Componenta to appeal to Court of Appeal against District Court decision

Componenta to appeal to Court of Appeal against District Court decision On 31 December 2003 the Helsinki District Court announced its decision according to which Componenta CPC Oy (now called Componenta Karkkila Oy) was sentenced to compensate VR Ltd (Finnish Railways) a total of EUR 870,000 in compensation for train wheels supplied and indirect costs, plus accumulated interest, as well as VR's legal costs. Componenta is appealing to the Court of Appeal against the decision. The decision of the district court relates to a contract to supply train wheels signed in 1990 and wheels supplied in 1991 and 1992. VR used the train wheels until 1997 when it made a claim for damages to Componenta for the wheels and took the wheels out of service. The main reason for the decision to take the wheels out of service was the damage to one train wheel that occurred in February 1997, which according to VR may have been due to a hidden manufacturing defect in the train wheel. The damaged wheel had been in use for more than 750,000 kilometres and had not been serviced for the past 400,000 km (2.3 years). Research by VTT (Technical Research Centre of Finland) has shown that the crack that resulted in the damage cannot have started from a hidden manufacturing defect; there must have been some other cause, possibly a crack left during turning carried out in the previous service. A total of more than 900 wheels were manufactured and the oldest of these have been in service for more than 10 years. VTT which was working for VR did not observe in its research that the properties of the damaged wheel differed from those of the other wheels. Based on these facts, VTT stated that there was very little chance of the other wheels supplied being damaged. Componenta supplied the train wheels in accordance with the drawings supplied by VR and with VR's technical requirements and VR approved all the train wheels in their thorough receiving inspection approval. Componenta is not responsible because the working life of the wheels did not meet VR's expectations. It is the understanding of Componenta and VTT that the cause of the damage in the train wheel was not a manufacturing defect but that a crack possibly left during the previous service carried out by VR was a decisive factor. Componenta is recording the decision of the district court in the notes to its 2003 financial statements and this will have no impact on the result for the previous or the current year. Helsinki, 7 January 2004 COMPONENTA CORPORATION Heikki Lehtonen FURTHER INFORMATION Heikki Lehtonen Kimmo Virtanen President and CEO CFO tel. +358 9 225 021 tel. +358 9 225 021 Componenta is a metal sector company with international operations and production plants located in Finland and Sweden. The company's net sales exceed EUR 180 million and the group employs about 1,600 people. Componenta's shares are quoted on the Main List of the Helsinki Exchanges. The group's customers operate in the heavy truck, power and transmission, machine building and off-road industries. Componenta specializes in supplying ready-to-install cast, geared and machined components directly to the customer's assembly line. Componenta Corporation Nuijamiestentie 3 C, FIN-00400 Helsinki , Finland Tel. +358 9 225 021, Fax +358 9 2250 2721 http://www.componenta.com ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2004/01/07/20040107BIT00260/wkr0001.doc http://www.waymaker.net/bitonline/2004/01/07/20040107BIT00260/wkr0002.pdf