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Componenta to appeal to Court of Appeal against District Court decision

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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 
President and CEO 
tel. +358 9 225 021 

Kimmo Virtanen
CFO
tel. +358 9 225 021





                                            

                

            

        

    

    



    

        
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