Cabot Microelectronics Announced Special Dividend of $15/Share; Boosts Stock Buyback to $150M

Cabot Microelectronics Corporation

today announced that its Board of Directors has determined to pursue a significant new capital management initiative, including a leveraged recapitalization, intended to more efficiently allocate the company's capital and provide additional value to its shareholders. The company intends to pay a special cash dividend of $15 per share, or approximately $345 million in aggregate, to its shareholders during the first quarter of calendar year 2012. Approximately half of the dividend is expected to be funded from the company's cash balance, and the remaining amount is expected to be funded with new debt. Payment of the special dividend is contingent upon arranging the associated financing with terms and conditions that are acceptable to the company. In addition, the Board has authorized an increase in the company's existing share repurchase program to $150 million, from the previous available authorization of approximately $83 million. The company intends to continue to repurchase its shares from time to time in open market transactions, depending on market conditions, at management's discretion. In considering the proposed recapitalization, the Board of Directors took into account a number of factors, including the current cash balance on the company's balance sheet, the current receptivity within credit markets for the financing required to effect the special cash dividend, the company's ability to generate cash to service the debt and to fund operations, and the potential implications of leverage on the company's ability to pursue its strategic initiatives. "Since our inception as a public company over eleven years ago, we have maintained solid revenue growth and a consistent level of profitability, and have made strategic investments to grow our business while also generating significant free cash flow", said William Noglows, Chairman and CEO of Cabot Microelectronics. "I am pleased that our company enjoys the financial strength and flexibility to now distribute a substantial amount of capital to our shareholders through this proposed special cash dividend while still maintaining the financial resources necessary to support future growth opportunities." Mr. Noglows continued, "Going forward, our investment and growth strategies remain unchanged. We will continue to invest in our business and pursue organic growth opportunities aggressively, as well as consider attractive acquisition opportunities that can profitably grow our company. We will balance these investments in our business with consideration of future opportunities to distribute capital to shareholders on an ongoing basis."