EX-99 2 c01700exv99.htm PRESS RELEASE exv99
 

CONFIDENTIAL — FINAL — 1/18/2006 11:00 AM
     
MEDIA CONTACT:
  INVESTOR CONTACT:
Connie Pautz
  Darlene Polzin
Corporate Communications Director
  Investor Relations Director
Hutchinson Technology
  Hutchinson Technology
320-587-1823
  320-587-1605
HUTCHINSON TECHNOLOGY FIRST QUARTER NET EARNINGS TOTAL
$6.0 MILLION, $0.22 PER SHARE, ON 27 PERCENT SALES GROWTH
Compared with Fiscal 2005 Fourth Quarter, Suspension Assembly Shipments Up 18%
HUTCHINSON, Minn., Jan. 18, 2006 -— Hutchinson Technology Incorporated (Nasdaq/NMS: HTCH) today reported net income of $6,046,000, or $0.22 per diluted share, on net sales of $184,627,000 for its fiscal 2006 first quarter ended December 25, 2005. The company’s fiscal 2006 first quarter results include non-cash stock-based compensation expenses of approximately $0.02 per diluted share resulting from its adoption in the quarter of the new accounting standard for stock-based compensation, SFAS No. 123(R). In the comparable fiscal 2005 period, the company reported net income of $13,444,000, or $0.47 per diluted share, on net sales of $145,616,000.
     The company shipped a record 207 million suspension assemblies during the quarter, up from 175 million in both the preceding fiscal quarter and in the fiscal 2005 first quarter. Overall average selling prices in the quarter were $0.85, compared with $0.86 in the preceding quarter and $0.82 in the fiscal 2005 first quarter. Compared with the fiscal 2005 first quarter, selling prices benefited from a richer mix of products incorporating value-added features.
     Wayne M. Fortun, Hutchinson Technology’s president and chief executive officer, said demand for the company’s suspension assemblies was strong during its first fiscal quarter. “Overall growth in storage demand and disk drive shipments and our share positions on customer disk drive programs currently ramping to volume resulted in record quarterly volume,” said Fortun.
     “During the quarter, our production output reached more than 18 million suspension assemblies per week, which enabled us to meet substantially all customer demand in the quarter,” said Fortun. “We continue to add capacity to attain, by the end of fiscal 2006, an improved level of flexibility to accommodate increased customer demand and expected shifts in product mix. We currently believe this requires equipment capacity that exceeds suspension assembly demand by 10 to 15 percent,” said Fortun.
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2—Hutchinson Technology Reports First Quarter Results
     Gross margin in the fiscal 2006 first quarter was 21%, compared with 22% in the preceding fiscal quarter and 28% in the fiscal 2005 first quarter. Gross margin was dampened by a product mix that included more advanced products that are typically more costly to produce in the ramp up to higher volume. Compared with fiscal 2005 first quarter, depreciation, material costs and labor expenses increased as a percentage of sales as a result of inefficiencies encountered while adding new manufacturing equipment and operating at very high equipment utilization.
     The company generated $26 million in cash from operations during the quarter. Cash, cash equivalents and securities held for sale totaled $161 million at quarter end, compared with $207 million at fiscal 2005 year end.
     During the fiscal 2006 first quarter, the company had $73 million in capital expenditures. For the full 2006 fiscal year, Hutchinson Technology currently expects capital spending to total approximately $280 million. Fortun said that capital expenditures may be adjusted during the year as the company responds to changes in demand, product mix and customer adoption of new technologies.
     Fortun noted that industry analysts continue to expect disk drive shipments for calendar 2006 to grow about 14% to 427 million units. The company expects the number of suspension assemblies per disk drive to remain about flat at 2.8 per drive and, as a result, industry-wide suspension assembly demand in 2006 is expected to track the anticipated growth in disk drive shipments. “Current demand trends are favorable for the industry overall and our company in particular,” said Fortun. “Activity in our development center is at record levels as we collaborate with customers on the design of new suspensions to meet specific disk drive performance criteria.”
     For its fiscal 2006 second quarter, the company currently expects suspension assembly shipments to range from 210 to 225 million units. Overall average selling prices are expected to range from $0.86 to $0.87, resulting in fiscal 2006 second quarter net sales of $190 to $205 million. The company is expecting fiscal second quarter gross margins of 21 to 23% resulting in expected net income per diluted share for the quarter of $0.15 to $0.30.
     Hutchinson Technology is the leading worldwide supplier of suspension assemblies for disk drives. Hutchinson Technology’s BioMeasurement Division provides health professionals with simple, accurate methods to measure the oxygen in tissue.
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3—Hutchinson Technology Reports First Quarter Results
     This announcement contains forward-looking statements regarding demand for and shipments of the company’s products, equipment capacity, production capacity utilization, developing designs and prototypes for new disk drive programs, industry-wide suspension assembly demand, suspensions per disk drive, the company’s share positions on customer disk drive programs, selling prices, capital expenditures, operating performance and results of operations. 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, 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 required capacity and investment, changes in capital expenditures, changes in development center activity, changes in expected data density and other factors described from time to time in the company’s reports filed with the Securities and Exchange Commission.
     The company will conduct a conference call and webcast for investors beginning at 5:00 p.m. Central Standard Time (CST) on January 18, 2006. Individual investors and news media may participate in the conference call via the live webcast. The webcast will be available through the Investor Relations page on Hutchinson Technology’s web site at www.htch.com. Webcast participants will need to complete a brief registration form and should allot extra time before the webcast begins to register and, if necessary, download and install audio software. A replay of the call will be available beginning at approximately 8:00 p.m. CST on January 18 until midnight on January 20. To access the replay, dial 800-405-2236 and enter 11050338# at the reservation number prompt.
Hutchinson Technology Incorporated
(Nasdaq/NMS: HTCH)
                 
    First Quarter Ended  
    Dec. 25, 2005     Dec. 26, 2004  
Net sales
   $ 184,627,000     $ 145,616,000  
Gross profit
   $ 39,667,000     $ 40,950,000  
Income from operations
   $ 4,407,000     $ 14,525,000  
Net income
   $ 6,046,000     $ 13,444,000  
Net income per common share:
                
Basic
   $ 0.24     $ 0.54  
Diluted
   $ 0.22     $ 0.47  
Weighted average common and common equivalent shares outstanding:
                
Basic
     25,535,000       24,757,000  
Diluted
     30,798,000       30,345,000  
                 
    At Dec. 25, 2005     At Sept. 25, 2005  
Total assets
   $ 816,246,000     $ 799,538,000  
Cash and cash equivalents
   $ 21,816,000     $ 33,733,000  
Securities available for sale
   $ 139,061,000     $ 172,778,000  
Total shareholders’ investment
   $ 562,085,000     $ 552,539,000  
(Financial statements follow)

 

 

Hutchinson Technology Incorporated
Condensed Consolidated Statements of Operations — Unaudited
(In thousands, except per share data)
                 
    Thirteen Weeks Ended  
    December 25,     December 26,  
    2005     2004  
Net sales
   $ 184,627     $ 145,616  
 
                
Cost of sales
     144,960       104,666  
 
            
 
                
Gross profit
     39,667       40,950  
 
                
Research and development expenses
     12,747       7,616  
 
                
Selling, general and administrative expenses
     22,513       18,809  
 
            
 
                
Income from operations
     4,407       14,525  
 
                
Interest expense
     (501 )     (654 )
 
                
Interest Income
     2,065       1,222  
 
                
Other income, net
     1,252       1,228  
 
            
 
                
Income before income taxes
     7,223       16,321  
 
                
Provision (benefit) for income taxes
     1,177       2,877  
 
            
 
                
Net income
   $ 6,046     $ 13,444  
 
            
 
                
Basic earnings per share
   $ 0.24     $ 0.54  
 
            
 
                
Diluted earnings per share
   $ 0.22     $ 0.47  
 
            
 
                
Weighted average common shares outstanding
     25,535       24,757  
 
            
 
                
Weighted average common and diluted shares outstanding
     30,798       30,345  
 
            

 

 

Hutchinson Technology Incorporated
Condensed Consolidated Balance Sheets — Unaudited
(In thousands, except shares data)
                 
    December 25,     September 25,  
ASSETS   2005     2005  
 
            
Current assets:
                
Cash and cash equivalents
   $ 21,816     $ 33,733  
Securities available for sale
     139,061       172,778  
Trade receivables, net
     104,464       85,019  
Other receivables
     9,909       11,181  
Inventories
     57,691       54,780  
Deferred tax assets
     6,676       7,206  
Prepaid taxes and other
     7,186       5,430  
 
            
Total current assets
     346,803       370,127  
Property, plant and equipment, net
     392,856       350,520  
Deferred tax assets
     61,184       61,078  
Other assets
     15,403       17,813  
 
            
 
   $ 816,246     $ 799,538  
 
            
 
                
LIABILITIES AND SHAREHOLDERS’ INVESTMENT
                
Current liabilities:
                
Current portion of long-term debt
   $ 1,187     $ —  
Accounts payable
     57,650       56,128  
Accrued expenses
     14,026       13,238  
Accrued compensation
     22,521       24,873  
 
            
Total current liabilities
     95,384       94,239  
Convertible subordinated notes
     150,000       150,000  
Long-term debt, net of current portion
     6,239       —  
Other long-term liabilities
     2,538       2,760  
Shareholders’ investment:
                
Common stock $.01 par value, 100,000,000 shares authorized, 25,576,000 and 25,450,000 issued and outstanding
     256       254  
Additional paid-in capital
     394,146       390,680  
Accumulated other comprehensive income
     (680 )     (712 )
Accumulated earnings
     168,363       162,317  
 
            
Total shareholders’ investment
     562,085       552,539  
 
            
 
   $ 816,246     $ 799,538  
 
            

 

 

Hutchinson Technology Incorporated
Condensed Consolidated Statements of Cash Flows — Unaudited
(Dollars in thousands)
                 
    Thirteen Weeks Ended  
    December 25,     December 26,  
    2005     2004  
Operating activities:
                
Net income
   $ 6,046     $ 13,444  
Adjustments to reconcile net income to cash provided by operating activities:
                
Depreciation and amortization
     27,526       12,644  
Stock-based compensation
     1,140       —  
Provision (benefit) for deferred taxes
     405       5,637  
(Gain) loss on disposal of assets
     61       (17 )
Changes in operating assets and liabilities
     (9,365 )     (19,937 )
 
            
Cash provided by (used for) operating activities
     25,813       11,771  
 
            
 
                
Investing activities:
                
Capital expenditures
     (73,397 )     (26,759 )
Purchases of marketable securities
     (148,583 )     (1,920 )
Sales of marketable securities
     182,351       29,495  
 
            
Cash provided by (used for) investing activities
     (39,629 )     816  
 
            
 
                
Financing activities:
                
Repayments of long-term debt
     (429 )     —  
Net proceeds from issuance of common stock
     2,328       11,158  
 
            
Cash provided by (used for) financing activities
     1,899       11,158  
 
            
 
                
Net increase (decrease) in cash and cash equivalents
     (11,917 )     23,745  
 
                
Cash and cash equivalents at beginning of period
     33,733       33,704  
 
            
 
                
Cash and cash equivalents at end of period
   $ 21,816     $ 57,449  
 
            

 

 

Hutchinson Technology Incorporated
Earnings Per Share Calculation — Unaudited
(In thousands, except per share data)
                 
    Thirteen Weeks Ended  
    December 25,     December 26,  
    2005     2004  
Net income (A)
   $ 6,046     $ 13,444  
Plus: interest expense on convertible subordinated notes
     1,008       1,008  
Less: additional profit sharing expense and income tax provision
     (342 )     (261 )
 
            
Net income available to common shareholders (B)
   $ 6,712     $ 14,191  
 
            
 
                
Weighted average common shares outstanding (C)
     25,535       24,757  
Dilutive potential common shares
     5,263       5,588  
Weighted average common and diluted shares
                
 
            
outstanding (D)
     30,798       30,345  
 
            
Basic earnings per share [(A)/(C)]
   $ 0.24     $ 0.54  
Diluted earnings per share [(B)/(D)]
   $ 0.22     $ 0.47