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Cabot Microelectronics Reports Results For Third Fiscal Quarter 2002
AURORA, Ill., Jul 25, 2002 /PRNewswire-FirstCall via COMTEX/ --

Quarterly Net Income up 91% and Revenue Up 35% on a Sequential Basis

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 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.

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 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          $196,681
CONTACT: Martin M. Ellen, Vice President and Chief Financial Officer of Cabot Microelectronics Corporation, +1-630-375-6631

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SOURCE Cabot Microelectronics Corporation

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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