Asia PR News

SAN JOSE, Calif., April 26 /PRNewswire-AsiaNet/ –

Komag, Incorporated (Nasdaq: KOMG), a leading independent supplier of
thin-film media for disk drives, today announced record revenue and diluted
earnings per share of $208.5 million and $1.09, respectively, for the first
quarter of 2006.

( Logo: http://www.newscom.com/cgi-bin/prnh/19990816/KOMGLOGO )

For comparison, fourth quarter 2005 revenue and diluted earnings per share
were $192.9 million, and $1.07, respectively. Revenue and diluted earnings per
share in the first quarter of 2005 were $140.3 million and $0.59, respectively.

T.H. Tan, Komag’s Chief Executive Officer, stated, "Overall market demand
for our products continued to be very strong in the first quarter of 2006. We
are very proud of our ability to deliver another record quarter in both revenue
and diluted earnings per share. This is the seventh consecutive quarter of both
increasing revenue and net income for Komag."

First Quarter Review
Sales to Western Digital, Hitachi Global Storage Technologies, Maxtor and
Seagate accounted for 35%, 22%, 21% and 18% of total revenue in the first
quarter of 2006, respectively. Total finished disk shipments were 31.9 million
in the first quarter of 2006. Finished disk shipments for desktop and consumer
electronics applications together represented 93% of Komag’s first quarter 2006
unit shipment volume. Disks for high-end server drives represented 7% of
finished disk shipments in the first quarter of 2006.

High capacity 3.5-inch advanced disks at storage capacities of 120GB and
greater including initial shipments of 160GB disks represented approximately
24% of Komag’s total finished disk shipments in the first quarter of 2006.
These disks are primarily targeted for multi-platter consumer applications.
These rapidly growing applications include personal video recorders (PVRs),
digital video recorders (DVRs), high definition television (HDTV), external
storage, gaming and other home entertainment devices.

Other revenue, which includes sales of aluminum substrates, nickel-plated
polished aluminum substrates and textured substrates, was 12% of total revenue
in the first quarter of 2006. Komag is the world’s largest hard disk aluminum
substrate manufacturer. Disk substrates are primarily produced for internal use
in the manufacture of finished disks. In addition, the high quality of Komag’s
substrates has led to continuing market opportunities to sell substrates
externally.

Business Outlook
"Early indications for 2006 are that overall demand continues to be very
strong and our factories are continuing to run at full manufacturing capacity.
Our capacity expansion plans remain on or slightly ahead of schedule and we
expect to have 35 million finished disk capacity in the second quarter of 2006.
Based on current demand, we expect total revenue in the second quarter of 2006
to increase 5% to 10% from the first quarter of 2006. Net margin in the second
quarter is currently expected to be similar to the first quarter at around 17%.

Additionally, based on the anticipated demand for finished media, our plans
are to exit the fourth quarter of 2006 with capacity of 43 million disks per
quarter. With this expected capacity expansion, we would anticipate increasing
sequential revenue during each quarter of 2006.

In April 2006, we announced a strategic agreement with Hitachi Global
Storage Technologies, which includes some incremental capacity planned for
early 2007.

Our current capacity expansion plans are based on strategic supply
agreements with each of our four major customers. As part of these agreements,
Komag has made certain commitments to increase capacity and our customers have
agreed to purchase certain amounts of media. In addition, our customers have
agreed to make certain pre-payments for media to help mitigate the cash impact
of the capital spending required for Komag to increase capacity.

We believe that these arrangements with our customers are the right
strategy to allow for prudent capacity increases to meet the expected
continuing growing demand for media, as disk drives further expand penetration
into multiple growing consumer applications. We expect to fund the capital
spending for the capacity expansions of both our finished media, as well as
substrates, from cash generated from operations and the pre-payment
arrangements. Total capital spending for 2006 is currently expected to
approximate $300 million.

Komag is committed to continuing to support the growing demand for digital
storage by maintaining our low cost manufacturing structure, providing advanced
technology products and providing rational capacity increases, as appropriate
with strategic supply arrangements with our customers, all with the goals of
growing our business and providing financial returns to our stockholders," said
Mr. Tan.

About Komag
Founded in 1983, Komag is a leading independent supplier of thin-film
disks, the primary high-capacity storage medium for digital data. Komag
leverages the combination of its world-class U.S. research and development
center and Malaysian manufacturing operations to produce disks that meet the
high-volume, stringent quality, low cost and demanding technology needs of its
customers. By enabling rapidly improving storage density at ever-lower cost per
gigabyte, Komag seeks to create extraordinary value for consumers of computers,
enterprise storage systems and electronic appliances such as digital video
recorders, game boxes and consumer electronic storage systems.

For more information about Komag, visit Komag’s Internet home page at
http://www.komag.com The Investors section of the website provides a variety of
financial and investor information, including an investor presentation. To
request an investor packet, call Komag’s Investor Relations at 408-576-2901.

Forward-Looking Statements
This press release contains certain "forward-looking" statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended, and are subject to the
safe harbors created thereby. These statements represent the Company’s current
judgment and include, but are not limited to, the expectation that revenue in
the second quarter of 2006 will be 5% to 10% higher than the first quarter of
2006, the Company’s expectation that net margin will approximate 17% in the
second quarter of 2006, the Company’s ability to increase capacity during 2006
and the expected amounts of such increased capacity, the Company’s expectation
that it will sequentially increase revenue in each quarter of 2006, the
Company’s projected capital spending of approximately $300 million in 2006, the
Company’s expectation that the capital spending for the capacity expansions
will be funded from cash generated from operations and the customer pre-payment
arrangements, the Company’s ability to accurately estimate net margin, the
market for unit shipments of disks and disk drives and the Company’s belief in
continued increased demand trends, and the benefits of the Company’s increased
capacity arrangements with its customers and market growth opportunities. The
Company’s actual results for future periods could differ materially from those
projected in such forward-looking statements. Factors that could cause actual
results to differ include, but are not limited to, the Company’s ability to
achieve its operating yield, cost and profitability targets, changes in the
currency exchange rate for the Malaysian ringgit as a result of the managed
float system, continued customer demand and the impact of demand variation on
factory utilization, the performance by the Company and its customers of their
obligations under the respective increased capacity arrangements, changes in
demand as a result of the proposed Seagate/Maxtor merger or otherwise, the
Company’s ability to increase its capacity, variability in demand and
associated impact on average selling price of disks, the Company’s ability to
satisfy customer qualification requirements and meet shipping demands, the
Company’s expectation that industry unit demand will continue to grow and not
decline and the Company’s ability to produce new generation disks in volume and
the other factors described in the Company’s reports filed with the Securities
and Exchange Commission, including, but not limited to, its most recent Annual
Report on Form 10-K and Quarterly Reports on Form 10-Q. Komag undertakes no
obligation to update forward-looking statements to reflect events or
circumstances occurring after the date of such statements.

KOMAG, INCORPORATED
Consolidated Income Statements
(in thousands, except per share data)
(Unaudited)

Three Three Three
Months Months Months
Ended Ended Ended
April 2, January 1, April 3,
2006 2006 2005

Net Sales $208,512 $192,920 $140,275
Cost of Sales 149,419 138,217 105,212
Gross Profit 59,093 54,703 35,063
Gross Profit % 28.3% 28.4% 25.0%
Research, Development, and
Engineering Expense 15,075 12,830 11,155
Selling, General, and Administrative
Expense 8,024 6,210 5,535
Gain on Disposal of Assets (60) (345) (389)
Operating Income 36,054 36,008 18,762
Interest Income 2,071 1,981 750
Interest Expense (441) (441) (441)
Other Expense, Net (476) (67) (28)
Income before Income Taxes 37,208 37,481 19,043
Provision for Income Taxes 971 2,246 516
Net Income $36,237 $35,235 $18,527
Net Income % 17.4% 18.3% 13.2%

Basic Net Income per Share $1.22 $1.20 $0.66

Diluted Net Income per Share $1.09 $1.07 $0.59

Basic Shares Outstanding 29,685 29,476 28,261

Diluted Shares Outstanding 33,499 33,329 32,313

KOMAG, INCORPORATED
Consolidated Balance Sheets
(in thousands)

April 2, 2006 January 1, 2006
ASSETS (Unaudited) (NOTE 1)

Cash, Cash Equivalents, and
Short-Term Investments $190,989 $205,034
Receivables, Net 119,462 116,217
Inventories 72,517 54,000
Prepaid Expenses and Deposits 1,418 1,846
Total Current Assets 384,386 377,097

Property, Plant, and Equipment, Net 439,247 351,046
Other Assets 3,291 3,308
TOTAL ASSETS $826,924 $731,451

LIABILITIES AND STOCKHOLDERS’ EQUITY

Trade Accounts Payable $143,557 $97,901
Customer Advances 122,540 102,898
Other Liabilities 16,880 28,585
Total Current Liabilities 282,977 229,384

Long-Term Debt 80,500 80,500
Long-Term Deferred Rent 2,694 2,562

Stockholders’ Equity 460,753 419,005
TOTAL LIABILITIES AND STOCKHOLDERS’
EQUITY $826,924 $731,451

NOTE 1: The Consolidated Balance Sheet at January 1, 2006 was derived
from the audited financial statements.

SOURCE: Komag, Incorporated

CONTACT: Kathy Bayless,
Chief Financial Officer of Komag, Incorporated,
+1-408-576-2000, or
ir_web@komag.com

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Web site: http://www.komag.com

(KOMG)