Hutchinson Technology Reports First Quarter Results

Hutchinson Technology Reports First Quarter Results

Program Ramps Continue to Partially Offset Market Weakness

HUTCHINSON, Minn., Jan. 29, 2013 (GLOBE NEWSWIRE) -- Hutchinson Technology
Incorporated (Nasdaq:HTCH) today reported a net loss of $6.5 million, or $0.27
per share, on net sales of $63.7 million for its fiscal 2013 first quarter
ended December 30, 2012. Results for the quarter included $1.0 million of
severance costs and $1.0 million of non-cash interest expense. Excluding these
items, the company's first quarter net loss was $4.5 million, or $0.19 per

In the preceding quarter, the company reported a net loss of $14.7 million, or
$0.62 per share, on net sales of $63.6 million. Excluding certain items, the
non-GAAP net loss in the preceding quarter was $13.0 million, or $0.54 per
share. A detailed reconciliation of GAAP to non-GAAP results is provided in
the accompanying financial statements.

The company's suspension assembly shipments totaled 103.6 million in the
13-week fiscal 2013 first quarter, up 6% on a weekly shipment basis compared
with 105.2 million in the 14-week fiscal 2012 fourth quarter. "As in the
preceding quarter, our shipments benefited from our market share positions on
both existing and new customer programs even as worldwide disk drive and
suspension assembly demand remained soft," said Rick Penn, Hutchinson
Technology's president and chief executive officer. 

Average selling price in the fiscal 2013 first quarter was $0.60, up from
$0.58 in the preceding quarter, due to a higher mix of both development and
high volume dual-stage actuated (DSA) suspensions and suspensions for
enterprise applications.DSA suspensions, which carry a higher selling price
and cost more to manufacture, increased to 9% of the company's first quarter
product mix from 5% in the preceding quarter. The company expects its product
mix to continue to shift toward DSA suspensions throughout fiscal 2013.

Gross profit in the fiscal 2013 first quarter was $7.4 million, or 11.6% of
net sales, compared with a gross loss of $0.2 million in the preceding
quarter. Compared with the fiscal 2012 fourth quarter, gross profit benefited
from improved absorption of fixed costs due to higher weekly volume, continued
efforts to reduce costs, increased shipments of higher-priced development
products and increased scrap recoveries.

TSA+ suspensions accounted for 85% of first quarter shipments, unchanged from
the preceding quarter."We are very pleased with the levels of quality and
output we are realizing from our existing TSA+ and DSA capacity," said
Penn."Our manufacturing proficiency is enabling us to meet increasing
customer demand for DSA suspensions."

Penn said that the company's operation in Thailand accounted for 18% of
assembly production in the fiscal first quarter. "We have qualified
additional products at our Thailand site and remain on track to have about
one-half of our total assembly output produced there by the end of our fiscal
2013 third quarter," said Penn.

Cash and investments at the end of the 2013 first quarter totaled $57.5
million, up $2.6 million compared with the preceding quarter. Cash used by
operations totaled $1.6 million in the fiscal 2013 first quarter, while
capital spending totaled $5.1 million.Outstanding borrowings on the company's
revolving line of credit totaled $4.1 million at the end of the fiscal 2013
first quarter compared with none at the end of the preceding quarter.

After the end of the fiscal 2013 first quarter, as previously announced, the
company issued $12.2 million of 10.875% Senior Secured Second Lien Notes due
2017 and used the proceeds to repurchase $18.7 million of its 8.50%
Convertible Senior Notes. This reduced the company's outstanding debt with a
first put date in 2015 from $58.5 million to $39.8 million. Combined with the
planned redemption in the fiscal 2013 second quarter of the remaining $11.9
million of its 3.25% Convertible Subordinated Notes, the total principal
amount of the company's outstanding long-term debt will be reduced to $131.0
million from $149.3 million.

Regarding the company's outlook, Penn said the company expects its fiscal 2013
second quarter suspension assembly shipments to range from 95 million to 105
million, anticipating slightly lower demand for disk drives and a delay in
some program ramps to the second half of fiscal 2013. Gross profit is
expected to decline on the lower volume in the second quarter and on lower
shipments of development products. 

"Looking beyond the second quarter," said Penn, "we expect our financial
results to benefit from higher volume and improved fixed cost leverage,
increased adoption of our DSA suspensions, the cost benefits of our TSA+
process, further cost reductions as we transition more assembly volume to
Thailand and continued consolidation and streamlining of our U.S. operations."

Hutchinson Technology to Host Conference Call

The company will conduct a conference call and webcast for investors beginning
at 4:30 p.m. Central Time today. Individual investors and news media may
participate in the conference call live via the webcast, which will be
available through the Investor Relations page on Hutchinson Technology's web
site at participants will need to complete a
brief registration form and should allow extra time before the webcast begins
to register and, if necessary, download and install audio software.

About Hutchinson Technology

Hutchinson Technology is a global technology leader committed to creating
value by developing solutions to critical customer problems.The company's
Disk Drive Components Division is a key worldwide supplier of suspension
assemblies for disk drives.The company's BioMeasurement Division is focused
on bringing new technologies and products to the market that provide
information clinicians can use to improve the quality of health care and
reduce costs.

Cautionary Note Regarding Forward-Looking Statements

This announcement contains forward-looking statements, including statements
regarding demand for and shipments of disk drives, disk drive components and
the company's products, product mix, production capability and costs,
operating performance, operations in Thailand and the United States, cost
reductions, outstanding debt and financial results.The company does not
undertake to update its forward-looking statements.These statements involve
risks and uncertainties.The company's actual results could differ materially
from those anticipated in these forward-looking statements as a result of
changes in market demand and market consumption of disk drives or suspension
assemblies, changes in demand for our products, market acceptance of new
products, the company's ability to produce suspension assemblies at levels of
precision, quality, volume and cost its customers require, changes in product
mix, changes in customers yields, changes in storage capacity requirements,
changes in expected data density, changes in the company's ability to operate
its assembly operation in Thailand, changes in the company's ability to reduce
costs and other factors described from time to time in the company's reports
filed with the Securities and Exchange Commission.

Hutchinson Technology Incorporated
Condensed Consolidated Statements of Operations - Unaudited
(In thousands, except per share data)
                                                Thirteen Weeks Thirteen Weeks
                                                 Ended          Ended
                                                December 30,   December 25,
                                                 2012           2011
Net sales                                        $63,699      $58,475
Cost of sales                                    56,278         56,174
Gross profit                                     7,421          2,301
Research and development expenses                3,339          3,948
Selling, general and administrative expenses     6,166          7,173
Severance and other expenses                     1,018         (711)
Flood-related costs, (net of insurance           --           --
Loss from operations                             (3,102)        (8,109)
Other income (expense), net                      472            (87)
Interest Income                                  50             17
Interest expense                                 (4,023)        (4,283)
Gain on short- and long-term investments         127           30
Loss before income taxes                         (6,476)        (12,432)
Provision for income taxes                       46            44
Net loss                                         $(6,522)     $(12,476)
Basic loss per share                             $(0.27)      $(0.53)
Diluted loss per share                           $(0.27)      $(0.53)
Weighted-average common shares outstanding       23,951         23,395
Weighted-average diluted shares outstanding      23,951         23,395

Hutchinson Technology Incorporated
Condensed Consolidated Balance Sheets - Unaudited
(In thousands, except shares data)
                                                   December 30, September 30,
                                                    2012         2012
Current assets:                                                 
Cash and cash equivalents                           $56,300    $53,653
Short-term investments - restricted                 1,200        1,200
Trade receivables, net                              23,998       21,438
Other receivables                                   6,735        3,880
Inventories                                         46,844       41,432
Other current assets                                3,433        7,203
Total current assets                                138,510      128,806
Property, plant and equipment, net                  199,280      202,468
Other assets                                        4,929        5,014
Total assets                                        $342,719   $336,288
Current liabilities:                                            
Current maturities of long-term debt, net of        $15,968    $11,514
Current portion of capital lease                    424          184
Accounts payable                                    17,950       13,982
Accrued expenses                                    8,950        6,350
Accrued compensation                                9,066        9,656
Total current liabilities                           52,358       41,686
Long-term debt, net of discount                     126,091      125,232
Capital lease obligation                            1,213        --
Other long-term liabilities                         1,600        1,540
Shareholders' equity:                                           
Common stock $.01 par value, 100,000,000 shares
authorized, 24,046,000 and 23,900,000 issued and    240          239
Additional paid-in capital                          430,536      430,448
Accumulated other comprehensive loss                (69)         (129)
Accumulated loss                                    (269,250)    (262,728)
Total shareholders' equity                          161,457      167,830
Total liabilities and shareholders' equity          $342,719   $336,288

Hutchinson Technology Incorporated
Condensed Consolidated Statements of Cash Flows - Unaudited
(Dollars in thousands)
                                                    Thirteen     Thirteen
                                                     Weeks Ended  Weeks Ended
                                                    December 30, December 25,
                                                     2012         2011
Operating activities:                                            
Net loss                                             $(6,522)   $(12,476)
Adjustments to reconcile net loss to cash (used for)             
provided by operating activities:
Depreciation and amortization                        9,596        9,334
Stock-based compensation                             88           388
Gain on short- and long-term investments             (127)        (30)
Loss on disposal of assets                           62           (38)
Asset impairment charge                              --         8,338
Non-cash interest expense                            1,020        1,672
Severance and other expenses                         387         (1,624)
Flood insurance receivable                           --         (4,727)
Changes in operating assets and liabilities          (6,068)      11,665
Cash (used for) provided by operating activities    (1,564)      12,502
Investing activities:                                            
Capital expenditures                                 (5,063)      (5,384)
Change in restricted cash                            3,400        (2)
Purchases of marketable securities                   (1,200)      (1,613)
Sales / maturities of marketable securities          1,327        2,055
Cash used for investing activities                  (1,536)      (4,944)
Financing activities:                                            
Repayments of capital lease                          (47)        (88)
Proceeds from sale/leaseback                         1,685       --
Repayments of revolving credit line                  (58,648)    (65,131)
Proceeds from revolving credit line                  62,757      54,722
Proceeds from issuance of common stock               --         20
Cash provided by (used for) financing activities    5,747        (10,477)
Net increase (decrease) in cash and cash equivalents 2,647        (2,919)
Cash and cash equivalents at beginning of period     53,653       57,554
Cash and cash equivalents at end of period           $56,300    $54,635

Hutchinson Technology Incorporated
Loss Per Share Calculation - Unaudited
(In thousands, except per share data)
                                                Thirteen Weeks Thirteen Weeks
                                                 Ended          Ended
                                                December 30,   December 25,
                                                 2012           2011
Net loss (A)                                     $(6,522)     $(12,476)
Weighted average common shares outstanding (B)   23,951         23,395
Dilutive potential common shares                 --           --
Weighted average common and diluted shares       23,951         23,395
outstanding (C)
Basic loss per share [(A)/(B)]                   $(0.27)      $(0.53)
Diluted loss per share [(A)/(C)]                 $(0.27)      $(0.53)

Hutchinson Technology Incorporated
Reconciliation of Non-GAAP to GAAP Financial Measures - Unaudited
(In thousands, except per share data)
                              Thirteen Weeks   Fourteen       Thirteen Weeks
                               Ended            Weeks Ended    Ended
                              December 30,     September 30,  December 25,
                               2012             2012           2011
Net loss - GAAP                $(6,522)       $(14,731)    $(12,476)
Add flood-related costs        --              546           13,727
Subtract flood insurance       --              --            (13,727)
Add severance and other        1,018           --            --
Subtract severance and other   --              --            (711)
Add debt refinancing costs     --              201           --
Add non-cash interest expenses 1,020           980           1,672
Net loss - Adjusted            $(4,484)       $(13,004)    $(11,515)
Net loss per common share –                                  
Basic loss per share           $(0.27)        $(0.62)      $(0.53)
Diluted loss per share         $(0.27)        $(0.62)      $(0.53)
Net loss per common share –                                  
Basic loss per share           $(0.19)        $(0.54)      $(0.49)
Diluted loss per share         $(0.19)        $(0.54)      $(0.49)
Weighted average common and
common equivalent shares                                     
Basic                          23,951           23,884         23,395
Diluted                        23,951           23,884         23,395
Net loss per common share basic and diluted, is calculated by dividing net
income by weighted average common and common equivalent shares outstanding
basic and diluted, respectively.

         Chuck Ives
         Hutchinson Technology Inc.
         Connie Pautz
         Hutchinson Technology Inc.

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