Applied Magnetics Corp. announces unaudited first quarter results.

GOLETA, Calif.--(BUSINESS WIRE)--Jan. 20, 1995--Applied Magnetics Corp. (NYSE:APM) Friday announced operating results for its first quarter ended Dec. 31, 1994.

Net sales for the first quarter were $55.4 million, compared with $64.6 million in the fourth quarter of fiscal 1994 and $71.2 million for the prior fiscal year's first quarter.

The net loss for the first quarter was $11.7 million (53 cents per share), which compares with a loss of $20.5 million (93 cents per share) in the fourth quarter of fiscal 1994 which included reserve provisions of $6.2 million primarily for inventory.

The results for the prior fiscal year's first quarter reflected a loss of $6.2 million, or 28 cents per share, which included the benefit of $3.9 million of cost offsets from the HML Agreement, which was concluded in fiscal 1994.

Thin-film disk head unit shipments increased approximately 30 percent quarter-to-quarter. Thin-film sales in the first quarter of fiscal 1995 were $41.9 million, up 10 percent from the quarter ended Sept. 30, 1994. A change in the mix of shipments among head assemblies and head stack assemblies, as well as continued pricing pressure, accounted for the revenue vs. unit growth variance.

The continued growth in units sold reflects improvements in the company's production process which had experienced unfavorable yields in fiscal 1994.

Ferrite disk head sales declined in the first quarter of fiscal 1995 to $9.0 million, down 59 percent from the quarter ended Sept. 30, 1994, due to the sharp drop in customer demand as thin-film technology replaced the ferrite technology. Ferrite disk head sales were $34.7 million in the prior year's first fiscal quarter.

Tape head sales for the first quarter of fiscal 1995 were $4.5 million, as compared with $4.0 million in the prior year's first fiscal quarter. The company sold its Tape Head subsidiary to Seagate Technology Inc. on Dec. 10, 1994. However, pursuant to certain ongoing contractual arrangements, the company will continue to sell to Seagate various tape-related goods and services.

Craig Crisman, president and chief executive officer, stated, "The company has taken, and will continue to take, a number of steps to aggressively manage cash, improve production yields and reduce costs. The sale of the Tape Head subsidiary in December and the completion, this month, of a financing agreement with The Cit Group/Business Credit Inc., will provide additional liquidity and further enhance our ability to focus efforts on thin-film and MR disk head products."

Applied Magnetics Corp., with headquarters in Goleta, is a major independent supplier of magnetic recording heads for disk drive applications for the worldwide data storage segment of the computer industry. -0-

             Applied Magnetics Corp. and Subsidiaries
       Condensed consolidated summary of operations -- unaudited
         (in thousands, except share and per-share data)

                                             Three months ended
                                                  Dec. 31,
                                             1994          1993

Net sales                                 $55,373       $71,244
Gross profit                                  527         3,747
Research and development expenses, net      7,782         4,104
Selling, general and administrative
  expenses                                  3,516         5,290
Total operating expenses, net              11,298         9,394
Loss from operations                      (10,771)       (5,647)
Interest expense, net                         723           712
Other (income) expense                          4          (318)
Loss before taxes                         (11,498)       (6,041)
Provision for income taxes                    216           204
Net loss                                 ($11,714)      ($6,245)
Net loss per share                      (53 cents)     (28 cents)
Weighted average common and dilutive
  equivalent shares outstanding        22,074,285     22,079,035

NOTE: In connection with the HML agreement, research and development expenses related to inductive and MR thin-film activities are net of cost offsets of approximately $3.9 million for the three months ended Dec. 31, 1993. -0-

                Applied Magnetics Corp. and Subsidiaries
           Condensed consolidated balance sheets -- unaudited
              (in thousands, except share and par value data)

                                        Dec. 31,         Sept. 30,
                                          1994             1994
Assets

Current assets:
  Cash and equivalents                   $29,061           $20,761
  Accounts receivable, net                17,516            18,720
  Inventories                             23,520            31,520
  Prepaid expenses and other               6,314             6,879

Total current assets                      76,411            77,880

Property, plant and equipment,
  at cost                                266,042           289,362
Less: accumulated depreciation          (150,979)         (165,046)
Property, plant and equipment, net       115,063           124,316
Notes receivable, net                      8,390             8,557
Other assets                               9,541             9,803

Total assets                            $209,405          $220,556

Liabilities and shareholders' investment

Current liabilities:
  Current portion of long-term debt      $20,596           $20,412
  Bank notes payable                      46,483            46,062
  Accounts payable                        19,462            22,332
  Accrued payroll and benefits             7,535             9,406
  Other current liabilities               20,599            16,111

Total current liabilities                114,675           114,323

Long-term debt, net                          531               677
Other liabilities                          7,164             7,123

Shareholders' investment:
  Common stock, 10 cents par value,
  authorized 40 million shares,
  issued 22,194,650 as of Dec.
  31, 1994, and 22,161,460
  as of Sept. 30, 1994                     2,219             2,216

Paid-in capital                          178,552           178,481
Retained deficit                         (92,493)          (80,779)
Treasury stock, at cost (96,603
  shares as of Dec. 31, 1994, and
  92,509 as of Sept. 30, 1994)              (830)             (812)
Unearned restricted stock
  compensation                              (413)             (673)

Total shareholders' investment            87,035             98,433
Total liabilities and shareholders'
  investment                            $209,405           $220,556

CONTACT: Applied Magnetics Corp., Goleta

Craig D. Crisman, 805/683-5353