Hutchinson Technology Reports Fourth Quarter Results Low Manufacturing Yields Contribute to Loss HUTCHINSON, Minn., Oct. 31, 2013 (GLOBE NEWSWIRE) -- Hutchinson Technology Incorporated (Nasdaq:HTCH) today reported suspension assembly shipments of 102.6 million for its fiscal fourth quarter ended September 29, 2013, up from 99.3 million in the preceding quarter. The company reported a net loss of $14.6 million, or $0.53 per share, on net sales of $63.7 million. The net loss for the fiscal 2013 fourth quarter included a $1.7 million impairment of BioMeasurement inventory, $900,000 of site consolidation costs, $800,000 of non-cash interest expense and a $100,000 foreign currency loss. Excluding these items, the company's fiscal 2013 fourth quarter net loss totaled $11.0 million, or $0.40 per share. In the preceding quarter, the company reported a net loss of $15.9 million, or $0.59 per share, on net sales of $61.3 million. The net loss for the fiscal 2013 third quarter included a $3.4 million foreign currency loss, $750,000 of non-cash interest expense and $600,000 of site consolidation costs. Excluding these items, the company's fiscal 2013 third quarter net loss totaled $11.1 million, or $0.41 per share. The company incurred a gross loss of $400,000, or 1% of net sales, in the fiscal 2013 fourth quarter, compared with a gross profit of $1.4 million, or 2% of net sales, in the preceding quarter. Excluding the impairment of BioMeasurement inventory, gross profit in the 2013 fourth quarter would have been $1.4 million, or 2% of net sales, reflecting the impact of the low yields that resulted from the manufacturing issues noted below. "While we resolved the previously reported process issues encountered in our third quarter, we missed our operational targets in two areas during the fourth quarter," said Rick Penn, Hutchinson Technology's president and chief executive officer. "At our Thailand assembly operation, the aggressive ramp, combined with a heavier mix of new dual-stage actuated (DSA) programs, put pressure on our yields and efficiencies and caused them to come in lower than planned. We have intensified our support and expect improved operational performance as we ramp additional programs and continue to transition more assembly production to Thailand." Penn said the company also experienced low yields in the last month of the quarter from a manufacturing issue in its components operation that has since been corrected. He noted that neither of the issues impacted suspension assembly shipments to customers. "Although we are disappointed with these manufacturing issues, we have addressed them and are confident our operational performance will improve going forward," said Penn. Average selling price in the fiscal 2013 fourth quarter was $0.60 compared to $0.59 in the preceding quarter. DSA suspension assemblies accounted for 23% of fourth quarter shipments, up from 20% in the preceding quarter, and are expected to account for about 25% of volume in the fiscal 2014 first quarter. Output from the company's Thailand assembly operation accounted for 48% of assembly production in the fiscal 2013 fourth quarter, up from 35% in the preceding quarter. The company expects 55% to 60% of assembly production to come from its Thailand operation in the fiscal 2014 first quarter. Cash and investments at the end of the 2013 fourth quarter totaled $40.6 million, up from $37.5 million at the end of the preceding quarter. Cash generated by operations in the fourth quarter totaled $3.0 million and capital spending in the quarter totaled $3.8 million. Outstanding borrowings on the company's revolving line of credit totaled $4.0 million at the end of the fiscal 2013 fourth quarter compared with zero at the end of the preceding quarter. Penn said the company expects its suspension assembly shipments in the fiscal 2014 first quarter to be flat to up 5% compared with the fiscal 2013 fourth quarter. Average selling price is expected to stay relatively flat, as increasing shipments of DSA suspensions are offset by a transition from development pricing to high-volume pricing on DSA suspensions. "Although we faced some challenges this past quarter, we remain well positioned to meet our customers' advancing requirements," said Penn. "As our execution improves and we move through fiscal 2014, we expect to realize the benefits from transitioning more assembly production to Thailand, consolidating our U.S. operations and continuing to improve our overall cost structure. Looking longer-term, we are confident our business can generate attractive profitability and free cash flow as our volume grows." 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. As a key worldwide supplier of suspension assemblies for disk drives, the company's products help customers improve overall disk drive performance and meet the demands of an ever-expanding digital universe. Cautionary Note Regarding Forward-Looking Statements This announcement contains forward-looking statements, including statements regarding demand for and shipments of 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 Fourteen Fifty-Two Fifty-Three Weeks Ended Weeks Ended Weeks Ended Weeks Ended September 29, September 30, September 29, September 30, 2013 2012 2013 2012 Net sales $63,659 $63,626 $249,596 $248,589 Cost of sales 64,031 63,867 233,171 245,068 Gross (loss) profit (372) (241) 16,425 3,521 Research and 3,695 4,088 14,621 16,474 development expenses Selling, general and administrative 5,709 6,866 23,676 28,398 expenses Site consolidation and 885 -- 2,873 (711) severance expenses Debt refinancing costs -- 201 -- 4,127 Flood related costs, net of Insurance -- 546 -- (4,640) recoveries Loss from operations (10,661) (11,942) (24,745) (40,127) Other (expense) (108) 1,273 (550) 1,646 income, net Gain on extinguishment -- -- 4,986 5,897 of long-term debt Interest Income 14 39 98 131 Interest expense (3,750) (4,016) (15,121) (16,551) Gain on short- and -- -- 272 567 long-term investments Loss before income (14,505) (14,646) (35,060) (48,437) taxes Provision for income 50 85 16 205 taxes Net loss $(14,555) $(14,731) $(35,076) $(48,642) Basic loss per share $(0.53) $(0.62) $(1.35) $(2.06) Diluted loss per share $(0.53) $(0.62) $(1.35) $(2.06) Weighted-average common shares 27,568 23,884 25,981 23,565 outstanding Weighted-average diluted shares 27,568 23,884 25,981 23,565 outstanding Hutchinson Technology Incorporated Condensed Consolidated Balance Sheets - Unaudited (In thousands, except shares data) September 29, September 30, 2013 2012 ASSETS Current assets: Cash and cash equivalents $39,403 $53,653 Short-term investments restricted 1,200 1,200 Trade receivables, net 21,680 21,438 Other receivables 3,214 3,880 Inventories 44,285 41,432 Other current assets 6,383 7,203 Total current assets 116,165 128,806 Property, plant and equipment, net 186,914 202,468 Other assets 3,596 5,014 Total assets $306,675 $336,288 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current maturities of short- and long-term debt, $3,980 $11,698 net of discount Current portion of capital lease obligation 1,122 -- Accounts payable 23,535 13,982 Accrued expenses 6,066 6,350 Accrued compensation 9,251 9,656 Total current liabilities 43,954 41,686 Long-term debt, net of discount 123,023 125,232 Capital lease obligation 2,968 -- Other long-term liabilities 2,497 1,540 Shareholders' equity: Common stock $.01 par value, 100,000,000 shares authorized, 27,581,000 and 23,900,000 issued and 276 239 outstanding Additional paid-in capital 431,909 430,448 Accumulated other comprehensive loss (148) (129) Accumulated loss (297,804) (262,728) Total shareholders' equity 134,233 167,830 Total liabilities and shareholders' equity $306,675 $336,288 Hutchinson Technology Incorporated Condensed Consolidated Statements of Cash Flows - Unaudited (Dollars in thousands) Fifty-Two Fifty-Three Weeks Ended Weeks Ended September 29, September 30, 2013 2012 Operating activities: Net loss $(35,076) $(48,642) Adjustments to reconcile net loss to cash provided by operating activities: Depreciation and amortization 38,891 41,459 Stock-based compensation 1,140 1,979 Gain on short- and long-term investments (272) (567) Loss on disposal of assets 98 418 Asset impairment charge -- 8,537 Non-cash interest expense 3,335 5,467 Gain on extinguishment of debt (4,986) (5,897) Severance and site consolidation expenses -- (1,741) Changes in operating assets and liabilities 2,955 37,079 Cash provided by operating activities 6,085 38,092 Investing activities: Capital expenditures (18,880) (27,880) Proceeds from sale/leaseback of equipment 5,025 -- Change in restricted cash 1,698 (2,799) Purchases of marketable securities (1,200) (2,813) Sales / maturities of marketable securities 1,472 3,789 Cash used for investing activities (11,885) (29,703) Financing activities: Net proceeds from issuance of common stock 358 -- Repayments of capital lease (783) -- Repayments of revolving credit line (237,525) (311,771) Proceeds from revolving credit line 241,505 301,362 Repayments of debt (23,470) (37,154) Proceeds from private placement of debt 11,590 39,400 Debt refinancing costs (359) (4,127) Cash used for financing activities (8,684) (12,290) Effect of exchange rate changes on cash 234 -- Net decrease in cash and cash equivalents (14,250) (3,901) Cash and cash equivalents at beginning of period 53,653 57,554 Cash and cash equivalents at end of period $39,403 $53,653 Hutchinson Technology Incorporated Loss Per Share Calculation - Unaudited (In thousands, except per share data) Thirteen Fourteen Fifty-Two Fifty-Three Weeks Ended Weeks Ended Weeks Ended Weeks Ended September 29, September 30, September 29, September 30, 2013 2012 2013 2012 Net loss (A) $(14,555) $(14,731) $(35,076) $(48,642) Weighted average common shares 27,568 23,884 25,981 23,565 outstanding (B) Dilutive potential -- -- -- -- common shares Weighted average common and diluted 27,568 23,884 25,981 23,565 shares outstanding (C) Basic loss per share $(0.53) $(0.62) $(1.35) $(2.06) [(A)/(B)] Diluted loss per share $(0.53) $(0.62) $(1.35) $(2.06) [(A)/(C)] Hutchinson Technology Incorporated Reconciliation of Non-GAAP to GAAP Financial Measures - Unaudited (In thousands, except per share data) Thirteen Thirteen Fourteen Weeks Ended Weeks Ended Weeks Ended September 29, June 30, September 30, 2013 2013 2012 Net loss - GAAP $(14,555) $(15,866) $(14,731) Add BioMeasurment inventory 1,747 -- -- impairment Add foreign currency loss 122 3,368 -- Subtract foreign currency gain -- -- (738) Add non-cash interest expenses 765 749 980 Add site consolidation expenses 885 638 -- Add flood-related costs -- -- 546 Add debt refinancing costs -- -- 201 Net loss - Adjusted $(11,036) $(11,111) $(13,742) Net loss per common share – GAAP: Basic loss per share $(0.53) $(0.59) $(0.62) Diluted loss per share $(0.53) $(0.59) $(0.62) Net loss per common share – Adjusted: Basic loss per share $(0.40) $(0.41) $(0.58) Diluted loss per share $(0.40) $(0.41) $(0.58) Weighted average common and common equivalent shares outstanding: Basic 27,568 27,084 23,884 Diluted 27,568 27,084 23,884 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 Fourth Quarter Results
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