EXHIBIT 99.1
CABOT MICROELECTRONICS REPORTS
RESULTS FOR FIRST QUARTER OF FISCAL 2005
AURORA, IL, January 27, 2005 - 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
first quarter of fiscal 2005, which ended December 31, 2004.
Total revenue for the first fiscal quarter was $67.1 million, down 18.9% from
$82.7 million in the prior quarter and down 12.1% from $76.3 million in the
first quarter a year ago. The sequential revenue decrease was primarily due to
lower demand for the company's products used in dielectric and tungsten
applications, the combined revenue of which declined by 19.4% sequentially. The
company attributes the decrease in demand to a reduction in wafer starts during
the quarter by a number of customers. Revenue from slurries for copper polishing
applications was down sequentially by 25.8% due to the remaining impact of lost
business with one customer, which the company previously disclosed, as well as
selected price reductions. Revenue from the company's products for data storage
applications increased sequentially by 21.3%. Average selling price decreased by
2.9% this quarter compared to the prior quarter, primarily due to price
reductions, which were partially offset by a higher valued product mix.
Gross profit for the quarter was $33.6 million, down 16.4% from the prior
quarter's $40.2 million, and down 9.8% from $37.3 million in the year ago
quarter. As a percentage of revenue, gross profit increased to 50.1% this
quarter from 48.6% last quarter and 48.8% in the same quarter last year. Gross
profit as a percentage of revenue benefited this quarter from a higher valued
product mix, as well as higher yields in the company's manufacturing operations.
These benefits were partially offset by the effects of price reductions and
lower utilization of the company's manufacturing capacity.
Operating expenses of $19.4 million, consisting of research and development,
selling and marketing, and general and administrative expenses, decreased by
$1.3 million sequentially from $20.7 million last quarter, and were $0.3 million
lower than the $19.7 million reported in the same quarter last year.
Net income for the quarter was $9.8 million, down 25.4% from $13.2 million last
quarter and down 15.3% from $11.6 million in the same quarter last year. Diluted
earnings per share were $0.40 this quarter, compared to $0.53 in the previous
quarter and $0.46 in the year ago quarter.
"We believe that the sequential decrease in revenue that we experienced this
quarter, which followed two consecutive quarters of record revenue, primarily
reflects the impact of a reduction in semiconductor industry output on our
business, which is principally wafer-start based," stated William P. Noglows,
Cabot Microelectronics' Chairman and CEO. "In our view, this decrease in
semiconductor production to reduce excess product inventories was primarily
focused on communications devices that represent more mature technologies.
Although broad based, the reduction in output was particularly evident among the
foundries, which represent a significant portion of our business. As a result,
sales of our products for tungsten and
oxide polishing applications decreased significantly. Further, although we also
experienced a sharp sequential decrease in revenue from our copper slurries,
sales volume remained solid, adjusting for the loss of one customer which we
have discussed in previous quarters. Despite the challenging industry conditions
this quarter, we are particularly encouraged by results of our efforts to
improve productivity and quality through our Six Sigma initiatives, as
demonstrated by our improved manufacturing yields within this lower revenue
environment, as well as our control of costs throughout the organization. In
particular, we believe these improvements contributed to the increase in gross
margin as a percentage of revenue that we achieved this quarter. From our
perspective, these improvements, along with our demonstrated business model,
position us well for continued profitability and strong cash generation."
CONFERENCE CALL
Cabot Microelectronics' quarterly earnings conference call will be held today at
9:00 a.m. Central Time. The live conference call will be available to all
interested parties via webcast from the company's website, www.cabotcmp.com, or
by phone at (800) 893-3008. Callers outside the U.S. can dial (706) 634-5531.
For those who cannot listen to the live broadcast, a replay will be available
through February, 17, 2005 by calling (800) 642-1687 or (706) 645-9291, and
using access code 3166676, or via webcast at www.cabotcmp.com. A transcript of
the formal comments made during the conference call will be available in the
Investor Relations section of the company's website.
ABOUT CABOT MICROELECTRONICS
Cabot Microelectronics Corporation, headquartered in Aurora, Illinois, is the
leading supplier of CMP slurries for polishing various materials used in
semiconductor manufacturing processes. The company's products play a critical
role in the production of the most advanced semiconductor devices, enabling the
manufacture of smaller, faster and more complex devices by its customers. For
more information about Cabot Microelectronics Corporation visit www.cabotcmp.com
or contact Mr. David H. Li, Director of Investor Relations, at (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 the markets
in which the company participates, international events, product performance,
new product introductions, development of new products and technologies, and
construction of new facilities 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 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 annual report on Form 10-K for the fiscal year
ended September 30, 2004, filed with the SEC and available on our website,
www.cabotcmp.com. Cabot Microelectronics Corporation assumes no obligation to
update this forward-looking information.
CABOT MICROELECTRONICS CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited in thousands, except per share amounts)
<Table>
<Caption>
Quarter Ended
----------------------------------------------
Dec. 31, Sept. 30, Dec. 31,
2004 2004 2003
------------ ------------ ------------
Revenue $ 67,084 $ 82,714 $ 76,279
Cost of goods sold 33,472 42,498 39,026
------------ ------------ ------------
Gross profit 33,612 40,216 37,253
Operating expenses:
Research and development 9,544 10,979 10,723
Selling and marketing 4,176 3,844 3,783
General and administrative 5,580 5,819 5,124
Amortization of intangibles 85 85 85
------------ ------------ ------------
Total operating expenses 19,385 20,727 19,715
------------ ------------ ------------
Operating income 14,227 19,489 17,538
Other income (expense), net 487 117 36
------------ ------------ ------------
Income before income taxes 14,714 19,606 17,574
Provision for income taxes 4,885 6,439 5,976
------------ ------------ ------------
Net income $ 9,829 $ 13,167 $ 11,598
============ ============ ============
Basic earnings per share $ 0.40 $ 0.53 $ 0.47
============ ============ ============
Weighted average basic shares outstanding 24,638 24,689 24,733
============ ============ ============
Diluted earnings per share $ 0.40 $ 0.53 $ 0.46
============ ============ ============
Weighted average diluted shares outstanding 24,721 24,783 24,994
============ ============ ============
</Table>
CABOT MICROELECTRONICS CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited and amounts in thousands)
<Table>
<Caption>
December 31, September 30,
2004 2004
------------- -------------
ASSETS:
Current assets:
Cash and cash equivalents $ 169,796 $ 157,318
Accounts receivable, net 32,596 41,347
Inventories, net 30,480 24,474
Other current assets 7,368 6,542
------------- -------------
Total current assets 240,240 229,681
Property, plant and equipment, net 128,526 127,794
Other long-term assets 5,547 5,816
------------- -------------
Total assets $ 374,313 $ 363,291
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable $ 12,429 $ 13,080
Capital lease obligations 1,111 1,272
Accrued expenses, income taxes payable and other current liabilities 15,668 18,023
------------- -------------
Total current liabilities 29,208 32,375
Capital lease obligations 6,153 6,385
Deferred income taxes and other long-term liabilities 9,091 8,909
------------- -------------
Total liabilities 44,452 47,669
Stockholders' equity 329,861 315,622
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Total liabilities and stockholders' equity $ 374,313 $ 363,291
============= =============
</Table>