Alfa Laval Downplays Suits Amid Securities Concerns --------------------------------------------------- Published November 08, 2002 Engineering equipment group Alfa Laval sought to reassure investors over its exposure to U.S. asbestos-related lawsuits amid concerns about whether it had adequately disclosed its risks in its May prospectus in advance of its initial public offering. The Swedish company said that none of its products have been found to be the cause of any asbestos injury in lawsuits in which its U.S. unit Alfa Laval Inc. has been named as a defendant. Based on current information, Alfa Laval said it doesn't believe these lawsuits will have a "material adverse" effect on the company's financial condition or results of operations. "We are absolutely convinced that we have adequate provisions," Alfa Laval's chief executive officer, Sigge Haraldsson, told Dow Jones Newswires. The company sold shares on the Stockholm exchange at 91 kronor ($9.97) in the IPO. Its stock has recently been trading at about half that price. In its third quarter earnings report last Thursday, Alfa Laval said its U.S. unit was named as a defendant in about 40 lawsuits related to asbestos. In all cases, the company is one among a large number of defendants. Alfa Laval said Monday that Alfa Laval Inc. is named as a co-defendant in a total of 68 asbestos-related lawsuits representing around 7,500 plaintiffs. Since Oct. 1, it has been named as a co-defendant in an additional 43 suits, with notice regarding 30 of these received in the last few days. Alfa Laval's share price fell more than 30 percent on Friday due to asbestos issues, including concerns over why the asbestos situation wasn't clarified in the IPO prospectus, according to brokers. Mr. Haraldsson said that at the time of the IPO, the company didn't see a significant impact from asbestos-related legal action. Alfa Laval Faces Asbestos Suits ------------------------------- In the asbestos lawsuits where Alfa Laval Inc. has been named as a defendant, the plaintiffs have not identified any Alfa Laval products that Alfa Laval believes could form the basis for liability, and in no lawsuit has an Alfa Laval product been determined as the cause of any asbestos injury. Alfa Laval strongly believes the claims against the company are without merit and intends to vigorously contest each lawsuit. As was disclosed in the Q3 interim report, distributed October 31, 2002, a subsidiary in the US, Alfa Laval Inc., has recently been named with increasing frequency as a co-defendant in lawsuits related to injuries allegedly suffered from the use of asbestos. These lawsuits relate to claims alleging injuries from exposure to asbestos primarily from the 1930's to the end of the 1970's. Alfa Laval Inc. is only one of hundreds of companies named as a defendant. Historically, claims against Alfa Laval Inc. have been dismissed due to lack of relevance or have been settled for insignificant amounts, far below expected defense costs. Prior to early 2002, Alfa Laval was granted summary judgment in its favor in nine asbestos lawsuits. A further seven lawsuits where Alfa Laval Inc. was named as a co-defendant have been dismissed. Alfa Laval also settled five asbestos lawsuits for insignificant amounts that were substantially less than estimated defense costs, however without accepting any liability. As per January 2002, Alfa Laval Inc. was involved in 9 asbestos-related lawsuits, filed between 1997 and 2001. As per May 20, 2002, Alfa Laval was aware of the existence of 11 lawsuits in which Alfa Laval Inc. was named as a co-defendant. These 11 lawsuits, which were not considered material, represented an aggregate of 517 plaintiffs, of which 507 corresponded to one lawsuit in which Alfa Laval was one of 384 defendants. Each of the remaining lawsuits had one plaintiff. In all of the cases, Alfa Laval was only named as one of numerous defendants. As per September 30, 2002, Alfa Laval Inc. was named as a co-defendant in a total of 25 asbestos lawsuits. Since October 1, 2002, Alfa Laval Inc. has been named as a co-defendant in an additional 43 lawsuits. Notice regarding 30 of these additional 43 lawsuits was received during the last few days. As a result of these recent lawsuits, Alfa Laval Inc. is now named as a co-defendant in a total of 68 asbestos lawsuits representing approximately 7,500 plaintiffs. These plaintiffs do not identify any Alfa Laval products that the company believes could form the basis for liability. Historically, the asbestos lawsuits in which Alfa Laval Inc. has been named as a defendant involved few plaintiffs, but with a large number of co-defendants. More recently, the company has been named in asbestos lawsuits also with large numbers of plaintiffs, which has now become a common approach in the US. The total number of plaintiffs underlying the lawsuits in which Alfa Laval Inc. has been named as a co-defendant is approximately 7,500. Alfa Laval Inc. is in all cases one among a large number of defendants. Over 6,550 plaintiffs are parties to the two largest lawsuits in which Alfa Laval Inc. has been included as a co- defendant. Alfa Laval knew these two lawsuits during the last three months, and more specifically the latest one became known on November 1. These two lawsuits named 380 and 266 defendants respectively. Based on current information and Alfa Laval's understanding of the situation of these lawsuits, Alfa Laval does not believe that these lawsuits will have a material adverse effect on the company's financial condition or results of operations. COMPANY PROFILE Alfa Laval Inc. - Contherm Product Center 111 Parker St., PO Box 352 Newburyport, Massachusetts 01950 United States Phone: 978-465-5777 Fax: 978-465-6006 Description: Alfa Laval supplies heat exchangers for every requirement of the food processing industry. Today our company is represented in 130 countries and all of our products are found in many more. Alfa Laval Faces 15,000 Asbestos Plaintiffs in US ------------------------------------------------- Alfa Laval said that as of Feb 15, its US subsidiary has been named as co-defendant in a total of 73 asbestos-related lawsuits with 15,000 plaintiffs. Of these, 19 lawsuits with a total of approximately 7,500 plaintiffs have been filed since Nov 4, 2002. However, the company said 99.7 percent of the increase in plaintiffs is related to multiple plaintiff lawsuits filed in Mississippi ahead of a new law which is likely to limit further such multiple filings after January 1. The lawsuits do not identify any Alfa Laval product that could be a basis of liability. The company believes the claims are without merit and intends to vigorously contest each lawsuit. It also said it believes the existing claims will be covered by insurance, and as such will not impact its results.