FEDERAL EXPRESS CORP - FORM 10-Q

FEDERAL EXPRESS CORP - FORM 10-Q - March 23, 2012

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EX-32.2 - EX-32.2 - FEDERAL EXPRESS CORP	d319946dex322.htm
EX-12.1 - EX-12.1 - FEDERAL EXPRESS CORP	d319946dex121.htm
EX-15.1 - EX-15.1 - FEDERAL EXPRESS CORP	d319946dex151.htm
EX-31.1 - EX-31.1 - FEDERAL EXPRESS CORP	d319946dex311.htm
EX-31.2 - EX-31.2 - FEDERAL EXPRESS CORP	d319946dex312.htm
EX-32.1 - EX-32.1 - FEDERAL EXPRESS CORP	d319946dex321.htm
EXCEL - IDEA: XBRL DOCUMENT - FEDERAL EXPRESS CORP	Financial_Report.xls

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED February 29, 2012 OR

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

Commission File Number: 1-7806

FEDERAL EXPRESS CORPORATION

(Exact name of registrant as specified in its charter)


Delaware		71-0427007
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

3610 Hacks Cross Road Memphis, Tennessee		38125
(Address of principal executive offices)		(ZIP Code)

(901) 369-3600

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ

The number of shares of common stock outstanding as of March 21, 2012 was 1,000. The Registrant is a wholly owned subsidiary of FedEx Corporation, and there is no market for the Registrant’s common stock.

The Registrant meets the conditions set forth in General Instructions H(1)(a) and (b) of Form 10-Q and is therefore filing this form with the reduced disclosure format permitted by General Instruction H(2).

FEDERAL EXPRESS CORPORATION

INDEX

		September 30,
	PAGE
PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

Condensed Consolidated Balance Sheets February 29, 2012 and May 31, 2011		3

Condensed Consolidated Statements of Income Three and Nine Months Ended February 29, 2012 and February 28, 2011		5

Condensed Consolidated Statements of Cash Flows Nine Months Ended February 29, 2012 and February 28, 2011		6

Notes to Condensed Consolidated Financial Statements		7

Report of Independent Registered Public Accounting Firm		12

ITEM 2. Management’s Discussion and Analysis of Results of Operations and Financial Condition		13

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk		21

ITEM 4. Controls and Procedures		21

PART II. OTHER INFORMATION

ITEM 1. Legal Proceedings		22

ITEM 1A. Risk Factors		22

ITEM 6. Exhibits		22

Signature		24

Exhibit Index		E-1

Exhibit 12.1

Exhibit 15.1

Exhibit 31.1

Exhibit 31.2

Exhibit 32.1

Exhibit 32.2

EX-101 INSTANCE DOCUMENT EX-101 SCHEMA DOCUMENT EX-101 CALCULATION LINKBASE DOCUMENT EX-101 LABELS LINKBASE DOCUMENT EX-101 PRESENTATION LINKBASE DOCUMENT

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FEDERAL EXPRESS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(IN MILLIONS)

		September 30,		September 30,
	February 29, 2012 (Unaudited)		May 31, 2011
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	747	$	626
Receivables, less allowances of $88 and $83		1,610		1,645
Spare parts, supplies and fuel, less allowances of $180 and $169		372		367
Deferred income taxes		405		398
Due from parent company and other FedEx subsidiaries		282		607
Prepaid expenses and other		105		90


Total current assets		3,521		3,733

PROPERTY AND EQUIPMENT, AT COST		23,317		21,622
Less accumulated depreciation and amortization		11,711		11,110


Net property and equipment		11,606		10,512

OTHER LONG-TERM ASSETS
Goodwill		1,177		1,085
Other assets		1,176		1,016


Total other long-term assets		2,353		2,101


	$	17,480	$	16,346

The accompanying notes are an integral part of these condensed consolidated financial statements.

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FEDERAL EXPRESS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(IN MILLIONS, EXCEPT SHARE DATA)

		September 30,		September 30,
	February 29, 2012 (Unaudited)		May 31, 2011
LIABILITIES AND OWNER’S EQUITY

CURRENT LIABILITIES
Current portion of long-term debt	$	418	$	17
Accrued salaries and employee benefits		895		836
Accounts payable		1,126		1,092
Accrued expenses		906		1,084
Due to other FedEx subsidiaries		397		283


Total current liabilities		3,742		3,312

LONG-TERM DEBT, LESS CURRENT PORTION		239		655

OTHER LONG-TERM LIABILITIES
Deferred income taxes		2,491		1,994
Pension, postretirement healthcare and other benefit obligations		898		867
Self-insurance accruals		641		631
Deferred lease obligations		663		695
Deferred gains, principally related to aircraft transactions		242		244
Other liabilities		114		115


Total other long-term liabilities		5,049		4,546

COMMITMENTS AND CONTINGENCIES

OWNER’S EQUITY
Common stock, $0.10 par value; 1,000 shares authorized, issued and outstanding		—		—
Additional paid-in capital		608		608
Retained earnings		7,744		7,107
Accumulated other comprehensive income		98		118


Total owner’s equity		8,450		7,833


	$	17,480	$	16,346

The accompanying notes are an integral part of these condensed consolidated financial statements.

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FEDERAL EXPRESS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

(IN MILLIONS)

		September 30,			September 30,			September 30,			September 30,
	Three Months Ended						Nine Months Ended
	February 29, 2012			February 28, 2011			February 29, 2012			February 28, 2011

REVENUES	$	6,363		$	5,914		$	19,178		$	17,524

OPERATING EXPENSES:
Salaries and employee benefits		2,337			2,255			6,985			6,636
Purchased transportation		337			313			1,012			910
Rentals and landing fees		418			419			1,251			1,238
Depreciation and amortization		296			263			860			778
Fuel		1,078			898			3,193			2,454
Maintenance and repairs		301			330			1,032			999
Intercompany charges, net		540			491			1,622			1,502
Other		705			769			2,251			2,225

		6,012			5,738			18,206			16,742


OPERATING INCOME		351			176			972			782

OTHER INCOME (EXPENSE):
Interest, net		8			2			28			6
Other, net		(18	)		(22	)		(38	)		(59	)

		(10	)		(20	)		(10	)		(53	)


INCOME BEFORE INCOME TAXES		341			156			962			729

PROVISION FOR INCOME TAXES		110			56			325			265


NET INCOME	$	231		$	100		$	637		$	464

The accompanying notes are an integral part of these condensed consolidated financial statements.

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FEDERAL EXPRESS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(IN MILLIONS)

		September 30,			September 30,
	Nine Months Ended
	February 29, 2012			February 28, 2011

Operating Activities:
Net income	$	637		$	464
Noncash charges:
Depreciation and amortization		860			779
Other, net		500			372
Changes in assets and liabilities, net		277			546


Cash provided by operating activities		2,274			2,161

Investing Activities:
Capital expenditures		(2,015	)		(2,038	)
Business acquisitions, net of cash acquired		(114	)		(96	)
Other		6			11


Cash used in investing activities		(2,123	)		(2,123	)

Financing Activities:
Principal payments on debt		(27	)		(12	)


Cash used in financing activities		(27	)		(12	)


Effect of exchange rate changes on cash		(3	)		32

Net increase in cash and cash equivalents		121			58
Cash and cash equivalents at beginning of period		626			512


Cash and cash equivalents at end of period	$	747		$	570

The accompanying notes are an integral part of these condensed consolidated financial statements.

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FEDERAL EXPRESS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(1) General

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. These interim financial statements of Federal Express Corporation (“FedEx Express”) have been prepared in accordance with accounting principles generally accepted in the United States and Securities and Exchange Commission instructions for interim financial information, and should be read in conjunction with our Annual Report on Form 10-K for the year ended May 31, 2011 (“Annual Report”). Accordingly, significant accounting policies and other disclosures normally provided have been omitted since such items are disclosed in our Annual Report.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments (including normal recurring adjustments) necessary to present fairly our financial position as of February 29, 2012, the results of our operations for the three- and nine-month periods ended February 29, 2012 and February 28, 2011 and cash flows for the nine-month periods ended February 29, 2012 and February 28, 2011. Operating results for the three- and nine-month periods ended February 29, 2012 are not necessarily indicative of the results that may be expected for the year ending May 31, 2012.

We are a wholly owned subsidiary of FedEx Corporation (“FedEx”) engaged in a single line of business and operate in one business segment — the worldwide express transportation and distribution of goods and documents.

Except as otherwise specified, references to years indicate our fiscal year ending May 31, 2012 or ended May 31 of the year referenced and comparisons are to the corresponding period of the prior year.

BUSINESS ACQUISITION. On July 25, 2011, FedEx completed its acquisition of Servicios Nacionales Mupa, S.A. de C.V. (MultiPack), a Mexican domestic express package delivery company, for $128 million in cash from operations. The financial results of the acquired business are included in our results from the date of acquisition and were not material to our results of operations or financial condition. Substantially all of the purchase price was allocated to goodwill.

EMPLOYEES UNDER COLLECTIVE BARGAINING ARRANGEMENTS. Our pilots, which represent a small number of our total employees, are employed under a collective bargaining agreement. During the fourth quarter of 2011 the pilots ratified a new labor contract that includes safety initiatives, increases in hourly pay rates and travel per diem rates, and provisions for opening a European crew base. The new contract becomes amendable in March 2013 as the pilot’s union determined, during the third quarter of 2012, not to exercise its option to shorten the contract. In addition to our pilots, certain of our non-U.S. employees are unionized.

STOCK-BASED COMPENSATION. FedEx has two types of equity-based compensation: stock options and restricted stock. The key terms of the stock option and restricted stock awards granted under FedEx’s incentive stock plans are set forth in FedEx’s Annual Report.

Our stock-based compensation expense was $7 million for the three-month period ended February 29, 2012 and $26 million for the nine-month period ended February 29, 2012. Our stock-based compensation expense was $6 million for the three-month period ended February 28, 2011 and $23 million for the nine-month period ended February 28, 2011. This amount represents the amount charged to us by FedEx for awards granted to our employees.

LONG-TERM DEBT. Long-term debt, exclusive of capital leases, had carrying values of $539 million at February 29, 2012 and May 31, 2011, compared with estimated fair values of $634 million at February 29, 2012 and $620 million at May 31, 2011. The estimated fair values were determined based on quoted market prices or on the current rates offered for debt with similar terms and maturities.

- 7 -

NEW ACCOUNTING GUIDANCE. New accounting rules and disclosure requirements can significantly impact our reported results and the comparability of our financial statements. See our Annual Report for a discussion of the impact of new accounting guidance issued but not yet effective as of May 31, 2011. We believe that no new accounting guidance was adopted or issued during the nine months of 2012 that is relevant to the readers of our financial statements. However, there are numerous new proposals under development which, if and when enacted, may have a significant impact on our financial reporting.

(2) Comprehensive Income

The following tables provide a reconciliation of net income reported in our financial statements to comprehensive income for the periods ended February 29, 2012 and February 28, 2011 (in millions):

		September 30,			September 30,
	Three Months Ended
	2012			2011

Net income	$	231		$	100
Other comprehensive income:
Foreign currency translation adjustments, net of tax of $15 in 2012 and $3 in 2011		63			32
Amortization of unrealized pension actuarial gains/losses, net of tax of $2 in 2012		3			—


Comprehensive income	$	297		$	132


	Nine Months Ended
	2012			2011
Net income	$	637		$	464
Other comprehensive income:
Foreign currency translation adjustments, net of tax of $5 in 2012 and $19 in 2011		(24	)		101
Amortization of unrealized pension actuarial gains/losses, net of tax of $3 in 2012		4			—


Comprehensive income	$	617		$	565

(3) Retirement Plans

We sponsor or participate in programs that provide retirement benefits to most of our employees. These programs include defined benefit pension plans, defined contribution plans and postretirement healthcare plans. A majority of our employees are covered by the FedEx Corporation Employees’ Pension Plan (“FedEx Plan”), a defined benefit pension plan sponsored by FedEx. The FedEx Plan covers certain U.S. employees age 21 and over with at least one year of service and provides benefits primarily based on earnings, age and years of service. Defined contribution plans covering a majority of U.S. employees and certain international employees are in place. We also sponsor or participate in nonqualified benefit plans covering certain of our U.S. employee groups and other pension plans covering certain of our international employees. For more information, refer to the financial statements of FedEx included in its Form 10-Q for the quarter ended February 29, 2012.

- 8 -

Our retirement plans costs for the periods ended February 29, 2012 and February 28, 2011 were as follows (in millions):

		September 30,		September 30,		September 30,		September 30,
	Three Months Ended				Nine Months Ended
	2012		2011		2012		2011
Pension plans sponsored by FedEx	$	81	$	80	$	241	$	241
Other U.S. domestic and international pension plans		13		12		34		33
U.S. domestic and international defined contribution plans		54		46		162		121
Postretirement healthcare plans		14		12		42		36


	$	162	$	150	$	479	$	431

The three- and nine-month periods ended February 29, 2012 reflect the full restoration on January 1, 2011 of company-matching contributions for our 401(k) plans.

The components of the net periodic benefit cost of the pension and postretirement healthcare plans currently sponsored by us were individually immaterial for all periods presented. No material contributions were made during the first nine months of 2012 or 2011 to pension plans sponsored by us, and we do not expect to make material contributions in 2012.

(4) Commitments

As of February 29, 2012, our purchase commitments under various contracts for the remainder of 2012 and annually thereafter were as follows (in millions):

		September 30,XXX		September 30,XXX		September 30,XXX
	Aircraft and Aircraft Related		Other⁽¹⁾		Total

2012 (remainder)	$	279	$	1	$	280
2013		743		12		755
2014		540		12		552
2015		734		8		742
2016		749		31		780
Thereafter		6,415		103		6,518

⁽¹⁾	Primarily advertising and promotions contracts.

The amounts reflected in the table above for purchase commitments represent noncancelable agreements to purchase goods or services. Our obligation to purchase 13 Boeing 777 Freighters (“B777F”) is conditioned upon there being no event that causes us or our employees not to be covered by the Railway Labor Act of 1926, as amended (“RLA”). Commitments to purchase aircraft in passenger configuration do not include the attendant costs to modify these aircraft for cargo transport unless we have entered into noncancelable commitments to modify such aircraft. Open purchase orders that are cancelable are not considered unconditional purchase obligations for financial reporting purposes and are not included in the table above.

In December 2011, we entered into an agreement to acquire 27 new Boeing 767-300 Freighter (“B767F”) aircraft, with the first three arriving in 2014 followed by six per year from 2015 to 2018. In conjunction with the execution of the B767F aircraft purchase agreement, we also delayed the delivery of nine B777F aircraft, five of which were deferred from 2014 and one per year from 2015 to 2018, to better align air network capacity to demand. We also removed the RLA condition from two of the 15 B777F aircraft (bringing the number of purchase obligations subject to the condition to 13) and exercised two B777F options for aircraft to be delivered at the end of the delivery schedule.

- 9 -

We had $734 million in deposits and progress payments as of February 29, 2012 on aircraft purchases and other planned aircraft-related transactions. These deposits are classified in the “Other assets” caption of our condensed consolidated balance sheets. In addition to our commitment to purchase B777Fs and B767Fs, our aircraft purchase commitments include the Boeing 757 (“B757”) in passenger configuration, which will require additional costs to modify for cargo transport. Aircraft and aircraft-related contracts are subject to price escalations. The following table is a summary of the key aircraft we are committed to purchase as of February 29, 2012, with the year of expected delivery:

		September 30,		September 30,		September 30,		September 30,
	B777F		B767F		B757		Total

2012 (remainder)		2		—		5		7
2013		4		—		8		12
2014		2		3		—		5
2015		2		6		—		8
2016		2		6		—		8
Thereafter		18		12		—		30

Total		30		27		13		70

A summary of future minimum lease payments under capital leases and noncancelable operating leases with an initial or remaining term in excess of one year at February 29, 2012 is as follows (in millions):

		September 30,		September 30,		September 30,		September 30,
			Operating Leases
	Capital Leases		Aircraft and Related Equipment		Facilities and Other		Total Operating Leases

2012 (remainder)	$	3	$	84	$	176	$	260
2013		118		486		660		1,146
2014		—		462		574		1,036
2015		—		448		536		984
2016		—		453		420		873
Thereafter		—		1,541		3,658		5,199

Total		121	$	3,474	$	6,024	$	9,498


Less amount representing interest		3

Present value of net minimum lease payments	$	118

(5) Contingencies

ATA Airlines. In October 2010, a jury returned a verdict in favor of ATA Airlines in its breach of contract lawsuit against us and awarded damages of $66 million, and in January 2011, the court awarded ATA pre-judgment interest of $5 million. In December 2011, the Seventh Circuit overturned the entire judgment entered against us. ATA Airlines requested the Seventh Circuit to rehear oral argument on appeal, and in February 2012, the Seventh Circuit denied the request. The time for filing further appeal has passed. We have reversed the $66 million accrual established in the second quarter of 2011.

- 10 -

California Paystub Class Action. A federal court in California ruled in April 2011 that paystubs for certain FedEx Express employees 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 noncompliant paystubs. The court certified the class in June 2011. The court has ruled that we are liable to the State of California, and there will be a ruling as to whether we are liable to class members who can prove they were injured by the paystub deficiencies. 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. Prior to any decision on the amount of liability, we reached an agreement to settle this matter for an immaterial amount in October 2011, subject to approval by the court. The court preliminarily approved the proposed settlement in January 2012. Class notices were mailed in March 2012.

Other. FedEx Express and its subsidiaries are subject to other legal proceedings 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.

(6) Parent/Affiliate Transactions

Affiliate company balances that are currently receivable or payable relate to charges for services provided to or by other FedEx affiliates, which are settled on a monthly basis, or the net activity from participation in FedEx’s consolidated cash management program. In addition, we are allocated net interest on these amounts at market rates.

We maintain an accounts receivable arrangement with FedEx TechConnect, Inc. (“FedEx TechConnect”), a wholly owned subsidiary of FedEx Corporate Services, Inc. (“FedEx Services”). FedEx Services is a wholly owned subsidiary of FedEx. Under this arrangement, we recognize revenue for the transportation services provided to our U.S. customers and factor the related receivables to FedEx TechConnect for collection. We have no continuing involvement with the receivables transferred to FedEx TechConnect. Our net receivables recorded by FedEx TechConnect totaled $1.3 billion at February 29, 2012 and $1.4 billion at May 31, 2011.

The costs of the FedEx Services segment are allocated to us and are included in the expense line item “Intercompany charges” based on metrics such as relative revenues or estimated services provided. We believe these allocations approximate the net cost of the functions provided by the FedEx Services segment.

(7) Supplemental Cash Flow Information

Cash paid for interest expense and income taxes for the nine-month periods ended February 29, 2012 and February 28, 2011 was as follows (in millions):

		September 30,			September 30,
	2012			2011

Cash payments for:
Interest (net of capitalized interest)	$	—		$	9


Income taxes		212			259
Income tax refunds received		(270	)		(256	)

Cash tax payments, net	$	(58	)	$	3

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REPORT OF INDEPENDENT REGISTERED

PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholder

Federal Express Corporation

We have reviewed the condensed consolidated balance sheet of Federal Express Corporation as of February 29, 2012, and the related condensed consolidated statements of income for the three-month and nine-month periods ended February 29, 2012 and February 28, 2011 and the condensed consolidated statements of cash flows for the nine-month periods ended February 29, 2012 and February 28, 2011. These financial statements are the responsibility of the Company’s management.

We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the condensed consolidated financial statements referred to above for them to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Federal Express Corporation as of May 31, 2011, and the related consolidated statements of income, changes in owner’s equity and comprehensive income, and cash flows for the year then ended not presented herein, and in our report dated July 12, 2011, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of May 31, 2011, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

/s/ Ernst & Young LLP

Memphis, Tennessee

March 23, 2012

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Item 2.

Management’s Discussion and Analysis of Results of Operations and Financial Condition

GENERAL

The following Management’s Discussion and Analysis of Results of Operations and Financial Condition, which describes the principal factors affecting the results of operations and financial condition of Federal Express Corporation (“FedEx Express”), is abbreviated pursuant to General Instruction H(2)(a) of Form 10-Q. This discussion should be read in conjunction with the accompanying quarterly unaudited condensed consolidated financial statements and our Annual Report on Form 10-K for the year ended May 31, 2011 (“Annual Report”). Our Annual Report includes additional information about our significant accounting policies, practices and the transactions that underlie our financial results. For additional information, including a discussion of outlook, liquidity, capital resources, contractual cash obligations and critical accounting estimates, see the Quarterly Report on Form 10-Q of our parent, FedEx Corporation (“FedEx”), for the quarter ended February 29, 2012.

We are the world’s largest express transportation company. Our sister company FedEx Corporate Services, Inc. (“FedEx Services”) provides us and our other sister companies, including FedEx Ground Package System, Inc. (“FedEx Ground”), with customer-facing sales, marketing, information technology and customer service support, as well as retail access for our customers through FedEx Office and Print Services, Inc. (“FedEx Office”). For the international regions of FedEx Express, some of these functions are performed on a regional basis by FedEx Express and reported in the FedEx Express segment in expense line items outside of intercompany charges.

The operating expenses line item “Intercompany charges” on the financial summary represents an allocation that primarily includes salaries and benefits, depreciation and other costs for the sales, marketing, information technology and customer service support provided to us by FedEx Services and FedEx Office’s net operating costs. These costs are allocated based on metrics such as relative revenues or estimated services provided. “Intercompany charges” also includes allocated charges from our parent for management fees related to services received for general corporate oversight, including executive officers and certain legal and finance functions. We believe the total amounts allocated reasonably reflect the cost of providing these functions.

The key indicators necessary to understand our operating results include:

•

the overall customer demand for our various services;

•

the volume of shipments transported through our network, as measured by our average daily volume and shipment weight;

•

the mix of services purchased by our customers;

•

the prices we obtain for our services, as measured by average revenue per package (yield);

•

our ability to manage our cost structure (capital expenditures and operating expenses) to match shifting volume levels; and

•

the timing and amount of fluctuations in fuel prices and our ability to recover incremental fuel costs through our fuel surcharges.

The majority of our operating expenses are directly impacted by revenue and volume levels. Accordingly, we expect these operating expenses to fluctuate on a year-over-year basis consistent with the change in revenues and volumes. Therefore, the discussion of operating expense captions focuses on the key drivers and trends impacting expenses other than changes in revenues and volume.

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RESULTS OF OPERATIONS

The following tables compare revenues, operating expenses, operating expenses as a percent of revenue, operating income, net income and operating margin (dollars in millions) for the periods ended February 29, 2012 and February 28, 2011:

		XXXX			XXXX			XXXX			XXXX			XXXX			XXXX
	Three Months Ended						Percent			Nine Months Ended						Percent
	2012			2011			Change			2012			2011			Change

Revenues:
Package:
U.S. overnight box	$	1,619		$	1,514			7		$	4,882		$	4,494			9
U.S. overnight envelope		426			425			—			1,298			1,273			2
U.S. deferred		792			743			7			2,254			2,070			9

Total U.S. domestic package revenue		2,837			2,682			6			8,434			7,837			8

International priority⁽¹⁾		2,079			1,974			5			6,448			5,957			8
International domestic⁽²⁾		210			158			33			634			471			35

Total package revenue		5,126			4,814			6			15,516			14,265			9
Freight:
U.S.		647			565			15			1,866			1,618			15
International priority⁽³⁾		443			412			8			1,362			1,253			9
International airfreight		77			68			13			228			207			10

Total freight revenue		1,167			1,045			12			3,456			3,078			12
Other		70			55			27			206			181			14

Total revenues		6,363			5,914			8			19,178			17,524			9
Operating expenses:
Salaries and employee benefits		2,337			2,255			4			6,985			6,636			5
Purchased transportation		337			313			8			1,012			910			11
Rentals and landing fees		418			419			—			1,251			1,238			1
Depreciation and amortization		296			263			13			860			778			11
Fuel		1,078			898			20			3,193			2,454			30
Maintenance and repairs		301			330			(9	)		1,032			999			3
Intercompany charges		540			491			10			1,622			1,502			8
Other⁽⁴⁾		705			769			(8	)		2,251			2,225			1

Total operating expenses		6,012			5,738			5			18,206			16,742			9

Operating income	$	351		$	176			99		$	972		$	782			24


Operating margin		5.5	%		3.0	%		250	bp		5.1	%		4.5	%		60	bp

Other income (expense):
Interest, net		8			2			NM			28			6			NM
Other, net		(18	)		(22	)		(18	)		(38	)		(59	)		(36	)

		(10	)		(20	)		NM			(10	)		(53	)		NM


Income before income taxes		341			156			119			962			729			32

Provision for income taxes		110			56			96			325			265			23


Net income	$	231		$	100			131		$	637		$	464			37

⁽¹⁾	International priority package revenues include our international overnight package, international overnight letter and international economy services.

⁽²⁾	International domestic revenues include our international intra-country operations, including acquisitions in India (February 2011) and Mexico (July 2011).

⁽³⁾	International priority freight revenues include our international priority freight and international economy freight services.

⁽⁴⁾	The third quarter of 2012 includes the reversal of a $66 million legal reserve associated with the ATA Airlines lawsuit. The reserve was initially recorded in the second quarter of 2011 (see Note 5 of the accompanying unaudited condensed consolidated financial statements).

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		September 30,			September 30,			September 30,			September 30,
	Percent of Revenue						Percent of Revenue
	Three Months Ended			Three Months Ended			Nine Months Ended			Nine Months Ended
	2012			2011			2012			2011

Operating expenses:
Salaries and employee benefits		36.7	%		38.1	%		36.4	%		37.9	%
Purchased transportation		5.3			5.3			5.3			5.2
Rentals and landing fees		6.6			7.1			6.5			7.0
Depreciation and amortization		4.7			4.4			4.5			4.4
Fuel		16.9			15.2			16.6			14.0
Maintenance and repairs		4.7			5.6			5.4			5.7
Intercompany charges		8.5			8.3			8.5			8.6
Other⁽¹⁾		11.1			13.0			11.7			12.7

Total operating expenses		94.5			97.0			94.9			95.5


Operating margin		5.5	%		3.0	%		5.1	%		4.5	%

⁽¹⁾	The third quarter of 2012 includes the reversal of a $66 million legal reserve associated with the ATA Airlines lawsuit. The reserve was initially recorded in the second quarter of 2011 (see Note 5 of the accompanying unaudited condensed consolidated financial statements).

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The following table compares selected statistics (in thousands, except yield amounts) for the periods ended February 29, 2012 and February 28, 2011:

		xxxx		xxxx		xxxx			xxxx		xxxx		xxxx
	Three Months Ended				Percent			Nine Months Ended				Percent
	2012		2011		Change			2012		2011		Change

Package Statistics
Average daily package volume (ADV):
U.S. overnight box		1,171		1,218		(4	)		1,158		1,194		(3	)
U.S. overnight envelope		581		631		(8	)		586		627		(7	)
U.S. deferred		923		952		(3	)		863		887		(3	)

Total U.S. domestic ADV		2,675		2,801		(4	)		2,607		2,708		(4	)

International priority⁽¹⁾		552		558		(1	)		555		569		(2	)
International domestic⁽²⁾		508		337		51			493		338		46

Total ADV		3,735		3,696		1			3,655		3,615		1

Revenue per package (yield):
U.S. overnight box	$	21.93	$	20.05		9		$	22.08	$	19.81		11
U.S. overnight envelope		11.65		10.87		7			11.59		10.68		9
U.S. deferred		13.62		12.60		8			13.67		12.29		11
U.S. domestic composite		16.83		15.45		9			16.94		15.23		11
International priority⁽¹⁾		59.78		57.07		5			60.88		55.06		11
International domestic⁽²⁾		6.57		7.54		(13	)		6.73		7.33		(8	)
Composite package yield		21.79		21.01		4			22.23		20.77		7
Freight Statistics
Average daily freight pounds:
U.S.		8,104		8,000		1			7,561		7,447		2
International priority⁽³⁾		3,257		3,131		4			3,279		3,158		4
International airfreight		1,169		1,262		(7	)		1,182		1,248		(5	)

Total average daily freight pounds		12,530		12,393		1			12,022		11,853		1

Revenue per pound (yield):
U.S.	$	1.27	$	1.14		11		$	1.29	$	1.14		13
International priority⁽³⁾		2.16		2.12		2			2.18		2.09		4
International airfreight		1.04		0.88		18			1.01		0.88		15
Composite freight yield		1.48		1.36		9			1.51		1.37		10

⁽¹⁾	International priority package statistics include our international overnight package, international overnight letter and international economy services.

⁽²⁾	International domestic statistics include our international intra-country operations, including acquisitions in India (February 2011) and Mexico (July 2011).

⁽³⁾	International priority freight statistics include our international priority freight and international economy freight services.

Revenues

Our revenues increased 8% in the third quarter and 9% in the nine months of 2012 primarily due to an increase in U.S. domestic and IP package yields, partially offset by decreases in U.S. domestic and IP volumes. Ongoing weakness in global growth continued to be reflected in reduced demand for our U.S. domestic and IP package services in the third quarter and nine months of 2012. U.S. domestic package yields increased in the third quarter primarily due to increased rate per pound and higher fuel surcharges. IP package yields increased in the third quarter due to higher fuel surcharges and increased package weights. In the nine months of 2012, U.S. domestic package yields increased primarily due to higher fuel surcharges and increased rate per pound. IP package yields increased in the nine months of 2012 primarily due to higher fuel surcharges, increased rate per pound and increased package weights.

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Our fuel surcharges are indexed to the spot price for jet fuel. Using this index, the U.S. domestic and outbound fuel surcharge and the international fuel surcharges ranged as follows for the periods ended February 29, 2012 and February 28, 2011:

		September 30,			September 30,			September 30,			September 30,
	Three Months Ended						Nine Months Ended
	2012			2011			2012			2011

U.S. Domestic and Outbound Fuel Surcharge:
Low		11.50	%		9.00	%		11.50	%		7.00	%
High		14.00			10.00			16.50			10.00
Weighted-average		12.91			9.70			14.36			8.68

International Fuel Surcharges:
Low		13.50			9.00			13.50			7.00
High		19.00			15.00			23.00			15.00
Weighted-average		16.45			12.04			17.23			11.22

On January 2, 2012, we implemented a 5.9% average list price increase for FedEx Express U.S. domestic, U.S. export and U.S. import services, while we lowered our fuel surcharge index by two percentage points. On January 3, 2011, we implemented a 5.9% average list price increase for FedEx Express U.S. domestic and U.S. outbound express package and freight shipments and made various changes to other surcharges, while we lowered our fuel surcharge index by two percentage points.

Operating Income

Our operating results for the third quarter and nine months of 2012 benefited from the timing lag that exists between when fuel prices change and when indexed fuel surcharges automatically adjust. Our third quarter of 2012 results also benefited from a milder winter, as third quarter of 2011 results were negatively impacted by unusually severe winter weather. Our third quarter of 2012 results include the reversal of a legal reserve of $66 million associated with the ATA Airlines lawsuit (see the “Overview” section above and Note 5 of the accompanying unaudited condensed consolidated financial statements). This reserve was initially recorded in the second quarter of 2011. Additionally, our operating income and operating margin increased during the third quarter and nine months of 2012 due to U.S. domestic and IP package yield improvement, partially offset by decreases in U.S. domestic and IP volumes. One additional operating day also contributed to earnings growth for the third quarter and nine months of 2012.

Salaries and employee benefits increased 4% in the third quarter of 2012 and 5% in the nine months of 2012 due to higher incentive compensation accruals and the full reinstatement of 401(k) company-matching contributions effective January 1, 2011. Purchased transportation costs increased 8% in the third quarter and 11% in the nine months of 2012 due to costs associated with recent business acquisitions in India and Mexico and higher utilization of third-party transportation providers, primarily in Europe. Intercompany charges increased 10% in the third quarter of 2012 and 8% in the nine months of 2012 due to higher allocated variable incentive compensation expenses.

Fuel costs increased 20% in the third quarter of 2012 and 30% in the nine months of 2012 due to increases in the average price per gallon of fuel. Based on a static analysis of the net impact of year-over-year changes in fuel prices compared to year-over-year changes in fuel surcharges, fuel had a positive impact on operating income in both the third quarter and nine months of 2012. This analysis considers the estimated impact of the reduction in fuel surcharges included in the base rates charged for our services.

Other Income and Income Taxes

Interest expense decreased during the third quarter and nine months of 2012 primarily due to increased capitalized interest related to aircraft and lower interest expense. Other non-operating expense decreased in the third quarter and nine months of 2012 primarily due to lower management fees.

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Our effective tax rate was 32.4% for the third quarter of 2012 and 33.8% for the nine months of 2012, compared with 35.9% for the third quarter of 2011 and 36.4% for the nine months of 2011. Our tax rates for both periods in 2012 were favorably impacted by the conclusion of the Internal Revenue Service (“IRS”) audit of our 2007-2009 consolidated income tax returns noted below. For the remainder of 2012, we expect our effective tax rate to be between 36.0% and 37.0%. The actual rate, however, will depend on a number of factors, including the amount and source of operating income.

As of February 29, 2012, there were no material changes to our liabilities for unrecognized tax benefits from May 31, 2011. The IRS completed its audit of our 2007 through 2009 consolidated U.S. income tax returns, and the result of the audit did not have a material effect on our consolidated financial statements.

We file income tax returns in the U.S. and various U.S. states and foreign jurisdictions. It is reasonably possible that certain other U.S. federal, U.S. state and foreign jurisdiction income tax return proceedings could be completed during the next 12 months and result in a change in our balance of unrecognized tax benefits. An estimate of the range of the change cannot be made at this time; however, the expected impact of any changes would not be material to our consolidated financial statements.

Business Acquisition

On July 25, 2011, FedEx completed its acquisition of Servicios Nacionales Mupa, S.A. de C.V. (MultiPack), a Mexican domestic express package delivery company, for $128 million in cash from operations. The financial results of the acquired business are included in our results from the date of acquisition and were not material to our results of operations or financial condition. Substantially all of the purchase price was allocated to goodwill.

NEW ACCOUNTING GUIDANCE

New accounting rules and disclosure requirements can significantly impact our reported results and the comparability of our financial statements. See our Annual Report for a discussion of the impact of new accounting guidance issued but not yet effective as of May 31, 2011. We believe that no new accounting guidance was adopted or issued during the nine months of 2012 that is relevant to the readers of our financial statements. However, there are numerous new proposals under development which, if and when enacted, may have a significant impact on our financial reporting.

FORWARD-LOOKING STATEMENTS

Certain statements in this report are “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to our financial condition, results of operations, cash flows, plans, objectives, future performance and business. Forward-looking statements include those preceded by, followed by or that include the words “may,” “could,” “would,” “should,” “believes,” “expects,” “anticipates,” “plans,” “estimates,” “targets,” “projects,” “intends” or similar expressions. These forward-looking statements involve risks and uncertainties. Actual results may differ materially from those contemplated (expressed or implied) by such forward-looking statements, because of, among other things, potential risks and uncertainties, such as:

•

economic conditions in the global markets in which we operate;

•

damage to our reputation or loss of brand equity;

•

disruptions to the Internet or our technology infrastructure, including those impacting our computer systems and Web site, which can adversely affect our operations and reputation among customers;

•

the price and availability of jet and vehicle fuel;

- 18 -

•

our ability to manage our cost structure for capital expenditures and operating expenses, and match it to shifting and future customer volume levels;

•

the impact of intense competition on our ability to maintain or increase our prices (including our fuel surcharges in response to rising fuel costs) or to maintain or grow our market share;

•

our ability to maintain good relationships with our employees and prevent attempts by labor organizations to organize groups of our employees, which could significantly increase our operating costs and reduce our operational flexibility;

•

our ability to effectively operate, integrate, leverage and grow acquired businesses, and to continue to support the value we allocate to these acquired businesses, including their goodwill;

•

any impacts on our businesses resulting from new domestic or international government laws and regulation, including regulatory actions affecting global aviation rights, increased air cargo and other security or pilot safety requirements, and tax, accounting, trade (such as protectionist measures enacted in response to weak economic conditions), labor (such as card-check legislation, hours of service regulations or changes to the Railway Labor Act affecting our employees), environmental (such as global climate change legislation) or postal rules;

•

adverse weather conditions or localized natural disasters in key geographic areas, such as earthquakes, volcanoes, and hurricanes, which can disrupt our electrical service, damage our property, disrupt our operations, increase our fuel costs and adversely affect our shipment levels;

•

increasing costs, the volatility of costs and funding requirements and other legal mandates for employee benefits, especially pension and healthcare benefits;

•

the impact of any international conflicts or terrorist activities on the United States and global economies in general, the transportation industry or us in particular, and what effects these events will have on our costs or the demand for our services;

•

changes in foreign currency exchange rates, especially in the euro, Japanese yen, Chinese yuan, Canadian dollar, Swiss Franc and British pound, which can affect our sales levels and foreign currency sales prices;

•

market acceptance of our new service and growth initiatives;

•

any liability resulting from and the costs of defending against class-action litigation, such as wage-and-hour and discrimination and retaliation claims, and any other legal proceedings;

•

the outcome of future negotiations to reach new collective bargaining agreements — including with the union that represents our pilots (the current pilot contract is scheduled to become amendable in March 2013);

•

any impact on our business from disruptions or modifications in service by the United States Postal Service (“USPS”), which is a significant customer of ours, as a consequence of the USPS’s current financial difficulties or any resulting structural changes to its operations, network, service offerings or pricing;

•

the impact of technology developments on our operations and on demand for our services, and our ability to continue to identify and eliminate unnecessary information technology redundancy and complexity throughout the organization;

•

widespread outbreak of an illness or any other communicable disease, or any other public health crisis;

- 19 -

•

availability of financing on terms acceptable to FedEx and FedEx’s ability to maintain our current credit ratings, especially given the capital intensity of our operations;

•

significant changes in the volumes of shipments transported through our networks, customer demand for our various services or the prices we obtain for our services; and

•

other risks and uncertainties you can find in FedEx’s press releases and SEC filings, including the risk factors identified under the heading “Risk Factors” in “Management’s Discussion and Analysis of Results of Operations and Financial Condition” in our Annual Report, as updated by our quarterly reports on Form 10-Q.

As a result of these and other factors, no assurance can be given as to our future results and achievements. Accordingly, a forward-looking statement is neither a prediction nor a guarantee of future events or circumstances, and those future events or circumstances may not occur. You should not place undue reliance on forward-looking statements, which speak only as of the date on which they are made. We undertake no obligation to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise.

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Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Omitted under the reduced disclosure format permitted by General Instruction H(2)(c) of Form 10-Q.

Item 4.

Controls and Procedures

Our management, with the participation of our principal executive and financial officers, has evaluated the effectiveness of our disclosure controls and procedures in ensuring that the information required to be disclosed in our filings under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, including ensuring that such information is accumulated and communicated to management as appropriate to allow timely decisions regarding required disclosure. Based on such evaluation, our principal executive and financial officers have concluded that such disclosure controls and procedures were effective as of February 29, 2012 (the end of the period covered by this Quarterly Report on Form 10-Q).

During our fiscal quarter ended February 29, 2012, no change occurred in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

For a description of all material pending legal proceedings, see Note 5 of the accompanying unaudited condensed consolidated financial statements.

In February 2011, we received a demand for production of information and documents in connection with a civil investigation by the Antitrust Division of the U.S. Department of Justice into the policies and practices of FedEx and United Parcel Service, Inc. for dealing with third-party consultants who work with shipping customers to negotiate lower rates. Related antitrust litigation with one of these third-party consultants was dismissed in late May 2011, but the court granted the plaintiff permission to file an amended complaint, which FedEx received in late June 2011. In November 2011, the court granted FedEx’s motion to dismiss this complaint, but again allowed the plaintiff to file an amended complaint. The plaintiff filed a new complaint on December 12, 2011.

Item 1A.

Risk Factors

With the exception of the inclusion in “Forward-Looking Statements” of a risk factor relating to our relationship, as a significant customer and vendor, with the USPS, there have been no material changes from the risk factors disclosed in our Annual Report (under the heading “Risk Factors” in “Management’s Discussion and Analysis of Results of Operations and Financial Condition”) in response to Part I, Item 1A of Form 10-K.

Item 6.

Exhibits


Exhibit Number		Description of Exhibit

10.1		Boeing 767-352 Freighter Purchase Agreement dated as of December 14, 2011 between The Boeing Company and Federal Express Corporation. Confidential treatment has been requested for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (Filed as Exhibit 10.1 to FedEx Corporation’s FY12 Third Quarter Report on Form 10-Q, and incorporated herein by reference.)

10.2		Supplemental Agreement No. 20 (and related side letters) dated as of December 14, 2011, amending the Boeing 777 Freighter Purchase Agreement dated as of November 7, 2006 between The Boeing Company and Federal Express Corporation. Confidential treatment has been requested for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (Filed as Exhibit 10.2 to FedEx Corporation’s FY12 Third Quarter Report on Form 10-Q, and incorporated herein by reference.)

10.3		Amendment dated December 5, 2011 to the Transportation Agreement dated July 31, 2006 between the United States Postal Service and Federal Express Corporation. Confidential treatment has been requested for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (Filed as Exhibit 10.3 to FedEx Corporation’s FY12 Third Quarter Report on Form 10-Q, and incorporated herein by reference.)

10.4		Fourth Amendment dated December 22, 2011 (but effective as of December 15, 2011) to the Composite Lease Agreement dated May 21, 2007 (but effective as of January 1, 2007) between the Memphis-Shelby Airport Authority and Federal Express Corporation. (Filed as Exhibit 10.4 to FedEx Corporation’s FY12 Third Quarter Report on Form 10-Q, and incorporated herein by reference.)

- 22 -


Exhibit Number		Description of Exhibit

12.1		Computation of Ratio of Earnings to Fixed Charges.

15.1		Letter re: Unaudited Interim Financial Statements.

31.1		Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.1		Interactive Data Files.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

- 24 -

EXHIBIT INDEX


Exhibit Number		Description of Exhibit

10.1		Boeing 767-352 Freighter Purchase Agreement dated as of December 14, 2011 between The Boeing Company and Federal Express Corporation. Confidential treatment has been requested for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (Filed as Exhibit 10.1 to FedEx Corporation’s FY12 Third Quarter Report on Form 10-Q, and incorporated herein by reference.)

10.2		Supplemental Agreement No. 20 (and related side letters) dated as of December 14, 2011, amending the Boeing 777 Freighter Purchase Agreement dated as of November 7, 2006 between The Boeing Company and Federal Express Corporation. Confidential treatment has been requested for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (Filed as Exhibit 10.2 to FedEx Corporation’s FY12 Third Quarter Report on Form 10-Q, and incorporated herein by reference.)

10.3		Amendment dated December 5, 2011 to the Transportation Agreement dated July 31, 2006 between the United States Postal Service and Federal Express Corporation. Confidential treatment has been requested for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (Filed as Exhibit 10.3 to FedEx Corporation’s FY12 Third Quarter Report on Form 10-Q, and incorporated herein by reference.)

10.4		Fourth Amendment dated December 22, 2011 (but effective as of December 15, 2011) to the Composite Lease Agreement dated May 21, 2007 (but effective as of January 1, 2007) between the Memphis-Shelby Airport Authority and Federal Express Corporation. (Filed as Exhibit 10.4 to FedEx Corporation’s FY12 Third Quarter Report on Form 10-Q, and incorporated herein by reference.)

12.1		Computation of Ratio of Earnings to Fixed Charges.

15.1		Letter re: Unaudited Interim Financial Statements.

31.1		Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.1		Interactive Data Files.

E-1

Large accelerated filer

Accelerated filer

Non-accelerated filer

þ (Do not check if a smaller reporting company)

Smaller reporting company