FedEx Annual Report 1998

FY1998 Annual Report · FedEx
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F D X   C O R P O R A T I O N   A N N U A L   R E P O R T   1 9 9 8

 
 
 
 
On  January  27,  1998,  Federal
On  January  27,  1998,  Federal

Express Corporation launched a
Express Corporation launched a

new  era  in  transportation  –
new  era  in  transportation  –

again. Twenty-five years after it
again. Twenty-five years after it

founded  the  express  distribu-
founded  the  express  distribu-

tion  industry,  FedEx  acquired
tion  industry,  FedEx  acquired

the Caliber System, Inc. compa-
the Caliber System, Inc. compa-

nies,  leaders  in  ground  small-
nies,  leaders  in  ground  small-

package  delivery,  surface  expedited  shipping,  less-than-truckload  freight  and  integrated  logistics 

management.

From  this  historic  union  emerged  a  new  brand  of  transportation  leadership: 

FDX Corporation, a $16 billion distribution and logistics powerhouse.  With its unprecedented portfolio

= A  N E W  B R A N D  O F  L E A D E R S H I P
= A  N E W  B R A N D  O F  L E A D E R S H I P

of shipping and logistics services, FDX is uniquely equipped to provide the comprehensive distribution

solutions customers seek in today’s fast, competitive, interconnected global marketplace. The service,

technology and marketing synergies created by FDX unlock exciting new opportunities for stockholders.

In this inaugural annual report

to FDX stockholders, you’ll dis-

cover  why  the  acquisition  of

Caliber System by FedEx involved

more than simple addition – why

for customers and stockholders

alike,  FDX  equals  a  whole  far

greater than the sum of its parts.

=A WHOLE GREATER
=A WHOLE GREATER 

THAN THE SUM OF ITS PARTS
THAN THE SUM OF ITS PARTS

On  January  27,  1998,  Federal
On  January  27,  1998,  Federal

Express Corporation launched a
Express Corporation launched a

new  era  in  transportation  –
new  era  in  transportation  –

again. Twenty-five years after it
again. Twenty-five years after it

founded  the  express  distribu-
founded  the  express  distribu-

tion  industry,  FedEx  acquired
tion  industry,  FedEx  acquired

the Caliber System, Inc. compa-
the Caliber System, Inc. compa-

nies,  leaders  in  ground  small-
nies,  leaders  in  ground  small-

package  delivery,  surface  expedited  shipping,  less-than-truckload  freight  and  integrated  logistics 

management.

From  this  historic  union  emerged  a  new  brand  of  transportation  leadership: 

FDX Corporation, a $16 billion distribution and logistics powerhouse.  With its unprecedented portfolio

= A  N E W  B R A N D  O F  L E A D E R S H I P
= A  N E W  B R A N D  O F  L E A D E R S H I P

of shipping and logistics services, FDX is uniquely equipped to provide the comprehensive distribution

solutions customers seek in today’s fast, competitive, interconnected global marketplace. The service,

technology and marketing synergies created by FDX unlock exciting new opportunities for stockholders.

In this inaugural annual report

to FDX stockholders, you’ll dis-

cover  why  the  acquisition  of

Caliber System by FedEx involved

more than simple addition – why

for customers and stockholders

alike,  FDX  equals  a  whole  far

greater than the sum of its parts.

=A WHOLE GREATER
=A WHOLE GREATER 

THAN THE SUM OF ITS PARTS
THAN THE SUM OF ITS PARTS

=A $400 BILLION
=A $400 BILLION

P 2

To Our Stockholders: During ﬁscal year 1998, FedEx

celebrated its 25th year of industry leadership by

laying  the  foundation  for  future  growth  with  the

acquisition of Caliber System, Inc., and the creation

of FDX Corporation. Our consolidated results for the

year were strong, revealing a $16 billion company with

net income of $583 million, excluding merger expenses.

Frederick W. Smith

Chairman, President and

Chief Executive Ofﬁcer

Earnings per share rose to a record $3.91. We are pleased with our

ﬁnancial  achievements  and  excited  about  our  growth  opportunities.

FDX is poised to take advantage of a global transportation market that

–  with  the  express,  less-than-truckload  and  ground  small-package 

MARKET  OPPORTUNITY
MARKET  OPPORTUNITY

segments combined – is projected to grow from $75 billion today to 

nearly $400 billion over the next 20 years.

Once again, we have changed the competitive landscape, creat-

ing a one-stop source for global shipping and logistics solutions.

No other corporation is better situated to take advantage of business

trends  such  as  “just-in-time”  shipping,  the  explosive  growth  of  elec-

tronic commerce, and the proliferation of global sourcing and selling

across  markets.  Prior  to  the  acquisition,  neither

FedEx nor RPS individually could offer the same com-

plementary mix of express and ground small-package

delivery services. Now – operating independently yet

CHAIRMAN(cid:213)S  LETTER    P 3

working  together  under  FDX  –  we’re  winning  busi-

ness from our competitors by providing unmatched

service,  access  and  connectivity. When  we

announced the formation of FDX Corporation, many

observers assumed that the Caliber acquisition made sense only if we

fully integrated our operations. Based on 25 years of industry leader-

ship and expertise, we are doing just the opposite – and for compelling

strategic reasons. Simply layering the unique resource and operating

requirements of a time-deﬁnite, global, express-delivery network onto a

day-definite,  ground  small-package  network  would  surely  result  in

diminished service quality and increased costs. 

=COMPLETE ONE   
=COMPLETE ONE   

Under  the  FDX  umbrella,  we  will  leverage  our  shared

strengths while operating each delivery network independently,

with  each  focused  on  its  respective  markets.  For  FedEx,  that

means an unrelenting dedication to rapid, time-speciﬁc global delivery

in 1, 2 or 3 business days. For RPS, that means continued commit-

ment to its highly efﬁcient and reliable, business-to-business, ground

small-package  delivery  capability.  The  result  for  all  FDX  companies 

is optimal service quality, reliability and proﬁtability.

To capitalize on the synergies of our shared cus-

tomer  relationships,  we  are  aggressively  aligning

sales  and  marketing  initiatives  across  all  FDX

P 4 CHAIRMAN(cid:213)S  LETTER

companies, with particular attention to our primary

opportunities – FedEx and RPS. We have identiﬁed

more  than  one  million  FedEx  customers  who  cur-

rently  have  no  relationship  with  RPS.  Conversely,

tens of thousands of RPS customers do not use FedEx for their inter-

national or U.S. domestic express shipments. Given an opportunity to

obtain  the  best  of  both  delivery  services,  we  ﬁnd  many  businesses

eager to become full-ﬂedged “FDX customers.”

FDX  is  now  positioned  to  meet  customer  needs  by  providing

comprehensive  transportation,  logistics  and  supply  chain 

management solutions. 

 -STOP  SHIPPING +       +       +    
 -STOP  SHIPPING

Increasingly,  businesses  are  seeking  strategic,  cost-effective  ways

to  manage  their  supply  chains  –  the  series  of  transportation  and

information exchanges required to convert parts and raw materials

into ﬁnished, delivered products. Experience tells us that customers

prefer  one  supplier  to  meet  all  of  their  distribution  and  logistics

needs.  And  FDX  has  what  it  takes:  Our  unique  global  network, 

operational  expertise  and  air  route  authorities  cannot  be  repli-

cated  by  the  competition.  With  FDX,  our  cus-

tomers  have  a  strategic  competitive  weapon  to

squeeze time, mass and cost from the supply chain.

CHAIRMAN(cid:213)S  LETTER    P 5

Looking  ahead,  FDX  will  seize  opportunities

to  drive  revenue  growth  and  build  bottom-line

results for our stockholders. We are focused on

three  primary  growth  strategies:  1)  A collabora-

tive sales process that leverages our shared customer relationships;

2) Aggressive  global  marketing  of  the  broad  FDX  portfolio  to  tar-

geted  prospective  customers;  and  3) Strategic  application  of  infor-

mation systems to reduce costs and improve customer access and

connectivity. We see a very bright future for FDX – and we’re not

alone in our conﬁdence. In June 1998, Wired magazine selected FDX

as one of 40 “New Blue Chips,” companies that are “building the new 

=A  NEW  BRAND     
=A  NEW  BRAND     

economy (using) technology, networks and information to reshape the

world.” Of the 40 companies cited for possessing fundamental quali-

ties necessary to succeed in a fast-changing economy – globalism,

communication, innovation, technology and strategic vision – FDX was

the only company deemed to possess all ﬁve fundamentals as core

business elements.

Thank you for your investment of capital and con-

ﬁdence in this new brand of leadership

we call FDX. We expect to reward your

investment  by  demonstrating  that  FDX

equals a historic opportunity for growth,

proﬁtability  and  market  leadership.

Frederick W. Smith 

Chairman, President and 

Chief Executive Ofﬁcer

P 6 CHAIRMAN(cid:213)S  LETTER

OF  LEADERSHIP
OF  LEADERSHIP

+       +       +    

P 7

==

P 8

SEND  A  MESSAGE

JTECH  More than one million JTECH pagers have been shipped around the world to hospitals, factories, auto 

dealerships, even church nursery centers. But perhaps the most critical shipments are the FedEx boxes that arrive

just in time for Mother's Day, the busiest day of the year for restaurants. At Outback Steakhouse and other 

restaurants, customers hold on to the short-range pagers so they can be alerted when a table is ready, freeing them

to stroll or browse nearby shops. Less urgent deliveries of replacement pagers or new orders are delivered via RPS. 

By using FDX services, JTECH sends a message to its customers: Your order will be there. 

TOTAL  SOLUTIONS
TOTAL  SOLUTIONS

P 9

P 1 0

BUILD TO  ORDER

DELL COMPUTER CORPORATION  Dell revolutionized the computer industry with a customer-focused direct 

business model that’s lean on inventory and cycle time, but long on logistics efﬁciencies, customization and customer

delight. The company turns inventory in fewer than eight days, compared with 60 to 90 days through more tradi-

tional indirect competitors. To keep its supply chain tight, Dell has FedEx deliver computers and parts from its factory

in Malaysia to its largest Asian market – Japan. In North America, Caliber Logistics provides distribution and ﬂeet

management services for Dell facilities in Austin, Texas. FedEx, meanwhile, handles the express deliveries of several

Dell products, displaying a commitment to velocity, quality and customer service that mirrors Dell’s own uniquely 

successful approach to business.

P 1 1

CALCULATE THE  MOVES

UNISYS CORP. When a large corporation decentralizes shipping, it’s like a computer’s circuitry ﬁring at random:

interesting pyrotechnics, but not very productive. That’s why Unisys chose to harness the buying power of hundreds

of sales ofﬁces, service locations and manufacturing sites by utilizing the transportation management services of FDX.

Unisys employees simply call a toll-free number staffed by Caliber Logistics. Caliber distribution experts rely on FedEx,

RPS, Roberts Express, and Viking Freight to ship everything from critical replacement parts to Unisys enterprise

servers directly to the customer site. Each shipping decision reﬂects the most appropriate and cost-effective delivery

solution. Now that computes.

P 1 2

CAPTURE THE  MOMENTS

ART LEATHER  When supplying 25,000 professional photographers with custom handmade photo albums, every-

thing has to be picture perfect from order through delivery. So Art Leather, the world’s largest manufacturer of

albums, folios and frames for professional photographers, and its partner, Gross National Products, offer customers

a choice of FDX services to meet their deadlines and budgets: FedEx express services or RPS ground small-package

delivery services. And the sky is no limit. Russian and U.S. commanders of the Mir Space Station recently exchanged

commemorative Art Leather albums. This year, FedEx and RPS will deliver more than 200,000 Art Leather ship-

ments, each one a thing memories are made of.

P 1 3

SHOP  FOR  VALUE

STAGE STORES INC.  Challenged with opening one new department store a week, Stage Stores didn't have to

shop long before selecting FDX as its distribution ally. Every day, RPS delivers up to 13,000 cartons of popular name-

brand merchandise – from Levi Strauss to Liz Claiborne – to 630 stores trade-named Stage, Bealls and Palais Royal.

Stage Stores relies on RPS as the distribution arm of its state-of-the-art inventory tracking system, which identiﬁes

and transfers slow-moving items and keeps staple merchandise in stock. Store advertising, payroll and other time-

sensitive corporate shipments are delivered via FedEx. In other words, for one-stop shipping, Stage Stores shops FDX.

P 1 4

P 1 5

DELIVER THE  GOODS

INGRAM MICRO INC.  Ingram Micro, the largest worldwide distributor of computer technology products and 

services, is legendary for its commitment to same-day shipping of orders received by 5 p.m. When customers 

have some time to spare, RPS delivers a growing number of those shipments. For more time-sensitive deliveries,

Ingram Micro did itself – and its customers – one better, locating its national distribution facility just minutes from

the FedEx SuperHub in Memphis, Tennessee. By leveraging late-night cutoff times for next-day and two-day delivery, 

Ingram Micro cuts as much as a day off its order cycle time. When delivering the goods is your business, that’s 

time well spent.

P 1 6

FDX  COMPANIES  AT  A  GLANCE

FDX is a unique holding company that provides strategic direction for FedEx and the Caliber companies. A $16 billion

global transportation and logistics enterprise, FDX offers customers “total one-stop shopping” for solutions at all 

levels of the supply chain. Services offered by FDX companies include worldwide express delivery, ground small-package

delivery, less-than-truckload freight delivery, and global logistics and electronic commerce solutions.

FedEx, the world leader in global express 
distribution, offering time-certain delivery
within 24 to 48 hours among markets that
comprise more than 90 percent of the
world’s gross domestic product.

RPS, North America’s 
second-largest provider of
business-to-business ground
small-package delivery.

Employees and Contractors:190,000
Headquarters: Memphis, Tennessee 
Stock Symbol: FDX
Online: www.fdxcorp.com

Roberts Express, the
world’s leading surface-
expedited carrier for
nonstop, time-critical
and special-handling
shipments.

Caliber Logistics, a pioneer in
providing customized, integrated
logistics and warehousing solu-
tions worldwide.

Viking Freight, the foremost 
less-than-truckload freight carrier
in the western United States.

Mission and Values  FDX will produce superior ﬁnancial returns for its stockholders by providing high value-added

logistics, transportation and related information services through focused operating companies. Customer require-

ments will be met in the highest quality manner appropriate to each market segment served. FDX will strive to 

develop mutually rewarding relationships with its employees, partners and suppliers. Safety will be the ﬁrst consider-

ation in all operations. Corporate activities will be conducted to the highest ethical and professional standards.

P 1 7

HIGHLIGHTS  OF THE  YEAR

The formation of FDX frees its member companies to focus on what they do best. In the 

case of FedEx, that is to provide the industry’s ﬁnest express-delivery services, just as it has 

for 25 years. 

Whether it’s rushing a drill bit to a Venezuelan oil ﬁeld, moving semiconductors just-in-time

between Asia and the United States, or delivering chemotherapy treatments to a hospital in

Europe, FDX customers rely on FedEx for fast, dependable, time-speciﬁc delivery of high-value

goods to more than 210 countries. With the world’s most advanced express-distribution network,

and information systems that allow shippers and their customers global visibility of shipment

status, FedEx and its 144,000 employees deliver more than 3 million boxes, documents and

pallets each business day.

+   +   +   +   +   +   +   +   +

A CELEBRATION OF

(cid:108) To reduce transit times

Osaka, Japan, with the

INNOVATION

along a route that links

FedEx SuperHub in

Fiscal year 1998 marked

Federal Express Corporation’s

25th anniversary, and with it

the latest in a string of serv-

ice and technology innova-

tions that have made – and

kept – FedEx the industry

leader since 1973.

North America, Europe, 

Memphis. The ﬂight makes

the Middle East, India and

possible unprecedented

Asia, a new around-the-

next-business-day delivery by

world ﬂight was launched in

10:30 a.m. – backed by the

September 1997.
(cid:108) To expand customers’

FedEx Money-Back

Guarantee – from key mar-

options for delivering heavy

kets in Asia to thousands of

freight, FedEx introduced

U.S. cities, major Canadian

FedEx International

markets and Mexico City.

Despite Asia’s current ﬁnan-

Economy® Freight, providing

cial situation, FedEx stuck by

time-speciﬁc delivery (typi-

SERVICE EXCELLENCE

its long-term strategy of

cally within ﬁve business

Even as it expanded the

improving global connectivity

days) for heavy, skidded ship-

reach of its network, FedEx

for FDX customers by reﬁn-

ing and strategically expand-

ments up to 1,500 lbs. 
(cid:108) To enhance global connec-

continued to enhance the

convenience and quality of

ing FedEx’s worldwide

tivity with Asia, FedEx added

its service. 

network. Examples include:

a nonstop daily ﬂight with

overnight service linking

During an August 1997

strike by UPS employees,

P 1 8

HIGHLIGHTS  OF THE  YEAR

  +

=FREEDOM TO FOCUS
=FREEDOM TO FOCUS

which caused FedEx, RPS

period, FedEx paid a

These service innovations,

and other carriers to experi-

$25 million Special Appre-

plus the brand respect FedEx

ence unusually high ship-

ciation Bonus to nearly

has earned among express

ment volumes, FedEx

90,000 U.S. employees. 

shippers worldwide, helped

employees earned system-

wide ISO 9001 recertiﬁca-

tion while handling 30

percent more volume than

normal. To recognize FedEx’s

most treasured asset – its

people – for their absolute

dedication to customer ser-

vice during this challenging

Online, FedEx continued to

set the customer-service

pace, unveiling an upgrade

to its FedEx interNetShipSM

FedEx generate revenues of

more than $13 billion, a

15 percent increase over 

ﬁscal year 1997. 

shipment processing capa-

As the largest subsidiary in

bility, and redesigning its

the FDX family, FedEx

acclaimed Web site

remains superbly positioned

(www.fedex.com) to improve

to propel FDX to new levels

access and functionality for

of growth and proﬁtability.

global customers. 

P 1 9

HIGHLIGHTS  OF THE  YEAR

For RPS, Inc., the FDX family of companies represents an ideal competitive enhancement to its

current market position. RPS is North America’s second-largest provider of ground small-package

delivery, with service available to 28 European countries and Puerto Rico.

Having responded to competitive pressure to add express to its service mix by joining FDX, RPS

now can concentrate on strategically expanding its core capability – delivering business-to-business

packages at rates and service levels that make it the price-value leader in its market. 

=A $16 BILLION  
=A $16 BILLION  

customers and streamlines

RPS, like its sister company,

FedEx, is an industry leader

the daily handling of more

in on-time performance. In

than 1.3 million packages. 

early 1998, RPS enhanced

In the past year alone, for

its deserved reputation

example, the company

for reliability by an-

added multiple-carrier 

nouncing a money-back 

shipment tracing and proof-

guarantee on all

of-delivery signature func-

business-to-business

tionality to its Web site

ground deliveries within

(www.shiprps.com), making

the continental United

it an even more customer-

States, beginning in July. 

useful shipping tool.

RPS also is a pioneer in

RPS’s value to FDX cus-

applying shipping-automation

tomers is reﬂected in 

technology, which beneﬁts

continued double-digit

growth in revenue and 

package volume.

HIGHLIGHTS  OF THE  YEAR

As the premier brand name in less-than-truckload (LTL) freight movements throughout the 

western United States, Viking Freight, Inc. adds yet another important service to the diverse

portfolio that FDX offers its customers. 

With next- and second-

two customer advisory

Viking’s commitment to 

business-day regional freight

boards – one for corporate

superior service has not

service, plus direct ocean

accounts, the other for

gone unnoticed. In 1997, for

service to Alaska and

smaller shippers – to better

the third time, the National

Hawaii, Viking’s 4,700

anticipate and meet cus-

Small Shipments Trafﬁc

employees handle approxi-

tomers’ needs. Viking has

Conference (NASSTRAC)

mately 12,000 shipments

enhanced its customer ser-

named Viking its regional LTL

per day, achieving on-time

vice and today responds to

carrier of the year. Readers

delivery on more than 

most inquiries within sec-

of Logistics Management

99 percent of all shipments. 

onds. Viking’s Web site

and Distribution magazine

Consistent with its “Easy To

Do Business With” philoso-

phy, Viking recently created

(www.vikingfreight.com), 

voted Viking “Quality Carrier”

lets customers conduct busi-

for 1998, the seventh 

ness electronically with con-

year Viking has received 

venience and conﬁdence.

this award.

  POWERHOUSE
  POWERHOUSE

+   +   +   +   +   +  

P 2 1

HIGHLIGHTS  OF THE  YEAR

Nearly 1,000 times each business day, Roberts Express, Inc. engineers and executes time-

speciﬁc, door-to-door surface and air-charter delivery solutions that solve special-handling 

challenges for FDX customers within North America and Europe. 

How special? Consider the 60-ton stamping press Roberts recently delivered from Brescia, Italy,

to Kokomo, Indiana. The largest shipment ever handled by Roberts, the press was delivered

quickly and on time, keeping an automaker’s assembly plant up and running at peak efﬁciency

and quality levels. 

+   +   +

With 2,000 employees and

mind, even in the most time-

the system lets dispatchers

owner-operators, Roberts is

critical situations. 

evaluate at least 20 load and

the world’s largest surface-

expedited carrier. For ship-

pers and their customers,

Roberts’ service guarantee

and exceptional on-time per-

formance deliver peace of

To promote ever higher 

levels of productivity and

service, Roberts recently

installed a dynamic vehicle

allocation system. As cus-

tomer orders are received,

trafﬁc variables to help

ensure that delivery vehicles

are where they need to be,

when they need to be, for

optimum customer service

and ﬂeet utilization.

P 2 2

HIGHLIGHTS  OF THE  YEAR

From order-fulﬁllment systems to warehousing solutions, Caliber Logistics, Inc. develops and

implements customized logistics solutions that help FDX customers manage costs, improve cus-

tomer service and focus on their core business activities. 

With 3,500 employees and owner-operators worldwide, Caliber Logistics manages logistics for

more than 100 FDX customer locations. It handles more than 3 million shipments per year and

operates more than 6 million square feet of contract warehouse space.

=SHARED STRENGTHS
=SHARED STRENGTHS

From its base of operations

controlled, opportunistic

in the United States and

expansion by initiating opera-

Canada, Caliber Logistics

tions in Mexico and Asia. 

launched European opera-

tions in the Netherlands in

1996. Since then, new oper-

ations in Belgium, Northern

Ireland and Scotland have

propelled European rev-

enues to nearly 10 percent

of the company’s annual

total. During the second half

of 1998, the company

expects to continue its 

To help customers manage

logistics activities and infor-

mation seamlessly across

international borders, the

company is deploying unique

transportation management

software. When installed,

initially in the United States

and Europe, it will make

Caliber the ﬁrst logistics sup-

plier to offer customers a

single transportation-

management interface on

both sides of the Atlantic.

P 2 3

MESSAGE  FROM THE  CHIEF  FINANCIAL  OFFICER

The birth of FDX Corporation illustrates the ﬁnancial synergies that can result when two 

complementary organizations combine strengths under a shared vision.

The acquisition of Caliber System, Inc. by FedEx – a “pooling of interests” transaction – was

accretive to FedEx earnings in ﬁscal year 1998. The transaction included no goodwill charges, 

produced a tax-free exchange of shares for Caliber stockholders, and left the FDX balance 

sheet in robust health.

FINANCIAL SECTION

Stockholders can expect to

We will manage the busi-

While the birth of FDX was a

beneﬁt from growth trends

ness as a portfolio. As a

unique event in the trans-

driving the multiple market

result, decisions on capital

portation industry, ﬁscal

niches now served by FDX.

investment, expansion of our

year 1998 was, in many

For each one of the FDX

delivery and information

ways, another step on a con-

companies, we will focus on

technology networks, and

tinuum of excellence – that

making appropriate 

service additions or

is, a continuation of the 

investments in the technol-

enhancements will be based

ﬁnancial performance, ser-

ogy and transportation

on achieving the highest

vice and technology innova-

assets necessary to opti-

overall return on capital. In

tion, and global leadership

mize our enhanced proﬁt

addition, our collaborative

FedEx stockholders have

position in terms of earnings

selling process will increase

grown to expect.

performance and cash 

revenues for the operating

ﬂow. Our strict yield manage-

companies through a tar-

ment programs will 

geted program focusing on

continue to support proﬁt-

high-yielding business.

able volume growth.

Alan B. Graf, Jr.

Executive Vice President 

and Chief Financial Ofﬁcer

(1) Earnings Per Share assumes dilution and excludes non-recurring items. See footnote (1) on page 25. 

$15.9  

$14.3

97

98

REVENUES
(in billions)

$3.91

$2.53

97

98

(1)

EARNINGS 
PER SHARE

33.3%

29.3%

97

98

DEBT TO TOTAL 
CAPITALIZATION

P 2 4

F I N A N C I A L   H I G H L I G H T S   O N   A   L I K E - C A L E N D A R   B A S I S

In thousands, except earnings per share

and Other Operating Data

OPERATING RESULTS
Revenues

Operating income 

Income from continuing operations before income taxes

Net income

Net income, excluding non-recurring items (1)

Earnings per share, assuming dilution

Earnings per share, excluding non-recurring items, 

assuming dilution (1)

Average common and common equivalent shares 

FINANCIAL POSITION
Property and equipment, net

Total assets

Long-term debt, less current portion
Common stockholders’ investment

OTHER OPERATING DATA
FedEx

Express package:

Average daily package volume

Average pounds per package

Average revenue per pound

Average revenue per package

Airfreight:

Average daily pounds

Average revenue per pound

Operating weekdays

Aircraft ﬂeet

RPS

Average daily package volume

Average revenue per package

Operating weekdays

Viking

Shipments per day

Average revenue per hundredweight

Operating weekdays

Average number of employees (based on a 

standard full-time workweek)

1998

1997

Percent Change

$15,872,810

$14,265,288

1,010,660

899,518

503,030

582,723

3.37

3.91

149,204

$

$

425,369

343,865

141,276

372,752

.96

2.53

147,144

$

$

$ 5,935,050

$ 5,460,293

9,686,060

1,385,180
3,961,230

9,008,816

1,597,954
3,448,095

3,025,999

2,715,894

8.5

1.84

15.69

2,769,922

.85

254

613

$

$

$

7.2

2.11

15.11

2,542,226

.94

254

584

1,326,190

1,121,380

5.04

256

13,287

9.28

256

$

$

4.93

257

30,771

9.08

257

$

$

$

$

$

+ 11

+138

+162

+256

+ 56

+251

+ 55

+

1

+

+

9

8

– 13
+ 15

+ 11

+ 18

– 13

+

+

4

9

– 10

+ 18

+

2

– 57

+

2

150,823

145,721

+

4

The information presented on page 24 and the table above compare the results for ﬁscal 1998 to 1997 as if Caliber System, Inc.’s prior year
had  ended  May  24, 1997  and  had  included  unaudited  results  from  May 19, 1996  to  May  24, 1997.  However,  the  1997  information 
discussed  in  the  accompanying Management’s Discussion and Analysis of Results of Operations and Financial Condition and  the  1997
amounts presented in the accompanying consolidated ﬁnancial statements are based on Caliber System, Inc.’s audited prior ﬁscal year ended
December 31, 1996.

(1) Non-recurring items include a charge of $88 million ($80 million, net of tax, or $.54 per share, assuming dilution) in 1998 related to the
acquisition of Caliber System, Inc., and charges of $310 million ($231 million, net of tax, or $1.57 per share, assuming dilution) in 1997
related to the restructuring of Viking Freight, Inc.’s operations.

FDX CORPORATION    P 2 5

F I N A N C I A L   H I G H L I G H T S

Years ended May 31

In thousands, except earnings per share

and Other Operating Data

OPERATING RESULTS
Revenues

Operating income 

Income from continuing operations before income taxes

Net income

Earnings per share, assuming dilution

Average common and common equivalent shares

FINANCIAL POSITION
Property and equipment, net

Total assets

Long-term debt, less current portion

Common stockholders’ investment

OTHER OPERATING DATA
FedEx

Express package:

Average daily package volume

Average pounds per package

Average revenue per pound

Average revenue per package

Airfreight:

Average daily pounds

Average revenue per pound

Operating weekdays

Aircraft ﬂeet

RPS

Average daily package volume

Average revenue per package

Operating weekdays

Viking

Shipments per day

Average revenue per hundredweight

Operating weekdays

Average number of employees (based on a 

standard full-time workweek)

1998

1997

Percent Change

$15,872,810

$14,237,892

1,010,660

899,518

503,030

507,002

425,865

196,104

$

3.37

$

1.33

149,204

147,228

$ 5,935,050

$ 5,470,399

9,686,060

1,385,180

3,961,230

9,044,316

1,597,954

3,501,161

3,025,999

2,715,894

8.5

1.84

15.69

2,769,922

.85

254

613

$

$

$

7.2

2.11

15.11

2,542,226

.94

254

584

1,326,190

1,067,104

5.04

256

13,287

9.28

256

$

$

4.96

254

33,294

9.04

254

$

$

$

$

$

+ 11

+ 99

+111

+157

+153

+

1

+

+

8

7

– 13

+ 13

+ 11

+ 18

– 13

+

+

4

9

– 10

+ 24

+

2

– 60

+

3

150,823

145,995

+

3

See Note 1 to Notes to Consolidated Financial Statements for a discussion of the periods presented.

P 2 6 FDX CORPORATION

M A N A G E M E N T (cid:213) S   D I S C U S S I O N   A N D   A N A L Y S I S   O F   R E S U LT S   O F   O P E R A T I O N S   A N D   F I N A N C I A L   C O N D I T I O N

On  January  27, 1998,  Federal  Express  Corporation
(“FedEx”) and Caliber System, Inc. (“Caliber”) became wholly-
owned  subsidiaries  of  a  newly-formed  holding  company,
FDX Corporation (together with its subsidiaries, the “Com-
pany”). In this transaction, which was accounted for as a
pooling  of  interests,  Caliber  shareholders  received  0.8
shares of the Company’s common stock for each share of
Caliber common stock. Each share of FedEx common stock
was  automatically  converted  into  one  share  of  the  Com-
pany’s  common  stock.  There  were  approximately
146,800,000 of $.10 par value shares so issued or con-
verted. The accompanying ﬁnancial statements have been
restated to include the ﬁnancial position and results of oper-
ations for both FedEx and Caliber for all periods presented.

Caliber operated on a 13 four-week period calendar end-
ing  December  31 with 12  weeks  in  each  of  the  ﬁrst
three  quarters  and 16  weeks  in  the  fourth  quarter.
FedEx’s ﬁscal year ending May 31 consists of four, three-
month  quarters.  The  accompanying  consolidated
results  of  operations  and  cash  ﬂows  and  the  following
ﬁnancial  and  statistical  information  for  the  year  ended
May 31, 1998 combine Caliber’s 53-week period from
May  25, 1997  to  May  31, 1998  with  FedEx’s  year
ended  May  31, 1998.  The  Company’s  consolidated
ﬁnancial  position  as  of  May 31, 1998  consists  of  Cal-
iber’s ﬁnancial position as of May 31, 1998 consolidated
with FedEx’s ﬁnancial position as of May 31, 1998. The
accompanying  consolidated  results  of  operations  and
cash  ﬂows  and  the  following  ﬁnancial  and  statistical
information  for  the  years  ended  May 31, 1997  and
1996  combine  Caliber’s  52  weeks  ended  December
31, 1996  and 1995,  respectively,  with  FedEx’s  years
ended May 31, 1997 and 1996, respectively. The Com-
pany’s  consolidated  ﬁnancial  position  as  of  May 31,
1997  consists  of  Caliber’s  financial  position  as  of
December 31, 1996 consolidated with FedEx’s ﬁnancial
position as of May 31, 1997. 

Due to the different ﬁscal year ends, Caliber’s results of
operations for the period January 1, 1997 to May 24,
1997 do not appear in the Consolidated Statements of
Income  and  instead  are  recorded  as  a  direct  adjust-
ment to equity. Caliber’s revenues, operating expenses
and net loss for this period were $1.0 billion, $1.1 billion
and  $41 million,  respectively.  Included  in  expenses  for
this period was an $85 million pre-tax charge ($56 mil-
lion,  net  of  tax)  related  to  the  restructuring  of  Viking
Freight, Inc. (“Viking”), Caliber’s regional freight carrier
(discussed below).

RESULTS OF OPERATIONS

Consolidated  net  income  for 1998  was  $503  million
($3.37  per  share,  assuming  dilution)  compared  with 
$196  million  ($1.33  per  share,  assuming  dilution)  and

$281million ($1.92 per share, assuming dilution) for 1997
and 1996, respectively. Current year results reﬂect strong
domestic  package  volume  growth  and  slightly  improving 
revenue  per  package  (yield)  at  both  FedEx  and RPS,  Inc.
(“RPS”) and significant improvements in Viking’s operations.

FedEx’s  net  income  for 1998  was  $421 million  com-
pared with $361 million and $308 million for 1997 and
1996,  respectively.  Year-over-year  improvements  in
FedEx’s  consolidated  results  for  the  past  three  years
reﬂect double-digit growth of its express delivery pack-
age volume and slight improvements in U.S. domestic
yield.  In 1998,  U.S.  domestic  margins  improved  as
yields increased at a higher rate than cost per package.
However,  international  margins  declined  in  the  face  of
diminished airfreight revenues, foreign currency ﬂuctua-
tions and rising expenses.

From continuing operations, Caliber recorded income of
$78 million for 1998, a loss of $165 million for 1997
and income of $92 million for 1996. The current year
income  is  attributable  to  strong  volume  growth  and
increased yields at RPS, Caliber’s ground small-package
carrier,  and  improved  operations  at  Viking  since  its
restructuring in March 1997 (discussed below). Exclud-
ing impairment charges related to the Viking restructur-
ing, Caliber recorded net income of $10 million in 1997.

Non-recurring Items
Results  of  operations  included  various  non-recurring
items  which  affected  reported  earnings  for 1998  and
1997 as discussed below.

Current year results included $88 million ($80 million,
net of tax) of expenses related to the acquisition of Cal-
iber and the formation of the Company. These expenses
were primarily investment banking fees and payments to
members of Caliber’s management in accordance with
pre-existing management retention agreements. Exclud-
ing these expenses, consolidated net income for 1998
was $583 million, or $3.91 per share, assuming dilu-
tion.

Also in the current year, Viking recognized a $16 million
gain  from  assets  sold  in  its  restructuring,  which  was
announced  by  Caliber  on  March  27, 1997.  Under  the
restructuring  plan,  operations  at  Viking’s  midwestern,
eastern  and  northeastern  divisions  ceased  on  March
27, 1997,  and  Viking’s  southwestern  division  operated
through June 1997 and was subsequently sold. Viking
continues  to  operate  in  the western  United  States
where  it  has  been  a  leader  in  the  regional  less-than-
truckload market for many years. In connection with the
restructuring,  Caliber  recorded  a  non-cash  asset
impairment charge of $225 million ($175 million, net of
tax) in December 1996 and an $85 million restructur-
ing  charge  in  March 1997.  Excluding  the  net  effect  of
the  December 1996  charge,  consolidated  net  income

FDX CORPORATION    P 2 7

M A N A G E M E N T (cid:213) S   D I S C U S S I O N   A N D   A N A L Y S I S  

for 1997  was  $371 million,  or  $2.52  per  share,
assuming dilution.

In  addition,  Caliber  recorded  in 1998  approximately
$5 million of income, net of tax, from discontinued oper-
ations  related  to  the  exiting  of  the  airfreight  business
served by Roadway Global Air, Inc. in 1995.

A  significant  non-recurring  item  impacting 1998’s
results of operations was the Teamsters strike against
United  Parcel  Service  (“UPS”)  in  August 1997.  During
the 12  operating  days  of  the  strike,  FedEx  delivered
approximately  800,000  additional  U.S.  domestic
express  packages  per  day,  and  RPS  delivered  approxi-
mately 300,000 additional packages per day. While it is
difﬁcult  to  estimate  with  precision  the  impact  of  this
additional volume, FedEx and RPS have retained a por-
tion of this volume. The Company analytically calculated
that the volume not retained at the end of the ﬁrst quar-
ter contributed approximately $170 million in revenues
to that quarter. This additional revenue, net of applicable
variable  compensation,  income  taxes  and  variable
costs, but not allocated ﬁxed costs, resulted in approxi-
mately  $.25  additional  earnings  per  share,  assuming
dilution, to the consolidated ﬁrst quarter’s earnings.

FedEx recorded two aircraft-related items in the current
year. FedEx realized a net gain of $17 million from the

insurance  settlement  and  the  release  from  certain
related liabilities on a leased MD11 aircraft destroyed in
an  accident  in  July 1997.  This  gain  was  recorded  in
operating  and  non-operating  income  in  substantially
equal  amounts.  An  unrelated  expense,  which  partially
offset this gain, was an addition of $9 million to an oper-
ating  reserve  for  the  disposition  of  leased  B747  air-
craft. In recording the additional reserve, maintenance
and repairs and rentals and landing fees expenses were
increased.  These  aircraft,  which  were  subleased,
underwent  certain  maintenance  and  repairs  before
being transferred to a new lessee. The net effect of the
MD11 gain and the B747 reserve on FedEx’s domestic
and international operating income was immaterial. The
combined  effect  of  these  aircraft-related  items  con-
tributed approximately $.03 per share in the ﬁrst quar-
ter  of 1998,  net  of  applicable  variable  compensation
and income taxes.

FedEx’s  1997  results  included  a  $15  million  pre-
tax  beneﬁt  to  operating  income  from  the  settlement 
of  a  Tennessee  personal  property  tax  matter  and  a 
$17 million gain in non-operating income from an insur-
ance  settlement  for  a  DC10  destroyed  by  ﬁre  in  Sep-
tember 1996.

In  1998,  FedEx’s  U.S.  domestic  package  volumes
increased  on  a  year-over-year  basis  primarily  due  to

Revenues
The following table shows a comparison of revenues for the years ended May 31:

In millions

FedEx:

U.S. domestic express

International Priority (IP)

International Express Freight (IXF)

and Airport-to-Airport (ATA)

FedEx Air Charter

Logistics services
Other(1)

Caliber:

RPS

Viking

Other

1998

1997

1996

1998/1997

1997/1996

Percent Change

$ 9,326

$ 8,073

$ 7,284

2,731

2,351

1,997

598

88

99

413

605

72

99

320

554

92

94

253

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

13,255

11,520

10,274

1,710

382

526

1,344

966

408

1,293

834

321

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

$15,873

$14,238

$12,722

+16

+16

– 1

+21

—

+29

+15

+27

–60

+29

+11

+11

+18

+ 9

–22

+ 5

+27

+12

+ 4

+16

+27

+12

(1)Includes the sale of engine noise reduction kits.

P 2 8 FDX CORPORATION

The following table shows a comparison of selected shipment statistics for the years ended May 31:

In thousands, except dollar amounts

Percent Change

1998

1997

1996

1998/1997

1997/1996

FedEx:

U.S. domestic express:

Average daily packages

Revenue per package

IP:

Average daily packages

Revenue per package

IXF/ATA:

Average daily pounds

Revenue per pound

Caliber:

RPS:

2,767

$13.27

259

$41.45

2,770

$

.85

2,490

$12.77

226

$40.91

2,542

$

.94

2,246

$12.67

192

$40.58

2,144

$ 1.01

Average daily packages
Revenue per package

1,326
$ 5.04

1,067
$ 4.96

1,043
$ 4.92

Viking:

Shipments per day

Revenue per hundredweight

13.3

$ 9.28

33.3

$ 9.04

31.3

$ 8.07

+11

+ 4

+15

+ 1

+ 9

–10

+24
+ 2

–60

+ 3

+11

+ 1

+18

+ 1

+19

– 7

+ 2
+ 1

+ 6

+12

rapid  growth  of  its  deferred  services,  including  FedEx
Express  Saver.  This  growth  was  augmented  by  incre-
mental UPS strike-related volume, the majority of which
was  in  the  deferred  service  category.  Excluding  the
effects of a temporary 2% fuel surcharge and the expi-
ration  of  the  air  cargo  transportation  tax  on  1997
yields, FedEx U.S. domestic yields rose 5% in 1998 as
a result of continuing yield-management actions. These
actions included pursuing price increases on low-yielding
accounts, discontinuing unproﬁtable accounts, increas-
ing average weight per package and implementing a 3%
to 4% price increase targeted to list price and standard
discount matrix customers for U.S. domestic shipments
effective February 15, 1998.

The expiration of the air cargo transportation excise tax
added approximately $50 million to U.S. domestic rev-
enues and 1% to U.S. domestic yields in both 1997 and
1996.  The  tax  expired  on  December  31, 1995,  was
reenacted by Congress effective August 27, 1996, and
expired  again  on  December  31, 1996.  FedEx  was  not
obligated  to  pay  the  tax  during  the  periods  in  which  it
was expired. The excise tax was reenacted by Congress
effective  March  7, 1997,  and,  in  August 1997,  it  was
extended for 10 years through September 30, 2007.

FedEx’s  IP  service  continued  to  experience  double-digit
growth  in  average  daily  volumes  and  revenues,  with
yields remaining relatively constant. Current year volume
growth  slowed  to 15%  year-over-year,  primarily  due  to
weakness in Asian markets. 

In 1998 and 1997, FedEx’s international non-express air-
freight revenues were a signiﬁcant factor in determining
international proﬁtability. FedEx uses ATA airfreight ser-
vice (a lower-priced, space-available service) to ﬁll space
on international ﬂights not used by express services such
as IP or IXF. In 1998, weakness in Asian economies and
continued downward pressure on yields resulted in lower
non-express  airfreight  prices  and  revenues  than  in
1997. In 1997, airfreight revenues increased year-over-
year, due to FedEx’s expansion in international markets,
despite excess market capacity and downward pressure
on yields. 

The  increases  in  FedEx’s  other  revenue  in 1998  and
1997 were primarily attributable to increased sales of
engine noise reduction kits.

RPS’s revenue per day increased 26% and 3% in 1998
and 1997, respectively, primarily due to increased aver-
age daily volume of 24% and 2% in these same years.
Over  the  same  periods,  RPS’s  yield  remained  stable,
and  effective  February  9, 1998,  management  imple-
mented a 3.7% rate increase at RPS.

On  a  daily  basis,  Viking’s  revenue  declined  61%  year-
over-year  in 1998  and  increased 15%  in 1997.  As  a
result of Viking’s restructuring in March 1997, in which
operations  at  four  of  ﬁve  divisions  were  terminated  by
June 1997, Viking’s daily shipments declined 60% year-
over-year in 1998.

FDX CORPORATION    P 2 9

M A N A G E M E N T (cid:213) S   D I S C U S S I O N   A N D   A N A L Y S I S

Operating Expenses
Volume growth and expansion of the Company’s opera-
tions  resulted  in  a  trend  of  rising  operating  expenses.
Presented  below  are  year-over-year  percentage
changes in selected operating expenses:

Percent Change

1998/1997

1997/1996

Salaries and employee beneﬁts

Purchased transportation

Rentals and landing fees

Depreciation and amortization

Maintenance and repairs

Fuel

Other

Total operating expenses

+ 8

+18

+14

+ 4

+13

– 1

+11

+ 8

+11

+18

+12

+ 9

+14

+20

+17

+15

Salaries and employee beneﬁts expense rose primarily
due to higher employment levels associated with volume
growth,  partially  offset  in 1998  by  a  decline  at  Viking
after  its  restructuring.  Increased  provisions  under  the
Company’s performance-based, incentive compensation
plans  in 1998  and 1997,  and  a  $25  million  special
appreciation bonus in 1998 for U.S. operations employ-
ees at FedEx for their extra efforts during the UPS strike
also  contributed  to  the  increases  in  salaries  and
employee beneﬁts expense.

Increases  in  purchased  transportation  were  primarily
volume related, with the majority of the increases occur-
ring at RPS in 1998 and at FedEx in 1997.

Rentals and landing fees increased primarily due to addi-
tional aircraft leased by FedEx. As of May 31, 1998, the
Company  had  86  wide-bodied  aircraft  under  operating
lease compared with 78 as of May 31, 1997, and 74 as of
May 31, 1996.  Management  expects  year-over-year
increases in lease expense to continue as the Company
enters into additional aircraft rental agreements during
1999 and thereafter.

In  the  past  three  years,  FedEx’s  aircraft  fleet  has
increased  resulting  in  a  corresponding  rise  in  mainte-
nance  expense.  The  rise  in  maintenance  and  repairs
expense  for 1998  was  primarily  due  to  higher  engine
maintenance  expense  on  B727,  DC10  and  A310  air-
craft. As discussed above, most of the 1998 increase in
an  operating  reserve  for  the  disposition  of  B747  air-
craft  was  recorded  as  maintenance  and  repairs
expense.  In 1997,  FedEx  experienced  higher  engine
maintenance expense on MD11 and A310 aircraft.

FedEx expects a predictable pattern of aircraft mainte-
nance  and  repairs  expense.  However,  unanticipated
maintenance  events  will  occasionally  disrupt  this  pat-
tern,  resulting  in  periodic  ﬂuctuations  in  maintenance
and repairs expense. Given FedEx’s increasing ﬂeet size,
aging ﬂeet  and  variety  of  aircraft  types,  management
believes that maintenance and repairs expense will con-
tinue  a  trend  of  year-over-year  increases  for  the  fore-
seeable future.

P 3 0 FDX CORPORATION

Fuel expense decreased in 1998 due to a 10% decline in
average jet fuel price per gallon and a decrease in vehicle
fuel  consumption  at  Viking,  partially  offset  by  a  13%
increase  in  jet  fuel  gallons  consumed.  Fuel  expense
increased in 1997due to a 12% and 8% rise in average
jet fuel price per gallon and gallons consumed, respec-
tively. In 1997, the increase in average price per gallon of
jet fuel was due to higher jet fuel prices and a 4.3 cents
per gallon excise tax on aviation fuel, used domestically,
which  became  effective  October 1, 1995.  For  the  past
three years, fuel expense included amounts received and
paid  by  FedEx  under  contracts  which  are  designed  to
limit FedEx’s exposure to ﬂuctuations in jet fuel prices.

In order to mitigate the impact of the increase in jet fuel
prices experienced in 1997, FedEx implemented fuel sur-
charges  on  airfreight  shipments,  effective  December 1,
1996,  for  shipments  out  of  Europe  and  selected  Asian
countries. Additionally, the Company implemented fuel sur-
charges, effective December 15, 1996, for airfreight ship-
ments originating in the United States, Latin America and
the remaining parts of Asia, except those to the People’s
Republic of China and Hong Kong. These surcharges were
discontinued effective April 15 or June 1, 1997, depending
on the origin country. FedEx also implemented a tempo-
rary  2%  fuel  surcharge,  effective  February  3, 1997,  on
U.S. domestic shipments except FedEx Same Day service
and including Puerto Rico. This surcharge also applied to
all U.S. export IP shipments, except those to the People’s
Republic  of  China  and  Hong  Kong.  This  surcharge  was
lifted on August 1, 1997.

Increases in other operating expenses for 1998 and 1997
were primarily due to expenses related to volume growth
and, in 1998, expenses necessitated by additional volume
during the UPS strike, including temporary manpower and
uniforms and supplies. The cost of sales of engine noise
reduction kits also increased in 1998 and 1997. 

The  Company’s  work  on  the  Year  2000  (“Y2K”)  com-
puter compliance issue began in 1996. The Company’s
Y2K compliance program consists of ﬁve parts: inven-
tory, assessment, renovation, testing and implementa-
tion.  The  Company  has  conducted  an  inventory  and
assessment  of  remediation  required  for  business-
critical  information  technology  applications.  Project
plans have been created, and progress is being moni-
tored on an ongoing basis. Upon completion, validation
of these efforts will be performed by an internal, inde-
pendent  process.  The  Company’s  goal  is  to  have  the
majority of these business-critical information technol-
ogy  applications  Y2K  compliant  by  December  31,
1998. The Company is also in the process of complet-
ing Company-wide inventory, assessment and remedia-
tion  project  plans  for  business-critical  personal
computers and software, user applications and embedded-
chip systems. The Company’s goal is to have the major-
ity  of  these  business-critical  components  Y2K
compliant by May 31, 1999. 

The Company is investigating the Y2K compliance sta-
tus of its vendors, suppliers and afﬁliates via the Com-
pany’s  own  internal  vendor  compliance  effort.  The

Company  will  carry  out  this  task  through  a  Company-
wide effort, assisted by consultants, to address internal
issues,  and  jointly  with  industry  trade  groups,  to
address issues related to third parties which are com-
mon to transportation companies.

The Company has incurred approximately $50 million to
date, including consulting fees, internal staff costs and
other  expenses.  The  Company  expects  to  incur  addi-
tional  expenses  of  approximately  $100  million  in  the
next two years to be Y2K compliant.

While  the  Company  believes  it  is  taking  all  appropriate
steps to achieve Y2K compliance, its Y2K issues and any
potential future business interruptions, costs, damages or
losses  related  thereto,  are  dependent,  to  a  signiﬁcant
degree,  upon  the  Y2K  compliance  of  third  parties,  both
domestic and international, such as government agencies,
customers,  vendors  and  suppliers.  The  Y2K  problem  is
pervasive and complex, as virtually every computer opera-
tion will be affected in some way. Consequently, no assur-
ance can be given that Y2K compliance can be achieved
without signiﬁcant additional costs.

Operating Income
The  Company ’s  consolidated  operating  income
increased 99% in 1998 and decreased 35% in 1997.
Operating income for 1998 beneﬁted from the effect of
the  UPS  strike;  whereas,  operating  income  for 1997
was reduced by the Viking asset impairment charge of
$225 million.

FedEx’s consolidated operating income increased 20%
and 12% in 1998 and 1997, respectively.

FedEx’s U.S. domestic operating income rose 35% and
3% in 1998 and 1997, respectively. In 1998, operating
income improved primarily due to increases in revenue
per  package  (3.9%)  exceeding  increases  in  cost  per
package (2.9%) and due to a rise in average daily vol-
ume (11%). Also, as noted above, 1998 U.S. domestic
operating  results  were  signiﬁcantly  impacted  by  the
UPS  strike.  Sales  of  engine  noise  reduction  kits  con-
tributed $127 million, $87 million and $63 million to
FedEx’s U.S. domestic operating income in 1998, 1997
and 1996,  respectively.  In 1997,  domestic  operating
income included a $15 million pre-tax beneﬁt from the
settlement of a Tennessee personal property tax mat-
ter.  Increases  in  cost  per  package  (1.4%)  exceeded
increases  in  revenue  per  package  (0.8%),  while  aver-
age  daily  volume  rose 11%.  U.S.  domestic  operating
margins  were  7.8%,  6.7%  and  7.3%  in 1998, 1997
and 1996, respectively.

International  operating  income  declined  $57  million  in
1998,  compared  with  a  $59  million  increase  in 1997.
International  operating  results  declined  in 1998  as  a
result  of  slower  growth  of  IP  and  IXF  volumes  during  a
period  of  international  network  expansion.  Lower  air-
freight yields, higher salaries and employee beneﬁts and
aircraft lease expense, additional start-up costs for sev-
eral new international ﬂights and the net effect of foreign
currency  ﬂuctuations  negatively  impacted  international
results.  The  increase  in  operating  income  in 1997  was

attributable to strong growth in the Company’s IP volumes
and airfreight pounds, partially offset by lower airfreight
yields. International operating margins were 2.3%, 4.4%
and 2.9% in 1998,1997 and 1996, respectively.

RPS reported operating income of $172 million, $136
million  and  $174  million  for 1998, 1997  and 1996,
respectively. The increase in operating income for 1998
resulted from package volume growth and the positive
effect of the 12-day UPS strike. In 1997, despite a 4%
increase in revenues, higher ﬁxed costs of RPS’s contin-
uing expansion and investment in technology and equip-
ment  contributed  to  the  decline  in  operating  results.
Operating  margins  were 10.1%, 10.1%  and 13.4%  in
1998, 1997 and 1996, respectively.

Viking  reported  operating  income  of  $28  million  in
1998, an operating loss of $362 million in 1997 and an
operating  loss  of  $40  million  in 1996.  As  discussed
above, operating results for 1998 include a $16 million
gain on the sale of certain Viking assets, and results for
1997 include a $225 million asset impairment charge.
Operating  margins  were  7.3%,  (37.5%)  and  (4.8%)  in
1998, 1997 and 1996, respectively. 

For additional information on the Company’s business
segments,  see  Note 12  of  Notes  to  Consolidated
Financial Statements.

Other Income and Expense and Income Taxes
Net interest expense increased 19% for 1998, primar-
ily  due  to  lower  levels  of  capitalized  interest  at  both
FedEx  and  Caliber.  Interest  is  capitalized  during  the
modiﬁcation of certain MD11 and DC10 aircraft from
passenger to freighter conﬁguration, among other pro-
jects.  For 1997,  net  interest  expense  increased 16%
due  to  higher  debt  levels  at  Caliber  and  the  loss  of
interest income from discontinued operations, partially
offset  by  lower  effective  interest  rates  at  FedEx.  The
level of capitalized interest in 1997 was comparable to
that of 1996.

Other, net for 1998 included a gain from an insurance
settlement  for  an  MD11 aircraft  destroyed  in  an  acci-
dent in July 1997. Other, net for 1997 included a $17
million  gain  from  an  insurance  settlement  for  a  DC10
aircraft destroyed by ﬁre in September 1996.

The Company’s effective tax rate was 44.6% in 1998,
53.9%  in 1997  and  43.0%  in 1996.  Excluding  non-
recurring  items  from  the  Caliber  acquisition  in 1998
and the Viking restructuring in 1997, the effective rate
would have been 41.5% in 1998 and 43.0% in 1997
and 1996. In each year, the effective tax rate (exclusive
of non-recurring items) was greater than the statutory
U.S. federal tax rate primarily because of state income
taxes and other factors as identiﬁed in Note 9 of Notes
to  Consolidated  Financial  Statements.  For 1999,
management  expects  the  effective  tax  rate  to  remain 
at  a  level  similar  to  the 1998  rate  (exclusive  of  non-
recurring  items).  The  actual  rate,  however,  is  depen-
dent on a number of factors, including the amount and
source of operating income.

FDX CORPORATION    P 3 1

M A N A G E M E N T (cid:213) S   D I S C U S S I O N   A N D   A N A L Y S I S

Outlook
Management is committed to achieving long-term earn-
ings  growth  by  providing  transportation,  high  value-
added logistics and related information services through
focused operating companies. This frequently involves a
signiﬁcant  front-end  investment  in  assets,  technology
and personnel that may reduce near-term proﬁtability.

As discussed in Revenues above, a key reason for the
increase in FedEx’s U.S. domestic yield was the contin-
ued  yield-management  actions  of  implementing  price
increases  on  low-yielding  accounts,  discontinuing
unproﬁtable  accounts,  increasing  average  weight  per
package and implementing a 3% to 4% rate increase in
February 1998.  Management  believes  yields  will  con-
tinue to beneﬁt from these actions in 1999, while pack-
age volumes will grow at a lower rate in 1999 than in
the past several years. FedEx will continue to manage
yields with the goal of ensuring an appropriate balance
between revenues generated and the cost of providing
express  services.  Actual  results,  however,  may  vary
depending primarily on the impact of competitive pricing
changes, customer responses to yield-management ini-
tiatives,  changing  customer  demand  patterns  and
domestic economic conditions.

FedEx’s operating income from the sales of engine noise
reduction kits peaked in 1998 and is expected to decline
$45 million  year-over-year  in 1999  and  to  become
insigniﬁcant by 2001. Actual results may differ depend-
ing  primarily  on  the  impact  of  actions  by  FedEx’s  com-
petitors and regulatory conditions.

While FedEx’s long-term strategy for international opera-
tions is to improve global connectivity for its customers
by strategically expanding its worldwide network, inter-
national economic developments, including the current
Asian economic difﬁculties, may limit short-term growth
of  FedEx’s  international  services  and  proﬁts.  Manage-
ment expects, however, strategic expansion to allow for
continued, long-term growth of these services.

Management  expects  IP  average  daily  volume  to  con-
tinue its strong growth in 1999, and IP yields to remain
relatively constant. With respect to airfreight, manage-
ment believes volumes and yields will decline year-over-
year  in 1999.  Actual  results  for  IP  or  airfreight,
however,  will  depend  on  international  economic  condi-
tions,  actions  by  FedEx’s  competitors  and  regulatory
conditions for international aviation rights.

To  boost  customer  conﬁdence  and  RPS’s  competitive 
position,  RPS  introduced  a  guaranteed  ground  offering
in July 1998 for business-to-business shipments. Manage-
ment expects RPS’s package volume to continue to grow,
as  projected  facility  expansions  begin  to  address  cur-
rent  capacity  constraints.  Yields  will  likely  remain  stable 
or  increase  slightly.  Actual  results,  however,  will  depend
primarily  on  the  impact  of  competitive  pricing  changes,
actions by RPS’s competitors, changing customer demand
patterns and domestic economic conditions.

P 3 2 FDX CORPORATION

Viking’s strategy for 1999 is to maintain its market leader-
ship in the western United States, improve yields and invest
in updated information systems and other technologies.

The Company will continue to invest in technologies that
improve the efﬁciency of package pick-up, sorting, track-
ing and delivery and that improve customer access and
connectivity.  The  Company  will  also  continue  projects
designed  to  enhance  productivity  and  strengthen  the
Company’s infrastructure. Assuming effective implemen-
tation, these investments are expected to reduce trans-
portation cost per package. 

Effective  June 1, 1998,  the  Company  adopted  a  new
accounting  standard  which  provides  guidance  on
accounting  for  the  costs  of  software  developed  or
obtained  for  internal  use.  This  standard  requires  that
certain of these costs be capitalized, and the Company
estimates  the  pre-tax  benefit  of  the  adoption  to  be
approximately $30 million for 1999.

FINANCIAL CONDITION

Liquidity
Cash  and  cash  equivalents  totaled  $230  million  at
May 31, 1998,  an  increase  of  $69  million  during 1998
compared with an increase of $33 million in 1997 and a
decrease  of  $244  million  in 1996.  Cash  provided  from
operations  during 1998  was  $1.7  billion  compared  with
$1.1 billion and $1.2 billion in 1997 and 1996, respectively.
The Company currently has available a $1.0 billion revolv-
ing bank credit facility that is generally used to ﬁnance tem-
porary  operating  cash  requirements  and  to  provide
support  for  the  issuance  of  commercial  paper.  Manage-
ment believes that cash ﬂow from operations, its commer-
cial paper program and the revolving bank credit facility will
adequately  meet  its  working  capital  needs  for  the  fore-
seeable future.

Capital Resources
The Company’s operations are capital intensive, charac-
terized  by  signiﬁcant  investments  in  aircraft,  vehicles,
computer  and  telecommunication  equipment,  package
handling facilities and sort equipment. The amount and
timing of capital additions are dependent on various fac-
tors  including  volume  growth,  domestic  and  interna-
tional economic conditions, new or enhanced services,
geographical  expansion  of  services,  competition  and
availability of satisfactory ﬁnancing.

Capital  expenditures  for 1998  totaled  $1.9  billion  and
included three MD11 aircraft (which were subsequently
sold  and  leased  back),  four  Airbus  A310  aircraft,  air-
craft modiﬁcations, customer automation and computer
equipment,  facilities  and  vehicles  and  ground  support
equipment.  In  comparison,  prior  year  expenditures
totaled  $1.8  billion  and  included  ten  Airbus  A310 
aircraft,  two  MD11 aircraft  (which  were  subsequently
sold  and  leased  back,  one  in 1997  and  one  in 1998),
customer  automation  and  computer  equipment  and 

vehicles and ground support equipment. For information
on the Company’s purchase commitments, see Note 14
of Notes to Consolidated Financial Statements.

The  Company  has  historically  financed  its  capital
investments through the use of lease, debt and equity
ﬁnancing in addition to the use of internally generated
cash from operations. Generally, management’s prac-
tice in recent years with respect to funding new wide-
bodied aircraft acquisitions has been to ﬁnance such
aircraft  through  long-term  lease  transactions  that
qualify  as  off-balance  sheet  operating  leases  under
applicable  accounting  rules.  Management  has  deter-
mined that these operating leases have provided eco-
nomic beneﬁts favorable to ownership with respect to
market values, liquidity and after-tax cash ﬂows. In the
future, other forms of secured ﬁnancing may be pur-
sued  to  finance  the  Company’s  aircraft  acquisitions
when management determines that it best meets the
Company’s needs. The Company has been successful
in  obtaining  investment  capital,  both  domestic  and
international,  for  long-term  leases  on  terms  accept-
able  to  it although  the  marketplace  for  such  capital
can become restricted depending on a variety of eco-
nomic factors beyond the control of the Company. See
Note 4 of Notes to Consolidated Financial Statements
for  additional  information  concerning  the  Company’s
debt and credit facilities.

In July 1997, $20 million of Memphis-Shelby County Airport
Authority (“MSCAA”) Special Facilities Revenue Bonds were
issued.  The  proceeds  of  the  bonds  in  combination  with
other  funds  were  used  to  refund  outstanding  MSCAA
1982B bonds on September 2, 1997. Also in July 1997,
FedEx issued $250 million of unsecured senior notes with a
maturity date of July1, 2097, under FedEx’s July1996 shelf
registration  statement  filed  with  the  Securities  and
Exchange Commission.

In June 1998, approximately $833 million of pass through
certiﬁcates  were  issued  under  shelf  registration  state-
ments ﬁled with the Securities and Exchange Commission
to ﬁnance or reﬁnance the debt portion of leveraged leases
related to eight Airbus A300 and ﬁve MD11 aircraft to be
delivered through the summer of 1999. The pass through
certiﬁcates are not direct obligations of, or guaranteed by,
the  Company  or  FedEx,  but  amounts  payable  by  FedEx
under the leveraged leases are sufﬁcient to pay the princi-
pal of and interest on the certiﬁcates.

Management  believes  that  the  capital  resources  avail-
able  to  the  Company  provide  ﬂexibility  to  access  the
most  efﬁcient  markets  for  ﬁnancing  its  capital  acquisi-
tions, including aircraft, and are adequate for the Com-
pany’s future capital needs.

Market Risk Sensitive Instruments and Positions
The  Company  currently  has  market  risk  sensitive  instru-
ments related to interest rates. As disclosed in Note 4 of
Notes to Consolidated Financial Statements, the Company
has outstanding unsecured debt of $1.6 billion at May 31,
1998,  of  which  $1.4  billion  is  long-term.  The  Company
does  not  have  signiﬁcant  exposure  to  changing  interest

rates on its long-term debt because the interest rates are
ﬁxed. Market risk for ﬁxed-rate long-term debt is estimated
as  the  potential  decrease  in  fair  value  resulting  from  a
hypothetical 10% increase in interest rates and amounts
to  approximately  $55  million  as  of  May  31,  1998.  The
underlying fair values of the Company’s long-term debt
were  estimated  based  on  quoted  market  prices  or  on
the  current  rates  offered  for  debt  with  similar  terms
and  maturities.  The  Company  does  not  use  derivative
ﬁnancial instruments to manage interest rate risk.

The Company’s earnings are affected by ﬂuctuations in
the value of the U.S. dollar as compared to foreign cur-
rencies, as a result of transactions in foreign markets.
At May 31, 1998, the result of a uniform 10% strength-
ening in the value of the dollar relative to the currencies
in which the Company’s transactions are denominated
would  result  in  a  decrease  in  operating  income  of
approximately $15 million for the year ending May 31,
1999.  This  calculation  assumes  that  each  exchange
rate would change in the same direction relative to the
U.S. dollar. In addition to the direct effects of changes in
exchange rates, which are a changed dollar value of the
resulting  sales,  changes  in  exchange  rates  also  affect
the volume of sales or the foreign currency sales price
as competitors’ services become more or less attrac-
tive. The Company’s sensitivity analysis of the effects of
changes  in  foreign  currency  exchange  rates  does  not
factor in a potential change in sales levels or local cur-
rency prices.

In  the  past  three  years,  FedEx  has  entered  into  con-
tracts which are designed to limit its exposure to ﬂuc-
tuations  in  jet  fuel  prices.  FedEx  hedges  its  exposure 
to jet fuel price market risk only on a conservative, lim-
ited  basis.  No  such  contracts  were  outstanding  as  of
May 31, 1998.  See  Note 14  of  Notes  to  Consolidated
Financial  Statements  for  accounting  policy  and  addi-
tional information regarding jet fuel contracts.

The Company does not purchase or hold any derivative
ﬁnancial instruments for trading purposes.

Deferred Tax Assets
At  May  31, 1998,  the  Company  had  a  net  cumula-
tive  deferred  tax  liability  of  $41 million  consisting  of
$601 million of deferred tax assets and $642 million of
deferred  tax  liabilities.  The  reversals  of  deferred  tax
assets in future periods will be offset by similar amounts
of deferred tax liabilities.

Statements  in  this  “Management’s  Discussion  and
Analysis  of  Results  of  Operations  and  Financial  Condi-
tion”  or  made  by  management  of  the  Company  which
contain more than historical information may be consid-
ered  forward-looking  statements  (as  such  term  is
deﬁned in the Private Securities Litigation Reform Act of
1995)  which  are  subject  to  risks  and  uncertainties.
Actual  results  may  differ  materially  from  those
expressed in the forward-looking statements because of
important factors identiﬁed in this section.

FDX CORPORATION    P 3 3

C O N S O L I D A T E D S T A T E M E N T S   O F   I N C O M E

Years ended May 31

In thousands, 

except Earnings Per Share

REVENUES

Operating Expenses:
Salaries and employee beneﬁts

Purchased transportation

Rentals and landing fees

Depreciation and amortization

Maintenance and repairs

Fuel

Merger expenses

Restructuring and impairment charges

Other

OPERATING INCOME

Other Income (Expense):
Interest, net

Other, net

Income from Continuing Operations Before Income Taxes
Provision for Income Taxes

Income from Continuing Operations

DISCONTINUED OPERATIONS, NET OF INCOME TAXES:
Loss from discontinued operations

Income (loss) from discontinuance

NET INCOME

EARNINGS (LOSS) PER COMMON SHARE:
Continuing operations
Discontinued operations

EARNINGS (LOSS) PER COMMON SHARE—

ASSUMING DILUTION:

Continuing operations

Discontinued operations

1998

1997

1996

$15,872,810

$14,237,892

$12,721,791

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(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

6,647,140

1,481,590

1,285,655

963,550

884,280

726,768

88,000

(16,000)

6,150,247

1,252,901

1,131,543

926,089

781,708

734,722

—-

225,036

5,557,962

1,064,925

1,014,024

851,992

686,185

612,243

—

—

2,801,167

2,528,644

2,154,908

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

14,862,150

13,730,890

11,942,239

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

1,010,660

507,002

779,552

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(124,413)

13,271

(104,195)

23,058

(90,190)

12,732 

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(111,142)

(81,137)

(77,458)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

899,518

401,363

425,865

229,761

702,094

301,908

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

498,155

196,104

400,186

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

—

4,875

—

—

(69,950)

(49,664)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

4,875

—

(119,614)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

$

503,030

$

196,104

$

280,572

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

$

$

3.40
.03

$

1.35
—

2.76
(.82)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

$

3.43

$

1.35

$

1.94

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

$

3.34

.03

$

1.33

$

—

2.74

(.82)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

$

3.37

$

1.33

$

1.92

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

P 3 4 FDX CORPORATION

C O N S O L I D A T E D   B A L A N C E   S H E E T S

May 31

In thousands

ASSETS
Current Assets:
Cash and cash equivalents

Receivables, less allowances of $61,409 and $68,130

Spare parts, supplies and fuel

Deferred income taxes

Prepaid expenses and other

Total current assets

Property and Equipment, at Cost:
Flight equipment

Package handling and ground support equipment and vehicles

Computer and electronic equipment

Other

Less accumulated depreciation and amortization

Net property and equipment

Other Assets:
Goodwill

Equipment deposits and other assets

Total other assets

LIABILITIES AND STOCKHOLDERS’ INVESTMENT
Current Liabilities:
Short-term debt

Current portion of long-term debt

Accounts payable

Accrued expenses

Total current liabilities

Long-Term Debt, Less Current Portion

Deferred Income Taxes

Other Liabilities

Commitments and Contingencies (Notes 5, 14 and 15)

Common Stockholders’ Investment:

Common stock, $.10 par value; 400,000 shares authorized; 

147,411 and 147,624 shares issued

Additional paid-in capital

Retained earnings

Less treasury stock, at cost, and deferred compensation

Total common stockholders’ investment

1998

1997

$

229,565

$

160,852

1,943,423

1,877,972

364,714

232,790

109,640

339,353

196,959

68,592

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

2,880,132

2,643,728

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

4,056,541

3,425,279

2,162,624

2,819,430

3,741,407

3,131,060

1,957,917

2,557,564

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

12,463,874

11,387,948

6,528,824

5,917,549

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

5,935,050

5,470,399

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

356,272

514,606

370,342

559,847

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

870,878

930,189

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

$ 9,686,060

$ 9,044,316

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

$

—

$

230,000

257,529

1,145,410

1,400,900

126,666

999,782

1,223,039

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

2,803,839

2,579,487

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

1,385,180

1,597,954

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

274,147

181,835

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

1,261,664

1,183,879

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

14,741

992,821

14,762

937,978

2,972,077

2,621,511

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

3,979,639

3,574,251

18,409

73,090

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

3,961,230

3,501,161

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

$ 9,686,060

$ 9,044,316

The accompanying Notes to Consolidated Financial Statements are an integral part of these balance sheets.

FDX CORPORATION    P 3 5

C O N S O L I D A T E D   S T A T E M E N T S   O F   C A S H   F L O W S

Years ended May 31

In thousands

OPERATING ACTIVITIES
Income from continuing operations

Adjustments to reconcile income from continuing operations 

to cash provided by operating activities:

Depreciation and amortization

Provision for uncollectible accounts

Provision (beneﬁt) for deferred income taxes and other

Restructuring and impairment charges 

Gain from disposals of property and equipment

Changes in assets and liabilities, net of

effects from dispositions of businesses:

Increase in receivables

Increase in other current assets

Increase in accounts payable, accrued
expenses and other liabilities

Other, net

Cash provided by operating activities

INVESTING ACTIVITIES
Purchases of property and equipment, including deposits

1998

1997

1996

$  498,155

$  196,104

$  400,186 

963,731

59,616

45,548

(16,000)

(5,741)

928,799 

40,634 

(9,610)

225,036 

(20,143)

857,951 

38,963 

34,355 

—

(7,040)

(254,283)

(102,203)

(426,357)

(443,799)

(205,427)

(65,038)

453,721

63,829

647,780

(29,266)

114,612 

15,971 

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

1,706,373

1,109,178

1,184,533 

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

on aircraft of $70,359, $26,107 and $68,202

(1,880,173)

(1,762,979)

(1,700,376)

Proceeds from dispositions of property and equipment:

Sale-leaseback transactions

Reimbursements of A300 deposits

Other dispositions

Net receipts from (advances to) discontinued operations

Other, net

Cash used in investing activities

FINANCING ACTIVITIES
Principal payments on debt

Proceeds from debt issuances

Proceeds from stock issuances

Dividends paid

Other, net

Cash (used in) provided by ﬁnancing activities

CASH AND CASH EQUIVALENTS
Cash provided by (used in) continuing operations

Cash used in discontinued operations

Balance at beginning of year

Balance at end of year

322,852

106,991

135,329

1,735

(75,964)

162,400

63,039

39,423

(2,527)

24,612

176,500 

143,859 

32,619 

(60,000)

77,208 

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(1,389,230)

(1,476,032)

(1,330,190)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(533,502)

267,105

33,925

(7,793)

(6,939)

(9,670)

433,404 

31,013 

(34,825)

(9,741)

(264,004)

214,798 

36,566 

(54,688)

(4,898)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(247,204)

410,181

(72,226)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

69,939

(1,735)

161,361

43,327

(10,802)

128,327

(217,883)

(26,118)

372,328 

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

$  229,565

$  160,852

$  128,327 

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

P 3 6 FDX CORPORATION

C O N S O L I D A T E D   S T A T E M E N T S   O F   C H A N G E S   I N   C O M M O N   S T O C K H O L D E R S (cid:213)   I N V E S T M E N T

In thousands, 

except shares

BALANCE AT MAY 31,1995
Cash dividends declared by 

Caliber System, Inc.

Distribution of Roadway Express, Inc.

Purchase of treasury stock

Forfeiture of restricted stock

Issuance of common and treasury stock 

under employee incentive plans 

(932,105 shares)

Amortization of deferred compensation

Foreign currency translation adjustment

Net income

BALANCE AT MAY 31,1996
Cash dividends declared by 

Caliber System, Inc.

Purchase of treasury stock

Forfeiture of restricted stock

Two-for-one stock split by

Issuance of common and treasury 

stock under employee incentive 

plans (1,336,116 shares)

Amortization of deferred compensation

Foreign currency translation adjustment

Net income

BALANCE AT MAY 31, 1997
Adjustment to conform

Caliber System, Inc.’s ﬁscal year

Cash dividends declared by

Caliber System, Inc.

Purchase of treasury stock

Forfeiture of restricted stock

Issuance of common and treasury stock
under employee incentive plans

Common

Stock

Additional

Paid-in

Capital

Retained

Earnings

Treasury

Deferred

Stock

Compensation

$ 8,888

$863,035

$2,444,886

$(55,122)

$ 

(724)

—

—

—

—

72

—

—

—

—

—

—

—

40,051

—

—

—

(54,706)

(199,745)

—

—

—

—

(7,626)

280,572

—

—

(13,009)

(1,068)

17,477

—

—

—

—

—

—

1,130

(13,898)

2,227

—

—

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

8,960

903,086

2,463,381

(51,722)

(11,265)

—

—

—

—

(28,184)

—

—

—

(15,057)

(803)

—

—

720

(5,699)

—

—

103

34,892

—

—

—

—

—

—

—

—

(4,091)

196,104

12,100

—

—

—

(10,484)

3,421 

— 

—

14,762

937,978

2,621,511

(55,482)

(17,608)

492

(51,795)

(1,765)

—

(7,049)

(979)

—

—

—

586

—

—

—

(3,899)

—

—

—

—

—

—

—

—

—

—

Federal Express Corporation in 

the form of a 100% stock dividend

5,699

(1,466,895 shares)

135

54,195

Cancellation of Caliber System, Inc.

7,918

(7,204)

treasury stock

(156)

156

(66,474)

57,357

Amortization of deferred compensation

Foreign currency translation adjustment

Net income

—

—

—

—

—

—

—

(30,296)

503,030

—

—

—

—

5,817

—

—

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

BALANCE AT MAY 31,1998

$14,741

$992,821

$2,972,077

$

—

$(18,409)

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

FDX CORPORATION    P 3 7

N O T E S   T O   C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

NOTE 1: BUSINESS COMBINATION AND BASIS OF
PRESENTATION

On  January  27, 1998,  Federal  Express  Corporation
(“FedEx”)  and  Caliber  System,  Inc.  (“Caliber”)  became
wholly-owned  subsidiaries  of  a  newly-formed  holding
company,  FDX  Corporation  (together  with  its  sub-
sidiaries, the “Company”). In this transaction, which was
accounted for as a pooling of interests, Caliber share-
holders received 0.8 shares of the Company’s common
stock  for  each  share  of  Caliber  common  stock.  Each
share  of  FedEx  common  stock  was  automatically  con-
verted into one share of the Company’s common stock.
There were approximately 146,800,000 of $0.10 par
value shares so issued or converted. The accompanying
ﬁnancial statements have been restated to include the
financial  position  and  results  of  operations  for  both
FedEx and Caliber for all periods presented.

Caliber operated on a 13 four-week period calendar
ending  December  31 with 12  weeks  in  each  of  the

first three quarters and 16 weeks in the fourth quar-
ter.  FedEx’s  fiscal  year  ending  May  31 consists  of
four, three-month quarters. The Company’s consoli-
dated  results  of  operations  and  cash  flows  for  the
year  ended  May  31, 1998  comprise  Caliber’s  53-
week  period  from  May  25, 1997  to  May  31, 1998
consolidated with FedEx’s year ended May 31, 1998.
The Company’s consolidated financial position as of
May 31, 1998 consists of Caliber’s financial position
as of May 31, 1998 consolidated with FedEx’s finan-
cial  position  as  of  May  31, 1998.  The  Company’s
consolidated  results  of  operations  and  cash  flows
for  the  years  ended  May  31, 1997  and 1996  com-
prise Caliber’s calendar years 1996 and 1995 con-
solidated with FedEx’s fiscal years 1997 and 1996.
The Company’s consolidated financial position as of
May 31, 1997 consists of Caliber’s financial position
as of December 31, 1996 consolidated with FedEx’s
financial position as of May 31, 1997.

The results of operations for FedEx and Caliber and the combined amounts presented in the Company’s consolidated
ﬁnancial statements are as follows:

In thousands

Revenues:

FedEx

Caliber

Net Income (Loss):

FedEx

Caliber

Other Changes in Common Stockholders’ Investment:

FedEx

Caliber

Years Ended
May 31,

Six Months Ended 
November 30, 1997

1997

1996

(Unaudited)

$11,519,750

$10,273,619

$6,596,377

2,718,142

2,448,172

1,212,132

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

$14,237,892

$12,721,791

$7,808,509

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

$

361,227

$

307,777

$ 250,272

(165,123)

(27,205)

64,329

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

$

196,104

$

280,572

$ 314,601

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

$

25,148

$

22,793

$

(32,531)

(251,888)

(3,254)

(3,826)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

$

(7,383)

$

(229,095)

$ 

(7,080)

Due to the different ﬁscal year ends, Caliber’s results for
the 20-week period from January 1, 1997 to May 24,
1997  are  not  included  in  the  restated  ﬁnancial  state-
ments  for 1998  or 1997.  For  this  period,  Caliber  had
revenues  of  $1,028,119,000,  operating  expenses  of
$1,083,898,000,  a  net  loss  of  $40,912,000,  divi-
dends  declared  of  $10,883,000  and  other  changes,
net, in common stockholders’ investment of $1,273,000.
Accordingly,  an  adjustment  has  been  included  in  the

Company’s  Consolidated  Statements  of  Changes  in
Common  Stockholders’  Investment  for  the  year  ended
May 31, 1998 to reﬂect this activity.

In 1998,  the  Company  incurred  $88,000,000  of
expenses  related  to  the  acquisition  of  Caliber  and  the
formation of the Company, primarily investment banking
fees  and  payments  to  members  of  Caliber’s  manage-
ment  in  accordance  with  pre-existing  management
retention agreements.

P 3 8 FDX CORPORATION

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES

Principles of consolidation. The  consolidated  ﬁnancial
statements  include  the  accounts  of  FDX  Corporation
and  its  subsidiaries.  All  significant  intercompany
accounts and transactions have been eliminated.

Property and equipment. Expenditures  for  major  addi-
tions,  improvements,  ﬂight  equipment  modiﬁcations,
and certain overhaul costs are capitalized. Maintenance
and repairs are charged to expense as incurred, except
for  B747  airframe  and  engine  overhaul  maintenance
which is accrued and charged to expense on the basis
of hours ﬂown. The cost and accumulated depreciation
of  property  and  equipment  disposed  of  are  removed
from  the  related  accounts,  and  any  gain  or  loss  is
reﬂected in the results of operations.

For  financial  reporting  purposes,  depreciation  and
amortization of property and equipment is provided on a
straight-line basis over the asset’s service life or related
lease term as follows:

Flight equipment

5 to 20 years

Package handling and ground 

support equipment and vehicles

5 to 30 years

Computer and electronic equipment

3 to 10 years

Other

2 to 30 years

Aircraft  airframes  and  engines  are  assigned  residual
values ranging from 10% to 20% of asset cost. All other
property and equipment have no assigned residual val-
ues.  Vehicles  are  depreciated  on  a  straight-line  basis
over 5 to 10 years.

For income tax purposes, depreciation is generally com-
puted using accelerated methods.

Deferred gains. Gains on the sale and leaseback of air-
craft  and  other  property  and  equipment  are  deferred
and amortized over the life of the lease as a reduction of
rent  expense.  Included  in  other  liabilities  at  May  31,
1998 and 1997, were deferred gains of $338,119,000
and $340,166,000, respectively.

Deferred lease obligations. While  certain  of  the  Com-
pany’s aircraft and facility leases contain ﬂuctuating or
escalating  payments,  the  related  rent  expense  is
recorded  on  a  straight-line  basis  over  the  lease  term.
Included in other liabilities at May 31, 1998 and 1997,
were  $324,203,000  and  $289,822,000,  respec-
tively,  representing  the  cumulative  difference  between
rent expense and rent payments.

Self-insurance reserves. The Company is self-insured up
to  certain  levels  for  workers’  compensation,  employee
health  care  and  vehicle  liabilities.  Reserves  are  based
on the actuarially estimated cost of claims. Included in
other  liabilities  at  May  31, 1998  and 1997,  were
$277,696,000 and $275,663,000, respectively, rep-
resenting  the  long-term  portion  of  self-insurance
reserves for the Company’s workers’ compensation and
vehicle liabilities.

Capitalized interest. Interest  on  funds  used  to  ﬁnance
the acquisition and modiﬁcation of aircraft and construc-
tion  of  certain  facilities  up  to  the  date  the  asset  is
placed in service is capitalized and included in the cost
of  the  asset.  Capitalized  interest  was  $33,009,000,
$45,717,000 and $44,624,000 for 1998, 1997 and
1996, respectively.

Advertising. Advertising  costs  are  generally  expensed  as
incurred  and  are  included  in  other  operating  expenses.
Adver tising  expenses  were  $183,253,0 0 0 ,
$162,337,000 and $145,592,000 for 1998, 1997 and
1996, respectively.

Cash equivalents. Cash equivalents are cash in excess
of  current  operating  requirements  invested  in  short-
term,  interest-bearing  instruments  with  maturities  of
three months or less at the date of purchase and are
stated at cost, which approximates market value. Inter-
est  income  was  $11,283,000,  $5,885,000  and
$19,059,000 in 1998, 1997 and 1996, respectively.

Spare parts, supplies and fuel. Spare  parts  are  stated
principally at weighted-average cost; supplies and fuel are
stated  principally  at  standard  cost  which  approximates
actual  cost  on  a  ﬁrst-in,  ﬁrst-out  basis.  Neither  method
values inventory in excess of current replacement cost.

Goodwill. Goodwill  is  the  excess  of  the  purchase  price
over the fair value of net assets of businesses acquired.
It is amortized on a straight-line basis over periods rang-
ing  up  to  40  years.  Accumulated  amortization  was
$144,580,000  and  $131,927,000  at  May  31, 1998
and 1997, respectively.

Foreign currency translation. Translation  gains  and
losses  of  the  Company’s  foreign  operations  that  use
local currencies as the functional currency are accumu-
lated  and  reported,  net  of  related  deferred  income
taxes, as a component of common stockholders’ invest-
ment.  Transaction  gains  and  losses  that  arise  from
exchange rate ﬂuctuations on transactions denominated
in  a  currency  other  than  the  local  functional  currency
are included in the results of operations.

Income taxes. Deferred  income  taxes  are  provided  for
the tax effect of temporary differences between the tax
basis  of  assets  and  liabilities  and  their  reported
amounts in the ﬁnancial statements. The Company uses
the liability method to account for income taxes, which
requires deferred taxes to be recorded at the statutory
rate expected to be in effect when the taxes are paid.

The Company has not provided for U.S. federal income
taxes on its foreign subsidiaries’ earnings deemed to be
permanently  reinvested.  Quantiﬁcation  of  the  deferred
tax  liability,  if  any,  associated  with  permanently  rein-
vested earnings is not practicable.

Revenue recognition. Revenue  is  generally  recognized
upon  delivery  of  shipments.  For  shipments  in  transit,
revenue is recorded based on the percentage of serv-
ice completed.

Earnings per share. In accordance with the provisions
of  Statement  of  Financial  Accounting  Standards

FDX CORPORATION    P 3 9

N O T E S   T O   C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

No. 128,  “Earnings  Per  Share,”  basic  earnings  per
share is computed by dividing net income by the number
of weighted-average common shares outstanding during
the  year.  Diluted  earnings  per  share  is  computed  by
dividing net income by the number of weighted-average
common  and  common  equivalent  shares  outstanding
during the year (See Note 8).

Recent pronouncements. In 1999,  the  Company  will
adopt  the  provisions  of  three  Statements  of  Financial
Accounting  Standards  (“SFAS”)  recently  issued  by  the
Financial Accounting Standards Board. SFAS No. 130,
“Reporting  Comprehensive  Income,”  establishes  stan-
dards  for  displaying  comprehensive  income  and  its 
components  in  a  full  set  of  general  purpose  ﬁnancial
statements.  SFAS  No. 131,  “Disclosures  about  Seg-
ments of an Enterprise and Related Information,” estab-
lishes  standards  for  reporting  information  about
operating segments in annual ﬁnancial statements and
requires reporting selected information about operating
segments  in  interim  ﬁnancial  reports  issued  to  share-
holders. SFAS No. 132, “Employers’ Disclosures about
Pensions and Other Postretirement Beneﬁts,” standard-
izes the disclosures for pensions and other postretire-
ment  benefits  to  the  extent  practicable,  requires
additional information on changes in the beneﬁt obliga-
tions  and  fair  values  of  plan  assets  that  will  facilitate
ﬁnancial  analysis  and  eliminates  other  disclosures  no
longer useful as prescribed in previous standards.

SFAS Nos. 130, 131 and 132 only affect ﬁnancial disclo-
sures  in  interim  and  annual  reports;  therefore,  the
adoption of these accounting standards will not have an
impact on the Company’s ﬁnancial condition or results
of operations.

Effective June 1,1998, the Company adopted Statement
of  Position  (“SOP”)  98-1,  “Accounting  for  the  Cost  of
Computer Software Developed or Obtained for Internal
Use,”  released  by  the  American  Institute  of  Certiﬁed
Public Accountants in March 1998. SOP 98-1 provides
guidance on accounting for these costs and requires
that certain related expenses be capitalized. The Com-
pany  estimates  the  pre-tax  beneﬁt  of  the  adoption  of
this  Statement  to  be  approximately  $30,000,000  in
1999.

Reclassiﬁcations. Certain prior year amounts have been
reclassiﬁed to conform to the 1998 presentation.

Use of estimates. The  preparation  of  the  consolidated
financial  statements  in  conformity  with  generally
accepted accounting principles requires management to
make  estimates  and  assumptions  that  affect  the
reported amounts of assets and liabilities and disclosure
of  contingent  assets  and  liabilities  at  the  date  of  the
ﬁnancial  statements  and  the  reported  amounts  of  rev-
enues and expenses during the reporting period. Actual
results could differ from those estimates.

1998

1997

$ 292,173

$ 266,397

278,550

190,056

188,464

143,876

73,643

234,138

260,724

145,556

159,180

126,030

84,006

181,146

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

$1,400,900

$1,223,039

NOTE 3: ACCRUED EXPENSES

May 31

In thousands

Insurance

Compensated absences

Employee beneﬁts

Taxes other than income taxes

Salaries

Aircraft overhaul

Other

P 4 0 FDX CORPORATION

NOTE 4: LONG-TERM DEBT

May 31

In thousands

Unsecured notes payable, interest rates of 7.60% to 10.57%, 

due through 2098

Unsecured sinking fund debentures, interest rate of 9.63%, 

due through 2020

Commercial paper

Capital lease obligations and tax exempt bonds, due through 2017, 

interest rates of 5.35% to 7.88%

Less bond reserves

Other debt, interest rates of 9.68% to 9.98%

Less current portion

1998

1997

$1,253,770

$1,128,525

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

98,529

98,461

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

—

200,904

253,425

9,024

255,100

11,096

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

244,401

244,004

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

46,009

52,726

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

1,642,709

1,724,620

257,529

126,666

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

$1,385,180

$1,597,954

The  Company  has  a  revolving  credit  agreement  with
domestic  and  foreign  banks  that  provides  for  a  total
commitment  of  $1,000,000,000,  all  of  which  was
available at May 31,1998. This agreement is composed
of two parts. The ﬁrst part provides for a commitment
of $800,000,000 through January 15, 2003. The sec-
ond part provides for a commitment of $200,000,000
through January 14, 1999. Interest rates on borrowings
under this agreement are generally determined by maturi-
ties selected and prevailing market conditions. The agree-
ment contains certain covenants and restrictions, none of
which are expected to signiﬁcantly affect operations or the
ability to pay dividends. As of May 31,1998, approximately
$1,066,000,000  was  available  for  the  payment  of  divi-
dends  under  the  restrictive  covenant  of  the  agreement.
Commercial paper borrowings are backed by unused com-
mitments  under  the  revolving  credit  agreement  and
reduce  the  amount  available  under  the  agreement.  Bor-
rowings  under  this  credit  agreement  and  commercial
paper borrowings are classiﬁed as long-term based on the
Company’s ability and intent to reﬁnance such borrowings.

Tax  exempt  bonds  were  issued  by  the  Memphis-Shelby
County Airport Authority (“MSCAA”) and the City of Indi-
anapolis. A lease agreement with the MSCAA and a loan
agreement with the City of Indianapolis covering the facil-
ities  and  equipment  ﬁnanced  with  the  bond  proceeds
obligate FedEx to pay rentals and loan payments, respec-
tively, equal to principal and interest due on the bonds.

Caliber has issued $200,000,000 of unsecured notes
which is included in long-term debt. The notes mature
on  August 1,  2006  and  bear  interest  at  7.80%.  The
notes contain restrictive covenants limiting the ability of
Caliber and its subsidiaries to incur liens on assets and
enter into certain leasing transactions.

In  July 1997,  the  MSCAA  issued  $20,105,000  of
5.35% Special Facilities Revenue Bonds. The proceeds
of the bonds in combination with other funds were used
to  refund  outstanding  MSCAA 1982B  8.3%  bonds  on
September  2, 1997.  The 1997  bonds  have  a  maturity
date of September 1, 2012. FedEx is obligated under a
lease  agreement  with  MSCAA  to  pay  rentals  equal  to
the principal and interest on the bonds.

In  July 1997,  FedEx  issued  $250,000,000  of  7.6%
unsecured senior notes due July 1, 2097, under its July
1996 shelf registration statement ﬁled with the Securi-
ties and Exchange Commission.

Scheduled annual principal maturities of long-term debt
for the ﬁve years subsequent to May 31, 1998, are as
follows:  $257,500,000  in 1999;  $14,900,000  in
2000;  $11,300,000  in  2001;  $206,900,000  in
2002; and $10,900,000 in 2003.

The  Company’s  long-term  debt,  exclusive  of  capital
leases,  had  carrying  values  of  $1,446,000,000  and
$1,322,000,000 at May 31, 1998 and 1997, respec-
tively,  compared  with  fair  values  of  approximately
$1,597,000,000  and  $1,423,000,000  at  those
dates. The estimated fair values were determined based
on quoted market prices or on current rates offered for
debt with similar terms and maturities.

NOTE 5: LEASE COMMITMENTS

The Company utilizes certain aircraft, land, facilities and
equipment  under  capital  and  operating  leases  which
expire at various dates through 2025. In addition, sup-
plemental aircraft are leased under agreements which
generally provide for cancellation upon 30 days’ notice.

FDX CORPORATION    P 4 1

N O T E S   T O   C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

Property and equipment recorded under capital leases at May 31 was as follows:

In thousands

Package handling and ground support equipment and vehicles

Facilities

Computer and electronic equipment and other

Less accumulated amortization

Rent expense under operating leases for the years ended May 31 was as follows:

1998

1997

$261,985

$274,017

134,442

6,518

134,442

6,520

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

402,945

274,494

414,979

277,406

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

$128,451

$137,573

In thousands

Minimum rentals

Contingent rentals

1998

1997

1996

$1,135,567

$ 986,758

$866,865

60,925

57,806

61,164

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

$1,196,492

$1,044,564

$928,029

Contingent rentals are based on mileage under supplemental aircraft leases.

A summary of future minimum lease payments under capital leases and non-cancellable operating leases (principally air-
craft and facilities) with an initial or remaining term in excess of one year at May 31, 1998 follows:

In thousands

1999
2000
2001
2002
2003
Thereafter

Capital Leases

Operating Leases

$ 15,023

$ 

960,462

15,023

15,023

15,023

15,023

918,193

843,352

778,016

716,559

317,397

8,225,590

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

$392,512

$12,442,172

At  May  31, 1998,  the  present  value  of  future  minimum  lease  payments  for  capital  lease  obligations  was
$200,183,000.

NOTE 6: PREFERRED STOCK

The Certiﬁcate of Incorporation authorizes the Board of
Directors, at its discretion, to issue up to 4,000,000
shares of Series Preferred Stock. The stock is issuable
in series which may vary as to certain rights and prefer-
ences and has no par value. As of May 31, 1998, none
of these shares had been issued.

NOTE 7: COMMON STOCKHOLDERS’ INVESTMENT

Stock Compensation Plans
At May 31,1998, the Company had options and awards
outstanding under 12 stock-based compensation plans
consisting  of  nine  ﬁxed  stock  option  plans  and  three
restricted stock plans, which are described below. As of
May 31, 1998, there were 10,049,688 shares of com-
mon stock reserved for issuance under these plans. The
Board  of  Directors  has  authorized  repurchase  of  the

Company’s common stock necessary for grants under
its  restricted  stock  plans.  As  of  May 31, 1998, 
a  total  of  6,112,517  shares  at  an  average  cost  of
$23.61 per  share  had  been  purchased  and  reissued
under the above-mentioned plans. On January 27, 1998,
as part of the Caliber acquisition,1,950,251 shares of Cal-
iber  treasury  stock  (equivalent  to 1,560,201 shares  of
FDX common stock) were cancelled.

The Company applies Accounting Principles Board Opin-
ion No. 25, “Accounting for Stock Issued to Employees,”
and related interpretations in accounting for its plans.
Accordingly, no compensation cost was recognized for
its  ﬁxed  stock  option  plans.  The  compensation  cost
charged  against  income  for  its  restricted  stock  plans
was  $5,817,000,  $3,421,000  and  $2,227,000  for
1998, 1997 and 1996, respectively. Had compensation
cost for the Company’s stock-based compensation plans
been determined consistent with SFAS 123, “Account-
ing for Stock-Based Compensation,”

P 4 2 FDX CORPORATION

the Company’s net income and earnings per share would have been the pro forma amounts indicated below:

In thousands, except per share data

Net income:

As reported

Pro forma

Earnings per share, assuming dilution:

As reported

Pro forma

1998

1997

1996

$503,030

$196,104

$280,572

489,556

187,624

275,299

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

$

3.37

3.28

$

1.33

1.27

$

1.92

1.89

The pro forma disclosures, applying SFAS 123, are not
likely to be representative of pro forma disclosures for
future years. The pro forma effect is not expected to be
fully reﬂected until 2002 since SFAS 123 is applicable to
options  granted  by  the  Company  after  May  31, 1995,
and because options vest over several years and addi-
tional grants could be made.

Fixed Stock Option Plans
Under the provisions of the Company’s stock incentive
plans, options may be granted to certain key employees

(and,  under  the 1993  plan,  to  directors  who  are  not
employees of the Company) to purchase shares of com-
mon stock of the Company at a price not less than its
fair market value at the date of grant. Options granted
have  a  maximum  term  of 10 years.  Vesting  require-
ments are determined at the discretion of the Compen-
sation Committee of the Board of Directors. Presently,
option vesting periods range from one to seven years.
At May 31, 1998, there were 2,863,362 shares avail-
able for future grants under these plans.

Beginning with the grants made on or after June 1, 1995, the fair value of each option grant was estimated on the
grant date using the Black-Scholes option-pricing model with the following assumptions for each option grant:

Dividend yield

Expected volatility

Risk-free interest rate

Expected lives

1998

0%

25%

1997

0%

25%

1996

0%

25%

5.4%–6.5%

5.8%–6.9%

5.9%–6.4%

2.5–6.5 years

2.5–8.5 years

2.5–7.5 years

The following table summarizes information about the Company’s ﬁxed stock option plans for the years ended May 31:

1998

1997

1996

Weighted-

Average

Exercise

Price

Weighted-

Average

Exercise

Price

Weighted-

Average

Exercise

Price

Shares

Shares

Shares

6,761,730

1,242,772

(1,168,492)

(141,784)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

$34.17 

6,444,178

$31.53 

6,377,979

$27.59 

56.40 

1,700,532

40.04 

1,823,369

26.89 

(1,136,503)

27.30 

(1,421,890)

39.01 

(268,030)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

35.98 

(335,280)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

40.71 

25.41 

32.46 

6,694,226

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

39.47 

6,740,177

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

34.21 

6,444,178

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

31.53 

Outstanding at

beginning of year

Granted

Exercised

Forfeited

Outstanding at 

end of year

Exercisable at

end of year

2,674,813

33.84 

2,265,149

27.84 

2,452,800

25.10 

FDX CORPORATION    P 4 3

N O T E S   T O   C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

The weighted-average fair value of options granted during the year was $16.49, $16.23 and $13.07 for the years
ended May 31, 1998, 1997 and 1996, respectively.

The following table summarizes information about ﬁxed stock options outstanding at May 31, 1998:

Range of

Exercise Prices

$15.28—$22.56

$23.13—$33.25

$35.00—$52.88

$59.06—$79.75

$15.28—$79.75

Options Outstanding

Options Exercisable

Weighted-

Average

Weighted-

Remaining

Number

Contractual 

Average

Exercise 

Number

Outstanding

Life

Price

Exercisable

Weighted-

Average

Exercise 

Price

363,615 

4.0 years 

$19.80

362,975

$19.80 

1,977,616 

5.4 years 

3,983,415 

7.8 years 

369,580 

9.4 years 

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

30.30

43.41

65.38

1,199,998

1,111,840

—

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

6,694,226 

7.0 years 

39.47 

2,674,813

29.97 

42.61 

—

33.84 

Restricted Stock Plans
Under  the  terms  of  the  Company’s  Restricted  Stock
Plans,  shares  of  the  Company’s  common  stock  are
awarded  to  key  employees.  All  restrictions  on  the
shares  expire  over  periods  varying  from  two  to  ﬁve
years from their date of award. Shares are valued at the 

market  price  of  the  Company’s  common  stock  at  the
date of award. Compensation expense related to these
plans  is  recorded  as  a  reduction  of  common  stock-
holders’  investment  and  is  being  amortized  as  restric-
tions on such shares expire. 

The following table summarizes information about restricted stock awards for the years ended May 31:

1998

1997

1996

Weighted-

Average

Weighted-

Average

Weighted-

Average

Shares

Fair Value

Shares

Fair Value

Shares

Fair Value

Awarded

Forfeited

120,000

14,000

$65.98

69.88

201,900

18,000

$51.93

40.03

350,500

29,000

$39.65

38.96

At May 31, 1998, there were 492,100 shares available for future awards under these plans.

P 4 4 FDX CORPORATION

NOTE 8: COMPUTATION OF EARNINGS PER SHARE

The calculation of basic and diluted earnings per share for the years ended May 31 was as follows:

In thousands, except per share amounts:

Income from continuing operations
Loss from discontinued operations
Income (loss) from discontinuance

Net income applicable to common stockholders

1998 

1997 

1996 

$498,155
—
4,875

$196,104
—
—

$400,186 
(69,950)
(49,664)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

$503,030 

$196,104

$280,572 

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

Average shares of common stock outstanding

146,701

145,713

144,695 

Basic earnings per share:
Continuing operations
Discontinued operations 

Loss from discontinued operations
Income (loss) from discontinuance

$

3.40

$

1.35

$

2.76 

—
.03

—
—

(.48)
(.34)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

$

3.43 

$

1.35

$

1.94 

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

Average shares of common stock outstanding

146,701

145,713

144,695 

Common equivalent shares:

Assumed exercise of outstanding dilutive options
Less shares repurchased from proceeds
of assumed exercise of options

6,924

6,100

5,250 

(4,421)

(4,585)

(4,102)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

Average common and common equivalent shares

149,204

147,228

145,843 

Diluted earnings per share:

Continuing operations
Discontinued operations 

Loss from discontinued operations
Income (loss) from discontinuance

NOTE 9: INCOME TAXES

$

3.34

$

1.33

$

2.74 

—
.03

—
—

(.48)
(.34)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

$

3.37 

$

1.33

$

1.92 

The components of the provision for income taxes for the years ended May 31 were as follows:

In thousands

Current provision:

Domestic

Federal

State and local

Foreign

Deferred provision:

Domestic

Federal

State and local

Foreign

1998

1997

1996 

$267,471

$153,244

$197,948 

32,839

36,543

29,344

44,165

24,431 

37,759 

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

336,853

226,753

260,138 

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

56,408

7,860

242

577

95

2,336

35,021 

4,398 

2,351 

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

64,510

3,008

41,770 

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

$401,363

$229,761

$301,908 

FDX CORPORATION    P 4 5

N O T E S   T O   C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

The Company’s operations included the following income (loss) with respect to entities in foreign locations for the
years ended May 31:

In thousands

Entities with pre-tax income

Entities with pre-tax losses

1998

1997

1996

$ 208,000 

$ 205,000 

$ 153,000 

(306,000)

(191,000)

(236,000)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

$ (98,000)

$ 14,000 

$ (83,000)

Income taxes have been provided for foreign operations
based upon the various tax laws and rates of the coun-
tries in which the Company’s operations are conducted.
There is no direct relationship between the Company’s

overall foreign income tax provision and foreign pre-tax
book  income  due  to  the  different  methods  of  taxation
used by countries throughout the world.

A reconciliation of the statutory federal income tax rate to the Company’s effective income tax rate for the years
ended May 31 is as follows:

Statutory U.S. income tax rate

Increase resulting from:

Goodwill amortization

Foreign operations

State and local income taxes, net of federal beneﬁt

Other, net

Non-recurring items (Caliber acquisition 1998,

Viking restructuring 1997)

Effective tax rate

1998

1997

1996 

35.0%

35.0%

35.0%

0.5 

0.8 

2.7 

2.5 

3.1 

0.9 

0.7 

2.9 

3.5 

10.9 

1.0 

1.7 

2.6 

2.7 

—

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

44.6%

53.9%

43.0% 

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

Effective tax rate (excluding non-recurring items)

41.5%

43.0%

43.0%

The signiﬁcant components of deferred tax assets and liabilities as of May 31 were as follows:

In thousands

Depreciation

Deferred gains on sales of assets
Employee beneﬁts

Self-insurance reserves

Other

1998

1997

Deferred

Deferred

Deferred

Deferred

Tax Assets

Tax Liabilities

Tax Assets

Tax Liabilities

$

—

$523,843

$

—

$429,350

86,053
126,513

204,303

183,941

—
22,595

—

95,729

83,413
88,467

196,684

189,986

—
18,830

—

95,246

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

$600,810

$642,167

$558,550

$543,426

NOTE 10: PENSION AND PROFIT SHARING PLANS

The  Company  sponsors  deﬁned  beneﬁt  pension  plans
covering substantially all employees. The largest plans
cover U.S. domestic employees age 21 and over, with
at least one year of service and provide beneﬁts based
on  ﬁnal  average  earnings  and  years  of  service.  Plan

funding is actuarially determined, subject to certain tax
law limitations.

International deﬁned beneﬁt pension plans provide ben-
efits  primarily  based  on  final  earnings  and  years  of
service  and  are  funded  in  accordance  with  local  laws
and income tax regulations. 

P 4 6 FDX CORPORATION

The following table sets forth the funded status of the plans as of May 31:

In thousands

Plan assets at fair value

Actuarial present value of the projected beneﬁt obligation

for service rendered to date

Plan assets in excess of projected beneﬁt obligation

Unrecognized net gains from past experience different from

that assumed and effects of changes in assumptions

Prior service cost not yet recognized in net periodic cost

Unrecognized transition amount

Adjustment required to recognize minimum liability

Net pension asset

Accumulated beneﬁt obligation

Vested beneﬁt obligation

1998

1997 

$4,434,870

$3,615,028 

4,121,795

3,151,083 

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

313,075

463,945

(196,519)

(338,491)

5,757

(13,197)

(847)

16,063 

(13,695)

—

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

$ 108,269

$ 127,822 

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

$2,865,542

$2,098,875 

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

$2,684,692

$1,950,809 

Net periodic pension cost for the years ended May 31 included the following components:

In thousands

Service cost — beneﬁts earned during the period

Interest cost on projected beneﬁt obligation

Actual return on plan assets

Net amortization and deferral

1998

1997

1996

$ 250,753

$ 246,443

$ 196,990

245,697

221,975

174,130

(730,436)

(463,442)

(474,434)

350,711

141,514

260,335

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

$116,725

$ 146,490

$ 157,021

The following actuarial assumptions were used in determining net pension cost and projected beneﬁt obligations:

Weighted-average discount rate

Weighted-average rate of increase in future compensation levels

Weighted-average expected long-term rate of return on assets

1998

1997

1996

7.0%

4.6

10.3

8.0%

5.4

10.3

7.9%

5.4

9.3

Plan assets consist primarily of marketable equity secu-
rities and ﬁxed income instruments.

The Company also has proﬁt sharing plans, which cover
substantially  all  U.S.  domestic  employees  age  21 and
over, with at least one year of service with the Company
as of the contribution date. The plans provide for discre-
tionary  employer  contributions  which  are  determined
annually  by  the  Board  of  Directors.  Profit  sharing
expense was $124,700,000 in 1998, $107,400,000
in 1997 and $95,000,000 in 1996. The 1998 amount
consists of contributions to the plans of $81,600,000
and cash distributions made outside the plans directly
to employees of $43,100,000. The 1997 amount con-
sists of contributions to the plans of $78,800,000 and
cash  distributions  made  outside  the  plans  directly  to
employees of $28,600,000.

NOTE 11: POSTRETIREMENT BENEFIT PLANS

FedEx offers medical and dental coverage to all eligible
U.S.  domestic  retirees  and  their  eligible  dependents.
Vision  coverage  is  provided  for  retirees,  but  not  their
dependents.  Substantially  all  of  FedEx’s  U.S.  domestic
employees become eligible for these beneﬁts at age 55
and  older,  if  they  have  permanent,  continuous  service
with FedEx of at least 10 years after attainment of age
45  if  hired  prior  to  January 1, 1988,  or  at  least  20
years  after  attainment  of  age  35,  if  hired  on  or  after
January 1, 1988.  Life  insurance  beneﬁts  are  provided
only  to  retirees  of  the  former  Tiger  International,  Inc.
who retired prior to acquisition.

Certain of the Caliber companies offer similar beneﬁts
to their eligible retirees.

FDX CORPORATION    P 4 7

N O T E S   T O   C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

The following table sets forth the accrued postretirement beneﬁt cost as of May 31:

In thousands

Accumulated postretirement beneﬁt obligation:

Retirees

Fully eligible active employees

Other active employees, not fully eligible

Unrecognized net gain

Unrecognized prior service beneﬁt

1998

1997

$ 52,559

$ 46,469

44,141

120,327

42,221

95,844

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

217,027

13,531

1,477

184,534

29,291

—

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

$232,035

$213,825

Net postretirement beneﬁt cost for the years ended May 31 was as follows:

In thousands

Service cost

Interest cost

Amortization of accumulated gains

Amortization of unrecognized prior service beneﬁt

1998

1997

1996

$18,385

14,767

$17,830

13,663

$13,608

12,577

(619)

(90)

(252)

—

(802)

—

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

$32,443

$31,241

$25,383

FedEx’s future medical beneﬁt costs were estimated to
increase  at  an  annual  rate  of  9.5%  during 1999,
decreasing to an annual growth rate of 5.25% in 2008
and  thereafter.  Future  dental  beneﬁt  costs  were  esti-
mated  to  increase  at  an  annual  rate  of  8.0%  during
1999, decreasing to an annual growth rate of 5.25%
in 2010 and thereafter. FedEx’s cost is capped at 150%
of 1993 employer cost and, therefore, will not be sub-
ject to medical and dental trends after the capped cost
is  attained,  projected  to  be  in  2000.  Caliber’s  health
care  costs  were  estimated  to  increase  at  an  annual
rate  of  8.5%  during  1999,  decreasing  to  an  annual
growth rate of 5.25% in 2005 and thereafter. Primar-
ily because of the cap on FedEx’s cost, a 1% increase in
these  annual  trend  rates  would  not  have  a  signiﬁcant
impact  on  the  accumulated  postretirement  benefit
obligation of the Company at May 31, 1998, or 1998
b e n ef i t   ex p e n s e .   T h e   we i g h t e d - av e ra g e   d i s -
count rates used in estimating the accumulated post-
retirement  beneﬁt  obligation  were  7.2%  and  7.8%  at

May 31, 1998  and 1997,  respectively.  The  Company
pays claims as incurred.

NOTE 12: BUSINESS SEGMENT INFORMATION

The Company is primarily composed of the operations of
FedEx and RPS, Inc. (“RPS”). FedEx is in a single line of
business  —  the  worldwide  express  transportation  and
distribution of goods and documents. RPS is a ground
small-package  carrier.  The  operations  represented  in
the Other category are also in the transportation indus-
try and include Viking Freight, Inc. (“Viking”), a regional
freight carrier, Caliber Logistics, Inc., a contract logis-
tics provider and Roberts Express, Inc., a surface expe-
dited carrier.

For reporting purposes, operations for FedEx are classi-
ﬁed into two geographic areas, U.S. domestic and inter-
national.  Shipments  which  either  originate  in  or  are
destined to locations outside the United States are cate-
gorized as international.

P 4 8 FDX CORPORATION

A summary of selected ﬁnancial information for the Company’s operations for the years ended or at May 31 is as follows:

In thousands

Revenues:

1998

1997

1996

Operating Income (Loss):

1998

1997

1996

Identiﬁable Assets:

1998

1997

FedEx
U.S. Domestic

FedEx
International

RPS

Other

Total

$9,665,342

$3,589,499

$1,710,378

$ 907,591

$15,872,810

8,322,037

7,466,311

3,197,713

2,807,308

1,344,307

1,373,835

14,237,892

1,292,748

1,155,424

12,721,791

$ 752,563

$

84,170

$ 172,033

$

1,894(1)

$ 1,010,660

558,040

542,168

141,002

81,656

135,721

173,610

(327,761)(2)

(17,882)

507,002

779,552

$6,872,952

$1,560,154

$ 799,733

$ 453,221

$ 9,686,060

6,122,885

1,502,601

713,887

704,943

9,044,316

(1) Includes $74,000,000 of merger expenses. See Note 1.

(2) Includes charges related to the Viking restructuring. See Note 17.

Identiﬁable  assets  used  jointly  in  U.S.  domestic  and
international operations (principally aircraft) have been
allocated based on estimated usage. International rev-
enues  related  to  services  originating  in  the  United

NOTE 13: SUPPLEMENTAL CASH FLOW INFORMATION

States  totaled  $1,588,400,000,  $1,433,700,000
and  $1,316,100,000  for  the  years  ended  May  31,
1998, 1997 and 1996, respectively.

Cash paid for interest expense and income taxes for the years ended May 31 was as follows:

In thousands

Interest (net of capitalized interest)

Income taxes

1998

1997

1996

$130,250

$108,828

$116,535

355,563

195,253

245,487

Non-cash investing and ﬁnancing activities for the years ended May 31 were as follows:

In thousands

Fair value of assets surrendered under

exchange agreements (with two airlines)

Fair value of assets acquired under exchange agreements

Fair value of assets receivable under exchange agreements

NOTE 14: COMMITMENTS AND CONTINGENCIES

1998

1997

1996

$90,428

$62,018

78,148

12,280

46,662

15,356

—

—

—

The Company’s annual purchase commitments under various contracts as of May 31, 1998, were as follows:

In thousands

1999

2000

2001

2002

2003

Aircraft

Aircraft-

Related(1)

Other (2)

Total

$530,500

$484,300

$487,400

$1,502,200

584,600

269,800

240,600

457,400

397,200

319,700

147,200

156,600

168,500

1,150,300

34,200

9,300

—

623,700

397,100

614,000

(1) Primarily aircraft modiﬁcations, rotables, and spare parts and engines.

(2) Facilities, vehicles, computer and other equipment.

FDX CORPORATION    P 4 9

N O T E S   T O   C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

At  May  31, 1998,  FedEx  was  committed  to  purchase
12 Airbus A300s, 35 MD11s and 50 Ayers ALM 200s
to  be  delivered  through  2007.  Deposits  and  progress
payments  of  $94,459,000  have  been  made  toward
these purchases.

During 1997, FedEx entered into agreements with two
airlines  to  acquire  53  DC10s,  spare  parts,  aircraft
engines  and  other  equipment,  and  maintenance  ser-
vices  in  exchange  for  a  combination  of  aircraft  engine
noise reduction kits and cash. Delivery of these aircraft
began  in 1997  and  will  continue  through  2001.  Addi-
tionally, these airlines may exercise put options through
December 31, 2003, requiring FedEx to purchase up to
29  additional  DC10s  along  with  additional  aircraft
engines and equipment.

In March 1998, put options were exercised by an airline
requiring  FedEx  to  purchase  seven  MD11s  for  a  total
purchase  price  of  $416,000,000.  Delivery  of  the  air-
craft will begin in 2000.

FedEx has entered into contracts which are designed to
limit its exposure to ﬂuctuations in jet fuel prices. Under
these  contracts,  FedEx  makes  (or  receives)  payments
based  on  the  difference  between  a  speciﬁed  lower  (or
upper)  limit  and  the  market  price  of  jet  fuel,  as  deter-
mined  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,
1998, all such contracts had expired. At May 31, 1997,
FedEx  had  contracts  with  various  ﬁnancial  institutions
covering  a  total  notional  volume  of  396,900,000  gal-
lons (approximately 54% of FedEx’s annual jet fuel con-
sumption),  with  some  contracts  extending  through
May 1998. Based on market prices at May 31, 1997,
the fair value of these contracts was a liability of approx-
imately $418,000 as of such date. Under jet fuel con-
tracts, FedEx made payments of $28,764,000 in 1998,
received  $15,162,000 (net  of  payments)  in 1997  and
received $1,977,000 in 1996.

NOTE 15: LEGAL PROCEEDINGS

Customers of FedEx have ﬁled four separate class-action
lawsuits against FedEx generally alleging that FedEx has
breached  its  contract  with  the  plaintiffs  in  transporting
packages  shipped  by  them.  These  lawsuits  allege  that
FedEx continued to collect a 6.25% federal excise tax on
the transportation of property shipped by air after the tax
expired on December 31, 1995, until it was reinstated in
August of 1996. The plaintiffs seek certiﬁcation as a class
action, damages, an injunction to enjoin FedEx from con-
tinuing to collect the excise tax referred to above, and an
award of attorneys’ fees and costs. Three of those cases
were  consolidated  in  Minnesota  Federal  District  Court.
That  court  stayed  the  consolidated  cases  in  favor  of  a
case ﬁled in Circuit Court of Greene County, Alabama. The
stay  was  lifted  in  July  1998.  The  complaint  in  the
Alabama case also alleges that FedEx continued to collect
the excise tax on the transportation of property shipped
by air after the tax expired again on December 31,1996.

P 5 0 FDX CORPORATION

A  ﬁfth  case,  ﬁled  in  the  Supreme  Court  of  New  York,
New  York  County,  containing  allegations  and  requests
for  relief  substantially  similar  to  the  other  four  cases
was  dismissed  with  prejudice  on  FedEx’s  motion  on
October  7, 1997.  The  Court  found  that  there  was  no
breach of contract and that the other causes of action
were  preempted  by  federal  law.  The  plaintiffs  have
appealed. This case originally alleged that FedEx contin-
ued  to  collect  the  excise  tax  on  the  transportation  of
property shipped by air after the tax expired on Decem-
ber  31, 1996.  The  New  York  complaint  was  later
amended to cover the ﬁrst expiration period of the tax
(December 31,1995 through August 27,1996) covered
in the original Alabama complaint.

The air transportation excise tax expired on December 31,
1995,  was  reenacted  by  Congress  effective  August 27,
1996, and expired again on December 31, 1996. The
excise  tax  was  then  reenacted  by  Congress  effective
March 7, 1997. The expiration of the tax relieved FedEx
of its obligation to pay the tax during the periods of expi-
ration. The Taxpayer Relief Act of 1997, signed by Presi-
dent  Clinton  in  August 1997,  extended  the  tax  for 10
years through September 30, 2007.

FedEx intends to vigorously defend itself in these cases.
No amount has been reserved for these contingencies.

FDX Corporation and its subsidiaries are subject to other
legal proceedings and claims which arise in the ordinary
course of their 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.

NOTE 16: DISCONTINUED OPERATIONS

On January 2, 1996, Caliber distributed to its share-
holders 95% of the issued and outstanding shares of
common  stock  of  Roadway  Express,  Inc.  (“REX”),  its
wholly-owned subsidiary. This distribution, which was
tax-free  for  federal  income  tax  purposes  to  Caliber
and  its  shareholders,  was  made  to  the  holders  of
record  of  Caliber’s  common  stock  at  the  close  of 
business  on  December  29, 1995.  Shareholders
received  one  share  of  REX  common  stock  for  every
two  shares  of  Caliber  common  stock  held  on  that
date. As a result, shareholders’ equity was reduced by
$199,700,000, which represented the book value of
the net assets distributed. Caliber’s remaining invest-
ment  in  REX  amounted  to  $8,40 0 ,0 0 0  and  is
included  in  other  assets  as  of  May  31, 1997.  The
remaining investment in REX was sold during the ﬁrst
quarter of 1998.

On November 6, 1995, Caliber announced plans to exit
the air freight business served by its wholly-owned sub-
sidiary,  Roadway  Global  Air,  Inc.  (“RGA”).  Caliber
recorded a pre-tax charge of $64,925,000 related to
the  discontinuance  of  this  business.  Income  from  dis-
continuance  of  $4,875,000,  net  of  tax,  in 1998
included  the  favorable  settlement  of  leases  and  other
contractual obligations.

Loss from discontinued operations for the year ended May 31, 1996 consists of the following:

In thousands

Revenue

Operating expenses

Operating loss

Other expense, net

Loss before income taxes

Income tax beneﬁt

REX 

RGA 

Total 

$2,288,845

$ 99,425

$2,388,270 

2,299,615

180,557

2,480,172 

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(10,770)

(3,103)

(81,132)

(6,571)

(91,902)

(9,674)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(13,873)

1,206

(87,703)

30,420

(101,576)

31,626 

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

Loss from discontinued operations

$

(12,667)

$ (57,283)

$

(69,950)

The loss from discontinuance for the year ended May 31, 1996 consists of the following:

In thousands

Costs related to the discontinuance of RGA’s air freight business

Transaction costs for the spin-off of REX

Loss before income taxes

Income tax beneﬁt

Loss from discontinuance

NOTE 17: UNUSUAL EVENTS

In 1998,  FedEx  realized  a  net  gain  of  $17,000,000
from  the  insurance  settlement  and  the  release  from
certain  related  liabilities  on  a  leased  MD11 aircraft
destroyed  in  an  accident  in  July 1997.  The  gain  was
recorded in operating and non-operating income in sub-
stantially equal amounts.

I n 19 9 7,   F e d E x ’s   o p e rat i n g   i n c o m e   i n c l u d e d   a
$15,000,000 pre-tax beneﬁt from the settlement of a
Tennessee personal property tax matter. Also in 1997,
FedEx  recorded  a  $17,100,000  non-operating  gain
from  an  insurance  settlement  for  a  DC10  aircraft
destroyed by ﬁre in September 1996.

On March 27, 1997, Caliber announced a major restruc-
turing of its Viking subsidiary. As a result of the restruc-
turing,  Viking’s  southwestern  division  (formerly  Central
Freight  Lines  Inc.)  was  sold  during  the  ﬁrst  quarter  of
1998  and  operations  at  Viking’s  midwestern,  eastern
and  northeastern  divisions  (formerly  Spartan  Express,
Inc. and Coles Express, Inc.) ceased on March 27,1997.

In connection with the restructuring, Caliber recorded a
pre-tax  asset  impairment  charge  of  $225,000,000
($175,000,000,  net  of  tax)  in 1997  and  a  pre-tax
restructuring charge of $85,000,000 ($56,400,000,
net  of  tax)  in  the  period  from  January 1, 1997  to
May 24, 1997. This restructuring charge is included in
the  adjustment  to  conform  Caliber’s  ﬁscal  year  in  the
accompanying  Consolidated  Statements  of  Changes  in
Common  Stockholders’  Investment  and,  therefore,  is
excluded from the Consolidated Statements of Income.
Components of the $85,000,000 restructuring charge
include  asset  impairment  charges,  future  lease  costs
and other contractual obligations, employee severance
and other beneﬁts and other exit costs. Gains on assets

$(64,925)

(7,518)

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

(72,443)

22,779 

(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)(cid:112)

$(49,664)

sold in the restructuring of $16,000,000 were recog-
nized in the third quarter of 1998.

The  long-lived  asset  impairment  charge  in 1997  of
$225,000,000 resulted from Caliber’s assessment of
the ongoing value of property and equipment (primarily
real  estate  and  revenue  equipment)  used  in  Viking’s
operations which was determined to be impaired under
SFAS No. 121, “Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to be Disposed
Of.” Accordingly, these assets were written down to fair
value  in  the  Company’s  May  31, 1997  ﬁnancial  state-
ments. Fair value was based on estimates of appraised
values for real estate and quoted prices for equipment.

Assets held for sale from the restructuring (principally
real  estate  and  revenue  equipment)  are  included  in
property  and  equipment  in  the  accompanying  consoli-
dated  balance  sheet.  Caliber  completed  the  sale  of  all
but $11,640,000 of the assets to be disposed of dur-
ing 1998.  Remaining  accrued  restructuring  costs  at
May  31, 1998  of  $18,900,000  relate  primarily  to
future  lease  obligations.  Results  of  operations  associ-
ated  with  the  assets  held  for  disposal  are  included  in
operating results in 1998 and 1997.

FedEx  received  $7,800,000  in 1996  from  the  bank-
ruptcy  estate  of  a  ﬁrm  engaged  by  FedEx  in 1990  to
remit  payments  of  employee  withholding  taxes.  This
amount  is  a  partial  recovery  of  a  $32,000,000  loss
incurred by FedEx in 1991 that resulted from the ﬁrm’s
failure to remit certain of these tax payments to appro-
priate  authorities.  FedEx  has  received  $17,900,000
from the bankruptcy estate of the ﬁrm. All major issues
pertaining  to  the  bankruptcy  have  been  resolved,  and
any additional amounts FedEx may receive are expected
to be insigniﬁcant.

FDX CORPORATION    P 5 1

N O T E S   T O   C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

NOTE 18: SUMMARY OF QUARTERLY OPERATING RESULTS (UNAUDITED)

In thousands, except earnings per share

1998

Revenues

Operating income

Income before income taxes

Income from continuing operations

Net income

Earnings per common share

Earnings per common share — 

assuming dilution

1997

Revenues

Operating income
Income before income taxes

Income from continuing operations

Net income (loss)

Earnings (loss) per common share

Earnings (loss) per common share — 

assuming dilution

First 

Quarter (1)

Second 

Quarter(2)

Third 

Fourth 

Quarter(3,4)

Quarter(5,6)

$3,866,491

$3,942,018

$3,986,304

$4,077,997 

303,905

284,786

164,777

164,777

1.13

1.11

$

$

288,949

256,719

149,824

149,824

1.02

1.00

$

$

95,381

63,670

12,836

17,711

$

$

.12

.12

$

$

322,425 

294,343 

170,718 

170,718 

1.16 

1.14 

$3,274,386

$3,468,270

$3,534,045

$3,961,191 

148,099
124,688

71,571

71,571

186,341
180,422

103,937

103,937

133,151
106,803

61,018

61,018

$

$

.49

.49

$

$

.71

.71

$

$

.42

.41

$

$

39,411 
13,952 

(40,422)

(40,422)

(.28)

(.28)

(1) First quarter 1998 included Caliber’s results for the 12-week period from May 25,1997 to August 16,1997 consolidated with FedEx’s results
for the three months ended August 31, 1997. First quarter 1997 included Caliber’s results for the 12-week period from January 1, 1996 to
March 23, 1996 consolidated with FedEx’s results for the three months ended August 31, 1996.

(2) Second quarter 1998 included Caliber’s results for the 12-week period from August 17, 1997 to November 8, 1997 consolidated with FedEx’s
results  for  the  three  months  ended  November  30, 1997.  Second  quarter 1997  included  Caliber’s  results  for  the 12-week  period  from
March 24, 1996 to June 15, 1996 consolidated with FedEx’s results for the three months ended November 30, 1996.

(3) Third quarter 1998 included Caliber’s results for the 16-week period from November 9,1997 to February 28,1998 consolidated with FedEx’s
results for the three months ended February 28, 1998. Third quarter 1997 included Caliber’s results for the 12-week period from June 16,
1996 to September 7, 1996 consolidated with FedEx’s results for the three months ended February 28, 1997.

(4) Third quarter 1998 results included $88,000,000 of expenses ($.53 per share, net of tax, assuming dilution) related to the acquisition of

Caliber and the formation of the Company.

(5) Fourth quarter 1998 included Caliber’s results for the 13-week period from March 1,1998 to May 31,1998 consolidated with FedEx’s results for
the three months ended May 31, 1998. Fourth quarter 1997 included Caliber’s results for the 16-week period from September 8, 1996 to
December 31,1996 consolidated with FedEx’s results for the three months ended May 31,1997.

(6) Caliber announced a major restructuring of its Viking operations on March 27, 1997. Non-recurring charges relating to the restructuring

included $225,000,000 ($1.18 per share, net of tax, assuming dilution) in the fourth quarter of 1997.

P 5 2 FDX CORPORATION

R E P O R T   O F   I N D E P E N D E N T   P U B L I C   A C C O U N TA N T S

To the Stockholders of FDX Corporation:

We  have  audited  the  accompanying  consolidated  bal-
ance  sheets  of  FDX  Corporation  (a  Delaware  corpora-
tion)  and  subsidiaries  as  of  May  31, 1998  and 1997,
and  the  related  consolidated  statements  of  income,
common  stockholders’  investment  and  cash  ﬂows  for
each  of  the  three  years  in  the  period  ended  May  31,
1998. These ﬁnancial statements are the responsibility
of the Company’s management. Our responsibility is to
express an opinion on these ﬁnancial statements based
on  our  audits.  We  did  not  audit  the  December  31,
1996,  balance  sheet  and  the  related  statements  of
income, shareholders’ equity and cash ﬂows for each of
the two years in the period ended December 31, 1996,
of  Caliber  System,  Inc.,  a  company  acquired  during
1998  in  a  transaction  accounted  for  as  a  pooling  of
interests, as discussed in Note 1. Such statements are
included in the consolidated ﬁnancial statements of FDX
Corporation as of May 31, 1997, and for each of the two
years in the period ended May 31,1997, and reﬂect total
assets  of  16  percent  at  May  31, 1997,  and  total  rev-
enues  of 19 percent  in  both  1996  and  1997  of  the
related  FDX  Corporation  consolidated  totals.  These
statements were audited by other auditors whose report
has been furnished to us, and our opinion, insofar as it
relates to amounts included for Caliber System, Inc., is
based solely upon the report of the other auditors. 

We conducted our audits in accordance with generally
accepted auditing standards. Those standards require
that  we  plan  and  perform  the  audit  to  obtain  reason-
able assurance about whether the ﬁnancial statements
are  free  of  material  misstatement.  An  audit  includes
examining,  on  a  test  basis,  evidence  supporting  the
amounts  and  disclosures  in  the  ﬁnancial  statements.
An audit also includes assessing the accounting princi-
ples used and signiﬁcant estimates made by manage-
ment,  as  well  as  evaluating  the  overall  financial
statement presentation. We believe that our audits and
the report of the other auditors provide a reasonable
basis for our opinion.

In our opinion, based on our audits and the report of the
other  auditors,  the  financial  statements  referred  to
above present fairly, in all material respects, the ﬁnan-
cial position of FDX Corporation as of May 31,1998 and
1997, and the results of their operations and their cash
ﬂows  for  each  of  the  three  years  in  the  period  ended
May  31, 1998,  in  conformity  with  generally  accepted
accounting principles.

Memphis, Tennessee
July 8, 1998

FDX CORPORATION    P 5 3

S E L E C T E D   C O N S O L I D AT E D   F I N A N C I A L   D A T A

Years ended May 31

In thousands, except per share 

amounts and Other Operating Data

1998

1997

1996

1995

1994

OPERATING RESULTS
Revenues
Operating income
Income from continuing operations 

before income taxes

Income from continuing operations
Income (loss) from 

$15,872,810
1,010,660

$14,237,892
507,002

$12,721,791
779,552

$11,719,596
756,247

$10,301,946
681,815

899,518
498,155

425,865
196,104

702,094
400,186

693,564
396,125

540,131
295,975

discontinued operations

4,875

—

(119,614)

(78,977)

27,730

Cumulative effect of 

accounting changes

Net income

PER SHARE DATA
Earnings (loss) per share:

Basic EPS

Continuing operations
Discontinued operations
Cumulative effect of 

accounting changes

Diluted EPS

Continuing operations
Discontinued operations
Cumulative effect of 

accounting changes

Average shares of common stock
Average common and common 

equivalent shares

Cash dividends

FINANCIAL POSITION
Property and equipment, net
Total assets
Long-term debt, less current portion
Common stockholders’ investment

OTHER OPERATING DATA
FedEx
Express package:

Average daily package volume
Average pounds per package
Average revenue per pound
Average revenue per package

Airfreight:

Average daily pounds
Average revenue per pound

Operating weekdays
Aircraft ﬂeet
RPS

Average daily package volume
Average revenue per package

Operating weekdays

$

$

$

$

$

—
503,030

3.40
.03

—
3.43

3.34
.03

—
3.37
146,701

$

$

$

$

$

—
196,104

1.35
—

—
1.35

1.33
—

—
1.33
145,713

149,204
—(1)

147,228
—(1)

$

$

$

$

$

—
280,572

2.76
(.82)

—
1.94

2.74
(.82)

—
1.92 
144,695

145,843
—(1)

$

$

$

$

$

$

$

$

$

$

—
317,148

2.76
(.55)

—
2.21

2.74
(.55)

—
2.19
143,489

144,501
—(1)

(18,131)
305,574

2.08
.20

(.13)
2.15

2.06
.20

(.13)
2.13
142,284

143,641
—(1)

$ 5,935,050
9,686,060
1,385,180
3,961,230

$ 5,470,399
9,044,316
1,597,954
3,501,161

$ 4,973,948
8,088,241
1,325,277
3,312,440

$ 4,421,312
7,943,218
1,324,711
3,260,963

$ 4,042,035
7,459,007
1,632,202
2,971,856

3,025,999
8.5
1.84
15.69

2,769,922
.85
254
613

1,326,190
5.04
256

$
$

$

$

2,715,894
7.2
2.11
15.11

2,542,226
.94
254
584

1,067,104
4.96
254

$
$

$

$

2,437,662
6.4
2.31
14.87

2,144,225
1.01
256
557

1,043,437
4.92
252

$
$

$

$

2,247,594
6.3
2.31
14.62

2,153,041
1.06
255
496

1,009,665
4.78
253

$
$

$

$

1,925,105
6.0
2.51
15.12

1,844,270
1.06
257
458

854,908
4.70
252

$
$

$

$

See Note 1 to Notes to Consolidated Financial Statements for a discussion of the periods presented.

(1)Caliber declared dividends of $3,899,000, $28,184,000, $54,706,000, $54,620,000 and $53,746,000 for 1998, 1997, 1996, 1995 and 1994,
respectively. Caliber declared additional dividends of $10,883,000 from January 1, 1997 to May 24, 1997, that are not included in the amounts above.
FedEx did not pay dividends in the years shown. FDX does not intend to pay dividends on FDX common stock.

P 5 4 FDX CORPORATION

B O A R D   O F   D I R E C T O R S   A N D   S E N I O R   O F F I C E R S

BOARD OF DIRECTORS

ROBERT H. ALLEN(2)
Private Investor and 
Managing Partner
Challenge Investment Partners

Investment ﬁrm

ROBERT L. COX(1)
Partner
Waring Cox

Law ﬁrm

RALPH D. DENUNZIO(2)
President
Harbor Point Associates, Inc.

Private investment and consulting ﬁrm

JUDITH L. ESTRIN(1)
Senior Vice President and 
Chief Technology Ofﬁcer
Cisco Systems, Inc.

Networking systems company

PHILIP GREER(1*)
Senior Managing Director
Weiss, Peck & Greer, L.L.C.

Investment management ﬁrm

J.R. HYDE, III(2)
President
Pittco, Inc.

Investment company

CHARLES T. MANATT(2)
Chairman
Manatt, Phelps & Phillips

Law ﬁrm

GEORGE J. MITCHELL(1)
Special Counsel
Verner, Liipfert, Bernhard, 
McPherson and Hand

Law ﬁrm

JACKSON W. SMART, JR.(2*)
Chairman, Executive Committee
First Commonwealth, Inc.

Managed dental care company

FREDERICK W. SMITH
Chairman, President and 
Chief Executive Ofﬁcer
FDX Corporation

DR. JOSHUA I. SMITH(1)
Chairman, President and 
Chief Executive Ofﬁcer
The MAXIMA Corporation

Information and data processing ﬁrm

PAUL S. WALSH(2)
Chairman, President and 
Chief Executive Ofﬁcer
The Pillsbury Company

Consumer food and beverage company

PETER S. WILLMOTT(1)
Chairman and 
Chief Executive Ofﬁcer
Willmott Services, Inc.

Retail and consulting ﬁrm

(1) Audit Committee
(2) Compensation Committee
(*) Committee Chairman

SENIOR OFFICERS

FREDERICK W. SMITH
Chairman, President and
Chief Executive Ofﬁcer

ALAN B. GRAF, JR.
Executive Vice President and
Chief Financial Ofﬁcer

KENNETH R. MASTERSON
Executive Vice President,
General Counsel and Secretary

DENNIS H. JONES
Executive Vice President and
Chief Information Ofﬁcer

T. MICHAEL GLENN
Executive Vice President,
Market Development and
Corporate Communications

FDX CORPORATION    P 5 5

C O R P O R A T E   I N F O R M A T I O N

Stock listing: The Company’s common stock is listed on The New York Stock Exchange under the ticker
symbol FDX.

Stockholders: At July 15, 1998, there were 15,373 stockholders of record.

Market information: Following are high and low closing prices, by quarter, for FDX Corporation common stock in
ﬁscal 1998 and 1997. No cash dividends have been declared.

FY 1998

High

Low

FY 1997

High

Low

First

Quarter

Second

Quarter

Third

Quarter

Fourth

Quarter

$70

53

$82 9⁄16

61 1⁄16

$69 11⁄16

56 3⁄8

$74 1⁄4

61 1⁄4

$41 9⁄16

37 1⁄16

$44 7⁄8

36 1⁄4

$53 1⁄8

40 1⁄8

$57 1⁄8

50 3⁄8

Corporate headquarters: 6075 Poplar Avenue, Suite 300, Memphis, Tennessee 38119, (901) 369-3600.

Annual meeting: The annual meeting of stockholders will be held at The Memphis Marriott, 2625 Thousand Oaks
Boulevard, Memphis, Tennessee, on Monday, September 28, 1998, at 10:00 a.m., CDT.

Inquiries: For  financial  information,  contact  Elizabeth  R.  Allen,  Investor  Relations,  FDX  Corporation, 
Box 727, Dept. 1854, Memphis, Tennessee 38194, (901) 395-3478. For general information, contact Shirlee
M.  Clark,  Director,  Public  Relations,  FDX  Corporation,  Box 727,  Dept. 1850,  Memphis,  Tennessee  38194,
(901) 395-3460.

Form 10-K: A copy of the Company’s Annual Report on Form 10-K (excluding exhibits), ﬁled with the Securities and
Exchange Commission (SEC) is available free of charge. You will be mailed a copy upon request to Elizabeth R. Allen,
Investor Relations, FDX Corporation, Box 727, Dept. 1854, Memphis, Tennessee 38194, (901) 395-3478. Com-
pany  documents  filed  electronically  with  the  SEC  can  also  be  found  on  the  Internet  at  the  SEC’s  Web  site
(http://www.sec.gov).

Auditors: Arthur Andersen LLP, Memphis, Tennessee.

Registrar and transfer agent: First Chicago Trust Company of New York, Shareholder Services, P.O. Box 2500, Jer-
sey City, New Jersey 07303-2500, (800) 446-2617/John H. Ruocco (312) 407-5153.

Equal Employment Opportunity: FDX Corporation is ﬁrmly committed to afford Equal Employment Opportunity to all individ-
uals regardless of age, sex, race, color, religion, national origin, citizenship, disability, or status as a Vietnam era or special
disabled veteran. We are strongly bound to this commitment because adherence to Equal Employment Opportunity princi-
ples is the only acceptable way of life. We adhere to those principles not just because they’re the law, but because it’s the
right thing to do.

Service Marks: FDXSM is a service mark of FDX Corporation. Federal Express,® FedEx,® the FedEx ® logo, FedEx Interna-
tional Priority® FedEx International Economy,® FedEx International Express Freight,® FedEx Express Saver® and FedEx
interNetShip® are registered service marks of Federal Express Corporation. Reg. U.S. Pat. & Tm. Off. and in certain
other countries. FedEx Air CharterSM and FedEx International Airport to Airport SM are service marks of Federal Express
Corporation.  RPS ® and  the  RPS® logo are  registered  service  marks  of  RPS,  Inc.  Reg.  U.S.  Pat  & Tm.  Off.  Viking
FreightSM is a service mark of Viking Freight, Inc. Caliber LogisticsSM is a service mark of Caliber Logistics, Inc. Roberts
Express ® is a registered service mark of Roberts Express, Inc. Reg. U.S. Pat. & Tm. Off.

Portions of this annual report were printed on recycled paper.

P 5 6 FDX CORPORATION

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+25

HOW TIME FLIES

When Federal Express took

FedEx’s 25th anniversary is

incessantly, and proved that

flight on April 17, 1973, it

cause to celebrate not only

a service company could win

delivered 186 packages to

the founding of an industry,

the Malcolm Baldrige

25 cities. One courier sold

but that the company did it

National Quality Award. In

his watch to buy fuel for his

so well. FedEx set standards

25 years, FedEx redefined

van. Others used their own

for service against which

service for all time.

cars for deliveries. The folks

every carrier is measured,

in Pittsburgh did business

instilled employees with a

out of a motel room. Anything

singular commitment to sat-

to make this vision fly.

isfy the customer, innovated

FDX Corporation

6075 Poplar Avenue

Memphis, Tennessee 38119