HUTCHINSON REPORTS 4TH QTR NET PROFIT OF OVER $6 MILLION.

Hutchinson Technology Incorporated (Nasdaq:HTCH), Hutchinson, Minn., has reported a net profit of $6,054,000, or $0.24 per diluted share, on net sales of $109,122,000 for its fiscal fourth quarter ended September 29, 2002. The company's fiscal 2002 fourth quarter results include a pre-tax charge of approximately $1.3 million, or $0.04 per diluted share, related to the prepayment during the quarter of approximately $26.6 million in Senior Notes.

In the comparable fiscal 2001 period, the company reported a net loss of $32,570,000 or $1.30 per diluted share, on net sales of $95,078,000. The net loss for the 2001 period included a pre-tax charge to earnings of $25,511,000, or $0.87 per diluted share, related to write-downs of certain assets and severance costs. Excluding this charge, the company would have reported a net loss of $10,885,000, or $0.43 per diluted share.

For the fiscal year ended September 29, 2002, the company reported a net profit of $15,002,000, or $0.59 per diluted share, on net sales of $390,694,000. The company's results for fiscal 2002 include a one-time increase to operating income of $2,632,000, or $.08 per diluted share, resulting from a legal settlement and insurance proceeds related to litigation defense costs. Excluding this one-time gain and the fourth quarter charge noted above, the company would have reported net income for fiscal 2002 of $13,958,000, or $0.55 per diluted share.

For fiscal 2001, the company reported a net loss of $56,277,000, or $2.25 per diluted share, on net sales of $401,236,000. The company's fiscal 2001 results included pre-tax charges totaling $27,875,000, or $0.95 per diluted share, related to write-downs of certain assets and severance costs. Excluding the charges, the company would have reported a fiscal 2001 net loss of $32,583,000, or $1.30 per diluted share.

Wayne M. Fortun, Hutchinson Technology's president and chief executive officer, said the company's fourth quarter performance benefited from an increase in suspension assembly shipments resulting primarily from market share gains. "Our shipment volumes increased steadily in each quarter this year despite an industry-wide decline in suspension assembly demand compared with the prior year," said Fortun. "The increase in volume improved our capacity utilization and, combined with our ongoing efforts to improve productivity and reduce costs, enabled a stronger finish for the year."

The company shipped 111 million suspensions in the fiscal 2002 fourth quarter, compared with 100 million in the 2002 fiscal third quarter. TSA suspensions accounted for 86 percent of the company's fiscal 2002 fourth quarter shipments. "We estimate that we gained market share steadily during fiscal 2002 and that our market share at year-end was approximately 60 percent," said Fortun. "Our market share growth primarily is a result of our ability to produce the suspension assemblies our customers require for their new products at levels of precision, quality, volume and cost that our competitors currently cannot match," said Fortun. The company's TSA suspension assemblies have been specified for use on ten of eleven new disk drive programs announced by the major disk drive makers during Hutchinson Technology's fiscal fourth quarter.

The company is also benefiting from further industry-wide acceptance of the TSA platform as the preferred technology for wireless head attachment. "We estimate that currently about 70 percent of all suspension assemblies shipped industry-wide are TSA suspensions," said Fortun. The company's sales of TSA components to competitors who manufacture TSA suspensions under licensing agreements with the company accounted for approximately 5 percent of fiscal 2002 fourth quarter revenues.

As noted earlier, during the quarter the company pre-paid approximately $26.6 million in Senior Notes. In addition, the company repurchased approximately $6.5 million of its 6% Convertible Subordinated Notes due 2005 during the fourth fiscal quarter and an additional $11.0 million in its fiscal first quarter to date. The prepayment of the Senior Notes and the repurchase of the Convertible Subordinated Notes will generate a reduction in interest expense of approximately $2.4 million in fiscal 2003.

At year-end, the company's debt totaled $144.1 million compared with $193.5 million at the end of fiscal 2001. The company's cash, cash equivalents and securities available for sale totaled $209.1 million at the end of fiscal 2002 compared with $244.8 million at the end of fiscal 2001.

Based on recent order trends, the company currently expects unit shipments of suspension assemblies in the fiscal 2003 first quarter will increase 20 to 25 percent compared with the fiscal 2002 fourth quarter. "We believe two factors are increasing demand in our fiscal first quarter," said Fortun. "Those factors are a recent increase in disk drive production and a temporary increase in TSA suspension consumption resulting from the lower yields some of our customers are experiencing as they transition to higher density recording heads. While future volumes are difficult to predict, we currently estimate demand for suspension assemblies will decline in the latter half of fiscal 2003 to levels comparable to those of the fiscal 2002 fourth quarter," said Fortun.

At the levels of demand currently anticipated, the company's net sales for the fiscal 2003 first quarter would range from $125 to $135 million. With expected gross margins for the fiscal 2003 first quarter at 24 to 29 percent, net income for the quarter should range from $14 to $18 million, or $0.50 to $0.65 per diluted share.

The company's BioMeasurement Division continues to focus on accumulating clinical data that demonstrate the utility and value of the tissue oxygenation measurement provided by its InSpectra(TM) Tissue Spectrometer system. The BioMeasurement Division is gathering this data through clinical studies, as well as through research being conducted by other early purchasers of the InSpectra system.

Hutchinson Technology is a leading worldwide supplier of suspension assemblies for disk drives. Hutchinson Technology's BioMeasurement Division provides health professionals with simple, accurate methods to measure the oxygen in tissue.

For more information, call 320/587-1823.