Attached files
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| 8-K - FORM 8-K - HUTCHINSON TECHNOLOGY INC | f8k_103113.htm |
| EX-10.1 - EXHIBIT 10.1 - HUTCHINSON TECHNOLOGY INC | exh_101.htm |
Exhibit 99.1
HUTCHINSON TECHNOLOGY REPORTS FOURTH QUARTER RESULTS
Low Manufacturing Yields Contribute to Loss
HUTCHINSON, Minn., Oct. 31, 2013 -- 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.
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INVESTOR CONTACT:
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MEDIA CONTACT:
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Chuck Ives
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Connie Pautz
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Hutchinson Technology Inc.
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Hutchinson Technology Inc.
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320-587-1605
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320-587-1823
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Hutchinson Technology Incorporated
Condensed Consolidated Statements of Operations - Unaudited
(In thousands, except per share data)
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Thirteen
Weeks Ended
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Fourteen
Weeks Ended
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Fifty-Two
Weeks Ended
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Fifty-Three
Weeks Ended
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|||||||||||||
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September 29,
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September 30,
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September 29,
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September 30,
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|||||||||||||
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2013
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2012
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2013
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2012
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Net sales
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$ | 63,659 | $ | 63,626 | $ | 249,596 | $ | 248,589 | ||||||||
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Cost of sales
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64,031 | 63,867 | 233,171 | 245,068 | ||||||||||||
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Gross (loss) profit
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(372 | ) | (241 | ) | 16,425 | 3,521 | ||||||||||
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Research and development expenses
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3,695 | 4,088 | 14,621 | 16,474 | ||||||||||||
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Selling, general and administrative expenses
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5,709 | 6,866 | 23,676 | 28,398 | ||||||||||||
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Site consolidation and severance expenses
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885 | - | 2,873 | (711 | ) | |||||||||||
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Debt refinancing costs
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- | 201 | - | 4,127 | ||||||||||||
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Flood related costs, net of Insurance recoveries
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- | 546 | - | (4,640 | ) | |||||||||||
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Loss from operations
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(10,661 | ) | (11,942 | ) | (24,745 | ) | (40,127 | ) | ||||||||
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Other (expense) income, net
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(108 | ) | 1,273 | (550 | ) | 1,646 | ||||||||||
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Gain on extinguishment of long-term debt
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- | - | 4,986 | 5,897 | ||||||||||||
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Interest Income
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14 | 39 | 98 | 131 | ||||||||||||
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Interest expense
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(3,750 | ) | (4,016 | ) | (15,121 | ) | (16,551 | ) | ||||||||
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Gain on short- and long-term investments
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- | - | 272 | 567 | ||||||||||||
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Loss before income taxes
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(14,505 | ) | (14,646 | ) | (35,060 | ) | (48,437 | ) | ||||||||
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Provision for income taxes
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50 | 85 | 16 | 205 | ||||||||||||
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Net loss
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$ | (14,555 | ) | $ | (14,731 | ) | $ | (35,076 | ) | $ | (48,642 | ) | ||||
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Basic loss per share
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$ | (0.53 | ) | $ | (0.62 | ) | $ | (1.35 | ) | $ | (2.06 | ) | ||||
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Diluted loss per share
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$ | (0.53 | ) | $ | (0.62 | ) | $ | (1.35 | ) | $ | (2.06 | ) | ||||
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Weighted-average common shares outstanding
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27,568 | 23,884 | 25,981 | 23,565 | ||||||||||||
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Weighted-average diluted shares outstanding
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27,568 | 23,884 | 25,981 | 23,565 | ||||||||||||
Hutchinson Technology Incorporated
Condensed Consolidated Balance Sheets - Unaudited
(In thousands, except shares data)
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September 29,
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September 30,
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2013
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2012
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ASSETS
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Current assets:
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Cash and cash equivalents
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$ | 39,403 | $ | 53,653 | ||||
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Short-term investments restricted
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1,200 | 1,200 | ||||||
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Trade receivables, net
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21,680 | 21,438 | ||||||
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Other receivables
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3,214 | 3,880 | ||||||
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Inventories
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44,285 | 41,432 | ||||||
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Other current assets
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6,383 | 7,203 | ||||||
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Total current assets
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116,165 | 128,806 | ||||||
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Property, plant and equipment, net
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186,914 | 202,468 | ||||||
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Other assets
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3,596 | 5,014 | ||||||
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Total assets
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$ | 306,675 | $ | 336,288 | ||||
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LIABILITIES AND SHAREHOLDERS' EQUITY
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Current liabilities:
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Current maturities of short- and long-term debt,
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net of discount
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$ | 3,980 | $ | 11,698 | ||||
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Current portion of capital lease obligation
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1,122 | - | ||||||
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Accounts payable
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23,535 | 13,982 | ||||||
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Accrued expenses
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6,066 | 6,350 | ||||||
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Accrued compensation
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9,251 | 9,656 | ||||||
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Total current liabilities
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43,954 | 41,686 | ||||||
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Long-term debt, net of discount
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123,023 | 125,232 | ||||||
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Capital lease obligation
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2,968 | - | ||||||
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Other long-term liabilities
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2,497 | 1,540 | ||||||
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Shareholders' equity:
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Common stock $.01 par value, 100,000,000 shares
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authorized, 27,581,000 and 23,900,000
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issued and outstanding
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276 | 239 | ||||||
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Additional paid-in capital
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431,909 | 430,448 | ||||||
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Accumulated other comprehensive loss
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(148 | ) | (129 | ) | ||||
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Accumulated loss
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(297,804 | ) | (262,728 | ) | ||||
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Total shareholders' equity
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134,233 | 167,830 | ||||||
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Total liabilities and shareholders' equity
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$ | 306,675 | $ | 336,288 | ||||
Hutchinson Technology Incorporated
Condensed Consolidated Statements of Cash Flows - Unaudited
(Dollars in thousands)
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Fifty-Two
Weeks Ended
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Fifty-Three
Weeks Ended
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September 29,
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September 30,
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2013
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2012
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Operating activities:
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Net loss
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$ | (35,076 | ) | $ | (48,642 | ) | ||
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Adjustments to reconcile net loss to
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cash provided by operating activities:
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Depreciation and amortization
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38,891 | 41,459 | ||||||
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Stock-based compensation
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1,140 | 1,979 | ||||||
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Gain on short- and long-term investments
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(272 | ) | (567 | ) | ||||
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Loss on disposal of assets
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98 | 418 | ||||||
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Asset impairment charge
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- | 8,537 | ||||||
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Non-cash interest expense
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3,335 | 5,467 | ||||||
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Gain on extinguishment of debt
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(4,986 | ) | (5,897 | ) | ||||
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Severance and site consolidation expenses
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- | (1,741 | ) | |||||
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Changes in operating assets and liabilities
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2,955 | 37,079 | ||||||
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Cash provided by operating activities
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6,085 | 38,092 | ||||||
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Investing activities:
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Capital expenditures
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(18,880 | ) | (27,880 | ) | ||||
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Proceeds from sale/leaseback of equipment
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5,025 | - | ||||||
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Change in restricted cash
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1,698 | (2,799 | ) | |||||
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Purchases of marketable securities
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(1,200 | ) | (2,813 | ) | ||||
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Sales / maturities of marketable securities
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1,472 | 3,789 | ||||||
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Cash used for investing activities
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(11,885 | ) | (29,703 | ) | ||||
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Financing activities:
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Net proceeds from issuance of common stock
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358 | - | ||||||
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Repayments of capital lease
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(783 | ) | - | |||||
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Repayments of revolving credit line
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(237,525 | ) | (311,771 | ) | ||||
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Proceeds from revolving credit line
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241,505 | 301,362 | ||||||
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Repayments of debt
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(23,470 | ) | (37,154 | ) | ||||
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Proceeds from private placement of debt
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11,590 | 39,400 | ||||||
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Debt refinancing costs
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(359 | ) | (4,127 | ) | ||||
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Cash used for financing activities
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(8,684 | ) | (12,290 | ) | ||||
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Effect of exchange rate changes on cash
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234 | - | ||||||
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Net decrease in cash and cash equivalents
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(14,250 | ) | (3,901 | ) | ||||
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Cash and cash equivalents at beginning of period
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53,653 | 57,554 | ||||||
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Cash and cash equivalents at end of period
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$ | 39,403 | $ | 53,653 | ||||
Hutchinson Technology Incorporated
Loss Per Share Calculation - Unaudited
(In thousands, except per share data)
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Thirteen
Weeks Ended
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Fourteen
Weeks Ended
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Fifty-Two
Weeks Ended
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Fifty-Three
Weeks Ended
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September 29,
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September 30,
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September 29,
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September 30,
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2013
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2012
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2013
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2012
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Net loss (A)
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$ | (14,555 | ) | $ | (14,731 | ) | $ | (35,076 | ) | $ | (48,642 | ) | ||||
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Weighted average common shares outstanding (B)
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27,568 | 23,884 | 25,981 | 23,565 | ||||||||||||
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Dilutive potential common shares
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- | - | - | - | ||||||||||||
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Weighted average common and diluted shares
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outstanding (C)
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27,568 | 23,884 | 25,981 | 23,565 | ||||||||||||
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Basic loss per share [(A)/(B)]
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$ | (0.53 | ) | $ | (0.62 | ) | $ | (1.35 | ) | $ | (2.06 | ) | ||||
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Diluted loss per share [(A)/(C)]
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$ | (0.53 | ) | $ | (0.62 | ) | $ | (1.35 | ) | $ | (2.06 | ) | ||||
Hutchinson Technology Incorporated
Reconciliation of Non-GAAP to GAAP Financial Measures - Unaudited
(In thousands, except per share data)
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Thirteen
Weeks Ended
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Thirteen
Weeks Ended
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Fourteen
Weeks Ended
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September 29,
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June 30,
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September 30,
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2013
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2013
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2012
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Net loss - GAAP
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$ | (14,555 | ) | $ | (15,866 | ) | $ | (14,731 | ) | |||
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Add BioMeasurment inventory impairment
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1,747 | - | - | |||||||||
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Add foreign currency loss
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122 | 3,368 | - | |||||||||
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Subtract foreign currency gain
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- | - | (738 | ) | ||||||||
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Add non-cash interest expenses
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765 | 749 | 980 | |||||||||
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Add site consolidation expenses
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885 | 638 | - | |||||||||
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Add flood-related costs
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- | - | 546 | |||||||||
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Add debt refinancing costs
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- | - | 201 | |||||||||
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Net loss - Adjusted
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$ | (11,036 | ) | $ | (11,111 | ) | $ | (13,742 | ) | |||
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Net loss per common share – GAAP:
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Basic loss per share
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$ | (0.53 | ) | $ | (0.59 | ) | $ | (0.62 | ) | |||
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Diluted loss per share
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$ | (0.53 | ) | $ | (0.59 | ) | $ | (0.62 | ) | |||
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Net loss per common share – Adjusted:
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Basic loss per share
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$ | (0.40 | ) | $ | (0.41 | ) | $ | (0.58 | ) | |||
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Diluted loss per share
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$ | (0.40 | ) | $ | (0.41 | ) | $ | (0.58 | ) | |||
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Weighted average common and common equivalent shares outstanding:
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Basic
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27,568 | 27,084 | 23,884 | |||||||||
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Diluted
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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.