10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended

December 31, 2015

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission File Number 000-30205

CABOT MICROELECTRONICS CORPORATION

(Exact name of registrant as specified in its charter)

DELAWARE	36-4324765
(State of Incorporation)	(I.R.S. Employer Identification No.)

870 NORTH COMMONS DRIVE	60504
AURORA, ILLINOIS	(Zip Code)
(Address of principal executive offices)

Registrant's telephone number, including area code: (630) 375-6631

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES X NO

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

YES X NO

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definitions of "large accelerated filer," "accelerated filer" and smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer X Accelerated filer Non-accelerated filer Smaller reporting company

As of January 31, 2016, the Company had 24,195,725 shares of Common Stock, par value $0.001 per share, outstanding.

CABOT MICROELECTRONICS CORPORATION

INDEX

Part I. Financial Information		Page
Item 1.	Unaudited Financial Statements
	Consolidated Statements of Income Three Months Ended December 31, 2015 and 2014	3
	Consolidated Statements of Comprehensive Income Three Months Ended December 31, 2015 and 2014	4
	Consolidated Balance Sheets December 31, 2015, and September 30, 2015	5
	Consolidated Statements of Cash Flows Three Months Ended December 31, 2015 and 2014	6
	Notes to the Consolidated Financial Statements	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4.	Controls and Procedures	33
Part II. Other Information
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	39
Item 3.	Defaults Upon Senior Securities	39
Item 4.	Mine Safety Disclosures	39
Item 6.	Exhibits	40
	Signatures	41

PART I. FINANCIAL INFORMATION

ITEM 1.

CABOT MICROELECTRONICS CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited and in thousands, except per share amounts)

	Three Months Ended December 31,
	2015		2014
Revenue	$	100,369	$	111,934
Cost of goods sold		50,174		54,960
Gross profit		50,195		56,974
Operating expenses:
Research, development and technical		14,828		15,018
Selling and marketing		6,749		7,639
General and administrative		14,263		11,751
Total operating expenses		35,840		34,408
Operating income		14,355		22,566
Interest expense		1,167		906
Other income, net		190		1,057
Income before income taxes		13,378		22,717
Provision for income taxes		2,069		2,801
Net income	$	11,309	$	19,916
Basic earnings per share	$	0.46	$	0.83
Weighted average basic shares outstanding		24,142		23,651
Diluted earnings per share	$	0.46	$	0.80
Weighted average diluted shares outstanding		24,549		24,486

The accompanying notes are an integral part of these consolidated financial statements.

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CABOT MICROELECTRONICS CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited and in thousands)

	Three Months Ended December 31,
	2015		2014
Net income	$	11,309	$	19,916
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments		197		(8,332	)
Minimum pension liability adjustment		372		-
Net unrealized losses on cash flow hedges		559		(169	)
Other comprehensive income (loss), net of tax		1,128		(8,501	)
Comprehensive income	$	12,437	$	11,415

The accompanying notes are an integral part of these consolidated financial statements.

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CABOT MICROELECTRONICS CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited and in thousands, except share amounts)

	December 31, 2015			September 30, 2015
ASSETS
Current assets:
Cash and cash equivalents	$	218,118		$	354,190
Accounts receivable, less allowance for doubtful accounts of $1,231 at December 31, 2015, and $1,224 at September 30, 2015		54,998			49,405
Inventories, net		76,179			70,678
Prepaid expenses and other current assets		15,163			12,840
Deferred income taxes		-			7,395
Total current assets		364,458			494,508
Property, plant and equipment, net		101,537			93,743
Goodwill		95,703			40,442
Other intangible assets, net		63,757			4,565
Deferred income taxes		15,615			12,212
Other long-term assets		15,615			15,004
Total assets	$	656,685		$	660,474
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	13,802		$	15,448
Accrued expenses, income taxes payable and other current liabilities		29,464			36,446
Current portion of long-term debt		8,750			8,750
Total current liabilities		52,016			60,644
Long-term debt, net of current portion		153,125			155,313
Deferred income taxes		64			76
Other long-term liabilities		15,368			15,477
Total liabilities		220,573			231,510
Commitments and contingencies (Note 10)
Stockholders' equity:
Common Stock: Authorized: 200,000,000 shares, $0.001 par value; Issued: 33,619,961 shares at December 31, 2015, and 33,489,181 shares at September 30, 2015		33			33
Capital in excess of par value of common stock		503,091			495,673
Retained earnings		295,397			284,088
Accumulated other comprehensive income		(4,962	)		(6,090	)
Treasury stock at cost, 9,342,227 shares at December 31, 2015, and 9,041,678 shares at September 30, 2015		(357,447	)		(344,740	)
Total stockholders' equity		436,112			428,964
Total liabilities and stockholders' equity	$	656,685		$	660,474

The accompanying notes are an integral part of these consolidated financial statements.

5

CABOT MICROELECTRONICS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited and amounts in thousands)

	Three Months Ended December 31,
	2015			2014
Cash flows from operating activities:
Net income	$	11,309		$	19,916
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		6,033			4,731
Provision for doubtful accounts		20			(12	)
Share-based compensation expense		4,467			3,407
Deferred income tax expense		1,509			3,531
Non-cash foreign exchange gain		(280	)		(50	)
(Gain)/loss on disposal of property, plant and equipment		37			(150	)
Impairment of long-lived assets		79			-
Other		273			(105	)
Changes in operating assets and liabilities:
Accounts receivable		(2,308	)		(2,846	)
Inventories		(2,860	)		243
Prepaid expenses and other assets		(67	)		(6,763	)
Accounts payable		(2,801	)		(906	)
Accrued expenses, income taxes payable and other liabilities		(8,193	)		656
Net cash provided by operating activities		7,218			21,652
Cash flows from investing activities:
Additions to property, plant and equipment		(5,120	)		(2,527	)
Proceeds from the sale of property, plant and equipment		17			160
Acquisition of business, net of cash acquired		(126,455	)		-
Net cash used in investing activities		(131,558	)		(2,367	)
Cash flows from financing activities:
Repayment of long-term debt		(2,188	)		(2,188	)
Repurchases of common stock		(12,707	)		(17,230	)
Net proceeds from issuance of stock		2,622			11,424
Tax benefits associated with share-based compensation expense		424			1,886
Net cash used in financing activities		(11,849	)		(6,108	)
Effect of exchange rate changes on cash		117			(1,903	)
Increase/(decrease) in cash and cash equivalents		(136,072	)		11,274
Cash and cash equivalents at beginning of period		354,190			284,155
Cash and cash equivalents at end of period	$	218,118		$	295,429
Supplemental disclosure of non-cash investing and financing activities:
Purchases of property, plant and equipment in accrued liabilities and accounts payable at the end of the period	$	1,886		$	648

The accompanying notes are an integral part of these consolidated financial statements.

6

CABOT MICROELECTRONICS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited and in thousands, except share and per share amounts)

1. BACKGROUND AND BASIS OF PRESENTATION

Cabot Microelectronics Corporation ("Cabot Microelectronics'', "the Company'', "us'', "we'' or "our'') supplies high-performance polishing slurries and pads used in the manufacture of advanced integrated circuit (IC) devices within the semiconductor industry, in a process called chemical mechanical planarization (CMP).  CMP is a polishing process used by IC device manufacturers to planarize or flatten many of the multiple layers of material that are deposited upon silicon wafers in the production of advanced ICs.  Our products play a critical role in the production of advanced IC devices, thereby enabling our customers to produce smaller, faster and more complex IC devices with fewer defects.  We develop, produce and sell CMP slurries for polishing many of the conducting and insulating materials used in IC devices, and also for polishing the disk substrates and magnetic heads used in hard disk drives.  We also develop, manufacture and sell CMP polishing pads, which are used in conjunction with slurries in the CMP process.  We also pursue other demanding surface modification applications through our Engineered Surface Finishes (ESF) business where we believe we can leverage our expertise in CMP consumables for the semiconductor industry to develop products for demanding polishing applications in other industries. For additional information, refer to Part 1, Item 1, "Business", in our Annual Report on Form 10-K for the fiscal year ended September 30, 2015.

The unaudited consolidated financial statements have been prepared by Cabot Microelectronics pursuant to the rules of the Securities and Exchange Commission (SEC) and accounting principles generally accepted in the United States of America (U.S. GAAP).  In the opinion of management, these unaudited consolidated financial statements include all  adjustments, consisting of normal recurring adjustments and preliminary purchase accounting adjustments discussed in Note 2, necessary for the fair statement of Cabot Microelectronics' financial position as of December 31, 2015, cash flows for the three months ended December 31, 2015, and December 31, 2014, and results of operations for the three months ended December 31, 2015, and December 31, 2014.  The consolidated balance sheet as of September 30, 2015 was derived from audited financial statements, but does not contain all of the footnote disclosures from the annual financial statements.  The results of operations for the three months ended December 31, 2015 may not be indicative of results to be expected for future periods, including the fiscal year ending September 30, 2016.  These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in Cabot Microelectronics' Annual Report on Form 10-K for the fiscal year ended September 30, 2015.

The consolidated financial statements include the accounts of Cabot Microelectronics and its subsidiaries.  All intercompany transactions and balances between the companies have been eliminated as of December 31, 2015.

2. BUSINESS COMBINATION

                      On October 22, 2015, the Company completed the acquisition of 100% of the outstanding stock of NexPlanar Corporation (NexPlanar), which was a privately held, U.S. based company that specializes in the development, manufacture and sale of advanced CMP pad solutions for the semiconductor industry.  We acquired NexPlanar to expand our polishing pad portfolio by adding a complementary pad technology for which we believe we can leverage our global infrastructure to better serve customers on a global basis, including offering performance-advantaged slurry and pad consumable sets.  We paid a total of $126,455, including total purchase consideration of 141,716, less cash acquired of $15,261.  In addition, we paid $605 in compensation expense related to certain unvested NexPlanar stock options settled in cash at the acquisition date.  We have included 100% of the NexPlanar revenue and earnings since October 22, 2015 in our Consolidated Statement of Income.  The net revenue and net loss included in our Consolidated Statement of Income for the three months ended December 31, 2015, attributable to NexPlanar, was $4,026 and $3,571, respectively.

7

                      The following table summarizes the preliminary fair values of assets acquired and liabilities assumed as of the date of acquisition:

Total purchase consideration	$	141,716
Cash	$	15,261
Accounts receivable		3,427
Inventories		2,768
Prepaid expenses and other current assets		1,712
Property, plant and equipment		6,296
Intangible assets		61,000
Deferred tax assets		19,642
Other long-term assets		1,458
Accounts payable		(1,057	)
Accrued expenses and other current liabilities		(1,692	)
Deferred tax liabilities		(22,289	)
Total identifiable net assets		86,526
Goodwill		55,190
	$	141,716

The acquisition was accounted for using the acquisition method of accounting. Tangible and identifiable intangible assets acquired and liabilities assumed are recorded at fair value as of the acquisition date. The current fair values assigned to assets acquired and liabilities assumed are considered preliminary and are based on information available as of the date of filing of this Form 10-Q. We believe that the information provides a reasonable basis for estimating the preliminary fair values of assets acquired and liabilities assumed, but certain items, such as deferred income taxes, may be subject to change as additional information is received. We expect to finalize the purchase price allocation as soon as practicable, but not later than one-year from the acquisition date of October 22, 2015.

We use third-party valuation experts in the calculation of the fair values of identifiable assets and liabilities acquired.  The fair value of acquired property, plant and equipment is valued at its "value-in-use" as there are no known plans to dispose of any assets.  The fair value of acquired identifiable intangible assets was determined using the "income approach" on an individual asset basis.  The key assumptions used in the calculation of the discounted cash flows include projected revenues, gross margin, and operating expenses.  The valuations and the underlying assumptions have been deemed reasonable by Company management.  There are inherent uncertainties and management judgment required in these determinations.

The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition:

	Preliminary		Useful
	Fair Value		Life
Trade name	$	8,000	7 years
Customer relationships		8,000	11 years
Developed technology - product family A		25,000	7 years
Developed technology - product family B		8,000	8 years
In-process technology		12,000
Total preliminary intangible assets	$	61,000

The trade name represents the estimated fair value of the brand and name recognition associated with the marketing of NexPlanar's product offerings.  Customer relationships represent the estimated fair value of the underlying relationships and agreements with NexPlanar customers.  Developed technology represents the estimated fair value of NexPlanar's knowledge regarding its product offerings.  In-process technology assets represent the fair value assigned to technology projects under development as of the acquisition date.  These intangible assets are capitalized and accounted for as indefinite-lived intangible assets and will be subject to impairment testing until completion or abandonment of the projects.  Upon successful completion of each project, we will make a determination of the appropriate useful life and the related amortization will be recorded as an expense over the estimated useful life based on the future expected cash flow stream.  The intangible assets subject to amortization have a weighted average useful life of 7.8 years.

8

The excess of preliminary purchase consideration over the preliminary fair value of net assets acquired was recorded as goodwill, and is not expected to be deductible for income tax purposes.  The goodwill is primarily attributable to anticipated revenue growth from the combination of our and NexPlanar pad technologies, expected synergies from the combined operations, and the assembled workforce of NexPlanar.

NexPlanar's results of operations have been included in our unaudited consolidated statements of income and comprehensive income from the date of acquisition.  We incurred $816 in professional fees related to the acquisition, $526 of which were recorded as general and administrative expense during the fourth quarter of fiscal 2015, and $290 of which were recorded as general and administrative expense during the first quarter of fiscal 2016.  As previously discussed, we recorded $605 in compensation expense during the quarter ended December 31, 2015, related to the cash settlement of certain unvested NexPlanar stock options.  See Note 12 of this Form 10-Q for additional discussion of share-based compensation.

The following supplemental pro forma information summarizes the combined results of operations for Cabot Microelectronics and NexPlanar as if the acquisition had occurred on October 1, 2014.

	Three Months Ended December 31,
	2015		2014
Revenues	$	101,776	$	117,569
Net income		12,372		16,815
Earnings per share - basic		0.51		0.70
Earnings per share - diluted	$	0.50	$	0.68

The historical financial information has been adjusted to give effect to the pro forma adjustments, which consist of amortization expense associated with intangible assets, and the elimination of interest expense on NexPlanar debt repaid prior to the acquisition.  The proforma for the three months ended December 31, 2015 exclude the impact of $605 in compensation expense related to unvested NexPlanar stock options settled in cash, and $403 for the step-up of inventory as these items are assumed to have occurred during the quarter ended December 31, 2014 had the acquisition been completed on October 1, 2014.  The pro forma adjustments are based on information currently available.  Therefore, the pro forma consolidated results are not necessarily indicative of what the consolidated results actually would have been had the acquisition been completed on October 1, 2014.  The pro forma consolidated results do not purport to project future results of combined operations, nor do they reflect the expected realization of any revenue or cost synergies associated with the acquisition.

3. FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value is defined as the price that would be received from the sale of an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.  The FASB established a three-level hierarchy for disclosure based on the extent and level of judgment used to estimate fair value.  Level 1 inputs consist of valuations based on quoted market prices in active markets for identical assets or liabilities.  Level 2 inputs consist of valuations based on quoted prices for similar assets or liabilities, quoted prices for identical assets or liabilities in an inactive market, or other observable inputs.  Level 3 inputs consist of valuations based on unobservable inputs that are supported by little or no market activity.

9

The following table presents financial instruments, other than long-term debt, that we measured at fair value on a recurring basis at December 31, 2015 and September 30, 2015.  See Note 8 for a detailed discussion of our long-term debt.  We have classified the following assets and liabilities in accordance with the fair value hierarchy set forth in the applicable standards.  In instances where the inputs used to measure the fair value of an asset fall into more than one level of the hierarchy, we have classified them based on the lowest level input that is significant to the determination of the fair value.

December 31, 2015	Level 1		Level 2		Level 3		Total Fair Value
Assets:
Cash and cash equivalents	$	218,118	$	-	$	-	$	218,118
Other long-term investments		1,489		-		-		1,489
Derivative financial instruments		-		130		-		130
Total assets	$	219,607	$	130	$	-	$	219,737
Liabilities:
Derivative financial instruments		-		653		-		653
Total liabilities	$	-	$	653	$	-	$	653

September 30, 2015	Level 1		Level 2		Level 3		Total Fair Value
Assets:
Cash and cash equivalents	$	354,190	$	-	$	-	$	354,190
Other long-term investments		1,720		-				1,720
Derivative financial instruments		-		14		-		14
Total assets	$	355,910	$	14	$	-	$	355,924
Liabilities:
Derivative financial instruments		-		1,406		-		1,406
Total liabilities	$	-	$	1,406	$	-	$	1,406

Our cash and cash equivalents consist of various bank accounts used to support our operations and investments in institutional money-market funds which are traded in active markets. The other long-term investments are included in other long-term assets on our Consolidated Balance Sheet. Our other long-term investments represent the fair value of investments under the Cabot Microelectronics Supplemental Employee Retirement Plan (SERP), which is a nonqualified supplemental savings plan.  The fair value of the investments is determined through quoted market prices within actively traded markets.  Although the investments are allocated to individual participants and investment decisions are made solely by those participants, the SERP is a nonqualified plan.  Consequently, the Company owns the assets and the related offsetting liability for disbursement until such time a participant makes a qualifying withdrawal.  The long-term asset was adjusted to $1,489 in the first quarter of fiscal 2016 to reflect its fair value as of December 31, 2015.

In the first quarter of fiscal 2015, we entered into floating-to-fixed interest rate swap agreements to hedge the variability in LIBOR-based interest payments on a portion of our outstanding variable rate debt.  These interest rate swaps represent our primary use of derivative financial instruments.  The fair value of our derivative instruments is estimated using standard valuation models using market-based observable inputs over the contractual term, including one-month LIBOR-based yield curves, among others.  We consider the risk of nonperformance, including counterparty credit risk, in the calculation of the fair value of derivative financial instruments.  See Note 9 of this Form 10-Q for more information on our use of derivative financial instruments.

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4. INVENTORIES, NET

Inventories, net consisted of the following:

	December 31, 2015		September 30, 2015
Raw materials	$	48,412	$	42,603
Work in process		4,919		5,487
Finished goods		22,848		22,588
Total	$	76,179	$	70,678

5. GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill was $95,703 as of December 31, 2015, and $40,442 as of September 30, 2015.  The increase in goodwill was due to $55,190 in goodwill related to the acquisition of NexPlanar and $71 in foreign exchange fluctuations of the New Taiwan dollar.

The components of other intangible assets are as follows:

	December 31, 2015				September 30, 2015
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Other intangible assets subject to amortization:
Product technology	$	41,060	$	8,612	$	8,053	$	7,490
Acquired patents and licenses		8,270		7,922		8,270		7,845
Trade secrets and know-how		2,550		2,550		2,550		2,550
Customer relationships, distribution rights and other		27,412		9,641		11,392		9,005
Total other intangible assets subject to amortization		79,292		28,725		30,265		26,890
In-process technology		12,000				-
Other indefinite-lived intangibles*		1,190				1,190
Total other intangible assets not subject to amortization		13,190				1,190
Total other intangible assets	$	92,482	$	28,725	$	31,455	$	26,890

*Other indefinite-lived intangible assets not subject to amortization consist primarily of trade names.

As discussed in Note 2, we recorded $61,000 of intangible assets related to our acquisition of NexPlanar.  The allocation of that amount into the various categories of intangible assets, as well as the useful lives we have established, are discussed in Note 2.

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Amortization expense on our other intangible assets was $1,816 and $593 for the three months ended December 31, 2015 and 2014, respectively. Estimated future amortization expense for the five succeeding fiscal years is as follows:

Fiscal Year	Estimated Amortization Expense
Remainder of 2016	$	6,142
2017		7,508
2018		6,861
2019		6,453
2020		6,448

Goodwill and indefinite-lived intangible assets are tested for impairment annually in the fourth quarter of the fiscal year or more frequently if indicators of potential impairment exist, using a fair-value-based approach.  The recoverability of goodwill is measured at the reporting unit level, which is defined as either an operating segment or one level below an operating segment.  An entity has the option to assess the fair value of a reporting unit either using a qualitative analysis ("step zero") or a discounted cash flow analysis ("step one").  Similarly, an entity has the option to use a step zero or a step one approach to determine the recoverability of indefinite-lived intangible assets.  In fiscal 2015, we chose to use a step one analysis for both goodwill impairment and for indefinite-lived intangible asset impairment.

We completed our annual impairment test during our fourth quarter of fiscal 2015 and concluded that no impairment existed.  There were no indicators of potential impairment during the quarter ended December 31, 2015, so it was not necessary to perform an impairment review for goodwill and indefinite-lived intangible assets during the quarter.  There have been no cumulative impairment charges recorded on the goodwill for any of our reporting units.

6. OTHER LONG-TERM ASSETS

Other long-term assets consisted of the following:

	December 31, 2015		September 30, 2015
Auction rate securities (ARS)	$	5,694	$	5,694
Other long-term assets		4,672		3,595
Long-term contract asset		3,760		3,995
Other long-term investments		1,489		1,720
Total	$	15,615	$	15,004

We classify our ARS investments as held-to-maturity and have recorded them at cost.  Our ARS investments at December 31, 2015 consisted of two tax exempt municipal debt securities with a total par value of $5,694, both of which have maturities greater than ten years.  The ARS market began to experience illiquidity in early 2008, and this illiquidity continues.  Despite this lack of liquidity, there have been no defaults in payment of the underlying securities and interest income on these holdings continues to be received on scheduled interest payment dates.  Our ARS, when purchased, were issued by A-rated municipalities.  Although the credit ratings of both municipalities have been downgraded since our original investment, one of the ARS is credit enhanced with bond insurance, and the other has become an obligation of the bond insurer.  Both ARS currently carry a credit rating of AA- by Standard & Poor's.

12

The fair value of our ARS, determined using level 2 fair value inputs, was $5,132 as of December 31, 2015. We have classified our ARS as held-to-maturity based on our intention and ability to hold the securities until maturity. We believe the gross unrecognized loss of $562 is due to the illiquidity in the ARS market, rather than to credit loss.  Although we believe these securities will ultimately be collected in full, we believe that it is not likely that we will be able to monetize the securities in our next business cycle (which for us is generally one year).  We will continue to monitor our ARS for impairment indicators, which may require us to record an impairment charge that is deemed other-than-temporary.

In the third quarter of fiscal 2015, we amended a supply contract with an existing supplier. The amended agreement includes a fee of $4,500, which provides us the option to purchase certain raw materials beyond calendar 2016.  This fee was recorded as a long-term asset at its present value and is being amortized into cost of goods sold on a straight-line basis through December 31, 2019, the expiration date of the agreement.  See Note 10 for more information regarding this contract.

Other long-term assets are comprised of the long-term portion of prepaid unamortized debt costs as well as miscellaneous deposits and prepayments on contracts extending beyond the next 12 months. As discussed in Note 3, we recorded a long-term asset and a corresponding long-term liability of $1,489 representing the fair value of our SERP investments as of December 31, 2015.

7. ACCRUED EXPENSES, INCOME TAXES PAYABLE AND OTHER CURRENT LIABILITIES

Accrued expenses, income taxes payable and other current liabilities consisted of the following:

	December 31, 2015		September 30, 2015
Accrued compensation	$	14,599	$	23,793
Goods and services received, not yet invoiced		1,501		1,830
Deferred revenue and customer advances		636		538
Warranty accrual		411		209
Income taxes payable		7,186		4,276
Taxes, other than income taxes		1,211		975
Other accrued expenses		3,920		4,825
Total	$	29,464	$	36,446

8. DEBT

On February 13, 2012, we entered into a credit agreement (the "Credit Agreement") among the Company, as Borrower, Bank of America, N.A., as administrative agent, swing line lender and an L/C issuer, Bank of America Merrill Lynch and J.P. Morgan Securities LLC, as joint lead arrangers and joint book managers, JPMorgan Chase Bank, N.A., as syndication agent, and Wells Fargo Bank, N.A. as documentation agent. The Credit Agreement provided us with a $175,000 term loan (the "Term Loan"), which we drew on February 27, 2012 to fund approximately half of the special cash dividend we paid to our stockholders on March 1, 2012, and a $100,000 revolving credit facility (the "Revolving Credit Facility"), which has never been drawn, with sub-limits for multicurrency borrowings, letters of credit and swing-line loans.  The Term Loan and the Revolving Credit Facility are referred to as the "Credit Facilities."  On June 27, 2014, we entered into an amendment (the "Amendment") to the Credit Agreement, which (i) increased term loan commitments by $17,500, from $157,500 to $175,000, the same level as the original amount under the Credit Agreement at its inception in 2012; (ii) increased the uncommitted accordion feature on the Revolving Credit Facility from $75,000 to $100,000; (iii) extended the expiration date of the Credit Facilities from February 13, 2017 to June 27, 2019; (iv) relaxed the consolidated leverage ratio financial covenant; and (v) revised certain pricing terms and other terms within the Credit Agreement. On June 27, 2014, we drew the $17,500 of increased term loan commitments, bringing the total outstanding commitments under the Term Loan to $175,000.

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Borrowings under the amended Credit Facilities (other than in respect of swing-line loans) bear interest at a rate per annum equal to the "Applicable Rate" (as defined below) plus, at our option, either (1) a LIBOR rate determined by reference to the cost of funds for deposits in the relevant currency for the interest period relevant to such borrowing or (2) the "Base Rate", which is the highest of (x) the prime rate of Bank of America, N.A., (y) the federal funds rate plus 1/2 of 1.00% and (z) the one-month LIBOR rate plus 1.00%.  The current Applicable Rate for borrowings under the Credit Facilities is 1.50% with respect to LIBOR borrowings and 0.25% with respect to Base Rate borrowings, with such Applicable Rate subject to adjustment based on our consolidated leverage ratio.  Swing-line loans bear interest at the Base Rate plus the Applicable Rate for Base Rate loans under the Revolving Credit Facility.  In addition to paying interest on outstanding principal under the Credit Agreement, we pay a commitment fee to the lenders under the Revolving Credit Facility in respect of the unutilized commitments thereunder.  The fee ranges from 0.20% to 0.30%, based on our consolidated leverage ratio. Interest expense and commitment fees are paid according to the relevant interest period and no less frequently than at the end of each calendar quarter. We paid $2,658 in arrangement fees, upfront fees and administration fees in February 2012 and we paid an additional $550 in upfront fees and arrangement fees in June 2014, of which $403 remains in prepaid expenses and other current assets and $977 remains in other long-term assets on our Consolidated Balance Sheet as of December 31, 2015.  We also pay letter of credit fees as necessary.  The Term Loan has periodic scheduled repayments; however, we may voluntarily prepay the Credit Facilities without premium or penalty, subject to customary "breakage" fees and reemployment costs in the case of LIBOR borrowings.  All obligations under the Credit Agreement are guaranteed by certain of our existing and future direct and indirect domestic subsidiaries.  The obligations under the Credit Agreement and guarantees of those obligations are secured, subject to certain exceptions, by first priority liens and security interests in the assets of the Company and certain of its domestic subsidiaries.

In the first quarter of fiscal 2015, we entered into interest rate swap agreements that have the economic effect of converting 0.5 of our variable rate debt into fixed rate debt at a weighted average fixed rate of 1.5% plus the Applicable Rate defined above.  See Notes 3 and 9 for additional information on the interest rate swap agreements.

The Credit Agreement contains covenants that restrict the ability of the Company and its subsidiaries to take certain actions, including, among other things and subject to certain significant exceptions: creating liens, incurring indebtedness, making investments, engaging in mergers, selling property, paying dividends or amending organizational documents.  The Credit Agreement requires us to comply with certain financial ratio maintenance covenants.  These include a maximum consolidated leverage ratio of 3.00 to 1.00 through December 31, 2015 and a minimum consolidated fixed charge coverage ratio of 1.25 to 1.00.  The maximum consolidated leverage ratio decreased to 2.75 to 1.00 from January 1, 2016 through the expiration of the Credit Agreement.  As of December 31, 2015, our consolidated leverage ratio was 1.56 to 1.00 and our consolidated fixed charge coverage ratio was 4.97 to 1.00.  The Credit Agreement also contains customary affirmative covenants and events of default.  We believe we are in compliance with these covenants.

At December 31, 2015, the fair value of the Term Loan, using level 2 inputs, approximates its carrying value of $161,875 as the loan bears a floating market rate of interest.  As of December 31, 2015, $8,750 of the debt outstanding is classified as short-term.

Principal repayments of the Term Loan are generally made on the last calendar day of each quarter if that day is considered to be a business day.  As of December 31, 2015, scheduled principal repayments of the Term Loan were as follows:

Fiscal Year	Principal Repayments
Remainder of 2016	$	6,562
2017		7,656
2018		14,219
2019		133,438
Total	$	161,875

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9. DERIVATIVE FINANCIAL INSTRUMENTS

We are exposed to various market risks, including interest rates and foreign currency exchange rates.  We enter into various derivative transactions to mitigate the volatility associated with these exposures.  We have policies in place that define acceptable instrument types we may enter into and we have established controls to limit our market risk exposure.  We do not use derivative financial instruments for trading or speculative purposes.  In addition, all derivatives, whether designated in hedging relationships or not, are required to be recorded on the balance sheet at fair value on a gross basis.

Cash Flow Hedges – Interest Rate Swap Agreements

In the first quarter of fiscal 2015, we entered into floating-to-fixed interest rate swap agreements to hedge the variability in LIBOR-based interest payments on $86,406 of our outstanding variable rate debt.  The notional amount of the swaps decreases each quarter by an amount in proportion to our scheduled quarterly principal payment of debt.  The notional value of the swaps was $80,938 as of December 31, 2015, and the swaps are scheduled to expire on June 27, 2019.

We have designated these swap agreements as cash flow hedges pursuant to ASC 815, "Derivatives and Hedging".  As cash flow hedges, unrealized gains are recognized as assets and unrealized losses are recognized as liabilities.  Unrealized gains and losses are designated as effective or ineffective based on a comparison of the changes in fair value of the interest rate swaps and the change in fair value of the underlying exposures being hedged. The effective portion is recorded as a component of accumulated other comprehensive income or loss, while the ineffective portion is recorded as a component of interest expense. Changes in the method by which we pay interest from one-month LIBOR to another rate of interest could create ineffectiveness in the swaps, and result in amounts being reclassified from other comprehensive income into net income. Hedge effectiveness is tested quarterly to determine if hedge treatment is appropriate.

Foreign Currency Contracts Not Designated as Hedges

Periodically we enter into forward foreign exchange contracts in an effort to mitigate the risks associated with currency fluctuations on certain foreign currency balance sheet exposures.  Our foreign exchange contracts do not qualify for hedge accounting; therefore, the gains and losses resulting from the impact of currency exchange rate movements on our forward foreign exchange contracts are recognized as other income or expense in the accompanying consolidated income statements in the period in which the exchange rates change.  As of December 31, 2015 and September 30, 2015, respectively, the notional amounts of the forward contracts we held to purchase U.S. dollars in exchange for other international currencies were $1,029 and $1,034, respectively, and the notional amounts of forward contracts we held to sell U.S. dollars in exchange for other international currencies were $17,550 and $18,690, respectively.

The fair value of our derivative instruments included in the Consolidated Balance Sheet, which was determined using level 2 inputs, was as follows:

		Asset Derivatives				Liability Derivatives
	Balance Sheet Location	December 31, 2015		September 30, 2015		December 31, 2015		September 30, 2015
Derivatives designated as hedging instruments
Interest rate swap contracts	Other noncurrent assets	$	114	$	-	$	-	$	-
	Accrued expenses and other current liabilities	$	-	$	-	$	645	$	885
	Other long-term liabilities	$	-	$	-	$	-	$	513
Derivatives not designated as hedging instruments
Foreign exchange contracts	Prepaid expenses and other current               assets	$	16	$	14	$	-	$	-
	Accrued expenses and other current liabilities	$	-	$	-	$	8	$	8

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The following table summarizes the effect of our derivative instruments on our Consolidated Statement of Income for the three months ended December 31, 2015 and 2014:

		Gain (Loss) Recognized in Statement of Income
		Three Months Ended
	Statement of Income Location	December 31, 2015				December 31, 2014
Derivatives not designated as hedging instruments
Foreign exchange contracts	Other income, net		$	(186	)		$	(1,336	)

The interest rate swap agreements were deemed to be effective since inception, so there was no impact on our Consolidated Statement of Income. We recorded a $559 unrealized loss in accumulated comprehensive income during the quarter ended December 31, 2015 for these interest rate swaps.  During the next 12 months, we expect approximately $650 may be reclassified from accumulated other comprehensive income into interest expense related to our interest rate swaps based on projected rates of the LIBOR forward curve as of December 31, 2015.

10. COMMITMENTS AND CONTINGENCIES

LEGAL PROCEEDINGS

While we are not involved in any legal proceedings that we believe will have a material impact on our consolidated financial position, results of operations or cash flows, we periodically become a party to legal proceedings in the ordinary course of business.

Refer to Note 17 of "Notes to the Consolidated Financial Statements" in Item 8 of Part II of our Annual Report on Form 10-K for the fiscal year ended September 30, 2015, for additional information regarding commitments and contingencies.

PRODUCT WARRANTIES

We maintain a warranty reserve that reflects management's best estimate of the cost to replace product that does not meet our specifications and customers' performance requirements, and costs related to such replacement.  The warranty reserve is based upon a historical product replacement rate, adjusted for any specific known conditions or circumstances.  Additions and deductions to the warranty reserve are recorded in cost of goods sold.  Our warranty reserve activity during the first three months of fiscal 2016 was as follows:

Balance as of September 30, 2015	$	209
Reserve for product warranty during the reporting period		143
Reserve acquired through business combination		220
Settlement of warranty		(161	)
Balance as of December 31, 2015	$	411

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POSTRETIREMENT OBLIGATIONS IN FOREIGN JURISDICTIONS

We have unfunded defined benefit plans covering employees in certain foreign jurisdictions as required by local law.  Benefit costs, consisting primarily of service costs, are recorded as fringe benefit expense under cost of goods sold and operating expenses in our Consolidated Statements of Income.  The projected benefit obligations and accumulated benefit obligations under all such unfunded plans are updated annually during the fourth quarter of the fiscal year.  Benefit payments under all such unfunded plans to be paid over the next 10 years are expected to be approximately $2,188.  For more information regarding these plans, refer to Note 17 of "Notes to the Consolidated Financial Statements" included in Item 8 of Part II of our Annual Report on Form 10-K for the fiscal year ended September 30, 2015.

PURCHASE OBLIGATIONS

Purchase obligations include our take-or-pay arrangements with suppliers, and purchase orders and other obligations entered into in the normal course of business regarding the purchase of goods and services.  We have been operating under a fumed silica supply agreement with Cabot Corporation, our former parent company which is not a related party, which had a termination date of December 31, 2016, which required us to purchase certain minimum quantities of fumed silica each year of the agreement, and to pay a shortfall if we purchased less than the minimum. This agreement was amended effective June 1, 2015 to, among other things, extend the term of the agreement through December 31, 2019, revise certain minimum purchase requirements through 2016, and provide us the option to purchase fumed silica for the remaining term of the agreement beyond calendar year 2016, for which we will pay a fee of $1,500 in each of calendar years 2017, 2018 and 2019.  This fee is included in other long-term liabilities at its present value of $3,760 as of December 31, 2015.  As of December 31, 2015, purchase obligations include $17,095 of contractual commitments related to our Cabot Corporation supply agreement for fumed silica.

11. ACCUMULATED OTHER COMPREHENSIVE INCOME

The components of accumulated other comprehensive income (AOCI), including the reclassification adjustments for items that are reclassified from AOCI to net income, are shown below:

	Foreign Currency Translation			Cash Flow Hedges			Pension and Other Postretirement Liabilities			Total
Balance at September 30, 2015	$	(4,011	)	$	(901	)	$	(1,178	)	$	(6,090	)
Foreign currency translation adjustment, net of tax of $187		197			-			-			197
Unrealized gain (loss) on cash flow hedges:
Change in fair value, net of tax of $211		-			383			-			383
Reclassification adjustment into earnings, net of tax of $97		-			176			-			176
Change in pension and other postretirement,  net of tax of $372		-			-			372			372
Balance at December 31, 2015	$	(3,814	)	$	(342	)	$	(806	)	$	(4,962	)

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	Foreign Currency Translation			Cash Flow Hedges			Pension and Other Postretirement Liabilities			Total
Balance at September 30, 2014	$	10,115		$	-		$	(860	)	$	9,255
Foreign currency translation adjustment, net of tax of $(1,626)		(8,332	)		-			-			(8,332	)
Unrealized gain (loss) on cash flow hedges:
Change in fair value, net of tax of tax benefit of $0		-			(275	)		-			(275	)
Reclassification adjustment into earnings, net of tax of $0		-			106			-			106
Change in pension and other postretirement,  net of tax of $0		-			-			-			-
Balance at December 31, 2014	$	1,783		$	(169	)	$	(860	)	$	754

The before tax amounts reclassified from OCI to net income during the three months ended December 31, 2015 and 2014, related to our cash flow hedges, were recorded as interest expense on our Consolidated Statement of Income.

12. SHARE-BASED COMPENSATION PLANS

We issue share-based awards under the following programs: our Cabot Microelectronics Corporation 2012 Omnibus Incentive Plan (OIP); our Cabot Microelectronics Corporation 2007 Employee Stock Purchase Plan, as Amended and Restated January 1, 2010 (ESPP); and pursuant to the OIP, our Directors' Deferred Compensation Plan, as amended September 23, 2008 (DDCP), and our 2001 Executive Officer Deposit Share Program (DSP).  Prior to March 2012, when our stockholders approved the OIP, we issued share-based payments under our Second Amended and Restated Cabot Microelectronics Corporation 2000 Equity Incentive Plan, as amended and restated September 23, 2008 (EIP); our ESPP, and, pursuant to the EIP, the DDCP and DSP.  For additional information regarding these programs, refer to Note 12 of "Notes to the Consolidated Financial Statements" included in Item 8 of Part II of our Annual Report on Form 10-K for the fiscal year ended September 30, 2015.  Other than the ESPP, all share-based payments granted beginning March 6, 2012 are made from the OIP, and since then, the EIP is no longer available for any awards.

We record share-based compensation expense for all share-based awards, including stock option grants, restricted stock and restricted stock unit awards and employee stock purchase plan purchases.  We calculate share-based compensation expense using the straight-line approach based on awards ultimately expected to vest, which requires the use of an estimated forfeiture rate.  Our estimated forfeiture rate is primarily based on historical experience, but may be revised in future periods if actual forfeitures differ from the estimate.  We use the Black-Scholes option-pricing model to estimate the grant date fair value of our stock options and employee stock purchase plan purchases.  This model requires the input of highly subjective assumptions, including the price volatility of the underlying stock, the expected term of our stock options and the risk-free interest rate.  We estimate the expected volatility of our stock options based on a combination of our stock's historical volatility and the implied volatilities from actively-traded options on our stock. We calculate the expected term of our stock options using historical stock option exercise data, and we add a slight premium to this expected term for employees who meet the definition of retirement-eligible pursuant to their grants during the contractual term of the grant. The risk-free interest rate is derived from the U.S. Treasury yield curve in effect at the time of grant.

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Share-based compensation expense for the three months ended December 31, 2015, and 2014, was as follows:

	Three Months Ended December 31,
	2015			2014
Cost of goods sold	$	534		$	498
Research, development and technical		418			415
Selling and marketing		404			320
General and administrative		3,716			2,174
Total share-based compensation expense		5,072			3,407
Tax benefit		(1,714	)		(1,122	)
Total share-based compensation expense, net of tax	$	3,358		$	2,285

As discussed in Note 2, during the quarter ended December 31, 2015, we recorded $605 in share-based compensation expense related to certain unvested NexPlanar incentive stock options (ISOs) settled in cash at the acquisition date.  This amount represents the portion of the fair value of the original awards related to the post-acquisition period had these awards not been settled in cash at the acquisition date.  U.S. GAAP prescribes that the portion of fair value of equity awards related to pre-acquisition service periods represents purchase consideration and the portion of fair value related to post-acquisition service periods represents compensation expense.  Since the post-acquisition service requirement was eliminated through the cash settlement, the compensation expense was recorded immediately following the acquisition date.  We also substituted certain NexPlanar ISOs with Cabot Microelectronics Corporation ISOs, preserving the intrinsic value, including the original vesting periods, of the original awards.  We accelerated the vesting on the substitute awards made to certain individuals based on the terms of their employment agreements and recorded $492 of share-based compensation expense related to this acceleration.  The total $1,097 of acquisition-related compensation is included in the table above as general and administrative expense.

As discussed in our Quarterly report on Form 10-Q for the quarter ended December 31, 2014, all unvested stock options and restricted stock held by our former President and Chief Executive Officer vested in full on December 31, 2015, in accordance with the terms of his employment letter with the Company dated December 12, 2014.  We applied the accounting guidance under Accounting Standards Codification (ASC) Topic 718 "Stock Compensation" to determine the additional share-based compensation expense to be recorded as part of the modification of the outstanding equity.  The original fair value of his unvested equity totaling $5,033 was recorded ratably between the date of modification and December 31, 2015, rather than recording the expense over the original vesting period.  During the quarter ended December 31, 2014, we recorded $378 in shared-based compensation expense related to this modification.

For additional information regarding the estimation of fair value, refer to Note 12 of "Notes to the Consolidated Financial Statements" included in Item 8 of Part II of our Annual Report on Form 10-K for the fiscal year ended September 30, 2015.

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13. OTHER INCOME, NET

Other income, net, consisted of the following:

	Three Months Ended December 31,
	2015				2014
Interest income		$	209			$	103
Other income (expense)			(19	)			954
Total other income, net		$	190			$	1,057

Other income (expense) primarily represents gains and losses recorded on transactions denominated in foreign currencies.  The decrease in other income was primarily due to the impact of foreign currency fluctuations on monetary assets and liabilities denominated in currencies other than the functional currency, net of the gains and losses incurred on forward foreign exchange contracts discussed in Note 9.

14. INCOME TAXES

Our effective income tax rate was 15.5% for the three months ended December 31, 2015 compared to a 12.3% effective income tax rate for the three months ended December 31, 2014.  The increase in the effective tax rate during the first quarter of fiscal 2016 was primarily due to higher income tax expense on foreign earnings, including a reduction in the benefit available under our tax holiday in South Korea.  This was partially offset by the absence of income taxes incurred during the first quarter of fiscal 2015 related to the restructuring of our operations in Taiwan.

The Company is currently operating under a tax holiday in South Korea in conjunction with our investment in research, development and manufacturing facilities there.  This arrangement allows for a tax at 50% of the local statutory rate in effect for fiscal years 2016 and 2017, following a 0% tax rate in fiscal years 2013, 2014 and 2015.  This tax holiday reduced our income tax provision by approximately $871 and $1,177 in the first quarter of fiscal 2016 and 2015, respectively.  This tax holiday increased our diluted earnings per share by approximately $0.04 and $0.05 during the first quarter of fiscal 2016 and 2015, respectively.

In November 2015, the FASB issued ASU No. 2015-17, "Balance Sheet Classification of Deferred Taxes" (Topic 740).  The provisions of ASU 2015-17 require that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position.  We have elected the early adoption provision of this standard in the quarter ended December 31, 2015, and have prospectively classified all deferred tax assets and liabilities as noncurrent on our consolidated balance sheet in accordance with this standard.  We have not retrospectively adjusted the deferred tax balances as of September 30, 2015.

15. EARNINGS PER SHARE

Basic earnings per share (EPS) is calculated by dividing net income available to common stockholders by the weighted-average number of common shares outstanding during the period, excluding the effects of unvested restricted stock awards with a right to receive non-forfeitable dividends, which are considered participating securities as prescribed by the two-class method under ASC 260.  Diluted EPS is calculated in a similar manner, but the weighted-average number of common shares outstanding during the period is increased to include the weighted-average dilutive effect of "in-the-money" stock options and unvested restricted stock shares using the treasury stock method.

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The standards of accounting for earnings per share require companies to provide a reconciliation of the numerator and denominator of the basic and diluted earnings per share computations.  Basic and diluted earnings per share were calculated as follows:

	Three Months Ended December,
	2015			2014
Numerator:
Net Income	$	11,309		$	19,916
Less: income attributable to participating securities		(127	)		(231	)
Earnings available to common shares	$	11,182		$	19,685
Denominator:
Weighted average common shares		24,141,726			23,651,405
(Denominator for basic calculation)
Weighted average effect of dilutive securities:
Share-based compensation		407,039			834,197
Diluted weighted average common shares		24,548,765			24,485,602
(Denominator for diluted calculation)
Earnings per share:
Basic	$	0.46		$	0.83
Diluted	$	0.46		$	0.80

For the three months ended December 31, 2015 and 2014, approximately 1.1 million and 0.1 million shares, respectively, attributable to outstanding stock options were excluded from the calculation of diluted earnings per share because the exercise price of the options was greater than the average market price of our common stock and, therefore, their inclusion would have been anti-dilutive.

16. FINANCIAL INFORMATION BY INDUSTRY SEGMENT AND PRODUCT LINE

We operate predominantly in one reportable segment, as defined under ASC 280 – the development, manufacture, and sale of CMP consumables.

Revenue generated by product line for the three months ended December 31, 2015, and 2014, was as follows:

	Three Months Ended December 31,
Revenue:	2015		2014
Tungsten slurries	$	44,412	$	45,144
Dielectric slurries		23,018		28,183
Other Metals slurries		16,358		19,897
Polishing pads		10,509		8,762
Engineered Surface Finishes		3,952		5,582
Data Storage slurries		2,120		4,366
Total revenue	$	100,369	$	111,934

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17. NEW ACCOUNTING PRONOUNCEMENTS

In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers" (Topic 606), an updated standard on revenue recognition.  ASU 2014-09 provides enhancements to how revenue is reported and improves comparability in the financial statements of companies reporting using IFRS and US GAAP.  The core principle of the new standard is for companies to recognize revenue for goods or services in amounts that reflect the consideration to which the company expects to be entitled in exchange for those goods or services.  The new standard is intended to enhance disclosures about revenue, provide guidance for transactions that were not previously addressed comprehensively, such as service revenue and contract modifications, and improve guidance for multiple-element arrangements.  In August 2015, the FASB issued ASU No. 2015-14, "Deferral of Effective Date" (Topic 606).  This standard officially defers the effective date of ASU 2014-09 by one year.  ASU 2014-09 will be effective for us beginning October 1, 2018, and may be applied on a full retrospective or modified retrospective approach.  Adoption is not permitted prior to the original effective date of the ASU, which for us is October 1, 2017.  We are currently evaluating the impact of implementation of this standard on our financial statements.

In June 2014, the FASB issued ASU No. 2014-12, "Accounting for Share-Based Payments When the Terms of an Award Provide that a Performance Target Could be Achieved after the Requisite Service Period" (Topic 718).  ASU 2014-12 requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition.  As such, the performance target should not be reflected in estimating the grant date fair value of an award, and compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved.  The compensation cost should represent the amount attributable to the periods for which the requisite service has been rendered.  ASU 2014-12 will be effective for us beginning October 1, 2016 and may be applied on a prospective or retrospective basis.  We do not expect the implementation of this standard to have a material effect on our financial statements as we have not granted any awards with a performance condition.

In January 2015, the FASB issued ASU No. 2015-01, "Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items" (Subtopic 225-20).  ASU 2015-01 eliminates the concept of extraordinary items from U.S. GAAP, so an entity no longer needs to consider whether an underlying event or transaction is extraordinary.  ASU 2015-01 retains the prior presentation and disclosure guidance for items that are unusual in nature or occur infrequently and will expand the guidance to include items that are both unusual in nature and infrequently occurring.  ASU 2015-01 will be effective for us beginning October 1, 2016.  We do not expect the implementation of this standard to have a material effect on our financial statements as we have not had any events or transactions that were considered to be extraordinary.

In February 2015, the FASB issued ASU No. 2015-02, "Amendments to the Consolidation Analysis" (Topic 810).  ASU 2015-02 amends the criteria for determining which entities are considered variable interest entities (VIEs), amends the criteria for determining if a service provider possesses a variable interest in a VIE and ends the deferral granted to investment companies for application of the VIE consolidation model.  ASU 2015-02 will be effective for us beginning October 1, 2016.  We do not expect the implementation of this standard to have a material effect on our financial statements as we have no interests in any entities that may be considered VIEs.

In April 2015, the FASB issued ASU No. 2015-03, "Simplifying the Presentation of Debt Issuance Costs" (Subtopic 835-30).  The provisions of ASU 2015-03 require an entity to present the debt issuance costs related to a recognized debt liability in the balance sheet as a direct deduction to the carry amount of that debt liability.  ASU 2015-03 will be effective for us beginning October 1, 2016, but early adoption is permitted.  The implementation of this standard will require us to reclassify our debt issuance costs from their asset position on our balance sheet to a liability position as an offset to the carrying amount of our outstanding debt.  We do not expect the implementation of this standard to have a material effect on our financial statements.

      In April 2015, the FASB issued ASU No. 2015-05, "Customer Accounting for Fees Paid in a Cloud Computing Arrangement" (Subtopic 350-40).  ASU 2015-05 provides guidance to entities on accounting for entering into a cloud computing arrangement with and without a software license.  If an arrangement includes a software license, then the purchaser should account for the software license element of the arrangement consistent with the treatment of other software licenses.  If an arrangement does not include a software license, it should be treated as a service contract.  ASU 2015-05 will be effective for us beginning October 1, 2016, but early adoption is permitted.  We are currently evaluating the impact of implementation of this standard on our financial statements.

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In July 2015, the FASB issued ASU No, 2015-11, "Simplifying the Measurement of Inventory" (Topic 330).  The provisions of ASU 2015-11 require an entity to measure inventory at the lower of cost and net realizable value.  Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.  ASU 2015-11 will be effective for us beginning October 1, 2017 but early adoption is permitted.  We do not believe the adoption of this standard will have a material effect on our financial statements.

In August 2015, the FASB issued ASU No. 2015-15, "Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements" (Subtopic 835-30).  ASU 2015-15 provides guidance on the treatment of debt issuance cost related to line-of-credit arrangements based on comments provided by the SEC staff.  The SEC staff stated that it would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance cost ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement.  ASU 2015-15 will be effective for us beginning October 1, 2016, but early adoption is permitted.  We are currently evaluating the impact of implementation of this standard on our financial statements.

In September 2015, the FASB issued ASU No. 2015-16, "Simplifying the Accounting for Measurement Period Adjustments" (Topic 805).  The provisions of ASU 2015-16 require an acquirer to recognize adjustments to provisional amounts identified during the measurement period in the reporting period in which the adjustment amounts are determined.  ASU 2015-16 requires an acquirer to record, in the same period's financial statements, the effect on earnings of changes in depreciation, amortization or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the account had been completed at the acquisition date. ASU 2015-16 also requires an entity to present separately on the face of the income statement or disclose in the footnotes the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustments had been recognized as of the acquisition date.  ASU 2015-16 will be effective for us beginning October 1, 2017, but early adoption is permitted.  We are currently evaluating the impact of implementation of this standard on our financial statements.

18. SUBSEQUENT EVENT

On January 7, 2016, we issued a press release announcing that our Board of Directors has authorized the initiation of a regular dividend program under which the Company intends to pay quarterly cash dividends on its common stock. Our Board of Directors declared an initial quarterly cash dividend of $0.18 per share, which would represent an annualized rate of $0.72 per share, or approximately $17,600 in the aggregate, based on our common share count as of January 31, 2016. The record date for the initial quarterly cash dividend is the close of business on March 17, 2016, and the payable date for the initial quarterly cash dividend is on or about April 15, 2016. The declaration and payment of future dividends is subject to the discretion and determination of the Board of Directors and management, based on a variety of factors, and the program may be suspended, terminated or modified at any time for any reason.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following "Management's Discussion and Analysis of Financial Condition and Results of Operations", as well as disclosures included elsewhere in this Form 10-Q, include "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.  This Act provides a safe harbor for forward-looking statements to encourage companies to provide prospective information about themselves so long as they identify these statements as forward-looking and provide meaningful cautionary statements identifying important factors that could cause actual results to differ from the projected results.  All statements other than statements of historical fact we make in this Form 10-Q are forward-looking.  In particular, the statements herein regarding future sales and operating results; growth or contraction of, and trends in, the industry and markets in which the Company participates; the Company's management;  various economic factors and international events, regulatory or legislative activity; 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 Company's supply chain; natural disasters; the acquisition of or investment in other entities, including NexPlanar; uses and investment of the Company's cash balance, including dividends and share repurchases, which may be suspended, terminated or modified at any time for any reason, based on a variety of factors; financing facilities and related debt, payment of principal and interest, and compliance with covenants and other terms; the Company's capital structure; the Company's current or future tax rate; the operation of facilities by the Company; and statements preceded by, followed by or that include the words "intends," "estimates," "plans," "believes," "expects," "anticipates," "should," "could" or similar expressions, are forward-looking statements.  Forward-looking statements reflect our current expectations and are inherently uncertain.  Our actual results may differ significantly from our expectations.  We assume no obligation to update this forward-looking information.  The section entitled "Risk Factors" describes some, but not all, of the factors that could cause these differences.

This section, "Management's Discussion and Analysis of Financial Condition and Results of Operations" (MD&A), should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended September 30, 2015, including the consolidated financial statements and related notes thereto.

FIRST QUARTER OF FISCAL 2016 OVERVIEW

On October 22, 2015, we completed our acquisition of 100% of the outstanding stock of NexPlanar Corporation (NexPlanar), which was a privately held, U.S. based company that specializes in the development, manufacture and sale of advanced CMP pad solutions for the semiconductor industry.  We acquired NexPlanar to expand our polishing pad portfolio and add a complementary pad technology for which we believe we can leverage our global infrastructure to better serve our customers, including offering performance-advantaged slurry and pad consumable sets.  We paid a purchase price of approximately $142.3 million from our available cash balance, including total purchase consideration of $141.7 million, plus $0.6 million in compensation expense related to certain unvested NexPlanar stock options settled in cash at the acquisition date pursuant to the acquisition agreement.  On the acquisition date, NexPlanar had a cash balance of $15.3 million.  See Note 2 of the Notes to the Consolidated Financial Statements of this Form 10-Q for more information regarding the acquisition.

On January 7, 2016, we announced that our Board of Directors had authorized the initiation of a dividend program under which the Company intends to pay quarterly cash dividends on its common stock.  Our Board of Directors declared an initial quarterly cash dividend of $0.18 per share, which would represent an annualized rate of $0.72 per share, or approximately $17.6 million in the aggregate based on our common share count as of January 31, 2016.  On January 7, 2016, we also announced that our Board of Directors authorized an increase in the Company's existing share repurchase program to $150.0 million, from the approximately $75.0 million that was available as of December 31, 2015.  The dividend and share repurchase programs, which can be suspended, modified or terminated at any time for any reason, are part of our balanced capital allocation strategy, including funding organic investments, dividends share repurchases and acquisitions in closely related areas.

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In our first quarter of fiscal 2016, we continued to see soft demand conditions in the semiconductor industry, which was consistent with what we described in late October, 2015 when we reported results for our fourth quarter of fiscal 2015.  Some industry reports and comments from other semiconductor industry participants suggest soft demand conditions will continue through our second fiscal quarter, with some potential strengthening in demand beginning in our third fiscal quarter.  Over the long-term, we continue to believe that semiconductor demand will continue to grow, fueled by demand for mobile internet devices (MIDs), as well as for electronics for automotive and industrial applications, accompanied by the continued scaling of semiconductor devices to smaller geometries and the introduction of more complex device architectures.  However, there are many factors that make it difficult for us to predict future revenue trends for our business, including those discussed in Part II, Item 1A entitled "Risk Factors" in this Form 10-Q.

Revenue for our first quarter of fiscal 2016 was $100.4 million, which represented a decrease of 10.3% from the first quarter of fiscal 2015.  This year-over-year decrease was primarily driven by continued soft demand conditions within the global semiconductor industry, continued soft demand for personal computers (PCs), and competitive dynamics within dielectrics and data storage applications.  Revenue from polishing pads increased 19.9% compared to the same quarter last year, and includes a partial quarter benefit of the NexPlanar acquisition; revenue from all other major product areas decreased.  The decrease in revenue also reflects a $1.4 million adverse impact of foreign exchange rate changes, primarily due to the weaker Korean won and Japanese yen versus the U.S. dollar.

Gross profit for our first quarter of fiscal 2016 expressed as a percentage of revenue was 50.0%, including a 160 basis point adverse impact of acquisition-related costs and NexPlanar amortization expense.  Gross profit was 50.9% for our first quarter of fiscal 2015.  Other factors affecting our gross profit were a favorable product mix, lower logistics costs, and lower costs related to raw material quality, partially offset by lower sales volume.  We continue to expect our gross profit percentage for full fiscal year 2016 to be in the range of 49% to 51%, including NexPlanar.  However, we may continue to experience fluctuations in our gross profit due to a number of factors, including the extent to which we utilize our manufacturing capacity and fluctuations in our product mix, which may cause our quarterly gross profit to be above or below this annual guidance range.

Operating expenses were $35.8 million in our first quarter of fiscal 2016, compared to $34.4 million in the first quarter of fiscal 2015.  The increase in operating expenses from the comparable quarter of fiscal 2015 was primarily due to $2.1 million of acquisition-related costs and $0.4 million of NexPlanar amortization expense.  These were partially offset by the absence of previously disclosed costs associated with executive officer transitions that occurred in the first quarter of fiscal 2015, and lower staffing-related costs, including costs associated with our annual cash incentive program (now called our Short Term Incentive Plan, or STIP, and previously, our Annual Incentive Program, or AIP).  We are lowering our guidance range for our full year fiscal 2016 operating expenses to $141.0 million to $145.0 million, including NexPlanar, which is $2.0 million lower than our prior guidance range of $143.0 million to $147.0 million.

Diluted earnings per share for the first quarter of fiscal 2016 were $0.46; the acquisition-related costs and NexPlanar amortization expense adversely impacted our diluted earnings per share for the quarter by $0.10.  Diluted earnings per share in the same quarter last year were $0.80.  The year-over-year decrease was primarily due to lower revenue and costs related to the NexPlanar acquisition.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES AND EFFECTS OF RECENT ACCOUNTING PRONOUNCEMENTS

We discuss our critical accounting estimates and effects of recent accounting pronouncements in "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in Item 7 of Part II of our Annual Report on Form 10-K for the fiscal year ended September 30, 2015.  There have been no material changes in our critical accounting estimates during the first three months of fiscal 2016.  See Note 17 of the Notes to the Consolidated Financial Statements of this Form 10-Q for a discussion of new accounting pronouncements.

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RESULTS OF OPERATIONS

THREE MONTHS ENDED DECEMBER 31, 2015, VERSUS THREE MONTHS ENDED DECEMBER 31, 2014

REVENUE

Revenue was $100.4 million for the three months ended December 31, 2015, which represented a 10.3%, or $11.6 million, decrease from the three months ended December 31, 2014.  The decrease in revenue was driven by a $13.3 million decrease due to lower sales volume, a $1.4 million decrease due to foreign exchange fluctuations, primarily the weakening of the Korean won and the Japanese yen versus the U.S. dollar, and a $1.2 million decrease due to price changes, partially offset by a $4.4 million increase due to product mix.  The decrease in sales volume was consistent with soft demand conditions seen in the global semiconductor industry, continued soft demand for PCs, and competitive dynamics within dielectrics and data storage applications, which we previously disclosed.  Revenue from our polishing pad products increased 19.9% from the same quarter of fiscal 2015, and included a partial quarter benefit of $4.0 million from our NexPlanar acquisition.  Revenue from all other major product areas decreased.

COST OF GOODS SOLD

Total cost of goods sold was $50.2 million for the three months ended December 31, 2015, which represented a decrease of 8.7%, or $4.8 million, from the three months ended December 31, 2014.  The decrease in cost of goods sold was primarily due to a $3.7 million decrease due to lower sales volume, a $1.3 million decrease due to lower logistics costs, a $1.3 million decrease due to foreign exchange fluctuations, and a $0.7 million decrease due to lower costs related to raw material quality.  These decreases in cost of goods sold were partially offset by a $1.9 million increase in fixed manufacturing costs, including $0.9 million of NexPlanar amortization expense and $0.7 million of acquisition-related costs.

Engineered abrasive particles are significant raw materials that we use in many of our CMP slurries.  In an effort to mitigate our risk to rising raw material costs and to increase supply assurance and quality performance requirements, we have entered into multi-year supply agreements with a number of suppliers.  For more financial information about our supply contracts, see "Tabular Disclosure of Contractual Obligations" in this Form 10-Q as well as in Item 7 of Part II of our Annual Report on Form 10-K for the fiscal year ended September 30, 2015.

Our need for additional quantities or different kinds of key raw materials in the future has required, and will continue to require, that we enter into new supply arrangements with third parties.  Future arrangements may result in costs that are different from those in the existing agreements.  In addition, a number of factors could impact the future cost of raw materials, packaging, freight and labor.  We also expect to continue to invest in our supply chain to improve product quality, reduce variability and improve our manufacturing product yields.

GROSS PROFIT

Our gross profit as a percentage of revenue was 50.0% for the three months ended December 31, 2015, compared to 50.9% for the three months ended December 31, 2014.  The decrease in gross profit as a percentage of revenue was primarily due to NexPlanar amortization expense on intangible assets and acquisition-related costs, and lower sales volume, partially offset by product mix, lower logistics costs, and lower costs related to raw material quality.

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RESEARCH, DEVELOPMENT AND TECHNICAL

Total research, development and technical expenses were $14.8 million for the three months ended December 31, 2015, which represented a decrease of 1.3%, or $0.2 million, from the three months ended December 31, 2014.  The decrease was primarily due to $0.4 million in lower staffing-related costs, including costs associated with our STIP, partially offset by $0.2 million in costs in respect of joint development arrangements.

Our research, development and technical efforts are focused on the following main areas:

· Research related to fundamental CMP technology;

· Development of new and enhanced CMP consumable products, including collaboration on joint development projects with technology-leading customers and suppliers;

· Process development to support rapid and effective commercialization of new products;

· Technical support of CMP products in our customers' research, development and manufacturing facilities; and,

· Evaluation and development of new polishing and metrology applications outside of the semiconductor industry.

SELLING AND MARKETING

Selling and marketing expenses were $6.7 million for the three months ended December 31, 2015, which represented a decrease of 11.7%, or $0.9 million, from the three months ended December 31, 2014.  The decrease was primarily due to $2.0 million in lower staffing-related costs, including $1.2 million in the severance costs related to departing executive officers recorded in the first quarter of fiscal 2015, partially offset by $0.4 million of NexPlanar amortization expense, $0.2 million in higher product sample costs, and $0.2 million in higher equipment-related costs.

GENERAL AND ADMINISTRATIVE

General and administrative expenses were $14.3 million for the three months ended December 31, 2015, which represented an increase of 21.4%, or $2.5 million, from the three months ended December 31, 2014.  The increase was primarily due to $1.8 million in acquisition-related costs, share-based compensation costs associated with the fiscal 2015 executive officer transition, and an increase of $0.4 million in certain foreign goods and services tax.

INTEREST EXPENSE

Interest expense was $1.2 million for the three months ended December 31, 2015, and increased from $0.9 million for the three months ended December 31, 2014.  The increase was primarily due to the higher interest rate on the portion of our outstanding debt on which we have fixed the interest rate via interest rate swaps versus the variable interest rate on the rest of our outstanding debt.

OTHER INCOME, NET

Other income was $0.2 million for the three months ended December 31, 2015, compared to $1.1 million during the three months ended December 31, 2014.  The decrease in other income was primarily due to the impact of foreign currency fluctuations on monetary assets and liabilities denominated in currencies other than the functional currency, net of the gains and losses incurred on forward foreign exchange contracts discussed in Note 9 of the Notes to the Consolidated Financial Statements of this Form 10-Q.

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PROVISION FOR INCOME TAXES

Our effective income tax rate was 15.5% for the three months ended December 31, 2015 compared to a 12.3% effective income tax rate for the three months ended December 31, 2014.  The increase in the effective tax rate during the first quarter of fiscal 2016 was primarily due to higher income tax expense on foreign earnings, including a reduction in the benefit available under our tax holiday in South Korea from 100% to 50% of the local statutory tax rate.  This was partially offset by the absence of income taxes incurred in the first quarter of fiscal 2015 related to the restructuring of our operations in Taiwan. We currently expect our effective tax rate for full year fiscal 2016 to be within the range of 18% to 21%.

NET INCOME

Net income was $11.3 million for the three months ended December 31, 2015, which represented a decrease of 43.2%, or $8.6 million, from the three months ended December 31, 2014.  The decrease was primarily due to lower revenue and $4.0 million in costs associated with the NexPlanar acquisition.

LIQUIDITY AND CAPITAL RESOURCES

We generated $7.2 million in cash flows from operating activities in the first three months of fiscal 2016, compared to $21.7 million in cash from operating activities in the first three months of fiscal 2014.  Our cash provided by operating activities in the first three months of fiscal 2016 represented $23.4 million in net income plus non-cash items and a $16.2 million decrease in cash flow due to a net increase in working capital.  The decrease in cash flows from operating activities compared to the first three months of fiscal 2015 was primarily due to a significant decrease in net income and changes in the timing and amount of accrued expense payments, including payments related to our annual cash incentive bonus program.  The cash incentive payment related to our performance in fiscal 2015, which was made in the first quarter of fiscal 2016, was $6.4 million higher than the cash incentive payment, related to our performance in fiscal 2014, which was made in the first quarter of fiscal 2015.

In the first three months of fiscal 2016, cash flows used in investing activities were $131.6 million, representing $126.5 million for the NexPlanar acquisition, net of $15.2 million in cash acquired, and $5.1 million for purchases of property, plant and equipment.  In the first three months of fiscal 2015, cash flows used in investing activities were $2.4 million, representing $2.5 million for purchases of property, plant and equipment, partially offset by $0.1 million received from other investing activities.  We continue to expect our total capital expenditures in fiscal 2016 will be in the range of $15.0 million to $20.0 million, including NexPlanar.

In the first three months of fiscal 2016, cash flows used in financing activities were $11.8 million.  We used $10.0 million to repurchase common stock under our share repurchase program and $2.7 million to repurchase common stock pursuant to the terms of our Second Amended and Restated Cabot Microelectronics Corporation 2000 Equity Incentive Plan (EIP) and our 2012 Omnibus Incentive Plan (OIP) for shares withheld from award recipients to cover payroll taxes on the vesting of restricted stock granted under these plans.  We also used $2.2 million to repay long-term debt.  We received $2.6 million from the issuance of common stock related to the exercise of stock options granted under our EIP and OIP, and we received $0.4 million in tax benefits related to exercises of stock options and vesting of restricted stock granted under these plans.  In the first three months of fiscal 2015, cash flows used in financing activities were $6.1 million.  We used $15.0 million to repurchase common stock under our share repurchase program and $2.2 million to repurchase common stock pursuant to the terms of our EIP and our OIP for shares withheld from award recipients to cover payroll taxes on the vesting of restricted stock granted under these plans.  We also used $2.2 million to repay long-term debt.  We received $11.4 million from the issuance of common stock related to the exercise of stock options granted under our EIP and OIP, and we received $1.9 million in tax benefits related to exercises of stock options and vesting of restricted stock granted under these plans.

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In April 2014, our Board of Directors authorized an increase in the amount available under our share repurchase program from the previously remaining $62.0 million to $150.0 million.  Under this program, we repurchased 237,615 shares for $10.0 million during the first quarter of fiscal 2016 and we repurchased 315,864 shares for $15.0 million during the first quarter of fiscal 2015.  As of December 31, 2015, approximately $75.0 million remained outstanding under our share repurchase program.  In January 2016, our Board of Directors authorized an increase in the amount available from $75.0 million to $150.0 million.  Share repurchases are made from time to time, depending on market conditions, in open market transactions, at management's discretion.  The timing, manner, price and amounts of repurchases will be determined at the Company's discretion, and the share repurchase program may be suspended, terminated or modified at any time for any reason.  The repurchase program does not obligate the Company to acquire any specific number of shares.  To date, we have funded share purchases under our share repurchase program from our available cash balance, and anticipate we will continue to do so.  During fiscal 2015 and in fiscal 2016, we entered into "10b5-1" stock purchase plan agreements with independent brokers, which expired or will expire at various times, to repurchase shares of our common stock in accordance with guidelines pursuant to Rule 10b5-1 of the Securities Exchange Act of 1934.  A plan under Rule 10b5-1 allows a company to repurchase its shares at times when it otherwise might be prevented from doing so under insider trading laws or because of self-imposed trading blackout periods.  Repurchases are subject to SEC regulations as well as certain conditions specified in the plan.

As discussed above in the "Overview", on January 7, 2016, we announced that our Board of Directors authorized the initiation of a regular dividend program under which the Company intends to pay quarterly cash dividends on our common stock.  Our Board of Directors declared an initial quarterly cash dividend of $0.18 per share, which would represent an annualized rate of $0.72 per share, or approximately $17.6 million in the aggregate.  The record date for the initial quarterly cash dividend is the close of business on March 17, 2016, and the payable date for the initial quarterly cash dividend is on or about April 15, 2016.  The declaration and payment of future dividends is subject to the discretion and determination of the Company's Board of Directors and management, based on a variety of factors, and the program may be suspended, terminated or modified at any time for any reason.

We entered into a Credit Agreement in February 2012, which provided us with a $175.0 million Term Loan and a $100.0 million Revolving Credit Facility, with sub-limits for multicurrency borrowings, letters of credit and swing-line loans.  The Term Loan and Revolving Credit Facility are referred to as the "Credit Facilities".  In June 2014, we entered into an amendment to the Credit Agreement (the "Amendment"), which provided for an additional $17.5 million in Term Loan commitments to bring the total commitments to the same level as the original amount under the Credit Agreement at its inception in 2012, an extension of the maturity date of the Credit Facilities to June 27, 2019, and changes to certain pricing and other terms of the agreement, including a relaxed consolidated leverage ratio financial covenant.  The Amendment also increased the uncommitted accordion feature that allows us to request the existing lenders or, if necessary, third-party financial institutions to provide additional capacity in the Revolving Credit Facility, from $75.0 million to $100.0 million.  The Term Loan has periodic scheduled principal repayments; however, we may prepay the loan without penalty.  The additional Term Loan commitments were drawn on June 27, 2014, and the Revolving Credit Facility remains undrawn.  The Term Loan has $161.9 million outstanding as of December 31, 2015.  The Credit Agreement contains covenants that restrict the ability of the Company and its subsidiaries to take certain actions, including, among other things and subject to certain significant exceptions and according to certain terms: creating liens, incurring indebtedness, making investments, engaging in mergers, selling property, paying dividends or amending organizational documents.  The Credit Agreement requires us to comply with certain financial ratio maintenance covenants, including a maximum consolidated leverage ratio of 3.00 to 1.00 through December 31, 2015 and a minimum consolidated fixed charge coverage ratio of 1.25 to 1.00.  The maximum consolidated leverage ratio decreased to 2.75 to 1.00 for the period from January 1, 2016 through the termination of the Credit Agreement.  As of December 31, 2015, our consolidated leverage ratio was 1.56 to 1.00 and our consolidated fixed charge coverage ratio was 4.97 to 1.00.  The Credit Agreement also contains customary affirmative covenants and events of default.  We believe we are in compliance with these covenants.  See Note 8 of the Notes to the Consolidated Financial Statements of this Form 10-Q for additional information regarding the Credit Agreement.

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As of December 31, 2015, we had $218.1 million of cash and cash equivalents, $116.2 million of which was held in foreign subsidiaries in Japan, the Netherlands, Singapore, South Korea and Taiwan where we have elected to permanently reinvest the earnings rather than repatriate the earnings to the U.S.  If we choose to repatriate these earnings in the future through dividends or loans to the U.S. parent company, the earnings could become subject to additional income tax expense.

We believe that our current balance of cash and long-term investments, cash generated by our operations and available borrowing capacity under our Credit Facilities will be sufficient to fund our operations, expected capital expenditures, merger and acquisition activities, dividend payments, and share repurchases for the foreseeable future.  However, in order to further expand our business, we may need to raise additional funds in the future through equity or debt financing, strategic relationships or other arrangements.  Depending on future conditions in the capital and credit markets, we could encounter difficulty securing additional financing in the type or amount necessary to pursue these objectives.

OFF-BALANCE SHEET ARRANGEMENTS

At December 31, 2015, and September 30, 2015, we did not have any unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which might have been established for the purpose of facilitating off-balance sheet arrangements.

TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

The following summarizes our contractual obligations at December 31, 2015, and the effect such obligations are expected to have on our liquidity and cash flow in future periods.

CONTRACTUAL OBLIGATIONS			Less Than			1-3		3-5	After 5
(In millions)	Total		1 Year		Years		Years		Years
Long-term debt	$	161.9	$	8.8	$	24.1	$	129.0	$	-
Interest expense and fees on long-term debt		12.2		4.1		6.6		1.5		-
Purchase obligations		34.6		31.7		1.8		1.1		-
Operating leases		11.1		2.6		3.3		2.2		3.0
Severance agreements		0.8		0.8		-		-		-
Other long-term liabilities		15.5		-		4.2		1.5		9.8
Total contractual obligations	$	236.1	$	48.0	$	40.0	$	135.3	$	12.8

We have been operating under a multi-year supply agreement with Cabot Corporation, our former parent company which is not a related party, for the purchase of fumed silica, which became effective January 1, 2013 and had a termination date of December 31, 2016.  This agreement required us to purchase certain minimum quantities of fumed silica each year of the agreement, and to pay a shortfall if we purchased less than the minimum.  This agreement was amended effective June 1, 2015 to, among other things, extend the term of the agreement through December 31, 2019, revise certain minimum purchase requirements through 2016, and provide us the option to purchase fumed silica for the remaining term of the agreement beyond calendar year 2016, for which we will pay a fee of $1.5 million in each of calendar years 2017, 2018 and 2019.  The purchase obligations in the table above reflect management's expectation that we will meet the minimum purchase quantities in calendar 2016.  Purchase obligations include an aggregate amount of $17.1 million of contractual commitments related to our Cabot Corporation supply agreement for fumed silica.  The long-term fee is included in other long-term liabilities in the table above.

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      Interest payments on long-term debt reflect interest rates in effect at December 31, 2015.  The interest payments reflect variable LIBOR-based rates currently in effect on $80.9 million of our outstanding debt, and reflect fixed interest rates on $80.9 million of outstanding debt for which we have implemented interest rate swaps.  Commitment fees are based on our estimated consolidated leverage ratio in future periods.  See Note 8 of the Notes to the Consolidated Financial Statements of this Form 10-Q for additional information regarding our long-term debt.

Refer to Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" of Part II of our Annual Report on Form 10-K for the fiscal year ended September 30, 2015, for additional information regarding our contractual obligations.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

EFFECT OF CURRENCY EXCHANGE RATES AND EXCHANGE RATE RISK MANAGEMENT

We conduct business operations outside of the United States through our foreign operations.  Some of our foreign operations maintain their accounting records in their local currencies.  Consequently, period to period comparability of results of operations is affected by fluctuations in exchange rates.  The primary currencies to which we have exposure are the Japanese yen, the New Taiwan dollar and the Korean won.  Approximately 20% of our revenue is transacted in currencies other than the U.S. dollar.  However, we also incur expenses in foreign countries that are transacted in currencies other than the U.S. dollar, which partially mitigates the exposure on the Consolidated Statement of Income.  We periodically enter into forward contracts in an effort to manage foreign currency exchange exposure on our Consolidated Balance Sheet.  However, we are unlikely to be able to hedge these exposures completely.  We do not enter into forward exchange contracts or other derivative instruments for speculative or trading purposes.

The weakening of the Japanese yen against the U.S. dollar in fiscal 2015 and during the first quarter of fiscal 2016 adversely affected our revenue, but had a net favorable impact on our gross profit percentage, as our yen-denominated cost of goods sold was greater than our yen-denominated revenue.  The weakening of the yen accounted for an approximate 115 basis point increase in our gross profit percentage for fiscal 2015 compared to fiscal 2014, and an approximate 40 basis point increase in our gross profit percentage for the first quarter of fiscal 2016 compared to the same period of fiscal 2015.  To a lesser extent, we have also seen a favorable foreign exchange impact on our yen-denominated operating expenses.  The weakening of the yen and won has also had a significant impact on other comprehensive income on our Consolidated Balance Sheet.  During the fiscal year ended September 30, 2015, we recorded $8.1 million in currency translation losses, net of tax, that are included in other comprehensive income.  These losses primarily relate to changes in the U.S. dollar value of assets and liabilities denominated in yen when these asset and liability amounts are translated at month-end exchange rates.

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MARKET RISK AND SENSITIVITY ANALYSIS RELATED TO FOREIGN EXCHANGE RATE RISK

We have performed a sensitivity analysis assuming a hypothetical 10% additional adverse movement in foreign exchange rates.  As of December 31, 2015, the analysis demonstrated that such market movements would not have a material adverse effect on our consolidated financial position, results of operations or cash flows over a one-year period.  Actual gains and losses in the future may differ materially from this analysis based on changes in the timing and amount of foreign currency rate movements and our actual exposures.

INTEREST RATE RISK

At December 31, 2015, we had $161.9 million in long-term debt outstanding on our Term Loan.  In the first quarter of fiscal 2015, we entered into interest rate swap agreements to hedge the variability in LIBOR-based interest rate payments on half of our outstanding debt.  The notional amount of the swaps decreases each quarter by an amount in proportion to our scheduled quarterly principal repayment to maintain a fixed rate of interest on half of our outstanding debt.  As of December 31, 2015, the fair value of this cash flow hedge is a liability of $0.5 million.  At December 31, 2015, we had $80.9 million of outstanding debt at a variable rate of interest.  Assuming a hypothetical 100 basis point increase in our current variable interest rate, our interest expense would increase by approximately $0.2 million per quarter.

MARKET RISK RELATED TO INVESTMENTS IN AUCTION RATE SECURITIES

At December 31, 2015, we owned two auction rate securities (ARS) with a total estimated fair value of $5.1 million and par value of $5.7 million which were classified as other long-term assets on our Consolidated Balance Sheet.  Beginning in 2008, general uncertainties in the global credit markets significantly reduced liquidity in the ARS market, and this illiquidity continues.  For more information on our ARS, see Note 6 of the Notes to the Consolidated Financial Statements of this Form 10-Q.

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ITEM 4. CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Our management, with the participation of our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), has conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of December 31, 2015.  Based on that evaluation, our CEO and CFO have concluded that our disclosure controls and procedures were effective to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and to ensure that such information is accumulated and communicated to management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

While we believe the present design of our disclosure controls and procedures is effective enough to make known to our senior management in a timely fashion all material information concerning our business, we intend to continue to improve the design and effectiveness of our disclosure controls and procedures to the extent we believe necessary in the future to provide our senior management with timely access to such material information, and to correct deficiencies that we may discover in the future, as appropriate.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

We acquired NexPlanar Corporation (NexPlanar) on October 22, 2015.  Consequently, management will exclude NexPlanar from its assessment of internal control over financial reporting as of September 30, 2016.  Subsequent to the acquisition, we applied certain corporate-level controls to elements of NexPlanar's internal control over financial reporting.  We will report on our assessment of our combined operations within one year, as permitted by the Sarbanes-Oxley Act of 2002 and the applicable SEC rules and regulations concerning business combinations.  There were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

INHERENT LIMITATIONS ON EFFECTIVENESS OF CONTROLS

Because of inherent limitations, our disclosure controls or our internal control over financial reporting may not prevent all errors and all fraud.  A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.  Further, the design of a control system must take into account the benefits of controls relative to their costs.  Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.  These inherent limitations include possible faulty judgment in decision making and breakdowns due to a simple error or mistake.  Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls.  The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.  Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate.  Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

While we are not involved in any legal proceedings that we believe will have a material impact on our consolidated financial position, results of operations or cash flows, we periodically become a party to legal proceedings in the ordinary course of business.

ITEM 1A. RISK FACTORS

We do not believe there have been any material changes in our risk factors since the filing of our Annual Report on Form 10-K for the fiscal year ended September 30, 2015.  However, we may update our risk factors, including adding or deleting them, in our SEC filings from time to time for clarification purposes or to include additional information, at management's discretion, even when there have been no material changes.

RISKS RELATING TO OUR BUSINESS

DEMAND FOR OUR PRODUCTS FLUCTUATES AND OUR BUSINESS MAY BE ADVERSELY AFFECTED BY WORLDWIDE ECONOMIC AND INDUSTRY CONDITIONS

Our business is affected by economic and industry conditions and our revenue is primarily dependent upon semiconductor demand.  Semiconductor demand, in turn, is impacted by changes in consumer demand, since in recent years the industry has seen a significant shift in demand from semiconductor devices for personal computers, which now are largely enterprise-related, to those for mobile internet devices (MIDs), which are more consumer-oriented.  Historically, semiconductor demand has fluctuated significantly due to economic and industry cycles and seasonal shifts in demand, which can dramatically affect our business, causing demand for our products to fluctuate.  For example, during the second half of fiscal 2015, we experienced relatively soft demand conditions in the semiconductor industry, and these soft demand conditions continued through the first quarter of fiscal 2016.  Furthermore, competitive dynamics within the semiconductor industry may impact our business.  Our limited visibility to future customer orders makes it difficult for us to predict industry trends.  If the global economy or the semiconductor industry weakens, whether in general or as a result of specific factors, such as macroeconomic factors, or unpredictable events such as natural disasters, we could experience material adverse impacts on our results of operations and financial condition.

Adverse global economic and industry conditions could have other negative effects on our Company.  For instance, we could experience negative impacts on cash flows due to the inability of our customers to pay their obligations to us, or our production process could be harmed if our suppliers cannot fulfill their obligations to us.  We could also have to reduce the carrying value of goodwill and other intangible assets, which could harm our financial position and results of operations.

Some additional factors that affect demand for our products include: the types of electronic devices that are in demand, such as MIDs versus PCs; products that our customers may produce, such as logic IC devices versus memory devices or digital versus analog devices; the various technology nodes at which those products are manufactured; customers' efficiencies in the use of CMP consumables; customers' device architectures and specific manufacturing processes; the short order to delivery time for our products; quarter-to-quarter changes in customer order patterns; market share gains and losses; and pricing changes by us and our competitors.

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WE HAVE A NARROW PRODUCT RANGE AND OUR PRODUCTS MAY BECOME OBSOLETE, OR TECHNOLOGICAL CHANGES MAY REDUCE OR LIMIT INCREASES IN THE CONSUMPTION OF CMP SLURRIES AND PADS

Our business is substantially dependent on a single class of products, CMP slurries, which account for the majority of our revenue.  We also continue to develop our business in CMP pads, and we acquired NexPlanar Corporation (NexPlanar), a supplier of advanced CMP pad solutions in the first quarter of fiscal 2016.  Our business would suffer if these products became obsolete or if consumption of these products decreased.  Our success depends on our ability to keep pace with technological changes and advances in the semiconductor industry and to adapt, improve and customize our products for advanced IC applications in response to evolving customer needs and industry trends.  Since its inception, the semiconductor industry has experienced rapid technological changes and advances in the design, manufacture, performance and application of IC devices, and our customers continually pursue lower cost of ownership and higher quality and performance of materials consumed in their manufacturing processes, including CMP slurries and pads, as a means to reduce the costs and increase the yield in their manufacturing facilities.  We expect these technological changes, and this drive toward lower costs, higher quality and performance and higher yields, will continue in the future.  Potential technology developments in the semiconductor industry, as well as our customers' efforts to reduce consumption of CMP consumables, including through use of smaller quantities could render our products less important to the IC device manufacturing process.

A SIGNIFICANT AMOUNT OF OUR BUSINESS COMES FROM A LIMITED NUMBER OF LARGE CUSTOMERS AND OUR REVENUE AND PROFITS COULD DECREASE SIGNIFICANTLY IF WE LOST ONE OR MORE OF THESE CUSTOMERS

Our CMP consumables customer base is concentrated among a limited number of large customers.  The semiconductor industry is consolidating as the larger semiconductor manufacturers have generally grown faster than the smaller ones, through business gains, mergers and acquisitions, and strategic alliances.  Industry analysts predict that this trend will continue, which means the semiconductor industry will be comprised of fewer and larger participants in the future if their prediction is correct.  One or more of these principal customers could stop buying CMP consumables from us or could substantially reduce the quantity of CMP consumables purchased from us.  Our principal customers also hold considerable purchasing power, which can impact the pricing and terms of sale of our products.  Any deferral or significant reduction in CMP consumables sold to these principal customers could seriously harm our business, financial condition and results of operations.

During the three months ended December 31, 2015 and 2014, our five largest customers accounted for approximately 55% and 54% of our revenue, respectively.  During the three months ended December 31, 2015, Samsung and Taiwan Semiconductor Manufacturing Company (TSMC) were our largest customers accounting for approximately 16% and 15%, respectively, of our revenue.  During the three months ended December 31, 2014, TSMC and Samsung were our largest customers accounting for approximately 21% and 13%, respectively, of our revenue.  During full fiscal year 2015, our five largest customers accounted for approximately 58% of our revenue, with TSMC and Samsung accounting for approximately 18% and 15%, respectively.

OUR BUSINESS COULD BE SERIOUSLY HARMED IF OUR COMPETITORS DEVELOP SUPERIOR CMP CONSUMABLES PRODUCTS, OFFER BETTER PRICING, SERVICE OR OTHER TERMS, OR OBTAIN CERTAIN INTELLECTUAL PROPERTY RIGHTS

Competition from other CMP consumables manufacturers or any new entrants could seriously harm our business and results of operations, and this competition could continue to increase.  Increased competition has and may continue to impact the prices we are able to charge for our CMP consumables products, as well as our overall business.  In addition, our competitors could have or obtain intellectual property rights that could restrict our ability to market our existing products and/or to innovate and develop new products.

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ANY PROBLEM OR DISRUPTION IN OUR SUPPLY CHAIN, INCLUDING SUPPLY OF OUR MOST IMPORTANT RAW MATERIALS, OR IN OUR ABILITY TO MANUFACTURE AND DELIVER OUR PRODUCTS TO OUR CUSTOMERS,  COULD ADVERSELY AFFECT OUR RESULTS OF OPERATIONS

We depend on our supply chain to enable us to meet the demands of our customers.  Our supply chain includes the raw materials we use to manufacture our products, our production operations and the means by which we deliver our products to our customers.  Our business could be adversely affected by any problem or interruption in our supply of the key raw materials we use in our CMP slurries and pads, including raw materials that do not meet the stringent quality and consistency requirements of our customers, or any problem or interruption that may occur during production or delivery of our products, such as weather-related problems, natural disasters, or labor-related issues.  For example, in our third quarter of fiscal 2015, we incurred significant costs associated with raw material that did not meet our material quality requirements.  Our supply chain may also be negatively impacted by unanticipated price increases due to supply restrictions beyond the control of our Company or our raw materials suppliers.

We believe it would be difficult to promptly secure alternative sources of key raw materials in the event one of our suppliers becomes unable to supply us with sufficient quantities of raw materials that meet the quality and technical specifications required by us and our customers.  In addition, new contract terms, contractual amendments to existing agreements with, or non-performance by, our suppliers, including any significant financial distress our suppliers may suffer, could adversely affect us.Also, if we change the supplier or type of key raw materials we use to make our CMP slurries or pads, or are required to purchase them from a different manufacturer or manufacturing facility or otherwise modify our products, in certain circumstances our customers might have to requalify our CMP slurries and pads for their manufacturing processes and products.  The requalification process could take a significant amount of time and expense to complete and could occupy technical resources of our customers that might otherwise be used to evaluate our new products, thus delaying potential revenue growth, or motivate our customers to consider purchasing products from our competitors, possibly interrupting or reducing our sales of CMP consumables to these customers.

WE ARE SUBJECT TO RISKS ASSOCIATED WITH OUR FOREIGN OPERATIONS

We currently have operations and a large customer base outside of the United States.  Approximately 86% of our revenue was generated by sales to customers outside of the United States for both the three months ended December 31, 2015 and full fiscal year ended September 30, 2015.  We may encounter risks in doing business in certain foreign countries, including, but not limited to, adverse changes in economic and political conditions, fluctuation in exchange rates, compliance with a variety of foreign laws and regulations, as well as difficulty in enforcing business and customer contracts and agreements, including protection of intellectual property rights.  We also may encounter the risks that we may not be able to repatriate earnings from our foreign operations, derive anticipated tax benefits of our foreign operations or recover the investments made in our foreign operations.

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WE MAY PURSUE ACQUISITIONS OF, INVESTMENTS IN, AND MERGERS OR STRATEGIC ALLIANCES WITH OTHER ENTITIES, WHICH COULD DISRUPT OUR OPERATIONS AND HARM OUR OPERATING RESULTS IF THEY ARE UNSUCCESSFUL

We expect to continue to make investments in technologies, assets and companies, either through acquisitions, mergers, investments or alliances, in order to supplement our internal growth and development efforts.  Acquisitions, mergers, and investments, including our acquisition of NexPlanar, which we completed on October 22, 2015, involve numerous risks, including the following: difficulties and risks in integrating the operations, technologies, products and personnel of acquired companies; diversion of management's attention from normal daily operations of the business; increased risk associated with foreign operations; potential difficulties and risks in entering markets in which we have limited or no direct prior experience and where competitors in such markets have stronger market positions; potential difficulties in operating new businesses with different business models; potential difficulties with regulatory or contract compliance in areas in which we have limited experience; initial dependence on unfamiliar supply chains or relatively small supply partners; insufficient revenues to offset increased expenses associated with acquisitions; potential loss of key employees of the acquired companies; or inability to effectively cooperate and collaborate with our alliance partners.

Further, we may never realize the perceived or anticipated benefits of a business combination or merger with, or asset or other acquisition of, or investments in, other entities.  Transactions such as these could have negative effects on our results of operations, in areas such as contingent liabilities, gross profit margins, amortization charges related to intangible assets and other effects of accounting for the purchases of other business entities.  Investments in and acquisitions of technology-related companies or assets are inherently risky because these businesses or assets may never develop, and we may incur losses related to these investments.  In addition, we may be required to impair the carrying value of these acquisitions or investments to reflect other than temporary declines in their value, which could harm our business and results of operations.

BECAUSE WE RELY HEAVILY ON OUR INTELLECTUAL PROPERTY, OUR FAILURE TO ADEQUATELY OBTAIN OR PROTECT IT COULD SERIOUSLY HARM OUR BUSINESS

Protection of intellectual property is particularly important in our industry because we develop complex technical formulas and processes for CMP products that are proprietary in nature and differentiate our products from those of our competitors.  Our intellectual property is important to our success and ability to compete.  We attempt to protect our intellectual property rights through a combination of patent, trademark, copyright and trade secret laws, as well as employee and third-party nondisclosure and assignment agreements.  Due to our international operations, we pursue protection in different jurisdictions, which may provide varying degrees of protection, and we cannot provide assurance that we can obtain adequate protection in each such jurisdiction.  Our failure to obtain or maintain adequate protection of our intellectual property rights for any reason, including through the patent prosecution process or in the event of litigation related to such intellectual property, could seriously harm our business.  In addition, the costs of obtaining or protecting our intellectual property could negatively affect our operating results.

BECAUSE WE HAVE LIMITED EXPERIENCE IN BUSINESS AREAS OUTSIDE OF CMP CONSUMABLES, EXPANSION OF OUR BUSINESS INTO OTHER PRODUCTS AND APPLICATIONS MAY NOT BE SUCCESSFUL

An element of our strategy has been to leverage our current customer relationships, technological expertise and other capabilities to expand our business beyond CMP consumables into other areas, such as other electronic materials.  Additionally, in our Engineered Surface Finishes business, we are pursuing other surface modification applications.  Expanding our business into new product areas could involve technologies, production processes and business models in which we have limited experience, and we may not be able to develop and produce products or provide services that satisfy customers' needs or we may be unable to keep pace with technological or other developments.  Also, our competitors may have or obtain intellectual property rights that could restrict our ability to market our existing products and/or to innovate and develop new products.

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OUR INABILITY TO ATTRACT AND RETAIN KEY PERSONNEL COULD CAUSE OUR BUSINESS TO SUFFER

If we fail to attract and retain the necessary managerial, technical and customer support personnel, our business and our ability to maintain existing and obtain new customers, develop new products and provide acceptable levels of customer service could suffer.  We compete with other industry participants for qualified personnel, particularly those with significant experience in the semiconductor industry.  The loss of services of key employees could harm our business and results of operations.

RISKS RELATING TO THE MARKET FOR OUR COMMON STOCK

THE MARKET PRICE MAY FLUCTUATE SIGNIFICANTLY AND RAPIDLY

The market price of our common stock has fluctuated and could continue to fluctuate significantly as a result of factors such as: economic and stock market conditions generally and specifically as they may impact participants in the semiconductor and related industries; changes in financial estimates and recommendations by securities analysts who follow our stock; earnings and other announcements by, and changes in market evaluations by securities analysts of, us or participants in the semiconductor and related industries; changes in business or regulatory conditions affecting us or participants in the semiconductor and related industries; announcements or implementation by us, our competitors, or our customers of technological innovations, new products or different business strategies; changes in our capital deployment strategy, or entering into a business combination; and trading volume of our common stock.

ANTI-TAKEOVER PROVISIONS UNDER OUR CERTIFICATE OF INCORPORATION AND BYLAWS MAY DISCOURAGE THIRD PARTIES FROM MAKING AN UNSOLICITED BID FOR OUR COMPANY

Our certificate of incorporation, our bylaws, and various provisions of the Delaware General Corporation Law may make it more difficult or expensive to effect a change in control of our Company.  For instance, our amended and restated certificate of incorporation provides for the division of our Board of Directors into three classes as nearly equal in size as possible with staggered three-year terms.

We have adopted change in control arrangements covering our executive officers and other key employees.  These arrangements provide for a cash severance payment, continued medical benefits and other ancillary payments and benefits upon termination of service of a covered employee's employment following a change in control, which may make it more expensive to acquire our Company.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

ISSUER PURCHASES OF EQUITY SECURITIES

Period	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in thousands)
Oct. 1 through Oct. 31, 2015		-		-		-	$	84,975
Nov. 1 through Nov. 30, 2015		148,398	$	42.11		148,398	$	78,725
Dec. 1 through Dec. 31, 2015		152,151	$	42.44		89,217	$	74,968
Total		300,549	$	42.28		237,615	$	74,968

In April 2014, our Board of Directors authorized an increase in the amount available under our share repurchase program from the previously remaining $62.0 million to $150.0 million.  Under this program, we repurchased 237,615 shares for $10.0 million during the first quarter of fiscal 2016.  As of December 31, 2015, $75.0 million remained outstanding under our share repurchase program.  In January 2016, our Board of Directors authorized another increase in the amount available from $75.0 million to $150.0 million.  The manner in which the Company repurchases its shares is discussed in Part I, Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations, under the heading "Liquidity and Capital Resources", of this Form 10-Q.  To date, we have funded share purchases under our share repurchase program from our available cash balance, and anticipate we will continue to do so.

Separate from this share repurchase program, a total of 62,934 shares were purchased during the first quarter of fiscal 2016 pursuant to the terms of our Second Amended and Restated Cabot Microelectronics Corporation 2000 Equity Incentive Plan (EIP) and our 2012 Omnibus Incentive Plan (OIP) as shares withheld from award recipients to cover payroll taxes on the vesting of shares of restricted stock granted under the EIP and OIP.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

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ITEM 6. EXHIBITS

The exhibit numbers in the following list correspond to the number assigned to such exhibits in the Exhibit Table of Item 601 of Regulation S-K:

Exhibit Number	Description
10.69	Cabot Microelectronics Corporation Short Term Incentive Program.
10.70	Form of Cabot Microelectronics Corporation 2012 Omnibus Incentive Plan Restricted Stock Unit Award Agreement (employees (including executive officers)).
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101. DEF	XBRL Taxonomy Extension Definition Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		CABOT MICROELECTRONICS CORPORATION
		[Registrant]
Date: February 8, 2016	By:	/s/ WILLIAM S. JOHNSON
		William S. Johnson
		Executive Vice President and Chief Financial Officer
		[Principal Financial Officer]
Date: February 8, 2016	By:	/s/ THOMAS S. ROMAN
		Thomas S. Roman
		Corporate Controller
		[Principal Accounting Officer]

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EX-10.69

CABOT MICROELECTRONICS CORPORATION

SHORT TERM INCENTIVE PROGRAM

ARTICLE I. GENERAL

Section 1.1.  Purpose.  Cabot Microelectronics Corporation (the "Corporation") maintains the Cabot Microelectronics Short Term Incentive Program, which operates pursuant to, and according to the terms of, the Cabot Microelectronics Corporation 2012 Omnibus Incentive Plan ("OIP"), (the "Program") to benefit and advance the interests of the Corporation by providing to the Corporation's employees performance-based cash bonuses ("Bonuses") that are based upon the achievement of financial, business and other performance goals.  Any Bonuses pursuant to the Program are Awards under the OIP.

Section 1.2.  Administration of the Program.  The Compensation Committee of the Corporation's Board of Directors (the "Committee") shall administer the Program.  The Committee may adopt such rules as it deems appropriate in order to carry out the purpose of the Program.  Questions of interpretation, administration and application of the Program shall be determined by the Committee.  The Committee may authorize any one or more of its members, or any officer of the Corporation, to execute and deliver documents on behalf of the Committee with respect to the Program.  The determinations of the Committee shall be final and binding in all matters relating to the Program.  The Committee shall have authority to determine the terms and conditions of Bonuses.   With the exception of any determination or payment of any Bonus to any Executive Officer of the Corporation (as defined by relevant Securities and Exchange Commission regulations), the Committee may delegate some or all of its authority under the Program to the Chief Executive Officer or other officers.

Section 1.3.  Eligible Persons.  Bonuses may be granted to employees of the Corporation.  The Committee or, if applicable, its delegate(s) shall determine the employees who are eligible to participate in the Program ("Participants").  An individual shall not be deemed an employee for purposes of the Program unless such individual is classified and receives compensation from the Corporation for services performed as an employee of the Corporation.

ARTICLE II. BONUSES

Section 2.1. Bonuses.  The Committee may grant annual Bonuses to employees subject to the provisions of the Program.

Section 2.2. Terms of Bonuses.  The Committee or, if applicable, its delegate(s) shall (i) establish for the relevant period of the Program ("Performance Period") the applicable performance goals and objectives ("Performance Objectives") for the Corporation and each Participant, and the particular allocation to each such Performance Objective, and (ii) establish target bonuses for each Participant, which shall equal a percentage of the Participant's base salary.  In general, for the Program, the Performance Period is the Corporation's fiscal year (October 1 – September 30).  Performance Objectives under the Program may include, but shall not be limited to, various financial, business and operational goals (for example, those related to earnings per share, revenue, gross margin, operating income, cash flow, earnings before interest and taxes, customer satisfaction, product quality, securing new opportunities, new product introductions, productivity improvements, customer return rate, and, new business area growth).

Section 2.3. Determination of Bonuses.  Following the close of the relevant Performance Period, the Committee, or, with respect to Participants other than Executive Officers, the Committee's delegate(s), shall determine the amount of Bonus (if any) to be paid to each Participant, based on assessment of achievement of the Performance Objectives of the Program, as well as reflecting an assessment of each Participant's individual performance or other factors during the relevant Performance Period, in the Committee's (or delegate(s)') sole discretion.  In no event shall a determination of a Bonus for an Executive Officer be made other than by the Committee.

Section 2.4. Payment of Bonuses.  Payment of a Bonus to a Participant shall be made as soon as practicable after determination of the amount of the Bonuses under Section 2.3 above, and after the Committee has approved the aggregate bonus payout amount for the Performance Period, and individual Bonuses for the Corporation's Executive Officers, but in no event later than 75 days after the end of the Performance Period.  In no event shall a payment of a Bonus be made to an Executive Officer other than as specifically authorized by the Committee.  Participants whose employment is terminated, whether by the Corporation or voluntarily by the Participant, prior to the payment date of a Bonus shall not be entitled to receive a Bonus, whether or not a Bonus amount previously had been designated for such Participant pursuant to the terms of the Program.  According to the intent of the Corporation to award the entire accrual of Bonus amounts for the relevant Performance Period, which is set by the Committee in conjunction with the closing of the Corporation's financial books for such Performance Period, to the extent a Bonus amount had been accrued for and/or designated for such Participant in advance of the termination of such Participant's employment, the Corporation shall reallocate such amount to the pool of other Participants (with the exception of Executive Officers unless specifically agreed upon by the Committee) in the Program, to the extent administratively practical.

Section 2.5. Recovery of Bonuses.  The Corporation may rescind or recover a Bonus paid to a Participant immediately under certain circumstances, including, but not limited to, (i) the Participant's: actions constituting Cause, as determined by the Corporation in its discretion and as otherwise enforceable under local law; rendering of services for a competitor prior to, or within six (6) months after, the payment of a Bonus or the termination of Participant's Service with the Corporation; unauthorized disclosure of any confidential/proprietary information of the Corporation to any third party; failure to comply with the Corporation's policies regarding the identification, disclosure and protection of intellectual property; violation of the Cabot Microelectronics Corporation Employee Confidentiality, Intellectual Property and Non-Competition Agreement; violation of the Cabot Microelectronics Corporation Code of Business Conduct, including those provisions related to financial reporting, (2) and, as may be required by law, including regulations related to the Dodd-Frank Wall Street Reform and Consumer Protection Act.  In the event of any such rescission or right of recovery, the Participant must repay the Bonus to the Corporation, and the Company shall be entitled to set-off against the amount of the Bonus any amount owed to the Participant by the Corporation.

ARTICLE III  MISCELLANEOUS

Section 3.1. No Additional Participant Rights.  The participation of an employee in the Program shall not give such employee any right to be retained in the employ of the Corporation or any of its affiliates, and the Corporation specifically reserves the right to dismiss a Participant or to terminate any arrangement pursuant to which any such Participant provides services to the Corporation, with or without cause.  No person shall have claim to a Bonus under the Program, except as otherwise provided for herein, or to continued participation in the Program. There is no obligation for uniformity of treatment of Participants under the Program. The benefits provided for Participants under the Program shall be in addition to and shall in no way preclude other forms of compensation to or in respect of such Participants. It is expressly agreed and understood that the employment of a Participant is terminable at the will of either party and, if such Participant is a party to an employment agreement with the Corporation or one of its affiliates, in accordance with the terms and conditions of the Participant's employment agreement.

Section 3.2. No Assignment.  The rights of a Participant with respect to any Bonuses granted under the Program shall not be transferable by the Participant.

Section 3.3. Taxes;Tax Withholding.  To the extent a Participant who is to be paid a Bonus under the Program is subject to an employment arrangement with the Corporation or a subsidiary thereof that provides for tax equalization consideration, then such tax equalization consideration also shall apply to, and be included as part of, the Participant's Bonus to be paid under the Program.  The Corporation or a subsidiary thereof, as appropriate, shall have the right to deduct from all payments made under the Program to a Participant or to a Participant's beneficiary or beneficiaries any federal, state or local taxes required by law to be withheld with respect to such payments.Section

Section 3.4. No Restriction on Right of Corporation to Effect Changes.  The Program shall not affect in any way the right or power of the Corporation or its stockholders to make or authorize any recapitalization, reorganization, merger, acquisition, divestiture, consolidation, spin-off, combination, liquidation, dissolution, sale of assets, or other similar corporate transaction or event involving the Corporation or a subsidiary thereof or any other event or series of events, whether of a similar character or otherwise.

Section 3.5. Source of Payments.  The Corporation shall not have any obligation to establish any separate fund or trust or other segregation of assets to provide for payments under the Program. To the extent any person acquires any rights to receive payments hereunder from the Corporation, such rights shall be no greater than those of an unsecured creditor.

Section 3.6. Amendment and Termination.  The Committee may at any time and from time to time alter, amend, suspend or terminate the Program in whole or in part.

Section 3.7. Governing Law and Severability.  The Program and all rights and Bonuses hereunder shall be construed in accordance with and governed by the laws of the State of Illinois without regard to conflicts of law principles and applicable federal law.  The jurisdiction and venue for any disputes arising under, or any action brought to enforce (or otherwise relating to), the Program shall be exclusively in the courts in the State of Illinois, including the Federal Courts located therein (should Federal jurisdiction exist).  If any portion of the Program is deemed to be in conflict with local law, that portion of the Program, and that portion only, will be deemed null and void under that local law. All other provisions of the Program will remain in full effect.

Section 3.8.  Miscellaneous.  Notwithstanding any provision of the Program to the contrary, any and all Bonuses made under the Program are intended to be exempt from or, in the alternative, comply with Section 409A of the Internal Revenue Code of 1986, as amended, and the interpretive guidance thereunder, including the exceptions for short-term deferrals.  The Program shall be construed and interpreted in accordance with such intent.

EX-10.70

Cabot Microelectronics Corporation 2012 Omnibus Incentive Plan

Fiscal Year 20[__] Restricted Stock Unit Award Agreement for United States Employees

[DATE]

«FIRST_NAME» «LAST_NAME»

«Address__1»

«Address_2», «Address_3», «Address_4»

«Address_5»

Dear «FIRST_NAME» «LAST_NAME»:

I am pleased to inform you (the "Participant") that the Compensation Committee of the Board of Directors (the "Committee") of Cabot Microelectronics Corporation (the "Company") has approved your participation in the Cabot Microelectronics Corporation 2012 Omnibus Incentive Plan (the "Plan") as a means of allowing you to participate in the success of the Company through ownership of Company common stock ("Stock"). A Restricted Stock Unit ("RSU") Award ("the "Award") is hereby awarded to you pursuant to the terms of the Plan and this RSU Award Agreement (the "Agreement").  Each RSU represents the right to receive one share of Stock on the applicable vesting date pursuant to the Agreement and the Plan. A copy of the Plan is enclosed, and can also be electronically accessed through the CMC Global Intranet @the Surface under "Departments/Human Resources/Compensation/Long-Term Incentive Plan."

Participant Name / ID Number	Type of Award	Number of Shares Subject to RSUs	Fair Market Value of Shares Subject to RSUs on Award Date
«FIRST_NAME» «LAST_NAME» «SOCIAL_SECURITY»	Restricted Stock Units	X,XXX	$[FMV / closing price on Award Date]
	Award Date	Vesting Date(s)	Award Number
	[Award Date]	25% 1st anniversary of Award Date 25% 2nd anniversary of Award Date 25% 3rd anniversary of Award Date 25% 4th anniversary of Award Date	«GRANT_ID»

This Agreement provides the Participant with the terms of the Award granted to the Participant. The terms specified in this Agreement are governed by the provisions of the Plan, which are incorporated herein by reference. The Committee has the exclusive authority to interpret and apply the Plan and this Agreement.  Any interpretation of the Agreement by the Committee and any decision made by it with respect to the Agreement are final and binding on all persons.  To the extent that there is any conflict between the terms of this Agreement and the Plan, the Plan shall govern. Capitalized terms used herein will have the same meaning as under the Plan, unless stated otherwise. For purposes of this Agreement, "Company" includes, at any time during the term of the RSUs, any subsidiary of the Company that employs the Participant on the applicable date.

In consideration of the foregoing and the mutual covenants hereinafter set forth, it is agreed by and between the Company and the Participant, as follows:

1. Award.  The Award shall become vested and the Participant shall be entitled to receive one share of Stock for each vested RSU in accordance with the following table:

Number of Shares	Vesting Date(s)
25% 25% 25% 25%	1st anniversary of Award Date 2nd anniversary of Award Date 3rd anniversary of Award Date 4th anniversary of Award Date

Notwithstanding the foregoing, the Award shall become fully vested and the Participant shall be entitled to receive one share of Stock for each vested RSU in the event of the Participant's death, Disability or a Change in Control.  Upon the Participant's termination of Service with the Company for any reason other than death or Disability, the Participant shall immediately cease vesting in the Award, and the unvested portion of the Award shall be forfeited immediately.

For purposes hereof, "Disability" shall have the meaning provided under: (a) first, an employment agreement between the Participant and the Company; (b) second, if no such employment agreement exists, the terms of the Plan.  In addition, for purposes of this Agreement, the Participant's date of termination of Service (for any reason other than death or Disability) shall be the earlier of: (i) the date on which the Participant ceases to render Service to or be employed by the Company, as determined by the Company in its sole discretion; (ii) the date on which the Company first provides notice of termination of Service; or (iii) the first date of any statutory notice period provided under local law.

For purposes hereof, the definition of "Change in Control" shall be deemed modified, only to the extent necessary, to avoid the imposition of an excise tax under Section 409A, to mean a "change in control event" as such term is defined for purposes of Section 409A.  For purposes of clarity, if an Award would, for example, vest and be paid on a Change in Control, but payment of such Award would violate the provisions of Section 409A, then the Award shall vest but will not be paid until the Participant experiences a "separation from service" within the meaning of Section 409A.

For purposes hereof, "termination of Service" shall be deemed to occur only if it is a "separation from service" within the meaning of Section 409A.

2. Termination / Cancellation / Rescission / Recovery / Revocation.  The Company may terminate, cancel, rescind, recover, or revoke the Award immediately under certain circumstances, including, but not limited to, the Participant's:

(a) actions constituting Cause, as defined in the Plan, or the Company's By-laws or Articles of Incorporation, and as otherwise enforceable under local law;

(b) rendering of services for a competitor prior to, or within six (6) months after, the exercise of any Award or the termination of Participant's Service with the Company;

(c) unauthorized disclosure of any confidential/proprietary information of the Company to any third party;

(d) failure to comply with the Company's policies regarding the identification, disclosure and protection of intellectual property;

(e) violation of the Cabot Microelectronics Corporation Employee Confidentiality, Intellectual Property and Non-Competition Agreement; or

(f) violation of the Cabot Microelectronics Corporation Code of Business Conduct, including those provisions related to financial reporting.

In the event of any such termination, cancellation, rescission, recovery, or revocation, the Participant must return any Stock obtained by the Participant pursuant to the Award, or pay to the Company the amount of any gain realized on the sale of such Stock, and the Company shall be entitled to set off against the amount of any such gain any amount owed to the Participant by the Company.  To the extent applicable, the Company will refund to the Participant any amount paid for such Stock, including any withholding requirements.

3. Purpose of Award.  The Award is intended to promote goodwill between the Participant and the Company and shall not be considered as salary or other remuneration for any employment or other services the Participant may perform for the Company or any of its affiliates.  The Company's grant of the Award does not confer any contractual or other rights of employment or service with the Company.  Benefits granted under the Plan shall not be considered as part of the Participant's salary in the event of severance, redundancy or resignation. Granting of the Award shall also not be construed as creating any right on the part of Participant to receive any additional benefits including awards in the future, it being expressly understood and agreed that any future awards shall be made solely at the discretion of the Company.

4. Rights and Restrictions Governing Underlying Stock.

(a) As of the Award Date, and until such time as the Participant becomes vested in an RSU and receives a share of Stock as provided in Section 5 of this Agreement, the Participant shall have no rights of a shareholder as to each share of Stock subject to an RSU, except as provided in Section 4(b) of this Agreement.

(b) If the Company declares a cash dividend on its shares of Stock, then, on the payment date of the dividend, the Participant will be credited with dividend equivalents equal to the amount of such cash dividend per share of Stock, multiplied by the number of RSUs credited to the Participant through the record date. The dollar amount credited to the Participant under the preceding sentence will be credited to an account ("Account") established for the Participant for bookkeeping purposes only on the books of the Company. The balance in the Account will be subject to the same terms regarding vesting and forfeiture as the Participant's RSUs awarded under this Agreement, and will be paid in cash at the time(s) that the corresponding shares of Stock associated with the Participant's RSUs are delivered (or forfeited at the time that the Participant's RSUs are forfeited).

5. Delivery of Stock.  As soon as reasonably practicable following each vesting date, one or more stock certificates for the appropriate number of shares of Stock shall be delivered to the Participant or such shares shall be credited to a brokerage account if the Participant so directs; provided however, that such certificates shall bear such legends as the Committee, in its sole discretion, may determine to be necessary or advisable in order to comply with applicable federal and state securities laws.

6. Tax Treatment. The Participant will generally be taxed on the Fair Market Value of the shares of Stock subject to the Award on the date(s) such shares of Stock are payable to the Participant according to the vesting terms above. This income will be taxed as ordinary income and will be subject to income and FICA withholding taxes. The Company is required to withhold and remit these taxes to the appropriate tax authorities. The Participant will be required to provide the Company with an amount of cash sufficient to satisfy the Participant's tax withholding obligations or to make arrangements satisfactory to the Company with regard to such taxes.  The income will be reported to the Participant as part of the Participant's employment compensation on the Participant's annual earnings statement Form W-2.

EACH PARTICIPANT IS URGED TO CONSULT WITH HIS OR HER OWN TAX ADVISOR TO DETERMINE THE PARTICULAR TAX CONSEQUENCES INCLUDING THE APPLICABILITY AND EFFECT OF FEDERAL, LOCAL AND OTHER TAX LAWS.

7. Tax Withholding.  All deliveries and distributions under this Agreement are subject to withholding of all applicable taxes. The various methods and manner by which tax withholding may be satisfied are set forth in Section 8.4 of the Plan.  If the Participant is subject to Section 16 (an "Insider"), of the Securities Exchange Act of 1934 ("Exchange Act"), any surrender of previously owned shares to satisfy tax withholding obligations arising under an Award must comply with the requirements of Rule 16b-3 promulgated under the Exchange Act ("Rule 16b-3").

8. Transferability.  The Award is not transferable other than: (a) by will or by the laws of descent and distribution; (b) pursuant to a domestic relations order; or (c) to members of the Participant's immediate family, to trusts solely for the benefit of such immediate family members or to partnerships in which family members and/or trusts are the only partners, all as provided under the terms of the Plan.  After any such transfer, the Award shall remain subject to the terms of the Plan.

9. Adjustment of Shares.  In the event of any transaction that is a Share Change or a Corporate Transaction, each as described in Section 8.6 of the Plan, the terms of this Award (including, without limitation, the number and kind of shares subject to this Award) shall or may be adjusted, as applicable, as set forth in Section 8.6 of the Plan.

10. Severability.  In the event that any provision of this Agreement is found to be invalid, illegal or incapable of being enforced by any court of competent jurisdiction for any reason, in whole or in part, the remaining provisions of this Agreement shall remain in full force and effect to the fullest extent permitted by law.

11. Waiver.  Failure to insist upon strict compliance with any of the terms and conditions of this Agreement or the Plan shall not be deemed a waiver of such term or condition.

12. Notices.  Except as provided in Section 13, any notices provided for in this Agreement or the Plan must be in writing and hand delivered, sent by fax or overnight courier, or by postage paid first class mail.  Notices are to be sent to the Participant at the address indicated by the Company's records and to the Company at its principal executive office.

13. Electronic Delivery.  The Company may, in its sole discretion, decide to deliver any documents related to the RSUs or other awards granted to the Participant under the Plan by electronic means.  The Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.

14. Section 409A. The RSUs are intended to be exempt from the requirements of Section 409A. The Plan and this Agreement shall be administered and interpreted in a manner consistent with this intent. If the Company determines that this Agreement is subject to Section 409A and that it has failed to comply with the requirements of Section 409A, the Company may, at the Company's sole discretion, and without the Participant's consent, amend this Agreement to cause it to comply with Section 409A or be exempt from Section 409A.

15. Governing Law.  This Agreement shall be construed under the laws of the State of Delaware.

 IN WITNESS WHEREOF, the Company has caused this Agreement to be executed in its name and on its behalf, all as of the Award Date.

CABOT MICROELECTRONICS CORPORATION

David H. Li

President and Chief Executive Officer

ACKNOWLEDGEMENT AND RECEIPT

FOR FISCAL YEAR 20[__] RESTRICTED STOCK UNIT AWARD AGREEMENT FOR UNITED STATES EMPLOYEES

Participant Name / ID Number	Type of Award	Number of Shares Subject to RSUs	Fair Market Value of Shares Subject to RSUs on Award Date
«FIRST_NAME» «LAST_NAME» «SOCIAL_SECURITY»	Restricted Stock Units	X,XXX	$[FMV / closing price on Award Date]
	Award Date	Vesting Date(s)	Award Number
	[Award Date]	25% 1st anniversary of Award Date 25% 2nd anniversary of Award Date 25% 3rd anniversary of Award Date 25% 4th anniversary of Award Date	«GRANT_ID»

I hereby acknowledge receipt of the award (the "Award") of restricted stock units ("Restricted Stock Units") issued to me by Cabot Microelectronics Corporation (the "Company") on the date shown above, which has been granted under and is governed by the terms and conditions of the Cabot Microelectronics Corporation 2012 Omnibus Incentive Plan (the "Plan") and the Restricted Stock Unit Award Agreement (the "Agreement").  I further acknowledge receipt of a copy of the Plan and certify that I am in conformance with and agree to conform to all of the terms and conditions of the Agreement and the Plan, including giving explicit consent to the Company to transfer personal data related to the Plan administration outside of the country in which I reside and/or provide services.

According to the terms and conditions of the Award, Restricted Stock Units awarded pursuant to it are scheduled to vest (lapse of restrictions) in equal installments upon each of the first four anniversaries of the Award Date.  When such Restricted Stock Units vest and shares are issued to me at such time, pursuant to the terms of the Plan, I will be free to hold these shares, or to sell, pledge, or give gifts of them, subject, of course, to the Company's policy on trading in Company stock as set forth in the Company's Insider Trading Policy and Trading Guidelines for Directors, Officers and Other Key Employees and the requirements of the federal securities laws.

The Company will be required at vesting to withhold the minimum federal, state and FICA taxes, on the total value of my Award upon vesting.  The value of the shares upon vesting will be based on the closing price of the Company stock (as reported on NASDAQ) as of the vesting date.

I may elect now to satisfy my future tax obligation on the value of the Award at the time of vesting by either (please elect and initial one):

· Providing a personal check, bank draft or money order payable to the Company at the time of each of the four vesting dates (instructions for doing so will be provided in advance of each vesting date) ___________.

· Selling enough shares of those that vest from the Award at the time of each of the four vesting dates ("withhold to cover") to satisfy my tax liability ___________.   My initialed election of this option confirms that at the time that I am making this election, I am not in possession of any material non-public information regarding the Company and am in compliance with the Company's Insider Trading Guidelines.

· I prefer to decide whether to "withhold to cover" or pay my tax obligation through personal check, bank draft or money order payable to the Company in advance of each vesting date (instructions for doing so will be provided in advance of each vesting date) ___________.

I further acknowledge that I have received a paper copy of the prospectus for the Plan.  I hereby consent to receiving all future prospectuses for the remainder of my employment with the Company through the Company's intranet website.  I am aware that I may withdraw my consent to receive future prospectuses from the Company's intranet website at any time and upon such withdrawal will be entitled to a paper copy of any future prospectus deliveries.

Any discrepancies between the Acknowledgement and Receipt, and the Agreement with respect to the information shown above, should be corrected and brought to the attention of the Committee.  Please be sure to initial any corrections made to this form.

Signature _____________________________________Date ___________________

Please return a copy of the enclosed Acknowledgement and Receipt form by [DATE] to:

Luke Alberts

Global Compensation and Benefits Analyst

Cabot Microelectronics Corporation

870 Commons Drive

Aurora, IL  60504

HR Confidential FAX:  (630)-375-5587

Please keep a copy of this signed Acknowledgement and Receipt, and the Agreement, for your own records. If you have any questions, please contact your HR Manager.

CONSENT OF SPOUSE

Restricted Stock Unit Award Agreement

I, ____________________, spouse of [Participant],have read and approve the Restricted Stock Unit Award Agreement dated [DATE] (the "Agreement").  In consideration of granting of the right to my spouse to receive or purchase shares of stock of Cabot Microelectronics Corporation, a Delaware corporation, as set forth in the Agreement, I hereby appoint my spouse as my attorney-in-fact with respect to the exercise of any rights under the Agreement and agree to be bound by the provisions of the Agreement insofar as I may have any rights in said Agreement or any shares issued pursuant thereto under the community property laws or similar laws relating to marital property in effect in the state of our residence as of the date of the signing of the foregoing Agreement.

Signature _____________________________________Date ___________________

Name (Print) ___________________________________

Please return one copy of a signed "Consent of Spouse" (if applicable) form to the Company's Human Resources Department by [DATE].

EX-31.1

Exhibit 31.1

CERTIFICATION

I, David H. Li, Chief Executive Officer of Cabot Microelectronics Corporation, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Cabot Microelectronics Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors:

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: February 8, 2016	/s/ DAVID H. LI
	David H. Li
	Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, William S. Johnson, Chief Financial Officer of Cabot Microelectronics Corporation, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Cabot Microelectronics Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors:

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: February 8, 2016	/s/ WILLIAM S. JOHNSON
	William S. Johnson
	Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Cabot Microelectronics Corporation (the "Company") on Form 10-Q for the fiscal quarter ended December 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), each of the undersigned officers of the Company certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: February 8, 2016	/s/ DAVID H. LI
	David H. Li
	Chief Executive Officer
Date: February 8, 2016	/s/ WILLIAM S. JOHNSON
	William S. Johnson
	Chief Financial Officer

XML

Document and Entity Information - USD ($)	3 Months Ended
	Dec. 31, 2015	Jan. 31, 2016	Mar. 31, 2015
Document and Entity Information [Abstract]
Entity Registrant Name	CABOT MICROELECTRONICS CORP
Entity Central Index Key	0001102934
Current Fiscal Year End Date	--09-30
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			$ 1,206,403,500
Entity Common Stock, Shares Outstanding		24,195,725
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q1
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Dec. 31, 2015

XML

CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
CONSOLIDATED STATEMENTS OF INCOME [Abstract]
Revenue	$ 100,369	$ 111,934
Cost of goods sold	50,174	54,960
Gross profit	50,195	56,974
Operating expenses:
Research, development and technical	14,828	15,018
Selling and marketing	6,749	7,639
General and administrative	14,263	11,751
Total operating expenses	35,840	34,408
Operating income	14,355	22,566
Interest expense	1,167	906
Other income, net	190	1,057
Income before income taxes	13,378	22,717
Provision for income taxes	2,069	2,801
Net income	$ 11,309	$ 19,916
Basic earnings per share (in dollars per share)	$ 0.46	$ 0.83
Weighted average basic shares outstanding (in shares)	24,141,726	23,651,405
Diluted earnings per share (in dollars per share)	$ 0.46	$ 0.80
Weighted average diluted shares outstanding (in shares)	24,548,765	24,485,602

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME [Abstract]
Net income	$ 11,309	$ 19,916
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment	197	(8,332)
Minimum pension liability adjustment	372	0
Net unrealized gain/(loss) on cash flow hedges	559	(169)
Other comprehensive income (loss), net of tax	1,128	(8,501)
Comprehensive income	$ 12,437	$ 11,415

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2015	Sep. 30, 2015
Current assets:
Cash and cash equivalents	$ 218,118	$ 354,190
Accounts receivable, less allowance for doubtful accounts of $1,231 at December 31, 2015, and $1,224 at September 30, 2015	54,998	49,405
Inventories, net	76,179	70,678
Prepaid expenses and other current assets	15,163	12,840
Deferred income taxes	0	7,395
Total current assets	364,458	494,508
Property, plant and equipment, net	101,537	93,743
Goodwill	95,703	40,442
Other intangible assets, net	63,757	4,565
Deferred income taxes	15,615	12,212
Other long-term assets	15,615	15,004
Total assets	656,685	660,474
Current liabilities:
Accounts payable	13,802	15,448
Accrued expenses, income taxes payable and other current liabilities	29,464	36,446
Current portion of long-term debt	8,750	8,750
Total current liabilities	52,016	60,644
Long-term debt, net of current portion	153,125	155,313
Deferred income taxes	64	76
Other long-term liabilities	15,368	15,477
Total liabilities	$ 220,573	$ 231,510
Commitments and contingencies (Note 10)
Stockholders' equity:
Common Stock: Authorized: 200,000,000 shares, $0.001 par value; Issued: 33,619,961 shares at December 31, 2015, and 33,489,181 shares at September 30, 2015	$ 33	$ 33
Capital in excess of par value of common stock	503,091	495,673
Retained earnings	295,397	284,088
Accumulated other comprehensive income	(4,962)	(6,090)
Treasury stock at cost, 9,342,227 shares at December 31, 2015, and 9,041,678 shares at September 30, 2015	(357,447)	(344,740)
Total stockholders' equity	436,112	428,964
Total liabilities and stockholders' equity	$ 656,685	$ 660,474

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2015	Sep. 30, 2015
Current assets
Allowance for doubtful accounts	$ 1,231	$ 1,224
Stockholders' equity
Common stock: Authorized (in shares)	200,000,000	200,000,000
Common stock: par value (in dollars per share)	$ 0.001	$ 0.001
Common stock: Issued (in shares)	33,619,961	33,489,181
Treasury stock at cost, shares (in shares)	9,342,227	9,041,678

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Cash flows from operating activities:
Net income	$ 11,309	$ 19,916
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	6,033	4,731
Provision for doubtful accounts	20	(12)
Share-based compensation expense	4,467	3,407
Deferred income tax expense	1,509	3,531
Non-cash foreign exchange gain	(280)	(50)
Gain/(loss) on disposal of property, plant and equipment	37	(150)
Impairment of long-lived assets	79	0
Other	273	(105)
Changes in operating assets and liabilities:
Accounts receivable	(2,308)	(2,846)
Inventories	(2,860)	243
Prepaid expenses and other assets	(67)	(6,763)
Accounts payable	(2,801)	(906)
Accrued expenses, income taxes payable and other liabilities	(8,193)	656
Net cash provided by operating activities	7,218	21,652
Cash flows from investing activities:
Additions to property, plant and equipment	(5,120)	(2,527)
Proceeds from the sale of property, plant and equipment	17	160
Acquisition of business, net of cash acquired	(126,455)	0
Net cash used in investing activities	(131,558)	(2,367)
Cash flows from financing activities:
Repayment of long-term debt	(2,188)	(2,188)
Repurchases of common stock	(12,707)	(17,230)
Net proceeds from issuance of stock	2,622	11,424
Tax benefits associated with share-based compensation expense	424	1,886
Net cash used in financing activities	(11,849)	(6,108)
Effect of exchange rate changes on cash	117	(1,903)
Increase/(decrease) in cash and cash equivalents	(136,072)	11,274
Cash and cash equivalents at beginning of period	354,190	284,155
Cash and cash equivalents at end of period	218,118	295,429
Supplemental disclosure of non-cash investing and financing activities:
Purchases of property, plant and equipment in accrued liabilities and accounts payable at the end of the period	$ 1,886	$ 648

XML

BACKGROUND AND BASIS OF PRESENTATION

3 Months Ended

Dec. 31, 2015

BACKGROUND AND BASIS OF PRESENTATION [Abstract]

BACKGROUND AND BASIS OF PRESENTATION

1. BACKGROUND AND BASIS OF PRESENTATION

Cabot Microelectronics Corporation ("Cabot Microelectronics'', "the Company'', "us'', "we'' or "our'') supplies high-performance polishing slurries and pads used in the manufacture of advanced integrated circuit (IC) devices within the semiconductor industry, in a process called chemical mechanical planarization (CMP).  CMP is a polishing process used by IC device manufacturers to planarize or flatten many of the multiple layers of material that are deposited upon silicon wafers in the production of advanced ICs.  Our products play a critical role in the production of advanced IC devices, thereby enabling our customers to produce smaller, faster and more complex IC devices with fewer defects.  We develop, produce and sell CMP slurries for polishing many of the conducting and insulating materials used in IC devices, and also for polishing the disk substrates and magnetic heads used in hard disk drives.  We also develop, manufacture and sell CMP polishing pads, which are used in conjunction with slurries in the CMP process.  We also pursue other demanding surface modification applications through our Engineered Surface Finishes (ESF) business where we believe we can leverage our expertise in CMP consumables for the semiconductor industry to develop products for demanding polishing applications in other industries. For additional information, refer to Part 1, Item 1, "Business", in our Annual Report on Form 10-K for the fiscal year ended September 30, 2015.

The unaudited consolidated financial statements have been prepared by Cabot Microelectronics pursuant to the rules of the Securities and Exchange Commission (SEC) and accounting principles generally accepted in the United States of America (U.S. GAAP).  In the opinion of management, these unaudited consolidated financial statements include all  adjustments, consisting of normal recurring adjustments and preliminary purchase accounting adjustments discussed in Note 2, necessary for the fair statement of Cabot Microelectronics' financial position as of December 31, 2015, cash flows for the three months ended December 31, 2015, and December 31, 2014, and results of operations for the three months ended December 31, 2015, and December 31, 2014.  The consolidated balance sheet as of September 30, 2015 was derived from audited financial statements, but does not contain all of the footnote disclosures from the annual financial statements.  The results of operations for the three months ended December 31, 2015 may not be indicative of results to be expected for future periods, including the fiscal year ending September 30, 2016.  These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in Cabot Microelectronics' Annual Report on Form 10-K for the fiscal year ended September 30, 2015.

The consolidated financial statements include the accounts of Cabot Microelectronics and its subsidiaries.  All intercompany transactions and balances between the companies have been eliminated as of December 31, 2015.

XML

BUSINESS COMBINATION

3 Months Ended

Dec. 31, 2015

BUSINESS COMBINATION [Abstract]

BUSINESS COMBINATION

2. BUSINESS COMBINATION

                      On October 22, 2015, the Company completed the acquisition of 100% of the outstanding stock of NexPlanar Corporation (NexPlanar), which was a privately held, U.S. based company that specializes in the development, manufacture and sale of advanced CMP pad solutions for the semiconductor industry.  We acquired NexPlanar to expand our polishing pad portfolio by adding a complementary pad technology for which we believe we can leverage our global infrastructure to better serve customers on a global basis, including offering performance-advantaged slurry and pad consumable sets.  We paid a total of $126,455, including total purchase consideration of 141,716, less cash acquired of $15,261.  In addition, we paid $605 in compensation expense related to certain unvested NexPlanar stock options settled in cash at the acquisition date.  We have included 100% of the NexPlanar revenue and earnings since October 22, 2015 in our Consolidated Statement of Income.  The net revenue and net loss included in our Consolidated Statement of Income for the three months ended December 31, 2015, attributable to NexPlanar, was $4,026 and $3,571, respectively.

                      The following table summarizes the preliminary fair values of assets acquired and liabilities assumed as of the date of acquisition:

Total purchase consideration	$	141,716
Cash	$	15,261
Accounts receivable		3,427
Inventories		2,768
Prepaid expenses and other current assets		1,712
Property, plant and equipment		6,296
Intangible assets		61,000
Deferred tax assets		19,642
Other long-term assets		1,458
Accounts payable		(1,057	)
Accrued expenses and other current liabilities		(1,692	)
Deferred tax liabilities		(22,289	)
Total identifiable net assets		86,526
Goodwill		55,190
	$	141,716

The acquisition was accounted for using the acquisition method of accounting. Tangible and identifiable intangible assets acquired and liabilities assumed are recorded at fair value as of the acquisition date. The current fair values assigned to assets acquired and liabilities assumed are considered preliminary and are based on information available as of the date of filing of this Form 10-Q. We believe that the information provides a reasonable basis for estimating the preliminary fair values of assets acquired and liabilities assumed, but certain items, such as deferred income taxes, may be subject to change as additional information is received. We expect to finalize the purchase price allocation as soon as practicable, but not later than one-year from the acquisition date of October 22, 2015.

We use third-party valuation experts in the calculation of the fair values of identifiable assets and liabilities acquired.  The fair value of acquired property, plant and equipment is valued at its "value-in-use" as there are no known plans to dispose of any assets.  The fair value of acquired identifiable intangible assets was determined using the "income approach" on an individual asset basis.  The key assumptions used in the calculation of the discounted cash flows include projected revenues, gross margin, and operating expenses.  The valuations and the underlying assumptions have been deemed reasonable by Company management.  There are inherent uncertainties and management judgment required in these determinations.

The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition:

	Preliminary		Useful
	Fair Value		Life
Trade name	$	8,000	7 years
Customer relationships		8,000	11 years
Developed technology - product family A		25,000	7 years
Developed technology - product family B		8,000	8 years
In-process technology		12,000
Total preliminary intangible assets	$	61,000

The trade name represents the estimated fair value of the brand and name recognition associated with the marketing of NexPlanar's product offerings.  Customer relationships represent the estimated fair value of the underlying relationships and agreements with NexPlanar customers.  Developed technology represents the estimated fair value of NexPlanar's knowledge regarding its product offerings.  In-process technology assets represent the fair value assigned to technology projects under development as of the acquisition date.  These intangible assets are capitalized and accounted for as indefinite-lived intangible assets and will be subject to impairment testing until completion or abandonment of the projects.  Upon successful completion of each project, we will make a determination of the appropriate useful life and the related amortization will be recorded as an expense over the estimated useful life based on the future expected cash flow stream.  The intangible assets subject to amortization have a weighted average useful life of 7.8 years.

The excess of preliminary purchase consideration over the preliminary fair value of net assets acquired was recorded as goodwill, and is not expected to be deductible for income tax purposes.  The goodwill is primarily attributable to anticipated revenue growth from the combination of our and NexPlanar pad technologies, expected synergies from the combined operations, and the assembled workforce of NexPlanar.

NexPlanar's results of operations have been included in our unaudited consolidated statements of income and comprehensive income from the date of acquisition.  We incurred $816 in professional fees related to the acquisition, $526 of which were recorded as general and administrative expense during the fourth quarter of fiscal 2015, and $290 of which were recorded as general and administrative expense during the first quarter of fiscal 2016.  As previously discussed, we recorded $605 in compensation expense during the quarter ended December 31, 2015, related to the cash settlement of certain unvested NexPlanar stock options.  See Note 12 of this Form 10-Q for additional discussion of share-based compensation.

The following supplemental pro forma information summarizes the combined results of operations for Cabot Microelectronics and NexPlanar as if the acquisition had occurred on October 1, 2014.

	Three Months Ended December 31,
	2015		2014
Revenues	$	101,776	$	117,569
Net income		12,372		16,815
Earnings per share - basic		0.51		0.70
Earnings per share - diluted	$	0.50	$	0.68

The historical financial information has been adjusted to give effect to the pro forma adjustments, which consist of amortization expense associated with intangible assets, and the elimination of interest expense on NexPlanar debt repaid prior to the acquisition.  The proforma for the three months ended December 31, 2015 exclude the impact of $605 in compensation expense related to unvested NexPlanar stock options settled in cash, and $403 for the step-up of inventory as these items are assumed to have occurred during the quarter ended December 31, 2014 had the acquisition been completed on October 1, 2014.  The pro forma adjustments are based on information currently available.  Therefore, the pro forma consolidated results are not necessarily indicative of what the consolidated results actually would have been had the acquisition been completed on October 1, 2014.  The pro forma consolidated results do not purport to project future results of combined operations, nor do they reflect the expected realization of any revenue or cost synergies associated with the acquisition.

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FAIR VALUE OF FINANCIAL INSTRUMENTS

3 Months Ended

Dec. 31, 2015

FAIR VALUE OF FINANCIAL INSTRUMENTS [Abstract]

FAIR VALUE OF FINANCIAL INSTRUMENTS

3. FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value is defined as the price that would be received from the sale of an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.  The FASB established a three-level hierarchy for disclosure based on the extent and level of judgment used to estimate fair value.  Level 1 inputs consist of valuations based on quoted market prices in active markets for identical assets or liabilities.  Level 2 inputs consist of valuations based on quoted prices for similar assets or liabilities, quoted prices for identical assets or liabilities in an inactive market, or other observable inputs.  Level 3 inputs consist of valuations based on unobservable inputs that are supported by little or no market activity.

The following table presents financial instruments, other than long-term debt, that we measured at fair value on a recurring basis at December 31, 2015 and September 30, 2015.  See Note 8 for a detailed discussion of our long-term debt.  We have classified the following assets and liabilities in accordance with the fair value hierarchy set forth in the applicable standards.  In instances where the inputs used to measure the fair value of an asset fall into more than one level of the hierarchy, we have classified them based on the lowest level input that is significant to the determination of the fair value.

December 31, 2015	Level 1		Level 2		Level 3		Total Fair Value
Assets:
Cash and cash equivalents	$	218,118	$	-	$	-	$	218,118
Other long-term investments		1,489		-		-		1,489
Derivative financial instruments		-		130		-		130
Total assets	$	219,607	$	130	$	-	$	219,737
Liabilities:
Derivative financial instruments		-		653		-		653
Total liabilities	$	-	$	653	$	-	$	653

September 30, 2015	Level 1		Level 2		Level 3		Total Fair Value
Assets:
Cash and cash equivalents	$	354,190	$	-	$	-	$	354,190
Other long-term investments		1,720		-				1,720
Derivative financial instruments		-		14		-		14
Total assets	$	355,910	$	14	$	-	$	355,924
Liabilities:
Derivative financial instruments		-		1,406		-		1,406
Total liabilities	$	-	$	1,406	$	-	$	1,406

Our cash and cash equivalents consist of various bank accounts used to support our operations and investments in institutional money-market funds which are traded in active markets. The other long-term investments are included in other long-term assets on our Consolidated Balance Sheet. Our other long-term investments represent the fair value of investments under the Cabot Microelectronics Supplemental Employee Retirement Plan (SERP), which is a nonqualified supplemental savings plan.  The fair value of the investments is determined through quoted market prices within actively traded markets.  Although the investments are allocated to individual participants and investment decisions are made solely by those participants, the SERP is a nonqualified plan.  Consequently, the Company owns the assets and the related offsetting liability for disbursement until such time a participant makes a qualifying withdrawal.  The long-term asset was adjusted to $1,489 in the first quarter of fiscal 2016 to reflect its fair value as of December 31, 2015.

In the first quarter of fiscal 2015, we entered into floating-to-fixed interest rate swap agreements to hedge the variability in LIBOR-based interest payments on a portion of our outstanding variable rate debt.  These interest rate swaps represent our primary use of derivative financial instruments.  The fair value of our derivative instruments is estimated using standard valuation models using market-based observable inputs over the contractual term, including one-month LIBOR-based yield curves, among others.  We consider the risk of nonperformance, including counterparty credit risk, in the calculation of the fair value of derivative financial instruments.  See Note 9 of this Form 10-Q for more information on our use of derivative financial instruments.

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INVENTORIES

3 Months Ended

Dec. 31, 2015

INVENTORIES [Abstract]

INVENTORIES

4. INVENTORIES, NET

Inventories, net consisted of the following:

	December 31, 2015		September 30, 2015
Raw materials	$	48,412	$	42,603
Work in process		4,919		5,487
Finished goods		22,848		22,588
Total	$	76,179	$	70,678

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GOODWILL AND OTHER INTANGIBLE ASSETS

3 Months Ended

Dec. 31, 2015

GOODWILL AND OTHER INTANGIBLE ASSETS [Abstract]

GOODWILL AND OTHER INTANGIBLE ASSETS

5. GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill was $95,703 as of December 31, 2015, and $40,442 as of September 30, 2015.  The increase in goodwill was due to $55,190 in goodwill related to the acquisition of NexPlanar and $71 in foreign exchange fluctuations of the New Taiwan dollar.

The components of other intangible assets are as follows:

	December 31, 2015				September 30, 2015
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Other intangible assets subject to amortization:
Product technology	$	41,060	$	8,612	$	8,053	$	7,490
Acquired patents and licenses		8,270		7,922		8,270		7,845
Trade secrets and know-how		2,550		2,550		2,550		2,550
Customer relationships, distribution rights and other		27,412		9,641		11,392		9,005
Total other intangible assets subject to amortization		79,292		28,725		30,265		26,890
In-process technology		12,000				-
Other indefinite-lived intangibles*		1,190				1,190
Total other intangible assets not subject to amortization		13,190				1,190
Total other intangible assets	$	92,482	$	28,725	$	31,455	$	26,890

*Other indefinite-lived intangible assets not subject to amortization consist primarily of trade names.

As discussed in Note 2, we recorded $61,000 of intangible assets related to our acquisition of NexPlanar.  The allocation of that amount into the various categories of intangible assets, as well as the useful lives we have established, are discussed in Note 2.

Amortization expense on our other intangible assets was $1,816 and $593 for the three months ended December 31, 2015 and 2014, respectively. Estimated future amortization expense for the five succeeding fiscal years is as follows:

Fiscal Year	Estimated Amortization Expense
Remainder of 2016	$	6,142
2017		7,508
2018		6,861
2019		6,453
2020		6,448

Goodwill and indefinite-lived intangible assets are tested for impairment annually in the fourth quarter of the fiscal year or more frequently if indicators of potential impairment exist, using a fair-value-based approach.  The recoverability of goodwill is measured at the reporting unit level, which is defined as either an operating segment or one level below an operating segment.  An entity has the option to assess the fair value of a reporting unit either using a qualitative analysis ("step zero") or a discounted cash flow analysis ("step one").  Similarly, an entity has the option to use a step zero or a step one approach to determine the recoverability of indefinite-lived intangible assets.  In fiscal 2015, we chose to use a step one analysis for both goodwill impairment and for indefinite-lived intangible asset impairment.

We completed our annual impairment test during our fourth quarter of fiscal 2015 and concluded that no impairment existed.  There were no indicators of potential impairment during the quarter ended December 31, 2015, so it was not necessary to perform an impairment review for goodwill and indefinite-lived intangible assets during the quarter.  There have been no cumulative impairment charges recorded on the goodwill for any of our reporting units.

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OTHER LONG-TERM ASSETS

3 Months Ended

Dec. 31, 2015

OTHER LONG-TERM ASSETS [Abstract]

OTHER LONG-TERM ASSETS

6. OTHER LONG-TERM ASSETS

Other long-term assets consisted of the following:

	December 31, 2015		September 30, 2015
Auction rate securities (ARS)	$	5,694	$	5,694
Other long-term assets		4,672		3,595
Long-term contract asset		3,760		3,995
Other long-term investments		1,489		1,720
Total	$	15,615	$	15,004

We classify our ARS investments as held-to-maturity and have recorded them at cost.  Our ARS investments at December 31, 2015 consisted of two tax exempt municipal debt securities with a total par value of $5,694, both of which have maturities greater than ten years.  The ARS market began to experience illiquidity in early 2008, and this illiquidity continues.  Despite this lack of liquidity, there have been no defaults in payment of the underlying securities and interest income on these holdings continues to be received on scheduled interest payment dates.  Our ARS, when purchased, were issued by A-rated municipalities.  Although the credit ratings of both municipalities have been downgraded since our original investment, one of the ARS is credit enhanced with bond insurance, and the other has become an obligation of the bond insurer.  Both ARS currently carry a credit rating of AA- by Standard & Poor's.

The fair value of our ARS, determined using level 2 fair value inputs, was $5,132 as of December 31, 2015. We have classified our ARS as held-to-maturity based on our intention and ability to hold the securities until maturity. We believe the gross unrecognized loss of $562 is due to the illiquidity in the ARS market, rather than to credit loss.  Although we believe these securities will ultimately be collected in full, we believe that it is not likely that we will be able to monetize the securities in our next business cycle (which for us is generally one year).  We will continue to monitor our ARS for impairment indicators, which may require us to record an impairment charge that is deemed other-than-temporary.

In the third quarter of fiscal 2015, we amended a supply contract with an existing supplier. The amended agreement includes a fee of $4,500, which provides us the option to purchase certain raw materials beyond calendar 2016.  This fee was recorded as a long-term asset at its present value and is being amortized into cost of goods sold on a straight-line basis through December 31, 2019, the expiration date of the agreement.  See Note 10 for more information regarding this contract.

Other long-term assets are comprised of the long-term portion of prepaid unamortized debt costs as well as miscellaneous deposits and prepayments on contracts extending beyond the next 12 months. As discussed in Note 3, we recorded a long-term asset and a corresponding long-term liability of $1,489 representing the fair value of our SERP investments as of December 31, 2015.

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ACCRUED EXPENSES, INCOME TAXES PAYABLE AND OTHER CURRENT LIABILITIES

3 Months Ended

Dec. 31, 2015

ACCRUED EXPENSES, INCOME TAXES PAYABLE AND OTHER CURRENT LIABILITIES [Abstract]

ACCRUED EXPENSES, INCOME TAXES PAYABLE AND OTHER CURRENT LIABILITIES

7. ACCRUED EXPENSES, INCOME TAXES PAYABLE AND OTHER CURRENT LIABILITIES

Accrued expenses, income taxes payable and other current liabilities consisted of the following:

	December 31, 2015		September 30, 2015
Accrued compensation	$	14,599	$	23,793
Goods and services received, not yet invoiced		1,501		1,830
Deferred revenue and customer advances		636		538
Warranty accrual		411		209
Income taxes payable		7,186		4,276
Taxes, other than income taxes		1,211		975
Other accrued expenses		3,920		4,825
Total	$	29,464	$	36,446

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DEBT

3 Months Ended

Dec. 31, 2015

DEBT [Abstract]

DEBT

8. DEBT

On February 13, 2012, we entered into a credit agreement (the "Credit Agreement") among the Company, as Borrower, Bank of America, N.A., as administrative agent, swing line lender and an L/C issuer, Bank of America Merrill Lynch and J.P. Morgan Securities LLC, as joint lead arrangers and joint book managers, JPMorgan Chase Bank, N.A., as syndication agent, and Wells Fargo Bank, N.A. as documentation agent. The Credit Agreement provided us with a $175,000 term loan (the "Term Loan"), which we drew on February 27, 2012 to fund approximately half of the special cash dividend we paid to our stockholders on March 1, 2012, and a $100,000 revolving credit facility (the "Revolving Credit Facility"), which has never been drawn, with sub-limits for multicurrency borrowings, letters of credit and swing-line loans.  The Term Loan and the Revolving Credit Facility are referred to as the "Credit Facilities."  On June 27, 2014, we entered into an amendment (the "Amendment") to the Credit Agreement, which (i) increased term loan commitments by $17,500, from $157,500 to $175,000, the same level as the original amount under the Credit Agreement at its inception in 2012; (ii) increased the uncommitted accordion feature on the Revolving Credit Facility from $75,000 to $100,000; (iii) extended the expiration date of the Credit Facilities from February 13, 2017 to June 27, 2019; (iv) relaxed the consolidated leverage ratio financial covenant; and (v) revised certain pricing terms and other terms within the Credit Agreement. On June 27, 2014, we drew the $17,500 of increased term loan commitments, bringing the total outstanding commitments under the Term Loan to $175,000.

Borrowings under the amended Credit Facilities (other than in respect of swing-line loans) bear interest at a rate per annum equal to the "Applicable Rate" (as defined below) plus, at our option, either (1) a LIBOR rate determined by reference to the cost of funds for deposits in the relevant currency for the interest period relevant to such borrowing or (2) the "Base Rate", which is the highest of (x) the prime rate of Bank of America, N.A., (y) the federal funds rate plus 1/2 of 1.00% and (z) the one-month LIBOR rate plus 1.00%.  The current Applicable Rate for borrowings under the Credit Facilities is 1.50% with respect to LIBOR borrowings and 0.25% with respect to Base Rate borrowings, with such Applicable Rate subject to adjustment based on our consolidated leverage ratio.  Swing-line loans bear interest at the Base Rate plus the Applicable Rate for Base Rate loans under the Revolving Credit Facility.  In addition to paying interest on outstanding principal under the Credit Agreement, we pay a commitment fee to the lenders under the Revolving Credit Facility in respect of the unutilized commitments thereunder.  The fee ranges from 0.20% to 0.30%, based on our consolidated leverage ratio. Interest expense and commitment fees are paid according to the relevant interest period and no less frequently than at the end of each calendar quarter. We paid $2,658 in arrangement fees, upfront fees and administration fees in February 2012 and we paid an additional $550 in upfront fees and arrangement fees in June 2014, of which $403 remains in prepaid expenses and other current assets and $977 remains in other long-term assets on our Consolidated Balance Sheet as of December 31, 2015.  We also pay letter of credit fees as necessary.  The Term Loan has periodic scheduled repayments; however, we may voluntarily prepay the Credit Facilities without premium or penalty, subject to customary "breakage" fees and reemployment costs in the case of LIBOR borrowings.  All obligations under the Credit Agreement are guaranteed by certain of our existing and future direct and indirect domestic subsidiaries.  The obligations under the Credit Agreement and guarantees of those obligations are secured, subject to certain exceptions, by first priority liens and security interests in the assets of the Company and certain of its domestic subsidiaries.

In the first quarter of fiscal 2015, we entered into interest rate swap agreements that have the economic effect of converting 0.5 of our variable rate debt into fixed rate debt at a weighted average fixed rate of 1.5% plus the Applicable Rate defined above.  See Notes 3 and 9 for additional information on the interest rate swap agreements.

The Credit Agreement contains covenants that restrict the ability of the Company and its subsidiaries to take certain actions, including, among other things and subject to certain significant exceptions: creating liens, incurring indebtedness, making investments, engaging in mergers, selling property, paying dividends or amending organizational documents.  The Credit Agreement requires us to comply with certain financial ratio maintenance covenants.  These include a maximum consolidated leverage ratio of 3.00 to 1.00 through December 31, 2015 and a minimum consolidated fixed charge coverage ratio of 1.25 to 1.00.  The maximum consolidated leverage ratio decreased to 2.75 to 1.00 from January 1, 2016 through the expiration of the Credit Agreement.  As of December 31, 2015, our consolidated leverage ratio was 1.56 to 1.00 and our consolidated fixed charge coverage ratio was 4.97 to 1.00.  The Credit Agreement also contains customary affirmative covenants and events of default.  We believe we are in compliance with these covenants.

At December 31, 2015, the fair value of the Term Loan, using level 2 inputs, approximates its carrying value of $161,875 as the loan bears a floating market rate of interest.  As of December 31, 2015, $8,750 of the debt outstanding is classified as short-term.

Principal repayments of the Term Loan are generally made on the last calendar day of each quarter if that day is considered to be a business day.  As of December 31, 2015, scheduled principal repayments of the Term Loan were as follows:

Fiscal Year	Principal Repayments
Remainder of 2016	$	6,562
2017		7,656
2018		14,219
2019		133,438
Total	$	161,875

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DERIVATIVE FINANCIAL INSTRUMENTS

3 Months Ended

Dec. 31, 2015

DERIVATIVE FINANCIAL INSTRUMENTS [Abstract]

DERIVATIVE FINANCIAL INSTRUMENTS

9. DERIVATIVE FINANCIAL INSTRUMENTS

We are exposed to various market risks, including interest rates and foreign currency exchange rates.  We enter into various derivative transactions to mitigate the volatility associated with these exposures.  We have policies in place that define acceptable instrument types we may enter into and we have established controls to limit our market risk exposure.  We do not use derivative financial instruments for trading or speculative purposes.  In addition, all derivatives, whether designated in hedging relationships or not, are required to be recorded on the balance sheet at fair value on a gross basis.

Cash Flow Hedges – Interest Rate Swap Agreements

In the first quarter of fiscal 2015, we entered into floating-to-fixed interest rate swap agreements to hedge the variability in LIBOR-based interest payments on $86,406 of our outstanding variable rate debt.  The notional amount of the swaps decreases each quarter by an amount in proportion to our scheduled quarterly principal payment of debt.  The notional value of the swaps was $80,938 as of December 31, 2015, and the swaps are scheduled to expire on June 27, 2019.

We have designated these swap agreements as cash flow hedges pursuant to ASC 815, "Derivatives and Hedging".  As cash flow hedges, unrealized gains are recognized as assets and unrealized losses are recognized as liabilities.  Unrealized gains and losses are designated as effective or ineffective based on a comparison of the changes in fair value of the interest rate swaps and the change in fair value of the underlying exposures being hedged. The effective portion is recorded as a component of accumulated other comprehensive income or loss, while the ineffective portion is recorded as a component of interest expense. Changes in the method by which we pay interest from one-month LIBOR to another rate of interest could create ineffectiveness in the swaps, and result in amounts being reclassified from other comprehensive income into net income. Hedge effectiveness is tested quarterly to determine if hedge treatment is appropriate.

Foreign Currency Contracts Not Designated as Hedges

Periodically we enter into forward foreign exchange contracts in an effort to mitigate the risks associated with currency fluctuations on certain foreign currency balance sheet exposures.  Our foreign exchange contracts do not qualify for hedge accounting; therefore, the gains and losses resulting from the impact of currency exchange rate movements on our forward foreign exchange contracts are recognized as other income or expense in the accompanying consolidated income statements in the period in which the exchange rates change.  As of December 31, 2015 and September 30, 2015, respectively, the notional amounts of the forward contracts we held to purchase U.S. dollars in exchange for other international currencies were $1,029 and $1,034, respectively, and the notional amounts of forward contracts we held to sell U.S. dollars in exchange for other international currencies were $17,550 and $18,690, respectively.

The fair value of our derivative instruments included in the Consolidated Balance Sheet, which was determined using level 2 inputs, was as follows:

		Asset Derivatives				Liability Derivatives
	Balance Sheet Location	December 31, 2015		September 30, 2015		December 31, 2015		September 30, 2015
Derivatives designated as hedging instruments
Interest rate swap contracts	Other noncurrent assets	$	114	$	-	$	-	$	-
	Accrued expenses and other current liabilities	$	-	$	-	$	645	$	885
	Other long-term liabilities	$	-	$	-	$	-	$	513
Derivatives not designated as hedging instruments
Foreign exchange contracts	Prepaid expenses and other current               assets	$	16	$	14	$	-	$	-
	Accrued expenses and other current liabilities	$	-	$	-	$	8	$	8

The following table summarizes the effect of our derivative instruments on our Consolidated Statement of Income for the three months ended December 31, 2015 and 2014:

		Gain (Loss) Recognized in Statement of Income
		Three Months Ended
	Statement of Income Location	December 31, 2015				December 31, 2014
Derivatives not designated as hedging instruments
Foreign exchange contracts	Other income, net		$	(186	)		$	(1,336	)

The interest rate swap agreements were deemed to be effective since inception, so there was no impact on our Consolidated Statement of Income. We recorded a $559 unrealized loss in accumulated comprehensive income during the quarter ended December 31, 2015 for these interest rate swaps.  During the next 12 months, we expect approximately $650 may be reclassified from accumulated other comprehensive income into interest expense related to our interest rate swaps based on projected rates of the LIBOR forward curve as of December 31, 2015.

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COMMITMENTS AND CONTINGENCIES

3 Months Ended

Dec. 31, 2015

COMMITMENTS AND CONTINGENCIES [Abstract]

COMMITMENTS AND CONTINGENCIES

10. COMMITMENTS AND CONTINGENCIES

LEGAL PROCEEDINGS

While we are not involved in any legal proceedings that we believe will have a material impact on our consolidated financial position, results of operations or cash flows, we periodically become a party to legal proceedings in the ordinary course of business.

Refer to Note 17 of "Notes to the Consolidated Financial Statements" in Item 8 of Part II of our Annual Report on Form 10-K for the fiscal year ended September 30, 2015, for additional information regarding commitments and contingencies.

PRODUCT WARRANTIES

We maintain a warranty reserve that reflects management's best estimate of the cost to replace product that does not meet our specifications and customers' performance requirements, and costs related to such replacement.  The warranty reserve is based upon a historical product replacement rate, adjusted for any specific known conditions or circumstances.  Additions and deductions to the warranty reserve are recorded in cost of goods sold.  Our warranty reserve activity during the first three months of fiscal 2016 was as follows:

Balance as of September 30, 2015	$	209
Reserve for product warranty during the reporting period		143
Reserve acquired through business combination		220
Settlement of warranty		(161	)
Balance as of December 31, 2015	$	411

POSTRETIREMENT OBLIGATIONS IN FOREIGN JURISDICTIONS

We have unfunded defined benefit plans covering employees in certain foreign jurisdictions as required by local law.  Benefit costs, consisting primarily of service costs, are recorded as fringe benefit expense under cost of goods sold and operating expenses in our Consolidated Statements of Income.  The projected benefit obligations and accumulated benefit obligations under all such unfunded plans are updated annually during the fourth quarter of the fiscal year.  Benefit payments under all such unfunded plans to be paid over the next 10 years are expected to be approximately $2,188.  For more information regarding these plans, refer to Note 17 of "Notes to the Consolidated Financial Statements" included in Item 8 of Part II of our Annual Report on Form 10-K for the fiscal year ended September 30, 2015.

PURCHASE OBLIGATIONS

Purchase obligations include our take-or-pay arrangements with suppliers, and purchase orders and other obligations entered into in the normal course of business regarding the purchase of goods and services.  We have been operating under a fumed silica supply agreement with Cabot Corporation, our former parent company which is not a related party, which had a termination date of December 31, 2016, which required us to purchase certain minimum quantities of fumed silica each year of the agreement, and to pay a shortfall if we purchased less than the minimum. This agreement was amended effective June 1, 2015 to, among other things, extend the term of the agreement through December 31, 2019, revise certain minimum purchase requirements through 2016, and provide us the option to purchase fumed silica for the remaining term of the agreement beyond calendar year 2016, for which we will pay a fee of $1,500 in each of calendar years 2017, 2018 and 2019.  This fee is included in other long-term liabilities at its present value of $3,760 as of December 31, 2015.  As of December 31, 2015, purchase obligations include $17,095 of contractual commitments related to our Cabot Corporation supply agreement for fumed silica.

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ACCUMULATED OTHER COMPREHENSIVE INCOME

3 Months Ended

Dec. 31, 2015

ACCUMULATED OTHER COMPREHENSIVE INCOME [Abstract]

ACCUMULATED OTHER COMPREHENSIVE INCOME [Text Block]

11. ACCUMULATED OTHER COMPREHENSIVE INCOME

The components of accumulated other comprehensive income (AOCI), including the reclassification adjustments for items that are reclassified from AOCI to net income, are shown below:

	Foreign Currency Translation			Cash Flow Hedges			Pension and Other Postretirement Liabilities			Total
Balance at September 30, 2015	$	(4,011	)	$	(901	)	$	(1,178	)	$	(6,090	)
Foreign currency translation adjustment, net of tax of $187		197			-			-			197
Unrealized gain (loss) on cash flow hedges:
Change in fair value, net of tax of $211		-			383			-			383
Reclassification adjustment into earnings, net of tax of $97		-			176			-			176
Change in pension and other postretirement,  net of tax of $372		-			-			372			372
Balance at December 31, 2015	$	(3,814	)	$	(342	)	$	(806	)	$	(4,962	)

	Foreign Currency Translation			Cash Flow Hedges			Pension and Other Postretirement Liabilities			Total
Balance at September 30, 2014	$	10,115		$	-		$	(860	)	$	9,255
Foreign currency translation adjustment, net of tax of $(1,626)		(8,332	)		-			-			(8,332	)
Unrealized gain (loss) on cash flow hedges:
Change in fair value, net of tax of tax benefit of $0		-			(275	)		-			(275	)
Reclassification adjustment into earnings, net of tax of $0		-			106			-			106
Change in pension and other postretirement,  net of tax of $0		-			-			-			-
Balance at December 31, 2014	$	1,783		$	(169	)	$	(860	)	$	754

The before tax amounts reclassified from OCI to net income during the three months ended December 31, 2015 and 2014, related to our cash flow hedges, were recorded as interest expense on our Consolidated Statement of Income.

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SHARE-BASED COMPENSATION PLANS

3 Months Ended

Dec. 31, 2015

SHARE-BASED COMPENSATION PLANS [Abstract]

SHARE-BASED COMPENSATION PLANS

12. SHARE-BASED COMPENSATION PLANS

We issue share-based awards under the following programs: our Cabot Microelectronics Corporation 2012 Omnibus Incentive Plan (OIP); our Cabot Microelectronics Corporation 2007 Employee Stock Purchase Plan, as Amended and Restated January 1, 2010 (ESPP); and pursuant to the OIP, our Directors' Deferred Compensation Plan, as amended September 23, 2008 (DDCP), and our 2001 Executive Officer Deposit Share Program (DSP).  Prior to March 2012, when our stockholders approved the OIP, we issued share-based payments under our Second Amended and Restated Cabot Microelectronics Corporation 2000 Equity Incentive Plan, as amended and restated September 23, 2008 (EIP); our ESPP, and, pursuant to the EIP, the DDCP and DSP.  For additional information regarding these programs, refer to Note 12 of "Notes to the Consolidated Financial Statements" included in Item 8 of Part II of our Annual Report on Form 10-K for the fiscal year ended September 30, 2015.  Other than the ESPP, all share-based payments granted beginning March 6, 2012 are made from the OIP, and since then, the EIP is no longer available for any awards.

We record share-based compensation expense for all share-based awards, including stock option grants, restricted stock and restricted stock unit awards and employee stock purchase plan purchases.  We calculate share-based compensation expense using the straight-line approach based on awards ultimately expected to vest, which requires the use of an estimated forfeiture rate.  Our estimated forfeiture rate is primarily based on historical experience, but may be revised in future periods if actual forfeitures differ from the estimate.  We use the Black-Scholes option-pricing model to estimate the grant date fair value of our stock options and employee stock purchase plan purchases.  This model requires the input of highly subjective assumptions, including the price volatility of the underlying stock, the expected term of our stock options and the risk-free interest rate.  We estimate the expected volatility of our stock options based on a combination of our stock's historical volatility and the implied volatilities from actively-traded options on our stock. We calculate the expected term of our stock options using historical stock option exercise data, and we add a slight premium to this expected term for employees who meet the definition of retirement-eligible pursuant to their grants during the contractual term of the grant. The risk-free interest rate is derived from the U.S. Treasury yield curve in effect at the time of grant.

Share-based compensation expense for the three months ended December 31, 2015, and 2014, was as follows:

	Three Months Ended December 31,
	2015			2014
Cost of goods sold	$	534		$	498
Research, development and technical		418			415
Selling and marketing		404			320
General and administrative		3,716			2,174
Total share-based compensation expense		5,072			3,407
Tax benefit		(1,714	)		(1,122	)
Total share-based compensation expense, net of tax	$	3,358		$	2,285

As discussed in Note 2, during the quarter ended December 31, 2015, we recorded $605 in share-based compensation expense related to certain unvested NexPlanar incentive stock options (ISOs) settled in cash at the acquisition date.  This amount represents the portion of the fair value of the original awards related to the post-acquisition period had these awards not been settled in cash at the acquisition date.  U.S. GAAP prescribes that the portion of fair value of equity awards related to pre-acquisition service periods represents purchase consideration and the portion of fair value related to post-acquisition service periods represents compensation expense.  Since the post-acquisition service requirement was eliminated through the cash settlement, the compensation expense was recorded immediately following the acquisition date.  We also substituted certain NexPlanar ISOs with Cabot Microelectronics Corporation ISOs, preserving the intrinsic value, including the original vesting periods, of the original awards.  We accelerated the vesting on the substitute awards made to certain individuals based on the terms of their employment agreements and recorded $492 of share-based compensation expense related to this acceleration.  The total $1,097 of acquisition-related compensation is included in the table above as general and administrative expense.

As discussed in our Quarterly report on Form 10-Q for the quarter ended December 31, 2014, all unvested stock options and restricted stock held by our former President and Chief Executive Officer vested in full on December 31, 2015, in accordance with the terms of his employment letter with the Company dated December 12, 2014.  We applied the accounting guidance under Accounting Standards Codification (ASC) Topic 718 "Stock Compensation" to determine the additional share-based compensation expense to be recorded as part of the modification of the outstanding equity.  The original fair value of his unvested equity totaling $5,033 was recorded ratably between the date of modification and December 31, 2015, rather than recording the expense over the original vesting period.  During the quarter ended December 31, 2014, we recorded $378 in shared-based compensation expense related to this modification.

For additional information regarding the estimation of fair value, refer to Note 12 of "Notes to the Consolidated Financial Statements" included in Item 8 of Part II of our Annual Report on Form 10-K for the fiscal year ended September 30, 2015.

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OTHER INCOME, NET

3 Months Ended

Dec. 31, 2015

OTHER INCOME, NET [Abstract]

OTHER INCOME, NET

13. OTHER INCOME, NET

Other income, net, consisted of the following:

	Three Months Ended December 31,
	2015				2014
Interest income		$	209			$	103
Other income (expense)			(19	)			954
Total other income, net		$	190			$	1,057

Other income (expense) primarily represents gains and losses recorded on transactions denominated in foreign currencies.  The decrease in other income was primarily due to the impact of foreign currency fluctuations on monetary assets and liabilities denominated in currencies other than the functional currency, net of the gains and losses incurred on forward foreign exchange contracts discussed in Note 9.

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INCOME TAXES

3 Months Ended

Dec. 31, 2015

INCOME TAXES [Abstract]

INCOME TAXES

14. INCOME TAXES

Our effective income tax rate was 15.5% for the three months ended December 31, 2015 compared to a 12.3% effective income tax rate for the three months ended December 31, 2014.  The increase in the effective tax rate during the first quarter of fiscal 2016 was primarily due to higher income tax expense on foreign earnings, including a reduction in the benefit available under our tax holiday in South Korea.  This was partially offset by the absence of income taxes incurred during the first quarter of fiscal 2015 related to the restructuring of our operations in Taiwan.

The Company is currently operating under a tax holiday in South Korea in conjunction with our investment in research, development and manufacturing facilities there.  This arrangement allows for a tax at 50% of the local statutory rate in effect for fiscal years 2016 and 2017, following a 0% tax rate in fiscal years 2013, 2014 and 2015.  This tax holiday reduced our income tax provision by approximately $871 and $1,177 in the first quarter of fiscal 2016 and 2015, respectively.  This tax holiday increased our diluted earnings per share by approximately $0.04 and $0.05 during the first quarter of fiscal 2016 and 2015, respectively.

In November 2015, the FASB issued ASU No. 2015-17, "Balance Sheet Classification of Deferred Taxes" (Topic 740).  The provisions of ASU 2015-17 require that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position.  We have elected the early adoption provision of this standard in the quarter ended December 31, 2015, and have prospectively classified all deferred tax assets and liabilities as noncurrent on our consolidated balance sheet in accordance with this standard.  We have not retrospectively adjusted the deferred tax balances as of September 30, 2015.

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EARNINGS PER SHARE

3 Months Ended

Dec. 31, 2015

EARNINGS PER SHARE [Abstract]

EARNINGS PER SHARE

15. EARNINGS PER SHARE

Basic earnings per share (EPS) is calculated by dividing net income available to common stockholders by the weighted-average number of common shares outstanding during the period, excluding the effects of unvested restricted stock awards with a right to receive non-forfeitable dividends, which are considered participating securities as prescribed by the two-class method under ASC 260.  Diluted EPS is calculated in a similar manner, but the weighted-average number of common shares outstanding during the period is increased to include the weighted-average dilutive effect of "in-the-money" stock options and unvested restricted stock shares using the treasury stock method.

The standards of accounting for earnings per share require companies to provide a reconciliation of the numerator and denominator of the basic and diluted earnings per share computations.  Basic and diluted earnings per share were calculated as follows:

	Three Months Ended December,
	2015			2014
Numerator:
Net Income	$	11,309		$	19,916
Less: income attributable to participating securities		(127	)		(231	)
Earnings available to common shares	$	11,182		$	19,685
Denominator:
Weighted average common shares		24,141,726			23,651,405
(Denominator for basic calculation)
Weighted average effect of dilutive securities:
Share-based compensation		407,039			834,197
Diluted weighted average common shares		24,548,765			24,485,602
(Denominator for diluted calculation)
Earnings per share:
Basic	$	0.46		$	0.83
Diluted	$	0.46		$	0.80

For the three months ended December 31, 2015 and 2014, approximately 1.1 million and 0.1 million shares, respectively, attributable to outstanding stock options were excluded from the calculation of diluted earnings per share because the exercise price of the options was greater than the average market price of our common stock and, therefore, their inclusion would have been anti-dilutive.

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FINANCIAL INFORMATION BY INDUSTRY SEGMENT, GEOGRAPHIC AREA AND PRODUCT LINE

3 Months Ended

Dec. 31, 2015

FINANCIAL INFORMATION BY INDUSTRY SEGMENT, GEOGRAPHIC AREA AND PRODUCT LINE [Abstract]

FINANCIAL INFORMATION BY INDUSTRY SEGMENT, GEOGRAPHIC AREA AND PRODUCT LINE

16. FINANCIAL INFORMATION BY INDUSTRY SEGMENT AND PRODUCT LINE

We operate predominantly in one reportable segment, as defined under ASC 280 – the development, manufacture, and sale of CMP consumables.

Revenue generated by product line for the three months ended December 31, 2015, and 2014, was as follows:

	Three Months Ended December 31,
Revenue:	2015		2014
Tungsten slurries	$	44,412	$	45,144
Dielectric slurries		23,018		28,183
Other Metals slurries		16,358		19,897
Polishing pads		10,509		8,762
Engineered Surface Finishes		3,952		5,582
Data Storage slurries		2,120		4,366
Total revenue	$	100,369	$	111,934

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NEW ACCOUNTING PRONOUNCEMENTS

3 Months Ended

Dec. 31, 2015

NEW ACCOUNTING PRONOUNCEMENTS [Abstract]

NEW ACCOUNTING PRONOUNCEMENTS

17. NEW ACCOUNTING PRONOUNCEMENTS

In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers" (Topic 606), an updated standard on revenue recognition.  ASU 2014-09 provides enhancements to how revenue is reported and improves comparability in the financial statements of companies reporting using IFRS and US GAAP.  The core principle of the new standard is for companies to recognize revenue for goods or services in amounts that reflect the consideration to which the company expects to be entitled in exchange for those goods or services.  The new standard is intended to enhance disclosures about revenue, provide guidance for transactions that were not previously addressed comprehensively, such as service revenue and contract modifications, and improve guidance for multiple-element arrangements.  In August 2015, the FASB issued ASU No. 2015-14, "Deferral of Effective Date" (Topic 606).  This standard officially defers the effective date of ASU 2014-09 by one year.  ASU 2014-09 will be effective for us beginning October 1, 2018, and may be applied on a full retrospective or modified retrospective approach.  Adoption is not permitted prior to the original effective date of the ASU, which for us is October 1, 2017.  We are currently evaluating the impact of implementation of this standard on our financial statements.

In June 2014, the FASB issued ASU No. 2014-12, "Accounting for Share-Based Payments When the Terms of an Award Provide that a Performance Target Could be Achieved after the Requisite Service Period" (Topic 718).  ASU 2014-12 requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition.  As such, the performance target should not be reflected in estimating the grant date fair value of an award, and compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved.  The compensation cost should represent the amount attributable to the periods for which the requisite service has been rendered.  ASU 2014-12 will be effective for us beginning October 1, 2016 and may be applied on a prospective or retrospective basis.  We do not expect the implementation of this standard to have a material effect on our financial statements as we have not granted any awards with a performance condition.

In January 2015, the FASB issued ASU No. 2015-01, "Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items" (Subtopic 225-20).  ASU 2015-01 eliminates the concept of extraordinary items from U.S. GAAP, so an entity no longer needs to consider whether an underlying event or transaction is extraordinary.  ASU 2015-01 retains the prior presentation and disclosure guidance for items that are unusual in nature or occur infrequently and will expand the guidance to include items that are both unusual in nature and infrequently occurring.  ASU 2015-01 will be effective for us beginning October 1, 2016.  We do not expect the implementation of this standard to have a material effect on our financial statements as we have not had any events or transactions that were considered to be extraordinary.

In February 2015, the FASB issued ASU No. 2015-02, "Amendments to the Consolidation Analysis" (Topic 810).  ASU 2015-02 amends the criteria for determining which entities are considered variable interest entities (VIEs), amends the criteria for determining if a service provider possesses a variable interest in a VIE and ends the deferral granted to investment companies for application of the VIE consolidation model.  ASU 2015-02 will be effective for us beginning October 1, 2016.  We do not expect the implementation of this standard to have a material effect on our financial statements as we have no interests in any entities that may be considered VIEs.

In April 2015, the FASB issued ASU No. 2015-03, "Simplifying the Presentation of Debt Issuance Costs" (Subtopic 835-30).  The provisions of ASU 2015-03 require an entity to present the debt issuance costs related to a recognized debt liability in the balance sheet as a direct deduction to the carry amount of that debt liability.  ASU 2015-03 will be effective for us beginning October 1, 2016, but early adoption is permitted.  The implementation of this standard will require us to reclassify our debt issuance costs from their asset position on our balance sheet to a liability position as an offset to the carrying amount of our outstanding debt.  We do not expect the implementation of this standard to have a material effect on our financial statements.

      In April 2015, the FASB issued ASU No. 2015-05, "Customer Accounting for Fees Paid in a Cloud Computing Arrangement" (Subtopic 350-40).  ASU 2015-05 provides guidance to entities on accounting for entering into a cloud computing arrangement with and without a software license.  If an arrangement includes a software license, then the purchaser should account for the software license element of the arrangement consistent with the treatment of other software licenses.  If an arrangement does not include a software license, it should be treated as a service contract.  ASU 2015-05 will be effective for us beginning October 1, 2016, but early adoption is permitted.  We are currently evaluating the impact of implementation of this standard on our financial statements.

In July 2015, the FASB issued ASU No, 2015-11, "Simplifying the Measurement of Inventory" (Topic 330).  The provisions of ASU 2015-11 require an entity to measure inventory at the lower of cost and net realizable value.  Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.  ASU 2015-11 will be effective for us beginning October 1, 2017 but early adoption is permitted.  We do not believe the adoption of this standard will have a material effect on our financial statements.

In August 2015, the FASB issued ASU No. 2015-15, "Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements" (Subtopic 835-30).  ASU 2015-15 provides guidance on the treatment of debt issuance cost related to line-of-credit arrangements based on comments provided by the SEC staff.  The SEC staff stated that it would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance cost ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement.  ASU 2015-15 will be effective for us beginning October 1, 2016, but early adoption is permitted.  We are currently evaluating the impact of implementation of this standard on our financial statements.

In September 2015, the FASB issued ASU No. 2015-16, "Simplifying the Accounting for Measurement Period Adjustments" (Topic 805).  The provisions of ASU 2015-16 require an acquirer to recognize adjustments to provisional amounts identified during the measurement period in the reporting period in which the adjustment amounts are determined.  ASU 2015-16 requires an acquirer to record, in the same period's financial statements, the effect on earnings of changes in depreciation, amortization or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the account had been completed at the acquisition date. ASU 2015-16 also requires an entity to present separately on the face of the income statement or disclose in the footnotes the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustments had been recognized as of the acquisition date.  ASU 2015-16 will be effective for us beginning October 1, 2017, but early adoption is permitted.  We are currently evaluating the impact of implementation of this standard on our financial statements.

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SUBSEQUENT EVENT

3 Months Ended

Dec. 31, 2015

SUBSEQUENT EVENT [Abstract]

SUBSEQUENT EVENT

18. SUBSEQUENT EVENT

On January 7, 2016, we issued a press release announcing that our Board of Directors has authorized the initiation of a regular dividend program under which the Company intends to pay quarterly cash dividends on its common stock. Our Board of Directors declared an initial quarterly cash dividend of $0.18 per share, which would represent an annualized rate of $0.72 per share, or approximately $17,600 in the aggregate, based on our common share count as of January 31, 2016. The record date for the initial quarterly cash dividend is the close of business on March 17, 2016, and the payable date for the initial quarterly cash dividend is on or about April 15, 2016. The declaration and payment of future dividends is subject to the discretion and determination of the Board of Directors and management, based on a variety of factors, and the program may be suspended, terminated or modified at any time for any reason.

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BUSINESS COMBINATION (Tables)

3 Months Ended

Dec. 31, 2015

BUSINESS COMBINATION [Abstract]

Preliminary Fair Values of Assets Acquired and Liabilities Assumed

                      The following table summarizes the preliminary fair values of assets acquired and liabilities assumed as of the date of acquisition:

Total purchase consideration	$	141,716
Cash	$	15,261
Accounts receivable		3,427
Inventories		2,768
Prepaid expenses and other current assets		1,712
Property, plant and equipment		6,296
Intangible assets		61,000
Deferred tax assets		19,642
Other long-term assets		1,458
Accounts payable		(1,057	)
Accrued expenses and other current liabilities		(1,692	)
Deferred tax liabilities		(22,289	)
Total identifiable net assets		86,526
Goodwill		55,190
	$	141,716

Components of Identifiable Intangible Assets

The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition:

	Preliminary		Useful
	Fair Value		Life
Trade name	$	8,000	7 years
Customer relationships		8,000	11 years
Developed technology - product family A		25,000	7 years
Developed technology - product family B		8,000	8 years
In-process technology		12,000
Total preliminary intangible assets	$	61,000

Pro Forma Combined Results of Operations

The following supplemental pro forma information summarizes the combined results of operations for Cabot Microelectronics and NexPlanar as if the acquisition had occurred on October 1, 2014.

	Three Months Ended December 31,
	2015		2014
Revenues	$	101,776	$	117,569
Net income		12,372		16,815
Earnings per share - basic		0.51		0.70
Earnings per share - diluted	$	0.50	$	0.68

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FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

3 Months Ended

Dec. 31, 2015

FAIR VALUE OF FINANCIAL INSTRUMENTS [Abstract]

Schedule of Fair Value of Financial Instruments

The following table presents financial instruments, other than long-term debt, that we measured at fair value on a recurring basis at December 31, 2015 and September 30, 2015.  See Note 8 for a detailed discussion of our long-term debt.  We have classified the following assets and liabilities in accordance with the fair value hierarchy set forth in the applicable standards.  In instances where the inputs used to measure the fair value of an asset fall into more than one level of the hierarchy, we have classified them based on the lowest level input that is significant to the determination of the fair value.

December 31, 2015	Level 1		Level 2		Level 3		Total Fair Value
Assets:
Cash and cash equivalents	$	218,118	$	-	$	-	$	218,118
Other long-term investments		1,489		-		-		1,489
Derivative financial instruments		-		130		-		130
Total assets	$	219,607	$	130	$	-	$	219,737
Liabilities:
Derivative financial instruments		-		653		-		653
Total liabilities	$	-	$	653	$	-	$	653

September 30, 2015	Level 1		Level 2		Level 3		Total Fair Value
Assets:
Cash and cash equivalents	$	354,190	$	-	$	-	$	354,190
Other long-term investments		1,720		-				1,720
Derivative financial instruments		-		14		-		14
Total assets	$	355,910	$	14	$	-	$	355,924
Liabilities:
Derivative financial instruments		-		1,406		-		1,406
Total liabilities	$	-	$	1,406	$	-	$	1,406

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INVENTORIES (Tables)

3 Months Ended

Dec. 31, 2015

INVENTORIES [Abstract]

Schedule of inventories

Inventories, net consisted of the following:

	December 31, 2015		September 30, 2015
Raw materials	$	48,412	$	42,603
Work in process		4,919		5,487
Finished goods		22,848		22,588
Total	$	76,179	$	70,678

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GOODWILL AND OTHER INTANGIBLE ASSETS (Tables)

3 Months Ended

Dec. 31, 2015

GOODWILL AND OTHER INTANGIBLE ASSETS [Abstract]

Components of other intangible assets

The components of other intangible assets are as follows:

	December 31, 2015				September 30, 2015
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Other intangible assets subject to amortization:
Product technology	$	41,060	$	8,612	$	8,053	$	7,490
Acquired patents and licenses		8,270		7,922		8,270		7,845
Trade secrets and know-how		2,550		2,550		2,550		2,550
Customer relationships, distribution rights and other		27,412		9,641		11,392		9,005
Total other intangible assets subject to amortization		79,292		28,725		30,265		26,890
In-process technology		12,000				-
Other indefinite-lived intangibles*		1,190				1,190
Total other intangible assets not subject to amortization		13,190				1,190
Total other intangible assets	$	92,482	$	28,725	$	31,455	$	26,890

*Other indefinite-lived intangible assets not subject to amortization consist primarily of trade names.

As discussed in Note 2, we recorded $61,000 of intangible assets related to our acquisition of NexPlanar.  The allocation of that amount into the various categories of intangible assets, as well as the useful lives we have established, are discussed in Note 2.

Estimated future amortization expense for the succeeding five fiscal years

Amortization expense on our other intangible assets was $1,816 and $593 for the three months ended December 31, 2015 and 2014, respectively. Estimated future amortization expense for the five succeeding fiscal years is as follows:

Fiscal Year	Estimated Amortization Expense
Remainder of 2016	$	6,142
2017		7,508
2018		6,861
2019		6,453
2020		6,448

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OTHER LONG-TERM ASSETS (Tables)

3 Months Ended

Dec. 31, 2015

OTHER LONG-TERM ASSETS [Abstract]

Schedule of other long term assets

Other long-term assets consisted of the following:

	December 31, 2015		September 30, 2015
Auction rate securities (ARS)	$	5,694	$	5,694
Other long-term assets		4,672		3,595
Long-term contract asset		3,760		3,995
Other long-term investments		1,489		1,720
Total	$	15,615	$	15,004

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ACCRUED EXPENSES, INCOME TAXES PAYABLE AND OTHER CURRENT LIABILITIES (Tables)

3 Months Ended

Dec. 31, 2015

ACCRUED EXPENSES, INCOME TAXES PAYABLE AND OTHER CURRENT LIABILITIES [Abstract]

Schedule of accrued expenses, income taxes payable and other current liabilities

Accrued expenses, income taxes payable and other current liabilities consisted of the following:

	December 31, 2015		September 30, 2015
Accrued compensation	$	14,599	$	23,793
Goods and services received, not yet invoiced		1,501		1,830
Deferred revenue and customer advances		636		538
Warranty accrual		411		209
Income taxes payable		7,186		4,276
Taxes, other than income taxes		1,211		975
Other accrued expenses		3,920		4,825
Total	$	29,464	$	36,446

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DEBT (Tables)

3 Months Ended

Dec. 31, 2015

DEBT [Abstract]

Schedule of Maturities of Long-term Debt

Principal repayments of the Term Loan are generally made on the last calendar day of each quarter if that day is considered to be a business day.  As of December 31, 2015, scheduled principal repayments of the Term Loan were as follows:

Fiscal Year	Principal Repayments
Remainder of 2016	$	6,562
2017		7,656
2018		14,219
2019		133,438
Total	$	161,875

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DERIVATIVE FINANCIAL INSTRUMENTS (Tables)

3 Months Ended

Dec. 31, 2015

DERIVATIVE FINANCIAL INSTRUMENTS [Abstract]

Schedule of Fair Value of Derivative Instruments in the Consolidated Balance Sheet

The fair value of our derivative instruments included in the Consolidated Balance Sheet, which was determined using level 2 inputs, was as follows:

		Asset Derivatives				Liability Derivatives
	Balance Sheet Location	December 31, 2015		September 30, 2015		December 31, 2015		September 30, 2015
Derivatives designated as hedging instruments
Interest rate swap contracts	Other noncurrent assets	$	114	$	-	$	-	$	-
	Accrued expenses and other current liabilities	$	-	$	-	$	645	$	885
	Other long-term liabilities	$	-	$	-	$	-	$	513
Derivatives not designated as hedging instruments
Foreign exchange contracts	Prepaid expenses and other current               assets	$	16	$	14	$	-	$	-
	Accrued expenses and other current liabilities	$	-	$	-	$	8	$	8

Schedule of the Effect of Derivative Instruments on the Consolidated Statement of Income

The following table summarizes the effect of our derivative instruments on our Consolidated Statement of Income for the three months ended December 31, 2015 and 2014:

		Gain (Loss) Recognized in Statement of Income
		Three Months Ended
	Statement of Income Location	December 31, 2015				December 31, 2014
Derivatives not designated as hedging instruments
Foreign exchange contracts	Other income, net		$	(186	)		$	(1,336	)

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COMMITMENTS AND CONTINGENCIES (Tables)

3 Months Ended

Dec. 31, 2015

COMMITMENTS AND CONTINGENCIES [Abstract]

Schedule of product warranty reserve activity

We maintain a warranty reserve that reflects management's best estimate of the cost to replace product that does not meet our specifications and customers' performance requirements, and costs related to such replacement.  The warranty reserve is based upon a historical product replacement rate, adjusted for any specific known conditions or circumstances.  Additions and deductions to the warranty reserve are recorded in cost of goods sold.  Our warranty reserve activity during the first three months of fiscal 2016 was as follows:

Balance as of September 30, 2015	$	209
Reserve for product warranty during the reporting period		143
Reserve acquired through business combination		220
Settlement of warranty		(161	)
Balance as of December 31, 2015	$	411

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ACCUMULATED OTHER COMPREHENSIVE INCOME (Tables)

3 Months Ended

Dec. 31, 2015

ACCUMULATED OTHER COMPREHENSIVE INCOME [Abstract]

Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block]

The components of accumulated other comprehensive income (AOCI), including the reclassification adjustments for items that are reclassified from AOCI to net income, are shown below:

	Foreign Currency Translation			Cash Flow Hedges			Pension and Other Postretirement Liabilities			Total
Balance at September 30, 2015	$	(4,011	)	$	(901	)	$	(1,178	)	$	(6,090	)
Foreign currency translation adjustment, net of tax of $187		197			-			-			197
Unrealized gain (loss) on cash flow hedges:
Change in fair value, net of tax of $211		-			383			-			383
Reclassification adjustment into earnings, net of tax of $97		-			176			-			176
Change in pension and other postretirement,  net of tax of $372		-			-			372			372
Balance at December 31, 2015	$	(3,814	)	$	(342	)	$	(806	)	$	(4,962	)

	Foreign Currency Translation			Cash Flow Hedges			Pension and Other Postretirement Liabilities			Total
Balance at September 30, 2014	$	10,115		$	-		$	(860	)	$	9,255
Foreign currency translation adjustment, net of tax of $(1,626)		(8,332	)		-			-			(8,332	)
Unrealized gain (loss) on cash flow hedges:
Change in fair value, net of tax of tax benefit of $0		-			(275	)		-			(275	)
Reclassification adjustment into earnings, net of tax of $0		-			106			-			106
Change in pension and other postretirement,  net of tax of $0		-			-			-			-
Balance at December 31, 2014	$	1,783		$	(169	)	$	(860	)	$	754

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SHARE-BASED COMPENSATION PLANS (Tables)

3 Months Ended

Dec. 31, 2015

SHARE-BASED COMPENSATION PLANS [Abstract]

Share based compensation expense

Share-based compensation expense for the three months ended December 31, 2015, and 2014, was as follows:

	Three Months Ended December 31,
	2015			2014
Cost of goods sold	$	534		$	498
Research, development and technical		418			415
Selling and marketing		404			320
General and administrative		3,716			2,174
Total share-based compensation expense		5,072			3,407
Tax benefit		(1,714	)		(1,122	)
Total share-based compensation expense, net of tax	$	3,358		$	2,285

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OTHER INCOME, NET (Tables)

3 Months Ended

Dec. 31, 2015

OTHER INCOME, NET [Abstract]

Other income, net

Other income, net, consisted of the following:

	Three Months Ended December 31,
	2015				2014
Interest income		$	209			$	103
Other income (expense)			(19	)			954
Total other income, net		$	190			$	1,057

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EARNINGS PER SHARE (Tables)

3 Months Ended

Dec. 31, 2015

EARNINGS PER SHARE [Abstract]

Earnings Per Share

The standards of accounting for earnings per share require companies to provide a reconciliation of the numerator and denominator of the basic and diluted earnings per share computations.  Basic and diluted earnings per share were calculated as follows:

	Three Months Ended December,
	2015			2014
Numerator:
Net Income	$	11,309		$	19,916
Less: income attributable to participating securities		(127	)		(231	)
Earnings available to common shares	$	11,182		$	19,685
Denominator:
Weighted average common shares		24,141,726			23,651,405
(Denominator for basic calculation)
Weighted average effect of dilutive securities:
Share-based compensation		407,039			834,197
Diluted weighted average common shares		24,548,765			24,485,602
(Denominator for diluted calculation)
Earnings per share:
Basic	$	0.46		$	0.83
Diluted	$	0.46		$	0.80

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FINANCIAL INFORMATION BY INDUSTRY SEGMENT, GEOGRAPHIC AREA AND PRODUCT LINE (Tables)

3 Months Ended

Dec. 31, 2015

FINANCIAL INFORMATION BY INDUSTRY SEGMENT, GEOGRAPHIC AREA AND PRODUCT LINE [Abstract]

Schedule of revenue by product line

Revenue generated by product line for the three months ended December 31, 2015, and 2014, was as follows:

	Three Months Ended December 31,
Revenue:	2015		2014
Tungsten slurries	$	44,412	$	45,144
Dielectric slurries		23,018		28,183
Other Metals slurries		16,358		19,897
Polishing pads		10,509		8,762
Engineered Surface Finishes		3,952		5,582
Data Storage slurries		2,120		4,366
Total revenue	$	100,369	$	111,934

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BUSINESS COMBINATION (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended			6 Months Ended
	Oct. 22, 2015	Dec. 31, 2015	Sep. 30, 2015	Dec. 31, 2014	Dec. 31, 2015
Business Acquisition [Line Items]
Payments to Acquire Businesses, Net of Cash Acquired		$ 126,455		$ 0
Revenue		100,369		111,934
Net income		11,309		19,916
Fair values of assets acquired and liabilities assumed [Abstract]
Goodwill		95,703	$ 40,442		$ 95,703
Business Acquisition, Pro Forma Information [Abstract]
Revenues		101,776		117,569
Net income		$ 12,372		$ 16,815
Earnings per share - basic (in dollars per share)		$ 0.51		$ 0.70
Earnings per share - diluted (in dollars per share)		$ 0.50		$ 0.68
NexPlanar [Member]
Business Acquisition [Line Items]
Effective date of business acquisition	Oct. 22, 2015
Business Acquisition, Percentage of Voting Interests Acquired	100.00%
Payments to Acquire Businesses, Net of Cash Acquired	$ 126,455
Purchase price	141,716
Cash Acquired from Acquisition	$ 15,261
Revenue		$ 4,026
Net income		(3,571)
Weighted average useful life	7 years 9 months 18 days
Transaction and acquisition-related expenses		$ 290	$ 526		$ 816
Compensation expense	$ 605
Fair values of assets acquired and liabilities assumed [Abstract]
Total purchase consideration	141,716
Cash	15,261
Accounts receivable	3,427
Inventories	2,768
Prepaid expenses and other current assets	1,712
Property, plant and equipment	6,296
Intangible assets	61,000
Deferred tax assets	19,642
Other long-term assets	1,458
Accounts payable	(1,057)
Accrued expenses and other current liabilities	(1,692)
Deferred tax liabilities	(22,289)
Total identifiable net assets	86,526
Goodwill	55,190
Business Acquisition, Pro Forma Information [Abstract]
Inventory Adjustments				$ 403
NexPlanar [Member] | Trade Name [Member]
Fair values of assets acquired and liabilities assumed [Abstract]
Intangible assets	$ 8,000
Useful Life	7 years
NexPlanar [Member] | Customer Relationships [Member]
Fair values of assets acquired and liabilities assumed [Abstract]
Intangible assets	$ 8,000
Useful Life	11 years
NexPlanar [Member] | Developed Technology - Product Family A [Member]
Fair values of assets acquired and liabilities assumed [Abstract]
Intangible assets	$ 25,000
Useful Life	7 years
NexPlanar [Member] | Developed Technology - Product Family B [Member]
Fair values of assets acquired and liabilities assumed [Abstract]
Intangible assets	$ 8,000
Useful Life	8 years
NexPlanar [Member] | In-process Technology [Member]
Fair values of assets acquired and liabilities assumed [Abstract]
Intangible assets	$ 12,000

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FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) $ in Thousands	Dec. 31, 2015 USD ($)
FAIR VALUE OF FINANCIAL INSTRUMENTS [Abstract]
Other long-term investments, Supplemental Employee Retirement Plan (SERP)	$ 1,489
Corresponding SERP liability	$ 1,489

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FAIR VALUE OF FINANCIAL INSTRUMENTS, Schedule of Fair Value of Financial Instruments (Details) - Fair Value, Measurements, Recurring [Member] - USD ($) $ in Thousands	Dec. 31, 2015	Sep. 30, 2015
Assets [Abstract]
Cash and cash equivalents	$ 218,118	$ 354,190
Other long-term investments	1,489	1,720
Derivative financial instruments	130	14
Total assets	219,737	355,924
Liabilities [Abstract]
Derivative financial instruments	653	1,406
Total liabilities	653	1,406
Level 1 [Member]
Assets [Abstract]
Cash and cash equivalents	218,118	354,190
Other long-term investments	1,489	1,720
Derivative financial instruments	0	0
Total assets	219,607	355,910
Liabilities [Abstract]
Derivative financial instruments	0	0
Total liabilities	0	0
Level 2 [Member]
Assets [Abstract]
Cash and cash equivalents	0	0
Other long-term investments	0	0
Derivative financial instruments	130	14
Total assets	130	14
Liabilities [Abstract]
Derivative financial instruments	653	1,406
Total liabilities	653	1,406
Level 3 [Member]
Assets [Abstract]
Cash and cash equivalents	0	0
Other long-term investments	0	0
Derivative financial instruments	0	0
Total assets	0	0
Liabilities [Abstract]
Derivative financial instruments	0	0
Total liabilities	$ 0	$ 0

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INVENTORIES (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Sep. 30, 2015
INVENTORIES [Abstract]
Raw materials	$ 48,412	$ 42,603
Work in process	4,919	5,487
Finished goods	22,848	22,588
Total	$ 76,179	$ 70,678

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GOODWILL AND OTHER INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands		3 Months Ended
		Dec. 31, 2015	Dec. 31, 2014	Sep. 30, 2015
Goodwill [Roll Forward]
Beginning Balance		$ 40,442
Goodwill recorded in connection with acquisition		55,190
Foreign exchange fluctuation		71
Ending Balance		95,703
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount subject to amortization		79,292		$ 30,265
Accumulated Amortization		28,725		26,890
Other intangible assets [Abstract]
Amortization expense		1,816	$ 593
Indefinite-lived Intangible Assets by Major Class [Line Items]
Indefinite-Lived Intangible Assets (Excluding Goodwill)		13,190		1,190
Estimated future amortization expense [Abstract]
Remainder of 2016		6,142
2017		7,508
2018		6,861
2019		6,453
2020		6,448
Total other intangible assets, gross carrying amount		92,482		31,455
In-process Technology [Member]
Indefinite-lived Intangible Assets by Major Class [Line Items]
Other Indefinite-lived Intangible Assets		12,000		0
Other Intangible Assets [Member]
Indefinite-lived Intangible Assets by Major Class [Line Items]
Other Indefinite-lived Intangible Assets	[1]	1,190		1,190
Product Technology [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount subject to amortization		41,060		8,053
Accumulated Amortization		8,612		7,490
Acquired Patents and Licenses [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount subject to amortization		8,270		8,270
Accumulated Amortization		7,922		7,845
Trade Secrets and Know-how [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount subject to amortization		2,550		2,550
Accumulated Amortization		2,550		2,550
Customer Relationships, Distribution Rights and Other
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount subject to amortization		27,412		11,392
Accumulated Amortization		$ 9,641		$ 9,005

[1] Total other intangible assets not subject to amortization consist primarily of trade names.

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OTHER LONG-TERM ASSETS (Details) $ in Thousands	3 Months Ended
	Dec. 31, 2015 USD ($) Security	Sep. 30, 2015 USD ($)	Jun. 30, 2015 USD ($)
Other long-term assets [Abstract]
Auction rate securities (ARS)	$ 5,694	$ 5,694
Other long-term assets	4,672	3,595
Long-term contract asset	3,760	3,995
Other long-term investments	1,489	1,720
Total	$ 15,615	$ 15,004
Number of Auction rate securities | Security	2
Minimum maturity period of auction rate securities (ARS)	10 years
Fair value of auction rate securities	$ 5,132
Gain unrecognized loss of ARS	562
Long-term liability, SERP investments	$ 1,489
Long-term contract asset face amount			$ 4,500

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ACCRUED EXPENSES, INCOME TAXES PAYABLE AND OTHER CURRENT LIABILITIES (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Sep. 30, 2015
Accrued expenses, income taxes payable and other current liabilities [Abstract]
Accrued compensation	$ 14,599	$ 23,793
Goods and services received, not yet invoiced	1,501	1,830
Deferred revenue and customer advances	636	538
Warranty accrual	411	209
Income taxes payable	7,186	4,276
Taxes, other than income taxes	1,211	975
Other	3,920	4,825
Total	$ 29,464	$ 36,446

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DEBT (Details) $ in Thousands			3 Months Ended
	Jun. 27, 2014 USD ($)	Jun. 26, 2014 USD ($)	Dec. 31, 2015 USD ($)	Dec. 31, 2014	Jun. 30, 2014 USD ($)	Mar. 31, 2012 USD ($)	Sep. 30, 2015 USD ($)	Feb. 13, 2012 USD ($)
Debt Instrument [Line Items]
Debt Instrument, Maturity Date	Jun. 27, 2019	Feb. 13, 2017
Total outstanding commitments			$ 161,875
Debt issuance costs					$ 550	$ 2,658
Debt issuance costs, current			403
Debt issuance costs, noncurrent			$ 977
Weighted average fixed rate (in hundredths)				1.50%
Percentage for converting from variable rate debt into fixed debt rate				50.00%
Line of Credit Facility, Covenant Terms			The Credit Agreement contains covenants that restrict the ability of the Company and its subsidiaries to take certain actions, including, among other things and subject to certain significant exceptions: creating liens, incurring indebtedness, making investments, engaging in mergers, selling property, paying dividends or amending organizational documents. The Credit Agreement requires us to comply with certain financial ratio maintenance covenants. These include a maximum consolidated leverage ratio of 3.00 to 1.00 through December 31, 2015 and a minimum consolidated fixed charge coverage ratio of 1.25 to 1.00. The maximum consolidated leverage ratio decreased to 2.75 to 1.00 from January 1, 2016 through the expiration of the Credit Agreement. As of December 31, 2015, our consolidated leverage ratio was 1.56 to 1.00 and our consolidated fixed charge coverage ratio was 4.97 to 1.00. The Credit Agreement also contains customary affirmative covenants and events of default. We believe we are in compliance with these covenants.
Consolidated leverage ratio through December 31, 2015			3.00
Consolidated fixed charge coverage ratio			1.25
Consolidated leverage ratio after January 1, 2016			2.75
Actual consolidated leverage ratio			1.56
Actual consolidated fixed charge coverage			4.97
Current portion of long-term debt			$ 8,750				$ 8,750
Long-term Debt, by Maturity [Abstract]
Remainder of 2016			6,562
2017			7,656
2018			14,219
2019			133,438
Long Term Debt			$ 161,875
Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Line of credit facility, borrowing capacity	$ 100,000	$ 75,000
Line of Credit Facility, Interest Rate Description			In addition to paying interest on outstanding principal under the Credit Agreement, we pay a commitment fee to the lenders under the Revolving Credit Facility in respect of the unutilized commitments thereunder. The fee ranges from 0.20% to 0.30%, based on our consolidated leverage ratio.
Line of Credit Facility Unused Capacity Commitment Fee Percentage Minimum			0.20%
Line of Credit Facility Unused Capacity Commitment Fee Percentage Maximum			0.30%
Term Loan [Member]
Debt Instrument [Line Items]
Debt Instrument, Face Amount	157,500							$ 175,000
Increase in loan commitments	17,500
Amount drawn from increase in loan commitments	17,500
Total outstanding commitments	175,000
Line of Credit Facility, Interest Rate Description			Borrowings under the amended Credit Facilities (other than in respect of swing-line loans) bear interest at a rate per annum equal to the “Applicable Rate” (as defined below) plus, at our option, either (1) a LIBOR rate determined by reference to the cost of funds for deposits in the relevant currency for the interest period relevant to such borrowing or (2) the “Base Rate”, which is the highest of (x) the prime rate of Bank of America, N.A., (y) the federal funds rate plus 1/2 of 1.00% and (z) the one-month LIBOR rate plus 1.00%. The current Applicable Rate for borrowings under the Credit Facilities is 1.50% with respect to LIBOR borrowings and 0.25% with respect to Base Rate borrowings, with such Applicable Rate subject to adjustment based on our consolidated leverage ratio. Swing-line loans bear interest at the Base Rate plus the Applicable Rate for Base Rate loans under the Revolving Credit Facility.
Debt instrument, fair value			$ 161,875
Current portion of long-term debt			$ 8,750
Long-term Debt, by Maturity [Abstract]
Long Term Debt	$ 175,000

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DERIVATIVE FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2015	Sep. 30, 2015	Dec. 31, 2014
Derivative [Line Items]
Unrealized gain	$ 559
Reclassified from accumulated other comprehensive income into interest expense	$ 650
Reclassification period	12 months
Foreign Exchange Contract [Member] | Buy [Member]
Derivative [Line Items]
Derivative notional amount	$ 1,029	$ 1,034
Foreign Exchange Contract [Member] | Sell [Member]
Derivative [Line Items]
Derivative notional amount	17,550	$ 18,690
Interest Rate Swap [Member]
Derivative [Line Items]
Outstanding variable rate debt			$ 86,406
Interest Rate Swap [Member] | Buy [Member]
Derivative [Line Items]
Derivative notional amount	$ 80,938

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DERIVATIVE FINANCIAL INSTRUMENTS, Schedule of Fair Value of Derivative Instruments in the Consolidated Balance Sheet (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Sep. 30, 2015
Foreign Exchange Contract [Member] | Accrued Expenses and Other Current Liabilities [Member] | Not Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Fair value of foreign exchange contract asset derivatives	$ 0	$ 0
Fair value of foreign exchange contract liability derivatives	8	8
Foreign Exchange Contract [Member] | Prepaid Expenses and Other Current Assets [Member] | Not Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Fair value of foreign exchange contract asset derivatives	16	14
Fair value of foreign exchange contract liability derivatives	0	0
Interest Rate Swap [Member] | Accrued Expenses and Other Current Liabilities [Member] | Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Fair value of foreign exchange contract asset derivatives	0	0
Fair value of foreign exchange contract liability derivatives	645	885
Interest Rate Swap [Member] | Other Noncurrent Assets [Member] | Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Fair value of foreign exchange contract asset derivatives	114	0
Fair value of foreign exchange contract liability derivatives	0	0
Interest Rate Swap [Member] | Other Long-term Liabilities [Member] | Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Fair value of foreign exchange contract asset derivatives	0	0
Fair value of foreign exchange contract liability derivatives	$ 0	$ 513

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DERIVATIVE FINANCIAL INSTRUMENTS, Schedule of the Effect of Derivative Instruments on the Consolidated Statement of Income (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Foreign Exchange Contract [Member] | Other income (expense), net [Member] | Not Designated as Hedging Instrument [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) recognized in statement of income	$ (186)	$ (1,336)

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COMMITMENTS AND CONTINGENCIES (Details) $ in Thousands	3 Months Ended
	Dec. 31, 2015 USD ($)
Movement in standard product warranty accrual [Roll Forward]
Balance as of September 30, 2015	$ 209
Reserve for product warranty during the reporting period	143
Reserve acquired through business combination	220
Settlement of warranty	(161)
Balance as of December 31, 2015	411
Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract]
Future benefit payments	2,188
Purchase obligations [Abstract]
Purchase obligation, due in 2017	1,500
Purchase obligation	3,760
Contractual obligation	$ 17,095

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ACCUMULATED OTHER COMPREHENSIVE INCOME (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance	$ (6,090)	$ 9,255
Foreign currency translation adjustment	197	(8,332)
Change in fair value	383	(275)
Reclassification adjustment into earnings	176	106
Change in pension and other postretirement	372	0
Ending Balance	(4,962)	754
Foreign currency translation adjustment, tax	187	(1,626)
Change in fair value, tax	211	0
Reclassification adjustment into earnings, tax	97	0
Change in pension and other postretirement, tax	372	0
Foreign Currency Translation Adjustment [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance	(4,011)	10,115
Foreign currency translation adjustment	197	(8,332)
Change in fair value	0	0
Reclassification adjustment into earnings	0	0
Change in pension and other postretirement	0	0
Ending Balance	(3,814)	1,783
Unrealized Gain (Loss) on Cash Flow Hedges [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance	(901)	0
Foreign currency translation adjustment	0	0
Change in fair value	383	(275)
Reclassification adjustment into earnings	176	106
Change in pension and other postretirement	0	0
Ending Balance	(342)	(169)
Pension and Other Postretirement Liabilities [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance	(1,178)	(860)
Foreign currency translation adjustment	0	0
Change in fair value	0	0
Reclassification adjustment into earnings	0	0
Change in pension and other postretirement	372	0
Ending Balance	$ (806)	$ (860)

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SHARE-BASED COMPENSATION PLANS (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Oct. 22, 2015
Omnibus Incentive Plan [Abstract]
Share based compensation expense	$ 4,467	$ 3,407
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock based compensation expense	5,072	3,407
Stock based compensation - tax benefit	(1,714)	(1,122)
Total share-based compensation expense, net of tax	3,358	2,285
Additional share-based compensation expense		378
Fair value of unvested equity		5,033
NexPlanar [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Business Combination Compensation expense			$ 605
Accelerated share-based compensation expense	492
Cost of Goods Sold [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock based compensation expense	534	498
Research, Development and Technical [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock based compensation expense	418	415
Selling and Marketing [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock based compensation expense	404	320
General and Administrative [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock based compensation expense	3,716	$ 2,174
General and Administrative [Member] | NexPlanar [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock based compensation expense	$ 1,097

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OTHER INCOME, NET (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Other Income (Expense) Net [Line Items]
Total other income, net	$ 190	$ 1,057
Interest Income [Member]
Other Income (Expense) Net [Line Items]
Total other income, net	209	103
Other Income (Expense) [Member]
Other Income (Expense) Net [Line Items]
Total other income, net	$ (19)	$ 954

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INCOME TAXES (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Effective income tax rate reconciliation [Abstract]
Provision for income taxes (in hundredths)	15.50%	12.30%
Income (loss) from continuing operations before income taxes [Abstract]
Total	$ 13,378	$ 22,717
Foreign [Abstract]
Total U.S. and foreign	$ 2,069	2,801
Carryforwards [Line Items]
Former tax holiday percentage (in hundredths)	0.00%
Percentage of local statutory rate in effect for 2016 and 2017 (in hundredths)	50.00%
Approximate tax provision reduction as a result in the tax holiday	$ 871	$ 1,177
Income Tax Holiday, Income Tax Benefits Per Share	$ 0.04	$ 0.05

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EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Numerator:
Net income	$ 11,309	$ 19,916
Less: income attributable to participating securities	(127)	(231)
Earnings available to common shares	$ 11,182	$ 19,685
Denominator:
Weighted average common shares (Denominator for basic calculation, in shares)	24,141,726	23,651,405
Weighted average effect of dilutive securities:
Share-based compensation (in shares)	407,039	834,197
Diluted weighted average common shares (Denominator for diluted calculation, in shares)	24,548,765	24,485,602
Earnings per share:
Basic (in dollars per share)	$ 0.46	$ 0.83
Diluted (in dollars per share)	$ 0.46	$ 0.80
Outstanding stock options excluded from diluted earnings (in shares)	1,100,000	100,000

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FINANCIAL INFORMATION BY INDUSTRY SEGMENT, GEOGRAPHIC AREA AND PRODUCT LINE, SEGMENT REPORTING INFORMATION BY PRODUCT TYPE (Details) $ in Thousands	3 Months Ended
	Dec. 31, 2015 USD ($) Segment	Dec. 31, 2014 USD ($)
FINANCIAL INFORMATION BY INDUSTRY SEGMENT, GEOGRAPHIC AREA AND PRODUCT LINE [Abstract]
Number of segments | Segment	1
Revenue from External Customer [Line Items]
Revenue	$ 100,369	$ 111,934
Tungsten slurries [Member]
Revenue from External Customer [Line Items]
Revenue	44,412	45,144
Dielectric slurries [Member]
Revenue from External Customer [Line Items]
Revenue	23,018	28,183
Other Metals slurries [Member]
Revenue from External Customer [Line Items]
Revenue	16,358	19,897
Polishing pads [Member]
Revenue from External Customer [Line Items]
Revenue	10,509	8,762
Data storage slurries [Member]
Revenue from External Customer [Line Items]
Revenue	2,120	4,366
Engineered Surface Finishes [Member]
Revenue from External Customer [Line Items]
Revenue	$ 3,952	$ 5,582

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SUBSEQUENT EVENT (Details) - Subsequent Event [Member] $ / shares in Units, $ in Thousands	Jan. 07, 2016 USD ($) $ / shares
Subsequent Event [Line Items]
Initial quarterly cash dividend (in dollars per share)	$ 0.18
Cash dividend annual rate (in dollars per share)	$ 0.72
Aggregate cash dividend | $	$ 17,600
Quarterly dividend record date	Mar. 17, 2016
Quarterly dividend payable date	Apr. 15, 2016