Mumbai:

FedEx reported the following consolidated results for the fourth quarter:

• Revenue of $5.83 billion, up 8 per cent from $5.42 billion the previous year.
• Operating income of $492 million, up 18 per cent from $416 million a year ago.
• Net income of $280 million, up 19 per cent from last year''s $236 million.

The total average daily package volume at FedEx Express and FedEx Ground grew a combined 5 per cent year over year for the quarter, due to continued strong growth at Ground and in international express shipments.

For the full fiscal year, FedEx reported earnings of $2.74 per diluted share. Last year''s reported earnings were $2.34 per diluted share including a non-cash charge from an accounting change of $0.05. Additional consolidated results for the fiscal year were:

• Revenue of $22.5 billion, up 9 per cent from $20.6 billion the previous year.
• Operating income of $1.47 billion, up 11 per cent from $1.32 billion a year ago.
• Net income of $830 million, up 17 per cent from last year''s $710 million.

"FedEx achieved record earnings during the year, as the company advanced its strategy of being a full service transportation company with the broadest choices in the industry," says Frederick W Smith, chairman, president and chief executive officer. "Our strategy execution enabled the company to improve its revenue, earnings and returns during the year, posting a strong performance despite challenging economic conditions."

"FedEx''s return on invested capital improved in fiscal 2003, as earnings continued to increase and the company''s capital intensity declined," says Alan B Graf Jr, executive vice-president and chief financial officer. "We believe that our efforts, combined with an improving economy, will provide FedEx improved profitability and cash flow."

Capital spending in fiscal 2003 was $1.5 billion, marking the fifth consecutive year of reduced capital expenditures. The company generated solid positive cash flow during the year despite over $1 billion in pension contributions. The company also repurchased 3.275 million shares of FedEx stock at a cost of $186 million, disbursed $60 million in cash dividends, and increased its cash level by $207 million during 2003. A total of 3.375 million shares remain under the existing share repurchase authorisation.

The company recently announced that it would offer two new programmes at FedEx Express during fiscal 2004 to enable the company to continue resizing its US organisation and improve profitability. The first programme will be a voluntary retirement option with an enhanced pension package to certain groups of employees, aged 50 or older. The second programme will offer voluntary severance incentives to eligible employees. Both programmes are limited to salaried US staff and some management employees at FedEx Express.

Depending on employee acceptance rates, the pre-tax charge for these programmes is estimated to be in a range of $230 million to $290 million in fiscal 2004, with most of the charge to be incurred in the first half of the fiscal year. Approximately one-third of the pre-tax charge will be cash, with the remainder of the charge relating primarily to pension and post-retirement healthcare liabilities.

The estimated savings from these programmes are expected to be $100 million to $130 million in fiscal 2004, primarily in the second half of the fiscal year. The resulting net cost of these programmes in fiscal 2004 is expected to be $130 million to $160 million. In fiscal 2005 and beyond, the estimated annual savings from these programmes are expected to be $150 million to $190 million.