Condensed Consolidating Financial Statements

6 Months Ended

Nov. 30, 2019

Condensed Financial Information Of Parent Company Only Disclosure [Abstract]

Condensed Consolidating Financial Statements

(12) 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 $18.6 billion of our public 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, 2019

			Guarantor		Non-guarantor
	Parent		Subsidiaries		Subsidiaries		Eliminations			Consolidated
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	394	$	236	$	1,410	$	(9	)	$	2,031
Receivables, less allowances		348		5,698		3,762		(99	)		9,709
Spare parts, supplies, fuel, prepaid expenses and other,    less allowances		128		932		398		—			1,458
Total current assets		870		6,866		5,570		(108	)		13,198
PROPERTY AND EQUIPMENT, AT COST		27		58,286		4,402		—			62,715
Less accumulated depreciation and amortization		17		28,139		2,151		—			30,307
Net property and equipment		10		30,147		2,251		—			32,408
INTERCOMPANY RECEIVABLE		3,181		—		—		(3,181	)		—
OPERATING LEASE RIGHT-OF-USE ASSETS, NET		39		11,844		2,214		—			14,097
GOODWILL		—		1,587		5,274		—			6,861
INVESTMENT IN SUBSIDIARIES		35,086		4,982		—		(40,068	)		—
OTHER ASSETS		953		1,141		1,820		(524	)		3,390
	$	40,139	$	56,567	$	17,129	$	(43,881	)	$	69,954
LIABILITIES AND COMMON STOCKHOLDERS’ INVESTMENT
CURRENT LIABILITIES
Short-term borrowings	$	150	$	—	$	—	$	—		$	150
Current portion of long-term debt		—		5		11		—			16
Accrued salaries and employee benefits		87		1,058		487		—			1,632
Accounts payable		192		1,505		1,692		(106	)		3,283
Operating lease liabilities		4		1,476		448		—			1,928
Accrued expenses		509		2,023		1,008		(2	)		3,538
Total current liabilities		942		6,067		3,646		(108	)		10,547
LONG-TERM DEBT, LESS CURRENT PORTION		18,362		286		43		—			18,691
INTERCOMPANY PAYABLE		—		58		3,123		(3,181	)		—
OTHER LONG-TERM LIABILITIES
Deferred income taxes		—		3,013		583		(524	)		3,072
Operating lease liabilities		37		10,577		1,818		—			12,432
Other liabilities		2,139		3,439		975		—			6,553
Total other long-term liabilities		2,176		17,029		3,376		(524	)		22,057
COMMON STOCKHOLDERS’ INVESTMENT		18,659		33,127		6,941		(40,068	)		18,659
	$	40,139	$	56,567	$	17,129	$	(43,881	)	$	69,954

CONDENSED CONSOLIDATING BALANCE SHEETS

May 31, 2019

			Guarantor			Non-guarantor
	Parent		Subsidiaries			Subsidiaries		Eliminations			Consolidated
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	826	$	158		$	1,381	$	(46	)	$	2,319
Receivables, less allowances		56		5,603			3,684		(227	)		9,116
Spare parts, supplies, fuel, prepaid expenses and other,    less allowances		366		953			332		—			1,651
Total current assets		1,248		6,714			5,397		(273	)		13,086
PROPERTY AND EQUIPMENT, AT COST		25		55,341			4,145		—			59,511
Less accumulated depreciation and amortization		17		27,066			1,999		—			29,082
Net property and equipment		8		28,275			2,146		—			30,429
INTERCOMPANY RECEIVABLE		2,877		(405	)		—		(2,472	)		—
GOODWILL		—		1,589			5,295		—			6,884
INVESTMENT IN SUBSIDIARIES		33,725		5,449			—		(39,174	)		—
OTHER ASSETS		995		1,811			1,789		(591	)		4,004
	$	38,853	$	43,433		$	14,627	$	(42,510	)	$	54,403
LIABILITIES AND COMMON STOCKHOLDERS’ INVESTMENT
CURRENT LIABILITIES
Current portion of long-term debt	$	959	$	2		$	3	$	—		$	964
Accrued salaries and employee benefits		143		1,100			498		—			1,741
Accounts payable		16		1,469			1,808		(263	)		3,030
Accrued expenses		521		1,853			914		(10	)		3,278
Total current liabilities		1,639		4,424			3,223		(273	)		9,013
LONG-TERM DEBT, LESS CURRENT PORTION		16,322		287			8		—			16,617
INTERCOMPANY PAYABLE		—		—			2,472		(2,472	)		—
OTHER LONG-TERM LIABILITIES
Deferred income taxes		—		2,832			580		(591	)		2,821
Other liabilities		3,135		3,965			1,095		—			8,195
Total other long-term liabilities		3,135		6,797			1,675		(591	)		11,016
COMMON STOCKHOLDERS’ INVESTMENT		17,757		31,925			7,249		(39,174	)		17,757
	$	38,853	$	43,433		$	14,627	$	(42,510	)	$	54,403

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

Three Months Ended November 30, 2019

	Parent			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
REVENUES	$	—		$	12,307		$	5,110		$	(93	)	$	17,324
OPERATING EXPENSES:
Salaries and employee benefits		22			4,823			1,390			—			6,235
Purchased transportation		—			2,865			1,505			(42	)		4,328
Rentals and landing fees		2			715			209			(2	)		924
Depreciation and amortization		—			785			116			—			901
Fuel		—			846			44			—			890
Maintenance and repairs		—			685			89			—			774
Asset impairment charges		—			66			—			—			66
Intercompany charges, net		(77	)		(622	)		699			—			—
Other		53			1,752			896			(49	)		2,652
		—			11,915			4,948			(93	)		16,770
OPERATING INCOME		—			392			162			—			554
OTHER (EXPENSE) INCOME:
Equity in earnings of subsidiaries		560			26			—			(586	)		—
Interest, net		(164	)		8			5			—			(151	)
Other retirement plans income		—			163			5			—			168
Intercompany charges, net		161			(117	)		(44	)		—			—
Other, net		3			12			(14	)		—			1
INCOME (LOSS) BEFORE INCOME TAXES		560			484			114			(586	)		572
Provision for income taxes (benefit)		—			81			(69	)		—			12
NET INCOME (LOSS)	$	560		$	403		$	183		$	(586	)	$	560
COMPREHENSIVE INCOME (LOSS)	$	540		$	380		$	278		$	(586	)	$	612

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

Three Months Ended November 30, 2018

	Parent			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
REVENUES	$	—		$	12,874		$	5,050		$	(100	)	$	17,824
OPERATING EXPENSES:
Salaries and employee benefits		34			4,797			1,429			—			6,260
Purchased transportation		—			2,650			1,731			(35	)		4,346
Rentals and landing fees		1			640			196			(1	)		836
Depreciation and amortization		—			709			119			—			828
Fuel		—			968			84			—			1,052
Maintenance and repairs		—			655			96			—			751
Intercompany charges, net		(152	)		(149	)		301			—			—
Other		117			1,675			863			(72	)		2,583
		—			11,945			4,819			(108	)		16,656
OPERATING INCOME		—			929			231			8			1,168
OTHER (EXPENSE) INCOME:
Equity in earnings of subsidiaries		935			48			—			(983	)		—
Interest, net		(169	)		50			(12	)		—			(131	)
Other retirement plans income		—			155			3			—			158
Intercompany charges, net		162			(124	)		(38	)		—			—
Other, net		7			(9	)		(7	)		(9	)		(18	)
INCOME (LOSS) BEFORE INCOME TAXES		935			1,049			177			(984	)		1,177
Provision for income taxes		—			217			25			—			242
NET INCOME (LOSS)	$	935		$	832		$	152		$	(984	)	$	935
COMPREHENSIVE INCOME (LOSS)	$	912		$	819		$	133		$	(983	)	$	881

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

Six Months Ended November 30, 2019

	Parent			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
REVENUES	$	—		$	24,549		$	10,002		$	(179	)	$	34,372
OPERATING EXPENSES:
Salaries and employee benefits		42			9,507			2,773			—			12,322
Purchased transportation		—			5,408			3,025			(77	)		8,356
Rentals and landing fees		4			1,426			417			(3	)		1,844
Depreciation and amortization		—			1,547			233			—			1,780
Fuel		—			1,658			102			—			1,760
Maintenance and repairs		1			1,368			173			—			1,542
Asset impairment charges		—			66			—			—			66
Intercompany charges, net		(156	)		(1,103	)		1,259			—			—
Other		109			3,419			1,742			(99	)		5,171
		—			23,296			9,724			(179	)		32,841
OPERATING INCOME		—			1,253			278			—			1,531
OTHER INCOME (EXPENSE):
Equity in earnings of subsidiaries		1,305			43			—			(1,348	)		—
Interest, net		(315	)		20			7			—			(288	)
Other retirement plans income		—			325			11			—			336
Intercompany charges, net		325			(237	)		(88	)		—			—
Other, net		(10	)		28			(29	)		—			(11	)
INCOME (LOSS) BEFORE INCOME TAXES		1,305			1,432			179			(1,348	)		1,568
Provision for income taxes (benefit)		—			306			(43	)		—			263
NET INCOME (LOSS)	$	1,305		$	1,126		$	222		$	(1,348	)	$	1,305
COMPREHENSIVE INCOME (LOSS)	$	1,270		$	1,085		$	246		$	(1,348	)	$	1,253

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

Six Months Ended November 30, 2018

	Parent			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
REVENUES	$	—		$	25,241		$	9,837		$	(202	)	$	34,876
OPERATING EXPENSES:
Salaries and employee benefits		82			9,580			2,858			—			12,520
Purchased transportation		—			5,032			3,364			(83	)		8,313
Rentals and landing fees		3			1,271			388			(3	)		1,659
Depreciation and amortization		—			1,402			234			—			1,636
Fuel		—			1,871			167			—			2,038
Maintenance and repairs		1			1,301			184			—			1,486
Intercompany charges, net		(264	)		(375	)		639			—			—
Other		178			3,221			1,711			(125	)		4,985
		—			23,303			9,545			(211	)		32,637
OPERATING INCOME		—			1,938			292			9			2,239
OTHER INCOME (EXPENSE):
Equity in earnings of subsidiaries		1,770			128			—			(1,898	)		—
Interest, net		(330	)		97			(25	)		—			(258	)
Other retirement plans income		—			311			5			—			316
Intercompany charges, net		304			(246	)		(58	)		—			—
Other, net		26			(51	)		16			(10	)		(19	)
INCOME (LOSS) BEFORE INCOME TAXES		1,770			2,177			230			(1,899	)		2,278
Provision for income taxes		—			432			76			—			508
NET INCOME (LOSS)	$	1,770		$	1,745		$	154		$	(1,899	)	$	1,770
COMPREHENSIVE INCOME (LOSS)	$	1,730		$	1,833		$	(133	)	$	(1,899	)	$	1,531

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(UNAUDITED)

Six Months Ended November 30, 2019

	Parent			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
CASH PROVIDED BY (USED IN) OPERATING    ACTIVITIES	$	(1,759	)	$	3,595		$	201		$	37		$	2,074
INVESTING ACTIVITIES
Capital expenditures		(2	)		(3,007	)		(257	)		—			(3,266	)
Proceeds from asset dispositions and other		(12	)		9			7						4
CASH USED IN INVESTING    ACTIVITIES		(14	)		(2,998	)		(250	)		—			(3,262	)
FINANCING ACTIVITIES
Proceeds from short-term borrowings, net		150			—			—			—			150
Net transfers from (to) Parent		700			(853	)		153			—			—
Payment on loan between subsidiaries		(326	)		—			326			—			—
Intercompany dividends		—			398			(398	)		—			—
Proceeds from debt issuances		2,093			—			—			—			2,093
Principal payments on debt		(956	)		(62	)		(3	)		—			(1,021	)
Proceeds from stock issuances		26			—			—			—			26
Dividends paid		(339	)		—			—			—			(339	)
Purchase of treasury stock		(3	)		—			—			—			(3	)
Other, net		(4	)		—			(1	)		—			(5	)
CASH (USED IN) PROVIDED BY FINANCING    ACTIVITIES		1,341			(517	)		77			—			901
Effect of exchange rate changes on cash		—			(2	)		1			—			(1	)
Net (decrease) increase in cash and cash equivalents		(432	)		78			29			37			(288	)
Cash and cash equivalents at beginning of period		826			158			1,381			(46	)		2,319
Cash and cash equivalents at end of period	$	394		$	236		$	1,410		$	(9	)	$	2,031

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(UNAUDITED)

Six Months Ended November 30, 2018

	Parent			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
CASH PROVIDED BY (USED IN) OPERATING    ACTIVITIES	$	262		$	1,631		$	333		$	(47	)	$	2,179
INVESTING ACTIVITIES
Capital expenditures		(2	)		(2,337	)		(295	)		—			(2,634	)
Proceeds from asset dispositions and other		(45	)		83			15			—			53
CASH USED IN INVESTING ACTIVITIES		(47	)		(2,254	)		(280	)		—			(2,581	)
FINANCING ACTIVITIES
Proceeds from short-term borrowings, net		248			—			—			—			248
Net transfers from (to) Parent		(344	)		350			(6	)		—			—
Intercompany dividends		—			113			(113	)		—			—
Proceeds from debt issuances		1,233			—			—			—			1,233
Principal payments on debt		(750	)		(29	)		(6	)		—			(785	)
Proceeds from stock issuances		45			—			—			—			45
Dividends paid		(173	)		—			—			—			(173	)
Purchase of treasury stock		(1,271	)		—			—			—			(1,271	)
Other, net		—			128			(127	)		—			1
CASH (USED IN) PROVIDED BY FINANCING    ACTIVITIES		(1,012	)		562			(252	)		—			(702	)
Effect of exchange rate changes on cash		—			(9	)		(29	)		—			(38	)
Net decrease in cash and cash equivalents		(797	)		(70	)		(228	)		(47	)		(1,142	)
Cash and cash equivalents at beginning of period		1,485			257			1,538			(15	)		3,265
Cash and cash equivalents at end of period	$	688		$	187		$	1,310		$	(62	)	$	2,123