Owens Corning posts $4.2 billion loss on asbestos reserve
Reuters - NEW YORK - Bankrupt building materials company Owens Corning on Wednesday reported a huge first-quarter loss after increasing its recorded reserves for asbestos-related liability, but said sales rose in the quarter. It posted a loss of $4.2 billion compared to net income of $5 million a year earlier after increasing its recorded reserves for asbestos-related liability by about $4.3 billion.
Owens Corning filed for Chapter 11 protection in October 2000, weighed down by hundreds of thousands of lawsuits involving its Kaylo brand insulation, which contained asbestos and was sold from the late 1950s to the early 1970s.
The Toledo, Ohio-based company said its income from continuing operations, excluding the asbestos charge and $36 million of reorganization items, would have been $97 million compared to $39 million a year earlier.
Sales in the quarter rose 16% to $1.4 billion, with the company reporting strong demand from all its major markets and higher prices.
"Through a combination of record sales and productivity, we offset significant increases in energy and raw material costs," said Chief Executive Dave Brown.
The increase in recorded reserves for asbestos liability followed a March 31 court ruling that the building materials company owes a potential $7 billion to thousands of people sickened or killed by asbestos used to insulate pipes in homes and offices. The estimate, determined by U.S. District Judge John Fullam last week, is a crucial step in the company's emergence from Chapter 11 bankruptcy.
Now that the judge has determined asbestos costs, creditors can try to settle on a final restructuring plan.
The judge's $7 billion estimate fell between claims as high as $11 billion from asbestos litigants and $2 billion from bank creditors, according to a 12-page decision dated March 31.
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