| Significant Accounting Policies [Text Block] | 1. Basis of Presentation and Summary of Significant Accounting Policies Organization We are a global supplier of critical precision component technologies. As a key supplier of suspension assemblies for disk drives, we help customers improve overall disk drive performance and meet the demands of an ever-expanding digital universe. Through our new business development initiatives, we focus on leveraging our unique precision manufacturing capabilities in new markets to improve product performance, reduce size, lower cost and reduce time to market. We manufacture suspension assemblies for all sizes and types of hard disk drives. Suspension assemblies are critical components of disk drives that hold the read/write heads in position above the spinning magnetic disks. We developed our position as a key supplier of suspension assemblies through an integrated manufacturing approach, research, development and design activities coupled with substantial investments in process capabilities, product features and manufacturing capacity. We manufacture our suspension assemblies with proprietary technology and processes with very low part-to-part variation. These processes require manufacturing to precise specifications that are critical to maintaining the necessary microscopic clearance between the head and disk and the electrical connectivity between the head and the drive circuitry. We design our suspension assemblies with a focus on the increasing performance requirements of new disk drives, principally more complex, increased data density, improved head-to-disk stability during a physical shock event and reduced data access time. Increased capacity, improved reliability and performance, as well as the miniaturization of disk drives, generally require suspension assemblies with lower variability, specialized design, expanded functionality and greater precision. Manufacturing of these smaller and more complex suspension assemblies requires that we develop new manufacturing process capabilities. We will continue to invest, as needed, to advance suspension assembly technology, enhance our process capabilities and expand our production capacity. Our business is comprised of a single operating and reportable segment. Our chief operating decision maker assesses financial performance of our company as a whole. Entry into Merger Agreement On November 1, 2015, subsequent to our 2015 year end, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Headway Technologies, Inc. (“Parent”) and Hydra Merger Sub, Inc., a wholly owned subsidiary of Parent (“Merger Subsidiary”). Pursuant to the Merger Agreement, Merger Subsidiary will merge with and into our company and our company will continue as the surviving corporation and as a wholly owned subsidiary of Parent (the “Merger”). Parent and Merger Subsidiary are each beneficially owned by TDK Corporation, a Japanese electronics company (“TDK”). Pursuant to the Merger Agreement, at the effective time of the Merger, each issued and outstanding share of our capital stock (other than shares held (1) by Parent or Merger Subsidiary or any direct or indirect subsidiary of our company or Parent, and (2) by shareholders who have perfected and not withdrawn a demand for dissenters’ rights or who have not otherwise lost dissenters’ rights under Minnesota law with respect to such shares), will be cancelled and extinguished and automatically converted into the right to receive: · $ 3.62 · up to $ 0.38 The Additional Consideration will be determined prior to consummation of the Merger and will be an amount equal to approximately $ 0.01 500,000 17,500,000 41,900,000 Each obligation to consummate the Merger is subject to satisfaction or of a number of conditions set forth in the Merger Agreement. The consolidated financial statements include the accounts of Hutchinson Technology Incorporated and its subsidiaries (“we,” “our,” “us” and the “company”), all of which are wholly-owned. All intercompany accounts and transactions have been eliminated in consolidation. The preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. In May 2014, the FASB issued authoritative guidance related to revenue from contracts with customers. The guidance outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. It also requires entities to disclose both quantitative and qualitative information that enable financial statements users to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. In July 2015, the FASB confirmed a one year deferral of the effective date of the new revenue standard and allows early adoption as of the original effective date. The updated guidance will be effective for our first quarter of 2019. We are in the process of assessing the impact, if any, this guidance will have on our consolidated financial statements. In April 2015, the FASB issued authoritative guidance related to simplifying the presentation of debt issuance costs, which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the associated debt liability. The standard is effective for our first quarter of 2017. Early adoption is permitted for financial statements that have not been previously issued. The new guidance will be applied on a retrospective basis. We are in the process of assessing the impact this guidance will have on our consolidated financial statements. Year Our fiscal year is a fifty-two/fifty-three week period ending on the last Sunday in September. The fiscal years ended September 27, 2015, September 28, 2014, and September 29, 2013, were fifty-two week periods. Recognition We recognize revenue from the sale of our products when persuasive evidence of an arrangement exists, the product has been delivered, the fee is fixed and determinable and collection of the resulting receivable is reasonably assured. Amounts billed to customers for shipping and handling costs associated with products sold are classified as revenue. For all sales, we use a binding purchase order as evidence of an arrangement. Delivery generally occurs when the product is delivered to a common carrier. Certain of our products are delivered on an FOB destination basis. We defer our revenue associated with these transactions until the product has been delivered and accepted at the customer’s premises. We also store inventory in “vendor managed inventory,” or VMI, facilities, which are warehouses located close to the customer’s manufacturing facilities. Revenue is recognized on sales from such facilities upon the transfer of title and risk of loss, following the customer’s acknowledgement of the receipt of the goods. We also enter into arrangements with customers that provide us with reimbursement for engineering services and specific program capacity to partially offset the costs of our investment. We recognize the associated revenue over the estimated life of the program to which the services and capacity relate. The deferred revenue related to these reimbursements, as recorded on our consolidated balance sheets as of September 27, 2015, and September 28, 2014, was $ 940,000 1,135,000 1,649,000 1,891,000 Cash Equivalents Cash equivalents consist of all highly liquid investments with original maturities of three months or less. The cash and cash equivalents that were restricted in use, as recorded on our consolidated balance sheets as of September 27, 2015, and September 28, 2014, was $ 1,677,000 2,059,000 The revolving credit and security agreement between us and PNC Bank, National Association’s (“PNC Bank”), as amended, requires that we maintain a $ 2,500,000 Our short-term investments are comprised of United States government debt securities. We account for securities available for sale in accordance with Financial Accounting Standards Board (“FASB”) guidance regarding accounting for certain investments in debt and equity securities, which requires that available-for-sale and trading securities be carried at fair value. Unrealized gains and losses deemed to be temporary on available-for-sale securities are reported as other comprehensive income (“OCI”) within shareholders’ equity. Fair value of the securities is based upon quoted market prices in active markets or estimated fair value when quoted market prices are not available. The cost basis for realized gains and losses on available-for-sale securities is determined on a specific identification basis. We classify our available-for-sale securities as short- or long-term based upon management’s intent and ability to hold these investments. September 27, 2015 Gross Realized Gross Unrealized Cost Basis Gains Losses Gains Losses Recorded Basis Available-for-sale securities Short-term investments restricted U.S. government debt securities $ 965 $ $ $ $ $ 965 September 28, 2014 Gross Realized Gross Unrealized Cost Basis Gains Losses Gains Losses Recorded Basis Available-for-sale securities Short-term investments restricted U.S. government debt securities $ 965 $ $ $ $ $ 965 As of September 27, 2015, and September 28, 2014, our short-term investments mature within one year. As of September 27, 2015, and September 28, 2014, we had $ 965,000 965,000 We grant credit to our customers, but generally do not require collateral or any other security to support amounts due. Trade receivables of $ 15,860,000 23,971,000 623,000 497,000 During 2015, we entered into multiple independent bill of exchange discounting transactions under an uncommitted facility with Hongkong and Shanghai Banking Corporation Limited, Bangkok Branch (“HSBC”), under which our Thai subsidiary, Hutchinson Technology Operations (Thailand) Co. Ltd., sold, without recourse, an aggregate of $ 105,476,000 95 1.75 5 1,228,000 1,777,000 Late in 2015, we also entered into multiple independent bill of exchange discounting transactions under an uncommitted facility with Bank of America, N.A., Bangkok Branch (“Bank of America”), under which our Thai subsidiary can sell, without recourse, approximately 90 1.50 10 19,665,000 We generally warrant that the products sold by us will be free from defects in materials and workmanship for a period of one year or less following delivery to our customer. Upon determination that the products sold are defective, we typically accept the return of such products and refund the purchase price to our customer. We record a provision against revenue for estimated returns on sales of our products in the same period that the related revenues are recognized. We base the allowance on historical product returns, as well as existing product return authorizations. Fiscal Year Beginning Balance Increases in the Reductions in the Ending Balance 2015 $ 497 $ 3,845 $ (3,719) $ 623 2014 $ 656 $ 1,968 $ (2,127) $ 497 Inventories are valued at the lower of cost (first-in, first-out method) or market by analyzing market conditions, current sales prices, inventory costs and inventory balances. 2015 2014 Raw materials $ 19,236 $ 21,376 Work in process 9,537 11,860 Finished goods 11,375 15,742 $ 40,148 $ 48,978 and Depreciation Property, plant and equipment are stated at cost. We compute depreciation using the straight-line method over the estimated useful lives of the assets. We also use straight-line depreciation methods for income tax reporting purposes. Costs of renewals and betterments that substantially extend the useful life of an asset are capitalized and depreciated. Maintenance and repairs are charged directly to expense as incurred. Property under capital lease is comprised of equipment used in our operations. The related depreciation for capital leases is included in depreciation expense. The carrying value of property under capital lease was $ 11,564,000 3,842,000 Buildings 25 to 35 years Leasehold improvements 5 to 10 years Equipment 1 to 15 years Capital leases 1 to 15 years September 27, September 28, Foreign currency translation $ (4,309) $ (543) Our Thailand operation uses their local currency as its functional currency. Assets and liabilities are translated at exchange rates in effect at the balance sheet date. Income and expense accounts are translated at the average exchange rates during the year. Resulting translation adjustments are recorded as a separate component of accumulated OCI. Foreign currency translation, net of income taxes of $ 0 Transaction gains and losses that arise from the exchange rate changes on transactions denominated in a currency other than the local currency are included in “Other expense, net” in the consolidated statements of operations. We recognized a foreign currency loss of $3,949,000 in 2015, a loss of $2,076,000 in 2014 and a loss of $1,372,000 in 2013 primarily related to purchases denominated in U.S. dollars made by our Thailand operation. and Process Development Our engineers and technicians are responsible for the implementation of new technologies, as well as process and product development and improvements. Expenditures related to these activities totaled $ 54,622,000 47,397,000 39,657,000 22,100,000 17,316,000 14,621,000 Severance and Site Consolidation Total Accrual balances, September 30, 2012 $ $ $ Restructuring charges 1,212 1,661 2,873 Cash payments (1,212) (1,661) (2,873) Accrual balances, September 29, 2013 Restructuring charges 1,377 1,349 2,726 Cash payments (1,350) (1,349) (2,699) Accrual balances, September 28, 2014 27 27 Restructuring charges (19) 178 159 Cash payments (8) (178) (186) Accrual balances, September 27, 2015 $ $ $ All severance and benefits amounts owed have been paid in full. In recent years, we had multiple severance and manufacturing consolidation and restructuring plans in place to support efforts to improve operating results and liquidity through improved utilization of our facilities in both the U.S. and Thailand. During the first quarter of 2013, we eliminated approximately 55 positions as part of our continued focus on overall cost reductions. As of September 29, 2013, we had incurred $ 2,873 During the second and third quarters of 2014, we identified a total of approximately 170 positions to be eliminated as part of our continued consolidation effort and our continued focus on overall cost reductions. During the fourth quarter of 2014, we retained approximately 40 of those positions for manufacturing of our shape memory alloy optical image stabilization product. This and our site consolidation activities resulted in $ 2,726 During the first quarter of 2015, we recorded site consolidation expenses of $ 178 When indicators of impairment exist and assets are held for use, we estimate future undiscounted cash flows attributable to the assets. In the event such cash flows are not expected to be sufficient to recover the recorded value of the assets, the assets are written down to their estimated fair values based on the expected discounted future cash flows attributable to the assets or based on appraisals. Factors affecting impairment of assets held for use include the ability of the specific assets to generate positive cash flows. Changes in any of these factors could necessitate impairment recognition in future periods for other assets held for use. In connection with this consolidation of our operations, two of our facilities were offered for sale or lease in 2013, including the Eau Claire, Wisconsin assembly building and the Development Center building on our Hutchinson, Minnesota campus. During the first quarter of 2014, we received third-party interest in purchasing the Eau Claire assembly building. Based on the discussions regarding the potential sale of this building, we modified our forecast model to increase the probability of a sale of our Eau Claire assembly building and decrease the probability of a lease. Using these new weightings for sale and lease, the carrying value of our assets exceeded the expected undiscounted cash flows indicating a trigger of potential impairment. As a result, we evaluated the recoverability of the Eau Claire assembly building based on these circumstances and recorded an impairment charge of $ 4,470,000 15 30 4,364,000 700,000 During the fourth quarter of 2015, we received new market information that negatively impacted our valuation assumptions regarding our Development Center building. The valuation assumptions of the building were determined based on the estimated sales value of the building less the costs to sell. Using those new valuation assumptions, we determined that the carrying value of our assets exceeded the expected undiscounted cash flows indicating a trigger of potential impairment. As a result, we evaluated the recoverability of the Development Center building based on these circumstances and recorded an impairment charge of $ 1,620,000 1 18 Taxes As part of the process of preparing our consolidated financial statements, we are required to estimate our income taxes in each of the jurisdictions in which we operate. This process involves estimating our current tax exposure together with assessing temporary differences resulting from differing treatment of items for tax and accounting purposes. These temporary differences result in deferred tax assets and liabilities, which are included within our consolidated balance sheets. We must then assess the likelihood that our deferred tax assets will be realized based on future taxable income, and to the extent we believe that recovery is not likely, we must establish a valuation allowance. To the extent we establish a valuation allowance or change this allowance in a period, we must include an expense or a benefit within the tax provision in our consolidated statement of operations. Significant judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities and any valuation allowance recorded against our deferred tax assets. Valuation allowances arise due to the uncertainty of realizing deferred tax assets. At September 27, 2015, and September 28, 2014, we had valuation allowances of $ 239,912,000 227,219,000 Share Basic loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding during the year. Diluted earnings (loss) per share identifies the dilutive effect of potential common shares using net income (loss) available to common shareholders and is computed using the treasury stock method for outstanding stock options and the if-converted method for the 8.50% Convertible Notes, and the 8.50% New Convertible Notes. 2015 2014 2013 Net loss $ (39,098) $ (40,414) $ (35,076) Weighted-average common shares outstanding 32,711 27,993 25,981 Dilutive potential common shares Weighted-average diluted shares outstanding 32,711 27,993 25,981 Basic loss per share $ (1.20) $ (1.44) $ (1.35) Diluted loss per share $ (1.20) $ (1.44) $ (1.35) Diluted loss per share for 2015 excludes potential common shares of 189,000 10,715,000 8.50 8.50 366,000 4,630,000 8.50 533,000 5,305,000 8.50 |
