What Would You Do With $1.94 Billion in Cash? - August 04, 2006

The Fitch Ratings press release that was posted in the clips earlier made an interesting observation:

FedEx has a strong liquidity position, including $1.94 billion in cash on hand at May 31 and access to a $1 billion revolving credit facility. The proceeds from today's notes offering further bolster the company's liquidity. Fitch expects operating cash flow to remain robust in fiscal 2007, due to continued favorable pricing and the company's focus on improving productivity. However, heavy capital spending and acquisition expenses, along with $850 million in debt maturities and higher dividend payments mean calls on operating cash flow will be significant.  

There are any number of things to do with the $1 billion in new cash that FedEx borrowed yesterday and the $1.94 billion in cash on hand that Fitch noted.  FedEx can start to pay off its Watkins Motor Lines and Chinese purchases, it can pay down past debt, it can give away more cash to shareholders (like Fred Smith who'll get a dividend bonus of roughly $4.35 million this fiscal year) and it can refurbish certain barns.

Here's a thought.  Those who actually make FedEx run should get their proper piece of the profits.  The company could re-start the profit share programs for Express employees that were "suspended" after 9-11.  Or comply with the law and make the Ground drivers employees.  Or reinstate previous insurance coverage for FedEx Freight employees. Or even start a pension program for FedEx Freight East employees.