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Cabot Microelectronics Reports Results for Third Fiscal Quarter 2004 and Announces Share Repurchase Program

AURORA, Ill.--(BUSINESS WIRE)--July 22, 2004--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, which ended June 30, 2004. The company also announced that its Board of Directors has authorized a share repurchase program for up to $25 million of the company's outstanding common stock.

Total revenue for the third fiscal quarter of 2004 was $76.9 million, up 4.6% from $73.5 million in the prior quarter and up 19.7% from $64.3 million in the third quarter a year ago. Slurries used for copper, tungsten, and oxide polishing applications all experienced sequential revenue increases this quarter. Average selling price also rose sequentially by 2.0%, due to a higher valued product mix than in the prior quarter, partially offset by selected price reductions.

Gross profit for the quarter was $39.0 million, up by 7.9% from the prior quarter's $36.1 million, and up 18.5% from $32.9 million in the year ago quarter. As a percentage of revenue, gross profit increased to 50.7% this quarter from 49.2% last quarter, primarily due to the benefits of higher manufacturing capacity utilization and a more favorable product mix versus the previous quarter, partially offset by selected price reductions. Gross profit in the same quarter of last year represented 51.2% of revenue.

Operating expenses of $21.1 million, consisting of research and development, selling and marketing, and general and administrative expenses, decreased by $0.2 million sequentially, and were $2.8 million higher than the same quarter last year.

Net income for the quarter was $12.2 million, up by 26.0% from $9.7 million last quarter, and up 25.4% from $9.8 million in the same quarter last year. Diluted earnings per share were $0.49 this quarter, compared to $0.39 in the previous quarter and $0.40 in the year ago quarter.

In addition, with respect to the $25 million share repurchase program, share repurchases will be funded from the company's cash balance, which as of June 30, 2004 was $155.9 million, and are primarily intended to diminish dilution from stock option and employee stock purchase plans. Share repurchases under the program may be made at management's discretion from time to time, depending on market conditions, in open market transactions. The program, which is effective immediately, may be suspended or terminated at the company's discretion. At present, the company has approximately 24.8 million shares of common stock outstanding and an aggregate market capitalization of approximately $680 million.

"We are proud of our strong financial performance this quarter, including our achievement of a record level of quarterly revenue," stated William P. Noglows, Chairman and CEO. "Our company has recently realized progress on a number of important initiatives that we believe will contribute toward our long term success. First, in support of our strategy to enlarge and strengthen our already substantial presence in the Asia Pacific region, we purchased additional land adjoining our existing facilities in Japan to expand our current infrastructure there. Second, as part of our strategy of continued technology leadership, we entered into a strategic alliance with NanoProducts Corporation, a technology leader in the field of nanoscale particles, and also obtained a minority equity position in the company, which we believe will allow us to leverage innovative next generation abrasives for our CMP slurries and other fine finish polishing applications. Finally, we believe the implementation of our share repurchase program represents a prudent use of a portion of our growing cash balance. We are excited about the progress we have made, as demonstrated by these important initiatives, and we believe we are well positioned for continued leadership in this competitive arena."

Conference Call

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, www.cabotcmp.com, 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 August 19, 2004, by calling (800) 642-1687 or (706) 645-9291, and using access code 5676078, or via webcast at www.cabotcmp.com. A transcript of the formal comments made during the conference call will be available in the Investor Relations section of the company's website.

About Cabot Microelectronics

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 www.cabotcmp.com or contact Mr. David H. Li, Director of Investor Relations at (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, product performance, 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 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 March 31, 2004, and our Annual Report on Form 10-K for the fiscal year ended September 30, 2003, 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 and amounts in thousands, except per share amounts)


                             Quarter Ended          Nine Months Ended
                     ----------------------------  -------------------
                     June 30,  March 31, June 30,  June 30,  June 30,
                       2004      2004     2003       2004      2003
                     --------- --------- --------  --------- ---------

  Revenue             $76,925   $73,515  $64,288   $226,719  $183,762

  Cost of goods sold   37,915    37,366   31,360    114,307    90,811
                     --------- --------- --------  --------- ---------

    Gross profit       39,010    36,149   32,928    112,412    92,951

  Operating expenses:

   Research and
    development        11,158    11,143   10,803     33,024    29,047

   Selling and
    marketing           4,235     4,363    2,751     12,381     7,883

   General and
    administrative      5,659     5,749    4,655     16,532    13,618

   Amortization of
    intangibles            85        85       85        255       255
                     --------- --------- --------  --------- ---------

    Total operating
     expenses          21,137    21,340   18,294     62,192    50,803
                     --------- --------- --------  --------- ---------

  Operating income     17,873    14,809   14,634     50,220    42,148

  Other income
   (expense), net          72       (86)      46         22        84
                     --------- --------- --------  --------- ---------

  Income before
   income taxes        17,945    14,723   14,680     50,242    42,232

  Provision for
   income taxes         5,699     5,006    4,918     16,681    14,148
                     --------- --------- --------  --------- ---------

    Net income        $12,246    $9,717   $9,762    $33,561   $28,084
                     ========= ========= ========  ========= =========


Basic earnings per
 share                  $0.49     $0.39    $0.40      $1.35     $1.15
                     ========= ========= ========  ========= =========

Weighted average
 basic shares
 outstanding           24,818    24,785   24,389     24,775    24,341
                     ========= ========= ========  ========= =========


Diluted earnings per
 share                  $0.49     $0.39    $0.40      $1.35     $1.14
                     ========= ========= ========  ========= =========

Weighted average
 diluted shares
 outstanding           24,912    24,926   24,639     24,919    24,600
                     ========= ========= ========  ========= =========


CABOT MICROELECTRONICS CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited and amounts in thousands)

                                            June 30,    September 30,
                                              2004          2003
                                          ------------- -------------
                    ASSETS:

Current assets:
  Cash and cash equivalents                   $155,885      $111,318
  Accounts receivable, net                      37,952        37,564
  Inventories, net                              24,565        23,814
  Other current assets                           7,286         6,416
                                          ------------- -------------
    Total current assets                       225,688       179,112

Property, plant and equipment, net             126,900       133,695
Other long-term assets                           2,368         2,810
                                          ------------- -------------
    Total assets                              $354,956      $315,617
                                          ============= =============


    LIABILITIES AND STOCKHOLDERS' EQUITY:

Current liabilities:
  Accounts payable                             $13,363       $12,521
  Capital lease obligations                      1,434         1,716
  Accrued expenses, income taxes payable
   and other current liabilities                13,597        14,679
                                          ------------- -------------
    Total current liabilities                   28,394        28,916

Capital lease obligations                        6,612         7,452
Deferred income taxes and other long-term
 liabilities                                     9,523         7,476
                                          ------------- -------------
    Total liabilities                           44,529        43,844

Stockholders' equity                           310,427       271,773
                                          ------------- -------------
    Total liabilities and stockholders'
     equity                                   $354,956      $315,617
                                          ============= =============

    CONTACT: Cabot Microelectronics Corporation
             William S. Johnson, 630-375-5591

    SOURCE: Cabot Microelectronics Corporation

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