Dow Chemical 2015 Annual Report Download - page 119

109
has reached settlements with most of the carriers involved in the Insurance Litigation and continues to pursue a settlement with
the remaining carrier. Union Carbide’s receivable for insurance recoveries related to its asbestos liability was $10 million at
December 31, 2015 and $10 million at December 31, 2014.
In addition to the receivable for insurance recoveries related to its asbestos liability, Union Carbide had receivables for defense
and resolution costs submitted to insurance carriers that have settlement agreements in place regarding their asbestos-related
insurance coverage. The following table summarizes Union Carbide’s receivables related to its asbestos-related liability:
Receivables for Asbestos-Related Costs at December 31
In millions 2015 2014
Receivables for defense and resolution costs – carriers with settlement agreements $ 51 $ 69
Receivables for insurance recoveries – carriers without settlement agreements 10 10
Total $ 61 $ 79
After a review of its insurance policies, with due consideration given to applicable deductibles, retentions and policy limits,
after taking into account the solvency and historical payment experience of various insurance carriers; existing insurance
settlements; and the advice of outside counsel with respect to the applicable insurance coverage law relating to the terms and
conditions of its insurance policies, Union Carbide continues to believe that its recorded receivable for insurance recoveries
from all insurance carriers is probable of collection.
Union Carbide expenses defense costs as incurred. The pretax impact for defense and resolution costs, net of insurance, was
$83 million in 2015, $108 million in 2014 and $107 million in 2013, and was reflected in “Cost of sales” in the consolidated
statements of income.
Summary
The amounts recorded by Union Carbide for the asbestos-related liability and related insurance receivable described above were
based upon current, known facts. However, future events, such as the number of new claims to be filed and/or received each
year, the average cost of disposing of each such claim, coverage issues among insurers, and the continuing solvency of various
insurance companies, as well as the numerous uncertainties surrounding asbestos litigation in the United States, could cause the
actual costs and insurance recoveries for Union Carbide to be higher or lower than those projected or those recorded.
Because of the uncertainties described above, Union Carbide’s management cannot estimate the full range of the cost of
resolving pending and future asbestos-related claims facing Union Carbide and Amchem. Union Carbide’s management
believes that it is reasonably possible that the cost of disposing of Union Carbide’s asbestos-related claims, including future
defense costs, could have a material impact on Union Carbide’s results of operations and cash flows for a particular period and
on the consolidated financial position of Union Carbide.
It is the opinion of Dow’s management that it is reasonably possible that the cost of Union Carbide disposing of its asbestos-
related claims, including future defense costs, could have a material impact on the Company’s results of operations and cash
flows for a particular period and on the consolidated financial position of the Company.
Urethane Matters
On February 16, 2006, the Company, among others, received a subpoena from the U.S. Department of Justice ("DOJ") as part
of a previously announced antitrust investigation of manufacturers of polyurethane chemicals, including methylene diphenyl
diisocyanate, toluene diisocyanate, polyether polyols and system house products. The Company cooperated with the DOJ and,
following an extensive investigation, on December 10, 2007, the Company received notice from the DOJ that it had closed its
investigation of potential antitrust violations involving these products without indictments or pleas.
In 2005, the Company, among others, was named as a defendant in multiple civil class action lawsuits alleging a conspiracy to
fix the price of various urethane chemical products, namely the products that were the subject of the above described DOJ
antitrust investigation. These lawsuits were consolidated in the U.S. District Court for the District of Kansas (the "District
Court") or have been tolled. On July 29, 2008, the District Court certified a class of purchasers of the products for the six-year
period from 1999 through 2004. In January 2013, the class action lawsuit went to trial in the District Court with the Company
as the sole remaining defendant, the other defendants having previously settled. On February 20, 2013, the jury returned a
damages verdict of approximately $400 million against the Company, which ultimately was trebled by the District Court under
applicable antitrust laws, less offsets from other settling defendants, resulting in a judgment entered in July 2013 in the amount
of $1.06 billion. The Company appealed this judgment to the U.S. Tenth Circuit Court of Appeals ("Tenth Circuit" or "Court of
Appeals"), and on September 29, 2014, the Court of Appeals issued an opinion affirming the District Court judgment. On