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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 (FEE REQUIRED) FOR THE FISCAL YEAR ENDED MAY 31, 1996.
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 (NO FEE REQUIRED) 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:
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS 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 ((S) 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. / /
As of July 31, 1996, 56,944,841 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 $4,030,802,040.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Stockholders for the fiscal year ended May
31, 1996 are incorporated by reference into Parts II and IV.
Portions of the Proxy Statement for the Annual Meeting of Stockholders to
be held October 1, 1996 are incorporated by reference into Part III.
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TABLE OF CONTENTS
PAGE
----
PART I
ITEM 1. Business......................................................... 1
ITEM 2. Properties....................................................... 11
ITEM 3. Legal Proceedings................................................ 13
ITEM 4. Submission of Matters to a Vote of Security Holders.............. 14
Executive Officers of the Registrant............................. 15
PART II
ITEM 5. Market for the Registrant's Common Stock and Related Stockholder
Matters.......................................................... 18
ITEM 6. Selected Financial Data........................................... 18
ITEM 7. Management's Discussion and Analysis.............................. 18
ITEM 8. Financial Statements and Supplementary Data....................... 18
ITEM 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure............................ 18
PART III
ITEM 10. Directors and Executive Officers of the Registrant.............. 18
ITEM 11. Executive Compensation.......................................... 19
ITEM 12. Security Ownership of Certain Beneficial Owners and Management.. 19
ITEM 13. Certain Relationships and Related Transactions.................. 19
PART IV
ITEM 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.... 19
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
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 1996, 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. The most significant
expansion was the launch of the Company's FedEx AsiaOne/R/ network. With
FedEx AsiaOne, the Company now connects Asia's major cities with late-in-the day
pickups and door-to-door, next-business-day deliveries, and provides Asia-to-
North America daily all-cargo flights. The Company also allocated larger
aircraft to its three daily trans-Atlantic flights, added a fifth daily trans-
Pacific flight and became the only U.S. all-cargo carrier authorized to fly into
and out of the People's Republic of China.
In September 1995, the Company unveiled FedEx First Overnight,/SM/ an 8:00
a.m. next business day delivery service from almost anywhere in the U.S. to more
than 90 major U.S. markets and, in March 1996, began FedEx International
First,/SM/ an 8:00 a.m. one to two business day delivery service for import
shipments to more than 90 U.S. cities from 18 business centers around the world.
The Company also added new Airbus A300 aircraft and introduced new innovative
technologies aimed at improving customer satisfaction while reducing the
resources required to serve customer needs, including the introduction of
shipment status tracking on the Company's World Wide Web page
(http://www.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/SM/
strategically located throughout the country.
The Company's newest overnight delivery service is FedEx First Overnight.
This next business day service offers 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 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 750 pounds. Shipments exceeding 750 pounds will be
accepted if advance approval is obtained.
Two U.S. domestic second-day services are available for less urgent
shipments: FedEx 2Day/SM/ and FedEx 2Day Freight./SM/ 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 shipments
destined for private residences) 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.
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 domestic 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/SM/ 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.
The Company introduced FedEx Express Saver/SM/ Freight in 1996, a distance-
based, one, two or three business-day, time-definite service. FedEx Express
Saver Freight shipments are committed for delivery by 4:30 p.m. to virtually all
locations in the continental United States. This service is designed as an
express alternative to time-indefinite "less-than-truckload" shipments.
In addition to the services discussed above, the Company offers various
international document and package delivery services and international freight
services. FedEx International First/SM/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. Customs clearance is included as part of this service.
FedEx International Priority/R/ ("IP") is a time-definite 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.
FedEx International Priority/R/ Freight is an expansion of IP service and
is a time-definite service for international shipments 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
2
prohibited by destination country laws. Pick-up and delivery are provided from
many points in the Company'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 Direct
Distribution/SM/ is a time-definite service for larger bulk shipments destined
to several different recipients in one country. Once the bulk shipment arrives
in the destination country and the entire shipment clears, 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 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.
FedEx International Economy/SM/ is a deferred, customs-cleared service for
shipments of unlimited weight (except individual boxes within the shipment may
not exceed 150 pounds). This service is available Monday through Friday only
between the United States and Canada with a delivery commitment of two to three
business days by 5:00 p.m. This service offers customers cost-effective rates,
customs clearance, package tracking and the Company's money-back guarantee on
service commitments.
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-Airport/SM/ 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 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.
3
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 1996, revenues from charter operations accounted for
approximately 0.9% of the Company's total revenues and approximately 1.2% and
1.3% of total revenues during fiscal 1995 and 1994, 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 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 1996, LECC 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 redesign their supply chains to reduce cost and improve
service to their customers.
LECC solutions include FedEx PowerPartner,/R/ an electronic order entry
system, FedEx interNetShip,/SM/ FedEx Ship/R/ and the FedEx POWERSHIP/R/
options discussed below, FedEx Express Distribution Center/SM/ facilities and
services such as EMerge,/R/ FedEx Repair and Return and FedEx International
Priority DirectDistribution. FedEx Express Distribution Center facilities 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.
EMerge is designed for customers that source components in multiple
locations. EMerge consolidates shipments en route so that components from
different U.S. locations are delivered the same day. FedEx Repair and Return is
a domestic door-to-door, fast cycle repair service where the Company manages the
pickup, repair and return of defective computers and other electronics products.
Woven throughout these solutions and services is the Marketing Advantage
Program. Through this consulting program, LECC offers advice to catalogers and
direct marketers regarding customized promotional strategies, telemarketing
training, operational support and international mailing services. This program
helps the Company's customers improve their businesses by marketing their use of
FedEx value-added logistics and electronic commerce services to their customers.
4
LECC has offices and operating locations in Memphis and other key U.S.
cities, the United Kingdom, Belgium, France, the Netherlands, the United Arab
Emirates, 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, domestic shipping rates are 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 are 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.
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):
1996 1995 1994
----------- ---------- ----------
FedEx Priority Overnight $ 4,170,254 $3,908,837 $3,737,022
FedEx Standard Overnight 1,616,538 1,374,440 1,178,628
FedEx 2Day 1,365,430 1,284,297 1,110,543
Domestic freight services 132,122 132,672 115,365
International priority services 1,996,827 1,679,830 1,338,795
International freight services 554,143 580,315 504,738
Charter 92,389 115,062 113,446
LECC and other* 345,916 316,620 380,919
----------- ---------- ----------
Total $10,273,619 $9,392,073 $8,479,456
=========== ========== ==========
*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, non-U.S. intra-country
operations and Warren Transport, Inc. (sold September 1993).
SEASONALITY OF BUSINESS
- -----------------------
The Company's express package business and international airfreight
business are both seasonal in nature. Historically, the 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 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.
5
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, 559 aircraft,
approximately 36,900 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, 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 7,000 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, that utilizes hand-held electronic scanning equipment and computer
terminals. This system provides proof of 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
6
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. In 1996, the Company introduced shipment status
tracking on its World Wide Web page. From the Web site, shippers can retrieve
precise details on the status of their shipments any time of day from anywhere
in the world. In July 1996, the Company introduced FedEx interNetShip which
provides shipment processing capability on the World Wide Web.
FUEL SUPPLIES AND COSTS
- -----------------------
During 1996 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. The Company 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, 1996, the
Company had contracts with various financial institutions covering a total
notional volume of 365.3 million gallons (approximately 54% of the Company's
annual jet fuel consumption), with some contracts extending through May 1997.
During 1996, the Company received $1,977,000 under jet fuel contracts.
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:
TOTAL COST PERCENTAGE OF TOTAL
FISCAL YEAR (IN THOUSANDS) OPERATING EXPENSE
- ------------- -------------- --------------------
1996 $461,401 4.8%
1995 394,225 4.5
1994 374,561 4.7
1993 403,597 5.4
1992 414,481 5.5
Approximately 40% 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
7
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 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, pricing oversight and to other regulatory matters,
including the transfer of route authority between carriers. The Company holds
various certificates of public convenience and necessity issued by the DOT,
authorizing the Company to engage in 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 points
in its domestic route system to numerous points throughout the world. The DOT
regulates international routes, fares, rates 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 aspects of air transportation, including aircraft
standards and maintenance, personnel and ground facilities. 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.
8
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 Federal Highway Administration of
the DOT ("FHA"). Carriers already holding ICC authority were not required to
register with the FHA. The Bureau of Motor Carrier Safety of the FHA regulates
the safety aspects of the Company's motor vehicle operations.
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.
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 1, 1996, the Company employed approximately 70,692 permanent full-
time and 43,516 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 11% of all employees. The
Company believes its relationship with its employees is excellent.
Following the Company's flight crewmembers' decision to form a collective
bargaining unit, the Company and the Air Line Pilots Association ("ALPA") began
negotiations toward a comprehensive
9
collective bargaining agreement in 1993. In October 1994, ALPA petitioned the
National Mediation Board (the "NMB") to provide mediation to assist in contract
negotiations, and the NMB appointed two mediators. In October 1995, the NMB
released the parties from mediation and the parties entered a "cooling off"
period. No agreement was reached during the "cooling off" period so the parties
instituted "self-help" activities. In January 1996, ALPA voluntarily suspended
all self-help activities and a tentative agreement was reached on March 18,
1996. However, in June 1996, the ALPA membership, pursuant to a vote, did not
ratify the tentative agreement. In July 1996, the FedEx Pilots Association, 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. The NMB has ruled on this application for
election and has ordered an election to be held during September and October
1996.
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, 1996, 1995 and 1994,
refer to Note 10 of Notes to Consolidated Financial Statements contained in the
Company's 1996 Annual Report to Stockholders, which Note is incorporated herein
by reference.
10
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, 1996 consisted of the following:
MAXIMUM GROSS
STRUCTURAL PAYLOAD
DESCRIPTION NUMBER (POUNDS PER AIRCRAFT)**
- ----------- ------ -----------------------
Boeing B747-200 3* 250,000
McDonnell Douglas MD11 19* 198,500
McDonnell Douglas DC10-30 22* 172,000
McDonnell Douglas DC10-10 13* 142,000
Airbus A300-600 17* 117,700
Airbus A310-200 26* 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 559
- -------------------------
*3 B747-200, 18 MD11, 17 DC10-30, 4 DC10-10, 17 A300, 16 A310, 13 B727-200 and 5
B727-100 aircraft are subject to operating leases.
**Maximum gross structural payload includes revenue payload and container
weight.
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 B747s are four-engine, wide-
bodied aircraft. 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 44 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
At July 1, 1996, the Company operated approximately 36,900 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, 1996, the Company was committed under various contracts to
purchase eight Airbus A300, 11 Airbus A310 and nine McDonnell Douglas MD11
aircraft to be delivered through 2000. In addition, the Company may be required
to purchase seven MD11 aircraft for delivery beginning no later than 2000 under
a put option agreement.
SORTING AND HANDLING FACILITIES
- -------------------------------
At July 1, 1996, the Company operated the following sorting and handling
facilities:
SORTING LEASE
SQUARE CAPACITY EXPIRATION
LOCATION ACRES FEET (PER HOUR)* LESSOR YEAR
-------- ----- ------- ----------- ------ ----------
NATIONAL
- --------
Memphis, Tennessee 395 2,742,196 491,000 Memphis-Shelby County Airport 2014
Authority
Indianapolis, Indiana 120 645,000 153,000 Indianapolis Airport 2016
Authority
REGIONAL
- --------
Newark, New Jersey 56 554,000 108,000 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 47,000 City of Chicago 2018
Anchorage, Alaska+ 42 208,000 3,600 Alaska Department of 2013
Transportation and Public
Facilities
Subic Bay, 11 169,800 16,000 Subic Bay 2002
The Philippines++ Metropolitan Authority
- ------------------------
* 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.
12
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.
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. The Company is also developing a 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 65
facilities in the Memphis area for its corporate headquarters, warehouse
facilities and administrative offices.
The Company owns 16 and leases 789 facilities for city station operations
in the United States. In addition, 122 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, 1996, the Company leased space for 405 FedEx World
Service Centers in the United States and had placed approximately 33,604 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 231 were operating at July 1, 1996. Internationally, the Company leases
space for 14 FedEx World Service Centers and has approximately 662 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
On May 14, 1996, a class-action suit was filed by customers of the Company
in the United States District Court for the District of Minnesota. The
complaint generally alleges that the Company breached its contract with the
plaintiffs in transporting packages shipped by them by continuing to collect a
6.25% federal excise tax on the transportation of property shipped by air after
the tax expired on December 31, 1995. The plaintiffs assert that the benefit to
the Company is believed to be in excess of $30,000,000. The plaintiffs seek
certification as a class action, damages, an injunction to enjoin the Company
from
13
continuing to collect the excise tax referred to above and an award of
attorneys fees and costs. Other customers of the Company filed two separate
lawsuits, one in California state court during April 1996 and one in Minnesota
state court during June 1996, containing substantially similar allegations and
requests for relief.
During June 1996, the Company reached an agreement with the plaintiffs in
all three lawsuits to consolidate the three lawsuits in the United States
District Court for the District of Minnesota. The plaintiffs are in the process
of filing the necessary motions to accomplish this consolidation.
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 .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, 1996.
14
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):
OFFICER, YEAR FIRST
ELECTED AS OFFICER AGE POSITIONS HELD WITH COMPANY
------------------- --- ---------------------------
FREDERICK W. SMITH 51 Chairman, President and Chief Executive
1971 Officer 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. 42 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 52 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 52 Executive Vice President - Worldwide
1977 Operations 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 42 Senior Vice President - Europe, Middle East
1987 and 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.
15
MICHAEL L. DUCKER 42 Senior Vice President - Asia and Pacific
1991 since 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 40 Senior Vice President - Central Support
1991 Services 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.
T. MICHAEL GLENN 40 Senior Vice President - Marketing, Customer
1985 Service 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 44 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.
JOSEPH C. MCCARTY, III 51 Senior Vice President - Latin America and
1983 Caribbean 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 53 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 52 Senior Vice President and Chief Personnel
1979 Officer since June 1979 and various personnel
managerial positions from 1974 to 1979.
16
DAVID F. REBHOLZ 43 Senior Vice President - Global Sales and
1988 Trade Services since June 1993; 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 39 Senior Vice President - Air Ground Terminals
1990 and 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.
MARY ALICE TAYLOR 46 Senior Vice President - United States and
1985 Canada since October 1995; Senior Vice
President - Americas and Caribbean from
October 1994 to October 1995; Senior Vice
President - Central Support Services from
September 1991 to October 1994; Regional Vice
President - Ground Operations - Southern
Region from May 1988 to September 1991; Vice
President - Logistics and Publishing Services
from November 1985 to May 1988. Various
management positions in finance and
management information consultant from 1980
to 1985.
LAURIE A. TUCKER 39 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.
JAMES S. HUDSON 47 Vice President, Controller and Chief
1992 Accounting Officer since December 1994; Vice
President - Finance - Europe, Africa and
Mediterranean from July 1992 to December
1994; various management positions in finance
from 1974 to 1992.
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.
17
PART II
Information for Items 5 through 8 of this Report appears in the Company's
1996 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 1996 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.
PAGE IN ANNUAL REPORT
TO STOCKHOLDERS
---------------
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 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Consolidated Statements of Income.............. 23
Consolidated Balance Sheets.................... 24
Consolidated Statements of Cash Flows.......... 26
Consolidated Statements of Changes in
Common Stockholders' Investment............... 27
Notes to Consolidated Financial Statements..... 28
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS NOT
ON ACCOUNTING AND FINANCIAL DISCLOSURE APPLICABLE
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". On pages 1 through 7 and page 14 of the Definitive Proxy
18
Statement for the Company's 1996 Annual Meeting of Stockholders which will be
held October 1, 1996 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 required by Item 405 of Regulation S-K is presented in
"Section 16(a) Beneficial Ownership Reporting Compliance" on page 16 of the
Definitive Proxy Statement and is incorporated herein by reference.
Information for Items 11 through 13 of this Report appears in the
Definitive Proxy Statement for the Company's 1996 Annual Meeting of Stockholders
to be held on October 1, 1996, as indicated in the following table and is
incorporated herein by reference.
PAGE IN PROXY
STATEMENT
-------------
ITEM 11. EXECUTIVE COMPENSATION
Compensation Information............................ 8
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
Voting Securities and Principal Holders Thereof...... 2
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions with Management and Others.............. 14
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K
(a) 1. FINANCIAL STATEMENTS
The consolidated financial statements of the Company, together with the
report thereon of Arthur Andersen LLP, dated July 1, 1996, are presented on
pages 23 through 39 of the Company's 1996 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 1996 Annual Report to Stockholders is not to be deemed as
filed as part of this Report.
19
2. FINANCIAL STATEMENT SCHEDULE PAGE NUMBER
IN FORM 10-K
------------
Report of Independent Public Accountants on Financial Statement
Schedule......................................................... S-1
Schedule II - Valuation and Qualifying Accounts.................... S-2
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 1996 Annual Report
to Stockholders and incorporated herein by reference.
3. EXHIBITS
The documents attached hereto as Exhibits 3.1, 3.2, 4.1 through 4.26, 10.1
through 10.88, 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-12 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 March 14, 1996 and contained
Registrant's press release dated March 14, 1996 and Appendix A to a preliminary
official statement. The second Current Report was dated April 30, 1996 and
contained a discussion of legal proceedings. These reports were filed as Item 5
or Item 7 Current Reports.
20
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/ JAMES S. HUDSON
--------------------------------------
James S. Hudson
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.
SIGNATURE CAPACITY DATE
--------- -------- ----
/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/ JAMES S. HUDSON Vice President and Controller August 8, 1996
- ---------------------------- (Principal Accounting Officer)
James S. Hudson
/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
SIGNATURE CAPACITY DATE
--------- -------- ----
/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/ PETER S. WILLMOTT * Director
- ----------------------------
Peter S. Willmott
*By: /s/ JAMES S. HUDSON August 8, 1996
----------------------
James S. Hudson
Attorney-in-Fact
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 1996
Annual Report to Stockholders incorporated by reference in this Form 10-K, and
have issued our report thereon dated July 1, 1996. 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,
July 1, 1996
S-2
SCHEDULE II
FEDERAL EXPRESS CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED MAY 31, 1996, 1995 AND 1994
(In thousands)
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
- -------------------
1996............... $31,173 $38,963 $1,700 $41,027 $30,809
======= ======= ====== ======= =======
1995............... $33,933 $36,334 - $39,094 $31,173
======= ======= ====== ======= =======
1994............... $31,308 $45,763 - $43,138 $33,933
======= ======= ====== ======= =======
(A) Accounts written off net of recoveries.
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- ----------------------
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.)
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.)
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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.
4.15 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.)
4.16 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.)
4.17 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.)
4.18 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.)
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4.19 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.)
4.20 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.)
4.21 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.)
4.22 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.)
4.23 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.)
4.24 Pass Through Trust Agreement dated as of June 1, 1996 between
Registrant and State Street Bank and Trust Company, as Pass
Through Trustee. (Filed as Exhibit 4(a)(1) to Registrant's
Registration Statement No. 333-07691 on Form S-3 and
incorporated herein by reference.)
4.25 Loan Agreement dated March 27, 1995, between Registrant and
certain lenders relating to the financing of Airbus A310
aircraft. A copy of this loan agreement will be furnished to
the Commission upon request pursuant to Regulation S-K Item
601(4)(iii)(A). (Filed as Exhibit 4.23 to Registrant's FY95
Annual Report on Form 10-K, Commission File No. 1-7806, and
incorporated herein by reference.)
4.26 Facility Agreement dated as of April 1, 1996 between
Registrant and Morgan Guaranty Trust Company of New York, as
agent. Confidential treatment has been requested for
confidential commercial and financial information, pursuant
to Rule 24b-2 under the Securities Exchange Act of 1934.
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.)
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10.2 Second Supplemental Indenture dated as of May 1, 1982 between
the Authority and BONY relating to 8.30% Special Facilities
Revenue Bonds, Series 1982B due September 1, 2012. (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 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.)
10.7 Reaffirmation of Guaranty dated as of May 1, 1982 from
Registrant to BONY relating to Special Facilities Revenue
Bonds, Series 1982B. (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.)
10.8 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.)
10.9 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.)
10.10 Consolidated and Restated Lease Agreement dated as of August
1, 1979 between the Authority and Registrant. (Refiled as
Exhibit 10.11 to Registrant's FY90 Annual Report on Form 10-
K, Commission File No. 1-7806, and incorporated herein by
reference.)
10.11 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.)
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10.12 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.)
10.13 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.)
10.14 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.)
10.15 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.)
10.16 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.)
10.17 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.)
10.18 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.)
10.19 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.)
10.20 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.)
10.21 Eleventh Supplemental Lease Agreement dated as of July 1,
1994 between the Authority and Registrant.
10.22 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.)
10.23 Thirteenth Supplemental Lease Agreement dated as of June 1,
1995 between the Authority and Registrant.
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10.24 Fourteenth Supplemental Lease Agreement dated as of January
1, 1996 between the Authority and Registrant.
10.25 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.)
10.26 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.)
10.27 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.)
10.28 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.)
10.29 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.)
10.30 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.)
10.31 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.)
10.32 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.)
10.33 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.)
10.34 Ground Lease dated as of February 27, 1979 between the City
of Los Angeles and The Flying Tiger Line Inc. ("FTL"). (Filed
as Exhibit 28.1 to Registrant's FY93 Second Quarter Report on
Form 10-Q, Commission File No. 1-7806, and incorporated
herein by reference.)
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10.35 First Amendment dated September 18, 1979, to Ground Lease,
dated February 27, 1979, between the City of Los Angeles and
FTL. (Filed as Exhibit 28.2 to Registrant's FY93 Second
Quarter Report on Form 10-Q, Commission File No. 1-7806, and
incorporated herein by reference.)
10.36 Second Amendment dated March 9, 1983 to Ground Lease, dated
February 27, 1979, between the City of Los Angeles and FTL.
(Filed as Exhibit 28.3 to Registrant's FY93 Second Quarter
Report on Form 10-Q, Commission File No. 1-7806, and
incorporated herein by reference.)
10.37 Interim Exchange Agreement dated as of September 11, 1990
between the City of Los Angeles and Registrant. (Filed as
Exhibit 28.4 to Registrant's FY93 Second Quarter Report on
Form 10-Q, Commission File No. 1-7806, and incorporated
herein by reference.)
10.38 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.)
10.39 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.)
10.40 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.)
10.41 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.)
10.42 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.)
10.43 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.)
10.44 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.)
10.45 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.)
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10.46 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.)
10.47 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.)
10.48 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.)
10.49 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.)
10.50 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.)
10.51 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.)
10.52 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.)
10.53 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.)
10.54 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.)
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10.55 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.)
10.56 Amended and Restated Airport Use Agreement and Terminal
Facilities Lease dated as of January 1, 1985 between the City
of Chicago and FTL. (Filed as Exhibit 28.20 to Registrant's
FY93 Second Quarter Report on Form 10-Q, Commission File No.
1-7806, and incorporated herein by reference.)
10.57 Cargo Building Site Lease dated September 23, 1987 between
the City of Chicago and FTL. (Filed as Exhibit 28.21 to
Registrant's FY93 Second Quarter Report on Form 10-Q,
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.)
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.)
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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.
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.
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.
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.
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.)
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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.)
10.79 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.)
10.80 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.)
10.81 Registrant's Retirement Parity Pension Plan. (Filed as
Exhibit 10.67 to Registrant's FY93 Annual Report on Form 10-
K, Commission File No. 1-7806, and incorporated herein by
reference.)
10.82 First Amendment to Registrant's Retirement Parity Pension
Plan. (Filed as Exhibit 10.1 to Registrant's FY95 First
Quarter Report on Form 10-Q, Commission File No. 1-7806, and
incorporated herein by reference.)
10.83 Management Performance Bonus Plan. (Description of the
performance bonus plan contained in the Definitive Proxy
Statement for Registrant's 1996 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.)
10.84 Registrant's Retirement Plan for Outside Directors. (Filed as
Exhibit 10.30 to Registrant's FY90 Annual Report on Form 10-
K, Commission File No. 1-7806, and incorporated herein by
reference.)
10.85 Long-term Performance Bonus Plans. (Description of the long-
term performance bonus plans contained in the Definitive
Proxy Statement for Registrant's 1996 Annual Meeting of
Stockholders, under the heading "Long-term Incentive Plans -
Awards in Last Fiscal Year" is incorporated herein by
reference.)
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EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- ----------------------
10.86 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.)
10.87 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.)
10.88 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.)
11 Statement re Computation of Earnings Per Share.
12 Statement re Computation of Ratio of Earnings to Fixed
Charges.
13 Registrant's Annual Report to Stockholders for the fiscal
year ended May 31, 1996.
21 Subsidiaries of Registrant.
23 Consent of Independent Public Accountants.
24 Powers of Attorney.
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