The company estimates that its financial results over the next 12 months will include $8 million to $10 million of severance and other costs and $5 million to $10 million of asset impairment charges and accelerated depreciation related to the consolidation of operations. 

Fiscal 2011 Second Quarter Update

Due to recent reductions in its customers' production plans, the company said that it now expects its fiscal 2011 second quarter suspension assembly shipments to decline as much as 5% from the fiscal 2011 first quarter. The company has accordingly reduced its production plan, resulting in lower capacity utilization. The combination of these factors is expected to result in a negative gross margin in the company's fiscal 2011 second quarter and a larger operating loss compared to the preceding quarter. 

After the first eight weeks of the fiscal 2011 second quarter, the company's cash and investments balance was $66.3 million compared with $101.2 million at the end of the fiscal 2011 first quarter. This decrease includes $31.2 million of cash used to complete the company's previously announced tender/exchange offer.

About Hutchinson Technology

Hutchinson Technology is a global technology manufacturer committed to creating value by developing solutions to critical customer problems. The company's Disk Drive Components Division is a key worldwide supplier of suspension assemblies for disk drives. The company's BioMeasurement Division is focused on bringing new technologies and products to the market that provide information clinicians can use to improve the quality of health care and reduce costs.

Cautionary Note Regarding Forward-Looking Statements

This announcement contains forward-looking statements regarding the company's consolidation and restructuring plans, cost reductions, severance costs, asset impairments, demand and shipments for suspension assemblies, capacity utilization and the company's financial results. These statements involve risks and uncertainties. The company's actual results could differ materially from those anticipated in these forward-looking statements as a result of changes in market demand and market consumption of disk drives or suspension assemblies, the company's ability to produce suspension assemblies at levels of precision, quality, variety, volume and cost that its customers require, changes in product mix, changes in customers yields, changes in storage capacity requirements, changes in expected data density, changes in the company's ability to ramp its assembly operation in Thailand, changes in the company's ability to consolidate operations and reduce costs and other factors described from time to time in the company's reports filed with the Securities and Exchange Commission.
CONTACT: INVESTOR CONTACT:         Charles Ives         Hutchinson Technology Inc.         320-587-1605                  MEDIA CONTACT:         Connie Pautz         Hutchinson Technology Inc.         320-587-1823

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