Federal Express 2000 Annual Report Download - page 17

FedEx
Corp.
15
Deferred Tax Assets
At May 31, 2000, the Company had a net cumula-
tive deferred tax liability of $27 million, consisting
of $884 m illion of deferred tax assets and $911 m il-
lion of deferred tax liabilities. The reversals of
deferred tax assets in future periods will be offset
by similar am ounts of deferred tax liabilities.
Euro Currency Conversion
Since the beginning of the European Union’s tran-
sition to the euro on January 1,1999, our subsidiaries
have been prepared to quote rates to customers, gen-
erate billings and accept paym ents, in both euro and
legacy currencies. The legacy currencies will rem ain
legal tender through Decem ber 31, 2001. FedEx
believes that the introduction of the euro, any
price transparency brought about by its introduc-
tion and the phasing out of the legacy currencies
will not have a material im pact on our consoli-
dated financial position, results of operations or
cash flows. Costs associated with the euro project
are being expensed as incurred and are being
funded entirely by internal cash flows.
Year 2000 Compliance
FedEx’s operating subsidiaries rely heavily on
sophisticated inform ation technology for their
business operations. Our Year 2000 (“Y2K”) com -
puter compliance issues were, therefore, broad and
com plex. N othing has come to the Com pany’s
attention that would cause it to believe that its
Y2K compliance effort was not successful.
Since 1996, FedEx has incurred approxim ately
$115 m illion on Y2K com pliance ($22 million in
2000), which was funded by internal cash flows.
We do not expect to incur any m aterial additional
Y2K-related costs. We classified costs as Y2K for
reporting purposes if they remedied only Y2K risks
or resulted in the form ulation of contingency plans
and would otherwise have been unnecessary in the
normal course of business. For 2000, Y2K expendi-
tures were less than 10% of the Com pany’s total
inform ation technology expense budget. We believe
that no significant inform ation technology projects
were deferred due to our Y2K com pliance effort.
FORWARD-LOOKING STATEMENTS
Certain statem ents contained in this report are
“forward-looking statem ents” within the meaning
of the Private Securities Litigation Reform Act of
1995, such as statements relating to m anagement’s
views with respect to future events and financial
performance. Such forward-looking statem ents are
subject to risks, uncertainties and other factors
that could cause actual results to differ m aterially
from historical experience, or from future results
expressed or im plied by such forward-looking state-
m ents. Potential risks and uncertainties include,
but are not lim ited to, econom ic and competitive
conditions in the markets where FedEx operates,
m atching capacity to volum e levels and other
uncertainties detailed from time to tim e in FedEx’s
Securities and Exchange Comm ission filings.