Cascade Microtech (CSCD) 8-K Cascade Microtech Reports Third Quarter 2006 Results

Exhibit 99.1

Cascade Microtech Reports Third Quarter 2006 Results

Record Quarterly Revenue of $23.0 million, Up 17% Sequentially and Diluted EPS of $0.10

PORTLAND, Ore.—(BUSINESS WIRE)—October 24, 2006—Cascade Microtech (NASDAQ:CSCD), today reported financial results for the third quarter ended September 30, 2006.

Highlights for the third quarter include:

·Record revenue of $23.0 million, up 17% over Q2 of this year

·$18.2 million Engineering Products division revenue, up 13% over Q2 of this year

·$4.8 million Production Probes division revenue, up 33% over Q2 of this year

·Diluted EPS of $0.10 compared to $0.07 for Q2 of this year

·Cash and investments at the end of the quarter were $54.9 million, up $3.0 million from the end of last year.

“We are pleased to report record revenue for our third quarter of 2006,” said Eric Strid, CEO of Cascade Microtech. “We had a strong quarter in both divisions.”

Revenue for the third quarter was $23.0 million, an increase of 17% over $19.6 million in the second quarter of 2006. Net income for the third quarter was $1.2 million and diluted earnings per share were $0.10, compared to net income of $0.8 million and diluted earnings per share of $0.07 for the second quarter of 2006.

Beginning in January 2006 we were required to expense the costs of stock options through our income statement under SFAS 123R. This resulted in a charge to earnings of approximately $516,000 during the third quarter of 2006 compared to a charge of $447,000 in the second quarter of 2006.

Gross margin for the third quarter was 43.2% compared to 44.6% in the second quarter of 2006 primarily due to additional production costs and a change in product mix.

At September 30, 2006, the Company had cash and investments of $54.9 million, up from $51.9 million at December 31, 2005.

Financial Outlook

Based on the current backlog and anticipated bookings, Cascade anticipates that fourth quarter 2006 revenues will be in the range of $21.0 million to $23.0 million; and that diluted earnings per share will be in the range of $0.07 to $0.12, including stock compensation expense under SFAS 123R .

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 in the paragraph above captioned “Financial Outlook” 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 24, 2006 to discuss its results for the third quarter ended September 30, 2006.

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: 80836239; International: 617-801-6888.)

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,		June 30,			September 30,			September 30,
	2006		2006			2005			2006		2005
Sales	$	22,950	$	19,598		$	18,987		$	62,247	$	55,959
Cost of sales	12,929		10,739			10,110			34,688		29,251
Stock-based compensation	107		113			11			332		33
Gross profit	9,914		8,746			8,866			27,227		26,675
Operating expenses:
Research and development (includes $77, $76, $6, $230 and $14, respectively, of stock-based compensation)	2,231		2,150			1,758			6,379		5,070
Selling, general and administrative (includes $332, $258, $24, $854 and $60, respectively, of stock-based compensation)	6,222		5,808			4,939			18,039		14,735
Total operating expenses	8,453		7,958			6,697			24,418		19,805
Income from operations	1,461		788			2,169			2,809		6,870
Other income (expense):
Interest income	428		405			276			1,195		746
Interest expense	—		—			—			—		(16		)
Other, net	272		(10		)	(18		))	319		772
Total other income (expense)	700		395			258			1,514		1,502
Income before income taxes	2,161		1,183			2,427			4,323		8,372
Provision for income taxes	929		387			279			1,639		1,498
Net income	$	1,232	$	796		$	2,148		$	2,684	$	6,874
Net income per share:
Basic	$	0.11	$	0.07		$	0.19		$	0.24	$	0.63
Diluted	$	0.10	$	0.07		$	0.18		$	0.23	$	0.58
Shares used in computing net income per share:
Basic	11,475		11,411			11,154			11,420		10,979
Diluted	11,930		11,897			11,933			11,845		11,783

CASCADE MICROTECH, INC.

AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

	September 30,		June 30,			December 31,
	2006		2006			2005
Assets
Current assets:
Cash and cash equivalents	$	2,806	$	2,008		$	2,224
Marketable securities	44,179		46,644			48,122
Accounts receivable, net	18,729		17,399			16,182
Inventories	13,940		12,445			10,889
Prepaid expenses and other	1,901		2,047			3,000
Deferred income taxes	1,832		1,745			1,699
Total current assets	83,387		82,288			82,116
Long-term investments	7,933		4,972			1,549
Fixed assets, net	6,351		5,712			4,422
Deferred income tax	343		344			336
Other assets	2,062		1,881			1,697
	$	100,076	$	95,197		$	90,120
Liabilities and Stockholders’ Equity
Current liabilities:
Current portion of long-term debt and capital leases	$	1	$	4		$	8
Accounts payable	5,696		4,860			3,904
Deferred revenue	558		562			516
Accrued liabilities	5,047		4,116			3,087
Total current liabilities	11,302		9,542			7,515
Long-term debt and capital leases	—		—			—
Deferred revenue	265		241			255
Other long-term liabilities	934		802			845
Total liabilities	12,501		10,585			8,615
Stockholders’ equity:
Common stock	61,561		59,896			58,400
Deferred stock-based compensation	—		—			(142		)
Unrealized holding gain (loss) on investments	7		(59		)	(76		)
Retained earnings	26,007		24,775			23,323
Total stockholders’ equity	87,575		84,612			81,505
	$	100,076	$	95,197		$	90,120

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