PRESS RELEASE
FOR IMMEDIATE RELEASE
CONTACT:
William S. Johnson
Vice President and Chief Financial Officer
Cabot Microelectronics Corporation
630/375-6631
CABOT MICROELECTRONICS REPORTS RESULTS
FOR FOURTH FISCAL QUARTER 2003
AURORA, IL, October 23, 2003 - Cabot Microelectronics Corporation (Nasdaq:
CCMP), the leading supplier of chemical mechanical planarization (CMP) polishing
slurries to the semiconductor industry, today reported financial results for its
fourth fiscal quarter and for the year ended September 30, 2003.
Total revenue for the fourth fiscal quarter of 2003 was $67.9 million, up 5.6%
on a sequential basis from $64.3 million in the prior quarter and up 4.0% from
$65.3 million in the fourth quarter a year ago. The sequential increase is
principally due to the absence of the $3.7 million adverse revenue impact the
Company experienced in the prior quarter as it transitioned from a distributor
to direct sales in Europe and Southeast Asia.
Overall revenue from the sale of slurries for polishing IC devices remained
stable. However, after two consecutive quarters of double digit growth in
revenue from the sale of slurry for polishing copper interconnects, this quarter
saw a 7.9 % decrease from the record level last quarter. The decrease is
primarily due to yield and efficiency gains captured by key customers in their
manufacturing processes that reduced their slurry consumption, as well as a draw
down of slurry inventory by several customers. Revenue from the sale of slurries
for polishing tungsten and oxide, combined, increased sequentially by 10.4%.
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CABOT MICROELECTRONICS REPORTS RESULTS FOR FOURTH FISCAL
QUARTER 2003.......................................................PAGE 2 OF 5
Gross profit of $34.4 million in the fourth fiscal quarter was up sequentially
from $32.9 million. During the quarter the Company recorded a $2.0 million
charge related to the minimum purchase obligation of a raw material supply
agreement for a polishing pad technology that was previously under development
but is no longer being pursued. This supply obligation is associated with an
older technology, unrelated to the Company's current pad strategy. As a
percentage of revenue, gross profit of 50.7% was lower than last quarter's 51.2%
as the effects of the minimum purchase obligation charge more than offset the
positive effects of lower manufacturing costs and an improved product mix. Gross
profit in the year ago quarter was $33.3 million, which represented 51.1% of
revenue.
Operating expenses of $20.5 million, consisting of research and development
(R&D), selling and marketing, and general and administrative expenses, were up
sequentially $2.2 million, and were $3.9 million higher than the year ago
quarter. These increases were mainly due to higher R&D spending on new product
development, which is consistent with the Company's strategy of investing to
maintain its technology leadership. Increased staffing, technology license
agreement costs and higher development lab expenses contributed to the increase
in R&D spending. Selling and marketing costs increased to strengthen our
customer support.
Net income for the quarter was $9.6 million, compared to $9.8 million in the
previous quarter and $11.5 million in the year ago quarter. Diluted earnings per
share were $0.39 this quarter, compared to $0.40 in the previous quarter and
$0.47 in the year ago quarter. Included in net income and diluted earnings per
share in the quarter was a charge of $1.3 million, net of taxes, or $0.05 per
share, related to the minimum purchase obligation.
For the 2003 fiscal year, revenues were $251.7 million, up 7.0% from fiscal
2002. Net income of $37.7 million in fiscal 2003 was down 7.3% from fiscal 2002.
Diluted earnings per share in fiscal 2003 were $1.53 compared to $1.66 in fiscal
2002.
"We are pleased we were able to grow revenue again this year despite the
difficult semiconductor industry environment," stated Dr. Matthew Neville, Cabot
Microelectronics' Chairman and CEO. "We remain optimistic about the compelling
growth drivers for CMP. As a result of our continued investments in R&D,
operations excellence and customer support initiatives, we believe we are well
positioned for the future in this challenging and competitive industry."
CONFERENCE CALL
Cabot Microelectronics' quarterly earnings conference call will be held today at
9:00 a.m. Central Time. The live conference call and a subsequent replay will be
available via webcast at www.cabotcmp.com. Access to the live call is
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CABOT MICROELECTRONICS REPORTS RESULTS FOR FOURTH FISCAL
QUARTER 2003.......................................................PAGE 3 OF 5
also available by phone at 800-923-0061, access code 7436284. Callers outside of
the U.S. can dial 706-634-5545. For assistance, call 630-499-2600. This press
release, as well as the transcript of the formal comments made during the
conference call, will be available in the Investor Relations section of the
company's web site at www.cabotcmp.com.
ABOUT CABOT MICROELECTRONICS
Cabot Microelectronics Corp., headquartered in Aurora, Ill., is the leading
supplier of CMP slurries for polishing various materials used in semiconductor
manufacturing processes. These products enable manufacturers of integrated
circuits to make smaller, faster and more complex devices and improve their
production processes. For more information about Cabot Microelectronics, visit
www.cabotcmp.com or call 630-499-2600.
SAFE HARBOR STATEMENT
This news release may include statements that constitute "forward-looking
statements" within the meaning of federal securities regulations. These
forward-looking statements include statements related to future sales and
operating results, company and industry growth and trends, growth of this
market, international events, new product introductions and development of new
products and technologies by Cabot Microelectronics. These forward-looking
statements involve a number of risks, uncertainties, and other factors,
including those described from time to time in Cabot Microelectronics' filings
with the Securities and Exchange Commission (SEC), that could cause the actual
results to differ materially from those described by these forward-looking
statements. In particular, see "Risks Relating to Our Business" in Management's
Discussion and Analysis in our quarterly report on Form 10-Q for the quarter
ended June 30, 2003, and our Annual Report on Form 10-K for the fiscal year
ended September 30, 2002, both filed with the SEC. Cabot Microelectronics
Corporation assumes no obligation to update this forward-looking information.
###
[Tables to follow]
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CABOT MICROELECTRONICS CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited and amounts in thousands, except per share amounts)
<Table>
<Caption>
Quarter Ended Twelve Months Ended
--------------------------------------- -------------------------
Sept. 30, June 30, Sept. 30, Sept. 30, Sept. 30,
2003 2003 2002 2003 2002
----------- ----------- ------------ ----------- ------------
Revenue $67,903 $64,288 $65,264 $251,665 $235,165
Cost of goods sold 33,458 31,360 31,946 124,269 113,067
----------- ----------- ------------ ----------- ------------
Gross profit 34,445 32,928 33,318 127,396 122,098
Operating expenses:
Research and development 12,469 10,803 10,102 41,516 33,668
Selling and marketing 3,338 2,751 2,469 11,221 9,667
General and administrative 4,607 4,655 3,917 18,225 17,458
Litigation settlement - - - - 1,000
Amortization of intangibles 85 85 74 340 345
----------- ----------- ------------ ----------- ------------
Total operating expenses 20,499 18,294 16,562 71,302 62,138
----------- ----------- ------------ ----------- ------------
Operating income 13,946 14,634 16,756 56,094 59,960
Other income (expense), net (111) 46 71 (27) 763
----------- ----------- ------------ ----------- ------------
Income before income taxes 13,835 14,680 16,827 56,067 60,723
Provision for income taxes 4,186 4,918 5,377 18,334 20,038
----------- ----------- ------------ ----------- ------------
Net income $ 9,649 $ 9,762 $11,450 $37,733 $40,685
=========== =========== ============ =========== ============
Basic earnings per share $0.39 $0.40 $0.47 $1.55 $1.68
=========== =========== ============ =========== ============
Weighted average basic shares outstanding 24,591 24,389 24,231 24,401 24,160
=========== =========== ============ =========== ============
Diluted earnings per share $0.39 $0.40 $0.47 $1.53 $1.66
=========== =========== ============ =========== ============
Weighted average diluted shares outstanding 25,049 24,639 24,501 24,665 24,565
=========== =========== ============ =========== ============
</Table>
CABOT MICROELECTRONICS CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited and amounts in thousands)
<Table>
<Caption>
September 30, September 30,
2003 2002
----------------- -----------------
ASSETS:
Current assets:
Cash and cash equivalents $ 111,318 $ 69,605
Accounts receivable, net 37,564 26,082
Inventories, net 22,906 21,959
Other current assets 6,416 5,637
----------------- -----------------
Total current assets 178,204 123,283
Property, plant and equipment, net 133,695 132,264
Other long-term assets 2,810 2,838
----------------- -----------------
Total assets $ 314,709 $ 258,385
================= =================
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable $ 12,521 $ 11,748
Capital lease obligations 1,716 1,585
Accrued expenses, income taxes payable and other current liabilities 14,679 17,238
----------------- -----------------
Total current liabilities 28,916 30,571
Long-term debt - 3,500
Capital lease obligations 7,452 8,865
Deferred income taxes and other long-term liabilities 7,476 1,943
----------------- -----------------
Total liabilities 43,844 44,879
Stockholders' equity 270,865 213,506
----------------- -----------------
Total liabilities and stockholders' equity $ 314,709 $ 258,385
================= =================
</Table>