Cascade Microtech (CSCD) 8-K Cascade Microtech Reports Third Quarter 2005 Results

Exhibit 99.1

Cascade Microtech Reports Third Quarter 2005 Results

Quarterly revenues of $19.0 million, up 11% over the prior year and EPS of $0.18

PORTLAND, Ore.—(BUSINESS WIRE)—October 25, 2005—Cascade Microtech (NASDAQ:CSCD), today reported financial results for the third quarter ended September 30, 2005.

Highlights for the third quarter include:

•Revenues of $19.0 million, up 11% year over year

•$16.5 million Engineering Products division revenue, up 6% year over year

•$2.5 million revenue and strong book to bill for Production Probes division, up 63% year over year

•EPS of $0.18 per diluted share, compared to $0.17 for the third quarter of 2004

•Cash and investments at the end of the quarter were $51.1 million, up $4.6 million from the end of last year.

“We are pleased to report solid revenue and earnings for our third quarter of 2005,” said Eric Strid, CEO of Cascade Microtech. “We had a particularly strong quarter and built significant backlog in our fastest growing division, Production Probes.”

Revenue for the third quarter was $19.0 million, an increase of 11% over $17.1 million in the third quarter of the prior year. Net income for the third quarter was $2.1 million and diluted earnings per share were $0.18 on 11.9 million shares, compared to net income of $1.4 million and diluted earnings per share of $0.17 on 8.3 million shares for the third quarter of 2004.

Gross margin for the third quarter increased to 46.7% from 44.8% in the third quarter of 2004.

At September 30, 2005, the Company had cash and investments of $51.1 million, up from $46.5 million at December 31, 2004.

Financial Outlook

Based on the current backlog and anticipated bookings, Cascade anticipates that fourth quarter 2005 revenues will be in the range of $18.8 million to $20.0 million compared to $18.4 million in the fourth quarter of 2004 and that diluted earnings per share will be in the range of $0.15 to $0.20 on 12.0 million shares compared to $0.19 on 9.0 million shares in the fourth quarter of 2004.

About Cascade Microtech

Cascade Microtech, Inc. (Nasdaq: CSCD) is a worldwide leader in the precise electrical measurement and test of integrated circuits (ICs) and other small structures. For technology businesses and scientific institutions who need to evaluate small structures, Cascade Microtech delivers access to, and extraction of, electrical data from wafers, integrated circuits (ICs), IC packages, circuit boards and modules, MEMs, biological structures, electro-optic devices and more. Cascade Microtech’s highly reliable production wafer test solutions provide the semiconductor industry with leading-edge probe cards that reduce manufacturing costs of complex semiconductors. Information about Cascade Microtech can be found on the Web at www.cascademicrotech.com.

Forward-Looking Statements

The statements in this release regarding the Company’s financial outlook as to revenue and diluted earnings per share in the fourth quarter of 2005 are “forward-looking” statements within the meaning of the Securities Litigation Reform Act of 1995. Such statements are based on current expectations, estimates and projections about the Company’s business based in part on assumptions made by management. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements due to numerous factors, including changes in demand for the Company’s products, product mix, the timing of shipments and customer orders, constraints on supplies of components, excess or shortage of production capacity and other risks discussed from time to time in the Company’s Securities and Exchange Commission filings and reports, including the Company’s Annual Report on Form 10-K. In addition such statements could be affected by general industry and market conditions and growth rates and general domestic and international economic conditions. Such forward-looking statements speak only as of the date on which they are made and the company does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this release.

The company will host a conference call beginning at 5 p.m. EST (2 p.m. PST) on October 25, 2005 to discuss its results for the third quarter ended September 30, 2005.

A simultaneous audio cast of the conference call may be accessed online from the investor relations page of www.cascademicrotech.com. A replay will be available after 7 p.m. EST at this same internet address. (For a telephone replay, dial (888) 286-8010 passcode: 81876511; International: 617-801-6888.)

CASCADE MICROTECH, INC.

AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

	September 30, 2005			June 30, 2005			December 31, 2004
Assets
Current assets:
Cash and cash equivalents	$	2,268		$	1,034		$	2,033
Marketable securities	43,223			45,616			41,714
Accounts receivable, net	17,015			14,516			13,640
Inventories	10,471			10,864			10,180
Prepaid expenses and other	2,807			2,387			1,579
Deferred income taxes	1,686			1,717			1,552
Total current assets	77,470			76,135			70,698
Long-term investments	5,579			3,090			2,779
Fixed assets, net	3,974			3,677			4,008
Deferred income tax	206			222			65
Other assets	1,632			1,585			1,466
	$	88,861		$	84,708		$	79,016
Liabilities and Stockholders’ Equity
Current liabilities:
Current portion of long-term debt and capital leases	$	8		$	8		$	21
Accounts payable	4,513			4,189			3,951
Deferred revenue	505			380			579
Accrued liabilities	2,971			2,763			2,609
Total current liabilities	7,997			7,340			7,160
Long-term debt and capital leases	2			5			14
Deferred revenue	306			314			282
Other long-term liabilities	1,135			1,206			1,372
Total liabilities	9,440			8,865			8,828
Stockholders’ equity:
Common stock	57,764			56,389			55,511
Deferred stock-based compensation	(171		)	(229		)	(310		)
Unrealized holding gain (loss) on investments	(50		)	(47		)	(17		)
Retained earnings	21,878			19,730			15,004
Total stockholders’ equity	79,421			75,843			70,188
	$	88,861		$	84,708		$	79,016

CASCADE MICROTECH, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Income

(in thousands, except per share data)

(unaudited)

	Three Months Ended								Year to Date Ended September 30,
	September 30,			June 30,		September 30,
	2005			2005		2004			2005			2004
Sales	$	18,987		$	18,311	$	17,059		$	55,959		$	46,013
Cost of sales	10,110			9,651		9,400			29,251			25,888
Deferred stock compensation	11			10		19			33			58
Gross profit	8,866			8,650		7,640			26,675			20,067
Operating expenses:
Research and development	1,752			1,665		1,368			5,056			4,026
Selling, general and administrative	4,915			5,161		4,190			14,675			12,165
Deferred stock compensation	30			15		60			74			230
Total operating expenses	6,697			6,841		5,618			19,805			16,421
Income from operations	2,169			1,809		2,022			6,870			3,646
Other income (expense):
Interest income	276			258		23			746			69
Interest expense	(1		)	—		(107		)	(17		)	(361		)
Other, net	(17		)	766		31			773			225
Total other income (expense)	258			1,024		(53		)	1,502			(67		)
Income before income taxes	2,427			2,833		1,969			8,372			3,579
Provision for income taxes	279			602		541			1,498			539
Net income	2,148			2,231		1,428			6,874			3,040
Accretion of redeemable stock	—			—		38			—			113
Net income attributed to common shareholders	$	2,148		$	2,231	$	1,390		$	6,874		$	2,927
Net income per share:
Basic	$	0.19		$	0.20	$	0.27		$	0.63		$	0.57
Diluted	$	0.18		$	0.19	$	0.17		$	0.58		$	0.37
Shares used in computing net income per share:
Basic	11,154			10,916		5,187			10,979			5,169
Diluted	11,933			11,728		8,257			11,783			8,269

Contact:	Cascade Microtech, Inc.
	Steven Sipowicz, Chief Financial Officer, 503 601-1000
	Gale Napier, Investor relations, 503 601-1000