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Toshiba takes $US1bn charge to settle suit

Toshiba takes $US1bn charge to settle suit

Toshiba last week said it will set up a $US1 billion fund related to a settlement agreement in a class-action lawsuit filed against the company in a Federal Court in Texas.

The Japanese PC and electronics vendor said its financial statements for fiscal 1999, ending March 31, 2000, will reflect a $1 billion extraordinary loss in connection with the settlement.

In related news, Toshiba yesterday revised its expectations for full fiscal year 1999 results. Due to the unexpected $1 billion settlement loss in combination with an expected extraordinary gain of 50 billion yen ($US480 million) from securities sales, the company now expects to post a net loss of 65 billion yen for full fiscal year 1999. Earlier last week, Toshiba said it expected to lose 30 billion yen for fiscal 1999.

Filed earlier this year, the lawsuit alleged that a "condition" in the floppy disk controller circuitry in Toshiba notebook PCs under certain circumstances can cause data loss or corruption to information stored on a floppy disk, according to a statement issued by Toshiba. The lawsuit was filed against Toshiba and some of its US affiliates.

The Texas Federal Court has given the settlement agreement its preliminary approval, Toshiba said.

Although settling the lawsuit, Toshiba has not admitted any legal liability and has denied that the floppy disk controller constitutes a problem or defect in Toshiba notebooks, the statement added.

The statement did not say how many notebook PCs featuring the floppy disk controller cited in the lawsuit Toshiba has shipped, or how many owners are expected to be affected.

Effective from November 8, Toshiba will begin manufacturing notebooks for sale in the US that will be equipped with new floppy drive controllers, the company said. The condition cited in the lawsuit is not present on floppy disk controllers used in any Toshiba desktop PCs or servers, the statement added.

By November 10, owners of Toshiba notebooks will be able to download a software patch from the company's Web site. Depending on when they purchased their notebooks, some customers may also have the option to request a hardware solution, and cash refunds will be available for more recent purchasers, Toshiba said.

Any unclaimed amount from the settlement fund will be donated to a newly created charitable organisation, the statement said.http://www.toshiba.co.jp


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