Hutchinson Technology (HTCH)

GENERAL

SIZE="2">Foreign Sales

Sales to foreign-based enterprises for both divisions totaled $263,346,000, $356,141,000 and
$434,979,000 for 2008, 2007 and 2006, respectively. Sales to foreign subsidiaries of United States corporations totaled $360,843,000, $328,743,000 and $233,860,000 for 2008, 2007 and 2006, respectively. The majority of these sales were to the
Pacific Rim region. In addition, we have significant sales to United States corporations that use our products in their offshore manufacturing sites.

SIZE="2">Intellectual Properties

We regard much of the equipment,
processes, information and knowledge that we generate and use in the manufacture of our products as proprietary and protectable under applicable trade secret, copyright, trademark and unfair competition laws. In addition, if we develop manufacturing
equipment, products and processes for making disk drive products where patents might enhance our position, we have pursued, and we will continue to pursue, patents in the United States and in other countries covering our disk drive products. We have
United States and foreign patents issued and pending on the technology employed by the InSpectra StO₂
System. We also have obtained certain trademarks for our products to distinguish them from our competitors’ products.

As of
September 28, 2008, we held 190 United States patents and 44 foreign patents, and we had 71 patent applications pending in the United States and 19 patent applications pending in other countries covering both our Disk Drive Components Division
and our BioMeasurement Division. Internally, we protect intellectual property and trade secrets through physical security measures at our facilities, as well as through non-disclosure and non-competition agreements with all employees and
confidentiality policies and non-disclosure agreements with consultants, strategic suppliers and customers.

In the past, we have entered
into licensing and cross-licensing agreements under certain of our patents and patent applications allowing some of our suspension assembly competitors to produce products similar to ours in return for royalty payments and/or cross-license rights.
In November 2001, we entered into cross-license agreements with three suspension assembly suppliers, and in October 2003, we entered into an additional cross-licensing agreement with an additional suspension assembly supplier, enabling each of them
to offer customers in the disk drive industry TSA suspension assemblies based on our proprietary technology. The agreements also include cross-licenses to certain existing and future suspension assembly technology.