US Postal Service 2003 Annual Report Download - page 55

2003 annual report united states postal service | 53
notes to the
financial statements
years 1991 through 1998. The amounts receivable
as of September 30, 2003 and 2002 were $367
million and $370 million, respectively.
9commitments
At September 30, 2003, we estimate our financial
commitment for approved capital projects in progress
to be approximately $2,395 million.
Our total rental expense for the years ended September
30 is summarized as follows (dollars in millions):
2003 2002 2001
Non-cancelable real
estate leases including
related taxes $923 $894 $863
Facilities leased from
General Services
Administration subject
to 120-day notice
of cancellation 53 45 41
Equipment and other
short-term rentals 201 214 312
Total $1,177 $1,153 $1,216
At September 30, 2003, our future minimum lease
payments for all non-cancelable leases are as follows
(dollars in millions):
Year Operating Capital
2004 $ 718 $ 80
2005 679 80
2006 631 80
2007 580 80
2008 560 80
After 2008 5,500 562
$8,668 $962
Less: Interest at 4.5% 220
Total capital lease obligations 742
Less: Short-term portion
of capital lease obligations 48
Long-term portion of
capital lease obligations $694
Most of these leases contain renewal options for
periods ranging from 3 to 20 years. Certain non-cance-
lable real estate leases give us the option to purchase
the facilities at prices specified in the leases.
Capital leases included in buildings were $963 million
in 2003 and $1,038 million in 2002. Total accumu-
lated amortization is $259 million in 2003 and $264
million in 2002. Amortization expense for assets
recorded under capital leases is included in deprecia-
tion expense.
10 contingent liabilities
Each quarter we review litigation pending against us.
As a result of this review, we classify and adjust our
contingencies for claims that we think it probable that
we will pay and for which we can reasonably estimate
the amount of the unfavorable outcome.
These claims cover labor, equal employment opportu-
nity, environmental issues, traffic accidents, injuries on
postal properties, personal claims and property
damages and suits and claims arising from postal
contracts. We also recognize the settlements of claims
and lawsuits and revisions of other estimates.
Additionally, we evaluate the materiality of cases deter-
mined to have a reasonably possible chance of
adverse outcome. Such cases are immaterial to our
financial statements taken as a whole.
As a part of our continuing evaluation of estimates
required in the preparation of management’s financial
statements, we recorded a $92 million decrease in the
contingent liabilities balance in 2003, compared to an
increase of $187 million in 2002 and an $88 million
increase in 2001. We recognized settlements,
payments and changes in estimates of claims and
lawsuits in our changes in contingent liabilities.
Management and General Counsel believe that we
have made adequate provision for the amounts that
may become due under the suits, claims and proceed-
ings we have discussed here.
11 emergency preparedness
funding
In October 2001, the United States became the target
of biological terrorism. These activities affected us
because infectious biological agents were sent by mail,
resulting in the death of two employees, the curtail-
ment of mail services in some areas, long-term closing
of two processing facilities and a decline in mail
volume. Our viability and our value to the American
people are dependent upon an open and accessible
system. It was critical to put in place process changes
and technology applications that can reduce risks for
both employees and customers.
The President authorized an initial funding of $175
million for 2002 to assist in paying for these safety
measures. In November 2001, Congress appropriated
an additional $500 million to “protect postal employees