Applied Magnetics Corp. announces unaudited third-quarter results.

GOLETA, Calif.--(BUSINESS WIRE)--July 19, 1995--Applied Magnetics Corp. (NYSE:APM) Wednesday announced operating results for its third quarter ended June 30, 1995.

Net sales for the third quarter were $79.9 million, compared with $64.9 million in the second quarter of fiscal 1995 and $70.3 million for the prior fiscal year's third quarter. Net income for the third quarter was $6.7 million (30 cents per share), which compares with a loss of $2.7 million (12 cents per share) in the second quarter of fiscal 1995.

The results for the third quarter of fiscal 1995 include $1.9 million of other income related to the completion of performance milestones pursuant to the company's agreement with Seagate Technology Inc. regarding the sale of the company's Tape Head operations to Seagate in December 1994.

The results for the prior fiscal year's third quarter reflected a loss of $16.5 million, or 75 cents per share, which included the benefit of $2.7 million of costs offset from a technology license and development agreement with Hitachi Metals Ltd., which was concluded in fiscal 1994.

Thin-film disk-head sales increased approximately 24 percent to $71.9 million for the third quarter of fiscal 1995, as compared with $57.9 million in the second quarter of fiscal 1995, while unit shipments increased approximately 6 percent. The change in mix of shipments between head assemblies and head stack assemblies accounted for the revenue-vs.-unit-growth variance.

Ferrite disk-head sales were $5.8 million in the third quarter of fiscal 1995, up 29 percent from the second quarter of fiscal 1995. Fiscal 1995 ferrite revenue is significantly lower than the prior fiscal year as the company continues to focus on thin-film production. Ferrite disk-head sales were $32.5 million in the prior year's third fiscal quarter.

Sales of tape-head goods and services for the third quarter of fiscal 1995 were $2.2 million, as compared with $5.3 million in the prior year's third fiscal quarter. The company continues to sell these products and services to Seagate, pursuant to certain ongoing contractual arrangements relating to the sale of its Tape Head operations in December.

Craig Crisman, president and chief executive officer, stated: ``The company is meeting the turnaround plan established at the beginning of the fiscal year. We continue to make significant progress with the production process and production ramp during fiscal 1995. Our liquidity has substantially improved, as reflected by cash and equivalents of $37.1 million at the end of the third quarter.''

Applied Magnetics, 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      Nine months ended
                                 June 30,                June 30,
                             1995        1994        1995        1994
Net sales                 $79,860    $ 70,289    $200,152    $211,367
Gross profit (loss)        16,406      (2,723)     20,735       1,974
Research and development
 expenses, net              8,612       7,953      23,679      18,747
Selling, general and
 administrative expenses    1,921       4,205       5,770      12,234
Total operating expenses,
 net                       10,533      12,158      29,449      30,981
Income (loss) from
 operations                 5,873     (14,881)     (8,714)    (29,007)
Interest expense, net        (929)     (1,116)     (2,340)     (2,491)
Other income (expense)      1,822        (293)      3,814          96
Income (loss) before
 taxes                      6,766     (16,290)     (7,240)    (31,402)
Provision for income taxes     45         215         444         723
Net income (loss)         $ 6,721    $(16,505)   $ (7,684)   $(32,125)
Net income (loss)
 per share               30 cents   (75 cents)  (35 cents)   $  (1.45)
Weighted average common
 and dilutive equivalent
 shares outstanding    22,304,211  22,081,043  22,089,460  22,082,451

(a)  Other income (expense) includes $1.9 million and $3.9 million
other income recognized as the company completed certain performance
milestones pursuant to the Seagate agreement, for the three months
and nine months ended June 30, 1995, respectively.

(b)  Certain prior-year and current-year G&A expense amounts have
been reclassified to cost of sales to conform to current-quarter
presentation.

(c)  In fiscal 1994, 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 $2.7 million and
$10.5 million for the three months and nine months ended June 30,
1994, respectively.
-0-

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

                                                June 30,    Sept. 30,
                                                  1995        1994
Current assets:
 Cash and equivalents                         $ 37,130    $ 20,761
 Accounts receivable, net                       40,069      18,720
 Inventories                                    36,170      31,520
 Prepaid expenses and other                     13,114       6,879
 Total current assets                          126,483      77,880
Property, plant and equipment, at cost         257,591     289,362
Less:  accumulated depreciation               (154,952)   (165,046)
Property, plant and equipment, net             102,639     124,316
Other assets                                    12,643      18,360
Total assets                                  $241,765    $220,556

Liabilities and shareholders' investment:
 Current liabilities:
  Current portion of long-term debt           $ 11,362    $ 20,412
  Bank notes payable                            54,741      46,062
  Accounts payable                              47,626      22,332
  Accrued payroll and benefits                   9,467       9,406
  Other current liabilities                     17,901      16,111
  Total current liabilities                    141,097     114,323
 Long-term debt, net                             2,254         677
 Other liabilities                               6,754       7,123
 Shareholders' investment:
  Common stock, 10 cents par value, authorized
   40 million shares, issued 22,199,495 as of
   June 30, 1995, and 22,161,460 as of
   Sept. 30, 1994                                2,220       2,216
  Paid-in capital                              178,733     178,481
  Retained deficit                             (88,463)    (80,779)
  Treasury stock, at cost (96,603 shares
   as of June 30, 1995, and 92,509 as of
   Sept. 30, 1994)                                (830)       (812)
  Unearned restricted stock compensation            --        (673)
  Total shareholders' investment                91,660      98,433
  Total liabilities and shareholders'
   investment                                 $241,765    $220,556

CONTACT: Applied Magnetics Corp., Goleta

Craig D. Crisman, 805/683-5353