Fed Ex

INTRODUCTION
Fed ex is an abbreviation used for the word Federal Express, which was used from 1973 until
2000. The company is known for its overnight shipping service, but also for pioneering a system
that could track packages and provide real-time updates on package location (to help in finding
lost packages), a feature that has now been implemented by most other carrier services.
FedEx Express invented express distribution and is the industrys global leader, providing rapid,
reliable, time-definite delivery to more than 220 countries and territories, connecting markets
that comprise more than 90 percent of the worlds gross domestic product within one to three
business days. Unmatched air route authorities and transportation infrastructure, combined with
leading-edge information technologies, make FedEx Express the worlds largest express
transportation company, providing fast and reliable services for more than 3.6 million shipments
each business day.
A more connected world means more opportunities. Thats why customers count on our diverse
portfolio of transportation, e-commerce, and business solutions. Fed ex air, ground and sea
networks cover more than 220 countries and territories, linking more than 99 percent of the
worlds GDP.
Fed ex is consistently ranked among the worlds most admired brands and employers. More than
400,000 FedEx team members are absolutely, positively focused on safety, the highest ethical
and professional standards, and the needs of our customers and communities.

HISTORY
In 1965, Yale University undergraduate Frederick W. Smith wrote a term paper that invented an
industry and changed whats possible. In the paper, he laid out the logistical challenges facing
pioneering firms in the information technology industry. Most airfreight shippers relied on
passenger route systems, but those didnt make economic sense for urgent shipments, Smith
wrote.

He proposed a system specifically designed to accommodate time-sensitive shipments such as

medicine, computer parts, and electronics. Smiths professor apparently didnt see the
revolutionary implications of his thesis, and the paper received just an average grade.
In August 1971, following a stint in the military, Smith bought controlling interest in Arkansas
Aviation Sales, located in Little Rock, Arkansas. While operating his new firm, he saw firsthand
how difficult it was to get packages and other airfreight delivered within one to two days. With
his term paper in mind, Smith set out to find a better way. Thus the idea for Federal Express was
born: A company that has revolutionized global business practices and that now defines speed
and reliability.
Smith named the company Federal Express because he believed the patriotic meaning associated
with the word federal suggested an interest in nationwide economic activity. He also hoped the
name would resonate with the Federal Reserve Bank, a potential customer. Although the bank
denied his proposal, Smith kept the name because he thought it was memorable and would help
attract public attention.
Company headquarters later moved to Memphis, Tennessee. Memphis was chosen because of its
central location within the U.S. and because Memphis International Airport was rarely closed
due to bad weather. The airport was also willing to make the necessary improvements for the
operation and additional hangar space was readily available.

FOUNDER PROFILE
In 1970, Smith purchased the controlling interest in an aircraft maintenance company, Ark
Aviation Sales, and by 1971 turned its focus to trading used jets. On June 18, 1971, Smith
founded Federal Express with his $4 million inheritance (approximately $23 million in 2013
dollars), and raised $91 million (approximately $525 million in 2013 dollars) in venture capital.
In 1973, the company began offering service to 25 cities, and it began with small packages and
documents and a fleet of 14 Falcon 20 (DA-20) jets. His focus was on developing an integrated
air-ground system, which had never been done before. Smith developed FedEx on the business
idea of a shipment version of a bank clearing house where one bank clearing house was located

in the middle of the representative banks and all their representatives would be sent to the central
location to exchange materials.
In the early days of FedEx, Smith had to go to great lengths to keep the company afloat. In one
instance, he took the company's last $5,000 to Las Vegas and won $27,000 gambling
on blackjack to cover the company's $24,000 fuel bill.
Smith has served on the boards of several large public companies, the St. Jude Children's
Research Hospital and Mayo Foundation boards. He was formerly chairman of the Board of
Governors for the International Air Transport Association and the U.S. Air Transport
Association. Smith is chair of the Business Roundtable's Security Task Force, and a member of
the Business Council and the Cato Institute. He served as chairman of the U.S.-China Business
Council and is the current chairman of the French-American Business Council. In addition,
Smith was named 2006 Person of the Year by the French-American Chamber of Commerce. He
is a member of the Aviation Hall of Fame. Smith was approached by Senator Bob Dole, who
asked Smith for support in opening corporate doors for a new World War II memorial. Smith was
appointed to co-chairman of the U.S. World War II Memorial Project. Smith was named as Chief
Executive Magazines 2004 "CEO of the Year".
In addition to FedEx, Smith is also a co-owner of the Washington Redskins NFL Team. His son,
Arthur Smith, who played football at the University of North Carolina, is an Offensive
Line/Tight End Assistant Coach for the Tennessee Titans. This partnership resulted in FedEx
sponsorship of the Joe Gibbs NASCAR racing team. Smith also owns or co-owns several
entertainment companies, including Dream Image Productions and Alcon Films (producers of
the Warner Bros. film Insomnia starring Al Pacino and Robin Williams).
A DKE Fraternity Brother of George W. Bush while at Yale, after Bush's 2000 election, there was
some speculation that Smith might be appointed to the Bush Cabinet as Defense Secretary. While
Smith was Bush's first choice for the position, he declined for medical reasons Donald
Rumsfeld was named instead Although Smith was friends with both 2004 major candidates, John
Kerry and George W. Bush, Smith chose to endorse Bush's re-election in 2004. When Bush

decided to replace Rumsfeld, Smith was offered the position again, but he declined in order to
spend time with his terminally ill daughter.

MISSION
FedEx Corporation will produce superior financial returns for its shareowners by providing high
value-added logistics, transportation and related business services through focused operating
companies. Customer requirements will be met in the highest quality manner appropriate to each
market segment served.
FedEx will strive to develop mutually rewarding relationships with its employees, partners and
suppliers. Safety will be the first consideration in all operations. Corporate activities will be
conducted to the highest ethical and professional standards.

SERVICE PROFILE
FedEx provide a broad portfolio of transportation, e-commerce and business services through
companies competing collectively, operating independently and managed collaboratively, under
the respected FedEx brand. Our primary operating companies are Federal Express Corporation
(FedEx Express), the worlds largest express transportation company; TNT Express B.V.,
formerly TNT Express N.V. (TNT Express), an international express, small-package ground
delivery and freight transportation company that was acquired near the end of our 2016 fourth
quarter; FedEx Ground Package System, Inc. (FedEx Ground), a leading North American
provider of small-package ground delivery services; and FedEx Freight, Inc. (FedEx Freight),
a leading U.S. provider of less-than-truckload (LTL) freight services. These companies
represent our major service lines and, along with FedEx Corporate Services, Inc. (FedEx
Services), form the core of our reportable segments. Our FedEx Services segment provides
sales, marketing, information technology, communications, customer service, technical support,
billing and collection services, and certain back-office functions that support our transportation
segments. In addition, the FedEx Services segment provides customers with retail access to

FedEx Express and FedEx Ground shipping services through FedEx Office and Print Services,
Inc. (FedEx Office). See Reportable Segments for further discussion.
The key indicators necessary to understand our operating results include:
> The overall customer demand for our various services based on macro-economic factors and
the global economy;
> The volumes of transportation services provided through our networks, primarily measured by
our average daily volume and shipment weight and size;
> The mix of services purchased by our customers;
> The prices we obtain for our services, primarily measured by yield (revenue per package or
pound or revenue per hundredweight and shipment for LTL freight shipments);
> Our ability to manage our cost structure (capital expenditures and operating expenses) to match
shifting volume levels;
> The timing and amount of fluctuations in fuel prices and our ability to recover incremental fuel
costs through our fuel surcharges. Many of our operating expenses are directly impacted by
revenue and volume levels. Accordingly, we expect these operating expenses to fluctuate on a
year-over-year basis consistent with changes in revenues and volumes. Therefore, the discussion
of operating expense captions focuses on the key drivers and trends impacting expenses other
than changes in revenues and volumes.
The line item Other operating expenses predominantly includes costs associated with outside
service contracts (such as security, facility services and cargo handling), insurance, legal
reserves, professional fees and uniforms. Except as otherwise specified, references to years
indicate our fiscal year ended May 31, 2016 or ended May 31 of the year referenced and
comparisons are to the prior year. References to our transportation segments include,
collectively, our FedEx Express group, including the FedEx Express and TNT Express reportable
segments, the FedEx Ground segment and the FedEx Freight segment. Because TNT Express
was acquired so late in 2016, its financial results are immaterial and are included in
Eliminations, corporate and other. In 2017, TNT Expresss results will be disclosed as a
reportable segment and combined with the FedEx Express reportable segment in a new reporting

structure referred to as the FedEx Express Group. This reporting structure will continue
throughout the integration of the TNT Express and FedEx Express businesses. Once these
businesses are integrated, our segment reporting structure could change based on how we are
operating, managing and accessing the performance of the integrated businesses.

PRINCIPAL SUBSIDIARIES
FedEx Ground; FedEx Express; FedEx Freight, comprised of Viking Freight, Inc. and American
Freightways, Inc.; FedEx Custom Critical; FedEx Trade Networks; Federal Express Aviation
Services; Federal Express International; Flying Tiger Line Inc.; Tiger Inter Modal Inc.; Tiger
Trucking Subsidiary Inc.; Warren Transport Inc.

COMPANY STRUCTURE AND FACTS

Federal Express employs almost 90,000 persons at more than 1,600 facilities globally (1990
winners, 1990, p. 19). The company is just 20 years old in 1993, yet commands a 40 percent
share of the air express delivery service market.
Federal Express set out to provide high quality package service. The success of the company in
attaining this goal has established the standards by which all other overnight courier services are
evaluated (Hauss, 1993, pp. 22-26). In corporate America, it is a near maxim that "if it absolutely
has to get there overnight, send it by Federal Express" (Fish kind, 1993, pp. 56-58).
FOLLOWING IS THE CHART OF FEDEX ORGANISATION STRUCTURE:-

MARKET SHARE
FedEx's global market share seems to be in the neighborhood of 14%, while with revenue
growth of 5.14 % within Total segment, FedEx Corporation achieved improvement in market
share, within Total segment to approximate 30.22 %. Whereas market share of FedEx in India is
around 15.7%.
Competitors within the U.S. include other package delivery concerns, principally United Parcel
Service, Inc. (UPS), passenger airlines offering express package services, regional delivery
concerns, air freight forwarders and the USPS. FedEx Expresss principal international
competitors are DHL, UPS, TNT Express, foreign postal authorities, freight forwarders,
passenger airlines and all-cargo airlines. Many of FedEx Expresss international competitors are
government-owned, -controlled or -subsidized carriers, which may have greater resources, lower
costs, less profit sensitivity and more favorable operating conditions than FedEx Express.

FUTURE OUTLOOK
For fiscal 2016, FedEx (FDX) has set a mixed bag of guidance. The company has projected
adjusted earnings to be $10.60$11.10 per share before any year-end mark-to-market pension
accounting adjustments. The company expects to see better base pricing, volume growth, and
benefits from its profit improvement program. This will offset any unfavorable change in fuel
prices and anticipated increases in salary and benefits for the year. FedEx expects to see a higher
capex of about $4.6 billion due to higher investment in the continued expansion of the FedEx
Ground networks. The effective tax rate for 2016 should be 36%37% before any year-end
pension adjustments and excluding any impact from the TNT acquisition.

BUSINESS ACQUISITIONS
On April 6, 2015, FedEx entered into a conditional agreement to acquire TNT Express N.V.
(TNT Express) for 4.4 billion (currently, approximately $4.9 billion). This combination is
expected to expand our global portfolio, particularly in Europe, lower our costs to serve our
European markets by increasing density in our pickup-and-delivery operations and accelerate our

global growth. This acquisition is expected to be completed in the first half of calendar year
2016. The closing of the acquisition is subject to customary conditions, including obtaining all
necessary approvals and competition clearances. FedEx expect to secure all relevant competition
approvals.
During 2015, FedEx acquired two businesses, expanding our portfolio in e-commerce and
supply chain solutions. On January 30, 2015, FedEx acquired GENCO, a leading North
American third-party logistics provider, for $1.4 billion, which was funded using a portion of the
proceeds from our January 2015 debt issuance. The financial results of this business are included
in the FedEx Ground segment from the date of acquisition.
In addition, on December 16, 2014, FedEx acquired Bongo International, LLC (Bongo), a
leader in cross-border enablement technologies and solutions, for $42 million in cash from
operations. The financial results of this business are included in the FedEx Express segment from
the date of acquisition.
In 2014, FedEx expanded the international service offerings of FedEx Express by completing our
acquisition of the businesses operated by our previous service provider, Supaswift (Pty) Ltd., in
seven countries in Southern Africa, for $36 million in cash from operations. The financial results
of this business are included in the FedEx Express segment from the date of acquisition.

In 2013, FedEx completed our acquisitions of Rapido Cometa Logstica e Transporte S.A., a
Brazilian transportation and logistics company, for $398 million; TATEX, a French express
transportation company, for $55 million; and a Polish domestic express package delivery
company, for $54 million. The financial results of these businesses are included in the FedEx
Express segment from their respective date of acquisition. The financial results of these acquired
businesses were not material, individually or in the aggregate, to our results of operations and
therefore, pro forma financial information has not been presented.

FACILITIES

At its Cologne hub, the company operates a solar power system that has the capacity
to produce more than 800,000 kilowatt hours of electricity each year equivalent to

the demand of 230 households with three persons. This project is FedEx Express
largest solar-power roof-top installation in terms of area on roof space of
approximately 16,000 m2.

FedEx European hub at Paris received ISO 14001 certification in 2011,

complementing the 50 FedEx UK facilities which have been awarded the same
certification.

An energy efficient distribution center in Antwerp provides a reduction of energy

consumption by more than 40% and CO2 emissions by 60% each year.

A distribution center in Machelen, Belgium contains solar panels which generate

144,000 kilowatt hours per year equivalent to the electricity needs of thirty
households on an annual basis.

A facility in Montpellier, France, has a 1600 m2. solar panel capable of producing
92,000 kilowatt hours per year of electricity and a low power primary conveyor belt
that uses 16 times less electricity than a standard three-phase 380 volt belt; together
these features save 41.1 tons of CO2 emissions each year.

FINANCIALS
For the fiscal year ended 31 May 2016, FedEx Corporation revenues increased 6% to $50.37B.
Net income applicable to common stockholders increased 73% to $1.82B. Revenues reflect
FedEx Ground segment increase of 28% to $16.57B, FedEx Services segment increase of 3% to
$1.59B, FedEx Freight segment increase of less than 1% to $6.2B, United States segment
increase of 11% to $38.07B.Results for 2016 include provisions related to independent
contractor litigation matters at FedEx Ground for $256 million, net of recognized immaterial

insurance recovery ($158 million, net of tax, or $0.57 per diluted share) and expenses related to
the settlement of a U.S. Customs and Border Protection notice of action in the amount of $69
million, net of recognized immaterial insurance recovery ($43 million, net of tax, or $0.15 per
diluted share.
Results include mark-to-market losses of $1.5 billion in 2016 and $2.2 billion ($1.4 billion, net
of tax, or $4.81 per diluted share) in 2015. Results for 2015 include impairment and related
charges of $276 million ($175 million, net of tax, or $0.61 per diluted share) resulting from the
decision to permanently retire and adjust the retirement schedule of certain aircraft and related
engines. Additionally, results for 2015 include a charge of $197 million ($133 million, net of tax,
or $0.46 per diluted share) in the fourth quarter to increase the legal reserve associated with the
settlement of a legal matter at FedEx Ground to the amount of the settlement.

Following is Income Statement of FedEX-

Income Statement
All numbers in thousands

Revenue

5/31/2016

5/31/2015

5/31/2014

Total Revenue

50,365,000

47,453,000

45,567,000

Cost of Revenue

17,327,000

16,984,000

17,052,000

Gross Profit

33,038,000

30,469,000

28,515,000

27,330,000

25,715,000

22,113,000

276,000

276,000

2,631,000

2,611,000

2,587,000

Operating Expenses
Research Development

Selling General and

Administrative

Non Recurring
Others

Total Operating Expenses

3,077,000

1,867,000

3,815,000

-1,000

-5,000

3,000

3,076,000

1,862,000

3,818,000

336,000

235,000

160,000

2,740,000

1,627,000

3,658,000

920,000

577,000

1,334,000

1,820,000

1,050,000

2,324,000

Discontinued Operations

Extraordinary Items

Effect Of Accounting Changes

Operating Income or Loss

Income from Continuing Operations

Total Other Income/Expenses

Net

Earnings Before Interest and

Taxes

Interest Expense
Income Before Tax

Income Tax Expense

Minority Interest

Net Income From Continuing

Ops

Non-recurring Events

Other Items

Net Income
Net Income

Preferred Stock And Other

Adjustments

Net Income Applicable To

Common Shares

1,820,000

1,050,000

2,324,000

1,820,000

1,050,000

2,324,000

Following is the balance sheet of the FedEx:

Balance Sheet
All numbers in thousands

Period Ending

5/31/2016

5/31/2015

5/31/2014

3,534,000

3,763,000

2,908,000

7,252,000

5,719,000

5,982,000

Inventory

496,000

498,000

463,000

Other Current Assets

707,000

355,000

330,000

Current Assets
Cash And Cash Equivalents

Short Term Investments

Net Receivables

Total Current Assets

11,989,000

10,335,000

9,683,000

24,284,000

20,875,000

19,550,000

6,747,000

3,810,000

2,790,000

Intangible Assets

Accumulated Amortization

3,044,000

1,511,000

1,047,000

46,064,000

36,531,000

33,070,000

7,979,000

5,937,000

5,311,000

29,000

19,000

1,000

8,008,000

5,956,000

5,312,000

Long Term Debt

13,838,000

7,249,000

4,736,000

Other Liabilities

8,312,000

6,231,000

4,667,000

Long Term Investments

Property Plant and Equipment

Goodwill

Other Assets

Deferred Long Term Asset Charges

Total Assets

Current Liabilities
Accounts Payable

Short/Current Long Term Debt

Other Current Liabilities

Total Current Liabilities

Deferred Long Term Liability Charges

2,122,000

2,102,000

3,078,000

Minority Interest

Negative Goodwill

32,280,000

21,538,000

17,793,000

Misc. Stocks Options Warrants

Redeemable Preferred Stock

Preferred Stock

Common Stock

32,000

32,000

32,000

Retained Earnings

18,371,000

16,900,000

16,229,000

Treasury Stock

-7,342,000

-4,897,000

-4,133,000

Capital Surplus

2,892,000

2,786,000

2,643,000

-169,000

172,000

506,000

13,784,000

14,993,000

15,277,000

7,037,000

11,183,000

12,487,000

Total Liabilities

Stockholders' Equity

Other Stockholder Equity

Total Stockholder Equity

Net Tangible Assets

AWARDS AND ACHIEVEMENT

At FedEx, we believe our success depends upon the dedication of our people. We have
developed recognition programs that celebrate the achievements of our people and their
commitment to delivering on the values of the company.

FedEx was recognized among the Top 20 commercial solar power users in the U.S.

by the Solar Energy Industries Association in September 2012

No. 2 Ranking in Air Transport World's Eco-Airline of the Year Awards 2012
Recognized in the prestigious Maple croft Climate Innovation Leaders Index 2012
In February 2011, FedEx won the Dubai Award for Sustainable Transport (DAST)
sponsored by the Dubai government Roads and Transport Authority (RTA) in the

Environmental Protection category

FedEx ranks #122 in Newsweeks 2011 Top 500 Greenest Companies
Included in the top 50 ranking on the Boston College-Reputation Institute 2011 CSR

Index, the fourth consecutive year maintaining this recognition

51 facilities in Europe are IS0 14001 certified including our Paris hub at RoissyCharles De Gaulle, the largest FedEx hub outside the U.S.

FedEx has been honored as one of the Fortune 100 Best Companies to Work For"
list in 10 of the past 11 years and was named to the Fortune 100 Best Companies to

Work For Hall of Fame in 2005.

FedEx has consistently ranked in Fortunes list of Worlds Most Admired
Companies and Fortunes list of Americas Most Admired Companies since 2002

and 2001, respectively.

FedEx Express was ranked the 24th Best Multinational Workplace in Europe 2012.
FedEx Express was named among Top Five of the Worlds Best Multinational

Workplaces by the Great Places to Work Institute.

FedEx Express was named Super Eco-Airline of the Year 2012 by Air Transport

World.
FedEx provide tuition reimbursement for FedEx Express employees and offer

benefits to part-time employees.

More than half of our management team has risen through the ranks of the company.

SWOT ANALYSIS
Strength:
1. Network in more than 220 countries and more than 290,000 employees worldwide
2. Best use of technology
3. Dependable knowledge in the delivery business
4. High investment in IT systems
5. More than three decades of experience in logistics services
6. The company is striving and making efforts to improve its services. Also it is providing variant
options to its customers in order to facilitate them.
7. Corporate culture and workforce is also considered as one of the strength of the company.
8. People are working on great values and norms. These values include integrity, responsibility
and loyalty. Also the company is focusing to provide innovative services, which is also included
in organizational culture.
9. The company is providing best training to its employees. Also the compensation provided to
the employees is competitive.
10. The FedEx has titles like 100 Best Companies to Work For and Worlds Most Admired
Corporations by Fortune. These titles will support the company to make it globally recognized.

Weakness:
1. More dependence on US market
2. Since this is a competitive segment, the market share growth is limited

3. The Zap Mail fax service is facing losses of $190 million. This loss in the company will surely
effect the other operations of the company.
4. There is competition in heavy weight distribution market. Only by air is not the only source
for distributing the heavy goods. There are other means of transportation for transporting the
heavy goods especially by sea. Also by sea is a cost effective method of transporting the goods.
5. The fixed cost for global expansion is higher.

Opportunities:
The opportunities available to FedEx are as following:
1. The company should invest in IT. The company should enhance its IT network. The
advancement in information technology will support the process of globalization of Fed Ex.
2. The company has the opportunity to install computer terminals with tracking system FedEx
Ship Manager.
3. The company has to improvise its operations to provide better coverage in order to compete
with UPS and DHL. The company has many available resources and many opportunities which
will give it competitive advantage.
4. The company has to make deals with companies providing fuel. By making deals with fuel
companies FedEx will be able to get cost effective fuel. It will reduce its overall cost and FedEx
can charge competitive prices for its services.
5. The company has to negotiate between products and delivery

Threats:

The threats FedEx is facing during making the company globally recognized are as following:
1. The biggest threat for FedEx is its competitors which include US Portal Services, UPS, Emery,
DHL, RPS, electronic-document delivery services
2. The cost of employees salaries and also the fuel cost is rising.
3. The economic conditions of different countries are in crisis.
4. The faster transportation i.e. jet fuel has high cost of fuel. It is more expensive.
5. The company has following threat related to lawsuits with drivers - Not recognizing them as
employees but as independent operators - 50 class action lawsuits in 40 states IJSER
International Journal of Scientific & Engineering Research, Volume 7, Issue 3, March-2016 731
ISSN 2229-5518 IJSER 2016 http://www.ijser.org - IRS investigation due to misclassification
of workers for $319 million - If classified, large increase in company costs