To Defend Against 13,500 Asbestos Related Lawsuits -------------------------------------------------- Published November 01, 2002 Aqua-Chem has been named as one of many defendants in numerous lawsuits alleging personal injury arising from exposure to asbestos-containing materials contained in certain boilers manufactured by the Company many years ago. To date, the Company has disposed of around 3,400 lawsuits of this nature, which included at least 27,000 plaintiffs, including the settlement during Fiscal 2001 of several lawsuits which included over 1,000 plaintiffs each. In the vast majority of the closed cases, neither the Company nor its insurers have made payments to the plaintiffs. The Company has not admitted liability or been found liable for the plaintiffs' injuries in any case. Currently, there are at least 13,500 lawsuits pending against Aqua-Chem which include at least 48,500 plaintiffs. This represents an increase of more than 2,000 lawsuits. While Aqua intends to continue to work to dispose of these lawsuits, the number of cases filed and the number of plaintiffs per case have continued to increase, and it expects that additional lawsuits will be filed in the future. Aqua believes that substantially all of the pending lawsuits are without merit. It will continue to vigorously defend itself in the open cases, which, in some instances, may not be resolved for several years. Various factors preclude certainty in the determination of the Company's total potential cost to resolve the open cases or cases that may be filed against the Company in the future. For example, pleadings generally do not specify the amount of damages sought, and the Company is typically only one of many defendants initially named. Additionally, bankruptcy filings of other companies with asbestos- related litigation could affect the Company's asbestos-related costs over time. These matters make it difficult to determine the Company's proportionate share or amount of liability, if any, in these cases with certainty. However, based on its historical experience, the Company continues to believe that its insurance coverage should be adequate to cover future costs in these cases. The Company is continuing to monitor this situation and is undertaking appropriate actions to assess the potential impact of future cases on the Company. Although Aqua-Chem believes the costs associated with these matters will not have a material adverse effect on its results of operations or financial condition, there can be no assurance to this effect. COMPANY PROFILE Aqua-Chem Inc. 11950 West Lake Park Drive Milwaukee, WI 53224 Phone: 414-359-0600 Description: For over 70 years, Aqua-Chem, Inc. and its Divisions, Cleaver-Brooks, Water Technologies, Lincoln Manufacturing, Gonzales Manufacturing, Energy Recovery International, Industrial Combustion, and Nebraska Boiler have provided energy and environmental solutions in the form of water treatment, commercial heating comfort, and industrial processes in partnership with customers in more than 100 countries around the world.