SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
(x) ANNUAL REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE ACT
OF 1934 (FEE REQUIRED)
For the fiscal year ended September 27, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE ACT
OF 1934 (NO FEE REQUIRED) For the transition period from _________________ to
____________ Commission file number_____________.
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
Applied Magnetics Corporation Employee Stock Purchase Plan (the "Plan")
B. Name of issuer of the securities held pursuant to the Plan and the
address of its principal executive office:
Applied Magnetics Corporation
75 Robin Hill Road
Goleta, California 93117
Financial Statements Page
-----
Report of Independent Public Accountants 3
Statements of Financial Condition -
September 27, 1997 and September 28, 1996 4
Statements of Changes in Plan Equity for the
years ended September 27, 1997, September 28, 1996 and
September 30, 1995 5
Notes to Financial Statements, September 27, 1997 6
Schedules are not submitted because they are not applicable or not
required or because the required information is included elsewhere in the
financial statements or notes thereto.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Committee has duly caused this annual report to be signed by the undersigned
hereunto duly authorized.
APPLIED MAGNETICS CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
Date: December 3, 1997 By: /s/ Mayellen Banister
Mayellen Banister
Committee Member
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Employee Stock Purchase Plan Committee of the
Applied Magnetics Corporation
Employee Stock Purchase Plan:
We have audited the accompanying statements of financial condition of the
APPLIED MAGNETICS CORPORATION EMPLOYEE STOCK PURCHASE PLAN (the "Plan") as of
September 27, 1997 and September 28, 1996, and the related statements of changes
in Plan equity for each of the three years in the period ended September 27,
1997. These financial statements are the responsibility of the Plan's
administrative committee. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial condition of the Plan as of
September 27, 1997 and September 28, 1996, and the changes in Plan equity for
each of the three years in the period ended September 27, 1997, in conformity
with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Los Angeles, California
December 3, 1997
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APPLIED MAGNETICS CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
STATEMENTS OF FINANCIAL CONDITION
As of
-----------------------------
September 27, September 28,
ASSETS 1997 1996
-----------------------------
Investments in common stock of
Applied Magnetics Corporation,
at market value (cost of $608,318
in 1997 and $612,440 in 1996) $1,804,622 $1,164,824
Cash 492 111
Contributions due from participants 25,179 20,500
---------- ----------
$1,830,293 $1,185,435
========== ==========
LIABILITIES AND PLAN EQUITY
Excess contributions from
Applied Magnetics Corporation
at market value (cost of $223,736
in 1997 and $206,465 in 1996) $ 830,320 $ 411,894
Plan equity 999,973 773,541
---------- ----------
$1,830,293 $1,185,435
========== ==========
The accompanying notes to financial statements are an integral part of these
statements.
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APPLIED MAGNETICS CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
STATEMENTS OF CHANGES IN PLAN EQUITY
For the Years Ended
-------------------------------------------
September 27, September 28, September 30,
1997 1996 1995
-------------------------------------------
Contributions from participants $ 249,308 $ 180,537 $ 154,541
Contributions from Applied
Magnetics Corporation, net
of forfeitures 220,763 68,371 5,903
Distributions to participants (813,758) (376,016) (397,887)
Net appreciation of investments 570,119 68,850 725,095
--------- --------- ---------
Increase (decrease) in plan equity 226,432 (58,258) 487,652
Plan equity, beginning of year 773,541 831,799 344,147
--------- --------- ---------
Plan equity, end of year $ 999,973 $ 773,541 $ 831,799
========= ========= =========
The accompanying notes to financial statements are an integral part of these
statements.
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APPLIED MAGNETICS CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
NOTES TO FINANCIAL STATEMENTS
September 27, 1997
Note 1. Description
The following description of the Applied Magnetics Corporation Employee
Stock Purchase Plan (The "Plan") provides only general information.
Participants should refer to the Plan agreement for a more complete description
of the Plan's provisions. The Plan was established by Applied Magnetics
Corporation (the "Company") on November 2, 1979, and is offered to employees of
Applied Magnetics Corporation and certain of its subsidiaries. The Plan is a
broad-based nonqualified Employee Stock Purchase Plan. The Plan is
administered by the Employee Stock Purchase Plan Committee (the "Committee")
consisting of one member of the Company's management appointed by the Board of
Directors of the Company. All expenses of the Plan are paid by the Company.
Expenses paid by the Company for the years ended September 27, 1997,
September 28, 1996 and September 30, 1995 were immaterial.
Participation in the Plan is entirely voluntary and open to each
full-time employee 18 years of age or older who has been with the Company or
participating subsidiaries for at least six full months of continuous
employment. Shares purchased under the Plan are limited to the Company's
common stock and accordingly the participant's only option is to purchase the
Company's common stock. Each participating employee must contribute a minimum
of 2 percent of his or her compensation and may also make voluntary
contributions up to a maximum of an additional 4 percent of their compensation
depending on the length of service with the Company.
The Company contributes shares of its common stock and/or cash equal in
aggregate value to one-third of the value of the common stock purchased by the
participants' total contributions. At September 27, 1997, the Company had
contributed shares in excess of the amount required by the Plan. The aggregate
value of these excess contributions, stated at fair value as of September 27,
1997 and September 28, 1996 is reflected as a liability under the caption
"Excess contributions from Applied Magnetics Corporation" in the accompanying
statements of Financial Condition." The excess contributions can be used by the
Company to offset future contributions required by the Plan. The Plan allows the
Company to withdraw the excess contributions from the Plan.
Note 2. Summary of Accounting Policies
BASIS OF ACCOUNTING:
The accompanying financial statements are prepared on the accrual
basis of accounting.
RECLASSIFICATIONS:
Certain previously reported amounts have been reclassified to conform with
current year presentation.
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USE OF ESTIMATES:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of changes in Plan
equity during the reporting period. Actual results could differ from those
estimates.
PAYMENT OF BENEFITS:
Benefits are recorded when paid.
Note 3. Plan Vesting
All voluntary contributions are 100 percent vested and non-forfeitable.
Company contributions will become 100 percent vested and non-forfeitable upon
the earliest occurrence of: (1) the termination of the Plan, (2) the termination
of the participant's employment with the Company on or after the attainment of
age 65, (3) the termination of the participant's employment with the Company by
reason of the participant's death, total disability or layoff (as defined),
(4) the termination of the participant's employment with the Company on or
after the attainment of age 55 and the completion of a minimum of 15 years of
service with the Company, and when the age and years of service sum to 75 years
or greater, or (5) the February 1, immediately following the expiration of two
years from the end of the Plan year in which the contributions were made.
At September 27, 1997, unvested Company contributions had a market value of
$523,698, which was included in "Investments in common stock of Applied
Magnetics Corporation" in the accompanying Statements of Financial Condition.
Amounts shown as "Contributions from Applied Magnetics Corporation, net" in
the accompanying Statements of Changes in Plan Equity are net of forfeitures.
Forfeitures offset against contributions from the Company for fiscal years 1997,
1996 and 1995 were $37,035, $12,988 and $52,068, respectively. There were no
material forfeitures outstanding as of September 27, 1997, and
September 28, 1996.
Note 4. Investments
Robertson Stephens & Company has been retained by the Committee to act as
custodian over the assets of the Plan. All investments must be made in the
Company's common stock and consisted of 53,970 and 65,165 shares at
September 27, 1997 and September 28, 1996, respectively. The Company's common
stock is valued at its quoted market price. The closing sales prices of the
Company's common stock on the New York Stock Exchange on September 27, 1997 and
December 3, 1997, were $33.4375 and $15.2500, respectively.
Note 5. Participant Withdrawals and Distributions
Withdrawals and distributions allocated to accounts of participants who
have withdrawn from participation in the equity of the Plan as of
September 27, 1997, but have not received such amounts until October, 1997 are
not reflected in liabilities and are included in "Plan equity" at
September 27, 1997. Withdrawals and distributions included in "Plan equity" as
of September 27, 1997, and September 28, 1996 are as follows:
1997 1996
------ ------
Payable to withdrawing participants $15,047 $ 4,755
======= =======
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Note 6. Net Appreciation/(Depreciation) of Investments
Net appreciation/(depreciation) included in investments for the years
ended September 27, 1997, September 28, 1996 and September 30, 1995 were as
follows:
1997 1996 1995
---- ---- ----
Balance, beginning of year $ 552,384 $ 590,446 $ (355,473)
Net appreciation/(depreciation 643,920 (38,062) 945,939
---------- ---------- ----------
Balance, end of year $1,196,304 $ 552,384 $ 590,466
========== ========== ==========
The amounts shown as "Net appreciation of investments" in the accompanying
Statements of Changes in Plan Equity, are primarily comprised of the difference
between the net appreciation/(depreciation) of investments and the net
appreciation/(depreciation) in the excess contributions from Applied Magnetics.
Note 7. Plan Termination
Although it has not expressed any intention to do so, the Company has the
right, under the terms of the Plan document to amend or terminate the Plan at
anytime. In event of Plan termination, participants will become fully vested
in all Plan assets, excluding excess contributions at that date which will be
remitted back to the Company.
Note 8. Federal Income Tax Status
The Company has received a private letter ruling from the Internal Revenue
Service with regard to the Federal income tax consequences of the Plan. The
Plan is a broad-based non-qualified Employee Stock Purchase Plan. In
accordance with this letter and Section 83 of the Internal Revenue Code of 1986,
as amended, Company contributions generally become taxable to participants on
the date they vest in an amount equal to the market value of the stock which
vests on such date, unless certain elections are made.
There is no taxable income associated with the Plan, and no income taxes
have been provided for in the accompanying financial statements since the income
taxes are the obligation of the participants.
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