Fed ex 2011 financial statement

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  • GovernanceMetrics International (GMI) is an independent governance research and ratings firm founded in 2000 to provide institutional investors an objective way of assessing corporate governance risk as well as governance leaders in their portfolios. The firm provides research and ratings only and does not offer consulting services to rated companies.

Transcript

  • 1. Case Project Caroline PonteDavid Montejano-Espinosa
  • 2. Overview• FedEx Corporation (NYSE: FDX), originally known as FDX Corporation• FedEx is a logistics services company• FedEx is based in the United States with headquarters in Memphis, Tennessee• FedEx was founded in Little Rock, Arkansas (1971) as Federal Express Corporation• FedEx currently serves worldwide customers
  • 3. Ownership• FedEx is a publicly held company which is traded in the NYSE• There are a total of 12 members on the board of directors• Fred Sidney Smith III is the founder, chairman, president, and CEO of FedEx.• Total shares outstanding are 314,484,000 Frederick W. Smith 19,714,015 All directors and executive officers as a group (20 persons) 20,727,786
  • 4. Accomplishments• Trade growth with Asia – Asia pacific, the largest single region for air freight grew at a rate of 24% in 2010• Growing Revenues – Revenues have reached nearly 40 billion which is a 13% year-over-year increase. • This is due to yield increases and volume growth across all transportation segments in 2011 – Earnings per share grew more than 20% year- over-year
  • 5. Accomplishments Cont.• Mergers and Acquisitions – On February 22, 2011 FedEx Express completed the acquisition of the Indian Logistics, distribution and express businesses of AFL Pvt. Ltd. And its affiliate Unifreght India Pvt. Ltd. For $96 million in cash • These acquisitions give FedEx more efficient domestic transportation networks and added capabilities in global
  • 6. Plans for upcoming years• 3 pillars focused on supporting reputation – Growing Earnings • Recent earnings which have been steadily improving are proof that FedEx is on track to achieving its long-term goals of: Growing revenue, improving earnings per share 10%, and increasing returns on invested capital. – Strengthening Ethical Reputation • By dedicating to conduct business around the globe in and honest and forthright way starting with financial transparency. – Reinforce reputation of a great place to work • By inspiring FedEx team members with the Purple Promise “I will make every FedEx experience outstanding” FedEx was ranked top ten on FORTUNE’S World’s most admired companies to work for
  • 7. Risk AnalysisFedEx Corporation is currently rated as having Average Accounting &Governance Risk (AGR). This places them in the 42nd percentile among allcompanies, indicating higher Accounting & Governance Risk (AGR) than 58% ofcompanies.Accounting and Governance Risk (AGR) score is from 1-100, with 100 being themost conservative and reliable. Audit Integrity ranks companies asconservative, average, aggressive or very aggressive. AGR Average Rating Published09/30/2011 Industry Air Freight / Courier Period End 08/31/2011 Services (Fiscal 2012 Q-1) SEC Filing 09/23/2011 (10-Q) Last Audit Ernst & Young LLP RISK AGR® IMPACT TOP ISSUE Corporate Governance Events 57.4% Litigation: Other Regulatory High Risk Events 23.1% Mergers-Acquisitions Asset-Liability Valuation 19.5% Pension Liability Discount Rate Domestic
  • 8. Risk Analysis• Salaries and employee benefits have increased 9% in 2011 due to the reinstatement of merit salary increases, pension, and medical costs• Increased security or pilot safety requirements could impose substantial costs• A $66 million reserve associated with and adverse jury decision in the ATA airlines lawsuit against fedex express was recognized in 2011• Fedex is directly affected by the state of the economy – When individuals and companies purchase and produce fewer goods, fedex transports fewer goods
  • 9. MethodologyMoodys raised its senior unsecured rating toBaa1, three notches into investment grade, from Baa2.The outlook is stable.Moodys Investment Grade: Aaa → Aa1 → Aa2 → Aa3→ A1 → A2 → A3 → Baa1 → Baa2 → Baa3Very good liquidity and ongoing ability to fund itsgrowth capital from operating cash flow
  • 10. Capital StructureMost Recent (Feb 2012) Nov 2011 Feb 2011 Feb 2009 Type % Amount Debt 9.2% 1.7 Bil Equity 90.8% 16.6 BilFinancing Activities•During 2011 FedEx repaid $250 million 7.25% unsecured notesthat matures on February 15, 2011 using cash from operations.•During 2010 FedEx made principal payments in the amount of$12 million related to capital lease obligations
  • 11. Financial Information 2011 2010 2009Revenue 39,304 Mil 34,734 Mil 35,497 MilNet Income 98 Mil 1,184 Mil 1,452 MilEarnings Per Share 0.31 3.76 4.57• From 2009 to 2011 FedEx overall revenue increased by xxx partly due tobusiness acquisitions Indian logistics and its affiliate unifreight India PVT Ltd.•Operating income and margin during the quarter improved due to revenuegrowth, revenue management and effective cost controls• FedEx Ground average daily package volume grew 13% year over year in thefirst quarter due to increased commercial business and the continued growthin the FedEx Home Delivery service.
  • 12. Annual Report Summary Liquidity Ratio 2011 2010 2009Current Ratio 1.70 1.57 1.57Working Capital 3,403 2,639 2,592 Profitability Ratios 2011 2010 2009Return on Assets 5.55 4.82 0.39Profit Margin % 3.93% 3.61% .282%Return on 10.00 8.63 0.70Common S/E
  • 13. Solvency Ratios 2011 2010 2009Debt to total asset 27.48% 39.4% 31.14%ratioTimes Interest 429.3Earned