Federal Express 2000 Annual Report Download - page 34

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NOTE 17: SUMMARY OF QUARTERLY OPERATING RESULTS (UNAUDITED)
First Second Third Fourth
In thousands, except earnings per share Quarter Quarter Quarter Quarter
2000
Revenues $4,319,977 $4,570,104 $4,518,057 $4,848,807
Operating incom e 283,807 304,535 206,472 426,260
Income before income taxes 262,880 282,928 186,998 404,934
N et incom e 159,034 171,183 113,128 244,991
Earnings per comm on share $ .53 $ .58 $ .39 $ .86
Earnings per comm on share – assum ing dilution $ .52 $ .57 $ .39 $ .85
1999 (1)
Revenues $4,082,302 $4,209,237 $4,098,418 $4,383,513
Operating incom e 283,843 336,987 152,038 390,218
Income before income taxes 255,348 312,404 121,269 372,043
N et incom e 149,379 182,756 77,833 221,365
Earnings per comm on share $ .51 $ .62 $ .26 $ .74
Earnings per comm on share – assum ing dilution $ .50 $ .61 $ .26 $ .73
(1) Third quarter 1999 results included approxim ately $91,000,000 of expenses ($54,100,000 net of tax or $.18 per share, assum ing dilution) for contingency
plans m ade by FedEx related to the threatened strike by the FPA.
additional third-party air and ground transportation
and establishing special financing arrangem ents.
Subsequently, a five-year collective bargaining
agreement was ratified by the FPA mem bership in
February 1999 and becam e effective May 31, 1999.
Costs associated with these contingency plans were
approxim ately $91,000,000. Of these costs, approx-
im ately $81,000,000, prim arily the cost of contracts
for supplemental airlift and ground transportation,
was included in operating expenses. The rem aining
$10,000,000 was included in nonoperating expenses
and represents the costs associated with obtaining
additional short-term financing capabilities.
In 1998, FedEx Express realized a net gain of
$17,000,000 from the insurance settlem ent 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 incom e in substantially equal am ounts.
FedEx incurred $88,000,000 of m erger expenses
related to the acquisition of Caliber and the form a-
tion of FedEx in 1998, prim arily investm ent bank-
ing fees and paym ents to m em bers of Caliber’s
m anagem ent in accordance with pre-existing man-
agement retention agreements. There are no
remaining accrued costs at May 31, 2000 related to
the m erger.
On March 27, 1997, Caliber announced a m ajor
restructuring of its Viking subsidiary. In connection
with the restructuring, Viking recorded a pretax
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 Stockholders’ Investm ent and
Com prehensive Income and, therefore, is excluded
from the Consolidated Statem ents of Incom e.
Com ponents of the $85,000,000 restructuring
charge included asset impairm ent charges, future
lease costs and other contractual obligations,
em ployee severance and other benefits and other
exit costs. Gains on assets sold in the restructur-
ing of $16,000,000 were recognized in the third
quarter of 1998 and estim ates, prim arily for future
lease costs, were revised in 2000 resulting in a
favorable adjustment of approximately $10,000,000.
There are no remaining accrued restructuring
costs at May 31, 2000.
On Novem ber 6, 1995, Caliber announced plans to
exit the airfreight business served by its wholly-
owned subsidiary, Roadway Global Air, Inc. Income
from discontinuance of $4,875,000, net of tax, in
1998 included the favorable settlem ent of leases
and other contractual obligations.