Full-Year Earnings Outlook Increased
MEMPHIS, Tenn., December 16, 2010 … FedEx Corp. (NYSE: FDX) today reported earnings of $0.89 per diluted share for the second quarter ended November 30. Excluding certain charges described below, second quarter earnings were $1.16 per diluted share, compared to $1.10 per diluted share a year ago.
“Solid demand for our transportation solutions, outstanding customer service from FedEx team members and a healthier global economy helped drive second-quarter revenue higher,” said Frederick W. Smith, FedEx Corp. chairman, president and chief executive officer. “Our yield improvement strategy is working, holiday peak season volumes are exceeding our expectations and our economic forecast for calendar 2011 has improved. Accordingly, we have increased our earnings outlook for our current fiscal year.”
Reported results for the current quarter include costs related to the previously announced combination of the company’s FedEx Freight and FedEx National LTL operations and a reserve associated with a legal matter at FedEx Express, which together negatively impacted earnings by a net $0.27 per diluted share. Last year’s second quarter results included a benefit from plan design changes to a self-insurance program at FedEx Express, which increased earnings by a net $0.05 per diluted share.
Second Quarter Results
FedEx Corp. reported the following consolidated results for the second quarter:
- Revenue of $9.63 billion, up 12% from $8.60 billion the previous year
- Operating income of $469 million, down 18% from $571 million last year
- Operating margin of 4.9%, down from 6.6% the previous year
- Net income of $283 million, down 18% from $345 million a year ago
While shipments and yields grew in all transportation segments, earnings were reduced by costs related to the January 30, 2011 combination of FedEx Freight and FedEx National LTL operations, including severance costs associated with personnel reductions and non-cash asset impairment charges. Earnings were also reduced by a reserve for a legal matter at FedEx Express. The reinstatement of certain employee compensation programs, and higher pension and aircraft maintenance expenses, also impacted earnings.
Outlook
FedEx projects earnings to be $0.95 to $1.15 per diluted share in the third quarter and $5.00 to $5.30 per diluted share for fiscal 2011, up from the company’s previous estimate of $4.80 to $5.25 per diluted share. This guidance excludes any FedEx Freight combination costs and the second quarter legal reserve, and also assumes stable fuel prices and continued moderate growth in the global economy. Including costs from the FedEx Freight combination and the legal reserve, earnings are expected to be $0.78 to $1.04 per diluted share for the third quarter and $4.59 to $4.95 per diluted share for fiscal 2011. The company reported earnings of $0.76 per diluted share in last year’s third quarter. The capital spending forecast for fiscal 2011 remains $3.5 billion.
“Our operating performance in the quarter was impacted by strong compensation and benefits headwinds as we reinstated programs curtailed during the recession,” said Alan B. Graf, Jr., FedEx Corp. executive vice president and chief financial officer. “During the quarter, we also realized more normalized growth in FedEx International Priority shipments and higher fuel prices than our earnings guidance had assumed. Yield improvement and cost management remain our focus. We expect margins to improve in the second half of fiscal 2011 and in fiscal 2012, as we continue to benefit from solid global demand for our differentiated services and as certain cost headwinds subside next fiscal year.”
FedEx Express Segment
For the second quarter, the FedEx Express segment reported:
- Revenue of $5.99 billion, up 13% from last year’s $5.31 billion
- Operating income of $264 million, down 23% from $345 million a year ago
- Operating margin of 4.4%, down from 6.5% the previous year
FedEx International Priority (IP) average daily package volume increased 11%, led by exports from Asia. IP revenue per package grew 3% due to improved weight per package and higher fuel surcharges. IP Freight pounds increased 29%, with revenue per pound up 5%. U.S. domestic average daily package volume increased 3% and revenue per package grew 5% due to improved base pricing, higher fuel surcharges and improved weight per package.
Operating income and margin were negatively impacted by a $66 million reserve associated with an adverse jury decision in the ATA Airlines lawsuit. In addition, prior year results included a one time benefit from plan design changes for a self insurance program. The combination of these two items significantly impacted the year-over-year operating margin comparison. The reinstatement of certain employee compensation programs, increased aircraft maintenance costs and higher pension expenses also impacted operating income and margin.
Earlier today, FedEx announced an agreement to acquire Servicios Nacionales Mupa, SA de CV (MultiPack), a Mexican domestic express package delivery company. Last month, FedEx Express announced plans to acquire the logistics, distribution and express businesses of AFL Pvt. Ltd. and its affiliate, Unifreight India Pvt. Ltd. Once completed, these acquisitions will give FedEx more robust domestic transportation and related capabilities in these important global markets.
FedEx Ground Segment
For the second quarter, the FedEx Ground segment reported:
- Revenue of $2.08 billion, up 13% from last year’s $1.84 billion
- Operating income of $296 million, up 24% from $238 million a year ago
- Operating margin of 14.3%, up from 13.0% the previous year
FedEx Ground average daily package volume grew 7% in the second quarter driven by increases in the business-to-business market and FedEx Home Delivery. Yield increased 5% primarily due to higher fuel surcharges and rate increases. FedEx SmartPost average daily volume increased 17% due to growth in e-commerce, gains in market share and the introduction of new service offerings. FedEx SmartPost yield increased 10% primarily due to lower postage costs as a result of increased deliveries to U.S. Postal Service final destination facilities and increased fuel surcharges.
Operating income and margin increased primarily due to higher package yield and volume.
FedEx Ground and FedEx Home Delivery will increase shipping rates by a net average of 4.9% effective January 3, 2011. The full average rate increase of 5.9% will be partially offset by adjusting the fuel price threshold at which the fuel surcharge begins, reducing the fuel surcharge by one percentage point. FedEx Ground will make additional changes to dimensional weight charges and surcharges, and FedEx SmartPost rates will also increase.
FedEx Freight Segment
For the second quarter, the FedEx Freight segment reported:
- Revenue of $1.22 billion, up 14% from last year’s $1.07 billion
- Operating loss of $91 million, compared with an operating loss of $12 million a year ago
- Operating margin of (7.5%), compared with (1.1%) the previous year
Less-than-truckload (LTL) average daily shipments increased 8%. LTL yield increased 7% year-over-year and 5% from the first quarter, primarily due to yield management programs that include targeted improvement from lower-performing accounts.
The operating loss in the quarter largely resulted from $86 million of costs associated with the combination of the FedEx Freight and FedEx National LTL operations, which will become effective January 30, 2011. These costs primarily relate to severance expenses, asset impairment charges and accelerated depreciation expenses. Additional costs associated with this program totaling $54 to $84 million are expected in the third quarter. The total expected cost of this program has been reduced to $140 to $170 million.
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 $37 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 285,000 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 second 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. EST on December 16 are available on the company’s Web site at www.fedex.com/us/investorrelations . 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.
| RECONCILIATION OF NON-GAAP FINANCIAL MEASURES |
| TO GAAP FINANCIAL MEASURES |
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 and the costs of the combination of FedEx Freight and FedEx National LTL operations from our second quarter earnings and our earnings guidance, net of applicable incentive compensation impacts, will allow more accurate comparisons to prior periods of our second quarter operating performance and our expected operating performance in fiscal 2011. As required by SEC rules, the tables below present a reconciliation of our presented non-GAAP measures to the most directly comparable GAAP measures.
| Fiscal 2011 Second Quarter Earnings | ||||
| Q2 Diluted
Earnings Per Share |
||||
| Non-GAAP Measure | $1.16 | |||
| FedEx Freight Combination Costs | (0.17) | |||
| ATA Legal Reserve | (0.10) | |||
| GAAP Measure | $0.89 | |||
| Fiscal 2011 Third Quarter and Full-Year Earnings Guidance | |||||
| Q3 Diluted
EPS Guidance |
FY 2011 Diluted
EPS Guidance |
||||
| Non-GAAP Measure | $0.95 to $1.15 | $5.00 to $5.30 | |||
| FedEx Freight Combination Costs | (0.17 to 0.11) | (0.34 to 0.28) | |||
| ATA Legal Reserve | “ | (0.07) | |||
| GAAP Measure | $0.78 to $1.04 | $4.59 to $4.95 | |||
| FEDEX CORP. FINANCIAL HIGHLIGHTS | ||||||||||||||||||||||||
| Second Quarter Fiscal 2011 | ||||||||||||||||||||||||
| (In millions, except earnings per share and FTEs) | ||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||
| November 30 | November 30 | |||||||||||||||||||||||
| 2010 | 2009 | % | 2010 | 2009 | % | |||||||||||||||||||
| Revenue: | ||||||||||||||||||||||||
| FedEx Express segment | $ | 5,992 | $ | 5,314 | 13 | % | $ | 11,904 | $ | 10,238 | 16 | % | ||||||||||||
| FedEx Ground segment | 2,077 | 1,837 | 13 | % | 4,038 | 3,567 | 13 | % | ||||||||||||||||
| FedEx Freight segment | 1,221 | 1,068 | 14 | % | 2,479 | 2,050 | 21 | % | ||||||||||||||||
| FedEx Services segment | 434 | 465 | (7 | %) | 849 | 916 | (7 | %) | ||||||||||||||||
| Other & eliminations | (92 | ) | (88 | ) | NM | (181 | ) | (166 | ) | NM | ||||||||||||||
| Total Revenue | 9,632 | 8,596 | 12 | % | 19,089 | 16,605 | 15 | % | ||||||||||||||||
| Operating Expenses: | ||||||||||||||||||||||||
| Salaries and employee benefits | 3,779 | 3,424 | 10 | % | 7,582 | 6,801 | 11 | % | ||||||||||||||||
| Purchased transportation | 1,390 | 1,155 | 20 | % | 2,717 | 2,209 | 23 | % | ||||||||||||||||
| Rentals and landing fees | 628 | 593 | 6 | % | 1,229 | 1,171 | 5 | % | ||||||||||||||||
| Depreciation and amortization | 502 | 487 | 3 | % | 981 | 982 | (0 | %) | ||||||||||||||||
| Fuel | 938 | 744 | 26 | % | 1,825 | 1,410 | 29 | % | ||||||||||||||||
| Maintenance and repairs | 473 | 410 | 15 | % | 990 | 811 | 22 | % | ||||||||||||||||
| Impairment and other charges | 67 | “ | NM | 67 | “ | NM | ||||||||||||||||||
| Other | 1,386 | 1,212 | 14 | % | 2,601 | 2,335 | 11 | % | ||||||||||||||||
| Total Operating Expenses | 9,163 | 8,025 | 14 | % | 17,992 | 15,719 | 14 | % | ||||||||||||||||
| Operating Income (Loss): | ||||||||||||||||||||||||
| FedEx Express segment | 264 | 345 | (23 | %) | 621 | 449 | 38 | % | ||||||||||||||||
| FedEx Ground segment | 296 | 238 | 24 | % | 583 | 447 | 30 | % | ||||||||||||||||
| FedEx Freight segment | (91 | ) | (12 | ) | NM | (107 | ) | (10 | ) | NM | ||||||||||||||
| Total Operating Income | 469 | 571 | (18 | %) | 1,097 | 886 | 24 | % | ||||||||||||||||
| Other Expense: | ||||||||||||||||||||||||
| Interest, net | (23 | ) | (15 | ) | 53 | % | (41 | ) | (33 | ) | 24 | % | ||||||||||||
| Other, net | (9 | ) | (9 | ) | “ | (16 | ) | (12 | ) | 33 | % | |||||||||||||
| Total Other Expense | (32 | ) | (24 | ) | 33 | % | (57 | ) | (45 | ) | 27 | % | ||||||||||||
| Pretax Income | 437 | 547 | (20 | %) | 1,040 | 841 | 24 | % | ||||||||||||||||
| Provision for Income Taxes | 154 | 202 | (24 | %) | 377 | 315 | 20 | % | ||||||||||||||||
| Net Income | $ | 283 | $ | 345 | (18 | %) | $ | 663 | $ | 526 | 26 | % | ||||||||||||
| Diluted Earnings Per Share | $ | 0.89 | $ | 1.10 | (19 | %) | $ | 2.09 | $ | 1.68 | 24 | % | ||||||||||||
| Weighted Average Common and Common Equivalent Shares | 316 | 314 | 1 | % | 316 | 313 | 1 | % | ||||||||||||||||
| Capital Expenditures | $ | 1,047 | $ | 668 | 57 | % | $ | 2,059 | $ | 1,549 | 33 | % | ||||||||||||
| Average Full-Time Equivalents (000s) | 255 | 244 | 5 | % | 253 | 241 | 5 | % | ||||||||||||||||
| FEDEX CORP. CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||
| Second Quarter Fiscal 2011 | ||||||||||
| (In millions) | ||||||||||
| Nov. 30, 2010 | ||||||||||
| ASSETS | (Unaudited) | May 31, 2010 | ||||||||
| Current Assets | ||||||||||
| Cash and cash equivalents | $ | 1,877 | $ | 1,952 | ||||||
| Receivables, less allowances | 4,279 | 4,163 | ||||||||
| Spare parts, supplies and fuel, less allowances | 400 | 389 | ||||||||
| Deferred income taxes | 540 | 529 | ||||||||
| Prepaid expenses and other | 302 | 251 | ||||||||
| Total current assets | 7,398 | 7,284 | ||||||||
| Property and Equipment, at Cost | 32,720 | 31,302 | ||||||||
| Less accumulated depreciation and amortization | 17,454 | 16,917 | ||||||||
| Net property and equipment | 15,266 | 14,385 | ||||||||
| Other Long-Term Assets | ||||||||||
| Goodwill | 2,224 | 2,200 | ||||||||
| Other assets | 1,205 | 1,033 | ||||||||
| Total other long-term assets | 3,429 | 3,233 | ||||||||
| $ | 26,093 | $ | 24,902 | |||||||
| LIABILITIES AND STOCKHOLDERS’ INVESTMENT | ||||||||||
| Current Liabilities | ||||||||||
| Current portion of long-term debt | $ | 251 | $ | 262 | ||||||
| Accrued salaries and employee benefits | 1,231 | 1,146 | ||||||||
| Accounts payable | 1,561 | 1,522 | ||||||||
| Accrued expenses | 1,820 | 1,715 | ||||||||
| Total current liabilities | 4,863 | 4,645 | ||||||||
| Long-Term Debt, Less Current Portion | 1,667 | 1,668 | ||||||||
| Other Long-Term Liabilities | ||||||||||
| Deferred income taxes | 976 | 891 | ||||||||
| Pension, postretirement healthcare and other benefit obligations | 1,731 | 1,705 | ||||||||
| Self-insurance accruals | 969 | 960 | ||||||||
| Deferred lease obligations | 913 | 804 | ||||||||
| Deferred gains, principally related to aircraft transactions | 257 | 267 | ||||||||
| Other liabilities | 156 | 151 | ||||||||
| Total other long-term liabilities | 5,002 | 4,778 | ||||||||
| Commitments and Contingencies | ||||||||||
| Common Stockholders’ Investment | ||||||||||
| Common stock, $0.10 par value, 800 million shares authorized | 31 | 31 | ||||||||
| Additional paid-in capital | 2,343 | 2,261 | ||||||||
| Retained earnings | 14,515 | 13,966 | ||||||||
| Accumulated other comprehensive loss | (2,316 | ) | (2,440 | ) | ||||||
| Treasury stock, at cost | (12 | ) | (7 | ) | ||||||
| Total common stockholders’ investment | 14,561 | 13,811 | ||||||||
| $ | 26,093 | $ | 24,902 | |||||||
| FEDEX CORP. CONDENSED CONSOLIDATED | |||||||||
| STATEMENTS OF CASH FLOWS | |||||||||
| Second Quarter Fiscal 2011 | |||||||||
| (In millions) | |||||||||
| (Unaudited) | |||||||||
| Six Months Ended | |||||||||
| November 30 | |||||||||
| 2010 | 2009 | ||||||||
| Operating Activities: | |||||||||
| Net income | $ | 663 | $ | 526 | |||||
| Noncash charges: | |||||||||
| Depreciation and amortization | 981 | 982 | |||||||
| Other, net | 262 | 176 | |||||||
| Changes in operating assets and liabilities, net | 105 | (327 | ) | ||||||
| Net cash provided by operating activities | 2,011 | 1,357 | |||||||
| Investing Activities: | |||||||||
| Capital expenditures | (2,059 | ) | (1,549 | ) | |||||
| Proceeds from asset dispositions and other | 7 | 33 | |||||||
| Net cash used in investing activities | (2,052 | ) | (1,516 | ) | |||||
| Financing Activities: | |||||||||
| Principal payments on debt | (12 | ) | (625 | ) | |||||
| Dividends paid | (76 | ) | (69 | ) | |||||
| Other, net | 29 | 13 | |||||||
| Net cash used in financing activities | (59 | ) | (681 | ) | |||||
| Effect of exchange rate changes on cash | 25 | 13 | |||||||
| Net decrease in cash and cash equivalents | (75 | ) | (827 | ) | |||||
| Cash and cash equivalents at beginning of period | 1,952 | 2,292 | |||||||
| Cash and cash equivalents at end of period | $ | 1,877 | $ | 1,465 | |||||
| FEDEX EXPRESS SEGMENT FINANCIAL AND OPERATING HIGHLIGHTS | |||||||||||||||||||||||||
| Second Quarter Fiscal 2011 | |||||||||||||||||||||||||
| (Dollars in millions) | |||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||
| November 30 | November 30 | ||||||||||||||||||||||||
| FINANCIAL HIGHLIGHTS | 2010 | 2009 | % | 2010 | 2009 | % | |||||||||||||||||||
| Revenue | $ | 5,992 | $ | 5,314 | 13 | % | $ | 11,904 | $ | 10,238 | 16 | % | |||||||||||||
| Operating Expenses: | |||||||||||||||||||||||||
| Salaries and employee benefits | 2,253 | 2,036 | 11 | % | 4,511 | 4,079 | 11 | % | |||||||||||||||||
| Purchased transportation | 388 | 283 | 37 | % | 757 | 538 | 41 | % | |||||||||||||||||
| Rentals and landing fees | 427 | 396 | 8 | % | 830 | 781 | 6 | % | |||||||||||||||||
| Depreciation and amortization | 265 | 251 | 6 | % | 520 | 503 | 3 | % | |||||||||||||||||
| Fuel | 802 | 638 | 26 | % | 1,556 | 1,209 | 29 | % | |||||||||||||||||
| Maintenance and repairs | 320 | 267 | 20 | % | 672 | 528 | 27 | % | |||||||||||||||||
| Intercompany charges | 512 | 470 | 9 | % | 1,025 | 939 | 9 | % | |||||||||||||||||
| Other1 | 761 | 628 | 21 | % | 1,412 | 1,212 | 17 | % | |||||||||||||||||
| Total Operating Expenses | 5,728 | 4,969 | 15 | % | 11,283 | 9,789 | 15 | % | |||||||||||||||||
| Operating Income | $ | 264 | $ | 345 | (23 | %) | $ | 621 | $ | 449 | 38 | % | |||||||||||||
| Operating Margin | 4.4 | % | 6.5 | % | (2.1 pts) | 5.2 | % | 4.4 | % | 0.8 pts | |||||||||||||||
| OPERATING STATISTICS | |||||||||||||||||||||||||
| Operating Weekdays | 63 | 63 | “ | 128 | 128 | “ | |||||||||||||||||||
| AVG DAILY VOLUME / POUNDS | |||||||||||||||||||||||||
| Average Daily Package Volume (000s): | |||||||||||||||||||||||||
| U.S. Overnight Box | 1,196 | 1,154 | 4 | % | 1,182 | 1,141 | 4 | % | |||||||||||||||||
| U.S. Overnight Envelope | 626 | 606 | 3 | % | 625 | 611 | 2 | % | |||||||||||||||||
| U.S. Deferred | 865 | 858 | 1 | % | 855 | 840 | 2 | % | |||||||||||||||||
| Total U.S. Domestic Package | 2,687 | 2,618 | 3 | % | 2,662 | 2,592 | 3 | % | |||||||||||||||||
| International Priority | 585 | 529 | 11 | % | 575 | 502 | 15 | % | |||||||||||||||||
| International Domestic | 354 | 338 | 5 | % | 339 | 315 | 8 | % | |||||||||||||||||
| Total Average Daily Packages | 3,626 | 3,485 | 4 | % | 3,576 | 3,409 | 5 | % | |||||||||||||||||
| Average Daily Freight Pounds (000s): | |||||||||||||||||||||||||
| U.S. | 7,459 | 7,193 | 4 | % | 7,179 | 6,883 | 4 | % | |||||||||||||||||
| International Priority | 3,320 | 2,571 | 29 | % | 3,171 | 2,353 | 35 | % | |||||||||||||||||
| International Airfreight | 1,243 | 1,207 | 3 | % | 1,242 | 1,253 | (1 | %) | |||||||||||||||||
| Total Avg Daily Freight Pounds | 12,022 | 10,971 | 10 | % | 11,592 | 10,489 | 11 | % | |||||||||||||||||
| YIELD | |||||||||||||||||||||||||
| Revenue Per Package: | |||||||||||||||||||||||||
| U.S. Overnight Box | $ | 19.75 | $ | 18.87 | 5 | % | $ | 19.70 | $ | 18.51 | 6 | % | |||||||||||||
| U.S. Overnight Envelope | 10.54 | 10.36 | 2 | % | 10.59 | 10.27 | 3 | % | |||||||||||||||||
| U.S. Deferred | 12.24 | 11.58 | 6 | % | 12.12 | 11.40 | 6 | % | |||||||||||||||||
| Total U.S. Domestic Package | 15.19 | 14.51 | 5 | % | 15.13 | 14.26 | 6 | % | |||||||||||||||||
| International Priority | 54.54 | 52.88 | 3 | % | 54.12 | 52.27 | 4 | % | |||||||||||||||||
| International Domestic | 7.39 | 7.09 | 4 | % | 7.22 | 7.07 | 2 | % | |||||||||||||||||
| Composite Package Yield | $ | 20.77 | $ | 19.62 | 6 | % | $ | 20.65 | $ | 19.19 | 8 | % | |||||||||||||
| Revenue Per Freight Pound: | |||||||||||||||||||||||||
| U.S. | $ | 1.13 | $ | 1.08 | 5 | % | $ | 1.15 | $ | 1.07 | 7 | % | |||||||||||||
| International Priority | 2.08 | 1.98 | 5 | % | 2.07 | 1.93 | 7 | % | |||||||||||||||||
| International Airfreight | 0.88 | 0.83 | 6 | % | 0.87 | 0.77 | 13 | % | |||||||||||||||||
| Composite Freight Yield | $ | 1.36 | $ | 1.26 | 8 | % | $ | 1.37 | $ | 1.22 | 12 | % | |||||||||||||
| Average Full-Time Equivalents (000s) | 132 | 126 | 5 | % | 132 | 126 | 5 | % | |||||||||||||||||
| 1 – Current year includes a $66 million reserve for a legal matter. | |||||||||||||||||||||||||
| FEDEX GROUND SEGMENT FINANCIAL AND OPERATING HIGHLIGHTS | |||||||||||||||||||||||||
| Second Quarter Fiscal 2011 | |||||||||||||||||||||||||
| (Dollars in millions) | |||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||
| November 30 | November 30 | ||||||||||||||||||||||||
| 2010 | 2009 | % | 2010 | 2009 | % | ||||||||||||||||||||
| FINANCIAL HIGHLIGHTS | |||||||||||||||||||||||||
| Revenue | $ | 2,077 | $ | 1,837 | 13 | % | $ | 4,038 | $ | 3,567 | 13 | % | |||||||||||||
| Operating Expenses: | |||||||||||||||||||||||||
| Salaries and employee benefits | 318 | 288 | 10 | % | 625 | 570 | 10 | % | |||||||||||||||||
| Purchased transportation | 845 | 733 | 15 | % | 1,627 | 1,426 | 14 | % | |||||||||||||||||
| Rentals | 67 | 63 | 6 | % | 129 | 121 | 7 | % | |||||||||||||||||
| Depreciation and amortization | 83 | 83 | “ | 165 | 168 | (2 | %) | ||||||||||||||||||
| Fuel | 3 | 2 | 50 | % | 4 | 3 | 33 | % | |||||||||||||||||
| Maintenance and repairs | 42 | 40 | 5 | % | 86 | 78 | 10 | % | |||||||||||||||||
| Intercompany charges | 227 | 196 | 16 | % | 448 | 380 | 18 | % | |||||||||||||||||
| Other | 196 | 194 | 1 | % | 371 | 374 | (1 | %) | |||||||||||||||||
| Total Operating Expenses | 1,781 | 1,599 | 11 | % | 3,455 | 3,120 | 11 | % | |||||||||||||||||
| Operating Income | $ | 296 | $ | 238 | 24 | % | $ | 583 | $ | 447 | 30 | % | |||||||||||||
| Operating Margin | 14.3 | % | 13.0 | % | 1.3 pts | 14.4 | % | 12.5 | % | 1.9 pts | |||||||||||||||
| OPERATING STATISTICS | |||||||||||||||||||||||||
| Operating Weekdays | 63 | 63 | “ | 128 | 128 | “ | |||||||||||||||||||
| Average Daily Package Volume (000s) | |||||||||||||||||||||||||
| FedEx Ground | 3,843 | 3,602 | 7 | % | 3,686 | 3,454 | 7 | % | |||||||||||||||||
| FedEx SmartPost | 1,484 | 1,265 | 17 | % | 1,287 | 1,135 | 13 | % | |||||||||||||||||
| Yield (Revenue Per Package) | |||||||||||||||||||||||||
| FedEx Ground | $ | 7.89 | $ | 7.54 | 5 | % | $ | 7.94 | $ | 7.56 | 5 | % | |||||||||||||
| FedEx SmartPost | $ | 1.72 | $ | 1.57 | 10 | % | $ | 1.70 | $ | 1.50 | 13 | % | |||||||||||||
| FEDEX FREIGHT SEGMENT FINANCIAL AND OPERATING HIGHLIGHTS | |||||||||||||||||||||||||
| Second Quarter Fiscal 2011 | |||||||||||||||||||||||||
| (Dollars in millions) | |||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||
| November 30 | November 30 | ||||||||||||||||||||||||
| 2010 | 2009 | % | 2010 | 2009 | % | ||||||||||||||||||||
| FINANCIAL HIGHLIGHTS | |||||||||||||||||||||||||
| Revenue | $ | 1,221 | $ | 1,068 | 14 | % | $ | 2,479 | $ | 2,050 | 21 | % | |||||||||||||
| Operating Expenses: | |||||||||||||||||||||||||
| Salaries and employee benefits | 584 | 513 | 14 | % | 1,184 | 1,020 | 16 | % | |||||||||||||||||
| Purchased transportation | 185 | 168 | 10 | % | 389 | 286 | 36 | % | |||||||||||||||||
| Rentals | 31 | 27 | 15 | % | 65 | 56 | 16 | % | |||||||||||||||||
| Depreciation and amortization | 62 | 46 | 35 | % | 110 | 101 | 9 | % | |||||||||||||||||
| Fuel | 133 | 104 | 28 | % | 264 | 198 | 33 | % | |||||||||||||||||
| Maintenance and repairs | 45 | 35 | 29 | % | 91 | 69 | 32 | % | |||||||||||||||||
| Intercompany charges | 108 | 98 | 10 | % | 217 | 150 | 45 | % | |||||||||||||||||
| Impairment and other charges1 | 67 | “ | NM | 67 | “ | NM | |||||||||||||||||||
| Other | 97 | 89 | 9 | % | 199 | 180 | 11 | % | |||||||||||||||||
| Total Operating Expenses | 1,312 | 1,080 | 21 | % | 2,586 | 2,060 | 26 | % | |||||||||||||||||
| Operating Loss | ($91 | ) | ($12 | ) | NM | ($107 | ) | ($10 | ) | NM | |||||||||||||||
| Operating Margin | (7.5 | %) | (1.1 | %) | (6.4 pts) | (4.3 | %) | (0.5 | %) | (3.8 pts) | |||||||||||||||
| OPERATING STATISTICS | |||||||||||||||||||||||||
| LTL Operating Weekdays | 62 | 62 | “ | 127 | 127 | “ | |||||||||||||||||||
| LTL Shipments Per Day (000s) | 89.4 | 82.9 | 8 | % | 90.6 | 77.0 | 18 | % | |||||||||||||||||
| Weight Per LTL Shipment (lbs) | 1,115 | 1,128 | (1 | %) | 1,125 | 1,119 | 1 | % | |||||||||||||||||
| LTL Revenue/CWT | $ | 18.27 | $ | 17.09 | 7 | % | $ | 17.77 | $ | 17.45 | 2 | % | |||||||||||||
| 1 – Current year includes charges associated with the combination of FedEx Freight and FedEx National LTL operations effective January 30, 2011. | |||||||||||||||||||||||||
