Revenue of $86 - $87 Million Expected as Pricing Environment
Remains Stable
Business Editors
AURORA, Ill.--(BUSINESS WIRE)--Oct. 12, 2006--Cabot
Microelectronics Corporation (Nasdaq:CCMP), the world's leading
supplier of chemical mechanical planarization (CMP) polishing slurries
to the semiconductor industry, today updated its outlook for its
financial performance for the fourth quarter of fiscal 2006, which
ended September 30. The company now expects gross profit for its
fiscal fourth quarter to be between 44 and 45 percent of revenue. This
is below the guidance range of 48 percent plus or minus two percentage
points that it provided in its fiscal third quarter conference call in
July. Factors causing gross profit to fall below this guidance range
include an asset write-off and accounting for the company's recent QED
acquisition as well as its third fiscal quarter purchase of a
portfolio of CMP technology patents from IBM. Additionally, the
company now expects operating expenses of between $28 and $29 million
for the quarter, which is approximately $2 million lower than
indicated in its July conference call.
The company expects to write-off approximately $1.8 million of
assets related to converting an existing building previously used for
CMP slurry production and research and development activities into a
polishing pad manufacturing facility. The write-off is expected to
increase cost of goods sold by approximately $1.1 million and increase
research and development expense by around $0.7 million in the fourth
fiscal quarter. Retrofitting the existing building, which is near
completion, should provide a lower cost approach versus competitors'
greenfield investment strategies.
Cost of goods sold in the quarter will also increase by
approximately $0.9 million more than was previously anticipated due to
accounting for the company's QED acquisition, which required
writing-up acquired inventories to fair market value. The QED business
enjoyed robust sales of some of this written-up inventory during the
quarter, which increased costs and reduced margin. In the future,
these higher costs should dissipate as the rest of the acquired
inventory is sold, and margins on QED sales should trend toward Cabot
Microelectronics' average gross profit.
Finally, approximately $0.6 million of amortization expense
related to intangible assets acquired with the QED business and the
patent portfolio will be recorded as cost of goods sold in the
quarter, as well as in each quarter of fiscal 2007. The QED and patent
acquisitions are expected to support continued revenue momentum and
product innovation.
On an operating basis, management is pleased with the quarter's
preliminary results. Revenue is expected to be between $86 and $87
million, or 1 to 2 percent higher than the prior quarter's $84.9
million, which was a record for the company, and 16 to 18 percent
higher than revenue in the fourth quarter of fiscal 2005. Demand for
the company's CMP slurry products remained strong in July and August,
but softened somewhat in September, and pricing remained generally
stable in the quarter. Expected sales by QED of approximately $5
million met management's expectations.
William Noglows, Chairman and CEO of Cabot Microelectronics, said,
"During 2006 we continued to strengthen our business by executing our
three strategic initiatives: technology leadership, operations
excellence and connecting with customers. Demand for our CMP slurries
in fiscal 2006 was strong and we continue to establish our pads
business. We are also encouraged by our progress growing in areas
adjacent to our core CMP business, as with the QED acquisition."
Financial results for the fourth quarter of fiscal 2006 have not
yet been finalized. Therefore, information regarding this period is
subject to change, and actual results for the quarter may differ from
these preliminary results. Cabot Microelectronics will report fourth
fiscal quarter results the morning of October 26, 2006, followed by a
conference call to discuss the quarter.
ABOUT CABOT MICROELECTRONICS
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 approximately 650
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.
Notwithstanding today's foregoing announcement, it continues to be
Cabot Microelectronics' regular policy to not provide periodic
financial guidance updates outside of its quarterly earnings release
and associated conference calls, or to comment upon financial
analysts' estimates.
CONTACT: Cabot Microelectronics Corporation
Barbara Ven Horst, 630-375-5412
SOURCE: Cabot Microelectronics Corporation