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About FedEx
FedEx Archives: 2003 Press Releases
FedEx Updates Savings and Costs Forecasts for Early Retirement and Severance ProgramsMEMPHIS, Tenn.--(BUSINESS WIRE)--Oct. 2, 2003--FedEx Corporation (NYSE: FDX) today announced that employee acceptance of the previously announced early retirement and severance programs at its FedEx Express unit has exceeded original expectations. As a result, the company has adjusted its forecasts for the costs and savings associated with these programs, which are designed to resize its U.S Express organization in order to improve profitability. The company now estimates that pretax costs for these programs will be in a range of $380 million to $420 million in fiscal 2004. Most of the costs will be incurred in the first half of the fiscal year. Approximately one-half of the pretax charge will be cash. The remainder of the charge relates primarily to pension and post-retirement healthcare liabilities. The estimated savings from these programs is expected to be $130 million to $140 million in fiscal 2004, primarily in the second half of the fiscal year. The fiscal 2004 net cost is estimated to be $250 million to $280 million. In fiscal 2005 and beyond, the estimated annual savings from these programs is now expected to be $200 million to $230 million. The early retirement sign-up period expired on September 30, 2003. The voluntary severance program continues, and employees can request voluntary severance up until November 24, 2003. Due to the positive response to these voluntary programs, some employee departures will be deferred up to May 31, 2004 and some replacement staff will be required. The earnings forecasts for the second quarter and full year are unchanged, excluding the business realignment costs and savings, as well as the recent one-time tax benefit. Excluding these items, earnings are expected to be $0.80 to $0.90 per diluted share in the second quarter, compared to $0.81 per diluted share a year ago, while fiscal 2004 earnings are still expected to be $3.00 to $3.15 per diluted share. 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 the impact of two items (net business realignment costs and the benefit from a tax court decision) from our earnings guidance will allow more accurate comparisons to prior periods of our expected operating performance in fiscal 2004 and beyond. As required by SEC rules, the table below presents a reconciliation of our presented non-GAAP measures to the most directly comparable GAAP measures.
Fiscal 2004 Second Quarter and Full-Year Earnings Guidance
Q2 Diluted EPS FY 2004 Diluted
Guidance EPS Guidance
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Non-GAAP Measure $0.80 to $0.90 $3.00 to $3.15
Net Business Realignment Costs (0.51 to 0.46) (0.57 to 0.51)
First Quarter Benefit From Tax
Court Decision - 0.08
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GAAP Measure $0.29 to $0.44 $2.51 to $2.72
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Business Editors Because the ultimate costs and savings of these programs will depend on a number of factors, including those described above, it is difficult to precisely determine the financial impact until the program has been fully completed. The company will provide further guidance of the costs and savings associated with these business realignment programs when it announces second quarter results in mid-December. With annual revenues of $23 billion, FedEx Corp. is the premier global provider of transportation, e-commerce and supply chain management services. The company offers integrated business solutions through a network of subsidiaries operating independently, including: FedEx Express, the world's largest express transportation company; FedEx Ground, North America's second largest provider of small-package ground delivery service; FedEx Freight, the largest U.S. provider of regional less-than-truckload freight services; FedEx Custom Critical, North America's largest provider of expedited time-critical shipments; and FedEx Trade Networks, North America's largest customs broker and a provider of international freight forwarding and trade facilitation services. FedEx ranked highest in the J.D. Power and Associates 2002 Small Package Delivery Service Business Customer Satisfaction Study(SM) in the categories of air, ground and international delivery services. 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. Specifically, the updated ranges of estimated business realignment costs and savings reflect employee acceptances to date. The ultimate costs and savings from this initiative will depend, among other things, on the number of additional employees who participate in the voluntary severance program (which runs through November 24, 2003), the number of employees whose departure is deferred and the number of new staff required. Other potential risks and uncertainties include, but are not limited to, any impacts on the company's business resulting from the timing, speed and magnitude of the U.S. domestic economic recovery, new U.S. domestic or international government regulation, the impact from any terrorist activities or international conflicts, the impact of rising fuel prices, our ability to match capacity to shifting volume levels, the timing and amount of any money that FedEx is entitled to receive and retain under the Air Transportation Safety and System Stabilization Act and other factors which can be found in FedEx Corp.'s and its subsidiaries' press releases and filings with the SEC. --30--TLM/na*
CONTACT: FedEx Corporation
Media Contact:
Shirlee Clark, 901-818-7463
or
Investor Contact:
Jim Clippard, 901-818-7468
Home Page: www.fedex.com
KEYWORD: TENNESSEE
INDUSTRY KEYWORD: TRANSPORTATION AIRLINES
SOURCE: FedEx Corporation
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