UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10K10-K

or

For the transition period from ________ to ________

Subsequent to the Acquisition, we have operated our business within two reportable segments: Electronic Materials and Performance Materials. The Electronic Materials segment consists of our heritage chemical mechanical planarization (CMP).  CMP is a slurries and polishing process used by IC device manufacturers to planarize or flatten many ofpads businesses, as well as the multiple layers of material that are deposited upon silicon wafersKMG’s heritage electronic chemicals business. In our Electronic Materials segment, we serve customers in the production of advanced ICs.  Our products play a critical role insemiconductor industry across the production of advanced semiconductor devices, helping to enable our customers to produce smaller, fasterUnited States, Europe and more complex IC devices with fewer defects.  Our mission is to create value by delivering high-performingAsia, and innovative solutions that solve our customer's challenges.

CMP PROCESS WITHIN IC DEVICE MANUFACTURING

IC devices, or "chips", are components in a wide range of electronic systems for computing, communications, manufacturing and transportation. Consumers most frequently encounter IC devices in mobile internet devices (MIDs) such as smart phones and tablets, microprocessors, application processors and memory chips in their desktop or laptop computers, and in automotive applications, gaming devices, and digital televisions. The multi-step manufacturing process for IC devices typically begins with a circular wafer of pure silicon, with the first manufacturing step referred to as a "wafer start". A large number ofMany identical IC devices, or dies, are manufactured on each wafer at the same time. The initial steps in the manufacturing process build transistors and other electronic components on the silicon wafer. These components are isolated from each other using a layer of insulating material, most often silicon dioxide, to prevent electrical signals from bridging from one transistor to another. These components are then wired together using conducting materials such as aluminum or copper in a particular sequence to produce a functional IC device with specific characteristics. WhenOnce the conducting wiring on one layer of the IC device is completed, another layer of insulating material is added. The process of alternating insulating and conducting layers is repeated until the desired wiring within the IC device is achieved. At the end of the process, the wafer is cut into the individual dies, which are then packaged to form individual chips.

Demand for CMP consumables products, including slurries and pads, used in the production of IC devices is primarily based on the number of wafer starts by semiconductor manufacturers and the type and complexity of the IC devices they produce. To enhance the performance of IC devices, IC device manufacturers have progressively increased the number and density of electronic components and wiring layers in each IC device. This is typically done in conjunction with shrinking the key dimensions on an IC device from one technology generation, or "node," to another. As a result, the number of transistors, wires and the number of discrete wiring layers have increased, increasing the complexity of the IC device and the related demand for CMP consumables products. AsFurthermore, as semiconductor technology has advanced and performance requirements of IC devices have increased, the percentage of IC devices that utilize CMP in the manufacturing process has increased steadily over time. We believe that CMP is used in the majority of allmost IC devices made today, and we expect that the use of CMP will continue to increase in the future.

In the CMP polishing process, CMP consumables are used to remove excess material that is deposited during the IC manufacturing process, and to level and smooth the surfaces of the layers of IC devices, via a combination of chemical reactions and mechanical abrasion, leaving minimal residue and defects on the surface, with only the material necessary for circuit integrity remaining. CMP slurries are liquid solutions generally composed of high-purity deionized water and a proprietary mix of chemical additives and engineered abrasives that chemically and mechanically interact at an atomic level with the surface material on the wafer. CMP pads are engineered polymeric materials designed to distribute and transport the slurry to the surface of the wafer and distribute it evenly across the wafer. Grooves are formed into the surface of the pad to facilitate distribution of the slurry. The CMP process is performed on a CMP polishing tool. During the CMP process, the wafer is held on a rotating carrier, which is pressed down against a CMP pad. The CMP pad is attached to a rotating polishing table that spins in a circular motion in the opposite direction from the rotating wafer carrier. A CMP slurry is continuously applied to the polishing pad to facilitate and enhance the polishing process. Hard disk drive and silicon wafer manufacturers use similar processes to smooth the surface of substrate disks.

An effective CMP process is achieved through technical optimization of the CMP consumables in conjunction with an appropriately designed CMP process. Prior to introducing new or different CMP slurries or pads into its manufacturing process, an IC device manufacturer generally requires the product to be qualified in its processes through an extensive series of tests and evaluations. These qualifications are intended to confirm that the CMP consumable product will function properly within the customer's overall manufacturing process. These tests and evaluations may require minor changes to the CMP process or the CMP slurry or pad. While this qualification process varies depending on numerous factors, it is generally quite costly and may take six months or longer to complete. IC device manufacturers usually assess the cost, time required, and impact on production when they consider implementing or switching to a new CMP slurry or pad.

CMP enables IC device manufacturers to produce smaller, faster and more complex IC devices with a greater density of transistors and other electronic components. With smaller IC devices, IC device manufacturers can increase the number of IC devices that fit on a wafer, which increases their throughput, or the number of IC devices that can be manufactured in a given time period. CMP also helps reduce the number of defective or substandard IC devices produced, which increases the device yield. Producing more complex and higher performing IC devices increases the value of the wafers processed. Improvements in throughput, yield and value per wafer improve the return on an IC device manufacturer's significant investment in manufacturing capacity, which is a high priority. More broadly, sustained growth in the semiconductor industry traditionally has been fueled by enhanced performance and lower unit costs, making IC devices more affordable in an expanding range of applications. We believe CMP remains a critical process in leading-edge semiconductor technology, enabling IC device manufacturers to efficiently produce the complex chips, particularly where higher performance may now be accompanied by higher unit costs.

Through our ESFelectronic chemicals business, we formulate, purify and blend acids, solvents and other wet chemicals used to etch and clean silicon wafers in the production of semiconductors, photovoltaics (solar cells) and flat panel displays. Our products include sulfuric, phosphoric, nitric and hydrofluoric acids, ammonium hydroxide, hydrogen peroxide, isopropyl alcohol, other specialty organic solvents and various blends of chemicals. Our customers rely on us to provide products with very low levels of contaminants and particles. We purchase raw material chemicals from various suppliers and at our facilities blend, purify and package them for distribution to our customers. We are responsible for product purity levels and analytical testing, and in our view, our ability to maintain high purity levels throughout the supply chain process is a competitive advantage. We believe the production of high-purity process chemicals is critical to our customers’ businesses, as they demand an increasing level of purity to enable more advanced technology nodes and increase yields. We believe demand for electronic chemicals will continue to increase as the semiconductor industry migrates to smaller nodes, which require additional processing steps.

Our wholly-owned subsidiary, QED Technologies International, Inc. (QED), is a leading provider of deterministic finishing and advanced measurement technology for the precision optics industry. Many of the production processes currently used in precision machining and polishing have been based on traditional, labor-intensive techniques, which are being replaced by computer-controlled, deterministic processes. Through our QED subsidiary, we are applying our technical expertise in polishing techniques to demanding applications in other industries where shaping, enabling, and enhancing the performance of surfaces is critical to success, such as for precision optics and electronic substrates, including silicon and silicon-carbide wafers.

OUR PRODUCTS

We also develop, manufacture and sell slurry products used to polish the dielectric insulating materials that separate conductive layers within logic and memory IC devices. Some of our slurry products for these materials are used in mature, high volume polishing applications called Interlayer Dielectric, or ILD, in the production of both logic and memory devices. Our more advanced dielectrics products are designed to deliver higher throughput, improved defectivity, and lower cost of ownership than required in traditional ILD applications, as well as to meet the more stringent and complex performance requirements of lower-volume, more specialized dielectrics polishing applications at advanced technology nodes. Some of the applications for advanced dielectrics slurries include shallow trench isolation (STI), "stop on poly" or "stop on nitride" isolation, bulk oxide polishing, and polishing of various dielectrics in advanced transistor designs.

We develop, produce and sell CMP polishing pads, which are consumable materials that work in conjunction with CMP slurries in the CMP polishing process. We believe that CMP polishing pads represent a natural adjacency to our CMP slurry business, since both technologies are required by our customers to deliver their intended result and utilize the same technical and sales infrastructure. Our polishing pad product portfolio includes pads utilizing both thermoset and thermoplastic polyurethane pad material. We produce and sell pads that can be used on a variety of polishing tools, over a range of applications, including tungsten, copper, and dielectrics, over a range of technology nodes, and on both 300mm and 200mm wafers.

In our Flowchem business, we provide polymer-based DRAs for light, medium, and heavy crude oil transmission. We have several product offerings to meet specific customer needs depending on the physical properties of the hard disk drive systems,crude being pumped and improvesvarious geographic climate conditions. Our products provide benefit by reducing the pressure loss in a pipeline due to the turbulent flow. This allows pipeline operators to maximize product flow while maintaining safe operating pressure and reducing energy consumption.

Penta products include solid blocks and concentrated solutions. The solid penta blocks are manufactured at our facility in Matamoros, Mexico. DT-40 (penta concentrate liquid) is processed at KMG-Bernuth’s plant in Tuscaloosa, Alabama. See above and below, and Note 9 and Note 10 of “Notes to the Consolidated Financial Statements” included in Item 8 of Part II of this Annual Report on Form 10-K regarding our decision to cease future investment in the wood treatment business and to not construct a new production efficiency of manufacturers of hard disk drives.

PRECISION OPTICS PRODUCTS

We collaborate closely with our customers to develop and manufacture products that offer innovative and reliable solutions to our customers' challenges, and we strive to consistently and reliably deliver and support these products around the world through what we believe is a robust global infrastructure and supply chain. We continue to focus on the execution of our primary strategies related to technology leadership, customer collaboration, and supply chain excellence.

We believe an example of our ability to deliver innovative products for advanced applications is the growth we saw in revenue in fiscal 2018generated from certain of our tungsten and dielectrics slurry products used in 3D memory and tungsten slurry products for FinFET in advanced logic, as well as growth in revenue from our CMP pads products. We believe our focused effort on advanced technologies with technology-leading customers will enable us to provide more compelling new products as technology continues to advance. In addition, we believe our polishingCMP pads product area represents a promising opportunity for continued growth. We believe that the combinationour array of pad technology and products from our NexPlanar acquisition with our organic pad technology and products enables us to better serve the needs of our customers on a global basis, including the ability to offer performance-differentiated CMP slurry and pad consumable sets. For our electronic chemicals products, we believe increasing levels of purity and achieving lower levels of variation are required to enable these next-generation IC technologies. We continue to work to develop industry leading metrology methods to measure the purity levels achieved.

We believe the several supplier excellence awards we have received from our customers in fiscal 2018over the past decade, which recognize our product quality and reliability, technology leadership, and customer support capabilities, are evidence of our commitment to, and success in, delivering high-performing and high-quality products to our customers through close collaboration with them. These awards recognized our product quality and reliability, our technology leadership, and our customer support capabilities.  Our global business teams are focused on a range of projects with our customers to address specific business opportunities for advanced technologies.

We also believe that continuous improvement and variation reduction in our global supply chain are critical to our success and the success of our customers. We believe our capabilities in supply chain management and quality systems differentiate us from our competitors.  We believecompetitors, and that our worldwide CMP consumables manufacturing plants and global network of suppliers also provide supply chain flexibility as needed.

In our ESFValves Products and Services business, we continue to work to drive demand for our products by promoting valve best practices to energy industry operators that align with current and trending global regulations. Our primary focus is the promotion of our high-margin critical sealing products as an alternative to more costly mechanical solutions for achieving isolation in aged infrastructure.

Through our QED subsidiary, we develop and provide products for demanding polishing applications in other industries, such as infor precision optics, and electronic substrates.  Our QED subsidiary continues to be the technology leader in deterministic finishing forin the precision optics industry. QED'sQED’s polishing and metrology technology enables customers to replace manual processes with automated solutions that provide more precise and repeatable results.  Another aspect of our ESF business is the polishing of electronic substrates, including silicon and silicon-carbide wafers.  CMP is utilized in the production of these wafers to ensure they meet the stringent specifications required by IC manufacturers.

INDUSTRY TRENDS

SEMICONDUCTOR INDUSTRY

We believe the semiconductor industry continues to exhibit various trends. The demandDemand within the semiconductor businessindustry is driven primarily by MIDs, secondarily by personal computers (PCs), as well asand a wide range of other electronic applications including high-performance computing and artificial intelligence. The semiconductor industry has shown fluctuation in the overall industry demand, consolidationas a result of our customer base,numerous factors, including changing mix of demand drivers, semiconductor fab utilization, pressure to reduce costs, and slower pace of technology advancement.

We have discussed the significant shift in semiconductor industry demand over the past several years from IC devices for PCs to MIDs. Demand for MIDs is largely consumer-based, versus more enterprise-based demand for PCs, and this shift introduced fluctuations in semiconductor industry demand.  For example, the semiconductor industry experienced relatively strong demand, conditions during the second half of our fiscal 2016 through the end of our fiscal 2018 following soft demand conditions during the first half of our fiscal 2016.  Industry reports suggest demand during our fiscal 2018 was primarily driven by a robust memory market, generally due to the growing requirements for storage in a wide range of end-use applications, as well as strengthening of demand for certain logic applications.along with various macroeconomic and geopolitical conditions. There are several factors that could drive future industry growth: thegrowth, such as the: ongoing transition from traditional planar, or 2D, memory to advanced 3D memory for mobile, server, and PC applications; expected need for advanced semiconductor devices for high performance computing, virtual and augmented reality, smart phone applications, artificial intelligence, and artificial intelligence;5G; demand for greater connectivity with wearables, peripherals, and the internet of things; increased semiconductor content in automobiles; and semiconductor industry development in China. WeWhile demand conditions may fluctuate, and periodically be softer, which we experienced in fiscal year 2019, we continue to believe that semiconductor industry demand will grow over the long term based on increased usage of IC devices in existing applications, as well as future applications.

Over a number ofthe past several years, we have seen ourthe customer base within the semiconductor industry consolidate as larger semiconductor manufacturers have generally grown faster than the smaller ones, through mergers and acquisitions as well as through alliances among and between different companies. Costs to achieve the required scale in manufacturing within the semiconductor industry continue to rise, along with the related costs of research and development, and larger manufacturers generally have greater access to the resources necessary to manage their businesses, than do smaller ones.businesses. This trend is particularly evident in capital spending within the industry, as the largest semiconductor companies account for an increasingly large portion of total capital spending in the industry compared to the past.

As demand for more advanced and lower cost electronic devices grows, there is continued pressure on IC device manufacturers to reduce their costs. Many manufacturers reduce costs by pursuing ever-increasing scale in their operations, while seeking to reduce their production costs by increasing their production yields, regardless of their scale. Thus, they look for electronic materials products, such as CMP consumables and electronic chemicals products, with quality and performance attributes that can help them reduce their overall cost of ownership, pursue ways to use smaller amounts of CMP materials, and aggressively pursue price reductions for these materials. Electronic chemicals products also require increased levels of purity and, like CMP consumables products, lower levels of variation, which contributes to our pursuit of cutting-edge metrology methods to measure purity levels achieved.

Manufacturers also have historically reduced cost, and simultaneously improved device performance, by migrating to smaller technology nodes. However, as the industry continues to shrink dimensions, leading edge technology node transitions are becoming more challenging due to technical and physical obstacles, and the pace of technology change has slowed. To achieve performance and cost improvements, semiconductor manufacturers are placing greater emphasis on new device architectures, including 3D memory and FinFET. Industry commentary suggests that approximately 50%two-thirds of the NAND market has been converted to 3D memory, and while the industry transition is expectedalmost complete, we expect additional incremental volume in the memory area associated with more vertical layers. In addition, while during our fiscal 2019 the semiconductor industry experienced weakness in overall DRAM and NAND demand that led to what we believe is a short-term reduction in wafer starts, industry expectations remain that overall demand for these devices, and the related need for increased wafer starts, should continue overin the next several years, providing additional anticipated momentum to memory growth.  The capacity of 3D NAND and DRAM continued to expand, primarily in Korea and China, as demand remained robust and DRAM capacity continued to be tight.coming years. We believe semiconductor manufacturers will continue to depend upon highly engineered materials in these new architectures, requiring innovative CMP solutions. Further, as wafer starts and the subsequent number of processing steps used on each wafer continue to grow, we see the demand for our high purity electronic chemicals products as also likely to increase.

Demand for our CMP consumables and electronic chemicals products is primarily driven by wafer starts, so the CMP consumables industryelectronic materials sector reflects semiconductor industry demand patterns in terms of growth, cyclicality and seasonality and varying demand for specific device types. We saw stronger demand starting in the second half of fiscal 2016 through fiscal 2018, which was consistentConsistent with other participants in the semiconductor industry.  Our revenue generated in China and Korea during fiscal 2018 increased 30% and 43%, respectively, from fiscal 2017, which is attributable to semiconductor growth in China and overall growthindustry, we have experienced relatively soft demand conditions in the memory market.semiconductor industry starting in our second fiscal quarter of 2019 and continuing past the end of the fiscal year, although some signs of stabilization are becoming apparent. Over the long term, we anticipate worldwide demand for CMP consumables and electronic chemicals used by IC device manufacturers will grow as a result of expected long-term growth in wafer starts, and the trend to more advanced technologies andtechnologies. With respect to CMP consumables, we believe there will continue to be an associated increase in the number of CMP polishing steps required to produce these advanced devices, and the introduction of new materials that are expected to require CMP. With respect to electronic chemicals, we believe there will be increasing demand as customers are requiring a higher level of purity, which requires an increasing number of processing steps used on each wafer. In addition, as customers introduce smaller technology nodes and new architectures, they require higher purity chemicals with fewer and fewer impurities.

We expect the anticipated long-term growth in demand will be partially mitigated by continued efficiency improvements in CMP consumableselectronic materials usage as customers seek to reduce their costs. As discussed above, semiconductor manufacturers look for ways to lower the cost of CMP consumables and electronic chemicals in their production operations, includingoperations. As an example, for CMP consumables, these can include customer improvements in technology, dilution of slurry, use of concentrated slurry products, or reduction of slurry flow rate, to reduce the total amount of slurry used, and to extend pad life. In addition, CMP demand also depends upon the specific mix of IC device demand, since the intensity of CMP usage varies by IC device type.

We believe that CMP technical solutions are becoming more complex, with advanced technologies generally requiring greater customization of CMP slurry products by customer, tool set and process integration approach. As a result, we generally see customers selecting suppliers earlier in their development processes and maintaining preferred supplier relationships through production. Therefore, we believe that close collaboration with our customers early in the development cycle offers the best opportunity for optimal CMP solutions. We also believe that research and development programs with customers and suppliers continue to be vital to our success as we develop and commercialize innovative, high-performing and more cost-effective CMP solutions.

COMPETITION

Our CMP slurry competitors range from small companies that compete with a single product or in a single geographic region, to divisions of global companies with multiple lines of CMP products, and we believe we are the leader in CMP slurries.products. In our view, we are the only CMP slurry supplier today that serves a broad range of customers by offering and supporting a full line of CMP slurry solutions for all major applications, with a proven track record of supplying these products globally in high volumes with the requisite high level of technical support services.

Our QED subsidiary operates in the precision optics industry. There are few direct competitors of QED and we believe its technology is unique and provides a competitive advantage to customers in the precision optics industry, which still relies heavily on traditional artisanal methods of fabrication.

CUSTOMERS, SALES, AND MARKETING

Within the semiconductor industry, our customers are generally producers of logic or memory IC devices, or providers of IC foundry services. Some logic customers, and so-called "fabless" companies, outsource some or all of the production of their devices to foundries, which provide contract manufacturing services, in order to avoid the high cost of process development, construction and operation of a fab, or to provide additional capacity when needed.

We believe the primary influences of our customers' CMP consumableselectronic materials buying decisions are: overall cost of ownership, which represents the cost to purchase, use and maintain a product; product quality and consistency; product performance and its impact on a customer's overall yield; engineering support; and, supply assurance. We believe that greater customer expertise within the processes that utilize our CMP process,consumables and electronic chemicals, more challenging integration schemes, additional and unique polishing materials, and cost pressures will continue to increase demands on CMP consumables suppliers like us.

We market our CMP slurry and pad products primarily through direct sales to our customers, although we use distributors in certain areas. We believe this strategy of primarily direct sales provides us an additional means to collaborate with our customers and provides our customers with the most efficient means by which to procure our products.

Our QED subsidiary supports customers in the semiconductor equipment, aerospace, defense, research, biomedical, and digital imaging industries. QED counts among its worldwide customers leading precision optics manufacturers, major semiconductor original equipment manufacturers, research institutions, and contractors to the United States and other governments.

RESEARCH, DEVELOPMENT AND TECHNICAL SUPPORT

We believe that technology is vital to success in our businesses, primarily in the area of CMP and ESF businesses,consumables, and we plan to continue to devote significant resources to research, development and technical support (R&D)(“R&D”), and balance our efforts between shorter and longer-term marketindustry needs. WeHere, we focus our R&D efforts on product innovation at leading-edge applications for our technology-leading customers. We develop new and enhanced CMP solutions tailored to these customers' requirements using our expertise in chemical formulation, materials science, product engineering and manufacturing technology. We work closely with these customers at their facilities to identify their specific technology and manufacturing challenges and to translate these challenges into viable CMP process solutions.

Our technologyResearch, development and technical efforts are focused on five mainthe areas that span the early stage of productresearch related to fundamental CMP technology; development involvingof new materials, processes and designs several years in advanceenhanced CMP consumables products, including collaboration on joint development projects with technology-leading customers and suppliers; process development to support rapid and effective commercialization of commercialization, to continuous improvementnew products; technical support of already commercializedour CMP products in daily use in our customers'customers’ research, development and manufacturing facilities:facilities; and, development of polishing and metrology application outside of the semiconductor industry.

Our research in CMP slurries and pads addresses a breadth of complex and interrelated performance criteria that relate to the functional performance of IC devices, our customers' manufacturing yields, and their overall cost of ownership. We design slurries and pads that are capable of polishing one or more materials of differing hardness, sometimes at the same time, that comprise the semiconductor circuitry. In addition, our slurries and pads products must achieve the desired surface conditions at high polishing rates, high processing yields and low consumables costs in order to provide acceptable cost of ownership for our customers. Meanwhile, our electronic chemicals products are subject to increased high purity demand to enable more advanced technology nodes and increase yields. These market expectations require us to continue to develop industry leading metrology methods in order to measure the purity levels achieved. As technology advances and materials and designs increase in complexity, these challenges require significant investments in R&D.

We believe that our technology provides us with a competitive advantage, and that our investments in R&D provide us with polishing and metrology capabilities that support the most advanced and challenging customer technology requirements.  In fiscal years 2018, 2017 and 2016, we incurred approximately $52.0 million, $55.7 million and $58.5 million, respectively, in R&D expenses.  Investments in property, plant and equipment to support our R&D efforts are capitalized and depreciated over their useful lives.

Our global R&D team includes experts from the semiconductor industry and scientists from key disciplines required for the development of high-performance CMP consumable products. We operate an R&D facility in Aurora, Illinois, that features a Class 1 clean room and advanced equipment for product development, including 300mm polishing and metrology capabilities; a facility in Japan, which includes a Class 1 clean room with 300mm polishing, metrology and slurry development capabilities;; a facility in Taiwan that includes a clean room with 200mm polishing capability; a facility in South Korea that provides slurry formulation capability and 300mm polishing capability; and, an R&D laboratory in Singapore that provides polishing, metrology and slurry development capabilities for the data storage industry;industry. We also operate R&D facilities in the United States, Europe, and a research facility in Rochester, New York that supportsSingapore pertaining to our QEDelectronic chemicals business. TheseOur slurry, pads, and electronic chemicals facilities underscore our commitment to continuing to invest in our technology infrastructure to maintain our technology leadership and to be responsive to the needs of our customers.

Engineered abrasive particles are significant raw materials we use in many of our CMP slurries.slurries and pads. Our strategy is to secure various sources of different raw materials, as appropriate, to enable the desired performance of our products, and monitor those sources as necessary to provide supply assurance. Also, we have entered into multi-year supply agreements with a number ofseveral suppliers for the purchase of raw materials in the interest of supply assurance and to control costs. For additional information regarding these agreements, refer to "Tabular Disclosure of Contractual Obligations", included in "Management's Discussion and Analysis of Financial Condition and Results of Operations," in Item 7 of Part II of this Annual Report on Form 10-K. In our electronic chemicals business, we rely on a variety of suppliers for our raw materials, some of which we purchase on open account and others which we purchase under supply contracts. The number of suppliers is often limited, particularly as to the specific grade of raw material required by us to supply high purity products to our customers.

INTELLECTUAL PROPERTY

We believe our intellectual property is important to our success and ability to compete, and we also differentiate our products and technology by their high quality and reliability, and our quality systems, global supply chain and logistics. As of October 31, 2018,2019, we had 1,3191,317 active worldwide patents, of which 276 are U.S.284 United States patents, and 410357 pending worldwide patent applications, of which 4551 are in the United States.

Many of these patents are important to our continued development of new and innovative products for CMP and related processes, as well as for new businesses. Our patents have a range of duration. We refresh our intellectual property on an ongoing basis through continued innovation. As an example, we have had patent coverage that was important to some of our legacy CMP slurry business and continue to have significant other patents that protect this technology and other legacy and advanced technology with a range of duration. We attempt to protect our intellectual property rights through a combination of patent, trademark, copyright and trade secret laws, use of certain manufacturing technologies, exclusive contractual arrangements with suppliers, and with employee and third party-nondisclosure and assignment agreements. We vigorously protect and defend our intellectual property and have been successful in this regard.

Most of our intellectual property has been developed internally, but we also may acquire intellectual property from others to enhance our intellectual property portfolio. These enhancements may be via licenses or assignments or we may acquire certain proprietary technology and intellectual property when we make acquisitions. We believe these technology rights can enhance our competitive advantage by providing us with future product development opportunities and expanding our intellectual property portfolio.

We believe our employees are the foundation of our success. As of October 31, 2018,2019, we employed 1,2192,047 individuals, including 7221,385 in operations, 248249 in research and development and technical, 84413 in sales, general and marketing and  165 in administration. In general, our employees are not covered by collective bargaining agreements.agreements, but we do have some workers who are subject to such agreements, part of works councils, or similar arrangements, primarily in Europe, Mexico, Singapore. We have not experienced any work stoppages and consider our relations with our employees to be good.

We sell our products worldwide. We believe our geographic coverage allows us to utilize our business and technical expertise from a diverse, global workforce, strategically located in close proximity to our customers. As a result of the Acquisition, our geographic mix has changed. For example, in fiscal 2019, our North America revenue as a percentage of total revenue has increased from 13% to 36% compared to fiscal 2018. While approximately 50% of our global revenue is still being generated in Asia Pacific, our dependency on revenue from Asia Pacific has decreased as a result of the Acquisition. For more financial information about geographic areas, see Note 2023 of the "Notes“Notes to the Consolidated Financial Statements"Statements” included in Item 8 of Part II of this Annual Report on Form 10-K.

AVAILABLE INFORMATION

Our annual reports on Form 10-K, quarterly reports on Form 10-Q, definitive proxy statements on Schedule 14A, current reports on Form 8-K, and any amendments to those reports, as well as any other filings with the SEC, including our Form S-4 Registration Statement with respect to our pending acquisition of KMG, and amendments thereto, are made available free of charge on our Company website, www.cabotcmp.com, as soon as reasonably practicable after such reports are filed with the Securities and Exchange Commission (SEC).  Any materials that the Company files with the SEC are also available to read and copy at the SEC's Public Reference Room at 100 F Street, NE, Washington, DC 20549.  Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. Statements regarding beneficial ownership of our securities by our executive officers and directors are made available on our Company website following the filing of such with the SEC. In addition, the SEC's website (http://www.sec.gov) contains reports, proxy statements, and other information that we file electronically with the SEC.

Our business is affected by economic and industry conditions and the majority of our revenue derives from our Electronic Materials segment, which is primarily dependent upon semiconductor industry demand. Historically,With respect to our Electronic Materials segment, historically, semiconductor industry demand has fluctuated due to economic and industry cycles and seasonal shifts in demand, which can affect our business, causing demand for our electronic materials products to fluctuate. For example, we have experienced relatively soft demand conditions in the semiconductor industry starting in our second fiscal quarter of 2019 and continuing past the end of the fiscal year, although some signs of stabilization are becoming apparent. Previously, we had experienced the strengthening of demand conditions in the semiconductor industry we experienced duringfrom the second half of fiscal 2016 continued through fiscal 2018, following relatively soft demand conditions during the first half of fiscal 2016. Furthermore, competitive dynamics within the semiconductor industry may impact our business. Our limited visibility to future customer orders makes it difficult for us to predict industry trends. If the global economy or the semiconductor industry weakens, whether in general or as a result of specific factors, such as macroeconomic factors, or unpredictable events such as natural disasters or geopolitical events, we could experience material adverse impacts on our results of operations and financial condition.

OurAlthough our product offerings have expanded with the Acquisition, our business isremains substantially dependent on products in our Electronic Materials segment, such as CMP slurries, pads and pads,electronic chemicals, which account for the majority of our revenue. OurWe have identified our Performance Materials segment as another area of potential continued growth and the product offerings in our Performance Materials segment are similarly concentrated. As such, our business would suffer if these products became obsolete or if consumption of these products decreased. Our success depends on our ability to keep pace with technological changes and advances in the industries in which we operate, particularly the semiconductor industry, and to adapt, improve and customize our products for advanced IC applications in response to evolving customer needs and industry trends. Since its inception, the semiconductor industry, which is the largest industry in which we operate, has experienced technological changes and advances in the design, manufacture, performance and application of IC devices. Our customers continually pursue lower cost of ownership and higher quality and performance of materials consumed in their manufacturing processes, including CMP slurries and pads and electronic chemicals, as a means to reduce costs, increase the yield in their manufacturing facilities, and achieve desired performance of the IC devices they produce. We expect these technological changes, and this drive toward lower costs, higher quality and performance and higher yields, will continue in the future. Potential technology developments in the semiconductor industry, as well as our customers' efforts to reduce consumption of CMP consumables, including through use of smaller quantities, could render our products less important to the IC device manufacturing process.

Our CMP consumables customer base is concentrated among a limited number of large customers.customers in each of our segments. Currently, our principal business is to supply electronic materials primarily to the semiconductor industry. The semiconductor industry has been consolidating as the larger semiconductor manufacturers have generally grown faster than the smaller ones, through business gains, mergers and acquisitions, and strategic alliances. Industry analysts predict that this trend will continue, which means the semiconductor industry will continue to be comprised of fewer and larger participants in the future if their prediction is correct. In addition, our customer base in our pipeline-related businesses is also somewhat concentrated, with large entities predominant, and outside of the United States, these entities frequently are state-owned or sponsored, and limited in number per country, as described more above. One or more of these principal customers could stop buying CMP consumablesproducts from us or could substantially reduce the quantity of CMP consumablesproducts purchased from us. Our principal customers in both of our segments also hold considerable purchasing power, which can impact the pricing and terms of sale of our products. Any deferral or significant reduction in the quantity or price of CMP consumablesproducts sold to these principal customers could seriously harm our business, financial condition and results of operations.

We depend on our supply chain to enable us to meet the demands of our customers. Our supply chain includes the raw materials we use to manufacture our products, our production operations and the means by which we deliver our products to our customers. Our business could be adversely affected by any problem or interruption in the supply of the key raw materials we use in our CMP slurries and pads,products, including raw materials that do not meet the stringent quality and consistency requirements of our customers, any problem or interruption that may occur during production or delivery of our products, such as weather-related problems, natural disasters, or geopolitical, trade or labor-related issues, or any difficulty in producing sufficient quantities of our products to meet growing demand from our customers. In particular, severe weather conditions have the potential to adversely affect our operations, damage facilities and increase our costs, and those conditions may also have an indirect effect on our operations by disrupting services provided by service companies or suppliers with whom we have a business relationship. Additionally, some of our full-time employees are represented by labor unions, works councils or comparable organizations, particularly in Mexico and Europe. As our current agreements expire, we cannot provide assurance that new agreements will be reached at the end of each period without union action, or that a new agreement will be reached on terms satisfactory to us. An extended work stoppage, slowdown or other action by our employees could significantly disrupt our business. Future labor contracts may be on terms that result in higher labor costs to us, which also could adversely affect our results of operations. Our supply chain may also be negatively impacted by unanticipated price increases due to supply restrictions beyond the control of our Company or our raw materials suppliers.

We believe it would be difficult to promptly secure alternative sources of key raw materials in the event one of our suppliers becomes unable to supply us with sufficient quantities of raw materials that meet the quality and technical specifications required by us and our customers. In addition, new contract terms, forced production or manufacturing changes, contractual amendments to existing agreements with, or non-performance by, our suppliers, including any significant financial distress our suppliers may suffer, could adversely affect us. Also, if we change the supplier or type of key raw materials we use to make our CMP slurries or pads,products, in particular our electronic materials products, or are required to purchase them from a different manufacturer or manufacturing facility or otherwise modify our products, in certain circumstances our customers might have to requalify our CMP slurries and padsproducts for their manufacturing processes and products. The requalification process could take a significant amount of time and expense to complete and could occupy technical resources of our customers that might otherwise be used to evaluate our new products, thus delaying potential revenue growth, or motivate our customers to consider purchasing products from our competitors, possibly interrupting or reducing our sales of CMP consumablesproducts to these customers, especially sales of our electronic materials products to our semiconductor industry customers, but also with respect to our pipeline performance products to our pipeline and adjacent industry customers.

We currently have operations and a large customer base outside of the United States. Approximately 87%, 86% and 86%64% of our revenue was generated by sales to customers outside of the United States duringfor the full fiscal years 2018, 2017 and 2016, respectively.year ended September 30, 2019. We may encounter risks in doing business in certain foreign countries, including, but not limited to, adverse changes in economic and political conditions, both in foreign locations and in the United States with respect to non-U.S. operations of U.S. businesses like ours, geopolitical and/or trade tensions, fluctuation in exchange rates, changes in international trade requirements and sanctions and/or tariffs that affect our business and that of our customers and suppliers, compliance with a variety of foreign laws and regulations and related audits and investigations, as well as difficulty in enforcing business and customer contracts and agreements, including protection of intellectual property rights. We also may encounter risks that we may not be able to repatriate additional earnings from our foreign operations, derive anticipated tax benefits of our foreign operations or recover the investments made in our foreign operations, whether due to regulatory or policy changes in the U.S. or in the countries outside of the U.S. in which we do business, or other factors.

In particular, China iscontinues to be a fast-developing market for the semiconductor industry, and is an area of potential continued growth for us. As business volume between China and the rest of the world continues to grow, there is risk that geopolitical, regulatory, trade and political matters could adversely affect business for companies like ours based on the complex relationships among China, the United States, and other countries in the Asia Pacific region or elsewhere, which could have a material adverse impact on our business. In addition, there are risks that the Chinese government may, among other things, require the use of local suppliers, compel companies that do business in China to partner with local companies to conduct business, and,or, provide incentives to government-backed local customers to buy from local suppliers rather than companies like ours, all of which could adversely impact our business, including our results of operations.

Protection of intellectual property is particularly important in our industry because we develop complex technical formulas and processes for CMP products that are proprietary in nature and differentiate our products from those of our competitors. Our intellectual property is important to our success and ability to compete. We attempt to protect our intellectual property rights through a combination of patent, trademark, copyright and trade secret laws, as well as employee and third-party nondisclosure and assignment agreements. In addition, we protect our product differentiation through various other means, such as proprietary supply arrangements for certain raw materials, and use of certain manufacturing technologies. Due to our international operations, we pursue protection in different jurisdictions, which may provide varying degrees of protection, and we cannot provide assurance that we can obtain adequate protection in each such jurisdiction. Our failure to obtain or maintain adequate protection of our intellectual property rights for any reason, including through the patent prosecution process or in the event of litigation related to such intellectual property, could seriously harm our business. In addition, certain types of intellectual property, such as patents, expire after a certain period of time, and products protected by our patents then lose such protection, so we refresh our intellectual property portfolio on an ongoing basis through continued innovation, and failure to do so could adversely affect our business. Also, the costs of obtaining or protecting our intellectual property could negatively affect our operating results.

An element of our strategy has been to leverage our current customer relationships, technological expertise and other capabilities and competencies to expand our businessbusiness. For example, we have made acquisitions to expand beyond CMP consumables into other electronic materials product areas, such as other electronic materials.  In addition,well as into performance materials product areas in our Engineered Surface Finishes business,which we have been pursuing other surface modification applications.limited experience. Expanding our business into new product areas could involve technologies, production processes and business models in which we have limited experience, and we may not be able to develop and produce products or provide services that satisfy customers' needs, or we may be unable to keep pace with technological or other developments. Or, we may decide that we no longer wish to pursue these new business initiatives. Also, our competitors may have or obtain intellectual property rights that could restrict our ability to market our existing products and/or to innovate and develop new products.

As a company conducting business on a global basis, we are exposed, both directly and indirectly, to effects of changes in United States, state, local and foreign tax rules. OnIn December 22, 2017, the President of the United States signed and enacted into law comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the "Tax Act"). was enacted in the United States. Known and certain estimated effects based upon current interpretation of the Tax Act have been incorporated into our financial results. As additional clarification and implementation guidance is issued on the Tax Act,, it may be necessary to adjust our income tax estimates, as we experienced in our second fiscal quarter of fiscal 2019 with respect to our previously reported Transition Tax describe in Note 19 of “Notes to the provisional amounts.Consolidated Financial Statements” included in Item 8 of Part II of this Annual Report on Form 10-K. Adjustments to provisionalincome tax amounts could be material to our results of operations and cash flows. In addition, there is a risk that state or foreign jurisdictions may amend their tax laws in response to the Tax Act, which could have a material impact on our future results of operations and cash flows.

We maintain and rely upon certain critical information systems for the effective operation of our business. These information systems include, but are not limited to, telecommunications, the Internet, our corporate intranet, various computer hardware and software applications, network communications, and email. These information systems may be owned and maintained by us, our outsourced providers, or third parties such as vendors, contractors, and Cloud providers. All of these information systems are subject to disruption, breach or failure from various sources including, but not limited to, attacks, degradation, and failures resulting from potential sources, including viruses, malware, denial of service, destructive or inadequate code, power failures, and physical damage. Confidential and/or sensitive information stored on these information systems, or transmitted to or from Cloud storage, could be intentionally or unintentionally compromised, lost, and/or stolen. While we have implemented security procedures and virus protection software, intrusion prevention systems, access control, and emergency recovery processes to mitigate risks like these with respect to information systems that are under our control, they are not fail-safe and may be subject to breaches. Further, we cannot assure that third parties upon whom we rely for various IT services will maintain sufficient vigilance and controls over their systems. Our inability to use or access these information systems at critical points in time, or unauthorized releases of personal or confidential information, could unfavorably impact the timely and efficient operation of our business, including our results of operations, and our reputation, as well as our relationships with our employees or other individuals whose information may have been affected by such cybersecurity incidents.

We utilizemay in the future be required to raise capital through public or private financing or other arrangements. Such financing may not be available on acceptable terms, or at all, and rely upon a global workforce.  If we failour failure to attractraise capital when needed could harm our business. Our Credit Agreement contains financial and retain the necessary managerial, technical and customer support personnel,other covenants that may restrict our business andactivities or our ability to maintain existingexecute our strategic objectives, and obtain new customers, develop new productsour failure to comply with these covenants could result in a default under our Credit Agreement. Furthermore, additional equity financing may dilute the interests of our common stockholders, and providedebt financing, if available, may involve restrictive covenants that could further restrict our business activities or our ability to execute our strategic objectives and could reduce our profitability. If we raise or borrow funds on acceptable levelsterms, we may not be able to grow our business or respond to competitive pressures.

In addition, borrowings under our Credit Facilities generally bear interest based on (a) a London Inter-bank Offered Rate (“LIBOR”), subject to a 0.00% floor, or (b) a base rate, in each case plus an applicable margin of, customer service could suffer.  We compete worldwide with other industry participants for qualified personnel, particularly those with significant experience in the semiconductor industry.  The losscase of servicesborrowings under the Term Loan Facility, 2.25% for LIBOR loans and 1.25% for base rate loans and, in the case of key employees,borrowings under the Revolving Credit Facility, initially, 1.50% for LIBOR loans and 0.50% for base rate loans. On July 27, 2017, the Financial Conduct Authority (the authority that regulates LIBOR) announced that it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. In the United States, the Alternative Reference Rates Committee (“ARRC”), the working group formed to recommend an alternative rate to LIBOR, has identified the Secured Overnight Financing Rate (“SOFR”) as its preferred alternative rate for USD LIBOR. When LIBOR ceases to exist after 2021, any calculation of interest based upon the Alternate Base Rate (or any comparable or replacement formulation), may result in higher interest rates. To the extent that these interest rates increase, our inability to obtain or maintain visas or other travel or residency documents on their behalf with respect toInterest expense will increase, which could adversely affect our business needs, could harm our businessfinancial condition, operating results and results of operations.  Periodically, we engage in succession planning for our key employees, and our Board of Directors reviews succession planning for our executive officers, including our chief executive officer, on an annual basis.cash flows.

The market price of our common stock has fluctuated and could continue to fluctuate significantly as a result of factors such as: economic, geopolitical, political and stock market conditions generally and specifically as they may impact participants in the semiconductor and related industries; changes in financial estimates and recommendations by securities analysts who follow our stock; earnings and other announcements, and changes in market evaluations, by securities analysts, investors, market participants or others, of or related to, us or participants in the semiconductor and related industries; changes in business, trade or regulatory conditions affecting us or participants in the semiconductor and related industries; announcements or implementation by us, our competitors, or our customers of technological innovations, new products or different business strategies; changes in our capital deployment strategy, issuances of shares of our capital stock or entering into a business combination or other strategic transaction, such as our pending acquisition of KMG;transaction; and trading volume of our common stock.

Our certificate of incorporation and bylaws, and various provisions of the Delaware General Corporation Law may make it more difficult or expensive to effect a change in control of our Company. For instance, our amended and restated certificate of incorporation provides for the division of our Board of Directors into three classes as nearly equal in size as possible with staggered three-year terms.

We have adopted change in control arrangements covering our executive officers and other key employees. These arrangements provide for a cash severance payment, continued medical benefits and other ancillary payments and benefits upon termination of service of a covered employee's employment following a change in control, which may make it more expensive to acquire our Company.

ITEM 1B. UNRESOLVED STAFF COMMENTS

We also may face other governmental or third-party claims, or otherwise incur costs, relating to cleanup of, or for injuries resulting from, contamination at sites associated with this or other past and present operations. We accrue for environmental liabilities when a determination can be made that they are probable and reasonably estimable. Other than as described herein, we are not involved in any legal proceedings that we believe willcould have a material impact on our consolidated financial position, results of operations or cash flows, we periodically become a partyflows.

In addition, our Company is subject to legal proceedingsextensive federal, state and local laws, regulations and ordinances in the ordinary courseU.S. and in other countries. These regulatory requirements relate to the use, generation, storage, handling, emission, transportation and discharge of business.certain hazardous materials, substances and waste into the environment. The Company, including its KMG entities, manage EHS matters related to protection of the environment and human health, the cleanup of contaminated sites, the treatment, storage and disposal of wastes, and the emission of substances into the air or waterways, among other EHS concerns. Governmental authorities can enforce compliance with their regulations, and violators may be subject to fines, injunctions or both. The Company devotes significant financial resources to compliance, including costs for ongoing compliance.

ITEM 4. MINE SAFETY DISCLOSURES

Set forth below is information concerning our executive officers and their ages as of October 31, 2018.2019.

Our common stock has traded publicly under the symbol "CCMP" since our initial public offering in April 2000, currently on the NASDAQ Global Select Market, and formerly the NASDAQ National Market. The following table sets forth the range of quarterly high and low sales prices for our common stock.

In January 2016, our Board of Directors authorized an increase in the amount available under our share repurchase program from the previously remaining $75.0 million to $150.0 million. Under this program, we repurchased 369,79188,403 shares for $40.7$10.0 million in fiscal 2018.2019. As of September 30, 2018, $81.32019, $71.3 million remains available under our share repurchase program. The manner in which the Company repurchases its shares is discussed in Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, under the heading "Liquidity and Capital Resources", of this Annual Report on Form 10-K. To date, we have funded share purchases under our share repurchase program from our available cash balance, and currently anticipate we will continue to do so.

Separate from this share repurchase program, we purchased a total of 38,16646,702 shares during fiscal 20182019 pursuant to the terms of our Cabot Microelectronics Corporation 2012 Omnibus Incentive Plan, as amended (OIP)(“OIP”), as shares withheld from award recipients to cover payroll taxes on the vesting of shares of restricted stock or restricted stock units awarded under the OIP.

See Part III, Item 12 of this Form 10-K for information regarding shares of common stock that may be issued under the Company's existing equity compensation plans.

The following selected financial data for each year of the five-year period ended September 30, 20182019 has been derived from the audited consolidated financial statements.

The information set forth below is not necessarily indicative of results of future operations and should be read in conjunction with Management's"Management's Discussion and Analysis of Financial Condition and Results of OperationsOperations", "Consolidated Financial Statements" and "Notes to the consolidated financial statements and notes to those statementsConsolidated Financial Statements" included in Items 7 and 8 of Part II of this Annual Report on Form 10-K, as well as Risk Factors"Risk Factors" included in Item 1A of Part I of this Annual Report on Form 10-K.

SELECTED FINANCIAL DATA - FIVE YEAR SUMMARY

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following "Management's Discussion and Analysis of Financial Condition and Results of Operations" (MD&A), as well as disclosures included elsewhere in this Annual Report on Form 10-K, include "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. This Act provides a safe harbor for forward-looking statements to encourage companies to provide prospective information about themselves so long as they identify these statements as forward-looking and provide meaningful cautionary statements identifying important factors that could cause actual results to differ from the projected results. All statements other than statements of historical fact we make in this Annual Report on Form 10-K are forward-looking.  In particular, forward-looking statements include statements herein regarding the expected timetableand address a variety of subjects including, for closing of the pending acquisition of KMG; the expected benefits and synergies of the pending acquisition of KMG and the capital structure of the combined company; our and KMG's beliefs, plans and expectations;example, future sales and operating results; growth or contraction, of, and trends in the industry and markets in which the Company participates; the acquisition of, investment in, or collaboration with other entities, including the Company’s acquisition of KMG Chemicals, Inc. (“KMG”), and the expected benefits and synergies of such acquisition; divestment or disposition, or cessation of investment in certain, of the Company’s businesses; new product introductions; development of new products, technologies and markets; product performance; the financial conditions of the Company's management;customers; competitive landscape; the Company's supply chain; natural disasters; various economic or political factors and international or national events, including related to the enactment of trade sanctions, tariffs, or other similar matters; regulatory or legislative activity, including the enactment of the Tax Act in December 2017 in the United States; product performance; the generation, protection and acquisition of intellectual property, and litigation related to such intellectual property or third party intellectual property; new product introductions; developmentenvironmental, health and safety laws and regulations, and related compliance; the operation of new products, technologies and markets;facilities by Cabot Microelectronics; the Company's supply chain;management; foreign exchange fluctuation; the financial conditionsCompany's current or future tax rate, including the effects of the Company's customers; natural disasters;Tax Cuts and Jobs Act in the acquisitionUnited States (“tax act”); cybersecurity threats; financing facilities and related debt, pay off or payment of investment in, or collaborationprincipal and interest, and compliance with covenants and other entities;terms; and, uses and investment of the Company's cash balance, including dividends and share repurchases, which may be suspended, terminated or modified at any time for any reason by the Company, based on a variety of factors; financing facilitiesfactors. Statements that are not historical facts, including statements about Cabot Microelectronics’ beliefs, plans and related debt, payoff or payment of principal and interest, and compliance with covenants and other terms; the Company's capital structure; the Company's current or future tax rate, including the effects of the Tax Act in the United States; and the operation of facilities by the Company; and statements preceded by, followed by or that include the words "intends," "estimates," "plans," "believes," "expects," "anticipates," "should," "could" or similar expressions,expectations, are forward-looking statements. These forward-lookingSuch statements involveare based on current expectations of Cabot Microelectronics’ management and are subject to a number of risks,factors and uncertainties, and other factors, thatwhich could cause actual results to differ materially from those described by thesein the forward-looking statements. We assumeExcept as required by law, Cabot Microelectronics undertakes no obligation to update this forward-looking information.statements made by it to reflect new information, subsequent events or circumstances. The section entitled "Risk Factors" describes some, but not all, of the factors that could cause these differences.

The following discussion and analysis should be read in conjunction with our historical financial statements and "Notes to the notes to those financial statementsConsolidated Financial Statements" which are included in Item 8 of Part II of this Annual Report on Form 10-K.

Cabot Microelectronics Corporation ("Cabot Microelectronics'', "the Company'', "us'', "we'', or "our'') supplies high-performance polishingis a leading global supplier of consumable materials to semiconductor manufacturers and pipeline companies. As discussed above, on November 15, 2018 (“Acquisition Date”), we completed our acquisition of KMG Chemicals, Inc. (“KMG”), which produces and distributes specialty chemicals and performance materials for the semiconductor industry, pipeline operations and adjacent industries, and industrial wood preservation industry (“Acquisition”). The Acquisition has extended and strengthened our position as one of the leading suppliers of consumable materials to the semiconductor industry and has expanded our portfolio with the addition of KMG’s performance materials business, which enables us to be a leading global provider of performance products and services to the pipeline operations industry. The Consolidated Financial Statements included in this Annual Report on Form 10-K include the financial results of KMG from the Acquisition Date. Subsequent to the Acquisition, we operate our business within two reportable segments: Electronic Materials and Performance Materials. The Electronic Materials segment consists of our heritage CMP slurries and polishing pads usedbusinesses, as well as the recently-acquired KMG electronic chemicals business. The Performance Materials segment includes KMG’s heritage pipeline performance and wood treatment businesses, and our heritage QED business. For additional information, refer to Part 1, Item 1, “Business”, in this Annual Report on Form 10-K.

In the manufactureElectronic Materials segment, we recorded record revenue in fiscal 2019, primarily due to the Acquisition. We had lower CMP slurries revenue in fiscal 2019 compared to fiscal year 2018, which was partially offset by higher revenue in CMP pads and the addition of advanced integrated circuit (IC) devices withinrevenue in electronic chemicals. We believe this decline in CMP slurries revenue was due to the softness in the semiconductor industry in a process called chemical mechanical planarization (CMP).  CMP polishes surfaces at an atomic level, thereby helping to enable IC device manufacturers to produce smaller, faster and more complex IC devices with fewer defects.  We operate predominantlyfiscal 2019, primarily in one industry segment – the development, manufacture and sale of CMP consumables.  We develop, produce and sellmemory sector. CMP slurries for polishinghave a high participation in the memory sector, and were adversely impacted by the decrease in DRAM and NAND production at our customers during our fiscal 2019. In logic applications, the transition to advanced nodes by many of the conducting and insulating materials used in IC devices, and for polishing the disk substrates and magnetic heads used in hard disk drives.  We also develop, manufacture and sell CMP polishing pads, which are used in conjunction with slurries in the CMP process.  We also pursue other demanding surface modification applications through our Engineered Surface Finishes (ESF) business, in which we develop and provide products for demanding polishing applications in other industries.

Revenue for fiscal 20182019 was $590.1$1,037.7 million, which represented an increase of 16.4%75.8% from $507.2the $590.1 million reported for fiscal 2017,2018, primarily due to the Acquisition.

Net income was $39.2 million in fiscal 2019, which represented a decrease of 64.4% or $70.8 million, from $110.0 million in fiscal 2018. Results benefited from the Acquisition, but were more than offset by Acquisition-related expenses, asset impairment charges and a restructuring charge related to wood treatment, increased amortization and depreciation associated with re-valuing KMG assets to fair value, cleanup and disposal costs related to a warehouse fire at our wood treatment facility in Tuscaloosa, Alabama, higher Interest expense resulting from the debt borrowing to finance the Acquisition, and newly issued final regulations related to the United States Tax Cut and Jobs Act ("Tax Act"), which impacted our reserves for uncertain tax positions. For the same reasons, Diluted earnings per share decreased from $4.19 in fiscal 2018 to $1.35 in fiscal 2019. See Note 21 of "Notes to the Consolidated Financial Statements" included in Part II, Item 8 of this Annual Report on Form 10-K.

Adjusted EBITDA was a record$333.4 million in fiscal 2019. This represents an increase of $143.5 million, or 75.5% from $189.9 million in fiscal 2018. Adjusted EBITDA benefited from the Acquisition of the KMG businesses, partially offset by the softer industry conditions that resulted in lower demand for our heritage CMP products. Refer to the “Use of certain GAAP and Non-GAAP Financial Information” section below for the Company.  The increase in revenue from fiscal 2017 included record annual revenue in our tungsten slurries, dielectrics slurries,definition of adjusted EBITDA and polishing pads,a reconciliation of adjusted EBITDA to Net income, the most comparable GAAP financial measure. Adjusted EBITDA margin, which grew 14.3%, 16.1% and 21.0%, respectively, from last year.  In addition, results benefited from record revenue in ESF, which includes QED Technologies.

This MD&A, as well as disclosures included elsewhere in this Annual Report on Form 10-K, are based upon our audited consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingencies. On an ongoing basis, we evaluate the estimates used, including those related to bad debt expense, inventory valuation,business combinations, asset retirement obligations, impairment of long-lived assets, goodwill and investments, business combinations, goodwill, other intangible assets, share-based compensation, income taxes and contingencies. We base our estimates on historical experience, current conditions and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources, as well as for identifying and assessing our accounting treatment with respect to commitments and contingencies. Actual results may differ from these estimates under different assumptions or conditions. We believe the following critical accounting policies involve significant judgments and estimates used in the preparation of our consolidated financial statements.