10-QPeriod: Q1 FY2012

FEDEX CORP Quarterly Report for Q1 Ended Aug 31, 2011

Filed September 23, 2011For Securities:FDX

Summary

FedEx Corp's (FDX) Q1 2012 10-Q filing for the period ending August 30, 2011, indicates no material changes in market risk sensitive instruments compared to its annual report. The company primarily faces foreign currency exchange rate risks with the euro, Chinese yuan, Canadian dollar, British pound, and Japanese yen. While the U.S. dollar weakened against these currencies during the quarter, it did not materially impact results. Fuel price volatility remains a concern, though largely mitigated by variable fuel surcharges. However, a timing lag of six to eight weeks in these surcharges, and a buffer of approximately 2-4% in fuel price fluctuations before adjustments, could still affect operating income if fuel prices change suddenly or significantly.

Financial Highlights

40 data points
Beta

Revenue

$10.52B

Net Income

$464.00M

4.4% Net Margin

EPS (Diluted)

$1.46

Total Assets

$27.84B

Cash & Equivalents

$1.96B

Free Cash Flow

$860.00M

Financial Statements
Beta
Revenue$10.52B
Operating Expenses$9.78B
Operating Income$737.00M
Net Income$464.00M
EPS (Basic)$1.46
EPS (Diluted)$1.46
Shares Outstanding (Basic)316.00M
Shares Outstanding (Diluted)318.00M

Key Highlights

  • 1No material changes in market risk sensitive instruments reported.
  • 2Key foreign currency exchange rate risks identified in EUR, CNY, CAD, GBP, and JPY.
  • 3Weakening U.S. dollar against operating country currencies did not materially affect Q1 2012 results.
  • 4Variable fuel surcharges largely mitigate fuel price risk.
  • 5A 6-8 week lag and a 2-4% fluctuation buffer in fuel surcharges present potential operating income volatility risk.
  • 6Disclosure controls and procedures were deemed effective as of August 31, 2011.
  • 7No material changes in internal control over financial reporting occurred during the quarter.

Frequently Asked Questions

FedEx's primary market risks include foreign currency exchange rate fluctuations, particularly with the euro, Chinese yuan, Canadian dollar, British pound, and Japanese yen, and changes in the price of jet and vehicle fuel. The company noted no material changes in its market risk sensitive instruments since its last annual report.

FedEx largely mitigates the risk of fuel price changes through variable fuel surcharges. However, a timing lag of approximately six to eight weeks for these surcharges to adjust, along with a tolerance for fuel price fluctuations of about 2% for FedEx Express and 4% for FedEx Ground before an adjustment occurs, means that sudden or significant fuel price movements can still impact operating income.

While the U.S. dollar had weakened relative to the currencies of countries where FedEx operates during the first three months of fiscal year 2012 compared to May 31, 2011, this weakening did not have a material effect on the company's results.

The filing states that FedEx's management concluded that disclosure controls and procedures were effective as of August 31, 2011, and that no change occurred in internal control over financial reporting that materially affected it. For legal proceedings, investors are directed to Note 8 of the accompanying unaudited condensed consolidated financial statements, and no material changes were noted in risk factors other than a mention related to its relationship with the USPS.