Hutchinson Technology Reports Fourth Quarter Results

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

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