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lawsuits alleging exposure to these asbestos containing
products. The Company discovered that the defendant
insurance companies in the coverage litigation had wrongfully
used cases alleging exposure to these pre-1966 products to
erode their aggregate limits. This conduct, apparently known
by the insurance industry based on discovery conducted to
date, was in breach of the insurers’ policy language. Two of
the defendant insurers have filed counterclaims seeking to
recoup certain monies should the plaintiffs prevail on their
claims. The parties have substantially completed all fact and
expert discovery relating to the liability phase of the case.
The parties have filed dispositive motions (including motions
for summary judgment) and related briefs. It is difficult to
predict when any such motions will be decided by the court
or when the court will set a definitive trial date, although
our subsidiaries anticipate a ruling on these pending motions
during the 2007 calendar year.
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During the second fiscal quarter ended November 30, 2006,
Bondex reached a cash settlement of $15.0 million, the terms
of which are confidential by agreement of the parties, with
one of the defendant insurers. The settling defendant has
been dismissed from the case. Our subsidiaries are aggressively
pursuing their claims against the remaining insurers based on
the terms of their respective policies.
We are unable at the present time to predict the timing or
ultimate outcome of this insurance coverage litigation or
whether there will be any further settlements. Consequently,
we are unable to predict whether, or to what extent, any
additional insurance may be available to cover a portion of
our subsidiaries’ asbestos liabilities. We have not included
any potential benefits from this litigation in calculating our
current asbestos reserve. Our wholly-owned captive insurance
companies have not provided any insurance or reinsurance
coverage for any of our subsidiaries’ asbestos-related claims.
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The following table illustrates the movement of current and long-term asbestos-related liabilities through May 31, 2007:
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