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Debt Accounting Policy

CAPITALIZED INTEREST

Interest on funds used to finance the acquisition and modification of aircraft, including purchase deposits, construction of certain facilities, and development of certain software up to the date the asset is ready for its intended use is capitalized and included in the cost of the asset if the asset is actively under construction. Capitalized interest was $41 million in 2017, $42 million in 2016 and $37 million in 2015.

Source: FedEx Corp., Annual Report

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Total Debt (Carrying Amount)

FedEx Corp., Statement of Financial Position, Debt

USD $ in millions

 
May 31, 2017 May 31, 2016 May 31, 2015 May 31, 2014 May 31, 2013 May 31, 2012
Current portion of long-term debt
Long-term debt, less current portion
Total long-term debt (carrying amount)

Source: Based on data from FedEx Corp., Annual Reports

Item Description The company
Total long-term debt (carrying amount) Sum of the carrying values as of the balance sheet date of all debt plus capital lease obligations. FedEx Corp.'s total debt increased from 2015 to 2016 and from 2016 to 2017.

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Total Debt (Fair Value)

 
May 31, 2017
Selected Financial Data (USD $ in millions)
Long-term debt, exclusive of capital leases
Capital lease obligations
Total long-term debt (fair value)
Ratio
Debt, fair value to carrying amount

Source: Based on data from FedEx Corp., Annual Reports

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Weighted-average Interest Rate on Debt

Weighted-average interest rate on debt: %

Interest Rate Debt Amount1 Interest Rate × Debt Amount Weighted-average Interest Rate2
%
Total %

Source: Based on data from FedEx Corp., Annual Reports

1 USD $ in millions

2 Weighted-average interest rate = 100 × ÷ = %

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Interest Costs Incurred

FedEx Corp.

USD $ in millions

 
12 months ended May 31, 2017 May 31, 2016 May 31, 2015 May 31, 2014 May 31, 2013 May 31, 2012
Interest expense
Capitalized interest
Interest costs incurred

Source: Based on data from FedEx Corp., Annual Reports

Item Description The company
Interest expense Represents the portion of interest incurred in the period on debt arrangements that was charged against earnings. FedEx Corp.'s interest expense increased from 2015 to 2016 and from 2016 to 2017.
Capitalized interest The amount of interest that was capitalized during the period. FedEx Corp.'s capitalized interest increased from 2015 to 2016 but then slightly declined from 2016 to 2017.
Interest costs incurred Total interest costs incurred during the period and either capitalized or charged against earnings. FedEx Corp.'s interest costs incurred increased from 2015 to 2016 and from 2016 to 2017.

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Adjusted Interest Coverage Ratio

 
May 31, 2017 May 31, 2016 May 31, 2015 May 31, 2014 May 31, 2013 May 31, 2012
Selected Financial Data (USD $ in millions)
Net income
Add: Income tax expense
Add: Interest expense
Earnings before interest and tax (EBIT)
 
Interest costs incurred
Ratio With and Without Capitalized Interest
Interest coverage ratio (excluding capitalized interest)1
Adjusted interest coverage ratio (including capitalized interest)2

2017 Calculations

1 Interest coverage ratio (excluding capitalized interest) = EBIT ÷ Interest expense
= ÷ =

2 Adjusted interest coverage ratio (including capitalized interest) = EBIT ÷ Interest costs incurred
= ÷ =

Ratio Description The company
Adjusted interest coverage ratio A solvency ratio calculated as EBIT divided by interest payments (including capitalized interest). FedEx Corp.'s adjusted interest coverage ratio improved from 2015 to 2016 and from 2016 to 2017.

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