Impaired Assets

Losses on long-lived assets are recorded when events or circumstances indicate that the assets might be impaired and valuation indicates that the fair value of the asset is less than the carrying value. To meet the Postal Service’s universal service requirement, certain real estate and other assets are maintained which are underutilized. Such assets are not deemed impaired solely on the basis of volume of activity but, rather, are evaluated for impairment when no longer required to provide mailing services. When such a determination is made, impaired assets are written down to the lower of cost or fair value. Fair value is determined by comparison to independent appraisals for real property, adjusted for estimated selling costs. Due to the absence of a market for most types of mailing equipment, impaired equipment assets are assigned a fair value of zero.

Impairment charges of $26 million and $71 million were recorded in 2010 and 2009, respectively, and are included in the Statement of Operations in “Other”. The majority of the impairments in 2009 related to a project under development that was cancelled prior to implementation. Impairment charges in 2008 were immaterial.