FINANCING ARRANGEMENTS |
9 Months Ended |
|---|---|
Feb. 28, 2026 | |
| Debt and Lease Obligation [Abstract] | |
| FINANCING ARRANGEMENTS | NOTE 4: FINANCING ARRANGEMENTS Long-term debt, including current maturities and exclusive of finance leases, had carrying values of $24.1 billion at February 28, 2026 and $19.9 billion at May 31, 2025, with estimated fair values of $22.7 billion at February 28, 2026 and $17.2 billion at May 31, 2025. The annualized weighted-average interest rate on long-term debt was 3.76% at February 28, 2026. The estimated fair values were determined based on quoted market prices and the current rates offered for debt with similar terms and maturities. The fair value of our long-term debt is classified as Level 2 within the fair value hierarchy. We have a shelf registration statement filed with the SEC that allows us to sell, in one or more future offerings, any combination of our unsecured debt securities and common stock and allows pass-through trusts formed by Federal Express to sell, in one or more future offerings, pass-through certificates. FEDEX CORPORATION. Long-Term Debt During the first quarter of 2026, we issued €850 million of senior unsecured debt under our current shelf registration statement, comprised of €500 million of 3.50% fixed-rate notes due in July 2032 and €350 million of 4.13% fixed-rate notes due in July 2037. We used a portion of the net proceeds to repay the €500 million aggregate principal amount outstanding of our 0.45% notes due at maturity in August 2025. The remaining net proceeds may be used for general corporate purposes. Credit Agreements We have a $1.75 billion three-year credit agreement (the “Three-Year Credit Agreement”) and a $1.75 billion five-year credit agreement (the “Five-Year Credit Agreement” and together with the Three-Year Credit Agreement, the “Credit Agreements”). Each of the Credit Agreements has a $125 million letter of credit sublimit. The Credit Agreements are available to finance our operations and other cash flow needs. As of February 28, 2026, no amounts were outstanding under the Credit Agreements, no commercial paper was outstanding, and we had $250 million of the letter of credit sublimit unused under the Credit Agreements. Our commercial paper program is backed by unused commitments under the Credit Agreements, and borrowings under the program reduce the amount available under the Credit Agreements. During the second quarter of 2026, we amended the Credit Agreements with a syndicate of banks and other financial institutions to update certain provisions in anticipation of the planned spin-off of FedEx Freight and incorporate certain other customary changes. Among other changes, the amendments (i) will release FedEx Freight from its guarantees under the Credit Agreements upon consummation of the planned spin-off of FedEx Freight and (ii) extend the expiration of the Three-Year Credit Agreement from March 2027 to March 2028 and the expiration of the Five-Year Credit Agreement from March 2029 to March 2030. The Credit Agreements contain a financial covenant requiring us to maintain a ratio of debt (excluding debt incurred by affiliates of FedEx Freight to finance distributions to FedEx and other transactions related to the planned spin-off of FedEx Freight and certain other customary items) to consolidated earnings (excluding noncash retirement plans mark-to-market adjustments; noncash pension service costs; noncash asset impairment charges; and, subject to certain limitations, business optimization and restructuring expenses, pro forma cost savings and synergies associated with an acquisition, and transaction costs, fees, and expenses and synergies and cost savings related to the planned spin-off of FedEx Freight) before interest, taxes, depreciation, and amortization (“adjusted EBITDA”) of not more than 3.5 to 1.0, calculated as of the last day of each fiscal quarter on a rolling four-quarters basis. The ratio of our debt to adjusted EBITDA was 1.9 at February 28, 2026. Additional information on the financial covenant can be found in our Annual Report. The financial covenant discussed above is the only significant restrictive covenant in the Credit Agreements. The Credit Agreements contain other customary covenants that do not, individually or in the aggregate, materially restrict the conduct of our business. We are in compliance with the financial covenant and all other covenants in the Credit Agreements and do not expect the covenants to affect our operations, including our liquidity or expected funding needs. If we failed to comply with the financial covenant or any other covenants in the Credit Agreements, our access to financing could become limited. FEDERAL EXPRESS. Long-Term Debt Federal Express has issued $970 million of Pass-Through Certificates, Series 2020-1AA (the “Certificates”) with a fixed interest rate of 1.88% due in February 2034 utilizing pass-through trusts. The Certificates are secured by 19 Boeing aircraft with a net book value of $1.5 billion at February 28, 2026. The payment obligations of Federal Express in respect of the Certificates are fully and unconditionally guaranteed by FedEx. FEDEX FREIGHT HOLDING. Unsecured Notes On February 5, 2026, FedEx Freight Holding issued $3.7 billion of senior unsecured debt in an unregistered offering, comprised of $1.0 billion of 4.30% fixed-rate notes due in March 2029, $1.0 billion of 4.65% fixed-rate notes due in March 2031, $700 million of 4.95% fixed-rate notes due in March 2033, and $1.0 billion of 5.25% fixed-rate notes due in March 2036 (together, the “FedEx Freight Notes”). FedEx Freight Holding has agreed to file with the SEC an exchange registration statement with respect to an exchange offer for the FedEx Freight Notes and the related guarantees or a shelf registration statement for the resale of the FedEx Freight Notes and the related guarantees. Credit Facilities On January 15, 2026, FedEx Freight Holding entered into (i) a five-year revolving credit facility in an aggregate committed amount of $1.2 billion (the “FedEx Freight Revolving Credit Facility”) and (ii) a three-year delayed draw term loan facility in the aggregate principal amount of $600 million (the “FedEx Freight Term Loan Facility” and together with the FedEx Freight Revolving Credit Facility, the “FedEx Freight Credit Agreements”). The availability of borrowings under the commitments in respect of the FedEx Freight Revolving Credit Facility is conditioned on the consummation of the spin-off of FedEx Freight and the funding of the term loan facility is conditioned on the good faith anticipation of the spin-off of FedEx Freight occurring within five business days after such funding. FedEx Freight Holding will distribute the net proceeds of the FedEx Freight Notes and the FedEx Freight Term Loan Facility to FedEx as consideration for FedEx’s contribution of assets to FedEx Freight Holding in connection with the spin-off. FedEx Freight Holding’s obligations under the FedEx Freight Notes and the FedEx Freight Credit Agreements are jointly and severally guaranteed by FedEx and FedEx Freight until the consummation of the spin-off, at which point FedEx will be automatically released from such respective guarantees.
|