Hutchinson Technology Third Quarter Earnings Per Share Total $0.22; Quarter's Earnings Include $0.10 Per Share Increase on Resolution of Supplier Dispute.HUTCHINSON Hutchinson, city (1990 pop. 39,308), seat of Reno co., S central Kans., on the Arkansas River; inc. 1872. It is a commercial and industrial center in a grain (especially wheat), livestock, and oil region. , Minn. -- Hutchinson Technology ''This article or section is being rewritten at Hutchinson Technology is an acknowledged world leader in precision manufacturing. Specializing in design and manufacture of close-tolerance products that require chemical, mechanical and electronic technologies. Incorporated (Nasdaq/NMS:HTCH) today reported net income of $5,838,000, or $0.22 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, on net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight of $169,599,000 for its fiscal third quarter ended June June: see month. 25, 2006. The company's fiscal 2006 third quarter net income includes an increase to operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. of $5,000,000, or $0.10 per diluted share, resulting from the resolution of a dispute with a former supplier. Excluding this increase to operating income, the company's fiscal third quarter net income would be $3,126,000 or $0.12 per diluted share. In the comparable fiscal 2005 period, the company reported net income of $19,642,000, or $0.65 per diluted share, on net sales of $169,676,000. Net income for the fiscal 2005 third quarter was increased by $2,792,000, or $0.09 per diluted share, as a result of a refund TO REFUND. To pay back by the party who has received it, to the party who has paid it, money which ought not to have been paid. 2. On a deficiency of assets, executors and administrators cum testamento annexo, are entitled to have refunded to them legacies , with interest, of certain Minnesota Minnesota, state, United States Minnesota (mĭn'ĭsō`tə), upper midwestern state of the United States. It is bordered by Lake Superior and Wisconsin (E), Iowa (S), South Dakota and North Dakota (W), and the Canadian provinces corporate income taxes paid for the years 1995 through 1999 and the reversal reversal n. the decision of a court of appeal ruling that the judgment of a lower court was incorrect and is reversed. The result is that the lower court which tried the case is instructed to dismiss the original action, retry the case, or is ordered to change its of a related tax reserve, offset in part by an adjustment to the carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. of net operating loss carryforwards Net operating loss carryforwards Application of losses to offset earnings in future years. . Excluding these items, the company's fiscal 2005 third quarter net income would have totaled $16,850,000, or $0.56 per diluted share. For the 39 weeks ended June 25, 2006, Hutchinson Technology reported net income of $19,756,000, or $0.72 per diluted share, on net sales of $540,152,000. Net income for the 39-week period includes the increase to operating income noted above. Excluding this increase, net income for the 39-week period would be $17,044,000, or $0.63 per diluted share. In the comparable fiscal 2005 period, the company reported net income of $48,224,000, or $1.63 per diluted share, on net sales of $473,336,000. Net income for the fiscal 2005 39-week period includes the tax refund Tax refund Money back from the government when too much tax has been paid or withheld from a salary. and related items noted above. Excluding these items, the company's net income for the 39 weeks ended June 26, 2005 would have totaled $45,432,000, or $1.54 per diluted share. The company shipped approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 192 million suspension suspension, in vehicles suspension, in automobiles, system of springs used to suspend the frame, body, engine, and power train above the wheels. Its principal purpose is to lessen the jarring of the automobile that is caused by irregularities in the roads assemblies in the fiscal 2006 third quarter compared with approximately 188 million in the fiscal 2005 third quarter and approximately 205 million in the preceding quarter. Wayne Wayne, city (1990 pop. 19,899), Wayne co., SE Mich., a suburb of Detroit, on the Lower Rouge River; inc. as a village 1869, and with surrounding areas as a city 1960. It has automobile and aircraft industries and other varied manufactures. M. Fortun, Hutchinson Technology's president and chief executive officer, said the company believes the decline in volume compared with the fiscal 2006 second quarter resulted from seasonally lower demand for disk drives used in desktop applications and certain head-gimbal assemblers This is a list of assemblers. Hundreds of assemblers have been written; some notable examples are:
Gross margin for the fiscal 2006 third quarter was 19 percent, compared with 22 percent in the preceding quarter and 30 percent in the fiscal 2005 third quarter. The decline in third quarter gross margin was primarily the result of underutilization of manufacturing capacity added in the last year and the associated increases in depreciation and overhead. The negative impact of the underutilization was somewhat mitigated mit·i·gate v. mit·i·gat·ed, mit·i·gat·ing, mit·i·gates v.tr. To moderate (a quality or condition) in force or intensity; alleviate. See Synonyms at relieve. v.intr. To become milder. , however, by improvements in yields and labor productivity. "During the third quarter, we made substantial gains in yields on advanced TSA TSA See tax-sheltered annuity (TSA). products," said Fortun. "Our overall TSA yields in the fiscal 2006 third quarter were among the highest we have ever achieved. In addition, compared with the preceding quarter, we made improvements in labor productivity in all of our manufacturing processes." Research and development expenses in the fiscal 2006 third quarter totaled $13,906,000 compared with $13,370,000 in the preceding quarter and $9,571,000 in the fiscal 2005 third quarter. "The increase in research and development spending reflects continued commitment to developing our additive additive In foods, any of various chemical substances added to produce desirable effects. Additives include such substances as artificial or natural colourings and flavourings; stabilizers, emulsifiers, and thickeners; preservatives and humectants (moisture-retainers); and processing capabilities, strong demand for new suspension assembly designs and product prototypes and continued investment in the company's InSpectra(TM) StO(2)Tissue Oxygenation oxygenation /ox·y·gen·a·tion/ (ok?si-je-na´shun) 1. the act or process of adding oxygen. 2. the result of having oxygen added. Monitor," said Fortun. In a separate announcement today, the company said it has received U.S. Food and Drug Administration clearance CLEARANCE, com. law. The name of a certificate given by the collector of a port, in which is stated the master or commander (naming him) of a ship or vessel named and described, bound for a port, named, and having on board goods described, has entered and cleared his ship or vessel to begin marketing this product, which is designed for clinical use in trauma trauma /trau·ma/ (traw´mah) (trou´mah) pl. traumas, trau´mata [Gr.] 1. injury. 2. psychological or emotional damage. and emergency medicine settings. The company generated $11,871,000 in cash from operations during the fiscal 2006 third quarter. At quarter end, the company's cash, cash equivalents and securities held for sale totaled $323,494,000 compared with $370,868,000 at the end of the preceding quarter. The decline is primarily the result of capital expenditures that totaled $59,743,000 in the quarter. Fortun said the company now expects to reduce capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. for the full year to about $250,000,000 as the company manages its capacity and capital spending to align align (  līn),v to move the teeth into their proper positions to conform to the line of occlusion. with near-term near-term adj. Of, for, or involving a short period of time in the near future. demand. He said the majority of planned capital spending for the remainder of fiscal 2006 is focused on development of additive processes required for next-generation suspension assemblies. In updated forecasts, industry analysts now expect calendar year 2006 disk drive shipments to grow between 14 to 17 percent compared with calendar year 2005. "We continue to expect worldwide demand for suspension assemblies to track the rate of growth in disk drive shipments over the long term," said Fortun. For its fiscal 2006 fourth quarter, the company currently expects suspension assembly shipments to range from 195 to 210 million units. Overall average selling prices The average sales price of goods or commodities. Especially used in the retail sector and technology distribution. are expected to range from $0.83 to $0.84, generating net sales of approximately $170 to $185 million. At the currently expected level of fourth quarter production volume, the company's manufacturing capacity will be further underutilized, resulting in fiscal 2006 fourth quarter gross margin of 15 to 20 percent. Net earnings per share are expected to range from a loss of $0.15 to a profit of $0.15. Hutchinson Technology is the leading worldwide supplier of suspension assemblies for disk drives. Hutchinson Technology's BioMeasurement Division provides health professionals with simple, accurate methods to measure the oxygen in tissue. This announcement contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. regarding demand for and shipments of the company's products, the company's manufacturing capacity and capital expenditures, research and development spending and worldwide disk drive and suspension assembly demand and shipments, selling prices, results of operations and operating 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 disk drives or suspension assemblies, the company's ability to produce suspension assemblies with features at levels of precision, quality, variety, volume and cost its customers require, changes in its utilization utilization, n 1. the extent to which a given group uses a particular service in a specified period. Although usually expressed as the number of services used per year per 100 or per 1000 persons eligible for the service, utilization rates may be of capacity, changes in product mix, changes in required investment to increase manufacturing capacity and develop process capabilities, changes in expected data density and other factors described from time to time in the company's reports filed with the Securities and Exchange Commission. The company will conduct a conference call and webcast for investors beginning at 4:00 p.m. Central Time (CT) on July July: see month. 20, 2006. Individual investors and news media may participate in the conference call via the live webcast. The webcast will be available through the Investor Relations Investor relations The process by which the corporation communicates with its investors. page on Hutchinson Technology's web site at www.htch.com. Webcast participants will need to complete a brief registration form and should allot al·lot tr.v. al·lot·ted, al·lot·ting, al·lots 1. To parcel out; distribute or apportion: allotting land to homesteaders; allot blame. 2. extra time before the webcast begins to register and, if necessary, download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. and install audio software. A replay of the call will be available beginning at approximately 6:00 p.m. CT on July 20 until midnight CT Saturday Saturday: see week; Sabbath. , July 22, 2006. To access the replay, dial 800-405-2236 and enter 11064340# at the reservation A clause in a deed of real property whereby the grantor, one who transfers property, creates and retains for the grantor some right or interest in the estate granted, such as rent or an Easement ,a right of use over the land of another. number prompt.
Hutchinson Technology Incorporated
(Nasdaq/NMS:HTCH)
Thirteen Weeks Ended
----------------------------
June 25, 2006 June 26, 2005
------------- -------------
Net sales $169,599,000 $169,676,000
Gross profit $32,111,000 $51,434,000
Income from operations $2,942,000 $20,713,000
Net income $5,838,000 $19,642,000
Net income per common share:
Basic $0.23 $0.77
Diluted $0.22 $0.65
Net income - excluding dispute settlement $3,126,000
Net income - excluding tax benefit $16,850,000
Net income per common share - excluding
dispute settlement:
Basic $0.12
Diluted $0.12
Net income per common share - excluding tax
benefit:
Basic $0.66
Diluted $0.56
Weighted average common and
common equivalent shares outstanding:
Basic 25,648,000 25,378,000
Diluted 30,872,000 31,103,000
Thirty-Nine Weeks Ended
---------------------------
June 25, 2006 June 26, 2005
------------- -------------
Net sales $540,152,000 $473,336,000
Gross profit $113,272,000 $140,072,000
Income from operations $14,129,000 $53,451,000
Net income $19,756,000 $48,224,000
Net income per common share:
Basic $0.77 $1.92
Diluted $0.72 $1.63
Net income - excluding dispute settlement $17,044,000
Net income - excluding tax benefit $45,432,000
Net income per common share - excluding
dispute settlement:
Basic $0.67
Diluted $0.63
Net income per common share - excluding tax
benefit:
Basic $1.81
Diluted $1.54
Weighted average common and
common equivalent shares outstanding:
Basic 25,598,000 25,107,000
Diluted 30,869,000 30,724,000
At June 25, 2006 At Sept. 25, 2005
----------------- -----------------
Total assets $1,058,539,000 $799,538,000
Cash and cash equivalents $78,436,000 $33,733,000
Securities available for sale $245,058,000 $172,778,000
Total shareholders' investment $579,033,000 $552,539,000
Hutchinson Technology Incorporated
Condensed Consolidated Statements of Operations - Unaudited
(In thousands, except per share data)
Thirteen Weeks Ended Thirty-Nine Weeks Ended
--------------------- -----------------------
June 25, June 26, June 25, June 26,
2006 2005 2006 2005
----------- --------- ------------- ---------
Net sales $169,599 $169,676 $540,152 $473,336
Cost of sales 137,488 118,242 426,880 333,264
----------- --------- ------------- ---------
Gross profit 32,111 51,434 113,272 140,072
Research and development
expenses 13,906 9,571 40,023 25,488
Selling, general and
administrative
expenses 20,263 21,150 64,120 61,133
----------- --------- ------------- ---------
Dispute settlement (5,000) - (5,000) -
----------- --------- ------------- ---------
Income from
operations 2,942 20,713 14,129 53,451
Interest expense (2,522) (395) (4,995) (1,636)
Interest Income 3,903 3,020 9,138 5,725
Other income, net 1,352 1,283 3,859 3,585
----------- --------- ------------- ---------
Income before income
taxes 5,675 24,621 22,131 61,125
Provision (benefit) for
income taxes (163) 4,979 2,375 12,901
----------- --------- ------------- ---------
Net income $5,838 $19,642 $19,756 $48,224
=========== ========= ============= =========
Basic earnings per share $0.23 $0.77 $0.77 $1.92
=========== ========= ============= =========
Diluted earnings per
share $0.22 $0.65 $0.72 $1.63
=========== ========= ============= =========
Weighted average common
shares outstanding 25,648 25,378 25,598 25,107
=========== ========= ============= =========
Weighted average common
and diluted shares
outstanding 30,872 31,103 30,869 30,724
=========== ========= ============= =========
Hutchinson Technology Incorporated
Condensed Consolidated Balance Sheets - Unaudited
(In thousands, except shares data)
June 25, September 25,
ASSETS 2006 2005
----------- -------------
Current assets:
Cash and cash equivalents $78,436 $33,733
Securities available for sale 245,058 172,778
Trade receivables, net 89,412 85,019
Other receivables 13,950 11,181
Inventories 86,791 54,780
Deferred tax assets 8,434 7,206
Prepaid taxes and other 7,449 5,430
----------- -------------
Total current assets 529,530 370,127
Property, plant and equipment, net 449,346 350,520
Deferred tax assets 57,544 61,078
Other
assets 22,119 17,813
----------- -------------
$1,058,539 $799,538
=========== =============
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current liabilities:
Current portion of long-term debt $1,230 $-
Accounts payable $53,212 $56,128
Accrued expenses 18,452 13,238
Accrued compensation 23,814 24,873
----------- -------------
Total current liabilities 96,708 94,239
Long-term debt, less current maturities 5,613 -
Convertible subordinated notes 375,000 150,000
Other long-term liabilities 2,185 2,760
Shareholders' investment:
Common stock $.01 par value, 100,000,000
shares
authorized, 25,617,000 and 25,450,000
issued and outstanding 256 254
Additional paid-in capital 397,360 390,680
Accumulated other comprehensive income (655) (712)
Accumulated earnings 182,072 162,317
----------- -------------
Total shareholders' investment 579,033 552,539
----------- -------------
$1,058,539 $799,538
=========== =============
Hutchinson Technology Incorporated
Condensed Consolidated Statements of Cash Flows - Unaudited
(Dollars in thousands)
Thirty-Nine Weeks Ended
------------------------
June 25, June 26,
2006 2005
------------ -----------
Operating activities:
Net income $19,756 $48,224
Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation and amortization 87,463 49,057
Stock-based compensation 2,688
Deferred income taxes 2,340 14,301
Loss on disposal of assets 231 52
Changes in operating assets and
liabilities (25,765) 10,569
------------ -----------
Cash provided by operating
activities 86,713 122,203
------------ -----------
Investing activities:
Capital expenditures (191,705) (137,182)
Purchases of marketable securities (1,428,247) (413,983)
Sales of marketable securities 1,355,990 422,370
------------ -----------
Cash used for investing
activities (263,962) (128,795)
------------ -----------
Financing activities:
Repayments of long-term debt (1,012) -
Repayments of capital lease obligation - -
Net proceeds from issuance of convertible
subordinated notes 218,971 -
Net proceeds from issuance of common stock 3,992 20,637
------------ -----------
Cash provided by (used for)
financing activities 221,951 20,637
------------ -----------
Net increase in cash and cash equivalents 44,702 14,045
Cash and cash equivalents at beginning of
period 33,733 33,704
------------ -----------
Cash and cash equivalents at end of period $78,435 $47,749
============ ===========
Hutchinson Technology Incorporated
Earnings Per Share Calculation - Unaudited
(In thousands, except per share data)
Thirteen Weeks Thirty-Nine Weeks
Ended Ended
----------------- -----------------
June 25, June 26, June 25, June 26,
2006 2005 2006 2005
-------- -------- -------- --------
Net income (A) $5,838 $19,642 $19,756 $48,224
Plus: interest expense on
convertible
subordinated notes 1,008 1,008 3,025 3,025
Less: additional profit sharing
expense and
income tax provision 75 358 687 1,046
-------- -------- -------- --------
Net income available to common
shareholders (B) $6,771 $20,292 $22,094 $50,203
======== ======== ======== ========
Weighted average common shares
outstanding (C) 25,648 25,378 25,598 25,107
Dilutive potential common shares 5,224 5,725 5,271 5,617
Weighted average common and
diluted shares
-------- -------- -------- --------
outstanding (D) 30,872 31,103 30,869 30,724
======== ======== ======== ========
Basic earnings per share ((A)/(C)) $0.23 $0.77 $0.77 $1.92
Diluted earnings per share
((B)/(D)) $0.22 $0.65 $0.72 $1.63
Hutchinson Technology Incorporated
Reconciliation of Non-GAAP to GAAP Financial Measures - Unaudited
(In thousands, except per share data)
Thirteen Weeks Thirty-Nine Weeks
Ended Ended
----------------- -----------------
June 25, June 26, June 25, June 26,
2006 2005 2006 2005
-------- -------- -------- --------
Net income - GAAP $5,838 $19,642 $19,756 $48,224
Less dispute settlement (5,000) (5,000)
Increase in incentive compensation
expense related to dispute
settlement 538 538
Income taxes expense on dispute
settlement 1,750 1,750
-------- --------
Net income - excluding dispute
settlement $3,126 $17,044
======== ========
Less adjustment to provision for
income taxes for refund of state
income taxes(1) (1,676) (1,676)
Increase in incentive compensation
expense related to refund of
state income taxes 133 133
Less interest income related to
refund of state income taxes
Net income - excluding tax benefit (1,249) (1,249)
-------- --------
Net income per common share -
excluding dispute settlement(2): 16,850 45,432
======== ========
Basic earnings per share $0.12 $0.67
Diluted earnings per share $0.12 $0.63
Net income per common share -
excluding tax benefit(3):
Basic earnings per share $0.66 $1.81
Diluted earnings per share $0.56 $1.54
Weighted average common and common
equivalent shares outstanding:
Basic 25,648 25,378 25,598 25,107
Diluted 25,845 31,103 30,869 30,724
(1) Amounts reflect the refund of certain Minnesota corporate income
taxes paid for the year 1995 through 1999 and the reversal of a
related tax reserve offset in part by an adjustment to the
carrying value of net operating loss carryforwards.
(2) Net income per common share - excluding dispute settlement, basic
and diluted, is calculated by dividing net income - excluding
dispute settlement by weighted average common and common
equivalent shares outstanding basic and diluted, respectively.
(3) Net income per common share - excluding tax benefit, basic and
diluted, is calculated by dividing net income - excluding tax
benefit by weighted average common and common equivalent shares
outstanding basic and diluted, respectively.
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