3M 2005 Annual Report Download - page 95

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The following table shows the major categories of ongoing claims 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) 2005 2004 2003
Breast implant liabilities $ 7 $ 11 $ 13
Breast implant receivables 130 278 338
Respirator mask/asbestos liabilities 210 248 289
Respirator mask/asbestos receivables 447 464 448
Environmental remediation liabilities 30 39 41
Environmental remediation receivables 15 16 16
For those significant pending legal proceedings that do not appear in the table and that are not the subject of
pending settlement agreements, the Company has determined that liability is not probable or the amount of the
liability is not estimable, or both, and the Company is unable to estimate the possible loss or range of loss at this
time. The amounts in the preceding table with respect to breast implant and environmental remediation represent
the Company’s best estimate of the respective liabilities. The Company has recorded liabilities with respect to the
two pending transparent tape antitrust class action settlements.
Breast Implant Insurance Receivables: As of December 31, 2005, the Company had receivables for insurance
recoveries related to the breast implant matter of $130 million, representing amounts covered by the Minnesota
Supreme Court’s ruling of August 2003 but yet to be received and other amounts that have been claimed from
various reinsurers, the Minnesota Insurance Guaranty Association, and the estates of certain insolvent insurance
carriers. The Company received about $92 million in the fourth quarter of 2005 (bringing total recoveries in 2005 to
$148 million), offsetting a portion of the previously recorded receivable, pursuant to settlements with seven insurers
and one reinsurer that were consistent with the Company’s overall expectation of recovery as a result of the
Minnesota Supreme Court ruling. With these recent settlements and the previously disclosed settlements, 17 of the
29 insurers have withdrawn from the pending proceedings and have settled the Company’s claims under the
Minnesota Supreme Court decision. Various factors could affect the timing and amount of recovery of the balance of
the Company’s insurance receivables, including (i) additional delays in or avoidance of payment by insurers; (ii) the
extent to which insurers may become insolvent in the future, and (iii) the outcome of the pending legal proceedings
involving the insurers.
Respirator Mask/Asbestos Liabilities and Insurance Receivables: The Company estimates its respirator
mask/asbestos liabilities, including the cost to resolve the claim and defense costs, by examining: (i) the
Company’s experience in resolving claims, (ii) apparent trends, (iii) the apparent quality of claims (e.g., the
Company believes many of the claims have been asserted on behalf of asymptomatic claimants), (iv) changes in the
nature and mix of claims (e.g., the proportion of claims asserting usage of the Company’s mask or respirator
products and alleging exposure to each of asbestos, silica or other occupational dusts, and claims pleading use of
asbestos-containing products allegedly manufactured by the Company), (v) the number of current claims and a
projection of the number of future asbestos and other claims that may be filed against the Company, (vi) the cost
to resolve recently settled claims, and (vii) an estimate of the cost to resolve and defend against current and future
claims. Because of the inherent difficulty in projecting the number of claims that have not yet been asserted,
particularly with respect to the Company's respiratory products that themselves did not contain any harmful
materials (which makes the various published studies that purport to project future asbestos claims substantially
removed from the Company's principal experience and which themselves vary widely), the Company does not
believe that there is any single best estimate of this liability, nor that it can reliably estimate the amount or range of
amounts by which the liability may exceed the reserve the Company has established. No liability has been
recorded regarding the pending action brought by the West Virginia Attorney General previously described.
Developments may occur that could affect the Company’s estimate of its liabilities. These developments include, but
are not limited to, significant changes in (i) the number of future claims, (ii) the average cost of resolving claims, (iii)
the legal costs of defending these claims and in maintaining trial readiness, (iv) changes in the mix and nature of
claims received, (v) trial and appellate outcomes, (vi) changes in the law and procedure applicable to these claims,
and (vii) the financial viability of other co-defendants and insurers. Congress is currently considering legislation that
would terminate essentially all litigation related to asbestos (but not other occupational dusts) in exchange for
substantial annual payments by the defendant companies and their insurers and, accordingly, such legislation, if
enacted, would bring considerable certainty to the assessment of the Company's future asbestos-related liability; the