##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period endedJUNE 25, 2006
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Number 0-14709
 HUTCHINSON TECHNOLOGY INCORPORATED
  MINNESOTA
    
    41-0901840(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 40 WEST HIGHLAND PARK DRIVE N.E., HUTCHINSON, MINNESOTA
    
    55350(Address of principal executive offices)
    
    (Zip code)
 (320) 587-3797  (Registrants telephone number, including area code)
 (Former name, address or fiscal year, if changed since last report)
  þ o
  þ o o
  o þ




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TABLE OF CONTENTS  PART I. FINANCIAL INFORMATIONITEM 1. FINANCIAL STATEMENTSITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKITEM 4. CONTROLS AND PROCEDURESPART II. OTHER INFORMATIONITEM 1. LEGAL PROCEEDINGSITEM 1A. RISK FACTORSITEM 6. EXHIBITSSIGNATURESINDEX TO EXHIBITSRule 13a-14(a)/15d-14(a) Certifications of CEORule 13a-14(a)/15d-14(a) Certifications of CFOSection 1350 Certifications    Table of Contents  
 PART I. FINANCIAL INFORMATION
 
  HUTCHINSON TECHNOLOGY INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS  UNAUDITED
 June 25,
    
    
    September 25,2006
    
    
    2005ASSETSCurrent assets:Cash and cash equivalents
    
    $
    78,436
    
    
    $
    33,733Securities available for sale
    
    
    245,058
    
    
    
    172,778Trade receivables, net
    
    
    89,412
    
    
    
    85,019Other receivables
    
    
    13,950
    
    
    
    11,181Inventories
    
    
    86,791
    
    
    
    54,780Deferred tax assets (Note 7)
    
    
    8,434
    
    
    
    7,206Other current assets (Note 8)
    
    
    7,449
    
    
    
    5,430Total current assets
    
    
    529,530
    
    
    
    370,127Property, plant and equipment, net
    
    
    449,346
    
    
    
    350,520Deferred tax assets (Note 7)
    
    
    57,544
    
    
    
    61,078Other assets (Note 8)
    
    
    22,119
    
    
    
    17,813$
    1,058,539
    
    
    $
    799,538LIABILITIES AND SHAREHOLDERS INVESTMENTCurrent liabilities:Current portion of long-term debt
    
    $
    1,230
    
    
    $
    Accounts payable
    
    
    53,212
    
    
    
    56,128Accrued expenses
    
    
    18,452
    
    
    
    13,238Accrued compensation
    
    
    23,814
    
    
    
    24,873Total current liabilities
    
    
    96,708
    
    
    
    94,239Convertible subordinated notes
    
    
    375,000
    
    
    
    150,000Long-term debt, net of current portion
    
    
    5,613
    
    
    
    Other long-term liabilities
    
    
    2,185
    
    
    
    2,760Shareholders investment:Common stock, $.01 par value, 100,000,000
shares authorized, 25,650,000 and
25,450,000 issued and outstanding
    
    
    256
    
    
    
    254Additional paid-in capital
    
    
    397,360
    
    
    
    390,680Accumulated other comprehensive loss
    
    
    (656
    )
    
    
    (712
    )Accumulated earnings
    
    
    182,073
    
    
    
    162,317Total shareholders investment
    
    
    579,033
    
    
    
    552,539$
    1,058,539
    
    
    $
    799,538
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HUTCHINSON TECHNOLOGY INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  UNAUDITED
 Thirteen Weeks Ended
    
    
    Thirty-Nine Weeks EndedJune 25,
    
    
    June 26,
    
    
    June 25,
    
    
    June 26,2006
    
    
    2005
    
    
    2006
    
    
    2005Net sales
    
    $
    169,599
    
    
    $
    169,676
    
    
    $
    540,152
    
    
    $
    473,336Cost of sales
    
    
    137,488
    
    
    
    118,242
    
    
    
    426,880
    
    
    
    333,264Gross profit
    
    
    32,111
    
    
    
    51,434
    
    
    
    113,272
    
    
    
    140,072Research and development expenses
    
    
    13,906
    
    
    
    9,571
    
    
    
    40,023
    
    
    
    25,488Selling, general and administrative expenses
    
    
    20,263
    
    
    
    21,150
    
    
    
    64,120
    
    
    
    61,133Dispute settlement
    
    
    (5,000
    )
    
    
    
    
    
    
    (5,000
    )
    
    
    Income from operations
    
    
    2,942
    
    
    
    20,713
    
    
    
    14,129
    
    
    
    53,451Interest and other income, net
    
    
    5,255
    
    
    
    4,303
    
    
    
    12,997
    
    
    
    9,310Interest expense
    
    
    (2,522
    )
    
    
    (395
    )
    
    
    (4,995
    )
    
    
    (1,636
    )Income before income taxes
    
    
    5,675
    
    
    
    24,621
    
    
    
    22,131
    
    
    
    61,125Provision (benefit) for income taxes (Note 7)
    
    
    (163
    )
    
    
    4,979
    
    
    
    2,375
    
    
    
    12,901Net income
    
    $
    5,838
    
    
    $
    19,642
    
    
    $
    19,756
    
    
    $
    48,224Basic earnings per share
    
    $
    0.23
    
    
    $
    0.77
    
    
    $
    0.77
    
    
    $
    1.92Diluted earnings per share
    
    $
    0.22
    
    
    $
    0.65
    
    
    $
    0.72
    
    
    $
    1.63Weighted average common shares outstanding
    
    
    25,648
    
    
    
    25,378
    
    
    
    25,598
    
    
    
    25,107Weighted average common and diluted shares
outstanding
    
    
    30,872
    
    
    
    31,103
    
    
    
    30,869
    
    
    
    30,724
  3




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HUTCHINSON TECHNOLOGY INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  UNAUDITED
 Thirty-Nine Weeks EndedJune 25,
    
    
    June 26,2006
    
    
    2005OPERATING ACTIVITIES:Net income
    
    $
    19,756
    
    
    $
    48,224Adjustments to reconcile net income to cash
provided by operating activities:Depreciation and amortization
    
    
    87,463
    
    
    
    49,057Stock-based compensation
    
    
    2,688
    
    
    
    Provision for deferred taxes (Note 7)
    
    
    2,340
    
    
    
    14,301Loss on disposal of assets
    
    
    231
    
    
    
    52Changes in operating assets and liabilities (Note 11)
    
    
    (25,765
    )
    
    
    10,569Cash provided by operating activities
    
    
    86,713
    
    
    
    122,203INVESTING ACTIVITIES:Capital expenditures
    
    
    (191,705
    )
    
    
    (137,182
    )Purchases of marketable securities
    
    
    (1,428,247
    )
    
    
    (413,983
    )Sales of marketable securities
    
    
    1,355,990
    
    
    
    422,370Cash used for investing activities
    
    
    (263,962
    )
    
    
    (128,795
    )FINANCING ACTIVITIES:Net proceeds from issuance of common stock
    
    
    3,993
    
    
    
    20,637Net proceeds from issuance of convertible
subordinated notes
    
    
    218,971
    
    
    
    Repayment of long-term debt
    
    
    (1,012
    )
    
    
    Cash provided by financing activities
    
    
    221,952
    
    
    
    20,637Net increase in cash and cash equivalents
    
    
    44,703
    
    
    
    14,045Cash and cash equivalents at beginning of period
    
    
    33,733
    
    
    
    33,704Cash and cash equivalents at end of period
    
    $
    78,436
    
    
    $
    47,749
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HUTCHINSON TECHNOLOGY INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  UNAUDITED
 When we refer to we, us, the company or HTI, we mean Hutchinson Technology Incorporated and
its subsidiaries. Unless otherwise indicated, references to 2006 mean our fiscal year ending
September 24, 2006, references to 2005 mean our fiscal year ended September 25, 2005, references
to 2004 mean our fiscal year ended September 26, 2004, references to 2003 mean our fiscal year
ended September 28, 2003, references to 2002 mean our fiscal year ended September 29, 2002,
references to 2001 mean our fiscal year ended September 30, 2001, references to 2000 mean our
fiscal year ended September 24, 2000 and references to 1999 mean our fiscal year ended September
26, 1999.
 (1) BASIS OF PRESENTATION
  (2) ACCOUNTING PRONOUNCEMENTS
   (3) BUSINESS AND CUSTOMERS
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Percentage of Net SalesThirteen Weeks Ended
    
    Thirty-Nine Weeks EndedJune 25,
    
    June 26,
    
    June 25,
    
    June 26,2006
    
    2005
    
    2006
    
    2005Five Largest Customers
    
    
    88
    %
    
    
    89
    %
    
    
    87
    %
    
    
    88
    %Sales to Major Customers:SAE Magnetics, Ltd./TDK
    
    
    24
    %
    
    
    30
    %
    
    
    27
    %
    
    
    29
    %Alps Electric Co., Ltd.
    
    
    22
    
    
    
    21
    
    
    
    22
    
    
    
    21Western Digital Corporation
    
    
    17
    
    
    
    16
    
    
    
    16
    
    
    
    19Seagate Technology LLC
    
    
    17
    
    
    
    9
    
    
    
    14
    
    
    
    8Innovex, Inc.
    
    
    8
    
    
    
    13
    
    
    
    8
    
    
    
    11
 (4) TRADE RECEIVABLES
   Increases in the
    
    Reductions in theallowance related
    
    allowance forSeptember 25,
    
    to warranties
    
    returns under
    
    June 25,2005
    
    issued
    
    warranties
    
    2006$596
    
    $
    5,001
    
    
    $
    (4,755
    )
    
    $
    842
 (5) INVENTORIES
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June 25,
    
    
    September 25,2006
    
    
    2005Raw materials
    
    $
    21,782
    
    
    $
    15,410Work in process
    
    
    20,085
    
    
    
    13,780Finished goods
    
    
    44,924
    
    
    
    25,590$
    86,791
    
    
    $
    54,780
 (6) EARNINGS PER SHARE
  Thirteen Weeks Ended
    
    
    Thirty-Nine Weeks EndedJune 25,
    
    
    June 26,
    
    
    June 25,
    
    
    June 26,2006
    
    
    2005
    
    
    2006
    
    
    2005Net income
    
    $
    5,838
    
    
    $
    19,642
    
    
    $
    19,756
    
    
    $
    48,224Plus: interest expense on convertible
subordinated
notes
    
    
    1,008
    
    
    
    1,008
    
    
    
    3,025
    
    
    
    3,025Less: additional profit-sharing expense and
income tax provision
    
    
    75
    
    
    
    358
    
    
    
    687
    
    
    
    1,046Net income available to common shareholders
    
    $
    6,771
    
    
    $
    20,292
    
    
    $
    22,094
    
    
    $
    50,203Weighted average common shares outstanding
    
    
    25,648
    
    
    
    25,378
    
    
    
    25,598
    
    
    
    25,107Dilutive potential common shares
    
    
    5,224
    
    
    
    5,725
    
    
    
    5,271
    
    
    
    5,617Weighted average common and diluted shares
outstanding
    
    
    30,872
    
    
    
    31,103
    
    
    
    30,869
    
    
    
    30,724Basic earnings per share
    
    $
    0.23
    
    
    $
    0.77
    
    
    $
    0.77
    
    
    $
    1.92Diluted earnings per share
    
    $
    0.22
    
    
    $
    0.65
    
    
    $
    0.72
    
    
    $
    1.63
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(7) INCOME TAXES
  June 25,
    
    
    September 25,2006
    
    
    2005Current deferred tax assets:Receivable allowance
    
    $
    563
    
    
    $
    443Inventories
    
    
    4,396
    
    
    
    2,997Accruals and other reserves
    
    
    3,475
    
    
    
    3,766Total current deferred tax assets
    
    
    8,434
    
    
    
    7,206Long-term deferred tax assets:Property, plant and equipment
    
    
    23,732
    
    
    
    19,782Deferred income
    
    
    917
    
    
    
    208Tax credits
    
    
    19,298
    
    
    
    18,370Net operating loss carryforwards
    
    
    18,764
    
    
    
    27,763Valuation allowance
    
    
    (5,167
    )
    
    
    (5,045
    )Total long-term deferred tax assets
    
    
    57,544
    
    
    
    61,078Total deferred tax assets
    
    $
    65,978
    
    
    $
    68,284
    (8) OTHER ASSETS
  8




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(9) LONG-TERM DEBT
    (10) SHAREHOLDERS EQUITY
  9




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(11) SUPPLEMENTARY CASH FLOW INFORMATION
 Thirty-Nine Weeks EndedJune 25,
    
    
    June 26,2006
    
    
    2005Changes in operating assets and liabilities:Receivables, net
    
    $
    (7,162
    )
    
    $
    (26,750
    )Inventories
    
    
    (32,011
    )
    
    
    (7,292
    )Other assets
    
    
    (4,364
    )
    
    
    1,345Accounts payable and accrued expenses
    
    
    18,347
    
    
    
    43,551Other non-current liabilities
    
    
    (575
    )
    
    
    (285
    )$
    (25,765
    )
    
    $
    10,569Cash paid for:Interest (net of amount capitalized)
    
    $
    1,750
    
    
    $
    1,242Income taxes
    
    
    511
    
    
    
    962Non-cash investing activities:Capital expenditures in accounts payable
    
    
    10,718
    
    
    
    31,726
   Purchase price of building and related equipment acquired
    
    $
    12,924Cash paid for building and related equipment
    
    
    (5,069
    )Mortgage assumed
    
    $
    7,855
  (12) STOCK-BASED COMPENSATION
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
    
    compensation expense for all stock-based compensation awards granted prior to, but not
yet vested as of, September 25, 2005, based on the grant-date fair value estimated in
accordance with the original provisions of Statement of Financial Accounting Standards No.
123, Accounting for Stock-Based Compensation; and
    
    compensation expense for all stock-based compensation awards granted subsequent to
September 25, 2005, based on the grant-date fair value estimated in accordance with the
provisions of FAS 123(R).
    Thirteen Weeks
    
    
    Thirty-Nine WeeksEnded
    
    
    EndedJune 26,
    
    
    June 26,2005
    
    
    2005Net income
 as reported
    
    $
    19,642
    
    
    $
    48,224Stock-based employee compensation
determined under the fair value based
method, net of related tax effects
    
    
    945
    
    
    
    3,033Net income
 pro forma
    
    $
    18,697
    
    
    $
    45,191Income per common equivalent share:Basic  as reported
    
    $
    0.77
    
    
    $
    1.92Diluted  as reported
    
    $
    0.65
    
    
    $
    1.63Basic  pro forma
    
    $
    0.74
    
    
    $
    1.80Diluted  pro forma
    
    $
    0.62
    
    
    $
    1.54
  11




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Thirty-Nine Weeks EndedJune 25,
    
    June 26,2006
    
    2005Risk-free interest rate
    
    
    4.5
    %
    
    
    3.9
    %Expected volatility
    
    
    45
    %
    
    
    41
    %Expected life (in years)
    
    
    7.4
    
    
    
    6.0Dividend yield
    
    
    
    
    
    
    
   Weighted-AverageRemainingNumber of
    
    
    Weighted-Average
    
    
    Contractual
    
    
    Aggregate IntrinsicShares
    
    
    Exercise Price ($)
    
    
    Life (yrs)
    
    
    ValueOutstanding at September 25, 2005
    
    
    2,790,631
    
    
    
    24.38Granted
    
    
    456,000
    
    
    
    27.50Exercised
    
    
    (97,460
    )
    
    
    16.58Canceled
    
    
    (12,150
    )
    
    
    29.83Outstanding at June 25, 2006
    
    
    3,137,021
    
    
    
    25.06
    
    
    
    5.5
    
    
    
    $0Options exercisable at June 25, 2006
    
    
    2,685,771
    
    
    
    24.64
    
    
    
    4.8
    
    
    
    $0
  Options Outstanding
    
    Options ExercisableWeighted-AverageRemaining
    
    Weighted-Average
    
    
    
    Weighted-AverageRange of
    
    Number
    
    Contractual
    
    Exercise
    
    Number
    
    ExerciseExercise Prices ($)
    
    Outstanding
    
    Life (yrs.)
    
    Price ($)
    
    Exercisable
    
    Price ($)14.81 to
17.33
    
    
    296,305
    
    
    
    0.2
    
    
    
    17.25
    
    
    
    293,305
    
    
    
    17.2518.75 to 19.13
    
    
    596,540
    
    
    
    3.9
    
    
    
    18.93
    
    
    
    596,540
    
    
    
    18.9320.19 to 21.64
    
    
    323,765
    
    
    
    5.4
    
    
    
    21.64
    
    
    
    323,765
    
    
    
    21.6423.29 to 24.77
    
    
    592,982
    
    
    
    4.9
    
    
    
    24.70
    
    
    
    592,982
    
    
    
    24.7027.00 to 30.28
    
    
    643,944
    
    
    
    7.5
    
    
    
    28.14
    
    
    
    193,694
    
    
    
    29.6532.05 to 45.06
    
    
    683,485
    
    
    
    7.7
    
    
    
    32.78
    
    
    
    682,485
    
    
    
    32.7814.81 to 45.06
    
    
    3,137,021
    
    
    
    5.5
    
    
    
    25.05
    
    
    
    2,685,771
    
    
    
    24.64
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(13) LEGAL CONTINGENCIES
 Securities Litigation
   Derivative Litigation
 Saul Kopelowitz v. Wayne Fortun, et al.
 Other Litigation
  13




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(14) OTHER MATTERS
   (15) SEGMENT REPORTING
    Thirteen Weeks Ended
    
    
    Thirty-Nine Weeks EndedJune 25,
    
    
    June 26,
    
    
    June 25,
    
    
    June 26,2006
    
    
    2005
    
    
    2006
    
    
    2005Net sales:Disk Drive Components Division
    
    $
    169,499
    
    
    $
    169,500
    
    
    $
    539,919
    
    
    $
    472,917BioMeasurement Division
    
    
    100
    
    
    
    176
    
    
    
    233
    
    
    
    419$
    169,599
    
    
    $
    169,676
    
    
    $
    540,152
    
    
    $
    473,336Income (loss) from operations:Disk Drive Components Division
    
    $
    6,469
    
    
    $
    22,842
    
    
    $
    23,912
    
    
    $
    59,201BioMeasurement Division
    
    
    (3,527
    )
    
    
    (2,129
    )
    
    
    (9,783
    )
    
    
    (5,750
    )$
    2,942
    
    
    $
    20,713
    
    
    $
    14,129
    
    
    $
    53,451
  14




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When we refer to we, us, HTI or the Company, we mean Hutchinson Technology Incorporated and
its subsidiaries. Unless otherwise indicated, references to 2009 mean HTIs fiscal year ending
September 27, 2009, references to 2008 mean HTIs fiscal year ending September 28, 2008,
references to 2007 mean HTIs fiscal year ending September 30, 2007, references to 2006 mean
HTIs fiscal year ending September 24, 2006, references to 2005 mean HTIs fiscal year ended
September 25, 2005, references to 2004 mean HTIs fiscal year ended September 26, 2004,
references to 2003 mean HTIs fiscal year ended September 28, 2003, references to 2002 mean
HTIs fiscal year ended September 29, 2002, references to 2001 mean HTIs fiscal year ended
September 30, 2001, and references to 2000 mean HTIs fiscal year ended September 24, 2000.
 GENERAL
      15




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
    
    demand or customer requirements;
    
    utilization of our production capacity;
    
    manufacturing yields or efficiencies;
    
    production and engineering costs associated with production of new products and features;
    
    product and feature mix;
    
    depreciation expense associated with adding production capacity;
    
    selling prices;
    
    infrastructure and expedited production and shipping costs; and
    
    costs of materials.
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RESULTS OF OPERATIONS
 Thirteen Weeks Ended June 25, 2006 vs. Thirteen Weeks Ended June 26, 2005
  18




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Thirty-Nine Weeks Ended June 25, 2006 vs. Thirty-Nine Weeks Ended June 26, 2005
      20




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LIQUIDITY AND CAPITAL RESOURCES
  21




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CRITICAL ACCOUNTING POLICIES
  Revenue Recognition
   23




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Accounts Receivable
   Inventory Valuation
   Long-Lived Assets
  24




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Income Taxes
   RECENT ACCOUNTING PRONOUNCEMENTS
  MARKET TRENDS
    25




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OTHER MATTERS
   26




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CONTRACTUAL OBLIGATIONS
  Payments due by periodOne toLess Than
    
    
    Three
    
    
    Three to
    
    
    More ThanTotal
    
    
    One Year
    
    
    Years
    
    
    Five Years
    
    
    Five YearsLong-term debt
    
    $
    381,843
    
    
    $
    1,230
    
    
    $
    2,739
    
    
    $
    152,874
    
    
    $
    225,000Interest expense
    
    
    161,071
    
    
    
    11,148
    
    
    
    22,015
    
    
    
    18,221
    
    
    
    109,688Operating leases
    
    
    35,067
    
    
    
    13,466
    
    
    
    16,506
    
    
    
    3,048
    
    
    
    2,047Total
    
    $
    577,981
    
    
    $
    25,844
    
    
    $
    41,260
    
    
    $
    174,143
    
    
    $
    336,735
  OFF-BALANCE SHEET ARRANGEMENTS
   FORWARD-LOOKING STATEMENTS
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EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
  CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
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PART II. OTHER INFORMATION
 
  SECURITIES LITIGATION
   DERIVATIVE LITIGATION
 Saul Kopelowitz v. Wayne Fortun, et al.
 OTHER LITIGATION
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Almost all of our sales depend on the disk drive industry, which is cyclical, subject to ongoing
technological innovation and subject to intense price competition.
    A slowdown in demand for computer systems and consumer electronics may cause a decline in demand
for suspension assemblies.
  To meet industry requirements, we must extend our existing process capabilities and develop new
products and features, which will increase our operating costs.
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
    
    suspension assemblies with tighter performance specifications than our customers
currently require;
    
    suspension assemblies that incorporate new materials, such as thinner laminates which
are more difficult to handle in the manufacturing process;
    
    suspension assemblies that require additional or smaller electrical conductors;
    
    suspension assemblies for use with next-generation read/write heads; and
    
    suspension assemblies that incorporate dual stage actuators to improve head positioning
over increasingly tighter data tracks on each disk.
  Our investment in developing new process capabilities to produce suspension assemblies will result
in significant increases in our operating expenses and may not result in a product that is
acceptable to our customers.
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We may not be able to manufacture our products efficiently due to changes in product mix or
technology, or other unforeseen events.
     We may not be able to utilize our capacity efficiently or accurately plan our capacity
requirements, which may negatively affect our operating results.
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
    
    changes in the mix of specific products our customers buy and the features they require;
    
    the ability to add and train staff to operate our production equipment in advance of demand;
    
    the pace of technological change;
    
    variability in our manufacturing yields and productivity; and
    
    long lead times for most of our plant and equipment expenditures, requiring major
financial commitments well in advance of actual production requirements.
  We may experience difficulties in the implementation of and transition to our new ERP system.
  Our sales are concentrated in a small customer base.
  Our business is capital intensive and we may not be able to obtain the capital we need to maintain
or grow our business.
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
    
    our results of operations;
    
    general economic conditions and conditions in the disk drive industry;
    
    the perception in the capital markets of our business;
    
    our ratio of debt to equity;
    
    our financial condition;
    
    our business prospects; and
    
    changes in interest rates.
  Demand for our suspension assemblies will decline if we are unable to qualify our products in disk
drive programs.
  If the rate of data density improves significantly, demand for suspension assemblies may decrease.
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Our operating results are subject to fluctuations.
  
    
    changes in overall demand for our products;
    
    changes in our manufacturing yields and related scrap recovery;
    
    changes in our production efficiency;
    
    changes in utilization of our production capacity;
    
    increased costs when we start producing new products and features, and ramping up
high-volume production;
    
    changes in the specific products our customers buy and features they require;
    
    depreciation expense associated with adding production capacity;
    
    changes in our selling prices;
    
    changes in our manufacturing process, or problems related to our manufacturing process;
    
    changes in our infrastructure costs and expected production and shipping costs, and how
we control them;
    
    technological changes (such as data density improvements) that reduce the number of
suspension assemblies per drive required by drive makers;
    
    long disruptions in operations at any of our plants or our customers plants for any reason; and
    
    changes in the cost of, or limits on, available materials and labor.
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If our customers improve their manufacturing yields, demand for our suspension assemblies may
decrease.
  We may not be able to adequately protect our intellectual property.
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
    
    enforce patents issued or licensed to us;
    
    protect trade secrets or know-how owned by us; or
    
    determine the enforceability, scope and validity of the intellectual property rights of others.
  We may have difficulty obtaining an adequate supply of raw materials that meet our strict
specifications at reasonable prices.
  Competing process capabilities and storage technology may reduce demand for our products.
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Taxation authorities could challenge certain tax positions we have taken.
  We expect that our BioMeasurement Division will continue to experience operating losses.
  We could incur substantial costs as a result of violations of or liabilities under environmental
laws.
  Servicing and repaying our existing debt may constrain our future operations.
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Our financing agreements contain restrictive covenants with which we may not be able to comply.
  We have been named as a defendant in securities class action litigation which may result in
substantial costs and divert managements attention and resources.
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(A) EXHIBITS :
 Unless otherwise indicated, all documents incorporated herein by reference to a document filed with
the SEC pursuant to the Exchange Act, are located under SEC file number 0-14709.
 3.1
    
    Amended and Restated Articles of Incorporation of HTI (incorporated by reference to Exhibit
3.1 to HTIs Quarterly Report on Form 10-Q for the quarter ended 12/29/02).3.2
    
    Restated By-Laws of HTI (incorporated by reference to Exhibit 3.2 to HTIs Quarterly Report
on Form 10-Q for the quarter ended 6/27/04).31.1
    
    Rule 13a-14(a)/15d-14(a) Certifications of Chief Executive Officer.31.2
    
    Rule 13a-14(a)/15d-14(a) Certifications of Chief Financial Officer.32
    
    Section 1350 Certifications.
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SIGNATURES
  HUTCHINSON TECHNOLOGY INCORPORATEDDate: August 2, 2006
    
    By
    
    /s/ Wayne M. Fortun

Wayne M. FortunPresident and Chief Executive OfficerDate: August 2, 2006
    
    By
    
    /s/ John A. InglemanJohn A. InglemanVice President and Chief Financial Officer
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INDEX TO EXHIBITS
 ExhibitNo.
    
    
    
    Page3.1
    
    Amended and Restated Articles of Incorporation of HTI
(incorporated by reference to Exhibit 3.1 to HTIs Quarterly
Report on Form 10-Q for the quarter ended 12/29/02).
    
    Incorporated by Reference3.2
    
    Restated By-Laws of HTI (incorporated by reference to Exhibit 3.2
to HTIs Quarterly Report on Form 10-Q for the quarter ended
6/27/04).
    
    Incorporated by Reference31.1
    
    Rule 13a-14(a)/15d-14(a) Certifications of Chief Executive Officer.
    
    Filed Electronically31.2
    
    Rule 13a-14(a)/15d-14(a) Certifications of Chief Financial Officer.
    
    Filed Electronically32
    
    Section 1350 Certifications.
    
    Filed Electronically
 43