Hutchinson Technology Incorporated (Nasdaq:HTCH) today reported a
net loss of $9.9 million, or $0.32 per share, on net sales of $72.4
million for its fiscal 2015 first quarter ended December 28, 2014.
The net loss included a $4.3 million loss on debt extinguishment,
$860,000 of non-cash interest expense, $640,000 of foreign currency
losses and $160,000 of site consolidation costs. Excluding these
items, the company's net loss for the fiscal 2015 first quarter was
$3.9 million, or $0.13 per share.
In the preceding quarter, the company reported a net loss of
$5.2 million, or $0.18 per share, on net sales of $70.3 million.
The net loss included $870,000 of non-cash interest expense,
$400,000 of foreign currency gains, a $325,000 reversal of an
accrual for severance costs and $270,000 of site consolidation
costs. Excluding these items, the company's fiscal 2014 fourth
quarter net loss was $4.7 million, or $0.17 per share.
As previously reported, the company's suspension assembly
shipments in the fiscal 2015 first quarter totaled 121.7 million,
up 4% from the preceding quarter, as the company benefited from
increased participation on customers' disk drive programs and
growth in the suspension market. "Our shipments were generally in
line with our expectations for the quarter, but demand softened in
late December as customers positioned themselves for what is
typically a seasonally slower March quarter," said Rick Penn,
Hutchinson Technology's president and chief executive officer.
Gross profit in the fiscal 2015 first quarter improved to $11.5
million, or 15.8% of net sales, up from $9.0 million, or 12.7% of
net sales, in the preceding quarter. As in the preceding quarter,
the increase in gross profit resulted from higher volume and
improved operating performance. "Our yields and output in both our
TSA+ components and DSA assembly operations improved during the
quarter," said Penn. The company's Thailand assembly operation
increased output by 18% compared with the preceding quarter and
accounted for 77% of assembly production.
Penn said that the first smartphone incorporating the company's
shape memory alloy (SMA) optical image stabilization (OIS) actuator
was introduced in January for the Taiwan and China markets. "The
interest in our SMA OIS product from handset and camera module
makers remains strong," said Penn. "In the current fiscal year, we
are focusing on winning positions on new smartphone programs,
improving our production efficiency and increasing our production
capacity." The company noted that all of the costs of its SMA OIS
initiative are currently classified as research and development
expenses. Research and development expenses for the company's
fiscal 2015 first quarter increased to $6.0 million, compared to
$4.8 million in the preceding quarter, primarily due to process
development costs for its SMA OIS actuator.
Cash and investments at the end of the fiscal 2015 first quarter
totaled $34.5 million compared with $38.9 million at the end of the
preceding quarter. At quarter end, the company also held $44.6
million of cash that was restricted in use, including $35 million
that was used to help fund the redemption of $39.8 million of 8.50%
Convertible Senior Notes on January 15.
As previously disclosed, the company obtained a $15 million term
loan during the fiscal 2015 first quarter. There were no
outstanding borrowings on the company's revolving line of credit at
the end of the first quarter, compared with $9.5 million at the end
of the preceding quarter. Subsequent to the end of the fiscal 2015
first quarter, the company received a $15 million advance payment
from a customer for suspension assemblies expected to ship to that
customer in the fiscal 2015 second quarter.
Regarding its outlook, the company said it expects fiscal 2015
second quarter suspension assembly shipments to be down about 10%
compared with the first quarter in what is typically a seasonally
slow period for suspension assembly shipments. Average selling
price in the fiscal 2015 second quarter is expected to remain flat
at approximately 58 cents, while the lower volume is expected to
reduce the company's gross profit.
"We believe the softer demand in our second quarter reflects
historical seasonal patterns in the disk drive industry," said
Penn. "With our technology leadership, vertical integration and
improved cost model, we expect to benefit from future growth in the
suspension assembly market and increased participation on
customers' disk drive programs. In addition, we are encouraged by
the growing interest in our SMA OIS actuator, which leverages our
core strengths and precision manufacturing expertise."
Hutchinson Technology to Host
Conference Call
The company will conduct a conference call and webcast for
investors beginning at 7:00 a.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 supplier of critical precision
component technologies. As a key supplier of suspension assemblies
for disk drives, we help customers improve overall disk drive
performance and meet the demands of an ever-expanding digital
universe. Through our new business development initiatives, we
focus on leveraging our unique precision manufacturing capabilities
in new markets to improve product performance, reduce size, lower
cost, and reduce time to market.
Cautionary Note Regarding Forward-Looking
Statements
This announcement contains forward-looking statements regarding
demand for and shipments of the company's products, pricing,
production capabilities, operating performance, market adoption and
production of OIS actuators 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 |
|
December 28, |
December 29, |
|
2014 |
2013 |
|
|
|
|
|
|
Net sales |
$ 72,423 |
$ 70,312 |
Cost of sales |
60,959 |
64,782 |
Gross profit |
11,464 |
5,530 |
|
|
|
Research and development
expenses |
6,042 |
3,942 |
Selling, general and administrative
expenses |
5,984 |
5,863 |
Site consolidation and severance
expenses |
159 |
592 |
Asset impairment |
-- |
4,470 |
Loss from
operations |
(721) |
(9,337) |
|
|
|
Other expense, net |
(555) |
(3,073) |
Loss on extinguishment of long-term
debt |
(4,318) |
-- |
Interest income |
4 |
25 |
Interest expense |
(4,453) |
(3,777) |
Loss before income
taxes |
(10,043) |
(16,162) |
|
|
|
Benefit for income
taxes |
(145) |
(816) |
|
|
|
Net loss |
$ (9,898) |
$ (15,346) |
|
|
|
Basic loss per share |
$ (0.32) |
$ (0.55) |
|
|
|
Diluted loss per share |
$ (0.32) |
$ (0.55) |
|
|
|
Weighted-average common shares
outstanding |
30,548 |
27,800 |
|
|
|
Weighted-average diluted shares
outstanding |
30,548 |
27,800 |
|
|
Hutchinson Technology
Incorporated |
Condensed Consolidated
Balance Sheets - Unaudited |
(In thousands, except shares
data) |
|
|
|
|
December 28, |
September 28, |
|
2014 |
2014 |
ASSETS |
|
|
Current assets: |
|
|
Cash and cash
equivalents |
$ 33,556 |
$ 37,939 |
Cash and cash equivalents -
restricted |
44,629 |
2,059 |
Short-term investments -
restricted |
965 |
965 |
Trade receivables,
net |
27,021 |
23,971 |
Other receivables |
2,388 |
2,894 |
Inventories |
50,028 |
48,978 |
Other current
assets |
1,520 |
2,264 |
Total current
assets |
160,107 |
119,070 |
Property, plant and equipment,
net |
151,370 |
153,169 |
Other assets |
4,677 |
2,926 |
Total assets |
$ 316,154 |
$ 275,165 |
|
|
|
LIABILITIES AND SHAREHOLDERS'
EQUITY |
|
|
Current liabilities: |
|
|
Current debt, net of
discount |
$ 41,971 |
$ 48,731 |
Current portion of capital lease
obligation |
2,230 |
2,109 |
Accounts payable |
20,503 |
19,055 |
Accrued expenses |
9,824 |
6,406 |
Accrued
compensation |
8,538 |
9,312 |
Total current
liabilities |
83,066 |
85,613 |
Long-term debt, net of
discount |
123,403 |
87,168 |
Capital lease
obligation |
4,511 |
4,464 |
Other long-term
liabilities |
3,041 |
3,092 |
Shareholders' equity: |
|
|
Common stock $.01 par value,
100,000,000 shares authorized, 32,213,000 and 28,102,000 issued and
outstanding |
322 |
281 |
Additional paid-in
capital |
450,995 |
433,308 |
Accumulated other comprehensive
loss |
(1,068) |
(543) |
Accumulated loss |
(348,116) |
(338,218) |
Total shareholders'
equity |
102,133 |
94,828 |
Total liabilities and shareholders'
equity |
$ 316,154 |
$ 275,165 |
|
|
Hutchinson Technology
Incorporated |
Condensed Consolidated
Statements of Cash Flows - Unaudited |
(Dollars in thousands) |
|
|
|
|
Thirteen Weeks
Ended |
Thirteen Weeks
Ended |
|
December 28, |
December 29, |
|
2014 |
2013 |
Operating activities: |
|
|
Net loss |
$ (9,898) |
$ (15,346) |
Adjustments to reconcile net loss
to cash provided by operating activities: |
|
|
Depreciation and
amortization |
8,201 |
10,034 |
Stock-based
compensation |
291 |
337 |
Loss (gain) on disposal of
assets |
5 |
(19) |
Asset impairment
charge |
-- |
4,470 |
Non-cash interest
expense |
858 |
799 |
Loss on extinguishment of
debt |
4,318 |
-- |
Severance and other
expenses |
(27) |
-- |
Changes in operating assets and
liabilities |
(606) |
1,724 |
Cash provided by operating
activities |
3,142 |
1,999 |
|
|
|
Investing activities: |
|
|
Capital
expenditures |
(6,285) |
(7,413) |
Proceeds from sale / leaseback of
equipment |
836 |
4,900 |
Change in restricted
cash |
(42,570) |
917 |
Purchases of marketable
securities |
(965) |
(1,200) |
Sales / maturities of marketable
securities |
965 |
1,200 |
Cash used for investing
activities |
(48,019) |
(1,596) |
|
|
|
Financing activities: |
|
|
Proceeds from issuance of common
stock |
24 |
18 |
Repayments of capital
lease |
(521) |
(267) |
Repayments of revolving credit
line |
(55,901) |
(62,958) |
Proceeds from revolving credit
line |
46,368 |
60,978 |
Proceeds from private placement
of debt |
37,500 |
-- |
Proceeds from term
loan |
15,000 |
-- |
Debt refinancing
costs |
(3,175) |
-- |
Cash provided by (used for)
financing activities |
39,295 |
(2,229) |
|
|
|
Effect of exchange rate changes on
cash |
1,199 |
1,380 |
|
|
|
Net decrease in cash and cash
equivalents |
(4,383) |
(446) |
|
|
|
Cash and cash equivalents at
beginning of period |
37,939 |
39,403 |
|
|
|
Cash and cash equivalents at end of
period |
$ 33,556 |
$ 38,957 |
|
|
Hutchinson Technology
Incorporated |
Reconciliation of
Non-GAAP to GAAP Financial Measures - Unaudited |
(In thousands, except per share
data) |
|
|
|
|
|
Thirteen Weeks
Ended |
|
December 28, |
September 28, |
December 29, |
|
2014 |
2014 |
2013 |
|
|
|
|
Net loss - GAAP |
$ (9,898) |
$ (5,156) |
$ (15,346) |
Subtract foreign currency
gain |
-- |
(396) |
-- |
Subtract reversal of severance
expense |
-- |
(325) |
-- |
Subtract tax
benefit |
-- |
|
(859) |
Add loss on debt
extinguishment |
4,318 |
-- |
-- |
Add foreign currency
loss |
640 |
-- |
3,173 |
Add non-cash interest
expenses |
858 |
869 |
798 |
Add site consolidation and
severance expenses |
159 |
268 |
592 |
Add asset
impairment |
-- |
-- |
4,470 |
Net loss - Adjusted |
$ (3,923) |
$ (4,740) |
$ (7,172) |
|
|
|
|
|
|
|
|
Net loss per common share –
GAAP: |
|
|
|
|
|
|
|
Basic loss income per
share |
$ (0.32) |
$ (0.18) |
$ (0.55) |
Diluted loss income per
share |
$ (0.32) |
$ (0.18) |
$ (0.55) |
|
|
|
|
Net loss per common share –
Adjusted: |
|
|
|
|
|
|
|
Basic loss per share |
$ (0.13) |
$ (0.17) |
$ (0.26) |
Diluted loss per share |
$ (0.13) |
$ (0.17) |
$ (0.26) |
|
|
|
|
Weighted average common and common
equivalent shares outstanding: |
|
|
|
|
|
|
|
Basic |
30,548 |
28,072 |
27,800 |
Diluted |
30,548 |
28,072 |
27,800 |
|
|
|
|
|
|
|
|
Net loss per common share
basic and diluted, is calculated by dividing net loss 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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