Union Pacific 2009 Annual Report Download - page 49

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49
Our liability for asbestos-related claims is not discounted to present value due to the uncertainty
surrounding the timing of future payments. Approximately 21% of the recorded liability related to
asserted claims and approximately 79% related to unasserted claims at December 31, 2009. Because of
the uncertainty surrounding the ultimate outcome of asbestos-related claims, it is reasonably possible that
future costs to settle these claims may range from approximately $174 million to $189 million. We
record an accrual at the low end of the range as no amount of loss is more probable than any other. In
conjunction with the liability update performed in 2009, we also reassessed estimated insurance
recoveries. We have recognized an asset for estimated insurance recoveries at December 31, 2009 and
2008. Our asbestos-related liability activity was as follows:
Millions of Dollars 2009 2008 2007
Beginning balance $ 213 $ 265 $ 302
Accruals/(credits) (25) (42) (20)
Payments (14) (10) (17)
Ending balance at December 31 $ 174 $ 213 $ 265
Current portion, ending balance at December 31 $ 13 $ 12 $ 11
Our asbestos-related claims activity was as follows:
2009 2008 2007
Open claims, beginning balance 1,867 2,086 2,277
New claims 249 256 269
Settled or dismissed claims (446) (475) (460)
Open claims, ending balance at December 31 1,670 1,867 2,086
We believe that our estimates of liability for asbestos-related claims and insurance recoveries are
reasonable and probable. The amounts recorded for asbestos-related liabilities and related insurance
recoveries were based on currently known facts. However, future events, such as the number of new
claims to be filed each year, average settlement costs, and insurance coverage issues, could cause the
actual costs and insurance recoveries to be higher or lower than the projected amounts. Estimates also
may vary in the future if strategies, activities, and outcomes of asbestos litigation materially change;
federal and state laws governing asbestos litigation increase or decrease the probability or amount of
compensation of claimants; and there are material changes with respect to payments made to claimants by
other defendants.
Environmental – We are subject to federal, state, and local environmental laws and regulations. We
identified 307 sites at which we are or may be liable for remediation costs associated with alleged
contamination or for violations of environmental requirements. This includes 32 sites that are the subject
of actions taken by the U.S. government, 17 of which are currently on the Superfund National Priorities
List. Certain federal legislation imposes joint and several liability for the remediation of identified sites;
consequently, our ultimate environmental liability may include costs relating to activities of other parties,
in addition to costs relating to our own activities at each site.