Document XR08YbG3VL7GKojdGyDE96R7K

Tower Place 3340 Peachtree Road Atlanta, Ceorgia 30026 (404) 261-5420 Tillinghast, Nelson & Warren, Inc. CONSULTANTS - ACTUARIES ATLANTA 8DSTON CHICACO DALLAS DENVER FT WORTH HARTfORD JACKSONVILLE * KANSAS CITY LOS ANGELES NEW ORLEANS NEW YORK SAN ANTONIO * ST. LOUIS October 12, 1982 Mr. William E. Moore, President Kelly-Moore Paint Company 987 Commercial Street San Carlos, California 94070 Dear Mr. Moore: Enclosed is a copy of the report on Kelly-Moore's asbestos liability exposure which Tillinghast, Nelson' & Warren, Inc., prepared for Reed Decorative Products. Also enclosed is a copy of our September 8, 1982, letter to Mr. Wilks. As noted in the report, this study was prepared solely for the in ternal use of Reed management. We are providing you with a copy at the express request of Mr. Wilks. We will be pleased to answer any questions that you may have. Sincerely, W. Ja/mes- MacG.m.m.tie WJM/jmw cc: MMrr. William Wilks Enclosures KMX 02111 Tillinghast. Nelson & Warren Affiliates in London, England Toronto. Canada Hamilton. Bermuda 200 Clarendon Street Boston. Massachusetts 02116 (617) 267-4300 September 8, 1982 Tillinghast, Nelson & Warren, Inc. CONSULTANTS ACTUARIES ATLANTA BOSTON COLUMBUS DAUAS Of NVfR fT WORTH iosHartford jac*sonvuu Kansas cit> anccles NFW ORLEANS NEW YORK * SAN AMOMO ST LOUIS Mr. William Wilks Reed Decorative Products Cloisters House High Street Rickmansworth, Herts WD 31 BG England Dear Mr. Wilks: This letter and its attachments have been prepared to reflect the newly released report by Dr. Selikoff. In the newly released r-eport. Dr. Selikoff has revised his calculations as to population at risk and as to relative disease frequencies. We have reflected these revisions in our model and have developed revised estimates. These are shown in the attached exhibits, which are simply revisions from exhibits .contained in our August,' 1982 report. Exhibit I is a revision of the exhibit from pages 10-11 of our report. The conclusion is that the expected total cost of asbestos-related claims is now $5.7 million. (An upper bound estimate would be $8.5 million.) This is about 25% less than the $7.5 million estimate in our previous report, due to a lower number of expected mortalities, particularly for mesothelioma and asbestosis. Asbestosis mortalities are now calculated as being one-third the level of mesothelioma mortalities. In his latest report, "Disability Compensation for AsbestosAssociated Disease in the United States," Dr. Selikoff revised his estimates as to population at risk and disease frequencies. In particular, the calculated number of people exposed to asbestos was increased, while the average duration of exposure was decreased. While these changes did not substantially alter Dr. Selikoff's conclusions, they did reduce the anticipated disease rate for construction workers. The revisions we made to our model's assumptions and the resulting calculations are attached here as Exhibit II, corresponding to page 12 of our report, and Section II, Exhibits I through V, corresponding to pages 36 through 62 of our report. Those assumptions which were revised have been noted with a double asterisk for your KMX 02112 Tillinghast. Nelson & Warren Affiliates in London. England Toronto. Canada Hamilton. Bermuda ) Mr. William Wilks 2- - September 8, 1982 convenience. One assumption worth noting pertains to the expected filing percentages shown in Exhibit 1, Sheet 2. Based upon more recent information, we slightly modified upward our percentages for the years 1982 through 1985. We have also prepared some additional information which you may find useful. The attached Exhibit A corresponds to the Exhibit A provided to you by Jim Hurley in his 7/29/82 letter. This exhibit displays the expected costs by calendar year of manifestation, and sums to the $5.7 million noted above. In rega rd to your recent cable to Jim MacG innitie, we have investi<gated the four questions contained therein. 1) In regard to the popula tion at ris k, there is a reflection of K-M's inc reased mark et share in 1968. Please see Page 22 of o ur report. ' 2) To address the question of populat ion at r isk , we have attached Exhibit B, whi ch is an ex pansiori of the exhibit on Page 37 of our repor t. Exhibit B, Shee t 1 , displays the calculation of the number- of residential construction workers exposed each year to a K-M asbestos product, and the percentage those workers represent relative to all construction workers. On Sheet 2, this percentage is applied to Selikoff's new entrants to determine the number of new entrants who were exposed to K-M products. 3) We are still investigating the subject of growth in ' residential construction workers during the time period in question. The information we have seen so far does not seem to indicate that there has beenn a significant upward movement in the relative numbers of residential workers. We are currently seeking other sources of data on the subject. 4) We used a 25% rate of unsuccessful claims to relect that not all claimants will receive damages from the company. Some claimants will simply not present a strong enough case to win a jury award. Manville has stated that 40% of the claims filed against them are unsuccessful, while other industry analysts have used the 25% figure. We felt the 25% figure to be appropriately conservative for our calculations. Tillinghast, Nelson & Warren KMX 02172 \ Mr. William Wilks -3- September 8, 1982 Finally, we have attached copies of recent news articles on the subject of Manville's bankruptcy filing. If you have any questions on this material, please don't hesitate to call. Sincerely, n.z. J Fohn P. Tierney Consulting Actuary JPTtarc Attachments Tillinghast, Nelson & Warren . 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X X CM fM to 'f D~ O Cu reoN^reo we coco -o *"* m oo oo o we i". re--*'-ore X cd 'O pv - pe Cu ^r--* O'-*-m--o CCCD -0*T"^ re oo oo Ooo NNOO-VNM X O' ^rpvP'CN a. lOCN ^ P* ' re COCO P' ^ *^ re oo ooooo re o r- rsi p"0 re X cn ^ co -ops. re *o -- n o --x o CN ajoaxmcMoo re oo ooooo CO ue px CN ^5" CD CN X aa n rj x xx -o Cu in we re ^ to CD CD N/efJo O re oooo UJ--' cn oooo we ox -- cn re *- ueo >o Tillinghast, Nelson & Warren 40 Exhibit I Sheet 1 REED DECORATIVE PRODUCTS, INC. Projection of Loss Costs Due to Asbestos-Related Liability Disease Type Expected Number of Successfully Filed Claims(a) Expected Average Cost In Current Dollars {Including Legal Expenses)(b) Expected Total Cost (Current Dollars) Respiratory Cancer 156 $12,750 $1,989,000 Mesothelioma 140 ' 21,000 2,940,000 Other Cancers (c) 32 12,750 408,000 Asbestosis 33 9,750 321 ,750 Total 361 $5,658,750 (a) Exhibit I, Sheet 2. (b) Exhibit II, Items (3), (4) and (5). (c) Including non-occupational exposure. / Tillinghast, Nelson & Warren KMX 02179 REED DECORATIVE PRODUCTS. INC. Estimated Number of Successfully Filed Claims Exhibit I Sheet 2 Disease Type O) Respiratory Cancer Calendar Year (2) Expected Manifestations(a) (3) Ex pected Percentage To File(b) (4) Expected Number Filed(c) (5) Expected Number Successfully Filed(d) (6) 1982 1983 1984 1985 1986+ Total 1.91 2.13 2.37 2.62 253.74 262.77 63.8 67.8 71.8 75.8 79.7 -- 1.22 1.44 1.70 1.99 202.23 208.58 .92 1.08 1.28 1.49 151.67 156.44 Mesothelioma ** 1982 1983 1984 1985 1986+ Total .47 .55 .65 .77 187.84 190.28 78.8 83.8 88.6 93-6 98.5 . .-- ... .37 .46 .58 .72 185.02 187.15. .28 .35 .44 .54 138.77 .140.38 Asbestosis 1982 1983 1984 1985 1986+ Total .35 .40 .46 .52 60.53 62.26 56.3 59.8 63.3 66.9 70.4 -- .20 .24 .29 .35 42.61 43.69 . 15 .18 .22 .26 31.96 32.77 All Other (e) All Types 1982 1983 1984 1985 1986+ Total All .64 .70 .79 .88 111.89 114.90 630.21 30.0 31.9 33.8 35.7 37.5 -- _ .19 .22 .27 .31 41.96 42.95 482.37 .14 .17 .20 .23 31.47 32.21 361.80 NOTES: (a) See Section II, Exhibit IV, Sheet 16. (b) See Exhibit II. (c) Column (3) x Column (4). (d) Column (5) x 75S(e) Includes General Population exposure. KMX 02178 Tillinghast. Nelson & Warren Exhibit II REED DECORATIVE PRODUCTS, INC. Calculation of Expected Costs Due to Asbestos Liability Assumptions * (1) Percentage of expected asbestos disea;se v ictims fil ing cl a im by disease type: Calendar Year Respiratory Mesothelioma A;sbestosis Oth er D i se ase 1982 1983 1984 1985 1986 + 63.8 67.8 71.8 75.8 79.7 78.8 83.8 88.6 93.6 98.5 56.3 59.8 63.3 66.9 70.4 30. 0 31. 9 33. 8 35. 7 37. 5 (2) Claims settling with i ndemnity cost: 75% (3) Average claim cost at current value: $10 , 000 (4) Legal expense factor: 50% (5) Claim cost relativity by disease type - Disease Type Asbestosis Mesothelioma All Other Cancers Average Rel at i vity .65 1.40 .85 1.00 ** (6) One asbestosis death occurs for each three asbestos-related mesothelioma deaths. (7) General population contributes an additional 10% incidence to the otherwise indicated asbestos-related disease. KMX 02128 Tillinghast, Nelson & Warren REED DECORATIVE PRODUCTS ASBESTOS LITIGATION MODEL POPULATION AT RISK BY CALENDAR YEAR OF ENTRY I SECTION II EXHIBIT II Sheet 1 CALENDAR YEAR (1) 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 .1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 ~ CONSTRUCTION WORKERS TOTAL RESIDENTIAL- SELECTED STATES(A) TOTALCOUNTRY -WIDE(B) (2) 0 0 0 0 0 0 0 0 17387 18673 18562 18793 19320 20041 20427 20545 20781 19904 34846 36801 36149 37335 40679 44317 44478 40993 43148 48093 54624 0 (3) 2101000 2343000 2360000 2341000 2316000 2477000 2653000' 2577000 2420000 2577000 2497000 2426000 2500000 2562000 2637000 2749000 2818000 2741000 282200Q 3012000 2990000 3071000 3257000 3405000 3294000 2808000 2814000 3004000 3336000 3550000 ESTIMATED NUMBER OF NEW ENTRANTS BY CAL. YEAR OF ENTRY <C) (4) 0,0 0.0 0.0 0.0 0.0 0.0 0.0 17304.4 1044.7 1122.0 1294.2 1310.3 1347.0 1397.3 1424.2 1432.4 1448.8 1387.7 2429.5 2565.8 2264.4 2338.7 2548.1 2776.1 2786.1 2567.8 2702.8 3012.6 3421.7 0.0 Tillinghast, Nelson & Warren KMX 02139 ) REED DECORATIVE PRODUCTS, INC. Notes to Sheet 1 Section II Exhibit II Sheet 2 (A) Total number of employees from Exhibit I adjusted by following: (1) 15.7% to convert from total construction employees to residential construction workers. (2) 15% and 25% to reflect K-M's market penetration for the 1958-1967 and 1968-1978 periods, respectively (i.e., on average, approximately 15% or 25% of the workers come in contact with a K-M product). - [e.g., for 1960, (.157) x (.15) x (788,200) = 18,562] (B) Total number of construction workers. countrywide- from -U.S. Department of Labor. ** (C). Estimated number of newly exposed residential construction workers by calendar year of entry. Derived using Selikoff's estimate of population at risk. (e.g., for 1960, (18,562/26,764,000*) x 1,866,000* = 472.3) ** (D) Estimated beginning population is determined by taking average of the 1958, 1959 and 1960 new entrants and multiplying by the average duration of 15.0 years.. (i.e., 15.0 x (1044.7 + 1,122.0 + l,294.2)/3 = 17,304.4) ** The Selikoff study summarizes new entrants into 10 year groups. Therefore, 26,764,000 is the 1960-1969 sum of values in column (3) of Sheet 1 and 1,866,000 is the Selikoff estimate, of newly exposed construction workers in the 1960 - 1969 period. KMX 02140 Tillinghast, Nelson & Warren ' 38 [ asbestos LITIGATION MODI t POPULATION AT RISK BY AGE GROUP AND YEAR OF ENTRY SECTION II EXHIBIT III Sheet 1 CALENDAR YEAR OF ENTRY ESTIMATED REMAINING LIVES 0 1/1/82 BY ENTRY AGE GROUP <20 20-24 25-34 35-44 45-54 55-64 >64 TOTAL 1957 1958 1959 1960 1961 1962 1963 1964 .1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 TOTAL 1166.2 147.5 159.3 184.7 188.0 194.1 202.2 206.9 208.9 212.0 203.7 357.7 378.8 335.2 347.1 379.1 414.0 416.5 384.7 405.8 453.3 516.0 1666.4 261.1 282.5 328.1 334.3 345.6 360.4 369.2 373.0 378.9 364.3 640.1 678.3 600.5 622.1 679.7 742.5 747.1 690.3 728.3 813.6 926.2 3053.3 217.5 236.8 276.6 283.3 294.5 308.5 317.4 322.0 328.3 316.8 558.4 593.4 526.7 546.8 598.7 . 655.2 660.4 611.0 645.4 721.8 822.4 2779.3 1599.8 109.4 50.2 121.0 57.6 143.4 70.6 148.8 75.7 156,6 82.0 .165,9 89.2 172.5 95.1 176.7 99.6 181.8 104.6 177.0 103.7 314.4 187.4 336.6 203.8 300.8 184.7 314.3 195.6 346.2. . 218.1 381.6 242.7 385.9 248,4 358.8 233.2 380.6 249.7 427.4 282.8 488.7 325.9 353.1 11.9 15.0 20.0 23.1 26.8 31.1 35.1 38.7 ` 42.7 44.2 83.2 93.9 88.1 96.3 110.6 126.4 132.6 127.3 139.1 160.5 188.2 44.0 10662.0 2.0 799.5 2.7 874.8 3.9 1027.3 4.9 1058.0 6.1 1105.6 7.5 1164.9 8.9 1205.1 10.4 1229.3 12.0 1260.3 13.0 1222.6 25.4 2166.5 29.6 2314.3 28.7 2064.8 32.3 2154.5 ,38.1 2370.5 44.6 2606.4 47.9 2638.8 46.9 2452.1 52.2 2601.2 61.4 2920.6 73,1 3340.3 7461.5 12932,4 12895.1 8367.2 5000.3 1987.8 595.4 49239.7 KMX 02141 Tiliinghast, Nelson & Warren REED DECORATIVE PRODUCTS ASPESTOS LITIGATION MODEL / SECTION II EXHIBIT IV SHEET 1 DISPLAY OF EXPECTED MORTALITY BY CALENDAR YEAR AGE GROUP! <20 CAL. NORMAL YEAR MORTALITY RESPIRATORY EXCESS CANCER MORTALITY ALL OTHER MESOTHELIOMA TOTAL EXCESS TOTAL MORTALITY 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 . 2013 2014 2015 2016' 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026+ 26.70 28.29 30.02 31.92 33.98 36.22 38.67 41.29 44.10 47.12 50.34 53.78 57.42 61.28 65.34 69.62 74.09 78.77 83.70 88.91 94.38 100.05 105.88 111.81 117.85 123.97 130.11 136.26 142.33 148.30 154.14 159.81 165.27 170.44 175.24 179.61 183.45 186.67 189.20 190.97 191.89 191.91 190.97 189.09 2562.30 TOTAL 7333.43 0.03 0.19 0.23 0.28 0.33 0.39 0.44 0.50 0.56 0.62 0.68 1.11 1.23 1.34 1.46 1.57 1.69 1.78 1.87 1.95 2.00 2.03 2.13 2.18 2.20 2.22 2.24 2,20 2.16 2.11 2.06 2.02 1.98 1.81 1.64 1.49 1.34 1.21 1.08 0.97 0.85 0.75 0.65 0.57 2.99 61.16 0.02 0.04 0.04 0.05 0.06 0.07 0.07 0.08 0.09 0.10 0.11 0.16 0.18 0.19 0.21 0.22 0.24 0.25 0.26 0.27 0.27 0.40 0.42 0.44 0.46 0.47 0.49 0.49 0.50 0.50 0.49 0.48 0.50 0.49 0.48 0.46 0.46 0.44 0.42 0.40 0.39 0.38 0.37 0.32 1.70 14.93 0.05 0.06 0.07 0.09 0.10 0.13 0.15 0.18 0.21 0.25 0.29 0.33 0.38 0.44 0.50 0.57 0.65 0.73 0.82 0.92 1.02 1.09 1.16 1.23 1.30 1.37 1.43 1.49 1.54 1.60 1.64 1.68 1.71 1.72 1.72 1.71 1.68 1.65 1.60 1.54 1.47 1.39 1.30 1.21 9.84 52.01 0.09 0.29 0.35 0.42 0.49 0.58 0.67 0.76 0.86 0.97 1.07 1.61 1.79 1.98 2.17 2.37 2.57 2.76 2.95 3.14 3.30 3.51 3.72 3.86 3.96 4.06 4.15 4.19 4.21 4.21 4.19 4.18 4.18 4.02 3.84 3.66 3.49 3.30 3.11 2.91 2.71 2.52 2.31 2.10 14.53 128.09 26.79 28.57 30.37 32.33 34.47 36.80 39.33 42.05 44.96 48.09 51.42 55.39 59.21 63.25 67.51 71.99 76.66 81.53 86.65 92.04 97.68 103.56 109.60 115.67 121.82 128.03 134.27 140.45 146.53 152.50 158.33 164.00 169.45 174.45 179.08 183.28 186.94 189.97 192.31 193.88 194.61 194.42 193.28 191.18 2576.83 7461.52 Tillinghast, Nelson & Warren KMX 02109 REED DECORATIVE PRODUCTS ASBESTOS LITIGATION MODEL ) SECTION II EXHIBIT IV SHEET 2 DISPLAY OF EXPECTED MORTALITY BY CALENDAR YEAR AGE GROUP: 20-24 CAL. NORHAL YEAR MORTALITY RESPIRATORY EXCESS CANCER MORTALITY ALL OTHER MESOTHELIOMA TOTAL EXCESS TOTAL MORTALITY 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026-f 54.31 57.79 61.60 65.75 70.22 75.02 80.18 85.69 91.59 97.85 104.50 111.51 118.89 126.63 134.72 143.25 152.24 161.68 171.49 181.60 191.91 202.45 213.15 223.93 234.76 245.49 256.11 266.55 276.75 286.61 296.04 304.88 313.03 320.30 326.57 331.70 335.55 337.98 338.85 338.05 335.58 331.48 325.84 318.75 3634.98 TOTAL 12733.78 0.04 0.28 0.35 0.43 0.52 0.61 0.70 0.80 0.91 1.01 1.11 1.72 1.92 2.13 2.34 2.54 2.74 2.90 3,06 3.20 3.29 3.34 3.53 3.61 3.64 3.66 3.69 3.63 3.56 3.46 3.37 3.29 3.22 2.93 2.65 2.39 2.14 1.91 1.70 1.50 1.31 1.14 0.97 0.84 3.97 98.05 0.03 0.06 0.07 0.08 0.09 0.11 0.12 0.13 0.15 0.16 0.18 0.26 0.28 0.31 0.34 0.36 0.38 0.40 0.42 0.44 0.45 0.61 0.66 0.69 0.72 0.74 0.77 0.78 0.78 0.78 0.77 0.76 0.78 0.76 0.74 0.72 0.71 0.68 0.65 0.61 0.58 0.56 0.55 0.48 2.25 22.97 0.07 0.09 0.11 0.14 0.17 0.20 0.24 0.29 0.34 0.40 0.46 0.53 0.62 0.71 0.81 0.92 1.04 1.17 1.31 1.46 1.62 1.73 1.84 1.96 2.07 2.17 2.27 2.36 2.45 2.52 2.58 2.64 2.67 2.67 2.66 2.63 2.57 2.49 2.40 2.30 2.17 2.03 1.87 1.72 12.17 77.65 0.15 0.43 0.53 0.65 0.78 0.92 1.07 1.22 1.39 1.57 1.74 2.51 2.82 3.15 3.48 3.82 4.16 4.48 4.79 5.10 5.36 5.68 6.03 6.26 6.43 6.58 6.72 6.76 6.78 6.77 6.73 6.69 6.67 6.37 6.06 5.74 5.42 5.08 4.75 4.41 4.07 3.73 3.39 3.03 18.39 54.46 58.23 62.13 66.40 70.99 75.93 81.24 86.92 92.98 99.42 106.24 114.02 121.72 129.78 138.21 147.07 156.40 166.16 176.28 186.69 197.27 208.13 219.17 230.19 241.19 252.07 262.83 273.31 283.53 293.38 302.77 311.57 319.70 326.67 332.63 337.44 340.97 343.07 343.59 342.46 339.65 335.21 329.23 321.78 3653.37 198.66 12932.44 Tillinghast, Nelson & Warren KMX 02110 REED DECORATIVE FRODUCTS ASBESTOS LITIGATION MODEL SECTION II EXHIBIT IV SHEET 3 DISPLAY OF EXPECTED MORTALITY BY CALENDAR YEAR AGE GROUP: 25-34 CAL. NORMAL YEAR MORTALITY RESPIRATORY EXCESS CANCER MORTALITY ALL OTHER NESOTHELIOHA TOTAL EXCESS TOTAL MORTALITY 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015. 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 + 109.34 116.62 124.29 132.36 140.82 149.64 158.85 168.58 178.91 189.78 201.03 212.51 224.02 235.65 247.31 258.87 270.29 281.36 292.05 302.31 312.05 321.16 329.52 336.94 343.30 348.36 352.00 354.08 354.49 353.12 349.92 344.89 338.15 329.89 320.34 309.73 298.24 286.02 273.29 260.34 247.04 233.07 218.18 202.49 1350.71 TOTAL 12761.92 0.05 0.48 0.55 0.61 0.69 0.77 0.85 0.93 1.01 1.09 ' 1.16 2.08 2.17 2.26 2.35 2.44 2.52 2.58 2.62 2.65 2.64 2.59 2.66 2.67 2.64 2.60 2.57 2.47 2.38 2.25 2.13 2.02 1.92 1.70 1.49 1.30 1.13 0.97 0.83 0.70 0.59 0.48 0.39 0.32 1.08 72.37 0.04 0.08 0.09 0.10 0.11 0.13 0.14 0.15 0.16 0.17 0.18 0.30 0.31 0.32 0.33 0.34 0.35 0.36 0.36 0.36 0.36 0.55 0.55 0.55 0.54 0.53 0.53 0.51 0.50 0.47 0.45 0.43 0.43 0.41 0.39 0.37 0.35 0.33 0.31 0.28 0.25 0.24 0.22 0.18 0.61 ' 14.73 0.10 0.12 0.14 0.17 0.21 0.24 0.29 0.33 0.39 0.44 0.51 0.58 0.65 0.73 0.82 0.91 1,00 1.10 1.20 1.30 1.40 1.42 1.46 1.49 1.52 1.54 1.56 1.57 1.57 1.57 1.56 1.55 1.52 1.48 1.43 1.37 1.29 1.21 1.13 1.04 0.95 0.84 0.73 0.64 2.98 46.03 0.19 0.68 0.78 ' 0.89 1.01 1.14 1.27 1.41 1.56 1.71 1.85 2.95 3.13 3.31 3.50 3.68 3,87 4.03 4.18 4.31 4.40 4.56 4.67 4.71 4.70 4.67 4.65 4.55 4.45 4.30 4.14 4.00 3.87 3.59 3.31 3.03 2.77 2.51 2.26 2.02 1.79 1.56 1.35 1.14 4.68 109.53 117.31 125.08 133.25 141.83 150.77 160.12 169.99 180.46 191.49 202.88 215.46 227.15 238.97 250.81 262.56 274.16 285.39 296.23 306.61 316.45 325.72 334.19 341.65 347.99 353.04 356.65 358.63 358.94 357.42 354.06 348.88 342.02 333.47 323.65 312.76 301.01 288.53 275.55 262.36 248.83 234.63 219.53 203.64 1355.39 133.14 12895.06 Tillinghast, Nelson & Warren KMX 02113 REED DECORATIVE PRODUC'S ASBESTOS LITIGATION MODEL SECTION II EXHIBIT IV SHEET 4 DISPLAY OF EXPECTED MORTALITY BY CALENDAR YEAR AGE GROUP: 35-44 CAL. NORMAL YEAR MORTALITY RESPIR ATORY EXCESS CANCER MORTALITY ALL OTHER HESOTHELIZMA TOTAL EXCESS TOTAL MORTALITY 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 . 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 .2013 2014 2015 2016 ' 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026+ 168.07 177.37 186.60 195.82 204.95 213.85 222.49 230.67 238.36 245.52 252.09 257.95 262.98 267.02 270.00 271.69 272.00 270.85 268.16 263.90 258.10 250.86 242.37 232.91 222.76 212.18 201.40 190.57 179.93 169.76 159.83 149.74 139.15 128.14 117.22 106.98 97.27 87.44 77.64 68.02 58.74 49.96 41.79 34.33 106.40 TOTAL 8323.80 0.04 0.42 0.45 0.48 0.51 0.54 0.57 0.59 0.61 0.63 0.65 1.21 1.18 1.15 1.12 1.09 1.07 1.04 1.00 0.97 0.93 0.88 0.88 0.85 0.81 0.78 0,75 0.70 0.65 0.60 0.55 0.50 0.47 0.39 0.32 0.26 0.21 0.17 0.13 0.10 0.08 0.06 0,04 0.03 0.06 26.48 0.03 0.07 0.07 0.08 0.08 0.08 0.09 0.09 0.10 0.10 0.10 0.17 0.17 0.16 0.16 0.15 0.15 0.14 0.14 0.13 0.13 0.18 0.17 0.16 0.14 0.13 0.13 0.12 0.11 0.10 0.09 0.08 0.08 0.07 0.06 0.06 0.05 0.04 0.04 0.03 0.03 0.03 0.02 0.02 0.03 . 0.08 0.09 0.11 0.13 0.15 0.17 0.19 0.21 0.24 0.27 0.29 0.32 0.35 0.37 0.39 0.42 0.44 0.45 0.46 0.47 0.48 0.46 0.44 0.43 0.41 0.40 0.39 0.38 0.36 0.35 0.33 0.32 0.30 0.28 0.25 0.23 0.21 0.18 0.16 0.14 0.11 0.09 0.07 0.05 0.13 4.37 12.54 0.14 0.58 0.63 0.68 0.73 0.79 0.84 . 0 ..90 0.95 1.00 1.04 1.70 1.69 1.68 1.67 1.66 1.65 1.63 1.61 1.57 1.53 1.51 1.49 1.43 1.37 1.31 1.26 1.19 1.12 1.04 0,97 0.91 0.85 0.74 0.64 0.55 0.47 0.40 0.33 0.27 0.22 0.17 0.13 0.10 0.22 168.21 177.94 187.22 196.50 205.68 214.64 223.34 231.57 239.31 246.52 253.12 259.65 264.67 268.71 271.67 273.35 273.65 272.48 269.77 265.48 259.63 252.37 243.86 234.34 224.13 213.49 202.66 191.76 181.05 170.80 160.81 150.65 140.00 128.88 117.86 107.53 97.74 87.84 77.97 68.29 58.96 50.13 41.92 34.43 106.62 43.39 8367.19 Tillinghast. Nelson & Warren . KMX 02114 ) REED DECORATIVE PRODUCTS ASBESTOS LITIGATION MODEL DISPLAY OF EXPECTED MORTALITY BY CALENDAR YEAR AGE GROUF: 45-54 SECTION II EXHIBIT IV SHEET 5 CAL. NORMAL YEAR MORTALITY RESPIRATORY EXCESS CANCER MORTALITY ALL OTHER HESOTHELIOMA TOTAL EXCESS TOTAL MORTALITY 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 ' 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 20162017 2018 2019 2020 2021 2022 2023 2024 2025 2026+ 214.32 218.75 222.41 225.16 226.92 227.49 226.79 224.77 221.36 216.56 210.42 203.05 194.64 185.49 175.90 166.11 156.34 146.74 137.54 128.99 120.87 112.75 104.29 95.57 87.06 79.30 72.11 64.84 57.58 50.45 43.57 37.05 31.00 25.46 20.51 16.17 12.47 9.42 6.94 4.98 3.47 2.32 1.44 0.78 0.40 TOTAL 4990.53 0.02 0.23 0.23 0.23 0.24 0.23 0.23 0.23 0.22 0.21 0.21 0.34 0.31 0.28 0.26 0.24 0.23 0.22 0.21 0.20 0.19 0.18 0.18 0.17 0.16 0.14 0.13 0.12 0.10 0.09 0.07 0.07 0.06 0.04 0.03 0.02 0.01 O.OJ, 0.01 0.00 0.00 0.00 0.00 0.00 0.00 6.37 0.02 0.04 0.04 0.04 0.04 0.04 0.04 0.04 0.04 0.04 0.03 0.05 0.05 0.04 0.04 0.04 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.02 0.02 0.02 0.02 0.02 0.01 0.01 0.01 0.01 0.01 0.01 0.00 1 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.98 0.04 0.05 0.06 0.06 0.07 0.07 0.08 0.08 0.09 0.09 0.09 0.10 0.10 0.10 0.09 0.09 Q.09 0.09 0.08 0.08 0.08 0.07 0.07 0.06 0.06 0.06 0.05 0.05 0.05 0.04 0.04 0.03 0.03 0.02 0.02 0.01 0.01 0.01 0.01 0.00 0.00 0.00 0.00 0.00 0.00 2.37 0.08 0.32 0.33 0.33 0.34 0.35 0.35 0> 35 0.35 0.34 0.33 0.49 0.45 0.42 0.39 0.37 0.36 0.34 0.32 0.31 0.29 0.28 0.28 0.26 0.24 0.22 0.20 0.18 0.16 0.14 0.12 0.11 0.09 0.07 0.05 0.04 0.03 0.02 .0.01 0.01 0.01 0.00 0.00 0.00 0.00 9.72 214.40 219.06 222.74 225.50 227.26 227.84 227.14 225.12 221.71 216.91 210.75 203.54 195.09 185.91 176.29 166.48 156.69 147.08 137.87 129.30 121.16 113.03 104.57 95.83 87.30 79.52 72.32 65.02 57.74 50.59 43.69 37.16 31.09 25.53 20.56 16.21 12.50 9.44 6.95 4.99 3.48 2.32 1.44 0.78 0.40 5000.25 Tillinghast. Nelson & Warren KMX 02115 } REED DECORATIVE PRODUCTS ASBESTOS LITIGATION MODEL SECTION II EXHIBIT IV SHEET 6 DISPLAY OF EXPECTED MORTALITY BY CALENDAR YEAR AGE GROUP! 55-64 CAL. NORMAL YEAR MORTALITY RESPIR ATORY EXCESS CANCER MORTALITY ALL OTHER HESOTHELIOMA TOTAL EXCESS TOTAL MORTALITY 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026+ 151.95 146.52 140.36 133.66 126.64 119.49 112.36 105.37 98.68 92.48 86.61 80.75 74.66 68.38 62.26 56.70 51.57 46.38 41.20 36.11 31.19 26.54 22.21 18.25 14.70 11.60 8,95 6.76 4.98 3.57 2.49 1.67 1.04 0.56 0.23 0.05 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 TOTAL 1986.91 0.01 0.05 0.04 0.04 0.03 0.03 0.03 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.01 0.01 0.01 0.01 0.01 0.01 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.57 0.00 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.00 0.00 0.00 0.00 0.00 0,00 0.00 0.00' 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 OiOl 0.01 0.01 0.01 0.01 0.01 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.11 0.23 0.02 0.07 0.06 0.06 0.05 0.05 0.04 0 .-04 0.04 0.04 0.03 0.04 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.02 0.02 0.02 0.02 0,01 0.01 0.01 0.01 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.90 151.97 146.59 140.42 133.72 126,69 119.53 112.40 105.41 98.71 92.52 86.64 80.79 74.69 68.41 62.29 56.73 51.60 46.41 41,23 36.13 31.22 26,56 22.23 18.27 14.72 11.61 8.96 6.76 4.98 3.58 2.49 1.67 1.04 0.56 0.23 0.05 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1987.81 Tillinghast. Nelson & Warren KMX 02167 REED DECORATIVE PRODUCTS ASBESTOS LITIGATION MODEL SECTION II EXHIBIT IV SHEET 7 DISPLAY OF EXPECTED MORTALITY BY CALENDAR YEAR AGE GROUP: >64 CAL. NORMAL YEAR MORTALITY RESPIRATORY EXCESS CANCER MORTALITY ALL OTHER MESOTHELIOMA TOTAL EXCESS TOTAL MORTALITY 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 . 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 '2014 2015 ' 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026+ 53.76 50.87 48.00 45.20 42.56 40.01 37.43 34.73 31.94 29.18 26.61 24.21 21.77 19.34 16.95 14.65 12.46 10.43 8.57 6.91 .5.45 4.21 3.18 2.34 1.68 1.17 0.78 0.49 0.26 0.11 0.03 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 TOTAL 595.28 0.00 0.01 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.05 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 . . 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Q ..00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00- 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0,00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 . 0.01 0.03 0.00 0.01 0.01 0.01 0.01 0.01 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.10 53.76 50.88 48.01 45.21 42.57 40.02 37.44 34.74 31.94 29.18 26.62 24.21 21.78 19.35 16.96 14.65 12.47 10.43 8.58 6.91 5.45 4.21 3.18 2.34 1.68 1.17 0.78 0.49 0.26 0.11 0.03 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 595.38 Tillinghast, Nelson & Warren KMX 02168 REED DECORATIVE PRODUCTS ASBESTOS LITIGATION MODEL SECTION II EXHIBIT IV SHEET 8 DISPLAY OF EXPECTED MORTALITY BY CALENDAR YEAR . ALL AGE GROUPS CAL. NORMAL YEAR MORTALITY RESPIR ATORY EXCESS CANCER MORTALITY ALL OTHER MESO THELIOMA TOTAL EXCESS TOTAL MORTALITY 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015' 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026+ 778.44 796.21 813.27 829.87 846.08 861.71 876.76 891.10 904.93 918.50 931.60 943.77 954.39 963.79 972.48 980.88 988.99 996.22 1002.71 1008.72 1013.95 1018.00 1020.60 1021.76 1022.11 1022.08 1021.47 1019.55 1016.31 1011.92 1006.01 998.04 987.62 974.79 960.11 944.24 926.98 907.52 885.92 862.36 836.73 808.73 778.22 745.43 7654.79 TOTAL 48725.65 0.18 1.65 1.86 2.08 2.32 2.57 2.82 3.08 3.34 3.60 3.82 6.48 6.82 7.19 7.55 7.90 8.27 8.54 8.79 8.98 9.07 9.03 9.40 9.49 9.46 9.41 9.37 9.12 8.86 8.51 8.18 7.90 7.65 6.87 6.14 5.46 4.84 4.27 3.75 3.27 2.83 2.43 2.06 1.76 8.10 265.05 0.14 0.29 0.32 0.36 0.39 0.43 0.46 0.50 0.54 0.57 0.60 0.95 1.00 1,04 1.08 1.12 1.16 1.19 1.21 1.23 1.24 1.78 1.83 1.86 1.89 1.90 1.92 1.91 1.90 1.87 1.82 1.77 1.79 1.74 1.68 1.62 1.58 1.49 1.42 1.33 1.26 1.20 1.17 1.00 4.59 . 0.35 0.42 0.51 0.60 0.71 0.82 0.96 1.11 1.27 1.45 1.65 1.87 2.10 2.36 2.63 2..91 3.22 3.55 3.89 4.24 4.61 4.76 4.97 5.18 5.37 5.54 5.70 5.85 5.97 6.08 6.16 6.22 6.22 6.17 6.08 5.95 5.76 5.55 5.30 5.02 4.71 4.36 3.97 3.62 25.13 58.10 190.85 0.67 2.37 2.69 3.03 3.42 3.82 4.24 4,69 5.15 5.62 6.07 9.30 9.92 10.58 11.25 11.93 . 12.65 13.27 13.89 14.45 14.92 15.57 16.20 16.53 16.71 16.85 17.00 16.88 16.73 16.45 16.16 15.88 15.66 14.79 13.90 13.03 12.18 11.31 10.46 9.62 8.79 7.98 7.19 6.37 37.82 779.11 798.58 815.96 832.90 849.50 865.53 881.01 895.79 910.08 924.12 937.68 953.06 964.31 974.37 983.73 992.82 1001.64 1009.48 1016.60 1023.16 1028.86 1033.58 1036.80 1038.29 1038.82 1038.93 1038.47 1036.43 1033.04 1028.37 1022.17 1013.92 1003.29 989.58 974.01 957.27 939.16 918.84 896.38 871.98 845.52 816.72 785.41 751.80 7692.61 514.00 49239.66 KMX 02169 Til I inghast. Nelson & Warren REED DECORATIVE PRODUCTS ASBESTOS LITIGATION MODEL DISPLAY OF EXPECTED MANIFESTATIONS BY CALENDAR YEAR AGE GROUP: <20 CAL. YEAR EXCESS CANCER MANIFESTATIONS RESPIRATORY ALL OTHER MESOTHELIOMA TOTAL EXCESS SECTION II EXHIBIT IV SHEET 9 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026-f TOTAL 0.24 0.29 0.34 0.40 0.45 0.51 0.57 0.67 0.83 1.05 1.25 1.37 1.48 1.59 1.70 1.80 1.88 1.95 2.01 2.06 2.13 2.18 2.21 2.22 2.22 2.19 2.15 2.10 2.05 2.00 1.91 1.78 1.62 1.46 1.32 1.19 1.06 0.95 0.83 0.73 0.64 0.55 0.48 0.41 2.03 60.88 0.05 0.05 0.06 0.07 0.08 0.08 0.0? 0.11 0.13 0.16 0.18 0.20 0.21 0.22 0.24 0.25 0.26 0.28 0.32 0.38 .. . 0.43 0.44 0.46 0.48 0.49 0.49 0.50 ' 0.50 0.49 0.49 0.49 0.49 0.48 0.46 0.45 0.44 0.42 0.40 0.3? 0.37 0.35 0.31 0.27 0.23 1.15 0.06 0.08 0.10 0.12 0.14 0.16 0.1? 0.23 0.27 0.31 0.36 0.41 0.47 0.54 0.61 0.69 0.78 0.87 0.97 1.06 1.12 1.19 1.26 1.33 1.40 1.46 1.52 1.57 1.62 1.66 1.69 1.71 1.72 1.71 1.6? 1.66 1.62 1.57 1.51 1.43 1.35 1.25 1.16 1.08 8.21 0.36 0.42 0.50 0.58 0.67 0.76 0.86 1.01 1.22 1.52 1.7? 1.98 2.17 2.36 2.55 2.74 2.92 3.10 3.2? 3.50 3.67 3.82 3.93 4.03 4.10 4.14 4.16 4.17 4.16 4.15 4.0? 3.98 3.81 3.64 3.47 3.29 3.10 2.92 2.73 2.53 2.33 2.12 1.92 1.72 11.3? 14.86 51.93 127.67 Tillinghast, Nelson & Warren KMX 02181 v_` I REED DECORATIVE PRODUCTS ASBESTOS LITIGATION MODEL SECTION II EXHIBIT IV SHEET 10 DISPLAY OF EXPECTED MANIFESTATIONS BY CALENDAR YEAR AGE GROUP: 20-24 / 4 -/I <3 v ,u\ 1 ? CAL. YEAR EXCESS CANCER MANIFESTATIONS RESPIR ATORY ALL OTHER MESO TOTAL THELIOMA . EXCESS 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026+ TOTAL 0.37 0.45 0.54 0.63 0.73 0.83 0.93 1.08 1.32 1.66 1.97 2.17 2.38 2.58 2.76 2.93 3.08 3.20 3.30 3.40 3.51 3,60 3.64 3.66 3.65 3.61 3.53 3.45 3.36 3.26 3.11 2.88 2.61 2.35 2.10 1.87 1.66 1.46 1.28 1.11 0.95 0.82 0.70 0.59 2.57 97.63 0.07 0.08 0.10 0.11 0.12 0.14 0.15 0.17 0.20 0.25 0.29 0.31 0.34 0.36 0.39 0.41 0.42 0.45 0.51 0.59 0.66 0.69 0.72 0.75 0.76 0.78 0.78 0.78 0.77 0.77 0.77 0.76 0.74 0.72 0.70 0.67 0.64 0.61 0.58 0.56 0.52 0.46 0.40 0.34 1.46 .. . 0.10 0.13 0.15 0.19 0.22 0.26 0.31 0.37 0.43 0.50 0.58 0.66 0.76 0.86 0.98 1.11 1.24 1.39 1.54 1.68 1.79 1.90 2.01 2.12 2.22 2.32 2.40 2.48 2.55 2.61 2.65 2.67 2.67 2.64 2.60 2.53 2.45 2.35 2.23 2.10 1.95 1.79 1.64 1.50 9.91 - 0.55 0.66 . 0.79 0.92 1.07 1.23 1.39 1.62 1.95 2.41 2.83 3.15 3.48 3.80 4.13 4.44 4.74 5.04 5.35 5.67 5.96 6.20 6.38 6.53 6.64 6.70 6.72 6.71 6.68 6.64 6,53 6.31 6.01 5.71 5.40 5.08 4.75 4.42 4.10 3.76 3.42 3.07 2.74 2.43 13.94 22.86 77.52 198.01 / - . -r:n: -- t____* _____o w KMX 02182 ) REED DECORATIVE PRODUCTS ASBESTOS LITIGATION MODEL DISPLAY OF EXPECTED MANIFESTATIONS BY CALENDAR YEAR AGE GROUP.* 25-34 CAL. YEAR EXCESS CANCER MANIFESTATIONS RESPIRATORY ALL OTHER MESOTHELIOMA TOTAL EXCESS SECTION II EXHIBIT IV SHEET 11 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026+ TOTAL 0.56 0.63 0.71 0.79 0.87 0.95 1.03 1.19 1.47 1.89 2.19 2.28 2.37 2.45 2.52 2.58 2.62 2.64 2.63 2.63 2.64 2.65 2.63 2.59 2.53 2.45 2.35 2.23 2.11 1.99 1.85 1.66 1.46 1.27 1.10 0.95 0.81 0.68 0.57 0.47 0.38 0.31 0.25 0.20 0.60 71.71 0.10 0.13 0.11 0.16 0.12 0.19 0.13 0.23 0.14 0.26 0.15 0.31 0.16 0.36 0.18 0.41 0.22 0.48 0.28 0.54 0.31 0.61 0.32 0.69 0.33 0.77 0.34 0.86 0.35 0.95 0.36 1.05 0.36 1.15 0.38 1.25 0.43 1.34 ' 0.50 ' ' ' 1.41 0.55 1.44 0.55 1.47 0.54 1.50 0.53 1.53 0.52 1.55 0.51 . 1.56 0.49 1.57 0.47 1.57 0.45 1.57 0.43 1.56 0.42 1.53 0.40 1.50 0.38 1.45 0.36 1.40 0.35 1.33 0.32 1.25 0.30 1.17 0.27 1.08 0.25 0.99 0.23 0.89 0.21 0.79 0.18 0.69 0.14 0.60 0.11 0.51 0.34 2.20 0.79 0.90 1.01 1.14 1.27 1.41 1.55 1.79 2.17 2.71 3.11 3.29 3.47 3.65 3.83 3.99 4.13 4.26 4.40 4.54 4.63 4.67 4.67 4.65 4.60 4.52 4.41 4.27 4.13 3.98 3.80 3.57 3.30 3.03 2.78 2.52 2.28 2.04 1.81 1.60 1.38 1.18 0.99 0,83 3.14 14.59 45.87 132.17 KMX 02118 Tillinghast, Nelson & Warren ) REED DECORATIVE PRODUCTS ASBESTOS LITIGATION MODEL DISPLAY OF EXPECTED MANIFESTATIONS BY CALENDAR YEAR AGE GROUP: 35-44 CAL. YEAR EXCESS CANCER MANIFESTATIONS RESPIRATORY ALL OTHER MESOTHELIOMA TOTAL EXCESS SECTION II EXHIBIT IV SHEET 12 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026+ TOTAL 0.45 0.48 0.51 0.54 0.57 0.59 0.62 0.69 0.84 1.05 1.17 1.14 1.11 1.09 1.06 1.03 1.00 0.96 0.92 0.89 0.86 0.84 0.80 0.77 0.73 0.69 0.64 0.59 0.54 0.50 0.44 0.38 0.32 0.26 0.21 0.16 0.13 0.10 0.07 0.06 0.04 0.03 0.02 0.01 0.02 25.93 0.07 0.08 0.08 0.09 0.09 0.09 0.10 0.11 0.12 0.15 0.17 0.16 0.16 0.15 0.15 0.14 0.14 0.14 0.15- 0.16 0.17 0.15 0.14 0.13 0.12 0.12 0.11 0.10 0.09 0.08 0.08 0.07 0.06 0.06 0.05 0.04 ' 0.04 0.03 0.03 0.02 0.02 0.02 0.01 0.01 0.01 . 0.10 0.12 0.14 0.16 0.18 0.20 0.23 0.25 0.28 0.31 0.33 0.36 0.38 0.40 0.43 0.44 0.46 0.47 0.47 0.47 0.45 0.43 0.42 0.41 0.40 0.38 0.37 0.36 0.34 0.33 0.31 0.29 0.27 0.24 0.22 0.20 0.17 0.15 0.12 0.10 0.08 0.06 0.05 0.03 0.08 4.26 12.41 0.63 0.68 0.73 0.78 0.84 0.89 0.94 1.05 1.24 1.51 1.67 1.66 1.65 1.64 1.63 1.62 1.59 1.56 1.54 1.52 1.48 1.43 1.37 1.31 1.25 1.19 1.11 1.04 0.97 0.91 0.83 0.74 0.64 0.56 0.48 0.40 0.34 0.28 0.23 0.18 0.14 0.11 0.08 0.06 0.11 42.60 Tillinghast. Nelson & Warren KMX 02119 REED DECORATIVE PRODUCTS ASBESTOS LITIGATION HODEL DISFLAT OF EXPECTED MANIFESTATIONS BY CALENDAR YEAR AGE GROUP! 45-54 CAL. YEAR EXCESS CANCER MANIFESTATIONS . RESPIR ATORY ALL OTHER MESO THELIOMA TOTAL EXCESS SECTION II EXHIBIT IV SHEET 13 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026+ TOTAL 0.23 0.23 0.23 0.23 0.23 0.23 0.22 0.23 0.25 0.29 0.30 0.28 0.26 0.24 0.23 0.22 0.21 0.20 0.19 0.18 0.18 0.17 0.15 0.14 0.13 0.11 0.10 0.09 0.07 0.06 0.05 0.04 0.03 0.02 0.01 0.01 0.01 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 6.07 0.04 0.04 0.04 0.04 0.04 0,04 ` 0.04 0.04 0.04 0.05 0.05 ' 0.04 0.04 0.04 0.03 0.03 0.03 0.03 0.03 0.03 ' 0.03 0.02 0.02 0.02 0.02 0.02 0.01 0.01 0.01 0.01 0.01 0.01 0.00 0.00 0.00 0.00 .0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.92 0.05 0.06 0.06 0.07 0.08 0.08 0.09 0.09 0.09 0.09 0.10 0.10 0.09 0.09 0.09 0.09 0.08 0.08 0.08 0.07 0.07 0.07 0.06 0.06 0.06 0.05 0.05 0.04 0.04 0.03 0.03 0.02 0.02 0.02 0.01 0.01 0.01 0.01 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2.30 0.32 0.33 0.34 0.34 0.34 0.34 0.34 0.35 0.38 0.43 0.45 0.42 0.39 0.37 0.35 0.34 0.32 0.31 0.29 0.28 0.27 0.26 0.24 0.22 0.20 0.18 0.16 0.14 0.12 0.11 0.09 0.07 0.05 0.04 0.03 0.02 0.01 0.01 0.01 0.00 0.00 0.00 0.00 0.00 0.00 9.30 Tillinghast, Nelson & Warren KMX 02120 REED DECORATIVE FRODUCTS asbestos litigation model niSFLAY OF EXFECTED MANIFESTATIONS BY CALENDAR YEAR AGE GROUF: 55-64 CAL. YEAR EXCESS CANCER MANIFESTATIONS' RESPIR ATORY ALL OTHER HESOTHELIOMA TOTAL EXCESS SECTION II EXHIBIT IV SHEET 14 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026+ TOTAL 0.04 0.01 0.01 0.04 0.01 0.01 0.03 0.01 0.01 0.03 0,01 0.01 0.03 0.01 0.01 0.02 0.01 0.01 0.02 0.01 0.01 0.02 0.00 0.01 0.02 0.00 0.01 0.02 0.00 0.01 0.02 0.00 0.01 0.02 0.00 0.01 0.02 0.00 0.01 0.02 0.00 0.01 0.02 0.00 0.01 0.02 0.00 0.01 0.02 0.00 0.01 0.02 0.00 0.01 0.02 0.00 0.01 0.01 0.00 0.01 0.01 OiOO 0.00 0.01 0.00 0,00 0.01 0.00 0.00 0.01 0.00 0.00 0.01 0.00 0.00 0.00 0.00 . 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 . 0.00 0.00 0.00 0.00 0.00 0.51 0.10 0.21 0.06 0.06 0.05 0.05 0.04 0.04 0.04 0.04 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.02 0.02 0.02 0.02 0.01 0.01 0.01 0.01 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 o.oo 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.81 S Tillinghast, Nelson & Warren KMX 02121 ) REED DECORATIVE PRODUCTS ASBESTOS LITIGATION MODEL DISPLAY OF EXPECTED MANIFESTATIONS BY CALENDAR YEAR AGE GROUP: >64 CAL. YEAR EXCESS CANCER MANIFESTATIONS RESPIRATORY ALL OTHER MESOTHELIDHA TOTAL EXCESS SECTION II EXHIBIT IV SHEET 15 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 + TOTAL 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.05 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.01 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0,00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.03 0.01 0.01 0.01 0.01 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.08 KMX 02122 Tillinghast, Nelson & Warren v_/i ) REED DECORATIVE PRODUCTS ASBESTOS LITIGATION MODEL DISPLAY OF EXPECTED MANIFESTATIONS BY CALENDAR YEAR ALL AGE GROUPS SECTION II EXHIBIT IV SHEET 16 CAL. YEAR EXCESS CANCER MANIFESTATIONS' RESPIR ATORY ALL OTHER MESO THELIOMA TOTAL EXCESS 1?82 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 + TOTAL 1.91 2.13 2.37 2.62 2.88 3.13 3.39 3.88 4.73 5.97 6.90 7.26 7.62 7.97 8.29 8.58 8.80 8.96 9.07 9.18 9.34 9.45 9.44 9.38 9.27 9.06 8.77 8.45 8.14 7.80 7.37 6.74 6.03 5.36 4.74 4.18 3.67 3.19 2.76 2.37 2.02 1.71 1.45 1.22 5.23 262.77 0.33 0.36 0.40 0.44 0.47 0.51 0.54 0.61 0.72 0.88 1.00 1.04 1.09 1.12 1.16 1.19 1.21 . 1.28 . 1.43 1.66 1.83 1.87 1.89 1.91 1.91 1.91 1.89 1.85 1.81 1.78 1.76 1.72 1.67 1.61 1.55 1.48 1.40 1.32 1.25 1.18 1.10 0.97 0.82 0.69 2.96 0.47 0.55 0.65 0.77 0.89 1.03 1.19 1.36 1.55 1.76 1.99 2.23 2.49 2.77 3.07 3.39 3.72 4.06 4.40 4.69 4.87 5.07 5.27 5.45 5.62 5.77 5.91 6.02 6.12 6.18 6.22 6.19 6.13 6.01 5.85 5.65 5.42 5.15 4.86 4.53 4.17 3.79 3.45 3.12 20.40 2.71 3.05 3.43 3.82 4.24 4.67 5.12 5.85 7.00 8.62 9.89 10.53 11.20 11.86 12.52 13.15 13.73 14.31 14.90 15.53 16.03 16.39 16.60 16.74 16,80 16.74 16.56 16.33 16.07 15.77 15.34 14.66 13.82 12.98 12.15 11.31 10.48 9.67 8.87 8.08 7.29 6.48 5.73 5.03 28.58 57.60 190,28 510.65 127..'-7 l u ' ^ '1-<1 1 KMX 02123 O rrrtp REED DECORATIVE PRODUCTS, INC. Model Assumptions Section II Exhibit V Sheet 1 (1) Relationship of individual selected state residential construc tion workers to countrywide construction workers applied to projected workers exposed in construction industry is valid estimate of residential construction workers exposed in the selected states (factor'"is 15.7% based on Exhibit V, Sheet 5). (2) Adjustment for limited market penetration reflects the expectation that a Kelly-Moore product would have been involved in only 15% and 25% of residential construction situations for the periods 1957-1967 and 1968-1978, respectively. (See Exhibit V, Sheet 6 and text.) (3) For normal mortality we have used an accelerated mortality relative to the U.S. Life tables, by use of the 1961 Commissioner's Standard Industrial table-. This implies an expectation of a more rapid decrease in the population at risk (essentially, a "blue-collar"' population) versus the general public. Male mortality has been used throughout (see Exhibit III, Sheet 2). (-4) The age distribution for the existing work force in 1957 per data of the United States Statistical Abstract. Age Group < 19 20-24 25-34 35-44 45-54 55-64 >64 Percentage 7.3% 10.6% 20.9% 23.1% 20.7% 13.0% 44% (5) Age distribution of new entrants to the work force was extracted from a Selikoff analysis. The following distribution was used: Aqe Group <20 20-24 25-34 35-44 45-54 55-64 >64 Percentage 15.2% 27.3% 24.3% 14.6% 10.0% 6.1% 2.5% (6) The population by calendar year of entry and age group was matured to 1/1/82. The intent of this maturation was to determine the population at risk still living at 1/1/82. The normal mortality assumption (point (3)) was applied as well as applicable excess cancer mortality described below. (7) Disease frequencies are expected to vary by age group. The following factors form the basis for the underlying, or "background", risk of cancer mortality by"age group. These values represent frequency per 100,030 persons. Tillinghast. Nelson & Warren KMX 02180 57 vj ) Section II Exhibit V Sheet 2 Type Respiratory Other <20 .1 4.5 20-24 .2 8.2 25-34 1.3 13.8 Age Group 35-44 45-54 4.7 81.3 35.1 110.9 55-64 223.5 298.5 >64 203.6 1153.4 (8) The relative risk of cancer mortality for insulators is defined as a very simple linear relationship by Selikoff. The suggested relationship for "all other cancers" is signifi cantly reduced (factor of 10%) to reflect input from various insurers handling these claims. These insurers indicate that the frequency of asbestos-related other cancers are very infrequent and do not reflect a multiplier to the pre- existing, or background, risk of these cancers. It is worth noting that the studies available also indicate a less certain excess asbestos-related other cancer incidence, particularly of the magnitude expected for excess respira- . tory cancers. Time is the number of years from onset of exposure and relative risk represents the factor applied to the background cancer mortality in (7) above: Time Relative Risk 7.5 35 60> 1.0 6.5 1.8 * (9) The relative risks defined in point (7) reflect the exposure of insulation workers with 25 years' exposure. Based on studies of dose, duration and response, it has been estimated that con ' struction exposure represents a relative exposure of 5% of the 25- vear insulator exposure, except during the period 1958-1972 when . extensive use. of spray asbestos was occurring. The factor was amended to 7.5% during this period. (10) Changing smoking habits are reflected by factors applied by calendar year of entry and age group. These are described in Exhibit V, Sheet 4. . (11) Mesothelioma and asbestosis excess mortality were estimated as absolute frequencies. For mesothelioma the frequency below was used, while in the case of asbestosis, one excess mortality was estimated for each four otherwise determined cancer mortalities. Since, for mesothelioma, these frequencies reflect long-term insulator exposure, both the relativities in item (9) and the duration adjustment below are applied. KMX 02174 Tillinghast, Nelson & Warren ' 58 Section'11 Exhibit v Sheet 3 Time from Onset Frequency . Duration Adjustment ** <45 Years (T4*9)/(100,000)2 15`/25 ** >45 Years (-012) 15.0/25 (12) The time from manifestation to death is applied to the projected excess asbestos-related mortality. These lags vary by disease type as indicated below: Number of Years from Manifestation to Death Respiratory and All Other Lag Factors Mesothelioma Asbestosis 1 2 3 4 5 6 7 81 9 10 25% 60% 5% 40 30 5 25 10 5 10 5 15 ' 15 15 15 10 10 100% 100% 100% KMX 02175 Tillinghast, Nelson & Warren 59 ) REED DECORATIVE PRODUCTS, INC- Percentage of the Male Population Who Smoke (000s) Section II Exhibit V Sheet 4 1965 Age Present Total Group Smokers Population % 17-24 4,838 9,962 49% 25-44 12,814 21,613 59 45-64 9,527 18,401 52 >65 2,161 7,610 28 1970 Present Total Smokers Population % 1976 Present Total Smokers Population % 4,885 12,034 41% 3,508 8,997 39% 11,406 22,542 51 10,743 25,966 41 8,763 19,644 45 7,551 20,632 37 1,858 8,090 23 ' 1,939 8,961 22 Development of Relativities By Calendar Year of Entry Age Group 17-24 25-44 45-64 >65 Pre--1966 Percentage . ' Smokers Relativity 50 1.0000 60 1.000 50 1.000 30 1.000 1966-1974 Percentage Smokers Relativity 40 .800 50 .833 45 .900 25 .833 1975 and After Percentage Smokers Relativity 40 .800 40 .667 35 .700 20 .667 SOURCE: Uhited States Statistical Abstract KMX 02117 Tillinghast, Nelson & Warren 60 x? ) Section II Exhibit V Sheet 5 REED DECORATIVE PRODUCTS, INC. Construction Employees Determination of Residential Portion of All Construction Employees Category All Employees All Construction Workers . Number With Residential Exposure General Contractors - ---------- * 1,180,747 (27.9%) 963,362 (22.8%) 428,513 (10.1%) Heavy Construction 917,083 (21.7%) 757,465 (17.9%) 0 (0) Special Trade . Contractors. .' 2,135,828 (50.4%) . 1,827,124 (43.2%) 234,625 (5.5%) Total - All Employees 4,233,658 (100%) 3,547,951 (83.8%) t * 11: -- t--------- * O \ A f------ KMX 02184 61 ) Section II Exhibit V Sheet 6 REED DECORATIVE PRODUCTS, INC. Expected Kelly-Moore Market Penetration Calendar Year 1958 1959 1960 1961 - 1962 1963 1964 1965 1966 1967 - 1968 1969 1970 1971 1972 1973 1974 1975 1975 1977 1978 Asbestos Used (a) Index at % Market Penetration 25%(b) 50%(c) 250 3.0% " 6.0% 500 6.0 12.0 700 8.4 16.8 700 8.4 16.8 763 9.2 18.4 713 679 697 617 701 . 1,112 1,036 1,354 1,885 2,080 8.6 8.2 8.-4 7.4 8.4 13.4 12.5 16.3 22.7 25.0 17.2 16.4 16.8 14.8 16.8 25.8 25.0 32.6 45.4 50.0 1,434 1,308 791 724 1,276 17.2 15.7 9.5 8.7 15. 3 34.4 31.4 19.0 17.4 30.6 23 .3 .6 Sel ected Values: * ** Period 1957-1967 1968-1978 Expected ' Factor * 15.0% 25.0% Upper Bound 22.5% 37.5% (a) (b) * * (c) Thousands of tons per Exhibit II of Section VI. 25% x (column (2)/2,080) 37.5% x (column (2)/2,080) Tillinghast, Nelson & Warren KMX 02176 REED DECORATIVE FRODUCTS EXHIBIT A ASBESTOS LITIGATION MODEL DISPLAY OF EXPECTED LOSS COSTS BY CALENDAR YEAR OF MANIFESTATION ALL AGE GROUPS CAL. RESPIR YEAR ATORY DISEASE TYPE ALL OTHER MESO THELIOMA ASFESEXCESS TOTAL EXCESS 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 20.17 2018 2019 2020 2021 2022 2023 2024 2025 2026* 11646 13832 16290 19002 21913 23877 25827 29558 36045 45494 52578 55306 58054 60721 63217 65360 67071 68276 69129 69960 71150 72024 71976 71499 70617 69019 66824 64415 - 62024 59475 56148 51398 45921 40841 36163 31880 27951 24346 21044 18045 15377 13068 11067 9290 39823 TOTAL 1994542 1826 2166 2547 2969 ` 3422 3733 4048 4575 5427 6625 7547 7962 8382 8795 9192 9554 9871 10351 11116 12201 12996 13261 13437 13557 13613 13570 13429 13217 12973 12734 12481 12084 11545 11001 10460 9872 9250 8639 8068 7510 6879 6095 5256 4503 21976 5777 7304 9116 11294 13849 16041 18475 21161 24111 27333 30830 34605 38664 43006 47628 52517 57660 63040 68287. 72753 75491 78696 81746 84588 87215 89584 91667 93441 94890 95942 96446 96107 95024 93268 90798 87657 84059 79960 75385 70268 64665 58872 53541 48461 316409 410716 2947634 1436 1752 2120 2547 3033 3415 3828 4271 4744 5247 5778 6299 6814 7300 7755 8173 8545 8903 . . 9231 9524 9777 10007 10198 10343 10436 10468 10433 10325 10148 9904 9594 9218 8780 8294 7828 7319 6813 6287 5760 5235 4662 4126 3633 3184 15968 319454 20686 25053 30073 35813 42217 47066 52177 59565 70327 84699 96733 104172 111914 119823 127792 135604 143148 150570 157764 164439 169414 173988 177357 179987 181880 182641 182352 181399 180036 178056 174669 168806 161271 153403 145249 136728 128073 119231 110257 101058 91583 82162 73497 65438 394176 5672345 Tillinghast, Nelson & Warren KMX 02177 vj ) REED DECORATIVE PRODUCTS ASBESTOS LITIGATION MODEL EXHIBIT B SHEET I POPULATION AT RISK BY CALENDAR YEAR OF ENTRY CONSTRUCTION WORKERS Calendar .Year (1) Exposed Construction Workers(A) (2) Total ResidentialSelected States(B) (3) TotalCountry-wide (4) Ratio of K-M Exposed Workers To Total Workers (5) = (3)/ (4) 1957 1958 1959 1960 1961 19'6 2 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 -7-38,-3ft0 7 9-2-; 900 788,200 798,000 820,400 851,000 867,400 872,400 882,400 845,200 887,800 937,600 - 921,000 951,200 1,036,400 1,129,100 1,133,200 1,044,400 1,099,300 1,225,300 1,391,700 1,523,500 44487.^70. 1-867-372^ 18562 18793 19320 20041 20427 20545 20781 19904 34846 36801 36149 37335 40679 44317 44478 40993 43148 48093 54624 0 ^ 24,165,000 26,764,000 \/ A 31,529,000 V .? ,'^uk*. Kffre- U3rviiv*- :00tr?2', oaoj. % .-00 0-74.00030 . 00069 .00070 .00072 .00075 .00076 .00077 .00077 .00074 .00130 .00138 .00115 .00118 ' .00129 .00141 .00141 .00130 .00137 .00153 .00173 .0 ((A) From Page 36 of the reports (B) Col. (3) = Col . (2) x .157 x .15 from 19 58-1967; = Col (2) X .157 x .25 from 1968-1978. KMX 02126 Tillinehast. Nelson & Warren REED DECORATIVE PRODUCTS ASBESTOS LITIGATION MODEL EXHIBIT B SHEET 2 POPULATION AT RISK BY CALENDAR YEAR OF ENTRY Calendar Year (1) Ratio of K-M Exposed Workers to Total Workers (2) 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 ` - .00072-.OQQ2.^ n n 0 7 7- >000 3 .00069 .00070 .00072 .00075 .00076 .00077 .00077 .00074 .00130 .00138 .00115 .00118 .00129 .00141 .00141 .00130 .00137 .00153 .00173 .0 Selikoff's Numbe r of New Entrants (3) 'T* 1,452,000 K 1,866,000 1/ N / 1,925,000 . \J/ Estimated Numb of New Entrant Cal. Year of E by (4) = (2) x ((3) -1-7-3 0 4.4 Hr0T4."7 11-22-7-01294.2 1310.3 1347.0 1397.3 1424.2 1432.4 1448.8 1387.7 2429.5 2565.8 2264.4 2338.7 2548.1 2776.1 2786.1 2567.8 2702.8 3012.6 3421.7 .0 Figures in Column (2) are rounded; unrounded figures are used to calculate Column (4) . KMX 02125 Tillinghast. Nelson & Warren (^y<Ls. T'0 3*2- b^^ji ^y^JIaJJ!^. ><'^r e- %. 57 ^ CfiTka O'$e& --> 1 y' ru^j^ V^ 2.^ SP-3y* /?// ~xr~^f7' ft l ^y o- 1_ Q eLA^> ^ ^ ^ ***** pO//'f (?*^^' (p>r^> ?Y KMX 02171 * 3f, /?* Travelers Says It Proposed Plan to Help Manville a Day Prior to Chapter 11 Filing 0-- --------- --------- ` A Wau, Jiiukkai. Nriti RmjM.lup Travelers Insurance Cos. said it filed a plan to help Manville Corp. cover costs of asbestos-related, personal-injury claims a day before Manville's filing for protection under Chapter 11 of the federal Bankruptcy Code. gardless of when their policies were in force, has gained ground. In an unrelated action. Manville won a victory in federal bankruptcy court in New York. In the first challenge to its Chapter 11 filing. Judge Burton R. Lifland upheld the company. Lawyers for plaintiffs in asbestos- Travelers Insurance, a unit of Hartford. damage cases had requested that the bank Conn.-based Travelers Corp., said it filed ruptcy judge lift the Chapter 11 barrier to the plan with Superior Court of California at pending suits filed against Manville to allow- San Francisco Aug. 25. the day before Man them to take a deposition from an ailing 83- ville also filed court papers seeking S5 bil year-old witness against Manville. lion punitive damages from its insurance Manville's lawyers argued that if an ex carriers. Manville alleges that the insurers ception was made in this case, soon there refused to honor their obligations under var would be a flood of similar filings. Judge Li ious liability policies covering asbestos dis fland refused the request and set Sept. 29 to ease and property damage claims. hear further argument. Travelers said its plan calls for a pooled Meanwhile, no date has been set for pre fund, to which involved insurers would con liminary meeting to form a creditors' com tribute until the court resolves the compli mittee to look into the Manville filing. cated coverage issues. Travelers didn't specify the amount of the fund. _ While Travelers said it was willing to participate in the pool, the company also said that it has fulfilled product-liability ob ligations of its contracts with Manville. A Travelers Insurance official said: "We've paid the full amount" of the total aggregate product-liabiity limits of the policies. "Yet." he added, "we are willing, on an interim basis, to pay into a pool that will pay (Man ville's) settlement and defense costs." -As reported. Manville has sought protec tion under Chapter 11 of the Bankruptcy Code to fend off thousands of lawsuits from plaintiffs who claim they have been injured by asbestos, a product that causes various lung ailments, including, cancer. Under Chapter 11, a company can con tinue to operate free from creditors' suits. The Manville filing is unusual because the company is financially strong. In bank ruptcy cases, usually the party seeking pro tection is in dire financial straits. Manville has argued that if it didn't seek protection now it soon would have been overwhelmed by the suits, which, according to the com pany. could number as many as 52.000. Some lawyers representing plaintiffs have called .Manville's use of Chapter 11 "fraudu lent." Travelers said it had paid defense and other expenses for Manville as they were in curred "until the limits were exhausted." Travelers provided general liability insur ance policies to .Manville Corp.. previously Johns-Manville Corp.. from 1947 through 1976. One major dispute among insurers and their clients is the "exposure" and the "manifestation" theories of :isbestos-rclated diseases, including lung cancer. Some argue that the insurer that held the policy when the illness niantlested ilself should pay the damages Others say the exposure theory Should prevail. !x-r.iiise it can lake 20 to -10 yrars after exposure to the product for ill ef fects to be manifested. Thus the formula to maVr all in>,rr-rc oav to a rrunral fund rr-j- i!I inghast. Nelson & Warren KMX 02129 4- ) THE wall STREET JOURNAL. TurfrdtJ. AufVtl Jl, 1992 Manville's Chapter 11 Filing Spotlights Tiny Firm That Probes Health Hazards By Nkil Maxwell DENVER-A tiny consulting firm in suburban Boston is at the center of one of history's bluest and most controversial bankruptcy cases. Epidemiology Resources Inc., a two* year-old company with a full-time staff of five, conducted research for Manville Corp. on asbestos-related disease. The study led to the company's,decision to seek protection of federal bankruptcy laws. Citing results of the study. Manville said it is being overwhelmed by the cost of litigation. And even though the company acknowledges that ft is financially healthy, it filed for reorganization under Chapter II. halting all claims and litigation against It. The filing angered attorneys for thou sands of plaintiffs who claim to suffer from lung diseases caused by exposure to as bestos made by Manville. And it practi cally assures a court challenge of the re search by Epidemiology Resources of Brookline. Mass. 'How Much Disease* Manville said it asked Epidemiology Resources to project "how much asbestosrelated disease there would be in the fu ture.*4 Manville took the answer and fig ured there would be 32.000 new plaintiffs along with the 20.000 who have filed suit. Manville has said It could cost more than n billion to resolve that many claims. "We want to know exactly where those figures came from.*' said one lawyer, who believes Manville Is using the consulting firm's study to exaggerate the seriousness of its financial position. Manville defended the study as conser vative and said Epidemiology Resources was chosen because it was "the best quali fied" of several concerns, most connected with universities, that study health haz ards. Manville won't comment on the study's methodology and Nancy Dreyer. 32-yearold chairman and president of Epidemiol ogy Resources, said that 7>ny comment should come from (Manvillel." While Epidemiology Resources is young and small. Miss Dreyer said. It is well qualified to do such studies, and some past customers agree. General Motors Corp. for example, has used the firm to check stud ies it had done elsewhere. A CM spokes man said the company was satisfied with results. Checking Others Some of Epidemiology Resources' proj ects apparently involved checking others' work and putting it in presentable form. Texaco fnc.. for example, hired the con sulting firm "to interpret medical data for the media and to add credibility to our own studies." a Texaco spokesman said. The oil company work has involved such things as occupation-related mortality studies of dis eases like leukemia, a spokesman saJd. Miss Dreyer lists her husband. Kenneth J, Rothman, an associate professor of epi demiology at Harvard University, as a member of the firm's senior advisory board. The other two members, she said, are Philip Cole, chairman of the epidemiol ogy department at the University of Ala bama Medical School in Birmingham, and Henry Kohn. retired professor of radiation biology at Harvard. (Prof. Kohn said that he didn't know he was on the board, but that he hadn't seen a corporate letterhead lately and that being considered a senior adviser was fine with him.I Miss Dreyer declined to disclose owners or other officers In the company, which is closely held. She said that for the year ended June 30 "we did show a small profit." but that as far as current opera tions go, "I don't know. Thert are substan tial variations from month to month." In addition to staff members the firm said It has a network of consultants it hires to help on specific projects. Name Problem But the firm is so obscure that even Manville executives have a tough time with it. At a news conference in Denver the day after its filing for Chapter 11 sutus. Manvllle's chairman, John A. McKinney, said he couldn't remember the consulting firm's name. Later, a Manville spokesman said ft was Epidemiological Research Inc.. San Francisco. Hours later he amended that to the proper name. Before starling the company. Miss Dreyer worked for Equifac Inc., helping develop a division to perform epidemiolog ical work, but the unit was sold, she said. Miss Dreyer wouldn't disclose how much the firm was paid for the Manville study or whether it has done work pre viously for the construction and forest-products company. "I'm not at lib erty to talk about that." Miss Dreyer said. A study by doctors at Mount Sinai Hos pital In New York has Indicated that nearly Z2S.OO0 deaths will result between 1SR2 and 2027 from asbestos exposure. A smaller number of Injuries possibly result ing in lawsuits would also emerge, accord ing to William J. Nicholson, associate pro fessor at Mount Sinai School of Medicine. ho helped conduct the hospital's study. Tillinghast, Nelson & Warren ` KMX 02130 /Manville Filing i ExpectedtoHave A Wide Effect Creditors Are Seen Sharing Estimated $2 Billion Cost To Settle Health Claims By Dca* Rotiast St+Jf & fp+r\rr / Tmc *+14. Sneer Jovwmai. DENVER-AJthough Manvllle Corp.'s un usual bankruptcy filing list week was In tended chiefly to shield the company from thousands of current and future asbestos-re* lated claims, estimated to total S3 billion, the actual Impact will extend far beyond as* besios victims and their families. Despite the relative strength of Man* vllle's balance sheet and cash Row, dozens. If not hundreds, of the company's creditor! and suppliers stand to lose millions of dol lars because of Manvllle's decision to seek protection under Chapter 11 of the federal Bankruptcy Code. 'The freorganization) plan won't be a 100 Cenis-on-the-dollir plan, or we wouldn't be" in bankruptcy, a com* pany official said. Many Investors, of course, already have suffered huge paper losses on their holdings of the construction and forest-products com pany's preferred and common stocks. And , at the very least. It appears that hundreds of millions of dollars of accounts and notes payable by Manvllle and other accrued lia bilities will remain frozen, barring special court Intervention, until all the legal issues of reorganization are resolved. The com pany concedes that isn't Ifkely to be soon. The practical effect Is that the company's creditors and suppliers "are going to have to share the burden" of paying off individu als who claim health damage from exposure to asbestos made by Manvllle. Richard too Wald, a company attorney, said. Claiming U Is "completely overwhelmed" by the cast of asbestos-related litigation. Manvllle filed for bankruptcy Thursday morning, halting all claims and litigation against the company. (See related story oa page IS). Seeks Government AJd . Along with other asbestos makers, Man- vllle believes the federal government should pass legislation to help pay asbestos claims, because the product was used during World War U tn US. shipbuilding efforts. Some aides believe Manvllle's bankruptcy filing is intended to force the government to .pro vide aid to the industry, and at least ooe critic labeled the company's action "a fraud on the bankruptcy laws.*,* Many asbestos plaintiffs and their attorneys also blasted Manvine's action fast week, calling It a dodge. .. Manvllle creditors and suppliers of such goods as pipe resin, utilities, roofing materi als and services, reacted with chagrin and anger. "It Isn't fair," complained one Colo* redo small business man. who b awaiting 150.000 In payments from Manvllle. "This asbestos business goes back 30 to 40 yean and 1 had nothing to do with It, so why should 1 pay for it?" he asked. Added an of* fleial of a major Eastern supplier that doesn't expect to recover much of Its moo..ney from ManvUJe: "Once these things gel Into the courts, you're dead." tn other related developments: -Some of the company's largest unse cured creditors said they expect to meet with Manvllle management In Denver today or tomorrow to hear the company's explana tion for the filing. Us proposed course of ac tion and its pleas for support. "My guess ts that they **111 have (some outline of) their reorganization plan there" for creditors to comment oo, said Charles Haielngg. an ex ecutive at United Bank of Denver, which holds S million of Manvllle debt. -- Representatives of the Asbestos Litiga tion Croup, consisting of 150 lawyers who art ruing ManvUlc and others over health damage claims, planned to meet today tn New York to hJre a bankruptcy lawyer to lead their atUck again*1 Manvllie's filing and to discuss filing a motion iater this week asking that the stay of lawsuits against ManviUe be lifted, if the Judge accepts that motion, he would set a preliminary hearing withIn 30 days, "and then Manvllle would have to show its cards," said Fred. M. Baron, a Dallas lawyer who b a trustee of the group. * --The company's Johns-ManvUle unit, which makes asbestos, filed papers in San Francisco Superior Court seeking 15 billion in punitive damages from Its Insurance car riers. The unit alleges that the Insurers re fused to honor their obligations under vari ous liability policies covering asbestos dis ease and property damage claims. As a re sult the company saJd It had to spend tens of millions of dollars, which "so strained Its financial resources that reorganization pro ceedings bad to be commenced." The filings seek Iq amend an earlier complaint against two dozen Insurers, la which Johns-Manvllle asked for declaratory judgments, damages and other relief. The company currently faces 16.500 asbestos-related claims. J2 BiliJon Estimate `Conservative* (The filing disclosed that the company has spent more on lawyers than oo health Injury claims so far. it listed legal fees of X24.S mJJJlon. Q4 million for Injuries and VS million for property damage.) --John H. McKinney, ManvUJe'* chair man and president, told a news conference . Friday that a company-sponsored study that; estimated a total of 52.000 asbestos-related . suits eventually might be filed against Manvllle b "conservative" In Us conclusions. In cluding the estimated S3 billion cost of the suits. The study was done by a rwo-year-old Boston consulting concern. Epidemiology Resources Inc., whose president, Nancy5 Drtytr. said it has had varied experience to conducting environmental and occupational health surreys. Clients Include major indus trial concerns, she saJd. and a recent task was to determine If it Is safe for natives to return to Bikini Island to the South Pacific, 3S years after an atomic bomb was set off there. (It Isn't, she said.) She also said that only the epidemiology part of the survey ' leading to the prediction of 52.000 lawsuits was done by her concent, not the arithmetic leading to the C billion damages estimated by Manvllle. She wouldn't discuss details of the survey. The study Intentionally assessed the com pany's legal problems oo the km side, "so If anyooe could attack them (the findings), they'd attack them for being low," Mr. Mc Kinney said. Manvllle used the stiidy's find ings u evidence of Its need to seek court protection. -Mr. McKinney abo defended the Chap ter 11 filing as Manvllle's "best chance of coming up whole* (rather than facing) even tual liquidation and cannibalization of the company's assets." He contended that If Manvllle hadn't sought court protection now, to a position of relative financial-strength, the alternative would have been to seek ft to a few years after some assets had bees de pleted by further asbestos claims. Mr. Mc Kinney saJd the prospect of having to liqui date some assets to help pay legal costs mo tivated him to drop his personal objections to a Chapter U filing. In Hanford, otflclils of Travelers Indem nity Co., a unit of Travelers Corp. declined immediate comment, saying they hadn't yet seen a copy of the amended complaint filed In San Francisco by Manvllle. Also In Hartford. John Shea, vice presi dent and claims counsei for Aetna Ufe it Casualty Co., said the Insurer hasn't bad any direct financial dealing? with Manvllle to settling asbestos claims. "We really haven't been involved fin the dispute! because our layer of Insurance cov erage hasn't been reached." Mr. Shea said, adding that Aetna Isn't the primary insurer and wouldn't cover claims until several of the ocher carrier? bad exhausted their cov erage. Tillinghast, Nelson & Warren Officials of Home Ufe Insurance Cb. of New York were unavailable tor comment. Until Friday** new? conference, some ManvUJe supplier? and Investor? thought they might be spared the pain* of the com pany's bankruptcy. "We were hopeful that they'd at least pay (preferred) dividends and Interest on their debt." said Crajg Hobbs, an official of Seattle-based Unigird Insurance Croup, which holds 16.000 Man- vtlie preferred shares. But Mr. McKinney told reporter? that aJ/ creditors, whether asbestos-related oe not, would be treated the same and fact the same potential losses. "Yes. the sharehold ers and creditor* are to a difficult position." he said. Nevertheless, he explained, "when you go Into one of the* proceeding?, you're restructuring everything," -*-. < >: Manvtile declined to Identify Its take- cured creditors, ranging from Prudaffal Corp., with about MS million of debt, to small supplier? with only a few dollars in debt As of June 30, according to the com pany's Chapter 11 filing. Manvllle had S1SQJ million to accounts and notes payable, and $148.6 million to other accrued lubtfties. The company's long-term debt at the time was M38.7 million. In composite trading Fri day oo the New York Slock Exchange, the company's common stock closed at SS.12S, off 0.75. The preferred dosed at J12J75, off J12.62S. . j Tremendous' Hash Flow i Because the filing lets it suspend pay1 ments oo existing obligations, such as debt, dividends and legal claims, Mr. McKinney saJd ManvUJe should "generate a treroem- dous amount of cash for running our busi nesses.'* As such, he said it won't rroke any "significant borrowing?" in the next year, adding that U is "perfectly possible" that the company wtU begin paying cash tor its materials. Manvllle Isn't likely to hire a choice la the matter, as many supplier? saJd they win begin xhlppLig products crJy oo a cash-ctr- delivery basis. Some said they've already halted all shipments on Manvtile order?, awaiting cash payments. United Bank of Denver froze MaavtiJc's payroll acsoot last Thursday" and returned all company-issued checks. However, last Friday. Manvllle opened oew accounts In cash with the bank, which then let Friday's payroll check? dear. . Because Manvllie's decision to file bank ruptcy was based principally on legal and political considerations and not ac a cash crunch, most Investor?, creditors and suppli ers were caught off guard, and many were overexposed to their financial dealings with Manvllle. "When we are worried about the health of companies such as Chrysler or Interna tional Harvester, we cover ourselves and re quire payments every two weeks," said ooe Manvllle supplier who could take a loss of as much as Jl million. "But this bankruptcy came as a complete surprise/'-Several fi nancial advisers said they had recently been recommending Manvllle stock as a "bar gain." As recently as two weeks ago. about 75 Manvllle supplier? turned out at a goU out ing to Colorado sponsored by a chemical axnpany. 'There wasn't eves a peep of a suggestion" about Manvllle'* Impending bankruptcy, said one supplier who attended the event Even now, some creditor? say they wifi need weeks to assess the extent of their possible losses. _ The town of Winder. Ca.,` for example, said tt could have a kiss of as much as M0Q.- 000 to revenue from utility services tt pro vided Manvllie's nearby fiberglass Insula tion plant this month. Ernest Grahm, clerk and treasurer of the town, said he doesn't know how much of the town's money *111 be frozen by Manvllle'* action because the town won't even bill ManvUlc until early next month. For winder, which has a population of ! about 3.000. the loss of MOO.OOQ. even tempo rarily. would mean forgoing about 6H of its annual revenue. Tt would be hard for us to handle," said a somber Mr. Grahm. "The first thing we'd have to do ti'cut back oo joroe of our capful trpcrviJturts. and then hope w wouldn't trf into any kind of actual service reductions." KMX 02131 LOJr 14/ .j ) / / t ^ u> `Problems Have Long Plagued Asbestos Firms . By Ratmokd A. Jqseth S\*Jf A rp+rtrr *f Txc Wau SnucT Jovmai NEW . YORX-Tht tataruplcy peUtloo 'flJed Thuradiy by Muvlllt Corp. wu Just Ux Utfst shock lor the tattered isbesu* In dustry. '. As of esses of ssbestcs-rutsted diseases among asbestos workers and users .tare come to djht. Ui asbestos consump- doo has fallen by about half since 1973. For the past several years asbestos milters have either'gotten out ol the business entirely, or hare tried hard to dissociate themselves from their product. . -. Some companies have changed thelg names. The century-old Johns-ManvlUe Corp. became'Manvllle Corp.; Raybestos- Miahittu Inc. became Paymark Corp.: Keene Corp. became Balroco Corp.; South ern Asbestos Oo. became Southern Textiles Corp., a unit of HJC. Porter 'Co.; Union As bestos It Rubber Oo. became Unareo Indus- :U.S. Asbestos Consumption *659 ' ' (Thousands of tasm : tnkfW tries Inc.* utd then UNR Industries toe. UNR filed for. baakniptoy protect** to July. ' ...................... V*** * * , The thinft of nimes was mainly cot* metic* tbd to come cues reflected cocpo- rile diversification. But the structural changes that iccompuded some wen more significant. A newly organixed bolding com pany would assign a percentage of assets to the various units. including ooe saddled with asbestos products. The Idea wu that as* beslos-related claim could be paid coly Crons that unit's assets. Dot the parent's. A.Tangled Web'/ ' \ ; * ! MinvUle, for example, had assigned 2*% of Its more than C bilhoo to assets to Us* as bestos Wbddlaiy^ The company 'hasn't ex plained bow tt arrived at; that figure. Qd* cap-baaed UNR;had .assigned only pro-1979 assets to Unareo, Its asbestos toll,`eves though UNR hidni made any asbestos prod- oca since 1562. UNR. which has diversified since then, has assets of more than COO mil* Deo now, up from 04 million to 199. But the bankruptcy filings of both Maarllle and UNR throw those attempts to as sign assets Into question. Both filings affect the parent companies and most of their sub sidiaries, not just the unia that make or made asbdoc.'Malcolm Cayoor. UNR'* bankruptcy lawyer, explains: "It was such a tangled web that wt decided to file for Chap ter 11 protection for all those ur.lu whose asacts might hare been liable" to claims. Companies hare been moving away from asbestoa. Raymark. for example, has been replacing asbestos with other Oterx. Includ ing metal and glass, to make such things as shoe brakes for can. Southern Textiles, which changed to that name to 1979. says that Us use of asbestos has come down steadily. Currently, says a spokesman, the company'* products, some of which are used to construction; are about 40% made with asbestos, down from 90% five yean ago. Dangerous Effects . The use of asbestos has bees decreasing to this country as the dangerous effects of the product have become known. According to the U.S. Bureau of Mines, UJS. eonsump boo of asbestos fell to about 90.000 metric tons last year from a high of 795.000 metric tons to 197X Asbestos, has been used to various appli cations Including shipbuilding and for under ground water pipe. Dr. Irving Selikot!. an expert to asbestos-related diseases at New York's Mount Sinai Hospital, says a 700-page report produced for the Department of La bor, states that between 1940 and 1979 more than 27 million Americans were exposed to asbestos to one form or another. Apprcndmatoty 20 mliiloo of these people are still alive. Some wlU'sutfer the Ui effects of as bestos. be says. He estimates that the indus try should anticipate up to 10.000 cancer deaths a year related to asbestos to the end of the century. Asbestos-related rtlsenrs In clude mesothelioma, a cancer of the fining of the lungs, and asbestosls, a lung disease similar to emphysema. " Asbestos products still are being made and used, although tmder strict safety regu lations laid down by the Occupational Safety and Health Administi-adoo. Places where asbestos Is handled newiave signs warning of Its health hazards and workers use spe cial masks. ' '* Paintiffs wbo suffered from asbestos ex- are fighting across a broad front, art chaflengicg the asbestos compa nies' restructuring, especially that of Man* rule. In a suit to federal district court to Bcstoo, Mamdfie' arfues that the suit shouldn't be amended to include parent Manvllle Corp. as a defendant, because the suit was filed several years ago against j Johns-ManvlUe Corp. and Manvllle Corp- didn't exist until last year. , Judge Robert DeGiacomo last month saW he recognized the ''concern" of the plaintiff that the changes at Manville might have been Intended to shield a good portion of the company's assets. Ironically, some plaintiffs see Manvtile's bankruptcy petition as potential good news. "WUh Qiapter 11. It's another ballgame," says Ronald Motley, a Barnwell. S.C.. law yer who represents some asbestos victims. "We will get to see the evidence on which they claim protection." he says. The Manvllle filing sent lawyers at other asbestos makers scurrying. After a day of huddling among lawyers and executives at Balroco, the company decided to inertase its quarterly dividend to 12 cents a share :from 10 cents. Balroco. which makes con struction materials, had made asbestos for only four years, ending in 1572. It recently won a court decision requiring its Insurers to cover any costs from asbestos claims, and It no longer has to set aside ar. annual reserve against earnings. "We feel we'U continue to do all nght." says a spokesI man. | Approximately 300 companies at one time (used asbestos In their products. One major user was Eagle-Plcher industries Inc.. Cin cinnati The company, a maker of ma chinery. automotive and industrial goods, has been out of the asbestos business for years. Yet asbestos-related suits have been siphoning off between 10% and 15% of the company's cash flow. Bui Eagie-Ptcher says it has no tmention of cutting Us dividend or of filing for protection under Chapter 11. Attorneys representing plaintiffs stilt worry about the possibility that another as bestos concern win follow the industry leader. "Who would have thought that Manrllle would have made such a desperate move?" asks Thomas Henderson, a Pitts burgh lawyer. KMX 02132 Tiflinghast. Nelson & Warren 12 REVIEW & OUTLOOK I The Price of `Toxic Torts' Product liability lawyers have a name lor the kind o! case that forced Manvilie Corp. to seek refuge In bank ruptcy court last week. It's called a "toxic tort." or a damage claim re sulting from exposure' to some toxic substance. It's a burgeoning category In a burgeoning field of law. But there piust be a better way for victims to be compensated for their losses and manufacturers held accountable for the safety of their products and work places. The Manvilie case may well prove to be the dramatic event needed to call attention to the waste and injus tice that have resulted from the fail ure of the legal system to deal with product liability in an orderly man ner. A very large and financially strong company chose Chapter 11 bankruptcy because It was facing over 52,000 lawsuits and potential damage awards of 12 billion arising from health injuries associated with years of making asbestos products. This is a case of a company at tempting to use law in an innovative way to counter the innovative ways law has been used against It. In the hands of modern lawyers, judges and Juries, the old English Common Law concept of torts, wrongful acts that entitle the victim to damages, has been stood on Its head. In some Judi cially liberal states tike California, a "wrongful act" may consist of nothing more than having fulfilled a govern ment contract years ago to protect seamen from shipboard fires, using a material that was later found to pose health risks to the people who in stalled IL Some of the Manvilie cases are of that type, dating back to worker expo sures In World War II shipyards, when asbestosis seemed a minor haz ard compared to those that would be risked by sailors on fighting ships. That is not to say that corporations have always been as careful as they should be about work hazards. Dam age suits, along with union pressures, safety legislation, workmen's compen sation claims and increased medical understanding of occupational hazards all have combined to raise the corpo rate consciousness. We certainly are not Inclined to argue for the abolition of tort law. On the other hand, the Manvilie case Illuminates serious problems. Lawyers have made product liability a happy hunting ground for fees and. as Manvilie argued In full-page news paper ads last week, the lawyers in these cases often fare far better finan cially than the victims they represent. Fee limitation might reduce the num ber of speculative filings. Findings and awards vary widely from case to case and state to state. The Nebraska Supreme Court last year upheld a state workmen's com pensation board award to the widow of a man who had installed asbestos insulation for some 40 firms over 35 years. Lacking a more equitable for mula, the board had simply assessed the last company the man had worked for. Statutes of limitations also vary widely from state to state, making It possible for Californians to collect large damages, for example, on claims that could not even be filed In New York. A uniform code may be the answer. In cases where a widespread hazard has been belatedly discovered, sepa rate court suits are highly Inefficient In economic terms. Aside from plain tiff lawyer fees and court casts, prod uct liability cases have piled large new legal costs on business corpora tions. Newsweek not long ago came up with the estimate that the Fortune 500 spend some S2.5 billion a year on law yers. Consumers pay for corporate law just as they pay for the steel, ma chinery or engineering talent corpora tions use. Some chemical companies, wary of product liability suits, even have set up "product stewardship" departments, at some cost, to monitor the safety of products their customers make with their chemicals. In the asbestos field. Congress has been groping for a more efficient way to deal with claims, mainly through an Industry-financed fund. This effort, however, also has become.- adver sarial, pilling Democrat George Miller of California against Manvilie et al. Congressman Miller wants, to exclude existing suits. ManviUe- wants them covered and also wants the-gov ernment to pay part of the cost. Dearly, such funds can become politi cal footballs, as black lung compensa tion for coal miners has demon strated. But It should not be beyond the wit of Congress and-industry to come up with an efficient way of com pensating asbestos victims fairly. Finally, a word about asbestos it self. It has about 3.000 commercial and Industrial uses, some of them vi tal to human safety. We can't see why the producer of such a valuable prod uct should be forced Into bankruptcy for self-protection. Tort law has be come a vast tangle, and whatever else Manvilie has achieved, ft has called attention to the need for untangling IL THE WALL STREET JOURNAL. MONDAY. AUCUST 30. 196: KMX 02133 Tillinghast, Nelson & Warren 7//^ bht-t. Jpu KAS/l t- , /4<SG~. /7?Z- m/Tfble Says Manville Filing to A ffect Review Of U.S. Bankruptcy Code by Senate Panel By m Wall. Smrr Jovmm, SimJJ Rtpmrtwr WASHINGTON - ManvlUe Corp.'s un usual bankruptcy law fifing last week Is In tensifying a partial review of federal bank ruptcy law already under way In Con gress. ManvUIe's decision to seek protection un der Chapter 11 of the Bankruptcy Code be cause of a barrage of lawsuits charging health damages from asbestos It produced was crlticUed as "dubious and unusual at best." by Sen. Robert Dole (R., Kan.). Sen. Dole heads a judiciary subcommittee that Is studying a part of the Bankruptcy Code that apparently Is related to Manvtlle's move. Sen. Dole Indicated the panel should con* ,sider changing the law to ensure that other companies don't file for Chapter 11 protec tion when faced with product-llabUlry law suits. ManrlUe took the highly unusual action even though Its construction and forest-prod ucts businesses are. according to the com pany. "in good shape." But the company said It Is "completely overwhelmed by the cost of asbestos health lawsuits bled against us." The claims against the company will be frozen as a result of the filing. Also, as a result of filing under Qupter 11, the bankruptcy court, rather than federal and state courts, will decide the ootcome of the suits. The company will gain a delay In legal action while its reorganization pro ceeds, and U wool have to fight thousands of different cases across the country, ac cording to one bankruptcy expert. According to some legal experts. Man- vllle's situation might have become more complicated if It had delayed its filing. A re cent Supreme Court decision called into question a company's use of the bankruptcy code as a means of defense against such Is sues as product-liability lawsuits. The court ruled that bankruptcy Judges should be re stricted to ruling on issues directly related to bankruptcy proceedings and shouldn't be permitted to review other Issues "arising In or relited to" bankruptcy cases, such as produet-liabUlty cases. One of the majority opinions died the fact that the 1978 law lets bankruptcy judges decide legal Issues previously reserved for federal district courts but doesn't give the Judges the lile tenure or salary protection that other federal Judges are provided under the Constitution. The court's ruling tikes effect Oct. 4. un less Congress amends the law to grant fed eral bankruptcy Judges such Job protection. Currently* bankruptcy Judges are appointed for 14-year terms and their pay can be re duced by Congress. The House Judiciary Committee earlier this momtb approved a measure that would give the bankruptcy Jurists lifetime tenure and salary protection. Sen. Dole's subcom mittee recently held hearings and will begin drafting legislation when Congress returns from Its recess Sept. 1. . Sen. Dole said the MtnvtiJe filing might force the Senate to consider a broader amendment, but he left unclear what ft might contain. "America's bankruptcy sys tem can U1 afford the additional strains placed upon U by those who would use Ks protection for shelter against personal or corporate trucks where other remedies ... would teem more appropriate." the senator said in a statement i ^agle-Picher to Re^in\ Level of Its Dividend, Despite Asbestos Suits By Waix Stuott Sn/f Rrr*rr\rr CINCLVNATI--Asbestos-related Uwsuits are robbing between 10% and 15* of Eagle- Pitier Industries Inc.'s cash Cow. but the company doesn't blend to cut Us current 24cect quarterly dividend and "b no w*y" i$ cootemplatbg filbg a Chapter 11 petition, company officials said. Thomas B. Petty, preddeni and chief ex ecutive officer, said the ie% to u% outflow "has an Impact but it doesn't hurt our abti- 'tty to finance roovbg bto new product tines or major ciptial expenditures because that's the ultimate way to overcome the asbestos probjem-to outgrow il" Haaville Cbrp. filed for protection under : Chapter 11 of the federal Bankruptcy Ode las: week because of asbestos lawsuits. The filing freezes pending litigation and provides court protection from creditors. Mr. Petty, however, exhibited cocfidenee to Eagte-Plcher's ability to handle the as bestos problem, ai least for a lengthy pe riod. "Our cash requirements for asbestos, while having grown to the prcseol CT mil- Uoo-pJus a year, aren't gobg to mushroom" soon, be said. "We know the pace of actual cash outflows. We can't determbe the Insur ance coverage, but obviously we have some idea of that," he added b an blenrlcw. Bagle-Plaher, a maker of machinery, au tomotive and industrial goods, be said, b prepared to operate oa the assumption that the Bligation will continue to siphon the 10% to 15% of cash flow "Indefinitely" dr until a broader resolution of the problem b reached. The company's cash flow has bees between U0 million and SIS million the past three years. Bagle-Picher Is one of a number of defen dant corporations agzbst which Individual claims have been filed for alleged damage to health because of exposure to asbestos. Bagle-Picher made asbestos-content bsuia- tioo under government contract to the IWs and 1550s. It discontinued using asbestos to 1571. So far, through 1981. Bagle-Picher settled 1,400 suits of 11.700 filed at an average 17,0# each. Including legal costs. Tillinghast, Nelson & Warren KMX 02134 KMX 02135 THE WALL STREET JOURNAL HtlDAY. AUCUST 27. 1982 Despite Strong Business, Litigation Forces Manville to File for Reorganization Attention: Manville Corporation Shareholders, Employees, Customers, Suppliers and Creditors On Thursday, August 26, Manville Corporalion and its principal American and Canadian aliiliales filed voluntarily (or reorganiza tion under Chapter 11 in New Yorfc In the following interview, John A. McKinney. Manville's Chief Executive, answers questions about the background of this star tling development Q. Uf. Ue<FYwy. vw, was a aurpriaa. WTaat'a wrong w+tn UanvMa'a op*esdona7 A. Naewy 9 mrang-imour F*ng O**0tw 110o*t notfnmtnttmff* Comply * gc**g out of t*jvr>*33 ar tut ts Misitst* Thousands of asoexios-M^rt Uwsurx art to* coc^em'Wt're to* Amencan and -pr *ov a numbw of markets. mosby mtaied to eonsauefecru &^ng to* Ototnt rearssonott U0 hjv* M up wri Mra w*V* operated at ben* nan beak even (rf you trouoe fiigaton expens**) We're summed oown too. hewng e*mn*i*dmore nan 1500 aafardjObs toe las Srt monlh*. Wet coma* gwai* jusuna*l cash *> Ot* Chapter 11 lawyers 4 m* U*r*vW* ms strong* bust* nesses and carfifepw nan any otoerbg company that sever Ned. 0. Your businesses art In pood shape, but you Wed under Chfepttr 117 Why? A. We r*PMntwmdby 16.5CO wwsafs ai*d to toe heath *"ecacf asbeitts.wdt many more proecied The td* goiemmea Ms reL/sed to tone u rtsponsiwny io as shyard workers Congress Mi feSed * proude Com;*janon r ciamantt Chafer Uof^e priy orderly way lor tot Conpany c Mo** toe bugaton and veal everybody l**ly You may Mr* reed r*ceMy toa( *nrw gut*&y he asbestos maoXadk** has iafcen toe same Wp. Q. CotJd you Mr*rro*d*d Chapte 11? A- No. To avod Chap** 11. we wotrtJ have had io seangte toe Company *-y. by JtMmg ma*`Sareeandpoonr9c*ptai*tperRt*es Wewoua9oMMhadcanrvbaL:ot* oood Ujvnesses Just to keep gc-nj D rrcrt rends had cortrued w* -ou her* had htonpafe w ptant* ana proper** and nr* crtarf oud o* mo oflcu* and txp*n*M to oouto T> a no way go forward Chap** 11 toods tost* proeaan am pr*srws ou* ooentens. Q. WM Uanvftle fO put Of butbwss? . A- Mo. CXv Outnesses w x* cpe*aJrg. Mry prootf,*y. w* b*k*M. Q. Wtt any ot your 25.090 employees last th-fr jobs? A. I don? m* Chapter II d cause a single ernptoyee bse a job. pay or benefits Im. mt be*eM Chapter 11 toe besi way pam* tot Comply opauie n*ma*y. po*orq and ueU producu. pvsp^ ai toe to^afeon. Uos( titotfsart. I wan kteo our tnyeor- as1 nm*t up. They've done a bang-i joO to kaep Mater wan and competes. Q. Can you pay your supplier*? A. Wedon?atpactany*9rricartprcefemfnafetogIu(,krTrtypaymar*lorrwwihpmarts iiuorfirg. Q. What effect wM Chapter 11 hew on your customers? A. Hone. Wt Wcorwad p maarfack*-* are sh twgh^vttty products end prpwaa toe same sendees, as always. Q. What Wtn happen to the (awsutu? A, The CMprer 11 UnQ attomaxarfy stop* a/ itwsuts ptncsnj aga0 *. New tawtuts are aho automafecaiy topped We Nape estaefen an rtroii system hand* toes* dam* Chapter 11. Q. What are a8 these lawsuits realty about? A. 81 a long siory. Hem's toe bottom me Hat unit 1964 was 4 known naf trceisrv* rrpcwuf asbestos fperrewaserfapm *3b*tros-core*r*ng raiacon pvpduca can some- femes cause carta Ang diseases Save re w3-70s. Uwsums have been brougtt agartp John Wam*e. or totday. on behai of neahy 20 000 people siegg tyury from exce*- swe astwstos erposue Wt have loosedofabota 3 500oftoesacasesbysemementoMntf. a tpnrfcar* nunper of cases toed. yr& have tour that wt rt not w laufe sn) aoed r*spon&bfytgr*ofvierHte^med<jfiux>tedfe Nevertheless new Uwsuts have been comrtg n at a rate of 500 a month--every rrertot* to toe febee^ce of Congressonal aaon, to* board ef drecVTj coOtOrf! Mt no conctovabfe resofe/kon to res Urdea otoe toan Chaplet R. Jufi to pul * perspeevve. M*wsw*** Ms stated toaf asbestos Mann Hgnoi surpasses ti sue al tot atoncoir acoderi au pendng affou tot rvaxw btr* n>Ua toeurance laws *rt aoootedL Q. 20 OOOpU*ntm?|flOO new ones a year? Wtwr* art tMsesuhs coivJng Worn? A. WH.fhanyoftoemcomtlromwp(\trstosrpy/osandrdusaestvto)wsedOtrasbee fbtr and products Decades can pass tc*-e*nrcoess<veeods*reas>esaos and onset of toe doeaae. For stance. Mt was asbestos insufaken an toe sieam ppos and aofee-s to most shps buk or rrtned Amg Wond War 8 The Urges: group &jg um now cormgs of Shpysrd word's pamng rtceMy rhaMested i-fay feom asbestos e^osuo dvrg wvkne sendee 0yeanaga Q, WMt about your tnuaance? ShoufcJnt the suranee eon-panic* ufe cam of tha problem? A. Orer toe years. Jurns Hn 4( Ccrporaion't nu/re> brcr> bou^i rwvtt coverage r s touang Kto^eds Crf m^ons ek ooiars feginow ho-rm, orrfy or* compjny My*1, end a pays ory a srtal part of ta^t ctaait. Q. Why Is that? A. The whr*e subeO dogusts me No*, when w* rw*d e comage. vp one erttrpaon. toe romance compares ** ipe/g Wc u-*d Ten ai CaKo-r** cvty i960 roa payment You won? 5ent c. but even no* 30 uurcs ia*e*. is* *'*<-'* surt w-<h uog* e prestoe over toe esse As * re*a toe case Ms gone -xWi As '~xT- as i-yhrg nr, toe bad tmto of Skrvtoa eompa'ves has ruoe ( necessary r us cson lM*e nwvo; toa: EU car-age Om toe Car^ case be creased by *<* tKto oofeaa o pw>y csnxiensa own and sMnoioen r r* ss*t Q. how much do the asbestos irmuRa c*1 you? A. todudg o^ouooe gall*** tot cost e oaTrvOy o<vr 00C pr cas THssMri^y h^tr >anOk* averages n pro years kenW Wgaf sut{ cocts are afso arjCeur*^. Q. 8a818.500Uw*vtu no- p*^ng eo*l VSO.csOapwce to *titt. mat would tow UC0 mUon. Without payments trom your survnot companw*. your problem Is obvtout. A. And raidotsnl laketo asatoi tot cases j*i b be *ed Tafcg about legal costs. on# orf toe toiy ot^fegeous tsoects of tos skuabon toe amoai of money beg pouted do-rt toeatoh9akonepenses andcorngertleespa<{*stopPs`ta-yn Ot>rbeSguss toa/ tot ryuod worker rvcewvs Jeu ftin a toto? of toe lW cost of toest sats Tne court fynem, --en tparsis tfvOuaf a(s. a too reforrt and Mpraia/d r a msurvt probMm Ik* too. Wt need an tlecwt. prwcil naicnaf rysiem wt*3\ pev.crs runvi r?bted workan. mreruts tot com of Oetomnng toose payments and xftoBi payments toose wCi no daab*ty. Q. What do you mean by haphazard? A. There a no better wore desuite >M ttpenero* date toe kr^aion W had one sue bom a putot^ -eh flcufetfU asSestosa who MO r*v*d on K4 doabAty pensrx1 w*n a broatn anwe ht mcenod an addsona! w*<d lor ubeaos disease of one and a ouadc* m4n desars W have se*n otoerj u*y dsabed or n Ua dead who csctovoo no *warg bom toe jury toonemeent iruf Ttias. tv separaiefLtoesheanng fivedrfte^nt cases we<t tmparu aed and heard tot same noma bere toe same judge toe same couvoorn at tot same feme. The* fencirgs ranged kpm no (apery punrVv* awards. Maybe haphaisrdsno wtlhfe dtsctpbon. Ties type of x n iegaten an oe<ab* gamewg tcerasc la toetpfave* anddeftodanL Q. Why d you fUt now? A_ We're a puOic company We are (soared compry w\ certa accotrerg reout emeres Ltodsr toes* toes, -e re sipoosed estmat* toe cora Of current and prooaoe kgaton wheorver poisfet and ora# a >eserv* tor toe karafey r. an ano*v eouai toe ts*Mte vmen me astescs casts began prostrate. *t coodk? csamait to* prooao ixrrtjtr p cart, and Out audeprs QuaS^ed toe* CfW about at irsnoa MYawtt When t ur hi*, toe amber erf ne-- cases u na oeonng and ou "Can base* erf pmonj cases was Urge enough assn: m*kgpr>sOiCns.wt hrdcpe~tog>s,a and omtr prptesscnaf* bmreo an esrrrat* erf procabe luture dbaai* cases arty m rrontn, vwy Wrcsrwd toe* or*. On toe tass erf toe* -ort, lar. wt brcut tow we cou get at least 22 000 more b-mea on tep of to* 20 000 akeedy asatned Some peopw cuts* fcUnvds nav* tsamewd many mor* Gam* ran tost O. A lofjf of 52JOO Uwhrfts at a coet of 540.000 apiece couid mean a tout cost of two MMfon dolUr* and toat ckwsn? hdmM an nation factor. Cow UanvUw aftord 8? A. Noe on ou own Cu bu*rs*3 art snong and vaoe but toey mgn not De ab to pay a bitoatbg Eonlweeoupay.wrtoaXtoeprasaonof Oapier n.<oucncowus Tne CD of handing paperwork r toe amber of cases asiaggemg We Mv* nca toaf cop to a* e-veoa and somewas w* arc pessursd by toe coats pay s*fn*menfs <ttu( coal deterroMbon toa: dcsabAty tnsfs We abo mght have set good busmesses ra^e cash Chapter 11, we can seep toose bustoesses gog and use toe* camngs pay oa aabrf*L kttS tmng % of COSse fe prc&otn. Wt Mm (mead cprvQf ov*r to* vrwtg erf tmutt and teat *08*y mah krrrg erf gafsn peymeoi agansf averfacst cs*i Otoregarpng tot 9*100. wears a lowebtqjiv*? a book net wormof 51.1 b*ovWhona restwt ebooaaa net werto must also b* mduoed. The booung of a targe reserve now tor curreri and (Jure 9best heakh Ub*bes wood woe out moe: of oa net worw WKnoui snowng a good-sued nef-orto on eur balance sheet, a^ordab credR wood Mm dned to. and we sry cou not Mm operated. So. when ot* board of (fereoors Uwned toe monet of tot probate need tot a large reserve, * eontocred toe epeons and conefeoed we had He far refeef aider Duceer 11. Q. How do you hef about this? A- Awfc*. fm never had do anytoog l Mled more. 0t yaf stopkers. Unoers and fharmototfs a* may sufter tosses fc* tot* exeat anp toMgment icotut betor* ou CMteer 11 ttng Losses cou ba very, very Urge r ot* preser* sM<ehoert. Then. o. toe irony peep** who do Mve Osabfing ryunes bom ttcessne exposure asbestos wd be hud. TMt c*a*m wt be defayad and reduced Sid, 4 seems us that toe erty orderly way net cMrycn* U*1y a through a coutl-supemsed Chapt* 11 proceeOng. Q. Host people think tfltehltd workers art kuOy protected by worktrs* compensattoa How b 8 they can Sue you? ' A. You're party rgt Wooers'compematxan co.ers an emptoycr's iab*ry emptoy tea rryoyrt toe wont pace The lew has teen*serpret*dm*k***TTPbye' *r"embyee" very (tana** lenm. Tbs meu toat s IWi emptoyee of a fi^yard can get wooers* compencetcn bom toe snyar0, Cxi he cef etso sue us tor havng stpficd to* tyd/ OHosm produetl don? agree wentotal, ba toe taa we art beng sued wnua*y every m because of L Q. bn? them some other naltonal program lor people Injured whfet on the job? A. There are programs Oder duene*. but not tor asbertte waters. There shot*? be staktory ccmpeva*son program r asbestos rytrea. We've toed gef a progrw* passed. t>ut Ccoyits Ms been prvoccupvd. Th anotoer reason t`v* been torced to C^toe dbaase. Q. How long w you be In Chapter 11? A. TMioepends Tm ordered Ot* Uwyers go ltd CiasL One erf to* hugest procatms d be pottoaccrovslcrftotesr*naiadarrotrfdu*ntoeluu*taodua-kabfetyaa*ws Ox*m gto ffwt apcrarel, t tor* toa* gating out dl Chapter 1? ougTtWbe ysi a mantr of krvjftng t tow Uga" proceedtogs to to* runt), 1 iTOriUrd ton a curparvy to Oiapwr 11 * ato-td to conoud o aAa*s to to* ordtoary C0t*s Of bus*ss wenot* coto approval On* Oto*rtorg needs anaacn Ott lawyena m* toal Corgrrs* needs W aa by Od*r 4 to 091*1 ctl an mponan chncal port of barmrt^cy coto yjTso^crt tnpartar* cspeoi of our Chapter II cur cou be sialad tref e g*4 n*w wg-ua-ton I hope Congess -d rescue too rrpoMrt WrtC^ frcdem OuOt>y and * "M to-arp a rescancn of nr-T~ rjyrj. 5wU4 ligSpi *C toll to* toOtOardS erf DtL'tTS anp -Or-1 CK^t vO *t Vlf gtrfMm W< be spwC tot trpenvM n*om and ?ap`a.*ii< *9*on sfltcm -* Mv* bem uoded wd I aoo Ys* toe go-emrw* 4 sJc-p XCO 'evxr^cuc*s r h*-wg pa-ed a roe n ot*ng toe dotasa prroem, Q. (* par* anytrvng efw ws mow? A. Ys You Sftoud tno- to*f I and to* {*co w*r -cn r to* Company mm kmtd *Mry al Uas: one* *a*g an ou<f<ou' Kxxn ic w pobm. Dieter 11 oats. yes. h-eMr.a*bcardb*Wv**OvaaeS1rwbrSwayioprc*aaotabtistoesses WtcipaO O^rwgtkOT Owe** llferttopar toan *M W* a* o*temwi*d maa ** bed G to* r t. wfcn* ndet. Augusi?7.t2 August )! iy2 Radical Tactic y Manville's Big Concern ,As It Files in Chapter 11 Is Litigation, Not Debt Bankruptcy Petition Freezes Asbestos Suits, May Prod Government to Help Out 'They Want a Bail-Out Bill* DENVER-Manvilie Corp. has filed a bankruptcy petition although It is far from broke. In a highly unusual--and unexpected-de velopment. the financially strong construc tion and forest-products giant sought protec tion yesterday under Chapter U of the fed eral Bankruptcy Code for political and legal ' reasons. | "Our businesses are in good shape de spite this recession.** John H. McKinney, | This article was prepared by Well Street Journal staff reporters ,Vf Mai' well, C. Christian HiU and Raymond A. Joseph. MinvUle's chairman and president, said. But be added: "We are completely over whelmed by the cost o( the asbestos health lawsuits filed against us.** The company has 16,500 claims pending against It now. with 500 new ones being filed each month. The lawsuits, which essentially charge health damage from exposure to asbestos produced by Manville, will be frozen as a result of the Chapter 41 filing. Manvllle apparently decided to file for Chapter 11 protection after a recent outside study brought Its legal problems into sharp focus. The study concluded that 52,000 such suits might eventually be filed, and they might cost S2 bUlton. **! think that's what did 1C* says R. Jerry Falkner. an analyst with Underwood Neuhaus if Co. in Houston. RJnder accounting rules, once you have an estimate of a liability, you have to set up a resenre. so their net worth of Sl.l billion would have been wiped out.** Rote of Government Cited The bankruptcy filing also appears to be an attempt to influence the federal govern ment, which Manvllle and others in the as bestos business contend should share the burden of liability for asbestos heahh dam age because the product was used la UJL shipbuilding efforts during Workl War 11. Mr. McKinney said that Manvtlle*s Chapter 11 action "might not have been necessary If the government had accepted financial re sponsibility for Its role tn causing much of tbe disease.** Fred M. Baron, a Dallas attorney who represents clients suing Manvllle and others for asbestos damages, says. "They are try ing to force the government's hand. They want a bail-out bill. That's IOTa behind their fifing.** Manvllle Corp,, formerly Johns-Manvifir Corp.. is the Western world's leading pro ducer of asbestos, and company officials have conceded that this has helped to make Manvllle one of the most sued companies In the world. In recent years, asbestos has be come known as the cause of deadly lung dis eases that often don't show up until 20 or 40 years after exposure. The Manvllle Chapter 11 filing is the most dramatic In a series of maneuvers within the beietguered Industry to minimize the Impact of accumulating asbesioc lltlgat>on. AJJ told, tome X.000 claims hive been filed against some 20 asbesu* concerns to date. UNR's Chapter 11 Filing A similar Chapter 11 filing was made July 23 by Chicago-based UNR Industries Inc. a steel fabricator that is swamped by damage suits although It hasn't made an as bestos product since 1962. UN'R weighed var . Ions options-including liquidation--before i deciding oa Chapter 11 as "the most prudent I course,** says Malcolm Caynor, a lawyer who b handling UNR's reorganization. ! After UNR filed for bankruptcy. Manvllle ' began making tbe rounds of federal and state courts In which suits had been filed naming UNR and Manville as co-defendants. . Manvllle argued that since It was a co-de fendant, legal action should be stayed against it as well as UNR because of the Chapter 11 fifing. Plaintiffs' attorneys in the asbestos liti gation are highly cynical about the Chapter 11 action, viewing it as ploy to head off the relentless stream of litigation. "ft's a fraud on the bankruptcy laws,** declares Ronald L Modey. a Barnwell. S.C.. attorney who represents some 3.000 asbestos plaintiffs. Alluding to a series of bleak announce ments In recent weeks by companies facing asbestos claims, Mr. Motley says: "The script now Isn't bard to fofiow: First you cut the dividend, then you eliminate ft, and fi nally you file for Chapter 1L" Manvllle fol lowed this sequence. Raymark Corp.. for merly Paybeftcs-Manhattaa Inc^ omitted Its dividend earlier this week after reducing ft last year. But .the company says ft has "no Intention" of filing for Chapter U. Other Filings Predicted William F. Bailey, senior vice president of Boston-based Commercial Union Insur ance Cos., predicts that other asbestos com panies "may follow Manvllle and UNR" Into Chapter 11. The Manvllle and UNR filings may beneffi insurers who are battling one another and their asbestos-company clients over the pay ment of asbestos damage claims. "As we read ft now." Mr. Bailey says, "any sun that Manvllle may have had going against an Insurer will also be stayed." Manville, on the other hand, cites insur ers* role in its Chapter 11 filing. Mr. McKin ney, tn an advertisement placed in newspa pers today, says that Minvtlle's insurers haven't been paying the company's claims, and so "as much as anything else, the bad faith of Insurance companies has made ft necessary for us to take this action." One Urge Insurance corporation, iron!Please Turn to Pape f. Column t KMX 02136 Tillinghast, Nelson & Warren 8 THE WALL STREET JOURNAL, Fridy. Aujuti 27, 1982 Radical Tactic: Filing Chapter 11 Bankruptcy Plea, Manville Corp. Takes Aim at Costly Asbestos Suits CcmU'*Kf From First Pope I Dow Jones May Change cally. b listed among Manville's largest un secured creditors -- Prudential Insurance Co., holding tS million of debt. Other Urge creditors: Morgan Guaranty Trust Co., 13( million; Bank of America. Chemical Bank, and Citibank, each for BO million; Republic National Bank of Dallas, S12 million; and Continental Illinois National Bank and Wells Fargo Bank for $10 million each. The asbestos battle, meanwhile, has also been heating up in Washington. Congress has three bills pending that would partly ball out asbestos manufacturers, but ail have rolled because either industry or labor has strong objections to certain provisions. Manville has fought for a bill that would ; require the federal government to pay lor almost all of the cost of compensating as bestos victims, but It hasn't gotten to first base. One bill calls for 50% of the cost to be picked up by the government, but observers ay that, too, has little chance. The most talked-about bill Is one Intro* duced by Democratic Congressman George Miller of California, chairman of the House Labor Standards subcommittee. It would set up an industry-financed fund to provide pen sions for injured workers. It would allow suits already filed to proceed but would pro hibit future suits. All industries that used as bestos products would contribute to some Industrial Average List y wA(x Stwcct Joumm<o. <// NEW YORK-Dow Jones lr Co. said It is coosiderm; possible changes In the list of stocks Included In the Dow Jones Industrial Average. . Tbe move was prompted by the bankruptcy petition of Manville Corp.. one of the 30 stocks in the average, and the New York Stock Exchange's plan to suspend trading In the stock Sept. 10. Johns-Manriile Corp., which changed its name last year, became a compo nent of the average Jan. 23. 1330, re placing North American Aviation. It Is believed to be the first component of the average to file for bankruptcy protec tion since the 30-component average be gan Oct. 1. 1923. If and when a substitution is made for l component of the Index. It wouldn't have any immediate effect on the average, because the divisor used to calculate the average Is changed when a substitution Is made. The change as sures that the "new" average ts the . same as the previous one. ! Current calculations of the average . include Manvffie at 7%, the price of its last trade on Wednesday. degree. But Manville and other manufactur ers rigorously contest the bill because of its cost and Its failure to deal with present suits. John Lawrence, staff director of the La bor Standards subcommittee, says Congress b apt to view Manville's bankruptcy filing with deep suspicion. "We are going to make sure this isn't a little corporate shuck and jive" to escape liability, be says. Congressman Miller suggests that Mwrilk may have escaped the reach of Ms bill by filing under Chapter 11. "We have to see whether this cuts off our ability to Include KanriUe." he says. "What if Manville won't be there as a contributor to the fund? Will other manufacturers show a greater interest to the MU, or run to bankruptcy court them selves?" From the standpoint of Its balance sheet, Manville Corp. Is considered the healthiest giant corporation ever to file for Chapter 11. Its June 30 financial statement boasts a net worth of Sl.l billion, with Short-term debt of $102 million and long term debt totaling M96.7 million. This is considerably' better than the one-to-one debt-to-equity ratio con sidered satisfactory for large manufactur ers. The company earned WU million In 1381 but had a loss of BS.l miljjoo for the first half of 1382. because of a recession-re lated decline In demand (or Its products. The financial statement didn't contain an estimate of the liability from the asbestos suits. The company did. however, make de tailed estimates of potential liability In yes terday's bankruptcy petition. It stated that through the first half of this year it had set tled about 3400 asbestos-related claims, for an average of SK.fiOO per claim. It said the currant cost of settling claims was running about MO.OOO per claim. In addition, Man* ritle said. In five cases decided during the first half of this year, it was held liable for punitive damages averaging SSlfi.OQQ per case. The company said that its board and a special committee formed to review the situ had been limited to workers' compensation awards specified by state taws; for plaintiffs not employed by Manville. only compensa tory damages had been awarded. "1 think what set jhem on this course was punitive damages." says Michael P. Mealey. managing editor of the Asbestos Utfgallon Reporter, a publication devoted to j covering *lhe asbestos legal battle. "Those damages aren't covered by insurance-they come right out of the company's pocket-" Filing Chapter 11 halts all legal action against Manville. The bankruptcy judge, rather than federal and state courts, now de cides the outcome of cases, according to bankruptcy expert Vera Countryman, a pro fessor at Harvard University. The company will benefit not ooly from a delay In legal action while Its reorganisation proceeds, be says, but also from not having to fight thou sands of different cases across the court- tty- , Mr. Countryman sees a good chance that Manville will emerge from Chapter 1! pro ceedings as l sound operation. If the net worth figure of $1.1 billion "Is anywhere In the ballpark," he says, "they should emerge from a reorganization with something left for shareholders." In a sense. Manville`s decision pitted the interests of Its shareholders against the growing burden of Its legal liability, and the shareholders lost, at least for the time beIng. Common stock worth about J6C9 mUlloe In 1981 Is now worth little or nothing because it Is so illiquid and the ultimate value b so speculative. Preferred shares worth SK2.8 million Wednesday are also now of quesoooable value. - Tbe market obviously sensed Manrilie'i growing difficulties, Tbe commoa nock de clined from a high of G6.S0 In 1961 to a re cent low of S6J75. It closed at 37475 Wednes day on the Big Board. The market value of the common stock at that price b II* mUUoo. Tbe stocks didn't trade yesterday, and the New York Stock Exchange said ft will suspend trading In the shares Sept. 10. Asbestos has been linked to the develop ment of lung cancer: to mesothelioma, a cancer of the lining of the lungs; and ashes* tests, a lung disease similar to emphysema. Asbestos miners, former employees of com panies that manufactured asbestos prod ucts-and their survivors-now are among those suing for compensation for Illness and death allegedly caused 'by the mineral. ation concluded that the potential costs of asbestos cases "could and probably will ex ceed Manville's ability to pay and finance the continuing operation of Manville's busi nesses." It added that the total "financial burden" could range from C billJoc "to miny times that amount over the next 20 To one victim of asbestosis, Manville's bankruptcy filing is but one more attempt to escape a court award and other Uligadoo that has been pending for five years. Jim Vermeulen, a 54-year-old former worker at Manville's Stocktoa. Calif., asbestos con crete pipe plant, has a personal Injury and yeira." fraud suit agilnfl Manville, and two years So-called punitive damages have become ago the California Supreme Court ordered a major woiry for asbestos concerns. Two i Manville to pay him 128.000 in rahabMtuooA I yean ago. the California Supreme Court 1 benefits. ` ruled that plaintiffs were entitled to puniUve or other damages because Manville had * tnuduJerniy concealed Its knowledge of as bestos hazards from workers. Previously, recovery ol damages by Manville employees 1 Manville b still contesting the CS.00Q award In a lower court, he says. Of the bankruptcy filing, he says "it b as plain as the nose on my face that Manville will do anything h can lo evade rwponaltXMty." Tillinghast, Nelson & Warren KMX 02137 I Tillinghast, Nelson & Warren KMX 02138