<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended MARCH 28, 1999
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 0-14709
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HUTCHINSON TECHNOLOGY INCORPORATED
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(Exact name of registrant as specified in its charter)
MINNESOTA 41-0901840
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
40 WEST HIGHLAND PARK, HUTCHINSON, MINNESOTA 55350
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(Address of principal executive offices) (Zip code)
(320) 587-3797
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(Registrant's telephone number, including area code)
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(Former name, address or fiscal year, if changed since last report)
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
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
As of April 30, 1999 the registrant had 24,649,587 shares of Common Stock issued
and outstanding.
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<PAGE>
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
HUTCHINSON TECHNOLOGY INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED
(Dollars in thousands)
March 28, September 27,
1999 1998
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<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $243,956 $ 58,942
Securities available for sale 45,125 11,921
Trade receivables, net 61,312 65,798
Other receivables 2,421 12,337
Inventories 47,282 25,780
Prepaid taxes and other expenses 18,719 19,507
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Total current assets 418,815 194,285
Property, plant and equipment, net 344,081 335,289
Other assets 20,662 19,904
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$783,558 $549,478
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LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current liabilities:
Current maturities of long-term debt $ 4,615 $ 4,613
Accounts payable and accrued expenses 56,851 61,822
Accrued compensation 29,910 24,371
Accrued income taxes 2,823 2,365
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Total current liabilities 94,199 93,171
Long-term debt, less current maturities 65,705 68,247
Convertible subordinated notes 150,000 150,000
Other long-term liabilities 1,181 1,230
Shareholders' investment:
Common stock, $.01 par value, 45,000,000 shares authorized,
24,649,000 and 19,780,000 issued and outstanding 246 198
Additional paid-in capital 363,271 152,957
Retained earnings 108,956 83,675
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Total shareholders' investment 472,473 236,830
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$783,558 $549,478
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</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
HUTCHINSON TECHNOLOGY INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
(In thousands, except per share data)
Thirteen Weeks Ended Twenty-Six Weeks Ended
-------------------------------- --------------------------------
March 28, March 29, March 28, March 29,
1999 1998 1999 1998
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<S> <C> <C> <C> <C>
Net sales $152,366 $ 95,128 $307,641 $184,110
Cost of sales 115,976 97,825 237,666 187,303
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Gross profit (loss) 36,390 (2,697) 69,975 (3,193)
Selling, general and
administrative expenses 12,845 11,418 25,046 21,687
Research and development
expenses 6,376 5,524 11,046 10,685
----------- ----------- ----------- -----------
Income (loss) from operations 17,169 (19,639) 33,883 (35,565)
Other income, net 2,484 548 3,256 1,115
Interest expense (2,249) (404) (5,137) (551)
----------- ----------- ----------- -----------
Income (loss) before income taxes 17,404 (19,495) 32,002 (35,001)
Provision (benefit) for income taxes 3,656 (5,070) 6,721 (9,102)
----------- ----------- ----------- -----------
Net income (loss) $ 13,748 ($ 14,425) $ 25,281 ($ 25,899)
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----------- ----------- ----------- -----------
Basic earnings (loss) per share $ 0.61 ($ 0.73) $ 1.19 ($ 1.32)
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Diluted earnings (loss) per share $ 0.54 ($ 0.73) $ 1.05 ($ 1.32)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Weighted average common shares
outstanding 22,681 19,673 21,232 19,651
Weighted average common and
diluted shares outstanding 28,812 19,673 27,222 19,651
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
HUTCHINSON TECHNOLOGY INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
(Dollars in thousands)
Twenty-Six Weeks Ended
--------------------------------
March 28, March 29,
1999 1998
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<S> <C> <C>
Operating activities:
Net income (loss) $ 25,281 ($ 25,899)
Adjustments to reconcile net income (loss) to
cash provided by operating activities:
Depreciation and amortization 42,390 19,918
Deferred taxes 1,683 (4,685)
Change in operating assets and liabilities (Note 5) 272 16,886
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Cash provided by operating activities 69,626 6,220
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Investing activities:
Capital expenditures (59,230) (114,848)
Funding from GE lease receivable - 24,055
Increase in GE lease receivable - (7,463)
Sales of marketable securities 8,148 16,542
Purchases of marketable securities (41,352) (4,814)
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Cash used for investing activities (92,434) (86,528)
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Financing activities:
Repayments of long-term debt (2,540) (3,259)
Net proceeds from issuance of convertible subordinated notes - 145,320
Net proceeds from issuance of common stock 210,362 456
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Cash provided by financing activities 207,822 142,517
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Net increase in cash and cash equivalents 185,014 62,209
Cash and cash equivalents at beginning of period 58,942 98,340
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Cash and cash equivalents at end of period $243,956 $160,549
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</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
HUTCHINSON TECHNOLOGY INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
(Dollars in thousands)
(1) ACCOUNTING POLICIES
The condensed consolidated financial statements have been prepared by the
Company, without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission. The information furnished in the condensed consolidated
financial statements include normal recurring adjustments and reflect all
adjustments which are, in the opinion of management, necessary for a fair
presentation of such financial statements. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. Although the Company believes that the
disclosures are adequate to make the information presented not misleading, it is
suggested that these condensed consolidated financial statements be read in
conjunction with the financial statements and the notes thereto included in the
Company's latest Annual Report on Form 10-K. The quarterly results are not
necessarily indicative of the actual results that may occur for the entire
fiscal year.
(2) BUSINESS AND CUSTOMERS
The Company is the world's leading supplier of suspension assemblies for hard
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 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
hard disk drive industry. The Company also is evaluating other product
opportunities in the medical devices market but does not expect any
medical-related revenue in fiscal 1999. A breakdown of customer sales is as
follows:
<TABLE>
<CAPTION>
Thirteen Weeks Ended Twenty-Six Weeks Ended
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March 28, March 29, March 28, March 29,
Percentage of Net Sales 1999 1998 1999 1998
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<S> <C> <C> <C> <C>
Five Largest Customers 81% 84% 83% 77%
IBM and affiliates 24 20 30 17
SAE Magnetics, Ltd./TDK 20 30 19 28
Seagate Technology Incorporated 15 23 13 20
Yamaha Corporation 11 10 13 11
Alps Electric Co., Ltd. 11 1 8 1
</TABLE>
(3) INVENTORIES
All inventories are stated at the lower of last-in, first-out ("LIFO") cost or
market. Inventories consisted of the following:
<TABLE>
<CAPTION>
March 28, September 27,
1999 1998
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<S> <C> <C>
Raw materials $ 13,647 $ 9,320
Work in process 15,822 12,740
Finished goods 18,001 3,908
LIFO reserve (188) (188)
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$ 47,282 $ 25,780
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</TABLE>
<PAGE>
(4) NET INCOME PER SHARE
Basic earnings (loss) per share is computed by dividing net income (loss)
available to common shareholders by the weighted average number of common shares
outstanding during the year. Diluted earnings (loss) per share is computed under
the treasury stock method and is calculated to compute the dilutive effect of
potential common shares. A reconciliation of these amounts is as follows:
<TABLE>
<CAPTION>
Twenty-Six Weeks Ended
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March 28, March 29,
1999 1998
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<S> <C> <C>
Net income (loss) $25,281 ($25,899)
Plus: interest expense on convertible subordinated notes 4,822 -
Less: additional profit-sharing expense and tax benefit reduction 1,394 -
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Net income (loss) available to common shareholders $28,709 ($25,899)
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Weighted average common shares outstanding 21,232 19,651
Dilutive potential common shares 5,990 -
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Weighted average common and diluted shares outstanding 27,222 19,651
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Basic earnings (loss) per share $ 1.19 ($ 1.32)
Diluted earnings (loss) per share $ 1.05 ($ 1.32)
</TABLE>
(5) SUPPLEMENTARY CASH FLOW INFORMATION
<TABLE>
<CAPTION>
Twenty-Six Weeks Ended
---------------------------------
March 28, March 29,
1999 1998
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<S> <C> <C>
Changes in operating assets and liabilities:
Receivables, net $14,402 ($ 3,882)
Inventories (21,502) (8,806)
Prepaid and other (2,125) (4,202)
Accounts payable and accrued liabilities 9,546 36,326
Other non-current liabilities (49) (2,550)
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$ 272 $16,886
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Cash paid (refunded) for:
Interest (net of amount capitalized) $ 3,635 $ 44
Income taxes ($ 5,473) $ 2,708
</TABLE>
Capitalized interest for the twenty-six weeks ended March 28, 1999 was
$2,646,000 compared to $2,954,000 for the comparable period in fiscal 1998.
<PAGE>
(6) SALE OF COMMON STOCK
In February 1999, the Company issued 4,800,000 shares of its common stock
through a public offering. The Company received net proceeds of $209,136,000 and
expects to use the funds for general corporate purposes, primarily capital
expenditures related to expansion of TSA suspension assembly production
capacity. Pending such uses, the Company has invested the net proceeds from the
offering in short-term income-producing investments.
<PAGE>
HUTCHINSON TECHNOLOGY INCORPORATED
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
GENERAL
Since the late 1980's, we have derived substantially all of our revenue from
the sale of our suspension assemblies. We currently sell a large variety of
conventional suspension assemblies based on several standard designs for
nano-and pico-sized heads. In fiscal 1997, we began volume production of our
TSA suspension assemblies.
The disk drive industry is highly cyclical, with periods of increased demand
and rapid growth followed by periods of oversupply and subsequent
contraction. Beginning in the third quarter of fiscal 1997 and continuing
throughout all of fiscal 1998, total suspension assembly unit sales in the
industry declined substantially. Demand for our conventional suspension
assemblies started to recover during the latter part of the fourth quarter of
fiscal 1998. Such demand continued to recover during the first fiscal
1999 quarter and in the first half of the second fiscal 1999 quarter.
Demand for our TSA suspension assemblies was not adversely affected by the
industry slowdown during fiscal 1998. In fiscal 1998, we shipped 85 million
TSA suspension assemblies, up from 8 million units shipped in fiscal 1997. In
the first quarter of fiscal 1999, we shipped 55 million TSA suspension
assemblies, representing approximately 38% of our total unit shipments and a
majority of net sales in that period. In the second quarter of fiscal 1999,
we again increased our shipments of TSA suspension assemblies to 60 million,
representing approximately 40% of our total unit shipments and a majority of
net sales in that period.
Demand for both conventional and TSA suspension assembly products weakened in
the latter half of the second quarter of fiscal 1999 and is expected to be
weak in the fiscal 1999 third quarter. Demand also has typically been weak
during the summer months, and we currently have limited visibility for future
demand.
Although we have limited visibility, we expect that demand for our
conventional suspension assemblies will remain relatively flat for the rest
of fiscal 1999 from the 89 million units shipped in each of the first and
second quarters of fiscal 1999, and we expect to ship fewer conventional
suspension assemblies in fiscal 1999 than we shipped in fiscal 1998. At the
same time, we anticipate continuing acceptance by the disk drive industry of
our TSA suspension assemblies and expect TSA suspension assemblies to account
for just under half of our total unit shipments and a majority of our net
sales in fiscal 1999.
TSA suspension assemblies have a higher average selling price than
conventional suspension assemblies because of the improved performance and
other benefits they provide to our customers. We rapidly expanded our TSA
suspension assembly production capacity in fiscal 1998, but our high-volume
production of TSA suspension assemblies was not profitable in that year due
to production inefficiencies. We produced TSA suspension assemblies
profitably in the first quarter of fiscal 1999 due to higher volumes,
productivity gains and the benefits of premium pricing on a particular
program that required an accelerated ramp. During the second quarter of
fiscal 1999, we have continued to improve our TSA suspension production
efficiency, and have improved the profitability of TSA suspensions over the
first quarter of fiscal 1999. We expect that lower suspension assembly
demand, as noted above, and declining TSA prices, as certain TSA products
mature, will impact TSA suspension margins in the fiscal 1999 third quarter.
<PAGE>
Growth in our net sales depends, in part, on the successful management of our
TSA suspension assembly production capacity, our manufacturing work force and
our corporate infrastructure. To meet anticipated future demand for TSA
suspension assemblies, we are continuing to expand TSA suspension assembly
production capacity. In the fiscal year ended September 27, 1998, our capital
expenditures were approximately $207 million, primarily related to expansion
of TSA suspension assembly capacity. We made capital expenditures of $35
million in the first quarter of fiscal 1999 and $24 million in the second
quarter of fiscal 1999. We currently anticipate spending an additional $91
million in capital expenditures during the remainder of fiscal 1999,
primarily for expansion of TSA suspension assembly production capacity. We
anticipate that we will continue to make significant capital expenditures in
fiscal 2000 to further expand our TSA suspension assembly production capacity
to accommodate anticipated market growth.
Our ability to introduce new products on a timely basis is an important factor
in our continued success. New products have lower manufacturing yields and are
produced in lower quantities than more mature products. Manufacturing yields
generally improve as a product matures and production volumes increase.
Manufacturing yields also vary depending on the complexity and uniqueness of
product specifications. Because our business is capital intensive and requires a
high level of fixed costs, gross margins are also extremely sensitive to changes
in volume. Small variations in capacity utilization or manufacturing yields
generally have a significant impact on gross margins. Both customer demand and
our resulting forecasts often fluctuate substantially. These factors, among
others, create an environment where scheduled production and capacity
utilization can vary significantly from week to week, leading to variability in
gross margins.
RESULTS OF OPERATIONS
THIRTEEN WEEKS ENDED MARCH 28, 1999 VS. THIRTEEN WEEKS ENDED MARCH 29, 1998.
Net sales for the thirteen weeks ended March 28, 1999 were $152,366,000, an
increase of $57,238,000 or 60% compared to the comparable period in fiscal 1998.
This increase was primarily due to a favorable product mix of more TSA
suspension assemblies and higher average selling prices.
Gross profit for the thirteen weeks ended March 28, 1999 was $36,390,000, or
24% of net sales, compared to a gross loss of $2,697,000 for the comparable
period in fiscal 1998. This increase was primarily due to improved
efficiencies on TSA suspension assembly production and higher TSA suspension
assembly sales volume, offset partially by lower conventional suspension
assembly sales volume.
Selling, general and administrative expenses for the thirteen weeks ended March
28, 1999 were $12,845,000, an increase of $1,427,000 or 12% compared to the
comparable period in fiscal 1998. The increased expenses were due primarily to
increased profit sharing and other incentive compensation costs of $2,462,000
and higher depreciation and lease expenses of $201,000. The second quarter of
fiscal 1998 also included $1,290,000 in fees related to certain financing
agreements. As a percent of net sales, selling, general and administrative
expenses decreased from 12% in the second quarter of fiscal 1998 to 8% in the
second quarter of fiscal 1999.
Research and development expenses for the thirteen weeks ended March 28, 1999
were $6,376,000 compared to $5,524,000 for the thirteen weeks ended March 29,
1998. The increase was mainly due to higher expenses for developing
suspensions incorporating a second stage actuator and other suspension and
equipment development, offset partially by lower medical product development
expenses. As a percent of net sales, research and development expenses
decreased from 6% in the second quarter of fiscal 1998 to 4% in the second
quarter of fiscal 1999.
<PAGE>
Other income, net, for the thirteen weeks ended March 28, 1999 was $2,484,000,
an increase of $1,936,000 from the comparable fiscal 1998 period. The increase
was primarily due to an increase in interest income as a result of a higher
average investment balance.
Interest expense for the thirteen weeks ended March 28, 1999 was $2,249,000, an
increase of $1,845,000 from the comparable period in fiscal 1998, primarily due
to higher average outstanding debt, partially offset by an increase in
capitalization of interest of $161,000.
The income tax provision for the thirteen weeks ended March 28, 1999 was based
on an estimated effective tax rate for the fiscal year of 21% which was below
the statutory federal rate primarily due to the large portion of sales that
qualifies for the benefit of our Foreign Sales Corporation.
Net income for the thirteen weeks ended March 28, 1999 was $13,748,000, or 9% of
net sales, compared to a net loss of $14,425,000 for the comparable period in
fiscal 1998. The improved profitability was primarily due to the favorable
product mix and higher average selling prices, noted above.
TWENTY-SIX WEEKS ENDED MARCH 28, 1999 VS. TWENTY-SIX WEEKS ENDED MARCH 29, 1998.
Net sales for the twenty-six weeks ended March 28, 1999 were $307,641,000, an
increase of $123,531,000 or 67% compared to the comparable period in fiscal
1998. This increase was primarily due to a favorable product mix of more TSA
suspension assemblies and higher average selling prices, a portion of which was
related to premium pricing on a particular program that required an accelerated
ramp in the first fiscal quarter.
Gross profit for the twenty-six weeks ended March 28, 1999 was $69,975,000, or
23% of net sales, compared to a gross loss of $3,193,000 for the comparable
period in fiscal 1998. This increase was primarily due to improved manufacturing
efficiencies on TSA suspension assembly production, higher average selling
prices, the premium pricing described above, and higher TSA suspension assembly
sales volume, offset partially by lower conventional suspension assembly sales
volume.
Selling, general and administrative expenses for the twenty-six weeks ended
March 28, 1999 were $25,046,000, an increase of $3,359,000 or 15% compared to
the comparable period in fiscal 1998. The increased expenses were due
primarily to increased profit sharing and other incentive compensation costs
of $4,684,000 and higher depreciation and lease expense of $687,000. The
second quarter of fiscal 1998 included $1,290,000 in fees related to certain
financing agreements. Increases in selling, general and administrative
expenses were also partially offset by decreased bad debt expense of
$323,000. As a percent of net sales, selling, general and administrative
expenses decreased from 12% for the twenty-six weeks ended March 29, 1998 to
8% for the twenty-six weeks ended March 28, 1999.
Research and development expenses for the twenty-six weeks ended March 28,
1999 were $11,046,000 compared to $10,685,000 for the twenty-six weeks ended
March 29, 1998. The increase was mainly due to higher expenses for developing
suspensions incorporating a second stage actuator and other suspension and
equipment development, offset partially by lower medical product development
expenses. As a percent of net sales, research and development expenses
decreased from 6% for the twenty-six weeks ended March 29, 1998 to 4% for the
twenty-six weeks ended March 28, 1999.
Other income, net, for the twenty-six weeks ended March 28, 1999 was $3,256,000,
an increase of $2,141,000 from the comparable period in fiscal 1998, primarily
due to an increase in interest income as a result of a higher average investment
balance.
<PAGE>
Interest expense for the twenty-six weeks ended March 28, 1999 was $5,137,000,
an increase of $4,586,000 from the comparable period in fiscal 1998, primarily
due to higher average outstanding debt and a decrease in capitalization of
interest of $308,000.
The income tax provision for the twenty-six weeks ended March 28, 1999 was based
on an estimated effective tax rate for the fiscal year of 21% which was below
the statutory federal rate primarily due to the large portion of sales that
qualifies for the benefit of our Foreign Sales Corporation.
Net income for the twenty-six weeks ended March 28, 1999 was $25,281,000, or 8%
of net sales, compared to a net loss of $25,899,000 for the comparable period in
fiscal 1998. The improved profitability was primarily due to the favorable
product mix and higher average selling prices, noted above.
LIQUIDITY AND CAPITAL RESOURCES
Our principal sources of liquidity are cash and cash equivalents, securities
available for sale, cash flow from operations and additional financing capacity.
On December 31, 1998, we signed a financing agreement with The CIT
Group/Business Credit, Inc., establishing a $50,000,000 credit facility secured
by our accounts receivable and inventory. No amounts were outstanding under
the credit facility at March 28, 1999.
Our cash and cash equivalents increased from $58,942,000 at September 27, 1998
to $243,956,000 at March 28, 1999. The increase was primarily a result of the
stock offering noted below. We generated cash from operating activities of
$69,626,000 for the twenty-six weeks ended March 28, 1999.
Cash used for capital expenditures totaled $206,888,000 in fiscal 1998 and
$59,230,000 for the twenty-six weeks ended March 28, 1999. The capital
expenditures we made in the first and second quarters of fiscal 1999 were
primarily related to continued expansion of our TSA suspension assembly
production capacity.
In February 1999, we issued 4,800,000 shares of our common stock through a
public offering. We received net proceeds of $209,136,000 and expect to use the
funds for general corporate purposes, primarily capital expenditures related to
expansion of TSA suspension assembly production capacity. Pending such uses, we
have invested the net proceeds from the offering in short-term income-producing
investments.
We currently anticipate spending an additional $91,000,000 during the remainder
of fiscal 1999 and significant amounts thereafter, primarily for continued
expansion of TSA suspension assembly production capacity and new technologies,
production capacity and infrastructure to accommodate anticipated market growth.
We currently believe that our cash and cash equivalents, cash generated from
operations and our existing credit facility will be sufficient to meet our
operating expenses, debt service requirements and capital expenditures through
fiscal 1999. We may require significant additional financing to meet our capital
requirements beyond fiscal 1999, dependent on market conditions. We will pursue
additional debt or equity financing to supplement our current capital resources
if needed. Our ability to obtain additional financing will depend upon a number
of factors, including our future performance and financial results and general
economic and capital market conditions. We cannot be sure that we will be able
to raise additional capital on reasonable terms or at all.
<PAGE>
Certain of our existing debt agreements contain covenants which may restrict our
ability to accept certain types of financing. At March 28, 1999, we were in
compliance with all such covenants. If we are not in compliance with financial
covenants in our financing agreements at the end of any fiscal quarter, our
future financial results and liquidity could be materially adversely affected.
There can be no assurance that our business will generate sufficient cash flow
from operations, that anticipated future revenue growth and operating
improvements will be realized or that we will be able to obtain additional
financing in an amount sufficient to enable us to make necessary capital
expenditures, service our indebtedness, fund our operations or maintain
compliance with financing agreement covenants.
YEAR 2000 ISSUE
The Year 2000 issue is the result of computer programs, microprocessors and
embedded date-reliant systems using two digits rather than four to define the
applicable year. If not corrected, date-related information and data could cause
many programs or systems to fail or to generate erroneous information. Our
products have no inherent time or date function. Our products will operate
regardless of the Year 2000 issue. However, we use computer systems and programs
that will be affected by Year 2000 issues.
In fiscal 1997, we began a comprehensive Year 2000 readiness program. The
program addressed: (i) business software and hardware; (ii) manufacturing
software and hardware used in the design, and/or manufacturing of suspension
assemblies; and (iii) third party suppliers. Although we do not currently expect
any significant disruption to our operations due to Year 2000 issues, we cannot
be sure that we will be able to assess, identify and correct all Year 2000
issues in a timely or successful manner.
We completed remediation of our key business software in November 1997. These
key applications include purchased applications that address, but are not
limited to: (i) sales and order processing; (ii) resource planning and
scheduling; (iii) procurement; (iv) inventory control; (v) shipping; and (vi)
financial accounting and reporting. We completed additional testing of
these systems during the second quarter of fiscal 1999 using "data-aging"
software, and are currently implementing Year 2000 compliance follow-up
measures in connection with such testing. We believe all follow-up measures
will be completed by June 1999.
We completed an enterprise-wide inventory in May 1998 of all other business
software and hardware with potential Year 2000 issues. The inventory included
approximately 460 purchased and internally-developed business and desktop
software programs or packages. We consider 350 of these software programs or
packages critical. The inventory also included over 3,000 pieces of hardware,
including personal computers, servers and network devices. We have analyzed all
of the critical business and desktop software and substantially all of the
hardware included in the inventory for the existence and extent of Year 2000
issues. As of March 31, 1999, approximately 74% of the critical software and
approximately 90% of the hardware was Year 2000 compliant. We believe that all
of the critical business software and hardware included in the inventory will be
Year 2000 compliant by September 1999.
<PAGE>
We completed an enterprise-wide inventory in May 1998 of all manufacturing
software, hardware and embedded-chip technology with potential Year 2000
issues. The inventory included: (i) all equipment and software used to
design, build and test tools and machines; (ii) all tools and machines used
to design, build and test suspension assemblies; and (iii) software and
equipment for all facility systems. As of March 31, 1999, we had completed
analysis of 90% of the inventory for the existence and extent of Year 2000
issues. As of March 31, 1999, approximately 55% of the manufacturing
software, hardware and embedded-chip technology included in the inventory was
Year 2000 compliant. We believe that all manufacturing software, hardware and
embedded-chip technology will be Year 2000 compliant by September 1999.
We are assessing our suppliers whose failure to become Year 2000 compliant in a
timely manner, if at all, could have a material adverse effect on us. We
distributed questionnaires on Year 2000 compliance status (and follow-up
letters, as necessary) to over 200 of our suppliers. As of March 31, 1999, we
have received responses from 85% of the suppliers queried. The responses are
being reviewed, and follow-up activities are being pursued as required to
evaluate, or mitigate, potential risks associated with such suppliers due to
Year 2000 issues. Analysis of initial supplier responses is 70% complete. We
anticipate that all analysis and follow-up activities with these 200 suppliers
will be complete by June 30, 1999.
As of March 31, 1999, we had incurred $240,000 in Year 2000 efforts. We
currently estimate incurring an additional $1,400,000 for Year 2000 efforts. The
projected costs of our Year 2000 readiness efforts are based on our best
estimates, which were derived using assumptions about future events. These
estimates may change as our efforts proceed and actual results could differ
significantly from current plans.
Although we expect to complete our Year 2000 remediation in 1999, there are
risks if our efforts are delayed or fail. A delay or failure in remedying a Year
2000 issue, caused by computer hardware or software errors, or our failure to
be, or suppliers who may not be, Year 2000 compliant could, in a worst case,
interrupt our business. Any interruption in our business could have a material
adverse effect on our business, financial condition and results of operations
depending upon the extent and duration of the interruption.
We have begun to develop contingency plans for Year 2000 readiness to ensure
that back-up processes are in place if we are unable to complete remediation
efforts by December 31, 1999. We expect to complete a draft of a corporate
contingency plan by June 1999, with all final plans completed by September 1999,
but we cannot be sure that we will complete such plans, or that any such plans
will address all risks that may actually arise.
MARKET TRENDS AND CERTAIN CONTINGENCIES
We expect that the expanding use of personal computers, enterprise computing and
storage, increasingly complex software and the emergence of new applications for
disk storage that have contributed to the historical year-to-year increases in
disk drive production will continue for the foreseeable future. We also believe
demand for disk drives will continue to be subject, as it has in the past, to
rapid short-term changes resulting from, among other things, changes in disk
drive inventory levels, responses to competitive price changes and unpredicted
high or low market acceptance of new drive models.
As in past years, disk drives continue to be the storage device of choice for
applications requiring low access times and higher capacities because of their
speed and low cost per megabyte of stored data. The cost of storing data on disk
drives continues to decrease primarily due to increasing areal density, the
amount of data which can be stored on magnetic disks. Improvements in areal
density have been attained by lowering the fly height of the read/write head,
using smaller read/write heads with advanced air bearing designs, improving
other components such as motors and media and using new read/write
<PAGE>
head types such as those of magneto-resistive (MR) and giant magneto-resistive
(GMR) design. The move to MR and GMR heads, which require more electrical leads,
and the transition to smaller or pico-sized heads, which are more sensitive to
mechanical variation, may compel drive manufacturers to use newer suspension
technologies, such as our TSA suspension assemblies. We anticipate continuing
acceptance by the disk drive industry of our TSA suspension assemblies and
expect TSA suspension assemblies to account for just under half of our total
unit shipments in fiscal 1999.
The continual pursuit of increasing areal density may lead to further
value-added features for TSA suspensions which incorporate a second stage
actuator on the suspension to improve head positioning over increasingly
tighter data tracks, or which mount preamplifiers near the head to improve
data transfer signals. These changes have required that we develop the
competencies of an electromechanical system supplier so that multiple
functions may be consolidated on the suspension assembly.
The introduction of new types or sizes of read/write heads and new disk drive
designs tends to initially decrease customers' yields with the result that we
may experience temporary elevations of demand for some types of suspension
assemblies. The advent of new heads and new drive designs may require rapid
development and implementation of new suspension types which temporarily may
reduce our manufacturing yields and efficiencies. There can be no assurance that
we will not continue to be affected by such changes.
We generally experience fluctuating selling prices due to product maturity,
competitive pricing pressures and new product offerings. While many of our
current products are reaching or are in the mature phase of their life cycle and
thus are experiencing declining prices, our newer products have initially much
higher selling prices.
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 to
date has not been a party to any such 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. The
Company expects that, as the number of patents issued continues to increase, and
as the Company grows, the volume of intellectual property claims could increase.
On February 27, 1998, the Company commenced a lawsuit, in McLeod County
District Court in Glencoe, Minnesota, against five former employees and their
newly-formed company. The lawsuit alleges, among other things, breach of
non-compete, confidentiality and assignment of inventions agreements. On
August 24, 1998, the Court entered an injunction against the defendants.
Thereafter, the Company filed motions to add a competitor and its parent
corporation as party defendants, with whom the enjoined defendants had a
contract. A formal settlement agreement setting forth the material terms by
which the litigation is to be dismissed, including, among other things, the
resolution of certain trade secret claims through arbitration, if necessary,
was executed by the parties, effective as of April 19, 1999.
The Company is a party to certain other claims arising in the ordinary course of
business. In the opinion of management, the outcome of such claims will not
materially affect the Company's current or future financial position or results
of operations.
<PAGE>
FORWARD-LOOKING STATEMENTS
The statements above under the headings "General" and "Market Trends and
Certain Contingencies" about demand for and shipments of disk drives and
suspension assemblies, including TSA suspensions, production capacity and
yields and selling prices, the statements above under the headings "General"
and "Liquidity and Capital Resources" about anticipated operating results and
gross margins, capital expenditures and capital resources, and the statements
above under the heading "Year 2000 Issue" about Year 2000 readiness efforts
and its projected costs, are forward-looking statements based on current
expectations. These statements are subject to risks and uncertainties,
including fluctuating order rates and product mix, slower or faster customer
acceptance of the Company's new products, difficulties in producing its TSA
suspensions, difficulties in financing and expanding capacity, changes in
manufacturing efficiencies, difficulties in implementing Year 2000 compliance
and the other risks and uncertainties discussed above. These factors may
cause the Company's actual future results to differ materially from
historical earnings and from the financial performance of the Company
presently anticipated. Additional discussion of these and other factors may
be found in the Company's Registration Statement on Form S-3, filed January
8, 1999, under the heading "Risk Factors".
<PAGE>
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
At the Company's 1999 Annual Meeting of Shareholders held on January 26th, 1999,
the shareholders approved the following:
(a) the election of directors to serve until their successors are duly
elected. Each nominated director was elected as follows:
<TABLE>
<CAPTION>
Director - Nominee Votes For Votes Withheld
------------------------ ------------- ---------------
<S> <C> <C>
W. Thomas Brunberg 17,240,901 52,947
Archibald Cox, Jr. 17,244,526 49,322
James E. Donaghy 17,241,601 52,247
Harry C. Ervin, Jr. 17,242,026 51,822
Wayne M. Fortun 17,240,741 53,107
Jeffrey W. Green 17,244,011 49,837
Steven E. Landsburg 17,243,371 50,477
Richard B. Solum 17,240,971 52,877
</TABLE>
(b) a proposal to approve the Hutchinson Technology Incorporated
Employee Stock Purchase Plan. The proposal received 11,666,041 votes
for, and 213,520 votes against, approval. There were 47,527 abstentions
and 5,366,760 broker non-votes.
(c) a proposal to ratify the appointment of Arthur Andersen LLP to
serve as independent public accountants of the Company for the fiscal
year ending September 26, 1999. The proposal received 17,229,075 votes
for, and 27,623 votes against, ratification. There were 37,150
abstentions and no broker non-votes.
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a) EXHIBITS.
3.1 Restated Articles of Incorporation of the Company, as amended
by Articles of Amendment dated January 27, 1988 and as amended
by Articles of Amendment dated January 21, 1997 (incorporated
by reference to Exhibit 3.1 to the Company's Quarterly Report
on Form 10-Q for the quarter ended June 29, 1997, File No.
0-14709).
3.2 Restated By-Laws of the Company (incorporated by reference to
Exhibit 3.2 to the Company's Quarterly Report on Form 10-Q for
the quarter ended December 29, 1996, 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), 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), Amendment dated as of February 24,
1997 (incorporated by reference to Exhibit 4.2 to the
Company's Quarterly Report on Form 10-Q for the quarter ended
March 30, 1997, File No. 0-14709), Amendment dated as of
December 16, 1998 (incorporated by reference to Exhibit 4.2
to the Company's Quarterly Report on Form 10-Q for the quarter
ended December 27, 1998, File No. 0-14709), and Amendment
dated as of March 3, 1999.
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),
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), Amendment dated as of February 24, 1997
(incorporated by reference to Exhibit 4.3 to the Company's
Quarterly Report on Form 10-Q for the quarter ended March 30,
1997, File No. 0-14709), Amendment dated as of December 16,
1998 (incorporated by reference to Exhibit 4.3 to the
Company's Quarterly Report on Form 10-Q for the quarter ended
December 27, 1998, File No. 0-14709), and Amendment dated as
of March 3, 1999.
<PAGE>
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), 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), Amendment dated as
of February 24, 1997 (incorporated by reference to Exhibit
4.4 to the Company's Quarterly Report on Form 10-Q for the
quarter ended March 30, 1997, File No. 0-14709), Amendment
dated as of December 16, 1998 (incorporated by reference to
Exhibit 4.4 to the Company's Quarterly Report on Form 10-Q
for the quarter ended December 27, 1998, File No. 0-14709),
and Amendment dated as of March 3, 1999.
4.5 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 (incorporated
by reference to Exhibit 4.6 to the Company's Annual Report on
Form 10-K for the fiscal year ended September 29, 1996, File
No. 0-14709), Amendment dated as of February 24, 1997
(incorporated by reference to Exhibit 4.6 to the Company's
Quarterly Report on Form 10-Q for the quarter ended March 30,
1997, File No. 0-14709), Amendment dated as of December 16,
1998 (incorporated by reference to Exhibit 4.6 to the
Company's Quarterly Report on Form 10-Q for the quarter ended
December 27, 1998, File No. 0-14709), and Amendment dated as
of March 3, 1999.
4.6 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 (incorporated by
reference to Exhibit 4.7 to the Company's Annual Report on
Form 10-K for the fiscal year ended September 29, 1996, File
No. 0-14709), Amendment dated as of February 24, 1997
(incorporated by reference to Exhibit 4.7 to the Company's
Quarterly Report on Form 10-Q for the quarter ended March 30,
1997, File No. 0-14709), Amendment dated as of December 16,
1998 (incorporated by reference to Exhibit 4.7 to the
Company's Quarterly Report on Form 10-Q for the quarter ended
December 27, 1998, File No. 0-14709), and Amendment dated as
of March 3, 1999.
4.7 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
(incorporated by reference to Exhibit 4.8 to the Company's
Annual Report on Form 10-K for the fiscal year ended September
29, 1996, File No. 0-14709), Amendment dated as of February
24, 1997 (incorporated by reference to Exhibit 4.8 to the
Company's Quarterly Report on Form 10-Q for the quarter ended
March 30, 1997, File No. 0-14709), Amendment dated as of
December 16, 1998 (incorporated by reference to Exhibit 4.8
to the Company's Quarterly Report on Form 10-Q for the quarter
ended December 27, 1998, File No. 0-14709), and Amendment
dated as of March 3, 1999.
11.1 Statement Regarding Computation of Net Income Per Share.
27.1 Financial Data Schedule.
<PAGE>
b) REPORTS ON FORM 8-K.
No Current Reports on Form 8-K were filed by the Company during the
thirteen weeks ended March 28, 1999.
<PAGE>
SIGNATURES
Pursuant to the requirements 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.
HUTCHINSON TECHNOLOGY INCORPORATED
Date: May 5, 1999 By /s/Wayne M. Fortun
----------------------- ----------------------------------------
Wayne M. Fortun
President and Chief Executive Officer
Date: May 5, 1999 By /s/John A. Ingleman
----------------------- ----------------------------------------
John A. Ingleman
Vice President, Chief Financial Officer
and Secretary
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
No. Page
- --------- ---------
<S> <C>
4.2 Amendment dated as of March 3, 1999 to 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.... Electronically
Filed
4.3 Amendment dated as of March 3, 1999 to 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........................... Electronically
Filed
4.4 Amendment dated as of March 3, 1999 to 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................................ Electronically
Filed
4.5 Amendment dated as of March 3, 1999 to 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............... Electronically
Filed
4.6 Amendment dated as of March 3, 1999 to 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...................... Electronically
Filed
4.7 Amendment dated as of March 3, 1999 to 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.... Electronically
Filed
11.1 Statement Regarding Computation of Per Share Earnings Electronically
Filed
27.1 Financial Data Schedule Electronically
Filed
</TABLE>
<PAGE>
Exhibit 4.2
Dated as of March 3, 1999
Teachers Insurance and Annuity
Association of America
730 Third Avenue
New York, New York 10017
AmerUs Life Insurance Company
c/o Amerus Capital Management
699 Walnut Street, Suite 1700
Des Moines, Iowa 50309-3945
Modern Woodmen of America
1701 First Avenue
Rock Island, Illinois 61201
Ladies and Gentlemen:
Reference is made to those certain Note Purchase Agreements between
Hutchinson Technology Incorporated, a Minnesota corporation (the "Company"), and
each of Teachers Insurance and Annuity Association of America, Central Life
Assurance Company and Modern Woodmen of America (collectively, the
"Purchasers"), each dated as of April 20, 1994 (as heretofore amended or
otherwise modified, the "Agreements"), pursuant to which the Purchasers
purchased the 7.46% Senior Notes of the Company in the aggregate original
principal amount of $30,000,000 (the "Notes"). The addressees of this letter
agreement (collectively, the "Noteholders") are the registered holders of 100%
of the aggregate outstanding principal amount of the Notes as reflected in the
Note Register required to be maintained by the Company pursuant to Section 10.1
of each of the Agreements, and the Noteholders whose signatures are affixed
below hold 100% of the aggregate unpaid principal amount of the Notes
outstanding as of the date hereof.
The Company has informed the Noteholders that it desires to amend the
Agreements in certain respects as of the date hereof, and the Noteholders have
agreed to such amendments as more fully described below in this letter agreement
("this Amendment").
Now, therefore, the Company and the Noteholders (by their acceptance
hereof) hereby agree as follows:
1. AMENDMENTS.
The Agreements will be amended as hereafter in this paragraph 1 set
forth, such amendments to become effective as provided in paragraph 3 hereof:
<PAGE>
(a) Section 3.1 of the Agreements shall be amended to be and
read in its entirety as follows:
"3.1. PREPAYMENTS AND PAYMENT AT MATURITY. On August 15, 1996 and on
each February 15 and August 15 thereafter to and including August 15,
2003 (so long as any Notes shall remain outstanding), the Company will
prepay, and there shall become due and payable, $1,875,000.00 in
principal amount of the Notes (or such lesser principal amount of Notes
as shall then be outstanding). Each such prepayment pursuant to this
Section shall be at 100% of the principal amount so to be prepaid
together with interest accrued thereon to the date of such prepayment,
without premium. Upon the prepayment on any date of less than the
entire outstanding principal amount of the Notes pursuant to SECTION
3.2 or SECTION 3.8, the principal amount of the Notes required to be
prepaid on any February 15 or August 15 thereafter pursuant to this
Section shall be reduced in the same proportion as the aggregate
principal amount of the Notes outstanding immediately prior to said
prepayment pursuant to SECTION 3.2 or SECTION 3.8 shall have been
reduced by said prepayment. The Company will, in the event of any such
reduction pursuant to the immediately preceding sentence, promptly
after the prepayment of Notes giving rise to such reduction, furnish
each holder of Notes with notice thereof setting forth the Company's
calculation of the respective required prepayments and payment at final
maturity due thereafter pursuant to this Section (giving effect to such
reduction). On February 15, 2004, the Company will pay, and there shall
become due and payable, the entire remaining unpaid principal amount of
the Notes, together with interest accrued thereon.
(b) Section 3.4 of the Agreements shall be amended to be and read in
its entirety as follows:
"3.4. ALLOCATION OF PARTIAL PREPAYMENTS. In the case of each
prepayment, whether required or optional, of less than the entire
unpaid principal amount of all outstanding Notes (other than any such
prepayment pursuant to SECTION 3.8 in connection with the acceptance by
one or more holders of Notes of a Prepayment Offer referred to in
SECTION 3.8), the principal amount of the Notes so to be prepaid shall
be allocated among all of the Notes at the time outstanding in
proportion, as nearly as practicable, to the respective principal
amounts thereof not theretofore prepaid."
(c) Section 3.5 of the Agreements shall be amended to be and read in
its entirety as follows:
"3.5. MATURITY; SURRENDER, ETC. In the case of each prepayment
of Notes, the principal amount of each Note to be prepaid shall become
due and payable on the date fixed for such prepayment in this Agreement
(if such prepayment is to be made pursuant to SECTION 3.1) or in the
notice of such prepayment pursuant to SECTION 3.3 (if such prepayment
is to be made pursuant to SECTION 3.2) or in the Trust Agreement
referred to in SECTION 3.8 (if such prepayment is to made pursuant to
SECTION 3.8), together with
2
<PAGE>
interest accrued on such principal amount to such date and the
Makewhole Amount, if any, payable in connection with such prepayment.
Any Note paid or prepaid in full shall thereafter be surrendered to the
Company upon its written request therefor and cancelled and not
reissued."
(d) Section 3 of the Agreements shall be further amended by adding
thereto, following Section 3.7 thereof, a new Section 3.8, which new Section
shall be and read in its entirety as follows:
"3.8. PREPAYMENT OF NOTES PURSUANT TO TRUST AGREEMENT. The
Company shall be required to prepay Notes of each holder thereof which
shall have given notice of such holder's acceptance of a Prepayment
Offer made by the Company pursuant to (and as the term `Prepayment
Offer' is defined in) Section 7.2(b) of that certain Trust Agreement,
dated as of March 3, 1999 (as from time to time supplemented and
amended and in effect, the "TRUST AGREEMENT"), between the Company and
U.S. Bank Trust National Association, a national banking association,
as trustee thereunder (together with its successors as such trustee,
the "TRUSTEE") for the equal and ratable benefit and security of the
holders from time to time of the Notes and the holders from time to
time of the Company's 1996 Notes referred to (and as the term `1996
Notes' is defined) in the Trust Agreement, each such prepayment to be
made at the price and on the date determined in accordance with, and
otherwise as provided in, said Section 7.2(b) of the Trust Agreement."
2. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants
and covenants to and for the benefit of the Noteholders as follows:
(a) The execution and delivery by the Company of this Amendment and the
performance by the Company of this Amendment and of the Agreements and the Notes
as amended hereby (i) have been duly authorized by all requisite corporate
action on the part of the Company (no action on the part of the shareholders of
the Company being required therefor), (ii) do not require the consent or
approval of (A) any Governmental Body, or (B) except as set forth below, any
other Person, and (iii) do not and will not (A) violate (1) any provision of any
law, statute, rule or regulation or of the articles of incorporation or by-laws
of the Company, (2) any Order of any court, administrative body or arbitrator or
any rule, regulation or Order of any Governmental Body binding upon the Company
or any of its properties, or (3) any provision of any loan or credit agreement,
indenture, mortgage or other agreement or instrument to which the Company is a
party or by which it or any of its properties are or may be bound, or (B) result
in any breach of or constitute (alone or with notice or lapse of time or both) a
default under any such loan or credit agreement, indenture, mortgage or other
agreement or instrument.
(b) This Amendment, and the Agreements as amended hereby, constitute
the legal, valid and binding obligations and agreements of the Company,
enforceable against the Company in accordance with their respective terms,
except as such enforcement may be limited by
3
<PAGE>
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws or equitable principles relating to or limiting creditors'
rights generally.
(c) As of the date hereof, and after giving effect to the amendments to
the Agreements effected by this Amendment, no Default or Event of Default has
occurred and is continuing under and within the meaning of the Agreements.
3. EFFECTIVENESS. The amendments to the Agreements provided for in this
Amendment shall become effective upon the execution and delivery of counterparts
of this Amendment by the Company and the holders of 100% in aggregate principal
amount of Notes at the time outstanding (as provided in Section 12(a) of the
Agreements).
4. MISCELLANEOUS. Except as specifically amended hereby, all terms and
provisions of each of the Agreements shall remain in full force and effect.
Without limiting the provisions of Section 15.1 of the Agreements, the Company
will pay all expenses incurred by each Noteholder in connection with this
Amendment. This Amendment may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument. Capitalized terms used but not otherwise
defined in this Amendment shall have the meanings assigned to them by each of
the Agreements.
4
<PAGE>
If you are in agreement with the foregoing, please so indicate by
executing the form of acknowledgment set forth below, whereupon this Amendment
shall become a binding agreement effective as of the date hereof.
Very truly yours,
HUTCHINSON TECHNOLOGY
INCORPORATED
By /s/ John A. Ingleman
--------------------------------
Its CFO
-----------------------------
Agreed to and accepted as of the date first above written.
TEACHERS INSURANCE AND ANNUITY
ASSOCIATION OF AMERICA
By /s/ Diane Hom
---------------------------------------------
Its Director-Private Placements
------------------------------------------
AMERUS LIFE INSURANCE COMPANY
By /s/ Roger D. Fors
---------------------------------------------
Its Vice President
------------------------------------------
MODERN WOODMEN OF AMERICA
By /s/ Nick S. Coin
---------------------------------------------
Its Manager, Securities Division
-----------------------------------------
<PAGE>
Exhibit 4.3
Dated as of March 3, 1999
Teachers Insurance and Annuity
Association of America
730 Third Avenue
New York, New York 10017
AmerUs Life Insurance Company
c/o Amerus Capital Management
699 Walnut Street, Suite 1700
Des Moines, Iowa 50309-3945
Modern Woodmen of America
1701 First Avenue
Rock Island, Illinois 61201
Ladies and Gentlemen:
Reference is made to those certain Note Purchase Agreements between
Hutchinson Technology Incorporated, a Minnesota corporation (the "Company"), and
each of Teachers Insurance and Annuity Association of America, Central Life
Assurance Company and Modern Woodmen of America (collectively, the
"Purchasers"), each dated as of April 20, 1994 (as heretofore amended or
otherwise modified, the "Agreements"), pursuant to which the Purchasers
purchased the 7.46% Senior Notes of the Company in the aggregate original
principal amount of $30,000,000 (the "Notes"). The addressees of this letter
agreement (collectively, the "Noteholders") are the registered holders of 100%
of the aggregate outstanding principal amount of the Notes as reflected in the
Note Register required to be maintained by the Company pursuant to Section 10.1
of each of the Agreements, and the Noteholders whose signatures are affixed
below hold 100% of the aggregate unpaid principal amount of the Notes
outstanding as of the date hereof.
The Company has informed the Noteholders that it desires to amend the
Agreements in certain respects as of the date hereof, and the Noteholders have
agreed to such amendments as more fully described below in this letter agreement
("this Amendment").
Now, therefore, the Company and the Noteholders (by their acceptance
hereof) hereby agree as follows:
1. AMENDMENTS.
The Agreements will be amended as hereafter in this paragraph 1 set
forth, such amendments to become effective as provided in paragraph 3 hereof:
<PAGE>
(a) Section 3.1 of the Agreements shall be amended to be and
read in its entirety as follows:
"3.1. PREPAYMENTS AND PAYMENT AT MATURITY. On August 15, 1996 and on
each February 15 and August 15 thereafter to and including August 15,
2003 (so long as any Notes shall remain outstanding), the Company will
prepay, and there shall become due and payable, $1,875,000.00 in
principal amount of the Notes (or such lesser principal amount of Notes
as shall then be outstanding). Each such prepayment pursuant to this
Section shall be at 100% of the principal amount so to be prepaid
together with interest accrued thereon to the date of such prepayment,
without premium. Upon the prepayment on any date of less than the
entire outstanding principal amount of the Notes pursuant to SECTION
3.2 or SECTION 3.8, the principal amount of the Notes required to be
prepaid on any February 15 or August 15 thereafter pursuant to this
Section shall be reduced in the same proportion as the aggregate
principal amount of the Notes outstanding immediately prior to said
prepayment pursuant to SECTION 3.2 or SECTION 3.8 shall have been
reduced by said prepayment. The Company will, in the event of any such
reduction pursuant to the immediately preceding sentence, promptly
after the prepayment of Notes giving rise to such reduction, furnish
each holder of Notes with notice thereof setting forth the Company's
calculation of the respective required prepayments and payment at final
maturity due thereafter pursuant to this Section (giving effect to such
reduction). On February 15, 2004, the Company will pay, and there shall
become due and payable, the entire remaining unpaid principal amount of
the Notes, together with interest accrued thereon.
(b) Section 3.4 of the Agreements shall be amended to be and
read in its entirety as follows:
"3.4. ALLOCATION OF PARTIAL PREPAYMENTS. In the case of each
prepayment, whether required or optional, of less than the entire
unpaid principal amount of all outstanding Notes (other than any such
prepayment pursuant to SECTION 3.8 in connection with the acceptance by
one or more holders of Notes of a Prepayment Offer referred to in
SECTION 3.8), the principal amount of the Notes so to be prepaid shall
be allocated among all of the Notes at the time outstanding in
proportion, as nearly as practicable, to the respective principal
amounts thereof not theretofore prepaid."
(c) Section 3.5 of the Agreements shall be amended to be and
read in its entirety as follows:
"3.5. MATURITY; SURRENDER, ETC. In the case of each prepayment
of Notes, the principal amount of each Note to be prepaid shall become
due and payable on the date fixed for such prepayment in this Agreement
(if such prepayment is to be made pursuant to SECTION 3.1) or in the
notice of such prepayment pursuant to SECTION 3.3 (if such prepayment
is to be made pursuant to SECTION 3.2) or in the Trust Agreement
referred to in SECTION 3.8 (if such prepayment is to made pursuant to
SECTION 3.8), together with
2
<PAGE>
interest accrued on such principal amount to such date and the
Makewhole Amount, if any, payable in connection with such prepayment.
Any Note paid or prepaid in full shall thereafter be surrendered to the
Company upon its written request therefor and cancelled and not
reissued."
(d) Section 3 of the Agreements shall be further amended by adding
thereto, following Section 3.7 thereof, a new Section 3.8, which new Section
shall be and read in its entirety as follows:
"3.8. PREPAYMENT OF NOTES PURSUANT TO TRUST AGREEMENT. The
Company shall be required to prepay Notes of each holder thereof which
shall have given notice of such holder's acceptance of a Prepayment
Offer made by the Company pursuant to (and as the term `Prepayment
Offer' is defined in) Section 7.2(b) of that certain Trust Agreement,
dated as of March 3, 1999 (as from time to time supplemented and
amended and in effect, the "TRUST AGREEMENT"), between the Company and
U.S. Bank Trust National Association, a national banking association,
as trustee thereunder (together with its successors as such trustee,
the "TRUSTEE") for the equal and ratable benefit and security of the
holders from time to time of the Notes and the holders from time to
time of the Company's 1996 Notes referred to (and as the term `1996
Notes' is defined) in the Trust Agreement, each such prepayment to be
made at the price and on the date determined in accordance with, and
otherwise as provided in, said Section 7.2(b) of the Trust Agreement."
2. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants
and covenants to and for the benefit of the Noteholders as follows:
(a) The execution and delivery by the Company of this Amendment and the
performance by the Company of this Amendment and of the Agreements and the Notes
as amended hereby (i) have been duly authorized by all requisite corporate
action on the part of the Company (no action on the part of the shareholders of
the Company being required therefor), (ii) do not require the consent or
approval of (A) any Governmental Body, or (B) except as set forth below, any
other Person, and (iii) do not and will not (A) violate (1) any provision of any
law, statute, rule or regulation or of the articles of incorporation or by-laws
of the Company, (2) any Order of any court, administrative body or arbitrator or
any rule, regulation or Order of any Governmental Body binding upon the Company
or any of its properties, or (3) any provision of any loan or credit agreement,
indenture, mortgage or other agreement or instrument to which the Company is a
party or by which it or any of its properties are or may be bound, or (B) result
in any breach of or constitute (alone or with notice or lapse of time or both) a
default under any such loan or credit agreement, indenture, mortgage or other
agreement or instrument.
(b) This Amendment, and the Agreements as amended hereby, constitute
the legal, valid and binding obligations and agreements of the Company,
enforceable against the Company in accordance with their respective terms,
except as such enforcement may be limited by
3
<PAGE>
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws or
equitable principles relating to or limiting creditors' rights generally.
(c) As of the date hereof, and after giving effect to the amendments to
the Agreements effected by this Amendment, no Default or Event of Default has
occurred and is continuing under and within the meaning of the Agreements.
3. EFFECTIVENESS. The amendments to the Agreements provided for in this
Amendment shall become effective upon the execution and delivery of counterparts
of this Amendment by the Company and the holders of 100% in aggregate principal
amount of Notes at the time outstanding (as provided in Section 12(a) of the
Agreements).
4. MISCELLANEOUS. Except as specifically amended hereby, all terms and
provisions of each of the Agreements shall remain in full force and effect.
Without limiting the provisions of Section 15.1 of the Agreements, the Company
will pay all expenses incurred by each Noteholder in connection with this
Amendment. This Amendment may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument. Capitalized terms used but not otherwise
defined in this Amendment shall have the meanings assigned to them by each of
the Agreements.
4
<PAGE>
If you are in agreement with the foregoing, please so indicate by
executing the form of acknowledgment set forth below, whereupon this Amendment
shall become a binding agreement effective as of the date hereof.
Very truly yours,
HUTCHINSON TECHNOLOGY
INCORPORATED
By /s/ John A. Ingleman
----------------------------
Its CFO
------------------------
Agreed to and accepted as of
the date first above written.
TEACHERS INSURANCE AND ANNUITY
ASSOCIATION OF AMERICA
By /s/ Diane Hom
-------------------------------------------
Its Director-Private Placements
----------------------------------------
AMERUS LIFE INSURANCE COMPANY
By /s/ Roger D. Fors
-------------------------------------------
Its Vice President
----------------------------------------
MODERN WOODMEN OF AMERICA
By /s/ Nick S. Coin
-------------------------------------------
Its Manager, Securities Division
----------------------------------------
<PAGE>
Exhibit 4.4
Dated as of March 3, 1999
Teachers Insurance and Annuity
Association of America
730 Third Avenue
New York, New York 10017
AmerUs Life Insurance Company
c/o Amerus Capital Management
699 Walnut Street, Suite 1700
Des Moines, Iowa 50309-3945
Modern Woodmen of America
1701 First Avenue
Rock Island, Illinois 61201
Ladies and Gentlemen:
Reference is made to those certain Note Purchase Agreements between
Hutchinson Technology Incorporated, a Minnesota corporation (the "Company"), and
each of Teachers Insurance and Annuity Association of America, Central Life
Assurance Company and Modern Woodmen of America (collectively, the
"Purchasers"), each dated as of April 20, 1994 (as heretofore amended or
otherwise modified, the "Agreements"), pursuant to which the Purchasers
purchased the 7.46% Senior Notes of the Company in the aggregate original
principal amount of $30,000,000 (the "Notes"). The addressees of this letter
agreement (collectively, the "Noteholders") are the registered holders of 100%
of the aggregate outstanding principal amount of the Notes as reflected in the
Note Register required to be maintained by the Company pursuant to Section 10.1
of each of the Agreements, and the Noteholders whose signatures are affixed
below hold 100% of the aggregate unpaid principal amount of the Notes
outstanding as of the date hereof.
The Company has informed the Noteholders that it desires to amend the
Agreements in certain respects as of the date hereof, and the Noteholders have
agreed to such amendments as more fully described below in this letter agreement
("this Amendment").
Now, therefore, the Company and the Noteholders (by their acceptance
hereof) hereby agree as follows:
1. AMENDMENTS.
The Agreements will be amended as hereafter in this paragraph 1 set
forth, such amendments to become effective as provided in paragraph 3 hereof:
<PAGE>
(a) Section 3.1 of the Agreements shall be amended to be and read
in its entirety as follows:
"3.1. PREPAYMENTS AND PAYMENT AT MATURITY. On August 15, 1996 and on
each February 15 and August 15 thereafter to and including August 15,
2003 (so long as any Notes shall remain outstanding), the Company will
prepay, and there shall become due and payable, $1,875,000.00 in
principal amount of the Notes (or such lesser principal amount of Notes
as shall then be outstanding). Each such prepayment pursuant to this
Section shall be at 100% of the principal amount so to be prepaid
together with interest accrued thereon to the date of such prepayment,
without premium. Upon the prepayment on any date of less than the
entire outstanding principal amount of the Notes pursuant to SECTION
3.2 or SECTION 3.8, the principal amount of the Notes required to be
prepaid on any February 15 or August 15 thereafter pursuant to this
Section shall be reduced in the same proportion as the aggregate
principal amount of the Notes outstanding immediately prior to said
prepayment pursuant to SECTION 3.2 or SECTION 3.8 shall have been
reduced by said prepayment. The Company will, in the event of any such
reduction pursuant to the immediately preceding sentence, promptly
after the prepayment of Notes giving rise to such reduction, furnish
each holder of Notes with notice thereof setting forth the Company's
calculation of the respective required prepayments and payment at final
maturity due thereafter pursuant to this Section (giving effect to such
reduction). On February 15, 2004, the Company will pay, and there shall
become due and payable, the entire remaining unpaid principal amount of
the Notes, together with interest accrued thereon.
(b) Section 3.4 of the Agreements shall be amended to be and
read in its entirety as follows:
"3.4. ALLOCATION OF PARTIAL PREPAYMENTS. In the case of each
prepayment, whether required or optional, of less than the entire
unpaid principal amount of all outstanding Notes (other than any such
prepayment pursuant to SECTION 3.8 in connection with the acceptance by
one or more holders of Notes of a Prepayment Offer referred to in
SECTION 3.8), the principal amount of the Notes so to be prepaid shall
be allocated among all of the Notes at the time outstanding in
proportion, as nearly as practicable, to the respective principal
amounts thereof not theretofore prepaid."
(c) Section 3.5 of the Agreements shall be amended to be and
read in its entirety as follows:
"3.5. MATURITY; SURRENDER, ETC. In the case of each prepayment
of Notes, the principal amount of each Note to be prepaid shall become
due and payable on the date fixed for such prepayment in this Agreement
(if such prepayment is to be made pursuant to SECTION 3.1) or in the
notice of such prepayment pursuant to SECTION 3.3 (if such prepayment
is to be made pursuant to SECTION 3.2) or in the Trust Agreement
referred to in SECTION 3.8 (if such prepayment is to made pursuant to
SECTION 3.8), together with
2
<PAGE>
interest accrued on such principal amount to such date and the
Makewhole Amount, if any, payable in connection with such prepayment.
Any Note paid or prepaid in full shall thereafter be surrendered to the
Company upon its written request therefor and cancelled and not
reissued."
(d) Section 3 of the Agreements shall be further amended by adding
thereto, following Section 3.7 thereof, a new Section 3.8, which new Section
shall be and read in its entirety as follows:
"3.8. PREPAYMENT OF NOTES PURSUANT TO TRUST AGREEMENT. The
Company shall be required to prepay Notes of each holder thereof which
shall have given notice of such holder's acceptance of a Prepayment
Offer made by the Company pursuant to (and as the term `Prepayment
Offer' is defined in) Section 7.2(b) of that certain Trust Agreement,
dated as of March 3, 1999 (as from time to time supplemented and
amended and in effect, the "TRUST AGREEMENT"), between the Company and
U.S. Bank Trust National Association, a national banking association,
as trustee thereunder (together with its successors as such trustee,
the "TRUSTEE") for the equal and ratable benefit and security of the
holders from time to time of the Notes and the holders from time to
time of the Company's 1996 Notes referred to (and as the term `1996
Notes' is defined) in the Trust Agreement, each such prepayment to be
made at the price and on the date determined in accordance with, and
otherwise as provided in, said Section 7.2(b) of the Trust Agreement."
2. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants
and covenants to and for the benefit of the Noteholders as follows:
(a) The execution and delivery by the Company of this Amendment and the
performance by the Company of this Amendment and of the Agreements and the Notes
as amended hereby (i) have been duly authorized by all requisite corporate
action on the part of the Company (no action on the part of the shareholders of
the Company being required therefor), (ii) do not require the consent or
approval of (A) any Governmental Body, or (B) except as set forth below, any
other Person, and (iii) do not and will not (A) violate (1) any provision of any
law, statute, rule or regulation or of the articles of incorporation or by-laws
of the Company, (2) any Order of any court, administrative body or arbitrator or
any rule, regulation or Order of any Governmental Body binding upon the Company
or any of its properties, or (3) any provision of any loan or credit agreement,
indenture, mortgage or other agreement or instrument to which the Company is a
party or by which it or any of its properties are or may be bound, or (B) result
in any breach of or constitute (alone or with notice or lapse of time or both) a
default under any such loan or credit agreement, indenture, mortgage or other
agreement or instrument.
(b) This Amendment, and the Agreements as amended hereby, constitute
the legal, valid and binding obligations and agreements of the Company,
enforceable against the Company in accordance with their respective terms,
except as such enforcement may be limited by
3
<PAGE>
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws or
equitable principles relating to or limiting creditors' rights generally.
(c) As of the date hereof, and after giving effect to the amendments to
the Agreements effected by this Amendment, no Default or Event of Default has
occurred and is continuing under and within the meaning of the Agreements.
3. EFFECTIVENESS. The amendments to the Agreements provided for in this
Amendment shall become effective upon the execution and delivery of counterparts
of this Amendment by the Company and the holders of 100% in aggregate principal
amount of Notes at the time outstanding (as provided in Section 12(a) of the
Agreements).
4. MISCELLANEOUS. Except as specifically amended hereby, all terms and
provisions of each of the Agreements shall remain in full force and effect.
Without limiting the provisions of Section 15.1 of the Agreements, the Company
will pay all expenses incurred by each Noteholder in connection with this
Amendment. This Amendment may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument. Capitalized terms used but not otherwise
defined in this Amendment shall have the meanings assigned to them by each of
the Agreements.
4
<PAGE>
If you are in agreement with the foregoing, please so indicate by
executing the form of acknowledgment set forth below, whereupon this Amendment
shall become a binding agreement effective as of the date hereof.
Very truly yours,
HUTCHINSON TECHNOLOGY
INCORPORATED
By /s/ John A. Ingleman
----------------------------
Its CFO
-------------------------
Agreed to and accepted as of
the date first above written.
TEACHERS INSURANCE AND ANNUITY
ASSOCIATION OF AMERICA
By /s/ Diane Hom
----------------------------------
Its Director-Private Placements
-------------------------------
AMERUS LIFE INSURANCE COMPANY
By /s/ Roger D. Fors
----------------------------------
Its Vice President
-------------------------------
MODERN WOODMEN OF AMERICA
By /s/ Nick S. Coin
----------------------------------
Its Manager, Securities Division
------------------------------
<PAGE>
Exhibit 4.5
Dated as of March 3, 1999
Teachers Insurance and Annuity
Association of America
730 Third Avenue
New York, New York 10017
CIG & Co.
c/o CIGNA Investments, Inc.
900 Cottage Grove Road
Hartford, Connecticut 06152
Ladies and Gentlemen:
Reference is made to those certain Note Purchase Agreements between
Hutchinson Technology Incorporated, a Minnesota corporation (the "Company"), and
each of Metropolitan Life Insurance Company and Metropolitan Insurance and
Annuity Company (each, a "Series A Purchaser" and collectively, the "Series A
Purchasers") and Teachers Insurance and Annuity Association of America (the
"Series B Purchaser"), each dated as of July 26, 1996 (each as heretofore
amended or otherwise modified, an "Agreement" and collectively, the
"Agreements"), providing for the issuance to the Series A Purchasers of the
senior notes of the Company in the aggregate original principal amount of
$25,000,000 (the "Series A Notes"), and the issuance to the Series B Purchaser
of a senior note of the Company in the original principal amount of $25,000,000
(the "Series B Note"). The addressees of this letter agreement (collectively,
the "Noteholders"), are the registered holders of 100% of the aggregate
outstanding principal amount of the Series A Notes and the Series B Note
(collectively, the "Notes") as reflected in the Note Register required to be
maintained by the Company pursuant to Section 10.1 of each of the Agreements,
and the Noteholders whose signatures are affixed below hold 100% of the
aggregate unpaid principal amount of the Notes outstanding as of the date
hereof.
The Company has informed the Noteholders that it desires to amend the
Agreements in certain respects as of the date hereof, and the Noteholders have
agreed to such amendments as more fully described below in this letter agreement
("this Amendment").
Now, therefore, the Company and the Noteholders (by their acceptance
hereof) hereby agree as follows:
<PAGE>
1. AMENDMENTS.
The Agreements will be amended as hereafter in this paragraph 1 set
forth, such amendments to become effective as provided in paragraph 3 hereof:
(a) Section 3.1(a) of the Agreements shall be amended by adding
at the end thereof the following:
"If and whenever any Series A Note (but less than all of the
Series A Notes) shall be prepaid pursuant to SECTION 3.8, the aggregate
principal amount of the Series A Notes required to be prepaid on any
date thereafter pursuant to the first sentence of this SECTION 3.1(a)
shall be reduced in the same proportion as the aggregate principal
amount of the Series A Notes outstanding immediately prior to said
prepayment pursuant to SECTION 3.8 shall have been reduced by said
prepayment. The Company will, in the event of any reduction pursuant to
the immediately preceding sentence, promptly after the prepayment of
Series A Notes giving rise to such reduction, furnish each holder of
Notes with notice thereof setting forth the Company's calculation of
the respective required prepayments and payment at final maturity of
Series A Notes due thereafter pursuant to this SECTION 3.1(a) (giving
effect to such reduction)."
(b) Section 3.1(b) of the Agreements shall be amended by adding
at the end thereof the following:
"If and whenever any Series B Note (but less than all of the
Series B Notes) shall be prepaid pursuant to SECTION 3.8, the aggregate
principal amount of the Series B Notes required to be prepaid on any
date thereafter pursuant to the first sentence of this SECTION 3.1(b)
shall be reduced in the same proportion as the aggregate principal
amount of the Series B Notes outstanding immediately prior to said
prepayment pursuant to SECTION 3.8 shall have been reduced by said
prepayment. The Company will, in the event of any reduction pursuant to
the immediately preceding sentence, promptly after the prepayment of
Series B Notes giving rise to such reduction, furnish each holder of
Notes with notice thereof setting forth the Company's calculation of
the respective required prepayments and payment at final maturity of
Series B Notes due thereafter pursuant to this SECTION 3.1(b) (giving
effect to such reduction)."
(c) Section 3.4 of the Agreements shall be amended to be and
read in its entirety as follows:
"3.4. ALLOCATION OF PARTIAL PREPAYMENTS. In the case of each
prepayment, whether required or optional, of less than the entire
unpaid principal amount of all outstanding Notes of any series (other
than any such prepayment pursuant to SECTION 3.8 in connection with the
acceptance by one or more holders of Notes of such series of a
Prepayment Offer referred to in SECTION 3.8), the principal amount of
the Notes of such series so to be prepaid shall be allocated among all
of the Notes of such
2
<PAGE>
series at the time outstanding in proportion, as nearly as practicable,
to the respective principal amounts thereof not theretofore prepaid.
The amount of each such optional prepayment so allocated to the Notes
of any series (other than pursuant to any such prepayment of Notes
pursuant to SECTION 3.8) shall be credited against the remaining
required prepayments and payment at final maturity of the Notes of such
series in the inverse order of such required prepayments and payment at
final maturity."
(d) Section 3.5 of the Agreements shall be amended to be and read
in its entirety as follows:
"3.5. MATURITY; SURRENDER, ETC. In the case of each prepayment
of Notes, the principal amount of each Note to be prepaid shall become
due and payable on the date fixed for such prepayment in this Agreement
(if such prepayment is to be made pursuant to SECTION 3.1) or in the
notice of such prepayment pursuant to SECTION 3.3 (if such prepayment
is to be made pursuant to SECTION 3.2) or in the Trust Agreement
referred to in SECTION 3.8 (if such prepayment is to be made pursuant
to SECTION 3.8), together with interest accrued on such principal
amount to such date and the Makewhole Amount, if any, payable in
connection with such prepayment. Any Note paid or prepaid in full shall
thereafter be surrendered to the Company upon its written request
therefor and cancelled and not reissued."
(e) Section 3 of the Agreements shall be further amended by adding
thereto, following Section 3.7 thereof, a new Section 3.8, which new Section
shall be and read in its entirety as follows:
"3.8. PREPAYMENT OF NOTES PURSUANT TO TRUST AGREEMENT. The
Company shall be required to prepay Notes of each holder thereof which
shall have given notice of such holder's acceptance of a Prepayment
Offer made by the Company pursuant to (and as the term `Prepayment
Offer' is defined in) Section 7.2(b) of that certain Trust Agreement,
dated as of March 3, 1999 (as from time to time supplemented and
amended and in effect, the "TRUST AGREEMENT"), between the Company and
U.S. Bank Trust National Association, a national banking association,
as trustee thereunder (together with its successors as such trustee,
the "TRUSTEE"), for the equal and ratable benefit and security of the
holders from time to time of the Notes and the holders from time to
time of the Company's 1994 Notes referred to (and as the term `1994
Notes' is defined) in the Trust Agreement, each such prepayment to be
made at the price and on the date determined in accordance with, and
otherwise as provided in, said Section 7.2(b) of the Trust Agreement.
For the avoidance of doubt, no prepayment of Notes of any series
pursuant to this SECTION 3.8 shall be deemed, for purposes of SECTION
3.2 or SECTION 3.3, an optional prepayment pursuant to SECTION 3.2."
2. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants
and covenants to and for the benefit of the Noteholders as follows:
3
<PAGE>
(a) The execution and delivery by the Company of this Amendment and the
performance by the Company of this Amendment and of the Agreements and the Notes
as amended hereby (i) have been duly authorized by all requisite corporate
action on the part of the Company (no action on the part of the shareholders of
the Company being required therefor), (ii) do not require the consent or
approval of (A) any Governmental Body, or (B) except as set forth below, any
other Person, and (iii) do not and will not, (A) violate (1) any provision of
any law, statute, rule or regulation or of the articles of incorporation or
by-laws of the Company, (2) any Order of any court, administrative body or
arbitrator or any rule, regulation or Order of any Governmental Body binding
upon the Company or any of its properties, or (3) any provision of any loan or
credit agreement, indenture, mortgage or other agreement or instrument to which
the Company is a party or by which it or any of its properties are or may be
bound, or (B) result in any breach of or constitute (alone or with notice or
lapse of time or both) a default under any such loan or credit agreement,
indenture, mortgage or other agreement or instrument.
(b) This Amendment, and the Agreements as amended hereby, constitute
the legal, valid and binding obligations and agreements of the Company,
enforceable against the Company in accordance with their respective terms,
except as such enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws or equitable principles relating to
or limiting creditors' rights generally.
(c) As of the date hereof, and after giving effect to the amendments to
the Agreements effected by this Amendment, no Default or Event of Default has
occurred and is continuing under and within the meaning of the Agreements.
3. EFFECTIVENESS. The amendments to the Agreements provided for in this
Amendment shall become effective upon the execution and delivery of counterparts
of this Amendment by the Company and the holders of 100% in aggregate principal
amount of Notes at the time outstanding (as provided in Section 12(a) of the
Agreements).
4. MISCELLANEOUS. Except as specifically amended hereby, all terms and
provisions of each of the Agreements shall remain in full force and effect.
Without limiting the provisions of Section 15.1 of the Agreements, the Company
will pay all expenses incurred by each Noteholder in connection with this
Amendment. This Amendment may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument. Capitalized terms used but not otherwise
defined in this Amendment shall have the meanings assigned to them by each of
the Agreements.
4
<PAGE>
If you are in agreement with the foregoing, please so indicate by
executing the form of acknowledgment set forth below, whereupon this Amendment
shall become a binding agreement effective as of the date hereof.
Very truly yours,
HUTCHINSON TECHNOLOGY
INCORPORATED
By /s/ John A. Ingleman
------------------------
Its CFO
---------------------------
Agreed to and accepted as of
the date first above written.
TEACHERS INSURANCE AND ANNUITY
ASSOCIATION OF AMERICA
By /s/ Diane Hom
-----------------------------------------
Its Director-Private Placements
--------------------------------------
CIG & CO.
By /s/ Edward Lewis
-----------------------------------------
Its Partner
--------------------------------------
<PAGE>
Exhibit 4.6
Dated as of March 3, 1999
Teachers Insurance and Annuity
Association of America
730 Third Avenue
New York, New York 10017
CIG & Co.
c/o CIGNA Investments, Inc.
900 Cottage Grove Road
Hartford, Connecticut 06152
Ladies and Gentlemen:
Reference is made to those certain Note Purchase Agreements between
Hutchinson Technology Incorporated, a Minnesota corporation (the "Company"), and
each of Metropolitan Life Insurance Company and Metropolitan Insurance and
Annuity Company (each, a "Series A Purchaser" and collectively, the "Series A
Purchasers") and Teachers Insurance and Annuity Association of America (the
"Series B Purchaser"), each dated as of July 26, 1996 (each as heretofore
amended or otherwise modified, an "Agreement" and collectively, the
"Agreements"), providing for the issuance to the Series A Purchasers of the
senior notes of the Company in the aggregate original principal amount of
$25,000,000 (the "Series A Notes"), and the issuance to the Series B Purchaser
of a senior note of the Company in the original principal amount of $25,000,000
(the "Series B Note"). The addressees of this letter agreement (collectively,
the "Noteholders"), are the registered holders of 100% of the aggregate
outstanding principal amount of the Series A Notes and the Series B Note
(collectively, the "Notes") as reflected in the Note Register required to be
maintained by the Company pursuant to Section 10.1 of each of the Agreements,
and the Noteholders whose signatures are affixed below hold 100% of the
aggregate unpaid principal amount of the Notes outstanding as of the date
hereof.
The Company has informed the Noteholders that it desires to amend the
Agreements in certain respects as of the date hereof, and the Noteholders have
agreed to such amendments as more fully described below in this letter agreement
("this Amendment").
Now, therefore, the Company and the Noteholders (by their acceptance
hereof) hereby agree as follows:
<PAGE>
1. AMENDMENTS.
The Agreements will be amended as hereafter in this paragraph 1 set
forth, such amendments to become effective as provided in paragraph 3 hereof:
(a) Section 3.1(a) of the Agreements shall be amended by adding
at the end thereof the following:
"If and whenever any Series A Note (but less than all of the
Series A Notes) shall be prepaid pursuant to SECTION 3.8, the aggregate
principal amount of the Series A Notes required to be prepaid on any
date thereafter pursuant to the first sentence of this SECTION 3.1(a)
shall be reduced in the same proportion as the aggregate principal
amount of the Series A Notes outstanding immediately prior to said
prepayment pursuant to SECTION 3.8 shall have been reduced by said
prepayment. The Company will, in the event of any reduction pursuant to
the immediately preceding sentence, promptly after the prepayment of
Series A Notes giving rise to such reduction, furnish each holder of
Notes with notice thereof setting forth the Company's calculation of
the respective required prepayments and payment at final maturity of
Series A Notes due thereafter pursuant to this SECTION 3.1(a) (giving
effect to such reduction)."
(b) Section 3.1(b) of the Agreements shall be amended by adding
at the end thereof the following:
"If and whenever any Series B Note (but less than all of the
Series B Notes) shall be prepaid pursuant to SECTION 3.8, the aggregate
principal amount of the Series B Notes required to be prepaid on any
date thereafter pursuant to the first sentence of this SECTION 3.1(b)
shall be reduced in the same proportion as the aggregate principal
amount of the Series B Notes outstanding immediately prior to said
prepayment pursuant to SECTION 3.8 shall have been reduced by said
prepayment. The Company will, in the event of any reduction pursuant to
the immediately preceding sentence, promptly after the prepayment of
Series B Notes giving rise to such reduction, furnish each holder of
Notes with notice thereof setting forth the Company's calculation of
the respective required prepayments and payment at final maturity of
Series B Notes due thereafter pursuant to this SECTION 3.1(b) (giving
effect to such reduction)."
(c) Section 3.4 of the Agreements shall be amended to be and read
in its entirety as follows:
"3.4. ALLOCATION OF PARTIAL PREPAYMENTS. In the case of each
prepayment, whether required or optional, of less than the entire
unpaid principal amount of all outstanding Notes of any series (other
than any such prepayment pursuant to SECTION 3.8 in connection with the
acceptance by one or more holders of Notes of such series of a
Prepayment Offer referred to in SECTION 3.8), the principal amount of
the Notes of such series so to be prepaid shall be allocated among all
of the Notes of such
2
<PAGE>
series at the time outstanding in proportion, as nearly as practicable,
to the respective principal amounts thereof not theretofore prepaid.
The amount of each such optional prepayment so allocated to the Notes
of any series (other than pursuant to any such prepayment of Notes
pursuant to SECTION 3.8) shall be credited against the remaining
required prepayments and payment at final maturity of the Notes of such
series in the inverse order of such required prepayments and payment at
final maturity."
(d) Section 3.5 of the Agreements shall be amended to be and read
in its entirety as follows:
"3.5. Maturity; Surrender, etc. In the case of each prepayment
of Notes, the principal amount of each Note to be prepaid shall become
due and payable on the date fixed for such prepayment in this Agreement
(if such prepayment is to be made pursuant to SECTION 3.1) or in the
notice of such prepayment pursuant to SECTION 3.3 (if such prepayment
is to be made pursuant to SECTION 3.2) or in the Trust Agreement
referred to in SECTION 3.8 (if such prepayment is to be made pursuant
to SECTION 3.8), together with interest accrued on such principal
amount to such date and the Makewhole Amount, if any, payable in
connection with such prepayment. Any Note paid or prepaid in full shall
thereafter be surrendered to the Company upon its written request
therefor and cancelled and not reissued."
(e) Section 3 of the Agreements shall be further amended by adding
thereto, following Section 3.7 thereof, a new Section 3.8, which new Section
shall be and read in its entirety as follows:
"3.8. PREPAYMENT OF NOTES PURSUANT TO TRUST AGREEMENT. The
Company shall be required to prepay Notes of each holder thereof which
shall have given notice of such holder's acceptance of a Prepayment
Offer made by the Company pursuant to (and as the term `Prepayment
Offer' is defined in) Section 7.2(b) of that certain Trust Agreement,
dated as of March 3, 1999 (as from time to time supplemented and
amended and in effect, the "TRUST AGREEMENT"), between the Company and
U.S. Bank Trust National Association, a national banking association,
as trustee thereunder (together with its successors as such trustee,
the "TRUSTEE"), for the equal and ratable benefit and security of the
holders from time to time of the Notes and the holders from time to
time of the Company's 1994 Notes referred to (and as the term `1994
Notes' is defined) in the Trust Agreement, each such prepayment to be
made at the price and on the date determined in accordance with, and
otherwise as provided in, said Section 7.2(b) of the Trust Agreement.
For the avoidance of doubt, no prepayment of Notes of any series
pursuant to this SECTION 3.8 shall be deemed, for purposes of SECTION
3.2 or SECTION 3.3, an optional prepayment pursuant to SECTION 3.2."
2. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants
and covenants to and for the benefit of the Noteholders as follows:
3
<PAGE>
(a) The execution and delivery by the Company of this Amendment and the
performance by the Company of this Amendment and of the Agreements and the Notes
as amended hereby (i) have been duly authorized by all requisite corporate
action on the part of the Company (no action on the part of the shareholders of
the Company being required therefor), (ii) do not require the consent or
approval of (A) any Governmental Body, or (B) except as set forth below, any
other Person, and (iii) do not and will not, (A) violate (1) any provision of
any law, statute, rule or regulation or of the articles of incorporation or
by-laws of the Company, (2) any Order of any court, administrative body or
arbitrator or any rule, regulation or Order of any Governmental Body binding
upon the Company or any of its properties, or (3) any provision of any loan or
credit agreement, indenture, mortgage or other agreement or instrument to which
the Company is a party or by which it or any of its properties are or may be
bound, or (B) result in any breach of or constitute (alone or with notice or
lapse of time or both) a default under any such loan or credit agreement,
indenture, mortgage or other agreement or instrument.
(b) This Amendment, and the Agreements as amended hereby, constitute
the legal, valid and binding obligations and agreements of the Company,
enforceable against the Company in accordance with their respective terms,
except as such enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws or equitable principles relating to
or limiting creditors' rights generally.
(c) As of the date hereof, and after giving effect to the amendments to
the Agreements effected by this Amendment, no Default or Event of Default has
occurred and is continuing under and within the meaning of the Agreements.
3. EFFECTIVENESS. The amendments to the Agreements provided for in this
Amendment shall become effective upon the execution and delivery of counterparts
of this Amendment by the Company and the holders of 100% in aggregate principal
amount of Notes at the time outstanding (as provided in Section 12(a) of the
Agreements).
4. MISCELLANEOUS. Except as specifically amended hereby, all terms and
provisions of each of the Agreements shall remain in full force and effect.
Without limiting the provisions of Section 15.1 of the Agreements, the Company
will pay all expenses incurred by each Noteholder in connection with this
Amendment. This Amendment may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument. Capitalized terms used but not otherwise
defined in this Amendment shall have the meanings assigned to them by each of
the Agreements.
4
<PAGE>
If you are in agreement with the foregoing, please so indicate by
executing the form of acknowledgment set forth below, whereupon this Amendment
shall become a binding agreement effective as of the date hereof.
Very truly yours,
HUTCHINSON TECHNOLOGY
INCORPORATED
By /s/ John A. Ingleman
----------------------------
Its CFO
-------------------------
Agreed to and accepted as of
the date first above written.
TEACHERS INSURANCE AND ANNUITY
ASSOCIATION OF AMERICA
By /s/ Diane Hom
------------------------------------------
Its Director-Private Placements
---------------------------------------
CIG & CO.
By /s/ Edward Lewis
------------------------------------------
Its Partner
---------------------------------------
<PAGE>
Exhibit 4.7
Dated as of March 3, 1999
Teachers Insurance and Annuity
Association of America
730 Third Avenue
New York, New York 10017
CIG & Co.
c/o CIGNA Investments, Inc.
900 Cottage Grove Road
Hartford, Connecticut 06152
Ladies and Gentlemen:
Reference is made to those certain Note Purchase Agreements between
Hutchinson Technology Incorporated, a Minnesota corporation (the "Company"), and
each of Metropolitan Life Insurance Company and Metropolitan Insurance and
Annuity Company (each, a "Series A Purchaser" and collectively, the "Series A
Purchasers") and Teachers Insurance and Annuity Association of America (the
"Series B Purchaser"), each dated as of July 26, 1996 (each as heretofore
amended or otherwise modified, an "Agreement" and collectively, the
"Agreements"), providing for the issuance to the Series A Purchasers of the
senior notes of the Company in the aggregate original principal amount of
$25,000,000 (the "Series A Notes"), and the issuance to the Series B Purchaser
of a senior note of the Company in the original principal amount of $25,000,000
(the "Series B Note"). The addressees of this letter agreement (collectively,
the "Noteholders"), are the registered holders of 100% of the aggregate
outstanding principal amount of the Series A Notes and the Series B Note
(collectively, the "Notes") as reflected in the Note Register required to be
maintained by the Company pursuant to Section 10.1 of each of the Agreements,
and the Noteholders whose signatures are affixed below hold 100% of the
aggregate unpaid principal amount of the Notes outstanding as of the date
hereof.
The Company has informed the Noteholders that it desires to amend the
Agreements in certain respects as of the date hereof, and the Noteholders have
agreed to such amendments as more fully described below in this letter agreement
("this Amendment").
Now, therefore, the Company and the Noteholders (by their acceptance
hereof) hereby agree as follows:
<PAGE>
1. AMENDMENTS.
The Agreements will be amended as hereafter in this paragraph 1 set
forth, such amendments to become effective as provided in paragraph 3 hereof:
(a) Section 3.1(a) of the Agreements shall be amended by adding
at the end thereof the following:
"If and whenever any Series A Note (but less than all of the
Series A Notes) shall be prepaid pursuant to SECTION 3.8, the aggregate
principal amount of the Series A Notes required to be prepaid on any
date thereafter pursuant to the first sentence of this SECTION 3.1(a)
shall be reduced in the same proportion as the aggregate principal
amount of the Series A Notes outstanding immediately prior to said
prepayment pursuant to SECTION 3.8 shall have been reduced by said
prepayment. The Company will, in the event of any reduction pursuant to
the immediately preceding sentence, promptly after the prepayment of
Series A Notes giving rise to such reduction, furnish each holder of
Notes with notice thereof setting forth the Company's calculation of
the respective required prepayments and payment at final maturity of
Series A Notes due thereafter pursuant to this SECTION 3.1(a) (giving
effect to such reduction)."
(b) Section 3.1(b) of the Agreements shall be amended by adding
at the end thereof the following:
"If and whenever any Series B Note (but less than all of the
Series B Notes) shall be prepaid pursuant to SECTION 3.8, the aggregate
principal amount of the Series B Notes required to be prepaid on any
date thereafter pursuant to the first sentence of this SECTION 3.1(b)
shall be reduced in the same proportion as the aggregate principal
amount of the Series B Notes outstanding immediately prior to said
prepayment pursuant to SECTION 3.8 shall have been reduced by said
prepayment. The Company will, in the event of any reduction pursuant to
the immediately preceding sentence, promptly after the prepayment of
Series B Notes giving rise to such reduction, furnish each holder of
Notes with notice thereof setting forth the Company's calculation of
the respective required prepayments and payment at final maturity of
Series B Notes due thereafter pursuant to this SECTION 3.1(b) (giving
effect to such reduction)."
(c) Section 3.4 of the Agreements shall be amended to be and read
in its entirety as follows:
"3.4. ALLOCATION OF PARTIAL PREPAYMENTS. In the case of each
prepayment, whether required or optional, of less than the entire
unpaid principal amount of all outstanding Notes of any series (other
than any such prepayment pursuant to SECTION 3.8 in connection with the
acceptance by one or more holders of Notes of such series of a
Prepayment Offer referred to in SECTION 3.8), the principal amount of
the Notes of such series so to be prepaid shall be allocated among all
of the Notes of such
2
<PAGE>
series at the time outstanding in proportion, as nearly as practicable,
to the respective principal amounts thereof not theretofore prepaid.
The amount of each such optional prepayment so allocated to the Notes
of any series (other than pursuant to any such prepayment of Notes
pursuant to SECTION 3.8) shall be credited against the remaining
required prepayments and payment at final maturity of the Notes of such
series in the inverse order of such required prepayments and payment at
final maturity."
(d) Section 3.5 of the Agreements shall be amended to be and read
in its entirety as follows:
"3.5. MATURITY; SURRENDER, ETC. In the case of each prepayment
of Notes, the principal amount of each Note to be prepaid shall become
due and payable on the date fixed for such prepayment in this Agreement
(if such prepayment is to be made pursuant to SECTION 3.1) or in the
notice of such prepayment pursuant to SECTION 3.3 (if such prepayment
is to be made pursuant to SECTION 3.2) or in the Trust Agreement
referred to in SECTION 3.8 (if such prepayment is to be made pursuant
to SECTION 3.8), together with interest accrued on such principal
amount to such date and the Makewhole Amount, if any, payable in
connection with such prepayment. Any Note paid or prepaid in full shall
thereafter be surrendered to the Company upon its written request
therefor and cancelled and not reissued."
(e) Section 3 of the Agreements shall be further amended by adding
thereto, following Section 3.7 thereof, a new Section 3.8, which new Section
shall be and read in its entirety as follows:
"3.8. PREPAYMENT OF NOTES PURSUANT TO TRUST AGREEMENT. The
Company shall be required to prepay Notes of each holder thereof which
shall have given notice of such holder's acceptance of a Prepayment
Offer made by the Company pursuant to (and as the term `Prepayment
Offer' is defined in) Section 7.2(b) of that certain Trust Agreement,
dated as of March 3, 1999 (as from time to time supplemented and
amended and in effect, the "TRUST AGREEMENT"), between the Company and
U.S. Bank Trust National Association, a national banking association,
as trustee thereunder (together with its successors as such trustee,
the "TRUSTEE"), for the equal and ratable benefit and security of the
holders from time to time of the Notes and the holders from time to
time of the Company's 1994 Notes referred to (and as the term `1994
Notes' is defined) in the Trust Agreement, each such prepayment to be
made at the price and on the date determined in accordance with, and
otherwise as provided in, said Section 7.2(b) of the Trust Agreement.
For the avoidance of doubt, no prepayment of Notes of any series
pursuant to this SECTION 3.8 shall be deemed, for purposes of SECTION
3.2 or SECTION 3.3, an optional prepayment pursuant to SECTION 3.2."
2. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants
and covenants to and for the benefit of the Noteholders as follows:
3
<PAGE>
(a) The execution and delivery by the Company of this Amendment and the
performance by the Company of this Amendment and of the Agreements and the Notes
as amended hereby (i) have been duly authorized by all requisite corporate
action on the part of the Company (no action on the part of the shareholders of
the Company being required therefor), (ii) do not require the consent or
approval of (A) any Governmental Body, or (B) except as set forth below, any
other Person, and (iii) do not and will not, (A) violate (1) any provision of
any law, statute, rule or regulation or of the articles of incorporation or
by-laws of the Company, (2) any Order of any court, administrative body or
arbitrator or any rule, regulation or Order of any Governmental Body binding
upon the Company or any of its properties, or (3) any provision of any loan or
credit agreement, indenture, mortgage or other agreement or instrument to which
the Company is a party or by which it or any of its properties are or may be
bound, or (B) result in any breach of or constitute (alone or with notice or
lapse of time or both) a default under any such loan or credit agreement,
indenture, mortgage or other agreement or instrument.
(b) This Amendment, and the Agreements as amended hereby, constitute
the legal, valid and binding obligations and agreements of the Company,
enforceable against the Company in accordance with their respective terms,
except as such enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws or equitable principles relating to
or limiting creditors' rights generally.
(c) As of the date hereof, and after giving effect to the amendments to
the Agreements effected by this Amendment, no Default or Event of Default has
occurred and is continuing under and within the meaning of the Agreements.
3. EFFECTIVENESS. The amendments to the Agreements provided for in this
Amendment shall become effective upon the execution and delivery of counterparts
of this Amendment by the Company and the holders of 100% in aggregate principal
amount of Notes at the time outstanding (as provided in Section 12(a) of the
Agreements).
4. MISCELLANEOUS. Except as specifically amended hereby, all terms and
provisions of each of the Agreements shall remain in full force and effect.
Without limiting the provisions of Section 15.1 of the Agreements, the Company
will pay all expenses incurred by each Noteholder in connection with this
Amendment. This Amendment may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument. Capitalized terms used but not otherwise
defined in this Amendment shall have the meanings assigned to them by each of
the Agreements.
4
<PAGE>
If you are in agreement with the foregoing, please so indicate by
executing the form of acknowledgment set forth below, whereupon this Amendment
shall become a binding agreement effective as of the date hereof.
Very truly yours,
HUTCHINSON TECHNOLOGY
INCORPORATED
By /s/ John A. Ingleman
-----------------------------
Its CFO
--------------------------
Agreed to and accepted as of
the date first above written.
TEACHERS INSURANCE AND ANNUITY
ASSOCIATION OF AMERICA
By /s/ Diane Hom
-----------------------------------------
Its Director-Private Placements
--------------------------------------
CIG & CO.
By /s/ Edward Lewis
-----------------------------------------
Its Partner
--------------------------------------
<PAGE>
<TABLE>
<CAPTION>
HUTCHINSON TECHNOLOGY INCORPORATED
STATEMENT REGARDING COMPUTATION
OF PER SHARE EARNINGS - UNAUDITED
(In thousands, except per share data)
Thirteen Weeks Ended Twenty-Six Weeks Ended
----------------------------- -----------------------------
March 28, March 29, March 28, March 29,
1999 1998 1999 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
NET INCOME (LOSS) $13,748 ($14,425) $25,281 ($25,899)
Plus: interest expense on convertible
subordinated notes 2,411 - 4,822 -
Less: additional profit sharing expense and tax
benefit reduction 697 - 1,394 -
---------- ---------- ---------- ----------
NET INCOME (LOSS) AVAILABLE TO COMMON
SHAREHOLDERS: $15,462 ($14,425) $28,709 ($25,899)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Weighted average common
shares outstanding 22,681 19,673 21,232 19,651
Dilutive effect of convertible
subordinated notes 5,291 - 5,291 -
Dilutive effect of stock options
outstanding after application of
treasury stock method 840 - 699 -
---------- ---------- ---------- ----------
28,812 19,673 27,222 19,651
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
BASIC
NET INCOME (LOSS) PER SHARE $ 0.61 ($ 0.73) $ 1.19 ($ 1.32)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
DILUTED
NET INCOME (LOSS) PER SHARE $ 0.54 ($ 0.73) $ 1.05 ($ 1.32)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENT OF OPERATIONS OF
HUTCHINSON TECHNOLOGY INCORPORATED FOR THE TWENTY-SIX WEEKS ENDED MARCH 28,
1999, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-26-1999
<PERIOD-START> SEP-28-1998
<PERIOD-END> MAR-28-1999
<CASH> 243,956,000
<SECURITIES> 45,125,000
<RECEIVABLES> 61,312,000
<ALLOWANCES> 8,669,000
<INVENTORY> 47,282,000
<CURRENT-ASSETS> 418,815,000
<PP&E> 574,614,000
<DEPRECIATION> 230,533,000
<TOTAL-ASSETS> 783,558,000
<CURRENT-LIABILITIES> 94,199,000
<BONDS> 215,705,000
0
0
<COMMON> 246,000
<OTHER-SE> 472,227,000
<TOTAL-LIABILITY-AND-EQUITY> 783,558,000
<SALES> 307,641,000
<TOTAL-REVENUES> 307,641,000
<CGS> 237,666,000
<TOTAL-COSTS> 237,666,000
<OTHER-EXPENSES> 11,046,000<F1>
<LOSS-PROVISION> 2,579,000
<INTEREST-EXPENSE> 5,137,000
<INCOME-PRETAX> 32,002,000
<INCOME-TAX> 6,721,000
<INCOME-CONTINUING> 25,281,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 25,281,000
<EPS-PRIMARY> 1.19
<EPS-DILUTED> 1.05
<FN>
<F1>OTHER EXPENSES REFLECT RESEARCH AND DEVELOPMENT EXPENSES.
</FN>
</TABLE>
