Form 8-K FEDEX CORP For: Mar 16 Filed by: FEDERAL EXPRESS CORP

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): March 16, 2016

 

 

FEDEX CORPORATION

(Exact name of registrant as specified in its charter)

Commission File Number 1-15829

 

Delaware		62-1721435
(State or other jurisdiction of		(IRS Employer
incorporation)		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		(IRS Employer
incorporation)		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))

 

 

 

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EXPLANATORY NOTE

The information in this Report, including the exhibit, is being furnished pursuant to Item 2.02 of Form 8-K and General Instruction B.2 thereunder. Such information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended.

SECTION 2. FINANCIAL INFORMATION.

Item 2.02. Results of Operations and Financial Condition.

Attached as Exhibit 99.1 and incorporated herein by reference is a copy of FedEx Corporation’s press release, dated March 16, 2016, announcing its and its wholly owned subsidiary Federal Express Corporation’s financial results for the fiscal quarter ended February 29, 2016.

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 March 16, 2016.

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned hereunto duly authorized.

 

		FedEx Corporation
Date: March 16, 2016		By:		/s/ JOHN L. MERINO
				John L. Merino
				Corporate Vice President and
				Principal Accounting Officer
		Federal Express Corporation
Date: March 16, 2016		By:		/s/ ELISE L. JORDAN
				Elise L. Jordan
				Senior Vice President and
				Chief Financial Officer

 

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EXHIBIT INDEX

 

Exhibit Number		Description
99.1		Press Release of FedEx Corporation dated March 16, 2016.

 

E-1

Exhibit 99.1

FOR IMMEDIATE RELEASE

FedEx Corp. Reports Strong Adjusted Third Quarter Earnings

MEMPHIS, Tenn., March 16, 2016 ... FedEx Corp. (NYSE: FDX) today reported adjusted earnings of $2.51 per diluted share for the third quarter ended February 29, compared to adjusted earnings of $2.03 per diluted share a year ago. Without adjustments, FedEx reported earnings of $1.84 for the third quarter compared to $2.18 per diluted share last year.

This year’s quarterly consolidated earnings have been adjusted for expenses related to certain legal matters ($0.61 per diluted share) and the pending acquisition of TNT Express ($0.06 per diluted share).

“Our strong financial performance was driven by increasing demand for our broad portfolio of FedEx business solutions which helped increase revenue and adjusted profit for the corporation,” said Frederick W. Smith, FedEx Corp. chairman, president and chief executive officer. “We sincerely appreciate the peak season efforts of our FedEx team members who delivered great service despite the challenges of stronger-than-expected shipping demand, driven by the growth in e-commerce.”

Third Quarter Results

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

 

		Fiscal 2016				Fiscal 2015
		Adjusted (non-GAAP)		As Reported (GAAP)		Adjusted (non-GAAP)		As Reported (GAAP)
Revenue		$12.7 billion		$12.7 billion		$11.7 billion		$11.7 billion
Operating income		$1.16 billion		$864 million		$971 million		$1.04 billion
Operating margin		9.2%		6.8%		8.3%		8.9%
Net income		$692 million		$507 million		$586 million		$628 million
Diluted EPS		$2.51		$1.84		$2.03		$2.18

Adjusted operating income rose 19% year over year primarily due to improved yield management and the continued positive impacts from profit improvement program initiatives at FedEx Express. The net impact of fuel and currency exchange rates also improved results. These benefits were partially offset by weaker operating results at FedEx Freight and FedEx Ground.

 

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During the quarter, the company acquired 7.3 million shares of FedEx common stock. Share repurchases benefited the quarter’s results by $0.07 per diluted share year over year.

Outlook

FedEx is tightening its adjusted earnings forecast to $10.70 to $10.90 per diluted share for fiscal 2016 before year-end mark-to-market pension accounting adjustments (“MTM adjustments”), compared to the previous forecast of $10.40 to $10.90 per diluted share. The outlook assumes moderate economic growth and excludes certain legal matters as well as any TNT-related costs or operating results. The capital spending forecast for the fiscal year is now $4.8 billion.

“We now expect our fiscal 2016 adjusted earnings to be up 20% to 22% over last year, as we continue to benefit from our execution of the profit improvement program,” said Alan B. Graf, Jr., FedEx Corp. executive vice president and chief financial officer. “Our positive financial momentum should continue into our upcoming fiscal 2017, where we expect solid growth in earnings and cash flow.”

FedEx Express Segment

For the third quarter, the FedEx Express segment reported:

 

•

Revenue of $6.56 billion, down 1% from last year’s $6.66 billion

 

•

Operating income of $595 million, up 51% from $393 million a year ago

 

•

Operating margin of 9.1%, up from 5.9% the previous year

Revenue decreased slightly as lower fuel surcharges and unfavorable currency exchange rates offset improved yield management and a 2% increase in U.S. domestic volume.

Operating results improved due to yield management efforts and U.S. domestic volume growth as well as the ongoing benefits from profit improvement program initiatives, which continued to improve revenue quality and constrain expense growth. Fuel and currency exchange rate changes had a positive net impact on the quarter.

 

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FedEx Ground Segment

For the third quarter, the FedEx Ground segment reported:

 

•

Revenue of $4.41 billion, up 30% from last year’s $3.39 billion

 

•

Operating income of $557 million, down from $559 million a year ago

 

•

Operating margin of 12.6%, down from 16.5% the previous year

Revenue increased due to an 11% increase in FedEx Ground volume, improved yield management, the recording of FedEx SmartPost revenues on a gross basis versus the previous net treatment and the inclusion of GENCO results for the entire quarter versus one month in the prior year’s results.

Operating results were negatively impacted by higher costs, driven significantly by network expansion and by peak season demand that exceeded both volume and package size expectations. Increased self-insurance expense and higher purchased transportation rates also negatively impacted the quarter. The change in FedEx SmartPost revenue reporting and the inclusion of GENCO results collectively reduced the operating margin year-over-year by 1.9 percentage points.

FedEx Ground has reached agreements in principle to settle all of the 19 cases on appeal in the multidistrict independent contractor litigation. The multidistrict court had found the owner-operators in these cases to be contractors as a matter of law, and the disputes involve a contractor model which FedEx Ground has not operated since 2011. In the third quarter, we recognized a liability at Corporate for the net expected loss of $204 million for these settlements and other contractor-related proceedings. The settlements will require court approval.

FedEx Freight Segment

For the third quarter, the FedEx Freight segment reported:

 

•

Revenue of $1.45 billion, up 1% from last year’s $1.43 billion

 

•

Operating income of $56 million, down 16% from $67 million a year ago

 

•

Operating margin of 3.9%, down from 4.7% the previous year

Revenue increased as less-than-truckload (LTL) average daily shipments increased 7%, mostly offset by lower fuel surcharges and weight per shipment.

Operating results declined primarily due to salaries and employee benefits expense outpacing volume growth.

 

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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 $49 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 340,000 team members to remain “absolutely, positively” focused on safety, the highest ethical and professional standards and the needs of their customers and communities. For more information, visit news.fedex.com.

Additional information and operating data are contained in the company’s annual report, Form 10-K, Form 10-Qs and third quarter fiscal 2016 Statistical Book. These materials, as well as a webcast of the earnings release conference call to be held at 5:00 p.m. EDT on March 16 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.

The Investor Relations page of our website, investors.fedex.com, contains a significant amount of information about FedEx, including our SEC filings and financial and other information for investors. The information that we post on our Investor Relations website could be deemed to be material information. We encourage investors, the media and others interested in the company to visit this website from time to time, as information is updated and new information is posted.

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

 

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and its subsidiaries’ press releases and filings with the SEC. Any forward-looking statement speaks only as of the date on which it is made. We do not undertake or assume any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Media Contact: Jess Bunn 901-818-7463

Investor Contact: Mickey Foster 901-818-7468

Home Page: fedex.com

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RECONCILIATION OF FEDEX CORPORATION’S 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 from third quarter fiscal 2016 results TNT Express-related expenses and certain legal settlement costs (net of recognized insurance recoveries), and from third quarter fiscal 2015 results the credit associated with the segment reporting change, will assist investors in understanding and allow for more accurate comparisons of the company’s core operating performance. As required by SEC rules, the table below presents 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 for the full year impracticable.

Third Quarter Fiscal 2016

 

Dollars in millions, except EPS		Operating								Net Income1				Diluted Earnings Per Share
		Income				Margin1
Non-GAAP measure		$	1,160				9.2	%		$	692			$	2.51
FedEx Ground legal matters2			(204	)			(1.6	%)			(126	)			(0.46	)
FedEx Trade Networks legal matter2			(69	)			(0.5	%)			(43	)			(0.15	)
TNT Express expenses			(23	)			(0.2	%)			(15	)			(0.06	)
GAAP measure		$	864				6.8	%		$	507			$	1.84

Third Quarter Fiscal 2015

 

Dollars in millions, except EPS		Operating								Net Income				Diluted Earnings Per Share
		Income				Margin
Non-GAAP measure		$	971				8.3	%		$	586			$	2.03
Segment reporting change3			67				0.6	%			42				0.15
GAAP measure		$	1,038				8.9	%		$	628			$	2.18

Notes

 

1	– Does not sum to total due to rounding.

2	– Net of recognized insurance recovery.

3

– Represents the credit at Corporate resulting from the change in recognizing expected return on plan assets for our defined benefit pension and post-retirement healthcare plans at the segment level associated with the adoption of mark-to-market accounting, as discussed further in our fiscal 2015 Annual Report on Form 10-K.

 

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FEDEX CORP. FINANCIAL HIGHLIGHTS

Third Quarter Fiscal 2016

(In millions, except earnings per share)

(Unaudited)

 

		Three Months Ended												Nine Months Ended
		Feb. 29, 2016				Feb. 28, 2015				%				Feb. 29, 2016				Feb. 28, 2015				%
Revenue:
FedEx Express segment		$	6,557			$	6,656				(1	%)		$	19,736			$	20,542				(4	%)
FedEx Ground segment			4,408				3,393				30	%			12,288				9,416				31	%
FedEx Freight segment			1,447				1,428				1	%			4,595				4,622				(1	%)
FedEx Services segment			384				370				4	%			1,177				1,138				3	%
Eliminations and other			(142	)			(131	)			NM				(410	)			(379	)			NM
Total Revenue			12,654				11,716				8	%			37,386				35,339				6	%
Operating Expenses:
Salaries and employee benefits			4,712				4,335				9	%			13,807				12,678				9	%
Purchased transportation			2,623				2,165				21	%			7,505				6,404				17	%
Rentals and landing fees			744				686				8	%			2,121				2,009				6	%
Depreciation and amortization			663				652				2	%			1,964				1,954				1	%
Fuel			537				810				(34	%)			1,864				2,982				(37	%)
Maintenance and repairs			504				505				—				1,581				1,604				(1	%)
Other			2,007				1,525				32	%			5,399				4,520				19	%
Total Operating Expenses			11,790				10,678				10	%			34,241				32,151				7	%
Operating Income:
FedEx Express segment			595				393				51	%			1,762				1,262				40	%
FedEx Ground segment			557				559				—				1,620				1,569				3	%
FedEx Freight segment			56				67				(16	%)			289				347				(17	%)
Corporate, eliminations and other			(344	)			19				NM				(526	)			10				NM
Total Operating Income			864				1,038				(17	%)			3,145				3,188				(1	%)
Other Expense:
Interest, net			(81	)			(58	)			NM				(218	)			(153	)			NM
Other, net			(1	)			5				NM				(6	)			8				NM
Total Other Expense			(82	)			(53	)			NM				(224	)			(145	)			NM
Pretax Income			782				985				(21	%)			2,921				3,043				(4	%)
Provision for Income Taxes			275				357				(23	%)			1,031				1,099				(6	%)
Net Income		$	507			$	628				(19	%)		$	1,890			$	1,944				(3	%)
Diluted Earnings Per Share		$	1.84			$	2.18				(16	%)		$	6.71			$	6.75				(1	%)
Weighted Average Common and Common Equivalent Shares			275				287				(4	%)			281				288				(2	%)
Capital Expenditures		$	1,000			$	1,080				(7	%)		$	3,562			$	2,969				20	%

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FEDEX CORP. CONDENSED CONSOLIDATED BALANCE SHEETS

Third Quarter Fiscal 2016

(In millions)

 

		Feb. 29, 2016
		(Unaudited)				May 31, 2015
ASSETS
Current Assets
Cash and cash equivalents		$	2,841			$	3,763
Receivables, less allowances			5,634				5,719
Spare parts, supplies and fuel, less allowances			476				498
Deferred income taxes			608				606
Prepaid expenses and other			678				355
Total current assets			10,237				10,941
Property and Equipment, at Cost			46,032				42,864
Less accumulated depreciation and amortization			23,480				21,989
Net property and equipment			22,552				20,875
Other Long-Term Assets
Goodwill			3,764				3,810
Other assets			1,266				1,443
Total other long-term assets			5,030				5,253
		$	37,819			$	37,069
LIABILITIES AND STOCKHOLDERS’ INVESTMENT
Current Liabilities
Current portion of long-term debt		$	11			$	19
Accrued salaries and employee benefits			1,451				1,436
Accounts payable			2,024				2,066
Accrued expenses			2,453				2,436
Total current liabilities			5,939				5,957
Long-Term Debt, Less Current Portion			8,477				7,249
Other Long-Term Liabilities
Deferred income taxes			2,046				1,747
Pension, postretirement healthcare and other benefit obligations			4,628				4,893
Self-insurance accruals			1,282				1,120
Deferred lease obligations			723				711
Deferred gains, principally related to aircraft transactions			161				181
Other liabilities			236				218
Total other long-term liabilities			9,076				8,870
Commitments and Contingencies
Common Stockholders’ Investment
Common stock, $0.10 par value, 800 million shares authorized			32				32
Additional paid-in capital			2,869				2,786
Retained earnings			18,481				16,900
Accumulated other comprehensive (loss) income			(159	)			172
Treasury stock, at cost			(6,896	)			(4,897	)
Total common stockholders’ investment			14,327				14,993
		$	37,819			$	37,069

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FEDEX CORP. CONDENSED CONSOLIDATED

STATEMENTS OF CASH FLOWS

Third Quarter Fiscal 2016

(In millions)

(Unaudited)

 

		Three Months Ended
		Feb. 29, 2016				Feb. 28, 2015
Operating Activities:
Net income		$	1,890			$	1,944
Noncash charges:
Depreciation and amortization			1,964				1,954
Other, net			493				438
Changes in operating assets and liabilities, net			(551	)			(863	)
Net cash provided by operating activities			3,796				3,473
Investing Activities:
Capital expenditures			(3,562	)			(2,969	)
Business acquisitions, net of cash acquired			—				(1,429	)
Asset dispositions and other, net			(17	)			16
Net cash used in investing activities			(3,579	)			(4,382	)
Financing Activities:
Principal payments on debt			(28	)			(1	)
Proceeds from debt issuances			1,238				2,491
Proceeds from stock issuances			79				272
Excess tax benefit on the exercise of stock options			9				31
Dividends paid			(210	)			(171	)
Purchases of treasury stock			(2,133	)			(1,016	)
Other, net			(16	)			(23	)
Net cash (used in) provided by financing activities			(1,061	)			1,583
Effect of exchange rate changes on cash			(78	)			(104	)
Net (decrease) increase in cash and cash equivalents			(922	)			570
Cash and cash equivalents at beginning of period			3,763				2,908
Cash and cash equivalents at end of period		$	2,841			$	3,478

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FEDEX EXPRESS SEGMENT FINANCIAL HIGHLIGHTS

Third Quarter Fiscal 2016

(Dollars in millions)

(Unaudited)

 

		Three Months Ended												Nine Months Ended
		Feb. 29, 2016				Feb. 28, 2015				%				Feb. 29, 2016				Feb. 28, 2015				%
Revenues:
Package Revenue:
U.S. Overnight Box		$	1,704			$	1,653				3	%		$	5,044			$	5,040				—
U.S. Overnight Envelope			408				392				4	%			1,227				1,207				2	%
Total U.S. Overnight			2,112				2,045				3	%			6,271				6,247				—
U.S. Deferred			926				895				3	%			2,568				2,524				2	%
Total U.S. Package Revenue			3,038				2,940				3	%			8,839				8,771				1	%
International Priority			1,346				1,463				(8	%)			4,243				4,742				(11	%)
International Economy			546				560				(3	%)			1,688				1,729				(2	%)
Total International Export Package			1,892				2,023				(6	%)			5,931				6,471				(8	%)
International Domestic1			303				328				(8	%)			966				1,082				(11	%)
Total Package Revenue			5,233				5,291				(1	%)			15,736				16,324				(4	%)
Freight Revenue:
U.S.			647				580				12	%			1,798				1,745				3	%
International Priority			325				375				(13	%)			1,029				1,182				(13	%)
International Airfreight			30				45				(33	%)			98				133				(26	%)
Total Freight Revenue			1,002				1,000				—				2,925				3,060				(4	%)
Other Revenue2			322				365				(12	%)			1,075				1,158				(7	%)
Total Express Revenue		$	6,557			$	6,656				(1	%)		$	19,736			$	20,542				(4	%)
Operating Expenses:
Salaries and employee benefits			2,602				2,572				1	%			7,638				7,574				1	%
Purchased transportation			545				614				(11	%)			1,762				1,942				(9	%)
Rentals and landing fees			452				436				4	%			1,261				1,284				(2	%)
Depreciation and amortization			342				364				(6	%)			1,038				1,106				(6	%)
Fuel			455				697				(35	%)			1,579				2,573				(39	%)
Maintenance and repairs			306				324				(6	%)			981				1,060				(7	%)
Intercompany charges			464				460				1	%			1,371				1,360				1	%
Other			796				796				—				2,344				2,381				(2	%)
Total Operating Expenses			5,962				6,263				(5	%)			17,974				19,280				(7	%)
Operating Income		$	595			$	393				51	%		$	1,762			$	1,262				40	%
Operating Margin			9.1	%			5.9	%			3.2 pts				8.9	%			6.1	%			2.8 pts

 

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

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

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FEDEX EXPRESS SEGMENT OPERATING HIGHLIGHTS

Third Quarter Fiscal 2016

(Unaudited)

 

		Three Months Ended												Nine Months Ended
		Feb. 29, 2016				Feb. 28, 2015				%				Feb. 29, 2016				Feb. 28, 2015				%
PACKAGE STATISTICS1
Average Daily Package Volume (000s):
U.S. Overnight Box			1,316				1,258				5	%			1,271				1,243				2	%
U.S. Overnight Envelope			535				516				4	%			536				521				3	%
Total U.S. Overnight Package			1,851				1,774				4	%			1,807				1,764				2	%
U.S. Deferred			1,015				1,024				(1	%)			926				928				—
Total U.S. Domestic Package			2,866				2,798				2	%			2,733				2,692				2	%
International Priority			386				398				(3	%)			393				410				(4	%)
International Economy			179				175				2	%			180				175				3	%
Total International Export Package			565				573				(1	%)			573				585				(2	%)
International Domestic2			878				831				6	%			895				854				5	%
Total Average Daily Packages			4,309				4,202				3	%			4,201				4,131				2	%
Yield (Revenue Per Package):
U.S. Overnight Box		$	20.56			$	20.85				(1	%)		$	20.77			$	21.34				(3	%)
U.S. Overnight Envelope			12.11				12.07				—				11.99				12.18				(2	%)
U.S. Overnight Composite			18.11				18.30				(1	%)			18.17				18.64				(3	%)
U.S. Deferred			14.48				13.88				4	%			14.52				14.32				1	%
U.S. Domestic Composite			16.83				16.68				1	%			16.93				17.15				(1	%)
International Priority			55.35				58.40				(5	%)			56.59				60.79				(7	%)
International Economy			48.36				50.60				(4	%)			49.02				52.03				(6	%)
Total International Export Composite			53.14				56.01				(5	%)			54.21				58.17				(7	%)
International Domestic2			5.47				6.28				(13	%)			5.65				6.67				(15	%)
Composite Package Yield		$	19.27			$	19.99				(4	%)		$	19.61			$	20.80				(6	%)
FREIGHT STATISTICS
Average Daily Freight Pounds (000s):
U.S.			8,340				8,145				2	%			7,937				7,831				1	%
International Priority			2,414				2,823				(14	%)			2,503				2,866				(13	%)
International Airfreight			622				718				(13	%)			636				673				(5	%)
Total Avg Daily Freight Pounds			11,376				11,686				(3	%)			11,076				11,370				(3	%)
Revenue Per Freight Pound:
U.S.		$	1.23			$	1.13				9	%		$	1.19			$	1.17				2	%
International Priority			2.14				2.11				1	%			2.15				2.17				(1	%)
International Airfreight			0.76				1.00				(24	%)			0.81				1.04				(22	%)
Composite Freight Yield		$	1.40			$	1.36				3	%		$	1.38			$	1.42				(3	%)
Operating Weekdays			63				63				—				191				190				1	%

 

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

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

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FEDEX GROUND SEGMENT FINANCIAL AND OPERATING HIGHLIGHTS

Third Quarter Fiscal 2016

(Dollars in millions)

(Unaudited)

 

		Three Months Ended												Nine Months Ended
		Feb. 29, 20162				Feb. 28, 2015				%				Feb. 29, 20162				Feb. 28, 2015				%
FINANCIAL HIGHLIGHTS
Revenues:
FedEx Ground1		$	4,025			$	3,306				22	%		$	11,161			$	9,329				20	%
GENCO			383				87				NM				1,127				87				NM
Total Revenues			4,408				3,393				30	%			12,288				9,416				31	%
Operating Expenses:
Salaries and employee benefits			756				564				34	%			2,105				1,497				41	%
Purchased transportation1			1,891				1,348				40	%			5,130				3,765				36	%
Rentals			166				126				32	%			466				349				34	%
Depreciation and amortization			159				136				17	%			451				381				18	%
Fuel			3				3				—				8				9				(11	%)
Maintenance and repairs			71				61				16	%			209				174				20	%
Intercompany charges			312				281				11	%			910				834				9	%
Other			493				315				57	%			1,389				838				66	%
Total Operating Expenses			3,851				2,834				36	%			10,668				7,847				36	%
Operating Income		$	557			$	559				—			$	1,620			$	1,569				3	%
Operating Margin			12.6	%			16.5	%			(3.9 pts	)			13.2	%			16.7	%			(3.5 pts	)
OPERATING STATISTICS3
Operating Weekdays			63				63				—				191				190				1	%
Average Daily Package Volume (000s)			8,339				7,496				11	%			7,551				6,970				8	%
Yield (Revenue Per Package)1		$	7.65			$	7.06				8	%		$	7.72			$	7.06				9	%

 

1	- Effective June 1, 2015, FedEx Ground began recording FedEx SmartPost service revenues on a gross basis (including postal fees). Postal fees, which previously were netted against revenue, are now charged to purchased transportation.

2	- The financial results of GENCO are included in the current year.

3	- Operating statistics include only the operations of FedEx Ground (including FedEx SmartPost). FedEx SmartPost was merged into FedEx Ground on August 31, 2015.

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FEDEX FREIGHT SEGMENT FINANCIAL AND OPERATING HIGHLIGHTS

Third Quarter Fiscal 2016

(Dollars in millions)

(Unaudited)

 

		Three Months Ended												Nine Months Ended
		Feb. 29, 2016				Feb. 28, 2015				%				Feb. 29, 2016				Feb. 28, 2015				%
FINANCIAL HIGHLIGHTS
Revenue		$	1,447			$	1,428				1	%		$	4,595			$	4,622				(1	%)
Operating Expenses:
Salaries and employee benefits			716				664				8	%			2,168				2,006				8	%
Purchased transportation			223				235				(5	%)			720				792				(9	%)
Rentals			33				33				—				109				96				14	%
Depreciation and amortization			65				54				20	%			185				170				9	%
Fuel			80				109				(27	%)			277				399				(31	%)
Maintenance and repairs			48				49				(2	%)			154				148				4	%
Intercompany charges			112				108				4	%			337				329				2	%
Other			114				109				5	%			356				335				6	%
Total Operating Expenses			1,391				1,361				2	%			4,306				4,275				1	%
Operating Income		$	56			$	67				(16	%)		$	289			$	347				(17	%)
Operating Margin			3.9	%			4.7	%			(0.8 pts	)			6.3	%			7.5	%			(1.2 pts	)
OPERATING STATISTICS
LTL Operating Weekdays			62				62				—				189				188				1	%
Average Daily LTL Shipments (000s)
Priority			64.7				62.0				4	%			66.7				67.1				(1	%)
Economy			30.0				26.8				12	%			30.7				28.4				8	%
Total Average Daily LTL Shipments			94.7				88.8				7	%			97.4				95.5				2	%
Weight Per LTL Shipment (lbs)
Priority			1,189				1,287				(8	%)			1,189				1,262				(6	%)
Economy			1,152				1,007				14	%			1,154				1,010				14	%
Composite Weight Per LTL Shipment			1,177				1,203				(2	%)			1,178				1,187				(1	%)
LTL Revenue/Shipment
Priority		$	218.15			$	231.92				(6	%)		$	220.03			$	229.43				(4	%)
Economy			258.35				265.66				(3	%)			263.84				265.51				(1	%)
Composite LTL Revenue/Shipment		$	231.61			$	242.52				(4	%)		$	234.07			$	240.30				(3	%)
LTL Yield (Revenue/CWT)
Priority		$	18.35			$	18.02				2	%		$	18.51			$	18.18				2	%
Economy			22.42				26.38				(15	%)			22.86				26.29				(13	%)
Composite LTL Yield		$	19.67			$	20.17				(2	%)		$	19.87			$	20.24				(2	%)