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Cabot Microelectronics Reports Results for Second Fiscal Quarter 2004


AURORA, Ill., Apr 22, 2004 /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 second fiscal quarter, which ended March 31, 2004.

Total revenue for the second fiscal quarter of 2004 was $73.5 million, down 3.6% from $76.3 million in the prior quarter and up 18.2% from $62.2 million in the second quarter a year ago. While overall sales volumes increased slightly from the prior quarter, revenue was adversely affected by a decline in the overall average selling price as a result of a lower valued product mix and selective price reductions.

Gross profit of $36.1 million in the quarter was down by 3.0% sequentially from the $37.3 million reported in the prior quarter and up 18.9% from the $30.4 million reported in the year ago quarter. As a percentage of revenue, gross profit increased to 49.2% this quarter from 48.8% last quarter, primarily due to higher yields in the company's manufacturing process and overall lower product costs, partially offset by lower prices. Gross profit in the same quarter of last year represented 48.9% of revenue.

Operating expenses of $21.3 million, consisting of research and development, selling and marketing, and general and administrative expenses, increased sequentially by $1.6 million, and were $4.5 million higher than the comparable quarter last year. The increase from the prior quarter was partially attributable to approximately $0.5 million in separation costs associated with the departure of two executives, which the company had previously disclosed, along with annual wage and salary increases that became effective on January 1, higher depreciation, and a modest increase in research and development expense.

Net income for the quarter was $9.7 million, down 16.2% from $11.6 million in the previous quarter and up 7.3% from $9.1 million in the year ago quarter. Diluted earnings per share were $0.39 this quarter, compared to $0.46 in the previous quarter and $0.37 in the year ago quarter.

"While it has been a challenging quarter, we believe we are well-positioned for continued leadership in the competitive CMP slurry arena," stated William P. Noglows, Cabot Microelectronics' Chairman and CEO. "We view our operational and technical capabilities and facilities as unmatched in the industry, enabling us to continue to meet our customers' increasing requirements for product quality and performance. Further, the breadth and depth of our infrastructure, along with a renewed focus on costs, provide us with continued opportunities to capture efficiencies and economies of scale in our business."

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 800-893-3008, access code 4711975. Callers outside of the U.S. can dial 706-634-5531. 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, 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, 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 quarterly report on Form 10-Q for the quarter ended December 31, 2003, and our Annual Report on Form 10-K for the fiscal year ended September 30, 2003, 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              Six Months Ended
                         March 31,  Dec. 31,  March 31,   March 31,  March 31,
                           2004       2003      2003        2004       2003

      Revenue             $73,515   $76,279    $62,201    $149,794   $119,474

      Cost of goods sold   37,366    39,026     31,786      76,392     59,451

          Gross profit     36,149    37,253     30,415      73,402     60,023

      Operating expenses:

        Research and
         development       11,143    10,723      9,609      21,866     18,244

        Selling and
         marketing          4,363     3,783      2,554       8,146      5,132

        General and
         administrative     5,749     5,124      4,595      10,873      8,963

        Amortization of
         intangibles           85        85         85         170        170

          Total operating
           expenses        21,340    19,715     16,843      41,055     32,509

      Operating income     14,809    17,538     13,572      32,347     27,514

      Other income
       (expense), net         (86)       36         43         (50)        38

      Income before income
       taxes               14,723    17,574     13,615      32,297     27,552

      Provision for income
       taxes                5,006     5,976      4,561      10,982      9,230

          Net income       $9,717   $11,598     $9,054     $21,315    $18,322

    Basic earnings per
     share                  $0.39     $0.47      $0.37       $0.86      $0.75

    Weighted average basic
     shares outstanding    24,785    24,733     24,346      24,761     24,325

    Diluted earnings per
     share                  $0.39     $0.46      $0.37       $0.85      $0.75

    Weighted average
     diluted shares
     outstanding           24,926    24,994     24,593      24,935     24,589

     (Unaudited and amounts in thousands)

                                                   March 31,     September 30,
                                                     2004            2003

    Current assets:
      Cash and cash equivalents                    $140,264        $111,318
      Accounts receivable, net                       38,452          37,564
      Inventories, net                               23,861          23,814
      Other current assets                            8,427           6,416
        Total current assets                        211,004         179,112

    Property, plant and equipment, net              129,799         133,695
    Other long-term assets                            2,660           2,810
        Total assets                               $343,463        $315,617


    Current liabilities:
      Accounts payable                              $14,398         $12,521
      Capital lease obligations                       1,591           1,716
      Accrued expenses and other current
       liabilities                                   12,141          14,679
        Total current liabilities                    28,130          28,916

    Capital lease obligations                         6,835           7,452
    Deferred income taxes and other long-term
     liabilities                                      8,669           7,476
        Total liabilities                            43,634          43,844

    Stockholders' equity                            299,829         271,773
        Total liabilities and stockholders'
         equity                                    $343,463        $315,617

SOURCE Cabot Microelectronics Corporation

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

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