Condensed Consolidating Financial Statements

3 Months Ended

Aug. 31, 2017

Condensed Financial Information Of Parent Company Only Disclosure [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 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 $15.0 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)

August 31, 2017

			Guarantor		Non-guarantor
	Parent		Subsidiaries		Subsidiaries		Eliminations			Consolidated
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	1,681	$	343	$	1,519	$	(40	)	$	3,503
Receivables, less allowances		2		4,852		3,241		(89	)		8,006
Spare parts, supplies, fuel, prepaid expenses and other,    less allowances		41		931		241		—			1,213
Total current assets		1,724		6,126		5,001		(129	)		12,722
PROPERTY AND EQUIPMENT, AT COST		22		47,939		3,579		—			51,540
Less accumulated depreciation and amortization		18		23,761		1,526		—			25,305
Net property and equipment		4		24,178		2,053		—			26,235
INTERCOMPANY RECEIVABLE		1,578		2,744		—		(4,322	)		—
GOODWILL		—		1,570		5,812		—			7,382
INVESTMENT IN SUBSIDIARIES		28,433		2,672		—		(31,105	)		—
OTHER ASSETS		3,492		1,403		1,308		(3,192	)		3,011
	$	35,231	$	38,693	$	14,174	$	(38,748	)	$	49,350
LIABILITIES AND STOCKHOLDERS’ INVESTMENT
CURRENT LIABILITIES
Current portion of long-term debt	$	—	$	6	$	13	$	—		$	19
Accrued salaries and employee benefits		50		1,116		490		—			1,656
Accounts payable		149		1,429		1,489		(129	)		2,938
Accrued expenses		891		1,520		766		—			3,177
Total current liabilities		1,090		4,071		2,758		(129	)		7,790
LONG-TERM DEBT, LESS CURRENT PORTION		14,872		244		21		—			15,137
INTERCOMPANY PAYABLE		—		—		4,322		(4,322	)		—
OTHER LONG-TERM LIABILITIES
Deferred income taxes		—		5,753		169		(3,192	)		2,730
Other liabilities		2,651		3,526		898		—			7,075
Total other long-term liabilities		2,651		9,279		1,067		(3,192	)		9,805
STOCKHOLDERS’ INVESTMENT		16,618		25,099		6,006		(31,105	)		16,618
	$	35,231	$	38,693	$	14,174	$	(38,748	)	$	49,350

CONDENSED CONSOLIDATING BALANCE SHEETS

May 31, 2017

			Guarantor		Non-guarantor
	Parent		Subsidiaries		Subsidiaries		Eliminations			Consolidated
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	1,884	$	325	$	1,807	$	(47	)	$	3,969
Receivables, less allowances		3		4,729		2,928		(61	)		7,599
Spare parts, supplies, fuel, prepaid expenses and other,    less allowances		25		787		248		—			1,060
Total current assets		1,912		5,841		4,983		(108	)		12,628
PROPERTY AND EQUIPMENT, AT COST		22		47,201		3,403		—			50,626
Less accumulated depreciation and amortization		18		23,211		1,416		—			24,645
Net property and equipment		4		23,990		1,987		—			25,981
INTERCOMPANY RECEIVABLE		1,521		2,607		—		(4,128	)		—
GOODWILL		—		1,571		5,583		—			7,154
INVESTMENT IN SUBSIDIARIES		27,712		2,636		—		(30,348	)		—
OTHER ASSETS		3,494		1,271		1,249		(3,225	)		2,789
	$	34,643	$	37,916	$	13,802	$	(37,809	)	$	48,552
LIABILITIES AND STOCKHOLDERS’ INVESTMENT
CURRENT LIABILITIES
Current portion of long-term debt	$	—	$	9	$	13	$	—		$	22
Accrued salaries and employee benefits		72		1,335		507		—			1,914
Accounts payable		10		1,411		1,439		(108	)		2,752
Accrued expenses		991		1,522		717		—			3,230
Total current liabilities		1,073		4,277		2,676		(108	)		7,918
LONG-TERM DEBT, LESS CURRENT PORTION		14,641		244		24		—			14,909
INTERCOMPANY PAYABLE		—		—		4,128		(4,128	)		—
OTHER LONG-TERM LIABILITIES
Deferred income taxes		—		5,472		238		(3,225	)		2,485
Other liabilities		2,856		3,448		863		—			7,167
Total other long-term liabilities		2,856		8,920		1,101		(3,225	)		9,652
STOCKHOLDERS’ INVESTMENT		16,073		24,475		5,873		(30,348	)		16,073
	$	34,643	$	37,916	$	13,802	$	(37,809	)	$	48,552

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

Three Months Ended August 31, 2017

	Parent			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
REVENUES	$	—		$	11,567		$	3,854		$	(124	)	$	15,297
OPERATING EXPENSES:
Salaries and employee benefits		38			4,227			1,253			—			5,518
Purchased transportation		—			2,063			1,464			(82	)		3,445
Rentals and landing fees		1			627			191			(1	)		818
Depreciation and amortization		—			639			112			—			751
Fuel		—			637			66			—			703
Maintenance and repairs		—			602			73			—			675
Intercompany charges, net		(116	)		113			3			—			—
Other		77			1,476			758			(41	)		2,270
		—			10,384			3,920			(124	)		14,180
OPERATING INCOME		—			1,183			(66	)		—			1,117
OTHER INCOME (EXPENSE):
Equity in earnings of subsidiaries		596			(3	)		—			(593	)		—
Interest, net		(129	)		13			2			—			(114	)
Intercompany charges, net		131			(71	)		(60	)		—			—
Other, net		(2	)		(8	)		(11	)		—			(21	)
INCOME BEFORE INCOME TAXES		596			1,114			(135	)		(593	)		982
Provision for income taxes		—			399			(13	)		—			386
NET INCOME	$	596		$	715		$	(122	)	$	(593	)	$	596
COMPREHENSIVE INCOME	$	578		$	719		$	(18	)	$	(593	)	$	686

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

Three Months Ended August 31, 2016

	Parent			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
REVENUES	$	—		$	10,903		$	3,830		$	(70	)	$	14,663
OPERATING EXPENSES:
Salaries and employee benefits		36			4,106			1,169			—			5,311
Purchased transportation		—			1,917			1,351			(28	)		3,240
Rentals and landing fees		1			620			170			(1	)		790
Depreciation and amortization		—			611			128			—			739
Fuel		—			578			72			—			650
Maintenance and repairs		—			526			72			—			598
Intercompany charges, net		(90	)		62			28			—			—
Other		53			1,373			686			(41	)		2,071
		—			9,793			3,676			(70	)		13,399
OPERATING INCOME		—			1,110			154			—			1,264
OTHER INCOME (EXPENSE):
Equity in earnings of subsidiaries		715			56			—			(771	)		—
Interest, net		(122	)		9			—			—			(113	)
Intercompany charges, net		122			(81	)		(41	)		—			—
Other, net		—			(5	)		(4	)		—			(9	)
INCOME BEFORE INCOME TAXES		715			1,089			109			(771	)		1,142
Provision for income taxes		—			380			47			—			427
NET INCOME	$	715		$	709		$	62		$	(771	)	$	715
COMPREHENSIVE INCOME	$	696		$	702		$	81		$	(771	)	$	708

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(UNAUDITED)

Three Months Ended August 31, 2017

	Parent			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
CASH PROVIDED BY (USED IN) OPERATING    ACTIVITIES	$	(878	)	$	1,717		$	(256	)	$	7		$	590
INVESTING ACTIVITIES
Capital expenditures		—			(985	)		(59	)		—			(1,044	)
Proceeds from asset dispositions and other		—			6			—			—			6
CASH USED IN INVESTING    ACTIVITIES		—			(979	)		(59	)		—			(1,038	)
FINANCING ACTIVITIES
Net transfers from (to) Parent		744			(735	)		(9	)		—			—
Principal payments on debt		—			(8	)		(4	)		—			(12	)
Proceeds from stock issuances		150			—			—			—			150
Dividends paid		(134	)		—			—			—			(134	)
Purchase of treasury stock		(86	)		—			—			—			(86	)
Other, net		3			—			(9	)		—			(6	)
CASH (USED IN) PROVIDED BY FINANCING    ACTIVITIES		677			(743	)		(22	)		—			(88	)
Effect of exchange rate changes on cash		(2	)		23			49			—			70
Net (decrease) increase in cash and cash equivalents		(203	)		18			(288	)		7			(466	)
Cash and cash equivalents at beginning of period		1,884			325			1,807			(47	)		3,969
Cash and cash equivalents at end of period	$	1,681		$	343		$	1,519		$	(40	)	$	3,503

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(UNAUDITED)

Three Months Ended August 31, 2016

	Parent			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
CASH PROVIDED BY (USED IN) OPERATING    ACTIVITIES	$	(342	)	$	1,119		$	188		$	6		$	971
INVESTING ACTIVITIES
Capital expenditures		—			(1,111	)		(104	)		—			(1,215	)
Proceeds from asset dispositions and other		—			9			—			—			9
CASH USED IN INVESTING ACTIVITIES		—			(1,102	)		(104	)		—			(1,206	)
FINANCING ACTIVITIES
Net transfers from (to) Parent		(35	)		(2	)		37			—			—
Payment on loan between subsidiaries		(2	)		(14	)		16			—			—
Principal payments on debt		—			(7	)		(5	)		—			(12	)
Proceeds from stock issuances		40			—			—			—			40
Dividends paid		(106	)		—			—			—			(106	)
Purchase of treasury stock		(222	)		—			—			—			(222	)
Other, net		1			(1	)		(13	)		—			(13	)
CASH (USED IN) PROVIDED BY FINANCING    ACTIVITIES		(324	)		(24	)		35			—			(313	)
Effect of exchange rate changes on cash		—			8			(5	)		—			3
Net (decrease) increase in cash and cash equivalents		(666	)		1			114			6			(545	)
Cash and cash equivalents at beginning of period		1,974			326			1,277			(43	)		3,534
Cash and cash equivalents at end of period	$	1,308		$	327		$	1,391		$	(37	)	$	2,989