772897--12/6/2006--HUTCHINSON_TECHNOLOGY

related topics

{product, liability, claim}

{customer, product, revenue}

{product, market, service}

{acquisition, growth, future}

{property, intellectual, protect}

{stock, price, operating}

To meet industry requirements, we must extend our existing process capabilities and develop new products and features, which will increase our operating costs. A slowdown in demand for computer systems and consumer electronics may cause a decline in demand for suspension assemblies. 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. We may not be able to manufacture our products efficiently due to changes in product mix or technology, or other unforeseen events. Our sales are concentrated in a small customer base. Our operating results are subject to fluctuations. 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. If our customers improve their manufacturing yields, demand for our suspension assemblies may decrease. Competing process capabilities and storage technology may reduce demand for our products. We do not know when, if ever, our BioMeasurement Division will be profitable. The long sales cycle for the InSpectra StO 2 System will defer the generation of revenue by our BioMeasurement Division. We do not know whether our only medical product, the InSpectra StO 2 System, will achieve market acceptance. We do not currently have experience as a company selling, marketing or distributing medical devices, which could impair the BioMeasurement Division s ability to achieve profitability. We may not be able to develop new products and expand our medical device product line successfully. We have limited experience in manufacturing and assembling the InSpectra StO 2 System, and we may encounter problems at our manufacturing facility or otherwise experience manufacturing delays or warranty claims that could result in lost revenue. We may fail to comply with manufacturing regulations, or be subject to product recalls, which could hurt our ability to sell and distribute our device and could subject us to fines, injunctions and penalties. We face the risk of product liability claims if the InSpectra StO 2 System fails to perform, and we may not be able to obtain adequate insurance. We will need significant funds over the next several years to achieve our long-term growth objectives, and we may not be able to obtain the funds we need to maintain or grow our business. We may not be able to adequately protect our intellectual property.

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772897--12/6/2006--HUTCHINSON_TECHNOLOGY_INC