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The following table reflects the consolidated income statement classification of the additional stock-based
compensation and tax-related expenses related to the adjustment for fiscal years 1998 to 2006:
Cost of revenues .................................... $ 2.0
Research and development expense ....................... 12.2
Selling, general and administrative expense ................. 6.1
Provision for income taxes ............................. 0.6
Total .......................................... $20.9
The adjustments reduce previously reported diluted earnings per share (“diluted EPS”) by $0.01 each for both of the
years ended July 1, 2005 and July 2, 2004. Because the Company concluded that the foregoing adjustments were not
material to its historical financial statements, it has not amended, and does not intend to amend, any of its other
previously filed annual reports on Form 10-K or quarterly reports on Form 10-Q for the periods affected by the
adjustments.
The following tables set forth the effects of the adjustments on certain line items within the Company’s consolidated
statements of income and cash flows for the years ended July 1, 2005 and July 2, 2004 and consolidated balance sheet as of
July 1, 2005 (in millions, except per share amounts):
CONSOLIDATED BALANCE SHEETS
Previously
Reported Adjustment As Adjusted
July 1, 2005
Accrued expenses .......................................... $154.1 $ 1.8 $155.9
Total current liabilities ...................................... 818.5 1.8 820.3
Total liabilities............................................ 886.5 1.8 888.3
Additional paid-in capital .................................... 696.5 17.8 714.3
Retained earnings.......................................... 15.5 (19.6) (4.1)
Total shareholders’ equity .................................... 702.1 (1.8) 700.3
Previously
Reported Adjustment As Adjusted
July 2, 2004
Additional paid-in capital .................................... 697.4 16.8 714.2
Accumulated deficit ........................................ (182.9) (17.2) (200.1)
Previously
Reported Adjustment As Adjusted
June 27, 2003
Additional paid-in capital .................................... 675.4 15.4 690.8
Accumulated deficit ........................................ (334.2) (15.7) (349.9)
57
WESTERN DIGITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)