What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-07-20 compared with 2025-07-21 · 527 added, 388 removed, 1327 unchanged (41% of the section changed)

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The effectiveness of our internal control over financial reporting as of May 31, 2026, 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.

42 ), the independent registered public accounting firm who also audited the Company’s consolidated financial statements included in this Annual Report.

Ernst & Young LLP’s report on the Company’s internal control over financial reporting is included in this Annual Report.

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors of

FedEx Corporation

To the Stockholders and the Board of Directors of FedEx Corporation

Opinion on Internal Control Over Financial Reporting

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Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors of

FedEx Corporation

To the Stockholders and the Board of Directors of FedEx Corporation

Opinion on the Financial Statements

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As explained in Note 1 and Note 1 2 to the consolidated financial statements, the Company’s projected benefit obligation for the U.S.

pension plans is measured using actuarial techniques that reflect management’s assumptions for discount rate and demographic experience, such as mortality and retirement ages.

pension plans is measured using actuarial techniques that reflect management’s assumptions.

Auditing the projected benefit obligation of the U.S.

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We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over management’s process for estimating the projected benefit obligation of the U.S.

pension plans, including management’s review of the significant assumptions and assessment of the data inputs provided to the actuary.

pension plans, including management’s review of the discount rate and assessment of the data inputs provided to the actuary.

To test the projected benefit obligation of the U.S.

pension plans, our audit procedures included, among others, evaluating the methodologies used, the significant actuarial assumptions described above, and the underlying data used by the Company.

pension plans, our audit procedures included, among others, evaluating the methodologies, discount rate, and the underlying data used by the Company.

We compared the actuarial assumptions used by management to historical trends and evaluated the change in the projected benefit obligation of the U.S.

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At May 31, 2026, the Company’s self-insurance accruals reflected in the balance sheet were $6.4 billion.

As explained in Note 1 to the consolidated financial statements, self-insurance accruals include costs associated with workers’ compensation claims, vehicle accidents, property and cargo loss, general business liabilities, and benefits paid under employee disability programs.

As explained in Note 1 to the consolidated financial statements, self-insurance accruals include costs associated with vehicle accidents, workers’ compensation claims, property and cargo loss, general business liabilities, and benefits paid under employee disability programs.

These accrued liabilities are primarily based on the actuarially estimated cost of claims, including incurred-but-not-reported (IBNR) claims.

Auditing the Company’s self-insurance accruals is complex due to the significant measurement uncertainty inherent to the estimate, the application of management judgment, and the use of various actuarial methods.

Auditing the Company’s self-insurance accruals for vehicle accidents and workers’ compensation claims is complex due to the significant measurement uncertainty inherent to the estimate, the application of management judgment, and the use of various actuarial methods.

In addition, the accruals are sensitive due to the volume of claims and the amount of time that can pass before the final cost is known.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over management’s process for estimating self-insurance accruals, including management’s review of actuarial estimates and assessment of data underlying the accruals.

To evaluate the self-insurance accruals, our audit procedures included, among others, testing the completeness and accuracy of the underlying claims data used by the Company.

We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over management’s process for estimating self-insurance accruals for vehicle accidents and workers’ compensation claims, including management’s review of actuarial estimates and assessment of data underlying the accruals.

To evaluate the self-insurance accruals for vehicle accidents and workers’ compensation claims, our audit procedures included, among others, testing the completeness and accuracy of the underlying claims data used by the Company.

We involved our actuarial specialists to assist in our evaluation of the methodologies applied by management in establishing the actuarially determined accrual and in reviewing the Company’s reinsurance contracts by policy year to assess the Company’s self-insured retentions, deductibles, and coverage limits.

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CURRENT LIABILITIES

Current portion of long-term debt $ 1,428 $ 68

Accrued salaries and employee benefits 2,731 2,673

Accrued expenses $ 5,725 $ 4,995

Accounts payable 4,327 3,692

Accrued salaries and employee benefits 3,759 2,731

Operating lease liabilities 2,680 2,565

Accrued expenses 4,995 4,962

Current portion of long-term debt 1,676 1,428

Short-term borrowings 745 —

Total current liabilities 18,912 15,411

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OTHER LONG-TERM LIABILITIES

Operating lease liabilities 14,549 14,272

Self-insurance accruals 4,413 4,033

Deferred income taxes 3,664 4,205

Pension, postretirement healthcare, and other benefit obligations 1,625 1,698

Self-insurance accruals 4,033 3,701

Operating lease liabilities 14,272 15,053

Other liabilities 834 783

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COMMON STOCKHOLDERS’ INVESTMENT

Preferred stock, no par value;

4 million shares authorized;

no shares issued or outstanding

Common stock, $ 0.10 par value;

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Maintenance and repairs 3,330 3,245 3,291

Goodwill and other asset impairment charges 21 157 117

Separation and other costs 771 38 —

Business optimization and realignment costs 366 756 582

Goodwill and other asset impairment charges 23 21 157

Other 13,999 12,963 12,654

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Interest expense ( 970 ) ( 789 ) ( 745 )

Interest income 363 370 198

Other retirement plans income 885 713 722

Interest income 437 363 370

Other, net ( 22 ) ( 63 ) ( 70 )

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NET INCOME $ 4,433 $ 4,092 $ 4,331

BASIC EARNINGS PER COMMON SHARE $ 16.96 $ 17.41 $ 15.60

DILUTED EARNINGS PER COMMON SHARE $ 16.81 $ 17.21 $ 15.48

EARNINGS PER COMMON SHARE:

Basic $ 18.71 $ 16.96 $ 17.41

Diluted $ 18.55 $ 16.81 $ 17.21

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

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NET INCOME $ 4,433 $ 4,092 $ 4,331

OTHER COMPREHENSIVE LOSS:

OTHER COMPREHENSIVE INCOME (LOSS):

Foreign currency translation adjustments, net of tax benefits of $ 6 in 2026, $ 13 in 2025, and $ 5 in 2024

2 ( 60 ) ( 214 )

Prior service credit arising during period, net of tax (expense) of $ 0 in 2026, $ 0 in 2025, and ($ 11 ) in 2024

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( 10 ) ( 5 ) ( 8 )

TOTAL OTHER COMPREHENSIVE LOSS ( 3 ) ( 32 ) ( 224 )

TOTAL OTHER COMPREHENSIVE INCOME (LOSS) 135 ( 3 ) ( 32 )

COMPREHENSIVE INCOME $ 4,568 $ 4,089 $ 4,299

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Goodwill and other asset impairment charges 23 21 157

Separation and other costs, net of payments 248 15 —

Business optimization and realignment costs, net of payments ( 48 ) 43 26

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FINANCING ACTIVITIES

Proceeds from debt issuances

Short-term borrowings, net 742 — —

Principal payments on debt ( 2,049 ) ( 157 ) ( 147 )

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Other, net ( 55 ) ( 30 ) ( 11 )

Cash used in financing activities ( 4,019 ) ( 3,426 ) ( 2,597 )

Cash provided by (used in) financing activities 2,749 ( 4,019 ) ( 3,426 )

Effect of exchange rate changes on cash 46 76 ( 41 )

Net decrease in cash and cash equivalents ( 999 ) ( 355 ) ( 41 )

Net increase (decrease) in cash and cash equivalents 7,809 ( 999 ) ( 355 )

Cash and cash equivalents at beginning of period 5,502 6,501 6,856

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— ( 21 ) — — ( 2,999 ) ( 3,020 )

Issuance of treasury stock for acquisition — 42 — — 48 90

Cash dividends declared ($ 5.52 per share)

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Net income — — 4,433 — — 4,433

Other comprehensive loss, net of tax of $ 19

Other comprehensive income, net of tax of $ 7

— — — 135 — 135

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— — — — ( 775 ) ( 775 )

Issuance of treasury stock for acquisition — 42 — — 48 90

Cash dividends declared ($ 5.80 per share)

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(“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.

Federal Express operates a unified, fully integrated air-ground express network under the respected FedEx brand.

FedEx Freight provides LTL freight transportation services as a separate subsidiary.

Prior to June 1, 2026, Federal Express and FedEx Freight represented our major service lines and constituted our reportable segments.

On June 1, 2026, we completed the spin-off of FedEx Freight into a new, publicly traded company (the “Spin-Off”).

As a result of the Spin-Off, effective June 1, 2026, FedEx will no longer consolidate the FedEx Freight business, and FedEx Freight will no longer be a reportable segment.

Following the Spin-Off, we realigned our internal reporting and management structure, resulting in the identification of two new reportable segments:

Domestic and Express International.

These changes had no impact on our consolidated results of operations or financial position.

See Note 20 for additional information.

FISCAL YEARS .

Except as otherwise specified, references to years indicate our fiscal year ended May 31, 2026 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.

Effective June 1, 2026, we changed our fiscal year end from May 31 to December 31.

As a result, we will report operating results covering the seven-month transition period from June 1, 2026 through December 31, 2026 (the “Transition Period”) in a Transition Report on Form 10-K.

Following the Transition Period, we will report our operating results on a calendar-year basis, beginning with the fiscal year ending December 31, 2027.

PRINCIPLES OF CONSOLIDATION .

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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

FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

estimated costs at completion of the performance obligation.

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 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.

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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.

FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

arrangements, the majority of which are conducted by our 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.

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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 include 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.

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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 were $ 760 million and $ 526 million at May 31, 2026 and May 31, 2025, respectively.

Contract assets are included within “Receivables” in the accompanying consolidated balance sheets.

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We present these revenues net of tax.

Under the typical payment terms of our customer contracts, the customer pays at periodic

FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

intervals (e.g., every 15 days, 30 days, 45 days, etc.) for shipments included on invoices received.

Under the typical payment terms of our customer contracts, the customer pays at periodic 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.

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This presentation is consistent with how we organize our segments internally for making operating decisions and measuring performance.

FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

We routinely grant credit to many of our customers for transportation and business services without collateral.

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Depreciation and amortization expense includes amortization of assets under finance leases.

FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

CAPITALIZED INTEREST .

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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.

If impairment exists, an

FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

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We operate integrated transportation networks so cash flows for most of our operating assets to be held and used are assessed at a network level, not at an individual asset level, for our analysis of impairment.

In 2026, we made the decision to permanently retire from service ten aircraft, resulting in a noncash impairment charge of $ 23 million ($ 18 million, net of tax, or $ 0.08 per diluted share).

These retirements included four Boeing 757 aircraft, one Airbus A300 aircraft, and five 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.

Eight of these permanently retired aircraft were temporarily idled and not in revenue service.

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.

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.

All of these permanently retired aircraft were temporarily idled and not in revenue service.

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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 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.

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 air network capacity of Federal Express to match current and 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.

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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.

At May 31, 2026, we had 13 jet aircraft temporarily idled.

These aircraft have been idled for an average of 23 months and are expected to return to revenue service in order to meet expected demand.

Goodwill is recognized for the excess of the purchase price over the fair value of tangible and identifiable intangible net assets of businesses acquired.

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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

FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

increases, expected retirement, mortality, 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.

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The annual MTM adjustment is recognized at the corporate level and does not impact segment results.

The remaining components of pension and postretirement healthcare expense, primarily service and interest costs and the EROA, are recorded on a quarterly basis.

The remaining

FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

components of pension and postretirement healthcare expense, primarily service and interest costs and the EROA, are recorded on a quarterly basis.

Only service cost is recognized in segment level operating results.

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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.

We record taxes for net controlled foreign corporation (“CFC”) tested income (formerly global intangible low-taxed income) as a period cost.

We recognize liabilities for uncertain income tax positions based on a two-step process.

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and administrative buildings.

FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Our leases generally contain options to extend or terminate the lease.

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The interest rate implicit in the lease is generally not determinable in transactions where we are the lessee.

FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For real estate leases, we account for lease components and non-lease components (such as common area maintenance) as a single lease component.

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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

The pilots at Federal Express, who are a small number of its total employees, are represented by the Air Line Pilots Association, International (“ALPA”) and are employed under a newly ratified collective bargaining agreement (“CBA”).

The new CBA was ratified by Federal Express pilots in a vote concluded on June 9, 2026, and is the product of several years of bargaining under the Railway Labor Act of 1926, as amended (“RLA”), including mediation by the National Mediation Board (the U.S.

governmental agency that oversees labor agreements for entities covered by the RLA).

The new CBA took effect June 29, 2026, and is scheduled to become amendable in December 2030.

For more information, see Note 20 .

In addition to our pilots, certain of Federal Express’s non-U.S.

employees are unionized.

FedEx believes its employee relations are excellent.

See “ Item 1A.

Risk Factors ” of this Annual Report for more information.

INVESTMENTS IN EQUITY AND DEBT SECURITIES.

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 have elected to apply the NAV practical

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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.

expedient to estimate fair value.

Changes in fair value are included in “Other, net” 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.

Under the measurement alternative these equity securities are accounted for at cost, with adjustments for observable changes in prices and impairments included within “Other, net” in the accompanying consolidated statements of income.

We perform a qualitative assessment each reporting period to evaluate whether these equity securities are impaired.

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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.

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.

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

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 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 balances, existing or new liquidity sources, or a combination thereof.

The Transaction is expected to be completed in the second half of calendar 2026.

STOCK-BASED COMPENSATION.

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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.

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.

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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.

In 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 share repurchase (“ASR”) agreements or open market transactions under this program at an average price of $ 233.07 per share for a total of $ 776 million.

Share repurchases had a benefit of $ 0.21 per diluted share in 2026.

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.

During fiscal year 2025, 10.9 million shares were repurchased under the stock repurchase program through ASR agreements or 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.

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.

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.

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.

DIVIDENDS DECLARED PER COMMON SHARE.

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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.

BUSINESS OPTIMIZATION AND REALIGNMENT COSTS .

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.

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.

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.

The table below summarizes the changes to amounts accrued associated with business optimization and realignment costs during 2026 and 2025:

Business optimization and realignment costs accrued, beginning of period $ ( 227 ) $ ( 155 )

Expense incurred ( 352 ) ( 756 )

Amounts paid 419 684

Business optimization and realignment costs accrued, end of period $ ( 160 ) $ ( 227 )

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 impairment of property and equipment.

The remaining 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 $ 756 million ($ 577 million, net of tax, or $ 2.37 per diluted share) in 2025.

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.

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 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 no t 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.

Network 2.0 is our multi-year effort to improve the efficiency with which FedEx picks up, transports, and delivers packages in the U.S.

Through Network 2.0, we continue 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.

We have implemented Network 2.0 optimization in approximately 410 locations in the 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 complete the U.S implementation by the end of calendar 2027.

International operational transformation programs

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 up to 800 operational employees and is expected to occur over approximately 18 months, subject to required consultation processes in accordance with local country regulations.

We 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 these programs.

The timing and amount of our business optimization expenses and the related cost savings associated with this operational transformation program are dependent on local country consultation processes, regulations and the negotiation of social plans, and may change as we revise and implement our plans.

Europe workforce reduction plan

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 expected to be approximately $ 150 million on an annualized basis beginning in calendar 2026.

Pre-tax costs for severance benefits and legal and professional fees related to the 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.

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

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 1 .” See also Note 20 for further information.

FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The table below summarizes the changes to amounts accrued associated with separation and other costs during 2026 and 2025:

Separation and other costs accrued, beginning of period $ ( 15 ) $ —

Expense incurred ( 777 ) ( 56 )

Amounts paid 529 41

Separation and other costs accrued, end of period $ ( 263 ) $ ( 15 )

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 an employee incentive plan related to the Spin-Off.

Separation costs of $ 738 million are included within “Separation and other costs,” and separation costs of $ 6 million are included within “Other, net” in the accompanying consolidated statements of income.

These costs are included in FedEx Freight;

Corporate, other, and eliminations;

and Federal Express.

In 2025, we incurred costs related to the Spin-Off of $ 56 million ($ 44 million, net of tax, or $ 0.18 per diluted share).

Professional and 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 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 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.

Fiscal year change

We incurred costs related to the 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 “Separation and other costs” caption of the accompanying consolidated statements of income.

Costs associated with the fiscal year change are included in Federal Express and Corporate, other, and eliminations.

We did not incur any costs related to the fiscal year change in 2025 or 2024.

USE OF ESTIMATES .

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We believe the following new accounting guidance is relevant to the readers of our financial statements.

FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Recently Adopted Accounting Standards

In November 2023, the Financial 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 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 assessing segment performance and allocating resources.

We adopted this standard effective June 1, 2024 (fiscal 2025).

The adoption of this standard did not have a material effect on our consolidated financial statements or internal controls.

See Note 15 for further discussion about segment reporting.

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 1 1 for further discussion about income taxes.

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).

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.

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.

FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

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 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 Codification 606.

The update will be effective for annual reporting periods beginning after December 15, 2025, and interim periods within those annual reporting periods.

Early adoption is permitted.

We are assessing the effect of this update on our consolidated financial statements and related disclosures.

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.

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.

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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.

We update our estimate of credit loss reserves quarterly.

Credit losses were $ 521 million in 2025, $ 421 million in 2024, and $ 696 million in 2023.

Our allowance for credit losses was $ 438 million at May 31, 2025 and $ 436 million at May 31, 2024.

BUSINESS COMBINATIONS

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.

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 monthly.

Changes in the allowance for credit losses for the years ended May 31 were as follows:

Allowance, beginning of period $ 438 $ 436

Current period provision for expected credit losses 946 521

Write-offs charged against allowance ( 1,896 ) ( 1,422 )

Recoveries collected 1,022 903

Allowance, end of period $ 510 $ 438

FEDEX CORPORATION

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Balance as of May 31, 2024 5,769 638 16 6,423

( 12 ) — — ( 12 )

Goodwill acquired (2)

Balance as of May 31, 2025 5,949 638 16 6,603

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(2) Goodwill acquired related to the acquisition of RouteSmart Technologies.

See Note 4 for more information.

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.

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 .

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Total $ 724 $ ( 571 ) $ 153 $ 713 $ ( 508 ) $ 205

As part of our review of long-lived assets in the fourth quarter of 2025 and 2024, there were no impairments recorded for our reporting units.

During the fourth quarter of 2023, we recognized an $ 11 million asset impairment charge related to customer relationships from the ShopRunner acquisition.

Amortization expense for intangible assets was $ 54 million in 2026, $ 48 million in 2025, and $ 47 million in 2024.

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

Expected amortization expense for the next five years ending May 31 is as follows (in millions):

FEDEX CORPORATION

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SELECTED CURRENT LIABILITIES

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

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

Accrued salaries and employee benefits

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$ 5,725 $ 4,995

FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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):

Fiscal Year of May 31,

Interest Rate % Maturity 2026 2025

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5.25 2050 1,226 1,225

4.50 2065 245 245

7.60 2098 237 237

Euro senior unsecured debt:

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2033 1,328 734

4.125 2038 404 —

Total senior unsecured debt 22,776 19,170

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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

FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

finance leases, had estimated fair values of $ 17.2 billion at May 31, 2025 and $ 17.5 billion at May 31, 2024.

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.

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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.

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.

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

FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FEDEX CORPORATION

Long-Term Debt

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 remaining net proceeds may be used for general corporate purposes.

On April 1, 2026, we repaid at maturity the $ 750 million principal amount of our 3.25 % senior notes due 2026 using available cash.

No amounts remained outstanding under these notes as of May 31, 2026.

The following table sets forth the future scheduled principal payments due for the next five years ending May 31 and thereafter on our long-term debt (in millions):

Debt Principal

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Total debt $ 23,455

Exchange Offers and Consent Solicitations

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”).

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.

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”).

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.

Each of the Credit Agreements has a $ 125 million letter of credit sublimit.

The Credit Agreements are available to finance our operations and other cash flow needs.

As of 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.

Our Credit Agreements contain a financial covenant requiring us to maintain a ratio of debt (excluding up to $ 500 million 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”)

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

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.

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 1.8 to 1.0 at May 31, 2026.

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

FEDERAL EXPRESS.

Long-Term Debt

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 unconditionally guaranteed by FedEx.

FEDEX FREIGHT.

Unsecured Notes

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.

Credit Facilities

On January 15, 2026, FedEx Freight Holding entered into (i) a five-year revolving credit facility in an aggregate committed amount of $ 1.2 billion (the “FedEx Freight Revolving Credit Facility”) and (ii) a three-year delayed draw term loan facility in the aggregate principal amount of $ 600 million (the “FedEx Freight Term Loan Facility” and together with the FedEx Freight Revolving Credit Facility, the “FedEx Freight Credit Agreements”).

The availability of borrowings under the commitments in respect of the FedEx Freight Revolving Credit Facility 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.

FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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Right-of-use assets obtained in exchange for new finance lease liabilities 1,086 352

FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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and administrative buildings.

FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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, 2026 is as follows (in millions):

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Commencement dates are expected to be from calendar years 2026 to 2028.

FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Federal Express makes payments under certain leveraged operating leases that are sufficient to pay principal and interest on certain pass-through certificates.

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Our maximum exposure under these leases is included in the summary of future minimum lease payments.

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.

ACCUMULATED OTHER COMPREHENSIVE LOSS

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Stock-based compensation expense $ 177 $ 154 $ 163

We have three types of equity-based compensation:

stock options, restricted stock, and RSUs.

FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

We have four types of equity-based compensation:

stock options, restricted stock, restricted stock units (“RSUs”), and performance stock units (“PSUs”).

STOCK OPTIONS .

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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 on a straight-line basis over the requisite service period of the award.

Compensation expense associated with these awards is 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 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 expire after one year (or the date of the next annual meeting of stockholders, if earlier).

Under the terms of our incentive stock plan, restricted shares of our common stock may be awarded to key employees and non-employee directors.

Restrictions on shares of restricted stock expire ratably over a four-year period and restrictions on 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.

The terms of our restricted stock provide for continued vesting subsequent to the employee’s 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.

FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 .

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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.

FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Stock Options

Shares Weighted-

Price Weighted-

Term Aggregate

Shares Subject to Stock Options Weighted-

Exercise Price Weighted-

Term (in years) Aggregate

Intrinsic Value

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Exercised ( 4,824,124 ) 209.54

Forfeited ( 459,561 ) $ 245.35

Forfeited or expired ( 333,980 ) 243.01

Outstanding at May 31, 2026 8,412,866 233.46 6.2 $ 1,500

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Available for future grants 2,252,275

FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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:

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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.

FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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):

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 vesting, making them participating securities and a separate class in basic earnings per share.

Diluted earnings per share reflects the potential impact of contingently issuable shares, including awards requiring future service.

It is computed under both the 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.

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

2026 2025 2024

Basic earnings per common share:

Net earnings allocable to common shares (1)

$ 4,426 $ 4,087 $ 4,325

Weighted-average common shares 241 248 254

Weighted-average common shares for basic earnings per common share 237 241 248

Dilutive effect of stock options and RSUs 2 2 3

Weighted-average common shares for diluted earnings per common share 239 243 251

Basic earnings per common share $ 18.71 $ 16.96 $ 17.41

Diluted earnings per common share $ 18.55 $ 16.81 $ 17.21

Net earnings allocable to common shares (1)

$ 4,087 $ 4,325 $ 3,966

Weighted-average common shares 241 248 254

Dilutive effect of share-based awards 2 3 2

Weighted-average diluted shares 243 251 256

Diluted earnings per common share $ 16.81 $ 17.21 $ 15.48

Anti-dilutive options excluded from diluted earnings per common share 4 5 6

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

FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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Total Provision $ 1,360 $ 1,349 $ 1,505

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.

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):

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

2026 2025 2024

United States $ 4,287 $ 3,614 $ 5,289

Foreign 1,506 1,827 547

Total $ 5,793 $ 5,441 $ 5,836

FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Cash paid for income taxes, net of refunds for the year ended May 31, 2026 were as follows (in millions):

Federal $ 1,370

State and local 140

Total $ 1,912

Amount Percent

Statutory U.S.

federal income tax rate $ 1,217 21.0 %

State and local income taxes - net of federal benefit (1)

Foreign tax effects

Valuation allowances ( 97 ) ( 1.6 ) %

Other jurisdictions 120 2.0 %

Effect of cross-border tax laws ( 1 ) — %

Tax credits ( 47 ) ( 0.8 ) %

Nontaxable or nondeductible items 14 0.3 %

Changes in unrecognized tax benefits 45 0.8 %

Other adjustments ( 12 ) ( 0.2 ) %

Effective Tax Rate $ 1,360 23.5 %

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

Taxes computed at federal statutory rate $ 1,143 $ 1,226

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State deferred tax remeasurement — 54

Goodwill impairment charges — — 8

Corporate structuring transactions ( 66 ) —

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Effective Tax Rate 24.8 % 25.8 %

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.

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.

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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 valuation allowances primarily represent amounts reserved for operating loss carryforwards, which expire over varying periods starting in the Transition Period.

Therefore, we establish valuation allowances if it is more likely than not that deferred income tax assets will not be realized.

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Income statement impacts are reflected in our effective tax rate reconciliation.

The decrease in the valuation allowance during 2025 includes a $ 42 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.

The decrease in the valuation allowance during 2026 includes $ 100 million related to foreign tax 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.

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state, local, and foreign jurisdictions.

We are currently under examination by the Internal Revenue Service for the 2016 through 2021 tax years.

We are currently under examination by the 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.

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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.

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.

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):

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Postretirement healthcare plans 90 87 85

Pension plans MTM gain ( 515 ) ( 561 ) ( 650 )

Retirement plans MTM adjustments ( 647 ) ( 515 ) ( 561 )

$ 892 $ 994 $ 855

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

FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

2026 2025 2024

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Pension plan amendments, including curtailment gains ( 17 ) ( 9 ) 1

Total MTM gain $ ( 515 ) $ ( 561 ) $ ( 650 )

FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Total retirement plans MTM adjustments $ ( 647 ) $ ( 515 ) $ ( 561 )

Net of all fees and expenses, the actual rate of return on our U.S.

Pension Plan assets was 12.40 %, which was higher than our expected rate of return of 7.00 %.

Performance was driven by public equities, but all asset classes were additive.

The weighted-average discount rate for all our pension and postretirement healthcare plans decreased from 5.87 % at May 31, 2025 to 5.72 % at May 31, 2026.

The demographic experience in 2026 reflects an update to our short-term cash balance interest crediting assumption.

Net 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 %.

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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 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 assumptions.

Net of all fees and expenses, the actual rate of return on our U.S.

Pension Plan assets was ( 2.70 %), which was lower than our expected rate of return of 6.50 %.

Negative portfolio returns derived due to losses in both equities and our fixed-income assets due to market volatility and rising interest rates.

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 2023 reflects an update to our short-term cash balance interest crediting assumption.

The demographic experience in 2024 reflects an update to our retirement rate and short-term cash balance interest crediting assumption.

PENSION PLANS .

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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.

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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.

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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.

FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 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.

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and retirement ages.

FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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For consolidated pension expense, we assumed a 7.00 % expected long-term rate of return on our U.S.

Pension Plan assets in 2025 and 6.50 % in 2024 and 2023.

Pension Plan assets in 2026, 6.75 % in 2025, and 6.50 % in 2024.

The historical annual return on our U.S.

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Our investment strategy also includes the limited use of derivative financial instruments on a discretionary basis to improve investment returns and manage portfolio risk.

FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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government securities, and other fixed-income securities by using bid evaluation pricing models or quoted prices of securities with similar characteristics.

FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

• Alternative Investments.

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Voluntary 275 800

For 2026, no pension contributions are required for our U.S.

During the next 12 months, no pension contributions are required for our U.S.

Pension Plan, as it is fully funded under the Employee Retirement Income Security Act.

However, we expect to make voluntary contributions of up to $ 600 million to the plan in 2026.

However, we expect to make voluntary contributions of up to $ 700 million to the plan during the next 12 months.

FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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Net periodic benefit (income) cost $ ( 458 ) $ ( 304 ) $ ( 289 ) $ 20 $ 65 $ 75 $ 66 $ 89 $ 101

FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Amounts recognized in other comprehensive loss were primarily related to amortization of prior service cost in our U.S.

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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 % during 2026, decreasing to an annual growth rate of 4.0 % in 2045 and thereafter.

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

BUSINESS SEGMENTS AND DISAGGREGATED REVENUE

Federal Express and FedEx Freight represent our major service lines and constitute our reportable segments.

Our reportable segments include the following businesses:

Federal Express Segment Federal Express (express transportation, small-package ground delivery, and freight transportation)

FedEx Freight Segment FedEx Freight (LTL freight transportation)

FedEx Custom Critical (time-critical transportation)

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.

As a result of the Spin-Off, effective June 1, 2026, FedEx will no longer consolidate FedEx Freight, and FedEx Freight is no longer a reportable segment.

Following the Spin-Off, we realigned our internal reporting and management structure, resulting in the identification of two new reportable segments:

Domestic and Express International.

These changes had no impact on our consolidated results of operations or financial position.

Refer to Note 20 for additional information.

Prior to the Spin-Off, Federal Express and FedEx Freight 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 the company’s operating strategy, growth, and profitability and reviews financial information for our two reportable segments.

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 regularly reviews significant segment level expense details to assess segment performance and allocate resources.

References to our transportation segments include, collectively, the Federal Express segment and the FedEx Freight segment.

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.

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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.

FEDEX CORPORATION

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 and other 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 operating segment.

FedEx Dataworks is focused on creating solutions to transform the digital and physical experiences of our customers and team members.

Also included in Corporate and other is the FedEx Office and Print Services, Inc.

Corporate, other, and 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, Inc.

(“FedEx Dataworks”) operating segment.

FedEx Dataworks is focused on creating new digital revenue streams using proven FedEx intelligence to digitize supply chains and create new opportunities for our customers and team members.

Also included in Corporate, other, and 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.

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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 ended May 31, 2025 (in millions):

Segment FedEx

Segment Corporate,

other, and eliminations Consolidated

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

2026 2025 2024

Federal Express segment:

Revenue $ 82,273 $ 75,304 $ 74,663

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Asset impairment charges 23 21 157

Separation and other costs 92 — —

Business optimization costs 303 384 251

Intercompany allocations (charges) ( 853 ) ( 791 ) ( 684 )

11,964 666 371 13,001

Other 13,096 11,964 11,582

Total operating expenses 76,361 70,419 69,844

Operating income $ 5,912 $ 4,885 $ 4,819

Other income (expense):

Interest, net ( 426 )

Other retirement plans, net (2)

Other, net (3)

Total other income (expense) 224

Income before income taxes 5,441

Provision for income taxes 1,349

Net income $ 4,092

(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.

FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Segment FedEx

Segment Corporate,

other, and eliminations Consolidated

2026 2025 2024

FedEx Freight segment:

Revenue $ 8,795 $ 8,892 $ 9,429

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Purchased transportation 807 807 877

Rentals and landing fees 3,863 280 428 4,571

Rentals 301 287 280

Depreciation and amortization 450 416 404

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Maintenance and repairs 314 332 330

Goodwill and other asset impairment charges 157 — — 157

Business optimization costs 251 — 331 582

Separation and other costs 492 — —

Intercompany allocations (charges) 561 573 543

11,582 680 392 12,654

Other 778 666 680

Total operating expenses 8,179 7,403 7,608

Operating income $ 616 $ 1,489 $ 1,821

Other income (expense):

Interest, net ( 375 )

Other retirement plans, net (2)

Other, net ( 70 )

Total other income (expense) 277

Income before income taxes 5,836

Provision for income taxes (3)

Net income $ 4,331

(1) Includes a $ 57 million benefit included in “Corporate, other, and eliminations" for an insurance reimbursement related to pre- and post-judgment interest in connection with a legacy FedEx Ground legal matter.

(2) Includes a pre-tax, noncash gain of $ 561 million associated with our MTM retirement plans accounting adjustments.

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

FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Segment FedEx

Segment Corporate,

other, and eliminations Consolidated

Revenue $ 75,884 $ 10,084 $ 4,187 $ 90,155

Operating expenses:

Salaries and employee benefits 24,523 4,057 2,439 31,019

Purchased transportation 19,677 1,078 1,035 21,790

Rentals and landing fees 4,035 269 434 4,738

Depreciation and amortization 3,655 387 134 4,176

Fuel 5,157 748 4 5,909

Maintenance and repairs 2,910 320 127 3,357

Goodwill and other asset impairment charges 70 — 47 117

Business optimization costs 47 — 262 309

Intercompany allocations (charges) ( 689 ) 542 147 —

2026 2025 2024

Total operating expenses 71,691 8,148 5,404 85,243

Reconciliation of segment revenue:

Total Federal Express and FedEx Freight revenue $ 91,068 $ 84,196 $ 84,092

Other revenues (1)

3,652 3,730 3,601

Total consolidated revenue $ 94,720 $ 87,926 $ 87,693

Reconciliation of segment operating income to income before income taxes:

Total Federal Express and FedEx Freight operating income $ 6,528 $ 6,374 $ 6,640

Other operating loss (1)

( 1,065 ) ( 1,157 ) ( 1,081 )

Operating income 5,463 5,217 5,559

Other income (expense):

Interest, net ( 533 ) ( 426 ) ( 375 )

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Other, net (2)

Total other income (expense) 451

( 22 ) ( 63 ) ( 70 )

Total other (expense) income 330 224 277

Income before income taxes $ 5,793 $ 5,441 $ 5,836

Provision for income taxes 1,391

Net income $ 3,972

(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.

(1) Revenue and operating loss from segments below the quantitative thresholds are attributable to operating segments contained within “Corporate, other, and eliminations.” These operating segments include FedEx Corporate, FedEx Office, FedEx Logistics, and FedEx Dataworks.

(2) Includes costs related to the Spin-Off of $ 6 million and $ 18 million for the years ended May 31, 2026 and 2025, respectively, included in “Corporate, other, and eliminations.”

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

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2024 73,259 11,615 2,133 87,007

(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.

(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.

FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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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2024 4,591 461 124 5,176

FEDEX CORPORATION

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):

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however, many of our aircraft operate internationally.

FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 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.

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 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.

FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Certain of our debts expose us to fluctuations of interest rates, these fluctuations may impact our future cashflows.

NET INVESTMENT HEDGES .

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dollar value of a portion of our net investment in a euro-denominated consolidated subsidiary.

During 2025 and 2024, we entered into certain foreign currency derivatives to hedge our net investments in foreign operations.

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):

Foreign Currency Derivative Number of Instruments Notional Sold Notional Purchased Number of Instruments Notional Sold Notional Purchased

Derivatives designated as net investment hedges Number of Instruments Notional Sold Notional Purchased Number of Instruments Notional Sold Notional Purchased

Cross-currency swaps 4 € ( 949 ) $ 1,000 4 € ( 949 ) $ 1,000

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):

Derivatives not designated in a hedging relationship Underlying Notional Underlying Notional

Interest rate swaps $ 2,300 $ —

Foreign exchange contracts 1,753 1,118

FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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):

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Cross-currency swaps Prepaid expenses and other $ 12 $ 13

Interest rate swaps Prepaid expenses and other 4 —

Foreign exchange contracts Prepaid expenses and other 9 —

Liability Derivatives

Cross-currency swaps Other liabilities $ 115 $ 108

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.

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.

Interest rate swaps Accrued expenses 1 —

Foreign exchange contracts Accrued expenses 3 2

The estimated fair values were determined using pricing models that rely on market-based inputs such as foreign currency exchange rates and yield curves and are 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 derivative financial instruments, either directly or indirectly.

Our cross-currency swaps and interest rate swaps contain an element of risk that counterparties may be unable to meet the terms of the agreements.

We seek to minimize such risk exposures for these instruments by limiting the counterparties to banks and financial institutions that meet established credit guidelines.

Our counterparties to the swaps all have an investment 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.

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.

Losses recognized in AOCL related to our debt designated as a net investment hedge, which excludes any adjustments for the impact of deferred income taxes, was immaterial for the periods ended May 31, 2026, 2025, and 2024.

Amounts recorded to “Other, net” related to our interest rate swaps and foreign exchange contracts for the periods ended May 31, 2026, 2025 and 2024 were immaterial.

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.

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Shares of common stock issued from treasury stock for acquisition $ — $ 90 $ —

FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 such guarantees and indemnifications cannot be reasonably estimated.

The overall maximum potential amount of the obligation under

FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

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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 by the purchase of Boeing 777 Freighter (“B777F”) and Boeing 767-300 Freighter (“B767F”) aircraft.

We have several aircraft modernization programs led by the purchase of Boeing 777 Freighter (“B777F”) 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.

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As of May 31, 2026, we had $ 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 our accompanying consolidated balance sheets.

These deposits are classified in “Other assets” 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, 2026, with the year of expected delivery:

Cessna SkyCourier 408 ATR 72-600F B767F B777F Total

2026 19 3 7 — 29

2027 4 3 — 5 12

2028 — 4 — 5 9

Cessna SkyCourier 408 ATR 72-600F B777F Total

2027 9 5 5 19

2028 2 4 5 11

Thereafter — — — — —

Total 11 15 10 36

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.

FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

EQUITY SECURITIES.

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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.

We apply the measurement alternative for all other equity securities without readily determinable fair values, where adjustments to cost

FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

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.

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.

DEBT SECURITIES.

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The summary of our investments in debt securities at May 31, 2026 and 2025 is as follows (in millions):

Gross Unrealized Gross Unrealized

Cost Gains Losses Estimated Fair Value Cost Gains Losses Estimated Fair Value

Gross Unrealized Amount in AOCL Gross Unrealized Amount in AOCL

Amortized Cost Gains Losses Estimated Fair Value Amortized Cost Gains Losses Estimated Fair Value

Fixed-income securities $ 236 $ — $ — $ 236 $ 69 $ 1 $ — $ 70

Total debt securities $ 69 $ 1 $ — $ 70 $ 76 $ 1 $ — $ 77

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 no t invest in debt securities during 2023.

CONTINGENCIES

FedEx Ground Negligence Lawsuit.

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.

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.

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Applying this threshold, there are no environmental matters required to be disclosed for this period.

SUBSEQUENT EVENTS

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.

FEDEX CORPORATION

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.

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.

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:

Fiscal Period Reporting Period Report to be Filed

Fiscal year 2026 June 1, 2025 to

May 31, 2026 Annual Report on Form 10-K

Third quarter of calendar year 2026 July 1, 2026 to

September 30, 2026 Quarterly Report on Form 10-Q (1)

Transition Period June 1, 2026 to

December 31, 2026 Transition Report on Form 10-KT

(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.

FEDEX CORPORATION

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.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data