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Cabot Microelectronics Reports Results for Second Fiscal Quarter 2002
AURORA, Ill., Apr 25, 2002 (BUSINESS WIRE) -- 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 second fiscal quarter ended March 31, 2002.

Total revenue for the second fiscal quarter of 2002 was $50.5 million, down just under one percent from the $51.0 million reported in the first fiscal quarter of this year. When compared to second quarter revenue a year ago of $55.7 million, revenue was down about 9%. The weakening Japanese Yen reduced revenue this quarter. On a currency neutral basis, sequential revenues were flat and year-over-year revenues declined by about 8%.

Revenue from IC device and data storage customers grew sequentially by almost 1.0% on a currency neutral basis, with volumes up about 2.6% sequentially. Average selling price comparisons, on a currency neutral basis, were down sequentially by about 1.8%. The average selling price decline was partially due to product mix as well as pricing adjustments made under new agreements with two non-U.S. customers.

Gross margins of 50% in the second fiscal quarter were down sequentially from 53.4% reported in the first fiscal quarter. The product mix and pricing adjustments mentioned above contributed 260 basis points of this decline in gross margin. Gross margin of 53.5% in the year ago second quarter included a $0.6 million reduction in cost of goods sold resulting from certain favorable inventory adjustments.

During the second fiscal quarter of 2002, the company settled all pending patent infringement litigation which, as previously announced, resulted in the company making a one-time payment of $1.0 million with no other financial obligation of any kind. This amount is included in operating expenses for the second fiscal quarter.

Total operating expenses of $15.3 million in the second fiscal quarter were up $2.0 million sequentially and down $0.4 million from the year ago quarter. The sequential increase was caused by the litigation settlement and certain increases in general and administrative expenses. Notwithstanding the second quarter sequential increase in general and administrative expenses, for the first six months of 2002, consistent with the company's focus on tightly managing discretionary spending, these expenses are 14% lower than the year ago period (after adjusting year ago expenses to remove the non-cash charge of $0.9 million related to a stock option agreement).

The company's current estimate of its worldwide effective income tax rate for all of fiscal 2002 has been lowered to 32% from 34%, resulting in a second quarter tax rate of just over 29%.

Fiscal 2002 second quarter net income was $7.0 million, compared to $9.0 million in the first fiscal quarter and $9.4 million in the year ago second quarter. On a diluted share basis, earnings were $0.28 per share this quarter and were $0.31 per share without the litigation settlement expense. This compares to diluted EPS of $0.37 in the first fiscal quarter and $0.39 in the year ago second quarter.

Capital spending of $15.8 million this quarter included $12.7 million for our new R&D facility and Class 1 clean room and related equipment located in Aurora, Illinois.

For the six-month fiscal 2002 period, revenues reached $101.5 million. This represents a decrease of 18% compared to the prior year, which included record sales levels achieved during the December 2000 quarter prior to the impact on our business of the downturn in the semiconductor industry. Net income for the first half of fiscal 2002 was $16.0 million compared to $23.8 million for the same period in the prior year.

"During this downturn our strategy has been to maintain our mission critical focus, continue to advance our product technologies and not waver in the short term from making the right long-term strategic investments. As a result, we've maintained our market and technology leadership position during these most challenging times," stated Dr. Matthew Neville, Cabot Microelectronics Chairman, President and CEO. "Our product development activities, including next generation copper and STI, are being well received by our customers. Our research and development teams moved into their brand new state-of-the-art R&D facility this quarter. This major investment will better enable the advancement of our technologies with our customers. Also, as we announced in February, we have settled all patent litigation suits against us thereby removing the cost and business distraction of these matters," continued Neville.

"From an industry point of view, it appears there are some signs of improvement. Industry capital spending appears to be improving based on order activity being reported by the equipment companies. We have also seen a pick-up in our April order activity. We hope these are the early signs of an improving trend and industry recovery, but our limited visibility makes this impossible for us to predict," concluded Neville.

    Conference Call
Cabot Microelectronics' quarterly earnings conference call will be held today at 10:00 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 anticipated 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 December 31, 2001, 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.

    (Tables to follow)
CABOT MICROELECTRONICS CORPORATION
STATEMENTS OF INCOME
(Unaudited in thousands, except per share amounts)
                          Quarter Ended             Six Months Ended
                  ------------------------------  --------------------
                  March 31,  Dec. 31,  March 31,  March 31,  March 31,
                      2002      2001       2001       2002       2001
                  ---------  --------  ---------  ---------  ---------
Revenue            $50,520   $51,004    $55,695   $101,524   $124,311
Cost of
 goods sold         25,262    23,746     25,923     49,008     58,486
                  ---------  --------  ---------  ---------  ---------
  Gross profit      25,258    27,258     29,772     52,516     65,825
Operating expenses:
  Research and
   development       6,429     6,947      6,805     13,376     13,343
  Selling and
   marketing         2,370     2,358      2,249      4,728      4,518
  General and
   administrative    5,397     3,884      6,485      9,281     11,632
  Litigation
   settlement        1,000         -          -      1,000          -
  Amortization of
   goodwill and
   other intangibles    91        90        180        181        359
                  ---------  --------  ---------  ---------  ---------
    Total operating
     expenses       15,287    13,279     15,719     28,566     29,852
                  ---------  --------  ---------  ---------  ---------
Operating income     9,971    13,979     14,053     23,950     35,973
Other income
 (expense), net       (151)     (317)       238       (468)       675
                  ---------  --------  ---------  ---------  ---------
Income before
 income taxes        9,820    13,662     14,291     23,482     36,648
Provision for
 income taxes        2,869     4,645      4,907      7,514     12,825
                  ---------  --------  ---------  ---------  ---------
  Net income       $ 6,951   $ 9,017    $ 9,384    $15,968    $23,823
                  =========  ========  =========  =========  =========
Basic earnings
 per share           $0.29     $0.37      $0.39      $0.66      $1.00
                  =========  ========  =========  =========  =========
Weighted average
 basic shares
 outstanding        24,140    24,096     23,800     24,119     23,705
                  =========  ========  =========  =========  =========
Diluted earnings
 per share           $0.28     $0.37      $0.39      $0.65      $0.98
                  =========  ========  =========  =========  =========
Weighted average
 diluted shares
 outstanding        24,583    24,532     24,328     24,558     24,223
                  =========  ========  =========  =========  =========
CABOT MICROELECTRONICS CORPORATION
CONDENSED BALANCE SHEETS
(Unaudited and amounts in thousands)
                                      March 31,          September 30,
                                        2002                  2001
                                    -----------          -------------
                          ASSETS:
Current assets:
  Cash and cash equivalents            $ 51,424              $ 47,677
  Accounts receivable, net               21,532                26,735
  Inventories, net                       18,282                16,806
  Other current assets                    6,368                 5,236
                                    -----------          -------------
    Total current assets                 97,606                96,454
Property, plant and equipment, net      126,348                97,426
Other long-term assets                    3,093                 2,801
                                    -----------          -------------
    Total assets                      $ 227,047             $ 196,681
                                    ===========          =============
        LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
  Accounts payable                     $ 18,656              $ 13,557
  Capital lease obligation                1,358                     -
  Accrued expenses, income taxes
   payable and other current
   liabilities                           10,347                12,809
                                    -----------          -------------
    Total current liabilities            30,361                26,366
Long-term debt                            3,500                 3,500
Capital lease obligation                  9,579                     -
Deferred income taxes and other
 long-term liabilities                      633                   528
                                    -----------          -------------
    Total liabilities                    44,073                30,394
Stockholders' equity                    182,974               166,287
                                    -----------          -------------
    Total liabilities and
     stockholders' equity             $ 227,047             $ 196,681
                                    ===========          =============
CONTACT:          Cabot Microelectronics Corporation
                  Martin M. Ellen, 630/375-6631

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