Form 8-K HUTCHINSON TECHNOLOGY For: Jul 30

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

 

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

 

July 30, 2015

Date of report (Date of earliest event reported)

 

HUTCHINSON TECHNOLOGY INCORPORATED

(Exact Name of Registrant as Specified in its Charter)

 

 

Minnesota		001-34838		41-0901840
(State of Incorporation)		(Commission File Number)		(I.R.S. Employer Identification No.)

 

40 West Highland Park Drive N.E., Hutchinson, Minnesota				55350
(Address of Principal Executive Offices)				(Zip Code)

 

(320) 587-3797

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

☐

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Item 2.02 Results of Operations and Financial Condition.

 

On July 30, 2015, we issued a press release regarding our financial results for the fiscal quarter ended June 28, 2015, which is furnished as Exhibit 99.1 hereto.

 

The press release includes certain “non-GAAP financial measures” within the meaning of the rules of the Securities and Exchange Commission. With respect to such non-GAAP financial measures, we have disclosed in the press release the most directly comparable financial measure calculated and presented in accordance with generally accepted accounting principles (“GAAP”) and have provided a reconciliation of such non-GAAP financial measures to the most directly comparable GAAP financial measure. Management believes that the non-GAAP measures provide useful information to investors regarding our results of operations and financial condition because they eliminate unusual items impacting earnings and facilitate a more meaningful comparison and understanding of our operating performance for the current, past and future periods.

 

Item 8.01 Other Events.

 

On July 30, 2015, we announced the introduction of our new SMA OIS actuator, pursuant to a press release, a copy of which is filed as Exhibit 99.2 hereto and incorporated herein by reference.

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits

 

	99.1	Press Release dated July 30, 2015, regarding our financial results for the fiscal quarter ended June 28, 2015.
	99.2	Press Release dated July 30, 2015, regarding the introduction of our new SMA OIS actuator.

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

	HUTCHINSON TECHNOLOGY INCORPORATED
Date: July 30, 2015	/s/ David P. Radloff                                               David P. Radloff Vice President and Chief Financial Officer

EXHIBIT INDEX

 

 

No.		Description		Manner of Filing
99.1		Press Release dated July 30, 2015, regarding our financial results for the fiscal quarter ended June 28, 2015.		Furnished Electronically
99.2		Press Release dated July 30, 2015, regarding the introduction of our new SMA OIS actuator.		Filed Electronically

 

 

EXHIBIT 99.1

 

HUTCHINSON TECHNOLOGY REPORTS THIRD QUARTER RESULTS

 

 

Hutchinson, Minn., July 30, 2015 -- Hutchinson Technology Incorporated (NASDAQ: HTCH) today reported a net loss of $10.2 million, or $0.30 per share, on net sales of $54.7 million for its fiscal third quarter ended June 28, 2015. The net loss included a $1.1 million foreign currency loss and $330,000 of non-cash interest expense. Excluding these items, the company’s net loss for the fiscal 2015 third quarter was $8.7 million, or $0.26 per share.

 

In the preceding quarter, the company reported a net loss of $9.7 million, or $0.29 per share, on net sales of $62.4 million. The net loss included $430,000 of non-cash interest expense and a $140,000 foreign currency gain. Excluding these items, the company’s net loss for the fiscal 2015 second quarter was $9.4 million, or $0.28 per share.

 

Compared with the preceding quarter, the company’s suspension assembly shipments declined 14% to 86.6 million. The decline in shipments resulted from the seasonal slowdown in disk drive demand, weakness in PC demand and inventory reductions in the PC supply chain. “Demand for suspension assemblies typically strengthens in the second half of the calendar year and we expect our shipments to increase in our fiscal 2015 fourth quarter,” said Rick Penn, Hutchinson Technology’s president and chief executive officer.

 

Gross profit in the fiscal 2015 third quarter totaled $4.8 million, or 8.8% of net sales, down from $6.3 million, or 10.0% of net sales, in the preceding quarter primarily because of the lower volume in the quarter. The company’s operating loss in the third quarter totaled $6.1 million, an improvement from a $6.7 million operating loss in the preceding quarter, as research and development expenses declined from $7.1 million in the preceding quarter to $5.2 million in the third quarter. “We took steps to manage our costs and mitigate the impact of the lower volume on gross profit and operating income,” said Penn. “We intend to continue improving our vertically integrated cost model while leveraging our capacity and technology investments in the U.S. and Thailand.” The company’s Thailand assembly operation accounted for 89% of assembly production in the third quarter, up from 85% in the preceding quarter.

 

The company today announced the introduction of a new SMA OIS actuator that is 70% thinner than its initial product and that significantly lowers the company’s capital and production costs. “We believe this new design has fundamental advantages that bring superior value and capability to the marketplace and that the product is well aligned with the needs of camera module and smartphone manufacturers,” said Penn. “We are focused on introducing our new offering to the market, earning positions on new smartphone programs and optimizing our manufacturing processes for the new design.”

 

Cash and investments at the end of the fiscal 2015 third quarter totaled $36.4 million compared with $43.6 million at the end of the preceding quarter. As the company expected, cash decreased primarily as a result of applying the $6 million remainder of a customer’s advance payment to a portion of third quarter suspension assembly shipments and a subsequent $5 million increase in the company’s receivables. Capital spending totaled $2.8 million in the third quarter. Outstanding borrowings on the company’s revolving line of credit were $3.0 million at the end of the third quarter compared to zero at the end of the preceding quarter.

 

For its fiscal 2015 fourth quarter, the company currently expects its suspension assembly shipments to increase 10% to 20% sequentially. Average selling price is expected to be $0.57 to $0.58, depending on product mix, compared with $0.59 in the third quarter.

 

“We have managed through two challenging quarters and now expect our suspension assembly shipments to increase due to strengthening disk drive demand, our high level of development activity with customers and our expanding program wins across the disk drive segments,” said Penn. “In addition, we continue to be excited about the growth potential for OIS as we introduce our new SMA OIS actuator that offers size and performance benefits to prospective customers while substantially lowering our capital and manufacturing costs.”

 

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 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 our market position, demand for and shipments of suspension assemblies, product mix, pricing, operating performance, market adoption and production of OIS actuators, our capital and manufacturing costs, business model 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 and other factors described from time to time in the company's reports filed with the Securities and Exchange Commission.

 

 

 

INVESTOR CONTACT:	MEDIA CONTACT:
Chuck Ives	Connie Pautz
Hutchinson Technology Inc.	Hutchinson Technology Inc.
320-587-1605	320-587-1823

 

Hutchinson Technology Incorporated

Condensed Consolidated Statements of Operations - Unaudited

(In thousands, except per share data)

 

		Thirteen Weeks Ended								Thirty-Nine Weeks Ended
		June 28,				June 29,				June 28,				June 29,
		2015				2014				2015				2014
Net sales		$	54,675			$	59,772			$	189,457			$	190,783
Cost of sales			49,846				56,215				166,902				175,833
Gross profit			4,829				3,557				22,555				14,950
Research and development expenses			5,165				4,157				18,304				12,488
Selling, general and administrative expenses			5,726				5,268				17,559				17,343
Severance  and site consolidation expenses			-				1,544				159				2,786
Asset impairment			-				-				-				4,470
Loss from operations			(6,062	)			(7,412	)			(13,467	)			(22,137	)
Other (expense) income, net			(1,004	)			179				(1,292	)			(2,238	)
Loss on extinguishment of long-term debt			-				-				(4,318	)			-
Interest income			7				28				26				63
Interest expense			(3,086	)			(3,987	)			(10,809	)			(11,723	)
Loss before income taxes			(10,145	)			(11,192	)			(29,860	)			(36,035	)
Provision (benefit) for income taxes			15				15				(98	)			(776	)
Net loss		$	(10,160	)		$	(11,207	)		$	(29,762	)		$	(35,259	)
Basic loss per share		$	(0.30	)		$	(0.40	)		$	(0.92	)		$	(1.26	)
Diluted loss per share		$	(0.30	)		$	(0.40	)		$	(0.92	)		$	(1.26	)
Weighted-average common shares outstanding			33,493				28,055				32,437				27,967
Weighted-average diluted shares outstanding			33,493				28,055				32,437				27,967

 

Hutchinson Technology Incorporated

Condensed Consolidated Balance Sheets - Unaudited

(In thousands, except shares data)

 

		June 28,				September 28,
		2015				2014
ASSETS
Current assets:
Cash and cash equivalents		$	35,387			$	37,939
Short-term investments - restricted			965				965
Trade receivables, net			21,287				23,971
Other receivables			2,021				2,894
Inventories			43,960				48,978
Other current assets			2,822				4,323
Total current assets			106,442				119,070
Property, plant and equipment, net			145,306				153,169
Other assets			4,602				2,926
Total assets		$	256,350			$	275,165
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current debt, net of discount		$	6,000			$	48,731
Current portion of capital lease obligation			2,434				2,109
Accounts payable			17,214				19,055
Accrued expenses			7,481				6,406
Accrued compensation			9,688				9,312
Total current liabilities			42,817				85,613
Long-term debt, net of discount			122,565				87,168
Capital lease obligation			5,106				4,464
Other long-term liabilities			3,916				3,092
Shareholders' equity:
Common stock $.01 par value, 100,000,000 shares
authorized, 33,526,000 and 28,058,000
issued and outstanding			335				281
Additional paid-in capital			451,767				433,308
Accumulated other comprehensive loss			(2,176	)			(543	)
Accumulated loss			(367,980	)			(338,218	)
Total shareholders' equity			81,946				94,828
Total liabilities and shareholders' equity		$	256,350			$	275,165

 

Hutchinson Technology Incorporated

Condensed Consolidated Statements of Cash Flows - Unaudited

(Dollars in thousands)

 

		Thirty-Nine Weeks Ended
		June 28,				June 29,
		2015				2014
Operating activities:
Net loss		$	(29,762	)		$	(35,259	)
Adjustments to reconcile net loss to
cash provided by operating activities:
Depreciation and amortization			24,134				28,944
Stock-based compensation			1,041				976
Loss on disposal of assets			63				80
Asset impairment charge			-				4,470
Non-cash interest expense			1,622				2,475
Loss on extinguishment of debt			4,318				-
Severance and site consolidation expenses			(27	)			949
Changes in operating assets and liabilities			9,463				(2,293	)
Cash provided by operating activities			10,852				342
Investing activities:
Capital expenditures			(17,344	)			(13,396	)
Proceeds from sale / leaseback of equipment			3,111				6,395
Proceeds from sale of building			-				4,364
Change in restricted cash			19				1,609
Purchases of marketable securities			(965	)			(1,195	)
Sales / maturities of marketable securities			965				1,200
Cash used for investing activities			(14,214	)			(1,023	)
Financing activities:
Proceeds from issuance of common stock			60				26
Repayments of capital lease			(1,749	)			(1,230	)
Repayments of revolving credit line			(101,139	)			(153,950	)
Proceeds from revolving credit line			93,856				154,770
Repayments of debt			(39,822	)			-
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			531				(384	)
Effect of exchange rate changes on cash			279				657
Net decrease in cash and cash equivalents			(2,552	)			(408	)
Cash and cash equivalents at beginning of period			37,939				39,403
Cash and cash equivalents at end of period		$	35,387			$	38,995

 

Hutchinson Technology Incorporated

Reconciliation of Non-GAAP to GAAP Financial Measures - Unaudited

(In thousands, except per share data)

 

		Thirteen Weeks Ended
		June 28,				March 29,				June 29,
		2015				2015				2014
Net loss - GAAP		$	(10,160	)		$	(9,703	)		$	(11,207	)
Subtract foreign currency gain			-				(139	)			(101	)
Add foreign currency loss			1,093				-				-
Add non-cash interest expenses			332				431				842
Add site consolidation and severance expenses			-				-				1,544
Net loss - Adjusted		$	(8,735	)		$	(9,411	)		$	(8,922	)
Net loss per common share – GAAP:
Basic loss income per share		$	(0.30	)		$	(0.29	)		$	(0.40	)
Diluted loss income per share		$	(0.30	)		$	(0.29	)		$	(0.40	)
Net loss per common share – Adjusted:
Basic loss per share		$	(0.26	)		$	(0.28	)		$	(0.32	)
Diluted loss per share		$	(0.26	)		$	(0.28	)		$	(0.32	)
Weighted average common and common equivalent shares outstanding:
Basic			33,493				33,267				28,055
Diluted			33,493				33,267				28,055

 

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.

 

 

EXHIBIT 99.2

 

HUTCHINSON TECHNOLOGY INTRODUCES NEW GEMINI SMA OIS ACTUATOR

 

New Design Can Enable the World’s Slimmest OIS Smartphone Cameras

 

Hutchinson, Minn., July 30, 2015 -- Hutchinson Technology Incorporated (NASDAQ: HTCH) today announced that it expects to begin shipping prototypes of a new Shape Memory Alloy Optical Image Stabilization (SMA OIS) actuator to tier 1 camera module manufacturers in early August. The new Gemini product was designed in response to customer requests for reduced OIS camera thickness. Gemini reduces SMA OIS actuator thickness by more than 70%, to enable the world’s slimmest OIS smartphone cameras.

 

Gemini also improves handshake suppression, resulting in clearer photos in low light conditions and more stabilized videos. The unique properties of shape memory alloy wire enable a more compact, higher force, and a more rugged actuator than industry standard voice coil motor designs.

 

The Gemini design significantly lowers the company’s capital and manufacturing costs by reducing the number of components in the product and better leveraging the company’s existing production equipment. “Our proven automated processes, quality control systems, and high volume precision manufacturing capabilities position us well to support large smartphone programs,” said Rick Penn, Hutchinson Technology’s president and chief executive officer.

 

Building on the value users place on “selfie” photos, Hutchinson Technology is also developing SMA OIS designs to improve front-facing camera image quality. With superior miniaturization capabilities, SMA OIS is an excellent candidate for spatially constrained front-facing cameras. Unlike voice coil motor actuators, SMA OIS actuators do not use magnets. This eliminates magnetic interference that could occur due to the camera’s close proximity to the phone’s antenna.

 

SMA OIS products offer a unique blend of smallest size, excellent performance, and industry leading shock reliability. Gemini is expected to be ready for volume production in CQ4 2015. Front-facing SMA OIS samples are also expected to be available in CQ4.

 

More information about Gemini OIS actuators can be found on Hutchinson Technology’s website at http://www.htchmfg.com/gemini-sma-ois.html.

 

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 development, market adoption and production of OIS actuators and product performance. 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 smartphones, changes in demand for our products, market acceptance of new products, the company’s ability to produce SMA OIS actuators at levels of precision, quality, volume and cost its customers require and other factors described from time to time in the company's reports filed with the Securities and Exchange Commission.

 

 

MARKETING CONTACT:	INVESTOR CONTACT:
Keith Johnson	Chuck Ives
Hutchinson Technology Inc.	Hutchinson Technology Inc.
320-587-1203	320-587-1605

 

 

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