FEDEX CORP (FDX)

” of this Annual Report.

LONG-LIVED ASSETS

USEFUL LIVES AND SALVAGE VALUES

. Our business is capital intensive, with approximately 59% of our owned assets invested in our transportation and information system infrastructures.

The depreciation or amortization of our capital assets over their estimated useful lives, and the determination of any salvage values, requires management to make judgments about future events. Because we utilize many of our capital assets over relatively long periods (the majority of aircraft costs are depreciated over 18 to 30 years), we periodically evaluate whether adjustments to our estimated service lives or salvage values are necessary to ensure these estimates properly match the economic use of the asset. These evaluations consider usage, maintenance costs, and economic factors that affect the useful life of an asset. This evaluation may result in changes in the estimated lives and residual values used to depreciate our aircraft and other equipment.

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For our aircraft, we consider actual experience with the same or similar aircraft types and future volume projections in estimating the useful lives and expected salvage values. We typically assign no residual value due to the utilization of our aircraft in cargo configuration, which results in little to no value at the end of their useful life. These estimates affect the amount of depreciation expense recognized in a period and, ultimately, the gain or loss on the disposal of the asset. Changes in the estimated lives of assets will result in an increase or decrease in the amount of depreciation recognized in future periods and could have a material impact on our results of operations (as described below). Historically, gains and losses on disposals of operating equipment have not been material. However, such amounts may differ materially in the future due to changes in business levels, technological obsolescence, accident frequency, regulatory changes, and other factors beyond our control.

IMPAIRMENT.

As of May 31, 2025, the Federal Express global air network included a fleet of 698 aircraft (including 312 supplemental aircraft) that provide delivery of packages and freight to more than 220 countries and territories through a wide range of U.S. and international shipping services. While certain aircraft are utilized in primary geographic areas (U.S. versus international), we operate an integrated global network, and utilize our aircraft and other modes of transportation to achieve the lowest cost of delivery while maintaining our service commitments to our customers. Because of the integrated nature of our global network, our aircraft are interchangeable across routes and geographies, giving us flexibility with our fleet planning to meet changing global economic conditions and maintain and modify aircraft as needed.

Because of the lengthy lead times for aircraft manufacture and modifications, we must anticipate volume levels and plan our fleet requirements years in advance, and make commitments for aircraft based on those projections. Furthermore, the timing and availability of certain used aircraft types (particularly those with better fuel efficiency) may create limited opportunities to acquire these aircraft at favorable prices in advance of our capacity needs. These activities create risks that asset capacity may exceed demand. At May 31, 2025, we had two purchased aircraft that were not yet placed into service.

We evaluate our long-lived assets used in operations for impairment when events and circumstances indicate that the undiscounted cash flows to be generated by that asset group are less than the carrying amounts of the asset group and may not be recoverable. If the cash flows do not exceed the carrying value, the asset must be adjusted to its current fair value. We operate integrated transportation networks, and accordingly, cash flows for most of our operating assets are assessed at a network level, not at an individual asset level for our analysis of impairment. Further, decisions about capital investments are evaluated based on the effect on the overall network rather than the return on an individual asset. We make decisions to remove certain long-lived assets from service based on projections of reduced capacity needs or lower operating costs of newer aircraft types, and those decisions may result in an impairment charge. Assets held for disposal must be adjusted to their estimated fair values less costs to sell when the decision is made to dispose of the asset and certain other criteria are met. The fair value determinations for such aircraft may require management estimates, as there may not be active markets for some of these aircraft. Such estimates are subject to revision from period to period.

In the fourth quarter of 2025, we made the decision to permanently retire from service 12 aircraft and eight related engines, resulting in a noncash impairment charge of $21 million ($16 million, net of tax, or $0.06 per diluted share). These retirements included two Boeing 757-200 aircraft, seven Airbus A300-600 aircraft, three Boeing MD-11 aircraft, and align with Federal Express’s fleet reduction and modernization strategy as we continue to improve our global network efficiency and better align air network capacity with anticipated demand. All of these permanently retired aircraft were temporarily idled and not in revenue service.

During 2024, Federal Express made the decision to permanently retire from service 22 Boeing 757-200 aircraft and seven related engines to align with Federal Express’s fleet reduction and modernization strategy. As a consequence of this decision, a noncash impairment charge of $157 million ($120 million, net of tax, or $0.48 per diluted share) was recorded in 2024.

In 2023 we accelerated the retirement of the entire Boeing MD-11 fleet by the end of 2028. In 2025 we made the decision to extend the retirement plan to have the fleet retired by the end of 2032 to better align the air network capacity of Federal Express to match anticipated shipment volumes. As a result of this decision, we had a net decrease in depreciation expense in 2025 of $19 million.

In the normal management of our aircraft fleet, we routinely idle aircraft and engines temporarily due to maintenance cycles and adjustments of our network capacity to match seasonality and overall customer demand levels. Temporarily idled assets are classified as available-for-use, and we continue to record depreciation expense associated with these assets. These temporarily idled assets are assessed for impairment and remaining life on a quarterly basis. The criteria for determining whether an asset has been permanently removed from service (and, as a result, is potentially impaired) include, but are not limited to, our global economic outlook and the impact of our outlook on our current and projected volume levels, including capacity needs during our peak shipping seasons; the introduction of new fleet types or decisions to permanently retire an aircraft fleet from operations; and changes to planned service expansion activities. At May 31, 2025, we had 22 aircraft temporarily idled. These aircraft have been idled for an average of ten months and are expected to return to revenue service i

n order to meet expected demand.

LEASES

. We utilize operating leases to finance certain of our aircraft, facilities, and equipment. Such arrangements typically shift the risk of loss on the residual value of the assets at the end of the lease period to the lessor. We had $17 billion in operating lease liabilities and $16 billion in related right-of-use assets on the balance sheet as of May 31, 2025. The weighted-average remaining lease term of all operating leases outstanding at May 31, 2025 was 9.7 years.

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Our leases generally contain options to extend or terminate the lease. We reevaluate our leases on a regular basis to consider the economic and strategic incentives of exercising the renewal options, and how they align with our operating strategy. Therefore, substantially all the renewal option periods are not included within the lease term and the associated payments are not included in the measurement of the right-of-use asset and lease liability as the options to extend are not reasonably certain at lease commencement. Short-term leases with an initial term of 12 months or less are not recognized in the right-of-use asset and lease liability on the consolidated balance sheets.

The lease liabilities are measured at the lease commencement date and determined using the present value of the minimum lease payments not yet paid and our incremental borrowing rate, which approximates the rate at which we would borrow, on a collateralized basis, over the term of a lease in the applicable currency environment. The interest rate implicit in the lease is generally not determinable in transactions where we are the lessee.

The determination of whether a lease is accounted for as a finance lease or an operating lease requires management to make estimates primarily about the fair value of the asset and its estimated economic useful life. In addition, our evaluation includes ensuring we properly account for build-to-suit lease arrangements and making judgments about whether various forms of lessee involvement allow the lessee to control the underlying leased asset during the construction period. We believe we have well-defined and controlled processes for making these evaluations, including obtaining third-party appraisals for material transactions to assist us in making these evaluations.

GOODWILL

. We had $6.6 billion of recorded goodwill at May 31, 2025 and $6.4 billion of recorded goodwill at May 31, 2024 from our business acquisitions, representing the excess of the purchase price over the fair value of the net assets acquired. Several factors give rise to goodwill in our acquisitions, such as the expected benefits from synergies of the combination and the existing workforce of the acquired business.

Goodwill is reviewed at least annually for impairment. In our evaluation of goodwill impairment, we perform a qualitative assessment that requires management judgment and the use of estimates to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount. An entity has an unconditional option to bypass the qualitative assessment for any reporting unit and proceed directly to performing the quantitative goodwill impairment test. An entity may resume performing the qualitative assessment in any subsequent period. We performed a qualitative assessment of goodwill in the fourth quarter of 2025 and 2024.

As part of our qualitative assessment, we consider changes in the macroeconomic environment such as the general economic conditions, limitations on accessing capital, fluctuations in foreign exchange rates, and other developments in equity and credit markets.

When we perform quantitative assessments, we compare the fair value of the reporting unit to its carrying value (including attributable goodwill). Fair value is estimated using standard valuation methodologies (principally the income or market approach classified as Level 3 within the fair value hierarchy) incorporating market participant considerations and management’s assumptions on revenue growth rates, operating margins, discount rates, and expected capital expenditures. Estimates used by management can significantly affect the outcome of the impairment test. Changes in forecasted operating results and other assumptions could materially affect these estimates.

We evaluated each of our reporting units during the fourth quarters of

and

and

the estimated fair value of each of our reporting units exceeded their carrying values as of the end of 2025 and 2024; therefore, no impairment was recorded during any of the years presented.

LEGAL AND OTHER

CONTINGENCIES

We are subject to various loss contingencies in connection with our operations. Contingent liabilities are difficult to measure, as their measurement is subject to multiple factors that are not easily predicted or projected. Further, additional complexity in measuring these liabilities arises due to the various jurisdictions in which these matters occur, which makes our ability to predict their outcome highly uncertain. Moreover, different accounting rules must be employed to account for these items based on the nature of the contingency. Accordingly, significant management judgment is required to assess these matters and to make determinations about the measurement of a liability, if any. Certain pending loss contingencies are described in

Note 21

of the accompanying consolidated financial statements. In the opinion of management, the aggregate liability, if any, of individual matters or groups of related matters not specifically described in

Note 21

is not expected to be material to our financial position, results of operations, or cash flows. The following describes our methods and associated processes for evaluating these matters.

Because of the complex environment in which we operate, we are subject to numerous legal proceedings and claims, including those relating to general commercial matters, governmental enforcement actions, employment-related claims, vehicle accidents, and service providers. Accounting guidance for contingencies requires an accrual of estimated loss from a contingency, such as a non-income tax or other legal proceeding or claim, when it is probable (i.e., the future event or events are likely to occur) that a loss has been incurred

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and the amount of the loss can be reasonably estimated. This guidance also requires disclosure of a loss contingency matter when, in management’s judgment, a material loss is reasonably possible or probable.

During the preparation of our financial statements, we evaluate our contingencies to determine whether it is probable, reasonably possible, or remote that a liability has been incurred. A loss is recognized for all contingencies deemed probable and reasonably estimable. For unresolved contingencies with potentially material exposure that are deemed reasonably possible, we evaluate whether a potential loss or range of loss can be reasonably estimated.

Our evaluation of these matters is the result of a comprehensive process designed to ensure that accounting recognition of a loss or disclosure of these contingencies is made in a timely manner and involves our legal and accounting personnel, as well as external counsel where applicable. The process includes regular communications during each quarter and scheduled meetings shortly before the issuance of our financial statements to evaluate any new legal proceedings and the status of existing matters.

In determining whether a loss should be accrued or a loss contingency disclosed, we evaluate, among other factors:

•

the current status of each matter within the scope and context of the entire lawsuit or proceeding (e.g., the lengthy and complex nature of class-action matters);

•

the procedural status of each matter;

•

any opportunities to dispose of a lawsuit on its merits before trial (i.e., motion to dismiss or for summary judgment);

•

the amount of time remaining before a trial date;

•

the status of discovery;

•

the status of settlement, arbitration, or mediation proceedings; and

•

our judgment regarding the likelihood of success prior to or at trial.

In reaching our conclusions with respect to accrual of a loss or loss contingency disclosure, we take a holistic view of each matter based on these factors and the information available prior to the issuance of our financial statements. Uncertainty with respect to an individual factor or combination of these factors may impact our decisions related to accrual or disclosure of a loss contingency, including a conclusion that we are unable to establish an estimate of possible loss or a meaningful range of possible loss. We update our disclosures to reflect our most current understanding of the contingencies at the time we issue our financial statements. However, events may arise that were not anticipated and the outcome of a contingency may result in a loss to us that differs materially from our previously estimated liability or range of possible loss.

Despite the inherent complexity in the accounting and disclosure of contingencies, we believe that our processes are robust and thorough and provide a consistent framework for management in evaluating the potential outcome of contingencies for proper accounting recognition and disclosure.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

INTEREST RATES.

While we currently have market risk sensitive instruments related to interest rates, we do not have significant exposure to changing interest rates on our long-term debt. As disclosed in

Note

to the accompanying consolidated financial statements, we had outstanding fixed-rate long-term debt (exclusive of finance leases) with an estimated fair value of $17.2 billion at May 31, 2025 and outstanding fixed-rate long-term debt (exclusive of finance leases) with an estimated fair value of $17.5 billion at May 31, 2024. Market risk for long-term debt is estimated as the potential decrease in fair value resulting from a hypothetical 10% increase in interest rates and amounts to approximately $600 million as of May 31, 2025 and approximately $650 million as of May 31, 2024. The underlying fair values of our long-term debt were estimated based on quoted market prices or on the current rates offered for debt with similar terms and maturities.

We have interest rate risk with respect to our pension and postretirement benefit obligations. Changes in interest rates impact our liabilities associated with these retirement plans, as well as the amount of pension and postretirement benefit expense recognized. Declines in the value of plan assets could diminish the funded status of our pension plans and potentially increase our requirement to make contributions to the plans. Substantial investment losses on plan assets would also increase net pension expense. See the “Critical Accounting Estimates — Retirement Plans” section of “

Item 7. Management’s Discussion and Analysis of Results of Operations and Financial Condition

” of this Annual Report for more information.

FOREIGN CURRENCY. INVESTMENTS IN EQUITY AND DEBT SECURITIES.

While Investments in equity securities with a readily determinable fair value are carried at fair value and are classified as Level 1 investments in the fair value hierarchy. Level 1 investments are valued at the closing price or last trade reported on the major market on which the individual securities are traded. For equity securities without readily determinable fair values that qualify for the net asset value (“NAV”) practical expedient, we are a global provider of transportation, e-commerce, and business services, have elected to apply the majority of our transactions during the periods presented in this Annual Report are denominated in U.S. dollars. The principal foreign currency exchange rate risks to which we are exposed relate to the euro, Chinese yuan, British pound, Canadian dollar, Australian dollar, Mexican peso, Hong Kong dollar, and Japanese yen. Historically, our exposure to foreign currency fluctuations is more significant NAV practical

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with respect to our revenue than our expenses, as a significant portion of our expenses are denominated in U.S. dollars, such as aircraft and fuel expenses. Foreign currency fluctuations had a slightly positive impact on operating income in 2025 and a slightly negative impact on operating income in 2024. However, favorable foreign currency fluctuations also may have had an offsetting impact on the price we obtained or the demand for our services, which is not quantifiable. At May 31, 2025, the result of a uniform 10% strengthening in the value of the dollar relative to the currencies in which our transactions are denominated would result in a decrease in operating income of approximately $450 million for 2026, assuming operations were consistent with the prior year. This theoretical calculation assumes that each exchange rate would change in the same direction relative to the U.S. dollar, which is not consistent with our actual experience in foreign currency transactions. In addition to the direct effects of changes in exchange rates, fluctuations in exchange rates also affect the volume of sales or the foreign currency sales price as competitors’ services become more or less attractive. The sensitivity analysis of the effects of changes in foreign currency exchange rates does not factor in a potential change in sales levels or local currency prices.

We maintain derivative financial instruments to manage foreign currency fluctuations related to probable future transactions and cash flows denominated in currencies other than the currency of the transacting entity, which impacts our exposure to foreign currency exchange risk. Certain derivatives are designated as net investment hedges and the gains or losses on those derivatives are reported in accumulated other comprehensive loss within common stockholders’ investment as part of the cumulative translation adjustment. During 2025, we recognized an $86 million loss in other comprehensive income related to our cross-currency swaps, which excludes any impact of deferred income taxes. All other derivatives are accounted for at fair value with any gains or losses recorded in income, and were immaterial in 2025. The income statement impact of the derivatives was immaterial in 2024. For additional discussion of our derivatives, see

Note 1

of the accompanying consolidated financial statements.

COMMODITY.

While we have market risk for changes in the price of jet and vehicle fuel, this risk is largely mitigated by our indexed fuel surcharges. For additional discussion of our indexed fuel surcharges, see the “Results of Operations and Outlook — Consolidated Results — Fuel” section of “

Item 7. Management’s Discussion and Analysis of

Financ

ial Condition and

Results of Operations

.

”

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

MANAGEMENT’S REPORT ON INTERNAL

CONTROL OVER FINANCIAL REPORTING

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended). Our internal control over financial reporting includes, among other things, defined policies and procedures for conducting and governing our business, sophisticated information systems for processing transactions, and a properly staffed, professional internal audit department. Mechanisms are in place to monitor the effectiveness of our internal control over financial reporting and actions are taken to correct all identified deficiencies. Our procedures for financial reporting include the active involvement of senior management, our Audit and Finance Committee, and our staff of highly qualified financial and legal professionals.

Management, with the participation of our principal executive and financial officers, assessed our internal control over financial reporting as of May 31, 2025, the end of our fiscal year. Management based its assessment on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

Based on this assessment, management has concluded that our internal control over financial reporting was effective as of May 31, 2025.

The effectiveness of our internal control over financial reporting as of May 31, 2025, has been audited by Ernst & Young LLP (PCAOB ID: 42), the independent registered public accounting firm who also audited the Company’s consolidated financial statements included in this Annual Report on Form 10-K. Ernst & Young LLP’s report on the Company’s internal control over financial reporting is included in this Annual Report on Form 10-K.

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Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors of

FedEx Corporation

Opinion on Internal Control Over Financial Reporting

We have audited FedEx Corporation’s internal control over financial reporting as of May 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, FedEx Corporation (the Company) maintained, in all material respects, effective internal control over financial reporting as of May 31, 2025, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of May 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, cash flows and changes in common stockholders’ investment for each of the three years in the period ended May 31, 2025, and the related notes and our report dated July 21, 2025 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Memphis, Tennessee

July 21, 2025

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Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors of

FedEx Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of FedEx Corporation (the Company) as of May 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, cash flows and changes in common stockholders’ investment for each of the three years in the period ended May 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at May 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended May 31, 2025, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of May 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated July 21, 2025 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

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/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2002.

Memphis, Tennessee

July 21, 2025

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FEDEX CORPORATION

CONSOLIDATED BALANCE SHEETS

(IN MILLIONS)

The accompanying notes are an integral part of these consolidated financial statements.

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FEDEX CORPORATION

CONSOLIDATED BALANCE SHEETS

(IN MILLIONS, EXCEPT SHARE DATA)

The accompanying notes are an integral part of these consolidated financial statements.

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FEDEX CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)

The accompanying notes are an integral part of these consolidated financial statements.

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FEDEX CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(IN MILLIONS)

The accompanying notes are an integral part of these consolidated financial statements.

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FEDEX CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN MILLIONS)

The accompanying notes are an integral part of these consolidated financial statements.

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FEDEX CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN COMMON STOCKHOLDERS’ INVESTMENT

(IN MILLIONS, EXCEPT SHARE DATA)

The accompanying notes are an integral part of these consolidated financial statements.

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1: DESCRIPTION OF BUSINESS SEGMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS SEGMENTS.

FedEx Corporation (“FedEx”) provides a broad portfolio of transportation, e-commerce, and business services, offering integrated business solutions utilizing our flexible, efficient, and intelligent global network. During the fiscal years ended May 31, 2025 and 2024, our primary operating companies were Federal Express Corporation (“Federal Express”), the world’s largest express transportation company and a leading North American provider of small-package ground delivery services, and FedEx Freight, Inc. (“FedEx Freight”), a leading North American provider of less-than-truckload (“LTL”) freight transportation services.

In connection with our one FedEx consolidation pl

an, on June 1, 2024, FedEx Ground Package System, Inc. (“FedEx Ground”) and FedEx Corporate Services, Inc. (“FedEx Services”) were merged into Federal Express, becoming a single company operating a unified, fully integrated air-ground express network under the respected FedEx brand. FedEx Freight continues to provide LTL freight transportation services as a separate subsidiary. Beginning in the first quarter of 2025, Federal Express and FedEx Freight represent our major service lines and constitute our reportable segments. Additionally, the results of FedEx Custom Critical, Inc. (“FedEx Custom Critical”) are included in the FedEx Freight segment instead of the Federal Express segment in 2025. Prior-year amounts were revised to reflect this presentation.

We evaluated our reporting units with significant recorded goodwill during the fourth quarter of 2024, and the estimated fair value of each reporting unit exceeded its carrying value as of the end of 2024 immediately before our one FedEx consolidation. We reevaluated the conclusion of our 2024 goodwill impairment tests as of June 1, 2024 immediately after our one FedEx consolidation and concluded that the estimated fair values of our reporting units with significant goodwill continued to exceed their respective carrying values.

In December 2024, we announced that FedEx’s Board of Directors decided to pursue a full separation of FedEx Freight throu

gh the capital markets, creating a new publicly traded company. The transaction, which would be implemented through the spin-off of shares of the new company to FedEx stockholders, is expected to be tax-free for U.S. federal income tax purposes for FedEx stockholders and be completed by June 2026.

FISCAL YEARS

. Except as otherwise specified, references to years indicate our fiscal year ended May 31, 2025 or ended May 31 of the year referenced, and comparisons are to the corresponding period of the prior year.

In January 2025, the Board of Directors approved a change in FedEx's fiscal year end from May 31 to December 31. The fiscal year change will be effective for the period beginning June 1, 2026.

PRINCIPLES OF CONSOLIDATION

. The consolidated financial statements include the accounts of FedEx and its subsidiaries, substantially all of which are wholly owned. All significant intercompany accounts and transactions have been eliminated in consolidation.

REVENUE RECOGNITION

.

Satisfaction of Performance Obligation

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the basis of revenue recognition in accordance with U.S. generally accepted accounting principles (“GAAP”). To determine the proper revenue recognition method for contracts, we evaluate whether two or more contracts should be combined and accounted for as one single contract and whether the combined or single contract should be accounted for as more than one performance obligation. For most of our contracts, the customer contracts with us to provide distinct services within a single contract, primarily transportation services. Substantially all of our contracts with customers for transportation services include only one performance obligation, the transportation services themselves. However, if a contract is separated into more than one performance obligation, we allocate the total transaction price to each performance obligation in an amount based on the estimated relative standalone selling prices of the promised goods or services underlying each performance obligation. We frequently sell standard transportation services with observable standalone sales prices. In these instances, the observable standalone sales are used to determine the standalone selling price.

For transportation services, revenue is recognized over time as we perform the services in the contract because of the continuous transfer of control to the customer. Our customers receive the benefit of our services as the goods are transported from one location to another. If we were unable to complete delivery to the final location, another entity would not need to reperform the transportation service already performed. As control transfers over time, revenue is recognized based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the products or services to be provided. We use the cost-to-cost measure of progress for our package delivery contracts because it best depicts the transfer of control to the customer which occurs as we incur costs on our contracts. Under the cost-to-cost measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

estimated costs at completion of the performance obligation. Revenue, including ancillary or accessorial fees and reductions for estimated customer incentives, is recorded proportionally as costs are incurred. Costs to fulfill include labor and other direct costs and an allocation of indirect costs. For our FedEx Freight and freight forwarding contracts, an output method of progress based on time-in-transit is utilized as the timing of costs incurred does not best depict the transfer of control to the customer.

We also provide customized customer-specific solutions, such as supply chain management solutions and inventory and service parts logistics, through which we provide the service of integrating a complex set of tasks and components into a single capability. For these arrangements, the majority of which are conducted by our FedEx Logistics, Inc. (“FedEx Logistics”) operating segment, the entire contract is accounted for as one performance obligation. For these performance obligations, we typically have a right to consideration from customers in an amount that corresponds directly with the value to the customers of our performance completed to date, and as such we recognize revenue in the amount to which we have a right to invoice the customer.

Contract Modification

Contracts are often modified to account for changes in the rates we charge our customers or to add additional distinct services. We consider contract modifications to exist when the modification either creates new enforceable rights and obligations or alters the existing arrangement. Contract modifications that add distinct goods or services are treated as separate contracts. Contract modifications that do not add distinct goods or services typically change the price of existing services. These contract modifications are accounted for prospectively as the remaining performance obligations are distinct.

Variable Consideration

Certain contracts contain customer incentives, guaranteed service refunds, and other provisions that can either increase or decrease the transaction price. These incentives are generally awarded based upon achieving certain performance metrics. We estimate variable consideration as the most likely amount to which we expect to be entitled. We include estimated amounts of revenue, which may be reduced by incentives or other contract provisions, in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Our estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based on an assessment of anticipated customer spending and all information (historical, current, and forecasted) that is reasonably available to us.

Principal vs. Agent Considerations

Transportation services are provided with the use of employees and independent businesses that contract with FedEx. GAAP requires us to evaluate whether our businesses themselves promise to transfer services to the customer (as the principal) or to arrange for services to be provided by another party (as the agent) using a control model. Based on our evaluation of the control model, we determined that FedEx is the principal to the transaction for most of these services and revenue is recognized on a gross basis based on the transfer of control to the customer. Costs associated with independent businesses providing transportation services are recognized as incurred and included within “Purchased transportation” in the accompanying consolidated statements of income.

Our contract logistics, global trade services, and certain transportation businesses engage in certain transactions wherein they act as agents. Revenue from these transactions is recorded on a net basis. Net revenue includes billings to customers less third-party charges, including transportation or handling costs, fees, commissions, and taxes and duties.

Contract Assets and Liabilities

Contract assets include billed and unbilled amounts resulting from in-transit shipments, as we have an unconditional right to payment only once all performance obligations have been completed (e.g., packages have been delivered). Contract assets are generally classified as current, and the full balance is converted each quarter based on the short-term nature of the transactions. Our contract liabilities consist of advance payments and billings in excess of revenue. The full balance of deferred revenue is converted each quarter based on the short-term nature of the transactions.

Gross contract assets related to in-transit shipments totaled $673 million and $672 million at May 31, 2025 and May 31, 2024, respectively. Contract assets net of deferred unearned revenue were $526 million and $463 million at May 31, 2025 and May 31, 2024, respectively. Contract assets are included within “Receivables” in the accompanying consolidated balance sheets. Contract liabilities related to advance payments from customers were $23 million and $23 million at May 31, 2025 and May 31, 2024, respectively. Contract liabilities are included within “Accrued expenses” in the accompanying consolidated balance sheets.

Payment Terms

Certain of our revenue-producing transactions are subject to taxes and duties, such as sales tax, assessed by governmental authorities. We present these revenues net of tax. Under the typical payment terms of our customer contracts, the customer pays at periodic

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

intervals (e.g., every 15 days, 30 days, 45 days, etc.) for shipments included on invoices received. It is not customary business practice to extend payment terms past 90 days, and as such, we do not have a practice of including a significant financing component within our revenue contracts with customers.

Disaggregation of Revenue

See

Note 1

for disclosure of disaggregated revenue for the periods ended May 31. This presentation is consistent with how we organize our segments internally for making operating decisions and measuring performance.

CREDIT RISK.

We routinely grant credit to many of our customers for transportation and business services without collateral. The risk of credit loss in our trade receivables is substantially mitigated by our credit evaluation process, short collection terms, and sales to a large number of customers, as well as the low revenue per transaction for most of our services. Allowances for potential credit losses are determined based on historical experience and the impact of current economic conditions. Historically, credit losses have been within management’s expectations.

ADVERTISING.

Advertising and promotion costs are expensed as incurred and are classified in other operating expenses. Advertising and promotion expenses were $425 million in 2025, $421 million in 2024, and $435 million in 2023.

CASH EQUIVALENTS.

Cash in excess of current operating requirements is invested in short-term, interest-bearing instruments with maturities of three months or less at the date of purchase and is stated at cost, which approximates market value.

SPARE PARTS, SUPPLIES, AND FUEL.

Spare parts (principally aircraft-related) are reported at weighted-average cost. Allowances for obsolescence are provided for spare parts currently identified as excess or obsolete as well as expected to be on hand at the date the aircraft are retired from service. These allowances are provided over the estimated useful life of the related aircraft and engines. The majority of our supplies and fuel are reported at weighted-average cost.

PROPERTY AND EQUIPMENT

. Expenditures for major additions, improvements, and flight equipment modifications are capitalized when such costs are determined to extend the useful life of the asset or are part of the cost of acquiring the asset. Expenditures for equipment overhaul costs of engines or airframes prior to their operational use are capitalized as part of the cost of such assets as they are costs required to ready the asset for its intended use. Maintenance and repairs costs are charged to expense as incurred, except for certain aircraft engine maintenance costs incurred under third-party service agreements. These agreements result in costs being expensed based on cycles or hours flown and are subject to annual escalation. These service contracts transfer risk to third-party service providers and generally fix the amount we pay for maintenance to the service provider as a rate per cycle or flight hour, in exchange for maintenance and repairs under a predefined maintenance program. We capitalize certain direct internal and external costs associated with the development of internal-use software, including implementation of cloud computing service arrangements. Gains and losses on sales of property used in operations are classified within operating expenses and historically have been nominal.

For financial reporting purposes, we record depreciation and amortization of property and equipment on a straight-line basis over the asset’s service life or related lease term, if shorter. For income tax purposes, depreciation is computed using accelerated methods when applicable.

The depreciable lives and net book value of our property and equipment are as follows (dollars in millions):

Substantially all property and equipment have no material residual values. The majority of aircraft costs are depreciated on a straight-line basis over

to

30 years

. We

periodically evaluate the estimated service lives and residual values used to depreciate our property and equipment.

Depreciation and amortization expense, excluding gains and losses on sales of property and equipment used in operations, was $4.3 billion in 2025, $4.3 billion in 2024, and $4.2 billion in 2023. Depreciation and amortization expense includes amortization of assets under finance leases.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

CAPITALIZED INTEREST expedient to estimate fair value. Changes in fair value are included in “Other, net” in the accompanying consolidated statements of income.

. Interest on funds used We apply the measurement alternative to finance all other investments in equity securities without a readily determinable fair value. Under the acquisition measurement alternative these equity securities are accounted for at cost, with adjustments for observable changes in prices 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 impairments included within “Other, net” in the cost accompanying consolidated statements of the asset if the asset income. We perform a qualitative assessment each reporting period to evaluate whether these equity securities are impaired. Our assessment includes a review of recent operating results and trends and other publicly available data. If an investment is actively under construction. Capitalized interest was $55 million in 2025, $81 million in 2024, and $77 million in 2023. impaired, we write it down to its estimated fair value.

IMPAIRMENT OF LONG-LIVED ASSETS. Investments in debt securities, which are considered short-term investments, are classified as “available-for-sale” and are carried at fair value. Realized gains and losses on available-for-sale debt securities are included within “Other, net” in the accompanying consolidated statements of income while unrealized gains and losses, net of tax, are included within AOCL in the accompanying consolidated balance sheet.

Long-lived assets Investments in equity securities and debt securities are reviewed for impairment when circumstances indicate included within “Other assets” and “Prepaid expenses and other,” respectively, in the carrying value of an asset may not be recoverable. For assets that are to be held and used, an impairment is recognized when the estimated undiscounted cash flows associated with the asset or group of assets is less than their carrying value. If impairment exists, an adjustment is made to write the asset down to its fair value, and a loss is recorded as the difference between the carrying value and fair value. Fair values are determined based on quoted market values, discounted cash flows, or internal and external appraisals, as applicable. Assets to be disposed of are carried at the lower of carrying value or estimated net realizable value. accompanying consolidated balance sheets.

We On February 9, 2026, InPost S.A. (“InPost”) and a consortium including FedEx announced a conditional agreement on an intended recommended all-cash public offer for all issued and outstanding shares of InPost at an offer price of €15.60 (cum dividend) per share (the “Offer”). Post-completion, the consortium will be structured with FedEx holding 37%. InPost will continue to operate integrated transportation networks so as a standalone company. The Offer and the transactions contemplated thereby (the “Transaction”) are subject to certain customary closing conditions, including, among others, the receipt of regulatory approvals. Based upon the proposed Offer price, FedEx’s investment is valued at approximately €2.20 billion. FedEx intends to fund its portion of the Offer by utilizing available cash flows for most of our operating assets balances, existing or new liquidity sources, or a combination thereof. The Transaction is expected to be held and used are assessed at a network level, not at an individual asset level, for our analysis completed in the second half of impairment. calendar 2026.

In 2025 we made the decision to permanently retire from service 12 aircraft and eight related engines, resulting in a noncash impairment charge of $21 million ($16 million, net of tax, or $0.06 per diluted share). These retirements included two Boeing 757-200 aircraft, seven Airbus A300-600 aircraft, three Boeing MD-11 aircraft, and align with Federal Express’s fleet reduction and modernization strategy as we continue to improve our global network efficiency and better align air network capacity with anticipated demand. All of these permanently retired aircraft were temporarily idled and not in revenue service. STOCK-BASED COMPENSATION.

In 2024, we made The accounting guidance related to share-based payments requires recognition of compensation expense for stock-based awards using a fair value method. We use the decision Black-Scholes option pricing model to permanently retire calculate the fair value of stock options. The value of restricted stock awards, restricted stock units (“RSUs”), and performance stock units (“PSUs”) are based on the stock price of the award on the grant date. We record stock-based compensation expense within “Salaries and employee benefits” in the accompanying consolidated statements of income. We issue new shares or treasury shares from service 22 Boeing 757-200 aircraft stock repurchases to cover employee stock option exercises and seven related engines restricted stock grants. Shares not issued for restricted stock grants are available to align with Federal Express’s fleet reduction and modernization strategy. As a consequence of this decision, a noncash impairment charge of $157 million ($120 million, net of tax, or $0.48 per diluted share) was recorded in 2024. be issued for stock option grants.

In 2023, we made the decision to permanently retire from service 12 Boeing MD-11F aircraft and 25 related engines, four Boeing 757-200 aircraft and one related engine, and two Airbus A300-600 aircraft and eight related engines for the same reasons stated above. As a consequence of this decision, a noncash impairment charge of $70 million ($54 million, net of tax, or $0.21 per diluted share) was recorded in 2023. TREASURY SHARES.

In 2023 we March 2024, our Board of Directors authorized a stock repurchase program for repurchases of up to $5.0 billion of FedEx common stock. As of May 31, 2026, $1.3 billion remained available to use for repurchases under our 2024 stock repurchase program. During fiscal year 2026, 3.3 million shares were repurchased through accelerated the retirement share repurchase (“ASR”) agreements or open market transactions under this program at an average price of the entire Boeing MD-11 fleet by the end $233.07 per share for a total of 2028. In 2025 we made the decision to extend the retirement plan to have the fleet retired by the end of 2032 to better align air network capacity of Federal Express to match current and anticipated shipment volumes. As a result of this decision, we $776 million. Share repurchases had a net decrease benefit of $0.21 per diluted share in depreciation expense in 2025 of $19 million. 2026.

In During fiscal year 2025, 10.9 million shares were repurchased under the normal management of our aircraft fleet, we routinely idle aircraft and engines temporarily due to maintenance cycles and adjustments of our network capacity to match seasonality and overall customer demand levels. Temporarily idled assets are classified as available-for-use, and we continue to record depreciation expense associated with these assets. These temporarily idled assets are assessed for impairment and remaining life on a quarterly basis. The criteria for determining whether an asset has been permanently removed from service (and, as a result, is potentially impaired) include, but are not limited to, our global economic outlook and the impact of our outlook on our current and projected volume levels, including capacity needs during our peak shipping seasons; the introduction of new fleet types stock repurchase program through ASR agreements or decisions to permanently retire an aircraft fleet from operations; and changes to planned service expansion activities. At May 31, 2025, we had 22 aircraft temporarily idled. These aircraft have been idled for open market transactions at an average price of ten months and are expected to return to revenue service i $274.34 per share for a total of $3.0 billion. Share repurchases had a benefit of $0.44 per diluted share in 2025. During fiscal year 2024, 9.8 million shares were repurchased at an average price of $255.34 per share for a total of $2.5 billion.

n order The final number of shares delivered upon settlement of the ASR agreements was determined based on a discount to meet expected demand. the volume-weighted average price of our stock during the term of the transaction. The repurchased shares were accounted for as a reduction to “Common stockholders’ investment” in the accompanying consolidated balance sheets and resulted in a reduction of the outstanding shares used to calculate the weighted-average common shares outstanding for basic and diluted earnings per share.

GOODWILL. DIVIDENDS DECLARED PER COMMON SHARE.

Goodwill is recognized for the excess On June 8, 2026, our Board of Directors declared a quarterly cash dividend of $1.22 per share of common stock. The dividend was paid on July 7, 2026 to stockholders of record as of the purchase price over close of business on June 22, 2026. Each quarterly dividend payment is subject to review and approval by our Board of Directors, and we evaluate our dividend payment amount on an annual basis. There are no material restrictions on our ability to declare dividends, nor are there any material restrictions on the fair value ability of tangible and identifiable intangible net assets of businesses acquired. Several factors give rise our subsidiaries to goodwill in our acquisitions, such as the expected benefits from synergies of the combination and the existing workforce of the acquired business. Goodwill is reviewed at least annually for impairment. In our evaluation of goodwill impairment, we perform a qualitative assessment transfer funds to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the qualitative assessment is not conclusive, we proceed to test goodwill for impairment, including comparing the fair value of the reporting unit to its carrying value (including attributable goodwill). Fair value for our reporting units is determined using an income or market approach incorporating market participant considerations and management’s assumptions on revenue growth rates, operating margins, discount rates, and expected capital expenditures. Fair value determinations may include both internal and third-party valuations. Unless circumstances otherwise dictate, we perform our annual impairment testing us in the fourth quarter. See form of cash dividends, loans, or advances.

Note 5 BUSINESS OPTIMIZATION AND REALIGNMENT COSTS

for additional information. . Our business optimization and realignment costs relate to transformation initiatives aimed to improve long-term profitability, drive efficiency within and between our transportation segments, lower our overhead and support costs, and transform our digital capabilities. Costs included in “Business optimization and realignment costs” in the accompanying consolidated statements of income relate to our Network 2.0 program, our international operational transformation programs, our DRIVE initiatives commenced in prior years, and the Europe workforce reduction plan announced in June 2024.

INTANGIBLE ASSETS

. Intangible assets primarily include customer relationships, technology assets, and trademarks acquired in business combinations. Intangible assets are amortized over periods ranging from 1

to

15 years

, either

on a straight-line basis or on a basis consistent with the pattern in which the economic benefits are realized. See

Note 5

for additional information.

PENSION AND POSTRETIREMENT HEALTHCARE PLANS.

Our defined benefit pension and other postretirement benefit plans are measured using actuarial techniques that reflect management’s assumptions for discount rate, investment returns on plan assets, salary

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

increases, expected retirement, mortality, The table below summarizes the changes to amounts accrued associated with business optimization and employee turnover. We determine the discount rate (which is required to be the rate at which the projected benefit obligation (“PBO”) could be effectively settled as of the measurement date) with the assistance of actuaries, who calculate the yield on a theoretical portfolio of high-grade corporate bonds (rated Aa or better) with cash flows that are designed to match our expected benefit payments in future years. We use the fair value of plan assets to calculate the expected return on assets (“EROA”) for interim realignment costs during 2026 and segment reporting purposes. Our EROA is a judgmental estimate which is reviewed on an annual basis and revised as appropriate. 2025:

The accounting guidance We incurred business optimization and realignment costs of $366 million ($285 million, net of tax, or $1.19 per diluted share) in 2026, of which $14 million related to employers’ accounting for defined benefit pension impairment of property and other postretirement plans requires recognition in the balance sheet of the funded status of these plans. We use “mark-to-market” (or “MTM”) accounting and immediately recognize changes in the fair value of plan assets and actuarial gains or losses in our results annually in the fourth quarter each year. The annual MTM adjustment is recognized at the corporate level and does not impact segment results. equipment. The remaining components costs were primarily related to severance, professional services, and incentive payments to our contracted service providers, and are included in Federal Express and Corporate, other, and eliminations. We incurred business optimization and realignment costs of pension $756 million ($577 million, net of tax, or $2.37 per diluted share) in 2025. These costs were primarily related to professional services and postretirement healthcare expense, severance and are included in Federal Express and Corporate, other, and eliminations. We incurred costs associated with our business optimization and realignment activities of $582 million ($444 million, net of tax, or $1.77 per diluted share) in 2024. These costs were primarily service related to professional services and interest costs severance and the EROA, are recorded on a quarterly basis. Only service cost is recognized included in segment level operating results. Corporate, other, and eliminations and Federal Express.

INCOME TAXES. Network 2.0

Deferred income taxes are provided for Network 2.0 is our multi-year effort to improve the tax effect of temporary differences between the tax basis of assets efficiency with which FedEx picks up, transports, and liabilities and their reported amounts delivers packages in the financial statements. The liability method is used U.S. and Canada. Through Network 2.0, we continue to account for income taxes, which requires deferred taxes consolidate our sortation facilities and equipment, reduce pickup-and-delivery routes, and optimize our enterprise linehaul network by moving beyond discrete collaboration to be recorded at an end-to-end optimized network. We have implemented Network 2.0 optimization in approximately 410 locations in the statutory rate expected U.S. and Canada as of May 31, 2026. Service providers will handle the pickup and delivery of Federal Express packages in some locations while employee couriers will handle others. We completed Canada’s implementation of Network 2.0 in the fourth quarter of fiscal year 2025 and expect to be in effect when complete the taxes are paid. U.S implementation by the end of calendar 2027.

Deferred income tax assets represent amounts available to reduce income taxes payable on taxable income in future years. Such assets arise because of temporary differences between the financial reporting and tax bases of assets and liabilities, as well as from net operating loss, capital loss, and tax credit carryforwards. We evaluate the recoverability of these future tax deductions and credits by assessing the adequacy of future expected taxable income from all sources, including reversal of taxable temporary differences, forecasted operating earnings, and available tax planning strategies. These sources of income rely heavily on estimates to make this determination and, as a result, there is a risk that these estimates will have to be revised as new information is received. To the extent we do not consider it more likely than not that a deferred tax asset will be recovered, a valuation allowance is established. We believe we will generate sufficient future taxable income to realize the tax benefits related to the remaining net deferred tax assets in the consolidated balance sheets that are not subject to valuation allowances. We record the taxes for global intangible low-taxed income as a period cost. International operational transformation programs

We recognize liabilities In January 2026, FedEx initiated operational transformation programs in certain international locations designed to modernize, streamline, and optimize international domestic operations. These transformation programs may reduce approximately 5,000 operational employees, as well as changing working locations and schedules for uncertain income tax positions based on a two-step process. The first step up to 800 operational employees and is expected to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step requires us occur over approximately 18 months, subject to estimate and measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. It is inherently difficult and subjective to estimate such amounts, as we must determine the probability of various possible outcomes. We reevaluate these uncertain tax positions on a quarterly basis or when new information becomes available to management. These reevaluations are based on factors including, but not limited to, changes required consultation processes in facts or circumstances, changes in tax law, successfully settled issues under audit, and new audit activity. Such a change in recognition or measurement could result in the recognition of a tax benefit or an increase to the related provision. accordance with local country regulations.

We classify interest expect the combined pre-tax costs of severance benefits, legal and professional fees, and facilities-related exit costs to range from $225 million to $325 million, substantially all of which are cash expenditures. These charges are expected to be incurred through calendar year 2028 and will be recorded as business optimization expenses. In 2026, we incurred $147 million of costs related to income tax liabilities as interest expense, these programs. The timing and if applicable, penalties are recognized as a component of income tax expense. The income tax liabilities and accrued interest and penalties that are due within one year of the balance sheet date are presented as current liabilities. The noncurrent portion amount of our income tax liabilities business optimization expenses and accrued interest the related cost savings associated with this operational transformation program are dependent on local country consultation processes, regulations and penalties are included within “Other liabilities” in the accompanying consolidated balance sheets. negotiation of social plans, and may change as we revise and implement our plans.

SELF-INSURANCE ACCRUALS. Europe workforce reduction plan

We Our workforce reduction plan in Europe to reduce structural costs, announced in June 2024, is now fully complete as of May 31, 2026. The plan occurred over an 18-month period in accordance with local country processes and regulations and impacted approximately 1,400 employees across back-office and commercial functions. Savings from the plan are self-insured for costs associated with workers’ compensation claims, vehicle accidents, property and cargo loss, general business liabilities, and benefits paid under employee disability programs. Accruals are primarily based expected to be approximately $150 million on the actuarially estimated cost of claims, which includes incurred-but-not-reported claims. Current workers’ compensation claims, vehicle and general liability, and long-term disability are included within “Accrued expenses” an annualized basis beginning in the accompanying consolidated balance sheets. We self-insure up to certain limits that vary by operating company and type of risk. Claims costs are recognized on a gross basis and a receivable is recorded for amounts covered by third-party insurance. Periodically, we evaluate the level of insurance coverage and adjust insurance levels based on risk tolerance and premium expense. calendar 2026.

We are also self-insured Pre-tax costs for certain short-term employee healthcare claims, which are included within “Accrued expenses” in severance benefits and legal and professional fees related to the accompanying consolidated balance sheets. plan were recorded as business optimization expenses. In 2026 and 2025, we incurred $13 million and $235 million, respectively, of costs related to this plan.

LEASES. The identification of costs as business optimization and realignment-related expenditures is subject to our disclosure controls and procedures.

We lease certain facilities, aircraft, equipment, and vehicles under operating and finance leases. A determination of whether a contract contains a lease is made at the inception of the arrangement. Our leased facilities include national, regional, and metropolitan sorting facilities; retail facilities; and administrative buildings. SEPARATION AND OTHER COSTS.

Our separation and other costs relate to the Spin-Off and fiscal year change, as noted above in the “

Description of B

usiness Se

gments

and

Fiscal Years

section

s

of Note

.” See also

Note 20

for further information.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Our leases generally contain options The table below summarizes the changes to extend or terminate the lease. We reevaluate our leases on a regular basis to consider the economic amounts accrued associated with separation and strategic incentives of exercising the renewal options, other costs during 2026 and how they align with our operating strategy. Therefore, substantially all the renewal option periods are not included within the lease term and the associated payments are not included in the measurement of the right-of-use asset and lease liability as the options to extend are not reasonably certain at lease commencement. Short-term leases with an initial term of 12 months or less are not recognized in the right-of-use asset and lease liability within the consolidated balance sheets. 2025:

The lease liabilities are measured at the lease commencement date and determined using the present value of the minimum lease payments not yet paid and our incremental borrowing rate, which approximates the rate at which we would borrow, on a collateralized basis, over the term of a lease in the applicable currency environment. The interest rate implicit in the lease is generally not determinable in transactions where we are the lessee. Spin-Off

For real estate leases, we account for lease components We incurred costs related to the Spin-Off of $744 million ($589 million, net of tax, or $2.46 per diluted share) in 2026. These costs primarily consist of professional services and non-lease components (such as common area maintenance) as a single lease component. Certain real estate leases require additional payments based on sales volume an employee incentive plan related to the Spin-Off. Separation costs of $738 million are included within “Separation and index-based rate increases, as well as reimbursement for real estate taxes, common area maintenance, other costs,” and insurance, which separation costs of $6 million are expensed as incurred as variable lease costs. Certain leases contain fixed lease payments for items such as real estate taxes, common area maintenance, and insurance. included within “Other, net” in the accompanying consolidated statements of income. These fixed payments costs are considered part of the lease payment and included in FedEx Freight; Corporate, other, and eliminations; and Federal Express. In 2025, we incurred costs related to the right-of-use asset Spin-Off of $56 million ($44 million, net of tax, or $0.18 per diluted share). Professional and lease liability. See legal fees of $38 million are included within “Separation and other costs,” and $18 million related to a debt exchange offer and consent solicitation transactions discussed in

Note 8 6

are included within “Other, net” in the accompanying consolidated statements of income. These costs are included in Corporate, other, and eliminations. Costs included in “Separation and other costs” for additional information. 2025 were reclassified from “Other” to conform to the current period presentation. This change had no impact on total operating income or net income. Additionally, “Separation and other costs, net of payments” of $15 million were reclassified from “Changes in assets and liabilities: Accounts payable and other liabilities” in the consolidated statements of cash flows for 2025. We did not incur any Spin-Off costs in 2024.

DERIVATIVE FINANCIAL INSTRUMENTS. Fiscal year change

We record all derivatives on incurred costs related to the balance sheet at fair value. The accounting for changes fiscal year change of $33 million ($26 million, net of tax, or $0.11 per diluted share) in 2026. These costs were primarily related to professional services and are included in the fair value of derivatives depends on the intended use “Separation and other costs” caption of the derivative, whether we have elected to designate a derivative in a hedging relationship and apply hedge accounting, and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge accompanying consolidated statements of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument income. Costs associated with the recognition of the changes fiscal year change are included in the fair value of the hedged asset or liability that are attributable Federal Express and Corporate, other, and eliminations. We did not incur any costs related to the hedged risk fiscal year change in a fair value hedge 2025 or the earnings effect of the hedged forecasted transactions in a cash flow hedge. We may enter into derivative contracts that are intended to economically hedge certain of our risk, even though hedge accounting does not apply or we elect not to apply hedge accounting. We are not subject to any master netting agreements. 2024.

SUPPLIER FINANCE PROGRAM.

We offer voluntary Supply Chain Finance (“SCF”) programs through financial institutions to certain of our suppliers. We agree to commercial terms with our suppliers, including prices, quantities, and payment terms, and they issue invoices to us based on the agreed-upon contractual terms. If our suppliers choose to participate in the SCF programs, they determine which invoices, if any, to sell to the financial institutions to receive an early discounted payment, while we settle the invoice amount with the financial institutions on the payment due dates. We guarantee these payments with the financial institutions.

Amounts due to our suppliers that participate in the SCF programs are included within “Accounts payable” in the accompanying consolidated balance sheets. We have been informed by the participating financial institutions that as of May 31, 2025 and May 31, 2024, suppliers have been approved to sell to them $71 million and $94 million, respectively, of our outstanding payment obligations. A rollforward of obligations confirmed and paid during the years ended May 31 is presented below (in millions):

FOREIGN CURRENCY TRANSLATION.

Translation gains and losses of foreign operations that use local currencies as the functional currency are accumulated and reported, net of applicable deferred income taxes, as a component of accumulated other comprehensive loss (“AOCL”) within “Common stockholders’ investment” in the accompanying consolidated balance sheets. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the local currency are included within “Other, net” in the accompanying consolidated statements of income and were immaterial for each period presented.

EMPLOYEES UNDER COLLECTIVE BARGAINING ARRANGEMENTS.

Our pilots, who are a small number of our total employees, are represented by the Air Line Pilots Association, International (“ALPA”) and are employed under a collective bargaining agreement that took effect on November 2, 2015. The agreement became amendable in November 2021. Bargaining for a successor agreement

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

began in May 2021, and in November 2022 the National Mediation Board (“NMB”) began actively mediating the negotiations. In July 2023, the pilots failed to ratify the tentative successor agreement that was approved by ALPA’s FedEx Master Executive Council the prior month. Bargaining for a successor agreement continues. In April 2024, the NMB rejected ALPA’s request for a proffer of arbitration. The conduct of mediated negotiations has no effect on our operations. Once a new agreement is ratified, we may amend our pension plan offered to the pilots, which would result in a remeasurement of our pension benefit obligation.

INVESTMENTS IN EQUITY AND DEBT SECURITIES.

Investments in equity securities with a readily determinable fair value are carried at fair value. For equity securities without readily determinable fair values that qualify for the net asset value (“NAV”) practical expedient, we have elected to apply the NAV practical expedient to estimate fair value. Changes in fair value are included in “Other income (expense)” in the accompanying consolidated statements of income.

We apply the measurement alternative to all other investments in equity securities without a readily determinable fair value. Under the measurement alternative these equity securities are accounted for at cost, with adjustments for observable changes in prices and impairments included within “Other income (expense)” in the accompanying consolidated statements of income. We perform a qualitative assessment each reporting period to evaluate whether these equity securities are impaired. Our assessment includes a review of recent operating results and trends and other publicly available data. If an investment is impaired, we write it down to its estimated fair value.

Investments in debt securities, which are considered short-term investments, are classified as “available-for-sale” and are carried at fair value. Realized gains and losses on available-for-sale debt securities are included within “Other income (expense)” in the accompanying consolidated statements of income while unrealized gains and losses, net of tax, are included within AOCL in the accompanying consolidated balance sheet.

Investments in equity securities and debt securities are included within “Other assets” and “Prepaid expenses and other,” respectively, in the accompanying consolidated balance sheets.

STOCK-BASED COMPENSATION.

The accounting guidance related to share-based payments requires recognition of compensation expense for stock-based awards using a fair value method. We use the Black-Scholes option pricing model to calculate the fair value of stock options. The value of restricted stock awards and restricted stock units (“RSUs”) are based on the stock price of the award on the grant date. We record stock-based compensation expense within “Salaries and employee benefits” in the accompanying consolidated statements of income. We issue new shares or treasury shares from stock repurchases to cover employee stock option exercises and restricted stock grants. Shares not issued for restricted stock grants are available to be issued for stock option grants.

TREASURY SHARES.

In

December 2021

, our Board of Directors authorized a stock repurchase program of up to

$5.0 billion

of FedEx common stock.

In

March 2024

, our Board of Directors authorized a new stock repurchase program for additional repurchases of up to

$5.0 billion

of FedEx common stock.

As of June 1, 2024, $5.1 billion remained available to be used for repurchases under the 2021 and 2024 programs.

During 2025, we repurchased 10.9 million shares of FedEx common stock under accelerated share repurchase ("ASR") transactions with two banks and open market transactions at an average price of $274.34 per share for a total of $3.0 billion. Share repurchases had a benefit of $0.44 per diluted share in 2025. In fiscal 2026 we have completed $500 million of share repurchases through open market transactions and as of July 21, 2025, $1.6 billion remained available to be used for repurchases under the 2024 program, which is the only program that currently exists. During 2024, we repurchased 9.8 million shares of FedEx common stock at an average price of $255.34 per share for a total of $2.5 billion. During 2023, we repurchased 9.2 million shares of FedEx common stock at an average price of $163.39 per share for a total of $1.5 billion.

The final number of shares delivered upon settlement of the ASR agreements was determined based on a discount to the volume-weighted average price of our stock during the term of the transaction. The repurchased shares were accounted for as a reduction within “Common stockholders’ investment” in the accompanying consolidated balance sheets and resulted in a reduction of the outstanding shares used to calculate the weighted-average common shares outstanding for basic and diluted earnings per share.

Shares under the 2024 repurchase program may be repurchased from time to time in the open market or in privately negotiated transactions. The timing and volume of repurchases are at the discretion of management, based on the capital needs of the business, the market price of FedEx common stock, and general market conditions. No time limits were set for the completion of the programs, however the programs may be suspended or discontinued at any time.

DIVIDENDS DECLARED PER COMMON SHARE.

On June 9, 2025, our Board of Directors declared a quarterly cash dividend of $1.45 per share of common stock. The dividend was paid on July 8, 2025 to stockholders of record as of the close of business on June 23, 2025. Each quarterly dividend payment is subject to review and approval by our Board of Directors, and we evaluate our dividend payment amount on an annual basis. There are no material restrictions on our ability to declare dividends, nor are there any material restrictions on the ability of our subsidiaries to transfer funds to us in the form of cash dividends, loans, or advances.

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

B

USINESS OPTIMIZATION AND REALIGNMENT COSTS

. In the second quarter of 2023, we announced DRIVE, a comprehensive program to improve long-term profitability. This program includes a business optimization plan to drive efficiency within and among our transportation segments, lower our overhead and support costs, and transform our digital capabilities. We have commenced our plan to consolidate our sortation facilities and equipment, reduce pickup-and-delivery routes, and optimize our enterprise linehaul network by moving beyond discrete collaboration to an end-to-end optimized network through Network 2.0, the multi-year effort to improve the efficiency with which FedEx picks up, transports, and delivers packages in the U.S. and Canada.

We have implemented Network 2.0 optimization in approximately 290 locations in the U.S and Canada as of May 31, 2025. Service providers will handle the pickup and delivery of Federal Express packages in some locations while employee couriers will handle others. We completed Canada’s implementation of Network 2.0 in the fourth quarter of 2025.

In June 2024, Federal Express announced a workforce reduction plan in Europe as part of its ongoing measures to reduce structural costs. The plan will impact approximately 1,400 employees in Europe across back-office and commercial functions. The execution of the plan is subject to a consultation process that is expected to occur over an 18-month period in accordance with local country processes and regulations. We expect savings from the plan to be approximately $150 million on an annualized basis beginning in calendar 2026.

We expect the pre-tax cost of the severance benefits and legal and professional fees to be provided under and related to our workforce reduction plan in Europe to range from $250 million to $275 million in cash expenditures through fiscal 2026. The timing and amount of our business optimization expenses and the related cost savings from the workforce reduction plan may change as we revise and implement our plans. The identification of costs as business optimization-related expenditures is subject to our disclosure controls and procedures.

We incurred business optimization costs of $756 million ($577 million, net of tax, or $2.37 per diluted share) in 2025, including $235 million of costs related to the workforce reduction plan in Europe. These costs were primarily related to professional services and severance, and are included in Federal Express and Corporate, other, and eliminations. We incurred costs associated with our business optimization activities of $582 million ($444 million, net of tax, or $1.77 per diluted share) in 2024. These costs were primarily related to professional services and severance and are included in Corporate, other, and eliminations and Federal Express. We incurred costs associated with our business optimization activities of $273 million ($209 million, net of tax, or $0.81 per diluted share) in 2023. These costs were primarily related to consulting services, severance, professional fees, and idling our operations in Russia. These business optimization costs are included in Corporate, other, and eliminations and Federal Express. The aggregate pre-tax cost of our business optimization activities was $1.6 billion through 2025.

In 2021, Federal Express announced a workforce reduction plan in Europe related to the network integration of TNT Express. The plan affected approximately 5,000 employees in Europe across operational teams and back-office functions and was completed during 2023. We incurred costs of $36 million ($27 million, net of tax, or $0.11 per diluted share) in 2023 associated with our business realignment activities. These costs were related to certain employee severance arrangements. Payments under this program totaled approximately $118 million in 2023. The cumulative pre-tax cost of our business realignment activities was approximately $430 million. We did not incur any costs related to business realignment activities in 2024 or 2025.

FEDEX FREIGHT SPIN-OFF COSTS.

We incurred costs related to the planned spin-off of FedEx Freight of $56 million ($44 million, net of tax, or $0.18 per diluted share) in 2025. These costs are included in Corporate, other, and eliminations and consist of $38 million of professional and legal fees included within “Other” operating expenses and $18 million related to the debt exchange offer and consent solicitation transactions discussed in

Note 7

included within “Other, net” in the accompanying consolidated statements of income. We did not incur any FedEx Freight spin-off costs in 2024.

USE OF ESTIMATES

. The preparation of our consolidated financial statements requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, the reported amounts of revenue and expenses, and the disclosure of contingent liabilities. Management makes its best estimate of the ultimate outcome for these items based on historical trends and other information available when the financial statements are prepared. Changes in estimates are recognized in accordance with the accounting rules for the estimate, which is typically in the period when new information becomes available to management. Areas where the nature of the estimate makes it reasonably possible that actual results could materially differ from amounts estimated include self-insurance accruals, retirement plan obligations, long-term incentive accruals, tax liabilities, loss contingencies, litigation claims, impairment assessments on long-lived assets (including goodwill) that rely on projections of future cash flows, and purchase price allocations.

NOTE 2: RECENT ACCOUNTING GUIDANCE

New accounting rules and disclosure requirements can significantly affect our reported results and the comparability of our financial statements. We believe the following new accounting guidance is relevant to the readers of our financial statements.

-86- Recently Adopted Accounting Standards

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The new requirements enhance detail regarding the amount of cash taxes paid and the reconciliation of our effective tax rate. We adopted this standard effective June 1, 2025 (fiscal 2026) on a prospective basis. See

Note

for further discussion about income taxes.

New Accounting Standards and Accounting Standards Not Yet Adopted

In May 2026, the FASB issued ASU 2026-02, Environmental Credits and Environmental Credit Obligations (Topic 818), which establishes accounting requirements for environmental credits and environmental credit obligations (“ECOs”). The ASU introduces a comprehensive model that establishes recognition, measurement, presentation, and disclosure requirements for environmental credits and, when applicable, compliance obligations that may be settled by using environmental credits. The new accounting standard will be effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. We are assessing the effect of this update on our consolidated financial statements and related disclosures.

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Recently Adopted Accounting Standards In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which clarifies the applicability of the interim reporting guidance, the types of interim reporting, and the form and content of interim financial statements in accordance with U.S. GAAP. Per the FASB, the amendment does not intend to change the fundamental nature of interim reporting or expand or reduce current interim disclosure requirements but rather provide clarity and improve navigability of the existing interim reporting requirements. The update will be effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. We are assessing the effect of this update on our consolidated financial statements and related disclosures.

In November 2023, July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which simplifies the application of the current expected credit loss model for current accounts receivable and current contract assets under Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which expands disclosures about a public entity’s reportable segments Codification 606. The update will be effective for annual reporting periods beginning after December 15, 2025, and requires more enhanced information about a reportable segment’s expenses, interim segment profit or loss, and how a public entity’s chief operating decision maker uses reported segment profit or loss information in periods within those annual reporting periods. Early adoption is permitted. We are assessing segment performance and allocating resources. We adopted this standard effective June 1, 2024 (fiscal 2025). The adoption the effect of this standard did not have a material effect update on our consolidated financial statements or internal controls. See and related disclosures.

Note 15 In November 2024, the FASB issued ASU 2024-03, Income Statement–Reporting Comprehensive Income–Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which expands disclosures about specific expense categories at interim and annual reporting periods. The update will be effective for annual periods beginning after December 15, 2026 and interim periods within annual reporting periods beginning after December 15, 2027. We are assessing the effect of this update on our consolidated financial statements and related disclosures.

for further discussion about segment reporting. Other accounting pronouncements issued, but not effective until after May 31, 2026, are not expected to have a material impact on our consolidated financial statements, related disclosures, or internal controls.

New Accounting Standards and Accounting Standards Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which expands disclosures in an entity’s income tax rate reconciliation table and regarding cash taxes paid both in the U.S. and foreign jurisdictions. The update will be effective for annual periods beginning after December 15, 2024 (fiscal 2026). We are assessing the effect of this update on our consolidated financial statements and related disclosures.

In March 2024, the Securities and Exchange Commission (“SEC”) adopted final rules requiring public entities to provide certain climate-related information in their registration statements and annual reports. As part of the disclosures, entities would have been required to quantify certain effects of severe weather events and other natural conditions in a note to their audited financial statements. The rules were originally scheduled to be effective for annual periods beginning in calendar 2025. In April 2024, the SEC voluntarily stayed implementation of the final rules pending certain legal challenges and in February 2025 requested that the court not schedule the matter for argument in order to allow time for the SEC to determine appropriate next steps. In March 2025, the SEC withdrew its defense of the rules. We are currently evaluating the status of these rules and the related litigation.

In November 2024, the FASB issued ASU 2024-03, Income Statement–Reporting Comprehensive Income–Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which expands disclosures about specific expense categories at interim and annual reporting periods. The update will be effective for annual periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027. We are assessing the effect of this update on our consolidated financial statements and related disclosures.

Other accounting pronouncements issued, but not effective until after May 31, 2025, are not expected to have a material impact on our consolidated financial statements, related disclosures, or internal controls.

NOTE 3: CREDIT LOSSES

We are exposed to credit losses primarily through our trade receivables. We assess ability to pay for certain customers by conducting a credit review, which considers the customer’s established credit rating and our assessment of creditworthiness. We determine the allowance for credit losses on accounts receivable using a combination of specific reserves for accounts that are deemed to exhibit credit loss indicators and general reserves that are determined using loss rates based on historical write-offs by geography and recent forecast information, including underlying economic expectations. During the year, changes in macroeconomic conditions, including the impact of tariffs, contributed to higher bad‑debt write‑offs compared to the prior year. These factors were considered in our assessment of expected credit losses and the determination of the allowance. We update our estimate of credit loss reserves quarterly. monthly.

Credit losses were $521 million Changes in 2025, $421 million in 2024, and $696 million in 2023. Our the allowance for credit losses was $438 million at for the years ended May 31, 2025 and $436 million at May 31, 2024. 31 were as follows:

NOTE 4: BUSINESS COMBINATIONS -85-

On February 4, 2025, we acquired RouteSmart Technologies, Inc. (“RouteSmart”), a global leader in route planning and optimization solutions, for $113 million in FedEx common shares from treasury stock and cash from operations. The majority of the purchase price was allocated to intangible assets and goodwill. The financial results of RouteSmart are included in the FedEx Dataworks, Inc. (“FedEx Dataworks”) operating segment under “Corporate, other and eliminations” from the date of acquisition and were not material to our results of operations or financial condition; therefore, pro forma financial information has not been provided.

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5: 4: GOODWILL AND OTHER INTANGIBLE ASSETS

GOODWILL.

The carrying amount of goodwill attributable to each reportable operating segment and changes therein are as follows (in millions):

(1)

Primarily currency translation adjustments.

(2)

Goodwill acquired related to the acquisition of RouteSmart Technologies. See

Note 4 We evaluated each of our reporting units during the fourth quarters of 2026 and 2025 and the estimated fair value of each of our reporting units exceeded their carrying values as of the end of 2026 and 2025; therefore, no impairment was recorded during any of the years presented.

for more information.

We evaluated each of our reporting units during the fourth quarters of 2025 and 2024 and the estimated fair value of each of our reporting units exceeded their carrying values as of the end of 2025 and 2024; therefore, no impairment was recorded during any of the years presented.

In connection with our annual impairment testing of goodwill conducted in the fourth quarter of 2023, we recorded an

impairment charge

of $36 million for all of the goodwill attributable to our FedEx Dataworks reporting unit. The key factors contributing to the goodwill impairment were underperformance of the ShopRunner business during 2023, including base business erosion, and the failure to attain the level of operating synergies and revenue and profit growth anticipated at the time of acquisition. Based on these factors, our outlook for the business changed in the fourth quarter of 2023.

OTHER INTANGIBLE ASSETS

. The summary of our intangible assets and related accumulated amortization at May 31, 2026 and 2025 and 2024 is as follows (in millions):

As part of our review of long-lived Amortization expense for intangible assets was $54 million in the fourth quarter of 2025 2026, $48 million in 2025, and 2024, there were no impairments recorded for our reporting units. During the fourth quarter of 2023, we recognized an $11 $47 million asset impairment charge related to customer relationships from the ShopRunner acquisition. in 2024.

Amortization Expected amortization expense for intangible assets was $48 million in 2025, $47 million in 2024, and $52 million in 2023. the next five years ending May 31 is as follows (in millions):

Expected amortization expense for the next five years is as follows (in millions): -86-

FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5: SELECTED CURRENT LIABILITIES

The components of selected current liabilities at May 31 were as follows (in millions)

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6: LONG-TERM DEBT AND OTHER FINANCING ARRANGEMENTS

The components of long-term debt (net of discounts and debt issuance costs), along with maturity dates for the years subsequent to May 31, 2026, are as follows (in millions):

Interest on our U.S. dollar fixed-rate notes is paid semi-annually. Interest on our euro fixed-rate notes is paid annually. The weighted-average interest rate on long-term debt was 3.8% as of May 31, 2026. Long-term debt, including current maturities and exclusive of finance leases, had estimated fair values of $20.9 billion at May 31, 2026 and $17.2 billion at May 31, 2025. 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. This classification is defined as a fair value determined using market-based inputs other than quoted prices that are observable for the liability, either directly or indirectly.

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.

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6: SELECTED CURRENT LIABILITIES FEDEX CORPORATION

The components of selected current liability captions at May 31 were as follows (in millions) Long-Term Debt

NOTE 7: LONG-TERM DEBT AND OTHER FINANCING ARRANGEMENTS In connection with the Spin-Off, we redeemed in full the €354.9 million aggregate principal amount of our 1.30% senior notes due 2031 on May 28, 2026. The redemption was funded with available liquidity and resulted in the extinguishment of the notes. An immaterial loss on the extinguishment of debt was recorded in the period ended May 31, 2026.

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 components remaining net proceeds may be used for general corporate purposes. On April 1, 2026, we repaid at maturity the $750 million principal amount of long-term debt (net our 3.25% senior notes due 2026 using available cash. No amounts remained outstanding under these notes as of discounts and debt issuance costs), along with maturity dates for the years subsequent to May 31, 2025, are as follows (in millions): 2026.

Interest The following table sets forth the future scheduled principal payments due for the next five years ending May 31 and thereafter on our U.S. dollar fixed-rate notes is paid semi-annually. Interest on our euro fixed-rate notes is paid annually. The weighted-average interest rate on long-term debt was 3.5% as of May 31, 2025. Long-term debt, including current maturities and exclusive of (in millions):

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. In addition, our Board of Directors has authorized up to $3.5 billion in commercial paper. Our commercial paper program is backed by unused commitments under the Credit Agreements, and borrowings under the program reduce the amount available to borrow under the Credit Agreements.

We issued $750 million of commercial paper, which remained outstanding as of May 31, 2026, at a weighted-average interest rate of 4.19%. No additional amounts were outstanding under the Credit Agreements, resulting in $2.8 billion remaining available as of May 31, 2026.

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 Spin-Off and incorporate certain other customary changes. Among other changes, the amendments (i) released FedEx Freight from its guarantees under the Credit Agreements upon consummation of the Spin-Off and (ii) extended 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 Spin-Off and certain other customary items) to consolidated earnings (excluding noncash retirement plans MTM 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 Spin-Off) 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 aggregate amount of adjustments for business optimization and restructuring expenses and pro forma cost savings and synergies associated with an acquisition may not exceed 10% of adjusted EBITDA (calculated after giving effect to any such add-back and such cap and all other permitted add-backs and adjustments) in any period. Additionally, following the consummation of an acquisition for

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

finance leases, had estimated fair values which the aggregate cash consideration is at least $250 million, FedEx may elect to increase the ratio to 4.0 to 1.0 with respect to the last day of $17.2 billion the fiscal quarter during which such acquisition is consummated and the last day of each of the immediately following three consecutive fiscal quarters, provided that there must be at least two consecutive fiscal quarters between such elections during which the ratio is 3.5 to 1.0. The ratio of our debt to adjusted EBITDA was 1.8 to 1.0 at May 31, 2025 and $17.5 billion at May 31, 2024. 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. This classification is defined as a fair value determined using market-based inputs other than quoted prices that are observable for the liability, either directly or indirectly. 2026.

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 have a shelf registration statement filed are in compliance with the SEC that allows us financial covenant and all other covenants in the Credit Agreements and do not expect the covenants to sell, affect our operations, including our liquidity or expected funding needs. If we failed to comply with the financial covenant or any other covenants in one or more future offerings, any combination of the Credit Agreements, our unsecured debt securities and common stock and allows pass-through trusts formed access to financing could become limited. Our commercial paper program is backed by Federal Express to sell, in one or more future offerings, pass-through certificates. unused commitments under the Credit Agreements.

Federal Express has issued $970 million of Pass-Through Certificates, Series 2020-1AA (the “Certificates”) with a fixed interest rate of 1.875% due in February 2034 utilizing pass-through trusts. The Certificates are secured by 19 Boeing aircraft with a net book value of $1.6 billion at May 31, 2025. The payment obligations of Federal Express in respect of the Certificates are fully and unconditionally guaranteed by FedEx. FEDERAL EXPRESS.

The following table sets forth the future scheduled principal payments due by fiscal year on our long-term debt (in millions): Long-Term Debt

Exchange Offers Federal Express has issued $970 million of Pass-Through Certificates, Series 2020-1AA (the “Certificates”) with a fixed interest rate of 1.875% 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 May 31, 2026. The payment obligations of Federal Express in respect of the Certificates are fully and Consent Solicitations unconditionally guaranteed by FedEx.

In January 2025, in connection with the planned separation of FedEx Freight, we commenced offers to exchange any and all of $16.2 billion of FedEx’s outstanding senior notes (22 series in total) for new notes to be issued by FedEx. Concurrently with the exchange offers, we also solicited consents from eligible holders of such notes to adopt certain proposed amendments to each of the indentures governing such notes to provide for the automatic and unconditional release and discharge of the guarantee of FedEx Freight with respect to that series of notes at the time FedEx Freight ceases to be a subsidiary of FedEx in connection with the planned separation (the “Proposed Amendments”). FEDEX FREIGHT.

We completed the exchange offers and consent solicitations in February 2025. An aggregate of $10.7 billion principal amount of U.S. dollar-denominated notes and €940 million principal amount of euro-denominated notes were validly tendered and not properly withdrawn, and the requisite consents were received to adopt the Proposed Amendments with respect to an aggregate of $15.9 billion principal amount of our outstanding senior notes (21 of the 22 series in scope). The new notes issued in connection with the exchange offer have the same interest rate, interest payment dates, maturity date, and optional redemption provisions as the corresponding series of existing notes; provided that (a) the methodology for calculating any make-whole redemption price for the USD-denominated notes will reflect the SIFMA model provisions and (b) FedEx will be permitted to deliver notices of redemption that are subject to one or more conditions precedent with respect to the notes. Unsecured Notes

Credit Agreements On February 5, 2026, FedEx Freight Holding Company, Inc. (“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.

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”). The Three-Year Credit Agreement and the Five-Year Credit Agreement expire in March 2027 and March 2029, respectively, and each has a $125 million letter of credit sublimit. The Credit Agreements are available to finance our operations and other cash flow needs. As of May 31, 2025, 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. Outstanding commercial paper reduces the amount available to borrow under the Credit Agreements. Facilities

Our 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 Agreements contain Facility”) and (ii) a financial covenant requiring us to maintain a ratio three-year delayed draw term loan facility in the aggregate principal amount of debt (excluding up to $500 $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 unrestricted cash and cash equivalents) to consolidated earnings (excluding noncash retirement plans mark-to-market adjustments, noncash pension service costs, noncash asset impairment charges, business optimization and restructuring expenses, and pro forma cost savings and synergies associated with an acquisition) before interest, taxes, depreciation, and amortization (“adjusted EBITDA”) borrowings under the commitments in respect of the FedEx Freight Revolving Credit Facility was conditioned on the consummation of the Spin-Off. On May 27, 2026, FedEx Freight Holding drew down the full $600 million available under the FedEx Freight Term Loan Facility.

In connection with the Spin-Off, FedEx Freight Holding paid a $4.1 billion cash dividend to FedEx, funded by the net proceeds of the FedEx Freight Notes and borrowings under the FedEx Freight Term Loan Facility, 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 were jointly and severally guaranteed by FedEx and FedEx Freight Holding until the consummation of the Spin-Off, at which point FedEx was released from such respective guarantees and such obligations were transferred in full to FedEx Freight Holding. Refer to

Note 20

for additional information.

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 aggregate amount of adjustments for business optimization and restructuring expenses and pro forma cost savings and synergies associated with an acquisition may not exceed 10% of adjusted EBITDA (calculated after giving effect to any such addback and such cap and all other permitted addbacks and adjustments) in any period. Additionally, following the consummation of an acquisition for which the aggregate cash consideration is at least $250 million, FedEx may elect to increase the ratio to 4.0 to 1.0 with respect to the last day of the fiscal quarter during which such acquisition is consummated and the last day of each of the immediately following three consecutive fiscal quarters, provided that there must be at least two consecutive fiscal quarters between such elections during which the ratio is 3.5 to 1.0. The ratio of our debt to adjusted EBITDA was 1.9 to 1.0 at May 31, 2025. NOTE 7: LEASES

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. Our commercial paper program is backed by unused commitments under the Credit Agreements.

NOTE 8: LEASES

The following table is a summary of the components of net lease cost for the period ended May 31 (in millions)

Supplemental cash flow information related to leases for the period ended May 31 is as follows (in millions):

Supplemental balance sheet information related to leases as of May 31 is as follows (dollars in millions):

We utilize certain aircraft, land, facilities, retail locations, and equipment under finance and operating leases that expire at various dates through 2078. We leased less than 1% of our total aircraft fleet under operating leases as of May 31, 2026 and less than 1% as of May 31, 2025. A portion of our supplemental aircraft are leased by us under agreements that provide for cancellation upon 30 days’ notice. Our leased facilities include national, regional, and metropolitan sorting facilities; retail facilities; and administrative buildings.

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Supplemental balance sheet information related to A summary of future minimum lease payments under non-cancelable operating and finance leases as with an initial or remaining term in excess of one year at May 31 31, 2026 is as follows (dollars in (in millions):

We utilize certain aircraft, land, facilities, retail locations, and equipment under finance and operating leases that expire at various dates through 2078. We leased less than 1% of our total aircraft fleet under operating leases as of May 31, 2025 and less than 1% as of May 31, 2024. A portion of our supplemental aircraft are leased by us under agreements that provide for cancellation upon 30 days’ notice. Our leased facilities include national, regional, and metropolitan sorting facilities; retail facilities; and administrative buildings.

A summary of future minimum lease payments under non-cancelable operating and finance leases with an initial or remaining term in excess of one year at May 31, 2025 is as follows (in millions):

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.

As of May 31, 2025, 2026, FedEx has 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 equipment and have undiscounted future payments of approximately $1.1 $1.4 billion and will commence when FedEx gains beneficial access to the leased asset. Commencement dates are expected to be from calendar years 2025 2026 to 2026. 2028.

Federal Express makes payments under certain leveraged operating leases that are sufficient to pay principal and interest on certain pass-through certificates. The pass-through certificates are not direct obligations of, or guaranteed by, FedEx or Federal Express.

We are the lessee under certain leases covering a portion of our leased aircraft in which the lessors are trusts established specifically to purchase, finance, and lease these aircraft to us. These leasing entities are variable interest entities. We are not the primary beneficiary of the leasing entities, as the lease terms are at market at the inception of the lease and do not include a residual value guarantee, fixed-price purchase option, or similar feature that obligates us to absorb decreases in value or entitles us to participate in increases in the value of the aircraft. Therefore, we are not required to consolidate any of these entities as the primary beneficiary. Our maximum exposure under these leases is included in the summary of future minimum lease payments.

NOTE 8: ACCUMULATED OTHER COMPREHENSIVE LOSS

The following table provides changes in AOCL, net of tax, reported in the consolidated financial statements for the years ended May 31 (in millions; amounts in parentheses indicate debits to AOCL):

NOTE 9: STOCK-BASED COMPENSATION

Our total stock-based compensation expense for the years ended May 31 was as follows (in millions):

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Federal Express makes payments under certain leveraged operating leases that are sufficient to pay principal We have four types of equity-based compensation: stock options, restricted stock, restricted stock units (“RSUs”), and interest on certain pass-through certificates. The pass-through certificates are not direct obligations of, or guaranteed by, FedEx or Federal Express. performance stock units (“PSUs”).

We are the lessee under certain leases covering a portion of our leased aircraft in which the lessors are trusts established specifically to purchase, finance, and lease these aircraft to us. These leasing entities are variable interest entities. We are not the primary beneficiary of the leasing entities, as the lease terms are at market at the inception of the lease and do not include a residual value guarantee, fixed-price purchase option, or similar feature that obligates us to absorb decreases in value or entitles us to participate in increases in the value of the aircraft. Therefore, we are not required to consolidate any of these entities as the primary beneficiary. Our maximum exposure under these leases is included in the summary of future minimum lease payments.

NOTE 9: PREFERRED STOCK

Our Certificate of Incorporation authorizes the Board of Directors, at its discretion, to issue up to 4,000,000 shares of preferred stock. The stock is issuable in series, which may vary as to certain rights and preferences, and has no par value. As of May 31, 2025, none of these shares had been issued.

NOTE 10: ACCUMULATED OTHER COMPREHENSIVE LOSS

The following table provides changes in AOCL, net of tax, reported in the consolidated financial statements for the years ended May 31 (in millions; amounts in parentheses indicate debits to AOCL):

NOTE 11: STOCK-BASED COMPENSATION

Our total stock-based compensation expense for the years ended May 31 was as follows (in millions):

We have three types of equity-based compensation: stock options, restricted stock, and RSUs.

STOCK OPTIONS

. Under the provisions of our incentive stock plan, key employees and non-employee directors may be granted options to purchase shares of our common stock at a price not less than its fair market value on the date of grant. Vesting requirements are determined at the discretion of the Compensation and Human Resources Committee of our Board of Directors. Option-vesting periods range from

one

to four years, with the majority of our options vesting ratably over four years. Compensation expense associated with these awards is recognized recognized, net of estimated forfeitures, on a straight-line basis over the requisite service period of the award.

RESTRICTED STOCK AND RSUs

. Under the terms of our incentive stock plan, restricted shares of our common stock are may be awarded to key employees and RSUs are awarded to non-employee directors. Restrictions on shares of restricted stock expire ratably over a four-year period and restrictions on the RSUs granted prior to June 2026 expire after one year (or the date of the next annual meeting of stockholders, if earlier). Restricted stock and RSUs are valued at the market price on the date of award. The terms of our restricted stock provide for continued vesting subsequent to the employee’s retirement. retirement (at or after age 55). Compensation expense associated with these awards is recognized on a straight-line basis over the shorter of the requisite service period or the stated vesting period.

PSUs.

Under the terms of our incentive stock plan, we granted 92,249 PSUs at target to key employees in September 2025.The PSUs had a grant-date fair value of $236.89 per share. The PSUs conditionally vest on December 31, 2028, subject to the achievement of specified performance objectives. The number of shares ultimately earned may range from zero to 150% of the target number of PSUs granted, based on performance against goals tied to improvement in operating margin of Federal Express.

ASSUMPTIONS

. The key assumptions for the Black-Scholes valuation method include the expected life of the option, stock price volatility, a risk-free interest rate, and dividend yield. The following table includes the weighted-average Black-Scholes value per share of our stock option grants, the intrinsic value of options exercised (in millions), and the key weighted-average assumptions used in the valuation calculations for options granted during the years ended May 31, followed by a discussion of our methodology for developing each of the assumptions used in the valuation model:

The expected life represents an estimate of the period of time options are expected to remain outstanding, and we examine actual stock option exercises to determine the expected life of the options. Options granted have a maximum term of 10 years. Expected volatilities are based on the actual changes in the market value of our stock and are calculated using daily market value changes from the date of grant over a past period equal to the expected life of the options. The risk-free interest rate is the U.S. Treasury Strip rate posted at the date of grant having a term equal to the expected life of the option. The expected dividend yield is the annual rate of dividends per share over the exercise price of the option. Estimates of expected forfeitures are based on historical data.

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

ASSUMPTIONS The following table summarizes information regarding stock option activity for the year ended May 31, 2026:

. The key assumptions for the Black-Scholes valuation method include the expected life of the option, stock price volatility, a risk-free interest rate, and dividend yield. The following table includes the weighted-average Black-Scholes value per share of our stock option grants, the intrinsic value of options exercised (in millions), and the key weighted-average assumptions used in the valuation calculations for options granted during the years ended May 31, followed by a discussion of our methodology for developing each of the assumptions used in the valuation model:

The expected life represents an estimate of the period of time options are expected to remain outstanding, and we examine actual stock option exercises to determine the expected life of the options. Options granted have a maximum term of 10 years. Expected volatilities are based on the actual changes in the market value of our stock and are calculated using daily market value changes from the date of grant over a past period equal to the expected life of the options. The risk-free interest rate is the U.S. Treasury Strip rate posted at the date of grant having a term equal to the expected life of the option. The expected dividend yield is the annual rate of dividends per share over the exercise price of the option.

The following table summarizes information regarding stock option activity for the year ended May 31, 2025:

(1)

Only presented for options with market value at May 31, 2025 2026 in excess of the exercise price of the option.

The options granted during 2025 2026 are primarily related to our principal annual stock option grant in June 2024. 2025.

The following table summarizes information regarding vested and unvested restricted stock and RSUs for the year ended May 31, 2025: 2026:

During the year ended May 31, 2025, there were 150,967 shares of restricted stock granted with a weighted-average fair value of $276.44 per share. During the

year ended May 31, 2024, there were 169,371 shares of restricted stock granted with a weighted-average fair value of $239.33 per share. The total fair value of restricted stock vested during the

years ended

May 31, 2026, 2025, and 2024 was $35 million, $40 million, and $36 million, respectively.

Stock option vesting during the years ended May 31 was as follows:

As of May 31, 2026, there was $246 million of total unrecognized compensation cost, net of estimated forfeitures, related to unvested share-based compensation arrangements. This compensation expense is expected to be recognized on a straight-line basis over the remaining weighted-average vesting period of approximately two years.

Total shares outstanding or available for grant related to equity compensation at May 31, 2026 represented 8% of the total outstanding common and equity compensation shares and equity compensation shares available for grant.

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

During the year ended May 31, 2024, there were 169,371 shares of restricted stock granted with a weighted-average fair value of $239.33 per share. During the year ended May 31, 2023, there were 160,286 shares of restricted stock granted with a weighted-average fair value of $208.57 per share. NOTE 10: COMPUTATION OF EARNINGS PER SHARE

Stock option vesting Basic earnings per share is calculated using the two-class method, which allocates all earnings (distributed and undistributed) to common stock and participating securities. FedEx grants restricted stock under its stock-based compensation programs; these shares receive nonforfeitable dividends during the years ended May 31 was as follows: vesting, making them participating securities and a separate class in basic earnings per share.

As Diluted earnings per share reflects the potential impact of May 31, 2025, there was $219 million of total unrecognized compensation cost, net of estimated forfeitures, related to unvested share-based compensation arrangements. This compensation expense contingently issuable shares, including awards requiring future service. It is expected to be recognized on a straight-line basis over computed under both the remaining weighted-average vesting period of approximately two years. two-class and treasury stock methods, with the more dilutive amount reported. For all periods shown, the two-class method produced the more dilutive result.

Total shares outstanding or available The calculation of basic and diluted earnings per share for grant related to equity compensation at the years ended May 31, 2025 represented 9% of the total outstanding common and equity compensation shares and equity compensation shares available for grant. 31 was as follows (in millions, except per share amounts):

NOTE 12: COMPUTATION OF EARNINGS PER SHARE

The calculation of basic and diluted earnings per common share for the years ended May 31 was as follows (in millions, except per share amounts):

(1)

Net earnings available to participating securities were $7 million in 2026, $5 million in 2025, $6 million in 2024, and $6 million in 2023. 2024.

NOTE 11: INCOME TAXES

The components of the provision for income taxes for the years ended May 31 were as follows (in millions):

Income from operations before income taxes for the years ended May 31 were as follows (in millions):

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13: INCOME TAXES Cash paid for income taxes, net of refunds for the

The components of the provision for income taxes for the years year ended May 31 were as follows (in millions): 31, 2026

Pre-tax earnings of foreign operations for 2025, 2024, and 2023 were $1.8 billion, $0.5 billion, and $0.6 billion, respectively. These amounts represent only a portion of total results associated with international shipments and do not represent our international results of operations. as follows (in millions):

A reconciliation of total income tax expense and the amount computed by applying the statutory federal income tax to income before income taxes for the years ended May 31 is as follows (dollars in millions):

(1)

State taxes in Tennessee, Alaska, California, Pennsylvania, Missouri, and Florida made up the majority (greater than 50 percent) of this category.

The 2026 tax provision includes an income tax benefit of approximately $100 million from the reduction of a Brazil valuation allowance on certain foreign tax loss carryforwards due to operational changes which impacted the determination of the realizability of the deferred tax asset in that jurisdiction.

The 2025 tax provision includes an income tax benefit of $66 million from the write-off of U.S. deferred tax balances due to corporate structuring transactions.

The 2024 tax provision includes an unfavorable income tax expense of $54 million from the remeasurement of U.S. state deferred tax balances to reflect aggregate temporary differences at the expected applicable tax rates after the merger of FedEx Ground and FedEx Services into Federal Express Corporation.

The 2023 tax provision was negatively impacted by an expense of $46 million related to a write-down and valuation allowance on certain foreign tax credit carryforwards due to operational changes which impacted the determination of the realizability of the deferred tax asset. The 2023 tax provision was also negatively impacted by lower earnings in certain non-U.S. jurisdictions.

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The 2024 tax provision includes an unfavorable income tax expense of $54 million from the remeasurement of U.S. state deferred tax balances to reflect aggregate temporary differences at the expected applicable tax rates after the merger of FedEx Ground Package System, Inc. (“FedEx Ground”) and FedEx Corporate Services, Inc. (“FedEx Services”) into Federal Express Corporation.

We regularly assess the need for cash in the U.S., as well as in our foreign subsidiaries, and will occasionally repatriate back to the U.S. excess earnings above working capital needs that can be repatriated with an immaterial tax cost. We assert all other earnings, both historical and current in our foreign subsidiaries, are permanently reinvested and therefore no deferred taxes or withholding taxes have been provided, including deferred taxes on any additional outside basis difference (e.g., stock basis differences attributable to acquisition or other permanent differences). Determination of the amount of unrecognized deferred income tax liability related to any remaining undistributed foreign earnings and additional outside basis differences is not practicable.

The significant components of deferred tax assets and liabilities as of May 31 were as follows (in millions):

The net deferred tax liabilities as of May 31 have been classified in the balance sheets as follows (in millions):

(1)

Noncurrent deferred tax assets are included within “Other Assets” assets” in the accompanying consolidated balance sheets.

We have approximately $3.2 $3.0 billion of net operating loss carryovers in various foreign jurisdictions, $1.4 $1.1 billion of state operating loss carryovers, and $139 $130 million of U.S. federal operating loss and capital loss carryovers. The valuation allowances primarily represent amounts reserved for operating loss carryforwards, which expire over varying periods starting in 2026. the Transition Period. Therefore, we establish valuation allowances if it is more likely than not that deferred income tax assets will not be realized. The total change in the valuation allowance reflects certain balance sheet items. Income statement impacts are reflected in our effective tax rate reconciliation. The decrease in the valuation allowance during 2025 2026 includes a $42 $100 million increase related to foreign net operating losses, which includes a $21 million increase in a branch valuation allowance which has been offset by a corresponding deferred tax asset in the U.S. loss carryforwards described above. We believe that we will generate sufficient future taxable income to realize the tax benefits related to the remaining net deferred tax assets in the consolidated balance sheets. See

Note 1

for more information on our policy for assessing the recoverability of deferred tax assets and valuation allowances.

We are subject to taxation in the U.S. and various U.S. state, local, and foreign jurisdictions. We are currently under examination by the Internal Revenue Service IRS for the 2016 through 2021 tax years. It is reasonably possible that certain income tax return proceedings will be completed during the next 12 months and could result in a change in our balance of unrecognized tax benefits. However, we believe we have recorded adequate amounts of tax, including interest and penalties, for any adjustments expected to occur.

During 2021, we filed suit in U.S. District Court for the Western District of Tennessee challenging the validity of a tax regulation related to the one-time transition tax on unrepatriated foreign earnings, which was enacted as part of the Tax Cuts and Jobs Act (“TCJA”). Our lawsuit sought to have the court declare this regulation invalid and order the refund of overpayments of U.S. federal income taxes for 2018 and 2019 attributable to the denial of foreign tax credits under the regulation. We have recorded a cumulative benefit of $249 million attributable to our interpretation of the TCJA and the Internal Revenue Code. In March 2023, the District Court ruled that the regulation is invalid and contradicts the plain terms of the tax code. On February 13, 2025, the District Court ruled again in our favor with regard to a new argument raised by the U.S. government. On June 4, 2025, the District Court validated the amount of refunds owed for 2018 and 2019, which includes the foreign tax credits previously denied. The U.S. government has until August 4, 2025, to appeal the decision to the U.S. Court of Appeals for the Sixth Circuit. If we are ultimately unsuccessful in defending our position, we may be required to reverse the benefit previously recorded.

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On August 1, 2025, the U.S. government filed a notice to appeal the decision to the U.S. Court of Appeals for the Sixth Circuit. The government submitted its opening brief on January 7, 2026, and FedEx filed its response on March 23, 2026. The government filed its reply brief on May 13, 2026.

Oral arguments are scheduled for July 30, 2026.

If we are ultimately unsuccessful in defending our position, we may be required to reverse the benefit previously recorded.

A reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended May 31 is as follows (in millions):

Our liabilities recorded for uncertain tax positions include $161 million at May 31, 2026 and $149 million at May 31, 2025 and $184 million at May 31, 2024 associated with positions that, if favorably resolved, would provide a benefit to our income tax expense. We classify interest related to income tax liabilities as interest expense and, if applicable, penalties are recognized as a component of income tax expense. The balance of accrued interest and penalties was $48 million at May 31, 2026 and $35 million at May 31, 2025 and $59 million at May 31, 2024. 2025.

It is difficult to predict the ultimate outcome or the timing of resolution for tax positions. Changes may result from the conclusion of ongoing audits, appeals, or litigation in state, local, federal, and foreign tax jurisdictions, or from the resolution of various proceedings between U.S. and foreign tax authorities. It is reasonably possible that the amount of the benefit with respect to certain of our unrecognized tax positions will increase or decrease within the next 12 months. However, estimates of the amounts or ranges for individual matters where a material change is reasonably possible cannot be made. We believe we have recorded adequate amounts of tax reserves, including interest and penalties, for any adjustments that may occur.

NOTE 14: 12: RETIREMENT PLANS

We sponsor programs that provide retirement benefits to most of our employees. These programs include defined benefit pension plans, defined contribution plans, and postretirement healthcare plans.

The accounting guidance related to postretirement benefits requires recognition in the balance sheet of the funded status of defined benefit pension and other postretirement benefit plans, and the recognition in either expense or accumulated other comprehensive income of unrecognized gains or losses and prior service costs or credits. We use MTM accounting for the recognition of our actuarial gains and losses related to our defined benefit pension and postretirement healthcare plans as described in

Note 1

. The funded status is measured as the difference between the fair value of the plan’s assets and the PBO of the plan.

A summary of our retirement plan costs for the years ended May 31 is as follows (in millions):

The components of the MTM adjustments for the years ended May 31 are as follows (in millions):

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Net The components of all fees and expenses, the actual rate of return on our U.S. Pension Plan assets was 6.50%, which was lower than our expected rate of return of 6.75%. Performance was driven by public equities and alternatives, offset by fixed income gains due to higher interest rates. The weighted-average discount rate retirement plans MTM adjustments for all our pension and postretirement healthcare plans increased from 5.53% at the years ended May 31, 2024 to 5.87% at May 31, 2025. The demographic experience in 2025 reflects an update to our retirement rate assumption. 31 are as follows (in millions):

Net of all fees and expenses, the actual rate of return on our U.S. Pension Plan assets was 6.80%, 12.40%, which was higher than our expected rate of return of 6.50%. 7.00%. Performance was driven by public equities and alternatives, offset by modest losses in fixed-income due to higher interest rates. equities, but all asset classes were additive. The weighted-average discount rate for all our pension and postretirement healthcare plans increased decreased from 5.17% 5.87% at May 31, 2023 2025 to 5.53% 5.72% at May 31, 2024. 2026. The demographic experience in 2024 2026 reflects an update to our retirement rate and short-term cash balance interest crediting assumptions. assumption.

Net of all fees and expenses, the actual rate of return on our U.S. Pension Plan assets was (2.70%), 6.50%, which was lower than our expected rate of return of 6.50%. Negative portfolio returns derived 6.75%. Performance was driven by public equities and alternatives, offset by fixed-income gains due to losses in both equities and our fixed-income assets due to market volatility and rising higher interest rates. The weighted-average discount rate for all our pension and postretirement healthcare plans increased from 4.21% 5.53% at May 31, 2022 2024 to 5.17% 5.87% at May 31, 2023. 2025. The demographic experience in 2023 2025 reflects an update to our short-term cash balance interest crediting retirement rate assumption.

Net of all fees and expenses, the actual rate of return on our U.S. Pension Plan assets was 6.80%, which was higher than our expected rate of return of 6.50%. Performance was driven by public equities and alternatives, offset by modest losses in fixed-income assets due to higher interest rates. The weighted-average discount rate for all our pension and postretirement healthcare plans increased from 5.17% at May 31, 2023 to 5.53% at May 31, 2024. The demographic experience in 2024 reflects an update to our retirement rate and short-term cash balance interest crediting assumption.

PENSION PLANS

. Our largest pension plan covers certain U.S. employees age 21 and over, with at least one year of service. Pension benefits for most employees are accrued under a cash balance formula we call the Portable Pension Account (“PPA”). Under the PPA, the retirement benefit is expressed as a dollar amount in a notional account that grows with annual credits based on pay, age and years of credited service, and interest on the notional account balance. The PPA benefit is payable as a lump sum or an annuity at retirement at the election of the employee. The plan interest credit rate varies from year to year based on a U.S. Treasury index. Prior to 2009, certain employees earned benefits using a traditional pension formula (based on average earnings and years of service). Benefits under this formula were capped on May 31, 2008 for most employees.

We also sponsor or participate in nonqualified benefit plans covering certain of our U.S. employee groups and other pension plans covering certain of our international employees. The international defined benefit pension plans provide benefits primarily based on earnings and years of service and are funded in compliance with local laws and practices. The majority of our international obligations are for defined benefit pension plans in the United Kingdom.

In 2020, we announced the closing of our U.S.-based defined benefit pension plans to new non-union employees hired on or after January 1, 2020. We introduced an all-401(k) plan retirement benefit structure for eligible employees with a higher company match of up to 8% across all U.S.-based operating companies in 2022. During calendar 2021, current eligible employees under the PPA pension formula were given a one-time option to continue to be eligible for pension compensation credits under the existing PPA formula and remain in the existing 401(k) plan with its company match of up to 3.5%, or to cease receiving compensation credits under the PPA and move to the new 401(k) plan with the higher match of up to 8%. Changes to the new 401(k) plan structure became effective January 1, 2022. See

Note 1

for additional information on potential amendments to our pension plan offered to Federal Express pilots.

In connection with the Spin-Off, and effective June 1, 2026, all eligible Freight employees transitioned to a newly established, dedicated pension plan. Refer to

Note 20

for additional information.

POSTRETIREMENT HEALTHCARE PLANS.

Certain of our subsidiaries offer medical, dental, and vision coverage to eligible U.S. retirees and their eligible dependents and a small number of international employees. U.S. employees covered by the principal plan become eligible for these benefits at age 55 and older, if they have permanent, continuous service of at least 10 years after attainment of age 45 if hired prior to January 1, 1988, or at least 20 years after attainment of age 35 if hired on or after January 1, 1988.

The U.S. postretirement healthcare benefit is a lump-sum benefit in a notional retiree health reimbursement account (“HRA”) for eligible participants. The HRA is available to reimburse a participant for qualifying healthcare premium costs and limits the company liability to the HRA account balance. The amount of the credit is based on age at retirement. Retiree health coverage was closed to most new employees hired on or after January 1, 2018.

PENSION PLAN ASSUMPTIONS

. The accounting for pension and postretirement healthcare plans includes numerous assumptions, such as: discount rates; expected long-term investment returns on plan assets; future salary increases; employee turnover; mortality; and retirement ages.

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The U.S. postretirement healthcare benefit is a lump-sum benefit in a notional retiree health reimbursement account (“HRA”) for eligible participants. The HRA is available to reimburse a participant for qualifying healthcare premium costs and limits our liability to the HRA account balance. The amount of the credit is based on age at retirement. Retiree health coverage was closed to most new employees hired on or after January 1, 2018.

PENSION PLAN ASSUMPTIONS

. The accounting for pension and postretirement healthcare plans includes numerous assumptions, such as: discount rates; expected long-term investment returns on plan assets; future salary increases; employee turnover; mortality; and retirement ages.

Weighted-average actuarial assumptions used to determine the benefit obligations and net periodic benefit cost of our plans are as follows:

Our U.S. Pension Plan assets are invested primarily in publicly tradable securities, and our pension plans hold only a minimal investment in FedEx common stock that is entirely at the discretion of third-party pension fund investment managers. As part of our strategy to manage pension costs and funded status volatility, we follow a liability-driven investment strategy to better align plan assets with liabilities.

Establishing the expected future rate of investment return on our pension assets is a judgmental matter, which we review on an annual basis and revise as appropriate. Management considers the following factors in determining this assumption:

•

the duration of our pension plan liabilities, which drives the investment strategy we can employ with our pension plan assets;

•

the types of investment classes in which we invest our pension plan assets and the expected compound geometric return we can reasonably expect those investment classes to earn over time, net of all fees and expenses; and

•

the investment returns we can reasonably expect our investment management program to achieve in excess of the returns we could expect if investments were made strictly in indexed funds.

For consolidated pension expense, we assumed a 6.75% 7.00% expected long-term rate of return on our U.S. Pension Plan assets in 2025 2026, 6.75% in 2025, and 6.50% in 2024 and 2023. 2024. The historical annual return on our U.S. Pension Plan assets, calculated on a compound geometric basis, was 6.90%, 6.50%, net of all fees and expenses, for the 15-year period ended May 31, 2025. 2026.

The investment strategy for our U.S. Pension Plan assets is to utilize a diversified mix of public equities, fixed-income, and alternative investments to earn a long-term investment return that meets our pension plan obligations. Our largest asset classes are Corporate Fixed Income Securities and Government Fixed Income Securities (which are largely benchmarked against the Bloomberg Barclays Long Government, Bloomberg Barclays Long Corporate, or the Bloomberg Barclays 20+ STRIPS indices), and U.S. and non-U.S. Equities (which are mainly benchmarked to the S&P 500 Index and MSCI indices). Accordingly, we do not have any significant concentrations of risk. Active management strategies are utilized within the plan in an effort to realize investment returns in excess of market indices. Our investment strategy also includes the limited use of derivative financial instruments on a discretionary basis to improve investment returns and manage portfolio risk.

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following is a description of the valuation methodologies used for investments measured at fair value:

•

Cash and cash equivalents.

Level 1 investments include cash, cash equivalents, and foreign currency valued using exchange rates. Level 2 investments include short-term investment funds, which are collective funds priced at a constant value by the administrator of the funds.

•

Domestic, international, and global equities.

Level 1 investments are valued at the closing price or last trade reported on the major market on which the individual securities are traded.

•

Fixed income.

We determine the fair value of Level 2 corporate bonds, U.S. and non-U.S. government securities, and other fixed-income securities by using bid evaluation pricing models or quoted prices of securities with similar characteristics.

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

•

Alternative Investments.

The valuation of Level 3 investments requires significant judgment due to the absence of quoted market prices, the inherent lack of liquidity, and the long-term nature of such assets. Investments in private equity, debt, real estate, hedge funds, and other private investments are valued at estimated fair value based on quarterly financial information received from the investment advisor and/or general partner. These estimates incorporate factors such as contributions and distributions, market transactions, market comparables, and performance multiples.

The fair values of investments by level and asset category and the weighted-average asset allocations for our U.S. Pension Plans and our most significant international pension plan at the measurement date are presented in the following tables (in millions):

(1)

Target ranges have not been provided for international plan assets as they are managed at an individual country level.

(2)

Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy but are included in the total.

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)

Target ranges have not been provided for international plan assets as they are managed at an individual country level.

(2)

Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy but are included in the total.

The change in fair value of Level 3 assets that use significant unobservable inputs is shown in the table below (in millions):

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following tables provide a reconciliation of the changes in the pension and postretirement healthcare plans’ benefit obligations and fair value of assets over the two-year period ended May 31, 2025 2026 and a statement of the funded status as of May 31, 2026 and 2025 and 2024 (in millions):

Our pension plans included the following components at May 31 (in millions):

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The table above provides the PBO, fair value of plan assets, and funded status of our pension plans on an aggregated basis. The following tables present our plans on a disaggregated basis to show those plans (as a group) whose assets did not exceed their liabilities. The fair value of plan assets for pension plans with a PBO or ABO in excess of plan assets at May 31 were as follows (in millions):

(1)

ABO not used in determination of funded status.

Contributions to our

qualified U.S. Pension Plans

for the years ended May 31 were as follows (in millions):

For 2026, During the next 12 months, no pension contributions are required for our U.S. Pension Plan Plan, as it is fully funded under the Employee Retirement Income Security Act. However, we expect to make voluntary contributions of up to $600 $700 million to the plan in 2026. during the next 12 months.

Net periodic benefit (income) cost for the years ended May 31 were as follows (in millions):

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Amounts recognized in other comprehensive loss Net periodic benefit (income) cost for the years ended May 31 were primarily related to amortization of prior service cost in our U.S. Pension Plans of $8 million in 2025 and $7 million in 2024 ($6 million, net of tax, in 2025 and $6 million, net of tax, in 2024). as follows (in millions):

Amounts recognized in other comprehensive loss were primarily related to amortization of prior service cost in our U.S. Pension Plans of $8 million in 2026 and $8 million in 2025 ($6 million, net of tax, in 2026 and $6 million, net of tax, in 2025).

Benefit payments, which reflect expected future service, are expected to be paid as follows for the years ending May 31 (in millions):

These estimates are based on assumptions about future events. Actual benefit payments may vary significantly from these estimates.

Future medical benefit claims costs are estimated to increase at an annual rate of 6.90% 8.30% during 2026, the fiscal year 2027, decreasing to an annual growth rate of 4.0% 4.00% in 2045 2050 and thereafter.

NOTE 15: 13: BUSINESS SEGMENTS AND DISAGGREGATED REVENUE

Federal Express As a result of the Spin-Off, effective June 1, 2026, FedEx will no longer consolidate FedEx Freight, and FedEx Freight represent is no longer a reportable segment. Following the Spin-Off, we realigned our major service lines internal reporting and constitute management structure, resulting in the identification of two new reportable segments: Express U.S. Domestic and Express International. These changes had no impact on our reportable segments. Our reportable segments include the following businesses: consolidated results of operations or financial position. Refer to

In connection with our one FedEx consolidation plan, on June 1, 2024, FedEx Ground and FedEx Services were merged into Federal Express, becoming a single company operating a unified, fully integrated air-ground express network under the respected FedEx brand. FedEx Freight continues to provide LTL freight transportation services as a separate subsidiary. Beginning in the first quarter of 2025, Federal Express and FedEx Freight represent our major service lines and constitute our reportable segments. Additionally, the results of FedEx Custom Critical are included in the FedEx Freight segment instead of the Federal Express segment in 2025. Prior-year amounts were revised to reflect this presentation. Note 20

Our Chief Executive Officer is our chief operating decision maker (“CODM”). The CODM is responsible for the company’s operating strategy, growth, and profitability and reviews financial information for our two reportable segments. The CODM uses operating income as the primary measure of segment performance because it reflects the underlying business performance and provides the CODM with a basis for making resource allocation decisions. Operating income is defined as income before other income (expense), interest expense and income tax expense. Our CODM regularly reviews significant segment level expense details to assess segment performance and allocate resources. additional information.

References Prior to our transportation segments include, collectively, the Spin-Off, Federal Express segment and the FedEx Freight segment. represented our major service lines and constituted our reportable segments. Our Chief Executive Officer is our chief operating decision maker (“CODM”). The CODM is responsible for our operating strategy, growth, and profitability and reviews financial information for our two reportable segments. The CODM uses operating income as the primary measure of segment performance because it reflects the underlying business performance and provides the CODM with a basis for making resource allocation decisions. Operating income is defined as income before other income (expense), interest expense and income tax expense. Our CODM also utilizes operating income in the annual budget and monthly forecasting process and considers forecast-to-actual variances on a monthly basis when making resource allocation decisions. Our CODM regularly reviews significant expense details, which include salaries and employee benefits, purchased transportation, rentals and landing fees, depreciation and amortization, fuel, maintenance and repairs, separation and other costs, business optimization costs, and other operating expenses. These expense categories are included within operating expenses in the accompanying consolidated statements of income and are used by the CODM in assessing performance and allocating resources.

The Federal Express segment operates combined sales, marketing, administrative, and information-technology functions in shared service operations for U.S. customers of our major business units and certain back-office support to FedEx Freight and our other operating segments which allows us to obtain synergies from the combination of these functions. We allocate the net operating costs of these services to reflect the full cost of operating our businesses in the results of those segments. We review and evaluate the performance of FedEx Freight and our other operating segments based on operating income inclusive of these allocations.

Operating expenses for our FedEx Freight segment include allocations of these services from the Federal Express segment. These allocations also include charges and credits for administrative services provided between operating companies. The allocations of net operating costs are based on metrics such as relative revenue or estimated services provided. We believe these allocations approximate the net cost of providing these functions. Our allocation methodologies are refined periodically, as necessary, to reflect changes in our businesses.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Operating expenses for our FedEx Freight segment included allocations of these services from the Federal Express segment. These allocations also included charges and credits for administrative services provided between operating companies. The allocations of net operating costs are based on metrics such as relative revenue or estimated services provided. We believe these allocations approximated the net cost of providing these functions. Our allocation methodologies are refined periodically, as necessary, to reflect changes in our businesses.

Corporate, Other, and Eliminations

Corporate Corporate, other, and other eliminations includes corporate headquarters costs for executive officers and certain legal and finance functions, certain other costs and credits not attributed to our core business, and certain costs associated with developing integrated business solutions through our FedEx Dataworks Dataworks, Inc. (“FedEx Dataworks”) operating segment. FedEx Dataworks is focused on creating solutions new digital revenue streams using proven FedEx intelligence to transform the digital digitize supply chains and physical experiences of create new opportunities for our customers and team members.

Also included in Corporate Corporate, other, and other is eliminations are the FedEx Office and Print Services, Inc. (“FedEx Office”) operating segment, which provides an array of document and business services and retail access to our customers for our package transportation businesses, and the FedEx Logistics operating segment, which provides integrated supply chain management solutions, specialty transportation, customs brokerage, and global ocean and air freight forwarding. The results of Corporate, other, and eliminations are not allocated to the other business segments.

The results of Corporate, other, and eliminations are not allocated to the other business segments.

Certain FedEx operating companies provide transportation and related services for other FedEx companies outside their reportable segment in order to optimize our resources.

Billings for such services are based on negotiated rates and are reflected as revenue of the billing segment. These rates are adjusted from time to time based on market conditions. Such intersegment revenue and expenses are eliminated in our consolidated results and are not separately identified in the following segment information because the amounts are not material.

The following table presents segment information for the year years ended May 31, 2025 2026, May 31, 2025, and May 31, 2024 (in millions):

(1)

Includes $88 million of net expenses included in Federal Express for international regulatory and legacy FedEx Ground legal matters. Also includes costs related to the planned spin-off of FedEx Freight of $38 million included in "Corporate, other, and eliminations."

(2)

Includes a pre-tax, noncash gain of $515 million associated with our MTM retirement plans accounting adjustments.

(3)

Includes $18 million related to the debt exchange offer and consent solicitation transactions in connection with the planned spin-off of FedEx Freight.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents segment information for the year ended May 31, 2024 (in millions):

(1)

Includes a $57 million benefit included in Revenue and operating loss from segments below the quantitative thresholds are attributable to operating segments contained within “Corporate, other, and eliminations" for an insurance reimbursement related to pre- eliminations.” These operating segments include FedEx Corporate, FedEx Office, FedEx Logistics, and post-judgment interest in connection with a legacy FedEx Ground legal matter. Dataworks.

(2)

Includes a pre-tax, noncash gain costs related to the Spin-Off of $561 $6 million associated with our MTM retirement plans accounting adjustments. and $18 million for the years ended May 31, 2026 and 2025, respectively, included in “Corporate, other, and eliminations.”

(3) The following table provides a reconciliation of segment assets to consolidated financial statement totals (in millions) for the years as of May 31:

Includes a $54 million tax expense related to the remeasurement of state deferred income taxes under the new one FedEx structure. (1)

In connection with the Spin-Off, FedEx Freight settled an intercompany balance of $7.9 billion with Federal Express, impacting segment assets for both segments. In addition, segment assets for “Corporate, other, and eliminations” reflects the $4.1 billion dividend from FedEx Freight Holding to FedEx, funded through the FedEx Freight Notes and borrowings under the FedEx Freight Term Loan Facility, received as consideration for FedEx’s contribution of assets to FedEx Freight Holding in connection with the Spin-Off, as well as an increase in additional $2.5 billion increase in cash and cash equivalents driven by overall growth in the business, increases in pension funded status and other changes in working capital accounts.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents segment information for the year ended May 31, 2023 (in millions):

(1)

Includes $35 million in connection with a FedEx Ground legal matter included in “Corporate, other, and eliminations.”

(2)

Includes a pre-tax, noncash gain of $650 million associated with our MTM retirement plans accounting adjustments.

The following table provides a reconciliation of segment assets to consolidated financial statement totals (in millions) for the years as of May 31:

(1)

Segment assets include intercompany receivables. In the fourth quarter of 2024, legacy FedEx Ground settled an intercompany balance of $19.5 billion with FedEx in preparation for the one FedEx consolidation.

The following table provides a reconciliation of reportable segment capital expenditures to consolidated totals for the years ended May 31 (in millions):

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents revenue by service type and geographic information for the years ended or as of May 31 (in millions):

(1)

International domestic revenue relates to our intra-country operations.

(2)

Includes the FedEx Office, FedEx Logistics, and FedEx Dataworks operating segments.

(3)

International revenue includes shipments that either originate in or are destined to locations outside the United States, which could include U.S. payors. Noncurrent assets include property and equipment, operating lease right-of-use assets, goodwill, and other long-term assets. Our flight equipment is registered in the U.S. and is included as U.S. assets; however, many of our aircraft operate internationally.

NOTE 16: DERIVATIVE FINANCIAL INSTRUMENTS -108-

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14: DERIVATIVE FINANCIAL INSTRUMENTS

RISK MANAGEMENT OBJECTIVE OF USING DERIVATIVES.

We enter into derivative financial instruments to reduce the effects of volatility in foreign currency exchange exposure or interest rates on operating results and cash flows. Our derivative financial instruments are used to manage differences in the amount, timing, and duration of cash receipts and cash payments principally related to our investments. investments and debts.

Certain of our foreign operations expose us to fluctuations of foreign exchange rates. These fluctuations may impact the value of our cash receipts and payments in terms of our functional currency. Certain of our debts expose us to fluctuations of interest rates, these fluctuations may impact our future cashflows.

NET INVESTMENT HEDGES

. We are exposed to fluctuations in foreign exchange rates on investments we hold in foreign entities. We use debt denominated in foreign currency and fixed-to-fixed cross-currency swaps to hedge our exposure to changes in foreign exchange rates on certain of our foreign investments. Cross-currency swaps involve the receipt of functional-currency-fixed rate amounts from a counterparty in exchange for us making foreign-currency-fixed rate payments over the life of the agreement. Cross-currency swaps also involve final exchanges of the functional-currency principal amounts for the foreign-currency principal amounts between us and the counterparty.

For debt and foreign currency derivatives designated as net investment hedges, the gain or loss on the derivative is reported in AOCL as part of the cumulative translation adjustment. Amounts are reclassified out of AOCL into earnings when the hedged net investment is either sold or substantially liquidated.

As of May 31, 2026 and 2025, we had €518 million and €506 million, respectively, of debt designated to reduce the volatility of the U.S. dollar value of a portion of our net investment in a euro-denominated consolidated subsidiary.

During 2026 and 2025, we had certain foreign currency derivatives to hedge our net investments in foreign operations. The following foreign currency derivatives were outstanding as of May 31, 2026 and 2025 (notional amounts in millions):

OTHER HEDGES

. We are exposed to fluctuations in interest rate risks on the fair value of our debt. We are exposed to fluctuation in foreign exchange rates due to our international operations. We may enter into derivatives contracts to mitigate these risks. For derivatives not designated in hedging relationships, the changes in fair value are recognized immediately in Other, net.

During 2026 we entered into certain interest rate derivatives to hedge our interest rate risk on debt. During 2026 and 2025 we entered into certain foreign exchange contracts to hedge our foreign exchange exposures in the balance sheet. The following interest rate derivatives and foreign exchange contracts were outstanding as of May 31, 2026 and 2025 (notional amounts in millions):

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NET INVESTMENT HEDGES The following table presents the fair value of our derivatives, including their classification on the consolidated balance sheet, as of May 31, 2026 and 2025 (in millions):

. We are exposed to fluctuations in The estimated fair values were determined using pricing models that rely on market-based inputs such as foreign currency exchange rates on investments we hold in foreign entities. We use debt denominated in foreign currency and fixed-to-fixed cross-currency swaps to hedge our exposure to changes in foreign exchange rates on certain of our foreign investments. Cross-currency swaps involve yield curves and are classified as Level 2 within the receipt of functional-currency-fixed rate amounts from fair value hierarchy. This classification is defined as a counterparty in exchange for us making foreign-currency-fixed rate payments over the life of the agreement. Cross-currency swaps also involve final exchanges of the functional-currency principal amounts fair value determined using market-based inputs other than quoted prices that are observable for the foreign-currency principal amounts between us and the counterparty. derivative financial instruments, either directly or indirectly.

For debt Our cross-currency swaps and foreign currency derivatives designated as net investment hedges, interest rate swaps contain an element of risk that counterparties may be unable to meet the gain or loss on the derivative is reported in AOCL as part terms of the cumulative translation adjustment. Amounts are reclassified out of AOCL into earnings when agreements. We seek to minimize such risk exposures for these instruments by limiting the hedged net counterparties to banks and financial institutions that meet established credit guidelines. Our counterparties to the swaps all have an investment is either sold or substantially liquidated. grade rating. To keep our exposure minimal, we monitor our counterparties’ credit worthiness on a regular basis, reviewing amongst others Standard & Poor’s rating and credit default swap spreads.

As We recognized losses of $9 million, $86 million, and $6 million in AOCL related to our cross-currency swaps for the periods ended May 31, 2026, 2025 and 2024, we had €506 million and €173 million, respectively, of 2024. Losses recognized in AOCL related to our debt designated to reduce the volatility of the U.S. dollar value of as a portion of our net investment in a euro-denominated consolidated subsidiary. hedge, which excludes any adjustments for the impact of deferred income taxes, was immaterial for the periods ended May 31, 2026, 2025, and 2024.

During 2025 Amounts recorded to “Other, net” related to our interest rate swaps and 2024, we entered into certain foreign currency derivatives to hedge our net investments in foreign operations. The following foreign currency derivatives were outstanding as of exchange contracts for the periods ended May 31, 2026, 2025 and 2024 (notional amounts in millions): were immaterial.

The following table presents the fair value of our derivatives, including their classification on the consolidated balance sheet, as As of May 31, 2026 and 2025, we had not posted any collateral related to our derivatives. No amounts have been reclassified out of AOCL during 2026 or 2025 for our net investment hedges. As of May 31, 2026 and 2024 (in millions): 2025, our net investment hedges remained effective.

The estimated fair values were determined using pricing models that rely on market-based inputs such as foreign currency exchange rates and yield curves. The fair value of our derivative financial instruments is classified as Level 2 within the fair value hierarchy. NOTE 15: SUPPLEMENTAL CASH FLOW INFORMATION

During 2025 and 2024, we recognized losses of $86 million and $6 million, respectively, in AOCL related to our cross-currency swaps, which excludes any adjustments for the impact of deferred income taxes.

As of May 31, 2025 and 2024, we had not posted any collateral related to our cross-currency swaps. No amounts have been reclassified out of AOCL during 2025 or 2024 for our net investment hedges. As of May 31, 2025 and 2024, our net investment hedges remained effective.

NOTE 17: SUPPLEMENTAL CASH FLOW INFORMATION

Cash paid for interest expense and income taxes for the years ended May 31 was as follows (in millions):

Noncash investing and financing activities for the years ended May 31 were as follows (in millions):

NOTE 16: GUARANTEES AND INDEMNIFICATIONS

In conjunction with certain transactions, primarily the lease, sale, or purchase of real estate, operating assets, or services in the ordinary course of business and in connection with business sales and acquisitions, we may provide routine guarantees or indemnifications (e.g., environmental, fuel, tax, and intellectual property infringement),

the terms of which range in duration, and often they are not limited and have no specified maximum obligation. The overall maximum potential amount of the obligation under

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 18: GUARANTEES AND INDEMNIFICATIONS such guarantees and indemnifications cannot be reasonably estimated. Historically, we have not been required to make significant payments under our guarantee or indemnification obligations and no material amounts have been recognized in our financial statements for the underlying fair value of these obligations.

In conjunction with certain transactions, primarily the lease, sale, or purchase of real estate, operating assets, or services in the ordinary course of business and in connection with business sales and acquisitions, we may provide routine guarantees or indemnifications (e.g., environmental, fuel, tax, and intellectual property infringement), the terms of which range in duration, and often they are not limited and have no specified maximum obligation. The overall maximum potential amount of the obligation under such guarantees and indemnifications cannot be reasonably estimated. Historically, we have not been required to make significant payments under our guarantee or indemnification obligations and no material amounts have been recognized in our financial statements for the underlying fair value of these obligations. NOTE 17: COMMITMENTS

NOTE 19: COMMITMENTS Annual purchase commitments under various contracts as of May 31, 2026 were as follows (in millions):

Annual purchase commitments under various contracts as of May 31, 2025 were as follows (in millions):

(1)

Primarily information technology and advertising contracts.

The amounts reflected in the table above for purchase commitments represent noncancellable agreements to purchase goods or services. Open purchase orders that are cancellable are not considered unconditional purchase obligations for financial reporting purposes and are not included in the table above.

We have several aircraft modernization programs under way that are supported led by the purchase of Boeing 777 Freighter (“B777F”) and Boeing 767-300 Freighter (“B767F”) aircraft. These aircraft are significantly more fuel-efficient per unit than the aircraft types previously utilized, and these future expenditures are necessary to achieve significant long-term operational savings and to replace older aircraft. Our ability to delay the timing of these aircraft-related expenditures is limited without incurring significant costs to modify existing purchase agreements.

As of May 31, 2025, 2026, we had $590 $727 million in deposits and progress payments on aircraft purchases and other planned aircraft-related transactions. These deposits are classified in the “Other assets” caption of in our accompanying consolidated balance sheets. Aircraft and aircraft-related contracts are subject to price escalations. The following table is a summary of the key aircraft we were committed to purchase as of May 31, 2025, 2026, with the year of expected delivery:

During 2025, Federal Express exercised options to purchase eight B777F aircraft and ten ATR 72-600F aircraft. Of the eight B777F aircraft, three are expected to be delivered in calendar year 2026 and five are expected to be delivered in calendar year 2027. Of the ten ATR 72-600F aircraft, three are expected to be delivered in calendar year 2027, four in calendar year 2028, and three in calendar year 2029. NOTE 18: INVESTMENTS

EQUITY SECURITIES.

Equity securities are included within “Other assets” in the accompanying consolidated balance sheets. The summary of our investments in equity securities at May 31, 2026 and 2025 is as follows (in millions):

Equity securities with a readily determinable fair value are Level 1 investments that are valued at the closing price or last trade reported on the major market on which the individual securities are traded. For equity securities without readily determinable fair values that qualify for the NAV practical expedient, we have elected to apply the NAV practical expedient to estimate fair value. We apply the measurement alternative for all other equity securities without readily determinable fair values, where adjustments to cost

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 20: INVESTMENTS are made for observable price changes and any impairments. For equity securities where the measurement alternative is applied, annual and cumulative amounts of impairments, downward adjustments, and upward adjustments were immaterial for 2026 and 2025.

EQUITY SECURITIES. Unrealized gains and (losses) recognized during the reporting period on all equity securities held at May 31, 2026, 2025, and 2024 were $35 million, ($6) million, and $14 million, respectively.

Equity securities are included within “Other assets” in the accompanying consolidated balance sheets. The summary of our investments in equity securities at May 31, 2025 and 2024 is as follows (in millions):

Equity securities with a readily determinable fair value are Level 1 investments that are valued at the closing price or last trade reported on the major market on which the individual securities are traded. For equity securities without readily determinable fair values that qualify for the NAV practical expedient, we have elected to apply the NAV practical expedient to estimate fair value. We apply the measurement alternative for all other equity securities without readily determinable fair values, where adjustments to cost are made for observable price changes and any impairments. For equity securities where the measurement alternative is applied, annual and cumulative amounts of impairments, downward adjustments, and upward adjustments were immaterial for 2025 and 2024.

Unrealized gains and (losses) recognized during the reporting period on all equity securities still held at May 31, 2025, 2024, and 2023 were ($6) million, $14 million, and ($48) million, respectively.

DEBT SECURITIES.

The carrying values of our investments in debt securities are classified as available-for-sale and reported at their estimated fair values within “Prepaid expenses and other” in the accompanying consolidated balance sheets. The summary of our investments in debt securities at May 31, 2026 and 2025 and 2024 is as follows (in millions):

Debt securities are classified as Level 2 within the fair value hierarchy. Realized gains and losses were immaterial for 2026, 2025 and 2024. We did not invest in debt securities during 2023.

NOTE 21: 19: CONTINGENCIES

FedEx Ground Negligence Lawsuit. Litigation Matters.

In December 2022, FedEx Ground was named as a defendant in a lawsuit filed in Texas state court related to the alleged kidnapping and first-degree murder of a minor by a driver employed by a service provider engaged by FedEx Ground. The complaint alleged compensatory and punitive damages against FedEx Ground for negligence and gross negligence, negligent hiring and retention, and negligent entrustment. The service provider and driver were also named as defendants in the lawsuit. In February 2025, we reached an agreement to settle the lawsuit for an amount below the previously established immaterial accrual, and the court approved the settlement and dismissed the case in March 2025.

Other Litigation Matters.

FedEx and its subsidiaries are subject to various legal proceedings and claims, including lawsuits alleging that Federal Express should be treated as the employer or joint employer of drivers employed by service providers engaged by Federal Express, lawsuits containing various class-action allegations of wage-and-hour violations in which plaintiffs claim, among other things, that they were forced to work “off the clock,” were not paid overtime, or were not provided work breaks or other benefits, and lawsuits alleging that FedEx and its subsidiaries are responsible for third-party losses related to vehicle accidents that could exceed our insurance coverage for such losses. In the opinion of management, the aggregate liability, if any, with respect to these actions will not have a material adverse effect on our financial position, results of operations, or cash flows.

On February 20, 2026, the U.S. Supreme Court issued a decision invalidating tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”). On February 23, 2026, FedEx filed a lawsuit in the U.S. Court of International Trade against the U.S. Customs and Border Protection (“CBP”), the CBP commissioner, and the United States of America seeking a full refund of all IEEPA tariffs that FedEx has paid to the United States. On April 20, 2026, FedEx began filing refund claims through the CBP’s Consolidated Administration and Processing of Entries (“CAPE”) system.

FedEx has received cash refunds of approximately $800 million as of May 31, 2026. FedEx recognizes amounts associated with these claims when cash is received or when realization is otherwise considered probable and estimable. To the extent customers have previously paid amounts associated with these tariffs, FedEx plans to remit corresponding refunds as soon as practicable. Accordingly, FedEx has recorded $749 million as of May 31, 2026 within current liabilities representing estimated customer refund obligations for cash refunds received.

Additionally, fourteen nationwide class action lawsuits seeking refunds of IEEPA tariffs from FedEx were filed in U.S. district courts in various states. Thirteen of those lawsuits were consolidated into a single case pending in Tennessee federal court. The remaining lawsuit is pending in the Court of International Trade. The financial impact of these events is uncertain, as it is unclear to what extent duties will be refunded by CBP, what processes will govern such refunds in upcoming CAPE phases, or if we can fully collect related accounts receivable. We are evaluating the impact of these developments on our business and financial statements. No adjustments have been recorded in the accompanying consolidated financial statements as we cannot reasonably estimate the financial impact; however, it is reasonably possible that it could be material.

Environmental Matters.

SEC regulations require us to disclose certain information about proceedings arising under federal, state, or local environmental provisions involving a governmental authority as a party if we reasonably believe that such proceedings may result in monetary sanctions above a stated threshold. Pursuant to the SEC regulations, FedEx uses a threshold of $1 million or more for purposes of determining whether disclosure of any such proceedings is required. Applying this threshold, there are no environmental matters required to be disclosed for this period.

NOTE 20: SUBSEQUENT EVENTS

SPIN-OFF.

On June 1, 2026 (the “Distribution Date”), we completed the previously announced Spin-Off of the FedEx Freight business. The transaction was implemented through the distribution of shares of FedEx Freight Holding to holders of FedEx common stock and was structured as a tax-free Spin-Off for U.S. federal income tax purposes.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On the Distribution Date, each holder of record of FedEx common stock received one share of FedEx Freight Holding common stock for every two shares of FedEx common stock held. In the aggregate, we distributed 80.1% of the outstanding shares of FedEx Freight Holding common stock on a pro rata basis to our stockholders of record as of the close of business on May 15, 2026. Following the completion of the Spin-Off, FedEx Freight Holding is an independent public company trading under the symbol “FDXF” on the New York Stock Exchange, and its financial results will no longer be consolidated in our financial statements beginning on the Distribution Date. Following the Spin-Off, the results and assets and liabilities of FedEx Freight will be reported as discontinued operations and excluded from both continuing operations and segment results for all reporting periods, including comparable historical periods.

We retained an ownership interest of 19.9% in FedEx Freight Holding common stock following the distribution, which will be accounted for as an equity security. The investment will be measured at fair value, with changes in fair value recognized in earnings in each reporting period. We expect to fully monetize our remaining stake in FedEx Freight Holding within 24 months of the Distribution Date, subject to market conditions.

Financing.

In connection with the Spin-Off, we received a $4.1 billion cash dividend from FedEx Freight Holding funded by its $3.7 billion of senior notes offering completed in February 2026 and additional borrowings under a delayed draw term loan facility. Upon completion of the Spin-Off, FedEx was released from its guarantee of these notes pursuant to the applicable guarantee agreement. The notes remain the obligation of FedEx Freight Holding and are guaranteed by certain of its subsidiaries, including FedEx Custom Critical. FedEx Freight Holding has agreed to file with the SEC an exchange registration statement with respect to an exchange offer for the notes and related guarantees or a shelf registration statement for the resale of the notes and the related guarantees.

In July 2026, FedEx utilized the $4.1 billion dividend received from FedEx Freight Holding, together with cash on hand, to repurchase approximately $4.9 billion aggregate principal amount of its outstanding debt securities. These transactions occurred after the balance sheet date and, accordingly, have not been reflected in the accompanying consolidated financial statements.

Retirement Plans.

In connection with the Spin-Off described above and as a result of the legal split of certain plans as set forth in

Note 12

, an immaterial amount of net liabilities associated with FedEx's retirement plans, including a portion of the defined benefit pension plans, were transferred to FedEx Freight Holding. The legal split and transfer of the plans and the related liabilities and obligations to FedEx Freight Holding will impact our assumptions and projections used to determine the funding and costs of FedEx’s remaining plans.

Other Spin-Off Related Agreements.

Also in connection with the Spin-Off, FedEx entered into various agreements to effect the Spin-Off and provide a framework for the relationship between FedEx and FedEx Freight Holding, including a separation and distribution agreement, a tax matters agreement, a transition services agreement, an employee matters agreement, an intellectual property cross-license agreement, a trademark license agreement, and a stockholder and registration rights agreement.

OTHER EVENTS

Fiscal Year End Change.

On January 27, 2025, our Board of Directors approved a change in our fiscal year end from May 31 to December 31. The fiscal year change became effective June 1, 2026. We will file a Transition Report on Form 10-K for the seven-month transition period from June 1, 2026 through December 31, 2026. The reporting periods and applicable reports preceding and following the effective date of the fiscal year change will be as follows:

(1)

This report will also include discrete financial information for the one-month periods ending June 30, 2026 and 2025.

Collective Bargaining Agreement.

On June 9, 2026, based on a majority pilot vote, Federal Express pilots ratified a new collective bargaining agreement with ALPA. This agreement marks a pivotal step forward, uniting our team behind a shared strategy for success as we continue to modernize our global operations and transform the business. The agreement includes new work rule changes, pay rate increases, and pension plan modifications, including an initial pay rate increase of 40%. The agreement also includes a provision for a one-time payment of $625 million upon ratification, which is expected to be paid in the September 2026 quarter. As of May 31, 2026, this amount was accrued and is included within “Accrued salaries and employee benefits” in the accompanying consolidated balance sheets.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

IEEPA Tariff Refunds.

Subsequent to May 31, 2026, we have continued to submit refund claims with the CBP through the CAPE system and we have received material refunds related to these claims, which we plan to remit to customers as soon as practicable. Amounts received as of July 20, 2026 had an immaterial impact on our operating results. See

Note 19

for further information related to these refunds.

Treasury Shares.

As of May 31, 2026, $1.3 billion remained available to use for repurchases under the 2024 program. In June 2026, we repurchased $0.3 billion of our common stock through open market transactions and executed an ASR to repurchase $1.0 billion of our common stock with a completion date by the end of September 2026. There are no amounts remaining available to be used for repurchases under the 2024 program.

On July 20, 2026, our Board of Directors authorized a new stock repurchase program for additional repurchases of up to $5.0 billion of FedEx common stock (“2026 program”). Under the 2026 program, shares may be repurchased from time to time in the open market or in privately negotiated transactions. The timing and volume of repurchases are at the discretion of management, based on the capital needs of the business, the market price of FedEx common stock, and general market conditions. No time limits were set for the completion of the program; however, we may decide to suspend or discontinue the program at any time.

Sale of Supply Chain.

On July 1, 2026, FedEx announced that it would sell its FedEx Supply Chain business to CMA CGM Group for $1.4 billion as part of a strategic portfolio streamlining effort. The transaction is expected to close in the second half of calendar year 2026. Upon completion of the sale, FedEx will no longer consolidate FedEx Supply Chain and FedEx Supply Chain will no longer be included in “Corporate, other, and eliminations” in our segment reporting.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Management’s Evaluation of Disclosure Controls and Procedures

The management of FedEx, with the participation of our principal executive and financial officers, has evaluated the effectiveness of our disclosure controls and procedures in ensuring that the information required to be disclosed in our filings under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, including ensuring that such information is accumulated and communicated to FedEx management as appropriate to allow timely decisions regarding required disclosure. Based on such evaluation, our principal executive and financial officers have concluded that such disclosure controls and procedures were effective as of May 31, 2025 2026 (the end of the period covered by this Annual Report).

Assessment of Internal Control Over Financial Reporting

Management’s report on our internal control over financial reporting and the report of Ernst & Young LLP with respect to our internal control over financial reporting are presented in “Item 8. Financial Statements and Supplementary Data” of this Annual Report.

Changes in Internal Control Over Financial Reporting

During our fiscal quarter ended May 31, 2025, 2026, no change occurred in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

Trading Arrangements

During our fiscal quarter ended May 31, 2025, 2026, no director or officer of FedEx adopted, modified, or terminated any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement, as such terms are defined in Item 408(a) of Regulation S-K.

Disclosure Pursuant to Section 219 Retirement of the Iran Threat Reduction and Syria Human Rights Act of 2012 and Section 13(r) of the Exchange Act Director

The information On July 19, 2026, Amy B. Lane provided pursuant notice of her decision to Section 13(r) retire from the Board of Directors of FedEx, effective immediately before the Securities Exchange Act of 1934 in Part II, Item 5 (“Other Information”) next annual meeting of FedEx’s Quarterly Report stockholders on Form 10-Q September 28, 2026, and not stand for reelection. Ms. Lane has served with distinction on the quarter ended November 30, 2024, is incorporated herein by reference. FedEx Board since 2022.

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ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not applicable.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

Information required by this Item regarding members of the Board of Directors and certain other aspects of FedEx’s corporate governance (such as the procedures by which FedEx’s stockholders may recommend nominees to the Board of Directors, information about the Audit and Finance Committee, including its members and our “audit committee financial expert,” and information regarding FedEx’s policies and procedures regarding insider trading) will be presented in FedEx’s definitive proxy statement for its 2025 2026 annual meeting of stockholders, which will be held on September 29, 2025, 28, 2026, and is incorporated herein by reference. Information regarding timely filing of reports under Section 16 of the Exchange Act of 1934 will also be presented in FedEx’s definitive proxy statement for its 2026 annual meeting of stockholders and is incorporated herein by reference. Information regarding executive officers of FedEx is included above in Part I of this Annual Report under the caption “Information About Our Executive Officers” pursuant to the Instruction to Item 401 of Regulation S-K and General Instruction G(3) of Form 10-K. Information regarding FedEx’s Code of Conduct is included above in “

Item 1. Business

” of this Annual Report under the caption “Reputation and Responsibility — Governance.”

ITEM 11. EXECUTIVE COMPENSATION

Information required by this Item regarding director and executive compensation (including FedEx’s policies and practices regarding the timing of awards of stock options in relation to the disclosure of material, non-public information) will be presented in FedEx’s definitive proxy statement for its 2025 2026 annual meeting of stockholders, which will be held on September 29, 2025, 28, 2026, and is incorporated herein by reference; provided that the information in the “Executive Compensation — Pay Versus Performance” section of the definitive proxy statement is not incorporated herein by reference.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Information required by this Item regarding security ownership of certain beneficial owners and management and related stockholder matters, as well as equity compensation plan information, will be presented in FedEx’s definitive proxy statement for its 2025 2026 annual meeting of stockholders, which will be held on September 29, 2025, 28, 2026, and is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Information required by this Item regarding certain relationships and transactions with related persons (including FedEx’s policies and procedures for the review and preapproval of related person transactions) and director independence will be presented in FedEx’s definitive proxy statement for its 2025 2026 annual meeting of stockholders, which will be held on September 29, 2025, 28, 2026, and is incorporated herein by reference.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Information regarding the fees for services provided by Ernst & Young LLP during 2026 and 2025 and 2024 and the Audit and Finance Committee’s administration of the engagement of Ernst & Young LLP, including the Committee’s preapproval policies and procedures (such as FedEx’s Policy on Engagement of Independent Auditor), will be presented in FedEx’s definitive proxy statement for its 2025 2026 annual meeting of stockholders, which will be held on September 29, 2025, 28, 2026, and is incorporated herein by reference.

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PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)(1) and (2) Financial Statements; Financial Statement Schedules

FedEx’s consolidated financial statements, together with the notes thereto and the report of Ernst & Young LLP dated July 21, 2025 20, 2026 thereon, are presented in “

Item 8. Financial Statements and Supplementary Data

” of this Annual Report. FedEx’s “Schedule II — Valuation and Qualifying Accounts,” together with the report of Ernst & Young LLP dated July 21, 2025 20, 2026 thereon, is presented on pages

through

of this Annual Report. All other financial statement schedules have been omitted because they are not applicable or the required information is included in FedEx’s consolidated financial statements or the notes thereto.

(a)(3) Exhibits

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* Filed herewith.

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** Pursuant to Instruction 2 to Item 601 of Regulation S-K, Exhibit 99.1 to the August 13, 2020 Form 8-K contains a list of documents applicable to the Boeing 767-300F aircraft (other than the aircraft bearing Registration No. N126FE) that relate to the offering of the Certificates, which documents are substantially identical to those which are filed as Exhibits 4.7 and 4.9 to the August 13, 2020 Form 8-K, except for the information identifying such aircraft in question and various information relating to the principal amounts of the equipment notes relating to such aircraft. Exhibit 99.1 to the August 13, 2020 Form 8-K sets forth the details by which such documents differ from the corresponding representative sample of documents filed as Exhibits 4.7 and 4.9 to the August 13, 2020 Form 8-K with respect to the aircraft bearing Registration No. N976JT.

*** Pursuant to Instruction 2 to Item 601 of Regulation S-K, Exhibit 99.2 to the August 13, 2020 Form 8-K contains a list of documents applicable to the Boeing 777F aircraft (other than the aircraft bearing Registration No. N869FD) that relate to the offering of the Certificates, which documents are substantially identical to those which are filed as Exhibits 4.8 and 4.10 to the August 13, 2020 Form 8-K, except for the information identifying such aircraft in question and various information relating to the principal amounts of the equipment notes relating to such aircraft. Exhibit 99.2 to the August 13, 2020 Form 8-K sets forth the details by which such documents differ from the corresponding representative sample of documents filed as Exhibits 4.8 and 4.10 to the August 13, 2020 Form 8-K with respect to the aircraft bearing Registration No. N869FD.

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Form 8-K, except for the information identifying such aircraft in question and various information relating to the principal amounts of the equipment notes relating to such aircraft. Exhibit 99.2 to the August 13, 2020 Form 8-K sets forth the details by which such documents differ from the corresponding representative sample of documents filed as Exhibits 4.8 and 4.10 to the August 13, 2020 Form 8-K with respect to the aircraft bearing Registration No. N869FD.

† Certain attachments have been omitted pursuant to Item 601(a)(5) of Regulation S-K because the information contained therein is not material and is not otherwise publicly disclosed. FedEx will furnish supplementally copies of such attachments to the SEC or its staff upon request.

ITEM 16. FORM 10-K SUMMARY

None.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

Power of Attorney

. KNOW ALL PERSONS BY THESE PRESENTS, that

each person whose signature appears below hereby constitutes and appoints

Rajesh Subramaniam

,

John W. Dietrich

, and

Guy M. Erwin II Claude F. Russ

, and each of them, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with any and all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, and hereby grants to such attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

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Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of FedEx Corporation

We have audited the consolidated financial statements of FedEx Corporation (the Company) as of May 31, 2026 and 2025, and for each of the three years in the period ended May 31, 2026, and have issued our report thereon dated July 20, 2026 included elsewhere in this Form 10-K. Our audits of the consolidated financial statements included the financial statement schedule listed in Item 15(a) of this Form 10-K (the “schedule”). This schedule is the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s schedule, based on our audits.

We have audited the consolidated financial statements of FedEx Corporation (the Company) as of May 31, 2025 and 2024, and for each of the three years in the period ended May 31, 2025, and have issued our report thereon dated July 21, 2025 included elsewhere in this Form 10-K. Our audits of the consolidated financial statements included the financial statement schedule listed in Item 15(a) of this Form 10-K (the “schedule”). This schedule is the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s schedule, based on our audits.

In our opinion, the schedule presents fairly, in all material respects, the information set forth therein when considered in conjunction with the consolidated financial statements.

/s/ Ernst & Young LLP

Memphis, Tennessee

July 21, 2025 20, 2026

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SCHEDULE II

FEDEX CORPORATION

VALUATION AND QUALIFYING ACCOUNTS

FOR THE YEARS ENDED MAY 31, 2026, 2025, 2024, AND 2023 2024

(IN MILLIONS)

(a)

Uncollectible accounts written off, net of recoveries, and other adjustments.

(b)

Principally charged against revenue.

(c)

Service failures, rebills, and other.

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Financ

ial Condition and

Results of Operations

.

”

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