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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended Commission File
September 29, 1996 Number 0-14709
HUTCHINSON TECHNOLOGY INCORPORATED
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(Exact name of registrant as specified in its charter)
Minnesota 41-0901840
-------------------- ----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
40 West Highland Park
Hutchinson, Minnesota 55350
------------------------- -------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (320)587-3797
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.02
par value
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the Common Stock held by non-affiliates of
the registrant as of November 27, 1996 was $286,251,525, based on the closing
sale price for the Company's Common Stock on that date. For purposes of
determining this number, all officers and directors of the registrant are
considered to be affiliates of the registrant. This number is provided only for
the purposes of this report on Form 10-K and does not represent an admission by
either the registrant or any such person as to the status of such person.
As of November 27, 1996, the registrant had 5,452,410 shares of Common
Stock issued and outstanding.
1
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Annual Report to Shareholders for the fiscal
year ended September 29, 1996 are incorporated by reference in Part II.
Portions of the registrant's Proxy Statement for the annual meeting of
shareholders to be held January 29, 1997 are incorporated by reference in Part
III.
2
PART I
ITEM 1. BUSINESS
Hutchinson Technology Incorporated (the "Company") was incorporated in 1965
in Minnesota. The Company is the world's leading supplier of suspension
assemblies for rigid magnetic disk drives. Suspension assemblies hold the
recording heads in position above the spinning magnetic disks in the drive and
are critical to maintaining the necessary microscopic clearance between the head
and disk. The Company is a supplier to nearly all domestic and many
foreign-based users of suspension assemblies, including Applied Magnetics, IBM,
Maxtor, Quantum, Read-Rite, SAE Magnetics, Seagate Technology, Western Digital
and Yamaha. The Company developed its leadership position in suspension
assemblies through research, development and design activities coupled with a
substantial investment in manufacturing technologies and equipment. The Company
is focused on continuing to develop suspension assemblies which address the
rapidly changing requirements of the rigid magnetic disk drive industry. The
Company also is evaluating some product opportunities in the medical market but
does not expect any medical revenues in fiscal 1997.
PRODUCTS
The Company's current products can be categorized as follows:
- suspension assemblies, and
- other, consisting primarily of etched and stamped components.
The following table shows for each of fiscal 1996, 1995 and 1994 the
relative contribution to net sales in millions of dollars and percentages of
each product category:
Fiscal 1996 Fiscal 1995 Fiscal 1994
------------ ------------ -----------
Amount % Amount % Amount %
------ - ------ - ------ -
Suspension
Assemblies............. $345.4 98% $292.1 97% $231.1 97%
Other.................... 7.8 2 7.9 3 7.7 3
------ ---- ------ ---- ------ ----
Total Net Sales...... $353.2 100% $300.0 100% $238.8 100%
====== ==== ====== ==== ====== ====
SUSPENSION ASSEMBLIES
The growing complexity of computer applications requires more data or
software program steps than can be economically stored in the computer's
semiconductor main memory. The additional required data storage capacity is
provided primarily by rigid magnetic disk drives which are the most
cost-effective devices for storing large amounts of data that must be retrieved
quickly. A typical 3.5" disk drive contains two rigid disks attached to a motor
assembly which rotates the disks at high speeds in extremely close proximity to
four magnetic recording heads, each of which is attached to a suspension
assembly.
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Suspension assemblies are a critical component of disk drive performance
and reliability, with nearly all performance improvements in storage capacity
sought by disk drive manufacturers requiring corresponding advances in
suspension assemblies. One of the major determinants of disk drive data storage
capacity is the microscopic height at which the magnetic head "flies" above the
disk. Suspension assemblies hold the magnetic recording heads in position and
are a significant factor in controlling the critical flying height of the head
above the disk and maintaining the position of the head on the tracks of data.
A typical nominal flying height is about one millionth of an inch (a sheet of
paper is approximately 3,000 millionths of an inch). Flying height is to a
large extent determined by the magnitude of the force exerted by the suspension
assembly on the recording head and by the location of the point on the recording
head at which the assembly imposes the force.
A suspension assembly consists of two or three components that are laser
welded together. Certain suspension assemblies also incorporate electrical
leads which provide electrical connection from the magnetic head to the disk
drive's circuitry. Alignment, adjustment and freedom from imperfections and
contaminants are of critical importance and, therefore, the photoetching of the
components, the laser-welding operations which fuse the components together and
subsequent processing steps are subject to stringent specifications and
controls. See "Production Processes" below.
The design of suspension assemblies is driven by the increasing performance
requirements of new disk drives, principally reduced data access time, increased
data storage density, smaller form factors and type of recording head used.
Technologically advanced drives generally require suspension assemblies with
specialized design, functionality and greater precision. The Company has
developed significant proprietary capabilities in the design and production
of suspension assemblies for both current and emerging disk drive designs.
OTHER
The Company also manufactures a small amount of etched and stamped
components used in connection or related to suspension assemblies. The Company
is also engaged in the development of certain medical devices of which there are
no revenues anticipated in fiscal 1997; there can be no assurance that the
Company's efforts will result in a marketable product or that such products will
ever generate significant revenues.
PRODUCTION PROCESSES
The Company's products require several manufacturing processes, each
dependent on different technical disciplines, to meet strict customer tolerances
and other requirements. The Company has developed sophisticated manufacturing
processes and controls, and related equipment, which are essential to the
precision and reliability of its products. The manufacturing processes employed
by the Company include photoetching, stamping, plasma etching, plating,
precision forming, laser-welding and ultra-cleaning. The Company monitors and
controls these processes through real-time statistical process analysis, and
continuously tracks critical parameters and takes corrective action as needed.
The Company's production processes require the storage, use and disposal of
a variety of chemicals which are considered hazardous under applicable federal
and state laws. Accordingly, the Company is subject to a variety of regulatory
requirements for the handling of such materials. If an accident were to result
in significant personal injury or environmental damage, the Company's operations
and financial performance could be adversely affected.
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RAW MATERIALS AND SOURCES OF SUPPLY
Certain materials used in the Company's manufacturing processes have
limited availability. Certain types of photoresist, a liquid compound used in
the photoetching process, are available from only one supplier. Most of the
stainless steel which meets the Company's strict specifications is available
from only one supplier. To protect against the adverse effect of a short-term
supply disruption, the Company maintains several weeks' supply of these
materials. If for any reason the Company was unable to continue to obtain these
materials in the necessary quantities and at reasonable prices, production would
be adversely affected.
CUSTOMERS AND MARKETING
The Company's products are sold principally through its own ten-member
sales force operating primarily from its headquarters in Hutchinson, Minnesota.
The Company has one technical representative in Europe, and, through a
subsidiary, four technical representatives in Singapore serving its southern
Pacific Rim customers. The Company's products are sold to original equipment
manufacturers for use in their products and to subassemblers who sell to
original equipment manufacturers. The Company's sales force is organized by
customer. Company salespeople typically initiate contacts with both the
customer's purchasing agent and its engineers. The Company's engineers and
sales force actively participate in the selling process and in maintaining
customer relationships.
The Company is a supplier to nearly all domestic and most foreign-based
manufacturers of rigid magnetic disk drives and recording heads used in such
drives. The following table shows the Company's five largest customers for
fiscal 1996 as a percentage of net sales.
Seagate Technology Incorporated.............. 35%
Yamaha Corporation........................... 16
SAE Magnetics, Ltd........................... 14
Read-Rite Corporation........................ 13
IBM.......................................... 9
Sales to the Company's five largest customers constituted 87%, 86% and 75%
of net sales for fiscal 1996, 1995 and 1994, respectively. Significant portions
of the Company's revenue may be indirectly attributable to large manufacturers
of disk drives, such as Quantum Corporation and Western Digital Corporation,
which purchase recording head assemblies from recording head manufacturers
utilizing the Company's suspension assemblies.
The Company expects to continue to depend upon a limited number of
customers for a majority of its sales, given the relatively small number of
rigid magnetic disk drive and recording head manufacturers. The Company's
financial performance could be adversely affected by reduced requirements of its
major customers.
Sales to foreign-based enterprises totaled $63,898,000 in fiscal 1996,
$46,075,000 in fiscal 1995 and $29,394,000 in fiscal 1994. Sales to foreign
subsidiaries of U.S. corporations totaled $51,564,000 in fiscal 1996,
$54,398,000 in fiscal 1995 and $14,126,000 in fiscal 1994. The majority of
these foreign location sales were to the Pacific Rim region. In addition, the
Company had significant sales to U.S. corporations which used the Company's
products in their offshore manufacturing sites.
5
BACKLOG
The Company's sales are generally made pursuant to purchase orders rather
than long-term contracts. The Company's backlog of purchase orders was
approximately $58,500,000 at September 29, 1996, as compared to $55,200,000 at
September 24, 1995. Such purchase orders may be changed or canceled by
customers on short notice without penalty. In addition, the Company believes
that it is a common practice for disk drive manufacturers to place orders in
excess of their needs during growth periods. Accordingly, the Company does not
believe that backlog should be considered indicative of sales for any future
period.
COMPETITION
The Company believes that the principal factors of competition in the
suspension assembly market include time-to-market, product quality, design
expertise, reliability of supply and price. The Company estimates that in
fiscal 1996 it produced a majority of all suspension assemblies sold to rigid
magnetic disk drive manufacturers and their suppliers, including recording head
manufacturers, worldwide. The Company's competitors include K.R. Precision Co.,
Magnecomp Corporation and Nippon Hatsujo Kogyo Co. Certain users of suspension
assemblies also may have or may develop the ability to fabricate their own
suspension assemblies. Although there can be no assurance that the number of
competitors will not increase in the future or that users of suspension
assemblies will not develop internal capabilities to manufacture suspension
assemblies, management of the Company believes that the number of entities that
have the technical capability and capacity for producing precision suspension
assemblies in large volumes will remain small.
Other types of computer memory systems, such as semiconductor memories
(flash memory) and tape and laser (optical and CD) drives, may become
competitive with certain rigid magnetic disk drive applications, and thereby
affect the demand for certain of the Company's products. However, semiconductor
memories are not expected to be price competitive with disk drives and optical
memories are inherently much slower than rigid magnetic disk drives.
Accordingly, the Company believes that such technologies will not materially
impact the market for rigid magnetic disk drives in the near future.
ENGINEERING AND PROCESS DEVELOPMENT
As of September 29, 1996, the Company employed 703 engineers and
technicians who are responsible for the implementation of new technologies as
well as process and product development and improvements. Expenditures for
these activities in fiscal 1996, 1995 and 1994 amounted to approximately
$51,212,000, $32,567,000 and $25,663,000, respectively. Of those amounts, the
Company classified approximately $27,651,000, $15,041,000 and $8,626,000,
respectively, as research and development expenditures.
The Company's current research and development efforts are principally
directed to continuing the development and prototype production of new high
precision suspension assemblies to meet the changing form factors,
performance standards and electrical connectivity required for disk drives.
The Company entered into a Technology Transfer and Development Agreement
(the "Technology Sharing Agreement") and a Patent License Agreement with IBM
during fiscal 1995. Under the Technology Sharing Agreement, IBM made
available to the Company the results of many years of research by IBM into a
new type of suspension, called an integrated lead suspension. The Company
itself had devoted substantial efforts independent of IBM to the research and
development of TSA-TM- suspensions, and contributed its existing TSA-TM-
suspension technology to the joint effort. The Company and IBM will continue
to pursue joint research and development efforts to complete the
commercialization of integrated lead suspension designs. All amounts due
under the Technology Sharing Agreement have been expensed and a related
6
liability has been recorded by the Company. As of September 29, 1996, the
Company had made payments totaling $1,500,000 to IBM and will make additional
payments over the next three fiscal years totaling $6,500,000.
The Company also is engaged in the development of certain medical devices,
including a probe for the measurement of tissue vitality. There can be no
assurance that the Company's efforts will result in a marketable product or that
such products will ever generate significant revenues.
INTELLECTUAL PROPERTY
Certain equipment, processes, information and knowledge generated by the
Company and utilized in the manufacture of its products are regarded as
proprietary by the Company and are protectable under applicable trade secret,
copyright and unfair competition laws. In addition, where the Company believes
it has made inventions in manufacturing equipment, product and processes for
making products where patents might enhance the Company's position, patents have
been and will continue to be pursued in the U.S. and abroad. The Company
currently holds eighteen U.S. patents, and has more than fifty patent
applications pending in the U.S., relating to its proprietary suspension
assembly products and manufacturing equipment and processes relating to their
manufacture. The Company believes that although the patents it holds and may
obtain will continue to be of value, they will not independently determine the
Company's success, which depends principally upon its engineering and
manufacturing skills.
Within the Company, intellectual property protection of trade secrets is
achieved through physical security measures at the Company's facilities as well
as through nondisclosure/noncompete agreements with all employees and
confidentiality agreements with consultants, strategic suppliers and customers.
There can be no assurance as to the degree of protection afforded by these
practices and laws.
In addition to the Technology Sharing Agreement and the Patent License
Agreement with IBM discussed in "Engineering and Process Development" above, the
Company also has entered into licensing and cross-licensing agreements under the
Company's patents and patent applications allowing certain competitors to
produce certain of the Company's products in return for either royalty payments
or cross-license rights.
The Company and certain users of the Company's products have from time to
time received, and may in the future receive, communications from third parties
asserting patents against the Company or its customers which may relate to
certain of the Company's manufacturing equipment or products or to products
which include the Company's products as a component. Although the Company has
not been a party to any material intellectual property litigation, certain of
its customers have been sued on patents having claims closely related to
products sold by the Company. In the event any third party were to make a valid
infringement claim and a license were not available on terms acceptable to the
Company, the Company's operating results could be adversely affected.
7
EMPLOYEES
As of September 29, 1996, the Company had 5,479 regular employees, 3,236 of
whom were working at the Company's Hutchinson, Minnesota facility, 1,435 of whom
were working at the Company's Sioux Falls, South Dakota facility, 627 of whom
were working in Eau Claire, Wisconsin, 172 of whom were working in Plymouth,
Minnesota and nine of whom were working overseas. The Company's ability to
conduct its business would be impaired if a significant number of its
specialized employees were to leave and could not be replaced by comparable
personnel. However, turnover of specialized employees, including key management
personnel, historically has been low. The locations of the Company's facilities
and the broad span and complexity of technology encompassed by the Company's
products and processes limit the number of qualified engineering and other
candidates for key positions. The Company expects that internal training will
continue to be the primary avenue for the development of key employees.
None of the Company's employees is subject to a collective bargaining
agreement, and the Company has experienced no work stoppages. The Company
believes that its employee relations are good.
ITEM 2. PROPERTIES
The Company's executive offices, primary manufacturing facilities and
training center are located in four buildings on a 163-acre site in Hutchinson,
Minnesota. The largest building has floor area of approximately 450,000 square
feet. The Company also leases a 20,000 square foot warehouse and a 7,000 square
foot fabrication shop near the Hutchinson site.
The Company operates a manufacturing facility in Sioux Falls, South Dakota,
in connection with which it leases a building of approximately 94,000 square
feet, a training center of 5,500 square feet and a warehouse of 4,800 square
feet.
The Company also operates a manufacturing facility in Eau Claire,
Wisconsin, in connection with which it leases a building of approximately
156,000 square feet.
The Company is leasing a building of approximately 100,000 square feet
located in Plymouth, Minnesota for stamping operations, office space and a
logistic center. The Company also leases sales offices in Singapore and the
Netherlands.
The Company is in the process of constructing a photoetching facility of
approximately 320,000 square feet in Eau Claire, Wisconsin.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
8
ITEM X. EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the Company are:
Name Age Position
---- --- --------
Jeffrey W. Green 56 Chairman of the Board and Director
Wayne M. Fortun 47 President, Chief Executive Officer,
Chief Operating Officer
and Director
John A. Ingleman 50 Vice President, Chief
Financial Officer and
Secretary
Rebecca A. Albrecht 43 Vice President of
Human Resources
Beatrice A. Graczyk 48 Vice President of Disk Drive
Components Operations
Larry G. Moehring 47 Vice President of Disk Drive
Components Assembly Operations
Richard C. Myers 56 Vice President of Administration
LeRoy E. Olson 60 Vice President of Disk Drive
Components Operations
Development
Richard J. Penn 40 Vice President of
Sales and Marketing
R. Scott Schaefer 43 Vice President of Disk Drive
Components Business Development
Executive officers are elected annually by the Board of Directors and serve
a one-year period or until their successors are elected.
Mr. Green is a co-founder of the Company and has served as a director since
the Company's formation in 1965. Mr. Green has been Chairman of the Board
since January 1983, and served as the Company's Chief Executive Officer from
January 1983 to May 1996.
Mr. Fortun was elected a director in 1983. He has been with the Company
since 1975 and was elected President and Chief Operating Officer in January
1983 and Chief Executive Officer in May 1996.
9
Mr. Ingleman was elected Vice President in January 1982, Chief Financial
Officer in January 1988, and Secretary in January 1992. Mr. Ingleman served
as the Company's Treasurer from January 1982 through January 1996. Mr. Ingleman
has beenwith the Company since 1977.
Ms. Albrecht was elected Vice President in January 1995 and is responsible
for Human Resources. Previously she had been Director of Human Resources since
1988. Ms. Albrecht has been with the Company since 1983.
Ms. Graczyk was elected Vice President in May 1990 and is now responsible
for Disk Drive Components Operations. She had been Director of Component
Operations since 1988.
Mr. Moehring was elected Vice President in May 1990 and is now responsible
for Disk Drive Components Assembly Operations. He had been Director of Assembly
Operations since 1988.
Mr. Myers was elected Vice President of Sales and Marketing in January
1988. In January 1995, he was elected Vice President of Administration. Mr.
Myers has been with the Company since 1977.
Mr. Olson was elected Vice President in May 1990 and is now responsible for
Disk Drive Components Operations Development. He had been Director of Sioux
Falls Operations since April 1988 when he joined the Company.
Mr. Penn was elected Vice President in January 1996 and is responsible
for Sales and Marketing. Previously he had been Director of Sales and
Marketing since December 1994, Senior Manager responsible for Medical
Business Development from January 1994 to December 1994 and Marketing Manager
since June 1990. Mr. Penn has been with the Company since 1981.
Mr. Schaefer was elected Vice President in May 1990 and is now responsible
for Disk Drive Components Business Development. He had been Vice President of
Medical Business Development since 1990 and Director of Engineering since 1988.
None of the above executive officers is related to each other or to any
director of the Company, except that Richard N. Rosett, a director, is married
to Mr. Green's first cousin.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Incorporated herein by reference is the Company's Annual Report to
Shareholders for the fiscal year ended September 29, 1996, pages 30, 34 and 39.
ITEM 6. SELECTED FINANCIAL DATA
Incorporated herein by reference is the Company's Annual Report to
Shareholders for the fiscal year ended September 29, 1996, pages 36 and 37.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
10
Incorporated herein by reference is the Company's Annual Report to
Shareholders for the fiscal year ended September 29, 1996, pages 19-23.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Incorporated herein by reference is the Company's Annual Report to
Shareholders for the fiscal year ended September 29, 1996, pages 24-35.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Incorporated herein by reference is the information appearing under the
heading "Election of Directors" and "Compliance with Section 16(a) of The
Securities Exchange Act of 1934", pages 3, 4 and 13, in the Company's Proxy
Statement dated December 18, 1996. See also Part I hereof under the heading
"Item X. Executive Officers of the Registrant".
ITEM 11. EXECUTIVE COMPENSATION
Incorporated herein by reference is the information appearing under the
headings "Summary Compensation Table" and "Option Tables", pages 9-11, and
the information regarding fees paid to non-employee directors on page 4, in
the Company's Proxy Statement dated December 18, 1996.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Incorporated herein by reference is the information appearing under the
heading "Security Ownership of Principal Shareholders and Management", page 2,
and the information appearing in the tables and notes on pages 9-11 in the
Company's Proxy Statement dated December 18, 1996.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
a) 1. Consolidated Financial Statements:
Report of Independent Public Accountants
Consolidated Statements of Operations for the fiscal years 1996, 1995
and 1994
11
Consolidated Balance Sheets as of September 29, 1996 and September 24,
1995
Consolidated Statements of Cash Flows for the fiscal years 1996, 1995
and 1994
Consolidated Statements of Shareholders' Investment for the fiscal
years 1996, 1995 and 1994
Notes to Consolidated Financial Statements
(Incorporated by reference to pages 24-35 of the Company's Annual
Report to Shareholders for the fiscal year ended September 29, 1996.)
2. Schedule:
Report of Independent Public Accountants on Schedule
Valuation and Qualifying Accounts...Schedule II
3. Exhibits:
3.1 Restated Articles of Incorporation of the Company (incorporated by
reference to Exhibit 3.1 to Registration Statement No. 2-98270), as
amended by Articles of Amendment dated January 27, 1988
(incorporated by reference to Exhibit 4.1 to the Company's Quarterly
Report on Form 10-Q for the quarter ended December 27, 1987, File
No. 0-14709).
3.2 Restated By-Laws of the Company (incorporated by reference to Exhibit
4.2 to the Company's Quarterly Report on Form 10-Q for the quarter
ended March 27, 1988, File No. 0-14709), and amendment adopted on
March 5, 1991 (incorporated by reference to Exhibit 4.2 to the
Company's Quarterly Report on Form 10-Q for the quarter ended March
31, 1991, File No. 0-14709).
4.1 Instruments defining the rights of security holders, including an
indenture. The Registrant agrees to furnish the Securities and
Exchange Commission upon request copies of instruments with respect
to long-term debt.
4.2 Note Purchase Agreement dated as of April 20, 1994, providing for
the placement of $20,000,000 of senior unsecured notes with Teachers
Insurance and Annuity Association of America (incorporated by
reference to Exhibit 4.10 to the Company's Quarterly Report on Form
10-Q for the quarter ended March 27, 1994, File No. 0-14709) and
Amendment dated as of March 15, 1996 (incorporated by reference to
Exhibit 4.2 to the Company's Quarterly Report on Form 10-Q for the
quarter ended March 24, 1996, File No. 0-14709).
4.3 Note Purchase Agreement dated as of April 20, 1994, providing for
the placement of $5,000,000 of senior unsecured notes with Central
Life Assurance Company (incorporated by reference to Exhibit 4.11 to
the Company's Quarterly Report on Form 10-Q for the quarter ended
March 27, 1994, File No. 0-14709) and Amendment dated as of March
15, 1996 (incorporated by reference to Exhibit 4.3 to the Company's
Quarterly Report on Form 10-Q for the quarter ended March 24, 1996,
File No. 0-14709).
12
4.4 Note Purchase Agreement dated as of April 20, 1994, providing for
the placement of $5,000,000 of senior unsecured notes with Modern
Woodmen of America (incorporated by reference to Exhibit 4.12 to the
Company's Quarterly Report on Form 10-Q for the quarter ended March
27, 1994, File No. 0-14709) and Amendment dated as of March 15, 1996
(incorporated by reference to Exhibit 4.4 to the Company's Quarterly
Report on Form 10-Q for the quarter ended March 24, 1996, File No.
0-14709).
4.5 Credit Agreement between the Company and The First National Bank of
Chicago, dated as of December 8, 1995 (incorporated by reference to
Exhibit 4.5 to the Company's Quarterly Report on Form 10-Q for the
quarter ended December 24, 1995, File No. 0-14709), and First
Amendment dated as of June 22, 1996 (incorporated by reference to
Exhibit 4.5 to the Company's Quarterly Report on Form 10-Q for the
quarter ended June 23, 1996, File No. 0-14709).
4.6 Note Purchase Agreement dated as of July 26, 1996, providing for the
placement of $15,000,000 of senior unsecured notes with Metropolitan
Insurance and Annuity Company.
4.7 Note Purchase Agreement dated as of July 26, 1996, providing for
the placement of $10,000,000 of senior unsecured notes with
Metropolitan Life Insurance Company.
4.8 Note Purchase Agreement dated as of July 26, 1996, providing for the
placement of $25,000,000 of senior unsecured notes with Teachers
Insurance and Annuity Association of America.
10.1 Lease with Right of Refusal between Donald Wendorff and Laura
Wendorff, Lessors, and the Company, Lessee, dated September 6, 1995
(incorporated by reference to Exhibit 10.2 to the Company's Annual
Report on Form 10-K for the fiscal year ended September 24, 1995,
File No. 0-14709).
10.2 Office/Warehouse Lease between OPUS Corporation, Lessor, and the
Company, Lessee, dated December 29, 1995 (incorporated by reference
to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for
the quarter ended March 24, 1996, File No. 0-14709), and First
Amendment to Office/Warehouse Lease dated April 30, 1996
(incorporated by reference to Exhibit 10.2 to the Company's
Quarterly Report on Form 10-Q for the quarter ended June 23, 1996,
File No. 0-14709).
10.3 Building Lease dated April 1988 and Amendment to Building Lease
dated August 29, 1988 (incorporated by reference to Exhibit 10.9 to
the Company's Annual Report on Form 10-K for the fiscal year ended
September 25, 1988, File No. 0-14709), Second Amendment to Building
Lease dated as of September 18, 1989, relating to the Company's
Sioux Falls, South Dakota facility (incorporated by reference to
Exhibit 10.9 to the Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 1990, File No. 0-14709), Third
Amendment to Building Lease dated September 19, 1991, relating to
the Company's Sioux Falls, South Dakota facility (incorporated by
reference to Exhibit 10.9 to the Company's Annual Report on Form
10-K for the fiscal year ended September 29, 1991, File No.
0-14709), Fourth Amendment to Commercial Lease dated September 29,
1992, relating to the Company's Sioux Falls, South Dakota facility
13
(incorporated by reference to Exhibit 10.10 to the Company's Annual
Report on Form 10-K for the fiscal year ended September 27, 1992,
File No. 0-14709), Fifth Amendment to Commercial Lease dated
February 11, 1993, relating to the Company's Sioux Falls, South
Dakota facility (incorporated by reference to Exhibit 10.6 to the
Company's Annual Report on Form 10-K for the fiscal year ended
September 24, 1995, File No. 0-14709), Sixth Amendment to Commercial
Lease dated February 17, 1995, relating to the Company's Sioux
Falls, South Dakota facility (incorporated by reference to Exhibit
10.6 to the Company's Annual Report on Form 10-K for the fiscal year
ended September 24, 1995, File No. 0-14709), and Seventh Amendment
to Commercial Lease dated April 1, 1995, relating to the Company's
Sioux Falls, South Dakota facility (incorporated by reference to
Exhibit 10.6 to the Company's Annual Report on Form 10-K for the
fiscal year ended September 24, 1995, File No. 0-14709).
10.4 Hutchinson Technology Incorporated 401-K Plan and related 401-K
Trust (incorporated by reference to Exhibit 10.10 to the Company's
Annual Report on Form 10-K for the fiscal year ended September 30,
1990, File No. 0-14709), and Amendment effective April 1, 1995
(incorporated by reference to Exhibit 10.4 to the Company's
Quarterly Report on Form 10-Q for the quarter ended March 24, 1996,
File No. 0-14709), and Amendment effective April 1, 1996
(incorporated by reference to Exhibit 10.4 to the Company's
Quarterly Report on Form 10-Q for the quarter ended June 23, 1996,
File No. 0-14709).
10.5 Directors' Retirement Plan effective as of January 1, 1992
(incorporated by reference to Exhibit 10.12 to the Company's Annual
Report on Form 10-K for the fiscal year ended September 27, 1992,
File No. 0-14709).
10.6 Description of Bonus Program for Key Employees of Hutchinson
Technology Incorporated (incorporated by reference to Exhibit 10.13
to the Company's Annual Report on Form 10-K for the fiscal year
ended September 27, 1992, File No. 0-14709).
10.7 1988 Stock Option Plan (incorporated by reference to Exhibit 10.8 to
the Company's Annual Report on Form 10-K for the fiscal year ended
September 25, 1988, File No. 0-14709), Amendment to the 1988 Stock
Option Plan (incorporated by reference to Exhibit 10.5 to the
Company's Annual Report on Form 10-K for the fiscal year ended
September 26, 1993, File No. 0-14709), and Amendment to the 1988
Stock Option Plan (incorporated by reference to Exhibit 10.5 to the
Company's Quarterly Report on Form 10-Q for the quarter ended March
26, 1995, File No. 0-14709).
*10.8 Technology Transfer and Development Agreement, effective as of
September 1, 1994, between Hutchinson Technology Incorporated and
International Business Machines Corporation (incorporated by
reference to Exhibit 10.10 to the Company's Quarterly Report on Form
10-Q/A for the quarter ended June 25, 1995, File No. 0-14709), and
Amendment dated December 11, 1995 to the Technology Transfer and
Development Agreement between International Business Machines
Corporation and Hutchinson Technology Incorporated executed June 15,
1995 (incorporated by reference to Exhibit 10.8 to the Company's
Quarterly Report on Form 10-Q for the quarter ended December 24,
1995, File No. 0-14709).
* Exhibit 10.8 contains portions for which confidential treatment has been
granted by the Securities and Exchange Commission.
14
*10.9 Patent License Agreement, effective as of September 1, 1994, between
Hutchinson Technology Incorporated and International Business
Machines Corporation (incorporated by reference to Exhibit 10.11 to
the Company's Quarterly Report on Form 10-Q/A for the quarter ended
June 25, 1995, File No. 0-14709).
10.10 Lease Agreement between Meridian Eau Claire LLC and Hutchinson
Technology Incorporated, dated May 1, 1996 (incorporated by
reference to Exhibit 10.10 to the Company's Quarterly Report on Form
10-Q for the quarter ended June 23, 1996, File No. 0-14709).
11.1 Statement Regarding Computation of Net Income Per Share.
13.1 Annual Report to Shareholders for the fiscal year ended
September 29, 1996 (only those portions specifically incorporated by
reference herein shall be deemed filed with the Securities and
Exchange Commission).
21.1 List of Subsidiaries.
23.1 Consent of Independent Public Accountants.
27.1 Financial Data Schedule.
b) Reports on Form 8-K
No reports were filed on Form 8-K during the fourth quarter of the fiscal
year ended September 29, 1996.
* Exhibit 10.9 contains portions for which confidential treatment has been
granted by the Securities and Exchange Commission.
15
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE
To Hutchinson Technology Incorporated:
We have audited in accordance with generally accepted auditing standards,
the consolidated financial statements included in Hutchinson Technology
Incorporated and Subsidiaries 1996 annual report to shareholders incorporated by
reference in this Form 10-K, and have issued our report thereon dated October
31, 1996. Our audit was made for the purpose of forming an opinion on those
statements taken as a whole. The schedule listed in Item 14(a)(2) is the
responsibility of the Company's management and is presented for purposes of
complying with the Securities and Exchange Commission's rules and is not part of
the basic consolidated financial statements. This schedule has been subjected
to the auditing procedures applied in the audit of the basic consolidated
financial statements and, in our opinion, fairly states in all material respects
the financial data required to be set forth therein in relation to the basic
consolidated financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Minneapolis, Minnesota,
October 31, 1996
16
SCHEDULE II
HUTCHINSON TECHNOLOGY INCORPORATED AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
(Dollars in thousands)
Balance at Additions Charged Other Balance at
Beginning to Costs Changes End of
of Period and Expenses Add (Deduct) Period
---------- ----------------- ------------ ----------
1994:
Deducted from asset accounts-
Allowance for doubtful
accounts receivable......... $1,525 $199 ($327) (1) $1,397
Reserve for sales returns
and allowances.............. 291 2,849 (2,651) (2) 489
---------- ----------------- ------------ ----------
$1,816 $3,048 ($2,978) $1,886
---------- ----------------- ------------ ----------
---------- ----------------- ------------ ----------
1995:
Deducted from asset accounts-
Allowance for doubtful
accounts receivable......... $1,397 $148 ($6) (1) $1,539
Reserve for sales returns
and allowances.............. 489 1,797 (1,901) (2) 385
---------- ----------------- ------------ ----------
$1,886 $1,945 ($1,907) $1,924
---------- ----------------- ------------ ----------
---------- ----------------- ------------ ----------
1996:
Deducted from asset accounts-
Allowance for doubtful
accounts receivable......... $1,539 $178 ($1) (1) $1,716
Reserve for sales returns
and allowances.............. 385 1,835 (1,788) (2) 432
---------- ----------------- ------------ ----------
$1,924 $2,013 ($1,789) $2,148
---------- ----------------- ------------ ----------
---------- ----------------- ------------ ----------
(1) Uncollectible accounts receivable written off, net of recoveries.
(2) Returns honored and credit memos issued.
17
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Date: December 17, 1996 HUTCHINSON TECHNOLOGY INCORPORATED
By /s/ Wayne M. Fortun
---------------------------------
Wayne M. Fortun
President, Chief Operating Officer and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
Date: December 17, 1996 /s/ Wayne M. Fortun
-----------------------------------
Wayne M. Fortun, President, Chief
Executive Officer, Chief Operating
Officer (Principal Executive Officer)
and Director
Date: December 17, 1996 /s/ John A. Ingleman
-----------------------------------
John A. Ingleman, Vice President, Chief
Financial Officer (Principal Financial
Officer and Principal Accounting
Officer)
Date: December 17, 1996 /s/ W. Thomas Brunberg
-----------------------------------
W. Thomas Brunberg, Director
Date: December 17, 1996 /s/ Archibald Cox, Jr.
-----------------------------------
Archibald Cox, Jr., Director
Date: December 17, 1996 /s/ James E. Donaghy
-----------------------------------
James E. Donaghy, Director
Date: December 17, 1996 /s/ Harry C. Ervin, Jr.
-----------------------------------
Harry C. Ervin, Jr., Director
Date: December 17, 1996 /s/ Jeffrey W. Green
-----------------------------------
Jeffrey W. Green, Director
Date: December 17, 1996 /s/ Richard N. Rosett
-----------------------------------
Richard N. Rosett, Director
18
INDEX TO EXHIBITS
Exhibit
No. Page
---------- --------
4.6 Note Purchase Agreement Electronically
Filed
4.7 Note Purchase Agreement Electronically
Filed
4.8 Note Purchase Agreement Electronically
Filed
11.1 Statement Regarding Computation of Net Income Electronically
Per Share Filed
13.1 Annual Report to Shareholders for the fiscal Electronically
year ended September 29, 1996 Filed
21.1 List of Subsidiaries Electronically
Filed
23.1 Consent of Public Accountants Electronically
Filed
27.1 Financial Data Schedule Electronically
Filed
19