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Hutchinson Technology, Inc. (HTCH)
F3Q09 (Qtr End 6/28/09) Earnings Call
July 30, 2009 05:00 PM ET
John A. Ingleman - Senior Vice President and Chief Financial Officer
Wayne M. Fortun - President and Chief Executive Officer
Kathleen S. Skarvan - Vice President and President of Disk Drive Components Division
Richard J. Penn - Senior Vice President and President of BioMeasurement Division
Richard Kugele - Needham & Company
Matt Bryson - Avian Securities
Previous Statements by HTCH
» Hutchinson Technology Inc. F4Q09 (Qtr End 27/09/09) Earnings Call Transcript
» Hutchinson Technology Incorporated. F2Q09 (Qtr End 03/23/09) Earnings Call Transcript
» Hutchinson Technology Incorporated F1Q09 (Qtr End 12/28/2008) Earnings Call Transcript
I would now like to turn the conference over to John Ingleman, Chief Financial Officer. Please go ahead, sir.
John A. Ingleman
Good afternoon everyone. Welcome to our third quarter results conference call.
With me today is Wayne Fortun, our CEO; Kathleen Skarvan, President of our Disk Drive Components Division; Rick Penn, President of our BioMeasurement Division; Dave Radloff, our Corporate Controller; and Chuck Ives, our Investor Relations Manager.
As a reminder, we will be providing forward-looking information on demand for shipments of the company's products, production capacity and capability, capital expenditures, worldwide disk drive and suspension assembly demand and shipments; average selling price; product cost, cost reductions, severance costs, our plans to establish new assembly operation in Thailand, our law measurement division revenue and operating loss, product commercialization product commercialization and adoption, the company's results of operations, operating performance and debt obligations in cash management.
These forward-looking statements involve risks and uncertainties since they are based on our current expectations. Our actual results could differ materially as a result of several factors that are described in our periodic reports on file with the SEC.
In connection with the adoption of SEC rules governing fair disclosure, the company provides financial information and projections only through means that are designed to provide broad distribution of the information to the public. The company will not make projections or provide material non-public information through any other means. We issued our third quarter results announcements just after the market closed this afternoon. The announcement is now posted on our website at www.htch.com as well.
I'll turn the call over for Wayne for his opening remarks.
Wayne M. Fortun
Thanks John. In our fiscal 2009 third quarter we saw net sales grow 34% compared with the preceding quarter as we responded to increase suspension assembly demand from all of the disk drive customers.
We also completed a major restructuring actions announced earlier this year to align our costs with the market and economic conditions and our expectations regarding suspension assembly demand. Our fiscal 2009 restructuring actions have reduced our costs on an annual basis by approximately $185 million compared to our fiscal 2008 run rate.
We began realizing some of the benefits of our lower cost structures in the third quarter and expect to see the benefits more to be more fully evident in operating results for the fourth and beyond.
During the quarter we also further reduced our current portion of our debts. We repurchase unfavorable churns, approximately 25 million par value of our 2.25 or 2.25% convertibles subordinated notes that we will do in March 2010.
With the retirement of another $25 million in short term debt and the overall reduction of our operating cost we are well positioned to meet our current debt obligations and make strategic investment in company's future. Accordingly we have resumed our plans to establish an assembly operation in Thailand in order to further reduce our costs and better serve our customers through closer proximity.
While business conditions remain challenging we have nailed our losses and positioned the company for further improvement in our financial results.
Now I'll turn the call over to Cathleen to discuss the Disk Drive Components Divisions third quarter performance.
Kathleen S. Skarvan
Thanks Wayne. During our fiscal 2009 third quarter we shipped 146 million suspension assemblies, an increase of 36% when compared with shipments of 107 million in the preceding quarter. Shipments in last year's third quarter totaled 189 million.
We estimate that we maintained our overall market share during the quarter and we believe the sequential quarter increased in our shipments reflects growth in the overall suspension assembly market resulting from increase shipments and production.
Suspension assembly shipments increased sequentially in all segments including a 97% increase in shipments for mobile application. The mix of our third quarter shipment breakdown as follows: suspension assemblies for mobile applications accounted for 44% of our shipment, up for 30% in the preceding quarter, 3.5-inch ATA applications accounted for 38% of our shipment compared to 49% in the preceding quarter.
And suspension for enterprise applications accounted for 18% of our shipment's compared to 21% in the preceding quarter. This product mix help maintain our average selling price of $0.71 for the third quarter which was flat with the preceding quarter.
Based on our current expectations for product mix, our fourth quarter sequential ASP decline should continue to be more moderate than what we experienced in the first half of this fiscal year. Also included in our third quarter shipments were about 10 million TSA+ suspension assemblies. This was flat with the preceding quarter and lower than our expectations as a result of the lower than expected by customers Disk Drive programs.