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 Hutchinson Technology Incorporated Logo
Hutchinson Technology Reports Second Quarter Results
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