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TO OUR STOCKHOLDERS, CUSTOMERS, SUPPLIERS AND EMPLOYEES
(L) William P. Noglows, Chairman, President & CEO (R) William S. Johnson, Vice President & CFO
As the leading supplier of CMP slurries to the semiconductor industry and a growing supplier of CMP pads, we supply virtually every semiconductor manufacturer in the world. Our broad exposure across the semiconductor industry, our robust product portfolio and extensive global infrastructure differentiate us from our competitors and enable us to better serve the needs of our customers on a global basis. We continue to demonstrate our commitment and ability to provide leading edge solutions in close collaboration with our customers around the world as we pursue and win new business opportunities. Despite the challenging macroeconomic and semiconductor industry environments in fiscal year 2012, we continued to execute our strategies to strengthen and grow our core CMP consumables business, and also further develop our Engineered Surface Finishes business. As a result, we achieved solid financial results in fiscal year 2012. Total annual revenue was $427.7 million, gross profit margin was 47.7 percent of revenue, diluted earnings per share were $1.75 and cash flow from operations was $66.4 million. Our full year revenue results reflect strengthening in demand for our products in the second half of the fiscal year after soft industry demand during the first half of the year; we began to see some softening of demand again late in the fourth fiscal quarter. CMP CONSUMABLES Within our CMP consumables business, we believe our Pads business represents our most significant organic growth opportunity. We achieved record annual revenue of $33.7 million in our Pads business, representing an 8.6 percent increase over last year’s record level. We believe the
momentum our Pads business demonstrated during the year is fueled by the fundamental value proposition offered by our pad products of providing lower cost of ownership through longer pad life and lower defectivity. Through the year, our first generation Epic® D100 and second generation Epic D200 pad products were adopted by our customers for a number of advanced applications. Since reporting our first Epic D200 pad business win in fiscal year 2011, we have continued to gain traction with this tunable platform, which allows us to modify several important properties of the pad material to meet specific customer performance requirements. We believe we made significant progress in our Pads business during the year as we continued to engage closely with our customers around the world on new business opportunities that are in various stages of evaluation and qualification. Within our CMP slurry business, in fiscal year 2012 we continued developing and commercializing reliable and innovative solutions for our customers to address both performance and cost of ownership, and we won new business across our slurry product portfolio. Our collaborative efforts with customers on high-quality, high performing products and solutions were rewarded with customer adoptions of our slurry products for Tungsten, Advanced Dielectrics, Copper and Data Storage applications. We are also pleased with the growth we experienced with our slurry products for polishing Aluminum, and we look forward to continuing to leverage our technology within this important emerging application. We also made significant progress toward commercializing and qualifying products and solutions from our new
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