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Cabot Microelectronics Reports Results for First Fiscal Quarter 2003

AURORA, Ill., Jan. 23 /PRNewswire-FirstCall/ -- 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 first fiscal quarter ended December 31, 2002.

Total revenue for the first fiscal quarter of 2003 was $57.3 million, up 12.3% from the first quarter a year ago. On a sequential basis, revenue was down 12.2% from the fourth fiscal quarter of 2002. The majority of the revenue decrease from the prior quarter was due to decreased demand caused by a decline in wafer starts along with a few customers drawing down their slurry inventories. The Company's overall average selling price was unchanged.

Gross margin in the first fiscal quarter of 51.7% was up sequentially from 51.1%. The improvement in margin primarily resulted from lower manufacturing operating costs and other expenses, which more than offset the effect of lower production volumes. Gross margin in the year ago quarter was 53.4%.

Operating expenses of $15.7 million, consisting of research and development (R&D), selling and marketing and general and administrative expenses, were down sequentially by $0.9 million, mainly due to lower spending on research and development supplies as well as other reduced discretionary items. Operating expenses increased on a year-over-year basis by $2.4 million, primarily due to increases in R&D efforts consistent with the Company's strategy of investing to maintain its technology leadership. The Company's current estimate of its worldwide effective tax rate for all of fiscal 2003 is 33.5%.

Net income for the quarter was $9.3 million, compared to $11.5 million in the fourth quarter and $9.0 million in the year ago quarter. On a diluted share basis, earnings were $0.38 this quarter, compared to $0.47 in the fourth quarter and $0.37 in the year ago first quarter.

"During our first fiscal quarter of 2003, Cabot Microelectronics delivered solid financial performance that showed concrete improvement in our overall year-over-year financial measures and operational initiatives," stated Dr. Matthew Neville, Cabot Microelectronics, Chairman and CEO. "Despite the ongoing effects of the global and industry downturn and sequential impact of our customers' reduction in wafer starts to meet current end-market demand, we were able to deliver these results because of our continued mission critical focus to advance our product technologies and improve our customer relationships, while stringently managing our costs. We remain encouraged about the long-term growth opportunities for the CMP consumables market, given factors such as our customers' continued implementation of advanced technologies, feature shrinks, and the adoption of new materials and processes that require CMP."

Conference Call

Cabot Microelectronics' quarterly earnings conference call will be held today at 9:00 a.m. Central Time. The live conference call and a subsequent replay will be available via Webcast at www.cabotcmp.com or www.ccbn.com. For assistance, call 1-630-499-2600.

About Cabot Microelectronics

Cabot Microelectronics Corp., headquartered in Aurora, Ill., is the leading supplier of CMP slurries for polishing various materials used in semiconductor manufacturing processes. These products enable IC manufacturers to make smaller, faster and more complex devices and improve their production processes. For more information on Cabot Microelectronics, visit www.cabotcmp.com or call 1-630-499-2600.

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 this market, international events, new product introductions and development of new products and technologies by Cabot Microelectronics. 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 the actual results to differ materially from those described by these forward-looking statements. In particular, see "Risks Relating to our Business" in Management's Discussion and Analysis in our Annual Report on Form 10K for the fiscal year ended September 30, 2002, filed with the SEC. Cabot Microelectronics Corporation assumes no obligation to update this forward- looking information.

                      CABOT MICROELECTRONICS CORPORATION
                      CONSOLIDATED STATEMENTS OF INCOME
              (Unaudited in thousands, except per share amounts)

                                                 Quarter Ended
                                   Dec. 31,        Sept. 30,        Dec. 31,
                                     2002            2002             2001

    Revenue                        $57,273           $65,264        $51,004
    Cost of goods sold              27,665            31,946         23,746
      Gross profit                  29,608            33,318         27,258
    Operating expenses:
      Research and development       8,635            10,102          6,947
      Selling and marketing          2,578             2,469          2,358
      General and administrative     4,368             3,917          3,884
      Amortization of intangibles       85                74             90
        Total operating expenses    15,666            16,562         13,279
    Operating income                13,942            16,756         13,979
    Other income (expense)              (5)               71           (317)
    Income before income taxes      13,937            16,827         13,662
    Provision for income taxes       4,669             5,377          4,645
      Net income                    $9,268           $11,450         $9,017

    Basic net income per share       $0.38             $0.47          $0.37
    Weighted average
     basic shares outstanding       24,300            24,231         24,096

    Diluted net income per share     $0.38             $0.47          $0.37
    Weighted average diluted
     shares outstanding             24,579            24,501         24,532


                      CABOT MICROELECTRONICS CORPORATION
                    CONSOLIDATED CONDENSED BALANCE SHEETS
                     (Unaudited and amounts in thousands)

                                        December 31,        September 30,
                                            2002                2002

                     ASSETS:
    Current assets:
      Cash and cash equivalents            $76,796             $69,605
      Accounts receivable, net              28,141              26,082
      Inventories, net                      24,390              21,959
      Other current assets                   5,910               5,637
        Total current assets               135,237             123,283

    Property, plant and equipment, net     131,449             132,264
    Other long-term assets                   2,637               2,838
        Total assets                      $269,323            $258,385

       LIABILITIES AND STOCKHOLDERS' EQUITY:
    Current liabilities:
      Accounts payable                      $9,405             $11,748
      Capital lease obligation               1,612               1,585
      Accrued expenses, income
       taxes payable and other
       current liabilities                  17,248              17,238
        Total current liabilities           28,265              30,571

    Long-term debt                           3,500               3,500
    Capital lease obligation                 8,499               8,865
    Deferred income taxes and
     other long-term liabilities             2,197               1,943
        Total liabilities                   42,461              44,879

    Stockholders' equity                   226,862             213,506
        Total liabilities
         and stockholders' equity         $269,323            $258,385

CONTACT: Daniel S. Wobby, Corporate Controller and Acting Chief
Financial Officer of Cabot Microelectronics Corporation, +1-630-375-6631

SOURCE Cabot Microelectronics Corp.

-0- 01/23/2003

/CONTACT: Daniel S. Wobby, Corporate Controller and Acting Chief Financial Officer of Cabot Microelectronics Corporation, +1-630-375-6631/

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