Fisher-Price Inc. has agreed to pay a $975,000 civil penalty for failing to report to the government that one of its toys posed a choking hazard to young children, the U.S. Consumer Product Safety Commission said Thursday.

The agency said it provisionally accepted the agreement with the East Aurora, N.Y., company to settle allegations that the company failed to report that a nail fastener in the Little People Animal Sounds Farm could separate from the toy and "pose a serious choking or aspiration hazard to young children."

In agreeing to the settlement, Fisher-Price denied it knowingly violated the law.

About 67,000 of the toys were sold nationwide in June and July 2002. In September 2002, the company received its first report of a nail fastener coming loose from one of the toy barn's stall doors and over the next two months received nine additional reports, the agency said.

It said the company received two reports of parents concerned that this problem posed a choking hazard to children and a report of a Dec. 30, 2002, incident in which a 14-month-old child aspirated a nail fastener into his lung. The child was taken to the hospital and underwent an emergency surgical procedure to have the metal nail fastener removed, the agency said.

The agency said the company did not report the safety hazard to the government until March 2003 and by that time it was aware of at least 33 reports in which the nail fastener came loose from the stall doors. These included four reports of children who put the metal nail fastener in their mouths and the one case of the child who aspirated the nail fastener.

Federal law requires firms to report to CPSC within 24 hours after obtaining information that a product contains a defect that could create a substantial risk to the public or violates a federal safety standard.

Fisher-Price announced a recall of the toys in April 2003 and recommended that consumers take the toy away from young children immediately and contact the company to receive a free repair kit.

Consumers can still call Fisher-Price anytime at (866) 259-7873 or order the repair kit online at www.service.mattel.com.