NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization and Summary of Significant Accounting Policies
Description of Business
ATMI, Inc. (together with its subsidiaries, collectively referred to as the “Company,” “ATMI,” or “we”) believes it is among the leading suppliers of high performance materials, materials packaging and materials delivery systems used worldwide in the manufacture of microelectronics devices. Our products consist of “front-end” semiconductor performance materials, sub-atmospheric pressure gas delivery systems for safe handling and delivery of toxic and hazardous gases to semiconductor process equipment, high-purity materials packaging and dispensing systems that allow for the reliable introduction of low volatility liquids and solids to microelectronics processes. ATMI targets semiconductor and flat-panel display manufacturers, whose products form the foundation of microelectronics technology rapidly proliferating through the consumer products, information technology, automotive, and communications industries. The market for microelectronics devices is continually changing, which drives demand for new products and technologies at lower cost. ATMI’s customers include many of the leading semiconductor manufacturers in the world who target leading edge technologies. ATMI’s objective is to meet the demands of our microelectronics customers with solutions that maximize the efficiency of their manufacturing processes, reduce capital or operating costs, and minimize the time to develop new products and integrate them into their processes.
Consolidation
The consolidated financial statements include the accounts of all subsidiaries where control exists. Equity investments generally consist of
20 percent
to
50 percent
owned operations which by definition demonstrate significant influence and instances where the Company through voting and similar rights can exercise significant influence. Operations less than
20 percent
owned, where the Company does not exercise significant influence, are generally carried at cost. Earnings from equity investments are reported, net of income taxes, within the caption, “Other income (expense), net” on the consolidated statements of operations. Intercompany transactions have been eliminated.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. While actual results could differ, management believes such estimates to be reasonable.
Revenue Recognition and Accounts Receivable
We recognize revenue when the following four criteria are met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services have been rendered; (3) the fee is fixed or determinable; and (4) collectability is reasonably assured. Revenues from product sales are generally recognized upon delivery to a common carrier when terms are equivalent to free-on-board (“FOB”) origin and upon receipt by a customer when terms are equivalent to FOB destination. In instances where final acceptance of equipment is specified by the purchase agreement, revenue is deferred until all acceptance criteria have been satisfied, except when reasonable reserves for returns can be effectively established due to substantial successful installation history for homogenous transactions. Should changes in conditions cause management to determine these criteria are not met for certain future transactions, revenue recognized for any reporting period could be adversely affected. We accrue for sales returns, warranty costs, and other allowances based on a current evaluation of our experience based on stated terms of the transactions.
Prior to October 31, 2011, we used Matheson as our exclusive contract manufacturer and distribution partner for the manufacture and distribution of our Safe Delivery Source
®
(“SDS”) products (the “Licensed Products”). Under the terms of the original manufacturing agreement, ATMI retained the right to manufacture
25 percent
of all Licensed Products, while Matheson had the right to manufacture
75 percent
of all Licensed Products. Upon completion of manufacture, ATMI purchased all Licensed Products produced by Matheson. Under the terms of the distribution agreement, we received payment from Matheson based upon a formula which was dependent on the sale price obtained by Matheson from its customers. ATMI recognized revenue from the sale of Licensed Products to Matheson when Matheson sold the Licensed Products to its customers, because that is when the sales price became fixed and determinable. On October 31, 2011, we terminated the agreements with Matheson for manufacturing, marketing, selling and/or distributing of our SDS products (“SDS Direct transaction”). Matheson provided support services to ATMI during a transition period. Subject to such continuing services, ATMI assumed control of all manufacturing, distribution, logistics and sales services, which Matheson had provided globally prior to execution of the Termination Agreement, other than the distribution of the SDS and VAC product lines in Japan, which services continue to be provided by Matheson’s parent company, Taiyo Nippon Sanso Corporation (“TNSC”). We recognize revenue to TNSC when all the revenue recognition criteria are met, which is upon shipment. In those regions where Matheson was involved in distributing products during the transition period in the first half of 2012, revenues were recognized only after sale of the Licensed Products to the end users.
ATMI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
During the years ended
December 31, 2013
,
2012
and
2011
, ATMI recognized
$0.2 million
,
$6.9 million
, and
$65.8 million
of revenues from Matheson, respectively. The decline in revenue from Matheson in 2012 and 2013 is a result of the SDS Direct transaction. During the years ended
December 31, 2013
,
2012
and
2011
, ATMI recognized revenues from Taiwan Semiconductor Manufacturing Corporation (“TSMC”), of
$53.8 million
,
$48.1 million
, and
$32.0 million
, respectively. During the years ended
December 31, 2013
,
2012
and
2011
, ATMI recognized revenues from Samsung, a leading global integrated circuit manufacturer of
$50.7 million
,
$57.3 million
, and
$47.6 million
, respectively. During the years ended
December 31, 2013
,
2012
and
2011
, ATMI recognized revenues from United Microelectronics Corporation (“UMC”), of
$37.7 million
,
$44.7 million
, and
$48.7 million
, respectively.
Billings to customers for shipping and handling are included in revenues. Costs incurred for shipping and handling of products are charged to cost of revenues. Credit is extended to customers based on an evaluation of each customer’s financial condition; generally, collateral is not required. Revenues are presented in the consolidated financial statements net of sales allowances and discounts. Accounts receivable are presented in the consolidated financial statements net of the allowance for doubtful accounts. Taxes collected from customers and remitted to governmental authorities are presented on a net basis; and they are excluded from revenues.
Accounts Receivable Allowances
The allowance for doubtful accounts is established to represent our best estimate of the net realizable value of the outstanding accounts receivable balances. We estimate our allowance for doubtful accounts based on past due amounts and historical write-off experience, as well as trends and factors surrounding the credit risk of the markets we operate in and the financial viability of specific customers. In an effort to identify adverse trends, we assess the financial health of the markets we operate in and perform periodic credit evaluations of our customers and ongoing reviews of account balances and aging of receivables. Amounts are considered past due when payment has not been received within the time frame of the credit terms extended. Write-offs are charged directly against the allowance for doubtful accounts and occur only after all collection efforts have been exhausted.
Concentrations of Credit Risk
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents, marketable securities, accounts receivable, and currency forward exchange contracts. We invest our cash and cash equivalents and marketable securities in bank deposits, time deposits, money market securities, equity securities, corporate debt obligations, and government and government-sponsored enterprise bond obligations. The Company had amounts due from
two
customers that accounted for approximately
32 percent
of accounts receivable at
December 31, 2013
and amounts due from
one
customer that accounted for approximately
20 percent
of accounts receivable at
December 31, 2012
.
Research and Development
Costs associated with the development of new products and improvements to existing products are charged to expense as incurred.
Cash and Cash Equivalents and Marketable Securities
Highly liquid investments with maturities of three months or less, when acquired, are classified as cash and cash equivalents. Investments in publicly traded securities with maturities greater than three months, when acquired, are classified as marketable securities.
All of the Company’s marketable securities are classified as available-for-sale as of the balance sheet date and are reported at fair value, with unrealized gains and losses included in stockholders’ equity as a component of accumulated other comprehensive income, net of applicable taxes. We regularly review the fair value of marketable security declines below amortized cost to evaluate whether the decline is other-than-temporary. In making this determination, the Company considers all available evidence including, among other things, considering the duration and extent of the decline and the economic factors influencing the market to determine if the fair value will recover to equal or exceed the amortized cost. If we determine that the fair value will not recover, an other-than-temporary impairment is recognized, net of applicable taxes.
In 2012, we sold our only auction-rate security for
$4.2 million
resulting in a recognized loss of
$0.5 million
, which is included in the consolidated statements of operations in the caption “Other expense, net.”
Marketable securities that are in a temporarily impaired position, where management has the ability and intent to hold until anticipated recovery or maturity, are classified as either current or non-current based on the remaining contractual maturity of the security. Those securities in a temporarily impaired position with contractual maturities greater than one year are classified as non-current.
ATMI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As part of our ongoing cash management optimization efforts during
2013
, the Company purchased South Korean time deposits which were classified as marketable securities. At
December 31, 2013
and
2012
, the Company had
$13.3 million
and
$16.9 million
, respectively, of time deposits in South Korea.
As of
December 31, 2013
, we had
$26.5 million
of cash and cash equivalents in South Korea,
$6.0 million
of cash and cash equivalents in Taiwan and
$1.9 million
in cash and cash equivalents in Japan, which were not available to fund domestic US operations without repatriation. These funds could become subject to additional tax if they are repatriated. It is not practicable to estimate the amount or timing of the additional tax, if any, that eventually might be paid on these foreign funds. We do not anticipate repatriating these funds in the foreseeable future. Refer to Note 17 for a discussion of restrictions related to the merger agreement with Entegris which could limit or restrict our ability to transfer funds from our subsidiaries should the need arise.
Non-marketable Equity and Debt Securities
We selectively invest in non-marketable equity securities of private companies, which range from early-stage companies that are often still defining their strategic direction to more mature companies whose products or technologies may directly support an ATMI product or initiative. Our non-marketable equity investments are recorded using cost basis or the equity method of accounting, depending on the facts and circumstances of each investment. At
December 31, 2013
, the carrying value of our portfolio of strategic investments in non-marketable equity securities totaled
$6.6 million
(
$6.6 million
at
December 31, 2012
), of which,
$4.0 million
are accounted for at cost (
$4.0 million
at
December 31, 2012
) and
$2.6 million
are accounted for using the equity method of accounting (
$2.6 million
at
December 31, 2012
). In certain instances, we loan funds to early-stage investees at market interest rates to enable them to focus on product and technology development. At
December 31, 2013
, we had
$0.6 million
in outstanding loans and accrued interest (
$0.2 million
at
December 31, 2012
). Non-marketable equity and debt securities are included in the consolidated balance sheets under the caption “Other non-current assets.” ATMI’s share of the income or losses of all equity-method investees, using the most current financial information available, which is typically one month behind ATMI’s normal closing date, is included in our results of operations from the investment date forward.
Investments in non-marketable equity securities are inherently risky, and some of these companies are likely to fail. Their success (or lack thereof) is dependent on product development, market acceptance, operational efficiency, attracting and retaining talented professionals, and other key business success factors. In addition, depending on their future prospects, they may not be able to raise additional funds when needed or they may receive lower valuations, with less favorable investment terms than in previous financings, and the investments would likely become impaired.
We review our investments quarterly for indicators of impairment; however, for non-marketable equity securities, the impairment analysis may require significant judgment to identify events or circumstances that would likely have a significant adverse effect on the fair value of the investment. The indicators that we use to identify those events or circumstances include (a) the investee’s revenue and earnings trends relative to predefined milestones and overall business prospects, (b) the technological feasibility of the investee’s products and technologies, (c) the general market conditions in the investee’s industry or geographic area, including adverse regulatory or economic changes, (d) factors related to the investee’s ability to remain in business, such as the investee’s liquidity, and the rate at which the investee is using its cash, and (e) the investee’s receipt of additional funding at a lower valuation.
Investments identified as having an indicator of impairment are subject to further analysis to determine if the investment is other-than-temporarily impaired, in which case we write the investment down to its fair value, using the framework required by Accounting Standards Codification (“ASC”) 820 “Fair Value Measurements and Disclosures.” When an investee is not considered viable from a financial or technological point of view, we write down the entire investment balance to zero since we consider the estimated fair market value to be nominal. If an investee obtains additional funding at a valuation lower than our carrying amount or requires a new round of equity funding to stay in operation and the new funding does not appear imminent, we presume that the investment is other-than-temporarily impaired, unless specific facts and circumstances indicate otherwise. There were
no
impairments recognized in our portfolio of non-marketable equity securities in
2013
,
2012
, or 2011.
In July 2005, ATMI made an investment in Anji Microelectronics Co., Ltd. (“Anji”), an entity in the development stage of researching and developing advanced semiconductor materials, with primary operations in Shanghai, China. We have determined that Anji is a variable interest entity. However, we have determined that we are not the primary beneficiary of Anji because we do not have the power, through voting or similar rights, to direct the activities of Anji that most significantly impact the entity’s economic performance, and we are also not expected to absorb significant losses or gains from Anji. ATMI’s carrying value of this cost basis investment is
$3.9 million
at
December 31, 2013
. The carrying value of our investment in Anji represents the cash paid, less our share of the cumulative losses during the period we used the equity-method of accounting. At
December 31, 2013
, our maximum exposure to loss is our carrying value in this investment of
$3.9 million
.
ATMI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Inventories
Inventories are stated at the lower of cost or market, using the first-in, first-out (“FIFO”) method. Finished goods and work in process inventories include direct material, direct labor and manufacturing overhead costs. Inventory valuation reserves are established in order to report inventories at the lower of cost or market value on our consolidated balance sheets. The determination of inventory valuation reserves requires management to make estimates and judgments on the future salability of inventories. Valuation reserves for excess, obsolete, and slow-moving inventory are estimated by comparing the inventory levels of individual parts to both future sales forecasts or production requirements and historical usage rates in order to identify inventory where the resale value or replacement value is less than inventory cost. Other factors that management considers in determining these reserves include whether individual inventory parts or chemicals meet current specifications and cannot be substituted for or reworked into a part currently being sold or used as a service part, overall market
conditions
, and other inventory management initiatives.
As of
December 31, 2013
and
2012
, we had
$2.9 million
of inventory valuation reserves recorded
.
Property, Plant, and Equipment, net
Property, plant, and equipment are carried at cost, net of accumulated depreciation. Depreciation is calculated on the straight-line method based on the estimated useful lives of the assets, which range from
3
to
35
years (see Note 6). The estimated useful life represents the projected period of time that the asset will be productively employed by the Company and is determined by management based on many factors, including historical experience with similar assets and technological life cycles. Circumstances and events relating to these assets are monitored to ensure that changes in asset lives or impairments are identified and prospective depreciation expense or impairment expense is adjusted accordingly. The depreciation periods used are: buildings,
5
to
35
years; machinery and equipment,
3
to
15
years; software,
5
to
10
years; cylinders and canisters,
7
to
15
years; furniture and fixtures,
5
years; and leasehold improvements, over the lesser of the lease term or estimated useful life. We use accelerated depreciation methods for tax purposes where appropriate.
Asset-Retirement Obligations
An asset-retirement obligation (“ARO”) is recognized in the period in which sufficient information exists to determine the fair value of the liability with a corresponding increase to the carrying amount of the related property, plant, and equipment which is then depreciated over its useful life. The liability is initially measured at fair value and then accretion expense is recorded in each subsequent period. Refer to Note 8 for further discussion on leases.
Income Taxes
Current income taxes are determined based on estimated taxes payable or refundable on tax returns for the current year. Deferred income taxes are determined using enacted tax rates for the effect of temporary differences between the book and tax bases of recorded assets and liabilities. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company recognizes the benefit of an income tax position only if it is more likely than not (greater than
50 percent
) that the tax position will be sustained upon tax examination, based solely on the technical merits of the tax position. Otherwise, no benefit can be recognized. The tax benefits recognized are measured based on the largest benefit that has a greater than
50 percent
likelihood of being realized upon ultimate settlement. We adjust these unrecognized tax benefits, including any impact on the related interest and penalties, in light of changing facts and circumstances. A number of years may elapse before a particular matter for which we have established an unrecognized tax benefit is audited and fully resolved. Additionally, the Company accrues interest and related penalties, if applicable, on all tax exposures for which reserves have been established consistent with jurisdictional tax laws, which is included in income tax expense. Refer to Note 9 for more information and disclosures on income taxes.
ATMI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Fair Value of Financial Instruments
The Company measures and reports financial assets and financial liabilities on a fair value basis, consistent with ASC 820 “Fair Value Measurements and Disclosures,” using the following three categories for classification and disclosure purposes:
Level 1 — Quoted prices in active markets for identical assets and liabilities. Level 1 assets and liabilities consist of cash, money market fund deposits, time deposits, certain of our marketable equity instruments, and forward foreign currency exchange contracts that are traded in an active market with sufficient volume and frequency of transactions.
Level 2 — Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities. Level 2 assets include certain of our marketable debt instruments with quoted market prices that are traded in less active markets or priced using a quoted market price for similar instruments.
Level 3 — Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.
Refer to Note 3 for more information regarding the details, methods and assumptions used to estimate the fair value of our other financial instruments.
Foreign Currency Exchange Contracts
We use forward foreign currency exchange contracts to hedge specific or anticipated exposures relating to intercompany payments (primarily U.S. export sales to subsidiaries at pre-established U.S. dollar prices), intercompany loans, future cash flows and other specific and identified exposures. The terms of the forward foreign currency exchange contracts are matched to the underlying transaction being hedged. Because such contracts are directly associated with identified transactions, they are an effective hedge against fluctuations in the value of the foreign currency underlying the transaction.
Changes in the fair value of economic hedges are recognized in earnings as an offset to the change in the fair value of the underlying exposures being hedged. The changes in fair value of derivatives that are designated as cash-flow hedges are deferred in accumulated other comprehensive income (loss) and are recognized in earnings when the underlying hedged transaction occurs. Any ineffectiveness is recognized in earnings immediately. We do not enter into derivative instruments for trading or speculative purposes and all of our derivatives were effective throughout the periods reported.
Counterparties to forward foreign currency exchange contracts are major banking institutions with credit ratings of investment grade or better and no collateral is required. There are no significant risk concentrations. We believe the risk of incurring losses on derivative contracts related to credit risk is remote.
Goodwill and Other Indefinite-Lived Intangible Assets
The assets and liabilities of acquired businesses are recorded under the purchase method of accounting at their estimated fair values at the dates of acquisition. Goodwill represents costs in excess of fair values assigned to the underlying net assets of acquired businesses.
Goodwill and intangible assets deemed to have indefinite lives are not amortized, but are subject to annual impairment testing.
For reporting units where the qualitative determination does not indicate that it is more likely than not that the fair value of a reporting unit is more than its carrying value, the prescribed two step test is performed. In order to perform the two-step test we would estimate the fair value of a reporting unit based on the best information available as of October 31, 2013, which primarily incorporates management assumptions about expected future cash flows and contemplates other valuation techniques. No goodwill impairment has been recorded to date.
Other Long-Lived Assets
We evaluate the potential impairment of other long-lived assets when indicators of impairment are present. If the carrying value of assets exceeds the sum of the undiscounted expected future cash flows, the carrying value of the asset is written down to fair value. We amortize acquired patents and other amortizable intangible assets over their estimated useful lives. All amortizable intangible assets are amortized using the straight-line method over the estimated useful lives of the assets, ranging from
5
to
15
years.
ATMI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Intercompany Loans
In certain circumstances, the Company maintains intercompany agreements with and among our wholly-owned subsidiaries under which funds are provided to subsidiaries to finance general business activities and are of a long-term investment nature. When settlement of these loans is not planned or anticipated in the foreseeable future, and there is no repayment schedule as part of the agreements, we defer translation gains and losses on these loans in Accumulated other comprehensive income in the period in which they arise.
Translation of Foreign Currencies
We conduct business in many different currencies and, accordingly, are subject to the inherent risks associated with foreign exchange rate movements. The financial position and results of operations of many of our foreign subsidiaries are measured using the local currency as the functional currency. Foreign currency denominated assets and liabilities are translated into U.S. dollars at the exchange rates existing at the respective balance sheet dates, and income and expense items are translated at the average exchange rates during the respective periods. The aggregate effects of translating the balance sheets of these subsidiaries are deferred as a separate component of Stockholders’ equity.
Equity-based Compensation
The Company recognizes compensation expense in its consolidated financial statements for all share-based payments granted based on the fair value on the date of grant. For share-based payments granted with a service period vesting restriction, compensation expense is recognized on a straight-line basis or accelerated attribution method over the awards’ respective vesting period. For share-based payments granted with a performance condition, we accrue compensation expense when we determine it is probable that the awards will be earned. For share-based payments granted with a market condition, expense is recognized using the accelerated attribution method over the awards’ respective vesting period.
Collaborative Arrangements
ATMI entered into a collaborative development agreement (“CDA”) with an advanced memory integrated circuit manufacturer for the purpose of developing molecules, including chemical precursors, and material systems for next generation semiconductor products. ATMI will use its High Productivity Development platform to collaboratively work with this customer on specific statements of work designed to develop next-generation materials. The agreement, which was signed in September 2011 and expired in August 2012, required the customer to make quarterly payments to ATMI over the contract term. The arrangement has been determined to be a reimbursement of research and development costs and was recognized as a reduction of expense under the caption, “Research and development” in the Consolidated Statements of Operations. We recognized
$0.9 million
and
$2.9 million
related to the CDA as of December 31, 2011 and December 31, 2012.
Each CDA we execute will be reviewed based on the unique terms and conditions associated with such arrangement to determine, using applicable accounting guidance, the timing of recognition, whether the arrangement is revenue producing or represents a reimbursement of research and development costs, and the appropriate amounts to be recognized. If an arrangement is determined to be revenue producing, we apply applicable accounting standards to ensure proper timing and amounts of revenue recognition. If an arrangement is determined to represent a reimbursement of research and development costs, we apply accounting standards for reimbursements to ensure proper timing, amounts and classification as an offset to research and development expenses.
Severance Expense
During the first quarter of 2013, we initiated actions to better streamline business activities with our customers and partners and reduce our operational infrastructure. As a result, we recognized
$2.6 million
of severance expense under the caption, Selling, general & administrative in the consolidated statements of operations. All liabilities associated with this action were settled prior to December 31, 2013.
Recently Adopted Accounting Pronouncements
In December 2011, the FASB issued ASU 2011-11-”Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities” and in January 2013, the FASB issued ASU 2013-01- “Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities.” In ASU 2011-11, entities are required to disclose both gross information and net information about both instruments and transactions eligible for offset in the statement of financial position and instruments and transactions subject to an agreement similar to a master netting arrangement. ASU 2013-01 limits the scope of disclosures to derivatives, repurchase agreements and securities lending arrangements. We were required to apply the amendments retrospectively for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. There was no material impact from the adoption of these Updates.
ATMI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In February 2013, the FASB issued ASU 2013-02-”Comprehensive Income (Topic 220): Reporting of Amounts Reclassified out of Accumulated Other Comprehensive Income.” Substantially all of the information that this Update requires was already disclosed in our financial statements under U.S. GAAP, however, this Update requires additional disclosure about amounts reclassified out of accumulated other comprehensive income and their corresponding effect on net income in one place. We were required to apply the amendments prospectively for annual reporting periods beginning after December 15, 2012. There was no material impact from the adoption of this Update. Refer to Note 12 for the disclosures as a result of adoption of this Update.
Recently Issued Accounting Pronouncements
In July 2013, the FASB issued ASU 2013-11-“Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists.” In this update, entities are required to offset a liability related to an unrecognized tax benefit against a deferred tax asset for a net operating loss carryforward, a similar tax loss or a tax credit carryforward if such settlement is required or expected in the event the uncertain tax position is disallowed. An entity is required to apply the amendments prospectively for annual reporting periods beginning after December 15, 2013, and interim periods within those annual periods. Retrospective application is permitted. We do not anticipate any material impact from this Update.
In January 2013, the FASB issued ASU 2013-05 - “Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity. In this update, an entity will apply the guidance in ASC 830 and recognize CTA in earnings when it ceases to have a controlling financial interest in a subsidiary or group of assets within a consolidated foreign entity and the sale or transfer results in the complete or substantially completed liquidation of the foreign entity in which the subsidiary or group of assets resided. However, when an entity sells either a part or all of its investment in a consolidated foreign entity, it would apply the guidance in ASC 810 and recognize CTA in earnings only if the parent no longer has a controlling financial interest in the foreign entity as a result of the sale. An entity is required to apply the amendments prospectively for annual reporting periods beginning after December 15, 2013, and interim periods within those annual periods. Retrospective application is permitted. We do not anticipate any material impact from this Update.
2. Discontinued Operations
On December 22, 2013, ATMI, Inc. and certain of its subsidiaries entered into a Share and Asset Purchase Agreement with Pall Corporation, to sell and transfer all assets and liabilities primarily related to the LifeSciences business, including all equity interests held in ATMI BVBA, a company organized under the laws of Belgium, in exchange for cash proceeds of $
185 million
, subject to customary working capital adjustments. The Company has accounted for this segment as a discontinued operation. The operating results of this segment, including restated prior periods, are shown as a discontinued operation in the consolidated statements of operations. The assets and liabilities of the discontinued operation have been classified separately on the consolidated balance sheets in the current assets and liabilities, respectively. The consolidated statements of cash flows are presented as a combination of continuing and discontinued operations. We continued to operate the LifeSciences business and generate cash flows through the transaction close on February 20, 2014.
The Company will continue to perform certain services for Pall Corporation for a transition period following the sale of the LifeSciences business as part of an orderly transition. The Company expects the transition period will be no longer than twelve months. The net cash flows expected to be received and paid by the Company related to the transition services during the transition period are not expected to be material.
Revenues and losses from discontinued operations were as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2013
|
|
2012
|
|
2011
|
|
Revenues
|
|
$
|
49,358
|
|
|
$
|
41,584
|
|
|
$
|
38,264
|
|
|
Loss from discontinued operations before income taxes
|
|
(7,845
|
)
|
|
(6,501
|
)
|
|
(9,906
|
)
|
|
Loss from discontinued operations, net of tax
|
|
$
|
(8,594
|
)
|
|
$
|
(5,965
|
)
|
|
$
|
(9,055
|
)
|
ATMI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The assets and liabilities of the discontinued operations were as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2013
|
|
December 31, 2012
|
|
Assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
2,800
|
|
|
$
|
2,342
|
|
|
Marketable securities
|
|
3,050
|
|
|
—
|
|
|
Accounts receivable, net
|
|
9,562
|
|
|
7,122
|
|
|
Inventories, net
|
|
15,874
|
|
|
10,542
|
|
|
Other current assets
|
|
1,924
|
|
|
1,423
|
|
|
Property, plant and equipment, net
|
|
14,267
|
|
|
13,379
|
|
|
Goodwill, net
|
|
33,735
|
|
|
33,178
|
|
|
Other intangible assets, net
|
|
25,248
|
|
|
25,752
|
|
|
Other non-current assets
|
|
14,158
|
|
|
7,313
|
|
|
Total assets
|
|
$
|
120,618
|
|
|
$
|
101,051
|
|
|
Liabilities:
|
|
|
|
|
|
Accounts payable
|
|
$
|
2,946
|
|
|
$
|
2,726
|
|
|
Accrued liabilities
|
|
2,630
|
|
|
1,044
|
|
|
Accrued salaries and related benefits
|
|
2,117
|
|
|
1,682
|
|
|
Other current liabilities
|
|
1,240
|
|
|
2,307
|
|
|
Other non-current liabilities
|
|
4,175
|
|
|
4,618
|
|
|
Total liabilities
|
|
13,108
|
|
|
12,377
|
|
3. Fair Value Measurements and Marketable Securities
Assets / Liabilities Measured at Fair Value on a Recurring Basis
This table summarizes the Company’s assets (liabilities) measured at fair value on a recurring basis at
December 31, 2013
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measured Using
|
|
|
|
Total
|
|
Quoted
Prices in
Active
Markets for
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Cash & cash equivalents
|
|
$
|
82,646
|
|
|
$
|
82,646
|
|
|
—
|
|
|
—
|
|
|
Available-for-sale marketable securities
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
$
|
12,754
|
|
|
$
|
12,754
|
|
|
—
|
|
|
—
|
|
|
Time deposits
|
|
$
|
13,260
|
|
|
$
|
13,260
|
|
|
—
|
|
|
—
|
|
|
Corporate debt obligations
|
|
$
|
7,244
|
|
|
—
|
|
|
$
|
7,244
|
|
|
—
|
|
|
Government debt obligations
|
|
$
|
12,943
|
|
|
—
|
|
|
$
|
12,943
|
|
|
—
|
|
|
Government sponsored enterprise debt obligations
|
|
$
|
2,225
|
|
|
—
|
|
|
$
|
2,225
|
|
|
—
|
|
|
Foreign currency exchange contract asset
(1)
|
|
$
|
30
|
|
|
$
|
30
|
|
|
—
|
|
|
—
|
|
|
Foreign currency exchange contract liability
(1)
|
|
$
|
(409
|
)
|
|
$
|
(409
|
)
|
|
—
|
|
|
—
|
|
|
|
|
|
(1)
|
Refer to Note 5 for additional disclosures on Foreign Currency Exchange Contrac
ts
|
In
2013
, our valuation methodologies were consistent with previous years, and there were no transfers made among the three levels of the valuation hierarchy.
ATMI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Assets / Liabilities Measured at Fair Value on a Nonrecurring Basis
During the fourth quarter of 2013, we completed negotiations with Intermolecular, Inc., which resulted in the discontinuation of site, maintenance, and license support for certain long-lived HPD assets. In accordance with the provisions of ASC 360 “Property, Plant and Equipment”, long-lived assets held and used with a carrying amount of
$10.8 million
and the related prepaid support fees with a carrying amount of
$0.7 million
were deemed to be impaired and we recorded a charge to reduce the net book value of the assets to zero, which is included in the caption "Research and development" in the consolidated statements of operations.
In 2012, we received
$2.6 million
of research and development equipment as compensation for a royalty agreement with a third party. The fair value of the equipment was determined using Level 3 inputs, including cash flow analysis and also the use of market comparables for similar equipment. The fair value of the equipment is recorded as revenues in the consolidated statements of operations.
Due to their nature, the carrying value of cash, receivables, and payables approximates fair value.
Marketable securities include at
December 31,
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
|
|
2013
Gross
Unrealized
Gain (Loss)
(3)
|
|
Estimated
Fair Value
|
|
Cost
|
|
2012
Gross
Unrealized
Gain (Loss)
(3)
|
|
Estimated
Fair Value
|
|
Securities in unrealized gain position:
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
22,376
|
|
|
$
|
13,049
|
|
|
$
|
35,425
|
|
|
Corporate debt obligations
|
3,415
|
|
|
6
|
|
|
3,421
|
|
|
4,211
|
|
|
4
|
|
|
4,215
|
|
|
Government debt obligations
(1)
|
11,393
|
|
|
11
|
|
|
11,404
|
|
|
4,495
|
|
|
14
|
|
|
4,509
|
|
|
GSE
(2)
debt obligations
|
—
|
|
|
—
|
|
|
—
|
|
|
3,501
|
|
|
—
|
|
|
3,501
|
|
|
U.S. Treasury obligations
|
—
|
|
|
—
|
|
|
—
|
|
|
4,023
|
|
|
—
|
|
|
4,023
|
|
|
Subtotal
|
14,808
|
|
|
17
|
|
|
14,825
|
|
|
38,606
|
|
|
13,067
|
|
|
51,673
|
|
|
Securities in unrealized loss position:
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
14,870
|
|
|
(2,116
|
)
|
|
12,754
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Corporate debt obligations
|
3,824
|
|
|
(1
|
)
|
|
3,823
|
|
|
4,844
|
|
|
(7
|
)
|
|
4,837
|
|
|
Government debt obligations
|
1,039
|
|
|
—
|
|
|
1,039
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
GSE debt obligations
|
2,226
|
|
|
(1
|
)
|
|
2,225
|
|
|
8,251
|
|
|
(1
|
)
|
|
8,250
|
|
|
Subtotal
|
21,959
|
|
|
(2,118
|
)
|
|
19,841
|
|
|
13,095
|
|
|
(8
|
)
|
|
13,087
|
|
|
Securities at amortized cost:
|
|
|
|
|
|
|
|
|
|
|
|
|
Time deposits
|
13,260
|
|
|
—
|
|
|
13,260
|
|
|
16,920
|
|
|
—
|
|
|
16,920
|
|
|
Corporate debt obligations
|
—
|
|
|
—
|
|
|
—
|
|
|
790
|
|
|
—
|
|
|
790
|
|
|
Government debt obligations
|
500
|
|
|
—
|
|
|
500
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Subtotal
|
13,760
|
|
|
—
|
|
|
13,760
|
|
|
17,710
|
|
|
—
|
|
|
17,710
|
|
|
Total marketable securities
|
$
|
50,527
|
|
|
$
|
(2,101
|
)
|
|
$
|
48,426
|
|
|
$
|
69,411
|
|
|
$
|
13,059
|
|
|
$
|
82,470
|
|
|
|
|
|
(1)
|
State and municipal government debt obligations.
|
|
|
|
|
(2)
|
Government sponsored enterprise.
|
|
|
|
|
(3)
|
Unrealized gains or losses of less than
$500
for each category are reflected as a dash.
|
We recorded a
$2.0 million
gain in earnings as a result of sales of Intermolecular, Inc. common stock during 2013. At
December 31, 2013
we own Intermolecular, Inc. common shares with a market value of
$12.8 million
, including a temporary unrealized loss of $
2.1 million
due to recent declines in market price of their common stock.
The amortized cost and estimated fair value of available-for-sale securities, by contractual maturity, as of
December 31, 2013
are shown below (in thousands); expected maturities may differ from contractual maturities because the issuers of the securities may exercise the right to prepay obligations without prepayment penalties.
ATMI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
|
|
Estimated
Fair Value
|
|
Due in one year or less
|
$
|
29,779
|
|
|
$
|
29,789
|
|
|
Due between one and three years
|
5,878
|
|
|
5,883
|
|
|
|
35,657
|
|
|
35,672
|
|
|
Common stock
|
14,870
|
|
|
12,754
|
|
|
|
$
|
50,527
|
|
|
$
|
48,426
|
|
This table shows the Company’s marketable securities that were in an unrealized loss position at
December 31, 2013
, and also shows the duration of time the security had been in an unrealized loss position (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less Than 12 Months
|
|
12 Months or Greater
|
|
Total
|
|
|
|
Fair Value
|
|
Unrealized
Losses
|
|
Fair Value
|
|
Unrealized
Losses
|
|
Fair Value
|
|
Unrealized
Losses
|
|
Common stock
|
|
$
|
12,754
|
|
|
$
|
(2,116
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
12,754
|
|
|
$
|
(2,116
|
)
|
|
Corporate debt obligations
|
|
—
|
|
|
—
|
|
|
3,823
|
|
|
(1
|
)
|
|
3,823
|
|
|
(1
|
)
|
|
Government debt obligations
|
|
1,039
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,039
|
|
|
—
|
|
|
GSE
(1)
debt obligations
|
|
2,225
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
2,225
|
|
|
(1
|
)
|
|
Total
(2)
|
|
$
|
16,018
|
|
|
$
|
(2,117
|
)
|
|
$
|
3,823
|
|
|
$
|
(1
|
)
|
|
$
|
19,841
|
|
|
$
|
(2,118
|
)
|
|
|
|
|
(1)
|
Government sponsored enterprise.
|
|
|
|
|
(2)
|
As of
December 31, 2013
, we had
6
securities in an unrealized loss position. We have evaluated the near-term prospects of the investments in relation to the severity and duration of the decline in fair value and based on that evaluation we have concluded that we have the ability and intent to hold these investments until the recovery of fair value.
|
4. Inventories
Inventories include at
December 31,
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
2012
|
|
Raw materials
|
|
$
|
25,216
|
|
|
$
|
23,972
|
|
|
Work in process
|
|
1,615
|
|
|
799
|
|
|
Finished goods
|
|
52,592
|
|
|
55,127
|
|
|
|
|
79,423
|
|
|
79,898
|
|
|
Excess and obsolescence reserve
|
|
(2,938
|
)
|
|
(2,886
|
)
|
|
Inventories, net
|
|
$
|
76,485
|
|
|
$
|
77,012
|
|
As of
December 31, 2013
, the Company had commitments for inventory purchases of $
73.0 million
.
As
December 31, 2013
and
2012
, respectively, we had
$5.5 million
and
$5.1 million
of finished goods inventory residing at non-ATMI consignment locations.
5. Foreign Currency Exchange Contracts
At
December 31, 2013
, we held foreign currency exchange contracts, not designated as cash flow hedges, with notional amounts totaling
$46.0 million
of which
$32.5 million
will be settled in Euros,
$1.2 million
will be settled in Taiwan Dollars,
$6.6 million
will be settled in Korean Won,
$1.7 million
will be settled in Chinese Yuan Renminbi, and
$4.0 million
will be settled in Japanese Yen. At
December 31, 2013
, we held forward foreign currency exchange contracts designated as cash flow hedges with notional amounts totaling
$11.9 million
, which will be settled in Japanese Yen. The cash flow hedges held at
December 31, 2013
mature monthly through the fourth quarter of 2014. At
December 31, 2013
, the accumulated net unrecognized losses that are expected to be reclassified into earnings during the next twelve months is
$1.4 million
.
ATMI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company recorded a net loss of
$0.5 million
for the year ended
December 31, 2013
, a net gain of
$1.7 million
for the year ended
December 31, 2012
, and a net loss of
$2.0 million
for the year ended
December 31, 2011
, under the caption “Other expense, net” in the Consolidated Statements of Operations related to changes in the fair value of the foreign currency exchange contract economic hedges. The Company recorded net gains of
$0.3 million
and
$1.1 million
for the twelve months ended
December 31, 2013
and
December 31, 2012
, respectively in other comprehensive income related to the change in the fair value of cash flow hedges. Reclassification of deferred gains in other comprehensive income into earnings was
$2.8 million
for the year ended
December 31, 2013
and reclassification of deferred losses in other comprehensive income into earnings was
$0.2 million
for the year ended
December 31, 2012
.
At
December 31, 2012
, we held foreign currency exchange contracts, not designated as cash flow hedges, with notional amounts totaling
$22.6 million
, of which
$9.0 million
were settled in Euros,
$4.2 million
were settled in Taiwan Dollars,
$3.6 million
were settled in Japanese Yen, and
$5.8 million
were settled in Korean Won. At
December 31, 2012
, we held forward foreign currency exchange contracts designated as cash flow hedges with notional amounts totaling
$19.1 million
, which were settled in Japanese Yen, and the accumulated net unrecognized losses reclassified into earnings during 2013 was
$0.8 million
.
6. Property, Plant and Equipment, Net
Property, plant, and equipment, net, consists of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2013
|
|
2012
|
|
Land
|
|
$
|
1,203
|
|
|
$
|
1,149
|
|
|
Buildings
|
|
30,033
|
|
|
22,109
|
|
|
Machinery and equipment
|
|
121,610
|
|
|
122,043
|
|
|
Software
|
|
26,754
|
|
|
25,122
|
|
|
Cylinders and canisters
|
|
64,091
|
|
|
57,711
|
|
|
Furniture and fixtures
|
|
2,139
|
|
|
1,977
|
|
|
Leasehold improvements
|
|
21,539
|
|
|
18,749
|
|
|
Construction in progress
|
|
21,394
|
|
|
13,448
|
|
|
|
|
288,763
|
|
|
262,308
|
|
|
Accumulated depreciation and amortization
|
|
(168,301
|
)
|
|
(150,588
|
)
|
|
|
|
$
|
120,462
|
|
|
$
|
111,720
|
|
Depreciation and amortization expense for property, plant, and equipment for the years ended
December 31, 2013
,
2012
and
2011
was
20.4 million
,
19.9 million
, and
20.1 million
, respectively.
Fully depreciated assets, which were no longer in use, of approximately
$0.5 million
(primarily machinery and equipment and cylinders) and
$11.4 million
were written off in the years ended
December 31, 2013
and
2012
, respectively.
We recognized disposals and impairment losses from property, plant, and equipment of
$11.7 million
,
$0.9 million
, and
$0.6 million
, in the years ended
December 31, 2013
,
2012
and
2011
, respectively. Refer to Note 3 for additional information.
As of
December 31, 2013
, the Company had commitments for capital expenditures of
$1.4 million
.
This table shows amounts recorded in the consolidated statements of operations related to depreciation expense for property, plant, and equipment (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2013
|
|
2012
|
|
2011
|
|
Cost of revenues
|
|
$
|
9,286
|
|
|
$
|
8,801
|
|
|
$
|
8,889
|
|
|
Research and development
|
|
8,111
|
|
|
7,609
|
|
|
7,211
|
|
|
Selling, general, and administrative
|
|
3,039
|
|
|
3,446
|
|
|
4,021
|
|
|
Total depreciation and amortization
|
|
$
|
20,436
|
|
|
$
|
19,856
|
|
|
$
|
20,121
|
|
ATMI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. Goodwill and Other Intangibles
Goodwill and other intangibles balances at
December 31, 2013
and
2012
were (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
Patents &
Trademarks
|
|
Other
|
|
Total Other
Intangibles
|
|
Gross amount as of December 31, 2012
|
|
$
|
13,653
|
|
|
$
|
33,404
|
|
|
$
|
9,784
|
|
|
$
|
43,188
|
|
|
Accumulated amortization
|
|
—
|
|
|
(20,847
|
)
|
|
(1,163
|
)
|
|
(22,010
|
)
|
|
Balance at December 31, 2012
|
|
$
|
13,653
|
|
|
$
|
12,557
|
|
|
$
|
8,621
|
|
|
$
|
21,178
|
|
|
Gross amount as of December 31, 2013
|
|
$
|
13,657
|
|
|
$
|
33,440
|
|
|
$
|
9,784
|
|
|
$
|
43,224
|
|
|
Accumulated amortization
|
|
—
|
|
|
(22,677
|
)
|
|
(2,161
|
)
|
|
(24,838
|
)
|
|
Balance at December 31, 2013
|
|
$
|
13,657
|
|
|
$
|
10,763
|
|
|
$
|
7,623
|
|
|
$
|
18,386
|
|
Changes in carrying amounts of goodwill and other intangibles for the years ended
December 31, 2013
and
2012
, respectively, were (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
Patents &
Trademarks
|
|
Other
|
|
Total Other
Intangibles
|
|
Balance at December 31, 2011
|
|
$
|
13,606
|
|
|
$
|
7,812
|
|
|
$
|
11,605
|
|
|
$
|
19,417
|
|
|
Acquisitions
|
|
—
|
|
|
6,268
|
|
|
—
|
|
|
6,268
|
|
|
Amortization expense
|
|
—
|
|
|
(1,523
|
)
|
|
(967
|
)
|
|
(2,490
|
)
|
|
Other, including foreign currency translation
|
|
47
|
|
|
—
|
|
|
(2,017
|
)
|
|
(2,017
|
)
|
|
Balance at December 31, 2012
|
|
$
|
13,653
|
|
|
$
|
12,557
|
|
|
$
|
8,621
|
|
|
$
|
21,178
|
|
|
Amortization expense
|
|
—
|
|
|
(1,830
|
)
|
|
(998
|
)
|
|
(2,828
|
)
|
|
Other, including foreign currency translation
|
|
4
|
|
|
36
|
|
|
—
|
|
|
36
|
|
|
Balance at December 31, 2013
|
|
$
|
13,657
|
|
|
$
|
10,763
|
|
|
$
|
7,623
|
|
|
$
|
18,386
|
|
This table shows amounts recorded in the consolidated statements of operations related to amortization expense for intangibles (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2013
|
|
2012
|
|
2011
|
|
Research and development
|
|
399
|
|
|
92
|
|
|
—
|
|
|
Selling, general, and administrative
|
|
2,429
|
|
|
2,398
|
|
|
1,628
|
|
|
Total amortization
|
|
$
|
2,828
|
|
|
$
|
2,490
|
|
|
$
|
1,628
|
|
The approximate amortization expense expected to be recognized related to intangible assets is (in thousands):
|
|
|
|
|
|
|
|
Year
|
Amount
|
|
2014
|
$
|
2,849
|
|
|
2015
|
2,849
|
|
|
2016
|
2,849
|
|
|
2017
|
2,073
|
|
|
2018
|
1,417
|
|
|
Thereafter
|
6,349
|
|
|
Total
|
$
|
18,386
|
|
ATMI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In October 2012, ATMI acquired commercial and exclusive intellectual property rights related to certain electronic waste recovery technology. ATMI recorded
$6.3 million
of intangible assets in the acquisition of which
$5.5 million
was cash consideration and
$0.8 million
was the non-cash portion. This asset is being amortized over
15
years. The net book value of the intellectual property rights at
December 31, 2013
was
$5.8 million
.
In conjunction with the SDS Direct transaction in 2011, we recognized intangible assets of
$11.8 million
for the reacquired rights (
$8.8 million
) and a non-competition agreement (
$3.0 million
) net of liabilities assumed. The useful lives of the reacquired rights and the non-competition agreement are
10
years and
9
years, respectively. In 2012,
$2.0 million
of purchase price refinements have reduced the initial values recorded as certain fees have been recovered from the seller, resulting in the final intangible asset cost basis of
$9.8 million
. The net book value of the intangible assets at December 31, 2013 was
$7.6 million
.
The license for our distribution rights to Enthone’s copper ECD products, including its ViaForm products, was automatically renewed upon satisfaction of certain conditions in 2013. The net book value of the licensing right at
December 31, 2013
was
$4.9 million
.
8. Leases
The Company leases office, and manufacturing facilities, certain manufacturing equipment, and land under several operating leases expiring between 2014 and 2034. Rental expense was
$3.5 million
, $
3.4 million
, and
$3.2 million
, for the years ended
December 31, 2013
,
2012
and
2011
, respectively.
Below is a schedule of future minimum lease payments for operating leases as of
December 31, 2013
(in thousands):
|
|
|
|
|
|
|
|
|
Operating
Leases
|
|
2014
|
$
|
2,760
|
|
|
2015
|
2,124
|
|
|
2016
|
1,570
|
|
|
2017
|
468
|
|
|
2018
|
209
|
|
|
Thereafter
|
268
|
|
|
Total minimum lease payments
|
$
|
7,399
|
|
We lease two facilities in Danbury, CT. One facility houses our research and development activities and certain of our manufacturing capabilities, and contains approximately
73,000
square feet of space. In December 2010 we exercised a renewal option for the period January 1, 2012 to December 31, 2016. For the period January 1, 2012 to
December 31, 2016
, the monthly base rent is
$47,500
. There is
one
additional
five
-year renewal period available to ATMI under this lease. We have agreed to certain restoration obligations associated with this facility, which we are accounting for as an asset retirement obligation (“ARO”), associated with the leasehold improvements made to this facility. The discounted fair value of the ARO at
December 31, 2013
is
$2.8 million
.
The other facility in Danbury, CT is our headquarters, and contains approximately
31,000
square feet of space. In October 2010, we exercised a renewal option for the period January 1, 2012 to December 31, 2016. For the period January 1, 2011 to
December 31, 2016
, the monthly base rent is
$17,606
. There is
one
additional
five
-year renewal period available to ATMI under this lease.
Changes in the carrying amounts of the Company’s AROs at
December 31, 2013
are shown below (in thousands):
|
|
|
|
|
|
|
|
Balance at December 31, 2012
|
$
|
3,574
|
|
|
Liabilities settled
|
(8
|
)
|
|
Liabilities incurred
|
28
|
|
|
Accretion expense
|
54
|
|
|
Revisions in estimated cash flows
|
(33
|
)
|
|
Balance at December 31, 2013
|
$
|
3,615
|
|
The ARO liability is included in the consolidated balance sheets under the caption, “Other non-current liabilities.”
ATMI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9. Income Taxes
Pre-tax income (loss) was taxed in these jurisdictions (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2013
|
|
2012
|
|
2011
|
|
Domestic
|
|
$
|
31,561
|
|
|
$
|
41,970
|
|
|
$
|
(54,333
|
)
|
|
Foreign
|
|
19,395
|
|
|
24,656
|
|
|
25,104
|
|
|
Total pre-tax income (loss)
|
|
$
|
50,956
|
|
|
$
|
66,626
|
|
|
$
|
(29,229
|
)
|
Significant components of the provision (benefit) for income taxes for the following years ended are (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2013
|
|
2012
|
|
2011
|
|
Current:
|
|
|
|
|
|
|
|
Federal
|
|
$
|
(3,817
|
)
|
|
$
|
12,001
|
|
|
$
|
6,778
|
|
|
State
|
|
271
|
|
|
344
|
|
|
277
|
|
|
Foreign
|
|
5,082
|
|
|
1,638
|
|
|
2,632
|
|
|
Total current
|
|
1,536
|
|
|
13,983
|
|
|
9,687
|
|
|
Deferred:
|
|
|
|
|
|
|
|
Federal
|
|
10,951
|
|
|
3,210
|
|
|
(26,547
|
)
|
|
State
|
|
570
|
|
|
436
|
|
|
(2,070
|
)
|
|
Foreign
|
|
(860
|
)
|
|
702
|
|
|
665
|
|
|
Total deferred
|
|
10,661
|
|
|
4,348
|
|
|
(27,952
|
)
|
|
|
|
$
|
12,197
|
|
|
$
|
18,331
|
|
|
$
|
(18,265
|
)
|
Significant components of the Company’s deferred tax assets and liabilities are (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2013
|
|
2012
|
|
Deferred tax assets:
|
|
|
|
|
|
Accrued liabilities
|
|
$
|
3,624
|
|
|
$
|
4,581
|
|
|
Inventory reserves
|
|
2,166
|
|
|
2,227
|
|
|
Net operating loss and tax credit carryforwards
|
|
3,369
|
|
|
2,747
|
|
|
Equity-based compensation
|
|
7,929
|
|
|
8,613
|
|
|
Reacquired rights on contract termination
|
|
14,112
|
|
|
27,013
|
|
|
Other, net
|
|
747
|
|
|
96
|
|
|
|
|
31,947
|
|
|
45,277
|
|
|
Valuation allowance
|
|
(574
|
)
|
|
(359
|
)
|
|
|
|
31,373
|
|
|
44,918
|
|
|
Deferred tax liabilities:
|
|
|
|
|
|
Depreciation and amortization
|
|
(16,146
|
)
|
|
(20,525
|
)
|
|
Unrealized gain on marketable securities
|
|
—
|
|
|
(4,408
|
)
|
|
Other, net
|
|
(3,309
|
)
|
|
(3,184
|
)
|
|
|
|
(19,455
|
)
|
|
(28,117
|
)
|
|
Net deferred tax assets
|
|
$
|
11,918
|
|
|
$
|
16,801
|
|
The valuation allowance relates to the realizability of certain U.S. state and foreign net operating losses.
ATMI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of
December 31, 2013
, the Company had the following deferred tax assets related to net operating loss (“NOLs”) and tax credit carryforwards (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expiration
|
|
Federal
|
|
|
|
|
|
-Capital Loss
|
|
$
|
472
|
|
|
2015-2017
|
|
|
|
$
|
472
|
|
|
|
|
State
|
|
|
|
|
|
-NOLs
|
|
478
|
|
|
2014-2033
|
|
-Credits
|
|
54
|
|
|
2024-2028
|
|
-Credits
|
|
216
|
|
|
None
|
|
|
|
$
|
748
|
|
|
|
|
Foreign
|
|
|
|
|
|
-NOLs
|
|
998
|
|
|
None
|
|
-NOLs
|
|
161
|
|
|
2017-2018
|
|
-Credits
|
|
990
|
|
|
2017-2018
|
|
|
|
$
|
2,149
|
|
|
|
|
Total
|
|
$
|
3,369
|
|
|
|
The reconciliation of income tax expense (benefit) from continuing operations computed at the U.S. federal statutory tax rate to the Company’s tax expense (benefit) is (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year Ended December 31,
|
|
|
|
2013
|
|
2012
|
|
2011
|
|
U.S. statutory rate
|
|
$
|
17,834
|
|
|
$
|
23,319
|
|
|
$
|
(10,231
|
)
|
|
State income taxes
|
|
312
|
|
|
507
|
|
|
(1,165
|
)
|
|
Foreign income taxes
|
|
(3,193
|
)
|
|
(6,675
|
)
|
|
(6,144
|
)
|
|
Change in valuation allowance of deferred tax assets
|
|
235
|
|
|
388
|
|
|
(347
|
)
|
|
Other, net
|
|
(2,991
|
)
|
|
792
|
|
|
(378
|
)
|
|
|
|
$
|
12,197
|
|
|
$
|
18,331
|
|
|
$
|
(18,265
|
)
|
We recorded income tax expense of
$0.7 million
, and income tax benefits of
$0.5 million
and
$0.9 million
from discontinued operations for the years ended December 31, 2013, 2012, and 2011.
ATMI has not provided for U.S. federal income and foreign withholding taxes on approximately
$88.5 million
of undistributed earnings from non-U.S. operations as of
December 31, 2013
, because such earnings are intended to be reinvested indefinitely outside of the United States. These earnings could become subject to additional tax if they are remitted as dividends, loaned to ATMI, or upon sale of subsidiary stock. It is not practicable to estimate the amount or timing of the additional tax, if any, that eventually might be paid on the foreign earnings.
South Korea has granted the Company an income tax exemption that expires in 2014, including the reduction from
100 percent
to
50 percent
of the exemption in 2013 and 2014. The exemption applies only to income related to one of the Company’s product lines. The effect of the tax exemption was to reduce income tax expense by
$0.9 million
,
$2.3 million
, and
$2.8 million
for the years ended
December 31, 2013
,
2012
, and
2011
. In December 2013, the Company was granted a new tax exemption related to the manufacturing of different product lines at its recently-built JangAn facility; the tax exemption is for a
seven
year period that is expected to start in 2014.
ATMI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
At
December 31, 2013
, ATMI had
$2.3 million
of unrecognized tax benefits which, if recognized, would favorably affect the effective income tax rate in future periods.
$0.2 million
of this amount is included in deferred taxes, and the balance of
$2.1 million
is included in the caption “Other non-current liabilities” on the consolidated balance sheets, together with
$0.3 million
of accrued interest (net) on tax reserves and
$0
accrued for penalties. At
December 31, 2012
, the amount of unrecognized tax benefits (out of a total of
$30.6 million
), which, if recognized, would have favorably affected the effective income tax rate in future periods, was
$3.6 million
,
$0.6 million
of accrued interest (net) on tax reserves and
$0
accrued for penalties. At
December 31, 2011
, the amount of unrecognized tax benefits, which, if recognized, would have favorably affected the effective income tax rate in future periods, was
$3.7 million
,
$0.4 million
of accrued interest (net) on tax reserves and
$0
accrued for penalties.
The reconciliation of the unrecognized tax benefits (exclusive of interest) at the beginning of
2012
through the end of
2013
is (in thousands):
|
|
|
|
|
|
|
|
Ending Balance - December 31, 2011
|
$
|
3,656
|
|
|
Increases from prior period positions
|
27,015
|
|
|
Decreases from prior period positions
|
(159
|
)
|
|
Increases from current period positions
|
467
|
|
|
Decreases related to settlements with taxing authorities
|
(224
|
)
|
|
Decreases from lapse of statute of limitations
|
(127
|
)
|
|
Ending Balance - December 31, 2012
|
$
|
30,628
|
|
|
Increases from prior period positions
|
359
|
|
|
Decreases from prior period positions
|
(74
|
)
|
|
Increases from current period positions
|
454
|
|
|
Decreases related to settlements with taxing authorities
|
(27,868
|
)
|
|
Decreases from lapse of statute of limitations
|
(1,163
|
)
|
|
Balance at December 31, 2013
|
$
|
2,336
|
|
In the next 12 months, the Company does not expect any material decreases to the unrecognized tax benefits for tax positions taken related to previously filed tax returns.
At December 31, 2012, the Company had
$27.0 million
of unrecognized tax benefits related to the timing of deduction of the reacquired rights due to the Matheson contract termination. This uncertainty was resolved in 2013 as the Internal Revenue Service completed the audit of tax years 2010 and 2011, for which the Company paid
$8.2 million
(including
$0.2 million
of interest). Except for interest expense associated with the timing of the payment, since it was an uncertainty related to the timing of the deduction, the reversal of the
$27.0 million
of unrecognized tax benefits in 2013 had no impact on the income statement or on our effective tax rate. The reversal also resulted in a reclassification between taxes payable and deferred taxes on the balance sheet, to properly reflect in deferred tax assets the future amortization tax effect of the reacquired rights.
10. Defined Contribution Plan
The Company maintains a defined contribution plan (401(k) Plan) covering substantially all of its U.S. employees that is subject to the provisions of the Employee Retirement Income Security Act of 1974. The Company’s matching contributions are discretionary by plan year and were approximately
$1.5 million
,
$1.6 million
, and
$1.6 million
for the years ended
December 31, 2013
,
2012
and
2011
, respectively. The Plan provides for discretionary matching contributions of
100 percent
of the first
3 percent
of each participant’s eligible compensation plus
50 percent
on the next
2 percent
of each participant’s eligible compensation, up to statutory limitations. There is
no
matching contribution above
5 percent
of each participant’s eligible compensation.
ATMI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
11. Stockholders’ Equity
This table shows the effect of pre-tax compensation cost arising from equity-based payment arrangements recognized in income (loss) from continuing operations (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2013
|
|
2012
|
|
2011
|
|
Cost of revenues
|
|
$
|
161
|
|
|
$
|
232
|
|
|
$
|
406
|
|
|
Research and development
|
|
476
|
|
|
612
|
|
|
794
|
|
|
Selling, general, and administrative
|
|
6,144
|
|
|
6,954
|
|
|
5,878
|
|
|
Total equity-based compensation expense
|
|
$
|
6,781
|
|
|
$
|
7,798
|
|
|
$
|
7,078
|
|
No equity-based compensation cost was capitalized.
Summary of Plans
We currently have two equity-based compensation plans which provide for the granting of up to
4,000,000
shares of common stock pursuant to nonqualified stock options, incentive stock options (“ISOs”), stock appreciation rights, Total Shareholder Return Performance Restricted Stock Units (“TSR PRSU”), and restricted stock awards to employees, directors and consultants of the Company. Stock options typically vest over periods ranging from
one
to
four
years with a maximum term of
ten
years. Restricted stock awards and units typically vest over periods ranging from
three
to
five
years. Shares issued as a result of stock option exercises are primarily settled by the issuance of new shares.
This table shows the number of shares approved by shareholders for each plan and the number of shares that remain available for equity awards at
December 31, 2013
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
Stock Plan
|
|
# of Shares
Approved
|
|
# of Shares
Available
|
|
2010 Stock Plan
(1)
|
|
3,000
|
|
|
2,189
|
|
|
Employee Stock Purchase Plan
(2)
|
|
1,000
|
|
|
227
|
|
|
Totals
|
|
4,000
|
|
|
2,416
|
|
|
|
|
|
(1)
|
Exercise prices for ISOs and non-qualified stock options granted under this plan may not be less than
100 percent
of the fair market value for the Company’s common stock on the date of grant.
|
|
|
|
|
(2)
|
Employees may purchase shares at
95 percent
of the closing price on the day previous to the last day of each six-month offering period. This plan is not considered to be compensatory.
|
Fair Value
The Company uses the Black-Scholes-Merton options-pricing model to determine the fair value of stock options under ASC 718 “Compensation – Stock Compensation.” Management is required to make certain assumptions with respect to selected model inputs, including anticipated changes in the underlying stock price (i.e., expected volatility) and option exercise activity (i.e., expected term). For awards granted subsequent to January 1, 2006, expected volatility is based on the historical volatility of ATMI common stock for a period shorter than the expected term of the options. For awards granted in 2010 and 2011, expected volatility is based on the historical volatility of ATMI common stock for a period shorter than the expected term of the options. We have excluded the historical volatility prior to the public announcement regarding the sale of our non-core businesses in 2004, solely because those businesses that were sold represented a significant portion of ATMI’s consolidated business and were subject to considerable cyclicality associated with the semiconductor equipment industry, which drove increased volatility in ATMI’s stock price, which we did not believe would be representative of future expected volatility. The expected term of options granted is derived using historical exercise patterns which represent the period of time that options granted are expected to be outstanding. The risk-free rate is based on the U.S. yield curve in effect at the time of grant for a period commensurate with the estimated expected term. In accordance with ASC 718, in the determination of equity-based compensation cost, the Company estimates the total number of instruments that will be forfeited as a result of a failure to provide the requisite service to earn the award.
ATMI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
To estimate the fair value of our TSR PRSU’s, we use a Monte-Carlo simulation of future stock prices for ATMI and the components of the Russell 2000 index. This method uses a risk-neutral framework to model future stock prices. The stock price projections are based upon estimates for the risk-free rate of return, the volatility of our stock and the others included in the Russell 2000 index, and the correlation of each stock within the Russell 2000 index. Management is required to make certain judgments for these estimates.
The weighted-average fair value of options granted during the years ended
December 31, 2013
,
2012
and
2011
was
$10.34
,
$11.66
and
$9.66
, respectively, based on the Black-Scholes-Merton options-pricing model. These weighted-average assumptions were used for grants in the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
2012
|
|
2011
|
|
Stock option grants:
|
|
|
|
|
|
|
|
Risk free interest rate
|
|
1.59
|
%
|
|
1.52
|
%
|
|
3.15
|
%
|
|
Expected term, in years
|
|
7.92
|
|
|
7.87
|
|
|
7.85
|
|
|
Expected volatility
|
|
41.00
|
%
|
|
42.84
|
%
|
|
43.30
|
%
|
|
Dividend yield
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
The Company uses historical data to estimate forfeitures of awards from employee terminations in order to estimate compensation cost for awards expected to vest. In addition, we separate employees into groups that have similar characteristics for purposes of making forfeiture estimates.
Stock Option and Restricted Stock Activity
This table shows the option activity under our current and prior plans as of
December 31, 2013
and changes during the year then ended (options are expressed in thousands; averages are calculated on a weighted basis; life in years; intrinsic value expressed in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
of
Options
|
|
Average
Exercise
Price
|
|
Average
Remaining
Life
|
|
Aggregate
Intrinsic
Value
|
|
Outstanding at December 31, 2012
|
|
1,528
|
|
|
$
|
21.98
|
|
|
|
|
|
|
Granted
|
|
180
|
|
|
$
|
21.92
|
|
|
|
|
|
|
Exercised
|
|
(391
|
)
|
|
$
|
19.87
|
|
|
|
|
|
|
Forfeited
|
|
(47
|
)
|
|
$
|
20.65
|
|
|
|
|
|
|
Expired
|
|
(109
|
)
|
|
27.48
|
|
|
|
|
|
|
Outstanding at December 31, 2013
|
|
1,161
|
|
|
$
|
22.22
|
|
|
5.4
|
|
$
|
9,409
|
|
|
Exercisable at December 31, 2013
|
|
822
|
|
|
$
|
22.57
|
|
|
4.2
|
|
$
|
6,401
|
|
The aggregate intrinsic value represents the difference between the Company’s closing stock price of
$30.21
as of
December 31, 2013
and the exercise price of the dilutive options at that date, multiplied by the number of dilutive options outstanding at that date. The total intrinsic value of stock options exercised during the years ended
December 31, 2013
,
2012
and
2011
was
$2.4 million
,
$0.6 million
, and
$0.1 million
, respectively. The total fair value of options which vested during the years ended
December 31, 2013
,
2012
and
2011
was
$1.8 million
(
184,000
shares),
$1.9 million
(
203,000
shares), and
$1.7 million
(
184,000
shares) respectively.
There was no income tax deficiency recognized in additional paid-in capital from equity-based compensation for the years ended
December 31, 2013
,
2012
and
2011
respectively. An income tax deficiency was recognized in income tax expense from equity-based compensation totaling
$0.2 million
,
$0.2 million
, and
$0.9 million
for the years ended
December 31, 2013
,
2012
, and
December 31, 2011
, respectively.
ATMI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
This table shows restricted stock activity as of
December 31, 2013
and changes during the year then ended (shares are expressed in thousands; averages are calculated on a weighted basis):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
of
Shares
|
|
Average
Grant Date
Fair Value
|
|
Nonvested at December 31, 2012
|
|
1,073
|
|
|
$
|
18.75
|
|
|
Granted
|
|
340
|
|
|
$
|
22.47
|
|
|
Vested
|
|
(255
|
)
|
|
$
|
18.00
|
|
|
Forfeited
|
|
(152
|
)
|
|
$
|
19.17
|
|
|
Nonvested at December 31, 2013
|
|
1,006
|
|
|
$
|
20.14
|
|
The total fair value of restricted stock which vested during the years ended
December 31, 2013
,
2012
and
2011
was
$4.6 million
,
$5.7 million
and
$5.3 million
, respectively.
As of
December 31, 2013
,
$2.1 million
of unrecognized compensation cost related to non-vested stock options is expected to be recognized over a weighted-average period of approximately
1.6
years. As of
December 31, 2013
,
$8.9 million
of unrecognized compensation cost related to restricted stock is expected to be recognized over a weighted-average period of approximately
2.2
years. As of
December 31, 2013
,
$0.6 million
of unrecognized compensation cost related to TSR PRSU’s is expected to be recognized over a weighted-average period of approximately
1.2
years.
Earnings Per Share
This table shows the computation of basic and diluted earnings per share (in thousands, except per share data):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
2012
|
|
2011
|
|
Numerator:
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
$
|
38,759
|
|
|
$
|
48,295
|
|
|
$
|
(10,964
|
)
|
|
Denominator:
|
|
|
|
|
|
|
|
Denominator for basic earnings per share
|
|
|
|
|
|
|
|
- weighted average shares
|
|
31,911
|
|
|
31,931
|
|
|
31,703
|
|
|
Dilutive effect of employee stock options
|
|
162
|
|
|
168
|
|
|
—
|
|
|
Dilutive effect of restricted stock
|
|
678
|
|
|
565
|
|
|
—
|
|
|
Denominator for diluted earnings per common share – weighted average shares
|
|
32,751
|
|
|
32,664
|
|
|
31,703
|
|
|
Earnings (loss) per common share from continuing operations - basic
|
|
1.21
|
|
|
1.51
|
|
|
(0.35
|
)
|
|
Earnings (loss) per common share from continuing operations - diluted
|
|
1.18
|
|
|
1.48
|
|
|
(0.35
|
)
|
This table shows the potential common shares excluded from the calculation of weighted-average shares outstanding because their effect was considered to be antidilutive (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
2012
|
|
2011
|
|
Antidilutive shares
|
|
581
|
|
|
1,069
|
|
|
2,144
|
|
The Company has never declared or paid cash dividends on its capital stock. Refer to Note 17 for discussion of restrictive covenants related to the Agreement and Plan of Merger with Entegris.
In August 2010, the Company’s Board of Directors approved a share repurchase program for up to
$50.0 million
of ATMI common stock. The program, which has no expiration date, does not require the Company to purchase any specific number or amount of shares and may be suspended or reinstated at any time at the Company’s discretion and without notice. Under the terms of the share repurchase program, repurchases can be made from time to time in open market transactions at prevailing market prices or in privately negotiated transactions. Management determined the timing and amount of purchases under the repurchase program based upon market conditions or other factors.
ATMI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Under all the repurchase programs approved by the Company’s Board of Directors, the Company purchased a total of
8,787,077
shares of its common stock at an average price of
$27.80
per share. Our merger agreement with Entegris restricts our ability to repurchase shares. Please see Note 17 for further details.
12. Accumulated Other Comprehensive Income
The components of accumulated other comprehensive income are (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency
Translation
Adjustments
|
|
Unrealized
Gain (Loss) on
Available-for-
Sale Securities
|
|
Unrealized
Gain (Loss) on
Derivative
Instruments
|
|
Total
|
|
Balance at December 31, 2010
|
|
$
|
4,167
|
|
|
$
|
(139
|
)
|
|
—
|
|
|
$
|
4,028
|
|
|
Reclassification adjustment related to marketable securities in net unrealized gain at prior period end, net of $0 tax provision
(1)
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|
Change in fair value of available-for-sale securities, net of deferred income tax of $4,351
|
|
—
|
|
|
7,119
|
|
|
—
|
|
|
7,119
|
|
|
Cumulative translation adjustment
|
|
(3,097
|
)
|
|
—
|
|
|
—
|
|
|
(3,097
|
)
|
|
Balance at December 31, 2011
|
|
$
|
1,070
|
|
|
$
|
6,979
|
|
|
$
|
—
|
|
|
$
|
8,049
|
|
|
Reclassification adjustment related to marketable securities in net unrealized loss at prior period end, net of $495 tax provision
(1)
|
|
—
|
|
|
854
|
|
|
—
|
|
|
854
|
|
|
Change in fair value of available-for-sale securities, net of deferred income tax of $326
|
|
—
|
|
|
397
|
|
|
—
|
|
|
397
|
|
|
Change in fair value of derivative financial instruments, net of deferred income tax of $636
|
|
—
|
|
|
—
|
|
|
1,098
|
|
|
1,098
|
|
|
Cumulative translation adjustment
|
|
5,230
|
|
|
—
|
|
|
—
|
|
|
5,230
|
|
|
Balance at December 31, 2012
|
|
$
|
6,300
|
|
|
$
|
8,230
|
|
|
$
|
1,098
|
|
|
$
|
15,628
|
|
|
Reclassification adjustment related to marketable securities in net unrealized gain at prior period end, net of $1,625 tax provision
(1)
|
|
—
|
|
|
(3,489
|
)
|
|
|
|
(3,489
|
)
|
|
Change in fair value of available-for-sale securities, net of deferred income tax of $3,215
|
|
—
|
|
|
(5,592
|
)
|
|
|
|
(5,592
|
)
|
|
Reclassification adjustment related to cash flow hedges in net unrealized gain position at prior period end, net of $455 tax provision
(1)
|
|
|
|
|
|
|
(799
|
)
|
|
(799
|
)
|
|
Change in fair value of derivative financial instruments, net of deferred income tax of $615
|
|
—
|
|
|
|
|
1,080
|
|
|
1,080
|
|
|
Cumulative translation adjustment
|
|
1,703
|
|
|
|
|
|
|
1,703
|
|
|
Balance at December 31, 2013
|
|
$
|
8,003
|
|
|
$
|
(851
|
)
|
|
$
|
1,379
|
|
|
$
|
8,531
|
|
|
|
|
|
(1)
|
Determined based on the average cost method.
|
ATMI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The reclassifications out of accumulated other comprehensive income are (in thousands):
|
|
|
|
|
|
|
|
|
|
Details about Accumulated Other Comprehensive
Income Components
|
Amount Reclassified from
Accumulated Other
Comprehensive Income
|
|
Effect on the Consolidated
Statements of Comprehensive Income
|
|
Realized gains and losses on cash flow hedges
|
|
|
|
|
Foreign exchange contracts
|
$
|
1,442
|
|
|
Revenues
|
|
|
(188
|
)
|
|
Cost of revenues
|
|
|
1,254
|
|
|
Total before tax
|
|
|
(455
|
)
|
|
Estimated tax expense
|
|
|
$
|
799
|
|
|
Net of estimated tax
|
|
Realized gains and losses on available-for-sale securities
|
|
|
|
|
Available-for-sale securities
|
$
|
5,114
|
|
|
Other income (expense), net
|
|
|
5,114
|
|
|
Total before tax
|
|
|
(1,625
|
)
|
|
Estimated tax expense
|
|
|
$
|
3,489
|
|
|
Net of estimated tax
|
|
Total reclassifications for the period
|
$
|
4,288
|
|
|
Net of estimated tax
|