Federal Express 1998 Annual Report Download - page 49

FDX CORPORATION P47
The following table sets forth the funded status of the plans as of May 31:
In thousands
1998 1997
Plan assets at fair value $4,434,870 $3,615,028
Actuarial present value of the projected benefit obligation
for service rendered to date 4,121,795 3,151,083
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Plan assets in excess of projected benefit obligation 313,075 463,945
Unrecognized net gains from past experience different from
that assumed and effects of changes in assumptions (196,519) (338,491)
Prior service cost not yet recognized in net periodic cost 5,757 16,063
Unrecognized transition amount (13,197) (13,695)
Adjustment required to recognize minimum liability (847) —
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Net pension asset $ 108,269 $ 127,822
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Accumulated benefit obligation $2,865,542 $2,098,875
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Vested benefit obligation $2,684,692 $1,950,809
Net periodic pension cost for the years ended May 31 included the following components:
In thousands
1998 1997 1996
Service cost — benefits earned during the period $ 250,753 $ 246,443 $ 196,990
Interest cost on projected benefit obligation 245,697 221,975 174,130
Actual return on plan assets (730,436) (463,442) (474,434)
Net amortization and deferral 350,711 141,514 260,335
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$116,725 $ 146,490 $ 157,021
The following actuarial assumptions were used in determining net pension cost and projected benefit obligations:
1998 1997 1996
Weighted-average discount rate 7.0% 8.0% 7.9%
Weighted-average rate of increase in future compensation levels 4.6 5.4 5.4
Weighted-average expected long-term rate of return on assets 10.3 10.3 9.3
Plan assets consist primarily of marketable equity secu-
rities and fixed income instruments.
The Company also has profit sharing plans, which cover
substantially all U.S. domestic employees age 21 and
over, with at least one year of service with the Company
as of the contribution date. The plans provide for discre-
tionary employer contributions which are determined
annually by the Board of Directors. Profit sharing
expense was $124,700,000 in 1998, $107,400,000
in 1997 and $95,000,000 in 1996. The 1998 amount
consists of contributions to the plans of $81,600,000
and cash distributions made outside the plans directly
to employees of $43,100,000. The 1997 amount con-
sists of contributions to the plans of $78,800,000 and
cash distributions made outside the plans directly to
employees of $28,600,000.
NOTE 11: POSTRETIREMENT BENEFIT PLANS
FedEx offers medical and dental coverage to all eligible
U.S. domestic retirees and their eligible dependents.
Vision coverage is provided for retirees, but not their
dependents. Substantially all of FedEx’s U.S. domestic
employees become eligible for these benefits at age 55
and older, if they have permanent, continuous service
with FedEx of at least 10 years after attainment of age
45 if hired prior to January 1, 1988, or at least 20
years after attainment of age 35, if hired on or after
January 1, 1988. Life insurance benefits are provided
only to retirees of the former Tiger International, Inc.
who retired prior to acquisition.
Certain of the Caliber companies offer similar benefits
to their eligible retirees.