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 MILPITAS, Calif., March 17 /PRNewswire/ -- Komag Inc. (NASDAQ: KMAG) a leading supplier of thin-film components for high- performance Winchester disk drives, today announced audited financial results for its 1991 fourth quarter and fiscal year ended Dec. 29, 1991. The company had previously announced on Feb. 27, 1992 preliminary unaudited earnings for the same periods.
 There were no changes between the audited results announced today and the earnings contained in the company's Feb. 27, 1992 press release. The audited financial results for 1991 and prior years have been restated to account for the Dec. 20, 1991 merger of Komag and Dastek Inc., a privately held manufacturer of thin-film recording heads.
 For the fourth quarter ended Dec. 29, 1991, net sales totaled $72.3 million, including $60.9 million in thin-film media revenue and $11.4 million in thin-film head revenue. The combined net sales for the comparable fourth quarter of 1990 were $53.9 million. For the 1991 fiscal year net sales totaled $279.2 million, including $228.2 million in thin film media revenue and $51.0 million in thin- film head revenue. The combined net sales for the 1990 fiscal year were $179.9 million.
 Income before extraordinary credit for the fourth quarter of 1991 was $0.9 million, or $0.04 per share based on 21.0 million shares. The fourth quarter results included income of $6.5 million at Komag, a loss of $3.5 million at Dastek, and a one-time charge of $2.1 million for the costs related to the merger. Also included in these results were additional reserves of $0.7 million for thin-film head inventory and $0.9 million for equipment related to a discontinued process development effort in the thin-film media business. Income before extraordinary credit for the fourth quarter of 1990 on a restated basis including the financial results of Dastek was $5.7 million, or $0.32 per share based on 18.1 million shares.
 Income before extraordinary credit for the 1991 fiscal year totaled $15.1 million, or $0.74 per share based on 20.5 million shares. This result included write-offs of $8.4 million at Dastek, primarily for the establishment of reserves against inventories and accounts receivable as well as the one-time charge of $2.1 million for the merger costs. These merger costs included various professional fees and the expense associated with the termination of a contractual right held by a third party. Income before extraordinary credit for the 1990 fiscal year on a restated basis including the financial results of Dastek was $12.9 million, or $0.74 per share based on 17.5 million shares.
 Komag's media operations achieved record sales and profits in 1991. Net sales of $228.2 million for 1991 represented a 52 percent increase over net sales of $149.9 million in 1990. Income before extraordinary credit for 1991, excluding the one-time merger costs, totaled $27.3 million and rose 104 percent over 1990. Eliminating the shares associated with the Dastek merger and excluding the one-time merger costs, the pro forma income before extraordinary credit was $1.54 per share on 17.8 million shares.
 "Komag's balance sheet remains in excellent condition and should provide the financial strength to grow both our thin-film media and thin-film head operations," commented Stephen C. Johnson, Komag's president and chief executive officer. "Our combined operations had $91 million in cash and short-term investments at year end and in February our new thin-film head joint venture received a substantial equity commitment from our joint venture partner. Our U.S. media operations continue to generate strong operating cash flows. In fact, operating cash flows in our disk business exceeded capital expenditures in 1991 for the first time in our corporate history. In addition, we recently signed two multi-year bank lines of credit totalling $40 million," noted Johnson.
 As recently announced, Komag completed the formation of a thin- film head joint venture with Asahi Glass America Inc., a subsidiary of Asahi Glass Co. Ltd. of Japan. At the closing on Feb. 28, 1992, Komag contributed Dastek and its related thin-film head development program to the joint venture in exchange for a 60 percent economic interest. At the same time, Asahi contributed nearly $60 million in equity capital to the joint venture in exchange for a 40 percent economic interest in the joint venture. This contribution consisted of $36 million in cash and two discounted notes with principal and accrued interest payable in two installments of $12 million each on Dec. 31, 1992 and 1993. Komag will fully consolidate the operating results of the joint venture, giving appropriate recognition to Asahi's minority interest in reporting periods after the closing date.
 "Our long-term goal is to be the leading manufacturer of both thin-film media and thin-film heads for high-performance, high- capacity Winchester disk drives. With glide heights approaching two- millionths of an inch, the interaction between the disk media and the recording head is pivotal to the performance of today's, and more importantly tomorrow's, disk drives. As the only company currently supplying both of these critical components to the merchant market, we are uniquely positioned to use our advanced knowledge in materials science and our manufacturing capabilities to deliver value-added products to our customers," stated Johnson.
 The products of Komag and Dastek address the fast growing high- capacity, high-performance segment of the Winchester disk drive market. Winchester disk drives are widely used in a broad range of computer applications from mainframes to portable computers. Komag is the leading supplier of media to this market segment and manufactures the highest density disks commercially available for 5 1/4-, 3 1/2-, and 2 1/2-inch form factors. Dastek is one of the three largest non- captive thin-film head suppliers to the merchant market.
 Founded in 1983, Komag and its two consolidated subsidiaries (Komag Material Technology Inc. and Dastek Inc.) maintain 610,000 square feet of manufacturing and administrative space in California and Malaysia. Komag also operates a technical support facility in Singapore. The company and its consolidated subsidiaries employ approximately 2,600 people. Komag also manufactures and sells thin- film disk products through its unconsolidated joint venture, Asahi Komag Co. Ltd., which is among the top three media producers in Japan. The company is traded on the NASDAQ over-the-counter market under the symbol KMAG.
 Consolidated Statements of Operations
 (in thousands, except per share data)
 (Unaudited) (Audited)
 Three Months Ended 12 Months Ended
 Dec. 29, Dec. 30, Dec. 29, Dec. 30,
 1991 1990 1991 1990
 Net sales $72,347 $53,894 $279,194 $179,921
 Cost of Sales 56,322 38,337 211,009 136,996
 Gross Profit 16,025 15,557 68,185 42,925
 Research & Development
 Expense 5,462 3,858 18,028 12,603
 Selling, General &
 Administrative 4,702 4,278 20,571 14,135
 Merger Costs 2,111 -- 2,111 --
 Operating Profit 3,750 7,421 27,475 16,187
 Other Income 183 654 1,132 1,535
 Income Before Income
 Taxes, Minority
 Interest, Equity
 Income and
 Extraordinary Credit 3,933 8,075 28,607 17,722
 Provision for Income
 Taxes 3,262 2,765 14,581 6,741
 Minority Interest in
 Net Income (Loss)
 of Consolidated
 Subsidiary 298 59 1,025 (882)
 Equity in Net Income
 of Unconsolidated
 Joint Venture 520 460 2,070 1,086
 Income Before
 Extraordinary Credit 893 5,711 15,071 12,949
 Extraordinary Credit
 Resulting from
 Utilization of Net
 Operating Loss Carryforward 7 -- 288 371
 Net Income $900 $5,711 $15,359 $13,320
 Income Per Share:
 Income Before
 Extraordinary Credit $0.04 $0.32 $0.74 $0.74
 Extraordinary Credit -- -- 0.01 0.02
 Net Income $0.04 $0.32 $0.75 $0.76
 Shares Used in
 Calculating Per
 Share Amounts 21,015 18,062 20,463 17,480
 Consolidated Balance Sheets
 (in thousands)
 Dec. 29, 1991 Dec. 30, 1990
 (Audited) (Audited)
 Cash and Short-Term
 Investments $91,014 $46,626
 Net Accounts Receivable
 Trade 27,759 27,032
 Inventories 21,991 16,225
 Deposits and Other
 Current Assets 8,696 6,442
 Total Current Assets 149,460 96,325
 Investment in
 Unconsolidated Joint
 Venture 4,665 1,876
 Net Property, Plant &
 Equipment 120,904 90,690
 Deposits and Other Assets 1,950 2,219
 Total Assets $276,979 $191,110
 Liabilities and Stockholders' Equity
 Note Payable $-- $1,000
 Accounts Payable Trade 25,190 13,644
 Accrued Liabilities 16,060 9,234
 Long-Term Obligations --
 Current Portion 10,402 9,297
 Total Current Liabilities 51,652 33,175
 Long-Term Obligations 16,516 25,057
 Other Liabilities 4,565 2,987
 Minority Interest in
 Consolidated Subsidiary 2,169 1,144
 Common Stock 179,316 122,543
 Retained Earnings 21,276 5,414
 Foreign Currency
 Translation Adjustments 1,485 790
 Total Stockholders' Equity 202,077 128,747
 Total Liabilities &
 Stockholders' Equity $276,979 $191,110
 -0- 3/17/92
 /CONTACT: David H. Allen, William L. Potts, Jr., or T. Hunt Payne, 408-946-2300 all of Komag; or John Trifari of John Trifari Public Relations, 415-349-9812, for Komag/
 (KMAG) CO: Komag Inc. ST: California IN: CPR SU: ERN

RF-JL -- SF010 -- 8966 03/17/92 17:51 EST
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Date:Mar 17, 1992

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