CEO Sullivan: RPM Will Deal Effectively with Asbestos Issue
Sullivan had disclosed that the company's insurance assets involving asbestos claims will likely run out in fiscal 2004, after which RPM would be responsible for 100% of the related costs. The company subsequently issued a statement by Sullivan saying the company has "been successfully managing this issue for close to 20 years." He said that based on "the strength of our operating results, balance sheet and solid cash flow, coupled with the numerous legal, defense and reserve strategies available to the company, we expect to continue to successfully manage this issue going forward."
Sullivan said, however, that unless legislative relief is approved, RPM and other companies are likely to be targeted for "some pretty big numbers" by asbestos-related litigation.
Sullivan pointed out that RPM reported solid earnings and sales growth in the company's most recent quarter, and said RPM's cash flow and balance sheet remain strong. "Our financial position is solid and our business fundamentals are sound," he said.
Glenn R. Hasman, RPM vice president, Finance and Communications, told PCI that the asbestos-litigation cases involving the company resulted from the use of asbestos in a drywall joint compound manufactured by RPM's Bondex business. The use of asbestos in the product was discontinued in 1977, he said.
About 50 companies facing asbestos claims have filed for Chapter 11 bankruptcy since the early 1980s. The litigation could cost U.S. companies more than $200 billion, several research firms have estimated.
The NPCA has called the asbestos-litigation situation an "emerging issue" for the paint and coatings industry. NPCA President J. Andrew Doyle has said the association is backing proposed federal legislation designed to protect companies that did not manufacture or sell asbestos. The threat of litigation stems from allegations of past use of asbestos-type materials in products.