Federal Express 2009 Annual Report Download - page 63

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
61
Benefi t payments, which refl ect expected future service, are
expected to be paid as follows for the years ending May 31 (in
millions):
Postretirement
Pension Plans Healthcare Plans
2010 $ 432 $ 27
2011 455 29
2012 507 30
2013 584 31
2014 654 32
2015–2019 4,654 188
These estimates are based on assumptions about future
events. Actual benefit payments may vary significantly from
these estimates.
Future medical benefi t claims costs are estimated to increase at
an annual rate of 9% during 2010, decreasing to an annual growth
rate of 4.5% in 2029 and thereafter. Future dental benefi t costs
are estimated to increase at an annual rate of 7% during 2010,
decreasing to an annual growth rate of 4.5% in 2029 and there-
after. A 1% change in these annual trend rates would not have a
signifi cant impact on the APBO at May 31, 2009 or 2009 benefi t
expense because the level of these benefi ts is capped.
Note 13: Business Segment
Information
FedEx Express, FedEx Ground and the FedEx Freight LTL Group
represent our major service lines and, along with FedEx Services,
form the core of our reportable segments. Our reportable seg-
ments as of May 31, 2009 included the following businesses:
FedEx Express Segment FedEx Express
(express transportation)
FedEx Trade Networks
(global trade services)
FedEx Ground Segment FedEx Ground
(small-package ground delivery)
FedEx SmartPost
(small-parcel consolidator)
FedEx Freight Segment FedEx Freight LTL Group:
FedEx Freight (regional
LTL freight transportation)
FedEx National LTL
(long-haul LTL freight
transportation)
FedEx Custom Critical
(time-critical transportation)
Caribbean Transportation Services
(airfreight forwarding)
FedEx Services Segment FedEx Services (sales,
marketing and information
technology functions)
FedEx Offi ce (document
and business services and
package acceptance)
FedEx Customer Information
Services (“ FCIS” )
(customer service,
billings and collections)
FedEx Global Supply Chain
Services (logistics services)
Amounts recognized in OCI for all plans were as follows (in millions):
2009 2008
Postretirement Postretirement
Pension Plans Healthcare Plans Pension Plans Healthcare Plans
Gross Net of tax Gross Net of tax Gross Net of tax Gross Net of tax
amount amount amount amount amount amount amount amount
Net gain (loss) and other, arising during period $ 1,944 $ 1,220 $ (94) $ (61) $ (685) $ (430) $ (56) $ (38)
Gain (loss) from settlements and curtailments 2 1 – – (17) (10) 6 4
Amortizations:
Prior service credit 113 71 – – 113 70 – –
Actuarial (losses) gains and other (49) (30) 7 4 (166) (104) 3 2
Total recognized in OCI $ 2,010 $ 1,262 $ (87) $ (57) $ (755) $ (474) $ (47) $ (32)
Weighted-average actuarial assumptions for our primary U.S. pension plans, which represent substantially all of our PBO, are
as follows:
Pension Plans Postretirement Healthcare Plans
2009 2008 2007 2009 2008 2007
Discount rate used to determine benefi t obligation (1) 7.68% 6.96% 6.01% 7.27% 6.81% 6.08%
Discount rate used to determine net periodic benefi t cost 7.15 6.01 5.91 7.13 6.08 6.08
Rate of increase in future compensation levels
used to determine benefi t obligation 4.42 4.51 4.47 – – –
Rate of increase in future compensation levels
used to determine net periodic benefi t cost (2) 4.49 4.47 3.46 – – –
Expected long-term rate of return on assets 8.50 8.50 9.10 – – –
(1) The assumed interest rate used to discount the estimated future benefi t payments that have been accrued to date (the PBO) to their net present value.
(2) Average future salary increases based on age and years of service.