Asbestos Claims - GE to record 115$ charge
Feb 18 2007 General Electric Co. is expecting to take a $115 million charge, approximately 1 cent per share, in the first quarter, as a result of losing the long law fight for a decade with its insurers over payments for various claims related to asbestos.
Gary Sheffer, a GE spokesman said on Friday that they were disappointed in the decision. "This is a one-time, nonrecurring event with an after-tax effect of approximately $115 million and does not change our earnings guidance for the first quarter or for 2007," Sheffer said.
Asbestos, a fire-retardant material, was widely used in insulation and other products, especially until the 1970s. But it's such a malignant material as well that inhalation of asbestos fiber may lead to cancer and many other dangerous diseases.
GE don't manufacture asbestos however, they have used it for insulating their steam turbines. For this reason, they had to face numerous claims from people who suffered from asbestos exposure through the turbines. Majority of the claims were from employees worked there between 1966 and 1986.
On Thursday, the New York State Court of Appeals sustained a lower court's decision the claims could not be treated as single incident. The Court of Appeals is the highest court of the state.
"All of GE's outstanding asbestos-related claims were covered by the ruling," said Sheffer.
GE, the a multinational company based on Fairfield, Conn., has already paid around 500 million dollars so far to settle different cases related to asbestos.
A GE spokesman said 509,000 asbestos-related cases were filed against them through 2006 and 40,000 of them are still pending. According to GE, claims settled to date have mostly been covered by GE's primary and secondary carriers. The rest are being covered by GE.
Shares of GE slipped 27 cents and closed at $35.87 on Friday in the New York Stock Exchange.