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 traffic accidents.

Each quarter, we review significant new claims and litigation 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 contingencies for settlements or revisions to prior estimates. No individual claim is material to our financial statements when taken as a whole. The following table summarizes contingent liabilities provided for in our financial statements.

We believe that adequate provision has been made for probable liabilities from claims and suits. The current portion of this liability at September 30, 2009, of $86 million is included on the balance sheets under the heading “Trade payables and accrued expenses”. On September 30, 2008, this amount was $198 million. The long-term portion at September 30, 2009, of $215 million is accrued under the heading, “Noncurrent Liabilities, Contingent liabilities and other” in our balance sheet. On September 30, 2008, the long-term liability was $238 million.

We also have other claims and lawsuits which we deem reasonably possible of an unfavorable outcome which range from $1.2 billion to $1.4 billion. No provisions for these are included in our financial statements.