Ingersoll Rand Records Charge for Pending and Potential Asbestos-related Claims

Jan. 18, 2008
Hamilton, Bermuda-based Ingersoll-Rand Co. Limited last week announced that it has taken a non-cash charge to earnings of discontinued operations of $449 million ($277 million after tax) relating to the company’s liability for all pending and estimated future asbestos claims through 2053. This charge results from an increase in the company’s recorded liability for asbestos claims by $538 million, from $217 million to $755 million, offset by a corresponding $89-million increase in its assets for probable asbestos-related insurance recoveries, which now total $250 million.

Hamilton, Bermuda-based Ingersoll-Rand Co. Limited last week announced that it has taken a non-cash charge to earnings of discontinued operations of $449 million ($277 million after tax) relating to the company’s liability for all pending and estimated future asbestos claims through 2053. This charge results from an increase in the company’s recorded liability for asbestos claims by $538 million, from $217 million to $755 million, offset by a corresponding $89-million increase in its assets for probable asbestos-related insurance recoveries, which now total $250 million.

Prior to the fourth quarter of 2007, Ingersoll Rand recorded a liability (which it periodically updated) for its actual and anticipated future asbestos settlement costs projected seven years into the future. The company did not record a liability for future asbestos settlement costs beyond the seven-year period covered by its reserve because such costs previously were not reasonably estimable.

In the fourth quarter of 2007, the company again reviewed its history and experience with asbestos-related litigation and determined that it had now become possible to make a reasonable estimate of its total liability for pending and unasserted potential future asbestos-related claims. With the aid of an outside expert, the company has estimated its total liability for pending and unasserted future asbestos-related claims through 2053 at $755 million.

Further details can be found on the Form 8-K, which the company filed last week with the Securities and Exchange Commission.