Manville Pays $1.3 Billion Charge : Company Anticipated Penalty After Reorganization

Manville Corp., the former asbestos maker that emerged from bankruptcy in 1988, announced today an after-tax charge of $1.3 billion against fourth-quarter earnings to reflect the cost of its reorganization.

“We have been anticipating a charge upon emerging from Chapter 11,” the company said. “It was the price we knew we had to pay to put our asbestos financial obligations behind us.”

Denver-based Manville filed for bankruptcy in 1982 as it faced massive lawsuits by asbestos victims. Although its reorganization plan providing for a $2.5-billion trust to pay for health injury claims was approved in 1986, the company had been held in bankruptcy because of appeals. It emerged from bankruptcy last Nov. 28.

The 131-year old company, formerly known as John Manville, was once the nation’s largest maker of asbestos, a fireproof insulator whose fibers if inhaled can lead to lung cancer and other serious diseases.

Under its reorganization, the company began last year paying creditors who were owed money when it filed for court protection under Chapter 11 of the bankruptcy code.

It also transferred funds to two trusts, one to settle health injury claims and the second to pay property damage claims. Both trusts operate independently from Manville and have their own executive directors and report to trustees.

Manville also reported today that it had a net operating loss of $27.9 million in the fourth quarter on sales of $522.1 million, against a net operating profit of $29.3 million on sales of $486 million in the comparable 1987 quarter.

For the year, the company reported net operating profit of $89.1 million on sales of $2.06 billion, compared to a profit of $157.1 million on sales of $1.94 billion.

Manville, which no longer makes asbestos, has three main areas of activity: fiber glass, forest and specialty products. Among products manufactured by its forest product group are cartons for such brands as Coca-Cola, Tide and Excedrin.

The operating results exclude charges of $1.29 billion in both 1988 periods for the restructuring, compared to charges of $91.5 million in both 1987 periods. The 1988 year’s operating profit also excludes charges of $106.9 million for a change in income tax accounting.