Condensed Consolidating Financial Statements

6 Months Ended

Nov. 30, 2011

Condensed Consolidating Financial Statements [Abstract]

Condensed Consolidating Financial Statements

(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 wholly owned by FedEx, guarantee $1.0 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. 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)
November 30, 2011
						Guarantor		Non-guarantor
				Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
ASSETS
CURRENT ASSETS
	Cash and cash equivalents			$	1,000	$	412	$	599	$	(115)	$	1,896
	Receivables, less allowances				96		3,775		1,010		(44)		4,837
	Spare parts, supplies, fuel, prepaid expenses
		and other, less allowances			58		703		46		-		807
	Deferred income taxes				-		609		19		-		628
			Total current assets		1,154		5,499		1,674		(159)		8,168
PROPERTY AND EQUIPMENT, AT COST					25		33,645		1,729		-		35,399
	Less accumulated depreciation and amortization				20		17,609		1,061		-		18,690
			Net property and equipment		5		16,036		668		-		16,709
INTERCOMPANY RECEIVABLE					-		-		1,250		(1,250)		-
GOODWILL					-		1,564		835		-		2,399
INVESTMENT IN SUBSIDIARIES					16,266		2,815		-		(19,081)		-
OTHER ASSETS					1,522		1,039		103		(1,488)		1,176
				$	18,947	$	26,953	$	4,530	$	(21,978)	$	28,452
LIABILITIES AND STOCKHOLDERS' INVESTMENT
CURRENT LIABILITIES
	Current portion of long-term debt			$	-	$	428	$	-	$	-	$	428
	Accrued salaries and employee benefits				64		1,172		154		-		1,390
	Accounts payable				40		1,337		428		(159)		1,646
	Accrued expenses				259		1,522		135		-		1,916
		Total current liabilities			363		4,459		717		(159)		5,380
LONG-TERM DEBT, LESS CURRENT PORTION					1,000		251		-		-		1,251
INTERCOMPANY PAYABLE					588		662		-		(1,250)		-
OTHER LONG-TERM LIABILITIES
	Deferred income taxes				-		3,037		6		(1,488)		1,555
	Other liabilities				1,079		3,120		150		-		4,349
		Total other long-term liabilities			1,079		6,157		156		(1,488)		5,904
STOCKHOLDERS' INVESTMENT					15,917		15,424		3,657		(19,081)		15,917
				$	18,947	$	26,953	$	4,530	$	(21,978)	$	28,452

CONDENSED CONSOLIDATING BALANCE SHEETS
May 31, 2011
						Guarantor		Non-guarantor
				Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
ASSETS
CURRENT ASSETS
	Cash and cash equivalents			$	1,589	$	279	$	546	$	(86)	$	2,328
	Receivables, less allowances				-		3,696		912		(27)		4,581
	Spare parts, supplies, fuel, prepaid expenses
		and other, less allowances			77		645		44		-		766
	Deferred income taxes				-		598		12		-		610
			Total current assets		1,666		5,218		1,514		(113)		8,285
PROPERTY AND EQUIPMENT, AT COST					24		31,916		1,746		-		33,686
	Less accumulated depreciation and amortization				18		17,071		1,054		-		18,143
			Net property and equipment		6		14,845		692		-		15,543
INTERCOMPANY RECEIVABLE					-		-		1,317		(1,317)		-
GOODWILL					-		1,564		762		-		2,326
INVESTMENT IN SUBSIDIARIES					15,404		2,705		-		(18,109)		-
OTHER ASSETS					1,652		1,039		63		(1,523)		1,231
				$	18,728	$	25,371	$	4,348	$	(21,062)	$	27,385
LIABILITIES AND STOCKHOLDERS' INVESTMENT
CURRENT LIABILITIES
	Current portion of long-term debt			$	-	$	18	$	-	$	-	$	18
	Accrued salaries and employee benefits				50		1,071		147		-		1,268
	Accounts payable				-		1,385		430		(113)		1,702
	Accrued expenses				198		1,563		133		-		1,894
		Total current liabilities			248		4,037		710		(113)		4,882
LONG-TERM DEBT, LESS CURRENT PORTION					1,000		667		-		-		1,667
INTERCOMPANY PAYABLE					1,095		222		-		(1,317)		-
OTHER LONG-TERM LIABILITIES
	Deferred income taxes				-		2,842		17		(1,523)		1,336
	Other liabilities				1,165		3,001		114		-		4,280
		Total other long-term liabilities			1,165		5,843		131		(1,523)		5,616
STOCKHOLDERS' INVESTMENT					15,220		14,602		3,507		(18,109)		15,220
				$	18,728	$	25,371	$	4,348	$	(21,062)	$	27,385

CONDENSED CONSOLIDATING STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended November 30, 2011
				Guarantor		Non-guarantor
		Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
REVENUES		$	-	$	9,001	$	1,660	$	(74)	$	10,587
OPERATING EXPENSES:
	Salaries and employee benefits		28		3,506		448		-		3,982
	Purchased transportation		-		1,122		482		(28)		1,576
	Rentals and landing fees		1		557		67		(2)		623
	Depreciation and amortization		1		480		37		-		518
	Fuel		-		1,181		19		-		1,200
	Maintenance and repairs		-		486		25		-		511
	Intercompany charges, net		(53)		(135)		188		-		-
	Other		23		1,156		262		(44)		1,397
			-		8,353		1,528		(74)		9,807
OPERATING INCOME			-		648		132		-		780
OTHER INCOME (EXPENSE):
	Equity in earnings of subsidiaries		497		80		-		(577)		-
	Interest, net		(19)		11		1		-		(7)
	Intercompany charges, net		21		(27)		6		-		-
	Other, net		(2)		(1)		7		-		4
INCOME BEFORE INCOME TAXES			497		711		146		(577)		777
	Provision for income taxes		-		202		78		-		280
NET INCOME		$	497	$	509	$	68	$	(577)	$	497
CONDENSED CONSOLIDATING STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended November 30, 2010
				Guarantor		Non-guarantor
		Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
REVENUES		$	-	$	8,002	$	1,718	$	(88)	$	9,632
OPERATING EXPENSES:
	Salaries and employee benefits		26		3,216		537		-		3,779
	Purchased transportation		-		970		447		(27)		1,390
	Rentals and landing fees		1		564		64		(1)		628
	Depreciation and amortization		-		443		59		-		502
	Fuel		-		891		47		-		938
	Maintenance and repairs		-		440		33		-		473
	Impairment and other charges		-		17		50		-		67
	Intercompany charges, net		(58)		(80)		138		-		-
	Other		31		1,137		278		(60)		1,386
			-		7,598		1,653		(88)		9,163
OPERATING INCOME			-		404		65		-		469
OTHER INCOME (EXPENSE):
	Equity in earnings of subsidiaries		283		23		-		(306)		-
	Interest, net		(23)		1		(1)		-		(23)
	Intercompany charges, net		28		(34)		6		-		-
	Other, net		(5)		(3)		(1)		-		(9)
INCOME BEFORE INCOME TAXES			283		391		69		(306)		437
	Provision for income taxes		-		138		16		-		154
NET INCOME		$	283	$	253	$	53	$	(306)	$	283

CONDENSED CONSOLIDATING STATEMENTS OF INCOME
(UNAUDITED)
Six Months Ended November 30, 2011
				Guarantor		Non-guarantor
		Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
REVENUES		$	-	$	18,008	$	3,244	$	(144)	$	21,108
OPERATING EXPENSES:
	Salaries and employee benefits		61		7,037		888		-		7,986
	Purchased transportation		-		2,202		946		(54)		3,094
	Rentals and landing fees		2		1,112		132		(3)		1,243
	Depreciation and amortization		1		951		75		-		1,027
	Fuel		-		2,405		39		-		2,444
	Maintenance and repairs		-		1,014		48		-		1,062
	Intercompany charges, net		(111)		(225)		336		-		-
	Other		47		2,281		494		(87)		2,735
			-		16,777		2,958		(144)		19,591
OPERATING INCOME			-		1,231		286		-		1,517
OTHER INCOME (EXPENSE):
	Equity in earnings of subsidiaries		961		151		-		(1,112)		-
	Interest, net		(39)		19		2		-		(18)
	Intercompany charges, net		42		(55)		13		-		-
	Other, net		(3)		(3)		8		-		2
INCOME BEFORE INCOME TAXES			961		1,343		309		(1,112)		1,501
	Provision for income taxes		-		417		123		-		540
NET INCOME		$	961	$	926	$	186	$	(1,112)	$	961
CONDENSED CONSOLIDATING STATEMENTS OF INCOME
(UNAUDITED)
Six Months Ended November 30, 2010
				Guarantor		Non-guarantor
		Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
REVENUES		$	-	$	15,895	$	3,364	$	(170)	$	19,089
OPERATING EXPENSES:
	Salaries and employee benefits		64		6,465		1,053		-		7,582
	Purchased transportation		-		1,890		879		(52)		2,717
	Rentals and landing fees		2		1,101		128		(2)		1,229
	Depreciation and amortization		-		875		106		-		981
	Fuel		-		1,732		93		-		1,825
	Maintenance and repairs		-		923		67		-		990
	Impairment and other charges		-		17		50		-		67
	Intercompany charges, net		(129)		(172)		301		-		-
	Other		63		2,123		531		(116)		2,601
			-		14,954		3,208		(170)		17,992
OPERATING INCOME			-		941		156		-		1,097
OTHER INCOME (EXPENSE):
	Equity in earnings of subsidiaries		663		49		-		(712)		-
	Interest, net		(47)		9		(3)		-		(41)
	Intercompany charges, net		55		(69)		14		-		-
	Other, net		(8)		(7)		(1)		-		(16)
INCOME BEFORE INCOME TAXES			663		923		166		(712)		1,040
	Provision for income taxes		-		334		43		-		377
NET INCOME		$	663	$	589	$	123	$	(712)	$	663

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended November 30, 2011
				Guarantor		Non-guarantor
		Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		$	135	$	1,814	$	248	$	(29)	$	2,168
INVESTING ACTIVITIES
	Capital expenditures		(1)		(2,161)		(55)		-		(2,217)
	Business acquisition, net of cash acquired		-		-		(114)		-		(114)
	Proceeds from asset dispositions and other		-		15		-		-		15
CASH USED IN INVESTING ACTIVITIES			(1)		(2,146)		(169)		-		(2,316)
FINANCING ACTIVITIES
	Net transfers from (to) Parent		(481)		484		(3)		-		-
	Intercompany dividends		-		21		(21)		-		-
	Principal payments on debt		-		(18)		-		-		(18)
	Proceeds from stock issuances		32		-		-		-		32
	Excess tax benefit on the exercise of stock options		5		-		-		-		5
	Dividends paid		(82)		-		-		-		(82)
	Purchase of treasury stock		(197)		-		-		-		(197)
	Other, net		-		(16)		16		-		-
CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES			(723)		471		(8)		-		(260)
Effect of exchange rate changes on cash			-		(6)		(18)		-		(24)
Net (decrease) increase in cash and cash equivalents			(589)		133		53		(29)		(432)
Cash and cash equivalents at beginning of period			1,589		279		546		(86)		2,328
Cash and cash equivalents at end of period		$	1,000	$	412	$	599	$	(115)	$	1,896
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended November 30, 2010
				Guarantor		Non-guarantor
		Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		$	(6)	$	1,755	$	259	$	3	$	2,011
INVESTING ACTIVITIES
	Capital expenditures		(1)		(1,968)		(90)		-		(2,059)
	Proceeds from asset dispositions and other		-		6		1		-		7
CASH USED IN INVESTING ACTIVITIES			(1)		(1,962)		(89)		-		(2,052)
FINANCING ACTIVITIES
	Net transfers from (to) Parent		(94)		100		(6)		-		-
	Payment on loan between subsidiaries		-		113		(113)		-		-
	Intercompany dividends		-		5		(5)		-		-
	Principal payments on debt		-		(12)		-		-		(12)
	Proceeds from stock issuances		25		-		-		-		25
	Excess tax benefit on the exercise of stock options		4		-		-		-		4
	Dividends paid		(76)		-		-		-		(76)
CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES			(141)		206		(124)		-		(59)
Effect of exchange rate changes on cash			-		11		14		-		25
Net (decrease) increase in cash and cash equivalents			(148)		10		60		3		(75)
Cash and cash equivalents at beginning of period			1,310		258		443		(59)		1,952
Cash and cash equivalents at end of period		$	1,162	$	268	$	503	$	(56)	$	1,877