Hutchinson Technology Reports Third Quarter Loss
HUTCHINSON, Minn., July 27, 2010 (GLOBE NEWSWIRE) -- Hutchinson Technology Incorporated (Nasdaq:HTCH) today reported a net loss of $18.5 million, or $0.79 per share, on net sales of $77.3 million for its fiscal third quarter ended June 27, 2010. In the preceding quarter, the company reported a net loss of $15.6 million, or $0.67 per share, on net sales of $87.6 million. Gross profit in the quarter was $4.9 million, or 6 percent of net sales, compared with $7.3 million, or 8 percent of net sales, in the preceding quarter. Results for the fiscal 2010 third quarter included $2.3 million of non-recurring asset write-downs in the BioMeasurement Division. Results for both the fiscal 2010 third quarter and the preceding quarter included non-cash interest expense of $2.1 million resulting from the company's adoption, at the beginning of fiscal 2010, of Financial Accounting Standards Board guidance for accounting for convertible debt instruments.
Wayne M. Fortun, Hutchinson Technology's president and chief executive officer, said that the company's shipments declined 11 percent sequentially primarily due to reductions in disk drive makers' production plans. In addition, the company lost volume due to a defect on some of its TSA+ product. "The defect that we encountered late in the quarter prevented share gains we expected to achieve," said Fortun. "We have now contained the defect and identified the cause, and we are implementing and validating the solutions. Our TSA+ production process is complex and requires persistent focus on improving reliability and yields. We acted quickly to address this latest challenge, and we continue to ship TSA+ suspensions in volume."
Fortun said the company is taking actions to further reduce costs and preserve cash, targeting annualized cost reductions of approximately $25 million by the end of fiscal 2010. "In our BioMeasurement Division, we will reduce costs by approximately $12 million in light of slower than expected revenue growth," said Fortun. "In our Disk Drive Components Division, we will reduce costs by approximately $8 million, while keeping intact capabilities that are core to our competitive position. We will also reduce our corporate expenses by approximately $5 million." The company estimates that its financial results for its fiscal 2010 fourth quarter will include approximately $4 million of severance charges related to these actions.
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