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Cabot Microelectronics Reports Results for First Fiscal Quarter 2004


AURORA, Ill., Jan. 22 /PRNewswire-FirstCall/ -- 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 fiscal quarter ended December 31, 2003.

Total revenue for the first fiscal quarter of 2004 was $76.3 million, up 12.3% on a sequential basis from $67.9 million in the prior quarter and up 33.2% from $57.3 million in the first quarter a year ago. The revenue increase this quarter was primarily due to strengthening demand for the company's products within the semiconductor industry. Sequentially higher sales levels were achieved in all product lines and all geographic regions. Average price per gallon increased slightly this quarter due to better product mix and the effect of the U.S. dollar's weakening against the Japanese Yen.

Gross profit of $37.3 million in the first fiscal quarter was up sequentially from $34.4 million. However, as a percentage of revenue, gross profit decreased from 50.7% last quarter to 48.8%. This quarter gross profit was adversely affected by higher manufacturing and other product costs associated with meeting increasing customer requirements for higher product quality and greater product consistency. These higher costs this quarter more than offset the combined benefit of higher capacity utilization, due to this quarter's higher level of sales, and the absence of the $2.0 million charge recorded last quarter related to a minimum purchase obligation under a raw material supply agreement. Gross profit in the year ago quarter was $29.6 million, which represented 51.7% of revenue.

Operating expenses of $19.7 million, consisting of research and development, selling and marketing, and general and administrative expenses, decreased sequentially $0.8 million, and were $4.0 million higher than the year ago quarter. This decrease from the prior quarter was mainly due to lower spending on wafers and supplies used in the company's research and development program, and was partially offset by a modest increase in staffing costs. Operating expenses represented 25.8% of sales this quarter, compared with 30.2% in the prior quarter and 28.3% for full fiscal year 2003.

Net income for the quarter was $11.6 million, up 20.2% from $9.6 million in the previous quarter and up 25.1% from $9.3 million in the year ago quarter. Diluted earnings per share were $0.46 this quarter, compared to $0.39 in the previous quarter and $0.38 in the year ago quarter.

"We are pleased with our overall sales growth and profitability this quarter," stated William P. Noglows, Cabot Microelectronics' Chairman and CEO. "We believe that the investments and commitments we made during the prolonged industry downturn have positioned us well for what appears to be a strong recovery in the semiconductor industry. Our operating profit this quarter demonstrates our ability to leverage our substantial investment in research and development and other fixed operating expenses as sales increase. We remain committed to maintaining our leadership position in this competitive CMP slurry arena."

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 4711006. 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, IL., 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, product performance, 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 annual report on Form 10-K for the fiscal year ended September 30, 2003, filed with the SEC. Cabot Microelectronics Corporation assumes no obligation to update this forward-looking information.

    (Unaudited in thousands, except per share amounts)

                                                     Quarter Ended
                                            Dec. 31,    Sept. 30,   Dec. 31,
                                              2003        2003        2002

      Revenue                               $76,279     $67,903     $57,273

      Cost of goods sold                     39,026      33,458      27,665

          Gross profit                       37,253      34,445      29,608

      Operating expenses:

        Research and development             10,723      12,469       8,635

        Selling and marketing                 3,783       3,338       2,578

        General and administrative            5,124       4,607       4,368

        Amortization of intangibles              85          85          85

          Total operating expenses           19,715      20,499      15,666

      Operating income                       17,538      13,946      13,942

      Other income (expense), net                36        (111)         (5)

      Income before income taxes             17,574      13,835      13,937

      Provision for income taxes              5,976       4,186       4,669

          Net income                        $11,598      $9,649      $9,268

    Basic earnings per share                  $0.47       $0.39       $0.38

    Weighted average basic shares
     outstanding                             24,733      24,591      24,300

    Diluted earnings per share                $0.46       $0.39       $0.38

    Weighted average diluted shares
     outstanding                             24,994      25,049      24,579

    (Unaudited and amounts in thousands)

                                                December 31,     September 30,
                                                    2003              2003

    Current assets:
      Cash and cash equivalents                    $127,359          $111,318
      Accounts receivable, net                       41,009            37,564
      Inventories, net                               22,682            23,814
      Other current assets                            7,039             6,416
        Total current assets                        198,089           179,112

    Property, plant and equipment, net              132,117           133,695
    Other long-term assets                            2,728             2,810
        Total assets                               $332,934          $315,617


    Current liabilities:
      Accounts payable                              $12,819           $12,521
      Capital lease obligations                       1,746             1,716
      Accrued expenses, income taxes
       payable and other current
       liabilities                                   16,133            14,679
        Total current liabilities                    30,698            28,916

    Capital lease obligations                         7,054             7,452
    Deferred income taxes and other long-
     term liabilities                                 8,108             7,476
        Total liabilities                            45,860            43,844

    Stockholders' equity                            287,074           271,773
        Total liabilities and
         stockholders' equity                      $332,934          $315,617

    William S. Johnson
    Vice President and Chief Financial Officer
    Cabot Microelectronics Corporation
SOURCE  Cabot Microelectronics Corporation
    -0-                             01/22/2004
    /CONTACT:  William S. Johnson, Vice President and Chief Financial Officer
of Cabot Microelectronics Corporation, +1-630-375-6631/
    /Web site: /

CO:  Cabot Microelectronics Corporation
ST:  Illinois

-- CGTH018 --
7711 01/22/2004 08:00 EST

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