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Cabot Microelectronics Reports Results for Second Quarter of Fiscal 2005

AURORA, Ill.--(BUSINESS WIRE)--April 28, 2005--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 quarter of fiscal 2005, which ended March 31, 2005.

Total revenue for the second fiscal quarter was $64.5 million, down 3.8% from $67.1 million in the prior quarter and down 12.3% from $73.5 million in the second quarter a year ago. The sequential revenue decrease was primarily due to lower demand for the company's products used in dielectric and tungsten applications, the combined revenue of which declined by 5.2% sequentially. The company believes the decrease in demand was due to reduced wafer starts by a number of customers as the semiconductor industry continued to correct excess inventories of certain semiconductor devices, the result of which also adversely affected the company's revenue in its first fiscal quarter. Revenue from slurries for copper polishing applications increased sequentially by 2.0%. The company's average selling price fell by 1.1% this quarter compared to the prior quarter, primarily due to selected price reductions.

Gross profit for the quarter was $29.8 million, down 11.4% from $33.6 million in the prior quarter, and down 17.6% from $36.1 million in the year ago quarter. As a percentage of revenue, gross profit represented 46.2% this quarter, down from 50.1% last quarter and 49.2% in the same quarter last year. Gross profit as a percentage of revenue was adversely affected this quarter by a lower valued product mix, lower utilization of the company's manufacturing capacity and selected price reductions. These adverse effects were partially offset by higher yields in the company's manufacturing operations.

Operating expenses of $21.4 million, consisting of research and development, selling and marketing, and general and administrative expenses, increased by $2.0 million sequentially from $19.4 million last quarter, and were $0.1 million higher than the $21.3 million reported in the same quarter last year. The sequential increase was primarily related to higher costs for cleanroom and laboratory supplies in research and development, higher professional fees, including costs to prepare for the company's compliance with Sarbanes Oxley Section 404, and higher staffing costs.

Net income for the quarter was $6.1 million, down 38.4% from the $9.8 million reported last quarter and down 37.7% from $9.7 million in the same quarter last year. Diluted earnings per share were $0.25 this quarter, compared to $0.40 in the previous quarter and $0.39 in the year ago quarter.

"We believe our results this quarter were impacted by continued softness in the semiconductor industry, as we saw some of our customers moderating wafer starts in order to work down excess inventories of certain semiconductor devices," stated William P. Noglows, Cabot Microelectronics' Chairman and CEO. "However, we remain encouraged by progress on a number of our strategic initiatives. For example, our product development pipeline is now more robust than at any time over the last several years, and we are seeing strong customer pull for our new products in each major application area. Specifically, we recently received our first commercial order for slurry products for 65 nanometer copper and barrier polishing applications. Also, although our gross margin expressed as a percentage of revenue decreased sequentially, our Six Sigma program continued to provide benefits of higher yields in our manufacturing operations, which we first discussed last quarter. From our perspective, our results this quarter were primarily a reflection of industry conditions rather than company specific issues. Further, we believe our steady progress on strategic initiatives along with a future recovery of the semiconductor industry, which could occur later this calendar year based on the predictions of some industry experts, position us well for continued success in the future."


Cabot Microelectronics' quarterly earnings conference call will be held today at 9:00 a.m. Central Time. The live conference call will be available to all interested parties via webcast from the company's website,, or by phone at (800) 893-3008. Callers outside the U.S. can dial (706) 634-5531. For those who cannot listen to the live broadcast, a replay will be available through May 19, 2005 by calling (800) 642-1687 or (706) 645-9291, and using access code 3993332, or via webcast at A transcript of the formal comments made during the conference call will be available in the Investor Relations section of the company's website.


Cabot Microelectronics Corporation, headquartered in Aurora, Illinois, is the leading supplier of CMP slurries for polishing various materials used in semiconductor manufacturing processes. The company's products play a critical role in the production of the most advanced semiconductor devices, enabling the manufacture of smaller, faster and more complex devices by its customers. For more information about Cabot Microelectronics Corporation visit or contact Mr. David H. Li, Director of Investor Relations, at (630) 499-2600.


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 and technologies, and the construction of new facilities 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 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 10-Q for the quarter ended December 31, 2004, and our Annual Report on Form 10-K for the fiscal year ended September 30, 2004, both filed with the SEC. Cabot Microelectronics Corporation assumes no obligation to update this forward-looking information.

(Unaudited and amounts in thousands, except per share amounts)

                             Quarter Ended           Six Months Ended
                     ----------------------------- -------------------
                     March 31, Dec. 31,  March 31, March 31, March 31,
                       2005      2004      2004      2005      2004
                     --------- --------- --------- --------- ---------

Revenue               $64,502   $67,084   $73,515  $131,586  $149,794

Cost of goods sold     34,733    33,472    37,366    68,205    76,392
                     --------- --------- --------- --------- ---------

    Gross profit       29,769    33,612    36,149    63,381    73,402

Operating expenses:

  Research and
   development         10,857     9,544    11,143    20,401    21,866

  Selling and
   marketing            4,012     4,176     4,363     8,188     8,146

  General and
   administrative       6,457     5,580     5,749    12,037    10,873

  Amortization of
   intangibles             85        85        85       170       170
                     --------- --------- --------- --------- ---------

    Total operating
     expenses          21,411    19,385    21,340    40,796    41,055
                     --------- --------- --------- --------- ---------

Operating income        8,358    14,227    14,809    22,585    32,347

Other income
 (expense), net           458       487       (86)      945       (50)
                     --------- --------- --------- --------- ---------

Income before income
 taxes                  8,816    14,714    14,723    23,530    32,297

Provision for income
 taxes                  2,762     4,885     5,006     7,647    10,982
                     --------- --------- --------- --------- ---------

    Net income         $6,054    $9,829    $9,717   $15,883   $21,315
                     ========= ========= ========= ========= =========

Basic earnings per
 share                  $0.25     $0.40     $0.39     $0.64     $0.86
                     ========= ========= ========= ========= =========

Weighted average
 basic shares
 outstanding           24,642    24,638    24,785    24,634    24,761
                     ========= ========= ========= ========= =========

Diluted earnings per
 share                  $0.25     $0.40     $0.39     $0.64     $0.85
                     ========= ========= ========= ========= =========

Weighted average
 diluted shares
 outstanding           24,685    24,721    24,926    24,698    24,935
                     ========= ========= ========= ========= =========

(Unaudited and amounts in thousands)

                                             March 31,   September 30,
                                               2005          2004
                                          -------------- -------------

Current assets:
  Cash, cash equivalents and short-term
   investments                                 $163,682      $157,318
  Accounts receivable, net                       31,828        41,347
  Inventories, net                               31,512        24,474
  Other current assets                           10,686         6,542
                                          -------------- -------------
     Total current assets                       237,708       229,681

Property, plant and equipment, net              128,550       127,794
Other long-term assets                            5,356         5,816
                                          -------------- -------------
     Total assets                              $371,614      $363,291
                                          ============== =============


Current liabilities:
  Accounts payable                               $9,860       $13,080
  Capital lease obligations                       1,131         1,272
  Accrued expenses, income taxes payable
   and other current liabilities                 12,859        18,023
                                          -------------- -------------
     Total current liabilities                   23,850        32,375

Capital lease obligations                         5,918         6,385
Deferred income taxes and other long-term
 liabilities                                      9,158         8,909
                                          -------------- -------------
     Total liabilities                           38,926        47,669

Stockholders' equity                            332,688       315,622
                                          -------------- -------------
     Total liabilities and stockholders'
      equity                                   $371,614      $363,291
                                          ============== =============

    CONTACT: Cabot Microelectronics Corporation
             David H. Li, 630-499-2600

    SOURCE: Cabot Microelectronics Corporation

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