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KEENE REPORTS SECOND QUARTER RESULTS

 NEW YORK, July 12 /PRNewswire/ -- Keene Corporation (NASDAQ: KEEN) announced second quarter results today. Investment income in the second quarter of 1993 was $2,129,000 compared with $2,128,000 in the second quarter of 1992. Investment income included $826,000 of realized capital gains in the second quarter of 1993 compared with $282,000 in 1992. Higher realized capital gains were offset by lower interest rates on a smaller investment portfolio. During the second quarter of 1993, the average yield on investments was 6.5 percent compared with 7.1 percent for 1992's second quarter. General and administrative expenses increased to $1,387,000 in the second quarter of 1993 compared with $1,026,000 in the comparable quarter of 1992 primarily due to a one-time increase in certain retirement benefit obligations.
 As a result of utilizing a portion of the deferred tax asset relating to unreimbursed asbestos-related expenditures, the income tax provision for the second quarter of 1993 was $30,000. The prior year second quarter income tax provision was $433,000. Income from continuing operations totaled $712,000, or $.07 per share, in 1993's second quarter compared with $669,000, or $.06 per share, in the prior year second quarter.
 Because substantially all of the asbestos-related expenses are now being paid directly by Keene, no dividend was declared for the second quarter of 1993.
 For the first half of 1993, investment income declined 13 percent to $3,766,000 from $4,316,000 in the 1992 first half. During the first half of 1993, the average yield on investments was 6.6 percent compared with 7.1 percent for 1992's first half. General and administrative expenses were $2,607,000 in the first half of 1993 compared with $2,207,000 in the first half of 1992. Income from continuing operations totaled $1,099,000, or $.11 per share, in 1993's first half compared with $1,279,000, or $.12 per share, in the prior year's first half.
 Keene has previously reported its plan to sell its Reinhold Industries, Inc. subsidiary, a custom manufacturer of advanced composite components and sheet molding compounds for a variety of defense, aerospace and commercial applications, to its existing stockholders and, if necessary, a group of standby investors for fair value through a rights offering. Consequently, Reinhold has been accounted for as an operation to be sold and Reinhold's results are not included in Keene's income from continuing operations. Reinhold's actual results for the second quarter of 1993 included sales of $2,960,000 compared with $3,744,000 in 1992. Net income in 1993's second quarter was $204,000 compared with $262,000 in 1992's second quarter. For the first half of 1993, sales declined 1 percent to $6,228,000 from $6,280,000 in 1992. Net income increased to $474,000 from $341,000 in 1992's first half.
 Asbestos Litigation
 Keene continued to adhere to the Asbestos Compensation Program it launched in July 1990 by paying settlements only on meritorious cases in amounts based upon specific disease ailments and geographic locations.
 In the second quarter of 1993, approximately $19.6 million in asbestos-related expenditures were incurred, of which $14.5 million were for indemnity costs and $5.1 million were for defense legal costs. All of the costs in the second quarter of 1993 were paid directly by Keene and charged to the asbestos-related contingent liability. By comparison, in the second quarter of 1992, approximately $15.9 million in asbestos-related expenditures were incurred, of which $8.6 million were for indemnity costs and $7.3 million were for defense legal costs. Substantially all of the costs in the second quarter of 1992 were paid by Keene's insurers.
 For the first half of 1993, Keene incurred $35.9 million in asbestos-related expenditures, of which $26.2 million were for indemnity costs and $9.7 million were for defense legal costs. In 1993, all of these costs were paid directly by Keene and charged to the asbestos-related contingent liability. For the prior year's first half, $29.4 million in asbestos-related expenditures were incurred, of which $14.7 million were for indemnity costs and $14.7 million were for defense legal costs. In 1992, substantially all of these costs were paid by Keene's insurers.
 The change in the direction and amount of the components of asbestos-related expenditures reflects an increasing acceptance of the Asbestos Compensation Program, the payment of a few large verdicts in certain jurisdictions after unsuccessful appeals and continued substantial reductions in defense legal costs.
 At June 30, 1993, approximately $55 million of jury verdicts were outstanding against Keene and on appeal to higher courts. During the appeals process, Keene is required to secure these verdicts by pledging marketable securities approximately equal to the verdict amounts. Keene's capacity to continue paying asbestos-related expenses and securing future potential verdicts it may seek to appeal is limited to those assets not pledged to secure appeals. Assets available to satisfy potential future bonding requirements totaled approximately $10 million at June 30, 1993.
 Keene continues to actively seek and support solutions to asbestos litigation that would provide fair and prompt compensation to those who are really sick from significant exposure to asbestos, reduce the high transaction costs (especially lawyers' fees and punitive damages) and preserve the businesses of the companies involved, the jobs of their employees and the investments of their stockholders.
 Mandatory Settlement Class Action
 On May 13, 1993, Keene filed a limited fund, mandatory settlement class action lawsuit in federal court in New York before Senior Judge Jack B. Weinstein seeking a declaration that it has only limited funds available to resolve numerous asbestos-related claims against it, including claims that might be filed in the future. This lawsuit is an effort to fairly allocate, by settlement, Keene's remaining funds among all competing asbestos-related claims, and maintain the future viability of the company. If successful, this limited fund, mandatory settlement class action would end all asbestos-related litigation against Keene for all time, while maximizing the amount of Keene's funds available for sick claimants and minimizing transaction costs. Some of the investment of Keene's stockholders would also be preserved.
 On July 1, 1993, Judge Weinstein entered an order enjoining the prosecution of all claims against Keene in state courts, federal courts, and any forum for alternative dispute resolution. The order will provide Keene the opportunity to negotiate a settlement with class representatives of the competing asbestos-related claims fair to all involved. If a fair settlement can not be reached, Keene may be forced to return to litigating asbestos-related cases one at a time in the tort system.
 KEENE CORPORATION
 Statements of Income
 (In thousands, except per share data)
 Periods Ended Three Months Six Months
 June 30 1993 1992 1993 1992
 Investment income $2,129 $2,128 $3,766 $4,316
 General & admin. expenses 1,387 1,026 2,607 2,207
 Income before taxes 742 1,102 1,159 2,109
 Income tax provision 30 433 60 830
 Income from cont. operations 712 669 1,099 1,279
 Income from oper. to be sold,
 net of tax -- 262 -- 341
 Income before cumulative effect
 of change in acctg. principle 712 931 1,099 1,620
 Cumulative effect of change in
 accounting principle
 (SFAS No. 109) -- -- -- 2,445
 Net income 712 931 1,099 4,065
 Average common shares 10,442 10,442 10,442 10,442
 Earnings per share:
 Continuing operations $0.07 $0.06 $0.11 $0.12
 Discontinued operations -- 0.03 -- 0.04
 Change in acctg. principle -- -- -- 0.23
 Net income 0.07 0.09 0.11 0.39
 -0- 7/12/93
 /CONTACT: Norman N. Weinstock of Keene Corporation, 212-557-1900/
 (KEEN)


CO: Keene Corporation ST: New York IN: SU: ERN

TS-PS -- NY046 -- 0465 07/12/93 13:29 EDT
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Date:Jul 12, 1993
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