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FedEx Archives: 1997 Press Releases

( BW)(FEDERAL-EXPRESS)(FDX) FEDERAL EXPRESS CORPORATION SECOND QUARTER FISCAL 1998 FINANCIAL RESULTS

    Business Editors

    MEMPHIS, Tenn.--(BUSINESS WIRE)--Dec. 11, 1997--Federal Express Corp. (NYSE:FDX) today announced that earnings for the quarter ended November 30 were $0.91 per share, compared to $0.79 per share last year, excluding a benefit of approximately $0.11 from one-time items in last year's second quarter. Net income for the quarter was $107.0 million compared to $103.7 million a year ago.
    Revenues for the quarter were $3,299.2 million, 16% higher than last year's $2,852.4 million. Operating income increased to $213.8 million from $184.9 million, and pretax income was $184.5 million compared to $180.4 million last year.
    "Worldwide demand for FedEx's unique express service continues to expand, as evidenced by the quarter's 5% year-over-year increase in international operating income, despite new flights which limited international profits for the quarter," said Executive Vice President and Chief Financial Officer Alan B. Graf, Jr. "To capitalize on this growing demand and extend our leadership position, we expanded our unparalleled global network during the quarter by adding several strategic international routes, including an around the world flight, overnight service from Osaka to the U.S. and improved service from the U.S. to Mexico and Brazil. Our premium FedEx International Priority(R) (IP) service grew a strong 18% while IP's revenue per package increased 1.5%."
    International operating income for the second quarter was $46.3 million on international segment revenues of $939.4 million. In last year's second quarter, the international segment reported operating income of $44.1 million on revenues of $814.1 million.
    The company's U.S. domestic operating income was $167.5 million on revenues of $2,359.8 million, compared to operating income of $140.8 million on revenues of $2,038.3 million in last year's second quarter.
    "In the U.S., package volumes increased 10%, revenue per package rose 4.7%, and cost per package was up 4.5%," said Graf. "The improvement in revenue per package demonstrates continued success of yield management programs. Accelerated growth in deferred volume, however, especially FedEx Express Saver(R), remains well ahead of our plans, putting pressure on our cost and productivity performance this quarter. We also incurred additional expenses with the opening of the southwest regional hub at Fort Worth Alliance Airport and the Small Package Sort System at the Memphis SuperHub. As these state-of-the-art automated facilities reach capacity, we expect significant improvements in productivity."
    Last year's second quarter operating results included a $13.5 million benefit from the settlement of a Tennessee personal property tax matter. Last year's second quarter non-operating income included a net gain of $17.1 million from the insurance settlement on a DC10-10 aircraft destroyed by fire. The net effect of these two items, after adjusting for variable compensation payments and income taxes, was a benefit of approximately $0.11 per share.
    During the quarter, Federal Express Corp. and Caliber System, Inc. jointly announced that their respective boards of directors have approved a transaction in which FDX Corporation, a new holding company to be formed as part of the transaction, will acquire Caliber System, Inc. and its subsidiaries, including package carrier RPS, Inc. FDX Corporation will offer a broad portfolio of express and non-express services at a level of excellence unmatched by any competitor. The transaction is expected to be finalized during the first calendar quarter of 1998.
    Federal Express connects areas that generate 90% of the world's gross domestic product in 24-48 hours with door-to-door, customs-cleared service with a money-back guarantee. The company's unmatched air route authorities and infrastructure make it the world's largest express transportation company, providing fast and reliable services for 3 million items in 212 countries each working day. The company employs approximately 140,000 people and has more than 43,000 drop-off locations, 600 aircraft and 39,500 vehicles in its integrated global network. FedEx maintains electronic connections with more than 850,000 customers via FedEx PowerShip(R), FedEx Ship(R) and FedEx interNetShip(SM). Federal Express reported revenues of $11.5 billion for its fiscal year ended May 31, 1997.


           FEDERAL EXPRESS CORPORATION FINANCIAL HIGHLIGHTS
             (Unaudited; Current year data is preliminary)

                      Second Quarter Fiscal 1998
      (In millions, except earnings per share and operating data)

                        Three Months Ended         Six Months Ended
                             November 30              November 30
                 ----------------------------------------------------
FINANCIAL RESULTS         1997         1996         1997       1996

Revenues                $3,299.2     $2,852.4     $6,596.4   $5,544.7

Operating
Expenses:
 Salaries and
  benefits               1,425.5      1,247.2      2,876.0    2,478.6
 Rentals and
  landing fees             316.5        267.2        591.0      520.6
 Depreciation
  and amortization         208.9        191.0        411.3      381.2
 Fuel                      182.4        174.5        356.2      328.0
 Maintenance and
  repairs                  206.7        188.4        415.1      369.9
 Other                     745.4        599.2      1,468.8    1,151.6
                         -------      -------      -------    -------
                         3,085.4      2,667.5      6,118.4    5,229.9

Operating Income           213.8        184.9        478.0      314.8

Other Income
 (Expense):
 Interest, net             (28.7)       (21.2)       (54.5)     (43.0)
 Other, net                 (0.6)        16.7          8.0       16.3
                           ------       ------       ------     ------
                           (29.3)        (4.5)       (46.5)     (26.7)

Pretax Income              184.5        180.4        431.5      288.1

Provision for
 Income Taxes               77.5         76.7        181.2      122.4

Net Income                $107.0       $103.7       $250.3     $165.7

Earnings Per
 Share                     $0.91        $0.90        $2.13      $1.44

Common and
 Common Equivalent
 Shares                  117.913      115.132      117.628    115.033

OPERATING DATA

Operating Weekdays            63           63          127        127

AVERAGE DAILY
 EXPRESS VOLUME
Priority
 Overnight             1,245,772    1,204,904    1,236,861  1,148,443
Standard
 Overnight               622,041      611,326      626,051    618,254
2Day/Express
 Saver                   854,647      663,570      840,257    618,580
Overnight/2Day/Express
 Saver Freight             9,479        5,144        8,698      4,729
Total U.S.A
 Express Volume        2,731,939    2,484,944    2,711,867  2,390,006
International Priority   264,901      225,141      255,617    217,127
Total Avg Daily
 Express Volume        2,996,840    2,710,085    2,967,484  2,607,133

YIELD PER EXPRESS
 PACKAGE
Priority Overnight        $15.15       $14.68       $15.28     $15.00
Standard Overnight         12.10        10.83        12.13      10.82
2Day/Express Saver          9.63         9.32        10.10       9.55
Overnight/2Day/Express
 Saver Freight            142.46       150.09       143.46     151.47
Total U.S.A
 Express Yield            $13.17       $12.58       $13.36     $12.78
International Priority     41.89        41.28        41.73      40.84
Total Composite Yield     $15.71       $14.97       $15.80     $15.11

Avg Pounds per
 Express Package             8.7          7.1          8.5        7.0
Avg Revenue per
 Express Pound             $1.80        $2.11        $1.86      $2.17

INT'L AIRFREIGHT
 (IXF/ATA)
Millions of Pounds         188.0        173.0        357.7      322.7
Revenue per Pound          $0.88        $0.94        $0.89      $0.93

    --30--KH/na*

    CONTACT:  Federal Express Corp., Memphis
              Greg Rossiter (Media), 901/395-4440
             Shirlee Clark (Media), 901/395-3463
              Becky Halvorson, (Investor), 901/395-3468
               or
              Worldwide Web Home Page: http://www.fedex.com

    KEYWORD:  TENNESSEE
    INDUSTRY KEYWORD:  TRANSPORTATION EARNINGS
    URL:  http://www.fedex.com