What changed in FedEx's 10-K — 2024 vs 2025

Item 1. Business ” for information regarding the ongoing redesign of the Federal Express international air network to improve efficiency and asset utilization.

As of May 31, 2025, Federal Express operated approximately 78,000 motorized vehicles in its global network and also conducts certain linehaul and pickup-and-delivery operations primarily with approximately 95,000 motorized vehicles owned or leased by independent service providers. -36- Aircraft Purchase Commitments The following table is a summary of the number and type of aircraft we were committed to purchase as of May 31, 2025, 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 2029 — 4 — — 4 2030 — 2 — — 2 Thereafter — — — — — Total 23 16 7 10 56 As of May 31, 2025, we had $590 million in deposits and progress payments on aircraft purchases and other planned aircraft-related transactions.

See Note 1 9 of the accompanying consolidated financial statements for more information about our purchase commitments and options. -37- Sorting and Handling Facilities At May 31, 2025, Federal Express operated the following major air sorting and handling facilities: Location Acres Square Feet Sorting Capacity (per hour) (1) Lessor Lease Expiration Calendar Year Primary Memphis, Tennessee 953 5,058,299 484,000 Memphis-Shelby County Airport Authority 2036 National Indianapolis, Indiana (2) 449 3,002,925 164,000 Indianapolis Airport Authority 2053 Miami, Florida (3) 35 284,809 7,000 Aero Miami FX, LLC 2041 Regional Fort Worth, Texas 168 987,388 76,000 Fort Worth Alliance Airport Authority 2041 Newark, New Jersey 70 634,193 156,000 Port Authority of New York and New Jersey 2030 Oakland, California 75 587,700 63,000 Port of Oakland 2036 Greensboro, N.

Carolina 165 595,000 23,000 Piedmont Triad Airport Authority 2031 Metropolitan Chicago, Illinois 54 481,350 24,000 City of Chicago 2028 Los Angeles, California 34 305,300 23,000 City of Los Angeles 2025⁽⁴⁾ Atlanta, Georgia 35 291,525 22,600 City of Atlanta 2030 International Anchorage, Alaska (5) 64 375,300 25,000 State of Alaska, Department of Transportation and Public Facilities 2078 Paris, France (6) 123 1,798,368 59,000 Aeroports de Paris 2048 Cologne, Germany (6) 14 731,267 17,900 Cologne Bonn Airport 2040 Guangzhou, China (7) 155 873,006 36,000 Guangdong Airport Management Corp. 2029 Osaka, Japan (7) 17 425,206 9,000 Kansai Airports 2029 Liege, Belgium (8) 23 1,027,952 33,700 Liege Airport 2036 (1) Documents and packages.

(2) In addition to U.S. domestic express package and freight shipments, handles certain international express package and freight shipments to and from Europe. (3) Handles international express package and freight shipments to and from Latin America and the Caribbean.

(4) Property is held under four separate leases — we continue to renew the leases for the sorting and handling facility on a month-to-month basis while a new lease is being negotiated. (5) Handles international express package and freight shipments to and from Asia, Europe, and North America.

(6) Handles intra-Europe express package and freight shipments, as well as international express package and freight shipments to and from Europe. (7) Handles intra-Asia express package and freight shipments, as well as international express package and freight shipments to and from Asia. (8) Handles intra-Europe express package and freight shipments.

Federal Express’s primary sorting facility, which serves as the center of its multiple hub-and-spoke system and worldwide air network, is located at the Memphis International Airport.

Federal Express’s facilities at the Memphis International Airport also include aircraft hangars, aircraft ramp areas, vehicle parking areas, flight training and fuel facilities, the FedEx Cold Chain Center, administrative offices, and warehouse space. -38- Federal Express leases these facilities from the Memphis-Shelby County Airport Authority (the “Authority”).

The lease obligates Federal Express to maintain and insure the leased property and to pay all related taxes, assessments, and other charges. The lease is subordinate to, and Federal Express’s rights thereunder could be affected by, any future lease or agreement between the Authority and the U.S. government.

Federal Express has additional major international sorting and freight handling facilities located at Narita Airport in Tokyo and Stansted Airport outside London. Federal Express also has a substantial presence at airports in Hong Kong, Taiwan, and Dubai. A central air hub near Liege, Belgium connects specific large European markets.

Additionally, central European road hubs are located in Duiven, The Netherlands and Novara, Italy, respectively. As of May 31, 2025, Federal Express owned or leased approximately 650 facilities for city station operations in the U.S.

As of May 31, 2025, Federal Express owned or leased approximately 1,150 additional sorting and distribution centers in the U.S. and 100 sorting and distribution centers in Canada that support its U.S. and Canada surface operations. This included approximately 720 legacy FedEx Ground and 530 legacy FedEx Express facilities.

See the “Federal Express Segment — Operations” section of “ Item 1. Business ” for information regarding the ongoing consolidation of these operations. The leased facilities have a variety of lease term lengths and are strategically located to cover the geographic area served by the U.S. and Canada surface operations of Federal Express.

The facilities range in size from approximately 1,000 to 1,160,000 square feet, with an average size of approximately 124,000 square feet. In addition, over 1,000 city stations are owned or leased throughout Federal Express’s international network. The majority of these leases are for terms of five to ten years.

City stations serve as a sorting and distribution center for a particular city or region. We believe that suitable alternative facilities are available in each locale on satisfactory terms, if necessary. Administrative and Other Properties and Facilities The World Headquarters of Federal Express is located in southeastern Shelby County, Tennessee. Federal Express international headquarters are located in Hoofddorp, The Netherlands.

Federal Express leases state-of-the-art technology centers in Collierville, Tennessee and Colorado Springs, Colorado. These facilities house personnel responsible for strategic software development and other functions that support FedEx’s technology and e-commerce solutions. As of May 31, 2025, Federal Express had approximately 24,700 Drop Boxes.

Federal Express customers can also ship from approximately 24,000 staffed drop-off locations, including FedEx Office stores and FedEx Authorized ShipCenters. Internationally, Federal Express had approximately 14,000 drop-off locations. The FedEx Authorized ShipCenter program offers U.S. domestic and international Federal Express shipping and drop-off services through a network of approximately 5,000 franchised and independent “pack and ship” retail locations.

The FedEx OnSite network includes over 15,000 drop-off locations at Walgreens and Dollar General. Additionally, Federal Express has an agreement with Office Depot, Inc. to offer U.S. domestic and international Federal Express shipping and drop-off services at nearly 800 Office Depot and OfficeMax retail locations.

FedEx Freight Segment FedEx Freight’s corporate headquarters are located in Memphis, Tennessee, with some administrative offices in Harrison, Arkansas. As of May 31, 2025, FedEx Freight operated nearly 30,000 motorized vehicles and approximately 355 service centers, which are strategically located to provide service throughout North America.

These facilities range in size from approximately 1,000 to 280,000 square feet of office and dock space. FedEx Dataworks Operating Segment FedEx Dataworks’ corporate headquarters are located in Memphis, Tennessee. FedEx Office Operating Segment FedEx Office’s corporate headquarters are located in Plano, Texas.

As of May 31, 2025, FedEx Office operated approximately 2,000 customer-facing stores and 16 manufacturing plants with expanded print capabilities (traditional electrophotography, digital and traditional offset, large and grand format, and dye sublimation printing), with 14 of the manufacturing plants also housing co-located signs and graphics production operations.

Substantially all FedEx Office stores are leased, generally for terms of five to ten years with varying renewal options. FedEx Office operates approximately 200 stores at hotels, convention centers, hospitals, universities, and corporate campuses, with the remainder generally located in strip malls, office buildings, Walmart stores, and stand-alone structures.

FedEx Office’s customer-facing stores average approximately 3,100 square feet in size. -39- FedEx Logistics Operating Segment FedEx Logistics’s corporate headquarters are located in Memphis, Tennessee and FedEx Supply Chain’s corporate headquarters are located in the Pittsburgh, Pennsylvania metropolitan area.

Item 1A. Risk Factors ” for more information. -53- RECENT ACCOUNTING GUIDANCE See Note 2 of the accompanying consolidated financial statements for a discussion of recent accounting guidance. REPORTABLE SEGMENTS 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) The Federal Express segment operates combined sales, marketing, administrative, and information-technology functions in shared service operations for U.S. customers of our major business units and certain back-office support to FedEx Freight and our other operating segments which allows us to obtain synergies from the combination of these functions.

We allocate the net operating costs of these services to reflect the full cost of operating our businesses in the results of those segments. We review and evaluate the performance of FedEx Freight and our other operating segments based on operating income inclusive of these allocations.

Operating expenses for our FedEx Freight segment include allocations of these services from the Federal Express segment. These allocations also include charges and credits for administrative services provided between operating companies. The allocations of net operating costs are based on metrics such as relative revenue or estimated services provided.

We believe these allocations approximate the net cost of providing these functions. Our allocation methodologies are refined periodically, as necessary, to reflect changes in our businesses.

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, Inc. ("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.

(“FedEx Office”) operating segment, which provides an array of document and business services and retail access to our customers for our package transportation businesses, and the FedEx Logistics operating segment, which provides integrated supply chain management solutions, specialty transportation, customs brokerage, and global ocean and air freight forwarding.

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

In 2025, the decline in operating results in Corporate, other, and eliminations was primarily due to a decrease in operating results at FedEx Dataworks and a $57 million benefit in 2024 at FedEx Corporate for insurance recoveries in connection with a legacy FedEx Ground legal matter, partially offset by improved operating results at FedEx Office.

The decline in operating results at FedEx Dataworks was primarily due to increased business optimization costs, salaries and employee benefits expense, and outside service contracts expense. The improvement in operating results at FedEx Office was primarily due to lower salaries and employee benefits expense and higher revenue.

Certain FedEx operating companies provide transportation and related services for other FedEx companies outside their reportable segment in order to optimize our resources. For example, during 2025 FedEx Freight provided road and intermodal support for Federal Express. In addition, Federal Express works with FedEx Logistics to secure air charters and other cargo space for U.S. customers.

Billings for such services are based on negotiated rates and are reflected as revenue of the billing segment. These rates are adjusted from time to time based on market conditions.

Such intersegment revenue and expenses are eliminated in our consolidated results and are not separately identified in the following segment information because the amounts are not material. -54- FEDERAL EXPRESS SEGMENT Federal Express offers a wide range of U.S. domestic and international shipping services for delivery of packages and freight including priority, deferred, and economy services, which provide delivery on a time-definite or day-definite basis.

The following table compares revenue, operating expenses, operating income (dollars in millions), operating margin, and operating expenses as a percent of revenue for the years ended May 31: 2025 2024 Percent Change Revenue: Package: U.S. priority $ 10,520 $ 10,543 — U.S. deferred 5,007 4,926 2 U.S. ground 33,887 32,981 3 Total U.S. domestic package revenue 49,414 48,450 2 International priority 8,737 9,454 (8) International economy 5,861 4,653 26 Total international export package revenue 14,598 14,107 3 International domestic (1) 4,495 4,659 (4) Total package revenue 68,507 67,216 2 Freight: U.S. 1,536 2,391 (36) International priority 2,320 2,205 5 International economy 1,975 1,874 5 Total freight revenue 5,831 6,470 (10) Percent of Revenue Other 966 977 (1) 2025 2024 Total revenue 75,304 74,663 1 100.0 % 100.0 % Operating expenses: Salaries and employee benefits 25,091 24,606 2 33.3 33.0 Purchased transportation 19,974 19,330 3 26.5 25.9 Rentals and landing fees 3,939 3,863 2 5.2 5.2 Depreciation and amortization 3,722 3,754 (1) 5.0 5.0 Fuel 3,316 4,137 (20) 4.4 5.5 Maintenance and repairs 2,799 2,848 (2) 3.7 3.8 Asset impairment charges 21 157 (87) — 0.2 Business optimization costs 384 251 53 0.5 0.3 Intercompany allocations (791) (684) 16 (1.0) (0.9) Other 11,964 11,582 3 15.9 15.5 Total operating expenses 70,419 69,844 1 93.5 % 93.5 % Operating income $ 4,885 $ 4,819 1 Operating margin 6.5 % 6.5 % — bp (1) International domestic revenue relates to our international intra-country operations. -55- The following table compares selected statistics (in thousands, except yield amounts) for the years ended May 31: 2025 2024 Percent Change Package Statistics Average daily package volume (ADV) (1) : U.S. priority 1,609 1,649 (2) U.S. deferred 1,052 1,015 4 U.S. ground commercial 4,252 4,276 (1) U.S. ground home delivery/economy 7,041 6,678 5 Total U.S. domestic ADV 13,954 13,618 2 International priority 584 667 (12) International economy 553 394 40 Total international export ADV 1,137 1,061 7 International domestic (2) 1,910 1,936 (1) Total ADV 17,001 16,615 2 Revenue per package (yield): U.S. priority $ 25.74 $ 24.98 3 U.S. deferred 18.75 18.97 (1) U.S. ground 11.81 11.76 — U.S. domestic composite 13.94 13.90 — International priority 58.89 55.36 6 International economy 41.74 46.14 (10) International export composite 50.55 51.94 (3) International domestic (2) 9.26 9.40 (1) Composite package yield 15.86 15.80 — Freight Statistics Average daily freight pounds: U.S. 3,137 5,636 (44) International priority 4,651 4,444 5 International economy 11,365 11,364 — Total average daily freight pounds 19,153 21,444 (11) Revenue per pound (yield): U.S. $ 1.93 $ 1.66 16 International priority 1.96 1.94 1 International economy 0.68 0.64 6 Composite freight yield 1.20 1.18 2 Prior year statistical information has been revised to conform to the current presentation.

(1) ADV is calculated on a 5-day-per-week basis.

(2) International domestic statistics relate to our international intra-country operations. -56- Federal Express Segment Revenue Federal Express segment revenue increased 1% in 2025 primarily due to increased international economy and U.S. ground package volume and improved base yields, partially offset by lower priority package and U.S. freight volume, two fewer operating days, and unfavorable currency exchange rates.

Yield: U.S. domestic composite package yield increased slightly in 2025 due to higher base rates from our continued focus on revenue quality.

Composite freight yield increased 2% in 2025 primarily due to improved U.S. freight yield resulting from the expiration of our contract with the USPS on September 29, 2024 and an increase in international economy freight yield due to improved market strength. International export composite package yield decreased 3% in 2025 primarily due to unfavorable service mix.

Volume: International economy package volume increased 40% in 2025 primarily due to continued growth in our deferred service offerings as a result of strengthening e-commerce. U.S. ground home delivery/economy package volume increased 5% in 2025, also primarily due to strong growth in e-commerce.

U.S. deferred package volume increased 4% in 2025 primarily due to mix shift toward our deferred service offerings. International and U.S. priority package volumes decreased 12% and 2%, respectively, in 2025 primarily due to softness in the global industrial economy.

U.S. average daily freight pounds decreased 44% in 2025 primarily due to the expiration of our contract with the USPS on September 29, 2024. Federal Express Segment Operating Income Federal Express segment operating income increased 1% in 2025 primarily due to higher base yields and volume, partially offset by increased operating expenses and two fewer operating days.

The increase in operating expenses was driven by increased wage and purchased transportation rates, employee benefits, and business optimization costs, partially offset by lower fuel prices and continued benefits from DRIVE initiatives that drove a reduction in our permanent cost structure.

These initiatives included the continued structural transformation of our network, improving the efficiency of our information technology and back-office functions, optimizing operations in Europe, and increasing linehaul efficiencies. Currency exchange rates had a negative effect on revenue and a positive effect on expenses and operating income in 2025.

Purchased transportation expense increased 3% in 2025 primarily due to higher rates as well as an increase in U.S. ground volume and an increase in commercial linehaul to support international economy volume growth and network changes, partially offset by savings from our DRIVE initiatives and lower fuel prices.

Salaries and employee benefits expense increased 2% in 2025 primarily due to an increase in wage rates and an increase in retirement benefits due to changes to our defined contribution plan which increased the number of eligible employees, partially offset by savings from our DRIVE initiatives and lower variable incentive compensation.

Other operating expense increased 3% in 2025 primarily due to higher self-insurance accruals, net expenses for international regulatory and legacy FedEx Ground legal matters in 2025, and higher credit losses. Fuel expense decreased 20% in 2025 due to decreases in fuel prices and usage from lower flight hours.

Federal Express segment results in 2025 and 2024 include business optimization costs of $384 million and $251 million, respectively, associated with our plan to drive efficiency and lower our overhead and support costs.

In July 2023, Federal Express’s pilots failed to ratify the tentative successor agreement that was approved by the Air Line Pilots Association, International’s FedEx Master Executive Council in the prior month. Negotiations have continued, and the ongoing bargaining process has no effect on our operations.

For more information, see Note 1 of the accompanying consolidated financial statements. -57- FEDEX FREIGHT SEGMENT FedEx Freight LTL service offerings include priority services when speed is critical and economy services when time can be traded for savings.

The following table compares revenue, operating expenses, operating income (dollars in millions), operating margin, selected statistics, and operating expenses as a percent of revenue for the years ended May 31: Percent Change Percent of Revenue 2025 2024 2025 2024 Revenue $ 8,892 $ 9,429 (6) 100.0 % 100.0 % Operating expenses: Salaries and employee benefits 3,865 3,923 (1) 43.5 41.6 Purchased transportation 807 877 (8) 9.1 9.3 Rentals 287 280 3 3.2 3.0 Depreciation and amortization 416 404 3 4.7 4.3 Fuel 457 571 (20) 5.1 6.0 Maintenance and repairs 332 330 1 3.7 3.5 Intercompany charges 573 543 6 6.5 5.8 Other 666 680 (2) 7.5 7.2 Total operating expenses 7,403 7,608 (3) 83.3 % 80.7 % Operating income $ 1,489 $ 1,821 (18) Operating margin 16.7% 19.3% (260) bp Average daily shipments (in thousands): Priority 61.8 64.9 (5) Economy 28.3 29.1 (3) Total average daily shipments 90.1 94.0 (4) Weight per shipment (pounds): Priority 941 977 (4) Economy 873 878 (1) Composite weight per shipment 920 946 (3) Revenue per shipment: Priority $ 358.84 $ 361.38 (1) Economy 405.53 411.25 (1) Composite revenue per shipment $ 373.52 $ 376.81 (1) Revenue per hundredweight: Priority $ 38.13 $ 36.98 3 Economy 46.46 46.86 (1) Composite revenue per hundredweight $ 40.61 $ 39.82 2 FedEx Freight Segment Revenue FedEx Freight segment revenue decreased 6% in 2025 primarily due to lower shipments and yields.

Revenue was also negatively impacted by two fewer operating days in 2025. Average daily shipments decreased 4% in 2025 due to reduced demand for our services, primarily resulting from weakness in the industrial economy.

Revenue per shipment decreased 1% in 2025 primarily due to lower fuel surcharges and weight per shipment, partially offset by base yield improvement from our continued focus on revenue quality. FedEx Freight Segment Operating Income FedEx Freight segment operating income decreased 18% in 2025 due to decreased revenue, partially offset by reduced operating expenses.

Operating income was also negatively impacted by two fewer operating days in 2025. Fuel and purchased transportation expense decreased 20% and 8%, respectively, in 2025 due to decreased shipments and lower fuel prices.

Salaries and employee benefits expense decreased 1% in 2025 primarily due to lower staffing to align with decreased shipments and lower variable incentive compensation, partially offset by higher wage rates. -58- FINANCIAL CONDITION LIQUIDITY Cash and cash equivalents totaled $5.5 billion at May 31, 2025, compared to $6.5 billion at May 31, 2024.

The following table provides a summary of our cash flows for the years ended May 31 (in millions): 2025 2024 Operating activities: Net income $ 4,092 $ 4,331 Retirement plans mark-to-market adjustments (515) (561) Asset impairment charges 21 157 Business optimization costs, net of payments 43 26 Other noncash charges and credits 8,095 7,790 Changes in assets and liabilities (4,700) (3,431) Cash provided by operating activities 7,036 8,312 Investing activities: Capital expenditures (4,055) (5,176) Purchase of investments (262) (176) Proceeds from sale of investments 110 38 Proceeds from asset dispositions and other investments 115 114 Cash used in investing activities (4,092) (5,200) Financing activities: Principal payments on debt (157) (147) Proceeds from stock issuances 524 491 Dividends paid (1,339) (1,259) Purchase of common stock (3,017) (2,500) Other, net (30) (11) Cash used in financing activities (4,019) (3,426) Effect of exchange rate changes on cash 76 (41) Net decrease in cash and cash equivalents $ (999) $ (355) Cash and cash equivalents at end of period $ 5,502 $ 6,501 Cash Provided by Operating Activities.

Cash flows from operating activities decreased $1.3 billion in 2025 primarily due to working capital changes driven by an increase in accounts receivable and a decrease in accrued incentive compensation, partially offset by an increase in accounts payable from 2024. Cash Used in Investing Activities .

Capital expenditures decreased i n 2025 primaril y due to decreased spending on aircraft and related equipment, facilities and other, vehicles and trailers, and information and technology investments. See “Capital Resources” below for a more detailed discussion of capital expenditures during 2025. Financing Activities .

We repurchased an aggregate of $3.0 billion, or 10.9 million shares, of our common stock in 2025 through ASR and open market transactions. During 2024, we repurchased an aggregate of $2.5 billion, or 9.8 million shares, of our common stock through ASR transactions.

Item 1C. Cybersecurity ” of this Annual Report.

FedEx Freight Segment FedEx Freight Overview FedEx Freight is a leading North American provider of LTL freight services, offering choice, simplicity, and reliability to meet the needs of LTL shippers — FedEx Freight Priority, when speed is critical to meet a customer’s supply chain needs; FedEx Freight Economy, when a customer can trade time for cost savings; and FedEx Freight Direct, a service to meet the needs of the growing e-commerce market for delivery of big and bulky products to or through the door for residences and businesses.

Through one comprehensive network of service centers and advanced information systems, FedEx Freight provides service to virtually every U.S. ZIP Code (including Alaska and Hawaii) with industry-leading transit times. FedEx Freight Priority has the fastest published transit times of any nationwide LTL service.

FedEx Freight Priority Plus adds even more speed to time-sensitive shipments even if the shipment is in transit, offering the fastest delivery option available through FedEx Freight with early-morning, after-hours, and Saturday delivery available. FedEx Freight also offers additional services to meet specific customer needs.

Volume Services offers -8- three different service options that allow customers to balance their budget and delivery timeline for larger LTL shipments — Truckload Exempt (TLX), Truckload Service (TLS), and Exclusive Use (EXCL).

Retail Flex is available for delivery to major retailers with key benefits that go beyond standard LTL services, ensuring on-time deliveries to avoid late fees and providing accountability for handling units to reduce incomplete shipments and chargebacks.

Internationally, FedEx Freight Canada offers FedEx Freight Priority service, serving most points in Canada, as well as FedEx Freight Priority and FedEx Freight Economy service between the U.S. and Canada. Additionally, FedEx Freight A.M. Delivery offers freight delivery by 10:30 a.m. within and between the U.S. and Canada.

FedEx Freight Direct, FedEx Freight Priority Plus and FedEx Freight Volume Services are available within and between Canada and the U.S. FedEx Freight Mexico offers FedEx Freight Priority to deliver cross-border and intra-Mexico LTL shipments door-to-door.

Customers receive support from the FedEx Freight International Services team to monitor LTL freight shipments, review customer paperwork, and follow up to avoid shipping delays when shipments are crossing borders. In addition to North America, FedEx Freight offers service to, from, and within Puerto Rico and to the U.S. Virgin Islands via alliances.

Through its many service offerings, FedEx Freight can match customers’ time-critical needs with industry-leading transit times. FedEx Automation solutions make freight shipping easier and provide customers easy access to their account information.

Customers can also process domestic and cross-border LTL shipments to and from Canada and Mexico, as well as intra-Canada and -Mexico shipments, through FedEx Ship Manager at fedex.com, FedEx Ship Manager Software, FedEx Web Services, FedEx API, FedEx Compatible, and LTL Select.

LTL Select is a free cloud-based, multi-carrier transportation management system that provides customers with visibility into all available carriers and their pricing in one location, as well as the ability to book service and make payments.

FedEx Freight uses radio frequency identification technology and customized software to improve shipment visibility on its docks and enhance custodial control at the handling unit level. FedEx Freight Direct has four delivery service levels to meet customer needs, with basic and basic by appointment to-the-door services and standard through-the-door service available to nearly 100% of the U.S. population.

Premium through-the-door service with packaging removal is available to 90% of the U.S. population. The services include flexible delivery windows, end-to-end visibility, proactive notifications, and returns services with flexible pickup windows and label-less options.

As of May 31, 2025, the FedEx Freight segment was operating nearly 30,000 motorized vehicles from a network of approximately 355 service centers and had approximately 40,000 employees, none of whom are unionized. John A. Smith is the President of FedEx Freight, which is based in Memphis, Tennessee.

FedEx Freight’s primary competitors are XPO, Inc., Old Dominion Freight Line, Inc., ABF Freight (an ArcBest company), SAIA, Inc., and TFI International Inc. In December 2024, we announced that FedEx’s Board of Directors decided to pursue a full separation of FedEx Freight through 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. See “ Item 1A.

Risk Factors — Strategic Risks — The planned spin-off of FedEx Freight may not be completed on the terms or timeline currently contemplated, if at all, and there is no guarantee that the spin-off, if completed, will achieve the intended financial and strategic benefits.” for more information.

Pricing FedEx Freight periodically publishes updates to the list prices for the majority of its services in its 100 Rules Tariff. In general, shipping rates are based on the service selected, origin, destination, weight, class, any ancillary service charge, and whether the customer charged the shipment to a FedEx account.

On January 6, 2025, FedEx Freight implemented a 5.9% average list price increase for customers who use FXF PZONE and FXF EZONE rates and a 6.9% average list price increase for customers who use FXF 1000 and FXF 501. These increases apply for shipments within the U.S. and between the contiguous U.S. and Canada.

FedEx Freight implements and adjusts demand surcharges from time-to-time based on assessments of shipment volume and capacity in our network. Beginning in July 2021, FedEx Freight implemented a demand surcharge applying to specific delivery points within the U.S. The demand surcharge has been adjusted periodically since implementation. Effective November 15, 2021, FedEx Freight increased applicable length surcharges.

Effective January 17, 2022, FedEx Freight added a surcharge that applies when a pickup is performed and no shipment is tendered to the carrier. Effective January 16, 2023, FedEx Freight changed the extreme length surcharge to a tier-based length structure.

The company continues to explore ways to modernize freight pricing including through dimension-in-motion technology, which more accurately captures freight profile and improves its ability to cost and price shipments. FedEx Freight has an indexed fuel surcharge, which is adjusted on a weekly basis.

The fuel surcharge is based on a weekly fuel price from two days prior to the day in which it is assessed. Effective August 26, 2024, and June 9, 2025, the tables used to determine fuel surcharges at FedEx Freight were updated. See the “Results of Operations and Outlook — Consolidated Results — Fuel” section of “ Item 7.

Management’s Discussion and Analysis of Results of Operations and Financial Condition ” for more information. -9- FedEx Custom Critical FedEx Custom Critical provides a range of expedited, time-specific freight-shipping services throughout the U.S., Canada, and Mexico.

Among its services are Surface Expedite, providing exclusive-use shipping and time-definite services; Air Expedite, offering an array of expedited air solutions to meet customers’ critical delivery times; and White Glove Services, for shipments that require extra care in handling, temperature control, or specialized security. Service from FedEx Custom Critical is available 24 hours a day, 365 days a year.

FedEx Custom Critical continuously monitors shipments through an integrated proprietary shipment-control system, including two-way satellite communications on exclusive-use shipments.

FedEx Dataworks Operating Segment The FedEx Dataworks operating segment is focused on putting our data into context and using it to enhance the efficiency of the FedEx network and our customers’ supply chains, as well as the end-to-end experience of our customers.

The size and scale of our global network gives us a bird’s-eye view of global supply chains and trends and provides an immense amount of data. As the digital twin of our physical network and a key enabler of our DRIVE transformation, FedEx Dataworks leverages this information to allow us to work differently through a more technology-enabled, data-driven approach.

See “Federal Express Segment — Operations” above for information regarding how FedEx Dataworks is enabling the transformation of our physical network. FedEx Dataworks is working to centralize data onto a single enterprise platform.

By adopting this single platform — where machine learning models are reusable and self-learning — we are able to solve problems and deliver value to stakeholders at speed, scale, and with the right economics.

This enterprise data platform serves as the foundation for our data science and machine learning practice and houses a common set of models and insights that can be reused across different use cases. Focusing on design principles that embrace simplification, our teams are working to enhance efficiencies and value across our operational portfolio. FedEx Dataworks is based in Memphis, Tennessee.

As of May 31, 2025, FedEx Dataworks had approximately 700 employees. FedEx Dataworks is an operating segment that is included in “Corporate, other, and eliminations” in our segment reporting.

FedEx Office Operating Segment As of May 31, 2025, FedEx Office operated approximately 2,000 customer-facing stores and manages the relationship and strategy for all on-site, owned, and third-party retail channel locations, providing convenient access to shipping expertise with reliable service.

The FedEx Office brick-and-mortar network features retail stores, FedEx Office locations inside Walmart stores, manufacturing plants, and on-site business centers at colleges and universities, hotels, convention centers, corporate campuses, and healthcare campuses. Many of these locations are open later in the evenings to accommodate urgent printing projects and delivery drop-offs.

FedEx Office has designed a suite of printing and shipping management solutions that are flexible and scalable, allowing customers to meet their unique printing and shipping needs. The network provides an adaptable cost model helping to save time, labor, and overhead by freeing up resources and avoiding fixed costs associated with large-scale printing and e-commerce parcel volumes.

This is especially valuable to our enterprise customers looking to outsource their print supply chain.

Services include digital printing, professional finishing, document creation, design solutions, direct mail, signs and graphics, custom-branded boxes, copying, computer rental, free Wi-Fi, corporate print solutions, shredding, expedited U.S. passport processing and renewal through a collaboration with a registered U.S. passport agency, and fully digital notarization services through FedEx Office Online Notary.

With the FedEx Office Print On Demand solution, customers can use their laptops or mobile devices to design their print needs or access their personal cloud accounts, and print directly to any FedEx Office location in the U.S., or have their order delivered right to their door.

Item 2. Properties ” of this Annual Report under the caption “Federal Express Segment” and Note 1 5 of the accompanying consolidated financial statements.

Facilities We work to support the long-term health and well-being of our business, the planet, and the communities in which we operate through the sustainable operations of our more than 5,000 air and ground hubs, local stations, freight service centers, and retail locations.

Our transition to one FedEx and implementation of Network 2.0 will support our sustainability efforts through the minimization of operational redundancies and reduction in our overall physical footprint. As we support electric vehicle deployment and charging infrastructure, our energy demand will increase.

In response to this challenge, we invest in both on- and off-site renewable energy generation and procurement of renewable energy. Given the complexity of grid systems, different real estate models, utility markets, and a varied regulatory landscape, the viability of on-site renewable energy differs by facility.

The pace of these investments is designed to grow in the coming years to address our increased electricity demands. We have set new mid-term renewable energy goals through calendar 2033 as we advance to our goal of having all electricity used at our facilities from renewable sources by calendar 2040.

Our approach to innovating operations involves continued investments in energy efficiency and management, renewable energy procurement, facility resiliency, environmental compliance and waste reduction, among other initiatives. For new facilities, we integrate energy efficiency specifications and explore on-site renewable energy generation options into the design.

We are committed to embedding resiliency in our operations as the physical risks of climate change increase, causing extreme weather events, strain on electricity grids, and higher energy costs. We invest in infrastructure reinforcement to meet growing electricity demand and evolving renewable generation standards, in addition to mitigating the potential for storm damage.

We also continuously enhance our contingency planning to address the impacts of severe weather more quickly. We strive to reduce the waste we generate and recycle waste when possible. We challenge our individual team members to find new ways to improve efficiencies and equip them with Quality Driven Management (“QDM”) tools to assist in identifying waste.

QDM tools are designed to drive continuous improvement and, in many cases, successful ideas become integrated across our networks. Sustainable Customer Solutions We recognize that transporting goods for our customers can lead to environmental impacts through emissions and waste generation. We embed circularity principles into our package design to minimize our environmental impact while protecting shipments from damage and loss.

Our more sustainable packaging choices, such as the resealable Reusable Padded Pak, give our customers more choice to reduce waste associated with their shipping and returns. To help us source our packaging materials responsibly, we seek relevant third-party certifications and review these certifications bi-annually. In calendar 2024, 74% of FedEx packaging materials were from third-party certified sources.

The FedEx Sourcing team also conducts annual reviews of our critical supplier’s environmental management practices and sustainability programs, including recommending improvement areas.

Our FedEx ® Sustainability Insights (“FSI”) tool gives our customers and suppliers access to estimated CO 2 e emissions data associated with their FedEx shipments, from the individual package to account levels, enabling them to understand their environmental impact and drive informed supply chain decisions.

This tool enables greater transparency for customers to inform their emissions reporting, understand their carbon footprint, and make informed decisions about their shipping patterns. Additionally, U.S.-based customers can forecast future emissions through predictive modeling capabilities. FSI is third-party verified to adhere to the GHG Protocol and Global Logistics Emissions Council framework.

Launched globally in 2024, FedEx ® Sustainability Insights is currently translated into more than 30 languages and available in over 100 markets. Since July 2023, over 13,000 customers have generated emissions reports from the tool.

Providing our customers with this level of information empowers them to gain a better understanding of their Scope 3 emissions generated from their shipping activities with us and to plan ahead for future improvements. For additional information on the ways we are minimizing our impact on the environment, see fedex.com/en-us/sustainability.html .

For additional information regarding environmental, climate, and weather-related regulation and risks, see “Regulation” above and “ Item 1 A. Risk Factors ” under “Environmental, Climate, and Weather Risks.” Governance The FedEx Board of Directors is comprised of a majority of independent directors and is committed to the highest quality corporate governance and accountability to stockholders.

Our Board of Directors periodically reviews all aspects of our governance policies and practices, including our Corporate Governance Guidelines (the “Guidelines”) and our Code of Conduct, in light of best practices and makes whatever changes it deems appropriate to further our longstanding commitment to the highest standards of corporate governance.

The Guidelines and the Code of Conduct, which apply to all of our directors, officers, and employees, including our principal executive officer and senior financial officers, are available under the Corporate Governance heading under “Governance” -20- on the Investor Relations page of our website at investors.fedex.com.

We will post under the Corporate Governance heading on the Investor Relations page of our website information regarding any amendment to, or waiver from, the provisions of the Code of Conduct to the extent such disclosure is required. ITEM 1A.

RISK FACTORS In addition to the other information set forth in this Annual Report, you should carefully consider the following factors, which could materially affect our business, results of operations, financial condition, and the price of our common stock.

Additional risks not currently known to us or that we currently deem to be immaterial also may materially affect our business, results of operations, financial condition, and the price of our common stock. Although the risks below are organized by headings and each risk is discussed separately, many are interrelated.

Macroeconomic and Market Risks We are directly affected by the state of the global economy and geopolitical developments. While macroeconomic risks apply to most companies, we are particularly vulnerable. The transportation industry is highly cyclical and especially susceptible to trends in economic activity.

Our primary business is to transport goods, so our business levels are directly tied to the purchase and production of goods and the rate of global trade growth — key macroeconomic measurements influenced by, among other things: inflation and deflation; international trade policies and relations; supply chain disruptions; interest rates and currency exchange rates; labor costs and unemployment levels; fuel and energy prices; inventory levels; spending patterns (including shifts from goods to services and vice versa); disposable income; debt levels; credit availability; political uncertainty; public health crises; and geopolitical tensions or conflicts.

When individuals and companies purchase and produce fewer goods, we transport fewer goods, and as companies move manufacturing closer to consumer markets and expand the number of distribution centers, we transport goods shorter distances, which adversely affects our yields and results of operations.

Certain manufacturers and retailers are making investments to produce and store goods in closer proximity to supply chains and consumers. Additionally, in 2025, we continued to see customer preference for slower, less costly shipping services and experienced lower fuel surcharges at FedEx Freight and reduced demand surcharges at Federal Express.

We expect service mix to shift further toward deferred service offerings in 2026. Further, the scale of our operations and our relatively high fixed-cost structure, particularly with respect to our air network, make it difficult to quickly adjust to match shifting volume levels.

For more information, see “Our businesses are capital intensive, and we must make capital decisions based upon projected volume levels.” below. The decline in U.S. imports of consumer goods that started in late 2022, along with slowed global industrial production, has contributed to continued weakened business conditions for the transportation industry, leading to lower freight and package volumes.

Additionally, recent changes in U.S. and international trade policy, along with continued uncertainty surrounding such policies, could lead to further weakened business conditions for the transportation industry. We also continue to experience pressure on demand for our transportation services, particularly our priority services, from the impact of elevated inflation and interest rates on consumer and business spending.

See “ Item 7. Management’s Discussion and Analysis of Results of Operations and Financial Condition ” of this Annual Report for more information.

Moreover, given the nature of our business and our global operations, political, economic, and other conditions in foreign countries and regions, including international taxes, government-to-government relations, the typically more volatile economies of emerging markets, and geopolitical risks such as the ongoing conflicts between Russia and Ukraine and in the Middle East or escalations thereof, may adversely affect our business and results of operations.

For example, services in Ukraine remain limited, services in Belarus remain suspended, and we have exited our operations in Russia.

While these conflicts have not had, and we do not expect these conflicts to have, a direct material effect on our business or results of operations, the broader consequences of these conflicts, which may include further sanctions, embargoes, regional instability, and geopolitical shifts; airspace bans relating to certain routes, or strategic decisions to alter certain routes; potential retaliatory action by foreign governments and other groups against us; increased tensions between the United States and countries in which we operate; and the extent of the conflict’s effect on our business and results of operations as well as the global economy, cannot be predicted.

Geopolitical uncertainty negatively affected our results of operations in recent years.

To the extent the continued conflicts between Russia and Ukraine and in the Middle East, or subsequent similar conflicts, adversely affect our business, they may also have the effect of heightening many other risks disclosed in this Annual Report, any of which could materially and adversely affect our business and results of operations.

Such risks include, but are not limited to, disruptions to our global technology infrastructure, including through cyberattack or cyber-intrusion, ransomware attack, or malware attack; adverse changes in international trade policies; increased costs and unavailability of fuel; our ability to implement and execute our business strategy, particularly with regard to our international business; disruptions in global supply chains, which can limit the access of FedEx and our service providers to vehicles and other key capital resources and increase our costs and could affect our ability to achieve our goal of carbon neutrality for our global operations by calendar 2040; our ability to maintain our strong reputation and the value of the FedEx brand; terrorist activities targeting transportation infrastructure; our exposure to foreign currency fluctuations; and constraints, volatility, or disruption in the capital markets. -21- Additional changes in international trade policies, including with respect to tariffs, and relations could significantly reduce the volume of goods transported globally, increase our costs, and materially and adversely affect our business, results of operations, cash flows, and financial condition.

The U.S. government has taken certain actions that have negatively affected U.S. trade, including imposing tariffs on many goods imported into the United States. Additionally, many foreign governments have imposed, and others have threatened to impose, tariffs on certain goods imported from the United States.

These actions have contributed to weakness in the global economy that has adversely affected our results of operations. Increased tariffs may lead to lower levels of trade or heightened political tensions.

Additional changes to global trade policies could lead to increased tariffs, export controls, quotas, embargoes, or sanctions, which may lead to increased prices or trade limitations for goods transported globally, potentially reducing customer demand for our services. See “ Item 7. Management’s Discussion and Analysis of Results of Operations and Financial Condition ” of this Annual Report for more information.

Additionally, the U.S. government has taken action to limit the ability of domestic companies to engage in commerce with certain foreign entities under certain circumstances, and foreign governments may investigate our compliance with these restrictions.

Furthermore, given the nature of our business and our global recognizability, foreign governments may target FedEx by limiting the ability of foreign entities to do business with us in certain instances, imposing monetary or other penalties or taking other retaliatory action, which could have an adverse effect on our business, results of operations, and financial condition, as well as on the price of our common stock.

Our transportation businesses and their profitability are affected by the price and availability of jet and vehicle fuel, as well as our ability to collect fuel surcharges. We must purchase large quantities of fuel to operate our aircraft and vehicles, and the price and availability of fuel is beyond our control and can be highly volatile.

In addition, our purchased transportation expense is affected by fuel costs. To date, we have been mostly successful in mitigating over time the expense effect of higher fuel costs through our indexed fuel surcharges, as the amount of the surcharges is closely linked to the market prices for fuel.

If we are unable to maintain or increase our fuel surcharges because of competitive pricing pressures or some other reason, fuel costs could adversely affect our operating results. Lower fuel prices have negatively affected yields through lower fuel surcharges at each of our transportation segments in recent years. See “ Item 7.

Management’s Discussion and Analysis of Results of Operations and Financial Condition ” of this Annual Report for more information. As of May 31, 2025, we had no derivative financial instruments to reduce our exposure to fuel price fluctuations, and we currently have no plans to use derivative financial instruments for this purpose in the future.

Even if we are able to offset the cost of fuel with our surcharges, high fuel surcharges could move our customers away from our higher-yielding express services to our lower-yielding deferred or ground services or even reduce customer demand for our services altogether.

In addition, disruptions in the supply of fuel could have a negative effect on our ability to operate our transportation networks.

The following factors may affect fuel supply and could result in shortages and price increases in the future: weather-related events; natural disasters; political disruptions or wars involving oil-producing countries; economic sanctions imposed against oil-producing countries or specific industry participants; changes in governmental policy concerning fuel production, transportation, taxes, or marketing; changes in refining capacity; sustainability concerns; cyberattacks; and public and investor sentiment.

Operating Risks The failure to successfully execute our DRIVE transformation, including Network 2.0 and Tricolor, in the expected time frame and at the expected cost may adversely affect our future results. In 2023, FedEx announced DRIVE, a comprehensive program to improve long-term profitability.

The program includes Network 2.0, the multi-year effort to improve the efficiency with which FedEx picks up, transports, and delivers packages in the U.S. and Canada, as well as Tricolor, the redesign of the Federal Express international air network to improve efficiency and asset utilization. See “ Item 1. Business ” and “

Adams Executive Vice President, General Counsel and Secretary 66 Executive Vice President, General Counsel and Secretary of FedEx since September 24, 2024; Executive Vice President and General Counsel–Elect of FedEx from September 1, 2024 through September 23, 2024; Corporate Vice President, Government & Regulatory Affairs of FedEx from 2019 through August 2024; Corporate Vice President, Government Affairs of FedEx from 2001 to 2019; Staff Vice President, International Government Affairs of FedEx from 1999 to 2001; and various government and regulatory affairs positions with FedEx and Federal Express from 1992 to 1999.

Prior to that, Ms. Adams worked in the Office of the General Counsel of the U.S. Department of Transportation for nine years. Ms. Adams serves as a director of Entergy Corporation, an integrated energy company. Tracy B.

Mr. Smith has been selected to serve as President and Chief Executive Officer of the new publicly traded company to be created upon the separation of FedEx Freight. Richard W.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES FedEx’s common stock is listed on the New York Stock Exchange under the symbol “FDX.” As of July 17, 2025, there were 11,538 holders of record of our common stock.

We expect to continue to pay regular quarterly cash dividends, though each quarterly dividend payment is subject to review and approval by our Board of Directors. We evaluate our dividend payment amount on an annual basis.

There are no material restrictions on our ability to declare dividends, nor are there any material restrictions on the ability of our subsidiaries to transfer funds to us in the form of cash dividends, loans, or advances. Unregistered Sales of Equity Securities In February 2025, we acquired RouteSmart Technologies, Inc.

(“RouteSmart”), a global leader in route planning and optimization solutions, and the consideration paid to certain former stockholders of RouteSmart consisted in part of 359,052 unregistered shares of our common stock valued at approximately $90 million as of the acquisition date.

In May 2025, in connection with pre-closing period financial statement adjustments, we issued another 1,510 unregistered shares of our common stock valued at less than $500,000 to the former RouteSmart stockholders pursuant to the terms of the acquisition agreement. The foregoing transactions did not involve any underwriters or underwriting discounts or commissions.

The shares of our common stock were issued in reliance upon the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended, in a privately negotiated transaction not involving any public offerings or solicitations. See Note 4 of the accompanying audited consolidated financial statements for additional information regarding the RouteSmart acquisition.

Issuer Purchases of Equity Securities In March 2024, our Board of Directors authorized the repurchase of up to $5.0 billion of FedEx common stock. As part of this program, we repurchased 2.1 million shares for $500 million in the open market during the fourth quarter of 2025.

In fiscal 2026 we have completed $500 million of share repurchases through open market transactions through July 21, 2025 and expect to continue repurchasing additional shares of our common stock subject to market conditions, our liquidity needs, and other factors. As of July 21, 2025, approximately $1.6 billion remained available to be used for repurchases under the program.

Shares under the program may be repurchased from time to time in the open market or in privately negotiated transactions. No time limits were set for completion of the program; however, we may decide to suspend or discontinue the program.

The following table provides additional information on our repurchases of our common stock during the fourth quarter of 2025: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Programs Approximate Dollar Value of Shares That May Yet Be Purchased Under the Programs ($ in millions) Mar. 1-31, 2025 1,775,000 $ 242.43 1,775,000 $ 2,134 Apr. 1-30, 2025 287,186 $ 242.78 287,186 $ 2,064 May 1-31, 2025 — $ — — $ 2,064 Total 2,062,186 2,062,186 $ 2,064 See “ Item 7.

Management’s Discussion and Analysis of Results of Operations and Financial Condition ” and Note 1 of the consolidated financial statements included in “ Item 8.

Financial Statements and Supplementary Data ” of this Annual Report for additional information regarding our stock repurchases during 2025 and expected stock repurchases during 2026. -42- Common Stock Performance Graph: The following performance graph and related information shall not be deemed “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or Securities Exchange Act of 1934, each as amended, except to the extent that we specifically incorporate such information by reference into such filing.

The following graph compares the cumulative total shareholder return on our common stock for the periods indicated with the Standard & Poor's ("S&P") 500 index and the Dow Jones Transportation Average index.

May 31, 2020 2021 2022 2023 2024 2025 FedEx Corporation $ 100.00 $ 244.20 $ 176.29 $ 175.00 $ 208.06 $ 182.43 S&P 500 Index $ 100.00 $ 140.25 $ 139.83 $ 143.91 $ 184.48 $ 209.42 Dow Jones Transportation Average Index $ 100.00 $ 178.01 $ 163.66 $ 159.29 $ 179.75 $ 176.03 (1) Assumes $100 invested in FedEx common stock and in each index on May 31, 2020 and that all dividends are reinvested.

ITEM 6. [RESERVED] ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION ORGANIZATION OF INFORMATION This Management’s Discussion and Analysis of Results of Operations and Financial Condition (“MD&A”) of FedEx Corporation (“FedEx”) is composed of three major sections: Results of Operations and Outlook, Financial Condition, and Critical Accounting Estimates.

These sections include the following information: • Results of operations includes an overview of our consolidated 2025 results compared to 2024 results. This section also includes a discussion of key actions and events that impacted our results. Discussion and analysis of 2023 results and year-over-year comparisons between 2024 results and 2023 results can be found in “Item 7.

Management’s Discussion and Analysis of Results of Operations and Financial Condition” of our Annual Report on Form 10-K (“Annual Report”) for the year ended May 31, 2024. -43- • The overview is followed by a discussion of both historical operating results for our business segments during 2025 and 2024 and our outlook for 2026, as well as a financial summary and analysis for each of our transportation segments in place during 2025 and 2024. • Our financial condition is reviewed through an analysis of key elements of our liquidity and capital resources, financial commitments, and liquidity outlook for 2026. • Critical accounting estimates discusses those financial statement elements that we believe are most important to understanding the material judgments and assumptions incorporated in our financial results.

The discussion in MD&A should be read in conjunction with the other sections of this Annual Report, particularly “ Item 1. Business ,” “ Item 1A. Risk Factors ,” and “ Item 8.

Financial Statements and Supplementary Data .” DESCRIPTION OF BUSINESS SEGMENTS We provide a broad portfolio of transportation, e-commerce, and business services, offering integrated business solutions utilizing our flexible, efficient, and intelligent global network.

Our primary operating companies are Federal Express Corporation (“Federal Express”), the world’s largest express transportation company and a leading North American provider of small-package ground delivery services, and FedEx Freight, Inc. (“FedEx Freight”), a leading North American provider of less-than-truckload (“LTL”) freight transportation services.

In connection with our one FedEx consolidation plan, 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. See “Reportable Segments” below and “ Item 1. Business ” for additional information.

In December 2024, we announced that FedEx’s Board of Directors decided to pursue a full separation of FedEx Freight through 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. See Item 1A.

“Risk Factors – The planned spin-off of FedEx Freight may not be completed on the terms or timeline currently contemplated, if at all, and there is no guarantee that the spin-off, if completed, will achieve the intended financial and strategic benefits. ” 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. References to our transportation segments include, collectively, the Federal Express segment and the FedEx Freight segment.

The key indicators necessary to understand our operating results include: • the overall customer demand for our various services based on macroeconomic factors and the global economy; • the volumes of transportation services provided through our networks, primarily measured by our average daily volume and shipment weight and size; • the mix of services purchased by our customers; • the prices we obtain for our services, primarily measured by yield (revenue per package or pound or revenue per shipment or hundredweight for LTL freight shipments); • our ability to manage our cost structure (capital expenditures and operating expenses) to match shifting volume levels; and • the timing and amount of fluctuations in fuel prices and our ability to recover incremental fuel costs through our fuel surcharges.

Trends Affecting Our Business The following trends significantly affect the indicators discussed above, as well as our business and operating results. See the risk factors identified under Item 1A. “Risk Factors” for more information.

Additionally, see “Results of Operations and Outlook – Consolidated Results – Business Optimization Costs and – Outlook” and “Financial Condition – Liquidity Outlook” below for additional information on efforts we are taking to mitigate adverse trends. -44- Macroeconomic Conditions While macroeconomic risks apply to most companies, we are particularly vulnerable.

The transportation industry is highly cyclical and especially susceptible to trends in economic activity. Our primary business is to transport goods, so our business levels are directly tied to the purchase and production of goods and the rate of global trade growth.

The decline in U.S. imports of consumer goods that started in late 2022, along with slowed global industrial production, has contributed to weakened business conditions for the transportation industry. Consequently, this environment has led to lower shipments at FedEx Freight, negatively affecting our results in 2025.

In the latter half of 2025, the U.S. government began the process of significantly increasing the rates and broadening the scope of tariffs imposed on goods imported into the United States. In response, several foreign governments imposed new tariffs on certain goods imported from the United States, and additional U.S. and retaliatory measures are possible in 2026.

Additional changes to global trade policies could lead to increased tariffs, export controls, quotas, embargoes, or sanctions, which may lead to increased prices or trade limitations for goods transported globally, potentially reducing customer demand for our services. Inflation and Interest Rates During 2025, global inflation decelerated year-over-year but continues to be above historical levels.

Additionally, global interest rates remained elevated in an effort to curb inflation. We are experiencing pressure on demand for our transportation services, particularly our priority services, as elevated inflation and interest rates are negatively affecting consumer and business spending. We expect inflation and high interest rates to continue to negatively affect our results in 2026.

Fuel We must purchase large quantities of fuel to operate our aircraft and vehicles, and the price and availability of fuel is beyond our control and can be highly volatile.

The timing and amount of fluctuations in fuel prices and our ability to recover incremental fuel costs through our fuel surcharges can significantly affect our operating results either positively or negatively in the short term. Lower fuel prices negatively affected yields through lower fuel surcharges at FedEx Freight and reduced fuel expense at both of our transportation segments during 2025.

Geopolitical Conflicts Given the nature of our business and our global operations, geopolitical conflicts may adversely affect our business and results of operations.

While we do not expect ongoing geopolitical conflicts between Russia and Ukraine and in the Middle East, or escalations thereof, to have a direct material impact on our business or results of operations, the broader consequences are adversely affecting the global economy and may also have the effect of heightening other risks disclosed under Item 1A.

“Risk Factors. ” RESULTS OF OPERATIONS AND OUTLOOK Many of our operating expenses are directly affected by revenue and volume levels, and we expect these operating expenses to fluctuate on a year-over-year basis consistent with changes in revenue and volumes.

Therefore, the discussion of operating expense captions focuses on the key drivers and trends affecting expenses other than those factors strictly related to changes in revenue and volumes. The line item “Other” includes costs associated with outside service contracts (such as information technology services, temporary labor, facility services, and security), insurance, professional fees, and operational supplies.

Except as otherwise specified, references to years indicate our fiscal year ended May 31, 2025 or ended May 31 of the year referenced, and comparisons are to the corresponding period of the prior year. -45- CONSOLIDATED RESULTS The following table compares summary operating results (dollars in millions, except per share amounts) for the years ended May 31: 2025⁽¹⁾ 2024⁽¹⁾ Percent Change Consolidated revenue $ 87,926 $ 87,693 — Operating income (loss): Federal Express segment 4,885 4,819 1 FedEx Freight segment 1,489 1,821 (18) Corporate, other, and eliminations (1,157) (1,081) 7 Consolidated operating income 5,217 5,559 (6) Operating margin: Federal Express segment 6.5 % 6.5 % — bp FedEx Freight segment 16.7 % 19.3 % (260) bp Consolidated operating margin 5.9 % 6.3 % (40) bp Consolidated net income $ 4,092 $ 4,331 (6) Diluted earnings per share $ 16.81 $ 17.21 (2) The following table shows changes in revenue and operating results by reportable segment for 2025 compared to 2024 (in millions): Year-over-Year Changes Revenue Operating Results (1) Federal Express segment $ 641 $ 66 FedEx Freight segment (537) (332) Corporate, other, and eliminations 129 (76) $ 233 $ (342) (1) The following is a summary of the effects of the (costs) benefits of certain items affecting our financial results for the years ended May 31 (in millions): 2025 2024 Items affecting Operating Income: Business optimization costs $ (756) $ (582) Asset impairment charges (21) (157) International regulatory and legacy FedEx Ground legal matters (88) 57 FedEx Freight spin-off costs (38) — $ (903) $ (682) Items affecting Net Income: Mark-to-market (“MTM”) retirement plans accounting adjustments, net of tax $ 390 $ 426 FedEx Freight spin-off costs, net of tax (44) — Remeasurement of state deferred income taxes under one FedEx structure — (54) $ 346 $ 372 Overview Operating income declined in 2025 primarily due to lower shipments and fuel surcharges at FedEx Freight, a continued mix shift toward deferred package services which constrained yield growth, and the expiration of our contract with the U.S.

Postal Service ("USPS"). In addition, operating results for 2025 were negatively affected by increased purchased transportation and wage rates and two fewer operating days at both of our transportation segments. Partially offsetting these pressures were continued savings related to DRIVE and higher demand for international economy and U.S. ground package services.

Our DRIVE initiatives for 2025 included the continued structural transformation of our network, improving -46- the efficiency of our information technology and back-office functions, optimizing operations in Europe, and increasing linehaul efficiencies.

Operating income in 2025 and 2024 includ es $756 million ($577 million, net of tax, or $2.37 per diluted share) and $582 million ( $444 million , net of tax, or $1.77 per diluted share), respectively, of ex penses associated with our DRIVE business optimization strategy to drive efficiency and lower our overhead and support costs.

See the “Business Optimization Costs” section of this MD&A for more information.

Operating income in 2025 and 2024 includes $21 million ($16 million, net of tax, or $0.06 per diluted share) and $157 million ( $120 million , net of tax, or $0.48 per diluted share), respectively, of asset impairment charges associated with the decision to permanently retire certain aircraft and related engines at Federal Express.

See the “Asset Impairment Charges” section of this MD&A for more information. Operating income in 2025 includes $88 million of net expenses ($90 million, net of tax, or $0.37 per diluted share) for international regulatory and legacy FedEx Ground legal matters included in Federal Express.

Operating income in 2024 includes a $57 million benefit ($44 million, net of tax, or $0.17 per diluted share) for insurance recoveries in connection with a separate legacy FedEx Ground legal matter included in "Corporate, other, and eliminations." 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 in other operating expenses and $18 million related to the debt exchange offer and consent solicitation transactions discussed in Note 7 of the accompanying financial statements included in other, net.

We did not incur any FedEx Freight spin-off costs in 2024. Net income includes a pre-tax, noncash gain of $515 million in 2025 ($390 million, net of tax, or $1.60 per diluted share) and a gain of $561 million in 2024 ($426 million, net of tax, or $1.69 per diluted share) associated with our MTM retirement plans accounting adjustments.

See the “Retirement Plans MTM Adjustments” section of this MD&A and Note 14 of the accompanying consolidated financial statements for more information. Net income in 2024 includes a $54 million ($0.21 per diluted share) tax expense related to the remeasurement of state deferred income taxes under the new one FedEx structure.

See the “Income Taxes” section of this MD&A and Note 13 of the accompanying consolidated financial statements for more information. During 2025, we repurchased 10.9 million shares of FedEx common stock under accelerated share repurchase ("ASR") and open market transactions at an average price of $274.34 per share for a total of $3.0 billion.

Share repurchases had a benefit of $0.44 per diluted share in 2025. In fiscal 2026 we have completed $500 million of share repurchases through open market transactions and as of July 21, 2025, $1.6 billion remained available to be used for repurchases under the stock repurchase program approved by our Board of Directors in March 2024.

See Note 1 of the accompanying consolidated financial statements and the “Financial Condition—Liquidity” section of this MD&A for additional information on our stock repurchases. -47- The following graphs for Federal Express and FedEx Freight show selected volume trends (in thousands) calculated on a 5-day-per-week basis for the years ended May 31: Prior year statistical information has been revised to conform to the current year presentation.

(1) International domestic average daily package volume relates to our international intra-country operations. International export average daily package volume relates to our international priority and economy services.

(2) International average daily freight pounds relate to our international priority and economy services. -48- The following graphs for Federal Express and FedEx Freight show selected yield trends for the years ended May 31: Prior year statistical information has been revised to conform to the current year presentation.

(1) International export revenue per package relates to our international priority and economy services. International domestic revenue per package relates to our international intra-country operations.

(2) International freight revenue per pound relates to our international priority and economy services. -49- Revenue Revenue was flat in 2025 primarily due to increased base yields at both of our transportation segments and higher volume at Federal Express, which offset two fewer operating days at both of our transportation segments, lower shipments and fuel surcharges at FedEx Freight, and unfavorable currency exchange rates.

Federal Express revenue increased 1% in 2025 primarily due to increased international economy and U.S. ground package volume and improved base yields, partially offset by lower priority package volume, the expiration of our contract with the USPS on September 29, 2024, two fewer operating days, and unfavorable exchange rates.

FedEx Freight revenue decreased 6% in 2025 primarily due to lower shipments, fuel surcharges, weight per shipment, and two fewer operating days, partially offset by base yield improvement. Revenue at Corporate, other, and eliminations increased in 2025 primarily due to higher yields and shipments at FedEx Logistics, Inc. (“FedEx Logistics”).

Operating Expenses The following table compares operating expenses expressed as dollar amounts (in millions) and as a percent of revenue for the years ended May 31: Percent Change Percent of Revenue 2025 2024 2025 2024 Operating expenses: Salaries and employee benefits $ 31,232 $ 30,961 1 35.5 % 35.3 % Purchased transportation 21,768 20,921 4 24.8 23.9 Rentals and landing fees 4,647 4,571 2 5.3 5.2 Depreciation and amortization 4,264 4,287 (1) 4.8 4.9 Fuel 3,775 4,710 (20) 4.3 5.4 Maintenance and repairs 3,245 3,291 (1) 3.7 3.7 Asset impairment charges (1) 21 157 (87) — 0.2 Business optimization costs (2) 756 582 30 0.9 0.7 Other (3) 13,001 12,654 3 14.8 14.4 Total operating expenses 82,709 82,134 1 94.1 93.7 Total operating income $ 5,217 $ 5,559 (6) 5.9 % 6.3 % (1) Includes asset impairment charges in 2025 and 2024 associated with the Federal Express operating segment.

Item 5. Market for R e gistrant's Com mon Equity, R e lated Sto ckholder Matters, and Issuer Purchases of Equity Securities ” for more information. Our cash and cash equivalents balance at May 31, 2025 includes $3.3 billion of cash in foreign jurisdictions associated with our permanent reinvestment strategy.

We are able to access the majority of this cash without a material tax cost and do not believe that the indefinite reinvestment of these funds impairs our ability to meet our U.S. domestic debt or working capital obligations. Our capital expenditures for 2026 are expected to be approximately $4.5 billion, $0.4 billion higher than 2025.

The increase is driven by investment in Network 2.0 initiatives and other efforts to modernize our facilities and package handling equipment in the U.S. and internationally. Aircraft spend is expected to decline to approximately $1.0 billion, $0.3 billion lower than 2025.

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. These aircraft are significantly more fuel-efficient per unit than the aircraft types previously utilized, and these expenditures are necessary to achieve significant long-term operating savings and to replace older aircraft.

Our ability to delay the timing of these aircraft-related expenditures is limited without incurring significant costs to modify existing purchase agreements. 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.

Additionally, we have extended the retirement of the entire Boeing MD-11 fleet from 2028 to the end of 2032. We have additional obligations as part of our ordinary course of business, beyond those committed for capital expenditures, which consist of debt obligations, lease obligations, and obligations and commitments for purchases of goods and services.

Refer to Note 7 , Note 8 , and Note 1 9 of the accompanying consolidated financial statements for more information. In addition, we have certain tax positions that are further discussed in Note 1 3 of the accompanying consolidated financial statements.

We do not have any guarantees or other off-balance sheet financing arrangements, including variable interest entities, which we believe could have a material impact on our financial condition or liquidity.

We have a shelf registration statement filed with the Securities and Exchange Commission (“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.

The Three-Year Credit Agreement and the Five-Year Credit Agreement expire in March 2027 and March 2029, respectively. 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. See Note 7 of the accompanying consolidated financial statements for a description of the terms and significant covenants of the Credit Agreements.

In fiscal 2026, we made voluntary contributions of $200 million to our tax-qualified U.S. domestic pension plan (“U.S. Pension Plan”) through July 21, 2025 and anticipate making up to $400 million of additional voluntary contributions during the remainder of 2026. There are currently no required minimum contributions to our U.S.

Pension Plan, and we maintain a credit balance related to our cumulative excess voluntary pension contributions over those required that exceeds $3.0 billion. The credit balance is subtracted from plan assets to determine the minimum funding requirements. Therefore, we have the flexibility to eliminate all required contributions to our principal U.S. Pension Plan for several years. Our U.S.

Pension Plan has ample funds to meet expected benefit payments. On June 9, 2025, our Board of Directors declared a quarterly cash dividend of $1.45 per share of common stock. The dividend was paid on July 8, 2025 to stockholders of record as of the close of business on June 23, 2025.

Standard & Poor’s has assigned us a senior unsecured debt credit rating of BBB, a Certificates rating of AA-, a commercial paper rating of A-2, and a ratings outlook of “stable.” Moody’s Investors Service has assigned us an unsecured debt credit rating of Baa2, a Certificates rating of Aa3, a commercial paper rating of P-2, and a ratings outlook of “stable.” Our interest expense may increase in the event of a reduction in our credit rating.

If our unsecured debt or commercial paper ratings are reduced to below investment grade, our access to the capital markets may become limited. -62- CRITICAL ACCOUNTING ESTIMATES The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make significant judgments and estimates to develop amounts reflected and disclosed in the financial statements.

In many cases, there are alternative policies or estimation techniques that could be used. We maintain a thorough process to review the application of our accounting policies and to evaluate the appropriateness of the many estimates that are required to prepare the financial statements of a complex, global corporation.

However, even under optimal circumstances, estimates routinely require adjustment based on changing circumstances and new or better information. The estimates discussed below include the financial statement elements that are either the most judgmental or involve the selection or application of alternative accounting policies and are material to our results of operations and financial condition.

Management has discussed the development and selection of these critical accounting estimates with the Audit and Finance Committee of our Board of Directors and with our independent registered public accounting firm. PENSION PLANS The rules for pension accounting are complex and can produce volatility in our earnings, financial condition, and liquidity.

Our defined benefit pension plans are measured using actuarial techniques that reflect management’s assumptions for expected returns on assets (“EROA”), discount rate, and demographic experience such as salary increases, expected retirement, mortality, and employee turnover. Differences between these assumptions and actual experience are recognized in our earnings through MTM accounting.

Our annual MTM adjustment is highly sensitive to the discount rate and EROA assumptions, which are as follows: U.S.

Pension Plans International Pension Plans 2025 2024 2025 2024 Discount rate used to determine benefit obligation 5.94 % 5.58 % 4.40 % 4.29 % Discount rate used to determine net periodic benefit cost 5.58 5.20 4.29 4.21 Expected long-term rate of return on assets 6.75 6.50 3.59 3.55 The following sensitivity analysis shows the impact of a 50-basis-point change in the EROA and discount rate assumptions for our largest pension plan and the resulting increase (decrease) in our projected benefit obligation (“PBO”) as of May 31, 2025 and expense for the year ended May 31, 2025 (in millions): 50 Basis Point Increase 50 Basis Point Decrease Pension Plan EROA: Effect on pension expense $ (131) $ 131 Discount Rate: Effect on pension expense 15 (17) Effect on PBO (1,275) 1,397 See Note 1 4 of the accompanying consolidated financial statements for further information about our pension plans.

INCOME TAXES We are subject to income taxes in the U.S. and numerous foreign jurisdictions. Our income taxes are a function of our income, tax planning opportunities available to us, statutory tax rates, and the income tax laws in the various jurisdictions in which we operate.

These tax laws are complex and subject to different interpretations by us and the respective governmental taxing authorities. As a result, significant judgment is required in determining our tax expense and in evaluating our tax positions, including evaluating uncertainties.

Also, our effective tax rate is significantly affected by the earnings generated in each jurisdiction, so unexpected fluctuations in the geographic mix of earnings could significantly impact our tax rate. Our intercompany transactions are based on globally accepted transfer pricing principles, which align profits with the business operations and functions of the various legal entities in our international business.

We evaluate our tax positions quarterly and adjust the balances as new information becomes available. These evaluations are based on factors including, but not limited to, changes in facts or circumstances, changes in tax laws or their interpretations, audit activity, and changes in our business.

In addition, management considers the advice of third parties in making conclusions regarding tax consequences. -63- Tax contingencies arise from uncertainty in the application of tax rules throughout the many jurisdictions in which we operate. Despite our belief that our tax return positions are consistent with applicable tax laws, taxing authorities could challenge certain positions.

We record tax benefits for uncertain tax positions based upon management’s evaluation of the information available at the reporting date. To be recognized in the financial statements, a tax benefit must be at least more likely than not of being sustained based on the technical merits.

The benefit for positions meeting the recognition threshold is measured as the largest benefit more likely than not of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. Significant judgment is required in making these determinations and adjustments to unrecognized tax benefits may be necessary to reflect actual taxes payable upon settlement.

Deferred income tax assets represent amounts available to reduce income taxes payable on taxable income in future years. Such assets arise because of temporary differences between the financial reporting and tax bases of assets and liabilities, as well as from net operating loss, capital loss, and tax credit carryforwards.

We evaluate the recoverability of these future tax deductions and credits by assessing the adequacy of future expected taxable income from all sources, including reversal of taxable temporary differences, forecasted operating earnings, and available tax planning strategies.

These sources of income rely heavily on estimates to make this determination, and as a result there is a risk that these estimates will have to be revised as new information is received. To the extent we do not consider it more likely than not that a deferred tax asset will be recovered, a valuation allowance is established.

We believe we will generate sufficient future taxable income to realize the tax benefits related to the remaining net deferred tax assets in our consolidated balance sheets that are not subject to valuation allowances. We record the taxes for global intangible low-taxed income as a period cost. Our income tax positions are based on currently enacted tax laws.

As further guidance is issued by the U.S. Treasury Department, the IRS, and other standard-setting bodies, any resulting changes to our estimates will be treated in accordance with the relevant accounting guidance. For more information, see the “Income Taxes” section of this MD&A and Note 1 3 of the accompanying consolidated financial statements.

SELF-INSURANCE ACCRUALS Our self-insurance reserves are established for estimates of ultimate loss on all incurred claims, including incurred-but-not-reported claims. Components of our self-insurance reserves included in this critical accounting estimate are workers’ compensation claims, vehicle accidents, property and cargo loss, general business liabilities, and benefits paid under employee disability programs.

These reserves are primarily based on the actuarially estimated cost of claims incurred as of the balance sheet date. These estimates include judgment about severity of claims, frequency and volume of claims, healthcare inflation, seasonality, and plan designs.

The use of any estimation technique in this area is inherently sensitive given the magnitude of claims involved and the length of time until the ultimate cost is known, which may be several years. We believe our recorded obligations for these expenses are consistently measured and appropriate.

Nevertheless, changes in accident frequency and severity, healthcare costs, insurance retention levels, and other factors can materially affect the estimates for these liabilities and affect our results of operations.

Self-insurance accruals reflected in our balance sheet for the period ended May 31 are as follows (in millions): 2025 2024 Short-Term $ 1,858 $ 1,931 Long-Term 4,033 3,701 Total $ 5,891 $ 5,632 A five-percent reduction or improvement in the assumed claim severity used to estimate our self-insurance accruals would result in an increase or decrease of approximately $295 million in our reserves and expenses as of and for the year ended May 31, 2025.

For more information, see “ Item 1A. Risk Factors ” of this Annual Report. LONG-LIVED ASSETS USEFUL LIVES AND SALVAGE VALUES . Our business is capital intensive, with approximately 59% of our owned assets invested in our transportation and information system infrastructures.

The depreciation or amortization of our capital assets over their estimated useful lives, and the determination of any salvage values, requires management to make judgments about future events.

Because we utilize many of our capital assets over relatively long periods (the majority of aircraft costs are depreciated over 18 to 30 years), we periodically evaluate whether adjustments to our estimated service lives or salvage values are necessary to ensure these estimates properly match the economic use of the asset.

These evaluations consider usage, maintenance costs, and economic factors that affect the useful life of an asset.

This evaluation may result in changes in the estimated lives and residual values used to depreciate our aircraft and other equipment. -64- For our aircraft, we consider actual experience with the same or similar aircraft types and future volume projections in estimating the useful lives and expected salvage values.

We typically assign no residual value due to the utilization of our aircraft in cargo configuration, which results in little to no value at the end of their useful life. These estimates affect the amount of depreciation expense recognized in a period and, ultimately, the gain or loss on the disposal of the asset.

Changes in the estimated lives of assets will result in an increase or decrease in the amount of depreciation recognized in future periods and could have a material impact on our results of operations (as described below). Historically, gains and losses on disposals of operating equipment have not been material.

However, such amounts may differ materially in the future due to changes in business levels, technological obsolescence, accident frequency, regulatory changes, and other factors beyond our control. IMPAIRMENT.

As of May 31, 2025, the Federal Express global air network included a fleet of 698 aircraft (including 312 supplemental aircraft) that provide delivery of packages and freight to more than 220 countries and territories through a wide range of U.S. and international shipping services.

While certain aircraft are utilized in primary geographic areas (U.S. versus international), we operate an integrated global network, and utilize our aircraft and other modes of transportation to achieve the lowest cost of delivery while maintaining our service commitments to our customers.

Because of the integrated nature of our global network, our aircraft are interchangeable across routes and geographies, giving us flexibility with our fleet planning to meet changing global economic conditions and maintain and modify aircraft as needed.

Because of the lengthy lead times for aircraft manufacture and modifications, we must anticipate volume levels and plan our fleet requirements years in advance, and make commitments for aircraft based on those projections.

Furthermore, the timing and availability of certain used aircraft types (particularly those with better fuel efficiency) may create limited opportunities to acquire these aircraft at favorable prices in advance of our capacity needs. These activities create risks that asset capacity may exceed demand. At May 31, 2025, we had two purchased aircraft that were not yet placed into service.

We evaluate our long-lived assets used in operations for impairment when events and circumstances indicate that the undiscounted cash flows to be generated by that asset group are less than the carrying amounts of the asset group and may not be recoverable.

If the cash flows do not exceed the carrying value, the asset must be adjusted to its current fair value. We operate integrated transportation networks, and accordingly, cash flows for most of our operating assets are assessed at a network level, not at an individual asset level for our analysis of impairment.

Further, decisions about capital investments are evaluated based on the effect on the overall network rather than the return on an individual asset. We make decisions to remove certain long-lived assets from service based on projections of reduced capacity needs or lower operating costs of newer aircraft types, and those decisions may result in an impairment charge.

Assets held for disposal must be adjusted to their estimated fair values less costs to sell when the decision is made to dispose of the asset and certain other criteria are met. The fair value determinations for such aircraft may require management estimates, as there may not be active markets for some of these aircraft.

Such estimates are subject to revision from period to period. In the fourth quarter of 2025, we made the decision to permanently retire from service 12 aircraft and eight related engines, resulting in a noncash impairment charge of $21 million ($16 million, net of tax, or $0.06 per diluted share).

These retirements included two Boeing 757-200 aircraft, seven Airbus A300-600 aircraft, three Boeing MD-11 aircraft, and align with Federal Express’s fleet reduction and modernization strategy as we continue to improve our global network efficiency and better align air network capacity with anticipated demand. All of these permanently retired aircraft were temporarily idled and not in revenue service.

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

In 2023 we accelerated the retirement of the entire Boeing MD-11 fleet by the end of 2028. In 2025 we made the decision to extend the retirement plan to have the fleet retired by the end of 2032 to better align the air network capacity of Federal Express to match anticipated shipment volumes.

As a result of this decision, we had a net decrease in depreciation expense in 2025 of $19 million. In the normal management of our aircraft fleet, we routinely idle aircraft and engines temporarily due to maintenance cycles and adjustments of our network capacity to match seasonality and overall customer demand levels.

Temporarily idled assets are classified as available-for-use, and we continue to record depreciation expense associated with these assets. These temporarily idled assets are assessed for impairment and remaining life on a quarterly basis.

The criteria for determining whether an asset has been permanently removed from service (and, as a result, is potentially impaired) include, but are not limited to, our global economic outlook and the impact of our outlook on our current and projected volume levels, including capacity needs during our peak shipping seasons; the introduction of new fleet types or decisions to permanently retire an aircraft fleet from operations; and changes to planned service expansion activities.

At May 31, 2025, we had 22 aircraft temporarily idled. These aircraft have been idled for an average of ten months and are expected to return to revenue service i n order to meet expected demand. LEASES . We utilize operating leases to finance certain of our aircraft, facilities, and equipment.

Such arrangements typically shift the risk of loss on the residual value of the assets at the end of the lease period to the lessor. We had $17 billion in operating lease liabilities and $16 billion in related right-of-use assets on the balance sheet as of May 31, 2025.

The weighted-average remaining lease term of all operating leases outstanding at May 31, 2025 was 9.7 years. -65- Our leases generally contain options to extend or terminate the lease. We reevaluate our leases on a regular basis to consider the economic and strategic incentives of exercising the renewal options, and how they align with our operating strategy.

Therefore, substantially all the renewal option periods are not included within the lease term and the associated payments are not included in the measurement of the right-of-use asset and lease liability as the options to extend are not reasonably certain at lease commencement.

Short-term leases with an initial term of 12 months or less are not recognized in the right-of-use asset and lease liability on the consolidated balance sheets.

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

The interest rate implicit in the lease is generally not determinable in transactions where we are the lessee. The determination of whether a lease is accounted for as a finance lease or an operating lease requires management to make estimates primarily about the fair value of the asset and its estimated economic useful life.