Applied Magnetics Corp. announces unaudited first-quarter fiscal 1997 results.

GOLETA, Calif.--(BUSINESS WIRE)--Jan. 22, 1997--Applied Magnetics Corp. (NYSE:APM) Wednesday announced operating results for its first fiscal quarter ended Dec. 28, 1996.

Total net sales were $121.6 million for the first quarter of fiscal 1997, an increase of 28.4 percent over sales of $94.7 million for the same period last year. Net income was $31.9 million for the quarter, an increase of 253 percent, compared with the prior year's first-quarter net income of $9 million.

Primary earnings were $1.30 per share, compared with 38 cents per share for the same period last year. Fully diluted earnings per share for the first quarter of fiscal 1997 were $1.10, which assumes the company's convertible subordinated debentures, issued in March 1996, were converted at the beginning of the fiscal year and net income was adjusted for elimination of interest expense, net of income tax effect.

Gross margin was 38.3 percent for the first quarter of fiscal 1997, exceeding the company's target, as revenues, unit volumes, overall production yields and associated costs were better than planned.

Cash and equivalents on Dec. 28, 1996, increased to $157 million, from $127.4 million at Sept. 28, 1996.

The company is continuing its strong financial and technological performance that started in fiscal 1996, and continues to execute its time-to-market and time-to-volume strategy with leading edge products.

Approximately 73 percent of the quarter's revenue came from products to be used by customers in 3.5" disk drive applications with data storage capacities over 1 gigabyte per disk, including initial production volumes of advanced thin film products at the 1.3 gigabyte-per-disk capacity point.

For fiscal 1997, the company is executing a plan that, by the fourth quarter, is expected to more than double the unit volume production rate that was achieved in the fourth quarter of fiscal 1996.

The company expects to further benefit from the cost reductions associated with such improved economies of scale. Fiscal 1997 will continue to be another year of rapid product and technology transition and the company believes it is well positioned to meet the challenge.

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, successful performance of internal plans, inventory control, changes in customer plans, the impact of competitive services and pricing, product development and acceptance, general economic risks and uncertainties and other risks disclosed in the company's periodic reports filed with the Securities and Exchange Commission. -0-

               Applied Magnetics Corp. and Subsidiaries
             Condensed Consolidated Summary of Operations
                            (unaudited)
           (in thousands, except share and per-share data)

                                       Three months ended
                                Dec. 28, 1996      Dec. 30, 1995

Net sales                         $ 121,627          $  94,709
Gross profit                         46,597             23,514
Research and development             11,148             13,315
Selling, general and
  administrative expenses             2,044              1,671
Total operating expenses             13,192             14,986
Income from operations               33,405              8,528
Interest expense, net                (1,289)              (888)
Other income, net                       279              1,489
Income before income taxes           32,395              9,129
Provision for income taxes              523                101
Net income                        $  31,872          $   9,028
Net income per share:
 Primary                          $    1.30           38 cents
 Fully diluted                    $    1.10           38 cents
Weighted average number of
  common shares outstanding:
 Primary                         24,531,737         23,774,471
 Fully diluted                   30,861,300         23,873,012

Note 1:  Other income for the three months ended Dec. 30, 1995,
includes a $1.3 million final payment from Seagate Technology Inc.
for its purchase of the company's Tape Head business unit in
December 1994.

Note 2:  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 exercise of 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.
-0-

               Applied Magnetics Corp. and Subsidiaries
                Condensed Consolidated Balance Sheets
                            (unaudited)
            (in thousands, except share and par-value data)

                                    Dec. 28, 1996      Sept. 28, 1996

Assets
Current assets:
 Cash and equivalents                 $ 156,974           $ 127,400
 Accounts receivable, net                43,587              43,403
 Inventories                             37,517              35,980
 Prepaid expenses and other               9,279              10,122
Total current assets                    247,357             216,905

Property, plant and equipment, at cost  305,427             288,856
 Less: accumulated depreciation        (162,507)           (155,134)
Property, plant and equipment, net      142,920             133,722
Other assets                              8,909               8,823
Total assets                          $ 399,186           $ 359,450

Liabilities and shareholders' investment
Current liabilities:
 Current portion of long-term debt    $   1,790           $   1,865
 Bank notes payable                      45,789              45,789
 Accounts payable                        38,684              32,314
 Accrued payroll and benefits            11,410              11,001
 Other current liabilities                8,835               8,054
Total current liabilities               106,508              99,023

Long-term debt, net                     115,848             116,263
Other liabilities                         4,465               4,465

Shareholders' investment:
 Common stock, $0.10 par value,
   authorized 40 million shares,
   issued 23,453,399 shares at
   Dec. 28, 1996, and 23,283,047
   shares at Sept. 28, 1996               2,345               2,328
 Paid-in capital                        186,155             185,378
 Retained deficit                       (14,941)            (46,813)
Treasury stock, at cost (116,995
  shares at Dec. 28, 1996, and
  Sept. 28, 1996, respectively)          (1,194)             (1,194)

Total shareholders' investment          172,365             139,699
Total liabilities and shareholders'
  investment                          $ 399,186           $ 359,450

CONTACT: Applied Magnetics Corp., Goleta

Craig D. Crisman, 805/683-5353