Western Digital

(WDC) - Get Report

will pay $45 million to

Cirrus Logic

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(CRUS) - Get Report

to settle a breach-of-contract suit. The payment will result in an $18.5 million charge to previously reported earnings.

Cirrus sued Western Digital in August 2001 after the company stopped paying it for "read-channel" chips, and cancelled its outstanding purchase orders. The suit sought compensatory damages of $53 million.

The charge reflects the settlement amount minus a $26.5 million reserve the company previously put up against the litigation. Western Digital already reported its fourth quarter and said the charge lowers the quarter's earnings to $31 million, or 15 cents a share, from the previously announced $48 million, or 23 cents a share.

Shares of Western Digital were down a penny, or 0.1%, at $9.24 in Monday morning trading.