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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(MARK ONE)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED MAY 31, 1997.
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 1-7806
FEDERAL EXPRESS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 71-0427007
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2005 CORPORATE AVENUE, MEMPHIS, TENNESSEE 38132
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (901) 369-3600
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
- -------------------------------------- -----------------------------------------
Common Stock, par value $.10 per share New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of Registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [x]
As of July 31, 1997, 114,998,392 shares of the Registrant's Common Stock
were outstanding and the aggregate market value of the voting stock held by
non-affiliates of the Registrant (based on the average bid and asked prices of
such stock on the New York Stock Exchange) was approximately $6,598,458,347.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Stockholders for the fiscal year ended May
31, 1997 are incorporated by reference into Parts II and IV.
Portions of the Proxy Statement for the Annual Meeting of Stockholders to
be held September 29, 1997 are incorporated by reference into Part III.
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TABLE OF CONTENTS
<TABLE>
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PAGE
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PART I
<S> <C> <C>
ITEM 1. Business ............................................................ 1
ITEM 2. Properties .......................................................... 11
ITEM 3. Legal Proceedings ................................................... 14
ITEM 4. Submission of Matters to a Vote of Security Holders ................. 15
Executive Officers of the Registrant ................................ 16
PART II
ITEM 5. Market for the Registrant's Common Stock and Related
Stockholder Matters ................................................ 19
ITEM 6. Selected Financial Data ............................................. 19
ITEM 7. Management's Discussion and Analysis ................................ 19
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk .......... 19
ITEM 8. Financial Statements and Supplementary Data ......................... 19
ITEM 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure ............................. 19
PART III
ITEM 10. Directors and Executive Officers of the Registrant ................. 20
ITEM 11. Executive Compensation ............................................. 20
ITEM 12. Security Ownership of Certain Beneficial Owners and Management ..... 20
ITEM 13. Certain Relationships and Related Transactions ..................... 20
PART IV
ITEM 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K..... 20
FINANCIAL STATEMENT SCHEDULE INDEX
Report of Independent Public Accountants on Financial Statement Schedule ..... S-1
SCHEDULE II Valuation and Qualifying Accounts .............................. S-2
EXHIBIT INDEX ................................................................ E-1
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PART I
ITEM 1. BUSINESS
INTRODUCTION AND RECENT DEVELOPMENTS
Federal Express Corporation (the "Company") was incorporated in Delaware on
June 24, 1971 and began operations in 1972. The Company offers a wide range of
express services for the time-definite transportation of documents, packages and
freight throughout the world using an extensive fleet of aircraft and vehicles
and leading-edge information technologies.
During fiscal year 1997, the Company continued to expand and improve its
global network of aviation, ground and information links between the major
trading centers of the Americas, Europe and Asia. In Europe, the Company
announced plans to open a European sorting hub at the Charles de Gaulle Airport
in Paris and launched international flight operations in Moscow, becoming the
only U.S. express carrier to operate its own aircraft and customs warehousing in
the Moscow market. In Asia, the Company increased its weekly flights serving the
People's Republic of China from two to four, expanded from 60 to 85 the number
of Chinese cities served and began construction of a transshipment center at the
CKS International Airport in Taiwan. In the Americas, the Company purchased
three cargo routes between the U.S. and Argentina and increased flights to
Brazil.
In November 1996, the Company improved FedEx International Priority(R) to
a 10:30 a.m. second business day delivery service from the U.S. to more than a
dozen European commercial centers. In July 1997, FedEx Express Saver(R) was
introduced for shipments up to 150 pounds with delivery within three business
days by 4:30 p.m. (7:00 p.m. for residential deliveries).
On July 1, 1997, the Company implemented distance-based pricing for its
U.S. express services. Distance-based pricing will allow the Company to better
balance the prices charged to customers with the costs of delivery for short-and
long-haul shipments. The Company also added new Airbus A300 aircraft during 1997
and introduced new technologies aimed at improving customer satisfaction while
reducing the resources required to serve customer needs, including the
introduction of new service innovations on the Company's World Wide Web page
(fedex.com).
FEDEX SERVICES
The Company offers four U.S. domestic overnight delivery services: FedEx
First Overnight, FedEx Priority Overnight(R), FedEx Standard Overnight(R) and
FedEx(R) Overnight Freight. Overnight document and package service extends to
virtually the entire United States population and overnight freight service
covers all major and most medium-size metropolitan areas. Packages and documents
are either picked up from shippers by Company couriers or are dropped off by
shippers at Company facilities, FedEx World Service Centers,(R) FedEx(R) Drop
Boxes, FedEx ShipSites(R) or FedEx Authorized ShipCenters(R) strategically
located throughout the country.
FedEx First Overnight is a next business day service offering scheduled
delivery by 8:00 a.m. to over 90 U.S. cities from anywhere in the United States
(except Hawaii) for packages weighing up to 150 pounds. FedEx Priority
Overnight, scheduled for delivery in most communities no later than 10:30 a.m.
local time the following business day, is designed for packages weighing up to
150 pounds. Also available are Saturday delivery service and Saturday pick-up
for delivery the following Monday. FedEx Standard Overnight is similar to,
though more economical than, FedEx Priority Overnight with delivery scheduled
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no later than 3:00 p.m. local time the following business day in most
communities. Company-provided packaging (FedEx Letter Envelope, FedEx Pak, FedEx
Box, FedEx Tube and FedEx Diagnostic Specimen Envelope) is provided as part of
these overnight services. FedEx Overnight Freight is scheduled for delivery by
noon or 4:30 p.m. the following business day, depending on the recipient's
location, and is designed for individual shipments weighing 151 to 1,500 pounds.
Shipments exceeding 1,500 pounds will be accepted if advance approval is
obtained.
Four U.S. domestic deferred services are available for less urgent
shipments: FedEx 2Day(R), FedEx 2Day Freight(R), FedEx Express Saver(R) and
FedEx Express Saver(R) Freight. FedEx 2Day is designed for packages weighing up
to 150 pounds. FedEx 2Day shipments are scheduled for delivery in most
communities no later than 4:30 p.m. (7:00 p.m. for residential deliveries) the
second business day following pick-up. FedEx 2Day Freight is a time-definite
U.S. domestic freight service for individual shipments weighing 151 to 1,500
pounds. Shipments exceeding 1,500 pounds will be accepted if advance approval is
obtained. Shipments are scheduled for delivery no later than 4:30 p.m. the
second business day in all major and most medium-size metropolitan areas. FedEx
Express Saver is for shipments up to 150 pounds with delivery within three
business days by 4:30 p.m. (7:00 p.m. for residential deliveries). FedEx Express
Saver Freight is a one, two or three business-day, time-definite service,
depending on the distance between origin and destination, which offers delivery
by 4:30 p.m. to virtually all locations in the continental United States. This
is a service for palletized freight, with unlimited total shipment weight.
U.S. domestic overnight and second-day services are primarily used by
customers for shipment of time-sensitive documents and goods, high-value
machines and machine parts, computer parts, software and consumer items from
manufacturers, distributors and retailers and to retailers, manufacturers and
consumers. Company employees handle virtually every shipment from origin to
destination.
The Company's Collect On Delivery (C.O.D.) service provides the fastest
payment return in the express industry. C.O.D. payments are returned to
shippers within one or two business days compared to competitors' services
which can take as long as 45 days. Like the Company's other U.S. services,
C.O.D. service offers money-back guarantees on timely delivery and on the
Company's ability to track and provide the status of any package in its system.
FedEx SameDay(R) service is for urgent shipments to virtually any U.S.
destination. This service is available seven days a week, 24 hours a day, where
available, and is designed for packages weighing up to 70 pounds that cannot
wait until the next day to be delivered.
In addition to the services discussed above, the Company offers various
international document and package delivery services and international freight
services. FedEx International FirstSM is the Company's fastest international
service with delivery of import shipments by 8:00 a.m. within one to two
business days to more than 90 U.S. cities from 18 business centers around the
world. Service is also available from the U.S. to certain key cities in Europe
by 8:00 a.m. on the second business day. Customs clearance is provided with this
service.
FedEx International Priority(R) ("IP") is a time-definite door-to-door
service for documents and packages weighing up to 150 pounds. Customs clearance
is included as part of this service. The broker selection option for IP service
permits customers to designate their own customs broker for clearance. Pick-up
and delivery are provided from any point in the Company's global network.
Delivery is generally scheduled within one to three business days depending on
the origin and destination of the shipment and commodity limitations imposed by
authorities in the destination country. Size, weight and commodity limitations
vary according to destination. In June 1997, the Company introduced the FedEx
10kg Box and
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FedEx 25kg Box for IP shipments. IP customers using the FedEx 10kg Box or FedEx
25kg Box can ship up to 22 pounds or 55 pounds, respectively, at a flat rate
which varies by destination region.
FedEx International Priority(R) Freight is an expansion of IP service and
is a time-definite door-to-door service for international shipments with
individual pieces weighing 151 to 1,500 pounds. Customs clearance is included
as part of this service or customers are permitted to designate their own
customs broker for clearance where not prohibited by destination country laws.
Pick-up and delivery are provided from many points in the Company's U.S.
domestic and international network around the world. Delivery is generally
scheduled within one to three business days depending on the origin and
destination of the shipment and commodity limitations imposed by authorities in
the destination country. Size, weight and commodity limitations vary according
to destination.
FedEx International Priority Plus(R) is an overnight service for packages
(up to 70 pounds) and documents shipped from New York City to Amsterdam,
Brussels, Buenos Aires, Dublin, Frankfurt (documents only), Geneva, London,
Madrid (documents only), Milan (documents only), Paris, Rio De Janeiro
(documents only), Rome (documents only), Sao Paulo (documents only) and Zurich.
IP Plus shipments must be picked up or dropped off in most locations by 3:00
p.m. for delivery the next business day.
EXPRESSfreighter(R) routing, discussed below, allows overnight service from
major locations in Europe and Asia to be scheduled for 10:30 a.m. delivery on
the next business day to many United States destinations and to major business
centers in Canada and Mexico.
More economical than IP service, FedEx International Priority
DirectDistributionSM is a time-definite service for larger bulk shipments
destined to multiple recipients in the United States. Once the bulk shipment
arrives and the entire shipment clears customs, the individual packages are
separated and delivered to the recipients. Weight and size restrictions are the
same as for IP service, with transit time one to two days longer.
FedEx International Economy(R) is a deferred, door-to-door service for
documents and packages weighing up to 150 pounds (total shipment weights are
unlimited). This service generally provides customers with less time-sensitive
shipments a more cost-effective alternative. The service is available Monday
through Friday between the United States and 22 major countries in Asia, Europe,
Latin America and the Middle East. The delivery commitment for shipments to and
from Canada is two to three business days by 5:00 p.m. For other countries, the
delivery commitment is four to five business days by end of the business day.
Customs clearance is included in this service and the broker selection option is
available in most markets. Shipments to and from Canada and Puerto Rico are
supported by the money-back guarantee, but shipments to other destinations are
not.
FedEx International Express Freight(R), a freight service for shipments of
nearly any weight, size or shape, is available between major markets in North
America, Asia, Australia, Europe and South America. This service, providing
scheduled delivery from one to three business days depending on destination, is
designed for shippers desiring time-definite, committed delivery with the option
of customs clearance provided by the Company. Commodity limitations vary
according to destination.
FedEx International Airport-to-AirportSM is an international airfreight
service designed for freight forwarders and agents who do not require a
time-definite, committed delivery. Space-available service is offered to and
from virtually any airport around the world for airfreight shipments of nearly
any weight, size or shape, with arrival at the destination airport from two to
four days after tender of the shipment. If
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the Company's aircraft do not serve the destination airport, another carrier's
services are used pursuant to an "interline" agreement or other arrangement with
such carrier. Commodity limitations vary according to destination.
FedEx International MailService(R) provides for the pick-up, transportation
and sorting of nondutiable, printed material and certain low-value, dutiable
items which are tendered for delivery to postal services throughout the world.
Generally, material sent by FedEx International MailService for premium service
is delivered to recipients within four to seven days, while receipt of material
sent by FedEx International MailService for standard service takes seven to
eleven days.
CHARTER SERVICES AND CRAF PARTICIPATION
The Company offers commercial and military charter services which
supplement the utilization of aircraft capacity when not needed in the Company's
scheduled operations. In addition to providing these charter services, the
Company participates in the Civil Reserve Air Fleet ("CRAF") program. Under this
program, the Department of Defense may requisition for military use certain of
the Company's wide-bodied aircraft in the event of a declared need, including a
national emergency. The Company is compensated for the operation of any aircraft
requisitioned under the CRAF program at standard contract rates established each
year in the normal course of awarding contracts. Through its participation in
the CRAF program, the Company is entitled to bid on peacetime military cargo
charter business. The Company, together with a consortium of other carriers,
currently contracts with the U.S. Government for charter flights. The Company,
while continuing to participate in the CRAF program and continuing to bid on
military charters with respect to the carriage of cargo, discontinued military
passenger flights at the end of September 1992.
During fiscal 1997, revenues from charter operations accounted for
approximately 0.6% of the Company's total revenues and approximately 0.9% and
1.2% of total revenues during fiscal 1996 and 1995, respectively.
LOGISTICS, ELECTRONIC COMMERCE AND CATALOG
Logistics, Electronic Commerce and Catalog ("LECC"), formerly FedEx
Logistics Services, is a division of the Company which offers a full range of
global and regional integrated logistics, information and marketing solutions
as well as other innovative services. LECC focuses on markets where delivering
high-speed, time-definite, information-intensive solutions provide significant
customer value. In 1997, LECC further expanded its information systems focus to
solutions that enable customers to do business electronically -- ranging from
order-entry to after-sales support. The combination of these electronic
commerce capabilities and the Company's global transportation and information
network will allow the Company's customers to create or redesign their supply
chains to reduce cost and improve service to their customers.
LECC solutions include FedEx VirtualOrderSM, an electronic order entry
system, FedEx interNetShipSM, FedEx Ship(R) and FedEx Express Distribution
CenterSM facilities and services such as FedEx Repair and Return and FedEx
International Priority DirectDistribution. FedEx Express Distribution DepotsSM
offering two to four hour delivery in 50 locations and FedEx Express
Distribution Centers are part of LECC's inventory management and warehouse
service. LECC customers warehouse their time-sensitive goods in the Company's
distribution facilities, and the Company in turn accepts and fills customer
orders and delivers the goods to the end user through the Company's global
transportation network.
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FedEx Repair and Return is a door-to-door, fast cycle repair service where
the Company manages the pickup, repair and return of defective computers and
other electronics products.
The FedEx Marketing Alliance Program is an on-line business rewards
program that allows FedEx VirtualOrder customers to leverage innovative
promotional tactics, electronic commerce tools, research, news services,
marketing consultation, support and other vital information to promote their
business growth over the Internet.
LECC has offices and operating locations in Memphis and other key U.S.
cities, the United Kingdom, Germany, Belgium, France, the Netherlands, the
United Arab Emirates, Israel, Singapore, Hong Kong, the Philippines and Japan
to serve its customers globally.
PRICING
The Company periodically publishes list prices in its Service Guides for
the majority of its services. In general during fiscal year 1997, U.S. domestic
shipping rates were based on the service selected, weight, size, any ancillary
service charge and whether or not the shipment is picked up by a Company courier
or dropped off by the customer at a Company location. International rates were
based on the type of service provided and vary with size, weight and
destination. The Company offers its customers volume discounts generally based
on actual or potential average daily revenue produced. Discounts are determined
by reference to several local and national revenue bands developed by the
Company. In general, the more revenue a particular customer produces, the
greater the discount. Of the more than two million current customers of the
Company, a significant portion participates in its discount program.
To more closely align the Company's rates with its transportation costs,
the Company introduced distance-based pricing effective July 1, 1997 for U.S.
shipments. The new rates are based on the weight and size of shipment, the
distance between the shipper and the recipient and the service commitment.
SERVICE REVENUES
The following table shows the amount of revenues generated for each class
of service offered for the fiscal years ending May 31 (amounts in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
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FedEx Priority Overnight $ 4,485,317 $ 4,170,254 $3,908,837
FedEx Standard Overnight 1,758,462 1,616,538 1,374,440
FedEx 2Day 1,621,643 1,365,430 1,284,297
U.S. domestic freight services 207,729 132,122 132,672
International priority services 2,351,096 1,996,827 1,679,830
International freight services 604,472 554,143 580,315
Charter 72,330 92,389 115,062
LECC and other* 418,701 345,916 316,620
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Total $11,519,750 $10,273,619 $9,392,073
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</TABLE>
- ----------------------------
*Includes revenues generated by the specialized services summarized above under
"Logistics, Electronic Commerce and Catalog." Also, includes revenues from sales
of aircraft engine noise-reduction kits and non-U.S. intra-country operations.
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SEASONALITY OF BUSINESS
The Company's express package business and international airfreight
business are both seasonal in nature. Historically, the U.S. domestic package
business experiences an increase in late November and December. International
business, particularly in the Asia to U.S. markets, peaks in October and
November due to U.S. domestic holiday sales. The latter part of the Company's
third fiscal quarter and late summer, being post-winter holiday and summer
vacation seasons, have historically exhibited lower volumes relative to other
periods.
OPERATIONS
The Company's global transportation and distribution services are provided
through an extensive worldwide network consisting of numerous aviation and
ground transportation operating rights and authorities, 587 aircraft,
approximately 38,500 vehicles, sorting facilities, FedEx World Service Centers,
FedEx Drop Boxes, FedEx ShipSites, FedEx Authorized ShipCenters and
sophisticated package tracking, billing and communications systems.
The Company's primary U.S. domestic sorting facility, the SuperHub located
in Memphis, serves as the center of the Company's multiple hub-and-spokes U.S.
domestic system. A second national hub is located in Indianapolis. In addition
to these national hubs, the Company operates regional hubs in Newark and Oakland
and major metropolitan sorting facilities in Los Angeles and Chicago. Facilities
in Anchorage, Alaska and Subic Bay, the Philippines, serve as sorting facilities
for express package and freight traffic moving to and from Asia, Europe and
North America. Major sorting and freight handling facilities are located at
Narita Airport in Japan, Charles de Gaulle Airport in Paris and Stansted Airport
outside London.
The Company's EXPRESSfreighter flights provide faster international service
through direct flights between major markets in Asia, Europe and North America.
For example, EXPRESSfreighter flights from Hong Kong, Osaka, Singapore, Taipei
and Tokyo to the Company's facility in Anchorage and from there to the SuperHub
in Memphis allow for next business day delivery by 10:30 a.m. in the United
States and to major business centers in Canada, Mexico and the Caribbean. Cargo
on EXPRESSfreighter flights bound for Europe is flown for second-day delivery to
sixteen European cities. Westbound from Europe, EXPRESSfreighter service is
available from Amsterdam, Antwerp, Basel, Brussels, Frankfurt, London,
Luxembourg, Milan, Munich, Paris and Zurich for 10:30 a.m.
next-day delivery in most of North America.
Throughout its worldwide network, the Company operates city stations and
employs a staff of customer service agents, cargo handlers and couriers who pick
up and deliver shipments in the station's service area. In some cities, the
Company operates FedEx World Service Centers which are staffed, store-front
facilities located in high-traffic, high-density areas. Unmanned FedEx Drop
Boxes provide customers the opportunity to drop off packages at locations in
office buildings, shopping centers and corporate or industrial parks. The
Company has also formed alliances with certain retailers to extend this customer
convenience network to over 7,600 drop-off sites in retail stores. In
international regions where low package traffic makes the Company's direct
presence less economical, Global Service Participants have been selected to
complete deliveries.
The Company has an advanced package tracking and billing system, FedEx
COSMOS(R), that utilizes hand-held electronic scanning equipment and computer
terminals. This system provides proof of
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delivery information, an electronically reproduced airbill for the customer and
information regarding the location of a package within the Company's system. For
international shipments, the Company has developed FedEx ExpressClear, a
worldwide electronic customs clearance system, which speeds up customs clearance
by allowing customs agents in destination countries to review information about
shipments before they arrive. The Company has 16 computerized telephone customer
service centers in the United States which handle thousands of customer calls
daily. In general, the Company's international locations handle customer calls
locally.
The Company provides many of its customers FedEx PowerShip(R) 2, a computer
system, which provides package tracking, produces shipping labels, calculates
shipping charges, invoices the customer daily and produces customized reports.
For customers that ship 100 or more packages a day, the Company offers FedEx
PowerShip Plus software, which performs the same functions as FedEx PowerShip 2
but can be integrated with the customer's own computer systems for customer
service, accounting, inventory control and financial analysis purposes. FedEx
PowerShip PassPort is an automated shipping system which is automatically
updated with the Company's system information, such as routing codes and rates.
FedEx PowerShip 3 enables customers who ship as few as three packages per day to
enjoy the advantage of automated shipping.
The Company also offers FedEx Ship software, free of charge, that can be
used on a personal computer. FedEx Ship allows customers to generate plain-paper
airbills on a laser printer, track shipments, order FedEx pickups and maintain a
database of shipping addresses and activity using modems and their own personal
computers. From the Company's World Wide Web page, shippers can retrieve precise
details on the status of their shipments any time of day from anywhere in the
world. In addition, FedEx interNetShip provides shipment processing capability
within the United States on the World Wide Web.
FUEL SUPPLIES AND COSTS
During fiscal 1997, the Company purchased aviation fuel from various
suppliers under contracts which vary in length from 12 to 36 months and which
provide for specific amounts of fuel to be delivered. Certain of these contracts
extend through May 1999. The fuel represented by these contracts is purchased at
market price which may fluctuate daily. Management believes that, barring a
substantial disruption in supplies of crude oil, these agreements will ensure
the availability of an adequate supply of fuel for the Company's needs for the
immediate future. However, a substantial reduction of oil supplies from oil
producing regions or refining capacity, or other events causing a substantial
reduction in the supply of aviation fuel, could have a significant adverse
effect on the Company.
The Company has also entered into contracts which 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 specified lower
(or upper) limit 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. At May 31, 1997, the
Company had contracts with various financial institutions covering a total
notional volume of 396.9 million gallons (approximately 54% of the Company's
annual jet fuel consumption), with some contracts extending through May 1998.
During 1997, the Company received $15,162,000 under jet fuel contracts.
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The following table sets forth the Company's costs for aviation fuel and
its percentage of total operating expense for the previous five fiscal years:
<TABLE>
<CAPTION>
TOTAL COST PERCENTAGE OF TOTAL
FISCAL YEAR (IN THOUSANDS) OPERATING EXPENSE
- ----------- -------------- -------------------
<S> <C> <C>
1997 $557,533 5.2%
1996 461,401 4.8
1995 394,225 4.5
1994 374,561 4.7
1993 403,597 5.4
</TABLE>
Approximately 25% of the Company's requirement for vehicle fuel is
purchased in bulk. The remainder of the Company's requirement is satisfied by
retail purchases with various discounts. The percentage of total operating
expense for vehicle fuel purchases for each of the last five fiscal years has
not exceeded 1.5%.
COMPETITION
The U.S. domestic express market is highly competitive and sensitive to
both price and service. Competitors in this market include other express package
concerns, principally United Parcel Service and Airborne Express, passenger
airlines offering package express services, regional express delivery concerns,
airfreight forwarders and the United States Postal Service.
The international express package and freight markets are also highly
competitive. Ability to compete effectively internationally depends principally
upon price, frequency and capacity of scheduled service, extent of geographic
coverage and reliability. The Company currently holds certificates of authority
to serve more foreign countries than any other United States all-cargo air
carrier and its extensive, scheduled international route system allows it to
offer single-carrier service to many points not offered by its principal
all-cargo competitors. This international route system, combined with an
integrated air and ground network, enables the Company to offer international
customers more extensive single-carrier service to a greater number of U.S.
domestic points than can be provided currently by competitors. However, many of
the Company's competitors in the international market are government owned,
controlled, or subsidized carriers which may have greater resources, lower
costs, less profit sensitivity and more favorable operating conditions than the
Company. The Company's principal competitors in the international market are
foreign national air carriers, United States passenger airlines and all-cargo
airlines and other express package companies including United Parcel Service and
DHL.
REGULATION
Air
Under the Federal Aviation Act of 1958, as amended, both the Department of
Transportation ("DOT") and the Federal Aviation Administration ("FAA") exercise
regulatory authority over the Company. The DOT's authority relates primarily to
economic aspects of air transportation. The DOT's jurisdiction extends to
aviation route authority and to other regulatory matters, including the transfer
of route authority between carriers. The Company holds various certificates
issued by the DOT, authorizing the Company to engage in U.S. domestic and
international air transportation of property and mail on a worldwide basis. The
Company's international authority permits it to carry cargo and mail from
several
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points in its U.S. domestic route system to numerous points throughout the
world. The DOT regulates international routes and practices and is authorized to
investigate and take action against discriminatory treatment of United States
air carriers abroad. The right of a United States carrier to serve foreign
points is subject to the DOT's approval and generally requires a bilateral
agreement between the United States and the foreign government. The carrier must
then be granted the permission of such foreign government to provide specific
flights and services. The regulatory environment for global aviation rights may
from time to time impair the ability of the Company to operate its air network
in the most efficient manner.
The FAA's regulatory authority relates primarily to safety and operational
aspects of air transportation, including aircraft standards and maintenance,
personnel and ground facilities, which may from time to time affect the ability
of the Company to operate its aircraft in the most efficient manner. The Company
holds an operating certificate granted by the FAA pursuant to Part 121 of the
Federal Aviation Regulations. This certificate is of unlimited duration and
remains in effect so long as the Company maintains its standards of safety and
meets the operational requirements of the regulations.
Ground
The ground transportation performed by the Company is integral to its air
transportation services. Prior to January 1996, the Company conducted its
interstate motor carrier operations pursuant to common and contract carrier
authorities issued by the Interstate Commerce Commission ("ICC"). The ICC
Termination Act of 1995 abolished the ICC and transferred responsibility for
interstate motor carrier registration to the Department of Transportation.
The enactment of the Federal Aviation Administration Authorization Act of
1994 abrogated the authority of states to regulate the rates, routes or services
of intermodal all-cargo air carriers and most motor carriers. States may now
only exercise jurisdiction over safety and insurance. The Company is registered
in those states that require registration.
Communication
Because of the extensive use of radio and other communication facilities in
its aircraft and ground transportation operations, the Company is subject to the
Federal Communications Commission Act of 1934, as amended. Additionally, the
Federal Communications Commission regulates and licenses the Company's
activities pertaining to satellite communications.
Environmental
Pursuant to the Federal Aviation Act, the FAA, with the assistance of the
Environmental Protection Agency, is authorized to establish standards governing
aircraft noise. The Company's present aircraft fleet is in compliance with
current noise standards of the Federal Aviation Regulations. The Company's
aircraft are also subject to, and are in compliance with, the regulations
limiting the level of engine smoke emissions. In addition to federal regulation
of aircraft noise, certain airport operators have local noise regulations which
limit aircraft operations by type of aircraft and time of day. These regulations
have had a restrictive effect on the Company's aircraft operations in some of
the localities where they apply but do not have a material effect on any of the
Company's significant markets. Congress' passage of the Airport Noise and
Capacity Act of 1990 established a National Noise Policy which enabled the
Company to plan for noise reduction and better respond to local noise
constraints.
9
<PAGE> 12
Certain regulations under the Clean Water Act, the Clean Air Act and the
Resource Conservation and Recovery Act impact the Company's operations. The
Company is most directly affected by regulations pertaining to underground
storage tanks, hazardous waste handling, vehicle and equipment emissions and the
discharge of effluents from properties and equipment owned or operated by the
Company.
EMPLOYEES
At July 30, 1997, the Company employed approximately 76,000 permanent
full-time and 50,000 permanent part-time employees, of which approximately 22%
are employed in Memphis. Employees of the Company's international branches and
subsidiaries in the aggregate comprise approximately 12% of all employees. The
Company believes its relationship with its employees is excellent.
In July 1996, the Fedex Pilots Association ("FPA"), an independent
collective bargaining organization, filed an application with the NMB seeking an
election to determine the collective bargaining representative for the Company's
flight crewmembers. That petition was granted and FPA won the election by a
margin of 1,589 to 1,133. On October 29, 1996, the NMB certified FPA as the
collective bargaining representative for the pilots. Since that time, FPA and
the Company have reached four interim agreements. Negotiations toward a
comprehensive collective bargaining agreement began in June 1997.
Attempts by other labor organizations to organize certain other groups of
employees have been initiated. Although the Company cannot predict the outcome
of these labor activities or their effect on the Company or its employees, if
any, the Company is responding to these organization attempts.
FINANCIAL INFORMATION ABOUT FOREIGN AND U.S. DOMESTIC OPERATIONS
For information concerning financial results for U.S. domestic and
international operations for the three years ended May 31, 1997, 1996 and 1995,
refer to Note 10 of Notes to Consolidated Financial Statements contained in the
Company's 1997 Annual Report to Stockholders, which Note is incorporated herein
by reference.
10
<PAGE> 13
ITEM 2. PROPERTIES
The Company's principal owned or leased properties include its aircraft,
vehicles, national, regional and metropolitan sorting facilities, administration
buildings, FedEx World Service Centers, FedEx Drop Boxes and data processing and
telecommunications equipment.
AIRCRAFT AND VEHICLES
The Company's aircraft fleet at July 1, 1997 consisted of the following:
<TABLE>
<CAPTION>
MAXIMUM GROSS
STRUCTURAL PAYLOAD
DESCRIPTION NUMBER (POUNDS PER AIRCRAFT)**
- ----------- ------ ----------------------
<S> <C> <C>
McDonnell Douglas MD11 24*1/ 198,500
McDonnell Douglas DC10-30 22* 172,000
McDonnell Douglas DC10-10 27* 142,000
Airbus A300-600 20* 117,700
Airbus A310-200 35* 74,200
Boeing B727-200 95* 59,500
Boeing B727-100 68* 38,000
Fokker F27-500 24 14,000
Fokker F27-600 8 12,500
Cessna 208B 254 3,500
Cessna 208A 10 3,000
---
Total 587
</TABLE>
- -----------------------------
*23 MD11, 17 DC10-30, four DC10-10, 20 A300, 16 A310, 13 B727-200 and five
B727-100 aircraft are subject to operating leases.
**Maximum gross structural payload includes revenue payload and container
weight.
1/One MD11 was destroyed by fire following an accident at Newark International
Airport on July 31, 1997.
The A300s and A310s are two-engine, wide-bodied aircraft which have a
longer range and more capacity than B727s. The MD11s are three-engine,
wide-bodied aircraft which have a longer range and larger capacity than DC10s.
The DC10s are three-engine, wide-bodied aircraft which have been specially
modified to meet the Company's cargo requirements. The B727s are three-engine
aircraft configured for cargo service. The Company's Fokker F27 and Cessna 208
turbo-prop aircraft are leased to unaffiliated operators to support Company
operations in areas where demand does not justify use of a larger aircraft. An
inventory of spare engines and parts is maintained for each aircraft type.
In addition, the Company "wet leases" approximately 21 smaller
piston-engine and turbo-prop aircraft which feed packages to and from airports
served by the Company's larger jet aircraft. The wet lease agreements call for
the owner-lessor to provide flight crews, insurance and maintenance, as well as
fuel and other supplies required to operate the aircraft. The Company's wet
lease agreements are for terms not exceeding one year and are generally
cancelable upon 30 days notice.
11
<PAGE> 14
At July 1, 1997, the Company operated approximately 38,500 ground transport
vehicles, including pick-up and delivery vans, larger trucks called container
transport vehicles and over-the-road tractors and trailers.
AIRCRAFT PURCHASE COMMITMENTS
At July 1, 1997, the Company was committed under various contracts to
purchase 16 Airbus A300, two Airbus A310, seven MD11 and 50 Ayers ALM 200
aircraft to be delivered through 2002. In addition, the Company may be required
to purchase seven additional MD11 aircraft for delivery beginning no later than
2000 under a put option agreement.
During 1997, the Company entered into agreements with two airlines to
acquire 53 DC10s, 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 the Company to purchase up to 29 additional
DC10s along with additional aircraft engines and equipment.
12
<PAGE> 15
SORTING AND HANDLING FACILITIES
At July 1, 1997, the Company operated the following sorting and handling
facilities:
<TABLE>
<CAPTION>
SORTING LEASE
SQUARE CAPACITY EXPIRATION
LOCATION ACRES FEET (PER HOUR)* LESSOR YEAR
-------- ----- ---- ----------- ------ ----
<S> <C> <C> <C> <C> <C>
NATIONAL
Memphis, Tennessee 468 2,742,196 455,000 Memphis-Shelby 2012
County Airport
Authority
Indianapolis, Indiana 120 645,000 153,000 Indianapolis Airport 2016
Authority
REGIONAL
Newark, New Jersey 56 554,000 142,000 Port Authority of New 2010
York and New Jersey
Oakland, California 21 191,000 50,000 City of Oakland 2011
METROPOLITAN
Los Angeles, California 25 130,000 53,000 City of Los Angeles 2009
Chicago, Illinois 55 419,000 15,000 City of Chicago 2018
Anchorage, Alaska+ 42 208,000 4,200 Alaska Department of 2013
Transportation and
Public Facilities
Subic Bay, 11 169,800 16,000 Subic Bay 2002
The Philippines++ Metropolitan Authority
</TABLE>
- ---------------------------
* Documents and packages
+ Handles international express package and freight shipments to and from
Asia, Europe and North America.
++ Handles intra-Asia express package and freight shipments.
The Company's facilities at the Memphis International Airport also consist
of aircraft hangars, flight training and fuel facilities, administrative offices
and warehouse space. The Company leases these facilities from the Memphis-Shelby
County Airport Authority under several leases. The leases cover land, the
administrative and sorting buildings, other facilities, ramps and certain
related equipment. The Company has the option to purchase certain equipment (but
not buildings or improvements to real estate) leased under such leases at the
end of the lease term for a nominal sum. The leases obligate the Company to
maintain and insure the leased property and to pay all related taxes,
assessments and other charges. The leases are subordinate to, and the Company's
rights thereunder could be affected by, any future lease or agreement between
the Authority and the United States Government.
13
<PAGE> 16
In addition to the facilities noted above, the Company has major
international sorting and freight handling facilities located at Narita Airport
in Japan, Charles de Gaulle Airport in Paris, France and Stansted Airport
outside London, England. During 1997, construction began on the Company's new
European sorting hub at Charles de Gaulle Airport which is expected to open in
1998, and on the Company's new transshipment center at the CKS International
Airport in Taiwan which is expected to open later this calendar year.
Construction also continued in 1997 on the Company's new regional sorting hub in
Fort Worth, Texas which is expected to become operational in 1998.
ADMINISTRATIVE AND OTHER PROPERTIES AND FACILITIES
The Company has facilities housing administrative and technical operations
on approximately 200 acres adjacent to the Memphis International Airport. Of the
seven buildings located on this site, four are subject to long-term leases, and
the other three are owned by the Company. The Company also leases approximately
90 facilities in the Memphis area for its corporate headquarters, warehouse
facilities and administrative offices. During fiscal year 1997, the Company
began construction on an office campus in Collierville, Tennessee, and announced
plans to build an office campus in East Shelby County, Tennessee.
The Company owns 13 and leases 704 facilities for city station operations
in the United States. In addition, 142 city stations are owned or leased
throughout the Company's international network. The majority of these leases are
for terms of five to ten years. The Company believes that suitable alternative
facilities are available in each locale on satisfactory terms, if necessary. As
of July 1, 1997, the Company leased space for 404 FedEx World Service Centers in
the United States and had placed approximately 33,865 Drop Boxes. The Company
also owns stand-alone mini-centers located on leaseholds in parking lots
adjacent to office buildings, shopping centers and office parks of which 207
were operating at July 1, 1997. Internationally, the Company leases space for 13
FedEx World Service Centers and has approximately 964 FedEx Drop Boxes.
The Company leases central processing units and most of the disk drives,
printers and terminals used for data processing. Owned equipment consists
primarily of Digitally Assisted Dispatch Systems ("DADS") terminals used in
communications between dispatchers and couriers, computerized routing, tracing
and billing equipment used by customers and mobile radios used in the Company's
vehicles. The Company also leases space on C-Band and Ku-Band satellite
transponders for use in its telecommunications network.
ITEM 3. LEGAL PROCEEDINGS
Customers of the Company have filed four separate class-action lawsuits
against the Company generally alleging that the Company has breached its
contract with the plaintiffs in transporting packages shipped by them. These
lawsuits allege that the Company continued to collect a 6.25% federal excise tax
on the transportation of property shipped by air after the tax expired on
December 31, 1995, until it was reinstated in August of 1996. The plaintiffs
seek certification as a class action, damages, an injunction to enjoin the
Company from continuing to collect the excise tax referred to above, and an
award of attorneys' fees and costs. Three of those cases were consolidated in
Minnesota Federal District Court. That court stayed the consolidated cases in
favor of a case filed in Circuit Court of Greene County, Alabama. The complaint
in the Alabama case also alleges that the Company continued to collect the
excise tax on the transportation of property shipped by air after the tax
expired again on December 31, 1996.
A fifth case, filed in the Supreme Court of New York, New York County,
containing allegations and requests for relief substantially similar to the
other four cases, originally alleged that the Company
14
<PAGE> 17
continued to collect the excise tax on the transportation of property shipped by
air after the tax expired on December 31, 1996. The New York complaint has been
amended to cover the first expiration period of the tax (December 31, 1995
through August 27, 1996) covered in the original Alabama complaint.
The air transportation excise tax expired on December 31, 1995, was
reenacted by Congress effective August 27, 1996, and expired again on December
31, 1996. The excise tax was then reenacted by Congress effective March 7, 1997,
and is scheduled to expire on September 30, 1997. The expiration of the tax
relieved the Company of its obligation to pay the tax during the periods of
expiration. Legislation to reenact the tax for a ten-year period as of October
1, 1997, is currently pending in Congress.
The Company intends to vigorously defend itself in these cases. No amount
has been reserved for these contingencies.
In November 1987, The Flying Tiger Line Inc. ("Flying Tigers"), a company
acquired by the Company in 1989, received a notice from the United States
Environmental Protection Agency ("EPA") identifying Flying Tigers as a
potentially responsible party ("PRP") in connection with a "Superfund" site
located in Monterey Park, California. The site is a 190-acre landfill which
operated from 1948 through 1984. In June 1985, the EPA began a remedial
investigation of the site to identify the extent of contamination. The EPA
estimates that approximately 0.1% of the waste disposed at the site is
attributable to Flying Tigers. Flying Tigers participated in a partial
settlement relating to remedial actions for management of contamination and site
control. Partial consent decrees were entered in the United States District
Court for the Central District of California in 1989 and 1992, which provided,
in part, for payments of $109,000 and $230,000, respectively, by Flying Tigers
and Federal Express to the partial-settlement escrow account. However, the
Company does not expect all outstanding issues to be resolved for several years.
Due to several variables which are beyond the Company's control, it is
impossible to accurately estimate the Company's potential share of the remaining
costs, but based on Flying Tigers' relatively insignificant contribution of
waste to the site, the Company believes that its remaining liability will not be
material.
The Company is subject to other legal proceedings and claims which arise in
the ordinary course of its business. In the opinion of management, the aggregate
liability, if any, with respect to these other actions will not materially
adversely affect the financial position or results of operations of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the
fourth quarter of the fiscal year ended May 31, 1997.
15
<PAGE> 18
EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding executive officers of the Company is as follows
(included herein pursuant to Instruction 3 to Item 401(b) of Regulation S-K and
General Instruction G(3) of Form 10-K):
<TABLE>
<CAPTION>
OFFICER, YEAR FIRST
ELECTED AS OFFICER AGE POSITIONS HELD WITH COMPANY
------------------ --- ---------------------------
<S> <C> <C>
FREDERICK W. SMITH 52 Chairman, President and Chief Executive Officer
1971 since April 1983; Chief Executive Officer since
April 1977; Chairman since February 1975; and
President from June 1971 to February 1975.
Founder of the Company.
ALAN B. GRAF, JR. 43 Executive Vice President and Chief Financial
1987 Officer since February 1996; Senior Vice President
and Chief Financial Officer from December 1991 to
February 1996; Vice President and Treasurer from
August 1987 to December 1991; and various
management positions in finance and a senior
financial analyst from 1980 to 1987.
KENNETH R. MASTERSON 53 Executive Vice President, General Counsel and
1980 Secretary since February 1996; Senior Vice
President, General Counsel and Secretary from
September 1993 to February 1996; Senior Vice
President and General Counsel from February 1981
to September 1993; and Vice President - Legal from
January 1980 to February 1981.
THEODORE L. WEISE 53 Executive Vice President - Worldwide Operations
1977 since February 1996; Senior Vice President - Air
Operations from August 1991 to February 1996;
Senior Vice President - United States and Canada
from June 1990 to August 1991; Senior Vice
President - Domestic Ground Operations from March
1987 to June 1990; Senior Vice President - Central
Support Services from October 1986 to March 1987;
Senior Vice President/General Manager - FedEx World
Service Centers from March 1983 to October 1986;
Senior Vice President - Operations Planning from
March 1979 to March 1983; Vice President Operations
Resource and Corporate Planning from September 1978
to March 1979; Vice President Special Projects and
Advanced Planning from April 1977 to September
1978; and Director of Special Projects from 1972 to
1977.
DAVID J. BRONCZEK 43 Senior Vice President - Europe, Middle East and
1987 Africa since June 1995; Senior Vice President -
Europe, Africa and Mediterranean from June 1993 to
June 1995; Vice President - Canadian Operations
from February 1987 to March 1993; and several
sales and operations managerial positions from
1976 to 1987.
</TABLE>
16
<PAGE> 19
<TABLE>
<S> <C> <C>
G. EDMOND CLARK 43 Senior Vice President - Operations Support and
1991 Engineering since January 1997; Vice President -
Corporate Financial Planning and Control from July
1994 to December 1996; Vice President - Finance -
Asia, Pacific and Middle East from December 1991
to June 1994; and various management positions in
Finance and Investor Relations, financial analyst
and project administrator from 1983 to 1991.
MICHAEL L. DUCKER 43 Senior Vice President - Asia and Pacific since
1991 October 1995; Vice President - South Pacific from
June 1992 to October 1995; Vice President - Italy
and Southeast Europe from November 1991 to June
1992; and various operating management positions
and a package sorter and checker from 1975 to
1991.
LEONARD B. FEILER 41 Senior Vice President - Central Support Services
1991 since February 1996; Vice President - Global
Operations Planning and Control from January 1995
to February 1996; Vice President - Systems Form
Planning and Engineering from July 1992 to January
1995; Vice President - Finance - FEDEX Aeronautics
Corporation from September 1991 to July 1992;
various management positions in finance and a
Senior financial analyst from 1979 to 1991.
WILLIAM G. FRAINE 39 Senior Vice President - Worldwide Sales since
1991 January 1997; Vice President Sales - United States
and Canada from December 1991 to December 1996;
Vice President - Sales - United Kingdom and
Continental Europe from May 1991 to November 1991;
various station and sales management positions and
sales representative from 1979 to 1991.
T. MICHAEL GLENN 41 Senior Vice President - Marketing, Customer Service
1985 and Corporate Communications since June 1994;
Senior Vice President - Marketing and Corporate
Communications from December 1993 to June 1994;
Senior Vice President - Worldwide Marketing,
Catalog Services and Corporate Communications from
June 1993 to December 1993; Senior Vice President -
Catalog and Remail Services from September 1992 to
June 1993; Vice President - Marketing from August
1985 to September 1992, various management
positions in sales and marketing and senior sales
specialist from 1981 to 1985.
DENNIS H. JONES 45 Senior Vice President and Chief Information
1986 Officer since December 1991; Vice President -
Customer Automation and Invoicing from December
1986 to December 1991; and various management
positions in finance and a financial analyst from
1975 to 1986.
</TABLE>
17
<PAGE> 20
<TABLE>
<S> <C> <C>
JOSEPH C. MCCARTY, III 52 Senior Vice President - Latin America and Caribbean
1983 since October 1995; Senior Vice President - Asia
Pacific from June 1995 to October 1995; Senior Vice
President - Asia, Pacific and Middle East from
November 1991 to June 1995; Vice President -
International Legal from March 1987 to November
1991; Vice President - Properties & Facilities from
November 1984 to March 1987; and Vice President -
Legal from February 1983 to November 1984.
GILBERT D. MOOK 54 Senior Vice President - Air Operations since
1985 February 1996; Senior Vice President - Central
Support Services from November 1994 to February
1996; Vice President - Properties and Facilities
from March 1988 to November 1994; Vice President -
Satellite Systems from June 1985 to March 1988;
Director - Satellite Systems from 1983 to 1985.
JAMES A. PERKINS 53 Senior Vice President and Chief Personnel Officer
1979 since June 1979 and various personnel managerial
positions from 1974 to 1979.
DAVID F. REBHOLZ 44 Senior Vice President - United States and Canada
1988 since January 1997; Senior Vice President - Global
Sales and Trade Services from June 1993 to December
1996; Vice President - Central Region - Americas
and Caribbean from October 1991 to June 1993; Vice
President - Customer Service from December 1988 to
October 1991; and Regional Sales Director-Western
Region and various operating management positions
from 1976 to 1988.
TRACY G. SCHMIDT 40 Senior Vice President - Air Ground Terminals and
1990 Transportation since July 1994; Vice President -
Corporate Financial Planning from January 1990 to
July 1994; and various management positions in
finance from 1980 to 1990.
LAURIE A. TUCKER 40 Senior Vice President - Logistics, Electronic
1991 Commerce and Catalog since April 1996; Vice
President - Customer Automation and Invoicing from
December 1991 to April 1996; and various
management positions and financial analyst from
1978 to 1991.
MICHAEL W. HILLARD 47 Vice President and Controller/Worldwide since
1997 January 1997; various accounting management
positions and senior accountant from 1979 to 1997.
</TABLE>
Officers are elected by, and serve at the discretion of, the Board of
Directors. There is no arrangement or understanding between any officer and any
person, other than a director or executive officer of the Company acting in his
or her official capacity, pursuant to which any officer was selected. There are
no family relationships between any executive officer and any other executive
officer or director of the Company. There has been no event involving any
executive officer under any bankruptcy act, criminal proceeding, judgment or
injunction during the past five years.
18
<PAGE> 21
PART II
Information for Items 5 through 8 of this Report appears in the Company's
1997 Annual Report to Stockholders as indicated in the following table and is
incorporated herein by reference.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
Information regarding market information, stockholders and dividends is
contained in the Corporate Information section of the Company's 1997 Annual
Report to Stockholders, on page 44 under the headings, "Stock Listing,"
"Stockholders" and "Market Information" and is incorporated herein by reference.
No cash dividends have been declared.
<TABLE>
<CAPTION>
PAGE IN ANNUAL REPORT
TO STOCKHOLDERS
---------------
<S> <C> <C>
ITEM 6. SELECTED FINANCIAL DATA
Selected Consolidated Financial Data .......................... 40
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS ................. 18
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK ............................................. N/A
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Consolidated Statements of Income ............................. 23
Consolidated Balance Sheets ................................... 24
Consolidated Statements of Cash Flows ......................... 25
Consolidated Statements of Changes in
Common Stockholders' Investment ............................. 26
Notes to Consolidated Financial Statements .................... 27
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE ....................... N/A
</TABLE>
19
<PAGE> 22
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding members of the Company's Board of Directors is
presented in sections "Voting Securities and Principal Holders Thereof Security
Ownership of Management and Certain Beneficial Owners," "Election of Directors,"
"Meetings and Committees," "Compensation of Directors," and "Transactions with
Management and Others" and on pages 1 through 8 and page 15 of the Definitive
Proxy Statement for the Company's 1997 Annual Meeting of Stockholders which will
be held September 29, 1997 and is incorporated herein by reference. Information
regarding executive officers of the Company is included above in Part I of this
Form 10-K under the caption "Executive Officers of the Registrant" pursuant to
Instruction 3 to Item 401(b) of Regulation S-K and General Instruction G(3) of
Form 10-K.
Information for Items 11 through 13 of this Report appears in the
Definitive Proxy Statement for the Company's 1997 Annual Meeting of Stockholders
to be held on September 29, 1997, as indicated in the following
table and is incorporated herein by reference.
<TABLE>
<CAPTION>
PAGE IN PROXY
STATEMENT
-------------
<S> <C> <C>
ITEM 11. EXECUTIVE COMPENSATION
Compensation Information ................................... 9
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
Voting Securities and Principal Holders Thereof ............ 1
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions with Management and Others .................... 15
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K
</TABLE>
(A) 1. FINANCIAL STATEMENTS
The consolidated financial statements of the Company, together with the
report thereon of Arthur Andersen LLP, dated June 30, 1997, are presented on
pages 23 through 39 of the Company's 1997 Annual Report to Stockholders and are
incorporated herein by reference. With the exception of the aforementioned
information and the information incorporated by reference in Items 5, 6, 7 and 8
hereof, the Company's 1997 Annual Report to Stockholders is not to be deemed as
filed as part of this Report.
20
<PAGE> 23
2. FINANCIAL STATEMENT SCHEDULE
<TABLE>
<CAPTION>
PAGE NUMBER
IN FORM 10-K
------------
<S> <C>
Report of Independent Public Accountants on Financial Statement Schedule .. S-1
Schedule II - Valuation and Qualifying Accounts ........................... S-2
</TABLE>
All other financial statement schedules have been omitted because they are not
applicable or the required information is included in the consolidated financial
statements, or the notes thereto, contained in the Company's 1997 Annual Report
to Stockholders and incorporated herein by reference.
3. EXHIBITS
Exhibits 3.1, 3.2, 4.1 through 4.29, 10.1 through 10.94, 11, 12, 13, 21, 23
and 24 are being filed in connection with this Report and incorporated herein by
reference.
The Exhibit Index on pages E-1 through E-13 is incorporated herein by
reference.
(b) REPORTS ON FORM 8-K
During the last quarter of the period covered by this Report on Form 10-K,
the Registrant filed two Current Reports on Form 8-K.
The first Current Report was dated May 12, 1997 and contained documents
relating to the Company's 1997 Pass Through Trust Certificates, Series 1997-1.
The second Current Report was dated May 22, 1997 and contained documents
relating to the Company's 1997 Pass Through Trust Certificates, Series 1997-1.
These reports were filed as Item 7 Current Reports.
21
<PAGE> 24
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
(Registrant)
BY: /s/ MICHAEL W. HILLARD
--------------------------------
Michael W. Hillard
Vice President and Controller
(Principal Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this Report has been signed below by the following persons on behalf of
the Registrant in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
--------- -------- ----
<S> <C> <C>
/s/ FREDERICK W. SMITH* Chairman, President and
- ----------------------- Chief Executive Officer
Frederick W. Smith and Director
(Principal Executive Officer)
/s/ ALAN B. GRAF, JR.* Executive Vice President and
- ---------------------- Chief Financial Officer
Alan B. Graf, Jr. (Principal Financial Officer)
/s/ MICHAEL W. HILLARD Vice President and Controller
- ---------------------- (Principal Accounting Officer) August 8, 1997
Michael W. Hillard
/s/ ROBERT H. ALLEN * Director
- ---------------------
Robert H. Allen
/s/ HOWARD H. BAKER, JR.* Director
- -------------------------
Howard H. Baker, Jr.
/s/ ROBERT L. COX * Director
- -------------------
Robert L. Cox
/s/ RALPH D. DENUNZIO * Director
- -----------------------
Ralph D. DeNunzio
</TABLE>
<PAGE> 25
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
--------- -------- ----
<S> <C> <C>
/s/ JUDITH L. ESTRIN * Director
- ----------------------
Judith L. Estrin
/s/ PHILIP GREER * Director
- ------------------
Philip Greer
/s/ J. R. HYDE, III * Director
- ---------------------
J. R. Hyde, III
/s/ CHARLES T. MANATT * Director
- -----------------------
Charles T. Manatt
/s/ GEORGE J. MITCHELL * Director
- ------------------------
George J. Mitchell
/s/ JACKSON W. SMART, JR.* Director
- --------------------------
Jackson W. Smart, Jr.
/s/ JOSHUA I. SMITH * Director
- ---------------------
Joshua I. Smith
/s/ PAUL S. WALSH* Director
- ------------------
Paul S. Walsh
/s/ PETER S. WILLMOTT * Director
- -----------------------
Peter S. Willmott
*By: /s/ MICHAEL W. HILLARD
- ----------------------------
Michael W. Hillard August 8, 1997
Attorney-in-Fact
</TABLE>
<PAGE> 26
S-1
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE
To Federal Express Corporation:
We have audited in accordance with generally accepted auditing standards, the
consolidated financial statements included in Federal Express Corporation's 1997
Annual Report to Stockholders incorporated by reference in this Form 10-K, and
have issued our report thereon dated June 30, 1997. Our audit was made for the
purpose of forming an opinion on those statements taken as a whole. The
financial statement schedule on page S-2 is the responsibility of the Company's
management and is presented for purposes of complying with the Securities and
Exchange Commission's rules and is not part of the basic financial statements.
The financial statement schedule has been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion,
fairly states in all material respects the financial data required to be set
forth therein in relation to the basic financial statements taken as a whole.
/s/ ARTHUR ANDERSEN LLP
------------------------------
ARTHUR ANDERSEN LLP
Memphis, Tennessee,
June 30, 1997
<PAGE> 27
S-2
SCHEDULE II
FEDERAL EXPRESS CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED MAY 31, 1997, 1996 AND 1995
(In thousands)
<TABLE>
<CAPTION>
ADDITIONS
----------------------
BALANCE AT CHARGED TO CHARGED TO BALANCE AT
BEGINNING COSTS AND OTHER END OF
DESCRIPTION OF YEAR EXPENSES ACCOUNTS DEDUCTIONS(A) YEAR
- ----------- ---------- ---------- ---------- ------------- ----------
Allowance for
Doubtful Accounts
-----------------
<S> <C> <C> <C> <C> <C>
1997.......................... $30,809 $38,711 - $33,345 $36,175
======= ======= ====== ======= =======
1996.......................... $31,173 $38,963 $1,700 $41,027 $30,809
======= ======= ====== ======= =======
1995.......................... $33,933 $36,334 - $39,094 $31,173
======= ======= ====== ======= =======
</TABLE>
(A) Accounts written off net of recoveries.
<PAGE> 28
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------ ----------------------
<S> <C>
3.1 Restated Certificate of Incorporation of Registrant as amended
(Filed as Exhibit 3.1 to Registrant's FY95 Third Quarter Report on
Form 10-Q, Commission File No. 1-7806, and incorporated herein by
reference.)
3.2 By-laws of Registrant (Filed as Exhibit 3.2 to Registrant's FY93
Annual Report on Form 10-K, Commission File No. 1-7806, and
incorporated herein by reference.)
4.1 Indenture dated as of April 1, 1987 between Registrant and The
Bank of New York ("BONY"), as Trustee, relating to Registrant's
10% Senior Notes due April 15, 1999. (Filed as Exhibit 10.36 to
Registrant's FY88 Annual Report on Form 10-K, Commission File No.
1-7806, and incorporated herein by reference.)
4.2 Supplemental Indenture No. 2 dated as of April 18, 1989 between
Registrant and BONY, relating to Registrant's 10% Senior Notes due
April 15, 1999. (Filed as Exhibit 4(a) to Registrant's Current
Report on Form 8-K dated April 25, 1989, Commission File No.
1-7806, and incorporated herein by reference.)
4.3 Supplemental Indenture No. 3 dated as of April 21, 1989 between
Registrant and BONY and form of note relating to Registrant's 10%
Senior Notes due April 15, 1999. (Filed as Exhibit 4(b) to
Registrant's Current Report on Form 8-K dated April 25, 1989,
Commission File No. 1-7806, and incorporated herein by reference.)
4.4 Indenture dated as of May 15, 1989 between Registrant and BONY
relating to Registrant's unsecured debt securities. (Filed as an
exhibit to Registrant's Registration Statement No. 33-28796 on
Form S-3 and incorporated herein by reference.)
4.5 Supplemental Indenture No. 2 dated as of August 11, 1989 between
Registrant and BONY. (Filed as Exhibit 4.2 to Registrant's
Registration Statement No. 33-30415 on Form S-3 and incorporated
herein by reference.)
4.6 Supplemental Indenture No. 3 dated as of October 15, 1989 between
Registrant and BONY relating to Registrant's 9 5/8% Sinking Fund
Debentures due October 15, 2019. (Filed as Exhibit 4.2 to
Registrant's Current Report on Form 8-K dated October 16, 1989,
Commission File No. 1-7806, and incorporated herein by reference.)
4.7 Supplemental Indenture No. 5 dated as of August 15, 1990 between
Registrant and BONY. (Filed as Exhibit 4(c) to Registrant's
Current Report on Form 8-K dated August 28, 1990, Commission File
No. 1-7806, and incorporated herein by reference.)
</TABLE>
E-1
<PAGE> 29
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------ ----------------------
<S> <C>
4.8 Indenture dated May 15, 1989 including Supplemental Indenture Nos.
2, 3 and 5 dated as described above, between Registrant and BONY,
relating to Registrant's Medium-Term Notes, Series B, the last of
which is due August 15, 2006, Registrant's 9 7/8% Notes due April
1, 2002, Registrant's 9.65% Notes due June 15, 2012 and
Registrant's 6 1/4% Notes due April 15, 1998. (Filed as described
above.)
4.9 Form of Fixed Rate Medium-Term Note, Series B, the last of which
is due August 15, 2006. (Filed as Exhibit 4.4 to Registrant's
Registration Statement No. 33-40018 on Form S-3 and incorporated
herein by reference.)
4.10 Form of Floating Rate Medium-Term Note, Series B, the last of
which is due August 15, 2006. (Filed as Exhibit 4.5 to
Registrant's Registration Statement No. 33-40018 on Form S-3 and
incorporated herein by reference.)
4.11 Form of 9 7/8% Note due April 1, 2002. (Filed as Exhibit 4.1 to
Registrant's Current Report on Form 8-K dated March 23, 1992,
Commission File No. 1-7806, and incorporated herein by reference.)
4.12 Form of 9.65% Note due June 15, 2012. (Filed as Exhibit 4.1 to
Registrant's Current Report on Form 8-K dated June 18, 1992,
Commission File No. 1-7806, and incorporated herein by reference.)
4.13 Form of 6 1/4% Note due April 15, 1998. (Filed as Exhibit 4.1 to
Registrant's Current Report on Form 8-K dated April 21, 1993,
Commission File No. 1-7806, and incorporated herein by reference.)
4.14 Indenture dated as of July 1, 1996 between the Registrant and The
First National Bank of Chicago, as Trustee, relating to
Registrant's unsecured debt securities. (Filed as Exhibit 4.14 to
Registrant's FY96 Annual Report on Form 10-K, Commission File No.
1-7806, and incorporated herein by reference.)
4.15 Supplemental Indenture No. 1 dated as of July 1, 1997 between
Registrant and The First National Bank of Chicago relating to
Registrant's 7.60% Notes due July 1, 2097. (Filed as Exhibit 4.1
to Registrant's Current Report on Form 8-K dated July 7, 1997,
Commission File No. 1-7806, and incorporated herein by reference.)
4.16 Form of 7.60% Note due July 1, 2097. (Filed as Exhibit 4.2 to
Registrant's Current Report on Form 8-K dated July 7, 1997,
Commission File No. 1-7806, and incorporated herein by reference.)
4.17 Pass Through Trust Agreement dated as of February 1, 1993, as
amended and restated as of October 1, 1995, between Registrant and
BONY, as Pass Through Trustee, relating to Registrant's 1993 Pass
Through Certificates, Series A1, A2, B1, B2, C1 and C2, 1995 Pass
Through Certificates, Series A1, A2, B1, B2 and B3 and 1996 Pass
Through Certificates, Series A1 and A2. (Filed as Exhibit 4.a.1 to
Registrant's Current Report on Form 8-K dated October 26, 1995,
Commission File No. 1-7806, and incorporated herein by reference.)
</TABLE>
E-2
<PAGE> 30
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------ ----------------------
<S> <C>
4.18 Form of 8.04% and 8.76% 1993 Pass Through Certificates, Series A1
and A2 due November 22, 2007 and May 22, 2015, respectively.
(Filed as Exhibit 4(a)(2) to Registrant's Current Report on Form
8-K dated February 4, 1993, Commission File No. 1-7806, and
incorporated herein by reference.)
4.19 Form of 6.68% and 7.63% 1993 Pass Through Certificates, Series B1
and B2 due January 1, 2008 and January 1, 2015, respectively.
(Filed as Exhibit 4.a.2 to Registrant's Current Report on Form 8-K
dated September 23, 1993, Commission File No. 1-7806, and
incorporated herein by reference.)
4.20 Form of 7.15% and 7.96% 1993 Pass Through Certificates, Series C1
and C2 due September 28, 2012 and March 28, 2017, respectively.
(Filed as Exhibit 4.a.2 to Registrant's Current Report on Form 8-K
dated December 2, 1993, Commission File No. 1-7806, and
incorporated herein by reference.)
4.21 Form of 7.63% and 8.06% 1995 Pass Through Certificates, Series A1
and A2 due January 5, 2014 and January 5, 2016, respectively.
(Filed as Exhibit 4.a.2 to Registrant's Current Report on Form 8-K
dated August 16, 1995, Commission File No. 1-7806, and
incorporated herein by reference.)
4.22 Form of 6.05%, 7.11% and 7.58% 1995 Pass Through Certificates,
Series B1, B2 and B3 due March 19, 1996, January 2, 2014 and July
2, 2019, respectively. (Filed as Exhibit 4.a.2 to Registrant's
Current Report on Form 8-K dated October 26, 1995, Commission File
No. 1-7806, and incorporated herein by reference.)
4.23 Form of 7.85% and 8.17% 1996 Pass Through Certificates, Series A1
and A2 due January 30, 2015 and January 30, 2018, respectively.
(Filed as Exhibit 4.a.2 to Registrant's Current Report on Form 8-K
dated June 5, 1996, Commission File No. 1-7806, and incorporated
herein by reference.)
4.24 Pass Through Trust Agreement dated as of March 1, 1994 between
Registrant and BONY, as Pass Through Trustee, relating to
Registrant's 1994 Pass Through Certificates, Series A310-A1,
A310-A2 and A310-A3. (Filed as Exhibit 4.a.1 to Registrant's
Current Report on Form 8-K dated March 16, 1994, Commission File
No. 1-7806, and incorporated herein by reference.)
4.25 Form of 7.53%, 7.89% and 8.40% 1994 Pass Through Certificates,
Series A310-A1, A310-A2 and A310-A3 due September 23, 2006,
September 23, 2008 and March 23, 2010, respectively. (Filed as
Exhibit 4.a.2 to Registrant's Current Report on Form 8-K dated
March 16, 1994, Commission File No. 1-7806, and incorporated
herein by reference.)
4.26 Pass Through Trust Agreement dated as of June 1, 1996 between
Registrant and State Street Bank and Trust Company, as Pass
Through Trustee, relating to Registrant's 1996 Pass Through
Certificates, Series B1 and B2. (Filed as Exhibit 4(a)(1) to
Registrant's Registration Statement No. 333-07691 on Form S-3 and
incorporated herein by reference.)
</TABLE>
E-3
<PAGE> 31
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------ ----------------------
<S> <C>
4.27 Form of 7.39% and 7.84% 1996 Pass Through Certificates, Series B1
and B2 due January 30, 2013 and January 30, 2018, respectively.
(Filed as Exhibit 4.a.2 to Registrant's Current Report on Form 8-K
dated October 17, 1996, Commission File No. 1-7806, and
incorporated herein by reference.)
4.28 Pass Through Trust Agreement dated as of May 1, 1997 between
Registrant and First Security Bank, National Association, as Pass
Through Trustee. (Filed as Exhibit 4.a.3 to Registrant's Form 8-K
dated May 12, 1997, Commission File No. 1-7806, and incorporated
herein by reference.)
4.29 Form of 7.50%, 7.52% and 7.65% 1997-1 Pass Through Certificates,
Class A, B and C due January 15, 2018, January 15, 2018 and
January 15, 2014, respectively. (Filed as Exhibit 4.a.2 to
Registrant's Current Report on Form 8-K dated May 22, 1997,
Commission File No. 1-7806, and incorporated herein by reference.)
10.1 Indenture dated as of August 1, 1979 between the Memphis-Shelby
County Airport Authority (the "Authority") and BONY, as Trustee.
(Refiled as Exhibit 10.1 to Registrant's FY90 Annual Report on
Form 10-K, Commission File No. 1-7806, and incorporated herein by
reference.)
10.2 Second Supplemental Indenture dated as of May 1, 1982 between the
Authority and BONY. (Refiled as Exhibit 10.2 to Registrant's FY93
Annual Report on Form 10-K, Commission File No. 1-7806, and
incorporated herein by reference.)
10.3 Third Supplemental Indenture dated as of November 1, 1982 between
the Authority and BONY. (Refiled as Exhibit 10.3 to Registrant's
FY93 Annual Report on Form 10-K, Commission File No. 1-7806, and
incorporated herein by reference.)
10.4 Fourth Supplemental Indenture dated as of December 1, 1984 between
the Authority and BONY relating to 7 7/8% Special Facilities
Revenue Bonds, Series 1984 due September 1, 2009. (Refiled as
Exhibit 10.4 to Registrant's FY95 Annual Report on Form 10-K,
Commission File No. 1-7806, and incorporated herein by reference.)
10.5 Fifth Supplemental Indenture dated as of July 1, 1992 between the
Authority and BONY relating to 6 3/4% Special Facilities Revenue
Bonds, Refunding Series 1992 due September 1, 2012. (Filed as
Exhibit 10.5 to Registrant's FY92 Annual Report on Form 10-K,
Commission File No. 1-7806, and incorporated herein by reference.)
10.6 Sixth Supplemental Indenture dated as of July 1, 1997 between the
Authority and BONY relating to 5.35% Special Facilities Revenue
Bonds, Refunding Series 1997 due September 1, 2012.
10.7 Guaranty dated as of August 1, 1979 from Registrant to BONY.
(Refiled as Exhibit 10.5 to Registrant's FY90 Annual Report on
Form 10-K, Commission File No. 1-7806, and incorporated herein by
reference.)
</TABLE>
E-4
<PAGE> 32
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------ ----------------------
<S> <C>
10.8 Reaffirmation of Guaranty dated as of May 1, 1982 from Registrant
to BONY. (Refiled as Exhibit 10.7 to Registrant's FY93 Annual
Report on Form 10-K, Commission File No. 1-7806, and incorporated
herein by reference.)
10.9 Reaffirmation of Guaranty dated as of December 1, 1984 from
Registrant to BONY relating to Special Facilities Revenue Bonds,
Series 1984. (Refiled as Exhibit 10.10 to Registrant's FY93 Annual
Report on Form 10-K, Commission File No. 1-7806, and incorporated
herein by reference.)
10.10 Reaffirmation of Guaranty dated as of July 30, 1992 from
Registrant to BONY relating to Special Facilities Revenue Bonds,
Refunding Series 1992. (Filed as Exhibit 10.11 to Registrant's
FY92 Annual Report on Form 10-K, Commission File No. 1-7806, and
incorporated herein by reference.)
10.11 Reaffirmation of Guaranty dated as of July 1, 1997 from Registrant
to BONY relating to Special Facilities Revenue Bonds, Refunding
Series 1997.
10.12 Consolidated and Restated Lease Agreement dated as of August 1,
1979 between the Authority and Registrant. (Refiled as Exhibit
10.12 to Registrant's FY90 Annual Report on Form 10-K, Commission
File No. 1-7806, and incorporated herein by reference.)
10.13 First Supplemental Lease Agreement dated as of April 1, 1981
between the Authority and Registrant. (Filed as Exhibit 10.13 to
Registrant's FY92 Annual Report on Form 10-K, Commission File No.
1-7806, and incorporated herein by reference.)
10.14 Second Supplemental Lease Agreement dated as of May 1, 1982
between the Authority and Registrant. (Refiled as Exhibit 10.14 to
Registrant's FY93 Annual Report on Form 10-K, Commission File No.
1-7806, and incorporated herein by reference.)
10.15 Third Supplemental Lease Agreement dated November 1, 1982 between
the Authority and Registrant. (Filed as Exhibit 28.22 to
Registrant's FY93 Second Quarter Report on Form 10-Q, Commission
File No. 1-7806, and incorporated herein by reference.)
10.16 Fourth Supplemental Lease Agreement dated July 1, 1983 between the
Authority and Registrant. (Filed as Exhibit 28.23 to Registrant's
FY93 Second Quarter Report on Form 10-Q, Commission File No.
1-7806, and incorporated herein by reference.)
10.17 Fifth Supplemental Lease Agreement dated February 1, 1984 between
the Authority and Registrant. (Filed as Exhibit 28.24 to
Registrant's FY93 Second Quarter Report on Form 10-Q, Commission
File No. 1-7806, and incorporated herein by reference.)
10.18 Sixth Supplemental Lease Agreement dated April 1, 1984 between the
Authority and Registrant. (Filed as Exhibit 28.25 to Registrant's
FY93 Second Quarter Report on Form 10-Q, Commission File No.
1-7806, and incorporated herein by reference.)
</TABLE>
E-5
<PAGE> 33
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------ ----------------------
<S> <C>
10.19 Seventh Supplemental Lease Agreement dated June 1, 1984 between
the Authority and the Registrant. (Filed as Exhibit 28.26 to
Registrant's FY93 Second Quarter Report on Form 10-Q, Commission
File No. 1-7806, and incorporated herein by reference.)
10.20 Eighth Supplemental Lease Agreement dated July 1, 1988 between the
Authority and Registrant. (Filed as Exhibit 28.27 to Registrant's
FY93 Second Quarter Report on Form 10-Q, Commission File No.
1-7806, and incorporated herein by reference.)
10.21 Ninth Supplemental Lease Agreement dated July 12, 1989 between the
Authority and Registrant. (Filed as Exhibit 28.28 to Registrant's
FY93 Second Quarter Report on Form 10-Q, Commission File No.
1-7806, and incorporated herein by reference.)
10.22 Tenth Supplemental Lease Agreement dated October 1, 1991 between
the Authority and Registrant. (Filed as Exhibit 28.29 to
Registrant's FY93 Second Quarter Report on Form 10-Q, Commission
File No. 1-7806, and incorporated herein by reference.)
10.23 Eleventh Supplemental Lease Agreement dated as of July 1, 1994
between the Authority and Registrant. (Filed as Exhibit 10.21 to
Registrant's FY96 Annual Report on Form 10-K, Commision File No.
1-7806, and incorporated herein by reference.)
10.24 Twelfth Supplemental Lease Agreement dated July 1, 1993 between
the Authority and Registrant. (Filed as Exhibit 10.23 to
Registrant's FY93 Annual Report on Form 10-K, Commission File No.
1-7806, and incorporated herein by reference.)
10.25 Thirteenth Supplemental Lease Agreement dated as of June 1, 1995
between the Authority and Registrant. (Filed as Exhibit 10.23 to
Registrant's FY96 Annual Report on Form 10-K, Commission File No.
1-7806, and incorporated herein by reference.)
10.26 Fourteenth Supplemental Lease Agreement dated as of January 1,
1996 between the Authority and Registrant. (Filed as Exhibit 10.24
to Registrant's FY96 Annual Report on Form 10-K, Commission File
No. 1-7806, and incorporated herein by reference.)
10.27 Fifteenth Supplemental Lease Agreement dated as of January 1, 1997
between the Authority and Registrant. (Filed as Exhibit 10.1 to
Registrant's FY97 Third Quarter Report on Form 10-Q, Commission
File No. 1-7806, and incorporated herein by reference.)
10.28 Sixteenth Supplemental Lease Agreement dated as of April 1, 1997
between the Authority and Registrant.
10.29 Seventeenth Supplemental Lease Agreement dated as of May 1, 1997
between the Authority and Registrant.
10.30 Special Facility Lease Agreement dated as of August 1, 1979
between the Authority and Registrant. (Refiled as Exhibit 10.15 to
Registrant's FY90 Annual Report on Form 10-K, Commission File No.
1-7806, and incorporated herein by reference.)
</TABLE>
E-6
<PAGE> 34
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------ ----------------------
<S> <C>
10.31 First Special Facility Supplemental Lease Agreement dated as of
May 1, 1982 between the Authority and Registrant. (Filed as
Exhibit 10.25 to Registrant's FY93 Annual Report on Form 10-K,
Commission File No. 1-7806, and incorporated herein by reference.)
10.32 Second Special Facility Supplemental Lease Agreement dated as of
November 1, 1982 between the Authority and Registrant. (Filed as
Exhibit 10.26 to Registrant's FY93 Annual Report on Form 10-K,
Commission File No. 1-7806, and incorporated herein by reference.)
10.33 Third Special Facility Supplemental Lease Agreement dated as of
December 1, 1984 between the Authority and Registrant. (Refiled as
Exhibit 10.25 to Registrant's FY95 Annual Report on Form 10-K,
Commission File No. 1-7806, and incorporated herein by reference.)
10.34 Fourth Special Facility Supplemental Lease Agreement dated as of
July 1, 1992 between the Authority and Registrant. (Filed as
Exhibit 10.20 to Registrant's FY92 Annual Report on Form 10-K,
Commission File No. 1-7806, and incorporated herein by reference.)
10.35 Fifth Special Facility Supplemental Lease Agreement dated as of
July 1, 1997 between the Authority and Registrant.
10.36 Special Facility Lease Agreement dated as of July 1, 1993 between
the Authority and Registrant. (Filed as Exhibit 10.29 to
Registrant's FY93 Annual Report on Form 10-K, Commission File No.
1-7806, and incorporated herein by reference.)
10.37 Special Facility Ground Lease Agreement dated as of July 1, 1993
between the Authority and Registrant. (Filed as Exhibit 10.30 to
Registrant's FY93 Annual Report on Form 10-K, Commission File No.
1-7806, and incorporated herein by reference.)
10.38 Indenture dated as of July 1, 1993 between the Authority and BONY,
as Trustee, relating to 6.20% Special Facility Revenue Bonds,
Series 1993, due July 1, 2014. (Filed as Exhibit 10.31 to
Registrant's FY93 Annual Report on Form 10-K, Commission File No.
1-7806, and incorporated herein by reference.)
10.39 Guaranty dated as of July 1, 1993 from Registrant to BONY relating
to 6.20% Special Facility Revenue Bonds, Series 1993. (Filed as
Exhibit 10.32 to Registrant's FY93 Annual Report on Form 10-K,
Commission File No. 1-7806, and incorporated herein by reference.)
10.40 Lease Agreement dated as of May 7, 1985 between the City of
Oakland and Registrant. (Filed as Exhibit 28.5 to Registrant's
FY93 Second Quarter Report on Form 10-Q, Commission File No.
1-7806, and incorporated herein by reference.)
10.41 Affirmative Action Agreement dated as of May 14, 1985, to Lease
Agreement dated May 7, 1985, between the City of Oakland and
Registrant. (Filed as Exhibit 28.6 to Registrant's FY93 Second
Quarter Report on Form 10-Q, Commission File No. 1-7806, and
incorporated herein by reference.)
</TABLE>
E-7
<PAGE> 35
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------ ----------------------
<S> <C>
10.42 First Supplemental Agreement dated August 5, 1986, to Lease
Agreement dated May 7, 1985, between the City of Oakland and
Registrant. (Filed as Exhibit 28.7 to Registrant's FY93 Second
Quarter Report on Form 10-Q, Commission File No. 1-7806, and
incorporated herein by reference.)
10.43 Second Supplemental Agreement dated February 17, 1987, to Lease
Agreement dated May 7, 1985, between the City of Oakland and
Registrant. (Filed as Exhibit 28.8 to Registrant's FY93 Second
Quarter Report on Form 10-Q, Commission File No. 1-7806, and
incorporated herein by reference.)
10.44 Third Supplemental Agreement dated February 1989, to Lease
Agreement dated May 7, 1985, between the City of Oakland and
Registrant. (Filed as Exhibit 28.9 to Registrant's FY93 Second
Quarter Report on Form 10-Q, Commission File No. 1-7806, and
incorporated herein by reference.)
10.45 Amendment dated August 1, 1989, to Lease Agreement dated May 7,
1985, between the City of Oakland and Registrant. (Refiled as
Exhibit 10.40 to Registrant's FY95 Annual Report on Form 10-K,
Commission File No. 1-7806, and incorporated herein by reference.)
10.46 Lease and First Right of Refusal Agreement dated July 22, 1988
between the State of Alaska, Department of Transportation and
Public Facilities and Registrant. (Filed as Exhibit 28.10 to
Registrant's FY93 Second Quarter Report on Form 10-Q, Commission
File No. 1-7806, and incorporated herein by reference.)
10.47 Development Agreement dated July 22, 1988, to Lease and First
Right of Refusal Agreement dated July 22, 1988, between the State
of Alaska, Department of Transportation and Public Facilities and
Registrant. (Filed as Exhibit 28.11 to Registrant's FY93 Second
Quarter Report on Form 10-Q, Commission File No. 1-7806, and
incorporated herein by reference.)
10.48 Supplement No. 1 dated May 19, 1989, to Development Agreement
dated July 22, 1988, between the State of Alaska, Department of
Transportation and Public Facilities and Registrant. (Filed as
Exhibit 28.12 to Registrant's FY93 Second Quarter Report on Form
10-Q, Commission File No. 1-7806, and incorporated herein by
reference.)
10.49 Supplement No. 1 dated July 19, 1989, to Lease and First Right of
Refusal Agreement dated July 22, 1988, between the State of
Alaska, Department of Transportation and Public Facilities and
Registrant. (Filed as Exhibit 28.13 to Registrant's FY93 Second
Quarter Report on Form 10-Q, Commission File No. 1-7806, and
incorporated herein by reference.)
10.50 Right-of-Way Agreement dated September 19, 1989, to Lease and
First Right of Refusal Agreement dated July 22, 1988, between the
State of Alaska, Department of Transportation and Public
Facilities and Registrant. (Filed as Exhibit 28.14 to Registrant's
FY93 Second Quarter Report on Form 10-Q, Commission File No.
1-7806, and incorporated herein by reference.)
</TABLE>
E-8
<PAGE> 36
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------ ----------------------
<S> <C>
10.51 Supplement No. 2 dated April 23, 1991, to Lease and First Right of
Refusal Agreement dated July 22, 1988, between the State of
Alaska, Department of Transportation and Public Facilities and the
Registrant. (Filed as Exhibit 28.15 to Registrant's FY93 Second
Quarter Report on Form 10-Q, Commission File No. 1-7806, and
incorporated herein by reference.)
10.52 Lease Agreement dated October 1, 1983 between The Port Authority
of New York and New Jersey and Registrant. (Filed as Exhibit 28.16
to Registrant's FY93 Second Quarter Report on Form 10-Q,
Commission File No. 1-7806, and incorporated herein by reference.)
10.53 Supplement No. 1, dated October 1, 1983 to Lease Agreement dated
October 1, 1983 between The Port Authority of New York and New
Jersey and Registrant. (Filed as Exhibit 28.17 to Registrant's
FY93 Second Quarter Report on Form 10-Q, Commission File No.
1-7806, and incorporated herein by reference.)
10.54 Supplement No. 2 dated September 1, 1985 to Lease Agreement dated
October 1, 1983 between The Port Authority of New York and New
Jersey and Registrant. (Filed as Exhibit 28.18 to Registrant's
FY93 Second Quarter Report on Form 10-Q, Commission File No.
1-7806, and incorporated herein by reference.)
10.55 Supplement No. 3 dated June 1, 1992 to Lease Agreement dated
October 1, 1983 between The Port Authority of New York and New
Jersey and Registrant. (Filed as Exhibit 28.19 to Registrant's
FY93 Second Quarter Report on Form 10-Q, Commission File No.
1-7806, and incorporated herein by reference.)
10.56 Supplement No. 4 dated March 1, 1993 to Lease Agreement dated
October 1, 1983 between The Port Authority of New York and New
Jersey and Registrant. (Filed as Exhibit 10.51 to Registrant's
FY95 Annual Report on Form 10-K, Commission File No. 1-7806, and
incorporated herein by reference.)
10.57 Supplement No. 5 dated February 1, 1994 to Lease Agreement dated
October 1, 1983 between The Port Authority of New York and New
Jersey and Registrant. (Filed as Exhibit 10.52 to Registrant's
FY95 Annual Report on Form 10-K, Commission File No. 1-7806, and
incorporated herein by reference.)
10.58 Amended and Restated Land Lease Agreement dated August 1993
between Registrant and the Indianapolis Airport Authority. (Filed
as Exhibit 10.52 to Registrant's FY94 Annual Report on Form 10-K,
Commission File No. 1-7806, and incorporated herein by reference.)
10.59 Indenture dated as of September 1, 1993 between the City of
Indianapolis, Indiana and NBD Bank, N.A., as Trustee, relating to
the City of Indianapolis Airport Facility Revenue Refunding Bonds,
Series 1994, due April 1, 2017. (Filed as Exhibit 10.1 to
Registrant's FY94 First Quarter Report on Form 10-Q, Commission
File No. 1-7806, and incorporated herein by reference.)
</TABLE>
E-9
<PAGE> 37
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------ ----------------------
<S> <C>
10.60 Loan Agreement between the City of Indianapolis and Registrant.
(Filed as Exhibit 10.2 to Registrant's FY94 First Quarter Report
on Form 10-Q, Commission File No. 1-7806, and incorporated herein
by reference.)
10.61 Form of Promissory Note to the City of Indianapolis. (Filed as
Exhibit 10.3 to Registrant's FY94 First Quarter Report on Form
10-Q, Commission File No. 1-7806, and incorporated herein by
reference.)
10.62 Indenture dated as of October 1, 1994 between Indianapolis Airport
Authority and NBD Bank, N. A., as Trustee, relating to 7.10%
Special Facilities Revenue Bonds, Series 1994 due January 15,
2017. (Filed as Exhibit 10.1 to Registrant's FY95 Second Quarter
Report on Form 10-Q, Commission File No. 1-7806, and incorporated
herein by reference.)
10.63 Guaranty dated as of October 1, 1994 from Registrant to NBD Bank,
N.A. relating to 7.10% Special Facilities Revenue Bonds, Series
1994 due January 15, 2017. (Filed as Exhibit 10.2 to Registrant's
FY95 Second Quarter Report on Form 10-Q, Commission File No.
1-7806, and incorporated herein by reference.)
10.64 Land and Special Facilities Lease Agreement dated as of October 1,
1994 between Registrant and the Indianapolis Airport Authority
relating to 7.10% Special Facilities Revenue Bonds, Series 1994
due January 15, 2017. (Filed as Exhibit 10.3 to Registrant's FY95
Second Quarter Report on Form 10-Q, Commission File No. 1-7806,
and incorporated herein by reference.)
10.65 Lease Agreement dated October 9, 1994 between the Registrant and
Subic Bay Metropolitan Authority. (Filed as Exhibit 10.62 to
Registrant's FY95 Annual Report on Form 10-K, Commission File No.
1-7806, and incorporated herein by reference.)
10.66 Indenture dated as of April 1, 1996 between AllianceAirport
Authority, Inc. and The First National Bank of Chicago, as
Trustee, relating to AllianceAirport Authority, Inc. Special
Facilities Revenue Bonds, Series 1996 (Federal Express Corporation
Project) due April 1, 2021. (Filed as Exhibit 10.66 to
Registrant's FY96 Annual Report on Form 10-K, Commission File No.
1-7806, and incorporated herein by reference.)
10.67 Guaranty dated as of April 1, 1996 from Registrant to The First
National Bank of Chicago relating to AllianceAirport Authority,
Inc. Special Facilities Revenue Bonds, Series 1996 (Federal
Express Corporation Project) due April 1, 2021. (Filed as Exhibit
10.67 to Registrant's FY96 Annual Report on Form 10-K, Commission
File No. 1-7806, and incorporated herein by reference.)
10.68 Land and Special Facilities Lease Agreement dated as of April 1,
1996 between Registrant and AllianceAirport Authority, Inc.
relating to AllianceAirport Authority, Inc. Special Facilities
Revenue Bonds, Series 1996 (Federal Express Corporation Project)
due April 1, 2021. (Filed as Exhibit 10.68 to Registrant's FY96
Annual Report on Form 10-K, Commission File No. 1-7806, and
incorporated herein by reference.)
</TABLE>
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<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------ ----------------------
<S> <C>
10.69 Assignment and Assumption Agreement dated April 10, 1996 between
AllianceAirport Authority, Inc. and the City of Fort Worth, Texas
relating to AllianceAirport Authority, Inc. Special Facilities
Revenue Bonds, Series 1996 (Federal Express Corporation Project)
due April 1, 2021. (Filed as Exhibit 10.69 to Registrant's FY96
Annual Report on Form 10-K, Commission File No. 1-7806, and
incorporated herein by reference.)
10.70 1980 Stock Incentive Plan and Form of Stock Option Agreement
pursuant to 1980 Stock Incentive Plan, as amended. (Filed as
Exhibit 10.59 to Registrant's FY93 Annual Report on Form 10-K,
Commission File No. 1-7806, and incorporated herein by reference.)
10.71 1983 Stock Incentive Plan and Form of Stock Option Agreement
pursuant to 1983 Stock Incentive Plan, as amended. (Filed as an
exhibit to Registrant's Registration Statement No. 2-95720 on Form
S-8 and incorporated herein by reference.)
10.72 1984 Stock Incentive Plan and Form of Stock Option Agreement
pursuant to 1984 Stock Incentive Plan, as amended. (Filed as an
exhibit to Registrant's Registration Statement No. 2-95720 on Form
S-8 and incorporated herein by reference.)
10.73 1987 Stock Incentive Plan and Form of Stock Option Agreement
pursuant to 1987 Stock Incentive Plan, as amended. (Filed as an
exhibit to Registrant's Registration Statement No. 33-20138 on
Form S-8 and incorporated herein by reference.)
10.74 1989 Stock Incentive Plan and Form of Stock Option Agreement
pursuant to 1989 Stock Incentive Plan, as amended. (Filed as
Exhibit 10.26 to Registrant's FY90 Annual Report on Form 10-K,
Commission File No. 1-7806, and incorporated herein by reference.)
10.75 1993 Stock Incentive Plan and Form of Stock Option Agreement
pursuant to 1993 Stock Incentive Plan, as amended. (1993 Stock
Incentive Plan was filed as Exhibit A to Registrant's FY93
Definitive Proxy Statement, Commission File No. 1-7806, and
incorporated herein by reference, and the form of stock option
agreement was filed as Exhibit 10.61 to Registrant's FY94 Annual
Report on Form 10-K, Commission File No. 1-7806, and incorporated
herein by reference.)
10.76 Amendment to Registrant's 1980, 1983, 1984, 1987 and 1989 Stock
Incentive Plans. (Filed as Exhibit 10.27 to Registrant's FY90
Annual Report on Form 10-K, Commission File No. 1-7806, and
incorporated herein by reference.)
10.77 Amendment to Registrant's 1983, 1984, 1987, 1989 and 1993 Stock
Incentive Plans. (Filed as Exhibit 10.63 to Registrant's FY94
Annual Report on Form 10-K, Commission File No. 1-7806, and
incorporated herein by reference.)
10.78 1995 Stock Incentive Plan and Form of Stock Option Agreement
pursuant to 1995 Stock Incentive Plan. (1995 Stock Incentive Plan
was filed as Exhibit A to Registrant's FY95 Definitive Proxy
Statement, Commission File No. 1-7806, and incorporated herein by
reference, and the form of stock option agreement was filed as
Exhibit 99.2 to Registrant's Registration Statement No. 333-03443
on Form S-8, and incorporated herein by reference.)
</TABLE>
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<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------ ----------------------
<S> <C>
10.79 Amendment to Registrant's 1980, 1983, 1984, 1987, 1989, 1993 and
1995 Stock Incentive Plans.
10.80 1986 Restricted Stock Plan and Form of Restricted Stock Agreement
pursuant to 1986 Restricted Stock Plan. (Filed as Exhibit 10.28 to
Registrant's FY90 Annual Report on Form 10-K, Commission File No.
1-7806, and incorporated herein by reference.)
10.81 1995 Restricted Stock Plan and Form of Restricted Stock Agreement
pursuant to 1995 Restricted Stock Plan. (1995 Restricted Stock
Plan filed as Exhibit B to Registrant's FY95 Definitive Proxy
Statement, Commission File No. 1-7806, and incorporated herein by
reference, and the Form of Restricted Stock Agreement was filed as
Exhibit 10.80 to Registrant's FY96 Annual Report on Form 10-K,
Commission File No. 1-7806, and incorporated herein by reference.)
10.82 1997 Restricted Stock Plan and Form of Restricted Stock Agreement
pursuant to 1997 Restricted Stock Plan.
10.83 Registrant's Amended and Restated Retirement Parity Pension Plan.
10.84 Management Performance Bonus Plan. (Description of the performance
bonus plan contained in the Definitive Proxy Statement for
Registrant's 1997 Annual Meeting of Stockholders, under the
heading "Report on Executive Compensation of the Compensation
Committee of the Board of Directors" is incorporated herein by
reference.)
10.85 Registrant's Retirement Plan for Outside Directors.
10.86 First Amendment to Registrant's Retirement Plan for Outside
Directors.
10.87 Registrant's Amended and Restated Retirement Plan for Outside
Directors.
10.88 Long-Term Performance Bonus Plan. (A description of each long-term
performance bonus plan is contained in the Definitive Proxy
Statement for Registrant's 1997 Annual Meeting of Stockholders,
under the heading "Long-Term Incentive Plans Awards in Last Fiscal
Year" and is incorporated herein by reference.)
10.89 Amended and Restated Credit Agreement dated May 12, 1995 among
Registrant and The First National Bank of Chicago, individually
and as agent, and certain lenders. (Filed as Exhibit 10.77 to
Registrant's FY95 Annual Report on Form 10-K, Commission File No.
1-7806, and incorporated herein by reference.)
10.90 Purchase Agreement between AVSA and Registrant for purchase of
Airbus A300 aircraft. Confidential treatment has been granted for
confidential commercial and financial information, pursuant to
Rule 24b-2 under the Securities Exchange Act of 1934. (Filed as
Exhibit 10.36 to Registrant's FY91 Annual Report on Form 10-K,
Commission File No. 1-7806, and incorporated herein by reference.)
</TABLE>
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<PAGE> 40
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------ ----------------------
<S> <C>
10.91 Amendment Nos. 1 through 4 to Purchase Agreement dated July 3,
1991 between AVSA and the Registrant. Confidential treatment has
been granted for confidential commercial and financial information
contained in this exhibit pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934, as amended. (Filed as Exhibits
10.1 through 10.5 to Registrant's FY97 Second Quarter Report on
Form 10-Q, Commission File No. 1-7806, and incorporated herein by
reference.)
10.92 Sales Agreement dated April 7, 1995 between Registrant and
American Airlines, Inc. for the purchase of MD11 aircraft.
Confidential treatment has been granted for confidential
commercial and financial information, pursuant to Rule 24b-2 under
the Securities Exchange Act of 1934. (Filed as Exhibit 10.79 to
Registrant's FY95 Annual Report on Form 10-K, Commission File No.
1-7806, and incorporated herein by reference.)
10.93 Amendment No. 1, dated September 19, 1996, to Sales Agreement
dated April 7, 1995 between Registrant and American Airlines, Inc.
10.94 Modification Services Agreement dated September 16, 1996 between
McDonnell Douglas Corporation and the Registrant. Confidential
treatment has been granted for confidential commercial and
financial information contained in this exhibit pursuant to Rule
24b-2 under the Securities Exchange Act of 1934, as amended.
(Filed as Exhibit 10.6 to Registrant's FY97 Second Quarter Report
on Form 10-Q, Commission File No. 1-7806, and incorporated herein
by reference.)
11 Statement re Computation of Earnings Per Share.
12 Statement re Computation of Ratio of Earnings to Fixed Charges.
(Filed as Exhibit 20.2 to Registrant's Current Report on Form 8-K
dated June 30, 1997, Commission File No. 1-7806, and incorporated
herein by reference.)
13 Registrant's Annual Report to Stockholders for the fiscal year
ended May 31, 1997.
21 Subsidiaries of Registrant.
23 Consent of Independent Public Accountants.
24 Powers of Attorney.
27 Financial Data Schedule (for SEC use only)
</TABLE>
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<PAGE> 1
EXHIBIT 10.6
================================================================================
SIXTH SUPPLEMENTAL INDENTURE
BETWEEN
MEMPHIS-SHELBY COUNTY AIRPORT AUTHORITY
AND
THE BANK OF NEW YORK (SUCCESSOR TO COMMERCE UNION BANK), TRUSTEE
DATED AS OF JULY 1, 1997
SUPPLEMENTING INDENTURE DATED AS OF
AUGUST 1, 1979 BETWEEN THE
MEMPHIS-SHELBY COUNTY AIRPORT AUTHORITY AND
THE TRUSTEE
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
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ARTICLE I
DEFINITIONS
<S> <C> <C> <C>
SECTION 1.1. Definitions...................................................................................... 2
SECTION 1.2. General Terms.................................................................................... 3
ARTICLE II
SERIES 1997 BONDS
SECTION 2.1. Details Thereof.................................................................................. 3
SECTION 2.2. Book-Entry; Replacement Bonds.................................................................... 4
SECTION 2.3. Provisions for Redemption of Series 1997 Bonds................................................... 5
SECTION 2.4. Execution and Form of Series 1997 Bonds.......................................................... 6
SECTION 2.5. Term Bond Principal Installments for Series 1997 Bonds........................................... 8
ARTICLE III
RESERVE ACCOUNT REQUIREMENT; DELIVERY OF SERIES 1997 BONDS;
APPLICATION OF SERIES 1997 BOND PROCEEDS
SECTION 3.1. Reserve Account Requirement...................................................................... 8
SECTION 3.2. Delivery of Series 1997 Bonds; Conditions Precedent.............................................. 8
SECTION 3.3. Application of Proceeds of Sale of the Series 1997 Bonds; Transfer of Funds..................... 8
</TABLE>
(i)
<PAGE> 3
<TABLE>
<CAPTION>
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ARTICLE IV
AUTHORITY; FINDINGS AND DETERMINATIONS
<S> <C> <C> <C>
SECTION 4.1. Authority..................................................................................... 9
SECTION 4.2. Series 1997 Bonds to Constitute Bonds......................................................... 9
SECTION 4.3. Findings and Determinations................................................................... 9
SECTION 4.4. Additional Findings and Determinations........................................................ 10
SECTION 4.5. Additional Findings as to the Initial Lease................................................... 10
ARTICLE V
MISCELLANEOUS
SECTION 5.1. Headings, Table of Contents................................................................... 10
SECTION 5.2. Law and Place of Enforcement.................................................................. 11
SECTION 5.3. Effective Date................................................................................ 11
SECTION 5.4. Reference to Sixth Supplemental Indenture..................................................... 11
</TABLE>
(ii)
<PAGE> 4
SIXTH SUPPLEMENTAL INDENTURE
SIXTH SUPPLEMENTAL INDENTURE, dated as of the first day of July 1997,
between MEMPHIS-SHELBY COUNTY AIRPORT AUTHORITY (the "Authority") and THE BANK
OF NEW YORK, as successor to Commerce Union Bank (the "Trustee").
WHEREAS, the Authority has executed and delivered to the Trustee an
Indenture dated as of August 1, 1979 (said Indenture, as originally adopted and,
unless the context shall clearly indicate otherwise, as supplemented, modified
or amended from time to time by any Supplemental Indenture permitted thereby,
being defined in said Indenture and referred to herein as the "Indenture") to
secure, as provided therein, Special Facilities Revenue Bonds (Federal Express
Corporation) of the Authority (in the Indenture and herein called the "Bonds")
to be issued in one or more series as provided in the Indenture;
WHEREAS, pursuant to the Indenture there have been executed,
authenticated and delivered six series of Bonds known as the Authority's Special
Facilities Revenue Bonds, Series 1979, Series 1982A, Series 1982B, Series 1982C,
Series 1984 (Federal Express Corporation) and Refunding Series 1992; and
WHEREAS, the Authority has executed and delivered to the Trustee five
Supplemental Indentures (collectively, the "Supplemental Indentures") dated as
of March 13, 1980, May 1, 1982, November 1, 1982, December 1, 1984 and July 1,
1992 amending and supplementing the Indenture;
WHEREAS, Federal Express Corporation, as lessee under the Initial Lease
has, pursuant to Section 7.6 of the Initial Lease, requested that the Authority
issue a series of Refunding Bonds in the aggregate principal amount of twenty
million one hundred five thousand dollars ($20,105,000) in accordance with
Sections 2.07 and 2.08 of the Indenture in order to refund the Authority's
Special Facilities Revenue Bonds, Series 1982B (Federal Express Corporation),
outstanding in the aggregate principal amount of twenty-one million seven
hundred eighty thousand dollars ($21,780,000);
WHEREAS, it is provided in the Indenture that without the consent or
concurrence of the holder of any Bond, the Authority and the Trustee may enter
into a Supplemental Indenture for the purpose of providing for the issuance of
Refunding Bonds pursuant to the provisions of Article II of the Indenture;
WHEREAS, the Board of Commissioners of the Authority at a meeting held
on July 17, 1997 duly adopted a resolution approving, among other things, this
Sixth Supplemental Indenture, and the Fifth Special Facility Supplemental Lease
Agreement dated as of July 1, 1997, supplementing the Initial Lease, and
authorizing the issuance, sale and delivery of a seventh series of Bonds to be
known as the Memphis-Shelby County Airport Authority, Special Facilities
<PAGE> 5
Revenue Bonds, Refunding Series 1997 (Federal Express Corporation) in the
aggregate principal amount of twenty million one hundred five thousand dollars
($20,105,000) (the "Series 1997 Bonds"), which resolution has not been amended,
modified or rescinded since the adoption thereof and remains in full force and
effect as of the date hereof;
WHEREAS, the Authority desires to provide for the issuance of the
Series 1997 Bonds; and
WHEREAS, all things necessary to make the Series 1997 Bonds to be
issued under the Indenture, when executed by the Authority and authenticated and
delivered under the Indenture, the valid special obligations of the Authority
payable solely from Revenues, as defined in the Indenture, have been done and
performed;
NOW, THEREFORE, THIS AGREEMENT WITNESSETH:
That in order to provide for the issuance of the Series 1997 Bonds and
in consideration of the premises and of the purchase and acceptance of the
Series 1997 Bonds by the holders thereof, the Authority covenants and agrees
with the Trustee, for the equal and proportionate benefit of the respective
bondholders from time to time, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. Unless the context shall clearly indicate
some other meaning, all words and terms used in this Sixth Supplemental
Indenture (including, without limitation, in the next paragraph hereof) which
are defined in the Indenture shall have the meanings given to them in the
Indenture.
Unless the context shall clearly indicate some other meaning, the
following terms shall, for all purposes of the Indenture as originally executed
and of any indentures supplemental thereto (including for all purposes this
Sixth Supplemental Indenture) and for all purposes of any opinion or instrument
or other document therein or herein mentioned, have the following meanings:
(a) "Escrow Trustee" means The Bank of New York, Atlanta, Georgia, or
any successor thereto.
(b) "Fifth Supplemental Lease" means that certain Fifth Special
Facility Supplemental Lease Agreement dated as of July 1, 1997, by and between
and the Authority and Federal Express Corporation, a Delaware corporation,
supplementing the Special Facility Lease Agreement dated as of August 1, 1979,
by and between the Authority and Federal Express
- 2 -
<PAGE> 6
Corporation (herein and in the Indenture referred to as the "Initial Lease"), as
the same has been and may be duly supplemented, modified or amended from time to
time.
(c) "1997 Refunding Trust Agreement" means the refunding trust
agreement between the Authority and the Escrow Trustee, dated as of July 1,
1997.
(d) "Refunded Bonds" means the outstanding twenty-one million seven
hundred eighty thousand dollars ($21,780,000) principal amount of the
Authority's Special Facilities Revenue Bonds, Series 1982B (Federal Express
Corporation).
(e) "Sixth Supplemental Indenture" means this sixth supplemental
indenture.
(f) "Series 1997 Bonds" means the bonds of the series authorized in
Section 2.1 hereof in the aggregate principal amount of twenty million one
hundred five thousand dollars ($20,105,000) and designated Memphis-Shelby County
Airport Authority, Special Facilities Revenue Bonds, Refunding Series 1997
(Federal Express Corporation), with such definition to be equally applicable to
the singular and plural form of such term.
SECTION 1.2. General Terms. Unless or except as the context shall
indicate otherwise or may otherwise require, in this Sixth Supplemental
Indenture: (i) all references to a particular section or subdivision of the
Indenture or of the Supplemental Indentures or this Sixth Supplemental
Indenture, as the case may be, are to the corresponding section or subdivision
of the Indenture as originally executed or the respective Supplemental Indenture
or this Sixth Supplemental Indenture only, as the case may be; (ii) the terms
"herein", "hereunder", "hereby", "hereto", "hereof", and any similar terms,
refer to this Sixth Supplemental Indenture only, and as to this Sixth
Supplemental Indenture as a whole and not to any particular section or
subdivision hereof; (iii) the terms "therein", "thereunder", "thereby",
"thereto", "thereof", and any similar terms, refer to the Indenture only, and to
the Indenture as a whole and not to any particular section or subdivision
thereof; and (iv) the term "heretofore" means before the time of effectiveness
of this Sixth Supplemental Indenture and the term "hereafter" means after the
time of such effectiveness.
ARTICLE II
SERIES 1997 BONDS
SECTION 2.1. Details Thereof. For the purpose of providing funds to
refund the Refunded Bonds there are hereby authorized to be issued and shall be
issued under the Indenture and secured thereby a series of Bonds in the
aggregate principal amount of twenty million one hundred five thousand dollars
($20,105,000), to be entitled and designated "Memphis-Shelby County Airport
Authority, Special Facilities Revenue Bonds, Refunding Series 1997 (Federal
Express Corporation)" (herein defined as the "Series 1997 Bonds"). The Series
1997 Bonds shall be issued in fully registered form; shall be dated as of July
15, 1997; shall be in the denomination of $5,000 each or any integral multiple
thereof; and shall be numbered or lettered, or both, as
- 3 -
<PAGE> 7
shall be determined by the Trustee, which numbers or letters shall have the
letter "R" prefixed thereto. The Series 1997 Bonds shall bear interest at the
rate of five and thirty-five hundredths per centum (5.35%) per annum, payable in
accordance with Section 4.01 of the Indenture, on March 1, 1998 and
semi-annually on the first day of each September and March thereafter. The
Series 1997 Bonds shall mature and become payable on September 1, 2012.
Principal of and premium, if any, on the Series 1997 Bonds shall be
payable at maturity or upon earlier redemption upon surrender thereof at the
principal office of the Trustee. The Trustee is hereby appointed as Paying Agent
and Registrar for the Series 1997 Bonds. Interest on the Series 1997 Bonds shall
be payable by check mailed to the holders thereof at their addresses as they
appear, on the 15th day of the month preceding the respective interest payment
date, in the books of registry kept pursuant to Section 6.06 of the Indenture by
the Trustee as Paying Agent for the Series 1997 Bonds, provided that while the
Series 1997 Bonds are in book-entry form payment shall be made by wire transfer
as provided in Section 2.2 hereof.
SECTION 2.2. Book-Entry; Replacement Bonds. The Series 1997 Bonds shall
be issued only in fully registered form without coupons. One Series 1997 Bond
will be issued to and registered in the name of Cede & Co., as nominee of The
Depository Trust Company, New York, New York ("DTC"), as registered owner of the
Series 1997 Bonds and such Bond shall be immobilized in the custody of DTC or
the Trustee. DTC will act as securities depository for the Series 1997 Bonds.
Individual purchases will be made in book-entry form only, in the principal
amount of $5,000 or any integral multiple thereof. Purchasers will not receive
physical delivery of certificates representing their interest in the Series 1997
Bonds purchased.
Principal, premium, if any, and interest payments on the Series 1997
Bonds will be made by the Trustee by wire transfer to DTC or its nominee, Cede &
Co., as registered owner of the Series 1997 Bonds, which will in turn remit such
payments to the DTC participants for subsequent disbursal to the beneficial
owners of the Series 1997 Bonds. Transfer of principal, premium, if any, and
interest payments to DTC participants will be the responsibility of DTC.
Transfers of such payments to beneficial owners of the Series 1997 Bonds by DTC
participants will be the responsibility of such participants and other nominees
of such beneficial owners. Transfers of ownership interests in the Series 1997
Bonds will be accomplished by book entries made by DTC and, in turn, by the DTC
participants who act on behalf of the indirect participants of DTC and the
beneficial owners of the Series 1997 Bonds.
Neither the Authority, Federal Express Corporation or the Trustee will
be responsible or liable for sending transaction statements or for maintaining,
supervising or reviewing records maintained by DTC, its participants or persons
acting through such participants or for transmitting payments to, communicating
with, notifying, or otherwise dealing with any beneficial owner of the Series
1997 Bonds.
The Authority shall issue certificates (the "Replacement Bonds")
directly to the beneficial owners of the Series 1997 Bonds other than DTC, or
its nominee, but only in the event that:
- 4 -
<PAGE> 8
(a) DTC determines to discontinue providing its services with
respect to the Series 1997 Bonds at any time by giving notice to the
Authority and discharging its responsibilities; or
(b) the Authority discontinues use of DTC (or substitute
depository or its successor) at any time upon determination by the
Authority that the use of DTC (or substitute depository or its
successor) is no longer in the best interests of the Authority and the
beneficial owners of the Series 1997 Bonds.
Upon occurrence of the events described in either (a) or (b) above, the
Authority shall attempt to locate another qualified securities depository. If
the Authority fails to locate another qualified securities depository to replace
DTC, the Authority shall execute and deliver Replacement Bonds in substantially
the form set forth in the Indenture as supplemented by this Sixth Supplemental
Indenture.
Prior to the execution and delivery of Replacement Bonds, the Authority
shall notify the beneficial owners of the Series 1997 Bonds by mailing an
appropriate notice to DTC. Principal of and interest on the Replacement Bonds
shall be payable by check or draft mailed to each owner of such Replacement
Bonds at the address of such owner as it appears in the books of registry
maintained on behalf of the Authority by the Trustee as Registrar. Replacement
Bonds will be transferred only by presentation and surrender to the Trustee as
Registrar, together with an assignment duly executed by the owner of the
Replacement Bond or by his representative in form satisfactory to the Trustee as
Registrar, and containing information required by the Trustee as Registrar, in
order to effect such transfer.
The Authority may make a charge sufficient to reimburse it for any tax,
fee or other governmental charge required to be paid with respect to an exchange
or transfer of a Series 1997 Bond, and may charge the person requesting such
exchange or transfer a sum or sums which shall be paid as a condition precedent
to the exercise of the privilege of making such exchange or transfer.
SECTION 2.3. Provisions for Redemption of Series 1997 Bonds. The Series
1997 Bonds may be called for redemption in whole at any time from any source of
moneys at a redemption price equal to the principal amount redeemed, together
with accrued interest on such principal amount to the date fixed for redemption:
(i) if the Special Facility is destroyed in whole or is damaged by fire or other
casualty to the extent that (A) such damage is not capable, in the reasonable
estimation of the lessee under the Lease, of being repaired within 180 days from
the date on which such fire or other casualty occurs or (B) the cost of such
repair is reasonably estimated by such lessee to be equal to or greater than
one-half of the principal amount of the Bonds Outstanding on the date on which
such fire or other casualty occurs, or (ii) in the event of the taking of the
whole or substantially the whole of the Special Facility as a result, or in
anticipation, of the exercise of the right of condemnation or eminent domain or
the taking of less than the whole or less than substantially the whole of the
Special Facility as a result, or in anticipation, of the exercise of the right
of condemnation or eminent domain if in either event, (A)
-5-
<PAGE> 9
the remaining portion of the Special Facility is not capable in such lessee's
reasonable estimation of being reconstructed and reequipped so that the same
will constitute a complete and functional unit suitable for the purposes for
which it is intended within 180 days from the date upon which such taking occurs
or (B) the cost of such reconstruction and reequipping is reasonably estimated
by such lessee to be equal to or greater than one-half of the principal amount
of the Bonds Outstanding on the date on which such taking occurs.
The Series 1997 Bonds shall also be subject to redemption and shall be
redeemed at any time in whole on the next practicable interest payment date at a
redemption price equal to the principal amount redeemed plus accrued interest
thereon to the date fixed for redemption, upon (i) a judgment or order of a
court of competent jurisdiction which is final (either because the time for
appeal thereof has expired or because the judgment or order is issued by the
court having final appellate jurisdiction over the matter and is not subject to
collateral attack), or (ii) determination of the Internal Revenue Service which
is final (because the tax has been paid pursuant thereto and the time for filing
a claim for refund for such tax has expired) to the effect that the interest
paid or payable on any Series 1997 Bond in the case of the issuance of such
judgment, order or determination with respect to Series 1997 Bonds to other than
a substantial user of the Special Facility or a related person is or was
includable in the gross income of the holder thereof for federal income tax
purposes as a result of a failure by the lessee to observe or perform by it
under the Lease any covenant or agreement to be observed or performed by it
under the Lease or as a result of facts within control of the lessee which are
contradictory to any representation or warranty made by the lessee under the
Lease.
In the event of the redemption of Series 1997 Bonds: (i) if less than
all of the Series 1997 Bonds are to be redeemed, the Series 1997 Bonds of such
maturity to be redeemed shall be selected as provided in Section 2.09 of the
Indenture, and (ii) notice of such redemption shall be given, and such
redemption shall have the effect as is provided in Section 2.09.
SECTION 2.4. Execution and Form of Series 1997 Bonds. The Series 1997
Bonds shall be executed, sealed and authenticated as is provided in Section
10.02 of the Indenture, provided, however, that signatures of both the President
and Secretary of the Authority may be facsimile signatures.
The Series 1997 Bonds, the form of authentication to appear thereon and
the form of assignment thereof, shall be in substantially the forms set forth in
Section 10.01 of the Indenture, with the following variations and omissions from
and insertions in said forms as set forth in that section:
(1) Such necessary or appropriate variations and omissions from and
insertions in the form of fully registered bond set forth in Section 10.01
of the Indenture shall be made as are incidental to the Series 1997 Bonds,
their series designation, date, numbers, denominations, aggregate
principal amount, maturities, interest rate or rates, first interest
payment date and redemption provisions.
-6-
<PAGE> 10
(2) The second paragraph of the form of the fully
registered Bond as set forth in Section 10.01 of the Indenture shall be
changed to read as follows:
"This Bond is one of a series of Bonds of the
Authority aggregating twenty million one hundred five thousand
dollars ($20,105,000) in principal amount. This Bond and the
series of Bonds of which it is one are authorized to be issued
and are issued under and in full compliance with the
Constitution and statutes of the State of Tennessee, including
particularly the Metropolitan Airport Authority Act, as
amended, and the Local Government Public Obligations Act of
1986, as amended, and under and pursuant to the Indenture
dated as of August 1, 1979, as amended and supplemented, and a
Sixth Supplemental Indenture dated as of July 1, 1997, each
between the Authority and The Bank of New York, New York, New
York, as successor to Commerce Union Bank, in Nashville,
Tennessee, Trustee (herein the "Trustee") (the Indenture as
amended and supplemented by the Sixth Supplemental Indenture
and by all other indentures supplemental to the Indenture
entered into prior to the Sixth Supplemental Indenture being
hereinafter called the "Indenture") and resolutions duly
adopted by the Board of Commissioners of the Authority."
(3) The following two sentences shall be added at the end
of the third paragraph of the form of the fully registered Bond as set
forth in Section 10.01 of the Indenture:
"The Indenture has been amended by the Second
Supplemental Indenture dated as of May 1, 1982 between the
Authority and the Trustee with respect to the definition and
the amount of the Reserve Account Requirement and the
application of the moneys on deposit in the Bond Fund created
under the Indenture to the credit of the Reserve Account
therein, the definition of Leased Equipment, and the issuance
of bonds, notes, certificates, warrants or other evidences of
indebtedness for any purpose relating to the Special Facility
hereinafter mentioned payable from the revenues derived by the
Authority from said Special Facility subject and subordinate
to the deposits and credits to be made to said Bond Fund. Such
amendments will become effective on the earlier of the time
when the Memphis-Shelby County Airport Authority Special
Facilities Revenue Bonds, Series 1979 (Federal Express
Corporation) heretofore issued under and pursuant to the
Indenture are no longer Outstanding under the Indenture or the
time when the holders of the requisite Outstanding principal
amount of the aforesaid Series 1979 Bonds shall have consented
in accordance with the provisions of the Indenture to such
amendments. From and after the effective date of such
amendments, no moneys shall be required to be held in the Bond
Fund to the credit of the Reserve Account therein for the
Bonds of the series of which this Bond is one."
-7-
<PAGE> 11
(4) The words ", as amended and supplemented," shall be
inserted after the date "August 1, 1979" in the first and third
sentences of the fourth paragraph of the form of the fully registered
bond as set forth in Section 10.01 of the Indenture.
(5) The words "Series 1979 Bond" appearing in the first
sentence of the fifth paragraph of the form of the fully registered
Bond as set forth in Section 10.01 of the Indenture, shall be changed
to read: "Bond of the series of which this Bond is one".
(6) The second and third sentences of the fifth paragraph
of the form of the fully registered Bond as set forth in Section 10.01
of the Indenture shall be deleted.
SECTION 2.5. Term Bond Principal Installments for Series
1997 Bonds. In order to provide for the retirement of Series 1997 Bonds (which
Bonds are in the form customarily known as "term bonds") the Authority shall
cause to be deposited in the Bond Fund from the Revenues, on or before
September 1, 2012, the amount sufficient to retire the principal amount of such
Bonds.
ARTICLE III
RESERVE ACCOUNT REQUIREMENT; DELIVERY OF SERIES 1997 BONDS;
APPLICATION OF SERIES 1997 BOND PROCEEDS
SECTION 3.1. Reserve Account Requirement. Since the
amendments to the Indenture set forth in Sections 5.1 and 5.2 of the Second
Supplemental Indenture are now effective, the Reserve Account Requirement with
respect to the Series 1997 Bonds is hereby determined to be zero.
SECTION 3.2. Delivery of Series 1997 Bonds; Conditions
Precedent. The Series 1997 Bonds shall be executed and deposited with the
Trustee for authentication, but before the Trustee shall deliver the Series
1997 Bonds there shall be filed with the Trustee the following:
(1) a certified copy of this Sixth Supplemental Indenture; and
(2) an Opinion of Counsel as required by subparagraph 3,
clause (iv), of Section 2.08 of the Indenture.
When the documents mentioned in clauses (1) and (2) of this Section 3.2
shall have been filed with the Trustee, and when the Series 1997 Bonds shall
have been executed and authenticated as required by the Indenture, the Trustee
shall deliver the Series 1997 Bonds at one time to or upon the order of the
purchasers thereof, but only upon the payment to the Trustee of the purchase
price of the Series 1997 Bonds.
-8-
<PAGE> 12
SECTION 3.3. Application of Proceeds of Sale of the Series 1997 Bonds;
Transfer of Funds. The Series 1997 Bonds shall be sold to the initial purchasers
thereof on the terms and conditions set forth in the resolution of the Board of
Commissioners of the Authority authorizing the issuance, sale and delivery of
the Series 1997 Bonds. The proceeds of the sale of the Series 1997 Bonds
(exclusive of accrued interest received on the Series 1997 Bonds from their date
to the date of delivery of and payment for the Series 1997 Bonds and exclusive
of any proceeds of the Series 1997 Bonds to be applied to the costs of issuance
of the Series 1997 Bonds) shall be deposited in the Authority's Special
Facilities Revenue Bonds, Refunding Series of 1997 (Federal Express
Corporation), Refunding Trust Fund (the "Trust Fund"), created by the 1997
Refunding Trust Agreement and held by the Escrow Trustee. There shall also be
deposited in the Trust Fund from moneys held in the Reserve Account in the Bond
Fund an amount, sufficient, together with proceeds of the Series 1997 Bonds and
investment earnings on such proceeds, to pay principal of and redemption premium
on the Refunded Bonds on September 1, 1997 and interest on the Refunded Bonds
due on September 1, 1997. Such proceeds and other moneys shall be invested as
provided in the 1997 Refunding Trust Agreement in direct obligations of, or
obligations the principal of and interest on which are unconditionally
guaranteed by the United States of America, maturing at such times as will
insure the availability of sufficient moneys to pay the principal of, premium
on, and interest on, the Refunded Bonds as the same becomes due. Accrued
interest received on the Series 1997 Bonds from their date to the date of
delivery of and payment for the Series 1997 Bonds shall be deposited into the
Bond Fund to be applied to the payment of interest on the Series 1997 Bonds on
March 1, 1998.
ARTICLE IV
AUTHORITY; FINDINGS AND DETERMINATIONS
SECTION 4.1. Authority. This Sixth Supplemental Indenture: (i)
supplements and amends the Indenture; (ii) is hereby found, determined and
declared to constitute and to be a "Supplemental Indenture" within the meaning
of the quoted words as defined in and used in the Indenture; and (iii) has been
authorized pursuant to and under the authority of the Indenture.
SECTION 4.2. Series 1997 Bonds to Constitute Bonds. The Series 1997
Bonds shall constitute and be "Bonds" as defined and used in the Indenture. The
Series 1997 Bonds shall: (i) be issued under Sections 2.07 and 2.08 of the
Indenture; (ii) shall be entitled to the benefits, security and protection of
the Indenture, equally and ratably with one another and with any other Bonds
heretofore or hereafter issued thereunder; (iii) shall be payable as provided in
the Indenture solely from the Revenues and other moneys specified in the
Indenture on a parity with one another and with all Bonds heretofore or
hereafter issued under the Indenture; and (iv) shall be equally and ratably
secured under the Indenture with one another and with all Bonds heretofore or
hereafter issued thereunder, without priority by reason of series, number, date
of adoption of
- 9 -
<PAGE> 13
the Supplemental Indenture providing for the issuance thereof, date of Bonds,
date of sale, date of execution, date of authentication, date of issuance, date
of delivery, or otherwise, by the liens, pledges, charges and assignments
created by the Indenture.
SECTION 4.3. Findings and Determinations. The Authority hereby
finds and determines the following:
(1) the Series 1997 Bonds shall be secured by and payable
solely from the rentals for that Special Facility from which the
Refunded Bonds were payable;
(2) issuance of the Series 1997 Bonds will not decrease the
rental, if any, for the Special Facility payable pursuant to
subparagraph 3 of the first paragraph of Section 10.1 of Resolution No.
88-3227 adopted January 29, 1988 by the Board of Commissioners of the
Authority;
(3) the Special Facility Lease for the Special Facility during
the life of the Series 1997 Bonds shall comply with subparagraphs 2, 3
and 4 of the first paragraph of Section 10.1 of Resolution No. 88-3227;
(4) the Series 1997 Bonds shall mature within the useful life
of the Special Facility (estimated by the Authority as 18.14 years) and
within the term of the Lease as amended and supplemented, including the
Fifth Supplemental Lease entered into in connection with the issuance
of the Series 1997 Bonds; and
(5) the provisions of paragraph (A) and (B) of Section 10.1 of
Resolution No. 88-3227 shall be complied with with respect to the
Series 1997 Bonds.
SECTION 4.4. Additional Findings and Determinations. The
Authority further finds and determines: (i) the Indenture has not been amended
or supplemented since the execution and delivery thereof other than by the
Supplemental Indentures; (ii) there does not exist an Event of Default as
defined in Section 9.01 of the Indenture, nor does there exist any condition
which, after the passage of time, would constitute such an "Event of Default";
and (iii) at the time of issuance of the Series 1997 Bonds all payments of
principal of and premium, if any, and interest on any Bonds that have become due
have been paid and no deficiencies exist in the Bond Fund.
SECTION 4.5. Additional Findings as to the Initial Lease. The
Authority further finds and determines: (i) the Initial Lease and the Guaranty
dated as of August 1, 1979 from Federal Express Corporation to the Trustee have
not terminated and are each in full force and effect; (ii) the Initial Lease has
been amended in such manner that the current term thereof shall be for a period
extending at least to the final maturity date of all Bonds to be Outstanding
upon the issuance of the Series 1997 Bonds; and (iii) the Initial Lease and the
supplemental leases thereto contain provisions including in the rentals payable
under subparagraphs (b) and (c) of Section 3.3 of the Lease and Section 3 of the
Fifth Supplemental Lease amounts at least equal to
-10-
<PAGE> 14
the principal of and premium (if any) and interest on all Bonds to be
Outstanding upon the issuance of the Series 1997 Bonds.
ARTICLE V
MISCELLANEOUS
SECTION 5.1. Headings, Table of Contents. The headings or
titles of the several articles and sections hereof, and any table of contents
appended hereto or to copies hereof, shall be solely for convenience of
reference and shall not affect the meaning, construction, interpretation or
effect of this Sixth Supplemental Indenture.
SECTION 5.2. Law and Place of Enforcement. This Sixth
Supplemental Indenture shall be construed and interpreted in accordance with the
laws of the State of Tennessee. All suits and actions against the Authority
arising under this Sixth Supplemental Indenture shall be instituted in a court
of competent jurisdiction in said State.
SECTION 5.3. Effective Date. This Sixth Supplemental Indenture
shall become effective upon the occurrence of the last of the following events:
(i) the execution and delivery hereof pursuant to Section 8.01 of the Indenture
and applicable law; and (ii) the delivery to the Trustee of a copy hereof,
certified by the Authority, together with an Opinion of Counsel to the Authority
to the effect required under Sections 2.08 and 8.03 of the Indenture.
SECTION 5.4. Reference to Sixth Supplemental Indenture.
Notwithstanding the actual date of the effectiveness hereof, for convenience and
purposes of reference this Sixth Supplemental Indenture shall be dated as of
July 1, 1997 and may be cited and referred to as the "Sixth Supplemental
Indenture dated as of July 1, 1997 between the Memphis-Shelby County Airport
Authority and The Bank of New York, Trustee."
- 11 -
<PAGE> 15
IN WITNESS WHEREOF, the undersigned President of the Authority has
hereunto set his hand, the Secretary of the Authority has attested such
signature and caused the official seal of the Authority to be impressed hereon,
and The Bank of New York, Trustee, has caused this Sixth Supplemental Indenture
to be signed in its name and on its behalf by one of its Vice Presidents.
MEMPHIS-SHELBY COUNTY AIRPORT
AUTHORITY
By /s/ LARRY D. COX
---------------------------
President
(SEAL)
Attest:
/s/ JERRY L. MCMICHAEL
- ---------------------------
Secretary
THE BANK OF NEW YORK,
TRUSTEE
By /s/ ROBERT MCINTYRE
---------------------------
Vice President
Approved by the Board of Commissioners of
the Memphis-Shelby County Airport Authority
at its meeting held on July 17, 1997.
- 12 -
<PAGE> 16
STATE OF TENNESSEE )
) ss:
COUNTY OF SHELBY )
On this 29 day of July, 1997, before me appeared Larry D. Cox, to me
personally known, who, being by me duly sworn (or affirmed) did say that he is
the President of Memphis-Shelby County Airport Authority, and that the seal
affixed to the foregoing instrument is the corporate seal of said Authority,
and that said instrument was signed and sealed on behalf of said Authority, by
authority of its Board of Commissioners and he acknowledged said instrument to
be the free act and deed of said Authority.
/s/ MARY JO JOHNSON
-------------------------------
Notary Public
My Commission Expires: 9/6/99
- 13 -
<PAGE> 17
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
On this 29 day of July, 1997, before me appeared Robert McIntyre, to
me personally known, who, being by me duly sworn (or affirmed) did say that he
is the Vice President of The Bank of New York, and that said instrument was
signed and sealed on behalf of said Bank, by authority of its Board of
Directors and he acknowledged said instrument to be the free act and deed of
said Bank.
/s/ JAMES FOLEY
-------------------------------
Notary Public
My Commission Expires: August 31, 1998
- 14 -
<PAGE> 1
EXHIBIT 10.11
REAFFIRMATION OF GUARANTY
In connection with the Guaranty entered into as of August 1,
1979 (the "Guaranty") by and between Federal Express Corporation (a Delaware
corporation), as Guarantor, and Commerce Union Bank, succeeded by The Bank of
New York, as Trustee for the holders of Bonds (as defined in the Guaranty)
issued under that certain Indenture between Memphis-Shelby County Airport
Authority and the Trustee, dated as of August 1, 1979, as heretofore
supplemented and amended and as amended and supplemented as of the date hereof
(the "Indenture"), Federal Express Corporation does hereby affirm as of the date
hereof the representations and warranties of the Guarantor made and all
covenants and agreements of the Guarantor contained in the Guaranty, including,
particularly, the obligations of the Guarantor relating to all Bonds (as defined
in the Indenture), including the $20,105,000 Special Facilities Revenue Bonds,
Refunding Series 1997 (Federal Express Corporation) to be issued under the
Indenture.
IN WITNESS WHEREOF, the undersigned FEDERAL EXPRESS
CORPORATION has caused this Reaffirmation of Guaranty to be executed in its name
and on its behalf and its corporate seal to be affixed hereto attested by a duly
authorized officer as of the 29th day of July 1997.
FEDERAL EXPRESS CORPORATION
By: /s/ BURNETTA B. WILLIAMS
-------------------------------
Name: Burnetta B. Williams
Title: Assistant Treasurer and
Managing Director,
Corporate Finance
(SEAL)
ATTEST:
/s/ SCOTT E. HANSEN
- ------------------------------
Assistant Secretary
<PAGE> 2
STATE OF TENNESSEE )
) ss.:
COUNTY OF SHELBY )
On this 29th day of July 1997, before me appeared Burnetta
B. Williams, to me personally known, who, being by me duly sworn (or affirmed)
did say that she is Assistant Treasurer and Managing Director, Corporate Finance
of Federal Express Corporation, the Guarantor, and that the seal affixed to the
foregoing instrument is the corporate seal of said corporation and that said
instrument was signed and sealed on behalf of said corporation by authority of
its Board of Directors and she acknowledged said instrument to be the free act
and deed of said corporation.
(SEAL)
/s/ ETHELDA D. MCKEEVER
------------------------------------
Notary Public
My Commission Expires: March 27, 2001
---------------
<PAGE> 1
EXHIBIT 10.28
EXECUTION COPY
SIXTEENTH SUPPLEMENTAL LEASE AGREEMENT
BY AND BETWEEN
MEMPHIS-SHELBY COUNTY AIRPORT AUTHORITY
AND
FEDERAL EXPRESS CORPORATION
DATED AS OF APRIL 1, 1997
AMENDING THE CONSOLIDATED AND RESTATED LEASE AGREEMENT DATED AS OF AUGUST 1,
1979 BETWEEN THE MEMPHIS-SHELBY COUNTY AIRPORT AUTHORITY AND FEDERAL EXPRESS
CORPORATION.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<S> <C> <C>
1 Definitions .......................................................... 6
2 Modification to the Fifteenth Supplemental Lease Agreement ........... 7
3 Granting Leasehold ................................................... 7
4 Term; Delivery and Acceptance of Possession ......................... 8
5 Rental ............................................................... 8
6 Hazardous Substances/Waste ........................................... 8
7 Lease Agreement Still in Effect; Provisions Thereof Applicable
to this Sixteenth Supplemental Lease Agreement ....................... 9
8 Descriptive Headings ................................................. 10
9 Effectiveness of this Sixteenth Supplemental Lease Agreement ......... 10
10 Execution of Counterparts ............................................ 10
11 Summaries............................................................. 10
Notary ............................................................... 12
Leased Parcel Summary ................................................ 13
Rental Summary ....................................................... 15
</TABLE>
<PAGE> 3
SIXTEENTH SUPPLEMENTAL LEASE AGREEMENT
THIS SIXTEENTH SUPPLEMENTAL LEASE AGREEMENT, made and entered into as
of the 1st of April, 1997, by and between MEMPHIS-SHELBY COUNTY AIRPORT
AUTHORITY (herein sometimes referred to as "Authority"), a public and
governmental body politic and corporate of the State of Tennessee, and FEDERAL
EXPRESS CORPORATION (herein sometimes referred to as "Tenant"), a corporation
duly organized and existing under the laws of the State of Delaware and
qualified to do business in the State of Tennessee.
W I T N E S S E T H:
WHEREAS, Authority and Tenant on October 3, 1979 entered into a
Consolidated and Restated Lease Agreement dated as of August 1, 1979; and
WHEREAS, Authority and Tenant on April 7, 1981 entered into a First
Supplemental Lease Agreement dated as of April 1, 1981 (the "First Supplemental
Lease Agreement") so as to provide for the lease by Tenant from Authority of
additional land, buildings, and equipment to be included in the Project as
defined in the Lease Agreement all as set forth therein (such additional land,
buildings, and equipment being defined therein and hereinafter referred to as
the "1981 Federal Express Project"), all as set forth therein; and
WHEREAS, the Authority and Tenant on May 6, 1982 entered into a Second
Supplemental Lease Agreement dated as of January 1, 1982 (the "Second
Supplemental Lease Agreement") so as to provide for the lease by Tenant from
Authority of additional land to be included in this Project, all as set forth
therein; and
WHEREAS, Authority and Tenant on December 9, 1982 entered into a Third
Supplemental Lease Agreement dated as of November 1, 1982 (the "Third
Supplemental Lease Agreement") so as to release certain items consisting of
buildings and leased equipment in the 1981 Federal Express Project; and
WHEREAS, Authority and Tenant on September 29, 1983 entered into a
Fourth Supplemental Lease Agreement dated as of July 1, 1983 (the "Fourth
Supplemental Lease
3
<PAGE> 4
Agreement") so as to provide for the lease by Tenant from Authority of
additional land to be included in the Project, all as set forth therein; and
WHEREAS, Authority and Tenant on April 23, 1984 entered into a Fifth
Supplemental Lease Agreement dated as of February 1, 1984 (the "Fifth
Supplemental Lease Agreement") so as to provide for the lease by Tenant from
Authority of additional land to be included in this Project, all as set forth
therein; and
WHEREAS, Authority and Tenant on November 19, 1984 entered into a Sixth
Supplemental Lease Agreement dated as of April 1, 1984 (the "Sixth Supplemental
Lease Agreement") so as to provide for the lease by Tenant from Authority of
additional land to be included in this Project, all as set forth therein; and
WHEREAS, Authority and Tenant on November 19, 1984 entered into a
Seventh Supplemental Lease Agreement dated as of June 1, 1984 (the "Seventh
Supplemental Lease Agreement") so as to provide for the lease by Tenant from
Authority of additional land to be included in this Project, all as set forth
therein; and
WHEREAS, Authority and Tenant on November 4, 1988 entered into a Eighth
Supplemental Lease Agreement dated as of July 1, 1988, (the "Eighth Supplemental
Lease Agreement") so as to provide for the lease by Tenant from Authority of
additional land to be included in this Project, all as set forth therein; and
WHEREAS, Authority and Tenant on July 12, 1989 entered into a Ninth
Supplemental Lease Agreement dated as of June 1, 1989, (the "Ninth Supplemental
Lease Agreement") so as to provide for the lease by Tenant from Authority of
additional land to be included in this Project, all as set forth therein; and
WHEREAS, Authority and Tenant on October 1, 1991 entered into a Tenth
Supplemental Lease Agreement dated as of October 1, 1991, (the "Tenth
Supplemental Lease Agreement") so as to provide for the lease by Tenant from
Authority of additional land to be included in this Project, all as set forth
therein; and
4
<PAGE> 5
WHEREAS, Authority and Tenant on July 1, 1994 entered into a Eleventh
Supplemental Lease Agreement dated July 1, 1994, (the "Eleventh Supplemental
Lease Agreement") so as to provide for the lease by Tenant from Authority of
additional land to be included in this Project, all as set forth therein; and
WHEREAS, Authority and Tenant on July 1, 1993 entered into a Twelfth
Supplemental Lease Agreement dated July 1, 1993, (the "Twelfth Supplemental
Lease Agreement") so as to release a certain parcel of land from the 1981
Federal Express Project as described on Exhibit 1 attached thereto; and
WHEREAS, Authority and Tenant on June 1, 1995 entered into a Thirteenth
Supplemental Lease Agreement dated June 1, 1995, (the "Thirteenth Supplemental
Lease Agreement") so as to provide for the lease by Tenant from Authority of
additional land to be included in this Project and so as to release a certain
parcel of land from the 1981 Federal Express Project, all as set forth therein;
and
WHEREAS, Authority and Tenant on December 1, 1995 entered into a
Fourteenth Supplemental Lease Agreement dated January 1, 1996, (the "Fourteenth
Supplemental Lease Agreement") so as to provide for the lease by Tenant from
Authority of additional land to be included in this Project, all as set forth
therein; and
WHEREAS, Authority and Tenant on January 1, 1997 entered into a
Fifteenth Supplemental Lease Agreement dated January 1, 1997, (the "Fifteenth
Supplemental Lease Agreement") so as to provide for the lease by Tenant from
Authority of additional land to be included in this Project, all as set forth
therein; and
WHEREAS, the said Consolidated and Restated Lease Agreement dated as of
August 1, 1979, together with the First through the Fifteenth Supplemental Lease
Agreements is herein referred to as the "Lease Agreement"; and
WHEREAS, Authority and Tenant have agreed to further amend and
supplement the Lease Agreement so as to modify Section 4 - Rental of the
Fifteenth Supplemental Lease
5
<PAGE> 6
Agreement and to lease to Tenant certain additional land under this Sixteenth
Supplemental Lease Agreement.
NOW THEREFORE, for and in consideration of the mutual promises,
covenants and agreements hereinafter contained to be kept and performed by the
parties hereto and upon the provisions and conditions hereinafter set forth,
Authority and Tenant do hereby covenant and agree, and each for itself does
hereby covenant and agree, as follows:
SECTION 1. DEFINITIONS. Except as otherwise provided herein, and unless
the context shall clearly require otherwise, all words and terms used in this
Sixteenth Supplemental Lease Agreement which are defined in the Lease Agreement,
shall, for all purposes of this Sixteenth Supplemental Lease Agreement, have the
respective meanings given to them in the Lease Agreement.
SECTION 2. MODIFICATION TO THE FIFTEENTH SUPPLEMENTAL LEASE AGREEMENT.
Section 4, Rental, of the Fifteenth Supplemental Lease Agreement dated as of
January 1, 1997 is hereby deleted in its entirety and the following substituted
therefor:
SECTION 4. RENTAL. In addition and supplemental to the rentals
required to be paid to the Authority pursuant to Section 5 of the Lease
Agreement (including all prior supplemental lease agreements), during
the term of this Fifteenth Supplemental Lease Agreement, Tenant as to
Parcel 21 shall pay to the Authority in advance on the first business
day of each month $11,877.03 in equal installments beginning January
1, 1997, a total rental payment of $142,524.40 per year, which the
parties hereto agree is based upon an aggregate of 833,476 square feet
of area at an annual rental rate of ($0.1710) per square foot.
SECTION 3. GRANTING OF LEASEHOLD. In addition to the lease and demise
to Tenant of the land in the Lease Agreement, the Authority hereby leases and
demises to Tenant, and Tenant hereby takes and hires from Authority, subject to
the provisions and conditions set forth in the Lease Agreement and this
Sixteenth Supplemental Lease Agreement, the additional land designated as new
Lease Parcel 22A which is located on the Memphis-Shelby County Airport Authority
property situated in Memphis, Shelby County, Tennessee, and being more
particularly described as follows:
6
<PAGE> 7
PARCEL 22A
(CONTRACTOR PARKING LOT)
BEING THE NORTHERN MOST PART OF PARCEL 22 OF THE MEMPHIS-SHELBY COUNTY
AIRPORT AUTHORITY (M.S.C.A.A.) PROPERTY SITUATED IN MEMPHIS, SHELBY
COUNTY, TENNESSEE AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
Beginning at a point in the northwest line of Tchulahoma Road (106'
R.O.W.) 43.61 feet south of the intersection of the south line of
Knight Arnold Road (80' R.O.W.) and said northeast line; thence
northeastwardly along a curve to the right having a radius of 40.00
feet an arc distance of 66.28 feet (Chord: N 16(Degree)22'21" E - 58.95
feet) to a point of tangency in the south line of Knight Arnold Road;
thence N 63(Degree)50'36" E along said south line a distance of 45.13
feet to a point of curvature; thence continuing along said south line
along a curve to the right having a radius of 960.00 feet an arc
distance of 477.04 feet (Chord: N 78(Degree)04'45" E - 472.15 feet) to
a point; thence along a curve to the right having a radius of 20.00
feet an arc distance of 32.13 feet (Chord: S 41(Degree)40'09" E - 28.78
feet) to a point of tangency in the west line of Linda Drive (50'
R.O.W.); thence S 04(Degree)20'49" W along said west line a distance of
309.31 feet to a point; thence N 85(Degree)38'25" W a distance of
442.28 feet to a point in said northeast line of Tchulahoma Road;
thence N 31(Degree)05'54" W along said northeast line a distance of
142.84 feet to the point of beginning and containing 140,000 square
feet or 3.214 acres.
SECTION 4. TERM; DELIVERY AND ACCEPTANCE OF POSSESSION. The terms of
this Sixteenth Supplemental Lease Agreement shall commence at 12:01 A.M. on
April 1, 1997 for the land described as Parcel 22A and shall expire at such time
as the Lease Agreement shall expire, to-wit: August 31, 2012 or upon such
earlier termination, extension or otherwise as provided therein. Authority shall
deliver to Tenant sole and exclusive possession of that portion of the land,
leased hereby as of the date commencement of the term hereof, subject however,
to Authority's right-of-entry set forth in Section 21 of the Lease Agreement.
SECTION 5. RENTAL. In addition and supplemental to the rentals required
to be paid to the Authority pursuant to Section 5 of the Lease Agreement
(including all prior supplemental lease agreements), during the term of this
Sixteenth Supplemental Lease Agreement, Tenant as to Parcel 22A shall pay to the
Authority in advance on the first business day of each month $1,995.00 in equal
installments beginning September 1, 1997, a total rental payment of $23,940.00
per year, which the parties hereto agree is based upon an aggregate of 140,000
square feet of area at an annual rental rate of ($0.1710) per square foot.
7
<PAGE> 8
SECTION 6. HAZARDOUS SUBSTANCES/WASTE. Tenant, at its own expense, may
arrange for a Phase 1 Environmental Survey on the land described as Parcel 22A
by a reputable environmental consultant to determine the existence of Hazardous
Substances. In the event that Hazard Substances are uncovered during excavation
for construction on Parcel 22A, and such Hazardous Substances, as defined
herein, shall require special handling and disposal, then Authority shall grant
to Tenant a rent credit equal to the reasonable documented costs paid by Tenant
for the removal and disposal of Hazardous Substance(s) associated with Parcel
22A exclusively.
The term "Hazardous Substances", as used in this Sixteenth
Supplemental Lease Agreement, shall mean any hazardous or toxic substances,
materials or wastes, including, but not limited to, those substances, materials,
and wastes (i) listed in the United States Department of Transportation
Hazardous Materials Table (49 CFR ss. 172.101) or by the Environmental
Protection Agency as hazardous substances (40 CFR Part 302) and amendments
thereto, (ii) designated as a "Hazardous Substance" pursuant to Section 311 of
the Clean Water Act, 33 U.S.C. ss. 1251 et seq. (33 U.S.C. ss. 1321) or listed
pursuant to Section 307 of the Clean Water Act (33 U.S.C. ss. 1317, (iii)
defined as a "Hazardous Waste" pursuant to Section 1004 of the Resource
Conservation and Recovery Act, 42 U.S.C. ss. 6901, et seq. (42 U.S.C. ss. 6903),
or (iv) defined as "Hazardous Substance" pursuant to Section 101 of the
Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C.ss. 9601, et seq. 42 U.S.C. ss. 9601) or any other substances, (including,
without limitation, asbestos and raw materials which include hazardous
constituents), the general, discharge or removal of which or the use of which is
restricted, prohibited or penalized by any "Environmental Law", which term shall
mean any Federal, State or local law, regulation, or ordinance relating to
pollution or protection of the environment.
SECTION 7. LEASE AGREEMENT STILL IN EFFECT; PROVISIONS THEREFORE
APPLICABLE TO THIS SUPPLEMENTAL LEASE AGREEMENT. All of the terms, provisions,
conditions, covenants and
8
<PAGE> 9
agreements of the Lease Agreement, as supplemented, shall continue in full force
and effect as supplemented hereby, and shall be applicable to each of the
provisions of this Sixteenth Supplemental Lease Agreement during the term hereof
with the same force and effect as though the provisions hereof were set forth in
the Lease Agreement.
SECTION 8. DESCRIPTIVE HEADINGS. The descriptive headings of the
sections of this Sixteenth Supplemental Lease Agreement are inserted for
convenience of reference only and do not constitute a part of this Sixteenth
Supplemental Lease Agreement and shall not affect the meaning, construction,
interpretation or effect of this Sixteenth Supplemental Lease Agreement.
SECTION 9. EFFECTIVENESS OF THIS SUPPLEMENTAL LEASE AGREEMENT. This
Sixteenth Supplemental Lease Agreement shall become effective at 12:01 a.m.
on April 1, 1997.
SECTION 10. EXECUTION OF COUNTERPARTS. This Sixteenth Supplemental
Lease Agreement may be simultaneously executed in several counterparts, each of
which shall be an original and all of which shall constitute but one and the
same instrument.
SECTION 11. SUMMARIES. For the convenience of both parties a Leased
Parcel Summary and a Rental Summary are attached to this Lease Agreement.
9
<PAGE> 10
IN WITNESS WHEREOF, THE MEMPHIS-SHELBY COUNTY AIRPORT AUTHORITY AND
FEDERAL EXPRESS CORPORATION have caused this Sixteenth Supplemental Lease
Agreement to be duly executed in their respective behalfs, as of the day and
year first above written.
WITNESS: MEMPHIS-SHELBY COUNTY AIRPORT
AUTHORITY
/s/ RICHARD V. WHITE BY: /s/ LARRY D. COX
- ----------------------------- --------------------------------
Title: Director of Properties TITLE: President
----------------------- -----------------------------
Approved as to Form and Legality:
/s/ R. GRATTAN BROWN, JR.
- ---------------------------------------------
R. Grattan Brown, Jr., Attorney for Authority
WITNESS: FEDERAL EXPRESS CORPORATION
/s/ LEANNA JOHNSON BY: /s/ WILEY JOHNSON, JR.
- ----------------------------- --------------------------------
Title: Project Coordinator TITLE: Managing Director, Real
---------------------- -----------------------------
Estate and Airport
Development
10
<PAGE> 11
(STATE OF TENNESSEE )
(COUNTY OF SHELBY )
On this 17 day of April, 1997, before me appeared LARRY D. COX, to me
personally known, who, being by me duly sworn (or affirmed), did say that he is
the President of the Memphis-Shelby County Airport Authority, the within named
Lessor, and that he as such President, being authorized so to do, executed the
foregoing instrument for the purposes therein contained, by signing the name of
the Authority by himself as such President.
MY COMMISSION EXPIRES
December 21, 1999 /s/ ANGELA WACHINGT
- ---------------------- -----------------------------------
Notary Public
(seal)
STATE OF TENNESSEE )
COUNTY OF SHELBY )
On this 17 day of April, 1997, before me appeared Wiley Johnson, to me
personally known, who, being by me duly sworn (or affirmed), did say that he
is a Managing Director of Real Estate of Federal Express Corporation, the
within named Lessee, and that he as such Managing Director, being authorized so
to do, executed the foregoing instrument for the purposes therein contained, by
signing the name of the Corporation by himself as such Managing Director.
MY COMMISSION EXPIRES
December 7, 1998 /s/ LEANNA M. JOHNSON
- ---------------------- ------------------------------------
Notary Public
(seal)
11
<PAGE> 12
FEDERAL EXPRESS LEASED PARCELS SUMMARY
<TABLE>
<CAPTION>
PARCEL EFFECTIVE
LEASE ACRES SQUARE FEET AGREEMENT DATE
- ----- ----- ----------- --------- ---------
BASE-LEASE
<S> <C> <C> <C> <C>
Revised 9 128.469 Consolidated & 08/01/79
Restated
10 1.612 70,200 Consolidated & 08/01/79
Restated
11 1.044 45,359 Consolidated & 08/01/79
Restated
PREVIOUS SUPPLEMENTS
12 2.707 117,915 First 04/01/81
Supplemental
13 6.860 298,830 Second 01/01/82
Supplemental
14 14.586 635,377 Fourth 07/01/83
Supplemental
15 12.689 552,723 Fourth 07/01/83
Supplemental
Rev 16 18.281 (19.685) 796,312 Fifth 02/01/84
Supplemental
Rev 17 119.616 (124.992) 5,210,477 Sixth 04/01/84
Supplemental
18 2.717 118,353 Sixth 04/01/84
Supplemental
19 41.606 1,812,352 Seventh 06/01/84
Supplemental
25 0.435 18,933 Eighth 07/01/88
Supplemental
20 11.275 491,127 Ninth 06/01/89
Supplemental
27 11.192 487,512 Tenth 10/01/91
Supplemental
27 A(West) 4.058 176,777 Eleventh 07/01/94
Supplemental
27 B(West) 5.706 248,533 Eleventh 07/01/94
Supplemental
Southwest
Ramp 2.350 102,366 Eleventh 07/01/94
Supplemental
</TABLE>
12
<PAGE> 13
<TABLE>
<CAPTION>
PARCEL EFFECTIVE
LEASE ACRES SQUARE FEET AGREEMENT DATE
- ----- ----- ----------- --------- ---------
<S> <C> <C> <C> <C>
32 (removed) 22.972 1,000,681 Twelfth 07/01/93
Supplemental
33 8.998 391,942 Thirteenth 06/01/95
Supplemental
36 3.050 132,837 Thirteenth 06/01/95
Supplemental
Hangar 8 (removed) 36,946,33 Thirteenth 06/01/95
Supplemental
34 9.951 433,461 Fourteenth 01/01/96
Supplemental
21 19.134 833,476 Fifteenth 01/01/97
Supplemental
THIS SUPPLEMENT
22A (NORTH) 3.214 140,000 SIXTEENTH 04/01/97
SUPPLEMENTAL
OPTIONS
22B (South) 3.310 144,200 Option, Expires 5/31/99
29 3.85 167,706 Option, Expires 9/30/2001
ASSIGNMENTS
23 5.923 258,008 Graber Assignment,
Expires 12/31/2000
Invoice FEC
Final Increase 1/1/96
24 9.964 434,030 Southwide Assignment
Expires 5/14/2013
Invoice FEC
Next Increase 5/15/98
26 9.532 415,213 BICO Assignment,
Expires 7/31/2021
Invoice FEC
Next Increase 8/01/2011
28 10.68 465,221 Equitable Life Assignment
Expires 5/14/2013
Invoice FEC
Next Increase 5/15/98
</TABLE>
13
<PAGE> 14
RENTAL - FEDERAL EXPRESS
Effective September 1, 1997
<TABLE>
<CAPTION>
Annual
Category Number of Rental Rate
of Space Square Feet Per Sq. Ft. Annual Rental
- -------- ----------- ----------- -------------
<S> <C> <C> <C>
Bldg. T-376 1,240 1.221 $ 1,514.04
Unimproved Ground 5,452,282 0.098 534,323.64
Improved Apron 2,395,802 0.122 292,287.84
Hangar Property 72,092.67 0.903 65,099.68
Hangar Office 28,000 1.465 41,020.00
International Park 9,694,700 0.171 1,657,793.70
Former IRS Facility 2,255,137.24 1,200,000.00
------------- -------------
19,899,253.91 $3,792,038.90
</TABLE>
BREAKDOWN OF SPACE
<TABLE>
<CAPTION>
Sq. Ft. Sq. Ft.
------- -------
<S> <C> <C> <C>
Bldg. T-376 Parcel 4 1,240
1,240
Unimproved Ground Parcel 1 130,900
Parcel 2 50,000
Parcel 3 192,400
Parcel 4 32,540
Parcel 6 89,700
Parcel 9 1,167,337
Parcel 19 1,812,362
Parcel 20 491,127
Parcel 27A 176,777
Parcel 27B 248,533
Southwest Ramp 102,366
Parcel 33 391,942
Parcel 36 132,837
Parcel 34 433,461
-------
5,452,282
Improved Apron Parcel 1 850,250
Parcel 2 226,900
Parcel 7 577,540
Parcel 9 253,600
Parcel 27 487,512
-------
2,395,802
</TABLE>
14
<PAGE> 15
<TABLE>
<CAPTION>
Sq. Ft. Sq. Ft.
------- -------
<S> <C> <C> <C>
Hangar Property Parcel 1 44,336
Parcel 2 27,756.67
---------
72,092.67
Hangar Office Parcel 1 22,400
Parcel 2 5,600
-----
28,000
International Park Parcel 5 24,000
Parcel 8 247,254
Parcel 9 1,586,172
Parcel 10 70,200
Parcel 11 45,359
Parcel 12 117,915
Parcel 13 298,830
Parcel 14 556,334
Parcel 15 552,723
Parcel 16 796,312
Parcel 17 4,288,839
Parcel 18 118,353
Parcel 25 18,933
Parcel 21 833,476
Parcel 22A 140,000
-------
9,694,700
Former IRS Facility 2,255,137.24 2,255,137.24
------------
TOTAL: 19,899,253.91
</TABLE>
15
<PAGE> 1
EXHIBIT 10.29
EXECUTION COPY
SEVENTEENTH SUPPLEMENTAL LEASE AGREEMENT
BY AND BETWEEN
MEMPHIS-SHELBY COUNTY AIRPORT AUTHORITY
AND
FEDERAL EXPRESS CORPORATION
DATED AS OF MAY 1, 1997
AMENDING THE CONSOLIDATED AND RESTATED LEASE AGREEMENT DATED AS OF AUGUST 1,
1979 BETWEEN THE MEMPHIS-SHELBY COUNTY AIRPORT AUTHORITY AND FEDERAL EXPRESS
CORPORATION.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<S> <C> <C>
1 Definitions ........................................................ 7
2 Granting Leasehold ................................................. 7
3 Term; Delivery and Acceptance of Possession ....................... 8
4 Rental ............................................................. 8
5 Hazardous Substances/Waste.......................................... 8
6 Lease Agreement Still in Effect; Provisions Thereof Applicable
to this Seventeenth Supplemental Lease Agreement ................... 10
7 Descriptive Headings ............................................... 10
8 Effectiveness of this Seventeenth Supplemental Lease Agreement ..... 10
9 Execution of Counterparts .......................................... 10
10 Summaries........................................................... 11
Notary ............................................................. 12
Leased Parcel Summary .............................................. 13
Rental Summary ..................................................... 15
</TABLE>
<PAGE> 3
SEVENTEENTH SUPPLEMENTAL LEASE AGREEMENT
THIS SEVENTEENTH SUPPLEMENTAL LEASE AGREEMENT, made and entered into as
of the 1st of May, 1997, by and between MEMPHIS-SHELBY COUNTY AIRPORT AUTHORITY
(herein sometimes referred to as "Authority"), a public and governmental body
politic and corporate of the State of Tennessee, and FEDERAL EXPRESS CORPORATION
(herein sometimes referred to as "Tenant"), a corporation duly organized and
existing under the laws of the State of Delaware and qualified to do business in
the State of Tennessee.
W I T N E S S E T H:
WHEREAS, Authority and Tenant on October 3, 1979 entered into a
Consolidated and Restated Lease Agreement dated as of August 1, 1979; and
WHEREAS, Authority and Tenant on April 7, 1981 entered into a First
Supplemental Lease Agreement dated as of April 1, 1981 (the "First Supplemental
Lease Agreement") so as to provide for the lease by Tenant from Authority of
additional land, buildings, and equipment to be included in the Project as
defined in the Lease Agreement all as set forth therein (such additional land,
buildings, and equipment being defined therein and hereinafter referred to as
the "1981 Federal Express Project"), all as set forth therein; and
WHEREAS, the Authority and Tenant on May 6, 1982 entered into a Second
Supplemental Lease Agreement dated as of January 1, 1982 (the "Second
Supplemental Lease Agreement") so as to provide for the lease by Tenant from
Authority of additional land to be included in this Project, all as set forth
therein; and
WHEREAS, Authority and Tenant on December 9, 1982 entered into a Third
Supplemental Lease Agreement dated as of November 1, 1982 (the "Third
Supplemental Lease Agreement") so
3
<PAGE> 4
as to release certain items consisting of buildings and leased equipment in the
1981 Federal Express Project; and
WHEREAS, Authority and Tenant on September 29, 1983 entered into a
Fourth Supplemental Lease Agreement dated as of July 1, 1983 (the "Fourth
Supplemental Lease Agreement") so as to provide for the lease by Tenant from
Authority of additional land to be included in the Project, all as set forth
therein; and
WHEREAS, Authority and Tenant on April 23, 1984 entered into a Fifth
Supplemental Lease Agreement dated as of February 1, 1984 (the "Fifth
Supplemental Lease Agreement") so as to provide for the lease by Tenant from
Authority of additional land to be included in this Project, all as set forth
therein; and
WHEREAS, Authority and Tenant on November 19, 1984 entered into a Sixth
Supplemental Lease Agreement dated as of April 1, 1984 (the "Sixth Supplemental
Lease Agreement") so as to provide for the lease by Tenant from Authority of
additional land to be included in this Project, all as set forth therein; and
WHEREAS, Authority and Tenant on November 19, 1984 entered into a
Seventh Supplemental Lease Agreement dated as of June 1, 1984 (the "Seventh
Supplemental Lease Agreement") so as to provide for the lease by Tenant from
Authority of additional land to be included in this Project, all as set forth
therein; and
WHEREAS, Authority and Tenant on November 4, 1988 entered into a Eighth
Supplemental Lease Agreement dated as of July 1, 1988, (the "Eighth Supplemental
Lease Agreement") so as to provide for the lease by Tenant from Authority of
additional land to be included in this Project, all as set forth therein; and
4
<PAGE> 5
WHEREAS, Authority and Tenant on July 12, 1989 entered into a Ninth
Supplemental Lease Agreement dated as of June 1, 1989, (the "Ninth Supplemental
Lease Agreement") so as to provide for the lease by Tenant from Authority of
additional land to be included in this Project, all as set forth therein; and
WHEREAS, Authority and Tenant on October 1, 1991 entered into a Tenth
Supplemental Lease Agreement dated as of October 1, 1991, (the "Tenth
Supplemental Lease Agreement") so as to provide for the lease by Tenant from
Authority of additional land to be included in this Project, all as set forth
therein; and
WHEREAS, Authority and Tenant on July 1, 1994 entered into a Eleventh
Supplemental Lease Agreement dated July 1, 1994, (the "Eleventh Supplemental
Lease Agreement") so as to provide for the lease by Tenant from Authority of
additional land to be included in this Project, all as set forth therein; and
WHEREAS, Authority and Tenant on July 1, 1993 entered into a Twelfth
Supplemental Lease Agreement dated July 1, 1993, (the "Twelfth Supplemental
Lease Agreement") so as to release a certain parcel of land from the 1981
Federal Express Project as described on Exhibit 1 attached thereto; and
WHEREAS, Authority and Tenant on June 1, 1995 entered into a Thirteenth
Supplemental Lease Agreement dated June 1, 1995, (the "Thirteenth Supplemental
Lease Agreement") so as to provide for the lease by Tenant from Authority of
additional land to be included in this Project and so as to release a certain
parcel of land from the 1981 Federal Express Project, all as set forth therein;
and
5
<PAGE> 6
EXHIBIT 10.35
================================================================================
FIFTH SPECIAL FACILITY SUPPLEMENTAL LEASE AGREEMENT
BY AND BETWEEN
MEMPHIS-SHELBY COUNTY AIRPORT AUTHORITY
AND
FEDERAL EXPRESS CORPORATION
DATED AS OF JULY 1, 1997
================================================================================
<PAGE> 7
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C> <C>
Parties....................................................... 1
Recitals...................................................... 1
Habendum...................................................... 1
1 Definitions .................................................. 1
2 Term of Lease ................................................ 2
3 Rental ....................................................... 2
4 Prepayment of Certain Rentals ................................ 2
5 Series 1997 Bonds ............................................ 3
6 Special Covenants of the Lessee .............................. 3
7 Lease Still in Effect; Provisions Thereof Applicable
to this Fifth Supplemental Lease............................ 3
8 Descriptive Headings ......................................... 3
9 Effectiveness of this Fifth Supplemental Lease ............... 3
10 Execution of Counterparts .................................... 3
</TABLE>
- i -
<PAGE> 8
FIFTH SPECIAL FACILITY
SUPPLEMENTAL LEASE AGREEMENT
THIS FIFTH SPECIAL FACILITY SUPPLEMENTAL LEASE AGREEMENT dated as of
the first day of July 1997, by and between MEMPHIS-SHELBY COUNTY AIRPORT
AUTHORITY (the "Lessor"), a public and governmental body politic and corporate
of the State of Tennessee, and FEDERAL EXPRESS CORPORATION (the "Lessee"), a
corporation duly organized and existing under the laws of the State of Delaware
and qualified to do business in the State of Tennessee;
WITNESSETH:
WHEREAS, Lessor and Lessee on August 21, 1979 entered into a Special
Facility Lease Agreement dated as of August 1, 1979 (the "Lease");
WHEREAS, Lessor and Lessee have amended and supplemented the Lease by
First and Second Supplemental Special Facility Lease Agreements, dated as of May
1, 1982 and November 1, 1982, respectively, so as to provide for the lease by
Lessee from Lessor of additional facilities and equipment to be included in the
Special Facility as defined in the Lease (the "1982 Federal Express Project")
and have heretofore further amended and supplemented the Lease by Third and
Fourth Supplemental Special Facility Lease Agreements dated as of December 1,
1984 and July 1, 1992 (said First, Second, Third and Fourth Special Facility
Supplemental Lease Agreements being referred to herein, collectively, as the
"Supplemental Leases"); and
WHEREAS, Lessor and Lessee have agreed to further supplement the Lease
to reflect a change in rentals resulting from the refunding of the Lessor's
Special Facilities Revenue Bonds, Series 1982B (Federal Express Corporation)
issued to finance a part of the 1982 Federal Express Project;
NOW, THEREFORE, for and in consideration of the mutual promises,
covenants and agreements hereinafter contained to be kept and performed by the
parties hereto and upon the provisions and conditions hereinafter set forth,
Lessor and Lessee do hereby covenant and agree, and each for itself does hereby
covenant and agree, as follows:
SECTION 1. Definitions. Except as otherwise provided herein, and unless
the context shall clearly require otherwise, all words and terms used in this
Fifth Supplemental Lease which are defined in the Lease shall, for all purposes
of this Fifth Supplemental Lease, have the respective meanings given to them in
the Lease.
Unless the context shall clearly require otherwise, the following terms
shall, for all purposes of the Lease and of any agreement amendatory or
supplemental thereto (including for all purposes this Fifth Supplemental Lease)
have the meanings herein specified, with the following definitions to be equally
applicable to both the single and plural forms of any of the terms herein
defined:
<PAGE> 9
(a) Sixth Supplemental Indenture. The term "Sixth Supplemental
Indenture" shall mean the Sixth Supplemental Indenture dated
as of July 1, 1997 between the Lessor and the Trustee
supplementing the Indenture, as amended as provided in the
Indenture.
(b) Series 1997 Bonds. The term "Series 1997 Bonds" shall mean the
$20,105,000 principal amount of special obligation bonds of
Lessor designated Special Facilities Revenue Bonds, Refunding
Series 1997 (Federal Express Corporation) and issued under
Sections 2.07 and 2.08 of the Indenture and the Sixth
Supplemental Indenture and in accordance with Section 7.6 of
the Lease.
SECTION 2. Term of Lease. The term of the Lease, including
this Fifth Supplemental Lease, shall expire on, August 31, 2012 at 11:59 o'clock
P.M.; provided, that the term of the Lease, including this Fifth Supplemental
Lease, shall not expire so long as any Bonds remain outstanding under the terms
of the Indenture except as provided in subsection A of Section 9.2 of the Lease.
SECTION 3. Rental. Lessee shall pay the rentals reserved to
the Lessor under Section 3.3 of the Lease at the time, place and manner set
forth therein, which from and after the date specified in this Section, in
addition to the amounts otherwise payable as of the date hereof under said
Section 3.3, shall include (a) an amount equal to the principal of, premium (if
any) and interest on, the Series 1997 Bonds as and when the same become due and
payable by reason of stated maturity or redemption of such Bonds as provided in
the Indenture, and (b) all other amounts payable under said Section 3.3 in
connection with the Series 1997 Bonds.
SECTION 4. Prepayment of Certain Rentals. (a) Lessee may
prepay the rentals required hereby in accordance with subsections A, B and C of
Section 3.4 of the Lease and receive the credits provided therein.
(b) In the event a judgment or order of a court of competent
jurisdiction which is final (either because the time for appeal thereof has
expired or because the judgment or order is issued by that court having final
appellate jurisdiction over the matter and is not subject to collateral attack),
or a determination of the Internal Revenue Service which is final (because the
tax has been paid pursuant thereto and the time for filing a claim for refund of
such tax has expired) to the effect that the interest paid or payable on any
Series 1997 Bond to other than a substantial user of the Special Facility or a
related person is or was includable in the gross income of the holder thereof
for federal income tax purposes as a result of a failure by the Lessee to
observe or perform any covenant or agreement to be observed or performed by it
under the Lease or as a result of facts within the control of the Lessee which
are contradictory to any representation or warranty made by the Lessee under the
Lease, the Lessee shall prepay on the next scheduled rent payment date the
entire amount of rent due under subparagraph (b) of Section 3.3 of the Lease
pursuant to Section 3 hereof to effect redemption of the then outstanding Series
1997 Bonds in accordance with the Indenture.
-2-
<PAGE> 10
SECTION 5. Series 1997 Bonds. Lessor shall apply the proceeds
of the Series 1997 Bonds in accordance with the terms of the Sixth Supplemental
Indenture, the form, terms and provisions of which the Lessee hereby
acknowledges.
SECTION 6. Special Covenants of the Lessee. The Lessee
covenants and agrees with the Lessor that so long as the Series 1997 Bonds are
outstanding, it will provide the Lessor with copies of all publicly available
reports, notices, financial statements or other documents that the Lessee is
required to provide the Securities and Exchange Commission and major lenders and
shall include the Lessor on its list of major lenders of Lessee for receipt of
all information made available to such lenders.
SECTION 7. Lease Still in Effect; Provisions Thereof
Applicable to this Fifth Supplemental Lease. All of the terms, provisions,
conditions, covenants and agreements of the Lease as supplemented by the
Supplemental Leases, shall continue in full force and effect as supplemented
hereby, and shall be applicable to each of the provisions of this Fifth
Supplemental Lease during the term hereof with the same force and effect as
though the provisions hereof were set forth in the Lease.
SECTION 8. Descriptive Headings. The descriptive headings of
the sections of this Fifth Supplemental Lease are inserted for convenience of
reference only and do not constitute a part of this Fifth Supplemental Lease and
shall not affect the meaning, construction, interpretation or effect of this
Fifth Supplemental Lease.
SECTION 9. Effectiveness of this Fifth Supplemental Lease.
This Fifth Supplemental Lease shall become effective upon delivery of and
payment for the Series 1997 Bonds.
SECTION 10. Execution of Counterparts. This Fifth Supplemental
Lease may be simultaneously executed in several counterparts, each of which
shall be an original and all of which shall constitute but one and the same
instrument.
- 3 -
<PAGE> 11
IN WITNESS WHEREOF, MEMPHIS-SHELBY COUNTY AIRPORT AUTHORITY and FEDERAL
EXPRESS CORPORATION have caused this Fifth Special Facility Supplemental Lease
Agreement to be duly executed as of the date first above written.
MEMPHIS-SHELBY COUNTY AIRPORT
AUTHORITY
By /s/ LARRY D. COX
-----------------------------
ATTEST: President
/s/ JERRY L. MCMICHAEL
- -----------------------------
Secretary
FEDERAL EXPRESS CORPORATION
By /s/ BURNETTA B. WILLIAMS
-----------------------------
ATTEST: Name: Burnetta B. Williams
Title: Assistant Treasurer
and Managing Director,
Corporate Finance
/s/ SCOTT E. HANSON
- -----------------------------
Assistant Secretary
- 4 -
<PAGE> 12
STATE OF TENNESSEE )
) ss:
COUNTY OF SHELBY )
On this 29th day of July 1997 before me appeared Larry D.
Cox, to me personally known, who, being by me duly sworn (or affirmed) did say
that he is the President of Memphis-Shelby County Airport Authority, and that
the seal affixed to the foregoing instrument is the corporate seal of said
Authority, and that said instrument was signed and sealed on behalf of said
Authority, by authority of its Board of Commissioners and he acknowledged said
instrument to be the free act and deed of said Authority.
(SEAL)
/s/ MARY JO JOHNSON
-------------------------
Notary Public
My Commission Expires 9/6/99
- 5 -
<PAGE> 13
STATE OF TENNESSEE )
) ss:
COUNTY OF SHELBY )
On this 29th day of July 1997 before me appeared Burnetta B. Williams,
to me personally known, who, being by me duly sworn (or affirmed) did say that
she is Assistant Treasurer and Managing Director, Corporate Finance of Federal
Express Corporation, and that the seal affixed to the foregoing instrument is
the corporate seal of said corporation, and that said instrument was signed and
sealed on behalf of said corporation by authority of its Board of Directors and
she acknowledged said instrument to be the free act and deed of said
corporation.
(SEAL)
/s/ ETHELDA D. MCKEEVER
---------------------------------
Notary Public
My Commission Expires: March 27, 2001
- 6 -
<PAGE> 14
WHEREAS, Authority and Tenant on December 1, 1995 entered into a
Fourteenth Supplemental Lease Agreement dated January 1, 1996, (the "Fourteenth
Supplemental Lease Agreement") so as to provide for the lease by Tenant from
Authority of additional land to be included in this Project, all as set forth
therein; and
WHEREAS, Authority and Tenant on January 1, 1997 entered into a
Fifteenth Supplemental Lease Agreement dated January 1, 1997, (the "Fifteenth
Supplemental Lease Agreement") so as to provide for the lease by Tenant from
Authority of additional land to be included in this Project, all as set forth
therein; and
WHEREAS, Authority and Tenant on April 1, 1997 entered into a Sixteenth
Supplemental Lease Agreement dated April 1, 1997, (the "Sixteenth Supplemental
Lease Agreement") so as to provide for the lease by Tenant from Authority of
additional land to be included in this Project, all as set forth therein; and
WHEREAS, the said Consolidated and Restated Lease Agreement dated as of
August 1, 1979, together with the First through the Sixteenth Supplemental Lease
Agreements is herein referred to as the "Lease Agreement"; and
WHEREAS, Authority and Tenant have agreed to further supplement the
Lease Agreement so as to lease to Tenant certain additional land under this
Seventeenth Supplemental Lease Agreement.
NOW THEREFORE, for and in consideration of the mutual promises,
covenants and agreements hereinafter contained to be kept and performed by the
parties hereto and upon the provisions and conditions hereinafter set forth,
Authority and Tenant do hereby covenant and agree, and each for itself does
hereby covenant and agree, as follows:
6
<PAGE> 15
SECTION 1. DEFINITIONS. Except as otherwise provided herein, and unless
the context shall clearly require otherwise, all words and terms used in this
Seventeenth Supplemental Lease Agreement which are defined in the Lease
Agreement, shall, for all purposes of this Seventeenth Supplemental Lease
Agreement, have the respective meanings given to them in the Lease Agreement.
SECTION 2. GRANTING OF LEASEHOLD. In addition to the lease and demise
to Tenant of the land in the Lease Agreement, the Authority hereby leases and
demises to Tenant, and Tenant hereby takes and hires from Authority, subject to
the provisions and conditions set forth in the Lease Agreement and this
Seventeenth Supplemental Lease Agreement, the additional land designated as new
Lease Parcel 37 which is located on the Memphis-Shelby County Airport Authority
property situated in Memphis, Shelby County, Tennessee, and being more
particularly described as follows:
PARCEL 37
(WEST WIDE BODY RAMP)
Being a portion of land contained entirely within the Memphis/Shelby
County Airport Authority property, City of Memphis, Shelby County,
State of Tennessee and being more particularly described by metes and
bounds as follows:
COMMENCING at a point being the intersection of the centerline of
Taxiway Charlie with the centerline of Taxiway Zulu, said point being
N01(Degree)56'39"E, a distance of 736.87' from the existing centerline
of Runway 9/27, thence northerly continuing along said centerline of
Taxiway Charlie, N01(Degree)56'39"E a distance of 122.72' to a point;
thence easterly departing from said centerline of Taxiway Charlie,
S88(Degree)03'21"E a distance of 129.50' to a point, said point being
the southwest corner of the FedEx Parcel #33 Lease property; thence
northerly along a line being 129.50' from and parallel with the said
centerline of Taxiway Charlie, said line also being the west line of
said FedEx Parcel #33 Lease property, N01(Degree)56'39"E a distance of
1427.49' to a point, said point being the northwest corner of the said
FedEx Parcel #33 Lease property; thence easterly along the north line
of the said FedEx Parcel #33 Lease property, S88(Degree)03'21"E a
distance of 233.58' to a point, said point being the most northeast
corner of the said FedEx Parcel #33 Lease property, said point also
being the TRUE POINT OF BEGINNING; thence northerly along the northerly
projection of the most northerly east line of the said FedEx Parcel #33
Lease parcel, N01(Degree)56'39"W a distance of 19.21' to a point;
thence easterly S88(Degree)03'21"E a distance of 241.42' to a point,
said point being 129.50' west of the centerline of Taxiway Sierra;
thence southerly along a line being 129.50' west
7
<PAGE> 16
of and parallel with said centerline of Taxiway Sierra
S01(Degree)56'02"W a distance of 485.71' to a point; said point being
the most easterly northeast corner of said FedEx Parcel #33 Lease
property; thence westerly along the most easterly north line of the
said FedEx Parcel #33 Lease property, N88(Degree)03'21"W a distance of
241.51' to a point, said point being the west end of the said most
easterly north line of the said FedEx Parcel #33 Lease property; thence
northerly along said most northerly east line of the said FedEx Parcel
#33 Lease property, N01(Degree)56'39"E a distance of 466.00' to the
POINT OF BEGINNING. Said described land containing 117,283 square feet
or 2.692 acres, more or less.
SECTION 3. TERM; DELIVERY AND ACCEPTANCE OF POSSESSION. The terms of
this Seventeenth Supplemental Lease Agreement shall commence at 12:01 A.M. on
May 1, 1997 for the land described as Parcel 37 and shall expire at such time as
the Lease Agreement shall expire, to-wit: August 31, 2012 or upon such earlier
termination, extension or otherwise as provided therein. Authority shall deliver
to Tenant sole and exclusive possession of that portion of the land, leased
hereby as of the date commencement of the term hereof, subject however, to
Authority's right-of-entry set forth in Section 21 of the Lease Agreement.
SECTION 4. RENTAL. In addition and supplemental to the rentals required
to be paid to the Authority pursuant to Section 5 of the Lease Agreement
(including all prior supplemental lease agreements), during the term of this
Seventeenth Supplemental Lease Agreement, Tenant shall pay to the Authority in
advance on the first business day of each month $953.90 in equal installments
beginning November 1, 1997, a total rental payment of $11,446.82 per year, which
the parties hereto agree is based upon an aggregate of 117,283 square feet of
area at an annual rental rate of ($0.0976) per square foot.
SECTION 5. HAZARDOUS SUBSTANCES/WASTE. Tenant, at its own expense, may
arrange for a Phase 1 Environmental Survey on the land described as Parcel 37 by
a reputable environmental consultant to determine the existence of "Hazardous
Substances", as such term is defined in this Agreement. In the event that
"Hazardous Substances" are discovered during
8
<PAGE> 17
excavation for construction on Parcel 37, and such "Hazardous Substances"
require special handling, removal or disposal ("Remediation"), then Tenant shall
immediately notify Authority. The Tenant and Authority will confer and jointly
determine the method for handling, removing or disposing of the "Hazardous
Substances" within 14 days after Tenant provides the Authority, in writing, its
plan for Remediation. The form of Remediation agreed to by the parties must
comply with "Environmental Laws", as such term is defined below. In the event
that Tenant and Authority are unable to agree on a method for handling, removing
or disposing of the "Hazardous Substances" due to differing interpretations of
the requirements for Remediation as set forth in the applicable "Environmental
Laws", then the form of Remediation will be determined by the appropriate
federal, state or local agency with relevant regulatory and enforcement
jurisdiction over the subject site. Authority will grant to Tenant a rent credit
equal to the reasonable documented costs paid by Tenant for the Remediation such
"Hazardous Substances" associated with Parcel 37.
The term "Hazardous Substances", as used in this Seventeenth
Supplemental Lease Agreement, shall mean any hazardous or toxic substances,
materials or wastes, including, but not limited to, those substances, materials,
and wastes (i) listed in the United States Department of Transportation
Hazardous Materials Table (49 CFR ss. 172.101) or by the Environmental
Protection Agency as hazardous substances (40 CFR Part 302) and amendments
thereto, (ii) designated as a "Hazardous Substance" pursuant to Section 311 of
the Clean Water Act, 33 U.S.C. ss. 1251 et seq. (33 U.S.C. ss. 1321) or listed
pursuant to Section 307 of the Clean Water Act (33 U.S.C. ss. 1317, (iii)
defined as a "Hazardous Waste" pursuant to Section 1004 of the Resource
Conservation and Recovery Act, 42 U.S.C. ss. 6901, et seq. (42 U.S.C. ss. 6903),
or (iv) defined
9
<PAGE> 18
as "Hazardous Substance" pursuant to Section 101 of the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C.ss. 9601, et
seq. 42 U.S.C. ss. 9601) or any other substances, (including, without
limitation, asbestos and raw materials which include hazardous constituents),
the general, discharge or removal of which or the use of which is restricted,
prohibited or penalized by any "Environmental Law", which term shall mean any
Federal, State or local law, regulation, or ordinance relating to pollution or
protection of the environment.
SECTION 6. LEASE AGREEMENT STILL IN EFFECT; PROVISIONS THEREFORE
APPLICABLE TO THIS SUPPLEMENTAL LEASE AGREEMENT. All of the terms, provisions,
conditions, covenants and agreements of the Lease Agreement, as supplemented,
shall continue in full force and effect as supplemented hereby, and shall be
applicable to each of the provisions of this Seventeenth Supplemental Lease
Agreement during the term hereof with the same force and effect as though the
provisions hereof were set forth in the Lease Agreement.
SECTION 7. DESCRIPTIVE HEADINGS. The descriptive headings of the
sections of this Seventeenth Supplemental Lease Agreement are inserted for
convenience of reference only and do not constitute a part of this Seventeenth
Supplemental Lease Agreement and shall not affect the meaning, construction,
interpretation or effect of this Seventeenth Supplemental Lease Agreement.
SECTION 8. EFFECTIVENESS OF THIS SUPPLEMENTAL LEASE AGREEMENT. This
Seventeenth Supplemental Lease Agreement shall become effective at 12:01 a.m. on
May 1, 1997.
SECTION 9. EXECUTION OF COUNTERPARTS. This Seventeenth Supplemental
Lease Agreement may be simultaneously executed in several counterparts, each of
which shall be an original and all of which shall constitute but one and the
same instrument.
10
<PAGE> 19
SECTION 10. SUMMARIES. For the convenience of both parties a Leased
Parcel Summary and a Rental Summary are attached to this Lease Agreement.
IN WITNESS WHEREOF, THE MEMPHIS-SHELBY COUNTY AIRPORT AUTHORITY AND
FEDERAL EXPRESS CORPORATION have caused this Seventeenth Supplemental Lease
Agreement to be duly executed in their respective behalfs, as of the day and
year first above written.
WITNESS: MEMPHIS-SHELBY COUNTY AIRPORT
AUTHORITY
/s/ RICHARD V. WHITE BY: /s/ J. MCMICHAEL
- ------------------------------ -----------------------------
TITLE: DIRECTOR OF PROPERTIES TITLE: EXECUTIVE VICE PRESIDENT
---------------------- ------------------------
Approved as to Form and Legality:
/s/ R. GRATTAN BROWN, JR.
- ---------------------------------------------
R. Grattan Brown, Jr., Attorney for Authority
WITNESS: FEDERAL EXPRESS CORPORATION
/s/ LEANNA JOHNSON BY: /s/ GRAHAM R. SMITH
- -------------------------- ----------------------------
TITLE: Project Coordinator TITLE: VP
------------------- -------------------------
APPROVED
AS TO LEGAL FORM
/s/ KLC 6/12/97
-------------------
LEGAL DEPT.
11
<PAGE> 20
(STATE OF TENNESSEE )
(COUNTY OF SHELBY )
On this 23rd day of June, 1997, before me appeared LARRY D. COX, to me
personally known, who, being by me duly sworn (or affirmed), did say that he is
the President of the Memphis-Shelby County Airport Authority, the within named
Lessor, and that he as such President, being authorized so to do, executed the
foregoing instrument for the purposes therein contained, by signing the name of
the Authority by himself as such President.
MY COMMISSION EXPIRES
2-23-2000 /s/ PAT SHANFIER
- ------------------------- ---------------------------
Notary Public
(seal)
STATE OF TENNESSEE )
COUNTY OF SHELBY )
On this 16th day of June, 1997, before me appeared Graham Smith, to me
personally known, who, being by me duly sworn (or affirmed), did say that he is
a Vice President of Federal Express Corporation, the within named Lessee, and
that he as such Vice President, being authorized so to do, executed the
foregoing instrument for the purposes therein contained, by signing the name of
the Corporation by himself as such Vice President.
MY COMMISSION EXPIRES
/s/ LEANNA M. JOHNSON
- --------------------- ----------------------------
Notary Public
(seal)
12
<PAGE> 21
FEDERAL EXPRESS LEASED PARCELS SUMMARY
<TABLE>
<CAPTION>
PARCEL EFFECTIVE
LEASE ACRES SQUARE FEET AGREEMENT DATE
- ----- ----- ----------- --------- ----
<S> <C> <C> <C> <C>
BASE-LEASE
Revised 9 128.469 Consolidated & 08/01/79
Restated
10 1.612 70,200 Consolidated & 08/01/79
Restated
11 1.044 45,359 Consolidated & 08/01/79
Restated
PREVIOUS SUPPLEMENTS
12 2.707 117,915 First 04/01/81
Supplemental
13 6.860 298,830 Second 01/01/82
Supplemental
14 14.586 635,377 Fourth 07/01/83
Supplemental
15 12.689 552,723 Fourth 07/01/83
Supplemental
Rev 16 18.281 (19.685) 796,312 Fifth 02/01/84
Supplemental
Rev 17 119.616 (124.992) 5,210,477 Sixth 04/01/84
Supplemental
18 2.717 118,353 Sixth 04/01/84
Supplemental
19 41.606 1,812,352 Seventh 06/01/84
Supplemental
25 0.435 18,933 Eighth 07/01/88
Supplemental
20 11.275 491,127 Ninth 06/01/89
Supplemental
27 11.192 487,512 Tenth 10/01/91
Supplemental
27 A(West) 4.058 176,777 Eleventh 07/01/94
Supplemental
27 B(West) 5.706 248,533 Eleventh 07/01/94
Supplemental
Southwest
Ramp 2.350 102,366 Eleventh 07/01/94
Supplemental
</TABLE>
13
<PAGE> 22
<TABLE>
<CAPTION>
PARCEL EFFECTIVE
LEASE ACRES SQUARE FEET AGREEMENT DATE
- ----- ----- ----------- --------- ----
<S> <C> <C> <C> <C>
32 (removed) 22.972 1,000,681 Twelfth 07/01/93
Supplemental
33 8.998 391,942 Thirteenth 06/01/95
Supplemental
36 3.050 132,837 Thirteenth 06/01/95
Supplemental
Hangar 8 (removed) 36,946,33 Thirteenth 06/01/95
Supplemental
34 9.951 433,461 Fourteenth 01/01/96
Supplemental
21 19.134 833,476 Fifteenth 01/01/97
Supplemental
22A (North) 3.214 140,000 Sixteenth 04/01/97
Supplemental
THIS SUPPLEMENT
37 2.692 117,283 SEVENTEENTH 05/01/97
SUPPLEMENTAL
OPTIONS
22B (South) 3.310 144,200 Option, Expires 5/31/99
29 3.85 167,706 Option, Expires 9/30/2001
ASSIGNMENTS
23 5.923 258,008 Graber Assignment,
Expires 12/31/2000
Invoice FEC
Final Increase 1/1/96
24 9.964 434,030 Southwide Assignment
Expires 5/14/2013
Invoice FEC
Next Increase 5/15/98
26 9.532 415,213 BICO Assignment,
Expires 7/31/2021
Invoice FEC
Next Increase 8/01/2011
28 10.68 465,221 Equitable Life Assignment
Expires 5/14/2013
Invoice FEC
Next Increase 5/15/98
</TABLE>
14
<PAGE> 23
RENTAL - FEDERAL EXPRESS
Effective November 1, 1997
<TABLE>
<CAPTION>
Annual
Category Number of Rental Rate
of Space Square Feet Per Sq. Ft. Annual Rental
- -------- ----------- ----------- -------------
<S> <C> <C> <C>
Bldg. T-376 1,240 1.221 $ 1,514.04
Unimproved Ground 5,569,565 0.098 545,817.37
Improved Apron 2,395,802 0.122 292,287.84
Hangar Property 72,092.67 0.903 65,099.68
Hangar Office 28,000 1.465 41,020.00
International Park 9,694,700 0.171 1,657,793.70
Former IRS Facility 2,255,137.24 1,200,000.00
------------- -------------
20,016,536.91 $3,803,532.63
</TABLE>
BREAKDOWN OF SPACE
Sq. Ft. Sq. Ft.
------ -------
Bldg. T-376 Parcel 4 1,240
-----
1,240
Unimproved Ground Parcel 1 130,900
Parcel 2 50,000
Parcel 3 192,400
Parcel 4 32,540
Parcel 6 89,700
Parcel 9 1,167,337
Parcel 19 1,812,362
Parcel 20 491,127
Parcel 27A 176,777
Parcel 27B 248,533
Southwest Ramp 102,366
Parcel 33 391,942
Parcel 36 132,837
Parcel 34 433,461
Parcel 37 117,283
-------
5,569,565
Improved Apron Parcel 1 850,250
Parcel 2 226,900
Parcel 7 577,540
Parcel 9 253,600
Parcel 27 487,512
-------
2,395,802
15
<PAGE> 24
Sq. Ft. Sq. Ft.
------ -------
Hangar Property Parcel 1 44,336
Parcel 2 27,756.67
--------- 72,092.67
Hangar Office Parcel 1 22,400
Parcel 2 5,600
-----
28,000
International Park Parcel 5 24,000
Parcel 8 247,254
Parcel 9 1,586,172
Parcel 10 70,200
Parcel 11 45,359
Parcel 12 117,915
Parcel 13 298,830
Parcel 14 556,334
Parcel 15 552,723
Parcel 16 796,312
Parcel 17 4,288,839
Parcel 18 118,353
Parcel 25 18,933
Parcel 21 833,476
Parcel 22A 140,000
-------
9,694,700
Former IRS Facility 2,255,137.24 2,255,137.24
------------
TOTAL: 20,016,536.91
16
<PAGE> 1
EXHIBIT 10.35
================================================================================
FIFTH SPECIAL FACILITY SUPPLEMENTAL LEASE AGREEMENT
BY AND BETWEEN
MEMPHIS-SHELBY COUNTY AIRPORT AUTHORITY
AND
FEDERAL EXPRESS CORPORATION
DATED AS OF JULY 1, 1997
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C> <C>
Parties....................................................... 1
Recitals...................................................... 1
Habendum...................................................... 1
1 Definitions .................................................. 1
2 Term of Lease ................................................ 2
3 Rental ....................................................... 2
4 Prepayment of Certain Rentals ................................ 2
5 Series 1997 Bonds ............................................ 3
6 Special Covenants of the Lessee .............................. 3
7 Lease Still in Effect; Provisions Thereof Applicable
to this Fifth Supplemental Lease............................ 3
8 Descriptive Headings ......................................... 3
9 Effectiveness of this Fifth Supplemental Lease ............... 3
10 Execution of Counterparts .................................... 3
</TABLE>
- i -
<PAGE> 3
FIFTH SPECIAL FACILITY
SUPPLEMENTAL LEASE AGREEMENT
THIS FIFTH SPECIAL FACILITY SUPPLEMENTAL LEASE AGREEMENT dated as of
the first day of July 1997, by and between MEMPHIS-SHELBY COUNTY AIRPORT
AUTHORITY (the "Lessor"), a public and governmental body politic and corporate
of the State of Tennessee, and FEDERAL EXPRESS CORPORATION (the "Lessee"), a
corporation duly organized and existing under the laws of the State of Delaware
and qualified to do business in the State of Tennessee;
WITNESSETH:
WHEREAS, Lessor and Lessee on August 21, 1979 entered into a Special
Facility Lease Agreement dated as of August 1, 1979 (the "Lease");
WHEREAS, Lessor and Lessee have amended and supplemented the Lease by
First and Second Supplemental Special Facility Lease Agreements, dated as of May
1, 1982 and November 1, 1982, respectively, so as to provide for the lease by
Lessee from Lessor of additional facilities and equipment to be included in the
Special Facility as defined in the Lease (the "1982 Federal Express Project")
and have heretofore further amended and supplemented the Lease by Third and
Fourth Supplemental Special Facility Lease Agreements dated as of December 1,
1984 and July 1, 1992 (said First, Second, Third and Fourth Special Facility
Supplemental Lease Agreements being referred to herein, collectively, as the
"Supplemental Leases"); and
WHEREAS, Lessor and Lessee have agreed to further supplement the Lease
to reflect a change in rentals resulting from the refunding of the Lessor's
Special Facilities Revenue Bonds, Series 1982B (Federal Express Corporation)
issued to finance a part of the 1982 Federal Express Project;
NOW, THEREFORE, for and in consideration of the mutual promises,
covenants and agreements hereinafter contained to be kept and performed by the
parties hereto and upon the provisions and conditions hereinafter set forth,
Lessor and Lessee do hereby covenant and agree, and each for itself does hereby
covenant and agree, as follows:
SECTION 1. Definitions. Except as otherwise provided herein, and unless
the context shall clearly require otherwise, all words and terms used in this
Fifth Supplemental Lease which are defined in the Lease shall, for all purposes
of this Fifth Supplemental Lease, have the respective meanings given to them in
the Lease.
Unless the context shall clearly require otherwise, the following terms
shall, for all purposes of the Lease and of any agreement amendatory or
supplemental thereto (including for all purposes this Fifth Supplemental Lease)
have the meanings herein specified, with the following definitions to be equally
applicable to both the single and plural forms of any of the terms herein
defined:
<PAGE> 4
(a) Sixth Supplemental Indenture. The term "Sixth Supplemental
Indenture" shall mean the Sixth Supplemental Indenture dated
as of July 1, 1997 between the Lessor and the Trustee
supplementing the Indenture, as amended as provided in the
Indenture.
(b) Series 1997 Bonds. The term "Series 1997 Bonds" shall mean the
$20,105,000 principal amount of special obligation bonds of
Lessor designated Special Facilities Revenue Bonds, Refunding
Series 1997 (Federal Express Corporation) and issued under
Sections 2.07 and 2.08 of the Indenture and the Sixth
Supplemental Indenture and in accordance with Section 7.6 of
the Lease.
SECTION 2. Term of Lease. The term of the Lease, including
this Fifth Supplemental Lease, shall expire on, August 31, 2012 at 11:59 o'clock
P.M.; provided, that the term of the Lease, including this Fifth Supplemental
Lease, shall not expire so long as any Bonds remain outstanding under the terms
of the Indenture except as provided in subsection A of Section 9.2 of the Lease.
SECTION 3. Rental. Lessee shall pay the rentals reserved to
the Lessor under Section 3.3 of the Lease at the time, place and manner set
forth therein, which from and after the date specified in this Section, in
addition to the amounts otherwise payable as of the date hereof under said
Section 3.3, shall include (a) an amount equal to the principal of, premium (if
any) and interest on, the Series 1997 Bonds as and when the same become due and
payable by reason of stated maturity or redemption of such Bonds as provided in
the Indenture, and (b) all other amounts payable under said Section 3.3 in
connection with the Series 1997 Bonds.
SECTION 4. Prepayment of Certain Rentals. (a) Lessee may
prepay the rentals required hereby in accordance with subsections A, B and C of
Section 3.4 of the Lease and receive the credits provided therein.
(b) In the event a judgment or order of a court of competent
jurisdiction which is final (either because the time for appeal thereof has
expired or because the judgment or order is issued by that court having final
appellate jurisdiction over the matter and is not subject to collateral attack),
or a determination of the Internal Revenue Service which is final (because the
tax has been paid pursuant thereto and the time for filing a claim for refund of
such tax has expired) to the effect that the interest paid or payable on any
Series 1997 Bond to other than a substantial user of the Special Facility or a
related person is or was includable in the gross income of the holder thereof
for federal income tax purposes as a result of a failure by the Lessee to
observe or perform any covenant or agreement to be observed or performed by it
under the Lease or as a result of facts within the control of the Lessee which
are contradictory to any representation or warranty made by the Lessee under the
Lease, the Lessee shall prepay on the next scheduled rent payment date the
entire amount of rent due under subparagraph (b) of Section 3.3 of the Lease
pursuant to Section 3 hereof to effect redemption of the then outstanding Series
1997 Bonds in accordance with the Indenture.
-2-
<PAGE> 5
SECTION 5. Series 1997 Bonds. Lessor shall apply the proceeds
of the Series 1997 Bonds in accordance with the terms of the Sixth Supplemental
Indenture, the form, terms and provisions of which the Lessee hereby
acknowledges.
SECTION 6. Special Covenants of the Lessee. The Lessee
covenants and agrees with the Lessor that so long as the Series 1997 Bonds are
outstanding, it will provide the Lessor with copies of all publicly available
reports, notices, financial statements or other documents that the Lessee is
required to provide the Securities and Exchange Commission and major lenders and
shall include the Lessor on its list of major lenders of Lessee for receipt of
all information made available to such lenders.
SECTION 7. Lease Still in Effect; Provisions Thereof
Applicable to this Fifth Supplemental Lease. All of the terms, provisions,
conditions, covenants and agreements of the Lease as supplemented by the
Supplemental Leases, shall continue in full force and effect as supplemented
hereby, and shall be applicable to each of the provisions of this Fifth
Supplemental Lease during the term hereof with the same force and effect as
though the provisions hereof were set forth in the Lease.
SECTION 8. Descriptive Headings. The descriptive headings of
the sections of this Fifth Supplemental Lease are inserted for convenience of
reference only and do not constitute a part of this Fifth Supplemental Lease and
shall not affect the meaning, construction, interpretation or effect of this
Fifth Supplemental Lease.
SECTION 9. Effectiveness of this Fifth Supplemental Lease.
This Fifth Supplemental Lease shall become effective upon delivery of and
payment for the Series 1997 Bonds.
SECTION 10. Execution of Counterparts. This Fifth Supplemental
Lease may be simultaneously executed in several counterparts, each of which
shall be an original and all of which shall constitute but one and the same
instrument.
- 3 -
<PAGE> 6
IN WITNESS WHEREOF, MEMPHIS-SHELBY COUNTY AIRPORT AUTHORITY and FEDERAL
EXPRESS CORPORATION have caused this Fifth Special Facility Supplemental Lease
Agreement to be duly executed as of the date first above written.
MEMPHIS-SHELBY COUNTY AIRPORT
AUTHORITY
By /s/ LARRY D. COX
-----------------------------
ATTEST: President
/s/ JERRY L. MCMICHAEL
- -----------------------------
Secretary
FEDERAL EXPRESS CORPORATION
By /s/ BURNETTA B. WILLIAMS
-----------------------------
ATTEST: Name: Burnetta B. Williams
Title: Assistant Treasurer
and Managing Director,
Corporate Finance
/s/ SCOTT E. HANSON
- -----------------------------
Assistant Secretary
- 4 -
<PAGE> 7
STATE OF TENNESSEE )
) ss:
COUNTY OF SHELBY )
On this 29th day of July 1997 before me appeared Larry D.
Cox, to me personally known, who, being by me duly sworn (or affirmed) did say
that he is the President of Memphis-Shelby County Airport Authority, and that
the seal affixed to the foregoing instrument is the corporate seal of said
Authority, and that said instrument was signed and sealed on behalf of said
Authority, by authority of its Board of Commissioners and he acknowledged said
instrument to be the free act and deed of said Authority.
(SEAL)
/s/ MARY JO JOHNSON
-------------------------
Notary Public
My Commission Expires 9/6/99
- 5 -
<PAGE> 8
STATE OF TENNESSEE )
) ss:
COUNTY OF SHELBY )
On this 29th day of July 1997 before me appeared Burnetta B. Williams,
to me personally known, who, being by me duly sworn (or affirmed) did say that
she is Assistant Treasurer and Managing Director, Corporate Finance of Federal
Express Corporation, and that the seal affixed to the foregoing instrument is
the corporate seal of said corporation, and that said instrument was signed and
sealed on behalf of said corporation by authority of its Board of Directors and
she acknowledged said instrument to be the free act and deed of said
corporation.
(SEAL)
/s/ ETHELDA D. MCKEEVER
---------------------------------
Notary Public
My Commission Expires: March 27, 2001
- 6 -
<PAGE> 1
EXHIBIT 10.79
AMENDMENT TO FEDERAL EXPRESS CORPORATION
1980, 1983, 1984, 1987, 1989, 1993 AND 1995 STOCK INCENTIVE PLANS
Paragraph 6(e) of each of the Federal Express Corporation (the "Company")
1980, 1983, 1984, 1987 and 1993 Stock Incentive Plans, as amended, is amended by
deleting the word "twelve" in line three of each such paragraph after the words
"expiration of the period of" and before the words "months from the date of such
termination" and by deleting the word "twelve" in line five of each such
paragraph after the words "if the optionee dies within" and before the words
"months after such termination" and substituting in lieu thereof in both line
three and line five of each such paragraph the word "twenty-four."
Paragraph 6(e) of the Company's 1989 Stock Incentive Plan, as amended, is
amended by deleting the word "twelve" in line four of such paragraph after the
words "expiration of the period of" and before the words "months from the date
of such termination" and by deleting the word "twelve" in line six of such
paragraph after the words "if the optionee dies within" and before the words
"months after such termination" and substituting in lieu thereof in both line
four and line six of such paragraph the word "twenty-four."
Paragraph 6(f) of each of the Company's 1980, 1983, 1984, 1987 and 1989
Stock Incentive Plans, as amended, is amended by deleting the word "twelve" in
line three of each such paragraph after the words "expiration of the period of"
and before the words "months from the date of such termination" and by deleting
the word "twelve" in line five of each such paragraph after the words "if the
optionee dies within a period of" and before the words "months after such
termination" and substituting in lieu thereof in both line three and line five
of each such paragraph the word "twenty-four."
Paragraph 6(f) of each of the Company's 1993 Stock Incentive Plan, as
amended, is amended by deleting the word "twelve" in line three of such
paragraph after the words "expiration of the period of" and before the words
"months from the date of such termination" and by deleting the word "twelve" in
line four of such paragraph after the words "if the optionee dies within a
period of" and before the words "months after such termination" and substituting
in lieu thereof in both line three and line four of such paragraph the word
"twenty-four."
Paragraph 6(d) of the Company's 1995 Stock Incentive Plan is amended by
deleting the word "twelve" in line four of the first subparagraph of such
paragraph (d) after the words "expiration of the period of" and before the words
"months from the date of such termination" and in line six of the first
subparagraph of such paragraph (d) after the words "if the optionee dies within"
and before the words "months after such termination" and substituting in lieu
thereof in both line four and line six of such paragraph the word "twenty-four."
Paragraph 6(d) of the Company's 1995 Stock Incentive Plan is amended by
deleting the word "twelve" in line four of the second subparagraph of such
paragraph (d) after the
<PAGE> 2
words "expiration of the period of" and before the words "months from the date
of such termination" and in line six of the second subparagraph of such
paragraph (d) after the words "if the optionee dies within a period of" and
before the words "months after such termination" and substituting in lieu
thereof in both line four and line six of such paragraph the word "twenty-four."
Adopted by the Compensation Committee of the Board of Directors of the Company
on October 1, 1996.
<PAGE> 1
Exhibit 10.82
FEDERAL EXPRESS CORPORATION
1997 RESTRICTED STOCK PLAN
1. PURPOSE OF PLAN
The Federal Express Corporation 1997 Restricted Stock Plan (the "Plan")
is established by Federal Express Corporation (the "Corporation") to aid the
Corporation and its subsidiaries in securing and retaining key employees of
outstanding ability and to provide additional motivation to such employees to
exert their best efforts on behalf of the Corporation and its subsidiaries. The
Corporation expects that it will benefit from the added interest which such
employees will have in the welfare of the Corporation as a result of their
ownership or increased ownership of the Corporation's Common Stock.
2. STOCK SUBJECT TO THE PLAN
The shares that may be awarded under the Plan (without payment by
participants) shall be the common stock, $.10 par value, of the Corporation, and
shall be treasury shares. The maximum number of shares of Common Stock that may
be awarded hereunder (subject to any adjustments as provided below) shall not in
the aggregate exceed 525,000 shares. Shares which are forfeited as a result of a
participant's termination of employment shall again become available for award
under the Plan.
3. ADMINISTRATION
The Plan shall be administered by those members, not less than two, of
the Compensation Committee of the Board of Directors, each of whom is a
"disinterested person" as defined in Rule 16b-3 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the
"Committee"). No member of the Committee shall be eligible to participate in the
Plan nor shall he or she have been at any time within one year prior to his or
her appointment eligible for selection as a person to whom shares might have
been awarded pursuant to the Plan or to whom stock options, stock appreciation
rights, or stock of the Corporation or any of its affiliates may have been
granted pursuant to any other plan of the Corporation or its affiliates, except
a formula plan meeting the conditions of Rule 16b-3(c)(2)(ii).
The Committee shall have the sole authority to (i) award shares under
the Plan; (ii) consistent with the Plan, determine the provisions of the shares
to be awarded, the restrictions and other terms and conditions applicable to
each award of shares under the Plan; (iii) interpret the Plan, the instruments
evidencing the restrictions imposed upon stock awarded under the Plan and the
shares awarded under the Plan; (iv) adopt, amend and rescind rules and
regulations for the administration of the Plan; and (v) generally to administer
the Plan and make all determinations in connection therewith which may be
necessary or advisable, and all such actions of the Committee shall be binding
upon all participants. Committee decisions and selections shall be made by a
majority of its members present at the meeting at which a quorum is present, and
shall be final. Any decision or selection reduced to writing and signed by all
of the members of the Committee shall be as fully effective as if it had been
made at a meeting duly held.
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4. ELIGIBILITY
Key employees, including officers, of the Corporation and its
subsidiaries who are from time to time responsible for the management, growth
and protection of the business of the Corporation and its subsidiaries shall be
eligible for awards of stock under the Plan. No member of the Board of Directors
of the Corporation shall be eligible to participate in the Plan unless such
director is also an employee of the Corporation or a subsidiary. The employees
who shall receive awards under the Plan shall be selected from time to time by
the Committee in its sole discretion, from among those eligible, and the
Committee shall determine, in its sole discretion, the number of shares to be
awarded to each such employee selected. The Committee may, within the terms of
the Plan, be selective and non-uniform with respect to its determination of the
amount of awards and the eligible employees to whom such awards are made.
5. RIGHTS WITH RESPECT TO SHARES
An employee to whom an award of Common Stock is made hereunder shall
have, after delivery to the Corporation or its designee of a certificate or
certificates for such stock to be held in escrow on such employee's behalf, all
rights of ownership with respect to such stock including the right to vote the
same and receive any dividends paid thereon, subject, however, to the terms,
conditions and restrictions contained in the Plan and in the instrument under
which the award is made.
6. INVESTMENT REPRESENTATION
If the shares of Common Stock that have been awarded to an employee
pursuant to the terms of the Plan are not registered under the Securities Act of
1933, as amended, pursuant to an effective registration statement, such
employee, if the Committee shall deem it advisable, may be required to represent
and agree in writing (i) that any shares of Common Stock acquired by such
employee pursuant to the Plan will not be sold except pursuant to an effective
registration statement under the Securities Act of 1933, as amended, or pursuant
to an exemption from registration under such Act, and (ii) that such employee
has acquired such shares of Common Stock for the participant's own account and
not with a view to the distribution thereof.
7. CASH BONUSES
If the Committee so determines in its sole and exclusive discretion,
the Corporation may make a cash payment or payments to an employee in connection
with an award of Common Stock hereunder, the lapse of restrictions imposed
thereon or the payment by the employee of any taxes related thereto.
8. RESTRICTIONS
(a) Terms, Conditions and Restrictions. In addition to such other
terms, conditions and restrictions as may be imposed by the Committee and
contained in the instrument under which awards of Common Stock are made pursuant
to the Plan, (i) no Common Stock so awarded shall be restricted for a period
(the "Restriction Period") of less than one year or more than ten years unless
otherwise specified by the Committee; and (ii) except as provided in paragraph
(e) below, the recipient of the award shall remain in the employ of the
Corporation or its subsidiaries during the Restriction Period or otherwise
forfeit all right, title and interest in and to the shares subject to such
restrictions.
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(b) Transferability Restriction. No share awarded under the Plan shall
be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of
during the Restriction Period applicable thereto.
(c) Agreements; Stock Legend. As a condition to the grant of an award
under the Plan, each eligible employee selected to participate shall execute and
deliver to the Corporation an agreement in form and substance satisfactory to
the Committee reflecting the conditions and restrictions imposed upon the Common
Stock awarded. Certificates for shares of Common Stock delivered pursuant to
such awards may, if the Committee so determines, bear a legend referring to the
restrictions and the instruments to which such awards are subject.
(d) Additional Conditions. In the agreements evidencing awards or
otherwise, the Committee may impose such other and additional terms, conditions
and restrictions upon the award as it, in its discretion, deems appropriate
including, without limitation: (i) that the Corporation shall have the right to
deduct from payments of any kind due to the participant any federal, state or
local taxes of any kind required by law to be withheld with respect to the
shares awarded or the payment of related cash bonuses; and (ii) that the
participant enter into a covenant not to compete with the business of the
Corporation and its subsidiaries during the period of employment and for a
reasonable time thereafter.
(e) Lapse of Restrictions. The restrictions imposed under paragraph (a)
above shall terminate with respect to the shares of Common Stock to which they
apply on the earliest to occur of the following, except no restrictions shall
lapse less than six months from the date of award in the event of (i), (ii) and
(iii) below, unless otherwise specified by the Committee:
(i) the expiration of the Restriction Period:
(ii) the participant's retirement at or after age 60;
(iii) the participant's total and permanent disability; or
(iv) the participant's death.
Certificates for shares of Common Stock with respect to which restrictions have
lapsed as provided above shall, upon lapse thereof, be released from escrow and
delivered to the participant or, in the event of participant's death, to
participant's personal representative. Any stock legend referring to the
restrictions imposed hereunder shall thereupon be removed.
9. CHANGES IN CAPITAL OR CONTROL
If the outstanding Common Stock of the Corporation subject to the Plan
shall at any time be changed or exchanged by declaration of a stock dividend,
stock split, combination of shares, recapitalization, merger, consolidation or
other corporate reorganization, an appropriate adjustment shall be made in the
number and kind of shares that have been awarded pursuant to the Plan and are
subject to restrictions imposed by the Plan and that may thereafter be awarded
hereunder.
Notwithstanding any other provision of the Plan, upon the occurrence of
a Change in Control, as defined below, the stock certificates evidencing any
Restricted Shares shall be canceled and the
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Corporation shall make a cash payment to the participants in an amount equal to
the highest price per share received by holders of the Corporation's Common
Stock in connection with the Change in Control multiplied by the then number of
Restricted Shares, with any non-cash consideration valued in good faith by the
Committee.
For purposes of the Plan, a "Change in Control" of the Corporation
shall be deemed to have occurred if:
(a) any person, as such term is used in Sections 13(d)(3) and
14(d)(2) of the Securities Exchange Act of 1934, as amended,
becomes a beneficial owner (within the meaning of Rule 13d-3
under such Act) of 20% or more of the Corporation's
outstanding Common Stock;
(b) there occurs within any period of two consecutive years any
change in the directors of the Corporation such that the
members of the Corporation's Board of Directors prior to such
change do not constitute a majority of the directors after
giving effect to all changes during such two-year period
unless the election, or the nomination for election by the
Corporation's stockholders, of each new director was approved
by a vote of at least two-thirds of the directors then still
in office who were directors at the beginning of the period;
or
(c) the Corporation is merged, consolidated or reorganized into or
with, or sells all or substantially all of its assets to,
another corporation or other entity, and immediately after
such transaction less than 80% of the voting power of the
then-outstanding securities of such corporation or other
entity immediately after such transaction is held in the
aggregate by holders of the Corporation's Common Stock
immediately before such transaction.
In addition, if the Corporation enters into an agreement or series of
agreements or the Board of Directors of the Corporation adopts a resolution
which results in the occurrence of any of the foregoing events, and the
employment of a participant is terminated after the entering into of such
agreement or series of agreements or the adoption of such resolution then, upon
the occurrence of any of the events described above, a Change in Control shall
be deemed to have retroactively occurred on the date of entering into of the
earliest of such agreements or the adoption of such resolution and the
participants shall be entitled to the payment as of such date with respect to
any forfeited Restricted Shares.
10. MISCELLANEOUS
(a) No Right to Receive Award. Nothing in the Plan shall be construed
to give any employee of the Corporation or a subsidiary any right to receive an
award under the Plan.
(b) Additional Shares Received With Respect to Restricted Stock. Any
shares of Common Stock or other securities of the Corporation received by an
employee as a stock dividend on, or as a result of stock splits, combinations,
exchanges of shares, reorganizations, mergers, consolidations or otherwise with
respect to shares of Common Stock received pursuant to an award hereunder shall
have the same status, be subject to the same restrictions and bear the same
legend, if any, as the shares received pursuant to the original award.
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(c) No Effect on Employment Rights. Nothing in the Plan or in the
instruments evidencing the grant of an award hereunder shall in any manner be
construed to limit in any way the right of the Corporation or a subsidiary to
terminate an employee's employment at any time, or give any right to an employee
to remain employed by the Corporation or a subsidiary.
11. EFFECTIVE DATE OF PLAN
The Plan shall become effective when approved by the Board of Directors
of the Corporation.
12. AMENDMENTS
This Plan may be amended any time or from time to time by the Committee
provided that no such amendment shall, without the further approval of the Board
of Directors:
(i) except as provided in paragraph 9 of the Plan, increase the
maximum number of shares reserved for purposes of the Plan;
(ii) extend the duration of the Plan; or
(iii) materially increase the benefits accruing to participants
under the Plan.
Neither shall any amendment or alteration impair the rights of any participant
during the Restriction Period without the participant's consent.
13. DURATION AND TERMINATION
This Plan shall terminate and no further stock shall be awarded
hereunder after July 14, 2007. In addition, the Committee may terminate the Plan
at any time prior thereto. The termination of this Plan shall not, however,
affect any restriction previously imposed or restricted stock awarded pursuant
to this Plan.
14. COMPLIANCE WITH SECTION 16(b)
The Plan is intended to comply with all applicable conditions of Rule
16b-3 of the General Rules and Regulations under the Securities Exchange Act of
1934, as amended. All transactions involving the Corporation's executive
officers are subject to such conditions, regardless of whether the conditions
are expressly set forth in the Plan. Any provision of the Plan that is contrary
to a condition of Rule 16b-3 shall not apply to executive officers of the
Corporation.
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RESTRICTED STOCK AGREEMENT
PURSUANT TO FEDERAL EXPRESS CORPORATION
1997 RESTRICTED STOCK PLAN
THIS RESTRICTED STOCK AGREEMENT is made this ______ day of
__________________, by and between __________________________ (the
"Participant") and Federal Express Corporation, a Delaware corporation (the
"Company"), pursuant to the Company's 1997 Restricted Stock Plan (the "Plan").
WHEREAS, the Compensation Committee (the "Committee") of the Board of
Directors of the Company at its meeting on __________________ authorized and
directed the Company to make an award of stock to the Participant under the Plan
for the purposes expressed in the Plan;
NOW THEREFORE, in consideration of the foregoing and the mutual
undertakings herein contained, the parties agree as follows:
1. Grant of Stock. In accordance with the terms of the Plan and subject
to the further terms, conditions and restrictions contained in this Agreement,
the Company hereby grants to the Participant __________ shares (the "Shares") of
the Company's common stock, $.10 par value (the "Common Stock"). As long as the
Shares are subject to the Restrictions set forth in Section 4 of this Agreement,
such shares shall be deemed to be, and are referred to in this Agreement as, the
"Restricted Shares." The Shares granted shall be treasury stock.
2. Certificates for Shares. Certificates evidencing Restricted Shares
shall be deposited with the Company to be held in escrow until such Shares are
released to the Participant or forfeited in accordance with this Agreement. The
Participant shall, simultaneously with the delivery of this Agreement, deliver
to the Company a stock power, in blank, executed by the Participant.
If any Restricted Shares are forfeited, the Company shall direct the
transfer agent of the Common Stock to make the appropriate entries in its
records showing the cancellation of the certificate or certificates for such
Restricted Shares and to return the Shares represented thereby to the Company's
treasury.
3. Adjustments in Restricted Shares. In the event of any change in the
outstanding Common Stock by reason of a stock dividend or distribution,
recapitalization, merger, consolidation, split-up, combination, exchange of
shares or the like, the Committee shall make equitable adjustments in the
Restricted Shares corresponding to adjustments made by the Committee in the
number and class of shares of Common Stock which may be issued under the Plan.
Any new, additional or different securities to which the Participant shall be
entitled in respect of Restricted Shares by reason of such adjustment shall be
deemed to be Restricted Shares and shall be subject to the same terms,
conditions, and restrictions as the Restricted Shares so adjusted.
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4. Restrictions. During applicable periods of restriction determined in
accordance with Section 6 of this Agreement, Restricted Shares and all rights
with respect to such Shares, may not be sold, assigned, transferred, exchanged,
pledged, hypothecated or otherwise encumbered or disposed of and shall be
subject to the risk of forfeiture contained in Section 5 of this Agreement (such
limitations on transferability and risk of forfeiture being herein referred to
as "Restrictions"), but the Participant shall have all other rights of a
stockholder, including, but not limited to, the right to vote and receive
dividends on Restricted Shares.
5. Forfeiture of Restricted Shares. In the event that the Participant
terminates employment with the Company and its subsidiaries for any reason other
than his or her death, retirement or permanent disability, such event shall
constitute an "Event of Forfeiture" and all Shares which at that time are
Restricted Shares shall thereupon be forfeited by the Participant to the Company
without payment of any consideration by the Company, and neither the Participant
nor any successor, heir, assign or personal representative of the Participant
shall have any right, title or interest in or to such Restricted Shares or the
certificates evidencing them.
6. Lapse of Restrictions. (a) Except as provided in subsection (b) below,
the Restrictions on the Restricted Shares granted under this Agreement shall
lapse ratably on each of the _________ through ___________ anniversaries of the
date of this Agreement in accordance with the following schedule:
Number of Shares on
Date Which Restrictions Lapse
---- ------------------------
(b) In the event that a Participant's employment with the Company and
its subsidiaries terminates as a result of his or her death, retirement or
permanent disability, the Restrictions shall lapse on the Restricted Shares (if
not already lapsed pursuant to subsection (a) above) on the later of (i) the
date of such event, or (ii) the first anniversary of the date of this Agreement.
Upon lapse of the Restrictions in accordance with this Section, the
Company shall, as soon as practicable thereafter, deliver to the Participant an
unrestricted certificate for the Shares with respect to which such Restrictions
have lapsed.
7. Tax Equalization Bonus. The Company shall, provided the Participant
has furnished the Company evidence of having timely made the election under
Section 83(b) of the Internal Revenue Code with respect to the grant of the
Shares, pay for the benefit of the Participant a bonus equal to the gross amount
of Federal income taxes, Medicare tax and loss of itemized deduction for such
Federal income taxes for which the Participant has incurred a liability solely
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as a result of the grant of the Shares, the making of such election and the
payment of such bonus. All of such payment shall be made in the form of Federal
income tax withholding payments on or before December 31, ______ and the amount
thereof shall be determined assuming that the Participant's marginal Federal
income tax rate is ______%. No such bonus shall be paid unless the Participant
makes such election and furnishes the Company proof of such election in such
form and manner as the Company shall prescribe.
8. Withholding Requirements. Whenever payments hereunder are to be made
in cash, or Restrictions lapse with respect to Restricted Shares, the Company
shall have the right to withhold from sums due to the Participant (or to require
the Participant to remit to the Company) an amount sufficient to satisfy any
Federal, state or local withholding tax requirements prior to making such
payments or delivering any certificate evidencing such Shares.
9. Change in Control. Notwithstanding any other provision of this
Agreement or the Plan, upon the occurrence of a Change in Control, as defined
below, the stock certificates evidencing any Restricted Shares shall be
cancelled and the Company shall make a cash payment to Participant in an amount
equal to the highest price per share received by holders of the Company's Common
Stock in connection with the Change in Control multiplied by the then number of
Restricted Shares, with any non-cash consideration valued in good faith by the
Committee.
For purposes of the Plan, a "Change in Control" of the Company shall be
deemed to have occurred if:
(a) any person, as such term is used in Sections 13(d)(3) and
14(d)(2) of the Securities Exchange Act of 1934, as amended,
becomes a beneficial owner (within the meaning of Rule 13d-3
under such Act) of 20% or more of the Company's outstanding
Common Stock;
(b) there occurs within any period of two consecutive years any
change in the directors of the Company such that the members
of the Company's Board of Directors prior to such change do
not constitute a majority of the directors after giving effect
to all changes during such two-year period unless the
election, or the nomination for election by the Company's
stockholders, of each new director was approved by a vote of
at least two-thirds of the directors then still in office who
were directors at the beginning of the period; or
(c) the Company is merged, consolidated or reorganized into or
with, or sells all or substantially all of its assets to,
another corporation or other entity, and immediately after
such transaction less than 80% of the voting power of the
then-outstanding securities of such corporation or other
entity
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immediately after such transaction is held in the aggregate by
holders of the Company's Common Stock immediately before such
transaction.
In addition, if the Company enters into an agreement or series of
agreements or the Board of Directors of the Company adopts a resolution which
results in the occurrence of any of the foregoing events, and Participant's
employment is terminated after the entering into of such agreement or series of
agreements or the adoption of such resolution, then, upon the occurrence of any
of the events described above, a Change in Control shall be deemed to have
retroactively occurred on the date of entering into of the earliest of such
agreements or the adoption of such resolution and Participant shall be entitled
to the payment as of such date with respect to any forfeited Restricted Shares.
10. Effect of Employment. Nothing contained in this Agreement shall
confer upon the Participant the right to continue in the employment of the
Company or affect any right which the Company may have to terminate the
employment of the Participant.
11. Amendment. This Agreement may not be amended except with the
consent of the Committee and by a written instrument duly executed by the
Participant and the Company.
12. Binding Effect. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their heirs, personal
representatives, successors and assigns. Participant acknowledges receipt of a
copy of the Plan, which is annexed hereto, represents that he or she is familiar
with the terms and provisions thereof and accepts the award of Shares hereunder
subject to all of the terms and conditions thereof and of this Agreement.
Participant hereby agrees to accept as binding, conclusive and final all
decisions and interpretations of the Committee upon any questions arising under
the Plan or this Agreement.
IN WITNESS WHEREOF, the Company and the Participant have each
executed and delivered this Agreement as of the date first above written.
ATTEST: FEDERAL EXPRESS CORPORATION
_______________________________ By:_________________________________
Assistant Secretary Chairman, President and
Chief Executive Officer
PARTICIPANT:
____________________________________
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Exhibit 10.83
FEDERAL EXPRESS CORPORATION
RETIREMENT PARITY PENSION PLAN
EFFECTIVE DATE
JUNE 1, 1993
AS AMENDED AND RESTATED
JUNE 1, 1996
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Section 1. Purpose and Description. Federal Express Corporation, a
Delaware corporation (the "Company"), established, effective June 1, 1993 (the
"Effective Date"), the Federal Express Corporation Retirement Parity Pension
Plan (the "Plan"). The Plan was amended, effective June 1, 1994, to increase the
benefit provided from 80% to 100% of the difference of the "Unreduced Benefit"
less the "Maximum Benefit," as both terms are defined below. The Plan is herein
amended and restated, effective June 1, 1996 (the "Restatement Effective Date"),
to provided for the inclusion of Managing Directors, in addition to Officers,
under the terms of the Plan. The Plan provisions, as in effect immediately prior
to June 1, 1996, shall remain in effect for anyone who is not actively employed
by the Company as an Officer or Managing Director on or after that date, unless
the Plan specifically provides otherwise. The Plan is intended to be an
"employee benefit pension plan," as defined in ss. 3(2) of the Employee
Retirement Income Security Act of 1974 ("ERISA"), and a plan that is "unfunded
and is maintained ... primarily for the purpose of providing deferred
compensation for a select group of management or highly compensated employees,"
as provided in ss.ss. 201, 301 and 401 of ERISA and the Department of Labor
regulations promulgated under ERISA. The benefits provided by the Plan are not
funded, but shall be payable when due out of the assets of the Company as
general, unsecured obligations of
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the Company.
Section 2. Eligibility. Any employee of the Company who (i) serves as
an Officer after the Effective Date or as a Managing Director after the
Restatement Effective Date, (ii) has served as an Officer and/or Managing
Director for a combined period of five consecutive years, including service
prior to the Effective Date or Restatement Effective Date, but excluding service
with a predecessor-in-interest to the Company, and (iii) is an active
participant in the Federal Express Corporation Employees' Pension Plan, as it
currently exists and as it may be amended from time to time (the "Qualified
Pension Plan"), shall be eligible for the benefit described in subsection (a) of
Section 3 below. In addition, an Officer described above shall be eligible for
the benefit described in subsection (b) of Section 3 below. For the purpose of
this Plan, the term "Officer" shall mean an officer of the Company elected to
the position of vice-president or above, as evidenced in the minutes of the
Company's Board of Directors. The term "Managing Director" shall, for the
purpose of this Plan, mean a managing director of the Company appointed to the
position of managing director, as evidenced in the Company's personnel
information system, PRISM.
Section 3. Benefit Amount and Limitations. (a) An Officer or Managing
Director who meets the eligibility requirements of Section 2 above shall be paid
from the Plan a benefit equal to 100% of the difference between the
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Unreduced Benefit and the Maximum Benefit.
For the purpose of this Plan, "Unreduced Benefit" shall mean the
benefit that would be provided to the Officer by the Qualified Pension Plan
without regard to the limits imposed by Internal Revenue Code (the "Code") ss.
415 (limitations on benefits for defined benefit plans and limitation in case of
defined benefit and defined contribution plan for same employee) and ss.
401(a)(17) (annual compensation limit).
For the purpose of this Plan, "Maximum Benefit" shall mean the benefit
actually provided to the Officer or Managing Director by the Qualified Pension
Plan.
(b) An Officer who meets the eligibility requirements of Section 2
above shall be paid from this Plan, in addition to the benefit described in
subsection (a) above, the difference between such Officer's Maximum Benefit
under the Qualified Pension Plan and what such Officer's Maximum Benefit would
have been had such Officer received credit for a Year of Service under the
Qualified Pension Plan for each year that such Officer is eligible to receive,
and does in fact receive, a benefit under the Federal Express Corporation
Nonqualified Disability Plan for Officers, as it currently exists or as it may
be amended from time to time (the "Officers Nonqualified Disability Plan").
For purpose of determining eligibility for an increased benefit as
contemplated by this subsection, such increased benefit shall be provided for
each Plan Year during which an
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Officer's Hours of Service under the Qualified Pension Plan plus such Officer's
"Phantom Hours of Service" while receiving benefits under the Officers
Nonqualified Disability Plan are equal to a Year of Service under the Qualified
Pension Plan. Phantom Hours of Service shall be credited at the same rate under
this subsection as if the Officer receiving benefits under the Officers
Nonqualified Disability Plan had been actively at work and receiving credit for
Hours of Service under the Qualified Pension Plan. Notwithstanding the above, an
Officer shall not receive credit under this subsection for the same Plan Year
for which such Officer receives credit for a Year of Service under the Qualified
Pension Plan.
(c) Unless otherwise provided herein, defined terms used in this Plan
shall have the same meaning attributed to such terms in the Qualified Pension
Plan and the Officers Nonqualified Disability Plan, as applicable.
Section 4. Payment of Benefits. Benefits under this Plan shall be paid
in the same manner and at the same time as benefit payments under the Qualified
Pension Plan and shall be subject to the same restrictions and limitations as
provided therein, without regard to Code ss.ss. 415 and 401(a)(17).
Section 5. Plan Administration. The Plan shall be administered by the
Company, acting through its Retirement Administration Department or its
successor (the "Administrator"). The Administrator shall have the
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<PAGE> 6
responsibility to receive, evaluate and process all claims for benefits and
shall allow payment of benefits under the Plan in accordance with its terms. In
connection with its duties, the Administrator shall have the authority to
interpret the Plan's provisions and to determine eligibility for Plan benefits.
The Administrator shall have the authority to adopt such rules and procedures
which it deems necessary for the administration of the Plan and recommend any
modifications, changes or amendments to the Plan.
Section 6. The Committee. The Committee, as defined in the Qualified
Pension Plan, shall have the authority to perform the administrative duties
under the Plan, other than the duties of the Administrator. In connection with
its duties, the Committee shall have the authority to interpret the Plan's
provisions and to determine eligibility for Plan benefits. The Committee is the
named fiduciary of the Plan and shall adopt such rules and procedures that in
its opinion are either necessary or desirable to implement and administer the
Plan.
Section 7. Claims Procedures. The claims procedures for the Plan
shall be the same as such procedures in the Qualified Pension Plan.
Section 8. Legal Expenses. An Officer or Managing Director shall be
entitled to reimbursement from the Company for reasonable legal expenses
incurred in successfully enforcing his or her right to benefits under the Plan.
This right to reimbursement shall only be available if such
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<PAGE> 7
Officer or Managing Director has applied for benefits in substantial compliance
with the Administrator's procedures, been denied benefits by the Administrator,
timely requested a review of that denial as provided in Section 7 above and had
the Administrator's denial upheld.
Section 9. Non-Assignability of Benefits. Benefits under this Plan
shall not be assignable or transferable in any manner, nor shall they be subject
to garnishment, attachment or other legal process, except as provided by ERISA
and other applicable federal law.
Section 10. Effect. Neither the establishment of the Plan nor any
modification thereto, nor the creation of any account on the books of the
Company, nor the payment of any benefit from the Plan shall be construed as
giving an Officer, Managing Director or any other person any legal or equitable
right against the Company, its directors, officers, employees or agents, except
as provided herein.
Section 11. No Guarantee of Employment. Nothing contained in this Plan
shall be construed as a contract of employment between the Company and any
Officer or Managing Director nor as a promise that any Officer or Managing
Director shall continue in his or her present or comparable position nor as a
limit on the Company's right to discharge such Officer or Managing Director,
with or without notice.
Section 12. Amendment or Termination. The Company may amend or
terminate the Plan at any time. An amendment shall become effective upon its
execution in writing by an Officer
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<PAGE> 8
of the Company or upon action of the Company's Board of Directors or any
committee thereof or upon action of the Committee, as reflected in the Board of
Directors', its committee's or the Committee's minutes, and the Plan's
termination shall become effective upon the action of the Company's Compensation
Committee of the Board of Directors or the Committee, as reflected in the
Compensation Committee's or Committee's minutes. However, no amendment or
termination shall eliminate or reduce any benefits accrued under the Plan at the
time of such amendment or termination.
Section 13. Agent for Service of Process. The Company is hereby
designated as agent for service of process for all purposes provided herein.
Section 14. Governing Law. Except to the extent preempted by federal
law, the provisions of this Plan shall be administered, construed and enforced
in accordance with the laws of the State of Tennessee.
Section 15. Execution. This document may be executed in any number of
counterparts and each fully executed counterpart shall be deemed an original.
IN WITNESS WHEREOF, the undersigned duly authorized Officer of the
Company has caused this Plan amendment and
7
<PAGE> 9
restatement to be adopted as of June 1, 1996, by affixing his signature hereto.
FEDERAL EXPRESS CORPORATION
BY: /s/ Steven E. Priddy
-------------------------
Steven E. Priddy
Vice President, Personnel
Administration
Date: 4/8/97
-----------------------
ATTEST:
/s/ George W. Hearn
- --------------------------
Title: Assistant Secretary
<PAGE> 1
EXHIBIT 10.85
FEDERAL EXPRESS CORPORATION
RETIREMENT PLAN FOR OUTSIDE DIRECTORS
1. Purpose and Description. Federal Express Corporation, a Delaware
corporation (the "Company"), has established, effective July 17, 1989 (the
"Effective Date"), the Federal Express Corporation Retirement Plan for Outside
Directors (the "Plan") in order to attract, retain and motivate directors who
are not also employees of the Company ("Outside Directors" or, individually, an
"Outside Director") to serve on the Company's Board of Directors (the "Board").
The Plan is not intended to be an employee benefit plan within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974 or to be a
qualified plan under Section 401(a) of the Internal Revenue Code of 1986.
Benefits provided by the Plan shall be payable out of the assets of the Company
as a general, unsecured obligation of the Company.
2. Retirement Benefit. An Outside Director who has completed at least
five years of service on the Board as an Outside Director and who terminates his
or her directorship on the Board on or after the Effective Date shall be
entitled to a retirement benefit commencing as of the first day of the fiscal
quarter of the Company next following the later of the date of termination of
his or her directorship on the Board or the date such director attains age 60.
Such benefit shall be an annual amount, payable thereafter in quarterly
installments for 10 years, equal to a percentage of the Final Year Retainer Fee,
hereinafter defined, set forth in the schedule below according to such
director's number of years of service on the Board as an Outside Director:
Years of Service Percentage
less than 5 0%
5 50%
6 60%
7 70%
8 80%
9 90%
10 or more 100%
For the purposes of the Plan, "Final Year Retainer Fee" shall mean the
annual retainer fee being paid to Outside Directors for serving on the Board
(exclusive of fees paid for attending Board or Board committee meetings and
excluding the annual fee paid for serving as chairperson of a Board committee)
at the time of termination of a director's service on the Board which gives rise
to such director's entitlement to benefits under the Plan.
3. Death Benefit.
1
<PAGE> 2
(a) Pre-Retirement Death. If an Outside Director's directorship on
the Board is terminated by reason of his or her death and if, at the time of
death, such director could have retired from the Board and become entitled to
the retirement benefit provided under paragraph 2 above, such director's
surviving spouse shall be entitled to a death benefit commencing as of the first
day of the fiscal quarter of the Company next following the later of the date of
the director's death or the date that such director would have attained age 60.
Such death benefit shall be an annual amount, payable thereafter in quarterly
installments for 10 years, equal to a percentage of the Final Year Retainer Fee
determined pursuant to the schedule in paragraph 2 above according to such
deceased director's number of years of service on the Board as an Outside
Direct.
(b) Post-Retirement Death. In the event of the death of a former
Outside Director who, at the time of his or her death, was receiving
installment payments of the retirement benefit provided pursuant to paragraph 2
above, such director's surviving spouse shall be entitled to receive as a death
benefit the remaining unpaid installments of such retirement benefit which
shall be payable at the same time and for the same period as such remaining
installments would have been paid to the deceased director.
No death benefits shall be payable under this Plan in respect of a
deceased director or former director who is not survived by his or her spouse or
who, prior to death, had received a cash-out distribution of a retirement
benefit pursuant to paragraph 4 hereof.
4. Cash-Out Distribution Option. Either an Outside Director who becomes
entitled to a retirement benefit or the spouse of a deceased current or former
Outside Director who becomes entitled to a death benefit under the Plan may, at
his or her option, elect to receive a cash-out distribution of such benefit.
Such cash-out distribution shall be an amount equal to the lump-sum present
value of the undistributed installments of such benefit at the time of such
election, computed on the basis of the discount rate then used by the Company in
determining the present-value equivalency of a deferred pension benefit under
the Company's defined benefit pension plan covering employees generally. A
cash-out distribution of a retirement or death benefit under the Plan shall,
when made to the person entitled thereto, constitute full satisfaction of the
Company's obligation to pay such benefit.
5. Administration. The Plan shall be administered by the Compensation
Committee of the Board (the "Committee"), which shall have full power and
authority to interpret the provisions of the Plan and determine eligibility for
benefits, to determine all questions arising in the administration of the Plan,
to adopt such rules, regulations and procedures which it deems necessary for the
administration of the Plan and to recommend any modifications, changes or
amendments to the Plan to the full Board. The determinations of the Committee
with respect to the Plan shall be binding upon all persons having an interest in
the Plan.
2
<PAGE> 3
6. Non-Assignability of Benefits. Benefits under this Plan shall not
be assignable or transferable in any manner, nor shall they be subject to
garnishment, attachment or other legal process.
7. Effect. Neither the establishment of the Plan or any modification
thereof, nor the creation of any account on the books of the Company, nor the
payment of any benefit hereunder shall be construed as giving to any Outside
Director or other person any legal or equitable rights against the Company, any
officer or employee thereof or the Committee except as herein provided.
8. Amendment and Termination. The Board may at any time amend or
terminate this Plan. However, no amendment or termination shall alter or impair
benefits accrued under the Plan at the time of such amendment or termination.
AUTHORIZED BY THE BOARD OF DIRECTORS the 17th day of July 1989.
3
<PAGE> 1
EXHIBIT 10.86
FIRST AMENDMENT
FEDERAL EXPRESS CORPORATION
RETIREMENT PLAN FOR OUTSIDE DIRECTORS
THIS AMENDMENT is made pursuant to the authority to amend the Federal
Express Corporation Retirement Plan For Outside Directors (the "Plan") as
provided in paragraph 8 therein.
WHEREAS, the Board of Directors of Federal Express Corporation at its
meeting on July 19, 1993 adopted a resolution amending the Plan; and
WHEREAS, it is necessary to conform the terms of the Plan to such amending
resolution;
NOW, THEREFORE, the Plan is hereby amended, effective September 1, 1993, in
the following respects:
FIRST
Paragraph 2 is amended by deleting "10 years," where it appears in the
second sentence and replacing it with the following:
the number of years determined by reference to the following schedule:
<TABLE>
<CAPTION>
YEARS OF SERVICE DURATION OF PENSION
AS A DIRECTOR PAYMENTS IN YEARS
<S> <C>
5-10 10
11 11
12 12
13 13
14 14
15 or more 15
</TABLE>
SECOND
Subparagraph 3(a) is amended by deleting "10 years" where it appears in
the second sentence and replacing it with the following "the number of years
determined by reference to the first schedule in paragraph 2".
<PAGE> 2
Subparagraph 3(a) is further amended by inserting "second" in the
second sentence immediately following "Final Year Retainer Fee determined
pursuant to the".
AUTHORIZED BY THE BOARD OF DIRECTORS the 19th day of July, 1993.
-2-
<PAGE> 1
EXHIBIT 10.87
FEDERAL EXPRESS CORPORATION
RETIREMENT PLAN FOR OUTSIDE DIRECTORS
RESTATED AND FROZEN
EFFECTIVE AS OF JULY 14, 1997
- --------------------------------------------------------------------------------
<PAGE> 2
1. Purpose and Description. Federal Express Corporation, a Delaware
corporation (the "Company"), established, effective July 17, 1989, the Federal
Express Corporation Retirement Plan for Outside Directors (the "Plan") in order
to attract, retain and motivate directors who are not also employees of the
Company ("Outside Directors" or, individually, an "Outside Director") to serve
on the Company's Board of Directors (the "Board"). The Plan was subsequently
amended effective September 1, 1993, to extend the maximum period of benefit
payments from 10 to 15 years. At its July 1997 meeting, the Board determined
that the purpose of the Plan as described above could be better served by other
means. Consequently, the Board froze the Plan's benefits, effective July 14,
1997, (the "Freeze Date") and restated the Plan, amending (among other matters)
the Plan's vesting schedule and defining a "Year of Service" for Plan purposes.
No further benefits shall accrue under the Plan subsequent to the Freeze Date.
The Plan is not intended to be an employee benefit plan within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974 or to be a
qualified plan under Section 401(a) of the Internal Revenue Code of 1986.
Benefits provided by the Plan shall be payable out of the assets of the Company
as a general, unsecured obligation of the Company.
2. Retirement Benefit. An Outside Director who was a member of the Board on
the Freeze Date shall be entitled to a retirement benefit commencing as of the
first day of the fiscal quarter of the Company next following the later of the
date of termination of his or her directorship on the Board or the date such
director attains age 60. Such benefit shall be an annual amount, payable
thereafter in quarterly installments for the number of years determined by
reference to the following schedule:
<TABLE>
<CAPTION>
YEARS OF SERVICE AS AN DURATION OF PENSION
OUTSIDE DIRECTOR PAYMENTS IN YEARS
<S> <C>
1-10 10
11 11
12 12
13 13
14 14
15 or more 15
</TABLE>
equal to a percentage of the Fiscal Year 1998 Retainer Fee, hereinafter defined,
set forth in the schedule below according to such director's number of Years of
Service, hereinafter defined, on the Board as an Outside Director:
<TABLE>
<CAPTION>
Years of Service Percentage
---------------- ----------
<S> <C>
1 10%
2 20%
3 30%
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
4 40%
5 50%
6 60%
7 70%
8 80%
9 90%
10 or more 100%
</TABLE>
For the purposes of the Plan, "Fiscal Year 1998 Retainer Fee" shall mean
$40,000, the annual retainer fee being paid to Outside Directors during the
Company's 1998 fiscal year for serving on the Board (exclusive of fees paid for
attending Board or Board committee meetings and excluding the annual fee paid
for serving as chairperson of a Board committee).
For purposes of the Plan, "Year of Service" shall mean each full and each
partial fiscal year of the Company during which the Outside Director served on
the Board. For all purposes of the Plan, the Years of Service of each Outside
Director, as of the Freeze Date, are shown in the following schedule:
<TABLE>
<S> <C>
Allen, Robert H. 15+
Baker, Howard H., Jr. 10
Cox, Robert L. 5
DeNunzio, Ralph D. 15+
Estrin, Judith L. 10
Greer, Philip 15+
Hyde, J. R., III 15+
Manatt, Charles T. 9
Mitchell, George J. 4
Smart, Jackson W., Jr. 15+
Smith, Joshua I. 9
Walsh, Paul S. 2
Willmott, Peter S. 15
</TABLE>
3. Death Benefit.
(a) Pre-Retirement Death. If an Outside Director's directorship on the
Board is terminated by reason of his or her death and if, at the time of death,
such director could have retired from the Board and become entitled to the
retirement benefit provided under paragraph 2 above, such director's surviving
spouse shall be entitled to a death benefit commencing as of the first day of
the fiscal quarter of the Company next following the later of the date of the
director's death or the date that such director would have attained age 60. Such
death benefit shall be an annual amount, payable thereafter in quarterly
installments for the number of years determined by reference to the first
schedule in paragraph 2, equal to a percentage of the Fiscal Year 1998 Retainer
Fee determined pursuant to the second schedule
2
<PAGE> 4
in paragraph 2 above according to such deceased director's number of Years of
Service on the Board as an Outside Director.
(b) Post-Retirement Death. In the event of the death of a former Outside
Director who, at the time of his or her death, was receiving installment
payments of the retirement benefit provided pursuant to paragraph 2 above, such
director's surviving spouse shall be entitled to receive as a death benefit the
remaining unpaid installments of such retirement benefit which shall be payable
at the same time and for the same period as such remaining installments would
have been paid to the deceased director.
No death benefits shall be payable under this Plan in respect of a deceased
director or former director who is not survived by his or her spouse or who,
prior to death, had received a cash-out distribution of a retirement benefit
pursuant to paragraph 4 hereof.
4. Cash-Out Distribution Option. Each Outside Director as of the Freeze
Date or the spouse of a deceased Outside Director may, at his or her option,
elect to receive a cash-out distribution of the benefit provided by the Plan.
Such cash-out distribution shall be an amount equal to the lump-sum present
value of the undistributed installments of such benefit at the time of such
election, computed on the basis of the discount rate then used by the Company in
determining the present-value equivalency of a deferred pension benefit under
the Company's defined benefit pension plan covering employees generally. A
cash-out distribution of a retirement or death benefit under the Plan shall,
when made to the person entitled thereto, constitute full satisfaction of the
Company's obligation to pay such benefit.
5. Administration. The Plan shall be administered by the Compensation
Committee of the Board (the "Committee"), which shall have full power and
authority to interpret the provisions of the Plan and determine eligibility for
benefits, to determine all questions arising in the administration of the Plan,
to adopt such rules, regulations and procedures which it deems necessary for the
administration of the Plan and to recommend any modifications, changes or
amendments to the Plan to the full Board. The determinations of the Committee
with respect to the Plan shall be binding upon all persons having an interest in
the Plan.
6. Non-Assignability of Benefits. Benefits under this Plan shall not be
assignable or transferable in any manner, nor shall they be subject to
garnishment, attachment or other legal process.
7. Effect. Neither the establishment of the Plan or any modification
thereof, nor the creation of any account on the books of the Company, nor the
payment of any benefit hereunder shall be construed as giving to any Outside
Director or other person any legal or equitable rights against the Company, any
officer or employee thereof or the Committee except as herein provided.
8. Amendment and Termination. The Board may at any time amend or terminate
this Plan. However, no amendment or termination shall alter or impair
3
<PAGE> 5
benefits accrued under the Plan at the time of such amendment or termination.
The version of the Plan in existence at the time that an Outside Director
terminates his or her membership on the Board shall control, in all respects,
the benefit payable from this Plan without regard to earlier or later versions
of the Plan unless such later version specifically provides otherwise.
This Plan shall terminate without the need of further action of the Board upon
the final payment of all benefits payable under its terms.
AUTHORIZED BY THE BOARD OF DIRECTORS the 14th day of July 1997.
4
<PAGE> 1
EXHIBIT 10.88
Federal Express Corporation
Long-Term Incentive Plan
as Amended and Restated as of October 1, 1996
1. PURPOSE OF PLAN
The Federal Express Corporation Long-Term Incentive Plan, as amended and
restated (the "Plan"), is established by Federal Express Corporation (the
"Corporation") to provide a long-term incentive for key employees of the
Corporation and its subsidiaries, to reward key employees for attaining high
financial performance levels during defined performance periods and to retain
and motivate them to exert their best efforts on behalf of the Corporation and
its subsidiaries.
2. ADMINISTRATION
This Plan shall be administrated by the Compensation Committee of the Board
of Directors (the "Committee"). The Committee shall have the sole authority to:
(i) select the key employees eligible to participate in the Plan; (ii) establish
performance criteria under the Plan; (iii) approve and make awards under the
Plan; (iv) interpret the Plan; (v) adopt, amend and rescind rules and
regulations for the administration of the Plan; (vi) determine the level of
achievement of performance criteria; and (vii) generally to administer the Plan
and make all determinations in connection therewith which may be necessary or
advisable, and all such actions of the Committee shall be binding upon all
participants. Committee decisions and selections shall be made by a majority of
its members present at the meeting at which a quorum is present, and shall be
final. Any decision or selection reduced to writing and signed by all of the
members of the Committee shall be as fully effective as if it had been made at a
meeting duly held.
3. EFFECTIVE DATE; PERFORMANCE PERIODS
The effective date of this Plan is June 1, 1993.
Performance periods for awards under this Plan shall be established by the
Committee in its sole discretion. Unless otherwise designated by the Committee,
a performance period for any award under the Plan shall be three consecutive
fiscal years and shall commerce on June 1 of the first fiscal year of such
period and end on May 31 of the third fiscal year of such period. The number of
performance periods that may be established is unlimited and performance periods
may overlap.
1
<PAGE> 2
4. ELIGIBILITY
Key employees of the Corporation who are from time to time responsible for
the management, growth and protection of the business of the Corporation and its
subsidiaries shall be eligible to participate for awards under the Plan. No
member of the Board of Directors of the Corporation shall be eligible to
participate in the Plan unless such director is also an employee of the
Corporation. The employees who shall participate in the Plan shall be selected
from time to time by the Committee in its sole discretion, from those eligible.
Except as provided below, a participant must be in an eligible position at
the beginning of a performance period and at the end of such period in order to
receive an award under this Plan. However, participants promoted to a managing
director or officer position or to a higher officer position on or before
September 1 of the first fiscal year of the performance period shall participate
at their new position for the entire performance period. In addition, for
performance periods beginning after FY94, participants promoted to an officer
position or to a higher officer position after September 1 of the first fiscal
year of such performance periods shall participate at the new position for the
remainder of the performance period on a pro rata basis.
5. CONDITIONS
(a) Awards shall be prorated for time spent on a Corporation-approved leave
of absence. In such case, awards shall be reduced by an amount equal to the
product of the amount of the award if there had been no leave of absence during
the performance period times a ratio, the numerator of which shall be the number
of full or partial months on leave and the denominator of which shall be the
total number of months in the performance period.
(b) If a participant's employment is terminated or such participant becomes
ineligible to participate in the Plan for reasons other than retirement, death
or permanent disability (as defined under the terms of the Corporation's short-
and long-term disability plans or the Corporation's supplemental long-term
disability plan or as otherwise determined by the Committee) prior to the end of
a performance period, such participant shall cease to participate and shall
forfeit any award accrued on behalf of the participant under the Plan during
such performance period.
(c) If a participant's employment is terminated due to retirement, death or
permanent disability (as defined under the terms of the Corporation's short- and
long-term disability plans or the Corporation's supplemental long-term
disability plan or as otherwise determined by the Committee), the
2
<PAGE> 3
amount of award accrued under the Plan to the date of such termination shall be
paid to the participant or, in the case of death, to the participant's personal
representative, in accordance with the terms of the Plan, if all performance
criteria are attained.
6. PERFORMANCE CRITERIA
At the beginning of a performance period, the Committee may establish a
performance goal or goals on which payment of awards will be based. The
Committee may modify these goals in extraordinary circumstances (i.e., mergers,
acquisitions, recapitalizations, extraordinary expense or income items, etc.).
Upon establishing such goals, the Committee may determine the projected
dollar amount of individual awards ranging from threshold amounts if the
performance criteria are minimally achieved, up to maximum amounts if the
performance criteria are exceeded. The Committee may determine an additional
bonus opportunity if the performance criteria are substantially exceeded.
The performance goals and target awards for each performance period shall
be set forth in writing and distributed to each eligible participant and shall
become effective when communicated to participants.
7. PAYMENT OF AWARDS
No amounts can be earned until the end of a performance period because it
is only after the conclusion of such period that the Committee can determine the
extent of achievement of the established performance goals and awards.
Unless otherwise determined by the Committee, awards shall be paid within
three months after the end of the applicable performance period in accordance
with the terms established by the Committee. Such payments shall be net of all
applicable withholdings.
8. AMENDMENTS
This Plan may be amended any time or from time to time by the Committee
provided that no amendment or alteration shall materially impair the rights of
any participant accrued at the time of the amendment.
3
<PAGE> 4
9. NO EFFECT ON EMPLOYMENT RIGHTS
Nothing herein shall in any manner be construed to limit in any way the
right of the Corporation to terminate an employee's employment at any time, or
give any right to an employee to remain employed by the Corporation.
10. DISPUTE RESOLUTION
All disputes under this Plan shall be resolved by the Committee within
its sole discretion and all decisions by the Committee in such matters shall be
final and binding on the Corporation and the participants.
11. TERMINATION OF PLAN
The Committee may terminate the Plan in whole or suspend it for any
performance period at any time. A suspension for a particular performance period
shall not, however, affect any other performance period except to the extent
specified by the Committee.
Approved by the Compensation Committee of the Board of Directors of the
Corporation at its meeting held on October 1, 1996.
4
<PAGE> 1
EXHIBIT 10.93
FIRST AMENDMENT TO AIRCRAFT SALES AGREEMENT
THIS FIRST AMENDMENT TO AIRCRAFT SALES AGREEMENT (this "Amendment"),
dated as of September 19, 1996, between AMERICAN AIRLINES, INC., a Delaware
corporation ("American"), and FEDERAL EXPRESS CORPORATION, a Delaware
corporation ("FedEx").
WITNESSETH:
WHEREAS, American and FedEx have heretofore entered into that certain
Aircraft Sales Agreement dated as of April 7, 1995 (the "Agreement"; defined
terms used herein as therein defined); and
WHEREAS, American and FedEx desire to amend and modify the terms of the
Agreement as provided below;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and pursuant to the Agreement, American and FedEx hereby agree as
follows:
A. AMENDMENTS TO THE AGREEMENT.
1. Section 2.01 of the Agreement is amended as follows:
The Scheduled Delivery Date for Delivery Number 3 shall be September
20, 1996 instead of October 16, 1996 and Delivery Number 4 shall be
February 28, 1997 instead of February 12, 1997.
2. Notwithstanding the provisions of Section 2.04 and the amendments to
Section 2.01 provided in the preceding paragraph 1, FedEx acknowledges and
agrees that American has met and complied with the requirements of Section 2.04
regarding the timing of the designations of the Airframes and the Engines to be
delivered as Delivery Numbers 3 and 4.
3. Section 3.01 of the Agreement is amended by deleting the third
sentence of Section 3.01 in its entirety and inserting the following in its
place:
Delivery of each Aircraft shall be made (i) at the option of American,
(A) at Dallas/Fort Worth International Airport ("DFW") or TUL (as
defined in Section 3.02(a)) or (B) at an airport in the State of Nevada
if American so advises FedEx at least seven (7) days prior to the
Scheduled Delivery Date for such Aircraft, or (ii) at such other
location on FedEx's route system as American designates in
<PAGE> 2
writing to FedEx at least ninety (90) days prior to the Scheduled
Delivery Date and to which FedEx consents, such consent not to be
unreasonably withheld.
4. Section 3.02 of the Agreement is amended by adding and inserting
"Revision 4.0, May 1994" following the word "Manual" in line 8 of Section 3.02.
5. Section 6.01 of the Agreement is amended by deleting "sixty (60)"
from line 4 of Section 6.01 and inserting "thirty (30)" in its place.
6. Section 8.02(a) of the Agreement is amended by adding "or at TUL" in
line 2 of Section 8.02(a) following the word "Nevada".
7. Attachment 2 to Exhibit B, Aircraft Delivery Certificate, is amended
by deleting Attachment 2 attached to Exhibit B in its entirety and replacing it
with the attachment to this Amendment labeled "Attachment 2 to Aircraft Delivery
Certificate".
8. Exhibit D to the Agreement is amended by deleting Exhibit D
(including Appendix 1 to Exhibit D) in its entirety and replacing it with the
attachment to this Amendment labeled "Exhibit D" (including the Appendix 1
attached to the Exhibit D attached to this Amendment).
B. MISCELLANEOUS.
1. Except as expressly set forth herein, all terms and provisions
contained in the Agreement shall remain unmodified and in full force and effect.
2. This Amendment shall be governed by and construed in accordance with
the internal laws of the State of New York, without regard to the laws of
conflicts of the State of New York.
4. This Amendment may be executed in several counterparts, all of which
shall be deemed an original, and all such counterparts shall constitute one and
the same instrument.
-2-
<PAGE> 3
IN WITNESS WHEREOF, American and FedEx have caused this Amendment to be
fully executed and delivered as of the date and year first above written.
AMERICAN AIRLINES, INC.
By: /s/ JEFFERY M. JACKSON
---------------------------------
Jeffery M. Jackson
Vice President-Corporate
Development and Treasurer
APPROVED FEDERAL EXPRESS CORPORATION
AS TO LEGAL FORM
KHS 10.04.96 By: /s/ JAMES R. PARKER
--------------------- ---------------------------------
LEGAL DEPT. James R. Parker
Vice President-Fleet Development
& Acquisitions
-3-
<PAGE> 4
ATTACHMENT 2 TO AIRCRAFT DELIVERY CERTIFICATE
AIRCRAFT RECORDS AND ENGINE RECORDS DELIVERED
WITH DELIVERED AIRCRAFT
The following Aircraft Records (as defined in the Agreement) were
delivered with the Delivered Aircraft:
DRAWINGS/CHARTS:
1. Fuel Distribution Chart, Compass Correction Card, Major Avionic List,
Drawings:
Layout Drawings, Emergency Equipment Placard Arrangement, Emergency
Aisle Lighting
RECORDS
1. Aircraft Flight Log (includes past 30 days aircraft routings)
2. Daily History Run
3. Heavy Maintenance Checks - History Log
4. Deferred Items List (Damage Log and FMR)
5. Last Bill-of-Work Prior to Delivery
6. Report 182Y (with required certification):
- Time-Control Components with 10,000 Hrs. or less to go and
calendar
7. Report 188Y (with required certification):
- Time Control Components by Cycles to go
8. Report 190Y (with required certification):
- Airframe Time Control Components by Aircraft and Position
- Engine Item Time Control Components by Aircraft and Position
- Airframe Calendar Control Components by Aircraft and Position
9. Report ET026 (with required certification):
- Component Time Control Status by S/N of Parts
10. Report ET049 (with required certification):
- Component Time - Special Item by RSPAM
11. AD Summary Report with certification per attached Appendix 1, including
accomplishment documents for the last action taken and stating specific
method of compliance and any alternate means of compliance, if any,
including FAA approval
12. Report EC014:
- Modification History by AD/FAR Number
13. Report EC014:
- Modification History by AA Job Number and cross reference
14. Report EC015:
- Modification History by Service Bulletin Number - Limited to
AD/FAR
15. Report EC015:
- Modification History by Service Bulletin Number
B-8
<PAGE> 5
16. Report D065 (with required certification):
- Engine Life Limited Parts/Life Limited Parts
17. Report D066 (with required certification):
- Engine Time Monitored Parts (including tags and tear-down
reports)
18. Report CML011:
- Engine Condition Monitoring - Last Run Before Delivery (if an
in-service engine)
19. Weight and Balance Report
20. Landing Gear Records
21. Component Shop Records (including tags and tear-down reports)
22. APU Records
23. Engine Records
24. Aircraft Airframe Records
25. Accident Report or Accident-Free Certification Letter
26. Major Repair Records
B-9
<PAGE> 6
EXHIBIT D
to the Aircraft Sales Agreement between
Federal Express Corporation ("FedEx") and
American Airlines, Inc. ("American")
Dated April 7, 1995 (the "Agreement)
DATA RELATING TO THE AIRCRAFT AND ENGINES
TO BE DELIVERED BY AMERICAN TO FEDEX
PURSUANT TO ARTICLE 6 OF THE AGREEMENT
Originals or copies of the following items of Data will be supplied in
accordance with Section 6.02(d) on the specified medium or on microfiche,
microfilm, paper, disk or any then current medium or a combination of these
media, with revision updates revised as of the applicable Delivery Dates. The
required certifications for Aircraft time and cycles, life-limited parts,
Airworthiness Directives and hard-time components for Airframes and Engines
shall be signed by a manager or higher management personnel in the
Airworthiness, Quality Assurance, Quality Control or Aircraft/Powerplant Records
department of American. Any required certification of any item of Data shall be
in the form attached as Appendix 1 to this Exhibit D.
MANUALS:
1. FAA Approved Aircraft Flight Manual
2. Aircraft Maintenance Manual (Microfilm)
3. Component Maintenance Manual
4. Aircraft Wiring Manual (Microfilm)
5. Aircraft Structure Repair Manual (Microfilm)
6. Aircraft Illustrated Parts Catalog (Microfilm)
7. McDonnell Douglas MD11 Passenger Weight and Balance Manual for
American Airlines
8. Aircraft Minimum Equipment List & Configuration
9. McDonnell Douglas Packing Sheets
10. McDonnell Douglas Aircraft Detail Finish Specification
11. CF6 Maintenance Manual (Microfilm-See Aircraft MM)
12. CF6 Engine Shop Manual including any Engineering Specification Orders
13. CF6 Illustrated Parts Catalog (Microfilm)
14. CF6 Service Bulletin (Microfilm)
15. Maintenance Check Manual (Microfilm)
16. Engineering Specification Maintenance Manual
17. AA Part Number versus Mfgr's Part Number (Fiche)
18. Cross Reference for AA Vendor Code Numbers
19. Engineering Change Orders (ECO) and Fleet Campaign Directives (FCO)
D-1
<PAGE> 7
DOCUMENTS:
1. Certificate of Airworthiness (on Aircraft)
2. Certificate of Registration (on Aircraft)
3. Sanitary Certificate (on Aircraft)
4. [Radio Station License (on Aircraft)]
DRAWINGS/CHARTS:
1. Fuel Distribution Chart, Compass Correction Card, Major Avionic List,
Drawings:
Layout Drawings, Emergency Equipment Placard Arrangement, Emergency
Aisle Lighting
RECORDS
1. Aircraft Flight Log (includes past 30 days aircraft routings)
2. Daily History Run
3. Heavy Maintenance Checks - History Log
4. Deferred Items List (Damage Log and FMR)
5. Last Bill-of-Work Prior to Delivery
6. Report 182Y (with required certification):
- Time-Control Components with 10,000 Hrs. or less to go and
calendar
7. Report 188Y (with required certification):
- Time Control Components by Cycles to go
8. Report 190Y (with required certification):
- Airframe Time Control Components by Aircraft and Position
- Engine Item Time Control Components by Aircraft and Position
- Airframe Calendar Control Components by Aircraft and Position
9. Report ET026 (with required certification):
- Component Time Control Status by S/N of Parts
10. Report ET049 (with required certification):
- Component Time - Special Item by RSPAM
11. AD Summary Report with certification per attached Appendix 1, including
accomplishment documents for the last action taken and stating specific
method of compliance and any alternate means of compliance, if any,
including FAA approval
12. Report EC014:
- Modification History by AD/FAR Number
13. Report EC014:
- Modification History by AA Job Number and cross reference
14. Report EC015:
- Modification History by Service Bulletin Number - Limited to
AD/FAR
15. Report EC015:
- Modification History by Service Bulletin Number
D-2
<PAGE> 8
16. Report D065 (with required certification):
- Engine Life Limited Parts/Life Limited Parts
17. Report D066 (with required certification):
- Engine Time Monitored Parts (including tags and tear-down
reports)
18. Report CML011:
- Engine Condition Monitoring - Last Run Before Delivery (if an
in-service engine)
19. Weight and Balance Report
20. Landing Gear Records
21. Component Shop Records (including tags and tear-down reports)
22. APU Records
23. Engine Records
24. Aircraft Airframe Records
25. Accident Report or Accident-Free Certification Letter
26. Major Repair Records
D-3
<PAGE> 9
APPENDIX 1 TO EXHIBIT D
AIRCRAFT REGISTRATION NO.
--------------
MANUFACTURER'S SERIAL NO.
-------------
DATE: ,
----------------- --------------
[TITLE]
I HEREBY CERTIFY THAT THIS IS A TRUE AND ACCURATE RECORD TO THE BEST OF MY
KNOWLEDGE.
- -------------------------------- -------------------------------
SIGNATURE DATE
- -------------------------------- -------------------------------
PRINTED NAME TITLE
AIR CARRIER
- -------------------------------- ---------------------------------
COMPANY NAME COMPANY CERTIFICATE TYPE
AA4A025A
- --------------------------------
COMPANY CERTIFICATE NUMBER
D-4
<PAGE> 1
EXHIBIT 11
FEDERAL EXPRESS CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
Net income applicable to common and common equivalent shares and the
weighted average number of shares used in the calculation of earnings per share
for the years ended May 31 were as follows (in thousands, except per share
amounts):
<TABLE>
<CAPTION>
YEAR ENDED MAY 31
---------------------------------------
1997 1996 1995
-------- --------- ------
<S> <C> <C> <C>
Net income applicable to common and
common equivalent shares................. $361,227 $307,777 $297,588
======== ======== ========
Average shares of common stock
outstanding.............................. 114,125 113,128 111,975
Common Equivalent Shares:
Assumed exercise of outstanding
dilutive options....................... 6,101 5,250 4,877
Less shares repurchased from proceeds of
assumed exercise of options............ (4,585) (4,102) (3,865)
-------- -------- --------
Average common and common equivalent
shares................................... 115,641 114,276 112,987
======== ======== ========
Earnings per share......................... $ 3.12 $ 2.69 $ 2.63
======== ======== ========
</TABLE>
- - The computation of the number of shares repurchased from the proceeds of
the assumed exercise of outstanding dilutive options is based upon the
average market price of the Company's common stock during the periods.
Common equivalent shares are excluded in periods in which their assumed
exercise would have an anti-dilutive effect.
- - Fully diluted earnings per share are substantially the same as earnings per
share for the years ended May 31, 1997, 1996, and 1995.
<PAGE> 1
FINANCIAL HIGHLIGHTS
Federal Express Corporation and Subsidiaries
Years ended May 31
In thousands, except earnings per share and Other Operating Data
<TABLE>
<CAPTION>
Percent
1997 1996 Change
- ----------------------------------------------------------------------------------------------------------
OPERATING RESULTS
<S> <C> <C> <C>
Revenues $ 11,519,750 $10,273,619 +12
Operating income 699,042 623,824 +12
Income before income taxes 628,221 539,959 +16
Net income 361,227 307,777 +17
Earnings per share $ 3.12 $ 2.69 +16
Average shares outstanding 115,641 114,276 + 1
FINANCIAL POSITION
Property and equipment, net $ 4,622,080 $ 4,116,601 +12
Total assets 7,625,486 6,698,971 +14
Long-term debt 1,397,954 1,325,277 + 5
Common stockholders' investment 2,962,514 2,576,139 +15
OTHER OPERATING DATA
Express package:
Average daily package volume 2,715,894 2,437,662 +11
Average pounds per package 7.2 6.4 +13
Average revenue per pound $ 2.11 $ 2.31 - 9
Average revenue per package $ 15.11 $ 14.87 + 2
Airfreight:
Average daily pounds 2,542,226 2,144,225 +19
Average revenue per pound $ .94 $ 1.01 - 7
Operating weekdays 254 256
Aircraft fleet 584 557
Vehicle fleet 38,500 36,900
Average number of employees (based
on a standard full-time workweek) 107,827 99,999
- ----------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
Year-over-year improvements in consolidated results for the past three years
reflect the expansion of the Company's express delivery services and the
stabilization of U.S. domestic express revenue per package (yield). In 1997,
international results improved primarily due to continued strong growth of
express volumes and increased airfreight revenues, despite declining airfreight
revenue per pound (yield). Intense domestic competition and the rising cost of
providing express services restrained U.S. domestic results in 1997.
Consolidated net income for 1997 was $361 million ($3.12 per share) compared
with $308 million ($2.69 per share) and $298 million ($2.63 per share) for 1996
and 1995, respectively.
REVENUES
The following table shows a comparison of revenues for the years ended May 31:
In millions
<TABLE>
<CAPTION>
Percent Change
1997/ 1996/
1997 1996 1995 1996 1995
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
U.S. domestic express $ 8,073 $ 7,284 $6,700 +11 + 9
International Priority (IP) 2,351 1,997 1,680 +18 +19
International Express Freight (IXF)
and Airport-to-Airport (ATA) 605 554 580 + 9 - 5
FedEx Air Charter 72 92 115 -22 -20
Logistics services 99 94 106 + 5 -11
Other* 320 253 211 +27 +20
------- ------- ------
$11,520 $10,274 $9,392 +12 + 9
- ----------------------------------------------------------------------------------------------------------
</TABLE>
*Includes the sale of engine noise reduction kits.
The following table shows a comparison of selected express and airfreight
(IXF/ATA) statistics for the years ended May 31:
In thousands, except dollar amounts
<TABLE>
<CAPTION>
Percent Change
1997/ 1996/
1997 1996 1995 1996 1995
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
U.S. domestic express:
Average daily packages 2,490 2,246 2,084 +11 + 8
Revenue per package $12.77 $12.67 $12.61 + 1 --
IP:
Average daily packages 226 192 164 +18 +17
Revenue per package $40.91 $40.58 $40.28 + 1 + 1
IXF/ATA:
Average daily pounds 2,542 2,144 2,153 +19 --
Revenue per pound $ .94 $ 1.01 $ 1.06 - 7 - 5
- ----------------------------------------------------------------------------------------------------------
</TABLE>
In 1997, U.S. domestic yield improved on a year-over-year basis (including the
effect of a temporary 2% fuel surcharge discussed below). Excluding the
surcharge, yields remained stable due to the effects of continuing
yield-management actions which include systematic review and revision of
customer pricing, an increase in the list price for FedEx Standard Overnight(R)
service in April 1996 and improved average weight per package. The yield
2
<PAGE> 3
improvement was restrained by strong growth in the Company's lower-yielding
products and a reduction in the price for FedEx 2Day(R) service.
The air cargo transportation excise tax expired on December 31, 1995, was
reenacted by Congress effective August 27, 1996, and expired again on December
31, 1996. The excise tax was reenacted by Congress effective March 7, 1997, and
is scheduled to expire again on September 30, 1997. This expiration relieved the
Company of its obligation to pay the tax for approximately five months in both
1997 and 1996. The expiration of the tax contributed approximately $50 million
to U.S. domestic revenues and 1% to U.S. domestic yields in both 1997 and 1996.
Legislation to reenact the tax for a ten-year period as of October 1, 1997, is
currently pending in Congress.
Over the past three years, the Company's IP service experienced year-over-year
growth in average daily volumes ranging from 17% to 23% and revenues from 18% to
25%. This strong growth is attributable to the Company's unique and expanding
network which provides customers with reduced transit times, later drop-off
opportunities and daily service on a global basis. Over the same period, yields
remained relatively constant.
In 1996 and 1997, the Company's international non-express airfreight revenues
were a significant factor in determining overall profitability. The Company uses
ATA airfreight service (a lower-priced, space-available service) to fill space
on international flights not used by express services such as IP or IXF. In
1996, excess capacity in the global airfreight market and slowing growth in
world demand resulted in lower non-express airfreight pounds, prices and
revenues than in 1995. In 1997, airfreight revenues increased, due to the
Company's expansion in international markets, despite continued excess market
capacity and downward pressure on yields.
The increases in other revenue in 1997 and 1996 were primarily attributable to
increased sales of engine noise reduction kits.
OPERATING EXPENSES
Volume growth and expansion of the Company's operations resulted in a trend of
rising operating expenses. Presented below are year-over-year percentage changes
in operating expenses:
<TABLE>
<CAPTION>
Percent Change
1997/ 1996/
1996 1995
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Salaries and employee benefits +10 + 4
Rentals and landing fees +12 +17
Depreciation and amortization + 8 +10
Fuel +19 +15
Maintenance and repairs +17 +14
Other +14 +16
Total operating expenses +12 +10
- ----------------------------------------------------------------------------------------------------------
</TABLE>
Salaries and employee benefits expense rose primarily due to higher employment
levels associated with volume growth. In 1997, increased provisions under the
Company's performance-based, incentive compensation plans also contributed to
the increase in salaries and employee benefits expense. In 1996, decreased
provisions under these plans offset a large portion of the increase in salaries
and employee benefits expense.
Rentals and landing fees increased primarily due to the leasing of additional
aircraft. As of May 31, 1997, the Company had 78 wide-bodied aircraft under
operating lease compared
3
<PAGE> 4
with 74 as of May 31, 1996, and 58 as of May 31, 1995. Management expects
year-over-year increases in lease expense to continue as the Company enters into
additional aircraft rental agreements during 1998 and thereafter.
Fuel expense increased in 1997 and 1996 due to increases in average jet fuel
price per gallon (12% and 7%, respectively) and gallons consumed (8% and 9%,
respectively). The increases in average price per gallon of jet fuel were due to
higher jet fuel prices and a 4.3 cents per gallon excise tax on aviation fuel,
used domestically, which became effective October 1, 1995.
In order to mitigate the impact of the recent increases in jet fuel prices, the
Company implemented temporary fuel surcharges on airfreight shipments, effective
December 1, 1996, for shipments out of Europe and selected Asian countries.
Additionally, the Company implemented fuel surcharges, effective December 15,
1996, for airfreight shipments originating in the U.S., Latin America and the
remaining parts of Asia, except those to the People's Republic of China and Hong
Kong. These surcharges were discontinued effective April 15 or June 1, 1997,
depending on the origin country. The Company also implemented a temporary 2%
fuel surcharge, effective February 3, 1997, on U.S. domestic shipments except
FedEx SameDay(R) service and including Puerto Rico. This surcharge also applied
to all U.S. export IP shipments, except those to the People's Republic of China
and Hong Kong. The Company plans to lift this surcharge on August 1, 1997.
In the past three years, the Company's aircraft fleet has increased, resulting
in a corresponding rise in maintenance expense. The rise in maintenance and
repairs expense for 1997 was primarily due to higher engine maintenance on MD11
and A310 aircraft. In 1996, the Company incurred significant spare parts expense
outfitting the newly-opened Subic Bay facility and earlier than expected DC10
engine maintenance expense.
The Company expects a predictable pattern of aircraft maintenance and repairs
expense. However, unanticipated maintenance events will occasionally disrupt
this pattern, resulting in periodic fluctuations in maintenance and repairs
expense. Given the Company's increasing fleet size, aging fleet and variety of
aircraft types, management believes that maintenance and repairs expense will
continue a trend of year-over-year increases for the foreseeable future.
Increases in other operating expenses for 1997 and 1996 were primarily due to
expenses related to volume growth, including the transportation of packages by
third parties and, for 1996, the cost of temporary manpower. The cost of sales
of engine noise reduction kits also increased in 1997 and 1996. A significant
portion of the 1996 increase in other operating expenses was due to consulting
fees related to on-going projects designed to optimize the value of goods and
services purchased and the use of internal resources.
OPERATING INCOME
The Company's operating income increased 12% and 6% in 1997 and 1996,
respectively.
U.S. domestic operating income rose 3% and 16% in 1997 and 1996, respectively.
In 1997, domestic income included a $15 million pre-tax benefit from the
settlement of a Tennessee personal property tax matter and an incremental
contribution from the sales of engine noise reduction kits of $24 million.
Increases in cost per package (1.4%) exceeded increases in revenue per package
(0.8%). Conversely, in 1996, operating income improved primarily due to
increases in revenue per package (0.5%) exceeding increases in cost per package
(0.3%) and due to increases in average daily volume (8%). In addition, in 1996,
sales of engine noise reduction kits contributed an incremental $15 million to
U.S.
4
<PAGE> 5
domestic operating income, while severe winter storms in the eastern United
States lowered U.S. domestic operating income by approximately $30 million. U.S.
domestic operating margins were 6.7%, 7.3% and 6.8% in 1997, 1996 and 1995,
respectively.
International operating income increased $59 million in 1997 compared with a $44
million decrease in 1996. The increase in operating income in 1997 was
attributable to strong growth in the Company's IP volumes and airfreight pounds,
partially offset by lower airfreight yields. In addition to the factors
impacting express and airfreight revenue discussed above, in 1996, the costs of
establishing the Company's intra-Asian network and declines in charter revenue
contributed to the decline in international operating income. International
operating margins were 4.4%, 2.9% and 4.9% in 1997, 1996 and 1995, respectively.
For additional information on the Company's U.S. domestic and international
operations, see Note 10 of Notes to Consolidated Financial Statements.
OTHER INCOME AND EXPENSE AND INCOME TAXES
Net interest expense decreased 5% for 1997, primarily due to lower effective
interest rates. For 1996, net interest expense decreased 17% due to lower debt
levels and a higher level of capitalized interest than in 1995. Interest is
capitalized during eligible projects, the most significant of which is the
modification of certain Airbus A310 aircraft from passenger to freighter
configuration. The level of capitalized interest in 1997 was comparable to that
of 1996.
Other, net for 1997 included a $17.1 million gain from an insurance settlement
for a DC10 aircraft destroyed by fire in September 1996. Other, net for 1996
included a distribution of $7.8 million from the bankruptcy estate of a firm
engaged by the Company in 1990 to remit payments of employee payroll taxes to
the appropriate authorities. Other, net for 1996 also included gains on sales of
B727 aircraft.
The Company's effective tax rate was 42.5% in 1997 and 43.0% in 1996 and 1995.
In each year, the effective tax rate was greater than the statutory U.S. federal
tax rate primarily because of state income taxes and the impact of foreign
operations. For 1998, management expects the effective tax rate to remain at a
level similar to the 1997 rate. The actual rate, however, is dependent on a
number of factors, including the amount and source of operating income.
OUTLOOK
Management is committed to achieving long-term earnings growth by positioning
the Company's resources to address customers' expectations and to capitalize on
emerging markets for express distribution services. This frequently involves a
significant front-end investment in assets, technology and personnel that may
reduce near-term profitability. The level of investment in 1998 is anticipated
to be greater than that in 1997.
As discussed above, a key factor in the stabilization of the Company's U.S.
domestic yield was the customer pricing review program. In 1998, management will
continue this program with the intent of pursuing price increases on
low-yielding accounts and discontinuing unprofitable accounts. In addition, on
July 1, 1997, the Company introduced distance-based pricing for all U.S.
domestic services. As a result of yield-management actions and the introduction
of distance-based pricing, management believes U.S. domestic yields will remain
stable or increase slightly, while package volumes will grow at a considerably
lower rate in 1998 than in the past several years. The goal of these actions is
to ensure an appropriate balance between revenues generated and the cost of
providing express services. Actual results, however, may vary depending
primarily on the impact of
5
<PAGE> 6
competitive pricing changes, including distance-based pricing, customer
responses to yield-management initiatives and changing customer demand patterns.
To reduce the cost of providing express services, management will continue to
invest in technologies that improve the efficiency of package pick-up, sorting,
tracking and delivery and further integrate the Company's air and ground
transportation system. The Company will also strive to increase the number of
transactions initiated through customer automation tools and will continue
projects designed to enhance productivity and strengthen the Company's
infrastructure. Assuming effective implementation, these investments are
expected to reduce transportation cost per package.
Long-term plans for the Company's international operations include continued
expansion of the international network to the emerging centers of economic
growth, particularly China, the Pacific Basin and Latin America. Management
expects this expansion to allow for continued growth of the Company's
international express services. However, with the additional capacity, more
reliance is placed on lower-yielding IXF/ATA to fill the available space until
express volumes grow into the increased capacity.
Management expects IP average daily volume to continue its strong growth in 1998
and IP yields to remain relatively constant. With respect to airfreight,
management believes that excess market capacity will continue its downward
pressure on yields in 1998. Actual results for IP or airfreight, however, will
depend on international economic conditions, actions by the Company's
competitors and regulatory conditions for international aviation rights.
FINANCIAL CONDITION
LIQUIDITY
Cash and cash equivalents totaled $122 million at May 31, 1997, an increase of
$29 million during 1997 compared with decreases of $264 million in 1996 and $35
million in 1995. Cash provided from operations during 1997 was $1.0 billion
compared with $947 million and $1.0 billion in 1996 and 1995, respectively. The
Company currently has available a $1.0 billion revolving bank credit facility
(of which $799 million was available as of May 31, 1997) that is generally used
to finance temporary operating cash requirements and to provide support for the
issuance of commercial paper. The reduction in the amount available under the
credit facility was solely attributable to support for the issuance of
commercial paper during the year. Management believes that cash flow from
operations, its commercial paper program and the revolving bank credit facility
will adequately meet its working capital needs for the foreseeable future.
CAPITAL RESOURCES
The Company's operations are capital intensive, characterized by significant
investments in aircraft, vehicles, computer and telecommunication equipment,
package handling facilities and sort equipment. The amount and timing of capital
additions are dependent on various factors including volume growth, new or
enhanced services, geographical expansion of services, competition, availability
of satisfactory financing and actions of regulatory authorities.
Capital expenditures for 1997 totaled $1.5 billion and included ten Airbus A310
aircraft, two MD11 aircraft (which were subsequently sold and leased back, one
in 1997 and one in 1998), customer automation and computer equipment and
vehicles and ground support equipment.
6
<PAGE> 7
In comparison, prior year expenditures totaled $1.4 billion and included seven
Airbus A310 aircraft (one of which, along with two purchased in 1995, was
subsequently sold and leased back), two MD11 aircraft (which were subsequently
sold and leased back, one in 1996 and one in 1997), five B727-200 aircraft, 35
Cessna 208 aircraft, deposits on future Airbus A300 aircraft, vehicles and
ground support equipment, customer automation and computer equipment, and
package handling facilities and sort equipment. For information on the Company's
purchase commitments, see Note 12 of Notes to Consolidated Financial Statements.
Additional investing activities in 1996 included the purchase of an all-cargo
route authority between the U.S. and China.
The Company has historically financed its capital investments through the use of
lease, debt and equity financing in addition to the use of internally generated
cash from operations. Generally, management's practice in recent years with
respect to funding new wide-bodied aircraft acquisitions has been to finance
such aircraft through long-term lease transactions that qualify as off-balance
sheet operating leases under applicable accounting rules. Management has
determined that these operating leases have provided economic benefits favorable
to ownership with respect to market values, liquidity and after-tax cash flows.
In the future, other forms of secured financing may be pursued to finance the
Company's aircraft acquisitions based on what management determines will best
meet the Company's needs. The Company has been successful in obtaining
investment capital, both domestic and international, for long-term leases on
acceptable terms although the marketplace for such capital can become restricted
depending on a variety of economic factors beyond the control of the Company.
See Note 3 of Notes to Consolidated Financial Statements for additional
information concerning the Company's debt and credit facilities.
In June 1996, October 1996 and May 1997, approximately $190 million, $186
million and $556 million, respectively, of pass through certificates were issued
under shelf registrations filed with the Securities and Exchange Commission to
finance or refinance the debt portion of leveraged leases related to nine Airbus
A300 and six MD11 aircraft. The pass through certificates are not direct
obligations of, or guaranteed by, the Company, but amounts payable by the
Company under the leveraged leases are sufficient to pay the principal of and
interest on the certificates.
Management believes that the capital resources available to the Company provide
flexibility to access the most efficient markets for financing its capital
acquisitions, including aircraft, and are adequate for the Company's future
capital needs.
DEFERRED TAX ASSETS
At May 31, 1997, the Company had a net cumulative deferred tax liability of $10
million consisting of $495 million of deferred tax assets and $505 million of
deferred tax liabilities. The reversals of deferred tax liabilities in future
periods will offset similar amounts of deferred tax assets.
Statements in this "Management's Discussion and Analysis of Results of
Operations and Financial Condition" or made by management of the Company which
contain more than historical information may be considered forward-looking
statements (as such term is defined in the Private Securities Litigation Reform
Act of 1995) which are subject to risks and uncertainties. Actual results may
differ materially from those expressed in the forward-looking statements because
of important factors identified in this section.
7
<PAGE> 8
CONSOLIDATED STATEMENTS OF INCOME
Federal Express Corporation and Subsidiaries
Years ended May 31
In thousands, except Earnings Per Share
<TABLE>
<CAPTION>
1997 1996 1995
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES $11,519,750 $10,273,619 $9,392,073
OPERATING EXPENSES:
Salaries and employee benefits (Notes 8 and 9) 5,095,462 4,619,990 4,425,202
Rentals and landing fees (Note 4) 1,070,658 959,055 818,599
Depreciation and amortization 777,374 719,609 652,287
Fuel 690,412 578,614 502,417
Maintenance and repairs 724,416 617,657 544,170
Other 2,462,386 2,154,870 1,858,254
----------- ----------- ----------
10,820,708 9,649,795 8,800,929
----------- ----------- ----------
OPERATING INCOME 699,042 623,824 591,144
OTHER INCOME (EXPENSE):
Interest, net (Note 1) (90,634) (95,599) (114,687)
Other, net (Note 14) 19,813 11,734 45,627
----------- ----------- ----------
(70,821) (83,865) (69,060)
Income before Income Taxes 628,221 539,959 522,084
Provision for Income Taxes (Note 7) 266,994 232,182 224,496
----------- ----------- ----------
Net Income $ 361,227 $ 307,777 $ 297,588
- ----------------------------------------------------------------------------------------------------------
Earnings Per Share (Note 6) $ 3.12 $ 2.69 $ 2.63
- ----------------------------------------------------------------------------------------------------------
Average Shares Outstanding (Note 6) 115,641 114,276 112,987
- ----------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
8
<PAGE> 9
CONSOLIDATED BALANCE SHEETS
Federal Express Corporation and Subsidiaries
May 31
In thousands
<TABLE>
<CAPTION>
1997 1996
- ----------------------------------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS:
<S> <C> <C>
Cash and cash equivalents $ 122,023 $ 93,419
Receivables, less allowance for doubtful accounts
of $36,175 and $30,809 1,512,939 1,271,599
Spare parts, supplies and fuel 313,337 222,110
Deferred income taxes (Note 7) 149,158 92,606
Prepaid expenses and other 35,132 48,527
---------- ----------
Total current assets 2,132,589 1,728,261
---------- ----------
PROPERTY AND EQUIPMENT, AT COST (Notes 1, 3, 4 and 12):
Flight equipment 3,741,407 3,372,647
Package handling and ground support equipment 2,403,806 2,148,509
Computer and electronic equipment 1,714,662 1,439,883
Other 1,959,061 1,717,478
---------- ----------
9,818,936 8,678,517
Less accumulated depreciation and amortization 5,196,856 4,561,916
---------- ----------
Net property and equipment 4,622,080 4,116,601
---------- ----------
OTHER ASSETS:
Goodwill (Note 1) 365,327 380,748
Equipment deposits and other assets (Note 12) 505,490 473,361
---------- ----------
Total other assets 870,817 854,109
---------- ----------
$7,625,486 $6,698,971
- ----------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' INVESTMENT
CURRENT LIABILITIES:
Current portion of long-term debt (Note 3) $ 126,666 $ 8,009
Accounts payable 828,421 705,532
Accrued expenses (Note 2) 1,007,696 904,856
---------- ----------
Total current liabilities 1,962,783 1,618,397
---------- ----------
LONG-TERM DEBT, LESS CURRENT PORTION (Note 3) 1,397,954 1,325,277
---------- ----------
DEFERRED INCOME TAXES (Note 7) 159,165 64,034
---------- ----------
OTHER LIABILITIES (Note 1) 1,143,070 1,115,124
---------- ----------
COMMITMENTS AND CONTINGENCIES (Notes 4, 12 and 13)
COMMON STOCKHOLDERS' INVESTMENT (Note 6):
Common Stock, $.10 par value; 200,000 shares authorized;
114,907 and 56,885 shares issued 11,491 5,689
Additional paid-in capital 850,616 815,137
Retained earnings 2,118,015 1,766,578
---------- ----------
2,980,122 2,587,404
Less deferred compensation 17,608 11,265
---------- ----------
Total common stockholders' investment 2,962,514 2,576,139
---------- ----------
$7,625,486 $6,698,971
- ----------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral part
of these balance sheets.
9
<PAGE> 10
CONSOLIDATED STATEMENTS OF CASH FLOWS
Federal Express Corporation and Subsidiaries
Years ended May 31
In thousands
<TABLE>
<CAPTION>
1997 1996 1995
- ----------------------------------------------------------------------------------------------------------
OPERATING ACTIVITIES
<S> <C> <C> <C>
Net income $ 361,227 $ 307,777 $ 297,588
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization 777,374 719,609 652,287
Provision for uncollectible accounts 40,634 38,963 36,334
Provision for deferred income taxes
and other 45,737 26,489 25,976
Gain from disposals of property
and equipment (19,567) (5,397) (39,997)
Changes in assets and liabilities,
net of effects from dispositions
of businesses:
Increase in receivables (334,448) (191,334) (167,319)
Increase in other current assets (450,945) (41,992) (24,101)
Increase in accounts payable,
accrued expenses and
other liabilities 597,980 100,515 258,373
Other, net (10,500) (8,050) (8,424)
------------ ---------- ------------
Cash provided by operating activities 1,007,492 946,580 1,030,717
------------ ---------- ------------
INVESTING ACTIVITIES
Purchases of property and equipment, including
deposits on aircraft of $26,107, $68,202
and $113,073 (1,470,592) (1,412,242) (1,060,761)
Proceeds from dispositions of property
and equipment:
Sale-leaseback transactions 162,400 176,500 --
Reimbursements of A300 deposits 63,039 143,859 138,203
Other dispositions 29,147 26,504 59,523
Other, net 24,612 77,208 87,925
----------- ---------- ------------
Cash used in investing activities (1,191,394) (988,171) (775,110)
----------- ---------- ------------
FINANCING ACTIVITIES
Proceeds from debt issuances 200,904 17,298 45,460
Proceeds from stock issuances 31,013 36,566 13,081
Principal payments on debt (9,670) (264,004) (349,523)
Other, net (9,741) (12,398) --
----------- ---------- ------------
Cash provided by (used in)
financing activities 212,506 (222,538) (290,982)
----------- ---------- ------------
CASH AND CASH EQUIVALENTS
Increase (decrease) during the year 28,604 (264,129) (35,375)
Balance at beginning of year 93,419 357,548 392,923
----------- ---------- ------------
Balance at end of year $ 122,023 $ 93,419 $ 357,548
- ----------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
10
<PAGE> 11
CONSOLIDATED STATEMENTS OF CHANGES IN COMMON
STOCKHOLDERS' INVESTMENT
Federal Express Corporation and Subsidiaries
<TABLE>
<CAPTION>
In thousands, except shares
Additional
Common Paid-in Retained Treasury Deferred
Stock Capital Earnings Stock Compensation
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE AT MAY 31, 1994 $ 5,589 $759,229 $1,162,160 $ (775) $ (1,498)
Forfeiture of restricted stock -- -- -- (231) --
Issuance of common stock
under employee incentive
plans (288,724 shares) 28 16,026 -- -- --
Amortization of deferred compensation -- -- -- -- 774
Foreign currency translation adjustment -- -- 6,679 -- --
Net income -- -- 297,588 -- --
------------------------------------------------------------------------
BALANCE AT MAY 31, 1995 5,617 775,255 1,466,427 (1,006) (724)
- ---------------------------------------------------------------------------------------------------------------------------
Purchase of treasury stock -- -- -- (12,398) --
Forfeiture of restricted stock -- -- -- (1,068) 1,130
Issuance of common and treasury
stock under employee incentive
plans (886,195 shares) 72 39,882 -- 14,472 (13,898)
Amortization of deferred compensation -- -- -- -- 2,227
Foreign currency translation adjustment -- -- (7,626) -- --
Net income -- -- 307,777 -- --
------------------------------------------------------------------------
BALANCE AT MAY 31, 1996 5,689 815,137 1,766,578 -- (11,265)
- ---------------------------------------------------------------------------------------------------------------------------
Purchase of treasury stock -- -- -- (9,741) --
Forfeiture of restricted stock -- -- -- (803) 720
Two-for-one stock split in the
form of a 100% stock dividend
(56,994,074 shares) 5,699 -- (5,699) -- --
Issuance of common and treasury
stock under employee incentive
plans (1,225,454 shares) 103 35,479 -- 10,544 (10,484)
Amortization of deferred compensation -- -- -- -- 3,421
Foreign currency translation adjustment -- -- (4,091) -- --
Net income -- -- 361,227 -- --
------------------------------------------------------------------------
BALANCE AT MAY 31, 1997 $11,491 $850,616 $2,118,015 $ -- $(17,608)
===========================================================================================================================
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
11
<PAGE> 12
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Federal Express Corporation and Subsidiaries
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION. The consolidated financial statements include the
accounts of Federal Express Corporation and its wholly-owned subsidiaries (the
"Company"). All significant intercompany accounts and transactions have been
eliminated.
PROPERTY AND EQUIPMENT. Expenditures for major additions, improvements, flight
equipment modifications, and certain overhaul costs are capitalized. Maintenance
and repairs are charged to expense as incurred, except for B747 airframe and
engine overhaul maintenance which is accrued and charged to expense on the basis
of hours flown. The cost and accumulated depreciation of property and equipment
disposed of are removed from the related accounts, and any gain or loss is
reflected in the results of operations.
For financial reporting purposes, depreciation and amortization of property and
equipment is provided on a straight-line basis over the asset's service life or
related lease term as follows:
Flight equipment 5 to 20 years
Package handling and ground support equipment 5 to 30 years
Computer and electronic equipment 3 to 10 years
Other 2 to 30 years
- --------------------------------------------------------------------------------
Aircraft airframes and engines are assigned residual values ranging from 10% to
20% of asset cost. All other property and equipment have no assigned residual
values. Vehicles, which are included in package handling and ground support
equipment, are depreciated on a straight-line basis over 5 to 10 years.
For income tax purposes, depreciation is generally computed using accelerated
methods.
DEFERRED GAINS. Gains on the sale and leaseback of aircraft and other property
and equipment are deferred and amortized over the life of the lease as a
reduction of rent expense. Included in other liabilities at May 31, 1997 and
1996, were deferred gains of $340,166,000 and $337,118,000, respectively.
DEFERRED LEASE OBLIGATIONS. While certain of the Company's aircraft and facility
leases contain fluctuating or escalating payments, the related rent expense is
recorded on a straight-line basis over the lease term. Included in other
liabilities at May 31, 1997 and 1996, were $289,822,000 and $260,977,000,
respectively, representing the cumulative difference between rent expense and
rent payments.
SELF-INSURANCE RESERVES. The Company is self-insured up to certain levels for
workers' compensation, employee health care and vehicle liabilities. Reserves
are based on the actuarially estimated cost of claims. Included in other
liabilities at May 31, 1997 and 1996, were $256,000,000 and $278,000,000,
respectively, representing the long-term portion of self-insurance reserves for
the Company's workers' compensation and vehicle liabilities.
CAPITALIZED INTEREST. Interest on funds used to finance the acquisition and
modification of aircraft and construction of certain facilities up to the date
the asset is placed in service is capitalized and included in the cost of the
asset. Capitalized interest was $39,449,000, $39,254,000 and $27,381,000 for
1997, 1996 and 1995, respectively.
12
<PAGE> 13
ADVERTISING. Advertising costs are generally expensed as incurred and are
included in other operating expenses. Advertising expenses were $153,399,000,
$138,408,000 and $147,288,000 in 1997, 1996 and 1995, respectively.
CASH EQUIVALENTS. Cash equivalents are cash in excess of current operating
requirements invested in short-term, interest-bearing instruments with
maturities of three months or less at the date of purchase and are stated at
cost, which approximates market value. Interest income was $5,055,000 in 1997,
$9,850,000 in 1996 and $16,236,000 in 1995.
SPARE PARTS, SUPPLIES AND FUEL. Spare parts are stated principally at weighted
average cost; supplies and fuel are stated principally at standard cost which
approximates actual cost on a first-in, first-out basis. Neither method values
inventory in excess of current replacement cost.
GOODWILL. Goodwill is the excess of the purchase price over the fair value of
net assets of businesses acquired. It is amortized on a straight-line basis over
periods ranging up to 40 years. Accumulated amortization was $129,404,000 and
$114,606,000 at May 31, 1997 and 1996, respectively.
FOREIGN CURRENCY TRANSLATION. Translation gains and losses of the Company's
foreign operations that use local currencies as the functional currency are
accumulated and reported, net of related deferred income taxes, as a separate
component of common stockholders' investment. Transaction gains and losses that
arise from exchange rate fluctuations on transactions denominated in a currency
other than the local functional currency are included in the results of
operations.
INCOME TAXES. Deferred income taxes are provided for the tax effect of temporary
differences between the tax basis of assets and liabilities and their reported
amounts in the financial statements. The Company uses the liability method to
account for income taxes, which requires deferred taxes to be recorded at the
statutory rate expected to be in effect when the taxes are paid.
The Company has not provided for U.S. federal income taxes on its foreign
subsidiaries' earnings deemed to be permanently reinvested. Quantification of
the deferred tax liability, if any, associated with permanently reinvested
earnings is not practicable.
REVENUE RECOGNITION. Revenue is generally recognized upon delivery of shipments.
For shipments in transit, revenue is recorded based on the percentage of service
completed.
EARNINGS PER SHARE. Earnings per share is computed based on the weighted average
number of common and common equivalent shares outstanding during the period.
Common equivalent shares are the shares of common stock that would be issued
upon the exercise of all dilutive outstanding stock options, less the assumed
repurchase of treasury shares. Earnings per share assuming full dilution is
substantially the same as earnings per share as stated and, accordingly, is not
shown separately.
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share." SFAS No.
128 specifies new standards for computing and disclosing earnings per share
effective for financial statements issued for periods ending after December 15,
1997. The Company does not expect the adoption of SFAS No. 128 to have a
material effect on the results of the earnings per share calculation for the
years ended May 31, 1997, 1996 and 1995.
13
<PAGE> 14
RECLASSIFICATIONS. Certain amounts for 1996 and 1995 have been reclassified to
conform to the 1997 presentation.
USE OF ESTIMATES. The preparation of the consolidated financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
NOTE 2: ACCRUED EXPENSES
May 31
In thousands
<TABLE>
<CAPTION>
1997 1996
- --------------------------------------------------------------------
<S> <C> <C>
Compensated absences $ 234,284 $211,499
Insurance 207,059 194,209
Taxes other than income taxes 143,541 153,905
Employee benefits 108,679 111,912
Salaries 101,694 78,384
Aircraft overhaul 84,006 59,343
Other 128,433 95,604
---------- --------
$1,007,696 $904,856
- --------------------------------------------------------------------
</TABLE>
NOTE 3: LONG-TERM DEBT
May 31
In thousands
<TABLE>
<CAPTION>
1997 1996
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Unsecured notes payable, interest rates of 6.25% to 10.57%,
due through 2013 $ 928,525 $ 934,181
---------- ----------
Unsecured sinking fund debentures, interest rate of 9.63%,
due through 2020 98,461 98,392
---------- ----------
Commercial paper, effective interest rate of 5.75% 200,904 --
---------- ----------
Capital lease obligations and tax exempt bonds, due
through 2017, interest rates of 6.75% to 8.30% 255,100 255,100
Less bond reserves 11,096 11,096
---------- ----------
244,004 244,004
---------- ----------
Other debt, interest rates of 9.68% to 9.98% 52,726 56,709
---------- ----------
1,524,620 1,333,286
Less current portion 126,666 8,009
---------- ----------
$1,397,954 $1,325,277
- ----------------------------------------------------------------------------------------------------------
</TABLE>
The Company has a revolving credit agreement with domestic and foreign banks
that provides for a commitment of $1,000,000,000 through May 31, 2000, of which
$799,096,000 was available at May 31, 1997. Interest rates on borrowings under
this agreement are generally determined by maturities selected and prevailing
market conditions. The agreement contains certain covenants and restrictions,
none of which are expected to significantly affect operations or the ability to
pay dividends. As of May 31, 1997, approximately $1,259,000,000 was available
for the payment of dividends under the restrictive covenant of the agreement.
Commercial paper borrowings are backed by unused commitments under the revolving
credit agreement and reduce the amount available under the agreement. Borrowings
under this credit agreement and commercial paper borrowings
14
<PAGE> 15
are classified as long-term based on the Company's ability and intent to
refinance such borrowings.
Tax exempt bonds were issued by the Memphis-Shelby County Airport Authority
("MSCAA") and the City of Indianapolis. A lease agreement with the MSCAA and a
loan agreement with the City of Indianapolis covering the facilities and
equipment financed with the bond proceeds obligate the Company to pay rentals
and loan payments, respectively, equal to principal and interest due on the
bonds.
Scheduled annual principal maturities of long-term debt for the five years
subsequent to May 31, 1997, are as follows: $126,700,000 in 1998; $263,300,000
in 1999; $14,900,000 in 2000; $11,300,000 in 2001; and $206,700,000 in 2002.
The Company's long-term debt, exclusive of capital leases, had carrying values
of $1,122,000,000 and $1,130,000,000 at May 31, 1997 and 1996, respectively,
compared with fair values of approximately $1,223,000,000 and $1,245,000,000 at
those dates. The estimated fair values were determined based on quoted market
prices or on the current rates offered for debt with similar terms and
maturities.
NOTE 4: LEASE COMMITMENTS
The Company utilizes certain aircraft, land, facilities and equipment under
capital and operating leases which expire at various dates through 2025. In
addition, supplemental aircraft are leased under agreements which generally
provide for cancellation upon 30 days' notice.
Property and equipment recorded under capital leases at May 31 was as follows:
In thousands
<TABLE>
<CAPTION>
1997 1996
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Package handling and ground support equipment $274,017 $303,756
Facilities 133,435 133,435
Computer and electronic equipment and other 6,520 7,143
-------- --------
413,972 444,334
Less accumulated amortization 276,855 296,317
-------- --------
$137,117 $148,017
- ----------------------------------------------------------------------------------------------------------
</TABLE>
Rent expense under operating leases for the years ended May 31 was as follows:
<TABLE>
<CAPTION>
In thousands
1997 1996 1995
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Minimum rentals $930,977 $820,896 $707,182
Contingent rentals 57,806 61,164 43,005
-------- -------- --------
$988,783 $882,060 $750,187
- ----------------------------------------------------------------------------------------------------------
</TABLE>
Contingent rentals are based on mileage under supplemental aircraft leases.
15
<PAGE> 16
A summary of future minimum lease payments under capital leases and
noncancelable operating leases (principally aircraft and facilities) with an
initial or remaining term in excess of one year at May 31, 1997, follows:
<TABLE>
<CAPTION>
In thousands
Capital Leases Operating Leases
- ----------------------------------------------------------------------------
<S> <C> <C>
1998 $ 15,561 $ 827,483
1999 15,561 838,904
2000 15,561 788,552
2001 15,561 749,014
2002 15,561 685,268
Thereafter 340,524 7,789,492
-------- ----------
$418,329 $11,678,713
</TABLE>
At May 31, 1997, the present value of future minimum lease payments for capital
lease obligations was $199,004,000.
NOTE 5: PREFERRED STOCK
The Certificate of Incorporation authorizes the Board of Directors, at its
discretion, to issue up to 4,000,000 shares of Series Preferred Stock. The stock
is issuable in series which may vary as to certain rights and preferences and
has no par value. As of May 31, 1997, none of these shares had been issued.
NOTE 6: COMMON STOCKHOLDERS' INVESTMENT
On October 1, 1996, the Board of Directors declared a two-for-one stock split in
the form of a 100% stock dividend, which was paid on November 4, 1996, to
stockholders of record on October 15, 1996. All share and per share amounts have
been adjusted to reflect the stock split.
STOCK COMPENSATION PLANS
At May 31, 1997, the Company had options and awards outstanding under nine
stock-based compensation plans consisting of seven fixed stock option plans and
two restricted stock plans, which are described below. As of May 31, 1997, there
were 7,218,819 shares of common stock reserved for issuance under five of these
plans. In 1988, the Board of Directors authorized the purchase of up to
approximately 10,600,000 shares of the Company's common stock on the open
market. As of May 31, 1997, a total of 6,006,517 shares at an average cost of
$22.88 per share had been purchased and reissued under the above-mentioned
plans.
The Company applies Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees," and related Interpretations in accounting for its
plans. Accordingly, no compensation cost was recognized for its fixed stock
option plans. The compensation cost charged against income for its restricted
stock plans was $3,421,000, $2,227,000 and $774,000 for 1997, 1996 and 1995,
respectively.
16
<PAGE> 17
Had compensation cost for the Company's stock-based compensation plans been
determined consistent with SFAS No. 123, "Accounting for Stock-Based
Compensation," the Company's net income and earnings per share would have been
the pro forma amounts indicated below:
In thousands, except per share data
<TABLE>
<CAPTION>
1997 1996
- ------------------------------------------------------------------------
<S> <C> <C>
Net Income:
As reported $361,227 $307,777
Pro forma 352,747 302,504
Earnings per share:
As reported $ 3.12 $ 2.69
Pro forma 3.05 2.65
- ------------------------------------------------------------------------
</TABLE>
The pro forma disclosures, applying SFAS No. 123, are not likely to be
representative of pro forma disclosures for future years. The pro forma effect
is not expected to be fully reflected until 2002 since SFAS No. 123 is
applicable to options granted by the Company after May 31, 1995, and because
options vest over several years and additional grants could be made.
FIXED STOCK OPTION PLANS
Under the provisions of the Company's stock incentive plans, options may be
granted to certain key employees (and, under the 1993 plan, to directors who are
not employees of the Company) to purchase shares of common stock of the Company
at a price not less than its fair market value at the date of grant. Options
granted have a maximum term of 10 years. Vesting requirements are determined at
the discretion of the Compensation Committee of the Board of Directors.
Presently, option vesting periods range from one to seven years. At May 31,
1997, there were 963,692 shares available for future grants under these plans.
Beginning with the grants made on or after June 1, 1995, the fair value of each
option grant was estimated on the grant date using the Black-Scholes
option-pricing model with the following assumptions for each option grant:
<TABLE>
<CAPTION>
1997 1996
- ---------------------------------------------------------------------
<S> <C> <C>
Dividend yield 0% 0%
Expected volatility 25% 25%
Risk-free interest rate 5.82%-6.91% 5.86%-6.43%
Expected lives 2.5-8.5 YEARS 2.5-7.5 years
- ---------------------------------------------------------------------
</TABLE>
17
<PAGE> 18
The following table summarizes information about the Company's fixed stock
option plans for the years ended May 31:
<TABLE>
<CAPTION>
1997 1996 1995
WEIGHTED- Weighted- Weighted-
AVERAGE Average Average
EXERCISE Exercise Exercise
SHARES PRICE Shares Price Shares Price
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at
beginning
of year 6,398,560 $31.44 6,337,730 $27.49 5,751,572 $25.78
Granted 1,188,000 38.84 1,818,000 40.69 1,343,600 32.71
Exercised (1,136,503) 27.30 (1,421,890) 25.41 (577,448) 20.95
Forfeited (268,030) 35.98 (335,280) 32.46 (179,994) 23.18
---------- ---------- ---------
Outstanding at
end of year 6,182,027 33.43 6,398,560 31.44 6,337,730 27.49
- ----------------------------------------------------------------------------------------------------------
Exercisable at
end of year 2,265,149 27.84 2,452,800 25.10 2,956,178 24.60
- ----------------------------------------------------------------------------------------------------------
</TABLE>
The weighted-average fair value of options granted during the year was $16.23
and $13.07 for the years ended May 31, 1997 and 1996, respectively.
The following table summarizes information about fixed stock options outstanding
at May 31, 1997:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
---------------------------------------------- -----------------------------
Weighted-
Average Remaining Weighted- Weighted-
Range of Number Contractual Average Number Average
Exercise Prices Outstanding Life Exercise Price Exercisable Exercise Price
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$15.28 - $22.56 842,955 2.3 years $19.82 818,755 $19.81
23.13 - 43.94 5,339,072 7.5 years 35.58 1,446,394 32.38
--------- ---------
15.28 - 43.94 6,182,027 6.8 years 33.43 2,265,149 27.84
- ----------------------------------------------------------------------------------------------------------
</TABLE>
RESTRICTED STOCK PLANS
Under the terms of the Company's Restricted Stock Plans, shares of the Company's
common stock are awarded to key employees. All restrictions on the shares expire
over periods varying from two to five years from their date of award. Shares are
valued at the market price of the Company's common stock at the date of award.
Compensation expense related to these plans is recorded as a reduction of common
stockholders' investment and is being amortized as restrictions on such shares
expire. The following table summarizes information about restricted stock awards
for the years ended May 31:
<TABLE>
<CAPTION>
1997 1996 1995
WEIGHTED- Weighted- Weighted-
AVERAGE Average Average
FAIR Fair Fair
SHARES VALUE Shares Value Shares Value
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Awarded 201,900 $51.93 350,500 $39.65 -- $ --
Forfeited 18,000 40.03 29,000 38.96 7,500 18.56
- ----------------------------------------------------------------------------------------------------------
</TABLE>
At May 31, 1997, there were 73,100 shares available for future awards under this
plan.
18
<PAGE> 19
NOTE 7: INCOME TAXES
The components of the provision for income taxes for the years ended May 31 were
as follows:
In thousands
<TABLE>
<CAPTION>
1997 1996 1995
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current provision:
Federal $144,647 $142,512 $137,041
Foreign 44,165 37,759 29,787
State 19,827 18,007 23,405
-------- -------- --------
208,639 198,278 190,233
- ----------------------------------------------------------------------------------------------------------
Deferred provision:
Federal 50,717 27,962 24,058
Foreign 2,336 2,351 9,072
State 5,302 3,591 1,133
-------- -------- --------
58,355 33,904 34,263
-------- -------- --------
$266,994 $232,182 $224,496
- ----------------------------------------------------------------------------------------------------------
</TABLE>
The Company's operations included the following income (loss) with respect to
entities in foreign locations for the years ended May 31:
<TABLE>
<CAPTION>
In thousands
1997 1996 1995
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Entities with pre-tax income $ 204,000 $ 153,000 $ 149,000
Entities with pre-tax losses (186,000) (228,000) (173,000)
----------- ----------- -----------
$ 18,000 $ (75,000) $ (24,000)
- ----------------------------------------------------------------------------------------------------------
</TABLE>
Income (losses) from entities which are structured as foreign subsidiaries are
not included in the U.S. consolidated income tax return. Approximately
$78,000,000, $60,000,000 and $29,000,000 of net foreign subsidiary income were
not taxable for federal income tax purposes in 1997, 1996 and 1995,
respectively. Income taxes have been provided for foreign operations based upon
the various tax laws and rates of the countries in which the Company's
operations are conducted. There is no direct relationship between the Company's
overall foreign income tax provision and foreign pre-tax book income due to the
different methods of taxation used by countries throughout the world.
A reconciliation of the statutory federal income tax rate to the Company's
effective income tax rate for the years ended May 31 follows:
<TABLE>
<CAPTION>
1997 1996 1995
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Statutory U.S. income tax rate 35.0% 35.0% 35.0%
Increase resulting from:
Goodwill amortization 0.8 0.9 1.0
Foreign operations 1.1 1.7 0.9
State income taxes, net of federal benefit 2.6 2.6 3.1
Other, net 3.0 2.8 3.0
---- ---- ----
42.5% 43.0% 43.0%
- --------------------------------------------------------------------------------------------------------
</TABLE>
19
<PAGE> 20
The significant components of deferred tax assets and liabilities as of May 31
were as follows:
<TABLE>
<CAPTION>
In thousands
1997 1996
DEFERRED DEFERRED Deferred Deferred
TAX ASSETS TAX LIABILITIES Tax Assets Tax Liabilities
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Depreciation $ -- $409,563 $ -- $324,221
Deferred gains on sales of assets 83,413 -- 81,370 --
Employee benefits 77,590 -- 45,137 --
Self-insurance reserves 162,443 -- 165,020 --
Other 171,356 95,246 151,355 90,089
-------- -------- -------- --------
$494,802 $504,809 $442,882 $414,310
- ----------------------------------------------------------------------------------------------------------
</TABLE>
NOTE 8: PENSION AND PROFIT SHARING PLANS
The Company sponsors pension plans covering substantially all employees. The
largest plan covers U.S. domestic employees age 21 and over, with at least one
year of service and provides benefits based on final average earnings and years
of service. Plan funding is actuarially determined, subject to certain tax law
limitations.
International defined benefit plans provide benefits primarily based on final
earnings and years of service and are funded in accordance with local laws and
income tax regulations.
The following table sets forth the funded status of the plans as of May 31:
<TABLE>
<CAPTION>
In thousands
1997 1996
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Plan assets at fair value $3,275,641 $2,725,896
Actuarial present value of the projected benefit obligation for
service rendered to date 2,911,584 2,571,086
---------- ----------
Plan assets in excess of projected benefit obligation 364,057 154,810
Unrecognized net gains from past experience different from
that assumed and effects of changes in assumptions (281,274) (74,425)
Prior service cost not yet recognized in net periodic cost (2,335) (7,398)
Unrecognized transition amount 3,169 3,239
---------- ----------
Pension asset $ 83,617 $ 76,226
- ----------------------------------------------------------------------------------------------------------
Accumulated benefit obligation $1,892,635 $1,626,877
- ----------------------------------------------------------------------------------------------------------
Vested benefit obligation $1,768,619 $1,538,267
- ----------------------------------------------------------------------------------------------------------
</TABLE>
Net periodic pension cost for the years ended May 31 included the following
components:
<TABLE>
<CAPTION>
In thousands
1997 1996 1995
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost-- benefits earned during the period $ 232,491 $ 184,305 $ 182,617
Interest cost on projected benefit obligation 206,359 165,635 143,408
Actual return on plan assets (423,871) (463,819) (192,939)
Net amortization and deferral 130,529 256,968 19,333
--------- --------- ---------
$ 145,508 $ 143,089 $ 152,419
- ----------------------------------------------------------------------------------------------------------
</TABLE>
The weighted-average discount rate and rate of increase in future compensation
levels used in determining the actuarial present value of the projected benefit
obligation were 8.1% and 5.5%, respectively, in 1997, 8.0% and 5.5%,
respectively, in 1996 and 8.6% and 6.0%, respectively, in 1995. The expected
long-term rate of return on assets was 10.5% in 1997
20
<PAGE> 21
and 9.5% in 1996 and 1995. Plan assets consist primarily of marketable equity
securities and fixed income instruments.
The Company also has a profit sharing plan, which covers substantially all U.S.
domestic employees age 21 and over, with at least one year of service with the
Company as of the contribution date. The plan provides for discretionary
contributions by the Company which are determined annually by the Board of
Directors. The plan also provides for a matching contribution by the Company
equal to 50% of each participant's contribution up to a maximum of $500 per
participant annually. Profit sharing expense was $90,800,000 in 1997,
$80,400,000 in 1996 and $76,600,000 in 1995. The 1997 amount consists of
contributions to the plan of $62,200,000 and cash distributions made outside the
plan directly to employees of $28,600,000.
NOTE 9: POSTRETIREMENT BENEFIT PLANS
The Company offers medical and dental coverage to all eligible U.S. domestic
retirees and their eligible dependents. Vision coverage is provided for
retirees, but not their dependents. Substantially all of the Company's U.S.
domestic employees become eligible for these benefits at age 55 and older, if
they have permanent, continuous service with the Company of at least 10 years
after attainment of age 45 if hired prior to January 1, 1988, or at least 20
years after attainment of age 35, if hired on or after January 1, 1988. Life
insurance benefits are provided only to retirees of the former Tiger
International, Inc. who retired prior to acquisition.
The following table sets forth the accrued postretirement benefit cost as of May
31:
<TABLE>
<CAPTION>
In thousands
1997 1996
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees $ 41,552 $ 39,539
Fully eligible active employees 38,430 31,472
Other active employees, not fully eligible 88,607 80,001
-------- --------
168,589 151,012
Unrecognized net gain 24,089 15,402
-------- --------
$192,678 $166,414
- ----------------------------------------------------------------------------------------------------------
</TABLE>
Net postretirement benefit cost for the years ended May 31 was as follows:
<TABLE>
<CAPTION>
In thousands
1997 1996 1995
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost $16,952 $12,085 $12,870
Interest cost 12,592 11,275 10,617
Amortization of accumulated gains -- (780) --
------- ------- -------
$29,544 $22,580 $23,487
- ---------------------------------------------------------------------------------------------------------
</TABLE>
Future medical benefit costs were estimated to increase at an annual rate of
10.0% during 1998, decreasing to an annual growth rate of 5.75% in 2007 and
thereafter. Future dental benefit costs were estimated to increase at an annual
rate of 8.25% during 1998, decreasing to an annual growth rate of 5.75% in 2008
and thereafter. The Company's cost is capped at 150% of 1993 employer cost and,
therefore, will not be subject to medical and dental trends after the capped
cost is attained, projected to be in 2000. Primarily because of the cap on the
Company's cost, a 1% increase in these annual trend rates would not have a
significant impact on the accumulated postretirement benefit obligation at May
31, 1997, or 1997 benefit expense. The weighted average discount rates used in
estimating the
21
<PAGE> 22
accumulated postretirement obligation were 7.8% and 7.4% at May 31, 1997 and
1996, respectively. The Company pays claims as incurred.
NOTE 10: BUSINESS SEGMENT INFORMATION
The Company is in a single line of business--the worldwide transportation and
distribution of goods and documents. For reporting purposes, operations are
classified into two geographic areas, U.S. domestic and international. Shipments
which either originate in or are destined to locations outside the U.S. are
categorized as international.
A summary of selected financial information for U.S. domestic and international
operations for the years ended May 31 follows:
<TABLE>
<CAPTION>
In thousands
U.S. Total
Domestic International Worldwide
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues:
1997 $8,322,037 $3,197,713 $11,519,750
1996 7,466,311 2,807,308 10,273,619
1995 6,839,418 2,552,655 9,392,073
Operating Income:
1997 $ 558,040 $ 141,002 $ 699,042
1996 542,168 81,656 623,824
1995 465,527 125,617 591,144
Identifiable Assets:
1997 $6,122,885 $1,502,601 $ 7,625,486
1996 5,449,353 1,249,618 6,698,971
1995 5,321,811 1,111,561 6,433,372
- ------------------------------------------------------------------------------------------------------
</TABLE>
Identifiable assets used jointly in U.S. domestic and international operations
(principally aircraft) have been allocated based on estimated usage.
International revenues related to services originating in the U.S. totaled
$1,433,700,000, $1,316,100,000 and $1,201,100,000 for the years ended May 31,
1997, 1996 and 1995, respectively.
NOTE 11: SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest expense and income taxes for the years ended May 31 was
as follows:
<TABLE>
<CAPTION>
In thousands
1997 1996 1995
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest (net of capitalized interest) $ 95,364 $108,052 $138,833
Income taxes 184,668 204,487 185,964
- ----------------------------------------------------------------------------------------------------------
</TABLE>
Non-cash investing and financing activities for the years ended May 31 were as
follows:
<TABLE>
<CAPTION>
In thousands
1997 1996 1995
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Fair value of assets surrendered under exchange
agreements (with two airlines) $62,018 $-- $ --
Fair value of assets acquired under
exchange agreements 46,662 -- --
Fair value of assets receivable under
exchange agreements 15,356 -- --
Liabilities assumed in buyout of a leased
B747 aircraft -- -- 50,300
- ----------------------------------------------------------------------------------------------------------
</TABLE>
22
<PAGE> 23
NOTE 12: COMMITMENTS AND CONTINGENCIES
The Company's annual purchase commitments under various contracts as of May 31,
1997, were as follows:
<TABLE>
<CAPTION>
In thousands
Aircraft-
Aircraft Related(1) Other(2) Total
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1998 $504,400 $276,300 $313,800 $1,094,500
1999 406,100 161,400 57,300 624,800
2000 369,500 364,900 13,300 747,700
2001 278,000 180,500 -- 458,500
2002 38,000 165,300 -- 203,300
- --------------------------------------------------------------------------------------------------------
</TABLE>
(1) Primarily aircraft modifications, rotables, and spare parts and engines.
(2) Facilities, vehicles, computer and other equipment.
At May 31, 1997, the Company was committed to purchase 17 Airbus A300s, two
Airbus A310s, eight MD11s and 50 Ayers ALM 200s to be delivered through 2002.
Deposits and progress payments of $141,090,000 had been made toward these
purchases. The Company may be required to purchase seven additional MD11
aircraft for delivery beginning no later than 2000 under a put option agreement.
During 1997, the Company entered into agreements with two airlines to acquire 53
DC10s, 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 the Company to purchase up to 29 additional DC10s along with
additional aircraft engines and equipment.
The Company has entered into contracts which 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 specified lower (or upper)
limit 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. At May 31, 1997, the Company had contracts
with various financial institutions covering a total notional volume of
396,900,000 gallons (approximately 54% of the Company's annual jet fuel
consumption), with some contracts extending through May 1998. At May 31, 1996,
the Company had similar contracts covering a total notional volume of
365,300,000 gallons (approximately 54% of the Company's annual jet fuel
consumption), with some contracts extending through May 1997. The Company
received $15,162,000 (net of payments) and $1,977,000 under jet fuel contracts
during 1997 and 1996, respectively. Based on current market prices, the fair
value of these contracts was a liability of approximately $418,000 at May 31,
1997, and an asset of approximately $1,370,000 at May 31, 1996.
NOTE 13: LEGAL PROCEEDINGS
Customers of the Company have filed four separate class-action lawsuits against
the Company generally alleging that the Company has breached its contract with
the plaintiffs in transporting packages shipped by them. These lawsuits allege
that the Company continued to collect a 6.25% federal excise tax on the
transportation of property shipped by air after the tax expired on December 31,
1995, until it was reinstated in August of 1996. The plaintiffs seek
certification as a class action, damages, an injunction to enjoin the Company
from continuing to collect the excise tax referred to above, and an award of
attorneys' fees and costs. Three of those cases were consolidated in Minnesota
Federal
23
<PAGE> 24
District Court. That court stayed the consolidated cases in favor of a case
filed in Circuit Court of Greene County, Alabama. The complaint in the Alabama
case also alleges that the Company continued to collect the excise tax on the
transportation of property shipped by air after the tax expired again on
December 31, 1996.
A fifth case, filed in the Supreme Court of New York, New York County,
containing allegations and requests for relief substantially similar to the
other four cases, originally alleged that the Company continued to collect the
excise tax on the transportation of property shipped by air after the tax
expired on December 31, 1996. The New York complaint has been amended to cover
the first expiration period of the tax (December 31, 1995 through August 27,
1996) covered in the original Alabama complaint.
The air transportation excise tax expired on December 31, 1995, was reenacted by
Congress effective August 27, 1996, and expired again on December 31, 1996. The
excise tax was then reenacted by Congress effective March 7, 1997, and is
scheduled to expire on September 30, 1997. The expiration of the tax relieved
the Company of its obligation to pay the tax during the periods of expiration.
Legislation to reenact the tax for a ten-year period as of October 1, 1997, is
currently pending in Congress.
The Company intends to vigorously defend itself in these cases. No amount has
been reserved for these contingencies.
The Company is subject to other legal proceedings and claims which arise in the
ordinary course of its business. In the opinion of management, the aggregate
liability, if any, with respect to these other actions will not materially
adversely affect the financial position or results of operations of the Company.
NOTE 14: UNUSUAL EVENTS
In 1997, operating income included a $15,000,000 pre-tax benefit from the
settlement of a Tennessee personal property tax matter. Also in 1997, the
Company recorded a $17,100,000 non-operating gain from an insurance settlement
for a DC10 aircraft destroyed by fire in September 1996.
The Company received $7,800,000 and $9,700,000 in 1996 and 1995, respectively,
from the bankruptcy estate of a firm engaged by the Company in 1990 to remit
payments of employee withholding taxes. This amount is a partial recovery of a
$32,000,000 loss incurred by the Company in 1991 that resulted from the firm's
failure to remit certain of these tax payments to appropriate authorities. The
Company has received $17,900,000 from the bankruptcy estate of the firm. All
major issues pertaining to the bankruptcy have been resolved, and any additional
amounts the Company may receive are expected to be insignificant.
In January 1995, the Company sold two dedicated warehousing and contract
distribution companies in the United Kingdom. A gain of $35,700,000 was recorded
from the sale.
24
<PAGE> 25
NOTE 15: SUMMARY OF QUARTERLY OPERATING RESULTS
(UNAUDITED)
<TABLE>
<CAPTION>
In thousands, except earnings per share
First Second Third Fourth
Quarter Quarter Quarter Quarter
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1997
Revenues $2,692,312 $2,852,369 $2,906,819 $3,068,250
Operating income 129,918 184,927 132,927 251,270
Income before income taxes 107,739 180,378 109,544 230,560
Net income 61,950 103,717 62,988 132,572
Earnings per share $ .54 $ .90 $ .54 $ 1.14
Average shares outstanding 114,934 115,132 115,849 116,649
- ----------------------------------------------------------------------------------------------------------
1996
Revenues $2,453,394 $2,547,012 $2,535,470 $2,737,743
Operating income 149,230 170,905 77,943 225,746
Income before income taxes 129,886 154,952 52,637 202,484
Net income 75,334 89,871 27,156 115,416
Earnings per share $ .66 $ .78 $ .24 $ 1.01
Average shares outstanding 113,376 114,520 114,515 114,691
- ----------------------------------------------------------------------------------------------------------
</TABLE>
25
<PAGE> 26
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
Federal Express Corporation and Subsidiaries
To the Stockholders of Federal Express Corporation:
We have audited the accompanying consolidated balance sheets of Federal Express
Corporation (a Delaware corporation) and subsidiaries as of May 31, 1997 and
1996, and the related consolidated statements of income, common stockholders'
investment and cash flows for each of the three years in the period ended May
31, 1997. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Federal Express Corporation and
subsidiaries as of May 31, 1997 and 1996, and the results of their operations
and their cash flows for each of the three years in the period ended May 31,
1997, in conformity with generally accepted accounting principles.
/s/ ARTHUR ANDERSEN, LLP
- ------------------------
Arthur Andersen, LLP
Memphis, Tennessee
June 30, 1997
26
<PAGE> 27
SELECTED CONSOLIDATED FINANCIAL DATA
Years ended May 31
In thousands, except per share amounts
and Other Operating Data
<TABLE>
<CAPTION>
1997 1996 1995
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING RESULTS
Revenues $11,519,750 $10,273,619 $9,392,073
Operating income 699,042 623,824 591,144
Income (loss) before income taxes 628,221 539,959 522,084
Income (loss) from continuing operations 361,227 307,777 297,588
Net income (loss) $ 361,227 $ 307,777 $ 297,588
PER SHARE DATA
Earnings (loss) per share:
Before cumulative effect of changes in
accounting principles $ 3.12 $ 2.69 $ 2.63
Cumulative effect of changes in
accounting principles -- -- --
Net earnings (loss) per share $ 3.12 $ 2.69 $ 2.63
Average shares outstanding 115,641 114,276 112,987
Cash dividends -- -- --
FINANCIAL POSITION
Property and equipment, net $ 4,622,080 $ 4,116,601 $3,715,244
Total assets 7,625,486 6,698,971 6,433,372
Long-term debt 1,397,954 1,325,277 1,324,711
Common stockholders' investment 2,962,514 2,576,139 2,245,569
OTHER OPERATING DATA
Express package:
Average daily package volume 2,715,894 2,437,662 2,247,594
Average pounds per package 7.2 6.4 6.3
Average revenue per pound* $ 2.11 $ 2.31 $ 2.31
Average revenue per package* $ 15.11 $ 14.87 $ 14.62
Airfreight:
Average daily pounds 2,542,226 2,144,225 2,153,041
Average revenue per pound $ .94 $ 1.01 $ 1.06
Operating weekdays 254 256 255
Aircraft fleet:
Airbus A300-600 19 16 9
Airbus A310-200 35 25 15
Boeing 747-100 -- -- --
Boeing 747-200 -- 4 5
McDonnell Douglas MD11 23 18 13
McDonnell Douglas DC10-10 26 13 13
McDonnell Douglas DC10-30 22 22 22
McDonnell Douglas DC8 -- -- --
Boeing 727-100 68 68 68
Boeing 727-200 95 95 90
Cessna 208A 10 10 10
Cessna 208B 254 254 219
Fokker F27 32 32 32
Vehicle fleet 38,500 36,900 35,900
Average number of employees (based on a
standard full-time workweek) 107,827 99,999 94,201
- ----------------------------------------------------------------------------------------------------------
</TABLE>
27
<PAGE> 28
*Beginning in 1995, certain service fee revenues were classified as
package-related revenue. Data for prior periods has been restated where
applicable to conform to this presentation.
28
<PAGE> 29
<TABLE>
<CAPTION>
Federal Express Corporation and Subsidiaries
1994 1993 1992 1991 1990 1989 1988
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$8,479,456 $7,808,043 $ 7,550,060 $7,688,296 $7,015,069 $5,166,967 $3,882,817
530,632 377,173 22,967 252,126 387,355 414,787 379,452
378,462 203,576 (146,828) 40,942 218,423 298,332 302,328
204,370 109,809 (113,782) 5,898 115,764 166,451 187,716
$ 204,370 $ 53,866 $ (113,782) $ 5,898 $ 115,764 $ 184,551 $ 187,716
$ 1.82 $ 1.00 $ (1.05) $ .06 $ 1.09 $ 1.59 $ 1.78
-- (.51) -- -- -- 18 --
$ 1.82 $ .49 $ (1.05) $ .06 $ 1.09 $ 1.77 $ 1.78
112,024 109,437 107,923 106,701 106,323 104,544 105,339
-- -- -- -- -- -- --
$3,449,093 $3,476,268 $ 3,411,297 $3,624,026 $3,566,321 $3,431,814 $2,231,875
5,992,498 5,793,064 5,463,186 5,672,461 5,675,073 5,293,422 3,008,549
1,632,202 1,882,279 1,797,844 1,826,781 2,148,142 2,138,940 838,730
1,924,705 1,671,381 1,579,722 1,668,620 1,649,187 1,493,524 1,330,679
1,925,105 1,710,561 1,472,642 1,310,890 1,234,174 1,059,882 877,543
6.0 5.8 5.7 5.6 5.4 5.4 5.3
$ 2.51 $ 2.62 $ 2.90 $ 3.08 $ 3.13 $ 3.04 $ 3.10
$ 15.12 $ 15.30 $ 16.38 $ 17.33 $ 16.76 $ 16.28 $ 16.32
1,844,270 2,050,033 2,258,303 2,650,204 3,148,290 4,019,353 --
$ 1.06 $ 1.09 $ 1.22 $ 1.20 $ 1.13 $ 1.06 --
257 255 254 255 255 255 257
2 -- -- -- -- -- --
-- -- -- -- -- -- --
-- -- 4 8 9 9 --
6 8 9 10 10 12 --
13 8 4 1 -- -- --
11 11 11 11 10 8 8
19 19 17 16 16 16 13
-- -- -- -- 6 6 --
69 80 85 92 89 80 47
90 87 66 57 41 26 21
10 10 10 10 37 38 38
206 206 206 183 147 109 71
32 32 32 26 19 7 5
30,900 28,100 30,400 32,800 31,000 28,900 21,000
88,502 84,104 84,162 81,711 75,102 58,136 48,556
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
29
<PAGE> 30
BOARD OF DIRECTORS
ROBERT H. ALLEN (2)
Private Investor and Managing Partner
Challenge Investment Partners
Investment firm
HOWARD H. BAKER, JR. (1)
Partner
Baker, Donelson, Bearman & Caldwell
Law firm
ROBERT L. COX (1)
Partner
Waring Cox
Law firm
RALPH D. DENUNZIO (2)
President
Harbor Point Associates, Inc.
Private investment and consulting firm
JUDITH L. ESTRIN (1)
President and Chief Executive Officer
Precept Software, Inc.
Computer software company
PHILIP GREER (1*)
Senior Managing Principal
Weiss, Peck & Greer, L.L.C.
Investment management firm
J.R. HYDE, III (2)
President
Pittco, Inc.
Investment management firm
Retired Chairman and
Chief Executive Officer
AutoZone, Inc.
Auto parts retail chain
CHARLES T. MANATT (2)
Senior Partner
Manatt, Phelps & Phillips
Law firm
GEORGE J. MITCHELL (1)
Special Counsel
Verner, Liipfert, Bernhard,
McPherson and Hand
Law firm
30
<PAGE> 31
JACKSON W. SMART, JR. (2*)
Chairman and Chief Executive Officer
MSP Communications, Inc.
Radio broadcasting company
FREDERICK W. SMITH
Chairman, President and
Chief Executive Officer
Federal Express Corporation
DR. JOSHUA I. SMITH (1)
Chairman, President and
Chief Executive Officer
The MAXIMA Corporation
Information and data processing firm
PAUL S. WALSH (2)
Chairman, President and
Chief Executive Officer
The Pillsbury Company
Consumer food and beverage company
PETER S. WILLMOTT (1)
President and Chief Executive Officer
Zenith Electronics Corporation
Electronics manufacturing company
(1) Audit Committee
(2) Compensation Committee
(*) Committee Chairman
31
<PAGE> 32
SENIOR OFFICERS
Federal Express Corporation and Subsidiaries
FREDERICK W. SMITH
Chairman, President and
Chief Executive Officer
ALAN B. GRAF, JR.
Executive Vice President and
Chief Financial Officer
KENNETH R. MASTERSON
Executive Vice President,
General Counsel and Secretary
THEODORE L. WEISE
Executive Vice President
Worldwide Operations
DAVID J. BRONCZEK
Senior Vice President
Europe, Middle East and Africa
G. EDMOND CLARK
Senior Vice President
Operations Support and Engineering
MICHAEL L. DUCKER
Senior Vice President
Asia and Pacific
LEONARD B. FEILER
Senior Vice President
Central Support Services
WILLIAM G. FRAINE
Senior Vice President
Worldwide Sales
T. MICHAEL GLENN
Senior Vice President
Marketing, Customer Service and
Corporate Communications
DENNIS H. JONES
Senior Vice President and
Chief Information Officer
JOSEPH C. MCCARTY, III
Senior Vice President
Latin America and Caribbean
32
<PAGE> 33
GILBERT D. MOOK
Senior Vice President
Air Operations
JAMES A. PERKINS
Senior Vice President and
Chief Personnel Officer
DAVID F. REBHOLZ
Senior Vice President
United States and Canada
TRACY G. SCHMIDT
Senior Vice President
Air Ground Terminals and Transportation
LAURIE A. TUCKER
Senior Vice President
Logistics, Electronic Commerce
and Catalog
MICHAEL W. HILLARD
Vice President, Controller and
Chief Accounting Officer
33
<PAGE> 34
CORPORATE INFORMATION
STOCK LISTING: The Company's common stock is listed on The New York Stock
Exchange under the ticker symbol FDX.
STOCKHOLDERS: At July 15, 1997, there were 9,565 stockholders of record.
MARKET INFORMATION: Following are high and low closing prices, by quarter, for
Federal Express Corporation common stock in fiscal 1997 and 1996. No cash
dividends have been declared.
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FY 1997
High $41 9/16 $44 7/8 $53 1/8 $57 1/8
Low 37 1/16 36 1/4 40 1/8 50 3/8
- -----------------------------------------------------------------------------------------------------------
FY 1996
High $37 11/16 $43 $41 5/16 $41 1/4
Low 29 1/4 39 13/16 33 7/16 34 7/16
- -----------------------------------------------------------------------------------------------------------
</TABLE>
CORPORATE HEADQUARTERS: 2005 Corporate Avenue, Memphis, Tennessee 38132, (901)
369-3600.
ANNUAL MEETING: The annual meeting of stockholders will be held at the Memphis
Marriott, 2625 Thousand Oaks Boulevard, Memphis, Tennessee, on Monday, September
29, 1997, at 10:00 a.m., CDT.
INQUIRIES: For financial information, contact Rebecca M. Halvorson, Managing
Director, Investor Relations and Corporate Contributions, Federal Express
Corporation, Box 727, Dept. 1854, Memphis, Tennessee 38194, (901) 395-3478. For
general information, contact Gregory M. Rossiter, Managing Director, Public
Relations, Federal Express Corporation, Box 727, Dept. 1850, Memphis, Tennessee
38194, (901) 395-3460.
FORM 10-K: A copy of the Company's Annual Report on Form 10-K (excluding
exhibits), filed with the Securities and Exchange Commission (SEC) is available
free of charge. You will be mailed a copy upon request to Susan J. McDonough,
Manager, Investor Relations, Federal Express Corporation, Box 727, Dept. 1854,
Memphis, Tennessee 38194, (901) 395-3478. Company documents filed electronically
with the SEC can also be found on the Internet at the SEC's Web site
(www.sec.gov).
AUDITORS: Arthur Andersen LLP, Memphis, Tennessee.
REGISTRAR AND TRANSFER AGENT: First Chicago Trust Company of New York,
Shareholder Services, P.O. Box 2500, Jersey City, New Jersey 07303-2500, (800)
446-2617 / John H. Ruocco (312) 407-5153.
EQUAL EMPLOYMENT OPPORTUNITY: Federal Express Corporation is firmly committed to
afford Equal Employment Opportunity to all individuals regardless of age, sex,
race, color, religion, national origin, citizenship, disability, or status as a
Vietnam era or special disabled veteran. We are strongly bound to this
commitment because adherence to Equal Employment Opportunity principles is the
only acceptable way of life. We adhere to those principles not just because
they're the law, but because it's the right thing to do.
34
<PAGE> 35
SERVICE MARKS: Federal Express,(R) FedEx,(R) the FedEx(R) logo, The World On
Time,(R) The Way the World Works,(R) 1-800-Go-FedEx,(R) FedEx SuperTracker,(R)
FedEx AsiaOne,(R) FedEx SameDay,(R) FedEx International Priority,(R) FedEx
Ship,(R) FedEx PowerShip,(R) FedEx ShipSite,(R) FedEx World Service Centers,(R)
FedEx First Overnight,(R) FedEx International Express Freight,(R) FedEx Standard
Overnight(R) and FedEx EXPRESSfreighter(R) are registered service marks of
Federal Express Corporation. Reg. U.S. Pat. & Tm. Off. and in certain other
countries. FedEx interNetShip(sm) FedEx International First(sm) FedEx Virtual
Order(sm) and FedEx International Airport-to-Airport(sm) are service marks of
Federal Express Corporation.
35
<PAGE> 1
EXHIBIT 21
FEDERAL EXPRESS CORPORATION
<TABLE>
<CAPTION>
JURISDICTION OF
ORGANIZATION OR
REGISTRATION STATUS
--------------- ------
<S> <C> <C> <C>
I. Federal Express Aviation Services, Incorporated Delaware Active
A. Federal Express Aviation Services International, Ltd. Delaware Active
II. Federal Express Canada Ltd. Canada Active
III. Federal Express International, Inc. Delaware Active
A. Dencom Investments Limited Northern Ireland Inactive
1. Dencom Freight Holdings Limited Northern Ireland Inactive
a. F.E.D.S. (Ireland) Limited Ireland Inactive
b. Federal Express (N.I.) Limited Northern Ireland Inactive
c. Fedex (Ireland) Limited Ireland Inactive
B. Federal Express (Australia) PTY Ltd. Australia Active
C. Federal Express Europe, Inc. Delaware Active
1. Federal Express Europe, Inc. & Co., V.O.F./S.N.C. Belgium Active
2. Federal Express European Services, Inc. Delaware Active
3. PIK Holdings Limited United Kingdom Active
D. Federal Express Europlex, Inc. Delaware Inactive
E. Federal Express Holdings, S.A. Delaware Active
1. Federal Express (Antigua) Limited Antigua Active
2. Federal Express (Antilles Francaises) S.A.R.L. French West Indies Active
3. Federal Express (Barbados) Limited Barbados Active
4. Federal Express (Bermuda) Limited Bermuda Active
5. Federal Express Cayman Limited Cayman Islands Active
6. Federal Express (Dominicana) S.A. Dominican Republic Active
a. Inversiones Geminis, S.A. Dominican Republic Active
b. Inversiones Piscis, S.A. Dominican Republic Active
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
JURISDICTION OF
ORGANIZATION OR
REGISTRATION STATUS
------------ ------
<S> <C> <C> <C>
c. Inversiones Sagitario, S.A. Dominican Republic Active
7. Federal Express Entregas Rapidas, Ltd. Brazil Inactive
8. Federal Express (Grenada) Limited Grenada Active
9. Federal Express (Haiti) S.A. Haiti Inactive
10. Federal Express Holdings (Mexico) y Compania Mexico Active
S.N.C. de C.V.
11. Federal Express (Jamaica) Limited Jamaica Active
12. Federal Express (St. Kitts) Limited St. Kitts Active
13. Federal Express (St. Lucia) Limited St. Lucia Active
14. Federal Express (St. Maarten) N.V. Netherland Antilles Active
a. Federal Express (Aruba) N.V. Netherland Antilles Active
15. Federal Express (Turks & Caicos) Limited Turks & Caicos Active
Islands
16. Federal Express Virgin Islands, Inc. U.S. Virgin Islands Active
17. FedEx (Bahamas) Limited Bahamas Active
F. Federal Express (Hong Kong) Limited Hong Kong Liquidation
G. Federal Express International (France) SNC France Active
H. Federal Express International Y Compania S.N.C. de Mexico Active
C.V.
I. Federal Express Italy Inc. Delaware Inactive
1. Federal Express Italia SpA Italy Liquidation
J. Federal Express (Japan) K.K. Japan Active
K. Federal Express Limited United Kingdom Liquidation
1. Federal Express Finance P.L.C. United Kingdom Inactive
2. Federal Express International Limited United Kingdom Inactive
3. Federal Express Parcel Services Limited United Kingdom Inactive
</TABLE>
2
<PAGE> 3
<TABLE>
<CAPTION>
JURISDICTION OF
ORGANIZATION OR
REGISTRATION STATUS
------------ ------
<S> <C> <C> <C>
4. Federal Express (U.K.) Limited United Kingdom Active
a. Federal Express (U.K.) Pension Trustees Ltd. United Kingdom Active
5. Winchmore Developments Ltd. United Kingdom Inactive
a. Concorde Advertising Limited United Kingdom Inactive
L. Federal Express Luxembourg, Inc. Delaware Active
M. Federal Express Pacific, Inc. Delaware Active
1. Federal Express Services (M) Sdn. Bhd. Malaysia Active
2. The Flying Tiger Line, Limited Hong Kong Inactive
3. Udara Express Courier Services Sdn. Bhd. Malaysia Active
N. Federal Express (Singapore) PTE, LTD. Singapore Active
O. Federal Express (Thailand) Limited Thailand Inactive
P. FedEx (Mauritius) Ltd. Mauritius Active
Q. Fedex (N. I.) Limited Northern Ireland Inactive
IV. Federal Express Leasing Corporation Delaware Active
V. Fedex Customs Brokerage Corporation Delaware Active
VI. Fedex Foreign Sales Corporation U. S. Virgin Islands Inactive
VII. Fedex FSC Corporation Barbados Active
VIII. Fedex International Transmission Corporation Delaware Active
IX. Fedex Partners, Inc. Delaware Active
X. Flying Tigers Limited New Zealand Inactive
XI. The Flying Tiger Line (NZ) Limited New Zealand Inactive
XII. Tiger International Insurance Ltd. Cayman Islands Active
</TABLE>
3
<PAGE> 1
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the
"Corporation"), a Delaware corporation, does hereby constitute and appoint
Frederick W. Smith, Alan B. Graf, Jr. and Michael W. Hillard, and each of them,
with full power of substitution and resubstitution, his true and lawful
attorneys-in-fact and agents, with full power and authority to execute in the
name and on behalf of the undersigned as such Director, the Corporation's Annual
Report on Form 10-K with respect to the Corporation's fiscal year ended May 31,
1997, and any and all amendments thereto; and hereby ratifies and confirms all
that said attorneys-in-fact and agents, or any of them, or their or his
substitute or substitutes may lawfully do or cause to be done by virtue of these
presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 6th day of June,
1997.
/s/ROBERT H. ALLEN
-------------------------
Robert H. Allen
STATE OF Texas
COUNTY OF Harris
I, Earlene L. Barbeau, a Notary Public in and for said County, in the
aforesaid State, do hereby certify that Robert H. Allen, personally known to me
to be the same person whose name is subscribed to the foregoing instrument,
appeared before me this day in person, and acknowledged that he signed and
delivered the said instrument as his free and voluntary act, for the uses and
purposes therein set forth.
/s/EARLENE L. BARBEAU
------------------------
Notary Public
My Commission Expires:
April 15, 2001
<PAGE> 2
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the
"Corporation"), a Delaware corporation, does hereby constitute and appoint
Frederick W. Smith, Alan B. Graf, Jr. and Michael W. Hillard, and each of them,
with full power of substitution and resubstitution, his true and lawful
attorneys-in-fact and agents, with full power and authority to execute in the
name and on behalf of the undersigned as such Director, the Corporation's Annual
Report on Form 10-K with respect to the Corporation's fiscal year ended May 31,
1997, and any and all amendments thereto; and hereby ratifies and confirms all
that said attorneys-in-fact and agents, or any of them, or their or his
substitute or substitutes may lawfully do or cause to be done by virtue of these
presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 20th day of June,
1997.
/s/HOWARD H. BAKER, JR.
-----------------------------
Howard H. Baker, Jr.
STATE OF Tennessee
COUNTY OF Knox
I, Betty B. Lowe, a Notary Public in and for said County, in the
aforesaid State, do hereby certify that Howard H. Baker, Jr., personally known
to me to be the same person whose name is subscribed to the foregoing
instrument, appeared before me this day in person, and acknowledged that he
signed and delivered the said instrument as his free and voluntary act, for the
uses and purposes therein set forth.
/s/BETTY B. LOWE
-----------------------
Notary Public
My Commission Expires:
8-27-97
<PAGE> 3
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the
"Corporation"), a Delaware corporation, does hereby constitute and appoint
Frederick W. Smith, Alan B. Graf, Jr. and Michael W. Hillard, and each of them,
with full power of substitution and resubstitution, his true and lawful
attorneys-in-fact and agents, with full power and authority to execute in the
name and on behalf of the undersigned as such Director, the Corporation's Annual
Report on Form 10-K with respect to the Corporation's fiscal year ended May 31,
1997, and any and all amendments thereto; and hereby ratifies and confirms all
that said attorneys-in-fact and agents, or any of them, or their or his
substitute or substitutes may lawfully do or cause to be done by virtue of these
presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 2nd day of June,
1997.
/s/PAUL S. WALSH
---------------------------
Paul S. Walsh
STATE OF Minnesota
COUNTY OF Hennepin
I, Eva L. Fix, a Notary Public in and for said County, in the aforesaid
State, do hereby certify that Paul S. Walsh, personally known to me to be the
same person whose name is subscribed to the foregoing instrument, appeared
before me this day in person, and acknowledged that he signed and delivered the
said instrument as his free and voluntary act, for the uses and purposes therein
set forth.
/s/EVA L. FIX
-------------------------
Notary Public
My Commission Expires:
Oct. 5, 1998
<PAGE> 4
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the
"Corporation"), a Delaware corporation, does hereby constitute and appoint
Frederick W. Smith, Alan B. Graf, Jr. and Michael W. Hillard, and each of them,
with full power of substitution and resubstitution, his true and lawful
attorneys-in-fact and agents, with full power and authority to execute in the
name and on behalf of the undersigned as such Director, the Corporation's Annual
Report on Form 10-K with respect to the Corporation's fiscal year ended May 31,
1997, and any and all amendments thereto; and hereby ratifies and confirms all
that said attorneys-in-fact and agents, or any of them, or their or his
substitute or substitutes may lawfully do or cause to be done by virtue of these
presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 2nd day of June,
1997.
/s/ROBERT L. COX
--------------------------
Robert L. Cox
STATE OF Tennessee
COUNTY OF Shelby
I, Lillian W. Powers, a Notary Public in and for said County, in the
aforesaid State, do hereby certify that Robert L. Cox, personally known to me to
be the same person whose name is subscribed to the foregoing instrument,
appeared before me this day in person, and acknowledged that he signed and
delivered the said instrument as his free and voluntary act, for the uses and
purposes therein set forth.
/s/LILLIAN W. POWERS
--------------------------
Notary Public
My Commission Expires:
Feb. 27, 2001
<PAGE> 5
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the
"Corporation"), a Delaware corporation, does hereby constitute and appoint
Frederick W. Smith, Alan B. Graf, Jr. and Michael W. Hillard, and each of them,
with full power of substitution and resubstitution, his true and lawful
attorneys-in-fact and agents, with full power and authority to execute in the
name and on behalf of the undersigned as such Director, the Corporation's Annual
Report on Form 10-K with respect to the Corporation's fiscal year ended May 31,
1997, and any and all amendments thereto; and hereby ratifies and confirms all
that said attorneys-in-fact and agents, or any of them, or their or his
substitute or substitutes may lawfully do or cause to be done by virtue of these
presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 11th day of June,
1997.
/s/RALPH D. DENUNZIO
---------------------------
Ralph D. DeNunzio
STATE OF NEW YORK
COUNTY OF NEW YORK
I, Pauline E. Kalahele, a Notary Public in and for said County, in the
aforesaid State, do hereby certify that Ralph D. DeNunzio, personally known to
me to be the same person whose name is subscribed to the foregoing instrument,
appeared before me this day in person, and acknowledged that he signed and
delivered the said instrument as his free and voluntary act, for the uses and
purposes therein set forth.
/s/PAULINE E. KALAHELE
--------------------------
Notary Public
My Commission Expires:
February 28, 1998
<PAGE> 6
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the
"Corporation"), a Delaware corporation, does hereby constitute and appoint
Frederick W. Smith, Alan B. Graf, Jr. and Michael W. Hillard, and each of them,
with full power of substitution and resubstitution, her true and lawful
attorneys-in-fact and agents, with full power and authority to execute in the
name and on behalf of the undersigned as such Director, the Corporation's Annual
Report on Form 10-K with respect to the Corporation's fiscal year ended May 31,
1997, and any and all amendments thereto; and hereby ratifies and confirms all
that said attorneys-in-fact and agents, or any of them, or their or his
substitute or substitutes may lawfully do or cause to be done by virtue of these
presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 19th day of June,
1997.
/s/JUDITH L. ESTRIN
-----------------------------
Judith L. Estrin
STATE OF CALIFORNIA
COUNTY OF SANTA CLARA
On 6/19/97 before me, ShaRon Lewis, Notary Public, personally appeared
Judith L. Estrin, who personally proved to me on the basis of satisfactory
evidence to be the person whose name is subscribed to the within instrument and
acknowledged to me that she executed the same in her authorized capacity, and
that by her signature on the instrument the person, or the entity upon behalf of
which the person acted, executed the instrument.
WITNESS my hand and official seal.
/s/SHARON LEWIS
--------------------------------
ShaRon Lewis, Notary Public
My Commission Expires:
Nov. 13, 1998
<PAGE> 7
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the
"Corporation"), a Delaware corporation, does hereby constitute and appoint
Frederick W. Smith, Alan B. Graf, Jr. and Michael W. Hillard, and each of them,
with full power of substitution and resubstitution, his true and lawful
attorneys-in-fact and agents, with full power and authority to execute in the
name and on behalf of the undersigned as such Director, the Corporation's Annual
Report on Form 10-K with respect to the Corporation's fiscal year ended May 31,
1997, and any and all amendments thereto; and hereby ratifies and confirms all
that said attorneys-in-fact and agents, or any of them, or their or his
substitute or substitutes may lawfully do or cause to be done by virtue of these
presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 2nd day of June,
1997.
/s/PHILIP GREER
-----------------------------
Philip Greer
STATE OF New York
COUNTY OF New York
I, Kathleen M. Rode, a Notary Public in and for said County, in the
aforesaid State, do hereby certify that Philip Greer, personally known to me to
be the same person whose name is subscribed to the foregoing instrument,
appeared before me this day in person, and acknowledged that he signed and
delivered the said instrument as his free and voluntary act, for the uses and
purposes therein set forth.
/s/KATHLEEN M. RODE
---------------------------
Notary Public
My Commission Expires:
5/31/98
<PAGE> 8
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the
"Corporation"), a Delaware corporation, does hereby constitute and appoint
Frederick W. Smith, Alan B. Graf, Jr. and Michael W. Hillard, and each of them,
with full power of substitution and resubstitution, his true and lawful
attorneys-in-fact and agents, with full power and authority to execute in the
name and on behalf of the undersigned as such Director, the Corporation's Annual
Report on Form 10-K with respect to the Corporation's fiscal year ended May 31,
1997, and any and all amendments thereto; and hereby ratifies and confirms all
that said attorneys-in-fact and agents, or any of them, or their or his
substitute or substitutes may lawfully do or cause to be done by virtue of these
presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 12th day of June,
1997.
/s/J. R. HYDE, III
-------------------------
J. R. Hyde, III
STATE OF Tennessee
COUNTY OF Shelby
I, Nancy C. Phillips, a Notary Public in and for said County, in the
aforesaid State, do hereby certify that J. R. Hyde, III, personally known to me
to be the same person whose name is subscribed to the foregoing instrument,
appeared before me this day in person, and acknowledged that he signed and
delivered the said instrument as his free and voluntary act, for the uses and
purposes therein set forth.
/s/NANCY C. PHILLIPS
------------------------------
Notary Public
My Commission Expires:
Jan. 12, 2000
<PAGE> 9
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the
"Corporation"), a Delaware corporation, does hereby constitute and appoint
Frederick W. Smith, Alan B. Graf, Jr. and Michael W. Hillard, and each of them,
with full power of substitution and resubstitution, his true and lawful
attorneys-in-fact and agents, with full power and authority to execute in the
name and on behalf of the undersigned as such Director, the Corporation's Annual
Report on Form 10-K with respect to the Corporation's fiscal year ended May 31,
1997, and any and all amendments thereto; and hereby ratifies and confirms all
that said attorneys-in-fact and agents, or any of them, or their or his
substitute or substitutes may lawfully do or cause to be done by virtue of these
presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 17th day of June,
1997.
/s/CHARLES T. MANATT
---------------------------
Charles T. Manatt
WASHINGTON
DISTRICT OF COLUMBIA
I, Joseph Chulew, a Notary Public in and for said County, in the
aforesaid State, do hereby certify that Charles T. Manatt, personally known to
me to be the same person whose name is subscribed to the foregoing instrument,
appeared before me this day in person, and acknowledged that he signed and
delivered the said instrument as his free and voluntary act, for the uses and
purposes therein set forth.
/s/JOSEPH CHULEW
---------------------------
Notary Public
My Commission Expires:
3-31-00
<PAGE> 10
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the
"Corporation"), a Delaware corporation, does hereby constitute and appoint
Frederick W. Smith, Alan B. Graf, Jr. and Michael W. Hillard, and each of them,
with full power of substitution and resubstitution, his true and lawful
attorneys-in-fact and agents, with full power and authority to execute in the
name and on behalf of the undersigned as such Director, the Corporation's Annual
Report on Form 10-K with respect to the Corporation's fiscal year ended May 31,
1997, and any and all amendments thereto; and hereby ratifies and confirms all
that said attorneys-in-fact and agents, or any of them, or their or his
substitute or substitutes may lawfully do or cause to be done by virtue of these
presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 9th day of June,
1997.
/s/GEORGE J. MITCHELL
---------------------------
George J. Mitchell
WASHINGTON
DISTRICT OF COLUMBIA
I, Ione M. Hartl, a Notary Public in and for said County, in the
aforesaid State, do hereby certify that George J. Mitchell, personally known to
me to be the same person whose name is subscribed to the foregoing instrument,
appeared before me this day in person, and acknowledged that he signed and
delivered the said instrument as his free and voluntary act, for the uses and
purposes therein set forth.
/s/IONE M. HARTL
---------------------------
Notary Public
My Commission Expires:
8/14/00
<PAGE> 11
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the
"Corporation"), a Delaware corporation, does hereby constitute and appoint
Frederick W. Smith, Alan B. Graf, Jr. and Michael W. Hillard, and each of them,
with full power of substitution and resubstitution, his true and lawful
attorneys-in-fact and agents, with full power and authority to execute in the
name and on behalf of the undersigned as such Director, the Corporation's Annual
Report on Form 10-K with respect to the Corporation's fiscal year ended May 31,
1997, and any and all amendments thereto; and hereby ratifies and confirms all
that said attorneys-in-fact and agents, or any of them, or their or his
substitute or substitutes may lawfully do or cause to be done by virtue of these
presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 16th day of June,
1997.
/s/JACKSON W. SMART, JR.
-----------------------------
Jackson W. Smart, Jr.
STATE OF Illinois
COUNTY OF Cook
I, Nicole Renea Roberts, a Notary Public in and for said County, in the
aforesaid State, do hereby certify that Jackson W. Smart, Jr., personally known
to me to be the same person whose name is subscribed to the foregoing
instrument, appeared before me this day in person, and acknowledged that he
signed and delivered the said instrument as his free and voluntary act, for the
uses and purposes therein set forth.
/s/NICOLE RENEA ROBERTS
------------------------------
Notary Public
My Commission Expires:
01/13/2001
<PAGE> 12
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the
"Corporation"), a Delaware corporation, does hereby constitute and appoint
Frederick W. Smith, Alan B. Graf, Jr. and Michael W. Hillard, and each of them,
with full power of substitution and resubstitution, his true and lawful
attorneys-in-fact and agents, with full power and authority to execute in the
name and on behalf of the undersigned as such Director, the Corporation's Annual
Report on Form 10-K with respect to the Corporation's fiscal year ended May 31,
1997, and any and all amendments thereto; and hereby ratifies and confirms all
that said attorneys-in-fact and agents, or any of them, or their or his
substitute or substitutes may lawfully do or cause to be done by virtue of these
presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 23rd day of June,
1997.
/s/JOSHUA I. SMITH
----------------------------
Joshua I. Smith
STATE OF Maryland
COUNTY OF Prince George's
I, Bertha A. Davis, a Notary Public in and for said County, in the
aforesaid State, do hereby certify that Joshua I. Smith, personally known to me
to be the same person whose name is subscribed to the foregoing instrument,
appeared before me this day in person, and acknowledged that he signed and
delivered the said instrument as his free and voluntary act, for the uses and
purposes therein set forth.
/s/BERTHA A. DAVIS
--------------------------
Notary Public
My Commission Expires:
5-1-00
<PAGE> 13
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the
"Corporation"), a Delaware corporation, does hereby constitute and appoint
Frederick W. Smith, Alan B. Graf, Jr. and Michael W. Hillard, and each of them,
with full power of substitution and resubstitution, his true and lawful
attorneys-in-fact and agents, with full power and authority to execute in the
name and on behalf of the undersigned as such Director, the Corporation's Annual
Report on Form 10-K with respect to the Corporation's fiscal year ended May 31,
1997, and any and all amendments thereto; and hereby ratifies and confirms all
that said attorneys-in-fact and agents, or any of them, or their or his
substitute or substitutes may lawfully do or cause to be done by virtue of these
presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 17th day of June,
1997.
/s/PETER S. WILLMOTT
-----------------------------
Peter S. Willmott
STATE OF Illinois
COUNTY OF Cook
I, Joan L. Noble, a Notary Public in and for said County, in the
aforesaid State, do hereby certify that Peter S. Willmott, personally known to
me to be the same person whose name is subscribed to the foregoing instrument,
appeared before me this day in person, and acknowledged that he signed and
delivered the said instrument as his free and voluntary act, for the uses and
purposes therein set forth.
/s/JOAN L. NOBLE
-----------------------------
Notary Public
My Commission Expires:
3-5-99
<PAGE> 14
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned, the principal financial officer of FEDERAL
EXPRESS CORPORATION (the "Corporation"), a Delaware corporation, does hereby
constitute and appoint Frederick W. Smith and Michael W. Hillard, and each of
them, with full power of substitution and resubstitution, his true and lawful
attorneys-in-fact and agents, with full power and authority to execute in the
name and on behalf of the undersigned as such officer, the Corporation's Annual
Report on Form 10-K with respect to the Corporation's fiscal year ended May 31,
1997, and any and all amendments thereto; and hereby ratifies and confirms all
that said attorneys-in-fact and agents, or any of them, or their or his
substitute or substitutes may lawfully do or cause to be done by virtue of these
presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 3rd day of June,
1997.
/s/ALAN B. GRAF, JR.
-----------------------------
Alan B. Graf, Jr.
STATE OF TENNESSEE
COUNTY OF SHELBY
I, Edna M. Kennon, a Notary Public in and for said County, in the
aforesaid State, do hereby certify that Alan B. Graf, Jr., personally known to
me to be the same person whose name is subscribed to the foregoing instrument,
appeared before me this day in person, and acknowledged that he signed and
delivered the said instrument as his free and voluntary act, for the uses and
purposes therein set forth.
/s/EDNA M. KENNON
----------------------------
Notary Public
My Commission Expires:
9-14-99
<PAGE> 15
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned, the principal executive officer and a director of
FEDERAL EXPRESS CORPORATION (the "Corporation"), a Delaware corporation, does
hereby constitute and appoint Alan B. Graf, Jr. and Michael W. Hillard, and each
of them, with full power of substitution and resubstitution, his true and lawful
attorneys-in-fact and agents, with full power and authority to execute in the
name and on behalf of the undersigned as such officer and director, the
Corporation's Annual Report on Form 10-K with respect to the Corporation's
fiscal year ended May 31, 1997, and any and all amendments thereto; and hereby
ratifies and confirms all that said attorneys-in-fact and agents, or any of
them, or their or his substitute or substitutes may lawfully do or cause to be
done by virtue of these presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 6th day of June,
1997.
/s/FREDERICK W. SMITH
----------------------------
Frederick W. Smith
STATE OF TENNESSEE
COUNTY OF SHELBY
I, June Y. Fitzgerald, a Notary Public in and for said County, in the
aforesaid State, do hereby certify that Frederick W. Smith, personally known to
me to be the same person whose name is subscribed to the foregoing instrument,
appeared before me this day in person, and acknowledged that he signed and
delivered the said instrument as his free and voluntary act, for the uses and
purposes therein set forth.
/s/JUNE Y. FITZGERALD
----------------------------
Notary Public
My Commission Expires:
Jan. 26, 1999
<PAGE> 16
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned, the principal accounting officer of FEDERAL
EXPRESS CORPORATION (the "Corporation"), a Delaware corporation, does hereby
constitute and appoint Frederick W. Smith and Alan B. Graf, Jr., and each of
them, with full power of substitution and resubstitution, his true and lawful
attorneys-in-fact and agents, with full power and authority to execute in the
name and on behalf of the undersigned as such officer, the Corporation's Annual
Report on Form 10-K with respect to the Corporation's fiscal year ended May 31,
1997, and any and all amendments thereto; and hereby ratifies and confirms all
that said attorneys-in-fact and agents, or any of them, or their or his
substitute or substitutes may lawfully do or cause to be done by virtue of these
presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 30th day of June,
1997.
/s/MICHAEL W. HILLARD
----------------------------
Michael W. Hillard
STATE OF TENNESSEE
COUNTY OF SHELBY
I, Rosemary Morlan, a Notary Public in and for said County, in the
aforesaid State, do hereby certify that Michael W. Hillard, personally known to
me to be the same person whose name is subscribed to the foregoing instrument,
appeared before me this day in person, and acknowledged that he signed and
delivered the said instrument as his free and voluntary act, for the uses and
purposes therein set forth.
/s/ROSEMARY MORLAN
----------------------------
Notary Public
My Commission Expires:
Dec. 21, 1998
<PAGE> 1
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the
"Corporation"), a Delaware corporation, does hereby constitute and appoint
Frederick W. Smith, Alan B. Graf, Jr. and Michael W. Hillard, and each of them,
with full power of substitution and resubstitution, his true and lawful
attorneys-in-fact and agents, with full power and authority to execute in the
name and on behalf of the undersigned as such Director, the Corporation's Annual
Report on Form 10-K with respect to the Corporation's fiscal year ended May 31,
1997, and any and all amendments thereto; and hereby ratifies and confirms all
that said attorneys-in-fact and agents, or any of them, or their or his
substitute or substitutes may lawfully do or cause to be done by virtue of these
presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 6th day of June,
1997.
/s/ROBERT H. ALLEN
-------------------------
Robert H. Allen
STATE OF Texas
COUNTY OF Harris
I, Earlene L. Barbeau, a Notary Public in and for said County, in the
aforesaid State, do hereby certify that Robert H. Allen, personally known to me
to be the same person whose name is subscribed to the foregoing instrument,
appeared before me this day in person, and acknowledged that he signed and
delivered the said instrument as his free and voluntary act, for the uses and
purposes therein set forth.
/s/EARLENE L. BARBEAU
------------------------
Notary Public
My Commission Expires:
April 15, 2001
<PAGE> 2
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the
"Corporation"), a Delaware corporation, does hereby constitute and appoint
Frederick W. Smith, Alan B. Graf, Jr. and Michael W. Hillard, and each of them,
with full power of substitution and resubstitution, his true and lawful
attorneys-in-fact and agents, with full power and authority to execute in the
name and on behalf of the undersigned as such Director, the Corporation's Annual
Report on Form 10-K with respect to the Corporation's fiscal year ended May 31,
1997, and any and all amendments thereto; and hereby ratifies and confirms all
that said attorneys-in-fact and agents, or any of them, or their or his
substitute or substitutes may lawfully do or cause to be done by virtue of these
presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 20th day of June,
1997.
/s/HOWARD H. BAKER, JR.
-----------------------------
Howard H. Baker, Jr.
STATE OF Tennessee
COUNTY OF Knox
I, Betty B. Lowe, a Notary Public in and for said County, in the
aforesaid State, do hereby certify that Howard H. Baker, Jr., personally known
to me to be the same person whose name is subscribed to the foregoing
instrument, appeared before me this day in person, and acknowledged that he
signed and delivered the said instrument as his free and voluntary act, for the
uses and purposes therein set forth.
/s/BETTY B. LOWE
-----------------------
Notary Public
My Commission Expires:
8-27-97
<PAGE> 3
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the
"Corporation"), a Delaware corporation, does hereby constitute and appoint
Frederick W. Smith, Alan B. Graf, Jr. and Michael W. Hillard, and each of them,
with full power of substitution and resubstitution, his true and lawful
attorneys-in-fact and agents, with full power and authority to execute in the
name and on behalf of the undersigned as such Director, the Corporation's Annual
Report on Form 10-K with respect to the Corporation's fiscal year ended May 31,
1997, and any and all amendments thereto; and hereby ratifies and confirms all
that said attorneys-in-fact and agents, or any of them, or their or his
substitute or substitutes may lawfully do or cause to be done by virtue of these
presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 2nd day of June,
1997.
/s/PAUL S. WALSH
---------------------------
Paul S. Walsh
STATE OF Minnesota
COUNTY OF Hennepin
I, Eva L. Fix, a Notary Public in and for said County, in the aforesaid
State, do hereby certify that Paul S. Walsh, personally known to me to be the
same person whose name is subscribed to the foregoing instrument, appeared
before me this day in person, and acknowledged that he signed and delivered the
said instrument as his free and voluntary act, for the uses and purposes therein
set forth.
/s/EVA L. FIX
-------------------------
Notary Public
My Commission Expires:
Oct. 5, 1998
<PAGE> 4
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the
"Corporation"), a Delaware corporation, does hereby constitute and appoint
Frederick W. Smith, Alan B. Graf, Jr. and Michael W. Hillard, and each of them,
with full power of substitution and resubstitution, his true and lawful
attorneys-in-fact and agents, with full power and authority to execute in the
name and on behalf of the undersigned as such Director, the Corporation's Annual
Report on Form 10-K with respect to the Corporation's fiscal year ended May 31,
1997, and any and all amendments thereto; and hereby ratifies and confirms all
that said attorneys-in-fact and agents, or any of them, or their or his
substitute or substitutes may lawfully do or cause to be done by virtue of these
presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 2nd day of June,
1997.
/s/ROBERT L. COX
--------------------------
Robert L. Cox
STATE OF Tennessee
COUNTY OF Shelby
I, Lillian W. Powers, a Notary Public in and for said County, in the
aforesaid State, do hereby certify that Robert L. Cox, personally known to me to
be the same person whose name is subscribed to the foregoing instrument,
appeared before me this day in person, and acknowledged that he signed and
delivered the said instrument as his free and voluntary act, for the uses and
purposes therein set forth.
/s/LILLIAN W. POWERS
--------------------------
Notary Public
My Commission Expires:
Feb. 27, 2001
<PAGE> 5
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the
"Corporation"), a Delaware corporation, does hereby constitute and appoint
Frederick W. Smith, Alan B. Graf, Jr. and Michael W. Hillard, and each of them,
with full power of substitution and resubstitution, his true and lawful
attorneys-in-fact and agents, with full power and authority to execute in the
name and on behalf of the undersigned as such Director, the Corporation's Annual
Report on Form 10-K with respect to the Corporation's fiscal year ended May 31,
1997, and any and all amendments thereto; and hereby ratifies and confirms all
that said attorneys-in-fact and agents, or any of them, or their or his
substitute or substitutes may lawfully do or cause to be done by virtue of these
presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 11th day of June,
1997.
/s/RALPH D. DENUNZIO
---------------------------
Ralph D. DeNunzio
STATE OF NEW YORK
COUNTY OF NEW YORK
I, Pauline E. Kalahele, a Notary Public in and for said County, in the
aforesaid State, do hereby certify that Ralph D. DeNunzio, personally known to
me to be the same person whose name is subscribed to the foregoing instrument,
appeared before me this day in person, and acknowledged that he signed and
delivered the said instrument as his free and voluntary act, for the uses and
purposes therein set forth.
/s/PAULINE E. KALAHELE
--------------------------
Notary Public
My Commission Expires:
February 28, 1998
<PAGE> 6
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the
"Corporation"), a Delaware corporation, does hereby constitute and appoint
Frederick W. Smith, Alan B. Graf, Jr. and Michael W. Hillard, and each of them,
with full power of substitution and resubstitution, her true and lawful
attorneys-in-fact and agents, with full power and authority to execute in the
name and on behalf of the undersigned as such Director, the Corporation's Annual
Report on Form 10-K with respect to the Corporation's fiscal year ended May 31,
1997, and any and all amendments thereto; and hereby ratifies and confirms all
that said attorneys-in-fact and agents, or any of them, or their or his
substitute or substitutes may lawfully do or cause to be done by virtue of these
presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 19th day of June,
1997.
/s/JUDITH L. ESTRIN
-----------------------------
Judith L. Estrin
STATE OF CALIFORNIA
COUNTY OF SANTA CLARA
On 6/19/97 before me, ShaRon Lewis, Notary Public, personally appeared
Judith L. Estrin, who personally proved to me on the basis of satisfactory
evidence to be the person whose name is subscribed to the within instrument and
acknowledged to me that she executed the same in her authorized capacity, and
that by her signature on the instrument the person, or the entity upon behalf of
which the person acted, executed the instrument.
WITNESS my hand and official seal.
/s/SHARON LEWIS
--------------------------------
ShaRon Lewis, Notary Public
My Commission Expires:
Nov. 13, 1998
<PAGE> 7
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the
"Corporation"), a Delaware corporation, does hereby constitute and appoint
Frederick W. Smith, Alan B. Graf, Jr. and Michael W. Hillard, and each of them,
with full power of substitution and resubstitution, his true and lawful
attorneys-in-fact and agents, with full power and authority to execute in the
name and on behalf of the undersigned as such Director, the Corporation's Annual
Report on Form 10-K with respect to the Corporation's fiscal year ended May 31,
1997, and any and all amendments thereto; and hereby ratifies and confirms all
that said attorneys-in-fact and agents, or any of them, or their or his
substitute or substitutes may lawfully do or cause to be done by virtue of these
presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 2nd day of June,
1997.
/s/PHILIP GREER
-----------------------------
Philip Greer
STATE OF New York
COUNTY OF New York
I, Kathleen M. Rode, a Notary Public in and for said County, in the
aforesaid State, do hereby certify that Philip Greer, personally known to me to
be the same person whose name is subscribed to the foregoing instrument,
appeared before me this day in person, and acknowledged that he signed and
delivered the said instrument as his free and voluntary act, for the uses and
purposes therein set forth.
/s/KATHLEEN M. RODE
---------------------------
Notary Public
My Commission Expires:
5/31/98
<PAGE> 8
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the
"Corporation"), a Delaware corporation, does hereby constitute and appoint
Frederick W. Smith, Alan B. Graf, Jr. and Michael W. Hillard, and each of them,
with full power of substitution and resubstitution, his true and lawful
attorneys-in-fact and agents, with full power and authority to execute in the
name and on behalf of the undersigned as such Director, the Corporation's Annual
Report on Form 10-K with respect to the Corporation's fiscal year ended May 31,
1997, and any and all amendments thereto; and hereby ratifies and confirms all
that said attorneys-in-fact and agents, or any of them, or their or his
substitute or substitutes may lawfully do or cause to be done by virtue of these
presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 12th day of June,
1997.
/s/J. R. HYDE, III
-------------------------
J. R. Hyde, III
STATE OF Tennessee
COUNTY OF Shelby
I, Nancy C. Phillips, a Notary Public in and for said County, in the
aforesaid State, do hereby certify that J. R. Hyde, III, personally known to me
to be the same person whose name is subscribed to the foregoing instrument,
appeared before me this day in person, and acknowledged that he signed and
delivered the said instrument as his free and voluntary act, for the uses and
purposes therein set forth.
/s/NANCY C. PHILLIPS
------------------------------
Notary Public
My Commission Expires:
Jan. 12, 2000
<PAGE> 9
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the
"Corporation"), a Delaware corporation, does hereby constitute and appoint
Frederick W. Smith, Alan B. Graf, Jr. and Michael W. Hillard, and each of them,
with full power of substitution and resubstitution, his true and lawful
attorneys-in-fact and agents, with full power and authority to execute in the
name and on behalf of the undersigned as such Director, the Corporation's Annual
Report on Form 10-K with respect to the Corporation's fiscal year ended May 31,
1997, and any and all amendments thereto; and hereby ratifies and confirms all
that said attorneys-in-fact and agents, or any of them, or their or his
substitute or substitutes may lawfully do or cause to be done by virtue of these
presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 17th day of June,
1997.
/s/CHARLES T. MANATT
---------------------------
Charles T. Manatt
WASHINGTON
DISTRICT OF COLUMBIA
I, Joseph Chulew, a Notary Public in and for said County, in the
aforesaid State, do hereby certify that Charles T. Manatt, personally known to
me to be the same person whose name is subscribed to the foregoing instrument,
appeared before me this day in person, and acknowledged that he signed and
delivered the said instrument as his free and voluntary act, for the uses and
purposes therein set forth.
/s/JOSEPH CHULEW
---------------------------
Notary Public
My Commission Expires:
3-31-00
<PAGE> 10
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the
"Corporation"), a Delaware corporation, does hereby constitute and appoint
Frederick W. Smith, Alan B. Graf, Jr. and Michael W. Hillard, and each of them,
with full power of substitution and resubstitution, his true and lawful
attorneys-in-fact and agents, with full power and authority to execute in the
name and on behalf of the undersigned as such Director, the Corporation's Annual
Report on Form 10-K with respect to the Corporation's fiscal year ended May 31,
1997, and any and all amendments thereto; and hereby ratifies and confirms all
that said attorneys-in-fact and agents, or any of them, or their or his
substitute or substitutes may lawfully do or cause to be done by virtue of these
presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 9th day of June,
1997.
/s/GEORGE J. MITCHELL
---------------------------
George J. Mitchell
WASHINGTON
DISTRICT OF COLUMBIA
I, Ione M. Hartl, a Notary Public in and for said County, in the
aforesaid State, do hereby certify that George J. Mitchell, personally known to
me to be the same person whose name is subscribed to the foregoing instrument,
appeared before me this day in person, and acknowledged that he signed and
delivered the said instrument as his free and voluntary act, for the uses and
purposes therein set forth.
/s/IONE M. HARTL
---------------------------
Notary Public
My Commission Expires:
8/14/00
<PAGE> 11
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the
"Corporation"), a Delaware corporation, does hereby constitute and appoint
Frederick W. Smith, Alan B. Graf, Jr. and Michael W. Hillard, and each of them,
with full power of substitution and resubstitution, his true and lawful
attorneys-in-fact and agents, with full power and authority to execute in the
name and on behalf of the undersigned as such Director, the Corporation's Annual
Report on Form 10-K with respect to the Corporation's fiscal year ended May 31,
1997, and any and all amendments thereto; and hereby ratifies and confirms all
that said attorneys-in-fact and agents, or any of them, or their or his
substitute or substitutes may lawfully do or cause to be done by virtue of these
presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 16th day of June,
1997.
/s/JACKSON W. SMART, JR.
-----------------------------
Jackson W. Smart, Jr.
STATE OF Illinois
COUNTY OF Cook
I, Nicole Renea Roberts, a Notary Public in and for said County, in the
aforesaid State, do hereby certify that Jackson W. Smart, Jr., personally known
to me to be the same person whose name is subscribed to the foregoing
instrument, appeared before me this day in person, and acknowledged that he
signed and delivered the said instrument as his free and voluntary act, for the
uses and purposes therein set forth.
/s/NICOLE RENEA ROBERTS
------------------------------
Notary Public
My Commission Expires:
01/13/2001
<PAGE> 12
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the
"Corporation"), a Delaware corporation, does hereby constitute and appoint
Frederick W. Smith, Alan B. Graf, Jr. and Michael W. Hillard, and each of them,
with full power of substitution and resubstitution, his true and lawful
attorneys-in-fact and agents, with full power and authority to execute in the
name and on behalf of the undersigned as such Director, the Corporation's Annual
Report on Form 10-K with respect to the Corporation's fiscal year ended May 31,
1997, and any and all amendments thereto; and hereby ratifies and confirms all
that said attorneys-in-fact and agents, or any of them, or their or his
substitute or substitutes may lawfully do or cause to be done by virtue of these
presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 23rd day of June,
1997.
/s/JOSHUA I. SMITH
----------------------------
Joshua I. Smith
STATE OF Maryland
COUNTY OF Prince George's
I, Bertha A. Davis, a Notary Public in and for said County, in the
aforesaid State, do hereby certify that Joshua I. Smith, personally known to me
to be the same person whose name is subscribed to the foregoing instrument,
appeared before me this day in person, and acknowledged that he signed and
delivered the said instrument as his free and voluntary act, for the uses and
purposes therein set forth.
/s/BERTHA A. DAVIS
--------------------------
Notary Public
My Commission Expires:
5-1-00
<PAGE> 13
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the
"Corporation"), a Delaware corporation, does hereby constitute and appoint
Frederick W. Smith, Alan B. Graf, Jr. and Michael W. Hillard, and each of them,
with full power of substitution and resubstitution, his true and lawful
attorneys-in-fact and agents, with full power and authority to execute in the
name and on behalf of the undersigned as such Director, the Corporation's Annual
Report on Form 10-K with respect to the Corporation's fiscal year ended May 31,
1997, and any and all amendments thereto; and hereby ratifies and confirms all
that said attorneys-in-fact and agents, or any of them, or their or his
substitute or substitutes may lawfully do or cause to be done by virtue of these
presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 17th day of June,
1997.
/s/PETER S. WILLMOTT
-----------------------------
Peter S. Willmott
STATE OF Illinois
COUNTY OF Cook
I, Joan L. Noble, a Notary Public in and for said County, in the
aforesaid State, do hereby certify that Peter S. Willmott, personally known to
me to be the same person whose name is subscribed to the foregoing instrument,
appeared before me this day in person, and acknowledged that he signed and
delivered the said instrument as his free and voluntary act, for the uses and
purposes therein set forth.
/s/JOAN L. NOBLE
-----------------------------
Notary Public
My Commission Expires:
3-5-99
<PAGE> 14
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned, the principal financial officer of FEDERAL
EXPRESS CORPORATION (the "Corporation"), a Delaware corporation, does hereby
constitute and appoint Frederick W. Smith and Michael W. Hillard, and each of
them, with full power of substitution and resubstitution, his true and lawful
attorneys-in-fact and agents, with full power and authority to execute in the
name and on behalf of the undersigned as such officer, the Corporation's Annual
Report on Form 10-K with respect to the Corporation's fiscal year ended May 31,
1997, and any and all amendments thereto; and hereby ratifies and confirms all
that said attorneys-in-fact and agents, or any of them, or their or his
substitute or substitutes may lawfully do or cause to be done by virtue of these
presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 3rd day of June,
1997.
/s/ALAN B. GRAF, JR.
-----------------------------
Alan B. Graf, Jr.
STATE OF TENNESSEE
COUNTY OF SHELBY
I, Edna M. Kennon, a Notary Public in and for said County, in the
aforesaid State, do hereby certify that Alan B. Graf, Jr., personally known to
me to be the same person whose name is subscribed to the foregoing instrument,
appeared before me this day in person, and acknowledged that he signed and
delivered the said instrument as his free and voluntary act, for the uses and
purposes therein set forth.
/s/EDNA M. KENNON
----------------------------
Notary Public
My Commission Expires:
9-14-99
<PAGE> 15
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned, the principal executive officer and a director of
FEDERAL EXPRESS CORPORATION (the "Corporation"), a Delaware corporation, does
hereby constitute and appoint Alan B. Graf, Jr. and Michael W. Hillard, and each
of them, with full power of substitution and resubstitution, his true and lawful
attorneys-in-fact and agents, with full power and authority to execute in the
name and on behalf of the undersigned as such officer and director, the
Corporation's Annual Report on Form 10-K with respect to the Corporation's
fiscal year ended May 31, 1997, and any and all amendments thereto; and hereby
ratifies and confirms all that said attorneys-in-fact and agents, or any of
them, or their or his substitute or substitutes may lawfully do or cause to be
done by virtue of these presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 6th day of June,
1997.
/s/FREDERICK W. SMITH
----------------------------
Frederick W. Smith
STATE OF TENNESSEE
COUNTY OF SHELBY
I, June Y. Fitzgerald, a Notary Public in and for said County, in the
aforesaid State, do hereby certify that Frederick W. Smith, personally known to
me to be the same person whose name is subscribed to the foregoing instrument,
appeared before me this day in person, and acknowledged that he signed and
delivered the said instrument as his free and voluntary act, for the uses and
purposes therein set forth.
/s/JUNE Y. FITZGERALD
----------------------------
Notary Public
My Commission Expires:
Jan. 26, 1999
<PAGE> 16
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned, the principal accounting officer of FEDERAL
EXPRESS CORPORATION (the "Corporation"), a Delaware corporation, does hereby
constitute and appoint Frederick W. Smith and Alan B. Graf, Jr., and each of
them, with full power of substitution and resubstitution, his true and lawful
attorneys-in-fact and agents, with full power and authority to execute in the
name and on behalf of the undersigned as such officer, the Corporation's Annual
Report on Form 10-K with respect to the Corporation's fiscal year ended May 31,
1997, and any and all amendments thereto; and hereby ratifies and confirms all
that said attorneys-in-fact and agents, or any of them, or their or his
substitute or substitutes may lawfully do or cause to be done by virtue of these
presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 30th day of June,
1997.
/s/MICHAEL W. HILLARD
----------------------------
Michael W. Hillard
STATE OF TENNESSEE
COUNTY OF SHELBY
I, Rosemary Morlan, a Notary Public in and for said County, in the
aforesaid State, do hereby certify that Michael W. Hillard, personally known to
me to be the same person whose name is subscribed to the foregoing instrument,
appeared before me this day in person, and acknowledged that he signed and
delivered the said instrument as his free and voluntary act, for the uses and
purposes therein set forth.
/s/ROSEMARY MORLAN
----------------------------
Notary Public
My Commission Expires:
Dec. 21, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENTS OF INCOME AND THE CONSOLIDATED BALANCE SHEETS ON PAGES
23 AND 24 OF THE COMPANY'S ANNUAL REPORT TO STOCKHOLDERS FOR THE YEAR ENDED
MAY 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-START> JUN-01-1996
<PERIOD-END> MAY-31-1997
<CASH> 122,023
<SECURITIES> 0
<RECEIVABLES> 1,549,114
<ALLOWANCES> 36,175
<INVENTORY> 313,337
<CURRENT-ASSETS> 2,132,589
<PP&E> 9,818,936
<DEPRECIATION> 5,196,856
<TOTAL-ASSETS> 7,625,486
<CURRENT-LIABILITIES> 1,962,783
<BONDS> 1,397,954
0
0
<COMMON> 11,491
<OTHER-SE> 2,951,023
<TOTAL-LIABILITY-AND-EQUITY> 7,625,486
<SALES> 0
<TOTAL-REVENUES> 11,519,750
<CGS> 0
<TOTAL-COSTS> 10,820,708
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 90,634
<INCOME-PRETAX> 628,221
<INCOME-TAX> 266,994
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 361,227
<EPS-PRIMARY> 3.12<F1>
<EPS-DILUTED> 3.12<F1>
<FN>
<F1>ON OCTOBER 1, 1996 THE BOARD OF DIRECTORS DECLARED A TWO-FOR-ONE STOCK SPLIT IN
THE FORM OF 100% STOCK DIVIDEND, WHICH WAS PAID ON NOVEMBER 4, 1996 TO
STOCKHOLDERS OF RECORD ON OCTOBER 15, 1996. PRIOR FINANCIAL DATA SCHEDULES
HAVE NOT BEEN RESTATED TO REFLECT THE STOCK SPLIT.
</FN>
</TABLE>
