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2009 Annual Report United States Postal Service | 39
CAUTIONARY STATEMENTS
Forward-looking statements contained in this report repre-
sent our best estimates of trends we know about, trends
we anticipate and trends we believe are relevant to future
operations. However, actual results may be different from
estimates. Certain forward-looking statements are in-
cluded in this report and use such words as “may,” “will,”
“could,” “expect,” “believe,” “plan” or other similar terminol-
ogy. These statements refl ect current expectations regard-
ing future events and operating performance as of the date
of this report. These forward-looking statements involve a
number of risks and uncertainties.
The following are some of the factors that could cause
actual results to differ materially from those expressed in,
or underlying, forward-looking statements: effectiveness
of operating initiatives; success in advertising and promo-
tional efforts; changes in national and local business and
economic conditions, including their impact on consumer
and business confi dence; fl uctuations in currency ex-
change and interest rates; labor and other operating costs;
oil, fuel and other transportation costs; the effects of war
and terrorist activities; competition, including pricing and
marketing initiatives and new service offerings by our com-
petitors; consumer preferences or perceptions concerning
our service offerings; spending patterns and demographic
trends; availability of qualifi ed personnel; severe weather
conditions; effects of legal claims; cost and deployment of
capital; changes in laws and regulations; costs and delays
associated with new regulations imposed by the PRC; and
changes in applicable accounting policies and practices.
The foregoing list of important factors is not all-inclusive.
We have no obligation to publicly update or revise any
forward-looking statements, whether as a result of new
information, future events or otherwise.
CRITICAL ACCOUNTING POLICIES
The preparation of fi nancial statements in accordance with
accounting principles generally accepted in the United
States requires management to make signifi cant judg-
ments and estimates to develop certain amounts refl ected
and disclosed in the fi nancial statements. In many cases,
there are alternative policies or estimation techniques that
could be used. We maintain a thorough process to review
the application of our accounting policies and to evalu-
ate the appropriateness of the many estimates that are
required to prepare the fi nancial statements of a large or-
ganization. However, even under optimal circumstances,
estimates routinely require adjustment based on changing
circumstances and new or better information.
The three critical accounting policies that we believe are
either the most judgmental or involve the selection or ap-
plication of alternative accounting policies, and are mate-
rial to fi nancial statements, are those relating to workers’
compensation costs, deferred revenue for prepaid post-
age and contingent liabilities. Workers’ compensation
costs are highly sensitive to the estimates of discount and
infl ation rates and the length of time recipients stay on the
compensation rolls, and reported fi nancial results may be
volatile. However the annual cash payment is relatively
stable and therefore predictable. Workers’ compensation
costs are also subject to actuarial estimates of future pay-
outs, based upon prior claims data. These estimates can
change signifi cantly from period to period.
Deferred revenue for prepaid postage represents our esti-
mate of postage that has been sold but has not yet been
used by the customers. We track postage sold from our
sales records. Postage used is estimated via statistical
samples of counts across the country. Changes in con-
sumer hold patterns can signifi cantly impact our estimates.
Contingent liabilities require signifi cant judgment in esti-
mating potential losses for legal claims. Each quarter, we
review signifi cant new claims and litigation for the prob-
ability of an adverse outcome. Estimates can change
as individual claims develop. In addition, retirement and
health benefi t costs for employees and retirees represent
a signifi cant portion of expenses. Any changes in laws or
regulations affecting the amounts, timing or administration
of these benefi ts could have a material effect on our fi nan-
cial position and results of operations. For additional infor-
mation, see Note 3, Summary of Signifi cant Accounting
Policies, in the Notes to the Financial Statements.
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND
RESULTS OF OPERATIONS