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Microsoft Excel LibreOffice Calc


Analysis of Operating Leases

Difficulty: Advanced


Operating Leases Accounting Policy

FedEx leases certain aircraft, facilities, equipment and vehicles under capital and operating leases. The commencement date of all leases is the earlier of the date FedEx becomes legally obligated to make rent payments or the date FedEx may exercise control over the use of the property. In addition to minimum rental payments, certain leases provide for contingent rentals based on equipment usage, principally related to aircraft leases at FedEx Express and copier usage at FedEx Office. Rent expense associated with contingent rentals is recorded as incurred. Certain of FedEx's leases contain fluctuating or escalating payments and rent holiday periods. The related rent expense is recorded on a straight-line basis over the lease term. The cumulative excess of rent payments over rent expense is accounted for as a deferred lease asset and recorded in "Other assets" in the accompanying consolidated balance sheets. The cumulative excess of rent expense over rent payments is accounted for as a deferred lease obligation. Leasehold improvements associated with assets utilized under capital or operating leases are amortized over the shorter of the asset's useful life or the lease term.

Source: 10-K (filing date: 2018-07-16).


Present Value of Future Operating Lease Payments

FedEx Corp., future operating lease payments

Microsoft Excel LibreOffice Calc
May 31, 2018 May 31, 2017 May 31, 2016 May 31, 2015 May 31, 2014 May 31, 2013
Total undiscounted future operating lease payments (USD $ in millions) hidden hidden hidden hidden hidden hidden
Discount rate1 hidden hidden hidden hidden hidden hidden
Total present value of future operating lease payments (USD $ in millions) hidden hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2018-07-16), 10-K (filing date: 2017-07-17), 10-K (filing date: 2016-07-18), 10-K (filing date: 2015-07-14), 10-K (filing date: 2014-07-14), 10-K (filing date: 2013-07-15).

1 Weighted-average interest rate for FedEx Corp.'s debt

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at hidden
2019 hidden 2019 hidden hidden
2020 hidden 2020 hidden hidden
2021 hidden 2021 hidden hidden
2022 hidden 2022 hidden hidden
2023 hidden 2023 hidden hidden
2024 and thereafter hidden 2024 hidden hidden
2025 hidden hidden
2026 hidden hidden
2027 hidden hidden
2028 hidden hidden
2029 hidden hidden
Total: hidden hidden hidden

Based on: 10-K (filing date: 2018-07-16).

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at hidden
2018 hidden 2018 hidden hidden
2019 hidden 2019 hidden hidden
2020 hidden 2020 hidden hidden
2021 hidden 2021 hidden hidden
2022 hidden 2022 hidden hidden
2023 and thereafter hidden 2023 hidden hidden
2024 hidden hidden
2025 hidden hidden
2026 hidden hidden
2027 hidden hidden
2028 hidden hidden
Total: hidden hidden hidden

Based on: 10-K (filing date: 2017-07-17).

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at hidden
2017 hidden 2017 hidden hidden
2018 hidden 2018 hidden hidden
2019 hidden 2019 hidden hidden
2020 hidden 2020 hidden hidden
2021 hidden 2021 hidden hidden
2022 and thereafter hidden 2022 hidden hidden
2023 hidden hidden
2024 hidden hidden
2025 hidden hidden
2026 hidden hidden
2027 hidden hidden
Total: hidden hidden hidden

Based on: 10-K (filing date: 2016-07-18).

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at hidden
2016 hidden 2016 hidden hidden
2017 hidden 2017 hidden hidden
2018 hidden 2018 hidden hidden
2019 hidden 2019 hidden hidden
2020 hidden 2020 hidden hidden
2021 and thereafter hidden 2021 hidden hidden
2022 hidden hidden
2023 hidden hidden
2024 hidden hidden
2025 hidden hidden
2026 hidden hidden
Total: hidden hidden hidden

Based on: 10-K (filing date: 2015-07-14).

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at hidden
2015 hidden 2015 hidden hidden
2016 hidden 2016 hidden hidden
2017 hidden 2017 hidden hidden
2018 hidden 2018 hidden hidden
2019 hidden 2019 hidden hidden
2020 and thereafter hidden 2020 hidden hidden
2021 hidden hidden
2022 hidden hidden
2023 hidden hidden
2024 hidden hidden
2025 hidden hidden
Total: hidden hidden hidden

Based on: 10-K (filing date: 2014-07-14).

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at hidden
2014 hidden 2014 hidden hidden
2015 hidden 2015 hidden hidden
2016 hidden 2016 hidden hidden
2017 hidden 2017 hidden hidden
2018 hidden 2018 hidden hidden
2019 and thereafter hidden 2019 hidden hidden
2020 hidden hidden
2021 hidden hidden
2022 hidden hidden
2023 hidden hidden
2024 hidden hidden
Total: hidden hidden hidden

Based on: 10-K (filing date: 2013-07-15).


Analyst Adjustments for Operating Leases

FedEx Corp., adjustments to financial data

USD $ in millions

Microsoft Excel LibreOffice Calc
May 31, 2018 May 31, 2017 May 31, 2016 May 31, 2015 May 31, 2014 May 31, 2013
Adjustment to Total Assets
Total assets (as reported) hidden hidden hidden hidden hidden hidden
Add: Operating leased assets1 hidden hidden hidden hidden hidden hidden
Total assets (adjusted) hidden hidden hidden hidden hidden hidden
Adjustment to Total Debt
Total debt (as reported) hidden hidden hidden hidden hidden hidden
Add: Operating lease obligations2 hidden hidden hidden hidden hidden hidden
Total debt (adjusted) hidden hidden hidden hidden hidden hidden
Adjustment to Earnings before Interest and Tax (EBIT)
EBIT3 (as reported) hidden hidden hidden hidden hidden hidden
Add-back: Rent expense under operating leases hidden hidden hidden hidden hidden hidden
Less: Depreciation expense, operating leased assets4 hidden hidden hidden hidden hidden hidden
EBIT (adjusted) hidden hidden hidden hidden hidden hidden
Adjustment to Interest Expense
Interest expense (as reported) hidden hidden hidden hidden hidden hidden
Add: Interest expense, operating lease obligations5 hidden hidden hidden hidden hidden hidden
Interest expense (adjusted) hidden hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2018-07-16), 10-K (filing date: 2017-07-17), 10-K (filing date: 2016-07-18), 10-K (filing date: 2015-07-14), 10-K (filing date: 2014-07-14), 10-K (filing date: 2013-07-15).

1, 2 Equal to total present value of future operating lease payments. See Details »

3 See Details »

4 See Details »

5 See Details »


FedEx Corp., Financial Data: Reported vs. Adjusted


Adjusted Ratios for Operating Leases (Summary)

FedEx Corp., adjusted ratios

Microsoft Excel LibreOffice Calc
May 31, 2018 May 31, 2017 May 31, 2016 May 31, 2015 May 31, 2014 May 31, 2013
Total Asset Turnover1
Reported total asset turnover hidden hidden hidden hidden hidden hidden
Adjusted total asset turnover hidden hidden hidden hidden hidden hidden
Debt to Equity2
Reported debt to equity hidden hidden hidden hidden hidden hidden
Adjusted debt to equity hidden hidden hidden hidden hidden hidden
Return on Assets3 (ROA)
Reported ROA hidden hidden hidden hidden hidden hidden
Adjusted ROA hidden hidden hidden hidden hidden hidden
Interest Coverage4
Reported interest coverage hidden hidden hidden hidden hidden hidden
Adjusted interest coverage hidden hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2018-07-16), 10-K (filing date: 2017-07-17), 10-K (filing date: 2016-07-18), 10-K (filing date: 2015-07-14), 10-K (filing date: 2014-07-14), 10-K (filing date: 2013-07-15).

Ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. FedEx Corp.'s adjusted total asset turnover improved from 2016 to 2017 and from 2017 to 2018.
Adjusted debt-to-equity A solvency ratio calculated as adjusted total debt divided by total shareholders' equity. FedEx Corp.'s adjusted debt-to-equity improved from 2016 to 2017 and from 2017 to 2018.
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. FedEx Corp.'s adjusted ROA improved from 2016 to 2017 and from 2017 to 2018.
Adjusted interest coverage A solvency ratio calculated as adjusted EBIT divided by adjusted interest payments. FedEx Corp.'s adjusted interest coverage improved from 2016 to 2017 but then slightly deteriorated from 2017 to 2018.

FedEx Corp., Ratios: Reported vs. Adjusted


Adjusted Total Asset Turnover

Microsoft Excel LibreOffice Calc
May 31, 2018 May 31, 2017 May 31, 2016 May 31, 2015 May 31, 2014 May 31, 2013
As Reported
Selected Financial Data (USD $ in millions)
Revenues hidden hidden hidden hidden hidden hidden
Total assets hidden hidden hidden hidden hidden hidden
Ratio
Total asset turnover1 hidden hidden hidden hidden hidden hidden
Adjusted for Operating Leases
Selected Financial Data (USD $ in millions)
Revenues hidden hidden hidden hidden hidden hidden
Adjusted total assets hidden hidden hidden hidden hidden hidden
Ratio
Adjusted total asset turnover2 hidden hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2018-07-16), 10-K (filing date: 2017-07-17), 10-K (filing date: 2016-07-18), 10-K (filing date: 2015-07-14), 10-K (filing date: 2014-07-14), 10-K (filing date: 2013-07-15).

2018 Calculations

1 Total asset turnover = Revenues ÷ Total assets
= hidden ÷ hidden = hidden

2 Adjusted total asset turnover = Revenues ÷ Adjusted total assets
= hidden ÷ hidden = hidden

Ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. FedEx Corp.'s adjusted total asset turnover improved from 2016 to 2017 and from 2017 to 2018.

Adjusted Debt to Equity

Microsoft Excel LibreOffice Calc
May 31, 2018 May 31, 2017 May 31, 2016 May 31, 2015 May 31, 2014 May 31, 2013
As Reported
Selected Financial Data (USD $ in millions)
Total debt hidden hidden hidden hidden hidden hidden
Common stockholders' investment hidden hidden hidden hidden hidden hidden
Ratio
Debt to equity1 hidden hidden hidden hidden hidden hidden
Adjusted for Operating Leases
Selected Financial Data (USD $ in millions)
Adjusted total debt hidden hidden hidden hidden hidden hidden
Common stockholders' investment hidden hidden hidden hidden hidden hidden
Ratio
Adjusted debt to equity2 hidden hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2018-07-16), 10-K (filing date: 2017-07-17), 10-K (filing date: 2016-07-18), 10-K (filing date: 2015-07-14), 10-K (filing date: 2014-07-14), 10-K (filing date: 2013-07-15).

2018 Calculations

1 Debt to equity = Total debt ÷ Common stockholders' investment
= hidden ÷ hidden = hidden

2 Adjusted debt to equity = Adjusted total debt ÷ Common stockholders' investment
= hidden ÷ hidden = hidden

Ratio Description The company
Adjusted debt-to-equity A solvency ratio calculated as adjusted total debt divided by total shareholders' equity. FedEx Corp.'s adjusted debt-to-equity improved from 2016 to 2017 and from 2017 to 2018.

Adjusted Return on Assets (ROA)

Microsoft Excel LibreOffice Calc
May 31, 2018 May 31, 2017 May 31, 2016 May 31, 2015 May 31, 2014 May 31, 2013
As Reported
Selected Financial Data (USD $ in millions)
Net income hidden hidden hidden hidden hidden hidden
Total assets hidden hidden hidden hidden hidden hidden
Ratio
ROA1 hidden hidden hidden hidden hidden hidden
Adjusted for Operating Leases
Selected Financial Data (USD $ in millions)
Net income hidden hidden hidden hidden hidden hidden
Adjusted total assets hidden hidden hidden hidden hidden hidden
Ratio
Adjusted ROA2 hidden hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2018-07-16), 10-K (filing date: 2017-07-17), 10-K (filing date: 2016-07-18), 10-K (filing date: 2015-07-14), 10-K (filing date: 2014-07-14), 10-K (filing date: 2013-07-15).

2018 Calculations

1 ROA = 100 × Net income ÷ Total assets
= 100 × hidden ÷ hidden = hidden

2 Adjusted ROA = 100 × Net income ÷ Adjusted total assets
= 100 × hidden ÷ hidden = hidden

Ratio Description The company
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. FedEx Corp.'s adjusted ROA improved from 2016 to 2017 and from 2017 to 2018.

Adjusted Interest Coverage

Microsoft Excel LibreOffice Calc
May 31, 2018 May 31, 2017 May 31, 2016 May 31, 2015 May 31, 2014 May 31, 2013
As Reported
Selected Financial Data (USD $ in millions)
Earnings before interest and tax1 (EBIT) hidden hidden hidden hidden hidden hidden
Interest expense hidden hidden hidden hidden hidden hidden
Ratio
Interest coverage2 hidden hidden hidden hidden hidden hidden
Adjusted for Operating Leases
Selected Financial Data (USD $ in millions)
Adjusted EBIT hidden hidden hidden hidden hidden hidden
Adjusted interest expense hidden hidden hidden hidden hidden hidden
Ratio
Adjusted interest coverage3 hidden hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2018-07-16), 10-K (filing date: 2017-07-17), 10-K (filing date: 2016-07-18), 10-K (filing date: 2015-07-14), 10-K (filing date: 2014-07-14), 10-K (filing date: 2013-07-15).

1 See Details »

2018 Calculations

2 Interest coverage = EBIT ÷ Interest expense
= hidden ÷ hidden = hidden

3 Adjusted interest coverage = Adjusted EBIT ÷ Adjusted interest expense
= hidden ÷ hidden = hidden

Ratio Description The company
Adjusted interest coverage ratio A solvency ratio calculated as adjusted EBIT divided by adjusted interest payments. FedEx Corp.'s adjusted interest coverage ratio improved from 2016 to 2017 but then slightly deteriorated from 2017 to 2018.

Estimation of Depreciation Expense, Operating Leased Assets

USD $ in millions

Microsoft Excel LibreOffice Calc
May 31, 2018 May 31, 2017 May 31, 2016 May 31, 2015 May 31, 2014 May 31, 2013
Rent expense under operating leases hidden hidden hidden hidden hidden hidden
Less: Estimated interest expense, operating lease obligations1 hidden hidden hidden hidden hidden hidden
Estimated depreciation expense, operating leased assets hidden hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2018-07-16), 10-K (filing date: 2017-07-17), 10-K (filing date: 2016-07-18), 10-K (filing date: 2015-07-14), 10-K (filing date: 2014-07-14), 10-K (filing date: 2013-07-15).


Estimation of Interest Expense, Operating Lease Obligations

Microsoft Excel LibreOffice Calc
May 31, 2018 May 31, 2017 May 31, 2016 May 31, 2015 May 31, 2014 May 31, 2013
Operating leased assets, at beginning of year1 (USD $ in millions) hidden hidden hidden hidden hidden hidden
Discount rate2 hidden hidden hidden hidden hidden hidden
Estimated interest expense, operating lease obligations3 (USD $ in millions) hidden hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2018-07-16), 10-K (filing date: 2017-07-17), 10-K (filing date: 2016-07-18), 10-K (filing date: 2015-07-14), 10-K (filing date: 2014-07-14), 10-K (filing date: 2013-07-15).

1 See Details »

2 Weighted-average interest rate for FedEx Corp.'s debt

2018 Calculations

3 Estimated interest expense, operating lease obligations = Operating leased assets, at beginning of year × Discount rate
= hidden × hidden = hidden


Present Value of Operating Lease Payments, at Beginning of Year

Microsoft Excel LibreOffice Calc
May 31, 2018 May 31, 2017 May 31, 2016 May 31, 2015 May 31, 2014 May 31, 2013
Total present value of future operating lease payments1 (USD $ in millions) hidden hidden hidden hidden hidden hidden
Rent expense under operating leases (USD $ in millions) hidden hidden hidden hidden hidden hidden
Discount rate2 hidden hidden hidden hidden hidden hidden
Total present value of operating lease payments, at beginning of year3 (USD $ in millions) hidden hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2018-07-16), 10-K (filing date: 2017-07-17), 10-K (filing date: 2016-07-18), 10-K (filing date: 2015-07-14), 10-K (filing date: 2014-07-14), 10-K (filing date: 2013-07-15).

1 Equal to total present value of future operating lease payments. See Details »

2 Weighted-average interest rate for FedEx Corp.'s debt

2018 Calculations

3 Total present value of operating lease payments, at beginning of year = (Total present value of future operating lease payments + Rent expense under operating leases) ÷ (1 + Discount rate)
= (hidden + hidden) ÷ (1 + hidden) = hidden