Ampex to issue new securities in exchange for $87 million of convertible preferred stock -- shareholder dilution to be reduced significantly.

REDWOOD CITY, Calif.--(BUSINESS WIRE)--Feb. 14, 1995--Ampex Corporation announced Tuesday that its Board of Directors has approved the issuance of 11 million new common shares and $69.9 million of a new issue of non-cumulative, non-convertible redeemable Preferred Stock.

The new securities will be exchanged with certain institutional investors for all of the $87.1 million of the Company's Convertible Preferred Stock currently outstanding and accumulated dividends thereon. The Convertible Preferred Stock being redeemed is mandatorily redeemable in 1999, and could have been converted at the option of the holders into 27.9 million shares of Ampex common stock, equivalent to 44% of the Company's fully-diluted common shares.

The new Preferred Stock is entitled to an 8% dividend at an annual rate in any quarterly period when a common dividend is declared. The Company is not otherwise obliged to declare or pay dividends on the new Preferred Stock. Ampex has not declared any dividends on its common stock since its initial public offering in 1992 and currently has no intention to do so. The new Preferred Stock is mandatorily redeemable in 1997 and may be redeemed in cash or at the option of the Company for common stock under certain circumstances.

The exchange of securities described above will result in a significant reduction in the number of shares of the Company that are outstanding and issuable on a fully-diluted basis, from 63.3 million shares prior to the transaction to 46.4 million shares following its completion, a decrease of 27 percent. The number of common shares used to compute primary earnings per share in future periods will increase from approximately 25.1 million to approximately 36.1 million. However, it is expected that this increase in the number of primary shares will be more than offset by the elimination of preferred dividends which would have reduced earnings available to common shareholders by $9.4 million in 1995, rising to $12.9 million in later years, and would have totaled $48 million through the mandatory redemption date. Closing of the exchange is expected to occur shortly.

Commenting on the exchange, Edward Bramson, Chairman, stated: "The reduced overhang of common shares that could have been offered for sale if the Preferred Stock had been converted addresses a concern that has been expressed by a number of shareholders. In addition, if the recent trend in earnings performance can be sustained, this financing will have a favorable effect both on primary and on fully-diluted earnings per share. It is quite rare for such a large reduction in the number of fully-diluted shares to be accomplished with no adverse effect on liquidity or debt levels."

Mr. Bramson went on to say: "The structure of this transaction has significant potential benefits for the Company's current common shareholders, as well as for the institutional investors involved in the exchange and should create substantial value for all shareholders. Our ability to conclude the financing was aided by the opportunity for our financial executives to work directly with a small group of institutions that have the experience and sophistication necessary to analyze complex transactions of this kind."

Separately, the Company disclosed that for the year ended December 31, 1994, it expects to report net sales of approximately $127 million and net income of approximately $15.5 million, resulting in primary earnings per share of approximately $0.42 and fully-diluted earnings per share of approximately $0.36. The Convertible Preferred Stock being redeemed was originally issued on April 22, 1994. The pro forma effect of the exchange, had it occurred on that date, would have been to increase l994 estimated primary earnings per share by 21% to $0.51, and fully-diluted earnings per share to $0.47, an increase of 31%.

In 1993, the Company reported net sales of $169.7 million, and a net loss of $296.4 million, resulting in a loss of $16.74 per share. Results for 1993 reflected restructuring charges of $230.5 million. The Company also disclosed that, in the fourth quarter of 1994, it will record a non-cash, non-recurring pre-tax gain of $7.3 million from curtailment of certain employee benefit programs.

Ampex Corporation (OTC Bulletin Board: AMPX) is one of the world's leading innovators in the fields of magnetic recording, image processing and high-performance digital storage. Ampex is currently focusing its technology on the emerging market for mass data storage in the visual information age. During its 50 year history of innovation, Ampex has been granted thousands of patents, and currently holds more than 1,300 that are active. Headquartered in Redwood City, Calif., Ampex's customers today include such leading organizations as Boeing, Eastman Kodak, Mobil Oil, Time Warner and NASA.

CONTACT: Ampex Corporation

Karen D. Schweikher, 415/367-4111 (Investor Relations)