Condensed Consolidating Financial Statements

6 Months Ended

Nov. 30, 2016

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 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 $13.4 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, 2016

						Guarantor		Non-guarantor
				Parent		Subsidiaries		Subsidiaries			Eliminations		Consolidated
ASSETS
CURRENT ASSETS
	Cash and cash equivalents			$	1,330	$	294	$	1,490	$		(55)	$	3,059
	Receivables, less allowances				1		4,753		2,872			(51)		7,575
	Spare parts, supplies, fuel, prepaid expenses
		and other, less allowances			370		822		226			-		1,418
			Total current assets		1,701		5,869		4,588			(106)		12,052

PROPERTY AND EQUIPMENT, AT COST					22		45,735		3,161			-		48,918
	Less accumulated depreciation and amortization				17		22,360		1,234			-		23,611
			Net property and equipment		5		23,375		1,927			-		25,307

INTERCOMPANY RECEIVABLE					2,359		1,602		-			(3,961)		-
GOODWILL					-		1,571		5,350			-		6,921
INVESTMENT IN SUBSIDIARIES					25,967		3,558		-			(29,525)		-
OTHER ASSETS					3,041		867		1,052			(2,892)		2,068

				$	33,073	$	36,842	$	12,917		$	(36,484)	$	46,348

LIABILITIES AND STOCKHOLDERS' INVESTMENT
CURRENT LIABILITIES
	Current portion of long-term debt			$	-	$	26	$	17		$	-	$	43
	Accrued salaries and employee benefits				43		1,247		475			-		1,765
	Accounts payable				112		1,441		1,507			(106)		2,954
	Accrued expenses				887		1,434		724			-		3,045
		Total current liabilities			1,042		4,148		2,723			(106)		7,807

LONG-TERM DEBT, LESS CURRENT PORTION					13,281		245		27			-		13,553
INTERCOMPANY PAYABLE					-		-		3,961			(3,961)		-
OTHER LONG-TERM LIABILITIES
	Deferred income taxes				-		4,792		248			(2,892)		2,148
	Other liabilities				4,219		3,501		589			-		8,309
		Total other long-term liabilities			4,219		8,293		837			(2,892)		10,457

STOCKHOLDERS' INVESTMENT					14,531		24,156		5,369			(29,525)		14,531

				$	33,073	$	36,842	$	12,917		$	(36,484)	$	46,348

CONDENSED CONSOLIDATING BALANCE SHEETS
May 31, 2016

						Guarantor		Non-guarantor
				Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
ASSETS
CURRENT ASSETS
	Cash and cash equivalents			$	1,974	$	326	$	1,277	$	(43)	$	3,534
	Receivables, less allowances				1		4,461		2,831		(41)		7,252
	Spare parts, supplies, fuel, prepaid expenses
		and other, less allowances			233		724		246		-		1,203
			Total current assets		2,208		5,511		4,354		(84)		11,989

PROPERTY AND EQUIPMENT, AT COST					22		43,760		3,236		-		47,018
	Less accumulated depreciation and amortization				17		21,566		1,151		-		22,734
			Net property and equipment		5		22,194		2,085		-		24,284

INTERCOMPANY RECEIVABLE					2,437		1,284		-		(3,721)		-
GOODWILL					-		1,571		5,176		-		6,747
INVESTMENT IN SUBSIDIARIES					24,766		3,697		-		(28,463)		-
OTHER ASSETS					3,359		967		1,851		(3,238)		2,939

				$	32,775	$	35,224	$	13,466	$	(35,506)	$	45,959

LIABILITIES AND STOCKHOLDERS' INVESTMENT
CURRENT LIABILITIES
	Current portion of long-term debt			$	-	$	13	$	16	$	-	$	29
	Accrued salaries and employee benefits				54		1,377		541		-		1,972
	Accounts payable				8		1,501		1,519		(84)		2,944
	Accrued expenses				883		1,411		769		-		3,063
		Total current liabilities			945		4,302		2,845		(84)		8,008

LONG-TERM DEBT, LESS CURRENT PORTION					13,451		245		37		-		13,733
INTERCOMPANY PAYABLE					-		-		3,721		(3,721)		-
OTHER LONG-TERM LIABILITIES
	Deferred income taxes				-		4,436		369		(3,238)		1,567
	Other liabilities				4,595		3,375		897		-		8,867
		Total other long-term liabilities			4,595		7,811		1,266		(3,238)		10,434

STOCKHOLDERS' INVESTMENT					13,784		22,866		5,597		(28,463)		13,784

				$	32,775	$	35,224	$	13,466	$	(35,506)	$	45,959

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
Three Months Ended November 30, 2016

				Guarantor		Non-guarantor
		Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated

REVENUES		$	-	$	10,997	$	4,004	$	(70)	$	14,931

OPERATING EXPENSES:
	Salaries and employee benefits		29		4,161		1,163		-		5,353
	Purchased transportation		-		2,074		1,383		(26)		3,431
	Rentals and landing fees		2		625		177		(2)		802
	Depreciation and amortization		-		634		106		-		740
	Fuel		-		584		74		-		658
	Maintenance and repairs		-		504		75		-		579
	Intercompany charges, net		(89)		38		51		-		-
	Other		58		1,429		756		(42)		2,201
			-		10,049		3,785		(70)		13,764

OPERATING INCOME			-		948		219		-		1,167

OTHER INCOME (EXPENSE):
	Equity in earnings of subsidiaries		700		54		-		(754)		-
	Interest, net		(123)		4		-		-		(119)
	Intercompany charges, net		124		(64)		(60)		-		-
	Other, net		(1)		(5)		36		-		30

INCOME BEFORE INCOME TAXES			700		937		195		(754)		1,078

	Provision for income taxes		-		291		87		-		378

NET INCOME		$	700	$	646	$	108	$	(754)	$	700

COMPREHENSIVE INCOME		$	682	$	635	$	(112)	$	(754)	$	451

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
Three Months Ended November 30, 2015

				Guarantor		Non-guarantor
		Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated

REVENUES		$	-	$	10,479	$	2,048	$	(74)	$	12,453

OPERATING EXPENSES:
	Salaries and employee benefits		26		3,926		618		-		4,570
	Purchased transportation		-		1,941		622		(25)		2,538
	Rentals and landing fees		2		596		86		(2)		682
	Depreciation and amortization		1		601		51		-		653
	Fuel		-		597		18		-		615
	Maintenance and repairs		-		497		32		-		529
	Intercompany charges, net		(112)		84		28		-		-
	Other		83		1,293		400		(47)		1,729
			-		9,535		1,855		(74)		11,316

OPERATING INCOME			-		944		193		-		1,137

OTHER INCOME (EXPENSE):
	Equity in earnings of subsidiaries		691		73		-		(764)		-
	Interest, net		(81)		6		1		-		(74)
	Intercompany charges, net		84		(83)		(1)		-		-
	Other, net		(3)		(6)		1		-		(8)

INCOME BEFORE INCOME TAXES			691		934		194		(764)		1,055

	Provision for income taxes		-		309		55		-		364

NET INCOME		$	691	$	625	$	139	$	(764)	$	691

COMPREHENSIVE INCOME		$	672	$	620	$	112	$	(764)	$	640

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
Six Months Ended November 30, 2016

				Guarantor		Non-guarantor
		Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated

REVENUES		$	-	$	21,900	$	7,834	$	(140)	$	29,594

OPERATING EXPENSES:
	Salaries and employee benefits		65		8,267		2,332		-		10,664
	Purchased transportation		-		3,991		2,734		(54)		6,671
	Rentals and landing fees		3		1,245		347		(3)		1,592
	Depreciation and amortization		-		1,245		234		-		1,479
	Fuel		-		1,162		146		-		1,308
	Maintenance and repairs		-		1,030		147		-		1,177
	Intercompany charges, net		(179)		100		79		-		-
	Other		111		2,802		1,442		(83)		4,272
			-		19,842		7,461		(140)		27,163

OPERATING INCOME			-		2,058		373		-		2,431

OTHER INCOME (EXPENSE):
	Equity in earnings of subsidiaries		1,415		110		-		(1,525)		-
	Interest, net		(245)		13		-		-		(232)
	Intercompany charges, net		246		(145)		(101)		-		-
	Other, net		(1)		(10)		32		-		21

INCOME BEFORE INCOME TAXES			1,415		2,026		304		(1,525)		2,220

	Provision for income taxes		-		671		134		-		805

NET INCOME		$	1,415	$	1,355	$	170	$	(1,525)	$	1,415

COMPREHENSIVE INCOME		$	1,378	$	1,337	$	(31)	$	(1,525)	$	1,159


CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
Six Months Ended November 30, 2015

				Guarantor		Non-guarantor
		Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated

REVENUES		$	-	$	20,352	$	4,557	$	(177)	$	24,732

OPERATING EXPENSES:
	Salaries and employee benefits		60		7,739		1,296		-		9,095
	Purchased transportation		-		3,375		1,587		(80)		4,882
	Rentals and landing fees		3		1,183		194		(3)		1,377
	Depreciation and amortization		1		1,184		116		-		1,301
	Fuel		-		1,288		39		-		1,327
	Maintenance and repairs		-		1,005		72		-		1,077
	Intercompany charges, net		(181)		44		137		-		-
	Other		117		2,557		812		(94)		3,392
			-		18,375		4,253		(177)		22,451

OPERATING INCOME			-		1,977		304		-		2,281

OTHER INCOME (EXPENSE):
	Equity in earnings of subsidiaries		1,383		134		-		(1,517)		-
	Interest, net		(156)		14		5		-		(137)
	Intercompany charges, net		162		(159)		(3)		-		-
	Other, net		(6)		(9)		10		-		(5)

INCOME BEFORE INCOME TAXES			1,383		1,957		316		(1,517)		2,139

	Provision for income taxes		-		666		90		-		756

NET INCOME		$	1,383	$	1,291	$	226	$	(1,517)	$	1,383

COMPREHENSIVE INCOME		$	1,346	$	1,271	$	70	$	(1,517)	$	1,170

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended November 30, 2016

				Guarantor		Non-guarantor
		Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated

CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		$	(376)	$	2,550	$	473	$	(12)	$	2,635

INVESTING ACTIVITIES
	Capital expenditures		-		(2,455)		(226)		-		(2,681)
	Proceeds from asset dispositions and other		84		13		3		-		100

CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES			84		(2,442)		(223)		-		(2,581)

FINANCING ACTIVITIES
	Net transfers from (to) Parent		24		(94)		70		-		-
	Payment on loan between subsidiaries		8		(15)		7		-		-
	Intercompany dividends		-		1		(1)		-		-
	Principal payments on debt		-		(31)		(12)		-		(43)
	Proceeds from stock issuances		164		-		-		-		164
	Dividends paid		(213)		-		-		-		(213)
	Purchase of treasury stock		(334)		-		-		-		(334)
	Other, net		4		(2)		(7)		-		(5)

CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES			(347)		(141)		57		-		(431)

Effect of exchange rate changes on cash			(5)		1		(94)		-		(98)
Net (decrease) increase in cash and cash equivalents			(644)		(32)		213		(12)		(475)
Cash and cash equivalents at beginning of period			1,974		326		1,277		(43)		3,534

Cash and cash equivalents at end of period		$	1,330	$	294	$	1,490	$	(55)	$	3,059


CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended November 30, 2015

				Guarantor		Non-guarantor
		Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated

CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		$	(847)	$	3,054	$	213	$	34	$	2,454

INVESTING ACTIVITIES
	Capital expenditures		-		(2,482)		(80)		-		(2,562)
	Proceeds from asset dispositions and other		(5)		21		(4)		-		12

CASH USED IN INVESTING ACTIVITIES			(5)		(2,461)		(84)		-		(2,550)

FINANCING ACTIVITIES
	Net transfers from (to) Parent		648		(691)		43		-		-
	Payment on loan between subsidiaries		-		106		(106)		-		-
	Intercompany dividends		-		20		(20)		-		-
	Principal payments on debt		-		(2)		(15)		-		(17)
	Proceeds from debt issuance		1,238		-		-		-		1,238
	Proceeds from stock issuances		62		-		-		-		62
	Dividends paid		(141)		-		-		-		(141)
	Purchase of treasury stock		(1,101)		-		-		-		(1,101)
	Other, net		(8)		(27)		27		-		(8)

CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES			698		(594)		(71)		-		33

Effect of exchange rate changes on cash			-		(12)		(41)		-		(53)
Net (decrease) increase in cash and cash equivalents			(154)		(13)		17		34		(116)
Cash and cash equivalents at beginning of period			2,383		487		971		(78)		3,763

Cash and cash equivalents at end of period		$	2,229	$	474	$	988	$	(44)	$	3,647

- Definition

The entire disclosure for condensed financial information, including the financial position, cash flows, and the results of operations of the registrant (parent company) as of the same dates or for the same periods for which audited consolidated financial statements are being presented. Alternatively, the details of this disclosure can be reported by the specific parent company taxonomy elements, indicating the appropriate date and period contexts in an instance document.

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