FULL PRODUCT VERSION :
> javac -version
javac 1.7.0-ea
> java -version
java version "1.7.0-ea"
Java(TM) SE Runtime Environment (build 1.7.0-ea-b130)
Java HotSpot(TM) Client VM (build 21.0-b02, mixed mode, sharing)


ADDITIONAL OS VERSION INFORMATION :
> uname -a
Linux riedquat 2.6.22.19-0.4-default #1 SMP 2009-08-14 02:09:16 +0200 i686 i686 i386 GNU/Linux


A DESCRIPTION OF THE PROBLEM :
When enabling the try-warnings (-Xlint:all or -Xlint:try), there will be false positives for resources allocated in outer try-with-resources blocks and used in inner try-blocks.

A bug description can also be found in this blog entry:
http://www.riedquat.de/blog/2011-02-28-02


STEPS TO FOLLOW TO REPRODUCE THE PROBLEM :
Compile the source code example below using javac -Xlint:all or javac -Xlint:try

EXPECTED VERSUS ACTUAL BEHAVIOR :
EXPECTED -
No warnings.
ACTUAL -
One warning:
> javac -Xlint:all XlintTryBug.java
XlintTryBug.java:5: warning: [try] auto-closeable resource out is never referenced in body of corresponding try statement
        try (final PrintWriter out = new PrintWriter(System.out)) {
             ^
1 warning


ERROR MESSAGES/STACK TRACES THAT OCCUR :
> javac -Xlint:all XlintTryBug.java
XlintTryBug.java:5: warning: [try] auto-closeable resource out is never referenced in body of corresponding try statement
        try (final PrintWriter out = new PrintWriter(System.out)) {
             ^
1 warning


REPRODUCIBILITY :
This bug can be reproduced always.

---------- BEGIN SOURCE ----------
import java.io.*;

public class XlintTryBug {
    public static void main(final String... args) throws IOException {
        try (final PrintWriter out = new PrintWriter(System.out)) {
            for (final String arg : args) {
                try (final BufferedReader in = new BufferedReader(new FileReader(arg))) {
                    out.println(in.readLine());
                }
            }
        }
    }
}

---------- END SOURCE ----------

CUSTOMER SUBMITTED WORKAROUND :
Possible Workarounds:
* Do not use -Xlint:try
    This will require reconfiguration of compilation settings / scripts like Makefiles, build.xml etc. to explicitely -try for projects with -Xlint:all
* Always use the variable within its try block, i.e. by using it w/o side-effect.
The following line of code will already help:
assert out != null;