EX-99.1 2 exhibit99_1.htm EXHIBIT 99.1 Exhibit 99.1
Exhibit 99.1

CABOT MICROELECTRONICS REPORTS RESULTS
FOR SECOND QUARTER OF FISCAL 2007; CONTINUED INDUSTRY SOFTNESS ADVERSELY AFFECTS FINANCIAL RESULTS

AURORA, IL, April 26, 2007 - 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 second quarter of fiscal 2007, which ended March 31.

Total revenue for the second fiscal quarter was $77.0 million, approximately 5.9 percent lower than the prior quarter’s revenue of $81.8 million. The sequential revenue decrease primarily reflects continued softening in industry demand as a number of the company’s key customers reduced production to correct excess inventories of semiconductor devices. This industry softness has adversely affected the company’s revenue for approximately the last six months. Revenue decreased sequentially in each of the company’s business areas, except for slurries for data storage polishing applications. Revenue this quarter was 14.2 percent higher than the $67.4 million in revenue the company reported in the same quarter last year. The year ago quarter was adversely affected by the company’s transition to selling directly to customers in Taiwan, rather than through a distributor, and also did not include the recently acquired QED business.
 
The average selling price for the company’s slurry products sold in the second quarter increased by 0.6 percent compared to the prior quarter, due primarily to a higher-priced product mix. The average selling price was 4.9 percent higher than in the same quarter last year mainly as a result of a higher-priced product mix and higher selling prices.

Gross profit for the March quarter was $33.8 million, compared with $39.3 million reported in the prior quarter and $31.5 million in the same quarter a year ago. As a percentage of revenue, gross profit was 43.9 percent this quarter, lower than both the 48.1 percent in the prior quarter and 46.8 percent in the same quarter last year. Year to date, gross profit represents 46.0 percent of revenue, which is consistent with the company’s guidance range of 46 to 48 percent for the full fiscal year. The sequential decline in gross profit percentage this quarter was primarily due to lower manufacturing capacity utilization on the lower level of sales, lower yields in the company’s manufacturing operations and higher fixed manufacturing costs. These adverse affects were partially offset by a higher-valued product mix.

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Operating expenses, consisting of research, development and technical, selling and marketing, and general and administrative expenses, were $28.9 million in the second quarter, which is within the company’s guidance range of $27 million to $30 million per quarter. This was $1.7 million higher than the $27.1 million reported last quarter, primarily due to higher professional fees, including costs to enforce the company’s intellectual property portfolio, higher costs for clean room materials in the company’s research and development activities, and increased compensation related expense typical of the company’s second fiscal quarter. Operating expenses this quarter were $4.2 million higher than in the same quarter last year, a quarter that did not include the QED business.

Net income for the quarter was $4.5 million, down from $9.1 million last quarter. Net income in the same quarter last year was $5.4 million.

Diluted earnings per share were $0.19 this quarter, down from both the $0.38 in the previous quarter and $0.22 in the second quarter of fiscal 2006.

William Noglows, Chairman and CEO of Cabot Microelectronics, stated, “Due to the continued weakness that we see in the semiconductor industry, our financial results for the second fiscal quarter were not as strong as we would have liked. We believe these results were primarily a reflection of industry conditions, rather than company-specific issues, and we remain optimistic that an improvement in industry conditions could allow for a stronger second half of the year. Our solid cash flow and strong balance sheet allow us to stay the course in this weak industry environment, as we continue to invest in our core CMP consumables business, as well as our Engineered Surface Finishes growth initiative, to capture future business opportunities. We continue to make inroads with our pads business, where customer interest in our products is growing and our new pad manufacturing capacity is now on line. Finally, on March 27, 2007, we were delighted to be recognized by Intel honoring us with its prestigious Preferred Quality Supplier award for 2006. We feel that this achievement was the result of the hard work and dedication of many people across our organization, as we continued to execute on our three strategic initiatives - technology leadership, operations excellence, and connecting with 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) 800-8649. Callers outside the U.S. can dial (617) 614-2703. The conference code for the call is 95536568. A replay will be available through May 24, 2007 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.

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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 approximately 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, so the company is leveraging its expertise in CMP slurry formulation, materials and polishing techniques developed for the semiconductor industry and applying it to demanding surface modification applications in other industries where shaping, enabling and enhancing the performance of surfaces is critical to success. For more information about Cabot Microelectronics Corporation, visit www.cabotcmp.com or contact Amy Ford, 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 or trends; growth of the markets in which the company participates; international events; product performance; the generation, protection and acquisition of intellectual property, and litigation related to such 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 the company’s quarterly report on Form 10-Q for the quarter ended December 31, 2006 and in the company’s annual report on Form 10-K for the fiscal year ended September 30, 2006, both filed with the SEC. Cabot Microelectronics assumes no obligation to update this forward-looking information.
 
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CABOT MICROELECTRONICS CORPORATION
                                
CONSOLIDATED STATEMENTS OF INCOME
                                
(Unaudited and amounts in thousands, except per share amounts)
                                
                                 
                                 
 
  
 Quarter Ended
    
Six Months Ended
     
March 31,
2007 
 
 
December 31,
2006
 
 
March 31,
2006
 
  
March 31,
2007 
 
 
March 31,
2006 
 
                                 
Revenue
  
$
76,987
  
$
81,816
  
$
67,389
  
$
158,803
  
$
148,877
  
                                 
Cost of goods sold
   
43,188
   
42,501
   
35,855
   
85,689
   
78,906
 
                                 
 Gross profit
    
33,799
   
39,315
   
31,534
   
73,114
   
69,971
 
                                 
Operating expenses:
                                
                                 
Research, development & technical  
    
13,481
   
12,247
   
11,321
   
25,728
   
22,980
 
                                 
Selling & marketing  
    
5,847
   
5,476
   
5,075
   
11,323
   
10,101
 
                                 
General & administrative  
    
9,537
   
9,425
   
8,244
   
18,962
   
16,658
 
                                 
 Total operating expenses
    
28,865
   
27,148
   
24,640
   
56,013
   
49,739
 
                                 
Operating income
    
4,934
   
12,167
   
6,894
   
17,101
   
20,232
 
                                 
Other income, net
    
1,260
   
1,174
   
1,090
   
2,434
   
1,806
 
                                 
Income before income taxes
    
6,194
   
13,341
   
7,984
   
19,535
   
22,038
 
                                 
Provision for income taxes
   
1,703
   
4,216
   
2,547
   
5,919
   
7,030
 
                                 
 Net income
  
$
4,491
  
$
9,125
  
$
5,437
  
$
13,616
  
$
15,008
  
                                 
                                 
Basic earnings per share
 
$
0.19
  
$
0.38
  
$
0.22
  
$
0.57
  
$
0.62
  
                                 
Weighted average basic shares outstanding
   
23,708
   
23,839
   
24,233
   
23,774
   
24,299
 
                                 
                                 
Diluted earnings per share
 
$
0.19
  
$
0.38
  
$
0.22
  
$
0.57
  
$
0.62
  
                                 
Weighted average diluted shares outstanding
   
23,718
   
23,841
   
24,233
   
23,777
   
24,299
 
                                 
                                 
 Certain reclassifications of prior fiscal quarter amounts have been made to conform with the current period presentation.
          
                                 

 
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CABOT MICROELECTRONICS CORPORATION
              
CONSOLIDATED CONDENSED BALANCE SHEETS
              
(Unaudited and amounts in thousands)
              
         
 
  
     
March 31,
2007 
    
September 30,
2006
  
ASSETS:
              
               
Current assets:
              
Cash, cash equivalents and short-term investments
  
$
163,568
  
$
165,930
  
Accounts receivable, net
   
47,563
   
48,028
 
Inventories, net
    
42,102
   
40,326
 
Other current assets
    
11,855
   
7,221
 
Total current assets 
    
265,088
   
261,505
 
               
Property, plant and equipment, net
    
123,839
   
130,176
 
Other long-term assets
    
24,573
   
20,452
 
Total assets 
  
$
413,500
  
$
412,133
  
               
               
LIABILITIES AND STOCKHOLDERS' EQUITY: 
              
               
Current liabilities:
              
Accounts payable
  
$
9,330
  
$
15,104
  
Capital lease obligations
    
1,297
   
1,254
 
Accrued expenses, income taxes payable and other current liabilities
    
18,710
   
22,475
 
Total current liabilities 
    
29,337
   
38,833
 
               
Capital lease obligations
    
3,885
   
4,420
 
Other long-term liabilities
    
1,263
   
1,109
 
Total liabilities 
    
34,485
   
44,362
 
               
Stockholders' equity
    
379,015
   
367,771
 
Total liabilities and stockholders' equity 
  
$
413,500
  
$
412,133
  
               
               
 
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