3M 2010 Annual Report Download - page 107

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101
or the amount of the liability is not estimable, or both, if the Company believes there is at least a reasonable
possibility that a loss may be incurred.
The Company estimates insurance receivables based on an analysis of its numerous policies, including their
exclusions, pertinent case law interpreting comparable policies, its experience with similar claims, and assessment of
the nature of the claim, and records an amount it has concluded is likely to be recovered. For those insured matters
where the Company has taken a reserve, the Company also records receivables for the amount of insurance that it
expects to recover under the Company’s insurance program. For those insured matters where the Company has not
taken a reserve because the liability is not probable or the amount of the liability is not estimable, or both, but where
the Company has incurred an expense in defending itself, the Company records receivables for the amount of
insurance that it expects to recover for the expense incurred.
Because litigation is subject to inherent uncertainties, and unfavorable rulings or developments could occur, there
can be no certainty that the Company may not ultimately incur charges in excess of presently recorded liabilities. A
future adverse ruling, settlement, or unfavorable development could result in future charges that could have a
material adverse effect on the Company’s results of operations or cash flows in the period in which they are
recorded. The Company currently believes that such future charges, if any, would not have a material adverse effect
on the consolidated financial position of the Company, taking into account its significant available insurance
coverage. Based on experience and developments, the Company periodically reexamines its estimates of probable
liabilities and associated expenses and receivables, and whether it is able to estimate a liability previously
determined to be not estimable and/or not probable. Where appropriate, the Company makes additions to or
adjustments of its estimated liabilities. As a result, the current estimates of the potential impact on the Company’s
consolidated financial position, results of operations and cash flows for the legal proceedings and claims pending
against the Company could change in the future.
The following table shows the major categories of significant legal matters — respirator mask/asbestos litigation
(including Aearo), environmental remediation and other environmental liabilities — for which the Company has been
able to estimate its probable liability and for which the Company has taken reserves and the related insurance
receivables:
At December 31
(Millions)
2010
2009
2008
Respirator mask/asbestos liabilities ..............................................
126
138
140
Respirator mask/asbestos insurance receivables .........................
122
143
193
Environmental remediation liabilities .............................................
24
31
31
Environmental remediation insurance receivables .......................
15
15
15
Other environmental liabilities .......................................................
90
117
137
The following sections first describe the significant legal proceedings in which the Company is involved, and then
describe the liabilities and associated insurance receivables the Company has accrued relating to its significant legal
proceedings.
Respirator Mask/Asbestos Litigation
As of December 31, 2010, the Company is a named defendant, with multiple co-defendants, in 854 lawsuits in
various courts that purport to represent approximately 2,148 individual claimants, down from the approximately 2,510
individual claimants with actions pending at December 31, 2009.
The vast majority of the lawsuits and claims resolved by and currently pending against the Company allege use of
some of the Company’s mask and respirator products and seek damages from the Company and other defendants
for alleged personal injury from workplace exposures to asbestos, silica, coal mine dust or other occupational dusts
found in products manufactured by other defendants or generally in the workplace. A minority of claimants generally
allege personal injury from occupational exposure to asbestos from products previously manufactured by the
Company, which are often unspecified, as well as products manufactured by other defendants, or occasionally at
Company premises.
The Company’s current volume of new and pending matters is substantially lower than its historical experience. The
Company expects that filing of claims by unimpaired claimants in the future will continue to be at much lower levels
than in the past. Accordingly, the number of claims alleging more serious injuries, including mesothelioma and other