Western Digital 2002 Annual Report Download - page 49

WESTERN DIGITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Cirrus for past deliveries of chips and terminated all outstanding purchase orders from Cirrus for such chips. The
Company's complaint alleges that Cirrus' unlawful conduct caused damages in excess of any amounts that may be owing
on outstanding invoices or arising out of any alleged breach of the outstanding purchase orders. On August 20, 2001,
Cirrus Ñled an answer and cross-complaint. Cirrus denied the allegations contained in the Company's complaint and
asserted counterclaims against the Company for, among other things, the amount of the outstanding invoices and the
Company's alleged breach of the outstanding purchase orders. The disputed payable, which is included in the Company's
balance sheet in accounts payable, is approximately $27 million. Cirrus claims that the canceled purchase orders, which
are not reÖected in the Company's Ñnancial statements, total approximately $26 million. On October 9, 2001, the Court
granted Cirrus' Motion for Judgment on the Pleadings, with leave to amend, and on November 8, 2001, the Company
Ñled its First Amended Complaint. Cirrus demurred to the First Amended Complaint, and on December 18, 2001, the
Court denied Cirrus' demurrer. On November 2, 2001, Cirrus Ñled Applications for Right to Attach Orders and for
Writs of Attachment against the Company and its Malaysian subsidiary in the amount of $25.2 million as security for
the approximately $27 million allegedly owed for read-channel chips purchased from Cirrus that is disputed by the
Company. On December 20, 2001, the Court granted Cirrus' Applications but required Cirrus to post undertakings in
the amount of approximately $0.5 million on each Writ before issuance. Pursuant to agreement with Cirrus, the
Company posted a letter of credit in the amount of $25.2 million in satisfaction of the Writs. Discovery in the case is
currently underway, and the Company expects that it will continue for the next several months.
Note 6. Shareholders' Equity
Equity Facility
Under shelf registrations (the ""equity facility'') previously in eÅect with the Securities and Exchange Commission,
the Company issued shares of common stock to institutional investors for cash. Shares sold under the equity facility were
at the market price of the Company's common stock less a discount ranging from 2.75% to 4.25%. During 2002, the
Company withdrew these shelf registrations. During 2001, the Company issued 23.5 million shares of common stock
under the equity facility for net cash proceeds of approximately $110.5 million. During 2000, the Company issued
24.6 million shares of common stock under the equity facility for net cash proceeds of approximately $111.8 million.
Stock Reserved for Issuance
The following table summarizes all shares of common stock reserved for issuance at June 28, 2002 (in thousands):
Number
of Shares
Issuable in connection with:
Convertible debentures ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2,890
Exercise of stock options, including options available for grant ÏÏÏÏÏÏÏÏ 42,340
Employee stock purchase plan ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,592
46,822
Employee Stock Purchase Plan
The Company has an employee stock purchase plan (""ESPP'') that operates in accordance with Section 423 of the
Internal Revenue Code whereby eligible employees may authorize payroll deductions of up to 10% of their salary to
purchase shares of the Company's common stock at 85% of the fair market value of common stock on the date of grant
or the exercise date, whichever is less. Approximately 1.6 million shares of common stock remain reserved for issuance
under this plan. Approximately 1,343,000, 1,199,000 and 1,236,000 shares were issued under this plan during 2002,
2001 and 2000, respectively.
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