FedEx Corp. Reports Higher Fourth Quarter Earnings

Strong Earnings Growth Expected in Fiscal 2012


MEMPHIS, Tenn., June 22, 2011 …FedEx Corp. (NYSE: FDX) today reported earnings of $1.75 per diluted share for the fourth quarter ended May 31, compared to $1.33 per diluted share a year ago, a year-over-year increase of 32%.

“During fiscal 2011, an improved economy, strong customer demand and decisive actions to grow our business led to increased volumes and yields across all transportation segments,” said Frederick W. Smith, FedEx Corp. chairman, president and chief executive officer. “With this positive momentum, moderate economic growth and subsiding cost headwinds, FedEx is well positioned to deliver strong earnings growth in fiscal 2012.”

Fourth Quarter Results

FedEx Corp. reported the following consolidated results for the fourth quarter:

Revenue of $10.55 billion, up 12% from $9.43 billion the previous year

Operating income of $888 million, up 28% from $696 million last year

Operating margin of 8.4%, up from 7.4% the previous year

Net income of $558 million, up 33% from last year’s $419 million

Revenue and earnings increased due to continued strong yield improvement in all transportation segments and volume growth of ground and international express shipments. FedEx Freight’s return to profitability also improved operating results.

Full Year Results

FedEx Corp. reported the following consolidated results for the full year:

Revenue of $39.3 billion, up 13% from $34.7 billion the previous year

Operating income of $2.38 billion, up 19% from $2.00 billion last year

Net income of $1.45 billion, up 23% from last year’s $1.18 billion

Adjusted earnings per share of $4.90, up from $3.76 per share a year ago

(Fiscal 2011 earnings per share exclude the impact of certain one-time costs”see table)

Capital spending for fiscal 2011 was $3.4 billion, of which $2.0 billion was for investments in aircraft and related equipment.


FedEx projects earnings to be $1.40 to $1.60 per diluted share in the first quarter and $6.35 to $6.85 per diluted share for fiscal 2012. This guidance assumes the current market outlook for fuel prices and continued moderate growth in the global economy. The company reported earnings of $1.20 per diluted share in last year’s first quarter. The capital spending forecast for fiscal 2012 is $4.2 billion, which includes the delivery of aircraft as well as progress payments toward future aircraft deliveries, along with investments in facilities, vehicles and information technology in support of the company’s global growth strategy. The company will benefit from the tax expensing/accelerated depreciation provisions included in the Tax Relief Act of 2010 passed last December.

“Our actions to improve yields continue to drive revenue and earnings growth across our transportation segments,” said Alan B. Graf, Jr., FedEx Corp. executive vice president and chief financial officer. “FedEx Ground maintained its exceptional performance this quarter, increasing volume, yields and margins, while FedEx Freight returned to profitability. Even with higher planned capital spending in fiscal 2012, margins, cash flows and returns are expected to improve year over year.”

FedEx Express Segment

For the fourth quarter, the FedEx Express segment reported:

Revenue of $6.63 billion, up 13% from last year’s $5.88 billion

Operating income of $429 million, up 4% from $413 million a year ago

Operating margin of 6.5%, down from 7.0% the previous year

FedEx International Priority (IP) average daily package volume increased 6%, led by exports from Asia. IP revenue per package grew 8% due to higher fuel surcharges, the favorable impact of exchange rates, improved weight per package and yield management actions. IP freight pounds increased 13% with revenue per pound up 6% due to higher fuel surcharges and the favorable impact of exchange rates. In total, IP package and freight revenue increased 15% and pounds increased 9% year-over-year. U.S. domestic revenue per package grew 10% due to higher fuel surcharges, yield management actions and increased weight per package, with slightly lower U.S. domestic average daily package volume.

Operating income improvements were driven by strong yield growth, particularly in U.S. domestic package services, and by volume growth in IP package and freight services. Results were negatively impacted by increased retirement plan expenses and the reinstatement of certain compensation programs.

FedEx Ground Segment

For the fourth quarter, the FedEx Ground segment reported:

Revenue of $2.26 billion, up 15% from last year’s $1.96 billion

Operating income of $417 million, up 31% from $319 million a year ago

Operating margin of 18.4%, up from 16.3% the previous year

FedEx Ground average daily package volume grew 6% in the fourth quarter driven by increases in the business-to-business market and the FedEx Home Delivery service. Revenue per package increased 7% primarily due to yield management actions and higher fuel surcharges. FedEx SmartPost average daily volume increased 24% due to growth in e-commerce and gains in market share. FedEx SmartPost revenue per package increased 8% primarily due to growth in higher-yielding services and increased fuel surcharges.

Operating income and margin increased primarily due to higher package yield and volume.

FedEx Freight Segment

For the fourth quarter, the FedEx Freight segment reported:

Revenue of $1.31 billion, up 6% from last year’s $1.23 billion

Operating income of $42 million, up from an operating loss of $36 million a year ago

Operating margin of 3.2%, compared with (2.9%) the previous year

Less-than-truckload (LTL) yield increased 13% primarily due to yield management actions and higher LTL fuel surcharges. LTL average daily shipments decreased 8% as a result of the yield management actions.

The segment returned to profitability in the quarter due primarily to the higher LTL yield. Last year’s results included an $18 million impairment charge related to the goodwill associated with the acquisition of Watkins Motor Lines. Strong yield growth and efficiencies resulting from the January 30, 2011 combination of the FedEx Freight and FedEx National LTL operations are expected to drive a substantial improvement in operating results in fiscal 2012. The net cash effect of the combination was immaterial, as cash proceeds of $88 million from asset sales offset severance and other cash outlays.

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 $39 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 290,000 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 .

Additional information and operating data are contained in the company’s annual report, Form 10-K, Form 10-Qs and fourth quarter fiscal 2011 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 June 22 are available on the company’s Web site at . A replay of the conference call Webcast will be posted on our Web site 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, 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.



The company believes that meaningful analysis of our financial performance requires an understanding of the factors underlying that performance and our judgments about the likelihood that particular factors will repeat. Excluding a reserve associated with a legal matter in the second quarter and the costs of the combination of FedEx Freight and FedEx National LTL operations from our full-year earnings, net of applicable incentive compensation impacts, will allow more accurate comparisons to prior periods of operating performance for fiscal 2011. As required by SEC rules, the table below presents a reconciliation of our presented non-GAAP measure to the most directly comparable GAAP measure.


FY 2011 Diluted
Earnings Per Share
Non-GAAP Measure$4.90
FedEx Freight Combination Costs(0.26)
ATA Legal Reserve, Net(0.07)
GAAP Measure$4.57
Fourth Quarter Fiscal 2011
(In millions, except earnings per share and FTEs)
Three Months EndedTwelve Months Ended
May 31May 31
FedEx Express segment$6,628$5,87713%$24,581$21,55514%
FedEx Ground segment2,2631,96215%8,4857,43914%
FedEx Freight segment1,3091,2316%4,9114,32114%
FedEx Services segment438448(2%)1,6841,770(5%)
Other & eliminations(86)(90)4%(357)(351)(2%)
Total Revenue10,5529,42812%39,30434,73413%
Operating Expenses:
Salaries and employee benefits3,8663,6775%15,27614,0279%
Purchased transportation1,5111,29916%5,6744,72820%
Rentals and landing fees6125953%2,4622,3594%
Depreciation and amortization4994882%1,9731,9581%
Maintenance and repairs5095002%1,9791,71515%
Impairment and other charges118NM8918NM
Total Operating Expenses9,6648,73211%36,92632,73613%
Operating Income (Loss):
FedEx Express segment4294134%1,2281,1279%
FedEx Ground segment41731931%1,3251,02429%
FedEx Freight segment42(36)217%(175)(153)(14%)
Total Operating Income88869628%2,3781,99819%
Other Income (Expense):
Interest, net(12)(19)(37%)(77)(71)8%
Other, net(11)(5)120%(36)(33)9%
Total Other Income (Expense)(23)(24)(4%)(113)(104)9%
Pretax Income86567229%2,2651,89420%
Provision for Income Taxes30725321%81371015%
Net Income$558$41933%$1,452$1,18423%
Diluted Earnings Per Share$1.75$1.3332%$4.57$3.7622%
Weighted Average Diluted Common and
Common Equivalent Shares3183161%3173141%
Capital Expenditures$731$835(12%)$3,434$2,81622%
Average Full-Time Equivalents (000s)2572484%2562454%
Fourth Quarter Fiscal 2011
(In millions)
(Current period is unaudited)
May 31, 2011May 31, 2010
Current Assets
Cash and cash equivalents$2,328$1,952
Receivables, less allowances4,5814,163
Spare parts, supplies and fuel, less allowances437389
Deferred income taxes610529
Prepaid expenses and other329251
Total current assets8,2857,284
Property and Equipment, at Cost33,68631,302
Less accumulated depreciation and amortization18,14316,917
Net property and equipment15,54314,385
Other Long-Term Assets
Other assets1,2311,033
Total other long-term assets3,5573,233
Current Liabilities
Current portion of long-term debt$18$262
Accrued salaries and employee benefits1,2681,146
Accounts payable1,7021,522
Accrued expenses1,8941,715
Total current liabilities4,8824,645
Long-Term Debt, Less Current Portion1,6671,668
Other Long-Term Liabilities
Deferred income taxes1,336891
Pension, postretirement healthcare and other benefit obligations2,1241,705
Self-insurance accruals977960
Deferred lease obligations779804
Deferred gains, principally related to aircraft transactions246267
Other liabilities154151
Total other long-term liabilities5,6164,778
Commitments and Contingencies
Common Stockholders’ Investment
Common stock, $0.10 par value, 800 million shares authorized3231
Additional paid-in capital2,4842,261
Retained earnings15,26613,966
Accumulated other comprehensive loss(2,550)(2,440)
Treasury stock, at cost(12)(7)
Total common stockholders’ investment15,22013,811
Fourth Quarter Fiscal 2011
(In millions)
(Current period is unaudited)
Year Ended
May 31
Operating Activities:
Net income$1,452$1,184
Noncash charges:
Depreciation and amortization1,9731,958
Other, net948574
Changes in operating assets and liabilities, net(332)(578)
Cash provided by operating activities4,0413,138
Investing Activities:
Capital expenditures(3,434)(2,816)
Business acquisitions, net of cash acquired(96)
Proceeds from asset dispositions and other11135
Cash used in investing activities(3,419)(2,781)
Financing Activities:
Principal payments on debt(262)(653)
Dividends paid(151)(138)
Other, net12699
Cash used in financing activities(287)(692)
Effect of exchange rate changes on cash41(5)
Net increase (decrease) in cash and cash equivalents376(340)
Cash and cash equivalents at beginning of period1,9522,292
Cash and cash equivalents at end of period$2,328$1,952
Fourth Quarter Fiscal 2011
(Dollars in millions)
Three Months EndedTwelve Months Ended
May 31May 31
FINANCIAL HIGHLIGHTS20112010%20112010%
Operating Expenses:
Salaries and employee benefits2,3512,1877%9,1838,4029%
Purchased transportation43034724%1,5731,17734%
Rentals and landing fees4183995%1,6721,5776%
Depreciation and amortization2722595%1,0591,0164%
Maintenance and repairs3513423%1,3531,13120%
Intercompany charges5205043%2,0431,9405%
Total Operating Expenses6,1995,46413%23,35320,42814%
Operating Income$429$4134%$1,228$1,1279%
Operating Margin6.5%7.0%(0.5 pts)5.0%5.2%(0.2 pts)
Operating Weekdays6565255255
Average Daily Package Volume (000s):
U.S. Overnight Box1,1581,1560%1,1841,1572%
U.S. Overnight Envelope626632(1%)6276142%
U.S. Deferred833843(1%)8738671%
Total U.S. Domestic Package2,6172,631(1%)2,6842,6382%
International Priority5935606%57552310%
International Domestic37332315%3483189%
Total Average Daily Packages3,5833,5142%3,6073,4794%
Average Daily Freight Pounds (000s):
International Priority3,2612,88913%3,1842,54425%
International Airfreight1,1951,198(0%)1,2351,2221%
Total Avg Daily Freight Pounds11,48311,0034%11,75910,9078%
Revenue Per Package:
U.S. Overnight Box$21.72$19.7710%$20.29$19.007%
U.S. Overnight Envelope11.3710.647%10.8610.474%
U.S. Deferred13.5612.2311%12.6011.708%
Total U.S. Domestic Package16.6515.1610%15.5914.617%
International Priority58.9654.458%56.0853.106%
International Domestic7.517.224%7.387.143%
Composite Package Yield$22.69$20.6910%$21.25$19.728%
Revenue Per Freight Pound:
International Priority2.212.096%2.122.015%
International Airfreight0.960.8513%0.900.8111%
Composite Freight Yield$1.49$1.3610%$1.40$1.2710%
Average Full-Time Equivalents (000s)1351295%1331284%
1 – Current year includes a $66 million reserve for a legal matter.
Fourth Quarter Fiscal 2011
(Dollars in millions)
Three Months EndedTwelve Months Ended
May 31May 31
FedEx Ground$2,099$1,84014%$7,855$6,95813%
FedEx SmartPost16412234%63048131%
Total Revenues2,2631,96215%8,4857,43914%
Operating Expenses:
Salaries and employee benefits32829910%1,2821,15811%
Purchased transportation89376916%3,4312,96616%
Depreciation and amortization88836%3373341%
Maintenance and repairs4347(9%)1691662%
Intercompany charges22820810%89779513%
Total Operating Expenses1,8461,64312%7,1606,41512%
Operating Income$417$31931%$1,325$1,02429%
Operating Margin18.4%16.3%2.1 pts15.6%13.8%1.8 pts
Operating Weekdays65652562550%
Average Daily Package Volume (000s)
FedEx Ground3,7323,5166%3,7463,5236%
FedEx SmartPost1,4301,15024%1,4321,22217%
Yield (Revenue Per Package)
FedEx Ground$8.64$8.047%$8.17$7.736%
FedEx SmartPost$1.76$1.638%$1.72$1.5610%
Fourth Quarter Fiscal 2011
(Dollars in millions)
Three Months EndedTwelve Months Ended
May 31May 31
Operating Expenses:
Salaries and employee benefits557576(3%)2,3032,1288%
Purchased transportation212213(0%)77969013%
Depreciation and amortization4748(2%)2051984%
Maintenance and repairs47439%18214823%
Intercompany charges1041022%42735122%
Impairment and other charges1118(94%)8918NM
Total Operating Expenses1,2671,2675,0864,47414%
Operating Income (Loss)$42($36)217%($175)($153)(14%)
Operating Margin3.2%(2.9%)6.1 pts(3.6%)(3.5%)(0.1 pts)
LTL Operating Weekdays65652542530%
LTL Shipments Per Day (000s)84.391.5(8%)86.082.34%
Weight Per LTL Shipment (lbs)1,1771,1601%1,1441,1341%
LTL Revenue/CWT$18.83$16.6913%$18.24$17.077%
1 – Current year includes charges associated with the combination of FedEx Freight and FedEx National LTL operations, which became effective January 30, 2011.


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