Federal Express 2000 Annual Report Download - page 26

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initial or remaining term in excess of one year at
May 31, 2000 is as follows:
Capital Operating
In thousands Leases Leases
2001 $ 15,195 $ 1,258,109
2002 15,174 1,087,035
2003 15,024 990,125
2004 14,894 926,290
2005 14,828 877,701
Thereafter 287,673 9,263,996
$362,788 $14,403,256
At May 31, 2000, the present value of future m ini-
m um lease paym ents for capital lease obliga-
tions, including certain tax exem pt bonds, was
$200,259,000.
FedEx Express m akes paym ents under certain
leveraged operating leases that are sufficient to pay
principal and interest on certain pass-through cer-
tificates. The pass-through certificates are not
direct obligations of, or guaranteed by, FedEx or
FedEx Express.
NOTE 7: 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 preferences, and has no par
value. As of May 31, 2000, none of these shares had
been issued.
NOTE 8: COMMON STOCKHOLDERS’ INVESTMENT
Stock Compensation Plans
At May 31, 2000, FedEx had options and awards
outstanding under stock-based compensation
plans described below. As of May 31, 2000, there
were 25,210,811 shares of com mon stock reserved
for issuance under these plans. The Board of
Directors has authorized repurchase of FedEx’s
com m on stock necessary for grants under its
restricted stock plans. As of May 31, 2000,
13,418,185 of the 27,688,302 total shares repur-
chased by FedEx at an average cost of $27.42
(including the 15,000,000 shares repurchased
under the current year stock repurchase program ,
see Note 9) had been reissued under the above-
m entioned plans.
FedEx applies Accounting Principles Board
Opinion N o. 25, “Accounting for Stock Issued to
Em ployees,” and related interpretations to m easure
com pensation expense for its plans. Com pensation
cost for the restricted stock plans was $12,178,000,
$8,928,000 and $5,817,000 for 2000, 1999 and
1998, respectively. If com pensation cost for FedEx’s
stock-based com pensation plans had been deter-
m ined under SFAS No. 123, “Accounting for Stock-
Based Com pensation,” FedEx’s net incom e and
earnings per share would have been the pro form a
am ounts indicated below:
In thousands,
except per share data 2000 1999 1998
N et incom e:
As reported $688,336 $631,333 $503,030
Pro forma 659,601 609,960 489,556
Earnings per share,
assuming dilution:
As reported $ 2.32 $ 2.10 $ 1.69
Pro forma 2.23 2.03 1.64
The pro form a disclosures, applying SFAS N o. 123,
are not likely to be representative of pro form a
disclosures for future years. The pro form a effect
is not expected to be fully reflected until 2002,
since SFAS No. 123 is applicable to options granted
by FedEx after May 31, 1995, and because options
vest over several years and additional grants could
be made.
Fixed Stock Option Plans
Under the provisions of FedEx’s stock incentive
plans, options may be granted to certain key
em ployees (and, under the 1997 plan, to directors
who are not em ployees of FedEx) to purchase
shares of com mon stock of FedEx 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 requirements are determ ined at the discre-
tion of the Compensation Com m ittee of the Board
of Directors. Presently, option vesting periods
range from one to eight years. At May 31, 2000,
there were 9,714,810 shares available for future
grants under these plans.