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Cabot Microelectronics Reports Results for First Quarter of Fiscal 2006

AURORA, Ill.--(BUSINESS WIRE)--Jan. 26, 2006--Cabot Microelectronics Corporation (Nasdaq:CCMP), the world's leading supplier of chemical mechanical planarization (CMP) polishing slurries to the semiconductor industry, today reported financial results for its first quarter of fiscal 2006, which ended December 31, 2005.

Total revenue for the first fiscal quarter was $81.5 million, up 10.3% from $73.9 million in the prior quarter and up 21.5% from $67.1 million in the first quarter a year ago. This was the second consecutive quarter in which the company's revenue grew by more than ten percent. Slurry revenues for copper, tungsten and dielectric applications all increased sequentially. Average selling price fell by 1.1% compared with the prior quarter, primarily due to selected price reductions and the effect of the weakening Japanese yen, partially offset by a higher-priced product mix.

Gross profit for the quarter was $38.4 million, up 11.0% from $34.6 million in the prior quarter and up 14.4% from $33.6 million in the same quarter a year ago. As a percentage of revenue, gross profit was 47.2% this quarter compared with 46.9% reported for last quarter and 50.1% in the same quarter last year. Gross profit expressed as a percentage of revenue rose this quarter primarily due to higher capacity utilization and lower fixed manufacturing costs, partially offset by certain higher variable manufacturing costs, including costs to resolve a quality issue related to a dielectric product.

Operating expenses of $25.1 million, consisting of research and development, selling and marketing, and general and administrative expense, increased by $1.1 million sequentially from $24.0 million last quarter, and were $5.7 million higher than $19.4 million in the same quarter last year. The sequential increase in operating expenses was primarily due to the commencement this quarter, as required by accounting rules, of the inclusion of stock option expense. The company recorded total stock option expense of $2.4 million this quarter, of which $2.2 million was included in operating expenses. This was partially offset by lower costs in certain areas, including cleanroom materials and laboratory supplies for research and development activities.

Net income for the quarter was $9.6 million, up 16.0% from $8.3 million last quarter, despite the inclusion this quarter of stock option expense. Net income in the same quarter last year was $9.8 million.

Diluted earnings per share were $0.39 this quarter, up from $0.34 in the previous quarter, even with the adverse impact of approximately $0.07 of stock option expense. Earnings per share in the first quarter of fiscal 2005 were $0.40.

"We are pleased with our strong revenue growth and profitability this quarter, especially given the adverse impact of stock option expensing," stated William Noglows, Chairman and CEO of Cabot Microelectronics. "This strong start to the fiscal year reflects an upturn in the semiconductor industry, but we believe it also results from the steps we've taken over the last two years to strengthen and grow our core CMP business. We expect to continue executing our strategic initiatives of technology leadership, operations excellence and getting closer to our customers in the coming year. We also plan to make further progress on our Engineered Surface Finishes initiative to deliver revolutionary performance to customers outside of our core CMP business by leveraging our capability to modify surfaces at an atomic level."

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 with access code 4017819; callers outside the U.S. can dial (706) 634-5531. A replay will be available through February 24, 2006 via webcast at www.cabotcmp.com. 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 slurries used in semiconductor and data storage manufacturing. The company's products play a critical role in the production of advanced semiconductor devices, enabling its customers to manufacture smaller, faster and more complex devices. As the company continues investing in its core CMP business, it is also looking beyond the semiconductor industry to pursue its vision to "be the world leader in shaping, enabling and enhancing the performance of surfaces". 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 Annual Report on Form 10-K for the fiscal year ended September 30, 2005, filed with the SEC. Cabot Microelectronics Corporation assumes no obligation to update this forward looking information.

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


                                           Quarter Ended
                             -----------------------------------------
                             December 31,  September 30, December 31,
                                 2005          2005          2004
                             ------------- ------------- -------------


 Revenue                          $81,488       $73,861       $67,084

 Cost of goods sold                43,051        39,234        33,472
                             ------------- ------------- -------------

     Gross profit                  38,437        34,627        33,612

 Operating expenses:

   Research and development        11,659        12,147         9,544

   Selling and marketing            5,026         4,863         4,176

   General and administrative       8,410         7,029         5,580

   Amortization of
    intangibles                         4             -            85
                             ------------- ------------- -------------

     Total operating
      expenses                     25,099        24,039        19,385
                             ------------- ------------- -------------

 Operating income                  13,338        10,588        14,227

 Other income, net                    716           833           487
                             ------------- ------------- -------------

 Income before income taxes        14,054        11,421        14,714

 Provision for income taxes         4,483         3,169         4,885
                             ------------- ------------- -------------

     Net income                    $9,571        $8,252        $9,829
                             ============= ============= =============


Basic earnings per share            $0.39         $0.34         $0.40
                             ============= ============= =============

Weighted average basic
 shares outstanding                24,363        24,459        24,638
                             ============= ============= =============


Diluted earnings per share          $0.39         $0.34         $0.40
                             ============= ============= =============

Weighted average diluted
 shares outstanding                24,363        24,460        24,721
                             ============= ============= =============


Line items above include the
 following amounts related to
 share-based compensation
 expense:
   Cost of goods sold                $150            $-            $-
   Research and development           233             -             -
   Selling and marketing              245             -             -
   General and
    administrative                  1,762             -             -
   Provision for income
    taxes                            (762)            -             -
                             -----------------------------------------
        Net income                 $1,628            $-            $-
                             ============= ============= =============



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

                                           December 31,  September 30,
                                               2005          2005
                                           ------------- -------------
               ASSETS:

Current assets:
 Cash, cash equivalents, and short-term
  investments                                  $178,710      $171,041
 Accounts receivable, net                        42,486        36,759
 Inventories, net                                24,460        28,797
 Other current assets                             7,610         9,210
                                           ------------- -------------
   Total current assets                         253,266       245,807

Property, plant and equipment, net              134,044       135,784
Other long-term assets                            5,399         5,172
                                           ------------- -------------
   Total assets                                $392,709      $386,763
                                           ============= =============


   LIABILITIES AND STOCKHOLDERS' EQUITY:

Current liabilities:
 Accounts payable                               $16,565       $10,236
 Capital lease obligations                        1,190         1,170
 Accrued expenses, income taxes payable
  and other current liabilities                  18,667        24,216
                                           ------------- -------------
   Total current liabilities                     36,422        35,622

Capital lease obligations                         5,188         5,436
Deferred income taxes and other long-term
 liabilities                                      5,772         6,621
                                           ------------- -------------
   Total liabilities                             47,382        47,679

Stockholders' equity                            345,327       339,084
                                           ------------- -------------
   Total liabilities and stockholders'
    equity                                     $392,709      $386,763
                                           ============= =============

    CONTACT: Cabot Microelectronics Corporation
             Barbara A. Ven Horst, 630-499-2600

    SOURCE: Cabot Microelectronics Corporation

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