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9
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 is probable that
we will lose and for which we can reasonably estimate the amount of the
unfavorable outcome. These claims cover labor, equal employment opportunity,
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 settlement of claims and lawsuits
and revisions of other estimates. Additionally, we evaluate the materiality
of cases determined 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 our financial statements,
we recorded approximately a $35 million increase in liabilities in 2001,
$63 million in 2000 and $104 million in 1999, to recognize changes in
the estimated cost of litigation and claims asserted in prior years. We
recognized settlements of claims and lawsuits and revised other estimates
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 proceedings we have discussed
here.
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