Applied Magnetics Corp. Announces Unaudited First-Quarter Fiscal Year 1999 Results.

GOLETA, Calif.--(BUSINESS WIRE)--Jan. 21, 1999--Applied Magnetics Corp. (NYSE:APM) Thursday reported a net loss of $45.6 million, or $1.90 net loss per share, for the first fiscal quarter of 1999 on sales of $23.5 million, compared with a net loss of $39.7 million, or $1.67 net loss per share, including special charges, on sales of $74.4 million for the same period last year.

Net sales for the first quarter of fiscal 1999 declined 68 percent, compared with the first quarter of fiscal 1998, and increased 40 percent over net sales of $16.8 million reported in the fourth quarter of fiscal 1998.

Gross margins in the first quarter of fiscal 1999 were a negative 40.8 percent, a decrease from the negative 9.5 percent reported in the same period last year, and an improvement compared with gross margins of a negative 58.8 percent in the fourth quarter of fiscal 1998.

Research and development ("R&D") expenses of $29.5 million in the first quarter of fiscal 1999 increased from $23.3 million in the same period last year and decreased from $32.4 million in the fourth fiscal quarter of 1998, reflecting the company's continued commitment to focus its technical resources on new program qualifications utilizing both MR- and GMR-based technology.

Cash and equivalents at Jan. 2, 1999, were $34.9 million, a decrease of $36.8 million from the $71.7 million reported on Oct. 3, 1998.

Additional credit available under the company's existing credit facilities was $8.9 million. As previously announced on Nov. 25, 1998, the company entered into an agreement with certain institutional investors to raise $20 million simultaneously with the completion of the company's anticipated consolidation with DAS Devices Inc., also announced on Nov. 25, 1998.

In addition, the company is seeking to arrange additional private financing that, along with the sale of certain assets, will provide sufficient funding to support the transition to GMR production.

The net loss for the first quarter of fiscal 1999 included approximately $1.0 million in severance costs associated with the impending merger. The company anticipates that the merger will be approved and completed within the next 30 days.

"The merger with DAS combines their proprietary and patented state-of-the-art wafer and GMR technology with AMC's world-class production facilities and high-volume, low-cost manufacturing capabilities," said Craig Crisman, AMC chairman and chief executive officer.

"It not only increases the ability of the company to produce GMR heads at high areal densities, but provides us an excellent opportunity to develop new products and accelerate time-to-market performance," he added.

The company is currently in the process of ramping down volume production shipments of its inductive thin film heads, and revenue from this family of products will decline significantly in the second fiscal quarter of 1999.

The company recently commenced volume production shipments of a 3.4-gigabyte-per-3.5-inch disk MR product based on a DAS Devices design. The 4.3-gigabyte-per-3.5-inch disk product is in the process of qualification, and this product is anticipated to contribute significant revenue in the third fiscal quarter of 1999.

Because of the long lead times required for new product qualification, the benefits of the DAS Devices GMR technology will not be realized until late in the third fiscal quarter of 1999. Consequently, the company anticipates that quarterly sales revenue in fiscal yearytes-per- 3.5-inch disk capacity points. It is d AMC organizations are moving quickly in a joinime span between today and the return to shipment levels the company enjoyed in 1997," said Crisman.

Applied Magnetics is an independent manufacturer of magnetic round the world, with facilities in Malaysia, Kormade by management of the company that, 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 riskk-head products with profitable yields; the lim results of operations that significantly incre; domestic and international competition in the company's product areas; risks related to international transactions; and general economic risks and uncertainties. -0-

               APPLIED MAGNETICS CORP. AND SUBSIDIARIES
       Condensed Consolidated Summary of Operations - U. 2,     Dec. 27,
                             rch and development expenses
29,497       23,309
Selling, general and administrative expenses       1,592        1,785
Restructuring charge (Note 1)      313)       1,625

Loss before income taxes                         (44,804)     (39,719)
Provision for income taxes                           771           30

Net loses outstanding:
  Common shares                                   23,978       23,858
  Common shares - assute 2: Loss per common share is computed by dividing net
loss by the
        weighted average number of shares of common stock outstanding
        during the period. Loss per common share - assuming dilution
        is computed based on the weighted average number of shares of
      ed into
        common stock at the beginning of the period after giving
        retroactive effect to the elimination of interest expense, net
        of income tax olidated Balance Sheets - Unaudited
            (In thousands, except share and par value data)


ASSETS                                      Jan. 2,           Oct. 3,
                                             1999              1998
expenses and other                 13,511                (195,796)
(188,022)

Property      $299,518

LIABILITIES AND SHAREHOLDERS' INVESTMENT

Current liabilities:
  Current portion of long-term debt        $  1,629          $  1,610
  Bank notes paya    84,239            94,210

Long-term debt, rized
   80 million shares, issued 24,125,194 225
  Retained earnings                        (151,640)         (106,065)
 Treasury stock, at cost (130,552 shares at
   Jan. 2, 1999, and  130,233 shares at
   Oct. $299,518