<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED JULY 2, 1995
COMMISSION FILE NUMBER 0-16852
KOMAG, INCORPORATED
(REGISTRANT)
INCORPORATED IN THE STATE OF DELAWARE
I.R.S. EMPLOYER IDENTIFICATION NUMBER 94-2914864
275 SOUTH HILLVIEW DRIVE, MILPITAS, CALIFORNIA 95035
TELEPHONE: (408) 946-2300
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 90 DAYS.
YES X NO
ON JULY 2, 1995, 23,379,829 SHARES OF THE REGISTRANT'S COMMON STOCK, $0.01
PAR VALUE, WERE ISSUED AND OUTSTANDING.
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<PAGE> 2
INDEX
KOMAG, INCORPORATED
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (Unaudited)
Consolidated income statements -- Three- and six-months ended July 2,
1995,
and July 3, 1994......................................................... 3
Consolidated balance sheets -- July 2, 1995, and January 1, 1995......... 4
Consolidated statements of cash flows -- Six months ended July 2, 1995,
and July 3, 1994......................................................... 5
Notes to consolidated financial statements -- July 2, 1995............... 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations............................................................ 7
PART OTHER INFORMATION
II....
Item 1. Legal Proceedings........................................................ 10
Item 2. Changes in Securities.................................................... 10
Item 3. Defaults Upon Senior Securities.......................................... 10
Item 4. Submission of Matters to a Vote of Security Holders...................... 10
Item 5. Other Information........................................................ 11
Item 6. Exhibits and Reports on Form 8-K......................................... 11
SIGNATURES.......................................................................... 12
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
KOMAG, INCORPORATED
CONSOLIDATED INCOME STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
-------------------- ---------------------
JULY 2 JULY 3 JULY 2 JULY 3
1995 1994 1995 1994
-------- ------- -------- --------
<S> <C> <C> <C> <C>
Net sales.......................................... $120,807 $97,774 $225,870 $195,475
Cost of sales...................................... 74,787 67,877 147,083 132,690
-------- ------- -------- --------
GROSS PROFIT............................. 46,020 29,897 78,787 62,785
Operating expenses:
Research, development and engineering............ 5,947 5,488 12,012 10,813
Selling, general and administrative.............. 10,496 6,391 18,038 13,916
-------- ------- -------- --------
16,443 11,879 30,050 24,729
-------- ------- -------- --------
OPERATING INCOME......................... 29,577 18,018 48,737 38,056
Other income (expense):
Interest income.................................. 1,130 801 2,164 1,518
Interest expense................................. (584) (770) (1,198) (1,622)
Other, net....................................... 828 (285) 444 152
-------- ------- -------- --------
1,374 (254) 1,410 48
Income before income taxes, minority interest, and
equity in joint venture income................... 30,951 17,764 50,147 38,104
Provision for income taxes......................... 7,737 5,035 12,537 11,050
-------- ------- -------- --------
Income before minority interest and equity in joint
venture income................................... 23,214 12,729 37,610 27,054
Minority interest in net income of consolidated
subsidiary....................................... 456 259 871 407
Equity in net income of unconsolidated joint
venture.......................................... 603 1,484 1,502 2,751
-------- ------- -------- --------
NET INCOME............................... $ 23,361 $13,954 $ 38,241 $ 29,398
======== ======= ======== ========
Net income per share............................... $ 0.96 $ 0.61 $ 1.59 $ 1.29
======== ======= ======== ========
Number of shares used in per share computation..... 24,234 22,822 23,985 22,758
======== ======= ======== ========
</TABLE>
See notes to consolidated financial statements.
3
<PAGE> 4
KOMAG, INCORPORATED
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
JULY 2 JANUARY 1
1995 1995
--------- ---------
(UNAUDITED) (NOTE)
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents............................................ $ 79,173 $ 47,329
Short-term investments............................................... 17,000 46,619
Accounts receivable less allowances of $2,380 in 1995 and $2,223 in
1994.............................................................. 56,259 44,778
Inventories:
Raw materials..................................................... 18,916 15,030
Work-in-process................................................... 4,391 5,652
Finished goods.................................................... 1,958 3,419
--------- ---------
Total inventories............................................ 25,265 24,101
Prepaid expenses and deposits........................................ 2,058 1,611
Deferred income taxes................................................ 7,069 7,069
--------- ---------
Total current assets......................................... 186,824 171,507
Investment in Unconsolidated Joint Venture............................. 28,805 22,653
Property, Plant and Equipment
Land................................................................. 4,360 4,360
Building............................................................. 34,484 33,322
Equipment............................................................ 355,364 294,626
Furniture............................................................ 5,570 4,711
Leasehold Improvements............................................... 47,388 45,633
--------- ---------
447,166 382,652
Less allowances for depreciation and amortization.................... (181,728) (153,769)
--------- ---------
Net property, plant and equipment............................ 265,438 228,883
Deposits and Other Assets.............................................. 893 1,052
--------- ---------
$ 481,960 $ 424,095
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Trade accounts payable............................................... $ 23,160 $ 17,842
Accounts payable to related parties.................................. 2,791 2,354
Accrued compensation and benefits.................................... 21,292 17,913
Other liabilities.................................................... 1,451 1,665
Income taxes payable................................................. 5,402 271
Current portion of long-term debt.................................... 11,357 13,232
--------- ---------
Total current liabilities.................................... 65,453 53,277
Long-term Debt, less current portion................................... 11,667 16,250
Deferred Income Taxes.................................................. 18,725 18,725
Other Long-term Liabilities............................................ 511 548
Minority Interest in Consolidated Subsidiary........................... 4,671 4,080
Stockholders' Equity
Preferred stock...................................................... -- --
Common stock......................................................... 234 229
Additional paid-in capital........................................... 245,093 238,262
Retained earnings.................................................... 125,031 86,790
Accumulated foreign currency translation adjustments................. 10,575 5,934
--------- ---------
Total stockholders' equity................................... 380,933 331,215
--------- ---------
$ 481,960 $ 424,095
========= =========
</TABLE>
- ---------------
Note: The balance sheet at January 1, 1995 has been derived from the audited
financial statements at that date.
See notes to consolidated financial statements.
4
<PAGE> 5
KOMAG, INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
---------------------
JULY 2 JULY 3
1995 1994
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES
Net income........................................................... $ 38,241 $ 29,398
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization..................................... 28,822 22,633
Provision for losses on accounts receivable....................... (73) 134
Equity in net income of unconsolidated joint venture.............. (1,502) (2,751)
Loss on disposal of equipment..................................... 480 594
Deferred rent..................................................... (37) 25
Minority interest in net income of consolidated subsidiary........ 871 407
Changes in operating assets and liabilities:
Accounts receivable............................................. (11,408) 1,560
Inventories..................................................... (1,164) 7,842
Prepaid expenses and deposits................................... (456) 1,384
Trade accounts payable.......................................... 5,318 (3,279)
Accounts payable to related parties............................. 437 (379)
Accrued compensation and benefits............................... 3,379 (435)
Other liabilities............................................... (214) (560)
Income taxes payable............................................ 5,131 3,181
Restructuring liability......................................... -- (14,125)
-------- --------
Net cash provided by operating activities.................... 67,825 45,629
INVESTING ACTIVITIES
Acquisition of property, plant and equipment......................... (65,970) (35,486)
Purchases of short-term investments.................................. (6,525) (42,121)
Proceeds from short-term investments at maturity..................... 36,144 47,948
Proceeds from disposal of equipment.................................. 113 2,470
Deposits and other assets............................................ 159 285
-------- --------
Net cash used in investing activities........................ (36,079) (26,904)
FINANCING ACTIVITIES
Increase in notes payable............................................ -- 1,500
Payments of notes payable............................................ -- (4,500)
Payments of long-term obligations.................................... (6,458) (6,280)
Sale of Common Stock, net of issuance costs.......................... 6,836 6,336
Distribution to minority interest holder............................. (280) (280)
-------- --------
Net cash provided by (used in) financing activities.......... 98 (3,224)
Increase in cash and cash equivalents........................... 31,844 15,501
Cash and cash equivalents at beginning of year....................... 47,329 27,159
-------- --------
Cash and cash equivalents at end of period........................... $ 79,173 $ 42,660
======== ========
</TABLE>
See notes to consolidated financial statements.
5
<PAGE> 6
KOMAG, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
JULY 2, 1995
NOTE 1 -- BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of Management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three- and six-month periods ended July
2, 1995 are not necessarily indicative of the results that may be expected for
the year ending December 31, 1995.
For further information, refer to the consolidated financial statements and
footnotes thereto included in the Company's Annual Report on Form 10-K for the
year ended January 1, 1995.
The Company uses a 52-53 week fiscal year ending on the Sunday closest to
December 31. The three-month reporting periods for the comparable years included
in this report are each comprised of thirteen weeks.
NOTE 2 -- INVESTMENT IN DEBT SECURITIES
The Company invests its excess cash in high-quality, short-term debt and
equity instruments. Short-term investments consist primarily of AAA-rated,
municipal auction-rate preferred stock with maturities greater than 90 days.
None of the Company's investments have maturities greater than one year.
The following is a summary of the Company's investments by major security
type at amortized cost which approximates its fair value:
<TABLE>
<CAPTION>
JANUARY
JULY 2, 1,
1995 1995
--------- --------
(IN THOUSANDS)
<S> <C> <C>
State and local government securities................................... $80,009 $70,765
Corporate debt securities............................................... 5,250 2,417
Mortgage-backed securities.............................................. 18,133 10,677
-------- -------
$103,392 $83,859
======== =======
Amounts included in cash and cash equivalents........................... $86,392 $37,240
Amounts included in short-term investments.............................. 17,000 46,619
-------- -------
$103,392 $83,859
======== =======
</TABLE>
The Company utilizes zero-balance accounts and other cash management tools
to invest all available funds including bank balances in excess of book
balances.
NOTE 3 -- INCOME TAXES
The estimated annual effective income tax rate for 1995 of 25% is lower
than the 1995 combined federal and state statutory rate of 41% and the effective
income tax rate for 1994 of 30%. The Company's wholly-owned thin-film media
operation, Komag USA (Malaysia) Sdn., has been granted a tax holiday for a
period of five years commencing in July 1993. The decrease in the effective
income tax rate for 1995 relative to 1994 is primarily due to anticipated growth
in the percentage of consolidated income to be derived from the Malaysian
operation in 1995.
NOTE 4 -- SUBSEQUENT EVENT
On July 18, 1995, the Board of Directors of the Company authorized the
Company to proceed with filing a Registration Statement with the Securities and
Exchange Commission for the sale of up to 2,012,500 shares of the Company's
Common Stock.
6
<PAGE> 7
KOMAG, INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS:
Revenue
Net sales of thin-film media increased 24% in the second quarter of 1995
relative to the second quarter of 1994. Unit sales volume growth and an increase
in the overall average selling price accounted for approximately two-thirds and
one-third of this substantial net sales increase, respectively. The overall
average selling price typically strengthens only as the result of product mix
shifts to higher-priced, more technologically advanced product offerings. Price
reductions for individual product offerings are characteristic of the thin-film
media industry. The Company began a rapid transition to its current
highest-density product offering (1800 Oe) in the fourth quarter of 1994. Sales
of this product accounted for 61% of unit sales in the second quarter of 1995.
The higher sales mix of 1800 Oe product and a favorable pricing environment
arising from an industry shortage of this product resulted in smaller than
normal price reductions for individual product offerings and strengthened the
overall average selling price in the second quarter of 1995 relative to the
second quarter of 1994. Unit sales of the Company's highest density product
offering in the second quarter of 1994 (1600 Oe) accounted for approximately 67%
of net sales in the quarter, but revenues were adversely affected by pricing as
industry supply of this product met or exceeded demand.
In addition to sales of its internally produced disk products, the Company
resells products manufactured by its Japanese joint venture, Asahi Komag Co.,
Ltd. ("AKCL"). Distribution sales of thin-film media manufactured by AKCL were
$0.3 million in the second quarter of 1995 compared to $2.2 million in the
second quarter of 1994. The Company expects that distribution sales of AKCL
product will be minimal throughout 1995 as demand within the Japanese thin-film
media market is expected to continue to absorb most of AKCL's production output.
Net sales increased 16% in the first half of 1995 relative to the first
half of 1994. Over three-quarters of the increase was due to higher unit sales
volume. The overall average selling price increased between the comparable
six-month periods due to the transition to 1800 Oe product and the favorable
pricing environment arising from strong market demand. Distribution sales of
AKCL manufactured thin-film media were $0.4 million in the first half of 1995
compared to $5.5 million in the first half of 1994.
During the second quarter of 1995 three customers individually accounted
for at least ten percent of consolidated net sales: Seagate Technology, Inc.
(42%), Quantum Corporation (24%), and Hewlett-Packard Company (21%). The Company
expects that it will continue to derive a substantial portion of its sales from
a relatively few number of customers. The distribution of sales among customers
may vary from quarter to quarter based on the match of the Company's product
capabilities with specific disk drive programs of the customers.
Increased production volume may occur due to increased effective capacity
(additional production lines and/or reduced process cycle time) and improvements
in manufacturing efficiencies (yields and/or equipment utilization). The
increased unit production volume required to support the growth in unit sales in
the second quarter of 1995 relative to the second quarter of 1994 was almost
entirely achieved through an increase in effective production capacity. The
Company has historically increased effective production capacity through
implementation of process improvement programs designed to improve unit output
and the addition of sputtering lines. Shortened process cycle times resulting
from these process improvement programs accounted for nearly one-half of the
increase in effective capacity in the second quarter of 1995 relative to the
second quarter of 1994. Net physical capacity additions provided the remaining
increase in unit production volume. The Company added its thirteenth, fourteenth
and fifteenth sputtering lines in January 1994, August 1994 and March 1995,
respectively. One of the Company's fifteen sputtering lines is exclusively
devoted to research and development activities. In late 1994, the Company began
a program to upgrade its sputtering machines to enhance product capabilities and
shorten process cycle times. The Company expects one machine will be out
7
<PAGE> 8
of production on a rotating basis for the next two years. Unit production
provided by a slightly improved manufacturing yield mostly offset the
unfavorable impact of lower equipment utilization in the second quarter of 1995
relative to the second quarter of 1994. An electrical power outage affecting
most of the Malaysian island of Penang halted production at the Company's Penang
facility for several days late in the second quarter of 1995 and contributed to
the decrease in equipment utilization.
Increased unit production volume in the first half of 1995 compared to the
first half of 1994 was primarily achieved through higher effective capacity in
the current year period. Approximately one-half of the effective capacity
increase resulted from process cycle time reductions. Net physical capacity
additions provided the remaining increase in effective capacity. The effects of
slightly lower equipment utilization in the first half of 1995 relative to the
first half of 1994 were partially offset by an improvement in manufacturing
yields.
The Company anticipates that overall unit production volume will continue
to rise during the third and fourth quarters of 1995 but not necessarily at the
same rate as between the first and second quarters of 1995. Assuming market
demand continues to remain strong, the Company will remain production
constrained during this time period.
Gross Margin
The gross margin percentage for the second quarter of 1995 increased
substantially to 38.1% from 30.6% in the second quarter of 1994. The increase
was attributable to the combination of a higher overall average selling price
and a reduction in the overall average unit production cost, resulting primarily
from shortened cycle times. The electrical power disruption in Malaysia
partially offset the effects of these shortened cycle times on the average unit
production cost. The Company believes it is adequately insured for this
manufacturing disruption and has accrued for a settlement in other income.
The gross margin percentage for the first half of 1995 increased to 34.9%
from 32.1% for the first half of 1994. The increase was primarily attributable
to the higher overall average selling price associated with the mix of 1800 Oe
product. The positive effects of manufacturing efficiencies achieved during the
first half of 1995 were offset in part by 1800 Oe production start-up costs
incurred during the first quarter at the Company's Malaysian facility, by
process equipment write-offs recorded for the cessation of the Company's
magneto-optic disk product line, and by the effects of the electrical power
disruption in Malaysia.
The gross margin percentage for the second quarter of 1995 reached an
historical high for the Company and increased markedly from the 31.2% achieved
for the first quarter of 1995. The elimination of start-up costs associated with
the production ramp of 1800 Oe products and the substantial on-going
manufacturing efficiency improvements, combined with a rising overall average
selling price due to strong market demand and an industry shortage of 1800 Oe
disks, resulted in the record gross margin percentage. To the extent these
factors continue, gross margins should continue to exceed the Company's
historical levels. There can be no assurance, however, that industry demand for
high performance 1800 Oe products will continue to outpace supply. In the event
that market supply meets or exceeds demand or the Company is unable to continue
to increase its production mix of 1800 Oe products, the Company's gross margin
percentage would likely decrease. In the longer term the Company believes that
the gross margin percentage may not be sustainable at these record high levels.
Operating Expenses
Research and development ("R&D") expenses increased 8% ($0.5 million) and
11% ($1.2 million) in the three- and six-month periods of 1995, respectively,
compared to the comparable periods of 1994. The increases between these periods
were mainly due to development costs for advanced thin-film media. Selling,
general and administrative ("SG&A") expenses increased $4.1 million in both the
second quarter of 1995 relative to the second quarter of 1994 and in the first
half of 1995 relative to the first half of 1994. The increases were primarily
due to higher provisions for the Company's bonus and profit sharing programs
resulting from the substantially higher operating performance in the 1995
periods. Excluding provisions for bad debts and the Company's bonus and profit
sharing programs, SG&A expenses increased approximately
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<PAGE> 9
$0.1 million between the three-month periods and $0.5 million between the
six-month periods. Increases in administrative costs required to support the
growth in the business accounted for the increase.
Interest and Other Income/Expense
Interest income increased $0.3 million (41%) in the second quarter of 1995
relative to the second quarter of 1994 and $0.6 million (43%) in the first half
of 1995 relative to the first half of 1994. The increases were due primarily to
higher interest rates in the current year periods. Average cash and short-term
investment balances were relatively unchanged between the three- and six-month
comparisons. Interest expense decreased $0.2 million (24%) in the second quarter
of 1995 relative to the second quarter of 1994 and $0.4 million (26%) in the
first half of 1995 relative to the comparable period in 1994 due to lower
average outstanding debt balances in the current year periods. Other income
increased $1.1 million in the second quarter of 1995 compared to the second
quarter of 1994 and $0.3 million in the first half of 1995 relative to the first
half of 1994. The increase between the three-month comparisons was primarily due
to the accrual for an insurance recovery related to the electrical power
disruption at the Company's Malaysian manufacturing facility. The increase
between the six-month periods was the net effect of the insurance accrual and
lower foreign currency gains at the Company's Malaysian operations in the first
half of 1995.
Income Taxes
The estimated annual effective income tax rate for 1995 of 25% is lower
than the 1995 combined federal and state statutory rate of 41% and the effective
income tax rate for 1994 of 30%. The Company's wholly-owned thin-film media
operation, Komag USA (Malaysia) Sdn., has been granted a tax holiday for a
period of five years commencing July 1993. The decrease in the effective income
tax rate for 1995 relative to 1994 is primarily due to anticipated growth in the
percentage of consolidated income to be derived from the Malaysian operation in
1995.
Minority Interest in KMT/Equity in Net Income of AKCL
The minority interest in the net income of consolidated subsidiary
represented Kobe Steel USA Holdings Inc's 45% share of Komag Material
Technology, Inc.'s ("KMT's") net income. KMT recorded net income of $1.0 million
and $1.9 million in the second quarter and first half of 1995, respectively,
compared to $0.6 million and $0.9 million in the second quarter and first half
of 1994, respectively.
The Company records 50% of AKCL's net income as equity in net income of
unconsolidated joint venture. AKCL reported net income of $1.2 million in the
second quarter of 1995, down from $3.0 million in the second quarter of 1994.
AKCL reported net income of $3.0 million for the first half of 1995 compared to
$5.5 million for the first half of 1994. AKCL's functional currency is the
Japanese yen and the Company translates AKCL's yen-based income statements to
U.S. dollars at the average exchange rate for the period. The yen strengthened
approximately 18% and 14% between the comparable three- and six-month periods,
respectively. AKCL's net income would have been approximately $0.8 million and
$2.3 million in the second quarter and first half of 1995, respectively, had the
yen-based income statement been translated at the average rates in effect for
the comparable 1994 periods. The differences between the 1994 results and the
yen adjusted 1995 results for both the three- and six-month periods were
attributable to the combination of lower operating performance and the continued
partial writedown of AKCL's investment in Headway Technologies, Inc. AKCL
recorded writedowns of $1.2 million and $2.2 million (net of tax) in the second
quarter of 1995 and first half of 1995, respectively. AKCL will continue such
write downs until Headway emerges from the development stage. These writedowns
are a function of losses incurred at Headway.
LIQUIDITY AND CAPITAL RESOURCES:
Cash and short-term investments of $96.2 million at the end of the second
quarter of 1995 increased $2.2 million from the end of the prior fiscal year.
Consolidated operating activities generated $67.8 million in cash during the
first half of 1995 and more than funded the Company's $66.0 million of capital
spending during the six-month period. Sales of Common Stock under the Company's
stock option and stock purchase
9
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programs during this period generated $6.8 million, while repayments of
long-term obligations used $6.5 million.
Total capital expenditures for 1995 are currently planned at approximately
$150 million. Construction of a 230,000 square-foot manufacturing plant on a
55-acre site in the east Malaysian state of Sarawak, capital expenditures
associated with process improvements in the U.S. and Malaysian facilities,
installation of two additional sputtering lines, and payments on an additional
sputtering line (expected to be installed in Malaysia in 1996) are the major
components of the capital plan. Non-cancellable commitments at July 2, 1995
total approximately $80 million.
The Company believes that, in order to achieve its long-term expansion
objectives and maintain and enhance its competitive position, it will need
significant additional financial resources over the next several years for
capital expenditures, working capital and research and development. The Company
has recently announced its intention to proceed with the registration and public
offering of up to 2,012,500 shares of the Company's Common Stock. During the
two-year period of 1995 and 1996, the Company expects to spend approximately
$400 million to add production capacity at its existing facilities, add a new
U.S. manufacturing facility, and begin construction of a southeast Asian
facility. While the Company has potential cash resources to fund these
expenditures through a combination of the proceeds of the anticipated public
offering, its existing cash balances, cash flow from operations, and funds
available from existing bank lines of credit, new debt or equity financing may
be required to fund this level of capital expenditures. If the Company is unable
to obtain sufficient capital it could be required to reduce its capital
equipment and research and development expenditures which could materially
adversely affect the Company's results of operations.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS -- Not Applicable.
ITEM 2. CHANGES IN SECURITIES -- Not Applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES -- Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS --
(a) The Annual Meeting of Stockholders was held on May 24, 1995.
(b) The meeting included the election of the Board of Directors,
submitted as Item No. 1, whose names are as follows:
Tu Chen
Stephen C. Johnson
Craig R. Barrett
Chris A. Eyre
Irwin Federman
George A. Neil
Max Palevsky
Anthony Sun
Masayoshi Takebayashi
(c) Other matters voted upon at the stockholders meeting were:
Item No. 2, Approval of Amendments to Restated 1987 Stock Option
Plan; and Item No. 3, Ratification of the Selection of Ernst & Young
LLP as the Company's Independent Auditors for the year ended December
31, 1995.
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Shares of Common Stock voted were as follows:
Item No. 1
(Election of Board of Directors)
<TABLE>
<CAPTION>
TOTAL VOTE FOR TOTAL VOTE WITHHELD
EACH DIRECTOR FROM EACH DIRECTOR
-------------- --------------------
<S> <C> <C>
Tu Chen............................................ 20,076,957 216,301
Stephen C. Johnson................................. 20,077,097 216,161
Craig R. Barrett................................... 20,134,097 159,161
Chris A. Eyre...................................... 20,133,897 159,361
Irwin Federman..................................... 20,134,047 159,211
George A. Neil..................................... 20,077,097 216,161
Max Palevsky....................................... 20,133,847 159,411
Anthony Sun........................................ 20,133,597 159,661
Masayoshi Takebayashi.............................. 20,076,928 216,330
</TABLE>
<TABLE>
<CAPTION>
BROKER
FOR AGAINST ABSTAIN NON-VOTE
----------- ---------- -------- --------
<S> <C> <C> <C> <C>
Item No. 2
(Amendment to Restated 1987 Stock
Option Plan)......................... 15,772,071 4,207,976 216,226 --
Item No. 3
(Selection of Independent Auditors).... 20,258,964 7,195 27,099 --
</TABLE>
(d) Not Applicable.
ITEM 5. OTHER INFORMATION -- Not Applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits -- Not Applicable.
(b) Form 8-K -- Not Applicable.
11
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
KOMAG, INCORPORATED
(Registrant)
By: /s/ WILLIAM L. POTTS, JR.
William L. Potts, Jr.
Vice President and
Chief Financial Officer
By: /s/ STEPHEN C. JOHNSON
Stephen C. Johnson
President and
Chief Executive Officer
July 18, 1995
12
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000813347
<NAME> 0
<MULTIPLIER> 1000
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0
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