v3.26.1
LEASES
 12 Months Ended
May 31, 2026
Leases [Abstract]  
LEASES LEASES
The following table is a summary of the components of net lease cost for the period ended May 31 (in millions):
202620252024
Operating lease cost $258 $245 $236 
Finance lease cost:
Amortization of right-of-use assets 16 3 2 
Interest on lease liabilities 7 3 3 
Total finance lease cost 23 6 5 
Short-term lease cost 8 9 8 
Variable lease cost 42 39 41 
Net lease cost $331 $299 $290 
Supplemental cash flow information related to leases for the period ended May 31 is as follows (in millions):
202620252024
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows paid for operating leases $250 $239 $232 
Operating cash flows paid for interest portion of finance leases 7 3 3 
Financing cash flows paid for principal portion of finance leases(1)
23 63 1 
Right-of-use assets obtained in exchange for new operating lease liabilities579 132 136 
Right-of-use assets obtained in exchange for new finance lease liabilities 212 94 — 
(1)“Principal payments on debt” in financing activities of the accompanying Consolidated Statements of Cash Flows includes finance lease liabilities.
Supplemental information related to leases as of May 31 is as follows (dollars in millions):
20262025
Weighted-average remaining lease term:
Operating leases 9.28.3
Finance leases 6.19.1
Weighted-average discount rate:
Operating leases 4.42%3.96%
Finance leases 4.89%5.50%
We utilize certain facilities and vehicles under finance and operating leases that expire at various dates through 2044. Our leased facilities include service centers and administrative space.
A summary of future minimum lease payments under noncancelable operating and finance leases with an initial or remaining term in excess of one year at May 31, 2026 is as follows (in millions):
Operating
Leases 		Finance Leases Total Leases
2027$261 $55 $316 
2028259 56 315 
2029238 56 294 
2030228 55 283 
2031216 32 248 
Thereafter 1,162 55 1,217 
Total lease payments 2,364 309 2,673 
Less imputed interest (526)(46)(572)
Present value of lease liability $1,838 $263 $2,101 
While certain of our lease agreements contain covenants governing the use of the leased assets or require us to maintain certain levels of insurance, none of our lease agreements include material financial covenants or limitations. Certain of our lease agreements include guarantees from FedEx. We and FedEx are currently using commercially reasonable efforts to terminate all such guarantees; however, some guarantees will remain in place following the Separation until terminated. See Note 10, Related Party Transactions, for further discussion.
As of May 31, 2026, we have entered into additional leases which have not yet commenced and are therefore not part of the right-of-use asset and liability. These leases are generally for build-to-suit facilities and have undiscounted future payments of approximately $280 million and will commence when we gain beneficial access to the leased asset. Commencement dates are expected to be from 2027 to 2028.
LEASES LEASES
The following table is a summary of the components of net lease cost for the period ended May 31 (in millions):
202620252024
Operating lease cost $258 $245 $236 
Finance lease cost:
Amortization of right-of-use assets 16 3 2 
Interest on lease liabilities 7 3 3 
Total finance lease cost 23 6 5 
Short-term lease cost 8 9 8 
Variable lease cost 42 39 41 
Net lease cost $331 $299 $290 
Supplemental cash flow information related to leases for the period ended May 31 is as follows (in millions):
202620252024
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows paid for operating leases $250 $239 $232 
Operating cash flows paid for interest portion of finance leases 7 3 3 
Financing cash flows paid for principal portion of finance leases(1)
23 63 1 
Right-of-use assets obtained in exchange for new operating lease liabilities579 132 136 
Right-of-use assets obtained in exchange for new finance lease liabilities 212 94 — 
(1)“Principal payments on debt” in financing activities of the accompanying Consolidated Statements of Cash Flows includes finance lease liabilities.
Supplemental information related to leases as of May 31 is as follows (dollars in millions):
20262025
Weighted-average remaining lease term:
Operating leases 9.28.3
Finance leases 6.19.1
Weighted-average discount rate:
Operating leases 4.42%3.96%
Finance leases 4.89%5.50%
We utilize certain facilities and vehicles under finance and operating leases that expire at various dates through 2044. Our leased facilities include service centers and administrative space.
A summary of future minimum lease payments under noncancelable operating and finance leases with an initial or remaining term in excess of one year at May 31, 2026 is as follows (in millions):
Operating
Leases 		Finance Leases Total Leases
2027$261 $55 $316 
2028259 56 315 
2029238 56 294 
2030228 55 283 
2031216 32 248 
Thereafter 1,162 55 1,217 
Total lease payments 2,364 309 2,673 
Less imputed interest (526)(46)(572)
Present value of lease liability $1,838 $263 $2,101 
While certain of our lease agreements contain covenants governing the use of the leased assets or require us to maintain certain levels of insurance, none of our lease agreements include material financial covenants or limitations. Certain of our lease agreements include guarantees from FedEx. We and FedEx are currently using commercially reasonable efforts to terminate all such guarantees; however, some guarantees will remain in place following the Separation until terminated. See Note 10, Related Party Transactions, for further discussion.
As of May 31, 2026, we have entered into additional leases which have not yet commenced and are therefore not part of the right-of-use asset and liability. These leases are generally for build-to-suit facilities and have undiscounted future payments of approximately $280 million and will commence when we gain beneficial access to the leased asset. Commencement dates are expected to be from 2027 to 2028.