US Postal Service 2012 Annual Report Download - page 103

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2012 Report on Form 10-K United States Postal Service- 102 -
In 2012, workers’ compensation expense was $3,729 million compared to $3,672 million in 2011 and
$3,566 million in 2010. The components of workers’ compensation expense are as follows:
Workers' Compensation Expense
(Dollars in millions) 2012 2011 2010
$
346
$
978
$
2,017
Actuarial Revaluation of Existing Cases
1,602
1,264
483
Subtotal
1,948
2,242
2,500
Costs of New Cases
1,714
1,367
1,009
Administrative Fee
67
63
57
Total Workers' Compensation Expense
$
3,729
$
3,672
$
3,566
Years Ended September 30,
Impact of Discount Rate Changes
NOTE 11 — FAIR VALUE MEASUREMENT
The Postal Service assumes that the carrying value of current assets and current liabilities approximates
fair values. The Postal Service also has noncurrent financial instruments, such as the long-term portion of
debt (see Note 4, Debt) and long-term receivables (see Note 12, Revenue Forgone), that must be
measured for disclosure purposes on a recurring basis under authoritative accounting literature as
promulgated by the Financial Accounting Standards Board. The Postal Service also applies these
requirements to various non-recurring measurements of financial and non-financial assets and liabilities,
such as the impairment of property and equipment. Measurement of assets and liabilities at fair value is
performed using inputs from the following three levels of the fair value hierarchy, as defined in the
authoritative literature:
Level 1 inputs include unadjusted quoted prices in active markets for identical assets or liabilities
as of the balance sheet date.
Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted
prices for identical or similar assets or liabilities in inactive markets, observable data, other than
quoted market prices for the asset or liability (i.e., interest rates, yield curves, etc.) and inputs that
are derived from, or corroborated by, observable market data.
Level 3 inputs include unobservable data that reflect current assumptions about the judgments
and estimates that market participants would use when pricing the asset or liability. These inputs
are based on the best information available, including internal data.
Because no active market exists for the debt with the FFB, the fair value of the noncurrent portion of these
notes has been estimated using prices provided by the FFB, a level 3 input.
The fair value of revenue forgone has been estimated using the income method and discount rates on
similar assets, such as noncurrent U.S. Treasury securities that have a similar maturity, a level 2 input.
The carrying values and the fair values of noncurrent assets and liabilities that qualify as financial
instruments in accordance with the accounting literature are in the table below. This table is presented for
disclosure purposes only. The Postal Service has not recorded a charge or credit to its operations for the
differences between carrying and fair values of the above assets and liabilities.
Carrying
Amount Fair
Value Carrying
Amount Fair
Value
Revenue Forgone
$
385
$
533
$
393
$
540
Total Long-Term Financial Assets
385 533 393 540
5,500
6,290
5,500
6,148
Total Long-Term Financial Liabilities
$ 5,500 $ 6,290 $ 5,500 $ 6,148
Fair Value of Long-Term Financial Assets
(Dollars in millions)
2012 2011
Debt
and Liabilities For The Years Ended September 30,