Condensed Consolidating Financial Statements

3 Months Ended

Aug. 31, 2014

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 $4.5 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)
August 31, 2014
						Guarantor		Non-guarantor
				Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
ASSETS
CURRENT ASSETS
	Cash and cash equivalents			$	1,305	$	430	$	821	$	(140)	$	2,416
	Receivables, less allowances				-		4,341		1,177		(31)		5,487
	Spare parts, supplies, fuel, prepaid expenses
		and other, less allowances			34		750		66		-		850
	Deferred income taxes				-		474		23		-		497
			Total current assets		1,339		5,995		2,087		(171)		9,250
PROPERTY AND EQUIPMENT, AT COST					28		38,489		2,349		-		40,866
	Less accumulated depreciation and amortization				22		20,182		1,238		-		21,442
			Net property and equipment		6		18,307		1,111		-		19,424
INTERCOMPANY RECEIVABLE					-		1,177		1,409		(2,586)		-
GOODWILL					-		1,552		1,223		-		2,775
INVESTMENT IN SUBSIDIARIES					21,352		3,679		-		(25,031)		-
OTHER ASSETS					2,069		850		240		(2,021)		1,138
				$	24,766	$	31,560	$	6,070	$	(29,809)	$	32,587
LIABILITIES AND STOCKHOLDERS' INVESTMENT
CURRENT LIABILITIES
	Current portion of long-term debt			$	-	$	1	$	-	$	-	$	1
	Accrued salaries and employee benefits				32		915		156		-		1,103
	Accounts payable				63		1,398		683		(171)		1,973
	Accrued expenses				502		1,384		190		-		2,076
		Total current liabilities			597		3,698		1,029		(171)		5,153
LONG-TERM DEBT, LESS CURRENT PORTION					4,486		249		-		-		4,735
INTERCOMPANY PAYABLE					2,586		-		-		(2,586)		-
OTHER LONG-TERM LIABILITIES
	Deferred income taxes				-		4,042		86		(2,021)		2,107
	Other liabilities				1,976		3,238		257		-		5,471
		Total other long-term liabilities			1,976		7,280		343		(2,021)		7,578
STOCKHOLDERS' INVESTMENT					15,121		20,333		4,698		(25,031)		15,121
				$	24,766	$	31,560	$	6,070	$	(29,809)	$	32,587

CONDENSED CONSOLIDATING BALANCE SHEETS
May 31, 2014
						Guarantor		Non-guarantor
				Parent		Subsidiaries		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

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
Three Months Ended August 31, 2014
				Guarantor		Non-guarantor
		Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
REVENUES		$	-	$	9,769	$	2,004	$	(89)	$	11,684
OPERATING EXPENSES:
	Salaries and employee benefits		30		3,606		553		-		4,189
	Purchased transportation		-		1,386		711		(43)		2,054
	Rentals and landing fees		1		572		88		(1)		660
	Depreciation and amortization		-		595		56		-		651
	Fuel		-		1,095		25		-		1,120
	Maintenance and repairs		-		522		34		-		556
	Intercompany charges, net		(95)		2		93		-		-
	Other		64		1,165		283		(45)		1,467
			-		8,943		1,843		(89)		10,697
OPERATING INCOME			-		826		161		-		987
OTHER INCOME (EXPENSE):
	Equity in earnings of subsidiaries		606		98		-		(704)		-
	Interest, net		(53)		4		1		-		(48)
	Intercompany charges, net		54		(59)		5		-		-
	Other, net		(1)		(3)		2		-		(2)
INCOME BEFORE INCOME TAXES			606		866		169		(704)		937
	Provision for income taxes		-		269		62		-		331
NET INCOME		$	606	$	597	$	107	$	(704)	$	606
COMPREHENSIVE INCOME		$	634	$	594	$	82	$	(704)	$	606
CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
Three Months Ended August 31, 2013
				Guarantor		Non-guarantor
		Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
REVENUES		$	-	$	9,228	$	1,878	$	(82)	$	11,024
OPERATING EXPENSES:
	Salaries and employee benefits		31		3,514		532		-		4,077
	Purchased transportation		-		1,242		673		(36)		1,879
	Rentals and landing fees		1		558		82		(1)		640
	Depreciation and amortization		-		589		50		-		639
	Fuel		-		1,081		23		-		1,104
	Maintenance and repairs		-		449		31		-		480
	Intercompany charges, net		(61)		(6)		67		-		-
	Other		29		1,133		293		(45)		1,410
			-		8,560		1,751		(82)		10,229
OPERATING INCOME			-		668		127		-		795
OTHER INCOME (EXPENSE):
	Equity in earnings of subsidiaries		489		110		-		(599)		-
	Interest, net		(34)		5		2		-		(27)
	Intercompany charges, net		35		(41)		6		-		-
	Other, net		(1)		(2)		1		-		(2)
INCOME BEFORE INCOME TAXES			489		740		136		(599)		766
	Provision for income taxes		-		232		45		-		277
NET INCOME		$	489	$	508	$	91	$	(599)	$	489
COMPREHENSIVE INCOME		$	528	$	507	$	16	$	(599)	$	452

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended August 31, 2014
				Guarantor		Non-guarantor
		Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		$	(67)	$	934	$	105	$	10	$	982
INVESTING ACTIVITIES
	Capital expenditures		(1)		(688)		(31)		-		(720)
	Proceeds from asset dispositions and other		-		7		(3)		-		4
CASH USED IN INVESTING ACTIVITIES			(1)		(681)		(34)		-		(716)
FINANCING ACTIVITIES
	Net transfers from (to) Parent		358		(366)		8		-		-
	Payment on loan between subsidiaries		-		103		(103)		-		-
	Intercompany dividends		-		2		(2)		-		-
	Proceeds from stock issuances		97		-		-		-		97
	Excess tax benefit on the exercise of stock options		10		-		-		-		10
	Dividends paid		(57)		-		-		-		(57)
	Purchase of treasury stock		(791)		-		-		-		(791)
	Other, net		-		(1)		1		-		-
CASH USED IN FINANCING ACTIVITIES			(383)		(262)		(96)		-		(741)
Effect of exchange rate changes on cash			-		(2)		(15)		-		(17)
Net (decrease) increase in cash and cash equivalents			(451)		(11)		(40)		10		(492)
Cash and cash equivalents at beginning of period			1,756		441		861		(150)		2,908
Cash and cash equivalents at end of period		$	1,305	$	430	$	821	$	(140)	$	2,416
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended August 31, 2013
				Guarantor		Non-guarantor
		Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		$	118	$	773	$	57	$	(19)	$	929
INVESTING ACTIVITIES
	Capital expenditures		-		(464)		(108)		-		(572)
	Proceeds from asset dispositions and other		-		10		-		-		10
CASH USED IN INVESTING ACTIVITIES			-		(454)		(108)		-		(562)
FINANCING ACTIVITIES
	Net transfers from (to) Parent		229		(261)		32		-		-
	Payment on loan between subsidiaries		-		(29)		29		-		-
	Intercompany dividends		-		2		(2)		-		-
	Proceeds from stock issuances		131		-		-		-		131
	Excess tax benefit on the exercise of stock options		14		-		-		-		14
	Dividends paid		(48)		-		-		-		(48)
	Purchase of treasury stock		(278)		-		-		-		(278)
CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES			48		(288)		59		-		(181)
Effect of exchange rate changes on cash			-		(5)		(2)		-		(7)
Net increase (decrease) in cash and cash equivalents			166		26		6		(19)		179
Cash and cash equivalents at beginning of period			3,892		405		717		(97)		4,917
Cash and cash equivalents at end of period		$	4,058	$	431	$	723	$	(116)	$	5,096