Fortun said that in addition to reducing the operating loss in the BioMeasurement Division, the company's path to profitability includes increasing revenue through overall suspension assembly market growth and higher market share, improving TSA+ production efficiency and establishing operations in Thailand.
Cash flow from operations in the fiscal 2010 third quarter totaled $2.9 million and capital expenditures totaled $10.9 million. The company has reduced its capital spending plans for fiscal 2010 from $50 million to $40 million. During the quarter, the company sold $20.5 million of auction rate securities at par value, and the full proceeds were applied to the loan that was previously obtained against these securities. The company's cash and investments balance at the end of the quarter totaled $168 million.
Subsequent to the end of the fiscal 2010 third quarter, the remaining $44.6 million of auction rate securities held by the company were put back to UBS at par value, under the terms of a previous agreement. The remaining $34 million balance on the loan obtained against these securities was repaid, reducing both the company's cash and investments balance and its current debt by $34 million.
Disk Drive Components DivisionThe company shipped approximately 117 million suspension assemblies in the fiscal 2010 third quarter, down from 130 million in the preceding quarter and 146 million in the fiscal 2009 third quarter. Shipments of suspension assemblies for 3.5-inch ATA applications increased slightly while shipments for the enterprise and mobile segments declined compared with the preceding quarter. The pricing environment continues to be competitive, and the company's average selling price declined one cent from the preceding quarter to 65 cents. Average selling price in the fiscal 2009 third quarter was 71 cents. The company shipped approximately 33 million TSA+ suspension assemblies in the fiscal 2010 third quarter, up from 20 million in the preceding quarter and 10 million in last year's third quarter. Kathleen Skarvan, president of the Disk Drive Components Division, said that a defect on some of its TSA+ product resulted in lost volume at the end of the fiscal 2010 third quarter and will negatively impact volume in the company's fourth quarter as well. The company reduced the cost burden of TSA+ flexure production from $7.9 million in the preceding quarter to $7.5 million in the fiscal 2010 third quarter as cost per part declined by approximately 13 percent. Skarvan said that TSA+ suspension assemblies will continue to grow as a percentage of the company's product mix. However, due to a yield setback associated with the TSA+ product defect, the company is now targeting elimination of the TSA+ cost burden in the first half of fiscal 2011.