NOTE 9 – CONTINgENCIEs The Company and certain of its subsidiaries have been designated as potentially responsible parties by the U.S. Environmental  Protection Agency for site investigation and remediation under the Comprehensive Environmental Response, Compensation and  Liability Act (Superfund) with respect to certain sites. The claims for remediation have been asserted against numerous other entities,  which are believed to be financially solvent and are expected to fulfill their proportionate share of the obligation. The Company had  an accrual of $16.3 million and $14.2 million for environmental matters that are probable and reasonably estimable, as of December  31, 2011 and 2010, respectively. This accrual is recorded based upon the best estimate of costs to be incurred in light of the progress  made in determining the magnitude of remediation costs, the timing and extent of remedial actions required by governmental  authorities and the amount of the Company’s liability in proportion to other responsible parties. Approximately $14.8 million of the  2011 accrual is included in the rollforward of the restructuring accrual as of December 31, 2011 discussed in Note 10 – Impairment  and Restructuring Charges. In addition, the Company is subject to various lawsuits, claims and proceedings, which arise in the ordinary course of its business.  The Company accrues costs associated with legal and non-income tax matters when they become probable and reasonably estimable.  Accruals are established based on the estimated undiscounted cash flows to settle the obligations and are not reduced by any potential  recoveries from insurance or other indemnification claims. Management believes that any ultimate liability with respect to these  actions, in excess of amounts provided, will not materially affect the Company’s Consolidated Financial Statements. The Company provides limited warranties on certain of its products. The Company accrues liabilities for warranty policies based upon  specific claims and a review of historical warranty claim experience in accordance with accounting rules relating to contingent liabilities.  The Company records and accounts for its warranty reserve based on specific claim incidents. Should the Company become aware of  a specific potential warranty claim for which liability is probable and reasonably estimable, a specific charge is recorded and accounted  for accordingly. Adjustments are made quarterly to the accruals as claim data and historical experience change. The following is a rollforward of the warranty reserves for 2011 and 2010: The product warranty accrual for 2011 and 2010 was included in other current liabilities on the Consolidated Balance Sheets. FINANCIAls ANd FOOTNOTEs 59 THE TIMKEN COMPANY Product Warranties 2011 2010 Beginning balance, January 1 $ 8.0 $ 5.4 Expense  9.0   6.0  Payments  (5.3)  (3.4) Ending balance, December 31 $ 11.7 $ 8.0