US Postal Service 2013 Annual Report Download - page 90

2013 Report on Form 10-K United States Postal Service 88
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.
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 restricted for such use. These funds were
accounted for as deferred revenue upon receipt and were generally utilized to procure capital equipment.
The majority of these funds were received in 2001. Revenue for emergency preparedness appropriations is
recognized when depreciation expense for the purchased equipment is recorded. The emergency
preparedness appropriations revenue recognized during the year ended September 30, 2013, was $48
million, and for the years ended September 30, 2012, and 2011, was $129 million and $63 million,
respectively. The majority of the amount recorded in 2012 reflects the revenue recognized to offset the
impairment expense related to equipment originally funded by appropriations that was taken out of service
as a result of a process improvement.
Deferred revenue at September 30 related to emergency preparedness appropriations was $184 million in
2013 and $231 million in 2012. The current portion is included in “Prepaid box rent and other deferred
revenue,” and the noncurrent portion is included in “Deferred appropriation and other revenue” on the
Balance Sheets.
ADVERTISING EXPENSES
Advertising costs are expensed as incurred and are included in other operating expenses. Advertising
expenses were $140 million in 2013, $125 million in 2012, and $147 million in 2011.
COMPENSATION AND BENEFITS
Compensation and benefits payable consists of the salaries and benefits owed to current and former
employees, including the amounts employees have earned but have not yet been paid, unemployment, and
health benefit costs.
REPAIRS AND MAINTENANCE
Repairs and maintenance are charged to expense as incurred. This expense amounted to $734 million in
2013, $708 million in 2012, and $725 million in 2011.
SUPPLIES AND REPAIR PARTS
Supplies and repair parts consist of parts for mail processing equipment and are valued at average cost.
These supplies and repair parts are included in supplies and prepayments, and expense is recognized
when placed in service. A majority of motor vehicle spare parts are supplied through consignment
agreements and not included in inventory. Total supplies and repair parts were $107 million, $106 million
and $93 million for 2013, 2012, and 2011, respectively.
FOREIGN CURRENCY TRANSLATION
Foreign currency risk exists related to settlements of receivables and payables with foreign postal
administrations for international mail. The majority of international accounts are denominated in special
drawing rights (SDRs). The SDR exchange rate fluctuates daily based on a basket of currencies comprised
of the Euro, Japanese yen, British pound sterling, and the U.S. dollar. Changes in the relative value of these
currencies will increase or decrease the value of the settlement accounts and result in a gain or loss that is
included in operating results. The impact of foreign currency translation on operating results was immaterial
for 2013, 2012, and 2011.