Federal Express 2009 Annual Report Download - page 50

FEDEX CORPORATION
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other comprehensive loss were $56 million at May 31, 2009,
$167 million at May 31, 2008 and $69 million at May 31, 2007.
EMPLOYEES UNDER COLLECTIVE BARGAINING
ARRANGEMENTS
The pilots of FedEx Express, who represent a small percent-
age of our total employees, are employed under a collective
bargaining agreement. During the second quarter of 2007, the
pilots ratifi ed a new four-year labor contract that included signing
bonuses and other upfront compensation of $143 million, as well
as pay increases and other benefi t enhancements. These costs
were partially mitigated by reductions in the variable incentive
compensation of our other employees. The effect of this new
agreement on second quarter 2007 net income was $78 million
net of tax, or $0.25 per diluted share.
STOCK-BASED COMPENSATION
We recognize compensation expense for stock-based awards
under the provisions of SFAS 123R, “Share-Based Payment,”
and related interpretations. SFAS 123R requires recognition of
compensation expense for stock-based awards using a fair value
method. We adopted SFAS 123R in 2007 using the modifi ed pro-
spective method, which resulted in prospective recognition of
compensation expense for all outstanding unvested share-based
payments based on the fair value on the original grant date.
DIVIDENDS DECLARED PER COMMON SHARE
On June 8, 2009, our Board of Directors declared a dividend of
$0.11 per share of common stock. The dividend was paid on July 1,
2009 to stockholders of record as of the close of business on
June 18, 2009. Each quarterly dividend payment is subject to
review and approval by our Board of Directors, and we evaluate
our dividend payment amount on an annual basis at the end of
each fi scal year.
USE OF ESTIMATES
The preparation of our consolidated fi nancial statements requires
the use of estimates and assumptions that affect the reported
amounts of assets and liabilities, the reported amounts of rev-
enues and expenses and the disclosure of contingent liabilities.
Management makes its best estimate of the ultimate outcome
for these items based on historical trends and other information
available when the fi nancial statements are prepared. Changes
in estimates are recognized in accordance with the accounting
rules for the estimate, which is typically in the period when new
information becomes available to management. Areas where the
nature of the estimate makes it reasonably possible that actual
results could materially differ from amounts estimated include:
self-insurance accruals; retirement plan obligations; long-term
incentive accruals; tax liabilities; accounts receivable allow-
ances; obsolescence of spare parts; contingent liabilities; loss
contingencies, such as litigation and other claims; and impairment
assessments on long-lived assets (including goodwill).
Note 2: Recent Accounting
Pronouncements
New accounting rules and disclosure requirements can signifi -
cantly impact our reported results and the comparability of our
fi nancial statements. We believe the following new accounting
pronouncements, in addition to FIN 48 and SFAS 158, are rel-
evant to the readers of our fi nancial statements.
On June 1, 2008, we adopted SFAS 157, “Fair Value
Measurements,” which provides a common defi nition of fair
value, establishes a uniform framework for measuring fair value
and requires expanded disclosures about fair value measure-
ments. There is a one-year deferral of the adoption of the standard
as it relates to nonfi nancial assets and liabilities. Therefore, the
adoption of SFAS 157 had no impact on our fi nancial statements
at June 1, 2008.
In December 2007, the FASB issued SFAS 141R, “ Business
Combinations,” and SFAS 160, “Noncontrolling Interests in
Consolidated Financial Statements, an amendment of Accounting
Research Bulletin (“ARB” ) No. 51.” These new standards sig-
nifi cantly change the accounting for and reporting of business
combination transactions, including noncontrolling interests
(previously referred to as minority interests). For example, these
standards require the acquiring entity to recognize the full fair
value of assets acquired and liabilities assumed in the transaction
and require the expensing of most transaction and restructuring
costs. Both standards are effective for us beginning June 1, 2009
(fi scal 2010) and are applicable only to transactions occurring after
the effective date.
In December 2008, the FASB issued FASB Staff Position (“ FSP” )
132(R)-1, “Employers’ Disclosures about Postretirement Benefi t
Plan Assets.” This FSP provides guidance on the objectives an
employer should consider when providing detailed disclosures
about assets of a defi ned benefi t pension plan or other postre-
tirement plan. These disclosure objectives include investment
policies and strategies, categories of plan assets, signifi cant
concentrations of risk and the inputs and valuation techniques
used to measure the fair value of plan assets. This FSP will be
effective for our fi scal year ending May 31, 2010.
In April 2009, the FASB issued FSP No. 107-1 and Accounting
Principles Board Opinion (“APB” ) No. 28-1, “Interim Disclosures
about Fair Value of Financial Instruments.” This FSP and APB
amends SFAS 107, “ Disclosures about Fair Value of Financial
Instruments,” to require disclosures about the fair value of
fi nancial instruments for interim reporting periods in addition to
annual reporting periods. This FSP and APB will be effective for
our fi rst quarter of fi scal year 2010.
In May 2009, the FASB issued SFAS No. 165, “Subsequent
Events,” which establishes general standards of accounting for
and disclosures of events that occur after the balance sheet
date but before fi nancial statements are issued or are available
to be issued. This standard will require us to disclose the date
through which we have evaluated subsequent events and the
basis for that date. This standard will be effective for our fi rst
quarter of fi scal year 2010.