US Postal Service 2012 Annual Report Download - page 90

2012 Report on Form 10-K United States Postal Service- 89 -
These changes are considered changes in accounting estimates under GAAP and, accordingly, the impact
of the changes was reflected in the quarter that the estimate changes were made.
The chart below details deferred revenue-prepaid postage by category.
Deferred Revenue - Prepaid Postage
(Dollars in millions)
2012
2011
2010
Forever Stamps
$
3,253
$
2,527
$
1,323
Non-Forever Stamps
117
246
488
Meters
362
459
506
Mail In-Transit
259
247
254
Other, primarily Precancelled Stamps
23
18
13
Total Deferred Revenue - Prepaid Postage $ 4,014 $ 3,497 $ 2,584
CONTINGENT LIABILITIES
The Postal Service is involved in various legal proceedings and contingencies. A liability is recorded based
on an estimate of the probable cost to resolve each contingency. The actual resolution of these
contingencies may differ from the estimates. If a contingency is settled for an amount greater than the
estimate, a future charge to income would result. Likewise, if a contingency is settled for an amount that is
less than the estimate, a future credit to income would result.
The events that may impact contingent liabilities are often unique and generally are not predictable. At the
time a contingency is identified, all relevant facts are considered. A liability is recorded for a loss when the
loss is probable of occurring and reasonably estimable. Events may arise that were not anticipated and the
outcome of a contingency may result in a loss to the Postal Service that differs from the previously
estimated liability. These factors could result in a material difference between estimated and actual
operating results. See Note 7, Contingent Liabilities, for additional information.
EMPLOYEES’ ACCUMULATED LEAVE
Employees earn annual leave based on their number of creditable years of service. The Postal Service
advances annual leave to employees at the beginning of each calendar year for the value of leave they will
earn for the year. Leave taken by employees before it is earned is considered an advance. Advances were
$166 million and $159 million at September 30, 2012 and 2011, respectively. Employees’ accumulated
leave represents leave earned as of the balance sheet date and is recorded net of advances.
RETIREE BENEFITS
Employees are eligible to participate in the federal government sponsored pension and retiree health
benefits programs. The Postal Service is required to provide funding for these plans as determined by the
administrator of the plans, the OPM. The Postal Service cannot direct the costs, benefits, or funding
requirements of the plans. Accordingly, the plans are accounted for using multiemployer plan accounting
rules and expense is recorded in the period the contribution is due and payable. These amounts can
fluctuate significantly from year to year, if changes in funding requirements are made. See Note 8,
Retirement Benefit Plans, and Note 9, Health Benefit Plans, for additional information.
WORKERS’ COMPENSATION
Workers’ compensation expenses are incurred under a program administered by the DOL and include
employees’ medical expenses, compensation for wages lost, and DOL administrative fees. See Note 10,
Workers’ Compensation, for additional information.
REVENUE FORGONE APPROPRIATION
Revenue forgone is an appropriation from Congress which covers the cost of providing mailing services to
certain groups at no cost or at reduced rates. The costs incurred for this service are estimated by the Postal
Service and submitted to Congress annually. Congress subsequently approves or alters the amount and
funds the necessary appropriation. See Note 12, Revenue Forgone, for additional information.