Cirrus Logic has settled all outstanding litigation with Western Digital Corporation and its Malaysian subsidiary.
Under the terms of the settlement agreement, Western Digital has agreed to pay Cirrus Logic $45 million on or before October 17, 2003, which is in the company’s fiscal 2004 third quarter. The settlement will result in a one-time benefit to the company’s net income when the cash is received.
On July 5, 2001, Western Digital and its subsidiary filed a lawsuit against Cirrus Logic in the Superior Court of the State of California, Orange County, in connection with the purchase of read-channel chips from Cirrus Logic, claiming breach of contract and breach of the duties of good faith and faith dealing. On August 20, 2001, Cirrus Logic filed a cross-complaint alleging breach of contract, fraud and negligent misrepresentation.
On December 24, 2001, the trial court granted Cirrus Logic’s application for writs of attachment against Western Digital and its subsidiary for approximately $25 million. Western Digital delivered a letter of credit in the amount of approximately $25 million in substitution for the writ of attachment. This letter of credit will be released following payment of the $45 million to Cirrus Logic.
‘We are pleased that the two parties were able to reach this settlement. The cash settlement further enhances our debt-free balance sheet, will enable us to focus on growing our business and eliminate certain legal expenses we have been incurring to pursue this dispute,’ said David D. French, president and CEO of Cirrus Logic.