Federal Express 2005 Annual Report Download - page 73

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Long-term debt, exclusive of capital leases, had carrying values of
$2.4 billion and $3.0 billion at May 31, 2005 and 2004, respectively,
compared with estimated fair values of approximately $2.6 billion
and $3.2 billion at those respective dates. The estimated fair val-
ues were determined based on quoted market prices or on the
current rates offered for debt with similar terms and maturities.
We have a $1.0 billion shelf registration statement with the SEC to
provide flexibility and efficiency when obtaining financing. Under
this shelf registration statement we may issue, in one or more
offerings, either unsecured debt securities, common stock or a
combination of such instruments. The entire $1 billion is available
for future financings.
NOTE 8: LEASE COMMITMENTS
We utilize certain aircraft, land, facilities, retail locations and
equipment under capital and operating leases that expire at var-
ious dates through 2039. In addition, supplemental aircraft are
leased under agreements that generally provide for cancelation
upon 30 days’ notice.
The components of property and equipment recorded under cap-
ital leases were as follows (in millions): May 31,
2005 2004
Aircraft $232 $ 344
Package handling and ground support
equipment 167 168
Vehicles 36 39
Other, principally facilities 167 230
602 781
Less accumulated amortization 329 390
$273 $391
Rent expense under operating leases was as follows (in millions):
For years ended May 31,
2005 2004 2003
Minimum rentals $1,793 $1,560 $1,522
Contingent rentals 235 143 107
$2,028 $1,703 $1,629
Contingent rentals are based on equipment usage.
A summary of future minimum lease payments under capital leases
at May 31, 2005 is as follows (in millions):
2006 $121
2007 22
2008 99
2009 11
2010 96
Thereafter 130
479
Less amount representing interest 78
Present value of net minimum lease payments $ 401
A summary of future minimum lease payments under noncan-
celable operating leases (principally aircraft, retail locations and
facilities) with an initial or remaining term in excess of one year
at May 31, 2005 is as follows (in millions):
Aircraft and Related Facilities and
Equipment Other Total
2006 $ 607 $ 1,039 $ 1,646
2007 606 912 1,518
2008 585 771 1,356
2009 555 636 1,191
2010 544 501 1,045
Thereafter 4,460 2,789 7,249
$ 7,357 $ 6,648 $14,005
The weighted-average remaining lease term of all operating leases
outstanding at May 31, 2005 was approximately six years. While
certain of our lease agreements contain covenants governing the
use of the leased assets or require us to maintain certain levels of
insurance, none of our lease agreements include material finan-
cial covenants or limitations.
FedEx Express makes payments under certain leveraged oper-
ating leases that are sufficient to pay principal and interest
on certain pass-through certificates. The pass-through certifi-
cates are not direct obligations of, or guaranteed by, FedEx or
FedEx Express.
NOTE 9: PREFERRED STOCK
Our Certificate of Incorporation authorizes the Board of Directors,
at its discretion, to issue up to 4,000,000 shares of preferred stock.
The stock is issuable in series, which may vary as to certain
rights and preferences, and has no par value. As of May 31, 2005,
none of these shares had been issued.
NOTE 10: COMMON STOCKHOLDERS’ INVESTMENT
TREASURY SHARES
The following table summarizes information about treasury share
repurchases for the years ended May 31: Average Price
Shares Per Share
2005 –$–
2004 2,625,000 68.14
2003 3,275,000 56.66
These repurchases were done under share repurchase programs
aggregating 15 million shares. A total of 5.75 million shares
remain under existing share repurchase authorizations. At May
31, 2005 and 2004, respectively, 18,111 and 4,760 shares remained
outstanding in treasury.
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