<PAGE>
==============================================================================
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 NOVEMBER 30, 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 December 31, 2000
Common Stock, par value $.10 per share 285,523,518
===============================================================================
<PAGE>
FEDEX CORPORATION
INDEX
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Page
----
<S> <C>
ITEM 1: Financial Statements
Condensed Consolidated Balance Sheets
November 30, 2000 and May 31, 2000.............................. 3-4
Condensed Consolidated Statements of Income
Three and Six Months Ended November 30, 2000 and 1999........... 5
Condensed Consolidated Statements of Cash Flows
Six Months Ended November 30, 2000 and 1999..................... 6
Notes to Condensed Consolidated Financial Statements.............. 7-11
Review of Condensed Consolidated Financial Statements
by Independent Public Accountants............................... 12
Report of Independent Public Accountants.......................... 13
ITEM 2: Management's Discussion and Analysis of Results of
Operations and Financial Condition..................... 14-22
ITEM 3: Quantitative and Qualitative Disclosures About Market Risk..... 23
PART II. OTHER INFORMATION
ITEM 6: Exhibits and Reports on Form 8-K............................... 24
Signatures........................................................ 25
EXHIBIT INDEX..................................................... E-1
</TABLE>
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<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FEDEX CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
November 30,
2000 May 31,
(Unaudited) 2000
----------- ----------
(In thousands)
<S> <C> <C>
Current Assets:
Cash and cash equivalents.........................$ 654,777 $ 67,959
Receivables, less allowances of
$90,288,000 and $85,972,000..................... 2,673,344 2,547,043
Spare parts, supplies and fuel.................... 281,907 255,291
Deferred income taxes............................. 349,972 317,784
Prepaid expenses and other........................ 88,557 96,667
----------- --------
Total current assets.......................... 4,048,557 3,284,744
Property and Equipment, at Cost........................ 15,352,228 14,742,543
Less accumulated depreciation and amortization.... 8,142,072 7,659,016
----------- ----------
Net property and equipment.................... 7,210,156 7,083,527
Other Assets:
Goodwill.......................................... 499,762 500,547
Other............................................. 728,696 658,293
----------- -----------
Total other assets............................ 1,228,458 1,158,840
----------- -----------
$12,487,171 $11,527,111
=========== ===========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
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<PAGE>
FEDEX CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' INVESTMENT
<TABLE>
<CAPTION>
November 30,
2000 May 31,
(Unaudited) 2000
----------- ----------
(In thousands)
<S> <C> <C>
Current Liabilities:
Current portion of long-term debt...............$ 23,079 $ 6,537
Accrued salaries and employee benefits.......... 762,864 755,747
Accounts payable................................ 1,287,831 1,120,855
Accrued expenses................................ 944,679 1,007,887
----------- -----------
Total current liabilities................... 3,018,453 2,891,026
Long-Term Debt, Less Current Portion................. 2,230,156 1,776,253
Deferred Income Taxes................................ 305,308 344,613
Other Liabilities.................................... 1,786,261 1,729,976
Commitments (Note 7)
Common Stockholders' Investment:
Common Stock, $.10 par value;
800,000,000 shares authorized, 298,573,387
issued at November 30 and May 31, 2000...... 29,857 29,857
Additional paid-in capital...................... 1,078,560 1,079,462
Retained earnings .............................. 4,649,286 4,295,041
Treasury stock, at cost; deferred compensation
and other..................................... (559,184) (583,043)
Accumulated other comprehensive income.......... (51,526) (36,074)
----------- ----------
Total common stockholders' investment....... 5,146,993 4,785,243
----------- ----------
$12,487,171 $11,527,111
=========== ===========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
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<PAGE>
FEDEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
November 30, November 30,
------------------------ -----------------------
2000 1999 2000 1999
----------- ---------- ---------- ----------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C>
Revenues..........................................$4,894,921 $4,570,104 $9,673,657 $8,890,081
Operating Expenses:
Salaries and employee benefits.............. 1,999,857 1,873,804 3,994,619 3,704,637
Purchased transportation..................... 439,312 437,409 874,189 827,717
Rentals and landing fees..................... 407,353 393,512 798,038 760,219
Depreciation and amortization................ 309,487 285,360 612,184 562,622
Fuel......................................... 313,185 225,101 563,179 409,561
Maintenance and repairs...................... 277,974 278,092 588,158 533,361
Other........................................ 802,341 772,291 1,586,911 1,503,622
---------- ---------- ---------- ----------
4,549,509 4,265,569 9,017,278 8,301,739
---------- ---------- ---------- ----------
Operating Income.................................. 345,412 304,535 656,379 588,342
Other Income (Expense):
Interest, net................................ (35,337) (26,589) (68,130) (47,197)
Other, net................................... 5,053 4,982 1,124 4,663
---------- ---------- ---------- ----------
(30,284) (21,607) (67,006) (42,534)
---------- ---------- ---------- ----------
Income Before Income Taxes........................ 315,128 282,928 589,373 545,808
Provision for Income Taxes........................ 121,324 111,745 226,909 215,591
---------- ---------- ---------- ----------
Net Income........................................$ 193,804 $ 171,183 $ 362,464 $330,217
========== ========== ========== ==========
Earnings per common share:
Basic........................................$ .68 $ .58 $ 1.27 $ 1.12
========== ========== ========== ==========
Assuming dilution............................$ .67 $ .57 $ 1.25 $ 1.10
========== ========== ========== ==========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
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<PAGE>
FEDEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
November 30,
----------------------------
2000 1999
----------- ------------
(In thousands)
<S> <C> <C>
Net Cash Provided by Operating Activities...........$ 834,567 $ 676,454
Investing Activities:
Purchases of property and equipment............ (819,378) (838,586)
Proceeds from disposition of property
and equipment:
Sale-leaseback transaction................. 80,000 -
Reimbursements of A300 and MD11 deposits... - 24,377
Other dispositions......................... 20,133 142,979
Acquisition of business........................ - (115,768)
Other, net..................................... (15,263) (13,848)
----------- -----------
Net cash used in investing activities............... (734,508) (800,846)
Financing Activities:
Short-term borrowings, net..................... - 200,000
Proceeds from debt issuances................... 478,044 497,120
Principal payments on debt..................... (230) (12,564)
Proceeds from stock issuances.................. 8,589 12,662
Purchase of treasury stock..................... - (369,508)
Other, net..................................... 356 (10,748)
----------- -----------
Net cash provided by financing activities........... 486,759 316,962
----------- -----------
Net increase in cash and cash equivalents........... 586,818 192,570
Cash and cash equivalents at beginning of period.... 67,959 325,323
----------- -----------
Cash and cash equivalents at end of period..........$ 654,777 $ 517,893
=========== ===========
Cash payments for:
Interest (net of capitalized interest).........$ 71,690 $ 51,251
=========== ===========
Income taxes...................................$ 345,184 $ 210,859
=========== ===========
Non-cash investing and financing activities:
Fair value of assets surrendered under
exchange agreements (with two airlines)......$ - $ 19,450
Fair value of assets acquired under
exchange agreements.......................... 1,785 18,903
----------- -----------
Fair value of assets surrendered (under) over
fair value of assets acquired................$ (1,785) $ 547
=========== ===========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
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<PAGE>
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 and 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
November 30, 2000 and the consolidated results of its operations for the
three- and six-month periods ended November 30, 2000 and 1999, and its
consolidated cash flows for the six-month periods ended November 30, 2000 and
1999. Operating results for the three- and six-month periods ended November
30, 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 and SFAS No.
138, 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 received $30,493,000 for the second quarter of 2001
and $57,427,000 for the first half of 2001. Through the first half of 2000,
there were no such settlements. As of November 30, 2000, contracts in place
to fix the price of jet fuel covered a total notional volume of 521,920,000
gallons through 2002. Based on current market prices, the fair value of these
jet fuel hedging contracts was an asset of approximately $14,534,000 at
November 30, 2000 and $51,060,000 at May 31, 2000. As of December 31, 2000,
contracts in place to fix the price of jet fuel covered approximately 41% of
the expected jet fuel usage for the remainder of 2001 and approximately 33%
for 2002.
Certain prior period amounts have been reclassified to conform to the
current presentation.
(2) ACQUISITION
On November 12, 2000, the Company entered into an agreement to
acquire American Freightways Corporation ("AF"), a multi-regional
less-than-truckload carrier, for $28.13 per share, or approximately
$1,170,000,000. The purchase price includes $920,000,000, payable half in
cash and half in FedEx stock to the shareholders of AF and the assumption of
approximately
- 7 -
<PAGE>
$250,000,000 in AF debt. This business combination will be accounted for as a
purchase.
During December 2000, the Company completed the first step of its
acquisition of AF by acquiring, in a tender offer, approximately 50.1% of the
outstanding shares of AF, or 16,380,038 shares at a price of $28.13 per share.
AF will merge into a newly-created subsidiary of FedEx and the remaining AF
common shares will be converted into shares of FedEx common stock having a value
of $28.13. FedEx will utilize shares of treasury stock to acquire the remaining
interest.
The acquisition is expected to be completed on or about February 9,
2001. After completing the acquisition of AF, the Company plans to report
separate results for a newly-formed FedEx freight group, which will include the
financial results of both AF and Viking Freight, Inc.
(3) COMPREHENSIVE INCOME
The following table provides a reconciliation of net income reported in
the Company's consolidated financial statements to comprehensive income:
<TABLE>
<CAPTION>
Three Months
Ended November 30,
------------------
2000 1999
-------- --------
(In thousands)
<S> <C> <C>
Net income.......................................... $193,804 $171,183
Other comprehensive income:
Unrealized gain (loss) on available-for-sale
securities, net of deferred tax benefit of
$2,383,000 and deferred taxes of $378,000........ (3,728) 591
Foreign currency translation adjustments,
net of deferred tax benefit of $2,486,000 and
deferred taxes of $577,000...................... (12,686) 2,335
-------- --------
Comprehensive income.............................. $177,390 $174,109
======== ========
Six Months
Ended November 30,
------------------
2000 1999
-------- --------
(In thousands)
Net income.......................................... $362,464 $330,217
Other comprehensive income:
Unrealized losses on available-for-sale
securities, net of deferred tax benefits of
$553,000 and $1,194,000.......................... (780) (1,868)
Foreign currency translation adjustments,
net of deferred tax benefit of $3,749,000 and
deferred taxes of $732,000...................... (14,672) 3,504
-------- --------
Comprehensive income.............................. $347,012 $331,853
======== ========
</TABLE>
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<PAGE>
(4) FINANCING ARRANGEMENTS
Commercial paper in the amount of $1,000,000,000 was outstanding at
November 30, 2000. Interest rates on these borrowings approximate 7.1%. The
commercial paper is classified as Long-Term Debt based on the Company's ability
and intent to refinance these borrowings 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 November 30, 2000, no additional borrowings were available
under this commitment.
On December 13, 2000, the Company closed on an additional 364-day
$750,000,000 revolving credit facility. This facility will be utilized to back
commercial paper borrowings that funded the cash requirements of the AF
acquisition and for general corporate purposes.
(5) COMPUTATION OF EARNINGS PER SHARE
The calculation of basic and diluted earnings per share for the three-
and six-month periods ended November 30, 2000 and 1999 was as follows (in
thousands, except per share amounts):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
November 30, November 30,
---------------------- ----------------------
2000 1999 2000 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net income applicable to common
stockholders .................. $ 193,804 $ 171,183 $ 362,464 $ 330,217
========= ========= ========= =========
Weighted-average shares of common
stock outstanding ............. 285,083 293,415 284,899 295,793
========= ========= ========= =========
Basic earnings per share ......... $ .68 $ .58 $ 1.27 $ 1.12
========= ========= ========= =========
Weighted-average shares of common
stock outstanding ............. 285,083 293,415 284,899 295,793
Common equivalent shares:
Assumed exercise of outstanding
dilutive options ............. 15,002 12,906 14,660 13,056
Less shares repurchased from
proceeds of assumed exercise
of options ................... (10,261) (8,240) (10,285) (7,888)
--------- --------- --------- ---------
Weighted-average common and
common equivalent shares ...... 289,824 298,081 289,274 300,961
========= ========= ========= =========
Earnings per share,
assuming dilution ............. $ .67 $ .57 $ 1.25 $ 1.10
========= ========= ========= =========
</TABLE>
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<PAGE>
(6) 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):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
November 30, November 30,
----------------------- -----------------------
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenue
FedEx Express $3,981,092 $3,736,027 $7,896,773 $7,322,833
FedEx Ground 581,696 521,062 1,124,509 996,958
Other ....... 332,133 313,015 652,375 570,290
---------- ---------- ---------- ----------
$4,894,921 $4,570,104 $9,673,657 $8,890,081
========== ========== ========== ==========
Operating income
FedEx Express $ 270,510 $ 211,216 $ 528,238 $ 420,159
FedEx Ground 57,404 65,637 100,416 116,150
Other ....... 17,498 27,682 27,725 52,033
---------- ---------- ---------- ----------
$ 345,412 $ 304,535 $ 656,379 $ 588,342
========== ========== ========== ==========
</TABLE>
(7) COMMITMENTS
As of November 30, 2000, the Company's purchase commitments for the
remainder of 2001 and annually thereafter under various contracts were as
follows (in thousands):
<TABLE>
<CAPTION>
Aircraft-
Aircraft Related(1) Other(2) Total
-------- ---------- -------- ----------
<S> <C> <C> <C> <C>
2001 (remainder) $186,700 $263,400 $216,400 $ 666,500
2002 400,500 421,500 26,500 848,500
2003 482,300 516,700 8,300 1,007,300
2004 354,100 479,900 7,600 841,600
2005 176,100 512,900 7,600 696,600
</TABLE>
(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, 29 MD11s, 8 A300s, 8
A310s and 75 Ayres ALM 200s to be delivered through 2006. Deposits and progress
payments of $9,050,000 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 November 30, 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 12 additional DC10s, along with
additional aircraft engines and equipment.
- 10 -
<PAGE>
Lease commitments added since May 31, 2000 for the one MD11 purchased in
2000 and subsequently sold and leased back, are as follows (in thousands):
<TABLE>
<S> <C>
2001 $ 1,025
2002 5,011
2003 6,719
2004 6,568
2005 7,076
Thereafter 116,122
</TABLE>
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<PAGE>
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 November
30, 2000, and the related condensed consolidated statements of income for the
three- and six-month periods ended November 30, 2000 and 1999 and the condensed
consolidated statements of cash flows for the six-month periods ended November
30, 2000 and 1999, included herein, as indicated in their report thereon
included on page 13.
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<PAGE>
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 November 30,
2000, and the related condensed consolidated statements of income for the three-
and six-month periods ended November 30, 2000 and 1999, and the condensed
consolidated statements of cash flows for the six-month periods ended November
30, 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
December 19, 2000
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<PAGE>
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 and six months ended November 30:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------ Percent ---------------- Percent
2000 1999 Change 2000 1999 Change
---- ---- ------- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C>
Revenues $4,895 $4,570 + 7 $9,674 $8,890 + 9
Operating income 345 305 +13 656 588 +12
Net income 194 171 +13 362 330 +10
-------------------------------------------------------------------------------------------
Earnings per diluted share $0.67 $0.57 +18 $1.25 $1.10 +14
===========================================================================================
</TABLE>
FedEx Corporation (also referred to herein as "FedEx" or the "Company")
results for the second quarter and first half ended November 30, 2000 include
solid year-over-year growth in operating income and net income. Continued volume
and revenue per package (yield) growth on international express packages were
the most significant contributing factors. Operating income was further enhanced
by ongoing yield-management actions and cost control measures as well as
increased productivity. While higher fuel costs continued to negatively affect
operating costs, the Company's fuel surcharges and hedging activity programs
were effective in offsetting the higher expenses.
In the second quarter, FedEx continued to capitalize on its international
express network that provides extensive, reliable express transportation service
for the global economy. For the second quarter, year-over-year revenue growth on
Federal Express Corporation ("FedEx Express") international priority (IP)
packages was more than 16% as a result of volume growth of 11% and a yield
increase of 5%. For the first half, IP revenue growth was more than 18% due to
strong volumes and yields. Domestic U.S. overnight box volume continued steady
growth of 4% for both the second quarter and the first half of 2001. The
Company's yield-management actions, including a sales focus on higher-yielding
business, resulted in higher domestic express and deferred product yields. Good
volume growth and yield improvement at FedEx Ground Package System, Inc. ("FedEx
Ground") also contributed to the increase in revenue for the second quarter. In
addition, cost control measures such as limiting staffing additions and lowering
discretionary spending more than offset increased fuel costs and costs
associated with implementing the Company's new sales and marketing strategy and
home delivery service offering in the second quarter and the first half of 2001.
Increased fuel prices negatively impacted year-over-year expenses by $78
million for the second quarter and $133 million for the first half of 2001, net
of the effects of jet fuel hedging contracts. In response to higher fuel costs,
several of our subsidiaries have implemented fuel surcharges. At 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. At FedEx Ground, a 1.25%
fuel surcharge was implemented effective August 7, 2000. We continue to evaluate
the level of fuel surcharges necessary in light of current and forecasted energy
costs.
- 14 -
<PAGE>
FedEx received approximately $30 million in the second quarter and $57
million in the first half of 2001 under jet fuel hedging contracts. The
Company has also entered into these contracts through 2002, as outlined in
the table below:
<TABLE>
<CAPTION>
2001
--------------------
Third Fourth
Quarter Quarter 2002
-------- ------- ------
<S> <C> <C> <C>
Percentage of usage hedged 23% 62% 33%
Price per gallon (including
taxes and fees) $.727 $.786 $.964
</TABLE>
Operating results also reflect the continuing implementation of the
rebranding and reorganization initiatives begun in 2000. We believe this
strategy will enable our operating subsidiaries to compete collectively while
retaining the independent operating structure of their business units. Over
time, this strategy will also allow us to better align the services provided
by each operating subsidiary based on the strengths of their respective
networks. 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 are now centralized in
FedEx Services. We have largely completed the retraining of our sales force,
but continue to incur costs associated with the retooling of our automation
systems and vehicle and facilities rebranding. The rebranding costs were
approximately $8 million for the second quarter and approximately $13 million
for the first half of 2001.
Net interest expense increased 33% for the second quarter and 44% for the
first half of 2001 from the prior year periods due to higher commercial paper
borrowings, primarily incurred as a result of the prior year stock repurchase
program. The Company's effective tax rate for the second quarter and first half
of 2001 was 38.5%, compared to 39.5% in the prior year periods. The decline in
the effective tax rate is attributable to a number of factors, none of which is
individually significant.
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 allocated to these operating segments 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.
- 15 -
<PAGE>
FEDEX EXPRESS
The following table compares revenues and operating income (in millions)
and selected statistics (in thousands, except yield amounts) for the three- and
six-month periods ended November 30:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------ Percent ------------------ Percent
2000 1999(1) Change 2000 1999(1) Change
---- ---- ------ ---- ---- -------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Package:
U.S. overnight box(2) $1,484 $1,393 + 7 $2,964 $2,773 + 7
U.S. overnight envelope(3) 456 451 + 1 928 904 + 3
U.S. deferred 634 588 + 8 1,252 1,147 + 9
International Priority 1,023 881 +16 2,007 1,699 +18
------ ------ ------ ----
Total package revenue 3,597 3,313 + 9 7,151 6,523 +10
Freight:
U.S. 177 144 +23 339 274 +24
International 102 127 -20 217 253 -14
------ ------ ------ ----
Total freight revenue 279 271 + 3 556 527 + 6
Other 105 152 -31 190 273 -30
------ ------ ------ ------
Total revenues $3,981 $3,736 + 7 $7,897 $7,323 + 8
====== ====== ====== ======
Operating Expenses:
Salaries and employee benefits 1,582 3,178
Purchased transportation 147 297
Rentals and landing fees 354 698
Depreciation and amortization 201 398
Fuel 300 541
Maintenance and repairs 238 506
Intercompany charges 346 673
Other 542 1,078
----- -----
Total operating expenses 3,710 3,525 + 5 7,369 6,903 + 7
----- ----- ----- ------
Operating income $ 271 $ 211 +28 $ 528 $ 420 +26
====== ====== ====== ======
Package statistics:
Average daily packages:
U.S. overnight box 1,292 1,241 + 4 1,273 1,222 + 4
U.S. overnight envelope 757 770 - 2 757 759 -
U.S. deferred 924 913 + 1 900 876 + 3
IP 359 323 +11 348 310 +12
------ ------ ------ -----
Composite 3,332 3,247 + 3 3,278 3,167 + 4
Revenue per package (yield):
U.S. overnight box $18.23 $17.82 + 2 $18.19 $17.72 + 3
U.S. overnight envelope 9.56 9.29 + 3 9.58 9.30 + 3
U.S. deferred 10.88 10.22 + 6 10.87 10.24 + 6
IP 45.27 43.31 + 5 45.04 42.88 + 5
Composite 17.13 16.20 + 6 17.04 16.09 + 6
Freight statistics:
Average daily pounds:
U.S. 4,749 5,072 - 6 4,556 4,810 - 5
International 2,234 2,574 -13 2,273 2,539 -10
------ ------ ------ ------
Composite 6,983 7,646 - 9 6,829 7,349 - 7
Revenue per pound (yield):
U.S. $ .59 $ .45 +31 $ .58 $ .45 +29
International .73 .78 - 6 .75 .78 - 4
Composite .63 .56 +13 .64 .56 +14
</TABLE>
1 Operating expense detail for the three- and six-month periods ended November
30, 1999 has been omitted, as this data is not comparable to the three- and
six-month periods ended November 30, 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.
================================================================================
- 16 -
<PAGE>
Revenues
Total package revenue increased 9% in the second quarter and 10% in
the first half of 2001, principally due to increases in IP and U.S. overnight
box volumes. Average daily package volume growth rates for U.S. domestic
overnight box maintained a steady growth rate of 4% for the second quarter
and the first half. Total package yield increased 6% for the second quarter
and first half of 2001, continuing the upward trend resulting from our
yield-management strategy, which includes restricting growth of less
profitable business.
Total freight revenue for the second quarter and first half of 2001
increased due to significantly improved yields in U.S. freight, offset by
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. Hushkit sales have continued to
decrease compared to the prior year periods and are expected to be immaterial
for the remainder of 2001.
Operating Income
Operating income increased 28% for the second quarter and 26% for the
first half of 2001 year over year, despite higher fuel costs. A 36% increase in
average jet fuel price per gallon contributed to a negative impact of
approximately $67 million on second quarter total fuel costs, including the
results of jet fuel hedging contracts entered into to mitigate some of the
increased jet fuel costs. For the first half, the impact was $110 million, net
of hedging effects, resulting from a 33% increase in average jet fuel price per
gallon. Fuel surcharges implemented during 2000 offset the increase in fuel
costs in the second quarter. Maintenance and repairs expense decreased year over
year for the second quarter due to the timing of scheduled aircraft maintenance;
for the first half, these expenses were consistent with the prior year period.
Cost containment and productivity enhancement programs contributed to the
increased second quarter and year-to-date operating margin. Staffing levels in
general and administrative support functions were held flat, and discretionary
spending was reduced.
Year-over-year comparisons were also affected by the reduction in the
contribution from sales of hushkits. Operating profit from these sales was $6
million for the second quarter and $7 million for the first half of 2001
compared to $14 million and $29 million in the respective prior year periods.
- 17 -
<PAGE>
FEDEX GROUND
The following table compares revenues and operating income (in
millions) and selected package statistics (in thousands, except dollar amounts)
for the three- and six-month periods ended November 30:
<TABLE>
<CAPTION>
Three months Ended Six Months Ended
------------------ Percent ---------------- Percent
2000 1999(1) Change 2000 1999(1) Change
---- ----- ------- ---- ----- -------
<S> <C> <C> <C> <C> <C> <C>
Revenues $582 $521 +12 $1,125 $997 +13
Operating Expenses:
Salaries and employee benefits 117 225
Purchased transportation 227 444
Rentals and landing fees 18 32
Depreciation and amortization 27 52
Fuel 1 2
Maintenance and repairs 15 31
Intercompany charges 56 109
Other 64 130
---- ---- ------ ----
Total operating expenses 525 455 +15 1,025 881 +16
---- ---- ------ ----
Operating income $ 57 $ 66 -14 $ 100 $116 -14
==== ==== ====== ====
--------------------------------------------------------------------------------
Average daily packages 1,648 1,541 + 7 1,547 1,453 + 6
Revenue per package (yield) $ 5.69 $ 5.45 + 4 $ 5.68 $ 5.49 + 3
</TABLE>
1 Operating expense detail for the three- and six-month periods ended November
30, 1999 has been omitted, as this data is not comparable to the three- and
six-month periods ended November 30, 2000. See "Reportable Segments" above.
================================================================================
Revenues
Revenues for FedEx Ground for the second quarter and first half of 2001
increased 12% and 13%, respectively, from the prior year periods, due to
increases in average daily package volumes and yields, as well as three
additional operating days in the first quarter. Revenue per operating day during
the first half of 2001 increased 10% from the prior year period.
Average daily volume from the new FedEx Home Delivery service doubled
from the end of the first quarter to the end of the second quarter of 2001.
The continued expansion of FedEx Home Delivery, in conjunction with FedEx's
new bundling and branding strategies, helped to increase the year-over-year
average daily volume growth rates to 7% for the second quarter and 6% for the
first half of 2001. Higher yields experienced in the second quarter and first
half of 2001 are attributed to the effects of the February 2000 rate
increase, the fuel surcharge and, to a lesser extent, the new Home Delivery
service.
Operating Income
Excluding the FedEx Home Delivery incremental operating loss of $9
million and expenses of $4 million associated with the rebranding and
reorganization initiatives ($17 million and $8 million year to date,
respectively), operating income for the second quarter and first half of 2001
increased 6% and 8% year over year, respectively. Expansion costs continued for
the FedEx Ground network, as an additional hub facility was opened during
October 2000, thereby increasing depreciation expense.
- 18 -
<PAGE>
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 are on schedule with the expansion
program and estimate that 70% coverage will be obtained by the end of February
2001. We continue to estimate that FedEx Home Delivery operating losses will
approximate $50 million in 2001, including costs associated with acceleration of
the expansion of the service.
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 second quarter and first half
of 2001 increased 6% and 14% from the respective prior year periods. Excluding
the effects of businesses acquired during or after the comparable periods,
revenues decreased 5% and 2% for the second quarter and first half of 2001,
respectively, principally due to lower revenues at FedEx Custom Critical. The
demand for services provided by this operating subsidiary (critical shipments)
is highly elastic and tied to leading economic indicators, principally in the
automotive industry, where volumes have continued to decline over the past six
months. This decrease was partially offset by revenue increases at FedEx
Logistics and Viking.
Operating income decreased 37% for the second quarter and 47% for the
first half of 2001. After adjusting for the effects of acquired businesses,
operating income decreased 16% and 37% for these respective periods. These
decreases reflect primarily the decline in volume and yield at FedEx Custom
Critical and lower performance at FedEx Logistics.
On November 12, 2000, the Company entered into an agreement to acquire
American Freightways Corporation ("AF") for $28.13 per share, or approximately
$1.17 billion, including assumed debt, payable in cash and FedEx stock. The
acquisition is expected to be completed on or about February 9, 2001. After
completing the acquisition of AF, the Company plans to report separate results
for a newly-formed FedEx freight group, which will include the financial results
of both AF and Viking. For further information, see "Liquidity" and Note 2 of
Notes to Condensed Consolidated Financial Statements.
OUTLOOK
Recently, the U.S. economy has slowed substantially. While softness in
some market segments, such as the automotive sector, has been experienced over
the past six months, the continued slowing of the economy has more recently been
noted as a decrease in general consumer spending resulting in less demand for
the transportation of all consumer goods. Volumes for the month of December 2000
were adversely affected by the current economic situation. Our fiscal third
quarter will also be negatively affected by the recent severe winter weather in
much of the U.S., causing increased costs for de-icing, overtime and
re-deliveries.
- 19 -
<PAGE>
In response to these slowing volume growth rates, the Company has
implemented cost controls, further reducing discretionary spending, and
decreased capital spending from our original plan (see "Capital Resources").
In late December 2000, FedEx Express announced list rate increases averaging
4.9% for shipments within the U.S. and 2.9% for U.S. export shipments, which
will be effective February 1, 2001. FedEx Ground also expects to implement a
normal price increase in February 2001. We do not anticipate that the
forecasted economic conditions will impact our pricing or pricing strategies.
Despite the near-term economic outlook, we believe FedEx is well
positioned for long-term growth. In January 2001, we entered into a business
alliance with the U.S. Postal Service, which is expected to generate revenue
of approximately $7 billion over seven years and is consistent with our goals
of improving margins, cash flows and returns. Moreover, our strategic
initiatives in support of long-term growth goals have not changed: we will
continue to make expenditures for the expansion of our Home Delivery and
FedEx Ground networks; for the enhancement of our LTL presence; for the
expansion of our IP business through strategic alliances such as LaPoste in
Europe and through global network enhancements such as adding routes and
increasing capacity; and for the design, testing and implementation of new
customer-facing technologies such as e-commerce solutions, enhanced customer
service tools and internet-based offerings, as well as internal technologies
such as improved scanning and wireless transmissions.
The globalization of markets will continue, and because of our extensive
international network, we believe FedEx is positioned to continue to capitalize
on that expansion. We also believe the reliable service and tracking
capabilities offered by FedEx will become even more important to customers as
they seek to shorten their supply chains and decrease inventory levels.
FINANCIAL CONDITION
Liquidity
Cash and cash equivalents totaled $655 million at November 30, 2000
compared to $68 million at May 31, 2000. Cash flows from operating activities
for the first half of 2001 totaled $835 million, compared to $676 million for
the prior year period.
As mentioned previously, FedEx plans to acquire AF during the first
calendar quarter of 2001 in a transaction to be accounted for as a purchase. The
$1.17 billion AF purchase price includes approximately $460 million in cash,
approximately $460 million of FedEx stock and the assumption of approximately
$250 million in AF debt. The Company's cash balances at the end of the second
quarter are higher primarily due to our increased commercial paper borrowings in
anticipation of the cash requirements of the tender offer made to AF
shareholders. The tender offer was funded on December 29, 2000. In the second
half of the transaction, FedEx will issue shares of treasury stock to the
shareholders of AF, and AF will be merged into a wholly-owned subsidiary of
FedEx.
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- and six-month periods ended November 30:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------ Percent ----------------- Percent
2000 1999 Change 2000 1999 Change
---- ---- ------ ---- ---- ------
<S> <C> <C> <C> <C> <C> <C>
EBITDA (earnings before interest,
taxes, depreciation and amortization) $ 660 $ 595 +11 $1,270 $1,156 +10
Cash earnings per share (net income
plus depreciation and amortization divided
by average common and common equivalent
shares) $1.74 $1.53 +14 $ 3.37 $ 2.97 +13
</TABLE>
- 20 -
<PAGE>
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 November 30, 2000,
no additional borrowings were available under this commitment. In December 2000,
the Company secured an additional $750 million credit facility. This facility
will be utilized to back commercial paper borrowings that funded the cash
requirements of the AF acquisition and for general corporate purposes. For more
information regarding these credit facilities, see Note 4 of Notes to Condensed
Consolidated Financial Statements.
We believe that cash flow from operations, our commercial paper program
and the credit facilities mentioned above 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 and systems, package handling
facilities and sort equipment. The amount and timing of capital additions depend
on various factors including 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 and six months ended November 30
(in millions):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------ ----------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Aircraft and related equipment $207 $135 $286 $ 249
Facilities and sort equipment 83 131 172 220
Information and technology
equipment 88 128 180 218
Other equipment 101 86 181 152
---- ---- ---- ------
Total capital expenditures 479 480 819 839
Equivalent capital, principally
aircraft-related - 114 - 356
---- ---- ---- ------
Total $479 $594 $819 $1,195
==== ==== ==== ======
</TABLE>
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.
As a result of our current outlook for the second half of 2001, we have
reduced planned capital expenditures for 2001 from our earlier estimate of $2.3
billion to approximately $2.0 billion, the same level as the prior year. We plan
to continue to make strategic capital investments, however, in support of our
long-term growth goals. For information on the Company's purchase commitments,
see Note 7 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.
- 21 -
<PAGE>
Regulatory Matters
In November 2000, the U.S. Occupational Safety and Health Administration,
or OSHA, published final regulations to mandate an ergonomics standard that
could require many businesses, including FedEx's operating companies, to make
significant changes in the workplace in an effort to reduce the incidence of
musculoskeletal disorders such as lower back pain. The new regulations do not
specify which workplace changes would be required in order for businesses to be
in compliance. We have joined other affected parties in lawsuits challenging the
legality, as well as the economic and technical feasibility, of the proposed
regulations. Pending the results of these legal challenges, the new regulations
will go into effect in mid-January 2001 and will have an initial compliance date
of October 15, 2001.
If the new regulations are upheld and if OSHA applies the new regulations
in the same way as it attempted unsuccessfully in the past to impose ergonomic
measures under its general authority, we would be required to make extensive
changes to the layout of our sorting facilities and hire a significant number of
additional employees. We believe that the cost of compliance would be
substantial and have a material adverse effect on our business. We expect that
our competitors, along with the rest of American industry, would also incur
substantial compliance costs.
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 transition are being
expensed as incurred and are being funded entirely by internal cash flows. The
devaluation of the Euro had an immaterial negative impact on the results of
operations of the Company for the second quarter and first half of 2001.
* * *
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 OF THE YEAR REFERENCED.
- 22 -
<PAGE>
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 second 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.
- 23 -
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
------- -------------------------
<S> <C>
10.1 Amendment dated November 27, 2000 to Sales Agreement dated April
7, 1995 between Federal Express Corporation and American
Airlines, Inc.
10.2 Credit Agreement among FedEx Corporation, the Lenders named
therein, Commerzbank AG, as Syndication Agent, Bank of America,
N.A., as Documentation Agent, The Chase Manhattan Bank, as
Administrative Agent, and Chase Securities Inc., as Lead
Arranger and Book Manager, dated as of December 13, 2000 (filed
as Exhibit (b)(2) to FedEx's Schedule TO (Amendment No. 2),
filed with the SEC on December 15, 2000, and incorporated by
reference herein).
12.1 Computation of Ratio of Earnings to Fixed Charges.
15.1 Letter re: Unaudited Interim Financial Statements.
</TABLE>
(b) Reports on Form 8-K.
During the quarter ended November 30, 2000, the Registrant filed two
Current Reports on Form 8-K. The November 12, 2000 report disclosed
the execution of an agreement to acquire American Freightways
Corporation for approximately $1.2 billion, comprising cash, FedEx
stock and assumed debt. The January 10, 2001 report disclosed the
execution of a transportation agreement and a retail agreement with
the United States Postal Service.
- 24 -
<PAGE>
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: January 12, 2001 /s/ JAMES S. HUDSON
----------------------------------------
JAMES S. HUDSON
CORPORATE VICE PRESIDENT
STRATEGIC FINANCIAL PLANNING & CONTROL
(PRINCIPAL ACCOUNTING OFFICER)
- 25 -
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
------- ----------------------
<S> <C>
10.1 Amendment dated November 27, 2000 to Sales Agreement dated April 7,
1995 between Federal Express Corporation and American Airlines,
Inc.
12.1 Computation of Ratio of Earnings to Fixed Charges.
15.1 Letter re: Unaudited Interim Financial Statements.
</TABLE>
E-1
