What an amazing story. Earnings of $3.60 and a price under $30. If only the past was the story. As to the future, it's totally open. Well, they seem to have added 2 new people to give their MR program a jump start.
I wish I new the future as they sure did finish a pretty good year.
Regards,
Applied Magnetics Corp. Announces Unaudited Fourth-Quarter and Record Fiscal-Year 1997 Results
GOLETA, Calif.--(BUSINESS WIRE)--Oct. 23, 1997--Applied Magnetics Corp. (NYSE:APM) Thursday reported net income of $16.3 million, or 60 cents per share fully diluted, for the fourth quarter of fiscal 1997, on sales of $122.8 million, compared with net income of $12.1 million, or 47 cents per share fully diluted, on sales of $89.3 million for the same period last year.
Net income for the fiscal year ended Sept. 27, 1997, was a record $100.3 million, or $3.50 per share fully diluted, on record sales of $494.8 million, compared with net income of $32.2 million, or $1.21 per share fully diluted, on sales of $344.8 million for fiscal 1996.
Fiscal 1997 was a record year for Applied Magnetics as the company celebrates its 40th anniversary. The company's sales increased by 43.5 percent for fiscal 1997, and gross margins increased to 33.9 percent from 27 percent, compared with fiscal 1996, primarily as a result of significant growth in shipments of advanced inductive thin film disk head products.
Net sales for the fourth quarter of fiscal 1997 increased 37.5 percent, compared with the same quarter in the prior year and remained flat from net sales of $124.1 million in the third quarter of fiscal 1997.
Gross margins in the fourth quarter of fiscal 1997 were 26.7 percent, a decrease from 29.7 percent for the same period last year, and a decrease compared with gross margins of 32.1 percent in the third quarter of fiscal 1997.
Net sales and gross margins in the fourth quarter of fiscal 1997 were negatively impacted by lower yields on newly qualified magnetoresistive (MR) programs and 1.7-gigabyte-per-3.5''-disk inductive thin film products, which were in their first full quarter of volume production.
Research and development expenses of $14.8 million in the fourth quarter of fiscal 1997 increased from $11.2 million in the fourth quarter of the previous fiscal year.
The company is continuing its commitment to MR product development and became qualified on two new customer drive programs during the quarter, for high-end and for portable-disk-drive applications, with additional qualifications anticipated in the first half of fiscal year 1998.
The company is currently in the qualification cycle on several customer MR programs, including desktop PC applications, at capacity/performance points ranging up to 3.7 gigabytes per 3.5'' disk.
The company believes that its pico form factor inductive thin film product solutions at the 1.7-gigabyte-per-3.5''-disk capacity point continue to offer its customers superior price/performance value and plans volume production of these products through fiscal year 1998.
However, this is expected to be the last new generation of inductive thin film products, making fiscal year 1998 a significant technology transition year as the company product mix evolves from thin-film to MR disk-head technology.
The majority of new customer development programs, for which the company is currently in qualification cycles, utilize MR technology. MR products are expected to represent the majority of the company's shipments by the fourth quarter of fiscal 1998.
Operating and financial results for fiscal year 1998 will depend heavily on the company's ability to continue to achieve qualification status on new MR programs, implement timely production ramps and improve process and production yields on its new programs.
Recently, the company announced the appointment of Dr. Virgil S. Speriosu to the newly created position of vice president, wafer development, where he will be concentrating on effecting the transition of the company's product technology from inductive thin film to MR during fiscal year 1998, as well as the development of future disk-head technologies and products.
Speriosu comes to Applied Magnetics with more than 13 years of experience in the development of magnetic recording devices and materials, most recently at IBM's Almaden Research Center. Speriosu will be reporting directly to Craig D. Crisman, chairman and chief executive officer.
The company also is now announcing the appointment, effective Oct. 29, 1997, of J. Kent Howard to the new position of director of materials science, reporting to Speriosu. Howard comes to Applied Magnetics with 37 years' industrial experience, most recently as a senior researcher at Komag Inc., a leading manufacturer of thin-film disks.
Prior to Komag, Howard was employed at IBM Corp. in various management and technology positions and, in 1990, was named an IBM Fellow. Prior to IBM, Howard was employed by Texas Instruments Inc. He has authored numerous publications and holds numerous patents and awards for his work in the field of magnetic recording materials.
Cash and equivalents at Sept. 27, 1997, increased to $162.3 million from $127.4 million at Sept. 28, 1996, and additional borrowings available under the company's existing credit facilities were $57.6 million.
The company believes it will have sufficient cash flows from operations and available credit facilities to support the company's continued investment in MR product development and capacity expansion.
The MR-wafer-fab-clean-room expansions currently underway will be completed and fully equipped by April 1998, as the company transitions during fiscal year 1998 to higher volume production of MR products.
Capital expenditures for the year ended Sept. 27, 1997, were $96.1 million. In addition, the company leased $35.3 million of production equipment through operating leases during fiscal 1997.
Applied Magnetics is a leading 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 (near Santa Barbara), the company employs more than 8,500 people around the world, with facilities in Malaysia, South Korea, Ireland, Singapore, the Philippines and China. The company's Web site can be found at www.appmag.com
Certain statements included in this release are forward- looking and involve risks and uncertainties, and actual results may differ materially. Factors that could cause results to differ include, but are not limited to, the company's successful transition to MR-technology volume production, short qualification and product life cycles and process yields related to its new products, the relatively limited number of customers and changes in customers' plans, successful performance of internal plans, inventory control, the impact of competitive products and pricing, general economic risks and uncertainties, and other risks disclosed in the company's periodic reports filed with the Securities and Exchange Commission.
Applied Magnetics Corp. and Subsidiaries
Condensed Consolidated Summary of Operations -- Unaudited
(In thousands, except per-share data)
Three months ended Fiscal year ended
Sept. 27, Sept. 28, Sept. 27, Sept. 28,
1997 1996 1997 1996
Net sales $122,828 $ 89,302 $494,839 $344,754
Gross profit 32,819 26,558 167,849 93,251
Research and
development
expenses 14,820 11,206 52,532 50,867
Selling, general
and administrative
expenses (b) 2,088 1,260 8,330 6,533
Terminated merger
costs (a) -- -- 2,906 --
Total operating
expenses 16,908 12,466 63,768 57,400
Income from
operations 15,911 14,092 104,081 35,851
Interest expense,
net (705) (1,664) (4,030) (4,828)
Other income (c) 1,642 96 2,384 2,047
Income before taxes 16,848 12,524 102,435 33,070
Provision for income
taxes 523 380 2,119 852
Net income $ 16,325 $ 12,144 $100,316 $ 32,218
Net income per
share (d):
Primary 66 cents 51 cents $ 4.05 $ 1.35
Fully diluted 60 cents 47 cents $ 3.50 $ 1.21
Weighted average
number of common
shares
outstanding:
Primary 24,872 23,882 24,780 23,897
Fully diluted 31,100 30,345 31,011 30,173
(a) Terminated merger costs for the year ended Sept. 27, 1997,
include legal and accounting fees, financial advisory fees and
miscellaneous other expenses related to the February 1997
proposed business combination between the company and Read-
Rite Corp. On March 14, 1997, the company announced its
withdrawal of the proposal.
(b) Selling, general and administrative expenses for the three
months and years ended Sept. 27, 1997, and Sept. 28, 1996,
include bad-debt recoveries of $66,000 and $469,000,
respectively, related to payments of 1990 bankruptcy
settlements with previous customers.
(c) Other income for the three months and year ended Sept. 27, 1997,
includes foreign translation/transaction gains of
$1.6 million and $2.1 million, respectively. Other income for
the year ended Sept. 28, 1996, includes foreign translation/
transaction gains of $500,000 and $1.3 million final payment
from Seagate Technology Inc. for its purchase of the company's
Tape Head business in December 1994.
(d) Primary net income per share is computed by dividing net income
by the weighted average number of shares of common stock and
common-stock equivalents outstanding during the period. Common-
stock equivalents include the company's stock options. Fully
diluted net income per share is computed based on the weighted
average number of shares of common stock and common-stock
equivalents outstanding during the period and as if the company's
convertible subordinated debentures were converted into common
stock at the beginning of the period after giving retroactive
effect to the elimination of interest expense, net of income tax
effect, applicable to the convertible subordinated debentures.
Applied Magnetics Corp. and Subsidiaries
Condensed Consolidated Balance Sheets -- Unaudited
(In thousands, except share and par-value data)
Sept. 27, 1997 Sept. 28, 1996
Assets
Current assets:
Cash and equivalents $162,302 $127,400
Accounts receivable, net 57,124 43,403
Inventories 51,438 35,980
Prepaid expenses and other 11,420 10,122
Total current assets 282,284 216,905
Property, plant and equipment,
at cost 371,224 288,856
Less: accumulated depreciation (181,732) (155,134)
Property, plant and equipment, net 189,492 133,722
Other assets 10,412 8,823
Total assets $482,188 $359,450
Liabilities and shareholders' investment
Current liabilities:
Current portion of long-term debt $ 513 $ 1,865
Bank notes payable 50,188 45,789
Accounts payable 49,103 32,314
Accrued payroll and benefits 11,287 11,001
Other current liabilities 5,829 8,054
Total current liabilities 116,920 99,023
Long-term debt, net 116,030 116,263
Other liabilities 4,257 4,465
Shareholders' investment:
Common stock, $0.10 par value,
authorized 40 million shares,
issued 23,976,711 shares and
23,283,047 shares at Sept. 27,
1997, and Sept. 28, 1996,
respectively 2,398 2,328
Paid-in capital 191,185 185,378
Retained earnings (deficit) 53,503 (46,813)
Treasury stock, at cost (128,384
shares and 116,995 shares at
Sept. 27, 1997, and Sept. 28,
1996, respectively) (1,554) (1,194)
Unearned restricted stock
compensation (551) --
Total shareholders' investment 244,981 139,699
Total liabilities and shareholders'
investment $482,188 $359,450 |
