This spreadsheet was prepared by Jenny Craddock, Senior Case Writer, and Michael J. Schill, Professor of Business Administration.

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 This spreadsheet supports STUDENT analysis of the case “The Battle for Value, 2016: FedEx
Corp. versus United Parcel Service, Inc.” (UVA-F-1773).

y Jenny Craddock, Senior Case Writer, and Michael J. Schill, Professor of Business Administration. Copyright © 2017 by the University of Virginia
ottesville, VA. All rights reserved. For customer service inquiries, send an e-mail to [email protected]. No part of this publication
etrieval system, posted to the Internet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—
den School Foundation. Our goal is to publish materials of the highest quality, so please submit any errata to [email protected].
 Exhibit 1
The Battle for Value, 2016: FedEx Corp. versus United Parcel Service, Inc.
Revenues for FedEx and UPS by Business and Geography Segment (in millions)

FedEx 2010 2011 2012 2013 2014 2015

Geography
U.S. Domestic Revenue 24,852 27,461 29,837 30,948 32,259 34,216
International Revenue 9,882 11,843 12,843 13,339 13,308 13,237

Business
FedEx Express 21,555 24,581 26,515 27,171 27,121 27,239
FedEx Ground 7,439 8,485 9,573 10,578 11,617 12,984
FedEx Freight 4,321 4,911 5,282 5,401 5,757 6,191
FedEx Services* 1,419 1,327 1,310 1,137 1,072 1,039

UPS 2010 2011 2012 2013 2014 2015

Geography
U.S. Domestic Revenue 36,795 39,347 40,428 41,772 43,840 45,309
International Revenue 12,750 13,758 13,699 13,666 14,392 13,054

Business
U.S. Domestic Package
Next-Day Air 5,835 6,229 6,412 6,443 6,581 6,570
Deferred 2,975 3,299 3,392 3,437 3,672 3,903
Ground 20,932 22,189 23,052 24,194 25,598 26,274
International Package 11,133 12,249 12,124 12,429 12,988 12,149
Supply-Chain & Freight 8,670 9,139 9,147 8,935 9,393 9,467

* FedEx Services provides back-office support to FedEx’s three transportation segments and printing and retail support to customers through FedEx Office.

Data source: Company SEC filings.

 Exhibit 2
The Battle for Value, 2016: FedEx Corp. versus United Parcel Service, Inc.
Operating Results for UPS, Inc. (period ending Dec. 31, in millions)

2010 2011 2012 2013 2014 2015 Weighted Average

Revenue 49,545 53,105 54,127 55,438 58,232 58,363 2.73%
Operating income (EBIT) 5,641 6,080 1,343 7,034 4,968 7,668 10.31%
Interest expense 354 348 393 380 353 341 16.79
Net income 3,338 3,804 807 4,372 3,032 4,844 6.42%
Capital expenditures 1,389 2,005 2,153 2,065 2,328 2,379 3.97%

Cash and marketable securities 4,081 4,275 7,924 5,245 3,283 4,726
Accounts receivable 6,117 6,246 6,111 6,502 6,661 7,134 2.73%
Total current assets 11,569 12,284 15,591 13,387 11,218 13,208
Net prop., plant, and equip. 17,387 17,621 17,894 17,961 18,281 18,352 2.93%
Total assets 33,597 34,077 38,818 35,553 35,440 38,311

Current liabilities 5,902 6,514 8,390 7,131 8,621 10,696 2.73%

Total debt 10,846 11,128 12,870 10,872 10,779 14,334
Total stockholders’ equity 8,047 7,108 4,733 6,488 2,158 2,491

2010 2011 2012 2013 2014 2015

Growth
Revenue growth 7.2% 1.9% 2.4% 5.0% 0.2%
Total asset growth 1.4% 13.9% -8.4% -0.3% 8.1%
Operating income growth 7.8% -77.9% 423.8% -29.4% 54.3%
Net income growth 14.0% -78.8% 441.8% -30.6% 59.8%

Asset Efficiency Ratios

Working capital turnover 8.7 9.2 7.5 8.9 22.4 23.2 18.52
PPE turnover 2.8 3.0 3.0 3.1 3.2 3.2
Capital expenditure % 2.8% 3.8% 4.0% 3.7% 4.0% 4.1%
Total asset turnover 1.5 1.6 1.4 1.6 1.6 1.5

Liquidity and Leverage Ratios

Current ratio 2.0 1.9 1.9 1.9 1.3 1.2
Cash ratio 0.7 0.7 0.9 0.7 0.4 0.4
Total debt/equity ratio 1.3 1.6 2.7 1.7 5.0 5.8
Times interest earned 15.9 17.5 3.4 18.5 14.1 22.5

Profitability Ratios
Operating margin 11% 11% 2% 13% 9% 13%
Net profit margin 7% 7% 1% 8% 5% 8%
Return on assets 11% 12% 3% 13% 10% 14%
Return on equity 41% 54% 17% 67% 141% 194%
Economic profit (millions) $1,873 $2,189 -$602 $2,832 $1,946 $3,255
* Economic Profit (EVA) is calculated as EBIT * (1 − t) − CofC × (T. Debt + T. St. Eq), where t = 40% and CofC = 8%.

Data sources: Capital IQ, Morningstar, and company annual reports.

rcel Service, Inc.
in millions)

2016 2017 2018 2019 2020

$ 59,956.31 $ 61,593.12 $ 63,274.61 $ 65,002.01 $ 66,776.56
$ 6,180.43 $ 6,349.16 $ 6,522.49 $ 6,700.55 $ 6,883.48
$ 368.15 $ 378.20 $ 388.52 $ 399.13 $ 410.02
$ 3,847.69 $ 3,952.73 $ 4,060.64 $ 4,171.49 $ 4,285.37
$ 2,380.97 $ 2,445.98 $ 2,512.75 $ 2,581.35 $ 2,651.82

$ 7,328.76 $ 7,329.79 $ 7,330.81 $ 7,331.84 $ 7,332.87

$ 18,888.82 $ 19,441.35 $ 20,010.04 $ 20,595.36 $ 21,197.81

$ 10,988.00 $ 11,287.97 $ 11,596.13 $ 11,912.71 $ 12,237.93

CAGR (’10–’15)
17.8% 3.33%
14.0% 2.66%
35.9% 6.33%
45.1% 7.73%

Revenue / (C. Assets − C. Liab.)

Revenue / PPE
Capital Exp. / Revenue 3.7%
Revenue / Total Assets

C. Assets / C. Liab.
Cash & Mkt. Sec. / Curr. Liab.
Total Debt / Total St. Eq.
Op. Income / Interest Exp.

EBIT / Revenue
Net Income / Revenue
(N. Inc. + Int. Exp.) / T. Assets
Net Income / Tot. St. Eq.

and CofC = 8%.

In Millions Formula
Tax Expense Operating Income -Interest Expense - Net Income
EBIT
Effective Tax Rate Tax Expense/(EBIT - Interest Expense)

NOPAT EBIT*(1-Effective Tax Rate)

Capital Expenditure
Net Operating Working Capital Operating Assets - Operating Liabilities
Fixed Assets
Invested Capital Net Working Operating Capital + Fisxed Assets
Gross Investment Change in Net Working Operating Capital + Capital Expenditure

ROIC Aggregate NOPAT/Invested Capital

ROIC Current Change in NOPAT/ Gross Investment

Market Capitalization Stock Price * Shares Outstanding

Market Value of Debt
Cash and Cash Equivelents
Enterprise Value Market Capitalization + Total Debt - Cash and Cash Equivelents

EV/NOPAT Enterprise Value/NOPAT

P/E Price/Earnings

Depreciation (10%) Fixed Assets * 0.1

Gross Cash Flows NOPAT + Depreciation
Change in Net Operating Working Capital
Gross investment in Invested Capital Change in Net Working Operating Capital + Capital Expenditure

Free Cash Flows Gross Cash Flows - Gross investment in Invested Capital

YOY Growth Rates

Revenue
Weighted average revenue growth
 2010 2011 2012 2013 2014 2015 2016
$ 1,949.00 $ 1,928.00 $ 143.00 $ 2,282.00 $ 1,583.00 $ 2,483.00 $ 1,964.60
$ 5,641.00 $ 6,080.00 $ 1,343.00 $ 7,034.00 $ 4,968.00 $ 7,668.00 $ 6,180.43
36.86% 33.64% 15.05% 34.30% 34.30% 33.89% 34%

$ 3,561.50 $ 4,034.95 $ 1,140.84 $ 4,621.68 $ 3,263.92 $ 5,069.44 $ 4,091.40

$ 1,389.00 $ 2,005.00 $ 2,153.00 $ 2,065.00 $ 2,328.00 $ 2,379.00 $ 2,380.97

$ 215.00 $ (268.00) $ (2,279.00) $ (629.00) $ (1,960.00) $ (3,562.00) $ (3,659.24)
$ 17,387.00 $ 17,621.00 $ 17,894.00 $ 17,961.00 $ 18,281.00 $ 18,352.00 $ 18,888.82
$ 17,602.00 $ 17,353.00 $ 15,615.00 $ 17,332.00 $ 16,321.00 $ 14,790.00 $ 15,229.58
Expenditure $ 1,522.00 $ 142.00 $ 3,715.00 $ 997.00 $ 777.00 $ 2,283.73

20.23% 23.25% 7.31% 26.67% 20.00% 34.28% 26.86%

31% -2038% 94% -136% 232% -43%

$ 70,264.69 $ 97,093.92 $ 100,608.85 $ 85,259.78

$ 12,870.00 $ 10,872.00 $ 10,779.00 $ 14,334.00
$ 7,924.00 $ 5,245.00 $ 3,283.00 $ 4,726.00
Equivelents $ 75,210.69 $ 102,720.92 $ 108,104.85 $ 94,867.78

$ 65.93 $ 22.23 $ 33.12 $ 18.71

$ 88.50 $ 67.10 $ 27.60 $ 22.00

$ 1,738.70 $ 1,762.10 $ 1,789.40 $ 1,796.10 $ 1,828.10 $ 1,835.20 $ 1,888.88

$ 5,300.20 $ 5,797.05 $ 2,930.24 $ 6,417.78 $ 5,092.02 $ 6,904.64 $ 5,980.28
$ (483.00) $ (2,011.00) $ 1,650.00 $ (1,331.00) $ (1,602.00) $ (97.24)
Expenditure $ 1,522.00 $ 142.00 $ 3,715.00 $ 997.00 $ 777.00 $ 2,283.73

$ 4,275.05 $ 2,788.24 $ 2,702.78 $ 4,095.02 $ 6,127.64 $ 3,696.55

Average
7.20% 1.90% 2.40% 5.00% 0.20% 3.34%
5% 10% 15% 35% 35% 2.7300%
 2017 2018 2019 2020
$ 2,018.23 $ 2,073.33 $ 2,129.93 $ 2,188.08
$ 6,349.16 $ 6,522.49 $ 6,700.55 $ 6,883.48
34% 34% 34% 34%

$ 4,203.09 $ 4,317.83 $ 4,435.71 $ 4,556.81

$ 2,445.98 $ 2,512.75 $ 2,581.35 $ 2,651.82

$ (3,958.19) $ (4,265.32) $ (4,580.87) $ (4,905.06)
$ 19,441.35 $ 20,010.04 $ 20,595.36 $ 21,197.81
$ 15,483.16 $ 15,744.72 $ 16,014.49 $ 16,292.75
$ 2,147.03 $ 2,205.62 $ 2,265.80 $ 2,327.63

27.15% 27.42% 27.70% 27.97%

5% 5% 5% 5%

$ 1,944.14 $ 2,001.00 $ 2,059.54 $ 2,119.78

$ 6,147.23 $ 6,318.84 $ 6,495.25 $ 6,676.59
$ (298.95) $ (307.13) $ (315.55) $ (324.19)
$ 2,147.03 $ 2,205.62 $ 2,265.80 $ 2,327.63

$ 4,000.20 $ 4,113.22 $ 4,229.45 $ 4,348.96

 Exhibit 3
The Battle for Value, 2016: FedEx Corp. versus United Parcel Service, Inc.
Operating Results for FedEx Corp. (period ending May 31, in millions)

2010 2011 2012 2013 2014 2015 Average

Revenue 34,734 39,304 42,680 44,287 45,567 47,453
Operating income (EBIT) 1,998 2,378 3,186 4,434 3,815 1,867
Interest expense 79 86 52 82 160 235
Net income 1,184 1,452 2,032 2,716 2,324 1,050
Capital expenditures 2,816 3,434 4,007 3,375 3,533 4,347

Cash and marketable securities 1,952 2,328 2,843 4,917 2,908 3,763
Accounts receivable 4,163 4,581 4,704 5,044 5,460 5,719
Total current assets 7,284 8,285 9,056 11,274 9,683 10,941
Net prop., plant, and equip. 14,385 15,543 17,248 18,484 19,550 20,875
Total assets 24,902 27,385 29,903 33,567 33,070 37,069

Current liabilities 4,645 4,882 5,374 5,750 5,312 5,957

Total debt 1,930 1,685 1,667 2,990 4,737 7,268
Total stockholders’ equity 13,811 15,220 14,727 17,398 15,277 14,993

2010 2011 2012 2013 2014 2015

Growth CAGR (’10–’15)
Revenue growth 13.16% 8.59% 3.77% 2.89% 4.14% 36.62%
Total asset growth 9.97% 9.19% 12.25% -1.48% 12.09% 48.86%
Operating income growth 19.02% 33.98% 39.17% -13.96% -51.06% -6.56%
Net income growth 22.64% 39.94% 33.66% -14.43% -54.82% -11.32%

Asset Efficiency Ratios

Working capital turnover 13.16 11.55 11.59 8.02 10.42 9.52 Revenue / (C. Assets – C. Liab.)
PPE turnover 2.41 2.53 2.47 2.40 2.33 2.27 Revenue / PPE
Capital expenditure % 8.1% 8.7% 9.4% 7.6% 7.8% 9.2% Capital Exp. / Revenue
Total asset turnover 1.39 1.44 1.43 1.32 1.38 1.28 Revenue / Total Assets

Liquidity and Leverage Ratios

Current ratio 1.57 1.70 1.69 1.96 1.82 1.84 C. Assets / C. Liab.
Cash ratio 0.42 0.48 0.53 0.86 0.55 0.63 Cash & Mkt. Sec. / Curr. Liab.
Total debt/equity ratio 0.1 0.1 0.1 0.2 0.3 0.5 Total Debt / Total St. Eq.
Times interest earned 25.3 27.7 61.3 54.1 23.8 7.9 Op. Income / Interest Exp.

Profitability Analysis
Operating margin 5.75% 6.05% 7.46% 10.01% 8.37% 3.93% EBIT / Revenue
Net profit margin 3.41% 3.69% 4.76% 6.13% 5.10% 2.21% Net Income / Revenue
Return on assets 5.07% 5.62% 6.97% 8.34% 7.51% 3.47% (N. Inc. + Int. Exp.) / T. Assets
Return on equity 8.57% 9.54% 13.80% 15.61% 15.21% 7.00% Net Income / Tot. St. Eq.
Economic profit (millions) -$60 $74 $600 $1,029 $688 -$661
* Economic Profit (EVA) is calculated as EBIT * (1 − t) − CofC × (T. Debt + T. St. Eq), where t = 40% and CofC = 8%.

Data sources: Capital IQ, Morningstar, and company annual reports.

 Rate Used 2016 2017 2018 2019 2020
4.54% $ 49,608.79 $ 51,862.52 $ 54,218.63 $ 56,681.78 $ 59,256.84
6.19% $ 3,068.95 $ 3,208.37 $ 3,354.13 $ 3,506.51 $ 3,665.81 $ 900.29
26.75 $ 114.74 $ 119.96 $ 125.40 $ 131.10 $ 137.06
4.14% $ 2,053.92 $ 2,147.23 $ 2,244.78 $ 2,346.76 $ 2,453.37
8.44% $ 4,186.35 $ 4,376.54 $ 4,575.36 $ 4,783.22 $ 5,000.53

4.54% $ 5,978.75 $ 6,250.29 $ 6,534.17 $ 6,830.93 $ 7,141.18

6.97% $ 22,330.02 $ 23,886.45 $ 25,551.37 $ 27,332.34 $ 29,237.45

4.54% 6,227.56 6,510.40 6,806.09 7,115.21 7,438.37

GR (’10–’15)
1.36618299072954

venue / (C. Assets – C. Liab.)

pital Exp. / Revenue

venue / Total Assets

Assets / C. Liab.
sh & Mkt. Sec. / Curr. Liab.
al Debt / Total St. Eq.
. Income / Interest Exp.

t Income / Revenue
Inc. + Int. Exp.) / T. Assets
t Income / Tot. St. Eq.

0% and CofC = 8%.

 Formula
Tax Expense Operating Income -Interest Expense - Net Income
EBIT
Effective Tax Rate Tax Expense/(EBIT - Interest Expense)

NOPAT EBIT*(1-Effective Tax Rate)

Capital Expenditure
Net Operating Working Capital Operating Assets - Operating Liabilities
Fixed Assets
Invested Capital Net Working Operating Capital + Fisxed Assets
Gross Investment Change in Net Working Operating Capital + Capital Expenditure

ROIC Aggregate NOPAT/Invested Capital

ROIC Current Change in NOPAT/ Gross Investment

Market Capitalization Stock Price * Shares Outstanding

Market Value of Debt
Cash and Cash Equivelents
Enterprise Value Market Capitalization + Total Debt - Cash and Cash Equivelents

EV/NOPAT Enterprise Value/NOPAT

P/E Price/Earnings

Depreciation (10%) Fixed Assets * 0.1

Gross Cash Flows NOPAT + Depreciation
Change in Net Operating Working Capital
Gross investment in Invested Capital Change in Net Working Operating Capital + Capital Expenditure

Free Cash Flows Gross Cash Flows - Gross investment in Invested Capital

YOY Growth Rates

Revenue
 2010 2011 2012 2013 2014 2015 2016
$ 735.00 $ 840.00 $ 1,102.00 $ 1,636.00 $ 1,331.00 $ 582.00 $ 900.29
$ 1,998.00 $ 2,378.00 $ 3,186.00 $ 4,434.00 $ 3,815.00 $ 1,867.00 $ 3,068.95
38.30% 36.65% 35.16% 37.59% 36.42% 35.66% 30.47%

$ 1,232.74 $ 1,506.48 $ 2,065.72 $ 2,767.17 $ 2,425.73 $ 1,201.19 $ 2,133.70

$ 2,816.00 $ 3,434.00 $ 4,007.00 $ 3,375.00 $ 3,533.00 $ 4,347.00 $ 4,186.35

$ (482.00) $ (301.00) $ (670.00) $ (706.00) $ 148.00 $ (238.00) $ (248.81)
$ 14,385.00 $ 15,543.00 $ 17,248.00 $ 18,484.00 $ 19,550.00 $ 20,875.00 $ 22,330.02
$ 13,903.00 $ 15,242.00 $ 16,578.00 $ 17,778.00 $ 19,698.00 $ 20,637.00 $ 22,081.21
Expenditure $ 3,615.00 $ 3,638.00 $ 3,339.00 $ 4,387.00 $ 3,961.00 $ 4,175.54

8.87% 9.88% 12.46% 15.57% 12.31% 5.82% 9.66%

8% 15% 21% -8% -31% 22%

$ 29,075.24 $ 45,718.86 $ 49,840.42 $ 42,074.78

$ 1,667.00 $ 2,990.00 $ 4,737.00 $ 7,268.00
$ 2,843.00 $ 4,917.00 $ 2,908.00 $ 3,763.00
Equivelents $ 27,899.24 $ 43,791.86 $ 51,669.42 $ 45,579.78

$ 13.51 $ 15.83 $ 21.30 $ 37.95

$ 14.70 $ 27.80 $ 22.00 $ 37.90

$ 1,438.50 $ 1,554.30 $ 1,724.80 $ 1,848.40 $ 1,955.00 $ 2,087.50 $ 2,233.00

$ 2,671.24 $ 3,060.78 $ 3,790.52 $ 4,615.57 $ 4,380.73 $ 3,288.69 $ 4,366.70
$ 181.00 $ (369.00) $ (36.00) $ 854.00 $ (386.00) $ (10.81)
Expenditure $ 3,615.00 $ 3,638.00 $ 3,339.00 $ 4,387.00 $ 3,961.00 $ 4,175.54

$ (554.22) $ 152.52 $ 1,276.57 $ (6.27) $ (672.31) $ 191.16

Average
13.16% 8.59% 3.77% 2.89% 4.14% 6.51%
5% 10% 15% 35% 35% 4.5430%
 2017 2018 2019 2020
$ 941.19 $ 983.94 $ 1,028.64 $ 1,075.38
$ 3,208.37 $ 3,354.13 $ 3,506.51 $ 3,665.81
30.47% 30.47% 30.47% 30.47%

$ 2,230.63 $ 2,331.97 $ 2,437.91 $ 2,548.66

$ 4,376.54 $ 4,575.36 $ 4,783.22 $ 5,000.53

$ (260.11) $ (271.92) $ (284.27) $ (297.19)
$ 23,886.45 $ 25,551.37 $ 27,332.34 $ 29,237.45
$ 23,626.34 $ 25,279.45 $ 27,048.07 $ 28,940.26
$ 4,365.24 $ 4,563.55 $ 4,770.87 $ 4,987.61

9.44% 9.22% 9.01% 8.81%

2% 2% 2% 2%

$ 2,388.65 $ 2,555.14 $ 2,733.23 $ 2,923.74

$ 4,619.28 $ 4,887.11 $ 5,171.14 $ 5,472.41
$ (11.30) $ (11.81) $ (12.35) $ (12.91)
$ 4,365.24 $ 4,563.55 $ 4,770.87 $ 4,987.61

$ 254.04 $ 323.55 $ 400.27 $ 484.79

 Exhibit 5
The Battle for Value, 2016: FedEx Corp. versus United Parcel Service, Inc.
Financial and Market Performance

FedEx 2012 2013 2014 2015

Stock price, Dec. 31 close 91.72 143.77 173.66 148.99
Dividends declared in dollars per share 0.52 0.56 0.6 0.8
Basic EPS (period ending May 31) 6.44 8.61 7.56 3.7
Common shares outstanding (millions) 317.0 318.0 287.0 282.4
Price/earnings 14.7 27.8 22.0 37.9
Annual return 57.4% 21.2% -13.7%
Cumul. annual return 57.4% 78.6% 64.8%

UPS 2012 2013 2014 2015

Stock price, Dec. 31 close 73.73 105.08 111.17 96.23
Dividends declared in dollars per share 2.28 2.48 2.68 2.92
Basic EPS (period ending May 31) 0.84 4.65 3.31 5.38
Common shares outstanding (millions) 953.0 924.0 905.0 886.0
Price/earnings 88.5 67.1 27.6 22.0
Annual return 45.9% 8.3% -10.8%
Cumul. annual return 45.9% 54.2% 43.4%

Standard & Poor’s 500 Index 2012 2013 2014 2015

Index level, Dec. 31 close 1,426.19 1,848.36 2,058.90 2,043.94
Annual return 29.6% 11.4% -0.7%
Cumul. annual return 29.6% 41.0% 40.3%

Data sources: Google Finance, Morningstar, Value Line, and Capital IQ.
 Figure 1
The Battle for Value, 2016: FedEx Corp. versus United Parcel Service, Inc
U.S. Package Market Revenue Share (%) by Segment—2015

Revenue Share—2015
UPS 48.6%
FedEx 33.4% Ground Revenue Express Revenue
USPS 18.0%
USPS

Ground Revenue Share—2015 USPS

UPS 49.8%
FedEx 25.9%
USPS 24.3% UPS UPS

FedEx
Express Revenue Share—2015 FedEx
UPS 45.7%
FedEx 50.9%
USPS 3.4%

Data source: Brandon Oglenski, Eric Morgan, and Van Kegel, “North American Transportation and Shipping Equity
d Parcel Service, Inc.
gment—2015

ress Revenue
USPS

UPS

n and Shipping Equity Research,” Barclays, May 2, 2016: 31.