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Cabot Microelectronics Reports Results for Fourth Fiscal Quarter 2002
AURORA, Ill., Oct 24, 2002 /PRNewswire-FirstCall via COMTEX/ -- 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 ended September 30, 2002.

Revenue for the fourth fiscal quarter ended September 30, 2002 was $65.3 million, up 26.9% from the fourth quarter a year ago. Net income for the quarter of $11.5 million, or $0.47 per diluted share, was up 24.1% from the fourth quarter a year ago. Compared to the near record level of revenue achieved in the third fiscal quarter of 2002, fourth quarter 2002 revenue was down 4.6%, as a result of reduced sales volumes of 8% while average selling prices increased 3.5%. This average selling price increase was primarily due to product mix.

Fourth quarter copper revenue increased 12.2% sequentially as the Company benefited from the semiconductor industry's continued ramp of this technology, while overall softening of demand in the semiconductor and data storage industries contributed to sequential revenue declines in the Company's other product lines.

Gross margins in the fourth fiscal quarter of 51.1% were slightly ahead of the 50.8% in the year ago fourth quarter, although down from the 53.0% earned in the third fiscal quarter of 2002. Included in the current fourth quarter's cost of goods sold is a $0.6 million final payment under a royalty obligation and $1.1 million of sequentially higher inventory-related expenses, mostly for the write-off of certain experimental, qualification and other products.

Operating expenses of $16.6 million were down sequentially by $0.4 million but were up $3.7 million from the year ago fourth quarter. Included in operating expenses are research and development expenses of $10.1 million in the 2002 fourth quarter, which increased by $3.8 million from the fourth quarter a year ago. This increase is primarily due to the higher level of R&D activity enabled by the Company's mid year opening of its new state-of-the-art class 1 clean room and R&D facility.

For the 2002 fiscal year, revenues were $235.2 million, up 3.5% from fiscal 2001. Net income of $40.7 million in fiscal 2002 was down 2.9% from fiscal 2001. Earnings per diluted share in fiscal 2002 were $1.66 compared to $1.72 in fiscal 2001. Net income and diluted earnings per share in fiscal 2002 were reduced by $0.7 million and $0.02, respectively, resulting from the settlement of certain patent litigation in the second fiscal quarter of 2002.

"I am pleased with our financial results and accomplishments this year given the overall difficult economic environment and its impact on the semiconductor industry," stated Dr. Matthew Neville, Cabot Microelectronics Chairman, President and CEO. "We were able to benefit from the industry's continued adoption of copper technology. Our copper product revenues for the fiscal year increased 115% over fiscal 2001. Unfortunately, in the last month of our fourth quarter, some of the strengthening in our product revenues which had occurred earlier in the spring and summer did not hold, and it also now appears we are entering fiscal 2003 with customers decreasing their level of demand for our products from these earlier levels. However, as a result of our many product development activities this year and the investments we've made that have furthered our research and development capabilities, I believe that we are well positioned to benefit from an industry recovery when it occurs.

"I am also pleased with a milestone reached in the fourth quarter in our pad program, through a distribution agreement we entered into with Freudenberg Nonwovens Limited, an existing pad supplier to the industry. Freudenberg's current products meet the needs of certain of the industry's existing pad applications, and we bring a strong channel to market for these products. We currently expect to have revenues from this program in 2003.

"In addition, we believe our position in the marketplace is strong. We have maintained our dedicated focus to meeting the technology needs of our customers and believe we have supported those initiatives with appropriate investments. For these reasons, we are optimistic about fiscal 2003," concluded Neville.

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 quarterly report on Form 10Q for the quarter ended June 30, 2002 and our Annual Report on Form 10K for the fiscal year ended September 30, 2001, both filed with the SEC. Cabot Microelectronics Corporation assumes no obligation to update this forward- looking information.

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


                               Quarter Ended (unaudited)  Twelve Months Ended
                            Sept. 30,  June 30,  Sept. 30, Sept. 30, Sept. 30,
                               2002     2002       2001      2002      2001

      Revenue                $65,264   $68,377   $51,411   $235,165  $227,192

      Cost of goods sold      31,946    32,113    25,305    113,067   108,419

         Gross profit         33,318    36,264    26,106    122,098   118,773

      Operating expenses:

        Research and
         development          10,102    10,190     6,297     33,668    25,805

        Selling and
         marketing             2,469     2,470     2,292      9,667     8,757

        General and
         administrative        3,917     4,260     4,106     17,458    21,054

        Litigation
         settlement                -         -         -      1,000         -

        Amortization of
         goodwill and other
         intangibles              74        90       179        345       718

          Total operating
           expenses           16,562    17,010    12,874     62,138    56,334

      Operating income        16,756    19,254    13,232     59,960    62,439

      Other income
       (expense), net             71     1,160       208        763     1,049

      Income before
       income taxes           16,827    20,414    13,440     60,723    63,488

      Provision for income
       taxes                   5,377     7,147     4,217     20,038    21,586

        Net income           $11,450   $13,267    $9,223    $40,685   $41,902


    Basic earnings
     per share                 $0.47     $0.55     $0.38      $1.68     $1.76

    Weighted average
     basic shares
     outstanding              24,231    24,193    24,043     24,160    23,824

    Diluted earnings
     per share                 $0.47     $0.54     $0.38      $1.66     $1.72

    Weighted average
     diluted shares
     outstanding              24,501    24,521    24,510     24,565    24,327


    CABOT MICROELECTRONICS CORPORATION
    CONSOLIDATED CONDENSED BALANCE SHEETS
    (Amounts in thousands)

                                                  September 30,  September 30,
                                                      2002           2001
                 ASSETS:

    Current assets:
      Cash and cash equivalents                     $69,605        $47,677
      Accounts receivable, net                       26,082         26,735
      Inventories, net                               21,959         16,806
      Other current assets                            5,637          5,236
        Total current assets                        123,283         96,454

    Property, plant and equipment, net              132,264         97,426
    Other long-term assets                            2,838          2,801
        Total assets                               $258,385       $196,681

        LIABILITIES AND STOCKHOLDERS'
         EQUITY:

    Current liabilities:
      Accounts payable                              $11,748        $13,557
      Capital lease obligation                        1,585              -
      Accrued expenses, income taxes
       payable and other current
       liabilities                                   17,238         12,809
        Total current liabilities                    30,571         26,366

    Long-term debt                                    3,500          3,500
    Capital lease obligation                          8,865              -
    Deferred income taxes and other long-
     term liabilities                                 1,943            528
        Total liabilities                            44,879         30,394

    Stockholders' equity                            213,506        166,287
        Total liabilities and
         stockholders' equity                      $258,385       $196,681

CONTACT: Martin M. Ellen, Vice President and Chief Financial Officer of Cabot Microelectronics Corporation, 630-375-6631.

SOURCE Cabot Microelectronics Corp.

CONTACT:          Martin M. Ellen, Vice President and Chief Financial Officer of
                  Cabot Microelectronics Corporation, +1-630-375-6631

URL:              http://www.cabotcmp.com 
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