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Gain on Debt Extinguishment Results in Net Profit
HUTCHINSON, Minn., April 30, 2013 (GLOBE NEWSWIRE) -- Hutchinson Technology Incorporated (Nasdaq:HTCH) today reported net income of $1.9 million, or $0.07 per diluted share, on net sales of $60.9 million for its fiscal second quarter ended March 31, 2013. Results for the quarter included a $5.0 million gain on debt extinguishment, a $2.0 million foreign currency gain, $800,000 of non-cash interest expense and $300,000 of severance and site consolidation costs. Excluding these items, the company's second quarter net loss was $4.0 million, or $0.16 per share.
In the preceding quarter, the company reported a net loss of $6.5 million, or $0.27 per share, on net sales of $63.7 million. Results for the quarter included $1.0 million of severance costs, $1.0 million of non-cash interest expense and a $100,000 foreign currency gain. Excluding these items, the company's first quarter net loss was $4.6 million, or $0.19 per share.
The company's suspension assembly shipments totaled 98.9 million in the fiscal 2013 second quarter, down from 103.6 million in the previous quarter, and in line with the company's prior guidance. Average selling price in the fiscal 2013 second quarter was $0.60, flat with the preceding quarter. Dual-stage actuated (DSA) suspensions accounted for 12% of second quarter shipments, up from 9% in the preceding quarter. "Our DSA suspension shipments increased in the latter part of the second quarter even though customer ramps on certain programs using DSA suspensions have been slower than expected," said Rick Penn, Hutchinson Technology's president and chief executive officer. "We expect DSA suspensions to account for approximately 20% of our shipments in our third quarter."
Gross profit in the fiscal 2013 second quarter was $8.0 million, or 13.1% of net sales, up from $7.4 million, or 11.6% of net sales, in the preceding quarter. Gross profit benefited from improved fixed cost leverage on higher levels of flexure and assembly production. The company built more inventory than previously planned in order to accommodate a product mix change and meet expected demand as it continues to transfer production capacity to its assembly operation in Thailand. Gross profit also benefited from lower variable costs per part, resulting primarily from improved efficiency in manufacturing TSA+ suspension assemblies.