York Comments on Furnace Inspections, Decreases Business Outlook
Jul 8, 2004
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HVAC equipment maker York International Corporation commented on the impact of certain furnace inspections on its results for 2004.
York's Unitary Products Group, after notifying the U.S. Consumer Product Safety Commission (CPSC), conducted field and factory testing to investigate failures found in the heat exchangers of certain sealed combustion gas furnaces used in the manufactured housing industry. Based on this testing, York found that installation and application factors combined with component part variation can result in excessive heat exchanger temperatures, which may contribute to failures in certain furnace models.
The furnaces impacted were sold solely to the manufactured housing market under the Coleman(R), Coleman-Evcon, and Red T brand names. The units that are potentially impacted were manufactured in the years 1995 to 2000; however, York said not all furnaces manufactured in this timeframe are involved in this program.
The HVAC company said it will locate the end users of these furnaces and conduct inspections as expeditiously as possible. As part of the process, York will continue to work closely with the CPSC and will request the CPSC's review and approval of its proposed inspection/remediation program.
York anticipates a charge in the second quarter in the range of $20 to $25 million pre-tax ($12 to $15 million after tax, or $0.28 to $0.36 per share) to cover the estimated liability associated with implementing the program and reworking the affected furnaces in the field. The previous 2004 full-year outlook for the HVAC company of $2.70 to $3.00 per share has been revised to a range of $2.34 to $2.72, reflecting the increased expense from this action
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