<PAGE> 1
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 March 31, 1996
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 March 31, 1996, 50,884,273 shares of the Registrant's common stock,
$0.01 par value, were issued and outstanding.
<PAGE> 2
INDEX
KOMAG, INCORPORATED
<TABLE>
<CAPTION>
Page No.
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (Unaudited)
Consolidated income statements -- Three months ended
March 31, 1996 and April 2, 1995. . . . . . . . . . . . . . . . . 3
Consolidated balance sheets -- March 31, 1996,
and December 31, 1995 . . . . . . . . . . . . . . . . . . . . . . 4
Consolidated statements of cash flows -- Three months
ended March 31, 1996, and April 2, 1995. . . . . . . . . . . . . 5
Notes to consolidated financial statements --
March 31, 1996 . . . . . . . . . . . . . . . . . . . . . . . . . 6-7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . . . . . . . 8-13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . 13
Item 2. Changes in Securities . . . . . . . . . . . . . . . . . . . . . . 13
Item 3. Defaults Upon Senior Securities . . . . . . . . . . . . . . . . . 13
Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . 13
Item 5. Other Information . . . . . . . . . . . . . . . . . . . . . . . . 13
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . 13
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
</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
-------------------------
MARCH 31 April 2
1996 1995
--------- ---------
<S> <C> <C>
Net sales $ 152,839 $ 105,063
Cost of sales 88,350 72,296
--------- ---------
GROSS PROFIT 64,489 32,767
Operating expenses:
Research, development and engineering 6,648 6,065
Selling, general and administrative 10,818 7,542
--------- ---------
17,466 13,607
--------- ---------
OPERATING INCOME 47,023 19,160
Other income (expense):
Interest income 2,282 1,034
Interest expense (106) (614)
Other, net 58 (384)
--------- ---------
2,234 36
Income before income taxes, minority interest, --------- ---------
and equity in joint venture income 49,257 19,196
Provision for income taxes 10,839 4,800
--------- ---------
Income before minority interest and equity in
joint venture income 38,418 14,396
Minority interest in net income of consolidated subsidiary 180 415
Equity in net income of unconsolidated joint venture 4,266 899
--------- ---------
NET INCOME $ 42,504 $ 14,880
========= =========
Net income per share $ 0.80 $ 0.31
========= =========
Number of shares used in per share computation 53,093 47,282
========= =========
</TABLE>
See notes to consolidated financial statements.
-3-
<PAGE> 4
KOMAG, INCORPORATED
CONSOLIDATED BALANCE SHEETS
(In Thousands)
<TABLE>
<CAPTION>
MARCH 31 December 31
1996 1995
--------- ---------
(UNAUDITED) (note)
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 44,666 $ 14,879
Short-term investments 152,274 198,799
Accounts receivable less allowances of
$3,974 in 1996 and $4,279 in 1995 54,161 61,660
Accounts receivable from related parties 7,575 5,034
Inventories:
Raw materials 26,676 20,213
Work-in-process 9,504 7,431
Finished goods 3,083 1,377
--------- ---------
Total inventories 39,263 29,021
Prepaid expenses and deposits 4,619 5,196
Deferred income taxes 8,569 8,569
--------- ---------
Total current assets 311,127 323,158
Investment in Unconsolidated Joint Venture 32,982 30,143
Property, Plant and Equipment
Land 6,674 5,268
Building 56,997 38,357
Equipment 469,775 443,011
Furniture 6,409 6,118
Leasehold Improvements 67,399 51,088
--------- ---------
607,254 543,842
Less allowances for depreciation and amortization (231,629) (214,668)
--------- ---------
Net property, plant and equipment 375,625 329,174
Deposits and Other Assets 4,008 3,840
--------- ---------
$ 723,742 $ 686,315
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Trade accounts payable $ 40,326 $ 28,717
Accounts payable to related parties 3,288 7,761
Accrued compensation and benefits 20,350 31,966
Other liabilities 1,546 2,096
Income taxes payable 529 400
--------- ---------
Total current liabilities 66,039 70,940
Deferred Income Taxes 37,643 37,643
Other Long-term Liabilities 490 474
Minority Interest in Consolidated Subsidiary 2,632 2,694
Stockholders' Equity
Preferred stock -- --
Common stock 509 507
Additional paid-in capital 375,702 374,399
Retained earnings 236,109 193,605
Accumulated foreign currency translation adjustments 4,618 6,053
--------- ---------
Total stockholders' equity 616,938 574,564
--------- ---------
$ 723,742 $ 686,315
========= =========
</TABLE>
Note: The balance sheet at December 31, 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>
Three Months Ended
-------------------------
MARCH 31 April 2
1996 1995
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 42,504 $ 14,880
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 17,931 13,885
Provision for losses on accounts receivable (324) (60)
Equity in net income of unconsolidated joint venture (4,266) (899)
Loss on disposal of equipment 127 476
Deferred rent 16 (19)
Minority interest in net income of consolidated subsidiary 180 415
Changes in operating assets and liabilities:
Accounts receivable 7,823 (2,686)
Accounts receivable from related parties (2,541) 99
Inventories (10,242) (3,626)
Prepaid expenses and deposits (678) 266
Income taxes refundable 1,376 4,183
Trade accounts payable 11,609 548
Accounts payable to related parties (4,473) 734
Accrued compensation and benefits (11,616) (2,408)
Other liabilities (550) 338
-------- --------
Net cash provided by operating activities 46,876 26,126
INVESTING ACTIVITIES
Acquisition of property, plant and equipment (64,390) (28,133)
Purchases of short-term investments (163) (38,554)
Proceeds from short-term investments at maturity 46,688 32,219
Proceeds from disposal of equipment 20 10
Deposits and other assets (270) 12
-------- --------
Net cash used in investing activities (18,115) (34,446)
FINANCING ACTIVITIES
Payments of long-term obligations -- (3,229)
Sale of Common Stock, net of issuance costs 1,305 2,775
Distribution to minority interest holder (279) (280)
-------- --------
Net cash provided by (used in) financing activities 1,026 (734)
Increase (decrease) in cash and cash equivalents 29,787 (9,054)
Cash and cash equivalents at beginning of year 14,879 23,183
-------- --------
Cash and cash equivalents at end of period $ 44,666 $ 14,129
======== ========
</TABLE>
See notes to consolidated financial statements.
-5-
<PAGE> 6
KOMAG, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 31, 1996
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-month period ended March 31, 1996 are not necessarily
indicative of the results that may be expected for the year ending December
29, 1996.
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 December 31, 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. None of the Company's
investments have maturities greater than one year.
-6-
<PAGE> 7
The following is a summary of the Company's investments by major
security type at amortized cost which approximates fair value:
<TABLE>
<CAPTION>
MAR 31 Dec 31
(in thousands) 1996 1995
------ ------
<S> <C> <C>
Municipal auction rate preferred stock $152,111 $198,636
Corporate debt securities 3,912 3,062
Mortgage-backed securities 38,782 19,462
-------- --------
$194,805 $221,160
======== ========
Amounts included in cash and cash equivalents $ 42,531 $ 22,361
Amounts included in short term investments 152,274 198,799
-------- --------
$194,805 $221,160
======== ========
</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 1996 of 22% is lower
than the 1996 combined federal and state statutory rate of 41% and the
effective income tax rate for 1995 of 25%. The difference between the
effective tax rate and the combined statutory rate is primarily due to a
five-year tax holiday (commencing in July 1993) for the Company's
wholly-owned thin-film media operation, Komag USA (Malaysia) Sdn. Assuming
the Company fulfills certain commitments under its license to operate
within Malaysia, this tax holiday may be extended for an additional
five-year period by the Malaysian government. The decrease in the effective
income tax rate for 1996 relative to 1995 is primarily due to anticipated
growth in the percentage of consolidated income to be derived from the
Malaysian operation in 1996.
-7-
<PAGE> 8
KOMAG, INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS:
The following discussion contains predictions, estimates and other
forward-looking statements that involve a number of risks and
uncertainties. While this outlook represents the Company's current judgment
on the future direction of the business, such risks and uncertainties could
cause actual results to differ materially from any future performance
suggested herein. Factors that could cause actual results to differ include
the following: product transitions to next-generation products; effective
utilization of existing manufacturing facilities; continuation of improved
manufacturing efficiencies; industry supply-demand relationship and related
pricing for high-end disk products; execution of planned capacity
additions; vertical integration and company consolidation within limited
customer base, including the ability of Komag and/or AKCL to obtain future
additional business from Matsushita-Kotobuki Electronics Industries Ltd.
(MKE); and the risk factors listed in the Company's Annual Report on Form
10-K filed in March 1996. The Company undertakes no obligation to publicly
release the result of any revisions to these forward-looking statements
which may be made to reflect events or circumstances after the date hereof
or to reflect the occurrence of unanticipated events.
Revenue
Net sales of thin-film media increased 45% in the first quarter of 1996
relative to the first quarter of 1995. The increase was almost entirely due
to an increase in unit sales volume. The overall average unit selling price
increased approximately one percent between these periods. Changes in the
overall average selling price are typically dependent upon sales mix shifts
toward higher-density, higher-priced product offerings and the relative
sales mix between 3.5-inch and 5.25-inch products. The 3.5-inch products at
a given oersted level are generally lower-priced than 5.25-inch products at
the same oersted level. The effect of a unit sales mix shift toward 1800 Oe
product offset the shift to a larger mix of 3.5-inch products, thus
resulting in the slight increase in the overall average selling price. Unit
sales of 1800 Oe products accounted for 95% of unit sales in the first
quarter of 1996 up substantially from 41% in the first quarter of 1995.
Unit sales of 5.25-inch products accounted for 3% of unit sales in the
first quarter of 1996, down from 13% in the first quarter of 1995.
-8-
<PAGE> 9
In addition to sales of 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 first quarter of 1996 compared to $0.2
million in the first quarter of 1995. The Company expects that distribution
sales of AKCL product will be minimal throughout 1996 as demand within the
Japanese thin-film media market is expected to absorb most of AKCL's
production output.
During the first quarter of 1996 three customers individually accounted
for at least ten percent of consolidated net sales: Seagate Technology,
Inc. (57%), Western Digital Corporation (18%), and Matsushita-Kotobuki
Electronics, Industries, Ltd. (13%). Seagate completed its merger with
Conner Peripherals, Inc. in the first quarter of 1996. The percentage of
consolidated net sales includes sales to Seagate and Conner on a combined
basis. The Company expects that it will continue to derive a substantial
portion of its sales from relatively few 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 physical
capacity (additional sputtering lines) and/or improvements in manufacturing
efficiencies (improved production throughput from higher yields, better
equipment utilization or shorter process cycle times). The increase in unit
production volume required to support the increase in unit sales volume for
the first quarter of 1996 relative to the first quarter of 1995 was
achieved through the addition of production lines, improvements in cycle
times and improvements in manufacturing yields. Equipment utilization rates
were relatively unchanged between the comparable quarters. The production
volume increase provided by improved cycle times and manufacturing yields
was approximately equal to the increased production volume provided by the
addition of sputtering machines. The Company added three new sputtering
lines in March 1995, September 1995 and January 1996. The Company has a
total of sixteen production sputtering lines, ten of which are in the U.S.
and six in Malaysia. The Company is continuing a program begun in 1994 to
upgrade its sputtering machines to enhance product capabilities and shorten
process cycle times. The Company expects one machine will be out of
production on a rotating basis through the third quarter of 1996.
Gross Margin
The gross margin percentage for the first quarter of 1996 was 42.2%, up
markedly from the 31.2% gross margin percentage achieved for the first
quarter of 1995. The increase was primarily due to improved manufacturing
efficiencies in the first quarter of 1996 relative to the first quarter of
1995. Shortened process cycle times, improved manufacturing yields and the
lack of certain non-recurring charges incurred in the first quarter of 1995
contributed to the
-9-
<PAGE> 10
improved gross margin percentage. During the first quarter of 1995 the
Company began a rapid transition to 1800 Oe products -- from 14% of unit
sales volume in the fourth quarter of 1994 to 41% of unit sales volume in
the first quarter of 1995. Low manufacturing yields associated with this
steep ramp of 1800 Oe products and certain equipment write-offs relating to
manufacturing process changes dampened the gross margin percentage in the
first quarter of 1995.
The Company expects to achieve quarter-to-quarter revenue growth for
the balance of 1996 through increases in unit production volume. However,
declining selling prices for 1800 Oe products and costs associated with the
anticipated production ramp of next-generation product offerings are
expected to reduce the gross margin percentage toward the Company's
targeted range of 33%-38% as the 1996 fiscal year progresses. The overall
average selling price decreased approximately 6% sequentially from the
fourth quarter of 1995 to the first quarter of 1996 as unit sales remained
heavily weighted toward 1800 Oe products. The Company expects to begin
volume production of next-generation 2000 Oe products -- one disk family
optimized for use with magnetoresistive ("MR") heads and a second disk
family designed for use with advanced inductive heads in near-contact
recording applications -- in the latter part of the second quarter. The
transition to 2000 Oe products during the second quarter of 1996 will be
constrained by continuing volume sales of numerous high-end drive programs
which incorporate the Company's 1800 Oe disks. The rate of integration of
MR technology into the Company's customers' next-generation drive programs
will influence the pace of the transition to 2000 Oe products. The Company
expects that 2000 Oe products will account for over one-half of unit sales
volume in the fourth quarter of 1996, however, any material delay in the
introduction of these products could adversely affect the Company's
capacity utilization and financial performance in the second half of 1996.
Continued focus on process improvement programs designed to increase
production throughput and reduce the overall average unit production cost
should reduce, but not eliminate, the impact of a decreasing overall
average selling price on the Company's gross margin for the remainder of
1996. In light of the above, the expected sequential revenue growth for the
balance of 1996 may or may not be sufficient to support sequential earnings
growth during 1996. However, the Company believes that its 1996 annual
financial performance will compare favorably to that achieved for fiscal
year 1995.
Operating Expenses
Research and development ("R&D") expenses increased 10% ($0.6 million)
in the first quarter of 1996 relative to the first quarter of 1995. The
increase between these periods was mainly due to development costs for
next-generation 2000 Oe and above thin-film media products. Selling,
general and administrative ("SG&A") expenses increased $3.3 million in the
first quarter of 1996 compared to the first quarter of 1995. The increase
was primarily due to higher provisions for the Company's bonus and profit
sharing programs resulting from the substantially higher operating
performance in the 1996 period. Provisions for bad debt
-10-
<PAGE> 11
decreased $0.2 million between the comparable three-month periods.
Excluding provisions for bad debt and the Company's bonus and profit
sharing programs, SG&A expenses increased approximately $1.1 million
between the three-month periods. General and administrative spending at the
Company's recently completed front end manufacturing facility in Sarawak,
Malaysia and higher worldwide recruiting and hiring costs accounted for the
majority of this increase.
Interest and Other Income/Expense
Interest income increased $1.2 million in the first quarter of 1996
relative to the first quarter of 1995. The increase in the comparable
three-month periods was due primarily to higher average cash and short-term
investment balances resulting from the $122 million proceeds provided by a
follow-on public stock offering completed in September 1995. Interest
expense decreased $0.5 million in the first quarter of 1996 relative to the
first quarter of 1995. The Company used a portion of the proceeds from the
public offering to repay all existing bank debt in September 1995. Interest
expense for the first quarter of 1996 primarily represented non-utilization
fees for the Company's $140 million credit facilities. Other income
increased $0.4 million in the first quarter of 1996 compared to the first
quarter of 1995. The increase between the three-month periods was primarily
due to lower losses on equipment dispositions in the first three months of
1996.
Income Taxes
The estimated annual effective income tax rate for 1996 of 22% is lower
than the 1996 combined federal and state statutory rate of 41% and the
effective income tax rate for 1995 of 25%. The difference between the
effective tax rate and the combined statutory rate is primarily due to a
five-year tax holiday (commencing in July 1993) for the Company's
wholly-owned thin-film media operation, Komag USA (Malaysia) Sdn. Assuming
the Company fulfills certain commitments under its license to operate
within Malaysia, this tax holiday may be extended for additional five-year
period by the Malaysian government. The decrease in the effective income
tax rate for 1996 relative to 1995 is primarily due to anticipated growth
in the percentage of consolidated income to be derived from the Malaysian
operation in 1996.
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 ("Kobe USA's") share of Komag
Material Technology, Inc.'s ("KMT's") net income. KMT was owned 55% by the
Company and 45% by Kobe USA from November 1988 to December 1995. On
December 28, 1995 the Company increased its ownership of KMT to 80% through
the purchase of KMT Common Stock directly from
Kobe USA. Kobe retained a 20% minority interest investment in KMT. KMT
recorded net income of $0.9 million in both the first quarter of 1996 and
1995.
-11-
<PAGE> 12
The Company records 50% of AKCL's net income as equity in net income
of unconsolidated joint venture. AKCL reported net income of $8.6 million
in the first quarter of 1996, up from $1.8 million in the first quarter of
1995. AKCL's net income for the first quarter of 1995 included a $1.0
million (net of tax) writedown of AKCL's investment in Headway. No such
writedown was recorded in the first quarter of 1996. Additional writedowns
by AKCL may be required if Headway is not profitable in future quarters.
The increase in AKCL's operating performance was primarily due to the
successful transition to
1800 Oe product offerings between the first quarter of 1995 and the first
quarter of 1996. Volume shipments of 1800 Oe product began at AKCL in the
second quarter of 1995. Unit sales of 1800 Oe and above products accounted
for nearly all unit sales in the first quarter of 1996. A higher overall
average selling price for these high performance disks combined with
substantial manufacturing efficiency improvements in the first quarter of
1996 relative to the first quarter of 1995 resulted in the significant
improvement in AKCL's operating performance.
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 decreased approximately 9%
between the comparable three-month periods. AKCL's net income would have
been approximately $9.3 million in the first quarter of 1996 had the
yen-based income statement been translated at the average rate in effect
for the first quarter of 1995.
LIQUIDITY AND CAPITAL RESOURCES:
Cash and short-term investments of $196.9 million at the end of the
first quarter of 1996 decreased $16.7 million from the end of the prior
fiscal year. Consolidated operating activities generated $46.9 million in
cash during the three-month period of 1996 and partially funded the
Company's $64.4 million of capital spending during the three-month period.
Sales of Common Stock under the Company's stock option and stock purchase
programs during this period generated $1.3 million.
Total capital expenditures for 1996 are currently planned at
approximately $350 million. Construction and fit up of three new
manufacturing facilities are the major components of the capital plan. The
Company has completed construction of a 275,000 square foot facility for
the front end stages of its manufacturing process in Sarawak, Malaysia and
has started volume production at this site in April 1996. Two back end
factories are currently under construction in San Jose, California and
Penang, Malaysia. The San Jose factory is approximately 225,000 square feet
and the Penang factory is approximately 275,000 square feet. The Company
plans
-12-
<PAGE> 13
to begin production at the new San Jose and Penang facilities in late 1996
and early 1997, respectively. Additionally, the Company expects to begin
construction of a 178,000 square foot research and development facility and
a 90,000 square foot administration building in 1996 for occupancy in the
first half of 1997. Current noncancellable commitments total approximately
$230 million.
The Company believes that, in order to achieve its long-term expansion
objectives and maintain and enhance its competitive position, it will need
additional financing over the next several years for capital expenditures,
working capital, and research and development. During the two-year period
of 1996 and 1997, the Company expects to spend approximately $750 million
to construct new facilities and add production equipment at its new and
existing facilities. Assuming a continued strong operating performance, the
Company expects to fund its 1996 capital expenditures through a combination
of cash flow from operations, its cash balances, and funds available from
its unutilized $140 million credit facilities. However, new debt or equity
financing will likely be required to fund a portion of capital expenditures
in 1997. 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 have a material adverse effect on 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
-- Not Applicable.
ITEM 5. Other Information -- Not Applicable.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits -- Not Applicable.
(b) Not Applicable
-13-
<PAGE> 14
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)
DATE: May 2, 1996 BY: /s/ William L. Potts, Jr.
--------------- -------------------------------
William L. Potts, Jr.
Senior Vice President and
Chief Financial Officer
DATE: May 2, 1996 BY: /s/ Stephen C. Johnson
--------------- -------------------------------
Stephen C. Johnson
President and
Chief Executive Officer
-14-
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000813347
<NAME> KOMAG, INCORPORATED
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-29-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 44666
<SECURITIES> 152274
<RECEIVABLES> 65695
<ALLOWANCES> 3974
<INVENTORY> 39263
<CURRENT-ASSETS> 311127
<PP&E> 607254
<DEPRECIATION> 231629
<TOTAL-ASSETS> 723742
<CURRENT-LIABILITIES> 66039
<BONDS> 0
0
0
<COMMON> 509
<OTHER-SE> 616429
<TOTAL-LIABILITY-AND-EQUITY> 616938
<SALES> 152839
<TOTAL-REVENUES> 152839
<CGS> 88350
<TOTAL-COSTS> 88350
<OTHER-EXPENSES> 7219
<LOSS-PROVISION> (324)
<INTEREST-EXPENSE> 106
<INCOME-PRETAX> 49257
<INCOME-TAX> 10839
<INCOME-CONTINUING> 42504
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 42504
<EPS-PRIMARY> 0.80
<EPS-DILUTED> 0.80
</TABLE>