Hutchinson Technology Inc. (HTCH, Financial) filed Annual Report for the period ended 2010-09-26.
Hutchinson Technology Inc. has a market cap of $71.5 million; its shares were traded at around $3.06 with and P/S ratio of 0.2. HTCH is in the portfolios of Arnold Van Den Berg of Century Management, Donald Smith of Donald Smith & Co., Jim Simons of Renaissance Technologies LLC.
Our cash and investments balance totaled $104,538,000 at the end of 2010, compared with $202,707,000 at the end of the preceding year. With the repayment of our 2.25% Convertible Subordinated Notes due 2010 (2.25% Notes) and the loan balance obtained against our portfolio of auction rate securities, we reduced the principal amount of our debt balance from $301,250,000 at the end of 2009 to $198,445,000 at the end of 2010, with all but $945,000 subject to holders right to require us to repurchase the 3.25% Notes for cash on or after January of 2013.
From the end of 2008 to the first quarter of 2010, we substantially improved our gross margin despite a decline in net sales. The improvement was the result of the actions we took in 2009 to restructure our business and reduce our costs, as well as a turnaround in demand that began in the latter half of 2009. Gross profit in the first quarter of 2010 was 19 percent, up from 17 percent in the fourth quarter of 2009, primarily due to an increase in net sales. Gross profit decreased in the second quarter of 2010, however, to $7,315,000, or 8 percent, primarily due to a 16 percent sequential quarter decline in suspension assembly shipments. Gross profit in the third quarter of 2010 decreased to $4,907,000, or 6 percent of net sales, primarily due to a further decline in suspension assembly shipments, an estimated $2,000,000 of costs related to a TSA+ product defect and $1,110,000 of asset impairments in our BioMeasurement Division, but also benefited from a build in suspension assembly inventory. In the fourth quarter of 2010, our gross profit was zero primarily due to a 19 percent reduction in our finished goods inventory, which brought our finished goods inventory levels down from 6 weeks to 4 1/2 weeks.
For 2009, our capital expenditures were $20,609,000, primarily for TSA+ suspension production capacity, new program tooling and deployment of new process technology and capability improvements. Capital spending for 2010 was $31,382,000, primarily for additional TSA+ suspension production capacity, construction of our Thailand assembly operation and new program tooling. We currently expect our capital expenditures to be approximately $20,000,000 to $25,000,000 in 2011, primarily for additional TSA+ flexure production capacity and tooling and manufacturing equipment for new process technology and capability improvements, such as DSA suspension assemblies. We continue to gain customer acceptance on new programs with our TSA+ products and expect TSA+ suspensions to grow significantly as a percentage of our product mix, as they continue to replace TSA suspensions.
Research and development expenses for 2010 were $21,429,000, compared to $26,776,000 for 2009, a decrease of $5,347,000. The decrease was primarily related to lower labor expenses as a result of our 2009 restructuring and cost reduction actions, partially offset by $394,000 of asset impairments in our BioMeasurement Division. Research and development expenses specific to our BioMeasurement Division were $5,033,000 in 2010 and $4,265,000 in 2009. Research and development expenses as a percent of net sales were 6% in 2010 and 7% in 2009.
Selling, general and administrative expenses for 2010 were $55,848,000, compared to $54,880,000 for 2009, an increase of $968,000. The higher selling, general and administrative expenses were primarily due to $5,700,000 of Thailand operation startup expenses and $790,000 of asset impairments in our BioMeasurement Division, offset by reductions in labor expenses as a result of our 2009 restructuring and cost reduction actions. Selling, general and administrative expenses as a percent of net sales were 16% in 2010 and 13% in 2009. Selling, general and administrative expenses specific to our BioMeasurement Division were $17,358,000 in 2010 and $17,991,000 in 2009.
Read the The complete Report
Hutchinson Technology Inc. has a market cap of $71.5 million; its shares were traded at around $3.06 with and P/S ratio of 0.2. HTCH is in the portfolios of Arnold Van Den Berg of Century Management, Donald Smith of Donald Smith & Co., Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:
During the 2010 fourth quarter, we took actions to further reduce costs and preserve cash. We targeted annualized cost reductions of approximately $25,000,000 company-wide. In our BioMeasurement Division, we expect to reduce annualized costs by approximately $12,000,000 in light of slower than expected revenue growth and we will focus our sales and marketing activities primarily on the customers, applications and geographic markets where we have momentum. These planned cost reductions in our BioMeasurement Division were more than 75% complete at the end 2010 and will substantially reduce the divisions operation loss in 2011. In our Disk Drive Components Division, we reduced costs by approximately $8,000,000, while keeping intact capabilities that are core to our competitive position, including product design, rapid prototype development, speed to volume and very low part-to-part variation in our finished product. We also reduced our corporate expenses by approximately $5,000,000. The Disk Drive Components Division reductions and corporate expense reductions were nearly complete at the end of 2010.Our cash and investments balance totaled $104,538,000 at the end of 2010, compared with $202,707,000 at the end of the preceding year. With the repayment of our 2.25% Convertible Subordinated Notes due 2010 (2.25% Notes) and the loan balance obtained against our portfolio of auction rate securities, we reduced the principal amount of our debt balance from $301,250,000 at the end of 2009 to $198,445,000 at the end of 2010, with all but $945,000 subject to holders right to require us to repurchase the 3.25% Notes for cash on or after January of 2013.
From the end of 2008 to the first quarter of 2010, we substantially improved our gross margin despite a decline in net sales. The improvement was the result of the actions we took in 2009 to restructure our business and reduce our costs, as well as a turnaround in demand that began in the latter half of 2009. Gross profit in the first quarter of 2010 was 19 percent, up from 17 percent in the fourth quarter of 2009, primarily due to an increase in net sales. Gross profit decreased in the second quarter of 2010, however, to $7,315,000, or 8 percent, primarily due to a 16 percent sequential quarter decline in suspension assembly shipments. Gross profit in the third quarter of 2010 decreased to $4,907,000, or 6 percent of net sales, primarily due to a further decline in suspension assembly shipments, an estimated $2,000,000 of costs related to a TSA+ product defect and $1,110,000 of asset impairments in our BioMeasurement Division, but also benefited from a build in suspension assembly inventory. In the fourth quarter of 2010, our gross profit was zero primarily due to a 19 percent reduction in our finished goods inventory, which brought our finished goods inventory levels down from 6 weeks to 4 1/2 weeks.
For 2009, our capital expenditures were $20,609,000, primarily for TSA+ suspension production capacity, new program tooling and deployment of new process technology and capability improvements. Capital spending for 2010 was $31,382,000, primarily for additional TSA+ suspension production capacity, construction of our Thailand assembly operation and new program tooling. We currently expect our capital expenditures to be approximately $20,000,000 to $25,000,000 in 2011, primarily for additional TSA+ flexure production capacity and tooling and manufacturing equipment for new process technology and capability improvements, such as DSA suspension assemblies. We continue to gain customer acceptance on new programs with our TSA+ products and expect TSA+ suspensions to grow significantly as a percentage of our product mix, as they continue to replace TSA suspensions.
Research and development expenses for 2010 were $21,429,000, compared to $26,776,000 for 2009, a decrease of $5,347,000. The decrease was primarily related to lower labor expenses as a result of our 2009 restructuring and cost reduction actions, partially offset by $394,000 of asset impairments in our BioMeasurement Division. Research and development expenses specific to our BioMeasurement Division were $5,033,000 in 2010 and $4,265,000 in 2009. Research and development expenses as a percent of net sales were 6% in 2010 and 7% in 2009.
Selling, general and administrative expenses for 2010 were $55,848,000, compared to $54,880,000 for 2009, an increase of $968,000. The higher selling, general and administrative expenses were primarily due to $5,700,000 of Thailand operation startup expenses and $790,000 of asset impairments in our BioMeasurement Division, offset by reductions in labor expenses as a result of our 2009 restructuring and cost reduction actions. Selling, general and administrative expenses as a percent of net sales were 16% in 2010 and 13% in 2009. Selling, general and administrative expenses specific to our BioMeasurement Division were $17,358,000 in 2010 and $17,991,000 in 2009.
Read the The complete Report
