REG - 3M Company - Annual Financial Report - Updated by Form 8-K <Origin Href="QuoteRef">MMM.N</Origin> - Part 10
05/05/2017 07:07
- Part 10: For the preceding part double click ID:nRSE2625Ei
foreign exchange forward contracts designated in net investment hedges
was approximately 150 million Euros and approximately 248 billion South Korean Won, along with a principal amount of
long-term debt instruments designated in net investment hedges totaling 4.4 billion Euros. The maturity dates of these
derivative and nonderivative instruments designated in net investment hedges range from 2017 to 2031.
The location in the consolidated statements of income and comprehensive income and amounts of gains and losses related to
derivative and nonderivative instruments designated as net investment hedges are as follows. There were no
reclassifications of the effective portion of net investment hedges out of accumulated other comprehensive income into
income for the periods presented in the table below.
Year ended December 31, 2016
Pretax Gain (Loss)
Recognized as
Cumulative Translation
within Other Ineffective Portion of Gain (Loss) on
Comprehensive Income Instrument and Amount Excluded
Derivative and Nonderivative Instruments in Net Investment Hedging on Effective Portion of from Effectiveness Testing
Relationships Instrument Recognized in Income
(Millions) Amount Location Amount
Foreign currency denominated debt $ 215 N/A $ -
Foreign currency forward contracts (9) Cost of sales (3)
Total $ 206 $ (3)
Year ended December 31, 2015
Pretax Gain (Loss)
Recognized as
Cumulative Translation
within Other Ineffective Portion of Gain (Loss) on
Comprehensive Income Instrument and Amount Excluded
Derivative and Nonderivative Instruments in Net Investment Hedging on Effective Portion of from Effectiveness Testing
Relationships Instrument Recognized in Income
(Millions) Amount Location Amount
Foreign currency denominated debt $ 63 N/A $ -
Foreign currency forward contracts 143 Cost of sales 11
Total $ 206 $ 11
Year ended December 31, 2014
Pretax Gain (Loss)
Recognized as
Cumulative Translation
within Other Ineffective Portion of Gain (Loss) on
Comprehensive Income Instrument and Amount Excluded
Derivative and Nonderivative Instruments in Net Investment Hedging on Effective Portion of from Effectiveness Testing
Relationships Instrument Recognized in Income
(Millions) Amount Location Amount
Foreign currency denominated debt $ 152 N/A $ -
Foreign currency forward contracts 94 Cost of sales 1
Total $ 246 $ 1
Derivatives Not Designated as Hedging Instruments:
Derivatives not designated as hedging instruments include dedesignated foreign currency forward and option contracts that
formerly were designated in cash flow hedging relationships (as referenced in the Cash Flow Hedges section above). In
addition, 3M enters into foreign currency forward contracts to offset, in part, the impacts of certain intercompany
activities (primarily associated with intercompany licensing arrangements) and enters into commodity price swaps to offset,
in part, fluctuations in costs associated with the use of certain commodities and precious metals. These derivative
instruments are not designated in hedging relationships; therefore, fair value gains and losses on these contracts are
recorded in earnings. The Company does not hold or issue derivative financial instruments for trading purposes.
The Company revised amounts previously presented in the table below for the gain (loss) on derivatives recognized in income
for the year ended December 31, 2015 relative to foreign currency forward contracts. This immaterial correction decreased
the previously presented amount of the loss recognized in income in the disclosure table below by $112 million for the year
ended December 31, 2015. This revision had no impact on the Company's consolidated results of operations, financial
condition, or cash flows.
The location in the consolidated statements of income and amounts of gains and losses related to derivative instruments not
designated as hedging instruments are as follows:
Gain (Loss) on Derivative Recognized in Income
Year ended Year ended Year ended
December 31, December 31, December 31,
Derivatives Not Designated as Hedging Instruments 2016 2015 2014
(Millions) Location Amount Amount Amount
Foreign currency forward/option contracts Cost of sales $ (14) $ 5 $ 10
Foreign currency forward contracts Interest expense 9 82 (40)
Commodity price swap contracts Cost of sales - (3) -
Total $ (5) $ 84 $ (30)
Location and Fair Value Amount of Derivative Instruments:
The following tables summarize the fair value of 3M's derivative instruments, excluding nonderivative instruments used as
hedging instruments, and their location in the consolidated balance sheet. Notional amounts below are presented at period
end foreign exchange rates, except for certain interest rate swaps, which are presented using the inception date's foreign
exchange rate. Additional information with respect to the fair value of derivative instruments is included in Note 13.
Gross Assets Liabilities
December 31, 2016 Notional Fair Fair
(Millions) Amount Location Value Amount Location Value Amount
Derivatives designated as
hedging instruments
Foreign currency forward/option contracts $ 2,160 Other current assets $ 107 Other current liabilities $ 9
Foreign currency forward/option contracts 1,459 Other assets 86 Other liabilities 3
Interest rate swap contracts 1,953 Other assets 25 Other current liabilities 1
Total derivatives designated as hedging instruments $ 218 $ 13
Derivatives not designated as
hedging instruments
Foreign currency forward/option contracts $ 5,655 Other current assets $ 41 Other current liabilities $ 82
Total derivatives not designated as hedging instruments $ 41 $ 82
Total derivative instruments $ 259 $ 95
Gross Assets Liabilities
December 31, 2015 Notional Fair Fair
(Millions) Amount Location Value Amount Location Value Amount
Derivatives designated as
hedging instruments
Foreign currency forward/option contracts $ 2,815 Other current assets $ 148 Other current liabilities $ 14
Foreign currency forward/option contracts 1,240 Other assets 61 Other liabilities 3
Interest rate swap contracts 1,753 Other assets 24 Other liabilities 1
Total derivatives designated as hedging instruments $ 233 $ 18
Derivatives not designated as
hedging instruments
Foreign currency forward/option contracts $ 5,359 Other current assets $ 63 Other current liabilities $ 51
Total derivatives not designated as hedging instruments $ 63 $ 51
Total derivative instruments $ 296 $ 69
Credit Risk and Offsetting of Assets and Liabilities of Derivative Instruments:
The Company is exposed to credit loss in the event of nonperformance by counterparties in interest rate swaps, currency
swaps, commodity price swaps, and forward and option contracts. However, the Company's risk is limited to the fair value of
the instruments. The Company actively monitors its exposure to credit risk through the use of credit approvals and credit
limits, and by selecting major international banks and financial institutions as counterparties. 3M enters into master
netting arrangements with counterparties when possible to mitigate credit risk in derivative transactions. A master netting
arrangement may allow each counterparty to net settle amounts owed between a 3M entity and the counterparty as a result of
multiple, separate derivative transactions. As of December 31, 2016, 3M has International Swaps and Derivatives Association
(ISDA) agreements with 16 applicable banks and financial institutions which contain netting provisions. In addition to a
master agreement with 3M supported by a primary counterparty's parent guarantee, 3M also has associated credit support
agreements in place with 15 of its primary derivative counterparties which, among other things, provide the circumstances
under which either party is required to post eligible collateral (when the market value of transactions covered by these
agreements exceeds specified thresholds or if a counterparty's credit rating has been downgraded to a predetermined
rating). The Company does not anticipate nonperformance by any of these counterparties.
3M has elected to present the fair value of derivative assets and liabilities within the Company's consolidated balance
sheet on a gross basis even when derivative transactions are subject to master netting arrangements and may otherwise
qualify for net presentation. However, the following tables provide information as if the Company had elected to offset the
asset and liability balances of derivative instruments, netted in accordance with various criteria in the event of default
or termination as stipulated by the terms of netting arrangements with each of the counterparties. For each counterparty,
if netted, the Company would offset the asset and liability balances of all derivatives at the end of the reporting period
based on the 3M entity that is a party to the transactions. Derivatives not subject to master netting agreements are not
eligible for net presentation. As of the applicable dates presented below, no cash collateral had been received or pledged
related to these derivative instruments.
Offsetting of Financial Assets under Master Netting Agreements with Derivative Counterparties
December 31, 2016 Gross Amounts not Offset in the
Consolidated Balance Sheet that are Subject
Gross Amount of to Master Netting Agreements
Derivative Assets Gross Amount of
Presented in the Eligible Offsetting
Consolidated Recognized Cash Collateral Net Amount of
(Millions) Balance Sheet Derivative Liabilities Received Derivative Assets
Derivatives subject to master netting agreements $ 259 $ 39 $ - $ 220
Derivatives not subject to master netting agreements - -
Total $ 259 $ 220
December 31, 2015 Gross Amounts not Offset in the
Consolidated Balance Sheet that are Subject
Gross Amount of to Master Netting Agreements
Derivative Assets Gross Amount of
Presented in the Eligible Offsetting
Consolidated Recognized Cash Collateral Net Amount of
(Millions) Balance Sheet Derivative Liabilities Received Derivative Assets
Derivatives subject to master netting agreements $ 296 $ 37 $ - $ 259
Derivatives not subject to master netting agreements - -
Total $ 296 $ 259
Offsetting of Financial Liabilities under Master Netting Agreements with Derivative Counterparties
December 31, 2016 Gross Amounts not Offset in the
Consolidated Balance Sheet that are Subject
Gross Amount of to Master Netting Agreements
Derivative Liabilities Gross Amount of
Presented in the Eligible Offsetting
Consolidated Recognized Cash Collateral Net Amount of
(Millions) Balance Sheet Derivative Assets Pledged Derivative Liabilities
Derivatives subject to master netting agreements $ 93 $ 39 $ - $ 54
Derivatives not subject to master netting agreements 2 2
Total $ 95 $ 56
December 31, 2015 Gross Amounts not Offset in the
Consolidated Balance Sheet that are Subject
Gross Amount of to Master Netting Agreements
Derivative Liabilities Gross Amount of
Presented in the Eligible Offsetting
Consolidated Recognized Cash Collateral Net Amount of
(Millions) Balance Sheet Derivative Assets Pledged Derivative Liabilities
Derivatives subject to master netting agreements $ 64 $ 37 $ - $ 27
Derivatives not subject to master netting agreements 5 5
Total $ 69 $ 32
Foreign Currency Effects
3M estimates that year-on-year foreign currency transaction effects, including hedging impacts, decreased pre-tax income by
approximately $69 million in 2016 and increased pre-tax income by approximately $180 million in 2015. These estimates
include transaction gains and losses, including derivative instruments designed to reduce foreign currency exchange rate
risks.
NOTE 13. Fair Value Measurements
3M follows ASC 820, Fair Value Measurements and Disclosures, with respect to assets and liabilities that are measured at
fair value on a recurring basis and nonrecurring basis. Under the standard, fair value is defined as the exit price, or the
amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants as of the measurement date. The standard also establishes a hierarchy for inputs used in measuring fair value
that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most
observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset
or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are
inputs that reflect the Company's assumptions about the factors market participants would use in valuing the asset or
liability developed based upon the best information available in the circumstances. The hierarchy is broken down into three
levels. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs
include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or
liabilities in markets that are not active, and inputs (other than quoted prices) that are observable for the asset or
liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability. Categorization
within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
Assets and Liabilities that are Measured at Fair Value on a Recurring Basis:
For 3M, assets and liabilities that are measured at fair value on a recurring basis primarily relate to available-for-sale
marketable securities, available-for-sale investments (included as part of investments in the Consolidated Balance Sheet)
and certain derivative instruments. Derivatives include cash flow hedges, interest rate swaps and most net investment
hedges. The information in the following paragraphs and tables primarily addresses matters relative to these financial
assets and liabilities. Separately, there were no material fair value measurements with respect to nonfinancial assets or
liabilities that are recognized or disclosed at fair value in the Company's financial statements on a recurring basis for
2016 and 2015.
3M uses various valuation techniques, which are primarily based upon the market and income approaches, with respect to
financial assets and liabilities. Following is a description of the valuation methodologies used for the respective
financial assets and liabilities measured at fair value.
Available-for-sale marketable securities - except certain U.S. municipal securities:
Marketable securities, except certain U.S. municipal securities, are valued utilizing multiple sources. A weighted average
price is used for these securities. Market prices are obtained for these securities from a variety of industry standard
data providers, security master files from large financial institutions, and other third-party sources. These multiple
prices are used as inputs into a distribution-curve-based algorithm to determine the daily fair value to be used. 3M
classifies U.S. treasury securities as level 1, while all other marketable securities (excluding certain U.S. municipal
securities) are classified as level 2. Marketable securities are discussed further in Note 9.
Available-for-sale marketable securities -certain U.S. municipal securities only:
In both 2016 and 2014, 3M obtained municipal bonds with the City of Nevada, Missouri, which represent 3M's only U.S.
municipal securities holding as of December 31, 2016. Due to the nature of this security, the valuation method utilized
will include the financial health of the City of Nevada, any recent municipal bond issuances by Nevada, and macroeconomic
considerations related to the direction of interest rates and the health of the overall municipal bond market, and as such
will be classified as a level 3 security.
Available-for-sale investments:
Investments include equity securities that are traded in an active market. Closing stock prices are readily available from
active markets and are used as being representative of fair value. 3M classifies these securities as level 1.
Derivative instruments:
The Company's derivative assets and liabilities within the scope of ASC 815, Derivatives and Hedging, are required to be
recorded at fair value. The Company's derivatives that are recorded at fair value include foreign currency forward and
option contracts, commodity price swaps, interest rate swaps, and net investment hedges where the hedging instrument is
recorded at fair value. Net investment hedges that use foreign currency denominated debt to hedge 3M's net investment are
not impacted by the fair value measurement standard under ASC 820, as the debt used as the hedging instrument is marked to
a value with respect to changes in spot foreign currency exchange rates and not with respect to other factors that may
impact fair value.
3M has determined that foreign currency forwards, commodity price swaps, currency swaps, foreign currency options, interest
rate swaps and cross-currency swaps will be considered level 2 measurements. 3M uses inputs other than quoted prices that
are observable for the asset. These inputs include foreign currency exchange rates, volatilities, and interest rates.
Derivative positions are primarily valued using standard calculations/models that use as their basis readily observable
market parameters. Industry standard data providers are 3M's primary source for forward and spot rate information for both
interest rates and currency rates, with resulting valuations periodically validated through third-party or counterparty
quotes and a net present value stream of cash flows model.
The following tables provide information by level for assets and liabilities that are measured at fair value on a recurring
basis.
Fair Value Measurements
Description Fair Value at Using Inputs Considered as
(Millions) December 31, 2016 Level 1 Level 2 Level 3
Assets:
Available-for-sale:
Marketable securities:
Corporate debt securities $ 10 $ - $ 10 $ -
Commercial paper 14 - 14 -
Certificates of deposit/time deposits 197 - 197 -
Asset-backed securities:
Automobile loan related 31 - 31 -
Credit card related 18 - 18 -
Other 7 - 7 -
U.S. municipal securities 20 - - 20
Derivative instruments - assets:
Foreign currency forward/option contracts 234 - 234 -
Interest rate swap contracts 25 - 25 -
Liabilities:
Derivative instruments - liabilities:
Foreign currency forward/option contracts 94 - 94 -
Interest rate swap contracts 1 - 1 -
Fair Value Measurements
Description Fair Value at Using Inputs Considered as
(Millions) December 31, 2015 Level 1 Level 2 Level 3
Assets:
Available-for-sale:
Marketable securities:
Corporate debt securities $ 10 $ - $ 10 $ -
Foreign government agency securities 10 - 10 -
Commercial paper 12 - 12 -
Certificates of deposit/time deposits 26 - 26 -
Asset-backed securities:
Automobile loan related 26 - 26 -
Credit card related 10 - 10 -
Other 21 - 21 -
U.S. municipal securities 12 - - 12
Derivative instruments - assets:
Foreign currency forward/option contracts 272 - 272 -
Interest rate swap contracts 24 - 24 -
Liabilities:
Derivative instruments - liabilities:
Foreign currency forward/option contracts 68 - 68 -
Interest rate swap contracts 1 - 1 -
The following table provides a reconciliation of the beginning and ending balances of items measured at fair value on a
recurring basis in the table above that used significant unobservable inputs (level 3).
Marketable securities - certain U.S. municipal securities and auction rate securities only
(Millions) 2016 2015 2014
Beginning balance $ 12 $ 15 $ 11
Total gains or losses:
Included in earnings - - (1)
Included in other comprehensive income - - 2
Purchases and issuances 12 - 15
Sales and settlements (4) (3) (12)
Transfers in and/or out of level 3 - - -
Ending balance 20 12 15
Change in unrealized gains or losses for the period included in earnings for securities held at the end of the reporting period - - -
In addition, the plan assets of 3M's pension and postretirement benefit plans are measured at fair value on a recurring
basis (at least annually). Refer to Note 11.
Assets and Liabilities that are Measured at Fair Value on a Nonrecurring Basis:
Disclosures are required for certain assets and liabilities that are measured at fair value, but are recognized and
disclosed at fair value on a nonrecurring basis in periods subsequent to initial recognition. For 3M, such measurements of
fair value relate primarily to long-lived asset impairments. There were no material long-lived asset impairments for 2016,
2015 and 2014.
Fair Value of Financial Instruments:
The Company's financial instruments include cash and cash equivalents, marketable securities, accounts receivable, certain
investments, accounts payable, borrowings, and derivative contracts. The fair values of cash and cash equivalents, accounts
receivable, accounts payable, and short-term borrowings and current portion of long-term debt approximated carrying values
because of the short-term nature of these instruments. Available-for-sale marketable securities and investments, in
addition to certain derivative instruments, are recorded at fair values as indicated in the preceding disclosures. For its
long-term debt, the Company utilized third-party quotes to estimate fair values (classified as level 2). Information with
respect to the carrying amounts and estimated fair values of these financial instruments follow:
December 31, 2016 December 31, 2015
Carrying Fair Carrying Fair
(Millions) Value Value Value Value
Long-term debt, excluding current portion $ 10,678 $ 11,168 $ 8,753 $ 9,101
The fair values reflected above consider the terms of the related debt absent the impacts of derivative/hedging activity.
The carrying amount of long-term debt referenced above is impacted by certain fixed-to-floating interest rate swaps that
are designated as fair value hedges and by the designation of fixed rate Eurobond securities issued by the Company as
hedging instruments of the Company's net investment in its European subsidiaries. Many of 3M's fixed-rate bonds were
trading at a premium at December 31, 2016 and 2015 due to the low interest rates and tightening of 3M's credit spreads.
NOTE 14. Commitments and Contingencies
Capital and Operating Leases:
Rental expense under operating leases was $318 million in 2016, $316 million in 2015 and $332 million in 2014. It is 3M's
practice to secure renewal rights for leases, thereby giving 3M the right, but not the obligation, to maintain a presence
in a leased facility. 3M has three primary capital leases. First, 3M has a capital lease, which became effective in April
2003, that involves a building in the United Kingdom (with a lease term of 22 years). During the second quarter of 2003, 3M
recorded a capital lease asset and obligation of approximately 33.5 million British Pound (GBP), or approximately $41
million at December 31, 2016, exchange rates. Second, during the fourth quarter of 2009, 3M recorded a capital lease asset
and obligation of approximately $50 million related to an IT investment with an amortization period of seven years. This
capital lease was fully amortized at December 31, 2016. Third, 3M recorded a capital lease asset and obligation of
approximately $12 million in 2016 and $15 million in 2014, which is discussed in more detail in Note 7.
Minimum lease payments under capital and operating leases with non-cancelable terms in excess of one year as of December
31, 2016, were as follows:
Operating
(Millions) Capital Leases Leases
2017 $ 9 $ 210
2018 7 161
2019 5 119
2020 4 89
2021 4 58
After 2021 30 188
Total $ 59 $ 825
Less: Amounts representing interest 5
Present value of future minimum lease payments 54
Less: Current obligations under capital leases 9
Long-term obligations under capital leases $ 45
Unconditional Purchase Obligations:
Unconditional purchase obligations are defined as an agreement to purchase goods or services that is enforceable and
legally binding (non-cancelable, or cancelable only in certain circumstances). The Company estimates its total
unconditional purchase obligation commitment (for those contracts with terms in excess of one year) as of December 31,
2016, at $608 million. Payments by year are estimated as follows: 2017 ($193 million), 2018 ($189 million), 2019 ($123
million), 2020 ($54 million), 2021 ($24 million) and after 2021 ($25 million). Many of these commitments relate to take or
pay contracts, in which 3M guarantees payment to ensure availability of products or services that are sold to customers.
The Company expects to receive consideration (products or services) for these unconditional purchase obligations. The
purchase obligation amounts do not represent the entire anticipated purchases in the future, but represent only those items
for which the Company is contractually obligated. The majority of 3M's products and services are purchased as needed, with
no unconditional commitment. For this reason, these amounts will not provide an indication of the Company's expected future
cash outflows related to purchase obligations.
Warranties/Guarantees:
3M's accrued product warranty liabilities, recorded on the Consolidated Balance Sheet as part of current and long-term
liabilities, are estimated at approximately $47 million at December 31, 2016, and $28 million at December 31, 2015. 3M does
not consider this amount to be material. The fair value of 3M guarantees of loans with third parties and other guarantee
arrangements are not material.
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.
Respirator Mask/Asbestos Litigation
As of December 31, 2016, the Company is a named defendant, with multiple co-defendants, in numerous lawsuits in various
courts that purport to represent approximately 2,660 individual claimants, compared to approximately 2,130 individual
claimants with actions pending at December 31, 2015.
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 the lawsuits and claims resolved by and
currently pending against the Company 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 it experienced at the peak of filings
in 2003. 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
malignancies, will represent a greater percentage of total claims than in the past. The Company has prevailed in all eleven
cases taken to trial, including nine of the ten cases tried to verdict (such trials occurred in 1999, 2000, 2001, 2003,
2004, 2007, 2015, and 2016-described below), and an appellate reversal in 2005 of the 2001 jury verdict adverse to the
Company. The remaining case, tried in 2009, was dismissed by the court at the close of plaintiff's evidence, based on the
court's legal finding that the plaintiff had not presented sufficient evidence to support a jury verdict. In August 2016,
3M received a unanimous defense verdict from a jury in state court in Kentucky, in 3M's first respirator trial involving
coal mine dust. The estate of the plaintiff alleged that the 3M 8710 respirator is defective and caused his death because
it did not protect him from harmful coal mine dust. The jury rejected plaintiff's claim and returned a verdict finding no
liability against 3M. The verdict is final as the plaintiff did not file an appeal.
The Company has demonstrated in these past trial proceedings that its respiratory protection products are effective as
claimed when used in the intended manner and in the intended circumstances. Consequently the Company believes that
claimants are unable to establish that their medical conditions, even if significant, are attributable to the Company's
respiratory protection products. Nonetheless the Company's litigation experience indicates that claims of persons with
malignant conditions are costlier to resolve than the claims of unimpaired persons, and it therefore believes the average
cost of resolving pending and future claims on a per-claim basis will continue to be higher than it experienced in prior
periods when the vast majority of claims were asserted by medically unimpaired claimants.
As previously
- More to follow, for following part double click ID:nRSE2625EkRecent news on 3M Co
See all newsREG - Stock Exch Notice - Admission to ISM - 30/11/2023
AnnouncementRCS - 3M Company - StageZero Announces COC Protocol in Europe
AnnouncementREG - Official List - Removal: 3M Company
AnnouncementREG - Stock Exch Notice - Cancellation - 3M Company
AnnouncementREG - 3M Company - 3rd Quarter Results
Announcement