Hutchinson Technology Reports Second Quarter Results

Hutchinson Technology Reports Second Quarter Results

                       Shipments in Line with Guidance

              Gain on Debt Extinguishment Results in Net Profit

HUTCHINSON, Minn., April 30, 2013 (GLOBE NEWSWIRE) -- Hutchinson Technology
Incorporated (Nasdaq:HTCH) today reported net income of $1.9 million, or $0.07
per diluted share, on net sales of $60.9 million for its fiscal second quarter
ended March 31, 2013. Results for the quarter included a $5.0 million gain on
debt extinguishment, a $2.0 million foreign currency gain, $800,000 of
non-cash interest expense and $300,000 of severance and site consolidation
costs. Excluding these items, the company's second quarter net loss was $4.0
million, or $0.16 per share.

In the preceding quarter, the company reported a net loss of $6.5 million, or
$0.27 per share, on net sales of $63.7 million. Results for the quarter
included $1.0 million of severance costs, $1.0 million of non-cash interest
expense and a $100,000 foreign currency gain.Excluding these items, the
company's first quarter net loss was $4.6 million, or $0.19 per share.

The company's suspension assembly shipments totaled 98.9 million in the fiscal
2013 second quarter, down from 103.6 million in the previous quarter, and in
line with the company's prior guidance. Average selling price in the fiscal
2013 second quarter was $0.60, flat with the preceding quarter.Dual-stage
actuated (DSA) suspensions accounted for 12% of second quarter shipments, up
from 9% in the preceding quarter."Our DSA suspension shipments increased in
the latter part of the second quarter even though customer ramps on certain
programs using DSA suspensions have been slower than expected," said Rick
Penn, Hutchinson Technology's president and chief executive officer."We
expect DSA suspensions to account for approximately 20% of our shipments in
our third quarter."

Gross profit in the fiscal 2013 second quarter was $8.0 million, or 13.1% of
net sales, up from $7.4 million, or 11.6% of net sales, in the preceding
quarter. Gross profit benefited from improved fixed cost leverage on higher
levels of flexure and assembly production.The company built more inventory
than previously planned in order to accommodate a product mix change and meet
expected demand as it continues to transfer production capacity to its
assembly operation in Thailand. Gross profit also benefited from lower
variable costs per part, resulting primarily from improved efficiency in
manufacturing TSA+ suspension assemblies.

The company continues to transfer more assembly production to its lower cost
operation in Thailand. In the fiscal 2013 second quarter, the Thailand
operation accounted for 27% of assembly production, up from 18% in the
preceding quarter. By the end of the fiscal 2013 third quarter, the company
expects its Thailand operation will account for approximately 40% of assembly
production, including increased production of DSA suspensions.

Cash and investments at the end of the 2013 second quarter totaled $41.1
million compared with $57.5 million at the end of the preceding quarter.
During the quarter, the company redeemed the remaining $11.9 million of its
3.25% Convertible Subordinated Notes.Cash generated by operations totaled
$3.7 million in the fiscal 2013 second quarter and capital spending totaled
$7.6 million.Outstanding borrowings on the company's revolving line of credit
totaled $2.3 million at the end of the fiscal 2013 second quarter compared
with $4.1 million at the end of the preceding quarter.

Regarding the company's outlook, Penn said the company expects its fiscal 2013
third quarter suspension assembly shipments to be roughly flat on a sequential
basis at 95 million to 105 million, anticipating flat demand for disk drives.
Third quarter average selling price is expected to increase slightly as a
result of a higher percentage of DSA suspension assemblies in the mix of
products shipped in the quarter.Third quarter gross profit is expected to
decline due to lower fixed cost leverage on lower production volume following
the inventory build in the second quarter.

"Overall, our results in the quarter demonstrate progress toward our goals of
being the industry's lowest cost producer of suspension assemblies and
improving our market position and financial performance," said Penn."We are
pleased with our positions on new customer programs and expect to see
increased volume from ramps on these programs beginning in our fiscal fourth
quarter. We will continue to strengthen our competitive position by advancing
our DSA products, further improving our operating efficiency, transitioning
more assembly production to our Thailand operation and continuing to
consolidate our U.S. operations."

Hutchinson Technology to Host Conference Call

The company will conduct a conference call and webcast for investors beginning
at 4:00 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 www.htch.com/investors.Webcast 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.In the disk drive
components market, the company is a key worldwide supplier of suspension
assemblies for disk drives.The company's suspension assembly products help
customers improve overall disk drive performance and meet the demands of an
ever-expanding digital universe.In the medical device market, the company 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, pricing, production capability and costs,
operating performance, operations in Thailand and the United States, cost
reductions 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 Ended Twenty-Six Weeks Ended
                                  March 31, March 25,  March 31,  March 25,
                                  2013      2012       2013       2012
                                                               
                                                               
Net sales                          $60,930 $65,483  $124,629 $123,958
Cost of sales                      52,953    62,835     109,231    119,009
Gross profit                       7,977     2,648      15,398     4,949
                                                               
Research and development expenses  3,485     4,279      6,824      8,227
Selling, general and               6,216     7,850      12,382     15,023
administrative expenses
Severance and other expenses       332      --       1,350     (711)
Debt refinancing costs             --      3,500     --       3,500
Insurance recoveries, net of flood --      (8,833)   --       (8,833)
related costs
Loss from operations               (2,056)   (4,148)    (5,158)    (12,257)
                                                               
Other income, net                  2,510     913        2,982      826
Gain on extinguishment of          4,986     --       4,986      --
long-term debt
Interest Income                    12        47         62         64
Interest expense                   (3,767)   (4,282)    (7,790)    (8,565)
Gain on short- and long-term       145      --       272       30
investments
Income (loss) before income taxes  1,830     (7,470)    (4,646)    (19,902)
                                                               
(Benefit) provision for income     (37)     75         9         119
taxes
                                                               
Net income (loss)                  $1,867  $(7,545) $(4,655) $(20,021)
                                                               
Basic income (loss) per share      $0.07   $(0.32)  $(0.19)  $(0.86)
                                                               
Diluted income (loss) per share    $0.07   $(0.32)  $(0.19)  $(0.86)
                                                               
Weighted-average common shares     25,319    23,409     24,635     23,402
outstanding
                                                               
Weighted-average diluted shares    26,555    23,409     24,635     23,402
outstanding


Hutchinson Technology Incorporated
Condensed Consolidated Balance Sheets - Unaudited
(In thousands, except shares data)
                                                               
                                                     March 31,  September 30,
                                                     2013       2012
ASSETS                                                          
Current assets:                                                 
Cash and cash equivalents                             $39,936  $53,653
Short-term investments - restricted                   1,200      1,200
Trade receivables, net                                23,855     21,438
Other receivables                                     8,134      3,880
Inventories                                           49,108     41,432
Other current assets                                  3,295      7,203
Total current assets                                  125,528    128,806
Property, plant and equipment, net                    196,748    202,468
Other assets                                          4,879      5,014
Total assets                                          $327,155 $336,288
                                                               
LIABILITIES AND SHAREHOLDERS' INVESTMENT                        
Current liabilities:                                            
Current maturities of long-term debt, net of discount $2,289   $11,514
Current portion of capital lease                      802        184
Accounts payable                                      17,857     13,982
Accrued expenses                                      5,757      6,350
Accrued compensation                                  10,687     9,656
Total current liabilities                             37,392     41,686
Long-term debt, net of discount                       121,509    125,232
Capital lease obligation                              2,451      --
Other long-term liabilities                           1,680      1,540
Shareholders' equity:                                           
Common stock $.01 par value, 100,000,000 shares
authorized, 26,213,000 and 23,900,000 issued and      262        239
outstanding
Additional paid-in capital                            430,828    430,448
Accumulated other comprehensive gain (loss)           416        (129)
Accumulated loss                                      (267,383)  (262,728)
Total shareholders' equity                            164,123    167,830
Total liabilities and shareholders' equity            $327,155 $336,288


Hutchinson Technology Incorporated
Condensed Consolidated Statements of Cash Flows - Unaudited
(Dollars in thousands)
                                                                 
                                                       Twenty-Six Weeks Ended
                                                       March 31,  March 25,
                                                       2013       2012
Operating activities:                                             
Net loss                                                $(4,655) $(20,021)
Adjustments to reconcile net loss to cash provided by             
operating activities:
Depreciation and amortization                           19,817     19,595
Stock-based compensation                                380        975
Gain on short- and long-term investments                (272)      (30)
Loss on disposal of assets                              334        178
Asset impairment charge                                 --       8,338
Non-cash interest expense                               1,820      3,390
Gain on extinguishment of debt                          (4,986)   --
Severance and other expenses                            --       (1,741)
Changes in operating assets and liabilities             (10,308)   12,848
Cash provided by operating activities                  2,130      23,532
                                                                 
Investing activities:                                             
Capital expenditures                                    (12,697)   (13,861)
Proceeds from sale/leaseback of equipment               3,486     --
Change in restricted cash                               3,217      (735)
Purchases of marketable securities                      (1,200)    (1,613)
Sales / maturities of marketable securities             1,464      2,055
Cash used for investing activities                     (5,730)    (14,154)
                                                                 
Financing activities:                                             
Proceeds from issuance of common stock                  23        --
Repayments of capital lease                             (191)     --
Repayments of revolving credit line                     (115,808) (138,123)
Proceeds from revolving credit line                     118,097   127,537
Repayments of debt                                      (23,469)  --
Proceeds from private placement of debt                 11,590    --
Debt refinancing costs                                  (359)     (1,419)
Cash used for financing activities                     (10,117)   (12,005)
                                                                 
Net decrease in cash and cash equivalents               (13,717)   (2,627)
                                                                 
Cash and cash equivalents at beginning of period        53,653     57,554
                                                                 
Cash and cash equivalents at end of period              $39,936  $54,927


Hutchinson Technology Incorporated
Earnings (Loss) Per Share Calculation - Unaudited
(In thousands, except per share data)
                                                               
                                  Thirteen Weeks Ended Twenty-Six Weeks Ended
                                  March 31, March 25,  March 31,  March 25,
                                  2013      2012       2013       2012
                                                               
Net income (loss) (A)              $1,867  $(7,545) $(4,655) $(20,021)
                                                               
Weighted average common shares     25,319    23,409     24,635     23,402
outstanding (B)
Dilutive potential common shares   1,236    --       --       --
                                                               
Weighted average common and        26,555    23,409     24,635     23,402
diluted shares outstanding (C)
                                                               
Basic earnings (loss) per share    $0.07   $(0.32)  $(0.19)  $(0.86)
[(A)/(B)]
Diluted earnings (loss) per share  $0.07   $(0.32)  $(0.19)  $(0.86)
[(A)/(C)]


Hutchinson Technology Incorporated
Reconciliation of Non-GAAP to GAAP Financial Measures - Unaudited
(In thousands, except per share data)
                                                              
                                  Thirteen Weeks Ended
                                  March 31,     December 30,    March 25,
                                  2013          2012            2012
                                                              
Net income (loss) - GAAP           $1,867      $(6,522)      $(7,545)
Subtract gain on extinguishment of (4,986)      --             --
debt
Subtract foreign currency gain     (1,980)      (138)          (649)
Add non-cash interest expenses     800          1,020          1,718
Add severance and other expenses   332          1,018          --
Subtract flood insurance           --           --             (11,273)
recoveries
Add flood-related costs            --           --             2,440
Add debt refinancing costs         --           --             3,500
Net loss - Adjusted                $(3,967)    $(4,622)      $(11,809)
                                                              
                                                              
Net loss per common share – GAAP:                              
                                                              
Basic earnings (loss) per share    $0.07       $(0.27)       $(0.32)
Diluted earnings (loss) per share  $0.07       $(0.27)       $(0.32)
                                                              
Net loss per common share –                                    
Adjusted:
                                                              
Basic earnings (loss) per share    $(0.16)     $(0.19)       $(0.50)
Diluted earnings (loss) per share  $(0.16)     $(0.19)       $(0.50)
                                                              
Weighted average common and common                             
equivalent shares outstanding:
                                                              
Basic                              25,319        23,951          23,409
Diluted                            26,555        23,951          23,409
                                                              
                                                              
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.

CONTACT: INVESTOR CONTACT:
         Chuck Ives
         Hutchinson Technology Inc.
         320-587-1605
        
         MEDIA CONTACT:
         Connie Pautz
         Hutchinson Technology Inc.
         320-587-1823

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