-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HMO7Gzz7O+QB8S3xI+gT8WUKczK18ZiGzDg8YjXWbA5qXxNXjc/VchmDbQQ6z0sl tFQFcebD2NbQeXiBuszXnQ== 0000950144-97-008676.txt : 19970812 0000950144-97-008676.hdr.sgml : 19970812 ACCESSION NUMBER: 0000950144-97-008676 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 20 CONFORMED PERIOD OF REPORT: 19970531 FILED AS OF DATE: 19970808 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FEDERAL EXPRESS CORP CENTRAL INDEX KEY: 0000230211 STANDARD INDUSTRIAL CLASSIFICATION: AIR COURIER SERVICES [4513] IRS NUMBER: 710427007 STATE OF INCORPORATION: DE FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-07806 FILM NUMBER: 97654830 BUSINESS ADDRESS: STREET 1: 2005 CORPORATE AVE CITY: MEMPHIS STATE: TN ZIP: 38132 BUSINESS PHONE: 9013693600 MAIL ADDRESS: STREET 1: 2005 CORPORATE AVE CITY: MEMPHIS STATE: TN ZIP: 38132 10-K 1 FEDERAL EXPRESS, FORM 10-K 1 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (MARK ONE) [x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED MAY 31, 1997. OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO . ------------------ ------------- COMMISSION FILE NUMBER 1-7806 FEDERAL EXPRESS CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 71-0427007 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2005 CORPORATE AVENUE, MEMPHIS, TENNESSEE 38132 (Address of principal executive offices) (Zip Code) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (901) 369-3600 SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED - -------------------------------------- ----------------------------------------- Common Stock, par value $.10 per share New York Stock Exchange SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [x] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [x] As of July 31, 1997, 114,998,392 shares of the Registrant's Common Stock were outstanding and the aggregate market value of the voting stock held by non-affiliates of the Registrant (based on the average bid and asked prices of such stock on the New York Stock Exchange) was approximately $6,598,458,347. DOCUMENTS INCORPORATED BY REFERENCE Portions of the Annual Report to Stockholders for the fiscal year ended May 31, 1997 are incorporated by reference into Parts II and IV. Portions of the Proxy Statement for the Annual Meeting of Stockholders to be held September 29, 1997 are incorporated by reference into Part III. ================================================================================ 2 TABLE OF CONTENTS
PAGE ---- PART I ITEM 1. Business ............................................................ 1 ITEM 2. Properties .......................................................... 11 ITEM 3. Legal Proceedings ................................................... 14 ITEM 4. Submission of Matters to a Vote of Security Holders ................. 15 Executive Officers of the Registrant ................................ 16 PART II ITEM 5. Market for the Registrant's Common Stock and Related Stockholder Matters ................................................ 19 ITEM 6. Selected Financial Data ............................................. 19 ITEM 7. Management's Discussion and Analysis ................................ 19 ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk .......... 19 ITEM 8. Financial Statements and Supplementary Data ......................... 19 ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ............................. 19 PART III ITEM 10. Directors and Executive Officers of the Registrant ................. 20 ITEM 11. Executive Compensation ............................................. 20 ITEM 12. Security Ownership of Certain Beneficial Owners and Management ..... 20 ITEM 13. Certain Relationships and Related Transactions ..................... 20 PART IV ITEM 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K..... 20 FINANCIAL STATEMENT SCHEDULE INDEX Report of Independent Public Accountants on Financial Statement Schedule ..... S-1 SCHEDULE II Valuation and Qualifying Accounts .............................. S-2 EXHIBIT INDEX ................................................................ E-1
3 PART I ITEM 1. BUSINESS INTRODUCTION AND RECENT DEVELOPMENTS Federal Express Corporation (the "Company") was incorporated in Delaware on June 24, 1971 and began operations in 1972. The Company offers a wide range of express services for the time-definite transportation of documents, packages and freight throughout the world using an extensive fleet of aircraft and vehicles and leading-edge information technologies. During fiscal year 1997, the Company continued to expand and improve its global network of aviation, ground and information links between the major trading centers of the Americas, Europe and Asia. In Europe, the Company announced plans to open a European sorting hub at the Charles de Gaulle Airport in Paris and launched international flight operations in Moscow, becoming the only U.S. express carrier to operate its own aircraft and customs warehousing in the Moscow market. In Asia, the Company increased its weekly flights serving the People's Republic of China from two to four, expanded from 60 to 85 the number of Chinese cities served and began construction of a transshipment center at the CKS International Airport in Taiwan. In the Americas, the Company purchased three cargo routes between the U.S. and Argentina and increased flights to Brazil. In November 1996, the Company improved FedEx International Priority(R) to a 10:30 a.m. second business day delivery service from the U.S. to more than a dozen European commercial centers. In July 1997, FedEx Express Saver(R) was introduced for shipments up to 150 pounds with delivery within three business days by 4:30 p.m. (7:00 p.m. for residential deliveries). On July 1, 1997, the Company implemented distance-based pricing for its U.S. express services. Distance-based pricing will allow the Company to better balance the prices charged to customers with the costs of delivery for short-and long-haul shipments. The Company also added new Airbus A300 aircraft during 1997 and introduced new technologies aimed at improving customer satisfaction while reducing the resources required to serve customer needs, including the introduction of new service innovations on the Company's World Wide Web page (fedex.com). FEDEX SERVICES The Company offers four U.S. domestic overnight delivery services: FedEx First Overnight, FedEx Priority Overnight(R), FedEx Standard Overnight(R) and FedEx(R) Overnight Freight. Overnight document and package service extends to virtually the entire United States population and overnight freight service covers all major and most medium-size metropolitan areas. Packages and documents are either picked up from shippers by Company couriers or are dropped off by shippers at Company facilities, FedEx World Service Centers,(R) FedEx(R) Drop Boxes, FedEx ShipSites(R) or FedEx Authorized ShipCenters(R) strategically located throughout the country. FedEx First Overnight is a next business day service offering scheduled delivery by 8:00 a.m. to over 90 U.S. cities from anywhere in the United States (except Hawaii) for packages weighing up to 150 pounds. FedEx Priority Overnight, scheduled for delivery in most communities no later than 10:30 a.m. local time the following business day, is designed for packages weighing up to 150 pounds. Also available are Saturday delivery service and Saturday pick-up for delivery the following Monday. FedEx Standard Overnight is similar to, though more economical than, FedEx Priority Overnight with delivery scheduled 4 no later than 3:00 p.m. local time the following business day in most communities. Company-provided packaging (FedEx Letter Envelope, FedEx Pak, FedEx Box, FedEx Tube and FedEx Diagnostic Specimen Envelope) is provided as part of these overnight services. FedEx Overnight Freight is scheduled for delivery by noon or 4:30 p.m. the following business day, depending on the recipient's location, and is designed for individual shipments weighing 151 to 1,500 pounds. Shipments exceeding 1,500 pounds will be accepted if advance approval is obtained. Four U.S. domestic deferred services are available for less urgent shipments: FedEx 2Day(R), FedEx 2Day Freight(R), FedEx Express Saver(R) and FedEx Express Saver(R) Freight. FedEx 2Day is designed for packages weighing up to 150 pounds. FedEx 2Day shipments are scheduled for delivery in most communities no later than 4:30 p.m. (7:00 p.m. for residential deliveries) the second business day following pick-up. FedEx 2Day Freight is a time-definite U.S. domestic freight service for individual shipments weighing 151 to 1,500 pounds. Shipments exceeding 1,500 pounds will be accepted if advance approval is obtained. Shipments are scheduled for delivery no later than 4:30 p.m. the second business day in all major and most medium-size metropolitan areas. FedEx Express Saver is for shipments up to 150 pounds with delivery within three business days by 4:30 p.m. (7:00 p.m. for residential deliveries). FedEx Express Saver Freight is a one, two or three business-day, time-definite service, depending on the distance between origin and destination, which offers delivery by 4:30 p.m. to virtually all locations in the continental United States. This is a service for palletized freight, with unlimited total shipment weight. U.S. domestic overnight and second-day services are primarily used by customers for shipment of time-sensitive documents and goods, high-value machines and machine parts, computer parts, software and consumer items from manufacturers, distributors and retailers and to retailers, manufacturers and consumers. Company employees handle virtually every shipment from origin to destination. The Company's Collect On Delivery (C.O.D.) service provides the fastest payment return in the express industry. C.O.D. payments are returned to shippers within one or two business days compared to competitors' services which can take as long as 45 days. Like the Company's other U.S. services, C.O.D. service offers money-back guarantees on timely delivery and on the Company's ability to track and provide the status of any package in its system. FedEx SameDay(R) service is for urgent shipments to virtually any U.S. destination. This service is available seven days a week, 24 hours a day, where available, and is designed for packages weighing up to 70 pounds that cannot wait until the next day to be delivered. In addition to the services discussed above, the Company offers various international document and package delivery services and international freight services. FedEx International FirstSM is the Company's fastest international service with delivery of import shipments by 8:00 a.m. within one to two business days to more than 90 U.S. cities from 18 business centers around the world. Service is also available from the U.S. to certain key cities in Europe by 8:00 a.m. on the second business day. Customs clearance is provided with this service. FedEx International Priority(R) ("IP") is a time-definite door-to-door service for documents and packages weighing up to 150 pounds. Customs clearance is included as part of this service. The broker selection option for IP service permits customers to designate their own customs broker for clearance. Pick-up and delivery are provided from any point in the Company's global network. Delivery is generally scheduled within one to three business days depending on the origin and destination of the shipment and commodity limitations imposed by authorities in the destination country. Size, weight and commodity limitations vary according to destination. In June 1997, the Company introduced the FedEx 10kg Box and 2 5 FedEx 25kg Box for IP shipments. IP customers using the FedEx 10kg Box or FedEx 25kg Box can ship up to 22 pounds or 55 pounds, respectively, at a flat rate which varies by destination region. FedEx International Priority(R) Freight is an expansion of IP service and is a time-definite door-to-door service for international shipments with individual pieces weighing 151 to 1,500 pounds. Customs clearance is included as part of this service or customers are permitted to designate their own customs broker for clearance where not prohibited by destination country laws. Pick-up and delivery are provided from many points in the Company's U.S. domestic and international network around the world. Delivery is generally scheduled within one to three business days depending on the origin and destination of the shipment and commodity limitations imposed by authorities in the destination country. Size, weight and commodity limitations vary according to destination. FedEx International Priority Plus(R) is an overnight service for packages (up to 70 pounds) and documents shipped from New York City to Amsterdam, Brussels, Buenos Aires, Dublin, Frankfurt (documents only), Geneva, London, Madrid (documents only), Milan (documents only), Paris, Rio De Janeiro (documents only), Rome (documents only), Sao Paulo (documents only) and Zurich. IP Plus shipments must be picked up or dropped off in most locations by 3:00 p.m. for delivery the next business day. EXPRESSfreighter(R) routing, discussed below, allows overnight service from major locations in Europe and Asia to be scheduled for 10:30 a.m. delivery on the next business day to many United States destinations and to major business centers in Canada and Mexico. More economical than IP service, FedEx International Priority DirectDistributionSM is a time-definite service for larger bulk shipments destined to multiple recipients in the United States. Once the bulk shipment arrives and the entire shipment clears customs, the individual packages are separated and delivered to the recipients. Weight and size restrictions are the same as for IP service, with transit time one to two days longer. FedEx International Economy(R) is a deferred, door-to-door service for documents and packages weighing up to 150 pounds (total shipment weights are unlimited). This service generally provides customers with less time-sensitive shipments a more cost-effective alternative. The service is available Monday through Friday between the United States and 22 major countries in Asia, Europe, Latin America and the Middle East. The delivery commitment for shipments to and from Canada is two to three business days by 5:00 p.m. For other countries, the delivery commitment is four to five business days by end of the business day. Customs clearance is included in this service and the broker selection option is available in most markets. Shipments to and from Canada and Puerto Rico are supported by the money-back guarantee, but shipments to other destinations are not. FedEx International Express Freight(R), a freight service for shipments of nearly any weight, size or shape, is available between major markets in North America, Asia, Australia, Europe and South America. This service, providing scheduled delivery from one to three business days depending on destination, is designed for shippers desiring time-definite, committed delivery with the option of customs clearance provided by the Company. Commodity limitations vary according to destination. FedEx International Airport-to-AirportSM is an international airfreight service designed for freight forwarders and agents who do not require a time-definite, committed delivery. Space-available service is offered to and from virtually any airport around the world for airfreight shipments of nearly any weight, size or shape, with arrival at the destination airport from two to four days after tender of the shipment. If 3 6 the Company's aircraft do not serve the destination airport, another carrier's services are used pursuant to an "interline" agreement or other arrangement with such carrier. Commodity limitations vary according to destination. FedEx International MailService(R) provides for the pick-up, transportation and sorting of nondutiable, printed material and certain low-value, dutiable items which are tendered for delivery to postal services throughout the world. Generally, material sent by FedEx International MailService for premium service is delivered to recipients within four to seven days, while receipt of material sent by FedEx International MailService for standard service takes seven to eleven days. CHARTER SERVICES AND CRAF PARTICIPATION The Company offers commercial and military charter services which supplement the utilization of aircraft capacity when not needed in the Company's scheduled operations. In addition to providing these charter services, the Company participates in the Civil Reserve Air Fleet ("CRAF") program. Under this program, the Department of Defense may requisition for military use certain of the Company's wide-bodied aircraft in the event of a declared need, including a national emergency. The Company is compensated for the operation of any aircraft requisitioned under the CRAF program at standard contract rates established each year in the normal course of awarding contracts. Through its participation in the CRAF program, the Company is entitled to bid on peacetime military cargo charter business. The Company, together with a consortium of other carriers, currently contracts with the U.S. Government for charter flights. The Company, while continuing to participate in the CRAF program and continuing to bid on military charters with respect to the carriage of cargo, discontinued military passenger flights at the end of September 1992. During fiscal 1997, revenues from charter operations accounted for approximately 0.6% of the Company's total revenues and approximately 0.9% and 1.2% of total revenues during fiscal 1996 and 1995, respectively. LOGISTICS, ELECTRONIC COMMERCE AND CATALOG Logistics, Electronic Commerce and Catalog ("LECC"), formerly FedEx Logistics Services, is a division of the Company which offers a full range of global and regional integrated logistics, information and marketing solutions as well as other innovative services. LECC focuses on markets where delivering high-speed, time-definite, information-intensive solutions provide significant customer value. In 1997, LECC further expanded its information systems focus to solutions that enable customers to do business electronically -- ranging from order-entry to after-sales support. The combination of these electronic commerce capabilities and the Company's global transportation and information network will allow the Company's customers to create or redesign their supply chains to reduce cost and improve service to their customers. LECC solutions include FedEx VirtualOrderSM, an electronic order entry system, FedEx interNetShipSM, FedEx Ship(R) and FedEx Express Distribution CenterSM facilities and services such as FedEx Repair and Return and FedEx International Priority DirectDistribution. FedEx Express Distribution DepotsSM offering two to four hour delivery in 50 locations and FedEx Express Distribution Centers are part of LECC's inventory management and warehouse service. LECC customers warehouse their time-sensitive goods in the Company's distribution facilities, and the Company in turn accepts and fills customer orders and delivers the goods to the end user through the Company's global transportation network. 4 7 FedEx Repair and Return is a door-to-door, fast cycle repair service where the Company manages the pickup, repair and return of defective computers and other electronics products. The FedEx Marketing Alliance Program is an on-line business rewards program that allows FedEx VirtualOrder customers to leverage innovative promotional tactics, electronic commerce tools, research, news services, marketing consultation, support and other vital information to promote their business growth over the Internet. LECC has offices and operating locations in Memphis and other key U.S. cities, the United Kingdom, Germany, Belgium, France, the Netherlands, the United Arab Emirates, Israel, Singapore, Hong Kong, the Philippines and Japan to serve its customers globally. PRICING The Company periodically publishes list prices in its Service Guides for the majority of its services. In general during fiscal year 1997, U.S. domestic shipping rates were based on the service selected, weight, size, any ancillary service charge and whether or not the shipment is picked up by a Company courier or dropped off by the customer at a Company location. International rates were based on the type of service provided and vary with size, weight and destination. The Company offers its customers volume discounts generally based on actual or potential average daily revenue produced. Discounts are determined by reference to several local and national revenue bands developed by the Company. In general, the more revenue a particular customer produces, the greater the discount. Of the more than two million current customers of the Company, a significant portion participates in its discount program. To more closely align the Company's rates with its transportation costs, the Company introduced distance-based pricing effective July 1, 1997 for U.S. shipments. The new rates are based on the weight and size of shipment, the distance between the shipper and the recipient and the service commitment. SERVICE REVENUES The following table shows the amount of revenues generated for each class of service offered for the fiscal years ending May 31 (amounts in thousands):
1997 1996 1995 ---- ---- ---- FedEx Priority Overnight $ 4,485,317 $ 4,170,254 $3,908,837 FedEx Standard Overnight 1,758,462 1,616,538 1,374,440 FedEx 2Day 1,621,643 1,365,430 1,284,297 U.S. domestic freight services 207,729 132,122 132,672 International priority services 2,351,096 1,996,827 1,679,830 International freight services 604,472 554,143 580,315 Charter 72,330 92,389 115,062 LECC and other* 418,701 345,916 316,620 ----------- ----------- ---------- Total $11,519,750 $10,273,619 $9,392,073 =========== =========== ==========
- ---------------------------- *Includes revenues generated by the specialized services summarized above under "Logistics, Electronic Commerce and Catalog." Also, includes revenues from sales of aircraft engine noise-reduction kits and non-U.S. intra-country operations. 5 8 SEASONALITY OF BUSINESS The Company's express package business and international airfreight business are both seasonal in nature. Historically, the U.S. domestic package business experiences an increase in late November and December. International business, particularly in the Asia to U.S. markets, peaks in October and November due to U.S. domestic holiday sales. The latter part of the Company's third fiscal quarter and late summer, being post-winter holiday and summer vacation seasons, have historically exhibited lower volumes relative to other periods. OPERATIONS The Company's global transportation and distribution services are provided through an extensive worldwide network consisting of numerous aviation and ground transportation operating rights and authorities, 587 aircraft, approximately 38,500 vehicles, sorting facilities, FedEx World Service Centers, FedEx Drop Boxes, FedEx ShipSites, FedEx Authorized ShipCenters and sophisticated package tracking, billing and communications systems. The Company's primary U.S. domestic sorting facility, the SuperHub located in Memphis, serves as the center of the Company's multiple hub-and-spokes U.S. domestic system. A second national hub is located in Indianapolis. In addition to these national hubs, the Company operates regional hubs in Newark and Oakland and major metropolitan sorting facilities in Los Angeles and Chicago. Facilities in Anchorage, Alaska and Subic Bay, the Philippines, serve as sorting facilities for express package and freight traffic moving to and from Asia, Europe and North America. Major sorting and freight handling facilities are located at Narita Airport in Japan, Charles de Gaulle Airport in Paris and Stansted Airport outside London. The Company's EXPRESSfreighter flights provide faster international service through direct flights between major markets in Asia, Europe and North America. For example, EXPRESSfreighter flights from Hong Kong, Osaka, Singapore, Taipei and Tokyo to the Company's facility in Anchorage and from there to the SuperHub in Memphis allow for next business day delivery by 10:30 a.m. in the United States and to major business centers in Canada, Mexico and the Caribbean. Cargo on EXPRESSfreighter flights bound for Europe is flown for second-day delivery to sixteen European cities. Westbound from Europe, EXPRESSfreighter service is available from Amsterdam, Antwerp, Basel, Brussels, Frankfurt, London, Luxembourg, Milan, Munich, Paris and Zurich for 10:30 a.m. next-day delivery in most of North America. Throughout its worldwide network, the Company operates city stations and employs a staff of customer service agents, cargo handlers and couriers who pick up and deliver shipments in the station's service area. In some cities, the Company operates FedEx World Service Centers which are staffed, store-front facilities located in high-traffic, high-density areas. Unmanned FedEx Drop Boxes provide customers the opportunity to drop off packages at locations in office buildings, shopping centers and corporate or industrial parks. The Company has also formed alliances with certain retailers to extend this customer convenience network to over 7,600 drop-off sites in retail stores. In international regions where low package traffic makes the Company's direct presence less economical, Global Service Participants have been selected to complete deliveries. The Company has an advanced package tracking and billing system, FedEx COSMOS(R), that utilizes hand-held electronic scanning equipment and computer terminals. This system provides proof of 6 9 delivery information, an electronically reproduced airbill for the customer and information regarding the location of a package within the Company's system. For international shipments, the Company has developed FedEx ExpressClear, a worldwide electronic customs clearance system, which speeds up customs clearance by allowing customs agents in destination countries to review information about shipments before they arrive. The Company has 16 computerized telephone customer service centers in the United States which handle thousands of customer calls daily. In general, the Company's international locations handle customer calls locally. The Company provides many of its customers FedEx PowerShip(R) 2, a computer system, which provides package tracking, produces shipping labels, calculates shipping charges, invoices the customer daily and produces customized reports. For customers that ship 100 or more packages a day, the Company offers FedEx PowerShip Plus software, which performs the same functions as FedEx PowerShip 2 but can be integrated with the customer's own computer systems for customer service, accounting, inventory control and financial analysis purposes. FedEx PowerShip PassPort is an automated shipping system which is automatically updated with the Company's system information, such as routing codes and rates. FedEx PowerShip 3 enables customers who ship as few as three packages per day to enjoy the advantage of automated shipping. The Company also offers FedEx Ship software, free of charge, that can be used on a personal computer. FedEx Ship allows customers to generate plain-paper airbills on a laser printer, track shipments, order FedEx pickups and maintain a database of shipping addresses and activity using modems and their own personal computers. From the Company's World Wide Web page, shippers can retrieve precise details on the status of their shipments any time of day from anywhere in the world. In addition, FedEx interNetShip provides shipment processing capability within the United States on the World Wide Web. FUEL SUPPLIES AND COSTS During fiscal 1997, the Company purchased aviation fuel from various suppliers under contracts which vary in length from 12 to 36 months and which provide for specific amounts of fuel to be delivered. Certain of these contracts extend through May 1999. The fuel represented by these contracts is purchased at market price which may fluctuate daily. Management believes that, barring a substantial disruption in supplies of crude oil, these agreements will ensure the availability of an adequate supply of fuel for the Company's needs for the immediate future. However, a substantial reduction of oil supplies from oil producing regions or refining capacity, or other events causing a substantial reduction in the supply of aviation fuel, could have a significant adverse effect on the Company. The Company has also entered into contracts which are designed to limit its exposure to fluctuations in jet fuel prices. Under these contracts, the Company makes (or receives) payments based on the difference between a specified lower (or upper) limit and the market price of jet fuel, as determined by an index of spot market prices representing various geographic regions. The difference is recorded as an increase or decrease in fuel expense. At May 31, 1997, the Company had contracts with various financial institutions covering a total notional volume of 396.9 million gallons (approximately 54% of the Company's annual jet fuel consumption), with some contracts extending through May 1998. During 1997, the Company received $15,162,000 under jet fuel contracts. 7 10 The following table sets forth the Company's costs for aviation fuel and its percentage of total operating expense for the previous five fiscal years:
TOTAL COST PERCENTAGE OF TOTAL FISCAL YEAR (IN THOUSANDS) OPERATING EXPENSE - ----------- -------------- ------------------- 1997 $557,533 5.2% 1996 461,401 4.8 1995 394,225 4.5 1994 374,561 4.7 1993 403,597 5.4
Approximately 25% of the Company's requirement for vehicle fuel is purchased in bulk. The remainder of the Company's requirement is satisfied by retail purchases with various discounts. The percentage of total operating expense for vehicle fuel purchases for each of the last five fiscal years has not exceeded 1.5%. COMPETITION The U.S. domestic express market is highly competitive and sensitive to both price and service. Competitors in this market include other express package concerns, principally United Parcel Service and Airborne Express, passenger airlines offering package express services, regional express delivery concerns, airfreight forwarders and the United States Postal Service. The international express package and freight markets are also highly competitive. Ability to compete effectively internationally depends principally upon price, frequency and capacity of scheduled service, extent of geographic coverage and reliability. The Company currently holds certificates of authority to serve more foreign countries than any other United States all-cargo air carrier and its extensive, scheduled international route system allows it to offer single-carrier service to many points not offered by its principal all-cargo competitors. This international route system, combined with an integrated air and ground network, enables the Company to offer international customers more extensive single-carrier service to a greater number of U.S. domestic points than can be provided currently by competitors. However, many of the Company's competitors in the international market are government owned, controlled, or subsidized carriers which may have greater resources, lower costs, less profit sensitivity and more favorable operating conditions than the Company. The Company's principal competitors in the international market are foreign national air carriers, United States passenger airlines and all-cargo airlines and other express package companies including United Parcel Service and DHL. REGULATION Air Under the Federal Aviation Act of 1958, as amended, both the Department of Transportation ("DOT") and the Federal Aviation Administration ("FAA") exercise regulatory authority over the Company. The DOT's authority relates primarily to economic aspects of air transportation. The DOT's jurisdiction extends to aviation route authority and to other regulatory matters, including the transfer of route authority between carriers. The Company holds various certificates issued by the DOT, authorizing the Company to engage in U.S. domestic and international air transportation of property and mail on a worldwide basis. The Company's international authority permits it to carry cargo and mail from several 8 11 points in its U.S. domestic route system to numerous points throughout the world. The DOT regulates international routes and practices and is authorized to investigate and take action against discriminatory treatment of United States air carriers abroad. The right of a United States carrier to serve foreign points is subject to the DOT's approval and generally requires a bilateral agreement between the United States and the foreign government. The carrier must then be granted the permission of such foreign government to provide specific flights and services. The regulatory environment for global aviation rights may from time to time impair the ability of the Company to operate its air network in the most efficient manner. The FAA's regulatory authority relates primarily to safety and operational aspects of air transportation, including aircraft standards and maintenance, personnel and ground facilities, which may from time to time affect the ability of the Company to operate its aircraft in the most efficient manner. The Company holds an operating certificate granted by the FAA pursuant to Part 121 of the Federal Aviation Regulations. This certificate is of unlimited duration and remains in effect so long as the Company maintains its standards of safety and meets the operational requirements of the regulations. Ground The ground transportation performed by the Company is integral to its air transportation services. Prior to January 1996, the Company conducted its interstate motor carrier operations pursuant to common and contract carrier authorities issued by the Interstate Commerce Commission ("ICC"). The ICC Termination Act of 1995 abolished the ICC and transferred responsibility for interstate motor carrier registration to the Department of Transportation. The enactment of the Federal Aviation Administration Authorization Act of 1994 abrogated the authority of states to regulate the rates, routes or services of intermodal all-cargo air carriers and most motor carriers. States may now only exercise jurisdiction over safety and insurance. The Company is registered in those states that require registration. Communication Because of the extensive use of radio and other communication facilities in its aircraft and ground transportation operations, the Company is subject to the Federal Communications Commission Act of 1934, as amended. Additionally, the Federal Communications Commission regulates and licenses the Company's activities pertaining to satellite communications. Environmental Pursuant to the Federal Aviation Act, the FAA, with the assistance of the Environmental Protection Agency, is authorized to establish standards governing aircraft noise. The Company's present aircraft fleet is in compliance with current noise standards of the Federal Aviation Regulations. The Company's aircraft are also subject to, and are in compliance with, the regulations limiting the level of engine smoke emissions. In addition to federal regulation of aircraft noise, certain airport operators have local noise regulations which limit aircraft operations by type of aircraft and time of day. These regulations have had a restrictive effect on the Company's aircraft operations in some of the localities where they apply but do not have a material effect on any of the Company's significant markets. Congress' passage of the Airport Noise and Capacity Act of 1990 established a National Noise Policy which enabled the Company to plan for noise reduction and better respond to local noise constraints. 9 12 Certain regulations under the Clean Water Act, the Clean Air Act and the Resource Conservation and Recovery Act impact the Company's operations. The Company is most directly affected by regulations pertaining to underground storage tanks, hazardous waste handling, vehicle and equipment emissions and the discharge of effluents from properties and equipment owned or operated by the Company. EMPLOYEES At July 30, 1997, the Company employed approximately 76,000 permanent full-time and 50,000 permanent part-time employees, of which approximately 22% are employed in Memphis. Employees of the Company's international branches and subsidiaries in the aggregate comprise approximately 12% of all employees. The Company believes its relationship with its employees is excellent. In July 1996, the Fedex Pilots Association ("FPA"), an independent collective bargaining organization, filed an application with the NMB seeking an election to determine the collective bargaining representative for the Company's flight crewmembers. That petition was granted and FPA won the election by a margin of 1,589 to 1,133. On October 29, 1996, the NMB certified FPA as the collective bargaining representative for the pilots. Since that time, FPA and the Company have reached four interim agreements. Negotiations toward a comprehensive collective bargaining agreement began in June 1997. Attempts by other labor organizations to organize certain other groups of employees have been initiated. Although the Company cannot predict the outcome of these labor activities or their effect on the Company or its employees, if any, the Company is responding to these organization attempts. FINANCIAL INFORMATION ABOUT FOREIGN AND U.S. DOMESTIC OPERATIONS For information concerning financial results for U.S. domestic and international operations for the three years ended May 31, 1997, 1996 and 1995, refer to Note 10 of Notes to Consolidated Financial Statements contained in the Company's 1997 Annual Report to Stockholders, which Note is incorporated herein by reference. 10 13 ITEM 2. PROPERTIES The Company's principal owned or leased properties include its aircraft, vehicles, national, regional and metropolitan sorting facilities, administration buildings, FedEx World Service Centers, FedEx Drop Boxes and data processing and telecommunications equipment. AIRCRAFT AND VEHICLES The Company's aircraft fleet at July 1, 1997 consisted of the following:
MAXIMUM GROSS STRUCTURAL PAYLOAD DESCRIPTION NUMBER (POUNDS PER AIRCRAFT)** - ----------- ------ ---------------------- McDonnell Douglas MD11 24*1/ 198,500 McDonnell Douglas DC10-30 22* 172,000 McDonnell Douglas DC10-10 27* 142,000 Airbus A300-600 20* 117,700 Airbus A310-200 35* 74,200 Boeing B727-200 95* 59,500 Boeing B727-100 68* 38,000 Fokker F27-500 24 14,000 Fokker F27-600 8 12,500 Cessna 208B 254 3,500 Cessna 208A 10 3,000 --- Total 587
- ----------------------------- *23 MD11, 17 DC10-30, four DC10-10, 20 A300, 16 A310, 13 B727-200 and five B727-100 aircraft are subject to operating leases. **Maximum gross structural payload includes revenue payload and container weight. 1/One MD11 was destroyed by fire following an accident at Newark International Airport on July 31, 1997. The A300s and A310s are two-engine, wide-bodied aircraft which have a longer range and more capacity than B727s. The MD11s are three-engine, wide-bodied aircraft which have a longer range and larger capacity than DC10s. The DC10s are three-engine, wide-bodied aircraft which have been specially modified to meet the Company's cargo requirements. The B727s are three-engine aircraft configured for cargo service. The Company's Fokker F27 and Cessna 208 turbo-prop aircraft are leased to unaffiliated operators to support Company operations in areas where demand does not justify use of a larger aircraft. An inventory of spare engines and parts is maintained for each aircraft type. In addition, the Company "wet leases" approximately 21 smaller piston-engine and turbo-prop aircraft which feed packages to and from airports served by the Company's larger jet aircraft. The wet lease agreements call for the owner-lessor to provide flight crews, insurance and maintenance, as well as fuel and other supplies required to operate the aircraft. The Company's wet lease agreements are for terms not exceeding one year and are generally cancelable upon 30 days notice. 11 14 At July 1, 1997, the Company operated approximately 38,500 ground transport vehicles, including pick-up and delivery vans, larger trucks called container transport vehicles and over-the-road tractors and trailers. AIRCRAFT PURCHASE COMMITMENTS At July 1, 1997, the Company was committed under various contracts to purchase 16 Airbus A300, two Airbus A310, seven MD11 and 50 Ayers ALM 200 aircraft to be delivered through 2002. In addition, the Company may be required to purchase seven additional MD11 aircraft for delivery beginning no later than 2000 under a put option agreement. During 1997, the Company entered into agreements with two airlines to acquire 53 DC10s, spare parts, aircraft engines and other equipment, and maintenance services in exchange for a combination of aircraft engine noise reduction kits and cash. Delivery of these aircraft began in 1997 and will continue through 2001. Additionally, these airlines may exercise put options through December 31, 2003, requiring the Company to purchase up to 29 additional DC10s along with additional aircraft engines and equipment. 12 15 SORTING AND HANDLING FACILITIES At July 1, 1997, the Company operated the following sorting and handling facilities:
SORTING LEASE SQUARE CAPACITY EXPIRATION LOCATION ACRES FEET (PER HOUR)* LESSOR YEAR -------- ----- ---- ----------- ------ ---- NATIONAL Memphis, Tennessee 468 2,742,196 455,000 Memphis-Shelby 2012 County Airport Authority Indianapolis, Indiana 120 645,000 153,000 Indianapolis Airport 2016 Authority REGIONAL Newark, New Jersey 56 554,000 142,000 Port Authority of New 2010 York and New Jersey Oakland, California 21 191,000 50,000 City of Oakland 2011 METROPOLITAN Los Angeles, California 25 130,000 53,000 City of Los Angeles 2009 Chicago, Illinois 55 419,000 15,000 City of Chicago 2018 Anchorage, Alaska+ 42 208,000 4,200 Alaska Department of 2013 Transportation and Public Facilities Subic Bay, 11 169,800 16,000 Subic Bay 2002 The Philippines++ Metropolitan Authority
- --------------------------- * Documents and packages + Handles international express package and freight shipments to and from Asia, Europe and North America. ++ Handles intra-Asia express package and freight shipments. The Company's facilities at the Memphis International Airport also consist of aircraft hangars, flight training and fuel facilities, administrative offices and warehouse space. The Company leases these facilities from the Memphis-Shelby County Airport Authority under several leases. The leases cover land, the administrative and sorting buildings, other facilities, ramps and certain related equipment. The Company has the option to purchase certain equipment (but not buildings or improvements to real estate) leased under such leases at the end of the lease term for a nominal sum. The leases obligate the Company to maintain and insure the leased property and to pay all related taxes, assessments and other charges. The leases are subordinate to, and the Company's rights thereunder could be affected by, any future lease or agreement between the Authority and the United States Government. 13 16 In addition to the facilities noted above, the Company has major international sorting and freight handling facilities located at Narita Airport in Japan, Charles de Gaulle Airport in Paris, France and Stansted Airport outside London, England. During 1997, construction began on the Company's new European sorting hub at Charles de Gaulle Airport which is expected to open in 1998, and on the Company's new transshipment center at the CKS International Airport in Taiwan which is expected to open later this calendar year. Construction also continued in 1997 on the Company's new regional sorting hub in Fort Worth, Texas which is expected to become operational in 1998. ADMINISTRATIVE AND OTHER PROPERTIES AND FACILITIES The Company has facilities housing administrative and technical operations on approximately 200 acres adjacent to the Memphis International Airport. Of the seven buildings located on this site, four are subject to long-term leases, and the other three are owned by the Company. The Company also leases approximately 90 facilities in the Memphis area for its corporate headquarters, warehouse facilities and administrative offices. During fiscal year 1997, the Company began construction on an office campus in Collierville, Tennessee, and announced plans to build an office campus in East Shelby County, Tennessee. The Company owns 13 and leases 704 facilities for city station operations in the United States. In addition, 142 city stations are owned or leased throughout the Company's international network. The majority of these leases are for terms of five to ten years. The Company believes that suitable alternative facilities are available in each locale on satisfactory terms, if necessary. As of July 1, 1997, the Company leased space for 404 FedEx World Service Centers in the United States and had placed approximately 33,865 Drop Boxes. The Company also owns stand-alone mini-centers located on leaseholds in parking lots adjacent to office buildings, shopping centers and office parks of which 207 were operating at July 1, 1997. Internationally, the Company leases space for 13 FedEx World Service Centers and has approximately 964 FedEx Drop Boxes. The Company leases central processing units and most of the disk drives, printers and terminals used for data processing. Owned equipment consists primarily of Digitally Assisted Dispatch Systems ("DADS") terminals used in communications between dispatchers and couriers, computerized routing, tracing and billing equipment used by customers and mobile radios used in the Company's vehicles. The Company also leases space on C-Band and Ku-Band satellite transponders for use in its telecommunications network. ITEM 3. LEGAL PROCEEDINGS Customers of the Company have filed four separate class-action lawsuits against the Company generally alleging that the Company has breached its contract with the plaintiffs in transporting packages shipped by them. These lawsuits allege that the Company continued to collect a 6.25% federal excise tax on the transportation of property shipped by air after the tax expired on December 31, 1995, until it was reinstated in August of 1996. The plaintiffs seek certification as a class action, damages, an injunction to enjoin the Company from continuing to collect the excise tax referred to above, and an award of attorneys' fees and costs. Three of those cases were consolidated in Minnesota Federal District Court. That court stayed the consolidated cases in favor of a case filed in Circuit Court of Greene County, Alabama. The complaint in the Alabama case also alleges that the Company continued to collect the excise tax on the transportation of property shipped by air after the tax expired again on December 31, 1996. A fifth case, filed in the Supreme Court of New York, New York County, containing allegations and requests for relief substantially similar to the other four cases, originally alleged that the Company 14 17 continued to collect the excise tax on the transportation of property shipped by air after the tax expired on December 31, 1996. The New York complaint has been amended to cover the first expiration period of the tax (December 31, 1995 through August 27, 1996) covered in the original Alabama complaint. The air transportation excise tax expired on December 31, 1995, was reenacted by Congress effective August 27, 1996, and expired again on December 31, 1996. The excise tax was then reenacted by Congress effective March 7, 1997, and is scheduled to expire on September 30, 1997. The expiration of the tax relieved the Company of its obligation to pay the tax during the periods of expiration. Legislation to reenact the tax for a ten-year period as of October 1, 1997, is currently pending in Congress. The Company intends to vigorously defend itself in these cases. No amount has been reserved for these contingencies. In November 1987, The Flying Tiger Line Inc. ("Flying Tigers"), a company acquired by the Company in 1989, received a notice from the United States Environmental Protection Agency ("EPA") identifying Flying Tigers as a potentially responsible party ("PRP") in connection with a "Superfund" site located in Monterey Park, California. The site is a 190-acre landfill which operated from 1948 through 1984. In June 1985, the EPA began a remedial investigation of the site to identify the extent of contamination. The EPA estimates that approximately 0.1% of the waste disposed at the site is attributable to Flying Tigers. Flying Tigers participated in a partial settlement relating to remedial actions for management of contamination and site control. Partial consent decrees were entered in the United States District Court for the Central District of California in 1989 and 1992, which provided, in part, for payments of $109,000 and $230,000, respectively, by Flying Tigers and Federal Express to the partial-settlement escrow account. However, the Company does not expect all outstanding issues to be resolved for several years. Due to several variables which are beyond the Company's control, it is impossible to accurately estimate the Company's potential share of the remaining costs, but based on Flying Tigers' relatively insignificant contribution of waste to the site, the Company believes that its remaining liability will not be material. The Company is subject to other legal proceedings and claims which arise in the ordinary course of its business. In the opinion of management, the aggregate liability, if any, with respect to these other actions will not materially adversely affect the financial position or results of operations of the Company. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS There were no matters submitted to a vote of security holders during the fourth quarter of the fiscal year ended May 31, 1997. 15 18 EXECUTIVE OFFICERS OF THE REGISTRANT Information regarding executive officers of the Company is as follows (included herein pursuant to Instruction 3 to Item 401(b) of Regulation S-K and General Instruction G(3) of Form 10-K):
OFFICER, YEAR FIRST ELECTED AS OFFICER AGE POSITIONS HELD WITH COMPANY ------------------ --- --------------------------- FREDERICK W. SMITH 52 Chairman, President and Chief Executive Officer 1971 since April 1983; Chief Executive Officer since April 1977; Chairman since February 1975; and President from June 1971 to February 1975. Founder of the Company. ALAN B. GRAF, JR. 43 Executive Vice President and Chief Financial 1987 Officer since February 1996; Senior Vice President and Chief Financial Officer from December 1991 to February 1996; Vice President and Treasurer from August 1987 to December 1991; and various management positions in finance and a senior financial analyst from 1980 to 1987. KENNETH R. MASTERSON 53 Executive Vice President, General Counsel and 1980 Secretary since February 1996; Senior Vice President, General Counsel and Secretary from September 1993 to February 1996; Senior Vice President and General Counsel from February 1981 to September 1993; and Vice President - Legal from January 1980 to February 1981. THEODORE L. WEISE 53 Executive Vice President - Worldwide Operations 1977 since February 1996; Senior Vice President - Air Operations from August 1991 to February 1996; Senior Vice President - United States and Canada from June 1990 to August 1991; Senior Vice President - Domestic Ground Operations from March 1987 to June 1990; Senior Vice President - Central Support Services from October 1986 to March 1987; Senior Vice President/General Manager - FedEx World Service Centers from March 1983 to October 1986; Senior Vice President - Operations Planning from March 1979 to March 1983; Vice President Operations Resource and Corporate Planning from September 1978 to March 1979; Vice President Special Projects and Advanced Planning from April 1977 to September 1978; and Director of Special Projects from 1972 to 1977. DAVID J. BRONCZEK 43 Senior Vice President - Europe, Middle East and 1987 Africa since June 1995; Senior Vice President - Europe, Africa and Mediterranean from June 1993 to June 1995; Vice President - Canadian Operations from February 1987 to March 1993; and several sales and operations managerial positions from 1976 to 1987.
16 19 G. EDMOND CLARK 43 Senior Vice President - Operations Support and 1991 Engineering since January 1997; Vice President - Corporate Financial Planning and Control from July 1994 to December 1996; Vice President - Finance - Asia, Pacific and Middle East from December 1991 to June 1994; and various management positions in Finance and Investor Relations, financial analyst and project administrator from 1983 to 1991. MICHAEL L. DUCKER 43 Senior Vice President - Asia and Pacific since 1991 October 1995; Vice President - South Pacific from June 1992 to October 1995; Vice President - Italy and Southeast Europe from November 1991 to June 1992; and various operating management positions and a package sorter and checker from 1975 to 1991. LEONARD B. FEILER 41 Senior Vice President - Central Support Services 1991 since February 1996; Vice President - Global Operations Planning and Control from January 1995 to February 1996; Vice President - Systems Form Planning and Engineering from July 1992 to January 1995; Vice President - Finance - FEDEX Aeronautics Corporation from September 1991 to July 1992; various management positions in finance and a Senior financial analyst from 1979 to 1991. WILLIAM G. FRAINE 39 Senior Vice President - Worldwide Sales since 1991 January 1997; Vice President Sales - United States and Canada from December 1991 to December 1996; Vice President - Sales - United Kingdom and Continental Europe from May 1991 to November 1991; various station and sales management positions and sales representative from 1979 to 1991. T. MICHAEL GLENN 41 Senior Vice President - Marketing, Customer Service 1985 and Corporate Communications since June 1994; Senior Vice President - Marketing and Corporate Communications from December 1993 to June 1994; Senior Vice President - Worldwide Marketing, Catalog Services and Corporate Communications from June 1993 to December 1993; Senior Vice President - Catalog and Remail Services from September 1992 to June 1993; Vice President - Marketing from August 1985 to September 1992, various management positions in sales and marketing and senior sales specialist from 1981 to 1985. DENNIS H. JONES 45 Senior Vice President and Chief Information 1986 Officer since December 1991; Vice President - Customer Automation and Invoicing from December 1986 to December 1991; and various management positions in finance and a financial analyst from 1975 to 1986.
17 20 JOSEPH C. MCCARTY, III 52 Senior Vice President - Latin America and Caribbean 1983 since October 1995; Senior Vice President - Asia Pacific from June 1995 to October 1995; Senior Vice President - Asia, Pacific and Middle East from November 1991 to June 1995; Vice President - International Legal from March 1987 to November 1991; Vice President - Properties & Facilities from November 1984 to March 1987; and Vice President - Legal from February 1983 to November 1984. GILBERT D. MOOK 54 Senior Vice President - Air Operations since 1985 February 1996; Senior Vice President - Central Support Services from November 1994 to February 1996; Vice President - Properties and Facilities from March 1988 to November 1994; Vice President - Satellite Systems from June 1985 to March 1988; Director - Satellite Systems from 1983 to 1985. JAMES A. PERKINS 53 Senior Vice President and Chief Personnel Officer 1979 since June 1979 and various personnel managerial positions from 1974 to 1979. DAVID F. REBHOLZ 44 Senior Vice President - United States and Canada 1988 since January 1997; Senior Vice President - Global Sales and Trade Services from June 1993 to December 1996; Vice President - Central Region - Americas and Caribbean from October 1991 to June 1993; Vice President - Customer Service from December 1988 to October 1991; and Regional Sales Director-Western Region and various operating management positions from 1976 to 1988. TRACY G. SCHMIDT 40 Senior Vice President - Air Ground Terminals and 1990 Transportation since July 1994; Vice President - Corporate Financial Planning from January 1990 to July 1994; and various management positions in finance from 1980 to 1990. LAURIE A. TUCKER 40 Senior Vice President - Logistics, Electronic 1991 Commerce and Catalog since April 1996; Vice President - Customer Automation and Invoicing from December 1991 to April 1996; and various management positions and financial analyst from 1978 to 1991. MICHAEL W. HILLARD 47 Vice President and Controller/Worldwide since 1997 January 1997; various accounting management positions and senior accountant from 1979 to 1997.
Officers are elected by, and serve at the discretion of, the Board of Directors. There is no arrangement or understanding between any officer and any person, other than a director or executive officer of the Company acting in his or her official capacity, pursuant to which any officer was selected. There are no family relationships between any executive officer and any other executive officer or director of the Company. There has been no event involving any executive officer under any bankruptcy act, criminal proceeding, judgment or injunction during the past five years. 18 21 PART II Information for Items 5 through 8 of this Report appears in the Company's 1997 Annual Report to Stockholders as indicated in the following table and is incorporated herein by reference. ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS Information regarding market information, stockholders and dividends is contained in the Corporate Information section of the Company's 1997 Annual Report to Stockholders, on page 44 under the headings, "Stock Listing," "Stockholders" and "Market Information" and is incorporated herein by reference. No cash dividends have been declared.
PAGE IN ANNUAL REPORT TO STOCKHOLDERS --------------- ITEM 6. SELECTED FINANCIAL DATA Selected Consolidated Financial Data .......................... 40 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ................. 18 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK ............................................. N/A ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Consolidated Statements of Income ............................. 23 Consolidated Balance Sheets ................................... 24 Consolidated Statements of Cash Flows ......................... 25 Consolidated Statements of Changes in Common Stockholders' Investment ............................. 26 Notes to Consolidated Financial Statements .................... 27 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE ....................... N/A
19 22 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Information regarding members of the Company's Board of Directors is presented in sections "Voting Securities and Principal Holders Thereof Security Ownership of Management and Certain Beneficial Owners," "Election of Directors," "Meetings and Committees," "Compensation of Directors," and "Transactions with Management and Others" and on pages 1 through 8 and page 15 of the Definitive Proxy Statement for the Company's 1997 Annual Meeting of Stockholders which will be held September 29, 1997 and is incorporated herein by reference. Information regarding executive officers of the Company is included above in Part I of this Form 10-K under the caption "Executive Officers of the Registrant" pursuant to Instruction 3 to Item 401(b) of Regulation S-K and General Instruction G(3) of Form 10-K. Information for Items 11 through 13 of this Report appears in the Definitive Proxy Statement for the Company's 1997 Annual Meeting of Stockholders to be held on September 29, 1997, as indicated in the following table and is incorporated herein by reference.
PAGE IN PROXY STATEMENT ------------- ITEM 11. EXECUTIVE COMPENSATION Compensation Information ................................... 9 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Voting Securities and Principal Holders Thereof ............ 1 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Transactions with Management and Others .................... 15 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(A) 1. FINANCIAL STATEMENTS The consolidated financial statements of the Company, together with the report thereon of Arthur Andersen LLP, dated June 30, 1997, are presented on pages 23 through 39 of the Company's 1997 Annual Report to Stockholders and are incorporated herein by reference. With the exception of the aforementioned information and the information incorporated by reference in Items 5, 6, 7 and 8 hereof, the Company's 1997 Annual Report to Stockholders is not to be deemed as filed as part of this Report. 20 23 2. FINANCIAL STATEMENT SCHEDULE
PAGE NUMBER IN FORM 10-K ------------ Report of Independent Public Accountants on Financial Statement Schedule .. S-1 Schedule II - Valuation and Qualifying Accounts ........................... S-2
All other financial statement schedules have been omitted because they are not applicable or the required information is included in the consolidated financial statements, or the notes thereto, contained in the Company's 1997 Annual Report to Stockholders and incorporated herein by reference. 3. EXHIBITS Exhibits 3.1, 3.2, 4.1 through 4.29, 10.1 through 10.94, 11, 12, 13, 21, 23 and 24 are being filed in connection with this Report and incorporated herein by reference. The Exhibit Index on pages E-1 through E-13 is incorporated herein by reference. (b) REPORTS ON FORM 8-K During the last quarter of the period covered by this Report on Form 10-K, the Registrant filed two Current Reports on Form 8-K. The first Current Report was dated May 12, 1997 and contained documents relating to the Company's 1997 Pass Through Trust Certificates, Series 1997-1. The second Current Report was dated May 22, 1997 and contained documents relating to the Company's 1997 Pass Through Trust Certificates, Series 1997-1. These reports were filed as Item 7 Current Reports. 21 24 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. FEDERAL EXPRESS CORPORATION (Registrant) BY: /s/ MICHAEL W. HILLARD -------------------------------- Michael W. Hillard Vice President and Controller (Principal Accounting Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated.
SIGNATURE CAPACITY DATE --------- -------- ---- /s/ FREDERICK W. SMITH* Chairman, President and - ----------------------- Chief Executive Officer Frederick W. Smith and Director (Principal Executive Officer) /s/ ALAN B. GRAF, JR.* Executive Vice President and - ---------------------- Chief Financial Officer Alan B. Graf, Jr. (Principal Financial Officer) /s/ MICHAEL W. HILLARD Vice President and Controller - ---------------------- (Principal Accounting Officer) August 8, 1997 Michael W. Hillard /s/ ROBERT H. ALLEN * Director - --------------------- Robert H. Allen /s/ HOWARD H. BAKER, JR.* Director - ------------------------- Howard H. Baker, Jr. /s/ ROBERT L. COX * Director - ------------------- Robert L. Cox /s/ RALPH D. DENUNZIO * Director - ----------------------- Ralph D. DeNunzio
25
SIGNATURE CAPACITY DATE --------- -------- ---- /s/ JUDITH L. ESTRIN * Director - ---------------------- Judith L. Estrin /s/ PHILIP GREER * Director - ------------------ Philip Greer /s/ J. R. HYDE, III * Director - --------------------- J. R. Hyde, III /s/ CHARLES T. MANATT * Director - ----------------------- Charles T. Manatt /s/ GEORGE J. MITCHELL * Director - ------------------------ George J. Mitchell /s/ JACKSON W. SMART, JR.* Director - -------------------------- Jackson W. Smart, Jr. /s/ JOSHUA I. SMITH * Director - --------------------- Joshua I. Smith /s/ PAUL S. WALSH* Director - ------------------ Paul S. Walsh /s/ PETER S. WILLMOTT * Director - ----------------------- Peter S. Willmott *By: /s/ MICHAEL W. HILLARD - ---------------------------- Michael W. Hillard August 8, 1997 Attorney-in-Fact
26 S-1 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE To Federal Express Corporation: We have audited in accordance with generally accepted auditing standards, the consolidated financial statements included in Federal Express Corporation's 1997 Annual Report to Stockholders incorporated by reference in this Form 10-K, and have issued our report thereon dated June 30, 1997. Our audit was made for the purpose of forming an opinion on those statements taken as a whole. The financial statement schedule on page S-2 is the responsibility of the Company's management and is presented for purposes of complying with the Securities and Exchange Commission's rules and is not part of the basic financial statements. The financial statement schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole. /s/ ARTHUR ANDERSEN LLP ------------------------------ ARTHUR ANDERSEN LLP Memphis, Tennessee, June 30, 1997 27 S-2 SCHEDULE II FEDERAL EXPRESS CORPORATION AND SUBSIDIARIES VALUATION AND QUALIFYING ACCOUNTS FOR THE YEARS ENDED MAY 31, 1997, 1996 AND 1995 (In thousands)
ADDITIONS ---------------------- BALANCE AT CHARGED TO CHARGED TO BALANCE AT BEGINNING COSTS AND OTHER END OF DESCRIPTION OF YEAR EXPENSES ACCOUNTS DEDUCTIONS(A) YEAR - ----------- ---------- ---------- ---------- ------------- ---------- Allowance for Doubtful Accounts ----------------- 1997.......................... $30,809 $38,711 - $33,345 $36,175 ======= ======= ====== ======= ======= 1996.......................... $31,173 $38,963 $1,700 $41,027 $30,809 ======= ======= ====== ======= ======= 1995.......................... $33,933 $36,334 - $39,094 $31,173 ======= ======= ====== ======= =======
(A) Accounts written off net of recoveries. 28 EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT ------ ---------------------- 3.1 Restated Certificate of Incorporation of Registrant as amended (Filed as Exhibit 3.1 to Registrant's FY95 Third Quarter Report on Form 10-Q, Commission File No. 1-7806, and incorporated herein by reference.) 3.2 By-laws of Registrant (Filed as Exhibit 3.2 to Registrant's FY93 Annual Report on Form 10-K, Commission File No. 1-7806, and incorporated herein by reference.) 4.1 Indenture dated as of April 1, 1987 between Registrant and The Bank of New York ("BONY"), as Trustee, relating to Registrant's 10% Senior Notes due April 15, 1999. (Filed as Exhibit 10.36 to Registrant's FY88 Annual Report on Form 10-K, Commission File No. 1-7806, and incorporated herein by reference.) 4.2 Supplemental Indenture No. 2 dated as of April 18, 1989 between Registrant and BONY, relating to Registrant's 10% Senior Notes due April 15, 1999. (Filed as Exhibit 4(a) to Registrant's Current Report on Form 8-K dated April 25, 1989, Commission File No. 1-7806, and incorporated herein by reference.) 4.3 Supplemental Indenture No. 3 dated as of April 21, 1989 between Registrant and BONY and form of note relating to Registrant's 10% Senior Notes due April 15, 1999. (Filed as Exhibit 4(b) to Registrant's Current Report on Form 8-K dated April 25, 1989, Commission File No. 1-7806, and incorporated herein by reference.) 4.4 Indenture dated as of May 15, 1989 between Registrant and BONY relating to Registrant's unsecured debt securities. (Filed as an exhibit to Registrant's Registration Statement No. 33-28796 on Form S-3 and incorporated herein by reference.) 4.5 Supplemental Indenture No. 2 dated as of August 11, 1989 between Registrant and BONY. (Filed as Exhibit 4.2 to Registrant's Registration Statement No. 33-30415 on Form S-3 and incorporated herein by reference.) 4.6 Supplemental Indenture No. 3 dated as of October 15, 1989 between Registrant and BONY relating to Registrant's 9 5/8% Sinking Fund Debentures due October 15, 2019. (Filed as Exhibit 4.2 to Registrant's Current Report on Form 8-K dated October 16, 1989, Commission File No. 1-7806, and incorporated herein by reference.) 4.7 Supplemental Indenture No. 5 dated as of August 15, 1990 between Registrant and BONY. (Filed as Exhibit 4(c) to Registrant's Current Report on Form 8-K dated August 28, 1990, Commission File No. 1-7806, and incorporated herein by reference.)
E-1 29
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT ------ ---------------------- 4.8 Indenture dated May 15, 1989 including Supplemental Indenture Nos. 2, 3 and 5 dated as described above, between Registrant and BONY, relating to Registrant's Medium-Term Notes, Series B, the last of which is due August 15, 2006, Registrant's 9 7/8% Notes due April 1, 2002, Registrant's 9.65% Notes due June 15, 2012 and Registrant's 6 1/4% Notes due April 15, 1998. (Filed as described above.) 4.9 Form of Fixed Rate Medium-Term Note, Series B, the last of which is due August 15, 2006. (Filed as Exhibit 4.4 to Registrant's Registration Statement No. 33-40018 on Form S-3 and incorporated herein by reference.) 4.10 Form of Floating Rate Medium-Term Note, Series B, the last of which is due August 15, 2006. (Filed as Exhibit 4.5 to Registrant's Registration Statement No. 33-40018 on Form S-3 and incorporated herein by reference.) 4.11 Form of 9 7/8% Note due April 1, 2002. (Filed as Exhibit 4.1 to Registrant's Current Report on Form 8-K dated March 23, 1992, Commission File No. 1-7806, and incorporated herein by reference.) 4.12 Form of 9.65% Note due June 15, 2012. (Filed as Exhibit 4.1 to Registrant's Current Report on Form 8-K dated June 18, 1992, Commission File No. 1-7806, and incorporated herein by reference.) 4.13 Form of 6 1/4% Note due April 15, 1998. (Filed as Exhibit 4.1 to Registrant's Current Report on Form 8-K dated April 21, 1993, Commission File No. 1-7806, and incorporated herein by reference.) 4.14 Indenture dated as of July 1, 1996 between the Registrant and The First National Bank of Chicago, as Trustee, relating to Registrant's unsecured debt securities. (Filed as Exhibit 4.14 to Registrant's FY96 Annual Report on Form 10-K, Commission File No. 1-7806, and incorporated herein by reference.) 4.15 Supplemental Indenture No. 1 dated as of July 1, 1997 between Registrant and The First National Bank of Chicago relating to Registrant's 7.60% Notes due July 1, 2097. (Filed as Exhibit 4.1 to Registrant's Current Report on Form 8-K dated July 7, 1997, Commission File No. 1-7806, and incorporated herein by reference.) 4.16 Form of 7.60% Note due July 1, 2097. (Filed as Exhibit 4.2 to Registrant's Current Report on Form 8-K dated July 7, 1997, Commission File No. 1-7806, and incorporated herein by reference.) 4.17 Pass Through Trust Agreement dated as of February 1, 1993, as amended and restated as of October 1, 1995, between Registrant and BONY, as Pass Through Trustee, relating to Registrant's 1993 Pass Through Certificates, Series A1, A2, B1, B2, C1 and C2, 1995 Pass Through Certificates, Series A1, A2, B1, B2 and B3 and 1996 Pass Through Certificates, Series A1 and A2. (Filed as Exhibit 4.a.1 to Registrant's Current Report on Form 8-K dated October 26, 1995, Commission File No. 1-7806, and incorporated herein by reference.)
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EXHIBIT NUMBER DESCRIPTION OF EXHIBIT ------ ---------------------- 4.18 Form of 8.04% and 8.76% 1993 Pass Through Certificates, Series A1 and A2 due November 22, 2007 and May 22, 2015, respectively. (Filed as Exhibit 4(a)(2) to Registrant's Current Report on Form 8-K dated February 4, 1993, Commission File No. 1-7806, and incorporated herein by reference.) 4.19 Form of 6.68% and 7.63% 1993 Pass Through Certificates, Series B1 and B2 due January 1, 2008 and January 1, 2015, respectively. (Filed as Exhibit 4.a.2 to Registrant's Current Report on Form 8-K dated September 23, 1993, Commission File No. 1-7806, and incorporated herein by reference.) 4.20 Form of 7.15% and 7.96% 1993 Pass Through Certificates, Series C1 and C2 due September 28, 2012 and March 28, 2017, respectively. (Filed as Exhibit 4.a.2 to Registrant's Current Report on Form 8-K dated December 2, 1993, Commission File No. 1-7806, and incorporated herein by reference.) 4.21 Form of 7.63% and 8.06% 1995 Pass Through Certificates, Series A1 and A2 due January 5, 2014 and January 5, 2016, respectively. (Filed as Exhibit 4.a.2 to Registrant's Current Report on Form 8-K dated August 16, 1995, Commission File No. 1-7806, and incorporated herein by reference.) 4.22 Form of 6.05%, 7.11% and 7.58% 1995 Pass Through Certificates, Series B1, B2 and B3 due March 19, 1996, January 2, 2014 and July 2, 2019, respectively. (Filed as Exhibit 4.a.2 to Registrant's Current Report on Form 8-K dated October 26, 1995, Commission File No. 1-7806, and incorporated herein by reference.) 4.23 Form of 7.85% and 8.17% 1996 Pass Through Certificates, Series A1 and A2 due January 30, 2015 and January 30, 2018, respectively. (Filed as Exhibit 4.a.2 to Registrant's Current Report on Form 8-K dated June 5, 1996, Commission File No. 1-7806, and incorporated herein by reference.) 4.24 Pass Through Trust Agreement dated as of March 1, 1994 between Registrant and BONY, as Pass Through Trustee, relating to Registrant's 1994 Pass Through Certificates, Series A310-A1, A310-A2 and A310-A3. (Filed as Exhibit 4.a.1 to Registrant's Current Report on Form 8-K dated March 16, 1994, Commission File No. 1-7806, and incorporated herein by reference.) 4.25 Form of 7.53%, 7.89% and 8.40% 1994 Pass Through Certificates, Series A310-A1, A310-A2 and A310-A3 due September 23, 2006, September 23, 2008 and March 23, 2010, respectively. (Filed as Exhibit 4.a.2 to Registrant's Current Report on Form 8-K dated March 16, 1994, Commission File No. 1-7806, and incorporated herein by reference.) 4.26 Pass Through Trust Agreement dated as of June 1, 1996 between Registrant and State Street Bank and Trust Company, as Pass Through Trustee, relating to Registrant's 1996 Pass Through Certificates, Series B1 and B2. (Filed as Exhibit 4(a)(1) to Registrant's Registration Statement No. 333-07691 on Form S-3 and incorporated herein by reference.)
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EXHIBIT NUMBER DESCRIPTION OF EXHIBIT ------ ---------------------- 4.27 Form of 7.39% and 7.84% 1996 Pass Through Certificates, Series B1 and B2 due January 30, 2013 and January 30, 2018, respectively. (Filed as Exhibit 4.a.2 to Registrant's Current Report on Form 8-K dated October 17, 1996, Commission File No. 1-7806, and incorporated herein by reference.) 4.28 Pass Through Trust Agreement dated as of May 1, 1997 between Registrant and First Security Bank, National Association, as Pass Through Trustee. (Filed as Exhibit 4.a.3 to Registrant's Form 8-K dated May 12, 1997, Commission File No. 1-7806, and incorporated herein by reference.) 4.29 Form of 7.50%, 7.52% and 7.65% 1997-1 Pass Through Certificates, Class A, B and C due January 15, 2018, January 15, 2018 and January 15, 2014, respectively. (Filed as Exhibit 4.a.2 to Registrant's Current Report on Form 8-K dated May 22, 1997, Commission File No. 1-7806, and incorporated herein by reference.) 10.1 Indenture dated as of August 1, 1979 between the Memphis-Shelby County Airport Authority (the "Authority") and BONY, as Trustee. (Refiled as Exhibit 10.1 to Registrant's FY90 Annual Report on Form 10-K, Commission File No. 1-7806, and incorporated herein by reference.) 10.2 Second Supplemental Indenture dated as of May 1, 1982 between the Authority and BONY. (Refiled as Exhibit 10.2 to Registrant's FY93 Annual Report on Form 10-K, Commission File No. 1-7806, and incorporated herein by reference.) 10.3 Third Supplemental Indenture dated as of November 1, 1982 between the Authority and BONY. (Refiled as Exhibit 10.3 to Registrant's FY93 Annual Report on Form 10-K, Commission File No. 1-7806, and incorporated herein by reference.) 10.4 Fourth Supplemental Indenture dated as of December 1, 1984 between the Authority and BONY relating to 7 7/8% Special Facilities Revenue Bonds, Series 1984 due September 1, 2009. (Refiled as Exhibit 10.4 to Registrant's FY95 Annual Report on Form 10-K, Commission File No. 1-7806, and incorporated herein by reference.) 10.5 Fifth Supplemental Indenture dated as of July 1, 1992 between the Authority and BONY relating to 6 3/4% Special Facilities Revenue Bonds, Refunding Series 1992 due September 1, 2012. (Filed as Exhibit 10.5 to Registrant's FY92 Annual Report on Form 10-K, Commission File No. 1-7806, and incorporated herein by reference.) 10.6 Sixth Supplemental Indenture dated as of July 1, 1997 between the Authority and BONY relating to 5.35% Special Facilities Revenue Bonds, Refunding Series 1997 due September 1, 2012. 10.7 Guaranty dated as of August 1, 1979 from Registrant to BONY. (Refiled as Exhibit 10.5 to Registrant's FY90 Annual Report on Form 10-K, Commission File No. 1-7806, and incorporated herein by reference.)
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EXHIBIT NUMBER DESCRIPTION OF EXHIBIT ------ ---------------------- 10.8 Reaffirmation of Guaranty dated as of May 1, 1982 from Registrant to BONY. (Refiled as Exhibit 10.7 to Registrant's FY93 Annual Report on Form 10-K, Commission File No. 1-7806, and incorporated herein by reference.) 10.9 Reaffirmation of Guaranty dated as of December 1, 1984 from Registrant to BONY relating to Special Facilities Revenue Bonds, Series 1984. (Refiled as Exhibit 10.10 to Registrant's FY93 Annual Report on Form 10-K, Commission File No. 1-7806, and incorporated herein by reference.) 10.10 Reaffirmation of Guaranty dated as of July 30, 1992 from Registrant to BONY relating to Special Facilities Revenue Bonds, Refunding Series 1992. (Filed as Exhibit 10.11 to Registrant's FY92 Annual Report on Form 10-K, Commission File No. 1-7806, and incorporated herein by reference.) 10.11 Reaffirmation of Guaranty dated as of July 1, 1997 from Registrant to BONY relating to Special Facilities Revenue Bonds, Refunding Series 1997. 10.12 Consolidated and Restated Lease Agreement dated as of August 1, 1979 between the Authority and Registrant. (Refiled as Exhibit 10.12 to Registrant's FY90 Annual Report on Form 10-K, Commission File No. 1-7806, and incorporated herein by reference.) 10.13 First Supplemental Lease Agreement dated as of April 1, 1981 between the Authority and Registrant. (Filed as Exhibit 10.13 to Registrant's FY92 Annual Report on Form 10-K, Commission File No. 1-7806, and incorporated herein by reference.) 10.14 Second Supplemental Lease Agreement dated as of May 1, 1982 between the Authority and Registrant. (Refiled as Exhibit 10.14 to Registrant's FY93 Annual Report on Form 10-K, Commission File No. 1-7806, and incorporated herein by reference.) 10.15 Third Supplemental Lease Agreement dated November 1, 1982 between the Authority and Registrant. (Filed as Exhibit 28.22 to Registrant's FY93 Second Quarter Report on Form 10-Q, Commission File No. 1-7806, and incorporated herein by reference.) 10.16 Fourth Supplemental Lease Agreement dated July 1, 1983 between the Authority and Registrant. (Filed as Exhibit 28.23 to Registrant's FY93 Second Quarter Report on Form 10-Q, Commission File No. 1-7806, and incorporated herein by reference.) 10.17 Fifth Supplemental Lease Agreement dated February 1, 1984 between the Authority and Registrant. (Filed as Exhibit 28.24 to Registrant's FY93 Second Quarter Report on Form 10-Q, Commission File No. 1-7806, and incorporated herein by reference.) 10.18 Sixth Supplemental Lease Agreement dated April 1, 1984 between the Authority and Registrant. (Filed as Exhibit 28.25 to Registrant's FY93 Second Quarter Report on Form 10-Q, Commission File No. 1-7806, and incorporated herein by reference.)
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EXHIBIT NUMBER DESCRIPTION OF EXHIBIT ------ ---------------------- 10.19 Seventh Supplemental Lease Agreement dated June 1, 1984 between the Authority and the Registrant. (Filed as Exhibit 28.26 to Registrant's FY93 Second Quarter Report on Form 10-Q, Commission File No. 1-7806, and incorporated herein by reference.) 10.20 Eighth Supplemental Lease Agreement dated July 1, 1988 between the Authority and Registrant. (Filed as Exhibit 28.27 to Registrant's FY93 Second Quarter Report on Form 10-Q, Commission File No. 1-7806, and incorporated herein by reference.) 10.21 Ninth Supplemental Lease Agreement dated July 12, 1989 between the Authority and Registrant. (Filed as Exhibit 28.28 to Registrant's FY93 Second Quarter Report on Form 10-Q, Commission File No. 1-7806, and incorporated herein by reference.) 10.22 Tenth Supplemental Lease Agreement dated October 1, 1991 between the Authority and Registrant. (Filed as Exhibit 28.29 to Registrant's FY93 Second Quarter Report on Form 10-Q, Commission File No. 1-7806, and incorporated herein by reference.) 10.23 Eleventh Supplemental Lease Agreement dated as of July 1, 1994 between the Authority and Registrant. (Filed as Exhibit 10.21 to Registrant's FY96 Annual Report on Form 10-K, Commision File No. 1-7806, and incorporated herein by reference.) 10.24 Twelfth Supplemental Lease Agreement dated July 1, 1993 between the Authority and Registrant. (Filed as Exhibit 10.23 to Registrant's FY93 Annual Report on Form 10-K, Commission File No. 1-7806, and incorporated herein by reference.) 10.25 Thirteenth Supplemental Lease Agreement dated as of June 1, 1995 between the Authority and Registrant. (Filed as Exhibit 10.23 to Registrant's FY96 Annual Report on Form 10-K, Commission File No. 1-7806, and incorporated herein by reference.) 10.26 Fourteenth Supplemental Lease Agreement dated as of January 1, 1996 between the Authority and Registrant. (Filed as Exhibit 10.24 to Registrant's FY96 Annual Report on Form 10-K, Commission File No. 1-7806, and incorporated herein by reference.) 10.27 Fifteenth Supplemental Lease Agreement dated as of January 1, 1997 between the Authority and Registrant. (Filed as Exhibit 10.1 to Registrant's FY97 Third Quarter Report on Form 10-Q, Commission File No. 1-7806, and incorporated herein by reference.) 10.28 Sixteenth Supplemental Lease Agreement dated as of April 1, 1997 between the Authority and Registrant. 10.29 Seventeenth Supplemental Lease Agreement dated as of May 1, 1997 between the Authority and Registrant. 10.30 Special Facility Lease Agreement dated as of August 1, 1979 between the Authority and Registrant. (Refiled as Exhibit 10.15 to Registrant's FY90 Annual Report on Form 10-K, Commission File No. 1-7806, and incorporated herein by reference.)
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EXHIBIT NUMBER DESCRIPTION OF EXHIBIT ------ ---------------------- 10.31 First Special Facility Supplemental Lease Agreement dated as of May 1, 1982 between the Authority and Registrant. (Filed as Exhibit 10.25 to Registrant's FY93 Annual Report on Form 10-K, Commission File No. 1-7806, and incorporated herein by reference.) 10.32 Second Special Facility Supplemental Lease Agreement dated as of November 1, 1982 between the Authority and Registrant. (Filed as Exhibit 10.26 to Registrant's FY93 Annual Report on Form 10-K, Commission File No. 1-7806, and incorporated herein by reference.) 10.33 Third Special Facility Supplemental Lease Agreement dated as of December 1, 1984 between the Authority and Registrant. (Refiled as Exhibit 10.25 to Registrant's FY95 Annual Report on Form 10-K, Commission File No. 1-7806, and incorporated herein by reference.) 10.34 Fourth Special Facility Supplemental Lease Agreement dated as of July 1, 1992 between the Authority and Registrant. (Filed as Exhibit 10.20 to Registrant's FY92 Annual Report on Form 10-K, Commission File No. 1-7806, and incorporated herein by reference.) 10.35 Fifth Special Facility Supplemental Lease Agreement dated as of July 1, 1997 between the Authority and Registrant. 10.36 Special Facility Lease Agreement dated as of July 1, 1993 between the Authority and Registrant. (Filed as Exhibit 10.29 to Registrant's FY93 Annual Report on Form 10-K, Commission File No. 1-7806, and incorporated herein by reference.) 10.37 Special Facility Ground Lease Agreement dated as of July 1, 1993 between the Authority and Registrant. (Filed as Exhibit 10.30 to Registrant's FY93 Annual Report on Form 10-K, Commission File No. 1-7806, and incorporated herein by reference.) 10.38 Indenture dated as of July 1, 1993 between the Authority and BONY, as Trustee, relating to 6.20% Special Facility Revenue Bonds, Series 1993, due July 1, 2014. (Filed as Exhibit 10.31 to Registrant's FY93 Annual Report on Form 10-K, Commission File No. 1-7806, and incorporated herein by reference.) 10.39 Guaranty dated as of July 1, 1993 from Registrant to BONY relating to 6.20% Special Facility Revenue Bonds, Series 1993. (Filed as Exhibit 10.32 to Registrant's FY93 Annual Report on Form 10-K, Commission File No. 1-7806, and incorporated herein by reference.) 10.40 Lease Agreement dated as of May 7, 1985 between the City of Oakland and Registrant. (Filed as Exhibit 28.5 to Registrant's FY93 Second Quarter Report on Form 10-Q, Commission File No. 1-7806, and incorporated herein by reference.) 10.41 Affirmative Action Agreement dated as of May 14, 1985, to Lease Agreement dated May 7, 1985, between the City of Oakland and Registrant. (Filed as Exhibit 28.6 to Registrant's FY93 Second Quarter Report on Form 10-Q, Commission File No. 1-7806, and incorporated herein by reference.)
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EXHIBIT NUMBER DESCRIPTION OF EXHIBIT ------ ---------------------- 10.42 First Supplemental Agreement dated August 5, 1986, to Lease Agreement dated May 7, 1985, between the City of Oakland and Registrant. (Filed as Exhibit 28.7 to Registrant's FY93 Second Quarter Report on Form 10-Q, Commission File No. 1-7806, and incorporated herein by reference.) 10.43 Second Supplemental Agreement dated February 17, 1987, to Lease Agreement dated May 7, 1985, between the City of Oakland and Registrant. (Filed as Exhibit 28.8 to Registrant's FY93 Second Quarter Report on Form 10-Q, Commission File No. 1-7806, and incorporated herein by reference.) 10.44 Third Supplemental Agreement dated February 1989, to Lease Agreement dated May 7, 1985, between the City of Oakland and Registrant. (Filed as Exhibit 28.9 to Registrant's FY93 Second Quarter Report on Form 10-Q, Commission File No. 1-7806, and incorporated herein by reference.) 10.45 Amendment dated August 1, 1989, to Lease Agreement dated May 7, 1985, between the City of Oakland and Registrant. (Refiled as Exhibit 10.40 to Registrant's FY95 Annual Report on Form 10-K, Commission File No. 1-7806, and incorporated herein by reference.) 10.46 Lease and First Right of Refusal Agreement dated July 22, 1988 between the State of Alaska, Department of Transportation and Public Facilities and Registrant. (Filed as Exhibit 28.10 to Registrant's FY93 Second Quarter Report on Form 10-Q, Commission File No. 1-7806, and incorporated herein by reference.) 10.47 Development Agreement dated July 22, 1988, to Lease and First Right of Refusal Agreement dated July 22, 1988, between the State of Alaska, Department of Transportation and Public Facilities and Registrant. (Filed as Exhibit 28.11 to Registrant's FY93 Second Quarter Report on Form 10-Q, Commission File No. 1-7806, and incorporated herein by reference.) 10.48 Supplement No. 1 dated May 19, 1989, to Development Agreement dated July 22, 1988, between the State of Alaska, Department of Transportation and Public Facilities and Registrant. (Filed as Exhibit 28.12 to Registrant's FY93 Second Quarter Report on Form 10-Q, Commission File No. 1-7806, and incorporated herein by reference.) 10.49 Supplement No. 1 dated July 19, 1989, to Lease and First Right of Refusal Agreement dated July 22, 1988, between the State of Alaska, Department of Transportation and Public Facilities and Registrant. (Filed as Exhibit 28.13 to Registrant's FY93 Second Quarter Report on Form 10-Q, Commission File No. 1-7806, and incorporated herein by reference.) 10.50 Right-of-Way Agreement dated September 19, 1989, to Lease and First Right of Refusal Agreement dated July 22, 1988, between the State of Alaska, Department of Transportation and Public Facilities and Registrant. (Filed as Exhibit 28.14 to Registrant's FY93 Second Quarter Report on Form 10-Q, Commission File No. 1-7806, and incorporated herein by reference.)
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EXHIBIT NUMBER DESCRIPTION OF EXHIBIT ------ ---------------------- 10.51 Supplement No. 2 dated April 23, 1991, to Lease and First Right of Refusal Agreement dated July 22, 1988, between the State of Alaska, Department of Transportation and Public Facilities and the Registrant. (Filed as Exhibit 28.15 to Registrant's FY93 Second Quarter Report on Form 10-Q, Commission File No. 1-7806, and incorporated herein by reference.) 10.52 Lease Agreement dated October 1, 1983 between The Port Authority of New York and New Jersey and Registrant. (Filed as Exhibit 28.16 to Registrant's FY93 Second Quarter Report on Form 10-Q, Commission File No. 1-7806, and incorporated herein by reference.) 10.53 Supplement No. 1, dated October 1, 1983 to Lease Agreement dated October 1, 1983 between The Port Authority of New York and New Jersey and Registrant. (Filed as Exhibit 28.17 to Registrant's FY93 Second Quarter Report on Form 10-Q, Commission File No. 1-7806, and incorporated herein by reference.) 10.54 Supplement No. 2 dated September 1, 1985 to Lease Agreement dated October 1, 1983 between The Port Authority of New York and New Jersey and Registrant. (Filed as Exhibit 28.18 to Registrant's FY93 Second Quarter Report on Form 10-Q, Commission File No. 1-7806, and incorporated herein by reference.) 10.55 Supplement No. 3 dated June 1, 1992 to Lease Agreement dated October 1, 1983 between The Port Authority of New York and New Jersey and Registrant. (Filed as Exhibit 28.19 to Registrant's FY93 Second Quarter Report on Form 10-Q, Commission File No. 1-7806, and incorporated herein by reference.) 10.56 Supplement No. 4 dated March 1, 1993 to Lease Agreement dated October 1, 1983 between The Port Authority of New York and New Jersey and Registrant. (Filed as Exhibit 10.51 to Registrant's FY95 Annual Report on Form 10-K, Commission File No. 1-7806, and incorporated herein by reference.) 10.57 Supplement No. 5 dated February 1, 1994 to Lease Agreement dated October 1, 1983 between The Port Authority of New York and New Jersey and Registrant. (Filed as Exhibit 10.52 to Registrant's FY95 Annual Report on Form 10-K, Commission File No. 1-7806, and incorporated herein by reference.) 10.58 Amended and Restated Land Lease Agreement dated August 1993 between Registrant and the Indianapolis Airport Authority. (Filed as Exhibit 10.52 to Registrant's FY94 Annual Report on Form 10-K, Commission File No. 1-7806, and incorporated herein by reference.) 10.59 Indenture dated as of September 1, 1993 between the City of Indianapolis, Indiana and NBD Bank, N.A., as Trustee, relating to the City of Indianapolis Airport Facility Revenue Refunding Bonds, Series 1994, due April 1, 2017. (Filed as Exhibit 10.1 to Registrant's FY94 First Quarter Report on Form 10-Q, Commission File No. 1-7806, and incorporated herein by reference.)
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EXHIBIT NUMBER DESCRIPTION OF EXHIBIT ------ ---------------------- 10.60 Loan Agreement between the City of Indianapolis and Registrant. (Filed as Exhibit 10.2 to Registrant's FY94 First Quarter Report on Form 10-Q, Commission File No. 1-7806, and incorporated herein by reference.) 10.61 Form of Promissory Note to the City of Indianapolis. (Filed as Exhibit 10.3 to Registrant's FY94 First Quarter Report on Form 10-Q, Commission File No. 1-7806, and incorporated herein by reference.) 10.62 Indenture dated as of October 1, 1994 between Indianapolis Airport Authority and NBD Bank, N. A., as Trustee, relating to 7.10% Special Facilities Revenue Bonds, Series 1994 due January 15, 2017. (Filed as Exhibit 10.1 to Registrant's FY95 Second Quarter Report on Form 10-Q, Commission File No. 1-7806, and incorporated herein by reference.) 10.63 Guaranty dated as of October 1, 1994 from Registrant to NBD Bank, N.A. relating to 7.10% Special Facilities Revenue Bonds, Series 1994 due January 15, 2017. (Filed as Exhibit 10.2 to Registrant's FY95 Second Quarter Report on Form 10-Q, Commission File No. 1-7806, and incorporated herein by reference.) 10.64 Land and Special Facilities Lease Agreement dated as of October 1, 1994 between Registrant and the Indianapolis Airport Authority relating to 7.10% Special Facilities Revenue Bonds, Series 1994 due January 15, 2017. (Filed as Exhibit 10.3 to Registrant's FY95 Second Quarter Report on Form 10-Q, Commission File No. 1-7806, and incorporated herein by reference.) 10.65 Lease Agreement dated October 9, 1994 between the Registrant and Subic Bay Metropolitan Authority. (Filed as Exhibit 10.62 to Registrant's FY95 Annual Report on Form 10-K, Commission File No. 1-7806, and incorporated herein by reference.) 10.66 Indenture dated as of April 1, 1996 between AllianceAirport Authority, Inc. and The First National Bank of Chicago, as Trustee, relating to AllianceAirport Authority, Inc. Special Facilities Revenue Bonds, Series 1996 (Federal Express Corporation Project) due April 1, 2021. (Filed as Exhibit 10.66 to Registrant's FY96 Annual Report on Form 10-K, Commission File No. 1-7806, and incorporated herein by reference.) 10.67 Guaranty dated as of April 1, 1996 from Registrant to The First National Bank of Chicago relating to AllianceAirport Authority, Inc. Special Facilities Revenue Bonds, Series 1996 (Federal Express Corporation Project) due April 1, 2021. (Filed as Exhibit 10.67 to Registrant's FY96 Annual Report on Form 10-K, Commission File No. 1-7806, and incorporated herein by reference.) 10.68 Land and Special Facilities Lease Agreement dated as of April 1, 1996 between Registrant and AllianceAirport Authority, Inc. relating to AllianceAirport Authority, Inc. Special Facilities Revenue Bonds, Series 1996 (Federal Express Corporation Project) due April 1, 2021. (Filed as Exhibit 10.68 to Registrant's FY96 Annual Report on Form 10-K, Commission File No. 1-7806, and incorporated herein by reference.)
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EXHIBIT NUMBER DESCRIPTION OF EXHIBIT ------ ---------------------- 10.69 Assignment and Assumption Agreement dated April 10, 1996 between AllianceAirport Authority, Inc. and the City of Fort Worth, Texas relating to AllianceAirport Authority, Inc. Special Facilities Revenue Bonds, Series 1996 (Federal Express Corporation Project) due April 1, 2021. (Filed as Exhibit 10.69 to Registrant's FY96 Annual Report on Form 10-K, Commission File No. 1-7806, and incorporated herein by reference.) 10.70 1980 Stock Incentive Plan and Form of Stock Option Agreement pursuant to 1980 Stock Incentive Plan, as amended. (Filed as Exhibit 10.59 to Registrant's FY93 Annual Report on Form 10-K, Commission File No. 1-7806, and incorporated herein by reference.) 10.71 1983 Stock Incentive Plan and Form of Stock Option Agreement pursuant to 1983 Stock Incentive Plan, as amended. (Filed as an exhibit to Registrant's Registration Statement No. 2-95720 on Form S-8 and incorporated herein by reference.) 10.72 1984 Stock Incentive Plan and Form of Stock Option Agreement pursuant to 1984 Stock Incentive Plan, as amended. (Filed as an exhibit to Registrant's Registration Statement No. 2-95720 on Form S-8 and incorporated herein by reference.) 10.73 1987 Stock Incentive Plan and Form of Stock Option Agreement pursuant to 1987 Stock Incentive Plan, as amended. (Filed as an exhibit to Registrant's Registration Statement No. 33-20138 on Form S-8 and incorporated herein by reference.) 10.74 1989 Stock Incentive Plan and Form of Stock Option Agreement pursuant to 1989 Stock Incentive Plan, as amended. (Filed as Exhibit 10.26 to Registrant's FY90 Annual Report on Form 10-K, Commission File No. 1-7806, and incorporated herein by reference.) 10.75 1993 Stock Incentive Plan and Form of Stock Option Agreement pursuant to 1993 Stock Incentive Plan, as amended. (1993 Stock Incentive Plan was filed as Exhibit A to Registrant's FY93 Definitive Proxy Statement, Commission File No. 1-7806, and incorporated herein by reference, and the form of stock option agreement was filed as Exhibit 10.61 to Registrant's FY94 Annual Report on Form 10-K, Commission File No. 1-7806, and incorporated herein by reference.) 10.76 Amendment to Registrant's 1980, 1983, 1984, 1987 and 1989 Stock Incentive Plans. (Filed as Exhibit 10.27 to Registrant's FY90 Annual Report on Form 10-K, Commission File No. 1-7806, and incorporated herein by reference.) 10.77 Amendment to Registrant's 1983, 1984, 1987, 1989 and 1993 Stock Incentive Plans. (Filed as Exhibit 10.63 to Registrant's FY94 Annual Report on Form 10-K, Commission File No. 1-7806, and incorporated herein by reference.) 10.78 1995 Stock Incentive Plan and Form of Stock Option Agreement pursuant to 1995 Stock Incentive Plan. (1995 Stock Incentive Plan was filed as Exhibit A to Registrant's FY95 Definitive Proxy Statement, Commission File No. 1-7806, and incorporated herein by reference, and the form of stock option agreement was filed as Exhibit 99.2 to Registrant's Registration Statement No. 333-03443 on Form S-8, and incorporated herein by reference.)
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EXHIBIT NUMBER DESCRIPTION OF EXHIBIT ------ ---------------------- 10.79 Amendment to Registrant's 1980, 1983, 1984, 1987, 1989, 1993 and 1995 Stock Incentive Plans. 10.80 1986 Restricted Stock Plan and Form of Restricted Stock Agreement pursuant to 1986 Restricted Stock Plan. (Filed as Exhibit 10.28 to Registrant's FY90 Annual Report on Form 10-K, Commission File No. 1-7806, and incorporated herein by reference.) 10.81 1995 Restricted Stock Plan and Form of Restricted Stock Agreement pursuant to 1995 Restricted Stock Plan. (1995 Restricted Stock Plan filed as Exhibit B to Registrant's FY95 Definitive Proxy Statement, Commission File No. 1-7806, and incorporated herein by reference, and the Form of Restricted Stock Agreement was filed as Exhibit 10.80 to Registrant's FY96 Annual Report on Form 10-K, Commission File No. 1-7806, and incorporated herein by reference.) 10.82 1997 Restricted Stock Plan and Form of Restricted Stock Agreement pursuant to 1997 Restricted Stock Plan. 10.83 Registrant's Amended and Restated Retirement Parity Pension Plan. 10.84 Management Performance Bonus Plan. (Description of the performance bonus plan contained in the Definitive Proxy Statement for Registrant's 1997 Annual Meeting of Stockholders, under the heading "Report on Executive Compensation of the Compensation Committee of the Board of Directors" is incorporated herein by reference.) 10.85 Registrant's Retirement Plan for Outside Directors. 10.86 First Amendment to Registrant's Retirement Plan for Outside Directors. 10.87 Registrant's Amended and Restated Retirement Plan for Outside Directors. 10.88 Long-Term Performance Bonus Plan. (A description of each long-term performance bonus plan is contained in the Definitive Proxy Statement for Registrant's 1997 Annual Meeting of Stockholders, under the heading "Long-Term Incentive Plans Awards in Last Fiscal Year" and is incorporated herein by reference.) 10.89 Amended and Restated Credit Agreement dated May 12, 1995 among Registrant and The First National Bank of Chicago, individually and as agent, and certain lenders. (Filed as Exhibit 10.77 to Registrant's FY95 Annual Report on Form 10-K, Commission File No. 1-7806, and incorporated herein by reference.) 10.90 Purchase Agreement between AVSA and Registrant for purchase of Airbus A300 aircraft. Confidential treatment has been granted for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934. (Filed as Exhibit 10.36 to Registrant's FY91 Annual Report on Form 10-K, Commission File No. 1-7806, and incorporated herein by reference.)
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EXHIBIT NUMBER DESCRIPTION OF EXHIBIT ------ ---------------------- 10.91 Amendment Nos. 1 through 4 to Purchase Agreement dated July 3, 1991 between AVSA and the Registrant. Confidential treatment has been granted for confidential commercial and financial information contained in this exhibit pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (Filed as Exhibits 10.1 through 10.5 to Registrant's FY97 Second Quarter Report on Form 10-Q, Commission File No. 1-7806, and incorporated herein by reference.) 10.92 Sales Agreement dated April 7, 1995 between Registrant and American Airlines, Inc. for the purchase of MD11 aircraft. Confidential treatment has been granted for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934. (Filed as Exhibit 10.79 to Registrant's FY95 Annual Report on Form 10-K, Commission File No. 1-7806, and incorporated herein by reference.) 10.93 Amendment No. 1, dated September 19, 1996, to Sales Agreement dated April 7, 1995 between Registrant and American Airlines, Inc. 10.94 Modification Services Agreement dated September 16, 1996 between McDonnell Douglas Corporation and the Registrant. Confidential treatment has been granted for confidential commercial and financial information contained in this exhibit pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (Filed as Exhibit 10.6 to Registrant's FY97 Second Quarter Report on Form 10-Q, Commission File No. 1-7806, and incorporated herein by reference.) 11 Statement re Computation of Earnings Per Share. 12 Statement re Computation of Ratio of Earnings to Fixed Charges. (Filed as Exhibit 20.2 to Registrant's Current Report on Form 8-K dated June 30, 1997, Commission File No. 1-7806, and incorporated herein by reference.) 13 Registrant's Annual Report to Stockholders for the fiscal year ended May 31, 1997. 21 Subsidiaries of Registrant. 23 Consent of Independent Public Accountants. 24 Powers of Attorney. 27 Financial Data Schedule (for SEC use only)
E-13 EX-10.6 2 SIXTH SUPPLEMENTAL INDENTURE DATED 7/1/97 1 EXHIBIT 10.6 ================================================================================ SIXTH SUPPLEMENTAL INDENTURE BETWEEN MEMPHIS-SHELBY COUNTY AIRPORT AUTHORITY AND THE BANK OF NEW YORK (SUCCESSOR TO COMMERCE UNION BANK), TRUSTEE DATED AS OF JULY 1, 1997 SUPPLEMENTING INDENTURE DATED AS OF AUGUST 1, 1979 BETWEEN THE MEMPHIS-SHELBY COUNTY AIRPORT AUTHORITY AND THE TRUSTEE ================================================================================ 2 TABLE OF CONTENTS
Page ---- ARTICLE I DEFINITIONS SECTION 1.1. Definitions...................................................................................... 2 SECTION 1.2. General Terms.................................................................................... 3 ARTICLE II SERIES 1997 BONDS SECTION 2.1. Details Thereof.................................................................................. 3 SECTION 2.2. Book-Entry; Replacement Bonds.................................................................... 4 SECTION 2.3. Provisions for Redemption of Series 1997 Bonds................................................... 5 SECTION 2.4. Execution and Form of Series 1997 Bonds.......................................................... 6 SECTION 2.5. Term Bond Principal Installments for Series 1997 Bonds........................................... 8 ARTICLE III RESERVE ACCOUNT REQUIREMENT; DELIVERY OF SERIES 1997 BONDS; APPLICATION OF SERIES 1997 BOND PROCEEDS SECTION 3.1. Reserve Account Requirement...................................................................... 8 SECTION 3.2. Delivery of Series 1997 Bonds; Conditions Precedent.............................................. 8 SECTION 3.3. Application of Proceeds of Sale of the Series 1997 Bonds; Transfer of Funds..................... 8
(i) 3
Page ---- ARTICLE IV AUTHORITY; FINDINGS AND DETERMINATIONS SECTION 4.1. Authority..................................................................................... 9 SECTION 4.2. Series 1997 Bonds to Constitute Bonds......................................................... 9 SECTION 4.3. Findings and Determinations................................................................... 9 SECTION 4.4. Additional Findings and Determinations........................................................ 10 SECTION 4.5. Additional Findings as to the Initial Lease................................................... 10 ARTICLE V MISCELLANEOUS SECTION 5.1. Headings, Table of Contents................................................................... 10 SECTION 5.2. Law and Place of Enforcement.................................................................. 11 SECTION 5.3. Effective Date................................................................................ 11 SECTION 5.4. Reference to Sixth Supplemental Indenture..................................................... 11
(ii) 4 SIXTH SUPPLEMENTAL INDENTURE SIXTH SUPPLEMENTAL INDENTURE, dated as of the first day of July 1997, between MEMPHIS-SHELBY COUNTY AIRPORT AUTHORITY (the "Authority") and THE BANK OF NEW YORK, as successor to Commerce Union Bank (the "Trustee"). WHEREAS, the Authority has executed and delivered to the Trustee an Indenture dated as of August 1, 1979 (said Indenture, as originally adopted and, unless the context shall clearly indicate otherwise, as supplemented, modified or amended from time to time by any Supplemental Indenture permitted thereby, being defined in said Indenture and referred to herein as the "Indenture") to secure, as provided therein, Special Facilities Revenue Bonds (Federal Express Corporation) of the Authority (in the Indenture and herein called the "Bonds") to be issued in one or more series as provided in the Indenture; WHEREAS, pursuant to the Indenture there have been executed, authenticated and delivered six series of Bonds known as the Authority's Special Facilities Revenue Bonds, Series 1979, Series 1982A, Series 1982B, Series 1982C, Series 1984 (Federal Express Corporation) and Refunding Series 1992; and WHEREAS, the Authority has executed and delivered to the Trustee five Supplemental Indentures (collectively, the "Supplemental Indentures") dated as of March 13, 1980, May 1, 1982, November 1, 1982, December 1, 1984 and July 1, 1992 amending and supplementing the Indenture; WHEREAS, Federal Express Corporation, as lessee under the Initial Lease has, pursuant to Section 7.6 of the Initial Lease, requested that the Authority issue a series of Refunding Bonds in the aggregate principal amount of twenty million one hundred five thousand dollars ($20,105,000) in accordance with Sections 2.07 and 2.08 of the Indenture in order to refund the Authority's Special Facilities Revenue Bonds, Series 1982B (Federal Express Corporation), outstanding in the aggregate principal amount of twenty-one million seven hundred eighty thousand dollars ($21,780,000); WHEREAS, it is provided in the Indenture that without the consent or concurrence of the holder of any Bond, the Authority and the Trustee may enter into a Supplemental Indenture for the purpose of providing for the issuance of Refunding Bonds pursuant to the provisions of Article II of the Indenture; WHEREAS, the Board of Commissioners of the Authority at a meeting held on July 17, 1997 duly adopted a resolution approving, among other things, this Sixth Supplemental Indenture, and the Fifth Special Facility Supplemental Lease Agreement dated as of July 1, 1997, supplementing the Initial Lease, and authorizing the issuance, sale and delivery of a seventh series of Bonds to be known as the Memphis-Shelby County Airport Authority, Special Facilities 5 Revenue Bonds, Refunding Series 1997 (Federal Express Corporation) in the aggregate principal amount of twenty million one hundred five thousand dollars ($20,105,000) (the "Series 1997 Bonds"), which resolution has not been amended, modified or rescinded since the adoption thereof and remains in full force and effect as of the date hereof; WHEREAS, the Authority desires to provide for the issuance of the Series 1997 Bonds; and WHEREAS, all things necessary to make the Series 1997 Bonds to be issued under the Indenture, when executed by the Authority and authenticated and delivered under the Indenture, the valid special obligations of the Authority payable solely from Revenues, as defined in the Indenture, have been done and performed; NOW, THEREFORE, THIS AGREEMENT WITNESSETH: That in order to provide for the issuance of the Series 1997 Bonds and in consideration of the premises and of the purchase and acceptance of the Series 1997 Bonds by the holders thereof, the Authority covenants and agrees with the Trustee, for the equal and proportionate benefit of the respective bondholders from time to time, as follows: ARTICLE I DEFINITIONS SECTION 1.1. Definitions. Unless the context shall clearly indicate some other meaning, all words and terms used in this Sixth Supplemental Indenture (including, without limitation, in the next paragraph hereof) which are defined in the Indenture shall have the meanings given to them in the Indenture. Unless the context shall clearly indicate some other meaning, the following terms shall, for all purposes of the Indenture as originally executed and of any indentures supplemental thereto (including for all purposes this Sixth Supplemental Indenture) and for all purposes of any opinion or instrument or other document therein or herein mentioned, have the following meanings: (a) "Escrow Trustee" means The Bank of New York, Atlanta, Georgia, or any successor thereto. (b) "Fifth Supplemental Lease" means that certain Fifth Special Facility Supplemental Lease Agreement dated as of July 1, 1997, by and between and the Authority and Federal Express Corporation, a Delaware corporation, supplementing the Special Facility Lease Agreement dated as of August 1, 1979, by and between the Authority and Federal Express - 2 - 6 Corporation (herein and in the Indenture referred to as the "Initial Lease"), as the same has been and may be duly supplemented, modified or amended from time to time. (c) "1997 Refunding Trust Agreement" means the refunding trust agreement between the Authority and the Escrow Trustee, dated as of July 1, 1997. (d) "Refunded Bonds" means the outstanding twenty-one million seven hundred eighty thousand dollars ($21,780,000) principal amount of the Authority's Special Facilities Revenue Bonds, Series 1982B (Federal Express Corporation). (e) "Sixth Supplemental Indenture" means this sixth supplemental indenture. (f) "Series 1997 Bonds" means the bonds of the series authorized in Section 2.1 hereof in the aggregate principal amount of twenty million one hundred five thousand dollars ($20,105,000) and designated Memphis-Shelby County Airport Authority, Special Facilities Revenue Bonds, Refunding Series 1997 (Federal Express Corporation), with such definition to be equally applicable to the singular and plural form of such term. SECTION 1.2. General Terms. Unless or except as the context shall indicate otherwise or may otherwise require, in this Sixth Supplemental Indenture: (i) all references to a particular section or subdivision of the Indenture or of the Supplemental Indentures or this Sixth Supplemental Indenture, as the case may be, are to the corresponding section or subdivision of the Indenture as originally executed or the respective Supplemental Indenture or this Sixth Supplemental Indenture only, as the case may be; (ii) the terms "herein", "hereunder", "hereby", "hereto", "hereof", and any similar terms, refer to this Sixth Supplemental Indenture only, and as to this Sixth Supplemental Indenture as a whole and not to any particular section or subdivision hereof; (iii) the terms "therein", "thereunder", "thereby", "thereto", "thereof", and any similar terms, refer to the Indenture only, and to the Indenture as a whole and not to any particular section or subdivision thereof; and (iv) the term "heretofore" means before the time of effectiveness of this Sixth Supplemental Indenture and the term "hereafter" means after the time of such effectiveness. ARTICLE II SERIES 1997 BONDS SECTION 2.1. Details Thereof. For the purpose of providing funds to refund the Refunded Bonds there are hereby authorized to be issued and shall be issued under the Indenture and secured thereby a series of Bonds in the aggregate principal amount of twenty million one hundred five thousand dollars ($20,105,000), to be entitled and designated "Memphis-Shelby County Airport Authority, Special Facilities Revenue Bonds, Refunding Series 1997 (Federal Express Corporation)" (herein defined as the "Series 1997 Bonds"). The Series 1997 Bonds shall be issued in fully registered form; shall be dated as of July 15, 1997; shall be in the denomination of $5,000 each or any integral multiple thereof; and shall be numbered or lettered, or both, as - 3 - 7 shall be determined by the Trustee, which numbers or letters shall have the letter "R" prefixed thereto. The Series 1997 Bonds shall bear interest at the rate of five and thirty-five hundredths per centum (5.35%) per annum, payable in accordance with Section 4.01 of the Indenture, on March 1, 1998 and semi-annually on the first day of each September and March thereafter. The Series 1997 Bonds shall mature and become payable on September 1, 2012. Principal of and premium, if any, on the Series 1997 Bonds shall be payable at maturity or upon earlier redemption upon surrender thereof at the principal office of the Trustee. The Trustee is hereby appointed as Paying Agent and Registrar for the Series 1997 Bonds. Interest on the Series 1997 Bonds shall be payable by check mailed to the holders thereof at their addresses as they appear, on the 15th day of the month preceding the respective interest payment date, in the books of registry kept pursuant to Section 6.06 of the Indenture by the Trustee as Paying Agent for the Series 1997 Bonds, provided that while the Series 1997 Bonds are in book-entry form payment shall be made by wire transfer as provided in Section 2.2 hereof. SECTION 2.2. Book-Entry; Replacement Bonds. The Series 1997 Bonds shall be issued only in fully registered form without coupons. One Series 1997 Bond will be issued to and registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ("DTC"), as registered owner of the Series 1997 Bonds and such Bond shall be immobilized in the custody of DTC or the Trustee. DTC will act as securities depository for the Series 1997 Bonds. Individual purchases will be made in book-entry form only, in the principal amount of $5,000 or any integral multiple thereof. Purchasers will not receive physical delivery of certificates representing their interest in the Series 1997 Bonds purchased. Principal, premium, if any, and interest payments on the Series 1997 Bonds will be made by the Trustee by wire transfer to DTC or its nominee, Cede & Co., as registered owner of the Series 1997 Bonds, which will in turn remit such payments to the DTC participants for subsequent disbursal to the beneficial owners of the Series 1997 Bonds. Transfer of principal, premium, if any, and interest payments to DTC participants will be the responsibility of DTC. Transfers of such payments to beneficial owners of the Series 1997 Bonds by DTC participants will be the responsibility of such participants and other nominees of such beneficial owners. Transfers of ownership interests in the Series 1997 Bonds will be accomplished by book entries made by DTC and, in turn, by the DTC participants who act on behalf of the indirect participants of DTC and the beneficial owners of the Series 1997 Bonds. Neither the Authority, Federal Express Corporation or the Trustee will be responsible or liable for sending transaction statements or for maintaining, supervising or reviewing records maintained by DTC, its participants or persons acting through such participants or for transmitting payments to, communicating with, notifying, or otherwise dealing with any beneficial owner of the Series 1997 Bonds. The Authority shall issue certificates (the "Replacement Bonds") directly to the beneficial owners of the Series 1997 Bonds other than DTC, or its nominee, but only in the event that: - 4 - 8 (a) DTC determines to discontinue providing its services with respect to the Series 1997 Bonds at any time by giving notice to the Authority and discharging its responsibilities; or (b) the Authority discontinues use of DTC (or substitute depository or its successor) at any time upon determination by the Authority that the use of DTC (or substitute depository or its successor) is no longer in the best interests of the Authority and the beneficial owners of the Series 1997 Bonds. Upon occurrence of the events described in either (a) or (b) above, the Authority shall attempt to locate another qualified securities depository. If the Authority fails to locate another qualified securities depository to replace DTC, the Authority shall execute and deliver Replacement Bonds in substantially the form set forth in the Indenture as supplemented by this Sixth Supplemental Indenture. Prior to the execution and delivery of Replacement Bonds, the Authority shall notify the beneficial owners of the Series 1997 Bonds by mailing an appropriate notice to DTC. Principal of and interest on the Replacement Bonds shall be payable by check or draft mailed to each owner of such Replacement Bonds at the address of such owner as it appears in the books of registry maintained on behalf of the Authority by the Trustee as Registrar. Replacement Bonds will be transferred only by presentation and surrender to the Trustee as Registrar, together with an assignment duly executed by the owner of the Replacement Bond or by his representative in form satisfactory to the Trustee as Registrar, and containing information required by the Trustee as Registrar, in order to effect such transfer. The Authority may make a charge sufficient to reimburse it for any tax, fee or other governmental charge required to be paid with respect to an exchange or transfer of a Series 1997 Bond, and may charge the person requesting such exchange or transfer a sum or sums which shall be paid as a condition precedent to the exercise of the privilege of making such exchange or transfer. SECTION 2.3. Provisions for Redemption of Series 1997 Bonds. The Series 1997 Bonds may be called for redemption in whole at any time from any source of moneys at a redemption price equal to the principal amount redeemed, together with accrued interest on such principal amount to the date fixed for redemption: (i) if the Special Facility is destroyed in whole or is damaged by fire or other casualty to the extent that (A) such damage is not capable, in the reasonable estimation of the lessee under the Lease, of being repaired within 180 days from the date on which such fire or other casualty occurs or (B) the cost of such repair is reasonably estimated by such lessee to be equal to or greater than one-half of the principal amount of the Bonds Outstanding on the date on which such fire or other casualty occurs, or (ii) in the event of the taking of the whole or substantially the whole of the Special Facility as a result, or in anticipation, of the exercise of the right of condemnation or eminent domain or the taking of less than the whole or less than substantially the whole of the Special Facility as a result, or in anticipation, of the exercise of the right of condemnation or eminent domain if in either event, (A) -5- 9 the remaining portion of the Special Facility is not capable in such lessee's reasonable estimation of being reconstructed and reequipped so that the same will constitute a complete and functional unit suitable for the purposes for which it is intended within 180 days from the date upon which such taking occurs or (B) the cost of such reconstruction and reequipping is reasonably estimated by such lessee to be equal to or greater than one-half of the principal amount of the Bonds Outstanding on the date on which such taking occurs. The Series 1997 Bonds shall also be subject to redemption and shall be redeemed at any time in whole on the next practicable interest payment date at a redemption price equal to the principal amount redeemed plus accrued interest thereon to the date fixed for redemption, upon (i) a judgment or order of a court of competent jurisdiction which is final (either because the time for appeal thereof has expired or because the judgment or order is issued by the court having final appellate jurisdiction over the matter and is not subject to collateral attack), or (ii) determination of the Internal Revenue Service which is final (because the tax has been paid pursuant thereto and the time for filing a claim for refund for such tax has expired) to the effect that the interest paid or payable on any Series 1997 Bond in the case of the issuance of such judgment, order or determination with respect to Series 1997 Bonds to other than a substantial user of the Special Facility or a related person is or was includable in the gross income of the holder thereof for federal income tax purposes as a result of a failure by the lessee to observe or perform by it under the Lease any covenant or agreement to be observed or performed by it under the Lease or as a result of facts within control of the lessee which are contradictory to any representation or warranty made by the lessee under the Lease. In the event of the redemption of Series 1997 Bonds: (i) if less than all of the Series 1997 Bonds are to be redeemed, the Series 1997 Bonds of such maturity to be redeemed shall be selected as provided in Section 2.09 of the Indenture, and (ii) notice of such redemption shall be given, and such redemption shall have the effect as is provided in Section 2.09. SECTION 2.4. Execution and Form of Series 1997 Bonds. The Series 1997 Bonds shall be executed, sealed and authenticated as is provided in Section 10.02 of the Indenture, provided, however, that signatures of both the President and Secretary of the Authority may be facsimile signatures. The Series 1997 Bonds, the form of authentication to appear thereon and the form of assignment thereof, shall be in substantially the forms set forth in Section 10.01 of the Indenture, with the following variations and omissions from and insertions in said forms as set forth in that section: (1) Such necessary or appropriate variations and omissions from and insertions in the form of fully registered bond set forth in Section 10.01 of the Indenture shall be made as are incidental to the Series 1997 Bonds, their series designation, date, numbers, denominations, aggregate principal amount, maturities, interest rate or rates, first interest payment date and redemption provisions. -6- 10 (2) The second paragraph of the form of the fully registered Bond as set forth in Section 10.01 of the Indenture shall be changed to read as follows: "This Bond is one of a series of Bonds of the Authority aggregating twenty million one hundred five thousand dollars ($20,105,000) in principal amount. This Bond and the series of Bonds of which it is one are authorized to be issued and are issued under and in full compliance with the Constitution and statutes of the State of Tennessee, including particularly the Metropolitan Airport Authority Act, as amended, and the Local Government Public Obligations Act of 1986, as amended, and under and pursuant to the Indenture dated as of August 1, 1979, as amended and supplemented, and a Sixth Supplemental Indenture dated as of July 1, 1997, each between the Authority and The Bank of New York, New York, New York, as successor to Commerce Union Bank, in Nashville, Tennessee, Trustee (herein the "Trustee") (the Indenture as amended and supplemented by the Sixth Supplemental Indenture and by all other indentures supplemental to the Indenture entered into prior to the Sixth Supplemental Indenture being hereinafter called the "Indenture") and resolutions duly adopted by the Board of Commissioners of the Authority." (3) The following two sentences shall be added at the end of the third paragraph of the form of the fully registered Bond as set forth in Section 10.01 of the Indenture: "The Indenture has been amended by the Second Supplemental Indenture dated as of May 1, 1982 between the Authority and the Trustee with respect to the definition and the amount of the Reserve Account Requirement and the application of the moneys on deposit in the Bond Fund created under the Indenture to the credit of the Reserve Account therein, the definition of Leased Equipment, and the issuance of bonds, notes, certificates, warrants or other evidences of indebtedness for any purpose relating to the Special Facility hereinafter mentioned payable from the revenues derived by the Authority from said Special Facility subject and subordinate to the deposits and credits to be made to said Bond Fund. Such amendments will become effective on the earlier of the time when the Memphis-Shelby County Airport Authority Special Facilities Revenue Bonds, Series 1979 (Federal Express Corporation) heretofore issued under and pursuant to the Indenture are no longer Outstanding under the Indenture or the time when the holders of the requisite Outstanding principal amount of the aforesaid Series 1979 Bonds shall have consented in accordance with the provisions of the Indenture to such amendments. From and after the effective date of such amendments, no moneys shall be required to be held in the Bond Fund to the credit of the Reserve Account therein for the Bonds of the series of which this Bond is one." -7- 11 (4) The words ", as amended and supplemented," shall be inserted after the date "August 1, 1979" in the first and third sentences of the fourth paragraph of the form of the fully registered bond as set forth in Section 10.01 of the Indenture. (5) The words "Series 1979 Bond" appearing in the first sentence of the fifth paragraph of the form of the fully registered Bond as set forth in Section 10.01 of the Indenture, shall be changed to read: "Bond of the series of which this Bond is one". (6) The second and third sentences of the fifth paragraph of the form of the fully registered Bond as set forth in Section 10.01 of the Indenture shall be deleted. SECTION 2.5. Term Bond Principal Installments for Series 1997 Bonds. In order to provide for the retirement of Series 1997 Bonds (which Bonds are in the form customarily known as "term bonds") the Authority shall cause to be deposited in the Bond Fund from the Revenues, on or before September 1, 2012, the amount sufficient to retire the principal amount of such Bonds. ARTICLE III RESERVE ACCOUNT REQUIREMENT; DELIVERY OF SERIES 1997 BONDS; APPLICATION OF SERIES 1997 BOND PROCEEDS SECTION 3.1. Reserve Account Requirement. Since the amendments to the Indenture set forth in Sections 5.1 and 5.2 of the Second Supplemental Indenture are now effective, the Reserve Account Requirement with respect to the Series 1997 Bonds is hereby determined to be zero. SECTION 3.2. Delivery of Series 1997 Bonds; Conditions Precedent. The Series 1997 Bonds shall be executed and deposited with the Trustee for authentication, but before the Trustee shall deliver the Series 1997 Bonds there shall be filed with the Trustee the following: (1) a certified copy of this Sixth Supplemental Indenture; and (2) an Opinion of Counsel as required by subparagraph 3, clause (iv), of Section 2.08 of the Indenture. When the documents mentioned in clauses (1) and (2) of this Section 3.2 shall have been filed with the Trustee, and when the Series 1997 Bonds shall have been executed and authenticated as required by the Indenture, the Trustee shall deliver the Series 1997 Bonds at one time to or upon the order of the purchasers thereof, but only upon the payment to the Trustee of the purchase price of the Series 1997 Bonds. -8- 12 SECTION 3.3. Application of Proceeds of Sale of the Series 1997 Bonds; Transfer of Funds. The Series 1997 Bonds shall be sold to the initial purchasers thereof on the terms and conditions set forth in the resolution of the Board of Commissioners of the Authority authorizing the issuance, sale and delivery of the Series 1997 Bonds. The proceeds of the sale of the Series 1997 Bonds (exclusive of accrued interest received on the Series 1997 Bonds from their date to the date of delivery of and payment for the Series 1997 Bonds and exclusive of any proceeds of the Series 1997 Bonds to be applied to the costs of issuance of the Series 1997 Bonds) shall be deposited in the Authority's Special Facilities Revenue Bonds, Refunding Series of 1997 (Federal Express Corporation), Refunding Trust Fund (the "Trust Fund"), created by the 1997 Refunding Trust Agreement and held by the Escrow Trustee. There shall also be deposited in the Trust Fund from moneys held in the Reserve Account in the Bond Fund an amount, sufficient, together with proceeds of the Series 1997 Bonds and investment earnings on such proceeds, to pay principal of and redemption premium on the Refunded Bonds on September 1, 1997 and interest on the Refunded Bonds due on September 1, 1997. Such proceeds and other moneys shall be invested as provided in the 1997 Refunding Trust Agreement in direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by the United States of America, maturing at such times as will insure the availability of sufficient moneys to pay the principal of, premium on, and interest on, the Refunded Bonds as the same becomes due. Accrued interest received on the Series 1997 Bonds from their date to the date of delivery of and payment for the Series 1997 Bonds shall be deposited into the Bond Fund to be applied to the payment of interest on the Series 1997 Bonds on March 1, 1998. ARTICLE IV AUTHORITY; FINDINGS AND DETERMINATIONS SECTION 4.1. Authority. This Sixth Supplemental Indenture: (i) supplements and amends the Indenture; (ii) is hereby found, determined and declared to constitute and to be a "Supplemental Indenture" within the meaning of the quoted words as defined in and used in the Indenture; and (iii) has been authorized pursuant to and under the authority of the Indenture. SECTION 4.2. Series 1997 Bonds to Constitute Bonds. The Series 1997 Bonds shall constitute and be "Bonds" as defined and used in the Indenture. The Series 1997 Bonds shall: (i) be issued under Sections 2.07 and 2.08 of the Indenture; (ii) shall be entitled to the benefits, security and protection of the Indenture, equally and ratably with one another and with any other Bonds heretofore or hereafter issued thereunder; (iii) shall be payable as provided in the Indenture solely from the Revenues and other moneys specified in the Indenture on a parity with one another and with all Bonds heretofore or hereafter issued under the Indenture; and (iv) shall be equally and ratably secured under the Indenture with one another and with all Bonds heretofore or hereafter issued thereunder, without priority by reason of series, number, date of adoption of - 9 - 13 the Supplemental Indenture providing for the issuance thereof, date of Bonds, date of sale, date of execution, date of authentication, date of issuance, date of delivery, or otherwise, by the liens, pledges, charges and assignments created by the Indenture. SECTION 4.3. Findings and Determinations. The Authority hereby finds and determines the following: (1) the Series 1997 Bonds shall be secured by and payable solely from the rentals for that Special Facility from which the Refunded Bonds were payable; (2) issuance of the Series 1997 Bonds will not decrease the rental, if any, for the Special Facility payable pursuant to subparagraph 3 of the first paragraph of Section 10.1 of Resolution No. 88-3227 adopted January 29, 1988 by the Board of Commissioners of the Authority; (3) the Special Facility Lease for the Special Facility during the life of the Series 1997 Bonds shall comply with subparagraphs 2, 3 and 4 of the first paragraph of Section 10.1 of Resolution No. 88-3227; (4) the Series 1997 Bonds shall mature within the useful life of the Special Facility (estimated by the Authority as 18.14 years) and within the term of the Lease as amended and supplemented, including the Fifth Supplemental Lease entered into in connection with the issuance of the Series 1997 Bonds; and (5) the provisions of paragraph (A) and (B) of Section 10.1 of Resolution No. 88-3227 shall be complied with with respect to the Series 1997 Bonds. SECTION 4.4. Additional Findings and Determinations. The Authority further finds and determines: (i) the Indenture has not been amended or supplemented since the execution and delivery thereof other than by the Supplemental Indentures; (ii) there does not exist an Event of Default as defined in Section 9.01 of the Indenture, nor does there exist any condition which, after the passage of time, would constitute such an "Event of Default"; and (iii) at the time of issuance of the Series 1997 Bonds all payments of principal of and premium, if any, and interest on any Bonds that have become due have been paid and no deficiencies exist in the Bond Fund. SECTION 4.5. Additional Findings as to the Initial Lease. The Authority further finds and determines: (i) the Initial Lease and the Guaranty dated as of August 1, 1979 from Federal Express Corporation to the Trustee have not terminated and are each in full force and effect; (ii) the Initial Lease has been amended in such manner that the current term thereof shall be for a period extending at least to the final maturity date of all Bonds to be Outstanding upon the issuance of the Series 1997 Bonds; and (iii) the Initial Lease and the supplemental leases thereto contain provisions including in the rentals payable under subparagraphs (b) and (c) of Section 3.3 of the Lease and Section 3 of the Fifth Supplemental Lease amounts at least equal to -10- 14 the principal of and premium (if any) and interest on all Bonds to be Outstanding upon the issuance of the Series 1997 Bonds. ARTICLE V MISCELLANEOUS SECTION 5.1. Headings, Table of Contents. The headings or titles of the several articles and sections hereof, and any table of contents appended hereto or to copies hereof, shall be solely for convenience of reference and shall not affect the meaning, construction, interpretation or effect of this Sixth Supplemental Indenture. SECTION 5.2. Law and Place of Enforcement. This Sixth Supplemental Indenture shall be construed and interpreted in accordance with the laws of the State of Tennessee. All suits and actions against the Authority arising under this Sixth Supplemental Indenture shall be instituted in a court of competent jurisdiction in said State. SECTION 5.3. Effective Date. This Sixth Supplemental Indenture shall become effective upon the occurrence of the last of the following events: (i) the execution and delivery hereof pursuant to Section 8.01 of the Indenture and applicable law; and (ii) the delivery to the Trustee of a copy hereof, certified by the Authority, together with an Opinion of Counsel to the Authority to the effect required under Sections 2.08 and 8.03 of the Indenture. SECTION 5.4. Reference to Sixth Supplemental Indenture. Notwithstanding the actual date of the effectiveness hereof, for convenience and purposes of reference this Sixth Supplemental Indenture shall be dated as of July 1, 1997 and may be cited and referred to as the "Sixth Supplemental Indenture dated as of July 1, 1997 between the Memphis-Shelby County Airport Authority and The Bank of New York, Trustee." - 11 - 15 IN WITNESS WHEREOF, the undersigned President of the Authority has hereunto set his hand, the Secretary of the Authority has attested such signature and caused the official seal of the Authority to be impressed hereon, and The Bank of New York, Trustee, has caused this Sixth Supplemental Indenture to be signed in its name and on its behalf by one of its Vice Presidents. MEMPHIS-SHELBY COUNTY AIRPORT AUTHORITY By /s/ LARRY D. COX --------------------------- President (SEAL) Attest: /s/ JERRY L. MCMICHAEL - --------------------------- Secretary THE BANK OF NEW YORK, TRUSTEE By /s/ ROBERT MCINTYRE --------------------------- Vice President Approved by the Board of Commissioners of the Memphis-Shelby County Airport Authority at its meeting held on July 17, 1997. - 12 - 16 STATE OF TENNESSEE ) ) ss: COUNTY OF SHELBY ) On this 29 day of July, 1997, before me appeared Larry D. Cox, to me personally known, who, being by me duly sworn (or affirmed) did say that he is the President of Memphis-Shelby County Airport Authority, and that the seal affixed to the foregoing instrument is the corporate seal of said Authority, and that said instrument was signed and sealed on behalf of said Authority, by authority of its Board of Commissioners and he acknowledged said instrument to be the free act and deed of said Authority. /s/ MARY JO JOHNSON ------------------------------- Notary Public My Commission Expires: 9/6/99 - 13 - 17 STATE OF NEW YORK ) ) ss: COUNTY OF NEW YORK ) On this 29 day of July, 1997, before me appeared Robert McIntyre, to me personally known, who, being by me duly sworn (or affirmed) did say that he is the Vice President of The Bank of New York, and that said instrument was signed and sealed on behalf of said Bank, by authority of its Board of Directors and he acknowledged said instrument to be the free act and deed of said Bank. /s/ JAMES FOLEY ------------------------------- Notary Public My Commission Expires: August 31, 1998 - 14 - EX-10.11 3 REAFFIRMATION OF GRARANTEE DATED 7/1/97 1 EXHIBIT 10.11 REAFFIRMATION OF GUARANTY In connection with the Guaranty entered into as of August 1, 1979 (the "Guaranty") by and between Federal Express Corporation (a Delaware corporation), as Guarantor, and Commerce Union Bank, succeeded by The Bank of New York, as Trustee for the holders of Bonds (as defined in the Guaranty) issued under that certain Indenture between Memphis-Shelby County Airport Authority and the Trustee, dated as of August 1, 1979, as heretofore supplemented and amended and as amended and supplemented as of the date hereof (the "Indenture"), Federal Express Corporation does hereby affirm as of the date hereof the representations and warranties of the Guarantor made and all covenants and agreements of the Guarantor contained in the Guaranty, including, particularly, the obligations of the Guarantor relating to all Bonds (as defined in the Indenture), including the $20,105,000 Special Facilities Revenue Bonds, Refunding Series 1997 (Federal Express Corporation) to be issued under the Indenture. IN WITNESS WHEREOF, the undersigned FEDERAL EXPRESS CORPORATION has caused this Reaffirmation of Guaranty to be executed in its name and on its behalf and its corporate seal to be affixed hereto attested by a duly authorized officer as of the 29th day of July 1997. FEDERAL EXPRESS CORPORATION By: /s/ BURNETTA B. WILLIAMS ------------------------------- Name: Burnetta B. Williams Title: Assistant Treasurer and Managing Director, Corporate Finance (SEAL) ATTEST: /s/ SCOTT E. HANSEN - ------------------------------ Assistant Secretary 2 STATE OF TENNESSEE ) ) ss.: COUNTY OF SHELBY ) On this 29th day of July 1997, before me appeared Burnetta B. Williams, to me personally known, who, being by me duly sworn (or affirmed) did say that she is Assistant Treasurer and Managing Director, Corporate Finance of Federal Express Corporation, the Guarantor, and that the seal affixed to the foregoing instrument is the corporate seal of said corporation and that said instrument was signed and sealed on behalf of said corporation by authority of its Board of Directors and she acknowledged said instrument to be the free act and deed of said corporation. (SEAL) /s/ ETHELDA D. MCKEEVER ------------------------------------ Notary Public My Commission Expires: March 27, 2001 --------------- EX-10.28 4 SIXTEENTH SUPP. LEASE AGREEMENT 1 EXHIBIT 10.28 EXECUTION COPY SIXTEENTH SUPPLEMENTAL LEASE AGREEMENT BY AND BETWEEN MEMPHIS-SHELBY COUNTY AIRPORT AUTHORITY AND FEDERAL EXPRESS CORPORATION DATED AS OF APRIL 1, 1997 AMENDING THE CONSOLIDATED AND RESTATED LEASE AGREEMENT DATED AS OF AUGUST 1, 1979 BETWEEN THE MEMPHIS-SHELBY COUNTY AIRPORT AUTHORITY AND FEDERAL EXPRESS CORPORATION. 2 TABLE OF CONTENTS
SECTION PAGE - ------- ---- 1 Definitions .......................................................... 6 2 Modification to the Fifteenth Supplemental Lease Agreement ........... 7 3 Granting Leasehold ................................................... 7 4 Term; Delivery and Acceptance of Possession ......................... 8 5 Rental ............................................................... 8 6 Hazardous Substances/Waste ........................................... 8 7 Lease Agreement Still in Effect; Provisions Thereof Applicable to this Sixteenth Supplemental Lease Agreement ....................... 9 8 Descriptive Headings ................................................. 10 9 Effectiveness of this Sixteenth Supplemental Lease Agreement ......... 10 10 Execution of Counterparts ............................................ 10 11 Summaries............................................................. 10 Notary ............................................................... 12 Leased Parcel Summary ................................................ 13 Rental Summary ....................................................... 15
3 SIXTEENTH SUPPLEMENTAL LEASE AGREEMENT THIS SIXTEENTH SUPPLEMENTAL LEASE AGREEMENT, made and entered into as of the 1st of April, 1997, by and between MEMPHIS-SHELBY COUNTY AIRPORT AUTHORITY (herein sometimes referred to as "Authority"), a public and governmental body politic and corporate of the State of Tennessee, and FEDERAL EXPRESS CORPORATION (herein sometimes referred to as "Tenant"), a corporation duly organized and existing under the laws of the State of Delaware and qualified to do business in the State of Tennessee. W I T N E S S E T H: WHEREAS, Authority and Tenant on October 3, 1979 entered into a Consolidated and Restated Lease Agreement dated as of August 1, 1979; and WHEREAS, Authority and Tenant on April 7, 1981 entered into a First Supplemental Lease Agreement dated as of April 1, 1981 (the "First Supplemental Lease Agreement") so as to provide for the lease by Tenant from Authority of additional land, buildings, and equipment to be included in the Project as defined in the Lease Agreement all as set forth therein (such additional land, buildings, and equipment being defined therein and hereinafter referred to as the "1981 Federal Express Project"), all as set forth therein; and WHEREAS, the Authority and Tenant on May 6, 1982 entered into a Second Supplemental Lease Agreement dated as of January 1, 1982 (the "Second Supplemental Lease Agreement") so as to provide for the lease by Tenant from Authority of additional land to be included in this Project, all as set forth therein; and WHEREAS, Authority and Tenant on December 9, 1982 entered into a Third Supplemental Lease Agreement dated as of November 1, 1982 (the "Third Supplemental Lease Agreement") so as to release certain items consisting of buildings and leased equipment in the 1981 Federal Express Project; and WHEREAS, Authority and Tenant on September 29, 1983 entered into a Fourth Supplemental Lease Agreement dated as of July 1, 1983 (the "Fourth Supplemental Lease 3 4 Agreement") so as to provide for the lease by Tenant from Authority of additional land to be included in the Project, all as set forth therein; and WHEREAS, Authority and Tenant on April 23, 1984 entered into a Fifth Supplemental Lease Agreement dated as of February 1, 1984 (the "Fifth Supplemental Lease Agreement") so as to provide for the lease by Tenant from Authority of additional land to be included in this Project, all as set forth therein; and WHEREAS, Authority and Tenant on November 19, 1984 entered into a Sixth Supplemental Lease Agreement dated as of April 1, 1984 (the "Sixth Supplemental Lease Agreement") so as to provide for the lease by Tenant from Authority of additional land to be included in this Project, all as set forth therein; and WHEREAS, Authority and Tenant on November 19, 1984 entered into a Seventh Supplemental Lease Agreement dated as of June 1, 1984 (the "Seventh Supplemental Lease Agreement") so as to provide for the lease by Tenant from Authority of additional land to be included in this Project, all as set forth therein; and WHEREAS, Authority and Tenant on November 4, 1988 entered into a Eighth Supplemental Lease Agreement dated as of July 1, 1988, (the "Eighth Supplemental Lease Agreement") so as to provide for the lease by Tenant from Authority of additional land to be included in this Project, all as set forth therein; and WHEREAS, Authority and Tenant on July 12, 1989 entered into a Ninth Supplemental Lease Agreement dated as of June 1, 1989, (the "Ninth Supplemental Lease Agreement") so as to provide for the lease by Tenant from Authority of additional land to be included in this Project, all as set forth therein; and WHEREAS, Authority and Tenant on October 1, 1991 entered into a Tenth Supplemental Lease Agreement dated as of October 1, 1991, (the "Tenth Supplemental Lease Agreement") so as to provide for the lease by Tenant from Authority of additional land to be included in this Project, all as set forth therein; and 4 5 WHEREAS, Authority and Tenant on July 1, 1994 entered into a Eleventh Supplemental Lease Agreement dated July 1, 1994, (the "Eleventh Supplemental Lease Agreement") so as to provide for the lease by Tenant from Authority of additional land to be included in this Project, all as set forth therein; and WHEREAS, Authority and Tenant on July 1, 1993 entered into a Twelfth Supplemental Lease Agreement dated July 1, 1993, (the "Twelfth Supplemental Lease Agreement") so as to release a certain parcel of land from the 1981 Federal Express Project as described on Exhibit 1 attached thereto; and WHEREAS, Authority and Tenant on June 1, 1995 entered into a Thirteenth Supplemental Lease Agreement dated June 1, 1995, (the "Thirteenth Supplemental Lease Agreement") so as to provide for the lease by Tenant from Authority of additional land to be included in this Project and so as to release a certain parcel of land from the 1981 Federal Express Project, all as set forth therein; and WHEREAS, Authority and Tenant on December 1, 1995 entered into a Fourteenth Supplemental Lease Agreement dated January 1, 1996, (the "Fourteenth Supplemental Lease Agreement") so as to provide for the lease by Tenant from Authority of additional land to be included in this Project, all as set forth therein; and WHEREAS, Authority and Tenant on January 1, 1997 entered into a Fifteenth Supplemental Lease Agreement dated January 1, 1997, (the "Fifteenth Supplemental Lease Agreement") so as to provide for the lease by Tenant from Authority of additional land to be included in this Project, all as set forth therein; and WHEREAS, the said Consolidated and Restated Lease Agreement dated as of August 1, 1979, together with the First through the Fifteenth Supplemental Lease Agreements is herein referred to as the "Lease Agreement"; and WHEREAS, Authority and Tenant have agreed to further amend and supplement the Lease Agreement so as to modify Section 4 - Rental of the Fifteenth Supplemental Lease 5 6 Agreement and to lease to Tenant certain additional land under this Sixteenth Supplemental Lease Agreement. NOW THEREFORE, for and in consideration of the mutual promises, covenants and agreements hereinafter contained to be kept and performed by the parties hereto and upon the provisions and conditions hereinafter set forth, Authority and Tenant do hereby covenant and agree, and each for itself does hereby covenant and agree, as follows: SECTION 1. DEFINITIONS. Except as otherwise provided herein, and unless the context shall clearly require otherwise, all words and terms used in this Sixteenth Supplemental Lease Agreement which are defined in the Lease Agreement, shall, for all purposes of this Sixteenth Supplemental Lease Agreement, have the respective meanings given to them in the Lease Agreement. SECTION 2. MODIFICATION TO THE FIFTEENTH SUPPLEMENTAL LEASE AGREEMENT. Section 4, Rental, of the Fifteenth Supplemental Lease Agreement dated as of January 1, 1997 is hereby deleted in its entirety and the following substituted therefor: SECTION 4. RENTAL. In addition and supplemental to the rentals required to be paid to the Authority pursuant to Section 5 of the Lease Agreement (including all prior supplemental lease agreements), during the term of this Fifteenth Supplemental Lease Agreement, Tenant as to Parcel 21 shall pay to the Authority in advance on the first business day of each month $11,877.03 in equal installments beginning January 1, 1997, a total rental payment of $142,524.40 per year, which the parties hereto agree is based upon an aggregate of 833,476 square feet of area at an annual rental rate of ($0.1710) per square foot. SECTION 3. GRANTING OF LEASEHOLD. In addition to the lease and demise to Tenant of the land in the Lease Agreement, the Authority hereby leases and demises to Tenant, and Tenant hereby takes and hires from Authority, subject to the provisions and conditions set forth in the Lease Agreement and this Sixteenth Supplemental Lease Agreement, the additional land designated as new Lease Parcel 22A which is located on the Memphis-Shelby County Airport Authority property situated in Memphis, Shelby County, Tennessee, and being more particularly described as follows: 6 7 PARCEL 22A (CONTRACTOR PARKING LOT) BEING THE NORTHERN MOST PART OF PARCEL 22 OF THE MEMPHIS-SHELBY COUNTY AIRPORT AUTHORITY (M.S.C.A.A.) PROPERTY SITUATED IN MEMPHIS, SHELBY COUNTY, TENNESSEE AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS: Beginning at a point in the northwest line of Tchulahoma Road (106' R.O.W.) 43.61 feet south of the intersection of the south line of Knight Arnold Road (80' R.O.W.) and said northeast line; thence northeastwardly along a curve to the right having a radius of 40.00 feet an arc distance of 66.28 feet (Chord: N 16(Degree)22'21" E - 58.95 feet) to a point of tangency in the south line of Knight Arnold Road; thence N 63(Degree)50'36" E along said south line a distance of 45.13 feet to a point of curvature; thence continuing along said south line along a curve to the right having a radius of 960.00 feet an arc distance of 477.04 feet (Chord: N 78(Degree)04'45" E - 472.15 feet) to a point; thence along a curve to the right having a radius of 20.00 feet an arc distance of 32.13 feet (Chord: S 41(Degree)40'09" E - 28.78 feet) to a point of tangency in the west line of Linda Drive (50' R.O.W.); thence S 04(Degree)20'49" W along said west line a distance of 309.31 feet to a point; thence N 85(Degree)38'25" W a distance of 442.28 feet to a point in said northeast line of Tchulahoma Road; thence N 31(Degree)05'54" W along said northeast line a distance of 142.84 feet to the point of beginning and containing 140,000 square feet or 3.214 acres. SECTION 4. TERM; DELIVERY AND ACCEPTANCE OF POSSESSION. The terms of this Sixteenth Supplemental Lease Agreement shall commence at 12:01 A.M. on April 1, 1997 for the land described as Parcel 22A and shall expire at such time as the Lease Agreement shall expire, to-wit: August 31, 2012 or upon such earlier termination, extension or otherwise as provided therein. Authority shall deliver to Tenant sole and exclusive possession of that portion of the land, leased hereby as of the date commencement of the term hereof, subject however, to Authority's right-of-entry set forth in Section 21 of the Lease Agreement. SECTION 5. RENTAL. In addition and supplemental to the rentals required to be paid to the Authority pursuant to Section 5 of the Lease Agreement (including all prior supplemental lease agreements), during the term of this Sixteenth Supplemental Lease Agreement, Tenant as to Parcel 22A shall pay to the Authority in advance on the first business day of each month $1,995.00 in equal installments beginning September 1, 1997, a total rental payment of $23,940.00 per year, which the parties hereto agree is based upon an aggregate of 140,000 square feet of area at an annual rental rate of ($0.1710) per square foot. 7 8 SECTION 6. HAZARDOUS SUBSTANCES/WASTE. Tenant, at its own expense, may arrange for a Phase 1 Environmental Survey on the land described as Parcel 22A by a reputable environmental consultant to determine the existence of Hazardous Substances. In the event that Hazard Substances are uncovered during excavation for construction on Parcel 22A, and such Hazardous Substances, as defined herein, shall require special handling and disposal, then Authority shall grant to Tenant a rent credit equal to the reasonable documented costs paid by Tenant for the removal and disposal of Hazardous Substance(s) associated with Parcel 22A exclusively. The term "Hazardous Substances", as used in this Sixteenth Supplemental Lease Agreement, shall mean any hazardous or toxic substances, materials or wastes, including, but not limited to, those substances, materials, and wastes (i) listed in the United States Department of Transportation Hazardous Materials Table (49 CFR ss. 172.101) or by the Environmental Protection Agency as hazardous substances (40 CFR Part 302) and amendments thereto, (ii) designated as a "Hazardous Substance" pursuant to Section 311 of the Clean Water Act, 33 U.S.C. ss. 1251 et seq. (33 U.S.C. ss. 1321) or listed pursuant to Section 307 of the Clean Water Act (33 U.S.C. ss. 1317, (iii) defined as a "Hazardous Waste" pursuant to Section 1004 of the Resource Conservation and Recovery Act, 42 U.S.C. ss. 6901, et seq. (42 U.S.C. ss. 6903), or (iv) defined as "Hazardous Substance" pursuant to Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.ss. 9601, et seq. 42 U.S.C. ss. 9601) or any other substances, (including, without limitation, asbestos and raw materials which include hazardous constituents), the general, discharge or removal of which or the use of which is restricted, prohibited or penalized by any "Environmental Law", which term shall mean any Federal, State or local law, regulation, or ordinance relating to pollution or protection of the environment. SECTION 7. LEASE AGREEMENT STILL IN EFFECT; PROVISIONS THEREFORE APPLICABLE TO THIS SUPPLEMENTAL LEASE AGREEMENT. All of the terms, provisions, conditions, covenants and 8 9 agreements of the Lease Agreement, as supplemented, shall continue in full force and effect as supplemented hereby, and shall be applicable to each of the provisions of this Sixteenth Supplemental Lease Agreement during the term hereof with the same force and effect as though the provisions hereof were set forth in the Lease Agreement. SECTION 8. DESCRIPTIVE HEADINGS. The descriptive headings of the sections of this Sixteenth Supplemental Lease Agreement are inserted for convenience of reference only and do not constitute a part of this Sixteenth Supplemental Lease Agreement and shall not affect the meaning, construction, interpretation or effect of this Sixteenth Supplemental Lease Agreement. SECTION 9. EFFECTIVENESS OF THIS SUPPLEMENTAL LEASE AGREEMENT. This Sixteenth Supplemental Lease Agreement shall become effective at 12:01 a.m. on April 1, 1997. SECTION 10. EXECUTION OF COUNTERPARTS. This Sixteenth Supplemental Lease Agreement may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. SECTION 11. SUMMARIES. For the convenience of both parties a Leased Parcel Summary and a Rental Summary are attached to this Lease Agreement. 9 10 IN WITNESS WHEREOF, THE MEMPHIS-SHELBY COUNTY AIRPORT AUTHORITY AND FEDERAL EXPRESS CORPORATION have caused this Sixteenth Supplemental Lease Agreement to be duly executed in their respective behalfs, as of the day and year first above written. WITNESS: MEMPHIS-SHELBY COUNTY AIRPORT AUTHORITY /s/ RICHARD V. WHITE BY: /s/ LARRY D. COX - ----------------------------- -------------------------------- Title: Director of Properties TITLE: President ----------------------- ----------------------------- Approved as to Form and Legality: /s/ R. GRATTAN BROWN, JR. - --------------------------------------------- R. Grattan Brown, Jr., Attorney for Authority WITNESS: FEDERAL EXPRESS CORPORATION /s/ LEANNA JOHNSON BY: /s/ WILEY JOHNSON, JR. - ----------------------------- -------------------------------- Title: Project Coordinator TITLE: Managing Director, Real ---------------------- ----------------------------- Estate and Airport Development 10 11 (STATE OF TENNESSEE ) (COUNTY OF SHELBY ) On this 17 day of April, 1997, before me appeared LARRY D. COX, to me personally known, who, being by me duly sworn (or affirmed), did say that he is the President of the Memphis-Shelby County Airport Authority, the within named Lessor, and that he as such President, being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of the Authority by himself as such President. MY COMMISSION EXPIRES December 21, 1999 /s/ ANGELA WACHINGT - ---------------------- ----------------------------------- Notary Public (seal) STATE OF TENNESSEE ) COUNTY OF SHELBY ) On this 17 day of April, 1997, before me appeared Wiley Johnson, to me personally known, who, being by me duly sworn (or affirmed), did say that he is a Managing Director of Real Estate of Federal Express Corporation, the within named Lessee, and that he as such Managing Director, being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of the Corporation by himself as such Managing Director. MY COMMISSION EXPIRES December 7, 1998 /s/ LEANNA M. JOHNSON - ---------------------- ------------------------------------ Notary Public (seal) 11 12 FEDERAL EXPRESS LEASED PARCELS SUMMARY
PARCEL EFFECTIVE LEASE ACRES SQUARE FEET AGREEMENT DATE - ----- ----- ----------- --------- --------- BASE-LEASE Revised 9 128.469 Consolidated & 08/01/79 Restated 10 1.612 70,200 Consolidated & 08/01/79 Restated 11 1.044 45,359 Consolidated & 08/01/79 Restated PREVIOUS SUPPLEMENTS 12 2.707 117,915 First 04/01/81 Supplemental 13 6.860 298,830 Second 01/01/82 Supplemental 14 14.586 635,377 Fourth 07/01/83 Supplemental 15 12.689 552,723 Fourth 07/01/83 Supplemental Rev 16 18.281 (19.685) 796,312 Fifth 02/01/84 Supplemental Rev 17 119.616 (124.992) 5,210,477 Sixth 04/01/84 Supplemental 18 2.717 118,353 Sixth 04/01/84 Supplemental 19 41.606 1,812,352 Seventh 06/01/84 Supplemental 25 0.435 18,933 Eighth 07/01/88 Supplemental 20 11.275 491,127 Ninth 06/01/89 Supplemental 27 11.192 487,512 Tenth 10/01/91 Supplemental 27 A(West) 4.058 176,777 Eleventh 07/01/94 Supplemental 27 B(West) 5.706 248,533 Eleventh 07/01/94 Supplemental Southwest Ramp 2.350 102,366 Eleventh 07/01/94 Supplemental
12 13
PARCEL EFFECTIVE LEASE ACRES SQUARE FEET AGREEMENT DATE - ----- ----- ----------- --------- --------- 32 (removed) 22.972 1,000,681 Twelfth 07/01/93 Supplemental 33 8.998 391,942 Thirteenth 06/01/95 Supplemental 36 3.050 132,837 Thirteenth 06/01/95 Supplemental Hangar 8 (removed) 36,946,33 Thirteenth 06/01/95 Supplemental 34 9.951 433,461 Fourteenth 01/01/96 Supplemental 21 19.134 833,476 Fifteenth 01/01/97 Supplemental THIS SUPPLEMENT 22A (NORTH) 3.214 140,000 SIXTEENTH 04/01/97 SUPPLEMENTAL OPTIONS 22B (South) 3.310 144,200 Option, Expires 5/31/99 29 3.85 167,706 Option, Expires 9/30/2001 ASSIGNMENTS 23 5.923 258,008 Graber Assignment, Expires 12/31/2000 Invoice FEC Final Increase 1/1/96 24 9.964 434,030 Southwide Assignment Expires 5/14/2013 Invoice FEC Next Increase 5/15/98 26 9.532 415,213 BICO Assignment, Expires 7/31/2021 Invoice FEC Next Increase 8/01/2011 28 10.68 465,221 Equitable Life Assignment Expires 5/14/2013 Invoice FEC Next Increase 5/15/98
13 14 RENTAL - FEDERAL EXPRESS Effective September 1, 1997
Annual Category Number of Rental Rate of Space Square Feet Per Sq. Ft. Annual Rental - -------- ----------- ----------- ------------- Bldg. T-376 1,240 1.221 $ 1,514.04 Unimproved Ground 5,452,282 0.098 534,323.64 Improved Apron 2,395,802 0.122 292,287.84 Hangar Property 72,092.67 0.903 65,099.68 Hangar Office 28,000 1.465 41,020.00 International Park 9,694,700 0.171 1,657,793.70 Former IRS Facility 2,255,137.24 1,200,000.00 ------------- ------------- 19,899,253.91 $3,792,038.90
BREAKDOWN OF SPACE
Sq. Ft. Sq. Ft. ------- ------- Bldg. T-376 Parcel 4 1,240 1,240 Unimproved Ground Parcel 1 130,900 Parcel 2 50,000 Parcel 3 192,400 Parcel 4 32,540 Parcel 6 89,700 Parcel 9 1,167,337 Parcel 19 1,812,362 Parcel 20 491,127 Parcel 27A 176,777 Parcel 27B 248,533 Southwest Ramp 102,366 Parcel 33 391,942 Parcel 36 132,837 Parcel 34 433,461 ------- 5,452,282 Improved Apron Parcel 1 850,250 Parcel 2 226,900 Parcel 7 577,540 Parcel 9 253,600 Parcel 27 487,512 ------- 2,395,802
14 15
Sq. Ft. Sq. Ft. ------- ------- Hangar Property Parcel 1 44,336 Parcel 2 27,756.67 --------- 72,092.67 Hangar Office Parcel 1 22,400 Parcel 2 5,600 ----- 28,000 International Park Parcel 5 24,000 Parcel 8 247,254 Parcel 9 1,586,172 Parcel 10 70,200 Parcel 11 45,359 Parcel 12 117,915 Parcel 13 298,830 Parcel 14 556,334 Parcel 15 552,723 Parcel 16 796,312 Parcel 17 4,288,839 Parcel 18 118,353 Parcel 25 18,933 Parcel 21 833,476 Parcel 22A 140,000 ------- 9,694,700 Former IRS Facility 2,255,137.24 2,255,137.24 ------------ TOTAL: 19,899,253.91
15 EX-10.29 5 SEVENTEENTH SUPP. LEASE AGREEMENT 1 EXHIBIT 10.29 EXECUTION COPY SEVENTEENTH SUPPLEMENTAL LEASE AGREEMENT BY AND BETWEEN MEMPHIS-SHELBY COUNTY AIRPORT AUTHORITY AND FEDERAL EXPRESS CORPORATION DATED AS OF MAY 1, 1997 AMENDING THE CONSOLIDATED AND RESTATED LEASE AGREEMENT DATED AS OF AUGUST 1, 1979 BETWEEN THE MEMPHIS-SHELBY COUNTY AIRPORT AUTHORITY AND FEDERAL EXPRESS CORPORATION. 2 TABLE OF CONTENTS
SECTION PAGE - ------- ---- 1 Definitions ........................................................ 7 2 Granting Leasehold ................................................. 7 3 Term; Delivery and Acceptance of Possession ....................... 8 4 Rental ............................................................. 8 5 Hazardous Substances/Waste.......................................... 8 6 Lease Agreement Still in Effect; Provisions Thereof Applicable to this Seventeenth Supplemental Lease Agreement ................... 10 7 Descriptive Headings ............................................... 10 8 Effectiveness of this Seventeenth Supplemental Lease Agreement ..... 10 9 Execution of Counterparts .......................................... 10 10 Summaries........................................................... 11 Notary ............................................................. 12 Leased Parcel Summary .............................................. 13 Rental Summary ..................................................... 15
3 SEVENTEENTH SUPPLEMENTAL LEASE AGREEMENT THIS SEVENTEENTH SUPPLEMENTAL LEASE AGREEMENT, made and entered into as of the 1st of May, 1997, by and between MEMPHIS-SHELBY COUNTY AIRPORT AUTHORITY (herein sometimes referred to as "Authority"), a public and governmental body politic and corporate of the State of Tennessee, and FEDERAL EXPRESS CORPORATION (herein sometimes referred to as "Tenant"), a corporation duly organized and existing under the laws of the State of Delaware and qualified to do business in the State of Tennessee. W I T N E S S E T H: WHEREAS, Authority and Tenant on October 3, 1979 entered into a Consolidated and Restated Lease Agreement dated as of August 1, 1979; and WHEREAS, Authority and Tenant on April 7, 1981 entered into a First Supplemental Lease Agreement dated as of April 1, 1981 (the "First Supplemental Lease Agreement") so as to provide for the lease by Tenant from Authority of additional land, buildings, and equipment to be included in the Project as defined in the Lease Agreement all as set forth therein (such additional land, buildings, and equipment being defined therein and hereinafter referred to as the "1981 Federal Express Project"), all as set forth therein; and WHEREAS, the Authority and Tenant on May 6, 1982 entered into a Second Supplemental Lease Agreement dated as of January 1, 1982 (the "Second Supplemental Lease Agreement") so as to provide for the lease by Tenant from Authority of additional land to be included in this Project, all as set forth therein; and WHEREAS, Authority and Tenant on December 9, 1982 entered into a Third Supplemental Lease Agreement dated as of November 1, 1982 (the "Third Supplemental Lease Agreement") so 3 4 as to release certain items consisting of buildings and leased equipment in the 1981 Federal Express Project; and WHEREAS, Authority and Tenant on September 29, 1983 entered into a Fourth Supplemental Lease Agreement dated as of July 1, 1983 (the "Fourth Supplemental Lease Agreement") so as to provide for the lease by Tenant from Authority of additional land to be included in the Project, all as set forth therein; and WHEREAS, Authority and Tenant on April 23, 1984 entered into a Fifth Supplemental Lease Agreement dated as of February 1, 1984 (the "Fifth Supplemental Lease Agreement") so as to provide for the lease by Tenant from Authority of additional land to be included in this Project, all as set forth therein; and WHEREAS, Authority and Tenant on November 19, 1984 entered into a Sixth Supplemental Lease Agreement dated as of April 1, 1984 (the "Sixth Supplemental Lease Agreement") so as to provide for the lease by Tenant from Authority of additional land to be included in this Project, all as set forth therein; and WHEREAS, Authority and Tenant on November 19, 1984 entered into a Seventh Supplemental Lease Agreement dated as of June 1, 1984 (the "Seventh Supplemental Lease Agreement") so as to provide for the lease by Tenant from Authority of additional land to be included in this Project, all as set forth therein; and WHEREAS, Authority and Tenant on November 4, 1988 entered into a Eighth Supplemental Lease Agreement dated as of July 1, 1988, (the "Eighth Supplemental Lease Agreement") so as to provide for the lease by Tenant from Authority of additional land to be included in this Project, all as set forth therein; and 4 5 WHEREAS, Authority and Tenant on July 12, 1989 entered into a Ninth Supplemental Lease Agreement dated as of June 1, 1989, (the "Ninth Supplemental Lease Agreement") so as to provide for the lease by Tenant from Authority of additional land to be included in this Project, all as set forth therein; and WHEREAS, Authority and Tenant on October 1, 1991 entered into a Tenth Supplemental Lease Agreement dated as of October 1, 1991, (the "Tenth Supplemental Lease Agreement") so as to provide for the lease by Tenant from Authority of additional land to be included in this Project, all as set forth therein; and WHEREAS, Authority and Tenant on July 1, 1994 entered into a Eleventh Supplemental Lease Agreement dated July 1, 1994, (the "Eleventh Supplemental Lease Agreement") so as to provide for the lease by Tenant from Authority of additional land to be included in this Project, all as set forth therein; and WHEREAS, Authority and Tenant on July 1, 1993 entered into a Twelfth Supplemental Lease Agreement dated July 1, 1993, (the "Twelfth Supplemental Lease Agreement") so as to release a certain parcel of land from the 1981 Federal Express Project as described on Exhibit 1 attached thereto; and WHEREAS, Authority and Tenant on June 1, 1995 entered into a Thirteenth Supplemental Lease Agreement dated June 1, 1995, (the "Thirteenth Supplemental Lease Agreement") so as to provide for the lease by Tenant from Authority of additional land to be included in this Project and so as to release a certain parcel of land from the 1981 Federal Express Project, all as set forth therein; and 5 6 EXHIBIT 10.35 ================================================================================ FIFTH SPECIAL FACILITY SUPPLEMENTAL LEASE AGREEMENT BY AND BETWEEN MEMPHIS-SHELBY COUNTY AIRPORT AUTHORITY AND FEDERAL EXPRESS CORPORATION DATED AS OF JULY 1, 1997 ================================================================================ 7 TABLE OF CONTENTS
Section Page - ------- ---- Parties....................................................... 1 Recitals...................................................... 1 Habendum...................................................... 1 1 Definitions .................................................. 1 2 Term of Lease ................................................ 2 3 Rental ....................................................... 2 4 Prepayment of Certain Rentals ................................ 2 5 Series 1997 Bonds ............................................ 3 6 Special Covenants of the Lessee .............................. 3 7 Lease Still in Effect; Provisions Thereof Applicable to this Fifth Supplemental Lease............................ 3 8 Descriptive Headings ......................................... 3 9 Effectiveness of this Fifth Supplemental Lease ............... 3 10 Execution of Counterparts .................................... 3
- i - 8 FIFTH SPECIAL FACILITY SUPPLEMENTAL LEASE AGREEMENT THIS FIFTH SPECIAL FACILITY SUPPLEMENTAL LEASE AGREEMENT dated as of the first day of July 1997, by and between MEMPHIS-SHELBY COUNTY AIRPORT AUTHORITY (the "Lessor"), a public and governmental body politic and corporate of the State of Tennessee, and FEDERAL EXPRESS CORPORATION (the "Lessee"), a corporation duly organized and existing under the laws of the State of Delaware and qualified to do business in the State of Tennessee; WITNESSETH: WHEREAS, Lessor and Lessee on August 21, 1979 entered into a Special Facility Lease Agreement dated as of August 1, 1979 (the "Lease"); WHEREAS, Lessor and Lessee have amended and supplemented the Lease by First and Second Supplemental Special Facility Lease Agreements, dated as of May 1, 1982 and November 1, 1982, respectively, so as to provide for the lease by Lessee from Lessor of additional facilities and equipment to be included in the Special Facility as defined in the Lease (the "1982 Federal Express Project") and have heretofore further amended and supplemented the Lease by Third and Fourth Supplemental Special Facility Lease Agreements dated as of December 1, 1984 and July 1, 1992 (said First, Second, Third and Fourth Special Facility Supplemental Lease Agreements being referred to herein, collectively, as the "Supplemental Leases"); and WHEREAS, Lessor and Lessee have agreed to further supplement the Lease to reflect a change in rentals resulting from the refunding of the Lessor's Special Facilities Revenue Bonds, Series 1982B (Federal Express Corporation) issued to finance a part of the 1982 Federal Express Project; NOW, THEREFORE, for and in consideration of the mutual promises, covenants and agreements hereinafter contained to be kept and performed by the parties hereto and upon the provisions and conditions hereinafter set forth, Lessor and Lessee do hereby covenant and agree, and each for itself does hereby covenant and agree, as follows: SECTION 1. Definitions. Except as otherwise provided herein, and unless the context shall clearly require otherwise, all words and terms used in this Fifth Supplemental Lease which are defined in the Lease shall, for all purposes of this Fifth Supplemental Lease, have the respective meanings given to them in the Lease. Unless the context shall clearly require otherwise, the following terms shall, for all purposes of the Lease and of any agreement amendatory or supplemental thereto (including for all purposes this Fifth Supplemental Lease) have the meanings herein specified, with the following definitions to be equally applicable to both the single and plural forms of any of the terms herein defined: 9 (a) Sixth Supplemental Indenture. The term "Sixth Supplemental Indenture" shall mean the Sixth Supplemental Indenture dated as of July 1, 1997 between the Lessor and the Trustee supplementing the Indenture, as amended as provided in the Indenture. (b) Series 1997 Bonds. The term "Series 1997 Bonds" shall mean the $20,105,000 principal amount of special obligation bonds of Lessor designated Special Facilities Revenue Bonds, Refunding Series 1997 (Federal Express Corporation) and issued under Sections 2.07 and 2.08 of the Indenture and the Sixth Supplemental Indenture and in accordance with Section 7.6 of the Lease. SECTION 2. Term of Lease. The term of the Lease, including this Fifth Supplemental Lease, shall expire on, August 31, 2012 at 11:59 o'clock P.M.; provided, that the term of the Lease, including this Fifth Supplemental Lease, shall not expire so long as any Bonds remain outstanding under the terms of the Indenture except as provided in subsection A of Section 9.2 of the Lease. SECTION 3. Rental. Lessee shall pay the rentals reserved to the Lessor under Section 3.3 of the Lease at the time, place and manner set forth therein, which from and after the date specified in this Section, in addition to the amounts otherwise payable as of the date hereof under said Section 3.3, shall include (a) an amount equal to the principal of, premium (if any) and interest on, the Series 1997 Bonds as and when the same become due and payable by reason of stated maturity or redemption of such Bonds as provided in the Indenture, and (b) all other amounts payable under said Section 3.3 in connection with the Series 1997 Bonds. SECTION 4. Prepayment of Certain Rentals. (a) Lessee may prepay the rentals required hereby in accordance with subsections A, B and C of Section 3.4 of the Lease and receive the credits provided therein. (b) In the event a judgment or order of a court of competent jurisdiction which is final (either because the time for appeal thereof has expired or because the judgment or order is issued by that court having final appellate jurisdiction over the matter and is not subject to collateral attack), or a determination of the Internal Revenue Service which is final (because the tax has been paid pursuant thereto and the time for filing a claim for refund of such tax has expired) to the effect that the interest paid or payable on any Series 1997 Bond to other than a substantial user of the Special Facility or a related person is or was includable in the gross income of the holder thereof for federal income tax purposes as a result of a failure by the Lessee to observe or perform any covenant or agreement to be observed or performed by it under the Lease or as a result of facts within the control of the Lessee which are contradictory to any representation or warranty made by the Lessee under the Lease, the Lessee shall prepay on the next scheduled rent payment date the entire amount of rent due under subparagraph (b) of Section 3.3 of the Lease pursuant to Section 3 hereof to effect redemption of the then outstanding Series 1997 Bonds in accordance with the Indenture. -2- 10 SECTION 5. Series 1997 Bonds. Lessor shall apply the proceeds of the Series 1997 Bonds in accordance with the terms of the Sixth Supplemental Indenture, the form, terms and provisions of which the Lessee hereby acknowledges. SECTION 6. Special Covenants of the Lessee. The Lessee covenants and agrees with the Lessor that so long as the Series 1997 Bonds are outstanding, it will provide the Lessor with copies of all publicly available reports, notices, financial statements or other documents that the Lessee is required to provide the Securities and Exchange Commission and major lenders and shall include the Lessor on its list of major lenders of Lessee for receipt of all information made available to such lenders. SECTION 7. Lease Still in Effect; Provisions Thereof Applicable to this Fifth Supplemental Lease. All of the terms, provisions, conditions, covenants and agreements of the Lease as supplemented by the Supplemental Leases, shall continue in full force and effect as supplemented hereby, and shall be applicable to each of the provisions of this Fifth Supplemental Lease during the term hereof with the same force and effect as though the provisions hereof were set forth in the Lease. SECTION 8. Descriptive Headings. The descriptive headings of the sections of this Fifth Supplemental Lease are inserted for convenience of reference only and do not constitute a part of this Fifth Supplemental Lease and shall not affect the meaning, construction, interpretation or effect of this Fifth Supplemental Lease. SECTION 9. Effectiveness of this Fifth Supplemental Lease. This Fifth Supplemental Lease shall become effective upon delivery of and payment for the Series 1997 Bonds. SECTION 10. Execution of Counterparts. This Fifth Supplemental Lease may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. - 3 - 11 IN WITNESS WHEREOF, MEMPHIS-SHELBY COUNTY AIRPORT AUTHORITY and FEDERAL EXPRESS CORPORATION have caused this Fifth Special Facility Supplemental Lease Agreement to be duly executed as of the date first above written. MEMPHIS-SHELBY COUNTY AIRPORT AUTHORITY By /s/ LARRY D. COX ----------------------------- ATTEST: President /s/ JERRY L. MCMICHAEL - ----------------------------- Secretary FEDERAL EXPRESS CORPORATION By /s/ BURNETTA B. WILLIAMS ----------------------------- ATTEST: Name: Burnetta B. Williams Title: Assistant Treasurer and Managing Director, Corporate Finance /s/ SCOTT E. HANSON - ----------------------------- Assistant Secretary - 4 - 12 STATE OF TENNESSEE ) ) ss: COUNTY OF SHELBY ) On this 29th day of July 1997 before me appeared Larry D. Cox, to me personally known, who, being by me duly sworn (or affirmed) did say that he is the President of Memphis-Shelby County Airport Authority, and that the seal affixed to the foregoing instrument is the corporate seal of said Authority, and that said instrument was signed and sealed on behalf of said Authority, by authority of its Board of Commissioners and he acknowledged said instrument to be the free act and deed of said Authority. (SEAL) /s/ MARY JO JOHNSON ------------------------- Notary Public My Commission Expires 9/6/99 - 5 - 13 STATE OF TENNESSEE ) ) ss: COUNTY OF SHELBY ) On this 29th day of July 1997 before me appeared Burnetta B. Williams, to me personally known, who, being by me duly sworn (or affirmed) did say that she is Assistant Treasurer and Managing Director, Corporate Finance of Federal Express Corporation, and that the seal affixed to the foregoing instrument is the corporate seal of said corporation, and that said instrument was signed and sealed on behalf of said corporation by authority of its Board of Directors and she acknowledged said instrument to be the free act and deed of said corporation. (SEAL) /s/ ETHELDA D. MCKEEVER --------------------------------- Notary Public My Commission Expires: March 27, 2001 - 6 - 14 WHEREAS, Authority and Tenant on December 1, 1995 entered into a Fourteenth Supplemental Lease Agreement dated January 1, 1996, (the "Fourteenth Supplemental Lease Agreement") so as to provide for the lease by Tenant from Authority of additional land to be included in this Project, all as set forth therein; and WHEREAS, Authority and Tenant on January 1, 1997 entered into a Fifteenth Supplemental Lease Agreement dated January 1, 1997, (the "Fifteenth Supplemental Lease Agreement") so as to provide for the lease by Tenant from Authority of additional land to be included in this Project, all as set forth therein; and WHEREAS, Authority and Tenant on April 1, 1997 entered into a Sixteenth Supplemental Lease Agreement dated April 1, 1997, (the "Sixteenth Supplemental Lease Agreement") so as to provide for the lease by Tenant from Authority of additional land to be included in this Project, all as set forth therein; and WHEREAS, the said Consolidated and Restated Lease Agreement dated as of August 1, 1979, together with the First through the Sixteenth Supplemental Lease Agreements is herein referred to as the "Lease Agreement"; and WHEREAS, Authority and Tenant have agreed to further supplement the Lease Agreement so as to lease to Tenant certain additional land under this Seventeenth Supplemental Lease Agreement. NOW THEREFORE, for and in consideration of the mutual promises, covenants and agreements hereinafter contained to be kept and performed by the parties hereto and upon the provisions and conditions hereinafter set forth, Authority and Tenant do hereby covenant and agree, and each for itself does hereby covenant and agree, as follows: 6 15 SECTION 1. DEFINITIONS. Except as otherwise provided herein, and unless the context shall clearly require otherwise, all words and terms used in this Seventeenth Supplemental Lease Agreement which are defined in the Lease Agreement, shall, for all purposes of this Seventeenth Supplemental Lease Agreement, have the respective meanings given to them in the Lease Agreement. SECTION 2. GRANTING OF LEASEHOLD. In addition to the lease and demise to Tenant of the land in the Lease Agreement, the Authority hereby leases and demises to Tenant, and Tenant hereby takes and hires from Authority, subject to the provisions and conditions set forth in the Lease Agreement and this Seventeenth Supplemental Lease Agreement, the additional land designated as new Lease Parcel 37 which is located on the Memphis-Shelby County Airport Authority property situated in Memphis, Shelby County, Tennessee, and being more particularly described as follows: PARCEL 37 (WEST WIDE BODY RAMP) Being a portion of land contained entirely within the Memphis/Shelby County Airport Authority property, City of Memphis, Shelby County, State of Tennessee and being more particularly described by metes and bounds as follows: COMMENCING at a point being the intersection of the centerline of Taxiway Charlie with the centerline of Taxiway Zulu, said point being N01(Degree)56'39"E, a distance of 736.87' from the existing centerline of Runway 9/27, thence northerly continuing along said centerline of Taxiway Charlie, N01(Degree)56'39"E a distance of 122.72' to a point; thence easterly departing from said centerline of Taxiway Charlie, S88(Degree)03'21"E a distance of 129.50' to a point, said point being the southwest corner of the FedEx Parcel #33 Lease property; thence northerly along a line being 129.50' from and parallel with the said centerline of Taxiway Charlie, said line also being the west line of said FedEx Parcel #33 Lease property, N01(Degree)56'39"E a distance of 1427.49' to a point, said point being the northwest corner of the said FedEx Parcel #33 Lease property; thence easterly along the north line of the said FedEx Parcel #33 Lease property, S88(Degree)03'21"E a distance of 233.58' to a point, said point being the most northeast corner of the said FedEx Parcel #33 Lease property, said point also being the TRUE POINT OF BEGINNING; thence northerly along the northerly projection of the most northerly east line of the said FedEx Parcel #33 Lease parcel, N01(Degree)56'39"W a distance of 19.21' to a point; thence easterly S88(Degree)03'21"E a distance of 241.42' to a point, said point being 129.50' west of the centerline of Taxiway Sierra; thence southerly along a line being 129.50' west 7 16 of and parallel with said centerline of Taxiway Sierra S01(Degree)56'02"W a distance of 485.71' to a point; said point being the most easterly northeast corner of said FedEx Parcel #33 Lease property; thence westerly along the most easterly north line of the said FedEx Parcel #33 Lease property, N88(Degree)03'21"W a distance of 241.51' to a point, said point being the west end of the said most easterly north line of the said FedEx Parcel #33 Lease property; thence northerly along said most northerly east line of the said FedEx Parcel #33 Lease property, N01(Degree)56'39"E a distance of 466.00' to the POINT OF BEGINNING. Said described land containing 117,283 square feet or 2.692 acres, more or less. SECTION 3. TERM; DELIVERY AND ACCEPTANCE OF POSSESSION. The terms of this Seventeenth Supplemental Lease Agreement shall commence at 12:01 A.M. on May 1, 1997 for the land described as Parcel 37 and shall expire at such time as the Lease Agreement shall expire, to-wit: August 31, 2012 or upon such earlier termination, extension or otherwise as provided therein. Authority shall deliver to Tenant sole and exclusive possession of that portion of the land, leased hereby as of the date commencement of the term hereof, subject however, to Authority's right-of-entry set forth in Section 21 of the Lease Agreement. SECTION 4. RENTAL. In addition and supplemental to the rentals required to be paid to the Authority pursuant to Section 5 of the Lease Agreement (including all prior supplemental lease agreements), during the term of this Seventeenth Supplemental Lease Agreement, Tenant shall pay to the Authority in advance on the first business day of each month $953.90 in equal installments beginning November 1, 1997, a total rental payment of $11,446.82 per year, which the parties hereto agree is based upon an aggregate of 117,283 square feet of area at an annual rental rate of ($0.0976) per square foot. SECTION 5. HAZARDOUS SUBSTANCES/WASTE. Tenant, at its own expense, may arrange for a Phase 1 Environmental Survey on the land described as Parcel 37 by a reputable environmental consultant to determine the existence of "Hazardous Substances", as such term is defined in this Agreement. In the event that "Hazardous Substances" are discovered during 8 17 excavation for construction on Parcel 37, and such "Hazardous Substances" require special handling, removal or disposal ("Remediation"), then Tenant shall immediately notify Authority. The Tenant and Authority will confer and jointly determine the method for handling, removing or disposing of the "Hazardous Substances" within 14 days after Tenant provides the Authority, in writing, its plan for Remediation. The form of Remediation agreed to by the parties must comply with "Environmental Laws", as such term is defined below. In the event that Tenant and Authority are unable to agree on a method for handling, removing or disposing of the "Hazardous Substances" due to differing interpretations of the requirements for Remediation as set forth in the applicable "Environmental Laws", then the form of Remediation will be determined by the appropriate federal, state or local agency with relevant regulatory and enforcement jurisdiction over the subject site. Authority will grant to Tenant a rent credit equal to the reasonable documented costs paid by Tenant for the Remediation such "Hazardous Substances" associated with Parcel 37. The term "Hazardous Substances", as used in this Seventeenth Supplemental Lease Agreement, shall mean any hazardous or toxic substances, materials or wastes, including, but not limited to, those substances, materials, and wastes (i) listed in the United States Department of Transportation Hazardous Materials Table (49 CFR ss. 172.101) or by the Environmental Protection Agency as hazardous substances (40 CFR Part 302) and amendments thereto, (ii) designated as a "Hazardous Substance" pursuant to Section 311 of the Clean Water Act, 33 U.S.C. ss. 1251 et seq. (33 U.S.C. ss. 1321) or listed pursuant to Section 307 of the Clean Water Act (33 U.S.C. ss. 1317, (iii) defined as a "Hazardous Waste" pursuant to Section 1004 of the Resource Conservation and Recovery Act, 42 U.S.C. ss. 6901, et seq. (42 U.S.C. ss. 6903), or (iv) defined 9 18 as "Hazardous Substance" pursuant to Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.ss. 9601, et seq. 42 U.S.C. ss. 9601) or any other substances, (including, without limitation, asbestos and raw materials which include hazardous constituents), the general, discharge or removal of which or the use of which is restricted, prohibited or penalized by any "Environmental Law", which term shall mean any Federal, State or local law, regulation, or ordinance relating to pollution or protection of the environment. SECTION 6. LEASE AGREEMENT STILL IN EFFECT; PROVISIONS THEREFORE APPLICABLE TO THIS SUPPLEMENTAL LEASE AGREEMENT. All of the terms, provisions, conditions, covenants and agreements of the Lease Agreement, as supplemented, shall continue in full force and effect as supplemented hereby, and shall be applicable to each of the provisions of this Seventeenth Supplemental Lease Agreement during the term hereof with the same force and effect as though the provisions hereof were set forth in the Lease Agreement. SECTION 7. DESCRIPTIVE HEADINGS. The descriptive headings of the sections of this Seventeenth Supplemental Lease Agreement are inserted for convenience of reference only and do not constitute a part of this Seventeenth Supplemental Lease Agreement and shall not affect the meaning, construction, interpretation or effect of this Seventeenth Supplemental Lease Agreement. SECTION 8. EFFECTIVENESS OF THIS SUPPLEMENTAL LEASE AGREEMENT. This Seventeenth Supplemental Lease Agreement shall become effective at 12:01 a.m. on May 1, 1997. SECTION 9. EXECUTION OF COUNTERPARTS. This Seventeenth Supplemental Lease Agreement may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. 10 19 SECTION 10. SUMMARIES. For the convenience of both parties a Leased Parcel Summary and a Rental Summary are attached to this Lease Agreement. IN WITNESS WHEREOF, THE MEMPHIS-SHELBY COUNTY AIRPORT AUTHORITY AND FEDERAL EXPRESS CORPORATION have caused this Seventeenth Supplemental Lease Agreement to be duly executed in their respective behalfs, as of the day and year first above written. WITNESS: MEMPHIS-SHELBY COUNTY AIRPORT AUTHORITY /s/ RICHARD V. WHITE BY: /s/ J. MCMICHAEL - ------------------------------ ----------------------------- TITLE: DIRECTOR OF PROPERTIES TITLE: EXECUTIVE VICE PRESIDENT ---------------------- ------------------------ Approved as to Form and Legality: /s/ R. GRATTAN BROWN, JR. - --------------------------------------------- R. Grattan Brown, Jr., Attorney for Authority WITNESS: FEDERAL EXPRESS CORPORATION /s/ LEANNA JOHNSON BY: /s/ GRAHAM R. SMITH - -------------------------- ---------------------------- TITLE: Project Coordinator TITLE: VP ------------------- ------------------------- APPROVED AS TO LEGAL FORM /s/ KLC 6/12/97 ------------------- LEGAL DEPT. 11 20 (STATE OF TENNESSEE ) (COUNTY OF SHELBY ) On this 23rd day of June, 1997, before me appeared LARRY D. COX, to me personally known, who, being by me duly sworn (or affirmed), did say that he is the President of the Memphis-Shelby County Airport Authority, the within named Lessor, and that he as such President, being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of the Authority by himself as such President. MY COMMISSION EXPIRES 2-23-2000 /s/ PAT SHANFIER - ------------------------- --------------------------- Notary Public (seal) STATE OF TENNESSEE ) COUNTY OF SHELBY ) On this 16th day of June, 1997, before me appeared Graham Smith, to me personally known, who, being by me duly sworn (or affirmed), did say that he is a Vice President of Federal Express Corporation, the within named Lessee, and that he as such Vice President, being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of the Corporation by himself as such Vice President. MY COMMISSION EXPIRES /s/ LEANNA M. JOHNSON - --------------------- ---------------------------- Notary Public (seal) 12 21 FEDERAL EXPRESS LEASED PARCELS SUMMARY
PARCEL EFFECTIVE LEASE ACRES SQUARE FEET AGREEMENT DATE - ----- ----- ----------- --------- ---- BASE-LEASE Revised 9 128.469 Consolidated & 08/01/79 Restated 10 1.612 70,200 Consolidated & 08/01/79 Restated 11 1.044 45,359 Consolidated & 08/01/79 Restated PREVIOUS SUPPLEMENTS 12 2.707 117,915 First 04/01/81 Supplemental 13 6.860 298,830 Second 01/01/82 Supplemental 14 14.586 635,377 Fourth 07/01/83 Supplemental 15 12.689 552,723 Fourth 07/01/83 Supplemental Rev 16 18.281 (19.685) 796,312 Fifth 02/01/84 Supplemental Rev 17 119.616 (124.992) 5,210,477 Sixth 04/01/84 Supplemental 18 2.717 118,353 Sixth 04/01/84 Supplemental 19 41.606 1,812,352 Seventh 06/01/84 Supplemental 25 0.435 18,933 Eighth 07/01/88 Supplemental 20 11.275 491,127 Ninth 06/01/89 Supplemental 27 11.192 487,512 Tenth 10/01/91 Supplemental 27 A(West) 4.058 176,777 Eleventh 07/01/94 Supplemental 27 B(West) 5.706 248,533 Eleventh 07/01/94 Supplemental Southwest Ramp 2.350 102,366 Eleventh 07/01/94 Supplemental
13 22
PARCEL EFFECTIVE LEASE ACRES SQUARE FEET AGREEMENT DATE - ----- ----- ----------- --------- ---- 32 (removed) 22.972 1,000,681 Twelfth 07/01/93 Supplemental 33 8.998 391,942 Thirteenth 06/01/95 Supplemental 36 3.050 132,837 Thirteenth 06/01/95 Supplemental Hangar 8 (removed) 36,946,33 Thirteenth 06/01/95 Supplemental 34 9.951 433,461 Fourteenth 01/01/96 Supplemental 21 19.134 833,476 Fifteenth 01/01/97 Supplemental 22A (North) 3.214 140,000 Sixteenth 04/01/97 Supplemental THIS SUPPLEMENT 37 2.692 117,283 SEVENTEENTH 05/01/97 SUPPLEMENTAL OPTIONS 22B (South) 3.310 144,200 Option, Expires 5/31/99 29 3.85 167,706 Option, Expires 9/30/2001 ASSIGNMENTS 23 5.923 258,008 Graber Assignment, Expires 12/31/2000 Invoice FEC Final Increase 1/1/96 24 9.964 434,030 Southwide Assignment Expires 5/14/2013 Invoice FEC Next Increase 5/15/98 26 9.532 415,213 BICO Assignment, Expires 7/31/2021 Invoice FEC Next Increase 8/01/2011 28 10.68 465,221 Equitable Life Assignment Expires 5/14/2013 Invoice FEC Next Increase 5/15/98
14 23 RENTAL - FEDERAL EXPRESS Effective November 1, 1997
Annual Category Number of Rental Rate of Space Square Feet Per Sq. Ft. Annual Rental - -------- ----------- ----------- ------------- Bldg. T-376 1,240 1.221 $ 1,514.04 Unimproved Ground 5,569,565 0.098 545,817.37 Improved Apron 2,395,802 0.122 292,287.84 Hangar Property 72,092.67 0.903 65,099.68 Hangar Office 28,000 1.465 41,020.00 International Park 9,694,700 0.171 1,657,793.70 Former IRS Facility 2,255,137.24 1,200,000.00 ------------- ------------- 20,016,536.91 $3,803,532.63
BREAKDOWN OF SPACE Sq. Ft. Sq. Ft. ------ ------- Bldg. T-376 Parcel 4 1,240 ----- 1,240 Unimproved Ground Parcel 1 130,900 Parcel 2 50,000 Parcel 3 192,400 Parcel 4 32,540 Parcel 6 89,700 Parcel 9 1,167,337 Parcel 19 1,812,362 Parcel 20 491,127 Parcel 27A 176,777 Parcel 27B 248,533 Southwest Ramp 102,366 Parcel 33 391,942 Parcel 36 132,837 Parcel 34 433,461 Parcel 37 117,283 ------- 5,569,565 Improved Apron Parcel 1 850,250 Parcel 2 226,900 Parcel 7 577,540 Parcel 9 253,600 Parcel 27 487,512 ------- 2,395,802 15 24 Sq. Ft. Sq. Ft. ------ ------- Hangar Property Parcel 1 44,336 Parcel 2 27,756.67 --------- 72,092.67 Hangar Office Parcel 1 22,400 Parcel 2 5,600 ----- 28,000 International Park Parcel 5 24,000 Parcel 8 247,254 Parcel 9 1,586,172 Parcel 10 70,200 Parcel 11 45,359 Parcel 12 117,915 Parcel 13 298,830 Parcel 14 556,334 Parcel 15 552,723 Parcel 16 796,312 Parcel 17 4,288,839 Parcel 18 118,353 Parcel 25 18,933 Parcel 21 833,476 Parcel 22A 140,000 ------- 9,694,700 Former IRS Facility 2,255,137.24 2,255,137.24 ------------ TOTAL: 20,016,536.91 16 EX-10.35 6 FIFTH SPECIAL FACILITY SUPP. LEASE AGREEMENT 1 EXHIBIT 10.35 ================================================================================ FIFTH SPECIAL FACILITY SUPPLEMENTAL LEASE AGREEMENT BY AND BETWEEN MEMPHIS-SHELBY COUNTY AIRPORT AUTHORITY AND FEDERAL EXPRESS CORPORATION DATED AS OF JULY 1, 1997 ================================================================================ 2 TABLE OF CONTENTS
Section Page - ------- ---- Parties....................................................... 1 Recitals...................................................... 1 Habendum...................................................... 1 1 Definitions .................................................. 1 2 Term of Lease ................................................ 2 3 Rental ....................................................... 2 4 Prepayment of Certain Rentals ................................ 2 5 Series 1997 Bonds ............................................ 3 6 Special Covenants of the Lessee .............................. 3 7 Lease Still in Effect; Provisions Thereof Applicable to this Fifth Supplemental Lease............................ 3 8 Descriptive Headings ......................................... 3 9 Effectiveness of this Fifth Supplemental Lease ............... 3 10 Execution of Counterparts .................................... 3
- i - 3 FIFTH SPECIAL FACILITY SUPPLEMENTAL LEASE AGREEMENT THIS FIFTH SPECIAL FACILITY SUPPLEMENTAL LEASE AGREEMENT dated as of the first day of July 1997, by and between MEMPHIS-SHELBY COUNTY AIRPORT AUTHORITY (the "Lessor"), a public and governmental body politic and corporate of the State of Tennessee, and FEDERAL EXPRESS CORPORATION (the "Lessee"), a corporation duly organized and existing under the laws of the State of Delaware and qualified to do business in the State of Tennessee; WITNESSETH: WHEREAS, Lessor and Lessee on August 21, 1979 entered into a Special Facility Lease Agreement dated as of August 1, 1979 (the "Lease"); WHEREAS, Lessor and Lessee have amended and supplemented the Lease by First and Second Supplemental Special Facility Lease Agreements, dated as of May 1, 1982 and November 1, 1982, respectively, so as to provide for the lease by Lessee from Lessor of additional facilities and equipment to be included in the Special Facility as defined in the Lease (the "1982 Federal Express Project") and have heretofore further amended and supplemented the Lease by Third and Fourth Supplemental Special Facility Lease Agreements dated as of December 1, 1984 and July 1, 1992 (said First, Second, Third and Fourth Special Facility Supplemental Lease Agreements being referred to herein, collectively, as the "Supplemental Leases"); and WHEREAS, Lessor and Lessee have agreed to further supplement the Lease to reflect a change in rentals resulting from the refunding of the Lessor's Special Facilities Revenue Bonds, Series 1982B (Federal Express Corporation) issued to finance a part of the 1982 Federal Express Project; NOW, THEREFORE, for and in consideration of the mutual promises, covenants and agreements hereinafter contained to be kept and performed by the parties hereto and upon the provisions and conditions hereinafter set forth, Lessor and Lessee do hereby covenant and agree, and each for itself does hereby covenant and agree, as follows: SECTION 1. Definitions. Except as otherwise provided herein, and unless the context shall clearly require otherwise, all words and terms used in this Fifth Supplemental Lease which are defined in the Lease shall, for all purposes of this Fifth Supplemental Lease, have the respective meanings given to them in the Lease. Unless the context shall clearly require otherwise, the following terms shall, for all purposes of the Lease and of any agreement amendatory or supplemental thereto (including for all purposes this Fifth Supplemental Lease) have the meanings herein specified, with the following definitions to be equally applicable to both the single and plural forms of any of the terms herein defined: 4 (a) Sixth Supplemental Indenture. The term "Sixth Supplemental Indenture" shall mean the Sixth Supplemental Indenture dated as of July 1, 1997 between the Lessor and the Trustee supplementing the Indenture, as amended as provided in the Indenture. (b) Series 1997 Bonds. The term "Series 1997 Bonds" shall mean the $20,105,000 principal amount of special obligation bonds of Lessor designated Special Facilities Revenue Bonds, Refunding Series 1997 (Federal Express Corporation) and issued under Sections 2.07 and 2.08 of the Indenture and the Sixth Supplemental Indenture and in accordance with Section 7.6 of the Lease. SECTION 2. Term of Lease. The term of the Lease, including this Fifth Supplemental Lease, shall expire on, August 31, 2012 at 11:59 o'clock P.M.; provided, that the term of the Lease, including this Fifth Supplemental Lease, shall not expire so long as any Bonds remain outstanding under the terms of the Indenture except as provided in subsection A of Section 9.2 of the Lease. SECTION 3. Rental. Lessee shall pay the rentals reserved to the Lessor under Section 3.3 of the Lease at the time, place and manner set forth therein, which from and after the date specified in this Section, in addition to the amounts otherwise payable as of the date hereof under said Section 3.3, shall include (a) an amount equal to the principal of, premium (if any) and interest on, the Series 1997 Bonds as and when the same become due and payable by reason of stated maturity or redemption of such Bonds as provided in the Indenture, and (b) all other amounts payable under said Section 3.3 in connection with the Series 1997 Bonds. SECTION 4. Prepayment of Certain Rentals. (a) Lessee may prepay the rentals required hereby in accordance with subsections A, B and C of Section 3.4 of the Lease and receive the credits provided therein. (b) In the event a judgment or order of a court of competent jurisdiction which is final (either because the time for appeal thereof has expired or because the judgment or order is issued by that court having final appellate jurisdiction over the matter and is not subject to collateral attack), or a determination of the Internal Revenue Service which is final (because the tax has been paid pursuant thereto and the time for filing a claim for refund of such tax has expired) to the effect that the interest paid or payable on any Series 1997 Bond to other than a substantial user of the Special Facility or a related person is or was includable in the gross income of the holder thereof for federal income tax purposes as a result of a failure by the Lessee to observe or perform any covenant or agreement to be observed or performed by it under the Lease or as a result of facts within the control of the Lessee which are contradictory to any representation or warranty made by the Lessee under the Lease, the Lessee shall prepay on the next scheduled rent payment date the entire amount of rent due under subparagraph (b) of Section 3.3 of the Lease pursuant to Section 3 hereof to effect redemption of the then outstanding Series 1997 Bonds in accordance with the Indenture. -2- 5 SECTION 5. Series 1997 Bonds. Lessor shall apply the proceeds of the Series 1997 Bonds in accordance with the terms of the Sixth Supplemental Indenture, the form, terms and provisions of which the Lessee hereby acknowledges. SECTION 6. Special Covenants of the Lessee. The Lessee covenants and agrees with the Lessor that so long as the Series 1997 Bonds are outstanding, it will provide the Lessor with copies of all publicly available reports, notices, financial statements or other documents that the Lessee is required to provide the Securities and Exchange Commission and major lenders and shall include the Lessor on its list of major lenders of Lessee for receipt of all information made available to such lenders. SECTION 7. Lease Still in Effect; Provisions Thereof Applicable to this Fifth Supplemental Lease. All of the terms, provisions, conditions, covenants and agreements of the Lease as supplemented by the Supplemental Leases, shall continue in full force and effect as supplemented hereby, and shall be applicable to each of the provisions of this Fifth Supplemental Lease during the term hereof with the same force and effect as though the provisions hereof were set forth in the Lease. SECTION 8. Descriptive Headings. The descriptive headings of the sections of this Fifth Supplemental Lease are inserted for convenience of reference only and do not constitute a part of this Fifth Supplemental Lease and shall not affect the meaning, construction, interpretation or effect of this Fifth Supplemental Lease. SECTION 9. Effectiveness of this Fifth Supplemental Lease. This Fifth Supplemental Lease shall become effective upon delivery of and payment for the Series 1997 Bonds. SECTION 10. Execution of Counterparts. This Fifth Supplemental Lease may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. - 3 - 6 IN WITNESS WHEREOF, MEMPHIS-SHELBY COUNTY AIRPORT AUTHORITY and FEDERAL EXPRESS CORPORATION have caused this Fifth Special Facility Supplemental Lease Agreement to be duly executed as of the date first above written. MEMPHIS-SHELBY COUNTY AIRPORT AUTHORITY By /s/ LARRY D. COX ----------------------------- ATTEST: President /s/ JERRY L. MCMICHAEL - ----------------------------- Secretary FEDERAL EXPRESS CORPORATION By /s/ BURNETTA B. WILLIAMS ----------------------------- ATTEST: Name: Burnetta B. Williams Title: Assistant Treasurer and Managing Director, Corporate Finance /s/ SCOTT E. HANSON - ----------------------------- Assistant Secretary - 4 - 7 STATE OF TENNESSEE ) ) ss: COUNTY OF SHELBY ) On this 29th day of July 1997 before me appeared Larry D. Cox, to me personally known, who, being by me duly sworn (or affirmed) did say that he is the President of Memphis-Shelby County Airport Authority, and that the seal affixed to the foregoing instrument is the corporate seal of said Authority, and that said instrument was signed and sealed on behalf of said Authority, by authority of its Board of Commissioners and he acknowledged said instrument to be the free act and deed of said Authority. (SEAL) /s/ MARY JO JOHNSON ------------------------- Notary Public My Commission Expires 9/6/99 - 5 - 8 STATE OF TENNESSEE ) ) ss: COUNTY OF SHELBY ) On this 29th day of July 1997 before me appeared Burnetta B. Williams, to me personally known, who, being by me duly sworn (or affirmed) did say that she is Assistant Treasurer and Managing Director, Corporate Finance of Federal Express Corporation, and that the seal affixed to the foregoing instrument is the corporate seal of said corporation, and that said instrument was signed and sealed on behalf of said corporation by authority of its Board of Directors and she acknowledged said instrument to be the free act and deed of said corporation. (SEAL) /s/ ETHELDA D. MCKEEVER --------------------------------- Notary Public My Commission Expires: March 27, 2001 - 6 - EX-10.79 7 AMMENDMENT TO REGISTRANTS STOCK INSENTIVE PLANS 1 EXHIBIT 10.79 AMENDMENT TO FEDERAL EXPRESS CORPORATION 1980, 1983, 1984, 1987, 1989, 1993 AND 1995 STOCK INCENTIVE PLANS Paragraph 6(e) of each of the Federal Express Corporation (the "Company") 1980, 1983, 1984, 1987 and 1993 Stock Incentive Plans, as amended, is amended by deleting the word "twelve" in line three of each such paragraph after the words "expiration of the period of" and before the words "months from the date of such termination" and by deleting the word "twelve" in line five of each such paragraph after the words "if the optionee dies within" and before the words "months after such termination" and substituting in lieu thereof in both line three and line five of each such paragraph the word "twenty-four." Paragraph 6(e) of the Company's 1989 Stock Incentive Plan, as amended, is amended by deleting the word "twelve" in line four of such paragraph after the words "expiration of the period of" and before the words "months from the date of such termination" and by deleting the word "twelve" in line six of such paragraph after the words "if the optionee dies within" and before the words "months after such termination" and substituting in lieu thereof in both line four and line six of such paragraph the word "twenty-four." Paragraph 6(f) of each of the Company's 1980, 1983, 1984, 1987 and 1989 Stock Incentive Plans, as amended, is amended by deleting the word "twelve" in line three of each such paragraph after the words "expiration of the period of" and before the words "months from the date of such termination" and by deleting the word "twelve" in line five of each such paragraph after the words "if the optionee dies within a period of" and before the words "months after such termination" and substituting in lieu thereof in both line three and line five of each such paragraph the word "twenty-four." Paragraph 6(f) of each of the Company's 1993 Stock Incentive Plan, as amended, is amended by deleting the word "twelve" in line three of such paragraph after the words "expiration of the period of" and before the words "months from the date of such termination" and by deleting the word "twelve" in line four of such paragraph after the words "if the optionee dies within a period of" and before the words "months after such termination" and substituting in lieu thereof in both line three and line four of such paragraph the word "twenty-four." Paragraph 6(d) of the Company's 1995 Stock Incentive Plan is amended by deleting the word "twelve" in line four of the first subparagraph of such paragraph (d) after the words "expiration of the period of" and before the words "months from the date of such termination" and in line six of the first subparagraph of such paragraph (d) after the words "if the optionee dies within" and before the words "months after such termination" and substituting in lieu thereof in both line four and line six of such paragraph the word "twenty-four." Paragraph 6(d) of the Company's 1995 Stock Incentive Plan is amended by deleting the word "twelve" in line four of the second subparagraph of such paragraph (d) after the 2 words "expiration of the period of" and before the words "months from the date of such termination" and in line six of the second subparagraph of such paragraph (d) after the words "if the optionee dies within a period of" and before the words "months after such termination" and substituting in lieu thereof in both line four and line six of such paragraph the word "twenty-four." Adopted by the Compensation Committee of the Board of Directors of the Company on October 1, 1996. EX-10.82 8 1997 RESTRICTED STOCK PLAN 1 Exhibit 10.82 FEDERAL EXPRESS CORPORATION 1997 RESTRICTED STOCK PLAN 1. PURPOSE OF PLAN The Federal Express Corporation 1997 Restricted Stock Plan (the "Plan") is established by Federal Express Corporation (the "Corporation") to aid the Corporation and its subsidiaries in securing and retaining key employees of outstanding ability and to provide additional motivation to such employees to exert their best efforts on behalf of the Corporation and its subsidiaries. The Corporation expects that it will benefit from the added interest which such employees will have in the welfare of the Corporation as a result of their ownership or increased ownership of the Corporation's Common Stock. 2. STOCK SUBJECT TO THE PLAN The shares that may be awarded under the Plan (without payment by participants) shall be the common stock, $.10 par value, of the Corporation, and shall be treasury shares. The maximum number of shares of Common Stock that may be awarded hereunder (subject to any adjustments as provided below) shall not in the aggregate exceed 525,000 shares. Shares which are forfeited as a result of a participant's termination of employment shall again become available for award under the Plan. 3. ADMINISTRATION The Plan shall be administered by those members, not less than two, of the Compensation Committee of the Board of Directors, each of whom is a "disinterested person" as defined in Rule 16b-3 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended (the "Committee"). No member of the Committee shall be eligible to participate in the Plan nor shall he or she have been at any time within one year prior to his or her appointment eligible for selection as a person to whom shares might have been awarded pursuant to the Plan or to whom stock options, stock appreciation rights, or stock of the Corporation or any of its affiliates may have been granted pursuant to any other plan of the Corporation or its affiliates, except a formula plan meeting the conditions of Rule 16b-3(c)(2)(ii). The Committee shall have the sole authority to (i) award shares under the Plan; (ii) consistent with the Plan, determine the provisions of the shares to be awarded, the restrictions and other terms and conditions applicable to each award of shares under the Plan; (iii) interpret the Plan, the instruments evidencing the restrictions imposed upon stock awarded under the Plan and the shares awarded under the Plan; (iv) adopt, amend and rescind rules and regulations for the administration of the Plan; and (v) generally to administer the Plan and make all determinations in connection therewith which may be necessary or advisable, and all such actions of the Committee shall be binding upon all participants. Committee decisions and selections shall be made by a majority of its members present at the meeting at which a quorum is present, and shall be final. Any decision or selection reduced to writing and signed by all of the members of the Committee shall be as fully effective as if it had been made at a meeting duly held. 2 4. ELIGIBILITY Key employees, including officers, of the Corporation and its subsidiaries who are from time to time responsible for the management, growth and protection of the business of the Corporation and its subsidiaries shall be eligible for awards of stock under the Plan. No member of the Board of Directors of the Corporation shall be eligible to participate in the Plan unless such director is also an employee of the Corporation or a subsidiary. The employees who shall receive awards under the Plan shall be selected from time to time by the Committee in its sole discretion, from among those eligible, and the Committee shall determine, in its sole discretion, the number of shares to be awarded to each such employee selected. The Committee may, within the terms of the Plan, be selective and non-uniform with respect to its determination of the amount of awards and the eligible employees to whom such awards are made. 5. RIGHTS WITH RESPECT TO SHARES An employee to whom an award of Common Stock is made hereunder shall have, after delivery to the Corporation or its designee of a certificate or certificates for such stock to be held in escrow on such employee's behalf, all rights of ownership with respect to such stock including the right to vote the same and receive any dividends paid thereon, subject, however, to the terms, conditions and restrictions contained in the Plan and in the instrument under which the award is made. 6. INVESTMENT REPRESENTATION If the shares of Common Stock that have been awarded to an employee pursuant to the terms of the Plan are not registered under the Securities Act of 1933, as amended, pursuant to an effective registration statement, such employee, if the Committee shall deem it advisable, may be required to represent and agree in writing (i) that any shares of Common Stock acquired by such employee pursuant to the Plan will not be sold except pursuant to an effective registration statement under the Securities Act of 1933, as amended, or pursuant to an exemption from registration under such Act, and (ii) that such employee has acquired such shares of Common Stock for the participant's own account and not with a view to the distribution thereof. 7. CASH BONUSES If the Committee so determines in its sole and exclusive discretion, the Corporation may make a cash payment or payments to an employee in connection with an award of Common Stock hereunder, the lapse of restrictions imposed thereon or the payment by the employee of any taxes related thereto. 8. RESTRICTIONS (a) Terms, Conditions and Restrictions. In addition to such other terms, conditions and restrictions as may be imposed by the Committee and contained in the instrument under which awards of Common Stock are made pursuant to the Plan, (i) no Common Stock so awarded shall be restricted for a period (the "Restriction Period") of less than one year or more than ten years unless otherwise specified by the Committee; and (ii) except as provided in paragraph (e) below, the recipient of the award shall remain in the employ of the Corporation or its subsidiaries during the Restriction Period or otherwise forfeit all right, title and interest in and to the shares subject to such restrictions. 3 (b) Transferability Restriction. No share awarded under the Plan shall be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of during the Restriction Period applicable thereto. (c) Agreements; Stock Legend. As a condition to the grant of an award under the Plan, each eligible employee selected to participate shall execute and deliver to the Corporation an agreement in form and substance satisfactory to the Committee reflecting the conditions and restrictions imposed upon the Common Stock awarded. Certificates for shares of Common Stock delivered pursuant to such awards may, if the Committee so determines, bear a legend referring to the restrictions and the instruments to which such awards are subject. (d) Additional Conditions. In the agreements evidencing awards or otherwise, the Committee may impose such other and additional terms, conditions and restrictions upon the award as it, in its discretion, deems appropriate including, without limitation: (i) that the Corporation shall have the right to deduct from payments of any kind due to the participant any federal, state or local taxes of any kind required by law to be withheld with respect to the shares awarded or the payment of related cash bonuses; and (ii) that the participant enter into a covenant not to compete with the business of the Corporation and its subsidiaries during the period of employment and for a reasonable time thereafter. (e) Lapse of Restrictions. The restrictions imposed under paragraph (a) above shall terminate with respect to the shares of Common Stock to which they apply on the earliest to occur of the following, except no restrictions shall lapse less than six months from the date of award in the event of (i), (ii) and (iii) below, unless otherwise specified by the Committee: (i) the expiration of the Restriction Period: (ii) the participant's retirement at or after age 60; (iii) the participant's total and permanent disability; or (iv) the participant's death. Certificates for shares of Common Stock with respect to which restrictions have lapsed as provided above shall, upon lapse thereof, be released from escrow and delivered to the participant or, in the event of participant's death, to participant's personal representative. Any stock legend referring to the restrictions imposed hereunder shall thereupon be removed. 9. CHANGES IN CAPITAL OR CONTROL If the outstanding Common Stock of the Corporation subject to the Plan shall at any time be changed or exchanged by declaration of a stock dividend, stock split, combination of shares, recapitalization, merger, consolidation or other corporate reorganization, an appropriate adjustment shall be made in the number and kind of shares that have been awarded pursuant to the Plan and are subject to restrictions imposed by the Plan and that may thereafter be awarded hereunder. Notwithstanding any other provision of the Plan, upon the occurrence of a Change in Control, as defined below, the stock certificates evidencing any Restricted Shares shall be canceled and the 4 Corporation shall make a cash payment to the participants in an amount equal to the highest price per share received by holders of the Corporation's Common Stock in connection with the Change in Control multiplied by the then number of Restricted Shares, with any non-cash consideration valued in good faith by the Committee. For purposes of the Plan, a "Change in Control" of the Corporation shall be deemed to have occurred if: (a) any person, as such term is used in Sections 13(d)(3) and 14(d)(2) of the Securities Exchange Act of 1934, as amended, becomes a beneficial owner (within the meaning of Rule 13d-3 under such Act) of 20% or more of the Corporation's outstanding Common Stock; (b) there occurs within any period of two consecutive years any change in the directors of the Corporation such that the members of the Corporation's Board of Directors prior to such change do not constitute a majority of the directors after giving effect to all changes during such two-year period unless the election, or the nomination for election by the Corporation's stockholders, of each new director was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period; or (c) the Corporation is merged, consolidated or reorganized into or with, or sells all or substantially all of its assets to, another corporation or other entity, and immediately after such transaction less than 80% of the voting power of the then-outstanding securities of such corporation or other entity immediately after such transaction is held in the aggregate by holders of the Corporation's Common Stock immediately before such transaction. In addition, if the Corporation enters into an agreement or series of agreements or the Board of Directors of the Corporation adopts a resolution which results in the occurrence of any of the foregoing events, and the employment of a participant is terminated after the entering into of such agreement or series of agreements or the adoption of such resolution then, upon the occurrence of any of the events described above, a Change in Control shall be deemed to have retroactively occurred on the date of entering into of the earliest of such agreements or the adoption of such resolution and the participants shall be entitled to the payment as of such date with respect to any forfeited Restricted Shares. 10. MISCELLANEOUS (a) No Right to Receive Award. Nothing in the Plan shall be construed to give any employee of the Corporation or a subsidiary any right to receive an award under the Plan. (b) Additional Shares Received With Respect to Restricted Stock. Any shares of Common Stock or other securities of the Corporation received by an employee as a stock dividend on, or as a result of stock splits, combinations, exchanges of shares, reorganizations, mergers, consolidations or otherwise with respect to shares of Common Stock received pursuant to an award hereunder shall have the same status, be subject to the same restrictions and bear the same legend, if any, as the shares received pursuant to the original award. 5 (c) No Effect on Employment Rights. Nothing in the Plan or in the instruments evidencing the grant of an award hereunder shall in any manner be construed to limit in any way the right of the Corporation or a subsidiary to terminate an employee's employment at any time, or give any right to an employee to remain employed by the Corporation or a subsidiary. 11. EFFECTIVE DATE OF PLAN The Plan shall become effective when approved by the Board of Directors of the Corporation. 12. AMENDMENTS This Plan may be amended any time or from time to time by the Committee provided that no such amendment shall, without the further approval of the Board of Directors: (i) except as provided in paragraph 9 of the Plan, increase the maximum number of shares reserved for purposes of the Plan; (ii) extend the duration of the Plan; or (iii) materially increase the benefits accruing to participants under the Plan. Neither shall any amendment or alteration impair the rights of any participant during the Restriction Period without the participant's consent. 13. DURATION AND TERMINATION This Plan shall terminate and no further stock shall be awarded hereunder after July 14, 2007. In addition, the Committee may terminate the Plan at any time prior thereto. The termination of this Plan shall not, however, affect any restriction previously imposed or restricted stock awarded pursuant to this Plan. 14. COMPLIANCE WITH SECTION 16(b) The Plan is intended to comply with all applicable conditions of Rule 16b-3 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended. All transactions involving the Corporation's executive officers are subject to such conditions, regardless of whether the conditions are expressly set forth in the Plan. Any provision of the Plan that is contrary to a condition of Rule 16b-3 shall not apply to executive officers of the Corporation. 6 RESTRICTED STOCK AGREEMENT PURSUANT TO FEDERAL EXPRESS CORPORATION 1997 RESTRICTED STOCK PLAN THIS RESTRICTED STOCK AGREEMENT is made this ______ day of __________________, by and between __________________________ (the "Participant") and Federal Express Corporation, a Delaware corporation (the "Company"), pursuant to the Company's 1997 Restricted Stock Plan (the "Plan"). WHEREAS, the Compensation Committee (the "Committee") of the Board of Directors of the Company at its meeting on __________________ authorized and directed the Company to make an award of stock to the Participant under the Plan for the purposes expressed in the Plan; NOW THEREFORE, in consideration of the foregoing and the mutual undertakings herein contained, the parties agree as follows: 1. Grant of Stock. In accordance with the terms of the Plan and subject to the further terms, conditions and restrictions contained in this Agreement, the Company hereby grants to the Participant __________ shares (the "Shares") of the Company's common stock, $.10 par value (the "Common Stock"). As long as the Shares are subject to the Restrictions set forth in Section 4 of this Agreement, such shares shall be deemed to be, and are referred to in this Agreement as, the "Restricted Shares." The Shares granted shall be treasury stock. 2. Certificates for Shares. Certificates evidencing Restricted Shares shall be deposited with the Company to be held in escrow until such Shares are released to the Participant or forfeited in accordance with this Agreement. The Participant shall, simultaneously with the delivery of this Agreement, deliver to the Company a stock power, in blank, executed by the Participant. If any Restricted Shares are forfeited, the Company shall direct the transfer agent of the Common Stock to make the appropriate entries in its records showing the cancellation of the certificate or certificates for such Restricted Shares and to return the Shares represented thereby to the Company's treasury. 3. Adjustments in Restricted Shares. In the event of any change in the outstanding Common Stock by reason of a stock dividend or distribution, recapitalization, merger, consolidation, split-up, combination, exchange of shares or the like, the Committee shall make equitable adjustments in the Restricted Shares corresponding to adjustments made by the Committee in the number and class of shares of Common Stock which may be issued under the Plan. Any new, additional or different securities to which the Participant shall be entitled in respect of Restricted Shares by reason of such adjustment shall be deemed to be Restricted Shares and shall be subject to the same terms, conditions, and restrictions as the Restricted Shares so adjusted. 7 4. Restrictions. During applicable periods of restriction determined in accordance with Section 6 of this Agreement, Restricted Shares and all rights with respect to such Shares, may not be sold, assigned, transferred, exchanged, pledged, hypothecated or otherwise encumbered or disposed of and shall be subject to the risk of forfeiture contained in Section 5 of this Agreement (such limitations on transferability and risk of forfeiture being herein referred to as "Restrictions"), but the Participant shall have all other rights of a stockholder, including, but not limited to, the right to vote and receive dividends on Restricted Shares. 5. Forfeiture of Restricted Shares. In the event that the Participant terminates employment with the Company and its subsidiaries for any reason other than his or her death, retirement or permanent disability, such event shall constitute an "Event of Forfeiture" and all Shares which at that time are Restricted Shares shall thereupon be forfeited by the Participant to the Company without payment of any consideration by the Company, and neither the Participant nor any successor, heir, assign or personal representative of the Participant shall have any right, title or interest in or to such Restricted Shares or the certificates evidencing them. 6. Lapse of Restrictions. (a) Except as provided in subsection (b) below, the Restrictions on the Restricted Shares granted under this Agreement shall lapse ratably on each of the _________ through ___________ anniversaries of the date of this Agreement in accordance with the following schedule: Number of Shares on Date Which Restrictions Lapse ---- ------------------------ (b) In the event that a Participant's employment with the Company and its subsidiaries terminates as a result of his or her death, retirement or permanent disability, the Restrictions shall lapse on the Restricted Shares (if not already lapsed pursuant to subsection (a) above) on the later of (i) the date of such event, or (ii) the first anniversary of the date of this Agreement. Upon lapse of the Restrictions in accordance with this Section, the Company shall, as soon as practicable thereafter, deliver to the Participant an unrestricted certificate for the Shares with respect to which such Restrictions have lapsed. 7. Tax Equalization Bonus. The Company shall, provided the Participant has furnished the Company evidence of having timely made the election under Section 83(b) of the Internal Revenue Code with respect to the grant of the Shares, pay for the benefit of the Participant a bonus equal to the gross amount of Federal income taxes, Medicare tax and loss of itemized deduction for such Federal income taxes for which the Participant has incurred a liability solely 8 as a result of the grant of the Shares, the making of such election and the payment of such bonus. All of such payment shall be made in the form of Federal income tax withholding payments on or before December 31, ______ and the amount thereof shall be determined assuming that the Participant's marginal Federal income tax rate is ______%. No such bonus shall be paid unless the Participant makes such election and furnishes the Company proof of such election in such form and manner as the Company shall prescribe. 8. Withholding Requirements. Whenever payments hereunder are to be made in cash, or Restrictions lapse with respect to Restricted Shares, the Company shall have the right to withhold from sums due to the Participant (or to require the Participant to remit to the Company) an amount sufficient to satisfy any Federal, state or local withholding tax requirements prior to making such payments or delivering any certificate evidencing such Shares. 9. Change in Control. Notwithstanding any other provision of this Agreement or the Plan, upon the occurrence of a Change in Control, as defined below, the stock certificates evidencing any Restricted Shares shall be cancelled and the Company shall make a cash payment to Participant in an amount equal to the highest price per share received by holders of the Company's Common Stock in connection with the Change in Control multiplied by the then number of Restricted Shares, with any non-cash consideration valued in good faith by the Committee. For purposes of the Plan, a "Change in Control" of the Company shall be deemed to have occurred if: (a) any person, as such term is used in Sections 13(d)(3) and 14(d)(2) of the Securities Exchange Act of 1934, as amended, becomes a beneficial owner (within the meaning of Rule 13d-3 under such Act) of 20% or more of the Company's outstanding Common Stock; (b) there occurs within any period of two consecutive years any change in the directors of the Company such that the members of the Company's Board of Directors prior to such change do not constitute a majority of the directors after giving effect to all changes during such two-year period unless the election, or the nomination for election by the Company's stockholders, of each new director was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period; or (c) the Company is merged, consolidated or reorganized into or with, or sells all or substantially all of its assets to, another corporation or other entity, and immediately after such transaction less than 80% of the voting power of the then-outstanding securities of such corporation or other entity 9 immediately after such transaction is held in the aggregate by holders of the Company's Common Stock immediately before such transaction. In addition, if the Company enters into an agreement or series of agreements or the Board of Directors of the Company adopts a resolution which results in the occurrence of any of the foregoing events, and Participant's employment is terminated after the entering into of such agreement or series of agreements or the adoption of such resolution, then, upon the occurrence of any of the events described above, a Change in Control shall be deemed to have retroactively occurred on the date of entering into of the earliest of such agreements or the adoption of such resolution and Participant shall be entitled to the payment as of such date with respect to any forfeited Restricted Shares. 10. Effect of Employment. Nothing contained in this Agreement shall confer upon the Participant the right to continue in the employment of the Company or affect any right which the Company may have to terminate the employment of the Participant. 11. Amendment. This Agreement may not be amended except with the consent of the Committee and by a written instrument duly executed by the Participant and the Company. 12. Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their heirs, personal representatives, successors and assigns. Participant acknowledges receipt of a copy of the Plan, which is annexed hereto, represents that he or she is familiar with the terms and provisions thereof and accepts the award of Shares hereunder subject to all of the terms and conditions thereof and of this Agreement. Participant hereby agrees to accept as binding, conclusive and final all decisions and interpretations of the Committee upon any questions arising under the Plan or this Agreement. IN WITNESS WHEREOF, the Company and the Participant have each executed and delivered this Agreement as of the date first above written. ATTEST: FEDERAL EXPRESS CORPORATION _______________________________ By:_________________________________ Assistant Secretary Chairman, President and Chief Executive Officer PARTICIPANT: ____________________________________ EX-10.83 9 REGISTRANTS PARITY PENSION PLAN 1 Exhibit 10.83 FEDERAL EXPRESS CORPORATION RETIREMENT PARITY PENSION PLAN EFFECTIVE DATE JUNE 1, 1993 AS AMENDED AND RESTATED JUNE 1, 1996 2 Section 1. Purpose and Description. Federal Express Corporation, a Delaware corporation (the "Company"), established, effective June 1, 1993 (the "Effective Date"), the Federal Express Corporation Retirement Parity Pension Plan (the "Plan"). The Plan was amended, effective June 1, 1994, to increase the benefit provided from 80% to 100% of the difference of the "Unreduced Benefit" less the "Maximum Benefit," as both terms are defined below. The Plan is herein amended and restated, effective June 1, 1996 (the "Restatement Effective Date"), to provided for the inclusion of Managing Directors, in addition to Officers, under the terms of the Plan. The Plan provisions, as in effect immediately prior to June 1, 1996, shall remain in effect for anyone who is not actively employed by the Company as an Officer or Managing Director on or after that date, unless the Plan specifically provides otherwise. The Plan is intended to be an "employee benefit pension plan," as defined in ss. 3(2) of the Employee Retirement Income Security Act of 1974 ("ERISA"), and a plan that is "unfunded and is maintained ... primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees," as provided in ss.ss. 201, 301 and 401 of ERISA and the Department of Labor regulations promulgated under ERISA. The benefits provided by the Plan are not funded, but shall be payable when due out of the assets of the Company as general, unsecured obligations of 3 the Company. Section 2. Eligibility. Any employee of the Company who (i) serves as an Officer after the Effective Date or as a Managing Director after the Restatement Effective Date, (ii) has served as an Officer and/or Managing Director for a combined period of five consecutive years, including service prior to the Effective Date or Restatement Effective Date, but excluding service with a predecessor-in-interest to the Company, and (iii) is an active participant in the Federal Express Corporation Employees' Pension Plan, as it currently exists and as it may be amended from time to time (the "Qualified Pension Plan"), shall be eligible for the benefit described in subsection (a) of Section 3 below. In addition, an Officer described above shall be eligible for the benefit described in subsection (b) of Section 3 below. For the purpose of this Plan, the term "Officer" shall mean an officer of the Company elected to the position of vice-president or above, as evidenced in the minutes of the Company's Board of Directors. The term "Managing Director" shall, for the purpose of this Plan, mean a managing director of the Company appointed to the position of managing director, as evidenced in the Company's personnel information system, PRISM. Section 3. Benefit Amount and Limitations. (a) An Officer or Managing Director who meets the eligibility requirements of Section 2 above shall be paid from the Plan a benefit equal to 100% of the difference between the 2 4 Unreduced Benefit and the Maximum Benefit. For the purpose of this Plan, "Unreduced Benefit" shall mean the benefit that would be provided to the Officer by the Qualified Pension Plan without regard to the limits imposed by Internal Revenue Code (the "Code") ss. 415 (limitations on benefits for defined benefit plans and limitation in case of defined benefit and defined contribution plan for same employee) and ss. 401(a)(17) (annual compensation limit). For the purpose of this Plan, "Maximum Benefit" shall mean the benefit actually provided to the Officer or Managing Director by the Qualified Pension Plan. (b) An Officer who meets the eligibility requirements of Section 2 above shall be paid from this Plan, in addition to the benefit described in subsection (a) above, the difference between such Officer's Maximum Benefit under the Qualified Pension Plan and what such Officer's Maximum Benefit would have been had such Officer received credit for a Year of Service under the Qualified Pension Plan for each year that such Officer is eligible to receive, and does in fact receive, a benefit under the Federal Express Corporation Nonqualified Disability Plan for Officers, as it currently exists or as it may be amended from time to time (the "Officers Nonqualified Disability Plan"). For purpose of determining eligibility for an increased benefit as contemplated by this subsection, such increased benefit shall be provided for each Plan Year during which an 3 5 Officer's Hours of Service under the Qualified Pension Plan plus such Officer's "Phantom Hours of Service" while receiving benefits under the Officers Nonqualified Disability Plan are equal to a Year of Service under the Qualified Pension Plan. Phantom Hours of Service shall be credited at the same rate under this subsection as if the Officer receiving benefits under the Officers Nonqualified Disability Plan had been actively at work and receiving credit for Hours of Service under the Qualified Pension Plan. Notwithstanding the above, an Officer shall not receive credit under this subsection for the same Plan Year for which such Officer receives credit for a Year of Service under the Qualified Pension Plan. (c) Unless otherwise provided herein, defined terms used in this Plan shall have the same meaning attributed to such terms in the Qualified Pension Plan and the Officers Nonqualified Disability Plan, as applicable. Section 4. Payment of Benefits. Benefits under this Plan shall be paid in the same manner and at the same time as benefit payments under the Qualified Pension Plan and shall be subject to the same restrictions and limitations as provided therein, without regard to Code ss.ss. 415 and 401(a)(17). Section 5. Plan Administration. The Plan shall be administered by the Company, acting through its Retirement Administration Department or its successor (the "Administrator"). The Administrator shall have the 4 6 responsibility to receive, evaluate and process all claims for benefits and shall allow payment of benefits under the Plan in accordance with its terms. In connection with its duties, the Administrator shall have the authority to interpret the Plan's provisions and to determine eligibility for Plan benefits. The Administrator shall have the authority to adopt such rules and procedures which it deems necessary for the administration of the Plan and recommend any modifications, changes or amendments to the Plan. Section 6. The Committee. The Committee, as defined in the Qualified Pension Plan, shall have the authority to perform the administrative duties under the Plan, other than the duties of the Administrator. In connection with its duties, the Committee shall have the authority to interpret the Plan's provisions and to determine eligibility for Plan benefits. The Committee is the named fiduciary of the Plan and shall adopt such rules and procedures that in its opinion are either necessary or desirable to implement and administer the Plan. Section 7. Claims Procedures. The claims procedures for the Plan shall be the same as such procedures in the Qualified Pension Plan. Section 8. Legal Expenses. An Officer or Managing Director shall be entitled to reimbursement from the Company for reasonable legal expenses incurred in successfully enforcing his or her right to benefits under the Plan. This right to reimbursement shall only be available if such 5 7 Officer or Managing Director has applied for benefits in substantial compliance with the Administrator's procedures, been denied benefits by the Administrator, timely requested a review of that denial as provided in Section 7 above and had the Administrator's denial upheld. Section 9. Non-Assignability of Benefits. Benefits under this Plan shall not be assignable or transferable in any manner, nor shall they be subject to garnishment, attachment or other legal process, except as provided by ERISA and other applicable federal law. Section 10. Effect. Neither the establishment of the Plan nor any modification thereto, nor the creation of any account on the books of the Company, nor the payment of any benefit from the Plan shall be construed as giving an Officer, Managing Director or any other person any legal or equitable right against the Company, its directors, officers, employees or agents, except as provided herein. Section 11. No Guarantee of Employment. Nothing contained in this Plan shall be construed as a contract of employment between the Company and any Officer or Managing Director nor as a promise that any Officer or Managing Director shall continue in his or her present or comparable position nor as a limit on the Company's right to discharge such Officer or Managing Director, with or without notice. Section 12. Amendment or Termination. The Company may amend or terminate the Plan at any time. An amendment shall become effective upon its execution in writing by an Officer 6 8 of the Company or upon action of the Company's Board of Directors or any committee thereof or upon action of the Committee, as reflected in the Board of Directors', its committee's or the Committee's minutes, and the Plan's termination shall become effective upon the action of the Company's Compensation Committee of the Board of Directors or the Committee, as reflected in the Compensation Committee's or Committee's minutes. However, no amendment or termination shall eliminate or reduce any benefits accrued under the Plan at the time of such amendment or termination. Section 13. Agent for Service of Process. The Company is hereby designated as agent for service of process for all purposes provided herein. Section 14. Governing Law. Except to the extent preempted by federal law, the provisions of this Plan shall be administered, construed and enforced in accordance with the laws of the State of Tennessee. Section 15. Execution. This document may be executed in any number of counterparts and each fully executed counterpart shall be deemed an original. IN WITNESS WHEREOF, the undersigned duly authorized Officer of the Company has caused this Plan amendment and 7 9 restatement to be adopted as of June 1, 1996, by affixing his signature hereto. FEDERAL EXPRESS CORPORATION BY: /s/ Steven E. Priddy ------------------------- Steven E. Priddy Vice President, Personnel Administration Date: 4/8/97 ----------------------- ATTEST: /s/ George W. Hearn - -------------------------- Title: Assistant Secretary EX-10.85 10 REGISTRANTS RETIREMENT PLAN 1 EXHIBIT 10.85 FEDERAL EXPRESS CORPORATION RETIREMENT PLAN FOR OUTSIDE DIRECTORS 1. Purpose and Description. Federal Express Corporation, a Delaware corporation (the "Company"), has established, effective July 17, 1989 (the "Effective Date"), the Federal Express Corporation Retirement Plan for Outside Directors (the "Plan") in order to attract, retain and motivate directors who are not also employees of the Company ("Outside Directors" or, individually, an "Outside Director") to serve on the Company's Board of Directors (the "Board"). The Plan is not intended to be an employee benefit plan within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974 or to be a qualified plan under Section 401(a) of the Internal Revenue Code of 1986. Benefits provided by the Plan shall be payable out of the assets of the Company as a general, unsecured obligation of the Company. 2. Retirement Benefit. An Outside Director who has completed at least five years of service on the Board as an Outside Director and who terminates his or her directorship on the Board on or after the Effective Date shall be entitled to a retirement benefit commencing as of the first day of the fiscal quarter of the Company next following the later of the date of termination of his or her directorship on the Board or the date such director attains age 60. Such benefit shall be an annual amount, payable thereafter in quarterly installments for 10 years, equal to a percentage of the Final Year Retainer Fee, hereinafter defined, set forth in the schedule below according to such director's number of years of service on the Board as an Outside Director: Years of Service Percentage less than 5 0% 5 50% 6 60% 7 70% 8 80% 9 90% 10 or more 100% For the purposes of the Plan, "Final Year Retainer Fee" shall mean the annual retainer fee being paid to Outside Directors for serving on the Board (exclusive of fees paid for attending Board or Board committee meetings and excluding the annual fee paid for serving as chairperson of a Board committee) at the time of termination of a director's service on the Board which gives rise to such director's entitlement to benefits under the Plan. 3. Death Benefit. 1 2 (a) Pre-Retirement Death. If an Outside Director's directorship on the Board is terminated by reason of his or her death and if, at the time of death, such director could have retired from the Board and become entitled to the retirement benefit provided under paragraph 2 above, such director's surviving spouse shall be entitled to a death benefit commencing as of the first day of the fiscal quarter of the Company next following the later of the date of the director's death or the date that such director would have attained age 60. Such death benefit shall be an annual amount, payable thereafter in quarterly installments for 10 years, equal to a percentage of the Final Year Retainer Fee determined pursuant to the schedule in paragraph 2 above according to such deceased director's number of years of service on the Board as an Outside Direct. (b) Post-Retirement Death. In the event of the death of a former Outside Director who, at the time of his or her death, was receiving installment payments of the retirement benefit provided pursuant to paragraph 2 above, such director's surviving spouse shall be entitled to receive as a death benefit the remaining unpaid installments of such retirement benefit which shall be payable at the same time and for the same period as such remaining installments would have been paid to the deceased director. No death benefits shall be payable under this Plan in respect of a deceased director or former director who is not survived by his or her spouse or who, prior to death, had received a cash-out distribution of a retirement benefit pursuant to paragraph 4 hereof. 4. Cash-Out Distribution Option. Either an Outside Director who becomes entitled to a retirement benefit or the spouse of a deceased current or former Outside Director who becomes entitled to a death benefit under the Plan may, at his or her option, elect to receive a cash-out distribution of such benefit. Such cash-out distribution shall be an amount equal to the lump-sum present value of the undistributed installments of such benefit at the time of such election, computed on the basis of the discount rate then used by the Company in determining the present-value equivalency of a deferred pension benefit under the Company's defined benefit pension plan covering employees generally. A cash-out distribution of a retirement or death benefit under the Plan shall, when made to the person entitled thereto, constitute full satisfaction of the Company's obligation to pay such benefit. 5. Administration. The Plan shall be administered by the Compensation Committee of the Board (the "Committee"), which shall have full power and authority to interpret the provisions of the Plan and determine eligibility for benefits, to determine all questions arising in the administration of the Plan, to adopt such rules, regulations and procedures which it deems necessary for the administration of the Plan and to recommend any modifications, changes or amendments to the Plan to the full Board. The determinations of the Committee with respect to the Plan shall be binding upon all persons having an interest in the Plan. 2 3 6. Non-Assignability of Benefits. Benefits under this Plan shall not be assignable or transferable in any manner, nor shall they be subject to garnishment, attachment or other legal process. 7. Effect. Neither the establishment of the Plan or any modification thereof, nor the creation of any account on the books of the Company, nor the payment of any benefit hereunder shall be construed as giving to any Outside Director or other person any legal or equitable rights against the Company, any officer or employee thereof or the Committee except as herein provided. 8. Amendment and Termination. The Board may at any time amend or terminate this Plan. However, no amendment or termination shall alter or impair benefits accrued under the Plan at the time of such amendment or termination. AUTHORIZED BY THE BOARD OF DIRECTORS the 17th day of July 1989. 3 EX-10.86 11 FIRST AMENDMENT TO RETIREMENT PLAN 1 EXHIBIT 10.86 FIRST AMENDMENT FEDERAL EXPRESS CORPORATION RETIREMENT PLAN FOR OUTSIDE DIRECTORS THIS AMENDMENT is made pursuant to the authority to amend the Federal Express Corporation Retirement Plan For Outside Directors (the "Plan") as provided in paragraph 8 therein. WHEREAS, the Board of Directors of Federal Express Corporation at its meeting on July 19, 1993 adopted a resolution amending the Plan; and WHEREAS, it is necessary to conform the terms of the Plan to such amending resolution; NOW, THEREFORE, the Plan is hereby amended, effective September 1, 1993, in the following respects: FIRST Paragraph 2 is amended by deleting "10 years," where it appears in the second sentence and replacing it with the following: the number of years determined by reference to the following schedule:
YEARS OF SERVICE DURATION OF PENSION AS A DIRECTOR PAYMENTS IN YEARS 5-10 10 11 11 12 12 13 13 14 14 15 or more 15
SECOND Subparagraph 3(a) is amended by deleting "10 years" where it appears in the second sentence and replacing it with the following "the number of years determined by reference to the first schedule in paragraph 2". 2 Subparagraph 3(a) is further amended by inserting "second" in the second sentence immediately following "Final Year Retainer Fee determined pursuant to the". AUTHORIZED BY THE BOARD OF DIRECTORS the 19th day of July, 1993. -2- EX-10.87 12 RESTATED AND FROZEN RETIREMENT PLAN 1 EXHIBIT 10.87 FEDERAL EXPRESS CORPORATION RETIREMENT PLAN FOR OUTSIDE DIRECTORS RESTATED AND FROZEN EFFECTIVE AS OF JULY 14, 1997 - -------------------------------------------------------------------------------- 2 1. Purpose and Description. Federal Express Corporation, a Delaware corporation (the "Company"), established, effective July 17, 1989, the Federal Express Corporation Retirement Plan for Outside Directors (the "Plan") in order to attract, retain and motivate directors who are not also employees of the Company ("Outside Directors" or, individually, an "Outside Director") to serve on the Company's Board of Directors (the "Board"). The Plan was subsequently amended effective September 1, 1993, to extend the maximum period of benefit payments from 10 to 15 years. At its July 1997 meeting, the Board determined that the purpose of the Plan as described above could be better served by other means. Consequently, the Board froze the Plan's benefits, effective July 14, 1997, (the "Freeze Date") and restated the Plan, amending (among other matters) the Plan's vesting schedule and defining a "Year of Service" for Plan purposes. No further benefits shall accrue under the Plan subsequent to the Freeze Date. The Plan is not intended to be an employee benefit plan within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974 or to be a qualified plan under Section 401(a) of the Internal Revenue Code of 1986. Benefits provided by the Plan shall be payable out of the assets of the Company as a general, unsecured obligation of the Company. 2. Retirement Benefit. An Outside Director who was a member of the Board on the Freeze Date shall be entitled to a retirement benefit commencing as of the first day of the fiscal quarter of the Company next following the later of the date of termination of his or her directorship on the Board or the date such director attains age 60. Such benefit shall be an annual amount, payable thereafter in quarterly installments for the number of years determined by reference to the following schedule:
YEARS OF SERVICE AS AN DURATION OF PENSION OUTSIDE DIRECTOR PAYMENTS IN YEARS 1-10 10 11 11 12 12 13 13 14 14 15 or more 15
equal to a percentage of the Fiscal Year 1998 Retainer Fee, hereinafter defined, set forth in the schedule below according to such director's number of Years of Service, hereinafter defined, on the Board as an Outside Director:
Years of Service Percentage ---------------- ---------- 1 10% 2 20% 3 30%
3 4 40% 5 50% 6 60% 7 70% 8 80% 9 90% 10 or more 100%
For the purposes of the Plan, "Fiscal Year 1998 Retainer Fee" shall mean $40,000, the annual retainer fee being paid to Outside Directors during the Company's 1998 fiscal year for serving on the Board (exclusive of fees paid for attending Board or Board committee meetings and excluding the annual fee paid for serving as chairperson of a Board committee). For purposes of the Plan, "Year of Service" shall mean each full and each partial fiscal year of the Company during which the Outside Director served on the Board. For all purposes of the Plan, the Years of Service of each Outside Director, as of the Freeze Date, are shown in the following schedule: Allen, Robert H. 15+ Baker, Howard H., Jr. 10 Cox, Robert L. 5 DeNunzio, Ralph D. 15+ Estrin, Judith L. 10 Greer, Philip 15+ Hyde, J. R., III 15+ Manatt, Charles T. 9 Mitchell, George J. 4 Smart, Jackson W., Jr. 15+ Smith, Joshua I. 9 Walsh, Paul S. 2 Willmott, Peter S. 15
3. Death Benefit. (a) Pre-Retirement Death. If an Outside Director's directorship on the Board is terminated by reason of his or her death and if, at the time of death, such director could have retired from the Board and become entitled to the retirement benefit provided under paragraph 2 above, such director's surviving spouse shall be entitled to a death benefit commencing as of the first day of the fiscal quarter of the Company next following the later of the date of the director's death or the date that such director would have attained age 60. Such death benefit shall be an annual amount, payable thereafter in quarterly installments for the number of years determined by reference to the first schedule in paragraph 2, equal to a percentage of the Fiscal Year 1998 Retainer Fee determined pursuant to the second schedule 2 4 in paragraph 2 above according to such deceased director's number of Years of Service on the Board as an Outside Director. (b) Post-Retirement Death. In the event of the death of a former Outside Director who, at the time of his or her death, was receiving installment payments of the retirement benefit provided pursuant to paragraph 2 above, such director's surviving spouse shall be entitled to receive as a death benefit the remaining unpaid installments of such retirement benefit which shall be payable at the same time and for the same period as such remaining installments would have been paid to the deceased director. No death benefits shall be payable under this Plan in respect of a deceased director or former director who is not survived by his or her spouse or who, prior to death, had received a cash-out distribution of a retirement benefit pursuant to paragraph 4 hereof. 4. Cash-Out Distribution Option. Each Outside Director as of the Freeze Date or the spouse of a deceased Outside Director may, at his or her option, elect to receive a cash-out distribution of the benefit provided by the Plan. Such cash-out distribution shall be an amount equal to the lump-sum present value of the undistributed installments of such benefit at the time of such election, computed on the basis of the discount rate then used by the Company in determining the present-value equivalency of a deferred pension benefit under the Company's defined benefit pension plan covering employees generally. A cash-out distribution of a retirement or death benefit under the Plan shall, when made to the person entitled thereto, constitute full satisfaction of the Company's obligation to pay such benefit. 5. Administration. The Plan shall be administered by the Compensation Committee of the Board (the "Committee"), which shall have full power and authority to interpret the provisions of the Plan and determine eligibility for benefits, to determine all questions arising in the administration of the Plan, to adopt such rules, regulations and procedures which it deems necessary for the administration of the Plan and to recommend any modifications, changes or amendments to the Plan to the full Board. The determinations of the Committee with respect to the Plan shall be binding upon all persons having an interest in the Plan. 6. Non-Assignability of Benefits. Benefits under this Plan shall not be assignable or transferable in any manner, nor shall they be subject to garnishment, attachment or other legal process. 7. Effect. Neither the establishment of the Plan or any modification thereof, nor the creation of any account on the books of the Company, nor the payment of any benefit hereunder shall be construed as giving to any Outside Director or other person any legal or equitable rights against the Company, any officer or employee thereof or the Committee except as herein provided. 8. Amendment and Termination. The Board may at any time amend or terminate this Plan. However, no amendment or termination shall alter or impair 3 5 benefits accrued under the Plan at the time of such amendment or termination. The version of the Plan in existence at the time that an Outside Director terminates his or her membership on the Board shall control, in all respects, the benefit payable from this Plan without regard to earlier or later versions of the Plan unless such later version specifically provides otherwise. This Plan shall terminate without the need of further action of the Board upon the final payment of all benefits payable under its terms. AUTHORIZED BY THE BOARD OF DIRECTORS the 14th day of July 1997. 4 EX-10.88 13 LONG-TERM INSENTIVE PLAN 1 EXHIBIT 10.88 Federal Express Corporation Long-Term Incentive Plan as Amended and Restated as of October 1, 1996 1. PURPOSE OF PLAN The Federal Express Corporation Long-Term Incentive Plan, as amended and restated (the "Plan"), is established by Federal Express Corporation (the "Corporation") to provide a long-term incentive for key employees of the Corporation and its subsidiaries, to reward key employees for attaining high financial performance levels during defined performance periods and to retain and motivate them to exert their best efforts on behalf of the Corporation and its subsidiaries. 2. ADMINISTRATION This Plan shall be administrated by the Compensation Committee of the Board of Directors (the "Committee"). The Committee shall have the sole authority to: (i) select the key employees eligible to participate in the Plan; (ii) establish performance criteria under the Plan; (iii) approve and make awards under the Plan; (iv) interpret the Plan; (v) adopt, amend and rescind rules and regulations for the administration of the Plan; (vi) determine the level of achievement of performance criteria; and (vii) generally to administer the Plan and make all determinations in connection therewith which may be necessary or advisable, and all such actions of the Committee shall be binding upon all participants. Committee decisions and selections shall be made by a majority of its members present at the meeting at which a quorum is present, and shall be final. Any decision or selection reduced to writing and signed by all of the members of the Committee shall be as fully effective as if it had been made at a meeting duly held. 3. EFFECTIVE DATE; PERFORMANCE PERIODS The effective date of this Plan is June 1, 1993. Performance periods for awards under this Plan shall be established by the Committee in its sole discretion. Unless otherwise designated by the Committee, a performance period for any award under the Plan shall be three consecutive fiscal years and shall commerce on June 1 of the first fiscal year of such period and end on May 31 of the third fiscal year of such period. The number of performance periods that may be established is unlimited and performance periods may overlap. 1 2 4. ELIGIBILITY Key employees of the Corporation who are from time to time responsible for the management, growth and protection of the business of the Corporation and its subsidiaries shall be eligible to participate for awards under the Plan. No member of the Board of Directors of the Corporation shall be eligible to participate in the Plan unless such director is also an employee of the Corporation. The employees who shall participate in the Plan shall be selected from time to time by the Committee in its sole discretion, from those eligible. Except as provided below, a participant must be in an eligible position at the beginning of a performance period and at the end of such period in order to receive an award under this Plan. However, participants promoted to a managing director or officer position or to a higher officer position on or before September 1 of the first fiscal year of the performance period shall participate at their new position for the entire performance period. In addition, for performance periods beginning after FY94, participants promoted to an officer position or to a higher officer position after September 1 of the first fiscal year of such performance periods shall participate at the new position for the remainder of the performance period on a pro rata basis. 5. CONDITIONS (a) Awards shall be prorated for time spent on a Corporation-approved leave of absence. In such case, awards shall be reduced by an amount equal to the product of the amount of the award if there had been no leave of absence during the performance period times a ratio, the numerator of which shall be the number of full or partial months on leave and the denominator of which shall be the total number of months in the performance period. (b) If a participant's employment is terminated or such participant becomes ineligible to participate in the Plan for reasons other than retirement, death or permanent disability (as defined under the terms of the Corporation's short- and long-term disability plans or the Corporation's supplemental long-term disability plan or as otherwise determined by the Committee) prior to the end of a performance period, such participant shall cease to participate and shall forfeit any award accrued on behalf of the participant under the Plan during such performance period. (c) If a participant's employment is terminated due to retirement, death or permanent disability (as defined under the terms of the Corporation's short- and long-term disability plans or the Corporation's supplemental long-term disability plan or as otherwise determined by the Committee), the 2 3 amount of award accrued under the Plan to the date of such termination shall be paid to the participant or, in the case of death, to the participant's personal representative, in accordance with the terms of the Plan, if all performance criteria are attained. 6. PERFORMANCE CRITERIA At the beginning of a performance period, the Committee may establish a performance goal or goals on which payment of awards will be based. The Committee may modify these goals in extraordinary circumstances (i.e., mergers, acquisitions, recapitalizations, extraordinary expense or income items, etc.). Upon establishing such goals, the Committee may determine the projected dollar amount of individual awards ranging from threshold amounts if the performance criteria are minimally achieved, up to maximum amounts if the performance criteria are exceeded. The Committee may determine an additional bonus opportunity if the performance criteria are substantially exceeded. The performance goals and target awards for each performance period shall be set forth in writing and distributed to each eligible participant and shall become effective when communicated to participants. 7. PAYMENT OF AWARDS No amounts can be earned until the end of a performance period because it is only after the conclusion of such period that the Committee can determine the extent of achievement of the established performance goals and awards. Unless otherwise determined by the Committee, awards shall be paid within three months after the end of the applicable performance period in accordance with the terms established by the Committee. Such payments shall be net of all applicable withholdings. 8. AMENDMENTS This Plan may be amended any time or from time to time by the Committee provided that no amendment or alteration shall materially impair the rights of any participant accrued at the time of the amendment. 3 4 9. NO EFFECT ON EMPLOYMENT RIGHTS Nothing herein shall in any manner be construed to limit in any way the right of the Corporation to terminate an employee's employment at any time, or give any right to an employee to remain employed by the Corporation. 10. DISPUTE RESOLUTION All disputes under this Plan shall be resolved by the Committee within its sole discretion and all decisions by the Committee in such matters shall be final and binding on the Corporation and the participants. 11. TERMINATION OF PLAN The Committee may terminate the Plan in whole or suspend it for any performance period at any time. A suspension for a particular performance period shall not, however, affect any other performance period except to the extent specified by the Committee. Approved by the Compensation Committee of the Board of Directors of the Corporation at its meeting held on October 1, 1996. 4 EX-10.93 14 FIRST AMENDMENT TO AIRCRAFT SALES AGREEMENT 1 EXHIBIT 10.93 FIRST AMENDMENT TO AIRCRAFT SALES AGREEMENT THIS FIRST AMENDMENT TO AIRCRAFT SALES AGREEMENT (this "Amendment"), dated as of September 19, 1996, between AMERICAN AIRLINES, INC., a Delaware corporation ("American"), and FEDERAL EXPRESS CORPORATION, a Delaware corporation ("FedEx"). WITNESSETH: WHEREAS, American and FedEx have heretofore entered into that certain Aircraft Sales Agreement dated as of April 7, 1995 (the "Agreement"; defined terms used herein as therein defined); and WHEREAS, American and FedEx desire to amend and modify the terms of the Agreement as provided below; NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and pursuant to the Agreement, American and FedEx hereby agree as follows: A. AMENDMENTS TO THE AGREEMENT. 1. Section 2.01 of the Agreement is amended as follows: The Scheduled Delivery Date for Delivery Number 3 shall be September 20, 1996 instead of October 16, 1996 and Delivery Number 4 shall be February 28, 1997 instead of February 12, 1997. 2. Notwithstanding the provisions of Section 2.04 and the amendments to Section 2.01 provided in the preceding paragraph 1, FedEx acknowledges and agrees that American has met and complied with the requirements of Section 2.04 regarding the timing of the designations of the Airframes and the Engines to be delivered as Delivery Numbers 3 and 4. 3. Section 3.01 of the Agreement is amended by deleting the third sentence of Section 3.01 in its entirety and inserting the following in its place: Delivery of each Aircraft shall be made (i) at the option of American, (A) at Dallas/Fort Worth International Airport ("DFW") or TUL (as defined in Section 3.02(a)) or (B) at an airport in the State of Nevada if American so advises FedEx at least seven (7) days prior to the Scheduled Delivery Date for such Aircraft, or (ii) at such other location on FedEx's route system as American designates in 2 writing to FedEx at least ninety (90) days prior to the Scheduled Delivery Date and to which FedEx consents, such consent not to be unreasonably withheld. 4. Section 3.02 of the Agreement is amended by adding and inserting "Revision 4.0, May 1994" following the word "Manual" in line 8 of Section 3.02. 5. Section 6.01 of the Agreement is amended by deleting "sixty (60)" from line 4 of Section 6.01 and inserting "thirty (30)" in its place. 6. Section 8.02(a) of the Agreement is amended by adding "or at TUL" in line 2 of Section 8.02(a) following the word "Nevada". 7. Attachment 2 to Exhibit B, Aircraft Delivery Certificate, is amended by deleting Attachment 2 attached to Exhibit B in its entirety and replacing it with the attachment to this Amendment labeled "Attachment 2 to Aircraft Delivery Certificate". 8. Exhibit D to the Agreement is amended by deleting Exhibit D (including Appendix 1 to Exhibit D) in its entirety and replacing it with the attachment to this Amendment labeled "Exhibit D" (including the Appendix 1 attached to the Exhibit D attached to this Amendment). B. MISCELLANEOUS. 1. Except as expressly set forth herein, all terms and provisions contained in the Agreement shall remain unmodified and in full force and effect. 2. This Amendment shall be governed by and construed in accordance with the internal laws of the State of New York, without regard to the laws of conflicts of the State of New York. 4. This Amendment may be executed in several counterparts, all of which shall be deemed an original, and all such counterparts shall constitute one and the same instrument. -2- 3 IN WITNESS WHEREOF, American and FedEx have caused this Amendment to be fully executed and delivered as of the date and year first above written. AMERICAN AIRLINES, INC. By: /s/ JEFFERY M. JACKSON --------------------------------- Jeffery M. Jackson Vice President-Corporate Development and Treasurer APPROVED FEDERAL EXPRESS CORPORATION AS TO LEGAL FORM KHS 10.04.96 By: /s/ JAMES R. PARKER --------------------- --------------------------------- LEGAL DEPT. James R. Parker Vice President-Fleet Development & Acquisitions -3- 4 ATTACHMENT 2 TO AIRCRAFT DELIVERY CERTIFICATE AIRCRAFT RECORDS AND ENGINE RECORDS DELIVERED WITH DELIVERED AIRCRAFT The following Aircraft Records (as defined in the Agreement) were delivered with the Delivered Aircraft: DRAWINGS/CHARTS: 1. Fuel Distribution Chart, Compass Correction Card, Major Avionic List, Drawings: Layout Drawings, Emergency Equipment Placard Arrangement, Emergency Aisle Lighting RECORDS 1. Aircraft Flight Log (includes past 30 days aircraft routings) 2. Daily History Run 3. Heavy Maintenance Checks - History Log 4. Deferred Items List (Damage Log and FMR) 5. Last Bill-of-Work Prior to Delivery 6. Report 182Y (with required certification): - Time-Control Components with 10,000 Hrs. or less to go and calendar 7. Report 188Y (with required certification): - Time Control Components by Cycles to go 8. Report 190Y (with required certification): - Airframe Time Control Components by Aircraft and Position - Engine Item Time Control Components by Aircraft and Position - Airframe Calendar Control Components by Aircraft and Position 9. Report ET026 (with required certification): - Component Time Control Status by S/N of Parts 10. Report ET049 (with required certification): - Component Time - Special Item by RSPAM 11. AD Summary Report with certification per attached Appendix 1, including accomplishment documents for the last action taken and stating specific method of compliance and any alternate means of compliance, if any, including FAA approval 12. Report EC014: - Modification History by AD/FAR Number 13. Report EC014: - Modification History by AA Job Number and cross reference 14. Report EC015: - Modification History by Service Bulletin Number - Limited to AD/FAR 15. Report EC015: - Modification History by Service Bulletin Number B-8 5 16. Report D065 (with required certification): - Engine Life Limited Parts/Life Limited Parts 17. Report D066 (with required certification): - Engine Time Monitored Parts (including tags and tear-down reports) 18. Report CML011: - Engine Condition Monitoring - Last Run Before Delivery (if an in-service engine) 19. Weight and Balance Report 20. Landing Gear Records 21. Component Shop Records (including tags and tear-down reports) 22. APU Records 23. Engine Records 24. Aircraft Airframe Records 25. Accident Report or Accident-Free Certification Letter 26. Major Repair Records B-9 6 EXHIBIT D to the Aircraft Sales Agreement between Federal Express Corporation ("FedEx") and American Airlines, Inc. ("American") Dated April 7, 1995 (the "Agreement) DATA RELATING TO THE AIRCRAFT AND ENGINES TO BE DELIVERED BY AMERICAN TO FEDEX PURSUANT TO ARTICLE 6 OF THE AGREEMENT Originals or copies of the following items of Data will be supplied in accordance with Section 6.02(d) on the specified medium or on microfiche, microfilm, paper, disk or any then current medium or a combination of these media, with revision updates revised as of the applicable Delivery Dates. The required certifications for Aircraft time and cycles, life-limited parts, Airworthiness Directives and hard-time components for Airframes and Engines shall be signed by a manager or higher management personnel in the Airworthiness, Quality Assurance, Quality Control or Aircraft/Powerplant Records department of American. Any required certification of any item of Data shall be in the form attached as Appendix 1 to this Exhibit D. MANUALS: 1. FAA Approved Aircraft Flight Manual 2. Aircraft Maintenance Manual (Microfilm) 3. Component Maintenance Manual 4. Aircraft Wiring Manual (Microfilm) 5. Aircraft Structure Repair Manual (Microfilm) 6. Aircraft Illustrated Parts Catalog (Microfilm) 7. McDonnell Douglas MD11 Passenger Weight and Balance Manual for American Airlines 8. Aircraft Minimum Equipment List & Configuration 9. McDonnell Douglas Packing Sheets 10. McDonnell Douglas Aircraft Detail Finish Specification 11. CF6 Maintenance Manual (Microfilm-See Aircraft MM) 12. CF6 Engine Shop Manual including any Engineering Specification Orders 13. CF6 Illustrated Parts Catalog (Microfilm) 14. CF6 Service Bulletin (Microfilm) 15. Maintenance Check Manual (Microfilm) 16. Engineering Specification Maintenance Manual 17. AA Part Number versus Mfgr's Part Number (Fiche) 18. Cross Reference for AA Vendor Code Numbers 19. Engineering Change Orders (ECO) and Fleet Campaign Directives (FCO) D-1 7 DOCUMENTS: 1. Certificate of Airworthiness (on Aircraft) 2. Certificate of Registration (on Aircraft) 3. Sanitary Certificate (on Aircraft) 4. [Radio Station License (on Aircraft)] DRAWINGS/CHARTS: 1. Fuel Distribution Chart, Compass Correction Card, Major Avionic List, Drawings: Layout Drawings, Emergency Equipment Placard Arrangement, Emergency Aisle Lighting RECORDS 1. Aircraft Flight Log (includes past 30 days aircraft routings) 2. Daily History Run 3. Heavy Maintenance Checks - History Log 4. Deferred Items List (Damage Log and FMR) 5. Last Bill-of-Work Prior to Delivery 6. Report 182Y (with required certification): - Time-Control Components with 10,000 Hrs. or less to go and calendar 7. Report 188Y (with required certification): - Time Control Components by Cycles to go 8. Report 190Y (with required certification): - Airframe Time Control Components by Aircraft and Position - Engine Item Time Control Components by Aircraft and Position - Airframe Calendar Control Components by Aircraft and Position 9. Report ET026 (with required certification): - Component Time Control Status by S/N of Parts 10. Report ET049 (with required certification): - Component Time - Special Item by RSPAM 11. AD Summary Report with certification per attached Appendix 1, including accomplishment documents for the last action taken and stating specific method of compliance and any alternate means of compliance, if any, including FAA approval 12. Report EC014: - Modification History by AD/FAR Number 13. Report EC014: - Modification History by AA Job Number and cross reference 14. Report EC015: - Modification History by Service Bulletin Number - Limited to AD/FAR 15. Report EC015: - Modification History by Service Bulletin Number D-2 8 16. Report D065 (with required certification): - Engine Life Limited Parts/Life Limited Parts 17. Report D066 (with required certification): - Engine Time Monitored Parts (including tags and tear-down reports) 18. Report CML011: - Engine Condition Monitoring - Last Run Before Delivery (if an in-service engine) 19. Weight and Balance Report 20. Landing Gear Records 21. Component Shop Records (including tags and tear-down reports) 22. APU Records 23. Engine Records 24. Aircraft Airframe Records 25. Accident Report or Accident-Free Certification Letter 26. Major Repair Records D-3 9 APPENDIX 1 TO EXHIBIT D AIRCRAFT REGISTRATION NO. -------------- MANUFACTURER'S SERIAL NO. ------------- DATE: , ----------------- -------------- [TITLE] I HEREBY CERTIFY THAT THIS IS A TRUE AND ACCURATE RECORD TO THE BEST OF MY KNOWLEDGE. - -------------------------------- ------------------------------- SIGNATURE DATE - -------------------------------- ------------------------------- PRINTED NAME TITLE AIR CARRIER - -------------------------------- --------------------------------- COMPANY NAME COMPANY CERTIFICATE TYPE AA4A025A - -------------------------------- COMPANY CERTIFICATE NUMBER D-4 EX-11 15 COMPUTATION OF EARNINGS PER SHARE 1 EXHIBIT 11 FEDERAL EXPRESS CORPORATION AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE Net income applicable to common and common equivalent shares and the weighted average number of shares used in the calculation of earnings per share for the years ended May 31 were as follows (in thousands, except per share amounts):
YEAR ENDED MAY 31 --------------------------------------- 1997 1996 1995 -------- --------- ------ Net income applicable to common and common equivalent shares................. $361,227 $307,777 $297,588 ======== ======== ======== Average shares of common stock outstanding.............................. 114,125 113,128 111,975 Common Equivalent Shares: Assumed exercise of outstanding dilutive options....................... 6,101 5,250 4,877 Less shares repurchased from proceeds of assumed exercise of options............ (4,585) (4,102) (3,865) -------- -------- -------- Average common and common equivalent shares................................... 115,641 114,276 112,987 ======== ======== ======== Earnings per share......................... $ 3.12 $ 2.69 $ 2.63 ======== ======== ========
- - The computation of the number of shares repurchased from the proceeds of the assumed exercise of outstanding dilutive options is based upon the average market price of the Company's common stock during the periods. Common equivalent shares are excluded in periods in which their assumed exercise would have an anti-dilutive effect. - - Fully diluted earnings per share are substantially the same as earnings per share for the years ended May 31, 1997, 1996, and 1995. EX-13 16 FINANCIAL HIGHLIGHTS FROM ANNUAL REPORT 1 FINANCIAL HIGHLIGHTS Federal Express Corporation and Subsidiaries Years ended May 31 In thousands, except earnings per share and Other Operating Data
Percent 1997 1996 Change - ---------------------------------------------------------------------------------------------------------- OPERATING RESULTS Revenues $ 11,519,750 $10,273,619 +12 Operating income 699,042 623,824 +12 Income before income taxes 628,221 539,959 +16 Net income 361,227 307,777 +17 Earnings per share $ 3.12 $ 2.69 +16 Average shares outstanding 115,641 114,276 + 1 FINANCIAL POSITION Property and equipment, net $ 4,622,080 $ 4,116,601 +12 Total assets 7,625,486 6,698,971 +14 Long-term debt 1,397,954 1,325,277 + 5 Common stockholders' investment 2,962,514 2,576,139 +15 OTHER OPERATING DATA Express package: Average daily package volume 2,715,894 2,437,662 +11 Average pounds per package 7.2 6.4 +13 Average revenue per pound $ 2.11 $ 2.31 - 9 Average revenue per package $ 15.11 $ 14.87 + 2 Airfreight: Average daily pounds 2,542,226 2,144,225 +19 Average revenue per pound $ .94 $ 1.01 - 7 Operating weekdays 254 256 Aircraft fleet 584 557 Vehicle fleet 38,500 36,900 Average number of employees (based on a standard full-time workweek) 107,827 99,999 - ----------------------------------------------------------------------------------------------------------
2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION RESULTS OF OPERATIONS Year-over-year improvements in consolidated results for the past three years reflect the expansion of the Company's express delivery services and the stabilization of U.S. domestic express revenue per package (yield). In 1997, international results improved primarily due to continued strong growth of express volumes and increased airfreight revenues, despite declining airfreight revenue per pound (yield). Intense domestic competition and the rising cost of providing express services restrained U.S. domestic results in 1997. Consolidated net income for 1997 was $361 million ($3.12 per share) compared with $308 million ($2.69 per share) and $298 million ($2.63 per share) for 1996 and 1995, respectively. REVENUES The following table shows a comparison of revenues for the years ended May 31: In millions
Percent Change 1997/ 1996/ 1997 1996 1995 1996 1995 - ---------------------------------------------------------------------------------------------------------- U.S. domestic express $ 8,073 $ 7,284 $6,700 +11 + 9 International Priority (IP) 2,351 1,997 1,680 +18 +19 International Express Freight (IXF) and Airport-to-Airport (ATA) 605 554 580 + 9 - 5 FedEx Air Charter 72 92 115 -22 -20 Logistics services 99 94 106 + 5 -11 Other* 320 253 211 +27 +20 ------- ------- ------ $11,520 $10,274 $9,392 +12 + 9 - ----------------------------------------------------------------------------------------------------------
*Includes the sale of engine noise reduction kits. The following table shows a comparison of selected express and airfreight (IXF/ATA) statistics for the years ended May 31: In thousands, except dollar amounts
Percent Change 1997/ 1996/ 1997 1996 1995 1996 1995 - ---------------------------------------------------------------------------------------------------------- U.S. domestic express: Average daily packages 2,490 2,246 2,084 +11 + 8 Revenue per package $12.77 $12.67 $12.61 + 1 -- IP: Average daily packages 226 192 164 +18 +17 Revenue per package $40.91 $40.58 $40.28 + 1 + 1 IXF/ATA: Average daily pounds 2,542 2,144 2,153 +19 -- Revenue per pound $ .94 $ 1.01 $ 1.06 - 7 - 5 - ----------------------------------------------------------------------------------------------------------
In 1997, U.S. domestic yield improved on a year-over-year basis (including the effect of a temporary 2% fuel surcharge discussed below). Excluding the surcharge, yields remained stable due to the effects of continuing yield-management actions which include systematic review and revision of customer pricing, an increase in the list price for FedEx Standard Overnight(R) service in April 1996 and improved average weight per package. The yield 2 3 improvement was restrained by strong growth in the Company's lower-yielding products and a reduction in the price for FedEx 2Day(R) service. The air cargo transportation excise tax expired on December 31, 1995, was reenacted by Congress effective August 27, 1996, and expired again on December 31, 1996. The excise tax was reenacted by Congress effective March 7, 1997, and is scheduled to expire again on September 30, 1997. This expiration relieved the Company of its obligation to pay the tax for approximately five months in both 1997 and 1996. The expiration of the tax contributed approximately $50 million to U.S. domestic revenues and 1% to U.S. domestic yields in both 1997 and 1996. Legislation to reenact the tax for a ten-year period as of October 1, 1997, is currently pending in Congress. Over the past three years, the Company's IP service experienced year-over-year growth in average daily volumes ranging from 17% to 23% and revenues from 18% to 25%. This strong growth is attributable to the Company's unique and expanding network which provides customers with reduced transit times, later drop-off opportunities and daily service on a global basis. Over the same period, yields remained relatively constant. In 1996 and 1997, the Company's international non-express airfreight revenues were a significant factor in determining overall profitability. The Company uses ATA airfreight service (a lower-priced, space-available service) to fill space on international flights not used by express services such as IP or IXF. In 1996, excess capacity in the global airfreight market and slowing growth in world demand resulted in lower non-express airfreight pounds, prices and revenues than in 1995. In 1997, airfreight revenues increased, due to the Company's expansion in international markets, despite continued excess market capacity and downward pressure on yields. The increases in other revenue in 1997 and 1996 were primarily attributable to increased sales of engine noise reduction kits. OPERATING EXPENSES Volume growth and expansion of the Company's operations resulted in a trend of rising operating expenses. Presented below are year-over-year percentage changes in operating expenses:
Percent Change 1997/ 1996/ 1996 1995 - ---------------------------------------------------------------------------------------------------------- Salaries and employee benefits +10 + 4 Rentals and landing fees +12 +17 Depreciation and amortization + 8 +10 Fuel +19 +15 Maintenance and repairs +17 +14 Other +14 +16 Total operating expenses +12 +10 - ----------------------------------------------------------------------------------------------------------
Salaries and employee benefits expense rose primarily due to higher employment levels associated with volume growth. In 1997, increased provisions under the Company's performance-based, incentive compensation plans also contributed to the increase in salaries and employee benefits expense. In 1996, decreased provisions under these plans offset a large portion of the increase in salaries and employee benefits expense. Rentals and landing fees increased primarily due to the leasing of additional aircraft. As of May 31, 1997, the Company had 78 wide-bodied aircraft under operating lease compared 3 4 with 74 as of May 31, 1996, and 58 as of May 31, 1995. Management expects year-over-year increases in lease expense to continue as the Company enters into additional aircraft rental agreements during 1998 and thereafter. Fuel expense increased in 1997 and 1996 due to increases in average jet fuel price per gallon (12% and 7%, respectively) and gallons consumed (8% and 9%, respectively). The increases in average price per gallon of jet fuel were due to higher jet fuel prices and a 4.3 cents per gallon excise tax on aviation fuel, used domestically, which became effective October 1, 1995. In order to mitigate the impact of the recent increases in jet fuel prices, the Company implemented temporary fuel surcharges on airfreight shipments, effective December 1, 1996, for shipments out of Europe and selected Asian countries. Additionally, the Company implemented fuel surcharges, effective December 15, 1996, for airfreight shipments originating in the U.S., Latin America and the remaining parts of Asia, except those to the People's Republic of China and Hong Kong. These surcharges were discontinued effective April 15 or June 1, 1997, depending on the origin country. The Company also implemented a temporary 2% fuel surcharge, effective February 3, 1997, on U.S. domestic shipments except FedEx SameDay(R) service and including Puerto Rico. This surcharge also applied to all U.S. export IP shipments, except those to the People's Republic of China and Hong Kong. The Company plans to lift this surcharge on August 1, 1997. In the past three years, the Company's aircraft fleet has increased, resulting in a corresponding rise in maintenance expense. The rise in maintenance and repairs expense for 1997 was primarily due to higher engine maintenance on MD11 and A310 aircraft. In 1996, the Company incurred significant spare parts expense outfitting the newly-opened Subic Bay facility and earlier than expected DC10 engine maintenance expense. The Company expects a predictable pattern of aircraft maintenance and repairs expense. However, unanticipated maintenance events will occasionally disrupt this pattern, resulting in periodic fluctuations in maintenance and repairs expense. Given the Company's increasing fleet size, aging fleet and variety of aircraft types, management believes that maintenance and repairs expense will continue a trend of year-over-year increases for the foreseeable future. Increases in other operating expenses for 1997 and 1996 were primarily due to expenses related to volume growth, including the transportation of packages by third parties and, for 1996, the cost of temporary manpower. The cost of sales of engine noise reduction kits also increased in 1997 and 1996. A significant portion of the 1996 increase in other operating expenses was due to consulting fees related to on-going projects designed to optimize the value of goods and services purchased and the use of internal resources. OPERATING INCOME The Company's operating income increased 12% and 6% in 1997 and 1996, respectively. U.S. domestic operating income rose 3% and 16% in 1997 and 1996, respectively. In 1997, domestic income included a $15 million pre-tax benefit from the settlement of a Tennessee personal property tax matter and an incremental contribution from the sales of engine noise reduction kits of $24 million. Increases in cost per package (1.4%) exceeded increases in revenue per package (0.8%). Conversely, in 1996, operating income improved primarily due to increases in revenue per package (0.5%) exceeding increases in cost per package (0.3%) and due to increases in average daily volume (8%). In addition, in 1996, sales of engine noise reduction kits contributed an incremental $15 million to U.S. 4 5 domestic operating income, while severe winter storms in the eastern United States lowered U.S. domestic operating income by approximately $30 million. U.S. domestic operating margins were 6.7%, 7.3% and 6.8% in 1997, 1996 and 1995, respectively. International operating income increased $59 million in 1997 compared with a $44 million decrease in 1996. The increase in operating income in 1997 was attributable to strong growth in the Company's IP volumes and airfreight pounds, partially offset by lower airfreight yields. In addition to the factors impacting express and airfreight revenue discussed above, in 1996, the costs of establishing the Company's intra-Asian network and declines in charter revenue contributed to the decline in international operating income. International operating margins were 4.4%, 2.9% and 4.9% in 1997, 1996 and 1995, respectively. For additional information on the Company's U.S. domestic and international operations, see Note 10 of Notes to Consolidated Financial Statements. OTHER INCOME AND EXPENSE AND INCOME TAXES Net interest expense decreased 5% for 1997, primarily due to lower effective interest rates. For 1996, net interest expense decreased 17% due to lower debt levels and a higher level of capitalized interest than in 1995. Interest is capitalized during eligible projects, the most significant of which is the modification of certain Airbus A310 aircraft from passenger to freighter configuration. The level of capitalized interest in 1997 was comparable to that of 1996. Other, net for 1997 included a $17.1 million gain from an insurance settlement for a DC10 aircraft destroyed by fire in September 1996. Other, net for 1996 included a distribution of $7.8 million from the bankruptcy estate of a firm engaged by the Company in 1990 to remit payments of employee payroll taxes to the appropriate authorities. Other, net for 1996 also included gains on sales of B727 aircraft. The Company's effective tax rate was 42.5% in 1997 and 43.0% in 1996 and 1995. In each year, the effective tax rate was greater than the statutory U.S. federal tax rate primarily because of state income taxes and the impact of foreign operations. For 1998, management expects the effective tax rate to remain at a level similar to the 1997 rate. The actual rate, however, is dependent on a number of factors, including the amount and source of operating income. OUTLOOK Management is committed to achieving long-term earnings growth by positioning the Company's resources to address customers' expectations and to capitalize on emerging markets for express distribution services. This frequently involves a significant front-end investment in assets, technology and personnel that may reduce near-term profitability. The level of investment in 1998 is anticipated to be greater than that in 1997. As discussed above, a key factor in the stabilization of the Company's U.S. domestic yield was the customer pricing review program. In 1998, management will continue this program with the intent of pursuing price increases on low-yielding accounts and discontinuing unprofitable accounts. In addition, on July 1, 1997, the Company introduced distance-based pricing for all U.S. domestic services. As a result of yield-management actions and the introduction of distance-based pricing, management believes U.S. domestic yields will remain stable or increase slightly, while package volumes will grow at a considerably lower rate in 1998 than in the past several years. The goal of these actions is to ensure an appropriate balance between revenues generated and the cost of providing express services. Actual results, however, may vary depending primarily on the impact of 5 6 competitive pricing changes, including distance-based pricing, customer responses to yield-management initiatives and changing customer demand patterns. To reduce the cost of providing express services, management will continue to invest in technologies that improve the efficiency of package pick-up, sorting, tracking and delivery and further integrate the Company's air and ground transportation system. The Company will also strive to increase the number of transactions initiated through customer automation tools and will continue projects designed to enhance productivity and strengthen the Company's infrastructure. Assuming effective implementation, these investments are expected to reduce transportation cost per package. Long-term plans for the Company's international operations include continued expansion of the international network to the emerging centers of economic growth, particularly China, the Pacific Basin and Latin America. Management expects this expansion to allow for continued growth of the Company's international express services. However, with the additional capacity, more reliance is placed on lower-yielding IXF/ATA to fill the available space until express volumes grow into the increased capacity. Management expects IP average daily volume to continue its strong growth in 1998 and IP yields to remain relatively constant. With respect to airfreight, management believes that excess market capacity will continue its downward pressure on yields in 1998. Actual results for IP or airfreight, however, will depend on international economic conditions, actions by the Company's competitors and regulatory conditions for international aviation rights. FINANCIAL CONDITION LIQUIDITY Cash and cash equivalents totaled $122 million at May 31, 1997, an increase of $29 million during 1997 compared with decreases of $264 million in 1996 and $35 million in 1995. Cash provided from operations during 1997 was $1.0 billion compared with $947 million and $1.0 billion in 1996 and 1995, respectively. The Company currently has available a $1.0 billion revolving bank credit facility (of which $799 million was available as of May 31, 1997) that is generally used to finance temporary operating cash requirements and to provide support for the issuance of commercial paper. The reduction in the amount available under the credit facility was solely attributable to support for the issuance of commercial paper during the year. Management believes that cash flow from operations, its commercial paper program and the revolving bank credit facility will adequately meet its working capital needs for the foreseeable future. CAPITAL RESOURCES The Company's operations are capital intensive, characterized by significant investments in aircraft, vehicles, computer and telecommunication equipment, package handling facilities and sort equipment. The amount and timing of capital additions are dependent on various factors including volume growth, new or enhanced services, geographical expansion of services, competition, availability of satisfactory financing and actions of regulatory authorities. Capital expenditures for 1997 totaled $1.5 billion and included ten Airbus A310 aircraft, two MD11 aircraft (which were subsequently sold and leased back, one in 1997 and one in 1998), customer automation and computer equipment and vehicles and ground support equipment. 6 7 In comparison, prior year expenditures totaled $1.4 billion and included seven Airbus A310 aircraft (one of which, along with two purchased in 1995, was subsequently sold and leased back), two MD11 aircraft (which were subsequently sold and leased back, one in 1996 and one in 1997), five B727-200 aircraft, 35 Cessna 208 aircraft, deposits on future Airbus A300 aircraft, vehicles and ground support equipment, customer automation and computer equipment, and package handling facilities and sort equipment. For information on the Company's purchase commitments, see Note 12 of Notes to Consolidated Financial Statements. Additional investing activities in 1996 included the purchase of an all-cargo route authority between the U.S. and China. The Company has historically financed its capital investments through the use of lease, debt and equity financing in addition to the use of internally generated cash from operations. Generally, management's practice in recent years with respect to funding new wide-bodied aircraft acquisitions has been to finance such aircraft through long-term lease transactions that qualify as off-balance sheet operating leases under applicable accounting rules. Management has determined that these operating leases have provided economic benefits favorable to ownership with respect to market values, liquidity and after-tax cash flows. In the future, other forms of secured financing may be pursued to finance the Company's aircraft acquisitions based on what management determines will best meet the Company's needs. The Company has been successful in obtaining investment capital, both domestic and international, for long-term leases on acceptable terms although the marketplace for such capital can become restricted depending on a variety of economic factors beyond the control of the Company. See Note 3 of Notes to Consolidated Financial Statements for additional information concerning the Company's debt and credit facilities. In June 1996, October 1996 and May 1997, approximately $190 million, $186 million and $556 million, respectively, of pass through certificates were issued under shelf registrations filed with the Securities and Exchange Commission to finance or refinance the debt portion of leveraged leases related to nine Airbus A300 and six MD11 aircraft. The pass through certificates are not direct obligations of, or guaranteed by, the Company, but amounts payable by the Company under the leveraged leases are sufficient to pay the principal of and interest on the certificates. Management believes that the capital resources available to the Company provide flexibility to access the most efficient markets for financing its capital acquisitions, including aircraft, and are adequate for the Company's future capital needs. DEFERRED TAX ASSETS At May 31, 1997, the Company had a net cumulative deferred tax liability of $10 million consisting of $495 million of deferred tax assets and $505 million of deferred tax liabilities. The reversals of deferred tax liabilities in future periods will offset similar amounts of deferred tax assets. Statements in this "Management's Discussion and Analysis of Results of Operations and Financial Condition" or made by management of the Company which contain more than historical information may be considered forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) which are subject to risks and uncertainties. Actual results may differ materially from those expressed in the forward-looking statements because of important factors identified in this section. 7 8 CONSOLIDATED STATEMENTS OF INCOME Federal Express Corporation and Subsidiaries Years ended May 31 In thousands, except Earnings Per Share
1997 1996 1995 - ---------------------------------------------------------------------------------------------------------- REVENUES $11,519,750 $10,273,619 $9,392,073 OPERATING EXPENSES: Salaries and employee benefits (Notes 8 and 9) 5,095,462 4,619,990 4,425,202 Rentals and landing fees (Note 4) 1,070,658 959,055 818,599 Depreciation and amortization 777,374 719,609 652,287 Fuel 690,412 578,614 502,417 Maintenance and repairs 724,416 617,657 544,170 Other 2,462,386 2,154,870 1,858,254 ----------- ----------- ---------- 10,820,708 9,649,795 8,800,929 ----------- ----------- ---------- OPERATING INCOME 699,042 623,824 591,144 OTHER INCOME (EXPENSE): Interest, net (Note 1) (90,634) (95,599) (114,687) Other, net (Note 14) 19,813 11,734 45,627 ----------- ----------- ---------- (70,821) (83,865) (69,060) Income before Income Taxes 628,221 539,959 522,084 Provision for Income Taxes (Note 7) 266,994 232,182 224,496 ----------- ----------- ---------- Net Income $ 361,227 $ 307,777 $ 297,588 - ---------------------------------------------------------------------------------------------------------- Earnings Per Share (Note 6) $ 3.12 $ 2.69 $ 2.63 - ---------------------------------------------------------------------------------------------------------- Average Shares Outstanding (Note 6) 115,641 114,276 112,987 - ----------------------------------------------------------------------------------------------------------
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. 8 9 CONSOLIDATED BALANCE SHEETS Federal Express Corporation and Subsidiaries May 31 In thousands
1997 1996 - ---------------------------------------------------------------------------------------------------------- ASSETS CURRENT ASSETS: Cash and cash equivalents $ 122,023 $ 93,419 Receivables, less allowance for doubtful accounts of $36,175 and $30,809 1,512,939 1,271,599 Spare parts, supplies and fuel 313,337 222,110 Deferred income taxes (Note 7) 149,158 92,606 Prepaid expenses and other 35,132 48,527 ---------- ---------- Total current assets 2,132,589 1,728,261 ---------- ---------- PROPERTY AND EQUIPMENT, AT COST (Notes 1, 3, 4 and 12): Flight equipment 3,741,407 3,372,647 Package handling and ground support equipment 2,403,806 2,148,509 Computer and electronic equipment 1,714,662 1,439,883 Other 1,959,061 1,717,478 ---------- ---------- 9,818,936 8,678,517 Less accumulated depreciation and amortization 5,196,856 4,561,916 ---------- ---------- Net property and equipment 4,622,080 4,116,601 ---------- ---------- OTHER ASSETS: Goodwill (Note 1) 365,327 380,748 Equipment deposits and other assets (Note 12) 505,490 473,361 ---------- ---------- Total other assets 870,817 854,109 ---------- ---------- $7,625,486 $6,698,971 - ---------------------------------------------------------------------------------------------------------- LIABILITIES AND STOCKHOLDERS' INVESTMENT CURRENT LIABILITIES: Current portion of long-term debt (Note 3) $ 126,666 $ 8,009 Accounts payable 828,421 705,532 Accrued expenses (Note 2) 1,007,696 904,856 ---------- ---------- Total current liabilities 1,962,783 1,618,397 ---------- ---------- LONG-TERM DEBT, LESS CURRENT PORTION (Note 3) 1,397,954 1,325,277 ---------- ---------- DEFERRED INCOME TAXES (Note 7) 159,165 64,034 ---------- ---------- OTHER LIABILITIES (Note 1) 1,143,070 1,115,124 ---------- ---------- COMMITMENTS AND CONTINGENCIES (Notes 4, 12 and 13) COMMON STOCKHOLDERS' INVESTMENT (Note 6): Common Stock, $.10 par value; 200,000 shares authorized; 114,907 and 56,885 shares issued 11,491 5,689 Additional paid-in capital 850,616 815,137 Retained earnings 2,118,015 1,766,578 ---------- ---------- 2,980,122 2,587,404 Less deferred compensation 17,608 11,265 ---------- ---------- Total common stockholders' investment 2,962,514 2,576,139 ---------- ---------- $7,625,486 $6,698,971 - ----------------------------------------------------------------------------------------------------------
The accompanying Notes to Consolidated Financial Statements are an integral part of these balance sheets. 9 10 CONSOLIDATED STATEMENTS OF CASH FLOWS Federal Express Corporation and Subsidiaries Years ended May 31 In thousands
1997 1996 1995 - ---------------------------------------------------------------------------------------------------------- OPERATING ACTIVITIES Net income $ 361,227 $ 307,777 $ 297,588 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization 777,374 719,609 652,287 Provision for uncollectible accounts 40,634 38,963 36,334 Provision for deferred income taxes and other 45,737 26,489 25,976 Gain from disposals of property and equipment (19,567) (5,397) (39,997) Changes in assets and liabilities, net of effects from dispositions of businesses: Increase in receivables (334,448) (191,334) (167,319) Increase in other current assets (450,945) (41,992) (24,101) Increase in accounts payable, accrued expenses and other liabilities 597,980 100,515 258,373 Other, net (10,500) (8,050) (8,424) ------------ ---------- ------------ Cash provided by operating activities 1,007,492 946,580 1,030,717 ------------ ---------- ------------ INVESTING ACTIVITIES Purchases of property and equipment, including deposits on aircraft of $26,107, $68,202 and $113,073 (1,470,592) (1,412,242) (1,060,761) Proceeds from dispositions of property and equipment: Sale-leaseback transactions 162,400 176,500 -- Reimbursements of A300 deposits 63,039 143,859 138,203 Other dispositions 29,147 26,504 59,523 Other, net 24,612 77,208 87,925 ----------- ---------- ------------ Cash used in investing activities (1,191,394) (988,171) (775,110) ----------- ---------- ------------ FINANCING ACTIVITIES Proceeds from debt issuances 200,904 17,298 45,460 Proceeds from stock issuances 31,013 36,566 13,081 Principal payments on debt (9,670) (264,004) (349,523) Other, net (9,741) (12,398) -- ----------- ---------- ------------ Cash provided by (used in) financing activities 212,506 (222,538) (290,982) ----------- ---------- ------------ CASH AND CASH EQUIVALENTS Increase (decrease) during the year 28,604 (264,129) (35,375) Balance at beginning of year 93,419 357,548 392,923 ----------- ---------- ------------ Balance at end of year $ 122,023 $ 93,419 $ 357,548 - ----------------------------------------------------------------------------------------------------------
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. 10 11 CONSOLIDATED STATEMENTS OF CHANGES IN COMMON STOCKHOLDERS' INVESTMENT Federal Express Corporation and Subsidiaries
In thousands, except shares Additional Common Paid-in Retained Treasury Deferred Stock Capital Earnings Stock Compensation - --------------------------------------------------------------------------------------------------------------------------- BALANCE AT MAY 31, 1994 $ 5,589 $759,229 $1,162,160 $ (775) $ (1,498) Forfeiture of restricted stock -- -- -- (231) -- Issuance of common stock under employee incentive plans (288,724 shares) 28 16,026 -- -- -- Amortization of deferred compensation -- -- -- -- 774 Foreign currency translation adjustment -- -- 6,679 -- -- Net income -- -- 297,588 -- -- ------------------------------------------------------------------------ BALANCE AT MAY 31, 1995 5,617 775,255 1,466,427 (1,006) (724) - --------------------------------------------------------------------------------------------------------------------------- Purchase of treasury stock -- -- -- (12,398) -- Forfeiture of restricted stock -- -- -- (1,068) 1,130 Issuance of common and treasury stock under employee incentive plans (886,195 shares) 72 39,882 -- 14,472 (13,898) Amortization of deferred compensation -- -- -- -- 2,227 Foreign currency translation adjustment -- -- (7,626) -- -- Net income -- -- 307,777 -- -- ------------------------------------------------------------------------ BALANCE AT MAY 31, 1996 5,689 815,137 1,766,578 -- (11,265) - --------------------------------------------------------------------------------------------------------------------------- Purchase of treasury stock -- -- -- (9,741) -- Forfeiture of restricted stock -- -- -- (803) 720 Two-for-one stock split in the form of a 100% stock dividend (56,994,074 shares) 5,699 -- (5,699) -- -- Issuance of common and treasury stock under employee incentive plans (1,225,454 shares) 103 35,479 -- 10,544 (10,484) Amortization of deferred compensation -- -- -- -- 3,421 Foreign currency translation adjustment -- -- (4,091) -- -- Net income -- -- 361,227 -- -- ------------------------------------------------------------------------ BALANCE AT MAY 31, 1997 $11,491 $850,616 $2,118,015 $ -- $(17,608) ===========================================================================================================================
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. 11 12 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Federal Express Corporation and Subsidiaries NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION. The consolidated financial statements include the accounts of Federal Express Corporation and its wholly-owned subsidiaries (the "Company"). All significant intercompany accounts and transactions have been eliminated. PROPERTY AND EQUIPMENT. Expenditures for major additions, improvements, flight equipment modifications, and certain overhaul costs are capitalized. Maintenance and repairs are charged to expense as incurred, except for B747 airframe and engine overhaul maintenance which is accrued and charged to expense on the basis of hours flown. The cost and accumulated depreciation of property and equipment disposed of are removed from the related accounts, and any gain or loss is reflected in the results of operations. For financial reporting purposes, depreciation and amortization of property and equipment is provided on a straight-line basis over the asset's service life or related lease term as follows: Flight equipment 5 to 20 years Package handling and ground support equipment 5 to 30 years Computer and electronic equipment 3 to 10 years Other 2 to 30 years - -------------------------------------------------------------------------------- Aircraft airframes and engines are assigned residual values ranging from 10% to 20% of asset cost. All other property and equipment have no assigned residual values. Vehicles, which are included in package handling and ground support equipment, are depreciated on a straight-line basis over 5 to 10 years. For income tax purposes, depreciation is generally computed using accelerated methods. DEFERRED GAINS. Gains on the sale and leaseback of aircraft and other property and equipment are deferred and amortized over the life of the lease as a reduction of rent expense. Included in other liabilities at May 31, 1997 and 1996, were deferred gains of $340,166,000 and $337,118,000, respectively. DEFERRED LEASE OBLIGATIONS. While certain of the Company's aircraft and facility leases contain fluctuating or escalating payments, the related rent expense is recorded on a straight-line basis over the lease term. Included in other liabilities at May 31, 1997 and 1996, were $289,822,000 and $260,977,000, respectively, representing the cumulative difference between rent expense and rent payments. SELF-INSURANCE RESERVES. The Company is self-insured up to certain levels for workers' compensation, employee health care and vehicle liabilities. Reserves are based on the actuarially estimated cost of claims. Included in other liabilities at May 31, 1997 and 1996, were $256,000,000 and $278,000,000, respectively, representing the long-term portion of self-insurance reserves for the Company's workers' compensation and vehicle liabilities. CAPITALIZED INTEREST. Interest on funds used to finance the acquisition and modification of aircraft and construction of certain facilities up to the date the asset is placed in service is capitalized and included in the cost of the asset. Capitalized interest was $39,449,000, $39,254,000 and $27,381,000 for 1997, 1996 and 1995, respectively. 12 13 ADVERTISING. Advertising costs are generally expensed as incurred and are included in other operating expenses. Advertising expenses were $153,399,000, $138,408,000 and $147,288,000 in 1997, 1996 and 1995, respectively. CASH EQUIVALENTS. Cash equivalents are cash in excess of current operating requirements invested in short-term, interest-bearing instruments with maturities of three months or less at the date of purchase and are stated at cost, which approximates market value. Interest income was $5,055,000 in 1997, $9,850,000 in 1996 and $16,236,000 in 1995. SPARE PARTS, SUPPLIES AND FUEL. Spare parts are stated principally at weighted average cost; supplies and fuel are stated principally at standard cost which approximates actual cost on a first-in, first-out basis. Neither method values inventory in excess of current replacement cost. GOODWILL. Goodwill is the excess of the purchase price over the fair value of net assets of businesses acquired. It is amortized on a straight-line basis over periods ranging up to 40 years. Accumulated amortization was $129,404,000 and $114,606,000 at May 31, 1997 and 1996, respectively. FOREIGN CURRENCY TRANSLATION. Translation gains and losses of the Company's foreign operations that use local currencies as the functional currency are accumulated and reported, net of related deferred income taxes, as a separate component of common stockholders' investment. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the local functional currency are included in the results of operations. INCOME TAXES. Deferred income taxes are provided for the tax effect of temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements. The Company uses the liability method to account for income taxes, which requires deferred taxes to be recorded at the statutory rate expected to be in effect when the taxes are paid. The Company has not provided for U.S. federal income taxes on its foreign subsidiaries' earnings deemed to be permanently reinvested. Quantification of the deferred tax liability, if any, associated with permanently reinvested earnings is not practicable. REVENUE RECOGNITION. Revenue is generally recognized upon delivery of shipments. For shipments in transit, revenue is recorded based on the percentage of service completed. EARNINGS PER SHARE. Earnings per share is computed based on the weighted average number of common and common equivalent shares outstanding during the period. Common equivalent shares are the shares of common stock that would be issued upon the exercise of all dilutive outstanding stock options, less the assumed repurchase of treasury shares. Earnings per share assuming full dilution is substantially the same as earnings per share as stated and, accordingly, is not shown separately. In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share." SFAS No. 128 specifies new standards for computing and disclosing earnings per share effective for financial statements issued for periods ending after December 15, 1997. The Company does not expect the adoption of SFAS No. 128 to have a material effect on the results of the earnings per share calculation for the years ended May 31, 1997, 1996 and 1995. 13 14 RECLASSIFICATIONS. Certain amounts for 1996 and 1995 have been reclassified to conform to the 1997 presentation. USE OF ESTIMATES. The preparation of the consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. NOTE 2: ACCRUED EXPENSES May 31 In thousands
1997 1996 - -------------------------------------------------------------------- Compensated absences $ 234,284 $211,499 Insurance 207,059 194,209 Taxes other than income taxes 143,541 153,905 Employee benefits 108,679 111,912 Salaries 101,694 78,384 Aircraft overhaul 84,006 59,343 Other 128,433 95,604 ---------- -------- $1,007,696 $904,856 - --------------------------------------------------------------------
NOTE 3: LONG-TERM DEBT May 31 In thousands
1997 1996 - ---------------------------------------------------------------------------------------------------------- Unsecured notes payable, interest rates of 6.25% to 10.57%, due through 2013 $ 928,525 $ 934,181 ---------- ---------- Unsecured sinking fund debentures, interest rate of 9.63%, due through 2020 98,461 98,392 ---------- ---------- Commercial paper, effective interest rate of 5.75% 200,904 -- ---------- ---------- Capital lease obligations and tax exempt bonds, due through 2017, interest rates of 6.75% to 8.30% 255,100 255,100 Less bond reserves 11,096 11,096 ---------- ---------- 244,004 244,004 ---------- ---------- Other debt, interest rates of 9.68% to 9.98% 52,726 56,709 ---------- ---------- 1,524,620 1,333,286 Less current portion 126,666 8,009 ---------- ---------- $1,397,954 $1,325,277 - ----------------------------------------------------------------------------------------------------------
The Company has a revolving credit agreement with domestic and foreign banks that provides for a commitment of $1,000,000,000 through May 31, 2000, of which $799,096,000 was available at May 31, 1997. Interest rates on borrowings under this agreement are generally determined by maturities selected and prevailing market conditions. The agreement contains certain covenants and restrictions, none of which are expected to significantly affect operations or the ability to pay dividends. As of May 31, 1997, approximately $1,259,000,000 was available for the payment of dividends under the restrictive covenant of the agreement. Commercial paper borrowings are backed by unused commitments under the revolving credit agreement and reduce the amount available under the agreement. Borrowings under this credit agreement and commercial paper borrowings 14 15 are classified as long-term based on the Company's ability and intent to refinance such borrowings. Tax exempt bonds were issued by the Memphis-Shelby County Airport Authority ("MSCAA") and the City of Indianapolis. A lease agreement with the MSCAA and a loan agreement with the City of Indianapolis covering the facilities and equipment financed with the bond proceeds obligate the Company to pay rentals and loan payments, respectively, equal to principal and interest due on the bonds. Scheduled annual principal maturities of long-term debt for the five years subsequent to May 31, 1997, are as follows: $126,700,000 in 1998; $263,300,000 in 1999; $14,900,000 in 2000; $11,300,000 in 2001; and $206,700,000 in 2002. The Company's long-term debt, exclusive of capital leases, had carrying values of $1,122,000,000 and $1,130,000,000 at May 31, 1997 and 1996, respectively, compared with fair values of approximately $1,223,000,000 and $1,245,000,000 at those dates. The estimated fair values were determined based on quoted market prices or on the current rates offered for debt with similar terms and maturities. NOTE 4: LEASE COMMITMENTS The Company utilizes certain aircraft, land, facilities and equipment under capital and operating leases which expire at various dates through 2025. In addition, supplemental aircraft are leased under agreements which generally provide for cancellation upon 30 days' notice. Property and equipment recorded under capital leases at May 31 was as follows: In thousands
1997 1996 - ---------------------------------------------------------------------------------------------------------- Package handling and ground support equipment $274,017 $303,756 Facilities 133,435 133,435 Computer and electronic equipment and other 6,520 7,143 -------- -------- 413,972 444,334 Less accumulated amortization 276,855 296,317 -------- -------- $137,117 $148,017 - ----------------------------------------------------------------------------------------------------------
Rent expense under operating leases for the years ended May 31 was as follows:
In thousands 1997 1996 1995 - ---------------------------------------------------------------------------------------------------------- Minimum rentals $930,977 $820,896 $707,182 Contingent rentals 57,806 61,164 43,005 -------- -------- -------- $988,783 $882,060 $750,187 - ----------------------------------------------------------------------------------------------------------
Contingent rentals are based on mileage under supplemental aircraft leases. 15 16 A summary of future minimum lease payments under capital leases and noncancelable operating leases (principally aircraft and facilities) with an initial or remaining term in excess of one year at May 31, 1997, follows:
In thousands Capital Leases Operating Leases - ---------------------------------------------------------------------------- 1998 $ 15,561 $ 827,483 1999 15,561 838,904 2000 15,561 788,552 2001 15,561 749,014 2002 15,561 685,268 Thereafter 340,524 7,789,492 -------- ---------- $418,329 $11,678,713
At May 31, 1997, the present value of future minimum lease payments for capital lease obligations was $199,004,000. NOTE 5: PREFERRED STOCK The Certificate of Incorporation authorizes the Board of Directors, at its discretion, to issue up to 4,000,000 shares of Series Preferred Stock. The stock is issuable in series which may vary as to certain rights and preferences and has no par value. As of May 31, 1997, none of these shares had been issued. NOTE 6: COMMON STOCKHOLDERS' INVESTMENT On October 1, 1996, the Board of Directors declared a two-for-one stock split in the form of a 100% stock dividend, which was paid on November 4, 1996, to stockholders of record on October 15, 1996. All share and per share amounts have been adjusted to reflect the stock split. STOCK COMPENSATION PLANS At May 31, 1997, the Company had options and awards outstanding under nine stock-based compensation plans consisting of seven fixed stock option plans and two restricted stock plans, which are described below. As of May 31, 1997, there were 7,218,819 shares of common stock reserved for issuance under five of these plans. In 1988, the Board of Directors authorized the purchase of up to approximately 10,600,000 shares of the Company's common stock on the open market. As of May 31, 1997, a total of 6,006,517 shares at an average cost of $22.88 per share had been purchased and reissued under the above-mentioned plans. The Company applies Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," and related Interpretations in accounting for its plans. Accordingly, no compensation cost was recognized for its fixed stock option plans. The compensation cost charged against income for its restricted stock plans was $3,421,000, $2,227,000 and $774,000 for 1997, 1996 and 1995, respectively. 16 17 Had compensation cost for the Company's stock-based compensation plans been determined consistent with SFAS No. 123, "Accounting for Stock-Based Compensation," the Company's net income and earnings per share would have been the pro forma amounts indicated below: In thousands, except per share data
1997 1996 - ------------------------------------------------------------------------ Net Income: As reported $361,227 $307,777 Pro forma 352,747 302,504 Earnings per share: As reported $ 3.12 $ 2.69 Pro forma 3.05 2.65 - ------------------------------------------------------------------------
The pro forma disclosures, applying SFAS No. 123, are not likely to be representative of pro forma disclosures for future years. The pro forma effect is not expected to be fully reflected until 2002 since SFAS No. 123 is applicable to options granted by the Company after May 31, 1995, and because options vest over several years and additional grants could be made. FIXED STOCK OPTION PLANS Under the provisions of the Company's stock incentive plans, options may be granted to certain key employees (and, under the 1993 plan, to directors who are not employees of the Company) to purchase shares of common stock of the Company at a price not less than its fair market value at the date of grant. Options granted have a maximum term of 10 years. Vesting requirements are determined at the discretion of the Compensation Committee of the Board of Directors. Presently, option vesting periods range from one to seven years. At May 31, 1997, there were 963,692 shares available for future grants under these plans. Beginning with the grants made on or after June 1, 1995, the fair value of each option grant was estimated on the grant date using the Black-Scholes option-pricing model with the following assumptions for each option grant:
1997 1996 - --------------------------------------------------------------------- Dividend yield 0% 0% Expected volatility 25% 25% Risk-free interest rate 5.82%-6.91% 5.86%-6.43% Expected lives 2.5-8.5 YEARS 2.5-7.5 years - ---------------------------------------------------------------------
17 18 The following table summarizes information about the Company's fixed stock option plans for the years ended May 31:
1997 1996 1995 WEIGHTED- Weighted- Weighted- AVERAGE Average Average EXERCISE Exercise Exercise SHARES PRICE Shares Price Shares Price - ---------------------------------------------------------------------------------------------------------- Outstanding at beginning of year 6,398,560 $31.44 6,337,730 $27.49 5,751,572 $25.78 Granted 1,188,000 38.84 1,818,000 40.69 1,343,600 32.71 Exercised (1,136,503) 27.30 (1,421,890) 25.41 (577,448) 20.95 Forfeited (268,030) 35.98 (335,280) 32.46 (179,994) 23.18 ---------- ---------- --------- Outstanding at end of year 6,182,027 33.43 6,398,560 31.44 6,337,730 27.49 - ---------------------------------------------------------------------------------------------------------- Exercisable at end of year 2,265,149 27.84 2,452,800 25.10 2,956,178 24.60 - ----------------------------------------------------------------------------------------------------------
The weighted-average fair value of options granted during the year was $16.23 and $13.07 for the years ended May 31, 1997 and 1996, respectively. The following table summarizes information about fixed stock options outstanding at May 31, 1997:
Options Outstanding Options Exercisable ---------------------------------------------- ----------------------------- Weighted- Average Remaining Weighted- Weighted- Range of Number Contractual Average Number Average Exercise Prices Outstanding Life Exercise Price Exercisable Exercise Price - ---------------------------------------------------------------------------------------------------------- $15.28 - $22.56 842,955 2.3 years $19.82 818,755 $19.81 23.13 - 43.94 5,339,072 7.5 years 35.58 1,446,394 32.38 --------- --------- 15.28 - 43.94 6,182,027 6.8 years 33.43 2,265,149 27.84 - ----------------------------------------------------------------------------------------------------------
RESTRICTED STOCK PLANS Under the terms of the Company's Restricted Stock Plans, shares of the Company's common stock are awarded to key employees. All restrictions on the shares expire over periods varying from two to five years from their date of award. Shares are valued at the market price of the Company's common stock at the date of award. Compensation expense related to these plans is recorded as a reduction of common stockholders' investment and is being amortized as restrictions on such shares expire. The following table summarizes information about restricted stock awards for the years ended May 31:
1997 1996 1995 WEIGHTED- Weighted- Weighted- AVERAGE Average Average FAIR Fair Fair SHARES VALUE Shares Value Shares Value - ---------------------------------------------------------------------------------------------------------- Awarded 201,900 $51.93 350,500 $39.65 -- $ -- Forfeited 18,000 40.03 29,000 38.96 7,500 18.56 - ----------------------------------------------------------------------------------------------------------
At May 31, 1997, there were 73,100 shares available for future awards under this plan. 18 19 NOTE 7: INCOME TAXES The components of the provision for income taxes for the years ended May 31 were as follows: In thousands
1997 1996 1995 - ---------------------------------------------------------------------------------------------------------- Current provision: Federal $144,647 $142,512 $137,041 Foreign 44,165 37,759 29,787 State 19,827 18,007 23,405 -------- -------- -------- 208,639 198,278 190,233 - ---------------------------------------------------------------------------------------------------------- Deferred provision: Federal 50,717 27,962 24,058 Foreign 2,336 2,351 9,072 State 5,302 3,591 1,133 -------- -------- -------- 58,355 33,904 34,263 -------- -------- -------- $266,994 $232,182 $224,496 - ----------------------------------------------------------------------------------------------------------
The Company's operations included the following income (loss) with respect to entities in foreign locations for the years ended May 31:
In thousands 1997 1996 1995 - ---------------------------------------------------------------------------------------------------------- Entities with pre-tax income $ 204,000 $ 153,000 $ 149,000 Entities with pre-tax losses (186,000) (228,000) (173,000) ----------- ----------- ----------- $ 18,000 $ (75,000) $ (24,000) - ----------------------------------------------------------------------------------------------------------
Income (losses) from entities which are structured as foreign subsidiaries are not included in the U.S. consolidated income tax return. Approximately $78,000,000, $60,000,000 and $29,000,000 of net foreign subsidiary income were not taxable for federal income tax purposes in 1997, 1996 and 1995, respectively. Income taxes have been provided for foreign operations based upon the various tax laws and rates of the countries in which the Company's operations are conducted. There is no direct relationship between the Company's overall foreign income tax provision and foreign pre-tax book income due to the different methods of taxation used by countries throughout the world. A reconciliation of the statutory federal income tax rate to the Company's effective income tax rate for the years ended May 31 follows:
1997 1996 1995 - ---------------------------------------------------------------------------------------------------------- Statutory U.S. income tax rate 35.0% 35.0% 35.0% Increase resulting from: Goodwill amortization 0.8 0.9 1.0 Foreign operations 1.1 1.7 0.9 State income taxes, net of federal benefit 2.6 2.6 3.1 Other, net 3.0 2.8 3.0 ---- ---- ---- 42.5% 43.0% 43.0% - --------------------------------------------------------------------------------------------------------
19 20 The significant components of deferred tax assets and liabilities as of May 31 were as follows:
In thousands 1997 1996 DEFERRED DEFERRED Deferred Deferred TAX ASSETS TAX LIABILITIES Tax Assets Tax Liabilities - ---------------------------------------------------------------------------------------------------------- Depreciation $ -- $409,563 $ -- $324,221 Deferred gains on sales of assets 83,413 -- 81,370 -- Employee benefits 77,590 -- 45,137 -- Self-insurance reserves 162,443 -- 165,020 -- Other 171,356 95,246 151,355 90,089 -------- -------- -------- -------- $494,802 $504,809 $442,882 $414,310 - ----------------------------------------------------------------------------------------------------------
NOTE 8: PENSION AND PROFIT SHARING PLANS The Company sponsors pension plans covering substantially all employees. The largest plan covers U.S. domestic employees age 21 and over, with at least one year of service and provides benefits based on final average earnings and years of service. Plan funding is actuarially determined, subject to certain tax law limitations. International defined benefit plans provide benefits primarily based on final earnings and years of service and are funded in accordance with local laws and income tax regulations. The following table sets forth the funded status of the plans as of May 31:
In thousands 1997 1996 - ---------------------------------------------------------------------------------------------------------- Plan assets at fair value $3,275,641 $2,725,896 Actuarial present value of the projected benefit obligation for service rendered to date 2,911,584 2,571,086 ---------- ---------- Plan assets in excess of projected benefit obligation 364,057 154,810 Unrecognized net gains from past experience different from that assumed and effects of changes in assumptions (281,274) (74,425) Prior service cost not yet recognized in net periodic cost (2,335) (7,398) Unrecognized transition amount 3,169 3,239 ---------- ---------- Pension asset $ 83,617 $ 76,226 - ---------------------------------------------------------------------------------------------------------- Accumulated benefit obligation $1,892,635 $1,626,877 - ---------------------------------------------------------------------------------------------------------- Vested benefit obligation $1,768,619 $1,538,267 - ----------------------------------------------------------------------------------------------------------
Net periodic pension cost for the years ended May 31 included the following components:
In thousands 1997 1996 1995 - ---------------------------------------------------------------------------------------------------------- Service cost-- benefits earned during the period $ 232,491 $ 184,305 $ 182,617 Interest cost on projected benefit obligation 206,359 165,635 143,408 Actual return on plan assets (423,871) (463,819) (192,939) Net amortization and deferral 130,529 256,968 19,333 --------- --------- --------- $ 145,508 $ 143,089 $ 152,419 - ----------------------------------------------------------------------------------------------------------
The weighted-average discount rate and rate of increase in future compensation levels used in determining the actuarial present value of the projected benefit obligation were 8.1% and 5.5%, respectively, in 1997, 8.0% and 5.5%, respectively, in 1996 and 8.6% and 6.0%, respectively, in 1995. The expected long-term rate of return on assets was 10.5% in 1997 20 21 and 9.5% in 1996 and 1995. Plan assets consist primarily of marketable equity securities and fixed income instruments. The Company also has a profit sharing plan, which covers 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 plan provides for discretionary contributions by the Company which are determined annually by the Board of Directors. The plan also provides for a matching contribution by the Company equal to 50% of each participant's contribution up to a maximum of $500 per participant annually. Profit sharing expense was $90,800,000 in 1997, $80,400,000 in 1996 and $76,600,000 in 1995. The 1997 amount consists of contributions to the plan of $62,200,000 and cash distributions made outside the plan directly to employees of $28,600,000. NOTE 9: POSTRETIREMENT BENEFIT PLANS The Company 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 the Company's U.S. domestic employees become eligible for these benefits at age 55 and older, if they have permanent, continuous service with the Company 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. The following table sets forth the accrued postretirement benefit cost as of May 31:
In thousands 1997 1996 - ---------------------------------------------------------------------------------------------------------- Accumulated postretirement benefit obligation: Retirees $ 41,552 $ 39,539 Fully eligible active employees 38,430 31,472 Other active employees, not fully eligible 88,607 80,001 -------- -------- 168,589 151,012 Unrecognized net gain 24,089 15,402 -------- -------- $192,678 $166,414 - ----------------------------------------------------------------------------------------------------------
Net postretirement benefit cost for the years ended May 31 was as follows:
In thousands 1997 1996 1995 - --------------------------------------------------------------------------------------------------------- Service cost $16,952 $12,085 $12,870 Interest cost 12,592 11,275 10,617 Amortization of accumulated gains -- (780) -- ------- ------- ------- $29,544 $22,580 $23,487 - ---------------------------------------------------------------------------------------------------------
Future medical benefit costs were estimated to increase at an annual rate of 10.0% during 1998, decreasing to an annual growth rate of 5.75% in 2007 and thereafter. Future dental benefit costs were estimated to increase at an annual rate of 8.25% during 1998, decreasing to an annual growth rate of 5.75% in 2008 and thereafter. The Company's cost is capped at 150% of 1993 employer cost and, therefore, will not be subject to medical and dental trends after the capped cost is attained, projected to be in 2000. Primarily because of the cap on the Company's cost, a 1% increase in these annual trend rates would not have a significant impact on the accumulated postretirement benefit obligation at May 31, 1997, or 1997 benefit expense. The weighted average discount rates used in estimating the 21 22 accumulated postretirement obligation were 7.8% and 7.4% at May 31, 1997 and 1996, respectively. The Company pays claims as incurred. NOTE 10: BUSINESS SEGMENT INFORMATION The Company is in a single line of business--the worldwide transportation and distribution of goods and documents. For reporting purposes, operations are classified into two geographic areas, U.S. domestic and international. Shipments which either originate in or are destined to locations outside the U.S. are categorized as international. A summary of selected financial information for U.S. domestic and international operations for the years ended May 31 follows:
In thousands U.S. Total Domestic International Worldwide - ------------------------------------------------------------------------------------------------------ Revenues: 1997 $8,322,037 $3,197,713 $11,519,750 1996 7,466,311 2,807,308 10,273,619 1995 6,839,418 2,552,655 9,392,073 Operating Income: 1997 $ 558,040 $ 141,002 $ 699,042 1996 542,168 81,656 623,824 1995 465,527 125,617 591,144 Identifiable Assets: 1997 $6,122,885 $1,502,601 $ 7,625,486 1996 5,449,353 1,249,618 6,698,971 1995 5,321,811 1,111,561 6,433,372 - ------------------------------------------------------------------------------------------------------
Identifiable assets used jointly in U.S. domestic and international operations (principally aircraft) have been allocated based on estimated usage. International revenues related to services originating in the U.S. totaled $1,433,700,000, $1,316,100,000 and $1,201,100,000 for the years ended May 31, 1997, 1996 and 1995, respectively. NOTE 11: SUPPLEMENTAL CASH FLOW INFORMATION Cash paid for interest expense and income taxes for the years ended May 31 was as follows:
In thousands 1997 1996 1995 - ---------------------------------------------------------------------------------------------------------- Interest (net of capitalized interest) $ 95,364 $108,052 $138,833 Income taxes 184,668 204,487 185,964 - ----------------------------------------------------------------------------------------------------------
Non-cash investing and financing activities for the years ended May 31 were as follows:
In thousands 1997 1996 1995 - ---------------------------------------------------------------------------------------------------------- Fair value of assets surrendered under exchange agreements (with two airlines) $62,018 $-- $ -- Fair value of assets acquired under exchange agreements 46,662 -- -- Fair value of assets receivable under exchange agreements 15,356 -- -- Liabilities assumed in buyout of a leased B747 aircraft -- -- 50,300 - ----------------------------------------------------------------------------------------------------------
22 23 NOTE 12: COMMITMENTS AND CONTINGENCIES The Company's annual purchase commitments under various contracts as of May 31, 1997, were as follows:
In thousands Aircraft- Aircraft Related(1) Other(2) Total - -------------------------------------------------------------------------------------------------------- 1998 $504,400 $276,300 $313,800 $1,094,500 1999 406,100 161,400 57,300 624,800 2000 369,500 364,900 13,300 747,700 2001 278,000 180,500 -- 458,500 2002 38,000 165,300 -- 203,300 - --------------------------------------------------------------------------------------------------------
(1) Primarily aircraft modifications, rotables, and spare parts and engines. (2) Facilities, vehicles, computer and other equipment. At May 31, 1997, the Company was committed to purchase 17 Airbus A300s, two Airbus A310s, eight MD11s and 50 Ayers ALM 200s to be delivered through 2002. Deposits and progress payments of $141,090,000 had been made toward these purchases. The Company may be required to purchase seven additional MD11 aircraft for delivery beginning no later than 2000 under a put option agreement. During 1997, the Company entered into agreements with two airlines to acquire 53 DC10s, spare parts, aircraft engines and other equipment, and maintenance services in exchange for a combination of aircraft engine noise reduction kits and cash. Delivery of these aircraft began in 1997 and will continue through 2001. Additionally, these airlines may exercise put options through December 31, 2003, requiring the Company to purchase up to 29 additional DC10s along with additional aircraft engines and equipment. The Company has entered into contracts which are designed to limit its exposure to fluctuations in jet fuel prices. Under these contracts, the Company makes (or receives) payments based on the difference between a specified lower (or upper) limit and the market price of jet fuel, as determined by an index of spot market prices representing various geographic regions. The difference is recorded as an increase or decrease in fuel expense. At May 31, 1997, the Company had contracts with various financial institutions covering a total notional volume of 396,900,000 gallons (approximately 54% of the Company's annual jet fuel consumption), with some contracts extending through May 1998. At May 31, 1996, the Company had similar contracts covering a total notional volume of 365,300,000 gallons (approximately 54% of the Company's annual jet fuel consumption), with some contracts extending through May 1997. The Company received $15,162,000 (net of payments) and $1,977,000 under jet fuel contracts during 1997 and 1996, respectively. Based on current market prices, the fair value of these contracts was a liability of approximately $418,000 at May 31, 1997, and an asset of approximately $1,370,000 at May 31, 1996. NOTE 13: LEGAL PROCEEDINGS Customers of the Company have filed four separate class-action lawsuits against the Company generally alleging that the Company has breached its contract with the plaintiffs in transporting packages shipped by them. These lawsuits allege that the Company continued to collect a 6.25% federal excise tax on the transportation of property shipped by air after the tax expired on December 31, 1995, until it was reinstated in August of 1996. The plaintiffs seek certification as a class action, damages, an injunction to enjoin the Company from continuing to collect the excise tax referred to above, and an award of attorneys' fees and costs. Three of those cases were consolidated in Minnesota Federal 23 24 District Court. That court stayed the consolidated cases in favor of a case filed in Circuit Court of Greene County, Alabama. The complaint in the Alabama case also alleges that the Company continued to collect the excise tax on the transportation of property shipped by air after the tax expired again on December 31, 1996. A fifth case, filed in the Supreme Court of New York, New York County, containing allegations and requests for relief substantially similar to the other four cases, originally alleged that the Company continued to collect the excise tax on the transportation of property shipped by air after the tax expired on December 31, 1996. The New York complaint has been amended to cover the first expiration period of the tax (December 31, 1995 through August 27, 1996) covered in the original Alabama complaint. The air transportation excise tax expired on December 31, 1995, was reenacted by Congress effective August 27, 1996, and expired again on December 31, 1996. The excise tax was then reenacted by Congress effective March 7, 1997, and is scheduled to expire on September 30, 1997. The expiration of the tax relieved the Company of its obligation to pay the tax during the periods of expiration. Legislation to reenact the tax for a ten-year period as of October 1, 1997, is currently pending in Congress. The Company intends to vigorously defend itself in these cases. No amount has been reserved for these contingencies. The Company is subject to other legal proceedings and claims which arise in the ordinary course of its business. In the opinion of management, the aggregate liability, if any, with respect to these other actions will not materially adversely affect the financial position or results of operations of the Company. NOTE 14: UNUSUAL EVENTS In 1997, operating income included a $15,000,000 pre-tax benefit from the settlement of a Tennessee personal property tax matter. Also in 1997, the Company recorded a $17,100,000 non-operating gain from an insurance settlement for a DC10 aircraft destroyed by fire in September 1996. The Company received $7,800,000 and $9,700,000 in 1996 and 1995, respectively, from the bankruptcy estate of a firm engaged by the Company in 1990 to remit payments of employee withholding taxes. This amount is a partial recovery of a $32,000,000 loss incurred by the Company in 1991 that resulted from the firm's failure to remit certain of these tax payments to appropriate authorities. The Company has received $17,900,000 from the bankruptcy estate of the firm. All major issues pertaining to the bankruptcy have been resolved, and any additional amounts the Company may receive are expected to be insignificant. In January 1995, the Company sold two dedicated warehousing and contract distribution companies in the United Kingdom. A gain of $35,700,000 was recorded from the sale. 24 25 NOTE 15: SUMMARY OF QUARTERLY OPERATING RESULTS (UNAUDITED)
In thousands, except earnings per share First Second Third Fourth Quarter Quarter Quarter Quarter - ---------------------------------------------------------------------------------------------------------- 1997 Revenues $2,692,312 $2,852,369 $2,906,819 $3,068,250 Operating income 129,918 184,927 132,927 251,270 Income before income taxes 107,739 180,378 109,544 230,560 Net income 61,950 103,717 62,988 132,572 Earnings per share $ .54 $ .90 $ .54 $ 1.14 Average shares outstanding 114,934 115,132 115,849 116,649 - ---------------------------------------------------------------------------------------------------------- 1996 Revenues $2,453,394 $2,547,012 $2,535,470 $2,737,743 Operating income 149,230 170,905 77,943 225,746 Income before income taxes 129,886 154,952 52,637 202,484 Net income 75,334 89,871 27,156 115,416 Earnings per share $ .66 $ .78 $ .24 $ 1.01 Average shares outstanding 113,376 114,520 114,515 114,691 - ----------------------------------------------------------------------------------------------------------
25 26 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS Federal Express Corporation and Subsidiaries To the Stockholders of Federal Express Corporation: We have audited the accompanying consolidated balance sheets of Federal Express Corporation (a Delaware corporation) and subsidiaries as of May 31, 1997 and 1996, and the related consolidated statements of income, common stockholders' investment and cash flows for each of the three years in the period ended May 31, 1997. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Federal Express Corporation and subsidiaries as of May 31, 1997 and 1996, and the results of their operations and their cash flows for each of the three years in the period ended May 31, 1997, in conformity with generally accepted accounting principles. /s/ ARTHUR ANDERSEN, LLP - ------------------------ Arthur Andersen, LLP Memphis, Tennessee June 30, 1997 26 27 SELECTED CONSOLIDATED FINANCIAL DATA Years ended May 31 In thousands, except per share amounts and Other Operating Data
1997 1996 1995 - ---------------------------------------------------------------------------------------------------------- OPERATING RESULTS Revenues $11,519,750 $10,273,619 $9,392,073 Operating income 699,042 623,824 591,144 Income (loss) before income taxes 628,221 539,959 522,084 Income (loss) from continuing operations 361,227 307,777 297,588 Net income (loss) $ 361,227 $ 307,777 $ 297,588 PER SHARE DATA Earnings (loss) per share: Before cumulative effect of changes in accounting principles $ 3.12 $ 2.69 $ 2.63 Cumulative effect of changes in accounting principles -- -- -- Net earnings (loss) per share $ 3.12 $ 2.69 $ 2.63 Average shares outstanding 115,641 114,276 112,987 Cash dividends -- -- -- FINANCIAL POSITION Property and equipment, net $ 4,622,080 $ 4,116,601 $3,715,244 Total assets 7,625,486 6,698,971 6,433,372 Long-term debt 1,397,954 1,325,277 1,324,711 Common stockholders' investment 2,962,514 2,576,139 2,245,569 OTHER OPERATING DATA Express package: Average daily package volume 2,715,894 2,437,662 2,247,594 Average pounds per package 7.2 6.4 6.3 Average revenue per pound* $ 2.11 $ 2.31 $ 2.31 Average revenue per package* $ 15.11 $ 14.87 $ 14.62 Airfreight: Average daily pounds 2,542,226 2,144,225 2,153,041 Average revenue per pound $ .94 $ 1.01 $ 1.06 Operating weekdays 254 256 255 Aircraft fleet: Airbus A300-600 19 16 9 Airbus A310-200 35 25 15 Boeing 747-100 -- -- -- Boeing 747-200 -- 4 5 McDonnell Douglas MD11 23 18 13 McDonnell Douglas DC10-10 26 13 13 McDonnell Douglas DC10-30 22 22 22 McDonnell Douglas DC8 -- -- -- Boeing 727-100 68 68 68 Boeing 727-200 95 95 90 Cessna 208A 10 10 10 Cessna 208B 254 254 219 Fokker F27 32 32 32 Vehicle fleet 38,500 36,900 35,900 Average number of employees (based on a standard full-time workweek) 107,827 99,999 94,201 - ----------------------------------------------------------------------------------------------------------
27 28 *Beginning in 1995, certain service fee revenues were classified as package-related revenue. Data for prior periods has been restated where applicable to conform to this presentation. 28 29
Federal Express Corporation and Subsidiaries 1994 1993 1992 1991 1990 1989 1988 - ---------------------------------------------------------------------------------------------------------------------------- $8,479,456 $7,808,043 $ 7,550,060 $7,688,296 $7,015,069 $5,166,967 $3,882,817 530,632 377,173 22,967 252,126 387,355 414,787 379,452 378,462 203,576 (146,828) 40,942 218,423 298,332 302,328 204,370 109,809 (113,782) 5,898 115,764 166,451 187,716 $ 204,370 $ 53,866 $ (113,782) $ 5,898 $ 115,764 $ 184,551 $ 187,716 $ 1.82 $ 1.00 $ (1.05) $ .06 $ 1.09 $ 1.59 $ 1.78 -- (.51) -- -- -- 18 -- $ 1.82 $ .49 $ (1.05) $ .06 $ 1.09 $ 1.77 $ 1.78 112,024 109,437 107,923 106,701 106,323 104,544 105,339 -- -- -- -- -- -- -- $3,449,093 $3,476,268 $ 3,411,297 $3,624,026 $3,566,321 $3,431,814 $2,231,875 5,992,498 5,793,064 5,463,186 5,672,461 5,675,073 5,293,422 3,008,549 1,632,202 1,882,279 1,797,844 1,826,781 2,148,142 2,138,940 838,730 1,924,705 1,671,381 1,579,722 1,668,620 1,649,187 1,493,524 1,330,679 1,925,105 1,710,561 1,472,642 1,310,890 1,234,174 1,059,882 877,543 6.0 5.8 5.7 5.6 5.4 5.4 5.3 $ 2.51 $ 2.62 $ 2.90 $ 3.08 $ 3.13 $ 3.04 $ 3.10 $ 15.12 $ 15.30 $ 16.38 $ 17.33 $ 16.76 $ 16.28 $ 16.32 1,844,270 2,050,033 2,258,303 2,650,204 3,148,290 4,019,353 -- $ 1.06 $ 1.09 $ 1.22 $ 1.20 $ 1.13 $ 1.06 -- 257 255 254 255 255 255 257 2 -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- 4 8 9 9 -- 6 8 9 10 10 12 -- 13 8 4 1 -- -- -- 11 11 11 11 10 8 8 19 19 17 16 16 16 13 -- -- -- -- 6 6 -- 69 80 85 92 89 80 47 90 87 66 57 41 26 21 10 10 10 10 37 38 38 206 206 206 183 147 109 71 32 32 32 26 19 7 5 30,900 28,100 30,400 32,800 31,000 28,900 21,000 88,502 84,104 84,162 81,711 75,102 58,136 48,556 - ----------------------------------------------------------------------------------------------------------------------------
29 30 BOARD OF DIRECTORS ROBERT H. ALLEN (2) Private Investor and Managing Partner Challenge Investment Partners Investment firm HOWARD H. BAKER, JR. (1) Partner Baker, Donelson, Bearman & Caldwell Law firm ROBERT L. COX (1) Partner Waring Cox Law firm RALPH D. DENUNZIO (2) President Harbor Point Associates, Inc. Private investment and consulting firm JUDITH L. ESTRIN (1) President and Chief Executive Officer Precept Software, Inc. Computer software company PHILIP GREER (1*) Senior Managing Principal Weiss, Peck & Greer, L.L.C. Investment management firm J.R. HYDE, III (2) President Pittco, Inc. Investment management firm Retired Chairman and Chief Executive Officer AutoZone, Inc. Auto parts retail chain CHARLES T. MANATT (2) Senior Partner Manatt, Phelps & Phillips Law firm GEORGE J. MITCHELL (1) Special Counsel Verner, Liipfert, Bernhard, McPherson and Hand Law firm 30 31 JACKSON W. SMART, JR. (2*) Chairman and Chief Executive Officer MSP Communications, Inc. Radio broadcasting company FREDERICK W. SMITH Chairman, President and Chief Executive Officer Federal Express Corporation DR. JOSHUA I. SMITH (1) Chairman, President and Chief Executive Officer The MAXIMA Corporation Information and data processing firm PAUL S. WALSH (2) Chairman, President and Chief Executive Officer The Pillsbury Company Consumer food and beverage company PETER S. WILLMOTT (1) President and Chief Executive Officer Zenith Electronics Corporation Electronics manufacturing company (1) Audit Committee (2) Compensation Committee (*) Committee Chairman 31 32 SENIOR OFFICERS Federal Express Corporation and Subsidiaries FREDERICK W. SMITH Chairman, President and Chief Executive Officer ALAN B. GRAF, JR. Executive Vice President and Chief Financial Officer KENNETH R. MASTERSON Executive Vice President, General Counsel and Secretary THEODORE L. WEISE Executive Vice President Worldwide Operations DAVID J. BRONCZEK Senior Vice President Europe, Middle East and Africa G. EDMOND CLARK Senior Vice President Operations Support and Engineering MICHAEL L. DUCKER Senior Vice President Asia and Pacific LEONARD B. FEILER Senior Vice President Central Support Services WILLIAM G. FRAINE Senior Vice President Worldwide Sales T. MICHAEL GLENN Senior Vice President Marketing, Customer Service and Corporate Communications DENNIS H. JONES Senior Vice President and Chief Information Officer JOSEPH C. MCCARTY, III Senior Vice President Latin America and Caribbean 32 33 GILBERT D. MOOK Senior Vice President Air Operations JAMES A. PERKINS Senior Vice President and Chief Personnel Officer DAVID F. REBHOLZ Senior Vice President United States and Canada TRACY G. SCHMIDT Senior Vice President Air Ground Terminals and Transportation LAURIE A. TUCKER Senior Vice President Logistics, Electronic Commerce and Catalog MICHAEL W. HILLARD Vice President, Controller and Chief Accounting Officer 33 34 CORPORATE INFORMATION STOCK LISTING: The Company's common stock is listed on The New York Stock Exchange under the ticker symbol FDX. STOCKHOLDERS: At July 15, 1997, there were 9,565 stockholders of record. MARKET INFORMATION: Following are high and low closing prices, by quarter, for Federal Express Corporation common stock in fiscal 1997 and 1996. No cash dividends have been declared.
First Second Third Fourth Quarter Quarter Quarter Quarter - ----------------------------------------------------------------------------------------------------------- FY 1997 High $41 9/16 $44 7/8 $53 1/8 $57 1/8 Low 37 1/16 36 1/4 40 1/8 50 3/8 - ----------------------------------------------------------------------------------------------------------- FY 1996 High $37 11/16 $43 $41 5/16 $41 1/4 Low 29 1/4 39 13/16 33 7/16 34 7/16 - -----------------------------------------------------------------------------------------------------------
CORPORATE HEADQUARTERS: 2005 Corporate Avenue, Memphis, Tennessee 38132, (901) 369-3600. ANNUAL MEETING: The annual meeting of stockholders will be held at the Memphis Marriott, 2625 Thousand Oaks Boulevard, Memphis, Tennessee, on Monday, September 29, 1997, at 10:00 a.m., CDT. INQUIRIES: For financial information, contact Rebecca M. Halvorson, Managing Director, Investor Relations and Corporate Contributions, Federal Express Corporation, Box 727, Dept. 1854, Memphis, Tennessee 38194, (901) 395-3478. For general information, contact Gregory M. Rossiter, Managing Director, Public Relations, Federal Express Corporation, Box 727, Dept. 1850, Memphis, Tennessee 38194, (901) 395-3460. FORM 10-K: A copy of the Company's Annual Report on Form 10-K (excluding exhibits), filed with the Securities and Exchange Commission (SEC) is available free of charge. You will be mailed a copy upon request to Susan J. McDonough, Manager, Investor Relations, Federal Express Corporation, Box 727, Dept. 1854, Memphis, Tennessee 38194, (901) 395-3478. Company documents filed electronically with the SEC can also be found on the Internet at the SEC's Web site (www.sec.gov). AUDITORS: Arthur Andersen LLP, Memphis, Tennessee. REGISTRAR AND TRANSFER AGENT: First Chicago Trust Company of New York, Shareholder Services, P.O. Box 2500, Jersey City, New Jersey 07303-2500, (800) 446-2617 / John H. Ruocco (312) 407-5153. EQUAL EMPLOYMENT OPPORTUNITY: Federal Express Corporation is firmly committed to afford Equal Employment Opportunity to all individuals regardless of age, sex, race, color, religion, national origin, citizenship, disability, or status as a Vietnam era or special disabled veteran. We are strongly bound to this commitment because adherence to Equal Employment Opportunity principles is the only acceptable way of life. We adhere to those principles not just because they're the law, but because it's the right thing to do. 34 35 SERVICE MARKS: Federal Express,(R) FedEx,(R) the FedEx(R) logo, The World On Time,(R) The Way the World Works,(R) 1-800-Go-FedEx,(R) FedEx SuperTracker,(R) FedEx AsiaOne,(R) FedEx SameDay,(R) FedEx International Priority,(R) FedEx Ship,(R) FedEx PowerShip,(R) FedEx ShipSite,(R) FedEx World Service Centers,(R) FedEx First Overnight,(R) FedEx International Express Freight,(R) FedEx Standard Overnight(R) and FedEx EXPRESSfreighter(R) are registered service marks of Federal Express Corporation. Reg. U.S. Pat. & Tm. Off. and in certain other countries. FedEx interNetShip(sm) FedEx International First(sm) FedEx Virtual Order(sm) and FedEx International Airport-to-Airport(sm) are service marks of Federal Express Corporation. 35 EX-21 17 SUBSIDIARIES OF REGISTRANT 1 EXHIBIT 21 FEDERAL EXPRESS CORPORATION
JURISDICTION OF ORGANIZATION OR REGISTRATION STATUS --------------- ------ I. Federal Express Aviation Services, Incorporated Delaware Active A. Federal Express Aviation Services International, Ltd. Delaware Active II. Federal Express Canada Ltd. Canada Active III. Federal Express International, Inc. Delaware Active A. Dencom Investments Limited Northern Ireland Inactive 1. Dencom Freight Holdings Limited Northern Ireland Inactive a. F.E.D.S. (Ireland) Limited Ireland Inactive b. Federal Express (N.I.) Limited Northern Ireland Inactive c. Fedex (Ireland) Limited Ireland Inactive B. Federal Express (Australia) PTY Ltd. Australia Active C. Federal Express Europe, Inc. Delaware Active 1. Federal Express Europe, Inc. & Co., V.O.F./S.N.C. Belgium Active 2. Federal Express European Services, Inc. Delaware Active 3. PIK Holdings Limited United Kingdom Active D. Federal Express Europlex, Inc. Delaware Inactive E. Federal Express Holdings, S.A. Delaware Active 1. Federal Express (Antigua) Limited Antigua Active 2. Federal Express (Antilles Francaises) S.A.R.L. French West Indies Active 3. Federal Express (Barbados) Limited Barbados Active 4. Federal Express (Bermuda) Limited Bermuda Active 5. Federal Express Cayman Limited Cayman Islands Active 6. Federal Express (Dominicana) S.A. Dominican Republic Active a. Inversiones Geminis, S.A. Dominican Republic Active b. Inversiones Piscis, S.A. Dominican Republic Active
2
JURISDICTION OF ORGANIZATION OR REGISTRATION STATUS ------------ ------ c. Inversiones Sagitario, S.A. Dominican Republic Active 7. Federal Express Entregas Rapidas, Ltd. Brazil Inactive 8. Federal Express (Grenada) Limited Grenada Active 9. Federal Express (Haiti) S.A. Haiti Inactive 10. Federal Express Holdings (Mexico) y Compania Mexico Active S.N.C. de C.V. 11. Federal Express (Jamaica) Limited Jamaica Active 12. Federal Express (St. Kitts) Limited St. Kitts Active 13. Federal Express (St. Lucia) Limited St. Lucia Active 14. Federal Express (St. Maarten) N.V. Netherland Antilles Active a. Federal Express (Aruba) N.V. Netherland Antilles Active 15. Federal Express (Turks & Caicos) Limited Turks & Caicos Active Islands 16. Federal Express Virgin Islands, Inc. U.S. Virgin Islands Active 17. FedEx (Bahamas) Limited Bahamas Active F. Federal Express (Hong Kong) Limited Hong Kong Liquidation G. Federal Express International (France) SNC France Active H. Federal Express International Y Compania S.N.C. de Mexico Active C.V. I. Federal Express Italy Inc. Delaware Inactive 1. Federal Express Italia SpA Italy Liquidation J. Federal Express (Japan) K.K. Japan Active K. Federal Express Limited United Kingdom Liquidation 1. Federal Express Finance P.L.C. United Kingdom Inactive 2. Federal Express International Limited United Kingdom Inactive 3. Federal Express Parcel Services Limited United Kingdom Inactive
2 3
JURISDICTION OF ORGANIZATION OR REGISTRATION STATUS ------------ ------ 4. Federal Express (U.K.) Limited United Kingdom Active a. Federal Express (U.K.) Pension Trustees Ltd. United Kingdom Active 5. Winchmore Developments Ltd. United Kingdom Inactive a. Concorde Advertising Limited United Kingdom Inactive L. Federal Express Luxembourg, Inc. Delaware Active M. Federal Express Pacific, Inc. Delaware Active 1. Federal Express Services (M) Sdn. Bhd. Malaysia Active 2. The Flying Tiger Line, Limited Hong Kong Inactive 3. Udara Express Courier Services Sdn. Bhd. Malaysia Active N. Federal Express (Singapore) PTE, LTD. Singapore Active O. Federal Express (Thailand) Limited Thailand Inactive P. FedEx (Mauritius) Ltd. Mauritius Active Q. Fedex (N. I.) Limited Northern Ireland Inactive IV. Federal Express Leasing Corporation Delaware Active V. Fedex Customs Brokerage Corporation Delaware Active VI. Fedex Foreign Sales Corporation U. S. Virgin Islands Inactive VII. Fedex FSC Corporation Barbados Active VIII. Fedex International Transmission Corporation Delaware Active IX. Fedex Partners, Inc. Delaware Active X. Flying Tigers Limited New Zealand Inactive XI. The Flying Tiger Line (NZ) Limited New Zealand Inactive XII. Tiger International Insurance Ltd. Cayman Islands Active
3 EX-23 18 CONSENT OF IND. ACCOUNTANTS 1 EXHIBIT 24 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the "Corporation"), a Delaware corporation, does hereby constitute and appoint Frederick W. Smith, Alan B. Graf, Jr. and Michael W. Hillard, and each of them, with full power of substitution and resubstitution, his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such Director, the Corporation's Annual Report on Form 10-K with respect to the Corporation's fiscal year ended May 31, 1997, and any and all amendments thereto; and hereby ratifies and confirms all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue of these presents. IN WITNESS WHEREOF, I have hereunto set my hand this 6th day of June, 1997. /s/ROBERT H. ALLEN ------------------------- Robert H. Allen STATE OF Texas COUNTY OF Harris I, Earlene L. Barbeau, a Notary Public in and for said County, in the aforesaid State, do hereby certify that Robert H. Allen, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the said instrument as his free and voluntary act, for the uses and purposes therein set forth. /s/EARLENE L. BARBEAU ------------------------ Notary Public My Commission Expires: April 15, 2001 2 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the "Corporation"), a Delaware corporation, does hereby constitute and appoint Frederick W. Smith, Alan B. Graf, Jr. and Michael W. Hillard, and each of them, with full power of substitution and resubstitution, his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such Director, the Corporation's Annual Report on Form 10-K with respect to the Corporation's fiscal year ended May 31, 1997, and any and all amendments thereto; and hereby ratifies and confirms all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue of these presents. IN WITNESS WHEREOF, I have hereunto set my hand this 20th day of June, 1997. /s/HOWARD H. BAKER, JR. ----------------------------- Howard H. Baker, Jr. STATE OF Tennessee COUNTY OF Knox I, Betty B. Lowe, a Notary Public in and for said County, in the aforesaid State, do hereby certify that Howard H. Baker, Jr., personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the said instrument as his free and voluntary act, for the uses and purposes therein set forth. /s/BETTY B. LOWE ----------------------- Notary Public My Commission Expires: 8-27-97 3 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the "Corporation"), a Delaware corporation, does hereby constitute and appoint Frederick W. Smith, Alan B. Graf, Jr. and Michael W. Hillard, and each of them, with full power of substitution and resubstitution, his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such Director, the Corporation's Annual Report on Form 10-K with respect to the Corporation's fiscal year ended May 31, 1997, and any and all amendments thereto; and hereby ratifies and confirms all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue of these presents. IN WITNESS WHEREOF, I have hereunto set my hand this 2nd day of June, 1997. /s/PAUL S. WALSH --------------------------- Paul S. Walsh STATE OF Minnesota COUNTY OF Hennepin I, Eva L. Fix, a Notary Public in and for said County, in the aforesaid State, do hereby certify that Paul S. Walsh, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the said instrument as his free and voluntary act, for the uses and purposes therein set forth. /s/EVA L. FIX ------------------------- Notary Public My Commission Expires: Oct. 5, 1998 4 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the "Corporation"), a Delaware corporation, does hereby constitute and appoint Frederick W. Smith, Alan B. Graf, Jr. and Michael W. Hillard, and each of them, with full power of substitution and resubstitution, his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such Director, the Corporation's Annual Report on Form 10-K with respect to the Corporation's fiscal year ended May 31, 1997, and any and all amendments thereto; and hereby ratifies and confirms all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue of these presents. IN WITNESS WHEREOF, I have hereunto set my hand this 2nd day of June, 1997. /s/ROBERT L. COX -------------------------- Robert L. Cox STATE OF Tennessee COUNTY OF Shelby I, Lillian W. Powers, a Notary Public in and for said County, in the aforesaid State, do hereby certify that Robert L. Cox, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the said instrument as his free and voluntary act, for the uses and purposes therein set forth. /s/LILLIAN W. POWERS -------------------------- Notary Public My Commission Expires: Feb. 27, 2001 5 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the "Corporation"), a Delaware corporation, does hereby constitute and appoint Frederick W. Smith, Alan B. Graf, Jr. and Michael W. Hillard, and each of them, with full power of substitution and resubstitution, his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such Director, the Corporation's Annual Report on Form 10-K with respect to the Corporation's fiscal year ended May 31, 1997, and any and all amendments thereto; and hereby ratifies and confirms all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue of these presents. IN WITNESS WHEREOF, I have hereunto set my hand this 11th day of June, 1997. /s/RALPH D. DENUNZIO --------------------------- Ralph D. DeNunzio STATE OF NEW YORK COUNTY OF NEW YORK I, Pauline E. Kalahele, a Notary Public in and for said County, in the aforesaid State, do hereby certify that Ralph D. DeNunzio, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the said instrument as his free and voluntary act, for the uses and purposes therein set forth. /s/PAULINE E. KALAHELE -------------------------- Notary Public My Commission Expires: February 28, 1998 6 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the "Corporation"), a Delaware corporation, does hereby constitute and appoint Frederick W. Smith, Alan B. Graf, Jr. and Michael W. Hillard, and each of them, with full power of substitution and resubstitution, her true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such Director, the Corporation's Annual Report on Form 10-K with respect to the Corporation's fiscal year ended May 31, 1997, and any and all amendments thereto; and hereby ratifies and confirms all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue of these presents. IN WITNESS WHEREOF, I have hereunto set my hand this 19th day of June, 1997. /s/JUDITH L. ESTRIN ----------------------------- Judith L. Estrin STATE OF CALIFORNIA COUNTY OF SANTA CLARA On 6/19/97 before me, ShaRon Lewis, Notary Public, personally appeared Judith L. Estrin, who personally proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that she executed the same in her authorized capacity, and that by her signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. /s/SHARON LEWIS -------------------------------- ShaRon Lewis, Notary Public My Commission Expires: Nov. 13, 1998 7 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the "Corporation"), a Delaware corporation, does hereby constitute and appoint Frederick W. Smith, Alan B. Graf, Jr. and Michael W. Hillard, and each of them, with full power of substitution and resubstitution, his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such Director, the Corporation's Annual Report on Form 10-K with respect to the Corporation's fiscal year ended May 31, 1997, and any and all amendments thereto; and hereby ratifies and confirms all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue of these presents. IN WITNESS WHEREOF, I have hereunto set my hand this 2nd day of June, 1997. /s/PHILIP GREER ----------------------------- Philip Greer STATE OF New York COUNTY OF New York I, Kathleen M. Rode, a Notary Public in and for said County, in the aforesaid State, do hereby certify that Philip Greer, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the said instrument as his free and voluntary act, for the uses and purposes therein set forth. /s/KATHLEEN M. RODE --------------------------- Notary Public My Commission Expires: 5/31/98 8 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the "Corporation"), a Delaware corporation, does hereby constitute and appoint Frederick W. Smith, Alan B. Graf, Jr. and Michael W. Hillard, and each of them, with full power of substitution and resubstitution, his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such Director, the Corporation's Annual Report on Form 10-K with respect to the Corporation's fiscal year ended May 31, 1997, and any and all amendments thereto; and hereby ratifies and confirms all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue of these presents. IN WITNESS WHEREOF, I have hereunto set my hand this 12th day of June, 1997. /s/J. R. HYDE, III ------------------------- J. R. Hyde, III STATE OF Tennessee COUNTY OF Shelby I, Nancy C. Phillips, a Notary Public in and for said County, in the aforesaid State, do hereby certify that J. R. Hyde, III, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the said instrument as his free and voluntary act, for the uses and purposes therein set forth. /s/NANCY C. PHILLIPS ------------------------------ Notary Public My Commission Expires: Jan. 12, 2000 9 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the "Corporation"), a Delaware corporation, does hereby constitute and appoint Frederick W. Smith, Alan B. Graf, Jr. and Michael W. Hillard, and each of them, with full power of substitution and resubstitution, his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such Director, the Corporation's Annual Report on Form 10-K with respect to the Corporation's fiscal year ended May 31, 1997, and any and all amendments thereto; and hereby ratifies and confirms all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue of these presents. IN WITNESS WHEREOF, I have hereunto set my hand this 17th day of June, 1997. /s/CHARLES T. MANATT --------------------------- Charles T. Manatt WASHINGTON DISTRICT OF COLUMBIA I, Joseph Chulew, a Notary Public in and for said County, in the aforesaid State, do hereby certify that Charles T. Manatt, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the said instrument as his free and voluntary act, for the uses and purposes therein set forth. /s/JOSEPH CHULEW --------------------------- Notary Public My Commission Expires: 3-31-00 10 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the "Corporation"), a Delaware corporation, does hereby constitute and appoint Frederick W. Smith, Alan B. Graf, Jr. and Michael W. Hillard, and each of them, with full power of substitution and resubstitution, his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such Director, the Corporation's Annual Report on Form 10-K with respect to the Corporation's fiscal year ended May 31, 1997, and any and all amendments thereto; and hereby ratifies and confirms all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue of these presents. IN WITNESS WHEREOF, I have hereunto set my hand this 9th day of June, 1997. /s/GEORGE J. MITCHELL --------------------------- George J. Mitchell WASHINGTON DISTRICT OF COLUMBIA I, Ione M. Hartl, a Notary Public in and for said County, in the aforesaid State, do hereby certify that George J. Mitchell, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the said instrument as his free and voluntary act, for the uses and purposes therein set forth. /s/IONE M. HARTL --------------------------- Notary Public My Commission Expires: 8/14/00 11 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the "Corporation"), a Delaware corporation, does hereby constitute and appoint Frederick W. Smith, Alan B. Graf, Jr. and Michael W. Hillard, and each of them, with full power of substitution and resubstitution, his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such Director, the Corporation's Annual Report on Form 10-K with respect to the Corporation's fiscal year ended May 31, 1997, and any and all amendments thereto; and hereby ratifies and confirms all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue of these presents. IN WITNESS WHEREOF, I have hereunto set my hand this 16th day of June, 1997. /s/JACKSON W. SMART, JR. ----------------------------- Jackson W. Smart, Jr. STATE OF Illinois COUNTY OF Cook I, Nicole Renea Roberts, a Notary Public in and for said County, in the aforesaid State, do hereby certify that Jackson W. Smart, Jr., personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the said instrument as his free and voluntary act, for the uses and purposes therein set forth. /s/NICOLE RENEA ROBERTS ------------------------------ Notary Public My Commission Expires: 01/13/2001 12 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the "Corporation"), a Delaware corporation, does hereby constitute and appoint Frederick W. Smith, Alan B. Graf, Jr. and Michael W. Hillard, and each of them, with full power of substitution and resubstitution, his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such Director, the Corporation's Annual Report on Form 10-K with respect to the Corporation's fiscal year ended May 31, 1997, and any and all amendments thereto; and hereby ratifies and confirms all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue of these presents. IN WITNESS WHEREOF, I have hereunto set my hand this 23rd day of June, 1997. /s/JOSHUA I. SMITH ---------------------------- Joshua I. Smith STATE OF Maryland COUNTY OF Prince George's I, Bertha A. Davis, a Notary Public in and for said County, in the aforesaid State, do hereby certify that Joshua I. Smith, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the said instrument as his free and voluntary act, for the uses and purposes therein set forth. /s/BERTHA A. DAVIS -------------------------- Notary Public My Commission Expires: 5-1-00 13 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the "Corporation"), a Delaware corporation, does hereby constitute and appoint Frederick W. Smith, Alan B. Graf, Jr. and Michael W. Hillard, and each of them, with full power of substitution and resubstitution, his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such Director, the Corporation's Annual Report on Form 10-K with respect to the Corporation's fiscal year ended May 31, 1997, and any and all amendments thereto; and hereby ratifies and confirms all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue of these presents. IN WITNESS WHEREOF, I have hereunto set my hand this 17th day of June, 1997. /s/PETER S. WILLMOTT ----------------------------- Peter S. Willmott STATE OF Illinois COUNTY OF Cook I, Joan L. Noble, a Notary Public in and for said County, in the aforesaid State, do hereby certify that Peter S. Willmott, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the said instrument as his free and voluntary act, for the uses and purposes therein set forth. /s/JOAN L. NOBLE ----------------------------- Notary Public My Commission Expires: 3-5-99 14 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned, the principal financial officer of FEDERAL EXPRESS CORPORATION (the "Corporation"), a Delaware corporation, does hereby constitute and appoint Frederick W. Smith and Michael W. Hillard, and each of them, with full power of substitution and resubstitution, his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such officer, the Corporation's Annual Report on Form 10-K with respect to the Corporation's fiscal year ended May 31, 1997, and any and all amendments thereto; and hereby ratifies and confirms all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue of these presents. IN WITNESS WHEREOF, I have hereunto set my hand this 3rd day of June, 1997. /s/ALAN B. GRAF, JR. ----------------------------- Alan B. Graf, Jr. STATE OF TENNESSEE COUNTY OF SHELBY I, Edna M. Kennon, a Notary Public in and for said County, in the aforesaid State, do hereby certify that Alan B. Graf, Jr., personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the said instrument as his free and voluntary act, for the uses and purposes therein set forth. /s/EDNA M. KENNON ---------------------------- Notary Public My Commission Expires: 9-14-99 15 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned, the principal executive officer and a director of FEDERAL EXPRESS CORPORATION (the "Corporation"), a Delaware corporation, does hereby constitute and appoint Alan B. Graf, Jr. and Michael W. Hillard, and each of them, with full power of substitution and resubstitution, his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such officer and director, the Corporation's Annual Report on Form 10-K with respect to the Corporation's fiscal year ended May 31, 1997, and any and all amendments thereto; and hereby ratifies and confirms all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue of these presents. IN WITNESS WHEREOF, I have hereunto set my hand this 6th day of June, 1997. /s/FREDERICK W. SMITH ---------------------------- Frederick W. Smith STATE OF TENNESSEE COUNTY OF SHELBY I, June Y. Fitzgerald, a Notary Public in and for said County, in the aforesaid State, do hereby certify that Frederick W. Smith, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the said instrument as his free and voluntary act, for the uses and purposes therein set forth. /s/JUNE Y. FITZGERALD ---------------------------- Notary Public My Commission Expires: Jan. 26, 1999 16 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned, the principal accounting officer of FEDERAL EXPRESS CORPORATION (the "Corporation"), a Delaware corporation, does hereby constitute and appoint Frederick W. Smith and Alan B. Graf, Jr., and each of them, with full power of substitution and resubstitution, his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such officer, the Corporation's Annual Report on Form 10-K with respect to the Corporation's fiscal year ended May 31, 1997, and any and all amendments thereto; and hereby ratifies and confirms all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue of these presents. IN WITNESS WHEREOF, I have hereunto set my hand this 30th day of June, 1997. /s/MICHAEL W. HILLARD ---------------------------- Michael W. Hillard STATE OF TENNESSEE COUNTY OF SHELBY I, Rosemary Morlan, a Notary Public in and for said County, in the aforesaid State, do hereby certify that Michael W. Hillard, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the said instrument as his free and voluntary act, for the uses and purposes therein set forth. /s/ROSEMARY MORLAN ---------------------------- Notary Public My Commission Expires: Dec. 21, 1998 EX-24 19 POWER OF ATTORNEY 1 EXHIBIT 24 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the "Corporation"), a Delaware corporation, does hereby constitute and appoint Frederick W. Smith, Alan B. Graf, Jr. and Michael W. Hillard, and each of them, with full power of substitution and resubstitution, his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such Director, the Corporation's Annual Report on Form 10-K with respect to the Corporation's fiscal year ended May 31, 1997, and any and all amendments thereto; and hereby ratifies and confirms all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue of these presents. IN WITNESS WHEREOF, I have hereunto set my hand this 6th day of June, 1997. /s/ROBERT H. ALLEN ------------------------- Robert H. Allen STATE OF Texas COUNTY OF Harris I, Earlene L. Barbeau, a Notary Public in and for said County, in the aforesaid State, do hereby certify that Robert H. Allen, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the said instrument as his free and voluntary act, for the uses and purposes therein set forth. /s/EARLENE L. BARBEAU ------------------------ Notary Public My Commission Expires: April 15, 2001 2 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the "Corporation"), a Delaware corporation, does hereby constitute and appoint Frederick W. Smith, Alan B. Graf, Jr. and Michael W. Hillard, and each of them, with full power of substitution and resubstitution, his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such Director, the Corporation's Annual Report on Form 10-K with respect to the Corporation's fiscal year ended May 31, 1997, and any and all amendments thereto; and hereby ratifies and confirms all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue of these presents. IN WITNESS WHEREOF, I have hereunto set my hand this 20th day of June, 1997. /s/HOWARD H. BAKER, JR. ----------------------------- Howard H. Baker, Jr. STATE OF Tennessee COUNTY OF Knox I, Betty B. Lowe, a Notary Public in and for said County, in the aforesaid State, do hereby certify that Howard H. Baker, Jr., personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the said instrument as his free and voluntary act, for the uses and purposes therein set forth. /s/BETTY B. LOWE ----------------------- Notary Public My Commission Expires: 8-27-97 3 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the "Corporation"), a Delaware corporation, does hereby constitute and appoint Frederick W. Smith, Alan B. Graf, Jr. and Michael W. Hillard, and each of them, with full power of substitution and resubstitution, his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such Director, the Corporation's Annual Report on Form 10-K with respect to the Corporation's fiscal year ended May 31, 1997, and any and all amendments thereto; and hereby ratifies and confirms all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue of these presents. IN WITNESS WHEREOF, I have hereunto set my hand this 2nd day of June, 1997. /s/PAUL S. WALSH --------------------------- Paul S. Walsh STATE OF Minnesota COUNTY OF Hennepin I, Eva L. Fix, a Notary Public in and for said County, in the aforesaid State, do hereby certify that Paul S. Walsh, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the said instrument as his free and voluntary act, for the uses and purposes therein set forth. /s/EVA L. FIX ------------------------- Notary Public My Commission Expires: Oct. 5, 1998 4 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the "Corporation"), a Delaware corporation, does hereby constitute and appoint Frederick W. Smith, Alan B. Graf, Jr. and Michael W. Hillard, and each of them, with full power of substitution and resubstitution, his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such Director, the Corporation's Annual Report on Form 10-K with respect to the Corporation's fiscal year ended May 31, 1997, and any and all amendments thereto; and hereby ratifies and confirms all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue of these presents. IN WITNESS WHEREOF, I have hereunto set my hand this 2nd day of June, 1997. /s/ROBERT L. COX -------------------------- Robert L. Cox STATE OF Tennessee COUNTY OF Shelby I, Lillian W. Powers, a Notary Public in and for said County, in the aforesaid State, do hereby certify that Robert L. Cox, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the said instrument as his free and voluntary act, for the uses and purposes therein set forth. /s/LILLIAN W. POWERS -------------------------- Notary Public My Commission Expires: Feb. 27, 2001 5 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the "Corporation"), a Delaware corporation, does hereby constitute and appoint Frederick W. Smith, Alan B. Graf, Jr. and Michael W. Hillard, and each of them, with full power of substitution and resubstitution, his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such Director, the Corporation's Annual Report on Form 10-K with respect to the Corporation's fiscal year ended May 31, 1997, and any and all amendments thereto; and hereby ratifies and confirms all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue of these presents. IN WITNESS WHEREOF, I have hereunto set my hand this 11th day of June, 1997. /s/RALPH D. DENUNZIO --------------------------- Ralph D. DeNunzio STATE OF NEW YORK COUNTY OF NEW YORK I, Pauline E. Kalahele, a Notary Public in and for said County, in the aforesaid State, do hereby certify that Ralph D. DeNunzio, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the said instrument as his free and voluntary act, for the uses and purposes therein set forth. /s/PAULINE E. KALAHELE -------------------------- Notary Public My Commission Expires: February 28, 1998 6 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the "Corporation"), a Delaware corporation, does hereby constitute and appoint Frederick W. Smith, Alan B. Graf, Jr. and Michael W. Hillard, and each of them, with full power of substitution and resubstitution, her true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such Director, the Corporation's Annual Report on Form 10-K with respect to the Corporation's fiscal year ended May 31, 1997, and any and all amendments thereto; and hereby ratifies and confirms all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue of these presents. IN WITNESS WHEREOF, I have hereunto set my hand this 19th day of June, 1997. /s/JUDITH L. ESTRIN ----------------------------- Judith L. Estrin STATE OF CALIFORNIA COUNTY OF SANTA CLARA On 6/19/97 before me, ShaRon Lewis, Notary Public, personally appeared Judith L. Estrin, who personally proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that she executed the same in her authorized capacity, and that by her signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. /s/SHARON LEWIS -------------------------------- ShaRon Lewis, Notary Public My Commission Expires: Nov. 13, 1998 7 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the "Corporation"), a Delaware corporation, does hereby constitute and appoint Frederick W. Smith, Alan B. Graf, Jr. and Michael W. Hillard, and each of them, with full power of substitution and resubstitution, his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such Director, the Corporation's Annual Report on Form 10-K with respect to the Corporation's fiscal year ended May 31, 1997, and any and all amendments thereto; and hereby ratifies and confirms all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue of these presents. IN WITNESS WHEREOF, I have hereunto set my hand this 2nd day of June, 1997. /s/PHILIP GREER ----------------------------- Philip Greer STATE OF New York COUNTY OF New York I, Kathleen M. Rode, a Notary Public in and for said County, in the aforesaid State, do hereby certify that Philip Greer, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the said instrument as his free and voluntary act, for the uses and purposes therein set forth. /s/KATHLEEN M. RODE --------------------------- Notary Public My Commission Expires: 5/31/98 8 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the "Corporation"), a Delaware corporation, does hereby constitute and appoint Frederick W. Smith, Alan B. Graf, Jr. and Michael W. Hillard, and each of them, with full power of substitution and resubstitution, his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such Director, the Corporation's Annual Report on Form 10-K with respect to the Corporation's fiscal year ended May 31, 1997, and any and all amendments thereto; and hereby ratifies and confirms all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue of these presents. IN WITNESS WHEREOF, I have hereunto set my hand this 12th day of June, 1997. /s/J. R. HYDE, III ------------------------- J. R. Hyde, III STATE OF Tennessee COUNTY OF Shelby I, Nancy C. Phillips, a Notary Public in and for said County, in the aforesaid State, do hereby certify that J. R. Hyde, III, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the said instrument as his free and voluntary act, for the uses and purposes therein set forth. /s/NANCY C. PHILLIPS ------------------------------ Notary Public My Commission Expires: Jan. 12, 2000 9 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the "Corporation"), a Delaware corporation, does hereby constitute and appoint Frederick W. Smith, Alan B. Graf, Jr. and Michael W. Hillard, and each of them, with full power of substitution and resubstitution, his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such Director, the Corporation's Annual Report on Form 10-K with respect to the Corporation's fiscal year ended May 31, 1997, and any and all amendments thereto; and hereby ratifies and confirms all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue of these presents. IN WITNESS WHEREOF, I have hereunto set my hand this 17th day of June, 1997. /s/CHARLES T. MANATT --------------------------- Charles T. Manatt WASHINGTON DISTRICT OF COLUMBIA I, Joseph Chulew, a Notary Public in and for said County, in the aforesaid State, do hereby certify that Charles T. Manatt, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the said instrument as his free and voluntary act, for the uses and purposes therein set forth. /s/JOSEPH CHULEW --------------------------- Notary Public My Commission Expires: 3-31-00 10 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the "Corporation"), a Delaware corporation, does hereby constitute and appoint Frederick W. Smith, Alan B. Graf, Jr. and Michael W. Hillard, and each of them, with full power of substitution and resubstitution, his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such Director, the Corporation's Annual Report on Form 10-K with respect to the Corporation's fiscal year ended May 31, 1997, and any and all amendments thereto; and hereby ratifies and confirms all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue of these presents. IN WITNESS WHEREOF, I have hereunto set my hand this 9th day of June, 1997. /s/GEORGE J. MITCHELL --------------------------- George J. Mitchell WASHINGTON DISTRICT OF COLUMBIA I, Ione M. Hartl, a Notary Public in and for said County, in the aforesaid State, do hereby certify that George J. Mitchell, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the said instrument as his free and voluntary act, for the uses and purposes therein set forth. /s/IONE M. HARTL --------------------------- Notary Public My Commission Expires: 8/14/00 11 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the "Corporation"), a Delaware corporation, does hereby constitute and appoint Frederick W. Smith, Alan B. Graf, Jr. and Michael W. Hillard, and each of them, with full power of substitution and resubstitution, his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such Director, the Corporation's Annual Report on Form 10-K with respect to the Corporation's fiscal year ended May 31, 1997, and any and all amendments thereto; and hereby ratifies and confirms all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue of these presents. IN WITNESS WHEREOF, I have hereunto set my hand this 16th day of June, 1997. /s/JACKSON W. SMART, JR. ----------------------------- Jackson W. Smart, Jr. STATE OF Illinois COUNTY OF Cook I, Nicole Renea Roberts, a Notary Public in and for said County, in the aforesaid State, do hereby certify that Jackson W. Smart, Jr., personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the said instrument as his free and voluntary act, for the uses and purposes therein set forth. /s/NICOLE RENEA ROBERTS ------------------------------ Notary Public My Commission Expires: 01/13/2001 12 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the "Corporation"), a Delaware corporation, does hereby constitute and appoint Frederick W. Smith, Alan B. Graf, Jr. and Michael W. Hillard, and each of them, with full power of substitution and resubstitution, his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such Director, the Corporation's Annual Report on Form 10-K with respect to the Corporation's fiscal year ended May 31, 1997, and any and all amendments thereto; and hereby ratifies and confirms all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue of these presents. IN WITNESS WHEREOF, I have hereunto set my hand this 23rd day of June, 1997. /s/JOSHUA I. SMITH ---------------------------- Joshua I. Smith STATE OF Maryland COUNTY OF Prince George's I, Bertha A. Davis, a Notary Public in and for said County, in the aforesaid State, do hereby certify that Joshua I. Smith, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the said instrument as his free and voluntary act, for the uses and purposes therein set forth. /s/BERTHA A. DAVIS -------------------------- Notary Public My Commission Expires: 5-1-00 13 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the "Corporation"), a Delaware corporation, does hereby constitute and appoint Frederick W. Smith, Alan B. Graf, Jr. and Michael W. Hillard, and each of them, with full power of substitution and resubstitution, his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such Director, the Corporation's Annual Report on Form 10-K with respect to the Corporation's fiscal year ended May 31, 1997, and any and all amendments thereto; and hereby ratifies and confirms all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue of these presents. IN WITNESS WHEREOF, I have hereunto set my hand this 17th day of June, 1997. /s/PETER S. WILLMOTT ----------------------------- Peter S. Willmott STATE OF Illinois COUNTY OF Cook I, Joan L. Noble, a Notary Public in and for said County, in the aforesaid State, do hereby certify that Peter S. Willmott, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the said instrument as his free and voluntary act, for the uses and purposes therein set forth. /s/JOAN L. NOBLE ----------------------------- Notary Public My Commission Expires: 3-5-99 14 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned, the principal financial officer of FEDERAL EXPRESS CORPORATION (the "Corporation"), a Delaware corporation, does hereby constitute and appoint Frederick W. Smith and Michael W. Hillard, and each of them, with full power of substitution and resubstitution, his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such officer, the Corporation's Annual Report on Form 10-K with respect to the Corporation's fiscal year ended May 31, 1997, and any and all amendments thereto; and hereby ratifies and confirms all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue of these presents. IN WITNESS WHEREOF, I have hereunto set my hand this 3rd day of June, 1997. /s/ALAN B. GRAF, JR. ----------------------------- Alan B. Graf, Jr. STATE OF TENNESSEE COUNTY OF SHELBY I, Edna M. Kennon, a Notary Public in and for said County, in the aforesaid State, do hereby certify that Alan B. Graf, Jr., personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the said instrument as his free and voluntary act, for the uses and purposes therein set forth. /s/EDNA M. KENNON ---------------------------- Notary Public My Commission Expires: 9-14-99 15 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned, the principal executive officer and a director of FEDERAL EXPRESS CORPORATION (the "Corporation"), a Delaware corporation, does hereby constitute and appoint Alan B. Graf, Jr. and Michael W. Hillard, and each of them, with full power of substitution and resubstitution, his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such officer and director, the Corporation's Annual Report on Form 10-K with respect to the Corporation's fiscal year ended May 31, 1997, and any and all amendments thereto; and hereby ratifies and confirms all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue of these presents. IN WITNESS WHEREOF, I have hereunto set my hand this 6th day of June, 1997. /s/FREDERICK W. SMITH ---------------------------- Frederick W. Smith STATE OF TENNESSEE COUNTY OF SHELBY I, June Y. Fitzgerald, a Notary Public in and for said County, in the aforesaid State, do hereby certify that Frederick W. Smith, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the said instrument as his free and voluntary act, for the uses and purposes therein set forth. /s/JUNE Y. FITZGERALD ---------------------------- Notary Public My Commission Expires: Jan. 26, 1999 16 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned, the principal accounting officer of FEDERAL EXPRESS CORPORATION (the "Corporation"), a Delaware corporation, does hereby constitute and appoint Frederick W. Smith and Alan B. Graf, Jr., and each of them, with full power of substitution and resubstitution, his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such officer, the Corporation's Annual Report on Form 10-K with respect to the Corporation's fiscal year ended May 31, 1997, and any and all amendments thereto; and hereby ratifies and confirms all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue of these presents. IN WITNESS WHEREOF, I have hereunto set my hand this 30th day of June, 1997. /s/MICHAEL W. HILLARD ---------------------------- Michael W. Hillard STATE OF TENNESSEE COUNTY OF SHELBY I, Rosemary Morlan, a Notary Public in and for said County, in the aforesaid State, do hereby certify that Michael W. Hillard, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the said instrument as his free and voluntary act, for the uses and purposes therein set forth. /s/ROSEMARY MORLAN ---------------------------- Notary Public My Commission Expires: Dec. 21, 1998 EX-27 20 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED STATEMENTS OF INCOME AND THE CONSOLIDATED BALANCE SHEETS ON PAGES 23 AND 24 OF THE COMPANY'S ANNUAL REPORT TO STOCKHOLDERS FOR THE YEAR ENDED MAY 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 YEAR MAY-31-1997 JUN-01-1996 MAY-31-1997 122,023 0 1,549,114 36,175 313,337 2,132,589 9,818,936 5,196,856 7,625,486 1,962,783 1,397,954 0 0 11,491 2,951,023 7,625,486 0 11,519,750 0 10,820,708 0 0 90,634 628,221 266,994 0 0 0 0 361,227 3.12 3.12 ON OCTOBER 1, 1996 THE BOARD OF DIRECTORS DECLARED A TWO-FOR-ONE STOCK SPLIT IN THE FORM OF 100% STOCK DIVIDEND, WHICH WAS PAID ON NOVEMBER 4, 1996 TO STOCKHOLDERS OF RECORD ON OCTOBER 15, 1996. PRIOR FINANCIAL DATA SCHEDULES HAVE NOT BEEN RESTATED TO REFLECT THE STOCK SPLIT.
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