Union Pacific 2010 Annual Report Download - page 43

43
are assessed based on a finding of fault through litigation or out-of-court settlements. We offer a
comprehensive variety of services and rehabilitation programs for employees who are injured at work.
Our personal injury liability is discounted to present value using applicable U.S. Treasury rates.
Approximately 88% of the recorded liability related to asserted claims, and approximately 12% related to
unasserted claims at December 31, 2010. Because of the uncertainty surrounding the ultimate outcome
of personal injury claims, it is reasonably possible that future costs to settle these claims may range from
approximately $426 million to $464 million. We record an accrual at the low end of the range as no
amount of loss is more probable than any other. Our personal injury liability activity was as follows:
Millions 2010 2009 2008
Beginning balance $ 545 $ 621 $ 593
Current year accruals 155 174 226
Changes in estimates for prior years (101) (95) (25)
Payments (173) (155) (173)
Ending balance at December 31 $ 426 $ 545 $ 621
Current portion, ending balance at December 31 $ 140 $ 158 $ 186
Our personal injury claims activity was as follows:
2010 2009 2008
Open claims, beginning balance 3,500 4,079 4,084
New claims 2,843 3,012 3,692
Settled or dismissed claims (3,192) (3,591) (3,697)
Open claims, ending balance at December 31 3,151 3,500 4,079
Asbestos – We are a defendant in a number of lawsuits in which current and former employees and
other parties allege exposure to asbestos. We assess our potential liability using a statistical analysis of
resolution costs for asbestos-related claims. This liability is updated annually and excludes future
defense and processing costs. The liability for resolving both asserted and unasserted claims was based
on the following assumptions:
• The ratio of future claims by alleged disease would be consistent with historical averages.
• The number of claims filed against us will decline each year.
• The average settlement values for asserted and unasserted claims will be equivalent to historical
averages.
• The percentage of claims dismissed in the future will be equivalent to historical averages.
Our liability for asbestos-related claims is not discounted to present value due to the uncertainty
surrounding the timing of future payments. Approximately 22% of the recorded liability related to asserted
claims and approximately 78% related to unasserted claims at December 31, 2010. 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 $162 million to $178 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 2010, we also reassessed estimated insurance
recoveries. We have recognized an asset for estimated insurance recoveries at December 31, 2010 and
2009. Our asbestos-related liability activity was as follows:
Millions 2010 2009 2008
Beginning balance $ 174 $ 213 $ 265
Accruals/(credits) (1) (25) (42)
Payments (11) (14) (10)
Ending balance at December 31 $ 162 $ 174 $ 213
Current portion, ending balance at December 31 $ 12 $ 13 $ 12