| Document Information | |
| 9 Months Ended
Feb. 28, 2010 | |
| Document Information | |
| Document Type | 10-Q |
| Document Period End Date | 2010-02-28 |
| Amendment Flag | false |
| Entity Information (USD $) | |||
| In Billions, except Share data | 9 Months Ended
Feb. 28, 2010 | Mar. 15, 2010
| Nov. 28, 2008
|
| Entity Information | |||
| Entity Registrant Name | FedEx Corporation | ||
| Entity Central Index Key | 0001048911 | ||
| Current Fiscal Year End Date | --05-31 | ||
| Entity Well-known Seasoned Issuer | Yes | ||
| Entity Voluntary Filers | Yes | ||
| Entity Current Reporting Status | Yes | ||
| Entity Filer Category | Large Accelerated Filer | ||
| Entity Public Float | 20.5 | ||
| Entity Common Stock, Shares Outstanding | 313,190,004 |
| CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | ||
| In Millions | Feb. 28, 2010
| May. 31, 2009
|
| CURRENT ASSETS | ||
| Cash and cash equivalents | $1,549 | $2,292 |
| Receivables, less allowances of $163 and $196 | 3,937 | 3,391 |
| Spare parts, supplies and fuel, less allowances of $168 and $175 | 380 | 367 |
| Deferred income taxes | 517 | 511 |
| Prepaid expenses and other | 300 | 555 |
| Total current assets | 6,683 | 7,116 |
| PROPERTY AND EQUIPMENT, AT COST | 30,675 | 29,260 |
| Less accumulated depreciation and amortization | 16,672 | 15,843 |
| Net property and equipment | 14,003 | 13,417 |
| OTHER LONG-TERM ASSETS | ||
| Goodwill | 2,229 | 2,229 |
| Pension assets | 833 | 311 |
| Other assets | 1,128 | 1,171 |
| Total other long-term assets | 4,190 | 3,711 |
| ASSETS | 24,876 | 24,244 |
| CURRENT LIABILITIES | ||
| Current portion of long-term debt | 283 | 653 |
| Accrued salaries and employee benefits | 959 | 861 |
| Accounts payable | 1,489 | 1,372 |
| Accrued expenses | 1,641 | 1,638 |
| Total current liabilities | 4,372 | 4,524 |
| LONG-TERM DEBT, LESS CURRENT PORTION | 1,668 | 1,930 |
| OTHER LONG-TERM LIABILITIES | ||
| Deferred income taxes | 1,384 | 1,071 |
| Pension, postretirement healthcare and other benefit obligations | 931 | 934 |
| Self-insurance accruals | 949 | 904 |
| Deferred lease obligations | 768 | 802 |
| Deferred gains, principally related to aircraft transactions | 274 | 289 |
| Other liabilities | 150 | 164 |
| Total other long-term liabilities | 4,456 | 4,164 |
| COMMON STOCKHOLDERS' INVESTMENT | ||
| Common stock, $0.10 par value; 800 million shares authorized; 313 million shares issued as of February 28, 2010 and 312 million shares issued as of May 31, 2009 | 31 | 31 |
| Additional paid-in capital | 2,168 | 2,053 |
| Retained earnings | 13,546 | 12,919 |
| Accumulated other comprehensive loss | (1,362) | (1,373) |
| Treasury stock, at cost | (3) | (4) |
| Total common stockholders' investment | 14,380 | 13,626 |
| LIABILITIES AND STOCKHOLDERS' INVESTMENT | $24,876 | $24,244 |
| Parenthetical Information for Condensed Consolidated Balance Sheets (USD $) | ||
| In Millions | Feb. 28, 2010
| May. 31, 2009
|
| Allowances for receivables | $163 | $196 |
| Allowances for spare parts, supplies and fuel | $168 | $175 |
| Common stock, par value | 0.1 | 0.1 |
| Common stock, shares authorized | 800 | 800 |
| Common stock, shares issued | 313 | 312 |
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME (USD $) | ||||
| In Millions, except Per Share data | 3 Months Ended
Feb. 28, 2010 | 3 Months Ended
Feb. 28, 2009 | 9 Months Ended
Feb. 28, 2010 | 9 Months Ended
Feb. 28, 2009 |
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||
| REVENUES | $8,701 | $8,137 | $25,306 | $27,645 |
| OPERATING EXPENSES: | ||||
| Salaries and employee benefits | 3,549 | 3,414 | 10,350 | 10,502 |
| Purchased transportation | 1,220 | 1,060 | 3,429 | 3,519 |
| Rentals and landing fees | 593 | 609 | 1,764 | 1,838 |
| Depreciation and amortization | 488 | 496 | 1,470 | 1,479 |
| Fuel | 810 | 636 | 2,220 | 3,270 |
| Maintenance and repairs | 404 | 449 | 1,215 | 1,507 |
| Other | 1,221 | 1,291 | 3,556 | 3,934 |
| OPERATING EXPENSES | 8,285 | 7,955 | 24,004 | 26,049 |
| OPERATING INCOME | 416 | 182 | 1,302 | 1,596 |
| OTHER INCOME (EXPENSE): | ||||
| Interest, net | (19) | (19) | (52) | (38) |
| Other, net | (16) | (4) | (28) | (7) |
| OTHER INCOME (EXPENSE) | (35) | (23) | (80) | (45) |
| INCOME BEFORE INCOME TAXES | 381 | 159 | 1,222 | 1,551 |
| PROVISION FOR INCOME TAXES | 142 | 62 | 457 | 577 |
| NET INCOME | $239 | $97 | $765 | $974 |
| EARNINGS PER COMMON SHARE: | ||||
| Basic | 0.76 | 0.31 | 2.44 | 3.13 |
| Diluted | 0.76 | 0.31 | 2.43 | 3.12 |
| DIVIDENDS DECLARED PER COMMON SHARE | 0.11 | 0.11 | 0.44 | 0.44 |
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | ||
| In Millions | 9 Months Ended
Feb. 28, 2010 | 9 Months Ended
Feb. 28, 2009 |
| Operating Activities: | ||
| Net income | $765 | $974 |
| Adjustments to reconcile net income to cash provided by operating activities: | ||
| Depreciation and amortization | 1,470 | 1,479 |
| Provision for uncollectible accounts | 100 | 128 |
| Stock-based compensation | 80 | 78 |
| Deferred income taxes and other noncash items | 183 | 71 |
| Changes in assets and liabilities: | ||
| Receivables | (645) | 550 |
| Other assets | 238 | 104 |
| Accounts payable and other liabilities | 288 | (794) |
| Other, net | (571) | (369) |
| Cash provided by operating activities | 1,908 | 2,221 |
| Investing Activities: | ||
| Capital expenditures | (1,981) | (1,987) |
| Proceeds from asset dispositions and other | 31 | 35 |
| Cash used in investing activities | (1,950) | (1,952) |
| Financing Activities: | ||
| Proceeds from debt issuance | 0 | 1,000 |
| Principal payments on debt | (632) | (1) |
| Proceeds from stock issuances | 36 | 10 |
| Excess tax benefit on the exercise of stock options | 9 | 1 |
| Dividends paid | (103) | (103) |
| Other, net | (16) | (7) |
| Cash (used in) provided by financing activities | (706) | 900 |
| Effect of exchange rate changes on cash | 5 | (35) |
| Net (decrease) increase in cash and cash equivalents | (743) | 1,134 |
| Cash and cash equivalents at beginning of period | 2,292 | 1,539 |
| Cash and cash equivalents at end of period | $1,549 | $2,673 |
| General | |
| 9 Months Ended
Feb. 28, 2010 | |
| General | |
| (1) General | (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 ("Annual Report") for the year ended May 31, 2009. Accordingly, significant accounting policies and other disclosures normally provided have been omitted since such items are disclosed therein. 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, 2010, the results of our operations for the three- and nine-month periods ended February 28, 2010 and 2009 and cash flows for the nine-month periods ended February 28, 2010 and 2009. Operating results for the three- and nine-month periods ended February 28, 2010 are not necessarily indicative of the results that may be expected for the year ending May 31, 2010. Except as otherwise specified, references to years indicate our fiscal year ending May 31, 2010 or ended May 31 of the year referenced and comparisons are to the corresponding period of the prior year. GOODWILL. Goodwill is reviewed at least annually for impairment by comparing the fair value of each reporting unit with its carrying value (including attributable goodwill). Fair value for our reporting units is determined incorporating market participant considerations and management's assumptions on revenue growth rates, operating margins, expected capital expenditures and discount rates. 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. Weak global economic conditions, despite a recent modest improvement, have had a negative impact on our overall earnings and the profitability of our reporting units during 2010. However, we do not believe this indicates that a reevaluation of the goodwill of our reporting units is required as of February 28, 2010. There is an increased risk, however, that we could record a noncash impairment charge relating to goodwill during the fourth quarter of 2010 in connection with our annual impairment tests at our FedEx Freight segment, where economic recovery has lagged our package businesses due to excess capacity in the less-than-truckload ("LTL") freight market. We currently have $621 million of goodwill attributable to our FedEx Freight segment. NEW ACCOUNTING GUIDANCE. New accounting rules and disclosure requirements can significantly impact our reported results and the comparability of our financial statements. We believe the following new accounting guidance is relevant to the readers of our financial statements. On June 1, 2008, we adopted the authoritative guidance issued by the Financial Accounting Standards Board ("FASB") on fair value measurements, which provides a common definition of |
| Stock Based Compensation | |
| 9 Months Ended
Feb. 28, 2010 | |
| Stock-Based Compensation Abstract | |
| (2) Stock-Based Compensation | (2) 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 are set forth in our Annual Report. We use the Black-Scholes option pricing model to calculate the fair value of stock options. The value of restricted stock awards is based on the price of the stock on the grant date. We recognize stock-based compensation expense on a straight-line basis over the requisite service period of the award in the "Salaries and employee benefits" caption of our condensed consolidated income statement. Our total stock-based compensation expense for the periods ended February 28 was as follows (in millions): Three Months Ended Nine Months Ended 2010 2009 2010 2009 Stock-based compensation expense $ 22 $ 22 $ 80 $ 78 The following table summarizes the stock option shares granted and corresponding weighted-average Black-Scholes value for the nine-month periods ended February 28: 2010 2009 Stock options granted 4,886,320 2,144,784 Weighted-average Black- Scholes value $ 20.22 $ 24.06 The stock options granted during the nine-month period ended February 28, 2010 were primarily in connection with our principal annual stock option grant during the first quarter of 2010. See our Annual Report for a discussion of our methodology for developing each of the assumptions used in the valuation model. The following table presents the key weighted-average assumptions used in the valuation calculations for the options granted during the nine-month periods ended February 28: 2010 2009 Expected lives 5.7 years 5.5 years Expected volatility 32% 23% Risk-free interest rate 3.25% 3.33% Dividend yield 0.749% 0.472% |
| Comprehensive Income | |
| 9 Months Ended
Feb. 28, 2010 | |
| Comprehensive Income | |
| (3) Comprehensive Income | (3) Comprehensive Income The following table provides a reconciliation of net income reported in our financial statements to comprehensive income for the periods ended February 28 (in millions): Three Months Ended 2010 2009 Net income $ 239 $ 97 Other comprehensive income: Foreign currency translation adjustments, net of tax benefit of $5 in 2010 and $1 in 2009 (28) (3) Amortization of unrealized pension actuarial gains/losses, net of tax benefit of $7 in 2009 - (11) Comprehensive income $ 211 $ 83 Nine Months Ended 2010 2009 Net income $ 765 $ 974 Other comprehensive income: Foreign currency translation adjustments, net of tax of $6 in 2010 and benefit of $36 in 2009 9 (182) Amortization of unrealized pension actuarial gains/losses, net of tax of $1 in 2010 and benefit of $20 in 2009 2 (33) Comprehensive income $ 776 $ 759 |
| Financing Arrangements | |
| 9 Months Ended
Feb. 28, 2010 | |
| Financing Arrangements | |
| (4) Financing Arrangements | (4) Financing Arrangements We have a shelf registration statement filed with the SEC that allows us to sell, in one or more future offerings, any combination of our unsecured debt securities and common stock. During the first quarter of 2010, we repaid our $500 million 5.50% notes that matured on August 15, 2009 using cash from operations and a portion of the proceeds of our January 2009 $1 billion senior unsecured debt offering. 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 revolving credit agreement expires in July 2012. The agreement contains a financial covenant, which requires us to maintain a leverage ratio of adjusted debt (long-term debt, including the current portion of such debt, plus six times our last four fiscal quarters' rentals and landing fees) to capital (adjusted debt plus total common stockholders' investment) that does not exceed 0.7 to 1.0. Our leverage ratio of adjusted debt to capital was 0.5 at February 28, 2010. We are in compliance with this and all other restrictive covenants of our revolving credit agreement and do not expect the covenants to affect our operations, including our liquidity or borrowing capacity. As of February 28, 2010, no commercial paper was outstanding and the entire $1 billion under the revolving credit facility was available for future borrowings. Long-term debt, exclusive of capital leases, had carrying values of $1.8 billion compared with an estimated fair value of $2.1 billion at February 28, 2010, and $2.3 billion compared with an estimated fair value of $2.4 billion at May 31, 2009. The estimated fair values were determined based on quoted market prices or on the current rates offered for debt with similar terms and maturities. |
| Computation of Earnings Per Share | |
| 9 Months Ended
Feb. 28, 2010 | |
| Computation of Earnings Per Share | |
| (5) Computation of Earnings Per Share | (5) 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 2010 2009 2010 2009 Basic earnings per common share: Net earnings allocable to common shares $ 238 $ 96 $ 763 $ 972 Weighted-average common shares 312 311 312 311 Basic earnings per common share $ 0.76 $ 0.31 $ 2.44 $ 3.13 Diluted earnings per common share: Net earnings allocable to common shares $ 238 $ 96 $ 763 $ 972 Weighted-average common shares 312 311 312 311 Dilutive effect of share-based awards 3 1 2 1 Weighted-average diluted shares 315 312 314 312 Diluted earnings per common share $ 0.76 $ 0.31 $ 2.43 $ 3.12 Anti-dilutive options excluded from diluted earnings per common share 9.7 13.9 12.3 11.6 |
| Retirement Plans | |
| 9 Months Ended
Feb. 28, 2010 | |
| Retirement Plans | |
| (6) Retirement Plans | (6) 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 2010 2009 2010 2009 U.S. domestic and international pension plans $ 75 $ 42 $ 226 $ 131 U.S. domestic and international defined contribution plans 41 51 86 210 Postretirement healthcare plans 11 14 32 43 $ 127 $ 107 $ 344 $ 384 The three- and nine-month periods ended February 28, 2010 reflect higher pension costs in 2010 due to the negative impact of market conditions on our pension plan assets at our May 31, 2009 measurement date. This increase in pension costs was offset by lower expenses for our 401(k) plans due to the temporary suspension of the company-matching contributions, as described in our Annual Report. Those matching contributions were reinstated generally at 50% of their normal levels on January 1, 2010. Net periodic benefit cost of the pension and postretirement healthcare plans for the periods ended February 28 was as follows (in millions): Three Months Ended Nine Months Ended 2010 2009 2010 2009 Pension Plans: Service cost $ 105 $ 125 $ 313 $ 376 Interest cost 206 200 617 601 Expected return on plan assets (239) (265) (716) (796) Recognized actuarial losses (gains) and other 3 (18) 12 (50) $ 75 $ 42 $ 226 $ 131 Postretirement Healthcare Plans: Service cost $ 6 $ 8 $ 18 $ 23 Interest cost 8 8 23 25 Recognized actuarial gains (3) (2) (9) (5) $ 11 $ 14 $ 32 $ 43 We made $731 million in contributions, including $495 million in tax-deductible voluntary contributions, to our tax-qualified U.S. domestic pension plans ("U.S. Retirement Plans") during the first nine months of 2010. In March 2010, we made an additional contribution of $117 million to our U.S. Retirement Plans. During the first nine months of 2009, we made $483 million in tax-deductible voluntary contributions to our U.S. Retirement Plans. In 2009, we contributed an aggregate of $1.1 billion to these plans. Our U.S. Retirement Plans have ample funds to meet expected benefit payments. During 2010, our pension plan asset performance has been strong and we do not expect a significant increase in funding requirements in 2011. However, due to an anticipated lower discount rate, a substantial year-over-year increase in our pension expense in 2011 is likely based on current conditions. |
| Business Segment Information | |
| 9 Months Ended
Feb. 28, 2010 | |
| Business Segment Information | |
| (7) Business Segment Information | (7) 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 Federal Express Corporation ("FedEx Express"), the world's largest express transportation company; FedEx Ground Package System, Inc. ("FedEx Ground"), a leading provider of small-package ground delivery services; and the FedEx Freight LTL Group, which comprises the FedEx Freight and FedEx National LTL businesses of FedEx Freight Corporation, a leading U.S. provider of LTL freight services. Our reportable segments include the following businesses: FedEx Express Segment FedEx Express (express transportation) FedEx Trade Networks (global trade services) FedEx SupplyChain Systems (logistics services) FedEx Ground Segment FedEx Ground (small-package ground delivery) FedEx SmartPost (small-parcel consolidator) FedEx Freight Segment FedEx Freight LTL Group: FedEx Freight (regional LTL freight transportation) FedEx National LTL (long-haul LTL freight transportation) FedEx Custom Critical (time-critical transportation) FedEx Services Segment FedEx Services (sales, marketing and information technology functions) FedEx Office and Print Services, Inc. (FedEx Office) (document and business services and package acceptance) FedEx Customer Information Services (FCIS) (customer service, billings and collections) 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 pursue synergies from the combination of these functions. The FedEx Services segment includes: FedEx Services, which provides sales, marketing and information technology support to our other companies; FCIS, which is responsible for customer service, billings and collections for U.S. customers of our major business units; and FedEx Office, which provides an array of document and business services and retail access to our customers for our package transportation businesses. Effective September 1, 2009, FedEx SupplyChain Systems, formerly included in the FedEx Services reporting segment, was realigned to become part of the FedEx Express reporting segment. Prior year amounts have not been reclassified to conform to the current year segment presentation, as the financial results are materially comparable. The FedEx Services segment provides direct and indirect support to our transportation businesses and accordingly 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 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 S |
| Commitments | |
| 9 Months Ended
Feb. 28, 2010 | |
| Commitments | |
| (8) Commitments | (8) Commitments As of February 28, 2010, our purchase commitments under various contracts for the remainder of 2010 and annually thereafter were as follows (in millions): Aircraft(1) Aircraft-Related(2) Other(3) Total 2010 (remainder) $ 53 $ 100 $ 220 $ 373 2011 789 47 230 1,066 2012 585 10 167 762 2013 365 19 65 449 2014 466 - 14 480 Thereafter 1,923 - 126 2,049 (1) Our obligation to purchase 15 of these aircraft (Boeing 777 Freighters, or B777Fs) is conditioned upon there being no event that causes FedEx Express or its employees not to be covered by the Railway Labor Act of 1926, as amended. (2) Primarily aircraft modifications. (3) Primarily vehicles, facilities, advertising and promotions contracts, and for the remainder of 2010, a total of $117 million of quarterly contributions to our U.S. domestic pension plans. The amounts reflected in the table above for purchase commitments represent noncancelable agreements to purchase goods or services.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 $499 million in deposits and progress payments as of February 28, 2010 (a decrease of $45 million from May 31, 2009) on aircraft purchases and other planned aircraft-related transactions. These deposits are classified in the "Other assets" caption of our condensed consolidated balance sheets. In addition to our commitment to purchase B777Fs, our aircraft purchase commitments include the Boeing 757 ("B757") in passenger configuration, which will require additional costs to modify for cargo transport. Aircraft and aircraft-related contracts are subject to price escalations. The following table is a summary of the number and type of aircraft we are committed to purchase as of February 28, 2010, with the year of expected delivery: B757 B777F(1) Total 2010 (remainder) - 1 1 2011 18 4 22 2012 8 4 12 2013 - 2 2 2014 - 3 3 Thereafter - 13 13 Total 26 27 53 (1) Our obligation to purchase 15 of these aircraft is conditioned upon there being no event that causes FedEx Express or its employees not to be covered by the Railway Labor Act of 1926, as amended. A summary of future minimum lease payments under capital leases and noncancelable operating leases with an initial or remaining term in excess of one year at February 28, 2010 is as follows (in millions): Operating Leases Aircraft Total Capital and Related Facilities Operating Leases Equipment and Other Leases 2010 (remainder) $ 24 $ 105 $ 326 $ 431 2011 20 526 1,220 1,746 2012 8 504 1,052 1,556 2013 119 499 903 1,402 2014 1 473 767 1,240 Thereafter 16 2,458 5,192 7,650 Total |
| Contingencies | |
| 9 Months Ended
Feb. 28, 2010 | |
| Contingencies | |
| (9) Contingencies | (9) 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. The following describes the wage-and-hour matters that have been certified as class actions. In February 2008, Wiegele v. FedEx Ground was certified as a class action by a California federal court, and in April 2008, the U.S. Court of Appeals for the Ninth Circuit denied our petition to review the class certification ruling. The certified class initially included FedEx Ground sort managers and dock service managers in California from May 10, 2002 to the present, but the court subsequently approved the dismissal of the sort managers, leaving only the dock service managers in the class. The plaintiffs allege that FedEx Ground has misclassified the managers as exempt from the overtime requirements of California wage-and-hour laws and is correspondingly liable for failing to pay them overtime compensation and provide them with rest and meal breaks. In September 2008, in Tidd v. Adecco USA, Kelly Services and FedEx Ground, a Massachusetts federal court conditionally certified a class limited to individuals who were employed by two temporary employment agencies and who worked as temporary pick-up-and-delivery drivers for FedEx Ground in the New England region within the past three years. Potential claimants must voluntarily "opt in" to the lawsuit in order to be considered part of the class. In addition, in the same opinion, the court granted summary judgment in favor of FedEx Ground with respect to the plaintiffs' claims for unpaid overtime wages. The court has since granted judgment in favor of the other two defendants with respect to the overtime claims. Accordingly, the conditionally certified class of plaintiffs is now limited to a claim of failure to pay regular wages due under the federal Fair Labor Standards Act. In April 2009, in Bibo v. FedEx Express, a California federal court granted class certification, certifying several subclasses of FedEx Express couriers in California from April 14, 2006 (the date of the settlement of the Foster class action) to the present. The plaintiffs allege that FedEx Express violated California wage-and-hour laws after the date of the Foster settlement. In particular, the plaintiffs allege, among other things, that they were forced to work "off the clock" and were not provided with required meal breaks or split-shift premiums. We asked the U.S. Court of Appeals for the Ninth Circuit to accept a discretionary appeal of the class certification order, but the court refused to accept it at this time. In September 2009, in Taylor v. FedEx Freight, a California state court granted class certification, certifying a class of all current and former drivers employed by FedEx Freight in California who performed line haul services since June 2003. The plaintiffs allege, among other things, that |
| Supplemental Cash Flow Information | |
| 9 Months Ended
Feb. 28, 2010 | |
| Supplemental Cash Flow Information | |
| (10) Supplemental Cash Flow Information | (10) Supplemental Cash Flow Information The following table presents supplemental cash flow information for the nine-month periods ended February 28 (in millions): 2010 2009 Cash payments for: Interest (net of capitalized interest) $ 101 $ 68 Income taxes $ 182 $ 464 Income tax refunds received (276) (6) Cash tax payments, net $ (94) $ 458 |
| Condensed Consolidating Financial Statements | |
| 9 Months Ended
Feb. 28, 2010 | |
| Condensed Consolidated Financial Statements | |
| (11) Condensed Consolidating Financial Statements | (11) 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. The guarantor subsidiaries, which are wholly owned by FedEx, guarantee $1.2 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" and "Non-Guarantor" 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. The internal reorganizations discussed in Note 7 had no significant impact on the assets or operations of the guarantor entities. 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, 2010 Guarantor Non-guarantor Parent Subsidiaries Subsidiaries Eliminations Consolidated ASSETS CURRENT ASSETS Cash and cash equivalents $ 922 $ 287 $ 396 $ (56) $ 1,549 Receivables, less allowances - 3,258 719 (40) 3,937 Spare parts, supplies, fuel, prepaid expenses and other, less allowances 2 628 50 - 680 Deferred income taxes - 489 28 - 517 Total current assets 924 4,662 1,193 (96) 6,683 PROPERTY AND EQUIPMENT, AT COST 23 28,555 2,097 - 30,675 Less accumulated depreciation and amortization 17 15,563 1,092 - 16,672 Net property and equipment 6 12,992 1,005 - 14,003 INTERCOMPANY RECEIVABLE - - 1,107 (1,107) - GOODWILL - 1,552 677 - 2,229 INVESTMENT IN SUBSIDIARIES 13,593 2,663 - (16,256) - PENSION ASSETS 833 - - - 833 OTHER ASSETS 888 983 111 (854) 1,128 $ 16,244 $ 22,852 $ 4,093 $ (18,313) $ 24,876 LIABILITIES AND STOCKHOLDERS' INVESTMENT CURRENT LIABILITIES Current portion of long-term debt $ 250 $ 33 $ - $ - $ 283 Accrued salaries and employee benefits 36 808 115 - 959 Accounts payable 37 1,137 411 (96) 1,489 Accrued expenses 21 1,437 183 - 1,641 Total current liabilities 344 3,415 709 (96) 4,372 LONG-TERM DEBT, LESS CURRENT PORTION 1,000 668 - - 1,668 INTERCOMPANY PAYABLE 247 860 - (1,107) - OTHER LONG-TERM LIABILITIES Deferred income taxes - 2,198 40 (854) 1,384 Other liabilities 273 2,693 106 - 3,072 Total other long-term liabilities 273 4,891 146 (854) 4,456 STOCKHOLDERS' INVESTMENT 14,380 13,018 3,238 (16,256) 14,380 $ 16,244 $ 2 |
