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74 | 2009 Annual Report United States Postal Service
Our total rental expense for the years ended September
30 is summarized as follows.
Rental Expense
(dollars in millions)
2009 2008 2007
Non-cancelable real estate leases
including related taxes $ 992 $ 967 $ 927
Facilities leased from GSA subject to
120-day cancellation 43 44 46
Equipment and other short-term rentals 294 294 261
Total Rental Expense $ 1,329 $ 1,305 $ 1,234
Capital Commitments
At September 30, 2009, we estimate our fi nancial commit-
ment for approved capital projects in progress (resources
on order) to be $1,809 million, detailed in the following table.
Capital Resources on Order
(dollars in millions)
2009
Mail Processing Equipment $ 1,072
Building Improvements 412
Postal Support Equipment 195
Construction and Building Purchase 92
Retail Equipment 33
Vehicles 5
Total Capital Resources on Order $ 1,809
Expense Commitments
In the normal operating of our business, we enter into
commitments for expense contracts. The contracts run for
periods from one to ten years. Although these contracts
contain clauses for termination by the Postal Service, we
normally would have early termination costs. As these ar-
rangements qualify as executory contracts, the obligations
are not recognized by us in the fi nancial statements until
we receive the related goods and services.
Expense commitments are classifi ed as miscellaneous,
inventory, and research and development. Our miscella-
neous expense commitments include contracts for sup-
plies, services, communications, repairs, research, printing
and advertising. Our inventory contracts are for vehicle re-
pair parts and mechanized equipment spare parts. These
are summarized in the following table.
Expense Resources on Order
(dollars in millions)
2009
Miscellaneous Contracts $ 4,879
Inventory Contracts 124
Research and Development Contracts 41
Total Expense Resources on Order $ 5,044
In addition, P.L. 109-435 mandates annual payments, due
each September 30, into the PSRHBF. These payments
are listed in the following table.
Retiree Health Benefi ts Commitments
(dollars in millions)
P.L. 109-435 Requirement
2010 $ 5,500
2011 5,500
2012 5,600
2013 5,600
2014 5,700
After 2014 11,500
Total Retiree Health Benefi ts Commitments $ 39,400
As discussed in Note 2, Liquidity Matters, we believe that,
while there are suffi cient cash fl ows for ongoing opera-
tions, there is considerable uncertainty as to whether we
will have suffi cient cash on September 30, 2010 to fund
our required $5.5 billion PSRHBF payment.
NOTE 9 — CONTINGENT LIABILITIES
Our contingent liabilities consist mainly of claims and suits
resulting from labor, equal employment opportunity and
environmental issues, property damage claims, injuries
on postal properties, issues arising from postal contracts,
personal claims and traffi c accidents.
Each quarter, we review signifi cant new claims and litiga-
tion for the probability of an adverse outcome. If a claim is
deemed “probable” for an unfavorable outcome and the
amount of settlement is estimable, we record a liability.
Each quarter, we also review and adjust any prior contin-
gencies for settlements or revisions to prior estimates. No
individual claim is material to our fi nancial statements when
taken as a whole. The following table summarizes contin-
gent liabilities provided for in our fi nancial statements.