Read-Rite Exits Fiscal Year With Positive Gross Margins and Targets Double-Digit Revenue Growth and Profitability for
the First Fiscal Quarter Of 2001
FREMONT, Calif., Nov. 1 /PRNewswire/ -- Read-Rite Corporation (Nasdaq: RDRT - news) today reported for the fourth fiscal quarter, ended October 1, 2000, revenues of $146.0 million, a positive gross margin of $8.2 million, and pro forma net loss and net loss per share of $16.1 million and $0.25, respectively. The pro forma results are approximately $21.6 million better than those of the third fiscal quarter's pro forma results due primarily to increased efficiencies, lower costs, higher volume and improved average selling prices. For the fourth quarter, the pro forma results exclude a net gain of $3.0 million related to a change in the estimate upon the finalization of the restructuring charges booked in a previous quarter and a 29.3 million charge related to conversion of the 10% convertible subordinated bonds.
Under generally accepted accounting principles (``GAAP''), for the fiscal quarter ended October 1, 2000, Read-Rite
Corporation reported a net loss and net loss per share of $42.5 million and $0.66, respectively, and for the fiscal year ended October 1, 2000, a net loss and net loss per share of $124.8 million and $2.26, respectively.
``I am gratified by the energy and accomplishments of our people and the progress we have made in all areas of the business during the last several quarters,'' stated Alan S. Lowe, president and chief executive officer. ``We have solidified our position as the technology leader with our superior performance on 20GB products; we have restructured and streamlined our manufacturing operations resulting in savings of approximately $80-$100 million per year; and we have improved our balance sheet by eliminating debt and increasing shareholder equity while at the same time reducing interest expense by approximately $20 million per year. Last but not least, we have identified and taken action to capitalize on an enormous opportunity in the
fiber optics communications market with the establishment of Scion Photonics. All of these efforts now put us in position to achieve our goal of profitability.''
Despite the slow start to the fourth quarter, Read-Rite Corporation realized an 8.3% quarter-to-quarter growth in GMR head shipments for a total of approximately 19 million heads during the quarter. The increase was attributable mainly to qualifications on and volume shipments for several 20GB per platter customer programs. ``Being early on these programs and obtaining qualifications during this past quarter position us to capture additional market share and, with it, to realize profitability in the December quarter,'' said Alan S. Lowe.
On October 19, 2000, the company completed the automatic conversion of its outstanding 10% convertible subordinated
notes due September 1, 2004. For convenience, the company has included a pro forma balance sheet showing the effect of the bond conversion. The conversion reduced long-term debt by $187.5 million. During the fourth fiscal quarter the company recorded a non-cash charge of approximately $29.3 million for the payment of the interest premium attached to the early conversion of the notes. The early conversion is expected to save approximately $20.0 million per year.
During the quarter the company also announced the formation of Scion Photonics, Inc., a new venture chartered to design,
market and manufacture high-performance optical components. In October, Scion Photonics received the initial funding of $25 million from the company's partners in Scion, Tyco Ventures and Integral Capital Partners. The company continues to improve and strengthen its Scion team with the recent hiring of Dr. Venkatesan Murali as chief operating officer. Dr. Murali said, ``Scion's product and manufacturing strategies will feature products based on planar lightwave circuit and silicon optical board-based technology in addition to thin-film filter products in 2001. We also expect to offer leading-edge integrated planar
photonic devices in the future. For all of Scion's product offerings, we will focus on bringing the high volume manufacturing efficiencies that are routinely achieved in the semiconductor and thin-film head industries to the optical components arena. With the team we are assembling in the areas of optics design, process technology, and assembly automation, I am confident that Scion is well on its way to becoming one of the premier suppliers of optical components and subsystems in the industry.''
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