NOTE 21: 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 $16.4 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

May 31, 2018

	Parent		Guarantor Subsidiaries		Non- guarantor Subsidiaries		Eliminations			Consolidated
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	1,485	$	257	$	1,538	$	(15	)	$	3,265
Receivables, less allowances		3		4,970		3,586		(78	)		8,481
Spare parts, supplies, fuel, prepaid expenses and other, less allowances		425		878		292		—			1,595
Total current assets		1,913		6,105		5,416		(93	)		13,341
PROPERTY AND EQUIPMENT, AT COST		21		51,232		3,868		—			55,121
Less accumulated depreciation and amortization		17		25,111		1,839		—			26,967
Net property and equipment		4		26,121		2,029		—			28,154
INTERCOMPANY RECEIVABLE		1,487		924		—		(2,411	)		—
GOODWILL		—		1,709		5,264		—			6,973
INVESTMENT IN SUBSIDIARIES		33,370		4,082		—		(37,452	)		—
OTHER ASSETS		75		1,854		1,829		104			3,862
	$	36,849	$	40,795	$	14,538	$	(39,852	)	$	52,330
LIABILITIES AND STOCKHOLDERS’ INVESTMENT
CURRENT LIABILITIES
Current portion of long-term debt	$	1,332	$	1	$	9	$	—		$	1,342
Accrued salaries and employee benefits		65		1,506		606		—			2,177
Accounts payable		16		1,332		1,719		(90	)		2,977
Accrued expenses		460		1,778		896		(3	)		3,131
Total current liabilities		1,873		4,617		3,230		(93	)		9,627
LONG-TERM DEBT, LESS CURRENT PORTION		14,942		288		13		—			15,243
INTERCOMPANY PAYABLE		—		—		2,411		(2,411	)		—
OTHER LONG-TERM LIABILITIES
Deferred income taxes		—		2,626		137		104			2,867
Other liabilities		619		3,432		1,126		—			5,177
Total other long-term liabilities		619		6,058		1,263		104			8,044
STOCKHOLDERS’ INVESTMENT		19,415		29,832		7,621		(37,452	)		19,416
	$	36,849	$	40,795	$	14,538	$	(39,852	)	$	52,330

CONDENSED CONSOLIDATING BALANCE SHEETS

May 31, 2017

	Parent		Guarantor Subsidiaries		Non- guarantor 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

Year Ended May 31, 2018

	Parent			Guarantor Subsidiaries			Non- guarantor Subsidiaries			Eliminations			Consolidated
REVENUES	$	—		$	48,601		$	17,256		$	(407	)	$	65,450
OPERATING EXPENSES:
Salaries and employee benefits		149			17,814			5,244			—			23,207
Purchased transportation		—			9,134			6,191			(224	)		15,101
Rentals and landing fees		5			2,587			776			(7	)		3,361
Depreciation and amortization		1			2,644			450			—			3,095
Fuel		—			3,077			297			—			3,374
Maintenance and repairs		1			2,294			327			—			2,622
Goodwill and other asset impairment charges		—			—			380			—			380
Retirement plans mark-to-market adjustment		—			19			(29	)		—			(10	)
Intercompany charges, net		(437	)		(120	)		557			—			—
Other		281			6,227			3,118			(176	)		9,450
		—			43,676			17,311			(407	)		60,580
OPERATING INCOME		—			4,925			(55	)		—			4,870
OTHER INCOME (EXPENSE):
Equity in earnings of subsidiaries		4,572			62			—			(4,634	)		—
Interest, net		(541	)		46			(15	)		—			(510	)
Intercompany charges, net		544			(291	)		(253	)		—			—
Other, net		(3	)		(120	)		116			—			(7	)
INCOME BEFORE INCOME TAXES		4,572			4,622			(207	)		(4,634	)		4,353
Provision for income taxes (benefit)		—			309			(528	)		—			(219	)
NET INCOME	$	4,572		$	4,313		$	321		$	(4,634	)	$	4,572
COMPREHENSIVE INCOME	$	4,489		$	4,263		$	291		$	(4,634	)	$	4,409

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME

Year Ended May 31, 2017

	Parent			Guarantor Subsidiaries			Non- guarantor Subsidiaries			Eliminations			Consolidated
REVENUES	$	—		$	44,823		$	15,798		$	(302	)	$	60,319
OPERATING EXPENSES:
Salaries and employee benefits		123			16,696			4,723			—			21,542
Purchased transportation		—			8,260			5,495			(125	)		13,630
Rentals and landing fees		5			2,517			724			(6	)		3,240
Depreciation and amortization		1			2,538			456			—			2,995
Fuel		—			2,476			297			—			2,773
Maintenance and repairs		1			2,086			287			—			2,374
Retirement plans mark-to-market adjustment		—			(75	)		51			—			(24	)
Intercompany charges, net		(434	)		182			252			—			—
Other		304			5,734			2,885			(171	)		8,752
		—			40,414			15,170			(302	)		55,282
OPERATING INCOME		—			4,409			628			—			5,037
OTHER INCOME (EXPENSE):
Equity in earnings of subsidiaries		2,997			68			—			(3,065	)		—
Interest, net		(507	)		27			1			—			(479	)
Intercompany charges, net		508			(296	)		(212	)		—			—
Other, net		(1	)		(134	)		156			—			21
INCOME BEFORE INCOME TAXES		2,997			4,074			573			(3,065	)		4,579
Provision for income taxes		—			1,439			143			—			1,582
NET INCOME	$	2,997		$	2,635		$	430		$	(3,065	)	$	2,997
COMPREHENSIVE INCOME	$	2,922		$	2,580		$	314		$	(3,065	)	$	2,751

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME

Year Ended May 31, 2016

	Parent			Guarantor Subsidiaries			Non- guarantor Subsidiaries			Eliminations			Consolidated
REVENUES	$	—		$	42,143		$	8,547		$	(325	)	$	50,365
OPERATING EXPENSES:
Salaries and employee benefits		119			15,880			2,582			—			18,581
Purchased transportation		—			7,380			2,720			(134	)		9,966
Rentals and landing fees		5			2,484			371			(6	)		2,854
Depreciation and amortization		1			2,399			231			—			2,631
Fuel		—			2,324			75			—			2,399
Maintenance and repairs		1			1,954			153			—			2,108
Retirement plans mark-to-market adjustment		—			1,414			84			—			1,498
Intercompany charges, net		(645	)		425			220			—			—
Other		519			5,274			1,643			(185	)		7,251
		—			39,534			8,079			(325	)		47,288
OPERATING INCOME		—			2,609			468			—			3,077
OTHER INCOME (EXPENSE):
Equity in earnings of subsidiaries		1,820			279			—			(2,099	)		—
Interest, net		(355	)		27			13			—			(315	)
Intercompany charges, net		369			(354	)		(15	)		—			—
Other, net		(14	)		(14	)		6			—			(22	)
INCOME BEFORE INCOME TAXES		1,820			2,547			472			(2,099	)		2,740
Provision for income taxes		—			818			102			—			920
NET INCOME	$	1,820		$	1,729		$	370		$	(2,099	)	$	1,820
COMPREHENSIVE INCOME	$	1,746		$	1,704		$	128		$	(2,099	)	$	1,479

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

Year Ended May 31, 2018

	Parent			Guarantor Subsidiaries			Non- guarantor Subsidiaries			Eliminations			Consolidated
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	$	(2,837	)	$	6,767		$	712		$	32		$	4,674
INVESTING ACTIVITIES
Capital expenditures		(1	)		(5,299	)		(363	)		—			(5,663	)
Business acquisitions, net of cash acquired		—			(44	)		(135	)		—			(179	)
Proceeds from sale of business		—			—			123			—			123
Proceeds from asset dispositions and other		(6	)		33			15			—			42
CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES		(7	)		(5,310	)		(360	)		—			(5,677	)
FINANCING ACTIVITIES
Net transfers from (to) Parent		1,529			(1,612	)		83			—			—
Payment on loan between subsidiaries		663			—			(663	)		—			—
Intercompany dividends		—			98			(98	)		—			—
Principal payments on debt		—			(22	)		(16	)		—			(38	)
Proceeds from debt issuance		1,480			—			—			—			1,480
Proceeds from stock issuances		327			—			—			—			327
Dividends paid		(535	)		—			—			—			(535	)
Purchase of treasury stock		(1,017	)		—			—			—			(1,017	)
Other, net		3			7			—			—			10
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		2,450			(1,529	)		(694	)		—			227
Effect of exchange rate changes on cash		(5	)		4			73			—			72
Net increase (decrease) in cash and cash equivalents		(399	)		(68	)		(269	)		32			(704	)
Cash and cash equivalents at beginning of period		1,884			325			1,807			(47	)		3,969
Cash and cash equivalents at end of period	$	1,485		$	257		$	1,538		$	(15	)	$	3,265

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

Year Ended May 31, 2017

	Parent			Guarantor Subsidiaries			Non- guarantor Subsidiaries			Eliminations			Consolidated
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	$	(1,155	)	$	5,254		$	835		$	(4	)	$	4,930
INVESTING ACTIVITIES
Capital expenditures		—			(4,694	)		(422	)		—			(5,116	)
Proceeds from asset dispositions and other		34			25			76			—			135
CASH USED IN INVESTING ACTIVITIES		34			(4,669	)		(346	)		—			(4,981	)
FINANCING ACTIVITIES
Net transfers from (to) Parent	421				(518	)	97				—			—
Payment on loan between subsidiaries		41			(15	)		(26	)		—			—
Intercompany dividends		—			1			(1	)		—			—
Principal payments on debt		—			(55	)		(27	)		—			(82	)
Proceeds from debt issuances		1,190			—			—			—			1,190
Proceeds from stock issuances		337			—			—			—			337
Dividends paid		(426	)		—			—			—			(426	)
Purchase of treasury stock		(509	)		—			—			—			(509	)
Other, net		(12	)		(13	)		43			—			18
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		1,042			(600	)		86			—			528
Effect of exchange rate changes on cash		(11	)		14			(45	)		—			(42	)
Net (decrease) increase in cash and cash equivalents		(90	)		(1	)		530			(4	)		435
Cash and cash equivalents at beginning of period		1,974			326			1,277			(43	)		3,534
Cash and cash equivalents at end of period	$	1,884		$	325		$	1,807		$	(47	)	$	3,969

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

Year Ended May 31, 2016

	Parent			Guarantor Subsidiaries			Non- guarantor Subsidiaries			Eliminations			Consolidated
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	$	(831	)	$	5,932		$	572		$	35		$	5,708
INVESTING ACTIVITIES
Capital expenditures		—			(4,617	)		(201	)		—			(4,818	)
Business acquisitions, net of cash acquired		—			—			(4,618	)		—			(4,618	)
Proceeds from asset dispositions and other		(55	)		33			12			—			(10	)
CASH USED IN INVESTING ACTIVITIES		(55	)		(4,584	)		(4,807	)		—			(9,446	)
FINANCING ACTIVITIES
Net transfers from (to) Parent		1,629			(1,549	)		(80	)		—			—
Payment on loan between subsidiaries		(4,805	)		109			4,696			—			—
Intercompany dividends		—			20			(20	)		—			—
Principal payments on debt		—			(19	)		(22	)		—			(41	)
Proceeds from debt issuance		6,519			—			—			—			6,519
Proceeds from stock issuances		183			—			—			—			183
Dividends paid		(277	)		—			—			—			(277	)
Purchase of treasury stock		(2,722	)		—			—			—			(2,722	)
Other, net		(51	)		(48	)		48			—			(51	)
CASH PROVIDED (USED IN) FINANCING ACTIVITIES		476			(1,487	)		4,622			—			3,611
Effect of exchange rate changes on cash		1			(22	)		(81	)		—			(102	)
Net increase in cash and cash equivalents		(409	)		(161	)		306			35			(229	)
Cash and cash equivalents at beginning of period		2,383			487			971			(78	)		3,763
Cash and cash equivalents at end of period	$	1,974		$	326		$	1,277		$	(43	)	$	3,534