Hutchinson Technology Reports First Quarter Results

Hutchinson Technology Reports First Quarter Results

     Higher Volume and Improved Manufacturing Execution Benefit Financial
                                 Performance

Non-GAAP Net Loss Reduced to $7 Million from $11 Million in Preceding Quarter

HUTCHINSON, Minn., Jan. 28, 2014 (GLOBE NEWSWIRE) -- Hutchinson Technology
Incorporated (Nasdaq:HTCH) today reported net sales of $70.3 million for its
fiscal 2014 first quarter ended December 29, 2013, up 10% from net sales of
$63.7 million in the preceding quarter. Suspension assembly shipments for the
quarter totaled 115.7 million, up 13% from 102.6 million in the preceding
quarter. Gross profit in the fiscal 2014 first quarter was $5.5 million, or 8%
of net sales, compared with a gross loss of $400,000 in the preceding quarter.

Rick Penn, Hutchinson Technology's president and chief executive officer, said
first quarter gross profit benefited from the higher volume in the quarter and
from improved manufacturing yields at the company's Thailand assembly
operation and in its components processes. "We are making good progress in
improving our operating performance and we're encouraged by the stronger
demand we saw in the quarter," said Penn. He said suspension assembly demand
for 2.5" mobile drives was particularly strong in the quarter and the company
responded quickly to meet the higher than expected demand.

"We improved manufacturing yields at our Thailand assembly operation while
increasing output there by nearly 20%," said Penn. The Thailand plant
accounted for more than half of the company's assembly production in the first
quarter and nearly 80% of its dual-stage actuated (DSA) suspension assembly
volume. "We will continue to shift more assembly production to Thailand while
maintaining our focus on further improving manufacturing yields and
efficiencies in all of our operations," said Penn. The company expects its
Thailand operation will account for about 60% of second quarter assembly
volume.

For its fiscal 2014 first quarter, the company reported a net loss of $15.3
million, or $0.55 per share. The net loss for the quarter included:

  *a $4.5 million asset impairment charge on the company's assembly building
    in Eau Claire, Wisconsin and $600,000 of site consolidation costs related
    to the ongoing consolidation of its operations;
  *a $3.2 million foreign currency loss primarily related to U.S.
    dollar-denominated inter-company liabilities owed to the company by its
    Thai subsidiary;
  *a $900,000 tax benefit as reserves for certain tax refunds were released
    due to the statute of limitations expiring; and
  *$800,000 of non-cash interest expense.

Excluding these items, the company's fiscal 2014 first quarter net loss was
$7.2 million, or $0.26 per share.

In the preceding quarter, the company reported a net loss of $14.6 million, or
$0.53 per share. 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 was $11.0 million or $0.40 per share.

Average selling price in the fiscal 2014 first quarter was $0.59, compared
with $0.60 in the preceding quarter, as certain DSA suspensions transitioned
to high-volume pricing. Shipments of DSA suspensions increased 12%
sequentially and accounted for 23% of first quarter shipments.

Cash and investments at the end of the fiscal 2014 first quarter totaled $40.2
million, compared with $40.6 million at the end of the preceding quarter.
Cash generated by operations in the quarter totaled $2.0 million and capital
spending in the quarter totaled $7.4 million. Outstanding borrowings on the
company's revolving line of credit totaled $2.0 million at the end of the
first quarter, compared with $4.0 million at the end of the preceding quarter.
During the quarter, the company received $4.9 million of lease financing.

The company expects suspension assembly shipments in the historically weaker
second quarter to be 105 million to 110 million. Average selling price is
expected to be relatively flat over the course of the fiscal year as the
transition to high-volume pricing on DSA suspensions continues and DSA
suspensions become a larger percentage of the product mix.DSA suspensions are
expected to account for 25% to 30% of second quarter shipments.

"Despite some near-term softness in demand, we are optimistic about our
outlook," said Penn."We continue to be encouraged by the level and breadth of
activity with our key customers.We improved our overall execution during the
first quarter and expect to make further progress toward our manufacturing
yield and efficiency targets in the quarters ahead. In addition, we are not
yet realizing the full benefits related to the shift of assembly manufacturing
to our Thailand plant and the consolidation of our U.S. operations. These
benefits will become more material to our financial performance in the latter
part of calendar 2014."

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 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 Weeks Ended Thirteen Weeks Ended
                                    December 29,         December 30,
                                    2013                 2012
                                                        
                                                        
Net sales                            $70,312            $63,699
Cost of sales                        64,782               56,278
Gross profit                         5,530                7,421
                                                        
Research and development expenses    3,942                3,339
Selling, general and administrative  5,863                6,166
expenses
Site consolidation and severance     592                 1,018
expenses
Asset impairment                     4,470               --
Loss from operations                 (9,337)              (3,102)
                                                        
Other (expense) income, net          (3,073)              472
Interest income                      25                   50
Interest expense                     (3,777)              (4,023)
Gain on short- and long-term         --                 127
investments
Loss before income taxes             (16,162)             (6,476)
                                                        
(Benefit) provision for income taxes (816)               46
                                                        
Net loss                             $(15,346)          $(6,522)
                                                        
Basic loss per share                 $(0.55)            $(0.27)
                                                        
Diluted loss per share               $(0.55)            $(0.27)
                                                        
Weighted-average common shares       27,800               23,951
outstanding
                                                        
Weighted-average diluted shares      27,800               23,951
outstanding



Hutchinson Technology Incorporated
Condensed Consolidated Balance Sheets - Unaudited
(In thousands, except shares data)
                                                               
                                                   December 29, September 29,
                                                   2013         2013
ASSETS                                                          
Current assets:                                                 
Cash and cash equivalents                           $38,957    $39,403
Short-term investments restricted                   1,200        1,200
Trade receivables, net                              23,383       21,680
Other receivables                                   2,225        3,214
Inventories                                         40,388       44,285
Other current assets                                4,546        6,383
Total current assets                                110,699      116,165
Property, plant and equipment, net                  173,507      186,914
Other assets                                        3,326        3,596
Total assets                                        $287,532   $306,675
                                                               
LIABILITIES AND SHAREHOLDERS' EQUITY                            
Current liabilities:                                            
Current maturities of short- and long-term debt,    $2,000     $3,980
net of discount
Current portion of capital lease obligations        1,693        1,122
Accounts payable                                    16,597       23,535
Accrued expenses                                    9,773        6,066
Accrued compensation                                8,448        9,251
Total current liabilities                           38,511       43,954
Long-term debt, net of discount                     123,822      123,023
Capital lease obligations                           4,721        2,968
Other long-term liabilities                         1,802        2,497
Shareholders' equity:                                           
Common stock, $.01 par value, 100,000,000 shares
authorized, 28,043,000 and 27,581,000 issued and    280          276
outstanding
Additional paid-in capital                          432,260      431,909
Accumulated other comprehensive loss                (714)        (148)
Accumulated loss                                    (313,150)    (297,804)
Total shareholders' equity                          118,676      134,233
Total liabilities and shareholders' equity          $287,532   $306,675



Hutchinson Technology Incorporated
Condensed Consolidated Statements of Cash Flows - Unaudited
(Dollars in thousands)
                                                        
                                    Thirteen Weeks Ended Thirteen Weeks Ended
                                    December 29,         December 30,
                                    2013                 2012
Operating activities:                                    
Net loss                             $(15,346)          $(6,522)
Adjustments to reconcile net loss to
cash provided by operating                               
activities:
Depreciation and amortization        10,034               9,596
Stock-based compensation             337                  88
Gain on short- and long-term         0                    (127)
investments
Loss on disposal of assets           (19)                 62
Asset impairment charge              4,470               --
Non-cash interest expense            799                  1,020
Severance and site consolidation     --                 387
expenses
Changes in operating assets and      1,724                (6,068)
liabilities
Cash provided by (used for)          1,999                (1,564)
operating activities
                                                        
Investing activities:                                    
Capital expenditures                 (7,413)              (5,063)
Proceeds from sale/leaseback of      4,900               1,685
equipment
Change in restricted cash            917                  3,400
Purchases of marketable securities   (1,200)              (1,200)
Sales / maturities of marketable     1,200                1,327
securities
Cash (used for) provided by          (1,596)              149
investing activities
                                                        
Financing activities:                                    
Net proceeds from issuance of common 18                  --
stock
Repayments of capital lease          (267)               (47)
Repayments of revolving credit line  (62,958)            (58,648)
Proceeds from revolving credit line  60,978              62,757
Cash (used for) provided by          (2,229)              4,062
financing activities
                                                        
Effect of exchange rate changes on   1,380                --
cash
                                                        
Net (decrease) increase in cash and  (446)                2,647
cash equivalents
                                                        
Cash and cash equivalents at         39,403               53,653
beginning of period
                                                        
Cash and cash equivalents at end of  $38,957            $56,300
period



Hutchinson Technology Incorporated
Loss Per Share Calculation - Unaudited
(In thousands, except per share data)
                                                        
                                    Thirteen Weeks Ended Thirteen Weeks Ended
                                    December 29,         December 30,
                                    2013                 2012
                                                        
Net loss (A)                         $(15,346)          $(6,522)
                                                        
Weighted-average common shares       27,800               23,951
outstanding (B)
Dilutive potential common shares     --                 --
Weighted-average common and diluted  27,800               23,951
shares outstanding (C)
                                                        
Basic loss per share [(A)/(B)]       $(0.55)            $(0.27)
Diluted loss per share [(A)/(C)]     $(0.55)            $(0.27)



Hutchinson Technology Incorporated
Reconciliation of Non-GAAP to GAAP Financial Measures - Unaudited
(In thousands, except per share data)
                                                            
                              Thirteen Weeks  Thirteen Weeks  Thirteen Weeks
                               Ended           Ended           Ended
                              December 29,    September 29,   December 30,
                              2013            2013            2012
                                                            
Net loss - GAAP                $(15,346)     $(14,555)     $(6,522)
Add BioMeasurement inventory   --             1,747          --
impairment
Add foreign currency loss      3,173          122            --
Subtract foreign currency gain --             --             (138)
Subtract tax benefit           (859)                         
Add non-cash interest expenses 798            765            1,020
Add severance                  --             --             1,018
Add site consolidation         592            885            --
expenses
Add asset impairment           4,470          --             --
Net loss - Adjusted            $(7,172)      $(11,036)     $(4,622)
                                                            
                                                            
Net loss per common share –                                  
GAAP:
                                                            
Basic loss per share           $(0.55)       $(0.53)       $(0.27)
Diluted loss per share         $(0.55)       $(0.53)       $(0.27)
                                                            
Net loss per common share –                                  
Adjusted:
                                                            
Basic loss per share           $(0.26)       $(0.40)       $(0.19)
Diluted loss per share         $(0.26)       $(0.40)       $(0.19)
                                                            
Weighted-average common and
common equivalent shares                                     
outstanding:
                                                            
Basic                          27,800          27,568          23,951
Diluted                        27,800          27,568          23,951
                                                            
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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