Accrued Liabilities

9 Months Ended

Sep. 30, 2012

3. Accrued Liabilities

Accrued liabilities consist of (in millions):


	September 30,		December 31,
	2012		2011
Customer prepayments and billings	$	687	$	686
Accrued vendor costs		407		280
Compensation		349		468
Warranty		210		211
Taxes (non income)		113		119
Insurance		111		103
Fair value of derivatives		33		83
Interest		9		7
Other		444		419

Total	$	2,363	$	2,376

Service and Product Warranties

The Company provides service and warranty policies on certain of its products. The Company accrues liabilities under service and warranty policies based upon specific claims and a review of historical warranty and service claim experience in accordance with Accounting Standards Codification (“ASC”) Topic 450 “Contingencies” (“ASC Topic 450”). Adjustments are made to accruals as claim data and historical experience change. In addition, the Company incurs discretionary costs to service its products in connection with product performance issues and accrues for them when they are encountered.

The changes in the carrying amount of service and product warranties are as follows (in millions):


Balance at December 31, 2011	$	211

Net provisions for warranties issued during the year		39
Amounts incurred		(44	)
Currency translation adjustments and other		4

Balance at September 30, 2012	$	210