Business Editors/Technology Editors
AURORA, Ill.--(BUSINESS WIRE)--Oct. 26, 2006--Cabot
Microelectronics Corporation (Nasdaq:CCMP), the world's leading
supplier of chemical mechanical planarization (CMP) polishing slurries
to the semiconductor industry, today reported financial results for
its fourth fiscal quarter and full fiscal year 2006, which ended
September 30.
Total revenue for the fourth fiscal quarter was $87.0 million,
which is consistent with the company's updated outlook that it
released on October 12, 2006. This is the highest quarterly revenue
ever recorded by the company, and is approximately $2.0 million higher
than the prior quarter's $84.9 million in revenue, which was the
previous record. The increase was primarily due to revenue contributed
by the company's recent QED Technologies acquisition. Revenue from the
company's tungsten slurry products increased sequentially, while
revenue from its copper, dielectric and data storage product lines
each declined sequentially as the company experienced some softening
of demand in September. Revenue this quarter was 17.8 percent higher
than last year's $73.9 million fourth quarter revenue. Revenue for the
full fiscal year was $320.8 million, which was $50.3 million, or 18.6
percent, higher than revenue for the previous fiscal year.
The average selling price for the company's slurry products sold
in the fourth quarter increased by 1.6 percent compared to the prior
quarter, due to a higher-priced product mix, partially offset by
limited price reductions.
Gross profit for the September quarter was $38.7 million, compared
with $40.4 million in the prior quarter and $34.6 million in the same
quarter a year ago. As a percentage of revenue, gross profit was 44.4
percent this quarter, which is consistent with the company's updated
outlook of October 12. Comparable gross profit percentages were 47.6
percent in the prior quarter and 46.9 percent in the same quarter last
year. The sequential decrease was primarily due to an asset write-off
associated with the company's establishing manufacturing capacity for
its new CMP polishing pad business by retrofitting an existing
building it owns, and purchase accounting associated with the
company's recent acquisitions of the QED business and a portfolio of
CMP technology patents from IBM. Other factors impacting gross profit
this quarter were higher costs in certain areas, including lower
yields in the company's manufacturing operations, partially offset by
a higher-valued product mix. Gross profit as a percentage of revenue
was 46.5 percent for the full fiscal year, compared with 47.8 percent
in the previous year.
Operating expenses, consisting of research, development and
technical, selling and marketing, and general and administrative
expenses, were $28.2 million in the fourth quarter, which is
consistent with the company's announcement on October 12. These
expenses increased by $1.6 million from $26.7 million last quarter,
and were $4.2 million higher than the $24.0 million in the same
quarter last year. The sequential increase was primarily due to
ongoing operating expenses associated with the newly acquired QED
business, a $1.1 million write-off associated with in-process research
and development efforts by QED as required by purchase accounting
rules, and a $0.7 million write-off of research and development assets
as part of the building conversion to pad manufacturing capacity.
These sequential increases were partially offset by lower professional
fees, including costs to enforce the company's intellectual property
portfolio, and lower usage of research and development materials. The
year-over-year increase in operating expenses was primarily due to
share-based compensation expense, including stock option expense,
which the company began recording in fiscal 2006 according to
accounting rules. The company recorded total pre-tax share-based
compensation expense of $2.8 million this quarter, of which $2.6
million was included in operating expense. Higher staffing costs,
including costs to support a number of the company's strategic
initiatives, particularly in Asia, also contributed to the
year-over-year increase.
For the full year, operating expenses increased by $19.2 million
to $104.6 million from $85.4 million. The single largest factor in the
year-over-year increase was $10.7 million in share-based compensation
expense that the company recorded, of which $10.0 million was
classified as operating expense. The second factor was increased
staffing-related expenses to support strategic initiatives.
Net income for the quarter was $8.2 million, down from $9.8
million last quarter. The effects of the asset write-off and purchase
accounting described above reduced net income this quarter by
approximately $3 million. Net income was only 1.1 percent lower than
the $8.3 million in the same quarter last year, despite the effects of
the asset write-off, purchase accounting, and share-based compensation
expense. Net income for the full fiscal year was $32.9 million, up
from $32.5 million in fiscal 2005 including the effects of these
factors this year.
Diluted earnings per share were $0.34 this quarter, which reflects
an adverse impact of approximately $0.12 for effects of the asset
write-off and purchase accounting and approximately $0.08 per share of
share-based compensation expense. Earnings per share were $0.06 lower
than the $0.40 in the previous quarter and equal to earnings per share
reported in the fourth quarter of fiscal 2005. The company did not
record share-based compensation expense in the year ago quarter.
Earnings per share for full fiscal year 2006 were $1.36, compared with
$1.32 for the previous fiscal year, despite the effects of the asset
write-off, purchase accounting, and approximately $0.28 of share based
compensation expense this year.
William Noglows, Chairman and CEO of Cabot Microelectronics,
stated, "This was an exciting and successful year of growth and
development for us. Guided by our strategic initiatives of technology
leadership, operations excellence and connecting with customers, we
continued to invest in our business and enhance our ability to serve
our customers. We are happy with our performance this year, which we
believe represents significant improvement over fiscal 2005. This year
we achieved record revenue in our CMP slurry business, and began to
establish our CMP polishing pad business. We also took our first
significant steps to expand our business beyond the semiconductor
industry, through two acquisitions under our Engineered Surface
Finishes initiative. We believe we have strengthened our leadership
position, which will help us to continue growing our business and
serving our customers."
CONFERENCE CALL
Cabot Microelectronics Corporation's quarterly earnings conference
call will be held today at 9:00 a.m. Central Time. The live conference
call will be available via webcast from the company's website,
www.cabotcmp.com, or by phone at (866) 383-8003. Callers outside the
U.S. can dial (617) 597-5330. A replay will be available through
November 30, 2006 via webcast at www.cabotcmp.com. A transcript of the
formal comments made during the conference call will also be available
in the Investor Relations section of the company's website.
ABOUT CABOT MICROELECTRONICS CORPORATION
Cabot Microelectronics Corporation, headquartered in Aurora,
Illinois, is the world's leading supplier of CMP slurries used in
semiconductor and data storage manufacturing. 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. Since becoming an independent
public company in 2000, the company has grown to nearly 750 employees
who work at research and development labs, sales and business offices,
manufacturing facilities and customer service centers in China,
France, Germany, Japan, Singapore, South Korea, Taiwan, the United
Kingdom and the United States. The company's vision is to become the
world leader in shaping, enabling and enhancing the performance of
surfaces, and thus looks beyond its core CMP business in the
semiconductor industry. For more information about Cabot
Microelectronics Corporation, visit www.cabotcmp.com or contact
Barbara Ven Horst, Director of Investor Relations at (630) 375-5412.
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; the
generation, protection and acquisition of intellectual property; new
product introductions; development of new products, technologies and
markets; the acquisition of or investment in other entities; and the
construction of new or refurbishment of existing facilities by Cabot
Microelectronics Corporation. 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 "Risk Factors" in Other
Information in our quarterly report on Form 10-Q for the quarter ended
June 30, 2006, and "Risks Related to Our Business" in Management's
Discussion and Analysis in our annual report on Form 10-K for the
fiscal year ended September 30, 2005, both filed with the SEC. Cabot
Microelectronics assumes no obligation to update this forward-looking
information.
CABOT MICROELECTRONICS CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited and amounts in thousands, except per share amounts)
Quarter Ended
--------------------------------------
September 30, June 30, September 30,
2006 2006 2005
------------- ---------- -------------
Revenue $86,982 $84,936 $73,861
Cost of goods sold (a) 48,328 44,524 39,234
------------- ---------- -------------
Gross profit 38,654 40,412 34,627
Operating expenses:
Research, development &
technical (a) 13,030 12,060 12,147
Selling & marketing (a) 5,528 5,486 4,863
General & administrative
(a) 8,556 9,105 7,029
Purchased in-process
research & development 1,120 - -
------------- ---------- -------------
Total operating
expenses 28,234 26,651 24,039
------------- ---------- -------------
Operating income 10,420 13,761 10,588
Other income, net 1,541 764 833
------------- ---------- -------------
Income before income taxes 11,961 14,525 11,421
Provision for income taxes 3,803 4,743 3,169
------------- ---------- -------------
Net income $8,158 $9,782 $8,252
============= ========== =============
Basic earnings per share $0.34 $0.40 $0.34
============= ========== =============
Weighted average basic shares
outstanding 24,087 24,205 24,459
============= ========== =============
Diluted earnings per share $0.34 $0.40 $0.34
============= ========== =============
Weighted average diluted
shares outstanding 24,087 24,205 24,460
============= ========== =============
(a) Includes the following
amounts related to share-
based compensation expense:
Cost of goods sold $171 $164 $-
Research, development &
technical 244 239 -
Selling & marketing 271 262 -
General & administrative 2,106 2,062 -
Tax benefit (897) (1,009) -
------------- ---------- -------------
Total share-based
compensation expense,
net of tax $1,895 $1,718 $-
============= ========== =============
Certain reclassifications of prior fiscal year and fiscal
quarter amounts have been made to conform with the current
period presentation.
Twelve Months Ended
---------------------------
September 30, September 30,
2006 2005
------------- -------------
Revenue $320,795 $270,484
Cost of goods sold (a) 171,758 141,282
------------- -------------
Gross profit 149,037 129,202
Operating expenses:
Research, development &
technical (a) 48,070 43,010
Selling & marketing (a) 21,115 16,989
General & administrative
(a) 34,319 25,427
Purchased in-process
research & development 1,120 -
------------- -------------
Total operating
expenses 104,624 85,426
------------- -------------
Operating income 44,413 43,776
Other income, net 4,111 2,747
------------- -------------
Income before income taxes 48,524 46,523
Provision for income taxes 15,576 14,050
------------- -------------
Net income $32,948 $32,473
============= =============
Basic earnings per share $1.36 $1.32
============= =============
Weighted average basic shares
outstanding 24,228 24,563
============= =============
Diluted earnings per share $1.36 $1.32
============= =============
Weighted average diluted
shares outstanding 24,228 24,612
============= =============
(a) Includes the following
amounts related to share-
based compensation expense:
Cost of goods sold $648 $-
Research, development &
technical 959 -
Selling & marketing 1,037 -
General & administrative 8,020 -
Tax benefit (3,809) -
------------- -------------
Total share-based
compensation expense,
net of tax $6,855 $-
============= =============
Certain reclassifications of prior fiscal year and fiscal
quarter amounts have been made to conform with the current
period presentation.
CABOT MICROELECTRONICS CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited and amounts in thousands)
September 30, September 30,
2006 2005
------------- -------------
ASSETS:
Current assets:
Cash, cash equivalents and short-term
investments $165,930 $171,041
Accounts receivable, net 48,028 36,759
Inventories, net 40,326 28,797
Other current assets 7,221 9,210
------------- -------------
Total current assets 261,505 245,807
Property, plant and equipment, net 130,176 135,784
Other long-term assets 20,452 5,172
------------- -------------
Total assets $412,133 $386,763
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable $15,104 $10,236
Capital lease obligations 1,254 1,170
Accrued expenses, income taxes payable
and other current liabilities 22,475 24,216
------------- -------------
Total current liabilities 38,833 35,622
Capital lease obligations 4,420 5,436
Deferred income taxes and other long-term
liabilities 1,109 6,621
------------- -------------
Total liabilities 44,362 47,679
Stockholders' equity 367,771 339,084
------------- -------------
Total liabilities and stockholders'
equity $412,133 $386,763
============= =============
CONTACT: Cabot Microelectronics Corporation
Barbara Ven Horst, 630-375-5412
SOURCE: Cabot Microelectronics Corporation