Federal Express 2011 Annual Report Download - page 67

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65
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
required an accrual of a $66 million loss in the second quarter of 2011.
We did not accrue the $5 million of interest as a loss because we have
additional arguments on appeal that lead us to believe that loss of that
amount is not probable.
CALIFORNIA PAYSTUB CLASS ACTION. A federal court in California
ruled in April 2011 that paystubs for certain FedEx Express employ-
ees in California did not meet that state’s requirements to reflect
pay period begin date, total overtime hours worked and the correct
overtime wage rate. The ruling came in a class action lawsuit filed by
a former courier seeking damages on behalf of herself and all other
FedEx Express employees in California that allegedly received non-
compliant paychecks. The court certified the class in June 2011. The
court has ruled that FedEx Express is liable to the State of California,
and there will be a ruling as to whether FedEx Express is liable to class
members who can prove they were injured by the paystub deficien-
cies. The judge has not yet decided on the amount, if any, of liability
to the State of California or to the class, but has wide discretion. A
material loss in this matter is reasonably possible but not estimable
because both the number of class members and the amount, if any,
to which some class members may be entitled is uncertain, and in
ruling the judge may consider some or all of the following: whether
employees suffered injury; whether remedial action was undertaken;
whether there was knowledge of any violation; whether any violation
was intentional; and whether any award would be unjust under the
circumstances.
OTHER. FedEx and its subsidiaries are subject to other legal proceed-
ings that arise in the ordinary course of their business. In the opinion
of management, the aggregate liability, if any, with respect to these
other actions will not have a material adverse effect on our financial
position, results of operations or cash flows.
NOTE 18: RELATED PARTY TRANSACTIONS
Our Chairman, President and Chief Executive Officer, Frederick W.
Smith, currently holds an approximate 10% ownership interest in the
National Football League Washington Redskins professional football
team (“Redskins”) and is a member of its board of directors. FedEx
has a multi–year naming rights agreement with the Redskins granting
us certain marketing rights, including the right to name the Redskins’
stadium “FedExField.”
NOTE 19: SUMMARY OF QUARTERLY OPERATING RESULTS (UNAUDITED)
(in millions, except per share amounts)
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
2011
Revenues $ 9,457 $ 9,632 $ 9,663 $ 10,552
Operating income 628 469 393 888
Net income 380 283 231 558
Basic earnings per common share(1) 1.21 0.90 0.73 1.76
Diluted earnings per common share 1.20 0.89 0.73 1.75
2010
Revenues $ 8,009 $ 8,596 $ 8,701 $ 9,428
Operating income 315 571 416 696
Net income 181 345 239 419
Basic earnings per common share 0.58 1.10 0.76 1.34
Diluted earnings per common share(1) 0.58 1.10 0.76 1.33
(1) The sum of the quarterly earnings per share may not equal annual amounts due to differences in the weighted–average number of shares outstanding during the respective period.