>>APM? <eom<<
CC LOST HIS HEAD!!!! muhahahahaha ops.. sowwy.. but how can a company loose 235 mil on revenues of 40 mil?
Applied Magnetics Corp. Announces Unaudited Fourth Quarter and Fiscal Year 1999 Results, Financing and MR Production Shipments
GOLETA, Calif.--(BUSINESS WIRE)--Oct. 28, 1999--Applied Magnetics Corp. (NYSE:APM)
today reported a net loss of $67.1 million, or $1.35 basic net loss per share, for the
fourth quarter of fiscal 1999, compared with a net loss of $47.8 million, or $1.99 basic
net loss per share, for the fourth quarter of fiscal 1998.
The net loss for the fiscal year ended Oct. 2, 1999, was $236.0 million, or $6.29
basic net loss per share, compared with a net loss of $155.4 million, or $6.49 basic net
loss per share, for fiscal year 1998.
Included in the fourth-quarter fiscal 1999 loss is a $22.9 million non-recurring
charge for in-process technology not deemed usable associated with the company's final
allocation of the purchase price of the DAS Devices Inc. acquisition, the writedown of
assembled workforce and a writedown to fair value for one of the company's facilities
held for sale in Goleta.
Net sales for the fourth quarter of fiscal 1999 declined to $2.5 million, compared
with $16.8 million for the fourth quarter of fiscal 1998. Net sales for fiscal year 1999
were $39.3 million, down from $183.6 million in net sales for fiscal 1998. The company
anticipates that net sales for the first fiscal quarter of 2000 will increase
substantially over net sales reported for the fourth fiscal quarter of 1999 as a result
of MR shipments against existing orders.
As previously announced, the company has received production orders from two of its
customers for MR recording heads. The company has qualified its MR headstack assemblies
for Samsung Electronics' Spinpoint family of 4.3-gigabyte-per-disk products and has
initiated volume shipments from its production facility in Cheong-ju, South Korea.
Production shipments have also begun to Conner Technology PLC for its 4.3
gigabyte-per-disk products, and the company is now shipping head-gimbal assemblies from
its production facility in Penang, Malaysia. The company has been rehiring manufacturing
personnel at its worldwide locations and has been steadily increasing internal production.
Craig D. Crisman, chairman and CEO of Applied Magnetics, said: "We are pleased to be
manufacturing and shipping MR heads in volume production and we are preparing for a rapid
transition to GMR in fiscal 2000. However, we still face significant operational and
financial challenges."
R&D expenditures for fiscal 1999 totaled $106.7 million, compared with $114.7 million
in fiscal 1998. The company is currently in the process of qualifying its GMR heads with
customers on programs ranging from 8.6 to 15.0 gigabytes capacity per 3.5-inch disk. GMR
production shipments are anticipated to begin by the end of the 1999 calendar year,
pending successful and timely completion of qualification.
Cash and equivalents as of Oct. 2, 1999, were $9.4 million, an increase of $3.4
million over the company's third fiscal quarter ended July 3, 1999, and a decrease of
$62.3 million from that reported on Oct. 3, 1998.
The company announced on Sept. 8, 1999, that it entered into definitive agreements
with respect to individual private placements of new convertible debt instruments and
common stock totaling $11.5 million. Of this amount, $5.0 million is reflected in the
fiscal year 1999 ending cash balance and an additional $5.2 million was received in
October 1999.
The company is also seeking to secure additional financing by the end of calendar year
1999 in order to continue funding its MR production ramp and to complete development,
qualification and production of its GMR products.
The company is also in the process of negotiating the sale and leaseback of facilities
at its Goleta headquarters, renegotiating its existing equipment lease obligations and is
seeking additional private placements of debt and common equity.
The company has also completed the transactions that were announced on May 12, 1999,
regarding the exchange of 6.0 million shares of newly issued common stock for $24 million
principal amount of the company's 7% Convertible Subordinated Debentures with Kennilworth
Partners II LP.
The Kennilworth transactions consisted of 4.0 million shares common stock exchanged
for $16 million principal amount of debentures per the company's announcement of July 15,
1999, and 2.0 million shares of common stock that were exchanged for $8 million principal
amount of debentures on Oct. 20, 1999.
Applied Magnetics is an independent manufacturer of magnetic recording heads,
head-gimbal assemblies ("HGAs") and headstack assemblies ("HSAs") for computer hard disk
drives. Founded in 1957, Applied Magnetics is the oldest independent U.S.-based supplier
of disk heads to the merchant market. With headquarters in Goleta, the company employs
more than 3,400 people around the world, with facilities in Malaysia, Korea and China.
The company's World Wide Web site can be found at www.appmag.com.
Forward-looking statements included in this release are based on estimates and
assumptions made by management of the company, which, although believed to be reasonable,
are inherently uncertain and difficult to predict. Therefore, undue reliance should not
be placed upon such estimates. Such statements are subject to certain risks and
uncertainties inherent in the company's business that could cause actual results to
differ materially from those projected. These factors include, but are not limited to:
successful transition to volume production of MR and GMR disk head products with
profitable yields; the limited number of customers and customer changes in short-range
and long-range plans; competitive pricing pressures; changes in business conditions
affecting the company's financial position or results of operations that significantly
increase the company's working capital needs; the company's inability to generate or
obtain sufficient capital to fund its working capital needs; the company's ability to
control inventory levels; domestic and international competition in the company's product
areas; risks related to international transactions; and general economic risks and
uncertainties.
APPLIED MAGNETICS CORP. AND SUBSIDIARIES
Condensed Consolidated Summary of Operations - Unaudited
(In thousands, except share and per share data)
Three months ended For the years ended
Oct. 2, Oct. 3, Oct. 2, Oct. 3,
1999 1998 1999 1998
Net sales $ 2,481 $ 16,763 $ 39,320 $ 183,597
Gross deficit (16,493) (9,853) (59,268) (15,145)
Research and
development expenses 20,129 32,396 106,736 114,659
Selling, general &
administrative expenses 1,831 1,435 7,138 6,514
Writedown of assets and
restructuring charges (a) 11,875 -- 26,146 8,400
Amortization (b) 1,792 -- 8,049 --
Purchased in-process
technology (d) 11,000 -- 39,700 --
Total operating expenses 46,627 33,831 187,769 129,573
Loss from operations (63,120) (43,684) (247,037) (144,718)
Interest expense, net (4,240) (1,925) (13,442) (6,750)
Other expense (33) (349) (1,263) (1,495)
Loss from continuing
operations before taxes (67,393) (45,958) (261,742) (152,963)
Provision (benefit)
for income taxes (325) 1,888 189 2,405
Discontinued
operations, net (b) -- -- 25,941 --
Net loss $ (67,068) $ (47,846) $(235,990) $(155,368)
Net loss per share: (e)
Loss from continuing
operations per
common share $ (1.35) $ (1.99) $ (6.98) $ (6.49)
Discontinued
operations, net -- -- 0.69 --
Loss per common share $ (1.35) $ (1.99) $ (6.29) $ (6.49)
Loss per common share
-- assuming dilution $ (1.35) $ (1.99) $ (6.29) $ (6.49)
Weighted average number
of common and common
equivalents shares
outstanding:
Common shares 49,849 23,973 37,496 23,931
Common shares
-- assuming dilution 49,849 23,973 37,496 23,931
(a) For the year ended Oct. 2, 1999, the company recorded (1) a
pre-tax charge of approximately $10.7 million for the writedown of a
building held for sale at its Goleta facility, (2) a pre-tax charge of
approximately $1.2 million for the impairment of assembled workforce
related to the acquisition of DAS Devices Inc., (3) a pre-tax charge
of approximately $9.8 million for the writedown of assets and
severance payments associated with the closure of its production
facility in Milpitas, Calif., and workforce reductions in Goleta, and
(4) a pre-tax charge of approximately $4.5 million for the writedown
of obsolete assets and the assets associated with the discontinuation
of an in-house suspension assembly operation. For the year ended
Oct. 3, 1998, the company recorded a pre-tax restructuring charge of
approximately $8.4 million, primarily related to the shutdown of its
production facility in Ireland and writedown of assets related to thin
film inductive technology.
(b) For the three months and year ended Oct. 2, 1999, discontinued
operations, net, represents an after-tax gain of $25.9 million,
related to the sale of Magnetic Data Technologies LLC, respectively.
(c) The excess of the purchase price plus related transaction costs
over the fair value of tangible and intangible assets acquired and
liabilities assumed through the acquisition with DAS Devices Inc. has
been allocated to (1) goodwill, (2) developed technology and know-how,
and (3) a covenant not to compete. For the three months and year ended
Oct. 2, 1999, the amortization of goodwill was $1,379 and $3,580,
respectively, the amortization of developed technology and know-how
was $2,509 and $6,271, respectively, and the amortization of the
covenants was $196 and $490, respectively. The amortization of
developed technology and know-how was adjusted downward by $2,292
related to the final allocation of an additional $11 million to
purchased in-process technology.
DJ Applied Magnetics Results -3: Year Financial Table
Year Oct. 3:
1999 1998
Sales $39,320,000 $183,597,000
Net income b (235,990,000) (155,368,000)
Avg shrs (basic) 37,496,000 23,931,000
Avg shrs (diluted) 37,496,000 23,931,000
Shr earns (basic)
Net income b (6.29) (6.49)
Shr earns (diluted)
Net income b (6.29) (6.49)
Figures in parentheses are losses.
b. Includes gain from discontinued operations of $25.9 million, or 69 cents a share;
charges of $26.1 million for write-down and restructuring; and $39.7 million in charges
for purchased in-process technology.
Applied Magnetics Corp. makes magnetic recording heads and other assemblies for
computer hard-disk drives.
-Sam Favate; Dow Jones Newswires; 201-938-5400
(END) DOW JONES NEWS 10-28-99
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