US Postal Service 2015 Annual Report Download - page 54

2015 Report on Form 10-K United States Postal Service 52
The following table provides details for total rental expense for the years ended September 30, 2015, 2014 and 2013:
(in millions) 2015 2014 2013
Non-cancellable real estate leases1$ 915 $ 918 $ 915
GSA facilities leases233 35 37
Equipment and other short-term rentals 155 139 153
Total rental expense $ 1,103 $ 1,092 $ 1,105
1Sublease income was not material to the financial statements for the years ended September 30, 2015, 2014 and 2013.
2General Services Administration leases subject to 120-day cancellation notice.
Capital Commitments
Capital commitments consist primarily of commitments to invest in equipment and building construction and improvements.
The following table provides details for approved capital projects in progress at September 30, 2015, and 2014:
(in millions) 2015 2014
Mail processing equipment $ 333 $ 278
Building improvements, construction and building purchase 309 265
Postal support equipment 85 123
Vehicles and other 561 104
Total capital commitments $ 1,288 $ 770
Contingent Liabilities
Contingent liabilities of the Postal Service consist primarily of claims and lawsuits resulting from labor, employment and
environmental matters, property damage claims and injuries on Postal Service properties and issues arising from Postal Service
contracts, personal claims and traffic accidents. Each quarter, significant new claims and litigation are evaluated for the
probability of an adverse outcome. If the claim is deemed probable of an unfavorable outcome and the amount of the potential
resolution is reasonably estimable, a liability for the loss is recorded. Any pre-existing claims and litigation are reviewed and
adjusted for resolutions or revisions to prior estimates. Because most contingencies are resolved over long period of time,
liabilities may change in the future due to new developments (including litigation developments, discovery of new facts,
changes in legislation and outcomes of similar cases), changes in assumptions or changes in the Postal Service’s settlement
strategy.
Provision for Losses
Based on available information, the Postal Service has made adequate provision for probable losses arising from all claims
and lawsuits and records this provision as contingent liabilities. As of September 30, 2015, contingent liabilities consisted of
$637 million associated with labor and employment matters, $47 million with asset retirement obligations, $38 million with
tort matters and $4 million with contractual matters, for a total of $726 million. As of September 30, 2014, contingent liabilities
consisted of $839 million associated with labor and employment matters, $48 million with asset retirement obligations, $45
million with tort matters and $2 million with contractual matters, for a total of $934 million.
The current portions of contingent liabilities were $132 million and $158 million at September 30, 2015, and 2014, respectively,
and are included within Payables and accrued expenses in the accompanying Balance Sheets. The noncurrent portions of
contingent liabilities were $594 million and $776 million at September 30, 2015, and 2014, respectively, and are included
within Other noncurrent liabilities in the accompanying Balance Sheets.
In addition to the amounts accrued in the financial statements, the Postal Service is subject to other claims and lawsuits which
it deems reasonably possible of an unfavorable outcome, which ranged from $185 million to $686 million and $325 million
to $925 million at September 30, 2015, and 2014, respectively. The Postal Service has not recorded accruals for these reasonably