3M 2015 Annual Report Download - page 103

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TableofContents
RelatedPartyActivity:
3Mdoesnothaveanymaterialrelatedpartyactivity.
LegalProceedings:
TheCompanyandsomeofitssubsidiariesareinvolvedinnumerousclaimsandlawsuits,principallyintheUnitedStates,and
regulatoryproceedingsworldwide.Theseincludevariousproductsliability(involvingproductsthattheCompanynoworformerly
manufacturedandsold),intellectualproperty,andcommercialclaimsandlawsuits,includingthosebroughtundertheantitrustlaws,
andenvironmentalproceedings.Unlessotherwisestated,theCompanyisvigorouslydefendingallsuchlitigation.
ProcessforDisclosureandRecordingofLiabilitiesandInsuranceReceivablesRelatedtoLegalProceedings
Manylawsuitsandclaimsinvolvehighlycomplexissuesrelatingtocausation,scientificevidence,andwhetherthereareactual
damagesandareotherwisesubjecttosubstantialuncertainties.Assessmentsoflawsuitsandclaimscaninvolveaseriesofcomplex
judgmentsaboutfutureeventsandcanrelyheavilyonestimatesandassumptions.TheCompanycomplieswiththerequirementsof
ASC450,Contingencies,andrelatedguidance,andrecordsliabilitiesforlegalproceedingsinthoseinstanceswhereitcan
reasonablyestimatetheamountofthelossandwhereliabilityisprobable.Wherethereasonableestimateoftheprobablelossisa
range,theCompanyrecordsthemostlikelyestimateoftheloss,orthelowendoftherangeifthereisnoonebestestimate.The
Companyeitherdisclosestheamountofapossiblelossorrangeoflossinexcessofestablishedaccrualsifestimable,orstatesthat
suchanestimatecannotbemade.TheCompanydisclosessignificantlegalproceedingsevenwhereliabilityisnotprobable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
remainingcoverage,andrecordsanamountithasconcludedislikelytoberecovered.ForthoseinsuredmatterswheretheCompany
hastakenanaccrual,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anaccrual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.AlthoughtheCompanycannotestimateitsexposuretoalllegal
proceedings,itcurrentlybelievesthatsuchfuturecharges,ifany,wouldnothaveamaterialadverseeffectontheconsolidated
financialpositionoftheCompany.Basedonexperienceanddevelopments,theCompanyreexaminesitsestimatesofprobable
liabilitiesandassociatedexpensesandreceivableseachperiod,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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.
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