Dow Corning Expecting $1.24-Billion Implant Tab : Lawsuits: It is the company’s first disclosure of potential liability in the case.
Dow Corning Corp. said Friday that legal and other problems related to silicone breast implants will cost $1.24 billion--the first time the former implant manufacturer has disclosed its potential liability in the matter.
Dow Corning also said it would take a pretax fourth-quarter charge of $640 million--or $415 million after taxes--to cover its potential liability from breast implant settlement talks. The company said it expects about half of the $1.24 billion amount will be covered by its insurance carriers.
A 50-50 joint venture of Dow Chemical Co. and Corning Inc., Dow Corning was the world’s largest maker of silicone breast implants until it stopped manufacturing them in 1992. The Midland, Mich., company also supplied silicone gel to many other implant makers for decades. It has been named as a defendant in more than 6,800 lawsuits relating to silicone breast implants, whose use has been restricted by the Food and Drug Administration.
In September, lawyers representing defendants and plaintiffs in implant lawsuits proposed a $4.75-billion fund to compensate women who claim they were physically or emotionally harmed by implants.
But the parties have missed several court-imposed deadlines for reaching a final agreement because of disputes among defendants over their individual contributions to the settlement fund. Other defendants at the center of the discussions are manufacturers Bristol-Myers Squibb and Baxter International Inc.
Gary Anderson, a Dow Corning executive vice president, said lawyers for both sides have made “good progress” in resolving the differences.
“We’re feeling better about it, and I’m hoping we’re looking at weeks instead of months” until a final agreement is struck.
Anderson said the settlement cost may actually be higher than $1.24 billion because that estimate is based on present values. The proposed settlement would require companies to pay into the fund over a 30-year period.
Wall Street welcomed the Dow Corning disclosure as better defining the liability for the Michigan firm and its parent companies. Investors have generally applauded the breast implant manufacturer’s decision to pursue a large class-action settlement as an alternative to battling thousands of individual lawsuits in state and federal court.
Dow Chemical shares rose 50 cents to $58.875 on the New York Stock Exchange on Friday, while Corning shares were up 37.5 cents to $31.125. Dow Corning shares are not publicly traded.
Separately, Corning said it would take an after-tax charge of $203 million to cover its part of the settlement costs. Dow Chemical estimated that the Dow Corning charges would negatively affect its fourth-quarter earnings by $192 million.
It is estimated that more than 1 million women have received silicone breast implants.
Under the September proposal, women with an implant who have been found to have one of eight diseases would collect from $200,000 to $2 million. The eight diseases are scleroderma, systemic lupus, mixed connective tissue disease, polymyositis and dermatomyositis, primary Sjogren’s disease, atypical neurological disease and atypical connective tissue disease/atypical rheumatic syndrome.
