Form 8-K FEDEX CORP For: Jun 17

 

 

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): June 17, 2015

 

 

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 June 17, 2015, announcing its and its wholly owned subsidiary Federal Express Corporation’s financial results for the fiscal quarter and year ended May 31, 2015.

 

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 June 17, 2015.

 

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: June 17, 2015				By:		/s/ JOHN L. MERINO
						John L. Merino
						Corporate Vice President and Principal Accounting Officer
				Federal Express Corporation
Date: June 17, 2015				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 June 17, 2015.

 

E-1

Exhibit 99.1

FOR IMMEDIATE RELEASE

FedEx Corp. Reports Fourth Quarter Earnings

Strong Earnings Growth Expected in Fiscal 2016

MEMPHIS, Tenn., June 17, 2015… FedEx Corp. (NYSE: FDX) today reported adjusted earnings of $2.66 per diluted share for the fourth quarter ended May 31, compared to adjusted earnings of $2.54 per diluted share a year ago. For fiscal 2015, adjusted earnings were $8.95 per diluted share, compared to $7.05 per diluted share a year ago. Without adjustments, FedEx reported a loss of $3.16 per diluted share for the fourth quarter compared to a profit of $2.62 per diluted share a year ago, and earnings of $3.65 per diluted share for the full fiscal year, compared to $7.48 per diluted share last year.

Quarterly consolidated earnings have been adjusted for previously announced changes in pension accounting ($4.88 per diluted share), aircraft impairments ($0.62 per diluted share), a legal reserve increase ($0.47 per diluted share) and changes in segment reporting (favorable $0.15 per diluted share).

“Fiscal 2015 was a transformative year for FedEx with outstanding financial results driving expanded long-term value for shareowners,” said Frederick W. Smith, FedEx Corp. chairman, president and chief executive officer. “Significant acquisitions announced in the year promise to strengthen our portfolio of services and change what’s possible for customers. I am very proud of the FedEx team for its accomplishments and look forward to a successful fiscal 2016.”

FedEx also announced today that independent members of its Board of Directors have approved a change to FedEx’s Corporate Governance Guidelines to increase the mandatory retirement age for directors from age 72 to age 75, effective immediately. “This change is consistent with the market trend of increasing the mandatory retirement age for board members,” said David P. Steiner, FedEx Corporation’s Lead Independent Director.

 

- more -

 

1

---

As previously disclosed, prior year amounts have been recast to conform to the current year presentation reflecting the pension accounting changes and allocation of corporate headquarters costs.

Fourth Quarter Results

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

 

		Fiscal 2015								Fiscal 2014
		Adjusted (non-GAAP)				As Reported (GAAP)				Adjusted (non-GAAP)				As Reported (GAAP)
Revenue		$	12.1 billion			$	12.1 billion			$	11.8 billion			$	11.8 billion
Operating income		$	1.28 billion			($	1.32 billion	)		$	1.22 billion			$	1.26 billion
Operating margin			10.5	%			(10.9	%)			10.3	%			10.7	%
Net income (loss)		$	753 million			($	895 million	)		$	753 million			$	780 million
Diluted EPS (loss)		$	2.66			($	3.16	)		$	2.54			$	2.62
YOY share repurchase impact, net of interest		$	0.12			($	0.14	)		$	0.13			$	0.13

Adjusted operating income improved 5% during the quarter, due to base yield growth in all three transportation segments, higher ground and U.S. domestic express volume, and benefits from profit improvement program initiatives. These improvements offset increased employee variable incentive compensation and unfavorable net impacts from fuel and weather.

Full Year Results

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

 

		Fiscal 2015								Fiscal 2014
		Adjusted (non-GAAP)				As Reported (GAAP)				Adjusted (non-GAAP)				As Reported (GAAP)
Revenue		$	47.5 billion			$	47.5 billion			$	45.6 billion			$	45.6 billion
Operating income		$	4.26 billion			$	1.87 billion			$	3.59 billion			$	3.82 billion
Operating margin			9.0	%			3.9	%			7.9	%			8.4	%
Net income		$	2.57 billion			$	1.05 billion			$	2.19 billion			$	2.32 billion
Diluted EPS		$	8.95			$	3.65			$	7.05			$	7.48
YOY share repurchase impact, net of interest		$	0.53			$	0.14			$	0.07			$	0.08

 

- more -

 

2

---

Adjusted operating results increased sharply during the year due to higher volumes and base yields in all three transportation segments, benefits from profit improvement program initiatives and a favorable net fuel impact. This was partially offset by increased incentive compensation and higher aircraft maintenance expense.

Capital spending for fiscal 2015 was $4.3 billion.

Outlook

For fiscal 2016, FedEx projects adjusted earnings to be $10.60 to $11.10 per diluted share before year-end mark-to-market pension accounting adjustments, driven by continued improvement in base pricing and benefits from our profit improvement program. The outlook assumes continued moderate economic growth and does not include any operating results or costs related to TNT Express.

Capital spending for fiscal 2016 is expected to be approximately $4.6 billion, which includes expansion of the FedEx Ground network and planned aircraft deliveries to support the FedEx Express fleet modernization program.

“Our operating performance significantly improved in fiscal 2015 as we focused on revenue quality and executed on our profit improvement program initiatives,” said Alan B. Graf, Jr., FedEx Corp. executive vice president and chief financial officer. “We expect strong earnings growth in fiscal 2016 as we continue to focus on improving performance and successfully executing our profit improvement initiatives.”

FedEx Express Segment

For the fourth quarter, the FedEx Express segment reported:

 

		Fiscal 2015				Fiscal 20141				Change
Revenue		$	6.70 billion			$	7.00 billion				(4	%)
Adjusted operating income		$	598 million			$	534 million				12	%
Adjusted operating margin			8.9	%			7.6	%			1.3	pts
Operating income		$	322 million			$	534 million				(40	%)
Operating margin			4.8	%			7.6	%			(2.8	pts)

1 – There were no adjustments to fourth quarter fiscal 2014 results.

During the fourth quarter, FedEx Express permanently retired 15 aircraft and 21 related engines, and adjusted the retirement schedule of an additional 23

 

- more -

 

3

---

aircraft and 57 engines. These actions resulted in $276 million of impairment and related charges, of which $246 million was noncash. These charges are excluded from this year’s adjusted operating income and margin.

Revenue decreased 4% as lower fuel surcharges and unfavorable currency exchange rates more than offset base yield and volume growth. U.S. domestic package volume grew 2%, driven by a 3% increase in overnight box. U.S. domestic revenue per package declined 4%, with lower fuel surcharges offsetting improved base rates. International export volume was down 1%, as FedEx International Economy grew 3% while FedEx International Priority^® declined 2%. International export revenue per package decreased 8%, as lower fuel surcharges and unfavorable currency exchange rates more than offset higher base rates.

Adjusted segment operating results improved due to higher base yield and U.S. domestic volume growth, the benefit from profit improvement program initiatives and lower international expenses due to currency exchange rates. These benefits were partially offset by an unfavorable net fuel impact, higher incentive compensation and a negative impact from weather.

FedEx Ground Segment

For the fourth quarter, the FedEx Ground segment reported:

 

		Fiscal 2015				Fiscal 2014				Change
Revenue		$	3.57 billion			$	3.01 billion				19	%
Operating income		$	603 million			$	601 million				—
Operating margin			16.9	%			20.0	%			(3.1	pts)

Revenue increased due to the inclusion of GENCO results and higher ground volume and revenue per package. Ground yield increased 2% due to higher dimensional weight charges and increased rates, partially offset by lower fuel surcharges. Ground average daily volume grew 5% in the quarter, primarily driven by growth in residential deliveries. FedEx SmartPost average daily volume decreased 1% due to the reduction in volume from a major customer. FedEx SmartPost revenue per package increased 7% due to rate increases and improved customer mix, partially offset by higher postage costs.

Segment operating margin declined due predominantly to the inclusion of GENCO results and increased self-insurance reserves.

 

- more -

 

4

---

FedEx Freight Segment

For the fourth quarter, the FedEx Freight segment reported:

 

		Fiscal 2015				Fiscal 2014				Change
Revenue		$	1.57 billion			$	1.55 billion				1	%
Operating income		$	137 million			$	130 million				5	%
Operating margin			8.7	%			8.4	%			0.3	pts

LTL revenue per shipment improved 2% due to higher rates from ongoing yield initiatives, significantly offset by lower fuel surcharges. Less-than-truckload (LTL) average daily shipments were flat.

Segment operating results improved primarily due to the positive impact of higher LTL revenue per shipment.

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 inspires its more than 325,000 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, Form 8-Ks and fourth 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. EDT on June 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

 

- more -

 

5

---

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

 

- more -

 

6

---

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, including an understanding of items that are non-operational or non-recurring in nature. Excluding the credit associated with the segment reporting change, amounts associated with changes in pension accounting, aircraft impairment and related charges at FedEx Express and a legal reserve increase from results will assist investors in understanding and allow for more accurate comparisons of the company’s and its segments’ core operating performance. Where applicable, the impacts of these events are shown net of incentive compensation impacts. As required by SEC rules, the tables below present a reconciliation of our presented non-GAAP measures to the most directly comparable GAAP measures. The inability to predict the amount of any future year-end mark-to-market pension accounting adjustments and the amount and timing of any operating results and integration planning and acquisition-related costs with respect to TNT Express makes a reconciliation of the forecasts for adjusted earnings per diluted share and the adjusted effective tax rate impracticable.

Fourth Quarter Fiscal 2015

 

		FedEx Corporation
		Operating								Net Income/ (Loss)				Diluted Earnings/ (Loss) Per Share
Dollars in millions, except EPS		Income/ (Loss)				Margin3
Non-GAAP measure		$	1,275				10.5	%		$	753			$	2.66
Segment reporting change1			67				0.5	%			42				0.15
Mark-to-market pension accounting adjustments2			(2,190	)			(18.1	%)			(1,382	)			(4.88	)
Aircraft impairment and related charges			(276	)			(2.3	%)			(175	)			(0.62	)
Legal reserve			(197	)			(1.6	%)			(133	)			(0.47	)
GAAP measure		($	1,321	)			(10.9	%)		($	895	)		($	3.16	)

 

		FedEx Express Operating
Dollars in millions		Income				Margin
Non-GAAP measure		$	598				8.9	%
Aircraft impairment and related charges			(276	)			(4.1	%)
GAAP measure4		$	322				4.8	%

 

- more -

 

7

---

Full Year Fiscal 2015

 

		FedEx Corporation
		Operating								Net Income				Diluted Earnings Per Share
Dollars in millions, except EPS		Income				Margin3
Non-GAAP measure		$	4,264				9.0	%		$	2,572			$	8.95
Segment reporting change1			266				0.6	%			168				0.58
Mark-to-market pension accounting adjustments2			(2,190	)			(4.6	%)			(1,382	)			(4.81	)
Aircraft impairment and related charges			(276	)			(0.6	%)			(175	)			(0.61	)
Legal reserve			(197	)			(0.4	%)			(133	)			(0.46	)
GAAP measure		$	1,867				3.9	%		$	1,050			$	3.65

 

		FedEx Express Operating
Dollars in millions		Income				Margin
Non-GAAP measure		$	1,860				6.8	%
Aircraft impairment and related charges			(276	)			(1.0	%)
GAAP measure4		$	1,584				5.8	%

 

- more -

 

8

---

Fourth Quarter Fiscal 2014

 

		FedEx Corporation
		Operating								Net Income				Diluted Earnings Per Share3
Dollars in millions, except EPS		Income				Margin
Non-GAAP measure		$	1,220				10.3	%		$	753			$	2.54
Segment reporting change1			59				0.5	%			36				0.12
Mark-to-market pension accounting adjustments2			(15	)			(0.1	%)			(9	)			(0.03	)
GAAP measure		$	1,264				10.7	%		$	780			$	2.62

Full Year Fiscal 2014

 

		FedEx Corporation
		Operating								Net Income				Diluted Earnings Per Share
Dollars in millions, except EPS		Income				Margin
Non-GAAP measure		$	3,593				7.9	%		$	2,190			$	7.05
Segment reporting change1			237				0.5	%			143				0.46
Mark-to-market pension accounting adjustments2			(15	)			0.0	%			(9	)			(0.03	)
GAAP measure		$	3,815				8.4	%		$	2,324			$	7.48

Notes

1 – At the segment level, the expected return on assets (EROA) has been set at 6.5%, which will equal the company’s consolidated EROA assumption in fiscal 2016. In fiscal years where the consolidated EROA is greater than 6.5% the difference is reflected as a credit at Corporate. The segment reporting change reflects this credit.

2 – Mark-to-market pension accounting adjustments reflect the year-end noncash adjustment to the valuation of the company’s defined benefit retirement plans.

3 – Does not sum to total due to rounding.

4 – The most directly comparable GAAP measure is segment operating income.

* * *

 

9

---

FEDEX CORP. FINANCIAL HIGHLIGHTS

Fourth Quarter Fiscal 2015

(In millions, except earnings per share)

(Unaudited)

 

		Three Months Ended May 31												Twelve Months Ended May 31
		2015				2014				%				2015				2014				%
Revenue:
FedEx Express segment		$	6,697			$	6,998				(4	%)		$	27,239			$	27,121				—
FedEx Ground segment			3,568				3,007				19	%			12,984				11,617				12	%
FedEx Freight segment			1,569				1,552				1	%			6,191				5,757				8	%
FedEx Services segment			407				402				1	%			1,545				1,536				1	%
Eliminations and other			(127	)			(120	)			(6	%)			(506	)			(464	)			(9	%)
Total Revenue			12,114				11,839				2	%			47,453				45,567				4	%
Operating Expenses:
Salaries and employee benefits1			4,432				4,067				9	%			17,110				16,171				6	%
Purchased transportation			2,079				2,029				2	%			8,483				8,011				6	%
Rentals and landing fees			673				672				—				2,682				2,622				2	%
Depreciation and amortization			657				649				1	%			2,611				2,587				1	%
Fuel			738				1,154				(36	%)			3,720				4,557				(18	%)
Maintenance and repairs			495				465				6	%			2,099				1,862				13	%
Impairment charges2			276				—				NM				276				—				NM
Retirement plans mark-to-market adjustment			2,190				15				NM				2,190				15				NM
Other3			1,895				1,524				24	%			6,415				5,927				8	%
Total Operating Expenses1			13,435				10,575				27	%			45,586				41,752				9	%
Operating Income:
FedEx Express segment1,2			322				534				(40	%)			1,584				1,428				11	%
FedEx Ground segment1			603				601				—				2,172				2,021				7	%
FedEx Freight segment1			137				130				5	%			484				351				38	%
Corporate, eliminations and other1,3			(2,383	)			(1	)			NM				(2,373	)			15				NM
Total Operating Income1			(1,321	)			1,264				NM				1,867				3,815				(51	%)
Other (Expense) Income:
Interest, net			(68	)			(47	)			NM				(221	)			(142	)			NM
Other, net			(27	)			1				NM				(19	)			(15	)			NM
Total Other (Expense) Income			(95	)			(46	)			NM				(240	)			(157	)			NM
Pretax Income1			(1,416	)			1,218				NM				1,627				3,658				(56	%)
Provision for Income Taxes1			(521	)			438				NM				577				1,334				(57	%)
Net Income1		($	895	)		$	780				NM			$	1,050			$	2,324				(55	%)
Diluted Earnings Per Share1		($	3.16	)		$	2.62				NM			$	3.65			$	7.48				(51	%)
Weighted Average Diluted Common and Common Equivalent Shares			283				296				(4	%)			287				310				(7	%)
Capital Expenditures		$	1,378			$	979				41	%		$	4,347			$	3,533				23	%

1 - Prior year amounts have been recast to conform to the current year presentation reflecting the pension accounting changes and allocation of corporate headquarters costs.

2 - Impairment and related charges (including $246 million noncash) to permanently retire and adjust the retirement schedule of certain aircraft and related engines. Such charges are included in FedEx Express segment results.

3 - Includes a legal reserve increase of $197 million. Such amount is included in the “Corporate, eliminations and other” results.

 

10

---

FEDEX CORP. CONDENSED CONSOLIDATED BALANCE SHEETS

Fourth Quarter Fiscal 2015

(In millions)

(Unaudited)

 

		May 31, 2015				May 31, 20141
ASSETS
Current Assets
Cash and cash equivalents		$	3,763			$	2,908
Receivables, less allowances			5,719				5,460
Spare parts, supplies and fuel, less allowances			498				463
Deferred income taxes			606				522
Prepaid expenses and other			355				330
Total current assets			10,941				9,683
Property and Equipment, at Cost			42,864				40,691
Less accumulated depreciation and amortization			21,989				21,141
Net property and equipment			20,875				19,550
Other Long-Term Assets
Goodwill			3,810				2,790
Other assets			1,443				1,047
Total other long-term assets			5,253				3,837
		$	37,069			$	33,070
LIABILITIES AND STOCKHOLDERS’ INVESTMENT
Current Liabilities
Current portion of long-term debt		$	19			$	1
Accrued salaries and employee benefits			1,436				1,277
Accounts payable			2,066				1,971
Accrued expenses			2,436				2,063
Total current liabilities			5,957				5,312
Long-Term Debt, Less Current Portion			7,249				4,736
Other Long-Term Liabilities
Deferred income taxes			1,747				2,114
Pension, postretirement healthcare and other benefit obligations			4,893				3,484
Self-insurance accruals			1,120				1,038
Deferred lease obligations			711				758
Deferred gains, principally related to aircraft transactions			181				206
Other liabilities			218				145
Total other long-term liabilities			8,870				7,745
Commitments and Contingencies
Common Stockholders’ Investment
Common stock, $0.10 par value, 800 million shares authorized			32				32
Additional paid-in capital			2,786				2,643
Retained earnings			16,900				16,229
Accumulated other comprehensive income			172				506
Treasury stock, at cost			(4,897	)			(4,133	)
Total common stockholders’ investment			14,993				15,277
		$	37,069			$	33,070

1 - Prior year amounts have been recast to conform to the current year presentation reflecting the pension accounting changes.

 

11

---

FEDEX CORP. CONDENSED CONSOLIDATED

STATEMENTS OF CASH FLOWS

Fourth Quarter Fiscal 2015

(In millions)

(Unaudited)

 

		Year Ended May 31
		2015				20141
Operating Activities:
Net income		$	1,050			$	2,324
Noncash charges:
Retirement plans mark-to-market adjustment			2,190				15
Impairment charges			246				—
Depreciation and amortization			2,611				2,587
Other, net			(294	)			586
Changes in operating assets and liabilities, net			(437	)			(1,248	)
Cash provided by operating activities			5,366				4,264
Investing Activities:
Capital expenditures			(4,347	)			(3,533	)
Business acquisitions, net of cash acquired			(1,429	)			(36	)
Proceeds from asset dispositions and other			24				18
Cash used in investing activities			(5,752	)			(3,551	)
Financing Activities:
Principal payments on debt			(5	)			(254	)
Proceeds from debt issuances			2,491				1,997
Dividends paid			(227	)			(187	)
Purchase of treasury stock			(1,254	)			(4,857	)
Other, net			344				582
Cash provided by (used in) financing activities			1,349				(2,719	)
Effect of exchange rate changes on cash			(108	)			(3	)
Net increase (decrease) in cash and cash equivalents			855				(2,009	)
Cash and cash equivalents at beginning of period			2,908				4,917
Cash and cash equivalents at end of period		$	3,763			$	2,908

1 - Prior year amounts have been recast to conform to the current year presentation reflecting the pension accounting changes.

 

12

---

FEDEX EXPRESS SEGMENT FINANCIAL HIGHLIGHTS

Fourth Quarter Fiscal 2015

(Dollars in millions)

(Unaudited)

 

		Three Months Ended May 31												Twelve Months Ended May 31
		2015				2014				%				2015				2014				%
Revenues:
Package Revenue:
U.S. Overnight Box		$	1,664			$	1,703				(2	%)		$	6,704			$	6,555				2	%
U.S. Overnight Envelope			422				426				(1	%)			1,629				1,636				—
Total U.S. Overnight			2,086				2,129				(2	%)			8,333				8,191				2	%
U.S. Deferred			818				819				—				3,342				3,188				5	%
Total U.S. Package Revenue			2,904				2,948				(1	%)			11,675				11,379				3	%
International Priority			1,509				1,691				(11	%)			6,251				6,451				(3	%)
International Economy			572				590				(3	%)			2,301				2,229				3	%
Total International Export Package			2,081				2,281				(9	%)			8,552				8,680				(1	%)
International Domestic1			324				369				(12	%)			1,406				1,446				(3	%)
Total Package Revenue			5,309				5,598				(5	%)			21,633				21,505				1	%
Freight Revenue:
U.S.			555				569				(2	%)			2,300				2,355				(2	%)
International Priority			406				410				(1	%)			1,588				1,594				—
International Airfreight			47				48				(2	%)			180				205				(12	%)
Total Freight Revenue			1,008				1,027				(2	%)			4,068				4,154				(2	%)
Other Revenue2			380				373				2	%			1,538				1,462				5	%
Total Express Revenue		$	6,697			$	6,998				(4	%)		$	27,239			$	27,121				—
Operating Expenses:
Salaries and employee benefits4			2,530				2,467				3	%			10,104				9,797				3	%
Purchased transportation			602				635				(5	%)			2,544				2,511				1	%
Rentals and landing fees			409				432				(5	%)			1,693				1,705				(1	%)
Depreciation and amortization			354				372				(5	%)			1,460				1,488				(2	%)
Fuel			626				991				(37	%)			3,199				3,943				(19	%)
Maintenance and repairs			297				294				1	%			1,357				1,182				15	%
Impairment charges3			276				—				NM				276				—				NM
Intercompany charges4			482				483				—				1,842				1,888				(2	%)
Other			799				790				1	%			3,180				3,179				—
Total Operating Expenses4			6,375				6,464				(1	%)			25,655				25,693				—
Operating Income4		$	322			$	534				(40	%)		$	1,584			$	1,428				11	%
Operating Margin4			4.8	%			7.6	%			(2.8	pts)			5.8	%			5.3	%			0.5	pts

1 - International Domestic revenues represent international intra-country express operations.

2 - Includes FedEx Trade Networks, FedEx SupplyChain Systems and Bongo International.

3 - Impairment and related charges (including $246 million noncash) to permanently retire and adjust the retirement schedule of certain aircraft and related engines.

4 - Prior year amounts have been recast to conform to the current year presentation reflecting the pension accounting changes and allocation of corporate headquarters costs.

 

13

---

FEDEX EXPRESS SEGMENT OPERATING HIGHLIGHTS

Fourth Quarter Fiscal 2015

(Unaudited)

 

		Three Months Ended May 31												Twelve Months Ended May 31
		2015				2014				%				2015				2014				%
PACKAGE STATISTICS1
Average Daily Package Volume (000s):
U.S. Overnight Box			1,231				1,195				3	%			1,240				1,164				7	%
U.S. Overnight Envelope			547				539				1	%			527				538				(2	%)
Total U.S. Overnight Package			1,778				1,734				3	%			1,767				1,702				4	%
U.S. Deferred			881				864				2	%			916				869				5	%
Total U.S. Domestic Package			2,659				2,598				2	%			2,683				2,571				4	%
International Priority			408				416				(2	%)			410				410				—
International Economy			178				173				3	%			176				170				4	%
Total International Export Package			586				589				(1	%)			586				580				1	%
International Domestic2			850				813				5	%			853				819				4	%
Total Average Daily Packages			4,095				4,000				2	%			4,122				3,970				4	%
Yield (Revenue Per Package):
U.S. Overnight Box		$	21.12			$	22.26				(5	%)		$	21.29			$	22.18				(4	%)
U.S. Overnight Envelope			12.07				12.36				(2	%)			12.15				11.97				2	%
U.S. Overnight Composite			18.34				19.18				(4	%)			18.56				18.95				(2	%)
U.S. Deferred			14.50				14.81				(2	%)			14.36				14.44				(1	%)
U.S. Domestic Composite			17.07				17.73				(4	%)			17.13				17.42				(2	%)
International Priority			57.85				63.57				(9	%)			60.05				61.88				(3	%)
International Economy			50.10				53.21				(6	%)			51.54				51.75				—
Total International Export Composite			55.49				60.52				(8	%)			57.50				58.92				(2	%)
International Domestic2			5.96				7.10				(16	%)			6.49				6.95				(7	%)
Composite Package Yield		$	20.26			$	21.87				(7	%)		$	20.66			$	21.32				(3	%)
FREIGHT STATISTICS1
Average Daily Freight Pounds (000s):
U.S.			7,836				7,865				—				7,833				7,854				—
International Priority			2,953				2,936				1	%			2,887				2,922				(1	%)
International Airfreight			716				677				6	%			684				798				(14	%)
Total Avg Daily Freight Pounds			11,505				11,478				—				11,404				11,574				(1	%)
Revenue Per Freight Pound:
U.S.		$	1.11			$	1.13				(2	%)		$	1.16			$	1.18				(2	%)
International Priority			2.15				2.18				(1	%)			2.17				2.15				1	%
International Airfreight			1.01				1.12				(10	%)			1.04				1.01				3	%
Composite Freight Yield		$	1.37			$	1.40				(2	%)		$	1.40			$	1.41				(1	%)
Operating Weekdays			64				64				—				254				254				—

1 - Package and freight statistics include only the operations of FedEx Express.

2 - International Domestic revenues represent international intra-country express operations.

 

14

---

FEDEX GROUND SEGMENT FINANCIAL AND OPERATING HIGHLIGHTS

Fourth Quarter Fiscal 2015

(Dollars in millions)

(Unaudited)

 

		Three Months Ended May 31												Twelve Months Ended May 31
		2015				2014				%				2015				2014				%
FINANCIAL HIGHLIGHTS
Revenues:
FedEx Ground		$	2,994			$	2,776				8	%		$	11,563			$	10,634				9	%
FedEx SmartPost			245				231				6	%			1,005				983				2	%
GENCO1			329				—				NM				416				—				NM
Total Revenues			3,568				3,007				19	%			12,984				11,617				12	%
Operating Expenses:
Salaries and employee benefits2			649				435				49	%			2,146				1,749				23	%
Purchased transportation			1,256				1,159				8	%			5,021				4,635				8	%
Rentals			136				103				32	%			485				402				21	%
Depreciation and amortization			149				118				26	%			530				468				13	%
Fuel			3				3				—				12				17				(29	%)
Maintenance and repairs			70				56				25	%			244				222				10	%
Intercompany charges2			289				277				4	%			1,123				1,095				3	%
Other			413				255				62	%			1,251				1,008				24	%
Total Operating Expenses2			2,965				2,406				23	%			10,812				9,596				13	%
Operating Income2		$	603			$	601				—			$	2,172			$	2,021				7	%
Operating Margin2			16.9	%			20.0	%			(3.1	pts)			16.7	%			17.4	%			(0.7	pts)
OPERATING STATISTICS
Operating Weekdays
FedEx Ground			64				64				—				254				254				—
FedEx SmartPost			64				64				—				252				252				—
Average Daily Package Volume (000s)
FedEx Ground			4,847				4,597				5	%			4,850				4,588				6	%
FedEx SmartPost			1,899				1,920				(1	%)			2,061				2,186				(6	%)
Yield (Revenue Per Package)
FedEx Ground		$	9.63			$	9.41				2	%		$	9.37			$	9.10				3	%
FedEx SmartPost		$	2.02			$	1.88				7	%		$	1.93			$	1.78				8	%

1 - Revenues for GENCO are included from the January 30, 2015 date of closing.

2 - Prior year amounts have been recast to conform to the current year presentation reflecting the pension accounting changes and allocation of corporate headquarters costs.

 

15

---

FEDEX FREIGHT SEGMENT FINANCIAL AND OPERATING HIGHLIGHTS

Fourth Quarter Fiscal 2015

(Dollars in millions)

(Unaudited)

 

		Three Months Ended May 31												Twelve Months Ended May 31
		2015				2014				%				2015				2014				%
FINANCIAL HIGHLIGHTS
Revenue		$	1,569			$	1,552				1	%		$	6,191			$	5,757				8	%
Operating Expenses:
Salaries and employee benefits1			692				636				9	%			2,698				2,442				10	%
Purchased transportation			253				266				(5	%)			1,045				981				7	%
Rentals			33				37				(11	%)			129				131				(2	%)
Depreciation and amortization			60				59				2	%			230				231				—
Fuel			109				159				(31	%)			508				595				(15	%)
Maintenance and repairs			53				45				18	%			201				179				12	%
Intercompany charges1			115				105				10	%			444				431				3	%
Other			117				115				2	%			452				416				9	%
Total Operating Expenses1			1,432				1,422				1	%			5,707				5,406				6	%
Operating Income1		$	137			$	130				5	%		$	484			$	351				38	%
Operating Margin1			8.7	%			8.4	%			0.3	pts			7.8	%			6.1	%			1.7	pts
OPERATING STATISTICS
LTL Operating Weekdays			64				64				—				252				252				—
Average Daily LTL Shipments (000s)
Priority			66.4				67.0				(1	%)			66.9				62.9				6	%
Economy			29.2				28.7				2	%			28.6				27.7				3	%
Total Average Daily LTL Shipments			95.6				95.7				—				95.5				90.6				5	%
Weight Per LTL Shipment (lbs)
Priority			1,301				1,280				2	%			1,272				1,262				1	%
Economy			984				1,013				(3	%)			1,003				1,000				—
Composite Weight Per LTL Shipment			1,204				1,200				—				1,191				1,182				1	%
LTL Revenue/Shipment
Priority		$	229.97			$	225.29				2	%		$	229.57			$	223.61				3	%
Economy			261.02				260.71				—				264.34				258.05				2	%
Composite LTL Revenue/Shipment		$	239.46			$	235.91				2	%		$	240.09			$	234.23				3	%
LTL Revenue/CWT
Priority		$	17.68			$	17.60				—			$	18.05			$	17.73				2	%
Economy			26.52				25.73				3	%			26.34				25.80				2	%
Composite LTL Revenue/CWT		$	19.89			$	19.66				1	%		$	20.15			$	19.82				2	%

1 - Prior year amounts have been recast to conform to the current year presentation reflecting the pension accounting changes and allocation of corporate headquarters costs.

 

16