SEC Comment Letter for FEDEX CORP (FDX) (CIK 0001048911) (FDX) — Jan 25, 2008
FEDEX CORP (FDX) (CIK 0001048911)
Date: Jan. 25, 2008 · CIK: 0001048911 · Accession: 0000000000-08-004542
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 001-15829
Letter
Mail Stop 3561 January 25, 2008 Via U.S. Mail and Facsimile Frederick W. Smith President and Chief Executive Officer FedEx Corporation 942 South Shady Grove Road Memphis, Tennessee 38120 RE: FedEx Corporation Form 10-K for the fiscal year ended May 31, 2007 File No. 001-15829
Dear Mr. Smith:
We have reviewed your filing and have the following comments. We have limited our review to only financial statements and related disclosures and do not intend to expand our review to othe r portions of your document. Where indicated, we think you should revise your document in response to these comments a nd comply with the remaining comments in all future filings. If you disagree, we will consider your explanation as to why our comments are inappl icable or a revision is unnecessary. Please be as detailed as necessary in your explanat ion. In some of our comments, we may ask you to provide us with information so we may better understand your disclosure. After reviewing this information, we may raise additional comments. Please understand that the purpose of our re view process is to assist you in your compliance with the applicable disclosure requirements and to enhance the overall disclosure in your filing. We look forward to working with you in these respects. We welcome any questions you may have about our comments or any other aspect of our review. Feel free to call us at the telephone numbers listed at the end of this letter.
Frederick W. Smith FedEx Corporation Page 2
Form 10-K for the fiscal year ended May 31, 2007
Management’s Discussion and Analysis of Re sults of Operations and Financial Condition
Results of Operations, page 34 1. When individual line items, disclosed in your statement of income, significantly fluctuate in comparison to the comparable prior period, quantif y and disclose the nature of each item that caused the significant change. For example we note from your consolidated statement of income th at salaries and employee benefits of $13,740 million for 2007 increased approxi mately $1,169 million from salaries and employee benefits of $12,571 million fo r 2006. We also note that in MD&A you only quantify and disclose the nature of each item that caused the significant change in salaries and employee benefits between 2007 and 2006 for the FedEx Express segment and the FedEx Kinko’s segment, which only explains approximately $172 million of the $1,169 million increase in salaries and employee benefits between 2007 and 2006. In this regard, please revise your consolidated operating results and segmen t operating results sections in future filing to quantify and disclose the nature of each item that caused the $1,169 million increase in salaries and employee benefits between 2007 and 2006. Please provide us with your proposed future disclo sure as part of your response. See Item 303 of Regulation S-K and FR-72 for guidance. 2. Additionally, please revise your consolidated operating results and segment operating results sections in MD&A to di scuss and analyze separately “salaries and employee benefits,” “purchased tran sportation,” “rental and landing fees,” “depreciation and amortization,” “fuel,” “maintenance and repairs” and “other” rather than only providing a discussion and analysis on consolidated and segment operating income. As part of your disc losure, please describe the major cost components included in each of the above categories and provide a more detail discussion and analysis of the results for each major component. This presentation appears meaningful and relevant in providi ng investors full disclosure and transparent financial information as required by Item 303 of Regulation S-K. Please provi de us with your proposed di sclosure as part of your response.
Frederick W. Smith FedEx Corporation Page 3
Form 10-Q for the quarterly period ended November 30, 2007
Management’s Discussion and Analysis of Re sults of Operations and Financial Condition
Results of Operations
FedEx Ground Segment Operating Income, page 39 3. We note from your disclosure that operat ing income for the first half of 2008 was substantially effected by th e net impact of increased fuel cost during the second quarter of 2008 and higher legal costs dur ing the first quarter of 2008. In this regard, please provide us with and include in your filing disclosure that quantifies and discusses the nature of each item that caused the higher legal cost. Also, tell us your reason for not including the fact that operating income was effected by higher legal cost during the first qua rter of 2008 in your respective MD&A section included in your Form 10-Q fo r the quarterly period ended August 31, 2008. 4. We note from your disclosure that Fed Ex Ground anticipates continuing changes in relationships with its c ontractors, which are expected to increase the cost of operations, and it is reasonably possible that such cost increase could be material. In this regard, please revise your filing to quantify the impact that such material cost increase could have on your futu re financial position, and results of operations. See FR-72 for guidance.
As appropriate, please respond to these co mments within 10 business days or tell us when you will provide us with a response. Pl ease furnish a cover letter that keys your responses to our comments and provides any requested information. Detailed cover letters greatly facilitate our review. Please understand that we may have additional comments after reviewing your responses to our comments. We urge all persons who are responsi ble for the accuracy an d adequacy of the disclosure in the filing to be certain that the filing includes all in formation required under the Securities Exchange Act of 1934 and th at they have provided all information investors require for an informed invest ment decision. Since the company and its management are in possession of all facts re lating to a company’s disclosure, they are responsible for the accuracy and adequacy of the disclosures they have made. In connection with responding to our comments, please provide, in writing, a statement from the company acknowledging that:
the company is responsible for the adequacy and accuracy of the disclosure in the filing;
staff comments or changes to disclosure in response to staff comments do not
Frederick W. Smith FedEx Corporation Page 4
foreclose the Commission from taking any action with respect to the filing; and
the company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.
In addition, please be advise d that the Division of Enfo rcement has access to all information you provide to the staff of the Divi sion of Corporation Fi nance in our review of your filing or in response to our comments on your filing.
You may contact Jeff Jaramillo at (202 ) 551-3212 if you have questions regarding comments on the financial statements and related matters. Please contact me at (202) 551-3816 with any other questions.
Sincerely,
J o e F o t i
Senior Assistant Chief Accountant
Via facsimile: Alan B. Graf, Jr., Chief Financial Officer (901) 818-7166
Show Raw Text
Mail Stop 3561
January 25, 2008
Via U.S. Mail and Facsimile
Frederick W. Smith President and Chief Executive Officer FedEx Corporation 942 South Shady Grove Road Memphis, Tennessee 38120
RE: FedEx Corporation
Form 10-K for the fiscal year ended May 31, 2007
File No. 001-15829
Dear Mr. Smith:
We have reviewed your filing and have the following comments. We have
limited our review to only financial statements and related disclosures and do not intend
to expand our review to othe r portions of your document. Where indicated, we think you
should revise your document in response to these comments a nd comply with the
remaining comments in all future filings. If you disagree, we will consider your explanation as to why our comments are inappl icable or a revision is unnecessary. Please
be as detailed as necessary in your explanat ion. In some of our comments, we may ask
you to provide us with information so we may better understand your disclosure. After
reviewing this information, we may raise additional comments.
Please understand that the purpose of our re view process is to assist you in your
compliance with the applicable disclosure requirements and to enhance the overall
disclosure in your filing. We look forward to working with you in these respects. We
welcome any questions you may have about our comments or any other aspect of our review. Feel free to call us at the telephone numbers listed at the end of this letter.
Frederick W. Smith
FedEx Corporation
Page 2
Form 10-K for the fiscal year ended May 31, 2007
Management’s Discussion and Analysis of Re sults of Operations and Financial Condition
Results of Operations, page 34
1. When individual line items, disclosed in your statement of income, significantly
fluctuate in comparison to the comparable prior period, quantif y and disclose the
nature of each item that caused the significant change. For example we note from
your consolidated statement of income th at salaries and employee benefits of
$13,740 million for 2007 increased approxi mately $1,169 million from salaries
and employee benefits of $12,571 million fo r 2006. We also note that in MD&A
you only quantify and disclose the nature of each item that caused the significant
change in salaries and employee benefits between 2007 and 2006 for the FedEx
Express segment and the FedEx Kinko’s segment, which only explains approximately $172 million of the $1,169 million increase in salaries and employee benefits between 2007 and 2006. In this regard, please revise your
consolidated operating results and segmen t operating results sections in future
filing to quantify and disclose the nature of each item that caused the $1,169 million increase in salaries and employee benefits between 2007 and 2006. Please provide us with your proposed future disclo sure as part of your response. See
Item 303 of Regulation S-K and FR-72 for guidance.
2. Additionally, please revise your consolidated operating results and segment
operating results sections in MD&A to di scuss and analyze separately “salaries
and employee benefits,” “purchased tran sportation,” “rental and landing fees,”
“depreciation and amortization,” “fuel,” “maintenance and repairs” and “other” rather than only providing a discussion and analysis on consolidated and segment
operating income. As part of your disc losure, please describe the major cost
components included in each of the above categories and provide a more detail
discussion and analysis of the results for each major component. This presentation appears meaningful and relevant in providi ng investors full
disclosure and transparent financial information as required by Item 303 of
Regulation S-K. Please provi de us with your proposed di sclosure as part of your
response.
Frederick W. Smith
FedEx Corporation
Page 3
Form 10-Q for the quarterly period ended November 30, 2007
Management’s Discussion and Analysis of Re sults of Operations and Financial Condition
Results of Operations
FedEx Ground Segment Operating Income, page 39
3. We note from your disclosure that operat ing income for the first half of 2008 was
substantially effected by th e net impact of increased fuel cost during the second
quarter of 2008 and higher legal costs dur ing the first quarter of 2008. In this
regard, please provide us with and include in your filing disclosure that quantifies
and discusses the nature of each item that caused the higher legal cost. Also, tell
us your reason for not including the fact that operating income was effected by
higher legal cost during the first qua rter of 2008 in your respective MD&A
section included in your Form 10-Q fo r the quarterly period ended August 31,
2008.
4. We note from your disclosure that Fed Ex Ground anticipates continuing changes
in relationships with its c ontractors, which are expected to increase the cost of
operations, and it is reasonably possible that such cost increase could be material.
In this regard, please revise your filing to quantify the impact that such material
cost increase could have on your futu re financial position, and results of
operations. See FR-72 for guidance.
As appropriate, please respond to these co mments within 10 business days or tell
us when you will provide us with a response. Pl ease furnish a cover letter that keys your
responses to our comments and provides any requested information. Detailed cover
letters greatly facilitate our review. Please understand that we may have additional comments after reviewing your responses to our comments.
We urge all persons who are responsi ble for the accuracy an d adequacy of the
disclosure in the filing to be certain that the filing includes all in formation required under
the Securities Exchange Act of 1934 and th at they have provided all information
investors require for an informed invest ment decision. Since the company and its
management are in possession of all facts re lating to a company’s disclosure, they are
responsible for the accuracy and adequacy of the disclosures they have made.
In connection with responding to our comments, please provide, in writing, a statement from the company acknowledging that:
the company is responsible for the adequacy and accuracy of the disclosure in the
filing;
staff comments or changes to disclosure in response to staff comments do not
Frederick W. Smith
FedEx Corporation Page 4
foreclose the Commission from taking any action with respect to the filing; and
the company may not assert staff comments as a defense in any proceeding initiated
by the Commission or any person under the federal securities laws of the United States.
In addition, please be advise d that the Division of Enfo rcement has access to all
information you provide to the staff of the Divi sion of Corporation Fi nance in our review
of your filing or in response to our comments on your filing.
You may contact Jeff Jaramillo at (202 ) 551-3212 if you have questions regarding
comments on the financial statements and related matters. Please contact me at (202) 551-3816 with any other questions.
Sincerely,
J o e F o t i
Senior Assistant Chief Accountant
Via facsimile: Alan B. Graf, Jr., Chief Financial Officer (901) 818-7166