Hutchinson Technology Inc. (HTCH, Financial) filed Quarterly Report for the period ended 2008-12-28.
Hutchinson Technology Incorporated is an acknowledged world leader in precision manufacturing. Hutchinson Technology specialize in design and manufacture of close-tolerance products that require chemical mechanical and electronic technologies. Its primary products suspension assemblies hold magnetic read-write heads at microscopic distances above the disks in rigid disk drives. The Company is strongly positioned as a provider of technology that our customers value for its ability to help them differentiate their products on performance and value attributes. . Hutchinson Technology Inc. has a market cap of $65.54 million; its shares were traded at around $3.48 with and P/S ratio of 0.1.
Net sales for the thirteen weeks ended December 28, 2008, were $119,671,000, compared to $173,077,000 for the thirteen weeks ended December 30, 2007, a decrease of $53,406,000. Suspension assembly sales decreased $54,297,000 from the thirteen weeks ended December 30, 2007, due to decreased suspension assembly unit shipments and our average selling price decreasing from $0.80 to $0.76 during the same period due to competitive pressures. The decrease in unit shipments was primarily due to a decline in world-wide disk drive shipments and a reduction of inventories in the supply chain.
Gross loss for the thirteen weeks ended December 28, 2008, was $133,000, compared to gross profit $32,917,000 for the thirteen weeks ended December 30, 2007, a decrease of $33,050,000. Gross profit as a percent of net sales was 0% and 19%, respectively. The lower gross profit was primarily due to the substantial decline in net sales, which reduced our ability to cover our fixed costs, and higher costs associated with the initiation of volume production of TSA+ suspension assemblies, which reduced gross profit by $9,500,000 for the thirteen weeks ended December 28, 2008, compared to $7,500,000 for the thirteen weeks ended December 30, 2007.
Other income, net of other expenses, for the thirteen weeks ended December 28, 2008, was $2,727,000, compared to $641,000 for the thirteen weeks ended December 30, 2007, an increase of $2,086,000. The increase in other income was primarily due to an increase of $8,577,000 related to the UBS rights offering offset by an additional $6,173,000 impairment of our ARS holdings.
Our principal sources of liquidity are cash and cash equivalents, short- and long-term investments, cash flow from operations and additional financing capacity, if available given current credit market conditions. Our cash and cash equivalents increased from $62,309,000 at September 28, 2008, to $176,216,000 at December 28, 2008. Our short- and long-term investments decreased from $201,110,000 to $123,221,000 during the same period. In total, our cash and cash equivalents and short- and long-term investments increased by $36,018,000. This increase is primarily due to $59,532,000 of net proceeds from the UBS Credit Line, $33,631,000 of cash generated from operations, $8,577,000 of fair value related to the rights offering as discussed below and $541,000 in net proceeds from issuances of our common stock from our employee stock purchase plan during the first quarter of 2009. These increases were partially offset by $48,100,000 for the repayment of long-term debt and $11,846,000 for capital expenditures. We also recognized a charge of $6,173,000 for additional other-than-temporary impairment of our ARS holdings.
On November 5, 2008, we and our wholly-owned subsidiary Hutchinson Technology Asia, Inc. (HTA), amended our second amended and restated loan agreement (the Amendment) relating to our credit facility (the Credit Facility) with Bank of America N.A. (BofA). The Amendment reduces the credit commitment from $50,000,000 to $25,000,000 within 90 days of entering into the Amendment or the first date on which we sign an agreement, note or similar document with respect to a loan secured by our ARS as permitted by the Credit Facility, adjusts the Credit Facilitys maturity date to December 1, 2009, provides for a blanket lien on substantially all of our and HTAs non-real estate assets, increases the maximum allowable debt to total capital ratio to 0.60 to 1.00, increases the Credit Facilitys pricing to LIBOR plus 2% or Prime plus 2% and increases to 0.5% the fee to be paid on the unused amount of the Credit Facility. On December 19, 2008, the credit commitment was reduced to $25,000,000 as we entered into a loan agreement with UBS Credit secured by the ARS we hold in accounts with UBS. As of December 28, 2008, we had no outstanding loans under the Credit Facility. Letters of credit outstanding under the Credit Facility totaled $1,250,000 as of such date, resulting in $23,750,000 of remaining availability under the facility.
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Hutchinson Technology Incorporated is an acknowledged world leader in precision manufacturing. Hutchinson Technology specialize in design and manufacture of close-tolerance products that require chemical mechanical and electronic technologies. Its primary products suspension assemblies hold magnetic read-write heads at microscopic distances above the disks in rigid disk drives. The Company is strongly positioned as a provider of technology that our customers value for its ability to help them differentiate their products on performance and value attributes. . Hutchinson Technology Inc. has a market cap of $65.54 million; its shares were traded at around $3.48 with and P/S ratio of 0.1.
Highlight of Business Operations:
We spent $39,711,000 on research and development in 2008 compared to $55,245,000 in 2007. In 2007, we continued development of the additive processes required for our TSA+ suspension assemblies and development of new process technologies for next-generation suspension assembly products and equipment. The decrease in 2008 was primarily attributable to $11,018,000 of lower expenses primarily related to the classification of the costs of running the TSA+ manufacturing lines as cost of sales beginning in the fourth quarter of 2007. Research and development spending specific to our BioMeasurement Division was $4,767,000 in 2008 and $4,207,000 in 2007. During the first quarter of 2009, we spent $8,883,000 on research and development, with $1,055,000 specific to our BioMeasurement Division. We expect our research and development spending in 2009 will be approximately $30,000,000.Net sales for the thirteen weeks ended December 28, 2008, were $119,671,000, compared to $173,077,000 for the thirteen weeks ended December 30, 2007, a decrease of $53,406,000. Suspension assembly sales decreased $54,297,000 from the thirteen weeks ended December 30, 2007, due to decreased suspension assembly unit shipments and our average selling price decreasing from $0.80 to $0.76 during the same period due to competitive pressures. The decrease in unit shipments was primarily due to a decline in world-wide disk drive shipments and a reduction of inventories in the supply chain.
Gross loss for the thirteen weeks ended December 28, 2008, was $133,000, compared to gross profit $32,917,000 for the thirteen weeks ended December 30, 2007, a decrease of $33,050,000. Gross profit as a percent of net sales was 0% and 19%, respectively. The lower gross profit was primarily due to the substantial decline in net sales, which reduced our ability to cover our fixed costs, and higher costs associated with the initiation of volume production of TSA+ suspension assemblies, which reduced gross profit by $9,500,000 for the thirteen weeks ended December 28, 2008, compared to $7,500,000 for the thirteen weeks ended December 30, 2007.
Other income, net of other expenses, for the thirteen weeks ended December 28, 2008, was $2,727,000, compared to $641,000 for the thirteen weeks ended December 30, 2007, an increase of $2,086,000. The increase in other income was primarily due to an increase of $8,577,000 related to the UBS rights offering offset by an additional $6,173,000 impairment of our ARS holdings.
Our principal sources of liquidity are cash and cash equivalents, short- and long-term investments, cash flow from operations and additional financing capacity, if available given current credit market conditions. Our cash and cash equivalents increased from $62,309,000 at September 28, 2008, to $176,216,000 at December 28, 2008. Our short- and long-term investments decreased from $201,110,000 to $123,221,000 during the same period. In total, our cash and cash equivalents and short- and long-term investments increased by $36,018,000. This increase is primarily due to $59,532,000 of net proceeds from the UBS Credit Line, $33,631,000 of cash generated from operations, $8,577,000 of fair value related to the rights offering as discussed below and $541,000 in net proceeds from issuances of our common stock from our employee stock purchase plan during the first quarter of 2009. These increases were partially offset by $48,100,000 for the repayment of long-term debt and $11,846,000 for capital expenditures. We also recognized a charge of $6,173,000 for additional other-than-temporary impairment of our ARS holdings.
On November 5, 2008, we and our wholly-owned subsidiary Hutchinson Technology Asia, Inc. (HTA), amended our second amended and restated loan agreement (the Amendment) relating to our credit facility (the Credit Facility) with Bank of America N.A. (BofA). The Amendment reduces the credit commitment from $50,000,000 to $25,000,000 within 90 days of entering into the Amendment or the first date on which we sign an agreement, note or similar document with respect to a loan secured by our ARS as permitted by the Credit Facility, adjusts the Credit Facilitys maturity date to December 1, 2009, provides for a blanket lien on substantially all of our and HTAs non-real estate assets, increases the maximum allowable debt to total capital ratio to 0.60 to 1.00, increases the Credit Facilitys pricing to LIBOR plus 2% or Prime plus 2% and increases to 0.5% the fee to be paid on the unused amount of the Credit Facility. On December 19, 2008, the credit commitment was reduced to $25,000,000 as we entered into a loan agreement with UBS Credit secured by the ARS we hold in accounts with UBS. As of December 28, 2008, we had no outstanding loans under the Credit Facility. Letters of credit outstanding under the Credit Facility totaled $1,250,000 as of such date, resulting in $23,750,000 of remaining availability under the facility.
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