UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
|
þ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE QUARTERLY PERIOD ENDED February 28, 2015
OR
|
¨ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE TRANSITION PERIOD FROM
TO
Commission File Number: 1-15829
FEDEX CORPORATION
(Exact
name of registrant as specified in its charter)
|
|
|
Delaware |
|
62-1721435 |
(State or other jurisdiction of
incorporation or organization) |
|
(I.R.S. Employer
Identification No.) |
|
|
942 South Shady Grove Road
Memphis, Tennessee |
|
38120 |
(Address of principal executive offices) |
|
(ZIP Code) |
(901) 818-7500
(Registrants telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨
Indicate by check mark whether the
registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12
months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting
company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
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Large accelerated filer þ |
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Accelerated filer ¨ |
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Non-accelerated filer ¨ |
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Smaller reporting company ¨ |
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|
(Do not check if a smaller reporting company) |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ¨ No þ
Indicate the number of shares
outstanding of each of the issuers classes of common stock, as of the latest practicable date.
|
|
|
Common Stock |
|
Outstanding Shares at March 18, 2015 |
Common Stock, par value $0.10 per share |
|
283,756,646 |
FEDEX CORPORATION
INDEX
PART I. FINANCIAL
INFORMATION
- 2 -
FEDEX CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN MILLIONS)
|
|
|
|
|
|
|
|
|
|
|
February 28, |
|
|
|
|
|
|
2015 |
|
|
May 31, |
|
|
|
(Unaudited) |
|
|
2014 |
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
3,478 |
|
|
$ |
2,908 |
|
Receivables, less allowances of $184 and $164 |
|
|
5,584 |
|
|
|
5,460 |
|
Spare parts, supplies and fuel, less allowances of $197 and $212 |
|
|
488 |
|
|
|
463 |
|
Deferred income taxes |
|
|
510 |
|
|
|
522 |
|
Prepaid expenses and other |
|
|
422 |
|
|
|
330 |
|
|
|
|
|
|
|
|
|
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Total current assets |
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|
10,482 |
|
|
|
9,683 |
|
|
|
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PROPERTY AND EQUIPMENT, AT COST |
|
|
42,652 |
|
|
|
40,691 |
|
Less accumulated depreciation and amortization |
|
|
22,227 |
|
|
|
21,141 |
|
|
|
|
|
|
|
|
|
|
Net property and equipment |
|
|
20,425 |
|
|
|
19,550 |
|
|
|
|
OTHER LONG-TERM ASSETS |
|
|
|
|
|
|
|
|
Goodwill |
|
|
3,805 |
|
|
|
2,790 |
|
Other assets |
|
|
1,396 |
|
|
|
1,047 |
|
|
|
|
|
|
|
|
|
|
Total other long-term assets |
|
|
5,201 |
|
|
|
3,837 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
36,108 |
|
|
$ |
33,070 |
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
- 3 -
FEDEX CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN MILLIONS, EXCEPT SHARE DATA)
|
|
|
|
|
|
|
|
|
|
|
February 28, |
|
|
|
|
|
|
2015 |
|
|
May 31, |
|
|
|
(Unaudited) |
|
|
2014 |
|
LIABILITIES AND STOCKHOLDERS INVESTMENT |
|
|
|
|
|
|
|
|
|
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|
CURRENT LIABILITIES |
|
|
|
|
|
|
|
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Current portion of long-term debt |
|
$ |
|
|
|
$ |
1 |
|
Accrued salaries and employee benefits |
|
|
1,231 |
|
|
|
1,277 |
|
Accounts payable |
|
|
2,050 |
|
|
|
1,971 |
|
Accrued expenses |
|
|
1,962 |
|
|
|
2,063 |
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
5,243 |
|
|
|
5,312 |
|
|
|
|
LONG-TERM DEBT, LESS CURRENT PORTION |
|
|
7,228 |
|
|
|
4,736 |
|
|
|
|
OTHER LONG-TERM LIABILITIES |
|
|
|
|
|
|
|
|
Deferred income taxes |
|
|
2,497 |
|
|
|
2,114 |
|
Pension, postretirement healthcare and other benefit obligations |
|
|
2,962 |
|
|
|
3,484 |
|
Self-insurance accruals |
|
|
1,092 |
|
|
|
1,038 |
|
Deferred lease obligations |
|
|
694 |
|
|
|
758 |
|
Deferred gains, principally related to aircraft transactions |
|
|
187 |
|
|
|
206 |
|
Other liabilities |
|
|
193 |
|
|
|
145 |
|
|
|
|
|
|
|
|
|
|
Total other long-term liabilities |
|
|
7,625 |
|
|
|
7,745 |
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|
|
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COMMITMENTS AND CONTINGENCIES |
|
|
|
|
|
|
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COMMON STOCKHOLDERS INVESTMENT |
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Common stock, $0.10 par value; 800 million shares authorized; 318 million shares issued as of February 28, 2015 and
May 31, 2014 |
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|
32 |
|
|
|
32 |
|
Additional paid-in capital |
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|
2,739 |
|
|
|
2,643 |
|
Retained earnings |
|
|
21,880 |
|
|
|
20,429 |
|
Accumulated other comprehensive loss |
|
|
(3,909 |
) |
|
|
(3,694 |
) |
Treasury stock, at cost |
|
|
(4,730 |
) |
|
|
(4,133 |
) |
|
|
|
|
|
|
|
|
|
Total common stockholders investment |
|
|
16,012 |
|
|
|
15,277 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
36,108 |
|
|
$ |
33,070 |
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
- 4 -
FEDEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
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|
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|
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Three Months Ended February 28, |
|
|
Nine Months Ended February 28, |
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
|
|
|
|
REVENUES |
|
$ |
11,716 |
|
|
$ |
11,301 |
|
|
$ |
35,339 |
|
|
$ |
33,728 |
|
|
|
|
|
|
OPERATING EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Salaries and employee benefits |
|
|
4,411 |
|
|
|
4,167 |
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|
|
12,904 |
|
|
|
12,392 |
|
Purchased transportation |
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|
2,165 |
|
|
|
2,063 |
|
|
|
6,404 |
|
|
|
5,982 |
|
Rentals and landing fees |
|
|
686 |
|
|
|
662 |
|
|
|
2,009 |
|
|
|
1,950 |
|
Depreciation and amortization |
|
|
652 |
|
|
|
652 |
|
|
|
1,954 |
|
|
|
1,938 |
|
Fuel |
|
|
810 |
|
|
|
1,163 |
|
|
|
2,982 |
|
|
|
3,403 |
|
Maintenance and repairs |
|
|
505 |
|
|
|
438 |
|
|
|
1,604 |
|
|
|
1,397 |
|
Other |
|
|
1,525 |
|
|
|
1,515 |
|
|
|
4,520 |
|
|
|
4,403 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,754 |
|
|
|
10,660 |
|
|
|
32,377 |
|
|
|
31,465 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME |
|
|
962 |
|
|
|
641 |
|
|
|
2,962 |
|
|
|
2,263 |
|
|
|
|
|
|
OTHER INCOME (EXPENSE): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest, net |
|
|
(58 |
) |
|
|
(38 |
) |
|
|
(153 |
) |
|
|
(95 |
) |
Other, net |
|
|
5 |
|
|
|
(9 |
) |
|
|
8 |
|
|
|
(16 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(53 |
) |
|
|
(47 |
) |
|
|
(145 |
) |
|
|
(111 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE INCOME TAXES |
|
|
909 |
|
|
|
594 |
|
|
|
2,817 |
|
|
|
2,152 |
|
|
|
|
|
|
PROVISION FOR INCOME TAXES |
|
|
329 |
|
|
|
216 |
|
|
|
1,015 |
|
|
|
785 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME |
|
$ |
580 |
|
|
$ |
378 |
|
|
$ |
1,802 |
|
|
$ |
1,367 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS PER COMMON SHARE: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
2.05 |
|
|
$ |
1.24 |
|
|
$ |
6.34 |
|
|
$ |
4.38 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
|
$ |
2.01 |
|
|
$ |
1.23 |
|
|
$ |
6.25 |
|
|
$ |
4.34 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DIVIDENDS DECLARED PER COMMON SHARE |
|
$ |
0.20 |
|
|
$ |
0.15 |
|
|
$ |
0.80 |
|
|
$ |
0.60 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
- 5 -
FEDEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
(IN MILLIONS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended February 28, |
|
|
Nine Months Ended February 28, |
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
|
|
|
|
NET INCOME |
|
$ |
580 |
|
|
$ |
378 |
|
|
$ |
1,802 |
|
|
$ |
1,367 |
|
|
|
|
|
|
OTHER COMPREHENSIVE INCOME (LOSS): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments, net of tax of $18, $3, $41 and $7 |
|
|
(152 |
) |
|
|
(30 |
) |
|
|
(305 |
) |
|
|
(64 |
) |
Amortization of unrealized pension actuarial gains/losses and other, net of tax of $18, $25, $53 and $75 |
|
|
30 |
|
|
|
45 |
|
|
|
90 |
|
|
|
130 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(122 |
) |
|
|
15 |
|
|
|
(215 |
) |
|
|
66 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE INCOME |
|
$ |
458 |
|
|
$ |
393 |
|
|
$ |
1,587 |
|
|
$ |
1,433 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
- 6 -
FEDEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN MILLIONS)
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended February 28, |
|
|
|
2015 |
|
|
2014 |
|
Operating Activities: |
|
|
|
|
|
|
|
|
Net income |
|
$ |
1,802 |
|
|
$ |
1,367 |
|
Adjustments to reconcile net income to cash provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
1,954 |
|
|
|
1,938 |
|
Provision for uncollectible accounts |
|
|
112 |
|
|
|
95 |
|
Stock-based compensation |
|
|
106 |
|
|
|
94 |
|
Deferred income taxes and other noncash items |
|
|
362 |
|
|
|
392 |
|
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
Receivables |
|
|
(200 |
) |
|
|
(242 |
) |
Other assets |
|
|
(38 |
) |
|
|
(150 |
) |
Accounts payable and other liabilities |
|
|
(599 |
) |
|
|
(893 |
) |
Other, net |
|
|
(26 |
) |
|
|
(23 |
) |
|
|
|
|
|
|
|
|
|
Cash provided by operating activities |
|
|
3,473 |
|
|
|
2,578 |
|
|
|
|
Investing Activities: |
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
(2,969 |
) |
|
|
(2,554 |
) |
Business acquisitions, net of cash acquired |
|
|
(1,429 |
) |
|
|
|
|
Proceeds from asset dispositions and other |
|
|
16 |
|
|
|
23 |
|
|
|
|
|
|
|
|
|
|
Cash used in investing activities |
|
|
(4,382 |
) |
|
|
(2,531 |
) |
|
|
|
Financing Activities: |
|
|
|
|
|
|
|
|
Principal payments on debt |
|
|
(1 |
) |
|
|
(254 |
) |
Proceeds from debt issuances |
|
|
2,491 |
|
|
|
1,997 |
|
Proceeds from stock issuances |
|
|
272 |
|
|
|
462 |
|
Excess tax benefit on the exercise of stock options |
|
|
31 |
|
|
|
27 |
|
Dividends paid |
|
|
(171 |
) |
|
|
(142 |
) |
Purchase of treasury stock, including accelerated share repurchase agreements |
|
|
(1,016 |
) |
|
|
(3,984 |
) |
Other, net |
|
|
(23 |
) |
|
|
(18 |
) |
|
|
|
|
|
|
|
|
|
Cash provided by (used in) financing activities |
|
|
1,583 |
|
|
|
(1,912 |
) |
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash |
|
|
(104 |
) |
|
|
(10 |
) |
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents |
|
|
570 |
|
|
|
(1,875 |
) |
Cash and cash equivalents at beginning of period |
|
|
2,908 |
|
|
|
4,917 |
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period |
|
$ |
3,478 |
|
|
$ |
3,042 |
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
- 7 -
FEDEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) General
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. These interim financial statements of FedEx Corporation (FedEx) have been
prepared in accordance with accounting principles generally accepted in the United States and Securities and Exchange Commission (SEC) instructions for interim financial information, and should be read in conjunction with our Annual
Report on Form 10-K for the year ended May 31, 2014 (Annual Report). Accordingly, significant accounting policies and other disclosures normally provided have been omitted since such items are disclosed in our Annual Report.
In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments (including normal
recurring adjustments) necessary to present fairly our financial position as of February 28, 2015, the results of our operations for the three- and nine-month periods ended February 28, 2015 and 2014 and cash flows for the nine-month
periods ended February 28, 2015 and 2014. Operating results for the three- and nine-month periods ended February 28, 2015 are not necessarily indicative of the results that may be expected for the year ending May 31, 2015.
Except as otherwise specified, references to years indicate our fiscal year ending May 31, 2015 or ended May 31 of the year referenced and
comparisons are to the corresponding period of the prior year.
BUSINESS ACQUISITIONS. During the third quarter of 2015, we acquired two
businesses, expanding our portfolio in e-commerce and supply chain solutions. On January 30, 2015, we acquired GENCO Distribution System, Inc. (GENCO), one of the largest third-party logistics providers in North America, for $1.4
billion, which was funded using a portion of the proceeds from our January 2015 debt issuance (see Note 3). The financial results of this business are included in the FedEx Ground segment from the date of acquisition.
In addition, on December 16, 2014, FedEx acquired Bongo International, LLC (Bongo), a leader in cross-border enablement technologies and
solutions, for $42 million in cash from operations. The financial results of this acquired business are included in the FedEx Express segment from the date of acquisition.
These acquisitions will allow us to enter new markets, as well as strengthen our current service offerings to existing customers. We expect that the goodwill
of $40 million associated with our Bongo acquisition will be entirely attributable to our FedEx Express reporting unit. We expect that the goodwill of approximately $1.1 billion associated with our GENCO acquisition will be primarily attributable to
our FedEx Ground and FedEx Express reporting units.
The financial results of these acquired businesses from the date of acquisition were not material,
individually or in the aggregate, to our results of operations and therefore, pro forma financial information has not been presented.
- 8 -
FEDEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
The estimated fair values of the assets and liabilities related to these acquisitions have been recorded in
the FedEx Ground and FedEx Express segments and are included in the accompanying unaudited balance sheets based on a preliminary allocation of the purchase price (summarized in the table below in millions). These allocations will be completed during
our fourth quarter.
|
|
|
|
|
Current assets |
|
$ |
344 |
|
Property and equipment |
|
|
96 |
|
Goodwill |
|
|
1,112 |
|
Intangible assets |
|
|
175 |
|
Other non-current assets |
|
|
37 |
|
Current liabilities |
|
|
(225 |
) |
Long-term liabilities |
|
|
(84 |
) |
|
|
|
|
|
Total purchase price |
|
$ |
1,455 |
|
|
|
|
|
|
The goodwill recorded of approximately $1.1 billion is primarily attributable to expected benefits from synergies of the
combinations with existing businesses and other acquired entities. The majority of the purchase price allocated to goodwill is not deductible for U.S. income tax purposes. The intangible assets acquired consist primarily of customer-related
intangible assets, which will be amortized over an estimated useful life of ten years.
EMPLOYEES UNDER COLLECTIVE BARGAINING ARRANGEMENTS. The
pilots of Federal Express Corporation (FedEx Express), which represent a small number of FedEx Expresss total employees, are employed under a collective bargaining agreement. The contract became amendable in March 2013, and the
parties are currently in negotiations. In October 2014, FedEx Express formally requested assistance from the National Mediation Board (NMB) to mediate the negotiations. The NMB is the U.S. governmental agency that oversees labor
agreements for entities covered by the Railway Labor Act of 1926, as amended (Railway Labor Act). The progression of negotiations into the mediation stage has no impact on our operations. In addition to our pilots at FedEx Express,
certain non-U.S. employees are unionized.
STOCK-BASED COMPENSATION. We have two types of equity-based compensation: stock options and restricted
stock. The key terms of the stock option and restricted stock awards granted under our incentive stock plans and all financial disclosures about these programs are set forth in our Annual Report.
Our stock-based compensation expense was $26 million for the three-month period ended February 28, 2015 and $106 million for the nine-month period ended
February 28, 2015. Our stock-based compensation expense was $23 million for the three-month period ended February 28, 2014 and $94 million for the nine-month period ended February 28, 2014. Due to its immateriality, additional
disclosures related to stock-based compensation have been excluded from this quarterly report.
RECENT ACCOUNTING GUIDANCE. New accounting rules
and disclosure requirements can significantly impact our reported results and the comparability of our financial statements. These matters are described in our Annual Report.
We believe that no other new accounting guidance was adopted or issued during the first nine months of 2015 that is relevant to the readers of our financial
statements. However, there are numerous new proposals under development which, if and when enacted, may have a significant impact on our financial reporting.
TREASURY SHARES. In September 2014, our Board of Directors authorized the repurchase of up to 15 million shares of common stock. It is expected
that the share authorization will primarily be utilized to offset equity compensation dilution over the next several years. During the third quarter of 2015, we repurchased 400,000 shares of FedEx common stock at an average price of $172 per share
for a total of $69 million. As of February 28, 2015, 13.6 million shares remained under the share repurchase authorization.
- 9 -
FEDEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
DIVIDENDS DECLARED PER COMMON SHARE. On February 13, 2015, our Board of Directors declared a
quarterly dividend of $0.20 per share of common stock. The dividend will be paid on April 1, 2015 to stockholders of record as of the close of business on March 11, 2015. Each quarterly dividend payment is subject to review and approval by
our Board of Directors, and we evaluate our dividend payment amount on an annual basis at the end of each fiscal year.
(2) Accumulated Other Comprehensive Income (Loss)
The following table provides changes in accumulated other comprehensive income (loss) (AOCI), net of tax, reported in our
condensed consolidated financial statements for the periods ended February 28 (in millions; amounts in parentheses indicate debits to AOCI):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
Foreign currency translation gain (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of period |
|
$ |
(76 |
) |
|
$ |
68 |
|
|
$ |
77 |
|
|
$ |
102 |
|
Translation adjustments |
|
|
(152 |
) |
|
|
(30 |
) |
|
|
(305 |
) |
|
|
(64 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of period |
|
|
(228 |
) |
|
|
38 |
|
|
|
(228 |
) |
|
|
38 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement plans adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of period |
|
|
(3,711 |
) |
|
|
(3,837 |
) |
|
|
(3,771 |
) |
|
|
(3,922 |
) |
Reclassifications from AOCI |
|
|
30 |
|
|
|
45 |
|
|
|
90 |
|
|
|
130 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of period |
|
|
(3,681 |
) |
|
|
(3,792 |
) |
|
|
(3,681 |
) |
|
|
(3,792 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive loss at end of period |
|
$ |
(3,909 |
) |
|
$ |
(3,754 |
) |
|
$ |
(3,909 |
) |
|
$ |
(3,754 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table presents details of the reclassifications from AOCI for the periods ended February 28 (in millions;
amounts in parentheses indicate debits to earnings):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount Reclassified from AOCI |
|
|
Affected Line Item in the Income Statement |
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
|
Retirement plans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of actuarial losses and other |
|
$ |
(76 |
) |
|
$ |
(98 |
) |
|
$ |
(229 |
) |
|
$ |
(290 |
) |
|
Salaries and employee benefits |
Amortization of prior service credits |
|
|
28 |
|
|
|
28 |
|
|
|
86 |
|
|
|
85 |
|
|
Salaries and employee benefits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total before tax |
|
|
(48 |
) |
|
|
(70 |
) |
|
|
(143 |
) |
|
|
(205 |
) |
|
|
Income tax benefit |
|
|
18 |
|
|
|
25 |
|
|
|
53 |
|
|
|
75 |
|
|
Provision for income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AOCI reclassifications, net of tax |
|
$ |
(30 |
) |
|
$ |
(45 |
) |
|
$ |
(90 |
) |
|
$ |
(130 |
) |
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3) Financing Arrangements
We have a shelf registration statement with the SEC that allows us to sell, in one or more future offerings, any combination of our
unsecured debt securities and common stock.
- 10 -
FEDEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
During the quarter, we issued $2.5 billion of senior unsecured debt under our current shelf registration
statement, comprised of $400 million of 2.30% fixed-rate notes due in February 2020, $700 million of 3.20% fixed-rate notes due in February 2025, $500 million of 3.90% fixed-rate notes due in February 2035, $650 million of 4.10% fixed-rate notes due
in February 2045, and $250 million of 4.50% fixed-rate notes due in February 2065. Interest on these notes is paid semiannually. We utilized the net proceeds to fund our $1.4 billion acquisition of GENCO and the remaining proceeds for working
capital and general corporate purposes.
A $1 billion revolving credit facility is available to finance our operations and other cash flow needs and to
provide support for the issuance of commercial paper. The agreement contains a financial covenant, which requires us to maintain a leverage ratio of adjusted debt to capital that does not exceed 70%. Our leverage ratio of adjusted debt to capital
was 59% at February 28, 2015. We are in compliance with the leverage ratio covenant and all other covenants of our revolving credit agreement and do not expect the covenants to affect our operations, including our liquidity or expected funding
needs. See our Annual Report for a description of the term and additional covenant details of our revolving credit facility.
Long-term debt, exclusive of
capital leases, had a carrying value of $7.2 billion compared with an estimated fair value of $7.8 billion at February 28, 2015 and a carrying value of $4.7 billion compared with an estimated fair value of $5.0 billion at May 31, 2014. The
estimated fair values were determined based on quoted market prices and the current rates offered for debt with similar terms and maturities. The fair value of our long-term debt is classified as Level 2 within the fair value hierarchy. This
classification is defined as a fair value determined using market-based inputs other than quoted prices that are observable for the liability, either directly or indirectly.
(4) Computation of Earnings Per Share
The calculation of basic and diluted earnings per common share for the periods ended February 28 was as follows (in millions, except
per share amounts):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
Basic earnings per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings allocable to common shares(1) |
|
$ |
579 |
|
|
$ |
377 |
|
|
$ |
1,799 |
|
|
$ |
1,365 |
|
Weighted-average common shares |
|
|
283 |
|
|
|
303 |
|
|
|
284 |
|
|
|
312 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per common share |
|
$ |
2.05 |
|
|
$ |
1.24 |
|
|
$ |
6.34 |
|
|
$ |
4.38 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings allocable to common shares(1) |
|
$ |
579 |
|
|
$ |
377 |
|
|
$ |
1,799 |
|
|
$ |
1,365 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares |
|
|
283 |
|
|
|
303 |
|
|
|
284 |
|
|
|
312 |
|
Dilutive effect of share-based awards |
|
|
4 |
|
|
|
4 |
|
|
|
4 |
|
|
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average diluted shares |
|
|
287 |
|
|
|
307 |
|
|
|
288 |
|
|
|
315 |
|
Diluted earnings per common share |
|
$ |
2.01 |
|
|
$ |
1.23 |
|
|
$ |
6.25 |
|
|
$ |
4.34 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Anti-dilutive options excluded from diluted earnings per common share |
|
|
2.0 |
|
|
|
0.5 |
|
|
|
2.1 |
|
|
|
4.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Net earnings available to participating securities were immaterial in all periods presented. |
- 11 -
FEDEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
(5) Retirement Plans
We sponsor programs that provide retirement benefits to most of our employees. These programs include defined benefit pension plans,
defined contribution plans and postretirement healthcare plans. Key terms of our retirement plans are provided in our Annual Report. Our retirement plans costs for the periods ended February 28 were as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
U.S. domestic and international pension plans |
|
$ |
66 |
|
|
$ |
124 |
|
|
$ |
199 |
|
|
$ |
366 |
|
U.S. domestic and international defined contribution plans |
|
|
96 |
|
|
|
90 |
|
|
|
284 |
|
|
|
269 |
|
U.S. domestic and international postretirement healthcare plans |
|
|
21 |
|
|
|
20 |
|
|
|
61 |
|
|
|
59 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
183 |
|
|
$ |
234 |
|
|
$ |
544 |
|
|
$ |
694 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic benefit cost of the pension and postretirement healthcare plans for the periods ended February 28 included
the following components (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
Pension Plans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service cost |
|
$ |
165 |
|
|
$ |
164 |
|
|
$ |
493 |
|
|
$ |
492 |
|
Interest cost |
|
|
274 |
|
|
|
264 |
|
|
|
824 |
|
|
|
790 |
|
Expected return on plan assets |
|
|
(420 |
) |
|
|
(374 |
) |
|
|
(1,260 |
) |
|
|
(1,121 |
) |
Recognized actuarial losses and other |
|
|
47 |
|
|
|
70 |
|
|
|
142 |
|
|
|
205 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
66 |
|
|
$ |
124 |
|
|
$ |
199 |
|
|
$ |
366 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
Postretirement Healthcare Plans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service cost |
|
$ |
10 |
|
|
$ |
10 |
|
|
$ |
30 |
|
|
$ |
29 |
|
Interest cost |
|
|
11 |
|
|
|
10 |
|
|
|
31 |
|
|
|
30 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
21 |
|
|
$ |
20 |
|
|
$ |
61 |
|
|
$ |
59 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributions to our tax qualified U.S. domestic pension plans (U.S. Pension Plans) for the nine months ended
February 28 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015 |
|
|
2014 |
|
Required |
|
|
|
|
|
$ |
380 |
|
|
$ |
480 |
|
Voluntary |
|
|
|
|
|
|
115 |
|
|
|
15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
495 |
|
|
$ |
495 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In March 2015, we made approximately $160 million in voluntary contributions to our U.S. Pension Plans. Our U.S. Pension Plans
have ample funds to meet expected benefit payments.
(6) Business Segment Information
We provide a broad portfolio of transportation, e-commerce and business services through companies competing collectively, operating
independently and managed collaboratively under the respected FedEx brand. Our primary operating companies include FedEx Express, the worlds largest express transportation company; FedEx Ground Package System, Inc. (FedEx Ground),
a leading North American provider of small-package ground delivery services; and FedEx Freight, Inc. (FedEx Freight), a leading U.S. provider of less-than-truckload (LTL) freight services.
- 12 -
FEDEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Our reportable segments include the following businesses:
|
|
|
FedEx Express Segment |
|
FedEx Express (express transportation) |
|
|
FedEx Trade Networks (air and ocean freight forwarding and customs brokerage) |
|
|
FedEx SupplyChain Systems (logistics services) |
|
|
Bongo (cross-border enablement technology and solutions) |
|
|
FedEx Ground Segment |
|
FedEx Ground (small-package ground delivery) |
|
|
FedEx SmartPost (small-parcel consolidator) |
|
|
GENCO (third-party logistics) |
|
|
FedEx Freight Segment |
|
FedEx Freight (LTL freight transportation) |
|
|
FedEx Custom Critical (time-critical transportation) |
|
|
FedEx Services Segment |
|
FedEx Services (sales, marketing, information technology, communications and back-office functions) |
|
|
FedEx TechConnect (customer service, technical support, billings and collections) |
|
|
FedEx Office (document and business services and package acceptance) |
FedEx Services Segment
The FedEx Services segment operates combined sales, marketing, administrative and information technology functions in shared services operations that support
our transportation businesses and allow us to obtain synergies from the combination of these functions. For the international regions of FedEx Express, some of these functions are performed on a regional basis by FedEx Express and reported in the
FedEx Express segment in their natural expense line items.
The FedEx Services segment provides direct and indirect support to our transportation
businesses, and we allocate all of the net operating costs of the FedEx Services segment (including the net operating results of FedEx Office) to reflect the full cost of operating our transportation businesses in the results of those segments.
Within the FedEx Services segment allocation, the net operating results of FedEx Office, which are an immaterial component of our allocations, are allocated to FedEx Express and FedEx Ground. We review and evaluate the performance of our
transportation segments based on operating income (inclusive of FedEx Services segment allocations). For the FedEx Services segment, performance is evaluated based on the impact of its total allocated net operating costs on our transportation
segments.
Operating expenses for each of our transportation segments include the allocations from the FedEx Services segment to the respective
transportation segments. These allocations also include charges and credits for administrative services provided between operating companies. The allocations of net operating costs are based on metrics such as relative revenues or estimated services
provided. We believe these allocations approximate the net cost of providing these functions and our allocation methodologies are refined as necessary to reflect changes in our businesses.
During the first quarter of 2015, we ceased allocating to our transportation segments the costs associated with our corporate headquarters division. These
costs included services related to general oversight functions, including executive officers and certain legal and finance functions. This change allows for additional transparency and improved management of our corporate oversight costs. These
costs are included in Corporate, eliminations and other in our segment reporting and reconciliations. Prior year amounts have been revised to conform to the current year segment presentation. This change did not impact our condensed
consolidated financial statements included in Note 10.
- 13 -
FEDEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Other Intersegment Transactions
Certain FedEx operating companies provide transportation and related services for other FedEx companies outside their reportable segment. Billings for such
services are based on negotiated rates, which we believe approximate fair value, and are reflected as revenues of the billing segment. These rates are adjusted from time to time based on market conditions. Such intersegment revenues and expenses are
eliminated in our consolidated results and are not separately identified in the following segment information, because the amounts are not material.
The
following table provides a reconciliation of reportable segment revenues and operating income to our unaudited condensed consolidated financial statement totals for the periods ended February 28 (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FedEx Express segment |
|
$ |
6,656 |
|
|
$ |
6,674 |
|
|
$ |
20,542 |
|
|
$ |
20,123 |
|
FedEx Ground segment |
|
|
3,393 |
|
|
|
3,031 |
|
|
|
9,416 |
|
|
|
8,610 |
|
FedEx Freight segment |
|
|
1,428 |
|
|
|
1,347 |
|
|
|
4,622 |
|
|
|
4,205 |
|
FedEx Services segment |
|
|
370 |
|
|
|
368 |
|
|
|
1,138 |
|
|
|
1,134 |
|
Eliminations and other |
|
|
(131 |
) |
|
|
(119 |
) |
|
|
(379 |
) |
|
|
(344 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
11,716 |
|
|
$ |
11,301 |
|
|
$ |
35,339 |
|
|
$ |
33,728 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FedEx Express segment |
|
$ |
384 |
|
|
$ |
168 |
|
|
$ |
1,237 |
|
|
$ |
798 |
|
FedEx Ground segment |
|
|
558 |
|
|
|
490 |
|
|
|
1,568 |
|
|
|
1,412 |
|
FedEx Freight segment |
|
|
68 |
|
|
|
35 |
|
|
|
348 |
|
|
|
217 |
|
Corporate, eliminations and other |
|
|
(48 |
) |
|
|
(52 |
) |
|
|
(191 |
) |
|
|
(164 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
962 |
|
|
$ |
641 |
|
|
$ |
2,962 |
|
|
$ |
2,263 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Prior year amounts have been revised to conform to the current year segment presentation regarding the allocation of corporate headquarters costs. |
(7) Commitments
As of February 28, 2015, our purchase commitments under various contracts for the remainder of 2015 and annually thereafter were as
follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aircraft and Aircraft-Related |
|
|
Other(1) |
|
|
Total |
|
2015 (remainder) |
|
$ |
415 |
|
|
$ |
180 |
|
|
$ |
595 |
|
2016 |
|
|
1,249 |
|
|
|
335 |
|
|
|
1,584 |
|
2017 |
|
|
1,013 |
|
|
|
186 |
|
|
|
1,199 |
|
2018 |
|
|
1,389 |
|
|
|
111 |
|
|
|
1,500 |
|
2019 |
|
|
1,033 |
|
|
|
68 |
|
|
|
1,101 |
|
Thereafter |
|
|
4,429 |
|
|
|
111 |
|
|
|
4,540 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
9,528 |
|
|
$ |
991 |
|
|
$ |
10,519 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Primarily equipment, advertising contracts and contributions to our U.S. Pension Plans, which are further described in Note 5. |
- 14 -
FEDEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
The amounts reflected in the table above for purchase commitments represent noncancelable agreements to
purchase goods or services. As of February 28, 2015, our obligation to purchase four Boeing 767-300 Freighter (B767F) aircraft and nine Boeing 777 Freighter (B777F) aircraft is conditioned upon there being no event that
causes FedEx Express or its employees not to be covered by the Railway Labor Act. Commitments to purchase aircraft in passenger configuration do not include the attendant costs to modify these aircraft for cargo transport unless we have entered into
noncancelable commitments to modify such aircraft. Open purchase orders that are cancelable are not considered unconditional purchase obligations for financial reporting purposes and are not included in the table above.
We had $401 million in deposits and progress payments as of February 28, 2015 on aircraft purchases and other planned aircraft-related transactions.
These deposits are classified in the Other assets caption of our consolidated balance sheets. Aircraft and aircraft-related contracts are subject to price escalations. The following table is a summary of the key aircraft we are committed
to purchase as of February 28, 2015 with the year of expected delivery:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B767F |
|
|
B777F |
|
|
Total |
|
2015 (remainder) |
|
|
4 |
|
|
|
|
|
|
|
4 |
|
2016 |
|
|
11 |
|
|
|
2 |
|
|
|
13 |
|
2017 |
|
|
12 |
|
|
|
|
|
|
|
12 |
|
2018 |
|
|
11 |
|
|
|
2 |
|
|
|
13 |
|
2019 |
|
|
6 |
|
|
|
2 |
|
|
|
8 |
|
Thereafter |
|
|
|
|
|
|
12 |
|
|
|
12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
44 |
|
|
|
18 |
|
|
|
62 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A summary of future minimum lease payments under noncancelable operating leases with an initial or remaining term in excess of
one year at February 28, 2015 is as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Leases |
|
|
|
Aircraft and Related Equipment |
|
|
Facilities and Other |
|
|
Total Operating Leases |
|
2015 (remainder) |
|
$ |
82 |
|
|
$ |
411 |
|
|
$ |
493 |
|
2016 |
|
|
461 |
|
|
|
1,628 |
|
|
|
2,089 |
|
2017 |
|
|
400 |
|
|
|
1,767 |
|
|
|
2,167 |
|
2018 |
|
|
329 |
|
|
|
1,335 |
|
|
|
1,664 |
|
2019 |
|
|
273 |
|
|
|
1,149 |
|
|
|
1,422 |
|
Thereafter |
|
|
550 |
|
|
|
7,459 |
|
|
|
8,009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
2,095 |
|
|
$ |
13,749 |
|
|
$ |
15,844 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Future minimum lease payments under capital leases were immaterial at February 28, 2015. While certain of our lease
agreements contain covenants governing the use of the leased assets or require us to maintain certain levels of insurance, none of our lease agreements include material financial covenants or limitations.
(8) Contingencies
Wage-and-Hour. We are a defendant in a number of lawsuits containing various class-action allegations of wage-and-hour
violations. The plaintiffs in these lawsuits allege, among other things, that they were forced to work off the clock, were not paid overtime or were not provided work breaks or other benefits. The complaints generally seek unspecified
monetary damages, injunctive relief, or both. We do not believe that a material loss is reasonably possible with respect to any of these matters.
- 15 -
FEDEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Independent Contractor Lawsuits and State Administrative Proceedings. FedEx Ground is
involved in numerous class-action lawsuits (including 25 that have been certified as class actions), individual lawsuits and state tax and other administrative proceedings that claim that the companys owner-operators should be treated as
employees, rather than independent contractors.
Most of the class-action lawsuits were consolidated for administration of the pre-trial proceedings by a
single federal court, the U.S. District Court for the Northern District of Indiana. The multidistrict litigation court granted class certification in 28 cases and denied it in 14 cases. On December 13, 2010, the court entered an opinion and
order addressing all outstanding motions for summary judgment on the status of the owner-operators (i.e., independent contractor vs. employee). In sum, the court ruled on our summary judgment motions and entered judgment in favor of FedEx Ground on
all claims in 20 of the 28 multidistrict litigation cases that had been certified as class actions, finding that the owner-operators in those cases were contractors as a matter of the law of 20 states. The plaintiffs filed notices of appeal in all
of these 20 cases. The Seventh Circuit heard the appeal in the Kansas case in January 2012 and, in July 2012, issued an opinion that did not make a determination with respect to the correctness of the district courts decision and, instead,
certified two questions to the Kansas Supreme Court related to the classification of the plaintiffs as independent contractors under the Kansas Wage Payment Act. The other 19 cases that are before the Seventh Circuit were stayed pending a decision
of the Kansas Supreme Court.
On October 3, 2014, the Kansas Supreme Court determined that a 20 factor right to control test applies to claims under
the Kansas Wage Payment Act and concluded that under that test, the class members were employees, not independent contractors. The case was subsequently transferred back to the Seventh Circuit, where both parties made filings requesting the action
necessary to complete the resolution of the appeals. The parties also made recommendations to the court regarding next steps for the other 19 cases that are before the Seventh Circuit. FedEx Ground has requested that each of those cases be
separately briefed given the potential differences in the applicable state law from that in Kansas. During the second quarter of 2015, we established an accrual for the estimated probable loss in the Kansas case that was required to be recognized
pursuant to applicable accounting standards. This amount was immaterial.
The multidistrict litigation court remanded the other eight certified class
actions back to the district courts where they were originally filed because its summary judgment ruling did not completely dispose of all of the claims in those lawsuits. Three of these matters settled for immaterial amounts and have received court
approval. One of the cases is on appeal with the Court of Appeals for the Eleventh Circuit and one is currently pending in the Eastern District of Arkansas. Two cases in Oregon and one in California were appealed to the Ninth Circuit Court of
Appeals, where the court reversed the district court decisions and held that the plaintiffs in California and Oregon were employees as a matter of law and remanded the cases to their respective district courts for further proceedings.
During the first quarter of 2015, we established an accrual for the estimated probable losses in the Oregon and California cases that were required to be
recognized pursuant to applicable accounting standards. These amounts were immaterial. Material exposure above the accrued amounts, however, is reasonably possible, and accordingly we have undertaken a process to attempt to estimate a range of
reasonably possible losses based on currently available information relating to the cases. This process has included attempting to evaluate what facts may arise in the course of discovery and what legal rulings the courts may render and how these
facts and rulings might impact FedEx Grounds loss. For a number of reasons, we are not currently able to estimate a range of reasonably possible losses in excess of the amounts accrued. The number and identities of plaintiffs in these lawsuits
are uncertain, as they are dependent on how the class of full-time drivers is defined and how many individuals will qualify based on whatever criteria may be established. In addition, the parties have conducted only very limited discovery into
damages, which could vary considerably from plaintiff to plaintiff and be dependent on evidence pertaining to individual plaintiffs, which has yet to be produced in the cases. Further, the range of potential losses could be impacted substantially by
future rulings by the courts, including on the merits of the claims, on FedEx Grounds defenses, and on evidentiary issues.
With respect to the
matters that are pending outside of California and Oregon, it is reasonably possible that potential loss in some of these lawsuits or changes to the independent contractor status of FedEx Grounds owner-operators could be material.
- 16 -
FEDEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
We have undertaken a process to attempt to estimate a range of reasonably possible loss based on currently available information relating to these cases. Similar to our analysis of loss
contingency in the California and Oregon cases, this process has included attempting to evaluate what facts may arise in the course of discovery and what legal rulings the courts may render and how these facts and rulings might impact FedEx
Grounds loss. As a consequence of many of the same factors described above, as well as others that are specific to these cases, we are not currently able to estimate a range of reasonably possible loss. We do not believe that a material loss
is probable in these matters.
In addition, we are defending contractor-model cases that are not or are no longer part of the multidistrict litigation.
These cases are in varying stages of litigation, and we do not expect to incur a material loss in any of these matters.
Adverse determinations in matters
related to FedEx Grounds independent contractors, could, among other things, entitle certain of our owner-operators and their drivers to the reimbursement of certain expenses and to the benefit of wage-and-hour laws and result in employment
and withholding tax and benefit liability for FedEx Ground, and could result in changes to the independent contractor status of FedEx Grounds owner-operators in certain jurisdictions. We believe that FedEx Grounds owner-operators are
properly classified as independent contractors and that FedEx Ground is not an employer of the drivers of the companys independent contractors.
City and State of New York Cigarette Suit. On December 30, 2013, the City of New York filed suit against FedEx Express and FedEx Ground
arising from our alleged shipments of cigarettes to New York City residents. The claims against FedEx Express were subsequently dismissed. On March 30, 2014, the complaint was amended adding the State of New York as a plaintiff. Beyond the
addition of the State as a plaintiff, the amended complaint contains several amplifications of the previous claims. First, the claims now relate to four shippers, none of which continues to ship in our network. Second, the amended complaint contains
a count for violation of the Assurance of Compliance (AOC) we had previously entered into with the State of New York, claiming that since 2006, FedEx has made shipments of cigarettes to residences in New York in violation of the AOC.
Lastly, the amendment contains new theories of Racketeer Influenced and Corrupt Organizations Act (RICO) violations. In May 2014, we filed a motion to dismiss almost all of the claims. On November 12, 2014 the City and State of New
York filed a separate but almost identical lawsuit that includes two additional shippers. On March 9, the court ruled on our motion to dismiss, granting our motions to limit the applicable statute of limitations to four years and to dismiss a
portion of the claims. The court, however, denied our motion to dismiss some of the claims, including the RICO claims. Loss in these lawsuits is reasonably possible, but the amount of any loss is expected to be immaterial.
Environmental Matters. SEC regulations require disclosure of certain environmental matters when a governmental authority is a party to the
proceedings and the proceedings involve potential monetary sanctions that management reasonably believes could exceed $100,000.
In February 2014, FedEx
Ground received oral communications from District Attorneys Offices (representing Californias county environmental authorities) and the California Attorney Generals Office (representing the California Division of Toxic Substances
Control) that they were seeking civil penalties for alleged violations of the states hazardous waste regulations. Specifically, the California environmental authorities alleged that FedEx Ground improperly generates and/or handles, stores and
transports hazardous waste from its stations to its hubs in California. In April 2014, FedEx Ground filed a declaratory judgment action in the United States District Court for the Eastern District of California against the Director of the California
Division of Toxic Substances Control and the county District Attorneys with whom we have been negotiating. In June 2014, the California Attorney General filed a complaint against FedEx Ground in Sacramento County Superior Court alleging violations
of FedEx Ground as described above. The County District Attorneys filed a similar complaint in Sacramento County Superior Court in July 2014. The county and state authorities filed a motion to dismiss FedEx Grounds declaratory judgment action,
and their motion was granted on January 22, 2015. FedEx Ground filed a notice of appeal with the Ninth Circuit Court of Appeals on February 23, 2015. Loss in this matter is reasonably possible, however, the amount of any loss is expected
to be immaterial.
- 17 -
FEDEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
On January 14, 2014, the U.S. Department of Justice (DOJ) issued a Grand Jury Subpoena to
FedEx Express relating to an asbestos matter previously investigated by the U.S. Environmental Protection Agency. On May 1, 2014, the DOJ informed us that it had determined to continue to pursue the matter as a criminal case, citing seven
asbestos-related regulatory violations associated with removal of roof materials from a hangar in Puerto Rico during cleaning and repair activity, as well as violation of waste disposal requirements. Loss is reasonably possible; however, the amount
of any loss is expected to be immaterial.
Department of Justice Indictment Internet Pharmacy Shipments. In the past, we received
requests for information from the DOJ in the Northern District of California in connection with a criminal investigation relating to the transportation of packages for online pharmacies that may have shipped pharmaceuticals in violation of federal
law. In July 2014, the DOJ filed a criminal indictment in the United States District Court for the Northern District of California in connection with the matter. A superseding indictment was filed in August 2014. The indictment alleges that FedEx
Corporation, FedEx Express and FedEx Services, together with certain pharmacies, conspired to unlawfully distribute controlled substances, unlawfully distributed controlled substances and conspired to unlawfully distribute misbranded drugs. The
superseding indictment adds conspiracy to launder money counts related to services provided to and payments from online pharmacies. We continue to believe that our employees have acted in good faith at all times and that we have not engaged in any
illegal activities.
Accordingly, we will vigorously defend ourselves in this matter. If we are convicted, remedies could include fines, penalties,
forfeiture and compliance conditions. Given the early stage of this proceeding, we cannot estimate the amount or range of loss, if any; however, it is reasonably possible that it could be material if we are convicted.
Other Matters. In August 2010, a third-party consultant who works with shipping customers to negotiate lower rates filed a lawsuit in federal
district court in California against FedEx and United Parcel Service, Inc. (UPS) alleging violations of U.S. antitrust law. This matter was dismissed in May 2011, but the court granted the plaintiff permission to file an amended
complaint, which FedEx received in June 2011. In November 2011, the court granted our motion to dismiss this complaint, but again allowed the plaintiff to file an amended complaint. The plaintiff filed a new complaint in December 2011, and the
matter remains pending before the court. In February 2011, shortly after the initial lawsuit was filed, we received a demand for the production of information and documents in connection with a civil investigation by the DOJ into the policies
and practices of FedEx and UPS for dealing with third-party consultants who work with shipping customers to negotiate lower rates. In November 2012, the DOJ served a civil investigative demand on the third-party consultant seeking all pleadings,
depositions and documents produced in the lawsuit. We are cooperating with the investigation, do not believe that we have engaged in any anti-competitive activities and will vigorously defend ourselves in any action that may result from the
investigation. While the litigation proceedings and the DOJ investigation move forward, and the amount of loss, if any, is dependent on a number of factors that are not yet fully developed or resolved, the amount of any loss is expected to be
immaterial.
On June 30, 2014, we received a Statement of Objections from the French Competition Authority (FCA) addressed to FedEx
Express France, formerly known as TATEX, regarding an investigation by the FCA into anticompetitive behavior that is alleged to have occurred primarily in the framework of trade association meetings that included the former general managers of TATEX
prior to our acquisition of that company in July 2012. In September 2014, FedEx Express France submitted its observations in response to the Statement of Objections to the FCA. Given the early stage of this matter, we cannot yet determine the amount
or range of potential loss; however, it is reasonably possible that it could be material.
FedEx and its subsidiaries are subject to other legal
proceedings that arise in the ordinary course of their business. In the opinion of management, the aggregate liability, if any, with respect to these other actions will not have a material adverse effect on our financial position, results of
operations or cash flows.
- 18 -
FEDEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
(9) Supplemental Cash Flow Information
Cash paid for interest expense and income taxes for the nine-month periods ended February 28 was as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
2015 |
|
|
2014 |
|
Cash payments for: |
|
|
|
|
|
|
|
|
Interest (net of capitalized interest) |
|
$ |
196 |
|
|
$ |
121 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes |
|
$ |
859 |
|
|
$ |
716 |
|
Income tax refunds received |
|
|
(7 |
) |
|
|
(50 |
) |
|
|
|
|
|
|
|
|
|
Cash tax payments, net |
|
$ |
852 |
|
|
$ |
666 |
|
|
|
|
|
|
|
|
|
|
(10) Condensed Consolidating Financial Statements
We are required to present condensed consolidating financial information in order for the subsidiary guarantors (other than FedEx Express)
of our public debt to continue to be exempt from reporting under the Securities Exchange Act of 1934, as amended.
The guarantor subsidiaries, which are
100% owned by FedEx, guarantee $7.0 billion of our debt. The guarantees are full and unconditional and joint and several. Our guarantor subsidiaries were not determined using geographic, service line or other similar criteria, and as a result, the
Guarantor Subsidiaries and Non-guarantor Subsidiaries columns each include portions of our domestic and international operations. Accordingly, this basis of presentation is not intended to present our financial condition,
results of operations or cash flows for any purpose other than to comply with the specific requirements for subsidiary guarantor reporting.
- 19 -
FEDEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Condensed consolidating financial statements for our guarantor subsidiaries and non-guarantor subsidiaries
are presented in the following tables (in millions):
CONDENSED CONSOLIDATING BALANCE SHEETS
(UNAUDITED)
February 28, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent |
|
|
Guarantor Subsidiaries |
|
|
Non- guarantor Subsidiaries |
|
|
Eliminations |
|
|
Consolidated |
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
2,142 |
|
|
$ |
492 |
|
|
$ |
886 |
|
|
$ |
(42 |
) |
|
$ |
3,478 |
|
Receivables, less allowances |
|
|
1 |
|
|
|
4,355 |
|
|
|
1,277 |
|
|
|
(49 |
) |
|
|
5,584 |
|
Spare parts, supplies, fuel, prepaid expenses and other, less allowances |
|
|
100 |
|
|
|
687 |
|
|
|
123 |
|
|
|
|
|
|
|
910 |
|
Deferred income taxes |
|
|
|
|
|
|
476 |
|
|
|
34 |
|
|
|
|
|
|
|
510 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
2,243 |
|
|
|
6,010 |
|
|
|
2,320 |
|
|
|
(91 |
) |
|
|
10,482 |
|
|
|
|
|
|
|
PROPERTY AND EQUIPMENT, AT COST |
|
|
28 |
|
|
|
40,264 |
|
|
|
2,360 |
|
|
|
|
|
|
|
42,652 |
|
Less accumulated depreciation and amortization |
|
|
23 |
|
|
|
20,973 |
|
|
|
1,231 |
|
|
|
|
|
|
|
22,227 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net property and equipment |
|
|
5 |
|
|
|
19,291 |
|
|
|
1,129 |
|
|
|
|
|
|
|
20,425 |
|
|
|
|
|
|
|
INTERCOMPANY RECEIVABLE |
|
|
|
|
|
|
1,406 |
|
|
|
1,578 |
|
|
|
(2,984 |
) |
|
|
|
|
GOODWILL |
|
|
|
|
|
|
1,552 |
|
|
|
2,253 |
|
|
|
|
|
|
|
3,805 |
|
INVESTMENT IN SUBSIDIARIES |
|
|
23,736 |
|
|
|
3,753 |
|
|
|
|
|
|
|
(27,489 |
) |
|
|
|
|
OTHER ASSETS |
|
|
2,055 |
|
|
|
856 |
|
|
|
473 |
|
|
|
(1,988 |
) |
|
|
1,396 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
28,039 |
|
|
$ |
32,868 |
|
|
$ |
7,753 |
|
|
$ |
(32,552 |
) |
|
$ |
36,108 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS INVESTMENT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued salaries and employee benefits |
|
$ |
35 |
|
|
$ |
1,053 |
|
|
$ |
143 |
|
|
$ |
|
|
|
$ |
1,231 |
|
Accounts payable |
|
|
60 |
|
|
|
1,327 |
|
|
|
754 |
|
|
|
(91 |
) |
|
|
2,050 |
|
Accrued expenses |
|
|
314 |
|
|
|
1,410 |
|
|
|
238 |
|
|
|
|
|
|
|
1,962 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
409 |
|
|
|
3,790 |
|
|
|
1,135 |
|
|
|
(91 |
) |
|
|
5,243 |
|
|
|
|
|
|
|
LONG-TERM DEBT, LESS CURRENT PORTION |
|
|
6,978 |
|
|
|
248 |
|
|
|
2 |
|
|
|
|
|
|
|
7,228 |
|
INTERCOMPANY PAYABLE |
|
|
2,984 |
|
|
|
|
|
|
|
|
|
|
|
(2,984 |
) |
|
|
|
|
OTHER LONG-TERM LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred income taxes |
|
|
|
|
|
|
4,294 |
|
|
|
191 |
|
|
|
(1,988 |
) |
|
|
2,497 |
|
Other liabilities |
|
|
1,656 |
|
|
|
3,229 |
|
|
|
243 |
|
|
|
|
|
|
|
5,128 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other long-term liabilities |
|
|
1,656 |
|
|
|
7,523 |
|
|
|
434 |
|
|
|
(1,988 |
) |
|
|
7,625 |
|
STOCKHOLDERS INVESTMENT |
|
|
16,012 |
|
|
|
21,307 |
|
|
|
6,182 |
|
|
|
(27,489 |
) |
|
|
16,012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
28,039 |
|
|
$ |
32,868 |
|
|
$ |
7,753 |
|
|
$ |
(32,552 |
) |
|
$ |
36,108 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- 20 -
FEDEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
CONDENSED CONSOLIDATING BALANCE SHEETS
May 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent |
|
|
Guarantor Subsidiaries |
|
|
Non- guarantor Subsidiaries |
|
|
Eliminations |
|
|
Consolidated |
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
1,756 |
|
|
$ |
441 |
|
|
$ |
861 |
|
|
$ |
(150 |
) |
|
$ |
2,908 |
|
Receivables, less allowances |
|
|
2 |
|
|
|
4,338 |
|
|
|
1,151 |
|
|
|
(31 |
) |
|
|
5,460 |
|
Spare parts, supplies, fuel, prepaid expenses and other, less allowances |
|
|
59 |
|
|
|
674 |
|
|
|
60 |
|
|
|
|
|
|
|
793 |
|
Deferred income taxes |
|
|
|
|
|
|
501 |
|
|
|
21 |
|
|
|
|
|
|
|
522 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
1,817 |
|
|
|
5,954 |
|
|
|
2,093 |
|
|
|
(181 |
) |
|
|
9,683 |
|
|
|
|
|
|
|
PROPERTY AND EQUIPMENT, AT COST |
|
|
28 |
|
|
|
38,303 |
|
|
|
2,360 |
|
|
|
|
|
|
|
40,691 |
|
Less accumulated depreciation and amortization |
|
|
22 |
|
|
|
19,899 |
|
|
|
1,220 |
|
|
|
|
|
|
|
21,141 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net property and equipment |
|
|
6 |
|
|
|
18,404 |
|
|
|
1,140 |
|
|
|
|
|
|
|
19,550 |
|
|
|
|
|
|
|
INTERCOMPANY RECEIVABLE |
|
|
|
|
|
|
1,058 |
|
|
|
1,265 |
|
|
|
(2,323 |
) |
|
|
|
|
GOODWILL |
|
|
|
|
|
|
1,552 |
|
|
|
1,238 |
|
|
|
|
|
|
|
2,790 |
|
INVESTMENT IN SUBSIDIARIES |
|
|
20,785 |
|
|
|
3,754 |
|
|
|
|
|
|
|
(24,539 |
) |
|
|
|
|
OTHER ASSETS |
|
|
2,088 |
|
|
|
747 |
|
|
|
250 |
|
|
|
(2,038 |
) |
|
|
1,047 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
24,696 |
|
|
$ |
31,469 |
|
|
$ |
5,986 |
|
|
$ |
(29,081 |
) |
|
$ |
33,070 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS INVESTMENT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion of long-term debt |
|
$ |
|
|
|
$ |
1 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
1 |
|
Accrued salaries and employee benefits |
|
|
55 |
|
|
|
1,042 |
|
|
|
180 |
|
|
|
|
|
|
|
1,277 |
|
Accounts payable |
|
|
2 |
|
|
|
1,530 |
|
|
|
620 |
|
|
|
(181 |
) |
|
|
1,971 |
|
Accrued expenses |
|
|
405 |
|
|
|
1,444 |
|
|
|
214 |
|
|
|
|
|
|
|
2,063 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
462 |
|
|
|
4,017 |
|
|
|
1,014 |
|
|
|
(181 |
) |
|
|
5,312 |
|
|
|
|
|
|
|
LONG-TERM DEBT, LESS CURRENT PORTION |
|
|
4,487 |
|
|
|
249 |
|
|
|
|
|
|
|
|
|
|
|
4,736 |
|
INTERCOMPANY PAYABLE |
|
|
2,323 |
|
|
|
|
|
|
|
|
|
|
|
(2,323 |
) |
|
|
|
|
OTHER LONG-TERM LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred income taxes |
|
|
|
|
|
|
4,059 |
|
|
|
93 |
|
|
|
(2,038 |
) |
|
|
2,114 |
|
Other liabilities |
|
|
2,147 |
|
|
|
3,230 |
|
|
|
254 |
|
|
|
|
|
|
|
5,631 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other long-term liabilities |
|
|
2,147 |
|
|
|
7,289 |
|
|
|
347 |
|
|
|
(2,038 |
) |
|
|
7,745 |
|
STOCKHOLDERS INVESTMENT |
|
|
15,277 |
|
|
|
19,914 |
|
|
|
4,625 |
|
|
|
(24,539 |
) |
|
|
15,277 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
24,696 |
|
|
$ |
31,469 |
|
|
$ |
5,986 |
|
|
$ |
(29,081 |
) |
|
$ |
33,070 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- 21 -
FEDEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
Three Months Ended
February 28, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent |
|
|
Guarantor Subsidiaries |
|
|
Non- guarantor Subsidiaries |
|
|
Eliminations |
|
|
Consolidated |
|
REVENUES |
|
$ |
|
|
|
$ |
9,793 |
|
|
$ |
2,024 |
|
|
$ |
(101 |
) |
|
$ |
11,716 |
|
|
|
|
|
|
|
OPERATING EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
|
25 |
|
|
|
3,784 |
|
|
|
602 |
|
|
|
|
|
|
|
4,411 |
|
Purchased transportation |
|
|
|
|
|
|
1,527 |
|
|
|
695 |
|
|
|
(57 |
) |
|
|
2,165 |
|
Rentals and landing fees |
|
|
1 |
|
|
|
597 |
|
|
|
89 |
|
|
|
(1 |
) |
|
|
686 |
|
Depreciation and amortization |
|
|
|
|
|
|
593 |
|
|
|
59 |
|
|
|
|
|
|
|
652 |
|
Fuel |
|
|
|
|
|
|
790 |
|
|
|
20 |
|
|
|
|
|
|
|
810 |
|
Maintenance and repairs |
|
|
|
|
|
|
468 |
|
|
|
37 |
|
|
|
|
|
|
|
505 |
|
Intercompany charges, net |
|
|
(48 |
) |
|
|
(34 |
) |
|
|
82 |
|
|
|
|
|
|
|
|
|
Other |
|
|
22 |
|
|
|
1,231 |
|
|
|
315 |
|
|
|
(43 |
) |
|
|
1,525 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,956 |
|
|
|
1,899 |
|
|
|
(101 |
) |
|
|
10,754 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME |
|
|
|
|
|
|
837 |
|
|
|
125 |
|
|
|
|
|
|
|
962 |
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings of subsidiaries |
|
|
580 |
|
|
|
90 |
|
|
|
|
|
|
|
(670 |
) |
|
|
|
|
Interest, net |
|
|
(66 |
) |
|
|
6 |
|
|
|
2 |
|
|
|
|
|
|
|
(58 |
) |
Intercompany charges, net |
|
|
68 |
|
|
|
(74 |
) |
|
|
6 |
|
|
|
|
|
|
|
|
|
Other, net |
|
|
(2 |
) |
|
|
(4 |
) |
|
|
11 |
|
|
|
|
|
|
|
5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE INCOME TAXES |
|
|
580 |
|
|
|
855 |
|
|
|
144 |
|
|
|
(670 |
) |
|
|
909 |
|
|
|
|
|
|
|
Provision for income taxes |
|
|
|
|
|
|
248 |
|
|
|
81 |
|
|
|
|
|
|
|
329 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME |
|
$ |
580 |
|
|
$ |
607 |
|
|
$ |
63 |
|
|
$ |
(670 |
) |
|
$ |
580 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE INCOME |
|
$ |
607 |
|
|
$ |
596 |
|
|
$ |
(75 |
) |
|
$ |
(670 |
) |
|
$ |
458 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- 22 -
CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
Three Months Ended
February 28, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent |
|
|
Guarantor Subsidiaries |
|
|
Non- guarantor Subsidiaries |
|
|
Eliminations |
|
|
Consolidated |
|
REVENUES |
|
$ |
|
|
|
$ |
9,509 |
|
|
$ |
1,876 |
|
|
$ |
(84 |
) |
|
$ |
11,301 |
|
|
|
|
|
|
|
OPERATING EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
|
24 |
|
|
|
3,615 |
|
|
|
528 |
|
|
|
|
|
|
|
4,167 |
|
Purchased transportation |
|
|
|
|
|
|
1,426 |
|
|
|
680 |
|
|
|
(43 |
) |
|
|
2,063 |
|
Rentals and landing fees |
|
|
1 |
|
|
|
576 |
|
|
|
86 |
|
|
|
(1 |
) |
|
|
662 |
|
Depreciation and amortization |
|
|
|
|
|
|
601 |
|
|
|
51 |
|
|
|
|
|
|
|
652 |
|
Fuel |
|
|
|
|
|
|
1,138 |
|
|
|
25 |
|
|
|
|
|
|
|
1,163 |
|
Maintenance and repairs |
|
|
1 |
|
|
|
406 |
|
|
|
31 |
|
|
|
|
|
|
|
438 |
|
Intercompany charges, net |
|
|
(52 |
) |
|
|
(17 |
) |
|
|
69 |
|
|
|
|
|
|
|
|
|
Other |
|
|
26 |
|
|
|
1,234 |
|
|
|
295 |
|
|
|
(40 |
) |
|
|
1,515 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,979 |
|
|
|
1,765 |
|
|
|
(84 |
) |
|
|
10,660 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME |
|
|
|
|
|
|
530 |
|
|
|
111 |
|
|
|
|
|
|
|
641 |
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings of subsidiaries |
|
|
378 |
|
|
|
80 |
|
|
|
|
|
|
|
(458 |
) |
|
|
|
|
Interest, net |
|
|
(45 |
) |
|
|
4 |
|
|
|
3 |
|
|
|
|
|
|
|
(38 |
) |
Intercompany charges, net |
|
|
46 |
|
|
|
(52 |
) |
|
|
6 |
|
|
|
|
|
|
|
|
|
Other, net |
|
|
(1 |
) |
|
|
(9 |
) |
|
|
1 |
|
|
|
|
|
|
|
(9 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE INCOME TAXES |
|
|
378 |
|
|
|
553 |
|
|
|
121 |
|
|
|
(458 |
) |
|
|
594 |
|
|
|
|
|
|
|
Provision for income taxes |
|
|
|
|
|
|
165 |
|
|
|
51 |
|
|
|
|
|
|
|
216 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME |
|
$ |
378 |
|
|
$ |
388 |
|
|
$ |
70 |
|
|
$ |
(458 |
) |
|
$ |
378 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE INCOME |
|
$ |
419 |
|
|
$ |
388 |
|
|
$ |
44 |
|
|
$ |
(458 |
) |
|
$ |
393 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- 23 -
FEDEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
Nine Months Ended
February 28, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent |
|
|
Guarantor Subsidiaries |
|
|
Non-guarantor Subsidiaries |
|
|
Eliminations |
|
|
Consolidated |
|
|
|
|
|
|
|
REVENUES |
|
$ |
|
|
|
$ |
29,488 |
|
|
$ |
6,136 |
|
|
$ |
(285 |
) |
|
$ |
35,339 |
|
|
|
|
|
|
|
OPERATING EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
|
78 |
|
|
|
11,119 |
|
|
|
1,707 |
|
|
|
|
|
|
|
12,904 |
|
Purchased transportation |
|
|
|
|
|
|
4,381 |
|
|
|
2,170 |
|
|
|
(147 |
) |
|
|
6,404 |
|
Rentals and landing fees |
|
|
4 |
|
|
|
1,746 |
|
|
|
263 |
|
|
|
(4 |
) |
|
|
2,009 |
|
Depreciation and amortization |
|
|
1 |
|
|
|
1,783 |
|
|
|
170 |
|
|
|
|
|
|
|
1,954 |
|
Fuel |
|
|
|
|
|
|
2,913 |
|
|
|
69 |
|
|
|
|
|
|
|
2,982 |
|
Maintenance and repairs |
|
|
|
|
|
|
1,497 |
|
|
|
107 |
|
|
|
|
|
|
|
1,604 |
|
Intercompany charges, net |
|
|
(191 |
) |
|
|
(82 |
) |
|
|
273 |
|
|
|
|
|
|
|
|
|
Other |
|
|
108 |
|
|
|
3,635 |
|
|
|
911 |
|
|
|
(134 |
) |
|
|
4,520 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,992 |
|
|
|
5,670 |
|
|
|
(285 |
) |
|
|
32,377 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME |
|
|
|
|
|
|
2,496 |
|
|
|
466 |
|
|
|
|
|
|
|
2,962 |
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings of subsidiaries |
|
|
1,802 |
|
|
|
291 |
|
|
|
|
|
|
|
(2,093 |
) |
|
|
|
|
Interest, net |
|
|
(172 |
) |
|
|
15 |
|
|
|
4 |
|
|
|
|
|
|
|
(153 |
) |
Intercompany charges, net |
|
|
176 |
|
|
|
(192 |
) |
|
|
16 |
|
|
|
|
|
|
|
|
|
Other, net |
|
|
(4 |
) |
|
|
(5 |
) |
|
|
17 |
|
|
|
|
|
|
|
8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE INCOME TAXES |
|
|
1,802 |
|
|
|
2,605 |
|
|
|
503 |
|
|
|
(2,093 |
) |
|
|
2,817 |
|
|
|
|
|
|
|
Provision for income taxes |
|
|
|
|
|
|
836 |
|
|
|
179 |
|
|
|
|
|
|
|
1,015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME |
|
$ |
1,802 |
|
|
$ |
1,769 |
|
|
$ |
324 |
|
|
$ |
(2,093 |
) |
|
$ |
1,802 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE INCOME |
|
$ |
1,883 |
|
|
$ |
1,733 |
|
|
$ |
64 |
|
|
$ |
(2,093 |
) |
|
$ |
1,587 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- 24 -
CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
Nine Months Ended
February 28, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent |
|
|
Guarantor Subsidiaries |
|
|
Non- guarantor Subsidiaries |
|
|
Eliminations |
|
|
Consolidated |
|
REVENUES |
|
$ |
|
|
|
$ |
28,184 |
|
|
$ |
5,796 |
|
|
$ |
(252 |
) |
|
$ |
33,728 |
|
|
|
|
|
|
|
OPERATING EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
|
79 |
|
|
|
10,697 |
|
|
|
1,616 |
|
|
|
|
|
|
|
12,392 |
|
Purchased transportation |
|
|
|
|
|
|
4,008 |
|
|
|
2,092 |
|
|
|
(118 |
) |
|
|
5,982 |
|
Rentals and landing fees |
|
|
4 |
|
|
|
1,697 |
|
|
|
253 |
|
|
|
(4 |
) |
|
|
1,950 |
|
Depreciation and amortization |
|
|
1 |
|
|
|
1,785 |
|
|
|
152 |
|
|
|
|
|
|
|
1,938 |
|
Fuel |
|
|
|
|
|
|
3,330 |
|
|
|
73 |
|
|
|
|
|
|
|
3,403 |
|
Maintenance and repairs |
|
|
1 |
|
|
|
1,302 |
|
|
|
94 |
|
|
|
|
|
|
|
1,397 |
|
Intercompany charges, net |
|
|
(163 |
) |
|
|
(47 |
) |
|
|
210 |
|
|
|
|
|
|
|
|
|
Other |
|
|
78 |
|
|
|
3,559 |
|
|
|
896 |
|
|
|
(130 |
) |
|
|
4,403 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,331 |
|
|
|
5,386 |
|
|
|
(252 |
) |
|
|
31,465 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME |
|
|
|
|
|
|
1,853 |
|
|
|
410 |
|
|
|
|
|
|
|
2,263 |
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings of subsidiaries |
|
|
1,367 |
|
|
|
323 |
|
|
|
|
|
|
|
(1,690 |
) |
|
|
|
|
Interest, net |
|
|
(114 |
) |
|
|
14 |
|
|
|
5 |
|
|
|
|
|
|
|
(95 |
) |
Intercompany charges, net |
|
|
117 |
|
|
|
(134 |
) |
|
|
17 |
|
|
|
|
|
|
|
|
|
Other, net |
|
|
(3 |
) |
|
|
(14 |
) |
|
|
1 |
|
|
|
|
|
|
|
(16 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE INCOME TAXES |
|
|
1,367 |
|
|
|
2,042 |
|
|
|
433 |
|
|
|
(1,690 |
) |
|
|
2,152 |
|
|
|
|
|
|
|
Provision for income taxes |
|
|
|
|
|
|
648 |
|
|
|
137 |
|
|
|
|
|
|
|
785 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME |
|
$ |
1,367 |
|
|
$ |
1,394 |
|
|
$ |
296 |
|
|
$ |
(1,690 |
) |
|
$ |
1,367 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE INCOME |
|
$ |
1,487 |
|
|
$ |
1,401 |
|
|
$ |
235 |
|
|
$ |
(1,690 |
) |
|
$ |
1,433 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- 25 -
FEDEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
February 28, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent |
|
|
Guarantor Subsidiaries |
|
|
Non- guarantor Subsidiaries |
|
|
Eliminations |
|
|
Consolidated |
|
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES |
|
$ |
(460 |
) |
|
$ |
3,443 |
|
|
$ |
382 |
|
|
$ |
108 |
|
|
$ |
3,473 |
|
|
|
|
|
|
|
INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
(1 |
) |
|
|
(2,849 |
) |
|
|
(119 |
) |
|
|
|
|
|
|
(2,969 |
) |
Business acquisitions, net of cash acquired |
|
|
(1,429 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,429 |
) |
Proceeds from asset dispositions and other |
|
|
|
|
|
|
35 |
|
|
|
(19 |
) |
|
|
|
|
|
|
16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH USED IN INVESTING ACTIVITIES |
|
|
(1,430 |
) |
|
|
(2,814 |
) |
|
|
(138 |
) |
|
|
|
|
|
|
(4,382 |
) |
|
|
|
|
|
|
FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net transfers from (to) Parent |
|
|
692 |
|
|
|
(681 |
) |
|
|
(11 |
) |
|
|
|
|
|
|
|
|
Payment on loan between subsidiaries |
|
|
|
|
|
|
202 |
|
|
|
(202 |
) |
|
|
|
|
|
|
|
|
Intercompany dividends |
|
|
|
|
|
|
38 |
|
|
|
(38 |
) |
|
|
|
|
|
|
|
|
Principal payments on debt |
|
|
|
|
|
|
(1 |
) |
|
|
|
|
|
|
|
|
|
|
(1 |
) |
Proceeds from debt issuance |
|
|
2,491 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,491 |
|
Proceeds from stock issuances |
|
|
272 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
272 |
|
Excess tax benefit on the exercise of stock options |
|
|
31 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31 |
|
Dividends paid |
|
|
(171 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(171 |
) |
Purchase of treasury stock |
|
|
(1,016 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,016 |
) |
Other, net |
|
|
(23 |
) |
|
|
(105 |
) |
|
|
105 |
|
|
|
|
|
|
|
(23 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES |
|
|
2,276 |
|
|
|
(547 |
) |
|
|
(146 |
) |
|
|
|
|
|
|
1,583 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash |
|
|
|
|
|
|
(31 |
) |
|
|
(73 |
) |
|
|
|
|
|
|
(104 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents |
|
|
386 |
|
|
|
51 |
|
|
|
25 |
|
|
|
108 |
|
|
|
570 |
|
Cash and cash equivalents at beginning of period |
|
|
1,756 |
|
|
|
441 |
|
|
|
861 |
|
|
|
(150 |
) |
|
|
2,908 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period |
|
$ |
2,142 |
|
|
$ |
492 |
|
|
$ |
886 |
|
|
$ |
(42 |
) |
|
$ |
3,478 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- 26 -
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
February 28, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent |
|
|
Guarantor Subsidiaries |
|
|
Non- guarantor Subsidiaries |
|
|
Eliminations |
|
|
Consolidated |
|
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES |
|
$ |
(104 |
) |
|
$ |
2,386 |
|
|
$ |
341 |
|
|
$ |
(45 |
) |
|
$ |
2,578 |
|
|
|
|
|
|
|
INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
|
|
|
|
(2,342 |
) |
|
|
(212 |
) |
|
|
|
|
|
|
(2,554 |
) |
Proceeds from asset dispositions and other |
|
|
|
|
|
|
26 |
|
|
|
(3 |
) |
|
|
|
|
|
|
23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH USED IN INVESTING ACTIVITIES |
|
|
|
|
|
|
(2,316 |
) |
|
|
(215 |
) |
|
|
|
|
|
|
(2,531 |
) |
FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net transfers from (to) Parent |
|
|
136 |
|
|
|
(123 |
) |
|
|
(13 |
) |
|
|
|
|
|
|
|
|
Payment on loan between subsidiaries |
|
|
|
|
|
|
5 |
|
|
|
(5 |
) |
|
|
|
|
|
|
|
|
Intercompany dividends |
|
|
|
|
|
|
36 |
|
|
|
(36 |
) |
|
|
|
|
|
|
|
|
Principal payments on debt |
|
|
(250 |
) |
|
|
(4 |
) |
|
|
|
|
|
|
|
|
|
|
(254 |
) |
Proceeds from debt issuance |
|
|
1,997 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,997 |
|
Proceeds from stock issuances |
|
|
462 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
462 |
|
Excess tax benefit on the exercise of stock options |
|
|
27 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27 |
|
Dividends paid |
|
|
(142 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(142 |
) |
Purchase of treasury stock |
|
|
(3,984 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,984 |
) |
Other, net |
|
|
(18 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(18 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH USED IN FINANCING ACTIVITIES |
|
|
(1,772 |
) |
|
|
(86 |
) |
|
|
(54 |
) |
|
|
|
|
|
|
(1,912 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash |
|
|
|
|
|
|
(9 |
) |
|
|
(1 |
) |
|
|
|
|
|
|
(10 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (decrease) increase in cash and cash equivalents |
|
|
(1,876 |
) |
|
|
(25 |
) |
|
|
71 |
|
|
|
(45 |
) |
|
|
(1,875 |
) |
Cash and cash equivalents at beginning of period |
|
|
3,892 |
|
|
|
405 |
|
|
|
717 |
|
|
|
(97 |
) |
|
|
4,917 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period |
|
$ |
2,016 |
|
|
$ |
380 |
|
|
$ |
788 |
|
|
$ |
(142 |
) |
|
$ |
3,042 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- 27 -
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
The Board of Directors
and Stockholders
FedEx Corporation
We have reviewed the
condensed consolidated balance sheet of FedEx Corporation as of February 28, 2015, and the related condensed consolidated statements of income and comprehensive income for the three-month and nine-month periods ended February 28, 2015 and
2014 and the condensed consolidated statements of cash flows for the nine-month periods ended February 28, 2015 and 2014. These financial statements are the responsibility of the Companys management.
We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial
information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the
Public Company Accounting Oversight Board, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should be made to the condensed consolidated financial statements referred to above
for them to be in conformity with U.S. generally accepted accounting principles.
We have previously audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), the consolidated balance sheet of FedEx Corporation as of May 31, 2014, and the related consolidated statements of income, comprehensive income, changes in stockholders
investment, and cash flows for the year then ended not presented herein, and in our report dated July 14, 2014 (except for Note 14, as to which the date is January 6, 2015), we expressed an unqualified opinion on those consolidated
financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of May 31, 2014, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it
has been derived.
/s/ Ernst & Young LLP
Memphis, Tennessee
March 19, 2015
- 28 -
Item 2. Managements Discussion and Analysis of Results of Operations
and Financial Condition
GENERAL
The
following Managements Discussion and Analysis of Results of Operations and Financial Condition (MD&A) describes the principal factors affecting the results of operations, liquidity, capital resources, contractual cash
obligations and critical accounting estimates of FedEx Corporation (FedEx). This discussion should be read in conjunction with the accompanying quarterly unaudited condensed consolidated financial statements and our Annual Report on Form
10-K for the year ended May 31, 2014 (Annual Report). Our Annual Report includes additional information about our significant accounting policies, practices and the transactions that underlie our financial results, as well as a
detailed discussion of the most significant risks and uncertainties associated with our financial condition and operating results.
We provide a broad
portfolio of transportation, e-commerce and business services through companies competing collectively, operating independently and managed collaboratively, under the respected FedEx brand. Our primary operating companies are Federal Express
Corporation (FedEx Express), the worlds largest express transportation company; FedEx Ground Package System, Inc. (FedEx Ground), a leading North American provider of small-package ground delivery services; and FedEx
Freight, Inc. (FedEx Freight), a leading U.S. provider of less-than-truckload (LTL) freight services. These companies represent our major service lines and, along with FedEx Corporate Services, Inc. (FedEx
Services), form the core of our reportable segments.
Our FedEx Services segment provides sales, marketing, information technology, communications
and certain back-office support to our transportation segments. In addition, the FedEx Services segment provides customers with retail access to FedEx Express and FedEx Ground shipping services through FedEx Office and Print Services, Inc.
(FedEx Office) and provides customer service, technical support and billing and collection services through FedEx TechConnect, Inc. (FedEx TechConnect). See Reportable Segments for further discussion. Additional
information on our businesses can also be found in our Annual Report.
The key indicators necessary to understand our operating results include:
|
|
the overall customer demand for our various services based on macro-economic factors and the global economy; |
|
|
the volumes of transportation services provided through our networks, primarily measured by our average daily volume and shipment weight; |
|
|
the mix of services purchased by our customers; |
|
|
the prices we obtain for our services, primarily measured by yield (revenue per package or pound or revenue per hundredweight and shipment for LTL freight shipments); |
|
|
our ability to manage our cost structure (capital expenditures and operating expenses) to match shifting volume levels; and |
|
|
the timing and amount of fluctuations in fuel prices and our ability to offset these fluctuations through our fuel surcharges. |
The majority of our operating expenses are directly impacted by revenue and volume levels. Accordingly, we expect these operating expenses to fluctuate on a
year-over-year basis consistent with the change in revenues and volumes. Therefore, the discussion of operating expense captions focuses on the key drivers and trends impacting expenses other than changes in revenues and volume. The line item
Other operating expenses predominantly includes costs associated with outside service contracts (such as security, facility services and cargo handling), insurance, professional fees, uniforms and advertising.
- 29 -
Except as otherwise specified, references to years indicate our fiscal year ending May 31, 2015 or ended
May 31 of the year referenced and comparisons are to the corresponding period of the prior year. References to our transportation segments include, collectively, our FedEx Express, FedEx Ground and FedEx Freight segments.
RESULTS OF OPERATIONS
CONSOLIDATED RESULTS
The following table compares summary operating results (dollars in millions, except per share amounts) for the periods ended February 28:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Percent |
|
|
Nine Months Ended |
|
|
Percent |
|
|
|
2015 |
|
|
2014 |
|
|
Change |
|
|
2015 |
|
|
2014 |
|
|
Change |
|
|
|
|
|
|
|
|
Revenues |
|
$ |
11,716 |
|
|
$ |
11,301 |
|
|
|
4 |
|
|
$ |
35,339 |
|
|
$ |
33,728 |
|
|
|
5 |
|
|
|
|
|
|
|
|
Operating income |
|
|
962 |
|
|
|
641 |
|
|
|
50 |
|
|
|
2,962 |
|
|
|
2,263 |
|
|
|
31 |
|
|
|
|
|
|
|
|
Operating margin |
|
|
8.2 |
% |
|
|
5.7 |
% |
|
|
250 |
bp |
|
|
8.4 |
% |
|
|
6.7 |
% |
|
|
170 |
bp |
|
|
|
|
|
|
|
Net income |
|
$ |
580 |
|
|
$ |
378 |
|
|
|
53 |
|
|
$ |
1,802 |
|
|
$ |
1,367 |
|
|
|
32 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share |
|
$ |
2.01 |
|
|
$ |
1.23 |
|
|
|
63 |
|
|
$ |
6.25 |
|
|
$ |
4.34 |
|
|
|
44 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table shows changes in revenues and operating income by reportable segment for the periods ended
February 28, 2015 compared to February 28, 2014 (dollars in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in Revenues |
|
|
Change in Operating Income |
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
FedEx Express segment |
|
$ |
(18 |
) |
|
$ |
419 |
|
|
$ |
216 |
|
|
$ |
439 |
|
FedEx Ground segment |
|
|
362 |
|
|
|
806 |
|
|
|
68 |
|
|
|
156 |
|
FedEx Freight segment |
|
|
81 |
|
|
|
417 |
|
|
|
33 |
|
|
|
131 |
|
FedEx Services segment |
|
|
2 |
|
|
|
4 |
|
|
|
|
|
|
|
|
|
Corporate, eliminations and other |
|
|
(12 |
) |
|
|
(35 |
) |
|
|
4 |
|
|
|
(27 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
415 |
|
|
$ |
1,611 |
|
|
$ |
321 |
|
|
$ |
699 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Overview
Our
earnings for the third quarter and nine months of 2015 increased significantly due to the strong performance of each of our transportation segments. Higher volumes across all of our transportation segments and improved yields at FedEx Ground and
FedEx Freight were key drivers of our results. In addition, earnings growth was driven by the positive net impact of fuel, benefits from our profit improvement program commenced in 2013, a lower year-over-year impact from severe winter weather and
reduced pension expense. Our results for the third quarter of 2015 include higher incentive compensation accruals and in the nine months of 2015, higher maintenance expense primarily due to the timing of aircraft maintenance events at FedEx Express.
Treasury stock repurchases had a $0.11 year-over-year positive impact on the third quarter earnings per diluted share and a $0.42 impact on the nine
months of 2015 earnings per diluted share.
- 30 -
The following graphs for FedEx Express, FedEx Ground and FedEx Freight show selected volume trends (in thousands)
over the five most recent quarters:
(1) |
International domestic average daily package volume represents our international intra-country express operations. |
- 31 -
The following graphs for FedEx Express, FedEx Ground and FedEx Freight show selected yield trends over the five
most recent quarters:
Revenue
Revenues increased 4% in the third quarter due to improved performance at our FedEx Ground and FedEx Freight segments and 5% in the nine months of 2015 due to
improved performance at all our transportation segments. At FedEx Ground, revenues increased 12% in the third quarter and 9% in the nine months of 2015 due to higher volume from continued growth in both our commercial business and FedEx Home
Delivery service, as well as increased yields. At FedEx Freight, revenues increased 6% in the third quarter and 10% in the nine months of 2015 primarily due to higher average daily shipments and revenue per shipment. Revenues at FedEx Express
declined slightly in the third quarter due to the negative impact of lower fuel surcharges, which were partially offset by higher U.S. and international export volumes. FedEx Express revenues increased 2% during the nine months of 2015 due to U.S.
and international export volume growth, which were partially offset by lower fuel surcharges.
- 32 -
Operating Expenses
The following tables compare operating expenses expressed as dollar amounts (in millions) and as a percent of revenue for the periods ended February 28:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
$ |
4,411 |
|
|
$ |
4,167 |
|
|
$ |
12,904 |
|
|
$ |
12,392 |
|
Purchased transportation |
|
|
2,165 |
|
|
|
2,063 |
|
|
|
6,404 |
|
|
|
5,982 |
|
Rentals and landing fees |
|
|
686 |
|
|
|
662 |
|
|
|
2,009 |
|
|
|
1,950 |
|
Depreciation and amortization |
|
|
652 |
|
|
|
652 |
|
|
|
1,954 |
|
|
|
1,938 |
|
Fuel |
|
|
810 |
|
|
|
1,163 |
|
|
|
2,982 |
|
|
|
3,403 |
|
Maintenance and repairs |
|
|
505 |
|
|
|
438 |
|
|
|
1,604 |
|
|
|
1,397 |
|
Other |
|
|
1,525 |
|
|
|
1,515 |
|
|
|
4,520 |
|
|
|
4,403 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
$ |
10,754 |
|
|
$ |
10,660 |
|
|
$ |
32,377 |
|
|
$ |
31,465 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent of Revenue |
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
|
37.6 |
% |
|
|
36.9 |
% |
|
|
36.5 |
% |
|
|
36.7 |
% |
Purchased transportation |
|
|
18.5 |
|
|
|
18.2 |
|
|
|
18.1 |
|
|
|
17.7 |
|
Rentals and landing fees |
|
|
5.9 |
|
|
|
5.8 |
|
|
|
5.7 |
|
|
|
5.8 |
|
Depreciation and amortization |
|
|
5.6 |
|
|
|
5.8 |
|
|
|
5.5 |
|
|
|
5.8 |
|
Fuel |
|
|
6.9 |
|
|
|
10.3 |
|
|
|
8.4 |
|
|
|
10.1 |
|
Maintenance and repairs |
|
|
4.3 |
|
|
|
3.9 |
|
|
|
4.6 |
|
|
|
4.1 |
|
Other |
|
|
13.0 |
|
|
|
13.4 |
|
|
|
12.8 |
|
|
|
13.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
|
91.8 |
|
|
|
94.3 |
|
|
|
91.6 |
|
|
|
93.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating margin |
|
|
8.2 |
% |
|
|
5.7 |
% |
|
|
8.4 |
% |
|
|
6.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses grew during the third quarter and nine months of 2015 primarily due to volume-related growth in salaries
and employee benefits and purchased transportation expenses, higher incentive compensation accruals and in the nine months of 2015, higher maintenance and repairs expense. However, operating margin expanded due to revenue growth, a significant
benefit from the net impact of fuel (as further described below), benefits from our profit improvement program, which we commenced in 2013, a lower year-over-year impact from severe winter weather and reduced pension expense.
Operating expenses included an increase in salaries and employee benefits expense of 6% in the third quarter and 4% in the nine months of 2015 due to
additional staffing to support volume growth and higher incentive compensation accruals, partially offset by the positive impact of our voluntary buyout program and lower pension expense. Purchased transportation costs increased 5% in the third
quarter due to volume growth and higher service provider rates at FedEx Ground and 7% in the nine months of 2015 due to volume growth and higher service provider rates at FedEx Ground and FedEx Freight. The timing of aircraft maintenance events at
FedEx Express primarily drove an increase in maintenance and repairs expense of 15% in the third quarter and nine months of 2015.
- 33 -
Fuel
The following graph for our transportation segments shows our average cost of jet and vehicle fuel per gallon for the five most recent quarters:
Fuel expense decreased 30% in the third quarter and 12% in the nine months of 2015 due to lower aircraft fuel prices.
However, fuel prices represent only one component of the two factors we primarily consider meaningful in understanding the impact of fuel on our business. Consideration must also be given to the fuel surcharge revenue we collect. Accordingly, we
believe discussion of the net impact of fuel on our results, which is a comparison of the year-over-year change in these two factors, is important to understand the impact of fuel on our business. In order to provide information about the impact of
fuel surcharges on the trend in revenue and yield growth, we have included the comparative weighted-average fuel surcharge percentages in effect for the third quarter and nine months of 2015 and 2014 in the accompanying discussions of each of our
transportation segments.
The index used to determine the fuel surcharge percentage for our FedEx Freight business adjusts weekly, while our fuel
surcharges for FedEx Express and FedEx Ground businesses incorporate a timing lag of approximately six to eight weeks before they are adjusted for changes in fuel prices. For example, the fuel surcharge index in effect at FedEx Express in February
2015 was set based on December 2014 fuel prices. In addition, the structure of the table that is used to determine our fuel surcharge at FedEx Express and FedEx Ground does not adjust immediately for changes in fuel price, but allows for the fuel
surcharge revenue charged to our customers to remain unchanged as long as fuel prices remain within certain ranges.
Beyond these factors, the manner in
which we purchase fuel also influences the net impact of fuel on our results. For example, our contracts for jet fuel purchases at FedEx Express are tied to various indices, including the U.S. Gulf Coast index. While many of these indices are
aligned, each index may fluctuate at a different pace, driving variability in the prices paid for jet fuel. Furthermore, under these contractual arrangements, approximately 75% of our jet fuel is purchased based on the index price for the preceding
week, with the remainder of our purchases tied to the index price for the preceding month, rather than based on daily spot rates. These contractual provisions mitigate the impact of rapidly changing daily spot rates on our jet fuel purchases.
Because of the factors described above, our operating results may be affected should the market price of fuel suddenly change by a significant amount or
change by amounts that do not result in an adjustment in our fuel surcharges, which can significantly affect our earnings either positively or negatively in the short-term.
We routinely review our fuel surcharges and our fuel surcharge methodology. On February 2, 2015, we updated the tables used to determine our fuel
surcharges at FedEx Express, FedEx Ground and FedEx Freight.
- 34 -
The net impact of fuel had a significant benefit in the third quarter and nine months of 2015 to operating
income. This was driven by decreased fuel prices during the third quarter and nine months of 2015 versus prior year, which was partially offset by the year-over-year decrease in fuel surcharge revenue during these periods.
The net impact of fuel on our operating results does not consider the effects that fuel surcharge levels may have on our business, including changes in demand
and shifts in the mix of services purchased by our customers. While fluctuations in fuel surcharge percentages can be significant from period to period, fuel surcharges represent one of the many individual components of our pricing structure that
impact our overall revenue and yield. Additional components include the mix of services sold, the base price and extra service charges we obtain for these services and the level of pricing discounts offered.
Income Taxes
Our effective tax rate was 36.2%
for the third quarter of 2015 and 36.0% for the nine months of 2015, compared with 36.4% in the third quarter and 36.5% in the nine months of 2014. The tax rates in 2015 have decreased primarily due to discrete tax benefits related to changes
in valuation allowances required in certain entities and jurisdictions. For 2015, we expect an effective tax rate between 36.0% and 36.5%. The actual rate, however, will depend on a number of factors, including the amount and source of
operating income.
We are subject to taxation in the United States and various U.S. state, local and foreign jurisdictions. Substantially all U.S. federal
income tax matters through fiscal year 2011 are concluded, and we are currently under examination by the Internal Revenue Service for the 2012 and 2013 tax years. It is reasonably possible that certain income tax return proceedings will be
completed during the next twelve months and could result in a change in our balance of unrecognized tax benefits. The expected impact of any changes would not be material to our consolidated financial statements. As of February 28, 2015,
there were no material changes to our liabilities for unrecognized tax benefits from May 31, 2014.
Business Acquisitions
During the third quarter of 2015, we acquired two businesses, expanding our portfolio in e-commerce and supply chain solutions. On January 30, 2015, we
acquired GENCO Distribution System, Inc. (GENCO), one of the largest third-party logistics providers in North America, for $1.4 billion, which was funded using a portion of the proceeds from our January 2015 debt issuance. The financial
results of this business are included in the FedEx Ground segment from the date of acquisition.
In addition, on December 16, 2014, FedEx acquired
Bongo International, LLC (Bongo), a leader in cross-border enablement technologies and solutions, for $42 million in cash from operations. The financial results of this acquired business are included in the FedEx Express segment from the
date of acquisition.
These acquisitions will allow us to enter new markets, as well as strengthen our current service offerings to existing customers.
The financial results of these acquired businesses were immaterial to our results for the third quarter of 2015. See Note 1 of the accompanying unaudited financial statements for further discussion of these acquisitions.
Outlook
We expect revenue and earnings growth to
continue into the fourth quarter of 2015, driven by ongoing improvements in the results of all of our transportation segments. We expect continued moderate global economic growth to drive volume and yield improvements. Our results in 2015 will
continue to benefit from execution of the profit improvement programs announced in 2013 and which are further described in our Annual Report. Our results for the fourth quarter of 2015 will also benefit from lower pension expense due to strong asset
returns in 2014; however, results for 2015 will be constrained by higher accruals for our incentive compensation programs to the extent our financial performance exceeds our business plan objectives. Our expectations for earnings growth in the
fourth quarter of 2015 are dependent on key external factors, including fuel prices and the pace of improvement in the global economy.
- 35 -
Other Outlook Matters. For details on key 2015 capital projects, refer to the Liquidity
Outlook section of this MD&A.
As described in Note 8 of the accompanying unaudited condensed consolidated financial statements and the
Independent Contractor Model section of our FedEx Ground segment MD&A, we are involved in a number of lawsuits and other proceedings that challenge the status of FedEx Grounds owner-operators as independent contractors. FedEx
Ground anticipates continuing changes to its relationships with its owner-operators. The nature, timing and amount of any changes are dependent on the outcome of numerous future events. We cannot reasonably estimate the potential impact of any such
changes or a meaningful range of potential outcomes, although they could be material. However, we do not believe that any such changes will impair our ability to operate and profitably grow our FedEx Ground business.
On March 16, 2015, we announced that our FedEx SmartPost business will be merged into FedEx Ground effective September 1, 2015. The FedEx SmartPost
service remains an important component of our service offerings and this internal structural change will enhance our ability to leverage the strengths of both the FedEx Ground and FedEx SmartPost networks to maximize operational efficiencies and
will provide greater flexibility to meeting the needs of our e-commerce customers. There will be no personnel reductions associated with this merger and the estimated cost of the merger activities is immaterial to our results.
See Forward-Looking Statements for a discussion of these and other potential risks and uncertainties that could materially affect our future
performance.
RECENT ACCOUNTING GUIDANCE
New
accounting rules and disclosure requirements can significantly impact our reported results and the comparability of our financial statements. These matters are described in our Annual Report.
We believe that no other new accounting guidance was adopted or issued during the nine months of 2015 that is relevant to the readers of our financial
statements. However, there are numerous new proposals under development which, if and when enacted, may have a significant impact on our financial reporting, as described in our Annual Report.
REPORTABLE SEGMENTS
FedEx Express, FedEx Ground
and FedEx Freight represent our major service lines and, along with FedEx Services, form the core of our reportable segments. Our reportable segments include the following businesses:
|
|
|
FedEx Express Segment |
|
FedEx Express (express transportation) |
|
|
FedEx Trade Networks (air and ocean freight forwarding and customs brokerage) |
|
|
FedEx SupplyChain Systems (logistics services) |
|
|
Bongo (cross-border enablement technology and solutions) |
|
|
FedEx Ground Segment |
|
FedEx Ground (small-package ground delivery) |
|
|
FedEx SmartPost (small-parcel consolidator) |
|
|
GENCO (third-party logistics) |
|
|
FedEx Freight Segment |
|
FedEx Freight (LTL freight transportation) |
|
|
FedEx Custom Critical (time-critical transportation) |
|
|
FedEx Services Segment |
|
FedEx Services (sales, marketing, information technology, communications and back-office functions) |
|
|
FedEx TechConnect (customer service, technical support, billings and collections) |
|
|
FedEx Office (document and business services and package acceptance) |
FEDEX SERVICES SEGMENT
The operating expenses line item Intercompany charges on the accompanying unaudited financial summaries of our transportation segments reflects
the allocations from the FedEx Services segment to the respective transportation segments. The allocations of net operating costs are based on metrics such as relative revenues or estimated services provided.
- 36 -
We allocate all of the net operating costs of the FedEx Services segment (including the net operating results of
FedEx Office) to reflect the full cost of operating our transportation businesses in the results of those segments. Within the FedEx Services segment allocation, the net operating results of FedEx Office, which are an immaterial component of our
allocations, are allocated to FedEx Express and FedEx Ground. We believe these allocations approximate the net cost of providing these functions and our allocation methodologies are refined as necessary to reflect changes in our businesses.
During the first quarter of 2015, we ceased allocating to our transportation segments the costs associated with our corporate headquarters division. These
costs included services related to general oversight functions, including executive officers and certain legal and finance functions. This change allows for additional transparency and improved management of our corporate oversight costs. These
costs were previously included in the operating expenses line item Intercompany charges on the accompanying unaudited financial summaries of our transportation segments. These costs are included in Corporate, eliminations and
other in our segment reporting and reconciliations. Prior year amounts have been revised to conform to the current year segment presentation. The increase in these unallocated costs in the nine months of 2015 from the prior year was driven by
a legal contingency reserve recorded in the first quarter of 2015 associated with the multi-district litigation matters described in Note 8.
See Note 6
of the accompanying unaudited condensed consolidated financial statements and our Annual Report for more information.
- 37 -
FEDEX EXPRESS SEGMENT
FedEx Express offers a wide range of U.S. domestic and international shipping services for delivery of packages and freight including priority services, which
provide time-definite delivery within one, two or three business days worldwide, and deferred or economy services, which provide time-definite delivery within five business days worldwide. On December 16, 2014, we acquired Bongo, a leader in
cross-border enablement technologies. Bongos financial results are included in the following table from the date of acquisition. The following table compares revenues, operating expenses, operating expenses as a percent of revenue, operating
income and operating margin (dollars in millions) for the periods ended February 28:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Percent |
|
|
Nine Months Ended |
|
|
Percent |
|
|
|
2015 |
|
|
2014 |
|
|
Change |
|
|
2015 |
|
|
2014 |
|
|
Change |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Package: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. overnight box |
|
$ |
1,653 |
|
|
$ |
1,643 |
|
|
|
1 |
|
|
$ |
5,040 |
|
|
$ |
4,852 |
|
|
|
4 |
|
U.S. overnight envelope |
|
|
392 |
|
|
|
393 |
|
|
|
|
|
|
|
1,207 |
|
|
|
1,210 |
|
|
|
|
|
U.S. deferred |
|
|
895 |
|
|
|
869 |
|
|
|
3 |
|
|
|
2,524 |
|
|
|
2,369 |
|
|
|
7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total U.S. domestic package revenue |
|
|
2,940 |
|
|
|
2,905 |
|
|
|
1 |
|
|
|
8,771 |
|
|
|
8,431 |
|
|
|
4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International priority |
|
|
1,463 |
|
|
|
1,542 |
|
|
|
(5 |
) |
|
|
4,742 |
|
|
|
4,760 |
|
|
|
|
|
International economy |
|
|
560 |
|
|
|
540 |
|
|
|
4 |
|
|
|
1,729 |
|
|
|
1,639 |
|
|
|
5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total international export package revenue |
|
|
2,023 |
|
|
|
2,082 |
|
|
|
(3 |
) |
|
|
6,471 |
|
|
|
6,399 |
|
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International domestic(1) |
|
|
328 |
|
|
|
347 |
|
|
|
(5 |
) |
|
|
1,082 |
|
|
|
1,077 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total package revenue |
|
|
5,291 |
|
|
|
5,334 |
|
|
|
(1 |
) |
|
|
16,324 |
|
|
|
15,907 |
|
|
|
3 |
|
Freight: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. |
|
|
580 |
|
|
|
577 |
|
|
|
1 |
|
|
|
1,745 |
|
|
|
1,786 |
|
|
|
(2 |
) |
International priority |
|
|
375 |
|
|
|
379 |
|
|
|
(1 |
) |
|
|
1,182 |
|
|
|
1,184 |
|
|
|
|
|
International airfreight |
|
|
45 |
|
|
|
48 |
|
|
|
(6 |
) |
|
|
133 |
|
|
|
157 |
|
|
|
(15 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total freight revenue |
|
|
1,000 |
|
|
|
1,004 |
|
|
|
|
|
|
|
3,060 |
|
|
|
3,127 |
|
|
|
(2 |
) |
Other(2) |
|
|
365 |
|
|
|
336 |
|
|
|
9 |
|
|
|
1,158 |
|
|
|
1,089 |
|
|
|
6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
|
6,656 |
|
|
|
6,674 |
|
|
|
|
|
|
|
20,542 |
|
|
|
20,123 |
|
|
|
2 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
|
2,580 |
|
|
|
2,509 |
|
|
|
3 |
|
|
|
7,596 |
|
|
|
7,418 |
|
|
|
2 |
|
Purchased transportation |
|
|
614 |
|
|
|
608 |
|
|
|
1 |
|
|
|
1,942 |
|
|
|
1,876 |
|
|
|
4 |
|
Rentals and landing fees |
|
|
436 |
|
|
|
432 |
|
|
|
1 |
|
|
|
1,284 |
|
|
|
1,273 |
|
|
|
1 |
|
Depreciation and amortization |
|
|
364 |
|
|
|
374 |
|
|
|
(3 |
) |
|
|
1,106 |
|
|
|
1,116 |
|
|
|
(1 |
) |
Fuel |
|
|
697 |
|
|
|
1,010 |
|
|
|
(31 |
) |
|
|
2,573 |
|
|
|
2,952 |
|
|
|
(13 |
) |
Maintenance and repairs |
|
|
324 |
|
|
|
273 |
|
|
|
19 |
|
|
|
1,060 |
|
|
|
888 |
|
|
|
19 |
|
Intercompany charges(3) |
|
|
461 |
|
|
|
474 |
|
|
|
(3 |
) |
|
|
1,363 |
|
|
|
1,413 |
|
|
|
(4 |
) |
Other |
|
|
796 |
|
|
|
826 |
|
|
|
(4 |
) |
|
|
2,381 |
|
|
|
2,389 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses(3) |
|
|
6,272 |
|
|
|
6,506 |
|
|
|
(4 |
) |
|
|
19,305 |
|
|
|
19,325 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income(3) |
|
$ |
384 |
|
|
$ |
168 |
|
|
|
129 |
|
|
$ |
1,237 |
|
|
$ |
798 |
|
|
|
55 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating margin(3) |
|
|
5.8 |
% |
|
|
2.5 |
% |
|
|
330 |
bp |
|
|
6.0 |
% |
|
|
4.0 |
% |
|
|
200 |
bp |
- 38 -
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent of Revenue |
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
|
38.8 |
% |
|
|
37.6 |
% |
|
|
37.0 |
% |
|
|
36.9 |
% |
Purchased transportation |
|
|
9.2 |
|
|
|
9.1 |
|
|
|
9.5 |
|
|
|
9.3 |
|
Rentals and landing fees |
|
|
6.5 |
|
|
|
6.5 |
|
|
|
6.2 |
|
|
|
6.3 |
|
Depreciation and amortization |
|
|
5.5 |
|
|
|
5.6 |
|
|
|
5.4 |
|
|
|
5.5 |
|
Fuel |
|
|
10.5 |
|
|
|
15.1 |
|
|
|
12.5 |
|
|
|
14.7 |
|
Maintenance and repairs |
|
|
4.9 |
|
|
|
4.1 |
|
|
|
5.2 |
|
|
|
4.4 |
|
Intercompany charges(3) |
|
|
6.9 |
|
|
|
7.1 |
|
|
|
6.6 |
|
|
|
7.0 |
|
Other |
|
|
11.9 |
|
|
|
12.4 |
|
|
|
11.6 |
|
|
|
11.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses(3) |
|
|
94.2 |
|
|
|
97.5 |
|
|
|
94.0 |
|
|
|
96.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating margin(3) |
|
|
5.8 |
% |
|
|
2.5 |
% |
|
|
6.0 |
% |
|
|
4.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
International domestic revenues represent our international intra-country express operations. |
(2) |
Includes FedEx Trade Networks, FedEx SupplyChain Systems and Bongo. |
(3) |
Prior year amounts have been revised to the current year segment presentation regarding the allocation of corporate headquarters costs. |
- 39 -
The following table compares selected statistics (in thousands, except yield amounts) for the periods ended
February 28:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Percent |
|
|
Nine Months Ended |
|
|
Percent |
|
|
|
2015 |
|
|
2014 |
|
|
Change |
|
|
2015 |
|
|
2014 |
|
|
Change |
|
Package Statistics(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average daily package volume (ADV): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. overnight box |
|
|
1,258 |
|
|
|
1,202 |
|
|
|
5 |
|
|
|
1,243 |
|
|
|
1,153 |
|
|
|
8 |
|
U.S. overnight envelope |
|
|
516 |
|
|
|
515 |
|
|
|
|
|
|
|
521 |
|
|
|
538 |
|
|
|
(3 |
) |
U.S. deferred |
|
|
1,024 |
|
|
|
984 |
|
|
|
4 |
|
|
|
928 |
|
|
|
871 |
|
|
|
7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total U.S. domestic ADV |
|
|
2,798 |
|
|
|
2,701 |
|
|
|
4 |
|
|
|
2,692 |
|
|
|
2,562 |
|
|
|
5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International priority |
|
|
398 |
|
|
|
399 |
|
|
|
|
|
|
|
410 |
|
|
|
409 |
|
|
|
|
|
International economy |
|
|
175 |
|
|
|
168 |
|
|
|
4 |
|
|
|
175 |
|
|
|
168 |
|
|
|
4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total international export ADV |
|
|
573 |
|
|
|
567 |
|
|
|
1 |
|
|
|
585 |
|
|
|
577 |
|
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International domestic(2) |
|
|
831 |
|
|
|
780 |
|
|
|
7 |
|
|
|
854 |
|
|
|
822 |
|
|
|
4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total ADV |
|
|
4,202 |
|
|
|
4,048 |
|
|
|
4 |
|
|
|
4,131 |
|
|
|
3,961 |
|
|
|
4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue per package (yield): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. overnight box |
|
$ |
20.85 |
|
|
$ |
21.70 |
|
|
|
(4 |
) |
|
$ |
21.34 |
|
|
$ |
22.15 |
|
|
|
(4 |
) |
U.S. overnight envelope |
|
|
12.07 |
|
|
|
12.09 |
|
|
|
|
|
|
|
12.18 |
|
|
|
11.84 |
|
|
|
3 |
|
U.S. deferred |
|
|
13.88 |
|
|
|
14.01 |
|
|
|
(1 |
) |
|
|
14.32 |
|
|
|
14.31 |
|
|
|
|
|
U.S. domestic composite |
|
|
16.68 |
|
|
|
17.07 |
|
|
|
(2 |
) |
|
|
17.15 |
|
|
|
17.32 |
|
|
|
(1 |
) |
International priority |
|
|
58.40 |
|
|
|
61.38 |
|
|
|
(5 |
) |
|
|
60.79 |
|
|
|
61.30 |
|
|
|
(1 |
) |
International economy |
|
|
50.60 |
|
|
|
51.01 |
|
|
|
(1 |
) |
|
|
52.03 |
|
|
|
51.24 |
|
|
|
2 |
|
International export composite |
|
|
56.01 |
|
|
|
58.30 |
|
|
|
(4 |
) |
|
|
58.17 |
|
|
|
58.37 |
|
|
|
|
|
International domestic(2) |
|
|
6.28 |
|
|
|
7.05 |
|
|
|
(11 |
) |
|
|
6.67 |
|
|
|
6.90 |
|
|
|
(3 |
) |
Composite package yield |
|
|
19.99 |
|
|
|
20.91 |
|
|
|
(4 |
) |
|
|
20.80 |
|
|
|
21.14 |
|
|
|
(2 |
) |
Freight Statistics(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average daily freight pounds: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. |
|
|
8,145 |
|
|
|
8,263 |
|
|
|
(1 |
) |
|
|
7,831 |
|
|
|
7,850 |
|
|
|
|
|
International priority |
|
|
2,823 |
|
|
|
2,823 |
|
|
|
|
|
|
|
2,866 |
|
|
|
2,917 |
|
|
|
(2 |
) |
International airfreight |
|
|
718 |
|
|
|
757 |
|
|
|
(5 |
) |
|
|
673 |
|
|
|
839 |
|
|
|
(20 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total average daily freight pounds |
|
|
11,686 |
|
|
|
11,843 |
|
|
|
(1 |
) |
|
|
11,370 |
|
|
|
11,606 |
|
|
|
(2 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue per pound (yield): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. |
|
$ |
1.13 |
|
|
$ |
1.11 |
|
|
|
2 |
|
|
$ |
1.17 |
|
|
$ |
1.20 |
|
|
|
(3 |
) |
International priority |
|
|
2.11 |
|
|
|
2.13 |
|
|
|
(1 |
) |
|
|
2.17 |
|
|
|
2.14 |
|
|
|
1 |
|
International airfreight |
|
|
1.00 |
|
|
|
1.00 |
|
|
|
|
|
|
|
1.04 |
|
|
|
0.98 |
|
|
|
6 |
|
Composite freight yield |
|
|
1.36 |
|
|
|
1.35 |
|
|
|
1 |
|
|
|
1.42 |
|
|
|
1.42 |
|
|
|
|
|
(1) |
Package and freight statistics include only the operations of FedEx Express. |
(2) |
International domestic statistics represent our international intra-country express operations. |
FedEx Express Segment Revenues
FedEx Express
revenues declined slightly in the third quarter due to the negative impact of lower fuel surcharges and unfavorable exchange rates. These negative impacts were partially offset by increases in U.S. and international export base yields and volumes.
Revenues during the nine months of 2015 increased 2% due to U.S. and international export base yield and volume growth, which were partially offset by lower fuel surcharges and unfavorable exchange rates.
U.S. domestic yields decreased in the third quarter and nine months of 2015 due to the negative impact of lower fuel surcharges, which were partially offset
by higher rates. The decrease in international export yields in the third quarter and nine months of 2015 was due to the negative impact of lower fuel surcharges and exchange rates and was partially offset by higher rates and weight per package.
U.S. domestic volumes increased 4% in the third quarter and 5% in the nine months of 2015 driven by both our overnight and deferred service offerings.
- 40 -
Our U.S. domestic and outbound fuel surcharge and the international fuel surcharges ranged as follows for the
periods ended February 28:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
U.S. Domestic and Outbound Fuel Surcharge: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Low |
|
|
3.50 |
% |
|
|
9.00 |
% |
|
|
3.50 |
% |
|
|
8.00 |
% |
High |
|
|
6.00 |
|
|
|
10.00 |
|
|
|
9.50 |
|
|
|
10.50 |
|
Weighted-average |
|
|
4.80 |
|
|
|
9.49 |
|
|
|
7.62 |
|
|
|
9.34 |
|
|
|
|
|
|
International Fuel Surcharges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Low |
|
|
0.50 |
|
|
|
13.00 |
|
|
|
0.50 |
|
|
|
12.00 |
|
High |
|
|
15.00 |
|
|
|
18.50 |
|
|
|
18.00 |
|
|
|
19.00 |
|
Weighted-average |
|
|
11.57 |
|
|
|
16.31 |
|
|
|
14.49 |
|
|
|
16.16 |
|
On February 2, 2015, FedEx Express updated the tables used to determine fuel surcharges. On September 16, 2014,
FedEx Express announced a 4.9% average list price increase for FedEx Express U.S. domestic, U.S. export and U.S. import services effective January 5, 2015. In January 2014, we implemented a 3.9% average list price increase for FedEx Express
U.S. domestic, U.S. export and U.S. import services.
FedEx Express Segment Operating Income
FedEx Express operating income and operating margin increased in the third quarter and nine months of 2015, driven by U.S. domestic and international export
base yield and volume growth, the positive net impact of fuel, benefits associated with our profit improvement program, a lower year-over-year impact from severe winter weather and reduced pension expense. These factors were partially offset by
higher maintenance expense and higher incentive compensation accruals.
Within operating expenses, salaries and employee benefits increased 3% in the
third quarter and 2% in the nine months of 2015 due to additional staffing to support volume growth and higher incentive compensation accruals, partially offset by the benefits from our voluntary employee severance program and lower pension expense.
Maintenance and repairs expense increased 19% in the third quarter and nine months of 2015 primarily due to the timing of aircraft maintenance events. Higher utilization of third-party transportation providers and costs associated with the growth of
our freight-forwarding business at FedEx Trade Networks drove an increase in purchased transportation costs of 1% in the third quarter and 4% in the nine months of 2015.
Fuel expense decreased 31% in the third quarter and 13% in the nine months of 2015 due to lower aircraft fuel prices. The net impact of fuel had a significant
benefit in the third quarter and nine months of 2015 to operating income. See the Fuel section of this MD&A for a description and additional discussion of the net impact of fuel on our operating results.
- 41 -
FEDEX GROUND SEGMENT
FedEx Ground service offerings include day-certain service delivery to businesses in the United States and Canada and to nearly 100% of U.S. residences. FedEx
SmartPost consolidates high-volume, low-weight, less time-sensitive business-to-consumer packages and utilizes the United States Postal Service (USPS) for final delivery. On January 30, 2015, we acquired GENCO, one of the largest
third-party logistics providers in North America. GENCOs financial results are included in the following table from the date of acquisition, which has impacted the year-over-year comparability of revenue and operating expenses. The following
table compares revenues, operating expenses, operating expenses as a percent of revenue, operating income and operating margin (dollars in millions) and selected package statistics (in thousands, except yield amounts) for the periods ended
February 28:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Percent |
|
|
Nine Months Ended |
|
|
Percent |
|
|
|
2015 |
|
|
2014 |
|
|
Change |
|
|
2015 |
|
|
2014 |
|
|
Change |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FedEx Ground |
|
$ |
3,021 |
|
|
$ |
2,751 |
|
|
|
10 |
|
|
$ |
8,569 |
|
|
$ |
7,858 |
|
|
|
9 |
|
FedEx SmartPost |
|
|
285 |
|
|
|
280 |
|
|
|
2 |
|
|
|
760 |
|
|
|
752 |
|
|
|
1 |
|
GENCO |
|
|
87 |
|
|
|
|
|
|
|
NM |
|
|
|
87 |
|
|
|
|
|
|
|
NM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
|
3,393 |
|
|
|
3,031 |
|
|
|
12 |
|
|
|
9,416 |
|
|
|
8,610 |
|
|
|
9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
|
565 |
|
|
|
460 |
|
|
|
23 |
|
|
|
1,498 |
|
|
|
1,319 |
|
|
|
14 |
|
Purchased transportation |
|
|
1,348 |
|
|
|
1,253 |
|
|
|
8 |
|
|
|
3,765 |
|
|
|
3,476 |
|
|
|
8 |
|
Rentals |
|
|
126 |
|
|
|
105 |
|
|
|
20 |
|
|
|
349 |
|
|
|
299 |
|
|
|
17 |
|
Depreciation and amortization |
|
|
136 |
|
|
|
121 |
|
|
|
12 |
|
|
|
381 |
|
|
|
350 |
|
|
|
9 |
|
Fuel |
|
|
3 |
|
|
|
7 |
|
|
|
(57 |
) |
|
|
9 |
|
|
|
14 |
|
|
|
(36 |
) |
Maintenance and repairs |
|
|
61 |
|
|
|
57 |
|
|
|
7 |
|
|
|
174 |
|
|
|
166 |
|
|
|
5 |
|
Intercompany charges(1) |
|
|
281 |
|
|
|
274 |
|
|
|
3 |
|
|
|
834 |
|
|
|
821 |
|
|
|
2 |
|
Other |
|
|
315 |
|
|
|
264 |
|
|
|
19 |
|
|
|
838 |
|
|
|
753 |
|
|
|
11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses(1) |
|
|
2,835 |
|
|
|
2,541 |
|
|
|
12 |
|
|
|
7,848 |
|
|
|
7,198 |
|
|
|
9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income(1) |
|
$ |
558 |
|
|
$ |
490 |
|
|
|
14 |
|
|
$ |
1,568 |
|
|
$ |
1,412 |
|
|
|
11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating margin(1) |
|
|
16.4 |
% |
|
|
16.2 |
% |
|
|
20 |
bp |
|
|
16.7 |
% |
|
|
16.4 |
% |
|
|
30 |
bp |
|
|
|
|
|
|
|
Average daily package volume |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FedEx Ground |
|
|
5,136 |
|
|
|
4,817 |
|
|
|
7 |
|
|
|
4,851 |
|
|
|
4,584 |
|
|
|
6 |
|
FedEx SmartPost |
|
|
2,360 |
|
|
|
2,529 |
|
|
|
(7 |
) |
|
|
2,117 |
|
|
|
2,276 |
|
|
|
(7 |
) |
|
|
|
|
|
|
|
Revenue per package (yield) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FedEx Ground |
|
$ |
9.32 |
|
|
$ |
9.04 |
|
|
|
3 |
|
|
$ |
9.28 |
|
|
$ |
9.00 |
|
|
|
3 |
|
FedEx SmartPost |
|
$ |
1.97 |
|
|
$ |
1.82 |
|
|
|
8 |
|
|
$ |
1.91 |
|
|
$ |
1.76 |
|
|
|
9 |
|
- 42 -
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent of Revenue |
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
|
16.7 |
% |
|
|
15.2 |
% |
|
|
15.9 |
% |
|
|
15.3 |
% |
Purchased transportation |
|
|
39.7 |
|
|
|
41.3 |
|
|
|
40.0 |
|
|
|
40.4 |
|
Rentals |
|
|
3.7 |
|
|
|
3.5 |
|
|
|
3.7 |
|
|
|
3.5 |
|
Depreciation and amortization |
|
|
4.0 |
|
|
|
4.0 |
|
|
|
4.0 |
|
|
|
4.1 |
|
Fuel |
|
|
0.1 |
|
|
|
0.2 |
|
|
|
0.1 |
|
|
|
0.2 |
|
Maintenance and repairs |
|
|
1.8 |
|
|
|
1.9 |
|
|
|
1.8 |
|
|
|
1.9 |
|
Intercompany charges(1) |
|
|
8.3 |
|
|
|
9.0 |
|
|
|
8.9 |
|
|
|
9.5 |
|
Other |
|
|
9.3 |
|
|
|
8.7 |
|
|
|
8.9 |
|
|
|
8.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses(1) |
|
|
83.6 |
|
|
|
83.8 |
|
|
|
83.3 |
|
|
|
83.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating margin(1) |
|
|
16.4 |
% |
|
|
16.2 |
% |
|
|
16.7 |
% |
|
|
16.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Prior year amounts have been revised to conform to the current year segment presentation regarding the allocation of corporate headquarters costs. |
FedEx Ground Segment Revenues
FedEx Ground
segment revenues increased 12% in the third quarter and 9% in the nine months of 2015 due to volume and yield growth at FedEx Ground and yield growth at FedEx SmartPost, partially offset by lower volumes at FedEx SmartPost.
Average daily volume at FedEx Ground increased 7% in the third quarter and 6% in the nine months of 2015 due to continued growth in our commercial business
and FedEx Home Delivery service. Yield increased 3% in the third quarter and nine months of 2015 primarily due to rate increases and higher dimensional weight charges.
FedEx SmartPost average daily volume decreased 7% in the third quarter and nine months of 2015 due to the reduction in volume from a major customer. FedEx
SmartPost yield increased 8% in the third quarter and 9% in the nine months of 2015 due to rate increases and improved customer mix, partially offset by higher postage costs. FedEx SmartPost yield represents the amount charged to customers net of
postage paid to the USPS.
The FedEx Ground fuel surcharge is based on a rounded average of the national U.S. on-highway average price for a gallon of
diesel fuel, as published by the Department of Energy. Our fuel surcharge ranged as follows for the periods ended February 28:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
Low |
|
|
5.50 |
% |
|
|
6.50 |
% |
|
|
5.50 |
% |
|
|
6.50 |
% |
High |
|
|
6.00 |
|
|
|
6.50 |
|
|
|
7.00 |
|
|
|
7.00 |
|
Weighted-average |
|
|
5.85 |
|
|
|
6.50 |
|
|
|
6.38 |
|
|
|
6.61 |
|
On February 2, 2015, FedEx Ground updated the tables used to determine fuel surcharges. On September 16, 2014, FedEx
Ground and FedEx Home Delivery announced a 4.9% increase in average list price effective January 5, 2015. In addition, as announced in May 2014, FedEx Ground began applying dimensional weight pricing to all shipments effective January 5,
2015. In January 2014, FedEx Ground and FedEx Home Delivery implemented a 4.9% increase in average list price. FedEx SmartPost rates also increased.
FedEx Ground Segment Operating Income
FedEx
Ground segment operating income increased 14% in the third quarter and 11% in the nine months of 2015 driven by higher revenue per package and volumes, the positive net impact of fuel, and a lower year-over-year impact from severe winter weather.
The increase to operating income was partially offset by higher network expansion costs, as we continue to invest heavily in our FedEx Ground and FedEx SmartPost businesses.
- 43 -
The inclusion of GENCO in the FedEx Ground segment results has impacted the year-over-year comparability of all
operating expenses. Along with incremental costs from GENCO, purchased transportation expense increased 8% in the third quarter and nine months of 2015 due to volume growth and higher service provider rates. Additional staffing to support volume
growth drove an increase in salaries and employee benefits expense of 23% in the third quarter and 14% in the nine months of 2015. Other expense increased 19% in the third quarter and 11% in the nine months of 2015 primarily due to self-insurance
costs and real estate taxes. Network expansion caused rentals expense to increase 20% in the third quarter and 17% in the nine months of 2015. Depreciation and amortization expense increased 12% in the third quarter and 9% in the nine months of 2015
due to network expansion and trailer purchases.
Independent Contractor Model
FedEx Ground is involved in numerous lawsuits and other proceedings (such as state tax or other administrative challenges) where the classification of its
independent contractors is at issue. We are vigorously defending ourselves in all of these proceedings and continue to believe that FedEx Grounds owner-operators are properly classified as independent contractors and not employees of FedEx
Ground. For a description of these proceedings, see Note 8 of the accompanying unaudited condensed consolidated financial statements.
For additional
information on the FedEx Ground Independent Service Provider model, see Part 1, Item 1 of our Annual Report under the caption Independent Contractor Model.
- 44 -
FEDEX FREIGHT SEGMENT
FedEx Freight service offerings include priority services when speed is critical and economy services when time can be traded for savings. The following table
compares revenues, operating expenses, operating expenses as a percent of revenue, operating income (dollars in millions), operating margin and selected statistics for the periods ended February 28:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Percent |
|
|
Nine Months Ended |
|
|
Percent |
|
|
|
2015 |
|
|
2014 |
|
|
Change |
|
|
2015 |
|
|
2014 |
|
|
Change |
|
Revenues |
|
$ |
1,428 |
|
|
$ |
1,347 |
|
|
|
6 |
|
|
$ |
4,622 |
|
|
$ |
4,205 |
|
|
|
10 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
|
663 |
|
|
|
598 |
|
|
|
11 |
|
|
|
2,005 |
|
|
|
1,807 |
|
|
|
11 |
|
Purchased transportation |
|
|
235 |
|
|
|
231 |
|
|
|
2 |
|
|
|
792 |
|
|
|
715 |
|
|
|
11 |
|
Rentals |
|
|
33 |
|
|
|
31 |
|
|
|
6 |
|
|
|
96 |
|
|
|
94 |
|
|
|
2 |
|
Depreciation and amortization |
|
|
54 |
|
|
|
58 |
|
|
|
(7 |
) |
|
|
170 |
|
|
|
172 |
|
|
|
(1 |
) |
Fuel |
|
|
109 |
|
|
|
146 |
|
|
|
(25 |
) |
|
|
399 |
|
|
|
436 |
|
|
|
(8 |
) |
Maintenance and repairs |
|
|
49 |
|
|
|
42 |
|
|
|
17 |
|
|
|
148 |
|
|
|
134 |
|
|
|
10 |
|
Intercompany charges(1) |
|
|
108 |
|
|
|
105 |
|
|
|
3 |
|
|
|
329 |
|
|
|
329 |
|
|
|
|
|
Other |
|
|
109 |
|
|
|
101 |
|
|
|
8 |
|
|
|
335 |
|
|
|
301 |
|
|
|
11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses(1) |
|
|
1,360 |
|
|
|
1,312 |
|
|
|
4 |
|
|
|
4,274 |
|
|
|
3,988 |
|
|
|
7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (1) |
|
$ |
68 |
|
|
$ |
35 |
|
|
|
94 |
|
|
$ |
348 |
|
|
$ |
217 |
|
|
|
60 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating margin(1) |
|
|
4.8 |
% |
|
|
2.6 |
% |
|
|
220 |
bp |
|
|
7.5 |
% |
|
|
5.2 |
% |
|
|
230 |
bp |
|
|
|
|
|
|
|
Average daily LTL shipments (in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Priority |
|
|
62.0 |
|
|
|
59.5 |
|
|
|
4 |
|
|
|
67.1 |
|
|
|
61.5 |
|
|
|
9 |
|
Economy |
|
|
26.8 |
|
|
|
26.3 |
|
|
|
2 |
|
|
|
28.4 |
|
|
|
27.3 |
|
|
|
4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total average daily LTL shipments |
|
|
88.8 |
|
|
|
85.8 |
|
|
|
3 |
|
|
|
95.5 |
|
|
|
88.8 |
|
|
|
8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weight per LTL shipment (lbs) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Priority |
|
|
1,287 |
|
|
|
1,280 |
|
|
|
1 |
|
|
|
1,262 |
|
|
|
1,255 |
|
|
|
1 |
|
Economy |
|
|
1,007 |
|
|
|
1,002 |
|
|
|
|
|
|
|
1,010 |
|
|
|
995 |
|
|
|
2 |
|
Composite weight per LTL shipment |
|
|
1,203 |
|
|
|
1,195 |
|
|
|
1 |
|
|
|
1,187 |
|
|
|
1,175 |
|
|
|
1 |
|
|
|
|
|
|
|
|
LTL revenue per shipment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Priority |
|
$ |
231.92 |
|
|
$ |
224.63 |
|
|
|
3 |
|
|
$ |
229.43 |
|
|
$ |
222.99 |
|
|
|
3 |
|
Economy |
|
|
265.66 |
|
|
|
257.74 |
|
|
|
3 |
|
|
|
265.51 |
|
|
|
257.10 |
|
|
|
3 |
|
Composite LTL revenue per shipment |
|
$ |
242.52 |
|
|
$ |
235.14 |
|
|
|
3 |
|
|
$ |
240.30 |
|
|
$ |
233.61 |
|
|
|
3 |
|
|
|
|
|
|
|
|
LTL yield (revenue per hundredweight) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Priority |
|
$ |
18.02 |
|
|
$ |
17.54 |
|
|
|
3 |
|
|
$ |
18.18 |
|
|
$ |
17.77 |
|
|
|
2 |
|
Economy |
|
|
26.38 |
|
|
|
25.71 |
|
|
|
3 |
|
|
|
26.29 |
|
|
|
25.83 |
|
|
|
2 |
|
Composite LTL yield |
|
$ |
20.17 |
|
|
$ |
19.67 |
|
|
|
3 |
|
|
$ |
20.24 |
|
|
$ |
19.88 |
|
|
|
2 |
|
- 45 -
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent of Revenue |
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
|
46.4 |
% |
|
|
44.4 |
% |
|
|
43.4 |
% |
|
|
43.0 |
% |
Purchased transportation |
|
|
16.5 |
|
|
|
17.2 |
|
|
|
17.1 |
|
|
|
17.0 |
|
Rentals |
|
|
2.3 |
|
|
|
2.3 |
|
|
|
2.1 |
|
|
|
2.2 |
|
Depreciation and amortization |
|
|
3.8 |
|
|
|
4.3 |
|
|
|
3.7 |
|
|
|
4.1 |
|
Fuel |
|
|
7.6 |
|
|
|
10.8 |
|
|
|
8.6 |
|
|
|
10.4 |
|
Maintenance and repairs |
|
|
3.4 |
|
|
|
3.1 |
|
|
|
3.2 |
|
|
|
3.2 |
|
Intercompany charges(1) |
|
|
7.6 |
|
|
|
7.8 |
|
|
|
7.1 |
|
|
|
7.8 |
|
Other |
|
|
7.6 |
|
|
|
7.5 |
|
|
|
7.3 |
|
|
|
7.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses(1) |
|
|
95.2 |
|
|
|
97.4 |
|
|
|
92.5 |
|
|
|
94.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating margin(1) |
|
|
4.8 |
% |
|
|
2.6 |
% |
|
|
7.5 |
% |
|
|
5.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Prior year amounts have been revised to conform to the current year segment presentation regarding the allocation of corporate headquarters costs. |
FedEx Freight Segment Revenues
FedEx Freight
segment revenues increased 6% in the third quarter and 10% in the nine months of 2015 due to higher average daily shipments and revenue per shipment. Average daily LTL shipments increased 3% in the third quarter and 8% in the nine months of 2015 due
to higher demand for both of our service offerings. LTL revenue per shipment increased 3% in the third quarter due to higher rates and in the nine months of 2015 due to higher weight per LTL shipment and higher rates.
The weekly indexed LTL fuel surcharge is based on the average of the U.S. on-highway average prices for a gallon of diesel fuel, as published by the
Department of Energy. The indexed LTL fuel surcharge ranged as follows for the periods ended February 28:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
Low |
|
|
20.90 |
% |
|
|
23.00 |
% |
|
|
20.90 |
% |
|
|
22.70 |
% |
High |
|
|
24.60 |
|
|
|
23.70 |
|
|
|
26.20 |
|
|
|
23.70 |
|
Weighted-average |
|
|
22.70 |
|
|
|
23.20 |
|
|
|
24.70 |
|
|
|
23.10 |
|
On February 2, 2015, FedEx Freight updated the tables used to determine fuel surcharges. On September 16, 2014,
FedEx Freight announced a 4.9% average increase in certain U.S. and other shipping rates effective January 5, 2015. In June 2014, FedEx Freight increased its published fuel surcharge indices by three percentage points. In March 2014, FedEx
Freight increased certain U.S. and other shipping rates by an average of 3.9%. In July 2013, FedEx Freight increased certain U.S. and other shipping rates by an average of 4.5%.
FedEx Freight Segment Operating Income
FedEx
Freight segment operating income and operating margin increased in the third quarter and nine months of 2015 due to higher LTL revenue per shipment and higher average daily LTL shipments.
Within operating expenses, salaries and employee benefits increased 11% in the third quarter and the nine months of 2015 due to additional staffing to support
volume growth and higher incentive compensation accruals. Volume growth and higher service provider rates drove an increase to purchased transportation expense of 11% in the nine months of 2015. Other expense increased 11% in the nine months of 2015
driven partially by higher cargo claims.
- 46 -
FINANCIAL CONDITION
LIQUIDITY
Cash and cash equivalents totaled $3.5
billion at February 28, 2015, compared to $2.9 billion at May 31, 2014. The following table provides a summary of our cash flows for the nine-month periods ended February 28 (in millions):
|
|
|
|
|
|
|
|
|
|
|
2015 |
|
|
2014 |
|
Operating activities: |
|
|
|
|
|
|
|
|
Net income |
|
$ |
1,802 |
|
|
$ |
1,367 |
|
Noncash charges and credits |
|
|
2,534 |
|
|
|
2,519 |
|
Changes in assets and liabilities |
|
|
(863 |
) |
|
|
(1,308 |
) |
|
|
|
|
|
|
|
|
|
Cash provided by operating activities |
|
|
3,473 |
|
|
|
2,578 |
|
|
|
|
|
|
|
|
|
|
Investing activities: |
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
(2,969 |
) |
|
|
(2,554 |
) |
Business acquisitions, net of cash acquired |
|
|
(1,429 |
) |
|
|
|
|
Proceeds from asset dispositions and other |
|
|
16 |
|
|
|
23 |
|
|
|
|
|
|
|
|
|
|
Cash used in investing activities |
|
|
(4,382 |
) |
|
|
(2,531 |
) |
|
|
|
|
|
|
|
|
|
Financing activities: |
|
|
|
|
|
|
|
|
Principal payments on debt |
|
|
(1 |
) |
|
|
(254 |
) |
Proceeds from debt issuances |
|
|
2,491 |
|
|
|
1,997 |
|
Proceeds from stock issuances |
|
|
272 |
|
|
|
462 |
|
Dividends paid |
|
|
(171 |
) |
|
|
(142 |
) |
Purchase of treasury stock, including accelerated share repurchase agreements |
|
|
(1,016 |
) |
|
|
(3,984 |
) |
Other |
|
|
8 |
|
|
|
9 |
|
|
|
|
|
|
|
|
|
|
Cash provided by (used in) financing activities |
|
|
1,583 |
|
|
|
(1,912 |
) |
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash |
|
|
(104 |
) |
|
|
(10 |
) |
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents |
|
$ |
570 |
|
|
$ |
(1,875 |
) |
|
|
|
|
|
|
|
|
|
Cash flows from operating activities increased $895 million in the nine months of 2015 primarily due to higher net income and
the inclusion in the prior year of payments associated with our voluntary employee buyout program. Capital expenditures during the nine months of 2015 were higher primarily due to increased spending for aircraft at FedEx Express and sort facility
expansion at FedEx Ground. See Capital Resources for a discussion of capital expenditures during 2015 and 2014.
During the quarter, we issued
$2.5 billion of senior unsecured debt under our current shelf registration statement. We utilized the net proceeds to fund our $1.4 billion acquisition of GENCO and the remaining proceeds for working capital and general corporate purposes. See Note
3 of the accompanying unaudited financial statements for further discussion of this debt issuance and Note 1 for discussion of business acquisitions.
In
September 2014, our Board of Directors authorized the repurchase of up to 15 million shares of common stock. It is expected that the additional share authorization will primarily be utilized to offset equity compensation dilution over the next
several years. During the third quarter of 2015, we repurchased 400,000 shares of FedEx common stock at an average price of $172 per share for a total of $69 million. As of February 28, 2015, 13.6 million shares remained under the share
repurchase authorization.
- 47 -
CAPITAL RESOURCES
Our operations are capital intensive, characterized by significant investments in aircraft, vehicles, technology, facilities, and package-handling and sort
equipment. The amount and timing of capital additions depend on various factors, including pre-existing contractual commitments, anticipated volume growth, domestic and international economic conditions, new or enhanced services, geographical
expansion of services, availability of satisfactory financing and actions of regulatory authorities.
The following table compares capital expenditures by
asset category and reportable segment for the periods ended February 28 (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent Change 2015/2014 |
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
|
Aircraft and related equipment |
|
$ |
472 |
|
|
$ |
308 |
|
|
$ |
1,270 |
|
|
$ |
1,001 |
|
|
|
53 |
|
|
|
27 |
|
Facilities and sort equipment |
|
|
294 |
|
|
|
215 |
|
|
|
746 |
|
|
|
545 |
|
|
|
37 |
|
|
|
37 |
|
Vehicles |
|
|
184 |
|
|
|
210 |
|
|
|
523 |
|
|
|
634 |
|
|
|
(12 |
) |
|
|
(18 |
) |
Information and technology investments |
|
|
59 |
|
|
|
91 |
|
|
|
209 |
|
|
|
253 |
|
|
|
(35 |
) |
|
|
(17 |
) |
Other equipment |
|
|
71 |
|
|
|
40 |
|
|
|
221 |
|
|
|
121 |
|
|
|
78 |
|
|
|
83 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capital expenditures |
|
$ |
1,080 |
|
|
$ |
864 |
|
|
$ |
2,969 |
|
|
$ |
2,554 |
|
|
|
25 |
|
|
|
16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FedEx Express segment |
|
$ |
569 |
|
|
$ |
472 |
|
|
$ |
1,649 |
|
|
$ |
1,467 |
|
|
|
21 |
|
|
|
12 |
|
FedEx Ground segment |
|
|
291 |
|
|
|
199 |
|
|
|
794 |
|
|
|
609 |
|
|
|
46 |
|
|
|
30 |
|
FedEx Freight segment |
|
|
147 |
|
|
|
110 |
|
|
|
285 |
|
|
|
250 |
|
|
|
34 |
|
|
|
14 |
|
FedEx Services segment |
|
|
73 |
|
|
|
83 |
|
|
|
240 |
|
|
|
228 |
|
|
|
(12 |
) |
|
|
5 |
|
Other |
|
|
|
|
|
|
|
|
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
NM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capital expenditures |
|
$ |
1,080 |
|
|
$ |
864 |
|
|
$ |
2,969 |
|
|
$ |
2,554 |
|
|
|
25 |
|
|
|
16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures during the nine months of 2015 were higher than the prior-year period primarily due to increased spending
for aircraft at FedEx Express and increased spending for sort facility expansion at FedEx Ground. Aircraft and related equipment purchases at FedEx Express during the nine months of 2015 included the delivery of ten Boeing 767-300 Freighter
(B767F) and thirteen Boeing 757 (B757) aircraft, as well as the modification of certain aircraft before being placed into service.
LIQUIDITY OUTLOOK
We believe that our existing
cash and cash equivalents, cash flow from operations and available financing sources are adequate to meet our liquidity needs, including working capital, capital expenditure and business acquisition requirements and debt payment obligations. Our
cash and cash equivalents balance at February 28, 2015 includes $488 million of cash in offshore jurisdictions associated with our permanent reinvestment strategy. We do not believe that the indefinite reinvestment of these funds offshore
impairs our ability to meet our domestic debt or working capital obligations. Although we expect higher capital expenditures in 2015, we anticipate that our cash flow from operations will be sufficient to fund these expenditures. Historically, we
have been successful in obtaining unsecured financing, from both domestic and international sources, although the marketplace for such investment capital can become restricted depending on a variety of economic factors.
Our capital expenditures are expected to be approximately $4.2 billion in 2015 and include spending for aircraft and aircraft-related equipment at FedEx
Express, sort facility expansion, primarily at FedEx Ground, and vehicle replacement at all our transportation segments. We invested $1.3 billion in aircraft and aircraft-related equipment in the nine months of 2015 and expect to invest an
additional $485 million for aircraft and aircraft-related equipment during the remainder of 2015. In March 2015, we made $165 million in contributions to our U.S. Pension Plans. Our U.S. Pension Plans have ample funds to meet expected benefit
payments. See Note 5 of the accompanying unaudited condensed consolidated financial statements for expected future benefit payments for the remainder of 2015.
- 48 -
We have a shelf registration statement filed with the Securities and Exchange Commission (SEC) that
allows us to sell, in one or more future offerings, any combination of our unsecured debt securities and common stock.
A $1 billion revolving credit
facility is available to finance our operations and other cash flow needs and to provide support for the issuance of commercial paper. As of February 28, 2015, no commercial paper was outstanding and the entire $1 billion under the revolving
credit facility was available for future borrowings. See Note 3 and our Annual Report for a description of the term and significant covenants of our revolving credit facility.
Standard & Poors has assigned us a senior unsecured debt credit rating of BBB and commercial paper rating of A-2 and a ratings outlook of
stable. Moodys Investors Service has assigned us a senior unsecured debt credit rating of Baa1 and commercial paper rating of P-2 and a ratings outlook of stable. If our credit ratings drop, our interest expense may
increase. If our commercial paper ratings drop below current levels, we may have difficulty utilizing the commercial paper market. If our senior unsecured debt credit ratings drop below investment grade, our access to financing may become limited.
CONTRACTUAL CASH OBLIGATIONS AND OFF-BALANCE SHEET ARRANGEMENTS
The following table sets forth a summary of our contractual cash obligations as of February 28, 2015. Certain of these contractual obligations are
reflected in our balance sheet, while others are disclosed as future obligations under accounting principles generally accepted in the United States. Except for the current portion of interest on long-term debt, this table does not include amounts
already recorded in our balance sheet as current liabilities at February 28, 2015. We have certain contingent liabilities that are not accrued in our balance sheet in accordance with accounting principles generally accepted in the United
States. These contingent liabilities are not included in the table below. We have other long-term liabilities reflected in our balance sheet, including deferred income taxes, qualified and nonqualified pension and postretirement healthcare plan
liabilities and other self-insurance accruals. The payment obligations associated with these liabilities are not reflected in the table below due to the absence of scheduled maturities. Accordingly, this table is not meant to represent a forecast of
our total cash expenditures for any of the periods presented.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments Due by Fiscal Year (Undiscounted) (in millions) |
|
|
|
2015(1) |
|
|
2016 |
|
|
2017 |
|
|
2018 |
|
|
2019 |
|
|
Thereafter |
|
|
Total |
|
Operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating leases |
|
$ |
493 |
|
|
$ |
2,089 |
|
|
$ |
2,167 |
|
|
$ |
1,664 |
|
|
$ |
1,422 |
|
|
$ |
8,009 |
|
|
$ |
15,844 |
|
Non-capital purchase obligations and other |
|
|
152 |
|
|
|
333 |
|
|
|
182 |
|
|
|
111 |
|
|
|
68 |
|
|
|
111 |
|
|
|
957 |
|
Interest on long-term debt |
|
|
14 |
|
|
|
325 |
|
|
|
320 |
|
|
|
320 |
|
|
|
320 |
|
|
|
5,591 |
|
|
|
6,890 |
|
Quarterly contributions to our U.S. Pension Plans |
|
|
8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8 |
|
|
|
|
|
|
|
|
|
Investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aircraft and aircraft-related capital commitments |
|
|
415 |
|
|
|
1,249 |
|
|
|
1,013 |
|
|
|
1,389 |
|
|
|
1,033 |
|
|
|
4,429 |
|
|
|
9,528 |
|
Other capital purchase obligations |
|
|
21 |
|
|
|
2 |
|
|
|
4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27 |
|
|
|
|
|
|
|
|
|
Financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
750 |
|
|
|
6,490 |
|
|
|
7,240 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
1,103 |
|
|
$ |
3,998 |
|
|
$ |
3,686 |
|
|
$ |
3,484 |
|
|
$ |
3,593 |
|
|
$ |
24,630 |
|
|
$ |
40,494 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Cash obligations for the remainder of 2015. |
Open
purchase orders that are cancelable are not considered unconditional purchase obligations for financial reporting purposes and are not included in the table above. Such purchase orders often represent authorizations to purchase rather than binding
agreements. See Note 7 of the accompanying unaudited condensed consolidated financial statements for more information.
- 49 -
Operating Activities
The amounts reflected in the table above for operating leases represent future minimum lease payments under noncancelable operating leases (principally
aircraft and facilities) with an initial or remaining term in excess of one year at February 28, 2015.
Included in the table above within the
caption entitled Non-capital purchase obligations and other is our estimate of the current portion of the liability ($1 million) for uncertain tax positions and amounts for purchase obligations that represent noncancelable agreements to
purchase goods or services that are not capital related. Such contracts include those for printing and advertising and promotions contracts. We cannot reasonably estimate the timing of the long-term payments or the amount by which the liability
for uncertain tax positions will increase or decrease over time; therefore, the long-term portion of the liability for uncertain tax positions ($34 million) is excluded from the table.
The amounts reflected in the table above for interest on long-term debt represent future interest payments due on our long-term debt, all of which are fixed
rate.
We had $401 million in deposits and progress payments as of February 28, 2015 on aircraft purchases and other planned aircraft-related
transactions.
Investing Activities
The amounts
reflected in the table above for capital purchase obligations represent noncancelable agreements to purchase capital-related equipment. Such contracts include those for certain purchases of aircraft, aircraft modifications, vehicles, facilities,
computers and other equipment.
Financing Activities
The amounts reflected in the table above for long-term debt represent future scheduled payments on our long-term debt. For the remainder of 2015, we have no
scheduled principal debt payments.
Additional information on amounts included within the operating, investing and financing activities captions in the
table above can be found in our Annual Report.
CRITICAL ACCOUNTING ESTIMATES
The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make
significant judgments and estimates to develop amounts reflected and disclosed in the financial statements. In many cases, there are alternative policies or estimation techniques that could be used. We maintain a thorough process to review the
application of our accounting policies and to evaluate the appropriateness of the many estimates that are required to prepare the financial statements of a complex, global corporation. However, even under optimal circumstances, estimates routinely
require adjustment based on changing circumstances and new or better information.
GOODWILL. Goodwill is tested for impairment between annual tests
whenever events or circumstances make it more likely than not that the fair value of a reporting unit has fallen below its carrying value. We do not believe there has been any change of events or circumstances that would indicate that a reevaluation
of the goodwill of our reporting units is required as of February 28, 2015, nor do we believe the goodwill of our reporting units is at risk of failing impairment testing. For additional details on goodwill impairment testing, refer to Note 1
of our Annual Report.
- 50 -
Information regarding our critical accounting estimates can be found in our Annual Report, including Note 1 to
the financial statements therein. Management has discussed the development and selection of these critical accounting estimates with the Audit Committee of our Board of Directors and with our independent registered public accounting firm.
FORWARD-LOOKING STATEMENTS
Certain statements in this
report, including (but not limited to) those contained in Outlook, Liquidity, Capital Resources, Liquidity Outlook, Contractual Cash Obligations and Critical Accounting
Estimates, and the General, Retirement Plans, and Contingencies notes to the consolidated financial statements, are forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995 with respect to our financial condition, results of operations, cash flows, plans, objectives, future performance and business. Forward-looking statements include those preceded by, followed by or that include the words
may, could, would, should, believes, expects, anticipates, plans, estimates, targets, projects, intends
or similar expressions. These forward-looking statements involve risks and uncertainties. Actual results may differ materially from those contemplated (expressed or implied) by such forward-looking statements, because of, among other things,
potential risks and uncertainties, such as:
|
|
economic conditions in the global markets in which we operate; |
|
|
significant changes in the volumes of shipments transported through our networks, customer demand for our various services or the prices we obtain for our services; |
|
|
damage to our reputation or loss of brand equity; |
|
|
disruptions to the Internet or our technology infrastructure, including those impacting our computer systems and website, or data breaches or leakage, including those arising from malware, attempts to penetrate our
network or human error, which can adversely affect our operations and reputation among customers; |
|
|
the price and availability of jet and vehicle fuel; |
|
|
our ability to manage our cost structure for capital expenditures and operating expenses, and match it to shifting and future customer volume levels; |
|
|
the impact of intense competition on our ability to maintain or increase our prices (including our fuel surcharges in response to fluctuating fuel price) or to maintain or grow our market share; |
|
|
our ability to effectively operate, integrate, leverage and grow acquired businesses, and to continue to support the value we allocate to these acquired businesses, including their goodwill; |
|
|
our ability to maintain good relationships with our employees and prevent attempts by labor organizations to organize groups of our employees, which could significantly increase our operating costs and reduce our
operational flexibility; |
|
|
the impact of costs related to (i) challenges to the status of FedEx Grounds owner-operators as independent contractors, rather than employees, and (ii) any related changes to our relationship with these
owner-operators; |
|
|
our ability to execute on our profit improvement programs; |
|
|
the impact of any international conflicts on the United States and global economies in general, the transportation industry or us in particular, and what effects these events will have on our costs or the demand for our
services; |
- 51 -
|
|
any impacts on our businesses resulting from new domestic or international government laws and regulation, including regulatory actions affecting global aviation or other transportation rights, increased air cargo and
other security or safety requirements, and tax, accounting, trade (such as protectionist measures enacted in response to weak economic conditions), labor (such as card-check legislation or changes to the Railway Labor Act of 1926, as amended
affecting FedEx Express employees), environmental (such as global climate change legislation), information security or postal rules; |
|
|
adverse weather conditions or localized natural disasters in key geographic areas, such as earthquakes, volcanoes, and hurricanes, which can disrupt our electrical service, damage our property, disrupt our operations,
increase our fuel costs and adversely affect our shipment levels; |
|
|
any impact on our business from disruptions or modifications in service by the USPS, which is a significant customer and vendor of FedEx, as a consequence of the USPSs current financial difficulties or any
resulting structural changes to its operations, network, service offerings or pricing; |
|
|
increasing costs, the volatility of costs and funding requirements and other legal mandates for employee benefits, especially pension and healthcare benefits; |
|
|
the increasing costs of compliance with federal, state and foreign governmental agency mandates (including the Foreign Corrupt Practices Act and the U.K. Bribery Act) and defending against inappropriate or unjustified
enforcement or other actions by such agencies; |
|
|
changes in foreign currency exchange rates, especially in the Chinese yuan, euro, Brazilian real, British pound and the Canadian dollar, which can affect our sales levels and foreign currency sales prices;
|
|
|
market acceptance of our new service and growth initiatives; |
|
|
any liability resulting from and the costs of defending against class-action litigation, such as wage-and-hour and discrimination and retaliation claims, and any other legal or governmental proceedings;
|
|
|
the outcome of future negotiations to reach new collective bargaining agreements including with the union that represents the pilots of FedEx Express (the current pilot contract became amendable in March 2013,
and the parties are currently in negotiations); |
|
|
the impact of technology developments on our operations and on demand for our services, and our ability to continue to identify and eliminate unnecessary information technology redundancy and complexity throughout the
organization; |
|
|
governmental underinvestment in transportation infrastructure, which could increase our costs and adversely impact our service levels due to traffic congestion or sub-optimal routing of our vehicles and aircraft;
|
|
|
widespread outbreak of an illness or any other communicable disease, or any other public health crisis; |
|
|
availability of financing on terms acceptable to us and our ability to maintain our current credit ratings, especially given the capital intensity of our operations; and |
|
|
other risks and uncertainties you can find in our press releases and SEC filings, including the risk factors identified under the heading Risk Factors in Managements Discussion and Analysis of
Results of Operations and Financial Condition in our Annual Report, as updated by our quarterly reports on Form 10-Q. |
- 52 -
As a result of these and other factors, no assurance can be given as to our future results and achievements.
Accordingly, a forward-looking statement is neither a prediction nor a guarantee of future events or circumstances and those future events or circumstances may not occur. You should not place undue reliance on the forward-looking statements, which
speak only as of the date of this report. We are under no obligation, and we expressly disclaim any obligation, to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As of February 28, 2015, there had been no material changes in our market risk sensitive instruments and positions since our disclosures in our Annual
Report.
The principal foreign currency exchange rate risks to which we are exposed are in the Chinese yuan, euro, Brazilian real, British pound and the
Canadian dollar. Historically, our exposure to foreign currency fluctuations is more significant with respect to our revenues than our expenses, as a significant portion of our expenses are denominated in U.S. dollars, such as aircraft and fuel
expenses. During the nine months of 2015, the U.S. dollar strengthened relative to the currencies of the foreign countries in which we operate, as compared to May 31, 2014; however, this strengthening did not have a material effect on our
results.
While we have market risk for changes in the price of jet and vehicle fuel, this risk is largely mitigated by our indexed fuel surcharges. For
additional discussion of our indexed fuel surcharges see the Fuel section of Managements Discussion and Analysis of Results of Operations and Financial Condition.
Item 4. Controls and Procedures
The management of FedEx, with the participation of our principal executive and financial officers, has evaluated the effectiveness of our disclosure controls
and procedures in ensuring that the information required to be disclosed in our filings under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SECs rules
and forms, including ensuring that such information is accumulated and communicated to FedEx management as appropriate to allow timely decisions regarding required disclosure. Based on such evaluation, our principal executive and financial officers
have concluded that such disclosure controls and procedures were effective as of February 28, 2015 (the end of the period covered by this Quarterly Report on Form 10-Q).
During our fiscal quarter ended February 28, 2015, no change occurred in our internal control over financial reporting that has materially affected, or
is reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
For a description of all material pending legal proceedings, see Note 8 of the accompanying unaudited condensed consolidated financial statements.
Item 1A. Risk Factors
There have been no material changes from the risk factors disclosed in our Annual Report (under the heading Risk Factors in
Managements Discussion and Analysis of Results of Operations and Financial Condition) in response to Part I, Item 1A of Form 10-K.
- 53 -
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The following table provides information on FedExs repurchases of our common stock during the third quarter of 2015:
ISSUER PURCHASES OF EQUITY SECURITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period |
|
Total Number of Shares Purchased |
|
|
Average Price Paid per Share |
|
|
Total Number of Shares Purchased as Part of Publicly Announced Program |
|
|
Maximum Number of Shares That May Yet Be Purchased Under the Program |
|
Dec. 1-31, 2014 |
|
|
200,000 |
|
|
|
173.22 |
|
|
|
200,000 |
|
|
|
13,800,000 |
|
Jan. 1-31, 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,800,000 |
|
Feb. 1-28, 2015 |
|
|
200,000 |
|
|
|
171.01 |
|
|
|
200,000 |
|
|
|
13,600,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
400,000 |
|
|
|
|
|
|
|
400,000 |
|
|
|
|
|
The repurchases were made under the stock repurchase program approved by our Board of Directors and announced on
September 29, 2014 and through which we were authorized to purchase, in the open market or in privately negotiated transactions, up to an aggregate of 15 million shares of our common stock. As of March 18, 2015, 13.6 million
shares remained authorized for purchase under the September 2014 stock repurchase program, which is the only such program that currently exists. The program does not have an expiration date.
Item 6. Exhibits
|
|
|
Exhibit Number |
|
Description of Exhibit |
|
|
4.1 |
|
Indenture, dated as of August 8, 2006, between FedEx Corporation, the Guarantors named therein and The Bank of New York Mellon Trust Company, N.A. (formerly, The Bank of New York Trust Company, N.A.), as trustee. (Filed as
Exhibit 4.3 to FedEx Corporations Registration Statement on Form S-3 filed with the Securities and Exchange Commission on September 19, 2012, and incorporated herein by reference). |
|
|
4.2 |
|
Supplemental Indenture No. 6, dated as of January 9, 2015, between FedEx Corporation, the Guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as trustee. (Filed as Exhibit 4.1 to FedEx
Corporations Current Report on Form 8-K filed with the Securities and Exchange Commission on January 9, 2015, and incorporated herein by reference). |
|
|
4.3 |
|
Form of 2.300% Note due 2020. (Included in Exhibit 4.1 to FedEx Corporations Current Report on Form 8-K filed with the Securities and Exchange Commission on January 9,
2015, and incorporated herein by reference). |
|
|
4.4 |
|
Form of 3.200% Note due 2025. (Included in Exhibit 4.1 to FedEx Corporations Current Report on Form 8-K filed with the Securities and Exchange Commission on January 9,
2015, and incorporated herein by reference). |
|
|
4.5 |
|
Form of 3.900% Note due 2035. (Included in Exhibit 4.1 to FedEx Corporations Current Report on Form 8-K filed with the Securities and Exchange Commission on January 9,
2015, and incorporated herein by reference). |
|
|
4.6 |
|
Form of 4.100% Note due 2045. (Included in Exhibit 4.1 to FedEx Corporations Current Report on Form 8-K filed with the Securities and Exchange Commission on January 9,
2015, and incorporated herein by reference). |
- 54 -
|
|
|
|
|
4.7 |
|
Form of 4.500% Note due 2065. (Included in Exhibit 4.1 to FedEx Corporations Current Report on Form 8-K filed with the Securities and Exchange Commission on January 9, 2015, and incorporated herein by
reference). |
|
|
10.1 |
|
Amendment dated December 23, 2014 (but effective as of October 27, 2014), amending the Transportation Agreement dated April 23, 2013 between the United States Postal Service and Federal Express Corporation (the
Transportation Agreement). Confidential treatment has been requested for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
|
|
10.2 |
|
Amendment dated December 10, 2014 (but effective as of November 24, 2014), amending the Transportation Agreement. Confidential treatment has been requested for confidential commercial and financial information, pursuant to
Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
|
|
10.3 |
|
Amendment dated December 23, 2014 (but effective as of January 5, 2015), amending the Transportation Agreement. Confidential treatment has been requested for confidential commercial and financial information, pursuant to
Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
|
|
10.4 |
|
Amendment dated February 19, 2015 (but effective as of December 1, 2014), amending the Transportation Agreement. Confidential treatment has been requested for confidential commercial and financial information, pursuant to
Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
|
|
10.5 |
|
Letter Agreement dated as of January 22, 2015, amending the Boeing 767-3S2 Freighter Purchase Agreement dated as of December 14, 2011 between The Boeing Company and Federal Express Corporation. Confidential treatment has
been requested for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
|
|
12.1 |
|
Computation of Ratio of Earnings to Fixed Charges. |
|
|
15.1 |
|
Letter re: Unaudited Interim Financial Statements. |
|
|
31.1 |
|
Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
31.2 |
|
Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
32.1 |
|
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
|
32.2 |
|
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
|
101.1 |
|
Interactive Data Files. |
- 55 -
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
|
|
|
|
|
|
|
|
|
|
|
|
|
FEDEX CORPORATION |
|
|
|
|
Date: March 19, 2015 |
|
|
|
|
|
/s/ JOHN L. MERINO |
|
|
|
|
|
|
JOHN L. MERINO CORPORATE VICE PRESIDENT AND
PRINCIPAL ACCOUNTING OFFICER |
- 56 -
EXHIBIT INDEX
|
|
|
Exhibit Number |
|
Description of Exhibit |
|
|
4.1 |
|
Indenture, dated as of August 8, 2006, between FedEx Corporation, the Guarantors named therein and The Bank of New York Mellon Trust Company, N.A. (formerly, The Bank of New York Trust Company, N.A.), as trustee. (Filed as Exhibit
4.3 to FedEx Corporations Registration Statement on Form S-3 filed with the Securities and Exchange Commission on September 19, 2012, and incorporated herein by reference). |
|
|
4.2 |
|
Supplemental Indenture No. 6, dated as of January 9, 2015, between FedEx Corporation, the Guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as trustee. (Filed as Exhibit 4.1 to FedEx Corporations
Current Report on Form 8-K filed with the Securities and Exchange Commission on January 9, 2015, and incorporated herein by reference). |
|
|
4.3 |
|
Form of 2.300% Note due 2020. (Included in Exhibit 4.1 to FedEx Corporations Current Report on Form 8-K filed with the Securities and Exchange Commission on January 9, 2015, and
incorporated herein by reference). |
|
|
4.4 |
|
Form of 3.200% Note due 2025. (Included in Exhibit 4.1 to FedEx Corporations Current Report on Form 8-K filed with the Securities and Exchange Commission on January 9, 2015, and
incorporated herein by reference). |
|
|
4.5 |
|
Form of 3.900% Note due 2035. (Included in Exhibit 4.1 to FedEx Corporations Current Report on Form 8-K filed with the Securities and Exchange Commission on January 9, 2015, and
incorporated herein by reference). |
|
|
4.6 |
|
Form of 4.100% Note due 2045. (Included in Exhibit 4.1 to FedEx Corporations Current Report on Form 8-K filed with the Securities and Exchange Commission on January 9, 2015, and
incorporated herein by reference). |
|
|
4.7 |
|
Form of 4.500% Note due 2065. (Included in Exhibit 4.1 to FedEx Corporations Current Report on Form 8-K filed with the Securities and Exchange Commission on January 9, 2015, and
incorporated herein by reference). |
|
|
10.1 |
|
Amendment dated December 23, 2014 (but effective as of October 27, 2014), amending the Transportation Agreement dated April 23, 2013 between the United States Postal Service and Federal Express Corporation (the Transportation
Agreement). Confidential treatment has been requested for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
|
|
10.2 |
|
Amendment dated December 10, 2014 (but effective as of November 24, 2014), amending the Transportation Agreement. Confidential treatment has been requested for confidential commercial and financial information, pursuant to Rule
24b-2 under the Securities Exchange Act of 1934, as amended. |
|
|
10.3 |
|
Amendment dated December 23, 2014 (but effective as of January 5, 2015), amending the Transportation Agreement. Confidential treatment has been requested for confidential commercial and financial information, pursuant to Rule 24b-2
under the Securities Exchange Act of 1934, as amended. |
E-1
|
|
|
|
|
10.4 |
|
Amendment dated February 19, 2015 (but effective as of December 1, 2014), amending the Transportation Agreement. Confidential treatment has been requested for confidential commercial and financial information, pursuant to
Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
|
|
10.5 |
|
Letter Agreement dated as of January 22, 2015, amending the Boeing 767-3S2 Freighter Purchase Agreement dated as of December 14, 2011 between The Boeing Company and Federal Express Corporation. Confidential treatment has been
requested for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
|
|
12.1 |
|
Computation of Ratio of Earnings to Fixed Charges. |
|
|
15.1 |
|
Letter re: Unaudited Interim Financial Statements. |
|
|
31.1 |
|
Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
31.2 |
|
Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
32.1 |
|
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
|
32.2 |
|
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
|
101.1 |
|
Interactive Data Files. |
E-2
Exhibit 10.1
|
|
|
|
|
AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT |
|
1. CONTRACT ID CODE |
|
PAGE OF
1 2 |
|
|
|
|
|
|
|
|
|
2.
AMENDMENT/MODIFICATION NO. 028 |
|
3. EFFECTIVE DATE 10/27/2014 |
|
4. REQUISITION/PURCHASE REQ. NO. |
|
5. PROJECT NO.
(If applicable) |
6. ISSUED BY
CODE |
|
5ASNET |
|
7. ADMINISTERED BY (If other than Item 6) |
|
CODE |
|
5ASNET |
ALAINA EARL
Air Transportation CMC United States Postal
Service 475 LEnfant Plaza SW
Room 1P 650 Washington DC 20260-0650
(202) 268-6580 |
|
Air Transportation CMC
Air Transportation CMC United States Postal Service 475 LEnfant Plaza SW, Room 1P650
Washington DC 20260-0650 |
|
|
|
|
|
|
|
8. NAME AND ADDRESS OF CONTRACTOR (No., street, county, State and ZIP Code)
FEDERAL EXPRESS CORPORATION 3610 HACKS CROSS ROAD MEMPHIS, TN 38125-8800 |
|
(x) |
|
9A. AMENDMENT OF SOLICITATION NO.
|
|
|
|
9B. DATED (SEE ITEM 11)
|
|
x |
|
10A. MODIFICATION OF CONTRACT/ORDER NO. ACN-13-FX |
|
|
|
10B. DATED (SEE ITEM 13)
04/23/2013 |
SUPPLIER CODE 000389122 |
|
FACILITY CODE |
|
|
|
|
11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS
|
|
|
|
|
|
|
¨ |
|
|
|
|
|
¨ is extended,
¨ is not extended. |
|
|
|
|
|
|
|
|
|
|
|
|
|
Offers must acknowledge receipt of this amendment
prior to the hour and date specified in the solicitation or as amended, by one of the following methods: (a) By completing Items 8 and 15, and
returning copies of the amendment; (b) By acknowledging receipt of this amendment on each copy of the offer
submitted; or (c) By separate letter or telegram which includes a reference to the solicitation and amendment number. FAILURE OF YOUR ACKNOWLEDGEMENT TO BE RECEIVED AT THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE HOUR AND DATE
SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue of this amendment you desire to change an offer already submitted, such change may be made by telegram or letter, provided each telegram or letter makes reference to the solicitation and
this amendment, and is received prior to the opening hour and date specified. |
|
|
|
12. ACCOUNTING AND APPROPRIATION DATA (If required).
See Schedule |
|
Net Decrease [*] |
|
|
|
13. THIS ITEM APPLIES ONLY TO MODIFICATIONS OF CONTRACTS/ORDERS. IT MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14
|
|
|
|
|
|
|
|
|
|
|
|
(x) |
|
A. |
|
THIS CHANGE BY CLAUSE IS ISSUED PURSUANT TO: (Specify clause) THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN ITEM 10A. |
|
|
|
|
x |
|
|
|
Monthly Fuel Adjustment |
|
|
|
|
¨ |
|
B. |
|
THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE ADMINISTRATIVE CHANGES (such as
changes in paying office, appropriation date, etc.) SET FORTH IN ITEM 14. |
|
|
|
|
¨ |
|
C. |
|
THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO AUTHORITY OF: THE CHANGES SET FORTH IN
ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN ITEM 10A. |
|
|
|
|
¨ |
|
D. |
|
OTHER (such as no cost change/cancellation, termination, etc.) (Specify type of modification and
authority): THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN ITEM 10A. |
|
|
|
|
|
|
|
E.
IMPORTANT: Contractor ¨ is not, x is required to sign this document and
return 1 copies to the issuing office.
|
|
|
14. DESCRIPTION OF AMENDMENT/MODIFICATION (Organized by UCF
section headings, including solicitation/contract subject matter where feasible.) In accordance with contract ACN-13-FX and
the Fuel Adjustment section, the following Line Haul Rate (fuel) for the Day Network as set out in Attachment 10 is modified for performance during the period of October 27, 2014 to November 30, 2014 (Operating Period 14) as
follows: From:
[*] per cubic foot
To:
Continued
|
|
|
|
|
|
Except as provided herein, all terms and conditions of the document referenced in Item 9A or 10A, as heretofore changed, remains
unchanged and in full force and effect. |
|
|
|
|
|
|
|
15A. NAME AND TITLE OF SIGNER (Type or
print) Paul J. Herron, Vice President
|
|
16A. NAME AND TITLE OF CONTRACTING OFFICER (Type or print)
Brian McKain
|
|
|
|
|
|
|
|
|
|
|
|
15B.
CONTRACTOR/OFFEROR
/s/ PAUL J. HERRON (Signature of person authorized to sign) |
|
15C. DATE SIGNED
12/21/14 |
|
16B. CONTRACT AUTHORITY
/s/ Brian McKain
(Signature of Contracting Officer) |
|
16C. DATE SIGNED
12/23/14 |
|
|
*Blank spaces contained confidential information which has been filed separately with the Securities and
Exchange Commission
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.
|
|
|
|
|
|
|
|
|
CONTINUATION SHEET |
|
REQUISITION NO.
|
|
PAGE OF
2 2 |
|
|
|
|
|
|
|
|
|
CONTRACT/ORDER NO.
ACN-13-FX/028 |
|
AWARD/ EFFECTIVE DATE
10/27/2014 |
|
MASTER/AGENCY CONTRACT NO. |
|
SOLICITATION NO. |
|
SOLICITATION ISSUE DATE |
|
|
|
|
|
|
|
|
|
|
|
ITEM NO. |
|
SCHEDULE OF SUPPLIES / SERVICES |
|
QUANTITY |
|
UNIT |
|
UNIT PRICE |
|
AMOUNT |
00001 |
|
[*] per cubic foot
This is a decrease of [*].
[*]
Sub Rept Reqd: Y Carrier Code: FX Route Termini
S: Various Route Termini End: Various Payment
Terms: SEE CONTRACT Delivery:
10/27/2014 Discount Terms:
See Schedule
Accounting Info: BFN: 670167
FOB: Destination Period of Performance:
10/27/2014 to 09/30/2020 Change Item 00001 to read as follows:
Day Network Account Number: 53503 |
|
|
|
|
|
|
|
[*] |
*Blank spaces contained confidential information which has been filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.
Exhibit 10.2
|
|
|
|
|
AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT |
|
1. CONTRACT ID CODE |
|
PAGE OF
1 2 |
|
|
|
|
|
|
|
|
|
2. AMENDMENT/MODIFICATION NO.
029 |
|
3. EFFECTIVE DATE
11/24/2014 |
|
4. REQUISITION/PURCHASE REQ. NO. |
|
5. PROJECT NO.
(If applicable) |
6. ISSUED BY
CODE |
|
5ASNET |
|
7. ADMINISTERED BY (IF OTHER THAN ITEM 6) |
|
CODE |
|
5ASNET |
ALAINA EARL
Air Transportation CMC United States Postal
Service 475 LEnfant Plaza SW
Room 1P 650 Washington DC 20260-0650
(202) 268-6580 |
|
Air Transportation CMC
Air Transportation CMC United States Postal
Service 475 LEnfant Plaza SW, Room 1P650 Washington DC 20260-0650 |
|
|
|
|
|
|
|
8. NAME AND ADDRESS OF CONTRACTOR (No., Street, County, State, and Zip Code) FEDERAL EXPRESS CORPORATION 3610 HACKS CROSS ROAD
MEMPHIS TN 38125-8800 |
|
(x) |
|
9A. AMENDMENT OF SOLICITATION NO.
|
|
|
|
9B. DATED (SEE ITEM 11)
|
|
x |
|
10A. MODIFICATION OF CONTRACT/ORDER NO. ACN-13-FX
|
|
|
|
10B. DATED (SEE ITEM 13)
04/23/2013 |
SUPPLIER CODE: 000389122 |
|
FACILITY CODE |
|
|
|
|
11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS
|
|
|
|
|
|
|
¨ |
|
|
|
|
|
¨ is extended,
¨ is not extended. |
Offers must acknowledge receipt of this amendment prior to the hour and date specified in the solicitation or as amended,
by one of the following methods: (a) By completing items 8 and 15, and returning copies of the amendment; (b) By acknowledging receipt of
this amendment on each copy of the offer submitted; or (c) By separate letter or telegram which includes a reference to the solicitation and amendment number. FAILURE OF YOUR ACKNOWLEDGEMENT TO BE RECEIVED AT THE PLACE DESIGNATED FOR THE
RECEIPT OF OFFERS PRIOR TO THE HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue of this amendment you desire to change an offer already submitted, such change may be made by telegram or letter, provided each telegram or
letter makes reference to the solicitation and this amendment, and is received prior to the opening hour and date specified.
|
|
|
12. ACCOUNTING AND APPROPRIATION
DATA (If Required) See Schedule |
|
$0.00 |
|
|
|
13. THIS
ITEM APPLIES ONLY TO MODIFICATIONS OF CONTRACTS/ORDERS. IT MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14. |
|
|
|
|
|
|
|
|
|
|
|
(x) |
|
A. |
|
THIS CHANGE BY CLAUSE IS ISSUED PURSUANT TO: (Specify Clause) THE CHANGES SET FORTH
IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN ITEM 10A. |
|
|
|
|
¨ |
|
|
|
|
|
|
|
¨ |
|
B. |
|
THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE ADMINISTRATIVE CHANGES (such as
changes in paying office, appropriation date, etc.) SET FORTH IN ITEM 14. |
|
|
|
|
¨ |
|
C. |
|
THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO AUTHORITY OF: THE CHANGES SET FORTH IN
ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN ITEM 10A. |
|
|
|
|
x |
|
D. |
|
OTHER (such as no cost change/cancellation, termination, etc.) (Specify type of modification and
authority): THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN ITEM 10A. By Mutual Agreement of the Contracting
Parties |
|
|
|
|
|
|
|
E.
IMPORTANT: Contractor ¨ is not, x is required to sign this document and
return 1 copies to the issuing office.
|
|
|
14. DESCRIPTION OF AMENDMENT/MODIFICATION (Organized by UCF
section headings, including solicitation/contract subject matter where feasible.) This modification is applicable to Operating Period 15 (Peak).
1. FedEx will accept up to a total of [*] cubic feet per day in the form of Ad Hoc Trucks and/or charter flights on the Day Network at
the Memphis Hub. FedEx must approve any additional
charters or rerouting of a scheduled charter flight in advance. All Domestic Charter flights must arrive by 10:00 AM daily at the Memphis Hub.
2. Ad hoc trucks accepted by FedEx will be paid at 3,000 cubic feet per truck.
3. In return for taking ad hoc trucks the Postal Service will
grant a waiver of any reductions in payment for delivery performance and missing scans. Continued
Except as
provided herein, all terms and conditions of the document referenced in Item 9A or 10A, as heretofore changed, remains unchanged and in full force and effect. |
|
|
|
|
|
|
|
15A. NAME AND TITLE OF SIGNER (Type or
print) Paul J. Herron, Vice
President |
|
16A. NAME AND TITLE OF CONTRACTING OFFICER (Type or print)
Brian McKain
|
|
|
|
|
|
|
|
|
|
|
|
15B.
CONTRACTOR/OFFEROR
/s/ PAUL J. HERRON (Signature of person authorized to sign) |
|
15C. DATE SIGNED 12-8-2014 |
|
16B. CONTRACT AUTHORITY
/s/ BRIAN MCKAIN
(Signature of Contracting Officer) |
|
16C. DATE SIGNED
12/10/14 |
|
|
* Blank spaces contained confidential information which has been filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.
|
|
|
|
|
|
|
|
|
CONTINUATION SHEET |
|
REQUISITION NO.
|
|
PAGE OF
2 2 |
|
|
|
|
|
|
|
|
|
CONTRACT/ORDER NO.
ACN-13-FX/029 |
|
AWARD/ EFFECTIVE DATE
11/24/2014 |
|
MASTER/AGENCY CONTRACT NO. |
|
SOLICITATION NO. |
|
SOLICITATION ISSUE DATE |
|
|
|
|
|
|
|
|
|
|
|
ITEM NO |
|
SCHEDULE OF SUPPLIES / SERVICES |
|
QUANTITY |
|
UNIT |
|
UNIT PRICE |
|
AMOUNT |
|
|
4. For the period of December 1, 2014 through
December 24, 2014, MEM will serve as co-terminus for all mail destinating to LAX. 5. FedEx is to supply Unit Load Device (ULD) containers or pallets and nets for charter operations during the Peak Season 2014, per the attached, Peak 2014 (FY15) Charter ULD Agreement. FedEx
will have the ULD containers or pallets and nets in place for operations effective November 24, 2014, through December 28, 2014. Payment for the use of the FedEx ULD containers will be based on agreed upon terms outlined in the attached
Peak 2014 (FY15) Charter ULD Agreement. Payment will be made through the reconciliation process. 6. In order to balance the ULDs needed each day, FedEx will load the LAX outbound mail from Memphis on the charter flight first and then load the remaining Postal containers on the scheduled FedEx
Flights. Sub Rept Reqd: Y Carrier Code: FX Route Termini S: Various Route Termini End: Various Payment Terms: SEE CONTRACT
Period of Performance: 10/27/2014 to 09/30/2020 |
|
|
|
|
|
|
|
|
Peak 2014 (FY15) Charter ULD Agreement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nov Week 5, Nov 24 to 30 |
|
Dec Week 1, Dec 1 to 7 |
|
Dec Week 2, Dec 8 to 14 |
|
Dec Week 3, Dec 15 to 21 |
|
Dec Week 4,
Dec 22 to 28 |
Charters |
|
AMJ |
|
LD3 |
|
AMJ |
|
LD3 |
|
AMJ |
|
LD3 |
|
AMJ |
|
LD3 |
|
AMJ |
|
LD3 |
LAX |
|
|
|
|
|
[*] |
|
[*] |
|
[*] |
|
[*] |
|
[*] |
|
[*] |
|
[*] |
|
[*] |
HNL |
|
[*] |
|
[*] |
|
[*] |
|
[*] |
|
[*] |
|
[*] |
|
[*] |
|
[*] |
|
[*] |
|
[*] |
SJU |
|
[*] |
|
[*] |
|
[*] |
|
[*] |
|
[*] |
|
[*] |
|
[*] |
|
[*] |
|
[*] |
|
[*] |
ANC |
|
[*] |
|
[*] |
|
[*] |
|
[*] |
|
[*] |
|
[*] |
|
[*] |
|
[*] |
|
[*] |
|
[*] |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total ULDs by Week |
|
[*] |
|
[*] |
|
[*] |
|
[*] |
|
[*] |
|
[*] |
|
[*] |
|
[*] |
|
[*] |
|
[*] |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total AMJs for the
Period |
|
[*] |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total LD3s for the Period |
|
[*] |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ULD Charges for Period |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ULD Type |
|
AMJ |
|
LD3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of containers |
|
[*] |
|
[*] |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charge per ULD |
|
[*] |
|
[*] |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Charges Per ULD type |
|
[*] |
|
[*] |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Charges |
|
|
|
|
|
[*] |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assumptions:
1. [*]
2. [*]
3. [*]
4. HNL ops from Nov. 30th through Dec.
23rd. ANC ops from Dec. 3rd through Dec. 21st. SJU ops from Nov. 30th to Dec. 23rd. LAX ops from December 2nd through December 23rd
5. ULDs are provided the day prior to the start of the first operation and are returned to FedEx the day after the last operation.
The day prior and after operations are included in the rental agreement.
6. The total amount of ULDs charged is based on the 3 offshore locations and LAX, 2 ULD sets per operational leg and length of operational periods as outlined above.
7. The amounts charged per container type are AMJ - [*] and LD3s - [*] based on current IATA rates.
8. The LAX 747 charter in weeks 3 and 4 may have different combinations of ULDs based on availability at the time of operation:
Uppers: AMJ, AAD, pallet, or a combination. Bellies: LD3, pallet, or a combination. The uppers ULD charge is [*] and the bellies ULD charge is [*] per
position for whatever combination of ULDs available for weeks 3 and 4.
9. No contingency dates were provided, but additional charges are due
for dates prior to or after the schedule dates listed in item 4
* |
Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities
Exchange Act of 1934, as amended. |
Exhibit 10.3
|
|
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|
AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT |
|
1. CONTRACT ID CODE |
|
PAGE OF
1 3 |
|
|
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|
|
|
2. AMENDMENT/MODIFICATION NO.
030 |
|
3. EFFECTIVE DATE 01/05/2015 |
|
4. REQUISITION/PURCHASE REQ. NO. |
|
5. PROJECT NO.
(If applicable) |
6. ISSUED BY
CODE |
|
5ASNET |
|
7. ADMINISTERED BY (IF OTHER THAN ITEM 6) |
|
CODE |
|
5ASNET |
ALAINA EARL
Air Transportation CMC United States Postal
Service 475 LEnfant Plaza SW
Room 1P 650 Washington DC 20260-0650
(202) 268-6580 |
|
Air Transportation CMC
Air Transportation CMC United States Postal
Service 475 LEnfant Plaza SW, Room 1P650 Washington DC 20260-0650 |
|
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|
8. NAME AND ADDRESS OF CONTRACTOR (No., Street, County, State, and Zip Code) FEDERAL EXPRESS CORPORATION 3610 HACKS CROSS ROAD
MEMPHIS TN 38125-8800 |
|
(x) |
|
9A. AMENDMENT OF SOLICITATION NO.
|
|
|
|
9B. DATED (SEE ITEM 11)
|
|
x |
|
10A. MODIFICATION OF CONTRACT/ORDER NO. ACN-13-FX
|
|
|
|
10B. DATED (SEE ITEM 13)
04/23/2013 |
SUPPLIER CODE: 000389122 |
|
FACILITY CODE |
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|
11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS
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¨ |
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¨ is extended,
¨ is not extended. |
Offers must acknowledge receipt of this amendment prior to the hour and date specified in the solicitation or as amended,
by one of the following methods: (a) By completing items 8 and 15, and returning copies of the amendment; (b) By
acknowledging receipt of this amendment on each copy of the offer submitted; or (c) By separate letter or telegram which includes a reference to the solicitation and amendment number. FAILURE OF YOUR ACKNOWLEDGEMENT TO BE RECEIVED AT THE PLACE
DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue of this amendment you desire to change an offer already submitted, such change may be made by telegram or letter, provided
each telegram or letter makes reference to the solicitation and this amendment, and is received prior to the opening hour and date specified.
|
|
|
12. ACCOUNTING AND APPROPRIATION DATA
(If Required) See Schedule |
|
$0.00 |
|
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13. THIS
ITEM APPLIES ONLY TO MODIFICATIONS OF CONTRACTS/ORDERS. IT MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14. |
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(x) |
|
A. |
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THIS CHANGE BY CLAUSE IS ISSUED PURSUANT TO: (Specify Clause) THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN ITEM 10A. |
¨ |
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¨ |
|
B. |
|
THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE ADMINISTRATIVE CHANGES (such as
changes in paying office, appropriation date, etc.) SET FORTH IN ITEM 14. |
¨ |
|
C. |
|
THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO AUTHORITY OF: THE CHANGES SET FORTH IN
ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN ITEM 10A. |
x |
|
D. |
|
OTHER (such as no cost change/cancellation, termination, etc.) (Specify type of modification and
authority): THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN ITEM 10A. By Mutual Agreement of the Contracting
Parties |
|
|
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E.
IMPORTANT: Contractor ¨ is not, x is required to sign this document and
return 1 copies to the issuing office.
|
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|
14. DESCRIPTION OF AMENDMENT/MODIFICATION (Organized by UCF
section headings, including solicitation/contract subject matter where feasible.) The purpose of this modification is to incorporate the following adjustments into ACN-13-FX beginning with Operating Period 16. The terms below apply to the Day Network only.
1- FedEx will accept mail from Origin air stops as identified in Attachment 3 Operating
Plan Day Network in excess of 105% of Planned Capacity on a space available basis.
2- FedEx will accept up to a total of
fifteen (15) Ad Hoc Trucks per day on the Day Network at the Memphis Hub.
a. All ad hoc trucks must arrive at the Memphis Hub before 10:00
a.m. local time and must be coordinated with FedEx in advance. Required Delivery Time (RDT) will be established
in Continued ...
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Except as provided herein, all terms and conditions of the document referenced in Item 9A or 10A, as heretofore changed, remains
unchanged and in full force and effect. |
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15A. NAME AND TITLE OF SIGNER (Type or
print) Paul J. Herron, Vice
President |
|
16A. NAME AND TITLE OF CONTRACTING OFFICER (Type or print)
Brian Mckain
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15B.
CONTRACTOR/OFFEROR
/s/ PAUL J. HERRON (Signature of person authorized to sign) |
|
15C. DATE SIGNED 12/21/14 |
|
16B. CONTRACT AUTHORITY
/s/ BRIAN MCKAIN
(Signature of Contracting Officer) |
|
16C. DATE SIGNED
12/23/14 |
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|
CONTINUATION SHEET |
|
REQUISITION NO.
|
|
PAGE OF
2 3 |
|
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|
|
|
|
|
CONTRACT/ORDER NO.
ACN-13-FX/030 |
|
AWARD/ EFFECTIVE DATE 01/05/2015 |
|
MASTER/AGENCY CONTRACT NO. |
|
SOLICITATION NO. |
|
SOLICITATION ISSUE DATE |
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ITEM NO |
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SCHEDULE OF SUPPLIES / SERVICES |
|
QUANTITY |
|
UNIT |
|
UNIT PRICE |
|
AMOUNT |
|
|
accordance with Attachment 3, Operating Plan, Day Network
contingent on the ad hoc trucks arriving at the Memphis Hub before 10:00 a.m. local time. Late arriving trucks (after 10:00 a.m. local time) will be assigned an RDT based on arrival on the next operational day. All RDTs will be adjusted to
reflect the first FedEx operational scan at the Memphis Hub. b. Initial
Payment for ad hoc trucks will be made in the amount of 3,000 cubic feet per truck on an Operating Period basis, no later than 30 days after the last day of each Operating Period. Final payment for ad hoc trucks will be adjusted, if applicable, for
any reductions of payment under Part 1: Statement of Work Reduction of Payment and will also be adjusted, if applicable, based upon the Day Turn Scan Requirements under contract section Payment Procedures, Rates and Payment General (with the
exception that the volumes moving via ad hoc trucks will not require a Possession Scan). Any adjustments described here, if applicable, will be made through the reconciliation process.
3- Handling Units that represent the amount of mail that FedEx accepts in excess of
105% of the Operating Periods Planned Capacity by Operating Day will not be assessed a reduction of payment under Part 1: Statement of Work Reduction of Payment or be taken into account under Part 1: Statement of Work Performance Requirements
and Measurement. a. Handling Units in excess of 105% of the Operating
Periods Planned Capacity will be identified by determining the actual volume, in cubic feet (weight of the Handling Units divided by contract density for the applicable Operating Period), delivered each day to each destination that is in
excess of 105% of the Planned Capacity for the relevant destination. b.
In each instance, volume in excess of 105% will be the latest volume to arrive as evidenced by the delivery scans. Continued
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|
CONTINUATION SHEET |
|
REQUISITION NO.
|
|
PAGE OF 3 3 |
|
|
|
|
|
|
|
|
|
CONTRACT/ORDER NO.
ACN-13-FX/030 |
|
AWARD/ EFFECTIVE DATE 01/05/2015 |
|
MASTER/AGENCY CONTRACT NO. |
|
SOLICITATION NO. |
|
SOLICITATION ISSUE DATE |
|
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ITEM NO |
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SCHEDULE OF SUPPLIES / SERVICES |
|
QUANTITY |
|
UNIT |
|
UNIT PRICE |
|
AMOUNT |
|
|
4- Part 1: Statement of Work Reduction of Payment, Section a,
will be modified as follows: a. All Handling Units delivered up to thirty
(30) minutes late will be subject to a [*]% reduction of the Transportation Payment. 5- Clause B-1: Definitions will be modified to replace the definition of Delivery Scan with the following:
Delivery Scan: A scan performed by the aviation supplier that indicates that the aviation supplier has tendered volume to the Postal Service. In instances
where a Delivery Scan is indicated by a combination of evidence of any scan performed by the aviation supplier and a CARDIT 3 from the THS indicating delivery of the Handling Unit to the third party ground handler, the time indicated for the latest
ULD tendered on that Operating Day will be used for the purposes of determining service performance and associated payment reductions described in Part 1: Statement of Work; Performance Requirements and Measurement and Part 1: Statement of Work;
Reduction of Payment. All other requirements, terms, and conditions of
the Contract remain unchanged and in full force and effect. Sub Rept
Reqd: Y Carrier Code: FX Route Termini S: Various Route Termini End: Various Payment
Terms: SEE CONTRACT Period of Performance:
10/27/2014 to 09/30/2020 |
|
|
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|
* |
Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities
Exchange Act of 1934, as amended. |
Exhibit 10.4
|
|
|
|
|
AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT |
|
1. CONTRACT ID CODE |
|
PAGE OF
1 2 |
|
|
|
|
|
|
|
|
|
2.
AMENDMENT/MODIFICATION NO. 031 |
|
3. EFFECTIVE DATE 12/01/2014 |
|
4. REQUISITION/PURCHASE REQ. NO. |
|
5. PROJECT NO.
(If applicable) |
6. ISSUED BY
CODE |
|
5ASNET |
|
7. ADMINISTERED BY (IF OTHER THAN ITEM 6) |
|
CODE |
|
5ASNET |
ALAINA EARL
Air Transportation CMC United States Postal
Service 475 LEnfant Plaza SW
Room 1P 650 Washington DC 20260-0650
(202) 268-6580 |
|
Air Transportation CMC
Air Transportation CMC United States Postal Service 475 LEnfant Plaza SW, Room 1P650
Washington DC 20260-0650 |
|
|
|
|
|
|
|
8. NAME AND ADDRESS OF CONTRACTOR (No., Street, County, State, and Zip Code) FEDERAL EXPRESS CORPORATION 3610 HACKS CROSS ROAD
MEMPHIS TN 38125-8800 |
|
(x) |
|
9A. AMENDMENT OF SOLICITATION NO.
|
|
|
|
9B. DATED (SEE ITEM 11)
|
|
x |
|
10A. MODIFICATION OF CONTRACT/ORDER NO. ACN-13-FX |
|
|
|
10B. DATED (SEE ITEM 13)
04/23/2013 |
SUPPLIER CODE: 000389122 |
|
FACILITY CODE |
|
|
|
|
11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS
|
|
|
|
|
|
|
¨ |
|
|
|
|
|
¨ is extended,
¨ is not extended. |
|
|
|
|
|
|
|
|
|
|
|
|
|
Offers must acknowledge receipt of this amendment
prior to the hour and date specified in the solicitation or as amended, by one of the following methods: (a) By completing items 8 and 15, and
returning copies of the amendment; (b) By acknowledging receipt of this amendment on each copy of the offer
submitted; or (c) By separate letter or telegram which includes a reference to the solicitation and amendment number. FAILURE OF YOUR ACKNOWLEDGEMENT TO BE RECEIVED AT THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE HOUR AND DATE
SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue of this amendment you desire to change an offer already submitted, such change may be made by telegram or letter, provided each telegram or letter makes reference to the solicitation and
this amendment, and is received prior to the opening hour and date specified. |
|
|
|
12. ACCOUNTING AND APPROPRIATION DATA (If Required)
See Schedule |
|
NET DECREASE: [*] |
|
|
|
13. THIS
ITEM APPLIES ONLY TO MODIFICATIONS OF CONTRACTS/ORDERS. IT MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14. |
|
|
|
|
|
|
|
|
|
|
|
(x) |
|
A. |
|
THIS CHANGE BY CLAUSE IS ISSUED PURSUANT TO: (Specify Clause) THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN ITEM 10A. |
|
|
|
|
x |
|
|
|
Monthly Fuel Adjustment
|
|
|
|
|
¨ |
|
B. |
|
THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE ADMINISTRATIVE CHANGES (such as
changes in paying office, appropriation date, etc.) SET FORTH IN ITEM 14. |
|
|
|
|
¨ |
|
C. |
|
THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO AUTHORITY OF: THE CHANGES SET FORTH IN
ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN ITEM 10A. |
|
|
|
|
x |
|
D. |
|
OTHER (such as no cost change/cancellation, termination, etc.) (Specify type of modification and
authority): THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN ITEM 10A. By Mutual Agreement of the Contracting
Parties |
|
|
|
|
|
|
|
E.
IMPORTANT: Contractor ¨ is not, x is required to sign this document and
return 1 copies to the issuing office.
|
|
|
14. DESCRIPTION OF AMENDMENT/MODIFICATION (Organized by UCF
section headings, including solicitation/contract subject matter where feasible.) In accordance with contract ACN-13-FX and
the Fuel Adjustment section, the following Line Haul Rate (fuel) for the Day Network as set out in Attachment 10 is modified for performance during the period of December 1, 2014 to January 4, 2015 (Operating Period 15) as
follows: From:
[*] per cubic foot
To: [*]
per cubic foot Continued
|
|
|
|
|
|
Except as provided herein, all terms and conditions of the document referenced in Item 9A or 10A, as heretofore changed, remains
unchanged and in full force and effect. |
|
|
|
|
|
|
|
15A. NAME AND TITLE OF SIGNER (Type or
print) Paul J. Herron, Vice President
|
|
16A. NAME AND TITLE OF CONTRACTING OFFICER (Type or print)
Brian Mckain
|
|
|
|
|
|
|
|
|
|
|
|
15B.
CONTRACTOR/OFFEROR
/s/ PAUL J. HERRON (Signature of person authorized to sign) |
|
15C. DATE SIGNED 02/13/2015 |
|
16B. CONTRACT AUTHORITY
/s/ BRIAN MCKAIN
(Signature of Contracting Officer) |
|
16C. DATE SIGNED
02/19/15 |
|
|
* Blank spaces contained confidential information which has been filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.
|
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|
CONTINUATION SHEET |
|
REQUISITION NO.
|
|
PAGE OF
2 2 |
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|
CONTRACT/ORDER NO.
ACN-13-FX/031 |
|
AWARD/ EFFECTIVE DATE
12/01/2014 |
|
MASTER/AGENCY CONTRACT NO. |
|
SOLICITATION NO. |
|
SOLICITATION ISSUE DATE |
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ITEM NO |
|
SCHEDULE OF SUPPLIES / SERVICES |
|
QUANTITY |
|
UNIT |
|
UNIT PRICE |
|
AMOUNT |
00001
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|
This is a decrease of [*].
[*]
This modification also incorporates the language from Modification 30
into the contract document as shown in the attached. A summary of these changes are as follows: Page 9: Aviation Supplier Planned Accommodation Day Network Page 22: Reduction of Payment Page 28: Payment Processing Day Network Per Cube Page 34: Clause B-1: Definitions (March 2006) (Tailored) An additional language change from Modification 30 is the removal of the following sentence from Line 1262 of the contract language:
The invoiced cubic feet for ad hoc trucks will be calculated by dividing the
Handling Units Postal Service assigned rounded weight by the applicable contract density. Sub Rept Reqd: Y Carrier Code: FX Route Termini S: Various Route Termini End: Various
Payment Terms: SEE CONTRACT Delivery:
12/01/2014 Discount Terms:
See Schedule
Accounting Info: BFN: 670167
FOB: Destination Period of Performance:
12/01/2014 to 09/30/2020 Change Item 00001 to read as follows:
Day Network Account Number: 53503 |
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[*] |
* Blank spaces contained confidential information which has been filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.
United States Postal Service
AIR CARGO NETWORK
Contract ACN-13-FX
Awarded By:
Air Transportation CMC
Transportation Portfolio
Supply Management
475 LEnfant Plaza SW
Room 1P 650
Washington, DC 20260-0650
April 23, 2013
Modification 1 Issued May 28, 2013
Modification 2 Issued June 24, 2013
Modification 3 Issued September 24, 2013
Modification 7 Issued October 22, 2013
Modification 11 Issued January 6,
2014
Modification 12 February 3, 2014
Modification 13 March 3, 2014
Modification 14 March 31, 2014
Modification 15 April 28, 2014
Modification 16 May 27, 2014
Modification 17, May 11, 2014
Modification 18, June 18, 2014
Modification 19, June 27, 2014
Modification 21, June 27, 2014
Modification 22, June 30, 2014
Air Cargo Network
Contract ACN-13-FX
Table of Contents
Modification 23, July 28, 2014
Modification 24, September 1, 2014
Modification 25, September 29, 2014
Modification
26, September 29, 2014
Modification 28, October 27, 2014
Modification 30, January 5, 2015
Modification 31, January 13, 2015
Air Cargo Network
Contract ACN-13-FX
Table of Contents
Table of Contents
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Part 1: Statement of Work |
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6 |
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Purpose and Scope |
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6 |
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Scale |
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6 |
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Services Provided |
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6 |
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Service Points |
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7 |
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Management Plan |
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7 |
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Frequency |
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8 |
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Mail Assignment and Transport - Day Network |
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8 |
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Mail Assignment and Transport - Night Network |
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8 |
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Local Agreements |
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8 |
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Postal Service Performs Terminal Handling Service (THS) Operation - Day Network |
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8 |
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Aviation Supplier Planned Accommodation - Day Network |
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9 |
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Aviation Supplier Planned Accommodation - Night Network |
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10 |
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Delivery - Day Network |
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10 |
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Delivery - Night Network |
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10 |
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Saturday Delivery - Day Network |
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10 |
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Specific Delivery Instructions |
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10 |
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Boarding Priority - Day Network |
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10 |
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Boarding Priority - Night Network |
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11 |
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Repossession of Mail by the Postal Service |
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11 |
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Treatment of Exceptional Types of Mail |
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11 |
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Perishable Mail and Live Mail |
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13 |
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Registered Mail |
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13 |
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Offshore Capacity Requirement - Day Network |
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13 |
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Volume Commitment - General Information |
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14 |
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Volume Commitment - Contract Volume Minimum - Day Network |
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14 |
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Operating Period Volume Minimum - Day Network |
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14 |
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Operating Period Volume Minimum - Night Network |
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14 |
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Volume Commitment - Holiday - Day Network |
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15 |
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Volume Commitment - Holiday - Night Network |
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15 |
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Operating Periods |
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16 |
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Ordering Process - Non-Peak - Day Network |
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16 |
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Ordering Process - Non-Peak - Night Network |
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16 |
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Ordering Process - Peak - Day Network |
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17 |
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Ordering Process - Peak - Night Network |
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17 |
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Electronic Data Interchange (EDI) |
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18 |
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Operational Condition Reports |
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18 |
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Dimensional Weight Reports |
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19 |
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Scanning and Data Transmission |
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19 |
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Performance Requirements and Measurement |
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20 |
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Reduction of Payment |
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21 |
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Performance Management |
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22 |
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Sustainability |
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22 |
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Security |
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23 |
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Postal Service Employees Allowed Access |
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23 |
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Personnel Screening |
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23 |
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Payment Procedures |
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27 |
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Rates and Payment General |
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27 |
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Payment Processing - Day Network - Per Cube |
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28 |
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Payment Processing - Night Network - Per Pound |
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31 |
|
Reconciliation Process |
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31 |
|
Air Cargo Network
Contract ACN-13-FX
Table of Contents
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Part 3: Contract Clauses |
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33 |
|
Clause B-1: |
|
Definitions (March 2006) (Tailored) |
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33 |
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Clause B-3: |
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Contract Type (March 2006) (Tailored) |
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36 |
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Clause B-9: |
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Claims and Disputes (March 2006) (Tailored) |
|
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36 |
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Clause B-10: |
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Pricing of Adjustments (March 2006) (Tailored) |
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37 |
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Clause B-15: |
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Notice of Delay (March 2006) (Tailored) |
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37 |
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Clause B-22: |
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Interest (March 2006) (Tailored) |
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38 |
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Clause B-25: |
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Advertising of Contract Awards (March 2006) |
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38 |
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Clause B-30: |
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Permits and Responsibilities (March 2006) (Tailored) |
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38 |
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Clause B-39: |
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Indemnification (March 2006) (Tailored) |
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38 |
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Clause B-45: |
|
Other Contracts (March 2006) (Tailored) |
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38 |
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Clause B-65: |
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Adjustments to Compensation (March 2006) (Tailored) |
|
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38 |
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Clause B-69: |
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Events of Default (March 2006) (Tailored) |
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40 |
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Clause B-75: |
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Accountability of the Aviation Supplier (Non-Highway) (March 2006) (Tailored) |
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40 |
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Clause B-77: |
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Protection of the Mail (Non-Highway) (March 2006) (Tailored) |
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41 |
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Clause B-80: |
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Laws and Regulations Applicable (March 2006) (Tailored) |
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42 |
|
Clause B-81: |
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Information or Access by Third Parties (March 2006) (Tailored) |
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42 |
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Clause B-82: |
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Access by Officials (March 2006) (Tailored) |
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42 |
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Clause 1-1: |
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Privacy Protection (July 2007) |
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43 |
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Clause 1-5: |
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Gratuities or Gifts (March 2006) |
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44 |
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Clause 1-6: |
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Contingent Fees (March 2006) |
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44 |
|
Clause 1-11: |
|
Prohibition Against Contracting with Former Officers or PCES Executives (March 2006) (Tailored) |
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45 |
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Clause 1-12: |
|
Use of Former Postal Service Employees (March 2006) (Tailored) |
|
|
45 |
|
Clause 2-11: |
|
Postal Service Property - Fixed-Price (March 2006) (Tailored) |
|
|
45 |
|
Clause 2-22: |
|
Value Engineering Incentive (March 2006) |
|
|
47 |
|
Clause 3-1: |
|
Small, Minority, and Woman-owned Business Subcontracting Requirements (March 2006) |
|
|
50 |
|
Clause 3-2: |
|
Participation of Small, Minority, and Woman-owned Businesses (March 2006) |
|
|
51 |
|
Clause 4-1: |
|
General Terms and Conditions (July 2007) (Tailored) |
|
|
51 |
|
Clause 4-2: |
|
Contract Terms and Conditions Required to Implement Policies, Statutes, or Executive Orders (July 2009)
(Tailored) |
|
|
55 |
|
Clause 4-7: |
|
Records Ownership (March 2006) |
|
|
56 |
|
Clause 6-1: |
|
Contracting Officers Representative (March 2006) |
|
|
56 |
|
Clause 9-1: |
|
Convict Labor (March 2006) |
|
|
56 |
|
Clause 9-2: |
|
Contract Work Hours and Safety Standards Act - Overtime Compensation (March 2006) |
|
|
57 |
|
Clause 9-7: |
|
Equal Opportunity (March 2006) (Tailored) |
|
|
57 |
|
Clause 9-9: |
|
Equal Opportunity Preaward Compliance of Subcontracts (March 2006) (Tailored) |
|
|
58 |
|
Clause 9-10: |
|
Service Contract Act (March 2006) |
|
|
58 |
|
Clause 9-12: |
|
Fair Labor Standards Act and Service Contract Act - Price Adjustment (February 2010) |
|
|
65 |
|
Clause 9-13: |
|
Affirmative Action for Workers with Disabilities (March 2006) (Tailored) |
|
|
66 |
|
Clause 9-14: |
|
Equal Opportunity for Disabled Veterans, Recently Separated Veterans, Other Protected Veterans, and Armed Forces Service Medal
Veterans (February 2010) (Tailored) |
|
|
67 |
|
Contract Term |
|
|
69 |
|
Renewal Process |
|
|
69 |
|
Amendments or Modifications |
|
|
69 |
|
Assignment |
|
|
69 |
|
Bankruptcy |
|
|
70 |
|
Air Cargo Network
Contract ACN-13-FX
Table of Contents
|
|
|
|
|
|
|
Confidentiality |
|
|
70 |
|
Entire Agreement |
|
|
70 |
|
Force Majeure |
|
|
71 |
|
Frequency Adjustment |
|
|
71 |
|
Notices |
|
|
72 |
|
Severability |
|
|
72 |
|
Third Party Governmental Delays |
|
|
73 |
|
Waiver of Breach |
|
|
73 |
|
|
|
Part 4 - List of Attachments and Forms |
|
|
74 |
|
Attachment 1 |
|
Postal Service Operating Periods, dated June 27, 2014 |
|
|
73 |
|
Attachment 2 |
|
Air Stops & Projected Volumes, dated January 8, 2013 |
|
|
75 |
|
Attachment 3 |
|
Operating Plan, Day Network, dated June 27, 2014 |
|
|
76 |
|
Attachment 4 |
|
Operating Plan, Night Network, dated June 27, 2014 |
|
|
83 |
|
Attachment 5 |
|
Reserved |
|
|
|
|
Attachment 6 |
|
Postal Furnished Property, April 16, 2013 |
|
|
91 |
|
Attachment 7 |
|
Electronic Data Interchange Service Requirements, dated September 1, 2012 |
|
|
92 |
|
Attachment 8 |
|
Investigative / Security Protocol and Guidelines, dated July 2012 |
|
|
93 |
|
Attachment 9 |
|
Wage Determination, dated October 31, 2012 |
|
|
97 |
|
Attachment 10 |
|
Pricing, dated January 13, 2015 |
|
|
99 |
|
Attachment 11 |
|
Perishable Mail and Lives, June 27, 2014 |
|
|
102 |
|
Attachment 12 |
|
Reserved |
|
|
|
|
Attachment 13 |
|
Service Contract Act Wage Determinations, dated June 24, 2014 |
|
|
104 |
|
Attachment 14 |
|
Contract Density, dated June 27, 2014 |
|
|
124 |
|
Attachment 15 |
|
Average Weight Process, dated June 27, 2014 |
|
|
126 |
|
Attachment 16 |
|
Re-labeling Process, dated June 27, 2014 |
|
|
127 |
|
Attachment 17 |
|
Handling Unit Types, dated June 27, 2014 |
|
|
129 |
|
|
|
|
Forms |
|
|
DOT Form F 5800.1 |
|
Hazardous Materials Incident Report |
I-9 Form |
|
Employment Eligibility Verification |
PS Form 2025 |
|
Contract Personnel Questionnaire |
PS Form 8203 |
|
Order / Solicitation / Offer / Award |
US Treasury Form 941 |
|
Quarterly Federal Tax Return |
Air Cargo Network
Contract ACN-13-FX
Part 1: Statement of Work
|
|
|
1 |
|
Part 1: Statement of Work |
2 |
|
|
3 |
|
|
4 |
|
Purpose and Scope |
5 |
|
The United States Postal Service is seeking to purchase air transportation and ancillary services for |
6 |
|
mail to and from destinations within the contiguous forty-eight (48) states as well as non-contiguous |
7 |
|
areas to include Alaska, Hawaii, and Puerto Rico. This statement of work (SOW) provides for the |
8 |
|
transportation of mail on any flight in the aviation suppliers air transportation network. It also provides |
9 |
|
for services associated with the transportation of mail by the aviation supplier. The air carriers |
10 |
|
network or transportation system may include its own flights, flights of its approved subcontractors, |
11 |
|
flights that may be dedicated to Postal operations, and Road Feeder Service. |
12 |
|
|
13 |
|
|
14 |
|
Scale |
15 |
|
The volume of mail (expressed in pounds and cubic feet) transported as contracted under this air |
16 |
|
cargo network contract may increase or decrease significantly over the term of the contract consistent |
17 |
|
with the needs of the Postal Service. |
18 |
|
|
19 |
|
|
20 |
|
Services Provided |
21 |
|
The aviation supplier shall provide sufficient resources to efficiently and effectively take possession, |
22 |
|
sort (if necessary), transport, scan, load, and deliver all mail to the designated destination Service |
23 |
|
Points specified by the Postal Service in Attachment 2: Air Stops & Projected Volumes, Attachment 3: |
24 |
|
Operating Plan, Day Network, and Attachment 4: Operating Plan, Night Network. |
25 |
|
|
26 |
|
The aviation supplier will present scan data for these events electronically to the Postal Service. See |
27 |
|
Attachment 7: Electronic Data Interchange Service Requirements. |
28 |
|
|
29 |
|
[*] |
30 |
|
|
31 |
|
|
32 |
|
|
33 |
|
|
34 |
|
|
35 |
|
The aviation supplier will be expected to (this list is not all inclusive): |
36 |
|
a. Coordinate and oversee its own operations; supervise and protect its own
employees. |
37 |
|
b. Ensure that the necessary facility support and administrative functions are
performed. |
38 |
|
c. Monitor performance. |
39 |
|
d. Provide feedback to the Postal Service. |
40 |
|
e. Ensure the integrity of data entry. |
41 |
|
f. Coordinate the exchange of information. |
42 |
|
g. Provide notification of changes or anticipated changes in services provided
(including |
43 |
|
subcontractors) to the Postal Service. |
44 |
|
h. Scan material Handling Units. |
45 |
|
i. Assist in unloading or loading Unit Load Devices (ULDs) to or from surface
transportation. |
46 |
|
j. Provide the correct type and quantity of equipment necessary to support the
service |
47 |
|
requirements of this contract. |
48 |
|
k. Process mail for dispatch from the aviation suppliers facility to the Postal Service
facility. |
49 |
|
l. Close-out, receive, and dispatch all surface vehicles. |
50 |
|
m. Handle overflow volumes per Postal Service general directions. |
51 |
|
n. Cooperate with all aviation suppliers in the transportation service
chain. |
52 |
|
o. Enter data timely and accurately. |
53 |
|
p. Prepare required reports. |
54 |
|
q. Perform verification of security seals on surface transportation. |
55 |
|
r. Ensure the security of all mail. |
56 |
|
|
* |
Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities
Exchange Act of 1934, as amended. |
Page 6 of 130
Air Cargo Network
Contract ACN-13-FX
Part 1: Statement of Work
|
|
|
57 |
|
|
58 |
|
Service Points |
59 |
|
Service Points are the locations where tender and / or delivery takes place. The locations and tender |
60 |
|
and delivery specifications are listed in Attachment 3: Operating Plan, Day Network, and Attachment |
61 |
|
4: Operating Plan, Night Network. |
62 |
|
|
63 |
|
The Day Network will service approximately eighty (80) origin and destination Service Points. |
64 |
|
|
65 |
|
The Night Network will service approximately one hundred forty-five (145) origin and destination |
66 |
|
Service Points |
67 |
|
|
68 |
|
|
69 |
|
Management Plan |
70 |
|
The aviation supplier shall develop and maintain a current Management Plan for dealing with normal |
71 |
|
daily operations as well as unscheduled and unexpected events affecting the expeditious operation of |
72 |
|
the facility, including aviation and surface service failure and delays. The Management Plan must also |
73 |
|
address the key personnel involved on a day to day basis. |
74 |
|
|
75 |
|
Updates to this plan shall be submitted to the Contracting Officer within ten (10) days of any changes |
76 |
|
to the plan. The aviation supplier shall review and verify, at least annually, that its management plan |
77 |
|
is current. |
78 |
|
|
79 |
|
The aviation supplier must train its employees to a level of familiarity that ensures a contingency plan |
80 |
|
can be exercised without delay. The following items must be addressed by the Management Plan; the |
81 |
|
list is not all inclusive. |
82 |
|
|
83 |
|
a. Late arriving aircraft and trucks |
84 |
|
Ability to conduct two operations Originating and Destinating |
85 |
|
|
86 |
|
b. Early arriving aircraft and trucks |
87 |
|
c. Mail arriving out of normal sequence |
88 |
|
d. Trucks not on-site for dispatch |
89 |
|
e. Inclement weather during operations |
90 |
|
Snow issues |
91 |
|
Ice storms |
92 |
|
Airport closures |
93 |
|
|
94 |
|
f. Protection of the mail during inclement weather |
95 |
|
g. Labor actions |
96 |
|
h. Inadequate staffing |
97 |
|
i. An inability to complete all loading in time to meet tender |
98 |
|
j. Overflow mail |
99 |
|
k. Damaged and / or non air worthy containers |
100 |
|
l. Damaged surface containers |
101 |
|
m. Damaged or non-labeled mail |
102 |
|
n. Plan and schedule changes |
103 |
|
o. Loose load mail |
104 |
|
p. Hazardous Material (HAZMAT)-acceptable and non-acceptable pieces |
105 |
|
q. Handling and staging of live animals |
106 |
|
r. Running out of supplies such as placards, bypass tape, etc. |
107 |
|
s. Power losses Describe in detail all steps to be taken in the event of power loss
to |
108 |
|
include specific actions for back up power at the Terminal Handling Service
(THS) location |
109 |
|
such as generators and other systems. |
110 |
|
t. Natural disasters |
111 |
|
u. Equipment breakdowns |
112 |
|
v. Airport closings |
113 |
|
w. Air Traffic Control (ATC) impact mitigation plan |
Page 7 of 130
Air Cargo Network
Contract ACN-13-FX
Part 1: Statement of Work
|
|
|
114 |
|
|
115 |
|
|
116 |
|
Frequency |
117 |
|
The initial frequency of service for the Day Network (Priority Mail / First Class network) is based on six |
118 |
|
(6) days of Postal Service delivery and shall be Tuesday through Sunday (X1).1 This will provide for |
119 |
|
approximately 307 (308 in a leap year) operating days annually. This excludes the widely observed |
120 |
|
holidays as listed in the sections titled, Volume Commitment Holiday Day Network and Volume |
121 |
|
Commitment Holiday Night Network. |
122 |
|
|
123 |
|
The initial frequency of service for the Night Network (Express Mail network) is based on five (5) days |
124 |
|
of Postal Service delivery and shall be Monday through Friday (X67).2 This will provide for |
125 |
|
approximately 254 (255 in a leap year) operating days annually. This excludes the widely observed |
126 |
|
holidays as listed in the sections titled, Volume Commitment Holiday Day Network and Volume |
127 |
|
Commitment Holiday Night Network. |
128 |
|
|
129 |
|
|
130 |
|
Mail Assignment and Transport - Day Network |
131 |
|
The aviation supplier shall provide flight schedules at least thirty (30) days in advance of the Operating |
132 |
|
Period. The Postal Service will create dispatch routing instructions based on the aviation suppliers |
133 |
|
flight schedule and subsequently shown on the Postal Service Dispatch and Routing (D&R) Tag. |
134 |
|
|
135 |
|
The Postal Service agrees to provide up to seventy-five (75%) percent of the total volume assigned to |
136 |
|
the outbound flights to the aviation supplier one (1) hour before the scheduled All Mail Due Aviation |
137 |
|
Supplier column as listed in Attachment 3: Operating Plan, Day Network. The Postal Service agrees |
138 |
|
to provide the remaining twenty-five (25%) percent by the All Mail Due Aviation Supplier column listed |
139 |
|
in Attachment 3: Operating Plan, Day Network. |
140 |
|
|
141 |
|
|
142 |
|
Mail Assignment and Transport - Night Network |
143 |
|
The Postal Service agrees to provide up to seventy-five (75%) percent of the total volume assigned to |
144 |
|
the outbound flights to the aviation supplier thirty (30) minutes before the scheduled All Mail Due |
145 |
|
Aviation Supplier column as listed in Attachment 4: Operating Plan, Night Network. The Postal |
146 |
|
Service agrees to provide the remaining twenty-five (25%) percent by the All Mail Due Aviation |
147 |
|
Supplier column listed in Attachment 4: Operating Plan, Night Network. |
148 |
|
|
149 |
|
|
150 |
|
Local Agreements |
151 |
|
No Local Agreement (any informal agreement or working arrangement made between representatives |
152 |
|
of the aviation supplier, the Postal Service, or their agents who lack authority to bind either company) |
153 |
|
shall be binding, obligate the Postal Service or the aviation supplier, or otherwise give rise to any claim |
154 |
|
under this contract. |
155 |
|
|
156 |
|
|
157 |
|
Postal Service Performs Terminal Handling Service (THS) Operation - Day |
158 |
|
Network |
159 |
|
Mail will be tendered to the aviation supplier in accordance with the Operating Plan provided by the |
160 |
|
aviation supplier. The aviation suppliers Operating Plan will be provided thirty (30) days before the |
161 |
|
start up of the Operating Period. The aviation suppliers Operating Plan will specify the following |
162 |
|
information: |
163 |
|
|
164 |
|
Specific Type of Airline ULD per origin / destination |
165 |
|
Destination of Airline ULD Direct (bypass) |
|
|
1 X1 refers to the day of the week that
service will not be performed. The days of the week are numbered consecutively from 1 through 7 beginning with Monday (1). X1 means that service will operate each day of the week except Monday.
2 X67 refers to the days of the week that service will not be performed. X67 means that service will operate each day of the week except
Saturday and Sunday. |
Page 8 of 130
Air Cargo Network
Contract ACN-13-FX
Part 1: Statement of Work
|
|
|
166 |
|
Destination of Airline ULD Mixed (to be sorted at hub) |
167 |
|
|
168 |
|
The Operating Plan will be mutually agreed upon prior to implementation. |
169 |
|
|
170 |
|
The aviation supplier will transport, scan, and deliver the ULDs to the specific Service Points listed in |
171 |
|
Attachment 3: Operating Plan, Day Network. The Postal Service or its representative will build the |
172 |
|
ULDs in conformance with the aviation suppliers Operating Plan. |
173 |
|
|
174 |
|
The aviation supplier will perform the following activities including, but not limited to: |
175 |
|
|
176 |
|
a. Sorting and scanning mail at an aviation supplier hub, as necessary, which also may
include |
177 |
|
re-wrap and reapplication of Distribution & Routing (D&R) Tags to
mail requiring such |
178 |
|
treatment, and dispatch on service responsive
transportation |
179 |
|
|
180 |
|
b. In the unlikely event that mail tendered to the aviation supplier is in excess
(overflow) of what |
181 |
|
may be transported, the aviation supplier shall: |
182 |
|
i. Secure the mail. |
183 |
|
ii. Scan all Handling Units and record the number of pieces, weight, and destination
of |
184 |
|
all overflow Handling Units. |
185 |
|
iii. Immediately notify the local Postal official after becoming aware of an
overflow |
186 |
|
situation. The Postal official will direct the aviation supplier to either
hold the mail for |
187 |
|
the next outbound flight or return it to the designated Postal
facility. |
188 |
|
iv. Prepare all overflow mail for delivery to the local designated Postal facility
within |
189 |
|
twenty (20) minutes of receipt of Postal direction. |
190 |
|
v. Provide a written report of the overflow to the local Postal official with a copy to
the |
191 |
|
COR. |
192 |
|
|
193 |
|
When transporting mail in carts, containers, or other vehicles, the mail must be securely enclosed to |
194 |
|
protect it from loss, depredation, and damage. The aviation supplier will stage mail in a secure area |
195 |
|
while in its possession. The aviation supplier is not allowed to transport mail in the cabs of its vehicles |
196 |
|
except for mail containing live animals. |
197 |
|
|
198 |
|
|
199 |
|
Aviation Supplier Planned Accommodation - Day Network |
200 |
|
The aviation supplier will guarantee space to accommodate up to 105% of the Planned Capacity from |
201 |
|
each origin daily. All mail accepted by the aviation supplier is subject to the service commitments set |
202 |
|
forth in this contract. |
203 |
|
|
204 |
|
FedEx will accept mail from Origin air stops as identified in Attachment 3 Operating Plan - Day |
205 |
|
Network in excess of 105% of Planned Capacity on a space available basis. |
206 |
|
|
207 |
|
If the Postal Service tenders mail to the aviation supplier after the All Mail Due Aviation Supplier |
208 |
|
column as shown in Attachment 3: Operating Plan, Day Network, the aviation supplier has the right to |
209 |
|
refuse that volume. |
210 |
|
|
211 |
|
Mail accepted after the agreed upon All Mail Due Aviation Supplier column in Attachment 3: |
212 |
|
Operating Plan, Day Network, shall be subject to the same service commitments as mail tendered at |
213 |
|
or before the All Mail Due Aviation Supplier column. |
214 |
|
|
215 |
|
|
Page 9 of 130
Air Cargo Network
Contract ACN-13-FX
Part 1: Statement of Work
|
|
|
216 |
|
|
217 |
|
Aviation Supplier Planned Accommodation - Night Network |
218 |
|
The aviation supplier will guarantee space to accommodate up to 120% of the Planned Capacity from |
219 |
|
each origin daily. All mail accepted by the aviation supplier is subject to the service commitments set |
220 |
|
forth in this contract. |
221 |
|
|
222 |
|
If the Postal Service tenders mail in excess of 120% of the Planned Capacity for that Service Point, |
223 |
|
the aviation supplier may refuse to transport the excess tender. If the volume is accepted, the same |
224 |
|
service requirements apply. |
225 |
|
|
226 |
|
If the Postal Service tenders mail to the aviation supplier after the All Mail Due Aviation Supplier |
227 |
|
column as shown in Attachment 4: Operating Plan, Night Network, the aviation supplier has the right to |
228 |
|
refuse that volume. |
229 |
|
|
230 |
|
Mail accepted after the agreed upon All Mail Due Aviation Supplier column in Attachment 4: |
231 |
|
Operating Plan, Night Network, shall be subject to the same service commitments as mail tendered at |
232 |
|
or before the All Mail Due Aviation Supplier column. |
233 |
|
|
234 |
|
|
235 |
|
Delivery - Day Network |
236 |
|
The aviation supplier will deliver mail to a destination Service Point by the scheduled Latest Delivery |
237 |
|
Time to Postal Service column in Attachment 3: Operating Plan, Day Network. |
238 |
|
|
239 |
|
|
240 |
|
Delivery - Night Network |
241 |
|
The aviation supplier will deliver mail to a Service Point by the scheduled Latest Delivery Time to |
242 |
|
Postal Service column in Attachment 4: Operating Plan, Night Network, on or before the scheduled |
243 |
|
delivery day (D+1) on Attachment 4: Operating Plan, Night Network. D+1 is defined as the day |
244 |
|
following acceptance by the aviation supplier. |
245 |
|
|
246 |
|
At destination, the aviation supplier is required to unload the mail from the ULDs received, scan, and |
247 |
|
deliver the mail to the Postal Service. |
248 |
|
|
249 |
|
|
250 |
|
Saturday Delivery - Day Network |
251 |
|
See Attachment 3: Operating Plan, Day Network, for details on Saturday delivery. |
252 |
|
|
253 |
|
|
254 |
|
Specific Delivery Instructions |
255 |
|
The aviation supplier shall: |
256 |
|
a. Assist in loading and dispatching all outbound surface vehicles, as
required |
257 |
|
|
258 |
|
b. Must develop a cooperative line of communication with the Postal Service to ensure the
timely |
259 |
|
delivery and dispatch of mail. All efforts shall be made to provide an
efficient and effective |
260 |
|
delivery to the Postal Service. |
261 |
|
|
262 |
|
|
263 |
|
Boarding Priority - Day Network |
264 |
|
The aviation supplier must board accepted mail using the following mail boarding preference order: |
265 |
|
a. Registered (Con-Con) Mail |
266 |
|
|
267 |
|
b. Lives |
268 |
|
|
269 |
|
c. Perishables |
270 |
|
|
271 |
|
d. HAZMAT, regardless of mail
class |
Page 10 of 130
Air Cargo Network
Contract ACN-13-FX
Part 1: Statement of Work
|
|
|
272 |
|
|
273 |
|
e. Domestic Priority and Express Mail |
274 |
|
|
275 |
|
f. First-Class Mail |
276 |
|
|
277 |
|
g. All Other Mail |
278 |
|
|
279 |
|
The Manager, Air Transportation Operations, or a Postal Service designee, will determine if the Postal |
280 |
|
Service should repossess any mail without exercising rights as described in the section titled |
281 |
|
Repossession of Mail by the Postal Service. |
282 |
|
|
283 |
|
|
284 |
|
Boarding Priority - Night Network |
285 |
|
The aviation supplier must board accepted mail using the following mail boarding preference order: |
286 |
|
a. Express Mail |
287 |
|
b. All other classes of mail |
288 |
|
|
289 |
|
|
290 |
|
Repossession of Mail by the Postal Service |
291 |
|
The Postal Service may, at any time, require the aviation supplier to return to the local Postal Service |
292 |
|
representative or agent at a Service Point, any or all of the mail in its possession at that location or the |
293 |
|
Postal Service may take possession of such mail from the aviation supplier. |
294 |
|
|
295 |
|
|
296 |
|
Treatment of Exceptional Types of Mail |
297 |
|
1. Tagging of Hazardous Material |
298 |
|
The aviation supplier may carry mailable HAZMAT, subject to applicable law, rules and |
299 |
|
regulations, including, without limitation: |
300 |
|
|
301 |
|
a. ORM-D Air |
302 |
|
ORM-D stands for Other Regulated Material-Class D. ORM-D is a term developed by |
303 |
|
the Department of Transportation (DOT) that signifies the hazard class associated with a |
304 |
|
consumer commodity. Most hazardous materials accepted by the Postal Service for |
305 |
|
mailing are classified as ORM-D. A package marked ORM-D meets the standards for |
306 |
|
surface transportation only. ORM-D-Air signifies that the item meets the requirements |
307 |
|
for air and surface transportation. |
308 |
|
|
309 |
|
The Postal Service currently accepts limited quantity alternative marking options (square |
310 |
|
on point) for ORM-D and ORM-D-Air and plans to adopt mandatory effective dates as |
311 |
|
identified by the Department of Transportation. There are no intended changes to |
312 |
|
quantity limits, package weights, or documentation requirements for these mailable |
313 |
|
materials. |
314 |
|
|
315 |
|
b. Division Class 6.2 |
316 |
|
Division Class 6.2 materials are not permitted in international mail or domestic mail, |
317 |
|
except when they are intended for medical or veterinary use, research, or laboratory |
318 |
|
certification related to the public health. These materials are permitted only when they are |
319 |
|
properly prepared for mailing to withstand shocks, pressure changes, and other conditions |
320 |
|
related to ordinary handling in transit. |
321 |
|
|
322 |
|
c. Division Class 9 |
323 |
|
Division Class 9 items are miscellaneous hazardous materials or substance articles that |
324 |
|
present a hazard during transportation but do not meet the definition of any other hazard |
325 |
|
class. Examples of miscellaneous hazardous materials (not all of which are mailable) |
326 |
|
include solid dry ice, elevated temperature substances, environmentally hazardous |
327 |
|
substances, life-saving appliances, and asbestos. |
328 |
|
|
Page 11 of 130
Air Cargo Network
Contract ACN-13-FX
Part 1: Statement of Work
|
|
|
329 |
|
d. Hazardous and Dangerous Goods |
330 |
|
The aviation supplier will accept all Dangerous Goods as defined in the Domestic Mail |
331 |
|
Manual, section 601.10. All Dangerous Goods will be tendered on the Night Network. |
332 |
|
The Postal Service will be in compliance with the current International Air Transport |
333 |
|
Association (IATA) allowed variations as listed for the aviation supplier. The Postal |
334 |
|
Service will tender all Dangerous Goods at least two hours prior to the tender time shown |
335 |
|
in Attachment 4: Operating Plan, Night Network. The Postal Service shall not tender any |
336 |
|
used sharps. Any future changes to Hazardous and Dangerous Goods requirements will |
337 |
|
be reviewed and must be acceptable to the aviation supplier prior to implementation of the |
338 |
|
changes. |
339 |
|
|
340 |
|
e. All other hazardous material that is packaged and distributed in a quantity and
form |
341 |
|
intended or suitable for retail sale and designed for consumption by individuals for their |
342 |
|
personal care or household use purposes; reference |
343 |
|
http://pe.usps.gov/text/dmm300/601.htm#wp1065003. |
344 |
|
|
345 |
|
2. Assignment of Hazardous Materials |
346 |
|
a. The tender of all hazardous materials will be performed a minimum of two (2) hours
prior |
347 |
|
to the final tender time of the intended flight. |
348 |
|
|
349 |
|
b. The desired flight assignment of HAZMAT is to non-stop or direct
flights. |
350 |
|
|
351 |
|
c. No surcharge is offered for the transportation of HAZMAT mail. |
352 |
|
|
353 |
|
d. A copy of the manifest and the assigned item MUST be handed to an aviation
supplier |
354 |
|
representative a minimum of two (2) hours prior to the closeout time of the
intended flight. |
355 |
|
The aviation supplier representative will be responsible for ensuring that
the information |
356 |
|
on the postal manifest which includes the number of pieces, weight, and
appropriate |
357 |
|
shippers certification detail is incorporated onto the aircraft load
manifest and pilot |
358 |
|
notification paperwork as outlined in CFR 49, Part 175, Carriage by
Aircraft. |
359 |
|
|
360 |
|
e. Aviation supplier Refusal to Accept Hazardous Materials: If the aviation supplier
refuses |
361 |
|
to accept a properly prepared HAZMAT item, it shall document the reasons
leading to the |
362 |
|
refusal. Documentation will include: |
363 |
|
i. Name and address of mailer and air carrier; |
364 |
|
ii. The type and amount of hazardous material; and |
365 |
|
iii. The reason for refusal. |
366 |
|
|
367 |
|
f. HAZMAT Spills, Releases, Incidents, and Emergencies |
368 |
|
i. While in the possession of the aviation supplier, but not on board an
aircraft: |
369 |
|
Hazardous Material items which are damaged must not be boarded on the |
370 |
|
aircraft. HAZMAT incidents which occur following the tender but prior to |
371 |
|
boarding of the aircraft, or after unloading from an aircraft and before delivery |
372 |
|
to the Postal Service, causing injury, illness, significant property damage, or |
373 |
|
disruption in operations will require the aviation supplier to enter the required |
374 |
|
information into the Mail Piece Incident Reporting Tool (MIRT), a Postal |
375 |
|
Service intranet tool for the collection of information on leaking and other non- |
376 |
|
mailable items. |
377 |
|
|
378 |
|
ii. While on board an aircraft: |
379 |
|
Any incident which occurs while on board an aircraft will require the aviation |
380 |
|
supplier to complete a Department of Transportation (DOT) Form F 5800.1 |
381 |
|
(01-2004), Hazardous Materials Incident Report. A copy of this form must be |
382 |
|
sent to the COR within twenty-four (24) hours of the incident with all |
383 |
|
information available. The incident type is not limited to hazardous material |
384 |
|
and may include hazardous cargo spills which come in contact with the mail. |
385 |
|
|
Page 12 of 130
Air Cargo Network
Contract ACN-13-FX
Part 1: Statement of Work
|
|
|
386 |
|
|
387 |
|
Perishable Mail and Live Mail |
388 |
|
The aviation supplier will be required to transport as mail perishable items which the Postal Service |
389 |
|
has accepted as mailable under Domestic Mail Manual (DMM) 601, sub section 9.0, including live |
390 |
|
animals as discussed at DMM 601 subsection 9.3. The Postal Service will notify the aviation supplier |
391 |
|
a minimum of two (2) hours prior to the All Mail Due Aviation Supplier time as listed in Attachment 3: |
392 |
|
Operating Plan, Day Network, and Attachment 4: Operating Plan, Night Network, of the intended flight |
393 |
|
of known perishable mail, including live animals. |
394 |
|
|
395 |
|
Attachment 11: Perishable Mail and Lives, details the requirements for preparation and tender of |
396 |
|
perishable mail and live animal shipments. |
397 |
|
|
398 |
|
|
399 |
|
Registered Mail |
400 |
|
The aviation supplier will accept Registered Mail provided in Con-Cons for the Day Network only. |
401 |
|
|
402 |
|
Registered Mail Con-Cons will be a part of the Planned Capacity and will be tendered in accordance |
403 |
|
with Attachment 3: Operating Plan, Day Network. |
404 |
|
|
405 |
|
Upon request, the aviation supplier shall furnish the Postal Service the following information |
406 |
|
concerning Registered Mail: |
407 |
|
Aircraft number, |
408 |
|
Aircraft compartment location, |
409 |
|
Actual flight departure time, and |
410 |
|
Any accident or irregularity which occurs to a flight containing Registered
Mail. |
411 |
|
|
412 |
|
Registered Mail Handling Units will have a D&R Tag affixed indicating the final destination air stop. |
413 |
|
This Handling Unit shall remain intact and shall not be opened by the aviation supplier. The desired |
414 |
|
routing for Registered Mail shipments will be to non-stop or direct flights only. |
415 |
|
|
416 |
|
The aviation supplier shall advise the U.S. Postal Inspection Service, local Postal Service |
417 |
|
representatives, and will send an email message to the COR of any Registered Mail that does not |
418 |
|
make its planned dispatch for disposition instructions. |
419 |
|
|
420 |
|
|
421 |
|
Offshore Capacity Requirement - Day Network |
422 |
|
The aviation supplier will make available at least the following daily volumes into and out of the |
423 |
|
following locations. |
424 |
|
|
425 |
|
Cube Based: |
426 |
|
[*] cube (Originating) and [*] cube Destinating Anchorage (ANC) |
427 |
|
[*] cube (Originating) and [*] cube Destinating Honolulu (HNL) |
428 |
|
[*] cube (Originating) and [*] cube Destinating San Juan (SJU) |
429 |
|
|
430 |
|
The Postal Service may increase this capacity as needed through the planning process through the |
431 |
|
mutual agreement of the parties. |
432 |
|
|
433 |
|
In the event that destinating offshore volumes exceed the volumes listed in Offshore Capacity |
434 |
|
Requirement - Day Network at the Aviation Suppliers Memphis hub, the excess volume will receive a |
435 |
|
scan in Memphis that qualifies as a Delivery Scan. This scan will fulfill the requirement that the |
436 |
|
aviation supplier obtain a destination Delivery Scan under Payment Procedures. The time of the scan |
437 |
|
will also be used to measure performance under Performance Requirements and Measurement and in |
438 |
|
the assessment of reductions under Reduction of Payment. |
439 |
|
|
440 |
|
All destinating offshore volume will move to the offshore destination as part of the Aviation Suppliers |
441 |
|
services under this contract, on a first-in, first-out basis. The Aviation Supplier is still responsible for |
* |
Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities
Exchange Act of 1934, as amended. |
Page 13 of 130
Air Cargo Network
Contract ACN-13-FX
Part 1: Statement of Work
|
|
|
442 |
|
performing a Delivery Scan when the volume is tendered to the Postal Service at the offshore |
443 |
|
destination. |
444 |
|
|
445 |
|
|
446 |
|
Volume Commitment - General Information |
447 |
|
The Day Network operating week is defined as Tuesday through Sunday inclusive (X1). |
448 |
|
|
449 |
|
The Night Network operating week is defined as Monday through Friday inclusive (X67). |
450 |
|
|
451 |
|
The Postal Service is not obligated to request consistent capacity by day of the week. Requests for |
452 |
|
capacity are detailed in the Ordering Process sections. |
453 |
|
|
454 |
|
The following constitute the only minimum volume guarantees under this contract: |
455 |
|
Contract Volume Minimum of [*] cubic feet on the Day
Network. |
456 |
|
The Contract Volume Minimum may be reduced in accordance with Clause
4-1: |
457 |
|
General Terms and Conditions, paragraph m, and Frequency Adjustment found in |
458 |
|
Part 3: Contract Clauses. |
459 |
|
|
460 |
|
[*] |
461 |
|
|
462 |
|
|
463 |
|
|
464 |
|
|
465 |
|
90% of Planned Capacity for the Night Network for each Operating
Period |
466 |
|
|
467 |
|
Any monies due as a result of the Postal Service not meeting its Contract Volume Minimum or its |
468 |
|
Operating Period Volume Minimum as measured and calculated at the end of each Operating Period |
469 |
|
will be included as part of the Operating Periods reconciliation process. |
470 |
|
|
471 |
|
On operating days where volume for lanes with Planned Capacity is withdrawn, withheld, or not |
472 |
|
transported under the Repossession of Mail by the Postal Service or Force Majeure sections, that |
473 |
|
volume will not be included in calculating the Operating Period Volume Minimum. The Contract |
474 |
|
Volume Minimum will be reduced for the Operating Period by the amount of that volume. |
475 |
|
|
476 |
|
|
477 |
|
Volume Commitment - Contract Volume Minimum - Day Network |
478 |
|
A minimum of [*] cubic feet per operational day, averaged across six (6) days per week, and measured |
479 |
|
across each Operating Period, will constitute the Contract Volume Minimum guaranteed to be paid by |
480 |
|
the Postal Service. |
481 |
|
|
482 |
|
|
483 |
|
Operating Period Volume Minimum - Day Network |
484 |
|
[*] |
485 |
|
|
486 |
|
|
487 |
|
|
488 |
|
|
489 |
|
|
490 |
|
|
491 |
|
|
492 |
|
|
493 |
|
|
494 |
|
|
495 |
|
Operating Period Volume Minimum - Night Network |
496 |
|
[*] |
497 |
|
|
* |
Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities
Exchange Act of 1934, as amended. |
Page 14 of 130
Air Cargo Network
Contract ACN-13-FX
Part 1: Statement of Work
|
|
|
498 |
|
[*] |
499 |
|
|
500 |
|
|
501 |
|
|
502 |
|
|
503 |
|
|
504 |
|
|
505 |
|
|
506 |
|
Volume Commitment - Holiday - Day Network |
507 |
|
Each holiday will be addressed separately between the parties during the Ordering Process. The |
508 |
|
holidays are: |
509 |
|
New Years Day (widely observed) |
510 |
|
Martin Luther King Day |
511 |
|
Presidents Day |
512 |
|
Memorial Day (widely observed) |
513 |
|
Independence Day (widely observed) |
514 |
|
Labor Day (widely observed) |
515 |
|
Columbus Day |
516 |
|
Veterans Day |
517 |
|
Thanksgiving (widely observed) |
518 |
|
Christmas (widely observed) |
519 |
|
|
520 |
|
For purposes of Contract Volume Minimum and Operating Period Volume Minimum calculations, the |
521 |
|
following days will not be included: |
522 |
|
Widely observed holidays |
523 |
|
The day following the widely observed holidays that occur on a Monday |
524 |
|
Non-widely observed holidays that occur on a Monday |
525 |
|
|
526 |
|
For purposes of Contract Volume Minimum and Operating Period Volume Minimum calculations, the |
527 |
|
following days will be included at a 50% volume level: |
528 |
|
The day following widely observed holidays not occurring on a Monday |
529 |
|
Non-widely observed holidays not occurring on a Monday |
530 |
|
The day after a non-widely observed holiday |
531 |
|
|
532 |
|
|
533 |
|
Volume Commitment - Holiday - Night Network |
534 |
|
Each holiday will be addressed separately between the parties during the Ordering Process. The |
535 |
|
holidays are: |
536 |
|
New Years Day (widely observed) |
537 |
|
Martin Luther King Day |
538 |
|
Presidents Day |
539 |
|
Memorial Day (widely observed) |
540 |
|
Independence Day (widely observed) |
541 |
|
Labor Day (widely observed) |
542 |
|
Columbus Day |
543 |
|
Veterans Day |
544 |
|
Thanksgiving (widely observed) |
545 |
|
Christmas (widely observed) |
546 |
|
|
547 |
|
The widely observed holidays will not be included in the Operating Period Volume Minimum |
548 |
|
calculation. |
549 |
|
|
550 |
|
The non-widely observed holidays will be included at a 50% volume level in the Operating Period |
551 |
|
Volume Minimum calculation. |
552 |
|
|
* |
Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities
Exchange Act of 1934, as amended. |
Page 15 of 130
Air Cargo Network
Contract ACN-13-FX
Part 1: Statement of Work
|
|
|
553 |
|
|
554 |
|
Operating Periods |
555 |
|
The Operating Periods are incorporated as Attachment 1: Postal Service Operating Periods. No |
556 |
|
Operating Period will exceed five weeks. The Peak Operating Periods are designated in Attachment |
557 |
|
1: Postal Service Operating Periods. |
558 |
|
|
559 |
|
|
560 |
|
Ordering Process - Non-Peak - Day Network |
561 |
|
The Postal Service will provide the aviation supplier mail volumes in accordance with the identified |
562 |
|
schedule specified below. The forecasting structure will specify each origin / destination lane pair |
563 |
|
including cubic feet by day of week for the pairs. The Postal Service will request capacity based on |
564 |
|
specific plans for a Tuesday / Wednesday plan, a Thursday / Friday plan, a Saturday plan, and a |
565 |
|
Sunday plan. |
566 |
|
|
567 |
|
[*] |
568 |
|
|
569 |
|
|
570 |
|
|
571 |
|
|
572 |
|
|
573 |
|
|
574 |
|
|
575 |
|
|
576 |
|
|
577 |
|
|
578 |
|
|
579 |
|
|
580 |
|
|
581 |
|
|
582 |
|
|
583 |
|
Over the course of the Ordering Process for two (2) Operating Periods, the Postal Service may reduce |
584 |
|
volume down to the Contract Volume Minimum. |
585 |
|
|
586 |
|
The request for capacity shall be presented to the aviation supplier in a mutually agreed upon |
587 |
|
electronic origin / destination format. |
588 |
|
|
589 |
|
Bypass containers will be allocated in lanes where the requested capacity is greater than one hundred |
590 |
|
and ten (110) percent of the cubic capacity of the ULD configuration for the aircraft planned for the |
591 |
|
Service Point provided there is sufficient space to flow the Bypass container from the origin to the final |
592 |
|
destination on the scheduled flights. To facilitate this process, the Postal Service and the aviation |
593 |
|
supplier will jointly agree upon both Bypass and Mixed containers to be built at all origins during the |
594 |
|
Ordering Process. |
595 |
|
|
596 |
|
|
597 |
|
Ordering Process - Non-Peak - Night Network |
598 |
|
The Postal Service will provide the aviation supplier mail volumes in accordance with the identified |
599 |
|
schedule specified below. The forecasting structure will specify each origin / destination lane pair |
600 |
|
including weight. |
601 |
|
|
602 |
|
[*] |
603 |
|
|
604 |
|
|
605 |
|
|
606 |
|
|
607 |
|
|
608 |
|
|
* |
Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities
Exchange Act of 1934, as amended. |
Page 16 of 130
Air Cargo Network
Contract ACN-13-FX
Part 1: Statement of Work
|
|
|
609 |
|
[*] |
610 |
|
|
611 |
|
|
612 |
|
The request for capacity shall be presented to the aviation supplier in a mutually agreed upon |
613 |
|
electronic origin / destination format. |
614 |
|
|
615 |
|
|
616 |
|
Ordering Process - Peak - Day Network |
617 |
|
The Peak Operating Period will consist of four or five individual weeks, measured and planned as |
618 |
|
independent of each other. One of the five weeks of the Peak Operating Period will include the week |
619 |
|
of Christmas. As such, the requested volume capacity will include the Christmas week. The |
620 |
|
forecasting structure will specify each origin / destination lane pair including weight or cubic feet by |
621 |
|
day of week for the pairs. The Postal Service will request capacity based on specific plans for a |
622 |
|
Tuesday / Wednesday plan, a Thursday / Friday plan, a Saturday plan and a Sunday plan. |
623 |
|
|
624 |
|
The aviation supplier will make available at least [*] cubic feet of capacity per week for the Peak |
625 |
|
Operating Period for the Day Network. As a general planning guideline, the historical volume |
626 |
|
transported per day during the Peak Operating Period ranges between [*] to [*] cubic feet. The Peak |
627 |
|
season tab included in Attachment 2: Air Stops & Projected Volumes provides the historic mail volume |
628 |
|
in pounds by mail class by week during the Peak Operating Period. These volumes are provided for |
629 |
|
initial planning purposes and do not constitute a guarantee of volume for the Peak Ordering Period. |
630 |
|
|
631 |
|
For the Peak Operating Period, the Postal Service will provide the aviation supplier a request for |
632 |
|
capacity by lane, expressed in cubic feet, one hundred fifty (150) days prior to the beginning of the |
633 |
|
Peak Operating Period. The request for capacity shall be presented to the aviation supplier in a |
634 |
|
mutually agreed upon electronic origin / destination format. The aviation supplier will reply to the |
635 |
|
request by providing the Postal Service with its response expressed in cubic feet one hundred twenty |
636 |
|
(120) days prior to the start of the Peak Operating Period. The Postal Service will communicate its |
637 |
|
acceptance of the aviation suppliers response ninety (90) days prior to the commencement of the |
638 |
|
Peak Operating Period. The Postal Service acceptance establishes the Planned Capacity for the |
639 |
|
Peak Operating Period. |
640 |
|
|
641 |
|
The Operating Period Minimum Volume for Peak will be [*] of the Planned Capacity. |
642 |
|
|
643 |
|
The aviation supplier will guarantee space to accommodate up to 105% of the Planned Capacity from |
644 |
|
each origin daily. |
645 |
|
|
646 |
|
|
647 |
|
Ordering Process - Peak - Night Network |
648 |
|
The Peak Operating Period will consist four or five individual weeks, measured and planned as |
649 |
|
independent of each other. One of the five weeks of the Peak Operating Period will include the week |
650 |
|
of Christmas. As such, the requested volume capacity will include the Christmas week. The |
651 |
|
forecasting structure will specify each origin / destination lane pair including weight. |
652 |
|
|
653 |
|
For the Peak Operating Period, the Postal Service will provide the aviation supplier a request for |
654 |
|
capacity by lane, expressed in pounds, one hundred fifty (150) days prior to the beginning of the Peak |
655 |
|
Operating Period. The request for capacity shall be presented to the aviation supplier in a mutually |
656 |
|
agreed upon electronic origin / destination format. The aviation supplier will reply to the request by |
657 |
|
providing the Postal Service with its response expressed in pounds one hundred twenty (120) days |
658 |
|
prior to the start of the Peak Operating Period. The Postal Service will communicate its acceptance of |
659 |
|
the aviation suppliers response ninety (90) days prior to the commencement of the Peak Operating |
660 |
|
Period. The Postal Service acceptance establishes the Planned Capacity for the Peak Operating |
661 |
|
Period. |
662 |
|
|
663 |
|
|
664 |
|
The Operating Period Minimum Volume for Peak will be [*] of the Planned Capacity. |
* |
Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities
Exchange Act of 1934, as amended. |
Page 17 of 130
Air Cargo Network
Contract ACN-13-FX
Part 1: Statement of Work
|
|
|
665 |
|
|
666 |
|
The aviation supplier will guarantee space to accommodate up to 120% of the Planned Capacity from |
667 |
|
each origin daily. |
668 |
|
|
669 |
|
|
670 |
|
Electronic Data Interchange (EDI) |
671 |
|
The aviation supplier will provide status and operational data as specified in Attachment 7: Electronic |
672 |
|
Data Interchange Service Requirements. The aviation supplier will use the EDI methods specified in |
673 |
|
the attachment to transmit and receive volume, and appropriate scans from its system to the Postal |
674 |
|
Service system. |
675 |
|
|
676 |
|
|
677 |
|
Operational Condition Reports |
678 |
|
The aviation supplier shall submit reports of hub and Service Point operating conditions on a daily |
679 |
|
basis for the Day Network and the Night Network. |
680 |
|
|
681 |
|
Some examples of these daily reports (more may be required) are: service performance reports, |
682 |
|
operations reports for departures / arrivals late due to mechanical issues, operations reports for |
683 |
|
departures / arrivals late due to weather and other issues, sort mail volume, mis-sent mail volume, |
684 |
|
surface truck utilization, etc. The format of the report and the items reported will be mutually agreed |
685 |
|
upon by the COR and the aviation supplier. |
686 |
|
|
687 |
|
In addition to these daily reports, the aviation supplier will coordinate with and advise the COR of any |
688 |
|
contingency plans to move mail delayed in transit, as soon as practical. |
689 |
|
|
690 |
|
The table below lists the reports required initially. |
691 |
|
|
|
|
|
|
|
Report Type |
|
Name |
|
Frequency |
Operational Planning |
|
[*] |
|
Prior to Operating Period |
Operational Planning |
|
[*] |
|
Prior to Operating Period |
Operational Planning |
|
[*] |
|
Prior to Operating Period |
Operational Planning |
|
[*] |
|
Prior to Operating Period |
Operational Planning |
|
[*] |
|
Prior to Operating Period |
Operational Planning |
|
[*] |
|
Monthly |
Operational Reports |
|
[*] |
|
Tuesday through Sunday |
Operational Reports |
|
[*] |
|
Monday through Friday |
Operational Reports |
|
[*] |
|
Tuesday through Sunday |
Operational Reports |
|
[*] |
|
Monday through Friday |
Operational Reports |
|
[*] |
|
Tuesday / Wednesday / Thursday / Saturday |
Operational Reports |
|
[*] |
|
Monday through Thursday |
Operational Reports |
|
[*] |
|
Tuesday through Sunday |
Operational Reports |
|
[*] |
|
Tuesday / Wednesday / Thursday / Saturday |
Operational Reports |
|
[*] |
|
Tuesday through Sunday |
* |
Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities
Exchange Act of 1934, as amended. |
Page 18 of 130
Air Cargo Network
Contract ACN-13-FX
Part 1: Statement of Work
|
|
|
|
|
Operational Reports |
|
[*] |
|
Tuesday through Sunday |
Operational Reports |
|
[*] |
|
Monday through Friday |
Operational Reports |
|
[*] |
|
Monday through Friday |
Operational Reports |
|
[*] |
|
Daily |
Operational Reports |
|
[*] |
|
Tuesday through Sunday |
Operational Reports |
|
[*] |
|
Monday through Friday |
Operational Reports |
|
[*] |
|
Tuesday through Sunday |
Operational Reports |
|
[*] |
|
Tuesday through Sunday |
Operational Reports |
|
[*] |
|
Tuesday through Sunday |
|
|
|
692 |
|
|
693 |
|
|
694 |
|
Dimensional Weight Reports |
695 |
|
The aviation supplier will provide a weekly report electronically for the Day Network of the dimensional |
696 |
|
weights [*]. This report will provide the following information for each Outside Pieces Handling Unit |
697 |
|
D&R tag: |
698 |
|
Time of each Handling Unit through the sort |
699 |
|
The length of each Handling Unit |
700 |
|
The width of each Handling Unit |
701 |
|
The height of each Handling Unit |
702 |
|
The D&R tag of each Handling Unit |
703 |
|
|
704 |
|
A sample of the report is below: |
705 |
|
|
706 |
|
Sorter, Time Stamp,Length,Width,Height,D&R Tag |
707 |
|
AS002,10170703012011,1863,1663,1005,1GBNP673BF |
708 |
|
AS002,10172003012011,2413,1107,0460,1ICK9H2YF/ |
709 |
|
AS002,10172703012011,3425,1911,0968,15HPP8W7D6 |
710 |
|
AS002,10175003012011,1864,1200,1149,1FZFOM73BX |
711 |
|
AS002,10175103012011,2404,1153,0460,17MKSORVBQ |
712 |
|
|
713 |
|
|
714 |
|
Scanning and Data Transmission |
715 |
|
All scanning data required to be presented to the Postal Service shall be in an electronic format |
716 |
|
acceptable to the Postal Service, containing all required data elements, and reported within two (2) |
717 |
|
hours after the occurrence of a reportable event. Available data will be transmitted in EDI message |
718 |
|
format at fifteen (15) minute intervals. |
719 |
|
|
720 |
|
Scanning will be used to measure performance and serve as the basis for payment for both the Day |
721 |
|
Network and the Night Network. |
722 |
|
|
723 |
|
Technical aspects of Electronic Data Interchange and the types of messaging events are discussed in |
724 |
|
Attachment 7: Electronic Data Interchange Service Requirements. |
725 |
|
|
* |
Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities
Exchange Act of 1934, as amended. |
Page 19 of 130
Air Cargo Network
Contract ACN-13-FX
Part 1: Statement of Work
|
|
|
726 |
|
The aviation supplier will be responsible for providing technology compatible with Postal Service |
727 |
|
systems for purposes of sending and receiving scanning data. |
728 |
|
|
729 |
|
The aviation supplier will be responsible for performing the following scans of D&R Tags and ULD |
730 |
|
identification tags. |
731 |
|
a. Possession or Load Scan of all Handling Units and ULDs at origin Service Points,
including |
732 |
|
Outside Handling Units |
733 |
|
|
734 |
|
b. Load Scan that associates the ULD to an aircraft |
735 |
|
|
736 |
|
c. [*] |
737 |
|
|
738 |
|
|
739 |
|
d. [*] |
740 |
|
|
741 |
|
|
742 |
|
|
743 |
|
|
744 |
|
|
745 |
|
|
746 |
|
|
747 |
|
|
748 |
|
|
749 |
|
|
750 |
|
|
751 |
|
|
752 |
|
|
753 |
|
|
754 |
|
|
755 |
|
|
756 |
|
|
757 |
|
|
758 |
|
|
759 |
|
|
760 |
|
|
761 |
|
|
762 |
|
|
763 |
|
|
764 |
|
|
765 |
|
|
766 |
|
|
767 |
|
|
768 |
|
|
769 |
|
|
770 |
|
|
771 |
|
|
772 |
|
e. [*] |
773 |
|
|
774 |
|
|
775 |
|
f. Delivery Scan of each Handling Unit and ULD at the specified delivery Service
Point. |
776 |
|
|
777 |
|
|
778 |
|
Performance Requirements and Measurement |
779 |
|
Mail delivery performance will be measured against the contract requirements based upon transmitted |
780 |
|
scan data. |
781 |
|
|
782 |
|
Delivery performance requirements are: |
* |
Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities
Exchange Act of 1934, as amended. |
Page 20 of 130
Air Cargo Network
Contract ACN-13-FX
Part 1: Statement of Work
|
|
|
783 |
|
|
784 |
|
Day Network: [*]% |
785 |
|
|
786 |
|
Night Network: [*]% |
787 |
|
|
788 |
|
Peak Operating Period: [*]% for the Day and Night
Networks |
789 |
|
|
790 |
|
Delivery performance will be measured across an Operating Period on a lane-by-lane basis, using |
791 |
|
actual scan delivery time versus Required Delivery Time (RDT), as outlined in Attachment 3: |
792 |
|
Operating Plan, Day Network, and Attachment 4: Operating Plan, Night Network. |
793 |
|
|
794 |
|
Delivery performance will be measured using the following methodology: |
795 |
|
|
796 |
|
a. The Postal Service will scan all Handling Units at origin. |
797 |
|
b. The Postal Service will nest all Handling Units into ULDs at origin. |
798 |
|
c. The Postal Service will tender the nested ULDs to the aviation supplier at
origin. |
799 |
|
d. The aviation supplier will scan the ULDs with a Possession Scan at
origin. |
800 |
|
e. The aviation supplier will scan all Handling Units processed through the sort at the
hub. |
801 |
|
f. The aviation supplier will nest all Handling Units to ULDs departing from the
hub. |
802 |
|
g. The aviation supplier will scan the ULDs as delivered to the Postal Service upon arrival
at |
803 |
|
destination. |
804 |
|
h. The Postal Service will break the ULDs and scan / de-nest all Handling
Units. |
805 |
|
|
806 |
|
Delivery performance will be measured for all ULDs and Handling Units receiving at least a Delivery |
807 |
|
Scan by the aviation supplier. |
808 |
|
|
809 |
|
The Postal Service will provide data to the aviation supplier via electronic files. The electronic file will |
810 |
|
show the nested date and time into the ULD, the possession time and date from the aviation supplier, |
811 |
|
the delivery time and date from the aviation supplier, and the de-nested break time and date from the |
812 |
|
Postal Service. Additionally, the files will show the weights of each Handling Unit. |
813 |
|
|
814 |
|
Delivery performance on a lane level basis will be calculated as follows: |
815 |
|
|
816 |
|
|
817 |
|
Total on-time Handling Units, by lane, for the Operating Period, receiving a Delivery Scan |
818 |
|
|
819 |
|
Divided by |
820 |
|
|
821 |
|
Total Handling Units, by lane, for the Operating Period, receiving a Delivery Scan |
822 |
|
|
823 |
|
|
824 |
|
Reduction of Payment |
825 |
|
If the calculated delivery performance is less than the delivery performance requirement, the late D&R |
826 |
|
tags will be ordered chronologically by the RDT. The percentage of D&R tags corresponding to the |
827 |
|
difference between [*]% and the delivery performance requirement (i.e., [*]% Day Network), [*]% |
828 |
|
(Night Network) or [*]% (Peak Operating Period)) will not be assessed a reduction in payment. The |
829 |
|
remaining late D&R tags will be assessed a reduction in payment as follows: |
830 |
|
|
831 |
|
a. All Handling Units delivered up to thirty (30) minutes late will be subject to a [*]%
reduction of |
832 |
|
the Transportation Payment. |
833 |
|
|
834 |
|
b. All Handling Units delivered from thirty-one (31) minutes up to one (1) hour to late will
be |
835 |
|
subject to a [*]% reduction of the Transportation
Payment. |
836 |
|
|
837 |
|
c. All Handling Units delivered 1 hour and one minute late or later will be subject to a
[*]% |
838 |
|
reduction of the Transportation Payment. |
839 |
|
|
* |
Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities
Exchange Act of 1934, as amended. |
Page 21 of 130
Air Cargo Network
Contract ACN-13-FX
Part 1: Statement of Work
|
|
|
840 |
|
The reduction in payment will be based on a conversion of the weight of the late Handling Units to |
841 |
|
cubic feet by the applicable contract density and will be applied at the base or the tier in which the late |
842 |
|
delivery occurred. |
843 |
|
|
844 |
|
Handling Units that represent the amount of mail that FedEx accepts in excess of 105% of the |
845 |
|
Operating Periods Planned Capacity by Operating Day will not be assessed a reduction of payment |
846 |
|
under Part 1: Statement of Work Reduction of Payment or be taken into account under Part 1: |
847 |
|
Statement of Work Performance Requirements and Measurement. |
848 |
|
|
849 |
|
a. Handling Units in excess of 105% of the Operating Periods Planned Capacity will be
identified |
850 |
|
by determining the actual volume, in cubic feet (weight of the Handling
Units divided by the |
851 |
|
contract density for the applicable Operating Period), delivered each day
to each destination |
852 |
|
that is in excess of 105% of the Planned Capacity for the relevant
destination. |
853 |
|
|
854 |
|
b. In each instance, volume in excess of 105% will be the latest volume to arrive
as evidenced |
855 |
|
by the delivery scans. |
856 |
|
|
857 |
|
|
858 |
|
Performance Management |
859 |
|
The aviation supplier and the Postal Service will meet once a quarter (at a minimum) to discuss items |
860 |
|
such as the following: |
861 |
|
|
862 |
|
a. Cost Control |
863 |
|
b. Holiday Operations and Planning |
864 |
|
c. Aviation Supplier Performance |
865 |
|
d. Peak Season Planning |
866 |
|
e. Quality |
867 |
|
f. Ramp Operations |
868 |
|
g. Reconciliation of Irregularities |
869 |
|
h. Security |
870 |
|
i. Technology Issues |
871 |
|
j. Tender and Delivery Hygiene |
872 |
|
k. Volume Planning |
873 |
|
l. Other Pertinent Topics |
874 |
|
|
875 |
|
|
876 |
|
Sustainability |
877 |
|
The aviation supplier must provide following sustainability metrics at the times specified below: |
878 |
|
|
879 |
|
a. All greenhouse gas emission estimates that are attributed to the transport of Postal
Service |
880 |
|
mail products via air and (if applicable) ground transport by the aviation
supplier. |
881 |
|
i. Emissions in a standard unit CO2e |
882 |
|
ii. Total weight of Postal Service products contributing to the emissions in the
Calendar |
883 |
|
Year. |
884 |
|
iii. Total air miles travelled to transport the Postal Service products per Calendar
Year. |
885 |
|
iv. High level summary describing methodology which could include the basis for
the |
886 |
|
Postal Service emissions allocation such as space, cost, weight, number of
packages |
887 |
|
or other methods used to derive numbers. For example, estimates based on
gallons |
888 |
|
used, flight characteristics, or both. |
889 |
|
v. Assurance letter of independent verification of Scope 1, 2, and 3
data. |
890 |
|
Scope 1: Emissions arising from when the aviation supplier burns fuel in its |
891 |
|
aircraft or its owned buildings |
892 |
|
Scope 2: Emissions from purchased electricity or steam. |
893 |
|
Scope 3: Emissions arising from activities over which the aviation supplier |
894 |
|
has less control. |
895 |
|
|
Page 22 of 130
Air Cargo Network
Contract ACN-13-FX
Part 1: Statement of Work
|
|
|
896 |
|
b. Fiscal Year (October through September) and Calendar Year (January through
December) |
897 |
|
greenhouse gas emissions data to be received by the Postal Service no later
than three (3) |
898 |
|
months after the close of the fiscal and calendar
year. |
899 |
|
|
900 |
|
The aviation supplier will convene a meeting with the Postal Service no later thirty (30) days after |
901 |
|
contract award to discuss high level greenhouse gas emissions estimation methodologies and network |
902 |
|
boundaries. |
903 |
|
|
904 |
|
The aviation supplier will hold quarterly meetings with the Postal Service to discuss reporting |
905 |
|
methodology developments, boundaries and notification of estimation methodology or boundary |
906 |
|
changes. |
907 |
|
|
908 |
|
|
909 |
|
Security |
910 |
|
See Attachment 8: Investigative / Security Protocol and Guidelines. |
911 |
|
|
912 |
|
|
913 |
|
Postal Service Employees Allowed Access |
914 |
|
The aviation supplier shall allow escorted Postal officials showing proper credentials access to all |
915 |
|
buildings, field areas, ground equipment being used to sort, stage, or transport mail under this contract |
916 |
|
or under any subcontract services performed under this contract. Government regulations (e.g., |
917 |
|
Transportation Security Administration) will supersede this section. |
918 |
|
|
919 |
|
The aviation supplier will allow unescorted access to Postal Service employees stationed on the |
920 |
|
aviation suppliers premises pending compliance with all required processes. Photography or |
921 |
|
videotaping will not be permitted except as outlined in the security protocols. |
922 |
|
|
923 |
|
|
924 |
|
Personnel Screening |
925 |
|
In general, the Postal Service accepts air carrier security program requirements set forth by the |
926 |
|
Transportation Security Administration (TSA). In addition to these, the Postal Service also mandates |
927 |
|
additional requirements. |
928 |
|
|
929 |
|
The Postal Service is aware that the aviation supplier must implement its human resources programs |
930 |
|
in accordance with certain state laws and that in that respect there may be certain deviations to the |
931 |
|
literal application of some of the Postal Service requirements set forth herein. |
932 |
|
|
933 |
|
In the event the aviation supplier establishes that a state law prohibits it from requesting from its |
934 |
|
employees or prospective employees any or all of the information requested in responses to questions |
935 |
|
21a through 21e of PS Form 2025, Contract Personnel Questionnaire, as required by 1.c below, or |
936 |
|
from certifying, as the result of a criminal records check, to any of the items requested under 1.b, |
937 |
|
Criminal History, below, the aviation supplier shall be relieved of its contractual obligation to require |
938 |
|
employees or prospective employees to respond to the portions of those questions requesting the |
939 |
|
prohibited information or to provide that information as part of its criminal records check. In these |
940 |
|
situations, the Postal Service Security Investigations Service Center (SISC) shall conduct the required |
941 |
|
criminal checks as outlined in 1.b. below. |
942 |
|
|
943 |
|
To establish the existence and the extent of the prohibitory effect of any such state law referenced |
944 |
|
above, the aviation supplier shall provide to the SISC documentary evidence (including a copy of the |
945 |
|
state law) demonstrating the stated prohibition. The Postal Services concurrence about the |
946 |
|
prohibitory nature of a state law shall not be unreasonably withheld. |
947 |
|
|
948 |
|
The Contracting Officer may, in consultation with the aviation supplier and the U.S. Postal Inspection |
949 |
|
Service, grant other appropriate deviations or implement alternate processes to the standard U.S. |
950 |
|
Postal Inspection Service requirements by letter. |
951 |
|
|
952 |
|
Applicability |
Page 23 of 130
Air Cargo Network
Contract ACN-13-FX
Part 1: Statement of Work
|
|
|
953 |
|
Individuals providing services to the Postal Service under this contract (including aviation suppliers, |
954 |
|
employees of aviation suppliers, and subcontractors and their employees at all levels), hereinafter, |
955 |
|
individuals, who have been hired after the effective date of this contract and whose duties will or |
956 |
|
likely may involve handing the mail must obtain a security clearance from the Postal Service, as |
957 |
|
provided herein. Access to the mail as defined by 3.a below is permitted as soon as the security |
958 |
|
clearance package has been submitted to the SISC in Memphis. |
959 |
|
|
960 |
|
If the aviation supplier commences a new operation (internally or with an aviation supplier) for the |
961 |
|
purpose of processing Postal volume, the employees hired since the effective date of this contract will |
962 |
|
be subject to Personnel Screening. |
963 |
|
|
964 |
|
Access to the mail is permitted as soon as the security clearance package has been submitted to the |
965 |
|
SISC in Memphis. If the aviation supplier has ground handling services performed at air stops by |
966 |
|
another aviation supplier (subcontractor), and if, to the best knowledge of the prime aviation supplier, |
967 |
|
that subcontractor is in compliance with the provisions of this clause, the prime aviation supplier may |
968 |
|
certify that fact to the Contracting Officer in writing, and thereby be relieved of the primary |
969 |
|
responsibility for personnel screening. Prime aviation suppliers are in all cases responsible for |
970 |
|
meeting these screening requirements for all persons having access to the mail who are their direct |
971 |
|
employees. For example, if ABC, Inc. is an aviation supplier, and it performs ground handling services |
972 |
|
at one or more air stops for CDE, Inc., CDE must certify in writing that: |
973 |
|
|
974 |
|
I certify that at the following air stops ground handling services are being performed by ABC, |
975 |
|
and that to the best of my knowledge, ABC is an aviation supplier of air transportation services |
976 |
|
under contract number . A listing of airports served by ABC is attached hereto as follows. |
977 |
|
|
978 |
|
Aviation suppliers must have clauses in their contracts with subcontractors requiring adherence to the |
979 |
|
Postal Service screening procedures contained in this contract. |
980 |
|
|
981 |
|
1. Requirements: The aviation supplier, when employing individuals who will or are
likely to |
982 |
|
handle the mail in the performance of their duties under this contract, must provide the |
983 |
|
following documentation as early as possible to the Security Investigations Services Center |
984 |
|
(SISC), 225 N. Humphreys Blvd., 4th floor, Memphis, Tennessee, 38161-0001 for those |
985 |
|
individual aviation supplier employees who will or are likely to handle the mail in the |
986 |
|
performance of their duties. (Form can be obtained by calling the SISC at (901) 747-7712 or |
987 |
|
by email at Meg@uspis.gov.) |
988 |
|
The items listed in sub-sections 1 through 4 and a through c below must be completed prior to |
989 |
|
the employee being granted permission to handle mail. For purposes of this requirement, the |
990 |
|
term completed means that all tasks have been done, and the required submissions to the |
991 |
|
SISC in Memphis have been made. |
992 |
|
|
993 |
|
1. Completed PS Form 2181-C. This form must be dated within 90 days of receipt
by |
994 |
|
the SISC. |
995 |
|
|
996 |
|
2. PS Form 2025. Each item on the PS Form 2025 must be addressed.
Applicants |
997 |
|
must provide their complete residential address, including city, state, and ZIP+4. The |
998 |
|
form must be signed and dated by the applicant within 90 days of receipt by the SISC. |
999 |
|
|
1000 |
|
3. The aviation supplier must obtain and provide to the SISC two original
fingerprint |
1001 |
|
cards (FD-258) for each applicant. The signature of the applicant and the individual |
1002 |
|
taking the prints must be on each FD-258. In lieu of submitting fingerprint cards, a |
1003 |
|
FBI rap sheet may be submitted, provided it is dated within 90 days of receipt by the |
1004 |
|
SISC. The Postal Inspection Service will provide additional fingerprint cards for |
1005 |
|
aviation supplier use. These additional forms may be obtained by calling the |
1006 |
|
Memphis office at (901) 747-7712 or via email at Meg@uspis.gov |
1007 |
|
|
1008 |
|
4. Certification and Transmittal Cover Sheet documenting Criminal History records
check |
1009 |
|
as required by subsection (b) below. The Certification and Transmittal cover
sheet |
Page 24 of 130
Air Cargo Network
Contract ACN-13-FX
Part 1: Statement of Work
|
|
|
1010 |
|
must include the administrative officers name, telephone number, facility name, email |
1011 |
|
address and mailing address. |
1012 |
|
|
1013 |
|
The aviation supplier is required to maintain all certifications required in sections a., b., and c |
1014 |
|
for the length of the contract. |
1015 |
|
|
1016 |
|
a. Drug Screening: The aviation supplier must certify that individuals providing
service |
1017 |
|
under this contract have passed a screening test for those substances identified by the |
1018 |
|
Substance Abuse and Mental Health Services Administration (SAMHSA) as the five (5) |
1019 |
|
most abused substances which are cocaine, marijuana, amphetamine / |
1020 |
|
methamphetamine, opiates, and phencyclidine (PCP). The tests must be performed by a |
1021 |
|
SAMHSA approved certified laboratory. The drug test must meet the cut-off levels |
1022 |
|
established by SAMHSA. All drug screening tests must be completed within ninety (90) |
1023 |
|
days prior to having access to the mail since drug tests older than ninety (90) days are |
1024 |
|
invalid and must be redone. The prime aviation suppliers and all subcontractors must |
1025 |
|
maintain the name of the institution conducting the test and a document indicating if the |
1026 |
|
employee passed or tested positive. |
1027 |
|
|
1028 |
|
b. Criminal History: The aviation supplier must certify, based upon a criminal
records |
1029 |
|
check (a state records check) of each employee through local agencies (state, county, or |
1030 |
|
city) where the applicant has resided and worked for the past five (5) years (this may |
1031 |
|
require multiple checks for applicants who live in one location and work in another |
1032 |
|
location, or for applicants who have moved within that time period), that each individual: |
1033 |
|
|
1034 |
|
i. Has not been convicted of a felony criminal violation in the past five (5)
years; |
1035 |
|
|
1036 |
|
ii. Has not been convicted of serious criminal charges (e.g. murder, rape,
robbery, |
1037 |
|
burglary, physical assaults, weapons violations, or drug charges [felony or |
1038 |
|
misdemeanor]); |
1039 |
|
|
1040 |
|
iii. Does not have any pending felony or serious criminal charges; and |
1041 |
|
|
1042 |
|
iv. Is not on parole for or probation for any felony or serious criminal
charges. |
1043 |
|
|
1044 |
|
This will be documented on the Certification and Transmittal Cover Sheet. This form is |
1045 |
|
provided under Personnel Security Administrative Instructions, and may be reproduced by |
1046 |
|
the aviation supplier. |
1047 |
|
|
1048 |
|
c. Citizenship: Certification of U.S. citizenship must be documented on PS Form
2025, |
1049 |
|
Contract Personnel Questionnaire, or legal work status authorizing the individual to work |
1050 |
|
in the United States is required. (I-9 Form, Employment Eligibility Verification, is to be |
1051 |
|
used for non-citizens). |
1052 |
|
|
1053 |
|
2. Processing: |
1054 |
|
a. The Postal Service agrees to use reasonable efforts to insure that security
clearance |
1055 |
|
decisions are issued within thirty (30) days after the aviation supplier submits the required |
1056 |
|
documents and information to the SISC. The Postal Service, however, cannot guarantee |
1057 |
|
that processing will be complete within thirty (30) days due to circumstances beyond its |
1058 |
|
control. |
1059 |
|
|
1060 |
|
b. For each individual employed by the aviation supplier or any subcontractor, the
aviation |
1061 |
|
supplier will submit to the SISC: |
1062 |
|
Full name |
1063 |
|
Social security number |
1064 |
|
Drug screening data (1.a) |
1065 |
|
Criminal history certifications (1.b) |
1066 |
|
Both sets of fingerprints
(1.c) |
Page 25 of 130
Air Cargo Network
Contract ACN-13-FX
Part 1: Statement of Work
|
|
|
1067 |
|
Citizenship certifications (1.d) |
1068 |
|
|
1069 |
|
Upon receipt of the required documentation, the SISC will submit the fingerprint cards |
1070 |
|
(1.c) to the Federal Bureau of Investigation, and perform a search of the National Crime |
1071 |
|
Information Center (NCIC) Wants and Warrants and Inspection Service databases at its |
1072 |
|
cost. |
1073 |
|
|
1074 |
|
c. In cases where an individual business entity is predominant at a given airport,
the |
1075 |
|
Contracting Officer in consultation with the Inspection Service may approve the receipt of |
1076 |
|
screening documents from that entity. |
1077 |
|
|
1078 |
|
d. The aviation supplier shall maintain supporting documentation for the drug
screening |
1079 |
|
(1.a), criminal history inquiries (1.b), and citizenship verifications (1.d) subject to review by |
1080 |
|
the Postal Service, for the life of this contract in accordance with its internal procedures, |
1081 |
|
advising the Inspection Service SISC on the Certification and Transmittal Cover Sheet. |
1082 |
|
|
1083 |
|
At the employees local station, aviation suppliers are only required to maintain a copy of |
1084 |
|
the Certification and Transmittal Cover Sheet. The Certification and Transmittal Cover |
1085 |
|
Sheet is provided under Personnel Security Administrative Instructions and may be |
1086 |
|
reproduced by the aviation supplier, as needed. |
1087 |
|
|
1088 |
|
Aviation suppliers currently maintaining security screening files under existing Postal |
1089 |
|
Service contracts shall continue to maintain those files. |
1090 |
|
|
1091 |
|
Submit all forms and certifications to: |
1092 |
|
|
1093 |
|
Memphis SISC |
1094 |
|
Security Investigations Service Center |
1095 |
|
225 North Humphreys Boulevard |
1096 |
|
Fourth Floor, South |
1097 |
|
Memphis, TN 38161-0008 |
1098 |
|
|
1099 |
|
The Postal Service intends to make its best efforts to position itself to eliminate the |
1100 |
|
requirement for its set of FD-258 forms, and other submissions to be determined, through |
1101 |
|
cooperation with the Federal Aviation Administration, Transportation Security |
1102 |
|
Administration, and other agencies or associations to share relevant information for its |
1103 |
|
regulatory purposes. |
1104 |
|
|
1105 |
|
3. Access to the Mail Screening Requirements: |
1106 |
|
Access to the mail refers to individuals who scan, transport, sort, load, and unload mail to |
1107 |
|
and from ground equipment and to and from the aircraft. This includes employees handling |
1108 |
|
sealed ULDs. This includes individuals who have direct supervisory duties in directing the |
1109 |
|
transporting, sorting, loading, and unloading of mail to and from ground equipment and |
1110 |
|
aircraft. Individuals providing services to the Postal Service under this contract (including |
1111 |
|
aviation suppliers, employees of aviation suppliers, and subcontractors and their employees at |
1112 |
|
any tier), hereinafter, individuals, who have access to the mail, must obtain a security |
1113 |
|
clearance from the Postal Service before such access to the mail is granted. |
1114 |
|
|
1115 |
|
4. Denial: |
1116 |
|
Persons who meet the following criteria are not permitted to have access to the mail under this |
1117 |
|
contract: |
1118 |
|
|
1119 |
|
a. An aviation supplier, subcontractor, or employee of an aviation supplier or
subcontractor |
1120 |
|
who has not received a security screening in accordance with the criteria listed above |
1121 |
|
under Personnel Screening. |
1122 |
|
|
Page 26 of 130
Air Cargo Network
Contract ACN-13-FX
Part 1: Statement of Work
|
|
|
1123 |
|
b. An aviation supplier, subcontractor, or employee of an aviation supplier or
subcontractor |
1124 |
|
who has been convicted of, or is on probation or parole for, or under suspended sentence |
1125 |
|
for assault, theft, or weapons charges or for the illegal use, possession, sale, or transfer of |
1126 |
|
controlled substances during the past five (5) years. |
1127 |
|
|
1128 |
|
c. An aviation supplier, subcontractor, or employee of an aviation supplier or
subcontractor |
1129 |
|
who has been convicted of any criminal felony violation during the past five (5) years, who |
1130 |
|
is on parole, probation, or suspended sentence for commission of a criminal felony during |
1131 |
|
the past five (5) years. |
1132 |
|
|
1133 |
|
d. An aviation supplier, subcontractor, or employee of an aviation supplier or
subcontractor |
1134 |
|
who has ever been convicted of theft of mail or other Postal offense. |
1135 |
|
|
1136 |
|
e. An aviation supplier, subcontractor, or employee of an aviation supplier or
subcontractor |
1137 |
|
who has an active warrant or is on probation or is on parole. |
1138 |
|
|
1139 |
|
f. An aviation supplier, subcontractor, or employee of an aviation supplier or
subcontractor |
1140 |
|
who has any pending felony or serious criminal charges. |
1141 |
|
|
1142 |
|
g. Any other circumstance that in the determination of the Postal Service makes
the |
1143 |
|
individual unfit to provide services under this contract. |
1144 |
|
|
1145 |
|
In the event an employee is disqualified under the above criteria, the aviation supplier has the |
1146 |
|
responsibility to insure that the employees duties no longer involve handling mail. |
1147 |
|
|
1148 |
|
5. Appeal Process: |
1149 |
|
An individual may appeal a decision to deny access made by the Postal Inspection Service |
1150 |
|
SISC by sending a letter to the Inspector In Charge, Security and Crime Prevention, |
1151 |
|
Washington, DC, within three (3) weeks of the date of the denial letter. An individual may not |
1152 |
|
handle the mail during the appeal process. The letter must contain the following information: |
1153 |
|
|
1154 |
|
a. A statement that reconsideration of the decision is requested and the basis on which it
is |
1155 |
|
sought. |
1156 |
|
|
1157 |
|
b. Additional information on the appellants behalf. |
1158 |
|
|
1159 |
|
c. A copy of the denial letter. |
1160 |
|
|
1161 |
|
6. Training: The Postal Service may, but is not required to, provide orientation /
training for |
1162 |
|
aviation suppliers during the term of this contract to clarify security clearance requirements, |
1163 |
|
processes, and procedures necessary to fully implement this program. |
1164 |
|
|
1165 |
|
|
1166 |
|
Payment Procedures |
1167 |
|
|
1168 |
|
Rates and Payment General |
1169 |
|
The aviation supplier will be compensated based upon properly scanned ULDs and Handling Units. |
1170 |
|
The payment for each ULD and Handling Unit will be based on the network (i.e., Day or Night) to |
1171 |
|
which the mail is assigned by the Postal Service. This process will allow for automated payment. |
1172 |
|
|
1173 |
|
[*] |
1174 |
|
|
1175 |
|
|
1176 |
|
|
1177 |
|
|
1178 |
|
Scan Requirements |
1179 |
|
All scan requirements listed below are specified in the Scanning and Data Transmission section. |
* |
Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities
Exchange Act of 1934, as amended. |
Page 27 of 130
Air Cargo Network
Contract ACN-13-FX
Part 1: Statement of Work
|
|
|
1180 |
|
|
1181 |
|
Night Turn Scan Requirements |
1182 |
|
a. Possession Scan of all ULDs and Handling Units at the origin |
1183 |
|
|
1184 |
|
b. Delivery Scan of all ULDs and Handling Units delivered at destination |
1185 |
|
|
1186 |
|
Day Turn Scan Requirements |
1187 |
|
a. The aviation supplier will conduct a Possession Scan of all ULDs and Handling Units at
the |
1188 |
|
origin. |
1189 |
|
|
1190 |
|
b. The aviation supplier will conduct a Nest Scan associating the Handling Unit with a ULD at
the |
1191 |
|
hub. |
1192 |
|
|
1193 |
|
c. The aviation supplier will conduct a Delivery Scan of all ULDs and Handling Units delivered
at |
1194 |
|
destination. |
1195 |
|
|
1196 |
|
The Hub Sort Scans will be paid in accordance with the pricing listed in Attachment 10: Pricing for |
1197 |
|
Handling Units sorted at the hub on the Day Network for which scans are provided. Hub Sort Scans |
1198 |
|
will not be paid for Handling Units assigned to a Bypass ULD or for the Night Network. |
1199 |
|
|
1200 |
|
[*] |
1201 |
|
|
1202 |
|
|
1203 |
|
|
1204 |
|
|
1205 |
|
|
1206 |
|
The base and tier pricing from Attachment 10: Pricing will be applied to the volume measured in each |
1207 |
|
Operating Period as follows. Volume within the base will be paid at the Base Rate. The portion of |
1208 |
|
volume exceeding the base volume and falling within the Tier 1 volume will be paid at the Tier 1 rate. |
1209 |
|
A similar incremental process will be applied to volume that falls within subsequent tiers. |
1210 |
|
|
1211 |
|
Payments will be made by Electronic Funds Transfer (EFT). |
1212 |
|
|
1213 |
|
[*] |
1214 |
|
|
1215 |
|
|
1216 |
|
|
1217 |
|
The aviation supplier will bill additional charges not covered within the automated payments system on |
1218 |
|
a weekly basis. For correct and sufficient invoices received by noon Wednesday of a given week, the |
1219 |
|
Postal Service will process them so as to generate a payment by Wednesday, three (3) weeks |
1220 |
|
following the receipt of the invoice through the EFT process. |
1221 |
|
|
1222 |
|
|
1223 |
|
Payment Processing - Day Network - Per Cube |
1224 |
|
|
1225 |
|
Invoicing |
1226 |
|
All invoices for the transportation of Handling Units or ULDs under this contract will be paid by the |
1227 |
|
cubic foot and payment will be based on completing the required scans. |
1228 |
|
|
1229 |
|
Mail Tendered in ULDs |
1230 |
|
The Line Haul rate for each ULD will be comprised of two components: Non-Fuel Line Haul and Fuel |
1231 |
|
Line Haul. The Non-Fuel Line Haul rate will include all of the transportation and handling associated |
1232 |
|
with a ULD. Hub Sort Scanning rates are separate from the Non-Fuel Line Haul rate. |
1233 |
|
|
1234 |
|
ULD cubic feet will be paid at the agreed cubic feet size for each ULD type described in Attachment |
1235 |
|
10: Pricing. |
1236 |
|
|
* |
Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities
Exchange Act of 1934, as amended. |
Page 28 of 130
Air Cargo Network
Contract ACN-13-FX
Part 1: Statement of Work
|
|
|
1237 |
|
The cubic feet paid will be based on the Postal assigned ULD type. If the Postal ULD type is missing, |
1238 |
|
the aviation suppliers ULD type will be used for invoicing. Any discrepancies between the types of |
1239 |
|
ULD processed will be resolved during the Reconciliation Process. |
1240 |
|
|
1241 |
|
The transportation payment for mixed ULDs will be based on the applicable cubic feet of the |
1242 |
|
originating ULD. These transportation payments will be reduced for Handling Units not receiving a |
1243 |
|
Delivery Scan by converting the weight of the Handling Units without a Delivery Scan at the correct |
1244 |
|
destination to cubic feet by the applicable contract density. |
1245 |
|
|
1246 |
|
The transportation payment for bypass ULDs will be based on the applicable cubic feet of the |
1247 |
|
originating ULD. These transportation payments will not be made for Bypass ULDs without a Delivery |
1248 |
|
Scan at the correct destination. |
1249 |
|
|
1250 |
|
Recognizing operational inefficiencies filling the last ULD at every location, the Postal Service will |
1251 |
|
incorporate within the daily invoice a daily credit of [*] cubic feet for each origin air stop per day. The |
1252 |
|
rate used will be the applicable base or tier cubic foot rate used at the beginning of the invoice day. |
1253 |
|
|
1254 |
|
Mail Tendered from Surface Trucks |
1255 |
|
If mail is tendered to the aviation supplier from a defined truck location as identified in Attachments 3 |
1256 |
|
and 4 at contract award, the invoiced cubic feet will be calculated by dividing the Handling Units |
1257 |
|
Postal Service assigned rounded weight by the applicable contract density. |
1258 |
|
|
1259 |
|
|
1260 |
|
Mail Tendered from Ad Hoc Trucks into the Aviation Supplier Hub |
1261 |
|
The aviation supplier will accept ad hoc trucks from the Postal Service at the proposed hub locations. |
1262 |
|
The Postal Service will incorporate ad hoc truck payments in the weekly electronic payment. |
1263 |
|
|
1264 |
|
FedEx will accept up to a total of fifteen (15) Ad Hoc Trucks per day on the Day Network at the |
1265 |
|
Memphis Hub. |
1266 |
|
|
1267 |
|
a. All ad hoc trucks must arrive at the Memphis Hub before 10:00 a.m. local time and must
be |
1268 |
|
coordinated with FedEx in advance. Required Delivery Time (RDT) will be established in |
1269 |
|
accordance with Attachment 3, Operating Plan, Day Network contingent on the ad hoc trucks |
1270 |
|
arriving at the Memphis Hub before 10:00 a.m. local time. Late arriving trucks (after 10:00 |
1271 |
|
a.m. local time) will be assigned an RDT based on arrival on the next operational day. All |
1272 |
|
RDTs will be adjusted to reflect the first FedEx operational scan at the Memphis Hub. |
1273 |
|
|
1274 |
|
b. Initial Payment for ad hoc trucks will be made in the amount of 3,000 cubic feet per truck
on |
1275 |
|
an Operating Period basis, no later than 30 days after the last day of each Operating Period. |
1276 |
|
Final payment for ad hoc trucks will be adjusted, if applicable, for any reductions of payment |
1277 |
|
under Part 1: Statement of Work Reduction of Payment and will also be adjusted, if applicable, |
1278 |
|
based upon the Day Turn Scan Requirements under contract section Payment Procedures, |
1279 |
|
Rates and Payment General (with the exception that the volumes moving via ad hoc trucks |
1280 |
|
will not require a Possession Scan). Any adjustments described here, if applicable, will be |
1281 |
|
made through the reconciliation process. |
1282 |
|
|
1283 |
|
Aviation Supplier Surface Transportation Not Included in the Transportation Payment |
1284 |
|
The aviation supplier will include a separate rate per mile for Highway Transportation in Attachment |
1285 |
|
10: Pricing which will be applied when the Postal Service requires the aviation supplier to operate |
1286 |
|
unplanned surface transportation of mail. |
1287 |
|
|
1288 |
|
Hub Sort Scan Charge |
1289 |
|
The Postal Service will pay a Hub Sort Scan charge for mail sorted and scanned at a hub per Handling |
1290 |
|
Unit (i.e., D&R Tag) as shown in Attachment 10: Pricing. This rate will not be subject to an increase |
1291 |
|
for the full term of the contract. |
1292 |
|
|
* |
Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities
Exchange Act of 1934, as amended. |
Page 29 of 130
Air Cargo Network
Contract ACN-13-FX
Part 1: Statement of Work
|
|
|
1293 |
|
Handling Units sorted at a hub must receive a Hub Sort Scan for payment purposes. The Postal |
1294 |
|
Service will not pay a Hub Sort Scan charge for sorts not supported by EDI scan information. The |
1295 |
|
pieces scanned into a tendered Bypass container are not eligible to receive Hub Sort Scan charges. |
1296 |
|
|
1297 |
|
Re-Labeling Charge |
1298 |
|
The Postal Service will pay an additional charge to the aviation supplier for re-labeling Postal Service |
1299 |
|
Handling Units at the hub for which the D&R tag is missing or becomes illegible. The Postal Service |
1300 |
|
will also provide all equipment necessary to perform this function. The re-labeling charge per Handling |
1301 |
|
Unit is shown in Attachment 10: Pricing. |
1302 |
|
|
1303 |
|
This rate will not be subject to an increase for the full term of the contract. |
1304 |
|
|
1305 |
|
Payment to the aviation supplier for the transport of re-labeled Handling Units will be based upon data |
1306 |
|
received from the Hub Scan plus (combined and matched with) the Delivery Scan for the Handling |
1307 |
|
Unit. An average weight per Handling Unit will be established based upon the previous months data |
1308 |
|
for average weight per Handling Unit, and for Handling Units that are not properly scanned due to |
1309 |
|
conditions beyond the aviation suppliers control. |
1310 |
|
|
1311 |
|
The average weight process is detailed in Attachment 15, Average Weights. |
1312 |
|
|
1313 |
|
The equipment to be supplied by the Postal Service for this function will be listed in Attachment 6: |
1314 |
|
Postal Furnished Property, and will be covered by Clause 2-22, Postal Service Property. Attachment |
1315 |
|
6: Postal Furnished Property will be created upon successful installation of the equipment. Upon |
1316 |
|
reasonable advance notice to the aviation supplier, the Postal Service shall be permitted to perform |
1317 |
|
maintenance on any of the equipment located in an aviation suppliers facility listed in Attachment 6: |
1318 |
|
Postal Service Furnished Property. |
1319 |
|
|
1320 |
|
The Re-Labeling Process is described in Attachment 16, Re-labeling / Type M Matching Process. |
1321 |
|
|
1322 |
|
Fuel Adjustment |
1323 |
|
There will be a monthly fuel adjustment to the Fuel Line Haul rate. Each month is defined in |
1324 |
|
Attachment 1: Postal Service Operating Periods. The adjustment will become effective on the first |
1325 |
|
operating day of each operating period after contract commencement. The adjustment may be |
1326 |
|
upward or downward. |
1327 |
|
|
1328 |
|
The adjustment will be based on the U.S. Gulf Coast (USGC) prices for Kerosene-type jet fuel |
1329 |
|
reported by the U.S. Department of Energy for the month that is two (2) months prior to the |
1330 |
|
adjustment. The adjustment will be calculated and applied monthly. |
1331 |
|
|
1332 |
|
For example, assume the Fuel Line Haul rate is $0.10. If the June 20XX USGC price for Kerosene- |
1333 |
|
type jet fuel is $2.68 per gallon and the July 20XX price is $3.00 per gallon, then the adjustment for |
1334 |
|
September XX would be calculated as follows: |
1335 |
|
|
1336 |
|
($3.00 / $2.68) = 1.12 |
1337 |
|
1.12 x $0.10 = $0.11 |
1338 |
|
|
1339 |
|
The new Fuel Line Haul rate would be $0.11 per cubic foot. |
1340 |
|
|
1341 |
|
In August 20XX, if the USGC price is $2.70 per gallon, the calculation for the October 20XX rate would |
1342 |
|
be: |
1343 |
|
|
1344 |
|
($2.70 / $3.00) = 0.90 |
1345 |
|
0.90 X $0.11 = $0.10 per cubic foot |
1346 |
|
|
1347 |
|
This calculation will be rounded after the decimal to four digits. |
1348 |
|
|
Page 30 of 130
Air Cargo Network
Contract ACN-13-FX
Part 1: Statement of Work
|
|
|
1349 |
|
The proposal pricing should be based on the August 2012 U.S. Gulf Coast Kerosene-type jet fuel |
1350 |
|
reported by the U.S. Department of Energy ($3.156 per gallon). |
1351 |
|
|
1352 |
|
Fuel will be adjusted for October 2013 based on the August 2013 U.S. Gulf Coast Kerosene-type jet |
1353 |
|
fuel reported by the U.S. Department of Energy. |
1354 |
|
|
1355 |
|
|
1356 |
|
Payment Processing - Night Network - Per Pound |
1357 |
|
|
1358 |
|
Invoicing |
1359 |
|
All Handling Units tendered to the aviation supplier for the Night Network will be paid by the pound and |
1360 |
|
payment will be based on required scanning. The weight will be derived from the assigned rounded |
1361 |
|
weight of the Handling Unit. The Non-Fuel Line Haul rate will include all of the transportation and |
1362 |
|
handling associated with a Handling Unit. The Fuel Line Haul rate for the Night Network will not be |
1363 |
|
subject to a fuel adjustment. |
1364 |
|
|
1365 |
|
Re-Labeling Charge |
1366 |
|
The Postal Service will pay an additional charge to the aviation supplier for re-labeling Postal Service |
1367 |
|
Handling Units for which the D&R tag is missing or becomes illegible. The Postal Service will also |
1368 |
|
provide all equipment necessary to perform this function. The re-labeling charge per Handling Unit is |
1369 |
|
shown in Attachment 10: Pricing. This rate will not be subject to an increase for the full term of the |
1370 |
|
contract. |
1371 |
|
|
1372 |
|
Payment to the aviation supplier for transport of re-labeled Handling Units will be based upon data |
1373 |
|
received from the Hub Scan plus (combined and matched with) the Delivery Scan for the Handling |
1374 |
|
Unit. An average weight per Handling Unit will be established based upon the previous months data |
1375 |
|
for average weight per Handling Unit and for Handling Units that are not properly scanned due to |
1376 |
|
conditions beyond the aviation suppliers control. |
1377 |
|
|
1378 |
|
The equipment to be supplied by the Postal Service for this function will be listed in Attachment 6: |
1379 |
|
Postal Furnished Property, and will be covered by Clause 2-22, Postal Service Property. Attachment |
1380 |
|
6 will be created upon successful installation of the equipment. Upon reasonable advance notice to |
1381 |
|
the aviation supplier, the Postal Service shall be permitted to perform maintenance on any of the |
1382 |
|
equipment located in an aviation suppliers facility listed in Attachment 6. |
1383 |
|
|
1384 |
|
The payment for the Night Network re-labeled Handling Units will be adjusted to reflect the percentage |
1385 |
|
of re-labeled Handling Units that have already been scanned. This percentage of previously scanned |
1386 |
|
Handling Units will be mutually agreed upon by the Postal Service and the aviation supplier through an |
1387 |
|
audit sampling of re-labeled Handling Units. Contingency Handling Units are excluded from this |
1388 |
|
adjustment. |
1389 |
|
|
1390 |
|
The average weight process is detailed in Attachment 15, Average Weights. |
1391 |
|
|
1392 |
|
|
1393 |
|
Reconciliation Process |
1394 |
|
Reconciliation of scanning and payment records between the Postal Service and the aviation supplier |
1395 |
|
will be conducted in a scheduled meeting attended by the Postal Service and the aviation supplier on |
1396 |
|
an Operating Period basis not more than ninety (90) days after the close of an Operating Period, or a |
1397 |
|
time frame as agreed mutually by the parties. The following procedures will be observed for the |
1398 |
|
reconciliation process: |
1399 |
|
|
1400 |
|
a. All data exchanges between the aviation supplier and the Postal Service for the
reconciliation |
1401 |
|
process will be performed electronically and sent to specified mailboxes operated by each |
1402 |
|
organization. Each file will have an individually specified transmission interval. |
1403 |
|
|
Page 31 of 130
Air Cargo Network
Contract ACN-13-FX
Part 1: Statement of Work
|
|
|
1404 |
|
b. For all files exchanged between the aviation supplier and the Postal Service, any changes
to |
1405 |
|
layout or data definition must be communicated to the receiving party at a minimum of sixty |
1406 |
|
(60) calendar days prior to implementation, or sooner if mutually agreed. |
1407 |
|
|
1408 |
|
c. All file transfers must adhere to Postal Service Security and Privacy
rules. |
1409 |
|
|
1410 |
|
d. Supplemental Charges / Assessments may be assessed each Operating Period. The
charges |
1411 |
|
shall include but not be limited to the following: |
1412 |
|
i. Operating Period Volume Minimum and Contract Volume Minimum |
1413 |
|
ii. Non-achievement of performance standards |
1414 |
|
|
1415 |
|
e. Once the parties have mutually agreed on the Operating Period reconciliation, both
parties |
1416 |
|
agree that neither can re-open the Operating Period for further adjustments. By mutually |
1417 |
|
agreeing to the Operating Period reconciliation, the parties thereby agree to waive their right |
1418 |
|
to pursue a claim under the Contract Disputes Act based upon the Operating Period |
1419 |
|
reconciliation. |
1420 |
|
|
1421 |
|
In the event there is a catastrophic equipment or information system failure, the aviation supplier will |
1422 |
|
provide electronic files to the Postal Service identifying all D&R Tags the aviation supplier scanned |
1423 |
|
that were lost. The aviation supplier will notify the Contracting Officer and the COR as soon as the |
1424 |
|
aviation supplier becomes aware of such a failure. |
1425 |
|
|
1426 |
|
If the Postal Service cannot produce D&R Tags, an emergency contingency will be developed and |
1427 |
|
implemented. Such a plan will include specifications for operational and information technology |
1428 |
|
issues, as well as payment. |
1429 |
|
|
Page 32 of 130
Air Cargo Network
Contract ACN-13-FX
Part 3: Contract Clauses
|
|
|
1430 |
|
Part 3: Contract Clauses |
1431 |
|
|
1432 |
|
|
1433 |
|
Clause B-1: Definitions (March 2006) (Tailored) |
1434 |
|
For purposes of this Contract, the following terms shall have the following meanings: |
1435 |
|
|
1436 |
|
1. Acceptable Dangerous Goods and Acceptable Hazardous Material: Those articles
or |
1437 |
|
substances which satisfy the air transportation requirements for the transportation of |
1438 |
|
Hazardous Goods set forth in Chapter 601.10.0 of the Domestic Mail Manual and which are |
1439 |
|
not required by applicable federal regulation to be accessible to crew members during flight. |
1440 |
|
|
1441 |
|
2. Advertisement: A free or paid mass or targeted communication under the control of a
party |
1442 |
|
intended for the general public or a specific potential or existing customer, the ultimate |
1443 |
|
purpose of which is to promote the sale of such partys products or services, including, but not |
1444 |
|
limited to, television, radio and internet commercials, out-of-home ads (e.g., billboards, sports |
1445 |
|
stadium displays, transit signs), direct mail ads, print ads and free standing inserts in |
1446 |
|
newspapers, magazines, and electronic media. |
1447 |
|
|
1448 |
|
3. All Mail Due Aviation Supplier: A designated time predetermined when the Postal
Service |
1449 |
|
provides all mail to the aviation supplier as shown in Attachments 3: Operating Plan, Day |
1450 |
|
Network, and Attachment 4: Operating Plan, Night Network |
1451 |
|
|
1452 |
|
4. Aviation Supplier: The person or persons, partnership, or corporation named that has
been |
1453 |
|
awarded the contract. |
1454 |
|
|
1455 |
|
5. Bypass Container: A ULD of mail designated for delivery to destination Service Point
on the |
1456 |
|
network which is transferred directly from one aircraft to another without going through the sort |
1457 |
|
operation. |
1458 |
|
|
1459 |
|
6. Con-Con: (Convoy and Conveyance) The concentration in a container of Registered Mail
for |
1460 |
|
single, daily, daylight, or authorized night air dispatch |
1461 |
|
|
1462 |
|
7. Contract Volume Minimum: The volume (in cubic feet) per operational day,
averaged |
1463 |
|
across six (6) days per week, and measured across each Operating Period that is guaranteed |
1464 |
|
by the Postal Service for the Day Network |
1465 |
|
|
1466 |
|
8. Contracting Officer: The person executing this contract on behalf of the Postal
Service and |
1467 |
|
any other officer or employee who is a properly designated Contracting Officer; the term |
1468 |
|
includes, except as otherwise provided in the contract, the authorized representative of a |
1469 |
|
Contracting Officer acting within the limits of the authority conferred upon that person. |
1470 |
|
|
1471 |
|
9. Contracting Officers Representative (COR): A person who acts within the limits
of |
1472 |
|
authority delegated by the Contracting Officer. |
1473 |
|
|
1474 |
|
10. Contingency Handling Units: Handling Units entered into the transportation network
without |
1475 |
|
an appropriate D&R tag. These Handling Units are subsequently processed at the aviation |
1476 |
|
suppliers hub through the re-labeling process. |
1477 |
|
|
1478 |
|
11. Dangerous Goods (Hazardous Material): Articles or substances which are capable
of |
1479 |
|
posing a significant risk to health, safety or to property when transported by air and which are |
1480 |
|
classified according to Section 3 (Classification) of the International Air Transport Association |
1481 |
|
(IATA) Dangerous Good Regulations, regardless of variations, exceptions, exemptions, or |
1482 |
|
limited quantity allowances. |
1483 |
|
|
1484 |
|
12. Day Network: Planned network that operates Tuesday through Sunday primarily for
the |
1485 |
|
transportation of the Priority and First Class Mail. |
1486 |
|
|
Page 33 of 130
Air Cargo Network
Contract ACN-13-FX
Part 3: Contract Clauses
|
|
|
1487 |
|
13. Delivery: The hand-off, at a destination Service Point, of all mail to the Postal Service
in |
1488 |
|
accordance with contract requirements. |
1489 |
|
|
1490 |
|
14. Delivery Scan: A scan performed by the aviation supplier that indicates that the
aviation |
1491 |
|
supplier has tendered volume to the Postal Service. In instances where a Delivery Scan is |
1492 |
|
indicated by a combination of evidence of any scan performed by the aviation supplier and a |
1493 |
|
CARDIT 3 from the THS indicating delivery of the Handling Unit to the third party ground |
1494 |
|
handler, the time indicated for the latest ULD tendered on that Operating Day will be used for |
1495 |
|
the purposes of determining service performance and associated payment reductions |
1496 |
|
described in Part 1: Statement of Work; Performance Requirements and Measurement and |
1497 |
|
Part 1: Statement of Work; Reduction of Payment. |
1498 |
|
|
1499 |
|
15. D&R (Dispatch and Routing) Tag: Bar coded tag that identifies the origin and
destination |
1500 |
|
airports, mail class, Handling Unit weight, and the assigned network air carrier. |
1501 |
|
|
1502 |
|
16. Exception Sort Scan: A Hub Scan performed on mail Handling Units that require
re-labeling |
1503 |
|
due to a missing or unreadable D&R tag. |
1504 |
|
|
1505 |
|
17. Express Mail: As defined in the U.S. Postal Service Domestic Mail Manual. |
1506 |
|
|
1507 |
|
18. Failure to Load: A failure to accept and load mail as specified in the
contract. |
1508 |
|
|
1509 |
|
19. Failure to Protect: Is a failure to protect and safeguard mail from depredation,
rifling, |
1510 |
|
inclement weather, mistreatment, or other hazard while in the aviation suppliers control. |
1511 |
|
|
1512 |
|
20. Failure to Protect Postal Service Equipment: A failure to protect, return or
safeguard |
1513 |
|
Postal Service provided equipment. This includes MTE and Postal provided scanning |
1514 |
|
equipment (if supplied by the Postal Service). |
1515 |
|
|
1516 |
|
21. First-Class Mail: As defined in the U.S. Postal Service Domestic Mail
Manual. |
1517 |
|
|
1518 |
|
22. Feeder: An aircraft normally used for local transport (for carriage of cargo and / or
containers) |
1519 |
|
to and from locations not scheduled to be serviced by primary aircraft from a hub, directly |
1520 |
|
connecting these locations to a hub. |
1521 |
|
|
1522 |
|
23. Ground Handling: Handling of mail, including unloading of mail from aircraft or
ground |
1523 |
|
vehicles, drayage, staging of mail, and loading of mail on receiving aircraft or ground vehicles. |
1524 |
|
|
1525 |
|
24. Handling Unit: A piece of mail (an outside) or a receptacle (such as loose sacks,
pouches, |
1526 |
|
trays, flat tubs) that contains multiple pieces of mail which is individually processed. |
1527 |
|
|
1528 |
|
25. Hub: A central sort facility that supports multiple markets via air and ground networks on
a |
1529 |
|
regional or national level by means of connecting flights and ground transportation. |
1530 |
|
|
1531 |
|
26. Hub Sort Scan: A scan performed by the aviation supplier at a hub
location. |
1532 |
|
|
1533 |
|
27. Line Haul: Transporting mail by air between origin and destination
locations. |
1534 |
|
|
1535 |
|
28. Live Animals: Animals accepted by the Postal Service in accordance with Chapter 601.9.3
of |
1536 |
|
the Domestic Mail Manual. |
1537 |
|
|
1538 |
|
29. Mail: Product that carries U.S. postage and the receptacles in which it is tendered
for |
1539 |
|
transportation. The term includes supplies and empty mail transportation equipment of the |
1540 |
|
U.S. Postal Service. |
1541 |
|
|
1542 |
|
30. Mail Bags: Postal Service bags which are used by the Postal Service in the transportation
of |
1543 |
|
mail. |
Page 34 of 130
Air Cargo Network
Contract ACN-13-FX
Part 3: Contract Clauses
|
|
|
1544 |
|
|
1545 |
|
31. Mis-delivered: Any mail delivered to the wrong destination. This includes, but is not
limited |
1546 |
|
to, mail placed in the wrong ULD, ULDs loaded onto an incorrect flight or truck, and ULDs |
1547 |
|
incorrectly placarded. |
1548 |
|
|
1549 |
|
32. Mixed Container: A Unit Load Device (ULD) containing mail for multiple destinations
that |
1550 |
|
requires sortation at the aviation supplier hub. |
1551 |
|
|
1552 |
|
33. Nest Scan: The scan that associates the Handling Unit with the ULD (air
container). |
1553 |
|
|
1554 |
|
34. Night Network: Planned network that operates Monday through Friday, primarily for
the |
1555 |
|
transportation of Express Mail. |
1556 |
|
|
1557 |
|
35. Operating Period: A scheduled period ranging from four (4) to five (5) weeks as
agreed |
1558 |
|
between the Postal Service and aviation supplier. |
1559 |
|
|
1560 |
|
36. Operating Period Volume Minimum: The volume minimum resulting from the
Planned |
1561 |
|
Capacity established through the Ordering Process for the Day and Night Networks. |
1562 |
|
|
1563 |
|
37. Overflow Mail: Mail that is tendered in excess of the Planned Capacity. |
1564 |
|
|
1565 |
|
38. Outsides: Individual mail piece, with dimensions no greater than 108 inches in
combined |
1566 |
|
length and girth and with no single dimension greater than 84 inches which is not otherwise |
1567 |
|
containerized and must be processed as a Handling Unit. |
1568 |
|
|
1569 |
|
39. Package: Any box or envelope that is accepted by the Postal Service for delivery to
a |
1570 |
|
consignee. |
1571 |
|
|
1572 |
|
40. Payment Week: The period each week of an Operating Period between 00:00 Saturday
and |
1573 |
|
23:59 Friday. |
1574 |
|
|
1575 |
|
41. Perishables: Those items which are susceptible to decay, spoilage or
destruction. |
1576 |
|
|
1577 |
|
42. Planned Capacity: Volume that the parties have agreed to by way of the Ordering
Process |
1578 |
|
for the Day and Night Networks. |
1579 |
|
|
1580 |
|
43. Possession Scan: A scan performed by the aviation supplier that indicates the
aviation |
1581 |
|
supplier has accepted the volume from the Postal Service. |
1582 |
|
|
1583 |
|
44. Priority Mail: Priority Mail and First-Class zone rated (Priority) mail as defined in the
U.S. |
1584 |
|
Postal Service Domestic Mail Manual, Chapter 3, Section 314. |
1585 |
|
|
1586 |
|
45. Registered Mail: A mail piece which is mailed in accordance with the requirements
of |
1587 |
|
Chapter 501.2.0 of the Domestic Mail Manual. Registered Mail provides added protection for |
1588 |
|
valuable or important mail. Registered Mail provides a receipt to the sender, special security |
1589 |
|
between shipment points, a record of acceptance and delivery maintained by the Postal |
1590 |
|
Service and, at the option of the mailer and for an additional fee, indemnity in case of loss or |
1591 |
|
damage. |
1592 |
|
|
1593 |
|
46. Re-Possessed: Regain possession of assigned mail. |
1594 |
|
|
1595 |
|
47. Required Delivery Time (RDT): The latest delivery time to the Postal Service as indicated
in |
1596 |
|
Attachment 3: Operating Plan, Day Network, and Attachment 4: Operating Plan, Night |
1597 |
|
Network. |
1598 |
|
|
Page 35 of 130
Air Cargo Network
Contract ACN-13-FX
Part 3: Contract Clauses
|
|
|
1599 |
|
48. Service Point: The physical location at which the aviation supplier must hand-off mail to
the |
1600 |
|
Postal Service or its duly appointed agent as specified in Attachment 3: Operating Plan, Day |
1601 |
|
Network, and Attachment 4: Operating Plan, Night Network. |
1602 |
|
|
1603 |
|
49. Tender: The drop-off, at an origin Service Point, of mail assigned by the Postal Service to
the |
1604 |
|
aviation supplier. |
1605 |
|
|
1606 |
|
50. Tender Point: The physical location at which the Postal Service or its duly appointed
agent |
1607 |
|
provides mail to the aviation supplier. |
1608 |
|
|
1609 |
|
51. Tender Time: The latest time at which the aviation supplier is required to accept mail
from |
1610 |
|
the Postal Service at an origin Service Point in accordance with contract requirements. |
1611 |
|
|
1612 |
|
52. Terminal Handling: The receipt, scanning, sorting, delivery and / or tug and
dolly |
1613 |
|
transportation of mail tendered under this contract. |
1614 |
|
|
1615 |
|
53. Trans Log File: The Postal Service data file that contains, for each D&R Tag, the
actual |
1616 |
|
weight, origin, and destination market for each Handling Unit. |
1617 |
|
|
1618 |
|
54. Transportation Payment:: Four items are included in the Transportation
Payment: |
1619 |
|
a. Non-Fuel Line Haul |
1620 |
|
b. Fuel Line Haul |
1621 |
|
c. Aircraft Ground Handling |
1622 |
|
d. Scanning |
1623 |
|
|
1624 |
|
55. Trucking Location: Those Service Points to which mail volume is transported via
highway. |
1625 |
|
|
1626 |
|
56. Unit Load Device (ULD): Airline container or pallet provided by the aviation
supplier |
1627 |
|
|
1628 |
|
|
1629 |
|
Clause B-3: Contract Type (March 2006) (Tailored) |
1630 |
|
This Contract is a fixed-price, indefinite quantity with adjustments contract for the purchase of |
1631 |
|
commercial services pursuant to 39 Code of Federal Regulations, Part 601 et seq. |
1632 |
|
|
1633 |
|
This is not a requirements-type contract. |
1634 |
|
|
1635 |
|
|
1636 |
|
Clause B-9: Claims and Disputes (March 2006) (Tailored) |
1637 |
|
a. This contract is subject to the Contract Disputes Act of 1978 (41 U.S.C. 601-613)
(the Act or |
1638 |
|
CDA). |
1639 |
|
|
1640 |
|
b. Except as provided in the Act, all disputes arising under or relating to this contract must
be |
1641 |
|
resolved under this clause. |
1642 |
|
|
1643 |
|
c. Claim, as used in this clause, means a written demand or written assertion by
one of the |
1644 |
|
contracting parties seeking, as a matter of right, the payment of money in a sum certain, the |
1645 |
|
adjustment or interpretation of contract terms, or other relief arising under or relating to this |
1646 |
|
contract. However, a written demand or written assertion by the aviation supplier seeking the |
1647 |
|
payment of money exceeding $100,000 is not a claim under the Act until certified as required |
1648 |
|
by subparagraph d.2 below. A voucher, invoice, or other routine request for payment that is |
1649 |
|
not in dispute when submitted is not a claim under the Act. The submission may be converted |
1650 |
|
to a claim under the Act by complying with the submission and certification requirements of |
1651 |
|
this clause, if it is disputed either as to liability or amount is not acted upon in a reasonable |
1652 |
|
time. |
1653 |
|
|
1654 |
|
d. |
Page 36 of 130
Air Cargo Network
Contract ACN-13-FX
Part 3: Contract Clauses
|
|
|
1655 |
|
1. A claim by the aviation supplier must be made in writing and submitted to
the |
1656 |
|
Contracting Officer for a written decision. A claim by the Postal Service against the |
1657 |
|
aviation supplier is subject to a written decision by the Contracting Officer. |
1658 |
|
|
1659 |
|
2. For aviation supplier claims exceeding $100,000, the aviation supplier must
submit |
1660 |
|
with the claim the following certification: |
1661 |
|
|
1662 |
|
I certify that the claim is made in good faith, that the supporting data are |
1663 |
|
accurate and complete to the best of my knowledge and belief, that the |
1664 |
|
amount requested accurately reflects the contract adjustment for which the |
1665 |
|
aviation supplier believes the Postal Service is liable, and that I am duly |
1666 |
|
authorized to certify the claim on behalf of the aviation supplier. |
1667 |
|
|
1668 |
|
3. The certification may be executed by any person duly authorized to bind the
aviation |
1669 |
|
supplier with respect to the claim. |
1670 |
|
|
1671 |
|
e. For aviation supplier claims of $100,000 or less, the Contracting Officer must, if
requested in |
1672 |
|
writing by the aviation supplier, render a decision within 60 days of the request. For aviation |
1673 |
|
supplier-certified claims over $100,000, the Contracting Officer must, within 60 days, decide |
1674 |
|
the claim or notify the aviation supplier of the date by which the decision will be made. |
1675 |
|
|
1676 |
|
f. The Contracting Officers decision is final unless the aviation supplier appeals
or files a suit as |
1677 |
|
provided in the Act. |
1678 |
|
|
1679 |
|
g. When a CDA claim is submitted by or against an aviation supplier, the parties shall make
a |
1680 |
|
good faith attempt to resolve the dispute, including an exchange of relevant information toward |
1681 |
|
a mutual resolution. Accordingly, by mutual consent, the parties may agree to use an |
1682 |
|
alternative dispute resolution (ADR) process to assist in resolving the claim. A certification as |
1683 |
|
described in d (2) of this clause must be provided for any claim, regardless of dollar amount, |
1684 |
|
before ADR is used. If either party declares the matter to be at an impasse, the dispute will be |
1685 |
|
resolved through the CDA process as contemplated by Clause B-9. |
1686 |
|
|
1687 |
|
h. The Postal Service will pay interest in the amount found due and unpaid
from: |
1688 |
|
1. The date the Contracting Officer receives the claim (properly certified, if required);
or |
1689 |
|
|
1690 |
|
2. The date payment otherwise would be due, if that date is later, until the date
of |
1691 |
|
payment. |
1692 |
|
|
1693 |
|
i. Simple interest on claims will be paid at a rate determined in accordance with the
Interest |
1694 |
|
clause. |
1695 |
|
|
1696 |
|
j. The aviation supplier must proceed diligently with performance of this contract,
pending final |
1697 |
|
resolution of any request for relief, claim, appeal, or action arising under the contract |
1698 |
|
regardless of the initiating party, and comply with any decision of the Contracting Officer. |
1699 |
|
|
1700 |
|
|
1701 |
|
Clause B-10: Pricing of Adjustments (March 2006) (Tailored) |
1702 |
|
When costs are a factor in determining any contract price adjustment under the Changes clause, the |
1703 |
|
process set forth in Clause 4-1.c will be followed. For any other provision of this contract, the parties |
1704 |
|
agree to use the process set forth in Attachment 10: Pricing and in the Payment Processing sections |
1705 |
|
of Part 1 for negotiating the adjustment. |
1706 |
|
|
1707 |
|
|
1708 |
|
Clause B-15: Notice of Delay (March 2006) (Tailored) |
1709 |
|
Immediately upon becoming aware of any difficulties that might delay deliveries under this contract, |
1710 |
|
the aviation supplier will notify the Postal Service in writing. The notification must identify the |
Page 37 of 130
Air Cargo Network
Contract ACN-13-FX
Part 3: Contract Clauses
|
|
|
1711 |
|
difficulties, the reasons for them, and the estimated period of delay anticipated. Failure to give notice |
1712 |
|
may preclude later consideration of any request for an extension of contract time. |
1713 |
|
|
1714 |
|
|
1715 |
|
Clause B-22: Interest (March 2006) (Tailored) |
1716 |
|
The Postal Service will pay interest on late payments and unearned prompt payment discounts in |
1717 |
|
accordance with the Prompt Payment Act, 31 U.S.C. 3901 et. seq., as amended by the Prompt |
1718 |
|
Payment Act Amendments of 1988, P.L. 100-496. The aviation supplier will pay interest on any |
1719 |
|
payment to the Postal Service at a rate equivalent to the prevailing Contract Disputes Act interest rate. |
1720 |
|
|
1721 |
|
|
1722 |
|
Clause B-25: Advertising of Contract Awards (March 2006) |
1723 |
|
Except with the Contracting Officers prior approval, the aviation supplier agrees not to refer in its |
1724 |
|
commercial advertising to the fact that it was awarded a Postal Service contract or to imply in any |
1725 |
|
manner that the Postal Service endorses its products. |
1726 |
|
|
1727 |
|
|
1728 |
|
Clause B-30: Permits and Responsibilities (March 2006) (Tailored) |
1729 |
|
The aviation supplier is responsible, without additional expense to the Postal Service, for obtaining |
1730 |
|
any necessary licenses and permits, and for complying with any applicable federal, state, and |
1731 |
|
municipal laws, codes, and regulations in connection with the performance of the contract. The |
1732 |
|
aviation supplier is responsible for all damage to persons or property, including environmental damage |
1733 |
|
that occurs as a result of its omission(s) or negligence. While in performance of the contract, the |
1734 |
|
aviation supplier must take proper safety and health precautions to protect the work, the workers, the |
1735 |
|
public, the environment, and the property of others. |
1736 |
|
|
1737 |
|
|
1738 |
|
Clause B-39: Indemnification (March 2006) (Tailored) |
1739 |
|
The aviation supplier must save harmless and indemnify the Postal Service and its officers, agents, |
1740 |
|
representatives, and employees from all claims, losses, damage, actions, causes of action, expenses, |
1741 |
|
and/or liability resulting from, brought forth, or on account of any personal injury or property damage |
1742 |
|
received or sustained by any person, persons, or property growing out of, occurring, or attributable to |
1743 |
|
any work performed under or related to this contract, resulting in whole or in part from negligent acts or |
1744 |
|
omissions of the aviation supplier, any subcontractor of the aviation supplier, or any employee, agent, |
1745 |
|
or representative of the aviation supplier or of the aviation suppliers subcontractor. |
1746 |
|
|
1747 |
|
The Postal Service must save harmless and indemnify the aviation supplier and its officers, agents, |
1748 |
|
representatives, and employees from all claims, losses, damage, actions, causes of action, expenses, |
1749 |
|
and / or liability resulting from, brought forth, or on account of any personal injury or property damage |
1750 |
|
received or sustained by any person, persons, or property growing out of, occurring, or attributable to |
1751 |
|
any work performed under or related to this contract, resulting in whole or in part from negligent acts or |
1752 |
|
omissions of the Postal Service, or any employee, agent, or representative of the Postal Service. |
1753 |
|
|
1754 |
|
|
1755 |
|
Clause B-45: Other Contracts (March 2006) (Tailored) |
1756 |
|
The Postal Service may award other contracts for additional work, and the aviation supplier must |
1757 |
|
cooperate fully with the other aviation suppliers and Postal Service employees. The aviation supplier |
1758 |
|
must not commit or permit any act that will interfere with the performance of work by any other aviation |
1759 |
|
supplier or by Postal Service employees. |
1760 |
|
|
1761 |
|
|
1762 |
|
Clause B-65: Adjustments to Compensation (March 2006) (Tailored) |
1763 |
|
Contract compensation may be adjusted, from time to time, by mutual agreement of the aviation |
1764 |
|
supplier and the Contracting Officer. No adjustment to compensation will be made for changes arising |
1765 |
|
from Clause 9-10: Service Contract Act or from Clause 9-12: Fair Labor Standards Act and Service |
Page 38 of 130
Air Cargo Network
Contract ACN-13-FX
Part 3: Contract Clauses
|
|
|
1766 |
|
Contract Act Price Adjustment. Adjustments in compensation pursuant to this clause shall be |
1767 |
|
memorialized by formal modification to the contract. All negotiations between the parties shall be |
1768 |
|
conducted with respect to the implied covenant of good faith and fair dealing. |
1769 |
|
|
Page 39 of 130
Air Cargo Network
Contract ACN-13-FX
Part 3: Contract Clauses
|
|
|
1770 |
|
|
1771 |
|
Clause B-69: Events of Default (March 2006) (Tailored) |
1772 1773 1774 |
|
The aviation suppliers right to perform this contract is subject to termination, in whole or in part, in the event of any of the following events of
default. |
1775 1776 |
|
a. The aviation suppliers failure to perform service according to the terms of the
contract; |
1777 1778 1779 |
|
b. If the aviation supplier has been administratively determined to have violated Postal laws
and regulations and other laws related to the performance of the service; |
1780 1781 1782 |
|
c. Failure to follow the instructions of the Contracting Officer that fall within the scope of
the contract; |
1783 1784 1785 1786 1787 |
|
d. If the aviation supplier transfers or assigns his contract, except as authorized herein,
or sublets the whole or a portion of this contract contrary to the applicable provisions of the U.S. Postal Service Supplying Principles and Practices or without any required approval of the Contracting Officer; |
1788 1789 1790 |
|
e. If the aviation supplier combines to prevent others from proposing for the performance
of Postal Service contracts; |
1791 1792 1793 1794 1795 |
|
f. If the aviation supplier or corporate officer has been or is, during the term of the
contract, convicted of a crime affecting his or her reliability or trustworthiness as a mail transportation aviation supplier, such as any form of fraud or embezzlement that has impacted the Postal Service or the U.S.
Government; |
1796 1797 1798 1799 |
|
g. If at any time the aviation supplier, its principal owners, corporate officers or personnel
are disqualified by law or regulation from performing services under this contract, and upon notice thereof, the aviation supplier fails to remove any such disqualification; |
1800 1801 1802 |
|
h. If the aviation supplier fails to provide any notification of a change in corporate
officers which this contract may require; or |
1803 1804 1805 |
|
i. If the aviation supplier materially breaches any other requirement or clause of this
contract. |
1806 1807 |
|
Clause B-75: Accountability of the Aviation Supplier (Non-Highway) (March 2006) (Tailored) |
1808 1809 1810 1811 1812 |
|
a. The aviation supplier shall supervise its operations and the operations of its
subcontractors that provide services under this contract personally or through representatives. The aviation supplier or its supervising representatives must be easily accessible in the event of emergencies or interruptions in
service. |
1813 1814 1815 1816 1817 1818 1819 1820 |
|
b. In all cases, the aviation supplier shall be liable to the Postal Service for the Postal
Services damages if mail is subject to loss, rifling, damage, wrong delivery, depredation, and other mistreatment while in the custody and control of the aviation supplier or its subcontractors. The aviation supplier shall also be
accountable and answerable in damages for the faithful performance of all other obligations assumed under this contract, whether or not it has entrusted part or all of its performance to another, except for any failure to perform that
is excused by the Force Majeure clause of this contract. |
1821 |
|
c. The aviation supplier shall faithfully account for and deliver to the Postal Service
all: |
1822 |
|
1. Mail, |
1823 |
|
2. Moneys, and |
1824 1825 |
|
3. Other property of any kind belonging to or entrusted to the care of the Postal
Service, that come into the possession of the aviation supplier during the term of this contract. |
Page 40 of 130
Air Cargo Network
Contract ACN-13-FX
Part 3: Contract Clauses
|
|
|
1826 |
|
|
1827 |
|
d. The aviation supplier shall, promptly upon discovery, refund (i) any overpayment made by
the |
1828 |
|
Postal Service for service performed, or (ii) any payment made by the Postal Service for |
1829 |
|
service not rendered. |
|
|
|
|
|
1830 |
|
|
|
|
1831 |
|
|
|
|
1832 |
|
Clause B-77: Protection of the Mail (Non-Highway) (March 2006) (Tailored) |
1833 |
|
The aviation supplier must protect and safeguard the mail from loss, theft, or damage while it is in the |
1834 |
|
aviation suppliers custody or control, and prevent unauthorized persons from having access to the |
1835 |
|
mail. |
|
|
1836 |
|
|
|
|
1837 |
|
a. Classification of Irregularities |
1838 |
|
The following classifications of irregularities are those that preclude the Postal Service from |
1839 |
|
accomplishing its mission. The damage caused from these irregularities result in actual |
1840 |
|
damage and degradation to its brand, and therefore, is associated with liquidated damages as |
1841 |
|
stated: |
|
|
1842 |
|
|
|
|
1843 |
|
1. Failure to Protect |
|
|
1844 |
|
Failure to protect the mail consists of: failure to protect or safeguard the mail from |
1845 |
|
inclement weather, from damage caused by the mechanized sort, from acts of the |
1846 |
|
aviation suppliers employees or contractors, and from loss, depredation, or other |
1847 |
|
hazards while in the control or custody of the aviation supplier. |
1848 |
|
|
|
|
1849 |
|
2. Theft of Mail |
|
|
1850 |
|
The theft of mail can cause immeasurable damage to the Postal Service, both in |
1851 |
|
terms of actual economic loss to our customers and to the competitive standing of our |
1852 |
|
products and services. The aviation supplier will support law enforcement efforts to |
1853 |
|
prevent theft of mail, and will support enforcement officials in the apprehension of |
1854 |
|
those who may be perpetrating such crimes. |
1855 |
|
|
|
|
1856 |
|
b. Damages and Liquidated Damages |
1857 |
|
The following liquidated damages for damaged and unprotected mail are applicable to the |
1858 |
|
associated classifications of irregularities: |
1859 |
|
|
|
|
1860 |
|
1. Damaged and Unprotected Mail |
|
|
1861 |
|
Liquidated damages may be assessed for damaged and unprotected mail. For |
1862 |
|
purposes of this section, damaged mail will consist of mail pieces whether inside or |
1863 |
|
outside of Postal Service MTE. This category includes but may not be limited to: |
1864 |
|
|
|
|
1865 |
|
i. Failure to Protect Causing Damage to Mail |
1866 |
|
Failure to protect causing physical damage to the U.S. Mail or MTE for which |
1867 |
|
there may be damage assessed equal to the actual costs incurred by the |
1868 |
|
Postal Service necessary to remedy the situation and forward the mail onward |
1869 |
|
to its next processing or delivery operation. Such actual costs may include |
1870 |
|
items such as administrative time at an appropriate hourly rate for |
1871 |
|
documenting the irregular condition and implementing the damage, labor time |
1872 |
|
used to repossess the mail, unpack, sort, dry, repack / repackage, and re- |
1873 |
|
dispatch to a subsequent destination or processing operation. |
1874 |
|
|
|
|
1875 |
|
If actual damages are not ascertainable, a liquidated damage may be |
1876 |
|
assessed as follows, taking into account the actual damage that may typically |
1877 |
|
result from such situations: |
1878 |
|
|
|
|
1879 |
|
Per Letter Tray: |
|
[*] per letter tray |
1880 |
|
Per Flat Tub: |
|
[*] per flat tub |
1881 |
|
Per Mail Sack or Pouch: |
|
[*] per sack or pouch |
1882 |
|
Per Outside Parcel: |
|
[*] per piece |
* |
Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities
Exchange Act of 1934, as amended. |
Page 41 of 130
Air Cargo Network
Contract ACN-13-FX
Part 3: Contract Clauses
|
|
|
|
|
1883 |
|
|
|
|
1884 |
|
ii. Failure to Protect - Dropped or Abandoned Pouch or Piece |
1885 |
|
When U.S. Mail is discovered unprotected in an unsecured location or on the |
1886 |
|
airport ramp, Liquidated Damages may be assessed at $50.00 per incident. |
|
|
|
1887 |
|
|
1888 |
|
c. Investigative Costs for Theft of Mail |
1889 |
|
In cases where a mail theft is committed by the aviation suppliers or its subcontractors |
1890 |
|
personnel, actual investigative costs to the U.S. Postal Inspection Service and/or the Office of |
1891 |
|
the Inspector General may be assessed as actual damages. These costs will be reasonably |
1892 |
|
determined and may begin accruing only when a specific investigation begins on the basis of |
1893 |
|
probable cause. The costs of routine surveillance not associated with a specific theft or series |
1894 |
|
of thefts will not be assessed. In addition to allocable investigative expenses, the Postal |
1895 |
|
Service may assess actual damages for loss of product value resulting from insurance claims |
1896 |
|
where payouts to postal customers can be traced to the incident(s). |
1897 |
|
|
1898 |
|
In addition to the above, in cases where mail theft occurs and the Postal Service determines |
1899 |
|
that the aviation suppliers failure to properly execute the mail handling employee screening |
1900 |
|
requirements set forth in the Contract was a proximate cause of the theft, and that by reason |
1901 |
|
of the theft it is necessary to conduct a complete audit of the aviation suppliers adherence to |
1902 |
|
the screening requirements with respect to the employment of other employees subject to |
1903 |
|
those requirements, the Postal Service may assess an administrative damage in the amount |
1904 |
|
of $5,000 in lieu of actual costs associated with that audit. |
1905 |
|
|
1906 |
|
Depending upon the circumstances of the incident, the Vice President, Network Operations, in |
1907 |
|
consultation with the Postal Inspection Service or Office of the Inspector General, and the |
1908 |
|
Contracting Officer, may determine that damages pursuant to this section are not appropriate, |
1909 |
|
and may waive all or a portion of the amounts that may otherwise be due the Postal Service |
1910 |
|
hereunder. Factors such as the seriousness of the misconduct, the aviation suppliers level of |
1911 |
|
cooperation in investigations, implementing corrective actions, and efforts directed at loss |
1912 |
|
recovery will be considered in reaching that determination. |
1913 |
|
|
1914 |
|
|
1915 |
|
Clause B-80: Laws and Regulations Applicable (March 2006) (Tailored) |
1916 |
|
This contract and the services performed under it are subject to all applicable federal, state, and local |
1917 |
|
laws and regulations. The aviation supplier assumes sole responsibility to faithfully discharge all |
1918 |
|
duties and obligations imposed by such laws and regulations, and shall obtain and pay for all permits, |
1919 |
|
licenses, and other authorities required to perform this contract. The aviation supplier shall hold |
1920 |
|
harmless, save, and defend the Postal Service from any consequence of the aviation suppliers failure |
1921 |
|
to abide by all applicable federal, state, and local laws and regulations (including but not limited to |
1922 |
|
regulations promulgated by the DOL and IRS) relating to the contract and throughout the term of the |
1923 |
|
contract and any subsequent renewal periods. |
1924 |
|
|
1925 |
|
|
1926 |
|
Clause B-81: Information or Access by Third Parties (March 2006) (Tailored) |
1927 |
|
The Postal Service retains exclusive authority to release any or all information about mail matter in the |
1928 |
|
custody of the aviation supplier and to permit access to that mail in the custody of the aviation |
1929 |
|
supplier. All requests by non-postal individuals for information about mail matter in the custody of the |
1930 |
|
aviation supplier or for access to mail in the custody of the aviation supplier must be referred to the |
1931 |
|
Contracting Officer or his or her designee. |
1932 |
|
|
1933 |
|
|
1934 |
|
Clause B-82: Access by Officials (March 2006) (Tailored) |
1935 |
|
The aviation supplier shall deny access to the cargo compartment of aircrafts or a vehicle containing |
1936 |
|
mail therein to state or local officials except at a postal facility or in the presence of a postal employee |
1937 |
|
or a Postal Inspection Service officer, unless to prevent immediate damage to the aircraft, vehicle, or |
1938 |
|
their contents. If authorized Federal law enforcement seeks access to the cargo compartment of |
Page 42 of 130
Air Cargo Network
Contract ACN-13-FX
Part 3: Contract Clauses
|
|
|
1939 |
|
aircrafts or vehicles contained mail therein, the aviation supplier shall notify the Postal Inspection |
1940 |
|
Service before permitting access, unless to prevent immediate damage to the aircraft, vehicle, or their |
1941 |
|
contents. |
1942 |
|
|
1943 |
|
|
1944 |
|
Clause 1-1: Privacy Protection (July 2007) |
1945 |
|
In addition to other provisions of this contract, the aviation supplier agrees to the following: |
1946 |
|
a. Privacy Act. If the aviation supplier operates a system of records on behalf of the
Postal |
1947 |
|
Service, the Privacy Act (5 U.S.C. 522a) and Postal Service regulations at 39 CFR Parts 266- |
1948 |
|
267 apply to those records. The aviation supplier is considered to operate a system of |
1949 |
|
records if it manages records (including collecting, revising, or disseminating records) from |
1950 |
|
which information is retrieved by the name of an individual or by some number, symbol, or |
1951 |
|
other identifier assigned to the individual. The aviation supplier agrees to comply with the Act |
1952 |
|
and the Postal Service regulations in designing, developing, and operating the system of |
1953 |
|
records, including ensuring that records are current and accurate for their intended use, and |
1954 |
|
incorporating adequate safeguards to prevent misuse or improper disclosure of personal |
1955 |
|
information. Violations of the Act may subject the violator to criminal penalties. |
1956 |
|
|
1957 |
|
b. Customer or Employee Information. If the aviation supplier has access to Postal
Service |
1958 |
|
customer or employee information, including address information, whether collected online or |
1959 |
|
offline by the Postal Service or by a aviation supplier acting on its behalf, the aviation supplier |
1960 |
|
must comply with the following: |
1961 |
|
|
1962 |
|
1. General. With regard to the Postal Service customer information to which it has
access |
1963 |
|
pursuant to this contract, the aviation supplier has that access as an agent of the Postal |
1964 |
|
Service and must adhere to its postal privacy policy at |
1965 |
|
www.usps.com/common/docs/privpol.htm. |
1966 |
|
|
1967 |
|
2. Use, Ownership, and Nondisclosure. The aviation supplier may use Postal
Service |
1968 |
|
customer or employee information solely for purposes of this contract, and may not collect |
1969 |
|
or use such information for non-Postal Service marketing, promotion, or any other |
1970 |
|
purpose without the prior written approval of the Contracting Officer. The aviation supplier |
1971 |
|
must restrict access to such information to those employees who need the information to |
1972 |
|
perform work under this contract, and must ensure that each such employee (including |
1973 |
|
subcontractors employees) sign a nondisclosure agreement, in a form suitable to the |
1974 |
|
Contracting Officer, prior to being granted access to the information. The Postal Service |
1975 |
|
retains sole ownership and rights to its customer or employee information. Unless the |
1976 |
|
contract states otherwise, upon completion of the contract, the aviation supplier must turn |
1977 |
|
over all Postal Service customer or employee information in its possession to the Postal |
1978 |
|
Service, and must certify that no Postal Service customer or employee information has |
1979 |
|
been retained unless otherwise authorized in writing by the Contracting Officer. |
1980 |
|
|
1981 |
|
3. Security Plan. When applicable, and unless waived in writing by the Contracting
Officer, |
1982 |
|
the aviation supplier must work with the Postal Service to develop and implement a |
1983 |
|
security plan that addresses the protection of customer or employee information. The |
1984 |
|
plan will be incorporated into the contract and followed by the aviation supplier, and must, |
1985 |
|
at a minimum, address notification to the Postal Service of any security breach. If the |
1986 |
|
contract does not include a security plan at the time of contract award, it must be added |
1987 |
|
within 60 days after contract award. |
1988 |
|
|
1989 |
|
4. Breach Notification. If there is a breach of any nature in the security of Postal
Service |
1990 |
|
data, including customer or employee data, the aviation supplier must follow the breach |
1991 |
|
notification requirements included in the security plan discussed in (3) above. The aviation |
1992 |
|
supplier will be required to follow Postal Service policies regarding breach notification to |
1993 |
|
customers and/or employees. |
1994 |
|
|
Page 43 of 130
Air Cargo Network
Contract ACN-13-FX
Part 3: Contract Clauses
|
|
|
1995 |
|
5. Legal Demands for Information. If a legal demand is made for Postal Service customer
or |
1996 |
|
employee information (such as by subpoena), the aviation supplier must immediately |
1997 |
|
notify the Contracting Officer and the nearest office of the Postal Inspection Service. After |
1998 |
|
notification, the Postal Service will determine whether and to what extent to comply with |
1999 |
|
the legal demand. Should the Postal Service agree to or unsuccessfully resist a legal |
2000 |
|
demand, the aviation supplier may, with the written permission of the Contracting Officer, |
2001 |
|
release the information specifically demanded. |
2002 |
|
|
2003 |
|
c. Online Assistance. If the aviation supplier assists in the design, development, or
operation of |
2004 |
|
a Postal Service customer Web site, or if it designs or places an ad banner, button, or link on |
2005 |
|
a Postal Service Web site or any Web site on the Postal Services behalf, the aviation supplier |
2006 |
|
must comply with the limitations in subparagraph b (1) above relating to ad banners, buttons, |
2007 |
|
or links, and the use of cookies, web beacons, or other web analysis tools. Exceptions to |
2008 |
|
these limitations require the prior written approval of the Contracting Officer and the Postal |
2009 |
|
Services chief privacy officer. |
2010 |
|
|
2011 |
|
d. Marketing E-Mail. If the aviation supplier assists the Postal Service in conducting
a marketing |
2012 |
|
e-mail campaign, the aviation supplier does so as an agent of the Postal Service and must |
2013 |
|
adhere to the Postal Service policies set out in Postal Service Management Instruction AS- |
2014 |
|
350-2004-4, Marketing E-mail. Aviation suppliers wishing to conduct marketing email |
2015 |
|
campaigns to postal employees must first obtain the prior written approval of the Contracting |
2016 |
|
Officer. |
2017 |
|
|
2018 |
|
e. Audits. The Postal Service may audit the aviation suppliers compliance with
the requirements |
2019 |
|
of this clause, including through the use of online compliance software. |
2020 |
|
|
2021 |
|
f. Indemnification. The aviation supplier will indemnify the Postal Service
against all liability |
2022 |
|
(including costs and fees) for damages arising out of violations of this clause. |
2023 |
|
|
2024 |
|
g. Flow-down. The aviation supplier will flow this clause down to subcontractors that
would be |
2025 |
|
covered by any portion of this clause if they were the aviation supplier. |
2026 |
|
|
2027 |
|
|
2028 |
|
Clause 1-5: Gratuities or Gifts (March 2006) |
2029 |
|
a. The Postal Service may terminate this contract for default if, after notice and a hearing,
the |
2030 |
|
Postal Service Board of Contract Appeals determines that the aviation supplier or the aviation |
2031 |
|
suppliers agent or other representative: |
2032 |
|
1. Offered or gave a gratuity or gift (as defined in 5 CFR 2635) to an officer or
employee |
2033 |
|
of the Postal Service; and |
2034 |
|
2. Intended by the gratuity or gift to obtain a contract or favorable treatment under
a |
2035 |
|
contract. |
2036 |
|
|
2037 |
|
b. The rights and remedies of the Postal Service provided in this clause are in addition to
any |
2038 |
|
other rights and remedies provided by law or under this contract. |
2039 |
|
|
2040 |
|
|
2041 |
|
Clause 1-6: Contingent Fees (March 2006) |
2042 |
|
a. The aviation supplier warrants that no person or selling agency has been employed
or |
2043 |
|
retained to solicit or obtain this contract for a commission, percentage, brokerage, or |
2044 |
|
contingent fee, except bona fide employees or bona fide, established commercial or selling |
2045 |
|
agencies employed by the aviation supplier for the purpose of obtaining business. |
2046 |
|
|
2047 |
|
b. For breach or violation of this warranty, the Postal Service has the right to annul this
contract |
2048 |
|
without liability or to deduct from the contract price or otherwise recover the full amount of the |
2049 |
|
commission, percentage, brokerage fee, or contingent fee. |
2050 |
|
|
Page 44 of 130
Air Cargo Network
Contract ACN-13-FX
Part 3: Contract Clauses
|
|
|
2051 |
|
|
2052 |
|
Clause 1-11: Prohibition Against Contracting with Former Officers or PCES |
2053 |
|
Executives (March 2006) (Tailored) |
2054 |
|
During the performance of this contract, former Postal officers or Postal Career Executive Service |
2055 |
|
(PCES) executives are prohibited from employment by the contractor as key personnel, experts or |
2056 |
|
consultants, if such individuals, within two years after their retirement from the Postal Service, would |
2057 |
|
be performing substantially the same duties as they performed during their career with the Postal |
2058 |
|
Service. |
2059 |
|
|
2060 |
|
|
2061 |
|
Clause 1-12: Use of Former Postal Service Employees (March 2006) (Tailored) |
2062 |
|
During the term of this contract, the aviation supplier must identify any former Postal Service officers |
2063 |
|
or Postal Career Executive Service (PCES) employees it proposes to be engaged, directly or |
2064 |
|
indirectly, in contract performance. Such individuals may not commence performance without the |
2065 |
|
Contracting Officers prior approval. If the Contracting Officer does not provide such approval, the |
2066 |
|
aviation supplier must replace the proposed individual former employee with another individual equally |
2067 |
|
qualified to provide the services called for in the contract. |
2068 |
|
|
2069 |
|
|
2070 |
|
Clause 2-11: Postal Service Property - Fixed-Price (March 2006) (Tailored) |
2071 |
|
a. Postal Service-Furnished Property |
2072 |
|
1. The Postal Service will deliver to the aviation supplier, for use in connection with
and |
2073 |
|
under the terms of this contract, the property described as Postal Service-furnished |
2074 |
|
property in the Schedule or specifications, together with any related information the |
2075 |
|
aviation supplier may request that may reasonably be required for the intended use of |
2076 |
|
the property (hereinafter referred to as Postal Service-furnished property). |
2077 |
|
|
2078 |
|
2. The contract delivery or performance dates are based on the expectation that
Postal |
2079 |
|
Service-furnished property suitable for use (except for property furnished as is) will |
2080 |
|
be delivered at the times stated in the Schedule or, if not so stated, in sufficient time to |
2081 |
|
enable the aviation supplier to meet these delivery or performance dates. If Postal |
2082 |
|
Service-furnished property is not delivered by these times, the Contracting Officer will, |
2083 |
|
upon timely written request from the aviation supplier, make a determination of any |
2084 |
|
delay occasioned the aviation supplier and will equitably adjust the delivery or |
2085 |
|
performance dates or the contract price, or both, and any other contractual provision |
2086 |
|
affected by the delay, in accordance with the Changes clause. |
2087 |
|
|
2088 |
|
3. Except for Postal Service-furnished property furnished as is, if the Postal
Service- |
2089 |
|
furnished property is received in a condition not suitable for its intended use, the |
2090 |
|
aviation supplier must notify the Contracting Officer and (as directed by the |
2091 |
|
Contracting Officer) either (a) return it at the expense of the Postal Service or |
2092 |
|
otherwise dispose of it, or (b) effect repairs or modifications. Upon the completion of |
2093 |
|
(a) or (b), the Contracting Officer (upon written request from the aviation supplier) will |
2094 |
|
equitably adjust the delivery or performance dates or the contract price, or both, and |
2095 |
|
any other affected contractual provision, in accordance with the Changes clause. |
2096 |
|
|
2097 |
|
4. The provisions for adjustment in this paragraph a are exclusive, and the
Postal |
2098 |
|
Service is not liable to suit for breach of contract by reason of any delay in delivery of |
2099 |
|
Postal Service-furnished property or its delivery in a condition not suitable for its |
2100 |
|
intended use. |
2101 |
|
|
2102 |
|
b. Changes in Postal Service-Furnished Property |
2103 |
|
1. By written notice, the Contracting Officer may (a) decrease the property provided or
to |
2104 |
|
be provided by the Postal Service under this contract, or (b) substitute other Postal |
2105 |
|
Service-owned property for the property to be provided by the Postal Service, or to be |
2106 |
|
acquired by the aviation supplier for the Postal Service under this contract.
The |
Page 45 of 130
Air Cargo Network
Contract ACN-13-FX
Part 3: Contract Clauses
|
|
|
2107 |
|
aviation supplier must promptly take any action the Contracting Officer may direct |
2108 |
|
regarding the removal and shipping of the property covered by this notice. |
2109 |
|
|
2110 |
|
2. In the event of any decrease in or substitution of property pursuant to
subparagraph |
2111 |
|
b.1 above, or any withdrawal of authority to use property provided under any other |
2112 |
|
contract or lease, which property the Postal Service had agreed in the Schedule to |
2113 |
|
make available for the performance of this contract, the Contracting Officer, upon the |
2114 |
|
aviation suppliers written request (or - if substitution causes a decrease in the cost of |
2115 |
|
performance - on the Contracting Officers own initiative), will equitably adjust any |
2116 |
|
contractual provisions affected by the decrease, substitution, or withdrawal, in |
2117 |
|
accordance with the Changes clause. |
2118 |
|
|
2119 |
|
c. Use of Postal Service Property. The Postal Service property, unless otherwise
provided in |
2120 |
|
this contract or approved by the Contracting Officer, must be used only for performing this |
2121 |
|
contract. |
2122 |
|
|
2123 |
|
d. Utilization, Maintenance, and Repair of Postal Service Property. The aviation
supplier must |
2124 |
|
maintain and administer, in accordance with sound industrial practice, a program or system for |
2125 |
|
the utilization, maintenance, repair, protection, and preservation of Postal Service property |
2126 |
|
until it is disposed of in accordance with this clause. If any damage occurs to Postal Service |
2127 |
|
property, the risk of which has been assumed by the Postal Service under this contract, the |
2128 |
|
Postal Service will replace the items or the aviation supplier must make such repairs as the |
2129 |
|
Postal Service directs; provided, however, that if the aviation supplier cannot effect these |
2130 |
|
repairs within the time required, the aviation supplier will dispose of the property in the manner |
2131 |
|
directed by the Contracting Officer. The contract price includes no compensation to the |
2132 |
|
aviation supplier for performing any repair or replacement for which the Postal Service is |
2133 |
|
responsible, and an equitable adjustment will be made in any contractual provisions affected |
2134 |
|
by such repair or replacement made at the direction of the Postal Service, in accordance with |
2135 |
|
the Changes clause. Any repair or replacement for which the aviation supplier is responsible |
2136 |
|
under the provisions of this contract must be accomplished by the aviation supplier at the |
2137 |
|
aviation suppliers own expense. |
2138 |
|
|
2139 |
|
e. Risk of Loss. Unless otherwise provided in this contract, the aviation supplier
assumes the |
2140 |
|
risk of, and becomes responsible for, any loss or damage to Postal Service property provided |
2141 |
|
under this contract upon its delivery to the aviation supplier or upon passage of title to the |
2142 |
|
Postal Service as provided in paragraph i below, except for reasonable wear and tear and |
2143 |
|
except to the extent that it is consumed in performing this contract. |
2144 |
|
|
2145 |
|
f. Access. The Postal Service, and any persons designated by it, must at
reasonable times |
2146 |
|
have access to premises where any Postal Service property is located, for the purpose of |
2147 |
|
inspecting it. |
2148 |
|
|
2149 |
|
g. Final Accounting for and Disposition of Postal Service Property. Upon completion, or
at such |
2150 |
|
earlier dates as may be fixed by the Contracting Officer, the aviation supplier must submit, in a |
2151 |
|
form acceptable to the Contracting Officer, inventory schedules covering all items of Postal |
2152 |
|
Service property not consumed in performing this contract (including any resulting scrap) or |
2153 |
|
not previously delivered to the Postal Service, and will prepare for shipment, deliver f.o.b. |
2154 |
|
origin, or dispose of this property, as the Contracting Officer may direct or authorize. The net |
2155 |
|
proceeds of disposal will be credited to the contract price or will be paid in such other manner |
2156 |
|
as the Contracting Officer may direct. |
2157 |
|
|
2158 |
|
h. Restoration of Aviation Suppliers Premises and Abandonment. Unless otherwise
provided in |
2159 |
|
this contract, the Postal Service: |
2160 |
|
1. May abandon any Postal Service property in place, whereupon all obligations of
the |
2161 |
|
Postal Service regarding it will cease; and |
2162 |
|
|
Page 46 of 130
Air Cargo Network
Contract ACN-13-FX
Part 3: Contract Clauses
|
|
|
2163 |
|
2. Has no obligation with regard to restoration or rehabilitation of the aviation
suppliers |
2164 |
|
premises, either in case of abandonment, disposition on completion of need or of the |
2165 |
|
contract, or otherwise, except for restoration or rehabilitation costs properly included |
2166 |
|
in an equitable adjustment under paragraph b or e above. |
2167 |
|
|
2168 |
|
i. Title. |
2169 |
|
1. Title to all Postal Service-furnished property remains in the Postal Service. To
define |
2170 |
|
the obligations of the parties under this clause, title to each item of facilities, special |
2171 |
|
test equipment, or special tooling (other than that subject to a special-tooling clause) |
2172 |
|
acquired by the aviation supplier on behalf of the Postal Service under this contract |
2173 |
|
will pass to and vest in the Postal Service when its use in the performance of this |
2174 |
|
contract begins, or upon payment for it by the Postal Service, whichever is earlier, |
2175 |
|
whether or not title was previously vested. |
2176 |
|
|
2177 |
|
2. Title to all material purchased by the aviation supplier for whose cost the
aviation |
2178 |
|
supplier is entitled to be reimbursed as a direct item of cost under this contract will |
2179 |
|
pass to and vest in the Postal Service upon delivery of the material to the aviation |
2180 |
|
supplier by the vendor. |
2181 |
|
|
2182 |
|
3. Title to other material whose cost is reimbursable to the aviation supplier under
this |
2183 |
|
contract will pass to and vest in the Postal Service upon: |
2184 |
|
a) Its issuance for use in the performance of this contract; or |
2185 |
|
b) Reimbursement of its cost by the Postal Service, whichever occurs
first. |
2186 |
|
|
2187 |
|
4. All Postal Service-furnished property, together with all property acquired by
the |
2188 |
|
aviation supplier, title to which vests in the Postal Service under this subsection i, is |
2189 |
|
subject to the provisions of this clause and is hereinafter collectively referred to as |
2190 |
|
Postal Service property. Title to Postal Service property is not affected by its |
2191 |
|
incorporation into or attachment to any property not owned by the Postal Service, nor |
2192 |
|
does Postal Service property become a fixture or lose its identity as personal property |
2193 |
|
by being attached to any real property. |
2194 |
|
|
2195 |
|
|
2196 |
|
Clause 2-22: Value Engineering Incentive (March 2006) |
2197 |
|
a. General. |
2198 |
|
The right of each party to improve its own methods for its own benefit, absent a change to the |
2199 |
|
obligations of the other party which requires an modification to this Contract, and to retain |
2200 |
|
such savings for itself is not affected by this clause. |
2201 |
|
|
2202 |
|
The aviation supplier is encouraged to develop and submit Value Engineering Change |
2203 |
|
Proposals (VECPs) voluntarily. The aviation supplier will share in savings realized from an |
2204 |
|
accepted VECP as provided in paragraph (h) below. No document submitted by the aviation |
2205 |
|
supplier shall be considered to be a VECP unless the aviation supplier specifically marks on |
2206 |
|
the document that it is to be considered a VECP and contains a statement that the aviation |
2207 |
|
supplier intends the document to be a VECP subject to the provisions of this Clause of the |
2208 |
|
Contract. |
2209 |
|
|
2210 |
|
b. Definitions |
2211 |
|
1. Value Engineering Change Proposal (VECP). A proposal that: |
2212 |
|
i. Requires a change to the instant contract; |
2213 |
|
ii. Results in savings to the instant contract; and |
2214 |
|
iii. Does not involve a change in: |
2215 |
|
a) Deliverable end items only; |
2216 |
|
b) Test quantities due solely to results of previous testing under the
instant |
2217 |
|
contract;or |
2218 |
|
c) Contract type only. |
2219 |
|
|
Page 47 of 130
Air Cargo Network
Contract ACN-13-FX
Part 3: Contract Clauses
|
|
|
2220 2221 |
|
2. Instant Contract. The contract under which a VECP is submitted. It does not
include additional contract quantities. |
2222 |
|
|
2223 2224 2225 |
|
3. Additional Contract Quantity. An increase in quantity after acceptance of a VECP
due to contract modification, exercise of an option, or additional orders (except orders under indefinite-delivery contracts within the original maximum quantity limitations). |
2226 |
|
|
2227 2228 2229 2230 |
|
4. Postal Service Costs. Costs to the Postal Service resulting from developing
and implementing a VECP, such as net increases in the cost of testing, operations, maintenance, logistics support, or property furnished. Normal administrative costs of processing the VECP are excluded. |
2231 |
|
|
2232 2233 2234 |
|
5. Instant Contract Savings. The estimated cost of performing the instant
contract without implementing a VECP minus the sum of: (a) the estimated cost of performance after implementing the VECP, and (b) Postal Service costs. |
2235 |
|
|
2236 2237 2238 2239 |
|
6. Additional Contract Savings. The estimated cost of performance or
delivering additional quantities without the implementation of a VECP minus the sum of (a) the estimated cost of performance after the VECP is implemented and (b) Postal Service cost. |
2240 |
|
|
2241 2242 2243 2244 |
|
7. Aviation Suppliers Development and Implementation Costs. Aviation
suppliers cost in developing, testing, preparing, and submitting a VECP. Also included are the aviation suppliers cost to make the contractual changes resulting from the Postal Service acceptance of the
VECP. |
2245 |
|
|
2246 |
|
c. Content. A VECP must include the following: |
2247 |
|
|
2248 2249 2250 2251 |
|
1. A description of the difference between the existing contract requirement and
that proposed, the comparative advantages and disadvantages of each, a justification when an items function or characteristics are being altered, the effect of the change on the end items performance, and any pertinent objective
test data. |
2252 |
|
|
2253 2254 |
|
2. A list and analysis of the contract requirements that must be changed if the VECP
is accepted, including any suggested specification revisions. |
2255 |
|
|
2256 2257 2258 2259 |
|
3. A separate, detailed cost estimate for: (a) the affected portions of the existing
contract requirement and, (b) the VECP. The cost reduction associated with the VECP must take into account the aviation suppliers allowable development and implementation costs. |
2260 |
|
|
2261 2262 |
|
4. A description and estimate of costs the Postal Service may incur in implementing
the VECP, such as test and evaluation and operating and support costs. |
2263 |
|
|
2264 |
|
5. A prediction of any effects the proposed change would have on Postal Service
costs. |
2265 |
|
|
2266 2267 2268 |
|
6. A statement of the time by which a contract modification accepting the VECP must
be issued in order to achieve the maximum cost reduction, noting any effect on the contract completion time or delivery schedule. |
2269 |
|
|
2270 2271 2272 |
|
7. Identification of any previous submissions of the VECP to the Postal Service, including
the dates submitted, purchasing offices, contract numbers, and actions taken. |
2273 |
|
|
2274 |
|
d. Submission. The aviation supplier must submit VECPs to the Contracting
Officer. |
2275 |
|
|
|
|
|
2276 |
|
e. Postal Service
Action |
Page 48 of 130
Air Cargo Network
Contract ACN-13-FX
Part 3: Contract Clauses
|
|
|
2277 |
|
|
2278 2279 2280 2281 2282 |
|
1. The Contracting Officer will give the aviation supplier written notification of
action taken on a VECP within 60 days after receipt. If additional time is needed, the Contracting Officer will notify the aviation supplier, within the 60-day period, of the expected date of a decision. The Postal Service will process
VECPs expeditiously but will not be liable for any delay in acting upon a VECP. |
2283 |
|
|
2284 2285 |
|
2. If a VECP is not accepted, the Contracting Officer will so notify the aviation
supplier, explaining the reasons for rejection. |
2286 |
|
|
2287 2288 |
|
f. Withdrawal. The aviation supplier may withdraw a VECP, in whole or in part, at
any time before its acceptance. |
2289 |
|
|
2290 |
|
g. Acceptance |
2291 |
|
|
2292 2293 2294 2295 2296 2297 |
|
1. Acceptance of a VECP, in whole or in part, will be by execution of a
supplemental agreement modifying this contract and citing this clause. If agreement on price (see paragraph h below) is reserved for a later supplemental agreement, and if such agreement cannot be reached, the disagreement is subject to the
Claims and Disputes clause of this contract, or another clause of the contract dealing with disputes. |
2298 |
|
|
2299 2300 |
|
2. Until a VECP is accepted by contract modification, both parties must perform
in accordance with the existing contract. |
2301 |
|
|
2302 2303 2304 |
|
3. The Contracting Officers decision to accept or reject all or any part of a VECP is
final and not subject to the Claims and Disputes clause or otherwise subject to litigation under the Contract Disputes Act of 1978. |
2305 |
|
|
2306 2307 2308 2309 2310 2311 |
|
h. Sharing. If a VECP is accepted, the aviation supplier and the Postal Service shall
negotiate their respective shares of the contract savings. The contract savings are calculated by subtracting the estimated cost of performing the contract with the VECP, Postal Service costs, and the allowable development and
implementation costs from the estimated cost of performing the contract without the VECP. Profit is excluded when calculating contract savings. |
2312 |
|
|
2313 |
|
i. Data |
2314 |
|
|
2315 2316 |
|
1. The aviation supplier may restrict the Postal Services right to use any part of a
VECP or the supporting data by marking the following legend on the affected parts: |
2317 |
|
|
2318 2319 2320 2321 2322 2323 2324 |
|
These data, furnished under the Value Engineering Incentive clause of contract, may not be disclosed outside the Postal Service or
duplicated, used, or disclosed, in whole or in part, for any purpose other than to evaluate a value engineering change proposal submitted under the clause. This restriction does not limit the Postal Services right to use information
contained in these data if it has been obtained or is otherwise available from the aviation supplier or from another source without limitation. |
2325 |
|
|
2326 2327 2328 2329 2330 |
|
2. If a VECP is accepted, the aviation supplier hereby grants the Postal Service unlimited
rights in the VECP and supporting data, except that, with respect to data qualifying and submitted as limited rights technical data, the Postal Service will have the rights specified in the contract modification implementing the VECP and
will appropriately mark the data. |
2331 |
|
|
2332 |
|
|
Page 49 of 130
Air Cargo Network
Contract ACN-13-FX
Part 3: Contract Clauses
|
|
|
2333 2334 |
|
Clause 3-1: Small, Minority, and Woman-owned Business Subcontracting Requirements (March 2006) |
2335 2336 2337 2338 2339 2340 2341 2342 |
|
a. All aviation suppliers, except small businesses, must submit a subcontracting plan that
is specific to this contract and that separately addresses subcontracting with small, minority, and woman-owned businesses. A plan approved by the Postal Service must be included in and made a part of the contract. Lack of an approved plan
may make the aviation supplier ineligible for award. A subcontract is defined as any agreement (other than one involving an employer-employee relationship) entered into by a Postal Service aviation supplier or subcontractor calling for
supplies or services required for performance of the contract or subcontract. |
2343 |
|
|
2344 |
|
b. The aviation suppliers subcontracting plan must include the
following: |
2345 2346 2347 2348 2349 |
|
1. Goals, in terms of percentages of the total amount of this contract that the
aviation supplier will endeavor to subcontract to small, minority, and woman-owned businesses. The aviation supplier must include all subcontracts that contribute to contract performance, and may include a proportionate share of supplies
and services that are normally allocated as indirect costs. |
2350 |
|
|
2351 |
|
2. A statement of the: |
2352 |
|
i. Total dollars planned to be subcontracted under this contract;
and |
2353 2354 |
|
ii. Total of that amount planned to be subcontracted to small, minority, and woman-owned
businesses. |
2355 |
|
|
2356 2357 2358 |
|
3. A description of the principal types of supplies and services to be subcontracted
under this contract, identifying the types planned for subcontracting to small, minority, and woman-owned businesses. |
2359 |
|
|
2360 |
|
4. A description of the method used to develop the subcontracting goals for this
contract. |
2361 |
|
|
2362 2363 2364 2365 |
|
5. A description of the method used to identify potential sources for solicitation
purposes and a description of efforts the aviation supplier will make to ensure that small, minority, and woman-owned businesses have an equitable opportunity to compete for subcontracts. |
2366 |
|
|
2367 2368 2369 2370 |
|
6. A statement as to whether the offer included indirect costs in
establishing subcontracting goals for this contract and a description of the method used to determine the proportionate share of indirect costs to be incurred with small, minority, and woman-owned businesses. |
2371 |
|
|
2372 2373 |
|
7. The name of the individual employed by the aviation supplier who will administer
the subcontracting program and a description of the individuals duties. |
2374 |
|
|
2375 2376 2377 |
|
8. Assurances that the aviation supplier will require all subcontractors
receiving subcontracts in excess of $1,000,000 to adopt a plan similar to the plan agreed to by the aviation supplier. |
2378 |
|
|
2379 2380 2381 |
|
9. A description of the types of records the aviation supplier will maintain to
demonstrate compliance with the requirements and goals in the plan for this contract. The records must include at least the following: |
2382 2383 |
|
i. Source lists, guides, and other data identifying small, minority, and woman- owned
businesses; |
2384 2385 |
|
ii. Organizations contacted in an attempt to locate sources that are small, minority, and
woman-owned businesses; |
2386 2387 2388 |
|
iii. Records on each subcontract solicitation resulting in an award of more than $100,000, indicating
whether small, minority, or woman-owned businesses were solicited and if not, why not; and |
Page 50 of 130
Air Cargo Network
Contract ACN-13-FX
Part 3: Contract Clauses
|
|
|
2389 2390 |
|
iv. Records to support subcontract award data, including the name, address, and business size of
each subcontractor. |
2391 |
|
|
2392 2393 2394 |
|
c. Reports. The aviation supplier must provide reports on subcontracting activity under
this contract on a calendar-quarter basis. The report must be one of the types described in Clause 3-2, Participation of Small, Minority, and Woman-owned Businesses. |
2395 |
|
|
2396 |
|
|
2397 2398 |
|
Clause 3-2: Participation of Small, Minority, and Woman-owned Businesses (March 2006) |
2399 2400 2401 2402 |
|
a. The policy of the Postal Service is to encourage the participation of small, minority,
and woman-owned business in its purchases of supplies and services to the maximum extent practicable consistent with efficient contract performance. The aviation supplier agrees to follow the same policy in performing this
contract. |
2403 |
|
|
2404 2405 |
|
b. Subject to the agreement of the aviation supplier and the Postal Service, the aviation
supplier will report subcontracting activity on one of the following bases: |
2406 |
|
1. Showing the amount of money paid to subcontractors during the reporting
period; |
2407 2408 |
|
2. Showing subcontracting activity that is allocable to this contract using
generally accepted accounting practices; or |
2409 |
|
3. A combination of the methods listed above. |
2410 |
|
|
2411 2412 2413 2414 |
|
c. The aviation supplier will submit a report to the Contracting Officer within 15 calendar
days after the end of each calendar-year quarter, describing all subcontract awards to small, minority, or woman-owned businesses. The Contracting Officer may require more frequent reports. |
2415 |
|
|
2416 |
|
|
2417 |
|
Clause 4-1: General Terms and Conditions (July 2007) (Tailored) |
2418 |
|
a. Inspection and Acceptance. Not applicable |
2419 |
|
|
2420 2421 2422 2423 2424 2425 2426 2427 2428 2429 |
|
b. Assignment. If this contract provides for payments aggregating $10,000 or more,
claims for monies due or to become due from the Postal Service under it may be assigned to a bank, trust company, or other financing institution, including any federal lending agency, and may thereafter be further assigned and reassigned to
any such institution. Any assignment or reassignment must cover all amounts payable and must not be made to more than one party, except that assignment or reassignment may be made to one party as agent or trustee for two or more parties
participating in financing this contract. No assignment or reassignment will be recognized as valid and binding upon the Postal Service unless a written notice of the assignment or reassignment, together with a true copy of the instrument of
assignment, is filed with: |
2430 |
|
1. The Contracting Officer; |
2431 |
|
2. The surety or sureties upon any bond; and |
2432 2433 |
|
3. The office, if any, designated to make payment, and the Contracting Officer
has acknowledged the assignment in writing. |
2434 2435 2436 |
|
4. Assignment of this contract or any interest in this contract other than in
accordance with the provisions of this clause will be grounds for termination of the contract for default at the option of the Postal Service. |
2437 |
|
|
2438 |
|
c. Changes |
2439 2440 |
|
1. The Contracting Officer may, in writing, without notice to any sureties, order
changes within the general scope of this contract in the following: |
2441 2442 |
|
i. Drawings, designs, or specifications when supplies to be furnished are to be specially
manufactured for the Postal Service in accordance with them; |
2443 |
|
ii. Statement of work or description of services; |
2444 |
|
iii. Method of shipment or packing; |
Page 51 of 130
Air Cargo Network
Contract ACN-13-FX
Part 3: Contract Clauses
|
|
|
2445 |
|
iv. Places of delivery of supplies or performance of services; |
2446 |
|
v. Delivery or performance schedule; |
2447 |
|
vi. Postal Service furnished property or facilities. |
2448 |
|
|
2449 2450 |
|
2. Changes pursuant to the Ordering Process and the Operating Period
Volume Minimum sections in Part 1- Statement of Work are not applicable under this clause. |
2451 |
|
|
2452 2453 2454 2455 2456 |
|
3. Any other written or oral order (including direction, instruction, interpretation,
or determination) from the Contracting Officer that causes a change will be treated as a change order under this paragraph, provided that the aviation supplier gives the Contracting Officer written notice stating: (a) the date,
circumstances, and source of the order and (b) that the aviation supplier regards the order as a change order. |
2457 |
|
|
2458 2459 |
|
4. If any such change affects the cost of performance or the delivery schedule,
the contract may be modified to effect an equitable adjustment. |
2460 |
|
|
2461 2462 2463 2464 |
|
5. The aviation suppliers claim for equitable adjustment must be asserted within 60
days of receiving a written change order, or on a date otherwise agreed to by the parties in writing. A later claim may be acted upon but not after final payment under this contract if the Contracting Officer decides that the
facts justify such action. |
2465 |
|
|
2466 2467 |
|
6. Failure to agree to any adjustment is a dispute under Clause B-9, Claims
and Disputes. |
2468 |
|
|
2469 |
|
d. Reserved |
2470 |
|
|
2471 |
|
e. Reserved |
2472 |
|
|
2473 |
|
f. Reserved |
2474 |
|
|
2475 |
|
g. Invoices |
2476 2477 2478 2479 2480 2481 |
|
The Postal Service intends to certify payment for services based, in part, upon collected scanned data. For services based upon scanned data, the
aviation supplier need not submit an invoice for payment. Rather, payment will be automatically processed, on a weekly basis, based on the scan data. In addition, certain supplemental charges (including, but not limited to, charges related
to minimum guaranteed volumes, surface transportation, and non- achievement of performance standards) may be assessed under the contract. |
2482 |
|
|
2483 2484 2485 2486 2487 2488 2489 2490 |
|
Any service requiring invoicing must meet the requirements specified herein. The aviation supplier shall submit an original invoice (or electronic
invoice if authorized) to the Contracting Officers Representative. All invoices must be submitted within ninety (90) days from completion of the service or the applicable Operating Period to be eligible for payment. Invoices received
after ninety (90) days from completion of the service or Operating Period will be subject to a 10% deduction or a deduction of $10,000, whichever is less, as a liquidated damage. The aviation supplier shall allow at least twenty-eight (28)
calendar days before submitting a second invoice to the Postal Service for the same service. |
2491 |
|
|
2492 2493 |
|
To ensure prompt payment, an original paper invoice (or electronic invoice, if authorized) must contain: |
2494 2495 |
|
1. Aviation suppliers name, remit to address (including ZIP+4), contact person
and phone number; |
2496 |
|
2. Unique invoice number and invoice date; |
2497 |
|
3. Contract number; |
2498 |
|
4. A description of the supplies or services and the dates delivered or
performed; |
2499 |
|
5. Points (air stops or facility) of shipment tender and delivery; if
applicable; |
2500 2501 |
|
6. Quantity, unit of measure, unit price(s) and extension(s) of the items delivered;
if applicable; |
Page 52 of 130
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Part 3: Contract Clauses
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|
|
2502 |
|
7. Payment terms, including any discounts offered; |
2503 2504 |
|
8. Name, title, and phone number of the person to be notified in the event of a
defective invoice; and |
2505 2506 |
|
9. Any additional information required by the contract or specified by the
Contracting Officer. |
2507 |
|
|
2508 2509 2510 2511 |
|
Invoices will be handled in accordance with the Prompt Payment Act (31 U.S.C. 3903) and Office of Management and Budget (OMB) Circular A-125,
Prompt Payment. Further guidelines may be found in the Payment Processing and Reconciliation Process sections of Part I Statement of Work. |
2512 |
|
|
2513 2514 2515 2516 2517 |
|
h. Patent Indemnity. The aviation supplier will indemnify the Postal Service and its
officers, employees and agents against liability, including costs for actual or alleged direct or contributory infringement of, or inducement to infringe, any United States or foreign patent, trademark, or copyright, arising out of the
performance of this contract, provided the aviation supplier is reasonably notified of such claims and proceedings. |
2518 |
|
|
2519 |
|
i. Payment |
2520 |
|
Payment will only be made for: |
2521 2522 |
|
1. Items that have been properly scanned and delivered to the correct delivery destination
Service Points set forth in this contract, and |
2523 |
|
|
2524 |
|
2. Other services and charges agreed upon by the parties. |
2525 |
|
|
2526 2527 2528 |
|
The Postal Service will make payment in accordance with the Prompt Payment Act (31 U.S.C. 3903) and 5 CFR 1315. Payments under this contract may be
made by the Postal Service either by electronic funds transfer or other method agreed upon by the parties. |
2529 |
|
|
2530 2531 2532 2533 2534 |
|
j. Risk of Loss. The Postal Service shall be liable for all third-party customer
claims arising from or in connection with the loss, damage, or delay of any mail transported under this contract, except to the extent of any insurance proceeds received by the aviation supplier as a result of a catastrophic loss of an
aircraft or other transport vehicle and attributable to Postal Service mail. |
2535 |
|
|
2536 2537 2538 2539 2540 2541 2542 2543 |
|
k. Taxes. The contract price includes all applicable federal, state, and local taxes
and duties except the applicable Federal excise tax on the transportation of property via air. The aviation supplier is required to report to the Postal Service on an annual basis (October 1), the portion of the rates listed in
Attachment 10: Pricing that are subject to federal excise tax. The Postal Service shall hold harmless, save, and defend the aviation supplier from any demand or claim of, or on behalf of, the IRS or the United States based on the
application of federal excise taxes applicable to the transportation services performed by the aviation supplier under this contract. |
2544 |
|
|
2545 |
|
l. Termination on Notice. |
2546 |
|
|
2547 2548 2549 2550 |
|
1. This contract does not contain a Termination for Convenience clause. In lieu of
a Termination for Convenience, either party may terminate this contract without cause by providing advanced written notice to the non-terminating party and a termination fee as follows: |
2551 |
|
|
Page 53 of 130
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Contract ACN-13-FX
Part 3: Contract Clauses
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Advanced Notice
Provided |
|
Postal Service
Termination Fee |
|
Aviation Supplier Termination Fee |
|
|
|
|
[*] |
|
[*] |
|
[*] |
|
|
|
|
[*] |
|
[*] |
|
[*] |
|
|
|
|
[*] |
|
[*] |
|
[*] |
|
|
|
|
[*] |
|
[*] |
|
[*] |
|
|
|
|
|
2553 |
|
|
2554 |
|
|
2555 |
|
|
2556 2557 |
|
2. The terminating party must pay the termination fee corresponding to the advanced written
notice within ninety (90) of the written notice of termination. |
2558 |
|
|
2559 2560 2561 2562 2563 2564 2565 2566 |
|
3. If the aviation supplier terminates the contract under this provision, the
aviation supplier guarantees to provide the Postal Service a daily average capacity through the effective date of the termination of not less than the daily average capacity offered in the two most recently completed Operating Periods prior
to the date of the receipt of the notice of termination, or, if two Operating Periods have not been completed when the notice of termination is received, the daily average capacity offered shall be at least equal to the average daily
capacity transported prior to the receipt of the written notice of termination. |
2567 |
|
|
2568 2569 2570 2571 |
|
4. Either partys termination under this provision shall not prejudice the
aviation suppliers right to payment for services rendered, but neither party shall be liable to the other for any other damages, fees, or payment except for the termination fee above. |
2572 |
|
|
2573 2574 2575 |
|
5. This clause does not apply to changes in service resulting from the Postal
Service changing from six (6) days to less than six (6) days of delivery per week. If such a scenario should occur, refer to the Frequency Adjustment clause of this contract. |
2576 |
|
|
2577 2578 2579 2580 2581 2582 2583 2584 2585 2586 2587 |
|
m. Termination for Default. The Postal Service may terminate this contract, or any part
hereof, for default if the aviation supplier fails to cure such default within thirty (30) days of being advised in writing of such by the Postal Service, or if the aviation supplier fails to provide the Postal Service, upon request, with
adequate assurances of future performance. In the event of termination for default, the Postal Service will not be liable to the aviation supplier for any amount for supplies or services not provided, and the Postal Service shall have any and
all rights and remedies provided by law, including the right to assess reasonable excess re- procurement costs. The Postal Service may withhold payment otherwise due the aviation supplier for services already performed in order to protect
its interest in recouping excess re- procurement costs, and will promptly determine such costs so as to mitigate damage to the aviation supplier. |
2588 |
|
|
2589 |
|
n. Title. Not applicable |
2590 |
|
|
2591 2592 2593 2594 2595 2596 2597 2598 |
|
o. Warranty. The aviation supplier warrants and represents that the services delivered
under this contract shall be in accordance with the requirements and performance standards set forth in the contract. With respect to services for which performance standards are set forth in the contract, the Postal Services
exclusive remedy (other than termination for default) shall be price adjustments as provided in this contract. With respect to all other services, the Postal Services exclusive remedy (other than termination for default) shall be for the
aviation supplier to promptly correct, replace, or otherwise cure such performance at no cost to the Postal Service. |
* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.
Page 54 of 130
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Contract ACN-13-FX
Part 3: Contract Clauses
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|
|
2599 2600 2601 |
|
p. Limitation of Liability. Except as otherwise provided by an express or
implied warranty, the supplier will not be liable to the Postal Service for consequential damages resulting from any defect or deficiencies in accepted items or services. |
2602 |
|
|
2603 2604 2605 |
|
q. Other Compliance Requirements. The aviation supplier will comply with all
applicable Federal, State, and local laws, executive orders, rules and regulations applicable to its performance under this contract. |
2606 |
|
|
2607 2608 |
|
r. Order of Precedence. Any inconsistencies in this solicitation or contract will
be resolved by giving precedence in the following order: |
2609 |
|
1. Contract clauses; |
2610 |
|
2. Statement of Work; |
2611 |
|
3. Attachments to the Statement of Work; |
2612 |
|
4. Solicitation provisions |
2613 |
|
5. Form 8203; |
2614 |
|
6. Other documents and attachments associated with the contract. |
2615 |
|
|
2616 |
|
s. Incorporation by Reference. Not applicable |
2617 |
|
|
2618 |
|
t. Shipping. Not applicable |
2619 |
|
|
2620 |
|
|
2621 2622 |
|
Clause 4-2: Contract Terms and Conditions Required to Implement Policies, Statutes, or Executive Orders (July 2009) (Tailored) |
2623 |
|
a. Incorporation by Reference. Not applicable |
2624 |
|
|
2625 |
|
b. Examination of Records. |
2626 2627 2628 |
|
1. Records. Records includes books, documents, accounting procedures
and practices, and other data, regardless of type and regardless of whether such items are in written form, in the form of computer data, or in any other form. |
2629 |
|
|
2630 2631 2632 2633 2634 2635 2636 |
|
2. Examination of Costs. If this is a cost-type contract, the aviation supplier
must maintain, and the Postal Service will have the right to examine and audit all records and other evidence sufficient to reflect properly all costs claimed to have been incurred or anticipated to be incurred directly or indirectly in
performance of this contract. This right of examination includes inspection at all reasonable times of the aviation suppliers plants, or parts of them, engaged in the performance of this contract. |
2637 |
|
|
2638 2639 2640 2641 2642 |
|
3. Cost or Pricing Data. If the aviation supplier is required to submit cost or pricing
data in connection with any pricing action relating to this contract, the Postal Service, in order to evaluate the accuracy, completeness, and currency of the cost or pricing data, will have the right to examine and audit all of the
aviation suppliers records, including computations and projections directly, related to: |
2643 |
|
a. The proposal for the contract, subcontract, or modification; |
2644 |
|
b. Pricing of the contract, subcontract, or modification; or |
2645 |
|
c. Performance of the contract, subcontract or modification. |
2646 |
|
|
2647 2648 2649 2650 |
|
4. Reports. If the aviation supplier is required to furnish cost, funding or
performance reports, the Contracting Officer or any authorized representative of the Postal Service will have the right to examine and audit the supporting records and materials, for the purposes of evaluating: |
2651 2652 |
|
a. The effectiveness of the aviation suppliers policies and procedures to produce
data compatible with the objectives of these reports; and |
2653 |
|
b. The data reported. |
2654 |
|
|
Page 55 of 130
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Contract ACN-13-FX
Part 3: Contract Clauses
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|
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2655 2656 2657 2658 2659 |
|
5. Availability. The aviation supplier must maintain and make available at its office
at all reasonable times the records, materials, and other evidence described in (b)(1)-(4) of this clause, for examination, audit, or reproduction, until three years after final payment under this contract or any longer period required by
statute or other clauses in this contract. In addition: |
2660 2661 2662 |
|
a. If this contract is completely or partially terminated, the aviation supplier must make
available the records related to the work terminated until three years after any resulting final termination settlement; and |
2663 |
|
|
2664 2665 2666 2667 |
|
b. The aviation supplier must make available records relating to appeals under the claims
and disputes clause or to litigation or the settlement of claims arising under or related to this contract. Such records must be made available until such appeals, litigation or claims are finally resolved. |
2668 |
|
|
2669 |
|
|
2670 |
|
Clause 4-7: Records Ownership (March 2006) |
2671 2672 2673 2674 |
|
Notwithstanding any state law providing for retention of rights in the records, the aviation supplier agrees that the Postal Service may, at its option, demand and take without
additional compensation all records relating to the services provided under this agreement. The aviation supplier must turn over all such records upon request but may retain copies of documents produced by the aviation
supplier. |
2675 |
|
|
2676 |
|
|
2677 |
|
Clause 6-1: Contracting Officers Representative (March 2006) |
2678 2679 2680 2681 |
|
The Contracting Officer will appoint a Contracting Officers representative (COR), responsible for the day-to-day administration of the contract, who will serve as the
Postal Services point of contact with the aviation supplier on all routine matters. A copy of the notice of appointment defining the CORs authority will be furnished to the aviation supplier upon award of the
contract. |
2682 |
|
|
2683 2684 2685 2686 |
|
a. The COR may be changed at any time by the Postal Service without prior notice to
the aviation supplier, but notification of the change, including the name and address of the successor COR, will be promptly provided to the aviation supplier by the Contracting Officer in writing. |
2687 |
|
|
2688 |
|
b. The responsibilities and limitations of the COR are as follows: |
2689 2690 2691 2692 |
|
1. The COR is responsible for the operational and administrative aspects of the
contract and technical liaison with the aviation supplier. The COR is responsible also for the final inspection and acceptance of aviation supplier performance and submitted reports and has other responsibilities as specified by the
contract. |
2693 |
|
|
2694 2695 2696 2697 2698 |
|
2. The COR is not authorized to make any commitments or otherwise obligate the
Postal Service or authorize any changes affecting the contract price, terms, or conditions. Any aviation supplier request for changes must be referred to the Contracting Officer directly or through the COR. No such changes may be made
without the Contracting Officers express prior authorization. |
2699 |
|
|
2700 2701 |
|
3. The COR may place orders for the aviation supplier to transport and process mail
in accordance with the provisions of the contract at the agreed-upon rate only. |
2702 |
|
|
2703 |
|
|
2704 |
|
Clause 9-1: Convict Labor (March 2006) |
2705 2706 2707 |
|
In connection with the work under this contract, the aviation supplier agrees not to employ any person undergoing sentence of imprisonment, except as provided by E.O. 11755,
December 28, 1973, as amended and 18 USC 3621 and 3622. |
2708 |
|
|
2709 |
|
|
Page 56 of 130
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Part 3: Contract Clauses
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|
|
2710 2711 |
|
Clause 9-2: Contract Work Hours and Safety Standards Act - Overtime Compensation (March 2006) |
2712 2713 2714 2715 2716 |
|
a. No aviation supplier or subcontractor contracting for any part of the contract work may
require or permit any laborer or mechanic to work more than 40 hours in any workweek on work subject to the provisions of the Contract Work Hours and Safety Standards Act, unless the laborer or mechanic receives compensation at a rate not
less than one-and-one-half times the laborers or mechanics basic rate of pay for all such hours worked in excess of 40 hours. |
2717 |
|
|
2718 2719 2720 2721 2722 2723 |
|
b. Violation, Liability for Unpaid Wages, and Liquidated Damages. In the event of any
violation of paragraph a above, the aviation supplier and any subcontractor responsible for the violation are liable to any affected employee for unpaid wages. The aviation supplier and subcontractor are also liable to the Postal Service
for liquidated damages, which will be computed for each laborer or mechanic at $10 for each day on which the employee was required or permitted to work in violation of paragraph a above. |
2724 |
|
|
2725 2726 2727 2728 2729 2730 2731 |
|
c. Withholding for Unpaid Wages and Liquidated Damages. The Contracting Officer
may withhold from the aviation supplier, from any moneys payable to the aviation supplier or subcontractor under this or any other contract with the same aviation supplier, or any other federally assisted contract subject to the Contract
Work Hours and Safety Standards Act held by the same aviation supplier, sums as may administratively be determined necessary to satisfy any liabilities of the aviation supplier or subcontractor for unpaid wages and liquidated damages
pursuant to paragraph b above. |
2732 |
|
|
2733 2734 2735 2736 2737 2738 2739 2740 2741 2742 2743 |
|
d. Records. The aviation supplier or subcontractor must maintain for 3 years from
the completion of the contract for each laborer and mechanic (including watchmen and guards) working on the contract payroll records which contain the name, address, social security number, and classification(s) of each such employee,
hourly rates of wages paid, number of daily and weekly hours worked, deductions made, and actual wages paid. The aviation supplier or subcontractor must make these records available for inspection, copying, or transcription by authorized
representatives of the Contracting Officer and the Department of Labor, and must permit such representatives to interview employees during working hours on the job. (The Department of Labor information collection and record keeping
requirements in this paragraph d have been approved by the Office of Management and Budget under OMB control numbers 1215-0140 and 1215-0017.) |
2744 |
|
|
2745 2746 |
|
e. Subcontracts. The aviation supplier must insert paragraphs a through d of this
clause in all subcontracts, and must require their inclusion in all subcontracts at any tier. |
2747 |
|
|
2748 |
|
|
2749 |
|
Clause 9-7: Equal Opportunity (March 2006) (Tailored) |
2750 |
|
During the performance of this contract, the contractor agrees as follows: |
2751 2752 2753 2754 2755 2756 2757 2758 2759 |
|
1. The contractor may not discriminate against employees or applicants for employment
because of race, color, religion, sex, or national origin. The contractor will take affirmative action to ensure that applicants are employed, and that employees are treated during employment, without regard to race, color, religion, sex,
or national origin. Such action shall include, but not be limited to the following: Employment, upgrading, demotion, or transfer; recruitment or recruitment advertising; layoff or termination; rates of pay or other forms of compensation;
and selection for training, including apprenticeship. The contractor agrees to post in conspicuous places, available to employees and applicants for employment, notices to be provided by the Contracting Officer setting forth the provisions
of this nondiscrimination clause. |
2760 |
|
|
2761 2762 2763 |
|
2. The contractor, in all solicitations or advertisements for employees placed by or on behalf
of the contractor, state that all qualified applicants will receive consideration for employment without regard to race, color, religion, sex, or national origin. |
2764 |
|
|
2765 2766 |
|
3. The contractor will send to each labor union or representative of workers with which he has
a collective bargaining agreement or other contract or understanding, a notice, provided by the |
Page 57 of 130
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Contract ACN-13-FX
Part 3: Contract Clauses
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|
|
2767 2768 2769 2770 |
|
agency Contracting Officer, advising the labor union or workers representative of the contractors commitments under section 202 of
Executive Order 11246 of September 24, 1965, and must post copies of the notice in conspicuous places available to employees and applicants for employment. |
2771 |
|
|
2772 2773 2774 |
|
4. The contractor will comply with all provisions of Executive Order (EO) 11246 of September
24, 1965, as amended, and of the rules, regulations, and relevant orders of the Secretary of Labor. |
2775 |
|
|
2776 2777 2778 2779 2780 |
|
5. The contractor will furnish all information and reports required by Executive Order, 11246
of September 24, 1964, and by the rules, regulations, and orders of the Secretary of Labor, or pursuant thereto, and will permit access to his books, records, and accounts by the contracting agency and the Secretary of Labor for purposes of
investigation to ascertain compliance with such rules, regulations, and orders. |
2781 |
|
|
2782 2783 2784 2785 2786 2787 2788 |
|
6. In the event of the contractors non-compliance with the non-discrimination clauses of
this contract or with any of such rules, regulations, or orders, this contract may be canceled, terminated, or suspended, in whole or in part and the contractor may be declared ineligible for further Government contracts in accordance with
procedures authorized in Executive Order 11246 of September 24, 1965, and such other sanctions may be imposed and remedies invoked as provided in Executive Order 11246 of September 24, 1965, or by rule, regulation, or order of the Secretary
of Labor, or as otherwise provided by law. |
2789 |
|
|
2790 2791 2792 2793 2794 2795 2796 2797 2798 2799 |
|
7. The contractor will include the provisions of paragraphs (1) through (7) in every
subcontract or purchase order under this contract unless exempted by rules, regulations, or orders of the Secretary of Labor issued pursuant to section 204 of Executive Order 11246 of September 24, 1965, so that such provisions will be
binding upon each subcontractor or vendor. The contractor will take such action with respect to any subcontract or purchase order as may be directed by the Secretary of Labor as a means of enforcing such provisions including sanctions for
noncompliance, provided, however, that in the event the contractor becomes involved in, or is threatened with, litigation with a subcontractor or vendor as a result of such direction, the contractor may request the United States
to enter into such litigation to protect the interest of the United States. |
2800 |
|
|
2801 |
|
|
2802 2803 |
|
Clause 9-9: Equal Opportunity Preaward Compliance of Subcontracts (March 2006) (Tailored) |
2804 2805 2806 |
|
The aviation supplier may not enter into a first-tier subcontract for an estimated or actual amount of $1 million or more without obtaining in writing from the Contracting
Officer a clearance that the proposed subcontractor is in compliance with equal opportunity requirements and therefore eligible for award. |
2807 |
|
|
2808 |
|
|
2809 |
|
Clause 9-10: Service Contract Act (March 2006) |
2810 2811 2812 |
|
a. This contract is subject to the Service Contract Act of 1965, as amended (41 U.S.C. 351
et seq.), and to the following provisions and all other applicable provisions of the Act and regulations of the Secretary of Labor issued under the Act (29 CFR Part 4). |
2813 |
|
|
2814 |
|
b. |
2815 2816 2817 2818 2819 |
|
1) Each service employee employed in the performance of this contract by the
aviation supplier or any subcontractor must be: a) paid not less than the minimum monetary wages and b) furnished fringe benefits in accordance with the wages and fringe benefits determined by the Secretary of Labor or an authorized
representative, as specified in any wage determination attached to this contract. |
2820 |
|
|
Page 58 of 130
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Part 3: Contract Clauses
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|
|
2821 |
|
|
2822 |
|
2) |
2823 2824 2825 2826 2827 2828 2829 2830 2831 2832 2833 2834 |
|
a) If a wage determination is attached to this contract, the Contracting Officer must
require that any class of service employees not listed in it and to be employed under the contract (that is, the work to be performed is not performed by any classification listed in the wage determination) be classified by the aviation
supplier so as to provide a reasonable relationship (that is, appropriate level of skill comparison) between the unlisted classifications and the classifications in the wage determination. The conformed class of employees must be paid the
monetary wages and furnished the fringe benefits determined under this clause. (The information collection requirements contained in this paragraph b have been approved by the Office of Management and Budget under OMB control number
1215- 0150.) |
2835 |
|
|
2836 2837 2838 2839 2840 2841 2842 2843 2844 2845 2846 2847 2848 2849 2850 2851 |
|
b) The conforming procedure must be initiated by the aviation supplier before the
performance of contract work by the unlisted class of employees. A written report of the proposed conforming action, including information regarding the agreement or disagreement of the authorized representative of the employees involved
or, if there is no authorized representative, the employees themselves, must be submitted by the aviation supplier to the Contracting Officer no later than 30 days after the unlisted class of employees performs any contract work. The
Contracting Officer must review the proposed action and promptly submit a report of it, together with the agencys recommendation and all pertinent information, including the position of the aviation supplier and the employees, to the
Wage and Hour Division, Employment Standards Administration, U.S. Department of Labor, for review. Within 30 days of receipt, the Wage and Hour Division will approve, modify, or disapprove the action, render a final determination in the
event of disagreement, or notify the Contracting Officer that additional time is necessary. |
2852 |
|
|
2853 2854 2855 2856 2857 |
|
c) The final determination of the conformance action by the Wage and Hour Division will be
transmitted to the Contracting Officer, who must promptly notify the aviation supplier of the action taken. The aviation supplier must give each affected employee a written copy of this determination, or it must be posted as a part of the
wage determination. |
2858 |
|
|
2859 |
|
d) |
2860 2861 2862 2863 2864 2865 2866 2867 2868 2869 2870 2871 2872 2873 |
|
i. The process of establishing wage and fringe benefit rates bearing a reasonable
relationship to those listed in a wage determination cannot be reduced to any single formula. The approach used may vary from determination to determination, depending on the circumstances. Standard wage and salary administration
practices ranking various job classifications by pay grade pursuant to point schemes or other job factors may, for example, be relied upon. Guidance may also be obtained from the way various jobs are rated under federal pay systems
(Federal Wage Board Pay System and the General Schedule) or from other wage determinations issued in the same locality. Basic to the establishment of conformable wage rates is the concept that a pay relationship should be maintained
between job classifications on the basis of the skill required and the duties performed. |
2874 |
|
|
Page 59 of 130
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Part 3: Contract Clauses
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|
|
2875 |
|
|
2876 2877 2878 2879 2880 2881 2882 2883 2884 2885 2886 2887 2888 2889 |
|
ii. If a contract is modified or extended or an option is exercised, or if a contract
succeeds a contract under which the classification in question was previously conformed pursuant to this clause, a new conformed wage rate and fringe benefits may be assigned to the conformed classification by indexing (that is, adjusting)
the previous conformed rate and fringe benefits by an amount equal to the average (mean) percentage increase change in the wages and fringe benefits specified for all classifications to be used on the contract that are listed in the
current wage determination, and those specified for the corresponding classifications in the previously applicable wage determination. If these conforming actions are accomplished before the performance of contract work by the unlisted
class of employees, the aviation supplier must advise the Contracting Officer of the action taken, but the other procedures in b.2(c) above need not be followed. |
2890 |
|
|
2891 2892 2893 |
|
iii. No employee engaged in performing work on this contract may be paid less than the currently
applicable minimum wage specified under section 6(a)(1) of the Fair Labor Standards Act of 1938, as amended. |
2894 |
|
|
2895 2896 2897 2898 2899 2900 2901 |
|
e) The wage rate and fringe benefits finally determined pursuant to b.2 (a) and (b) above
must be paid to all employees performing in the classification from the first day on which contract work is performed by them in the classification. Failure to pay unlisted employees the compensation agreed upon by the interested parties
and/or finally determined by the Wage and Hour Division retroactive to the date the class of employees began contract work is a violation of the Service Contract Act and this contract. |
2902 |
|
|
2903 2904 2905 2906 |
|
f) Upon discovery of failure to comply with b.2 (a) through (e) above, the Wage and Hour
Division will make a final determination of conformed classification, wage rate, and / or fringe benefits that will be retroactive to the date the class of employees commenced contract work. |
2907 |
|
|
2908 2909 2910 2911 2912 2913 |
|
3) If, as authorized pursuant to section 4(d) of the Service Contract Act, the term of
this contract is more than one year, the minimum monetary wages and fringe benefits required to be paid or furnished to service employees will be subject to adjustment after one year and not less often than once every two years, pursuant to
wage determinations to be issued by the Wage and Hour Division, Employment Standards Administration of the Department of Labor. |
2914 |
|
|
2915 2916 2917 2918 2919 |
|
c. The aviation supplier or subcontractor may discharge the obligation to furnish fringe
benefits specified in the attachment or determined conformably to it by furnishing any equivalent combinations of bona fide fringe benefits, or by making equivalent or differential payments in cash in accordance with the applicable rules
set forth in Subpart D of 29 CFR Part 4, and not otherwise. |
2920 |
|
|
2921 |
|
d. |
2922 2923 2924 2925 2926 2927 2928 |
|
1) In the absence of a minimum-wage attachment for this contract, neither the
aviation supplier nor any subcontractor under this contract may pay any person performing work under the contract (regardless of whether they are service employees) less than the minimum wage specified by section 6(a)(1) of the Fair Labor
Standards Act of 1938. Nothing in this provision relieves the aviation supplier or any subcontractor of any other obligation under law or contract for the payment of a higher wage to any employee. |
2929 |
|
|
Page 60 of 130
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Contract ACN-13-FX
Part 3: Contract Clauses
|
|
|
2930 |
|
|
2931 |
|
2) |
2932 2933 2934 2935 2936 2937 2938 2939 2940 2941 2942 2943 2944 |
|
a) If this contract succeeds a contract subject to the Service Contract Act, under which
substantially the same services were furnished in the same locality, and service employees were paid wages and fringe benefits provided for in a collective bargaining agreement, in the absence of a minimum wage attachment for this contract
setting forth collectively bargained wage rates and fringe benefits, neither the aviation supplier nor any subcontractor under this contract may pay any service employee performing any of the contract work (regardless of whether or not
the employee was employed under the predecessor contract), less than the wages and fringe benefits provided for in the agreement, to which the employee would have been entitled if employed under the predecessor contract, including
accrued wages and fringe benefits and any prospective increases in wages and fringe benefits provided for under the agreement. |
2945 |
|
|
2946 2947 2948 2949 2950 2951 2952 2953 2954 |
|
b) No aviation supplier or subcontractor under this contract may be relieved of the
foregoing obligation unless the limitations of section 4.1(b) of 29 CFR Part 4 apply or unless the Secretary of Labor or an authorized representative finds, after a hearing as provided in section 4.10 of 29 CFR Part 4, that the wages and/or
fringe benefits provided for in the agreement vary substantially from those prevailing for services of a similar character in the locality, or determines, as provided in section 4.11 of 29 CFR Part 4, that the agreement applicable to
service employees under the predecessor contract was not entered into as a result of arms-length negotiations. |
2955 |
|
|
2956 2957 2958 2959 2960 2961 2962 2963 2964 2965 2966 2967 2968 2969 2970 |
|
c) If it is found in accordance with the review procedures in 29 CFR 4.10 and/or 4.11 and
Parts 6 and 8 that wages and/or fringe benefits in a predecessor aviation suppliers collective bargaining agreement vary substantially from those prevailing for services of a similar character in the locality, and/or that the
agreement applicable to service employees under the predecessor contract was not entered into as a result of arms-length negotiations, the Department will issue a new or revised wage determination setting forth the applicable wage
rates and fringe benefits. This determination will be made part of the contract or subcontract, in accordance with the decision of the Administrator, the Administrative Law Judge, or the Board of Service Contract Appeals, as the case may
be, irrespective of whether its issuance occurs before or after award (53 Comp. Gen. 401 (1973)). In the case of a wage determination issued solely as a result of a finding of substantial variance, it will be effective as of the date
of the final administrative decision. |
2971 |
|
|
2972 2973 2974 2975 2976 2977 2978 |
|
e. The aviation supplier and any subcontractor under this contract must notify each
service employee starting work on the contract of the minimum monetary wage and any fringe benefits required to be paid pursuant to the contract, or must post the wage determination attached to this contract. The poster provided by the
Department of Labor (Publication WH 1313) must be posted in a prominent and accessible place at the worksite. Failure to comply with this requirement is a violation of section 2(a) (4) of the Act and of this contract. (Approved by the
Office of Management and Budget under OMB control number 1215-0150.) |
2979 |
|
|
2980 2981 2982 2983 2984 2985 |
|
f. The aviation supplier or subcontractor may not permit services called for by this
contract to be performed in buildings or surroundings or under working conditions provided by or under the control or supervision of the aviation supplier or subcontractor that are unsanitary or hazardous or dangerous to the health or
safety of service employees engaged to furnish these services, and the aviation supplier or subcontractor must comply with the safety and health standards applied under 29 CFR Part 1925. |
2986 |
|
|
Page 61 of 130
Air Cargo Network
Contract ACN-13-FX
Part 3: Contract Clauses
|
|
|
2987 |
|
g. |
2988 2989 2990 2991 2992 2993 2994 |
|
1) The aviation supplier and each subcontractor performing work subject to the Act
must maintain for 3 years from the completion of the work records containing the information specified in (a) through (f) following for each employee subject to the Service Contract Act and must make them available for inspection and
transcription by authorized representatives of the Wage and Hour Division, Employment Standards Administration of the U.S. Department of Labor (approved by the Office of Management and Budget under OMB control numbers 1215-0017 and
1215-0150): |
2995 |
|
a) Name, address, and social security number of each employee. |
2996 |
|
|
2997 2998 2999 |
|
b) The correct work classification, rate or rates of monetary wages paid and fringe
benefits provided, rate or rates of fringe benefit payments in lieu thereof, and total daily and weekly compensation of each employee. |
3000 |
|
|
3001 |
|
c) The number of daily and weekly hours so worked by each employee. |
3002 |
|
|
3003 3004 |
|
d) Any deductions, rebates, or refunds from the total daily or weekly compensation of each
employee. |
3005 |
|
|
3006 3007 3008 3009 3010 3011 |
|
e) A list of monetary wages and fringe benefits for those classes of service employees not
included in the wage determination attached to this contract but for whom wage rates or fringe benefits have been determined by the interested parties or by the Administrator or authorized representative pursuant to paragraph b above. A
copy of the report required by b.2 (b) above is such a list. |
3012 |
|
|
3013 3014 |
|
f) Any list of the predecessor aviation suppliers employees furnished to
the aviation supplier pursuant to section 4.6(1) (2) of 29 CFR Part 4. |
3015 |
|
|
3016 3017 |
|
2) The aviation supplier must also make available a copy of this contract for inspection
or transcription by authorized representatives of the Wage and Hour Division. |
3018 |
|
|
3019 3020 3021 3022 3023 3024 |
|
3) Failure to make and maintain or to make available the records specified in
this paragraph g for inspection and transcription is a violation of the regulations and this contract, and in the case of failure to produce these records, the Contracting Officer, upon direction of the Department of Labor and notification
of the aviation supplier, must take action to suspend any further payment or advance of funds until the violation ceases. |
3025 |
|
|
3026 3027 3028 |
|
4) The aviation supplier must permit authorized representatives of the Wage and
Hour Division to conduct interviews with employees at the worksite during normal working hours. |
3029 |
|
|
3030 3031 3032 3033 3034 3035 |
|
h. The aviation supplier must unconditionally pay to each employee subject to the
Service Contract Act all wages due free and clear and without subsequent deduction (except as otherwise provided by law or regulations, 29 CFR Part 4), rebate, or kickback on any account. Payments must be made no later than one pay period
following the end of the regular pay period in which the wages were earned or accrued. A pay period under the Act may not be of any duration longer than semimonthly. |
3036 |
|
|
3037 3038 3039 3040 3041 3042 3043 |
|
i. The Contracting Officer must withhold or cause to be withheld from the Postal Service
aviation supplier under this or any other contract with the aviation supplier such sums as an appropriate official of the Department of Labor requests or the Contracting Officer decides may be necessary to pay underpaid employees employed
by the aviation supplier or subcontractor. In the event of failure to pay employees subject to the Act wages or fringe benefits due under the Act, the Postal Service may, after authorization or by direction of the Department of Labor and
written notification to the aviation supplier, suspend any further |
Page 62 of 130
Air Cargo Network
Contract ACN-13-FX
Part 3: Contract Clauses
|
|
|
3044 3045 3046 3047 |
|
payment or advance of funds until the violations cease. Additionally, any failure to comply with the requirements of this clause may be grounds for
termination of the right to proceed with the contract work. In this event, the Postal Service may enter into other contracts or arrangements for completion of the work, charging the aviation supplier in default with any additional
cost. |
3048 |
|
|
3049 3050 3051 |
|
j. The aviation supplier agrees to insert this clause in all subcontracts subject to the
Act. The term aviation supplier, as used in this clause in any subcontract, is deemed to refer to the subcontractor, except in the term aviation supplier. |
3052 |
|
|
3053 3054 3055 3056 3057 3058 |
|
k. Service employee means any person engaged in the performance of this contract other
than any person employed in a bona fide executive, administrative, or professional capacity, as those terms are defined in Part 541 of Title 29, Code of Federal Regulations, as of July 30, 1976, and any subsequent revision of those
regulations. The term includes all such persons regardless of any contractual relationship that may be alleged to exist between an aviation supplier or subcontractor and them. |
3059 |
|
|
3060 |
|
l. |
3061 3062 3063 3064 3065 3066 3067 3068 3069 3070 3071 3072 3073 |
|
1) If wages to be paid or fringe benefits to be furnished service employees employed by the
aviation supplier or a subcontractor under the contract are provided for in a collective bargaining agreement that is or will be effective during any period in which the contract is being performed, the aviation supplier must report this fact
to the Contracting Officer, together with full information as to the application and accrual of these wages and fringe benefits, including any prospective increases, to service employees engaged in work on the contract, and furnish a copy
of the agreement. The report must be made upon starting performance of the contract, in the case of collective bargaining agreements effective at the time. In the case of agreements or provisions or amendments thereof effective at a later
time during the period of contract performance, they must be reported promptly after their negotiation. (Approved by the Office of Management and Budget under OMB control number 1215-0150.) |
3074 |
|
|
3075 3076 3077 3078 3079 3080 3081 3082 3083 3084 3085 3086 3087 |
|
2) Not less than 10 days before completion of any contract being performed at a
Postal facility where service employees may be retained in the performance of a succeeding contract and subject to a wage determination containing vacation or other benefit provisions based upon length of service with a aviation supplier
(predecessor) or successor (section 4.173 of Regulations, 29 CFR Part 4), the incumbent aviation supplier must furnish to the Contracting Officer a certified list of the names of all service employees on the aviation suppliers or
subcontractors payroll during the last month of contract performance. The list must also contain anniversary dates of employment on the contract, either with the current or predecessor aviation suppliers of each such service employee.
The Contracting Officer must turn over this list to the successor aviation supplier at the commencement of the succeeding contract. (Approved by the Office of Management and Budget under OMB control number 1215-0150.) |
3088 |
|
|
3089 3090 |
|
m. Rulings and interpretations of the Service Contract Act of 1965, as amended, are contained
in Regulations, 29 CFR Part 4. |
3091 |
|
|
3092 |
|
n. |
3093 3094 3095 3096 |
|
1) By entering into this contract, the aviation supplier and its officials certify that
neither they nor any person or firm with a substantial interest in the aviation suppliers firm are ineligible to be awarded government contracts by virtue of the sanctions imposed pursuant to section 5 of the Act. |
3097 |
|
|
3098 3099 |
|
2) No part of this contract may be subcontracted to any person or firm ineligible for award
of a government contract pursuant to section 5 of the Act. |
3100 |
|
|
Page 63 of 130
Air Cargo Network
Contract ACN-13-FX
Part 3: Contract Clauses
|
|
|
3101 |
|
3) The penalty for making false statements is prescribed in the U.S. Criminal Code,
18 |
3102 |
|
U.S.C. 1001. |
|
|
|
3103 |
|
|
3104 |
|
o. Notwithstanding any of the other provisions of this clause, the following employees may
be |
3105 |
|
employed in accordance with the following variations, tolerances, and exemptions, which the |
3106 |
|
Secretary of Labor, pursuant to section 4(b) of the Act before its amendment by Public Law |
3107 |
|
92-473, found to be necessary and proper in the public interest or to avoid serious impairment |
3108 |
|
of the conduct of government business: |
3109 |
|
|
3110 |
|
1) Apprentices, student-learners, and workers whose earning capacity is impaired
by |
3111 |
|
age, or physical or mental deficiency or injury may be employed at wages lower than |
3112 |
|
the minimum wages otherwise required by section 2(a)(1) or 2(b)(1) of the Service |
3113 |
|
Contract Act without diminishing any fringe benefits or cash payments in lieu thereof |
3114 |
|
required under section 2(a)(2) of the Act, in accordance with the conditions and |
3115 |
|
procedures prescribed for the employment of apprentices, student-learners, |
3116 |
|
handicapped persons, and handicapped clients of sheltered workshops under section |
3117 |
|
14 of the Fair Labor Standards Act of 1938, in the regulations issued by the |
3118 |
|
Administrator (29 CFR Parts 520, 521, 524, and 525). |
3119 |
|
|
3120 |
|
2) The Administrator will issue certificates under the Service Contract Act for
the |
3121 |
|
employment of apprentices, student-learners, handicapped persons, or handicapped |
3122 |
|
clients of sheltered workshops not subject to the Fair Labor Standards Act of 1938, or |
3123 |
|
subject to different minimum rates of pay under the two Acts, authorizing appropriate |
3124 |
|
rates of minimum wages (but without changing requirements concerning fringe |
3125 |
|
benefits or supplementary cash payments in lieu thereof), applying procedures |
3126 |
|
prescribed by the applicable regulations issued under the Fair Labor Standards Act of |
3127 |
|
1938 (29 CFR Parts 520, 521, 524, and 525). |
3128 |
|
|
3129 |
|
3) The Administrator will also withdraw, annul, or cancel such certificates in
accordance |
3130 |
|
with the regulations in Parts 525 and 528 of Title 29 of the Code of Federal |
3131 |
|
Regulations. |
3132 |
|
|
3133 |
|
p. Apprentices will be permitted to work at less than the predetermined rate for the work
they |
3134 |
|
perform when they are employed and individually registered in a bona fide apprenticeship |
3135 |
|
program registered with a State Apprenticeship Agency recognized by the U.S. Department of |
3136 |
|
Labor, or if no such recognized agency exists in a state, under a program registered with the |
3137 |
|
Bureau of Apprenticeship and Training, Employment and Training Administration, U.S. |
3138 |
|
Department of Labor. Any employee not registered as an apprentice in an approved program |
3139 |
|
must be paid the wage rate and fringe benefits contained in the applicable wage determination |
3140 |
|
for the journeyman classification of work actually performed. The wage rates paid apprentices |
3141 |
|
may not be less than the wage rate for their level of progress set forth in the registered |
3142 |
|
program, expressed as the appropriate percentage of the journeymans rate contained in the |
3143 |
|
applicable wage determination. The allowable ratio of apprentices to journeymen employed |
3144 |
|
on the contract work in any craft classification may not be greater than the ratio permitted to |
3145 |
|
the aviation supplier for its entire workforce under the registered program. |
3146 |
|
|
3147 |
|
q. An employee engaged in an occupation in which he or she customarily and regularly
receives |
3148 |
|
more than $30 a month tips may have the amount of tips credited by the employer against the |
3149 |
|
minimum wage required by section 2(a) (1) or section 2(b) (1) of the Act in accordance with |
3150 |
|
section 3(m) of the Fair Labor Standards Act and Regulations, 29 CFR Part 531. However, the |
3151 |
|
amount of this credit may not exceed $1.24 per hour beginning January 1, 1980, and $1.34 |
3152 |
|
per hour after December 31, 1980. To utilize this proviso: |
3153 |
|
1) The employer must inform tipped employees about this tip credit allowance before
the |
3154 |
|
credit is utilized; |
3155 |
|
|
Page 64 of 130
Air Cargo Network
Contract ACN-13-FX
Part 3: Contract Clauses
|
|
|
3156 |
|
2) The employees must be allowed to retain all tips (individually or through a
pooling |
3157 |
|
arrangement and regardless of whether the employer elects to take a credit for tips |
3158 |
|
received); |
3159 |
|
|
3160 |
|
3) The employer must be able to show by records that the employee receives at
least |
3161 |
|
the applicable Service Contract Act minimum wage through the combination of direct |
3162 |
|
wages and tip credit (approved by the Office of Management and Budget under OMB |
3163 |
|
control number 1214-0017); and |
3164 |
|
|
3165 |
|
4) The use of tip credit must have been permitted under any predecessor
collective |
3166 |
|
bargaining agreement applicable by virtue of section 4(c) of the Act. |
3167 |
|
|
3168 |
|
r. Disputes arising out of the labor standards provisions of this contract are not
subject to the |
3169 |
|
Claims and Disputes clause but must be resolved in accordance with the procedures of the |
3170 |
|
Department of Labor set forth in 29 CFR Parts 4, 6, and 8. Disputes within the meaning of this |
3171 |
|
clause include disputes between the aviation supplier (or any of its subcontractors) and the |
3172 |
|
Postal Service, the U.S. Department of Labor, or the employees or their representatives. |
3173 |
|
|
3174 |
|
|
3175 |
|
Clause 9-12: Fair Labor Standards Act and Service Contract Act - Price |
3176 |
|
Adjustment (February 2010) |
3177 |
|
a. The aviation supplier warrants that the contract prices do not include allowance for
any |
3178 |
|
contingency to cover increased costs for which adjustment is provided under this clause. |
3179 |
|
|
3180 |
|
b. The minimum prevailing wage determination, including fringe benefits, issued under
the |
3181 |
|
Service Contract Act of 1965 by the Department of Labor (DOL), current at least every two |
3182 |
|
years after the original award date, current at the beginning of any option or renewal period, or |
3183 |
|
in the case of a significant change in labor requirements, applies to this contract and any |
3184 |
|
exercise of an option or renewal of this contract. When no such determination has been made |
3185 |
|
as applied to this contract, the minimum wage established in accordance with the Fair Labor |
3186 |
|
Standards Act applies to any exercise of an option or renewal of this contract. |
3187 |
|
|
3188 |
|
c. When, as a result of the determination of minimum prevailing wages and fringe
benefits |
3189 |
|
applicable (1) every two years after original award date, (2) at the beginning of any option or |
3190 |
|
renewal period, or (3) in the case of a significant change in labor requirements, an increased |
3191 |
|
or decreased wage determination is applied to this contract, or when as a result of any |
3192 |
|
amendment to the Fair Labor Standards Act enacted after award that affects minimum wage, |
3193 |
|
and whenever such a determination becomes applicable to this contract under law, the |
3194 |
|
aviation supplier increases or decreases wages or fringe benefits of employees working on the |
3195 |
|
contract to comply, the aviation supplier and the Contracting Officer will negotiate whether and |
3196 |
|
to what extent either party will absorb the costs of the wage change. Any resulting change in |
3197 |
|
contract price is limited to increases or decreases in wages or fringe benefits, and the |
3198 |
|
concomitant increases or decreases in Social Security, unemployment taxes, and workers |
3199 |
|
compensation insurance, but may not otherwise include any amount for general and |
3200 |
|
administrative costs, overhead, or profit. |
3201 |
|
|
3202 |
|
d. The aviation supplier or Contracting Officer may request a contract price adjustment within
30 |
3203 |
|
days of the effective date of a wage change. If a request for contract price adjustment has |
3204 |
|
been made, and the parties have not reached an agreement within thirty days of that request, |
3205 |
|
the Contracting Officer should issue a unilateral change order in the amount considered to be |
3206 |
|
a fair and equitable adjustment. The aviation supplier may then either accept the amount, or |
3207 |
|
the aviation supplier may file a claim under Clause B-9: Claims and Disputes unless the |
3208 |
|
Contracting Officer and aviation supplier extend this period in writing. Upon agreement of the |
3209 |
|
parties, the contract price or unit price labor rates will be modified in writing. Pending |
3210 |
|
agreement on or determination of any such adjustment and its effective date, the aviation |
3211 |
|
supplier must continue performance. |
3212 |
|
|
Page 65 of 130
Air Cargo Network
Contract ACN-13-FX
Part 3: Contract Clauses
|
|
|
3213 |
|
e. The Contracting Officer or the Contracting Officers authorized representative must,
for 3 |
3214 |
|
years after final payment under the contract, be given access to and the right to examine any |
3215 |
|
directly pertinent books, papers, and records of the aviation supplier. |
|
|
|
3216 |
|
|
3217 |
|
|
3218 |
|
Clause 9-13: Affirmative Action for Workers with Disabilities (March 2006) |
3219 |
|
(Tailored) |
3220 |
|
a. The contractor will not discriminate against any employee or applicant for
employment |
3221 |
|
because of physical or mental disability in regard to any position for which the employee or |
3222 |
|
applicant for employment is qualified. The contractor agrees to take affirmative action to |
3223 |
|
employ, advance in employment, and otherwise treat qualified individuals with disabilities |
3224 |
|
without discrimination based on their physical or mental disability in all employment practices, |
3225 |
|
including the following: |
3226 |
|
1. Recruitment, advertising, and job application procedures; |
3227 |
|
|
3228 |
|
2. Hiring, upgrading, promotion, award of tenure, demotion, transfer, layoff,
termination, |
3229 |
|
right of return from layoff and rehiring |
3230 |
|
|
3231 |
|
3. Rates of pay or any other form of compensation and changes in
compensation |
3232 |
|
|
3233 |
|
4. Job assignments, job classifications, organizational structures, position
descriptions, |
3234 |
|
lines of progression, and seniority lists |
3235 |
|
|
3236 |
|
5. Leaves of absence, sick leave, or any other leave |
3237 |
|
6. Fringe benefits available by virtue of employment, whether or not administered by
the |
3238 |
|
contractor |
3239 |
|
|
3240 |
|
7. Selection and financial support for training, including apprenticeship,
professional |
3241 |
|
meetings, conferences, and other related activities, and selection for leaves of |
3242 |
|
absence to pursue training |
3243 |
|
|
3244 |
|
8. Activities sponsored by the contractor including social or recreational programs;
and |
3245 |
|
|
3246 |
|
9. Any other term, condition, or privilege of employment. |
3247 |
|
|
3248 |
|
b. The contractor agrees to comply with the rules, regulations, and relevant orders of
the |
3249 |
|
Secretary of Labor issued pursuant to the Rehabilitation Act of 1973, as amended. |
3250 |
|
|
3251 |
|
c. In the event of the contractors noncompliance with the requirements, actions
for |
3252 |
|
noncompliance may be taken in accordance with the rules, regulations, and relevant orders of |
3253 |
|
the Secretary of Labor issued pursuant to the act. |
3254 |
|
|
3255 |
|
d. The contractor agrees to post in conspicuous places, available to employees and
applicants |
3256 |
|
for employment, notices in a form to be prescribed by the Deputy Assistant Secretary for |
3257 |
|
Federal Contract Compliance Programs, provided by or through the Contracting Officer. Such |
3258 |
|
notices shall state the rights of applicants and employees as well as the contractors obligation |
3259 |
|
under the law to take affirmative action to employ and advance in employment qualified |
3260 |
|
employees and applicants with disabilities. The contractor must ensure that applicants and |
3261 |
|
employees with disabilities are informed of the contents of the notice (e.g., the contractor may |
3262 |
|
have the notice read to a visually disabled individual, or may lower the posted notice so that it |
3263 |
|
might be read by a person in a wheelchair). |
3264 |
|
|
3265 |
|
e. The contractor will notify each labor organization or representative of workers with which
it has |
3266 |
|
a collective bargaining agreement or other understanding that the contractor is bound by the |
3267 |
|
terms of section 503 of the Rehabilitation Act of 1973, as amended, and is committed to take |
3268 |
|
affirmative action to employ and advance in employment individuals with physical or mental |
3269 |
|
disabilities. |
Page 66 of 130
Air Cargo Network
Contract ACN-13-FX
Part 3: Contract Clauses
|
|
|
3270 |
|
|
3271 |
|
f. The contractor must include the provisions of this clause in every subcontract or
purchase |
3272 |
|
order in excess of $10,000, unless exempted by the rules, regulations, or orders of the |
3273 |
|
Secretary issued pursuant to section 503 of the Act, as amended, so that such provisions will |
3274 |
|
be binding upon each subcontractor or vendor. The contractor will take such action with |
3275 |
|
respect to any subcontract or purchase order as the Deputy Assistant Secretary for Federal |
3276 |
|
Contract Compliance Programs may direct to enforce such provisions, including action for |
3277 |
|
noncompliance. |
3278 |
|
|
3279 |
|
|
3280 |
|
Clause 9-14: Equal Opportunity for Disabled Veterans, Recently Separated |
3281 |
|
Veterans, Other Protected Veterans, and Armed Forces Service Medal Veterans |
3282 |
|
(February 2010) (Tailored) |
3283 |
|
a. The contractor will not discriminate against any employee or applicant for
employment |
3284 |
|
because he or she is a disabled veteran, recently separated veteran, other protected veteran, |
3285 |
|
or Armed Forces service medal veteran in regard to any position for which the employee or |
3286 |
|
applicant for employment is qualified. The contractor agrees to take affirmative action to |
3287 |
|
employ, advance in employment and otherwise treat qualified individuals without |
3288 |
|
discrimination based on their status as a disabled veteran, recently separated veteran, other |
3289 |
|
protected veteran, or Armed Forces service medal veteran in all employment practices, |
3290 |
|
including the following: |
3291 |
|
|
3292 |
|
1. Recruitment, advertising, and job application procedures; |
3293 |
|
|
3294 |
|
2. Hiring, upgrading, promotion, award of tenure, demotion, transfer, layoff,
termination, |
3295 |
|
right of return from layoff and rehiring; |
3296 |
|
|
3297 |
|
3. Rates of pay or any other form of compensation and changes in
compensation; |
3298 |
|
|
3299 |
|
4. Job assignments, job classifications, organizational structures, position
descriptions, |
3300 |
|
lines of progression, and seniority lists; |
3301 |
|
|
3302 |
|
5. Leaves of absence, sick leave, or any other leave; |
3303 |
|
|
3304 |
|
6. Fringe benefits available by virtue of employment, whether or not administered by
the |
3305 |
|
contractor; |
3306 |
|
|
3307 |
|
7. Selection and financial support for training, including apprenticeship, and
on-the-job |
3308 |
|
training under 38 U.S.C. 3687, professional meetings, conferences, and other related |
3309 |
|
activities, and selection for leaves of absence to pursue training; |
3310 |
|
|
3311 |
|
8. Activities sponsored by the contractor including social or recreational programs;
and |
3312 |
|
|
3313 |
|
9. Any other term, condition, or privilege of employment. |
3314 |
|
|
3315 |
|
b. The contractor agrees to immediately list all employment openings which exist at the time
of |
3316 |
|
the execution of this contract and those which occur during the performance of this contract, |
3317 |
|
including those not generated by this contract and including those occurring at an |
3318 |
|
establishment of the contractor other than the one where the contract is being performed, but |
3319 |
|
excluding those of independently operated corporate affiliates, with the appropriate |
3320 |
|
employment service delivery system where the opening occurs. Listing employment openings |
3321 |
|
with the state workforce agency job bank or with the local employment service delivery system |
3322 |
|
where the opening occurs will satisfy the requirement to list jobs with the appropriate |
3323 |
|
employment service delivery system. |
3324 |
|
|
Page 67 of 130
Air Cargo Network
Contract ACN-13-FX
Part 3: Contract Clauses
|
|
|
3325 |
|
|
3326 |
|
c. Listing of employment openings with the appropriate employment service delivery
system |
3327 |
|
pursuant to this clause shall be made at least concurrently with the use of any other |
3328 |
|
recruitment source or effort and shall involve the normal obligations which attach to the |
3329 |
|
placing of a bona fide job order, including the acceptance of referrals of veterans and |
3330 |
|
nonveterans. The listing of employment openings does not require the hiring of any particular |
3331 |
|
job applicants or from any particular group of job applicants, and nothing herein is intended to |
3332 |
|
relieve the contractor from any requirements in Executive orders or regulations regarding |
3333 |
|
nondiscrimination in employment. |
3334 |
|
|
3335 |
|
d. Whenever a contractor, other than a state or local governmental contractor,
becomes |
3336 |
|
contractually bound to the listing provisions in paragraphs 2 and 3 of this clause, it shall advise |
3337 |
|
the state workforce agency in each state where it has establishments of the name and location |
3338 |
|
of each hiring location in the state. As long as the contractor is contractually bound to these |
3339 |
|
provisions and has so advised the state agency, there is no need to advise the state agency of |
3340 |
|
subsequent contracts. The contractor may advise the state agency when it is no longer bound |
3341 |
|
by this contract clause. |
3342 |
|
|
3343 |
|
e. The provisions of paragraphs 2 and 3 of this clause do not apply to the listing of
employment |
3344 |
|
openings which occur and are filled outside of the 50 states, the District of Columbia, the |
3345 |
|
Commonwealth of Puerto Rico, Guam, the Virgin Islands, American Samoa, the |
3346 |
|
Commonwealth of the Northern Mariana Islands, Wake Island, and the Trust Territories of the |
3347 |
|
Pacific Islands. |
3348 |
|
|
3349 |
|
f. As used in this clause: |
3350 |
|
|
3351 |
|
1. All employment openings includes all positions except executive and
senior |
3352 |
|
management, those positions that will be filled from within the contractors |
3353 |
|
organization, and positions lasting three days or less. This term includes full-time |
3354 |
|
employment, temporary employment of more than three days duration, and part-time |
3355 |
|
employment. |
3356 |
|
|
3357 |
|
2. Executive and senior management means: (1) Any employee (a) compensated on
a |
3358 |
|
salary basis at a rate of not less than $455 per week (or $380 per week, if employed |
3359 |
|
in American Samoa by employers other than the Federal Government), exclusive of |
3360 |
|
board, lodging or other facilities; (b) whose primary duty is management of the |
3361 |
|
enterprise in which the employee is employed or of a customarily recognized |
3362 |
|
department or subdivision thereof; (c) who customarily and regularly directs the work |
3363 |
|
of two or more other employees; and (d) who has the authority to hire or fire other |
3364 |
|
employees or whose suggestions and recommendations as to the hiring, firing, |
3365 |
|
advancement, promotion or any other change of status of other employees are given |
3366 |
|
particular weight; or (2) any employee who owns at least a bona fide 20-percent |
3367 |
|
equity interest in the enterprise in which the employee is employed, regardless of |
3368 |
|
whether the business is a corporate or other type of organization, and who is actively |
3369 |
|
engaged in its management. |
3370 |
|
|
3371 |
|
3. Positions that will be filled from within the contractors organization
means |
3372 |
|
employment openings for which no consideration will be given to persons outside the |
3373 |
|
contractors organization (including any affiliates, subsidiaries, and parent companies) |
3374 |
|
and includes any openings which the contractor proposes to fill from regularly |
3375 |
|
established recall lists. The exception does not apply to a particular opening once |
3376 |
|
an employer decides to consider applicants outside of his or her own organization. |
3377 |
|
|
3378 |
|
g. The contractor agrees to comply with the rules, regulations, and relevant orders of
the |
3379 |
|
Secretary of Labor issued pursuant to the Act. |
3380 |
|
|
Page 68 of 130
Air Cargo Network
Contract ACN-13-FX
Part 3: Contract Clauses
|
|
|
3381 |
|
h. In the event of the contractors noncompliance with the requirements of this clause,
actions for |
3382 |
|
noncompliance may be taken in accordance with the rules, regulations, and relevant orders of |
3383 |
|
the Secretary of Labor issued pursuant to the Act. |
3384 |
|
|
3385 |
|
i. The contractor agrees to post in conspicuous places, available to employees and
applicants |
3386 |
|
for employment, notices in a form to be prescribed by the Deputy Assistant Secretary for |
3387 |
|
Federal Contract Compliance, provided by or through the Contracting Officer. Such notices |
3388 |
|
shall state the rights of applicants and employees as well as the contractors obligation under |
3389 |
|
the law to take affirmative action to employ and advance in employment qualified employees |
3390 |
|
and applicants who are disabled veterans, recently separated veterans, other protected |
3391 |
|
veterans, or Armed Forces service medal veterans. The contractor must ensure that |
3392 |
|
applicants or employees who are disabled veterans are informed of the contents of the notice |
3393 |
|
(e.g., the contractor may have the notice read to a visually disabled individual, or may lower |
3394 |
|
the posted notice so that it might be read by a person in a wheelchair). |
3395 |
|
|
3396 |
|
j. The contractor will notify each labor organization or representative of workers with
which it has |
3397 |
|
a collective bargaining agreement or other contract understanding, that the contractor is |
3398 |
|
bound by the terms of the Vietnam Era Veterans Readjustment Assistance Act of 1974, as |
3399 |
|
amended, and is committed to take affirmative action to employ and advance in employment |
3400 |
|
qualified disabled veterans, recently separated veterans, other protected veterans, and Armed |
3401 |
|
Forces service medal veterans. |
3402 |
|
|
3403 |
|
k. The contractor will include the provisions of this clause in every subcontract or purchase
order |
3404 |
|
of $100,000 or more, unless exempted by the rules, regulations, or orders of the Secretary |
3405 |
|
issued pursuant to the Vietnam Era Veterans Readjustment Assistance Act of 1974, as |
3406 |
|
amended, so that such provisions will be binding upon each subcontractor or vendor. The |
3407 |
|
contractor will take such action with respect to any subcontract or purchase order as the |
3408 |
|
Deputy Assistant Secretary for Federal Contract Compliance may direct to enforce such |
3409 |
|
provisions, including action for noncompliance. |
3410 |
|
|
3411 |
|
|
3412 |
|
Contract Term |
3413 |
|
The contract base period of performance will be October 1, 2013, through September 30, 2020, with |
3414 |
|
two, five year renewal periods to be exercised by mutual agreement of the parties. The Night Network |
3415 |
|
will begin operation on September 30, 2013; the Day Network will begin operation on October 1, 2013. |
3416 |
|
|
3417 |
|
|
3418 |
|
Renewal Process |
3419 |
|
[*] |
3420 |
|
|
3421 |
|
|
3422 |
|
|
3423 |
|
|
3424 |
|
Amendments or Modifications |
3425 |
|
In order to be binding upon the Postal Service or the aviation supplier, any amendment or modification |
3426 |
|
of this Contract must be in writing signed by the Contracting Officer on behalf of the Postal Service |
3427 |
|
and an officer of the aviation supplier authorized to bind the company. |
3428 |
|
|
3429 |
|
|
3430 |
|
Assignment |
3431 |
|
Neither Party shall, directly or indirectly (whether by succession, merger, or otherwise) assign, |
3432 |
|
delegate, novate, or otherwise transfer this Contract or any of its rights or obligations hereunder, |
3433 |
|
without the prior written approval of the other. However, the aviation supplier may assign this contract |
3434 |
|
to any of its internal business affiliates upon written notice to the Postal Service. |
3435 |
|
|
3436 |
|
|
* |
Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities
Exchange Act of 1934, as amended. |
Page 69 of 130
Air Cargo Network
Contract ACN-13-FX
Part 3: Contract Clauses
|
|
|
3437 |
|
Bankruptcy |
3438 |
|
In the event the aviation supplier enters into proceedings relating to bankruptcy, whether voluntary or |
3439 |
|
involuntary, the aviation supplier will furnish, by certified mail, written notification of the bankruptcy to |
3440 |
|
the Contracting Officer responsible for administering the contract. The notification must be furnished |
3441 |
|
within five days of the initiation of the bankruptcy proceedings. The notification must include the date |
3442 |
|
on which the bankruptcy petition was filed, the court in which the petition was filed, and a list of Postal |
3443 |
|
Service contracts and Contracting Officers for all Postal Service contracts for which final payment has |
3444 |
|
not yet been made. This obligation remains in effect until final payment under this contract. |
3445 |
|
|
3446 |
|
|
3447 |
|
Confidentiality |
3448 |
|
a. During the term of this contract and until the earlier of five (5) years after such
termination or |
3449 |
|
until such time as the information is no longer confidential as described below, each party |
3450 |
|
shall treat as confidential and appropriately safeguard and shall not use for the benefit of any |
3451 |
|
person or corporation other than the other party: |
3452 |
|
|
3453 |
|
1. Written information identified in writing as confidential or oral information
promptly |
3454 |
|
confirmed in writing as being confidential; |
3455 |
|
|
3456 |
|
2. Written information or oral information disclosed by the parties during the
negotiation |
3457 |
|
of this contract and written information or oral information promptly confirmed in |
3458 |
|
writing as confidential pertaining to a partys pricing, business or assets which is |
3459 |
|
received at any time from a party that is identified in writing; or |
3460 |
|
|
3461 |
|
3. Any information or knowledge concerning the methods of operation, promotion,
sale, |
3462 |
|
or distribution used by a party which may be communicated to the other party or which |
3463 |
|
a party may otherwise acquire by virtue of its performance of this Agreement. |
3464 |
|
|
3465 |
|
b. Notwithstanding the provisions of subparagraphs 1 through 3, above, neither party shall
be |
3466 |
|
required to obtain prior written approval before providing information regarding this contract: |
3467 |
|
|
3468 |
|
1. To Members of Congress serving on a committee or subcommittee with
oversight |
3469 |
|
responsibility of the Postal Service; |
3470 |
|
|
3471 |
|
2. In response to legal process or otherwise required by law; |
3472 |
|
|
3473 |
|
3. In response to a request from the Department of Justice Antitrust Division attorneys
or |
3474 |
|
economists in pursuit of a non-public investigation; or |
3475 |
|
|
3476 |
|
4. In response to requests submitted to the Postal Service under the Freedom
of |
3477 |
|
Information Act. In this regard, the Postal Service shall follow the procedures |
3478 |
|
promulgated at 39 CFR Section 265.8. |
3479 |
|
|
3480 |
|
c. Information shall not be considered confidential if it is: |
3481 |
|
1. Generally known to the trade or public; |
3482 |
|
2. Rightfully possessed by a party prior to the effective date of this
contract; |
3483 |
|
3. Received by a party from a third party which rightfully possesses
it; |
3484 |
|
4. Independently developed by the other party; or |
3485 |
|
5. Releasable pursuant to Postal Service regulations addressing how information
is |
3486 |
|
maintained by the Postal Service. |
3487 |
|
|
3488 |
|
|
3489 |
|
Entire Agreement |
3490 |
|
This Contract, together with all Attachments, constitutes the entire agreement and understanding |
3491 |
|
between the Parties in connection with the subject matter described, and supersedes and cancels all |
3492 |
|
previous negotiations, commitments, and writings related to the subject matter. |
Page 70 of 130
Air Cargo Network
Contract ACN-13-FX
Part 3: Contract Clauses
|
|
|
3493 |
|
|
3494 |
|
|
3495 |
|
Force Majeure |
3496 |
|
Both the Postal Service and the aviation supplier shall be excused from their obligations for volume |
3497 |
|
guarantees or service performance, respectively, under this Contract, and neither Party shall be liable |
3498 |
|
to the other or any other person or entity for loss, damage, delay, mis-delivery or non-delivery of |
3499 |
|
shipments transported pursuant to this Contract, resulting in whole or in part from any of the following: |
3500 |
|
|
3501 |
|
a. When there occurs a State or Federal government-declared State of Emergency and /
or |
3502 |
|
instructions by a government agency that has actual or apparent powers or authority |
3503 |
|
(including, but not limited to, the Federal Aviation Administration (FAA) or the Transportation |
3504 |
|
Security Administration (TSA)) to order airport closures or limitations on airport activity; |
3505 |
|
|
3506 |
|
b. When the failure to meet contractual obligations results in whole or in part from
public |
3507 |
|
enemies, terrorist acts, criminal acts of any person or entity, public authorities acting with |
3508 |
|
actual or apparent authority (including U.S. Postal Inspectors), civil commotion, hazards |
3509 |
|
incident to a state of war, national disruptions in transportation networks or operations (of any |
3510 |
|
mode) of the aviation supplier, Postal Service, or any other entity, strikes, natural disasters, or |
3511 |
|
disruption or failure of third-party communication and information systems; or |
3512 |
|
|
3513 |
|
c. When there exist any conditions that present a danger to each Partys
personnel. |
3514 |
|
|
3515 |
|
d. In every case the failure to perform must be beyond the control and without the fault
or |
3516 |
|
negligence of the party claiming that its performance is excused. Each Party is required to |
3517 |
|
continue and attempt to recommence performance to the greatest extent possible without |
3518 |
|
delay. |
3519 |
|
|
3520 |
|
It is the responsibility of the Party asserting the Force Majeure event to formally declare that a Force |
3521 |
|
Majeure event has taken place within twenty-four (24) hours of the event, except when the event |
3522 |
|
occurs on a Friday, Saturday or Sunday. Declaration of a Force Majeure event that occurs on a Friday, |
3523 |
|
Saturday, or Sunday must be made by the close of business on the following Monday, except when |
3524 |
|
the Monday falls on a holiday, then it must be declared by the close of business on the following |
3525 |
|
Tuesday. The party declaring the Force Majeure event must document the circumstances of the event |
3526 |
|
in writing to the Contracting Officers Representative, who will review the information with the |
3527 |
|
Manager, Air Transportation Operations, and relevant aviation supplier officials. In the absence of a |
3528 |
|
formal request for relief under this clause, all appropriate volume guarantees and performance |
3529 |
|
standards will remain in force. Except for the calculation of the service levels, nothing in this section |
3530 |
|
shall relieve or excuse the aviation supplier of its service obligations. Subsequent to a Force Majeure |
3531 |
|
event being declared, the declaring party must provide reasonable, written documentation with |
3532 |
|
sufficient detail to support the declaration. |
3533 |
|
|
3534 |
|
If, as a result of the occurrence of one of the foregoing events, the aviation supplier is excused from |
3535 |
|
performance, and the Postal Service is excused from meeting its minimum volume commitment for the |
3536 |
|
identified period, the Parties will meet to agree upon the pro-rata adjustments to be made. |
3537 |
|
|
3538 |
|
On days where mail volume is withdrawn, withheld, or not transported under this provision, the |
3539 |
|
minimum volume commitment for the identified period will be reduced for that period by the amount of |
3540 |
|
that volume. |
3541 |
|
|
3542 |
|
|
3543 |
|
Frequency Adjustment |
3544 |
|
If, during the term of this contract, the Postal Service decides to reduce, in whole or in part, the |
3545 |
|
number of delivery days, for any mail type it provides, to fewer than six (6) per week, the Postal |
3546 |
|
Service reserves the right to effectuate a change in delivery days by adjusting the Statement of Work |
3547 |
|
of this contract, including, but not limited to, the annual number of operating days or the frequency of |
3548 |
|
service hereunder. The parties agree that such an adjustment does not constitute a partial termination |
3549 |
|
of the contract, nor will it give rise to an equitable adjustment. |
Page 71 of 130
Air Cargo Network
Contract ACN-13-FX
Part 3: Contract Clauses
|
|
|
3550 |
|
|
3551 |
|
If the number of delivery days is reduced, in whole or in part, to five (5) and the Postal Service decides |
3552 |
|
to reduce the number of operating days under this contract, in whole or in part, to five (5), the parties |
3553 |
|
agree to reduce the Contract Volume Minimum calculation. The Contract Volume Minimum calculation |
3554 |
|
will be reduced by the average daily volume for the previous twelve (12) months excluding the weeks |
3555 |
|
of Peak associated with the removed day of service without adjustment to the tier structure, the |
3556 |
|
contract rate, or be subject to any other price-related adjustment. The monies associated with the |
3557 |
|
volume removed from the calculation will be eliminated. |
3558 |
|
|
3559 |
|
If the number of delivery days is reduced to fewer than five (5), and the Postal Service decides to |
3560 |
|
reduce the number of operating days under this contract, in whole or in part, to fewer than five (5), the |
3561 |
|
parties will negotiate an equitable adjustment if necessary. |
3562 |
|
|
3563 |
|
No later than 120 days prior to the effective date of such reduction in delivery days, the parties shall |
3564 |
|
commence discussions as to how to implement the change. Within 90 days of such notice, the |
3565 |
|
supplier must implement the changes outlined above. |
3566 |
|
|
3567 |
|
|
3568 |
|
Notices |
3569 |
|
Any notice, report, demand, acknowledgement or other communication which under the terms of this |
3570 |
|
Contract or otherwise must be given or made by either Party, unless specifically otherwise provided in |
3571 |
|
this Contract, shall be in the English language and in writing, and shall be given or made by express |
3572 |
|
delivery service with proof of delivery, certified air mail (return receipt requested). The parties may |
3573 |
|
also send a copy of the same communication through electronic mail, facsimile with acknowledgement |
3574 |
|
of receipt/proof of receipt, or personal delivery. If a party sends a copy of the official correspondence |
3575 |
|
by electronic mail or facsimile, the correspondence shall not be deemed received until the receiving |
3576 |
|
party confirms receipt. |
3577 |
|
|
3578 |
|
Such notice, report, demand, acknowledgement or other communication shall be deemed to have |
3579 |
|
been given or made in the case of express delivery service with tracking and tracing capability on the |
3580 |
|
date of signature of the proof of delivery, and in the case of certified mail on the fifth business day in |
3581 |
|
the place of receipt after the date sent. |
3582 |
|
|
3583 |
|
The notice address for the Postal Service shall be: |
3584 |
|
U.S. Postal Service |
3585 |
|
Air Transportation CMC |
3586 |
|
Attention: Manager |
3587 |
|
475 LEnfant Plaza SW, Room 1P 650 |
3588 |
|
Washington, DC 20260-0650 |
3589 |
|
|
3590 |
|
The notice address for the aviation supplier shall be: |
3591 |
|
Federal Express Corporation |
3592 |
|
Attention: Vice President, Postal Transportation Management |
3593 |
|
3610 Hacks Cross Road |
3594 |
|
Building A 1st Floor |
3595 |
|
Memphis, TN 38125-8800 |
3596 |
|
|
3597 |
|
|
3598 |
|
Severability |
3599 3600 3601 3602 3603 3604 3605 |
|
a. If any term, provision, covenant or condition of this Contract is held by a court or Board
of competent jurisdiction or by a request, direction or indication of an agency or department of a Governmental Body having subject matter jurisdiction to be invalid or unenforceable, the remainder of the provisions shall continue in full
force and effect unless the rights and obligations of the parties have been materially altered or abridged by such invalidation or unenforceability. |
Page 72 of 130
Air Cargo Network
Contract ACN-13-FX
Part 3: Contract Clauses
|
|
|
3606 3607 3608 3609 3610 3611 |
|
b. If a material provision of this Contract is materially altered or abridged as the result of
a final and binding order of a Governmental Body having subject matter jurisdiction, then the Postal Service and the aviation supplier will meet to negotiate in good faith to reach a mutually satisfactory modification to this Contract. If
the Parties are unable to reach a mutually satisfactory resolution, then either Party may declare the negotiations to be at an impasse and the parties shall resolve the dispute in accordance with the provisions of this
contract. |
3612 |
|
|
3613 3614 |
|
c. Notwithstanding the foregoing, the Parties agree to make their best efforts to oppose
any changes requested by a Governmental Body to any material provision of this Contract. |
3615 |
|
|
3616 |
|
|
3617 |
|
Third Party Governmental Delays |
3618 |
|
If, during the term of this contract, a governmental entity with subject matter jurisdiction enacts laws, |
3619 |
|
promulgates regulations, or issues orders mandating that the aviation supplier screen mail dispatched |
3620 |
|
for transportation by aircraft within the United States for bombs, explosives, or other hazardous |
3621 |
|
materials, and aviation supplier does not have a method for otherwise complying at no additional cost |
3622 |
|
to the Postal Service, either party may, at no cost to the other party, suspend performance under the |
3623 |
|
contract during the period in which such screening is actually required to be accomplished. |
3624 |
|
|
3625 |
|
Within fourteen (14) days of the enactment of any law, promulgation of any regulation, or issuance of |
3626 |
|
any order referenced above, the parties shall commence negotiations in an attempt to modify this |
3627 |
|
contract to address any adverse impacts and / or other concerns asserted by one or both parties that |
3628 |
|
may arise as a result of additional screening requirements. |
3629 |
|
|
3630 |
|
If the parties cannot agree upon such a modification within 180 days, or within such longer period as |
3631 |
|
the parties may mutually agree, the contract and all orders hereunder may be terminated at no cost to |
3632 |
|
either party. |
3633 |
|
|
3634 |
|
|
3635 |
|
Waiver of Breach |
3636 |
|
No waiver of breach of any of the provisions of this Contract shall be construed to be a waiver of any |
3637 |
|
succeeding breach of the same or any other provision. |
3638 |
|
|
Page 73 of 130
Air Cargo Network
Contract ACN-13-FX
Part 4: List of Attachments
Part 4 - List of Attachments and Forms
|
|
|
|
|
Attachments: |
|
|
|
|
|
|
|
Attachment 1 |
|
Postal Service Operating Periods, dated June 27, 2014 |
|
|
|
|
|
Attachment 2 |
|
Air Stops & Projected Volumes, dated January 8, 2013 |
|
|
|
|
|
Attachment 3 |
|
Operating Plan, Day Network, dated June 27, 2014 |
|
|
|
|
|
Attachment 4 |
|
Operating Plan, Night Network, dated June 27, 2014 |
|
|
|
|
|
Attachment 5 |
|
Reserved |
|
|
|
|
|
Attachment 6 |
|
Postal Furnished Property, April 16, 2013 |
|
|
|
|
|
Attachment 7 |
|
Electronic Data Interchange Service Requirements, dated September 1, 2012 |
|
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Attachment 8 |
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Investigative / Security Protocol and Guidelines, dated July 2012 |
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Attachment 9 |
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Wage Determination, dated October 31, 2012 |
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Attachment 10 |
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Pricing, dated September 29, 20141 |
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Attachment 11 |
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Perishable Mail and Lives, April 22, 2013 |
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Attachment 12 |
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Reserved |
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Attachment 13 |
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Service Contract Act Wage Determinations, dated April 17, 2013 |
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Attachment 14 |
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Contract Density, dated June 27, 2014 |
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Attachment 15 |
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Average Weight Process, dated June 27, 2014 |
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Attachment 16 |
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Re-labeling Process, dated June 27, 2014 |
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Attachment 17 |
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Handling Unit Types, dated June 27, 2014 |
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Forms: |
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DOT Form F 5800.1 |
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Hazardous Materials Incident Report |
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I-9 Form |
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Employment Eligibility Verification |
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PS Form 2025 |
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Contract Personnel Questionnaire |
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PS Form 8203 |
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Order / Solicitation / Offer / Award |
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US Treasury Form 941 |
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Quarterly Federal Tax Return |
Page 74 of 130
Air Cargo Network
Contract ACN-13-FX
Attachment 10: Pricing
Exercised Option 1, 2, and 3
Attachment 10
Pricing
January 13, 2015
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Attachment 10 Pricing Day Network (Proposal 2F) |
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1/13/2015 |
[*]
* |
Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities
Exchange Act of 1934, as amended. |
Page 101 of
130
Air Cargo Network
Contract ACN-13-FX
Attachment 10: Pricing
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Attachment 10 Pricing Night Network (Proposal 2B) |
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18-Apr-13 |
[*]
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Attachment 10 Pricing |
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6/27/2014 |
[*]
* |
Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities
Exchange Act of 1934, as amended. |
Page 102 of
130
Exhibit 10.5
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The Boeing Company |
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P.O. Box 3707 |
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Seattle, WA 98124-2207 |
6-1162-LKJ-0696R6
Federal Express Corporation
3131 Democrat Road
Memphis, TN
38118
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Subject: |
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[*] |
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Reference: |
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Purchase Agreement No. PA-3712 (Purchase Agreement) between The Boeing Company (Boeing) and Federal Express Corporation (Customer) relating to
Model 767-3S2F aircraft (Aircraft) |
All terms used but not defined in this letter agreement (Letter Agreement) have the same meaning as in
the Purchase Agreement. Other than as provided in this Letter Agreement all terms and conditions of the Purchase Agreement are hereby ratified and confirmed.
1. [*]
2. Customer understands that Boeing considers certain commercial and
financial information contained in this offer as confidential. Customer agrees that it will treat this offer and the information contained herein as confidential and will not, without the prior written consent of Boeing, disclose this offer or any
information contained herein to any other person or entity without the written consent of Boeing.
Please sign and return this
offer on or before January 22, 2015.
|
|
|
6-1162-LKJ-0696R6
January 22, 2015 [*] |
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Page 1 |
BOEING PROPRIETARY
* |
Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities
Exchange Act of 1934, as amended. |
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AGREED AND ACCEPTED this |
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1/22/2015 |
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Date |
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THE BOEING COMPANY |
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/s/ L. Kirsten Jensen |
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Signature |
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L. Kirsten Jensen |
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Printed name |
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Attorney-in-Fact |
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Title |
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FEDERAL EXPRESS CORPORATION |
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/s/ George Silverman |
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Signature |
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George Silverman |
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Printed name |
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Vice President Materiel Management |
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Title |
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6-1162-LKJ-0696R6
January 22, 2015 [*] |
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Page 2 |
BOEING PROPRIETARY
* |
Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities
Exchange Act of 1934, as amended. |
Attachment to Letter Agreement 6-1162-LKJ-0696R6
[ * ]
Note: Boeing acknowledges that as of the date of this Letter Agreement Customer has executed a definitive agreement (Supplemental Agreement No. 5) for four (4) LDS Additional Aircraft.
[ * ]
BOEING PROPRIETARY
* |
Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities
Exchange Act of 1934, as amended. |
EXHIBIT 12.1
FEDEX CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(UNAUDITED)
(IN
MILLIONS, EXCEPT RATIOS)
|
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Nine Months Ended February 28, |
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Year Ended May 31, |
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2015 |
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2014 |
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2014 |
|
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2013 |
|
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2012 |
|
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2011 |
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2010 |
|
Earnings: |
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|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
$ |
2,817 |
|
|
$ |
2,152 |
|
|
$ |
3,289 |
|
|
$ |
2,455 |
|
|
$ |
3,141 |
|
|
$ |
2,265 |
|
|
$ |
1,894 |
|
Add back: |
|
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|
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|
|
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|
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|
|
|
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|
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|
|
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|
|
Interest expense, net of capitalized interest |
|
|
164 |
|
|
|
106 |
|
|
|
160 |
|
|
|
82 |
|
|
|
52 |
|
|
|
86 |
|
|
|
79 |
|
Amortization of debt issuance costs |
|
|
4 |
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|
|
4 |
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|
|
4 |
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|
|
5 |
|
|
|
5 |
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|
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16 |
|
|
|
14 |
|
Portion of rent expense representative of interest factor |
|
|
668 |
|
|
|
666 |
|
|
|
876 |
|
|
|
864 |
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|
797 |
|
|
|
852 |
|
|
|
806 |
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Earnings as adjusted |
|
$ |
3,653 |
|
|
$ |
2,928 |
|
|
$ |
4,329 |
|
|
$ |
3,406 |
|
|
$ |
3,995 |
|
|
$ |
3,219 |
|
|
$ |
2,793 |
|
|
|
|
|
|
|
|
|
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|
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|
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|
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|
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|
Fixed Charges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net of capitalized interest |
|
$ |
164 |
|
|
$ |
106 |
|
|
$ |
160 |
|
|
$ |
82 |
|
|
$ |
52 |
|
|
$ |
86 |
|
|
$ |
79 |
|
Capitalized interest |
|
|
26 |
|
|
|
22 |
|
|
|
29 |
|
|
|
45 |
|
|
|
85 |
|
|
|
71 |
|
|
|
80 |
|
Amortization of debt issuance costs |
|
|
4 |
|
|
|
4 |
|
|
|
4 |
|
|
|
5 |
|
|
|
5 |
|
|
|
16 |
|
|
|
14 |
|
Portion of rent expense representative of interest factor |
|
|
668 |
|
|
|
666 |
|
|
|
876 |
|
|
|
864 |
|
|
|
797 |
|
|
|
852 |
|
|
|
806 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
862 |
|
|
$ |
798 |
|
|
$ |
1,069 |
|
|
$ |
996 |
|
|
$ |
939 |
|
|
$ |
1,025 |
|
|
$ |
979 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
Ratio of Earnings to Fixed Charges |
|
|
4.2 |
|
|
|
3.7 |
|
|
|
4.0 |
|
|
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3.4 |
|
|
|
4.3 |
|
|
|
3.1 |
|
|
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2.9 |
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
EXHIBIT 15.1
The Board of Directors and Stockholders
FedEx Corporation
We are aware of the incorporation by reference in the Registration Statements (Form S-8 Nos. 333-192957, 333-171232, 333-03443, 333-45037, 333-71065,
333-34934, 333-100572, 333-111399, 333-121418, 333-130619, 333-156333 and Form S-3 No. 333-183989) of FedEx Corporation and in the related Prospectuses of our report dated March 19, 2015, relating to the unaudited condensed consolidated
interim financial statements of FedEx Corporation that are included in its Form 10-Q for the quarter ended February 28, 2015.
/s/
Ernst & Young LLP
Memphis, Tennessee
March 19, 2015
EXHIBIT 31.1
CERTIFICATION PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Frederick W. Smith, certify that:
1. |
I have reviewed this quarterly report on Form 10-Q of FedEx Corporation (the registrant); |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report; |
4. |
The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|
(c) |
Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and |
|
(d) |
Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter that has materially affected, or is reasonably
likely to materially affect, the registrants internal control over financial reporting; and |
5. |
The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the
registrants board of directors (or persons performing the equivalent functions): |
|
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record,
process, summarize and report financial information; and |
|
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
|
Date: March 19, 2015 |
|
/s/ Frederick W. Smith |
Frederick W. Smith |
Chairman, President and Chief Executive
Officer |
EXHIBIT 31.2
CERTIFICATION PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Alan B. Graf, Jr., certify that:
1. |
I have reviewed this quarterly report on Form 10-Q of FedEx Corporation (the registrant); |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report; |
4. |
The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|
(c) |
Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and |
|
(d) |
Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter that has materially affected, or is reasonably
likely to materially affect, the registrants internal control over financial reporting; and |
5. |
The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the
registrants board of directors (or persons performing the equivalent functions): |
|
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record,
process, summarize and report financial information; and |
|
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
|
Date: March 19, 2015 |
|
/s/ Alan B. Graf, Jr. |
Alan B. Graf, Jr. |
Executive Vice President and Chief Financial
Officer |
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of FedEx Corporation (FedEx) on Form 10-Q for the period ended February 28, 2015 as filed with the
Securities and Exchange Commission on the date hereof (the Report), I, Frederick W. Smith, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
|
(1) |
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
|
(2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of FedEx. |
|
Date: March 19, 2015 |
|
/s/ Frederick W. Smith |
Frederick W. Smith |
Chairman, President and Chief Executive
Officer |
EXHIBIT 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of FedEx Corporation (FedEx) on Form 10-Q for the period ended February 28, 2015 as filed with the
Securities and Exchange Commission on the date hereof (the Report), I, Alan B. Graf, Jr., certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
|
(1) |
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
|
(2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of FedEx. |
|
Date: March 19, 2015 |
|
/s/ Alan B. Graf, Jr. |
Alan B. Graf, Jr. |
Executive Vice President and Chief Financial
Officer |
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