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Hutchinson Technology Reports Second Quarter Results

The company continues to transfer more assembly production to its lower cost operation in Thailand.  In the fiscal 2013 second quarter, the Thailand operation accounted for 27% of assembly production, up from 18% in the preceding quarter.  By the end of the fiscal 2013 third quarter, the company expects its Thailand operation will account for approximately 40% of assembly production, including increased production of DSA suspensions. 

Cash and investments at the end of the 2013 second quarter totaled $41.1 million compared with $57.5 million at the end of the preceding quarter.  During the quarter, the company redeemed the remaining $11.9 million of its 3.25% Convertible Subordinated Notes. Cash generated by operations totaled $3.7 million in the fiscal 2013 second quarter and capital spending totaled $7.6 million. Outstanding borrowings on the company's revolving line of credit totaled $2.3 million at the end of the fiscal 2013 second quarter compared with $4.1 million at the end of the preceding quarter. 

Regarding the company's outlook, Penn said the company expects its fiscal 2013 third quarter suspension assembly shipments to be roughly flat on a sequential basis at 95 million to 105 million, anticipating flat demand for disk drives.  Third quarter average selling price is expected to increase slightly as a result of a higher percentage of DSA suspension assemblies in the mix of products shipped in the quarter. Third quarter gross profit is expected to decline due to lower fixed cost leverage on lower production volume following the inventory build in the second quarter.

"Overall, our results in the quarter demonstrate progress toward our goals of being the industry's lowest cost producer of suspension assemblies and improving our market position and financial performance," said Penn. "We are pleased with our positions on new customer programs and expect to see increased volume from ramps on these programs beginning in our fiscal fourth quarter.  We will continue to strengthen our competitive position by advancing our DSA products, further improving our operating efficiency, transitioning more assembly production to our Thailand operation and continuing to consolidate our U.S. operations."

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