UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 20, 2013
FEDEX CORPORATION
(Exact name of registrant as specified in its charter)
Commission File Number 1-15829
| Delaware | 62-1721435 | |
| (State or other jurisdiction of incorporation) |
(IRS Employer Identification No.) | |
| 942 South Shady Grove Road, Memphis, Tennessee | 38120 | |
| (Address of principal executive offices) | (ZIP Code) | |
Registrant’s telephone number, including area code: (901) 818-7500
FEDERAL EXPRESS CORPORATION
(Exact name of registrant as specified in its charter)
Commission File Number 1-7806
| Delaware | 71-0427007 | |
| (State or other jurisdiction of incorporation) |
(IRS Employer Identification No.) | |
| 3610 Hacks Cross Road, Memphis, Tennessee | 38125 | |
| (Address of principal executive offices) | (ZIP Code) | |
Registrant’s telephone number, including area code: (901) 369-3600
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
EXPLANATORY NOTE
The information in this Report, including the exhibit, is being furnished pursuant to Item 2.02 of Form 8-K and General Instruction B.2 thereunder. Such information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended.
SECTION 2. FINANCIAL INFORMATION.
| Item 2.02. | Results of Operations and Financial Condition. |
Attached as Exhibit 99.1 and incorporated herein by reference is a copy of FedEx Corporation’s press release, dated March 20, 2013, announcing its and its wholly owned subsidiary Federal Express Corporation’s financial results for the fiscal quarter ended February 28, 2013.
SECTION 9. FINANCIAL STATEMENTS AND EXHIBITS.
| Item 9.01. | Financial Statements and Exhibits. |
| (d) | Exhibits. The following exhibit is being furnished as part of this Report. |
| Exhibit |
Description | |
| 99.1 | Press Release of FedEx Corporation dated March 20, 2013. | |
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned hereunto duly authorized.
| FedEx Corporation | ||||||
| Date: March 20, 2013 | By: | /s/ HERBERT C. NAPPIER | ||||
| Herbert C. Nappier | ||||||
| Staff Vice President and | ||||||
| Corporate Controller | ||||||
| Federal Express Corporation | ||||||
| Date: March 20, 2013 | By: | /s/ J. RICK BATEMAN | ||||
| J. Rick Bateman | ||||||
| Vice President and | ||||||
| Worldwide Controller | ||||||
3
EXHIBIT INDEX
| Exhibit |
Description | |
| 99.1 | Press Release of FedEx Corporation dated March 20, 2013. | |
E-1
Exhibit 99.1
FOR IMMEDIATE RELEASE
FedEx Corp. Reports Third Quarter Earnings
Additional Cost-Cutting Actions Under Way
MEMPHIS, Tenn., March 20, 2013 … FedEx Corp. (NYSE: FDX) today reported earnings of $1.23 per diluted share for the third quarter ended February 28, excluding business realignment costs totaling $47 million primarily related to the company’s voluntary buyout program for eligible U.S. officers and managing directors. Including this year’s realignment costs, third quarter earnings were $1.13 per diluted share.
Last year’s third quarter earnings were $1.55 per diluted share, excluding a $0.10 per share reversal of a reserve associated with a legal matter at FedEx Express. Including last year’s reserve reversal, earnings were $1.65 per diluted share.
“The third quarter was very challenging due to continued weakness in international air freight markets, pressure on yields due to industry overcapacity and customers selecting less expensive and slower-transit services,” said Frederick W. Smith, FedEx Corp. chairman, president and chief executive officer. “In response, beginning April 1, FedEx Express will decrease capacity to and from Asia and will aggressively manage traffic flows to place low yielding traffic in lower-cost networks. We are currently assessing how these actions may allow FedEx Express to retire more of its older, less-efficient aircraft. We remain focused on our strategic cost reduction programs, which are ramping up and on track.”
Third Quarter Results
FedEx Corp. reported the following consolidated results for the third quarter:
| • | Revenue of $11.0 billion, up 4% from $10.6 billion the previous year |
| • | Operating income of $589 million, down 28% from $813 million last year |
| • | Operating margin of 5.4%, down from 7.7% the previous year |
| • | Net income of $361 million, down 31% from $521 million a year ago |
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As discussed above, the quarter’s results reflect the decline in profitability at FedEx Express due to the accelerating demand shift toward lower-yielding international services and lower international export yields. The quarter’s results were also negatively impacted by the business realignment costs noted earlier and by fewer operating days in each transportation segment.
Outlook
FedEx projects earnings to be an adjusted $1.90 to $2.10 per diluted share in the fourth quarter and an adjusted $6.00 to $6.20 per diluted share for fiscal 2013 before charges related to the company’s business realignment. Costs of the benefits provided under the voluntary buyout program will be recognized in the period that eligible employees accept their offers, predominantly in the fourth fiscal quarter. Including the third quarter costs, the company now expects the fiscal 2013 pretax cost of the voluntary buyout program to range from approximately $450 million to $550 million in cash expenditures, or $0.89 to $1.09 per diluted share, with some additional costs expected in fiscal 2014. Actual costs will depend on employee acceptance rates. Including the business realignment costs, earnings are expected to be $0.94 to $1.34 per diluted share in the fourth quarter and $4.91 to $5.31 per diluted share for fiscal 2013. This guidance assumes the current market outlook for fuel prices. The capital spending forecast for fiscal 2013 is now $3.6 billion, compared to $3.9 billion in the company’s previous forecast.
In last year’s fourth quarter, the company reported earnings of $1.99 per diluted share, excluding a $0.26 per diluted share non-cash aircraft impairment charge at FedEx Express. Including this charge, earnings were $1.73 per diluted share.
“Our lower-than-expected results for the quarter and reduced full-year earnings outlook were driven by third quarter international revenues declining approximately $100 million versus our guidance primarily due to accelerating customer preference for lower-yielding international services, lower rate per pound and weight per shipment,” said Alan B. Graf Jr., FedEx Corp. executive vice president and chief financial officer. “We expect these international revenue trends to continue. We have other actions under way beyond those already included in our profit improvement program. Some of these additional actions may involve temporarily or permanently grounding aircraft, which could result in asset impairment or other charges in future periods.”
“In early February, a number of officers and managing directors, primarily at FedEx Services and FedEx Express, accepted voluntary buyouts, and on
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February 15, thousands more team members were notified of their eligibility for the buyout program. This program is one of the first steps in a process that will help FedEx Express achieve necessary cost structure reductions and improved efficiency. In addition to continued profit improvements in the base businesses at FedEx Ground and FedEx Freight, our profit improvement programs are targeting annual profitability improvement at FedEx Express of $1.6 billion by the end of fiscal 2016, from the fiscal year 2013 base business. Collectively, these initiatives are expected to increase margins, improve cash flows and increase our competitiveness,” said Graf.
Stock Repurchase Program Authorization Increase
The FedEx Corp. board of directors has authorized the repurchase of up to 10 million shares of FedEx Corp. common stock. These shares augment the remaining 188 thousand shares authorized for purchase under existing share repurchase programs. It is expected that the additional share authorization will primarily be utilized to offset equity compensation dilution over the next several years. Purchases may be made in the open market and in negotiated or block transactions. FedEx had 317 million shares outstanding as of February 28, 2013.
FedEx Express Segment
For the third quarter, the FedEx Express segment reported:
| • | Revenue of $6.70 billion, up 2% from last year’s $6.54 billion |
| • | Operating income of $118 million, down 66% from $349 million a year ago |
| • | Operating margin of 1.8%, down from 5.3% the previous year |
Revenue increased due to this year’s business acquisitions and growth at FedEx Trade Networks, while core express revenue was constrained by continued demand shift toward lower-yielding international services. U.S. domestic revenue per package grew 1% as higher rate per pound and weight per package were offset by lower fuel surcharges, while average daily package volume increased 1%. Higher growth in international deferred services continued, with FedEx International Economy® volume growing 12%, while FedEx International Priority® volume increased 2% during the quarter. International export revenue per package fell 3% due to the demand shift to lower-yielding international services, lower rates and lower fuel surcharges.
Operating income and margin were significantly lower due to the demand shift to lower-yielding international services, the prior year reversal of a $66 million
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reserve associated with a legal matter, the negative impact of one fewer operating day, higher pension cost and increased depreciation expense. Costs associated with the business realignment program also negatively impacted operating results by $34 million.
FedEx Ground Segment
For the third quarter, the FedEx Ground segment reported:
| • | Revenue of $2.75 billion, up 11% from last year’s $2.48 billion |
| • | Operating income of $467 million, up from $465 million a year ago |
| • | Operating margin of 17.0%, down from 18.8% the previous year |
FedEx Ground average daily volume grew 10% in the third quarter, as growth in both FedEx Home Delivery and business-to-business services was driven by market share gains. Revenue per package increased 1% due to increased rates and higher residential surcharges, partially offset by lower package weights and fuel surcharge. FedEx SmartPost average daily volume increased 26% primarily due to growth in e-commerce. FedEx SmartPost net revenue per package was down 1% due to higher postage rates, partially offset by rate increases.
Operating income increased slightly, while operating margin was lower, as the benefit of higher volume and revenue per package was mostly offset by higher purchased transportation, a favorable self-insurance adjustment in the prior year, higher network expansion costs, one fewer operating day and intercompany charges of $9 million associated with the business realignment program.
FedEx Freight Segment
For the third quarter, the FedEx Freight segment reported:
| • | Revenue of $1.24 billion, up from last year’s $1.23 billion |
| • | Operating income of $4 million, compared with an operating loss of $1 million a year ago |
| • | Operating margin of 0.3%, up from (0.1%) the previous year |
Less-than-truckload (LTL) yield increased 2% due to FedEx Freight Economy base yield improvement. LTL average daily shipments increased 1% due to higher customer demand for the FedEx Freight Economy service offering in all lengths of haul.
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Even though the quarter had two fewer operating days, operating income and margin increased due to higher yield, volume growth and continued operational efficiencies within the company’s integrated network.
Corporate Overview
FedEx Corp. (NYSE: FDX) provides customers and businesses worldwide with a broad portfolio of transportation, e-commerce and business services. With annual revenues of $44 billion, the company offers integrated business applications through operating companies competing collectively and managed collaboratively, under the respected FedEx brand. Consistently ranked among the world’s most admired and trusted employers, FedEx inspires its more than 300,000 team members to remain “absolutely, positively” focused on safety, the highest ethical and professional standards and the needs of their customers and communities. For more information, visit news.fedex.com.
Additional information and operating data are contained in the company’s annual report, Form 10-K, Form 10-Qs and third quarter fiscal 2013 Statistical Book. These materials, as well as a webcast of the earnings release conference call to be held at 8:30 a.m. EDT on March 20 are available on the company’s website at investors.fedex.com. A replay of the conference call webcast will be posted on our website following the call.
Certain statements in this press release may be considered forward-looking statements, such as statements relating to management’s views with respect to future events and financial performance. Such forward-looking statements are subject to risks, uncertainties and other factors which could cause actual results to differ materially from historical experience or from future results expressed or implied by such forward-looking statements. Potential risks and uncertainties include, but are not limited to, economic conditions in the global markets in which we operate, the employee acceptance rate of the voluntary buyout offers, legal challenges or changes related to FedEx Ground’s owner-operators, new U.S. domestic or international government regulation, the impact from any terrorist activities or international conflicts, our ability to effectively operate, integrate and leverage acquired businesses, changes in fuel prices and currency exchange rates, our ability to match capacity to shifting volume levels and other factors which can be found in FedEx Corp.’s and its subsidiaries’ press releases and filings with the SEC.
Media Contact: Jess Bunn 901-818-7463
Investor Contact: Mickey Foster 901-818-7468
Home Page: fedex.com
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RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
TO GAAP FINANCIAL MEASURES
The company believes that meaningful analysis of our historical and expected financial performance requires an understanding of the factors underlying that performance and our judgments about the likelihood that particular factors will repeat. Excluding the reversal of a reserve associated with a legal matter at FedEx Express from last year’s results, net of applicable incentive compensation impacts, and costs associated with the company’s business realignment initiative will allow for more accurate comparisons of our third quarter and expected operating performance. As required by SEC rules, the tables below present a reconciliation of our presented non-GAAP measures to the most directly comparable GAAP measures.
| Q3 FY2013 Diluted Earnings Per Share |
Q3 FY2012 Diluted Earnings Per Share |
Q4 FY2012 Diluted Earnings Per Share |
||||||||||
| Non-GAAP Measure |
$ | 1.23 | $ | 1.55 | $ | 1.99 | ||||||
| Business Realignment Costs |
(0.09 | ) | — | — | ||||||||
| Legal Reserve Reversal |
— | 0.10 | — | |||||||||
| Aircraft Impairment |
— | — | (0.26 | ) | ||||||||
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| GAAP Measure |
$ | 1.13 | * | $ | 1.65 | $ | 1.73 | |||||
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| * Does not sum to total due to rounding |
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Fiscal 2013 Earnings Guidance
| Q4 FY2013 Diluted EPS Guidance |
FY2013 Diluted EPS Guidance |
|||||||
| Non-GAAP Measure |
$ | 1.90 to $2.10 | $ | 6.00 to $6.20 | ||||
| Business Realignment Costs |
0.96 to 0.76 | 1.09 to 0.89 | ||||||
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| GAAP Measure |
$ | 0.94 to $1.34 | $ | 4.91 to $5.31 | ||||
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* * *
6
FEDEX CORP. FINANCIAL HIGHLIGHTS
Third Quarter Fiscal 2013
(In millions, except earnings per share)
(Unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
| Feb. 28, 2013 | Feb. 29, 2012 | % | Feb. 28, 2013 | Feb. 29, 2012 | % | |||||||||||||||||||
| Revenue: |
||||||||||||||||||||||||
| FedEx Express segment |
$ | 6,704 | $ | 6,543 | 2 | % | $ | 20,194 | $ | 19,718 | 2 | % | ||||||||||||
| FedEx Ground segment |
2,747 | 2,480 | 11 | % | 7,802 | 7,097 | 10 | % | ||||||||||||||||
| FedEx Freight segment |
1,237 | 1,234 | — | 4,013 | 3,887 | 3 | % | |||||||||||||||||
| FedEx Services segment |
380 | 401 | (5 | %) | 1,174 | 1,239 | (5 | %) | ||||||||||||||||
| Other & eliminations |
(115 | ) | (94 | ) | NM | (331 | ) | (269 | ) | NM | ||||||||||||||
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| Total Revenue |
10,953 | 10,564 | 4 | % | 32,852 | 31,672 | 4 | % | ||||||||||||||||
| Operating Expenses: |
||||||||||||||||||||||||
| Salaries and employee benefits |
4,150 | 4,021 | 3 | % | 12,378 | 12,007 | 3 | % | ||||||||||||||||
| Purchased transportation |
1,871 | 1,619 | 16 | % | 5,411 | 4,713 | 15 | % | ||||||||||||||||
| Rentals and landing fees |
640 | 628 | 2 | % | 1,888 | 1,871 | 1 | % | ||||||||||||||||
| Depreciation and amortization |
599 | 543 | 10 | % | 1,764 | 1,570 | 12 | % | ||||||||||||||||
| Fuel |
1,215 | 1,233 | (1 | %) | 3,588 | 3,677 | (2 | %) | ||||||||||||||||
| Maintenance and repairs |
424 | 456 | (7 | %) | 1,477 | 1,518 | (3 | %) | ||||||||||||||||
| Business realignment costs |
47 | — | NM | 64 | — | NM | ||||||||||||||||||
| Other |
1,418 | 1,251 | 13 | % | 4,233 | 3,986 | 6 | % | ||||||||||||||||
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| Total Operating Expenses |
10,364 | 9,751 | 6 | % | 30,803 | 29,342 | 5 | % | ||||||||||||||||
| Operating Income (Loss): |
||||||||||||||||||||||||
| FedEx Express segment |
118 | 349 | (66 | %) | 555 | 979 | (43 | %) | ||||||||||||||||
| FedEx Ground segment |
467 | 465 | — | 1,324 | 1,270 | 4 | % | |||||||||||||||||
| FedEx Freight segment |
4 | (1 | ) | NM | 170 | 81 | NM | |||||||||||||||||
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| Total Operating Income |
589 | 813 | (28 | %) | 2,049 | 2,330 | (12 | %) | ||||||||||||||||
| Other Expense: |
||||||||||||||||||||||||
| Interest, net |
(9 | ) | (12 | ) | (25 | %) | (37 | ) | (30 | ) | 23 | % | ||||||||||||
| Other, net |
(16 | ) | (9 | ) | 78 | % | (29 | ) | (7 | ) | NM | |||||||||||||
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| Total Other Expense |
(25 | ) | (21 | ) | 19 | % | (66 | ) | (37 | ) | 78 | % | ||||||||||||
| Pretax Income |
564 | 792 | (29 | %) | 1,983 | 2,293 | (14 | %) | ||||||||||||||||
| Provision for Income Taxes |
203 | 271 | (25 | %) | 725 | 811 | (11 | %) | ||||||||||||||||
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| Net Income |
$ | 361 | $ | 521 | (31 | %) | $ | 1,258 | $ | 1,482 | (15 | %) | ||||||||||||
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| Diluted Earnings Per Share |
$ | 1.13 | $ | 1.65 | (32 | %) | $ | 3.97 | $ | 4.67 | (15 | %) | ||||||||||||
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| Weighted Average Common and Common Equivalent Shares |
317 | 316 | — | 316 | 317 | — | ||||||||||||||||||
| Capital Expenditures |
$ | 542 | $ | 729 | (26 | %) | $ | 2,430 | $ | 2,946 | (18 | %) | ||||||||||||
FEDEX CORP. CONDENSED CONSOLIDATED BALANCE SHEETS
Third Quarter Fiscal 2013
(In millions)
| Feb. 28, 2013 | ||||||||
| (Unaudited) | May 31, 2012 | |||||||
| ASSETS |
||||||||
| Current Assets |
||||||||
| Cash and cash equivalents |
$ | 3,372 | $ | 2,843 | ||||
| Receivables, less allowances |
4,950 | 4,704 | ||||||
| Spare parts, supplies and fuel, less allowances |
460 | 440 | ||||||
| Deferred income taxes |
510 | 533 | ||||||
| Prepaid expenses and other |
453 | 536 | ||||||
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| Total current assets |
9,745 | 9,056 | ||||||
| Property and Equipment, at Cost |
38,114 | 36,164 | ||||||
| Less accumulated depreciation and amortization |
19,786 | 18,916 | ||||||
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| Net property and equipment |
18,328 | 17,248 | ||||||
| Other Long-Term Assets |
||||||||
| Goodwill |
2,765 | 2,387 | ||||||
| Other assets |
992 | 1,212 | ||||||
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| Total other long-term assets |
3,757 | 3,599 | ||||||
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| $ | 31,830 | $ | 29,903 | |||||
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| LIABILITIES AND STOCKHOLDERS’ INVESTMENT |
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| Current Liabilities |
||||||||
| Current portion of long-term debt |
$ | 251 | $ | 417 | ||||
| Accrued salaries and employee benefits |
1,395 | 1,635 | ||||||
| Accounts payable |
1,730 | 1,613 | ||||||
| Accrued expenses |
1,723 | 1,709 | ||||||
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| Total current liabilities |
5,099 | 5,374 | ||||||
| Long-Term Debt, Less Current Portion |
1,991 | 1,250 | ||||||
| Other Long-Term Liabilities |
||||||||
| Deferred income taxes |
1,139 | 836 | ||||||
| Pension, postretirement healthcare and other benefit obligations |
5,361 | 5,582 | ||||||
| Self-insurance accruals |
989 | 963 | ||||||
| Deferred lease obligations |
766 | 784 | ||||||
| Deferred gains, principally related to aircraft transactions |
234 | 251 | ||||||
| Other liabilities |
139 | 136 | ||||||
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| Total other long-term liabilities |
8,628 | 8,552 | ||||||
| Commitments and Contingencies |
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| Common Stockholders’ Investment |
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| Common stock, $0.10 par value, 800 million shares authorized |
32 | 32 | ||||||
| Additional paid-in capital |
2,623 | 2,595 | ||||||
| Retained earnings |
18,216 | 17,134 | ||||||
| Accumulated other comprehensive loss |
(4,710 | ) | (4,953 | ) | ||||
| Treasury stock, at cost |
(49 | ) | (81 | ) | ||||
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| Total common stockholders’ investment |
16,112 | 14,727 | ||||||
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| $ | 31,830 | $ | 29,903 | |||||
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FEDEX CORP. CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
Third Quarter Fiscal 2013
(In millions)
(Unaudited)
| Nine Months Ended | ||||||||
| Feb. 28, 2013 | Feb. 29, 2012 | |||||||
| Operating Activities: |
||||||||
| Net income |
$ | 1,258 | $ | 1,482 | ||||
| Noncash charges: |
||||||||
| Depreciation and amortization |
1,764 | 1,570 | ||||||
| Other, net |
710 | 900 | ||||||
| Changes in operating assets and liabilities, net |
(756 | ) | (935 | ) | ||||
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| Net cash provided by operating activities |
2,976 | 3,017 | ||||||
| Investing Activities: |
||||||||
| Capital expenditures |
(2,430 | ) | (2,946 | ) | ||||
| Business acquisitions, net of cash acquired |
(483 | ) | (114 | ) | ||||
| Proceeds from asset dispositions and other |
45 | 20 | ||||||
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| Net cash used in investing activities |
(2,868 | ) | (3,040 | ) | ||||
| Financing Activities: |
||||||||
| Principal payments on debt |
(417 | ) | (28 | ) | ||||
| Proceeds from debt issuance |
991 | — | ||||||
| Dividends paid |
(132 | ) | (123 | ) | ||||
| Purchase of treasury stock |
(246 | ) | (197 | ) | ||||
| Other, net |
221 | 90 | ||||||
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| Net cash provided by (used in) financing activities |
417 | (258 | ) | |||||
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| Effect of exchange rate changes on cash |
4 | (7 | ) | |||||
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| Net increase (decrease) in cash and cash equivalents |
529 | (288 | ) | |||||
| Cash and cash equivalents at beginning of period |
2,843 | 2,328 | ||||||
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| Cash and cash equivalents at end of period |
$ | 3,372 | $ | 2,040 | ||||
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FEDEX EXPRESS SEGMENT FINANCIAL HIGHLIGHTS
Third Quarter Fiscal 2013
(Dollars in millions)
(Unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
| Feb. 28, 2013 | Feb. 29, 2012 | % | Feb. 28, 2013 | Feb. 29, 2012 | % | |||||||||||||||||||
| Revenues: |
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| Package Revenue: |
||||||||||||||||||||||||
| U.S. Overnight Box |
$ | 1,609 | $ | 1,619 | (1 | %) | $ | 4,822 | $ | 4,882 | (1 | %) | ||||||||||||
| U.S. Overnight Envelope |
413 | 426 | (3 | %) | 1,252 | 1,298 | (4 | %) | ||||||||||||||||
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| Total U.S. Overnight |
2,022 | 2,045 | (1 | %) | 6,074 | 6,180 | (2 | %) | ||||||||||||||||
| U.S. Deferred |
812 | 792 | 3 | % | 2,246 | 2,254 | — | |||||||||||||||||
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| Total U.S. Package Revenue |
2,834 | 2,837 | — | 8,320 | 8,434 | (1 | %) | |||||||||||||||||
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| International Priority |
1,567 | 1,625 | (4 | %) | 4,906 | 5,093 | (4 | %) | ||||||||||||||||
| International Economy |
491 | 454 | 8 | % | 1,492 | 1,355 | 10 | % | ||||||||||||||||
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|||||||||||||||||
| Total International Export Package |
2,058 | 2,079 | (1 | %) | 6,398 | 6,448 | (1 | %) | ||||||||||||||||
| International Domestic1 |
342 | 210 | 63 | % | 1,035 | 634 | 63 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total Package Revenue |
5,234 | 5,126 | 2 | % | 15,753 | 15,516 | 2 | % | ||||||||||||||||
| Freight Revenue: |
||||||||||||||||||||||||
| U.S. |
668 | 647 | 3 | % | 1,923 | 1,866 | 3 | % | ||||||||||||||||
| International Priority |
384 | 443 | (13 | %) | 1,269 | 1,362 | (7 | %) | ||||||||||||||||
| International Airfreight |
64 | 77 | (17 | %) | 215 | 228 | (6 | %) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total Freight Revenue |
1,116 | 1,167 | (4 | %) | 3,407 | 3,456 | (1 | %) | ||||||||||||||||
| Other Revenue |
354 | 250 | 42 | % | 1,034 | 746 | 39 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total Express Revenue |
$ | 6,704 | $ | 6,543 | 2 | % | $ | 20,194 | $ | 19,718 | 2 | % | ||||||||||||
| Operating Expenses: |
||||||||||||||||||||||||
| Salaries and employee benefits |
2,539 | 2,410 | 5 | % | 7,500 | 7,200 | 4 | % | ||||||||||||||||
| Purchased transportation |
583 | 449 | 30 | % | 1,728 | 1,346 | 28 | % | ||||||||||||||||
| Rentals and landing fees |
429 | 425 | 1 | % | 1,262 | 1,269 | (1 | %) | ||||||||||||||||
| Depreciation and amortization |
334 | 299 | 12 | % | 993 | 869 | 14 | % | ||||||||||||||||
| Fuel |
1,066 | 1,078 | (1 | %) | 3,126 | 3,194 | (2 | %) | ||||||||||||||||
| Maintenance and repairs |
262 | 303 | (14 | %) | 983 | 1,037 | (5 | %) | ||||||||||||||||
| Business realignment costs2 |
13 | — | NM | 14 | — | NM | ||||||||||||||||||
| Intercompany charges3 |
548 | 547 | — | 1,620 | 1,643 | (1 | %) | |||||||||||||||||
|
Other4 |
812 | 683 | 19 | % | 2,413 | 2,181 | 11 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total Operating Expenses |
6,586 | 6,194 | 6 | % | 19,639 | 18,739 | 5 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Operating Income |
$ | 118 | $ | 349 | (66 | %) | $ | 555 | $ | 979 | (43 | %) | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Operating Margin |
1.8 | % | 5.3 | % | (3.5 | pts) | 2.7 | % | 5.0 | % | (2.3 | pts) | ||||||||||||
| 1 - | International Domestic includes international intra-country express operations, including recent acquisitions in Mexico (July 2011), Poland (June 2012), France (July 2012) and Brazil (July 2012). |
| 2 - | Includes predominantly severance costs associated with the company’s voluntary buyout program. |
| 3 - | Includes allocations of $21 million in the third quarter of 2013 and $31 million year-to-date for business realignment costs. |
| 4 - | The third quarter of 2012 includes the reversal of a $66 million legal reserve. |
FEDEX EXPRESS SEGMENT OPERATING HIGHLIGHTS
Third Quarter Fiscal 2013
(Unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
| Feb. 28, 2013 | Feb. 29, 2012 | % | Feb. 28, 2013 | Feb. 29, 2012 | % | |||||||||||||||||||
| PACKAGE STATISTICS |
||||||||||||||||||||||||
| Average Daily Package Volume (000s): |
||||||||||||||||||||||||
| U.S. Overnight Box |
1,176 | 1,171 | — | 1,135 | 1,158 | (2 | %) | |||||||||||||||||
| U.S. Overnight Envelope |
569 | 581 | (2 | %) | 570 | 586 | (3 | %) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total U.S. Overnight Package |
1,745 | 1,752 | — | 1,705 | 1,744 | (2 | %) | |||||||||||||||||
| U.S. Deferred |
944 | 923 | 2 | % | 843 | 863 | (2 | %) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total U.S. Domestic Package |
2,689 | 2,675 | 1 | % | 2,548 | 2,607 | (2 | %) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| International Priority |
420 | 413 | 2 | % | 424 | 421 | 1 | % | ||||||||||||||||
| International Economy |
155 | 139 | 12 | % | 152 | 134 | 13 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total International Export Package |
575 | 552 | 4 | % | 576 | 555 | 4 | % | ||||||||||||||||
| International Domestic1 |
781 | 508 | 54 | % | 781 | 493 | 58 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total Average Daily Packages |
4,045 | 3,735 | 8 | % | 3,905 | 3,655 | 7 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Yield (Revenue Per Package): |
||||||||||||||||||||||||
| U.S. Overnight Box |
$ | 22.08 | $ | 21.93 | 1 | % | $ | 22.35 | $ | 22.08 | 1 | % | ||||||||||||
| U.S. Overnight Envelope |
11.69 | 11.65 | — | 11.57 | 11.59 | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| U.S. Overnight Composite |
18.69 | 18.53 | 1 | % | 18.75 | 18.59 | 1 | % | ||||||||||||||||
| U.S. Deferred |
13.87 | 13.62 | 2 | % | 14.02 | 13.67 | 3 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| U.S. Domestic Composite |
17.00 | 16.83 | 1 | % | 17.18 | 16.94 | 1 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| International Priority |
60.25 | 62.49 | (4 | %) | 60.93 | 63.44 | (4 | %) | ||||||||||||||||
| International Economy |
51.03 | 51.74 | (1 | %) | 51.72 | 52.86 | (2 | %) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total International Export Composite |
57.76 | 59.78 | (3 | %) | 58.50 | 60.88 | (4 | %) | ||||||||||||||||
| International Domestic1 |
7.06 | 6.57 | 7 | % | 6.98 | 6.73 | 4 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Composite Package Yield |
$ | 20.87 | $ | 21.79 | (4 | %) | $ | 21.23 | $ | 22.23 | (4 | %) | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| FREIGHT STATISTICS |
||||||||||||||||||||||||
| Average Daily Freight Pounds (000s): |
||||||||||||||||||||||||
| U.S. |
8,324 | 8,104 | 3 | % | 7,697 | 7,561 | 2 | % | ||||||||||||||||
| International Priority |
2,894 | 3,257 | (11 | %) | 3,098 | 3,279 | (6 | %) | ||||||||||||||||
| International Airfreight |
1,035 | 1,169 | (11 | %) | 1,102 | 1,182 | (7 | %) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total Avg Daily Freight Pounds |
12,253 | 12,530 | (2 | %) | 11,897 | 12,022 | (1 | %) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Revenue Per Freight Pound: |
||||||||||||||||||||||||
| U.S. |
$ | 1.30 | $ | 1.27 | 2 | % | $ | 1.31 | $ | 1.29 | 2 | % | ||||||||||||
| International Priority |
2.14 | 2.16 | (1 | %) | 2.15 | 2.18 | (1 | %) | ||||||||||||||||
| International Airfreight |
0.99 | 1.04 | (5 | %) | 1.03 | 1.01 | 2 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Composite Freight Yield |
$ | 1.47 | $ | 1.48 | (1 | %) | $ | 1.51 | $ | 1.51 | — | |||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Operating Weekdays |
62 | 63 | (2 | %) | 190 | 191 | (1 | %) | ||||||||||||||||
| 1 - | International Domestic includes international intra-country express operations, including recent acquisitions in Mexico (July 2011), Poland (June 2012), France (July 2012) and Brazil (July 2012). |
FEDEX GROUND SEGMENT FINANCIAL AND OPERATING HIGHLIGHTS
Third Quarter Fiscal 2013
(Dollars in millions)
(Unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
| Feb. 28, 2013 | Feb. 29, 2012 | % | Feb. 28, 2013 | Feb. 29, 2012 | % | |||||||||||||||||||
| FINANCIAL HIGHLIGHTS |
||||||||||||||||||||||||
| Revenues: |
||||||||||||||||||||||||
| FedEx Ground |
$ | 2,480 | $ | 2,259 | 10 | % | $ | 7,112 | $ | 6,518 | 9 | % | ||||||||||||
| FedEx SmartPost |
267 | 221 | 21 | % | 690 | 579 | 19 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total Revenues |
2,747 | 2,480 | 11 | % | 7,802 | 7,097 | 10 | % | ||||||||||||||||
| Operating Expenses: |
||||||||||||||||||||||||
| Salaries and employee benefits |
405 | 369 | 10 | % | 1,178 | 1,082 | 9 | % | ||||||||||||||||
| Purchased transportation |
1,121 | 995 | 13 | % | 3,124 | 2,814 | 11 | % | ||||||||||||||||
| Rentals |
86 | 74 | 16 | % | 245 | 212 | 16 | % | ||||||||||||||||
| Depreciation and amortization |
111 | 102 | 9 | % | 324 | 289 | 12 | % | ||||||||||||||||
| Fuel |
6 | 4 | 50 | % | 13 | 11 | 18 | % | ||||||||||||||||
| Maintenance and repairs |
48 | 43 | 12 | % | 140 | 130 | 8 | % | ||||||||||||||||
| Intercompany charges |
270 | 246 | 10 | % | 794 | 732 | 8 | % | ||||||||||||||||
| Other |
233 | 182 | 28 | % | 660 | 557 | 18 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total Operating Expenses |
2,280 | 2,015 | 13 | % | 6,478 | 5,827 | 11 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Operating Income |
$ | 467 | $ | 465 | — | $ | 1,324 | $ | 1,270 | 4 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Operating Margin |
17.0 | % | 18.8 | % | (1.8 | pts) | 17.0 | % | 17.9 | % | (0.9 | pts) | ||||||||||||
| OPERATING STATISTICS |
||||||||||||||||||||||||
| Operating Weekdays |
62 | 63 | (2 | %) | 190 | 191 | (1 | %) | ||||||||||||||||
| Average Daily Package Volume (000s) |
||||||||||||||||||||||||
| FedEx Ground |
4,476 | 4,072 | 10 | % | 4,214 | 3,922 | 7 | % | ||||||||||||||||
| FedEx SmartPost |
2,477 | 1,960 | 26 | % | 2,051 | 1,701 | 21 | % | ||||||||||||||||
| Yield (Revenue Per Package) |
||||||||||||||||||||||||
| FedEx Ground |
$ | 8.92 | $ | 8.79 | 1 | % | $ | 8.86 | $ | 8.68 | 2 | % | ||||||||||||
| FedEx SmartPost |
$ | 1.77 | $ | 1.79 | (1 | %) | $ | 1.78 | $ | 1.78 | — | |||||||||||||
FEDEX FREIGHT SEGMENT FINANCIAL AND OPERATING HIGHLIGHTS
Third Quarter Fiscal 2013
(Dollars in millions)
(Unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
| Feb. 28, 2013 | Feb. 29, 2012 | % | Feb. 28, 2013 | Feb. 29, 2012 | % | |||||||||||||||||||
| FINANCIAL HIGHLIGHTS |
||||||||||||||||||||||||
| Revenue |
$ | 1,237 | $ | 1,234 | — | $ | 4,013 | $ | 3,887 | 3 | % | |||||||||||||
| Operating Expenses: |
||||||||||||||||||||||||
| Salaries and employee benefits |
562 | 566 | (1 | %) | 1,750 | 1,721 | 2 | % | ||||||||||||||||
| Purchased transportation |
197 | 201 | (2 | %) | 647 | 629 | 3 | % | ||||||||||||||||
| Rentals |
30 | 29 | 3 | % | 88 | 86 | 2 | % | ||||||||||||||||
| Depreciation and amortization |
55 | 47 | 17 | % | 160 | 135 | 19 | % | ||||||||||||||||
| Fuel |
142 | 149 | (5 | %) | 447 | 470 | (5 | %) | ||||||||||||||||
| Maintenance and repairs |
45 | 45 | — | 142 | 143 | (1 | %) | |||||||||||||||||
| Business realignment costs |
1 | — | NM | 1 | — | NM | ||||||||||||||||||
| Intercompany charges |
109 | 107 | 2 | % | 330 | 324 | 2 | % | ||||||||||||||||
| Other |
92 | 91 | 1 | % | 278 | 298 | (7 | %) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total Operating Expenses |
1,233 | 1,235 | — | 3,843 | 3,806 | 1 | % | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Operating Income (Loss) |
$ | 4 | ($ | 1 | ) | NM | $ | 170 | $ | 81 | NM | |||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Operating Margin |
0.3 | % | (0.1 | %) | 0.4 | pts | 4.2 | % | 2.1 | % | 2.1 | pts | ||||||||||||
| OPERATING STATISTICS |
||||||||||||||||||||||||
| LTL Operating Weekdays |
61 | 63 | (3 | %) | 188 | 190 | (1 | %) | ||||||||||||||||
| Average Daily LTL Shipments (000s) |
||||||||||||||||||||||||
| Priority |
55.3 | 56.4 | (2 | %) | 59.5 | 59.9 | (1 | %) | ||||||||||||||||
| Economy |
25.2 | 23.4 | 8 | % | 26.2 | 23.9 | 10 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total Average Daily LTL Shipments |
80.5 | 79.8 | 1 | % | 85.7 | 83.8 | 2 | % | ||||||||||||||||
| Weight Per LTL Shipment (lbs) |
||||||||||||||||||||||||
| Priority |
1,250 | 1,212 | 3 | % | 1,226 | 1,193 | 3 | % | ||||||||||||||||
| Economy |
989 | 1,025 | (4 | %) | 993 | 1,055 | (6 | %) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Composite Weight Per LTL Shipment |
1,168 | 1,157 | 1 | % | 1,154 | 1,154 | — | |||||||||||||||||
| LTL Yield (Revenue/CWT) |
||||||||||||||||||||||||
| Priority |
$ | 17.87 | $ | 18.10 | (1 | %) | $ | 17.91 | $ | 18.14 | (1 | %) | ||||||||||||
| Economy |
26.17 | 24.28 | 8 | % | 25.92 | 23.70 | 9 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Composite LTL Yield |
$ | 20.10 | $ | 19.70 | 2 | % | $ | 20.03 | $ | 19.59 | 2 | % | ||||||||||||