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KOMAG REPORTS FIRST QUARTER 1993 RESULTS

 MILPITAS, Calif., April 26 /PRNewswire/ -- Komag Inc. (NASDAQ: KMAG), a leading supplier of thin-film media and thin-film heads for high-performance Winchester disk drives, today announced its first quarter financial results for fiscal 1993.
 For the first quarter ended April 4, 1993, Komag's net sales totaled $93.6 million, including $80.4 million and $13.2 million in media and recording head revenue, respectively. Net sales were 32 percent higher than the $71.1 million for the first quarter of 1992 and 3 percent lower than the $96.3 million recorded in the fourth quarter of 1992.
 Net income for the first quarter of 1993 was $7.6 million, or 35 cents per share, up 153 percent from $3.0 million, or 14 cents per share in the same quarter a year earlier. Media operations recorded net income of $12.2 million, while Dastek Inc., the company's thin-film head joint venture with Asahi Glass America Inc. posted a net loss of $7.6 million. Upon consolidation into Komag's financial statements, Dastek's net loss was reduced by recognition of Asahi's 40-percent minority interest. On a consolidated basis, net income for the first quarter of 1993 was up 74 percent from the $4.4 million, or 20 cents per share, recorded in the fourth quarter of 1992.
 "Our media operations produced units at record production rates and posted solid earnings for the first quarter," said Stephen C. Johnson, Komag Inc.'s president and chief executive officer. "Our domestic media production results reflected increased manufacturing efficiencies, a full quarter's operation from the company's eleventh sputtering line, and a high-end product positioning strategy that favored smaller- diameter and higher-capacity 1400 Oe disks," Johnson said.
 "As expected, our unconsolidated Japanese joint venture, Asahi Komag Co. Ltd. (AKCL), supplied a greater proportion of its disk output to the local Japanese market in the recently completed quarter when compared to the fourth quarter of 1992. As a direct result, Komag's sales of AKCL-produced disks to our U.S. customers were reduced from $12.7 million in the fourth quarter of 1992 to $4.3 million in the first quarter of 1993. This reduction, coupled with a normal 13-week first quarter versus a 14-week fourth quarter, contributed to the 6 percent sequential quarter-to-quarter decline in Komag's media sales," said Johnson.
 "We recently completed construction of our new 220,000 square foot media factory in Penang, Malaysia. This new plant will be the first volume supplier of advanced thin-film disks located outside the United States or Japan. Full production from our first Malaysian sputtering line should commence on schedule in mid-1993," Johnson said.
 In April various disk drive manufacturers, including several of the company's major customers, announced a faster-than-anticipated transition in demand to higher capacity disk drives that led to a weakening of demand and strong competitive pricing pressures in the low-end segments of the disk drive market. "Although our customer mix may change as a result of competitive actions among our customers, we remain capacity-constrained. We continue to benefit from our position as the leading supplier of high-end media to the disk drive industry. At the present time, we believe that our product positioning and wide customer base will allow us to utilize our media capacity effectively through this unsettled market period," Johnson said.
 "In line with our expectations, Dastek reported higher first quarter 1993 revenue and a lower net loss in comparison to the fourth quarter of 1992. However, Dastek's ability to grow its sales and reduce its operating losses could be adversely impacted by product order rate uncertainties due to the unsettled market conditions," said Johnson.
 "Reflecting a major transition in its product line, Dastek's shipments of microslider and nanoslider products exceeded older generation minisliders for the first time during the recently completed quarter," said Johnson. "We are encouraged by our progress in the engineering and manufacturing operations at Dastek. The operating efficiency of Dastek's wafer fab increased significantly during the first quarter. Slider fab manufacturing has now been transferred to lower cost manufacturing sites in Malaysia and Korea, except for pilot line production which will remain in San Jose. Our R&D team, working closely with our joint development partner Hewlett-Packard, delivered engineering samples of magnetoresistive (MR) heads during the quarter. In spite of our first quarter progress, the rate of yield improvement and subsequent return to profitability at Dastek remain difficult to predict, particularly in light of product order rate uncertainties," Johnson said.
 Komag is the only independent volume supplier of thin-film disks and thin-film heads, two critical components used in today's advanced Winchester disk drives. Winchester disk drives are the primary storage device used by computers.
 Founded in 1983, Komag and its consolidated subsidiaries maintain 870,000 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 3,100 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.
 KOMAG INC.
 Consolidated Income Statements
 (Unaudited, in thousands, except per-share data)
 Three Months Ended
 April 4, 1993 March 29, 1992
 Net Sales $ 93,556 $ 71,118
 Cost of Sales 70,864 55,369
 Gross Profit 22,692 15,749
 Research & Development
 Expense 6,938 6,400
 Selling, General &
 Administrative 6,782 5,466
 Operating Profit 8,972 3,883
 Other Income (Expense) (680) 812
 Income Before Income Taxes,
 Minority Interest,
 Equity Income and
 Extraordinary Credit 8,292 4,695
 Provision for Income Taxes 4,975 2,280
 Minority Interest in Net Loss
 of Consolidated Subsidiaries (2,904) (525)
 Equity in Net Income of
 Unconsolidated Joint Venture 1,407 74
 Income Before Extraordinary Credit 7,628 3,014
 Net Income Per Share $ 0.35 $ 0.14
 Shares Used in Calculating
 Per Share Amounts 21,933 21,551
 Consolidated Balance Sheets
 (in thousands)
 April 4, 1993 Jan. 3, 1993
 (Unaudited) (See Note A)
 ASSETS
 Cash and Short-Term
 Investments $ 91,672 $ 89,343
 Net Accounts Receivable Trade 37,637 33,301
 Inventories 21,253 20,197
 Deposits and Other Current
 Assets 10,686 10,589
 Total Current Assets 161,248 153,430
 Investment in Unconsolidated
 Joint Venture 10,777 8,371
 Net Property, Plant & Equipment 203,883 192,051
 Deposits and Other Assets 1,985 1,997
 TOTAL ASSETS $377,893 $355,849
 LIABILITIES AND STOCKHOLDERS'
 EQUITY
 Accounts Payable Trade $ 25,145 $ 27,615
 Accrued Liabilities 18,297 19,155
 Long-Term Obligations -
 Current Portion 7,745 8,766
 Total Current Liabilities 51,187 55,536
 Long-Term Obligations 36,309 27,613
 Other Liabilities 7,016 7,379
 Minority Interest in
 Consolidated Subsidiaries 17,911 16,583
 Common Stock 216,671 219,597
 Note Receivable from
 Shareholder --- (11,031)
 Retained Earnings 45,797 38,169
 Foreign Currency Translation
 Adjustments 3,002 2,003
 TOTAL STOCKHOLDERS' EQUITY 265,470 248,738
 TOTAL LIABILITIES &
 STOCKHOLDERS' EQUITY $377,893 $355,849
 (A) The consolidated balance sheet at Jan. 3, 1993 has been derived from the audited financial statements.
 -0- 4/26/93
 /CONTACT: David H. Allen, T. Hunt Payne or William L. Potts Jr. of Komag, 408-946-2300/
 (KMAG)


CO: Komag Inc. ST: California IN: CPR SU: ERN

ML-TM -- SJ004 -- 0912 04/26/93 16:06 EDT
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Date:Apr 26, 1993
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