KOMAG REPORTS FIRST QUARTER 1992 RESULTS
KOMAG REPORTS FIRST QUARTER 1992 RESULTS MILPITAS, Calif., April 20 /PRNewswire/ -- Komag Inc.
(NASDAQ: KMAG), a leading supplier of thin-film components for high- performance Winchester disk drives, today announced first quarter financial results for fiscal 1992. These financial results include the company's core thin-film media operations as well as the thin-film recording head operations of Dastek Inc.
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. Komag fully consolidates the operating results of this joint venture, giving appropriate recognition to Asahi's minority interst in reporting periods after the closing date. For the first quarter ended March 29, 1992, net sales totaled $71.1 million, including $58.9 million in thin-film media revenue and $12.2 million in thin-film head revenue. The combined net sales for the comparable first quarter of 1991 were $64.2 million. Net sales in the first quarter of 1992 were 2 percent lower than the $72.3 million recorded in the fourth quarter of 1991. Income before extraordinary credit for the first quarter of 1992 was $2.9 million, or $0.14 per share based on 21.6 million shares. Income before extraordinary credit for the first quarter of 1991, on a restated basis including the financial results of Dastek, was $7 million, or $0.38 per share based on 18.4 million shares. In comparison, income before extraordinary credit posted in the fourth quarter of 1991 was $0.9 million, or $0.04 per share based on 21 million shares. These fourth quarter results included a one-time charge of $2.1 million for costs associated with the Dastek merger. "The company's results in the first quarter reflect a continuation of a number of previously noted trends. Demand for Komag's 3.5- and 5.25-inch disk products remains very strong and our U.S. media facilities continue to operate at full capacity," noted Stephen C. Johnson, Komag's president and chief executive officer. "Due to continued low industry demand for smaller 2.5-inch media, product mix changes to larger-diameter disks and lower prices for 2.5-inch disk products offset continued improvement in our product yields and equipment utilizations, thus lowering the overall gross margin of our media operations. A larger-diameter product mix generates less aggregate revenue at the same approximate level of fixed costs as incurred when the company runs a smaller-diameter product mix. In addition, intense competition in the Japanese media market negatively impacted the operating results of Asahi Komag Co., Ltd. (AKCL), our unconsolidated media joint venture in Japan," stated Johnson. "To support demand for 3.5-inch media products, the company recently added a tenth sputtering line at our San Jose, Calif. disk plant. Commercial production commenced on this new line in April. We also started construction of a disk manufacturing plant in Malaysia in February. This facility, scheduled for operation in 1993, has been configured to hold up to six new production lines," commented Johnson. "During the past quarter, we began to implement improvements to Dastek's manufacturing process and product designs. The march quarter represented the first full quarter that the management and technical staffs at Komag and Dastek have worked together as a fully integrated team," commented Johnson. "Our joint engineering efforts have already produced marked improvement in product performance in our laboratories. Current product offerings incorporating these improvements as well as new product designs in both microsliders and nanosliders are progressing toward market introduction. Longer-term, we expect that our combined knowledge of both thin-film heads and disks, and more importantly the interaction between these components, will lead to superior product designs for our customers," Johnson continued. "Despite these improvements, we expect that Dastek will continue to underutilize its facilities and incur significant losses that will continue to have a material dilutive effect on Komag's 1992 consolidated earnings. Together with our new thin-film head joint venture partner, Asahi Glass America, we remain committed to turning Dastek into a larger, more efficient thin-film head manufacturer whose products will more effectively compete in the rapidly growing thin- film head market," stated Johnson. The company's thin-film products 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 5.25-inch and smaller form factors. In addition to thin-film disks, Komag manufacturers precision disk substrates and thin-film heads through its two consolidated joint venture subsidiaries, Komag Material Technology and Dastek, respectively. Dastek is one of the three largest suppliers of thin-film heads to the merchant market. Komag also operates a technical support facility in Singapore. Komag and its consolidated subsidiaries maintain 640,000 square feet of manufacturing and administrative space in California and Malaysia, and employ approximately 2,600 people. The company also manufactures and sells products through an unconsolidated joint venture, Asahi Komag Co., Ltd., which is among the top three media producers in Japan. The company was founded in 1983. KOMAG INC. Consolidated Statements of Operations (in thousands, except per share data) (Unaudited) Three Months Ended March 29, 1992 March 31, 1991 Net Sales $71,118 $64,170 Cost of Sales 55,369 44,774 Gross Profit 15,749 19,396 Research & Development Expense 6,400 3,515 Selling, General and Administrative 5,466 5,328 Operating Profit 3,883 10,553 Other Income (Expense) 812 (29) Income Before Income Taxes, Minority Interest, Equity Income and Extraordinary Credit 4,695 10,524 Provision for Income Taxes 2,361 3,709 Minority Interest in Net Income (Loss) of Consolidated Subsidiaries (525) 91 Equity in Net Income of Unconsolidated Joint Venture 74 255 Income Before Extraordinary Credit 2,933 6,979 Extraordinary Credit Resulting From Utilization of Net Operating Loss Carryforward 81 39 Net Income $3,014 $7,018 Income Per Share: Income Before Extraordinary Credit $0.14 $0.38 Extraordinary Credit -- -- Net Income $0.14 $0.38 Shares Used in Calculating Per Share Amounts 21,551 18,375 KOMAG INC. Consolidated Balance Sheets (in thousands) March 29, 1992 Dec. 29, 1991 (Unaudited) (Audited) ASSETS Cash and Short-Term Investments $104,705 $91,014 Net Accounts Receivable Trade 32,986 27,759 Inventories 19,314 21,991 Deposits and Other Current Assets 8,770 8,696 Total Current Assets 165,775 149,460 Investment in Unconsolidated Joint Venture 4,626 4,665 Net Property, Plant & Equipment 132,708 120,904 Deposits and Other Assets 2,100 1,950 TOTAL ASSETS $305,209 $276,979 LIABILITIES AND STOCKHOLDERS' EQUITY Accounts Payable Trade $19,037 $25,190 Accrued Liabilities 12,520 16,060 Long-Term Obligations -- Current Portion 10,192 10,402 Total Current Liabilities 41,749 51,652 Long-Term Obligations 14,144 16,516 Other Liabilities 5,377 4,565 Minority Interest in Consolidated Subsidiaries 20,692 2,169 Common Stock 220,212 179,316 Retained Earnings 24,290 21,276 Notes Receivable from Shareholders (22,619) -- Foreign Currency Translation Adjustments 1,364 1,485 TOTAL STOCKHOLDERS' EQUITY 223,247 202,077 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $305,209 $276,979 -0- 4/20/92 /CONTACT: David H. Allen, T. Hunt Payne, or William L. Potts Jr., 408-946-2300, all of Komag Inc.; or John Trifari of John Trifari Public Relations, 415-349-9812, for Komag Inc./ (KMAG) CO: Komag Inc. ST: California IN: CPR SU: ERN
MM-DG -- SJ002 -- 9841 04/20/92 07:59 EDT
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|Date:||Apr 20, 1992|
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