2022 ANNUAL REPORT

2022

ANNUAL

REPORT

DELIVER TODAY.

INNOVATE FOR TOMORROW.

To our FedEx stockholders,

I am honored to write to you for the first time as President and CEO of FedEx Corporation. It has been my greatest privilege to

learn firsthand from our founder Frederick W. Smith, a visionary titan who successfully led this company for its first 50 years.

Now, as I take on the role of President and CEO of FedEx, I feel immense pride in what our organization has already accomplished,

how we’ve upheld our promise to deliver outstanding experiences, and the bright future ahead.

Connecting people to possibilities for 50 years

FedEx was founded to connect people in ways others could not. To deliver in ways that created possibilities. As the need for

reliable supply was brought to the forefront over the last few years, it was our ecosystem of team members across over 220

countries and territories that kept our customers, global trade, and society moving. The world grows more complex every day,

yet our commitment to service and the Purple Promise — to make every FedEx experience outstanding — remains constant.

We are at a pivotal moment in our history as we enter our 50

year, and I am honored to share the vision of how we are delivering

what’s next.

Because even after decades of changing the world, we are just getting started.

Unlocking the full potential of our network

The FedEx network is our distinctive strength and one that is exceptionally difficult to replicate — an unmatched combination of

scale, access, and flexibility.

Now, we’re ready to unlock the value from this foundation. This will shape how we operate, collaborate, and invest to Deliver

Today and Innovate for Tomorrow.

How we’re going to deliver

Our strategy, Deliver Today and Innovate for Tomorrow, aligns both our short-term and long-term goals. Deliver Today captures

the immediate work at hand, with three key strategies to drive stockholder value:

1. We will create strong annual revenue growth with a focus on driving premium yields and balanced growth, achieved

through specific commercial levers, such as focusing on high-value customer segments. We will concentrate on operational

levers, including data-driven customer insights and the optimization of existing infrastructure, to enhance our levels of

service and increase capacity — with rigorous business planning and strict return on invested capital (ROIC) requirements

guiding every dollar of new capital expenditure (CapEx) deployed.

2. We will increase focus on margin expansion and profitable growth by delivering through a more efficient network.

FedEx Ground will harness the power of the network we have been building since inception, and we will continue to win in

the attractive less-than-truckload (LTL) market at FedEx Freight. Additionally, we will enhance FedEx Express profits from a

physically integrated European operation.

With over 95% of U.S. revenue generated by customers who use more than one of our operating companies*, there is an

opportunity to maintain the advantages of our distinct networks while leveraging enterprise capabilities. We are undergoing

a transformation that will enable increased collaboration between FedEx Ground, FedEx Express, and FedEx Freight by

enhancing asset utilization to move packages seamlessly through the network, improving customer experience and, at the

same time, reducing our cost to serve and expanding margins.

3. We will lower capital intensity and increase ROIC for future investments with thoughtful, precise allocation. To enhance

returns through profitable growth and capital efficiency, we will reduce fleet investment, elevate ROIC, and drive higher

dividend payouts and stock buybacks.

Our focus on execution and driving higher returns, paired with lowered capital intensity, is expected to drive stockholder

value over the next three years and beyond.

These efforts will combine to significantly increase Total Stockholder Return (TSR) by FY25. The entire FedEx leadership

team is united in our determination to achieve these goals. Together, with our Board, we have integrated TSR into our long-term

incentive program to ensure disciplined execution.

12022 Annual Report

Supporting these goals are our three strategic operating principles:

¹ Compete Collectively reinforces customer centricity as the foundation for every experience FedEx delivers.

¹ Operate Collaboratively transforms the way we work across operating companies to improve the customer experience, asset

utilization, and financial performance.

¹ Innovate Digitally harnesses data and technology to make supply chains smarter.

And this is just the beginning

We have bold visions for FedEx. Our intelligent supply chains, unique culture, and unwavering commitment to sustainability

provide a blueprint as we Innovate for Tomorrow. With organization-wide infrastructure modernization, new data-driven

offerings, and sustainability-driven solutions, we’re leveraging the power of technology to make supply chains smarter

for everyone.

And, of course, our culture and people will keep us moving forward. With our People-Service-Profit philosophy, we will continue

to develop the entrepreneurial spirit of our people and communities.

Our next step

In closing, we stand at a pivotal moment in our company’s history.

We are focused on balanced growth and revenue quality, expanding our margins, and increasing returns on capital. As we evolve

and better serve our customers, our people, and our stockholders, we are delivering the next half century of our legacy.

I hope you share in our confidence as we chart the path forward for FedEx.

Sincerely,

RAJ SUBRAMANIAM

President & CEO, FedEx Corporation

* Revenue from U.S. payors for the period April 2021–March 2022 for FedEx Express Domestic, FedEx Express International (U.S. Outbound),

FedEx Ground (including Ground Economy), and FedEx Freight.

See “Forward-Looking Statements” and “Risk Factors” on pages 26-37 of the fiscal 2022 FedEx Corporation Annual Report on

Form 10-K, included herein, for a discussion of potential risks and uncertainties that could materially affect our future performance.

DELIVER TODAY. INNOVATE FOR TOMORROW.

Deliver Today. Innovate for Tomorrow.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended May 31, 2022.

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF

1934

For the transition period from to .

Commission file number 1-15829

FedEx Corporation

(Exact Name of Registrant as Specified in its Charter)

Delaware

62-1721435

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification No.)

942 South Shady Grove Road, Memphis, Tennessee

38120

(Address of Principal Executive Offices)

(ZIP Code)

Registrant’s telephone number, including area code: (901) 818-7500

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, par value $0.10 per share

FDX

New York Stock Exchange

0.450% Notes due 2025

1.625% Notes due 2027

0.450% Notes due 2029

1.300% Notes due 2031

0.950% Notes due 2033

FDX 25A

FDX 27

FDX 29A

FDX 31

FDX 33

New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☑ No ☐

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☑

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the

preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes

☑ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§

232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth

company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☑

Accelerated filer ☐

Non-accelerated filer ☐

Smaller reporting company ☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised

financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial

reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☑

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

The aggregate market value of the common stock held by non-affiliates of the Registrant, computed by reference to the closing price as of the last business day of the

Registrant’s most recently completed second fiscal quarter, November 30, 2021, was approximately $56.4 billion. The Registrant has no non-voting stock.

As of July 14, 2022, 259,845,660 shares of the Registrant’s common stock were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant’s definitive proxy statement to be delivered to stockholders in connection with the 2022 annual meeting of stockholders to be held on September

19, 2022 are incorporated by reference in response to Part III of this Report.

FORWARD-LOOKING STATEMENTS

Certain statements in this Annual Report on Form 10-K (this “Annual Report”), including (but not limited to) those contained in “Item

1. Business”; “Item 1A. Risk Factors”; “Item 2. Properties”; “Item 5. Market for Registrant’s Common Equity, Related Stockholder

Matters, and Issuer Purchases of Equity Securities”; the “Business Realignment Costs,” “Income Taxes,” “Outlook” (including

segment outlooks), “Liquidity Outlook,” and “Critical Accounting Estimates” sections of “Item 7. Management’s Discussion and

Analysis of Results of Operations and Financial Condition”; and the “Description of Business Segments and Summary of Significant

Accounting Policies,” “Long-Term Debt and Other Financing Arrangements,” “Income Taxes,” “Retirement Plans,” “Commitments,”

and “Contingencies” notes to the consolidated financial statements in “Item 8. Financial Statements and Supplementary Data” are

“forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to our financial

condition, results of operations, cash flows, plans, objectives, future performance, and business. Forward-looking statements include

those preceded by, followed by, or that include the words “will,” “may,” “could,” “would,” “should,” “believes,” “expects,”

“forecasts,” “anticipates,” “plans,” “estimates,” “targets,” “projects,” “intends,” or similar expressions. These forward-looking

statements involve risks and uncertainties. Actual results may differ materially from those contemplated (expressed or implied) by

such forward-looking statements, because of, among other things, the risk factors identified above and the other risks and uncertainties

you can find in our press releases and other Securities and Exchange Commission (“SEC”) filings.

As a result of these and other factors, no assurance can be given as to our future results and achievements. Accordingly, a forward-

looking statement is neither a prediction nor a guarantee of future events or circumstances and those future events or circumstances

may not occur. You should not place undue reliance on the forward-looking statements, which speak only as of the date of this report.

We are under no obligation, and we expressly disclaim any obligation, to update or alter any forward-looking statements, whether as a

result of new information, future events, or otherwise.

- 1 -

TABLE OF CONTENTS

Page

PART I

ITEM 1. Business

ITEM 1A. Risk Factors

ITEM 1B. Unresolved Staff Comments

ITEM 2. Properties

ITEM 3. Legal Proceedings

ITEM 4. Mine Safety Disclosures

Information about our Executive Officers

PART II

ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities

ITEM 6. [RESERVED]

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

ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk

ITEM 8. Financial Statements and Supplementary Data

ITEM 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

113

ITEM 9A. Controls and Procedures

113

ITEM 9B. Other Information

113

ITEM 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

113

PART III

ITEM 10. Directors, Executive Officers, and Corporate Governance

114

ITEM 11. Executive Compensation

114

ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

114

ITEM 13. Certain Relationships and Related Transactions, and Director Independence

114

ITEM 14. Principal Accountant Fees and Services

114

PART IV

ITEM 15. Exhibits and Financial Statement Schedules

115

ITEM 16. Form 10-K Summary

124

- 2 -

EXHIBITS

Exhibit 4.1

Exhibit 10.14

Exhibit 10.15

Exhibit 10.16

Exhibit 10.19

Exhibit 10.20

Exhibit 10.21

Exhibit 10.22

Exhibit 10.23

Exhibit 10.24

Exhibit 10.25

Exhibit 10.26

Exhibit 10.27

Exhibit 10.28

Exhibit 10.29

Exhibit 10.30

Exhibit 10.31

Exhibit 10.32

Exhibit 10.33

Exhibit 10.34

Exhibit 10.35

Exhibit 10.36

Exhibit 10.37

Exhibit 10.38

Exhibit 10.39

Exhibit 10.40

Exhibit 10.41

Exhibit 10.42

Exhibit 10.52

Exhibit 10.53

Exhibit 10.54

Exhibit 10.55

Exhibit 10.56

Exhibit 10.57

Exhibit 10.58

Exhibit 10.59

Exhibit 10.60

Exhibit 10.61

Exhibit 10.62

Exhibit 10.63

Exhibit 10.64

Exhibit 10.65

Exhibit 10.80

Exhibit 10.81

Exhibit 10.102

Exhibit 10.103

Exhibit 10.104

Exhibit 10.107

Exhibit 21

Exhibit 22

Exhibit 23

Exhibit 31.1

Exhibit 31.2

Exhibit 32.1

Exhibit 32.2

Exhibit 101.1 Interactive Date Files

Exhibit 104 Cover Page Interactive Data File

- 3 -

PART I

ITEM 1. BUSINESS

Overview

FedEx Corporation (“FedEx”) was incorporated in Delaware on October 2, 1997 to serve as the parent holding company and provide

strategic direction to the FedEx portfolio of companies. FedEx provides a broad portfolio of transportation, e-commerce, and business

services through operating companies competing collectively, operating collaboratively, and innovating digitally, under the respected

FedEx brand. These companies are included in the following reportable business segments:

• FedEx Express: Federal Express Corporation (“FedEx Express”) is the world’s largest express transportation company,

offering time-definite delivery to more than 220 countries and territories, connecting markets that comprise more than 99% of

the world’s gross domestic product.

• FedEx Ground: FedEx Ground Package System, Inc. (“FedEx Ground”) is a leading North American provider of small-

package ground delivery services. FedEx Ground provides low-cost, day-certain service to any business address in the U.S. and

Canada, as well as residential delivery to 100% of U.S. residences through its FedEx Home Delivery service. FedEx Ground

Economy specializes in the consolidation and delivery of high volumes of low-weight, less time-sensitive business-to-consumer

packages.

• FedEx Freight: FedEx Freight Corporation (“FedEx Freight”) is a leading North American provider of less-than-truckload

(“LTL”) freight transportation services across all lengths of haul to businesses and residences. Within the contiguous U.S.,

FedEx Freight offers 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 heavy, bulky products to or through the door for residences and businesses. FedEx

Freight also offers freight delivery service to most points in Puerto Rico and the U.S. Virgin Islands.

• FedEx Services: FedEx Corporate Services, Inc. (“FedEx Services”) provides sales, marketing, information technology,

communications, customer service, technical support, billing and collection services, and certain back-office functions that

support our operating segments.

The FedEx Office and Print Services, Inc. (“FedEx Office”) operating segment provides document and business services and retail

access to our package transportation businesses and the FedEx Logistics, Inc. (“FedEx Logistics”) operating segment provides

customs brokerage and global ocean and air freight forwarding through FedEx Trade Networks Transport & Brokerage, Inc. (“FedEx

Trade Networks Transport & Brokerage”) and integrated supply chain management solutions through FedEx Supply Chain

Distribution System, Inc. (“FedEx Supply Chain”). Additionally, the FedEx Dataworks, Inc. (“FedEx Dataworks”) operating segment,

including ShopRunner, Inc. (“ShopRunner”), is focused on creating solutions to transform the digital and physical experiences of our

customers and team members. FedEx Office, FedEx Logistics, and FedEx Dataworks are included in “Corporate, other, and

eliminations” in our segment reporting. For more information about FedEx Office, FedEx Logistics, and FedEx Dataworks, please see

“FedEx Office Operating Segment,” “FedEx Logistics Operating Segment,” and “FedEx Dataworks Operating Segment.”

For more information about our reportable segments, please see “Business Segments.” For financial information concerning our

reportable segments, refer to “Item 7. Management’s Discussion and Analysis of Results of Operations and Financial Condition” and

“Item 8. Financial Statements and Supplementary Data” of this Annual Report.

Our website is located at fedex.com. Detailed information about our services, e-commerce tools and solutions, and environmental,

social, and governance (“ESG”) initiatives can be found on our website. In addition, we make our Annual Reports on Form 10-K,

Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all exhibits and amendments to such reports available, free of

charge, through our website, as soon as reasonably practicable on the day they are filed with or furnished to the SEC. The Investor

Relations page of our website, investors.fedex.com, contains a significant amount of information about FedEx, including our SEC

filings and financial and other information for investors. The information that we post on the Investor Relations page of our website

could be deemed to be material information. We encourage investors, the media, and others interested in FedEx to visit this website

from time to time, as information is updated and new information is posted. The information on our website, however, is not

incorporated by reference in, and does not form part of, this Annual Report.

- 4 -

Except as otherwise specified, any reference to a year indicates our fiscal year ended May 31 of the year referenced. References to our

transportation segments include, collectively, the FedEx Express segment, the FedEx Ground segment, and the FedEx Freight

segment.

Strategy

At FedEx, our ambition to “Deliver Today, Innovate for Tomorrow” and our strategic operating principles, “compete collectively,

operate collaboratively, innovate digitally,” guide how we grow, execute, and evolve as a company and help differentiate FedEx from

our competitors.

The collective FedEx brand unites our distinct operating companies, giving us our competitive edge. Further, our strategy allows us to

manage our business as a portfolio, in the long-term best interest of the enterprise. As a result, we base decisions on capital investment

and service additions or enhancements upon achieving the highest overall long-term return on capital for our business as a whole. For

each FedEx operating company, we focus on making appropriate investments in the technology and assets necessary to optimize our

long-term earnings performance and cash flow. Our business strategy also provides flexibility in sizing our operating companies to

align with varying macroeconomic conditions and customer demand for the market segments in which they operate, allowing us to

leverage and manage change. Volatility, uncertainty, and evolution have become the norms in the global transportation market, and we

are able to use our flexibility to accommodate changing conditions in the global economy.

While we believe that operating separate networks enhances service quality and reliability from each business unit, we are building a

holistic, collaborative approach to compete in a dynamic and ever-changing market. Our business is currently undergoing a

transformation to enable increased collaboration between FedEx Express, FedEx Ground, and FedEx Freight by enhancing asset

utilization to move packages seamlessly through the network, improve customer experience, and reduce our cost to serve. We will

continue to look comprehensively at all assets in our network, including stations, hubs, and equipment, to put the right package in the

right network at the best service for our customers.

Innovation inspired our start at FedEx nearly 50 years ago, and it is fueling our future as we combine logistics with digital intelligence.

The size and scale of our network gives us key insights into global supply chains and trends. This foundation provides an immense

amount of data we can use to build better insights, improve the customer experience and differentiate our service offering, and

improve our operational efficiency by optimizing our existing physical capacity and staffing. To fully harness the power of this data,

FedEx Dataworks is focused on putting our data into context and using it to transform the digital and physical experiences of our

customers and team members. We are also leveraging the power of technology to make supply chains smarter for everyone through

sensor-based technologies, providing enhanced visibility and predictive capabilities, and enhancing sortation technology. See “FedEx

Services Segment — Customer-Driven Technology” and “FedEx Dataworks Operating Segment” below for more information.

At FedEx, “Safety Above All” is the first and foremost value in every aspect of our business. We are committed to making our

workplaces and communities safer for our team members, customers, and the public. This philosophy is embedded in our day-to-day

work through rigorous policies, continual education and engagement, and investments in technology designed to prevent accidents.

Through our global transportation, information technology, and retail networks, we help to facilitate an ongoing and unprecedented

expansion of customer access — to goods, services, and information. We believe it would be extremely difficult, costly, and time-

consuming to replicate our global network, which reflects decades of investment, innovation, and expertise, includes the world’s

largest all-cargo air fleet, and connects more than 99% of the world’s gross domestic product. We continue to position our companies

and team members to facilitate and capitalize on this access and to achieve stronger long-term growth, productivity, and profitability.

During 2022 and early 2023, we have introduced a number of innovative solutions, advanced important long-term business initiatives,

and made other important investments that benefit our customers, team members, and communities, including:

• Completing the physical network integration of TNT Express into FedEx Express and continuing to execute additional

initiatives to further transform and optimize the FedEx Express international business, particularly in Europe.

• Continuing to increase collaboration across our operating companies to utilize our air and ground networks in a more

efficient manner.

• Implementing technology to enhance sortation efficiency, optimize staffing, and improve safety at FedEx Ground, as well as

dimension-in-motion (”DIM”), radio frequency identification, and other technology at FedEx Freight.

• Providing in-kind shipping and other humanitarian aid in response to the conflict in Ukraine and the shortage of infant

formula in the U.S.

- 5 -

• Partnering with Microsoft Corporation (“Microsoft”), Adobe Inc. (“Adobe”), Salesforce, Inc. (“Salesforce”), and FourKites,

Inc. (“FourKites”) to create innovative solutions that help our customers increase their efficiency, competitiveness, and supply

chain visibility.

• Announcing the launch of Picture Proof of Delivery for express and ground residential deliveries in the U.S. and Canada that

are released without a signature in advance of the 2023 holiday peak season.

• Entering into a strategic alliance with Delhivery Limited (“Delhivery”), a leading logistics and supply chain services

company in India.

• Expanding our agreement to purchase electric vehicles from General Motors’ BrightDrop in furtherance of our goal to

achieve carbon neutrality for our global operations by calendar 2040.

• Further exploring the use of autonomous technologies by beginning a pilot program to test autonomous driving technology

within FedEx linehaul operations.

• Launching a new, enterprise-wide culture framework.

Reputation and Responsibility

By competing collectively under the FedEx brand, our operating companies benefit from one of the world’s most recognized brands.

FedEx is one of the most trusted and respected companies in the world, and the FedEx brand name is a powerful sales and marketing

tool. Among the many reputation awards we received during 2022, FedEx ranked 16

in FORTUNE magazine’s “World’s Most

Admired Companies” list — the 22

consecutive year FedEx has ranked among the top 20 in the FORTUNE Most Admired

Companies list, with 15 of those years ranking among the top 10. We also retained our position as the highest ranked delivery

company on the “World’s Most Admired Companies” list. During 2021 FedEx was also named one of the “TIME100 Most Influential

Companies” by Time magazine and was recognized as the biggest transportation and logistics company in the world by Forbes.

Additionally, FedEx was named one of “America’s Most Responsible Companies” by Newsweek in 2021, ranking higher than any

other “Travel, Transport & Logistics” company included on the list.

Along with a strong reputation among customers and the general public, FedEx is widely acknowledged as a great place to work. For

example, FedEx was named to FORTUNE magazine’s list of the “100 Best Companies to Work For” in the U.S. in 2022. FedEx was

also listed as one of “America’s Best Large Employers” and one of “America’s Best Employers for Diversity” by Forbes in 2021.

Through our ESG strategies, FedEx connects the communities where we live and work in remarkable ways. Our 2022 ESG Report is

available at fedex.com/en-us/sustainability/reports.html. This report discusses our ESG strategies and programs and includes important

goals and metrics that demonstrate our commitment to fulfilling our responsibilities in these areas. Information in our ESG Report is

not incorporated by reference in, and does not form part of, this Annual Report.

We remain committed to helping lift local economies by investing in people and communities where we live and work. In the U.S.,

this includes seeking diverse suppliers and strengthening our supply chain by sourcing from small, minority-, and women-owned

businesses. We are also proud of our long-standing history of supporting and fostering relationships with organizations that are

working to make our society more equitable and just, such as the National Association for the Advancement of Colored People and the

National Civil Rights Museum. In 2022 we launched the FedEx-HBCU Student Ambassador Program, which will prepare students at

Historically Black Colleges and Universities to be future leaders by interacting with FedEx executives and building leadership and

career-ready skills.

- 6 -

Human Resource Management

Our Culture

At FedEx, it is our people—our greatest asset—that give us our strong reputation and stand at the heart of our success. In addition to

our superior physical and information networks, FedEx has an exemplary human network. Across the globe, our team members are

united by our passion to deliver the FedEx Purple Promise—to make every FedEx experience outstanding—and our People–Service–

Profit principles. Our global team of innovators and collaborators are committed to bringing this concept to life by:

• Prioritizing safety.

• Taking care of our team members.

• Embracing Diversity, Equity, and Inclusion (“DEI”) so everyone feels appreciated and valued.

• Delivering excellence and value for our customers and stockholders.

• Acting with integrity in all that we do.

• Supporting our communities.

• Helping shape a better world.

• Growing profitably to reinvest in our team members and business.

In 2022, we launched a new, enterprise-wide culture framework built on five values: take care of each other, commit to do good, own

outstanding, drive business results, and create what’s next. These fundamental values apply to all roles and operating companies

within FedEx and define FedEx culture to ensure every team member is working to keep FedEx at the forefront of where now meets

next.

Ultimately, our success depends on the talent, dedication, and well-being of our people. As we grow, we strive to recruit, retain,

develop, and provide advancement opportunities for our team members. We continually work to make FedEx an inclusive, equitable,

and growth-focused workplace where all team members have the opportunity to flourish.

Safety

Our longstanding “Safety Above All” philosophy is the first and foremost value in every aspect of our business. It is backed by strict

policies, robust team member education, safety recognition awards, and continued investment in technology. Across the enterprise, we

are committed to making our workplaces and communities safer for our team members, customers, and the public. The Governance,

Safety, and Public Policy Committee of our Board of Directors oversees our safety strategies, policies, programs, and practices.

During the coronavirus (“COVID-19”) pandemic, we implemented numerous measures to keep our team members, customers, and

communities safe while on the front lines operating in impacted areas and providing connectivity and delivery of critical medical

supplies around the world.

- 7 -

Diversity, Equity, and Inclusion Creates Opportunity

We believe that DEI delivers a better future for all team members, customers, suppliers, and

communities. As a global company, we see exceptional business and community value in the

diversity of perspectives and experiences that our team members bring to work every day.

While we are proud of what we have achieved during our almost 50-year history, we know

that DEI must always be at the forefront of our business strategy.

The FedEx workforce is as diverse as the world we serve, and we believe that everyone

deserves respect. We are committed to be a diverse, equitable, and inclusive employer. We

set, measure, and assess our DEI goals and progress through four strategic pillars: Our

People; Our Education and Engagement; Our Communities, Customers, and Suppliers; and

Our Story. In 2022 we continued to align our strategy with these pillars by investing in

programs, initiatives, and people across our workforce, culture, marketplace, and

communities. Additionally, to further our transparency efforts regarding our workforce

composition, in 2022 we began reporting the prior year’s gender, racial, and ethnic

composition of our U.S. workforce by EEO-1 job category, as set forth in the consolidated

EEO-1 Reports filed by FedEx and its operating subsidiaries with the Equal Employment

Opportunity Commission.

Compensation and Benefits

We provide our team members with competitive healthcare, wellness, paid sick leave and

other flexible paid time off, and other benefits to support their quality of life and enable them

to thrive in the workplace. In addition, we offer competitive retirement benefits to eligible

U.S. team members.

We conduct periodic benchmarking analyses to ensure our pay remains competitive. In

addition, FedEx regularly assesses internal pay equity. In each pay analysis, we adjust for job

tenure, region, performance, and other variables that can influence pay over time.

All eligible full-time and part-time employees and their eligible dependents receive

competitive health benefits. In the U.S., we cover approximately 70% of total eligible

healthcare costs for part- and full-time employees at the plan level for our approximately

227,000 participating employees as of January 2022.

- 8 -

To support team members’ mental health and well-being, we offer 24/7 confidential counseling services to employees, eligible

dependents, and all household members, even if they are not participating plan members. We frequently communicate with employees

on how to access these resources to promote their use across the enterprise, with an increased focus on mental health resources in

recent years.

Learning and Development

As our team members commit to delivering the Purple Promise, we remain committed to providing all our employees with learning

and development opportunities to advance their careers at FedEx. Training and development begins with our enterprise-wide content

for new employees—Core New Employee Orientation—which provides a consistent onboarding experience across our operating

companies on topics such as safety, security, compliance, sustainability, and DEI. Beyond training opportunities, we provide ongoing

career development tools, opportunities, and education for all full-time employees. Each operating company designs and manages its

own leadership and development programs in support of its unique needs.

We are committed to supporting team members who wish to pursue higher education in a variety of ways. In 2021, we provided over

$17 million in tuition assistance to nearly 11,000 employees to further their education. In addition, Learning inspired by FedEx

(LiFE)—a partnership between multiple FedEx operating companies and The University of Memphis—continues to allow many

employees the opportunity to earn a tuition-free, fully online degree. Eligible employees include all FedEx Express employees at all

hub and airport locations in the U.S. as well as all U.S.-based FedEx Logistics and all Memphis-based FedEx Supply Chain

employees. In 2021, we expanded the LiFE program by adding a mentoring component and extending coverage to over 100 majors

and concentrations. The program currently has more than 2,000 enrolled employee participants.

In cooperation with key organizations, we are working to advance opportunities for team members from a variety of backgrounds to

build a workforce reflective of the world and the communities we serve. For example, FedEx Express has launched OnDeck, a

training and development program that provides frontline workers with skills to prepare for management roles.

Employee Engagement

We value feedback from our team members, looking to understand their concerns and expectations and, where appropriate, acting on

them. We provide several avenues to listen to and engage with our team, including annual surveys, employee networks, and direct

feedback. FedEx conducts annual engagement surveys to measure employee satisfaction on Culture, Engagement, and Diversity and

we share the results with senior leaders to inform leadership development plans and additional changes as needed. All surveys

included DEI questions in 2021, such as “I am treated with respect and dignity at work” (88% favorability rating) and “FedEx has an

environment where people of diverse backgrounds are welcome” (86% favorability rating), to capture team member perspectives on

inclusion in the workplace. FedEx Ground, our most diverse employee population, also added DEI as a standard goal in the 2022 team

member annual performance review process.

Due to the COVID-19 pandemic, we have reevaluated how and where team members work and, where appropriate, have provided

more flexibility to increase effectiveness and optimize our workspaces.

Tenure, Promotion, and Turnover

Every day, we work hard to earn and maintain the loyalty of our team members by creating a workplace culture that supports their

aspirations and provides benefits and opportunities to support their quality of life and development. Globally, FedEx hired nearly

367,000 full- and part-time team members in 2021, largely to keep up with increased shipping volumes. Turnover for part-time team

members, primarily package handlers at our sorting locations, was 200%, while full-time team member turnover was 32% in 2022.

Turnover rates among part-time frontline workers in a number of industries are historically higher than among other employee groups.

Within the ground transportation industry, many part-time workers pursue temporary employment opportunities that allow them to

exit and re-enter the workforce more frequently based on their needs. These traditionally higher rates have recently been further

exacerbated by the highly competitive labor market and the conditions created by the COVID-19 pandemic.

Other Information

As of May 31, 2022, FedEx employed approximately 345,000 permanent full-time and approximately 202,000 permanent part-time

employees and FedEx Ground utilized over 6,000 contracted service providers.

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The pilots at FedEx Express, who are a small number of its total employees, are employed under a collective bargaining agreement

that took effect on November 2, 2015, and became amendable in November 2021. Bargaining for a successor agreement began in May

2021 and continues. Other than the pilots at FedEx Express and drivers at one FedEx Freight, Inc. facility, our U.S. employees have

thus far chosen not to unionize (we acquired FedEx Supply Chain in 2015, which already had a small number of employees who are

members of unions). Additionally, certain of FedEx Express’s non-U.S. employees are unionized. For additional information, see

“FedEx Express Segment” and “Regulation” below and “Item 1A. Risk Factors.”

Our Community

FedEx is committed to actively supporting the communities we serve worldwide through the strategic investment of our people,

resources, and network. Through FedEx Cares, our global community engagement program, we support non-profit organizations

working to solve social challenges relevant to our business, customers, and team members. We pair donations with charitable shipping

and access to our global network, team member volunteers, subject matter expertise, influence, and connections to meet social and

business goals, and make our biggest investments in areas where we can address significant issues and apply our unique business

capabilities. Real change takes significant investment, authentic support for communities, and a commitment to continuous learning.

FedEx Cares focuses on three major giving portfolios:

• Delivering for Good: Lending our global network and unparalleled logistics expertise to organizations with mission-critical

needs in times of disaster and helping communities heal, learn, and thrive.

• Global Entrepreneurship: Advancing women and minority-owned small businesses globally through training and increased

access to resources, capital, and new markets.

• Sustainable Logistics: Accelerating process innovations such as public transportation and technological innovations such as

natural carbon capture and clean energy to reduce the environmental impact of the logistics industry.

Additionally, our commitments to DEI and team member volunteerism are foundational to FedEx Cares.

In 2020 we launched FedEx Cares 50 by 50 with the goal of positively impacting 50 million people around the world by our 50

anniversary in 2023. As of May 31, 2022, we have positively impacted approximately 40 million people. FedEx also supports

communities throughout the U.S. with its annual FedEx Cares United Way giving campaign.

We believe the investments we make in our communities today, combined with team member engagement, set the stage for a brighter

tomorrow. For additional information on our community involvement and our FedEx Cares strategy, visit fedexcares.com.

The Environment

At FedEx, we remain committed to minimizing the impacts our business has on the environment. Our “Practical Sustainability”

philosophy and “Reduce, Replace, Revolutionize” approach guide our efforts to mitigate environmental impacts, increase efficiency,

reduce costs, and protect against future risks. We understand the impacts climate change poses to our business, such as intensifying

weather events, emerging greenhouse gas (“GHG”) emissions regulations, increased media and investor attention, and enhanced

customer demands to address environmental challenges. We identify and evaluate physical and transition climate-related risks through

our enterprise risk management process and align our assessment and reporting approach with the recommendations from the Global

Reporting Initiative, Sustainability Accounting Standards Board, and the Task Force on Climate-related Financial Disclosures.

In 2021 we announced our goal to achieve carbon neutrality by calendar 2040 across our global operations’ Scope 1 and Scope 2

emissions and our Scope 3 contracted transportation GHG emissions. To help reach this goal, we are investing more than $2.0 billion

in vehicle electrification, sustainable energy, and carbon sequestration, including a pledge of $100 million to Yale University to help

establish the Yale Center for Natural Carbon Capture. In addition, we continue to leverage other approaches to reduce vehicle

emissions, such as increased intermodal rail usage at FedEx Ground and FedEx Freight.

Vehicle Electrification

We are leveraging various innovative technologies to transition our pickup-and-delivery and last-mile fleets to electric vehicles. We

plan to transition the entire FedEx parcel pickup-and-delivery fleet to zero-emission electric vehicles by calendar 2040, using a phased

approach to replace existing vehicles. For example, by calendar 2025, we expect 50% of FedEx Express global pickup-and-delivery

vehicle purchases will be electric, rising to 100% of all purchases by calendar 2030, subject to availability.

In 2021 FedEx Express agreed to purchase 500 electric vehicles from General Motors’ BrightDrop, and in January 2022 we expanded

our agreement to acquire 2,000 additional electric vans over the next several years. We are currently working on a plan to add up to

20,000 more, subject to further negotiations and execution of a definitive purchase agreement. FedEx Ground is developing a

comprehensive strategy to facilitate the electric vehicle transition for our independent service providers, and we are developing

innovative charging infrastructures to support the continued rollout of electric vehicles by FedEx and independent service providers.

To advance progress towards our electrification goal and enhance our intelligent logistics system, we are working to leverage

advanced technology to increase vehicle efficiency. See “FedEx Services Segment — Customer-Driven Technology — Autonomous

Delivery Technology” below for additional information on Roxo, the FedEx SameDay Bot and other innovative specialty delivery

technologies we are exploring. In addition, we continue to electrify forklifts, airport ground service equipment, and other non-road

vehicles across our operating companies.

We strive to employ the most advanced vehicle technologies to efficiently and safely move packages across our networks. FedEx

Express has established a goal to increase vehicle fuel efficiency by 50% from a 2005 baseline by calendar 2025. Through 2021, our

efforts collectively resulted in a 42% improvement in FedEx Express vehicle fuel efficiency from our 2005 baseline.

Sustainable Fuels

We continue to invest in, and seek the development of, viable, cost-effective alternative fuels to reduce aircraft and vehicle emissions.

Our global fleet includes more than 4,100 alternative fuel vehicles, including hybrid, electric, liquified or compressed natural gas,

liquified petroleum gas, and hydrogen fuel cell vehicles, and we will continue to grow our alternative fuel fleet in the coming years,

subject to availability. We have also established a goal of obtaining 30% of our jet fuel from alternative fuels by calendar 2030.

Aircraft Fuel Conservation and Fleet Modernization

To reduce the cost of fuel use and associated GHG emissions, we have implemented efficiencies in flight operations through our

global FedEx Fuel Sense program and are replacing many of our older airplanes with more fuel-efficient models. Our team members

remain committed to improving our fuel efficiency and reducing our environmental impact, which led to 65 million gallons of jet fuel

savings from our FedEx Fuel Sense program in 2021. Additionally, we are modernizing our aircraft fleet to reduce costs, enhance

reliability and operational adaptability, improve fuel efficiency, and reduce emissions. We retired our MD-10-10 fleet at the end of

2021 and plan to retire our MD-10-30 fleet during 2023. We took delivery of four Boeing 777 Freighter (“B777F”) aircraft in 2022,

and plan to deploy an additional eight B777F aircraft between 2023 and 2025. Similarly, we took delivery of 12 Boeing 767-300

Freighter (“B767F”) aircraft in 2022, and plan to deploy an additional 38 B767F aircraft between 2023 and 2025. Delays could impact

these timelines. We are also deploying 30 new ATR 72-600F aircraft for shorter feeder routes to replace our aging ATR-42 aircraft

and introducing 50 Cessna SkyCourier 408 cargo aircraft to help reduce the number of planes needed per feeder route and further

improve our fuel efficiency.

A global increase in shipping volume exacerbated by the COVID-19 pandemic delayed the retirement of certain older aircraft and led

us to fall short of our goal to reduce aircraft emissions intensity by 30% from a 2005 baseline by calendar 2020. Due to the increased

demand for essential deliveries, e-commerce, and other global shipments in 2021, our aircraft emissions increased 12% compared to

our 2020 performance. However, we have reduced our overall aircraft emissions intensity by 27% since 2005.

Facilities

We strive to sustainably operate our more than 5,000 air and ground hubs, local stations, freight service centers, and retail locations

through continued investments in efficiency, renewable energy, and other energy management programs. Our facility energy

management strategy is more important than ever as our energy demand increases to support electric vehicle deployment. We increase

the efficiency of our facilities through energy management systems that monitor, control, and optimize our lighting, heating,

ventilation, and air-conditioning equipment. In 2021, we generated on- and off-site solar energy at a total of 26 global locations across

our operating companies. Where appropriate, we adopt the Leadership in Energy and Environmental Design (“LEED”) standard in the

U.S. and the Building Research Establishment Environmental Assessment Method (“BREEAM”) in Europe to guide efficient facility

design. FedEx Express and FedEx Freight seek LEED certification on all new construction, and in total FedEx has 39 LEED-certified

facilities and 13 BREEAM-certified facilities across our operating companies.

In addition, we aim to minimize our operational waste footprint. FedEx recognizes that the long-term health of our business is directly

connected to the health of the planet and local communities, and each operating company has robust programs and policies in place to

help mitigate adverse impacts on the local environment from facility operations.

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Sustainable Customer Solutions

FedEx works with customers to evaluate offering end-to-end sustainability for our supply chains through options such as carbon-

neutral shipping offerings and sustainable packaging solutions. We help customers ship packages responsibly by offering free

packaging options for FedEx Express shipments that are reusable, recyclable, and made from recycled content. All FedEx-branded

cardboard packaging is 100% recyclable. In addition, during 2021 the third-party certified content percentage of our packaging

materials was 75% and all paper purchased by FedEx Office was from vendors with responsible forest-management practices.

For additional information on the ways we are minimizing our impact on the environment, see fedex.com/en-us/sustainability.html.

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 ESG heading under “Governance” on the Investor

Relations page of our website at investors.fedex.com. We will post under the ESG 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.

Business Segments

The following describes in more detail the operations of each of our principal operating segments:

FedEx Express Segment

FedEx Express

Overview

FedEx Express invented express distribution nearly 50 years ago in 1973 and remains the industry leader, providing rapid, reliable,

time-definite delivery of packages and freight to more than 220 countries and territories through an integrated global network.

FedEx Express offers a wide range of U.S. domestic and international shipping services for delivery of packages and freight,

connecting markets that generate more than 99% of the world’s gross domestic product through door-to-door, customs-cleared service,

historically with a money-back guarantee. As of July 15, 2022, the money-back guarantee remains suspended for certain FedEx

Express services in order to balance our focus on service and safety. FedEx Express’s unmatched air route authorities and extensive

transportation infrastructure, combined with leading-edge information technologies, make it the world’s largest express transportation

company. As of May 31, 2022, FedEx Express employed nearly 250,000 employees and had approximately 74,000 drop-off locations

(including FedEx Office stores and FedEx OnSite locations, such as approximately 19,000 Walgreens, Dollar General, and Albertsons

stores), 696 aircraft, and approximately 86,000 vehicles in its global network.

FedEx Express also provides time-critical shipment services through FedEx Custom Critical, Inc. (“FedEx Custom Critical”) and

cross-border enablement and technology solutions and e-commerce transportation solutions. FedEx Cross Border Holdings, Inc. was

merged into FedEx Express during 2022.

Services

FedEx Express offers a wide range of U.S. domestic and international shipping services for delivery of packages and freight. FedEx

Express offers three U.S. domestic overnight package delivery services: FedEx First Overnight, FedEx Priority Overnight, and FedEx

Standard Overnight. FedEx SameDay service is available 365 days a year throughout all 50 states for urgent shipments up to 150

pounds. FedEx Express also offers U.S. express overnight and deferred freight services to handle the needs of the time-definite freight

market.

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International express and deferred package delivery is available to more than 220 countries and territories, with a variety of time-

definite services to meet distinct customer needs. FedEx International Economy provides time-definite delivery typically in two to five

business days. FedEx International First provides time-definite delivery to select postal codes in more than 25 countries and territories,

with delivery to select U.S. ZIP Codes as early as 8:00 a.m. from nearly 200 countries and territories in one or two business days,

delivery by 10:00 a.m. in one business day from the U.S. to Canada, and by 11:00 a.m. in one business day from the U.S. to Mexico.

FedEx Express also offers domestic pickup-and-delivery services within certain non-U.S. countries, including France, the United

Kingdom, Australia, Brazil, Italy, Canada, Mexico, Poland, India, China, and South Africa. In addition, FedEx Express offers

comprehensive international express and deferred freight services, real-time tracking, and advanced customs clearance.

Our FedEx International Priority service provides end-of-day time-definite delivery in one to three business days to more than 220

countries and territories, and our FedEx International Priority Express service provides midday time-definite delivery in one to three

business days to more than 20 countries and territories. Additionally, FedEx International Connect Plus, a contractual e-commerce

service currently available from nearly 50 origin countries to over 130 destination countries, provides day-definite delivery typically

within two to five business days.

For information regarding FedEx Express e-commerce tools and solutions, such as FedEx Delivery Manager and FedEx Returns

Technology, see “FedEx Services Segment — Customer-Driven Technology — E-Commerce Solutions.”

International Expansion

Over the years, FedEx Express has added capabilities in important international markets that have given us more robust transportation

networks. Our 2016 acquisition of TNT Express accelerated our European and global growth; substantially enhanced our global

footprint through TNT Express’s lower-cost road networks in Europe, the Middle East, and Asia; and expanded our capabilities and

solutions for our customers. The completion of the physical network integration of TNT Express into FedEx Express in 2022 and

consolidation of flights into our Paris hub allow us to significantly improve operational efficiency. We are currently in the process of

migrating customers from services offered by TNT Express to the FedEx Express portfolio of services. Additionally, we continue to

execute initiatives to transform and optimize the FedEx Express international business, particularly in Europe. For more information

regarding our international strategy and related costs, see “Item 1A. Risk Factors” and “Item 7. Management’s Discussion and

Analysis of Results of Operations and Financial Condition” of this Annual Report.

We also have expanded our capabilities in the Asia-Pacific markets, including through the establishment of our Asia-Pacific hub at the

Guangzhou Baiyun International Airport in southern China; our North Pacific regional hub at the Kansai International Airport in

Osaka, Japan, which serves as a consolidation point for shipments from northern Asia to the U.S.; and our International Express and

Cargo Hub in Shanghai at Shanghai’s Pudong International Airport. During 2020, we added 14 new Asia-Pacific origin markets for

FedEx International First service to the U.S. and Canada. These developments allow us to continue to better serve our global

customers doing business in the Asia-Pacific markets.

In December 2021, FedEx Express entered into a strategic alliance with Delhivery, a leading logistics and supply chain services

company in India. See “Item 7. Management’s Discussion and Analysis of Results of Operations and Financial Condition” of this

Annual Report for more information.

To facilitate the use of our growing international network, we offer a full range of international trade consulting services and a variety

of online tools that enable customers to more easily determine and comply with international shipping requirements.

U.S. Postal Service Agreement

In 2013, FedEx Express entered into a new seven-year agreement with the U.S. Postal Service (“USPS”) under which FedEx Express

provides airport-to-airport transportation of USPS First Class Mail, Priority Mail Express, and Priority Mail within the U.S. In 2017,

the parties entered into an amendment to the agreement whereby the initial renewal period provided in the agreement was exercised in

part and the agreement’s period of performance was extended through September 29, 2024. FedEx Express also provides

transportation and delivery for the USPS’s international delivery service called Global Express Guaranteed under a separate

agreement. For more information about our relationship with the USPS, see “Item 1A. Risk Factors” of this Annual Report.

Pricing

FedEx Express periodically publishes updates to the list prices for the majority of its services in its Service Guides. In general,

shipping rates are based on the service selected, origin, destination, weight, size, any ancillary service charge, and whether the

customer charged the shipment to a FedEx account. Effective January 3, 2022, FedEx Express implemented a 5.9% average list price

increase for U.S. domestic, U.S. export, and U.S. import services.

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In order to manage demand and capacity constraints in connection with the COVID-19 pandemic, between April 2020 and November

2020 FedEx Express implemented temporary surcharges on all international package and airfreight shipments. These surcharges

continued as peak surcharges beginning in November 2020 and remain in effect. Additionally, beginning in June 2020 FedEx Express

has implemented a series of peak surcharges generally applying to U.S. domestic shipments that are oversized or require additional

handling, and to residential packages for customers meeting a certain volume threshold. Specific applicable surcharges have been

adjusted periodically since their implementation, and higher surcharges were applied during the 2022 holiday peak season. Effective

January 17, 2022, the U.S. domestic holiday peak surcharges were no longer in effect, and an additional residential surcharge was

applied for customers who met certain volume thresholds. These changes reflect incremental costs associated with the challenging

operating environment, while enabling FedEx Express to continue investing in service enhancement, fleet maintenance, technology

innovations, and other areas to serve customers more effectively and efficiently.

FedEx Express has an indexed fuel surcharge for U.S. domestic and U.S. outbound shipments and for shipments originating

internationally, where legally and contractually possible. FedEx Express fuel surcharges are adjusted on a weekly basis. The fuel

surcharge is based on a weekly fuel price from two weeks prior to the week in which it is assessed. Some FedEx Express international

fuel surcharges incorporate a timing lag of approximately six to eight weeks. The fuel surcharge for U.S. domestic freight services is

assessed per pound of shipment. Effective June 21, 2021, November 1, 2021, and April 4, 2022, the tables used to determine fuel

surcharges at FedEx Express were updated. The weighted-average U.S. domestic and outbound fuel surcharges for the past three years

were: 2022 — 13.1%; 2021 — 4.9%; and 2020 — 6.3%. 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” of this Annual

Report for more information.

Operations

FedEx Express’s primary sorting facility, located in Memphis, serves as the center of the company’s multiple hub-and-spoke system.

A second national hub facility is located in Indianapolis. We are making investments over multiple years in our facilities to expand

and modernize our Indianapolis hub and Memphis World Hub. See the “Financial Condition — Liquidity Outlook” section of “Item 7.

Management’s Discussion and Analysis of Results of Operations and Financial Condition” of this Annual Report for more

information. In addition to these national hubs, FedEx Express operates regional hubs in Fort Worth, Newark, Oakland, and

Greensboro and major metropolitan sorting facilities in Chicago and Los Angeles.

Facilities in Anchorage, Paris, Cologne, Guangzhou, and Osaka serve as sorting facilities for express package and freight traffic

moving to and from Asia, Europe, and North America. Additional major sorting and freight handling facilities are located at Narita

Airport in Tokyo and Stansted Airport outside London. The facilities in Paris, Cologne, Guangzhou, and Osaka are also designed to

serve as regional hubs for their respective market areas. A facility in Miami — the Miami Gateway Hub — serves our South Florida,

Latin American, and Caribbean markets. A central air hub near Liege, Belgium connects specific large European markets. In addition

to its worldwide air network, FedEx Express operates road networks in North America, Europe, the Middle East, Asia, Australia, and

South America. FedEx Express’s unique European road network connects more than 40 countries and territories through 19 transit

hubs and over 540 stations.

Throughout its worldwide network, FedEx Express operates city stations and employs a staff of customer service agents, cargo

handlers, and couriers who pick up and deliver shipments in the station’s service area. In some international areas, independent agents

(“Global Service Participants”) have been selected to complete deliveries and to pick up packages. For more information about our

sorting and handling facilities, see “Item 2. Properties” of this Annual Report under the caption “FedEx Express Segment.”

FedEx Office offers retail access to FedEx Express shipping services at all of its retail locations. FedEx Express also has alliances with

certain other retailers to provide in-store drop-off sites, including at more than 19,000 Walgreens, Dollar General, and Albertsons

stores. Our unstaffed FedEx Drop Boxes provide customers the opportunity to drop off packages in office buildings, shopping centers,

and corporate or industrial parks.

Fuel Supplies and Costs

During 2022, FedEx Express purchased jet fuel from various suppliers under contracts that vary in length and which provide for

estimated amounts of fuel to be delivered. The fuel represented by these contracts is purchased at market prices. We do not have any

jet fuel hedging contracts. See “Pricing” above.

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The following table sets forth FedEx Express’s costs for jet fuel and its percentage of FedEx Corporation consolidated revenues for

the last five fiscal years:

Fiscal Year

Total Jet

Fuel Cost

(in millions)

Percentage of

Consolidated

Revenue

2022

3,867

4.1

2021

2,065

2.5

2020

2,265

3.3

2019

2,847

4.1

2018

2,460

3.8

Most of FedEx Express’s vehicle fuel needs are satisfied by retail purchases with various discounts.

Competition

As described in “Item 1A. Risk Factors” of this Annual Report, the express package and freight markets are both highly competitive

and sensitive to price and service, especially in periods of little or no macroeconomic growth. The ability to compete effectively

depends upon price, frequency, reliability, capacity and speed of scheduled service, ability to track packages, extent of geographic

coverage, innovative service offerings, and the fit within the customer’s overall supply chain.

Competitors within the U.S. include other package delivery concerns, principally United Parcel Service, Inc. (“UPS”), passenger

airlines offering express package services, regional delivery companies, air freight forwarders, and the USPS. FedEx Express’s

principal international competitors are DHL, UPS, DPD (a subsidiary of France’s La Poste’s GeoPost), General Logistics Systems (a

Royal Mail-owned parcel delivery group), foreign postal authorities, passenger airlines, air freight forwarders, regional carriers, and

all-cargo airlines. FedEx Express also competes with startup companies that combine technology with crowdsourcing to focus on local

market needs. In addition, some high-volume package shippers, such as Amazon.com, are developing and implementing in-house

delivery capabilities and utilizing independent contractors for deliveries, and may be considered competitors. For example,

Amazon.com has established a network of hubs, aircraft, and vehicles and has expressed an intention to offer its internal delivery

capabilities broadly to third parties. Many of FedEx Express’s international competitors are government-owned, -controlled, or

-subsidized carriers, which may have greater resources, lower costs, less profit sensitivity, and more favorable operating conditions

than FedEx Express. For more information, see “Item 1A. Risk Factors” of this Annual Report.

Employees

Donald F. Colleran is the President and Chief Executive Officer of FedEx Express, which is headquartered in Memphis, Tennessee.

Mr. Colleran will serve as President and Chief Executive Officer through August 31, 2022 and remain at FedEx Express as FedEx

Express CEO Executive Advisor until his retirement on December 31, 2022. Richard W. Smith, who previously served as Regional

President, The Americas and Executive Vice President, Global Support of FedEx Express, was appointed President and Chief

Executive Officer—Elect of FedEx Express effective April 1, 2022, and will succeed Mr. Colleran as President and Chief Executive

Officer of FedEx Express effective September 1, 2022. As of May 31, 2022, FedEx Express employed approximately 191,000

permanent full-time and approximately 58,000 permanent part-time employees.

The pilots of FedEx Express, who are a small number of its total employees, are represented by the Air Line Pilots Association,

International (“ALPA”) and are employed under a collective bargaining agreement that took effect in November 2015. The collective

bargaining agreement became amendable in November 2021. Bargaining for a successor agreement began in May 2021 and continues.

In addition to our pilots at FedEx Express, certain of FedEx Express’s non-U.S. employees are unionized. In June 2022, the Transport

Workers Union filed an application with the National Mediation Board requesting an election to represent approximately 130 Global

Operations Control (“GOC”) specialists who perform flight dispatching functions in FedEx Express’s GOC center. FedEx Express has

raised objections to the application in its response. FedEx Express believes its employee relations are excellent. See “Item 1A. Risk

Factors” of this Annual Report for more information.

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.

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FedEx Ground Segment

Overview

By leveraging the FedEx brand, maintaining a low-cost structure, and efficiently using information technology and advanced

automation systems, FedEx Ground continues to enhance its competitive position as a leading provider of business and residential

money-back guaranteed ground package delivery services. As of July 15, 2022, the money-back guarantee for all FedEx Ground

services remains temporarily suspended in order to balance our focus on service and safety. FedEx Ground serves customers in the

North American small-package market, focusing on business and residential delivery of packages weighing up to 150 pounds. Ground

service is provided to 100% of the continental U.S. population and overnight service of up to 400 miles to nearly 100% of the

continental U.S. population. Service is also provided to nearly 100% of the Canadian population. In addition, FedEx Ground offers

service to Alaska and Hawaii through a ground and air network operation coordinated with other transportation providers. FedEx

Ground provides seven-day-per-week residential delivery to virtually all of the U.S. population.

The company offers FedEx Home Delivery service, which reaches 100% of U.S. residences. FedEx Home Delivery is dedicated to

meeting the delivery needs of residential customers and provides routine Saturday and evening delivery and premium options such as

day-specific, appointment, and signature delivery. Sunday delivery is also provided for virtually all of the U.S. population. FedEx

Home Delivery brings unmatched services to residential shippers and their customers and is the first residential ground package

delivery service to have offered a money-back guarantee. FedEx Ground Economy service is available for the consolidation and

delivery of high volumes of low-weight, less time-sensitive business-to-consumer packages to any residential address or PO Box in

the U.S.

Pricing

FedEx Ground periodically publishes updates to the list prices for the majority of its services in its Service Guide. In general, U.S.

shipping rates are based on the service selected, origin, destination, weight, size, any ancillary service charge, and whether the

customer charged the shipment to a FedEx account. Effective January 3, 2022, FedEx Ground and FedEx Home Delivery

implemented a 5.9% average list price increase. FedEx Ground Economy average list prices also increased.

To manage demand and capacity constraints in connection with the COVID-19 pandemic, beginning in June 2020 FedEx Ground

implemented a series of surcharges generally applying to shipments that are oversized, unauthorized, or require additional handling; to

residential packages for customers meeting a certain volume threshold; and to FedEx Ground Economy shipments. Specific applicable

surcharges have been adjusted periodically since their implementation, and higher surcharges were applied during the 2022 holiday

peak season. Effective January 17, 2022, the holiday peak surcharges were no longer in effect, and additional surcharges were applied

to residential shipments for customers who met certain volume thresholds and to packages delivered or returned using FedEx Ground

Economy services. These changes reflect incremental costs associated with the challenging operating environment, while enabling

FedEx Ground to continue investing in service enhancement, equipment maintenance, technology innovations, and other areas to

serve customers more effectively and efficiently.

FedEx Ground has an indexed fuel surcharge, which is adjusted on a weekly basis. The fuel surcharge is based on a weekly fuel price

from two weeks prior to the week in which it is assessed. Effective June 21, 2021, November 1, 2021, and April 4, 2022, the tables

used to determine fuel surcharges at FedEx Ground 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” of this

Annual Report for more information.

Operations

FedEx Ground operates a highly flexible network of over 680 sortation and distribution facilities, including approximately 160 fully

automated stations, in the U.S. and Canada as of May 31, 2022. FedEx Ground conducts its operations primarily with more than

100,000 vehicles owned or leased by independent service providers. To provide FedEx Home Delivery service and FedEx Ground

Economy service, FedEx Ground leverages its pickup operation and hub and linehaul network.

In recent years, FedEx Ground’s network expansion has substantially increased the company’s daily capacity through the addition of

new facilities featuring the latest automated sorting technology as well as the expansion or relocation of existing hubs and other

facilities. FedEx Ground has also made significant operational enhancements to ensure safe and reliable handling of large and heavy

items. These changes include designing new facilities, adding equipment to certain facilities, and making other operational

adjustments.

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FedEx Ground continues to leverage opportunities to maximize utilization of existing facilities and deploy new technologies to

enhance operational efficiency. Advanced automated unloading and sorting technology is used to streamline the handling of millions

of packages daily. FedEx Ground yard management systems, which interact with GPS tags on each trailer and create geofences around

FedEx Ground facilities, automatically notify the control center when a trailer arrives and departs. Using overhead laser and six-sided

camera-based bar code scan technology, hub conveyors electronically guide packages to their appropriate destination chute, where

they are loaded for transport to their respective destination stations for local delivery. FedEx Ground is implementing dynamic

scheduling tools to match sort staffing headcount with volumes, and is introducing capabilities to allow certain packages to bypass

station sortation and proceed directly to vehicles, which helps to maximize station capacity. Additionally, FedEx Ground is testing

autonomous, driverless technologies in the handling of large, non-conveyable packages.

Advanced route optimization technology provides service providers near real-time data that can be used to plan efficient delivery

routes and make decisions about vehicle mix and workforce. Additionally, software systems and internet-based applications are

deployed to offer customers new ways to connect internal package data with external delivery information. FedEx Ground provides

shipment tracing and proof-of-delivery signature functionality through the FedEx website, fedex.com. For additional information

regarding FedEx Ground e-commerce tools and solutions, including FedEx Delivery Manager and FedEx Returns Technology, see

“FedEx Services Segment — Customer-Driven Technology — E-Commerce Solutions.”

FedEx Ground has recently introduced new vehicle safety technologies and incentives for adoption by its service providers, as well as

new eligibility standards for drivers employed by service providers.

FedEx Office offers retail access to FedEx Ground shipping services at all of its retail locations. FedEx Ground is also available as a

service option at all FedEx Authorized ShipCenters and other FedEx OnSite locations, including at approximately 19,000 Walgreens,

Dollar General, and Albertsons stores.

As of May 31, 2022, FedEx Ground employed approximately 66,000 permanent full-time and approximately 134,000 permanent part-

time employees. In addition, FedEx Ground contracts with over 6,000 independent small businesses to conduct its linehaul and

pickup-and-delivery operations, as the use of these service providers is well suited to the needs of the ground delivery business and its

customers.

FedEx Ground is defending lawsuits in which it is alleged that FedEx Ground should be treated as an employer or joint employer of

drivers employed by service providers engaged by FedEx Ground. We continue to believe that FedEx Ground is not an employer or

joint employer of the drivers of these independent businesses. For a description of these proceedings, see “Item 1A. Risk Factors” of

this Annual Report and Note 19 of the consolidated financial statements included in “Item 8. Financial Statements and Supplementary

Data” of this Annual Report.

John A. Smith is the President and Chief Executive Officer of FedEx Ground. FedEx Ground is headquartered in the Pittsburgh,

Pennsylvania area, and its primary competitors are UPS, the USPS, and regional delivery carriers. FedEx Ground also competes with

startup companies that combine technology with crowdsourcing to focus on local market needs. In addition, some high-volume

package shippers, such as Amazon.com, are developing and implementing in-house delivery capabilities and utilizing independent

contractors for deliveries. For example, Amazon.com has established a network of hubs and vehicles and has expressed an intention to

offer its internal delivery capabilities broadly to third parties. For more information, see “Item 1A. Risk Factors” of this Annual

Report.

FedEx Freight Segment

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 heavy, 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. 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 Canada and the U.S. In addition, FedEx

Freight serves Mexico, Puerto Rico, and the U.S. Virgin Islands via alliances. As of July 15, 2022, the money-back guarantee for all

FedEx Freight services remains temporarily suspended in order to balance our focus on service and safety.

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Through its many service offerings, FedEx Freight can match customers’ time-critical needs with industry-leading transit times. With

the expansion of FedEx electronic solutions, LTL shippers have the convenience of a single shipping and tracking solution for FedEx

Freight, FedEx Express, and FedEx Ground. These solutions make freight shipping easier and provide customers easy access to their

account information. The FedEx Freight Advance Notice feature available on FedEx Freight Priority shipments uses the company’s

innovative technology systems to proactively notify FedEx Freight customers via the internet, e-mail, or fax when a shipment may be

delayed beyond its estimated delivery date, providing customers with greater visibility and control of their LTL freight shipments.

Customers can also process 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 Ship Manager Server, and FedEx Web

Services. Additionally, FedEx Freight A.M. Delivery offers freight delivery by 10:30 a.m. within and between the U.S. and Canada.

FedEx Freight also offers LTL Select, 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 Direct addresses the growing e-commerce market for heavy bulky products and supports ongoing collaboration

between FedEx Freight and FedEx Ground. It has four service levels to meet customer needs, with basic and basic by appointment

available to nearly 100% of the U.S. population and standard and premium available to 90% of the continental U.S. population.

FedEx Freight continues to expand its use of DIM technology to more accurately capture freight profile, which improves the

company’s ability to cost and price shipments. FedEx Freight also uses radio frequency identification technology and customized

software to improve shipment visibility on its docks and enhance custodial control at the handling unit level.

As of May 31, 2022, the FedEx Freight segment was operating more than 30,000 vehicles from a network of approximately 400

service centers and had approximately 47,000 employees. Lance D. Moll is the President and Chief Executive Officer of FedEx

Freight, which is based in Memphis, Tennessee. FedEx Freight’s primary competitors are YRC Worldwide Inc. (which includes YRC

Regional Transportation and YRC Freight), XPO Logistics, Inc., Old Dominion Freight Line, Inc., ABF Freight (an ArcBest

company), SAIA, Inc., and TFI International Inc.

We are currently bargaining with the International Brotherhood of Teamsters at one FedEx Freight facility.

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 3, 2022, FedEx Freight implemented a 5.9% average list price

increase for customers who use FXF PZONE and FXF EZONE rates and a 7.9% 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.

In order to manage demand and capacity constraints, beginning in July 2021 FedEx Freight implemented a peak surcharge applying to

specific delivery points within the U.S. The peak 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.

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 November 1, 2021 and April 4, 2022, 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” of this Annual Report for more

information.

FedEx Services Segment

FedEx Services provides our other companies with sales, marketing, information technology, communications, customer service,

technical support, billing and collection services, and certain other back-office support. Through FedEx Services, we provide a

convenient single point of access for many customer support functions, enabling us to more effectively sell the entire portfolio of

transportation services and to help ensure a consistent and outstanding experience for our customers.

Brie A. Carere and Robert B. Carter each serve as the Co-President and Co-Chief Executive Officer of FedEx Services, which is based

in Memphis, Tennessee. As of May 31, 2022, the FedEx Services segment had approximately 15,000 employees.

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Customer-Driven Technology

FedEx is a world leader in technology, and FedEx founder Frederick W. Smith’s vision that “the information about a package is as

important as the delivery of the package itself” remains at the core of our comprehensive technology strategy. We strive to build

technology solutions that will solve our customers’ business problems with simplicity, convenience, speed, and reliability.

Additionally, FedEx stands at the nexus of digital and physical networks, a crucial intersection for the success of e-commerce

deliveries. We continue to expand our e-commerce convenience network and explore innovative alternatives to help customers and

businesses deliver. During 2022 we continued to advance a major information technology transition from traditional mainframe

computing to cloud-based systems, which is delivering significant benefits in terms of flexibility, security, speed to market, and

resiliency. See “FedEx Dataworks Operating Segment” below for more information on the solutions we are creating to “Innovate for

Tomorrow.”

Shipping Management and Precision Tracking

The fedex.com website is widely recognized for its speed, ease of use, and customer-focused features. The advanced tracking

capability within FedEx Tracking provides customers with a consolidated view of inbound and outbound shipments. FedEx Virtual

Assistant on fedex.com is an artificial-intelligence-enabled service that provides answers to customer shipping questions, allowing our

customer service representatives and sales professionals to focus on higher-value customer interactions.

SenseAware, a FedEx innovation currently available in nearly 90 countries worldwide, allows customers to stay connected to their

critical shipments by providing real-time updates regarding current location, precise temperature, relative humidity, barometric

pressure readings, light exposure, and shock events. Additionally, FedEx SenseAware ID is a lightweight sensor-based logistics device

that delivers a new level of precision tracking. The enhanced location visibility provided by FedEx SenseAware ID will create

opportunities for FedEx customers to reimagine their supply chains through real-time updates on a package’s location within the

FedEx Express network. FedEx is currently expanding access to FedEx SenseAware ID and plans to eventually make FedEx

SenseAware ID available for a broad range of premium FedEx Express services.

FedEx Mobile is a suite of solutions including the FedEx mobile application, FedEx mobile website, and SMS text messaging. The

FedEx Mobile app provides convenience for recipients to track packages and access FedEx Delivery Manager to customize home

deliveries. Shippers can easily get rates and estimated delivery times and swiftly create a shipping label. All users can quickly find the

nearest FedEx location for Hold at Location or drop-off. It is available on Android™ and Apple devices. The FedEx Mobil app has

expanded to more than 220 countries and territories and 40 languages. SMS Notifications allows customers to track or follow a

package via text messaging, and it is currently available in five countries.

Additionally, our FedEx Ship Manager suite of solutions offers a wide range of options to help our customers manage their parcel and

LTL shipping and associated processes.

E-Commerce Solutions

FedEx Delivery Manager allows our U.S. residential customers to customize home deliveries to fit their schedule by providing a range

of options to schedule dates, locations, and times of delivery. Additionally, FedEx Returns Technology, a comprehensive solution for

returns management, provides high-volume merchants and e-tailers complete visibility into returns and an easy way to track

shipments, manage inventory, analyze returns trends, and make more informed decisions based on shoppers’ returns behaviors.

FedEx OnSite, our retail convenience network, utilizes third-party retailers to receive and hold packages for FedEx customers. As of

July 15, 2022, the FedEx OnSite network has grown to include approximately 19,000 Walgreens, Dollar General, and Albertsons

stores in addition to our approximately 2,200 FedEx Office locations. In addition to allowing for an easy returns and drop-off

experience for shoppers, the FedEx OnSite network is well positioned to serve as a “buy online, pickup in store” network for small

and medium merchants without brick-and-mortar locations. We have also added FedEx Returns Technology to the Walgreens retail

network, which allows for in-store printing of return shipping labels and eliminates the need to include a return label in every package.

We have expanded e-commerce delivery options for retailers with FedEx Extra Hours, a service that enables participating retailers to

fulfill e-commerce orders into the evening and receive late pickups by FedEx Express, with next-day local delivery and two-day

shipping to any address in the continental U.S. FedEx Extra Hours, which is currently available to select customers, allows retailers to

extend evening order cutoff times by five to eight hours, with some as late as midnight, depending on their current order fulfillment

process.

In June 2022, FedEx announced the launch of Picture Proof of Delivery for express and ground residential deliveries in the U.S. and

Canada that are released without a signature in advance of the 2023 holiday peak season.

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Autonomous Delivery Technology

FedEx is exploring the use of autonomous delivery technology within its operations. Roxo, the FedEx SameDay Bot, an autonomous

delivery device designed to help retailers make on-demand same-day and last-mile deliveries to their customers, continues

development and testing in select markets. In 2021, we announced a multi-year, multi-phase agreement to test Nuro’s next-generation

autonomous delivery vehicle within FedEx operations. The collaboration with Nuro will explore various use cases for on-road

autonomous vehicle logistics such as multi-stop and appointment-based deliveries.

In 2022, we began a pilot program with Aurora Innovation, Inc. (“Aurora”) and PACCAR Inc. to test Aurora’s autonomous driving

technology in PACCAR autonomous vehicle platform-equipped trucks within FedEx linehaul operations. Additionally, FedEx

Express is developing plans to test Elroy Air’s autonomous air cargo system within the company’s middle-mile logistics operations,

moving shipments between sortation locations. We are also working with major national retailers, fast food restaurants, and drug

stores to help assess different customers’ autonomous delivery needs.

Marketing

The FedEx brand name symbolizes outstanding service, reliability, and speed. Emphasis is continually placed on promoting and

protecting the FedEx brand, one of our most important assets. As a result, FedEx is one of the most widely recognized brands in the

world. In addition to television, print, and digital advertising, we promote the FedEx brand through sponsorships and special events.

For example, FedEx sponsors:

• The UEFA Champions League, which is broadcast in over 200 countries and territories worldwide.

• The season-long FedExCup competition on the PGA Tour, including the FedEx St. Jude Championship, a PGA Tour event

that has raised millions of dollars for St. Jude Children’s Research Hospital and is one of three annual FedExCup playoff events.

• The #11 Joe Gibbs Racing Toyota Camry driven by Denny Hamlin in the NASCAR Cup Series.

Additionally, FedEx is the “Official Delivery Service Sponsor” and “Official Office Services Provider” of the NFL, through which we

conduct events and other activities to promote the FedEx brand, such as the “FedEx Air & Ground” NFL Players of the Week and

Players of the Year Awards.

Information Security

FedEx Services has a team of highly qualified professionals dedicated to securing information about our customers’ shipments and

protecting our customers’, vendors’, and employees’ privacy, and we strive to provide a safe, secure online environment for our

customers. We are committed to compliance with applicable information security laws, regulations, and industry standards. For a

description of risks related to information security, see “Item 1A. Risk Factors” of this Annual Report.

FedEx Office Operating Segment

As of May 31, 2022, FedEx Office operated approximately 2,200 customer-facing stores, providing convenient access to printing and

shipping expertise with reliable service.

The FedEx Office brick-and-mortar network features retail stores, FedEx Office locations inside Walmart stores, manufacturing

plants, corporate on-site print centers, 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 services, direct mail, signs and graphics, custom-

printed boxes, copying, computer rental, free Wi-Fi, corporate print solutions, 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. Customers also have the flexibility of using FedEx Office’s Print & Go solutions to print at self-serve locations from USBs,

the cloud, or through email. Print & Go solutions allow customers to access files using popular cloud providers Google Drive™, Box,

Microsoft OneDrive®, and from FedEx Office’s own My Online Documents, making printing easy.

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FedEx Office has prioritized our e-commerce and digital offerings as a growth opportunity for the enterprise/large, medium, and small

business customers we serve. FedEx Office has partnered with a content and creative design platform to form a digital design-to-print

marketplace offering millions of images and illustrations, an extensive library of templates, and a simple drag-and-drop interface to

create custom business materials from fedex.com on any device, with next-day printing on many requests available at FedEx Office

stores. Additionally, FedEx Office has partnered with a leading marketing solutions company to introduce an online branded

promotional products marketplace that allows businesses to customize and purchase high-quality promotional products. FedEx Office

has also made investments in new machines and technology, enhancing capabilities in narrow format color, grand format, large

format, color management, enhanced finishing, and other technologies.

FedEx Office provides customers convenient access to the full range of FedEx Express and FedEx Ground shipping services.

Customers may have their FedEx Express and FedEx Ground packages delivered to any FedEx Office customer-facing location

nationwide through the Hold at FedEx Location service, free of charge, and may redirect packages to these locations through Redirect

to Hold or AutoRedirect to Hold services. FedEx Office facilitates e-commerce and returns through FedEx Returns Technology,

which allows for in-store printing of return shipping labels. Additionally, FedEx SameDay City is available in over 1,800 cities in 34

markets across the U.S., offering door-to-door residential and business delivery of time-sensitive parcels within hours by FedEx Office

uniformed team members in branded FedEx Office delivery vehicles. Industries such as healthcare, life sciences, manufacturing,

finance, perishables, travel, and automotive rely on same-day services for critical delivery needs.

FedEx Office also offers packing services, and packing supplies and boxes are included in its retail offerings. By allowing customers

to have items professionally packed by specially trained FedEx Office team members and then shipped using FedEx Ground day-

definite shipping or time-definite global FedEx Express shipping services, FedEx Office offers a complete “pack-and-ship” solution.

FedEx Office also offers FedEx Pack Plus, which includes custom box building capabilities and techniques; a robust assortment of

specialty boxes; and additional packing supplies, equipment, and tools to serve our customers’ needs.

Almost all FedEx Office locations provide local pickup-and-delivery service for print jobs completed by FedEx Office. A FedEx

courier picks up a customer’s print job at the customer’s location and then returns the finished product to the customer. Options and

services vary by location.

Brian D. Philips is the President and Chief Executive Officer of FedEx Office, which is based in Plano, Texas. As of May 31, 2022,

FedEx Office had approximately 13,000 employees. FedEx Office is an operating segment that is included in “Corporate, other, and

eliminations” in our segment reporting.

FedEx Logistics Operating Segment

The FedEx Logistics operating segment plays a key role within the FedEx portfolio with a comprehensive suite of integrated logistics

solutions, providing air and ocean cargo transportation, specialty transportation, customs brokerage, and trade management tools and

data through FedEx Trade Networks Transport & Brokerage, as well as third party logistics and supply chain solutions through FedEx

Supply Chain. FedEx Logistics has the unique ability to leverage the power of the FedEx transportation networks as well as its global

network of service providers. Additionally, FedEx Logistics provides international trade advisory services.

Dr. Udo Lange is the President and Chief Executive Officer of FedEx Logistics, which is based in Memphis, Tennessee. As of May

31, 2022, the FedEx Logistics organization had approximately 21,000 employees. FedEx Supply Chain has a small number of

employees who are members of unions. FedEx Logistics is an operating segment that is included in “Corporate, other, and

eliminations” in our segment reporting.

FedEx Trade Networks Transport & Brokerage

FedEx Trade Networks Transport & Brokerage provides international trade services, specializing in customs brokerage, global ocean

and air freight forwarding, and managed transportation. Additionally, FedEx Trade Networks Transport & Brokerage provides

customs clearance services for FedEx Express at its major U.S. hub facilities and border customs clearance for FedEx Ground and

FedEx Freight. FedEx Trade Networks Transport & Brokerage also offers global door-to-door air charter solutions collaborating with

FedEx Express and U.S. import door-to-door less-than-container-load ocean solutions collaborating with FedEx Freight.

As trade throughout the world grows, so does the FedEx Trade Networks Transport & Brokerage solutions portfolio. As of May 31,

2022, FedEx Trade Networks Transport & Brokerage operated approximately 150 offices and facilities in 34 countries and territories

throughout North America and in Africa, Asia-Pacific, Europe, India, Latin America, the Middle East, and Australia/New Zealand.

FedEx Trade Networks Transport & Brokerage maintains a network of air and ocean freight-forwarding service providers and has

entered into strategic alliances to provide services in certain countries in which it does not have owned offices.

FedEx Trade Networks Transport & Brokerage offers customized trade solutions that enable improved compliance practices through

FedEx Trade Solutions.

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FedEx Supply Chain

FedEx Supply Chain is a supply chain solutions provider specializing in Product Lifecycle Logistics

for technology, retail, consumer

and industrial goods, and healthcare industries. With approximately 15,000 employees at approximately 100 facilities as of May 31,

2022, FedEx Supply Chain provides a comprehensive range of integrated logistics services to enable growth, minimize cost, mitigate

supply chain risk, and improve customer services. Service offerings include inbound logistics, warehousing and distribution,

fulfillment, contract packaging and product configuration, systems integration, returns process and disposition, test, repair,

refurbishment, and product liquidation.

FedEx Fulfillment is an e-commerce solution that helps small and medium-sized businesses fulfill orders from multiple channels,

including websites and online marketplaces, and manage inventory for their retail stores. The FedEx Fulfillment platform is designed

to be an easy-to-use and all-in-one logistics solution through which customers have complete visibility into their products, giving them

an easy way to track items, manage inventory, analyze trends, and make more informed decisions by better understanding shoppers’

spending behaviors.

FedEx Dataworks Operating Segment

The FedEx Dataworks operating segment is focused on putting our data into context and using it to transform the digital and physical

experiences of our customers and team members. The size and scale of our global network gives us a bird’s-eye view of global supply

chains and trends. This foundation provides an immense amount of data we can use to build better insights, increase visibility, and

improve the customer experience. FedEx Dataworks is creating solutions that allow us to “Innovate for Tomorrow” by collaborating

across the FedEx enterprise to integrate the technology and services integral to the success of our customers. Further, FedEx

Dataworks will help to facilitate an open and collaborative e-commerce ecosystem that helps merchants provide seamless end-to-end

experiences for their customers. In 2022, we enhanced tracking capabilities on fedex.com based on an advanced machine learning and

artificial intelligence model developed by FedEx Dataworks. This new experience delivers greater estimated delivery date accuracy,

including updates for early or delayed shipments.

ShopRunner is an e-commerce platform that directly connects brands and merchants with online shoppers. ShopRunner members

enjoy benefits that include free two-day shipping, free returns, member-exclusive discounts, and seamless checkout. ShopRunner’s

data-driven marketing and omnichannel enablement capabilities also help brands and merchants acquire high-value customers and

accelerate their digital innovation by using ShopRunner’s e-commerce platform. We believe the complementary nature of

ShopRunner’s pre-purchase offerings combined with FedEx’s post-purchase logistics intelligence will enable brands and merchants to

attract and engage consumers at scale by providing innovative online shopping experiences.

FedEx Surround allows any business to enhance visibility into its supply chain by leveraging data to provide near-real-time analytics

into shipment tracking, which will drive more precise logistics and inventory management.

Through innovative partnerships, FedEx Dataworks seeks to open pathways to e-commerce and empower customers with

differentiated insights and tools. In April 2021, we announced a multi-year collaboration with Adobe, starting with the integration of

ShopRunner with Adobe Commerce’s Magento platform. By integrating their online storefronts with ShopRunner, Adobe merchants

are able to offer seamless checkout, two-day shipping, easy returns, and exclusive offers to shippers. The collaboration also gives

merchants access to FedEx post-purchase logistics intelligence, allowing for better management of supply chains. In September 2021,

we announced a multi-year partnership with Salesforce that integrates Salesforce Commerce Cloud and Salesforce Order Management

with innovative capabilities from FedEx and ShopRunner.

In January 2022, FedEx and Microsoft announced a new cross-platform logistics solution for e-commerce aimed at increasing

merchant competitiveness in the e-commerce space by improving customer engagement and providing enhanced shipping options,

which is expected to be available to customers in the U.S. in the second half of calendar 2022. Additionally, in June 2022 FedEx and

FourKites announced a strategic alliance to provide businesses with new, more robust real-time supply chain visibility capabilities.

Sriram Krishnasamy is the President and Chief Executive Officer of FedEx Dataworks, which is based in Memphis, Tennessee. As of

May 31, 2022, FedEx Dataworks had approximately 400 employees. FedEx Dataworks is an operating segment that is included in

“Corporate, other, and eliminations” in our segment reporting.

Seasonality

For information on the seasonality of our business, see the “Results of Operations and Outlook — Consolidated Results — Seasonality

of Business” section of “Item 7. Management’s Discussion and Analysis of Results of Operations and Financial Condition” of this

Annual Report.

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Trademarks

The “FedEx” trademark, service mark, and trade name are essential to our worldwide business. FedEx, FedEx Express, FedEx

Ground, FedEx Freight, FedEx Services, FedEx Office, FedEx Logistics, FedEx Dataworks, FedEx Trade Networks Transport &

Brokerage, FedEx Supply Chain, FedEx Custom Critical, and ShopRunner, among others, are trademarks, service marks, and trade

names of Federal Express Corporation or the respective companies for which registrations, or applications for registration, are on file,

as applicable. We have authorized, through licensing arrangements, the use of certain of our trademarks, service marks, and trade

names by our contractors and Global Service Participants to support our business. In addition, we license the use of certain of our

trademarks, service marks, and trade names on promotional items for the primary purpose of enhancing brand awareness.

Regulation

Air. Under the Federal Aviation Act of 1958, as amended (the “Federal Aviation Act”), both the U.S. Department of Transportation

(“DOT”) and the Federal Aviation Administration (“FAA”) exercise regulatory authority over FedEx Express.

The FAA’s regulatory authority relates primarily to operational aspects of air transportation, including aircraft standards and

maintenance, as well as personnel and ground facilities, which may from time to time affect the ability of FedEx Express to operate its

aircraft in the most efficient manner. FedEx Express holds an air carrier certificate granted by the FAA pursuant to Part 119 of the

federal aviation regulations. This certificate is of unlimited duration and remains in effect so long as FedEx Express maintains its

standards of safety and meets the operational requirements of the regulations.

The DOT’s authority relates primarily to economic aspects of air transportation. The DOT’s jurisdiction extends to aviation route

authority and to other regulatory matters, including the transfer of route authority between carriers. FedEx Express holds various

certificates issued by the DOT, authorizing FedEx Express to engage in U.S. and international air transportation of property and mail

on a worldwide basis.

Under the Aviation and Transportation Security Act of 2001, as amended, the Transportation Security Administration (“TSA”), an

agency within the Department of Homeland Security, has responsibility for aviation security. The TSA requires FedEx Express to

comply with a Full All-Cargo Aircraft Operator Standard Security Plan, which contains evolving and strict security requirements.

These requirements are not static, but change periodically as the result of regulatory and legislative requirements, imposing additional

security costs and creating a level of uncertainty for our operations. It is reasonably possible that these rules or other future security

requirements could impose material costs on us.

FedEx Express participates in the Civil Reserve Air Fleet (“CRAF”) program. Under this program, the U.S. Department of Defense

may requisition for military use certain of FedEx Express’s wide-bodied aircraft in the event of a declared need, including a national

emergency. FedEx Express is compensated for the operation of any aircraft requisitioned under the CRAF program at standard

contract rates established each year in the normal course of awarding contracts. Through its participation in the CRAF program,

FedEx Express is entitled to bid on peacetime military cargo charter business. FedEx Express, together with a consortium of other

carriers, currently contracts with the U.S. government for such charter flights.

See “Item 1A. Risk Factors” of this Annual Report for discussion of regulations related to pilots, including the proposed pilot flight

and duty time regulations, that could affect our business.

Ground. The ground transportation performed by FedEx Express is integral to its air transportation services. The enactment of the

Federal Aviation Administration Authorization Act of 1994 abrogated the authority of states to regulate the rates, routes, or services of

intermodal all-cargo air carriers and most motor carriers. States may now only exercise jurisdiction over safety and insurance. FedEx

Express is registered in those states that require registration.

The operations of FedEx Ground, FedEx Freight, and FedEx Custom Critical in interstate commerce are currently regulated by the

DOT and the Federal Motor Carrier Safety Administration, which retain limited oversight authority over motor carriers. Federal

legislation preempts regulation by the states of rates, routes, and services in interstate freight transportation.

Like other interstate motor carriers, our operations, including those at FedEx Express, are subject to certain DOT safety requirements

governing interstate operations. In addition, vehicle weight and dimensions remain subject to both federal and state regulations.

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International. FedEx Express’s international authority permits it to carry cargo and mail from points in its U.S. route system to

numerous points throughout the world. The DOT regulates international routes and practices and is authorized to investigate and take

action against discriminatory treatment of U.S. air carriers abroad. The right of a U.S. carrier to serve foreign points is subject to the

DOT’s approval and generally requires a bilateral agreement between the U.S. and the foreign government. In addition, the carrier

must then be granted the permission of such foreign government to provide specific flights and services. The regulatory environment

for global aviation rights may from time to time impair the ability of FedEx Express to operate its air network in the most efficient

manner, and efficient operations often utilize open skies provisions of aviation agreements. Additionally, global air cargo carriers,

such as FedEx Express, are subject to current and potential additional aviation security regulation by U.S. and foreign governments.

Our operations outside of the U.S., such as FedEx Express’s international domestic operations, are also subject to current and potential

regulations, including certain postal regulations and licensing requirements, that restrict, make difficult, and sometimes prohibit, the

ability of foreign-owned companies such as FedEx Express to compete effectively in parts of the international domestic transportation

and logistics market.

Communication. Because of the extensive use of radio and other communication facilities in its aircraft and ground transportation

operations, FedEx Express is subject to the Federal Communications Commission Act of 1934, as amended. Additionally, the Federal

Communications Commission (“FCC”) regulates and licenses FedEx Express’s activities pertaining to satellite communications, and

also manages the spectrum allocation and licensing process. The FCC recently expanded the use of the 3.7 to 4.2 gigahertz (“GHz”)

spectrum band, which has historically been reserved for aviation, to support the implementation of “5G” cellular networks across the

U.S. In December 2021, following concerns of potential interference with aircraft radio altimeters by the expanded use of the 3.7 to

4.2 GHz spectrum band, the FAA issued airworthiness directives prohibiting U.S. aircraft operators from operating at U.S. airports

affected by 5G cellular networks unless authorized via an alternative means of compliance. FedEx Express’s U.S. air operations have

continued to operate with minimal interruption due to the FAA’s issuance of alternative means of compliance based on voluntary

mitigations agreed to by the telecommunication companies implementing 5G cellular networks. While the voluntary mitigations

remain in effect as of July 18, 2022, the telecommunication companies are expected to fully implement 5G cellular networks over the

course of the next calendar year. Accordingly, it is possible that the FAA may take additional action to address aviation safety

concerns related to 5G implementation, which could adversely affect FedEx Express’s U.S. domestic air operations. We continue to

engage with the FAA and other industry stakeholders on this issue.

Environmental. Pursuant to the Federal Aviation Act, the FAA, with the assistance of the U.S. Environmental Protection Agency

(“EPA”), is authorized to establish standards governing aircraft noise. FedEx Express’s aircraft fleet is in compliance with current

noise standards of the federal aviation regulations. In addition to federal regulation of aircraft noise, certain airport operators have

local noise regulations, which limit aircraft operations by type of aircraft and time of day. These regulations have had a restrictive

effect on FedEx Express’s aircraft operations in some of the localities where they apply but do not have a material effect in any of

FedEx Express’s significant markets. Congress’s passage of the Airport Noise and Capacity Act of 1990 established a National Noise

Policy, which enabled FedEx Express to plan for noise reduction and better respond to local noise constraints. FedEx Express’s

international operations are also subject to noise regulations in certain of the countries in which it operates.

Concern over climate change, including the impact of global warming, has led to significant U.S. and international legislative and

regulatory efforts to limit GHG emissions, including our aircraft and vehicle engine emissions. Increasingly, state and local

governments are also considering GHG regulatory requirements.

Compliance with such regulation and the associated potential cost is complicated by the fact that various countries and regions are

following different approaches to the regulation of climate change. For example, the EU has established the Emissions Trading

System (“ETS”) to regulate GHG emissions in the EU and adopted a directive in 2008 requiring each EU member state to extend the

ETS to aviation operations. Efforts by the EU in 2009 to regulate flights arriving from or departing for airports outside of the EU were

postponed. The EU extended its stay on the extra-territorial application of the EU ETS as applied to international flights to and from

the European Economic Area (“EEA”) through the end of calendar 2023, contingent on successful implementation of the Carbon

Offsetting and Reduction Scheme for International Aviation (“CORSIA”).

In 2016, the International Civil Aviation Organization (“ICAO”) passed a resolution adopting CORSIA, which is a global, market-

based measure for purchasing credits to offset carbon dioxide emissions and intended to aid in meeting the ICAO’s goal of carbon

neutral growth starting in calendar 2020 by complementing industry efforts in infrastructure upgrades, technology, operations, and

sustainable aviation fuel. In June 2018, the ICAO adopted standards pertaining to country-by-country implementation including the

collection and reporting of information on international aviation emissions beginning in calendar 2019. In furtherance of these efforts,

in 2019 the FAA issued notice of a CORSIA program enabling U.S. carriers to submit emissions data used to set the initial global

industry emissions baseline. Beginning in calendar 2021, requirements commenced for carriers subject to CORSIA to offset

international aviation emissions above the industry baseline by purchasing and retiring eligible carbon credits and/or utilizing

sustainable aviation fuel. In response to the creation of the CORSIA program, in December 2017, the EU adopted a proposal that

indefinitely excludes from the ETS flights operating fully or partly outside the EU and gradually reduces the number of aviation

allowances from calendar 2021. The EU has indicated that it will assess CORSIA implementation and determine the future status of

the ETS as applied to international aviation to and from the EEA. We expect compliance with CORSIA to increase FedEx operating

expenses. The amount of such increase will ultimately depend on a number of factors, including the number of our flights subject to

CORSIA, the fuel efficiency of our fleet, the average growth of the aviation sector, our ability to utilize sustainable aviation fuels in

the future, and the price of ICAO-eligible emission units or offsets required to be purchased by FedEx.

Additionally, in calendar 2016, the EPA issued a finding that aircraft engine GHG emissions cause or contribute to air pollution that

may reasonably be anticipated to endanger public health or welfare. In 2017, ICAO adopted new carbon dioxide emissions standards

that would apply not only to new aircraft types as of calendar 2020, but also to new deliveries of current in-production aircraft types

from calendar 2023. Additionally, a cutoff date of calendar 2028 for production of aircraft that do not comply with proposed standards

was adopted. These standards are considered to be especially stringent for larger aircraft weighing over 60 tons. In 2021, the EPA

adopted its own aircraft and aircraft engine GHG emissions standards, which are aligned with the 2017 ICAO emissions standards. In

the past, the U.S. Congress has also considered bills that would regulate GHG emissions, and some form of federal climate change

legislation is possible in the future. In 2021 the U.S. reentered the Paris climate accord, an agreement among 197 countries to reduce

GHG emissions. The effect of the reentry on future U.S. policy regarding GHG emissions and on other GHG regulation is uncertain.

Additionally, the extent to which other countries implement that agreement could have an adverse direct or indirect effect on our

business.

We are also subject to international, federal, state, and local environmental laws and regulations relating to, among other things, the

shipment of dangerous goods and contingency planning for spills of petroleum products. Additionally, we are subject to numerous

regulations dealing with underground fuel storage tanks, hazardous waste handling, vehicle and equipment emissions and noise, and

the discharge of effluents from our properties and equipment. FedEx Express has an environmental management system based on

International Standardization 14001 designed to maintain compliance with these regulations and minimize our operational

environmental footprint.

Export Controls. In recent years, the U.S. government has increased the number of companies and persons subject to U.S. export

control regulations. Such regulations can restrict the types of items that FedEx customers are permitted to ship to certain entities, and

in some instances may prohibit FedEx from serving certain entities altogether. Violations of these regulations can result in significant

monetary and other penalties. For example, the Export Control Reform Act of 2018 (the “ECRA”) and its implementing regulations,

the Export Administration Regulations (the “EARs”), hold carriers such as FedEx strictly liable for shipments that may violate the

EARs without requiring evidence that the carriers had knowledge of any violations. Violations of the ECRA can result in criminal

penalties of up to $1 million and civil penalties of $305,000 (or twice the value of the transaction) per individual violation. FedEx is

investing in improvements and updates to its export control compliance programs. However, the heightened focus on export controls

by the U.S. government increases FedEx’s exposure to potential regulatory penalties and could result in higher compliance costs.

In June 2019 FedEx filed suit in U.S. District Court in the District of Columbia seeking to enjoin the U.S. Department of Commerce

(the “DOC”) from enforcing prohibitions contained in the EARs against FedEx. FedEx believes that the EARs violate common

carriers’ rights to due process under the Fifth Amendment of the U.S. Constitution as they unreasonably hold common carriers strictly

liable for shipments that may violate the EARs without requiring evidence that the carriers had knowledge of any violations. In

September 2020 the court granted the DOC’s motion to dismiss the lawsuit. In November 2020 we appealed this decision. On July 8,

2022, the U.S. Court of Appeals for the District of Columbia Circuit affirmed the dismissal of the lawsuit.

Customs. Our activities, including customs brokerage and freight forwarding, are subject to regulation by U.S. Customs and Border

Protection and the TSA within the Department of Homeland Security (customs brokerage and security issues), the U.S. Federal

Maritime Commission (ocean freight forwarding), and the DOT (air freight forwarding). Our offshore operations are subject to similar

regulation by the regulatory authorities of foreign jurisdictions.

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Labor. All U.S. employees at FedEx Express are covered by the Railway Labor Act of 1926, as amended (the “RLA”), while labor

relations within the U.S. at our other companies are governed by the National Labor Relations Act of 1935, as amended (the

“NLRA”). Under the RLA, groups that wish to unionize must do so across nationwide classes of employees. The RLA also requires

mandatory government-led mediation of contract disputes supervised by the National Mediation Board before a union can strike or an

employer can replace employees or impose contract terms. This part of the RLA helps minimize the risk of strikes that would shut

down large portions of the economy. Under the NLRA, employees can unionize in small localized groups, and government-led

mediation is not a required step in the negotiation process.

The RLA was originally passed to govern railroad and express carrier labor negotiations. As transportation systems evolved, the law

expanded to cover airlines, which are the dominant national transportation systems of today. As an air express carrier with an

integrated air/ground network, FedEx Express and its employees have been covered by the RLA since the founding of the company.

The purpose of the RLA is to offer employees a process by which to unionize (if they choose) and engage in collective bargaining

while also protecting global commerce from damaging work stoppages and delays. Specifically, the RLA ensures that an entire

transportation system, such as at FedEx Express, cannot be shut down by the actions of a local segment of the network.

The U.S. Congress has, in the past, considered adopting changes in labor laws that would make it easier for unions to organize units of

our employees. For example, there is always a possibility that Congress could remove most FedEx Express employees from the

jurisdiction of the RLA, thereby exposing the FedEx Express network to sporadic labor disputes and the risk that small groups of

employees could disrupt the entire air/ground network. In addition, federal and state governmental agencies, such as the National

Mediation Board and the National Labor Relations Board (“NLRB”), have and may continue to take actions that could make it easier

for our employees, and employees of service providers contracting with FedEx Ground, to organize under the RLA or NLRA. For a

description of these and other potential labor law changes, see “Item 1A. Risk Factors” of this Annual Report.

Data Protection. There has recently been heightened regulatory and enforcement focus relating to the collection, use, retention,

transfer, and processing of personal data in the U.S. (at both the state and federal level) and internationally. For more information

regarding data protection regulation, see “Item 1A. Risk Factors” of this Annual Report.

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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.

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 growth of global trade — key macroeconomic measurements influenced by, among other things, inflation and

deflation, supply chain disruptions, interest rates and currency exchange rates, labor costs and unemployment levels, fuel and energy

prices, public health crises, inventory levels, buying patterns and disposable income, debt levels, and credit availability. 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. Certain

manufacturers and retailers are making investments to produce and house goods in closer proximity to supply chains and consumers in

connection with recent macroeconomic, geopolitical, and public health developments. Additionally, consumer spending has shifted

from goods to services. We expect these trends to continue. Further, we have a relatively high fixed-cost structure, which is difficult to

quickly adjust to match shifting volume levels.

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 current conflict between Russia and Ukraine, may adversely affect our business and results

of operations. We have suspended all services in Ukraine, Russia, and Belarus, which has not had and is not expected to have a

material impact on our business or results of operations. The broader consequences of this conflict, 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 the Russian government against companies, including us, as a result of the suspension of

services in Russia, including nationalization of foreign businesses in Russia; 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.

To the extent the current conflict between Russia and Ukraine adversely affects our business, it 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, ransom attack, or cyber-intrusion; adverse changes in international trade policies; our ability to maintain or increase our

prices, including our fuel surcharges in response to rising fuel costs; our ability to implement and execute our business strategy,

particularly with regard to our FedEx Express 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.

Geopolitical uncertainty negatively impacted operations at FedEx Express in 2022. We expect slowing economic conditions during

2023. Additionally, we incurred higher costs due to labor market challenges in 2022, and we expect such conditions to continue to be

present in 2023. For more information, see “Our failure to attract and retain employee talent or maintain our company culture, as well

as increases in labor and purchased transportation costs, could adversely impact our business and results of operations.” below and

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

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Additional changes in international trade policies and relations could significantly reduce the volume of goods transported

globally and adversely affect our business and results of operations. The U.S. government has taken certain actions that have

negatively impacted U.S. trade, including imposing tariffs on certain goods imported into the U.S. Additionally, several foreign

governments have imposed tariffs on certain goods imported from the U.S. These actions contributed to weakness in the global

economy that adversely affected our results of operations in recent years. Any further changes in U.S. or international trade policy,

including tariffs, export controls, quotas, embargoes, or sanctions, could trigger additional retaliatory actions by affected countries,

resulting in “trade wars” and further increased costs for goods transported globally, which may reduce customer demand for these

products if the parties having to pay tariffs or other anti-trade measures increase their prices, or in trading partners limiting their trade

with countries that impose such measures. Political uncertainty surrounding international trade and other disputes could also have a

negative effect on business and consumer confidence and spending. Such conditions could have an adverse effect on our business,

results of operations, and financial condition, as well as on the price of our common stock.

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 are impacted by the price and availability of jet and vehicle 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. In

addition, our purchased transportation expense is impacted by fuel costs. To date, we have been mostly successful in mitigating over

time the expense impact 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 impact our operating results. 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, 2022, we had no

derivative financial instruments to reduce our exposure to fuel price fluctuations.

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 impact on our ability to operate our transportation

networks. The following factors may impact 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; environmental concerns; cyberattacks; and public and investor sentiment. Several of

these factors combined to constrain fuel supply and increase prices in 2022, and we expect such conditions to continue to be present in

2023.

Operating Risks

A significant data breach or other disruption to our technology infrastructure could disrupt our operations and result in the loss of

critical confidential information, adversely impacting our reputation, business, or results of operations. Our ability to attract and

retain customers, to efficiently operate our businesses, and to compete effectively depends in part upon the sophistication, security,

and reliability of our technology network, including our ability to provide features of service that are important to our customers, to

protect our confidential business information and the information provided by our customers, and to maintain customer confidence in

our ability to protect our systems and to provide services consistent with their expectations. For example, we rely on information

technology to receive package level information in advance of physical receipt of packages, to track items that move through our

delivery systems, to efficiently plan deliveries, to execute billing processes, and to track and report financial and operational data. We

are subject to risks imposed by data breaches and operational disruptions, including through cyberattack or cyber-intrusion, by

computer hackers, foreign governments, cyber terrorists and activists, cyber criminals, malicious employees or other insiders of FedEx

or third-party service providers, and other groups and individuals. Data breaches of companies and governments continue to increase

as the number, intensity, and sophistication of attempted attacks and intrusions from around the world have increased and we, our

customers, and third parties increasingly store and transmit data by means of connected information technology systems. Additionally,

risks such as code anomalies, “Acts of God,” transitional challenges in migrating operating company functionality to our FedEx

enterprise automation platforms, data leakage, cyber-fraud, and human error pose a direct threat to our products, services, systems, and

data and could result in unauthorized or block legitimate access to sensitive or confidential data regarding our operations, customers,

employees, and suppliers, including personal information.

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The technology infrastructure of acquired businesses, as well as their practices related to the use and maintenance of data, could also

present issues that we were not able to identify prior to the acquisition. See “Failure to successfully implement our business strategy

and effectively respond to changes in market dynamics and customer preferences will cause our future financial results to suffer.”

below for additional information on risks related to ShopRunner and FedEx Dataworks.

We also depend on and interact with the technology and systems of third parties, including our customers and third-party service

providers such as cloud service providers and delivery services. Such third parties may host, process, or have access to information we

maintain about our company, customers, employees, and vendors or operate systems that are critical to our business operations and

services. Like us, these third parties are subject to risks imposed by data breaches, cyberattacks, and other events or actions that could

damage, disrupt, or close down their networks or systems. We have security processes, protocols, and standards in place, including

contractual provisions requiring such security measures, that are applicable to such third parties and are designed to protect

information that is held by them, or to which they have access, as a result of their engagements with us. Nevertheless, a cyberattack

could defeat one or more of such third parties’ security measures, allowing an attacker to obtain information about our company,

customers, employees, and vendors or disrupt our operations. These third parties may also experience operational disruptions or

human error that could result in unauthorized access to sensitive or confidential data regarding our operations, customers, employees,

and suppliers, including personal information.

A disruption to our complex, global technology infrastructure, including those impacting our computer systems and websites, could

result in the loss of confidential business or customer information, require substantial repairs or replacements, resulting in significant

costs, and lead to the temporary or permanent transfer by customers of some or all of their business to our competitors. The foregoing

could harm our reputation and adversely impact our operations, customer service, and results of operations. Additionally, a security

breach could require us to devote significant management resources to address the problems created. These types of adverse impacts

could also occur in the event the confidentiality, integrity, or availability of company and customer information was compromised due

to a data loss by FedEx or a trusted third party. We or the third parties with which we share information may not discover any security

breach and loss of information for a significant period of time after the security breach occurs.

We have invested and continue to invest in technology security initiatives, information-technology risk management, business

continuity, and disaster recovery plans, including investments to retire and replace end-of-life systems. The development and

maintenance of these measures is costly and requires ongoing monitoring and updating as technologies change and efforts to

overcome security measures become increasingly more frequent, intense, and sophisticated. Despite our efforts, we are not fully

insulated from data breaches, technology disruptions, data loss, and cyber-fraud, which could adversely impact our competitiveness

and results of operations. See “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended May 31, 2021 for

information regarding the 2017 NotPetya cyberattack at TNT Express and immaterial cyber incidents we experienced in 2017 and

2018. Additionally, we have experienced continual attempts by cyber criminals, some of which have been successful, to gain access to

customer accounts for the purposes of fraudulently diverting and misappropriating items being transported in our network. None of

these fraudulent cyber activities caused a material disruption to our systems or resulted in any material costs to FedEx.

While we have significant security processes and initiatives in place, we may be unable to detect or prevent a breach or disruption in

the future. Additionally, while we have insurance coverage designed to address certain aspects of cyber risks in place, such insurance

coverage may be insufficient to cover all losses or all types of claims that may arise. See “Our business is subject to complex and

evolving U.S. and foreign laws and regulations regarding data protection.” below for additional information on risks related to legal

and regulatory developments with respect to data protection.

The continuing impact of the COVID-19 pandemic on our business, results of operations, and financial condition is highly

unpredictable. Since late 2020, the COVID-19 pandemic has had varying impacts on the demand for our services, our business

operations, and the global economy and supply chains. There is considerable uncertainty regarding the extent to which COVID-19 will

continue to spread in certain regions of the world and the extent and duration of measures to try to contain the virus, such as travel

bans and restrictions, quarantines, shelter-in-place orders, business and government shutdowns, and other restrictions. This uncertainty

is expected to continue to impact our business in 2023.

The COVID-19 pandemic negatively impacted our operating results in 2022. Global recovery from the impacts of the COVID-19

pandemic slowed with the onset of new variants, which resulted in reduced shipping demand and caused network disruptions,

particularly at FedEx Express. Our business is labor and capital intensive in nature, which has required us to incur higher costs to

operate our networks during the pandemic. If we are unable to remain agile and continue to flex our networks to align with shipping

volumes, customer needs, disrupted global supply chains and other network inefficiencies, market demands, and operating conditions,

or are unable to continuously respond to evolving governmental policies for the duration of a prolonged period of economic recovery,

our business operations could be negatively impacted, which could have a further adverse effect on our results of operations.

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We have also incurred increased operating expenses related to personal protective equipment and medical/safety supplies, as well as

additional security and cleaning services, in order to protect our team members and customers. Due to the size, scope, and

geographically dispersed nature of our operations, the expenses we incur to protect the health and safety of certain of our employees

may be higher than similar expenses incurred by companies in other industries.

Additionally, a significant number of our employees as well as customers and others with whom we do business continue to work

remotely in response to the COVID-19 pandemic. Our business operations may be disrupted, and we may experience increased risk of

adverse effects on our business, if a significant portion of our workforce or certain business operations are negatively impacted as a

result of remote work arrangements, including due to cyber risks or other disruption to our technology infrastructure.

The continuing impact of the COVID-19 pandemic, including the extent of its effect on our business, results of operations, and

financial condition as well as the global economy, will be dictated by future developments that remain uncertain and cannot be

predicted, such as its duration and spread, the success of efforts to contain it and treat its impact, the possibility of additional

subsequent widespread outbreaks and variant strains and the impact of actions taken in response, resulting effects on the economic

conditions in the global markets in which we operate, the future rate of e-commerce growth, and the timeline for recovery of

passenger airline cargo capacity.

To the extent the COVID-19 pandemic continues to adversely affect our business and financial results, it may also have the effect of

heightening many other risks described in this section, any of which could materially and adversely affect our business, results of

operations, and financial condition. Such risks include, but are not limited to, additional changes in the state of the global economy

and international trade policies and relations; our ability to implement our business strategy and effectively respond to changes in

market dynamics and customer preferences; our strong reputation and the value of the FedEx brand; our ability to meet our labor and

purchased transportation needs while controlling related costs; our ability to execute and effectively operate, integrate, leverage, and

grow acquired businesses; changes in the business and financial soundness of the USPS; our ability to achieve our goal of carbon

neutrality for our global operations by calendar 2040; and the impact of litigation or claims from customers, team members, suppliers,

regulators or other third parties relating to the COVID-19 pandemic or our actions in response to the pandemic.

For more information about the COVID-19 pandemic and its effect on our business, results of operations, and financial condition, see

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

Outlook—Consolidated Results” of this Annual Report.

We are self-insured for certain costs associated with our operations, and insurance and claims expenses could have a material

adverse effect on us. We are self-insured up to certain limits that vary by type of risk for costs associated with workers’ compensation

claims, vehicle accidents, property and cargo loss, general business liabilities, and benefits paid under employee disability programs.

Our self-insurance accruals are primarily based on estimated costs determined by actuarial methods. Estimated costs include

consideration of a variety of factors and related assumptions such as the severity of claims, frequency and volume of claims,

healthcare inflation, seasonality, and plan designs, which may be subject to a high degree of variability. However, 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. Material increases in the magnitude of claims, changes to healthcare costs,

accident frequency and severity, insurance retention levels, judgment and settlement amounts, associated legal expenses, and other

factors could result in unfavorable differences between actual self-insurance costs and our reserve estimates. As a result, our insurance

and claims costs could continue to increase materially which could adversely affect our results of operations and financial condition.

During 2022, higher self-insurance accruals negatively impacted our results of operations. See “Item 7. Management’s Discussion and

Analysis of Results of Operations and Financial Condition” of this Annual Report for more information.

As a supplement to our self-insurance program, we maintain coverage with excess insurance carriers for potential losses that exceed

the amounts we self-insure. Periodically, we evaluate the level of insurance coverage and adjust insurance levels based on risk

tolerance, risk volatility, and premium expense. Although we believe our aggregate insurance limits should be sufficient to cover our

historic claims amounts, the commercial trucking industry has experienced a wave of blockbuster or so-called “nuclear” verdicts,

including some instances in which juries have awarded hundreds of millions of dollars to those injured in accidents and their families

(such as the recently affirmed award by a New Mexico state court jury in a personal injury and wrongful death lawsuit against FedEx

Ground discussed below). Given this recent trend, it is possible that additional claims could exceed our aggregate coverage limits. If

any other claim were to exceed our aggregate insurance coverage, we would bear the excess in addition to our other self-insured

amounts.

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Given the current claims environment, the amount of coverage available from excess insurance carriers is decreasing, the premiums

for this excess coverage are increasing significantly, and excess insurance carriers are challenging insurance claims more frequently.

Accordingly, our excess insurance and claims expenses may continue to increase, or we could further increase our self-insured

retention as policies are renewed or replaced. In 2015, a jury awarded compensatory damages of approximately $160 million to

plaintiffs in connection with a personal injury and wrongful death lawsuit filed against FedEx Ground in New Mexico state court. The

award was subsequently affirmed by the New Mexico Court of Appeals and ultimately by the New Mexico Supreme Court in May

2022. While our insurance carriers have funded the approximately $160 million base judgment in excess of FedEx Ground’s $7.5

million self-insured retention and insurance deductible, we are currently pursuing insurance coverage for reimbursement of

approximately $210 million of pre- and post-judgment interest. See Note 19 of the consolidated financial statements included in “Item

8. Financial Statements and Supplementary Data” of this Annual Report for more information. Our results of operations and financial

condition could continue to be adversely affected if our costs or losses significantly exceed our aggregate coverage limits, we are

unable to obtain excess insurance coverage in amounts we deem sufficient, our insurance carriers fail to pay on our insurance claims,

or we experience a claim for which coverage is not provided.

The transportation infrastructure continues to be a target of terrorist activities. Because transportation assets continue to be a target

of terrorist activities, governments around the world are adopting or are considering adopting stricter security requirements that will

increase operating costs and potentially slow service for businesses, including those in the transportation industry. These security

requirements are not static, but change periodically as the result of regulatory and legislative requirements, imposing additional

security costs and creating a level of uncertainty for our operations. For example, the TSA requires FedEx Express to comply with a

Full All-Cargo Aircraft Operator Standard Security Plan, which contains evolving and strict security requirements. Additionally, the

ICAO’s standard that previously allowed a member state to permit carriers and other entities to determine, without government

oversight, which shippers and shipments are secure for purposes of putting those shipments on all-cargo aircraft was modified

effective July 1, 2021. As a result, we are now required to undertake additional security measures for international outbound

shipments. It is reasonably possible that these rules or other future security requirements could impose material costs on us or slow our

service to our customers. The impact on our operations of avoiding areas of the world, including airspace, in which there are

geopolitical conflicts and the targeting of aircraft by parties to those conflicts can also be significant. Moreover, a terrorist attack

directed at FedEx or other aspects of the transportation infrastructure could disrupt our operations and adversely impact demand for

our services.

Strategic Risks

Failure to successfully implement our business strategy and effectively respond to changes in market dynamics and customer

preferences will cause our future financial results to suffer. We are making significant investments and other decisions in

connection with our long-term business strategy, such as investments in fleet and facility modernization and strategic investments to

increase collaboration and automation and improve productivity, network efficiencies, and safety. Additionally, we are executing

initiatives to use data to transform the digital and physical experiences of our customers and team members, as well as to transform

and optimize the FedEx Express international business, particularly in Europe. See “Item 1. Business” and “Item 7. Management’s

Discussion and Analysis of Results of Operations and Financial Condition” of this Annual Report for additional information.

Such initiatives and enhancements may require us to make significant capital expenditures or incur significant expenses. We have also

incurred, and may continue to incur, increased operating expenses in connection with certain changes to our business strategy. We

may not be able to derive the expected operational efficiencies, cost savings, and other benefits from our strategic investments and

other decisions. For example, in 2021 we announced a workforce reduction plan in Europe. The execution of the plan is subject to a

works council consultation process that will occur through 2023 in accordance with local country processes and regulations. The

actual amount and timing of business realignment costs and related cost savings resulting from the workforce reduction plan are

dependent on local country consultation processes and regulations and negotiated social plans and may differ from our current

expectations and estimates. If we are not able to successfully implement this plan, our future financial results may suffer.

Changes in our business strategy may also expose us to new and heightened risks. For example, ShopRunner, which we acquired in

2020, collects and stores certain personal data of its merchants and their buyers, its partners, consumers with whom it has a direct

relationship, and users of its applications. Additionally, it uses third-party service providers and subprocessors to help deliver services

to merchants and their buyers. These service providers and subprocessors may store or access personal data, including payment

information and/or other confidential information. The foregoing factors increase the risk of data incidents and the amount of potential

exposure in the event of a data breach. Developing privacy legislation within the U.S. may also create limitations or added

requirements on the use of personal data within and among FedEx Dataworks, ShopRunner, and the other FedEx operating companies.

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Further, in developing our business strategy, we make certain assumptions including, but not limited to, those related to customer

demand and the mix of services to be purchased by our customers, the future rate of e-commerce growth and the timeline for recovery

of passenger airline cargo capacity, competition, and the global economy, and actual market, economic, and other conditions may be

different from our assumptions. As technology, customer behavior, and market conditions continue to evolve, it is important that we

maintain the relevance of our brand and service offerings to our customers. If we are not able to successfully implement our business

strategy and effectively respond to changes in market dynamics and customer preferences, our future financial results will suffer. For

additional discussion, see “Item 1. Business” of this Annual Report under the caption “Strategy.”

We may not be able to achieve our fiscal 2025 financial performance goals. In June 2022, we announced that FedEx is targeting

certain financial performance goals for fiscal 2025. Our ability to achieve these goals is dependent on a number of factors, including

the other risk factors described in this section. If we are not able to achieve these goals, the price of our common stock may be

negatively affected.

We depend on our strong reputation and the value of the FedEx brand. The FedEx brand name symbolizes high-quality service,

reliability, and speed. FedEx is one of the most widely recognized, trusted, and respected brands in the world, and the FedEx brand is

one of our most important and valuable assets. In addition, we have a strong reputation among customers, team members, and the

general public for high standards of social and environmental responsibility and corporate governance and ethics. The FedEx brand

name and our corporate reputation are powerful sales and marketing and recruitment tools, and we devote significant resources to

promoting and protecting them. Adverse publicity (whether or not justified) relating to activities by our team members or others with

whom we do business, such as customer service mishaps, accidents, catastrophes, or incidents involving aircraft, vehicles, or facilities

operated by us; low service or safety levels; data breaches or technology infrastructure disruptions; noncompliance with laws; the

shipment of certain items pursuant to our obligation as a common carrier operating under federal law; our advertising campaigns,

sponsorship arrangements, or marketing programs; or our executive compensation practices could tarnish our reputation and reduce

the value of our brand. With the increase in the use of social media outlets such as Facebook, YouTube, Instagram, Twitter, and

TikTok, adverse publicity can be disseminated quickly and broadly without context, making it increasingly difficult for us to

effectively respond. Further, our actual or perceived position or lack of position on social, environmental, political, public policy, or

other sensitive issues, and any perceived lack of transparency about those matters, could harm our reputation with certain groups,

including our customers and team members. Damage to our reputation and loss of brand equity could reduce demand for our services

and/or create difficulties in retaining and recruiting employee talent, and thus have an adverse effect on our financial condition,

liquidity, and results of operations, as well as require additional resources to rebuild our reputation and restore the value of our brand.

Changes in the business or financial soundness of the USPS, including strategic changes to its operations to reduce its reliance on

the air network of FedEx Express, could have an adverse effect on our results of operations and financial condition. The USPS is

the largest customer of FedEx Express, which provides domestic air transportation services for the USPS’s First Class Mail, Priority

Mail Express, and Priority Mail and transportation and delivery for the USPS’s international delivery service. See “Item 1. Business”

of this Annual Report under “FedEx Express Segment” for more information.

The COVID-19 pandemic has negatively impacted the USPS. Additionally, the USPS continues to experience budgetary uncertainty

as well as increased political debate regarding potential privatization or restructuring of its operations. The USPS is currently

implementing strategic changes to its operations to reduce its reliance on the air networks of FedEx Express and other transportation

providers, which negatively impacted our results of operations in 2022. The difficulties discussed above or additional changes in the

USPS’s business, including its ability to access capital or any structural changes to its operations, network, volume levels, service

offerings, service commitments, or pricing, could have additional negative impacts on our revenue, results of operations, and financial

condition. Further, a decision by the USPS to terminate early or not renew its contract with FedEx Express for domestic services,

which expires in September 2024, would negatively impact our profitability.

We face intense competition. The transportation and business services markets are both highly competitive and sensitive to price and

service, especially in periods of little or no macroeconomic growth. Some of our competitors have more financial resources and

competitive advantages than we do, appear willing to operate at little or no margin to gain market share, or they are owned, controlled,

or subsidized by foreign governments, which enables them to raise capital more easily. We also compete with regional transportation

providers that operate smaller and less capital-intensive transportation networks and startup companies that combine technology with

crowdsourcing to focus on local market needs. In addition, some high-volume package shippers are developing and implementing in-

house delivery capabilities and utilizing independent contractors for deliveries, which could in turn reduce our revenues and market

share. For example, Amazon.com has established a network of hubs, aircraft, and vehicles and has expressed an intention to offer its

internal delivery capabilities broadly to third parties. See “Item 1. Business” of this Annual Report for additional information.

We believe we compete effectively with these companies — for example, by providing more reliable service at compensatory prices.

However, the existence of an irrational pricing environment could limit our ability not only to maintain or increase our prices

(including our fuel surcharges in response to rising fuel costs), but also to maintain or grow our revenues and market share. While we

believe we compete effectively through our current and planned service offerings, if our current competitors or potential future

competitors offer a broader range of services or better service levels, more effectively bundle their services, or offer services at lower

prices, it could impede our ability to maintain or grow our market share. Continued transportation industry consolidation may further

increase competition. Moreover, if high-volume package shippers further develop or expand internal capabilities for the services we

provide, it may reduce our revenue and could negatively impact our financial condition and results of operations. These impacts could

be exacerbated if high-volume package shippers offer such capabilities to third parties. News regarding such developments or

expansions could also negatively impact the price of our common stock.

Additionally, advancements in technology, such as advanced safety systems; automated package sorting, handling, and delivery;

autonomous delivery; third-party supply chain insight and management; vehicle platooning; alternative fuel vehicles; and digitization

of freight services, may necessitate that we increase investments in order to remain competitive, and our customers may not be willing

to accept higher rates to cover the cost of these investments.

Our businesses are capital intensive, and we must make capital decisions based upon projected volume levels. We make significant

investments in aircraft, package handling facilities, vehicles, technology, sort equipment, and other assets to support our transportation

and business networks. We also make significant investments to rebrand, integrate, and grow the companies that we acquire. The

amount and timing of capital investments depend on various factors, including our anticipated volume growth. We must make

commitments to purchase or modify aircraft years before the aircraft are actually needed. We must predict volume levels and fleet

requirements and make commitments for aircraft based on those projections. Missing our projections could result in too much or too

little capacity relative to our shipping volumes. Overcapacity could lead to below-market asset dispositions or write-downs, as well as

negatively impact operating margins, and undercapacity could negatively impact service levels.

Our inability to execute and effectively operate, integrate, leverage, and grow acquired businesses and realize the anticipated

benefits of acquisitions, joint ventures, and strategic alliances and investments could materially adversely affect us. Our strategy for

long-term growth, productivity, and profitability depends in part on our ability to make prudent strategic acquisitions and investments,

form joint ventures or strategic alliances, and realize the expected benefits from these transactions. We regularly acquire businesses,

enter into strategic alliances, and make investments across the more than 220 countries and territories in which we provide services.

Acquisitions and other strategic transactions involve special commercial, customer, accounting, regulatory, compliance, information

technology, human resources, cultural, and other risks, including the potential assumption of unanticipated liabilities and

contingencies. Additionally, we may be required to make significant capital expenditures and/or incur certain operating expenses

following the completion of certain transactions, which may be higher than initially expected. For example, existing and future

customer data in the systems and business of FedEx and ShopRunner may not be immediately interoperable, or may not be

interoperable without significant added expense. In addition, we are currently in the process of migrating customers from services

offered by TNT Express to the FedEx Express portfolio of services.

While we expect our past and future acquisitions and strategic transactions to enhance our value proposition to customers and improve

our business and long-term profitability, there can be no assurance that we will realize our expectations within the time frame we have

established, if at all, or that we can continue to support the value we allocate to acquired businesses, including their goodwill or other

intangible assets. We have previously incurred goodwill impairment charges related to certain of our acquisitions, some of which have

been material, and may incur additional goodwill impairment charges in the future.

Our autonomous delivery strategy is dependent upon our ability to successfully mitigate unique technological, operational, and

regulatory risks. As discussed further in “Item 1. Business” under “FedEx Services Segment—Customer-Driven Technology—

Autonomous Delivery Technology,” we are exploring the use of autonomous delivery technology within our operations. Autonomous

delivery is a new and evolving market, which makes it difficult to predict its acceptance, growth, the magnitude and timing of

necessary investments, and other trends. This aspect of our business strategy is subject to a variety of risks inherent with the

development of new technologies, including the ability to continue to develop autonomous delivery software and hardware; access to

sufficient capital; our ability to develop and maintain necessary partnerships; risks related to the manufacture of autonomous devices;

and significant competition from other companies, some of which may have more resources and capital to devote to autonomous

delivery technologies than we do.

In addition, we face risks related to the commercial deployment of autonomous delivery devices on our targeted timeline or at all,

including consumer acceptance; achievement of adequate safety and other performance standards; and compliance with uncertain,

evolving, and potentially conflicting federal and state regulations. To the extent accidents, cybersecurity breaches, or other adverse

events associated with our autonomous delivery devices occur, we could be subject to liability, government scrutiny, further

regulation, and reputational damage. Any of the foregoing could adversely impact our results of operations, financial condition, and

growth prospects.

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Human Resource Management Risks

Our failure to attract and retain employee talent or maintain our company culture, as well as increases in labor and purchased

transportation costs, could adversely impact our business and results of operations. Our success depends upon the efforts and

abilities of our high-quality employees, many of whom are longstanding FedEx team members. Difficulties in motivating, rewarding,

recruiting, and retaining employee talent, including successors to members of senior management; the unexpected loss of such

individuals resulting in the depletion of our institutional knowledge base; and/or our inability to successfully transition key roles could

have an adverse impact on our business, results of operations, reputation, and the price of our common stock. Certain positions at

FedEx have historically experienced high turnover rates, which can lead to increased recruiting, training, and retention costs.

Additionally, our company culture is important to providing high-quality customer service and having a productive workforce and

could be adversely affected by our growing operations and other factors. If we fail to maintain the strength of our company culture,

our competitive ability and our business may be harmed.

Our business is labor intensive in nature, and our ability to meet our labor and purchased transportation needs while controlling related

costs is generally subject to numerous external factors, including the availability of qualified persons in the markets where we and our

contracted service providers operate and unemployment levels within these markets, prevailing wage rates and other benefits, health

and other insurance costs, inflation, behavioral changes, adoption of new or revised employment and labor laws and regulations

(including increased minimum wage requirements) or government programs, safety levels of our operations, our reputation within the

labor market, the continuing effect of the COVID-19 pandemic and variant strains, the availability of child care, and vaccine mandates

that may be announced in jurisdictions in which our businesses operate. Labor market challenges contributed to global supply chain

disruptions and affected the availability and cost of labor resulting in network inefficiencies, higher purchased transportation costs,

and higher wage rates in 2022. We expect such conditions to continue to be present in 2023. See “Item 7. Management’s Discussion

and Analysis of Results of Operations and Financial Condition” of this Annual Report for more information. Our inability to

effectively meet our labor and purchased transportation needs can hinder our ability to execute our business strategy, negatively

impact service levels, and adversely affect our business and results of operations.

Labor organizations attempt to organize groups of our employees from time to time, and potential changes in labor laws could

make it easier for them to do so. If we are unable to continue to maintain good relationships with our employees and avoid having

labor organizations organize groups of our employees, our operating costs could significantly increase and our operational flexibility

could be significantly reduced. Despite continual organizing attempts by labor unions, other than the pilots at FedEx Express and

drivers at one FedEx Freight, Inc. facility, our U.S. employees have thus far chosen not to unionize (we acquired FedEx Supply Chain

in 2015, which already had a small number of employees who are members of unions). Additionally, certain of FedEx Express’s non-

U.S. employees are unionized. In June 2022, the Transport Workers Union filed an application with the National Mediation Board

requesting an election to represent approximately 130 GOC specialists who perform flight dispatching functions in FedEx Express’s

GOC center. FedEx Express has raised objections to the application in its response. In 2022, labor unions attempted to organize

employees at businesses and in industries that have not traditionally been unionized, and in certain instances were successful. Such

attempts could continue in 2023.

Our collective bargaining agreement with the ALPA, which represents the pilots of FedEx Express, became amendable in November

2021. Bargaining for a successor agreement began in May 2021 and continues. While collective bargaining agreements under the

RLA, which covers the pilots at FedEx Express, do not expire, we may be unable to maintain certain favorable terms included in the

current collective bargaining agreement following negotiations with the ALPA. Our inability to successfully reach new collective

bargaining agreements with the ALPA and other unions representing FedEx employees could adversely affect our business and results

of operations.

The U.S. Congress has, in the past, considered adopting changes in labor laws that would make it easier for unions to organize units of

our employees. For example, there is always a possibility that Congress could remove most FedEx Express employees from the

jurisdiction of the RLA. For additional discussion of the RLA, see “Item 1. Business” of this Annual Report under the caption

“Regulation.” Such legislation could expose our customers to the type of service disruptions that the RLA was designed to prevent —

local work stoppages in key areas that interrupt the timely flow of shipments of time-sensitive, high-value goods throughout our global

network. Such disruptions could threaten our ability to provide competitively priced shipping options and ready access to global

markets.

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There is also the possibility that Congress could pass other labor legislation that could adversely affect our companies, such as FedEx

Ground and FedEx Freight, whose employees are governed by the NLRA. In addition, federal and state governmental agencies, such

as the National Mediation Board and the NLRB, have and may continue to take actions that could make it easier for our employees, as

well as our vendor and supplier workforces, to organize under the RLA or NLRA. Finally, changes to federal or state laws,

regulations, rules, judicial or administrative precedent, or guidance governing employee classification could impact the status of

FedEx Ground’s service providers as independent employers of drivers. If FedEx Ground is deemed to be an employer or joint

employer of the drivers of these service providers, labor organizations could more easily organize these individuals, our operating

costs could increase materially, and we could incur significant capital outlays and experience adverse impacts to service levels.

FedEx Ground contracts with service providers to conduct its linehaul and pickup-and-delivery operations, and the status of these

service providers as direct and exclusive employers of drivers providing these services is being challenged. We are defending joint-

employer cases where it is alleged that FedEx Ground should be treated as an employer or joint employer of the drivers employed by

service providers engaged by FedEx Ground. We incur certain costs, including legal fees, in defending the status of service providers

engaged by FedEx Ground as direct employers of their drivers. We continue to believe that FedEx Ground is not an employer or joint

employer of the drivers of these independent businesses. However, adverse determinations in these matters or regulatory

developments could, among other things, entitle service providers’ drivers to certain wage payments and penalties from the service

providers and FedEx Ground, and result in employment and withholding tax and benefit liability for FedEx Ground.

Proposed pilot flight and duty time regulations could impair our operations and impose substantial costs on us. In 2010, the FAA

proposed regulations that would change the flight and duty time rules applicable to all-cargo air carriers. When the FAA issued final

regulations in 2011 (the “2011 regulations”), all-cargo carriers, including FedEx Express, were exempt from these new requirements.

Instead, all-cargo carriers were required to continue complying with previously enacted flight and duty time rules and allowed to

pursue the development of fatigue risk management systems to develop fatigue mitigations unique to each operation. In 2012, the

FAA reaffirmed the exclusion of all-cargo carriers from the 2011 regulations, and litigation in the U.S. Court of Appeals for the

District of Columbia affirmed the FAA’s decision. However, this issue remains a policy priority for certain labor groups, and the U.S.

Congress is currently considering legislation that, if adopted, would require all-cargo carriers to comply with the 2011 regulations.

Required compliance with the 2011 regulations would make it more difficult to avoid pilot fatigue and could impose substantial costs

on us in order to maintain operational reliability.

Increasing costs, the volatility of costs and funding requirements, and other legal mandates for employee benefits, especially

pension and healthcare benefits, could adversely impact our results of operations, financial condition, and liquidity. We sponsor

programs that provide retirement benefits to most of our employees. These programs include defined benefit pension plans, defined

contribution plans, and postretirement healthcare plans. The costs of providing pension and other retirement benefit plans are

dependent on numerous assumptions, such as discount rates, investment returns on plan assets, salary increases, expected retirement,

mortality, employee turnover, and future increases in healthcare costs. Changes in actuarial assumptions and differences between the

assumptions and actual values, as well as significant declines in the value of investments that fund our pension and other

postretirement plans, if not offset or mitigated by a decline in plan liabilities, could increase pension and other postretirement expense,

and we could be required from time to time to fund the pension plans with significant amounts of cash. Such cash funding obligations

could adversely affect our results of operations and liquidity. Additionally, the rules for pension and retirement benefit plan

accounting are complex, involve numerous assumptions, and can produce volatility in our results of operations, financial condition,

and liquidity. For example, our fourth quarter mark-to-market (“MTM”) retirement plans accounting adjustment resulted in a pre-tax,

noncash loss of $1.3 billion in 2022 ($1.0 billion, net of tax, or $3.76 per diluted share) and a gain of $1.2 billion in 2021 ($936

million, net of tax, or $3.48 per diluted share). For additional information on our MTM retirement plans accounting adjustments, see

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

Outlook—Consolidated Results—Retirement Plans MTM Adjustments” and Note 14 of the consolidated financial statements included

in “Item 8. Financial Statements and Supplementary Data” of this Annual Report.

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Environmental, Climate, and Weather Risks

We may be affected by global climate change or by legal, regulatory, or market responses to such change. Concern over climate

change, including the impact of global warming, has led to significant U.S. and international legislative and regulatory efforts to limit

GHG emissions, including our aircraft and vehicle engine emissions. Increasingly, state and local governments are also considering

GHG regulatory requirements. Compliance with such regulation and the associated potential cost is complicated by the fact that

various countries and regions are following different approaches to the regulation of climate change. Increased regulation regarding

GHG emissions, especially aircraft or vehicle engine emissions, could impose substantial costs on us, especially at FedEx Express.

These costs include an increase in the cost of the fuel and other energy we purchase and capital costs associated with updating or

replacing our aircraft or vehicles prematurely. Until the timing, scope, and extent of such possible regulation becomes known, we

cannot predict its effect on our cost structure or our operating results. It is reasonably possible, however, that it could materially

increase our operating expenses and have an adverse direct or indirect effect on our business, if instituted. For additional discussion of

regulatory responses to climate change, including CORSIA and the Paris climate accord, see “Item 1. Business” of this Annual Report

under the caption “Regulation.” We may also incur additional expenses as a result of U.S. and international regulators requiring

additional disclosures regarding GHG emissions.

Moreover, even without such regulation, increased awareness and any adverse publicity in the global marketplace about the GHGs

emitted by companies in the airline and transportation industries could harm our reputation and reduce customer demand for our

services, especially our air express services. Finally, given the broad and global scope of our operations and our susceptibility to

global macroeconomic trends, we are particularly vulnerable to the physical risks of climate change that could affect all of humankind,

such as shifts in weather patterns and world ecosystems.

We may be unable to achieve our goal of carbon neutrality for our global operations by calendar 2040. In 2021, we announced a

goal to achieve carbon neutrality for our global operations by calendar 2040. Achievement of this goal depends on our execution of

operational strategies relating to vehicle electrification; development of sustainable customer solutions; identification and investment

in alternative fuels, fuel conservation, and aircraft modernization programs; and investments in our facilities and natural carbon

sequestration.

Execution of these strategies and achievement of our calendar 2040 goal is subject to risks and uncertainties, many of which are

outside of our control. These risks and uncertainties include, but are not limited to: our ability to successfully implement our business

strategy, effectively respond to changes in market dynamics and achieve the anticipated benefits and associated cost savings of such

strategies and actions; the availability and cost, and our ability to acquire, alternative fuel vehicles, alternative fuels, fuel-efficient

aircraft, global electrical charging infrastructure, off-site renewable energy, and other materials and components; unforeseen

production, design, operational, and technological difficulties; the outcome of research efforts and future technology developments,

including the ability to scale projects and technologies on a commercially competitive basis such as carbon sequestration and/or other

related processes; compliance with, and changes or additions to, global and regional regulations, taxes, charges, mandates, or

requirements relating to GHG emissions, carbon costs, or climate-related goals; labor-related regulations and requirements that restrict

or prohibit our ability to impose requirements on third parties who provide contracted transportation for our transportation networks;

adapting products to customer preferences and customer acceptance of sustainable supply chain solutions; and the actions of

competitors and competitive pressures.

There is no assurance that we will be able to successfully execute our strategies and achieve our calendar 2040 goal of carbon

neutrality for our global operations. Failure to achieve our calendar 2040 goal could damage our reputation and customer and other

stakeholder relationships. Further, given investors’ increased focus related to environmental, social, and governance matters, such a

failure could cause large stockholders to reduce their ownership of FedEx common stock and limit our access to financing. Such

conditions 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 inability to quickly and effectively restore operations following adverse weather or a localized disaster or disturbance in a key

geography could adversely impact our business and results of operations. While we operate several integrated networks with assets

distributed throughout the world, there are concentrations of key assets within our networks that are exposed to adverse weather

conditions or localized risks from natural or manmade disasters such as earthquakes, volcanoes, wildfires, hurricanes, tornadoes,

floods, severe winter weather, conflicts or unrest, terrorist attacks, or other disturbances, actual or threatened. Additionally, shifts in

weather patterns caused by climate change could increase the frequency, severity, or duration of certain adverse weather conditions.

Prolonged interruptions or disruptions at a key location such as our FedEx Express Memphis World Hub or one of our information-

technology centers could adversely impact our business and results of operations. We also may incur significant costs to reestablish or

relocate these functions. Moreover, resulting economic dislocations, including supply chain and fuel disruptions, could adversely

impact demand for our services resulting in an adverse effect on our business and results of operations.

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Other Legal, Regulatory, and Miscellaneous Risks

Government regulation and enforcement are evolving and unfavorable changes could harm our business. We are subject to

regulation under a wide variety of U.S. federal, state, and local and non-U.S. government regulations, laws, policies, and actions.

There can be no assurance that such regulations, laws, policies, and actions will not be changed in ways that will decrease the demand

for our services, subject us to escalating costs, or require us to modify our business models and objectives, harming our financial

results. In particular, legislative, regulatory, or other actions that U.S. and non-U.S. governments have undertaken or are considering

in areas such as data privacy and sovereignty, the use of new technology, taxes, foreign exchange intervention in response to currency

volatility, currency controls that could restrict the movement of liquidity from particular jurisdictions, trade controls, tariffs, quotas,

embargoes, or sanctions in the U.S. or other countries, complex economic sanctions, import and export controls, customs standards,

additional security or workplace and transportation health and safety requirements, labor and employment standards (including with

respect to our pilots) and benefits, government contracting, regulated commodities, environmental standards, and accounting may

have an adverse effect on our results of operations, financial condition, capital requirements, effective tax rate, and service levels. For

additional discussion, see “Item 1. Business” of this Annual Report under the caption “Regulation.” Additionally, the current U.S.

presidential administration and various U.S. federal and state regulatory bodies have indicated a desire to reform various aspects of

existing laws, regulations, and enforcement priorities and strategies that could, among other things, lead to comprehensive tax reform,

broadly increase the U.S. minimum wage to $15 per hour, make it easier for unions to organize our U.S. employees, and alter the

employment relationship between service providers engaged by FedEx Ground and the drivers employed by those service providers.

We could be subject to adverse changes in regulations and interpretations or challenges to our tax positions. We are subject to

taxation in the U.S. and numerous foreign jurisdictions. From time to time, changes in tax laws or regulations may be enacted that

could significantly affect our overall tax liabilities and our effective tax rate. U.S. and foreign governmental agencies maintain focus

on the taxation of multinational companies, including statutory tax rates, global minimum taxes (such as the framework agreed to by

members of the Organization for Economic Cooperation and Development in 2022), digital taxes, and transactions between affiliated

companies. Such changes may require new and complex computations to be performed, significant judgments, estimates, and

calculations to be made, and the preparation and analysis of information not previously relevant or regularly produced.

Standard-setting bodies could interpret or issue guidance on how provisions of certain tax laws and regulations will be applied or

otherwise administered that is different from our interpretation, and we may be required to make adjustments to amounts that we have

recorded that may adversely impact our results of operations and financial condition. See “Item 7. Management’s Discussion and

Analysis of Results of Operations and Financial Condition—Results of Operations and Outlook—Consolidated Results—Income

Taxes” of this Annual Report for information regarding the lawsuit we filed in 2021 challenging the validity of a tax regulation related

to the one-time transition tax on unrepatriated foreign earnings, which was enacted as part of the Tax Cuts and Jobs Act.

Our business is subject to complex and evolving U.S. and foreign laws and regulations regarding data protection. There has

recently been heightened regulatory and enforcement focus relating to the collection, use, retention, transfer, and processing of

personal data in the U.S. (at both the state and federal level) and internationally, including the EU’s General Data Protection

Regulation, the California Privacy Rights Act, the Virginia Consumer Data Protection Act, and other similar laws that have been or

will be enacted by other jurisdictions. In addition, China and certain other jurisdictions have enacted more stringent data localization

requirements. An actual or alleged failure to comply with applicable U.S. or foreign data protection laws, regulations, or other data

protection standards may expose us to litigation (including, in some instances, class action litigation), fines, sanctions, or other

penalties, which could harm our reputation and adversely impact our business, results of operations, and financial condition. This

regulatory environment is increasingly challenging, based on discretionary factors, and difficult to predict. Consequently, compliance

with all applicable regulations in the various jurisdictions in which we do business may present material obligations and risks to our

business, including significantly expanded compliance burdens, costs, and enforcement risks; require us to make extensive system or

operational changes; or adversely affect the cost or attractiveness of the services we offer. All of these evolving compliance and

operational requirements, as well as the uncertain interpretation and enforcement of laws, impose significant costs and regulatory risks

that are likely to increase over time. See “Failure to successfully implement our business strategy and effectively respond to changes

in market dynamics and customer preferences will cause our future financial results to suffer.” above for additional information on

data protection risks related to ShopRunner and FedEx Dataworks.

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The regulatory environment for global aviation or other transportation rights may impact our operations and increase our

operating costs. Our extensive air network is critical to our success. Our right to serve foreign points is subject to the approval of the

DOT and generally requires a bilateral agreement between the U.S. and foreign governments. In addition, we must obtain the

permission of foreign governments to provide specific flights and services. Our operations outside of the U.S., such as FedEx

Express’s international domestic operations, are also subject to current and potential regulations, including certain postal regulations

and licensing requirements, that restrict, make difficult, and sometimes prohibit, the ability of foreign-owned companies such as

FedEx Express to compete effectively in parts of the international domestic transportation and logistics market. Regulatory or

executive actions affecting global aviation or transportation rights or a failure to obtain or maintain aviation or other transportation

rights in important international markets could impair our ability to operate our networks. Further, our ability to obtain or maintain

aviation or other transportation rights internationally may be adversely affected by changes in international trade policies and

relations.

We are subject to other extensive regulatory and legal compliance requirements that may result in significant costs. For instance, the

FAA from time to time issues directives and other regulations relating to the maintenance and operation of aircraft that require

significant expenditures in order to comply. High-profile accidents, catastrophes, or incidents involving aircraft may trigger increased

regulatory and legal compliance requirements. These requirements can be issued with little or no notice, or can otherwise impact our

ability to efficiently or fully utilize our aircraft, and in some instances have resulted in the temporary grounding of aircraft types

altogether. Further, our business may be adversely impacted when government agencies cease to operate as expected, including due to

partial shutdowns, sequestrations, or similar events, which may result in, among other things, disruption in the ability of government

agencies to grant required regulatory approvals. For additional discussion, see “Item 1. Business” of this Annual Report under the

caption “Regulation.”

We are also subject to other risks and uncertainties, including:

• widespread outbreak of an illness or any other communicable disease, or any other public health crisis;

• the United Kingdom’s exit from the EU (“Brexit”), including the economic, operational, regulatory, and financial impacts of

any post-Brexit trade deal between the United Kingdom and EU;

• the increasing costs of compliance with federal, state, and foreign governmental agency mandates (including the Foreign

Corrupt Practices Act and the U.K. Bribery Act) and defending against inappropriate or unjustified enforcement or other actions

by such agencies;

• changes in foreign currency exchange rates, especially in the euro, Chinese yuan, British pound, Canadian dollar, Hong

Kong dollar, Australian dollar, Japanese yen, and Mexican peso, which can affect our sales levels and foreign currency sales

prices;

• any liability resulting from and the costs of defending against class-action, derivative, and other litigation, such as wage-

and-hour, joint employment, securities, vehicle accident, and discrimination and retaliation claims, claims related to our

mandatory and voluntary reporting and disclosure of climate change and other ESG topics, and any other legal or governmental

proceedings, including the matters discussed in Note 19 of the consolidated financial statements included in “Item 8. Financial

Statements and Supplementary Data” of this Annual Report;

• the impact of technology developments on our operations and on demand for our services, and our ability to continue to

identify and eliminate unnecessary information-technology redundancy and complexity throughout the organization;

• 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;

• governmental underinvestment in transportation infrastructure, which could increase our costs and adversely impact our

service levels due to traffic congestion, prolonged closure of key thoroughfares, or sub-optimal routing of our vehicles and

aircraft;

• stockholder activism, which could divert the attention of management and our board of directors from our business, hinder

execution of our business strategy, give rise to perceived uncertainties as to our future, and cause the price of our common stock

to fluctuate significantly; and

• constraints, volatility, or disruption in the capital markets, our ability to maintain our current credit ratings, commercial

paper ratings, and senior unsecured debt and pass-through certificate credit ratings, and our ability to meet credit agreement

financial covenants.

- 38 -

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

FedEx Express Segment

FedEx Express’s principal owned and leased properties include its aircraft, vehicles, major sorting and handling facilities,

administration buildings, FedEx Drop Boxes, and data processing and telecommunications equipment.

Aircraft and Vehicles

As of May 31, 2022, FedEx Express’s aircraft fleet consisted of the following:

Description

Owned

Leased

Total

Maximum Gross

Structural Payload

(Pounds per Aircraft)

Boeing B777F

233,300

Boeing MD11

192,600

Boeing MD10-30

—

175,900

Boeing 767F

114

—

114

127,100

Airbus A300-600

106,600

Boeing 757-200

119

—

119

63,000

ATR-72

—

17,970

ATR-72 600F

—

(1)

19,290

ATR-42

—

12,070

Cessna 408

—

(1)

6,000

Cessna 208B

235

—

235

2,830

Total

675

696

(1)

Includes one aircraft not currently in operation and undergoing pre-service modifications.

As of May 31, 2022, FedEx Express operated approximately 86,000 vehicles in its global network.

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, 2022, with the year

of expected delivery:

Cessna

SkyCourier 408

ATR 72-

600F

B767F

B777F

Total

2023

2024

2025

2026

—

2027

—

Thereafter

—

Total

119

As of May 31, 2022, we had $1.3 billion in deposits and progress payments on aircraft purchases and other planned aircraft-related

transactions. See Note 18 of the accompanying consolidated financial statements for more information about our purchase

commitments and options.

- 39 -

Sorting and Handling Facilities

At May 31, 2022, FedEx Express operated the following major sorting and handling facilities:

Location

Acres

Square

Feet

Sorting

Capacity

(per hour)

(1)

Lessor

Lease

Expiration

Calendar Year

Primary

Memphis, Tennessee

916

3,671,859

484,000

Memphis-Shelby County

Airport Authority

2036

National

Indianapolis, Indiana

(2)

482

2,847,215

131,000

Indianapolis Airport

Authority

2053

Miami, Florida

(3)

143,322

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

634,193

156,000

Port Authority of New York

and New Jersey

2030

Oakland, California

587,700

63,000

Port of Oakland

2036

Greensboro, N. Carolina

165

595,000

23,000

Piedmont Triad Airport

Authority

2031

Metropolitan

Chicago, Illinois

481,350

24,000

City of Chicago

2028

Los Angeles, California

305,300

57,000

City of Los Angeles

2025

(4)

International

Anchorage, Alaska

(5)

375,300

25,000

State of Alaska,

Department of

Transportation and

Public Facilities

2023

Paris, France

(6)

111

1,238,000

70,600

Aeroports de Paris

2048

Cologne, Germany

(6)

325,000

17,900

Cologne Bonn Airport

2040

Guangzhou, China

(7)

155

873,006

56,000

Guangdong Airport

Management Corp.

2029

Osaka, Japan

(7)

425,206

9,000

Kansai Airports

2024

Liege, Belgium

(8)

659,354

15,600

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 two separate leases — we are currently renewing the lease for the sorting and handling facility that expired

in 2021 on a month-to-month basis while a new lease is being negotiated, and the lease for the ramp expansion expires in calendar

2025.

(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.

FedEx Express’s primary sorting facility, which serves as the center of its multiple hub-and-spoke system, is located at the Memphis

International Airport. FedEx 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.

- 40 -

FedEx Express leases these facilities from the Memphis-Shelby County Airport Authority (the “Authority”). The lease obligates

FedEx Express to maintain and insure the leased property and to pay all related taxes, assessments, and other charges. The lease is

subordinate to, and FedEx Express’s rights thereunder could be affected by, any future lease or agreement between the Authority and

the U.S. government.

FedEx Express has additional major international sorting-and-handling facilities located at Narita Airport in Tokyo and Stansted

Airport outside London. FedEx 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. FedEx Express also operates a central European road hub in

Duiven, The Netherlands.

Administrative and Other Properties and Facilities

The World Headquarters of FedEx Express is located in southeastern Shelby County, Tennessee. FedEx Express international

headquarters are located in Hoofddorp, The Netherlands. As of May 31, 2022, FedEx Express owned or leased 652 facilities for city

station operations in the U.S. In addition, over 1,100 city stations are owned or leased throughout FedEx 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.

As of May 31, 2022, FedEx Express had approximately 32,000 Drop Boxes. FedEx Express customers can also ship from

approximately 42,000 staffed drop-off locations, including FedEx Office stores and FedEx Authorized ShipCenters. Internationally,

FedEx Express had approximately 15,000 drop-off locations.

FedEx Ground Segment

FedEx Ground’s corporate headquarters are located in the Pittsburgh, Pennsylvania area. As of May 31, 2022, FedEx Ground owned

or leased over 680 facilities, including approximately 160 fully automated stations. In addition, more than 100,000 vehicles owned or

leased by service providers support FedEx Ground’s business. Of the 583 facilities that supported FedEx Home Delivery as of May

31, 2022, 562 were co-located with existing FedEx Ground operations. Leased facilities generally have terms of five years or less.

Strategically located to cover the geographic area served by FedEx Ground, the facilities range in size from approximately 1,000 to

1,060,000 square feet, with an average size of approximately 165,000 square feet.

FedEx Freight Segment

FedEx Freight’s corporate headquarters are located in Memphis, Tennessee, with some administrative offices in Harrison, Arkansas.

As of May 31, 2022, FedEx Freight operated more than 30,000 vehicles and approximately 400 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 Services Segment

FedEx Services’ corporate headquarters are located in Memphis, Tennessee. FedEx Services 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.

The FedEx Authorized ShipCenter program offers U.S. domestic and international FedEx Express and FedEx Ground shipping and

drop-off services through a network of nearly 4,800 franchised and independent “pack and ship” retail locations. The FedEx OnSite

network includes approximately 19,000 drop-off locations at Walgreens, Dollar General, and Albertsons stores. Additionally, FedEx

Services has an agreement with Office Depot, Inc. to offer U.S. domestic and international FedEx Express and FedEx Ground

shipping and drop-off services at approximately 1,000 Office Depot and OfficeMax retail locations.

FedEx Office Operating Segment

FedEx Office’s corporate headquarters are located in Plano, Texas. As of May 31, 2022, FedEx Office operated approximately 2,200

customer-facing stores and 18 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 3,200 square feet in size.

- 41 -

FedEx Logistics Operating Segment

FedEx Logistics’ corporate headquarters are located in Memphis, Tennessee. As of May 31, 2022, FedEx Trade Networks Transport

& Brokerage operated approximately 150 offices and facilities in 34 countries and territories throughout North America and in Africa,

Asia-Pacific, Europe, India, Latin America, the Middle East, and Australia/New Zealand. In addition, as of May 31, 2022, FedEx

Supply Chain had approximately 100 facilities through which it operates its supply chain logistics services.

FedEx Dataworks Operating Segment

FedEx Dataworks’ corporate headquarters are located in Memphis, Tennessee and ShopRunner’s corporate headquarters are located in

Chicago, Illinois.

ITEM 3. LEGAL PROCEEDINGS

FedEx and its subsidiaries are subject to legal proceedings and claims that arise in the ordinary course of their business. For a

description of certain pending legal proceedings, see Note 19 of the accompanying consolidated financial statements.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

- 42 -

INFORMATION ABOUT OUR EXECUTIVE OFFICERS

Information regarding executive officers of FedEx is as follows:

Name and Office

Age

Positions and Offices Held and Business Experience

Frederick W. Smith

Executive Chairman and

Chairman of the Board

Executive Chairman of FedEx since June 1, 2022 and Chairman of the Board since

January 1998; Chief Executive Officer of FedEx from January 1998 to May 2022;

President of FedEx from January 1998 to January 2017; Chairman of the Board, President

and Chief Executive Officer of FedEx Express from April 1983 to January 1998; Chief

Executive Officer of FedEx Express from 1977 to January 1998; and President of FedEx

Express from June 1971 to February 1975.

Rajesh Subramaniam

President and Chief Executive

Officer and Director

President of FedEx since March 2019 and Chief Executive Officer of FedEx since June 1,

2022; director of FedEx since January 2020; Chief Operating Officer of FedEx from

March 2019 to May 2022; President and Chief Executive Officer of FedEx Express from

January 2019 to March 2019; Executive Vice President — Chief Marketing and

Communications Officer of FedEx from January 2017 to December 2018; Executive Vice

President — Marketing & Communications of FedEx Services from 2013 to January

2017; Senior Vice President — Marketing of FedEx Services from 2006 to 2013; Senior

Vice President — Canada of FedEx Express from 2003 to 2006; Vice President —

Marketing/APAC of FedEx Express from 2000 to 2003; Vice President — APAC, EC &

CS of FedEx Express from 1999 to 2000; and various management and marketing analyst

positions at FedEx Express from 1991 to 1999. Mr. Subramaniam serves as a director of

First Horizon Corporation, a financial holding company.

Mark R. Allen

Executive Vice President, General

Counsel and Secretary

Executive Vice President, General Counsel and Secretary of FedEx since October 2017;

Executive Vice President, General Counsel—Select of FedEx from September 2017 to

October 2017; Senior Vice President, Legal International of FedEx Express from July

2010 to September 2017; Vice President, Legal — Europe, Middle East, Africa and

Indian Subcontinent Region of FedEx Express from October 2000 to July 2010; Vice

President, Legal — Asia Pacific of FedEx Express from 1996 to October 2000; and

various legal positions with FedEx Express from 1982 to 1996.

Jill C. Brannon

Executive Vice President — Chief

Sales Officer

Executive Vice President — Chief Sales Officer of FedEx since March 2019; Senior Vice

President, Sales — Europe, Middle East, Africa and Indian Subcontinent Region of

FedEx Express from May 2016 to March 2019; Senior Vice President — Sales of FedEx

Services from July 2006 to May 2016; Vice President — Sales of FedEx Services from

July 2003 to June 2006; Vice President — Solutions of FedEx Services from July 2002 to

June 2003; Vice President — Marketing of FedEx Services from June 2001 to June 2002;

and various positions in sales, operations, marketing, and strategic planning from 1985 to

May 2002.

Brie A. Carere

Executive Vice President — Chief

Customer Officer

Executive Vice President — Chief Customer Officer of FedEx since June 1, 2022;

Executive Vice President — Chief Marketing and Communications Officer of FedEx

from January 2019 to May 2022; Senior Vice President, Global Portfolio Marketing of

FedEx Services from October 2016 to December 2018; Vice President, Marketing,

Customer Experience and Corporate Communications for FedEx Express Canada from

October 2010 to October 2016; and various positions in marketing, customer experience,

and strategy with FedEx Express Canada from 2001 to October 2010. Ms. Carere serves

as a director of ZipRecruiter, Inc., an online employment marketplace.

- 43 -

Robert B. Carter

Executive Vice President —

FedEx Information Services and

Chief Information Officer

Executive Vice President — FedEx Information Services and Chief Information Officer

of FedEx since January 2007; Executive Vice President and Chief Information Officer of

FedEx from June 2000 to January 2007; Corporate Vice President and Chief Technology

Officer of FedEx from February 1998 to June 2000; Vice President — Corporate Systems

Development of FedEx Express from September 1993 to February 1998; and Managing

Director — Systems Development of FedEx Express from April 1993 to September 1993.

Mr. Carter serves as a director of New York Life Insurance Company, a mutual life

insurance company.

Donald F. Colleran

President and Chief Executive

Officer, FedEx Express

President and Chief Executive Officer of FedEx Express since March 2019; Executive

Vice President — Chief Sales Officer of FedEx from January 2017 to March 2019;

Executive Vice President — Global Sales of FedEx Services from 2006 to January 2017;

Senior Vice President — International Sales from 2003 to 2006; Senior Vice President —

Canada of FedEx Express from 2000 to 2003; Vice President — Sales/APAC from 1997

to 2000; and various management positions in sales with FedEx Express from 1989 to

1997. Mr. Colleran will serve as President and Chief Executive Officer of FedEx Express

through August 31, 2022 and remain at FedEx Express as the CEO Executive Advisor

until his retirement on December 31, 2022. He serves as a director of (i) ABM Industries

Incorporated, a provider of integrated facility solutions, (ii) EastGroup Properties, Inc., an

equity real estate investment trust, and (iii) Delhivery Limited, a logistics and supply

chain company.

Michael C. Lenz

Executive Vice President and

Chief Financial Officer

Executive Vice President and Chief Financial Officer of FedEx since September 2020;

Executive Vice President and Chief Financial Officer —Elect of FedEx from June 2020

to September 2020; Corporate Vice President and Treasurer of FedEx from February

2012 to May 2020; Staff Vice President — Strategic Finance of FedEx from 2010 to

February 2012; Vice President — Finance of FedEx Office from 2005 to 2010; and

various positions in several finance and commercial areas including investor relations,

financial planning and analysis, international planning, and fleet planning at American

Airlines, Inc. from 1994 to 2005.

Lance D. Moll

President and Chief Executive

Officer, FedEx Freight

President and Chief Executive Officer of FedEx Freight since March 2021; Senior Vice

President — Operations of FedEx Freight from May 2018 to February 2021; Vice

President — Regional Operations of FedEx Freight from February 2015 to May 2018;

Managing Director — District Operations of FedEx Freight from June 2003 to January

2015; and various positions with FedEx Freight from 1992 to 2003.

John A. Smith

President and Chief Executive

Officer, FedEx Ground

President and Chief Executive Officer of FedEx Ground since June 2021; President and

Chief Executive Officer—Elect of FedEx Ground from March 2021 to May 2021;

President and Chief Executive Officer of FedEx Freight from August 2018 to February

2021; President and Chief Executive Officer — Select of FedEx Freight from May 2018

to August 2018; Senior Vice President — Operations of FedEx Freight from May 2015 to

May 2018; Vice President — Safety, Fleet Maintenance and Facilities Services of FedEx

Freight from June 2011 to May 2015; Vice President — Operations of FedEx National

LTL, Inc. from April 2010 to June 2011; Vice President — Transportation/Fleet

Maintenance of FedEx National LTL, Inc. from March 2008 to April 2010; and various

management positions at FedEx Freight from 2000 to 2008.

Richard W. Smith

President and Chief Executive

Officer — Elect, FedEx Express

President and Chief Executive Officer — Elect of FedEx Express since April 1, 2022;

will succeed Mr. Colleran as President and Chief Executive Officer of FedEx Express on

September 1, 2022; Regional President, The Americas and Executive Vice President,

Global Support of FedEx Express from 2020 to March 2022; Regional President, U.S.

and Executive Vice President, Global Support of FedEx Express from 2019 to 2020;

President and Chief Executive Officer of FedEx Logistics from July 2017 to 2019; Senior

Vice President, Global Trade and Specialty Services of FedEx Express from March 2017

to June 2017; Vice President, Global Trade Services of FedEx Express from 2014 to

2017; Managing Director, Life Sciences and Specialty Services/U.S./International of

FedEx Express from 2009 to 2014; and various positions with FedEx from 2005 to 2009.

- 44 -

Executive officers are elected by, and serve at the discretion of, the Board of Directors. There is no arrangement or understanding

between any executive officer and any person, other than a director or executive officer of FedEx or of any of its subsidiaries acting

solely in his or her official capacity, pursuant to which any executive officer was selected. Richard W. Smith is the son of Frederick

W. Smith. There are no other family relationships between any executive officer and any other executive officer or director of FedEx,

or any person nominated or chosen to become a director or executive officer.

PART II

ITEM 5. 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 14, 2022, there were 11,421

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.

We did not repurchase any shares of FedEx common stock during the fourth quarter of 2022.

On December 16, 2021, we announced a stock repurchase program approved by our Board of Directors, through which we are

authorized to purchase, in the open market or in privately negotiated transactions, up to $5 billion of FedEx common stock. As of July

14, 2022, approximately $4.1 billion remains available to be used for repurchases under the December 2021 stock repurchase

program, which is the only such program that currently exists. The program does not have an expiration date and may be suspended or

discontinued at any time.

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 2022 and planned stock repurchases during 2023.

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” or the “Company”) 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 2022 results compared to 2021 results. This section also

includes a discussion of key actions and events that impacted our results, as well as our outlook for 2023. Discussion and

analysis of 2020 results and year-over-year comparisons between 2021 results and 2020 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, 2021.

• The overview is followed by a financial summary and analysis (including a discussion of both historical operating results and

our outlook for 2023) for each of our transportation segments.

• Our financial condition is reviewed through an analysis of key elements of our liquidity and capital resources, financial

commitments, and liquidity outlook for 2023.

• 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.”

- 45 -

DESCRIPTION OF BUSINESS SEGMENTS

We provide a broad portfolio of transportation, e-commerce, and business services through companies competing collectively,

operating collaboratively, and innovating digitally, under the respected FedEx brand. Our primary operating companies are Federal

Express Corporation (“FedEx Express”), the world’s largest express transportation company; FedEx Ground Package System, Inc.

(“FedEx Ground”), a leading North American provider of small-package ground delivery services; and FedEx Freight Corporation

(“FedEx Freight”), a leading North American provider of less-than-truckload (“LTL”) freight transportation services. These

companies represent our major service lines and, along with FedEx Corporate Services, Inc. (“FedEx Services”), constitute our

reportable segments. Our FedEx Services segment provides sales, marketing, information technology, communications, customer

service, technical support, billing and collection services, and certain back-office functions that support our operating segments. The

operating costs of the FedEx Services segment are allocated to the business units it serves. See “Reportable Segments” for further

discussion and refer to “Item 1. Business” for a more detailed description of each of our operating companies.

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.

Many of our operating expenses are directly impacted 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 impacting expenses other than those factors strictly related to changes in revenue and

volumes. The line item “Other operating expense” includes costs associated with outside service contracts (such as facility services

and cargo handling, temporary labor, and security), insurance, professional fees, and operational supplies.

Except as otherwise specified, references to years indicate our fiscal year ended May 31, 2022 or ended May 31 of the year referenced

and comparisons are to the corresponding period of the prior year. References to our transportation segments include, collectively, the

FedEx Express segment, the FedEx Ground segment, and the FedEx Freight segment.

- 46 -

RESULTS OF OPERATIONS AND OUTLOOK

CONSOLIDATED RESULTS

The following table compares summary operating results (dollars in millions, except per share amounts) for the years ended May 31:

2022

(1)

2021

(1)

Percent

Change

Consolidated revenue

93,512

83,959

Operating income (loss):

FedEx Express segment

2,922

2,810

FedEx Ground segment

2,642

3,193

(17

)

FedEx Freight segment

1,663

1,005

Corporate, other, and eliminations

(982

)

(1,151

)

Consolidated operating income

6,245

5,857

Operating margin:

FedEx Express segment

6.4

6.7

(30

)

FedEx Ground segment

8.0

10.5

(250

)

FedEx Freight segment

17.4

12.8

460

Consolidated operating margin

6.7

7.0

(30

)

Consolidated net income

3,826

5,231

(27

)

Diluted earnings per share

14.33

19.45

(26

)

The following table shows changes in revenue and operating results by reportable segment for 2022 compared to 2021 (in millions):

Year-over-Year Changes

Revenue

Operating Results

(1)

FedEx Express segment

3,736

112

FedEx Ground segment

2,736

(551

)

FedEx Freight segment

1,699

658

FedEx Services segment

221

—

Corporate, other, and eliminations

1,161

169

9,553

388

(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):

2022

2021

Items affecting Operating Income:

Business realignment costs

(278

)

(116

)

FedEx Ground legal matter

(210

)

—

TNT Express integration expenses

(132

)

(210

)

(620

)

(326

)

Items affecting Net Income:

Mark-to-market (“MTM”) retirement plans accounting

adjustments, net of tax

(1,199

)

895

Loss on debt extinguishment, net of tax

—

(297

)

(1,199

)

598

Overview

We experienced revenue and operating income growth in 2022 resulting from yield management actions, including the favorable net

impact of fuel at all of our transportation segments. In addition, our results were positively affected by a mix shift to our higher

yielding services due to strategic actions to improve revenue quality. Lower variable incentive compensation expense, as well as

severe winter weather experienced in the prior year, also benefited year-over-year operating income in 2022.

- 47 -

Our operating results for 2022 were negatively affected by the coronavirus (“COVID-19”) pandemic, labor market challenges, and

inflationary cost pressures. Labor market challenges contributed to global supply chain disruptions and affected the availability and

cost of labor resulting in network inefficiencies, higher purchased transportation costs, and higher wage rates. In addition, global

recovery from the impacts of the COVID-19 pandemic slowed with the onset of new variants, which resulted in reduced shipping

demand and caused network disruptions, particularly at FedEx Express during 2022.

Our 2022 results include business realignment costs of $278 million ($214 million, net of tax, or $0.80 per diluted share) associated

with our workforce reduction plan in Europe announced in 2021. See the “Business Realignment Costs” section of this MD&A for

more information. Our 2022 results also include a $210 million charge ($160 million, net of tax, of $0.60 per diluted share) recognized

in the fourth quarter related to pre- and post-judgment interest in connection with a FedEx Ground legal matter. The amount is

included in “Corporate, other, and eliminations.” See Note 19 of the accompanying consolidated financial statements for more

information.

We incurred TNT Express integration expenses totaling $132 million ($103 million, net of tax, or $0.39 per diluted share) in 2022, a

decrease of $78 million from 2021. The integration expenses are predominantly incremental costs directly associated with the

integration of TNT Express, primarily related to professional and legal fees. Internal salaries and wages are included only to the extent

the individuals are assigned full-time to integration activities. These costs were recognized at FedEx Express and FedEx Corporation.

The identification of these costs as integration-related expenditures is subject to our disclosure controls and procedures. Integration

expenses do not include costs associated with our business realignment activities (discussed above).

Consolidated net income includes a pre-tax, noncash loss of $1.6 billion in 2022 ($1.2 billion, net of tax, or $4.49 per diluted share)

and a gain of $1.2 billion in 2021 ($895 million, net of tax, or $3.33 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.

Consolidated net income in 2021 also includes a loss on debt extinguishment of $393 million ($297 million, net of tax, or $1.11 per

diluted share) associated with our capital allocation strategy, which includes reducing outstanding debt. See the “Other Income and

Expense” section of this MD&A and Note 7 of the accompanying consolidated financial statements.

Net income for 2022 includes a $142 million ($0.53 per diluted share) tax benefit related to revisions of prior year estimates identified

during the preparation of U.S. and foreign tax returns. In 2021, we recognized a tax benefit of $279 million ($1.04 per diluted share)

related to the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), which allows tax losses to be offset against

income from prior years that was taxed at higher rates, and a tax benefit of $66 million ($0.25 per diluted share) from a tax rate

increase in the Netherlands applied to our deferred tax asset balances. See the “Income Taxes” section of this MD&A and Note 13 of

the accompanying consolidated financial statements.

In December 2021, our Board of Directors authorized a new stock repurchase program of up to $5 billion of FedEx common stock (in

addition to a 25 million share repurchase program authorized in 2016), and we entered into an accelerated share repurchase (“ASR”)

agreement with a bank to repurchase an aggregate of $1.5 billion of our common stock. Share repurchases had a benefit of $0.13 per

diluted share in 2022. See Note 1 of the accompanying consolidated financial statements and the “Financial Condition—Liquidity”

section of this MD&A for additional information on our repurchase programs (defined below).

- 48 -

The following graphs for FedEx Express, FedEx Ground, and FedEx Freight show selected volume trends (in thousands) for the years

ended May 31:

(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)

Ground commercial average daily volume is calculated on a 5-day-per-week basis, while home delivery and economy

average daily package volumes are calculated on a 7-day-per-week basis. 2020 and 2021 statistical information has been

revised to conform to the current year presentation. Total FedEx Ground average daily volume was 8,952 for 2019.

(3)

International average daily freight pounds relate to our international priority, economy, and airfreight services.

- 49 -

The following graphs for FedEx Express, FedEx Ground, and FedEx Freight show selected yield trends for the years ended May 31:

(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 revenue per pound relates to our international priority, economy, and airfreight services.

- 50 -

Revenue

Revenue increased 11% in 2022 primarily due to yield management actions, including higher fuel surcharges, as well as commercial

and home delivery volume growth at FedEx Ground and volume growth at FedEx Freight. In addition, we experienced severe winter

weather in the prior year which positively affected the year-over-year comparisons in 2022.

Revenue at FedEx Express increased 9% in 2022 due to global package and international priority freight yield improvement, partially

offset by decreased international and U.S. domestic package volume, as well as lower U.S. average daily freight pounds. At FedEx

Ground, revenue increased 9% in 2022 primarily due to yield improvement, two additional ground commercial operating days, a mix

shift to higher-yielding services, and growth in our commercial services. FedEx Freight revenue increased 22% in 2022 primarily due

to higher revenue per shipment and increased average daily shipments. Revenue at Corporate, other, and eliminations increased 33%

in 2022 primarily due to higher yields at FedEx Logistics, Inc. (“FedEx Logistics”) as a result of market capacity constraints related to

the COVID-19 pandemic.

Fuel Surcharges

While fluctuations in fuel surcharge percentages can be significant from period to period, fuel surcharges represent one of the many

individual components of our pricing structure that impact our overall revenue and yield. See the “Fuel” section of this MD&A for

more information.

Business Realignment Costs

In 2021, FedEx Express announced a workforce reduction plan in Europe related to the network integration of TNT Express. The plan

will affect approximately 5,000 employees in Europe across operational teams and back-office functions. The execution of the plan is

subject to a works council consultation process that will occur through 2023 in accordance with local country processes and

regulations.

We incurred costs of $278 million ($214 million, net of tax, or $0.80 per diluted share) in 2022 and $116 million ($90 million, net of

tax, or $0.33 per diluted share) in 2021 associated with our business realignment activities. These costs are related to certain employee

severance arrangements. Payments under this program totaled approximately $225 million in 2022 and approximately $15 million in

2021. We expect the pre-tax cost of our business realignment activities to be approximately $420 million through 2023. We expect

savings from our business realignment activities to be between $275 million and $350 million on an annualized basis beginning in

2024. The actual amount and timing of business realignment costs and related cost savings resulting from the workforce reduction

plan are dependent on local country consultation processes and regulations and negotiated social plans and may differ from our current

expectations and estimates.

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

Percent of Revenue

2022

(1)

2021

(1)

Change

2022

(1)

2021

(1)

Operating expenses:

Salaries and employee benefits

32,058

30,173

34.3

35.9

Purchased transportation

24,118

21,674

25.8

Rentals and landing fees

4,712

4,155

5.0

Depreciation and amortization

3,970

3,793

4.2

4.5

Fuel

5,115

2,882

5.5

3.4

Maintenance and repairs

3,372

3,328

3.6

4.0

Business realignment costs

(2)

278

116

140

0.3

0.1

Other

(3)

13,644

11,981

14.6

14.3

Total operating expenses

87,267

78,102

93.3

93.0

Total operating income

6,245

5,857

6.7

7.0

(1)

Includes TNT Express integration expenses of $132 million in 2022 and $210 million in 2021.

(2)

Includes costs associated with the workforce reduction plan in Europe.

(3)

Includes a $210 million charge in 2022 related to pre- and post-judgment interest in connection with a FedEx Ground legal

matter.

- 51 -

The challenging labor market and inflationary pressures contributed to increases in purchased transportation, salaries and employee

benefits, and other operating expenses in 2022. Higher fuel surcharges also contributed to increased purchased transportation costs.

Salaries and employee benefits expense also increased in 2022 due to merit increases, partially offset by lower variable incentive

compensation expense. Higher self-insurance accruals, increased costs related to information technology expenses, a charge related to

pre- and post-judgment interest in connection with a FedEx Ground legal matter, and additional volume-related expenses also

contributed to an increase in other operating expense in 2022. Rentals and landing fees increased in 2022 primarily driven by

increased vehicle and aircraft leases at FedEx Express, as well as network expansion at FedEx Ground.

Fuel

We apply a fuel surcharge on our air and ground services, most of which are adjusted on a weekly basis. The fuel surcharge is based

on a weekly fuel price from two weeks prior to the week in which it is assessed. Some FedEx Express international fuel surcharges

incorporate a timing lag of approximately six to eight weeks. We routinely review our fuel surcharges and periodically update the

tables used to determine our fuel surcharges at all of our transportation segments. The net impact of fuel on operating income

described below and for each segment below does not include the impact from these ordinary-course table changes.

While fluctuations in fuel surcharge percentages can be significant from period to period, fuel surcharges represent one of the many

individual components of our pricing structure that impact our overall revenue and yield. Additional components include the mix of

services sold, the base price, and extra service charges we obtain for these services and level of pricing discounts offered.

In order to provide information about the impact of fuel surcharges on the trend in revenue and yield growth, we have included the

comparative weighted-average fuel surcharge percentages in effect for 2022 and 2021 in the accompanying discussions of each of our

transportation segments.

Fuel expense increased 77% during 2022 due to higher fuel prices. In addition to variability in usage and market prices, the manner in

which we purchase fuel also influences the net impact of fuel on our results. For example, our contracts for jet fuel purchases at FedEx

Express are tied to various indices, including the U.S. Gulf Coast index. While many of these indices are aligned, each index may

fluctuate at a different pace, driving variability in the prices paid for jet fuel. Furthermore, under these contractual arrangements,

approximately 70% of our jet fuel is purchased based on the index price for the preceding week, with the remainder of our purchases

tied primarily to the index price for the preceding month and preceding day, rather than based on daily spot rates. These contractual

provisions mitigate the impact of rapidly changing daily spot rates on our jet fuel purchases.

Because of the factors described above, our operating results may be affected should the market price of fuel suddenly change by a

significant amount or change by amounts that do not result in an adjustment in our fuel surcharges, which can significantly affect our

earnings either positively or negatively in the short-term. For more information, see “Item 1A. Risk Factors.”

The net impact of fuel had a significant benefit to operating income in 2022 as higher fuel surcharges outpaced increased fuel prices.

The net impact of fuel on our operating results does not consider the effects that fuel surcharge levels may have on our business,

including changes in demand and shifts in the mix of services purchased by our customers. In addition, our purchased transportation

expense is impacted by fuel costs.

Other Income and Expense

Interest expense decreased $104 million in 2022 primarily due to the 2021 debt extinguishment transactions further discussed in the

“Liquidity” section of this MD&A and Note 7 of the accompanying consolidated financial statements. During 2021, we issued $3.25

billion of senior unsecured debt under our shelf registration statement and used the net proceeds to redeem outstanding debt. In

connection with our debt restructuring, we recognized a loss on debt extinguishment of $393 million ($297 million, net of tax, or

$1.11 per diluted share) in 2021. See Note 7 of the accompanying consolidated financial statements for more information.

Retirement Plans MTM Adjustments

In 2022, we incurred a pre-tax, noncash MTM loss of $1.6 billion ($1.2 billion, net of tax, or $4.49 per diluted share), which includes

a net loss of $1.3 billion ($1.0 billion, net of tax, or $3.76 per diluted share) related to the year-end actuarial adjustments of pension

and postretirement healthcare plans’ assets and liabilities. These actuarial adjustments were due to lower than expected asset returns,

demographic experience, and an update to the mortality assumption, partially offset by higher discount rates.

In addition, we incurred a pre-tax, noncash MTM net loss of $260 million ($195 million, net of tax, or $0.73 per diluted share) in the

second quarter of 2022, of which $224 million was related to the termination of the TNT Express Netherlands Pension Plan. Effective

October 1, 2021, the responsibility of all pension assets and liabilities of this plan was transferred to a separate, multi-employer

pension plan. The remaining $36 million net loss was related to the U.S. FedEx Freight Pension Plan and consisted of a $75 million

MTM loss due to a lower discount rate in the second quarter of 2022, partially offset by a $39 million curtailment gain.

- 52 -

In 2021, we incurred a pre-tax, noncash MTM gain of $1.2 billion ($936 million, net of tax, or $3.48 per diluted share) related to the

year-end actuarial adjustments of pension and postretirement healthcare plans’ assets and liabilities. These actuarial adjustments were

due to higher than expected asset returns and an improved discount rate.

Additionally, in 2021, we incurred a pre-tax, noncash MTM net loss of $52 million ($41 million, net of tax, or $0.15 per diluted share)

related to amendments to the TNT Express Netherlands Pension Plan. Benefits for approximately 2,100 employees were frozen

effective December 31, 2020. On January 1, 2021, these employees began earning pension benefits under a separate, multi-employer

pension plan. This $52 million net loss consisted of a $106 million MTM loss due to a lower discount rate and a $54 million

curtailment gain.

For more information, see the “Critical Accounting Estimates” section of this MD&A and Note 1 and Note 14 of the accompanying

consolidated financial statements.

Income Taxes

The 2022 tax provision was favorably impacted by a benefit of $142 million related to revisions of prior year tax estimates identified

during the preparation of U.S. and foreign tax returns. The 2022 tax provision was also favorably impacted by changes in our

corporate legal entity structure.

The 2021 tax provision includes a benefit of $279 million from an increase in our 2020 tax loss that the CARES Act allowed to be

carried back to 2015, when the U.S. federal income tax rate was 35%. The 2021 tax provision also includes a benefit of $66 million

from a tax rate increase in the Netherlands applied to our deferred tax asset balances and was unfavorably impacted by an increase in

uncertain tax positions for matters in multiple jurisdictions.

We are subject to taxation in the U.S. and various U.S. state, local, and foreign jurisdictions. We are currently under examination by

the Internal Revenue Service (“IRS”) for the 2016 through 2019 tax years. It is reasonably possible that certain income tax return

proceedings will be completed during the next 12 months and could result in a change in our balance of unrecognized tax benefits.

However, we believe we have recorded adequate amounts of tax, including interest and penalties, for any adjustments expected to

occur.

During 2021, we filed suit in U.S. District Court for the Western District of Tennessee challenging the validity of a tax regulation

related to the one-time transition tax on unrepatriated foreign earnings, which was enacted as part of the Tax Cuts and Jobs Act

(“TCJA”). Our lawsuit seeks to have the court declare this regulation invalid and order the refund of overpayments of U.S. federal

income taxes for 2018 and 2019 attributable to the denial of foreign tax credits under the regulation. We have recorded a cumulative

benefit of $215 million through 2022 attributable to our interpretation of the TCJA and the Internal Revenue Code. We continue to

pursue this lawsuit; however, if we are ultimately unsuccessful in defending our position, we may be required to reverse the benefit

previously recorded.

For more information on income taxes, see the “Critical Accounting Estimates” section of this MD&A and Note 13 of the

accompanying consolidated financial statements.

Business Acquisitions

See Note 4 of the accompanying consolidated financial statements for a discussion of business acquisitions.

Equity Investment

On December 8, 2021, FedEx Express entered into equity and commercial agreements with Delhivery Limited (“Delhivery”). As part

of the collaboration, FedEx Express made a $100 million equity investment in Delhivery, FedEx Express sold certain assets pertaining

to its domestic business in India to Delhivery, and the companies entered into a long-term commercial agreement. FedEx Express will

focus on international export and import services to and from India, and Delhivery will, in addition to FedEx, sell FedEx Express

international services in the India market and provide pickup-and-delivery services across India. This transaction was recorded in the

third quarter of 2022 and was not material to our results of operations.

- 53 -

Russia and Ukraine Conflict

The conflict in Russia and Ukraine that began in February 2022 continues as of the date of this Annual Report. The safety of our team

members in Ukraine is our top priority. We are providing team members in Ukraine with financial assistance and other resources. We

have provided more than $2.3 million in humanitarian aid to support those impacted by the conflict in Ukraine, which includes $1

million of in-kind shipping to organizations who are transporting supplies into the area. As we focus on the safety of our team

members, we have suspended all services in Ukraine, Russia, and Belarus, which has not had and is not expected to have a material

impact on our business or results of operations. For more information about the conflict between Russia and Ukraine and its effect on

FedEx’s business and results of operations, see “Item 1A. Risk Factors” of this Annual Report.

Outlook

During 2023, we anticipate revenue and operating income growth will be driven by improved yields and cost control actions, as we

continue to focus on yield management and revenue quality to help mitigate the impact of slowing economic conditions on our

volumes and inflationary pressures on our costs. We will continue to manage network capacity to demand levels, flexing our network

and making adjustments as needed to align operating costs to volumes. We will also continue executing targeted actions to improve

productivity and lower costs both through advanced technology and optimization of operations.

During 2023, we expect to continue our ongoing initiatives aimed to transform and optimize the FedEx Express international business,

particularly in Europe. These actions are focused on reducing the complexity and fragmentation of our international business,

improving efficiency to meet changing customer expectations and business dynamics, lowering costs, increasing profitability, and

improving service levels. As part of this strategy, in 2021 we announced a workforce reduction plan in Europe, which we expect to be

substantially complete in 2023, with aggregate spend through the completion of the program anticipated to be approximately $420

million in cash expenditures. We expect savings from our business realignment activities to be between $275 million and $350 million

on an annualized basis beginning in 2024. See the “Business Realignment Costs” section of this MD&A for additional information.

Our capital expenditures for 2023 are expected to be consistent with 2022 at approximately $6.8 billion. We expect increased

investment in replacement vehicles including our vehicle electrification initiative, information technology, and strategic initiatives

aimed to optimize operations across our networks to be offset with lower aircraft fleet modernization spend. Our expected capital

expenditures for 2023 also include investments in facilities and equipment at FedEx Ground, and the FedEx Express Indianapolis and

Memphis hub expansion and modernization programs.

We will continue to evaluate our investments in critical long-term strategic projects to ensure our capital expenditures are expected to

generate high returns on investment and are balanced with our outlook for global economic conditions. For additional details on key

2023 capital projects, refer to the “Financial Condition – Capital Resources” and “Financial Condition – Liquidity Outlook” sections

of this MD&A.

The uncertainty of a slowing global economy, geopolitical challenges including the ongoing conflict between Russia and Ukraine, and

the continuing effect of the COVID-19 pandemic, and the impact these factors will have on the rate of growth of global trade, supply

chains, fuel prices, and our business in particular, make any expectations for 2023 inherently less certain. See “Item 1A. Risk Factors”

for more information.

See “Item 1A. Risk Factors” and “Forward-Looking Statements” for a discussion of these and other potential risks and uncertainties

that could materially affect our future performance.

Seasonality of Business

Our businesses are cyclical in nature, as seasonal fluctuations affect volumes, revenue, and earnings. Historically, the U.S. express

package business experiences an increase in volumes in late November and December. International business, particularly in the Asia-

to-U.S. market, peaks in October and November in advance of the U.S. holiday sales season. Our first and third fiscal quarters,

because they are summer vacation and post winter-holiday seasons, have historically experienced lower volumes relative to other

periods. Normally, the fall is the busiest shipping period for FedEx Ground, while late December, June and July are the slowest

periods. For FedEx Freight, the spring and fall are the busiest periods and the latter part of December through February is the slowest

period. Shipment levels, operating costs, and earnings for each of our companies can also be adversely affected by inclement weather,

particularly the impact of severe winter weather in our third fiscal quarter. See “Item 1A. Risk Factors” for more information.

RECENT ACCOUNTING GUIDANCE

See Note 2 of the accompanying consolidated financial statements for a discussion of recent accounting guidance.

- 54 -

REPORTABLE SEGMENTS

FedEx Express, FedEx Ground, and FedEx Freight represent our major service lines and, along with FedEx Services, constitute our

reportable segments. Our reportable segments include the following businesses:

FedEx Express Segment

FedEx Express (express transportation, small-package ground delivery, and freight

transportation)

FedEx Custom Critical, Inc. (time-critical transportation)

FedEx Ground Segment

FedEx Ground (small-package ground delivery)

FedEx Freight Segment

FedEx Freight (LTL freight transportation)

FedEx Services Segment

FedEx Services (sales, marketing, information technology, communications, customer

service, technical support, billing and collection services, and back-office functions)

During the third quarter of 2022, FedEx Cross Border Holdings, Inc. was merged into FedEx Express.

FEDEX SERVICES SEGMENT

The FedEx Services segment provides direct and indirect support to our operating segments, and we allocate all of the net operating

costs of the FedEx Services segment to reflect the full cost of operating our businesses in the results of those segments. We review and

evaluate the performance of our transportation segments based on operating income (inclusive of FedEx Services segment

allocations). For the FedEx Services segment, performance is evaluated based on the impact of its total allocated net operating costs

on our operating segments.

Operating expense for each of our transportation segments include the allocations from the FedEx Services segment to the respective

transportation segments. These allocations 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, including

certain other costs and credits not attributed to our core business, as well as certain costs associated with developing our innovate

digitally strategic pillar through our FedEx Dataworks, Inc. (including ShopRunner, 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 are the FedEx Office and Print Services, Inc. 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 2022, the increase in operating results in Corporate, other, and eliminations was primarily due to improved operating income at

FedEx Logistics. Market capacity constraints related to the COVID-19 pandemic drove higher revenue due to increased yields,

partially offset by higher purchased transportation costs. In addition, 2022 operating results in Corporate, other, and eliminations

include a $210 million charge recognized in the fourth quarter of 2022 related to pre- and post-judgment interest in connection with a

FedEx Ground legal matter. See Note 19 of the accompanying consolidated financial statements for more information.

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 2022 FedEx Ground provided delivery support for certain FedEx

Express packages as part of our last-mile optimization efforts, and FedEx Freight provided road and intermodal support for both

FedEx Ground and FedEx Express. In addition, FedEx Express is working with FedEx Logistics to secure air charters for U.S.

customers. Billings for such services are based on negotiated rates, which we believe approximate fair value, 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.

- 55 -

FEDEX EXPRESS SEGMENT

FedEx 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:

2022

2021

Percent

Change

Revenue:

Package:

U.S. overnight box

9,084

8,116

U.S. overnight envelope

1,971

1,791

U.S. deferred

5,330

4,984

Total U.S. domestic package revenue

16,385

14,891

International priority

12,130

10,317

International economy

2,838

2,632

Total international export package revenue

14,968

12,949

International domestic

(1)

4,340

4,640

)

Total package revenue

35,693

32,480

Freight:

U.S.

3,041

3,325

)

International priority

3,840

3,030

International economy

1,653

1,582

International airfreight

177

245

(28

)

Total freight revenue

8,711

8,182

Percent of Revenue

Other

1,410

1,416

—

2022

2021

Total revenue

45,814

42,078

100.0

Operating expenses:

Salaries and employee benefits

16,435

16,217

35.9

38.5

Purchased transportation

6,322

5,744

13.8

13.7

Rentals and landing fees

2,568

2,296

5.6

5.5

Depreciation and amortization

2,007

1,946

4.4

4.6

Fuel

4,418

2,461

9.6

5.8

Maintenance and repairs

2,120

2,228

)

4.6

5.3

Business realignment costs

278

116

140

0.6

0.3

Intercompany charges

1,997

1,996

—

4.4

4.7

Other

6,747

6,264

14.7

14.9

Total operating expenses

42,892

39,268

93.6

93.3

Operating income

2,922

2,810

Operating margin

6.4

6.7

(30

)

(1)

International domestic revenue relates to our international intra-country operations.

- 56 -

The following table compares selected statistics (in thousands, except yield amounts) for the years ended May 31:

2022

2021

Percent Change

Package Statistics

Average daily package volume (ADV):

U.S. overnight box

1,421

1,427

—

U.S. overnight envelope

506

505

—

U.S. deferred

1,262

1,351

)

Total U.S. domestic ADV

3,189

3,283

)

International priority

786

752

International economy

277

284

)

Total international export ADV

1,063

1,036

International domestic

(1)

1,954

2,362

(17

)

Total ADV

6,206

6,681

)

Revenue per package (yield):

U.S. overnight box

25.07

22.31

U.S. overnight envelope

15.28

13.90

U.S. deferred

16.56

14.46

U.S. domestic composite

20.15

17.79

International priority

60.54

53.84

International economy

40.13

36.32

International export composite

55.21

49.03

International domestic

(1)

8.71

7.70

Composite package yield

22.56

19.06

Freight Statistics

Average daily freight pounds:

U.S.

7,935

9,231

(14

)

International priority

6,671

6,155

International economy

11,978

12,245

)

International airfreight

1,160

1,469

(21

)

Total average daily freight pounds

27,744

29,100

)

Revenue per pound (yield):

U.S.

1.50

1.41

International priority

2.26

1.93

International economy

0.54

0.51

International airfreight

0.60

0.65

)

Composite freight yield

1.23

1.10

(1)

International domestic statistics relate to our international intra-country operations.

FedEx Express Segment Revenue

FedEx Express segment revenue increased 9% in 2022 primarily due to global package and international priority freight yield

management actions, including higher fuel surcharges. These factors were partially offset by decreased international domestic package

volume driven by yield management actions. Additionally, we experienced lower U.S. average daily freight pounds primarily due to

decreased demand and a reduction in charter flights, as well as decreased U.S. domestic package volume due to a decline in our

deferred service offerings, reflecting year-over-year impacts of the COVID-19 pandemic on consumer behavior in 2022.

Yield improvement, including higher fuel surcharges, drove increases in international export package yield of 13%, U.S. domestic

package yield of 13%, composite freight yield of 12%, and international domestic package yield of 13% in 2022. International export

average daily volumes increased 3% primarily due to growth in our international priority service offering, as industry-wide capacity

constraints and actions to prioritize premium-yielding products drove a mix shift from international economy to international priority

services. Total average daily freight pounds decreased 5% primarily due to decreased demand and a reduction in charter flights. This

decrease was partially offset by higher international priority freight pounds resulting from increased demand for international freight

capacity in 2022.

- 57 -

FedEx Express’s U.S. domestic and outbound fuel surcharge and international fuel surcharges ranged as follows for the years ended

May 31:

2022

2021

U.S. Domestic and Outbound Fuel Surcharge:

Low

7.7

2.7

High

26.7

8.0

Weighted-average

13.1

4.9

International Export and Freight Fuel Surcharge:

Low

6.4

0.3

High

42.4

22.0

Weighted-average

23.0

12.8

International Domestic Fuel Surcharge:

Low

3.9

2.6

High

44.8

20.4

Weighted-average

10.1

6.4

FedEx Express Segment Operating Income

FedEx Express segment operating income increased 4% in 2022 primarily due to yield management actions, including the favorable

net impact of fuel, lower variable incentive compensation expense, and less severe weather experienced in 2022, partially offset by

higher operating expenses related to labor market challenges and inflationary pressures. The COVID-19 pandemic and geopolitical

uncertainty negatively impacted our operations in 2022 as we experienced reduced shipping demand and network disruptions,

particularly in the second half of the year. In addition, we experienced lower U.S. average daily freight pounds due to decreased

demand and a reduction in charter flights in 2022.

FedEx Express prior year operating results included a pre-tax benefit of approximately $165 million from a reduction in aviation

excise taxes provided by the CARES Act, which expired on December 31, 2020 and negatively affected year-over-year comparisons

in 2022.

FedEx Express segment results include business realignment costs of $278 million in 2022 associated with our workforce reduction

plan in Europe. See the “Business Realignment Costs” section of this MD&A for more information. FedEx Express segments results

also include approximately $115 million of TNT Express integration expenses in 2022, a decrease of $61 million from 2021.

Purchased transportation expense increased 10% in 2022 primarily due to higher utilization of third-party transportation providers and

increased rates. Other operating expense increased 8% in 2022 primarily due to higher outside service contract expense, which

includes variable costs driven by the constrained labor market, as well as additional volume-related expenses. Rentals and landing fees

expense increased 12% in 2022 primarily due to increased vehicle and aircraft leases. Salaries and employee benefits expense

increased 1% in 2022 primarily due to higher labor costs related to the constrained labor market and wage pressures, partially offset by

lower variable incentive compensation expense.

Fuel expense increased 80% in 2022 due to increased fuel prices. The net impact of fuel had a significant benefit to operating income

in 2022 as higher fuel surcharges outpaced increased fuel prices. See the “Results of Operations and Outlook – Consolidated Results –

Fuel” section of this MD&A for a description and additional discussion of the net impact of fuel on our operating results.

FedEx Express Segment Outlook

In 2023, we will focus on actions to improve global network efficiencies and lower our cost to serve as we expect rising uncertainty

from the slowing economic environment, including inflationary pressures and geopolitical conditions, to impact our business. In

addition, we will execute our disciplined revenue management strategy and implement cost control actions to drive improved revenue

and operating income. We will focus on returning to industry-leading service to support yield improvement.

Capital expenditures at FedEx Express are expected to be relatively flat in 2023, with an increase in capital spend primarily related to

vehicle purchases including our vehicle electrification initiative, investments in information technology, and package handling

equipment, offset by a decrease in aircraft spend. We continue to make multi-year investments in our facilities to expand and

modernize the Indianapolis hub and the Memphis World Hub.

- 58 -

FEDEX GROUND SEGMENT

FedEx Ground service offerings include day-certain delivery to businesses in the U.S. and Canada and to 100% of U.S. residences.

Prior year statistical information has been revised to conform to the current year presentation. The following table compares revenue,

operating expenses, operating income (dollars in millions), operating margin, selected package statistics (in thousands, except yield

amounts), and operating expenses as a percent of revenue for the years ended May 31:

2022

2021

Percent

Change

Percent of Revenue

2022

2021

Revenue

33,232

30,496

100.0

Operating expenses:

Salaries and employee benefits

7,101

6,060

21.4

19.9

Purchased transportation

15,232

14,126

45.8

46.3

Rentals

1,410

1,166

4.2

3.8

Depreciation and amortization

919

843

2.8

Fuel

0.1

Maintenance and repairs

584

496

1.7

1.6

Intercompany charges

1,954

1,862

5.9

6.1

Other

3,358

2,729

10.1

8.9

Total operating expenses

30,590

27,303

92.0

89.5

Operating income

2,642

3,193

(17

)

Operating margin

8.0

10.5

(250

)

Average daily package volume (ADV)

(1)

Ground commercial

4,549

4,312

Home delivery

4,223

4,048

Economy

1,130

1,594

(29

)

Total ADV

9,902

9,954

)

Revenue per package (yield)

10.64

9.70

(1)

Ground commercial ADV is calculated on a 5-day-per-week basis, while home delivery and economy ADV are calculated on a 7-

day-per-week basis.

FedEx Ground Segment Revenue

FedEx Ground segment revenue increased 9% in 2022 due to yield management actions, including higher fuel surcharges, as well as

two additional ground commercial operating weekdays. In addition, a mix shift to higher yielding services due to strategic actions to

improve revenue quality and growth in our commercial services as business returned to pre-pandemic levels contributed to the

increase in revenue in 2022.

FedEx Ground yield increased 10% in 2022 primarily due to higher fuel surcharges, product mix, and revenue management actions.

Average daily volume decreased 1% in 2022 driven by lower economy volume, partially offset by growth in ground commercial and

home delivery services. Strategic actions to improve revenue quality and prioritize capacity for higher yielding business-to-consumer

volume drove a mix shift from economy to home delivery services in 2022. Commercial services experienced growth in 2022 as

business returned to pre-pandemic levels.

The FedEx Ground fuel surcharge is based on a rounded average of the national U.S. on-highway average price for a gallon of diesel

fuel, as published by the Department of Energy. The fuel surcharge ranged as follows for the years ended May 31:

2022

2021

Low

8.0

5.5

High

19.3

8.0

Weighted-average

12.1

6.4

- 59 -

FedEx Ground Segment Operating Income

FedEx Ground segment operating income decreased 17% in 2022 primarily due to higher operating expenses related to labor market

challenges and inflationary pressures, as well as incremental costs associated with changes to our product mix. The constrained labor

market affected the availability and cost of labor resulting in higher purchased transportation costs, network inefficiencies, and higher

wage rates. In addition, higher self-insurance accruals and increased costs resulting from network expansion negatively impacted

operating income in 2022. These factors were partially offset by yield management actions, including the favorable net impact of fuel,

a favorable mix shift to higher yielding services, growth in commercial services, and two additional ground commercial operating

weekdays in 2022.

Purchased transportation expense increased 8% in 2022 due to higher fuel surcharges, as well as the challenging labor market resulting

in increased rates, higher utilization of third-party service providers, and network inefficiencies. Salaries and employee benefits

expense increased 17% in 2022 due to inflationary pressures and network inefficiencies related to the constrained labor market. Other

operating expense increased 23% in 2022 primarily due to higher self-insurance accruals, higher variable costs associated with the

constrained labor market, and additional volume-related expenses. Rentals expense increased 21% in 2022 due to network expansion.

The net impact of fuel had a significant benefit to operating income in 2022 as higher fuel surcharges outpaced increased fuel prices.

See the “Results of Operations and Outlook – Consolidated Results – Fuel” section of this MD&A for a description and additional

discussion of the net impact of fuel on our operating results.

FedEx Ground Segment Outlook

In 2023, FedEx Ground will focus on specific productivity and workforce initiatives to optimize operations and reduce cost to serve.

In addition, we are making strategic technology investments to improve safety and efficiency within our operations, as well as

executing targeted actions to enhance the hiring process, improve retention, and align staffing levels with network demands. We will

also continue executing pricing initiatives to mitigate slowing market demand and network capacity dynamics, while delivering

consistently superior service and improving the recipient experience to retain and grow the customer base. We anticipate these actions,

as well as cost control measures, will result in improved revenue and operating income in 2023.

Capital expenditures at FedEx Ground are expected to decrease in 2023 primarily related to lower spending on trailers and

investments in information technology.

- 60 -

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

Percent of Revenue

2022

2021

Change

2022

2021

Revenue

9,532

7,833

100.0

Operating expenses:

Salaries and employee benefits

4,140

3,666

43.4

46.8

Purchased transportation

976

827

10.2

10.6

Rentals

245

229

2.6

2.9

Depreciation and amortization

406

417

)

4.3

5.3

Fuel

662

398

7.0

5.1

Maintenance and repairs

274

227

2.9

Intercompany charges

517

505

5.4

6.5

Other

649

559

6.8

7.1

Total operating expenses

7,869

6,828

82.6

87.2

Operating income

1,663

1,005

Operating margin

17.4

12.8

460

Average daily shipments (in thousands):

Priority

79.1

76.2

Economy

32.6

32.2

Total average daily shipments

111.7

108.4

Weight per shipment:

Priority

1,092

1,104

)

Economy

947

987

)

Composite weight per shipment

1,050

1,069

)

Revenue per shipment:

Priority

320.76

269.98

Economy

368.08

313.67

Composite revenue per shipment

334.57

282.95

Revenue per hundredweight:

Priority

29.38

24.45

Economy

38.86

31.80

Composite revenue per hundredweight

31.88

26.46

FedEx Freight Segment Revenue

FedEx Freight segment revenue increased 22% in 2022 primarily due to yield management actions, including higher fuel surcharges,

as well as increased average daily shipments.

Revenue per shipment increased 18% in 2022 primarily due to revenue quality initiatives, including higher fuel surcharges, which

more than offset the effect of slightly lower weight per shipment. Average daily shipments increased 3% in 2022 due to higher

demand for our service offerings.

The weekly indexed fuel surcharge is based on the average of the U.S. on-highway prices for a gallon of diesel fuel, as published by

the Department of Energy. The indexed FedEx Freight fuel surcharge ranged as follows for the years ended May 31:

2022

2021

Low

25.4

21.0

High

49.0

25.4

Weighted-average

31.2

22.5

FedEx Freight Segment Operating Income

FedEx Freight segment operating income increased significantly in 2022 driven by continued focus on revenue quality and profitable

growth. Severe winter weather experienced in the prior year, as well as one additional operating day, benefited our year-over-year

operating income comparisons in 2022. Higher purchased transportation costs and wage rates as a result of constrained labor market

conditions negatively affected results in 2022.

- 61 -

Salaries and employee benefits increased 13% in 2022 primarily due to merit increases, higher volumes, and higher labor costs in the

constrained labor market. Purchased transportation increased 18% in 2022 primarily due to the challenging labor market resulting in

higher utilization of third-party service providers and increased rates, as well as higher fuel surcharges.

Fuel expense increased 66% in 2022 primarily due to increased fuel prices. The net impact of fuel had a significant benefit to

operating income in 2022 as higher fuel surcharges outpaced increased fuel prices. See the “Results of Operations and Outlook –

Consolidated Results – Fuel” section of this MD&A for a description and additional discussion of the net impact of fuel on our

operating results.

FedEx Freight Segment Outlook

We expect higher revenue and operating income for 2023 as we continue to utilize technology to improve the customer experience and

deliver profitable growth. We remain focused on safety, revenue quality, and improving operational productivities and efficiencies to

mitigate the impact of slowing economic conditions on our business. We will continue to invest in FedEx Freight Direct, a service to

meet the needs of the growing e-commerce market for delivery of heavy, bulky products to or through the door for residences and

businesses, and expect profitable growth in 2023. We will continue to capitalize on opportunities to collaborate with FedEx Ground

and FedEx Express by providing road, pickup-and-delivery, dock, and intermodal support.

Capital expenditures at FedEx Freight are expected to increase in 2023 primarily due to fleet modernization and strategic investments

in our network to support our focus on the security of our people, assets, and customers’ freight.

FINANCIAL CONDITION

LIQUIDITY

Cash and cash equivalents totaled $6.9 billion at May 31, 2022, compared to $7.1 billion at May 31, 2021. The following table

provides a summary of our cash flows for the years ended May 31 (in millions):

2022

2021

Operating activities:

Net income

3,826

5,231

Retirement plans mark-to-market adjustments

1,578

(1,176

)

Loss on extinguishment of debt

—

393

Business realignment costs

102

Other noncash charges and credits

7,494

7,457

Changes in assets and liabilities

(3,119

)

(1,872

)

Cash provided by operating activities

9,832

10,135

Investing activities:

Capital expenditures

(6,763

)

(5,884

)

Business acquisitions, net of cash acquired

—

(228

)

Purchase of investments

(147

)

—

Proceeds from asset dispositions and other

102

Cash used in investing activities

(6,816

)

(6,010

)

Financing activities:

Principal payments on debt

(161

)

(6,318

)

Proceeds from debt issuances

—

4,212

Proceeds from stock issuances

184

740

Dividends paid

(793

)

(686

)

Purchase of treasury stock

(2,248

)

—

Other, net

)

(38

)

Cash used in financing activities

(3,019

)

(2,090

)

Effect of exchange rate changes on cash

(187

)

171

Net (decrease) increase in cash and cash equivalents

(190

)

2,206

Cash and cash equivalents at end of period

6,897

7,087

Cash Provided by Operating Activities. Cash flows from operating activities decreased $0.3 billion in 2022 primarily due to timing of

variable incentive compensation payments and a decrease in other tax liabilities, including prior year relief from certain taxes in the

U.S. pursuant to the CARES Act, partially offset by lower accounts receivable due to the prior year effects of the COVID-19

pandemic, as well as higher net income (net of noncash items).

- 62 -

Cash Used in Investing Activities. Capital expenditures were 15% higher in 2022 primarily due to increased spending on package

handling equipment, vehicles and trailers, facilities, and information technology, partially offset by decreased aircraft spending. See

“Capital Resources” below for a more detailed discussion of capital expenditures during 2022.

Financing Activities. In January 2016, our Board of Directors approved a stock repurchase program of up to 25 million shares (the

“2016 repurchase program”). In December 2021, our Board of Directors authorized a new stock repurchase program of up to $5

billion of FedEx common stock (the “2022 repurchase program” and together with the 2016 repurchase program, the “repurchase

programs”). As part of the repurchase programs, we entered into an ASR agreement with a bank in December 2021 to repurchase an

aggregate of $1.5 billion of our common stock. During 2022, the ASR transaction was completed, and 6.1 million shares were

delivered under the ASR agreement. We repurchased 2.8 million additional shares of our common stock during 2022.

The following table provides a summary of repurchases of our common stock for the periods ended May 31 (dollars in millions,

except per share amounts):

2022

2021

Total

Number of

Purchased

Average

Price Paid

per Share

Total

Purchase

Price

Total

Number of

Purchased

Average

Price Paid

per Share

Total

Purchase

Price

Common stock repurchases

8,857,202

253.85

2,248

—

As of May 31, 2022, $4.1 billion remained available to be used for repurchases under the 2022 repurchase program. No shares remain

available for repurchase under the 2016 repurchase program. Shares under the 2022 repurchase program may be repurchased from

time to time in the open market or in privately negotiated transactions. The program does not have an expiration date and may be

suspended or discontinued at any time. See Note 1 of the accompanying consolidated financial statements for additional information.

During 2021, we issued $3.25 billion of senior unsecured debt under our shelf registration statement and used the net proceeds to

redeem $5.8 billion of outstanding debt and pay associated redemption premiums of $393 million, eliminating all debt maturities

through 2025 and one maturity in 2027. See Note 7 of the accompanying consolidated financial statements for additional information

on the terms of the senior unsecured debt, including the Sustainability Notes (defined in Note 7), as well as the debt maturities

redeemed.

Additionally, during 2021, FedEx Express issued $970 million of Pass-Through Certificates, Series 2020-1AA (the “Certificates”)

with a fixed interest rate of 1.875% due in February 2034 utilizing pass-through trusts. The Certificates are secured by 19 Boeing

aircraft. The payment obligations of FedEx Express in respect of the Certificates are fully and unconditionally guaranteed by FedEx.

FedEx Express is using the proceeds from the issuance for general corporate purposes. See Note 7 of the accompanying consolidated

financial statements for additional information regarding the terms of the Certificates.

CAPITAL RESOURCES

Our operations are capital intensive, characterized by significant investments in aircraft, package handling and sort equipment,

vehicles and trailers, technology, and facilities. The amount and timing of capital investments depend on various factors, including

pre-existing contractual commitments, anticipated volume growth, domestic and international economic conditions, new or enhanced

services, geographical expansion of services, availability of satisfactory financing, and actions of regulatory authorities.

The following table compares capital expenditures by asset category and reportable segment for the years ended May 31 (in millions):

2022

2021

Percent Change

Aircraft and related equipment

2,273

2,451

)

Package handling and ground support equipment

1,737

1,352

Vehicles and trailers

717

351

104

Information technology

851

816

Facilities and other

1,185

914

Total capital expenditures

6,763

5,884

FedEx Express segment

3,637

3,503

FedEx Ground segment

2,139

1,446

FedEx Freight segment

319

320

—

FedEx Services segment

565

512

Other

103

—

Total capital expenditures

6,763

5,884

- 63 -

Capital expenditures increased $0.9 billion during 2022 primarily due to increased spending on package handling equipment at all

transportation segments, higher spending on vehicles and trailers, as well as facilities at FedEx Ground and FedEx Express, and higher

information technology spending at FedEx Services, partially offset by decreased aircraft spending at FedEx Express.

GUARANTOR FINANCIAL INFORMATION

We are providing the following information in compliance with Rule 13-01 of Regulation S-X, “Financial Disclosures about

Guarantors and Issuers of Guaranteed Securities” with respect to our senior unsecured debt securities and the Certificates.

The $19.1 billion principal amount of the senior unsecured notes were issued by FedEx under a shelf registration statement and are

guaranteed by certain direct and indirect subsidiaries of FedEx (“Guarantor Subsidiaries”). FedEx owns, directly or indirectly, 100%

of each Guarantor Subsidiary. The guarantees are (1) unsecured obligations of the respective Guarantor Subsidiary, (2) rank equally

with all of their other unsecured and unsubordinated indebtedness, and (3) are full and unconditional and joint and several. If we sell,

transfer, or otherwise dispose of all of the capital stock or all or substantially all of the assets of a Guarantor Subsidiary to any person

that is not an affiliate of FedEx, the guarantee of that Guarantor Subsidiary will terminate, and holders of debt securities will no longer

have a direct claim against such subsidiary under the guarantee.

Additionally, FedEx fully and unconditionally guarantees the payment obligation of FedEx Express in respect of the $892 million

principal amount of the Certificates. See Note 7 of the accompanying consolidated financial statements for additional information

regarding the terms of the Certificates.

The following tables present summarized financial information for FedEx (as Parent) and the Guarantor Subsidiaries on a combined

basis after transactions and balances within the combined entities have been eliminated.

Parent and Guarantor Subsidiaries

The following table presents the summarized balance sheet information as of May 31, 2022 (in millions):

Current Assets

11,768

Intercompany Receivable

4,157

Total Assets

88,331

Current Liabilities

10,324

Intercompany Payable

—

Total Liabilities

58,883

The following table presents the summarized statement of income information as of May 31, 2022 (in millions):

Revenue

67,449

Intercompany Charges, net

(5,297

)

Operating Income

5,105

Intercompany Charges, net

116

Income Before Income Taxes

4,054

Net Income

3,250

The following tables present summarized financial information for FedEx (as Parent Guarantor) and FedEx Express (as Subsidiary

Issuer) on a combined basis after transactions and balances within the combined entities have been eliminated.

Parent Guarantor and Subsidiary Issuer

The following table presents the summarized balance sheet information as of May 31, 2022 (in millions):

Current Assets

4,687

Intercompany Receivable

—

Total Assets

68,449

Current Liabilities

5,155

Intercompany Payable

7,473

Total Liabilities

47,830

- 64 -

The following table presents the summarized statement of income information as of May 31, 2022 (in millions):

Revenue

24,438

Intercompany Charges, net

(3,790

)

Operating Income

1,633

Intercompany Charges, net

469

Income Before Income Taxes

3,282

Net Income

3,170

LIQUIDITY OUTLOOK

In response to current business and economic conditions as referenced above in the “Outlook” section of this MD&A, we are

continuing to actively manage and optimize our capital allocation in a challenging macroeconomic environment due to the ongoing

COVID-19 pandemic, labor availability and supply chain constraints, inflationary pressures, rising fuel prices, and geopolitical

conflicts. We had $6.9 billion in cash at May 31, 2022 and have $3.5 billion in available liquidity under our $2.0 billion five-year

credit agreement (the “Five-Year Credit Agreement) and $1.5 billion three-year credit agreement (the “Three-Year Credit Agreement”

and together with the Five-Year Credit Agreement, the “Credit Agreements”), and we believe that our cash and cash equivalents, cash

flow from operations, and available financing sources will be adequate to meet our liquidity needs, which include operational

requirements, expected capital expenditures, voluntary pension contributions, dividend payments, and stock repurchases.

We expect to repurchase $1.5 billion of our common stock in 2023.

Our cash and cash equivalents balance at May 31, 2022 includes $2.9 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 2023 capital expenditures are expected to be consistent with 2022 at approximately $6.8 billion. We expect increased investment

in replacement vehicles including our vehicle electrification initiative, information technology, and strategic investments aimed to

optimize operations across our networks to be offset with lower aircraft fleet modernization spend. Included within our expected 2023

capital expenditures are our continued investments in the FedEx Express Indianapolis hub and FedEx Express Memphis World Hub,

which are expected to total $1.5 billion each over the life of each project. Our expected capital expenditures for 2023 also include $1.7

billion for delivery of aircraft and related equipment and progress payments toward future aircraft deliveries at FedEx Express. While

we continue to invest in our business, the capital intensity relative to revenue is expected to remain below historical levels.

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 18 of the accompanying consolidated financial statements for more information. In addition, we have certain tax

positions that are further discussed in Note 13 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 several aircraft modernization programs underway that are supported by the purchase of Boeing 777 Freighter and Boeing

767-300 Freighter 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.

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

FedEx Express to sell, in one or more future offerings, pass-through certificates.

The Five-Year Credit Agreement expires in March 2026 and includes a $250 million letter of credit sublimit. The Three-Year Credit

Agreement expires in March 2025. The Credit Agreements are available to finance our operations and other cash flow needs. See Note

7 of the accompanying consolidated financial statements for a description of the terms and significant covenants of the Credit

Agreements.

- 65 -

We made a voluntary contribution of $400 million to our tax qualified U.S. domestic pension plans (“U.S. Pension Plans”) in June

2023 and anticipate making $400 million of additional voluntary contributions during the remainder of 2023. There are currently no

anticipated required minimum contributions to our U.S. Pension Plans based on our funded status and the fact we have a credit

balance related to our cumulative excess voluntary pension contributions over those required that exceeds $3.5 billion. The credit

balance is subtracted from plan assets to determine the minimum funding requirements. Therefore, we could eliminate all required

contributions to our principal U.S. Pension Plans for several years if we were to choose to waive part of that credit balance in any

given year. Our U.S. Pension Plans have ample funds to meet expected benefit payments.

On June 14, 2022, our Board of Directors declared a quarterly cash dividend of $1.15 per share of common stock. The dividend was

paid on July 11, 2022 to stockholders of record as of the close of business on June 27, 2022. Each quarterly dividend payment is

subject to review and approval by our Board of Directors, and we evaluate our dividend payment amount on an annual basis. There are

no material restrictions on our ability to declare dividends, nor are there any material restrictions on the ability of our subsidiaries to

transfer funds to us in the form of cash dividends, loans, or advances.

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.” If our credit ratings drop, our interest

expense may increase. If our commercial paper ratings drop below current levels, we may have difficulty utilizing the commercial

paper market. If our senior unsecured debt credit ratings drop below investment grade, our access to financing may become limited.

OTHER BUSINESS MATTERS

On June 24, 2019, FedEx filed suit in U.S. District Court in the District of Columbia seeking to enjoin the U.S. Department of

Commerce (the “DOC”) from enforcing prohibitions contained in the Export Administration Regulations against FedEx. On

September 11, 2020, the court granted the DOC’s motion to dismiss the lawsuit. On November 5, 2020, we appealed this decision. On

July 8, 2022, the U.S. Court of Appeals for the District of Columbia Circuit affirmed the dismissal of the lawsuit.

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.

RETIREMENT PLANS

The rules for pension accounting are complex and can produce volatility in our earnings, financial condition, and liquidity. Our

defined benefit pension and postretirement benefit 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, employee turnover, and future increases in healthcare costs. Differences between these assumptions and actual

experience are recognized in our earnings through MTM accounting. The components of the MTM adjustments for the period ended

May 31 are as follows (presented as loss (gain) in millions):

2022

2021

Actual versus expected return on assets

5,109

(1,712

)

Discount rate change

(4,486

)

(397

)

Demographic experience:

Current year actuarial loss

504

302

Change in future assumptions

314

685

Termination of TNT Express Netherlands pension plan

224

—

Pension plan amendments, including curtailment gains

(87

)

(54

)

Total MTM loss (gain)

1,578

(1,176

)

- 66 -

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

Postretirement

Healthcare Plans

2022

2021

2022

2021

2022

2021

Discount rate used to determine benefit

obligation

4.25

3.23

3.09

1.83

4.35

2.81

Discount rate used to determine net periodic

benefit cost

3.23

3.14

1.83

1.79

2.81

2.95

Expected long-term rate of return on assets

6.50

6.75

2.39

2.71

—

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, 2022 and expense

for the year ended May 31, 2022 (in millions):

50 Basis

Point Increase

50 Basis

Point Decrease

Pension Plan

EROA:

Effect on pension expense

(124

)

124

Discount Rate:

Effect on pension expense

(13

)

Effect on PBO

(1,642

)

1,820

See Note 14 of the accompanying consolidated financial statements for further information about our retirement 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.

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 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.

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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 13 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 on a conservative basis. 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):

2022

2021

Short-Term

1,646

1,193

Long-Term

2,889

2,430

Total

4,535

3,623

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 $230 million in our reserves and expenses as of and for the year ended May 31, 2022.

LONG-LIVED ASSETS

USEFUL LIVES AND SALVAGE VALUES. Our business is capital intensive, with approximately 55% 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 15 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.

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, 2022, the FedEx Express global air network included a fleet of 696 aircraft (including approximately

300 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.

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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, 2022, 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 impact to 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 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, 2022, we had eight aircraft temporarily idled. These aircraft have been idled for an average of 24

months and are expected to return to revenue service in 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. In accordance with the new lease accounting

standard adopted in 2020, we had approximately $17 billion in operating lease liabilities and related right-of-use assets on the balance

sheet as of May 31, 2022. The weighted-average remaining lease term of all operating leases outstanding at May 31, 2022 was

approximately 10 years.

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-to-use asset and lease liability on the

consolidated balance sheets.

The lease liabilities are measured at the lease commencement date and determined using the present value of the minimum lease

payments not yet paid and our incremental borrowing rate, which approximates the rate at which we would borrow, on a collateralized

basis, over the term of a lease in the applicable currency environment. The interest rate implicit in the lease is generally not

determinable in transactions where we are the lessee.

The determination of whether a lease is accounted for as a finance lease or an operating lease requires management to make estimates

primarily about the fair value of the asset and its estimated economic useful life. In addition, our evaluation includes ensuring we

properly account for build-to-suit lease arrangements and making judgments about whether various forms of lessee involvement

during the construction period allow the lessee to control the underlying leased asset during the construction period. We believe we

have well-defined and controlled processes for making these evaluations, including obtaining third-party appraisals for material

transactions to assist us in making these evaluations.

GOODWILL. We had $6.5 billion of recorded goodwill at May 31, 2022 and $7.0 billion of recorded goodwill at May 31, 2021 from

our business acquisitions, representing the excess of the purchase price over the fair value of the net assets acquired. Several factors

give rise to goodwill in our acquisitions, such as the expected benefits from synergies of the combination and the existing workforce

of the acquired business.

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Goodwill is reviewed at least annually for impairment. In our evaluation of goodwill impairment, we perform a qualitative assessment

that requires management judgment and the use of estimates to determine if it is more likely than not that the fair value of a reporting

unit is less than its carrying amount. An entity has an unconditional option to bypass the qualitative assessment for any reporting unit

and proceed directly to performing the quantitative goodwill impairment test. An entity may resume performing the qualitative

assessment in any subsequent period. We performed both qualitative and quantitative assessments of goodwill in the fourth quarter of

2022 and 2021. This included comparing the fair value of the reporting unit to its carrying value (including attributable goodwill). Fair

value is estimated using standard valuation methodologies (principally the income or market approach classified as Level 3 within the

fair value hierarchy) incorporating market participant considerations and management’s assumptions on revenue growth rates,

operating margins, discount rates, and expected capital expenditures. Estimates used by management can significantly affect the

outcome of the impairment test. Changes in forecasted operating results and other assumptions could materially affect these estimates.

As part of our qualitative assessment, we consider changes in the macroeconomic environment such as the general economic

conditions, limitations on accessing capital, fluctuations in foreign exchange rates, and other developments in equity and credit

markets.

The market approach uses observable market data of comparable public companies to estimate fair value utilizing financial metrics

such as operating value to earnings before interest, taxes, depreciation, and amortization. We apply judgment to select appropriate

comparison companies based on the business operations, growth, size, and risk profile relative to our reporting units. Changes to our

selection of comparable companies may result in changes to the estimates of fair value of our reporting units.

Our reporting units with significant recorded goodwill include FedEx Express, FedEx Ground, and FedEx Freight. We evaluated these

reporting units during the fourth quarters of 2022 and 2021 and the estimated fair value of each of these reporting units exceeded their

carrying values as of the end of 2022 and 2021; therefore, we do not believe that any of these reporting units were impaired as of the

balance sheet dates.

LEGAL AND OTHER CONTINGENCIES

We are subject to various loss contingencies in connection with our operations. Contingent liabilities are difficult to measure, as their

measurement is subject to multiple factors that are not easily predicted or projected. Further, additional complexity in measuring these

liabilities arises due to the various jurisdictions in which these matters occur, which makes our ability to predict their outcome highly

uncertain. Moreover, different accounting rules must be employed to account for these items based on the nature of the contingency.

Accordingly, significant management judgment is required to assess these matters and to make determinations about the measurement

of a liability, if any. Certain pending loss contingencies are described in Note 19 of the accompanying consolidated financial

statements. In the opinion of management, the aggregate liability, if any, of individual matters or groups of related matters not

specifically described in Note 19 is not expected to be material to our financial position, results of operations, or cash flows. The

following describes our methods and associated processes for evaluating these matters.

Because of the complex environment in which we operate, we are subject to numerous legal proceedings and claims, including those

relating to general commercial matters, governmental enforcement actions, employment-related claims, and FedEx Ground’s service

providers. Accounting guidance for contingencies requires an accrual of estimated loss from a contingency, such as a non-income tax

or other legal proceeding or claim, when it is probable (i.e., the future event or events are likely to occur) that a loss has been incurred

and the amount of the loss can be reasonably estimated. This guidance also requires disclosure of a loss contingency matter when, in

management’s judgment, a material loss is reasonably possible or probable.

During the preparation of our financial statements, we evaluate our contingencies to determine whether it is probable, reasonably

possible, or remote that a liability has been incurred. A loss is recognized for all contingencies deemed probable and estimable,

regardless of amount. For unresolved contingencies with potentially material exposure that are deemed reasonably possible, we

evaluate whether a potential loss or range of loss can be reasonably estimated.

Our evaluation of these matters is the result of a comprehensive process designed to ensure that accounting recognition of a loss or

disclosure of these contingencies is made in a timely manner and involves our legal and accounting personnel, as well as external

counsel where applicable. The process includes regular communications during each quarter and scheduled meetings shortly before

the completion of our financial statements to evaluate any new legal proceedings and the status of existing matters.

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

• the current status of each matter within the scope and context of the entire lawsuit or proceeding (e.g., the lengthy and complex

nature of class-action matters);

• the procedural status of each matter;

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

• the amount of time remaining before a trial date;

• the status of discovery;

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

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

In reaching our conclusions with respect to accrual of a loss or loss contingency disclosure, we take a holistic view of each matter

based on these factors and the information available prior to the issuance of our financial statements. Uncertainty with respect to an

individual factor or combination of these factors may impact our decisions related to accrual or disclosure of a loss contingency,

including a conclusion that we are unable to establish an estimate of possible loss or a meaningful range of possible loss. We update

our disclosures to reflect our most current understanding of the contingencies at the time we issue our financial statements. However,

events may arise that were not anticipated and the outcome of a contingency may result in a loss to us that differs materially from our

previously estimated liability or range of possible loss.

Despite the inherent complexity in the accounting and disclosure of contingencies, we believe that our processes are robust and

thorough and provide a consistent framework for management in evaluating the potential outcome of contingencies for proper

accounting recognition and disclosure.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

INTEREST RATES. While we currently have market risk sensitive instruments related to interest rates, we do not have significant

exposure to changing interest rates on our long-term debt. As disclosed in Note 7 to the accompanying consolidated financial

statements, we had outstanding fixed-rate long-term debt (exclusive of finance leases) with an estimated fair value of $18.8 billion at

May 31, 2022 and outstanding fixed- and floating-rate long-term debt (exclusive of finance leases) with an estimated fair value of

$23.1 billion at May 31, 2021. Market risk for long-term debt is estimated as the potential decrease in fair value resulting from a

hypothetical 10% increase in interest rates and amounts to approximately $518 million as of May 31, 2022 and approximately $507

million as of May 31, 2021. The underlying fair values of our long-term debt were estimated based on quoted market prices or on the

current rates offered for debt with similar terms and maturities.

We have interest rate risk with respect to our pension and postretirement benefit obligations. Changes in interest rates impact our

liabilities associated with these retirement plans, as well as the amount of pension and postretirement benefit expense recognized.

Declines in the value of plan assets could diminish the funded status of our pension plans and potentially increase our requirement to

make contributions to the plans. Substantial investment losses on plan assets would also increase net pension expense. See the

“Critical Accounting Estimates — Retirement Plans” section of “Item 7. Management’s Discussion and Analysis of Results of

Operations and Financial Condition” of this Annual Report for more information.

FOREIGN CURRENCY. While we are a global provider of transportation, e-commerce, and business services, the majority of our

transactions during the periods presented in this Annual Report are denominated in U.S. dollars. The principal foreign currency

exchange rate risks to which we are exposed are in the euro, Chinese yuan, British pound, Canadian dollar, Hong Kong dollar,

Australian dollar, Japanese yen, and Mexican peso. Historically, our exposure to foreign currency fluctuations is more significant with

respect to our revenue than our expenses, as a significant portion of our expenses are denominated in U.S. dollars, such as aircraft and

fuel expenses. Foreign currency fluctuations had a slightly positive impact on operating income in 2022 and a slightly negative impact

on operating income in 2021. However, favorable foreign currency fluctuations also may have had an offsetting impact on the price

we obtained or the demand for our services, which is not quantifiable. At May 31, 2022, the result of a uniform 10% strengthening in

the value of the dollar relative to the currencies in which our transactions are denominated would result in a decrease in expected

operating income of approximately $50 million for 2023. This theoretical calculation assumes that each exchange rate would change

in the same direction relative to the U.S. dollar, which is not consistent with our actual experience in foreign currency transactions. In

addition to the direct effects of changes in exchange rates, fluctuations in exchange rates also affect the volume of sales or the foreign

currency sales price as competitors’ services become more or less attractive. The sensitivity analysis of the effects of changes in

foreign currency exchange rates does not factor in a potential change in sales levels or local currency prices.

- 71 -

We maintain derivative financial instruments to manage foreign currency fluctuations related to probable future transactions and cash

flows denominated in currencies other than the currency of the transacting entity which impacts our exposure to foreign currency

exchange risk. These derivatives are not designated as hedges and are accounted for at fair value with any profit or loss recorded in

income, which was immaterial for 2022 and 2021.

COMMODITY. While we have market risk for changes in the price of jet and vehicle fuel, this risk is largely mitigated by our indexed

fuel surcharges. For additional discussion of our indexed fuel surcharges, see the “Results of Operations and Outlook — Consolidated

Results — Fuel” section of “Item 7. Management’s Discussion and Analysis of Results of Operations and Financial Condition.”

- 72 -

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

MANAGEMENT’S REPORT ON INTERNAL

CONTROL OVER FINANCIAL REPORTING

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules

13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended). Our internal control over financial reporting

includes, among other things, defined policies and procedures for conducting and governing our business, sophisticated information

systems for processing transactions, and a properly staffed, professional internal audit department. Mechanisms are in place to monitor

the effectiveness of our internal control over financial reporting and actions are taken to correct all identified deficiencies. Our

procedures for financial reporting include the active involvement of senior management, our Audit and Finance Committee, and our

staff of highly qualified financial and legal professionals.

Management, with the participation of our principal executive and financial officers, assessed our internal control over financial

reporting as of May 31, 2022, the end of our fiscal year. Management based its assessment on criteria established in Internal Control

— Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the

COSO criteria).

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

2022.

The effectiveness of our internal control over financial reporting as of May 31, 2022, has been audited by Ernst & Young LLP

(PCAOB ID: 42), the independent registered public accounting firm who also audited the Company’s consolidated financial

statements included in this Annual Report on Form 10-K. Ernst & Young LLP’s report on the Company’s internal control over

financial reporting is included in this Annual Report on Form 10-K.

- 73 -

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors of

FedEx Corporation

Opinion on Internal Control Over Financial Reporting

We have audited FedEx Corporation’s internal control over financial reporting as of May 31, 2022, based on criteria established in

Internal Control

– Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013

framework) (the COSO criteria). In our opinion, FedEx Corporation (the Company) maintained, in all material respects, effective

internal control over financial reporting as of May 31, 2022, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)

(PCAOB), the consolidated balance sheets of the Company as of May 31, 2022 and 2021, the related consolidated statements of

income, comprehensive income, cash flows and changes in common stockholders’ investment for each of the three years in the period

ended May 31, 2022, and the related notes and our report dated July 18, 2022 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of

the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control

over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based

on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the

Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange

Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit

to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness

exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such

other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our

opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of

financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting

principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the

maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the

company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in

accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in

accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding

prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect

on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections

of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in

conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Memphis, Tennessee

July 18, 2022

- 74 -

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors of

FedEx Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of FedEx Corporation (the Company) as of May 31, 2022 and 2021,

the related consolidated statements of income, comprehensive income, cash flows and changes in common stockholders’ investment

for each of the three years in the period ended May 31, 2022, and the related notes (collectively referred to as the “consolidated

financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial

position of the Company at May 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in

the period ended May 31, 2022, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)

(PCAOB), the Company’s internal control over financial reporting as of May 31, 2022, based on criteria established in Internal

Control

– Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013

framework) and our report dated July 18, 2022 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the

Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to

be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and

regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the

audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to

error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial

statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included

examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included

evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall

presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial

statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or

disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective or

complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial

statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the

critical audit matters or on the accounts or disclosures to which they relate.

Pension Projected Benefit Obligation

Description

of the Matter

At May 31, 2022, the Company’s aggregated projected benefit obligation for U.S. pension

plans was $28.7 billion and exceeded the $26.0 billion fair value of U.S. pension plan assets,

resulting in an unfunded U.S. pension obligation of $2.7 billion. The net periodic benefit cost

for the year ended May 31, 2022 for the U.S. pension plans was $1.6 billion. As explained in

Note 14 to the consolidated financial statements, the Company sponsors defined benefit

pension plans that provide retirement benefits to certain U.S. employees. The Company’s

projected benefit obligation for the U.S. pension plans is measured using actuarial techniques

that reflect management’s assumptions for discount rate, future salary increases, employee

turnover, mortality, and retirement ages.

Auditing the projected benefit obligation of the U.S. pension plans was complex due to the

highly judgmental nature and significant effect of the discount rate used in the measurement

process. The discount rate is developed by utilizing the yield on a theoretical portfolio of high-

grade corporate bonds that match cash flows to benefit payments, limit the concentration by

industry and issuer, and apply screening criteria to exclude bonds with a call feature unless

they have a low probability of being called.

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How We

Addressed

the Matter in

Our Audit

We obtained an understanding, evaluated the design and tested the operating effectiveness of

controls over management’s process for estimating the projected benefit obligation of the U.S.

pension plans, including management’s review of the significant assumptions and assessment

of the data inputs provided to the actuary.

To test the projected benefit obligation of the U.S. pension plans, our audit procedures

included, among others, evaluating the methodologies used, the significant actuarial

assumptions described above, and the underlying data used by the Company. We compared the

actuarial assumptions used by management to historical trends and evaluated the change in the

projected benefit obligation of the U.S. pension plans from the prior year due to the change in

service cost, interest cost, actuarial gains and losses, benefit payments, contributions and other

activities. In addition, we involved our actuarial specialists to assist in evaluating

management’s methodology for determining the discount rate. As part of this assessment, we

compared management’s selected discount rate to an independently developed range of

reasonable discount rates. Additionally, we compared the projected future cash flows of the

U.S. pension plans to the prior year projections and compared the current year benefits paid to

the prior year projected cash flows. We also tested the completeness and accuracy of the

underlying data, including the participant data provided to management’s actuarial specialists.

Valuation of Self-Insurance Accruals

Description

of the Matter

At May 31, 2022, the Company’s self-insurance accruals reflected in the balance sheet were

$4.5 billion. As explained in Note 1 to the consolidated financial statements, self-insurance

accruals include costs associated with workers’ compensation claims, vehicle accidents,

property and cargo loss, general business liabilities, and benefits paid under employee

disability programs. These accrued liabilities are primarily based on the actuarially estimated

cost of claims, including incurred-but-not-reported (IBNR) claims.

Auditing the Company’s self-insurance accruals is complex due to the significant

measurement uncertainty inherent to the estimate, the application of management judgment,

and the use of various actuarial methods. In addition, the accruals are sensitive due to the

volume of claims and the amount of time that can pass before the final cost is known.

How We

Addressed

the Matter in

Our Audit

We obtained an understanding, evaluated the design and tested the operating effectiveness of

controls over management’s process for estimating self-insurance accruals, including

management’s review of the assumptions used, results of calculations and assessment of data

underlying the accruals.

To evaluate the self-insurance accruals, our audit procedures included, among others, testing

the completeness and accuracy of the underlying claims data used by the Company. We

involved our actuarial specialists to assist in our evaluation of the methodologies applied by

management in establishing the actuarially determined accrual and in reviewing the

Company’s reinsurance contracts by policy year to assess the Company’s self-insured

retentions, deductibles, and coverage limits. We compared the Company’s accrued amounts to

a range developed by our actuarial specialists. Furthermore, we compared the Company’s

historical estimates of expected incurred losses to actual losses experienced during the current

year.

/s/ Ernst & Young LLP

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

Memphis, Tennessee

July 18, 2022

- 76 -

FEDEX CORPORATION

CONSOLIDATED BALANCE SHEETS

(IN MILLIONS)

May 31,

2022

2021

ASSETS

CURRENT ASSETS

Cash and cash equivalents

6,897

7,087

Receivables, less allowances of $692 and $742

11,863

12,069

Spare parts, supplies, and fuel, less allowances of $360 and $349

637

587

Prepaid expenses and other

968

837

Total current assets

20,365

20,580

PROPERTY AND EQUIPMENT, AT COST

Aircraft and related equipment

27,874

26,268

Package handling and ground support equipment

14,930

13,012

Information technology

8,098

7,486

Vehicles and trailers

9,806

9,282

Facilities and other

14,567

14,029

Total property and equipment, at cost

75,275

70,077

Less accumulated depreciation and amortization

37,184

34,325

Net property and equipment

38,091

35,752

OTHER LONG-TERM ASSETS

Operating lease right-of-use assets, net

16,613

15,383

Goodwill

6,544

6,992

Other assets

4,381

4,070

Total other long-term assets

27,538

26,445

TOTAL ASSETS

85,994

82,777

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

- 77 -

FEDEX CORPORATION

CONSOLIDATED BALANCE SHEETS

(IN MILLIONS, EXCEPT SHARE DATA)

May 31,

2022

2021

LIABILITIES AND COMMON STOCKHOLDERS’ INVESTMENT

CURRENT LIABILITIES

Current portion of long-term debt

146

Accrued salaries and employee benefits

2,531

2,903

Accounts payable

4,030

3,841

Operating lease liabilities

2,443

2,208

Accrued expenses

5,188

4,562

Total current liabilities

14,274

13,660

LONG-TERM DEBT, LESS CURRENT PORTION

20,182

20,733

OTHER LONG-TERM LIABILITIES

Deferred income taxes

4,093

3,927

Pension, postretirement healthcare, and other benefit obligations

4,448

3,501

Self-insurance accruals

2,889

2,430

Operating lease liabilities

14,487

13,375

Other liabilities

682

983

Total other long-term liabilities

26,599

24,216

COMMITMENTS AND CONTINGENCIES

COMMON STOCKHOLDERS’ INVESTMENT

Common stock, $0.10 par value; 800 million shares authorized; 318 million shares

issued as of May 31, 2022 and 2021

Additional paid-in capital

3,712

3,481

Retained earnings

32,782

29,817

Accumulated other comprehensive loss

(1,103

)

(732

)

Treasury stock, at cost

(10,484

)

(8,430

)

Total common stockholders’ investment

24,939

24,168

TOTAL LIABILITIES AND COMMON STOCKHOLDERS’ INVESTMENT

85,994

82,777

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

- 78 -

FEDEX CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)

Years ended May 31,

2022

2021

2020

REVENUE

93,512

83,959

69,217

OPERATING EXPENSES:

Salaries and employee benefits

32,058

30,173

25,031

Purchased transportation

24,118

21,674

17,466

Rentals and landing fees

4,712

4,155

3,712

Depreciation and amortization

3,970

3,793

3,615

Fuel

5,115

2,882

3,156

Maintenance and repairs

3,372

3,328

2,893

Business realignment costs

278

116

—

Goodwill and other asset impairment charges

—

435

Other

13,644

11,981

10,492

TOTAL OPERATING EXPENSES

87,267

78,102

66,800

OPERATING INCOME

6,245

5,857

2,417

OTHER (EXPENSE) INCOME:

Interest expense

(689

)

(793

)

(672

)

Interest income

Other retirement plans (expense) income

(726

)

1,983

(122

)

Loss on debt extinguishment

—

(393

)

—

Other, net

(32

)

TOTAL OTHER (EXPENSE) INCOME

(1,349

)

817

(748

)

INCOME BEFORE INCOME TAXES

4,896

6,674

1,669

PROVISION FOR INCOME TAXES

1,070

1,443

383

NET INCOME

3,826

5,231

1,286

BASIC EARNINGS PER COMMON SHARE

14.54

19.79

4.92

DILUTED EARNINGS PER COMMON SHARE

14.33

19.45

4.90

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

- 79 -

FEDEX CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(IN MILLIONS)

Years Ended May 31,

2022

2021

2020

NET INCOME

3,826

5,231

1,286

OTHER COMPREHENSIVE INCOME (LOSS):

Foreign currency translation adjustments, net of tax benefit of

$17 in 2022, tax expense of $13 in 2021, and tax benefit of $18 in 2020

(363

)

422

(254

)

Amortization of prior service credit and other, net of tax benefits of $2

in 2022, $3 in 2021, and $25 in 2020

)

(79

)

TOTAL OTHER COMPREHENSIVE INCOME (LOSS)

(371

)

415

(333

)

COMPREHENSIVE INCOME

3,455

5,646

953

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

- 80 -

FEDEX CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN MILLIONS)

Years ended May 31,

2022

2021

2020

OPERATING ACTIVITIES

Net income

3,826

5,231

1,286

Adjustments to reconcile net income to cash provided by operating

activities:

Depreciation and amortization

3,970

3,793

3,615

Provision for uncollectible accounts

403

577

442

Other noncash items including leases and deferred income taxes

2,931

2,887

2,449

Stock-based compensation

190

200

168

Retirement plans mark-to-market adjustments

1,578

(1,176

)

794

Loss on extinguishment of debt

—

393

—

Business realignment costs

102

—

Goodwill and other asset impairment charges

—

435

Changes in assets and liabilities:

Receivables

(310

)

(1,389

)

(1,331

)

Other current assets

(158

)

(40

)

(59

)

Pension and postretirement healthcare assets and liabilities, net

(697

)

(317

)

(908

)

Accounts payable and other liabilities

(1,861

)

(1,787

)

Other, net

(93

)

(197

)

Cash provided by operating activities

9,832

10,135

5,097

INVESTING ACTIVITIES

Capital expenditures

(6,763

)

(5,884

)

(5,868

)

Business acquisitions, net of cash acquired

—

(228

)

—

Purchase of investments

(147

)

—

Proceeds from asset dispositions and other

102

Cash used in investing activities

(6,816

)

(6,010

)

(5,846

)

FINANCING ACTIVITIES

Principal payments on debt

(161

)

(6,318

)

(2,548

)

Proceeds from debt issuances

—

4,212

6,556

Proceeds from stock issuances

184

740

Dividends paid

(793

)

(686

)

(679

)

Purchase of treasury stock

(2,248

)

—

)

Other, net

)

(38

)

Cash (used in) provided by financing activities

(3,019

)

(2,090

)

3,381

Effect of exchange rate changes on cash

(187

)

171

(70

)

Net (decrease) increase in cash and cash equivalents

(190

)

2,206

2,562

Cash and cash equivalents at beginning of period

7,087

4,881

2,319

Cash and cash equivalents at end of period

6,897

7,087

4,881

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

- 81 -

FEDEX CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN COMMON STOCKHOLDERS’ INVESTMENT

(IN MILLIONS, EXCEPT SHARE DATA)

Common

Stock

Additional

Paid-in

Capital

Retained

Earnings

Accumulated

Other

Comprehensive

Loss

Treasury

Stock

Total

Balance at May 31, 2019

3,231

24,648

(865

)

(9,289

)

17,757

Net income

—

1,286

—

1,286

Other comprehensive loss, net of tax of $43

—

(333

)

—

(333

)

Purchase of treasury stock (0.02 million shares)

—

)

Cash dividends declared ($2.60 per share)

—

(679

)

—

(679

)

Employee incentive plans and other

(1.0 million shares issued)

—

125

(35

)

—

130

220

Adoption of new accounting standards on

June 1, 2019

(1)

—

)

—

)

Reclassification to retained earnings due to the

adoption

of a new accounting standard on June 1, 2019

(2)

—

Balance at May 31, 2020

3,356

25,216

(1,147

)

(9,162

)

18,295

Net income

—

5,231

—

5,231

Other comprehensive gain, net of tax of ($10)

—

415

—

415

Cash dividends declared ($2.60 per share)

—

(686

)

—

(686

)

Employee incentive plans and other

(5.4 million shares issued)

—

125

—

732

913

Balance at May 31, 2021

3,481

29,817

(732

)

(8,430

)

24,168

Net income

—

3,826

—

3,826

Other comprehensive loss, net of tax of $19

—

(371

)

—

(371

)

Purchase of treasury stock (8.9 million shares)

—

)

—

(2,239

)

(2,248

)

Cash dividends declared ($3.00 per share)

—

(793

)

—

(793

)

Employee incentive plans and other

(1.4 million shares issued)

—

240

(68

)

—

185

357

Balance at May 31, 2022

3,712

32,782

(1,103

)

(10,484

)

24,939

(1)

Relates to the adoption of Accounting Standards Update (“ASU”) 2016-02 and ASU 2018-02.

(2)

Relates to the adoption of ASU 2018-02.

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

FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

- 82 -

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

DESCRIPTION OF BUSINESS SEGMENTS. FedEx Corporation (“FedEx”) provides a broad portfolio of transportation, e-commerce,

and business services through companies competing collectively, operating collaboratively, and innovating digitally, under the

respected FedEx brand. Our primary operating companies are Federal Express Corporation (“FedEx Express”), the world’s largest

express transportation company; FedEx Ground Package System, Inc. (“FedEx Ground”), a leading North American provider of

small-package ground delivery services; and FedEx Freight Corporation (“FedEx Freight”), a leading North American provider of

less-than-truckload (“LTL”) freight transportation services. These companies represent our major service lines and, along with FedEx

Corporate Services, Inc. (“FedEx Services”), constitute our reportable segments. Our FedEx Services segment provides sales,

marketing, information technology, communications, customer service, technical support, billing and collection services, and certain

back-office functions that support our operating segments.

FISCAL YEARS. Except as otherwise specified, references to years indicate our fiscal year ended May 31, 2022 or ended May 31 of

the year referenced.

PRINCIPLES OF CONSOLIDATION. The consolidated financial statements include the accounts of FedEx and its subsidiaries,

substantially all of which are wholly owned. All significant intercompany accounts and transactions have been eliminated in

consolidation.

REVENUE RECOGNITION.

Satisfaction of Performance Obligation

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the basis of revenue

recognition in accordance with U.S. generally accepted accounting principles (“GAAP”). To determine the proper revenue recognition

method for contracts, we evaluate whether two or more contracts should be combined and accounted for as one single contract and

whether the combined or single contract should be accounted for as more than one performance obligation. For most of our contracts,

the customer contracts with us to provide distinct services within a single contract, primarily transportation services. Substantially all

of our contracts with customers for transportation services include only one performance obligation, the transportation services

themselves. However, if a contract is separated into more than one performance obligation, we allocate the total transaction price to

each performance obligation in an amount based on the estimated relative standalone selling prices of the promised goods or services

underlying each performance obligation. We frequently sell standard transportation services with observable standalone sales prices.

In these instances, the observable standalone sales are used to determine the standalone selling price.

For transportation services, revenue is recognized over time as we perform the services in the contract because of the continuous

transfer of control to the customer. Our customers receive the benefit of our services as the goods are transported from one location to

another. If we were unable to complete delivery to the final location, another entity would not need to reperform the transportation

service already performed. As control transfers over time, revenue is recognized based on the extent of progress towards completion

of the performance obligation. The selection of the method to measure progress towards completion requires judgment and is based on

the nature of the products or services to be provided. We use the cost-to-cost measure of progress for our package delivery contracts

because it best depicts the transfer of control to the customer which occurs as we incur costs on our contracts. Under the cost-to-cost

measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total

estimated costs at completion of the performance obligation. Revenue, including ancillary or accessorial fees and reductions for

estimated customer incentives, is recorded proportionally as costs are incurred. Costs to fulfill include labor and other direct costs and

an allocation of indirect costs. For our FedEx Freight and freight forwarding contracts, an output method of progress based on time-in-

transit is utilized as the timing of costs incurred does not best depict the transfer of control to the customer.

We also provide customized customer-specific solutions, such as supply chain management solutions and inventory and service parts

logistics, through which we provide the service of integrating a complex set of tasks and components into a single capability. For these

arrangements, the majority of which are conducted by our FedEx Logistics, Inc. (“FedEx Logistics”) operating segment, the entire

contract is accounted for as one performance obligation. For these performance obligations, we typically have a right to consideration

from customers in an amount that corresponds directly with the value to the customers of our performance completed to date, and as

such we recognize revenue in the amount to which we have a right to invoice the customer.

FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

- 83 -

Contract Modification

Contracts are often modified to account for changes in the rates we charge our customers or to add additional distinct services. We

consider contract modifications to exist when the modification either creates new enforceable rights and obligations or alters the

existing arrangement. Contract modifications that add distinct goods or services are treated as separate contracts. Contract

modifications that do not add distinct goods or services typically change the price of existing services. These contract modifications

are accounted for prospectively as the remaining performance obligations are distinct.

Variable Consideration

Certain contracts contain customer incentives, guaranteed service refunds, and other provisions that can either increase or decrease the

transaction price. These incentives are generally awarded based upon achieving certain performance metrics. We estimate variable

consideration as the most likely amount to which we expect to be entitled. We include estimated amounts of revenue, which may be

reduced by incentives or other contract provisions, in the transaction price to the extent it is probable that a significant reversal of

cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Our

estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based on an

assessment of anticipated customer spending and all information (historical, current, and forecasted) that is reasonably available to us.

Principal vs. Agent Considerations

Transportation services are provided with the use of employees and independent businesses that contract with FedEx. GAAP requires

us to evaluate whether our businesses themselves promise to transfer services to the customer (as the principal) or to arrange for

services to be provided by another party (as the agent) using a control model. Based on our evaluation of the control model, we

determined that FedEx is the principal to the transaction for most of these services and revenue is recognized on a gross basis based on

the transfer of control to the customer. Costs associated with independent businesses providing transportation services are recognized

as incurred and included in the caption “Purchased transportation” in the accompanying consolidated statements of income.

Our contract logistics, global trade services, and certain transportation businesses engage in certain transactions wherein they act as

agents. Revenue from these transactions is recorded on a net basis. Net revenue includes billings to customers less third-party charges,

including transportation or handling costs, fees, commissions, and taxes and duties.

Contract Assets and Liabilities

Contract assets include billed and unbilled amounts resulting from in-transit shipments, as we have an unconditional right to payment

only once all performance obligations have been completed (e.g., packages have been delivered). Contract assets are generally

classified as current and the full balance is converted each quarter based on the short-term nature of the transactions. Our contract

liabilities consist of advance payments and billings in excess of revenue. The full balance of deferred revenue is converted each

quarter based on the short-term nature of the transactions.

Gross contract assets related to in-transit shipments totaled $861 million and $715 million at May 31, 2022 and May 31, 2021,

respectively. Contract assets net of deferred unearned revenue were $623 million and $572 million at May 31, 2022 and May 31,

2021, respectively. Contract assets are included within current assets in the accompanying consolidated balance sheets. Contract

liabilities related to advance payments from customers were $8 million and $9 million at May 31, 2022 and May 31, 2021,

respectively. Contract liabilities are included within current liabilities in the accompanying consolidated balance sheets.

Payment Terms

Certain of our revenue-producing transactions are subject to taxes and duties, such as sales tax, assessed by governmental authorities.

We present these revenues net of tax. Under the typical payment terms of our customer contracts, the customer pays at periodic

intervals (e.g., every 15 days, 30 days, 45 days, etc.) for shipments included on invoices received. It is not customary business practice

to extend payment terms past 90 days, and as such, we do not have a practice of including a significant financing component within

our revenue contracts with customers.

Disaggregation of Revenue

See Note 15 for disclosure of disaggregated revenue for the periods ended May 31. This presentation is consistent with how we

organize our segments internally for making operating decisions and measuring performance.

FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

- 84 -

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

risk of credit loss in our trade receivables is substantially mitigated by our credit evaluation process, short collection terms, and sales

to a large number of customers, as well as the low revenue per transaction for most of our services. Allowances for potential credit

losses are determined based on historical experience and the impact of current economic conditions. Historically, credit losses have

been within management’s expectations.

ADVERTISING. Advertising and promotion costs are expensed as incurred and are classified in other operating expenses. Advertising

and promotion expenses were $470 million in 2022, $428 million in 2021, and $427 million in 2020.

CASH EQUIVALENTS. Cash in excess of current operating requirements is invested in short-term, interest-bearing instruments with

maturities of three months or less at the date of purchase and is stated at cost, which approximates market value.

SPARE PARTS, SUPPLIES, AND FUEL. Spare parts (principally aircraft-related) are reported at weighted-average cost. Allowances

for obsolescence are provided for spare parts currently identified as excess or obsolete as well as expected to be on hand at the date the

aircraft are retired from service. These allowances are provided over the estimated useful life of the related aircraft and engines. The

majority of our supplies and fuel are reported at weighted-average cost.

PROPERTY AND EQUIPMENT. Expenditures for major additions, improvements, and flight equipment modifications are capitalized

when such costs are determined to extend the useful life of the asset or are part of the cost of acquiring the asset. Expenditures for

equipment overhaul costs of engines or airframes prior to their operational use are capitalized as part of the cost of such assets as they

are costs required to ready the asset for its intended use. Maintenance and repairs costs are charged to expense as incurred, except for

certain aircraft engine maintenance costs incurred under third-party service agreements. These agreements result in costs being

expensed based on cycles or hours flown and are subject to annual escalation. These service contracts transfer risk to third-party

service providers and generally fix the amount we pay for maintenance to the service provider as a rate per cycle or flight hour, in

exchange for maintenance and repairs under a predefined maintenance program. We capitalize certain direct internal and external

costs associated with the development of internal-use software, including implementation of cloud computing service arrangements.

Gains and losses on sales of property used in operations are classified within operating expenses and historically have been nominal.

For financial reporting purposes, we record depreciation and amortization of property and equipment on a straight-line basis over the

asset’s service life or related lease term, if shorter. For income tax purposes, depreciation is computed using accelerated methods when

applicable.

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

Net Book Value at May 31,

Range

2022

2021

Wide-body aircraft and related equipment

15 to 30 years

15,949

14,812

Narrow-body and feeder aircraft and related equipment

5 to 30 years

2,163

2,307

Package handling and ground support equipment

3 to 30 years

6,447

5,269

Information technology

2 to 10 years

1,907

1,863

Vehicles and trailers

3 to 15 years

4,004

4,033

Facilities and other

2 to 40 years

7,621

7,468

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

line basis over 15 to 30 years. We periodically evaluate the estimated service lives and residual values used to depreciate our property

and equipment.

Depreciation and amortization expense, excluding gains and losses on sales of property and equipment used in operations, was $4.0

billion in 2022, $3.8 billion in 2021, and $3.6 billion in 2020. Depreciation and amortization expense includes amortization of assets

under finance leases.

CAPITALIZED INTEREST. Interest on funds used to finance the acquisition and modification of aircraft, including purchase deposits,

construction of certain facilities, and development of certain software up to the date the asset is ready for its intended use, is

capitalized and included in the cost of the asset if the asset is actively under construction. Capitalized interest was $62 million in 2022,

$68 million in 2021, and $54 million in 2020.

FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

- 85 -

IMPAIRMENT OF LONG-LIVED ASSETS. Long-lived assets are reviewed for impairment when circumstances indicate the carrying

value of an asset may not be recoverable. For assets that are to be held and used, an impairment is recognized when the estimated

undiscounted cash flows associated with the asset or group of assets is less than their carrying value. If impairment exists, an

adjustment is made to write the asset down to its fair value, and a loss is recorded as the difference between the carrying value and fair

value. Fair values are determined based on quoted market values, discounted cash flows, or internal and external appraisals, as

applicable. Assets to be disposed of are carried at the lower of carrying value or estimated net realizable value.

We operate integrated transportation networks so cash flows for most of our operating assets to be held and used are assessed at a

network level, not at an individual asset level, for our analysis of impairment.

During 2020, we made the decision to permanently retire from service 10 Airbus A310-300 aircraft and 12 related engines at FedEx

Express to align with the needs of the U.S. domestic network and modernize its aircraft fleet. As a consequence of this decision, we

recognized noncash impairment charges of $66 million ($50 million, net of tax, or $0.19 per diluted share) in the FedEx Express

segment in 2020.