##### 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
ended MARCH 26,

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
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)40 WEST HIGHLAND PARK DRIVE N.E., HUTCHINSON, MINNESOTA
    
    55350(Address of principal executive offices)
    
    (Zip code)
 (320) 587-3797
  (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
 March 26,
    
    
    September 25,2006
    
    
    2005ASSETSCurrent assets:Cash and cash equivalents
    
    $
    49,287
    
    
    $
    33,733Securities available for sale
    
    
    321,581
    
    
    
    172,778Trade receivables, net
    
    
    87,019
    
    
    
    85,019Other receivables
    
    
    10,031
    
    
    
    11,181Inventories
    
    
    74,547
    
    
    
    54,780Deferred tax assets (Note 7)
    
    
    7,293
    
    
    
    7,206Other current assets (Note 8)
    
    
    6,901
    
    
    
    5,430Total current assets
    
    
    556,659
    
    
    
    370,127Property, plant and equipment, net
    
    
    427,368
    
    
    
    350,520Deferred tax assets (Note 7)
    
    
    58,697
    
    
    
    61,078Other assets (Note 8)
    
    
    20,296
    
    
    
    17,813$
    1,063,020
    
    
    $
    799,538LIABILITIES AND SHAREHOLDERS INVESTMENTCurrent liabilities:Current portion of long-term debt
    
    $
    1,208
    
    
    $
    Accounts payable
    
    
    67,835
    
    
    
    56,128Accrued expenses
    
    
    13,445
    
    
    
    13,238Accrued compensation
    
    
    25,455
    
    
    
    24,873Total current liabilities
    
    
    107,943
    
    
    
    94,239Convertible subordinated notes
    
    
    375,000
    
    
    
    150,000Long-term debt, net of current portion
    
    
    5,928
    
    
    
    Other long-term liabilities
    
    
    2,465
    
    
    
    2,760Shareholders investment:Common stock, $.01 par value, 100,000,000
shares authorized, 25,617,000 and
25,450,000 issued and outstanding
    
    
    256
    
    
    
    254Additional paid-in capital
    
    
    395,779
    
    
    
    390,680Accumulated other comprehensive loss
    
    
    (582
    )
    
    
    (712
    )Accumulated earnings
    
    
    176,231
    
    
    
    162,317Total shareholders investment
    
    
    571,684
    
    
    
    552,539$
    1,063,020
    
    
    $
    799,538
  2




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HUTCHINSON TECHNOLOGY INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  UNAUDITED
 Thirteen Weeks Ended
    
    
    Twenty-Six Weeks EndedMarch 26,
    
    
    March 27,
    
    
    March 26,
    
    
    March 27,2006
    
    
    2005
    
    
    2006
    
    
    2005Net sales
    
    $
    185,926
    
    
    $
    158,043
    
    
    $
    370,553
    
    
    $
    303,661Cost of sales
    
    
    144,431
    
    
    
    110,355
    
    
    
    289,391
    
    
    
    215,023Gross profit
    
    
    41,495
    
    
    
    47,688
    
    
    
    81,162
    
    
    
    88,638Research and development expenses
    
    
    13,370
    
    
    
    8,301
    
    
    
    26,117
    
    
    
    15,919Selling, general and administrative expenses
    
    
    21,344
    
    
    
    21,174
    
    
    
    43,857
    
    
    
    39,981Income from operations
    
    
    6,781
    
    
    
    18,213
    
    
    
    11,188
    
    
    
    32,738Interest and other income, net
    
    
    4,425
    
    
    
    2,557
    
    
    
    7,742
    
    
    
    5,008Interest expense
    
    
    (1,972
    )
    
    
    (587
    )
    
    
    (2,473
    )
    
    
    (1,241
    )Income before income taxes
    
    
    9,234
    
    
    
    20,183
    
    
    
    16,457
    
    
    
    36,505Provision for income taxes (Note 7)
    
    
    1,361
    
    
    
    5,046
    
    
    
    2,538
    
    
    
    7,923Net income
    
    $
    7,873
    
    
    $
    15,137
    
    
    $
    13,919
    
    
    $
    28,582Basic earnings per share
    
    $
    0.31
    
    
    $
    0.60
    
    
    $
    0.54
    
    
    $
    1.14Diluted earnings per share
    
    $
    0.28
    
    
    $
    0.51
    
    
    $
    0.50
    
    
    $
    0.98Weighted average common shares outstanding
    
    
    25,612
    
    
    
    25,184
    
    
    
    25,573
    
    
    
    24,971Weighted average common and diluted shares
outstanding
    
    
    30,939
    
    
    
    30,819
    
    
    
    30,866
    
    
    
    30,571
  3




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HUTCHINSON TECHNOLOGY INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  UNAUDITED
 Twenty-Six Weeks EndedMarch 26,
    
    
    March 27,2006
    
    
    2005OPERATING ACTIVITIES:Net income
    
    $
    13,919
    
    
    $
    28,582Adjustments to reconcile net income to cash
provided by operating activities:Depreciation and amortization
    
    
    56,537
    
    
    
    29,706Stock-based compensation
    
    
    1,926
    
    
    
    Provision for deferred taxes (Note 7)
    
    
    2,369
    
    
    
    5,744Loss on disposal of assets
    
    
    196
    
    
    
    11Changes in operating assets and liabilities (Note 11)
    
    
    (105
    )
    
    
    9,854Cash provided by operating activities
    
    
    74,842
    
    
    
    73,897INVESTING ACTIVITIES:Capital expenditures
    
    
    (131,962
    )
    
    
    (64,252
    )Purchases of marketable securities
    
    
    (713,483
    )
    
    
    (93,257
    )Sales of marketable securities
    
    
    564,735
    
    
    
    85,878Cash used for investing activities
    
    
    (280,710
    )
    
    
    (71,631
    )FINANCING ACTIVITIES:Net proceeds from issuance of common stock
    
    
    3,170
    
    
    
    14,142Net proceeds from issuance of convertible
subordinated notes
    
    
    218,971
    
    
    
    Repayment of long-term debt
    
    
    (719
    )
    
    
    Cash provided by financing activities
    
    
    221,422
    
    
    
    14,142Net increase in cash and cash equivalents
    
    
    15,554
    
    
    
    16,408Cash and cash equivalents at beginning of period
    
    
    33,733
    
    
    
    33,704Cash and cash equivalents at end of period
    
    $
    49,287
    
    
    $
    50,112
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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
  5




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Thirteen Weeks Ended
    
    Twenty-Six Weeks EndedMarch 26,
    
    March 27,
    
    March 26,
    
    March 27,2006
    
    2005
    
    2006
    
    2005Percentage of Net SalesFive Largest Customers
    
    
    87
    %
    
    
    87
    %
    
    
    88
    %
    
    
    88
    %Sales to Major Customers:SAE Magnetics, Ltd./TDK
    
    
    28
    %
    
    
    28
    %
    
    
    28
    %
    
    
    29
    %Alps Electric Co., Ltd.
    
    
    23
    
    
    
    20
    
    
    
    22
    
    
    
    21Western Digital Corporation
    
    
    14
    
    
    
    20
    
    
    
    16
    
    
    
    21Seagate Technology LLC
    
    
    13
    
    
    
    8
    
    
    
    13
    
    
    
    7Innovex, Inc.
    
    
    9
    
    
    
    11
    
    
    
    9
    
    
    
    9Fujitsu Limited
    
    
    5
    
    
    
    8
    
    
    
    5
    
    
    
    8
 (4) TRADE RECEIVABLES
   Increases in the
    
    
    Reductions in theSeptember 25,
    
    allowance related to
    
    
    allowance for returns
    
    
    March 26,2005
    
    warranties issued
    
    
    under warranties
    
    
    2006$596
    
    $3,664
    
    
    $(3,481)
    
    
    $779
 (5) INVENTORIES
  March 26,
    
    
    September 25,2006
    
    
    2005Raw materials
    
    $
    20,263
    
    
    $
    15,410Work in process
    
    
    19,992
    
    
    
    13,780Finished goods
    
    
    34,292
    
    
    
    25,590$
    75,547
    
    
    $
    54,780
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(6) EARNINGS PER SHARE
  Thirteen Weeks Ended
    
    
    Twenty-Six Weeks EndedMarch 26,
    
    
    March 27,
    
    
    March 26,
    
    
    March 27,2006
    
    
    2005
    
    
    2006
    
    
    2005Net income
    
    $
    7,873
    
    
    $
    15,137
    
    
    $
    13,919
    
    
    $
    28,582Plus: interest expense on convertible
subordinated
notes
    
    
    1,008
    
    
    
    1,008
    
    
    
    2,017
    
    
    
    2,017Less: additional profit-sharing expense and
income tax provision
    
    
    235
    
    
    
    328
    
    
    
    564
    
    
    
    596Net income available to common shareholders
    
    $
    8,646
    
    
    $
    15,817
    
    
    $
    15,372
    
    
    $
    30,003Weighted average common shares outstanding
    
    
    25,612
    
    
    
    25,184
    
    
    
    25,573
    
    
    
    24,971Dilutive potential common shares
    
    
    5,327
    
    
    
    5,635
    
    
    
    5,293
    
    
    
    5,600Weighted average common and diluted shares
outstanding
    
    
    30,939
    
    
    
    30,819
    
    
    
    30,866
    
    
    
    30,571Basic earnings per share
    
    $
    0.31
    
    
    $
    0.60
    
    
    $
    0.54
    
    
    $
    1.14Diluted earnings per share
    
    $
    0.28
    
    
    $
    0.51
    
    
    $
    0.50
    
    
    $
    0.98
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(7) INCOME TAXES
  March 26,
    
    
    September 25,2006
    
    
    2005Current deferred tax assets:Receivable allowance
    
    $
    613
    
    
    $
    443Inventories
    
    
    3,614
    
    
    
    2,997Accruals and other reserves
    
    
    3,066
    
    
    
    3,766Total current deferred tax assets
    
    
    7,293
    
    
    
    7,206Long-term deferred tax assets:Property, plant and equipment
    
    
    22,600
    
    
    
    19,782Deferred income
    
    
    1,280
    
    
    
    208Tax credits
    
    
    19,140
    
    
    
    18,370Net operating loss carryforwards
    
    
    20,844
    
    
    
    27,763Valuation allowance
    
    
    (5,167
    )
    
    
    (5,045
    )Total long-term deferred tax assets
    
    
    58,697
    
    
    
    61,078Total deferred tax assets
    
    $
    65,990
    
    
    $
    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
 Twenty-Six Weeks EndedMarch 26,
    
    
    March 27,2006
    
    
    2005Changes in operating assets and liabilities:Receivables, net
    
    $
    (850
    )
    
    $
    (9,588
    )Inventories
    
    
    (19,767
    )
    
    
    (533
    )Other assets
    
    
    (1,609
    )
    
    
    1,607Accounts payable and accrued expenses
    
    
    22,416
    
    
    
    18,566Other non-current liabilities
    
    
    (295
    )
    
    
    (198
    )$
    (105
    )
    
    $
    9,854Cash paid for:Interest (net of amount capitalized)
    
    $
    1,688
    
    
    $
    882Income taxes
    
    
    401
    
    
    
    394Non-cash investing activities:Capital expenditures in accounts payable
    
    
    17,906
    
    
    
    18,757
   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
    
    
    Twenty-Six WeeksEnded
    
    
    EndedMarch 27,
    
    
    March 27,2005
    
    
    2005Net income  as reported
    
    $
    15,137
    
    
    $
    28,582Stock-based employee compensation
determined under the fair value based
method, net of related tax effects
    
    
    941
    
    
    
    2,087Net income  pro forma
    
    $
    14,196
    
    
    $
    26,495Income per common equivalent share:Basic  as reported
    
    $
    0.60
    
    
    $
    1.14Diluted  as reported
    
    $
    0.51
    
    
    $
    0.98Basic  pro forma
    
    $
    0.56
    
    
    $
    1.06Diluted  pro forma
    
    $
    0.48
    
    
    $
    0.91
  11




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Twenty-Six Weeks EndedMarch 26,
    
    March 27,2006
    
    2005Risk-free interest rate
    
    
    4.5
    %
    
    
    3.9
    %Expected volatility
    
    
    45
    %
    
    
    41
    %Expected life (in years)
    
    
    7.4
    
    
    
    6.0Dividend yield
    
    
    
    
    
    
    
   Number of
    
    
    
    Weighted-AverageShares
    
    
    

Exercise
Price ($)Outstanding
at September 25, 2005
    
    
    2,790,631
    
    
    
    24.38Granted
    
    
    453,000
    
    
    
    27.48Exercised
    
    
    (97,460
    )
    
    
    16.58Canceled
    
    
    (4,450
    )
    
    
    31.59Outstanding at March 26, 2006
    
    
    3,141,721
    
    
    
    25.06Options exercisable at March 26, 2006
    
    
    2,687,721
    
    
    
    24.64
  Options Outstanding
    
    Options ExercisableWeighted-AverageRemaining
    
    Weighted-Range of
    
    Number
    
    Contractual
    
    Average
    
    Number
    
    Weighted-AverageExercise Prices ($)
    
    Outstanding
    
    Life (yrs.)
    
    Exercise Price ($)
    
    Exercisable
    
    Exercise Price ($)14.81 to 15.44
    
    
    11,500
    
    
    
    4.8
    
    
    
    15.30
    
    
    
    11,500
    
    
    
    15.3017.02 to 17.33
    
    
    284,805
    
    
    
    0.7
    
    
    
    17.33
    
    
    
    284,805
    
    
    
    17.3318.75
    
    
    308,330
    
    
    
    3.6
    
    
    
    18.75
    
    
    
    308,330
    
    
    
    18.7519.05 to 19.13
    
    
    288,210
    
    
    
    4.7
    
    
    
    19.12
    
    
    
    288,210
    
    
    
    19.1220.19 to 21.64
    
    
    323,765
    
    
    
    5.7
    
    
    
    21.64
    
    
    
    323,765
    
    
    
    21.6423.29 to 24.77
    
    
    592,982
    
    
    
    5.1
    
    
    
    24.70
    
    
    
    592,982
    
    
    
    24.7027.00 to 30.28
    
    
    646,694
    
    
    
    7.7
    
    
    
    28.13
    
    
    
    193,694
    
    
    
    29.6532.05 to 45.06
    
    
    685,435
    
    
    
    7.9
    
    
    
    32.78
    
    
    
    684,435
    
    
    
    32.7814.81 to 45.06
    
    
    3,141,721
    
    
    
    5.7
    
    
    
    25.06
    
    
    
    2,687,721
    
    
    
    24.64
 (13) LEGAL CONTINGENCIES
 Securities Litigation
  12




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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
    
    
    Twenty-Six Weeks EndedMarch 26,
    
    
    March 27,
    
    
    March 26,
    
    
    March 27,2006
    
    
    2005
    
    
    2006
    
    
    2005Net sales:Disk Drive Components Division
    
    $
    185,846
    
    
    $
    157,939
    
    
    $
    370,420
    
    
    $
    303,419BioMeasurement Division
    
    
    80
    
    
    
    104
    
    
    
    133
    
    
    
    242$
    185,926
    
    
    $
    158,043
    
    
    $
    370,553
    
    
    $
    303,661Income (loss) from operations:Disk Drive Components Division
    
    $
    10,201
    
    
    $
    20,178
    
    
    $
    17,444
    
    
    $
    36,359BioMeasurement Division
    
    
    (3,420
    )
    
    
    (1,965
    )
    
    
    (6,256
    )
    
    
    (3,621
    )$
    6,781
    
    
    $
    18,213
    
    
    $
    11,188
    
    
    $
    32,738
  14




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HUTCHINSON TECHNOLOGY INCORPORATED
 
  When we refer to we, us, HTI or the Company, we mean Hutchinson Technology Incorporated and
its subsidiaries. Unless otherwise indicated, 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;
    
    manufacturing yields or efficiencies;
    
    utilization of our production capacity;
    
    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.
  16




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RESULTS OF OPERATIONS
 Thirteen Weeks Ended March 26, 2006 vs. Thirteen Weeks Ended March 27, 2005
   18




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Twenty-Six Weeks Ended March 26, 2006 vs. Twenty-Six Weeks Ended March 27, 2005
  19




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LIQUIDITY AND CAPITAL RESOURCES
       21




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CRITICAL ACCOUNTING POLICIES
  22




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Revenue Recognition
     Accounts Receivable
   Inventory Valuation
   23




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Long-Lived Assets
  Income Taxes
   RECENT ACCOUNTING PRONOUNCEMENTS
  MARKET TRENDS
   24




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OTHER MATTERS
   25




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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
    
    $
    382,136
    
    
    $
    1,208
    
    
    $
    2,691
    
    
    $
    153,103
    
    
    $
    225,134Interest expense
    
    
    161,200
    
    
    
    11,170
    
    
    
    22,064
    
    
    
    18,276
    
    
    
    109,691Operating leases
    
    
    29,499
    
    
    
    12,361
    
    
    
    14,917
    
    
    
    2,221
    
    
    
    0Total
    
    $
    572,835
    
    
    $
    24,739
    
    
    $
    39,672
    
    
    $
    173,600
    
    
    $
    334,825
  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).4.1
    
    Instruments defining the rights of security holders, including an indenture. The Registrant
agrees to furnish the SEC upon request copies of instruments with respect to long-term debt.4.2
    
    Share Rights Agreement dated as of 7/19/00, between HTI and Wells Fargo Bank Minnesota, N.A.,
as Rights Agent (incorporated by reference to Exhibit 1 to HTIs Registration Statement on
Form 8-A, dated 7/24/00).4.3
    
    Indenture dated as of 2/24/03 between HTI and LaSalle Bank National Association, as Trustee
(incorporated by reference to Exhibit 4.5 to HTIs Registration Statement on Form S-3,
Registration No. 333-104074).4.4
    
    Indenture dated as of 1/25/06 between HTI and LaSalle Bank national Association, as Trustee
(incorporated by reference to Exhibit 4.1 to HTIs Current Report on Form 8-K filed 1/26/06).4.5
    
    Form of 3.25% Convertible Subordinated Note due 2026 (included as part of Exhibit 4.4).10
    
    Form of Hutchinson Technology Incorporated Amended and Restated 1996 Incentive Plan,
Non-Statutory Stock Option Agreement (Director) (incorporated by reference to Exhibit 10.1 to
HTIs Current Report on Form 8-K filed 1/26/06).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: May 4, 2006
    By:
    /s/ Wayne M. FortunWayne M. FortunPresident and Chief Executive OfficerDate:  May 4, 2006
    By:
    /s/ John A. InglemanJohn A. InglemanVice President and Chief Financial Officer 42




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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 Reference4.1
    
    Instruments defining the rights of security holders, including an
indenture. The Registrant agrees to furnish the SEC upon request
copies of instruments with respect to long-term debt.4.2
    
    Share Rights Agreement dated as of 7/19/00, between HTI and Wells
Fargo Bank Minnesota, N.A., as Rights Agent (incorporated by
reference to Exhibit 1 to HTIs Registration Statement on Form
8-A, dated 7/24/00).
    
    Incorporated by Reference4.3
    
    Indenture dated as of 2/24/03 between HTI and LaSalle Bank
National Association, as Trustee (incorporated by reference to
Exhibit 4.5 to HTIs Registration Statement on Form S-3,
Registration No. 333-104074).
    
    Incorporated by Reference4.4
    
    Indenture dated as of 1/25/06 between HTI and LaSalle Bank
national Association, as Trustee (incorporated by reference to
Exhibit 4.1 to HTIs Current Report on Form 8-K filed 1/26/06).
    
    Incorporated by Reference4.5
    
    Form of 3.25% Convertible Subordinated Note due 2026 (included as
part of Exhibit 4.4).10
    
    Form of Hutchinson Technology Incorporated Amended and Restated
1996 Incentive Plan, Non-Statutory Stock Option Agreement
(Director) (incorporated by reference to Exhibit 10.1 to HTIs
Current Report on Form 8-K filed 1/26/06).
    
    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