Hutchinson Revises June Quarter Outlook

Hutchinson Technology Incorporated revised its outlook for its fiscal 2011 third quarter ending June 26, 2011.

The company now expects its third quarter suspension assembly shipments to increase approximately 10 percent compared with its second quarter shipments of 102.3 million. The company previously expected its third quarter shipments to be relatively flat compared with its second quarter. Through the first eleven weeks of its third quarter, the company has shipped approximately 93 million suspension assemblies. Actual demand in the final two weeks of the third quarter may fluctuate and will determine the final amount of shipments for the quarter.

Wayne Fortun, Hutchinson Technology’s president and chief executive officer, attributed the stronger demand primarily to a shift in market share among the company’s customers. "It appears that demand has shifted to some customer programs where we have stronger positions, and that our position on certain programs has also improved slightly," said Fortun. "We are leveraging available capacity to respond to the additional customer demand."

The company also announced that it is currently in discussions with a U.S. bank to establish a secured credit facility of up to $35 million. As currently proposed, the credit facility would be secured by a first priority lien on substantially all of the non-real property assets of the company and its subsidiaries and would contain financial and non-financial covenants. The credit facility, as currently proposed, would reach maturity in October 2012 unless the aggregate outstanding principal amount of the company’s 3.25% Convertible Subordinated Notes is reduced to a certain amount, which would extend the maturity to October 2014. These discussions are ongoing, no commitments have been made and there is no guarantee that any credit facility will be entered into. The company expects that any loans made under such facility would be used for general corporate and working capital purposes and to improve liquidity.