Applied Magnetics Corp. announces unaudited results for second quarter and first half of fiscal 1996.

GOLETA, Calif.--(BUSINESS WIRE)--April 25, 1996--Applied Magnetics Corp. (NYSE:APM) Thursday announced operating results for its second quarter and first half of fiscal 1996, ended March 30, 1996.

                          Three months ended       Six months ended
                         March 30,   March 31,   March 30,   March 31,
(In thousands)             1996        1995        1996        1995

Thin-film sales, net    $62,544     $46,333    $127,161    $ 84,496
Ferrite sales, net       14,791       1,139      28,296       8,756
Other sales, net          9,371      17,447      25,958      27,040
Total net sales         $86,706     $64,919    $181,415    $120,292
Net income (loss)       $ 8,696     $(2,691)   $ 17,724    $(14,405)
Net income (loss)
 per share             37 cents   (12 cents)   74 cents   (65 cents)

Net sales in the second quarter of fiscal 1996 were $86.7 million, an increase of 34 percent over the same quarter last year. Thin-film sales increased 35 percent for the same periods, although the second quarter's sales were 3 percent lower than the first quarter of fiscal 1996.

The lower thin-film sales revenue is principally the result of the introduction of advanced-technology products that typically have low yields during initial production.

Ferrite sales will decrease in volume as this technology becomes obsolete for the company. This ferrite volume is expected to be replaced by advanced thin-film and magnetoresistive (MR) technology products.

Income from operations increased $907,000 from the first fiscal quarter of 1996, which represents an increase of 11 percent.

Cash and equivalents increased from $48.2 million at Sept. 30, 1995, to $133.9 million at March 30, 1996, primarily as a result of the sale of $115 million of convertible subordinated debentures on March 22, 1996.

Demand continues to be strong for the company's products. A high percentage of product shipments in the third fiscal quarter will be on customer programs requiring the company's new advanced thin-film technology. While the company has successfully qualified on its target programs, the management challenge will be to increase production yields to commercially profitable levels. -0-

               APPLIED MAGNETICS CORP. AND SUBSIDIARIES
             Condensed Consolidated Summary of Operations
                             (Unaudited)
            (In thousands, except share and per-share data)

                          Three months ended       Six months ended
                         March 30,   March 31,   March 30,   March 31,
                           1996        1995        1996        1995
Net sales               $86,706     $64,919    $181,415    $120,292
Gross profit             25,297       5,123      48,811       4,329
Gross profit %            29.2%        7.9%       26.9%        3.6%
Research and development
 expenses                13,972       7,285      27,287      15,067
Selling, general and
 administrative expenses  1,890       1,654       3,561       3,849
Total operating expenses 15,862       8,939      30,848      18,916
Income (loss) from
 operations               9,435      (3,816)     17,963     (14,587)
Interest expense, net      (724)       (688)     (1,612)     (1,411)
Other income                167       1,996       1,656       1,992
Income (loss) before
 taxes                    8,878      (2,508)     18,007     (14,006)
Provision for income
 taxes                      182         183         283         399
Net income (loss)        $8,696     $(2,691)    $17,724    $(14,405)
Net income (loss)
 per share             37 cents   (12 cents)   74 cents   (65 cents)
Weighted average
 common and dilutive
 equivalent shares
 outstanding         23,812,784  22,099,879  23,793,627  22,087,082

NOTE:  Other income includes $1.3 million income for the six months
ended March 30, 1996, and $2.7 million income for the three and six
months ended March 31, 1995, related to the completion of certain
milestones and release of the escrow holdback in connection with the
sale of the company's Tape Head business unit to Seagate Tape
Technology Inc. in December 1994.
-0-

                Condensed Consolidated Balance Sheets
                             (Unaudited)
           (In thousands, except share and par-value data)

                                                 March 30,   Sept. 30,
                                                   1996        1995
Current assets:
 Cash and equivalents                          $133,937    $ 48,236
 Accounts receivable, net                        46,605      36,571
 Inventories                                     30,569      32,727
 Prepaid expenses and other                       8,459      10,411
 Total current assets                           219,570     127,945

Property, plant and equipment, at cost          271,138     252,953
Less:  accumulated depreciation                (151,931)   (148,636)
Property, plant and equipment, net              119,207     104,317
Other assets                                     17,605      14,555
Total assets                                   $356,382    $246,817

Liabilities and shareholders' investment:
 Current liabilities:
  Current portion of long-term debt            $  2,014    $ 12,004
  Bank notes payable                             45,710      54,371
  Accounts payable                               39,768      44,535
  Accrued payroll and benefits                   10,667       9,361
  Other current liabilities                      13,302      13,637
  Total current liabilities                     111,461     133,908
 Long-term debt, net                            117,150       3,254
 Other liabilities                                4,930       6,063
 Shareholders' investment:
  Common stock, 10 cents par value, authorized
   40 million shares, issued 23,006,966 shares
   and 22,619,205 shares at March 30, 1996,
   and Sept. 30, 1995, respectively               2,301       2,262
  Paid-in capital                               183,041     181,191
  Retained deficit                              (61,307)    (79,031)
 Treasury stock, at cost (116,995 shares as
  of March 30, 1996, and 96,603 as of
  Sept. 30, 1995)                                (1,194)       (830)
 Total shareholders' investment                 122,841     103,592
 Total liabilities and shareholders'
  investment                                   $356,382    $246,817

CONTACT: Applied Magnetics Corp., Goleta

Craig D. Crisman, 805/683-5353