Industry conditions have been difficult throughout 1999, with extreme pricing pressures combined with the trend toward fewer heads per drive. In addition, Read-Rite's GMR transition did not occur until late in the fourth fiscal quarter, further compounding the company's results for the year. The year long pricing pressures were amplified during the fourth quarter, severely impacting the company's end-of-life 4.3 GB per platter MR products, which accounted for approximately 80% of product shipments. Unit shipments were down in the fourth quarter as the GMR ramp did not occur until late in the quarter, with one million GMR HGAs shipped to customers, supporting capacity points of 7.1 to 9.1 GB per 3 � inch platter. In light of the industry conditions, Read-Rite continues to take appropriate action to reduce its costs and streamline its operations in the U.S. and in Asia. With respect to the company's bank credit facility, during the month of October, Read-Rite obtained a waiver and amendment through December 31, 1999.
"As we enter fiscal year 2000, our strategy of technological leadership, operational excellence and broadening of the customer base is firmly taking shape," said Cyril J. Yansouni, chairman and chief executive officer. "Today, we are announcing a series of qualifications on significant GMR programs. With additional GMR qualifications anticipated this quarter, Read-Rite fully expects to be shipping GMR products in volume to five customers, Maxtor, Quantum, Samsung, Seagate, and Western Digital, on over nine different GMR programs this quarter. In addition, during 1999, the company announced several leading-edge technology demonstrations, the latest, an areal density demonstration of 26.5 gigabits per square inch at high data rates of 230 - 500 million bits per second; technology well suited for the enterprise applications. Read-Rite is incorporating aspects from our technology demonstrations into designs for customer applications this fiscal year. Samples of products being provided to customers for shipments later in fiscal year 2000 have been very well received, with Read-Rite providing some of the top performing heads in the industry. Read-Rite's technology leadership, and the robust design of our GMR heads, will allow us to further increase our presence in the desktop arena, expand our penetration into the enterprise segment, and enable us to leverage our position as a technology leader to expand our product line into such burgeoning growth areas as consumer appliances. We feel we are well positioned to ship over 25 million GMR heads during the fourth quarter of fiscal year 2000; an increase of over 100% from fourth quarter FY99 levels. While this has been a difficult year for the industry and for Read-Rite, we are confident that our leading-edge GMR technology is well positioned to lead us into the next millennium," he added.
Read-Rite Corporation is one of the world's leading independent manufacturers of magnetic recording heads, head gimbal assemblies (HGAs) and head stack assemblies (HSAs) for disk drives and tape drives. The company is headquartered in Milpitas, California and has operations in Japan, Thailand, the Philippines and Singapore. The company's home page on the world wide web can be reached at http://www.readrite.com.
This news release contains statements which include forward-looking information within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended, and is subject to the "safe harbor" created by those sections. These statements include, but are not limited to the company's belief that its ability to control expenditures and to secure financing will be sufficient to fund its operations throughout the current fiscal year; the company is focused on the cost structure at its factories and will take appropriate actions to improve efficiency and productivity at these locations; the company's belief that it is well positioned for strong growth in the tape head business throughout fiscal year 2000 based upon shipments to Benchmark, the company's existing leadership position in the Travan segment and the Quantum development agreement and planned production for their SDLT program; the company's belief that it expects strong sequential unit and revenue growth as the company ships in volume on the mainstream 10 GB per platter programs. The company's actual results for future periods could differ materially from those projected in such forward-looking information. Factors that could cause actual results to differ include, but are not limited to: the current unfavorable industry conditions could worsen; the company's anticipated unit and revenue growth in the next fiscal quarter may not occur; demand for the company's products could weaken and lead to order cancellations or reschedules; the company's ability to achieve and maintain satisfactory yields on its products; the company may be unsuccessful in controlling its expenditures and in securing financing to fund its operations for the balance of the fiscal year; the competition may introduce products earlier and/or be more cost efficient than the company; the company's anticipated growth in its tape head business may not occur; and the other factors described in the company's reports filed with the Securities and Exchange Commission, including, but not limited to, its Annual Report on Form 10-K for fiscal 1999. Read-Rite undertakes no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of such statements.
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