Wellman reports additional charge for settlement of class action lawsuits
09 Sep '05
2 min read
New Jersey based textile polymer products, textile fiber, staple, polyester and resins for packaging maker company Wellman Inc announced that it will record a pretax charge of $8.0 million in the third quarter of 2005 arising from the settlement of the federal class action lawsuits of direct purchasers alleging that the Company engaged in price fixing and customer allocation relating to sales of polyester staple fiber.
Once the court approves the settlement of the class action lawsuits being announced, given the earlier settlements with more than 30 major polyester fiber purchasers, Wellman will have settled substantially all of the federal claims of the direct purchasers. The after-tax effect of the charge will be $5.2 million or $0.16 per share in the third quarter of 2005.
When combined with the $24 million pre-tax charge recorded in the second quarter of 2005, the total after-tax effect is $20.8 million or $0.66 per share which represents the Company's best estimate of its total costs including all agreed upon settlements as well as the future costs to defend or settle any remaining litigation including state claims by indirect purchasers.
The Company denies any wrongdoing and has strong defenses to any claims; however, it is settling the class action lawsuits to minimize future expenses, risk and disruption of business that occurs with any litigation.
Thomas M. Duff, Wellman's Chief Executive Officer, stated, "The settlement of theclass action lawsuits is prudent given the high costs of litigation and the elimination of risk. The settlement will permit employees to focus on improving company business. This charge as well as the effects will reduce results for the third quarter from Hurricane Katrina. Fortunately these two events do not affect the long term profitability of business."
Wellman Inc manufactures and markets high-quality polyester products, including Fortrel brand polyester fibers and PermaClear and EcoClear brand PET (polyethylene terephthalate) packaging resins.
marketing@alchempro.com
