EX-99.1

EX-99.1 2 d706202dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

LOGO

FedEx Corp. Reports Fourth Quarter and

Full-Year Earnings

MEMPHIS, Tenn., June 25, 2019 ... FedEx Corp. (NYSE: FDX) today reported the following consolidated results for the fourth quarter ended May 31 (adjusted measures exclude the items listed below for the applicable year):


	Fiscal 2019						Fiscal 2018
	As Reported (GAAP)			Adjusted (non-GAAP)			As Reported (GAAP)			Adjusted (non-GAAP)
Revenue	$	17.8 billion		$	17.8 billion		$	17.3 billion		$	17.3 billion
Operating income	$	1.32 billion		$	1.72 billion		$	1.33 billion		$	1.85 billion
Operating margin		7.4	%		9.6	%		7.7	%		10.7	%
Net (loss) income	($	1.97 billion	)	$	1.32 billion		$	1.13 billion		$	1.60 billion
Diluted (loss) EPS	($	7.56	)	$	5.01		$	4.15		$	5.91

This year’s and last year’s quarterly and full-year consolidated results have been adjusted for:


	Fiscal 2019				Fiscal 2018
Cost/(Benefit) per diluted share	Fourth Quarter		Full Year		Fourth Quarter			Full Year
Mark-to-market retirement plan accounting adjustment	$	11.33	$	11.22	($	0.03	)	($	0.03	)
TNT Express integration expenses		0.26		1.18		0.39			1.36
Business realignment costs		0.91		0.91		—			—
FedEx Ground legal matter		—		0.16		—			—
Net U.S. deferred tax liability remeasurement		—		0.02		—			(4.22	)
FedEx Supply Chain goodwill and other asset impairments		—		—		1.40			1.39
FedEx Logistics legal matters		—		—		0.01			0.02

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“Fiscal 2019 was a year of both challenge and change for FedEx,” said Frederick W. Smith, FedEx Corp. chairman and CEO. “We are proud of our team members, who are responding with positive actions and innovative solutions that will make FedEx even stronger and more successful in the future. FedEx enters fiscal 2020 with a sharp focus on extending our lead as the premier global transportation and logistics company and on making the necessary investments today to capture the significant market opportunities we see for the future. These actions include enhancing FedEx Ground capabilities, speed and efficiency; improving FedEx Express hub automation; modernizing our FedEx Express air fleet; integrating TNT Express; and reducing unit costs and increasing productivity.”

Fourth quarter operating income was negatively affected by lower FedEx International Priority package and freight revenues at FedEx Express, higher costs at FedEx Ground and business realignment costs primarily associated with the U.S.-based voluntary employee buyout program. Partially offsetting these factors were the benefits from U.S. volume growth, increased revenue per shipment at FedEx Freight and FedEx Ground, lower variable incentive compensation expenses and a favorable net impact of fuel at all transportation segments.

The higher FedEx Ground costs were primarily related to increased purchased transportation rates and the January launch of year-round, six-day-per-week operations. Last year’s results for FedEx Express included an $85 million gain on the sale of a non-core business of TNT Express.

The pre-tax noncash mark-to-market (MTM) retirement plan accounting adjustment of a net $3.9 billion loss was due to a lower discount rate, changes in actuarial estimates and lower-than-expected asset returns. The discount rate decrease (42 basis points) contributed $1.8 billion to the net loss.

Full-Year Results

FedEx Corp. reported the following consolidated results for the full year (adjusted measures exclude the items listed above for the applicable year):


	Fiscal 2019						Fiscal 2018
	As Reported (GAAP)			Adjusted (non-GAAP)			As Reported (GAAP)			Adjusted (non-GAAP)
Revenue	$	69.7 billion		$	69.7 billion		$	65.5 billion		$	65.5 billion
Operating income	$	4.47 billion		$	5.22 billion		$	4.27 billion		$	5.14 billion
Operating margin		6.4	%		7.5	%		6.5	%		7.8	%
Net income	$	540 million		$	4.13 billion		$	4.57 billion		$	4.17 billion
Diluted EPS	$	2.03		$	15.52		$	16.79		$	15.31

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Capital spending for fiscal 2019 was $5.5 billion.

During fiscal 2019, the company repurchased 6.6 million shares of FedEx common stock for approximately $1.5 billion.

Outlook

During fiscal 2020, operating income at FedEx Ground and FedEx Freight is expected to increase due to higher revenues. At FedEx Express, macroeconomic weakness and trade uncertainty, continued mix shift to lower-yielding services and a strategic decision to not renew a customer contract will negatively impact operating income.

FedEx is unable to forecast the fiscal 2020 year-end MTM retirement plan accounting adjustment. As a result, the company is unable to provide a fiscal 2020 earnings per share or effective tax rate (ETR) outlook on a GAAP basis.

For fiscal 2020, FedEx forecasts:

•

A low-single-digit percentage point increase in diluted earnings per share prior to the year-end MTM retirement plan accounting adjustment compared with fiscal 2019’s earnings of $13.25 per diluted share prior to the year-end MTM retirement plan accounting adjustment;

•

A mid-single-digit percentage point decline in diluted earnings per share prior to the year-end MTM retirement plan accounting adjustment and excluding estimated TNT Express integration expenses compared with fiscal 2019’s adjusted earnings of $15.52 per diluted share;

•

A higher ETR in the range of 23-25% prior to the year-end MTM retirement plan accounting adjustment; and

•

Capital spending of $5.9 billion.

Total TNT Express integration program expenses through fiscal 2021 are now estimated to be approximately $1.7 billion, of which $350 million is expected to be incurred in fiscal 2020.

These forecasts assume moderate U.S. economic growth, the company’s current fuel price expectations, no further weakening in international economic conditions from the company’s current forecast and no additional adverse developments in international trade policies and relations. FedEx’s ETR and earnings per share outlooks are based on the company’s current interpretations of the Tax Cuts and Jobs Act (TCJA) and related regulations and guidance, and are subject to change based on future guidance, as well as FedEx’s ability to defend its interpretations.

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“Our fiscal 2020 performance is being negatively affected by continued weakness in global trade and industrial production, especially at FedEx Express,” said Alan B. Graf, Jr., FedEx Corp. executive vice president and chief financial officer. “While we are adjusting our costs to mitigate revenue weakness and market shifts, we will continue to invest in areas that expand our capabilities, improve our long-term efficiencies and reduce our cost to serve.”

Corporate Overview

FedEx Corp. (NYSE: FDX) provides customers and businesses worldwide with a broad portfolio of transportation, e-commerce and business services. With annual revenues of $70 billion, the company offers integrated business solutions through operating companies competing collectively and managed collaboratively, under the respected FedEx brand. Consistently ranked among the world’s most admired and trusted employers, FedEx inspires its more than 450,000 team members to remain focused on safety, the highest ethical and professional standards and the needs of their customers and communities. To learn more about how FedEx connects people and possibilities around the world, please visit about.fedex.com.

Additional information and operating data are contained in the company’s annual report, Form 10-K, Form 10-Qs, Form 8-Ks and Statistical Books. These materials, as well as a webcast of the earnings release conference call to be held at 5:30 p.m. EDT on June 25, are available on the company’s website at investors.fedex.com. A replay of the conference call webcast will be posted on our website following the call.

The Investor Relations page of our website, investors.fedex.com, contains a significant amount of information about FedEx, including our Securities and Exchange Commission (SEC) filings and financial and other information for investors. The information that we post on our Investor Relations website could be deemed to be material information. We encourage investors, the media and others interested in the company to visit this website from time to time, as information is updated and new information is posted.

Certain statements in this press release may be considered forward-looking statements, such as statements relating to management’s views with respect to future events and financial performance. Such forward-looking statements are subject to risks, uncertainties and other factors which could cause actual results to differ materially from historical experience or from future results

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expressed or implied by such forward-looking statements. Potential risks and uncertainties include, but are not limited to, economic conditions in the global markets in which we operate, a significant data breach or other disruption to our technology infrastructure, anti-trade measures and changes in international trade policies and relations, our ability to successfully integrate the businesses and operations of FedEx Express and TNT Express in the expected time frame and at the expected cost and to achieve the expected benefits from the combined businesses, our ability to successfully implement our business strategy and effectively respond to changes in market dynamics, the impact of the United Kingdom’s vote to leave the European Union and the terms of its withdrawal if it ultimately occurs, changes in fuel prices or currency exchange rates, our ability to match capacity to shifting volume levels, evolving or new U.S. domestic or international government regulation or regulatory actions, future guidance, regulations, interpretations or challenges to our tax positions relating to the TCJA and our ability to defend our interpretations of the TCJA, our ability to effectively operate, integrate, leverage and grow acquired businesses, legal challenges or changes related to owner-operators engaged by FedEx Ground and the drivers providing services on their behalf, disruptions or modifications in service by, or changes in the business or financial soundness of, the U.S. Postal Service, the impact of any international conflicts or terrorist activities, our ability to successfully mitigate unique operational and regulatory risks relating to developments in technology and other factors which can be found in FedEx Corp.’s and its subsidiaries’ press releases and FedEx Corp.’s filings with the SEC. Any forward-looking statement speaks only as of the date on which it is made. We do not undertake or assume any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Media Contact: Jenny Robertson 901-434-4829

Investor Contact: Mickey Foster 901-818-7468

Home Page: fedex.com

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RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES

TO GAAP FINANCIAL MEASURES

Fourth Quarter and Full-Year Fiscal 2019 and Fiscal 2018 Results

The company reports its financial results in accordance with accounting principles generally accepted in the United States (“GAAP” or “reported”). We have supplemented the reporting of our financial information determined in accordance with GAAP with certain non-GAAP (or “adjusted”) financial measures, including our adjusted fourth quarter and adjusted full-year fiscal 2019 and 2018 consolidated operating income and margin, net (loss) income and diluted (loss) earnings per share, and adjusted fourth quarter and adjusted full-year fiscal 2019 and 2018 FedEx Express segment operating income and margin. These financial measures have been adjusted to exclude the impact of the following items (as applicable):

•

The fiscal 2019 and 2018 year-end MTM retirement plan accounting adjustments for our defined benefit pension and other postretirement plans;

•

TNT Express integration expenses incurred in fiscal 2019 and 2018;

•

Business realignment costs incurred in fiscal 2019;

•

Fiscal 2019 charges related to a legal matter involving FedEx Ground;

•

Net U.S. deferred tax liability remeasurement during fiscal 2018 and the fiscal 2019 revision to the remeasurement;

•

FedEx Supply Chain goodwill and other asset impairment charges incurred in fiscal 2018; and

•

Fiscal 2018 charges related to certain U.S. Customs and Border Protection matters involving FedEx Logistics.

The MTM retirement plan accounting adjustments, business realignment costs, litigation- and legal-related matters and goodwill and other asset impairment charges at FedEx Supply Chain are excluded from our fourth quarter and full-year fiscal 2019 and 2018 consolidated non-GAAP financial measures, as applicable, because they are unrelated to our core operating performance and to assist investors with assessing trends in our underlying businesses.

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We have incurred and expect to incur significant expenses through fiscal 2021, and may incur additional expenses thereafter, in connection with our integration of TNT Express. We have adjusted our fourth quarter and full-year fiscal 2019 and 2018 consolidated financial measures and the FedEx Express segment fourth quarter and full-year fiscal 2019 and 2018 financial measures to exclude TNT Express integration expenses because we generally would not incur such expenses as part of our continuing operations. The integration expenses are predominantly incremental costs directly associated with the integration of TNT Express, including professional and legal fees, salaries and wages, and travel and advertising expenses. Internal salaries and wages are included only to the extent the individuals are assigned full-time to integration activities. The integration expenses also include any restructuring charges at TNT Express.

The provisional benefit from the remeasurement of our net U.S. deferred tax liability as of the date of the enactment of the TCJA and the fiscal 2019 revision to the provisional benefit are excluded from our full-year fiscal 2019 and 2018 consolidated non-GAAP financial measures, as applicable, because the provisional benefit resulted from the non-recurring impact of a significant change in the U.S. federal statutory income tax rate due to the enactment of the TCJA on our overall deferred tax position, which accumulated over many reporting periods prior to enactment. The adjustments to our full-year fiscal 2019 and 2018 consolidated financial measures related to the TCJA include only this transitional impact.

We have not included the benefit attributable to the phase-in of the reduced tax rate applied to our fiscal 2019 and 2018 earnings in the adjustment because the impact of the reduced tax rate on current year earnings will be ongoing. Additionally, we have not included the benefit from our incremental pension contribution made in February 2018 and deductible against our prior year taxes at 35% in the adjustment because the contribution was made in connection with our ongoing pension management strategy. Finally, we have not included the provisional benefit related to the one-time transition tax on previously deferred foreign earnings in the adjustment because the amount of this provisional benefit at the end of fiscal 2018 was not material to our overall tax position.

We believe these adjusted financial measures facilitate analysis and comparisons of our ongoing business operations because they exclude items that may not be indicative of, or are unrelated to, the company’s and our business segments’ core operating performance, and may assist investors with comparisons to prior periods and assessing trends in our underlying businesses. These adjustments are consistent with how management views our businesses. Management uses these non-GAAP financial measures in making financial, operating and planning decisions and evaluating the company’s and each business segment’s ongoing performance.

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Our non-GAAP financial measures are intended to supplement and should be read together with, and are not an alternative or substitute for, and should not be considered superior to, our reported financial results. Accordingly, users of our financial statements should not place undue reliance on these non-GAAP financial measures. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names. As required by SEC rules, the tables below present a reconciliation of our presented non-GAAP financial measures to the most directly comparable GAAP measures.

Fiscal 2020 Earnings Per Share and Effective Tax Rate Forecasts

Our fiscal 2020 earnings per share (EPS) forecast is a non-GAAP financial measure because it excludes the fiscal 2020 year-end MTM retirement plan accounting adjustment and estimated fiscal 2020 TNT Express integration expenses, and, for fiscal 2019, excludes the year-end MTM retirement plan accounting adjustment, TNT Express integration expenses, business realignment costs, costs related to a FedEx Ground legal matter and the revision to the provisional benefit from the remeasurement of our net U.S. deferred tax liability included in our fiscal 2018 earnings. Our fiscal 2020 effective tax rate (ETR) forecast is a non-GAAP financial measure because it excludes the impact of the fiscal 2020 year-end MTM retirement plan accounting adjustment.

We have provided these non-GAAP financial measures for the same reasons that were outlined above for historical non-GAAP measures. These items are excluded from our fiscal 2020 EPS and ETR forecasts, as applicable, for the same reasons described above for historical non-GAAP measures.

We are unable to predict the amount of the year-end MTM retirement plan accounting adjustment, as it is significantly impacted by changes in interest rates and the financial markets, so such adjustment is not included in our fiscal 2020 EPS and ETR forecasts. It is reasonably possible, however, that our fiscal 2020 year-end MTM retirement plan accounting adjustment could have a material impact on our fiscal 2020 consolidated financial results and ETR. Additionally, for comparison purposes, we have presented fiscal 2019 EPS prior to the year-end MTM retirement plan accounting adjustment in the “Outlook” section of this earnings release.

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Fourth Quarter Fiscal 2019

FedEx Corporation


Dollars in millions, except EPS						Income Taxes²			Net (Loss) Income³			Diluted (Loss) Earnings Per Share⁴
	Operating
	Income		Margin¹
GAAP measure	$	1,316		7.4	%	($	585	)	($	1,969	)	($	7.56	)
MTM retirement plan accounting adjustment⁵		—		—			902			2,981			11.33
Business realignment costs⁶		316		1.8	%		76			240			0.91
TNT Express integration expenses⁷		84		0.5	%		16			68			0.26

Non-GAAP measure	$	1,716		9.6	%	$	409		$	1,320		$	5.01

FedEx Express Segment


Dollars in millions	Operating
	Income		Margin
GAAP measure	$	766		8.1	%
TNT Express integration expenses		68		0.7	%

Non-GAAP measure	$	834		8.8	%

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Full-Year Fiscal 2019

FedEx Corporation


Dollars in millions, except EPS	Operating					Income Taxes²			Net Income³		Diluted Earnings Per Share⁸
	Income		Margin¹			Income Taxes²			Net Income³		Diluted Earnings Per Share⁸
GAAP measure	$	4,466		6.4	%	$	115		$	540	$	2.03
MTM retirement plan accounting adjustment⁵		—		—			902			2,981		11.22
TNT Express integration expenses⁷		388		0.6	%		74			314		1.18
Business realignment costs⁶		320		0.5	%		77			243		0.91
FedEx Ground legal matter		46		0.1	%		3			43		0.16
Net U.S. deferred tax liability remeasurement		—		—			(4	)		4		0.02

Non-GAAP measure	$	5,220		7.5	%	$	1,167		$	4,125	$	15.52

FedEx Express Segment


Dollars in millions	Operating
	Income		Margin
GAAP measure	$	2,123		5.7	%
TNT Express integration expenses		325		0.9	%

Non-GAAP measure	$	2,448		6.6	%

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Fourth Quarter Fiscal 2018

FedEx Corporation


Dollars in millions, except EPS	Operating					Income Taxes^1,2			Net Income^1,3			Diluted Earnings Per Share¹
	Income		Margin			Income Taxes^1,2			Net Income^1,3			Diluted Earnings Per Share¹
GAAP measure	$	1,328		7.7	%	$	231		$	1,127		$	4.15
FedEx Supply Chain goodwill and other asset impairments⁹		380		2.2	%		1			379			1.40
TNT Express integration expenses⁷		136		0.8	%		30			106			0.39
FedEx Logistics legal matters		1		—			(1	)		2			0.01
MTM retirement plan accounting adjustment⁵		—		—			(1	)		(9	)		(0.03	)

Non-GAAP measure	$	1,845		10.7	%	$	261		$	1,604		$	5.91

FedEx Express Segment


Dollars in millions	Operating
	Income		Margin¹
GAAP measure	$	867		9.0	%
TNT Express integration expenses		110		1.1	%

Non-GAAP measure	$	977		10.2	%

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Full-Year Fiscal 2018

FedEx Corporation


Dollars in millions, except EPS	Operating					Income Taxes^1,2			Net Income^1,3			Diluted Earnings Per Share
	Income		Margin			Income Taxes^1,2			Net Income^1,3			Diluted Earnings Per Share
GAAP measure	$	4,272		6.5	%	($	219	)	$	4,572		$	16.79
FedEx Supply Chain goodwill and other asset impairments⁹		380		0.6	%		1			379			1.39
TNT Express integration expenses⁷		477		0.7	%		105			372			1.36
FedEx Logistics legal matters		8		—			2			6			0.02
MTM retirement plan accounting adjustment⁵		—		—			(1	)		(9	)		(0.03	)
Net U.S. deferred tax liability remeasurement		—		—			1,150			(1,150	)		(4.22	)

Non-GAAP measure	$	5,137		7.8	%	$	1,039		$	4,169		$	15.31

FedEx Express Segment


Dollars in millions	Operating
	Income		Margin
GAAP measure	$	2,105		5.8	%
TNT Express integration expenses		380		1.1	%

Non-GAAP measure	$	2,485		6.9	%

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Notes:

1 -	Does not sum to total due to rounding.

2 -	Income taxes are based on the company’s approximate statutory tax rates applicable to each transaction and give consideration to the effects of the TCJA on the applicable rates.

3 -	Effect of “Total other (expense) income” on net income amount not shown.

4 -	Does not sum to total due to difference in weighted-average number of shares outstanding used to calculate EPS in accordance with GAAP.

5 -

The MTM retirement plan accounting adjustment reflects the year-end adjustment to the valuation of the company’s defined benefit pension and other postretirement plans. For the fourth quarter and full-year fiscal 2018 periods, the MTM retirement plan accounting adjustment includes the one-time $210 million charge recognized in the fourth quarter of fiscal 2018 related to the transfer of approximately $6 billion of FedEx Corporation’s tax-qualified U.S. domestic pension plan obligations to Metropolitan Life Insurance Company.

6 -	Business realignment costs are recognized at FedEx Corporate.

7 -	These expenses, including restructuring charges, were recognized at FedEx Corporate and FedEx Express.

8 -	Fiscal 2019 diluted earnings per share prior to the year-end MTM retirement plan accounting adjustment was $13.25.

9 -	Goodwill impairment charges are not deductible for income tax purposes.

* * *

FEDEX CORP. FINANCIAL HIGHLIGHTS

Fourth Quarter Fiscal 2019

(In millions, except earnings per share)

(Unaudited)


	Three Months Ended May 31									Twelve Months Ended May 31
	2019 ¹			2018 ²			%			2019 ¹			2018 ²			%
Revenue:
FedEx Express segment	$	9,500		$	9,598			(1%	)	$	37,331		$	36,172			3%
FedEx Ground segment		5,320			4,797			11%			20,522			18,395			12%
FedEx Freight segment		1,955			1,862			5%			7,582			6,812			11%
FedEx Services segment		443			437			1%			1,691			1,650			2%
Other and eliminations		589			620			(5%	)		2,567			2,421			6%

Total Revenue		17,807			17,314			3%			69,693			65,450			6%
Operating Expenses:
Salaries and employee benefits³		6,187			6,118			1%			24,776			23,795			4%
Purchased transportation		4,088			3,881			5%			16,654			15,101			10%
Rentals		827			835			(1%	)		3,360			3,361			—
Depreciation and amortization		866			802			8%			3,353			3,095			8%
Fuel		944			939			1%			3,889			3,374			15%
Maintenance and repairs		690			654			6%			2,834			2,622			8%
Business realignment costs⁴		316			—			NM			320			—			NM
Goodwill and other asset impairment charges		—			380			NM			—			380			NM
Other		2,573			2,377			8%			10,041			9,450			6%

Total Operating Expenses³		16,491			15,986			3%			65,227			61,178			7%
Operating Income:
FedEx Express segment³		766			867			(12%	)		2,123			2,105			1%
FedEx Ground segment³		810			813			—			2,640			2,529			4%
FedEx Freight segment³		194			168			15%			615			490			26%
Corporate, eliminations and other³		(454	)		(520	)		(13%	)		(912	)		(852	)		7%

Total Operating Income³		1,316			1,328			(1%	)		4,466			4,272			5%
Other (Expense) Income:
Interest, net		(136	)		(147	)		(7%	)		(529	)		(510	)		4%
Other retirement plans (loss) income^3,5		(3,725	)		162			NM			(3,251	)		598			NM
Other, net		(9	)		15			NM			(31	)		(7	)		NM

Total Other (Expense) Income^3,5		(3,870	)		30			NM			(3,811	)		81			NM

Pretax (Loss) Income		(2,554	)		1,358			NM			655			4,353			NM
Provision for Income Taxes		(585	)		231			NM			115			(219	)		NM

Net (Loss) Income	($	1,969	)	$	1,127			NM		$	540		$	4,572			NM

Diluted (Loss) Earnings Per Share	($	7.56	)	$	4.15			NM		$	2.03		$	16.79			NM

Weighted Average Diluted Common and Common Equivalent Shares		260			271			(4%	)		265			272			(3%	)
Capital Expenditures	$	1,733		$	1,669			4%		$	5,490		$	5,663			(3%	)

1 -

Includes $84 million of integration expenses, including restructuring charges, for the fourth quarter (of which $68 million was within the FedEx Express segment) and $388 million for the full year of fiscal 2019 (of which $325 million was within the FedEx Express segment). Also includes $46 million in connection with the settlement of a legal matter involving FedEx Ground included in “Corporate, other and eliminations” and a tax expense of $4 million as a revision to the provisional benefit from the remeasurement of the company’s net U.S. deferred tax liability included in fiscal 2018 earnings for the full year of fiscal 2019.

2 -

Includes $136 million of integration expenses, including restructuring charges, for the fourth quarter (of which $110 million was within the FedEx Express segment) and $477 million for the full year of fiscal 2018 (of which $380 million was within the FedEx Express segment). Also includes $380 million of goodwill and other asset impairment charges related to FedEx Supply Chain for the fourth quarter and full year of fiscal 2018. Also includes a provisional benefit of $1.15 billion from the remeasurement of the company’s net U.S. deferred tax liability for lower tax rates for the full year of fiscal 2018.

3 -	Prior year amounts have been recast to conform to the current year presentation reflecting the pension accounting changes.

4 -	Predominantly costs associated with the U.S.-based voluntary employee buyout program.

5 -	Includes a ($3,882 million) MTM adjustment for the fourth quarter and full year of fiscal 2019 and a $10 million MTM adjustment for the fourth quarter and full year of fiscal 2018.

FEDEX CORP. CONDENSED CONSOLIDATED BALANCE SHEETS

Fourth Quarter Fiscal 2019

(In millions)

(2019 unaudited)


	Year Ended May 31
	2019			2018
ASSETS
Current Assets
Cash and cash equivalents	$	2,319		$	3,265
Receivables, less allowances		9,116			8,481
Spare parts, supplies and fuel, less allowances		553			525
Prepaid expenses and other		1,098			1,070

Total current assets		13,086			13,341
Property and Equipment, at Cost		59,511			55,121
Less accumulated depreciation and amortization		29,082			26,967

Net property and equipment		30,429			28,154
Other Long-Term Assets
Goodwill		6,884			6,973
Other assets		4,004			3,862

Total other long-term assets		10,888			10,835

	$	54,403		$	52,330

LIABILITIES AND STOCKHOLDERS’ INVESTMENT
Current Liabilities
Current portion of long-term debt	$	964		$	1,342
Accrued salaries and employee benefits		1,741			2,177
Accounts payable		3,030			2,977
Accrued expenses		3,278			3,131

Total current liabilities		9,013			9,627
Long-Term Debt, Less Current Portion		16,617			15,243
Other Long-Term Liabilities
Deferred income taxes		2,821			2,867
Pension, postretirement healthcare and other benefit obligations		5,095			2,187
Self-insurance accruals		1,899			1,784
Deferred lease obligations		531			551
Deferred gains, principally related to aircraft transactions		99			121
Other liabilities		571			534

Total other long-term liabilities		11,016			8,044
Commitments and Contingencies
Common Stockholders’ Investment
Common stock, $0.10 par value, 800 million shares authorized		32			32
Additional paid-in capital		3,231			3,117
Retained earnings		24,648			24,823
Accumulated other comprehensive loss		(865	)		(578	)
Treasury stock, at cost		(9,289	)		(7,978	)

Total common stockholders’ investment		17,757			19,416

	$	54,403		$	52,330

FEDEX CORP. CONDENSED CONSOLIDATED

STATEMENTS OF CASH FLOWS

Fiscal 2019

(In millions)

(2019 unaudited)


	Year Ended
	May 31
	2019			2018
Operating Activities:
Net income	$	540		$	4,572
Noncash charges:
Depreciation and amortization		3,353			3,095
Retirement plans mark-to-market adjustment		3,882			(10	)
Business realignment costs		101			—
Goodwill and other asset impairment charges		—			380
Other, net		236			182
Gain from sale of business		(8	)		(85	)
Changes in operating assets and liabilities, net		(2,491	)		(3,460	)

Cash provided by operating activities		5,613			4,674
Investing Activities:
Capital expenditures		(5,490	)		(5,663	)
Business acquisitions, net of cash acquired		(66	)		(179	)
Proceeds from sale of business		—			123
Proceeds from asset dispositions and other		83			42

Cash used in investing activities		(5,473	)		(5,677	)
Financing Activities:
Principal payments on debt		(1,436	)		(38	)
Proceeds from debt issuances		2,463			1,480
Proceeds from stock issuances		101			327
Dividends paid		(683	)		(535	)
Purchase of treasury stock		(1,480	)		(1,017	)
Other, net		(4	)		10

Cash (used in) provided by financing activities		(1,039	)		227
Effect of exchange rate changes on cash		(47	)		72

Net decrease in cash and cash equivalents		(946	)		(704	)
Cash and cash equivalents at beginning of period		3,265			3,969

Cash and cash equivalents at end of period	$	2,319		$	3,265

FEDEX EXPRESS SEGMENT FINANCIAL HIGHLIGHTS

Fourth Quarter Fiscal 2019

(Dollars in millions)

(Unaudited)


	Three Months Ended							Twelve Months Ended
	May 31							May 31
	2019		2018		%			2019		2018		%
Revenues:
Package Revenue:
U.S. Overnight Box	$	1,985	$	1,900		4%		$	7,663	$	7,273		5%
U.S. Overnight Envelope		484		471		3%			1,829		1,788		2%

Total U.S. Overnight		2,469		2,371		4%			9,492		9,061		5%
U.S. Deferred		1,094		942		16%			4,225		3,738		13%

Total U.S. Package Revenue		3,563		3,313		8%			13,717		12,799		7%

International Priority		1,897		1,992		(5%	)		7,405		7,461		(1%	)
International Economy		905		877		3%			3,446		3,255		6%

Total International Export Package		2,802		2,869		(2%	)		10,851		10,716		1%
International Domestic¹		1,128		1,213		(7%	)		4,540		4,637		(2%	)

Total Package Revenue		7,493		7,395		1%			29,108		28,152		3%
Freight Revenue:
U.S.		731		757		(3%	)		3,025		2,797		8%
International Priority		496		578		(14%	)		2,070		2,105		(2%	)
International Economy		555		562		(1%	)		2,123		1,916		11%
International Airfreight		70		92		(24%	)		314		368		(15%	)

Total Freight Revenue		1,852		1,989		(7%	)		7,532		7,186		5%
Other Revenue		155		214		(28%	)		691		834		(17%	)

Total FedEx Express Revenue	$	9,500	$	9,598		(1%	)	$	37,331	$	36,172		3%
Operating Expenses:
Salaries and employee benefits²		3,445		3,476		(1%	)		13,748		13,522		2%
Purchased transportation		1,258		1,336		(6%	)		5,186		5,109		2%
Rentals and landing fees		460		485		(5%	)		1,908		1,987		(4%	)
Depreciation and amortization		460		431		7%			1,801		1,679		7%
Fuel		795		801		(1%	)		3,310		2,889		15%
Maintenance and repairs		439		430		2%			1,888		1,753		8%
Intercompany charges²		521		545		(4%	)		2,092		2,092		—
Other		1,356		1,227		11%			5,275		5,036		5%

Total Operating Expenses²		8,734		8,731		—			35,208		34,067		3%

Operating Income²	$	766	$	867		(12%	)	$	2,123	$	2,105		1%

Operating Margin²		8.1%		9.0%		(0.9 pts	)		5.7%		5.8%		(0.1 pts	)

1 -	International Domestic relates to international intra-country operations.

2 -	Prior year amounts have been recast to conform to the current year presentation reflecting the pension accounting changes.

FEDEX EXPRESS SEGMENT OPERATING HIGHLIGHTS

Fourth Quarter Fiscal 2019

(Unaudited)


	Three Months Ended							Twelve Months Ended
	May 31							May 31
PACKAGE STATISTICS	2019		2018		%			2019		2018		%
Average Daily Package Volume (000s):
U.S. Overnight Box		1,296		1,257		3%			1,285		1,252		3%
U.S. Overnight Envelope		549		551		—			539		549		(2%	)

Total U.S. Overnight Package		1,845		1,808		2%			1,824		1,801		1%
U.S. Deferred		1,092		878		24%			1,077		928		16%

Total U.S. Domestic Package		2,937		2,686		9%			2,901		2,729		6%

International Priority		542		543		—			538		535		1%
International Economy		304		277		10%			293		268		9%
Total International Export Package		846		820		3%			831		803		3%
International Domestic¹		2,413		2,401		—			2,471		2,454		1%

Total Average Daily Packages		6,196		5,907		5%			6,203		5,986		4%

Yield (Revenue Per Package):
U.S. Overnight Box	$	23.57	$	23.26		1%		$	23.38	$	22.80		3%
U.S. Overnight Envelope		13.59		13.15		3%			13.31		12.77		4%

U.S. Overnight Composite		20.60		20.17		2%			20.41		19.74		3%
U.S. Deferred		15.41		16.52		(7%	)		15.39		15.79		(3%	)

U.S. Domestic Composite		18.67		18.98		(2%	)		18.54		18.40		1%

International Priority		53.79		56.45		(5%	)		53.96		54.71		(1%	)
International Economy		45.83		48.72		(6%	)		46.16		47.63		(3%	)

Total International Export Composite		50.93		53.84		(5%	)		51.21		52.35		(2%	)
International Domestic¹		7.19		7.77		(7%	)		7.20		7.41		(3%	)

Composite Package Yield	$	18.61	$	19.26		(3%	)	$	18.40	$	18.44		—

FREIGHT STATISTICS
Average Daily Freight Pounds (000s):
U.S.		8,202		8,512		(4%	)		8,577		8,362		3%
International Priority		5,029		5,471		(8%	)		5,250		5,345		(2%	)
International Economy		14,509		13,738		6%			14,347		12,603		14%
International Airfreight		1,488		1,811		(18%	)		1,644		1,938		(15%	)

Total Avg Daily Freight Pounds		29,228		29,532		(1%	)		29,818		28,248		6%

Revenue Per Freight Pound:
U.S.	$	1.37	$	1.37		—		$	1.38	$	1.31		5%
International Priority		1.52		1.62		(6%	)		1.55		1.55		—
International Economy		0.59		0.63		(6%	)		0.58		0.60		(3%	)
International Airfreight		0.72		0.78		(8%	)		0.75		0.75		—

Composite Freight Yield	$	0.98	$	1.04		(6%	)	$	0.99	$	1.00		(1%	)

Operating Weekdays		65		65		—			255		255		—

1 -	International Domestic revenues represent international intra-country operations.

FEDEX GROUND SEGMENT FINANCIAL AND OPERATING HIGHLIGHTS

Fourth Quarter Fiscal 2019

(Dollars in millions)

(Unaudited)


	Three Months Ended							Twelve Months Ended
	May 31							May 31
	2019		2018		%			2019		2018		%
FINANCIAL HIGHLIGHTS
Revenue	$	5,320	$	4,797		11%		$	20,522	$	18,395		12%
Operating Expenses:
Salaries and employee benefits¹		843		757		11%			3,413		3,003		14%
Purchased transportation		2,304		1,992		16%			9,174		7,936		16%
Rentals		196		188		4%			791		754		5%
Depreciation and amortization		190		177		7%			728		681		7%
Fuel		3		2		50%			14		12		17%
Maintenance and repairs		89		82		9%			336		309		9%
Intercompany charges¹		382		372		3%			1,544		1,471		5%
Other		503		414		21%			1,882		1,700		11%

Total Operating Expenses¹		4,510		3,984		13%			17,882		15,866		13%

Operating Income¹	$	810	$	813		—		$	2,640	$	2,529		4%

Operating Margin¹		15.2%		16.9%		(1.7 pts	)		12.9%		13.7%		(0.8 pts	)

OPERATING STATISTICS
Operating Weekdays		65		65		—			255		255		—
Average Daily Package Volume (000s)		8,836		8,125		9%			8,952		8,336		7%
Yield (Revenue Per Package)	$	9.25	$	9.05		2%		$	8.97	$	8.63		4%

1 -	Prior year amounts have been recast to conform to the current year presentation reflecting the pension accounting changes.

FEDEX FREIGHT SEGMENT FINANCIAL AND OPERATING HIGHLIGHTS

Fourth Quarter Fiscal 2019

(Dollars in millions)

(Unaudited)


	Three Months Ended May 31							Twelve Months Ended May 31
	2019		2018		%			2019		2018		%
FINANCIAL HIGHLIGHTS
Revenue	$	1,955	$	1,862		5%		$	7,582	$	6,812		11%
Operating Expenses:
Salaries and employee benefits¹		927		878		6%			3,639		3,307		10%
Purchased transportation		210		237		(11%	)		932		847		10%
Rentals		43		39		10%			172		153		12%
Depreciation and amortization		90		80		13%			332		296		12%
Fuel		145		135		7%			563		471		20%
Maintenance and repairs		67		60		12%			245		227		8%
Intercompany charges¹		132		133		(1%	)		535		514		4%
Other		147		132		11%			549		507		8%

Total Operating Expenses¹		1,761		1,694		4%			6,967		6,322		10%

Operating Income¹	$	194	$	168		15%		$	615	$	490		26%

Operating Margin¹		9.9%		9.0%		0.9 pts			8.1%		7.2%		0.9 pts
OPERATING STATISTICS
Operating Weekdays		65		65		—			253		254		—
Average Daily Shipments (000s)
Priority		77.4		77.5		—			78.4		74.5		5%
Economy		34.3		33.1		4%			34.3		31.9		8%

Total Average Daily Shipments		111.7		110.6		1%			112.7		106.4		6%
Weight Per Shipment (lbs)
Priority		1,198		1,237		(3%	)		1,207		1,213		—
Economy		1,104		1,107		—			1,064		1,134		(6%	)

Composite Weight Per Shipment		1,169		1,198		(2%	)		1,164		1,190		(2%	)
Revenue/Shipment
Priority	$	254.39	$	246.33		3%		$	250.95	$	236.78		6%
Economy		302.46		289.24		5%			300.02		286.85		5%

Composite Revenue/Shipment	$	269.17	$	259.16		4%		$	265.98	$	251.93		6%
Revenue/CWT
Priority	$	21.23	$	19.92		7%		$	20.78	$	19.52		6%
Economy		27.41		26.13		5%			28.19		25.29		11%

Composite Revenue/CWT	$	23.02	$	21.63		6%		$	22.85	$	21.18		8%

1 -	Prior year amounts have been recast to conform to the current year presentation reflecting the pension accounting changes.