US Postal Service 2009 Annual Report Download - page 72

70 | 2009 Annual Report United States Postal Service
Advertising Expenses
Advertising costs are expensed as incurred and are clas-
sifi ed in other operating expenses. Advertising expenses
were $105 million in 2009, $106 million in 2008 and $121
million in 2007.
Compensation and Benefi ts Payable
Compensation and benefi ts payable are the salaries and
benefi ts we owe to current and retired employees, includ-
ing the amounts employees have earned but have not yet
been paid, current workers’ compensation, unemploy-
ment costs and health benefi ts.
Workers’ Compensation
We pay for workers’ compensation costs under a program
administered by the Department of Labor (DOL). These
costs include employees’ medical expenses, compen-
sation for wages lost and DOL administrative fees. We
record these costs as an operating expense. See Note
12, Workers’ Compensation, in the Notes to the Financial
Statements, for additional information.
Retiree Benefi ts
Our employees are eligible to participate in the federal gov-
ernment retirement programs, including pension and re-
tiree health benefi ts. We are required to provide funding for
those plans as determined by the administrator of the plan,
the Offi ce of Personnel Management (OPM). We cannot
direct the costs, benefi ts, or funding requirements of these
federally sponsored plans. In accordance with our parent-
subsidiary type relationship with the federal government,
we account for our participation in these plans using mul-
tiemployer plan accounting rules in accordance with ASC
715 (formerly FAS 87, Employers’ Accounting for Pension
Costs, and formerly FAS 106, Employers’ Accounting for
Postretirement Benefi ts Other Than Pensions). We ac-
count for the cost of our employees’ participation in these
programs as an expense in the period our contribution
is due and payable. These amounts can fl uctuate signifi -
cantly from year to year if changes in funding requirements
are made. As more fully described in Note 5, Subsequent
Events, Note 10, Health Benefi t Programs, and Note 11,
Retirement Programs, in the Notes to the Financial State-
ments. P.L.109-435 and P.L 111-68 signifi cantly impacted
our costs associated with these programs.
Revenue Forgone Appropriation
Revenue Forgone is an appropriation from Congress which
covers the cost of providing mailing services to statutorily
designated groups at free or reduced rates. The amount
of expense estimated by the Postal Service is submitted
to Congress annually. Congress subsequently approves or
alters the amount and funds the necessary appropriation.
See Note 14, Revenue Forgone, in the Notes to the Finan-
cial Statements, for additional information.
Emergency Preparedness Appropriation
Emergency preparedness appropriations were received
from Congress to help pay the costs of keeping the mail,
postal employees and postal customers safe, and are re-
stricted for such use. These funds were accounted for as
deferred revenue upon receipt and were largely utilized
to procure capital equipment. We recognize revenue for
emergency preparedness appropriations at the same time
we recognize depreciation expense for capital equipment
purchased with these appropriations. The emergency pre-
paredness appropriations revenue recognized during the
years ended September 30 was $64 million in 2009, $61
million in 2008 and $76 million in 2007.
Appropriations that have not been recognized as revenue
during the years ended September 30 were $486 million
in 2009 and $550 million in 2008. The current portion is
included in prepaid box rent and other deferred revenue,
and the long-term portion is in deferred appropriations and
other revenue on our balance sheets.
NOTE 4 — RECENT PRONOUNCEMENTS
New accounting rules and disclosure requirements can im-
pact our results and the comparability of our fi nancial state-
ments. The following new accounting pronouncements are
relevant to the readers of our fi nancial statements.
ASC 820 (formerly FAS 157, Fair Value Measurements)
We adopted ASC 820, which provides a common defi ni-
tion of fair value, establishes a uniform framework for mea-
suring fair value and requires expanded disclosures about
fair value measurements in 2009. See Note 13, Fair Value
Measurements, for details. The adoption of ASC 820 did
not have a material impact on our fi nancial statements.