-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GbtyJvR72phECEvhROyIrNfYby9xQ7L2IgVjcmv69SwPaXcYbmgUAvEvypPxNAim ludFnxlUKXG0RYYMVItRqQ== /in/edgar/work/0000912057-00-044395/0000912057-00-044395.txt : 20001012 0000912057-00-044395.hdr.sgml : 20001012 ACCESSION NUMBER: 0000912057-00-044395 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20000831 FILED AS OF DATE: 20001011 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FEDEX CORP CENTRAL INDEX KEY: 0001048911 STANDARD INDUSTRIAL CLASSIFICATION: [4513 ] IRS NUMBER: 621721435 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-15829 FILM NUMBER: 738172 BUSINESS ADDRESS: STREET 1: 942 SOUTH SHADY GROVE ROAD CITY: MEMPHIS STATE: TN ZIP: 38120- BUSINESS PHONE: 9013693600 MAIL ADDRESS: STREET 1: 6075 POPLAR AVENUE CITY: MEMPHIS STATE: TN ZIP: 38119 FORMER COMPANY: FORMER CONFORMED NAME: FDX CORP DATE OF NAME CHANGE: 19971103 10-Q 1 a2027245z10-q.txt 10-Q ================================================================================ FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 (Mark One) /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED AUGUST 31, 2000, OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______ TO ______. COMMISSION FILE NUMBER: 1-15829 FEDEX CORPORATION (Exact name of registrant as specified in its charter) Delaware 62-1721435 (State of incorporation) (I.R.S. Employer Identification No.) 942 South Shady Grove Road Memphis, Tennessee 38120 (Address of principal (Zip Code) executive offices) (901) 818-7200 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes /X/ No / / Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock Outstanding Shares at September 30, 2000 Common Stock, par value $.10 per share 285,037,989 ================================================================================ FEDEX CORPORATION INDEX
PART I. FINANCIAL INFORMATION PAGE ITEM 1: Financial Statements Condensed Consolidated Balance Sheets August 31, 2000 and May 31, 2000............................. 3-4 Condensed Consolidated Statements of Income Three Months Ended August 31, 2000 and August 31, 1999....... 5 Condensed Consolidated Statements of Cash Flows Three Months Ended August 31, 2000 and August 31, 1999....... 6 Notes to Condensed Consolidated Financial Statements........... 7-10 Review of Condensed Consolidated Financial Statements by Independent Public Accountants............................ 11 Report of Independent Public Accountants....................... 12 ITEM 2: Management's Discussion and Analysis of Results of Operations and Financial Condition........................ 13-20 ITEM 3: Quantitative and Qualitative Disclosures About Market Risk.. 20 PART II. OTHER INFORMATION ITEM 4: Submission of Matters to a Vote of Security Holders......... 21 ITEM 6: Exhibits and Reports on Form 8-K............................ 21 Signatures..................................................... 22 EXHIBIT INDEX.................................................. E-1
- 2 - PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS FEDEX CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS AUGUST 31, 2000 MAY 31, (UNAUDITED) 2000 ----------- ----------- (IN THOUSANDS) Current Assets: Cash and cash equivalents........................$ 176,589 $ 67,959 Receivables, less allowances of $91,020,000 and $85,972,000.................... 2,588,118 2,547,043 Spare parts, supplies and fuel................... 260,459 255,291 Deferred income taxes............................ 309,373 317,784 Prepaid expenses and other....................... 74,582 96,667 ----------- ----------- Total current assets......................... 3,409,121 3,284,744 Property and Equipment, at Cost....................... 15,019,373 14,742,543 Less accumulated depreciation and amortization... 7,902,302 7,659,016 ----------- ----------- Net property and equipment................... 7,117,071 7,083,527 Other Assets: Goodwill......................................... 494,878 500,547 Other............................................ 736,689 658,293 ----------- ----------- Total other assets........................... 1,231,567 1,158,840 ----------- ----------- $11,757,759 $11,527,111 =========== ===========
See accompanying Notes to Condensed Consolidated Financial Statements. - 3 - FEDEX CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS LIABILITIES AND STOCKHOLDERS' INVESTMENT
AUGUST 31, 2000 MAY 31, (UNAUDITED) 2000 ----------- ----------- (IN THOUSANDS) Current Liabilities: Current portion of long-term debt................$ 23,070 $ 6,537 Accrued salaries and employee benefits........... 671,550 755,747 Accounts payable................................. 1,101,781 1,120,855 Accrued expenses................................. 1,040,491 1,007,887 ----------- ----------- Total current liabilities.................... 2,836,892 2,891,026 Long-Term Debt, Less Current Portion.................. 1,894,854 1,776,253 Deferred Income Taxes................................. 306,000 344,613 Other Liabilities..................................... 1,758,451 1,729,976 Commitments (Note 6) Common Stockholders' Investment: Common Stock, $.10 par value; 800,000,000 shares authorized, 298,573,387 issued....................................... 29,857 29,857 Additional paid-in capital....................... 1,078,657 1,079,462 Retained earnings ............................... 4,460,782 4,295,041 Treasury stock, at cost; deferred compensation and other...................................... (572,623) (583,043) Accumulated other comprehensive income........... (35,111) (36,074) ----------- ---------- Total common stockholders' investment........ 4,961,562 4,785,243 ----------- ----------- $11,757,759 $11,527,111 =========== ===========
See accompanying Notes to Condensed Consolidated Financial Statements. - 4 - FEDEX CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS ENDED AUGUST 31, --------------------------- 2000 1999 ---------- ---------- (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Revenues.........................................$4,778,736 $4,319,977 Operating Expenses: Salaries and employee benefits.............. 1,994,762 1,830,833 Purchased transportation.................... 434,877 390,308 Rentals and landing fees.................... 390,685 366,707 Depreciation and amortization............... 302,697 277,262 Fuel........................................ 249,994 184,460 Maintenance and repairs..................... 310,184 255,269 Other....................................... 784,570 731,331 ---------- ---------- 4,467,769 4,036,170 ---------- ---------- Operating Income................................. 310,967 283,807 Other Income (Expense): Interest, net............................... (32,793) (20,608) Other, net.................................. (3,929) (319) ---------- ---------- (36,722) (20,927) ---------- ---------- Income Before Income Taxes....................... 274,245 262,880 Provision for Income Taxes....................... 105,585 103,846 ---------- ---------- Net Income.......................................$ 168,660 $ 159,034 ========== ========== Earnings per common share: Basic.......................................$ 0.59 $ 0.53 ========== ========== Assuming dilution...........................$ 0.58 $ 0.52 ========== ==========
See accompanying Notes to Condensed Consolidated Financial Statements. - 5 - FEDEX CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED ------------------------ AUGUST 31, AUGUST 31, 2000 1999 ----------- ----------- (IN THOUSANDS) Net Cash Provided by Operating Activities...........$ 312,188 $ 330,120 Investing Activities: Purchases of property and equipment............ (340,681) (358,195) Proceeds from disposition of property and equipment: Reimbursements of A300 and MD11 deposits... - 22,377 Other dispositions......................... 7,725 83,448 Other, net..................................... (9,302) (6,259) ----------- ----------- Net cash used in investing activities............... (342,258) (258,629) Financing Activities: Proceeds from debt issuances................... 134,828 - Principal payments on debt..................... (27) (12,532) Proceeds from stock issuances.................. 3,472 5,631 Other, net..................................... 427 (10,190) ----------- ----------- Net cash provided by (used in) financing activities. 138,700 (17,091) ----------- ----------- Net increase in cash and cash equivalents........... 108,630 54,400 Cash and cash equivalents at beginning of period.... 67,959 325,323 ----------- ----------- Cash and cash equivalents at end of period..........$ 176,589 $ 379,723 =========== =========== Cash payments for: Interest (net of capitalized interest).........$ 34,619 $ 24,323 =========== =========== Income taxes...................................$ 111,462 $ 16,961 =========== =========== Non-cash investing and financing activities: Fair value of assets surrendered under exchange agreements (with two airlines)......$ - $ 11,670 Fair value of assets acquired under exchange agreements.......................... 1,779 9,674 ----------- ----------- Fair value of assets surrendered (under) over fair value of assets acquired................$ (1,779) $ 1,996 =========== ===========
See accompanying Notes to Condensed Consolidated Financial Statements. - 6 - FEDEX CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES These interim financial statements of FedEx Corporation (the "Company") have been prepared in accordance with generally accepted accounting principles for interim financial information, the instructions to Quarterly Report on Form 10-Q and Rule 10-01 of Regulation S-X, and should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended May 31, 2000. Accordingly, significant accounting policies and other disclosures normally provided have been omitted since such items are disclosed therein. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments necessary to present fairly the consolidated financial position of the Company as of August 31, 2000 and the consolidated results of its operations and cash flows for the three-month periods ended August 31, 2000 and 1999. Operating results for the three-month period ended August 31, 2000 are not necessarily indicative of the results that may be expected for the year ending May 31, 2001. In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities," as amended by SFAS No. 137, which is effective for fiscal years beginning after June 15, 2000. The Statement requires an entity to recognize all derivatives as either assets or liabilities in the balance sheet and to measure those instruments at fair value. The impact, if any, on earnings, comprehensive income and financial position of the adoption of SFAS No. 133 will depend on the amount, timing and nature of any agreements entered into by the Company. Management has not yet completed its estimate of the effect of the adoption of this Statement. The Company has entered into contracts on behalf of its subsidiary Federal Express Corporation ("FedEx Express") that are designed to limit its exposure to fluctuations in jet fuel prices. Under these contracts, the Company makes (or receives) payments based on the difference between a fixed price and the market price of jet fuel, as determined by an index of spot market prices representing various geographic regions. The difference is recorded as an increase or decrease in fuel expense. Under jet fuel hedging contracts, the Company will receive $26,933,786 for the first quarter of 2001. As of August 31, 2000, contracts in place to fix the price of jet fuel cover a total notional volume of 272,414,000 gallons through the second quarter of 2002. Based on current market prices, the fair value of these jet fuel hedging contracts was an asset of approximately $79,365,000 at August 31, 2000. As of September 26, 2000, contracts in place to fix the price of jet fuel cover approximately 40% of the expected jet fuel usage for 2001 and approximately 18% through the third quarter of 2002. Certain prior period amounts have been reclassified to conform to the current presentation. - 7 - (2) COMPREHENSIVE INCOME The following table provides a reconciliation of net income reported in the Company's consolidated financial statements to comprehensive income:
THREE MONTHS ENDED AUGUST 31, ------------------- 2000 1999 ---- ---- (IN THOUSANDS) Net income............................................ $168,660 $159,034 Other comprehensive income: Unrealized gain (loss) on available-for-sale securities, net of deferred taxes of $1,830,000 and deferred tax benefit of $1,572,000............. 2,948 (2,459) Foreign currency translation adjustments, net of deferred tax benefit of $1,263,000 and deferred taxes of $154,000........................ (1,985) 1,169 -------- -------- Comprehensive income................................ $169,623 $157,744 ======== ========
(3) FINANCING ARRANGEMENTS Commercial paper in the amount of $657,000,000 was outstanding at August 31, 2000. Interest rates on these borrowings approximate 6.7%. The commercial paper is classified as Long-Term Debt based on the Company's ability and intent to refinance this instrument with long-term debt. The Company has a $1,000,000,000 revolving credit agreement with domestic and foreign banks. The revolving credit agreement comprises two parts. The first part provides for a commitment of $800,000,000 through January 27, 2003. The second part provides for a 364-day commitment of $200,000,000 through September 30, 2001. Interest rates on borrowings under this agreement are generally determined by maturities selected and prevailing market conditions. The commercial paper borrowings, which are backed by unused commitments under the revolving credit agreement, reduce the amount available under the revolving credit agreement. At August 31, 2000, $343,000,000 of the commitment amount was available. - 8 - (4) COMPUTATION OF EARNINGS PER SHARE The calculation of basic and diluted earnings per share for the three-month periods ended August 31, 2000 and 1999 was as follows (in thousands, except per share amounts):
THREE MONTHS ENDED AUGUST 31, ------------------------- 2000 1999 -------- -------- Net income applicable to common stockholders................................. $168,660 $159,034 ======== ======== Weighted-average shares of common stock outstanding.................................. 284,715 298,170 ======== ======== Basic earnings per share........................ $ 0.59 $ 0.53 ======== ======== Weighted-average shares of common stock outstanding.................................. 284,715 298,170 Common equivalent shares: Assumed exercise of outstanding dilutive options........................... 14,319 13,207 Less shares repurchased from proceeds of assumed exercise of options............. (10,309) (7,535) -------- -------- Weighted-average common and common equivalent shares........................... 288,725 303,842 ======== ======== Earnings per share, assuming dilution.......... $ 0.58 $ 0.52 ======== ========
(5) BUSINESS SEGMENT INFORMATION FedEx Corporation is a global transportation and logistics provider whose operations are primarily represented by FedEx Express, the world's largest express transportation company, and FedEx Ground Package System, Inc. ("FedEx Ground"), a ground small-package carrier. These operating companies comprise the Company's reportable segments. Included within "Other" are the operations of FedEx Global Logistics,Inc., a contract logistics provider; FedEx Custom Critical,Inc., a critical-shipment carrier; FedEx Trade Networks,Inc., a global trade services company; and Viking Freight,Inc., a less-than-truckload carrier operating principally in the western United States. Other also includes certain unallocated corporate items. The following table provides a reconciliation of reportable segment revenues and operating income to the Company's consolidated financial statement totals (in thousands):
THREE MONTHS ENDED AUGUST 31, ----------------------- 2000 1999 ---------- ---------- Revenue FedEx Express................................$3,915,681 $3,586,806 FedEx Ground................................. 542,813 475,896 Other........................................ 320,242 257,275 ---------- ---------- $4,778,736 $4,319,977 ========== ========== Operating income FedEx Express................................$ 257,728 $ 208,943 FedEx Ground................................. 43,012 50,513 Other........................................ 10,227 24,351 ---------- ---------- $ 310,967 $ 283,807 ========== ==========
- 9 - (6) COMMITMENTS As of August 31, 2000, the Company's purchase commitments for the remainder of 2001 and annually thereafter under various contracts are as follows (in thousands):
AIRCRAFT- AIRCRAFT RELATED(1) OTHER(2) TOTAL -------- ---------- -------- -------- 2001 (remainder) $207,700 $315,900 $353,500 $877,100 2002 235,100 429,500 18,000 682,600 2003 342,400 457,400 8,000 807,800 2004 271,200 417,800 7,600 696,600 2005 256,100 453,700 7,600 717,400
(1) Primarily aircraft modifications, rotables, spare parts and spare engines. (2) Primarily vehicles, facilities, computers and other equipment. FedEx Express is committed to purchase 11 DC10s, 28 MD11s and 75 Ayres ALM 200s to be delivered through 2007. Deposits and progress payments of $7,100,000 have been made toward these purchases. FedEx Express has entered into agreements with two airlines to acquire 53 DC10 aircraft (49 of which had been received as of August 31, 2000), spare parts, aircraft engines and other equipment, and maintenance services, in exchange for a combination of aircraft engine noise reduction kits and cash. Delivery of these aircraft began in 1997 and will continue through 2001. Additionally, these airlines may exercise put options through December 31, 2003, requiring FedEx Express to purchase up to 14 additional DC10s along with additional aircraft engines and equipment. - 10 - REVIEW OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS BY INDEPENDENT PUBLIC ACCOUNTANTS Arthur Andersen LLP, independent public accountants, has performed a review of the condensed consolidated balance sheet of the Company as of August 31, 2000, and the related condensed consolidated statements of income for the three-month periods ended August 31, 2000 and August 31, 1999 and the condensed consolidated statements of cash flows for the three-month periods ended August 31, 2000 and August 31, 1999, included herein, as indicated in their report thereon included on page 12. - 11 - REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Stockholders of FedEx Corporation: We have reviewed the accompanying condensed consolidated balance sheet of FedEx Corporation (a Delaware corporation) and subsidiaries as of August 31, 2000 and the related condensed consolidated statements of income and cash flows for the three-month periods ended August 31, 2000 and 1999. These financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the financial statements referred to above for them to be in conformity with accounting principles generally accepted in the United States. We have previously audited, in accordance with auditing standards generally accepted in the United States, the consolidated balance sheet of FedEx Corporation as of May 31, 2000 and the related consolidated statements of income, changes in stockholders' investment and comprehensive income and cash flows for the year then ended. In our report dated June 27, 2000, we expressed an unqualified opinion on those financial statements, which are not presented herein. In our opinion, the accompanying condensed consolidated balance sheet as of May 31, 2000 is fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived. /s/ Arthur Andersen LLP Arthur Andersen LLP Memphis, Tennessee September 18, 2000 - 12 - ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION RESULTS OF OPERATIONS
Consolidated Results - -------------------------------------------------------------------------------- In millions, except per share amounts Three months ended August 31: PERCENT 2000 1999 CHANGE ---- ---- ------- Revenues $4,779 $4,320 +11 Operating income 311 284 +10 Net income 169 159 + 6 - -------------------------------------------------------------------------------- Earnings per diluted share $ 0.58 $ 0.52 +12 ================================================================================
FedEx Corporation (also referred to herein as "FedEx" or the "Company") results for the first quarter ended August 31, 2000 include double-digit growth in revenue and earnings per diluted share. Strong volume and revenue per package (yield) growth on international express packages, improved growth in volumes and yields on U.S. domestic traffic, as well as continued focus on cost controls, more than offset higher fuel costs. In the first quarter, double-digit year-over-year express package volume growth rates were experienced in the European, Asian and Latin American markets. Yields also grew a strong 6% on international package shipments, due to a favorable mix of higher yielding packages and the effects of the Company's fuel surcharges. Domestic volumes also experienced improved growth, particularly in higher-yielding overnight box traffic, as the Company's new sales and marketing strategies began to show results. The Company's yield management actions, including a sales focus on higher-yielding business, resulted in higher domestic express and deferred product yields. The fuel surcharges discussed below also contributed to the yield improvement. Cost control measures, such as limiting staffing additions, lowering discretionary spending and increasing employee productivity, contributed to the quarter's positive operating results. These actions more than offset increased fuel costs and costs associated with implementing the Company's new sales and marketing strategy and home delivery service offering, leading to higher operating income. Increased fuel prices negatively impacted expenses for the quarter by $55 million, net of the effects of jet fuel hedging contracts. In response to higher fuel costs, several of our subsidiaries have implemented fuel surcharges. At Federal Express Corporation ("FedEx Express"), a 4% fuel surcharge has been in effect since April 1, 2000. The surcharge applies to all shipments tendered within the United States and all U.S. export shipments, where legally and contractually permissible. The surcharge was implemented in lieu of a normal price increase. At FedEx Ground Package System, Inc. ("FedEx Ground"), a 1.25% fuel surcharge was implemented effective August 7, 2000. We continue to evaluate whether increased fuel surcharges may be necessary in light of current and forecasted energy costs. The Company has also entered into jet fuel hedging contracts through the third quarter of 2002, designed to limit our exposure to fluctuations in fuel prices. In the first quarter of 2001, FedEx received approximately $27 million under these contracts. During 2000, FedEx began a major rebranding and reorganization initiative that management believes will enable our operating subsidiaries to more effectively compete collectively while retaining the independent operating - 13 - structure of their business units. The creation of FedEx Corporate Services, Inc. ("FedEx Services") gives customers a single point of contact for all express and ground services. The sales, marketing, customer service and most of the information technology functions of our two largest subsidiaries were centralized effective June 1, 2000. The reorganization was completed at the beginning of 2001 and we continue to incur higher costs associated with retraining our sales force and retooling our automation systems. Also, vehicle and facilities rebranding costs continue to be incurred in 2001. The rebranding costs were approximately $5 million for the first quarter of 2001 and are expected to remain at that level each quarter for the remainder of the fiscal year. The FedEx Home Delivery service was launched in March 2000 and volumes in the first quarter of 2001 were double those in the last quarter of 2000. Volumes in the second quarter of 2001 are expected to be double those of first quarter 2001. Thereafter, we expect continued increases in volume as new customers are added and awareness of the service increases. The Company is aggressively expanding FedEx Home Delivery, which was initially offered to approximately 50% of the U.S. population. FedEx Home Delivery results negatively affected first quarter 2001 operating income by approximately $8 million. Operating income from the sale of hushkits was less than $1 million during the first quarter of 2001, compared to $15 million in the prior year period. Sales of this product are expected to be immaterial for the remainder of 2001. Net interest expense increased 59% from the prior year period, due to increased commercial paper borrowings, primarily incurred as a result of FedEx's stock repurchase program and acquisitions completed in 2000. The Company's effective tax rate for the first quarter of 2001 was 38.5%, compared to 39.5% in the prior year period. The decline in the effective tax rate is attributable to a number of factors, none of which is individually significant. We do not expect significant changes to this rate for the forseeable future. Actual results for the remainder of 2001 may vary depending upon many factors, including, but not limited to, general U.S. and international economic conditions, rates of volume growth in U.S. domestic markets at both of the Company's principal business segments, the actions of competitors and the spot prices of aviation and diesel fuel. REPORTABLE SEGMENTS The formation of FedEx Services has changed the way certain costs are captured and allocated between the Company's operating segments. For example, salaries, wages and benefits, depreciation and other costs for the sales, marketing and information technology departments previously incurred at FedEx Express and FedEx Ground are now incurred at FedEx Services and allocated to other operating segments using various, relevant metrics and are included in the line item "Intercompany charges" on the accompanying financial summaries of our reportable segments. Consequently, certain segment expense data presented is not comparable to prior periods. We believe the total amounts allocated to the business segments reasonably reflect the cost of providing such services. - 14 - FEDEX EXPRESS The following table compares revenues and operating income (in millions) and selected statistics (in thousands, except yield amounts) for the three-month periods ended August 31:
- -------------------------------------------------------------------------------- PERCENT 2000 1999(1) CHANGE ---- ---- ------ Revenues: Package: U.S. overnight box(2) $1,479 $1,380 + 7 U.S. overnight envelope(3) 472 452 + 4 U.S. deferred 618 559 +11 International Priority (IP) 984 819 +20 ------ ------ Total package revenue 3,553 3,210 +11 Freight: U.S. 162 130 +25 International 115 127 - 9 ------ ------ Total freight revenue 277 257 + 8 Other 86 120 -28 ------ ------ Total revenues $3,916 $3,587 + 9 Operating Expenses: Salaries and employee benefits 1,595 Purchased transportation 150 Rentals and landing fees 344 Depreciation and amortization 197 Fuel 241 Maintenance and repairs 268 Intercompany charges 327 Other 536 ------ Total operating expenses 3,658 3,378 + 8 ------ ------ Operating income $ 258 $ 209 +23 ====== ====== - -------------------------------------------------------------------------------- Package statistics: Average daily packages: U.S. overnight box 1,254 1,205 + 4 U.S. overnight envelope 758 748 + 1 U.S. deferred 876 839 + 4 IP 338 297 +14 ------ ------ Total Packages 3,226 3,089 + 4 Revenue per package (yield): U.S. overnight box $ 18.15 $ 17.62 + 3 U.S. overnight envelope 9.59 9.31 + 3 U.S. deferred 10.85 10.25 + 6 IP 44.80 42.42 + 6 Package Composite 16.95 15.99 + 6 Freight statistics: Average daily pounds: U.S. 4,369 4,555 - 4 International 2,312 2,505 - 8 ------- ------- Total Freight 6,681 7,060 - 5 Revenue per pound (yield): U.S. $ .57 $ .44 +30 International .76 .78 - 3 Freight Composite .64 .56 +14
(1) Operating expense detail for the three month period ended August 31, 1999 has been omitted, as this data is not comparable to the three month period ended August 31, 2000. See "Reportable Segments" above. (2) The U.S. Overnight Box category includes packages exceeding 8 ounces in weight. (3) The U.S. Overnight Envelope category includes envelopes weighing 8 ounces or less. ================================================================================ - 15 - Revenues Total package revenue increased 11% year over year in the first quarter of 2001, principally due to increases in IP and U.S. overnight box volumes and yields. Average daily package volume growth rates for U.S. domestic overnight box and U.S. domestic deferred services each increased more than 4% during the quarter. We attribute this growth to, among other things, our new sales and marketing strategies. Total freight revenue for the first quarter of 2001 increased due to significantly improved yields in U.S. freight, offset by anticipated declines in domestic freight volume and international freight volume and yield. Other revenue included Canadian domestic revenue, charter services, logistics services, sales of hushkits and other. As expected, hushkit sales were immaterial in the first quarter of 2001. Operating Income Operating income for the first quarter of 2001 increased 23% year over year despite higher fuel costs. Improved yield, cost containment and productivity enhancement programs contributed to the increased first quarter of 2001 operating margin, which combined with volume growth led to the strong growth in operating income. Staffing levels in general and administrative support functions were held flat, and discretionary spending was reduced. A 29% increase in average jet fuel price per gallon contributed to a negative impact of approximately $52 million on first quarter total fuel costs, including the results of jet fuel hedging contracts entered into to mitigate some of the increased jet fuel costs. Fuel surcharges implemented during 2000 offset the increase in fuel costs in the quarter. Maintenance and repairs expense increased year over year due to the timing of scheduled maintenance. Year-over-year comparisons were also affected by the reduction in the contribution from sales of hushkits. Operating profit from these sales was less than $1 million in the first quarter of 2001, compared to $15 million in the first quarter of the prior year. Actual results for the remainder of the year may vary depending on, but not limited to, the continued successful implementation of our reorganization and rebranding initiative, the impact of competitive pricing changes, customer responses to yield management initiatives, the timing and extent of network refinement, actions by our competitors and jet fuel prices. - 16 - FEDEX GROUND The following table compares revenues and operating income (in millions) and selected package statistics (in thousands, except yield amounts) for the three-month periods ended August 31:
- -------------------------------------------------------------------------------- PERCENT 2000 1999(1) CHANGE ---- ---- ------- Revenues $543 $476 +14 Operating Expenses: Salaries and employee benefits 108 Purchased transportation 218 Rentals and landing fees 14 Depreciation and amortization 24 Fuel 1 Maintenance and repairs 16 Intercompany charges 53 Other 66 ---- Total operating expenses 500 425 +18 ---- ---- Operating income $ 43 $ 51 -16 ==== ==== - -------------------------------------------------------------------------------- Average daily packages 1,452 1,365 + 6 Revenue per package (yield) $ 5.67 $ 5.53 + 3
(1) Operating expense detail for the three month period ended August 31, 1999 has been omitted, as this data is not comparable to the three month period ended August 31, 2000. See "Reportable Segments" above. ================================================================================ Revenues Revenues for FedEx Ground during the first quarter of 2001 increased 14% from the prior year period, due to an increase of 6% in the average daily package volumes, a 3% increase in yield and three additional operating days. Revenue per operating day during the first quarter of 2001 increased 9% from the prior year period. Higher yields experienced in the quarter are attributed to the effects of the February 2000 rate increase and a shift in mix to higher-yielding packages. Operating Income Excluding the FedEx Home Delivery operating loss of $8 million and expenses of $4 million associated with the rebranding and reorganization initiatives, operating income for the first quarter of 2001 increased 8% year over year. Rentals expense increased year over year, primarily due to costs associated with our FedEx Home Delivery service. Maintenance and repairs increased primarily due to timing of linehaul maintenance expenses. The FedEx Home Delivery service, originally offered in March 2000 to approximately 50% of the U.S. population, is dedicated to meeting the needs of business-to-consumer shippers. FedEx Ground has announced an aggressive expansion of this service to achieve service coverage of approximately 80% of the U.S. population by September 2001. We continue to estimate that FedEx Home Delivery operating losses will approximate $50 million in 2001, including costs associated with acceleration of expansion of the service. Actual results for the remainder of the year may vary depending on a number of factors including, but not limited to, consumer demand for and satisfaction with the FedEx Ground product, the service coverage and brand awareness of the FedEx Ground product, competitive responses, including pricing and capacity fluctuations, the rate of U.S. domestic economic growth, the extent of FedEx Ground's ability to penetrate the business-to-consumer electronic commerce market, and the ability to attract and retain qualified contractors for the delivery network. - 17 - OTHER OPERATIONS Other operations include FedEx Global Logistics, Inc. ("FedEx Logistics"), a contract logistics provider; FedEx Custom Critical, Inc. ("FedEx Custom Critical"), a critical-shipment carrier; FedEx Trade Networks, Inc. ("FedEx Trade Networks"), a trade services provider; Viking Freight, Inc. ("Viking"), a regional less-than-truckload freight carrier operating in the western United States; and certain unallocated corporate items. Revenues from other operations during the first quarter of 2001 increased 24% from the prior year period. Excluding the effects of businesses acquired after August 31, 1999, the increase was 3%, due to higher revenues at Viking and FedEx Logistics, offset by a slight decline in revenues at FedEx Custom Critical. Decreased operating income from other operations for the first quarter of 2001 compared to prior year is due to rebranding and new service development costs, some softening in the demand for critical shipments in the automotive sector and, to a lesser extent, unallocated corporate expenses. FINANCIAL CONDITION Liquidity Cash and cash equivalents totaled $177 million at August 31, 2000, compared to $68 million at May 31, 2000. Cash flows from operating activities during the first quarter of 2001 totaled $312 million, compared to $330 million for the prior year period. FedEx's operations are generally capital intensive and generate cash earnings substantially in excess of reported earnings. The following table compares certain cash-based earnings measures (in millions, except per share amounts) for the three month periods ended August 31:
PERCENT 2000 1999 CHANGE ----- ----- ------ EBITDA (earnings before interest, taxes, depreciation and amortization) $ 610 $ 561 + 9 Cash earnings per share (net income plus depreciation and amortization divided by average common and common equivalent shares) $1.63 $1.44 +13
The Company currently has a $1.0 billion revolving credit facility that is generally used to finance temporary operating cash requirements and to provide support for the issuance of commercial paper. As of August 31, 2000, approximately $343 million of the credit facility remains available. For more information regarding the credit facility, see Note 3 of Notes to Condensed Consolidated Financial Statements. - 18 - We believe that cash flow from operations, our commercial paper program and revolving bank credit facility will adequately provide for the Company's working capital needs for the foreseeable future. Capital Resources Our operations require significant investments in aircraft, vehicles, computer and telecommunications equipment, package handling facilities and sort equipment. The amount and timing of capital additions depend on various factors, including, but not limited to, volume growth, domestic and international economic conditions, new or enhanced services, geographical expansion of services, competition, availability of satisfactory financing and actions of regulatory authorities. The following table compares capital expenditures (including equivalent capital, which is defined below) for the three months ended August 31 (in millions):
2000 1999 ---- ---- Aircraft and related equipment $ 79 $114 Facilities and sort equipment 89 89 Information and technology equipment 92 90 Other equipment 81 65 ---- ---- Total capital expenditures 341 358 Equivalent capital, principally aircraft-related - 243 ---- ---- Total $341 $601 ==== ====
We finance a significant amount of our aircraft and certain other equipment needs using long-term operating leases. The determination to lease versus buy equipment is a financing decision, and both forms of financing are considered when evaluating the resources committed for capital. The amount that the Company would have expended to purchase these assets had it not chosen to obtain their use through operating leases is considered equivalent capital in the table above. While total capital and equivalent capital expenditures during the first quarter of 2001 were well below the prior year period, we continue to believe that total capital spending for 2001 will approximate our original estimate of $2.3 billion. For information on the Company's purchase commitments, see Note 6 of Notes to Condensed Consolidated Financial Statements. We believe that the capital resources available to us provide flexibility to access the most efficient markets for financing capital acquisitions, including aircraft, and are adequate for FedEx's future capital needs. Euro Currency Conversion Since the beginning of the European Union's transition to the euro on January 1, 1999, our subsidiaries have been prepared to quote rates to customers, generate billings and accept payments, in both euro and legacy currencies. The legacy currencies will remain legal tender through December 31, 2001. FedEx believes that the introduction of the euro, any price transparency brought about by its introduction and the phasing out of the legacy currencies will not have a material impact on our consolidated financial position, results of operations or cash flows. Costs associated with the euro project are being expensed as incurred and are being funded entirely by internal cash flows. - 19 - * * * CERTAIN STATEMENTS CONTAINED IN THIS REPORT ARE "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995, 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 AND COMPETITIVE CONDITIONS IN THE MARKETS WHERE THE COMPANY OPERATES, CONTINUED INCREASES IN FUEL COSTS AND THE ABILITY TO MITIGATE THE EFFECTS OF SUCH INCREASES THROUGH FUEL SURCHARGES AND HEDGING ACTIVITIES, MATCHING CAPACITY TO VOLUME LEVELS AND OTHER UNCERTAINTIES DETAILED FROM TIME TO TIME IN THE COMPANY'S SECURITIES AND EXCHANGE COMMISSION FILINGS. EXCEPT AS OTHERWISE INDICATED, REFERENCES TO YEARS MEANS THE COMPANY'S FISCAL YEAR ENDING MAY 31, 2001 OR ENDED MAY 31 OF THE YEAR REFERENCED. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK There have been no material changes in the Company's market risk sensitive instruments and positions since its disclosure in its Annual Report on Form 10-K for the year ended May 31, 2000. Foreign currency fluctuations during the first quarter of 2001 did not have a material effect on the results of operations for the period. Many of the Company's international sales transactions are denominated in U.S. dollars, which mitigates the impact of foreign currency fluctuations. - 20 - PART II. OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS At the 2000 Annual Meeting of Stockholders held on September 25, 2000, the Company's stockholders elected three Class II Directors to serve for a three-year term expiring at the 2003 Annual Meeting. The tabulation of votes with respect to each nominee for office was:
NOMINEE FOR WITHHELD ------------------ ----------- --------- Ralph D. DeNunzio 248,411,546 1,693,578 George J. Mitchell 246,872,987 3,232,137 Joshua I. Smith 248,418,750 1,686,374
The Board of Directors' designation of Arthur Andersen LLP as independent auditors for the fiscal year ending May 31, 2001 was ratified by the stockholders by a vote of 248,869,629 for and 406,764 against. There were 828,731 abstentions. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits.
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT - ------- ---------------------- 10.1 Extension Agreement dated as of October 2, 2000 to Credit Agreement dated as of January 15, 1998 among FedEx Corporation, certain Lenders named therein and Bank One, NA (formerly known as The First National Bank of Chicago), in its capacity as Agent. 12.1 Computation of Ratio of Earnings to Fixed Charges. 15.1 Letter re: Unaudited Interim Financial Statements. 27 Financial Data Schedule (electronic filing only).
(b) Reports on Form 8-K. No Current Reports on Form 8-K were filed during the quarter ended August 31, 2000. - 21 - SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. FEDEX CORPORATION Date: October 9, 2000 /S/ JAMES S. HUDSON ------------------------------------------- JAMES S. HUDSON CORPORATE VICE PRESIDENT STRATEGIC FINANCIAL PLANNING & CONTROL (PRINCIPAL ACCOUNTING OFFICER) - 22 - EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT - ------- ---------------------- 10.1 Extension Agreement dated as of October 2, 2000 to Credit Agreement dated as of January 15, 1998 among FedEx Corporation, certain Lenders named therein and Bank One, NA (formerly known as The First National Bank of Chicago), in its capacity as Agent. 12.1 Computation of Ratio of Earnings to Fixed Charges. 15.1 Letter re: Unaudited Interim Financial Statements. 27 Financial Data Schedule (electronic filing only).
E-1 EX-10.1 2 a2027245zex-10_1.txt EX-10.1 Exhibit 10.1 EXTENSION AGREEMENT DATED AS OF OCTOBER 2, 2000 THIS EXTENSION AGREEMENT (the "Agreement") is made as of October 2, 2000 by and among Fed Ex Corporation, a Delaware corporation (the "Borrower"), the Lenders and Bank One, NA, having its principal office in Chicago, Illinois and formerly known as The First National Bank of Chicago, in its capacity as agent ("Agent"). Defined terms used herein and not otherwise defined herein shall have the meanings given to them in that certain Credit Agreement dated as of January 15, 1998, as amended, by and among the Borrower, the Lenders, Banc One Capital Markets, Inc., formerly known as First Chicago Capital Markets, Inc., as Arranger, J.P. Morgan Securities Inc., as Co-Arranger and Syndication Agent, Chase Securities Inc., as Co-Arranger and Documentation Agent, and the Agent (as amended, the "Credit Agreement"). WITNESSETH WHEREAS, the Borrower, the Lenders and the Agent are parties to the Credit Agreement; WHEREAS, the Borrower, the Lenders and the Agent have agreed to extend the Tranche B Facility Termination Date on the terms and conditions set forth herein; NOW, THEREFORE, in consideration of the premises set forth above, the terms and conditions contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Borrower, the Lenders and the Agent agree as follows: 1. EXTENSION OF TRANCHE B FACILITY TERMINATION DATE. Notwithstanding any of the notice requirements of Section 2.19 of the Credit Agreement but otherwise subject to such Section 2.19, each of the Lenders consents to the extension of the Tranche B Facility Termination Date to September 30, 2001, and waives its right under such Section 2.19 to revoke such consent. 2. CONDITIONS OF EFFECTIVENESS. This Agreement shall become effective as of the date set forth above when the Agent shall have received: (i) a counterpart of this Agreement executed by the Borrower, the Agent and each Lender; (ii) a counterpart of the Acknowledgment attached hereto as EXHIBIT A executed by Guarantor; and (iii) such documents evidencing corporate existence, action and authority of the Borrower and the Guarantors as the Agent may reasonably request. 3. REPRESENTATIONS AND WARRANTIES OF THE BORROWER. The Borrower represents and warrants that: (a) This Agreement, and the Credit Agreement as previously executed and amended and as amended hereby, constitute legal, valid and binding obligations of the Borrower and are enforceable against the Borrower in accordance with their terms, except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally and subject also to the availability of equitable remedies if equitable remedies are sought. (b) Upon the effectiveness of this Agreement, the Borrower reaffirms all covenants, representations and warranties made in the Credit Agreement. (c) No Default or Unmatured Default has occurred and is continuing. 4. EFFECT ON CREDIT AGREEMENT. (a) Each reference in the Credit Agreement to "this Agreement," "hereunder," "hereof," "herein" or words of like import shall mean and be a reference to the Credit Agreement as amended hereby. (b) Except as specifically amended above, the Credit Agreement and all other Loan Documents, instruments and agreements executed and/or delivered in connection therewith, shall remain in full force and effect, and are hereby ratified and confirmed. (c) The execution, delivery and effectiveness of this Agreement shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of the Agent or the Lenders, nor constitute a waiver of any provision of the Credit Agreement or any other Loan Documents, instruments and agreements executed and/or delivered in connection therewith. 5. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois. 6. HEADINGS. Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose. 7. COUNTERPARTS. This Agreement may be executed by one or more of the parties to the Agreement on any number of separate counterparts and all of said counterparts taken together shall be deemed to constitute one and the same instrument. 2 IN WITNESS WHEREOF, the Borrower, the Lenders and the Agent have executed this Agreement as of the date first above written. FEDEX CORPORATION By: /s/ Burnetta B. Williams Name: Burnetta B. Williams Title: Staff Vice President & Asst. Treasurer 3 BANK ONE, NA, having its principal office in Chicago, Illinois, as Agent By: /s/ Kenneth J. Kramer Name: Kenneth J. Kramer Title: Managing Director 4 MORGAN GUARANTY TRUST COMPANY OF NEW YORK By: /s/ Dennis Wilczek Name: Dennis Wilczek Title: Associate 5 THE CHASE MANHATTAN BANK By: /s/ Matthew H. Massie Name: Matthew H. Massie Title: Managing Director 6 KBC BANK N.Z., GRAND CAYMAN BRANCH By: /s/ Robert Snauffer Name: Robert Snauffer Title: First Vice President By: /s/ Patrick A. Janssens Name: Patrick A. Janssens Title: Vice President 7 BANK OF AMERICA, N.A., By: /s/ Sharon Burks Horos Name: Sharon Burks Horos Title: Vice President 8 BANK OF TOKYO-MITSUBISHI TRUST COMPANY By: /s/ Jeff Staebler ------------------------------- Name: Jeff Staebler Title: Vice President 9 CITICORP USA, INC. By: /s/ Michael Boster Name: Michael Boster Title: Vice President Global Aviation 10 COMMERZBANK AKTIENGESELLSCHAFT, NEW YORK AND GRAND CAYMAN BRANCHES By: /s/ Harry Yergey Name: Harry Yergey Title: SVP and Manager By: /s/ Subash Viswanathan Name: Subash Viswanathan Title: Vice President 11 THE FUJI BANK, LIMITED By: /s/ Raymond Ventura Name: Raymond Ventura Title: Vice President and Manager 12 MELLON BANK, N.A. By: /s/ Mark F. Johnston Name: Mark F. Johnston Title: Vice President 13 KEYBANK NATIONAL ASSOCIATION By: /s/ Mark A. LoSchiavo Name: Mark A. LoSchiavo Title: Assistant Vice President 14 AMSOUTH BANCORPORATION, successor-by- merger to FIRST AMERICAN NATIONAL BANK By: /s/ S. Floyd Harvey III Name: S. Floyd Harvey III Title: Vice President 15 THE BANK OF NEW YORK By: /s/ Steven Cavallizzo Name: Steven Cavallizzo Title: Vice President 16 THE BANK OF NOVA SCOTIA By: /s/ F.C.H. Ashby Name: F.C.H. Ashby Title: Senior Manager Loan Operator 17 CREDIT SUISSE FIRST BOSTON By: /s/ Robert Hetu Name: Robert Hetu Title: Vice President By: /s/ James P. Moran Name: James P. Moran Title: Director 18 DEUTSCHE VERKEHRS BANK AG By: /s/ James M. Morton Name: James M. Morton Title: Assistant Vice President By: /s/ Constance Laudenschlager Name: Constance Laudenschlager Title: Senior Vice President 19 THE SANWA BANK, LIMITED By: /s/ P. Bartlett Wu Name: P. Bartlett Wu Title: Vice President 20 SUNTRUST BANK, NASHVILLE, N.A. By: /s/ Renee D. Drake Name: Renee D. Drake Title: Vice President 21 THE SUMITOMO BANK, LIMITED By: /s/ C. Michael Garrido Name: C. Michael Garrido Title: Senior Vice President 22 BANCA COMMERCIALE ITALIANA NEW YORK BRANCH By: /s/ J. Dickerhof Name: J. Dickerhof Title: VP By: /s/ E. Bermant Name: E. Bermant Title: FVP/Deputy Manager 23 THE NORTHERN TRUST COMPANY By: /s/ Ashish S. Bhagwat Name: Ashish S. Bhagwat Title: Second Vice President 24 WACHOVIA BANK, N.A. By: /s/ Karin E. Reel Name: Karin E. Reel Title: Vice President 25 FIRST UNION NATIONAL BANK By: /s/ Andrew Tompkins Name: Andrew Tompkins Title: VP 26 EXHIBIT A TO EXTENSION AGREEMENT DATED AS OF OCTOBER 2, 2000 FOR CREDIT AGREEMENT DATED AS OF JANUARY 15, 1998 ACKNOWLEDGMENT Each of the undersigned hereby (i) acknowledges receipt of a copy of the Extension Agreement dated as of October 2, 2000, relating to the Credit Agreement dated as of January 15, 1998 by and among the Borrower, the Lenders, Banc One Capital Markets, Inc., formerly known as First Chicago Capital Markets, Inc., as Arranger, J.P. Morgan Securities Inc., as Co-Arranger and Syndication Agent, Chase Securities Inc., as Co-Arranger and Documentation Agent, and the Agent, as amended (as amended, the "Credit Agreement"), (ii) reaffirms the terms and conditions of that certain Guaranty dated as of January 27, 1998 (the "Guaranty") and (iii) acknowledges and agrees that the Guaranty (A) remains in full force and effect and (B) is hereby ratified and confirmed. FEDERAL EXPRESS CORPORATION By: /s/ Tracy G. Schmidt Name: Tracy G. Schmidt Title: Sr. Vice President & CFO FEDEX GROUND PACKAGE SYSTEM, INC. By: /s/ Daniel J. Sullivan Name: Daniel J. Sullivan Title: President & CEO 27 VIKING FREIGHT, INC. By: /s/ Douglas G. Duncan Name: Douglas G. Duncan Title: President & CEO FEDEX CUSTOM CRITICAL, INC. By: /s/ R. Bruce Simpson Name: R. Bruce Simpson Title: President Dated as of October 2, 2000 28 EX-12.1 3 a2027245zex-12_1.txt EXHIBIT 12.1 EXHIBIT 12.1 FEDEX CORPORATION COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (Unaudited)
THREE MONTHS ENDED YEAR ENDED MAY 31, AUGUST 31, ------------------------------------------------------------ ---------------------- 1996 1997 1998 1999 2000 1999 2000 ---------- -------- ---------- ---------- ---------- ---------- ---------- (In thousands, except ratios) Earnings: Income before income taxes............. $ 702,094 $425,865 $ 899,518 $1,061,064 $1,137,740 $ 262,880 $ 274,245 Add back: Interest expense, net of capitalized interest............... 109,249 110,080 135,696 110,590 121,173 24,311 34,318 Amortization of debt issuance costs..................... 1,628 1,328 1,481 9,249 1,264 282 306 Portion of rent expense representative of interest factor.................... 393,775 439,729 508,325 570,789 624,588 148,236 158,606 ---------- -------- ---------- ---------- ---------- ---------- ---------- Earnings as adjusted................... $1,206,746 $977,002 $1,545,020 $1,751,692 $1,884,765 $ 435,709 $ 467,475 ========== ======== ========== ========== ========== ========== ========== Fixed Charges: Interest expense, net of capitalized interest................. $ 109,249 $110,080 $ 135,696 $ 110,590 $ 121,173 $ 24,311 $ 34,318 Capitalized interest................... 44,654 45,717 33,009 38,880 34,823 8,537 4,916 Amortization of debt issuance costs....................... 1,628 1,328 1,481 9,249 1,264 282 306 Portion of rent expense representative of interest factor...................... 393,775 439,729 508,325 570,789 624,588 148,236 158,606 ---------- -------- ---------- ---------- --------- ---------- ---------- $ 549,306 $596,854 $ 678,511 $ 729,508 $ 781,848 $ 181,366 $ 198,146 ========== ======== ========== ========== ========== ========== ========== Ratio of Earnings to Fixed Charges..... 2.2 1.6 2.3 2.4 2.4 2.4 2.4 ========== ======== ========== ========== ========== ========== ==========
EX-15.1 4 a2027245zex-15_1.txt EX 15.1 EXHIBIT 15.1 September 18, 2000 FedEx Corporation 942 South Shady Grove Road Memphis, Tennessee 38120 We are aware that FedEx Corporation will be incorporating by reference in its previously filed Registration Statements No. 333-45037, 333-71065, 333-74701 and 333-34934 its Report on Form 10-Q for the quarter ended August 31, 2000, which includes our report dated September 18, 2000 covering the unaudited interim financial information contained therein. Pursuant to Regulation C of the Securities Act of 1933, that report is not considered part of these registration statements prepared or certified by our firm or a report prepared or certified by our firm within the meaning of Sections 7 and 11 of the Act. Very truly yours, /s/ Arthur Andersen LLP Arthur Andersen LLP EX-27 5 a2027245zex-27.txt EX 27
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED CONSOLIDATED BALANCE SHEETS AND CONDENSED CONSOLIDATED STATEMENTS OF INCOME ON PAGES 3-5 OF THE COMPANY'S FORM 10-Q FOR THE QUARTERLY PERIOD ENDING AUGUST 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS MAY-31-2001 JUN-01-2000 AUG-31-2000 176,589 0 2,679,138 91,020 260,459 3,409,121 15,019,373 7,902,302 11,757,759 2,836,892 1,894,854 0 0 29,857 4,931,705 11,757,759 0 4,778,736 0 4,467,769 3,929 0 32,793 274,245 105,585 168,660 0 0 0 168,660 .590 .580
-----END PRIVACY-ENHANCED MESSAGE-----