8-KMaterial AgreementsOther EventsExhibits & Filings

FEDEX CORP 8-K Report, Material Agreement (Aug 2, 2006)

Filed August 2, 2006For Securities:FDX

Summary

This 8-K filing by FedEx Corporation announces a significant new seven-year transportation agreement between its subsidiary, Federal Express Corporation (FedEx Express), and the United States Postal Service (USPS). The agreement, effective September 25, 2006, through September 30, 2013, is a renewal of an existing contract and is expected to generate approximately $8 billion in revenue for FedEx Express over its term. This substantial revenue stream provides considerable visibility and stability for FedEx's express services. Additionally, the filing incorporates FedEx Corporation's consolidated financial statements as of May 31, 2006 and 2005, and for the preceding three fiscal years, as part of a Registration Statement on Form S-3. The primary takeaway for investors is the confirmation of a long-term, high-value contract with a major customer, the USPS. This agreement underscores the strategic importance of FedEx Express's services to the postal service and provides a solid revenue foundation. Investors can view this as a positive development, signaling continued business volume and a reduced near-term risk associated with renewing this critical partnership. The inclusion of audited financial statements also offers a current snapshot of the company's financial health.

Key Highlights

  • 1FedEx Express entered into a new seven-year transportation agreement with the USPS, effective September 25, 2006.
  • 2The agreement is expected to generate approximately $8 billion in revenue for FedEx Express over its term, ending September 30, 2013.
  • 3This new agreement replaces the existing transportation contract between FedEx Express and the USPS dated January 10, 2001.
  • 4The filing incorporates FedEx Corporation's audited consolidated financial statements for the fiscal years ending May 31, 2006 and 2005, and the three preceding years.
  • 5These financial statements are being included as part of a Registration Statement on Form S-3.
  • 6The USPS contract covers domestic air transportation services for First-Class, Priority, and Express Mail.
  • 7The filing is made to incorporate these documents into a Registration Statement on Form S-3 intended to be filed on August 2, 2006.

Frequently Asked Questions

The main event is the announcement of a new seven-year transportation agreement between FedEx Express and the United States Postal Service (USPS). This agreement is expected to generate significant revenue for FedEx.

The new seven-year contract is projected to generate approximately $8 billion in revenue for FedEx Express over its term, which runs from September 25, 2006, to September 30, 2013.

FedEx Express will continue to provide domestic air transportation services to the USPS, including for its First-Class, Priority, and Express Mail offerings.

The consolidated financial statements as of May 31, 2006 and 2005, and for the three years prior, are being incorporated into this 8-K report to be included in a Registration Statement on Form S-3, which FedEx intended to file on August 2, 2006.