Your iteration through the list is wrong, while your list gets set up correctly:

print "Letters are >>@letters<<\n";
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will show you what letters you got from $contact.

To iterate through the letters you got, either do:

foreach my $letter (@letters) {
    print "Got letter '$letter'\n";
};
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or do

for my $i (0..$#letters) {
    print "Flag $i is $letters[$i]\n";
};
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... but no mixture of the two. Either you iterate through the array or you iterate through the indices of the array.