Quarterly Net Income up 91% and Revenue Up 35% on a Sequential BasisCabot Microelectronics Corporation (Nasdaq: CCMP), the leading supplier of chemical mechanical planarization (CMP) polishing slurries to the semiconductor industry, today reported financial results for its third fiscal quarter ended June 30, 2002.
Total revenue for the third fiscal quarter ended June 30, 2002, was $68.4 million, up 35% from the $50.5 million reported in the second fiscal quarter of this year. When compared to the third quarter a year ago, revenue was up 33%.
Total sales volume was up 30% sequentially while average selling prices were up sequentially by 4.6%. Revenue growth occurred in all geographic markets and in all Integrated Circuit (IC) device product lines.
Gross margin of 53.0% this quarter was up from the 50.0% reported in the second fiscal quarter of this year. This improved gross margin resulted from higher volumes and improved product mix, partially offset by a higher level of manufacturing expenses. Gross margin in the year ago quarter was 52.2%.
Operating expenses were $17.0 million this quarter compared to $15.3 million for the quarter ended March 31, 2002 and $13.6 million in the year ago quarter.
Research and Development spending this quarter reflects continued investment in technology with added technical expertise and enhanced development capability. R&D expenses of $10.2 million this quarter were up $3.8 million sequentially primarily due to the depreciation and operating expenses associated with our new R&D facility. R&D staffing levels also increased during the quarter.
General and administrative expenses declined sequentially by $1.1 million. About half of this is the result of allocating certain facility common operating costs, which had been included in general and administrative expenses, to research and development expense.
Other income includes an unrealized foreign exchange gain of $1.3 million associated with the strengthening of the yen this quarter.
The company's current estimate of its worldwide effective income tax rate for all of fiscal 2002 is now 33.4%, resulting in a third quarter effective tax rate of 35%.
Fiscal 2002 third quarter net income was $13.3 million, up 91% compared to $7.0 million in the second fiscal quarter of 2002. Second fiscal quarter 2002 net income was reduced by $0.7 million or $0.03 per share as a result of the settlement of certain litigation. Net income was $8.9 million in the year ago third quarter. On a diluted share basis, earnings were $0.54 per share this quarter compared to $0.28 per share in the March 2002 quarter ($0.31 per share in the March 2002 quarter without the litigation settlement expense), and $0.36 in the year ago third quarter.
For the nine-month fiscal 2002 period, revenues reached $169.9 million. This represents a decrease of 3% compared to the prior year, which included record sales levels achieved during the December 2000 quarter prior to the impact on the company's business of the downturn in the semiconductor industry. Net income for the first nine months of fiscal 2002 was $29.2 million compared to $32.7 million for the same period in the prior year.
"This quarter, we had strong, broad-based growth across all of our IC device application products," stated Dr. Matthew Neville, Cabot Microelectronics Chairman, President and CEO. "We continue to benefit from the industry's adoption of copper technology as reflected in our copper product revenue this quarter, which grew sequentially by 43% and was two and a half times the amount of copper revenue in the year ago quarter. Oxide and tungsten product revenues on a combined basis grew sequentially by 39% this quarter, the first time in six quarters that we've experienced growth in these applications. We hope this is a sign that IC industry inventory levels have declined sufficiently to allow our customers' production levels to increase to levels that now better match end market demand.
"Our product development teams continued to work hard this quarter on our new generation copper technology. We are getting good customer feedback on these products. Also, our research and development teams completed their move into our state-of-the-art R&D facility this quarter. This investment is giving us enormous capability in the advancement of our technologies along our customers' technology roadmaps," continued Neville.
"It is difficult for us to predict the fourth quarter's revenue because we have limited visibility beyond our two-week order cycle. However, we continue to be encouraged by the pace of technology advancement being made by our customers, as those activities provide the opportunity to further the market penetration and growth of CMP," concluded Neville.
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 March 31, 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 (Unaudited in thousands, except per share amounts) Quarter Ended Nine Months Ended June 30, March 31, June 30, June 30, June 30, 2002 2002 2001 2002 2001 Revenue $68,377 $50,520 $51,470 $169,901 $175,781 Cost of goods sold 32,113 25,262 24,628 81,121 83,114 Gross profit 36,264 25,258 26,842 88,780 92,667 Operating expenses: Research and development 10,190 6,429 6,165 23,566 19,508 Selling and marketing 2,470 2,370 1,947 7,198 6,465 General and administrative 4,260 5,397 5,316 13,541 16,948 Litigation settlement - 1,000 - 1,000 - Amortization of goodwill and other intangibles 90 91 180 271 539 Total operating expenses 17,010 15,287 13,608 45,576 43,460 Operating income 19,254 9,971 13,234 43,204 49,207 Other income (expense), net 1,160 (151) 166 692 841 Income before income taxes 20,414 9,820 13,400 43,896 50,048 Provision for income taxes 7,147 2,869 4,544 14,661 17,369 Net income $13,267 $6,951 $8,856 $29,235 $32,679 Basic earnings per share $0.55 $0.29 $0.37 $1.21 $1.37 Weighted average basic shares outstanding 24,193 24,140 23,975 24,140 23,774 Diluted earnings per share $0.54 $0.28 $0.36 $1.19 $1.35 Weighted average diluted shares outstanding 24,521 24,583 24,450 24,565 24,285 CABOT MICROELECTRONICS CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited and amounts in thousands) June 30, September 30, 2002 2001 ASSETS: Current assets: Cash and cash equivalents $59,622 $47,677 Accounts receivable, net 28,214 26,735 Inventories, net 18,620 16,806 Other current assets 5,235 5,236 Total current assets 111,691 96,454 Property, plant and equipment, net 133,187 97,426 Other long-term assets 3,000 2,801 Total assets $247,878 $196,681 LIABILITIES AND STOCKHOLDERS' EQUITY: Current liabilities: Accounts payable $14,167 $13,557 Capital lease obligation 1,558 - Accrued expenses, income taxes payable and other current liabilities 17,442 12,809 Total current liabilities 33,167 26,366 Long-term debt 3,500 3,500 Capital lease obligation 9,225 - Deferred income taxes and other long- term liabilities 1,112 528 Total liabilities 47,004 30,394 Stockholders' equity 200,874 166,287 Total liabilities and stockholders' equity $247,878 $196,681CONTACT: Martin M. Ellen, Vice President and Chief Financial Officer of Cabot Microelectronics Corporation, +1-630-375-6631
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CONTACT: Martin M. Ellen, Vice President and Chief Financial Officer of Cabot Microelectronics Corporation, +1-630-375-6631 URL: http://www.cabotcmp.com http://www.prnewswire.com
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