<PAGE>
Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________
(X) Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarterly Period Ended December 31, 1993
( ) Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period from to
Commission File No. 1-6635
APPLIED MAGNETICS CORPORATION
(Exact name of registrant as specified in its charter)
A Delaware Corporation 95-1950506
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
75 Robin Hill Road, Goleta, California 93117
(Address of principal executive offices)
Registrant's telephone number, including area code: (805) 683-5353
(No Change)
________________________________________________________________________________
Former name, former address and former fiscal year, if changed since last report
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past ninety days. Yes X No
- -
Indicate the number of shares outstanding of each of the issuer's classes of
common stock: 22,164,626 $.10 par value common stock as of January 24, 1994.
1
<PAGE>
PART I. FINANCIAL INFORMATION
- ------------------------------
Item 1. Financial Statements
--------------------
The unaudited condensed consolidated financial statements included herein have
been prepared by Applied Magnetics Corporation and its subsidiaries (the
"Company") pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations. The unaudited condensed consolidated financial statements and
selected notes included herein should be read in conjunction with the audited
consolidated financial statements and the notes thereto included in the
Company's Annual Report on Form 10-K for the fiscal year ended September 30,
1993.
The following unaudited condensed consolidated financial statements reflect all
adjustments, consisting only of normal and recurring adjustments, which, in the
opinion of management, are necessary to present fairly the consolidated
financial position and results of operations for the periods presented.
2
<PAGE>
APPLIED MAGNETICS CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations - Unaudited
(In thousands except share and per share data)
<TABLE>
<CAPTION>
For the three months
ended December 31,
--------------------
1993 1992
---- ----
<S> <C> <C>
Net sales $ 71,244 $ 74,556
Cost of sales 67,497 60,536
---------- ----------
Gross profit 3,747 14,020
---------- ----------
Research and development expenses, net 4,104 3,798
Selling, general and administrative expenses 5,290 6,391
---------- ----------
Total operating expenses 9,394 10,189
---------- ----------
Income (Loss) from operations (5,647) 3,831
Interest income 284 113
Interest expense (996) (1,626)
Other income (expense), net 318 348
---------- ----------
Income (Loss) before taxes (6,041) 2,666
Provision for income taxes 204 533
---------- ----------
Net income (loss) $ (6,245) $ 2,133
========== ==========
Net income (loss) per share:
Primary ($0.28) $0.13
========== ==========
Fully diluted ($0.28) $0.12
========== ==========
Weighted average common and dilutive equivalent
shares outstanding:
Primary 22,079,035 17,002,625
========== ==========
Fully diluted 22,079,035 17,472,230
========== ==========
</TABLE>
The accompanying Selected Notes to Condensed Consolidated Financial Statements
are an integral part of these consolidated statements.
3
<PAGE>
APPLIED MAGNETICS CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets - Unaudited
(In thousands except share and par value data)
ASSETS
December 31, September 30,
----------- ------------
1993 1993
---- ----
Current Assets:
Cash and equivalents $ 41,884 $ 49,371
Accounts receivable, net 37,299 37,873
Inventories 37,818 42,426
Receivable due from Hitachi Metals, Ltd. 7,366 5,170
Prepaid expenses and other 7,726 7,528
----------- -----------
132,093 142,368
----------- -----------
Property, plant and equipment, at cost 282,998 271,432
Less-accumulated depreciation (154,721) (152,024)
----------- -----------
128,277 119,408
----------- -----------
Notes receivable, net 9,307 9,630
Other assets 7,123 7,110
----------- -----------
$ 276,800 $ 278,516
=========== ===========
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities:
Current portion of long-term debt $ 19,772 $ 10,435
Notes payable 42,041 35,198
Accounts payable 29,034 28,287
Accrued payroll and benefits 8,517 12,145
Unearned revenue 1,692 3,383
Other current liabilities 20,927 19,000
----------- -----------
121,983 108,448
----------- -----------
Long-term debt, net 2,310 11,550
----------- -----------
Other liabilities 7,562 7,423
----------- -----------
Shareholders' Investment:
Preferred stock, $.10 par value, authorized
5,000,000 shares, none issued and outstanding - -
Common stock, $.10 par value, authorized
40,000,000 shares, issued 22,159,996 as
of December 31, 1993, and 22,153,742 as of
September 30, 1993 2,216 2,215
Paid-in capital 178,552 178,533
Retained deficit (34,354) (28,109)
----------- -----------
146,414 152,639
Treasury stock, at cost (79,328 shares as of
December 31, 1993, and September 30, 1993) (736) (736)
Unearned restricted stock compensation (733) (808)
----------- -----------
144,945 151,095
----------- -----------
$ 276,800 $ 278,516
=========== ===========
[/TABLE]
The accompanying Selected Notes to Condensed Consolidated Financial
Statements are an integral part of these consolidated balance sheets.
4
<PAGE>
APPLIED MAGNETICS CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows - Unaudited
(In thousands)
<TABLE>
<CAPTION>
For the three months ended
December 31,
--------------------------
1993 1992
---- ----
<S> <C> <C>
Cash Flows from Operating Activities:
Net income (loss) $ (6,245) $ 2,133
Adjustments to derive cash flows:
Depreciation and amortization 5,229 6,474
Provision for receivable allowances and related
costs 100 150
Deferred tax provision - 393
Amortization of unearned restricted stock
compensation 75 315
Other assets (64) (969)
Other liabilities 139 1,481
Net assets of discontinued operations - (142)
Other, net 2,050 (100)
Working capital changes affecting
cash flows from operations:
License fee receivable - 9,000
Receivable from broker - 7,070
Accounts receivable 474 (3,411)
Receivable due from Hitachi Metals, Ltd. (2,196) -
Inventories 4,608 (1,284)
Prepaid expenses and other (339) (753)
Accounts payable 747 1,989
Accrued payroll and benefits (3,628) (1,559)
Unearned revenue (1,691) 7,000
Other current liabilities 574 (1,350)
----------- -----------
Net cash flows (used in) provided by operating
activities (167) 26,437
----------- -----------
Cash Flows from Investing Activities:
Additions to property, plant and equipment (14,336) (19,781)
Notes receivable 464 -
----------- -----------
Net cash flows used in investing activities (13,872) (19,781)
----------- -----------
Cash Flows from Financing Actitivies:
Proceeds from debt 55,185 35,693
Repayment of debt (48,714) (29,815)
Proceeds from stock options exercised 20 1,384
----------- -----------
Net cash flows provided by financing activities 6,491 7,262
----------- -----------
Effect of Exchange Rate Changes on Cash and
Equivalents 61 (232)
----------- -----------
Net (Decrease) Increase in Cash and Equivalents (7,487) 13,686
----------- -----------
Cash and Equivalents at Beginning of Period 49,371 11,473
----------- -----------
Cash and Equivalents at End of Period $ 41,884 $ 25,159
=========== ===========
</TABLE>
The accompanying Selected Notes to Condensed Consolidated Financial Statements
are an integral part of these consolidated statements.
5
<PAGE>
APPLIED MAGNETICS CORPORATION AND SUBSIDIARIES
Selected Notes to Condensed Consolidated Financial Statements
Unaudited
Note A: Inventories
- --------------------
Inventories are stated at the lower of cost (first-in, first-out) or market.
Inventory costs consist of purchased materials and services, direct production
labor and manufacturing overhead expense. The components of inventory are as
follows (in thousands):
<TABLE>
<CAPTION>
December 31 September 30
----------- ------------
1993 1993
----------- ------------
<S> <C> <C>
Purchased parts and
manufacturing supplies $12,466 $13,810
Work in process 22,711 23,541
Finished goods 2,641 5,075
------- -------
$37,818 $42,426
======= =======
</TABLE>
Note B: Capitalized Interest
- -----------------------------
The cost of buildings and equipment includes interest expense incurred prior to
the time such assets are placed in service. Interest expense is net of interest
capitalized of $147,000 and $253,000 for the three months ended December 31,
1993 and 1992, respectively.
Note C: License and Technology Development Agreements
- ------------------------------------------------------
In September 1992, the Company entered into a license and technology agreement
(the "HML Agreement") with Hitachi Metals, Ltd. ("HML") to further the
development and marketing of advanced magnetic recording disk head technologies
and products. Under the HML Agreement, license fee income of $10.0 million was
recognized in 1992 and in October, 1992, $9.0 million, net of $1.0 million in
foreign withholding taxes, was received. In addition, HML agreed to pay the
Company an additional $25.0 million over the following two years and to supply
additional technical resources in exchange for certain licenses covering
existing technology and future technology developed by the companies under the
joint development activities contemplated by the HML Agreement. The Company
will recognize the $25.0 million as offsets to costs incurred over the
performance schedule period of the HML Agreement based upon the percentage
relationship between actual development costs incurred and the total estimated
development costs. In December 1992, the Company received a $10.0 million
payment from HML associated with the inductive thin-film program in accordance
with the HML
6
<PAGE>
Agreement. The Company recognized $6.6 million for the year ended 1993, and
$1.7 million for the first quarter ended December 31, 1993, as offsets against
development costs incurred during these periods. The remaining $1.7 million has
been recorded as Unearned Revenue on the unaudited Condensed Consolidated
Balance Sheet at December 31, 1993, and will be recognized during the second
quarter of fiscal 1994 as an offset to costs as they are incurred. Additional
payments in an aggregate of $15.0 million are to be paid to the Company in
connection with magnetoresistive ("MR") thin-film development efforts under this
program. Management believes that the development activities required for
payment of the remaining $15.0 million under the HML Agreement will be completed
by September 1994 pursuant to the performance schedule. The Company recognized,
as offsets against costs incurred for MR thin-film development efforts under the
HML Agreement, $5.2 million for the year ended 1993, and $2.2 million for the
first quarter ended December 31, 1993. The total amount of $7.4 million is
recorded as a Receivable due from Hitachi Metals, Ltd. on the unaudited
Condensed Balance Sheet at December 31, 1993.
During fiscal 1993, the Company entered into additional technology development
agreements (the "Development Agreements") with four major domestic disk drive
companies relating to the development of MR disk head products. Under these
Development Agreements, funding of up to an aggregate of $4.0 million is to be
paid to the Company. Approximately $2.6 million of this funding was recognized
as an offset to development costs in accordance with the contractual billing
schedules, of which $2.1 million and $0.5 million were recognized as offsets in
fiscal year 1993, and in the first quarter of fiscal 1994, respectively. This
completes the cost offset portion of the Development Agreements. An aggregate
of $1.4 million, which is based on MR disk head deliveries, will be recognized
as sales when the products are shipped in subsequent periods.
Note D: Fully Diluted Earnings Per Share
- -----------------------------------------
Fully diluted earnings per common share for the three months ended December 31,
1992, assumes conversion of a convertible term note, issued December 1992, and
elimination of the related interest expense, net of income taxes.
Note E: Restructuring Reserve
- ------------------------------
During the three months ended December 31, 1993, costs of approximately $0.5
million were charged to the 1993 restructuring charge related to further
consolidation of manufacturing resources.
7
<PAGE>
Item 2: Management's Discussion and Analysis of Financial Condition and Results
- --------------------------------------------------------------------------------
of Operations
-------------
In September, 1993, the Company announced a restructuring charge of
approximately $50 million, which was in response to significant order
cancellations and reschedules, anticipated product life cycle changes and
related product and technology transitions, and a loss for the fiscal year ended
September 30, 1993. It also announced expected operating losses during the first
half of fiscal 1994.
During the first, and continuing into the second, quarter of fiscal 1994, the
Company began volume production shipments for a number of new disk drive
programs, some of which utilize thin-film nanoslider (50%) products. The
Company is also attempting to qualify on other new drive programs which would
use thin-film microslider (70%) or nanoslider disk heads. These actions are
consistent with the Company's efforts to identify and pursue those high
performance drive programs that it believes will result in orders for volume
shipments of adequately priced thin-film disk heads.
The Company anticipates intense competition on these and other new programs. In
addition, the Company has, in the past, experienced difficulties in consistently
achieving "design-in" positions in connection with certain new drive programs
and, in some cases, its products have not achieved the required technical,
performance or pricing objectives. Moreover, successful execution of orders
obtained by the Company may be affected by quality, manufacturing or production
yield problems.
Accordingly, there can be no assurance that the Company will successfully obtain
design-in positions on a sufficient number of new disk drive programs that it is
currently pursuing or that it expects to pursue, or that, having achieved a
design-in position, the Company's execution of customer orders will not be
affected by quality, manufacturing or production problems. If the Company for
any reason were unable to achieve design-in positions on these programs or if,
having achieved design-ins, it is unable to successfully perform, the Company's
operating results could be adversely affected and the operating losses expected
during the first half of 1994 could continue beyond the second quarter.
Moreover, the disk head industry is intensively competitive and largely
dependent on sales to a limited number of disk drive manufacturers and systems
companies. The market for the Company's disk head products could be adversely
affected if one or more disk drive manufacturers were to experience severe
financial difficulties, enter into a transaction or combination in which it
becomes vertically integrated with a company that has disk head manufacturing
capability or undergo a significant loss of market share as a result of the
technological innovations of their competitors or various other factors. Maxtor
Corporation ("Maxtor"), which accounted for 28% of the Company's sales in fiscal
year 1993, has recently announced the sale of a significant equity interest to
Hyundai
8
<PAGE>
in order for Maxtor to obtain sufficient capital resources to successfully
pursue certain disk drive programs. This transaction may impose certain
restrictions on the manner in which Maxtor conducts its business.
A significant reduction in orders from, or loss of a customer, which could occur
for any of these circumstances or a wide variety of other reasons, could have a
material adverse effect on the Company's operations and financial condition,
including collection of accounts receivable and realization of inventories
relating to that customer.
The Company conducts manufacturing operations and has significant production
facilities in the Republic of Korea. Recent developments concerning published
reports that the Democratic Peoples Republic of Korea may be developing nuclear
weapons capabilities have been accompanied by expressions of concern and tension
by and among the governments of the United States, the Peoples Republic of
China, the Republic of Korea and the Democratic Peoples Republic of Korea
relating to this subject. Should diplomatic efforts to resolve these matters
fail and if actual or threatened confrontations involving military action or
trade restraints develop, the Company's future operating results could be
adversely affected.
Net Sales.
The following table sets forth for the periods indicated, net sales by product
line.
<TABLE>
<CAPTION>
For the three months ended
--------------------------------------------
December 31, September 30, December 31,
1993 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
Thin-film disk head products
Net sales $32,520 $39,139 $24,307
Percentage of total 45.6% 50.8% 32.6%
Ferrite disk head products
Net sales $34,721 $34,247 $44,999
Percentage of total 48.8% 44.4% 60.4%
Tape head products
Net sales $ 4,003 $ 3,734 $ 5,250
Percentage of total 5.6% 4.8% 7.0%
Total net sales $71,244 $77,120 $74,556
</TABLE>
Total net sales in the first quarter of fiscal 1994 decreased 7.6% from the
fourth quarter of fiscal 1993 and 4.4% from the first quarter of fiscal 1993.
The decreases in total net sales, and in net sales of thin-film disk head
products, in the first quarter of fiscal 1994 from the fourth quarter of fiscal
1993 were primarily due to significant order cancellations and reschedules in
September, 1993. The lower sales also resulted from both a decline in market
demand for certain disk head products and lower average unit sales prices. The
increase in net sales of thin-film disk head products from the first quarter of
fiscal 1993 to the comparable quarter in fiscal 1994 was primarily due to
increased thin-film disk head shipments for a number of new disk drive programs.
9
<PAGE>
Net sales of ferrite disk head products in the first quarter of fiscal 1994 were
generally flat from the fourth quarter of fiscal 1993 and declined 22.7% from
the first quarter of fiscal 1993. The decline in sales of ferrite disk head
products from the first quarter of fiscal 1993, to the comparable period in
fiscal 1994, was primarily due to the maturing nature of this technology, unit
price erosion and increased supplies market of competitively priced thin-film
disk head products with equal or better performance characteristics than ferrite
disk head designs. The Company anticipates that the market demand for ferrite
disk heads will continue to decline due to the superior performance
characteristics and competitive sales prices of thin-film disk heads. Further,
the Company has determined that obtaining sales of thin-film disk head products
generally represents more attractive opportunities for revenue growth and profit
improvement than ferrite disk head business. Accordingly, the Company expects
that its sales of ferrite disk head products will decline significantly by the
end of fiscal, 1994.
GROSS PROFIT. The gross margin was 5.3% for the first quarter of fiscal 1994 as
compared to 7.3% and 18.8% for the fourth quarter and first quarters of fiscal
1993, respectively. The lower gross margin in the first quarter of fiscal 1994,
as compared to the fourth and first quarters of fiscal 1993, was due primarily
to lower sales volume, lower sales prices reflecting intense price competition
and declines in manufacturing efficiencies and productivity, associated with the
Company's transition towards newer products. The overall decline in gross
margin was also a result of lack of profitability in certain of the Company's
more mature product lines. The lower gross margin in the fourth quarter of
fiscal 1993, as compared to the first quarter of fiscal 1993 was due primarily
to order cancellations and reschedules that occurred in September 1993,
and the establishment of associated inventory reserves and intense price
competition.
RESEARCH AND DEVELOPMENT. Research and development expenses as a percent of net
sales were 5.8% for the first quarter of fiscal 1994 as compared to 6.9% and
5.1%, for the fourth and first quarters of fiscal 1993, respectively. The
decline as a percent of sales, was primarily due to the Company's recognition,
as an offset to research and development expenses, of funding received by it
under the HML Agreement. In connection with these funding arrangements, the
Company recognized an aggregate of $3.9 million, $3.4 million and $2.4 million
for the first quarter of fiscal 1994 and the fourth quarter and first quarter of
fiscal 1993 respectively, as offsets to development costs incurred during those
periods. The Company expects to recognize additional offsets to its research
and development expenses through fiscal 1994, in the amount of approximately
$9.3 million, in connection with the HML Agreement.
The Company also entered into separate Development Agreements in fiscal 1993
with each of four major disk drive manufacturers for the development of MR
thin-film disk head products for customer-specific disk drive applications. The
agreements, which generally are terminable on notice by the customers, provide
for the customers to furnish to the Company up to an aggregate of approximately
$4.0 million in funding. Approximately $2.6 million was recognized as an offset
to research and development costs, of which $0.5 million was
10
<PAGE>
recognized in each of the first quarter of fiscal 1994, and the fourth quarter
of fiscal 1993. Before giving effect to the amounts recognized as offsets to
development costs associated with the HML Agreement and these other development
agreements (which totaled $4.4 million, $3.9 million and $2.4 million in the
first quarter of fiscal 1994 and the fourth and first quarters of fiscal 1993,
respectively), research and development expenses amounted to 12.0% of net sales
for the first quarter of fiscal 1994 and for the fourth quarter of fiscal 1993,
and 8.3% of net sales for the first quarter of fiscal 1993.
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
expenses as a percent of net sales were 7.4% for the first quarter of fiscal
1994 as compared to 8.7% and 8.6% for the fourth quarter and the first quarter
of fiscal 1993, respectively. The decrease from the prior quarter and the same
quarter of the prior year is primarily due to the implementation of cost-control
measures.
INTEREST INCOME AND EXPENSE. Interest income in the first quarter of fiscal
1994 was generally flat as compared to the fourth quarter of fiscal 1993, and
increased $0.2 million from the first quarter of fiscal 1993, due primarily to
higher cash balances. Interest expense in the first quarter of fiscal 1994
increased $0.3 million from the fourth quarter of fiscal 1993 due primarily to
higher average debt outstanding. Interest expense in the first quarter of
fiscal 1994 decreased $0.6 million from the first quarter of fiscal 1993 as a
result of lower average debt outstanding.
PROVISION FOR INCOME TAXES. The Company's provision for income taxes in the
three months ended December 31, 1993 consisted primarily of foreign taxes due on
intercompany royalties paid to the Company during the quarter and a ratable
portion of minimum state taxes that are expected to be incurred during fiscal
year 1994.
Liquidity and Capital Resources
- -------------------------------
At December 31, 1993, the Company's cash and equivalents were $41.9 million as
compared to $49.4 million at September 30, 1993. During the first quarter of
fiscal 1994, the primary sources of cash were $6.5 million provided by financing
activities. Available cash flows during this quarter were primarily used for
capital expenditures of $14.3 million, primarily for MR and thin-film disk head
production capacities.
At December 31, 1993, total debt, including notes payable, amounted to $64.1
million, an increase of $6.9 million from the balance outstanding at September
30, 1993. At December 31, 1993, the Company had approximately $4.9 million
available under an unsecured export credit/banker's acceptance facility which
has no stated maturity but is callable on demand from a bank in Malaysia where
the Company has substantial manufacturing operations.
At December 31, 1993, the Company also had outstanding $10.0 million under a
11
<PAGE>
revolving credit facility with a commercial bank. The credit facility provides
for up to $10.0 million in aggregate commitments and is supported by a letter of
credit issued for the account of HML, subject to reimbursement by the Company.
This credit facility expires on March 15, 1994. At December 31, 1993 the
Company also had outstanding a $10.0 million note held by Conner Peripherals,
Inc. ("Conner), pursuant to a Note Purchase Agreement, which is secured by
accounts receivable arising from sales to Conner and by certain capital
equipment. The underlying loan, which matures in December 1994, is convertible,
at Conner's election at any time into shares of the Company's Common Stock at a
conversion price of $10.25 per share. Interest expense on the underlying loan
was prepaid at issuance, resulting in net proceeds to the Company of
approximately $8.6 million.
In fiscal 1994, the Company plans approximately $55 million in capital
expenditures relating primarily to its thin-film and MR disk head products and
technology. The Company believes that it will be able to fund its operations,
debt repayment obligations and capital expenditures from existing cash balances,
cash flow from operations and full utilization of its Malaysian Credit Facility
through fiscal 1994. However, if for any reason, including the factors and
circumstances described above, the Company is unable to increase its sales and
lower its costs in order to return to profitability during the second half of
fiscal 1994 there could be a significant adverse impact on liquidity. Also, the
Company's accounts receivable and inventory balances are heavily concentrated in
a small number of customers. If any large customer of the Company became unable
to pay its debts to the Company, liquidity would be adversely impacted.
Further, should all or any significant portion of the Malaysian Credit Facility
become unavailable for any reason, the Company would need to pursue alternative
financing sources. Moreover, the Company expects that additional sources of
capital will be needed to meet its capital expenditure requirements in future
years. There are no assurances that additional funds will be available for
these purposes or that the terms associated with such funds will be satisfactory
to the Company. If the Company is unable to obtain sufficient capital, it would
need to curtail capital and R&D expenditures which could adversely affect the
Company's future years' operations and competitive position.
12
<PAGE>
PART II. OTHER INFORMATION
- ---------------------------
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibits
Exhibit
Number Description
------- -----------
2 Plan of acquisition, reorganization, arrangement,
liquidation or succession. None.
4 Instruments defining the rights or security holders,
including indentures.
Rights Agreements, dated as of October 19, 1988,
between Applied Magnetics Corporation and First
Interstate Bank of California, as Rights Agent (1).
11 Statement re computation of per share information.
15 Letter re unaudited interim financial information. None
18 Letter re change in accounting principles. None
20 Report Furnished to security holders. None
23 Published report re matters submitted to vote of security
holders. None
25 Power of attorney. None
27 Financial Data Schedule. None
99 Additional exhibits. None
(1) Filed as an exhibit to the Company's Current Report on Form
8-K dated October 19, 1988, and incorporated herein by
reference.
(b) Reports on Form 8-K. The Company filed a report on Form 8-K dated
December 22, 1993 reporting, under Item 5 of such Form (a) the
Company's intentions to defend several lawsuit filed in the U.S.
District Court for the Central District of California alleging
violations by the Company and certain executive officers of the
federal securities laws, and (b) certain severance agreements between
the Company and a former executive officer and a former director, a
Retention Agreement between the Company and a current executive
officer and a cross License Agreement between the Company and
Hutchinson Technology, Inc.
13
<PAGE>
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
APPLIED MAGNETICS CORPORATION
Dated: February 11, 1994 /s/Kathryn E. Gehrke
-----------------------------
Kathryn E. Gehrke
Vice President, Treasurer and Chief
Financial Officer (Principal Financial
and Accounting Officer)
14
<PAGE>
Exhibit 11
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
(in thousands)
<TABLE>
<CAPTION>
For the three months
ended December 31
----------------------------
1993 1992
--------- ---------
<S> <C> <C>
Primary Earnings Per Share:
Net income (loss) $ (6,245) $ 2,133
========== =========
Weighted average common shares outstanding 22,079 16,562
Dilutive effect of stock options - 441
---------- ---------
Primary weighted average common and
common equivalent shares 22,079 17,003
========== =========
Primary earnings per share:
Net income (loss) $ (0.28) $ 0.13
========== =========
Fully Diluted Earnings Per Share:
Net income (loss) $ (6,245) $ 2,133
Interest expense, net of tax on convertible note - 42
---------- ---------
Net income (loss) $ (6,245) $ 2,175
========== =========
Weighted average common shares outstanding 22,079 16,562
Dilutive effect of stock options - 585
Dilutive effect of convertible note - 325
---------- ---------
Fully diluted weighted average and
common equivalent shares 22,079 17,472
========== =========
Fully diluted earnings per share:
Net income (loss) $ (0.28) $ 0.12
========== =========
</TABLE>
15
