CCMP CMC Materials Inc

Cabot Microelectronics Corporation (Nasdaq:CCMP), the leading supplier of chemical mechanical planarization (CMP) polishing slurries to the semiconductor industry, today reported financial results for its fourth fiscal quarter and full fiscal year ended September 30, 2005. The company also announced that its Board of Directors has authorized a new share repurchase program for up to $40 million of the company's outstanding common stock, following the completion in the fourth quarter of the previously authorized $25 million share repurchase program. Total revenue for the fourth fiscal quarter of 2005 was $73.9 million, up 13.6% from $65.0 million in the prior quarter and down 10.7% from $82.7 million in the fourth quarter a year ago. All of the company's slurry application areas experienced sequential revenue increases this quarter. The company's average selling price rose by 0.6% this quarter compared with the prior quarter, primarily due to benefits of a higher priced product mix, partially offset by selected price reductions along with the effect of the Japanese yen weakening relative to the U.S. dollar. Revenue for fiscal year 2005 was $270.5 million, down 12.6 % from the $309.4 million reported for fiscal year 2004. Gross profit for the quarter was $34.6 million, up 11.0% from $31.2 million in the prior quarter and down 13.9% from $40.2 million in the same quarter a year ago. As a percentage of revenue, gross profit was 46.9% this quarter compared with 48.0% reported for last quarter and 48.6% in the same quarter last year. Gross profit this quarter was adversely affected by a lower margin product mix and higher manufacturing costs, partially offset by benefits of higher manufacturing capacity utilization. Gross profit for fiscal year 2005 was $129.2 million, down 15.3% from the $152.6 million reported for fiscal year 2004. Operating expenses of $24.0 million, consisting of research and development, selling and marketing, and general and administrative expense, increased by $3.4 million sequentially from $20.6 million last quarter, and were $3.3 million higher than $20.7 million in the same quarter of 2004. The increase in operating expense was primarily due to higher staffing related costs, including costs to support the company's activities in Asia. The higher operating expense also reflects startup costs for the company's new Asia Pacific Technology Center. Operating expenses for fiscal year 2005 were $85.4 million, up 3.0% from the $82.9 million reported for fiscal year 2004. Net income for the quarter was $8.25 million, down 1.0% from $8.34 million last quarter, and down 37.3% from $13.17 million in the same quarter last year. For the fiscal year, net income was $32.5 million in 2005, down 30.5% from the $46.7 million reported for 2004. Diluted earnings per share were $0.34 this quarter, equal to the previous quarter and down from $0.53 in the fourth quarter of 2004. Diluted earnings per share in fiscal 2005 were $1.32, down 29.7% from the $1.88 reported in fiscal 2004. "We are encouraged by the upturn we experienced in our business during the fourth fiscal quarter," stated William P. Noglows, Cabot Microelectronics' Chairman and CEO. "We are also excited about our progress on our strategic initiatives. We announced plans to begin selling directly to customers in Taiwan, one of our most important markets, rather than through a distributor. We believe this will provide our customers better access to the full range of our capabilities. Second, we completed construction of our new Asia Pacific Technology Center. This substantial investment reflects the importance of the Asia Pacific market to our business and underscores our commitment to maintaining our technology leadership and to becoming even more responsive to the needs of our customers. In addition, our Engineered Surface Finishes, or ESF, initiative also gained momentum. Through ESF we intend to leverage our CMP technology from the semiconductor industry into other technically demanding applications that are synergistic to our core CMP slurry business. We recently acquired the assets of Surface Finishes Co., Inc., a pioneer in precision machining and polishing techniques. This acquisition supplements our internal ESF development efforts, and should provide direct and immediate capabilities and customer linkages into high performance polishing markets that we do not currently serve. Finally, in recognition of our strong financial and cash flow model, we are implementing a new $40 million share repurchase program, which is a flexible and attractive means of returning cash to shareholders." "From our perspective, Cabot Microelectronics is a very different company than it was two years ago, and that is directly attributable to the steady progress we have made on our three core strategic initiatives of technology leadership, operations excellence, and getting closer to our customers", added Mr. Noglows. "We believe our CMP product development pipeline is robust, our operations are running more efficiently, our relationships with our customers have never been stronger, and our ESF initiative is gaining traction. Our progress in all of these areas gives us confidence that our company is well positioned for continued success." CONFERENCE CALL Cabot Microelectronics Corporation's quarterly earnings conference call will be held today at 9:00 a.m. Central Time. The live conference call will be available via webcast from the company's website, www.cabotcmp.com, or by phone at (800) 893-3008. Callers outside the U.S. can dial (706) 634-5531. A replay will be available through November 17, 2005, by calling (800) 642-1687 or (706) 645-9291, and using access code 4381290, or via webcast at www.cabotcmp.com. A transcript of the formal comments made during the conference call will be available in the Investor Relations section of the company's website. ABOUT CABOT MICROELECTRONICS CORPORATION Cabot Microelectronics Corporation, headquartered in Aurora, Illinois, is the leading supplier of CMP slurries for polishing various materials used in semiconductor manufacturing. The company's products play a critical role in the production of the most advanced semiconductor devices, enabling its customers to manufacture smaller, faster and more complex devices. For more information about Cabot Microelectronics Corporation, visit www.cabotcmp.com or contact Barbara A. Ven Horst, Director of Investor Relations at (630) 499-2600. SAFE HARBOR STATEMENT This news release may include statements that constitute "forward looking statements" within the meaning of federal securities regulations. These forward-looking statements include statements related to future sales and operating results, company and industry growth and trends, growth of the markets in which the company participates, international events, product performance, new product introductions, development of new products, technologies and markets, the acquisition of or investment in other entities, and the construction of new facilities by Cabot Microelectronics Corporation. These forward-looking statements involve a number of risks, uncertainties, and other factors, including those described from time to time in Cabot Microelectronics' filings with the Securities and Exchange Commission (SEC), that could cause actual results to differ materially from those described by these forward-looking statements. In particular, see "Risks Relating to Our Business" in Managements' Discussion and Analysis in our quarterly report on Form 10-Q for the quarter ended June 30, 2005, and our annual Report on Form 10-K for the fiscal year ended September 30, 2004, both filed with the SEC. Cabot Microelectronics Corporation assumes no obligation to update this forward looking information. -0- *T CABOT MICROELECTRONICS CORPORATION CONSOLIDATED STATEMENTS OF INCOME (Unaudited and amounts in thousands, except per share amounts) Quarter Ended Twelve Months Ended ----------------------------- ------------------- Sept. 30, June 30, Sept. 30, Sept. 30, Sept. 30, 2005 2005 2004 2005 2004 --------- --------- --------- --------- --------- Revenue $73,861 $65,037 $82,714 $270,484 $309,433 Cost of goods sold 39,234 33,843 42,498 141,282 156,805 --------- --------- --------- --------- --------- Gross profit 34,627 31,194 40,216 129,202 152,628 Operating expenses: Research and development 12,147 10,462 10,979 43,010 44,003 Selling and marketing 4,863 3,938 3,844 16,989 16,225 General and administrative 7,029 6,106 5,819 25,172 22,351 Amortization of intangibles - 85 85 255 340 --------- --------- --------- --------- --------- Total operating expenses 24,039 20,591 20,727 85,426 82,919 --------- --------- --------- --------- --------- Operating income 10,588 10,603 19,489 43,776 69,709 Other income, net 833 969 117 2,747 139 --------- --------- --------- --------- --------- Income before income taxes 11,421 11,572 19,606 46,523 69,848 Provision for income taxes 3,169 3,234 6,439 14,050 23,120 --------- --------- --------- --------- --------- Net income $8,252 $8,338 $13,167 $32,473 $46,728 ========= ========= ========= ========= ========= Basic earnings per share $0.34 $0.34 $0.53 $1.32 $1.89 ========= ========= ========= ========= ========= Weighted average basic shares outstanding 24,459 24,609 24,689 24,563 24,750 ========= ========= ========= ========= ========= Diluted earnings per share $0.34 $0.34 $0.53 $1.32 $1.88 ========= ========= ========= ========= ========= Weighted average diluted shares outstanding 24,460 24,610 24,783 24,612 24,882 ========= ========= ========= ========= ========= CABOT MICROELECTRONICS CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited and amounts in thousands) September 30, September 30, 2005 2004 ------------- ------------- ASSETS: Current assets: Cash, cash equivalents, and short-term investments $171,041 $157,318 Accounts receivable, net 36,759 41,347 Inventories, net 28,797 24,474 Other current assets 9,210 6,542 ------------- ------------- Total current assets 245,807 229,681 Property, plant and equipment, net 135,784 127,794 Other long-term assets 5,172 5,816 ------------- ------------- Total assets $386,763 $363,291 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY: Current liabilities: Accounts payable $10,236 $13,080 Capital lease obligations 1,170 1,272 Accrued expenses, income taxes payable and other current liabilities 24,216 18,023 ------------- ------------- Total current liabilities 35,622 32,375 Capital lease obligations 5,436 6,385 Deferred income taxes and other long-term liabilities 6,621 8,909 ------------- ------------- Total liabilities 47,679 47,669 Stockholders' equity 339,084 315,622 ------------- ------------- Total liabilities and stockholders' equity $386,763 $363,291 ============= ============= *T