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Cabot Microelectronics Reports Results for Third Fiscal Quarter 2003

Revenue Grew 3.4%, Earnings Up 7.8% Sequentially

AURORA, Ill., Jul 24, 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 third fiscal quarter ended June 30, 2003.

Total revenue for the third fiscal quarter of 2003 was $64.3 million, up 3.4% on a sequential basis from $62.2 million in the prior quarter and down 6.0% from $68.4 million in the third quarter a year ago. The majority of the increase from the prior quarter was due to revenue growth from sales of slurries for polishing applications at the leading edge of technology, such as copper interconnects for 130 nanometer IC devices. During this quarter the Company began selling direct to customers in Europe, Singapore and Malaysia rather than through a distributor. As anticipated, the draw down of the distributor's inventory during this transition period reduced revenue this quarter by approximately $3.7 million.

Gross profit in the third fiscal quarter of $32.9 million was up sequentially from $30.4 million. As a percentage of revenue, gross profit increased from 48.9% last quarter to 51.2%. The percentage increase in gross profit resulted primarily from lower manufacturing costs as well as improved product mix. Gross profit in the year ago quarter was $36.3 million or 53.0% of revenue. During the comparable quarter last year the Company experienced a significant sequential increase in revenue as the industry and its customers ramped production in anticipation of a strong recovery in the second half of 2002 that did not materialize and resulted in an over-build of IC device inventory.

Operating expenses of $18.3 million, consisting of research and development (R&D), selling and marketing, and general and administrative expenses, were up sequentially $1.5 million, and were $1.3 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.

Net income for the quarter was $9.8 million, compared to $9.1 million in the previous quarter and $13.3 million in the year ago quarter. Diluted earnings per share were $0.40 this quarter, compared to $0.37 in the previous quarter and $0.54 in the year ago quarter.

"We are pleased with our strong financial performance for the quarter," stated Dr. Matthew Neville, Cabot Microelectronics' Chairman and CEO. "Our results reflect the market's adoption of our industry-leading products in the manufacture of the most advanced integrated circuits. We continue to invest in both R&D to maintain our technology leadership, and our operations excellence initiatives to meet our customers' heightened performance requirements."

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. Callers outside of the U.S. can dial 706-634-5545. For assistance, call 630-499-2600. This press release, as well as the script of 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 March 31, 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.

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

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

                                      Quarter Ended        Nine Months Ended
                               June 30, March 31, June 30,  June 30,  June 30,
                                 2003     2003      2002      2003      2002

    Revenue                     $64,288  $62,201  $68,377  $183,762  $169,901
    Cost of goods sold           31,360   31,786   32,113    90,811    81,121
      Gross profit               32,928   30,415   36,264    92,951    88,780

    Operating expenses:
      Research and development   10,803    9,609   10,190    29,047    23,566
      Selling and marketing       2,751    2,554    2,470     7,883     7,198
      General and administrative  4,655    4,595    4,260    13,618    13,541
      Litigation settlement           -        -        -         -     1,000
      Amortization of intangibles    85       85       90       255       271
        Total operating
          expenses               18,294   16,843   17,010    50,803    45,576

    Operating income             14,634   13,572   19,254    42,148    43,204
    Other income (expense), net      46       43    1,160        84       692
    Income before income taxes   14,680   13,615   20,414    42,232    43,896
    Provision for income taxes    4,918    4,561    7,147    14,148    14,661
      Net income                 $9,762   $9,054  $13,267   $28,084   $29,235

    Basic earnings per share      $0.40    $0.37    $0.55     $1.15     $1.21
    Weighted average basic
      shares outstanding         24,389   24,346   24,193    24,341    24,140

    Diluted earnings per share    $0.40    $0.37    $0.54     $1.14     $1.19
    Weighted average diluted
      shares outstanding         24,639   24,593   24,521    24,600    24,565

    (Unaudited and amounts in thousands)

                                                    June 30,     September 30,
                                                     2003             2002
    Current assets:
      Cash and cash equivalents                     $99,268         $69,605
      Accounts receivable, net                       30,501          26,082
      Inventories, net                               22,439          21,959
      Other current assets                            7,528           5,637
        Total current assets                        159,736         123,283

    Property, plant and equipment, net              127,581         132,264
    Other long-term assets                            2,468           2,838
        Total assets                               $289,785        $258,385


    Current liabilities:
      Accounts payable                              $11,490         $11,748
      Capital lease obligations                       1,667           1,585
      Accrued expenses, income taxes
        payable and other current liabilities        15,058          17,238
        Total current liabilities                    28,215          30,571

    Long-term debt                                        -           3,500
    Capital lease obligations                         7,747           8,865
    Deferred income taxes and other long-
      term liabilities                                4,685           1,943
        Total liabilities                            40,647          44,879

    Stockholders' equity                            249,138         213,506
      Total liabilities and stockholders' equity   $289,785        $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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