Toshiba Reaches Settlement of U.S. Lawsuit Regarding Floppy Disk Controllers in Notebook PCs

29 October, 1999

TOKYO, October 29, 1999--Toshiba Corporation has reached a settlement in a class-action lawsuit in the U.S. concerning the floppy-disk drive controller incorporated in its notebook PCs (hereafter abbreviated as PCs). The settlement received preliminary approval from the Federal Court in Texas, where the suit was filed, and will be formally in effect following final approval to be given by the court.

The suit was brought earlier this year by two U.S. owners of Toshiba's PCs. They alleged that a condition in the microcode for the floppy disk controller (FDC) in Toshiba PCs may, under certain circumstances, cause data to be lost or corrupted as it is written to a floppy disk. They requested compensation under various theories of liability, including breach of warranty.

Toshiba has been vigorously defending itself in the lawsuit by arguing that it is not aware that the operating restriction on its FDC has ever resulted in the alleged data loss or data corruption.

Toshiba decided to settle the case for the following reasons:

1) Based on the legal precedents in the U.S., there was a serious risk that a substantial amount of compensation could be awarded through a jury verdict in the class-action lawsuit.
2) Toshiba wants to continue to ensure its customers that the Toshiba brand name merits their trust.

Toshiba carefully considered the risks attendant on continuing the case, and reached a settlement. The company has done so without admitting liability or that its PCs have technical problems or defects.

The settlement detailed below applies only in the U.S.

1) From November 8, Toshiba will incorporate a new FDC in PCs manufactured for sale in the U.S.
2) Toshiba will provide eligible customers with a software patch or a hardware solution, depending on when PCs were purchased.
3) Toshiba will provide coupons bearing a value of $100 to owners whose PCs were out of warranty as of March 5, 1999. Owners whose PCs were under warranty as of that date will receive a coupon with a value of $225 or $200, determined on the basis of their choice of the software patch or hardware solution, respectively. The coupons can be used for the purchase of Toshiba computer products sold through Toshiba's U.S. subsidiary.
4) Cash refunds will also be available for more recent purchasers.

In regions and territories other than the U.S., Toshiba will also ship PCs incorporating the modifications after November and will also make the free software patch available for current users.

Toshiba Corporation will reflect a 110 billion yen (approximately US$1 billion) extraordinary loss in its financial results for fiscal year 1999 in connection with the settlement.

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