MEMPHIS, Tenn., June 22, 2011 ...FedEx Corp. (NYSE: FDX) today reported earnings of $1.75 per diluted share for the fourth quarter ended May 31, compared to $1.33 per diluted share a year ago, a year-over-year increase of 32%.

"During fiscal 2011, an improved economy, strong customer demand and decisive actions to grow our business led to increased volumes and yields across all transportation segments," said Frederick W. Smith, FedEx Corp. chairman, president and chief executive officer. "With this positive momentum, moderate economic growth and subsiding cost headwinds, FedEx is well positioned to deliver strong earnings growth in fiscal 2012."

Fourth Quarter Results

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

Revenue of $10.55 billion, up 12% from $9.43 billion the previous year

Operating income of $888 million, up 28% from $696 million last year

Operating margin of 8.4%, up from 7.4% the previous year

Net income of $558 million, up 33% from last year's $419 million

Revenue and earnings increased due to continued strong yield improvement in all transportation segments and volume growth of ground and international express shipments. FedEx Freight's return to profitability also improved operating results.

Full Year Results

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

Revenue of $39.3 billion, up 13% from $34.7 billion the previous year

Operating income of $2.38 billion, up 19% from $2.00 billion last year

Net income of $1.45 billion, up 23% from last year's $1.18 billion

Adjusted earnings per share of $4.90, up from $3.76 per share a year ago

(Fiscal 2011 earnings per share exclude the impact of certain one-time costs"see table)

Capital spending for fiscal 2011 was $3.4 billion, of which $2.0 billion was for investments in aircraft and related equipment.

Outlook

FedEx projects earnings to be $1.40 to $1.60 per diluted share in the first quarter and $6.35 to $6.85 per diluted share for fiscal 2012. This guidance assumes the current market outlook for fuel prices and continued moderate growth in the global economy. The company reported earnings of $1.20 per diluted share in last year's first quarter. The capital spending forecast for fiscal 2012 is $4.2 billion, which includes the delivery of aircraft as well as progress payments toward future aircraft deliveries, along with investments in facilities, vehicles and information technology in support of the company's global growth strategy. The company will benefit from the tax expensing/accelerated depreciation provisions included in the Tax Relief Act of 2010 passed last December.

"Our actions to improve yields continue to drive revenue and earnings growth across our transportation segments," said Alan B. Graf, Jr., FedEx Corp. executive vice president and chief financial officer. "FedEx Ground maintained its exceptional performance this quarter, increasing volume, yields and margins, while FedEx Freight returned to profitability. Even with higher planned capital spending in fiscal 2012, margins, cash flows and returns are expected to improve year over year."

FedEx Express Segment

For the fourth quarter, the FedEx Express segment reported:

Revenue of $6.63 billion, up 13% from last year's $5.88 billion

Operating income of $429 million, up 4% from $413 million a year ago

Operating margin of 6.5%, down from 7.0% the previous year

FedEx International Priority (IP) average daily package volume increased 6%, led by exports from Asia. IP revenue per package grew 8% due to higher fuel surcharges, the favorable impact of exchange rates, improved weight per package and yield management actions. IP freight pounds increased 13% with revenue per pound up 6% due to higher fuel surcharges and the favorable impact of exchange rates. In total, IP package and freight revenue increased 15% and pounds increased 9% year-over-year. U.S. domestic revenue per package grew 10% due to higher fuel surcharges, yield management actions and increased weight per package, with slightly lower U.S. domestic average daily package volume.

Operating income improvements were driven by strong yield growth, particularly in U.S. domestic package services, and by volume growth in IP package and freight services. Results were negatively impacted by increased retirement plan expenses and the reinstatement of certain compensation programs.

FedEx Ground Segment

For the fourth quarter, the FedEx Ground segment reported:

Revenue of $2.26 billion, up 15% from last year's $1.96 billion

Operating income of $417 million, up 31% from $319 million a year ago

Operating margin of 18.4%, up from 16.3% the previous year

FedEx Ground average daily package volume grew 6% in the fourth quarter driven by increases in the business-to-business market and the FedEx Home Delivery service. Revenue per package increased 7% primarily due to yield management actions and higher fuel surcharges. FedEx SmartPost average daily volume increased 24% due to growth in e-commerce and gains in market share. FedEx SmartPost revenue per package increased 8% primarily due to growth in higher-yielding services and increased fuel surcharges.

Operating income and margin increased primarily due to higher package yield and volume.

FedEx Freight Segment

For the fourth quarter, the FedEx Freight segment reported:

Revenue of $1.31 billion, up 6% from last year's $1.23 billion

Operating income of $42 million, up from an operating loss of $36 million a year ago

Operating margin of 3.2%, compared with (2.9%) the previous year

Less-than-truckload (LTL) yield increased 13% primarily due to yield management actions and higher LTL fuel surcharges. LTL average daily shipments decreased 8% as a result of the yield management actions.

The segment returned to profitability in the quarter due primarily to the higher LTL yield. Last year's results included an $18 million impairment charge related to the goodwill associated with the acquisition of Watkins Motor Lines. Strong yield growth and efficiencies resulting from the January 30, 2011 combination of the FedEx Freight and FedEx National LTL operations are expected to drive a substantial improvement in operating results in fiscal 2012. The net cash effect of the combination was immaterial, as cash proceeds of $88 million from asset sales offset severance and other cash outlays.

Corporate Overview

FedEx Corp. (NYSE: FDX) provides customers and businesses worldwide with a broad portfolio of transportation, e-commerce and business services. With annual revenues of $39 billion, the company offers integrated business applications through operating companies competing collectively and managed collaboratively, under the respected FedEx brand. Consistently ranked among the world's most admired and trusted employers, FedEx inspires its more than 290,000 team members to remain "absolutely, positively" focused on safety, the highest ethical and professional standards and the needs of their customers and communities. For more information, visit news.fedex.com .

Additional information and operating data are contained in the company's annual report, Form 10-K, Form 10-Qs and fourth quarter fiscal 2011 Statistical Book. These materials, as well as a Webcast of the earnings release conference call to be held at 8:30 a.m. EDT on June 22 are available on the company's Web site at www.fedex.com/us/investorrelations . A replay of the conference call Webcast will be posted on our Web site following the call.

Certain statements in this press release may be considered forward-looking statements, such as statements relating to management's views with respect to future events and financial performance. Such forward-looking statements are subject to risks, uncertainties and other factors which could cause actual results to differ materially from historical experience or from future results expressed or implied by such forward-looking statements. Potential risks and uncertainties include, but are not limited to, economic conditions in the global markets in which we operate, legal challenges or changes related to FedEx Ground's owner-operators, new U.S. domestic or international government regulation, the impact from any terrorist activities or international conflicts, our ability to effectively operate, integrate and leverage acquired businesses, changes in fuel prices and currency exchange rates, our ability to match capacity to shifting volume levels and other factors which can be found in FedEx Corp.'s and its subsidiaries' press releases and filings with the SEC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

TO GAAP FINANCIAL MEASURES

The company believes that meaningful analysis of our financial performance requires an understanding of the factors underlying that performance and our judgments about the likelihood that particular factors will repeat. Excluding a reserve associated with a legal matter in the second quarter and the costs of the combination of FedEx Freight and FedEx National LTL operations from our full-year earnings, net of applicable incentive compensation impacts, will allow more accurate comparisons to prior periods of operating performance for fiscal 2011. As required by SEC rules, the table below presents a reconciliation of our presented non-GAAP measure to the most directly comparable GAAP measure.

 

       
      FY 2011 Diluted
     

Earnings Per Share

Non-GAAP Measure

   

$4.90

FedEx Freight Combination Costs

   

(0.26)

ATA Legal Reserve, Net

   

(0.07)

GAAP Measure

   

$4.57

       
   
FEDEX CORP. FINANCIAL HIGHLIGHTS  
                                           
                                           
Fourth Quarter Fiscal 2011  
(In millions, except earnings per share and FTEs)  
(Unaudited)  
                                           
        Three Months Ended       Twelve Months Ended  
        May 31       May 31  
       

2011

   

2010

   

%

     

2011

   

2010

   

%

 
Revenue:                                        
  FedEx Express segment     $6,628       $5,877       13 %       $24,581       $21,555       14 %  
  FedEx Ground segment     2,263       1,962       15 %       8,485       7,439       14 %  
  FedEx Freight segment     1,309       1,231       6 %       4,911       4,321       14 %  
  FedEx Services segment     438       448       (2 %)       1,684       1,770       (5 %)  
  Other & eliminations     (86 )     (90 )     4 %       (357 )     (351 )     (2 %)  
  Total Revenue     10,552       9,428       12 %       39,304       34,734       13 %  
                                           
Operating Expenses:                                        
  Salaries and employee benefits     3,866       3,677       5 %       15,276       14,027       9 %  
  Purchased transportation     1,511       1,299       16 %       5,674       4,728       20 %  
  Rentals and landing fees     612       595       3 %       2,462       2,359       4 %  
  Depreciation and amortization     499       488       2 %       1,973       1,958       1 %  
  Fuel     1,277       886       44 %       4,151       3,106       34 %  
  Maintenance and repairs     509       500       2 %       1,979       1,715       15 %  
  Impairment and other charges     1       18       NM         89       18       NM    
  Other     1,389       1,269       9 %       5,322       4,825       10 %  
  Total Operating Expenses     9,664       8,732       11 %       36,926       32,736       13 %  
                                           
Operating Income (Loss):                                        
  FedEx Express segment     429       413       4 %       1,228       1,127       9 %  
  FedEx Ground segment     417       319       31 %       1,325       1,024       29 %  
  FedEx Freight segment     42       (36 )     217 %       (175 )     (153 )     (14 %)  
  Total Operating Income     888       696       28 %       2,378       1,998       19 %  
                                           
Other Income (Expense):                                        
  Interest, net     (12 )     (19 )     (37 %)       (77 )     (71 )     8 %  
  Other, net     (11 )     (5 )     120 %       (36 )     (33 )     9 %  
  Total Other Income (Expense)     (23 )     (24 )     (4 %)       (113 )     (104 )     9 %  
                                           
Pretax Income     865       672       29 %       2,265       1,894       20 %  
                                           
Provision for Income Taxes     307       253       21 %       813       710       15 %  
                                           
Net Income     $558       $419       33 %       $1,452       $1,184       23 %  
                                           
Diluted Earnings Per Share     $1.75       $1.33       32 %       $4.57       $3.76       22 %  
                                           
Weighted Average Diluted Common and                                        
  Common Equivalent Shares     318       316       1 %       317       314       1 %  
                                           
Capital Expenditures     $731       $835       (12 %)       $3,434       $2,816       22 %  
                                           
Average Full-Time Equivalents (000s)     257       248       4 %       256       245       4 %  
 
FEDEX CORP. CONDENSED CONSOLIDATED BALANCE SHEETS
             
             
Fourth Quarter Fiscal 2011
(In millions)
(Current period is unaudited)
             
             
      May 31, 2011     May 31, 2010

ASSETS

           
             
Current Assets            
Cash and cash equivalents     $ 2,328       $ 1,952  
Receivables, less allowances       4,581         4,163  
Spare parts, supplies and fuel, less allowances       437         389  
Deferred income taxes       610         529  
Prepaid expenses and other       329         251  

Total current assets

      8,285         7,284  
             
Property and Equipment, at Cost       33,686         31,302  
Less accumulated depreciation and amortization       18,143         16,917  
Net property and equipment       15,543         14,385  
             
Other Long-Term Assets            
Goodwill       2,326         2,200  
Other assets       1,231         1,033  
Total other long-term assets       3,557         3,233  
             
      $ 27,385       $ 24,902  
             

LIABILITIES AND STOCKHOLDERS' INVESTMENT

           
             
Current Liabilities            
Current portion of long-term debt     $ 18       $ 262  
Accrued salaries and employee benefits       1,268         1,146  
Accounts payable       1,702         1,522  
Accrued expenses       1,894         1,715  
Total current liabilities       4,882         4,645  
             
Long-Term Debt, Less Current Portion       1,667         1,668  
             
Other Long-Term Liabilities            
Deferred income taxes       1,336         891  
Pension, postretirement healthcare and other benefit obligations       2,124         1,705  
Self-insurance accruals       977         960  
Deferred lease obligations       779         804  
Deferred gains, principally related to aircraft transactions       246         267  
Other liabilities       154         151  
Total other long-term liabilities       5,616         4,778  
             
Commitments and Contingencies            
             
Common Stockholders' Investment            
Common stock, $0.10 par value, 800 million shares authorized       32         31  
Additional paid-in capital       2,484         2,261  
Retained earnings       15,266         13,966  
Accumulated other comprehensive loss       (2,550 )       (2,440 )
Treasury stock, at cost       (12 )       (7 )
Total common stockholders' investment       15,220         13,811  
             
      $ 27,385       $ 24,902  
               
FEDEX CORP. CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
               
               
Fourth Quarter Fiscal 2011
(In millions)
(Current period is unaudited)
               
      Year Ended  
      May 31  
       

2011

       

2010

   
               
Operating Activities:              
Net income     $ 1,452       $ 1,184    
Noncash charges:              
Depreciation and amortization       1,973         1,958    
Other, net       948         574    
Changes in operating assets and liabilities, net       (332 )       (578 )  
               
Cash provided by operating activities       4,041         3,138    
               
Investing Activities:              
Capital expenditures       (3,434 )       (2,816 )  
Business acquisitions, net of cash acquired       (96 )       "    
Proceeds from asset dispositions and other       111         35    
               
Cash used in investing activities       (3,419 )       (2,781 )  
               
Financing Activities:              
Principal payments on debt       (262 )       (653 )  
Dividends paid       (151 )       (138 )  
Other, net       126         99    
               
Cash used in financing activities       (287 )       (692 )  
               
Effect of exchange rate changes on cash       41         (5 )  
               
Net increase (decrease) in cash and cash equivalents       376         (340 )  
               
Cash and cash equivalents at beginning of period       1,952         2,292    
Cash and cash equivalents at end of period     $ 2,328       $ 1,952    
               
FEDEX EXPRESS SEGMENT FINANCIAL AND OPERATING HIGHLIGHTS
                                       
                                       
Fourth Quarter Fiscal 2011
(Dollars in millions)
(Unaudited)
                                       
        Three Months Ended     Twelve Months Ended
        May 31     May 31

FINANCIAL HIGHLIGHTS

   

2011

   

2010

   

%

   

2011

   

2010

   

%

                                       
Revenue     $ 6,628       $ 5,877       13 %     $ 24,581       $ 21,555       14 %
                                       
Operating Expenses:                                    
  Salaries and employee benefits       2,351         2,187       7 %       9,183         8,402       9 %
  Purchased transportation       430         347       24 %       1,573         1,177       34 %
  Rentals and landing fees       418         399       5 %       1,672         1,577       6 %
  Depreciation and amortization       272         259       5 %       1,059         1,016       4 %
  Fuel       1,099         748       47 %       3,553         2,651       34 %
  Maintenance and repairs       351         342       3 %       1,353         1,131       20 %
  Intercompany charges       520         504       3 %       2,043         1,940       5 %
  Other1       758         678       12 %       2,917         2,534       15 %
  Total Operating Expenses       6,199         5,464       13 %       23,353         20,428       14 %
                                       
Operating Income     $ 429       $ 413       4 %     $ 1,228       $ 1,127       9 %
                                       
Operating Margin       6.5 %       7.0 %     (0.5 pts)       5.0 %       5.2 %     (0.2 pts)
                                       

OPERATING STATISTICS

                                   
                                       
Operating Weekdays       65         65       "         255         255       "  
                                       

AVG DAILY VOLUME / POUNDS

                                   
Average Daily Package Volume (000s):                                    
                                       
  U.S. Overnight Box       1,158         1,156       0 %       1,184         1,157       2 %
  U.S. Overnight Envelope       626         632       (1 %)       627         614       2 %
  U.S. Deferred       833         843       (1 %)       873         867       1 %
  Total U.S. Domestic Package       2,617         2,631       (1 %)       2,684         2,638       2 %
  International Priority       593         560       6 %       575         523       10 %
  International Domestic       373         323       15 %       348         318       9 %
  Total Average Daily Packages       3,583         3,514       2 %       3,607         3,479       4 %
                                       
Average Daily Freight Pounds (000s):                                    
                                       
  U.S.       7,027         6,916       2 %       7,340         7,141       3 %
  International Priority       3,261         2,889       13 %       3,184         2,544       25 %
  International Airfreight       1,195         1,198       (0 %)       1,235         1,222       1 %
  Total Avg Daily Freight Pounds       11,483         11,003       4 %       11,759         10,907       8 %
                                       

YIELD

                                   
Revenue Per Package:                                    
                                       
  U.S. Overnight Box     $ 21.72       $ 19.77       10 %     $ 20.29       $ 19.00       7 %
  U.S. Overnight Envelope       11.37         10.64       7 %       10.86         10.47       4 %
  U.S. Deferred       13.56         12.23       11 %       12.60         11.70       8 %
  Total U.S. Domestic Package       16.65         15.16       10 %       15.59         14.61       7 %
  International Priority       58.96         54.45       8 %       56.08         53.10       6 %
  International Domestic       7.51         7.22       4 %       7.38         7.14       3 %
  Composite Package Yield     $ 22.69       $ 20.69       10 %     $ 21.25       $ 19.72       8 %
                                       
Revenue Per Freight Pound:                                    
                                       
  U.S.     $ 1.25       $ 1.15       9 %     $ 1.17       $ 1.09       7 %
  International Priority       2.21         2.09       6 %       2.12         2.01       5 %
  International Airfreight       0.96         0.85       13 %       0.90         0.81       11 %
  Composite Freight Yield     $ 1.49       $ 1.36       10 %     $ 1.40       $ 1.27       10 %
                                       
Average Full-Time Equivalents (000s)       135         129       5 %       133         128       4 %
                                       
1 - Current year includes a $66 million reserve for a legal matter.
                     
FEDEX GROUND SEGMENT FINANCIAL AND OPERATING HIGHLIGHTS
                                       
                                       
Fourth Quarter Fiscal 2011
(Dollars in millions)
(Unaudited)
                                       
        Three Months Ended     Twelve Months Ended
        May 31     May 31
       

2011

   

2010

   

%

   

2011

   

2010

   

%

FINANCIAL HIGHLIGHTS

                                   
                                       
Revenues:                                    
  FedEx Ground     $ 2,099       $ 1,840       14 %     $ 7,855       $ 6,958       13 %
  FedEx SmartPost       164         122       34 %       630         481       31 %
  Total Revenues       2,263         1,962       15 %       8,485         7,439       14 %
                                       
Operating Expenses:                                    
  Salaries and employee benefits       328         299       10 %       1,282         1,158       11 %
  Purchased transportation       893         769       16 %       3,431         2,966       16 %
  Rentals       66         60       10 %       263         244       8 %
  Depreciation and amortization       88         83       6 %       337         334       1 %
  Fuel       3         2       50 %       12         8       50 %
  Maintenance and repairs       43         47       (9 %)       169         166       2 %
  Intercompany charges       228         208       10 %       897         795       13 %
  Other       197         175       13 %       769         744       3 %
  Total Operating Expenses       1,846         1,643       12 %       7,160         6,415       12 %
                                       
Operating Income     $ 417       $ 319       31 %     $ 1,325       $ 1,024       29 %
                                       
Operating Margin       18.4 %       16.3 %     2.1 pts       15.6 %       13.8 %     1.8 pts
                                       
                                       

OPERATING STATISTICS

                                   
                                       
Operating Weekdays       65         65       "         256         255       0 %
                                       
Average Daily Package Volume (000s)                                    
  FedEx Ground       3,732         3,516       6 %       3,746         3,523       6 %
  FedEx SmartPost       1,430         1,150       24 %       1,432         1,222       17 %
                                       
Yield (Revenue Per Package)                                    
  FedEx Ground     $ 8.64       $ 8.04       7 %     $ 8.17       $ 7.73       6 %
  FedEx SmartPost     $ 1.76       $ 1.63       8 %     $ 1.72       $ 1.56       10 %
 
FEDEX FREIGHT SEGMENT FINANCIAL AND OPERATING HIGHLIGHTS
                                     
                                     
Fourth Quarter Fiscal 2011
(Dollars in millions)
(Unaudited)
                                     
      Three Months Ended     Twelve Months Ended
      May 31     May 31
     

2011

   

2010

   

%

   

2011

   

2010

   

%

FINANCIAL HIGHLIGHTS

                                   
                                     
Revenue     $ 1,309       $ 1,231       6 %     $ 4,911       $ 4,321       14 %
                                     
Operating Expenses:                                    
Salaries and employee benefits       557         576       (3 %)       2,303         2,128       8 %
Purchased transportation       212         213       (0 %)       779         690       13 %
Rentals       28         31       (10 %)       122         116       5 %
Depreciation and amortization       47         48       (2 %)       205         198       4 %
Fuel       176         135       30 %       585         445       31 %
Maintenance and repairs       47         43       9 %       182         148       23 %
Intercompany charges       104         102       2 %       427         351       22 %
Impairment and other charges1       1         18       (94 %)       89         18       NM  
Other       95         101       (6 %)       394         380       4 %
Total Operating Expenses       1,267         1,267       "         5,086         4,474       14 %
                                     
Operating Income (Loss)     $ 42         ($36 )     217 %       ($175 )       ($153 )     (14 %)
                                     
Operating Margin       3.2 %       (2.9 %)     6.1 pts       (3.6 %)       (3.5 %)     (0.1 pts)
                                     
                                     

OPERATING STATISTICS

                                   
                                     
LTL Operating Weekdays       65         65       "         254         253       0 %
                                     
LTL Shipments Per Day (000s)       84.3         91.5       (8 %)       86.0         82.3       4 %
Weight Per LTL Shipment (lbs)       1,177         1,160       1 %       1,144         1,134       1 %
LTL Revenue/CWT     $ 18.83       $ 16.69       13 %     $ 18.24       $ 17.07       7 %
                                     

1 - Current year includes charges associated with the combination of FedEx Freight and FedEx National LTL operations, which became effective January 30, 2011.