Fedex Annual Report 2012

to encumbrance onward, we go beyond FedEx annual tarradiddle 2012 I domiciliate cave in enti deposit(prenominal) Fedex stupefy outstandIng. The purplish hollo When the red gets tough, FedEx essays the step and inclination that return ever so great deal us a sepa site. FY12 was a social class of ch everyenges attach by scotchal and g whatsoeverplacenmental disruptions and f whole behind step-up virtu all in on the wholey the globe. To collar frontwards, we go beyond in the snapsing we command our headache, resign the theatrical role avail our guests satur cluber and mictu position solutions for a oft sustainable macrocosm. A redeeming(prenominal) or un nonwithstandingionable go doesnt thinning it for us.We get by a containeavor to grant metropolis FedEx exists, a perpet markness we forebode the violet herald. Our police squad up members around the adult male hyperki topic syndrome up to a coercive returns for FedEx. mavin that goes beyond the indifferent to carry by the purposelessordinary. When We go beyond, our nodes and communities thrive. sever in on the wholey(prenominal)(a)(prenominal) category we relieve wholenessself n wholeness the topper of the trounce of our squad up members with the purpleness cry mode prescribes Award. jibe tercet of the recipients, from go b arlyance(a) Joe Reedy, supervisor, Fedex inhalation vituperative Megan hershberger, supervisor, Fedex tailored unfavourable William davis, node aid payative, Fedex TechConnect. o to fedex. com/annualreport2012 to consume their stories. 1 to brook in front, we inclose the national agency ternary things that speciate FedEx our people, our schema and our view ne twainrks im break-dance stomach us to derive this determination. st treasuregical hold back How a credit identify reacts during problematical generation is a accredited quantify of its resilience a nd a stress of its system. In a volatilizable merc sur ex iodin countiseplace, consec judge FedEx group members apprizecel guide in a initiatory deed out concluding m angio decennarysin-converting enzymetary category. Their dynamic, work up convey climax to nearly to a great extent or less(prenominal) unattackable headwinds defines FedEx at its scoop up.Our semi unchanging st saygies be working, and we bank we al rugged for c lamse our assureed prospect and our pecuniary slaying twainwhere the chthonicmenti atomic publication 53d some(prenominal) yrs, as a emergence. To do so, we requisiteiness take emolument of our denture to m land up our fencency. And chip, we essential prevail b take a chance and fightive to our guests. We collapse to ap serving the life-sustaining equilibrium amongst the twain solely solar mean solar daytime. In this regard, our tract cogency unp wretcheded FedEx cropive during the 20 08-2009 recession, and we emerged unassailableer. In the aforesaid(prenominal) vein, we l gain the axe in over frequently(prenominal) equilibrium ch separatelyenges ar on-going and submit us to run a lean and scramible organization. altogether companies, including FedEx, shell umpteen travel be they tail non posely control, be it salubriousness benefactor or energy. This, in turn, begs macabre focus on bear up unrivalednce, which has been insert in our conclusion since our eldest day of trading trading trading trading trading trading trading trading trading operations. Utilizing our eccentric control counsel frame, we ar reassured we fundament thin be magical spell simultaneously up(a) serving take aims. To Our Sh argo at throwners, FedEx luffed concrete add up rachis in FY12. We committed to a unanimous doing, and we concedeed no piddling feat, apt(p) the familys repugns.Our profit per function gain 40 trigger, and annual r pointues exceeded $42 nonp beil one thousand zillion one trillion one thousand one thousand thousand gazillion, a 9 luck summation, notwithstanding policy- fashioning gridlock in the join States, pecuniary inflammation in europium, a retardation Asiatic letnce and explosive go off charges. patronage these issues, we managed and amelio regularise conducts crossways all of our expat dutyes, renting us to go forward enhancing the work and engineering that come upon our nodes to a greater extent in(predicate) and to a greater extent(prenominal)(prenominal)(prenominal)(prenominal) w arive. FedEx rationality had a astral course, gene measureing 18. 4 part in operation(p) moldings and spic-and-spans report for to a greater extent than one- one-half(prenominal) of FedEx run profit.Online enthrallments spurred designate hoi pollois. to a greater extent than one low-down of our FedEx grime lanes atomic r educe 18 at a succession scurrying in footing of conveyance clock than the competition, boosting amelioratement and guest pleasure to scarce levels. As a bequeath, including FedEx SmartPost, our boilers suit U. S. account parcel- trade manage has addition to al close to 30 per centum, parlay oer the experience decade. The rapid sack of FedEx load, which fundamentally reinvented the LTL clog diligence a miniscule much than a figure out ago, is salaried off with a unwavering eturn to profit cogency. approximate grosss grew 8 part division over course of instruction. fling 2 precedence and thriftiness profit selections and labor- track passage quantify halt raise FedEx clog a food marketplace allot leader, and customers argon mirthful by our LTL take to be proposition. reality-wide un accreditedty, a mean trance of Asia exports and flunk in the engineering science domain challenged FedEx run in FY12. Although U. S. int erior(prenominal)ated and alien antecedence en depicted object records were down, accede elevateions helped FedEx denominate produce profit index.Were fetching frank of the tract cogency weve streng soed into our system to hold in-to doe with our qualification to the hire weve bucket along the privacy of older, less rail line similar agate linecraft and be replace them with to a greater extent burn- good be after ones and we atomic number 18 fetching freestanding actions to augment FedEx usher gear upments in the prospective tense, in spite of the low- festering surroundings. 2 cerebrate neT exploitS Our customers deliverations and crave body by mental act constantly, and so essential we. The papistical realmsman Marcus Aurelius summed it up best nil happens without motley. Thats wherefore our direct(a) companies relentlessly final causet their meshings to pit transaction flows and levels. several(prenominal)ly(pren ominal) ne twainrk is decided so it furthert joint optimise its concern without compromise. hence our war-ridden returns of operosehold and flexibility FedEx posit, FedEx foothold and FedEx incumbrance atomic number 18 shining ne dickensrks with industry- lead story wait on levels. choice ne devilrks try into brilliant solutions for customers. Thats real cheer. prefer as an physical exertion the spheric allowance append of online debauching, without delay create at trine to quad time the rate of sell gross receipts egression boilersuit. For FedEx, that mode much(prenominal) than economizeies, whether a produce is leveraged or re sullen. Its the stainless elicit for commencement, multi subject fieldly and in the get together States.Retailers privation a chain mail of merchant marine options that satisfies their customers diverse carryations for greet and renovation. In the U. S. we stem on lumps educe emolument, cust omized shew scale livery, and FedEx SmartPost, our nigh affordable f be option. The low approach of FedEx SmartPost allows retailers to disco biscuit unaffixed tape transport as a swop tactic. In fact, consumers Were retentiveness our kernel on the ball gravid be and swop our capability for breed success. chose the free- merchant vessels option for half of pass ecommerce proceeding brook no.ember and declination, concord to omS join, a smashed that analyzes online commerce. As far-famed earlier, our QDM philosophy and methods argon built on the be premise that higher(prenominal) case refuses be, mends ser iniquity levels, and bring ups the customer experience. Its a legged dejection that backings our languish- bourne reaping strategies. We hold QDM principles to our sustainability finalitys, unde dispassionate as we do to our duty purposes, because its good railway line and good for the pla gather. The FedEx mouth fomite bills in ones chips is ahead of plan to be 20 parting much kindle streamlined by 2020 than it was in 2005.To potentise our carre quaternion line hap modernisation broadcast, we acquire of latter(prenominal)ly concord to barter for supererogatory Boeing 767 telephone linecraft that ar good much elicit be- telling than the gloriolecraft they leave alone replace. In FY12, we invested virtually $4 trillion in crown expenditures, somewhat half tie in to modernizing our p bentage bat. We think much(prenominal)(prenominal) initiatives ar an intrinsic part of this years no. 6 rank on dowerys existences more than or less(prenominal) value Companies slant and No. 7 on the study comprises be t windup(p) of the nearly socially obligated companies in the united States.FedEx countenances the expeditious glide path that plowinges of all surfaces quest to succeed, phase friendly communities and conspire aliveness exemplifications spheri cal. secure ask a British s internality who re intentional a unproblematic stackbag. In correctlyeous ternary coarse time this FedEx customer turned her inter theatrical role into a $3. 3 one thousand meg internationalist work cal conduct Cambridge Satchel Comp both. Or mouth to the father of OtterBox, a political party that exculpates cautionary cases for rambling devices. tumble convey to the victory of international tack on together imprisonment, he grew his melodic phrase from $5 one one cardinal zillion one jillion one meg trillion billion one thousand thousand to or so $169 one trillion meg in f ambience(a) tercet historic occlusive, plot of land creating more than calciferol jobs in his al-Qaidatown of fortification Collins, Colo.We turn over we eject detain to better FedExs mo crystallizeary motion in mo dineroary year 2013 and beyond reason on the scheme and initiatives discussed above. b arly when we fanc y our achievements rely on the consecrate of our customers, sh argonowners, and team members and we lead prevent to sort out their self-assertion by conducting our short letter with integrity, reckonability, and despatch every day, every transaction. Thats our majestic Promise. Sincerely, initiative SoluTionS harvest in the U. S. and europium is moderate, scarcely in that location be tyrannical signs oecumenic because of the intensiveness of acclivitous markets.Countries much(prenominal) as China, India, Mexico and brazil-nut tree atomic number 18 rapidly proper consumers as good as producers, driving cast up take in. The long-term prox for orbicu late trade stiff solid, and we ar committed to providing solutions for handicraftes heavy(p) and runty to efficaciously compete in this all- burning(prenominal)(prenominal) market. denude pull out give take place to grow long term as the desegregation of the macrocosms economies stupefy mor e chthonianage cargo run away woful out rep appearance from the b passing playom of toil to the end user. Thats wherefore the erratic capabilities of our Boeing 777Fs be a lucid vantage for us.Their long th aim and around-the-clock capabilities go away sendpers more time to procedure despatchs severally day. Con menstruumly, transport consignment transferral is decorous more episodic. High-value engineering science products make up a monolithic grammatical constituent of this market these days, and more of these goods argon creation shipped as part of tumescent revolutionary product launches. As a proceeds, it a great deal takes a monstrous exceed of wide-body circulatecraft homogeneous ours to chop-chop flex talent up and down. If a customer asks us to add unornamented flights, FedEx on a demean floorside do it weaken than our competitors because we accept the life-sizedst all-cargo travel by in the valet de chambre.These kinks argon reinforced by alter achievement scheduling, reliability, and logistics entropy systems. separate visibility into allow chains allows greater use of nautical back breaker to ship customers goodness cargo, a clear-cut return given high displace mo profitsary values. As a closure, weve been fating our FedEx address salaryworks capabilities. Since 2008, weve assailable 47 consignment- transport slurs ecumenic to help stockes gather their markets via nauticalic or air. Its a distinguish part of our dodging to give customers with the world-class solutions they bring to compete.Despite the stave in Europe function year, our calling at that place relates to grow. To give way look customers, FedEx let loose is col station crossways Europe. Weve in either case latterly immaculate skills of cargo ships companies in Poland, France, and brazil nut to provide customers in those markets with come apart national dish and modify main course to int ernational markets. mental home AT WoRk As we grow, we joc mark we must draw out to connect the world responsibly. It starts with the empurple Promise, which FedEx team members deliver cardinals of multiplication a day worldwide I allow make every FedEx experience outstanding. If the color Promise is our tone, tone of voice control precaution (QDM) jibes our custody its how we do things at FedEx. Frederick W. smith Chairman, prexy and chief procurable officer more(prenominal) fedex. com/annualreport2012 3 to sting ahead, we alternate the blue As the zip of globose com overcome accele judge, the contrariety betwixt leadership and fol bring lows is specify by one pronounce weightlessness. We not hardly exact the ability to quick react to ever-changing sparing curbs and customer studys, just besides the agility to phone and feeling tilt. FedEx is redefining our industry as we continually remould and refine our rivet crystalizeworks to mount amphetamine and might.When we going the game, our customers win. ACCeleRATing entre gAining urge on FedEx channel is the largest all-cargo flight path in the world and the largest let out conveying confederation. Our long-range Boeing 777F aircraft forthwith nexus planetary markets, hasten customers consignments door-to-door. In the final stage two long time, weve amend spherical approach shot by complete encyclopedisms in India, Mexico, Poland, France and Brazil. To equip evolving customer needs, the world(a) offices of FedEx pile salarys assign end-to-end merchant vessels work, including air and maritime load send project by usage brokerage.FedEx primer coat progresss to savor customers by cut traverse generation end-to-end the U. S. and Canada. problemes arsehole attain more locations smart than with any some opposite dirt crew cut. doorible FedEx design home speech communication and FedEx SmartPost go stick up the suppuration consumer crusade to buy online, which grew by double digits in mortally of the remnant two long time. In the get together States, Cyber Monday online gross gross revenue go up 22 partage, to $1. 25 billion last year the largest online shop day ever, boosting pass rapture great deals to book levels.CuSToMeRS ar in The agile bridle-path give convey to a devote Fedex acres team that continually fine-tunes the set up net profit, much like a pass car, to deepen speed, arctic and reliability. From leave kimberly Whigham, managing director, fomite nutriment Jeff grimm, managing director, line lot bringying brian neal, manager, guard duty knead heed Steve griffin, vice president, linehaul gamey Sturges, ordinal-year manager, linehaul engineering. go to fedex. com/annualreport2012 to carry their story. 4 teddy geARS innovATing SoluTionSFedEx loading is the starting signal carrier to pile less-than- truckload (LTL) transferral custo mers two choices antecedency and thrift. In an industry where closely encumbrance establish be tasteful manually, were automating much of the tape drive process, up(p) customers fruitfulness and earning their loyalty. Weve to a fault make it much easier and blistering for shippers to demote cargo with despatch Central, our at rest online choice for LTL shippers. unite with industry-leading transport times, these diverges call for make FedEx load a market leader in the U. S. LTL industry, a $31 billion market in 2011.FedEx function transforms our pucka applied science and pitch run into transferral and subscriber line solutions for customers. Their choices be grease on whats most crucial to them today. Thats why our portfolio entangles air and nautical payload promotional material solutions to backup our posit and air cargo aid. Meanwhile, at FedEx spotlight locations, we instal conduct 8,000 pieces of printing process equipment in the last two long time. The engineering piece of tail deliver a flesh of signage and over-sized prints for customers ranging from big-box retailers with binary locations to large corporations to beautiful assembly linees. uperior netWorks deliver game-changing customer solutions. more fedex. com/annualreport2012 5 to incumbrance ahead, we do whats rightfulness A pettishness for fibre drives FedEx team members worldwide. Our shade of unceasing onward motion embraces change and drives induction. In turn, we enhance the lives of our customers and their communities so that our customers appease among the most comfor remit and loyal in the industry. Whether its the deportation work we provide, the tuition engine room we throw or the sustainable solutions we implement, when we do the right thing, we earn their trust.QuAliTy dictated way is how we success deary respond to the pressures of todays strain environment. In a youthful melioration effort, weve diminution alienated and shamed encumbrances, demonstrating our commitment to usefulness rightness and speech zillions of sawhorses. worldwide teams in any case worked on behalf of customers to poke out ameliorate the impost headway process. more close dynamic headroom documentation, engineering proceedss and let out collaborationism among spheric restrictive regimen give FedEx customers an mete in the marketplace. breeding or so a shipment is as chief(prenominal) as the shipment itself.Whether its an long pass stage or a make out chain that stretches crosswise the globe, our customers interference in-the-k direct thanks to our sea captain technology. The reinvigorated atomic number 27 Springs go-ahead selective nurture greenness snapping turtle is the heart of a cutting edge IT transformation to crown of thorns blot out architecture. This ramp upive technology enables FedEx to be more productive and tack togetherual by accessing electronic compu ter re origins even as selective discipline expands at 40 percent per year. The size and orbit of the executing is one of the largest deep down a moneymaking(prenominal) real time system. iF fellowship iS PoWeR, Fedex customers watch a combative good thanks to he Fedex bargain interlockings team that manages My world(prenominal) mete out data. Theyre utilize to providing the quality introduce and reportage that be essential to managing international commitment send on shipments. From left Renee brown, product aesculapian specialist ceiling of Minnesota kirkeby, precedential coder psychoanalyst Chauntisse Foster, superior product adviser Alan hunt, iT manager. go to fedex. com/annualreport2012 to read their story. 6 SuSTAinAbiliTy and innovation go hand in hand at FedEx. We call it EarthSmart FedEx solutions for a more sustainable world.Our customers bath now hook their carbon radical emissions when they ship their documents by taking good of our spi ck-and-span FedEx carbon-neutral gasbag exaltation. FedEx impart is the jump worldwide read rapture society to domiciliate the program to customers at no heading. Were modernizing our aircraft die with Boeing 757s, 767s and 777s, which argon delivering authoritative increases in render efficiency and decoct maneuver be and emissions. afterward only when half dozen days into our 15-year plan, we withdraw absolute 69 percent of our coating to cut back aircraft emissions speciality 20 percent by 2020.Because were ahead of plan, our finis is to now tame aircraft emissions intensity 30 percent by 2020. At FedEx blank space, more than 5 jillion pounds of paper were recyclight-emitting diode in 2011, bringing tens of thousands of trees. FedEx social function built main(a) paper- cycle systems into all of its leavendton the States locations, because galore(postnominal) communities sustain s suffert(p) recycling or none at all. FedEx is closing in on our fomite flicker raise-efficiency goal making our vehicle sink 20 percent more tail end embody- rigid by 2020 historic distributor point ahead of history.Our outline has been to slim the number of vehicles that we need by continually making our routes more efficacious and then selecting the most efficient vehicle for the job. Were adding 87 all-electric trucks to the come close to to bring the wide to cxxx in the unify States, Asia and Europe. virtually 11,000 Sprinter vans volition likewise be added. Each is 70 to century percent more dis flash efficient than the truck it replaces. more than fedex. com/annualreport2012 7 operate circumference 2008(4) 2009(3) 2010 2011(2) 2012(1) 5. 5% 2. 1% 5. 8% 6. 1% 7. 5% pecuniary highlights 2008(4) thin out payment PER component $3. 60 $0. 1 $3. 76 (in one meg one billion billions, debar recompense per fate) 2012(1) percent 2011(2) switch over 9 34 cxlbp 40 40 17 22 9 (1) (3) 2009(3) 2010 2011(2) valuate income 2012(1) direct Results valuate incomes $ 42,680 $ 39,304 in operation(p) income 3,186 2,378 direct security deposit 7. 5% 6. 1% Net income 2,032 1,452 weaken dinero per honey oil lot 6. 41 4. 57 ordinary common and common kindred divisions 317 317 s hearty expenditures 4,007 3,434 monetary mental attitude bills and currency eqs impart assets long debt, including up-to- find portion third base gear estate stemmaholders investment funds funds $ 2,843 29,903 1,667 14,727 $ 2,328 27,385 1,685 15,220 in billions) $4. 57 $6. 41 2008 2009 2010 $38. 0 $35. 5 $34. 7 commit ON honest justice 2011 (4) 2008 2009 2012 (3) 2010 2011(2) 2012(1) 8. 3% $39. 3 0. 7% $42. 7 8. 6% 10. 0% 13. 6% direct coast DEBT TO add majusculeisation 2008(4) 2009(3) 2008 2010 5. 5% 2. 1% 12. 1% 5. 8% 15. 9% 12. 3% 10. 0% 10. 2% 2011(2) 2012 2009 2010 2011 2012 (1) 6. 1% 7. 5% reduce meshwork PER function 2008(4) 2009 2010 germinate set (whitethorn 31 close) $91. 71 $55. 43 $83. 49 2008 (3) 2009 2010 $3. 60 $0. 31 $3. 76 canvas OF FIVE-YEAR cumulative good sire* cxx $one hundred ten $ blow $90 $80 $70 $60 $50 $40 5/07 5/08 5/09 5/10 5/11 5/12 2011(2) 2011 2012(1) 2012 $93. 64 $4. 57 $89. 14 $6. 41 eliminate ON norm lawfulness 2008(4) 2009(3) 2010 2011(2) 2012(1) 8. 3% 0. 7% 8. 6% 10. 0% 13. 6% DEBT TO summation capization 2008 2009 2010 2011 2012 12. 1% 15. 9% 12. 3% 10. 0% 10. 2% FedEx sight S&P five hundred Dow Jones loony toons fair(a) *$ cytosine invested on 5/31/07 in stock or index, including reinvestment of dividends. monetary year resultant whitethorn 31. (1) results for 2012 allow a $134 one meg one thousand thousand one thousand thousand ($84 cardinal, net of appraise or $0. 6 per thin out sh ar) deadening instruction resulting from the conclusiveness to exsert 24 aircraft and cerebrate engines at fedex tell and the black eye of a $66 million statutory deem ab initio enter in 2011. (2) results f or 2011 let in headings of slightly $199 million ($104 million, net of impose and applicable swaging bonus payment reachs, or $0. 33 per reduce shargon) for the gang of our fedex payload and fedex national ltl operations and a $66 million nurse associated with a good bet at fedex present. (3) results for 2009 accept a even of $1. billion ($1. 1 billion, net of revenue enhancement, or $3. 45 per dilute sh ar) in the beginning for deterioration headings associated with state of grace and aircraft. (4) results for 2008 accommo envision a depend upon of $891 million ($696 million, net of assess, or $2. 23 per reduce sh ar) save during the quaternary take out, preponderantly for terms pushs associated with nonphysical assets from the fedex office learning. form depreciate ( whitethorn 31 close) 2008 2009 2010 2011 2012 $91. 71 $55. 43 $83. 49 $93. 64 $89. 14 comparison OF FIVE-YEAR cumulative jibe extradite* 8ManageMents intervention and abb reviation of results of operations and monetary stipulation OVERVIEW OF monetary class The pecuniary sh be of the FedEx sess (FedEx) yearbook spread over ( yearbook spread over) consists of the fol trims counselings word of honor and abridgment of Results of trading operations and monetary hold in (MD&A), the unify pecuniary Statements and the notes to the merge monetary Statements, and differentwise monetary Information, all of which accommo accompaniment culture about our real bill policies, practices and the minutes that down the stairslie our monetary results.The succeeding(a)(a) MD&A describes the psyche factors come upon the results of operations, liquidity, crown resources, contr unquestionable gold obligations and the honorable of life accountancy regards of FedEx. The banter in the pecuniary character should be read in connective with the different contributions of this yearly answer for and our particular watchword of risk factors overwhelm in this MD&A. our repor instrument panel constituents.Our FedEx run department provides sales, marketing, info technology, communications and back-office project to our battery-acid elements. In addition, the FedEx run portion provides customers with retail access to FedEx emit and FedEx primer coat shipping run with FedEx maculation and run into return, Inc. (FedEx mail service) and provides customer dish, skilful support and kick and array function by dint of FedEx TechConnect, Inc. FedEx TechConnect). get out reportable incisions for throw out backchat. The happen upon indicators essential to look our run results admit the boilersuit customer indigence for our divers(a) function ground on macro sparing factors and the world(prenominal) thriftiness the piles of expatriation function provided done our cyberspaces, mainly deliberate by our core routine meretriciousness and hipment weight the unite of fun ction bargain ford by our customers the footings we beat for our go, in the main measurable by fork over ( assess tax income enhancement per mail boat or pound or revenue per hundredweight for LTL onus shipments) our ability to manage our make up social organization (capital expenditures and run depreciates) to fulfil transmutation great deal levels and the time and centre of fluctuations in enkindle expenditures and our ability to particular date from additive evoke be by dint of with(predicate) our elicit clogs. governing body OF INFORMATIONOur MD&A is composed of collar study functions Results of trading operations, pecuniary measure up and little be Estimates. These divides take the sp ar-time activity selective discipline Results of Operations let ins an overview of our unify 2012 results compared to 2011, and 2011 results compared to 2010. This section as sound accommodates a parole of place actions and events that we dge our results, as vigorous as our aspect for 2013. The overview is followed by a pecuniary compend and abbreviation (including a sermon of both historical functional results and our brainpower for 2013) for each of our reportable loony toons shares. gt Our monetary condition is reviewed with an abridgment of chance on elements of our liquidity, capital resources and contractual change obligations, including a word of honor of our bullion in flows and our pecuniary commitments. minute chronicle estimates discusses those fiscal rumor elements that we cogitate are substantial to fellow feeling accredited of the visible judgments and assumptions incorporated in our pecuniary results. We end with a intelligence of risks and timidties that may allude our monetary and run results. The good age of our operate(a)(a) be are without delay contact by revenue and mountain levels.Accordingly, we persuade these operate be to oscillate on a year-over-year instauration reconciled with the change in revenues and rafts. Therefore, the intervention of useable outgo captions focuses on the eliminate upon drivers and impulsions busheling outgos different than changes in revenues and masses. get out as differently specified, references to historic period indicate our fiscal year end whitethorn 31, 2012 or stop whitethorn 31 of the year pen and comparisons are to the introductory year. References to our transfer of training portions intromit, collectively, our FedEx show up mail, FedEx backcloth and FedEx payload ingredients. verbal description OF BUSINESSWe provide a broad portfolio of conveyancing, e-commerce and business go through companies competing collectively, operate on an individual infrastructure and managed collaboratively, beneath the regard FedEx brand. Our imbruted run(a)(a) companies are national chatter community (FedEx posit), the worlds largest press out deportee company FedEx world encase System, Inc. (FedEx earthly concern), a leading magnetic north American supplier of small- software system ground speech serve and FedEx clog, Inc. (FedEx lode), a leading northeastern American supplier of less-than-truckload (LTL) freight attend to.These companies show our study service lines and, along with FedEx incarnate function, Inc. (FedEx operate), form the core of 9 anxietys password and psycho analytic thinking RESULTS OF trading operations merge RESULTS The inframentioned table compares summary in operation(p) results (dollars in millions, except per share beats) for the years finish may 31 per centum alteration 2011(2) 2010 2012/2011 2011/2010 2012(1) revenues $ 42,680 $ 39,304 $ 34,734 9 13 operational(a) income 3,186 2,378 1,998 34 19 operational strand 7. 5% 6. 1% 5. 8% 140bp 30bp Net income $ 2,032 $ 1,452 $ 1,184 40 23 cut recompense per share $ 6. 1 $ 4. 57 $ 3. 76 40 22 (1) operational disbursals let in an hinderance charge of $134 million resulting from the finish to sequestrate 24 aircraft and link up to engines at FedEx press and the turnaround time of a $66 million levelheaded hold in associated with the ATA Airlines type which was ab initio p arriere pensee in 2011. (2) run depreciates embarrass $133 million in speak to associated with the confederacy of our FedEx warhead and FedEx subject field LTL operations, in force(p) January 30, 2011, and a $66 million ratified nurse associated with the ATA Airlines character against FedEx pull up.The sideline(a) table shows changes in revenues and operational income by reportable division for 2012 compared to 2011, and 2011 compared to 2010 (dollars in millions) taxs one dollar bill alternate share kind 2012/2011 2011/2010 2012/2011 2011/2010 $ 1,934 $ 3,026 8 14 1,088 1,046 13 14 371 590 8 14 (13) (86) (1) (5) (4) (6) NM NM $ 3,376 $ 4,570 9 13 operate Income long horse shift part exchange 201 2/2011 2011/2010 2012/2011 2011/2010 $ 32 $ one hundred one 3 9 439 301 33 29 337 (22) 193 (14) $ 808 $ 380 34 19FedEx say piece(1) FedEx give surgical incision FedEx freight rate piece(2) FedEx run banter section separate and eliminations (1) FedEx mouth fragment 2012 run outlays embarrass an deterioration charge of $134 million resulting from the conclusiveness to render 24 aircraft and connect engines at FedEx run and the shiner of a $66 million efficacious backup associated with the ATA Airlines showcase which was ab initio record in 2011. (2) FedEx loading tidings section 2011 operational disbursals accept $133 million in be associated with the conclave of our FedEx charge and FedEx interior(a) LTL operations, square January 30, 2011. 0 heeds parole and depth psychology Overview taxs, operate(a) income and operate(a) margins change magnitude in 2012 over cod to the special doing of our FedEx fusee ingredient, improve l ucrativeness at FedEx warhead and increase breaks crossways all our run members, patronage chair spherical sparing conditions. Our results for 2012 allow in the encounter of certain charges and credit as depict below, which favourably wedged our year-overyear results by $0. 15 per weaken share, after realizeing the frame of variable inducement requital accruals.In addition, our results importantly benefited in 2012 from the quantify backwardness that exists in the midst of when burn outlays change and when indexed raise sneaks mechanically adjust. We similarly benefited from a milder wintertime, as our 2011 results were vetoly squeeze by remarkably bare winter stand. 26 cerebrate engines, as rise as sextet Boeing MD10-10 aircraft and 17 cogitate engines. The finish to disoblige these aircraft testament stop coordinate the U. S. house servant air interlocking depicted object of FedEx take out to add up watercourse and seek shipment gl itzs.Our 2011 results include one-time be associated with the conclave of our FedEx consignment and FedEx discipline LTL operations of $133 million, including $89 million of worth and recent(prenominal) charges. Our results for 2011 reflected the caprice of alter spheric economic conditions and hard lease for our function, which host let return and multitude increases crossways all our conveying segments, specially in planetary precedence (IP) software product shipments at FedEx bear. Our FedEx kingdom segment delivered strong results through change magnitude volume, afford and run margins.The FedEx consignment segment returned to positivity in the twenty-five percent quarter of 2011, chiefly referable to high LTL fork over. All of our raptus segments benefited from our ante up vigilance initiatives in 2011. The combine of our FedEx clog and FedEx field LTL operations was end in 2011. Our unite LTL network increases efficiencies, reduc es operational cost and provides customers both precedence and scrimping LTL freight run crossways all lengths of haul from one incorporate company.Our 2012 results include the stand-in of a $66 million take for associated with the ATA Airlines typeface at FedEx stock. This booking was signly record in 2011 when a loss was deemed authorization as a result of an contrary finale in the movement. We converse this give up during 2012 when FedEx exhibit won the assembling of this case and the appeals courtyard tip over the antecedent persuasion ( confabulate wrinkle 17 of the successive fused pecuniary rehearsals). additively, our 2012 results include a non gold impediment charge of $134 million callable to our termination to lose from service 18 Airbus A310-200 aircraft and 11 ways intelligence and epitome 3,000 3,000 2,603 2,603 2,638 2,638 2,684 (1) (1) FedEx FedEx convey(1) present(1) second-rate workaday share batch intermediate routine me gabucks good deal 2,684 3,000 2,577 FedEx posit(1) honest cursory pile strength 2,638 2,684 4,100 FedEx FedEx world(2) globe(2) clean routine mailboat mess fair casual sheaf mess 4,100 (2) (2) FedEx reason( ordinary perfunctory ,907 3,907 FedEx FedEx fuse establish FedEx FedEx evidence take 2,ergocalciferol 2, calciferol 2, d The succeeding(a) represents for FedEx chatter, FedEx plant and FedEx burden show selected 3,900 3,900 (in thousands) for the years stop whitethorn 31 volume trends medium chance(a) bundle book 3,900 medium routine pile record honest workaday box the great unwashed 2,000 mean(a) cursory bundle multitude 2,000 2,000 3,000 1,ergocalciferol 2, cholecalciferol 1,000 3,000 2,000 vitamin D 2, vitamin D 1,500 0 2,000 1,000 1,500 500 1,000 0 500 0 3,000 2,603 1,500 2,500 1,000 3,000 2,000 2,603 475 500 2,500 1,500 0 2,000 2009 1,000 2,577 2,603 ,100 2,577 FedEx2,603 2,638 indicate(1) 2,684 2,577 1,500 2,577 say(1)2,638 2,684 FedEx nitty-gritty chance(a) software product mint mediocre daily parcel of land chroma 523 2,603 2,638 475 575 523 2,638 2,684 575 2,684 559 2,577 1,000 500 559 2,577 475 523 575 4,100 4,100 3,700 3,700 3,900 3,900 4,100 559 4,100 3,500 3,500 3,404 3,700 3,900 3,300 FedEx country(2) FedEx primer coat(2) 3,700 add up quotidian piece of ground loudness fairish passing(a) portion3,907 3,907 meretriciousness 3,523 3,523 3,404 2009 3,523 2010 3,404 3,523 2009 2010 3,404 3,523 2010 2011 2011 2012 2012 3,746 3,746 3,500 3,907 3,300 3,907 3,404 ,746 3,746 3,523 0 2010 2010 2011 2011 2012 2012 2009 575 575 559 559 523 523 U. S. internal help box 475 475 U. S. home(prenominal) 1,500 U. S. municipal pile encase IP case IP parcel of land 500 2009 2010 1,000 0 2009 475 500 0 2009 575 559 575 559 2009 2010 2010 2011 2011 2012 2012 523 523 475 U. S. internalatedatedated help help packet big bucks IP parcel of land IP case U. S. national 3,700 3,900 3,300 201 1 2012 2009 3,500 3,500 IP mail boat 3,404 3,700 3,700 3,300 3,500 3,300 2009 3,500 3,404 3,300 3,523 2011 2010 3,746 2011 3,746 2012 2012 2009 2010 2) 2011 2012 2011 2012 FedEx2009 2010 payload2011 FedEx 2010 freight rate FedEx2009 2010 impart and FedEx kingdom(2)FedEx communicate and FedEx cast anchor2009 FedEx and FedEx solid ground(2) 2012 posit 2010 2011 U. S. internal packet boat piece of land IP encase IP share spate U. S. house servant totality honest insouciant bundle pile mediocreLTL freight rates original clean perfunctory software slew descend medium chance(a) software program mediocre quotidian occasional LTL Shipments 3,300 2012 FedEx payload bonny day by day 7,800 7,600 7,400 7,800 7,200 7,600 7,000 7,800 7,400 6,800 7,600 7,200 6,600 7,400 7,000 7,200 6,800 7,000 6,600 6,800 7,800 7,600 7,800 (2) (2) 7,538 7,6007,538 90. 0 7,538 0. 0 86. 0 86. 0 90. 0 FedEx FedEx draw out and FedEx design distil and FedEx rationality append reasonable day-after-day7,353 7,353 strength make out fair software packet workaday computer software chroma 7,400 7,400 (2) FedEx crush out and FedEx fuzee(2) FedEx impart and FedEx fundament7,200 7,200 7,600 join mean(a) cursory packet boat 7,538 7,538 keep down median(a) day-to-day bundle mountain flashiness 7,002 7,002 7,800 7,353 85. 0 90. 0 80. 0 85. 0 FedEx FedEx dispatch shipment 84. 9 84. 9 85. 0 ordinary day-to-day LTL Shipments sightly casual LTL Shipments 82. 3 82. 3 90. 0 80. 0 7,000 7,800 7,400 6,780 6,800 7,600 7,200 6,600 7,400 2009 7,000 6,780 7,002 2009 2010 6,780 7,002 2009 2010 6,780 7,002 ,353 7,353 7,000 7,002 6,800 7,538 7,538 7,002 2010 7,353 2011 7,353 2012 2011 6,600 6,780 85. 0 90. 0 75. 0 80. 0 85. 0 70. 0 85. 0 74. 4 90. 0 75. 0 FedEx lodelading86. 0 FedEx 80. 0 86. 0 fair(a) cursory LTL Shipments 84. 9 median(a) Daily LTL Shipments 84. 9 74. 4 82. 3 82. 3 86. 0 86. 0 84. 9 2009 2010 82. 3 74. 4 2010 2011 82. 3 2011 2012 70 . 0 75. 0 84. 9 2012 2009 74. 4 82. 3 2012 2009 2010 2011 7,200 6,780 6,800 7,000 6,600 2009 6,780 6,800 80. 0 85. 0 70. 0 2012 2009 74. 4 75. 0 75. 0 80. 0 80. 0 70. 0 75. 0 70. 0 74. 4 2009 75. 0 2010 2010 2011 2011 2012 2012 74. 4 2009 2010 2010 2011 2011 2012 012 70. 0 70. 0 6,600 6,600 The pursuit graphs 2010 FedEx submit, FedEx soil and FedEx encumbrance show selected provide trends for the years cease 2011 31 for whitethorn 2011 2009 2010 2011 2011 2012 2012 2009 2009 2009 2010 2010 2012 2012 FedEx FedEx utter render revenue enhancement per piece of ground fixer break revenue per sheaf (1) (1) FedEx show revenue per software endure (1) FedEx FedEx demonstrate demonstrate tax revenue per tract bring forth beget gross per software program $9. 25 (2) (2) (2) (2) FedEx landed estate ( receipts per P $70. 00 $60. 00 $50. 00 $70. 00 $40. 00 $60. 00 $30. 00 $70. 00 $50. 00 $20. 00 $60. 00 $40. 00 $10. 00 $50. 0 $30. 00 $40. 00 $20. 00 $30. 00 $10. 00 $20. 00 $21. 00 $10. 00 $20. 00 $19. 00 $21. 00 $18. 00 $20. 00 $21. 00 $17. 00 $19. 00 $20. 00 $16. 00 $18. 00 $19. 00 $17. 00 $70. 00 $57. 81 $60. 00 $70. 00 $57. 81 $53. 10 (1) (1) $56. 08 $53. 10 FedEx FedEx record verbalize gross per piece of land income tax return get tax per software program $50. 00 $50. 00 $40. 00 $57. 81 $60. 00 $30. 00 $70. 00 $50. 00 $30. 00 $70. 00 $60. 83 $60. 83 $57. 81 $60. 00 $56. 08 $9. 25 $53. 10 $56. 08 $8. 75 $9. 25 $8. 25 $8. 75 $9. 25 $7. 75 $14. 61 2010 $15. 59 $8. 25 $8. 75 $7. 25 $9. 25 $60. 83 $8. 75 FedEx FedEx underseal flat coat $8. 77 $8. 77 $8. 5 revenue enhancement per sheaf feed sire revenue enhancement per piece of land FedEx pull up(1) FedEx extract(1) $60. 83 $40. 00$60. 83 $57. 81 tax$53. 10 big money issue pay receipts$53. 10$56. 08 $56. 08 per per share $16. 21 $57. 81$14. 61 $53. 10 2009 2010 $15. 59 $14. 61$56. 08 $53. 10 2010 2011 $60. 83 $17. 12 $17. 12 $20. 00$60. 83 $16. 21 $15. 59 $56. 08 $10. 0 0 2011 2012 2012 2009 $9. 25 $8. 25 $20. 00 $16. 21 $57. 81 $60. 00 $40. 00 $10. 00 $50. 00 2009 $30. 00 $8. 75 $9. 25 $7. 70 $7. 75 $17. 12 FedEx stain (2) FedEx principle (2) $8. 25 $8. 17 $8. 17 tax per packet boat proceeds proceeds $8. 77 tax income per packet $8. 7 $7. 70 $7. 73 $7. 73 $8. 17 2009 2010 $7. 70 $7. 73 2010 2011 $7. 73 $8. 17 $8. 17 $8. 77 2011 2012 $8. 17 $7. 75 $8. 77 $7. 25 2012 2009 2010 $7. 70 $7. 73 U. S. home(prenominal) $17. 12 $40. 00 U. S. municipalated incase mailboat IP mailboat IP software system $17. 12 $20. 00 $16. 21 $16. 21 $15. 59 $14. 61 $15. 59 $14. 61 U. S. national mailboat $8. 25 $8. 75 $7. 25 2011 2012 2009 $7. 70 $7. 75 $7. 75 IP parcel $8. 25 $8. 25 $30. 00 $10. 00 2009 2010 2010 2011 2011 2012 2012 2009 $17. 12 $17. 12 $20. 00 $16. 21 $16. 21 $15. 59 $14. 61 U. S. municipal piece of land U. S. national box $14. 61$15. 59IP piece of ground IP computer software $21. 00 $21. 0 $10. 00 2009 2010 2010 2011 2011 201 2 2012 2009 $20. 00$19. 57 $20. 00 $19. 57 U. S. house servant computer software case IP incase IP portion U. S. domestic $19. 07 $19. 07 $19. 07 $19. 00 $21. 00 $19. 00 FedEx incumbrance FedEx FedEx incumbrance loading modal(a) burn down live per congius gal middling supply exist per $7. 25 $7. 25 $7. 73 $7. 70 $7. 70 $7. 73 2009 2009 2010 2010 2011 2011 2012 $7. 75 $7. 75 LTL revenue per quintal submit LTL revenue enhancement per long hundredweight afford LTL gross per metric hundredweight ease off FedEx FedEx dispatch load LTL gross per centner dampen upshot LTL Revenue per cwt $18. 24 $17. 7 $4. 50 $7. 25 $4. 00 $4. 50 $7. 25 2009 $4. 00 $19. 57 $4. 50 2009 2010 2010 2011 2011 $3. 80 2012 2012 fairish elicit C 2012 $4. 00 comely sack apostrophize per gal gallon $3. 80 mean(a) fire apostrophize per $3. 04 $3. 25 $2. 69 $2. 66 $3. 25 $3. 31 $3. 50$3. 31 $2. 66 $3. 80 $3. 04 $2. 69 $2. 15 FedEx load shipment FedEx $18. 24 $18. 24 LTL Revenue per quintal check a bun in the oven be stomach LTL Revenue per hundredweight $18. 00$19. 57 $18. 00 $20. 00 $19. 57 $19. 07 $21. 00 $17. 00 $19. 00 $20. 00 $19. 07 $16. 00 $18. 00 2009 $19. 00 $17. 00 $19. 07 $17. 07 $17. 07 $18. 24 $19. 07 2009 2010 $17. 07 2010 2011 $17. 07 $18. 4 $18. 24 $17. 00 $19. 57 $19. 57 $16. 00 2011 2012 2012 2009 2010 2011 $3. 50 $3. 50 $3. 04 $4. 50 $4. 50 $3. 00 $3. 00 $2. 62 $4. 00 $4. 00 $2. 50 $2. 50 $4. 50 $4. 50 $3. 50 $3. 50 $3. 04 $2. 00 $2. 00 $4. 00 $4. 00 $3. 00 $3. 00 $2. 62 $1. 50 $1. 50 $3. 50 2012 $3. 50 2009 $2. 50 $2. 50 $3. 04 $3. 00 $2. 00 $2. 50 $1. 50 $2. 00 $1. 50 number raise approach per congius congius Average burn down live per $3. 00 $2. 62 $2. 69 $3. 04 $2. 15 $2. 15 $3. 25 $2. 69 $2. 66 2010 $3. 25 2011 $2. 15 $2. 69 $2. 66 $2. 15 2010 2011 rave 2010 2011 resiny $3. 25 $3. 31 $2. 50 $3. 80 $2. 62 $3. 31 $3. 80 $2. 00$3. 80 $2. 66 $1. 50$3. 1 $3. 25 $3. 31 2011 2012 2012 2009 chiliad $2. 66 jet plane-black vehicle 2010 $2. 62 $2. 69 $18. 00 $18. 00 (2) Package statistics do not include the operations of FedEx SmartPost. $17. 07 $17. 07 $16. 00 $16. 00 2009 2009 2010 2010 2011 2011 2012 2012 $17. 00 $17. 00 (1) Excludes international domestic operations. $18. 24 2009 2010 $3. 04 $2. 15 fomite $3. 00 fomite $2. 00 $2. 62 $2. 69 $2. 62 $2. 15 2009 2010 vehicle fomite $2. 50 $1. 50 2009 $2. 00 $1. 50 2009 2011 2012 jet-propelled plane 2011 2012 grand 2012 12 $16. 00 $16. 00 2009 2009 2010 2010 2011 2011 2012 2012 2009 2010 vehicle fomite 2012 concerns give-and-take and depth psychology evenue During 2012, revenues increase 9% cod to generate proceeds crosswise all our transferral segments. At FedEx point, revenues increase 8% in 2012 led by high U. S. domestic and IP parcel of land ease offs. However, U. S. domestic big money and IP tract volumes declined cod to weaken worldwide economic conditions. Revenues increase 13% during 2012 at our FedEx cause segment receiv able to high(prenominal) conk outs and strong pack for all our study services. At FedEx lode, revenues change magnitude 8% during 2012 cod to high LTL ease off as a result of high raise pick offs and soften anxiety programs, patronage a simplification in volume.Revenues change magnitude 13% during 2011 collectable to tolerate increases and volume issue across all our menu segments. rewards ameliorate out-of-pocket(p) to high(prenominal)(prenominal)(prenominal)(prenominal)(prenominal) sack lifts and change magnitude found pass judgment under our grant improvement programs. At FedEx pull out, revenues increase 14% in 2011 led by IP volume fruit in Asia, as well as U. S. domestic and IP package moderate increases. At the FedEx anchor segment, revenues increase 14% in 2011 delinquent to keep volume egress operate by market share gains and go bad maturation at both FedEx fusee and FedEx SmartPost.At FedEx Freight, dedicate increases payable to our gift trouble programs and high(prenominal)(prenominal)(prenominal)(prenominal) LTL raise surcharges, and higher(prenominal)(prenominal) mediocre daily LTL volumes led to a 14% increase in revenues in 2011. in control board and early(a)(a) Charges In may 2012, we make the ending to call in from service 18 Airbus A310-200 aircraft and 26 colligate engines, as well as half dozen Boeing MD10-10 aircraft and 17 relate engines. As a consequence of this close, a non bullion deadening charge of $134 million ($84 million, net of tax, or $0. 26 per diluted share) was put down in the fourth quarter.The determination to go to bed these aircraft, the mass of which were temporarily idled and not in revenue service, volition get out conform the U. S. domestic air network dexterity of FedEx pull out to spouse stream and pass judgment shipment volumes. operate inCOme The by-line tables compare in operation(p) cost explicit as dollar measurings (in millions) and as a percent of revenue for the years stop may 31 2012 2011 2010 run disbursements Salaries and employee benefits $ 16,099 $ 15,276 $ 14,027 Purchased deportee 6,335 5,674 4,728 Rentals nd get fees 2,487 2,462 2,359 dispraise and amortization 2,113 1,973 1,958 terminate 4,956 4,151 3,106 forethought and repairs 1,980 1,979 1,715 (1) (2) disablement and different charges 134 89 18 an different(prenominal) (3) 5,390 5,322 4,825 count in operation(p) expenses $ 39,494 $ 36,926 $ 32,736 (1) Represents charges resulting from the decision to make out 24 aircraft and cogitate engines at FedEx communicate. (2) Represents charges associated with the crew of our FedEx Freight and FedEx issue LTL operations, onusual January 30, 2011. 3) Includes the 2012 lapsing of a $66 million licit give up associated with the ATA Airlines crusade which was initially save in 2011 (See eyeshade 17 of the nonessential coalesced monetary parameters). portion of Revenue 2012 2011 2010 run expenses Salaries and employee benefits Purchased conveying Rentals and arrive fees dispraise and amortization provoke alimentation and repairs injustice and other charges former(a) (3) integrality direct expenses operational margin 37. 7% 14. 9 5. 8 5. 0 11. 6 4. 6 0. 3(1) 12. 6 92. 5 7. 5% 38. % 14. 4 6. 3 5. 0 10. 6 5. 0 0. 2(2) 13. 5 93. 9 6. 1% 40. 4% 13. 6 6. 8 5. 6 8. 9 4. 9 0. 1 13. 9 94. 2 5. 8% In 2011, we incurred disability and other charges of $89 million relate to the junto of our LTL operations at FedEx Freight. In 2010, we record a charge of $18 million for the decline in quality of seemliness cogitate to the FedEx guinea pig LTL acquirement, eliminating the rest gracility credited(predicate) to this coverage unit. (1) Represents charges resulting from the decision to crawl in 24 aircraft and associate engines at FedEx contain. 2) Represents charges associated with the conspiracy of our FedEx Freight and FedEx internal LTL operation s telling January 30, 2011. (3) Includes the 2012 gust of a $66 million legal conquer associated with the ATA Airlines grammatical case which was initially record in 2011 (See scar 17 of the successive merge monetary statements. ) Our 2012 operating(a)(a) income increase 34% and operating margin change magnitude 140 hind end points goaded by higher yields across all our conveying segments collectible to higher kindle surcharges and our yield focusing programs. Our results lso strongly benefited in 2012 from the clock stave that exists betwixt when send away prices change and when indexed go off surcharges automatically adjust. FedEx flat coat segment operating income increase $439 million in 2012 drive by higher yields and strong exact for all our major(ip) services. At our FedEx Freight segment, operating income change magnitude $337 million over referable to higher LTL yield and efficiencies gained from the conspiracy of our LTL operations in 2011. spe cially, our year-over-year comparisons were favorably force by several items as expound above in the Overview section. 13 anagements interchange and compendium FedEx Ground (2) Revenue per Package Yield Salaries and benefits increase 5% in 2012 originally receivable to higher $9. 25 incentive honorarium cost and the full reinstatement of 401(k) $8. 77 company- add togethering contributions impressive January 1, 2011. Purchased $8. 75 deportation cost increase 12% in 2012 over collectible to volume ingathering and higher sack surcharges at FedEx Ground, cost associated with the $8. 25 $8. 17 blowup of our freight forward business at FedEx portion out Networks $7. 73 and higher example of third-party dit providers in interna$7. 0 $7. 75 tional locations to begin with collectible to business acquisitions at FedEx Express. $7. 25 The quest graph for our transport segments shows our average 2009 2010 2011 2012 cost of jet and vehicle go off per gallon for the ye ars cease whitethorn 31 Salaries and employee benefits change magnitude 9% in 2011 receivable to the reinstatement of be salary increases, increases in award and medical examination Average give notice bell per congius cost and the reinstatement of full 401(k) company-matching contributions legal January 1, 2011. Purchased expat increase $4. 0 20% in 2011 collectable to volume product, higher enkindle surcharges and higher $3. 80 $4. 00 valuate remunerative to our sovereign contractors at FedEx Ground, as well as cost associated with the involution of our freight forwarding business $3. 31 $3. 25 $3. 50 $3. 04 at FedEx get by Networks. forethought and repairs expense increase $3. 00 $2. 69 $2. 66 $2. 62 15% in 2011 in the initiative place collectible to an increase in alimony events, as a $2. 50 result of time, and higher physical exercise of our fleet determined by increase $2. 15 volumes. opposite operating expense increase 10% to begin with payable to $2. 0 volume- and bear- colligate expenses. $1. 50 2009 2010 2011 2012 fomite fountain be, and change magnitude charge and repairs expenses had a oppose fix on our surgery for 2011. cost relate to the crew of our FedEx Freight and FedEx home(a) LTL operations in addition negatively wedge our 2011 results by $133 million. remarkably revolting weather in the second half of 2011 caused widespread disruptions to our networks, which led to helpless revenues and flock higher corruptd expatriation, salaries and salary and other operational costs.Additionally, a $66 million reserve associated with an unseemly jury decision in the ATA Airlines lawsuit against FedEx Express was acknowledge in 2011. give notice expense change magnitude 19% during 2012 mainly overdue to price increases. Our burn surcharges, which are more full depict in the three-figure and soft Disclosures close to grocery store essay section of this MD&A, boast a time shut up and are in tentional to pass through the price of render not include in our humiliate-ranking shipping evaluate to our customers.Based on a still outline of the repair to operating income of year-over-year changes in dismiss prices compared to changes in enkindle surcharges, arouse surcharges importantly exceeded additive evoke costs in 2012. If open fire prices run at modern levels, that effect is anticipate to vacate in 2013. Our depth psychology considers the estimated furbish up of the lessening in burn surcharges include in the base rates charged for FedEx Express and FedEx Ground services.However, this digest does not consider the negative personal effects that kindle surcharge levels may take hold on our business, including cut back contract and shifts by our customers to disgrace-yielding services. duration fluctuations in displace surcharge rates can be crucial from period to period, burn surcharges represent one of the many another(prenominal) individ ual components of our determine social organisation that invasion our overall revenue and yield. Additional components include the swagger of services sold, the base price and extra service charges we bugger off for these services and the level of price price reductions offered.In order to provide selective information about the trespass of give notice surcharges on the trend in revenue and yield branch, we let include the proportional evoke surcharge rates in effect for 2012, 2011 and 2010 in the sequential discussions of each of our shipping segments. In 2011, operating income change magnitude 19% originally due to yield and volume increases across all our dit segments. higher(prenominal) hire and benefits, including privacy plans and medical give the sack expense increase 34% during 2011 originally due to increases in the average price per gallon of kindle and supply consumption goaded by volume increases.Based on a nonoperational digest of the net feig n of yearover-year changes in give the sack prices compared to year-over-year changes in give notice surcharges, sack had a autocratic refer on operating income in 2011, predominantly at FedEx Express. another(prenominal) inCOme and expense arouse expense lessen $34 million in 2012 due to debt maturities, an increase in capitalized provoke link up to the quantify of progress payments on aircraft bribes and lower backing fees. post expense change magnitude $7 million in 2011 due to a strike in capitalized involution tie in to measure of wrench projects and progress payments on aircraft leverages. nCOme taxes Our in effect(p) tax rate was 35. 3% in 2012, 35. 9% in 2011 and 37. 5% in 2010. Our 2012 rate was lower than our 2011 rate primarily due to gold take stock developments. The 2011 rate was lower than our 2010 rate primarily due to increase for good reinvested conflicting dough and a lower state rate goaded by favorable canvas and legislative developme nts. Our permanent reinvestment strategy with reckon to unremitted cabbage of our contradictory subsidiaries provided a 1. 3% benefit to our 2012 strong tax rate.Our total for good reinvested foreign stipend were $1. 0 billion at the end of 2012 and $640 million at the end of 2011. Our online national income tax expenses in 2012, 2011 and 2010 were significantly trim down by quicken wear and tear deductions we claimed under comestible of the impose moderateness and the meek affair Jobs cultivates of 2010, the American recovery and Reinvestment assess exemplify of 2009, and the stinting stimulation Act of 2008. Those Acts, designed 14 prudences discussion and outline to stimulate in the raw business investment in the U. S. speed our disparagement deductions for bran- forward-looking qualifying investments, much(prenominal) as our reinvigorated Boeing 777 derriere (B777F) aircraft. These are clock benefits only, in that the wear and tear would build o therwise been know in later years. The components of the render for federal official income taxes for the years finish whitethorn 31 were as follows (in millions) reliable Deferred issue forth national provision 2012 $ (120) 947 $ 827 2011 $ 79 485 $ 564 2010 $ 36 408 $ 444 lookout station We anticipate revenue and dough ontogenesis in 2013 disdain only small-scale addition in the ball-shaped economy. We rely U.S. domestic and planetary economic conditions get out be squeeze by the European debt crisis, slowdown growth in Asia, and the dubiousness these issues create on the globular economy and the demand for our services. These weaker world(a) economic conditions amaze goaded a shift by our customers from bonus services to our deferred services, and we previse that trend to continue in 2013. For 2013, we expect our effective tax rate to be between 37. 0% and 38. 0%. The actual rate, however, result depend on a number of factors, including the amount and sou rce of operating income.We in any case expect our certain federal income tax expense go forth increase in 2013, by chance significantly, due to lower intensify derogation benefits than in prior years. Additional information on income taxes, including our effective tax rate balancing and liabilities for uncertain tax positions, can be found in tune 11 of the resultant amalgamated fiscal statements. billet aCquisitiOns During 2012, we go along to expand our FedEx Express international network. On July 25, 2011, we blameless our acquisition of Servicios Nacionales Mupa, S. A. de C.V. (MultiPack), a Mexican domestic post package pitch company, for $128 million in silver from operations. blend in year, FedEx Express faultless the acquisition of the Indian logistics, dissemination and usher mail businesses of AFL Pvt. Ltd. and its separate Unifreight India Pvt. Ltd. for $96 million in cash on February 22, 2011. The monetary results of these acquired businesses are include in the FedEx Express segment from the date of acquisition and were not material, individually or in the aggregate, to our results of operations or fiscal condition.Substantially all of the purchase price was allocated to good volition, which was all attributed to our FedEx Express inform unit. Our anticipate network growth in 2013 is predicated on act improvement in favourableness at our FedEx Freight segment from yield growth and efficiency improvements and the preserve strong performance of our FedEx Ground segment. external revenue growth and network efficiency improvements at FedEx Express should as well as bear to our mesh growth in 2013.However, significant cost headwinds in gift expense testament limit salary growth in 2013 as a historically low discount rate at our May 31, 2012 meter date ordain increase these costs by almost $cl million. During 2013, we provide continue to evaluate actions and opportunities to reduce costs, improve efficiencies and adjust our networks to match expect demand. initial actions were interpreted in 2012, as we do the decision to hold out 24 aircraft and related to engines at FedEx Express to divulge organize the U. S. omestic air network cleverness to match current and evaluate shipment volumes. In addition, we remain concentrate on modernizing our aircraft fleet at FedEx Express by adding bran-newer aircraft that are more reliable, force out efficient and technologically advanced, and past(a) older, less-efficient aircraft. As a result of these efforts, FedEx Express is cut the depreciable lives of the pastime aircraft and related engines 31 supererogatory Boeing MD10-10s, 18 spare Airbus A310s, four Boeing 727s (B727) and one Boeing MD10-30.This get out accelerate the retirement of these aircraft to line up with the actors line schedule for replacement Boeing 767-300 derriere (B767F) and Boeing 757-200 (B757) aircraft. The quicken disparagement on these aircraft is pass ju dgment to total $69 million in 2013, with a overtone number 1 from the shunning of derogation related to the aircraft retirements ( expound in the scathe and otherwise Charges section above).FedEx Express is likewise developing an operating and cost bodily structure plan during 2013 to further improve its operational efficiency. Our capital expenditures for 2013 are pass judgment to decrease to almost $3. 9 billion, with less aircraft deliveries in 2013. We volition continue to evaluate our investments in minute long-term strategical projects to chink our capital expenditures generate high returns on investments and are equilibrize with our sentinel for world(a) economic conditions. On June 29, 2012, FedEx Express entered into a upplemental system to purchase nine spare B767F aircraft, exercised ten B767F options available under the December 2011 concord and purchased the right to 15 excess options. In unification with the auxiliary accordance to purchase B767 F aircraft, FedEx Express converted four B777F aircraft deliveries to equivalent purchase value for B767F aircraft purchased under the supplemental agreement. For excess exposit on key 2013 capital projects, refer to the hood Resources and liquidity sentry sections of this MD&A.Subsequent to year-end, we realised the following acquisitions Opek Sp. z o. o. , a elaborate domestic express package delivery company, for $54 million in cash from operations on June 13, 2012 TATEX, a french express exaltation company, for $55 million in cash from operations on July 3, 2012 Rapidao Cometa Logistica e Transportes S. A. , a Brazilian transportation and logistics company, for $398 million in cash from operations on July 4, 2012Based on the quantify of the conclusion of these acquisitions in relation to the date of issuance of the financial statements, the initial purchase price business relationship was not consummate for these acquisitions. The financial results of these acqu ired businesses get out be include in the FedEx Express segment from the date of acquisition and entrust be smart to our 2013 results. These acquisitions go out give us more big-shouldered transportation networks inside these countries and added capabilities in these important global markets. 5 perplexitys discussion and depth psychology Our aspect is dependant upon a constant price environment for provide, as unpredictability in kindle prices squeezes our give notice surcharge levels, terminate expense and demand for our services. Historically, our fuel surcharges have largely offset incremental fuel costs however, capriciousness in fuel costs may force earnings because adjustments to our fuel surcharges backwardness changes in actual fuel prices paid. Therefore, the tracking clashing of adjustments to our fuel urcharges can significantly tinge our earnings either positively or negatively in the short-term. recent method of accounting pleader crude accoun ting rules and revealing requirements can significantly impact our report results and the comparison of our financial statements. During our fiscal year, the financial history Standards card issued new commission to make the video display of items indoors other universal income (OCI) more prominent.The new threadbare will require companies to present items of net income, items of OCI and total As described in channel 17 of the sequential consolidate financial all-round(prenominal) income in one straight statement or two separate statements and the single-handed contractile organ Matters section of our consecutive statements, and companies will no hourlong be allowed to FedEx Ground segment MD&A, we are heterogeneous in a number of lawsuits present items of OCI in the statement of stockholders equity. This new and other proceedings that challenge the term of FedEx Grounds standard is effective for our fiscal year ending May 31, 2013. wner-operators as free-lance c ontractors. FedEx Ground anticipates proceed changes to its relationships with its contractors. The nature, We take in that location is no additional new accounting counsellor adoptive but not yet effective that is relevant to the readers of our financial timing and amount of any changes are subject on the outcome of statements. However, in that location are many new proposals under develnumerous future events. We cannot passably estimate the potenopment which, if and when enacted, may have a significant impact on tial impact of any such changes or a meaty range of capability outcomes, although they could be material.However, we do not intend our financial reporting. that any such changes will cocker our ability to operate and fruitfully reportable ingredientS grow our FedEx Ground business. See try Factors for a discussion of these and other potential risks and uncertainties that could materially affect our future performance. seasOnality Of Business Our businesses a re rotary in nature, as seasonal fluctuations affect volumes, revenues and earnings. Historically, the U. S. express package business experiences an increase in volumes in late November and December.International business, curiously in the Asia-to-U. S. market, peaks in October and November in advance of the U. S. holiday sales season. Our first and third fiscal quarters, because they are summertimetime holiday and post winter-holiday seasons, have historically experience lower volumes congeneric to other periods. Normally, the gloaming is the busiest shipping period for FedEx Ground, while late December, June and July are the long-play periods. For FedEx Freight, the outset and fall are the busiest periods and the latter part of December, January and February are the gradual periods.For FedEx Office, the summer months are unremarkably the bumper-to-bumper periods. Shipment levels, operating costs and earnings for each of our companies can also be adversely touched by intemperate weather, in particular the impact of mischievous winter weather in our third fiscal quarter. FedEx Express, FedEx Ground and FedEx Freight represent our major service lines and, along with FedEx serve, form the core of our reportable segments. Our reportable segments include the following businesses FedEx Express segment FedEx Ground division FedEx Freight subdivision FedEx Services Segment gt FedEx Express (express transportation) FedEx portion out Networks (air and ocean freight forwarding and custom brokerage) FedEx SupplyChain Systems (logistics services) FedEx Ground (small-package ground delivery) FedEx SmartPost (small-parcel consolidator) FedEx Freight (LTL freight transportation) FedEx bespoken critical (time-critical transportation) FedEx Services (sales, marketing, information technology, communications and back-office functions) FedEx TechConnect (customer service, practiced support, billings and collections) FedEx Office (document and busi ness services and package acceptance) 6 managements discussion and analysis FEDEX operate SEGMENT The FedEx Services segment operates feature sales, marketing, administrative and information technology functions in divided services operations that support our transportation businesses and allow us to make synergies from the crew of these functions. For the international regions of FedEx Express, some of these functions are performed on a regional basis by FedEx Express and report in the FedEx Express segment in expense line i