8-K
FEDEX CORP (FDX)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 21, 2021
FedEx Corporation
(Exact name of registrant as specified in its charter)
Commission File Number 1-15829
| Delaware | 62-1721435 |
|---|---|
| (State or other jurisdiction of | (IRS Employer |
| incorporation) | Identification No.) |
| 942 South Shady Grove Road, Memphis, Tennessee | 38120 |
| (Address of principal executive offices) | (ZIP Code) |
Registrant’s telephone number, including area code: (901) 818-7500
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered |
|---|---|---|
| Common Stock, par value $0.10 per share | FDX | New York Stock Exchange |
| 0.450% Notes due 2025 | FDX 25A | New York Stock Exchange |
| 1.625% Notes due 2027 | FDX 27 | New York Stock Exchange |
| 0.450% Notes due 2029 | FDX 29A | New York Stock Exchange |
| 1.300% Notes due 2031 | FDX 31 | New York Stock Exchange |
| 0.950% Notes due 2033 | FDX 33 | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
EXPLANATORY NOTE
The information in this Report, including Exhibit 99.1, is being furnished pursuant to Item 2.02 of Form 8-K and General Instruction B.2 thereunder. Such information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended.
SECTION 2. FINANCIAL INFORMATION.
| Item 2.02. | Results of Operations and Financial Condition. |
|---|
Attached as Exhibit 99.1 and incorporated herein by reference is a copy of FedEx Corporation’s press release, dated September 21, 2021, announcing its financial results for the fiscal quarter ended August 31, 2021.
SECTION 9. FINANCIAL STATEMENTS AND EXHIBITS.
Item 9.01. Financial Statements and Exhibits.
| (d) | Exhibits. |
|---|---|
| Exhibit<br><br><br>Number | Description |
| --- | --- |
| 99.1 | Press Release of FedEx Corporation dated September 21, 2021. |
| 104 | Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| FedEx Corporation | ||
|---|---|---|
| Date: September 21, 2021 | By: | /s/ John L. Merino |
| John L. Merino | ||
| Corporate Vice President and | ||
| Principal Accounting Officer |
EXHIBIT INDEX
| Exhibit<br><br><br>Number | Description |
|---|---|
| 99.1 | Press Release of FedEx Corporation dated September 21, 2021. |
| 104 | Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document). |
E-1
fdx-ex991_6.htm
Exhibit 99.1
FedEx Corp. Reports First Quarter Results
MEMPHIS, Tenn., September 21, 2021 ... FedEx Corp. (NYSE: FDX) today reported the following consolidated results for the first quarter ended August 31 (adjusted measures exclude the items listed below for the applicable fiscal year):
| Fiscal 2022 | Fiscal 2021 | |||
|---|---|---|---|---|
| As Reported<br><br><br>(GAAP) | Adjusted<br><br><br>(non-GAAP) | As Reported<br><br><br>(GAAP) | Adjusted<br><br><br>(non-GAAP) | |
| Revenue | $22.0 billion | $22.0 billion | $19.3 billion | $19.3 billion |
| Operating income | $1.40 billion | $1.49 billion | $1.59 billion | $1.64 billion |
| Operating margin | 6.4% | 6.8% | 8.2% | 8.5% |
| Net income | $1.11 billion | $1.19 billion | $1.25 billion | $1.28 billion |
| Diluted EPS | $4.09 | $4.37 | $4.72 | $4.87 |
This year’s and last year’s quarterly consolidated results have been adjusted for:
| Impact per diluted share | Fiscal 2022 | Fiscal 2021 |
|---|---|---|
| Business realignment costs | $0.19 | $ — |
| TNT Express integration expenses | 0.08 | 0.14 |
“The execution of our strategies continues to drive higher demand for our services, despite the disruptive impact of the pandemic to labor availability and global supply chains,” said Frederick W. Smith, FedEx Corp. chairman and chief executive officer. “I am very proud of our team members around the world who continue to transport lifesaving vaccines and deliver urgently needed supplies to those affected by natural disasters like Hurricane Ida and the recent earthquakes.”
First quarter operating results were negatively affected by an estimated $450 million year over year increase in costs due to a constrained labor market which impacted labor availability, resulting in network inefficiencies, higher wage rates, and increased purchased transportation expenses. This was partially offset by higher package and freight yields, increased international export express shipments and a favorable net fuel impact. In addition, while commercial ground and U.S. domestic express package volume increased year over year, continued supply chain disruptions have slowed U.S. domestic parcel demand compared to the company’s earlier forecast.
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FedEx Express operating results declined due to higher operating expenses, largely driven by staffing challenges and COVID-19-related air network impacts. Results were also negatively impacted by a decline in U.S. average daily freight pounds due to a surge in charter flights a year ago. These factors were partially offset by higher revenue per package and growth in FedEx International Priority and U.S. domestic express packages. The prior year’s results included a pre-tax benefit of approximately $65 million from a reduction in aviation excise taxes provided by the Coronavirus Aid, Relief, and Economic Security Act, which expired on December 31, 2020.
FedEx Ground first quarter operating results declined primarily due to higher labor costs and network inefficiencies due to inadequate staffing, which negatively affected year-over-year results by an estimated $320 million. Operating results were also negatively impacted by higher expansion-related costs. These costs were partially offset by higher revenue per package and growth in commercial packages.
FedEx Freight first quarter operating results improved primarily due to the continued focus on revenue quality and cost management. FedEx Freight reported a record operating margin of 17.3% for the quarter, with average daily shipments growing 12% and revenue per shipment increasing 11%.
“The FedEx teams continue to diligently deliver for our customers under unique and challenging circumstances,” said Raj Subramaniam, FedEx Corp. president and chief operating officer. “The current labor environment is driving inefficiencies in the operation of our networks and significantly impacting our financial results. For the peak season ahead, service remains our focus and we are making investments in resources and capacity to meet our customer’s needs.”
2022 Rate Increases
As previously announced, effective January 3, 2022, FedEx Express, FedEx Ground and FedEx Home Delivery shipping rates will increase by an average of 5.9%, while FedEx Freight rates will increase by an average of 5.9% to 7.9%. Effective November 1, 2021, a fuel surcharge increase will be applied to FedEx Express (U.S. domestic package and freight services), FedEx Ground and FedEx Freight shipments. Details related to these and additional changes to rates and surcharges are available at fedex.com/en-us/shipping/current-rates.html.
Outlook
FedEx is unable to forecast the fiscal 2022 mark-to-market (MTM) retirement plan accounting adjustments. As a result, FedEx is unable to provide a fiscal 2022 earnings per share or effective tax rate (ETR) outlook on a GAAP basis.
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FedEx is reducing its earnings outlook to reflect first quarter results, which were lower than the company’s June forecast. As conditions during the first quarter were more challenging than anticipated and are now expected to extend longer, the revised FedEx outlook also reflects management’s updated expectations for the remainder of the fiscal year:
| • | Earnings per diluted share of $18.25 to $19.50 before the MTM retirement plan accounting adjustments, compared to the prior forecast of $18.90 to $19.90 per diluted share; |
|---|---|
| • | Earnings per diluted share of $19.75 to $21.00 before the MTM retirement plan accounting adjustments and excluding estimated TNT Express integration expenses and costs associated with business realignment activities, compared to the prior forecast of $20.50 to $21.50 per diluted share; |
| --- | --- |
| • | ETR of approximately 24% prior to the MTM retirement plan accounting adjustments; and |
| --- | --- |
| • | Capital spending of $7.2 billion. |
| --- | --- |
These forecasts assume continued growth in U.S. industrial production and global trade, a gradual improvement in labor availability beginning in the second half of fiscal 2022, no additional COVID-19-related business restrictions, and current fuel price expectations. FedEx’s ETR and earnings per share forecasts are based on current law and related regulations and guidance.
“Our results for the first quarter reflect higher operating costs we are incurring during this uncertain and challenging operating environment,” said Michael C. Lenz, FedEx Corp. executive vice president and chief financial officer. “While we expect these conditions to continue near-term, we expect a gradual improvement in labor availability combined with our proactive revenue management actions to mitigate the ongoing impact of these headwinds on our results and position us for earnings growth in fiscal 2022.”
Corporate Overview
FedEx Corp. (NYSE: FDX) provides customers and businesses worldwide with a broad portfolio of transportation, e-commerce and business services. With annual revenue of $87 billion, the company offers integrated business solutions through operating companies competing collectively, operating collaboratively and innovating digitally under the respected FedEx brand. Consistently ranked among the world's most admired and trusted employers, FedEx inspires its 560,000 team members to remain focused on safety, the highest ethical and professional standards and the needs of their customers and communities. FedEx is committed to connecting people and possibilities around the world responsibly and resourcefully, with a goal to achieve carbon-neutral operations by 2040. To learn more, please visit fedex.com/about.
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Additional information and operating data are contained in the company’s annual report, Form 10-K, Form 10-Qs, Form 8-Ks and Statistical Books. These materials, as well as a webcast of the earnings release conference call to be held at 5:30 p.m. EDT on September 21, are available on the company’s website at investors.fedex.com. A replay of the conference call webcast will be posted on our website following the call.
The Investor Relations page of our website, investors.fedex.com, contains a significant amount of information about FedEx, including our Securities and Exchange Commission (SEC) filings and financial and other information for investors. The information that we post on our Investor Relations website could be deemed to be material information. We encourage investors, the media and others interested in the company to visit this website from time to time, as information is updated and new information is posted.
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 and underlying assumptions. Forward-looking statements include those preceded by, followed by or that include the words “will,” “may,” “could,” “would,” “should,” “believes,” “expects,” “anticipates,” “plans,” “estimates,” “targets,” “projects,” “intends” or similar expressions. 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; our ability to meet our labor and purchased transportation needs while controlling related costs; a significant data breach or other disruption to our technology infrastructure; the continuing impact of the COVID-19 pandemic; anti-trade measures and additional changes in international trade policies and relations; our ability to successfully implement our business strategy, effectively respond to changes in market dynamics and achieve the anticipated benefits and associated cost savings of such strategies and actions, including our ability to successfully implement our FedEx Express workforce reduction plan in Europe and to continue to transform and optimize the FedEx Express international business, particularly in Europe; damage to our reputation or loss of brand equity; changes in the business or financial soundness of the U.S. Postal Service, including strategic changes to its operations to reduce its reliance on the air network of FedEx Express; changes in fuel prices or currency exchange rates; our ability to match capacity to shifting volume levels; the impact of intense competition; our ability to effectively operate, integrate, leverage and grow acquired businesses and realize the anticipated benefits of acquisitions and other strategic transactions; the future rate of e-commerce growth and our ability to successfully expand our e-commerce services portfolio; the timeline for recovery of passenger airline cargo capacity; evolving or new U.S. domestic or international laws and government regulations, policies and actions; future guidance, regulations, interpretations, challenges or judicial decisions related to our tax positions; legal challenges or changes related to service providers engaged by FedEx Ground and
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the drivers providing services on their behalf; an increase in self-insurance accruals and expenses; the impact of any international conflicts or terrorist activities; our ability to quickly and effectively restore operations following adverse weather or a localized disaster or disturbance in a key geography; our ability to achieve our goal of carbon-neutral operations by 2040; and other factors which can be found in FedEx Corp.’s and its subsidiaries’ press releases and FedEx Corp.’s filings with the SEC. Any forward-looking statement speaks only as of the date on which it is made. We do not undertake or assume any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
Media Contact: Jenny Robertson 901-434-4829
Investor Contact: Mickey Foster 901-818-7468
Home Page: fedex.com
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RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
TO GAAP FINANCIAL MEASURES
First Quarter Fiscal 2022 and Fiscal 2021 Results
The company reports its financial results in accordance with accounting principles generally accepted in the United States (“GAAP” or “reported”). We have supplemented the reporting of our financial information determined in accordance with GAAP with certain non-GAAP (or “adjusted”) financial measures, including our adjusted first quarter fiscal 2022 and 2021 consolidated operating income and margin, net income and diluted earnings per share, and adjusted first quarter fiscal 2022 and 2021 FedEx Express segment operating income and margin. These financial measures have been adjusted to exclude the impact of the following items (as applicable):
| • | TNT Express integration expenses incurred in fiscal 2022 and 2021; and |
|---|---|
| • | Business realignment costs incurred in fiscal 2022. |
| --- | --- |
We have incurred and expect to incur significant expenses through fiscal 2022 in
connection with our integration of TNT Express. We have adjusted our first quarter fiscal 2022 and 2021 consolidated and FedEx Express segment financial measures to exclude TNT Express integration expenses because we generally would not incur such expenses as part of our continuing operations. The integration expenses are predominantly incremental costs directly associated with the integration of TNT Express, including professional and legal fees and other operating expenses. Internal salaries and employee benefits are included only to the extent the individuals are assigned full-time to integration activities. The integration expenses do not include costs associated with our business realignment activities.
The costs related to business realignment activities in connection with the FedEx Express workforce reduction plan in Europe are excluded from our first quarter fiscal 2022 consolidated and FedEx Express segment non-GAAP financial measures because they are unrelated to our core operating performance and to assist investors with assessing trends in our underlying businesses.
We believe these adjusted financial measures facilitate analysis and comparisons of our ongoing business operations because they exclude items that may not be indicative of, or are unrelated to, the company’s and our business segments’ core operating performance, and may assist investors with comparisons to prior periods and assessing trends in our underlying businesses. These adjustments are consistent with how management views our businesses. Management uses these non-GAAP financial measures in making financial, operating and planning decisions and evaluating the company’s and each business segment’s ongoing performance.
Our non-GAAP financial measures are intended to supplement and should be read together with, and are not an alternative or substitute for, and should not be
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considered superior to, our reported financial results. Accordingly, users of our financial statements should not place undue reliance on these non-GAAP financial measures. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names. As required by SEC rules, the tables below present a reconciliation of our presented non-GAAP financial measures to the most directly comparable GAAP measures.
Fiscal 2022 Earnings Per Share and Effective Tax Rate Forecasts
Our fiscal 2022 earnings per share (EPS) forecast is a non-GAAP financial measure because it excludes (i) fiscal 2022 MTM retirement plan accounting adjustments, (ii) estimated fiscal 2022 TNT Express integration expenses, and (iii) estimated fiscal 2022 business realignment costs. Our fiscal 2022 effective tax rate (ETR) forecast is a non-GAAP financial measure because it excludes the impact of fiscal 2022 MTM retirement plan accounting adjustments.
We have provided these non-GAAP financial measures for the same reasons that were outlined above for historical non-GAAP measures. These items are excluded from our fiscal 2022 EPS and ETR forecasts, as applicable, for the same reasons described above for historical non-GAAP measures.
We are unable to predict the amount of the MTM retirement plan accounting adjustments, as they are significantly impacted by changes in interest rates and the financial markets, so such adjustments are not included in our fiscal 2022 EPS and ETR forecasts. For this reason, a full reconciliation of our fiscal 2022 EPS and ETR forecasts to the most directly comparable GAAP measures is impracticable. It is reasonably possible, however, that our fiscal 2022 MTM retirement plan accounting adjustments could have a material impact on our fiscal 2022 consolidated financial results and ETR.
The table included below titled “Fiscal 2022 Earnings Per Share Forecast” outlines the impacts of the items that are excluded from our fiscal 2022 EPS forecast, other than the MTM retirement plan accounting adjustments.
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First Quarter Fiscal 2022
FedEx Corporation
| Operating | Income | Net | Diluted<br><br><br>Earnings | ||
|---|---|---|---|---|---|
| Dollars in millions, except EPS | Income | Margin | Taxes^1^ | Income^2^ | Per Share^3^ |
| GAAP measure | $1,398 | 6.4% | $345 | $1,112 | $4.09 |
| Business realignment costs^4^ | 67 | 0.3% | 15 | 52 | 0.19 |
| TNT Express integration<br><br><br>expenses^5^ | 29 | 0.1% | 6 | 23 | 0.08 |
| Non-GAAP measure | $1,494 | 6.8% | $366 | $1,187 | $4.37 |
FedEx Express Segment
| Operating | ||
|---|---|---|
| Dollars in millions | Income | Margin |
| GAAP measure | $567 | 5.2% |
| Business realigment costs | 67 | 0.6% |
| TNT Express integration expenses | 26 | 0.2% |
| Non-GAAP measure | $660 | 6.0% |
First Quarter Fiscal 2021
FedEx Corporation
| Operating | Income | Net | Diluted<br><br><br>Earnings | ||
|---|---|---|---|---|---|
| Dollars in millions, except EPS | Income | Margin | Taxes^1^ | Income^2^ | Per Share^3^ |
| GAAP measure | $1,590 | 8.2% | $361 | $1,245 | $4.72 |
| TNT Express integration expenses^5^ | 49 | 0.3% | 11 | 38 | 0.14 |
| Non-GAAP measure | $1,639 | 8.5% | $372 | $1,283 | $4.87 |
FedEx Express Segment
| Operating | ||
|---|---|---|
| Dollars in millions | Income | Margin^3^ |
| GAAP measure | $710 | 7.4% |
| TNT Express integration expenses | 37 | 0.4% |
| Non-GAAP measure | $747 | 7.7% |
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Fiscal 2022 Earnings Per Share Forecast
| Dollars in millions, except EPS | Adjustments |
|---|---|
| Earnings per diluted share before<br><br><br>MTM retirement plan accounting<br><br><br>adjustments (non-GAAP)^6^ | |
| TNT Express integration expenses | 150 |
| Income tax effect^1^ | (28) |
| Net of tax effect | 122 |
| Business realignment costs | 370 |
| Income tax effect^1^ | (85) |
| Net of tax effect | 285 |
| Earnings per diluted share with adjustments^6^ |
All values are in US Dollars.
Notes:
| 1 – | Income taxes are based on the company’s approximate statutory tax rates applicable to each transaction. |
|---|---|
| 2 – | Effect of “total other (expense) income” on net income amount not shown. |
| --- | --- |
| 3 – | Does not sum to total due to rounding. |
| --- | --- |
| 4 – | Business realignment costs were recognized at FedEx Express. |
| --- | --- |
| 5 – | These expenses were recognized at FedEx Corporate and FedEx Express. |
| --- | --- |
| 6 – | The MTM retirement plan accounting adjustments, which are impracticable to calculate at this time, are excluded. |
| --- | --- |
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FEDEX CORP. FINANCIAL HIGHLIGHTS
First Quarter Fiscal 2022
(In millions, except earnings per share)
(Unaudited)
| Three Months Ended<br><br><br>August 31, | |||
|---|---|---|---|
| 2021 | 2020 | % | |
| Revenue: | |||
| FedEx Express segment | $10,966 | $9,647 | 14% |
| FedEx Ground segment | 7,677 | 7,040 | 9% |
| FedEx Freight segment | 2,251 | 1,826 | 23% |
| FedEx Services segment | 35 | 8 | 338% |
| Other and eliminations^1^ | 1,074 | 800 | 34% |
| Total Revenue | 22,003 | 19,321 | 14% |
| Operating Expenses: | |||
| Salaries and employee benefits | 7,776 | 6,852 | 13% |
| Purchased transportation | 5,659 | 4,977 | 14% |
| Rentals | 1,133 | 936 | 21% |
| Depreciation and amortization | 971 | 926 | 5% |
| Fuel | 1,009 | 565 | 79% |
| Maintenance and repairs | 869 | 806 | 8% |
| Business realignment costs | 67 | — | NM |
| Other | 3,121 | 2,669 | 17% |
| Total Operating Expenses | 20,605 | 17,731 | 16% |
| Operating Income: | |||
| FedEx Express segment | 567 | 710 | (20%) |
| FedEx Ground segment | 671 | 834 | (20%) |
| FedEx Freight segment | 390 | 274 | 42% |
| Corporate, other, and eliminations^1^ | (230) | (228) | 1% |
| Total Operating Income | 1,398 | 1,590 | (12%) |
| Other (Expense) Income: | |||
| Interest, net | (160) | (184) | (13%) |
| Other retirement plans income | 216 | 201 | 7% |
| Other, net | 3 | (1) | NM |
| Total Other Income | 59 | 16 | 269% |
| Income Before Income Taxes | 1,457 | 1,606 | (9%) |
| Provision for Income Taxes | 345 | 361 | (4%) |
| Net Income | $1,112 | $1,245 | (11%) |
| Diluted Earnings Per Share | $4.09 | $4.72 | (13%) |
| Weighted Average Common and | |||
| Common Equivalent Shares | 271 | 263 | 3% |
| Capital Expenditures | $1,570 | $1,424 | 10% |
1 – Includes the FedEx Office, FedEx Logistics, and FedEx Dataworks operating segments. The financial results of FedEx Dataworks are included in the period ended August 31, 2021.
FEDEX CORP. CONDENSED CONSOLIDATED BALANCE SHEETS
First Quarter Fiscal 2022
(In millions)
| August 31, 2021 | ||
|---|---|---|
| (Unaudited) | May 31, 2021 | |
| ASSETS | ||
| Current Assets | ||
| Cash and cash equivalents | $6,853 | $7,087 |
| Receivables, less allowances | 11,125 | 12,069 |
| Spare parts, supplies and fuel, less allowances | 577 | 587 |
| Prepaid expenses and other | 991 | 837 |
| Total current assets | 19,546 | 20,580 |
| Property and Equipment, at Cost | 71,542 | 70,077 |
| Less accumulated depreciation and amortization | 35,061 | 34,325 |
| Net property and equipment | 36,481 | 35,752 |
| Other Long-Term Assets | ||
| Operating lease right-of-use assets, net | 15,414 | 15,383 |
| Goodwill | 6,843 | 6,992 |
| Other assets | 3,764 | 4,070 |
| Total other long-term assets | 26,021 | 26,445 |
| $82,048 | $82,777 | |
| LIABILITIES AND COMMON STOCKHOLDERS'<br><br><br>INVESTMENT | ||
| Current Liabilities | ||
| Current portion of long-term debt | $125 | $146 |
| Accrued salaries and employee benefits | 2,200 | 2,903 |
| Accounts payable | 3,822 | 3,841 |
| Operating lease liabilities | 2,263 | 2,208 |
| Accrued expenses | 4,500 | 4,562 |
| Total current liabilities | 12,910 | 13,660 |
| Long-Term Debt, Less Current Portion | 20,554 | 20,733 |
| Other Long-Term Liabilities | ||
| Deferred income taxes | 3,969 | 3,927 |
| Pension, postretirement healthcare and other benefit obligations | 3,451 | 3,501 |
| Self-insurance accruals | 2,484 | 2,430 |
| Operating lease liabilities | 13,382 | 13,375 |
| Other liabilities | 977 | 983 |
| Total other long-term liabilities | 24,263 | 24,216 |
| Commitments and Contingencies | ||
| Common Stockholders' Investment | ||
| Common stock, $0.10 par value, 800 million shares authorized | 32 | 32 |
| Additional paid-in capital | 3,610 | 3,481 |
| Retained earnings | 30,462 | 29,817 |
| Accumulated other comprehensive loss | (881) | (732) |
| Treasury stock, at cost | (8,902) | (8,430) |
| Total common stockholders' investment | 24,321 | 24,168 |
| $82,048 | $82,777 |
FEDEX CORP. CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
First Quarter Fiscal 2022
(In millions)
(Unaudited)
| Three Months Ended<br><br><br>August 31, | ||
|---|---|---|
| 2021 | 2020 | |
| Operating Activities: | ||
| Net income | $1,112 | $1,245 |
| Noncash charges: | ||
| Depreciation and amortization | 971 | 926 |
| Other, net | 1,106 | 749 |
| Changes in operating assets and liabilities, net | (1,105) | (269) |
| Net cash provided by operating activities | 2,084 | 2,651 |
| Investing Activities: | ||
| Capital expenditures | (1,570) | (1,424) |
| Proceeds from asset dispositions and other | 20 | 6 |
| Net cash used in investing activities | (1,550) | (1,418) |
| Financing Activities: | ||
| Principal payments on debt | (64) | (45) |
| Proceeds from debt issuances | — | 959 |
| Proceeds from stock issuances | 84 | 82 |
| Dividends paid | (200) | (170) |
| Purchase of treasury stock | (549) | — |
| Other, net | (1) | (1) |
| Cash (used in) provided by financing activities | (730) | 825 |
| Effect of exchange rate changes on cash | (38) | 15 |
| Net (decrease) increase in cash and cash equivalents | (234) | 2,073 |
| Cash and cash equivalents at beginning of period | 7,087 | 4,881 |
| Cash and cash equivalents at end of period | $6,853 | $6,954 |
FEDEX EXPRESS SEGMENT FINANCIAL HIGHLIGHTS
First Quarter Fiscal 2022
(Dollars in millions)
(Unaudited)
| Three Months Ended<br><br><br>August 31, | |||
|---|---|---|---|
| 2021 | 2020 | % | |
| Revenue: | |||
| Package Revenue: | |||
| U.S. Overnight Box | $2,170 | $1,861 | 17% |
| U.S. Overnight Envelope | 482 | 426 | 13% |
| Total U.S. Overnight | 2,652 | 2,287 | 16% |
| U.S. Deferred | 1,231 | 1,096 | 12% |
| Total U.S. Package Revenue | 3,883 | 3,383 | 15% |
| International Priority | 2,839 | 2,317 | 23% |
| International Economy | 669 | 616 | 9% |
| Total International Export Package | 3,508 | 2,933 | 20% |
| International Domestic^1^ | 1,114 | 1,088 | 2% |
| Total Package Revenue | 8,505 | 7,404 | 15% |
| Freight Revenue: | |||
| U.S. | 775 | 833 | (7%) |
| International Priority | 873 | 653 | 34% |
| International Economy | 414 | 371 | 12% |
| International Airfreight | 47 | 75 | (37%) |
| Total Freight Revenue | 2,109 | 1,932 | 9% |
| Other Revenue | 352 | 311 | 13% |
| Total Express Revenue | $10,966 | $9,647 | 14% |
| Operating Expenses: | |||
| Salaries and employee benefits | 4,084 | 3,742 | 9% |
| Purchased transportation | 1,551 | 1,304 | 19% |
| Rentals and landing fees | 635 | 504 | 26% |
| Depreciation and amortization | 492 | 477 | 3% |
| Fuel | 868 | 496 | 75% |
| Maintenance and repairs | 573 | 551 | 4% |
| Business realignment costs | 67 | — | NM |
| Intercompany charges | 508 | 461 | 10% |
| Other | 1,621 | 1,402 | 16% |
| Total Operating Expenses | 10,399 | 8,937 | 16% |
| Operating Income | $567 | $710 | (20%) |
| Operating Margin | 5.2% | 7.4% | (2.2 pts) |
1 – International Domestic revenue relates to international intra-country operations.
FEDEX EXPRESS SEGMENT OPERATING HIGHLIGHTS
First Quarter Fiscal 2022
(Unaudited)
| Three Months Ended<br><br><br>August 31, | |||
|---|---|---|---|
| 2021 | 2020 | % | |
| PACKAGE STATISTICS | |||
| Average Daily Package Volume (000s): | |||
| U.S. Overnight Box | 1,413 | 1,287 | 10% |
| U.S. Overnight Envelope | 514 | 483 | 6% |
| Total U.S. Overnight Package | 1,927 | 1,770 | 9% |
| U.S. Deferred | 1,251 | 1,207 | 4% |
| Total U.S. Domestic Package | 3,178 | 2,977 | 7% |
| International Priority | 771 | 696 | 11% |
| International Economy | 263 | 260 | 1% |
| Total International Export Package | 1,034 | 956 | 8% |
| International Domestic^1^ | 2,004 | 2,298 | (13%) |
| Total Average Daily Packages | 6,216 | 6,231 | — |
| Yield (Revenue Per Package): | |||
| U.S. Overnight Box | $23.62 | $22.25 | 6% |
| U.S. Overnight Envelope | 14.42 | 13.56 | 6% |
| U.S. Overnight Composite | 21.17 | 19.88 | 6% |
| U.S. Deferred | 15.14 | 13.97 | 8% |
| U.S. Domestic Composite | 18.79 | 17.48 | 7% |
| International Priority | 56.64 | 51.18 | 11% |
| International Economy | 39.10 | 36.46 | 7% |
| Total International Export Composite | 52.18 | 47.18 | 11% |
| International Domestic^1^ | 8.56 | 7.28 | 18% |
| Composite Package Yield | $21.05 | $18.28 | 15% |
| FREIGHT STATISTICS | |||
| Average Daily Freight Pounds (000s): | |||
| U.S. | 8,040 | 8,849 | (9%) |
| International Priority | 6,594 | 5,501 | 20% |
| International Economy | 11,683 | 11,633 | — |
| International Airfreight | 1,227 | 1,575 | (22%) |
| Total Avg Daily Freight Pounds | 27,544 | 27,558 | — |
| Revenue Per Freight Pound: | |||
| U.S. | $1.48 | $1.45 | 2% |
| International Priority | 2.04 | 1.83 | 11% |
| International Economy | 0.55 | 0.49 | 12% |
| International Airfreight | 0.60 | 0.74 | (19%) |
| Composite Freight Yield | $1.18 | $1.08 | 9% |
| Operating Weekdays | 65 | 65 | — |
1 – International Domestic statistics relate to international intra-country operations.
FEDEX GROUND SEGMENT FINANCIAL AND OPERATING HIGHLIGHTS
First Quarter Fiscal 2022
(Dollars in millions)
(Unaudited)
| Three Months Ended<br><br><br>August 31, | |||
|---|---|---|---|
| 2021 | 2020 | % | |
| FINANCIAL HIGHLIGHTS | |||
| Revenue | $7,677 | $7,040 | 9% |
| Operating Expenses: | |||
| Salaries and employee benefits | 1,613 | 1,274 | 27% |
| Purchased transportation | 3,503 | 3,291 | 6% |
| Rentals | 318 | 264 | 20% |
| Depreciation and amortization | 226 | 204 | 11% |
| Fuel | 6 | 4 | 50% |
| Maintenance and repairs | 136 | 107 | 27% |
| Intercompany charges | 491 | 432 | 14% |
| Other | 713 | 630 | 13% |
| Total Operating Expenses | 7,006 | 6,206 | 13% |
| Operating Income | $671 | $834 | (20%) |
| Operating Margin | 8.7% | 11.8% | (3.1 pts) |
| OPERATING STATISTICS | |||
| Ground Commercial Operating Weekdays | 66 | 66 | — |
| Home Delivery and Economy Operating Days | 91 | 91 | — |
| Average Daily Package Volume (000s)^1^: | |||
| Ground Commercial | 4,425 | 3,966 | 12% |
| Home Delivery | 3,747 | 3,682 | 2% |
| Economy | 1,164 | 1,698 | (31%) |
| Total Average Daily Package Volume | 9,336 | 9,346 | — |
| Yield (Revenue Per Package) | $10.29 | $9.33 | 10% |
1 – As FedEx Ground has expanded seven-day-per-week residential delivery coverage to virtually all of the U.S. population, Ground Commercial average daily package volume is calculated on a 5-day-per-week basis, while Home Delivery and Economy average daily package volumes are calculated on a 7-day-per-week basis. Prior year statistical information has been revised to conform to the current year presentation.
FEDEX FREIGHT SEGMENT FINANCIAL AND OPERATING HIGHLIGHTS
First Quarter Fiscal 2022
(Dollars in millions)
(Unaudited)
| Three Months Ended<br><br><br>August 31, | |||
|---|---|---|---|
| 2021 | 2020 | % | |
| FINANCIAL HIGHLIGHTS | |||
| Revenue | $2,251 | $1,826 | 23% |
| Operating Expenses: | |||
| Salaries and employee benefits | 988 | 858 | 15% |
| Purchased transportation | 239 | 170 | 41% |
| Rentals | 59 | 56 | 5% |
| Depreciation and amortization | 99 | 106 | (7%) |
| Fuel | 135 | 65 | 108% |
| Maintenance and repairs | 63 | 53 | 19% |
| Intercompany charges | 126 | 119 | 6% |
| Other | 152 | 125 | 22% |
| Total Operating Expenses | 1,861 | 1,552 | 20% |
| Operating Income | $390 | $274 | 42% |
| Operating Margin | 17.3% | 15.0% | 2.3 pts |
| OPERATING STATISTICS | |||
| Operating Weekdays | 65 | 65 | — |
| Average Daily Shipments (000s): | |||
| Priority | 80.3 | 71.3 | 13% |
| Economy | 33.5 | 30.1 | 11% |
| Total Average Daily Shipments | 113.8 | 101.4 | 12% |
| Weight Per Shipment (lbs): | |||
| Priority | 1,085 | 1,096 | (1%) |
| Economy | 938 | 998 | (6%) |
| Composite Weight Per Shipment | 1,041 | 1,067 | (2%) |
| Revenue/Shipment: | |||
| Priority | $290.92 | $259.90 | 12% |
| Economy | 333.02 | 302.74 | 10% |
| Composite Revenue/Shipment | $303.32 | $272.62 | 11% |
| Revenue/CWT: | |||
| Priority | $26.82 | $23.71 | 13% |
| Economy | 35.50 | 30.34 | 17% |
| Composite Revenue/CWT | $29.13 | $25.55 | 14% |
16