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Earnings review to force Toshiba to post FY2014 loss

TOKYO -- Toshiba looks likely to report a group net loss for the year ended March 2015 as a result of reviewing its earnings in areas such as microchips, consumer electronics and its U.S. nuclear power business, sources close to the company told The Nikkei Monday. 

    The expected loss is in contrast to the 120 billion yen ($964.74 million) Toshiba originally projected. The company in May retracted this forecast.  

    Switches in earnings projections from profit to loss have major impacts on investors, a factor the Financial Services Agency will likely take into account when it determines how much to penalize the company.

   Toshiba compiles its earnings based on U.S. accounting standards. The release of its group results for fiscal 2014 was greatly delayed by the massive accounting scandal at the company.

    After incurring combined losses of over 100 billion yen in semiconductors, household appliances and U.S. nuclear power operations, the net earnings will break into the red, the sources said.

     Toshiba is also preparing to correct its past results. For fiscal 2011, the company intends to change its posted net profit of 70 billion yen into a loss, after incorporating the estimated 31.4 billion yen impact from the book-keeping irregularities, and losses newly recognized in its semiconductor business.

    The company is finalizing its revised figures with its auditing firm, but the number may exceed 10 billion yen.   

     Net earnings changing from black to red could significantly impact investors. Japan's Securities and Exchange Surveillance Commission and the Financial Services Agency are expected to slap a penalty levy on Toshiba for its falsification of financial reports, a violation of the country's financial instrument and exchange act.

     The size of the fine will be determined by the impact of the corrections. Factors to be considered include the size of corrected amounts. Whether the company raised funds through issuing new shares or bonds will also be considered in deciding the penalty.

(Nikkei)

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