Attached files
file | filename |
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EX-31.1 - EXHIBIT 31.1 - FEDERAL EXPRESS CORP | c25954exv31w1.htm |
EX-32.2 - EXHIBIT 32.2 - FEDERAL EXPRESS CORP | c25954exv32w2.htm |
EX-12.1 - EXHIBIT 12.1 - FEDERAL EXPRESS CORP | c25954exv12w1.htm |
EX-31.2 - EXHIBIT 31.2 - FEDERAL EXPRESS CORP | c25954exv31w2.htm |
EX-32.1 - EXHIBIT 32.1 - FEDERAL EXPRESS CORP | c25954exv32w1.htm |
EXCEL - IDEA: XBRL DOCUMENT - FEDERAL EXPRESS CORP | Financial_Report.xls |
EX-15.1 - EXHIBIT 15.1 - FEDERAL EXPRESS CORP | c25954exv15w1.htm |
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE QUARTERLY PERIOD ENDED November 30, 2011
OR
o | 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: 1-7806
FEDERAL EXPRESS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware (State or other jurisdiction of incorporation or organization) |
71-0427007 (I.R.S. Employer Identification No.) |
|
3610 Hacks Cross Road | ||
Memphis, Tennessee | 38125 | |
(Address of principal executive offices) | (ZIP Code) |
(901) 369-3600
(Registrants telephone number, including area code)
(Registrants 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 þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files).
Yes þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer or a smaller reporting company. See the definitions of large accelerated
filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
Large accelerated filer o | Accelerated filer o | Non-accelerated filer þ | Smaller reporting company o | |||
(Do not check if a smaller reporting company) |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). Yes o No þ
The number of shares of common stock outstanding as of December 14, 2011 was 1,000. The Registrant
is a wholly owned subsidiary of FedEx Corporation, and there is no market for the Registrants
common stock.
The Registrant meets the conditions set forth in General Instructions H(1)(a) and (b) of Form 10-Q
and is therefore filing this form with the reduced disclosure format permitted by General
Instruction H(2).
FEDERAL EXPRESS CORPORATION
INDEX
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FEDERAL EXPRESS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN MILLIONS)
November 30, | ||||||||
2011 | May 31, | |||||||
(Unaudited) | 2011 | |||||||
ASSETS |
||||||||
CURRENT ASSETS |
||||||||
Cash and cash equivalents |
$ | 675 | $ | 626 | ||||
Receivables, less allowances of $91 and $83 |
1,648 | 1,645 | ||||||
Spare parts, supplies and fuel, less
allowances of $176 and $169 |
364 | 367 | ||||||
Deferred income taxes |
416 | 398 | ||||||
Due from parent company and other FedEx subsidiaries |
228 | 607 | ||||||
Prepaid expenses and other |
98 | 90 | ||||||
Total current assets |
3,429 | 3,733 | ||||||
PROPERTY AND EQUIPMENT, AT COST |
22,990 | 21,622 | ||||||
Less accumulated depreciation and amortization |
11,430 | 11,110 | ||||||
Net property and equipment |
11,560 | 10,512 | ||||||
OTHER LONG-TERM ASSETS |
||||||||
Goodwill |
1,158 | 1,085 | ||||||
Other assets |
1,055 | 1,016 | ||||||
Total other long-term assets |
2,213 | 2,101 | ||||||
$ | 17,202 | $ | 16,346 | |||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
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FEDERAL EXPRESS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN MILLIONS, EXCEPT SHARE DATA)
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN MILLIONS, EXCEPT SHARE DATA)
November 30, | ||||||||
2011 | May 31, | |||||||
(Unaudited) | 2011 | |||||||
LIABILITIES AND OWNERS EQUITY |
||||||||
CURRENT LIABILITIES |
||||||||
Current portion of long-term debt |
$ | 428 | $ | 17 | ||||
Accrued salaries and employee benefits |
906 | 836 | ||||||
Accounts payable |
1,125 | 1,092 | ||||||
Accrued expenses |
1,056 | 1,084 | ||||||
Due to other FedEx subsidiaries |
456 | 283 | ||||||
Total current liabilities |
3,971 | 3,312 | ||||||
LONG-TERM DEBT, LESS CURRENT PORTION |
239 | 655 | ||||||
OTHER LONG-TERM LIABILITIES |
||||||||
Deferred income taxes |
2,129 | 1,994 | ||||||
Pension, postretirement healthcare and
other benefit obligations |
892 | 867 | ||||||
Self-insurance accruals |
633 | 631 | ||||||
Deferred lease obligations |
812 | 695 | ||||||
Deferred gains, principally related to
aircraft transactions |
232 | 244 | ||||||
Other liabilities |
140 | 115 | ||||||
Total other long-term liabilities |
4,838 | 4,546 | ||||||
COMMITMENTS AND CONTINGENCIES |
||||||||
OWNERS EQUITY |
||||||||
Common stock, $0.10 par value; 1,000 shares
authorized, issued and outstanding |
| | ||||||
Additional paid-in capital |
608 | 608 | ||||||
Retained earnings |
7,514 | 7,107 | ||||||
Accumulated other comprehensive income |
32 | 118 | ||||||
Total owners equity |
8,154 | 7,833 | ||||||
$ | 17,202 | $ | 16,346 | |||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
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FEDERAL EXPRESS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(IN MILLIONS)
(IN MILLIONS)
Three Months Ended | Six Months Ended | |||||||||||||||
November 30, | November 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
REVENUES |
$ | 6,406 | $ | 5,841 | $ | 12,815 | $ | 11,610 | ||||||||
OPERATING EXPENSES: |
||||||||||||||||
Salaries and employee benefits |
2,306 | 2,187 | 4,648 | 4,381 | ||||||||||||
Purchased transportation |
339 | 307 | 675 | 597 | ||||||||||||
Rentals and landing fees |
415 | 421 | 833 | 819 | ||||||||||||
Depreciation and amortization |
285 | 263 | 564 | 515 | ||||||||||||
Fuel |
1,039 | 802 | 2,115 | 1,556 | ||||||||||||
Maintenance and repairs |
352 | 319 | 731 | 669 | ||||||||||||
Intercompany charges, net |
541 | 505 | 1,082 | 1,011 | ||||||||||||
Other |
790 | 782 | 1,546 | 1,456 | ||||||||||||
6,067 | 5,586 | 12,194 | 11,004 | |||||||||||||
OPERATING INCOME |
339 | 255 | 621 | 606 | ||||||||||||
OTHER INCOME (EXPENSE): |
||||||||||||||||
Interest, net |
12 | 1 | 20 | 4 | ||||||||||||
Other, net |
(7 | ) | (19 | ) | (20 | ) | (37 | ) | ||||||||
5 | (18 | ) | | (33 | ) | |||||||||||
INCOME BEFORE INCOME TAXES |
344 | 237 | 621 | 573 | ||||||||||||
PROVISION FOR INCOME TAXES |
123 | 85 | 215 | 209 | ||||||||||||
NET INCOME |
$ | 221 | $ | 152 | $ | 406 | $ | 364 | ||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
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FEDERAL EXPRESS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN MILLIONS)
Six Months Ended | ||||||||
November 30, | ||||||||
2011 | 2010 | |||||||
Operating Activities: |
||||||||
Net income |
$ | 406 | $ | 364 | ||||
Noncash charges: |
||||||||
Depreciation and amortization |
564 | 515 | ||||||
Other, net |
184 | 113 | ||||||
Changes in assets and liabilities, net |
664 | 661 | ||||||
Cash provided by operating activities |
1,818 | 1,653 | ||||||
Investing Activities: |
||||||||
Capital expenditures |
(1,623 | ) | (1,601 | ) | ||||
Business acquisition, net of cash acquired |
(114 | ) | | |||||
Other |
3 | 5 | ||||||
Cash used in investing activities |
(1,734 | ) | (1,596 | ) | ||||
Financing Activities: |
||||||||
Principal payments on debt |
(17 | ) | (12 | ) | ||||
Cash used in financing activities |
(17 | ) | (12 | ) | ||||
Effect of exchange rate changes on cash |
(18 | ) | 24 | |||||
Net increase in cash and cash equivalents |
49 | 69 | ||||||
Cash and cash equivalents at beginning of period |
626 | 512 | ||||||
Cash and cash equivalents at end of period |
$ | 675 | $ | 581 | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
- 6 -
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FEDERAL EXPRESS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) General
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. These interim financial statements of Federal Express
Corporation (FedEx Express) have been prepared in accordance with accounting principles generally
accepted in the United States and Securities and Exchange Commission instructions for interim
financial information, and should be read in conjunction with our Annual Report on Form 10-K for
the year ended May 31, 2011 (Annual Report). Accordingly, significant accounting policies and
other disclosures normally provided have been omitted since such
items are disclosed in our Annual Report.
In the opinion of management, the accompanying unaudited condensed consolidated financial
statements reflect all adjustments (including normal recurring adjustments) necessary to present
fairly our financial position as of November 30, 2011, the results of our operations for the three-
and six-month periods ended November 30, 2011 and 2010 and cash flows for the six-month periods
ended November 30, 2011 and 2010. Operating results for the three- and six-month periods ended
November 30, 2011 are not necessarily indicative of the results that may be expected for the year
ending May 31, 2012.
We are a wholly owned subsidiary of FedEx Corporation (FedEx) engaged in a single line of
business and operate in one business segment the worldwide express transportation and
distribution of goods and documents.
Except as otherwise specified, references to years indicate our fiscal year ending May 31, 2012 or
ended May 31 of the year referenced and comparisons are to the corresponding period of the prior
year.
BUSINESS ACQUISITION. On July 25, 2011, FedEx completed its acquisition of Servicios Nacionales
Mupa, S.A. de C.V. (MultiPack), a Mexican domestic express package delivery company, for $128
million in cash from operations. The financial results of the acquired business are included in
our results from the date of acquisition and were not material to our results of operations or
financial condition. Substantially all of the purchase price was allocated to goodwill.
STOCK-BASED COMPENSATION. FedEx has two types of equity-based compensation: stock options and
restricted stock. The key terms of the stock option and restricted stock awards granted under
FedExs incentive stock plans are set forth in FedExs Annual Report.
Our stock-based compensation expense was $7 million for the three-month period ended November 30,
2011 and $19 million for the six-month period ended November 30, 2011. Our stock-based
compensation expense was $7 million for the three-month period ended November 30, 2010 and $17
million for the six-month period ended November 30, 2010. This amount represents the amount
charged to us by FedEx for awards granted to our employees.
LONG-TERM DEBT. Long-term debt, exclusive of capital leases, had carrying values of $539 million at
November 30, 2011 and May 31, 2011, compared with estimated fair values of $625 million at November
30, 2011 and $620 million at May 31, 2011. The estimated fair values were determined based on
quoted market prices or on the current rates offered for debt with similar terms and maturities.
NEW ACCOUNTING GUIDANCE. New accounting rules and disclosure requirements can significantly impact
our reported results and the comparability of our financial statements. See our Annual Report for
a discussion of the impact of new accounting guidance issued but not yet effective as of May 31,
2011. We believe that no new accounting guidance was adopted or issued during the first half of
2012 that is relevant to the readers of our financial statements. However, there are numerous new
proposals under development which, if and when enacted, may have a significant impact on our
financial reporting.
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Table of Contents
(2) Comprehensive Income
The following table provides a reconciliation of net income reported in our financial statements to
comprehensive income for the periods ended November 30 (in millions):
Three Months Ended | ||||||||
2011 | 2010 | |||||||
Net income |
$ | 221 | $ | 152 | ||||
Other comprehensive income: |
||||||||
Foreign currency translation adjustments, net of
tax of $23 in 2011 and $11 in 2010 |
(103 | ) | 42 | |||||
Comprehensive income |
$ | 118 | $ | 194 | ||||
Six Months Ended | ||||||||
2011 | 2010 | |||||||
Net income |
$ | 406 | $ | 364 | ||||
Other comprehensive income: |
||||||||
Foreign currency translation adjustments, net of
tax of $20 in 2011 and $16 in 2010 |
(86 | ) | 69 | |||||
Comprehensive income |
$ | 320 | $ | 433 | ||||
(3) Retirement Plans
We sponsor or participate in programs that provide retirement benefits to most of our employees.
These programs include defined benefit pension plans, defined contribution plans and postretirement
healthcare plans. A majority of our employees are covered by the FedEx Corporation Employees
Pension Plan (FedEx Plan), a defined benefit pension plan sponsored by FedEx. The FedEx Plan
covers certain U.S. employees age 21 and over with at least one year of service and provides
benefits primarily based on earnings, age and years of service. Defined contribution plans
covering a majority of U.S. employees and certain international employees are in place. We also
sponsor or participate in nonqualified benefit plans covering certain of our U.S. employee groups
and other pension plans covering certain of our international employees. For more information,
refer to the financial statements of FedEx included in its Form 10-Q for the quarter ended November
30, 2011.
Our retirement plans costs for the periods ended November 30 were as follows (in millions):
Three Months Ended | Six Months Ended | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Pension plans sponsored by FedEx |
$ | 80 | $ | 81 | $ | 160 | $ | 161 | ||||||||
Other U.S. domestic and international
pension plans |
11 | 11 | 21 | 21 | ||||||||||||
U.S. domestic and international
defined contribution
plans |
52 | 37 | 108 | 75 | ||||||||||||
Postretirement healthcare plans |
14 | 12 | 28 | 24 | ||||||||||||
$ | 157 | $ | 141 | $ | 317 | $ | 281 | |||||||||
The three- and six-month periods ended November 30, 2011 reflect the full restoration on January 1,
2011 of company-matching contributions for our 401(k) plans.
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Table of Contents
The components of the net periodic benefit cost of the pension and postretirement healthcare plans
currently sponsored by us were individually immaterial for all periods presented. No material
contributions were made during the first six months of 2012 or 2011 to pension plans sponsored by
us, and we do not expect to make material contributions in 2012.
(4) Commitments
As of November 30, 2011, our purchase commitments under various contracts for the remainder of 2012
and annually thereafter were as follows (in millions):
Aircraft and | ||||||||||||
Aircraft- | ||||||||||||
Related | Other (1) | Total | ||||||||||
2012 (remainder) |
$ | 389 | $ | 10 | $ | 399 | ||||||
2013 |
983 | 12 | 995 | |||||||||
2014 |
780 | 12 | 792 | |||||||||
2015 |
555 | 8 | 563 | |||||||||
2016 |
580 | 33 | 613 | |||||||||
Thereafter |
3,225 | 105 | 3,330 |
(1) | Primarily advertising and promotions contracts. |
The amounts reflected in the table above for purchase commitments represent noncancelable
agreements to purchase goods or services. Our obligation to purchase 15 Boeing 777
Freighters (B777F) is conditioned upon there being no event that causes us or our employees not
to be covered by the Railway Labor Act of 1926, as amended (RLA). Commitments to purchase aircraft in
passenger configuration do not include the attendant costs to modify these aircraft for cargo
transport unless we have entered into noncancelable commitments to modify such aircraft. Open
purchase orders that are cancelable are not considered unconditional purchase obligations for
financial reporting purposes and are not included in the table above.
We had $678 million in deposits and progress payments as of November 30, 2011 on aircraft purchases
and other planned aircraft-related transactions. These deposits are classified in the Other
assets caption of our condensed consolidated balance sheets. In addition to our commitment to
purchase B777Fs, our aircraft purchase commitments include the Boeing 757 (B757) in passenger
configuration, which will require additional costs to modify for cargo transport. Aircraft and
aircraft-related contracts are subject to price escalations.
The following table is a summary of the key aircraft we are committed to purchase as of November
30, 2011, with the year of expected delivery:
B777F(1) | B757 | Total | ||||||||||
2012 (remainder) |
2 | 8 | 10 | |||||||||
2013 |
4 | 6 | 10 | |||||||||
2014 |
7 | | 7 | |||||||||
2015 |
3 | | 3 | |||||||||
2016 |
3 | | 3 | |||||||||
Thereafter |
9 | | 9 | |||||||||
Total |
28 | 14 | 42 | |||||||||
(1) | Reflects the deferral during
the second quarter of 2012 of
the delivery of two B777F aircraft from 2013 to after 2016. |
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On December 14, 2011, we entered into an agreement with The Boeing Company for the purchase of 27
new Boeing 767-300 Freighter aircraft, with the first three arriving in 2014 followed by six per
year from 2015 to 2018. We are also delaying the delivery of nine B777F aircraft, five of which will
be deferred from 2014 and one per year from 2015 to 2018. (Including the two deferrals that
occurred in the second quarter of 2012, this brings the total B777F
deferrals to 11 aircraft.)
Additionally, we removed the RLA condition from two of the 15 B777F aircraft discussed above and
also exercised two B777F options for aircraft to be delivered at the end of the delivery schedule. These
aircraft transactions are not
reflected in the tables above, as they occurred subsequent to the end
of the second quarter of 2012.
A summary of future minimum lease payments under capital leases and noncancelable operating leases with an initial or
remaining term in excess of one year at November 30, 2011 is as follows (in millions):
Operating Leases | ||||||||||||||||
Aircraft | Total | |||||||||||||||
Capital | and Related | Facilities | Operating | |||||||||||||
Leases | Equipment | and Other | Leases | |||||||||||||
2012 (remainder) |
$ | 14 | $ | 370 | $ | 352 | $ | 722 | ||||||||
2013 |
118 | 499 | 640 | 1,139 | ||||||||||||
2014 |
| 473 | 551 | 1,024 | ||||||||||||
2015 |
| 455 | 517 | 972 | ||||||||||||
2016 |
| 458 | 403 | 861 | ||||||||||||
Thereafter |
| 1,545 | 3,585 | 5,130 | ||||||||||||
Total |
132 | $ | 3,800 | $ | 6,048 | $ | 9,848 | |||||||||
Less amount representing interest |
4 | |||||||||||||||
Present value of net minimum lease
payments |
$ | 128 | ||||||||||||||
(5) Contingencies
ATA Airlines. In October 2010, a jury returned a verdict in favor of ATA Airlines in its breach of
contract lawsuit against us and awarded damages of $66 million, and in January 2011, the court
awarded ATA pre-judgment interest of $5 million. While we do not agree with the verdict or the
amount of damages awarded and have appealed the matter to the U.S. Court of Appeals for the Seventh
Circuit, accounting standards required an accrual of a $66 million loss in the second quarter of
2011. We did not accrue the $5 million of interest as a loss because we have additional arguments
on appeal that lead us to believe that loss of that amount is not probable. The Seventh Circuit
heard oral argument on our appeal in November 2011.
California Paystub Class Action. A federal court in California ruled in April 2011 that paystubs
for certain FedEx Express employees in California did not meet that states requirements to reflect
pay period begin date, total overtime hours worked and the correct overtime wage rate. The ruling
came in a class action lawsuit filed by a former courier seeking damages on behalf of herself and
all other FedEx Express employees in California that allegedly received noncompliant paystubs. The
court certified the class in June 2011. The court has ruled that we are liable to the State of
California, and there will be a ruling as to whether we are liable to class members who can prove
they were injured by the paystub deficiencies. The judge has not yet decided on the amount, if any,
of liability to the State of California or to the class, but has wide discretion. Prior to any decision on the amount of
liability, we reached an
agreement to settle this matter for an immaterial amount in October 2011, subject to approval by
the court.
Other. FedEx Express and its subsidiaries are subject to other legal proceedings that arise in the
ordinary course of their business. In the opinion of management, the aggregate liability, if any,
with respect to these other actions will not have a material adverse effect on our financial
position, results of operations or cash flows.
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(6) Parent/Affiliate Transactions
Affiliate company balances that are currently receivable or payable relate to charges for services
provided to or by other FedEx affiliates, which are settled on a monthly basis, or the net activity
from participation in FedExs consolidated cash management program. In addition, we are allocated
net interest on these amounts at market rates.
We maintain an accounts receivable arrangement with FedEx TechConnect, Inc. (FedEx TechConnect),
a wholly owned subsidiary of FedEx Corporate Services, Inc. (FedEx Services). FedEx Services is
a wholly owned subsidiary of FedEx. Under this arrangement, we recognize revenue for the
transportation services provided to our U.S. customers and factor the related receivables to FedEx
TechConnect for collection. We have no continuing involvement with the receivables transferred to
FedEx TechConnect. Our net receivables recorded by FedEx TechConnect totaled $1.4 billion at
November 30, 2011 and May 31, 2011.
The costs of the FedEx Services segment are allocated to us and are included in the expense line
item Intercompany charges based on metrics such as relative revenues or estimated services
provided. We believe these allocations approximate the net cost of the functions provided by the
FedEx Services segment.
(7) Supplemental Cash Flow Information
Cash paid for interest expense and income taxes for the six-month periods ended November 30 was as
follows (in millions):
2011 | 2010 | |||||||
Cash payments for: |
||||||||
Income taxes |
$ | 149 | $ | 190 | ||||
Income tax refunds received |
(50 | ) | (50 | ) | ||||
Cash tax payments, net |
$ | 99 | $ | 140 | ||||
- 11 -
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REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
PUBLIC ACCOUNTING FIRM
The Board of Directors and Stockholder
Federal Express Corporation
Federal Express Corporation
We have
reviewed the condensed consolidated balance sheet of Federal Express Corporation as of
November 30, 2011, and the related condensed consolidated
statements of income for the three-month
and six-month periods ended November 30, 2011 and 2010 and the
condensed consolidated statements of
cash flows for the six-month periods ended November 30, 2011 and
2010. These financial statements
are the responsibility of the Companys management.
We conducted our review in accordance with the standards of the Public Company Accounting Oversight
Board (United States). A review of interim financial information consists principally of applying
analytical procedures and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance with the standards
of the Public Company Accounting Oversight Board, 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
condensed consolidated financial statements referred to above for them to be in conformity with
U.S. generally accepted accounting principles.
We have previously audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the consolidated balance sheet of Federal Express Corporation as
of May 31, 2011, and the related consolidated statements of income, changes in owners equity and
comprehensive income, and cash flows for the year then ended not presented herein, and in our
report dated July 12, 2011, we expressed an unqualified opinion on those consolidated financial
statements. In our opinion, the information set forth in the accompanying condensed consolidated
balance sheet as of May 31, 2011, is fairly stated, in all material respects, in relation to the
consolidated balance sheet from which it has been derived.
/s/ Ernst & Young LLP |
Memphis, Tennessee
December 16, 2011
December 16, 2011
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Item 2. | Managements Discussion and Analysis of Results of Operations and Financial
Condition |
GENERAL
The following Managements Discussion and Analysis of Results of Operations and Financial
Condition, which describes the principal factors affecting the results of operations and financial
condition of Federal Express Corporation (FedEx Express), is abbreviated pursuant to General
Instruction H(2)(a) of Form 10-Q. This discussion should be read in conjunction with the
accompanying quarterly unaudited condensed consolidated financial statements and our Annual Report
on Form 10-K for the year ended May 31, 2011 (Annual Report). Our Annual Report includes
additional information about our significant accounting policies, practices and the transactions
that underlie our financial results. For additional information, including a discussion of
outlook, liquidity, capital resources, contractual cash obligations and critical accounting
estimates, see the Quarterly Report on Form 10-Q of our parent, FedEx Corporation (FedEx), for
the quarter ended November 30, 2011.
We are the worlds largest express transportation company. Our sister company FedEx Corporate
Services, Inc. (FedEx Services) provides us and our other sister companies, including FedEx
Ground Package System, Inc. (FedEx Ground), with customer-facing sales, marketing, information
technology and customer service support, as well as retail access for our customers through FedEx
Office and Print Services, Inc. (FedEx Office).
The operating expenses line item Intercompany charges on the financial summary represents an
allocation that primarily includes salaries and benefits, depreciation and other costs for the
sales, marketing, information technology and customer service support provided to us by FedEx
Services and FedEx Offices net operating costs. These costs are allocated based on metrics such
as relative revenues or estimated services provided. Intercompany charges also includes
allocated charges from our parent for management fees related to services received for general
corporate oversight, including executive officers and certain legal and finance functions. We
believe the total amounts allocated reasonably reflect the cost of providing these functions.
The key indicators necessary to understand our operating results include:
| the overall customer demand for our various services; |
| the volume of shipments transported through our network, as measured by our average daily
volume and shipment weight; |
| the mix of services purchased by our customers; |
| the prices we obtain for our services, as measured by average revenue per package (yield); |
| our ability to manage our cost structure (capital expenditures and operating expenses) to
match shifting volume levels; and |
| the timing and amount of fluctuations in fuel prices and our ability to recover incremental
fuel costs through our fuel surcharges. |
The majority of our operating expenses are directly impacted by revenue and volume levels.
Accordingly, we expect these operating expenses to fluctuate on a year-over-year basis consistent
with the change in revenues and volumes. Therefore, the discussion of operating expense captions
focuses on the key drivers and trends impacting expenses other than changes in revenues and volume.
Except as otherwise specified, references to years indicate our fiscal year ending May 31, 2012 or
ended May 31 of the year referenced and comparisons are to the corresponding period of the prior
year.
- 13 -
Table of Contents
RESULTS OF OPERATIONS
The following tables compare revenues, operating expenses, operating expenses as a percent of
revenue, operating income, net income and operating margin (dollars in millions) for the periods
ended November 30:
Three Months Ended | Percent | Six Months Ended | Percent | |||||||||||||||||||||
2011 | 2010 | Change | 2011 | 2010 | Change | |||||||||||||||||||
Revenues: |
||||||||||||||||||||||||
Package: |
||||||||||||||||||||||||
U.S. overnight box |
$ | 1,623 | $ | 1,489 | 9 | $ | 3,263 | $ | 2,980 | 9 | ||||||||||||||
U.S. overnight envelope |
421 | 416 | 1 | 872 | 848 | 3 | ||||||||||||||||||
U.S. deferred |
731 | 666 | 10 | 1,462 | 1,327 | 10 | ||||||||||||||||||
Total U.S. domestic package revenue |
2,775 | 2,571 | 8 | 5,597 | 5,155 | 9 | ||||||||||||||||||
International priority |
2,171 | 2,009 | 8 | 4,369 | 3,983 | 10 | ||||||||||||||||||
International
domestic(1) |
217 | 165 | 32 | 424 | 313 | 35 | ||||||||||||||||||
Total package revenue |
5,163 | 4,745 | 9 | 10,390 | 9,451 | 10 | ||||||||||||||||||
Freight: |
||||||||||||||||||||||||
U.S. |
628 | 530 | 18 | 1,219 | 1,053 | 16 | ||||||||||||||||||
International priority |
470 | 435 | 8 | 919 | 841 | 9 | ||||||||||||||||||
International airfreight |
74 | 69 | 7 | 151 | 139 | 9 | ||||||||||||||||||
Total freight revenue |
1,172 | 1,034 | 13 | 2,289 | 2,033 | 13 | ||||||||||||||||||
Other |
71 | 62 | 15 | 136 | 126 | 8 | ||||||||||||||||||
Total revenues |
6,406 | 5,841 | 10 | 12,815 | 11,610 | 10 | ||||||||||||||||||
Operating expenses: |
||||||||||||||||||||||||
Salaries and employee benefits |
2,306 | 2,187 | 5 | 4,648 | 4,381 | 6 | ||||||||||||||||||
Purchased transportation |
339 | 307 | 10 | 675 | 597 | 13 | ||||||||||||||||||
Rentals and landing fees |
415 | 421 | (1 | ) | 833 | 819 | 2 | |||||||||||||||||
Depreciation and amortization |
285 | 263 | 8 | 564 | 515 | 10 | ||||||||||||||||||
Fuel |
1,039 | 802 | 30 | 2,115 | 1,556 | 36 | ||||||||||||||||||
Maintenance and repairs |
352 | 319 | 10 | 731 | 669 | 9 | ||||||||||||||||||
Intercompany charges |
541 | 505 | 7 | 1,082 | 1,011 | 7 | ||||||||||||||||||
Other |
790 | 782 | (2) | 1 | 1,546 | 1,456 | (2) | 6 | ||||||||||||||||
Total operating expenses |
6,067 | 5,586 | 9 | 12,194 | 11,004 | 11 | ||||||||||||||||||
Operating income |
$ | 339 | $ | 255 | 33 | $ | 621 | $ | 606 | 2 | ||||||||||||||
Operating margin |
5.3 | % | 4.4 | % | 90 | bp | 4.8 | % | 5.2 | % | (40 | )bp | ||||||||||||
Other income (expense): |
||||||||||||||||||||||||
Interest, net |
12 | 1 | NM | 20 | 4 | NM | ||||||||||||||||||
Other, net |
(7 | ) | (19 | ) | (63 | ) | (20 | ) | (37 | ) | (46 | ) | ||||||||||||
5 | (18 | ) | NM | | (33 | ) | NM | |||||||||||||||||
Income before income taxes |
344 | 237 | 45 | 621 | 573 | 8 | ||||||||||||||||||
Provision for income taxes |
123 | 85 | 45 | 215 | 209 | 3 | ||||||||||||||||||
Net income |
$ | 221 | $ | 152 | 45 | $ | 406 | $ | 364 | 12 | ||||||||||||||
(1) | International domestic revenues
include our international intra-country operations,
including our February 2011 business acquisition in India and our July 2011 business acquisition in
Mexico. |
|
(2) | Includes a $66 million legal reserve associated with the ATA Airlines lawsuit. |
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Percent of Revenue | Percent of Revenue | |||||||||||||||
Three | Three | Six | Six | |||||||||||||
Months | Months | Months | Months | |||||||||||||
Ended | Ended | Ended | Ended | |||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Operating expenses: |
||||||||||||||||
Salaries and employee benefits |
36.0 | % | 37.4 | % | 36.3 | % | 37.7 | % | ||||||||
Purchased transportation |
5.3 | 5.3 | 5.3 | 5.2 | ||||||||||||
Rentals and landing fees |
6.5 | 7.2 | 6.5 | 7.1 | ||||||||||||
Depreciation and amortization |
4.4 | 4.5 | 4.4 | 4.4 | ||||||||||||
Fuel |
16.2 | 13.7 | 16.5 | 13.4 | ||||||||||||
Maintenance and repairs |
5.5 | 5.5 | 5.7 | 5.8 | ||||||||||||
Intercompany charges |
8.5 | 8.6 | 8.4 | 8.7 | ||||||||||||
Other |
12.3 | 13.4 | (1) | 12.1 | 12.5 | (1) | ||||||||||
Total operating expenses |
94.7 | 95.6 | 95.2 | 94.8 | ||||||||||||
Operating margin |
5.3 | % | 4.4 | % | 4.8 | % | 5.2 | % | ||||||||
(1) | Includes a $66 million legal reserve associated with the ATA Airlines lawsuit. |
The following table compares selected statistics (in thousands, except yield amounts) for the
periods ended November 30:
Three Months Ended | Percent | Six Months Ended | Percent | |||||||||||||||||||||
2011 | 2010 | Change | 2011 | 2010 | Change | |||||||||||||||||||
Package Statistics |
||||||||||||||||||||||||
Average daily package volume (ADV): |
||||||||||||||||||||||||
U.S. overnight box |
1,168 | 1,196 | (2 | ) | 1,151 | 1,182 | (3 | ) | ||||||||||||||||
U.S. overnight envelope |
582 | 626 | (7 | ) | 589 | 625 | (6 | ) | ||||||||||||||||
U.S. deferred |
838 | 865 | (3 | ) | 834 | 855 | (2 | ) | ||||||||||||||||
Total U.S. domestic ADV |
2,588 | 2,687 | (4 | ) | 2,574 | 2,662 | (3 | ) | ||||||||||||||||
International priority |
569 | 585 | (3 | ) | 556 | 575 | (3 | ) | ||||||||||||||||
International domestic(1) |
529 | 354 | 49 | 486 | 339 | 43 | ||||||||||||||||||
Total ADV |
3,686 | 3,626 | 2 | 3,616 | 3,576 | 1 | ||||||||||||||||||
Revenue per package (yield): |
||||||||||||||||||||||||
U.S. overnight box |
$ | 22.05 | $ | 19.75 | 12 | $ | 22.15 | $ | 19.70 | 12 | ||||||||||||||
U.S. overnight envelope |
11.48 | 10.54 | 9 | 11.56 | 10.59 | 9 | ||||||||||||||||||
U.S. deferred |
13.84 | 12.24 | 13 | 13.70 | 12.12 | 13 | ||||||||||||||||||
U.S. domestic composite |
17.01 | 15.19 | 12 | 16.99 | 15.13 | 12 | ||||||||||||||||||
International priority |
60.56 | 54.54 | 11 | 61.42 | 54.12 | 13 | ||||||||||||||||||
International domestic(1) |
6.51 | 7.39 | (12 | ) | 6.81 | 7.22 | (6 | ) | ||||||||||||||||
Composite package yield |
22.23 | 20.77 | 7 | 22.45 | 20.65 | 9 | ||||||||||||||||||
Freight Statistics |
||||||||||||||||||||||||
Average daily freight pounds: |
||||||||||||||||||||||||
U.S. |
7,630 | 7,459 | 2 | 7,295 | 7,179 | 2 | ||||||||||||||||||
International priority |
3,451 | 3,320 | 4 | 3,289 | 3,171 | 4 | ||||||||||||||||||
International airfreight |
1,213 | 1,243 | (2 | ) | 1,188 | 1,242 | (4 | ) | ||||||||||||||||
Total average daily
freight pounds |
12,294 | 12,022 | 2 | 11,772 | 11,592 | 2 | ||||||||||||||||||
Revenue per pound (yield): |
||||||||||||||||||||||||
U.S. |
$ | 1.31 | $ | 1.13 | 16 | $ | 1.31 | $ | 1.15 | 14 | ||||||||||||||
International priority |
2.16 | 2.08 | 4 | 2.18 | 2.07 | 5 | ||||||||||||||||||
International airfreight |
0.97 | 0.88 | 10 | 0.99 | 0.87 | 14 | ||||||||||||||||||
Composite freight yield |
1.51 | 1.36 | 11 | 1.52 | 1.37 | 11 |
(1) | International domestic statistics include our international
intra-country operations, including our February 2011
business acquisition in India and our July 2011 business
acquisition in Mexico. |
- 15 -
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Revenues
Our revenues increased 10% in both the second quarter and the first half of 2012 primarily due to
an increase in U.S. domestic and IP package yields. U.S. domestic package yields increased in the
second quarter and first half of 2012 primarily due to higher fuel surcharges and increased rate
per pound. IP package yields increased in the second quarter of 2012 due to higher fuel
surcharges, increased rate per pound, and increased weights. In the
first half of 2012, IP package yields increased
primarily due to higher fuel surcharges, increased rate per pound and favorable exchange rates.
However, on-going weakness in global growth continued to be reflected in reduced demand for our
U.S. domestic and IP package services.
Our fuel surcharges are indexed to the spot price for jet fuel. Using this index, the U.S.
domestic and outbound fuel surcharge and the international fuel surcharges ranged as follows for
the periods ended November 30:
Three Months Ended | Six Months Ended | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
U.S. Domestic and Outbound Fuel
Surcharge: |
||||||||||||||||
Low |
14.00 | % | 7.00 | % | 14.00 | % | 7.00 | % | ||||||||
High |
15.50 | 8.50 | 16.50 | 10.00 | ||||||||||||
Weighted-average |
14.67 | 7.82 | 15.10 | 8.17 | ||||||||||||
International Fuel Surcharges: |
||||||||||||||||
Low |
14.00 | 7.00 | 14.00 | 7.00 | ||||||||||||
High |
21.00 | 13.50 | 23.00 | 14.00 | ||||||||||||
Weighted-average |
17.33 | 10.59 | 17.63 | 10.83 |
On September 22, 2011, we announced a 5.9% average list price increase effective January 2,
2012, for FedEx Express U.S. domestic, U.S. export and U.S. import services, while we lowered our
fuel surcharge index by two percentage points. In September 2010, we announced a 5.9% average
list price increase effective January 3, 2011, for FedEx U.S. domestic and U.S. outbound express
package and freight shipments and made various changes to other surcharges, while we lowered our
fuel surcharge index by two percentage points.
Operating Income
Our operating income increased during the second quarter and first half of 2012 as a result of the
benefit from the timing lag that exists between when fuel prices change and when indexed fuel
surcharges automatically adjust. However, operating margin decreased in the first half of 2012 due
to lower volumes in our U.S. domestic package and higher-yielding IP package services. The year-over-year
comparison of the results was favorably impacted by the inclusion in the second quarter of 2011 of
a $66 million legal reserve associated with the ATA Airlines lawsuit (see Note 5 of the
accompanying unaudited condensed consolidated financial statements).
Salaries and employee benefits increased 5% in the second quarter and 6% in the first half of 2012
due to higher incentive compensation accruals and the reinstatement of full 401(k) company-matching
contributions effective January 1, 2011. Purchased transportation costs increased 10% in the
second quarter of 2012 and 13% in the first half of 2012 due to higher utilization of third-party
transportation providers, primarily in Europe, and recent business acquisitions in India and Mexico.
Maintenance and repair expense increased 10% in the second quarter of 2012 and 9% in the first half
of 2012 due to timing of aircraft maintenance activities.
Fuel costs increased 30% in the second quarter of 2012 and 36% in the first half of 2012 due to
increases in the average price per gallon of fuel. Based on a static analysis of the net impact of
year-over-year changes in fuel prices compared to year-over-year changes in fuel surcharges, fuel
had a positive impact on operating income in both the second quarter and first half of 2012. This
analysis considers the estimated impact of the reduction in fuel surcharges included in the base
rates we charge for our services.
- 16 -
Table of Contents
Other Income and Income Taxes
Interest income increased during the second quarter and first half of 2012 primarily due to
increased capitalized interest related to aircraft and lower interest expense. Other non-operating expense decreased in the second quarter and first half of 2012
primarily due to the impact of foreign currency exchange rates.
Our effective tax rate was 35.8% for the second quarter of 2012 and 34.6% for the first half of
2012, compared with 35.8% for the second quarter of 2011 and 36.5% for the first half of 2011. For
the remainder of 2012, we expect the effective tax rate to be between 36.0% and 37.0%. The actual
rate, however, will depend on a number of factors, including the amount and source of operating
income.
Other than tax risks and related indemnifications recorded in connection with the business
acquisition described below, there were no material changes to our liabilities for unrecognized tax
benefits from May 31, 2011. We anticipate that certain income tax return proceedings, including an
Internal Revenue Service audit of our 2007-2009 U.S. income tax returns, will be completed during
the next 12 months and could result in a change in our balance of unrecognized tax benefits. The
expected impact of any changes would not be material to our consolidated financial statements.
Business Acquisition
On July 25, 2011, FedEx completed its acquisition of Servicios Nacionales Mupa, S.A. de C.V.
(MultiPack), a Mexican domestic express package delivery company, for $128 million in cash from
operations. The financial results of the acquired business are included in our results from the
date of acquisition and were not material to our results of operations or financial condition.
Substantially all of the purchase price was allocated to goodwill.
NEW ACCOUNTING GUIDANCE
New accounting rules and disclosure requirements can significantly impact our reported results and
the comparability of our financial statements. See our Annual Report for a discussion of the
impact of new accounting guidance issued but not yet effective as of May 31, 2011. We believe that
no new accounting guidance was adopted or issued during the first half of 2012 that is relevant to
the readers of our financial statements. However, there are numerous new proposals under
development which, if and when enacted, may have a significant impact on our financial reporting.
FORWARD-LOOKING STATEMENTS
Certain
statements in this report are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995 with respect to our financial condition, results
of operations, cash flows, plans, objectives, future performance and business. Forward-looking
statements include those preceded by, followed by or that include the words may, could,
would, should, believes, expects, anticipates, plans, estimates, targets,
projects, intends or similar expressions. These forward-looking statements involve risks and
uncertainties. Actual results may differ materially from those contemplated (expressed or implied)
by such forward-looking statements, because of, among other things, potential risks and
uncertainties, such as:
| economic conditions in the global markets in which we operate; |
| damage to our reputation or loss of brand equity; |
| disruptions to the Internet or our technology infrastructure, including those impacting our
computer systems and Web site, which can adversely affect our operations and reputation among
customers; |
|
| the price and availability of jet and vehicle fuel; |
- 17 -
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| our ability to manage our cost structure for capital expenditures and operating expenses,
and match it to shifting and future customer volume levels; |
| the impact of intense competition on our ability to maintain or increase our prices
(including our fuel surcharges in response to rising fuel costs) or to maintain or grow our
market share; |
| our ability to maintain good relationships with our employees and prevent attempts by labor
organizations to organize groups of our employees, which could significantly increase our
operating costs and reduce our operational flexibility; |
| our ability to effectively operate, integrate, leverage and grow acquired businesses, and
to continue to support the value we allocate to these acquired businesses, including their
goodwill; |
| any impacts on our businesses resulting from new domestic or international government laws
and regulation, including regulatory actions affecting global aviation rights, increased air
cargo and other security or pilot safety requirements, and tax, accounting, trade (such as
protectionist measures enacted in response to weak economic conditions), labor (such as
card-check legislation or changes to the Railway Labor Act affecting our employees),
environmental (such as global climate change legislation) or postal rules; |
| adverse weather conditions or localized natural disasters in key geographic areas, such as
earthquakes, volcanoes, and hurricanes, which can disrupt our electrical service, damage our
property, disrupt our operations, increase our fuel costs and adversely affect our shipment
levels; |
| increasing costs, the volatility of costs and funding requirements and other legal mandates
for employee benefits, especially pension and healthcare benefits; |
| the impact of any international conflicts or terrorist activities on the United States and
global economies in general, the transportation industry or us in particular, and what effects
these events will have on our costs or the demand for our services; |
| changes in foreign currency exchange rates, especially in the euro, Chinese yuan, Canadian
dollar, British pound and Japanese yen, which can affect our sales levels and foreign currency
sales prices; |
| market acceptance of our new service and growth initiatives; |
| any liability resulting from and the costs of defending against class-action litigation,
such as wage-and-hour and discrimination and retaliation claims, and any other legal
proceedings; |
| the outcome of future negotiations to reach new collective bargaining agreements
including with the union that represents our pilots (the current pilot contract is scheduled
to become amendable in March 2013 unless the union exercises its option to shorten the
contract, in which case the agreement would be amendable in March 2012); |
| any impact on our business from disruptions or modifications in service by the United
States Postal Service (USPS), which is a significant customer and vendor of ours, as a
consequence of the USPSs current financial difficulties or any resulting structural changes
to its operations, network, service offerings or pricing; |
|
| the impact of technology developments on our operations and on demand for our services, and
our ability to continue to identify and eliminate unnecessary information technology
redundancy and complexity throughout the organization; |
- 18 -
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| widespread outbreak of an illness or any other communicable disease, or any other public
health crisis; |
| availability of financing on terms acceptable to FedEx and FedExs ability to maintain our
current credit ratings, especially given the capital intensity of our operations; |
| significant changes in the volumes of shipments transported through our networks, customer
demand for our various services or the prices we obtain for our services; and |
| other risks and uncertainties you can find in FedExs press releases and SEC filings,
including the risk factors identified under the heading Risk Factors in Managements
Discussion and Analysis of Results of Operations and Financial Condition in our Annual
Report, as updated by our quarterly reports on Form 10-Q. |
As a result of these and other factors, no assurance can be given as to our future results and
achievements. Accordingly, a forward-looking statement is neither a prediction nor a guarantee of
future events or circumstances, and those future events or circumstances may not occur. You should
not place undue reliance on forward-looking statements, which speak only as of the date on which
they are made. We undertake no obligation to update or alter any forward-looking statements,
whether as a result of new information, future events or otherwise.
- 19 -
Table of Contents
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
Omitted under the reduced disclosure format permitted by General Instruction H(2)(c) of Form 10-Q.
Item 4. | Controls and Procedures |
Our management, with the participation of our principal executive and financial officers, has
evaluated the effectiveness of our disclosure controls and procedures in ensuring that the
information required to be disclosed in our filings under the Securities Exchange Act of 1934, as
amended, is recorded, processed, summarized and reported within the time periods specified in the
Securities and Exchange Commissions rules and forms, including ensuring that such information is
accumulated and communicated to management as appropriate to allow timely decisions regarding
required disclosure. Based on such evaluation, our principal executive and financial officers have
concluded that such disclosure controls and procedures were effective as of November 30, 2011 (the
end of the period covered by this Quarterly Report on Form 10-Q).
During our fiscal quarter ended November 30, 2011, no change occurred in our internal control over
financial reporting that has materially affected, or is reasonably likely to materially affect, our
internal control over financial reporting.
- 20 -
Table of Contents
PART II. OTHER INFORMATION
Item 1. | Legal Proceedings |
For a description of all material pending legal proceedings, see Note 5 of the accompanying
unaudited condensed consolidated financial statements.
In February 2011, we received a demand for production of information and documents in connection
with a civil investigation by the Antitrust Division of the U.S. Department of Justice into the
policies and practices of FedEx and United Parcel Service, Inc. for dealing with third-party
consultants who work with shipping customers to negotiate lower rates. Related antitrust
litigation with one of these third-party consultants was dismissed in late May 2011, but the court
granted the plaintiff permission to file an amended complaint, which FedEx received in late June
2011. In November 2011, the court granted FedExs motion to dismiss this complaint, but again allowed
the plaintiff to file an amended complaint. The plaintiff filed a new complaint on December 12,
2011.
Item 1A. | Risk Factors |
With the exception of the inclusion in Forward-Looking Statements of a risk factor relating to
our relationship, as a significant customer and vendor, with the USPS, there have been no material
changes from the risk factors disclosed in our Annual Report (under the heading Risk Factors in
Managements Discussion and Analysis of Results of Operations and Financial Condition) in
response to Part I, Item 1A of Form 10-K.
Item 5. | Other Information |
On December 14, 2011, we entered into an agreement with The Boeing Company for the purchase of 27
new B767F aircraft. The agreement provides for delivery of three of the 27 B767F aircraft in 2014
and six B767F aircraft in each year thereafter through 2018. The agreement also provides us with
an option to purchase an additional 30 767F aircraft. Most of the purchase price for each aircraft
is due upon delivery of the aircraft. A copy of the purchase agreement will be filed as an exhibit
to our quarterly report on Form 10-Q for the fiscal quarter ending February 29, 2012.
In the
second quarter of fiscal 2012, we delayed the delivery of two B777F aircraft from 2013, and in
conjunction with the execution of the B767F aircraft purchase
agreement, are also delaying the
delivery of nine B777F aircraft, five of which will be deferred from 2014 and one per year from 2015
to 2018, to better align air network capacity with demand. We also exercised two B777F options for aircraft
to be delivered at the end of the delivery schedule.
Item 6. | Exhibits |
Exhibit | ||||
Number | Description of Exhibit | |||
10.1 | Supplemental Agreement No.19 (and related side letter) dated as of October 27, 2011, amending
the Boeing 777 Freighter Purchase Agreement dated as of November 7, 2006 between The Boeing
Company and Federal Express Corporation. Confidential treatment has been requested for
confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities
Exchange Act of 1934, as amended. (Filed as Exhibit 10.2 to FedEx Corporations FY12 Second
Quarter Report on Form 10-Q, and incorporated herein by reference.) |
|||
10.2 | Letter Agreement dated September 9, 2011, amending the Transportation Agreement dated July
31, 2006 between the United States Postal Service and Federal Express Corporation.
Confidential treatment has been requested for confidential commercial and financial
information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.
(Filed as Exhibit 10.3 to FedEx Corporations FY12 Second Quarter Report on Form 10-Q, and
incorporated herein by reference.) |
- 21 -
Table of Contents
Exhibit | ||||
Number | Description of Exhibit | |||
12.1 | Computation of Ratio of Earnings to Fixed Charges. |
|||
15.1 | Letter re: Unaudited Interim Financial Statements. |
|||
31.1 | Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under
the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002. |
|||
31.2 | Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under
the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002. |
|||
32.1 | Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|||
32.2 | Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|||
101.1 | Interactive Data Files. |
- 22 -
Table of Contents
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
FEDERAL EXPRESS CORPORATION |
||||
Date: December 16, 2011 | /s/ J. RICK BATEMAN | |||
J. RICK BATEMAN | ||||
VICE PRESIDENT AND WORLDWIDE CONTROLLER (PRINCIPAL ACCOUNTING OFFICER) |
- 23 -
Table of Contents
EXHIBIT INDEX
Exhibit | ||||
Number | Description of Exhibit | |||
10.1 | Supplemental Agreement No.19 (and related side letter) dated as of October 27, 2011,
amending the Boeing 777 Freighter Purchase Agreement dated as of November 7, 2006 between
The Boeing Company and Federal Express Corporation. Confidential treatment has been
requested for confidential commercial and financial information, pursuant to Rule 24b-2
under the Securities Exchange Act of 1934, as amended. (Filed as Exhibit 10.2 to FedEx
Corporations FY12 Second Quarter Report on Form 10-Q, and incorporated herein by
reference.) |
|||
10.2 | Letter Agreement dated September 9, 2011, amending the Transportation Agreement dated
July 31, 2006 between the United States Postal Service and Federal Express Corporation.
Confidential treatment has been requested for confidential commercial and financial
information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.
(Filed as Exhibit 10.3 to FedEx Corporations FY12 Second Quarter Report on Form 10-Q, and
incorporated herein by reference.) |
|||
12.1 | Computation of Ratio of Earnings to Fixed Charges. |
|||
15.1 | Letter re: Unaudited Interim Financial Statements. |
|||
31.1 | Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a)
under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002. |
|||
31.2 | Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a)
under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002. |
|||
32.1 | Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|||
32.2 | Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|||
101.1 | Interactive Data Files. |
E-1