Hutchinson announces loss, more layoffs
- Article by: DEE DePASS
- Star Tribune
- January 27, 2009 - 11:19 PM
After weeks of cutting jobs to align its costs with lower demand, Hutchinson Technology reported a loss of $64 million, or $2.79 per share, for its fiscal first quarter Tuesday and announced 100 more layoffs from its plant in Eau Claire, Wis.
Hutchinson, which supplies disc drive assemblies and bio-measurement equipment, already had slashed 1,680 jobs since December, mostly in Minnesota and South Dakota.
Quarterly sales slumped to $119.7 million from $173 million a year ago, reflecting a 27 percent drop in product shipments to 155 million units from 213 million one year earlier.
Results, released after the market closed Tuesday, were worse than expected. On average, analysts expected a 94-cent loss per share and $123 million in sales.
The revenue decline was so swift that the company struggled to cover expenses.
CEO Wayne Fortun told analysts Tuesday that the layoffs and other moves are expected to save $110 million to $125 million in annual expenses. "Our immediate focus has been on reducing costs and strengthening our cash position," Fortun said.
Hutchinson, headquartered in Hutchinson, Minn., will shut its South Dakota plant in three months. It recently took a loan against its auction-rate securities portfolio. It also repurchased some convertible debt on more favorable terms, CFO John Ingleman said. The loan and debt restructuring contributed $14.6 million to the quarter. Hutchinson also reduced capital spending to $40 million from $60 million.
Hutchinson incurred $19.5 million in first quarter severance costs and had an asset impairment charge of $32.2 million relating to factory equipment.
Second-quarter results are expected to include severance and asset impairment charges of $10 million to $18 million, officials said.
Dee DePass • 612-673-7725
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