(Correction: The original article incorrectly suggested that the company was cutting 4,500 jobs. A corrected version follows.)
Tuesday, Hutchinson Technology Inc. (HTCH), a manufacturer of suspension assemblies for disk drives, announced a restructuring plan including a 20-25% reduction of its workforce. The company's workforce totaled about 4,500 people at the end of November.
Due to severance costs related to the workforce reduction, the company expects to incur a charge of $12 million to $16 million. In addition, Hutchinson said that it would implement a 5% pay reduction for all employees not affected by the workforce reduction.
According to the company, the actions will reduce its overall cost structure by about $65 million to $80 million on an annualized basis. The restructuring plans also include reducing the company's fiscal year 2009 capital spending to $40 million from $60 million.
The workforce and pay reductions are expected to be complete by the end of January 2009.
Hutchinson has already taken several steps to lower its operational expenses in response to lower demand in the first quarter. This includes the use of mandatory time off and implementing a two-week shutdown during the upcoming holidays. The shutdown will occur over the last week of the first quarter and the first week of the second quarter.
The company also announced that it has repurchased, in the open market, about $60 million par value of its 2.25% Convertible Subordinated Notes due 2010 for about $48 million in cash, including accrued interest. As a result of this transaction, the company will recognize a gain of about $12 million in fiscal 2009 first quarter.
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