EX-99.1 2 d745647dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

FedEx Corp. Reports Higher Fourth Quarter Earnings

Strong Earnings Growth Expected in Fiscal 2015

MEMPHIS, Tenn., June 18, 2014 … FedEx Corp. (NYSE: FDX) today reported earnings of $2.46 per diluted share for the fourth quarter ended May 31. Last year’s fourth quarter earnings were $2.13 per diluted share, excluding a $0.98 per diluted share business realignment program charge and a $0.20 per diluted share noncash aircraft impairment charge at FedEx Express. Including last year’s charges, earnings were $0.95 per diluted share.

“An outstanding fourth quarter helped FedEx post solid results for fiscal 2014, and we believe we are well positioned for a strong fiscal 2015,” said Frederick W. Smith, FedEx Corp. chairman, president and chief executive officer. “I would like to extend my sincere appreciation to the entire FedEx team for their contribution to our results and their continued commitment to providing outstanding service to our customers and connecting people and possibilities around the world.”

Fourth Quarter Results

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

 

    

Fiscal 2014

    

Fiscal 2013

         

Adjusted

(non-GAAP)

    

As Reported

(GAAP)

Revenue

   $11.8 billion      $11.4 billion      $11.4 billion

Operating Income

   $1.18 billion      $1.10 billion      $502 million

Operating Margin

   10.0%      9.6%      4.4%

Net Income

   $730 million      $679 million      $303 million

Diluted EPS

   $2.46      $2.13      $0.95

 

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1


Excluding business realignment program costs and aircraft impairment charges last year, operating results improved on higher volumes and operational efficiencies at FedEx Freight, increased volumes and yields at FedEx Ground, and better revenue and cost performance at FedEx Express.

During the fourth quarter, the company acquired 9.9 million shares of FedEx common stock, increasing the fiscal 2014 purchase total to 36.8 million shares. As of May 31, 2014, 5.3 million shares remained under the existing share repurchase authorizations. Share repurchases benefited fourth quarter earnings by $0.12 per diluted share.

Full Year Results

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

 

    

Fiscal 2014

  

Fiscal 2013

       

Adjusted

(non-GAAP)

  

As Reported

(GAAP)

Revenue

   $45.6 billion    $44.3 billion    $44.3 billion

Operating Income

   $3.45 billion    $3.21 billion    $2.55 billion

Operating Margin

   7.6%    7.3%    5.8%

Net Income

   $2.10 billion    $1.98 billion    $1.56 billion

Diluted EPS

   $6.75    $6.23    $4.91

Capital spending for fiscal 2014 was $3.5 billion.

Outlook

For fiscal 2015, FedEx projects earnings to be $8.50 to $9.00 per diluted share. The outlook assumes no net year-over-year fuel impact and continued moderate economic growth. Capital spending for fiscal 2015 is expected to increase to approximately $4.2 billion, which includes planned aircraft deliveries to support the company’s fleet modernization program and continued expansion of the FedEx Ground network.

“Fiscal 2014 was a good year for FedEx and we expect fiscal 2015 to be even better,” said Alan B. Graf, Jr., FedEx Corp. executive vice president and chief financial officer. “With continued modest economic improvement, our results in fiscal 2015 should benefit from base performance improvement and ongoing execution of our profit improvement initiatives at FedEx Express, continued profitable growth at FedEx Ground and FedEx Freight, and our share repurchase program. We remain committed to improving earnings, cash flows, returns on invested capital and returns to shareowners, with the most recent example of the latter being our announced 33% increase in the quarterly dividend.”

 

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FedEx Express Segment

For the fourth quarter, the FedEx Express segment reported:

 

    Revenue of $7.00 billion, up slightly from last year’s $6.98 billion

 

    Operating income of $475 million, up 3% from an adjusted $460 million a year ago. Including charges, last year’s operating income was $0.

 

    Operating margin of 6.8%, up from an adjusted 6.6% the previous year. Including charges, last year’s operating margin was 0.0%.

Revenue increased due to 2% higher package volume and higher base package yields, partially offset by the effects of one fewer operating day, lower fuel surcharges and lower express freight revenues. U.S. domestic average daily volume increased 3%, while U.S. domestic revenue per package was flat as lower fuel surcharges offset higher weight per package and favorable service mix. International export revenue per package grew 2%, as improved rates, higher weight per package and favorable service mix more than offset lower fuel surcharges. International export volume grew 2%, as FedEx International Economy grew 5% while FedEx International Priority® was flat despite reduced lower-yielding distribution services volume.

Operating results increased as higher base package yields and volume, along with lower pension expense, more than offset the significant negative net impact of fuel, lower freight revenue and one fewer operating day.

On May 1, 2014, Express completed the acquisition of Supaswift businesses in South Africa and six other countries: Botswana, Malawi, Mozambique, Namibia, Swaziland and Zambia. The acquisition of Supaswift will increase FedEx’s capabilities in one of the world’s most rapidly developing regions and offer tremendous opportunities for both local and international customers to access new markets.

 

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FedEx Ground Segment

For the fourth quarter, the FedEx Ground segment reported:

 

    Revenue of $3.01 billion, up 8% from last year’s $2.78 billion

 

    Operating income of $586 million, up 5% from an adjusted $557 million a year ago. Including charges, last year’s operating income was $464 million.

 

    Operating margin of 19.5%, down from an adjusted 20.1% the previous year. Including charges, last year’s operating margin was 16.7%.

FedEx Ground average daily volume grew 8% in the fourth quarter, primarily driven by growth in e-commerce. Revenue per package increased 2% due to rate increases and higher residential surcharges, partially offset by lower fuel surcharges. FedEx SmartPost average daily volume decreased 8% while net revenue per package was up 8% due to rate increases and improved customer mix, partially offset by higher postage costs.

Operating results benefited from higher Ground volume and revenue per package, partially offset by higher network expansion costs and one fewer operating day.

FedEx Freight Segment

For the fourth quarter, the FedEx Freight segment reported:

 

    Revenue of $1.55 billion, up 12% from last year’s $1.39 billion

 

    Operating income of $122 million, up 51% from an adjusted $81 million a year ago. Including charges, last year’s operating income was $38 million.

 

    Operating margin of 7.9%, up from an adjusted 5.8% the previous year. Including charges, last year’s operating margin was 2.7%.

Less-than-truckload (LTL) average daily shipments grew 12%, including a 14% increase in demand for Priority service. Weight per shipment grew 2%, driving a 1% increase in revenue per shipment.

Operating results improved due to the positive impacts of higher average daily shipments, higher weight per shipment and improved operational efficiencies, partially offset by one fewer operating day.

Effective June 2, 2014, FedEx Freight increased its published fuel surcharge indices by three percentage points.

 

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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 $46 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 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 fourth quarter fiscal 2014 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 18 are available on the company’s website at investors.fedex.com. A replay of the conference call webcast will be posted on our Web site following the call.

Certain statements in this press release may be considered forward-looking statements, such as statements relating to management’s views with respect to future events and financial performance. Such forward-looking statements are subject to risks, uncertainties and other factors which could cause actual results to differ materially from historical experience or from future results expressed or implied by such forward-looking statements. Potential risks and uncertainties include, but are not limited to, economic conditions in the global markets in which we operate, our ability to execute on our profit improvement program at FedEx Express, 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: Patrick Fitzgerald 901-818-7300

Investor Contact: Mickey Foster 901-818-7468

Home Page: fedex.com

 

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RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

TO GAAP FINANCIAL MEASURES

The company believes that meaningful analysis of our financial performance requires an understanding of the factors underlying that performance and our judgments about the likelihood that particular factors will repeat. Excluding charges associated with the business realignment program and a noncash aircraft impairment charge at FedEx Express from prior period results will allow for more accurate comparisons of the company’s 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.

Fourth Quarter Fiscal 2013

 

     FedEx Corporation  
Dollars in millions, except EPS    Operating     Net     Diluted
Earnings
 
     Income     Margin     Income     Per Share  

Non-GAAP Measure

   $ 1,098        9.6%      $ 679      $ 2.13   

Business Realignment Program

     (496     (4.3%     (313     (0.98

Aircraft Impairment

     (100     (0.9%     (63     (0.20
  

 

 

   

 

 

   

 

 

   

 

 

 

GAAP Measure

   $ 502        4.4%      $ 303      $ 0.95   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

Dollars in millions, except EPS    FedEx Express
Operating
    FedEx Ground
Operating
    FedEx Freight
Operating
 
     Income     Margin     Income     Margin     Income     Margin  

Non-GAAP Measure

   $ 460        6.6%      $ 557        20.1%      $ 81        5.8%   

Business Realignment Program

     (360     (5.2%     (93     (3.4%     (43     (3.1%

Aircraft Impairment

     (100     (1.4%     —          —          —          —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

GAAP Measure

   $ 0        0.0%      $ 464        16.7%      $ 38        2.7%   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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Full Year Fiscal 2013

 

     FedEx Corporation  
Dollars in millions, except EPS    Operating     Net     Diluted
Earnings
 
      
   Income     Margin     Income     Per Share1  

Non-GAAP Measure

   $ 3,211        7.3%      $ 1,977      $ 6.23   

Business Realignment Program

     (560     (1.3%     (353     (1.11

Aircraft Impairment

     (100     (0.2%     (63     (0.20
  

 

 

   

 

 

   

 

 

   

 

 

 

GAAP Measure

   $ 2,551        5.8%      $ 1,561      $ 4.91   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

1 –

Does not sum to total due to rounding.

# # #

 

7


FEDEX CORP. FINANCIAL HIGHLIGHTS

Fourth Quarter Fiscal 2014

(In millions, except earnings per share)

(Unaudited)

 

     Three Months Ended
May 31
    Twelve Months Ended
May 31
 
     2014     2013     %     2014     2013     %  

Revenue:

            

FedEx Express segment

   $ 6,998      $ 6,977        —        $ 27,121      $ 27,171        —     

FedEx Ground segment

     3,007        2,776        8%        11,617        10,578        10%   

FedEx Freight segment

     1,552        1,388        12%        5,757        5,401        7%   

FedEx Services segment

     402        406        (1%     1,536        1,580        (3%

Other & eliminations

     (120     (112     (7%     (464     (443     (5%
  

 

 

   

 

 

     

 

 

   

 

 

   

Total Revenue

     11,839        11,435        4%        45,567        44,287        3%   

Operating Expenses:

            

Salaries and employee benefits

     4,163        4,192        (1%     16,555        16,570        —     

Purchased transportation

     2,029        1,861        9%        8,011        7,272        10%   

Rentals and landing fees

     672        633        6%        2,622        2,521        4%   

Depreciation and amortization

     649        622        4%        2,587        2,386        8%   

Fuel

     1,154        1,158        —          4,557        4,746        (4%

Maintenance and repairs

     465        432        8%        1,862        1,909        (2%

Business realignment, impairment and other charges

     —          596        NM        —          660        NM   

Other

     1,524        1,439        6%        5,927        5,672        4%   
  

 

 

   

 

 

     

 

 

   

 

 

   

Total Operating Expenses

     10,656        10,933        (3%     42,121        41,736        1%   

Operating Income:

            

FedEx Express segment

     475        —          NM        1,172        555        111%   

FedEx Ground segment

     586        464        26%        1,955        1,788        9%   

FedEx Freight segment

     122        38        221%        319        208        53%   
  

 

 

   

 

 

     

 

 

   

 

 

   

Total Operating Income

     1,183        502        136%        3,446        2,551        35%   

Other (Expense) Income:

            

Interest, net

     (47     (24     NM        (142     (61     NM   

Other, net

     1        (6     NM        (15     (35     NM   
  

 

 

   

 

 

     

 

 

   

 

 

   

Total Other (Expense) Income

     (46     (30     NM        (157     (96     NM   

Pretax Income

     1,137        472        141%        3,289        2,455        34%   

Provision for Income Taxes

     407        169        141%        1,192        894        33%   
  

 

 

   

 

 

     

 

 

   

 

 

   

Net Income

   $ 730      $ 303        141%      $ 2,097      $ 1,561        34%   
  

 

 

   

 

 

     

 

 

   

 

 

   

Diluted Earnings Per Share

   $ 2.46      $ 0.95        159%      $ 6.75      $ 4.91        37%   
  

 

 

   

 

 

     

 

 

   

 

 

   

Weighted Average Diluted Common and Common Equivalent Shares

     296        319        (7%     310        317        (2%

Capital Expenditures

   $ 979      $ 945        4%      $ 3,533      $ 3,375        5%   

 

8


FEDEX CORP. CONDENSED CONSOLIDATED BALANCE SHEETS

Fourth Quarter Fiscal 2014

(In millions)

(Current period is unaudited)

 

     May 31, 2014     May 31, 2013  
ASSETS     

Current Assets

    

Cash and cash equivalents

   $ 2,908      $ 4,917   

Receivables, less allowances

     5,460        5,044   

Spare parts, supplies and fuel, less allowances

     463        457   

Deferred income taxes

     522        533   

Prepaid expenses and other

     330        323   
  

 

 

   

 

 

 

Total current assets

     9,683        11,274   

Property and Equipment, at Cost

     40,691        38,109   

Less accumulated depreciation and amortization

     21,141        19,625   
  

 

 

   

 

 

 

Net property and equipment

     19,550        18,484   

Other Long-Term Assets

    

Goodwill

     2,790        2,755   

Other assets

     1,047        1,054   
  

 

 

   

 

 

 

Total other long-term assets

     3,837        3,809   
  

 

 

   

 

 

 
   $ 33,070      $ 33,567   
  

 

 

   

 

 

 
LIABILITIES AND STOCKHOLDERS’ INVESTMENT     

Current Liabilities

    

Current portion of long-term debt

   $ 1      $ 251   

Accrued salaries and employee benefits

     1,277        1,688   

Accounts payable

     1,971        1,879   

Accrued expenses

     2,063        1,932   
  

 

 

   

 

 

 

Total current liabilities

     5,312        5,750   

Long-Term Debt, Less Current Portion

     4,736        2,739   

Other Long-Term Liabilities

    

Deferred income taxes

     2,114        1,652   

Pension, postretirement healthcare and other benefit obligations

     3,484        3,916   

Self-insurance accruals

     1,038        987   

Deferred lease obligations

     758        778   

Deferred gains, principally related to aircraft transactions

     206        227   

Other liabilities

     145        120   
  

 

 

   

 

 

 

Total other long-term liabilities

     7,745        7,680   

Commitments and Contingencies

    

Common Stockholders’ Investment

    

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

     32        32   

Additional paid-in capital

     2,643        2,668   

Retained earnings

     20,429        18,519   

Accumulated other comprehensive loss

     (3,694     (3,820

Treasury stock, at cost

     (4,133     (1
  

 

 

   

 

 

 

Total common stockholders’ investment

     15,277        17,398   
  

 

 

   

 

 

 
   $ 33,070      $ 33,567   
  

 

 

   

 

 

 

 

9


FEDEX CORP. CONDENSED CONSOLIDATED

STATEMENTS OF CASH FLOWS

Fourth Quarter Fiscal 2014

(In millions)

(Current period is unaudited)

 

     Year Ended May 31  
     2014     2013  

Operating Activities:

    

Net income

   $ 2,097      $ 1,561   

Noncash charges:

    

Depreciation and amortization

     2,587        2,386   

Other, net

     828        1,276   

Changes in operating assets and liabilities, net

     (1,248     (535
  

 

 

   

 

 

 

Cash provided by operating activities

     4,264        4,688   

Investing Activities:

    

Capital expenditures

     (3,533     (3,375

Business acquisitions, net of cash acquired

     (36     (483

Proceeds from asset dispositions and other

     18        55   
  

 

 

   

 

 

 

Cash used in investing activities

     (3,551     (3,803

Financing Activities:

    

Principal payments on debt

     (254     (417

Proceeds from debt issuances

     1,997        1,739   

Dividends paid

     (187     (177

Purchase of treasury stock

     (4,857     (246

Other, net

     582        285   
  

 

 

   

 

 

 

Cash (used in) provided by financing activities

     (2,719     1,184   

Effect of exchange rate changes on cash

     (3     5   
  

 

 

   

 

 

 

Net increase in cash and cash equivalents

     (2,009     2,074   

Cash and cash equivalents at beginning of period

     4,917        2,843   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 2,908      $ 4,917   
  

 

 

   

 

 

 

 

10


FEDEX EXPRESS SEGMENT FINANCIAL HIGHLIGHTS

Fourth Quarter Fiscal 2014

(Dollars in millions)

(Unaudited)

 

     Three Months Ended May 31     Twelve Months Ended May 31  
     2014      2013      %     2014      2013      %  

Revenues:

                

Package Revenue:

                

U.S. Overnight Box

   $ 1,703       $ 1,691         1%      $ 6,555       $ 6,513         1%   

U.S. Overnight Envelope

     426         453         (6%     1,636         1,705         (4%
  

 

 

    

 

 

      

 

 

    

 

 

    

Total U.S. Overnight

     2,129         2,144         (1%     8,191         8,218         —     

U.S. Deferred

     819         774         6%        3,188         3,020         6%   
  

 

 

    

 

 

      

 

 

    

 

 

    

Total U.S. Package Revenue

     2,948         2,918         1%        11,379         11,238         1%   
  

 

 

    

 

 

      

 

 

    

 

 

    

International Priority

     1,691         1,680         1%        6,451         6,586         (2%

International Economy

     590         554         6%        2,229         2,046         9%   
  

 

 

    

 

 

      

 

 

    

 

 

    

Total International Export Package

     2,281         2,234         2%        8,680         8,632         1%   

International Domestic1

     369         363         2%        1,446         1,398         3%   
  

 

 

    

 

 

      

 

 

    

 

 

    

Total Package Revenue

     5,598         5,515         2%        21,505         21,268         1%   

Freight Revenue:

                

U.S.

     569         639         (11%     2,355         2,562         (8%

International Priority

     410         409         —          1,594         1,678         (5%

International Airfreight

     48         61         (21%     205         276         (26%
  

 

 

    

 

 

      

 

 

    

 

 

    

Total Freight Revenue

     1,027         1,109         (7%     4,154         4,516         (8%

Other Revenue2

     373         353         6%        1,462         1,387         5%   
  

 

 

    

 

 

      

 

 

    

 

 

    

Total Express Revenue

   $ 6,998       $ 6,977         —        $ 27,121       $ 27,171         —     

Operating Expenses:

                

Salaries and employee benefits

     2,496         2,545         (2%     9,914         10,045         (1%

Purchased transportation

     635         603         5%        2,511         2,331         8%   

Rentals and landing fees

     432         422         2%        1,705         1,684         1%   

Depreciation and amortization

     372         357         4%        1,488         1,350         10%   

Fuel

     991         1,004         (1%     3,943         4,130         (5%

Maintenance and repairs

     294         261         13%        1,182         1,244         (5%

Business realignment, impairment and other charges3

     —           229         NM        —           243         NM   

Intercompany charges4

     513         759         (32%     2,027         2,379         (15%

Other5

     790         797         (1%     3,179         3,210         (1%
  

 

 

    

 

 

      

 

 

    

 

 

    

Total Operating Expenses

     6,523         6,977         (7%     25,949         26,616         (3%
  

 

 

    

 

 

      

 

 

    

 

 

    

Operating Income

   $ 475         —           NM      $ 1,172       $ 555         NM   
  

 

 

    

 

 

      

 

 

    

 

 

    

Operating Margin

     6.8%         0.0%         6.8 pts        4.3%         2.0%         2.3 pts   

 

1 –

International Domestic revenues represent international intra-country express operations, including countries such as Mexico, Brazil and our recent acquisition in Southern Africa (May 2014).

2 –

Includes FedEx Trade Networks and FedEx SupplyChain Systems.

3 –

2013 includes $129 million for the fourth quarter and $143 million for the full year of predominantly severance costs associated with the company’s voluntary buyout program and $100 million for both the fourth quarter and full year resulting from the decision to retire 10 aircraft and related engines.

4 –

Includes allocations of $231 million in the fourth quarter of 2013 and $262 million for the full year for business realignment costs.

5 –

Includes predominately costs associated with outside service contracts (such as security, facility services and cargo handling), professional fees, uniforms, insurance and advertising.

 

11


FEDEX EXPRESS SEGMENT OPERATING HIGHLIGHTS

Fourth Quarter Fiscal 2014

(Unaudited)

 

     Three Months Ended
May 31
    Twelve Months Ended
May 31
 
     2014      2013      %     2014      2013      %  
PACKAGE STATISTICS1                 

Average Daily Package Volume (000s):

                

U.S. Overnight Box

     1,195         1,131         6%        1,164         1,134         3%   

U.S. Overnight Envelope

     539         586         (8%     538         574         (6%
  

 

 

    

 

 

      

 

 

    

 

 

    

Total U.S. Overnight Package

     1,734         1,717         1%        1,702         1,708         —     

U.S. Deferred

     864         811         7%        869         835         4%   
  

 

 

    

 

 

      

 

 

    

 

 

    

Total U.S. Domestic Package

     2,598         2,528         3%        2,571         2,543         1%   
  

 

 

    

 

 

      

 

 

    

 

 

    

International Priority

     416         415         —          410         421         (3%

International Economy

     173         164         5%        170         155         10%   
  

 

 

    

 

 

      

 

 

    

 

 

    

Total International Export Package

     589         579         2%        580         576         1%   

International Domestic2

     813         796         2%        819         785         4%   
  

 

 

    

 

 

      

 

 

    

 

 

    

Total Average Daily Packages

     4,000         3,903         2%        3,970         3,904         2%   
  

 

 

    

 

 

      

 

 

    

 

 

    

Yield (Revenue Per Package):

                

U.S. Overnight Box

   $ 22.26       $ 22.99         (3%   $ 22.18       $ 22.52         (2%

U.S. Overnight Envelope

     12.36         11.91         4%        11.97         11.66         3%   
  

 

 

    

 

 

      

 

 

    

 

 

    

U.S. Overnight Composite

     19.18         19.21         —          18.95         18.87         —     

U.S. Deferred

     14.81         14.67         1%        14.44         14.18         2%   
  

 

 

    

 

 

      

 

 

    

 

 

    

U.S. Domestic Composite

     17.73         17.76         —          17.42         17.33         1%   
  

 

 

    

 

 

      

 

 

    

 

 

    

International Priority

     63.57         62.32         2%        61.88         61.28         1%   

International Economy

     53.21         51.90         3%        51.75         51.77         —     
  

 

 

    

 

 

      

 

 

    

 

 

    

Total International Export Composite

     60.52         59.37         2%        58.92         58.72         —     

International Domestic2

     7.10         7.02         1%        6.95         6.99         (1%
  

 

 

    

 

 

      

 

 

    

 

 

    

Composite Package Yield

   $ 21.87       $ 21.74         1%      $ 21.32       $ 21.36         —     
  

 

 

    

 

 

      

 

 

    

 

 

    
FREIGHT STATISTICS1                 

Average Daily Freight Pounds (000s):

                

U.S.

     7,865         7,363         7%        7,854         7,612         3%   

International Priority

     2,936         2,899         1%        2,922         3,048         (4%

International Airfreight

     677         961         (30%     798         1,066         (25%
  

 

 

    

 

 

      

 

 

    

 

 

    

Total Avg Daily Freight Pounds

     11,478         11,223         2%        11,574         11,726         (1%
  

 

 

    

 

 

      

 

 

    

 

 

    

Revenue Per Freight Pound:

                

U.S.

   $ 1.13       $ 1.33         (15%   $ 1.18       $ 1.32         (11%

International Priority

     2.18         2.18         —          2.15         2.16         —     

International Airfreight

     1.12         0.97         15%        1.01         1.01         —     
  

 

 

    

 

 

      

 

 

    

 

 

    

Composite Freight Yield

   $ 1.40       $ 1.52         (8%   $ 1.41       $ 1.51         (7%
  

 

 

    

 

 

      

 

 

    

 

 

    

Operating Weekdays

     64         65         (2%     254         255         —     

 

1 – Package and freight statistics include only the operations of FedEx Express.
2 – International Domestic revenues represent international intra-country express operations, including countries such as Mexico, Brazil and our recent acquisition in Southern Africa (May 2014).

 

12


FEDEX GROUND SEGMENT FINANCIAL AND OPERATING HIGHLIGHTS

Fourth Quarter Fiscal 2014

(Dollars in millions)

(Unaudited)

 

     Three Months Ended
May 31
    Twelve Months Ended
May 31
 
     2014      2013      %     2014      2013      %  
FINANCIAL HIGHLIGHTS                 

Revenues:

                

FedEx Ground

   $ 2,776       $ 2,540         9%      $ 10,634       $ 9,652         10%   

FedEx SmartPost

     231         236         (2%     983         926         6%   
  

 

 

    

 

 

      

 

 

    

 

 

    

Total Revenues

     3,007         2,776         8%        11,617         10,578         10%   

Operating Expenses:

                

Salaries and employee benefits

     437         408         7%        1,756         1,586         11%   

Purchased transportation

     1,159         1,067         9%        4,635         4,191         11%   

Rentals

     103         86         20%        402         331         21%   

Depreciation and amortization

     118         110         7%        468         434         8%   

Fuel

     3         4         (25%     17         17         —     

Maintenance and repairs

     56         50         12%        222         190         17%   

Intercompany charges1

     290         354         (18%     1,154         1,148         1%   

Other2

     255         233         9%        1,008         893         13%   
  

 

 

    

 

 

      

 

 

    

 

 

    

Total Operating Expenses

     2,421         2,312         5%        9,662         8,790         10%   
  

 

 

    

 

 

      

 

 

    

 

 

    

Operating Income

   $ 586       $ 464         26%      $ 1,955       $ 1,788         9%   
  

 

 

    

 

 

      

 

 

    

 

 

    

Operating Margin

     19.5%         16.7%         2.8 pts        16.8%         16.9%         (0.1 pts
OPERATING STATISTICS                 

Operating Weekdays

                

FedEx Ground

     64         65         (2%     254         255         —     

FedEx SmartPost

     64         65         (2%     252         254         (1%

Average Daily Package Volume (000s)

                

FedEx Ground

     4,597         4,246         8%        4,588         4,222         9%   

FedEx SmartPost

     1,920         2,078         (8%     2,186         2,058         6%   

Yield (Revenue Per Package)

                

FedEx Ground

   $ 9.41       $ 9.19         2%      $ 9.10       $ 8.94         2%   

FedEx SmartPost

   $ 1.88       $ 1.74         8%      $ 1.78       $ 1.77         1%   

 

1 – Includes allocations of $93 million in the fourth quarter of 2013 and $105 million for the full year for business realignment costs.
2 – Includes predominately costs associated with outside service contracts (such as security and facility services), insurance and professional fees.

 

13


FEDEX FREIGHT SEGMENT FINANCIAL AND OPERATING HIGHLIGHTS

Fourth Quarter Fiscal 2014

(Dollars in millions)

(Unaudited)

 

     Three Months Ended
May 31
    Twelve Months Ended
May 31
 
     2014      2013      %     2014      2013      %  
FINANCIAL HIGHLIGHTS                 

Revenue

   $ 1,552       $ 1,388         12%      $ 5,757       $ 5,401         7%   

Operating Expenses:

                

Salaries and employee benefits

     637         592         8%        2,444         2,342         4%   

Purchased transportation

     266         218         22%        981         865         13%   

Rentals

     37         30         23%        131         118         11%   

Depreciation and amortization

     59         57         4%        231         217         6%   

Fuel

     159         151         5%        595         598         (1%

Maintenance and repairs

     45         49         (8%     179         191         (6%

Business realignment, impairment and other charges1

     —           2         NM        —           3         NM   

Intercompany charges2

     112         154         (27%     461         484         (5%

Other3

     115         97         19%        416         375         11%   
  

 

 

    

 

 

      

 

 

    

 

 

    

Total Operating Expenses

     1,430         1,350         6%        5,438         5,193         5%   
  

 

 

    

 

 

      

 

 

    

 

 

    

Operating Income

   $ 122       $ 38         NM      $ 319       $ 208         53%   
  

 

 

    

 

 

      

 

 

    

 

 

    

Operating Margin

     7.9%         2.7%         5.2 pts        5.5%         3.9%         1.6 pts   
OPERATING STATISTICS                 

LTL Operating Weekdays

     64         65         (2%     252         253         —     

Average Daily LTL Shipments (000s)

                

Priority

     67.0         58.8         14%        62.9         59.3         6%   

Economy

     28.7         26.8         7%        27.7         26.4         5%   
  

 

 

    

 

 

      

 

 

    

 

 

    

Total Average Daily LTL Shipments

     95.7         85.6         12%        90.6         85.7         6%   

Weight Per LTL Shipment (lbs)

                

Priority

     1,280         1,272         1%        1,262         1,237         2%   

Economy

     1,013         981         3%        1,000         990         1%   
  

 

 

    

 

 

      

 

 

    

 

 

    

Composite Weight Per LTL Shipment

     1,200         1,181         2%        1,182         1,161         2%   

LTL Revenue/Shipment

                

Priority

   $ 225.29       $ 222.69         1%      $ 223.61       $ 220.32         1%   

Economy

     260.71         253.87         3%        258.05         256.38         1%   
  

 

 

    

 

 

      

 

 

    

 

 

    

Composite LTL Revenue/Shipment

   $ 235.91       $ 232.45         1%      $ 234.23       $ 231.52         1%   

LTL Revenue/CWT

                

Priority

   $ 17.60       $ 17.50         1%      $ 17.73       $ 17.80         —     

Economy

     25.73         25.87         (1%     25.80         25.90         —     
  

 

 

    

 

 

      

 

 

    

 

 

    

Composite LTL Revenue/CWT

   $ 19.66       $ 19.68         —        $ 19.82       $ 19.94         (1%

 

1 – 2013 includes severance costs associated with the company’s voluntary buyout program.
2 – Includes allocations of $41 million in the fourth quarter of 2013 and $47 million for the full year for business realignment costs.
3 – Includes predominately costs associated with insurance, professional fees and outside service contracts (such as security and facility services).

 

14