Rockwell Gives Extra Report on Cleanup Costs : Investing: O.C.-based company says the action was taken in part because of an SEC inquiry and the fact that such information will soon be required.
Rockwell International Corp. told its shareholders over the weekend that it could spend as much as $130 million for environmental cleanups and fines.
In a voluntary report issued along with its annual report, Rockwell gives more detail on the cost of its environmental problems than it was required to disclose in previous years.
The move was made in part because of an inquiry regarding Rockwell’s reports by the Securities and Exchange Commission last January and because the SEC will soon require such information, the company said.
“It’s a remarkable improvement in the reporting process,” said George Podrasky, analyst at Duff & Phelps, a research firm in Chicago. He said the disclosure is interesting, particularly because the liabilities would not be considered financially significant to a $10.8-billion company.
Rockwell could face $45 million in costs because of its designation as a “potentially liable party” at 34 sites designated by the federal Environmental Protection Agency as Superfund cleanup sites. The nearest site in Southern California is in Riverside; none of the sites are in Orange County.
Rockwell said it may have to pay an additional $85 million in environmental cleanup costs because of numerous lawsuits, claims and other environmental proceedings. Lawrence Komatz, Rockwell’s vice president and controller, said the expenditures would be mostly for cleanup costs associated with businesses that were sold in the 1980s. Of the $130 million, Rockwell said that $72.4 million has been accrued.
The company’s largest environmental fine by far was levied last year when Rockwell pleaded guilty to 10 violations of environmental laws. It paid an $18.5-million fine to settle government lawsuits alleging mismanagement of nuclear waste at the Department of Energy nuclear weapons plant in Rocky Flats, Colo. Rockwell said at the time that the violations represented no threat to public health or safety.
The annual report and the Rockwell Environmental Report, mailed out last weekend, anticipate government reporting requirements that take effect for annual reports issued after Wednesday.
Under a staff rule adopted in June, the SEC requires companies to make environmental liability disclosures more plainly or face fines or other penalties, said Rick Roberts, an SEC commissioner.
In the past, companies were allowed to report the net effect of a potential environmental liability and any likely recovery from insurers. But Roberts said the SEC has been concerned that a company could, say, report a potential loss of $1 million and say it expected to receive a $1-million insurance settlement and therefore decide there was nothing to report to investors.
Now the SEC requires reporting of all potential liabilities, anticipated insurance settlements and the net effect for the company.
Rockwell’s Komatz said the company voluntarily created the environmental supplement and disclosed information after it began having discussions with the SEC in January.
“We were not mandated to do this,” Komatz said. “We thought that as good citizens concerned about good corporate disclosure, we would expand our disclosure.”
Rockwell’s 1992 report, for instance, says only that “the company is involved in a number of remedial actions to clean up hazardous wastes as required by federal and state laws.” No liability amount was reported.
But the 1993 report is not all grim news. Rockwell touts its commitment to environmental matters and notes that more than half the vehicles used at its 192-acre defense subsidiary in Anaheim are electric- or propane-powered. The company also said that its headquarters building in Seal Beach uses motion-detection sensors to turn off office lights whenever a room is empty.
The report said too that the Anaheim plant reduced its annual sewage and legal discharges of chemicals into the air by 28%, to 80,000 pounds. Overall, Rockwell reported cutting the amount of chemical wastes it released from 4.79 million pounds in 1988 to 1.98 million pounds in 1992. Such data is regularly reported to the government but has not previously been included in the company’s annual reports.
Rockwell stock closed at $36.50 a share, up 12.5 cents Monday in trading on the New York Stock Exchange.
