USG to take $904 million charge on asbestos, restructuring initiatives
USG will take year-end charges totaling $904 million, or $557 million net of tax benefits, for costs associated with the two initiatives. The charges will reduce fourth quarter and twelve months earnings per share by $12.83 and $12.11, respectively.
Of the $904 million, a non-cash charge of $850 million will cover the estimated cost (in excess of the company's current reserve) of settling asbestos claims currently pending against United States Gypsum Company as well as future asbestos claims to be filed against it through 2003.
The balance of $54 million reflects a restructuring charge for plant shut downs, severance costs and inventory write-offs. The restructuring is part of the corporation's strategic plan, which includes production capacity modernization, the integration of its gypsum and ceilings businesses and working capital improvements. Annual savings from restructuring initiatives are estimated at $40 million. "The asbestos estimate and the restructuring initiatives are two very important accomplishments for USG,” said William C. Foote, USG chairman, president and CEO. “We have worked for some time to develop a reasonable estimate of our future asbestos liability and view this as a positive step in providing more clarity around the asbestos issue facing us. We are a leader in our businesses and enter the new year with improved production capacity, an organization better aligned to serve our customers, and a balance sheet and credit lines that afford us significant liquidity."