US Postal Service 2013 Annual Report Download - page 29

2013 Report on Form 10-K United States Postal Service 27
OPERATING EXPENSES
Operating expenses of $72,128 million in 2013 decreased 10.9% from $80,964 million in 2012 due primarily to reductions
in retiree health benefit expenses and workers’ compensation. In 2013, expenses related to a single scheduled payment
to PSRHBF of $5,600 million that was due, compared to two payments that were due in 2012. Workers’ compensation
decreased in 2013 primarily due to the impact of the fair value adjustments for Workers’ Compensation required by
changing interest rates. Compensation and benefits expenses also decreased by almost $1 billion driven by work hour
reductions and a decrease in the average hourly compensation and benefits rate. Compensation and benefits expenses
have decreased every year since 2006.
In contrast, total operating expenses in 2012 increased by $10,330 million, or 14.6%, from 2011 due to the passage of
P.L. 112-74 which changed the due date of the scheduled PSRHBF prefunding payment of $5.5 billion originally due by
September 30, 2011 to August 1, 2012, which with the previously scheduled prefunding payment of $5.6 billion due by
September 30, 2012 resulted in $11.1 billion of RHB expense in 2012. Excluding the impact of the PSRHBF prefunding
expense, operating expenses in 2012 would have been $770 million less than in 2011.
Operating Expenses
% Change
(Dollars in millions)
2013
2012
2011
2013 / 2012 2012 / 2011
Compensation and Benefits
$
46,708
$
47,689
$
48,310
(2.1%)
(1.3%)
Retiree Health Benefit Premiums
2,850
2,629
2,441
8.4%
7.7%
PSRHBF Prefunding
5,600
11,100
-
(49.5%)
-
Workers' Compensation
1,061
3,729
3,672
(71.5%)
1.6%
Transportation
6,735
6,630
6,389
1.6%
3.8%
Other Expenses
9,174
9,187
9,822
(0.1%)
(6.5%)
Total Operating Expenses
$
72,128
$
80,964
$
70,634
(10.9%)
14.6%
As discussed in the Results of Operations section of this document, our current period results are also impacted by items
that are not under our control or which are not reflective of our normal operations. These items include the annual
legally-mandated PSRHBF prefunding expense, fluctuations in workers’ compensation expense due to discount (interest)
rates, and significant changes in accounting estimates. Because these items are not typical, we believe that analyzing
operating results without the impact of certain of these charges provides a more meaningful insight into current
operations. The following table illustrates the operating expenses from ongoing business activities when these items are
not considered, and reconciles this amount back to our U.S. GAAP operating expense, which better reflects the aspects of
our financial results that are controllable by management.
(Dollars in millions) 2013 2012 2011
Operating Expenses $ 72,128 $ 80,964 $ 70,634
Impact of:
311 (2,341) (2,367)
PSRHBF Expense (5,600) (11,100) -
$ 66,839 $ 67,523 $ 68,267
Operating Expense before Impact of Expense Related to the
Long-term Portion of Workers' Compensation and PSRHBF
Expense
Expense Related to the Long-term Portion of Workers'
Compensation
Operating Expense before Impact of Expense Related to the Long-term Portion of Workers'
Compensation and PSRHBF Expense