Federal Express 2005 Annual Report Download - page 40

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FEDEX CORPORATION
38
RESULTS OF OPERATIONS
CONSOLIDATED RESULTS
The following table compares revenues, operating income, operating margin, net income and diluted earnings per share (dollars in
millions, except per share amounts) for the years ended May 31: Dollar Change Percent Change
2005(1) 2004(2) 2003 2005/2004 2004/2003 2005/2004 2004/2003
Revenues $29,363 $24,710 $22,487 4,653 2,223 19 10
Operating income $ 2,471 $ 1,440 $ 1,471 1,031 (31) 72 (2)
Operating margin 8.4% 5.8% 6.5% NM NM 260 bp (70) bp
Net income(3) $ 1,449 $ 838 $ 830 611 873 1
Diluted earnings per share(3) $ 4.72 $ 2.76 $ 2.74 1.96 0.02 71 1
(1) Includes $48 million ($31 million, net of tax, or $0.10 per diluted share) related to an Airline Stabilization Act charge described below.
(2) Includes $435 million ($270 million, net of tax, or $0.89 per diluted share) of business realignment costs described below. Also, see Note 5 to the accompanying consolidated
financial statements.
(3) 2005 includes a $12 million, or $0.04 per diluted share benefit from an income tax adjustment described below. 2004 includes a $37 million, net of tax, or $0.12 per diluted share benefit
related to a favorable ruling on a tax case and the reduction of our effective tax rate described below. Also, see Note 12 to the accompanying consolidated financial statements.
The following table shows changes in revenues and operating income by reportable segment for 2005 compared to 2004, and 2004
compared to 2003 (in millions): Dollar Change Percent Change Dollar Change Percent Change
Revenues Revenues Operating Income Operating Income
2005/2004 2004/2003 2005/2004 2004/2003 2005/2004 2004/2003 2005/2004 2004/2003
FedEx Express segment 1,988 1,030 11 6785(1) (154)(2) 125 (20)
FedEx Ground segment 770 329 20 982 28 16 6
FedEx Freight segment 528 246 20 10 110 51 45 26
FedEx Kinko’s segment 1,545 521 NM NM 61 39 NM NM
Other and Eliminations(3) (178) 97 NM NM (7) 5(117) NM
4,653 2,223 19 10 1,031 (31) 72 (2)
(1) Includes $48 million related to an Airline Stabilization Act charge described below.
(2) Includes $428 million of business realignment costs described below.
(3) Includes the results of operations of FedEx Kinko’s from February 12, 2004 (date of acquisition) through February 29, 2004 (approximately $100 million of revenue and $6 million of
operating income).
The following table shows selected operating statistics (in thou-
sands, except yield amounts) for the years ended May 31:
Percent Change
2005/ 2004/
2005 2004 2003 2004 2003
Average daily package
volume (ADV):
FedEx Express 3,259 3,167 3,121 31
FedEx Ground 2,609 2,285 2,168 14 5
Total ADV 5,868 5,452 5,289 83
Average daily LTL shipments:
FedEx Freight 63 58 56 94
Revenue per package (yield):
FedEx Express $20.10 $18.55 $17.69 85
FedEx Ground 6.68 6.48 6.25 34
LTL yield (revenue per
hundredweight):
FedEx Freight $15.48 $14.23 $13.40 96
During 2005, revenue growth was attributable to volume and yield
improvements across all transportation segments and the inclu-
sion of FedEx Kinko’s for the full year. Combined volume growth in
our package businesses increased 8%, the strongest growth rate
experienced in several years. Yields improved primarily due to
incremental jet and diesel fuel surcharges and rate increases.
Revenue growth during 2004 was attributable to increased vol-
umes of FedEx Express International Priority (IP), FedEx Ground
and FedEx Freight shipments, as well as strong growth of IP
yields at FedEx Express. Yield improvements at FedEx Ground and
FedEx Freight also contributed to 2004 revenue growth. In addi-
tion, FedEx Kinko’s (acquired on February 12, 2004) added $621
million of revenue during 2004.