Western Digital 2003 Annual Report Download - page 52

WESTERN DIGITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
as to the Ñrst, second, fourth, Ñfth and seventh causes of action, and denied Cirrus' motion as to the third cause of action.
On January 30, 2003, Cirrus Ñled another motion for summary adjudication as to the third cause of action. The parties
completed brieÑng on the motion and the motion was scheduled to be heard on April 15, 2003.
On March 4, 2003, WDT Ñled a motion for leave to amend its second amended complaint, seeking to add causes of
action for intentional and fraudulent misrepresentation and negligent misrepresentation. The Court granted WDT's
motion on March 25, 2003. On March 18, 2003, WDT Ñled a motion to continue the trial date from May 19, 2003.
On April 8, 2003, the Court granted Western Digital's motion and moved the trial date to December 1, 2003. As a
result, of its ruling to continue the trial date, the Court continued the mandatory settlement conference originally
scheduled for April 25, 2003, and continued indeÑnitely the hearings on WDT's motion for summary judgment and
Cirrus' motion for summary judgment originally scheduled for April 1, 2003 and April 15, 2003, respectively. The
Court also moved the discovery cutoÅ date from April 18, 2003 to September 2003.
On April 22, 2003, Cirrus Ñled a demurrer to WDT's claims for promissory estoppel, intentional and fraudulent
misrepresentation and negligent misrepresentation. The Court scheduled a hearing on the demurrer for May 13, 2003.
On May 13, 2003, the Court referred the case to the panel on complex litigation for a determination as to whether the
case should be regarded as complex. The Court also continued indeÑnitely the hearing on Cirrus' demurrer to WDT's
claims for promissory estoppel, intentional and fraudulent misrepresentation and negligent misrepresentation, which had
been scheduled for that day. On June 13, 2003 the complex litigation panel accepted the case. The case was assigned to a
new judge who vacated all hearing dates that had previously been set.
In July 2003, the parties agreed to attempt to resolve their claims through mediation, and scheduled a mediation
for August 22, 2003. On August 22, 2003, the Company and Cirrus reached a settlement of this litigation. Under the
terms of the agreement, the Company will make a one-time payment to Cirrus on or before October 17, 2003 of
$45 million in exchange for a mutual release of claims. The letter of credit previously posted by the Company will also be
released. Western Digital had previously recorded an obligation totaling approximately $26.5 million related to the
disputed payables. The diÅerence of approximately $18.5 million between the settlement amount and the amount
previously recorded was included in the cost of sales for the fourth quarter and year ended June 27, 2003. The Company
expects that formal dismissals of claims will be entered with the Court in this matter in the near future.
In the normal course of business, the Company is subject to legal proceedings, lawsuits and other claims. Although
the ultimate aggregate amount of monetary liability or Ñnancial impact with respect to these matters is subject to many
uncertainties and is therefore not predictable with assurance, management believes that any monetary liability or Ñnancial
impact to the Company from these matters, individually and in the aggregate, beyond that provided at June 27, 2003,
would not be material to the Company's Ñnancial condition. However, there can be no assurance with respect to such
result and results could diÅer materially from those projected.
Note 6. Shareholders' Equity
Equity Facility
During 2001, the Company issued 23.5 million shares of common stock under an equity facility for net cash
proceeds of approximately $110.5 million. Under shelf registrations (the ""equity facility'') previously in eÅect with the
Securities and Exchange Commission (""SEC''), 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.
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