Investor FAQ - Leveraged Recapitalization with a Special Cash Dividend

Cabot Microelectronics Corporation – February 13, 2012

Investor FAQ – Leveraged Recapitalization with a Special Cash Dividend

 

 

Why is Cabot Microelectronics Corporation ("the company") choosing to implement a leveraged recapitalization through payment of the special cash dividend ("Dividend")?

The company's Board of Directors has carefully reviewed the company's capital structure and believes that the leveraged recapitalization and payment of the Dividend is in the best interests of the company and its stockholders. The Dividend is intended to more efficiently allocate the company's capital and provide additional value to our stockholders.

 

What is the amount of the Dividend?

The amount of the Dividend will be $15.00 per share of our common stock.

 

What is the record date for the Dividend?

The record date for the Dividend is February 23, 2012.

 

What is the payment date for the Dividend?

The payment date (sometimes referred to as the "payable" date) for the Dividend is March 1, 2012.

 

What is the ex-dividend date for the Dividend?

The ex-dividend date is the date on which the stock begins to trade without a right to receive the Dividend. On February 13, 2012, the NASDAQ Stock Market advised the company that, pursuant to NASDAQ Rule 11140(b)(2), the ex-dividend date for the Dividend will be March 2, 2012, the day after the payment date of March 1, 2012 for the Dividend. Stockholders should consult their financial or legal advisors regarding the specific implications of the ex-dividend date.

 

What happens if I acquire my shares after the record date or don't hold my shares through the payment date (e.g., I sell them prior to the ex-dividend date)?

If you are holding your shares of our common stock as of February 23, 2012 (the record date) and through March 1, 2012 (the payment date), you will be entitled to receive the Dividend on these shares. However, if you own shares of our common stock as of February 23, 2012 (the record date), but sell those shares prior to March 2, 2012 (the ex-dividend date), the right to receive the Dividend also trades with the stock and you will not be entitled to receive the Dividend on such shares.

In addition, generally, if you purchase shares of our common stock on the market after February 23, 2012 (the record date) and hold those shares through March 1, 2012 (the payment date), the right to receive the Dividend trades with the stock and you will be entitled to receive the Dividend on such shares.

 

How will the Dividend affect the price of Cabot Microelectronics Corporation common stock?

Although we cannot make any predictions as to the expected impact of the Dividend, based on a general evaluation of other similar events involving other companies, the trading price of our common stock at the open of trading on the ex-dividend date of March 2, 2012 is expected to be lower than the price of our common stock on the close of trading on the day prior to the ex-dividend date because the trading price will no longer reflect the value of the Dividend.

 

When will I receive the Dividend?

The company's transfer agent, Computershare Trust Company, N.A., will begin distributing funds and mailing distribution checks to registered shareholders on or about March 2, 2012. Stockholders who hold their shares through a broker, bank or other nominee should contact their broker, bank or other nominee for more information on when they should expect to receive their distribution checks.

 

Do I need to request the Dividend, or do anything to receive it?

If you are a registered stockholder and you have moved from the location where you last received communications from the company, please ensure that our transfer agent, Computershare Trust Company, N.A., has your new address. If your shares are held at a brokerage firm under street name, make sure that your broker has your latest contact information. Otherwise, you should not have to do anything to receive the Dividend other than hold your shares of our common stock on the record date of February 23, 2012, through the payment date of March 1, 2012.

 

What is the tax treatment of the Dividend to holders of Cabot Microelectronics Corporation common stock?

The dividend is a Qualified Dividend.

These general principals of U.S. tax treatment should not in any manner be construed as tax advice. Because individual tax circumstances of shareholders vary, shareholders should consult their own tax advisors regarding the tax consequences to them of the special cash dividend.

 

Are there other implications of the Dividend?

In the event of certain transactions, such as the leveraged recapitalization of our company with the Dividend, the terms of our company's equity incentive plans, in which our employees, officers and directors participate, require that proportional adjustments be made to the maximum number and kind of shares of our common stock or other equity interest as to which awards may be granted, the number of shares of common stock or other equity interest subject to outstanding awards, and the exercise prices for outstanding options under the plans, to preserve the value of such awards as a result of the Dividend. More information regarding these mandatory adjustments is available in the company's 2012 proxy statement.

 

Whom should I call if I have questions regarding the Dividend?

If you hold your shares of CMC common stock through a broker, bank or other nominee, you should contact that institution directly for more information regarding the Dividend.

If you are a registered CMC stockholder and have questions regarding the Dividend, you may contact CMC's transfer agent, Computershare Trust Company, N.A., for more information by calling toll-free at (877) 373-6374 (U.S.) or (781) 575-3400 (outside the U.S.), or through Computershare's web site at www.computershare.com.

If you have questions relating to the tax consequences of the Dividend, you should consult your own tax advisor regarding such tax consequences.

Regardless of whether you are a registered or beneficial shareholder, you may also contact CMC Investor Relations by calling Trisha Tuntland, Manager of Investor Relations, at (630) 499-2600.

 

These Q&As are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Please refer to the "Safe Harbor Statement" in our press release dated February 13, 2012.