Komag Announces Second Quarter 2000 Results
SAN JOSE, Calif., July 20 /PRNewswire/ --
Komag, Incorporated (Nasdaq: KMAG), a technical leader in the disk drive
component industry, today announced financial results for the second fiscal
quarter of 2000.
(Photo: newscom.com )
Second Quarter Results:
Net sales for the second quarter of fiscal 2000 totaled $83.5 million, up
5% from $79.6 million in the first quarter of 2000. Net sales for the second
quarter of fiscal 1999 totaled $93.2 million. The company's net loss for the
second quarter of 2000 was $6.5 million, or $0.10 per share based on 66.0
million shares. The net loss included an extraordinary gain of $3.8 million
resulting from the exchange of senior debt to a new convertible, subordinated
note. The loss per share without extraordinary gain is $0.16. The company
reported a loss for the first quarter of 2000 of $5.3 million, or $0.08 per
share based on 65.9 million shares. A year ago, Komag reported a net loss for
the second quarter of 1999 of $38.2 million, or $0.60 per share based on 64.2
million shares.
Second Quarter Review:
Second quarter results were negatively affected by several items. Freight
charges were higher than normal due primarily to expediting shipments early in
the quarter to meet customer requirements. In addition, the gross margin
percentage of 11.9% was depressed because of the effect of selling $2 million
of disks produced by AKCL, the company's Japanese joint venture, at no margin.
Interest expense also increased $1 million due to higher bank prime rates and
the effect of completing a Loan Restructure Agreement with the company's
senior lenders.
"There were many positives during the second quarter," stated T.H. Tan,
Komag's president and chief executive officer. "During the quarter we began
volume shipments of 15 gigabyte ("GB") disks that comprised 19% of our
shipment volume. Our manufacturing operations were able to sustain product
yield performance at the same level as in the first quarter of 2000, an
excellent performance in light of the rapid introduction of these new
products. Our unit sales increased 9.7% sequentially to 11.8 million disks. Of
this total, 91% were 10 GB per disk or greater, providing excellent value to
our customers. As sales have increased, we also made progress toward balancing
our customer mix. Western Digital still comprised the majority of our sales at
52%, but Maxtor accounted for 25% and Seagate purchased 17% of total sales.
Finally, on the financial side of our business, we completed the Loan
Restructure Agreement that was under negotiation for almost two years. By
completing this agreement we are no longer in technical default under our line
of credit."
Business Outlook
"We expect pricing pressure to offset modest gains in unit volume during
the third quarter," said Mr. Tan. "Over the next quarter we must maintain
focus on cost reduction, yield improvement and productivity increases. At the
same time we will continue the rapid pace of new product introduction. And, of
course, we must plan for the HMT merger. We have our hands full, but have a
proven record of accomplishment. At this point we have rebuilt the company's
foundation for success."
HMT Merger
On April 26, 2000 Komag and HMT Technology Corporation ("HMT") announced
that the companies had agreed to merge. The combined company will offer
greater value to both customers and shareholders by bringing together the best
of the technology and manufacturing capabilities of each company. Further, the
combined company will have the broadest customer base in the industry and
sufficient scale to achieve the industry's lowest cost structure.
Completion of the merger is subject to regulatory approvals, consent of
Komag's senior lenders, and consent of both companies' stockholders. To date,
the Hart-Scott-Rodino Act waiting period applicable to the transaction expired
and the SEC has informed the companies that it will not review the S-4 filing
and associated proxy. Immediately following receipt of consent from the senior
lenders, the companies will set a date for the required stockholders' meetings
and mail the Proxy. The companies expect to complete the merger prior to the
end of the September quarter.
Additional Information and Where to Find It
Komag has filed a preliminary Registration Statement on SEC Form S-4 in
connection with the merger, and Komag and HMT expect to mail a Joint Proxy
Statement/Prospectus to stockholders of Komag and HMT containing information
about the merger. Investors and security holders are urged to read the
Registration Statement and the Joint Proxy Statement/Prospectus carefully when
they are available. The Registration Statement and the Joint Proxy
Statement/Prospectus will contain important information about Komag, HMT, the
merger and related matters. Investors and security holders will be able to
obtain free copies of these documents through the website maintained by the
U.S. Securities and Exchange Commission at sec.gov. Free copies of
the Joint Proxy Statement/Prospectus and these other documents may also be
obtained from Komag by directing a request through the Investors Relations
portion of website at komag.com or by mail to Komag, Incorporated,
1710 Automation Parkway, San Jose, CA 95131, attention: Investor Relations,
telephone: 408-576-2000.
In addition to the Registration Statement and the Joint Proxy
Statement/Prospectus, Komag and HMT file annual, quarterly and special
reports, proxy statements and other information with the Securities and
Exchange Commission. You may read and copy any reports, statements or other
information filed by Komag or HMT at the SEC public reference rooms at 450
Fifth Street, N.W., Washington, D.C. 20549 or at any of the Commission's other
public reference rooms in New York, New York and Chicago, Illinois. Please
call the Commission at 1-800-SEC-0330 for further information on the public
reference rooms. Komag's and HMT's filings with the Commission are also
available to the public from commercial document-retrieval services and at the
website maintained by the Commission at sec.gov.
Interests of Certain Persons in the Merger
Komag will be soliciting proxies from Komag stockholders in favor of the
adoption of the merger agreement. The directors and executive officers of
Komag and the directors and executive officers of HMT may be deemed to be
participants in HMT's solicitation of proxies. Information concerning the
directors and officers is contained in the preliminary Registration Statement.
The directors and executive officers of Komag have interests in the
merger, some of which may differ from, or may be in addition to, those of
HMT's stockholders generally. Information concerning those interests is
contained in the preliminary Registration Statement.
Forward-Looking Statements
The above information contains predictions, estimates and other forward-
looking statements that involve a number of risks and uncertainties. While
this outlook represents Komag's current judgment on the future direction of
the business, actual results may differ materially from any future performance
suggested above. Factors that could cause or contribute to such differences
include, but are not limited to, risks relating to the consummation of the
contemplated merger, including the risk that required regulatory clearances,
the bank consents or stockholder approval might not be obtained in a timely
manner or at all. In addition, statements in this press release relating to
the expected benefits of the contemplated merger are subject to risks relating
to the timing and successful completion of technology and product development
efforts, integration of the technologies and businesses of Komag and HMT,
unanticipated expenditures, changing relationships with customers, suppliers
and strategic partners. Predictions about third quarter pricing, new product
introduction and pricing may differ due to unanticipated changes in the disk
market. These and other factors are described in the most recent Form 10-Q,
most recent Form 10-K and other periodic reports filed by Komag and HMT with
the Securities and Exchange Commission.
About Komag:
Founded in 1983, Komag, Incorporated has produced over 465 million thin-
film disks, the primary storage medium for digital data used in computer disk
drives. The company is well positioned as the broad-based strategic supplier
of choice for the industry's leading disk drive manufacturers. Through its
advanced development facilities in the United States and high volume
production factories in Southeast Asia, Komag provides high quality, leading-
edge disk products at a low overall cost to its customers. These attributes
enable Komag to partner with customers in the execution of their time-to-
market design and time-to-volume manufacturing strategies.
For more information about Komag, visit Komag's Internet home page at
komag.com or call Komag's Investor Relations 24-hour Hot Line at
888-66-KOMAG or 408-576-2901.
KOMAG, INCORPORATED
Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
Jul 2, Apr 2, Jul 4, Jul 2, Jul 4,
2000 2000 1999 2000 1999
Net Sales $83,468 $79,633 $93,226 $163,101 $183,239
Cost of Sales 73,534 66,795 97,857 140,329 187,123
Gross Profit
(Loss) 9,934 12,838 (4,631) 22,772 (3,884)
Gross Profit
(Loss) % 11.9% 16.1% (5.0%) 14.0% (2.1%)
Research &
Development
Expense 8,343 8,549 12,151 16,892 24,166
Selling,
General &
Administrative 3,769 3,645 5,612 7,414 11,090
Amortization
of
Intangibles 2,555 2,555 7,359 5,110 7,359
Restructuring
Charge
(Credit) (711) (1,950) 4,321 (2,661) 4,321
Operating
Income
(Loss) (4,022) 39 (34,074) (3,983) (50,820)
Interest
Income 1,168 982 1,345 2,150 2,961
Interest
Expense (7,457) (6,451) (5,935) (13,908) (10,939)
Other Income 196 375 869 571 1,530
Loss Before
Income
Taxes,
Minority
Interest
and Equity
Loss (10,115) (5,055) (37,795) (15,170) (57,268)
Provision
for
Income
Taxes 450 376 350 826 750
Minority
Interest
in Net
Income (Loss)
of
Consolidated
Subsidiary (319) (137) 89 (456) 340
Equity in
Net Loss
of
Unconsolidated
Joint
Venture -- -- -- -- (1,402)
Loss Before
Extraor-
dinary
Gain (10,246) (5,294) (38,234) (15,540) (59,760)
Extraordinary
Gain 3,772 -- -- 3,772 --
Net Loss ($6,474) ($5,294) ($38,234) ($11,768) ($59,760)
Net Loss% (7.8%) (6.6%) (41.0%) (7.2%) (32.6%)
Basic and
Diluted
Loss Before
Extraordinary
Gain Per
Share ($0.16) ($0.08) ($0.60) ($0.24) ($1.01)
Basic and
Diluted
Extraordinary
Gain Per
Share $0.06 $-- $-- $0.06 $--
Basic and
Diluted Net
Loss Per
Share ($0.10) ($0.08) ($0.60) ($0.18) ($1.01)
Basic and
Diluted
Shares
Outstanding 66,039 65,902 64,246 65,958 59,080
KOMAG, INCORPORATED
Consolidated Balance Sheets
(in thousands)
Jul 2, 2000 Jan 2, 2000
ASSETS (unaudited) (See Note 1)
Cash and Short-Term Investments $55,129 $69,526
Net Accounts Receivable Trade 38,646 33,484
Inventories 25,897 23,018
Deposits and Other Current Assets 14,746 10,846
Total Current Assets 134,418 136,874
Net Property, Plant & Equipment 276,868 313,455
Net Intangible Assets 17,886 22,996
Deposits and Other Assets 915 2,546
TOTAL ASSETS $430,087 $475,871
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Portion of Long-Term Debt $231,740 $260,000
Accounts Payable Trade 26,679 23,493
Accrued Liabilities 26,761 29,772
Restructuring Liabilities 9,772 25,490
Total Current Liabilities 294,952 338,755
Long-Term Note Payable to Related Party 21,186 21,186
Other Liabilities 29,794 33,290
Convertible Subordinated Debt 9,281 --
Minority Interest in Consolidated Subsidiary 3,471 3,927
Common Stock 450,501 446,043
Accumulated Deficit (379,677) (367,909)
Accumulated Other Comprehensive Income 579 579
TOTAL STOCKHOLDERS' EQUITY 71,403 78,713
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $430,087 $475,871
(1) The Consolidated Balance Sheet at January 2, 2000 has been derived
from the Audited Financial Statements.
SOURCE Komag, Incorporated
CO: Komag, Incorporated
ST: California
IN: CPR
SU: ERN
07/20/2000 16:15 EDT prnewswire.com |
