Federal Express 2000 Annual Report Download - page 29

FedEx
Corp.
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These benefit enhancem ents are reflected in the
funded status of the plans at May 31, 2000 and
1999, but did not materially affect pension cost in
either year.
POSTRETIREMEN T HEALTH CARE PLANS.
FedEx Express offers m edical and dental coverage
to eligible U.S. retirees and their eligible depen-
dents. Vision coverage is provided for retirees, but
not their dependents. Substantially all FedEx
Express U.S. employees become eligible for these
benefits at age 55 and older, if they have perm a-
nent, continuous service with FedEx Express of at
least 10 years after attainm ent of age 45 if hired
prior to January 1, 1988, or at least 20 years after
attainm ent of age 35 if hired on or after January 1,
1988. Life insurance benefits are provided only to
retirees of the form er Tiger International, Inc. who
retired prior to acquisition. FedEx Ground offers
sim ilar benefits to its eligible retirees.
NOTE 11: EMPLOYEE BENEFIT PLANS
PEN SION PLAN S. FedEx sponsors defined benefit
pension plans covering a m ajority of all employees.
The largest plans cover certain U.S. employees age
21 and over, with at least one year of service, and
provide benefits based on average earnings and
years of service. Plan funding is actuarially deter-
m ined, and is also subject to certain tax law limita-
tions. International defined benefit pension plans
provide benefits primarily based on final earnings
and years of service and are funded in accordance
with local laws and income tax regulations. Plan
assets consist prim arily of marketable equity secu-
rities and fixed incom e instrum ents. During 1999,
benefits provided under certain of FedEx’s pension
plans were enhanced, principally in connection
with the ratification on February 4, 1999, of a col-
lective bargaining agreem ent between FedEx
Express and the Fedex Pilots Association (“FPA”).
A reconciliation of the statutory federal incom e tax rate to FedEx’s effective income tax rate for the years
ended May 31 is as follows:
2000 1999 1998
Statutory U.S. income tax rate 35.0% 35.0% 35.0%
Increase resulting from:
State and local income taxes, net of federal benefit 2.8 2.8 2.7
N onrecurring items (1998 Caliber acquisition) ––3.1
Other, net 1.7 2.7 3.8
Effective tax rate 39.5% 40.5% 44.6%
Effective tax rate (excluding nonrecurring item) 39.5% 40.5% 41.5%
The significant components of deferred tax assets and liabilities as of May 31 were as follows:
In thousands 2000 1999
Deferred Deferred Deferred Deferred
Tax Tax Ta x Ta x
Assets Liabilities Assets Liabilities
Property, equipm ent and leases $206,239 $686,547 $122,515 $608,719
Em ployee benefits 207,297 127,784 198,750 79,374
Self-insurance accruals 245,923 – 228,020 –
Other 224,615 96,572 233,331 97,264
$884,074 $910,903 $782,616 $785,357