Financial Analysis

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 Senior secured debt: 1.875 2034 $ 679 $ 729 Senior unsecured debt: 3.25 2026 749 3.40 2028 499 498 4.20-4.30 2029 1,392 398 3.10-4.90 2030 2,340 1,738 2.40-4.65 2031 1,985 992 4.95 2033 693 4.90 2034 496 496 3.90 2035 495 495 5.25 2036 988 3.25 2041 740 740 3.875-4.10 2043 985 985 5.10 2044 742 742 4.10 2045 641 641 4.55-4.75 2046 2,463 2,462 4.40 2047 736 736 4.05 2048 987 986 4.95 2049 836 835 5.25 2050 1,226 1,225 4.50 2065 245 245 7.60 2098 237 237 Euro senior unsecured debt: 0.45 2026 569 1.625 2027 1,455 1,422 0.45 2029 695 679 1.30 2032 168 566 0.95-3.50 2033 1,328 734 4.125 2038 404 Total senior unsecured debt 22,776 19,170 Finance lease obligations 1,514 680 24,969 20,579 Less current portion 1,676 1,428 $ 23,293 $ 19,151 Interest on our U.S. dollar fixed-rate notes is paid semi-annually. Interest on our euro fixed-rate notes is paid annually. The weighted-average interest rate on long-term debt was 3.8% as of May 31, 2026. Long-term debt, including current maturities and exclusive of finance leases, had estimated fair values of $20.9 billion at May 31, 2026 and $17.2 billion at May 31, 2025. The estimated fair values were determined based on quoted market prices and the current rates offere …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

STOCK-BASED COMPENSATION Our total stock-based compensation expense for the years ended May 31 was as follows (in millions): 2026 2025 2024 Stock-based compensation expense $ 177 $ 154 $ 163 We have four types of equity-based compensation: stock options, restricted stock, restricted stock units (RSUs), and performance stock units (PSUs). STOCK OPTIONS . Under the provisions of our incentive stock plan, key employees and non-employee directors may be granted options to purchase shares of our common stock at a price not less than its fair market value on the date of grant. Vesting requirements are determined at the discretion of the Compensation and Human Resources Committee of our Board of Directors. Option-vesting periods range from one to four years, with the majority of our options vesting ratably over four years. Compensation expense associated with these awards is recognized, 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 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 …

DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock · excerpt; the full note is in the filing

GOODWILL AND OTHER INTANGIBLE ASSETS GOODWILL. The carrying amount of goodwill attributable to each reportable operating segment and changes therein are as follows (in millions): Federal Express Segment FedEx Freight Segment Corporate, Other, and Eliminations Total Goodwill at May 31, 2024 $ 5,769 $ 771 $ 1,961 $ 8,501 Accumulated impairment charges (133) (1,945) (2,078) Balance as of May 31, 2024 5,769 638 16 6,423 Goodwill acquired (2) 38 38 Other (1) 142 142 Balance as of May 31, 2025 5,949 638 16 6,603 Goodwill acquired (2) 5 5 Other (1) 125 125 Balance as of May 31, 2026 6,079 638 16 6,733 Accumulated goodwill impairment charges as of May 31, 2026 $ $ (133) $ (1,945) $ (2,078) (1) Primarily currency translation adjustments. (2) Goodwill acquired related to the acquisition of RouteSmart Technologies. 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. OTHER INTANGIBLE ASSETS . The summary of our intangible assets and related accumulated amortization at May 31, 2026 and 2025 is as follows (in millions): 2026 2025 Gross Carrying Amount Accumulated Amortization Net Book Value Gross Carrying Amount Accumulated Amortization Net Book Value Customer relationships $ 591 $ (505) $ 86 $ 580 $ (454) $ 126 Technology 132 (65) 67 132 (53) 79 Trademarks and oth …

GoodwillAndIntangibleAssetsDisclosureTextBlock · excerpt; the full note is in the filing

INCOME TAXES The components of the provision for income taxes for the years ended May 31 were as follows (in millions): 2026 2025 2024 Current provision Domestic: Federal $ 1,335 $ 891 $ 1,184 State and local 186 146 218 Foreign 384 359 265 $ 1,905 $ 1,396 $ 1,667 Deferred provision Domestic: Federal $ (534) $ (302) $ (82) State and local (2) 20 60 Foreign (9) 235 (140) (545) (47) (162) Total Provision $ 1,360 $ 1,349 $ 1,505 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 Cash paid for income taxes, net of refunds for the year ended May 31, 2026 were as follows (in millions): 2026 Federal $ 1,370 State and local 140 Foreign 402 Total $ 1,912 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): 2026 Amount Percent Statutory U.S. federal income tax rate $ 1,217 21.0 % State and local income taxes - net of federal benefit (1) 118 2.0 % Foreign tax effects Brazil Other 3 % 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 Te …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

LEASES The following table is a summary of the components of net lease cost for the period ended May 31 (in millions) 2026 2025 Operating lease cost $ 3,518 $ 3,421 Finance lease cost: Amortization of right-of-use assets 68 31 Interest on lease liabilities 36 17 Total finance lease cost 104 48 Short-term lease cost 499 484 Variable lease cost 1,925 1,840 Net lease cost $ 6,046 $ 5,793 Supplemental cash flow information related to leases for the period ended May 31 is as follows (in millions): 2026 2025 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows paid for operating leases $ 3,511 $ 3,422 Operating cash flows paid for interest portion of finance leases 34 17 Financing cash flows paid for principal portion of finance leases 254 101 Right-of-use assets obtained in exchange for new operating lease liabilities 3,273 1,945 Right-of-use assets obtained in exchange for new finance lease liabilities 1,086 352 Supplemental balance sheet information related to leases as of May 31 is as follows (dollars in millions): 2026 2025 Operating leases: Operating lease right-of-use assets, net $ 16,822 $ 16,453 Current portion of operating lease liabilities $ 2,680 $ 2,565 Operating lease liabilities 14,549 14,272 Total operating lease liabilities $ 17,229 $ 16,837 Finance leases: Net property and equipment $ 1,609 $ 621 Current portion of long-term debt $ 170 $ 59 Long-term debt, less current portion 1,344 621 Total finance lease liabilities $ 1,51 …

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RECENT ACCOUNTING GUIDANCE New accounting rules and disclosure requirements can significantly affect our reported results and the comparability of our financial statements. We believe the following new accounting guidance is relevant to the readers of our financial statements. Recently Adopted Accounting Standards In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The new requirements enhance detail regarding the amount of cash taxes paid and the reconciliation of our effective tax rate. We adopted this standard effective June 1, 2025 (fiscal 2026) on a prospective basis. See Note 1 1 for further discussion about income taxes. New Accounting Standards and Accounting Standards Not Yet Adopted In May 2026, the FASB issued ASU 2026-02, Environmental Credits and Environmental Credit Obligations (Topic 818), which establishes accounting requirements for environmental credits and environmental credit obligations (ECOs). The ASU introduces a comprehensive model that establishes recognition, measurement, presentation, and disclosure requirements for environmental credits and, when applicable, compliance obligations that may be settled by using environmental credits. The new accounting standard will be effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. We are assess …

NewAccountingPronouncementsPolicyPolicyTextBlock · excerpt; the full note is in the filing

RETIREMENT PLANS We sponsor programs that provide retirement benefits to most of our employees. These programs include defined benefit pension plans, defined contribution plans, and postretirement healthcare plans. The accounting guidance related to postretirement benefits requires recognition in the balance sheet of the funded status of defined benefit pension and other postretirement benefit plans, and the recognition in either expense or accumulated other comprehensive income of unrecognized gains or losses and prior service costs or credits. We use MTM accounting for the recognition of our actuarial gains and losses related to our defined benefit pension and postretirement healthcare plans as described in Note 1 . The funded status is measured as the difference between the fair value of the plans assets and the PBO of the plan. A summary of our retirement plan costs for the years ended May 31 is as follows (in millions): 2026 2025 2024 Defined benefit pension plans $ 185 $ 278 $ 363 Defined contribution plans 1,264 1,144 968 Postretirement healthcare plans 90 87 85 Retirement plans MTM adjustments (647) (515) (561) $ 892 $ 994 $ 855 The components of the retirement plans MTM adjustments for the years ended May 31 are as follows (in millions): 2026 2025 2024 Actual versus expected return on assets $ (1,386) $ 75 $ (67) Discount rate change 462 (1,024) (1,139) Demographic experience: Current year actuarial loss 230 196 67 Change in future assumptions 64 247 577 Pension plan …

PensionAndOtherPostretirementBenefitsDisclosureTextBlock · excerpt; the full note is in the filing

BUSINESS SEGMENTS AND DISAGGREGATED REVENUE 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: Express U.S. 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 our operating strategy, growth, and profitability and reviews financial information for our two reportable segments. The CODM uses operating income as the primary measure of segment performance because it reflects the underlying business performance and provides the CODM with a basis for making resource allocation decisions. Operating income is defined as income before other income (expense), interest expense and income tax expense. Our CODM also utilizes operating income in the annual budget and monthly forecasting process and considers forecast-to-actual variances on a monthly basis when making resource allocation decisions. Our CODM regularly reviews significant expense details, which include salaries and employee be …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

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

SubsequentEventsTextBlock · excerpt; the full note is in the filing

NOTE 4: FINANCING ARRANGEMENTS 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. Long-Term Debt On July 30, 2025, 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 4.125% 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. Long-term debt, including current maturities and exclusive of finance leases, had carrying values of $20.3 billion at November 30, 2025 and $19.9 billion at May 31, 2025, with estimated fair values of $18.5 billion at November 30, 2025 and $17.2 billion at May 31, 2025. The annualized weighted-average interest rate on long-term debt was 3.6% at November 30, 2025. The estimated fair values were determined based on quoted market prices and the current rates offered for debt with similar terms and maturities. The fair value of our long-term debt is classified as Level 2 within the fair value hierarchy. Federal Express has issued $970 million of Pass-Through Certificates, Seri …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

RECENT ACCOUNTING GUIDANCE. New accounting rules and disclosure requirements can significantly affect our reported results and the comparability of our financial statements. We believe the following new accounting guidance is relevant to the readers of our financial statements. New Accounting Standards and Accounting Standards Not Yet Adopted In December 2025, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (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. generally accepted accounting principles. Per the FASB, the amendment does not intend to change the fundamental nature of interim reporting or expand or reduce current interim disclosure requirements but rather provide clarity and improve navigability of the existing interim reporting requirements. The update will be effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. We are assessing the effect of this update on our consolidated financial statements and related disclosures. In November 2025, the FASB issued ASU 2025-09, Derivatives and Hedging (Topic 815): Hedge Accounting Improvements, which introduces five targeted improvements to better align hedge accounting with entities risk management activities. The update will be effective f …

NewAccountingPronouncementsPolicyPolicyTextBlock · excerpt; the full note is in the filing

NOTE 6: RETIREMENT PLANS We sponsor programs that provide retirement benefits to most of our employees. These programs include defined benefit pension plans, defined contribution plans, and postretirement healthcare plans. Key terms of our retirement plans are provided in our Annual Report. Our retirement plans costs for the periods ended November 30, 2025 and 2024 were as follows (in millions): Three Months Ended Six Months Ended November 30, 2025 November 30, 2024 November 30, 2025 November 30, 2024 Defined benefit pension plans $ 46 $ 70 $ 93 $ 140 Defined contribution plans 312 288 618 575 Postretirement healthcare plans 23 21 45 43 $ 381 $ 379 $ 756 $ 758 Net periodic benefit cost of the pension and postretirement healthcare plans for the periods ended November 30, 2025 and 2024 included the following components (in millions): Three Months Ended U.S. Pension Plans International Pension Plans Postretirement Healthcare Plans 2025 2024 2025 2024 2025 2024 Service cost $ 111 $ 124 $ 10 $ 11 $ 7 $ 6 Other retirement plans expense (income): Interest cost 379 363 11 10 17 16 Expected return on plan assets (457) (430) (6) (7) Amortization of prior service credit and other (2) (2) 1 (1) (1) (80) (69) 5 4 16 15 Net periodic benefit cost $ 31 $ 55 $ 15 $ 15 $ 23 $ 21 Six Months Ended U.S. Pension Plans International Pension Plans Postretirement Healthcare Plans 2025 2024 2025 2024 2025 2024 Service cost $ 223 $ 249 $ 20 $ 20 $ 14 $ 13 Other retirement plans expense (income): Intere …

PensionAndOtherPostretirementBenefitsDisclosureTextBlock · excerpt; the full note is in the filing

NOTE 7: 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, Inc. (time-critical transportation) References to our transportation segments include, collectively, the Federal Express segment and the FedEx Freight segment. Our Chief Executive Officer is our chief operating decision maker (CODM). The CODM is responsible for the companys operating strategy, growth, and profitability and reviews financial information for our two reportable segments. The CODM uses operating income as the primary measure of segment performance because it reflects the underlying business performance and provides the CODM with a basis for making resource allocation decisions. Operating income is defined as income before other income (expense), interest expense, and income tax expense. Our CODM also utilizes operating income in the annual budget and monthly forecasting processes 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, depreci …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing