Cabot Microelectronics Corporation (Nasdaq: CCMP), the world’s
leading supplier of chemical mechanical planarization (CMP)
polishing slurries and a growing CMP pad supplier to the
semiconductor industry, today announced that its Board of Directors
has determined to pursue a significant new capital management
initiative, including a leveraged recapitalization, intended to
more efficiently allocate the company’s capital and provide
additional value to its shareholders.
The company intends to pay a special cash dividend of $15 per
share, or approximately $345 million in aggregate, to its
shareholders during the first quarter of calendar year
2012. Approximately half of the dividend is expected to be
funded from the company’s cash balance, and the remaining amount is
expected to be funded with new debt. Payment of the special
dividend is contingent upon arranging the associated financing with
terms and conditions that are acceptable to the company. In
addition, the Board has authorized an increase in the company’s
existing share repurchase program to $150 million, from the
previous available authorization of approximately $83
million. The company intends to continue to repurchase its
shares from time to time in open market transactions, depending on
market conditions, at management’s discretion.
In considering the proposed recapitalization, the Board of
Directors took into account a number of factors, including the
current cash balance on the company’s balance sheet, the current
receptivity within credit markets for the financing required to
effect the special cash dividend, the company’s ability to generate
cash to service the debt and to fund operations, and the potential
implications of leverage on the company’s ability to pursue its
strategic initiatives.
"Since our inception as a public company over eleven years ago,
we have maintained solid revenue growth and a consistent level of
profitability, and have made strategic investments to grow our
business while also generating significant free cash flow", said
William Noglows, Chairman and CEO of Cabot
Microelectronics. "I am pleased that our company enjoys the
financial strength and flexibility to now distribute a substantial
amount of capital to our shareholders through this proposed special
cash dividend while still maintaining the financial resources
necessary to support future growth opportunities."
Mr. Noglows continued, "Going forward, our investment and growth
strategies remain unchanged. We will continue to invest in our
business and pursue organic growth opportunities aggressively, as
well as consider attractive acquisition opportunities that can
profitably grow our company. We will balance these investments
in our business with consideration of future opportunities to
distribute capital to shareholders on an ongoing basis."
The company expects to declare and pay the special cash dividend
during the first quarter of calendar year 2012. Declaration
and payment of the dividend is conditioned upon obtaining debt
financing under terms and conditions that are acceptable to the
company. The company expects to enter into a new term loan
facility in the amount of approximately $175 million, with a
maturity of no less than five years, and a new $100 million
revolving credit facility, which is intended to be initially
undrawn. The company is currently in discussions with
financing sources and anticipates it will close on the new credit
facilities in early 2012.
"Our planned special dividend will distribute a significant
portion of our cash balance that is not required for day to day
operations to shareholders," said William Johnson, Vice President
and CFO of Cabot Microelectronics. "We remain committed to
maintaining a strong balance sheet. We currently have no debt
outstanding, and we believe the proposed new debt represents a
modest and prudent level of leverage that can represent a long term
element of our capital structure. In addition, our company has
been a strong cash flow generator, and we intend to use our future
free cash flow to continue investing in our business while also
considering future distributions to shareholders, whether through
ongoing share purchases, potential future dividend payments or
other means."
Current Business Conditions
The company last discussed industry and business conditions
during its earnings conference call on October 27, 2011, in
conjunction with the release of its fourth quarter and full year
results for fiscal 2011. At that time, the company cited
industry analyst projections that softness in semiconductor
industry demand, which the company had experienced during the
second half of its fiscal year 2011, was expected to continue
through the first half of its fiscal year 2012. Commenting on
current business conditions, Mr. Noglows stated, "We traditionally
see some seasonal softness in demand during the December quarter
compared to the September quarter. However, given the current
soft industry environment, we would characterize current conditions
as slightly softer than normal seasonality. More specifically,
through the first two months of the first fiscal quarter, our
revenue is running approximately five percent lower than last
quarter. While the strong start to holiday shopping in the
U.S. provides some hope for industry strengthening, we remain
cautious, particularly given global macroeconomic uncertainty."
CONFERENCE CALL
Cabot Microelectronics Corporation has scheduled a call with
investors and analysts to discuss the new capital management
initiative on Tuesday, December 13 at 8 a.m. Central Time. The
conference call will be available via live webcast and replay from
the company’s website, www.cabotcmp.com, or by phone at (866)
202-4367. Callers outside the U.S. can dial (617)
213-8845. The conference code for the call is 69780433. A
transcript of the formal comments made during the conference call
will also 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 world's leading supplier of CMP polishing slurries
and a growing CMP pad supplier to the semiconductor industry.
The company's products play a critical role in the production
of advanced semiconductor devices, enabling the manufacture of
smaller, faster and more complex devices by its customers. The
company’s mission is to create value by developing reliable and
innovative solutions, through close customer collaboration, that
solve today’s challenges and help enable tomorrow’s
technology. Since becoming an independent public company in
2000, the company has grown to approximately 1,000 employees on a
global basis. For more information about Cabot
Microelectronics Corporation, visit www.cabotcmp.com or contact
Trisha Tuntland, Manager 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: whether the conditions to the
proposed recapitalization transaction, including the declaration
and payment of the special cash dividend, will be satisfied,
including whether the company will obtain debt financing under
terms and conditions acceptable to the company; whether the
recapitalization transaction will occur on the terms described in
this press release or at all, and the timing of any such
recapitalization transaction; future sales and operating results;
company and industry growth, contraction or trends; growth or
contraction of the markets in which the company participates;
international events, regulatory or legislative activity, or
various economic factors; product performance; the generation,
protection and acquisition of intellectual property, and litigation
related to such intellectual property; new product introductions;
development of new products, technologies and markets; natural
disasters; the acquisition of or investment in other entities; uses
and investment of the company’s cash balance; financing facilities
and related availability and terms; the company’s capital
structure; and the construction and operation of 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 "Risk Factors" in the company's
annual report on Form 10-K for the fiscal year ended September 30,
2011, filed with the SEC. Cabot Microelectronics assumes no
obligation to update this forward-looking information.
CONTACT: Trisha Tuntland
Manager, Investor Relations
(630) 499-2600
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