FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Date of Report February 24, 1998
CURRENT REPORT PURSUANT TO SECTION 13 or 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 1-13418
FALCON BUILDING PRODUCTS, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 36-3931893
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
233 SOUTH WACKER DRIVE
CHICAGO, ILLINOIS 60606
(Address of Principal Executive Office)
(312) 906-9700
(Registrant's telephone number, including area code)
TWO NORTH RIVERSIDE PLAZA
CHICAGO, IL 60606
(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST
REPORT)
ITEM 5. OTHER EVENTS
As previously disclosed in the Company's reports on Form 10-K and Form 10-Q, in
May 1994, Underwriters Laboratories of Canada ("ULC") suspended recognition of
high temperature plastic venting ("HTPV") for gas appliance systems, including
Ultravent-Registered Trademark- product distributed by Hart & Cooley, Inc.
("Hart & Cooley"), a wholly-owned subsidiary of the Company. This action
resulted from reports of problems with HTPV including improper installation,
cracking, inadequate joint adhesion and related safety hazards, including
potential for carbon monoxide emission.
Hart & Cooley has been engaged in discussions with the United States Consumer
Product Safety Commission ("CPSC") regarding the use of HTPV in the United
States. Additionally, certain appliance manufacturers, the plastic resin
manufacturer and the HTPV manufacturer and distributor, including Hart &
Cooley, have participated in a non-binding facilitative mediation process, the
object of which was to develop and implement a voluntary HTPV corrective action
program. The CPSC agreed to delay initiating proceedings mandating a
corrective action program while these parties were involved in the mediation
process.
Hart & Cooley, along with others, is also a defendant in several lawsuits as a
result of its distribution of Ultravent-Registered Trademark-, including: 1) a
Canadian suit filed by the Ontario New Home Warranty Program against 24
entities; 2) a suit filed in Massachusetts by seven furnace manufacturers for
costs expected to be incurred as a result of a corrective action program; 3) a
suit filed in Pennsylvania by an appliance manufacturer for reimbursement of
costs incurred in an HTPV corrective action program; and 4) a class action
lawsuit regarding HTPV filed in Tennessee. Additionally, Hart & Cooley is
plaintiff in a suit filed in Michigan against certain appliance manufacturers.
As a result of the facilitative mediation process, Hart & Cooley entered into a
Corrective Action Program and Settlement Agreement in January 1998, along with
21 appliance manufacturers, an HTPV manufacturer and a resin manufacturer to
correct certain HTPV mid-efficiency gas fired appliances with a new venting
system. The Corrective Action Program was approved by the CPSC in February
1998. The Settlement Agreement provides for the dismissal of the above
referenced litigation in Massachusetts and Pennsylvania.
The Company will reflect an after-tax charge of $20 million in its financial
statements for the year ended December 31, 1997, consistent with amounts
previously disclosed in its financial statements, which represents an estimate
of its share of the cost of the Corrective Action Program in the United States,
resolution of the Canadian litigation, the class action litigation, legal fees
and other related costs. The Company estimates that the costs associated with
the Corrective Action Program and other related HTPV matters will be expended
during the next three years.
While the Company's insurance carriers have denied coverage on a number of
grounds, the Company continues to pursue action including a suit filed in
Illinois against certain of its insurance carriers for reimbursement of costs
and legal expenses arising from Ultravent-Registered Trademark- related claims.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FALCON BUILDING PRODUCTS, INC.
By: /s/ Sam A. Cottone
------------------------------
Sam A. Cottone
EXECUTIVE VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
Dated: February 24, 1998