Faces US$107 Million Asbestos Liabilities Thru 2001
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Published October 11, 2002

Zurn Industries estimates that its potential liability for asbestos 
claims pending against it and for claims estimated to be filed over a 
10-year period (i.e., through 2011) is approximately $107 million.  This
estimate is based on its view of the current and anticipated number of 
asbestos claims, the timing and amounts of asbestos payments and the 
status of ongoing litigation, defense strategies and settlement 
initiatives. 

However, there are inherent uncertainties involved in estimating both the
number of future asbestos claims as well as future settlement costs, and
the actual liability could exceed Zurn's estimate due to changes in facts
and circumstances after the date of the estimate. 

Further, while there is presently no reasonable basis for estimating 
Zurn's asbestos liability beyond 2011, such liability may continue beyond
2011, and such liability could be substantial.  Zurn faces around 59,000 
asbestos claims as of March 31, this year up from the record of 52,000 
in September 30, 2001

In June 1998, US Industries Inc acquired Zurn Industries Inc. Zurn is a 
wholly owned subsidiary of the Company. Zurn, along with many other 
companies, is a codefendant in numerous asbestos related lawsuits pending
in the United States. Plaintiffs' claims against Zurn allege personal 
injuries allegedly caused by exposure to asbestos used in industrial 
boilers formerly manufactured by Zurn. 

As reported by numerous other asbestos defendants, there has been a 
significant increase in the number of asbestos suits filed over the past
several years. Zurn has also experienced an increase in the number of 
suits filed against it in the last fiscal year. 

Since Zurn received its first asbestos claim in the 1980's, Zurn has 
settled or otherwise disposed of approximately 35,000 asbestos claims. 
Zurn's insurers have paid all settlement costs relating to these claims 
in an aggregate amount that has not eroded the available insurance 
coverage by a material amount. Zurn's insurers are currently paying 
defense costs without eroding the coverage amounts of its insurance 
policies.

Zurn's available insurance to cover its potential asbestos liability is 
between approximately $318 million and $380 million. Zurn believes, based
on its experience in defending the claims and the amount of insurance 
coverage available, that it has sufficient insurance to cover the pending
and reasonably estimable future claims. 

This conclusion was reached after considering the insurance payments made
to date by Zurn's insurance carriers, existing insurance policies, and 
the advice of insurance coverage counsel with respect to applicable 
insurance coverage law relating to the terms and conditions of those 
policies. 

After review of the foregoing with Zurn and its consultants, the Company
believes that the resolution of Zurn's pending and reasonably estimable 
asbestos claims will not have a material adverse effect on the Company's
financial condition, results of operations or cash flows.


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