Union Pacific 2012 Annual Report Download - page 80

Download and view the complete annual report

Please find page 80 of the 2012 Union Pacific annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 101

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101

80
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 not discounted to present value. Approximately 90% of the recorded liability
is related to asserted claims, and approximately 10% is related to unasserted claims at December 31,
2012. 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 $334 million to
$368 million. We record an accrual at the low end of the range as no amount of loss within the range is
more probable than any other. Estimates can vary over time due to evolving trends in litigation.
Our personal injury liability activity was as follows:
Millions 2012 2011 2010
Beginning balance $ 368 $426 $545
Current year accruals 121 118 155
Changes in estimates for prior years (58) (71) (101)
Payments (97) (105) (173)
Ending balance at December 31 $ 334 $ 368 $ 426
Current portion, ending balance at December 31 $ 95 $ 103 $ 140
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
adjusted for inflation.
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, 2012. 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 $139 million to $149 million. We record
an accrual at the low end of the range as no amount of loss within the range is more probable than any
other.
Our asbestos-related liability activity was as follows:
Millions 2012 2011 2010
Beginning balance $ 147 $ 162 $ 174
Credits (2) (5) (1)
Payments (6) (10) (11)
Ending balance at December 31 $ 139 $ 147 $ 162
Current portion, ending balance at December 31 $ 8 $ 8 $ 12
In conjunction with the liability update performed in 2012, we also reassessed estimated insurance
recoveries. We have recognized an asset for estimated insurance recoveries at December 31, 2012 and
2011. 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 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