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Cabot Microelectronics Reports Results For Fourth Fiscal Quarter 2003


AURORA, Ill., Oct 23, 2003 /PRNewswire-FirstCall via COMTEX/ -- 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%.

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 Access to the live call is 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

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 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.

     William S. Johnson
     Vice President and Chief Financial Officer
     Cabot Microelectronics Corporation    630/375-6631

    (Unaudited and amounts in thousands, except per share amounts)

                                     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

    (Unaudited and amounts in thousands)

                                               September 30,     September 30,
                                                     2003              2002

    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


    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

SOURCE Cabot Microelectronics Corp.

William S. Johnson, Vice President and Chief Financial Officer
of Cabot Microelectronics Corporation, +1-630-375-6631

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