UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE QUARTERLY PERIOD ENDED
OR
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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:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
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(Address of principal executive offices) |
(ZIP Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
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Trading Symbol |
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Name of each exchange on which registered |
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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.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Accelerated filer ☐ |
Non-accelerated filer ☐ |
Smaller reporting company |
Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) 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
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Common Stock |
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Outstanding Shares at December 17, 2024 |
Common Stock, par value $0.10 per share |
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FEDEX CORPORATION
INDEX
- 2 -
FEDEX CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN MILLIONS)
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November 30, 2024 |
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May 31, |
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ASSETS |
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CURRENT ASSETS |
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Cash and cash equivalents |
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$ |
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$ |
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Receivables, less allowances of $ |
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Spare parts, supplies, and fuel, less allowances of $ |
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Prepaid expenses and other |
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Total current assets |
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PROPERTY AND EQUIPMENT, AT COST |
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Less accumulated depreciation and amortization |
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Net property and equipment |
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OTHER LONG-TERM ASSETS |
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Operating lease right-of-use assets, net |
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Goodwill |
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Other assets |
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Total other long-term assets |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
- 3 -
FEDEX CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN MILLIONS, EXCEPT SHARE DATA)
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November 30, 2024 |
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May 31, |
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LIABILITIES AND COMMON STOCKHOLDERS’ INVESTMENT |
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CURRENT LIABILITIES |
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Current portion of long-term debt |
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$ |
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$ |
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Accrued salaries and employee benefits |
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Accounts payable |
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Operating lease liabilities |
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Accrued expenses |
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Total current liabilities |
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LONG-TERM DEBT, LESS CURRENT PORTION |
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OTHER LONG-TERM LIABILITIES |
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Deferred income taxes |
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Pension, postretirement healthcare, and other benefit obligations |
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Self-insurance accruals |
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Operating lease liabilities |
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Other liabilities |
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Total other long-term liabilities |
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COMMON STOCKHOLDERS’ INVESTMENT |
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Common stock, $ |
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Additional paid-in capital |
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Retained earnings |
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Accumulated other comprehensive loss |
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( |
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( |
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Treasury stock, at cost |
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( |
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( |
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Total common stockholders’ investment |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
- 4 -
FEDEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
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Three Months Ended |
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Six Months Ended |
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November 30, 2024 |
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November 30, 2023 |
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November 30, 2024 |
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November 30, 2023 |
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REVENUE |
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$ |
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$ |
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$ |
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$ |
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OPERATING EXPENSES: |
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Salaries and employee benefits |
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Purchased transportation |
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Rentals and landing fees |
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Depreciation and amortization |
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Fuel |
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Maintenance and repairs |
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Business optimization costs |
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Other |
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OPERATING INCOME |
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OTHER (EXPENSE) INCOME: |
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Interest, net |
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( |
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( |
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( |
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Other retirement plans, net |
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Other, net |
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( |
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( |
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( |
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( |
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INCOME BEFORE INCOME TAXES |
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PROVISION FOR INCOME TAXES |
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NET INCOME |
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$ |
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$ |
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$ |
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$ |
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EARNINGS PER COMMON SHARE: |
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Basic |
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$ |
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$ |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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$ |
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$ |
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DIVIDENDS DECLARED PER COMMON SHARE |
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$ |
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$ |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
- 5 -
FEDEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
(IN MILLIONS)
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Three Months Ended |
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Six Months Ended |
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November 30, 2024 |
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November 30, 2023 |
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November 30, 2024 |
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November 30, 2023 |
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NET INCOME |
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$ |
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$ |
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$ |
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$ |
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OTHER COMPREHENSIVE INCOME (LOSS): |
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Foreign currency translation adjustments, net of tax benefit/(expense) of $ |
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( |
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( |
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— |
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Prior service credit arising during period, net of tax (expense) of ($ |
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— |
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— |
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Amortization of prior service credit, net of tax benefit of $ |
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( |
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( |
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( |
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( |
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( |
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( |
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COMPREHENSIVE INCOME |
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$ |
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$ |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
- 6 -
FEDEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN MILLIONS)
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Six Months Ended |
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November 30, 2024 |
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November 30, 2023 |
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Operating Activities: |
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Net income |
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$ |
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$ |
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Adjustments to reconcile net income to cash provided by operating activities: |
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Depreciation and amortization |
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Provision for uncollectible accounts |
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Other noncash items including leases and deferred income taxes |
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Stock-based compensation |
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Business optimization costs, net of payments |
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( |
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Changes in assets and liabilities: |
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Receivables |
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( |
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( |
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Other assets |
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( |
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( |
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Accounts payable and other liabilities |
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( |
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( |
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Other, net |
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( |
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Cash provided by operating activities |
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Investing Activities: |
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Capital expenditures |
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( |
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( |
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Purchase of investments |
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( |
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( |
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Proceeds from sale of investments |
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Proceeds from asset dispositions and other |
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Cash used in investing activities |
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( |
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( |
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Financing Activities: |
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Principal payments on debt |
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( |
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Proceeds from stock issuances |
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Dividends paid |
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( |
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( |
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Purchase of treasury stock |
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( |
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( |
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Other |
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( |
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Cash used in financing activities |
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( |
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( |
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Effect of exchange rate changes on cash |
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( |
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( |
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Net decrease in cash and cash equivalents |
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( |
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( |
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Cash and cash equivalents at beginning of period |
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Cash and cash equivalents at end of period |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
- 7 -
FEDEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN COMMON STOCKHOLDERS’ INVESTMENT
(UNAUDITED)
(IN MILLIONS, EXCEPT SHARE DATA)
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Three Months Ended |
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Six Months Ended |
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November 30, 2024 |
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November 30, 2023 |
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November 30, 2024 |
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November 30, 2023 |
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Common Stock |
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Beginning Balance |
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$ |
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$ |
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$ |
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$ |
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Ending Balance |
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Additional Paid-in Capital |
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Beginning Balance |
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Purchase of treasury stock |
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( |
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( |
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( |
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Employee incentive plans and other |
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Ending Balance |
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Retained Earnings |
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Beginning Balance |
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Net Income |
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Cash dividends declared ($ |
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( |
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( |
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( |
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( |
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Ending Balance |
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Accumulated Other Comprehensive Loss |
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Beginning Balance |
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( |
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( |
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( |
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( |
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Other comprehensive (loss)/income, net of tax benefit/(expense) of $ |
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( |
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( |
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Ending Balance |
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( |
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( |
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( |
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( |
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Treasury Stock |
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Beginning Balance |
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( |
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( |
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( |
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( |
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Purchase of treasury stock ( |
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( |
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( |
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( |
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( |
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Employee incentive plans and other ( |
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Ending Balance |
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( |
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( |
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( |
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( |
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Total Common Stockholders’ Investment Balance |
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$ |
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$ |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
- 8 -
FEDEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1: Description of Business Segments and Summary of Significant Accounting Policies
DESCRIPTION OF BUSINESS SEGMENTS. FedEx Corporation (“FedEx”) provides a broad portfolio of transportation, e-commerce, and business services, offering integrated business solutions utilizing our flexible, efficient, and intelligent global network. Our primary operating companies are Federal Express Corporation (“Federal Express”), the world’s largest express transportation company and a leading North American provider of small-package ground delivery services, and FedEx Freight, Inc. (“FedEx Freight”), a leading North American provider of less-than-truckload (“LTL”) freight transportation services.
In connection with our one FedEx consolidation plan, on June 1, 2024, FedEx Ground Package System, Inc. (“FedEx Ground”) and FedEx Corporate Services, Inc. (“FedEx Services”) were merged into Federal Express, becoming a single company operating a unified, fully integrated air-ground express network under the respected FedEx brand. FedEx Freight continues to provide LTL freight transportation services as a separate subsidiary. Beginning in the first quarter of 2025, Federal Express and FedEx Freight represent our major service lines and constitute our reportable segments. Additionally, the results of FedEx Custom Critical, Inc. (“FedEx Custom Critical”) are included in the FedEx Freight segment instead of the Federal Express segment in 2025. Prior-year amounts were revised to reflect this presentation.
We evaluated our reporting units with significant recorded goodwill during the fourth quarter of 2024, and the estimated fair value of each reporting unit exceeded its carrying value as of the end of 2024 immediately before our one FedEx consolidation. We reevaluated the conclusion of our 2024 goodwill impairment tests as of June 1, 2024 immediately after our one FedEx consolidation and concluded that the estimated fair values of our reporting units with significant goodwill continued to exceed their respective carrying values.
In June 2024, we announced that FedEx’s management and Board of Directors were conducting an assessment of the role of FedEx Freight in the company’s portfolio structure. On December 19, 2024, we announced that the Board of Directors concluded that assessment and decided to pursue a full separation of FedEx Freight through the capital markets, creating a new publicly traded company. The transaction is intended to qualify as a tax-free separation for U.S. federal income tax purposes for FedEx stockholders and is expected to be executed within the next 18 months.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. These interim financial statements of FedEx have been prepared in accordance with accounting principles generally accepted in the United States and Securities and Exchange Commission (“SEC”) instructions for interim financial information, and should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended May 31, 2024 (“Annual Report”). 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 November 30, 2024, and the results of our operations for the three- and six-month periods ended November 30, 2024 and 2023, cash flows for the six-month periods ended November 30, 2024 and 2023, and changes in common stockholders’ investment for the three- and six-month periods ended November 30, 2024 and 2023. Operating results for the three- and six-month periods ended November 30, 2024 are not necessarily indicative of the results that may be expected for the year ending May 31, 2025.
Except as otherwise specified, references to years indicate our fiscal year ending May 31, 2025 or ended May 31 of the year referenced and comparisons are to the corresponding period of the prior year.
Contract Assets and Liabilities. Contract assets include billed and unbilled amounts resulting from in-transit shipments, as we have an unconditional right to payment only once all performance obligations have been completed (e.g., packages have been delivered). Contract assets are generally classified as current, and the full balance is converted each quarter based on the short-term nature of the transactions. Our contract liabilities consist of advance payments and billings in excess of revenue. The full balance of deferred revenue is converted each quarter based on the short-term nature of the transactions.
Gross contract assets related to in-transit shipments totaled $
- 9 -
Disaggregation of Revenue.
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Three Months Ended |
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Six Months Ended |
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November 30, |
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November 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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REVENUE BY SERVICE TYPE |
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Federal Express segment: |
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Package: |
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U.S. priority |
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$ |
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$ |
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$ |
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$ |
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U.S. deferred |
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U.S. ground |
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Total U.S. domestic package revenue |
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International priority |
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International economy |
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Total international export package revenue |
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International domestic(1) |
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Total package revenue |
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Freight: |
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U.S. |
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International priority |
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International economy |
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Total freight revenue |
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Other |
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Total Federal Express segment |
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FedEx Freight segment |
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Other and eliminations(2) |
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$ |
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$ |
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$ |
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$ |
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EMPLOYEES UNDER COLLECTIVE BARGAINING ARRANGEMENTS. The pilots of Federal Express, who are a small number of its total employees, are represented by the Air Line Pilots Association, International (“ALPA”) and are employed under a collective bargaining agreement that took effect on November 2, 2015. The agreement became amendable in November 2021. Bargaining for a successor agreement began in May 2021, and in November 2022 the National Mediation Board (“NMB”), which is the U.S. governmental agency that oversees labor agreements for entities covered by the Railway Labor Act of 1926, as amended, began actively mediating the negotiations. In July 2023, Federal Express’s pilots failed to ratify the tentative successor agreement that was approved by ALPA’s FedEx Master Executive Council the prior month. Bargaining for a successor agreement continues. In April 2024, the NMB rejected ALPA’s request for a proffer of arbitration, and the parties remain in mediated negotiations. The conduct of mediated negotiations has no effect on our operations. A small number of our other employees are members of unions.
STOCK-BASED COMPENSATION. We have three types of equity-based compensation: stock options, restricted stock, and, for outside directors, restricted stock units. The key terms of our equity-based compensation plans and financial disclosures about these programs are set forth in our Annual Report. Our stock-based compensation expense was $
BUSINESS OPTIMIZATION COSTS. In the second quarter of 2023, we announced DRIVE, a comprehensive program to improve long-term profitability. This program includes a business optimization plan to drive efficiency within and among our transportation segments, lower our overhead and support costs, and transform our digital capabilities. We have commenced our plan to consolidate our sortation facilities and equipment, reduce pickup-and-delivery routes, and optimize our enterprise linehaul network by moving beyond discrete collaboration to an end-to-end optimized network through Network 2.0, the multi-year effort to improve the efficiency with which we pick up, transport, and deliver packages in the U.S. and Canada.
- 10 -
We have implemented Network 2.0 optimization in more than 200 locations in the U.S. and Canada. Contracted service providers will handle the pickup and delivery of packages in some locations while employee couriers will handle others.
In June 2024, Federal Express announced a workforce reduction plan in Europe as part of its ongoing measures to reduce structural costs. The plan will impact between
We incurred costs associated with our business optimization activities, including the workforce reduction plan in Europe, of $
DERIVATIVE FINANCIAL INSTRUMENTS. We enter into derivative financial instruments to reduce the effects of volatility in foreign currency exchange exposure on operating results and cash flows. Our derivative financial instruments are used to manage differences in the amount, timing, and duration of cash receipts and cash payments principally related to our investments. We use debt denominated in foreign currency and fixed-to-fixed cross-currency swaps to hedge our exposure to changes in foreign exchange rates on certain of our foreign investments.
As of November 30, 2024, we had €
As of November 30, 2024, we had four cross-currency swaps outstanding, and the fair value of the swaps classified as assets and liabilities was $
As of November 30, 2024, our net investment hedges remain effective.
SUPPLIER FINANCE PROGRAM. We offer voluntary Supply Chain Finance (“SCF”) programs through financial institutions to certain of our suppliers. We agree to commercial terms with our suppliers, including prices, quantities, and payment terms, and they issue invoices to us based on the agreed-upon contractual terms. If our suppliers choose to participate in the SCF programs, they determine which invoices, if any, to sell to the financial institutions to receive an early discounted payment, while we settle the net payment amount with the financial institutions on the payment due dates. We guarantee these payments with the financial institutions.
Amounts due to our suppliers that participate in the SCF programs are included in “Accounts payable” in the accompanying unaudited condensed consolidated balance sheets. We have been informed by the participating financial institutions that as of November 30, 2024 and May 31, 2024, suppliers have been approved to sell to them $
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2024 |
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$ |