Wednesday January 21, 4:10 pm Eastern Time
Company Press Release
SOURCE: Read-Rite Corporation
Read-Rite Reports First Quarter of Fiscal 1998 Results
MILPITAS, Calif., Jan. 21 /PRNewswire/ -- Read-Rite Corporation (Nasdaq: RDRT - news) today reported sales of $261.4 million for the first quarter of fiscal 1998 ended December 28, 1997. The company recorded an after tax charge of $91.8 million primarily for the write-off of assets and inventory associated with the faster than expected phase-out of its advanced inductive recording head products. This charge resulted in a net loss for the quarter of $90.9 million, or $1.88 per share. Excluding the charge, the company would have reported net income for the first quarter of fiscal 1998 of $925,000, or two cents per share.
The results of the first quarter of fiscal 1998 were primarily impacted by a reduction of shipments late in the quarter due to a general industry slowdown in demand for recording heads, the industry's rapid phase-out of advanced inductive recording head products, as well as significant pricing pressure. Read-Rite expects this current industry environment to continue for the next several quarters.
Read-Rite has accelerated the implementation of its strategy to transition fully to magnetoresistive (MR) recording head technology production. During the quarter, Read-Rite shipped 22.4 million recording heads, which included heads shipped in 4.1 million headstack assemblies (HSAs). For the first quarter of fiscal 1998, MR recording head products accounted for 46 percent of the company's sales. The largest volume MR product manufactured during the quarter was Read-Rite's 2.1 Gigabyte (GB) per 3.5-inch disk MR recording head, which is being shipped to three major customers. The company is now in qualification at five customers with its next generation, 2.8 GB per 3.5-inch disk, advanced MR recording head.
Read-Rite is the world's largest independent manufacturer of recording heads, head gimbal assemblies (HGAs) and head stack assemblies (HSAs) for disk drives and magnetoresistive (MR) heads for quarter-inch-cartridge tape drives. The company is headquartered in Milpitas, California, and has operations in California, Japan, Thailand, Malaysia, the Philippines and Singapore. Read-Rite employs some 24,500 people. The company's home page on the World Wide Web can be reached at www.readrite.com.
This news release contains forward-looking information within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended, and is subject to the ''safe harbor'' created by those sections. The company's actual results for future periods could differ materially from those projected in such forward-looking information. Factors that could cause actual results to differ include, but are not limited to, the following: the current unfavorable industry environment could continue longer than expected or worsen; the company's ability to ramp-up volume production quickly and cost-effectively on its new MR products; design-ins and qualifications for the company's 2.8 GB per 3.5-inch disk MR products or future products may not occur or could be slower than anticipated; and/or competitors may introduce MR products earlier and/or more cost-effectively than the company. Read-Rite undertakes no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of such statements.
Read-Rite Corporation
Consolidated Statements of Operations
(In thousands, except per share amounts)
Three Months Ended
December 31,
1997 1996
Net sales $261,371 $251,588
Cost of sales 347,138 215,774
Gross margin (85,767) 35,814
% of net sales (32.8%) 14.2%
Research & development 21,731 14,938
% of net sales 8.3% 5.9%
Selling, general &
administrative 9,496 10,753
% of net sales 3.7% 4.3%
Total operating expenses 31,227 25,691
% of net sales 12.0% 10.2%
Operating Income (loss) (116,994) 10,123
% of net sales (44.8%) 4.0%
Interest income (expense)
and other, net (6,849) (1,515)
Income (loss) before
income taxes and
minority interest (123,843) 8,608
% of net sales (47.4%) 3.4%
Provision (benefit) for
income taxes (24,769) 2,668
Minority interest in
net income (loss) of
consolidated subsidiary (8,145) 153
Net income (loss) ($90,929) (a) $5,787
% of net sales (34.8%) 2.3%
Primary earnings (loss)
per share ($1.88) $0.12
Shares used in per
share calculation 48,286 46,976
Fully diluted earnings
(loss) per share ($1.88) $0.12
Shares used in per
share calculation 48,286 48,098
(a) Includes a charge, net of taxes, of approximately $91.8 million for the reserve of equipment and inventory primarily associated with the phase-out of advanced inductive technologies for the three months ended December 31, 1997.
Read-Rite Corporation
Consolidated Condensed Balance Sheets
(In thousands)
December 31, September 30,
1997 1997
ASSETS
Current Assets:
Cash, cash equivalents and
short-term investments $227,535 $298,097
Accounts receivable, net 131,858 178,722
Inventories 81,431 91,487
Prepaid expenses and other
current assets 17,634 14,988
Total current assets 458,458 583,294
Property, plant and
equipment, net 645,598 672,813
Intangibles and other assets 46,007 45,374
Total Assets $1,150,063 $1,301,481
LIABILITIES, MINORITY INTEREST
IN CONSOLIDATED SUBSIDIARY
AND STOCKHOLDERS' EQUITY
Current liabilities $211,039 $240,109
Long-term debt 403,085 402,224
Deferred income taxes
and other liabilities 13,943 40,373
Total liabilities 628,067 682,706
Minority interest in
consolidated subsidiary 64,978 73,122
Stockholders' equity:
Common stock and additional
paid-in capital 357,863 354,551
Retained earnings 99,155 191,102
Total stockholders'
equity 457,018 545,653
Total Liabilities, Minority
Interest in Consolidated
Subsidiary and
Stockholders' Equity $1,150,063 $1,301,481
SOURCE: Read-Rite Corporation
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