Document_and_Entity_Informatio
Document and Entity Information (USD $) | 3 Months Ended | ||
Dec. 31, 2014 | Jan. 31, 2015 | Mar. 31, 2014 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | CABOT MICROELECTRONICS CORP | ||
Entity Central Index Key | 1102934 | ||
Current Fiscal Year End Date | -21 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $1,030,587,000 | ||
Entity Common Stock, Shares Outstanding | 24,074,291 | ||
Document Fiscal Year Focus | 2015 | ||
Document Fiscal Period Focus | Q1 | ||
Document Type | 10-Q | ||
Amendment Flag | FALSE | ||
Document Period End Date | 31-Dec-14 |
CONSOLIDATED_STATEMENTS_OF_INC
CONSOLIDATED STATEMENTS OF INCOME (USD $) | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
CONSOLIDATED STATEMENTS OF INCOME [Abstract] | ||
Revenue | $111,934 | $100,515 |
Cost of goods sold | 54,960 | 52,801 |
Gross profit | 56,974 | 47,714 |
Operating expenses: | ||
Research, development and technical | 15,018 | 14,571 |
Selling and marketing | 7,639 | 6,707 |
General and administrative | 11,751 | 10,726 |
Total operating expenses | 34,408 | 32,004 |
Operating income | 22,566 | 15,710 |
Interest expense | 906 | 872 |
Other income, net | 1,057 | 617 |
Income before income taxes | 22,717 | 15,455 |
Provision for income taxes | 2,801 | 4,147 |
Net income | $19,916 | $11,308 |
Basic earnings per share (in dollars per share) | $0.83 | $0.47 |
Weighted average basic shares outstanding (in shares) | 23,651,405 | 23,589,627 |
Diluted earnings per share (in dollars per share) | $0.80 | $0.45 |
Weighted average diluted shares outstanding (in shares) | 24,485,602 | 24,622,960 |
CONSOLIDATED_STATEMENTS_OF_COM
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME [Abstract] | ||
Net income | $19,916 | $11,308 |
Other comprehensive income (loss), net of tax: | ||
Foreign currency translation adjustment | -8,332 | -4,760 |
Net unrealized losses on cash flow hedges | -169 | 0 |
Unrealized Gain on Investment | 0 | 151 |
Other comprehensive income (loss), net of tax | -8,501 | -4,609 |
Comprehensive income | $11,415 | $6,699 |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Dec. 31, 2014 | Sep. 30, 2014 |
In Thousands, unless otherwise specified | ||
Current assets: | ||
Cash and cash equivalents | $295,429 | $284,155 |
Accounts receivable, less allowance for doubtful accounts of $1,311 at December 31, 2014, and $1,392 at September 30, 2014 | 61,365 | 60,693 |
Inventories | 62,618 | 64,979 |
Prepaid expenses and other current assets | 16,940 | 10,645 |
Deferred income taxes | 8,105 | 7,521 |
Total current assets | 444,457 | 427,993 |
Property, plant and equipment, net | 95,299 | 100,821 |
Goodwill | 41,866 | 43,245 |
Other intangible assets, net | 6,418 | 7,163 |
Deferred income taxes | 8,494 | 11,353 |
Other long-term assets | 11,540 | 10,592 |
Total assets | 608,074 | 601,167 |
Current liabilities: | ||
Accounts payable | 13,137 | 15,304 |
Accrued expenses, income taxes payable and other current liabilities | 31,832 | 31,394 |
Current portion of long-term debt | 8,750 | 8,750 |
Total current liabilities | 53,719 | 55,448 |
Long-term debt, net of current portion | 161,875 | 164,063 |
Deferred income taxes | 355 | 510 |
Other long-term liabilities | 9,080 | 9,144 |
Total liabilities | 225,029 | 229,165 |
Commitments and contingencies (Note 9) | ||
Stockholders' equity: | ||
Common Stock: Authorized: 200,000,000 shares, $0.001 par value; Issued: 32,520,823 shares at December 31, 2014, and 31,927,601 shares at September 30, 2014 | 33 | 32 |
Capital in excess of par value of common stock | 454,123 | 437,266 |
Retained earnings | 247,858 | 227,942 |
Accumulated other comprehensive income | 754 | 9,255 |
Treasury stock at cost, 8,506,276 shares at December 31, 2014, and 8,142,687 shares at September 30, 2014 | -319,723 | -302,493 |
Total stockholders' equity | 383,045 | 372,002 |
Total liabilities and stockholders' equity | $608,074 | $601,167 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Dec. 31, 2014 | Sep. 30, 2014 |
In Thousands, except Share data, unless otherwise specified | ||
Current assets | ||
Allowance for doubtful accounts | $1,311 | $1,392 |
Stockholders' equity | ||
Common stock: Authorized | 200,000,000 | 200,000,000 |
Common stock: par value | $0.00 | $0.00 |
Common stock: Issued | 32,520,823 | 31,927,601 |
Treasury stock at cost, shares | 8,506,276 | 8,142,687 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Cash flows from operating activities: | ||
Net income | $19,916 | $11,308 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 4,731 | 5,009 |
Provision for doubtful accounts | -12 | -122 |
Share-based compensation expense | 3,407 | 3,366 |
Deferred income tax expense | 3,531 | 4,733 |
Non-cash foreign exchange gain | -50 | -60 |
Gain on disposal of property, plant and equipment | -150 | -150 |
Other | -105 | -175 |
Changes in operating assets and liabilities: | ||
Accounts receivable | -2,846 | 1,311 |
Inventories | 243 | -3,817 |
Prepaid expenses and other assets | -6,763 | -10,120 |
Accounts payable | -906 | -363 |
Accrued expenses, income taxes payable and other liabilities | 656 | -10,581 |
Net cash provided by operating activities | 21,652 | 339 |
Cash flows from investing activities: | ||
Additions to property, plant and equipment | -2,527 | -3,690 |
Proceeds from the sale of property, plant and equipment | 160 | 160 |
Proceeds from the sale of investments | 0 | 2,113 |
Net cash used in investing activities | -2,367 | -1,417 |
Cash flows from financing activities: | ||
Repayment of long-term debt | -2,188 | -2,187 |
Repurchases of common stock | -17,230 | -10,072 |
Net proceeds from issuance of stock | 11,424 | 32,606 |
Tax benefits associated with share-based compensation expense | 1,886 | 1,921 |
Net cash provided by (used in) financing activities | -6,108 | 22,268 |
Effect of exchange rate changes on cash | -1,903 | -756 |
Increase in cash and cash equivalents | 11,274 | 20,434 |
Cash and cash equivalents at beginning of period | 284,155 | 226,029 |
Cash and cash equivalents at end of period | 295,429 | 246,463 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Purchases of property, plant and equipment in accrued liabilities and accounts payable at the end of the period | 648 | 1,408 |
Issuance of restricted stock | $7,099 | $7,067 |
BACKGROUND_AND_BASIS_OF_PRESEN
BACKGROUND AND BASIS OF PRESENTATION | 3 Months Ended |
Dec. 31, 2014 | |
BACKGROUND AND BASIS OF PRESENTATION [Abstract] | |
BACKGROUND AND BASIS OF PRESENTATION | 1. BACKGROUND AND BASIS OF PRESENTATION |
Cabot Microelectronics Corporation ("Cabot Microelectronics'', "the Company'', "us'', "we'' or "our'') supplies high-performance polishing slurries and pads used in the manufacture of advanced integrated circuit (IC) devices within the semiconductor industry, in a process called chemical mechanical planarization (CMP). CMP is a polishing process used by IC device manufacturers to planarize or flatten many of the multiple layers of material that are deposited upon silicon wafers in the production of advanced ICs. Our products play a critical role in the production of advanced IC devices, thereby enabling our customers to produce smaller, faster and more complex IC devices with fewer defects. We develop, produce and sell CMP slurries for polishing many of the conducting and insulating materials used in IC devices, and also 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 where we believe we can leverage our expertise in CMP consumables for the semiconductor industry to develop products for demanding polishing applications in other industries. For additional information, refer to Part 1, Item 1, “Business”, in our Annual Report on Form 10-K for the fiscal year ended September 30, 2014. | |
The unaudited consolidated financial statements have been prepared by Cabot Microelectronics Corporation pursuant to the rules of the Securities and Exchange Commission (SEC) and accounting principles generally accepted in the United States of America. In the opinion of management, these unaudited consolidated financial statements include all normal recurring adjustments necessary for the fair presentation of Cabot Microelectronics’ financial position as of December 31, 2014, cash flows for the three months ended December 31, 2014, and December 31, 2013, and results of operations for the three months ended December 31, 2014, and December 31, 2013. The results of operations for the three months ended December 31, 2014 may not be indicative of results to be expected for future periods, including the fiscal year ending September 30, 2015. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in Cabot Microelectronics’ Annual Report on Form 10-K for the fiscal year ended September 30, 2014. | |
In conjunction with our financial statement revision, which was discussed in our Annual Report on Form 10-K for the fiscal year ended September 30, 2014, we have reclassified $172 between prepaid expense and income taxes payable within the operating section of the Consolidated Statement of Cash Flows for the period ended December 31, 2013. The consolidated financial statements include the accounts of Cabot Microelectronics and its subsidiaries. All intercompany transactions and balances between the companies have been eliminated as of December 31, 2014. |
FAIR_VALUE_OF_FINANCIAL_INSTRU
FAIR VALUE OF FINANCIAL INSTRUMENTS | 3 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS [Abstract] | |||||||||||||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | 2. FAIR VALUE OF FINANCIAL INSTRUMENTS | ||||||||||||||||
Fair value is defined as the price that would be received from the sale of an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The FASB established a three-level hierarchy for disclosure based on the extent and level of judgment used to estimate fair value. Level 1 inputs consist of valuations based on quoted market prices in active markets for identical assets or liabilities. Level 2 inputs consist of valuations based on quoted prices for similar assets or liabilities, quoted prices for identical assets or liabilities in an inactive market, or other observable inputs. Level 3 inputs consist of valuations based on unobservable inputs that are supported by little or no market activity. | |||||||||||||||||
The following table presents financial instruments, other than long-term debt, that we measured at fair value on a recurring basis at December 31, 2014 and September 30, 2014. See Note 7 for a detailed discussion of our long-term debt. We have classified the following assets and liabilities in accordance with the fair value hierarchy set forth in the applicable standards. In instances where the inputs used to measure the fair value of an asset fall into more than one level of the hierarchy, we have classified them based on the lowest level input that is significant to the determination of the fair value. | |||||||||||||||||
31-Dec-14 | Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Fair Value | |||||||||||||||||
Assets: | |||||||||||||||||
Cash and cash equivalents | $ | 295,429 | $ | - | $ | - | $ | 295,429 | |||||||||
Other long-term investments | 1,768 | - | - | 1,768 | |||||||||||||
Derivative financial instruments | - | 825 | - | 825 | |||||||||||||
Total assets | $ | 297,197 | $ | 825 | $ | - | $ | 298,022 | |||||||||
Liabilities: | |||||||||||||||||
Derivative financial instruments | - | 1,197 | - | 1,197 | |||||||||||||
Total liabilities | $ | - | $ | 1,197 | $ | - | $ | 1,197 | |||||||||
30-Sep-14 | Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Fair Value | |||||||||||||||||
Assets: | |||||||||||||||||
Cash and cash equivalents | $ | 284,155 | $ | - | $ | - | $ | 284,155 | |||||||||
Other long-term investments | 1,654 | - | - | 1,654 | |||||||||||||
Derivative financial instruments | - | 100 | - | 100 | |||||||||||||
Total assets | $ | 285,809 | $ | 100 | $ | - | $ | 285,909 | |||||||||
Liabilities: | |||||||||||||||||
Derivative financial instruments | - | 270 | - | 270 | |||||||||||||
Total liabilities | $ | - | $ | 270 | $ | - | $ | 270 | |||||||||
Our cash and cash equivalents consist of various bank accounts used to support our operations and investments in institutional money-market funds which are traded in active markets. The other long-term investments are included in other long-term assets on our Consolidated Balance Sheet. Our other long-term investments represent the fair value of investments under the Cabot Microelectronics Supplemental Employee Retirement Plan (SERP), which is a nonqualified supplemental savings plan. The fair value of the investments is determined through quoted market prices within actively traded markets. Although the investments are allocated to individual participants and investment decisions are made solely by those participants, the SERP is a nonqualified plan. Consequently, the Company owns the assets and the related offsetting liability for disbursement until such time a participant makes a qualifying withdrawal. The long-term asset was adjusted to $1,768 in the first quarter of fiscal 2015 to reflect its fair value as of December 31, 2014. | |||||||||||||||||
In the first quarter of fiscal 2015, we entered into floating-to-fixed interest rate swap agreements to hedge the variability in LIBOR-based interest payments on a portion of our outstanding variable rate debt. These interest rate swaps represent our primary use of derivative financial instruments. The fair value of our derivative instruments is estimated using standard valuation models using market-based observable inputs over the contractual term, including one-month LIBOR-based yield curves, among others. We consider the risk of nonperformance, including counterparty credit risk, in the calculation of the fair value of derivative financial instruments. See Note 8 of this Form 10-Q for more information on our use of derivative financial instruments. |
INVENTORIES
INVENTORIES | 3 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
INVENTORIES [Abstract] | |||||||||
INVENTORIES | 3. INVENTORIES, NET | ||||||||
Inventories, net consisted of the following: | |||||||||
December 31, | September 30, | ||||||||
2014 | 2014 | ||||||||
Raw materials | $ | 33,358 | $ | 37,009 | |||||
Work in process | 5,242 | 4,505 | |||||||
Finished goods | 24,018 | 23,465 | |||||||
Total | $ | 62,618 | $ | 64,979 |
GOODWILL_AND_OTHER_INTANGIBLE_
GOODWILL AND OTHER INTANGIBLE ASSETS | 3 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
GOODWILL AND OTHER INTANGIBLE ASSETS [Abstract] | |||||||||||||||||
GOODWILL AND OTHER INTANGIBLE ASSETS | 4. GOODWILL AND OTHER INTANGIBLE ASSETS | ||||||||||||||||
Goodwill was $41,866 as of December 31, 2014, and $43,245 as of September 30, 2014. The decrease in goodwill was due to foreign exchange fluctuations of the New Taiwan dollar. | |||||||||||||||||
The components of other intangible assets are as follows: | |||||||||||||||||
31-Dec-14 | 30-Sep-14 | ||||||||||||||||
Gross Carrying | Accumulated | Gross Carrying | Accumulated | ||||||||||||||
Amount | Amortization | Amount | Amortization | ||||||||||||||
Other intangible assets subject to amortization: | |||||||||||||||||
Product technology | $ | 8,167 | $ | 6,896 | $ | 8,278 | $ | 6,750 | |||||||||
Acquired patents and licenses | 8,270 | 7,611 | 8,270 | 7,534 | |||||||||||||
Trade secrets and know-how | 2,550 | 2,550 | 2,550 | 2,550 | |||||||||||||
Customer relationships, distribution rights and other | 11,799 | 8,501 | 12,193 | 8,484 | |||||||||||||
Total other intangible assets subject to amortization | 30,786 | 25,558 | 31,291 | 25,318 | |||||||||||||
Total other intangible assets not subject to amortization* | 1,190 | 1,190 | |||||||||||||||
Total other intangible assets | $ | 31,976 | $ | 25,558 | $ | 32,481 | $ | 25,318 | |||||||||
* | Total other intangible assets not subject to amortization consist primarily of trade names. | ||||||||||||||||
Amortization expense on our other intangible assets was $593 and $656 for the three months ended December 31, 2014 and 2013, respectively. Estimated future amortization expense for the five succeeding fiscal years is as follows: | |||||||||||||||||
Fiscal Year | Estimated Amortization Expense | ||||||||||||||||
Remainder of 2015 | $ | 1,744 | |||||||||||||||
2016 | 1,925 | ||||||||||||||||
2017 | 1,106 | ||||||||||||||||
2018 | 436 | ||||||||||||||||
2019 | 11 | ||||||||||||||||
Goodwill and indefinite-lived intangible assets are tested for impairment annually in the fourth quarter of the fiscal year or more frequently if indicators of potential impairment exist, using a fair-value-based approach. The recoverability of goodwill is measured at the reporting unit level, which is defined as either an operating segment or one level below an operating segment. An entity has the option to assess the fair value of a reporting unit either using a qualitative analysis (“step zero”) or a discounted cash flow analysis (“step one”). Similarly, an entity has the option to use a step zero or a step one approach to determine the recoverability of indefinite-lived intangible assets. In fiscal 2014, we chose to use a step one analysis for both goodwill impairment and for indefinite-lived intangible asset impairment. | |||||||||||||||||
We completed our annual impairment test during our fourth quarter of fiscal 2014 and concluded that no impairment existed. There were no indicators of potential impairment during the quarter ended December 31, 2014, so it was not necessary to perform an impairment review for goodwill and indefinite-lived intangible assets during the quarter. There have been no cumulative impairment charges recorded on the goodwill for any of our reporting units. |
OTHER_LONGTERM_ASSETS
OTHER LONG-TERM ASSETS | 3 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
OTHER LONG-TERM ASSETS [Abstract] | |||||||||
OTHER LONG-TERM ASSETS | 5. OTHER LONG-TERM ASSETS | ||||||||
Other long-term assets consisted of the following: | |||||||||
December 31, | September 30, | ||||||||
2014 | 2014 | ||||||||
Auction rate securities (ARS) | $ | 5,895 | $ | 5,895 | |||||
Other long-term assets | 3,877 | 3,043 | |||||||
Other long-term investments | 1,768 | 1,654 | |||||||
Total | $ | 11,540 | $ | 10,592 | |||||
We classify our ARS investments as held-to-maturity and have recorded them at cost. Our ARS investments at December 31, 2014 consisted of two tax exempt municipal debt securities with a total par value of $5,895, both of which have maturities greater than ten years. The ARS market began to experience illiquidity in early 2008, and this illiquidity continues. Despite this lack of liquidity, there have been no defaults in payment of the underlying securities and interest income on these holdings continues to be received on scheduled interest payment dates. Our ARS, when purchased, were issued by A-rated municipalities. Although the credit ratings of both municipalities have been downgraded since our original investment, one of the ARS is credit enhanced with bond insurance, and the other has become an obligation of the bond insurer. Both ARS currently carry a credit rating of AA- by Standard & Poor’s. | |||||||||
The fair value of our ARS, determined using level 2 fair value inputs, was $5,280 as of December 31, 2014. We have classified our ARS as held-to-maturity based on our intention and ability to hold the securities until maturity. We believe the gross unrecognized loss of $615 is due to the illiquidity in the ARS market, rather than to credit loss. Although we believe these securities will ultimately be collected in full, we believe that it is not likely that we will be able to monetize the securities in our next business cycle (which for us is generally one year). We will continue to monitor our ARS for impairment indicators, which may require us to record an impairment charge that is deemed other-than-temporary. In November 2011, the municipality that issued one of our ARS filed for bankruptcy protection. As a result of the approval of the municipality’s reorganization plan, and our voting elections, we received 65% of the par value outstanding, or $2,113, during the quarter ended December 31, 2013, and we reversed the $234 temporary impairment that we previously recorded. | |||||||||
Other long-term assets are comprised of the long-term portion of prepaid unamortized debt costs as well as miscellaneous deposits and prepayments on contracts extending beyond the next 12 months. As discussed in Note 2, we recorded a long-term asset and a corresponding long-term liability of $1,768 representing the fair value of our SERP investments as of December 31, 2014. |
ACCRUED_EXPENSES_INCOME_TAXES_
ACCRUED EXPENSES, INCOME TAXES PAYABLE AND OTHER CURRENT LIABILITIES | 3 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
ACCRUED EXPENSES, INCOME TAXES PAYABLE AND OTHER CURRENT LIABILITIES [Abstract] | |||||||||
ACCRUED EXPENSES, INCOME TAXES PAYABLE AND OTHER CURRENT LIABILITIES | |||||||||
6. ACCRUED EXPENSES, INCOME TAXES PAYABLE AND OTHER CURRENT LIABILITIES | |||||||||
Accrued expenses, income taxes payable and other current liabilities consisted of the following: | |||||||||
December 31, | September 30, | ||||||||
2014 | 2014 | ||||||||
Accrued compensation | $ | 14,638 | $ | 16,980 | |||||
Goods and services received, not yet invoiced | 2,288 | 3,167 | |||||||
Deferred revenue and customer advances | 775 | 1,223 | |||||||
Warranty accrual | 246 | 246 | |||||||
Income taxes payable | 7,171 | 5,448 | |||||||
Taxes, other than income taxes | 1,350 | 1,182 | |||||||
Other | 5,364 | 3,148 | |||||||
Total | $ | 31,832 | $ | 31,394 | |||||
Accrued compensation at December 31, 2014 includes $1,742 for severance payments to be made to three executive officers who resigned from their positions. |
DEBT
DEBT | 3 Months Ended | ||||
Dec. 31, 2014 | |||||
DEBT [Abstract] | |||||
DEBT | |||||
7. DEBT | |||||
On February 13, 2012, we entered into a credit agreement (the “Credit Agreement”) among the Company, as Borrower, Bank of America, N.A., as administrative agent, swing line lender and an L/C issuer, Bank of America Merrill Lynch and J.P. Morgan Securities LLC, as joint lead arrangers and joint book managers, JPMorgan Chase Bank, N.A., as syndication agent, and Wells Fargo Bank, N.A. as documentation agent. The Credit Agreement provided us with a $175,000 term loan (the “Term Loan”), which we drew on February 27, 2012 to fund approximately half of the special cash dividend we paid to our stockholders on March 1, 2012, and a $100,000 revolving credit facility (the “Revolving Credit Facility”), which has never been drawn, with sub-limits for multicurrency borrowings, letters of credit and swing-line loans. The Term Loan and the Revolving Credit Facility are referred to as the “Credit Facilities.” On June 27, 2014, we entered into an amendment (the “Amendment”) to the Credit Agreement, which (i) increased term loan commitments by $17,500, from $157,500 to $175,000, the same level as the original amount under the Credit Agreement at its inception in 2012; (ii) increased the uncommitted accordion feature on the Revolving Credit Facility from $75,000 to $100,000; (iii) extended the expiration date of the Credit Facilities from February 13, 2017 to June 27, 2019; (iv) relaxed the consolidated leverage ratio financial covenant; and (v) revised certain pricing terms and other terms within the Credit Agreement. On June 27, 2014, we drew the $17,500 of increased term loan commitments, bringing the total outstanding commitments under the Term Loan to $175,000. | |||||
Borrowings under the amended Credit Facilities (other than in respect of swing-line loans) bear interest at a rate per annum equal to the “Applicable Rate” (as defined below) plus, at our option, either (1) a LIBOR rate determined by reference to the cost of funds for deposits in the relevant currency for the interest period relevant to such borrowing or (2) the “Base Rate”, which is the highest of (x) the prime rate of Bank of America, N.A., (y) the federal funds rate plus 1/2 of 1.00% and (z) the one-month LIBOR rate plus 1.00%. The current Applicable Rate for borrowings under the Credit Facilities is 1.50% with respect to LIBOR borrowings and 0.25% with respect to Base Rate borrowings, with such Applicable Rate subject to adjustment based on our consolidated leverage ratio. Swing-line loans bear interest at the Base Rate plus the Applicable Rate for Base Rate loans under the Revolving Credit Facility. In addition to paying interest on outstanding principal under the Credit Agreement, we pay a commitment fee to the lenders under the Revolving Credit Facility in respect of the unutilized commitments thereunder. The fee ranges from 0.20% to 0.30%, based on our consolidated leverage ratio. Interest expense and commitment fees are paid according to the relevant interest period and no less frequently than at the end of each calendar quarter. We paid $2,658 in arrangement fees, upfront fees and administration fees in February 2012 and we paid an additional $550 in upfront fees and arrangement fees in June 2014, of which $404 remains in prepaid expense and other current assets and $1,368 remains other long-term assets on our Consolidated Balance Sheet as of December 31, 2014. We also pay letter of credit fees as necessary. The Term Loan has periodic scheduled repayments; however, we may voluntarily prepay the Credit Facilities without premium or penalty, subject to customary “breakage” fees and reemployment costs in the case of LIBOR borrowings. All obligations under the Credit Agreement are guaranteed by certain of our existing and future direct and indirect domestic subsidiaries. The obligations under the Credit Agreement and guarantees of those obligations are secured, subject to certain exceptions, by first priority liens and security interests in the assets of the Company and certain of its domestic subsidiaries. | |||||
In the first quarter of fiscal 2015, we entered into interest rate swap agreements that have the economic effect of converting fifty percent of our variable rate debt into fixed rate debt at a weighted average fixed rate of 1.5% plus the Applicable Rate defined above. See Notes 2 and 8 for additional information on the interest rate swap agreements. | |||||
The Credit Agreement contains covenants that restrict the ability of the Company and its subsidiaries to take certain actions, including, among other things and subject to certain significant exceptions: creating liens, incurring indebtedness, making investments, engaging in mergers, selling property, paying dividends or amending organizational documents. The Credit Agreement requires us to comply with certain financial ratio maintenance covenants. These include a maximum consolidated leverage ratio of 3.00 to 1.00 through December 31, 2015 and a minimum consolidated fixed charge coverage ratio of 1.25 to 1.00. The maximum consolidated leverage ratio will decrease to 2.75 to 1.00 from January 1, 2016 through the expiration of the Credit Agreement. As of December 31, 2014, our consolidated leverage ratio was 1.51 to 1.00 and our consolidated fixed charge coverage ratio was 7.25 to 1.00. The Credit Agreement also contains customary affirmative covenants and events of default. We believe we are in compliance with these covenants. | |||||
At December 31, 2014, the fair value of the Term Loan, using level 2 inputs, approximates its carrying value of $170,625 as the loan bears a floating market rate of interest. As of December 31, 2014, $8,750 of the debt outstanding is classified as short-term. | |||||
Principal repayments of the Term Loan are generally made on the last calendar day of each quarter if that day is considered to be a business day. As of December 31, 2014, scheduled principal repayments of the Term Loan were as follows: | |||||
Fiscal Year | Principal Repayments | ||||
Remainder of 2015 | $ | 6,562 | |||
2016 | 8,750 | ||||
2017 | 7,656 | ||||
2018 | 14,219 | ||||
2019 | 133,438 | ||||
Total | $ | 170,625 |
DERIVATIVE_FINANCIAL_INSTRUMEN
DERIVATIVE FINANCIAL INSTRUMENTS | 3 Months Ended | |||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||
DERIVATIVE FINANCIAL INSTRUMENTS [Abstract] | ||||||||||||||||||
DERIVATIVE FINANCIAL INSTRUMENTS | ||||||||||||||||||
8. DERIVATIVE FINANCIAL INSTRUMENTS | ||||||||||||||||||
We are exposed to various market risks, including interest rates and foreign currency exchange rates . We enter into various derivative transactions to mitigate the volatility associated with these exposures. We have policies in place that define acceptable instrument types we may enter into and we have established controls to limit our market risk exposure. We do not use derivative financial instruments for trading or speculative purposes. In addition, all derivatives, whether designated in hedging relationships or not, are required to be recorded on the balance sheet at fair value on a gross basis. | ||||||||||||||||||
Cash Flow Hedges – Interest Rate Swap Agreements | ||||||||||||||||||
In the first quarter of fiscal 2015, we entered into floating-to-fixed interest rate swap agreements to hedge the variability in LIBOR-based interest payments on $86,406 of our outstanding variable rate debt. The notional amount of the swaps decreases each quarter by an amount in proportion to our scheduled quarterly principal payment of debt. The notional value of the swaps was $85,313 as of December 31, 2014, and the swaps are scheduled to expire on June 27, 2019. | ||||||||||||||||||
We have designated these swap agreements as cash flow hedges pursuant to ASC 815, “Derivatives and Hedging”. As cash flow hedges, unrealized gains are recognized as assets and unrealized losses are recognized as liabilities. Unrealized gains and losses are designated as effective or ineffective based on a comparison of the changes in fair value of the interest rate swaps and the change in fair value of the underlying exposures being hedged. The effective portion is recorded as a component of accumulated other comprehensive income or loss, while the ineffective portion will be recorded as a component of interest expense. Changes in the method by which we pay interest from one-month LIBOR to another rate of interest could create ineefectiveness in the swaps, and result in amounts being reclassified from other comprehensive income into net income. Hedge effectiveness is tested quarterly to determine if hedge treatment is appropriate. | ||||||||||||||||||
Foreign Currency Contracts Not Designated as Hedges | ||||||||||||||||||
Periodically we enter into forward foreign exchange contracts in an effort to mitigate the risks associated with currency fluctuations on certain foreign currency balance sheet exposures. Our foreign exchange contracts do not qualify for hedge accounting; therefore, the gains and losses resulting from the impact of currency exchange rate movements on our forward foreign exchange contracts are recognized as other income or expense in the accompanying consolidated income statements in the period in which the exchange rates change. As of December 31, 2014 and September 30, 2014, respectively, the notional amounts of the forward contracts we held to purchase U.S. dollars in exchange for other international currencies were $3,012 and $4,695, respectively, and the notional amounts of forward contracts we held to sell U.S. dollars in exchange for other international currencies were $25,900 and $18,425, respectively. | ||||||||||||||||||
The fair value of our derivative instruments included in the Consolidated Balance Sheet, which was determined using level 2 inputs, was as follows: | ||||||||||||||||||
Asset Derivatives | Liability Derivatives | |||||||||||||||||
Balance Sheet Location | 31-Dec-14 | 30-Sep-14 | 31-Dec-14 | 30-Sep-14 | ||||||||||||||
Derivatives designated as hedging instruments | ||||||||||||||||||
Interest rate swap contracts | Other noncurrent assets | $ | 808 | $ | - | $ | - | $ | - | |||||||||
Accrued expenses and other current liabilities | $ | - | $ | - | $ | 977 | $ | - | ||||||||||
Derivatives not designated as hedging instruments | ||||||||||||||||||
Foreign exchange contracts | Prepaid expenses and other current assets | $ | 17 | $ | 100 | $ | - | $ | - | |||||||||
Accrued expenses and other current liabilities | $ | - | $ | - | $ | 220 | $ | 270 | ||||||||||
The following table summarizes the effect of our derivative instruments on our Consolidated Statement of Income for the three months ended December 31, 2013 and 2014: | ||||||||||||||||||
Gain (Loss) Recognized in Statement of Income | ||||||||||||||||||
Three Months Ended | ||||||||||||||||||
Statement of Income Location | 31-Dec-14 | 31-Dec-13 | ||||||||||||||||
Derivatives not designated as hedging instruments | ||||||||||||||||||
Foreign exchange contracts | Other income (expense), net | $ | (1,336 | ) | $ | (392 | ) | |||||||||||
The interest rate swap agreements were deemed to be effective since inception, so there was no impact on our Consolidated Statement of Income. We recorded a $169 unrealized loss in accumulated comprehensive income during the quarter ended December 31, 2014 for these interest rate swaps. We do not expect any material amounts related to our interest rate swaps will be reclassified into earnings during the next 12 months. |
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended | ||||
Dec. 31, 2014 | |||||
COMMITMENTS AND CONTINGENCIES [Abstract] | |||||
COMMITMENTS AND CONTINGENCIES | 9. COMMITMENTS AND CONTINGENCIES | ||||
LEGAL PROCEEDINGS | |||||
While we are not involved in any legal proceedings that we believe will have a material impact on our consolidated financial position, results of operations or cash flows, we periodically become a party to legal proceedings in the ordinary course of business. | |||||
Refer to Note 16 of “Notes to the Consolidated Financial Statements” in Item 8 of Part II of our Annual Report on Form 10-K for the fiscal year ended September 30, 2014, for additional information regarding commitments and contingencies. | |||||
PRODUCT WARRANTIES | |||||
We maintain a warranty reserve that reflects management’s best estimate of the cost to replace product that does not meet our specifications and customers’ performance requirements, and costs related to such replacement. The warranty reserve is based upon a historical product replacement rate, adjusted for any specific known conditions or circumstances. Additions and deductions to the warranty reserve are recorded in cost of goods sold. Our warranty reserve activity during the first three months of fiscal 2015 was as follows: | |||||
Balance as of September 30, 2014 | $ | 246 | |||
Reserve for product warranty during the reporting period | 164 | ||||
Settlement of warranty | (164 | ) | |||
Balance as of December 31, 2014 | $ | 246 | |||
PURCHASE OBLIGATIONS | |||||
Purchase obligations include our take-or-pay arrangements with suppliers, and purchase orders and other obligations entered into in the normal course of business regarding the purchase of goods and services. We operate under a fumed silica supply agreement with Cabot Corporation, our former parent company which is not a related party, which requires us to purchase certain minimum quantities of fumed silica each year of the agreement, and to pay a shortfall if we purchase less than the minimum. The agreement became effective as of January 1, 2013 with an initial term of four years. As of December 31, 2014, purchase obligations include $67,546 of contractual commitments related to our Cabot Corporation supply agreement for fumed silica. | |||||
POSTRETIREMENT OBLIGATIONS IN FOREIGN JURISDICTIONS | |||||
We have unfunded defined benefit plans covering employees in certain foreign jurisdictions as required by local law. Benefit costs, consisting primarily of service costs, are recorded as fringe benefit expense under cost of goods sold and operating expenses in our Consolidated Statements of Income. The projected benefit obligations and accumulated benefit obligations under all such unfunded plans are updated annually during the fourth quarter of the fiscal year. Benefit payments under all such unfunded plans to be paid over the next 10 years are expected to be immaterial. For more information regarding these plans, refer to Note 16 of “Notes to the Consolidated Financial Statements” included in Item 8 of Part II of our Annual Report on Form 10-K for the fiscal year ended September 30, 2014. |
ACCUMULATED_OTHER_COMPREHENSIV
ACCUMULATED OTHER COMPREHENSIVE INCOME | 3 Months Ended | ||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||
ACCUMULATED OTHER COMPREHENSIVE INCOME [Abstract] | |||||||||||||||||||||
ACCUMULATED OTHER COMPREHENSIVE INCOME [Text Block] | 10. ACCUMULATED OTHER COMPREHENSIVE INCOME | ||||||||||||||||||||
The components of accumulated other comprehensive income (AOCI), including the reclassification adjustments for items that are reclassified from AOCI to net income, are shown below: | |||||||||||||||||||||
Foreign Currency Translation Adjustment | Unrealized Gain (Loss) on Cash Flow Hedges | Pension and Other Postretirement Liabilities | Unrealized Gain (Loss) on Marketable Securities | Accumulated Other Comprehensive Income | |||||||||||||||||
Balance September 30, 2014 | $ | 10,115 | $ | - | $ | (860 | ) | $ | - | $ | 9,255 | ||||||||||
Increase (decrease) in OCI | (9,958 | ) | (169 | ) | - | - | (10,127 | ) | |||||||||||||
Reclassifications | - | - | - | - | - | ||||||||||||||||
Income tax benefit (expense) | 1,626 | - | - | - | 1,626 | ||||||||||||||||
Balance December 31, 2014 | $ | 1,783 | $ | (169 | ) | $ | (860 | ) | $ | - | $ | 754 | |||||||||
Foreign Currency Translation Adjustment | Unrealized Gain (Loss) on Cash Flow Hedges | Pension and Other Postretirement Liabilities | Unrealized Gain (Loss) on Marketable Securities | Accumulated Other Comprehensive Income | |||||||||||||||||
Balance September 30, 2013 | $ | 18,251 | $ | - | $ | (664 | ) | $ | (151 | ) | $ | 17,436 | |||||||||
Increase (decrease) in OCI | (5,765 | ) | - | - | 234 | (5,531 | ) | ||||||||||||||
Reclassifications | - | - | - | - | - | ||||||||||||||||
Income tax benefit (expense) | 1,005 | - | - | (83 | ) | 922 | |||||||||||||||
Balance December 31, 2013 | $ | 13,491 | $ | - | $ | (664 | ) | $ | - | $ | 12,827 | ||||||||||
Changes in our pension and postretirement liabilities are not material on a quarterly basis, so we record the annual change in accumulated other comprehensive income in the fourth quarter of our fiscal year. |
SHAREBASED_COMPENSATION_PLANS
SHARE-BASED COMPENSATION PLANS | 3 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
SHARE-BASED COMPENSATION PLANS [Abstract] | |||||||||
SHARE-BASED COMPENSATION PLANS | |||||||||
11. SHARE-BASED COMPENSATION PLANS | |||||||||
We issue share-based awards under the following programs: our Cabot Microelectronics Corporation 2012 Omnibus Incentive Plan (OIP); our Cabot Microelectronics Corporation 2007 Employee Stock Purchase Plan, as Amended and Restated January 1, 2010 (ESPP); and, pursuant to the OIP, our Directors’ Deferred Compensation Plan, as amended September 23, 2008 (DDCP), and our 2001 Executive Officer Deposit Share Program (DSP). Prior to March 2012, when our stockholders approved the OIP, we issued share-based payments under our Second Amended and Restated Cabot Microelectronics Corporation 2000 Equity Incentive Plan, as amended and restated September 23, 2008 (EIP); our ESPP, and, pursuant to the EIP, the DDCP and DSP. For additional information regarding these programs, refer to Note 11 of “Notes to the Consolidated Financial Statements” included in Item 8 of Part II of our Annual Report on Form 10-K for the fiscal year ended September 30, 2014. Other than the ESPP, all share-based payments granted beginning March 6, 2012 are made from the OIP, and the EIP is no longer available for any awards. | |||||||||
We record share-based compensation expense for all share-based awards, including stock option grants, restricted stock and restricted stock unit awards and employee stock purchase plan purchases. We calculate share-based compensation expense using the straight-line approach based on awards ultimately expected to vest, which requires the use of an estimated forfeiture rate. Our estimated forfeiture rate is primarily based on historical experience, but may be revised in future periods if actual forfeitures differ from the estimate. We use the Black-Scholes option-pricing model to estimate the grant date fair value of our stock options and employee stock purchase plan purchases. This model requires the input of highly subjective assumptions, including the price volatility of the underlying stock, the expected term of our stock options and the risk-free interest rate. We estimate the expected volatility of our stock options based on a combination of our stock’s historical volatility and the implied volatilities from actively-traded options on our stock. We calculate the expected term of our stock options using historical stock option exercise data, and we add a slight premium to this expected term for employees who meet the definition of retirement eligible pursuant to their grants during the contractual term of the grant. The risk-free interest rate is derived from the U.S. Treasury yield curve in effect at the time of grant. | |||||||||
Share-based compensation expense for the three months ended December 31, 2014, and 2013, was as follows: | |||||||||
Three Months Ended | |||||||||
December 31, | |||||||||
Income statement classifications: | 2014 | 2013 | |||||||
Cost of goods sold | $ | 498 | $ | 480 | |||||
Research, development and technical | 415 | 366 | |||||||
Selling and marketing | 320 | 353 | |||||||
General and administrative | 2,174 | 2,167 | |||||||
Total share-based compensation expense | 3,407 | 3,366 | |||||||
Tax benefit | (1,122 | ) | (1,092 | ) | |||||
Total share-based compensation expense, net of tax | $ | 2,285 | $ | 2,274 | |||||
As previously disclosed in our Current Report on Form 8-K filed on December 16, 2014, we announced that effective January 1, 2015, William P. Noglows would cease to serve as our President and Chief Executive Officer, and continue to serve only as the Executive Chairman of our Board of Directors until at least December 31, 2015. Under an employment letter with the Company dated December 12, 2014, filed as an exhibit to this Form 10-Q, all unvested stock options and restricted stock held by Mr. Noglows as of the date of his termination of service as Executive Chairman will vest in full, according to terms of, and if all service requirements under, the employment letter have been met. We applied the accounting guidance under Accounting Standards Codification (ASC) Topic 218 "Stock Compensation" to determine the additional share-based compensation expense to be recorded as part of the modification of the outstanding equity in the likely event that Mr. Noglows' service as Executive Chairman terminates according to the terms of the employment letter prior to the scheduled vesting of such equity. The additional share-based compensation expense was determined to be $378, which will be recorded ratably between December 12, 2014, the date of the modification, and December 31, 2015, the likely date of his termination of service. In addition, the original fair value of his unvested equity totaling $5,033 will be recorded ratably between the date of modification and December 31, 2015, rather than recording the expense over the original vesting period. | |||||||||
For additional information regarding the estimation of fair value, refer to Note 11 of “Notes to the Consolidated Financial Statements” included in Item 8 of Part II of our Annual Report on Form 10-K for the fiscal year ended September 30, 2014. |
OTHER_INCOME_NET
OTHER INCOME, NET | 3 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
OTHER INCOME, NET [Abstract] | |||||||||
OTHER INCOME, NET | 12. OTHER INCOME, NET | ||||||||
Other income, net, consisted of the following: | |||||||||
Three Months Ended | |||||||||
December 31, | |||||||||
2014 | 2013 | ||||||||
Interest income | $ | 103 | $ | 58 | |||||
Other income (expense) | 954 | 559 | |||||||
Total other income, net | $ | 1,057 | $ | 617 | |||||
Other income (expense) primarily represents gains and losses recorded on transactions denominated in foreign currencies. The increase in other income was primarily due to a reimbursement of overfunding of a foreign benefit plan, partially offset by the impact of foreign currency fluctuations on monetary assets and liabilities denominated in currencies other than the functional currency, net of the gains and losses incurred on forward foreign exchange contracts discussed in Note 8. |
INCOME_TAXES
INCOME TAXES | 3 Months Ended |
Dec. 31, 2014 | |
INCOME TAXES [Abstract] | |
INCOME TAXES | 13. INCOME TAXES |
Our effective income tax rate was 12.3% for the three months ended December 31, 2014 compared to a 26.8% effective income tax rate for the three months ended December 31, 2013. The decrease in the effective tax rate during the first quarter of fiscal 2015 was primarily due to lower tax expense on foreign earnings and the reinstatement of the U.S. research and experimentation tax credit retroactive to January 1, 2014. The retroactive reinstatement of the tax credit reduced our income tax expense for the quarter by approximately $1,124. The Company is currently operating under a tax holiday in South Korea in conjunction with our investment in research, development and manufacturing facilities there. This arrangement allows for a 0% tax in fiscal years 2013, 2014 and 2015, and a tax at 50% of the local statutory rate in effect for fiscal years 2016 and 2017. This tax holiday reduced our income tax provision by approximately $1,177 and $755 in the first quarter of fiscal 2015 and 2014, respectively. |
EARNINGS_PER_SHARE
EARNINGS PER SHARE | 3 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
EARNINGS PER SHARE [Abstract] | |||||||||
EARNINGS PER SHARE | 14. EARNINGS PER SHARE | ||||||||
Basic earnings per share (EPS) is calculated by dividing net income available to common stockholders by the weighted-average number of common shares outstanding during the period, excluding the effects of unvested restricted stock awards with a right to receive non-forfeitable dividends, which are considered participating securities as prescribed by the two-class method under ASC 260. Diluted EPS is calculated in a similar manner, but the weighted-average number of common shares outstanding during the period is increased to include the weighted-average dilutive effect of “in-the-money” stock options and unvested restricted stock shares using the treasury stock method. | |||||||||
The standards of accounting for earnings per share require companies to provide a reconciliation of the numerator and denominator of the basic and diluted earnings per share computations. Basic and diluted earnings per share were calculated as follows: | |||||||||
Three Months Ended | |||||||||
December 31, | |||||||||
2014 | 2013 | ||||||||
Numerator: | |||||||||
Net income | $ | 19,916 | $ | 11,308 | |||||
Less: income attributable to participating securities | (231 | ) | (127 | ) | |||||
Earnings available to common shares | $ | 19,685 | $ | 11,181 | |||||
Denominator: | |||||||||
Weighted average common shares | 23,651,405 | 23,589,627 | |||||||
(Denominator for basic calculation) | |||||||||
Weighted average effect of dilutive securities: | |||||||||
Share-based compensation | 834,197 | 1,033,333 | |||||||
Diluted weighted average common shares | 24,485,602 | 24,622,960 | |||||||
(Denominator for diluted calculation) | |||||||||
Earnings per share: | |||||||||
Basic | $ | 0.83 | $ | 0.47 | |||||
Diluted | $ | 0.8 | $ | 0.45 | |||||
For the three months ended December 31, 2014 and 2013, approximately 0.1 million and 0.5 million shares, respectively, attributable to outstanding stock options were excluded from the calculation of diluted earnings per share because the exercise price of the options was greater than the average market price of our common stock and, therefore, their inclusion would have been anti-dilutive. |
FINANCIAL_INFORMATION_BY_INDUS
FINANCIAL INFORMATION BY INDUSTRY SEGMENT, GEOGRAPHIC AREA AND PRODUCT LINE | 3 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
FINANCIAL INFORMATION BY INDUSTRY SEGMENT, GEOGRAPHIC AREA AND PRODUCT LINE [Abstract] | |||||||||
FINANCIAL INFORMATION BY INDUSTRY SEGMENT, GEOGRAPHIC AREA AND PRODUCT LINE | |||||||||
15. FINANCIAL INFORMATION BY INDUSTRY SEGMENT AND PRODUCT LINE | |||||||||
We operate predominantly in one reportable segment, as defined under ASC 280 – the development, manufacture, and sale of CMP consumables. | |||||||||
Revenue generated by product line for the three months ended December 31, 2014, and 2013, was as follows: | |||||||||
Three Months Ended | |||||||||
December 31, | |||||||||
Revenue: | 2014 | 2013 | |||||||
Tungsten slurries | $ | 45,144 | $ | 37,369 | |||||
Dielectric slurries | 28,183 | 29,946 | |||||||
Other Metals slurries | 19,897 | 17,805 | |||||||
Polishing pads | 8,762 | 7,410 | |||||||
Data storage slurries | 4,366 | 4,982 | |||||||
Engineered Surface Finishes | 5,582 | 3,003 | |||||||
Total revenue | $ | 111,934 | $ | 100,515 |
NEW_ACCOUNTING_PRONOUNCEMENTS
NEW ACCOUNTING PRONOUNCEMENTS | 3 Months Ended |
Dec. 31, 2014 | |
NEW ACCOUNTING PRONOUNCEMENTS [Abstract] | |
NEW ACCOUNTING PRONOUNCEMENTS | 16. NEW ACCOUNTING PRONOUNCEMENTS |
In July 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2013-11, “Income Taxes (Topic 740) – Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists” (ASU 2013-11). The provisions of ASU 2013-11 require an entity to present an unrecognized tax benefit, or a portion of an unrecognized tax benefit, as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward when the related deferred tax asset is available to be utilized. ASU 2013-11 was effective for us beginning October 1, 2014. The adoption of ASU 2013-11 had no impact on our financial statements as we have no such unrecognized tax benefits. | |
In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers” (Topic 606), an updated standard on revenue recognition. ASU 2014-09 provides enhancements to how revenue is reported and improves comparability in the financial statements of companies reporting using IFRS and US GAAP. The core principle of the new standard is for companies to recognize revenue for goods or services in amounts that reflect the consideration to which the company expects to be entitled in exchange for those goods or services. The new standard is intended to enhance disclosures about revenue, provide guidance for transactions that were not previously addressed comprehensively, such as service revenue and contract modifications, and improve guidance for multiple-element arrangements. ASU 2014-09 will be effective for us beginning October 1, 2017, and may be applied on a full retrospective or modified retrospective approach. We are evaluating the impact of implementation of this standard on our financial statements. | |
In June 2014, the FASB issued ASU No. 2014-12, “Accounting for Share-Based Payments When the Terms of an Award Provide that a Performance Target Could be Achieved after the Requisite Service Period” (Topic 718). ASU 2014-14 requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant date fair value of an award, and compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved. The compensation cost should represent the amount attributable to the periods for which the requisite service has been rendered. ASU 2014-09 will be effective for us beginning October 1, 2016 and may be applied on a prospective or retrospective basis. We do not expect the implementation of this standard to have a material effect on our financial statements as we have not granted any awards with a performance condition. | |
In November 2014, the FASB issued ASU No. 2014-17, “Pushdown Accounting, a consensus of the FASB Emerging Issues Task Force” (Topic 805). ASU 2014-17 provide an acquired entity with an option to apply pushdown accounting in its separate financial statements upon occurrence of an event in which an acquirer obtains control of the acquired entity. ASU 2014-17 was effective for us beginning in November 2014. The adoption of ASU 2014-17 had no impact as we have not acquired an entities that issue separate financial statements. |
FAIR_VALUE_OF_FINANCIAL_INSTRU1
FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) | 3 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS [Abstract] | |||||||||||||||||
Schedule of Fair Value of Financial Instruments | The following table presents financial instruments, other than long-term debt, that we measured at fair value on a recurring basis at December 31, 2014 and September 30, 2014. See Note 7 for a detailed discussion of our long-term debt. We have classified the following assets and liabilities in accordance with the fair value hierarchy set forth in the applicable standards. In instances where the inputs used to measure the fair value of an asset fall into more than one level of the hierarchy, we have classified them based on the lowest level input that is significant to the determination of the fair value. | ||||||||||||||||
31-Dec-14 | Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Fair Value | |||||||||||||||||
Assets: | |||||||||||||||||
Cash and cash equivalents | $ | 295,429 | $ | - | $ | - | $ | 295,429 | |||||||||
Other long-term investments | 1,768 | - | - | 1,768 | |||||||||||||
Derivative financial instruments | - | 825 | - | 825 | |||||||||||||
Total assets | $ | 297,197 | $ | 825 | $ | - | $ | 298,022 | |||||||||
Liabilities: | |||||||||||||||||
Derivative financial instruments | - | 1,197 | - | 1,197 | |||||||||||||
Total liabilities | $ | - | $ | 1,197 | $ | - | $ | 1,197 | |||||||||
30-Sep-14 | Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Fair Value | |||||||||||||||||
Assets: | |||||||||||||||||
Cash and cash equivalents | $ | 284,155 | $ | - | $ | - | $ | 284,155 | |||||||||
Other long-term investments | 1,654 | - | - | 1,654 | |||||||||||||
Derivative financial instruments | - | 100 | - | 100 | |||||||||||||
Total assets | $ | 285,809 | $ | 100 | $ | - | $ | 285,909 | |||||||||
Liabilities: | |||||||||||||||||
Derivative financial instruments | - | 270 | - | 270 | |||||||||||||
Total liabilities | $ | - | $ | 270 | $ | - | $ | 270 |
INVENTORIES_Tables
INVENTORIES (Tables) | 3 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
INVENTORIES [Abstract] | |||||||||
Schedule of inventories | Inventories, net consisted of the following: | ||||||||
December 31, | September 30, | ||||||||
2014 | 2014 | ||||||||
Raw materials | $ | 33,358 | $ | 37,009 | |||||
Work in process | 5,242 | 4,505 | |||||||
Finished goods | 24,018 | 23,465 | |||||||
Total | $ | 62,618 | $ | 64,979 |
GOODWILL_AND_OTHER_INTANGIBLE_1
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 3 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
GOODWILL AND OTHER INTANGIBLE ASSETS [Abstract] | |||||||||||||||||
Components of other intangible assets | The components of other intangible assets are as follows: | ||||||||||||||||
31-Dec-14 | 30-Sep-14 | ||||||||||||||||
Gross Carrying | Accumulated | Gross Carrying | Accumulated | ||||||||||||||
Amount | Amortization | Amount | Amortization | ||||||||||||||
Other intangible assets subject to amortization: | |||||||||||||||||
Product technology | $ | 8,167 | $ | 6,896 | $ | 8,278 | $ | 6,750 | |||||||||
Acquired patents and licenses | 8,270 | 7,611 | 8,270 | 7,534 | |||||||||||||
Trade secrets and know-how | 2,550 | 2,550 | 2,550 | 2,550 | |||||||||||||
Customer relationships, distribution rights and other | 11,799 | 8,501 | 12,193 | 8,484 | |||||||||||||
Total other intangible assets subject to amortization | 30,786 | 25,558 | 31,291 | 25,318 | |||||||||||||
Total other intangible assets not subject to amortization* | 1,190 | 1,190 | |||||||||||||||
Total other intangible assets | $ | 31,976 | $ | 25,558 | $ | 32,481 | $ | 25,318 | |||||||||
* | Total other intangible assets not subject to amortization consist primarily of trade names. | ||||||||||||||||
Estimated future amortization expense for the succeeding five fiscal years | Amortization expense on our other intangible assets was $593 and $656 for the three months ended December 31, 2014 and 2013, respectively. Estimated future amortization expense for the five succeeding fiscal years is as follows: | ||||||||||||||||
Fiscal Year | Estimated Amortization Expense | ||||||||||||||||
Remainder of 2015 | $ | 1,744 | |||||||||||||||
2016 | 1,925 | ||||||||||||||||
2017 | 1,106 | ||||||||||||||||
2018 | 436 | ||||||||||||||||
2019 | 11 |
OTHER_LONGTERM_ASSETS_Tables
OTHER LONG-TERM ASSETS (Tables) | 3 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
OTHER LONG-TERM ASSETS [Abstract] | |||||||||
Schedule of other long term assets | Other long-term assets consisted of the following: | ||||||||
December 31, | September 30, | ||||||||
2014 | 2014 | ||||||||
Auction rate securities (ARS) | $ | 5,895 | $ | 5,895 | |||||
Other long-term assets | 3,877 | 3,043 | |||||||
Other long-term investments | 1,768 | 1,654 | |||||||
Total | $ | 11,540 | $ | 10,592 |
ACCRUED_EXPENSES_INCOME_TAXES_1
ACCRUED EXPENSES, INCOME TAXES PAYABLE AND OTHER CURRENT LIABILITIES (Tables) | 3 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
ACCRUED EXPENSES, INCOME TAXES PAYABLE AND OTHER CURRENT LIABILITIES [Abstract] | |||||||||
Schedule of accrued expenses, income taxes payable and other current liabilities | Accrued expenses, income taxes payable and other current liabilities consisted of the following: | ||||||||
December 31, | September 30, | ||||||||
2014 | 2014 | ||||||||
Accrued compensation | $ | 14,638 | $ | 16,980 | |||||
Goods and services received, not yet invoiced | 2,288 | 3,167 | |||||||
Deferred revenue and customer advances | 775 | 1,223 | |||||||
Warranty accrual | 246 | 246 | |||||||
Income taxes payable | 7,171 | 5,448 | |||||||
Taxes, other than income taxes | 1,350 | 1,182 | |||||||
Other | 5,364 | 3,148 | |||||||
Total | $ | 31,832 | $ | 31,394 |
DEBT_Tables
DEBT (Tables) | 3 Months Ended | ||||
Dec. 31, 2014 | |||||
DEBT [Abstract] | |||||
Schedule of Maturities of Long-term Debt | As of December 31, 2014, scheduled principal repayments of the Term Loan were as follows: | ||||
Fiscal Year | Principal Repayments | ||||
Remainder of 2015 | $ | 6,562 | |||
2016 | 8,750 | ||||
2017 | 7,656 | ||||
2018 | 14,219 | ||||
2019 | 133,438 | ||||
Total | $ | 170,625 |
DERIVATIVE_FINANCIAL_INSTRUMEN1
DERIVATIVE FINANCIAL INSTRUMENTS (Tables) | 3 Months Ended | |||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||
DERIVATIVE FINANCIAL INSTRUMENTS [Abstract] | ||||||||||||||||||
Schedule of Fair Value of Derivative Instruments in the Consolidated Balance Sheet | The fair value of our derivative instruments included in the Consolidated Balance Sheet, which was determined using level 2 inputs, was as follows: | |||||||||||||||||
Asset Derivatives | Liability Derivatives | |||||||||||||||||
Balance Sheet Location | 31-Dec-14 | 30-Sep-14 | 31-Dec-14 | 30-Sep-14 | ||||||||||||||
Derivatives designated as hedging instruments | ||||||||||||||||||
Interest rate swap contracts | Other noncurrent assets | $ | 808 | $ | - | $ | - | $ | - | |||||||||
Accrued expenses and other current liabilities | $ | - | $ | - | $ | 977 | $ | - | ||||||||||
Derivatives not designated as hedging instruments | ||||||||||||||||||
Foreign exchange contracts | Prepaid expenses and other current assets | $ | 17 | $ | 100 | $ | - | $ | - | |||||||||
Accrued expenses and other current liabilities | $ | - | $ | - | $ | 220 | $ | 270 | ||||||||||
Schedule of the Effect of Derivative Instruments on the Consolidated Statement of Income | The following table summarizes the effect of our derivative instruments on our Consolidated Statement of Income for the three months ended December 31, 2013 and 2014: | |||||||||||||||||
Gain (Loss) Recognized in Statement of Income | ||||||||||||||||||
Three Months Ended | ||||||||||||||||||
Statement of Income Location | 31-Dec-14 | 31-Dec-13 | ||||||||||||||||
Derivatives not designated as hedging instruments | ||||||||||||||||||
Foreign exchange contracts | Other income (expense), net | $ | (1,336 | ) | $ | (392 | ) |
COMMITMENTS_AND_CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES (Tables) | 3 Months Ended | ||||
Dec. 31, 2014 | |||||
COMMITMENTS AND CONTINGENCIES [Abstract] | |||||
Schedule of product warranty reserve activity | We maintain a warranty reserve that reflects management’s best estimate of the cost to replace product that does not meet our specifications and customers’ performance requirements, and costs related to such replacement. The warranty reserve is based upon a historical product replacement rate, adjusted for any specific known conditions or circumstances. Additions and deductions to the warranty reserve are recorded in cost of goods sold. Our warranty reserve activity during the first three months of fiscal 2015 was as follows: | ||||
Balance as of September 30, 2014 | $ | 246 | |||
Reserve for product warranty during the reporting period | 164 | ||||
Settlement of warranty | (164 | ) | |||
Balance as of December 31, 2014 | $ | 246 |
ACCUMULATED_OTHER_COMPREHENSIV1
ACCUMULATED OTHER COMPREHENSIVE INCOME (Tables) | 3 Months Ended | ||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||
ACCUMULATED OTHER COMPREHENSIVE INCOME [Abstract] | |||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Income (Loss) | The components of accumulated other comprehensive income (AOCI), including the reclassification adjustments for items that are reclassified from AOCI to net income, are shown below: | ||||||||||||||||||||
Foreign Currency Translation Adjustment | Unrealized Gain (Loss) on Cash Flow Hedges | Pension and Other Postretirement Liabilities | Unrealized Gain (Loss) on Marketable Securities | Accumulated Other Comprehensive Income | |||||||||||||||||
Balance September 30, 2014 | $ | 10,115 | $ | - | $ | (860 | ) | $ | - | $ | 9,255 | ||||||||||
Increase (decrease) in OCI | (9,958 | ) | (169 | ) | - | - | (10,127 | ) | |||||||||||||
Reclassifications | - | - | - | - | - | ||||||||||||||||
Income tax benefit (expense) | 1,626 | - | - | - | 1,626 | ||||||||||||||||
Balance December 31, 2014 | $ | 1,783 | $ | (169 | ) | $ | (860 | ) | $ | - | $ | 754 | |||||||||
Foreign Currency Translation Adjustment | Unrealized Gain (Loss) on Cash Flow Hedges | Pension and Other Postretirement Liabilities | Unrealized Gain (Loss) on Marketable Securities | Accumulated Other Comprehensive Income | |||||||||||||||||
Balance September 30, 2013 | $ | 18,251 | $ | - | $ | (664 | ) | $ | (151 | ) | $ | 17,436 | |||||||||
Increase (decrease) in OCI | (5,765 | ) | - | - | 234 | (5,531 | ) | ||||||||||||||
Reclassifications | - | - | - | - | - | ||||||||||||||||
Income tax benefit (expense) | 1,005 | - | - | (83 | ) | 922 | |||||||||||||||
Balance December 31, 2013 | $ | 13,491 | $ | - | $ | (664 | ) | $ | - | $ | 12,827 |
SHAREBASED_COMPENSATION_PLANS_
SHARE-BASED COMPENSATION PLANS (Tables) | 3 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
SHARE-BASED COMPENSATION PLANS [Abstract] | |||||||||
Share based compensation expense | Share-based compensation expense for the three months ended December 31, 2014, and 2013, was as follows: | ||||||||
Three Months Ended | |||||||||
December 31, | |||||||||
Income statement classifications: | 2014 | 2013 | |||||||
Cost of goods sold | $ | 498 | $ | 480 | |||||
Research, development and technical | 415 | 366 | |||||||
Selling and marketing | 320 | 353 | |||||||
General and administrative | 2,174 | 2,167 | |||||||
Total share-based compensation expense | 3,407 | 3,366 | |||||||
Tax benefit | (1,122 | ) | (1,092 | ) | |||||
Total share-based compensation expense, net of tax | $ | 2,285 | $ | 2,274 |
OTHER_INCOME_NET_Tables
OTHER INCOME, NET (Tables) | 3 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
OTHER INCOME, NET [Abstract] | |||||||||
Other income, net | Other income, net, consisted of the following: | ||||||||
Three Months Ended | |||||||||
December 31, | |||||||||
2014 | 2013 | ||||||||
Interest income | $ | 103 | $ | 58 | |||||
Other income (expense) | 954 | 559 | |||||||
Total other income, net | $ | 1,057 | $ | 617 |
EARNINGS_PER_SHARE_Tables
EARNINGS PER SHARE (Tables) | 3 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
EARNINGS PER SHARE [Abstract] | |||||||||
Earnings Per Share | The standards of accounting for earnings per share require companies to provide a reconciliation of the numerator and denominator of the basic and diluted earnings per share computations. Basic and diluted earnings per share were calculated as follows: | ||||||||
Three Months Ended | |||||||||
December 31, | |||||||||
2014 | 2013 | ||||||||
Numerator: | |||||||||
Net income | $ | 19,916 | $ | 11,308 | |||||
Less: income attributable to participating securities | (231 | ) | (127 | ) | |||||
Earnings available to common shares | $ | 19,685 | $ | 11,181 | |||||
Denominator: | |||||||||
Weighted average common shares | 23,651,405 | 23,589,627 | |||||||
(Denominator for basic calculation) | |||||||||
Weighted average effect of dilutive securities: | |||||||||
Share-based compensation | 834,197 | 1,033,333 | |||||||
Diluted weighted average common shares | 24,485,602 | 24,622,960 | |||||||
(Denominator for diluted calculation) | |||||||||
Earnings per share: | |||||||||
Basic | $ | 0.83 | $ | 0.47 | |||||
Diluted | $ | 0.8 | $ | 0.45 |
FINANCIAL_INFORMATION_BY_INDUS1
FINANCIAL INFORMATION BY INDUSTRY SEGMENT, GEOGRAPHIC AREA AND PRODUCT LINE (Tables) | 3 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
FINANCIAL INFORMATION BY INDUSTRY SEGMENT, GEOGRAPHIC AREA AND PRODUCT LINE [Abstract] | |||||||||
Schedule of revenue by product line | Revenue generated by product line for the three months ended December 31, 2014, and 2013, was as follows: | ||||||||
Three Months Ended | |||||||||
December 31, | |||||||||
Revenue: | 2014 | 2013 | |||||||
Tungsten slurries | $ | 45,144 | $ | 37,369 | |||||
Dielectric slurries | 28,183 | 29,946 | |||||||
Other Metals slurries | 19,897 | 17,805 | |||||||
Polishing pads | 8,762 | 7,410 | |||||||
Data storage slurries | 4,366 | 4,982 | |||||||
Engineered Surface Finishes | 5,582 | 3,003 | |||||||
Total revenue | $ | 111,934 | $ | 100,515 |
FAIR_VALUE_OF_FINANCIAL_INSTRU2
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) (USD $) | Dec. 31, 2014 |
In Thousands, unless otherwise specified | |
FAIR VALUE OF FINANCIAL INSTRUMENTS [Abstract] | |
Other long-term investments, Supplemental Employee Retirement Plan (SERP) | $1,768 |
Corresponding SERP liability | $1,768 |
FAIR_VALUE_OF_FINANCIAL_INSTRU3
FAIR VALUE OF FINANCIAL INSTRUMENTS, Schedule of Fair Value of Financial Instruments (Details) (Fair Value, Measurements, Recurring [Member], USD $) | Dec. 31, 2014 | Sep. 30, 2014 |
In Thousands, unless otherwise specified | ||
Assets [Abstract] | ||
Cash and cash equivalents | $295,429 | $284,155 |
Other long-term investments | 1,768 | 1,654 |
Derivative financial instruments | 825 | 100 |
Total assets | 298,022 | 285,909 |
Liabilities [Abstract] | ||
Derivative financial instruments | 1,197 | 270 |
Total liabilities | 1,197 | 270 |
Level 1 [Member] | ||
Assets [Abstract] | ||
Cash and cash equivalents | 295,429 | 284,155 |
Other long-term investments | 1,768 | 1,654 |
Derivative financial instruments | 0 | 0 |
Total assets | 297,197 | 285,809 |
Liabilities [Abstract] | ||
Derivative financial instruments | 0 | 0 |
Total liabilities | 0 | 0 |
Level 2 [Member] | ||
Assets [Abstract] | ||
Cash and cash equivalents | 0 | 0 |
Other long-term investments | 0 | 0 |
Derivative financial instruments | 825 | 100 |
Total assets | 825 | 100 |
Liabilities [Abstract] | ||
Derivative financial instruments | 1,197 | 270 |
Total liabilities | 1,197 | 270 |
Level 3 [Member] | ||
Assets [Abstract] | ||
Cash and cash equivalents | 0 | 0 |
Other long-term investments | 0 | 0 |
Derivative financial instruments | 0 | 0 |
Total assets | 0 | 0 |
Liabilities [Abstract] | ||
Derivative financial instruments | 0 | 0 |
Total liabilities | $0 | $0 |
INVENTORIES_Details
INVENTORIES (Details) (USD $) | Dec. 31, 2014 | Sep. 30, 2014 |
In Thousands, unless otherwise specified | ||
INVENTORIES [Abstract] | ||
Raw materials | $33,358 | $37,009 |
Work in process | 5,242 | 4,505 |
Finished goods | 24,018 | 23,465 |
Total | $62,618 | $64,979 |
GOODWILL_AND_OTHER_INTANGIBLE_2
GOODWILL AND OTHER INTANGIBLE ASSETS (Details) (USD $) | 3 Months Ended | ||||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | ||
Goodwill [Roll Forward] | |||||
Beginning Balance | $43,245 | ||||
Ending Balance | 41,866 | ||||
Finite-Lived Intangible Assets [Line Items] | |||||
Gross Carrying Amount subject to amortization | 30,786 | 31,291 | |||
Accumulated Amortization | 25,558 | 25,318 | |||
Other intangible assets [Abstract] | |||||
Amortization expense | 593 | 656 | |||
Indefinite-lived Intangible Assets by Major Class [Line Items] | |||||
Gross Carrying Amount not subject to amortization | 1,190 | [1] | 1,190 | [1] | |
Estimated future amortization expense [Abstract] | |||||
Remainder of 2015 | 1,744 | ||||
2016 | 1,925 | ||||
2017 | 1,106 | ||||
2018 | 436 | ||||
2019 | 11 | ||||
Total other intangible assets, gross carrying amount | 31,976 | 32,481 | |||
Product Technology [Member] | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Gross Carrying Amount subject to amortization | 8,167 | 8,278 | |||
Accumulated Amortization | 6,896 | 6,750 | |||
Acquired Patents and Licenses [Member] | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Gross Carrying Amount subject to amortization | 8,270 | 8,270 | |||
Accumulated Amortization | 7,611 | 7,534 | |||
Trade Secrets and Know-how [Member] | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Gross Carrying Amount subject to amortization | 2,550 | 2,550 | |||
Accumulated Amortization | 2,550 | 2,550 | |||
Customer Relationships, Distribution Rights and Other | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Gross Carrying Amount subject to amortization | 11,799 | 12,193 | |||
Accumulated Amortization | $8,501 | $8,484 | |||
[1] | Total other intangible assets not subject to amortization consist primarily of trade names. |
OTHER_LONGTERM_ASSETS_Details
OTHER LONG-TERM ASSETS (Details) (USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2014 |
Security | |||
Other long-term assets [Abstract] | |||
Auction rate securities (ARS) | $5,895 | $5,895 | |
Other long-term assets | 3,877 | 3,043 | |
Other long-term investments | 1,768 | 1,654 | |
Total | 11,540 | 10,592 | |
Number of Auction rate securities | 2 | ||
Minimum maturity period of auction rate securities (ARS) | 10 years | ||
Auction rate securities (ARS) | 5,280 | ||
Reduction in fair value Auction Rate Securities, pretax | 615 | ||
Percentage of par value received from auction rate security settlement | 65.00% | ||
Monetization of Auction Rate Securities | 2,113 | ||
Reversal of temporary impairment | 234 | ||
Long-term liability, SERP investments | $1,768 |
ACCRUED_EXPENSES_INCOME_TAXES_2
ACCRUED EXPENSES, INCOME TAXES PAYABLE AND OTHER CURRENT LIABILITIES (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Sep. 30, 2014 |
ExecutiveOfficer | ||
Accrued expenses, income taxes payable and other current liabilities [Abstract] | ||
Accrued compensation | $14,638 | $16,980 |
Goods and services received, not yet invoiced | 2,288 | 3,167 |
Deferred revenue and customer advances | 775 | 1,223 |
Warranty accrual | 246 | 246 |
Income taxes payable | 7,171 | 5,448 |
Taxes, other than income taxes | 1,350 | 1,182 |
Other | 5,364 | 3,148 |
Total | 31,832 | 31,394 |
Severance payments | $1,742 | |
Number of executive officers who have announced their resignation | 3 |
DEBT_Details
DEBT (Details) (USD $) | 3 Months Ended | 0 Months Ended | ||||||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Jun. 30, 2014 | Dec. 31, 2013 | Mar. 31, 2012 | Jun. 27, 2014 | Jun. 26, 2014 | Sep. 30, 2014 | Feb. 13, 2012 |
Debt Instrument [Line Items] | ||||||||
Total outstanding commitments | $170,625 | |||||||
Debt issuance costs | 550 | 2,658 | ||||||
Debt issuance costs, current | 404 | |||||||
Debt issuance costs, noncurrent | 1,368 | |||||||
Weighted average fixed rate (in hundredths) | 1.50% | |||||||
Percentage for converting from variable rate debt into fixed debt rate | 50.00% | |||||||
Line of Credit Facility, Covenant Terms | The Credit Agreement contains covenants that restrict the ability of the Company and its subsidiaries to take certain actions, including, among other things and subject to certain significant exceptions: creating liens, incurring indebtedness, making investments, engaging in mergers, selling property, paying dividends or amending organizational documents. The Credit Agreement requires us to comply with certain financial ratio maintenance covenants. These include a maximum consolidated leverage ratio of 3.00 to 1.00 through December 31, 2015 and a minimum consolidated fixed charge coverage ratio of 1.25 to 1.00. The maximum consolidated leverage ratio will decrease to 2.75 to 1.00 from January 1, 2016 through the expiration of the Credit Agreement. As of December 31, 2014, our consolidated leverage ratio was 1.51 to 1.00 and our consolidated fixed charge coverage ratio was 7.25 to 1.00. The Credit Agreement also contains customary affirmative covenants and events of default. We believe we are in compliance with these covenants. | |||||||
Consolidated leverage ratio through December 31, 2015 | 3 | |||||||
Consolidated fixed charge coverage ratio | 1.25 | |||||||
Consolidated leverage ratio after January 1, 2016 | 2.75 | |||||||
Actual consolidated leverage ratio | 1.51 | |||||||
Actual consolidated fixed charge coverage | 7.25 | |||||||
Current portion of long-term debt | 8,750 | 8,750 | ||||||
Long-term Debt, by Maturity [Abstract] | ||||||||
Remainder of 2015 | 6,562 | |||||||
2016 | 8,750 | |||||||
2017 | 7,656 | |||||||
2018 | 14,219 | |||||||
2019 | 133,438 | |||||||
Long Term Debt | 170,625 | |||||||
Repayment of long-term debt | -2,188 | -2,187 | ||||||
Revolving Credit Facility [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Line of credit facility, borrowing capacity | 100,000 | 75,000 | ||||||
Debt Instrument, Maturity Date | 27-Jun-19 | 13-Feb-17 | ||||||
Line of Credit Facility, Interest Rate Description | In addition to paying interest on outstanding principal under the Credit Agreement, we pay a commitment fee to the lenders under the Revolving Credit Facility in respect of the unutilized commitments thereunder. The fee ranges from 0.20% to 0.30%, based on our consolidated leverage ratio. | |||||||
Line of Credit Facility Unused Capacity Commitment Fee Percentage Minimum | 0.20% | |||||||
Line of Credit Facility Unused Capacity Commitment Fee Percentage Maximum | 0.30% | |||||||
Term Loan [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt Instrument, Face Amount | 157,500 | 175,000 | ||||||
Increase in loan commitments | 17,500 | |||||||
Amount drawn from increase in loan commitments | 17,500 | |||||||
Total outstanding commitments | 175,000 | |||||||
Line of Credit Facility, Interest Rate Description | Borrowings under the amended Credit Facilities (other than in respect of swing-line loans) bear interest at a rate per annum equal to the bApplicable Rateb (as defined below) plus, at our option, either (1) a LIBOR rate determined by reference to the cost of funds for deposits in the relevant currency for the interest period relevant to such borrowing or (2) the bBase Rateb, which is the highest of (x) the prime rate of Bank of America, N.A., (y) the federal funds rate plus 1/2 of 1.00% and (z) the one-month LIBOR rate plus 1.00%. The current Applicable Rate for borrowings under the Credit Facilities is 1.50% with respect to LIBOR borrowings and 0.25% with respect to Base Rate borrowings, with such Applicable Rate subject to adjustment based on our consolidated leverage ratio. Swing-line loans bear interest at the Base Rate plus the Applicable Rate for Base Rate loans under the Revolving Credit Facility. | |||||||
Current portion of long-term debt | 8,750 | |||||||
Long-term Debt, by Maturity [Abstract] | ||||||||
Long Term Debt | $175,000 |
DERIVATIVE_FINANCIAL_INSTRUMEN2
DERIVATIVE FINANCIAL INSTRUMENTS (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Sep. 30, 2014 |
Derivative [Line Items] | ||
Unrealized loss | ($169) | |
Foreign Exchange Contract [Member] | Buy [Member] | ||
Derivative [Line Items] | ||
Derivative notional amount | 3,012 | 4,695 |
Foreign Exchange Contract [Member] | Sell [Member] | ||
Derivative [Line Items] | ||
Derivative notional amount | 25,900 | 18,425 |
Interest Rate Swap [Member] | ||
Derivative [Line Items] | ||
Outstanding variable rate debt | 86,406 | |
Interest Rate Swap [Member] | Buy [Member] | ||
Derivative [Line Items] | ||
Derivative notional amount | $85,313 |
DERIVATIVE_FINANCIAL_INSTRUMEN3
DERIVATIVE FINANCIAL INSTRUMENTS, Schedule of Fair Value of Derivative Instruments in the Consolidated Balance Sheet (Details) (USD $) | Dec. 31, 2014 | Sep. 30, 2014 |
In Thousands, unless otherwise specified | ||
Foreign Exchange Contract [Member] | Accrued Expenses and Other Current Liabilities [Member] | Not Designated as Hedging Instrument [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Fair value of foreign exchange contract asset derivatives | $0 | $0 |
Fair value of foreign exchange contract liability derivatives | 220 | 270 |
Foreign Exchange Contract [Member] | Prepaid Expenses and Other Current Assets [Member] | Not Designated as Hedging Instrument [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Fair value of foreign exchange contract asset derivatives | 17 | 100 |
Fair value of foreign exchange contract liability derivatives | 0 | 0 |
Interest Rate Swap [Member] | Accrued Expenses and Other Current Liabilities [Member] | Designated as Hedging Instrument [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Fair value of foreign exchange contract asset derivatives | 0 | 0 |
Fair value of foreign exchange contract liability derivatives | 977 | 0 |
Interest Rate Swap [Member] | Other Noncurrent Assets [Member] | Designated as Hedging Instrument [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Fair value of foreign exchange contract asset derivatives | 808 | 0 |
Fair value of foreign exchange contract liability derivatives | $0 | $0 |
DERIVATIVE_FINANCIAL_INSTRUMEN4
DERIVATIVE FINANCIAL INSTRUMENTS, Schedule of the Effect of Derivative Instruments on the Consolidated Statement of Income (Details) (Foreign Exchange Contract [Member], Other income (expense), net [Member], Not Designated as Hedging Instrument [Member], USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Foreign Exchange Contract [Member] | Other income (expense), net [Member] | Not Designated as Hedging Instrument [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gain (loss) recognized in statement of income | ($1,336) | ($392) |
COMMITMENTS_AND_CONTINGENCIES_1
COMMITMENTS AND CONTINGENCIES (Details) (USD $) | 3 Months Ended |
In Thousands, unless otherwise specified | Dec. 31, 2014 |
Movement in standard product warranty accrual [Roll Forward] | |
Balance as of September 30, 2014 | $246 |
Reserve for product warranty during the reporting period | 164 |
Settlement of warranty | -164 |
Balance as of December 31, 2014 | 246 |
Purchase obligations [Abstract] | |
Contract term | 4 years |
Contractual commitments for fumed silica and fumed alumina under purchase obligations | $67,546 |
ACCUMULATED_OTHER_COMPREHENSIV2
ACCUMULATED OTHER COMPREHENSIVE INCOME (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Beginning Balance | $9,255 | $17,436 |
Increase (decrease) in OCI | -10,127 | -5,531 |
Reclassifications | 0 | 0 |
Income tax benefit (expense) | 1,626 | 922 |
Ending Balance | 754 | 12,827 |
Foreign Currency Translation Adjustment [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Beginning Balance | 10,115 | 18,251 |
Increase (decrease) in OCI | -9,958 | -5,765 |
Reclassifications | 0 | 0 |
Income tax benefit (expense) | 1,626 | 1,005 |
Ending Balance | 1,783 | 13,491 |
Unrealized Gain (Loss) on Cash Flow Hedges [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Beginning Balance | 0 | 0 |
Increase (decrease) in OCI | -169 | 0 |
Reclassifications | 0 | 0 |
Income tax benefit (expense) | 0 | 0 |
Ending Balance | -169 | 0 |
Pension and Other Postretirement Liabilities [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Beginning Balance | -860 | -664 |
Increase (decrease) in OCI | 0 | 0 |
Reclassifications | 0 | 0 |
Income tax benefit (expense) | 0 | 0 |
Ending Balance | -860 | -664 |
Unrealized Gain (Loss) on Marketable Securities [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Beginning Balance | 0 | -151 |
Increase (decrease) in OCI | 0 | |
Reclassifications | 0 | 0 |
Income tax benefit (expense) | 0 | -83 |
Ending Balance | $0 | $0 |
SHAREBASED_COMPENSATION_PLANS_1
SHARE-BASED COMPENSATION PLANS (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Omnibus Incentive Plan [Abstract] | ||
Share based compensation expense | $3,407 | $3,366 |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Stock based compensation expense | 3,407 | 3,366 |
Stock based compensation - tax benefit | -1,122 | -1,092 |
Total share-based compensation expense, net of tax | 2,285 | 2,274 |
Additional share-based compensation expense | 378 | |
Fair value of unvested equity | 5,033 | |
Cost of Goods Sold [Member] | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Stock based compensation expense | 498 | 480 |
Research, Development and Technical [Member] | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Stock based compensation expense | 415 | 366 |
Selling and Marketing [Member] | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Stock based compensation expense | 320 | 353 |
General and Administrative [Member] | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Stock based compensation expense | $2,174 | $2,167 |
OTHER_INCOME_NET_Details
OTHER INCOME, NET (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Other Income (Expense) Net [Line Items] | ||
Total other income, net | $1,057 | $617 |
Interest Income [Member] | ||
Other Income (Expense) Net [Line Items] | ||
Total other income, net | 103 | 58 |
Other Income (Expense) [Member] | ||
Other Income (Expense) Net [Line Items] | ||
Total other income, net | $954 | $559 |
INCOME_TAXES_Details
INCOME TAXES (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Income (loss) from continuing operations before income taxes [Abstract] | ||
Total | $22,717 | $15,455 |
Total U.S. and foreign | 2,801 | 4,147 |
Effective income tax rate reconciliation [Abstract] | ||
Provision for income taxes (in hundredths) | 12.30% | 26.80% |
Tax holiday rate percentage (in hundredths) | 0.00% | |
Percentage of local statutory rate in effect for 2016 and 2017 (in hundredths) | 50.00% | |
Approximate tax provision reduction as a result in the tax holiday | 1,177 | 755 |
Reduction in income tax expense for retroactive reinstatement of research tax credit | $1,124 |
EARNINGS_PER_SHARE_Details
EARNINGS PER SHARE (Details) (USD $) | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Numerator: | ||
Net income | $19,916 | $11,308 |
Less: income attributable to participating securities | -231 | -127 |
Earnings available to common shares | $19,685 | $11,181 |
Denominator: | ||
Weighted average common shares (Denominator for basic calculation, in shares) | 23,651,405 | 23,589,627 |
Weighted average effect of dilutive securities: | ||
Share-based compensation (in shares) | 834,197 | 1,033,333 |
Diluted weighted average common shares (Denominator for diluted calculation, in shares) | 24,485,602 | 24,622,960 |
Earnings per share: | ||
Basic (in dollars per share) | $0.83 | $0.47 |
Diluted (in dollars per share) | $0.80 | $0.45 |
Outstanding stock options excluded from diluted earnings (in shares) | 100,000 | 500,000 |
FINANCIAL_INFORMATION_BY_INDUS2
FINANCIAL INFORMATION BY INDUSTRY SEGMENT, GEOGRAPHIC AREA AND PRODUCT LINE (Details) (USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2014 |
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Revenue | $111,934 | $100,515 | |
Property, plant and equipment, net | $95,299 | $100,821 |
FINANCIAL_INFORMATION_BY_INDUS3
FINANCIAL INFORMATION BY INDUSTRY SEGMENT, GEOGRAPHIC AREA AND PRODUCT LINE, SEGMENT REPORTING INFORMATION BY PRODUCT TYPE (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Segment | ||
FINANCIAL INFORMATION BY INDUSTRY SEGMENT, GEOGRAPHIC AREA AND PRODUCT LINE [Abstract] | ||
Number of segments | 1 | |
Revenue from External Customer [Line Items] | ||
Revenue | $111,934 | $100,515 |
Tungsten slurries [Member] | ||
Revenue from External Customer [Line Items] | ||
Revenue | 45,144 | 37,369 |
Dielectric slurries [Member] | ||
Revenue from External Customer [Line Items] | ||
Revenue | 28,183 | 29,946 |
Other Metals slurries [Member] | ||
Revenue from External Customer [Line Items] | ||
Revenue | 19,897 | 17,805 |
Polishing pads [Member] | ||
Revenue from External Customer [Line Items] | ||
Revenue | 8,762 | 7,410 |
Data storage slurries [Member] | ||
Revenue from External Customer [Line Items] | ||
Revenue | 4,366 | 4,982 |
Engineered Surface Finishes [Member] | ||
Revenue from External Customer [Line Items] | ||
Revenue | $5,582 | $3,003 |