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SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 22, 1997
COMMISSION FILE NUMBER 0-25796
STORMEDIA INCORPORATED
(Exact name of registrant as specified in its charter)
DELAWARE 77-0373062
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification
organization) Number)
385 REED STREET, SANTA CLARA, CALIFORNIA 95050-3118
(Address of principal executive offices)
(Zip Code)
(408) 327-8400
(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS
The information which is set forth in the Registrant's press release
dated October 22, 1997 is incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
99.1 Text of Press Release dated October 22, 1997.
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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 hereunto duly authorized.
Date: October 22, 1997 STORMEDIA INCORPORATED
/S/ Judith M. O'Brien
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Judith M. O'Brien
Secretary
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INDEX TO EXHIBITS
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Sequentially
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Exhibit Description Page
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99.1 Text of Press Release dated October 22, 1997 5
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EXHIBIT 99.1
FOR IMMEDIATE RELEASE For Further Information Contact:
Henry Lo, Treasurer (408) 327-8281
STORMEDIA INCORPORATED
STORMEDIA ANNOUNCES RESULTS FOR Q3 1997;
APPROVED AS SUPPLIER FOR WESTERN DIGITAL AND SAMSUNG
SANTA CLARA, CA,--(PR NEWSWIRE) -- October 22, 1997 -- StorMedia Incorporated
(NASDAQ/NMS: STMD) today reported net sales of $22.2 million, net loss of $13.3
million, and net loss per share of $0.74 for the quarter ended September 26,
1997. This compares with net sales of $41.6 million, net loss of $9.1 million,
and net loss per share of $0.52 for the quarter ended September 27, 1996.
Sequentially, net sales were down 32% from $32.6 million for the second quarter
ended June 27, 1997. Net loss and net loss per share were $20.9 million and
$1.17, respectively, for the second quarter of 1997.
For the nine months ended September 26, 1997, net sales, net loss, and net loss
per share were $88.9 million, $43.5 million, and $2.44, respectively. This
compares to net sales, net earnings, and net earnings per share of $160.4
million, $8.1 million, and $0.45 per share, respectively, for the nine months
ended September 27, 1996.
The Company is currently in violation of certain financial covenants of its
credit facility but remains current on debt service and interest payments. The
Company is currently in discussions with the bank group to revise certain
covenants under an amendment to the credit facility and is reviewing additional
debt or equity financing alternatives from certain financial institutions.
PERFORMANCE SUMMARY AND OUTLOOK
"Results for the third quarter were negatively impacted by continued weakness in
demand and the resulting underutilization of the Company's manufacturing
capacity," said William J. Almon, Chairman and Chief Executive Officer. "During
the third quarter, the Company took additional actions to reduce its costs and
expenses including rotating shutdowns at all of its media plants.
Such actions will likely continue until industry demand recovers."
"Expansion of net sales depends on industry demand improving and the Company
successfully qualifying products with new and existing customers. We are pleased
to announce that the Company has received approvals of new high capacity drive
programs and has expanded our customer base to include Western Digital
Corporation and Samsung Electronics. We believe that as industry demand
increases, our expertise in MR and laser zone texture media and the expansion of
our customer base will position us well to utilize our current capacity."
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The statements in this press release may contain forward-looking statements that
involve risks and uncertainties that could cause actual results to differ from
predicted results. Such risks include among others: dependence on a limited
number of customers; rapid changes in customer and product mix; reduction in
orders from existing customers; limited number of potential customers;
variability in gross margins and operating results; risk of excess industry
capacity; intensely competitive industry; rapid technological change; future
capital needs; and dependence on suppliers. Further risks are described in the
Company's Form 10-K and Form 10-Q, filed with the Securities and Exchange
Commission on March 25, 1997 and August 11, 1997, respectively, and other risks
detailed from time to time in the Company's reports filed with the Securities
and Exchange Commission. 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.
ABOUT STORMEDIA:
StorMedia is a leading independent supplier of thin film disks for hard disk
drives used in portable and desktop computers, network servers and workstations.
The company designs, develops, manufactures and sells disks in 2 1/2 and 3 1/2
inch sizes. Within each size, the company provides a range of coercivities
(magnetics), fly heights and disk thicknesses to meet distinct customer
specifications.
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STORMEDIA INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except for per share amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
---------------------------- ----------------------------
SEPTEMBER 26, SEPTEMBER 27, SEPTEMBER 26, SEPTEMBER 27,
1997 1996 1997 1996
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(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Net sales ......................................... $ 22,226 $ 41,575 $ 88,879 $ 160,383
Cost of sales ..................................... 28,111 44,130 108,339 130,938
-------- -------- -------- ---------
Gross Profit .................................. (5,885) (2,555) (19,460) 29,445
Operating expenses:
Research and development .......................... 4,252 3,945 10,922 12,072
Selling, general, and administrative .............. 2,257 3,984 7,077 8,163
Bad draft expense ................................. 0 -- 5,438 --
-------- -------- -------- ---------
Total operating expenses ...................... 6,509 7,929 23,437 20,235
Operating earnings (loss) ....................... (12,394) (10,484) (42,897) 9,210
Other income (expense), net ....................... (907) (255) (2,273) 1,057
-------- -------- -------- ---------
Earnings (loss) before income tax expense (benefit) (13,301) (10,739) (45,170) 10,267
-------- -------- -------- ---------
Income tax expense (benefit) ...................... 0 (1,611) (1,647) 2,131
Net earnings (loss) ............................... $(13,301) $ (9,128) $(43,523) $ 8,136
======== ======== ======== =========
Earnings (loss) per share:
Primary ......................................... $ (0.74) $ (0.52) $ (2,44) $ 0.45
======== ======== ======== =========
Fully diluted ................................... $ (0.74) $ (0.52) $ (2.44) $ 0.45
======== ======== ======== =========
Shares used in per share computation:
Primary ......................................... 17,919 17,414 17,863 18,048
======== ======== ======== =========
Fully diluted ................................... 17,919 17,414 17,863 18,050
======== ======== ======== =========
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STORMEDIA INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SEPTEMBER 26, DECEMBER 31,
1997 1996
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(UNAUDITED)
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ASSETS
Current assets:
Cash and cash equivalents and short-term investments $ 16,250 $ 47,711
Accounts receivable, less allowances of $7,257 at September 26, 1997
and $1,177 at December 31, 1996 9,333 31,047
Income taxes receivable 1,738 --
Inventories 24,330 14,848
Prepaid expenses 6,922 6,794
Deferred income taxes -- 2,819
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58,573 103,219
Plant and equipment, net 136,452 137,162
Deferred income taxes -- 17
Deposits and other assets 1,095 1,338
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$ 196,120 $ 241,736
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LIABILITIES AND EQUITY
Current liabilities:
Trade accounts payable $ 21,990 $ 25,234
Bank debt 48,334 5,014
Accrued salaries and benefits 5,228 4,151
Income taxes payable -- 2,556
Other accrued expenses 4,632 1,952
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80,184 38,907
Deferred income taxes -- 245
Long-term debt, less current portion 132 45,024
Equity:
Common stock, par value $.013 per share 237 233
Additional paid-in capital 126,450 124,686
Retained earnings (Accumulated deficit) (10,883) 32,641
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115,804 157,560
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$ 196,120 $ 241,736
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