Kaiser Aluminum Q3 to include one-time income, charge

HOUSTON, Oct 3 (Reuters) - Kaiser Aluminum Corp.'s (NYSE:KLU - news) Kaiser Aluminum & Chemical Corp. said on Tuesday its third-quarter results will include about $40 million in pre-tax real estate related income, which will be offset by a charge related to an increase in its net asbestos liability.

The one-time pre-tax real estate income stems from the sale of Kaiser's Pleasanton, Calif., office complex to PE Corp's PE Biosystems Group (NYSE:PEB - news) at a pre-tax gain of about $25 million and a favourable non-cash pre-tax adjustment of about $15 million to Kaiser's accrued long-term net lease obligation on an Oakland, Calif. office building.

Houston-based Kaiser, a major producer of aluminum and aluminum products, said the comparable non-cash asbestos-related pre-tax charge comes from its recurring assessment of existing reserves, net of expected insurance recoveries, based on recent cost and other trends it and other companies have experienced.

Kaiser said it still believes it has insurance coverage available to recover a substantial portion of its asbestos-related costs.

Kaiser said it sold the Pleasanton complex -- which includes about 80 acres and 330,000 square feet of office, laboratory and warehouse space -- because its administrative, research and development functions located there have been or are being relocated to other locations, and the complex had become surplus to the company's needs. The sale, which closed on Sept 29, generated about $50 million in net cash proceeds.

The adjustment of the net lease obligation on the 28-story Oakland office building reflects new lease agreements in 2000 at occupancy and lease rates above those previously projected, due to substantial improvement in the area's commercial real estate market.

While Kaiser has not maintained executive offices in the building for a number of years, it is the master tenant through 2008, subject to certain extension and other rights, under a 1983 sale-and-leaseback agreement. The building has about 750,000 square feet of rentable space, Kaiser said.

Kaiser previously said its third quarter results would also include a pre-tax net gain of $40 million on the sale of electrical power and a pre-tax charge of between $30 million and $40 million to reflect the incremental, non-recurring impacts of a labour settlement with the United Steelworkers of America.

Kaiser shares closed at $5-7/8 on Tuesday, between a 52-week low of $2-15/16 and a high of $8-7/8.