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UNITED STATES 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 October 2, 2005
 Commission File Number 0-16852
 KOMAG, INCORPORATED
  
 þ o
 þ o
 o þ
 þ o




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INDEX
KOMAG, INCORPORATED
  
 Page No.PART I.
    
    FINANCIAL INFORMATIONItem 1.
    
    Condensed Consolidated Financial Statements (Unaudited)Condensed Consolidated Statements of Income  three and nine months ended October 2, 2005 and October 3, 2004
    
    
    4Condensed Consolidated Balance Sheets  October 2, 2005 and January 2, 2005
    
    
    5Condensed Consolidated Statements of Cash Flows  nine months ended October 2, 2005 and October 3, 2004
    
    
    6Notes to Condensed Consolidated Financial Statements (Unaudited)
    
    
    7-14Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    15-38Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    39Item 4.
    
    Controls and Procedures
    
    
    40PART II.
    
    OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    41Item 2.
    
    Unregistered Sales of Equity Securities
    
    
    41Item 3.
    
    Defaults Upon Senior Securities
    
    
    41Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    41Item 5.
    
    Other Information
    
    
    41Item 6.
    
    Exhibits
    
    
    41SIGNATURES
    
    
    
    
    42EXHIBIT 10.1EXHIBIT 10.2EXHIBIT 10.3EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32
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FORWARD-LOOKING INFORMATION
   3




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PART I. FINANCIAL INFORMATION
 
 ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 KOMAG, INCORPORATED
 
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
 (In thousands, except per share amounts)
 Three Months Ended
    
    
    Nine Months EndedOctober 2, 2005
    
    
    October 3, 2004
    
    
    October 2, 2005
    
    
    October 3, 2004Net sales
    
    $
    180,011
    
    
    $
    102,424
    
    
    $
    493,026
    
    
    $
    327,148Cost of sales
    
    
    129,124
    
    
    
    79,256
    
    
    
    358,996
    
    
    
    245,422Gross profit
    
    
    50,887
    
    
    
    23,168
    
    
    
    134,030
    
    
    
    81,726Operating expenses:Research, development, and engineering
    
    
    12,054
    
    
    
    9,720
    
    
    
    36,043
    
    
    
    30,385Selling, general, and administrative
    
    
    6,090
    
    
    
    3,923
    
    
    
    17,412
    
    
    
    13,185Loss (gain) on disposal of assets
    
    
    400
    
    
    
    (230
    )
    
    
    (1,349
    )
    
    
    (630
    )18,544
    
    
    
    13,413
    
    
    
    52,106
    
    
    
    42,940Operating income
    
    
    32,343
    
    
    
    9,755
    
    
    
    81,924
    
    
    
    38,786Other income (expense):Interest income
    
    
    1,552
    
    
    
    342
    
    
    
    3,346
    
    
    
    851Interest expense
    
    
    (441
    )
    
    
    (437
    )
    
    
    (1,324
    )
    
    
    (2,744
    )Other, net
    
    
    (297
    )
    
    
    (75
    )
    
    
    (348
    )
    
    
    (142
    )814
    
    
    
    (170
    )
    
    
    1,674
    
    
    
    (2,035
    )Income before income taxes
    
    
    33,157
    
    
    
    9,585
    
    
    
    83,598
    
    
    
    36,751Provision for income taxes
    
    
    1,175
    
    
    
    321
    
    
    
    3,196
    
    
    
    1,146Net income
    
    $
    31,982
    
    
    $
    9,264
    
    
    $
    80,402
    
    
    $
    35,605Basic net income per share
    
    $
    1.09
    
    
    $
    0.33
    
    
    $
    2.79
    
    
    $
    1.31Diluted net income per share
    
    $
    0.97
    
    
    $
    0.31
    
    
    $
    2.48
    
    
    $
    1.20Number of shares used in basic per share
computations
    
    
    29,396
    
    
    
    27,792
    
    
    
    28,842
    
    
    
    27,200Number of shares used in diluted per share
computations
    
    
    33,381
    
    
    
    31,334
    
    
    
    32,969
    
    
    
    30,759
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KOMAG, INCORPORATED
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (In thousands)
 October 2, 2005
    
    
    January 2, 2005ASSETSCurrent assetsCash and cash equivalents
    
    $
    74,921
    
    
    $
    26,410Short-term investments
    
    
    104,000
    
    
    
    77,700Accounts receivable (less allowances of $1,687 and $1,075, respectively)
    
    
    116,090
    
    
    
    79,213Inventories
    
    
    49,380
    
    
    
    35,815Prepaid expenses and other current assets
    
    
    3,109
    
    
    
    1,815Total current assets
    
    
    347,500
    
    
    
    220,953Property, plant, and equipment (net of accumulated depreciation of
$128,332 and $99,065, respectively)
    
    
    271,435
    
    
    
    205,642Other assets
    
    
    3,356
    
    
    
    4,500$
    622,291
    
    
    $
    431,095LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesTrade accounts payable
    
    $
    70,640
    
    
    $
    43,082Customer advances
    
    
    64,625
    
    
    
    Accrued expenses and other liabilities
    
    
    22,143
    
    
    
    19,887Total current liabilities
    
    
    157,408
    
    
    
    62,969Long-term debt
    
    
    80,500
    
    
    
    80,500Long-term deferred rent
    
    
    1,922
    
    
    
    Total liabilities
    
    
    239,830
    
    
    
    143,469Stockholders equityCommon stock, $0.01 par value per share:Authorized
 50,000 sharesIssued and outstanding  29,942 and 28,065 shares, respectively
    
    
    299
    
    
    
    281Additional paid-in capital
    
    
    263,058
    
    
    
    241,960Deferred stock-based compensation
    
    
    (6,774
    )
    
    
    (91
    )Retained earnings
    
    
    125,878
    
    
    
    45,476Total stockholders equity
    
    
    382,461
    
    
    
    287,626$
    622,291
    
    
    $
    431,095
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KOMAG, INCORPORATED
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands)
 Nine Months EndedOctober 2, 2005
    
    
    October 3, 2004Operating ActivitiesNet income
    
    $
    80,402
    
    
    $
    35,605Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization of property, plant, and equipment
    
    
    31,907
    
    
    
    27,499Tax adjustment to additional paid-in capital
    
    
    3,156
    
    
    
    Amortization and adjustments of intangible assets
    
    
    1,029
    
    
    
    2,422Stock-based compensation
    
    
    4,185
    
    
    
    555Deferred rent
    
    
    1,922
    
    
    
    Non-cash interest charges
    
    
    115
    
    
    
    398Gain on disposal of assets
    
    
    (1,349
    )
    
    
    (630
    )Changes in operating assets and liabilities:Accounts receivable, net
    
    
    (36,877
    )
    
    
    (2,244
    )Inventories
    
    
    (13,565
    )
    
    
    (10,897
    )Prepaid expenses and deposits
    
    
    (1,294
    )
    
    
    (492
    )Trade accounts payable
    
    
    12,473
    
    
    
    (4,322
    )Accrued expenses and other liabilities
    
    
    66,881
    
    
    
    (7,987
    )Net cash provided by operating activities
    
    
    148,985
    
    
    
    39,907Investing ActivitiesAcquisition of property, plant, and equipment
    
    
    (84,358
    )
    
    
    (49,312
    )Purchases of short-term investments
    
    
    (220,350
    )
    
    
    (112,600
    )Proceeds from short-term investments
    
    
    194,050
    
    
    
    88,850Proceeds from disposal of property, plant, and equipment
    
    
    3,092
    
    
    
    1,290Other
    
    
    
    
    
    
    (256
    )Net cash used in investing activities
    
    
    (107,566
    )
    
    
    (72,028
    )Financing ActivitiesPayment of debt
    
    
    
    
    
    
    (116,341
    )Proceeds from the issuance of long-term debt
    
    
    
    
    
    
    77,419Proceeds from issuance of common stock, net of issuance costs
    
    
    7,092
    
    
    
    68,368Net cash provided by financing activities
    
    
    7,092
    
    
    
    29,446Increase (decrease) in cash and cash equivalents
    
    
    48,511
    
    
    
    (2,675
    )Cash and cash equivalents at beginning of period
    
    
    26,410
    
    
    
    27,208Cash and cash equivalents at end of period
    
    $
    74,921
    
    
    $
    24,533
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Note 1. Basis of Presentation and Summary of Significant Accounting Policies
  Use of Estimates in the Preparation of Financial Statements:
 Fiscal Year:
 Reclassification:
 7




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Statement of Cash Flows
 Cash and Cash Equivalents:
 Short-Term Investments:
 Inventories:
 October 2, 2005
    
    
    January 2, 2005Raw materials
    
    $
    33,841
    
    
    $
    20,647Work in process
    
    
    7,689
    
    
    
    7,785Finished goods
    
    
    7,850
    
    
    
    7,383$
    49,380
    
    
    $
    35,815
 Stock-Based Compensation: Accounting for Stock Issued
to Employees.
 Accounting for Stock-Based Compensation Accounting for Stock-Based Compensation  Transition and Disclosure  an Amendment of SFAS
123,
 8




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Three Months Ended
    
    
    Nine Months EndedOctober 2, 2005
    
    
    October 3, 2004
    
    
    October 2, 2005
    
    
    October 3, 2004Net income, as reported
    
    $
    31,982
    
    
    $
    9,264
    
    
    $
    80,402
    
    
    $
    35,605Add: Stock-based employee compensation expense included
in reported net income, net of related tax effects
    
    
    1,658
    
    
    
    185
    
    
    
    4,185
    
    
    
    555Deduct: Stock-based compensation expense determined under
the fair value method for all awards, net of related tax effects
    
    
    (2,300
    )
    
    
    (887
    )
    
    
    (6,216
    )
    
    
    (2,799
    )Pro forma net income
    
    $

31,340
    
    
    $
    8,562
    
    
    $
    78,371
    
    
    $
    33,361Net income per share:Basic  as reported
    
    
    1.09
    
    
    $
    0.33
    
    
    $
    2.79
    
    
    $
    1.31Diluted  as reported
    
    
    0.97
    
    
    $
    0.31
    
    
    $
    2.48
    
    
    $
    1.20Basic  pro forma
    
    
    1.07
    
    
    $
    0.31
    
    
    $
    2.72
    
    
    $
    1.23Diluted  pro forma
    
    
    0.95
    
    
    $
    0.29
    
    
    $
    2.42
    
    
    $
    1.12
  Share-Based Payment
 Computation of Net Income Per Share: Earnings per Share
  9




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Three Months Ended
    
    
    Nine Months EndedOctober 2, 2005
    
    
    October 3, 2004
    
    
    October 2, 2005
    
    
    October 3, 2004Numerator for basic net income per share:Net income as reported
    
    $
    31,982
    
    
    $
    9,264
    
    
    $
    80,402
    
    
    $
    35,605Numerator for diluted net income per share:Net income as reported
    
    $
    31,982
    
    
    $
    9,264
    
    
    $
    80,402
    
    
    $
    35,605Interest adjustment related to contigently convertible debt
    
    
    441
    
    
    
    437
    
    
    
    1,324
    
    
    
    1,210$
    32,423
    
    
    $
    9,701
    
    
    $
    81,726
    
    
    $
    36,815Denominator for basic income per share:Weighted average shares
    
    
    29,396
    
    
    
    27,792
    
    
    
    28,842
    
    
    
    27,200Denominator for diluted income per share:Weighted average shares
    
    
    29,396
    
    
    
    27,792
    
    
    
    28,842
    
    
    
    27,200Effect of dilutive securities:Contingently convertible shares under convertible debt
    
    
    3,049
    
    
    
    3,049
    
    
    
    3,049
    
    
    
    2,722Stock options
    
    
    629
    
    
    
    288
    
    
    
    583
    
    
    
    468Warrants
    
    
    
    
    
    
    201
    
    
    
    287
    
    
    
    357Stock purchase rights
    
    
    307
    
    
    
    4
    
    
    
    208
    
    
    
    1233,381
    
    
    
    31,334
    
    
    
    32,969
    
    
    
    30,759Basic net income per share
    
    $
    1.09
    
    
    $
    0.33
    
    
    $
    2.79
    
    
    $
    1.31Diluted net income per share
    
    $
    0.97
    
    
    $
    0.31
    
    
    $
    2.48
    
    
    $
    1.20
 Accounting Issues
Related to Certain Features of Contingently Convertible Debt and the Effect on Diluted Earnings per
Share.
 Recent Accounting Pronouncements: Consolidation of Variable Interest Entities Consolidation of Variable Interest Entities
 10




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Inventory Costs.
 Accounting Changes and Error Corrections.
 Note 2. Concentration of Customer, Supplier, and Geographic Risk
  Three Months Ended
    
    Nine Months EndedOctober 2, 2005
    
    October 3, 2004
    
    October 2, 2005
    
    October 3, 2004Maxtor Corporation
    
    
    34
    %
    
    
    48
    %
    
    
    33
    %
    
    
    48
    %Western Digital Corporation
    
    
    25
    %
    
    
    8
    %
    
    
    21
    %
    
    
    12
    %Hitachi Global Storage Technologies *
    
    
    20
    %
    
    
    36
    %
    
    
    22
    %
    
    
    29
    %Seagate Technology
    
    
    16
    %
    
    
    
    
    
    
    18
    %
    
    
    5
    %
 
 *
    
    (including sales to Hitachi Global Storage Technologies contract manufacturer, Excelstor) 11




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Note 3. Income Taxes
   Note 4. Accrued Expenses and Other Liabilities
  October 2, 2005
    
    
    January 2, 2005Accrued compensation and benefits
    
    $
    19,408
    
    
    $
    15,777Other liabilities
    
    
    2,735
    
    
    
    4,110$
    22,143
    
    
    $
    19,887
 Note 5. Customer Advances
  12




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Note 6. Deferred Rent
 Accounting for Operating Leases with Scheduled Rent Increases
 Note 7. Stock Purchase Rights
  Note 8. Derivative Financial Instruments
   13




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Note 9. Subsequent Event
     14




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    15




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Results of Operations
 Overview
      16




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Net Sales
          17




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Gross Profit
    Research, Development, and Engineering Expenses
   Selling, General, and Administrative Expenses
   Interest Expense
  18




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Income Taxes
   Critical Accounting Policies
  Allowance for Sales Returns
  19




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Impairment of Long-lived Assets
  Inventory Obsolescence
  Liquidity and Capital Resources
    
    
    net income of $80.4 million, net of non-cash depreciation and amortization of
property, plant and equipment of $31.9 million and other non-cash charges and gains of
$9.1 million;
    
    an accounts receivable increase of $36.9 million primarily due to an increase
in sales during the first nine months of 2005 compared to the first nine months of
2004;
 20




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
    
    an inventory increase of $13.6 million;
    
    a prepaid expense increase of $1.3 million primarily due to the payment of
insurance premiums;
    
    an accounts payable increase of $12.5 million related to increased inventory
and higher capital spending; and
    
    an accrued expenses and other liabilities increase of $66.9 million, which
primarily reflected the receipt of customer advances.
      21




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Remainderof2005
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    Thereafter
    
    
    TotalLong-Term Debt Obligations
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    80,500
    
    
    $
    80,500Operating Lease Obligations
    
    
    20
    
    
    
    2,334
    
    
    
    2,053
    
    
    
    2,046
    
    
    
    3,147
    
    
    
    16,384
    
    
    
    25,984Unconditional Purchase Obligations (1)
    
    
    2,873
    
    
    
    1,335
    
    
    
    1,196
    
    
    
    1,155
    
    
    
    1,155
    
    
    
    3,466
    
    
    
    11,180Total Contractual Cash Obligations
    
    $
    2,893
    
    
    $
    3,669
    
    
    $
    3,249
    
    
    $
    3,201
    
    
    $
    4,302
    
    
    $
    100,350
    
    
    $
    117,664
 
 (1)
    
    Unconditional purchase obligations are defined as agreements to purchase goods or services
that are enforceable and legally binding, and that specify all significant terms, including:
fixed or minimum quantities to be purchased; fixed, minimum, or variable pricing provisions;
and the approximate timing of the transactions. The amounts are based on our contractual
commitments. 22




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RISK FACTORS
 These risks and uncertainties are not the only ones facing our company. Additional risks and
uncertainties that we are unaware of or currently deem immaterial may also become important factors
that may harm our business. If any of the following risks actually occur, or other unexpected
events occur, our business, financial condition or results of operations could be materially
adversely affected, the value of our stock could decline, and you may lose part or all of your
investment. Further, this Form 10-Q contains forward-looking statements and actual results may
differ significantly from the results contemplated by our forward-looking statements.
 Risks Related to Our Business
 Our business is concentrated in the disk drive market, so downturns in the disk drive manufacturing
market and related markets may decrease our revenues and margins.
  23




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We are in the process of significantly increasing the scope of our manufacturing operations in
Malaysia, and if we fail to successfully manage and integrate our expanding operations, we may be
unable to exploit potential market opportunities, which would materially and adversely affect our
business.
   If our production capacity is underutilized, our gross margin will be adversely affected and we
could sustain significant losses.
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If future demand for our products exceeds the production capability of our existing facilities, we
may be required to invest significant capital expenditures to increase capacity or else risk losing
market share.
  Our customer supply agreements with several of our major customers require us to meet certain
production demands and volume goals, and if we fail to successfully perform under these agreements,
we may incur substantial costs and expenses, and our business could be materially and adversely
affected.
  25




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We receive a large percentage of our net sales from only a few disk drive manufacturing customers,
the loss of any of which would adversely affect our sales.
   Because we depend on a limited number of suppliers, if our suppliers experience capacity
constraints or production failures, our production, operating results and growth potential could be
harmed.
  26




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Changes in the accounting treatment of stock-based awards may adversely affect our reported results
of operations.
  Price competition may force us to lower our prices, causing our gross margin to suffer.
   Internal disk operations of disk drive manufacturers may adversely affect our ability to sell our
disk products.
  27




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All of our manufacturing operations have been consolidated in Malaysia and our foreign operations
and international sales subject us to additional risks inherent in doing business on an
international level that make it more costly or difficult to conduct our business.
    28




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
    
    compliance with changing legal and regulatory requirements of foreign jurisdictions;
    
    fluctuations in tariffs or other trade barriers;
    
    foreign currency exchange rate fluctuations;
    
    difficulties in staffing and managing foreign operations;
    
    political, social and economic instability;
    
    increased exposure to threats and acts of terrorism;
    
    exposure to taxes in multiple jurisdictions;
    
    local infrastructure problems or failures including but not limited to loss
of power and water supply; and
    
    transportation delays and interruptions.
  If we are unable to perform successfully in the highly competitive and increasingly concentrated
disk industry, we may not be able to maintain or gain additional market share, and our operating
results would be harmed.
  29




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Because our products require a lengthy sales cycle with no assurance of high volume sales, we may
expend significant financial and other resources without a return.
  If our customers cancel orders, our sales could suffer and we are generally not entitled to receive
cancellation penalties to offset the loss of sales revenue.
  Disk drive program life cycles are short, and disk drive programs are highly customized. If we fail
to respond to our customers demanding requirements, we will not be able to compete effectively.
  30




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If we do not keep pace with the rapid technological change in the disk drive industry, we will not
be able to compete effectively, and our operating results could suffer.
   If we fail to improve the quality of, and control contamination in our manufacturing processes, we
will lose our ability to remain competitive.
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An industry trend towards glass-based applications could negatively impact our ability to remain
competitive.
  If we are not able to attract and retain key personnel, our operations could be harmed.
  If we do not protect our patents and other intellectual property rights, our revenues could suffer.
  32




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##### Table of Contents



We may face intellectual property infringement claims that are costly to resolve, may divert our
managements attention, and may negatively impact our operations.
  Historical quarterly results may not accurately predict our performance due to a number of
uncertainties and market factors, and as a result it is difficult to predict our future results.
  
    
    timing of significant orders, or order cancellations;
    
    changes in our product mix and average selling prices;
    
    modified, adjusted, or rescheduled shipments;
    
    availability of disks versus demand for disks;
    
    the cyclical nature of the disk drive industry;
    
    our ability to develop and implement new manufacturing process technologies;
    
    increases in our production and engineering costs associated with initial
design and production of new product programs;
    
    fluctuations in exchange rates, particularly between the U.S. dollar and the Malaysian ringgit;
    
    the ability of our process equipment to meet more stringent future product requirements;
    
    our ability to introduce new products that achieve cost-effective high-volume
production in a timely manner, timing of product announcements, and market acceptance
of new products;
    
    the availability of our production capacity, and the extent to which we can
use that capacity;
    
    changes in our manufacturing efficiencies, in particular product yields and
input costs for direct materials, operating supplies and other running costs;
    
    prolonged disruptions of operations at any of our facilities for any reason;
    
    changes in the cost of or limitations on availability of labor;
    
    structural changes within the disk industry, including combinations,
failures, and joint venture arrangements; and
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
    
    changes in tax regulations in foreign jurisdictions that could potentially
reduce our tax incentives in areas such as Malaysian capital allowances, tax holidays,
and exemptions on withholding tax on royalty payments made by our Malaysian operations
to our subsidiary in The Netherlands.
  If we make unprofitable acquisitions or are unable to successfully integrate future acquisitions,
our business could suffer.
  
    
    difficulties in integrating the operations, technologies, products and
personnel of the acquired companies, especially given the specialized nature of our
technology;
    
    diversion of managements attention from normal daily operations of the
business;
    
    potential difficulties in completing projects associated with in-process
research and development;
    
    initial dependence on unfamiliar supply chains or relatively small supply partners; and
    
    the potential loss of key employees of the acquired companies.
  
    
    issue stock that would dilute our current stockholders percentage ownership;
    
    assume liabilities;
    
    record goodwill and non-amortizable intangible assets that will be subject to
impairment testing and potential periodic impairment charges;
    
    incur amortization expenses related to certain intangible assets;
    
    incur large and immediate write-offs; or
    
    become subject to litigation.
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The nature of our operations makes us susceptible to material environmental liabilities, which
could result in significant compliance and clean-up expenses and adversely affect our financial
condition.
  
    
    the use, storage, discharge, and disposal of hazardous materials used during
our manufacturing process;
    
    the treatment of water used in our manufacturing process; and
    
    air quality management.
   
    
    we could be subject to significant penalties;
    
    our ability to expand or operate in California or Malaysia could be restricted;
    
    our ability to establish additional operations in other locations could be restricted; or
    
    we could be required to obtain costly equipment or incur significant expenses
to comply with environmental regulations.
  From time to time, we may have to defend lawsuits in connection with the operation of our business.
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Earthquakes or other natural or man-made disasters could disrupt our operations.
  Terrorist attacks may adversely affect our business and operating results
  Compliance with the rules and regulations concerning corporate governance may be costly,
time-consuming, and difficult to achieve, which could harm our operating results and business.
   In the future, we may need additional capital, which may not be available on favorable terms, or at
all.
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
    
    the rate of our sales growth;
    
    the level of our profits or losses;
    
    the timing and extent of our spending to expand manufacturing capacity, support
facilities upgrades and product development efforts;
    
    the timing and size of business or technology acquisitions;
    
    the timing of introductions of new products and enhancements to our existing
products; and
    
    the length of product life cycles.
  Anti-takeover provisions in our certificate of incorporation could discourage potential acquisition
proposals or delay or prevent a change of control.
  Risks Related to our Indebtedness
 We are leveraged, and our debt obligations will continue to make us vulnerable to economic
downturns.
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Our holding company structure makes us dependent on cash flow from our subsidiaries to meet our
obligations.
  The assets of our subsidiaries may not be available to make payments on our debt obligations.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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ITEM 4. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
  Internal Control over Financial Reporting
  
    
    pertain to the maintenance of records that, in reasonable detail, accurately
and fairly reflect the transactions and dispositions of the assets of the company;
    
    provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are being
made only in accordance with authorizations of management and directors of the
company; and
    
    provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the companys assets that could have a
material effect on the financial statements.
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Changes in Internal Control Over Financial Reporting
  
 PART II. OTHER INFORMATION
 
   
   
   
   
   
  10.1
    
    Media Supply Agreement dated July 4, 2005 between Seagate Technology
International and Komag USA (Malaysia) Sdn. And Komag, Incorporated. *10.2
    
    Addendum to Business Agreement between Maxtor, Inc. and Komag, Incorporated
dated October 6, 2003, as amended on July 8, 2005.*10.3
    
    Form of Officer Employment Agreements.31.1
    
    Rule 13a  14 (a) Certification of Chief Executive Officer31.2
    
    Rule 13a  14 (a) Certification of Chief Financial Officer32
    
    Section 1350 Certification of Chief Executive Officer and Chief Financial Officer
 
 *
    
    Confidential treatment has been requested with respect to
certain portions of this exhibit. Omitted portions have been filed separately
with the Securities and Exchange Commission. 41




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SIGNATURES
  KOMAG, INCORPORATED(Registrant)DATE: November 7, 2005
    
    BY:
    
    /s/ Thian Hoo TanThian Hoo TanChief Executive OfficerDATE: November 7, 2005
    
    BY:
    
    /s/ Kathleen A. BaylessKathleen A. BaylessSenior Vice President, Chief Financial Officer
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EXHIBIT INDEX
 10.1
    
    Media Supply Agreement dated July 4, 2005 between Seagate Technology
International and Komag USA (Malaysia) Sdn. And Komag, Incorporated. *10.2
    
    Addendum to Business Agreement between Maxtor, Inc. and Komag, Incorporated
dated October 6, 2003, as amended on July 8, 2005.*10.3
    
    Form of Officer Employment Agreements.31.1
    
    Rule 13a  14 (a) Certification of Chief Executive Officer31.2
    
    Rule 13a  14 (a) Certification of Chief Financial Officer32
    
    Section 1350 Certification of Chief Executive Officer and Chief Financial Officer
 
 *
    
    Confidential treatment has been requested with respect to
certain portions of this exhibit. Omitted portions have been filed separately
with the Securities and Exchange Commission. 43