Document YGrQk7y3gydpReMeDKED744z0
Asbestos Defendant Profile
Page CBE-3
and Sale Agreement dated August 17,1998
("1998 Agreement"). In conjunction with the
sale, Federal-Mogul indemnified Cooper for
certain liabilities of these subsidiary
companies, including liabilities related to
the Abex product line and any potential
liability that Cooper may have to Pneumo
pursuant to a 1994 Mutual Guaranty
Agreement between Cooper and Pneumo.
On October 1, 2001, Federal-Mogul and
several of its affiliates filed a Chapter 11
bankruptcy petition and indicated that
Federal-Mogul may not honor the
indemnification obligations to Cooper. As of
the date of this filing, Federal-Mogul had
not yet made a decision whether to reject
the 1998 Agreement, which includes the
indemnification to Cooper. If Federal-
Mogul rejects the 1998 Agreement, Cooper
will be relieved of its future obligations
under the 1998 Agreement, including
specific indemnities relating to payment of
taxes and certain obligations regarding
insurance for its former Automotive
Products businesses. To the extent Cooper is
obligated to Pneumo for any asbestos-
related claims arising from the Abex
product line ("Abex Claims"), Cooper has
rights, confirmed by Pneumo, to significant
insurance for such claims. Based on
information provided by representatives of
Federal-Mogul
and recent claims
experience, from August 28, 1998 through
March 31, 2002, a total of 79,329 Abex
Claims were filed, of which 17,239 claims
have been resolved leaving 62,090 Abex Claims pending at March 31, 2002, that are the responsibility of Federal-Mogul. During the three months ended March 31, 2002, 4,177 claims were filed and 265 claims were resolved. Since August 28,1998, the average indemnity payment for resolved Abex Claims was $965 before insurance. A total of $27.5 million was spent on defense costs for the period August 28, 1998 through March 31, 2002. Historically, existing insurance coverage has provided 50% to 80% of the total defense and indemnity payments for Abex Claims. Cooper completed a thorough analysis of its potential exposure for asbestos liabilities in the event Federal-Mogul rejects the 1998 Agreement. The analysis included a review of the Abex Claims history, existing insurance coverage, the contractual indemnities and other facts determined to date. At this time, the manner in which this issue ultimately will be resolved is hot known. Cooper is preserving its rights as a creditor for breach of Federal-Mogul's indemnification to Cooper and its rights against all Federal-Mogul subsidiaries. Cooper intends to take all actions to seek a resolution of the indemnification issues and future handling of the Abex-related claims within the Federal-Mogul bankruptcy proceedings. At March 31, 2002, Cooper had a 100 million accrual for potential liabilities related to the Federal-Mogul bankruptcy.
Asbestos Discussion from SEC filings: From the Company's Form 10-Q for the quarter ended September 30,2001 at http:// www.sec.gov/Archives/edgar/data/24454/000095012901504062/h92289el0-q.txt Filed On: November 14,2001
In October 1998, Cooper sold its Automotive Products businesses to Federal-Mogul Corporation ("Federal-Mogul"). These discontinued businesses (including the Abex
product line obtained from Pneumo-Abex Corporation ("Pneumo") in 1994) were operated through subsidiary
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