Armstrong's Reorganization Boosts Asbestos Exp

Lancaster, PA Nov. 12-- Armstrong World Industries will record a charge of more than $2.4 billion to increase liabilities subject to compromise if its proposed reorganization plan is approved and becomes effective. In a Form 10-Q quarterly report with the Securities and Exchange Commission, Armstrong Holdings said its total exposure to asbestos related personal injury claims is likely to be "significantly higher" than the recorded liability and to be material to the financial statements. The company's asbestos related personal injury liability balance as of September 30 was $690.6 million, which was recorded in liabilities subject to compromise. The company said in its SEC filing that if its proposed reorganization plan is approved, it will record a pretax charge exceeding $2.4 billion, net of insurance coverage, to increase the subject to compromise liability. The filing stated that the company didn't adjust its asbestos related personal injury liability during the third quarter because the timing and terms of the resolution of its Chapter 11 case remain uncertain. Early this month, Armstrong filed a reorganization plan with the U.S. Bankruptcy Court in Wilmington, Delaware. The plan calls for the dissolution of parent Armstrong Holdings and the creation of a trust for the benefit of present and future asbestos personal injury claimants. The plan is subject to creditor and court approval. Armstrong World also said in the SEC filing that since an audit by the U.S. Department of Labor, it has been informed that the DOL is considering challenging the validity of the use of certain contributions to fund debt payments made by the Armstrong Employee Stock Ownership Plan. The company said it is cooperating with the DOL to address its questions and concerns about those transactions and believes it fully complied with all applicable laws and regulations governing the plan. The company hasn't recorded any liability related to this matter.