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Form 8-K FEDEX CORP For: Dec 17

December 17, 2014 7:39 AM EST

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): December�17, 2014

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 December�17, 2014, announcing its and its wholly owned subsidiary Federal Express Corporation�s financial results for the fiscal quarter ended November�30, 2014.

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
Number

��

Description

99.1 �� Press Release of FedEx Corporation dated December 17, 2014.

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: December�17, 2014 By: /s/ HERBERT C. NAPPIER
Herbert C. Nappier

Staff Vice President and

Corporate Controller

Federal Express Corporation
Date: December�17, 2014 By: /s/ ELISE L. JORDAN
Elise L. Jordan

Senior Vice President and

Chief Financial Officer

3


EXHIBIT INDEX

Exhibit
Number

��

Description

99.1 �� Press Release of FedEx Corporation dated December 17, 2014.

E-1

Exhibit 99.1

FOR IMMEDIATE RELEASE

FedEx Corp. Reports Strong Earnings Growth

MEMPHIS, Tenn., December�17, 2014� FedEx Corp. (NYSE: FDX) today reported earnings of $2.14 per diluted share for the second quarter ended November�30, up 36% from last year�s $1.57 per share.

�FedEx posted strong results and a higher operating margin in the second quarter, with continued growth in volumes and base yields in each of our transportation segments,� said Frederick W. Smith, FedEx Corp. chairman, president and chief executive officer. �We are in the final stages of this year�s peak shipping season, and I�d like to thank the more than 300,000 dedicated team members around the world for once again delivering outstanding service to our customers during the holidays.�

Second Quarter Results

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

Revenue of $11.9 billion, up 5% from $11.4 billion the previous year

Operating income of $1.01 billion, up 22% from $827 million last year

Operating margin of 8.5%, up from 7.3% a year ago

Net income of $616 million, up 23% from last year�s $500 million

Operating income and margin increased primarily due to higher volumes and base yields in all three transportation segments. Results in the second quarter also included benefits from the company�s profit improvement programs, lower pension expense and a slightly positive net impact from fuel. These benefits were partially offset by higher aircraft maintenance expense due to the timing of aircraft maintenance events.

Share repurchases benefited second quarter earnings by $0.16 per diluted share.

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Outlook

The company reaffirms its fiscal 2015 earnings forecast of $8.50 to $9.00 per diluted share. The outlook assumes continued moderate economic growth and a modest net benefit from fuel. The capital spending forecast for fiscal 2015 remains $4.2 billion.

Fuel Surcharges

FedEx regularly reviews its fuel surcharge tables and will update certain tables at FedEx Express, FedEx Ground and FedEx Freight effective February�2, 2015. Details on these changes will be available on fedex.com by December 23, 2014.

FedEx Express Segment

For the second quarter, the FedEx Express segment reported:

Revenue of $7.02 billion, up 3% from last year�s $6.84 billion

Operating income of $484 million, up 36% from $357 million a year ago

Operating margin of 6.9%, up from 5.2% the previous year

Revenue increased due to higher U.S. domestic package volume and international export package base revenue, partially offset by lower fuel surcharges and exchange rates. U.S. domestic package volume grew by 7%, including a 10% increase in U.S. overnight box. U.S. domestic revenue per package declined 2% due to decreased fuel surcharges and lower weight.

FedEx International Economy volume grew 5%, while FedEx International Priority volume increased 1%. International export revenue per package was flat, as higher rates were offset by unfavorable currency exchange and lower fuel surcharges.

Operating results improved due primarily to U.S. domestic and international export package revenue growth, cost management related to profit improvement programs, lower pension expense and a slight net benefit from fuel. These improvements were partially offset by the timing of higher aircraft maintenance expense. The year over year increase in aircraft maintenance expense is expected to subside beginning in the fourth fiscal quarter.

-more-

2


FedEx Ground Segment

For the second quarter, the FedEx Ground segment reported:

Revenue of $3.06 billion, up 8% from last year�s $2.85 billion

Operating income of $465 million, up 6% from $439 million a year ago

Operating margin of 15.2%, down from 15.4% the previous year

FedEx Ground average daily volume grew 5% in the second quarter, driven by growth in both business-to-business and FedEx Home Delivery services. Revenue per package increased 3% due to rate increases and higher residential surcharges. FedEx SmartPost average daily volume decreased 4% due to the reduction in volume of a major customer. FedEx SmartPost revenue per package increased 7% due to rate increases and improved customer mix, partially offset by higher postage rates.

Operating income increased due to higher revenue per package and volume, partially offset by higher network expansion costs, as the company continues to heavily invest in the FedEx Ground and FedEx SmartPost businesses.

FedEx Freight Segment

For the second quarter, the FedEx Freight segment reported:

Revenue of $1.59 billion, up 11% from last year�s $1.43 billion

Operating income of $112 million, up 35% from $83 million a year ago

Operating margin of 7.1%, up from 5.8% the previous year

Less-than-truckload (LTL) average daily shipments increased 8%, including a 10% increase in demand for Priority service. LTL revenue per shipment grew 3% due to higher weight per shipment, higher rates and increased fuel surcharges.

Operating results improved due to increased LTL revenue per shipment and higher average daily LTL shipments.

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 $47 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

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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 second quarter fiscal 2015 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�17 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, our ability to execute on our profit improvement programs, 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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FEDEX CORP. FINANCIAL HIGHLIGHTS

Second Quarter Fiscal 2015

(In millions, except earnings per share)

(Unaudited)

�� Three Months Ended Six Months Ended
�� November�30 November�30
�� 2014 2013 % 2014 2013 %

Revenue:

��

FedEx Express segment

�� $ 7,024 �� $ 6,844 �� 3% �� $ 13,886 �� $ 13,449 �� 3% ��

FedEx Ground segment

�� 3,063 �� 2,849 �� 8% �� 6,023 �� 5,579 �� 8% ��

FedEx Freight segment

�� 1,585 �� 1,434 �� 11% �� 3,194 �� 2,858 �� 12% ��

FedEx Services segment

�� 394 �� 391 �� 1% �� 768 �� 766 �� ��� ��

Eliminations and other

�� (127 )� (115 )� NM �� (248 )� (225 )� NM ��
��

Total Revenue

�� 11,939 �� 11,403 �� 5% �� 23,623 �� 22,427 �� 5% ��

Operating Expenses:

��

Salaries and employee benefits

�� 4,304 �� 4,148 �� 4% �� 8,493 �� 8,225 �� 3% ��

Purchased transportation

�� 2,185 �� 2,040 �� 7% �� 4,239 �� 3,919 �� 8% ��

Rentals and landing fees

�� 663 �� 648 �� 2% �� 1,323 �� 1,288 �� 3% ��

Depreciation and amortization

�� 651 �� 647 �� 1% �� 1,302 �� 1,286 �� 1% ��

Fuel

�� 1,052 �� 1,136 �� (7% )� 2,172 �� 2,240 �� (3% )�

Maintenance and repairs

�� 543 �� 479 �� 13% �� 1,099 �� 959 �� 15% ��

Other

�� 1,528 �� 1,478 �� 3% �� 2,995 �� 2,888 �� 4% ��
��

Total Operating Expenses

�� 10,926 �� 10,576 �� 3% �� 21,623 �� 20,805 �� 4% ��

Operating Income:

��

FedEx Express segment

�� 484 �� 357 �� 36% �� 853 �� 630 �� 35% ��

FedEx Ground segment

�� 465 �� 439 �� 6% �� 1,010 �� 922 �� 10% ��

FedEx Freight segment

�� 112 �� 83 �� 35% �� 280 �� 182 �� 54% ��

Corporate, eliminations and other

�� (48 )� (52 )� NM �� (143 )� (112 )� NM ��
��

Total Operating Income

�� 1,013 �� 827 �� 22% �� 2,000 �� 1,622 �� 23% ��

Other Expense:

��

Interest, net

�� (47 )� (30 )� NM �� (95 )� (57 )� NM ��

Other, net

�� 5 �� (5 )� NM �� 3 �� (7 )� NM ��
��

Total Other Expense

�� (42 )� (35 )� NM �� (92 )� (64 )� NM ��

Pretax Income

�� 971 �� 792 �� 23% �� 1,908 �� 1,558 �� 22% ��

Provision for Income Taxes

�� 355 �� 292 �� 22% �� 686 �� 569 �� 21% ��
��

Net Income

�� $ 616 �� $ 500 �� 23% �� $ 1,222 �� $ 989 �� 24% ��
��

Diluted Earnings Per Share

�� $ 2.14 �� $ 1.57 �� 36% �� $ 4.24 �� $ 3.10 �� 37% ��
��

Weighted Average Common and

��

Common Equivalent Shares

�� 287 �� 319 �� (10% )� 288 �� 319 �� (10% )�

Capital Expenditures

�� $ 1,170 �� $ 1,118 �� 5% �� $ 1,890 �� $ 1,690 �� 12% ��

5


FEDEX CORP. CONDENSED CONSOLIDATED BALANCE SHEETS

Second Quarter Fiscal 2015

(In millions)

�� Nov.�30,�2014
�� (Unaudited) May�31,�2014

ASSETS

��

Current Assets

��

Cash and cash equivalents

�� $ 2,266 �� $ 2,908 ��

Receivables, less allowances

�� 5,592 �� 5,460 ��

Spare parts, supplies and fuel, less allowances

�� 476 �� 463 ��

Deferred income taxes

�� 497 �� 522 ��

Prepaid expenses and other

�� 381 �� 330 ��
��

Total current assets

�� 9,212 �� 9,683 ��

Property and Equipment, at Cost

�� 41,616 �� 40,691 ��

Less accumulated depreciation and amortization

�� 21,723 �� 21,141 ��
��

Net property and equipment

�� 19,893 �� 19,550 ��

Other Long-Term Assets

��

Goodwill

�� 2,734 �� 2,790 ��

Other assets

�� 1,145 �� 1,047 ��
��

Total other long-term assets

�� 3,879 �� 3,837 ��
��

�� $ 32,984 �� $ 33,070 ��
��

LIABILITIES AND STOCKHOLDERS� INVESTMENT

��

Current Liabilities

��

Current portion of long-term debt

�� $ ��� �� $ 1 ��

Accrued salaries and employee benefits

�� 1,219 �� 1,277 ��

Accounts payable

�� 1,968 �� 1,971 ��

Accrued expenses

�� 1,986 �� 2,063 ��
��

Total current liabilities

�� 5,173 �� 5,312 ��

Long-Term Debt, Less Current Portion

�� 4,735 �� 4,736 ��

Other Long-Term Liabilities

��

Deferred income taxes

�� 2,104 �� 2,114 ��

Pension, postretirement healthcare and other benefit obligations

�� 3,136 �� 3,484 ��

Self-insurance accruals

�� 1,072 �� 1,038 ��

Deferred lease obligations

�� 832 �� 758 ��

Deferred gains, principally related to aircraft transactions

�� 193 �� 206 ��

Other liabilities

�� 176 �� 145 ��
��

Total other long-term liabilities

�� 7,513 �� 7,745 ��

Commitments and Contingencies

��

Common Stockholders� Investment

��

Common stock, $0.10 par value, 800�million shares authorized

�� 32 �� 32 ��

Additional paid-in capital

�� 2,618 �� 2,643 ��

Retained earnings

�� 21,480 �� 20,429 ��

Accumulated other comprehensive loss

�� (3,787 )� (3,694 )�

Treasury stock, at cost

�� (4,780 )� (4,133 )�
��

Total common stockholders� investment

�� 15,563 �� 15,277 ��
��

�� $ 32,984 �� $ 33,070 ��
��

6


FEDEX CORP. CONDENSED CONSOLIDATED

STATEMENTS OF CASH FLOWS

Second Quarter Fiscal 2015

(In millions)

(Unaudited)

�� Six Months Ended
�� November�30
�� 2014 2013

Operating Activities:

��

Net income

�� $ 1,222 �� $ 989 ��

Noncash charges:

��

Depreciation and amortization

�� 1,302 �� 1,286 ��

Other, net

�� 214 �� 337 ��

Changes in operating assets and liabilities, net

�� (587 )� (1,003 )�
��

Net cash provided by operating activities

�� 2,151 �� 1,609 ��

Investing Activities:

��

Capital expenditures

�� (1,890 )� (1,690 )�

Proceeds from asset dispositions and other

�� 7 �� 19 ��
��

Net cash used in investing activities

�� (1,883 )� (1,671 )�

Financing Activities:

��

Principal payments on debt

�� (1 )� (3 )�

Dividends paid

�� (114 )� (95 )�

Purchase of treasury stock

�� (947 )� (1,219 )�

Other, net

�� 212 �� 400 ��
��

Net cash (used in) provided by financing activities

�� (850 )� (917 )�
��

Effect of exchange rate changes on cash

�� (60 )� (3 )�
��

Net decrease in cash and cash equivalents

�� (642 )� (982 )�

Cash and cash equivalents at beginning of period

�� 2,908 �� 4,917 ��
��

Cash and cash equivalents at end of period

�� $ 2,266 �� $ 3,935 ��
��

7


FEDEX EXPRESS SEGMENT FINANCIAL HIGHLIGHTS

Second Quarter Fiscal 2015

(Dollars in millions)

(Unaudited)

�� Three Months Ended Six Months Ended
�� November�30 November�30
�� 2014 �� 2013 �� % 2014 �� 2013 �� %

Revenues:

�� �� �� �� ��

Package Revenue:

�� �� �� �� ��

U.S. Overnight Box

�� $ 1,705 �� �� $ 1,625 �� �� 5% �� $ 3,387 �� �� $ 3,209 �� �� 6% ��

U.S. Overnight Envelope

�� 400 �� �� 398 �� �� 1% �� 815 �� �� 817 �� �� ��� ��
��

��

��

��

��

Total U.S. Overnight

�� 2,105 �� �� 2,023 �� �� 4% �� 4,202 �� �� 4,026 �� �� 4% ��

U.S. Deferred

�� 834 �� �� 771 �� �� 8% �� 1,629 �� �� 1,500 �� �� 9% ��
��

��

��

��

��

Total U.S. Package Revenue

�� 2,939 �� �� 2,794 �� �� 5% �� 5,831 �� �� 5,526 �� �� 6% ��
��

��

��

��

��

International Priority

�� 1,649 �� �� 1,642 �� �� ��� �� 3,279 �� �� 3,218 �� �� 2% ��

International Economy

�� 598 �� �� 567 �� �� 5% �� 1,169 �� �� 1,099 �� �� 6% ��
��

��

��

��

��

Total International Export Package

�� 2,247 �� �� 2,209 �� �� 2% �� 4,448 �� �� 4,317 �� �� 3% ��

International Domestic1

�� 383 �� �� 385 �� �� (1% )� 754 �� �� 730 �� �� 3% ��
��

��

��

��

��

Total Package Revenue

�� 5,569 �� �� 5,388 �� �� 3% �� 11,033 �� �� 10,573 �� �� 4% ��

Freight Revenue:

�� �� �� �� ��

U.S.

�� 586 �� �� 585 �� �� ��� �� 1,165 �� �� 1,209 �� �� (4% )�

International Priority

�� 412 �� �� 417 �� �� (1% )� 807 �� �� 805 �� �� ��� ��

International Airfreight

�� 42 �� �� 55 �� �� (24% )� 88 �� �� 109 �� �� (19% )�
��

��

��

��

��

Total Freight Revenue

�� 1,040 �� �� 1,057 �� �� (2% )� 2,060 �� �� 2,123 �� �� (3% )�

Other Revenue2

�� 415 �� �� 399 �� �� 4% �� 793 �� �� 753 �� �� 5% ��
��

��

��

��

��

Total Express Revenue

�� $ 7,024 �� �� $ 6,844 �� �� 3% �� $ 13,886 �� �� $ 13,449 �� �� 3% ��

Operating Expenses:

�� �� �� �� ��

Salaries and employee benefits

�� 2,531 �� �� 2,469 �� �� 3% �� 5,016 �� �� 4,909 �� �� 2% ��

Purchased transportation

�� 681 �� �� 660 �� �� 3% �� 1,328 �� �� 1,268 �� �� 5% ��

Rentals and landing fees

�� 422 �� �� 420 �� �� ��� �� 848 �� �� 841 �� �� 1% ��

Depreciation and amortization

�� 368 �� �� 373 �� �� (1% )� 742 �� �� 742 �� �� ��� ��

Fuel

�� 906 �� �� 986 �� �� (8% )� 1,876 �� �� 1,942 �� �� (3% )�

Maintenance and repairs

�� 357 �� �� 308 �� �� 16% �� 736 �� �� 615 �� �� 20% ��

Intercompany charges3

�� 453 �� �� 481 �� �� (6% )� 902 �� �� 939 �� �� (4% )�

Other

�� 822 �� �� 790 �� �� 4% �� 1,585 �� �� 1,563 �� �� 1% ��
��

��

��

��

��

Total Operating Expenses3

�� 6,540 �� �� 6,487 �� �� 1% �� 13,033 �� �� 12,819 �� �� 2% ��
��

��

��

��

��

Operating Income3

�� $ 484 �� �� $ 357 �� �� 36% �� $ 853 �� �� $ 630 �� �� 35% ��
��

��

��

��

��

Operating Margin3

�� 6.9% �� �� 5.2% �� �� 1.7�pts �� 6.1% �� �� 4.7% �� �� 1.4�pts ��

1��

International Domestic revenues represent international intra-country express operations.

2��

Includes FedEx Trade Networks and FedEx SupplyChain Systems.

3��

Prior year amounts have been revised to conform to the current year segment presentation regarding the allocation of corporate headquarters costs.

8


FEDEX EXPRESS SEGMENT OPERATING HIGHLIGHTS

Second Quarter Fiscal 2015

(Unaudited)

�� Three Months Ended Six Months Ended
�� November�30 November�30
�� 2014 �� 2013 �� % 2014 �� 2013 �� %

PACKAGE STATISTICS1

�� �� �� �� ��

Average Daily Package Volume (000s):

�� �� �� �� ��

U.S. Overnight Box

�� �� 1,259 �� �� 1,146 �� �� 10% �� 1,235 �� �� 1,129 �� �� 9% ��

U.S. Overnight Envelope

�� 521 �� �� 535 �� �� (3% )� 524 �� �� 549 �� �� (5% )�
��

��

��

��

��

Total U.S. Overnight Package

�� 1,780 �� �� 1,681 �� �� 6% �� 1,759 �� �� 1,678 �� �� 5% ��

U.S. Deferred

�� 915 �� �� 841 �� �� 9% �� 880 �� �� 815 �� �� 8% ��
��

��

��

��

��

Total U.S. Domestic Package

�� 2,695 �� �� 2,522 �� �� 7% �� 2,639 �� �� 2,493 �� �� 6% ��
��

��

��

��

��

International Priority

�� 424 �� �� 421 �� �� 1% �� 417 �� �� 414 �� �� 1% ��

International Economy

�� 180 �� �� 172 �� �� 5% �� 175 �� �� 168 �� �� 4% ��
��

��

��

��

��

Total International Export Package

�� 604 �� �� 593 �� �� 2% �� 592 �� �� 582 �� �� 2% ��

International Domestic1

�� 917 �� �� 896 �� �� 2% �� 866 �� �� 842 �� �� 3% ��
��

��

��

��

��

Total Average Daily Packages

�� 4,216 �� �� 4,011 �� �� 5% �� 4,097 �� �� 3,917 �� �� 5% ��
��

��

��

��

��

Yield (Revenue Per Package):

�� �� �� �� ��

U.S. Overnight Box

�� $ 21.50 �� �� $ 22.50 �� �� (4% )� $ 21.59 �� �� $ 22.39 �� �� (4% )�

U.S. Overnight Envelope

�� 12.15 �� �� 11.84 �� �� 3% �� 12.24 �� �� 11.72 �� �� 4% ��
��

��

��

��

��

U.S. Overnight Composite

�� 18.76 �� �� 19.11 �� �� (2% )� 18.81 �� �� 18.89 �� �� ��� ��

U.S. Deferred

�� 14.48 �� �� 14.55 �� �� ��� �� 14.58 �� �� 14.49 �� �� 1% ��
��

��

��

��

��

U.S. Domestic Composite

�� 17.31 �� �� 17.59 �� �� (2% )� 17.40 �� �� 17.45 �� �� ��� ��
��

��

��

��

��

International Priority

�� 61.64 �� �� 61.87 �� �� ��� �� 61.92 �� �� 61.27 �� �� 1% ��

International Economy

�� 52.88 �� �� 52.27 �� �� 1% �� 52.75 �� �� 51.35 �� �� 3% ��
��

��

��

��

��

Total International Export Composite

�� 59.04 �� �� 59.08 �� �� ��� �� 59.21 �� �� 58.40 �� �� 1% ��

International Domestic1

�� 6.63 �� �� 6.82 �� �� (3% )� 6.85 �� �� 6.83 �� �� ��� ��
��

��

��

��

��

Composite Package Yield

�� $ 20.97 �� �� $ 21.32 �� �� (2% )� $ 21.21 �� �� $ 21.25 �� �� ��� ��
��

��

��

��

��

FREIGHT STATISTICS

�� �� �� �� ��

Average Daily Freight Pounds (000s):

�� �� �� �� ��

U.S.

�� 8,039 �� �� 7,872 �� �� 2% �� 7,676 �� �� 7,646 �� �� ��� ��

International Priority

�� 2,983 �� �� 3,068 �� �� (3% )� 2,887 �� �� 2,964 �� �� (3% )�

International Airfreight

�� 630 �� �� 907 �� �� (31% )� 650 �� �� 878 �� �� (26% )�
��

��

��

��

��

Total Avg Daily Freight Pounds

�� 11,652 �� �� 11,847 �� �� (2% )� 11,213 �� �� 11,488 �� �� (2% )�
��

��

��

��

��

Revenue Per Freight Pound:

�� �� �� �� ��

U.S.

�� $ 1.16 �� �� $ 1.18 �� �� (2% )� $ 1.20 �� �� $ 1.25 �� �� (4% )�

International Priority

�� 2.19 �� �� 2.16 �� �� 1% �� 2.20 �� �� 2.14 �� �� 3% ��

International Airfreight

�� 1.07 �� �� 0.97 �� �� 10% �� 1.07 �� �� 0.98 �� �� 9% ��
��

��

��

��

��

Composite Freight Yield

�� $ 1.42 �� �� $ 1.42 �� �� ��� �� $ 1.45 �� �� $ 1.46 �� �� (1% )�
��

��

��

��

��

Operating Weekdays

�� 63 �� �� 63 �� �� ��� �� 127 �� �� 127 �� �� ��� ��

1� � Package and freight statistics include only the operations of FedEx Express.
2� � International Domestic revenues represent international intra-country express operations.

9


FEDEX GROUND SEGMENT FINANCIAL AND OPERATING HIGHLIGHTS

Second Quarter Fiscal 2015

(Dollars in millions)

(Unaudited)

�� Three Months Ended Six Months Ended
�� November�30 November�30
�� 2014 �� 2013 �� % 2014 �� 2013 �� %

FINANCIAL HIGHLIGHTS

�� �� �� �� ��

Revenues:

�� �� �� �� ��

FedEx Ground

�� $ 2,809 �� �� $ 2,601 �� �� 8% �� $ 5,548 �� �� $ 5,107 �� �� 9% ��

FedEx SmartPost

�� 254 �� �� 248 �� �� 2% �� 475 �� �� 472 �� �� 1% ��
��

��

��

��

��

Total Revenues

�� 3,063 �� �� 2,849 �� �� 8% �� 6,023 �� �� 5,579 �� �� 8% ��

Operating Expenses:

�� �� �� �� ��

Salaries and employee benefits

�� 485 �� �� 445 �� �� 9% �� 933 �� �� 859 �� �� 9% ��

Purchased transportation

�� 1,263 �� �� 1,159 �� �� 9% �� 2,417 �� �� 2,223 �� �� 9% ��

Rentals

�� 115 �� �� 102 �� �� 13% �� 223 �� �� 194 �� �� 15% ��

Depreciation and amortization

�� 126 �� �� 118 �� �� 7% �� 245 �� �� 229 �� �� 7% ��

Fuel

�� 3 �� �� 4 �� �� (25% )� 6 �� �� 7 �� �� (14% )�

Maintenance and repairs

�� 57 �� �� 56 �� �� 2% �� 113 �� �� 109 �� �� 4% ��

Intercompany charges1

�� 278 �� �� 277 �� �� ��� �� 553 �� �� 547 �� �� 1% ��

Other

�� 271 �� �� 249 �� �� 9% �� 523 �� �� 489 �� �� 7% ��
��

��

��

��

��

Total Operating Expenses1

�� 2,598 �� �� 2,410 �� �� 8% �� 5,013 �� �� 4,657 �� �� 8% ��
��

��

��

��

��

Operating Income1

�� $ 465 �� �� $ 439 �� �� 6% �� $ 1,010 �� �� $ 922 �� �� 10% ��
��

��

��

��

��

Operating Margin1

�� 15.2% �� �� 15.4% �� �� (0.2�pts )� 16.8% �� �� 16.5% �� �� 0.3�pts ��

OPERATING STATISTICS

�� �� �� �� ��

Operating Weekdays

�� �� �� �� ��

FedEx Ground

�� 63 �� �� 63 �� �� ��� �� 127 �� �� 127 �� �� ��� ��

FedEx SmartPost

�� 63 �� �� 63 �� �� ��� �� 127 �� �� 127 �� �� ��� ��

Average Daily Package Volume (000s)

�� �� �� �� ��

FedEx Ground

�� 4,845 �� �� 4,627 �� �� 5% �� 4,709 �� �� 4,469 �� �� 5% ��

FedEx SmartPost

�� 2,122 �� �� 2,218 �� �� (4% )� 2,000 �� �� 2,154 �� �� (7% )�

Yield (Revenue Per Package)

�� �� �� �� ��

FedEx Ground

�� $ 9.18 �� �� $ 8.90 �� �� 3% �� $ 9.25 �� �� $ 8.98 �� �� 3% ��

FedEx SmartPost

�� $ 1.90 �� �� $ 1.77 �� �� 7% �� $ 1.87 �� �� $ 1.72 �� �� 9% ��

1��

Prior year amounts have been revised to conform to the current year segment presentation regarding the allocation of corporate headquarters costs.

10


FEDEX FREIGHT SEGMENT FINANCIAL AND OPERATING HIGHLIGHTS

Second Quarter Fiscal 2015

(Dollars in millions)

(Unaudited)

�� Three Months Ended Six Months Ended
�� November�30 November�30
�� 2014 �� 2013 �� % 2014 �� 2013 �� %

FINANCIAL HIGHLIGHTS

�� �� �� �� ��

Revenue

�� $ 1,585 �� �� $ 1,434 �� �� 11% �� $ 3,194 �� �� $ 2,858 �� �� 12% ��

Operating Expenses:

�� �� �� �� ��

Salaries and employee benefits

�� 686 �� �� 611 �� �� 12% �� 1,342 �� �� 1,209 �� �� 11% ��

Purchased transportation

�� 273 �� �� 250 �� �� 9% �� 557 �� �� 484 �� �� 15% ��

Rentals

�� 31 �� �� 31 �� �� ��� �� 63 �� �� 63 �� �� ��� ��

Depreciation and amortization

�� 58 �� �� 57 �� �� 2% �� 116 �� �� 114 �� �� 2% ��

Fuel

�� 143 �� �� 145 �� �� (1% )� 290 �� �� 290 �� �� ��� ��

Maintenance and repairs

�� 53 �� �� 46 �� �� 15% �� 99 �� �� 92 �� �� 8% ��

Intercompany charges1

�� 111 �� �� 111 �� �� ��� �� 221 �� �� 224 �� �� (1% )�

Other

�� 118 �� �� 100 �� �� 18% �� 226 �� �� 200 �� �� 13% ��
��

��

��

��

��

Total Operating Expenses1

�� 1,473 �� �� 1,351 �� �� 9% �� 2,914 �� �� 2,676 �� �� 9% ��
��

��

��

��

��

Operating Income1

�� $ 112 �� �� $ 83 �� �� 35% �� $ 280 �� �� $ 182 �� �� 54% ��
��

��

��

��

��

Operating Margin1

�� 7.1% �� �� 5.8% �� �� 1.3�pts �� 8.8% �� �� 6.4% �� �� 2.4�pts ��

OPERATING STATISTICS

�� �� �� �� ��

LTL Operating Weekdays

�� 62 �� �� 62 �� �� ��� �� 126 �� �� 126 �� �� ��� ��

Average Daily LTL Shipments (000s)

�� �� �� �� ��

Priority

�� 70.1 �� �� 63.8 �� �� 10% �� 69.5 �� �� 62.4 �� �� 11% ��

Economy

�� 29.3 �� �� 28.1 �� �� 4% �� 29.3 �� �� 27.9 �� �� 5% ��
��

��

��

��

��

Total Average Daily LTL Shipments

�� 99.4 �� �� 91.9 �� �� 8% �� 98.8 �� �� 90.3 �� �� 9% ��

Weight Per LTL Shipment (lbs)

�� �� �� �� ��

Priority

�� 1,245 �� �� 1,241 �� �� ��� �� 1,251 �� �� 1,243 �� �� 1% ��

Economy

�� 1,010 �� �� 992 �� �� 2% �� 1,012 �� �� 992 �� �� 2% ��
��

��

��

��

��

Composite Weight Per LTL Shipment

�� 1,176 �� �� 1,165 �� �� 1% �� 1,180 �� �� 1,165 �� �� 1% ��

LTL Revenue/Shipment

�� �� �� �� ��

Priority

�� $ 228.62 �� �� $ 221.99 �� �� 3% �� $ 228.34 �� �� $ 222.24 �� �� 3% ��

Economy

�� 265.46 �� �� 257.15 �� �� 3% �� 265.44 �� �� 256.76 �� �� 3% ��
��

��

��

��

��

Composite LTL Revenue/Shipment

�� $ 239.49 �� �� $ 232.73 �� �� 3% �� $ 239.32 �� �� $ 232.89 �� �� 3% ��

LTL Revenue/CWT

�� �� �� �� ��

Priority

�� $ 18.36 �� �� $ 17.89 �� �� 3% �� $ 18.25 �� �� $ 17.88 �� �� 2% ��

Economy

�� 26.29 �� �� 25.92 �� �� 1% �� 26.24 �� �� 25.88 �� �� 1% ��
��

��

��

��

��

Composite LTL Revenue/CWT

�� $ 20.37 �� �� $ 19.98 �� �� 2% �� $ 20.27 �� �� $ 19.99 �� �� 1% ��

1��

Prior year amounts have been revised to conform to the current year segment presentation regarding the allocation of corporate headquarters costs.

11



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