10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

FOR THE QUARTERLY PERIOD ENDED February 28, 2019

OR

☐ 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)

(901) 818-7500

(Registrant’s telephone number, including area code)

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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   ☐  No    ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common Stock	Outstanding Shares at March 15, 2019
Common Stock, par value $0.10 per share	260,574,612

FEDEX CORPORATION

INDEX

	PAGE
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Condensed Consolidated Balance Sheets February 28, 2019 and May 31, 2018	3
Condensed Consolidated Statements of Income Three and Nine Months Ended February 28, 2019 and 2018	5
Condensed Consolidated Statements of Comprehensive Income Three and Nine Months Ended February 28, 2019 and 2018	6
Condensed Consolidated Statements of Cash Flows Nine Months Ended February 28, 2019 and 2018	7
Condensed Consolidated Statements of Changes In Common Stockholders' Investment Three and Nine Months Ended February 28, 2019 and 2018	8
Notes to Condensed Consolidated Financial Statements	9
Report of Independent Registered Public Accounting Firm	30
ITEM 2. Management’s Discussion and Analysis of Results of Operations and Financial Condition	31
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk	56
ITEM 4. Controls and Procedures	56
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings	57
ITEM 1A. Risk Factors	57
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds	58
ITEM 5. Other Information	58
ITEM 6. Exhibits	59
Signature	61
Exhibit 10.1
Exhibit 10.2
Exhibit 10.3
Exhibit 10.4
Exhibit 10.5
Exhibit 10.6
Exhibit 10.7
Exhibit 10.8
Exhibit 10.9
Exhibit 15.1
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2
Exhibit 101.1 Interactive Data Files

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FEDEX CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(IN MILLIONS)

	February 28, 2019 (Unaudited)		May 31, 2018
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	2,872	$	3,265
Receivables, less allowances of $318 and $401		9,037		8,481
Spare parts, supplies and fuel, less allowances of $339 and $268		546		525
Prepaid expenses and other		1,045		1,070
Total current assets		13,500		13,341
PROPERTY AND EQUIPMENT, AT COST		58,164		55,121
Less accumulated depreciation and amortization		28,396		26,967
Net property and equipment		29,768		28,154
OTHER LONG-TERM ASSETS
Goodwill		6,916		6,973
Other assets		4,280		3,862
Total other long-term assets		11,196		10,835
	$	54,464	$	52,330

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

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FEDEX CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(IN MILLIONS, EXCEPT SHARE DATA)

	February 28, 2019 (Unaudited)			May 31, 2018
LIABILITIES AND COMMON STOCKHOLDERS’ INVESTMENT
CURRENT LIABILITIES
Short-term borrowings	$	225		$	—
Current portion of long-term debt		973			1,342
Accrued salaries and employee benefits		1,659			2,177
Accounts payable		3,156			2,977
Accrued expenses		3,243			3,131
Total current liabilities		9,256			9,627
LONG-TERM DEBT, LESS CURRENT PORTION		17,218			15,243
OTHER LONG-TERM LIABILITIES
Deferred income taxes		3,211			2,867
Pension, postretirement healthcare and other benefit obligations		1,847			2,187
Self-insurance accruals		1,861			1,784
Deferred lease obligations		512			551
Deferred gains, principally related to aircraft transactions		118			121
Other liabilities		547			534
Total other long-term liabilities		8,096			8,044
COMMITMENTS AND CONTINGENCIES
COMMON STOCKHOLDERS’ INVESTMENT
Common stock, $0.10 par value; 800 million shares authorized; 318 million shares    issued as of February 28, 2019 and May 31, 2018		32			32
Additional paid-in capital		3,209			3,117
Retained earnings		26,650			24,823
Accumulated other comprehensive loss		(737	)		(578	)
Treasury stock, at cost		(9,260	)		(7,978	)
Total common stockholders’ investment		19,894			19,416
	$	54,464		$	52,330

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

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FEDEX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)

	Three Months Ended						Nine Months Ended
	February 28,						February 28,
	2019			2018			2019			2018
				As Adjusted						As Adjusted
REVENUES	$	17,010		$	16,526		$	51,886		$	48,136
OPERATING EXPENSES:
Salaries and employee benefits		6,069			6,124			18,589			17,677
Purchased transportation		4,253			3,935			12,566			11,220
Rentals and landing fees		874			873			2,533			2,526
Depreciation and amortization		851			786			2,487			2,293
Fuel		907			914			2,945			2,435
Maintenance and repairs		658			628			2,144			1,968
Business realignment costs		4			—			4			—
Other		2,483			2,408			7,468			7,073
		16,099			15,668			48,736			45,192
OPERATING INCOME		911			858			3,150			2,944
OTHER INCOME (EXPENSE):
Interest, net		(135	)		(125	)		(393	)		(363	)
Other retirement plans income		158			143			474			436
Other, net		(3	)		(2	)		(22	)		(22	)
		20			16			59			51
INCOME BEFORE INCOME TAXES		931			874			3,209			2,995
PROVISION FOR INCOME TAXES		192			(1,200	)		700			(450	)
NET INCOME	$	739		$	2,074		$	2,509		$	3,445
EARNINGS PER COMMON SHARE:
Basic	$	2.83		$	7.74		$	9.55		$	12.85
Diluted	$	2.80		$	7.59		$	9.41		$	12.63
DIVIDENDS DECLARED PER COMMON SHARE	$	0.65		$	0.50		$	2.60		$	2.00

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

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FEDEX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

(IN MILLIONS)

	Three Months Ended						Nine Months Ended
	February 28,						February 28,
	2019			2018			2019			2018
NET INCOME	$	739		$	2,074		$	2,509		$	3,445
OTHER COMPREHENSIVE INCOME (LOSS):
Foreign currency translation adjustments, net of tax expense of $9 and tax benefit of $22 in 2019 and tax expense of $9 and $26 in 2018		103			100			(90	)		119
Amortization of prior service credit, net of tax benefit of $7 and $21 in 2019 and tax benefit of $7 and $29 in 2018		(23	)		(23	)		(69	)		(61	)
		80			77			(159	)		58
COMPREHENSIVE INCOME	$	819		$	2,151		$	2,350		$	3,503

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

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FEDEX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(IN MILLIONS)

	Nine Months Ended
	February 28,
	2019			2018
Operating Activities:
Net income	$	2,509		$	3,445
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization		2,487			2,293
Provision for uncollectible accounts		221			177
Stock-based compensation		141			135
Deferred income taxes and other noncash items		250			(914	)
Changes in assets and liabilities:
Receivables		(780	)		(986	)
Other assets		(96	)		(151	)
Accounts payable and other liabilities		(1,307	)		(2,781	)
Other, net		(102	)		(56	)
Cash provided by operating activities		3,323			1,162
Investing Activities:
Capital expenditures		(3,757	)		(3,994	)
Business acquisitions, net of cash acquired		—			(44	)
Proceeds from asset dispositions and other		62			21
Cash used in investing activities		(3,695	)		(4,017	)
Financing Activities:
Proceeds from short-term borrowings, net		220			797
Principal payments on debt		(874	)		(31	)
Proceeds from debt issuances		2,463			1,481
Proceeds from stock issuances		58			284
Dividends paid		(514	)		(402	)
Purchase of treasury stock		(1,365	)		(558	)
Other, net		5			6
Cash (used in) provided by financing activities		(7	)		1,577
Effect of exchange rate changes on cash		(14	)		98
Net decrease in cash and cash equivalents		(393	)		(1,180	)
Cash and cash equivalents at beginning of period		3,265			3,969
Cash and cash equivalents at end of period	$	2,872		$	2,789

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

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FEDEX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN COMMON STOCKHOLDERS' INVESTMENT

(UNAUDITED)

(IN MILLIONS, EXCEPT SHARE DATA)

	Three Months Ended						Nine Months Ended
	February 28,						February 28,
	2019			2018			2019			2018
Common Stock
Beginning Balance	$	32		$	32		$	32		$	32
Ending Balance		32			32			32			32
Additional Paid-in-Capital
Beginning Balance		3,185			3,055			3,117			3,005
Employee incentive plans and other		24			30			92			80
Ending Balance		3,209			3,085			3,209			3,085
Retained Earnings
Beginning Balance		26,080			21,785			24,823			20,833
Net Income		739			2,074			2,509			3,445
Cash dividends declared ($0.65, $0.50, $2.60, and $2.00 per share)		(169	)		(133	)		(683	)		(535	)
Employee incentive plans and other		—			(16	)		1			(33	)
Ending Balance		26,650			23,710			26,650			23,710
Accumulated Other Comprehensive Income
Beginning Balance		(817	)		(434	)		(578	)		(415	)
Other comprehensive income, net of tax (expense)/benefit of ($2), ($2), $43, and $3		80			77			(159	)		58
Ending Balance		(737	)		(357	)		(737	)		(357	)
Treasury Stock
Beginning Balance		(9,186	)		(7,383	)		(7,978	)		(7,382	)
Purchase of treasury stock (0.6, 1.2, 6.0, and 2.4 million shares)		(93	)		(288	)		(1,365	)		(558	)
Employee incentive plans and other (0.1, 0.7, 0.6, and 2.7 million shares)		19			95			83			364
Ending Balance		(9,260	)		(7,576	)		(9,260	)		(7,576	)
Total Common Stockholders' Investment Balance	$	19,894		$	18,894		$	19,894		$	18,894

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

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FEDEX CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(1) General

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. These interim financial statements of FedEx Corporation (“FedEx”) have been prepared in accordance with accounting principles generally accepted in the United States and Securities and Exchange Commission (“SEC”) instructions for interim financial information, and should be read in conjunction with our Annual Report on Form 10-K for the year ended May 31, 2018 (“Annual Report”). Significant accounting policies and other disclosures normally provided have been omitted since such items are disclosed in our Annual Report.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments (including normal recurring adjustments) necessary to present fairly our financial position as of February 28, 2019, and the results of our operations for the three- and nine-month periods ended February 28, 2019 and 2018, cash flows for the nine-month periods ended February 28, 2019 and 2018, and changes in common stockholders’ investment for the three- and nine-month periods ended February 28, 2019 and 2018. Operating results for the three- and nine-month periods ended February 28, 2019 are not necessarily indicative of the results that may be expected for the year ending May 31, 2019.

Except as otherwise specified, references to years indicate our fiscal year ending May 31, 2019 or ended May 31 of the year referenced and comparisons are to the corresponding period of the prior year.

RECLASSIFICATIONS. Certain reclassifications have been made to the prior years’ condensed consolidated financial statements to conform to the current year presentation.

REVENUE RECOGNITION. 

Satisfaction of Performance Obligation

We recognize revenue upon delivery of shipments for our transportation businesses and upon completion of services for our business services, logistics and trade services businesses. Transportation services are provided with the use of employees and independent businesses that contract with FedEx. 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 unaudited condensed consolidated statements of income.

For shipments in transit, revenue is recorded based on the percentage of service completed at the balance sheet date which results in our recognizing revenue 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 vast majority of our contracts include only one performance obligation, which is short in duration and spans only a few days. 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 stand-alone selling prices of the promised goods or services underlying each performance obligation. We frequently sell standard transportation services with observable stand-alone sales prices. In these instances, the observable stand-alone sales are used to determine the stand-alone selling price.

We sell customized customer-specific solutions, such as logistics, through which we provide the service of integrating a complex set of tasks and components into a single capability (even if that single capability results in the delivery of multiple units). Therefore, the entire contract is accounted for as one performance obligation. In these cases, we typically use the expected cost plus a margin approach to estimate the stand-alone selling price of each performance obligation.

Variable Consideration

It is common for our contracts to contain customer incentives, guaranteed service refunds or other provisions that can either increase or decrease the transaction price. These variable amounts are generally awarded based upon certain incentive achievements or performance metrics. We estimate variable consideration as the most likely amount to which we expect to be entitled. Estimates for adjustments to revenue and accounts receivable are recognized at the time of shipment for certain customer initiatives, money-back service guarantees and billing corrections based on our assessment of historical, current and forecasted information available. Delivery costs are accrued as incurred.

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FEDEX CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

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 executed.

Contract Assets and Liabilities

Contract assets include billed and unbilled amounts resulting from in-transit packages, 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 packages totaled $526 million and $542 million at February 28, 2019 and May 31, 2018, respectively. Contract assets net of deferred unearned revenue were $353 million and $363 million at February 28, 2019 and May 31, 2018, respectively. Contract assets are included within current assets in the accompanying unaudited condensed consolidated balance sheets. Contract liabilities related to advance payments from customers were $9 million and $13 million at February 28, 2019 and May 31, 2018, respectively. Contract liabilities are included within current liabilities in the accompanying unaudited condensed consolidated balance sheets.

Our contract logistics, global trade services and certain transportation businesses engage in some 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.

Certain of our revenue-producing transactions are subject to taxes, 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.

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FEDEX CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Disaggregation of Revenue

The following table provides revenue by service type (dollars in millions) for the periods ended February 28. This presentation is consistent with how we organize our segments internally for making operating decisions and measuring performance.

	Three Months Ended				Nine Months Ended
	2019		2018		2019		2018
REVENUE BY SERVICE TYPE
FedEx Express segment:
Package:
U.S. overnight box	$	1,844	$	1,836	$	5,678	$	5,373
U.S. overnight envelope		433		435		1,345		1,317
U.S. deferred		1,119		996		3,131		2,796
Total U.S. domestic package revenue		3,396		3,267		10,154		9,486
International priority		1,738		1,841		5,508		5,469
International economy		806		793		2,541		2,378
Total international export package revenue		2,544		2,634		8,049		7,847
International domestic(1)		1,078		1,140		3,412		3,424
Total package revenue		7,018		7,041		21,615		20,757
Freight:
U.S.		772		739		2,294		2,040
International priority		477		532		1,574		1,527
International economy		495		492		1,568		1,354
International airfreight		76		93		244		276
Total freight revenue		1,820		1,856		5,680		5,197
Other		167		201		536		620
Total FedEx Express segment		9,005		9,098		27,831		26,574
FedEx Ground segment		5,261		4,828		15,202		13,598
FedEx Freight segment		1,750		1,613		5,627		4,950
FedEx Services segment		402		397		1,248		1,213
Other and eliminations(2)		592		590		1,978		1,801
	$	17,010	$	16,526	$	51,886	$	48,136

⁽¹⁾ International domestic revenues relate to our intra-country operations.

⁽²⁾ Includes the FedEx Logistics, Inc. (“FedEx Logistics” (formerly FedEx Trade Networks, Inc.)) operating segment.

EMPLOYEES UNDER COLLECTIVE BARGAINING ARRANGEMENTS. The pilots of Federal Express Corporation (“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. The collective bargaining agreement is scheduled to become amendable in November 2021. 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 Distribution System, Inc. (“FedEx Supply Chain” (formerly GENCO Distribution System, Inc.)) 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, and a union has been certified to represent owner-drivers at a FedEx Freight, Inc. facility in Canada.

STOCK-BASED COMPENSATION. We have two types of equity-based compensation: stock options and restricted stock. The key terms of the stock option and restricted stock awards granted under our incentive stock plans and all financial disclosures about these programs are set forth in our Annual Report.

Our stock-based compensation expense was $33 million for the three-month period ended February 28, 2019 and $141 million for the nine-month period ended February 28, 2019. Our stock-based compensation expense was $32 million for the three-month period ended February 28, 2018 and $135 million for the nine-month period ended February 28, 2018. Due to its immateriality, additional disclosures related to stock-based compensation have been excluded from this quarterly report.

BUSINESS REALIGNMENT COSTS. In December 2018, we announced cost-reduction programs primarily through initiatives at FedEx Express and FedEx Corporate Services, Inc. (“FedEx Services”), including a U.S.-based voluntary employee buyout program.

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FEDEX CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

During the third quarter of 2019, we began offering voluntary cash buyouts to eligible U.S.-based employees in certain staff functions. The U.S.-based voluntary employee buyout program includes voluntary severance payments and funding to healthcare reimbursement accounts, with the voluntary severance payment calculated based on four weeks of gross base salary for every year of continuous FedEx service up to a maximum payment of two years of pay. Eligible employees will be scheduled to vacate positions in phases to ensure a smooth transition in the impacted functions so that we maintain service levels to our customers.Costs of the benefits provided under the program will be recognized as special termination benefits in the period employees accept their offers.

We incurred costs of approximately $4 million ($3 million, net of tax, or $0.01 per diluted share) during the third quarter of 2019 associated with our business realignment activities. These costs related to certain employee severance arrangements and other external costs directly attributable to our business realignment activities, such as professional fees. Total costs of the U.S.-based voluntary employee buyout program will depend on acceptance rates and severance payments will be made at the time of departure. The cost of our business realignment activities is included in the caption “Business realignment costs” in our unaudited condensed consolidated statements of income.

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

Recently Adopted Accounting Standards

In December 2017, the SEC staff issued Staff Accounting Bulletin (“SAB”) 118 to provide guidance to registrants in accounting for income taxes under the Tax Cuts and Jobs Act (“TCJA”). SAB 118 was issued to address the application of U.S. generally accepted accounting principles (“GAAP”) in situations when a registrant does not have the necessary information available, prepared, or analyzed in reasonable detail to finalize the calculations for certain income tax effects of the TCJA. In accordance with SAB 118, we made reasonable estimates and recorded provisional amounts for the TCJA during 2018. Under the transitional provisions of SAB 118, we had a one-year measurement period to complete the accounting for the initial tax effects of the TCJA. As of December 22, 2018, our accounting is complete for the tax effects of the TCJA, including the following elements initially recorded on a provisional basis:

• In 2018, we recognized a provisional benefit related to the revaluation of U.S. deferred tax assets and liabilities. During the second quarter of 2019, we revised the provisional benefit associated with the remeasurement of our net U.S. deferred tax liability. As a result, we recognized a $4 million tax expense, which decreased the $1.15 billion provisional benefit recorded in 2018.

• We previously recognized an immaterial provisional benefit from foreign tax credits exceeding the one-time transition tax on previously deferred foreign earnings. No adjustments were made to the provisional estimate recorded in 2018.

• We have determined to record the taxes for the global intangible low-taxed income (GILTI) as a period cost.

In 2014, the Financial Accounting Standards Board (“FASB”) and International Accounting Standards Board issued a new accounting standard that supersedes virtually all existing revenue recognition guidance under generally accepted accounting principles in the United States. The fundamental principles of the new guidance are that companies should recognize revenue in a manner that reflects the timing of the transfer of services to customers and the amount of revenue recognized reflects the consideration that a company expects to receive for the goods and services provided. The new guidance establishes a five-step approach for the recognition of revenue. We adopted this standard as of June 1, 2018 (fiscal 2019) using the modified retrospective method of adoption as permitted by the standard. The new guidance did not have an impact on our revenue recognition policies, practices or systems; therefore, there was no cumulative-effect adjustment to retained earnings as of June 1, 2018.

In March 2017, the FASB issued an Accounting Standards Update (ASU 2017-07) that changes how employers that sponsor defined benefit pension or other postretirement benefit plans present the net periodic benefit cost in the income statement. This new guidance requires entities to report the service cost component in the same line item or items as other compensation costs. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component outside of income from operations. This standard impacts our operating income but has no impact on our net income or earnings per share. We adopted this standard effective June 1, 2018 (fiscal 2019) and applied these changes retrospectively. As such, prior year financial results are recast to conform to these new rules upon adoption.

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FEDEX CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The following table presents our results under our historical method of accounting and as adjusted to reflect our adoption of ASU 2017-07 (in millions):

	Three Months Ended February 28, 2018								Nine Months Ended February 28, 2018
	Reported			Effect of Adoption of ASU 2017-07			As Adjusted		Reported			Effect of Adoption of ASU 2017-07			As Adjusted
Revenue	$	16,526		$	—		$	16,526	$	48,136		$	—		$	48,136
Operating Income		1,001			(143	)		858		3,380			(436	)		2,944
Other Income (Expense), net		(127	)		143			16		(385	)		436			51
Net Income		2,074			—			2,074		3,445			—			3,445

In August 2018, the SEC published Release No. 33-10532, Disclosure Update and Simplification (“DUSTR”), which adopted amendments to certain disclosure requirements that have become redundant, duplicative, overlapping, outdated or superseded, in light of other SEC disclosure requirements, GAAP, or changes in the information environment. While most of the DUSTR amendments eliminate outdated or duplicative disclosure requirements, the final rule amends the interim financial statement requirements to include a reconciliation of changes in common stockholders’ investment in the notes or as a separate statement for each period for which a statement of comprehensive income is required to be filed. The new interim reconciliation of changes in common stockholders’ investment is included herein as a separate statement.

New Accounting Standards and Accounting Standards Not Yet Adopted

In 2016, the FASB issued a new lease accounting standard which requires lessees to put most leases on their balance sheets but recognize the expenses in their income statements in a manner similar to current practice. The new standard states that a lessee will recognize a lease liability for the obligation to make lease payments and a right-of-use asset for the right to use the underlying asset for the lease term. Expenses related to leases determined to be operating leases will be recognized on a straight-line basis, while those determined to be financing leases will be recognized following a front-loaded expense profile in which interest and amortization are presented separately in the income statement. Based on our lease portfolio, we currently anticipate recognizing a lease liability and related right-of-use asset on our balance sheet of approximately $13 billion, with an immaterial impact on our income statement compared to the current lease accounting model. However, the ultimate impact of the standard will depend on our lease portfolio as of the adoption date. We are currently accumulating all of the necessary information required to properly account for the leases under the new standard. Additionally, we are implementing an enterprise-wide lease management system to assist in the accounting and are evaluating additional changes to our processes and internal controls to ensure we meet the standard’s reporting and disclosure requirements. These changes will be effective June 1, 2019 (fiscal 2020).

In February 2018, the FASB issued an Accounting Standards Update (ASU 2018-02) that will permit companies to reclassify the income tax effect of the TCJA on items within accumulated other comprehensive income (loss) (“AOCI”) to retained earnings. These changes will be effective June 1, 2019 (fiscal 2020). We are continuing to assess the impact of this new standard on our consolidated financial statements and related disclosures.

In August 2018, the FASB issued an Accounting Standards Update (ASU 2018-14) that modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement benefit plans. The guidance removes disclosures that are no longer considered cost beneficial, clarifies the specific requirements of disclosures and adds disclosure requirements identified as relevant. We expect this new guidance will have minimal impact on our financial reporting. These changes will be effective June 1, 2020 (fiscal 2021) and will be applied retrospectively. We plan to early adopt these new rules in the fourth quarter of 2019.

In August 2018, the FASB issued an Accounting Standards Update (ASU 2018-15) that reduces the complexity for accounting for costs of implementing a cloud computing service arrangement and aligns the accounting for capitalizing implementation costs of hosting arrangements, regardless of whether they convey a license to the hosted software. These changes will be effective June 1, 2020 (fiscal 2021). We are assessing the impact of this new standard on our consolidated financial statements and related disclosures.

TREASURY SHARES. In January 2016, our Board of Directors authorized a share repurchase program of up to 25 million shares. Shares under the current repurchase program may be repurchased from time to time in the open market or in privately negotiated transactions. The timing and volume of repurchases are at the discretion of management, based on the capital needs of the business, the market price of FedEx common stock and general market conditions. No time limit was set for the completion of the program, and the program may be suspended or discontinued at any time.

- 13 -

FEDEX CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

During the third quarter of 2019, we repurchased 0.6 million shares of FedEx common stock at an average price of $168.43 per share for a total of $93 million. During the nine months of 2019, we repurchased 6.0 million shares of FedEx common stock at an average price of $227.42 per share for a total of $1.4 billion. As of February 28, 2019, 5.7 million shares remained under the current share repurchase authorization.

DIVIDENDS DECLARED PER COMMON SHARE. On February 15, 2019, our Board of Directors declared a quarterly dividend of $0.65 per share of common stock. The dividend will be paid on April 1, 2019 to stockholders of record as of the close of business on March 11, 2019. 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.

(2) Accumulated Other Comprehensive Loss

The following table provides changes in AOCI, net of tax, reported in our unaudited condensed consolidated financial statements for the periods ended February 28 (in millions; amounts in parentheses indicate debits to AOCI):

	Three Months Ended						Nine Months Ended
	2019			2018			2019			2018
Foreign currency translation loss:
Balance at beginning of period	$	(952	)	$	(666	)	$	(759	)	$	(685	)
Translation adjustments		103			100			(90	)		119
Balance at end of period		(849	)		(566	)		(849	)		(566	)
Retirement plans adjustments:
Balance at beginning of period		135			232			181			270
Reclassifications from AOCI		(23	)		(23	)		(69	)		(61	)
Balance at end of period		112			209			112			209
Accumulated other comprehensive (loss) at end of period	$	(737	)	$	(357	)	$	(737	)	$	(357	)

The following table presents details of the reclassifications from AOCI for the periods ended February 28 (in millions; amounts in parentheses indicate debits to earnings):

	Amount Reclassified from AOCI												Affected Line Item in the Income Statement
	Three Months Ended						Nine Months Ended
	2019			2018			2019			2018
Amortization of retirement plans    prior service credits, before tax	$	30		$	30		$	90		$	90		Salaries and employee benefits
Income tax benefit		(7	)		(7	)		(21	)		(29	)	Provision for income taxes
AOCI reclassifications, net of tax	$	23		$	23		$	69		$	61		Net income

(3) Financing Arrangements

We have a shelf registration statement filed with the SEC that allows us to sell, in one or more future offerings, any combination of our unsecured debt securities and common stock.

During the third quarter of 2019, we issued $1.2 billion of senior unsecured debt under our current shelf registration statement, comprised of €640 million of 0.7% fixed-rate notes due in May 2022 and $500 million of 3.4% fixed-rate notes due in January 2022. We will use the net proceeds to pay the €500 million aggregate principal amount of floating rate notes due at maturity on April 11, 2019, and for general corporate purposes.

During the second quarter of 2019, we issued $1.25 billion of senior unsecured debt under our current shelf registration statement, comprised of $400 million of 4.20% fixed-rate notes due in October 2028 and $850 million of 4.95% fixed-rate notes due in October 2048. Interest on these notes is paid semi-annually. We used the net proceeds to redeem the $750 million aggregate principal amount of 8.00% notes due January 15, 2019, and for general corporate purposes.

- 14 -

FEDEX CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

We have a five-year $2.0 billion revolving credit facility that expires in November 2020. The facility, which includes a $500 million letter of credit sublimit, is available to finance our operations and other cash flow needs. The agreement contains a financial covenant, which requires us to maintain a ratio of debt to consolidated earnings (excluding non-cash retirement plans mark-to-market adjustments and non-cash asset impairment charges) before interest, taxes, depreciation and amortization (“adjusted EBITDA”) of not more than 3.5 to 1.0, calculated as of the end of the applicable quarter on a rolling four-quarters basis. The ratio of our debt to adjusted EBITDA was 2.2 to 1.0 at February 28, 2019. We believe this covenant is the only significant restrictive covenant in our revolving credit agreement. Our revolving credit agreement contains other customary covenants that do not, individually or in the aggregate, materially restrict the conduct of our business. We are in compliance with this financial covenant and all other covenants of our revolving credit agreement and do not expect the covenants to affect our operations, including our liquidity or expected funding needs.

During the third quarter of 2019, we issued commercial paper to provide us with additional short-term liquidity. The maximum amount outstanding during the quarter was $750 million. Our commercial paper program is backed by unused commitments under the revolving credit facility, and borrowings under the program reduce the amount available under the credit facility. As of February 28, 2019, $225 million of commercial paper and $53 million in letters of credit were outstanding, leaving $1.722 billion available under the revolving credit facility for future borrowings.

Long-term debt, including current maturities and exclusive of capital leases, had carrying values of $18.1 billion at February 28, 2019 and $16.5 billion at May 31, 2018, compared with estimated fair values of $17.8 billion at February 28, 2019 and $16.6 billion at May 31, 2018. The annualized weighted-average interest rate on long-term debt was 3.4% at February 28, 2019. The estimated fair values were determined based on quoted market prices and the current rates offered for debt with similar terms and maturities. The fair value of our long-term debt is classified as Level 2 within the fair value hierarchy. This classification is defined as a fair value determined using market-based inputs other than quoted prices that are observable for the liability, either directly or indirectly.

(4) Computation of Earnings Per Share

The calculation of basic and diluted earnings per common share for the periods ended February 28 was as follows (in millions, except per share amounts):

	Three Months Ended				Nine Months Ended
	2019		2018		2019		2018
Basic earnings per common share:
Net earnings allocable to common shares(1)	$	738	$	2,071	$	2,506	$	3,441
Weighted-average common shares		261		268		262		268
Basic earnings per common share	$	2.83	$	7.74	$	9.55	$	12.85
Diluted earnings per common share:
Net earnings allocable to common shares(1)	$	738	$	2,071	$	2,506	$	3,441
Weighted-average common shares		261		268		262		268
Dilutive effect of share-based awards		2		5		4		4
Weighted-average diluted shares		263		273		266		272
Diluted earnings per common share	$	2.80	$	7.59	$	9.41	$	12.63
Anti-dilutive options excluded from diluted earnings per    common share		7.2		1.9		5.0		2.6

⁽¹⁾Net earnings available to participating securities were immaterial in all periods presented.

- 15 -

FEDEX CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(5) Income Taxes

Our effective tax rate was 20.6% for the third quarter and 21.8% for the nine months of 2019, compared with (137.3)% for the third quarter and (15.0)% for the nine months of 2018. The 2019 tax rates include a benefit of $90 million from the reduction of a valuation allowance on certain tax loss carryforwards and an expense of $50 million from the impact on our deferred taxes attributable to a recently enacted lower tax rate in the Netherlands. The 2019 tax rates were also favorably impacted by the TCJA, which resulted in benefits of approximately $60 million during the third quarter and $230 million for the nine months of 2019, primarily from the lower statutory tax rate on fiscal 2019 earnings. The tax rate for the nine months of 2019 also benefited by approximately $60 million from accelerated deductions claimed on our 2018 U.S. income tax return. The 2018 tax rates were favorably impacted by a provisional benefit of $1.15 billion from the remeasurement of our net U.S. deferred tax liability and a provisional benefit of $36 million from foreign tax credits exceeding the one-time transition tax on previously deferred foreign earnings. In addition to these provisional amounts, we recognized a $204 million benefit from a $1.5 billion contribution to our tax-qualified U.S. domestic pension plans (“U.S. Pension Plans”) in February 2018 and $165 million related to the phase-in of a reduced statutory tax rate on 2018 year-to-date earnings, of which approximately $120 million was recorded in the third quarter and attributable to the first half of 2018 earnings.

On January 15, 2019, the U.S. Treasury Department issued final regulations covering the one-time transition tax on unrepatriated foreign earnings, which was enacted as part of the TCJA. Certain guidance included in these final regulations is inconsistent with our interpretation that led to the recognition of a $225 million ($0.94 per diluted share) benefit in 2018 (the “2018 Benefit”). Notwithstanding this inconsistency, we remain confident in our interpretation of the TCJA and intend to defend this position through litigation, if necessary. However, if we are ultimately unsuccessful in defending our position, we may be required to reverse the 2018 Benefit.

During the third quarter of 2019, we completed our accounting for the tax effects of the TCJA. No additional adjustments were made during the quarter. As a result, the only adjustment to the amounts initially recorded on a provisional basis in 2018 was a tax expense of $4 million recognized in the second quarter of 2019 as a revision of the provisional benefit associated with the remeasurement of our net U.S. deferred tax liability.  

The TCJA, enacted during the third quarter of fiscal 2018, significantly changed the U.S. corporate income tax system including, among other things, lowering the statutory federal income tax rate from 35% to 21%. Due to our May 31 fiscal year-end, the lower rate was phased in, resulting in a U.S. statutory federal rate of 29.2% for 2018 and a statutory federal rate of 21% for subsequent years.

The following table provides a reconciliation of the 2018 effective tax rates to the 2019 effective tax rates, including the impacts of the TCJA, for the periods ended February 28:

	Three Months Ended			Nine Months Ended
2018 Effective Tax Rate(a)		(137.3	)%		(15.0	)%
Remeasurement of net U.S. deferred tax liability in 2018		131.5			38.5
Effect of February 2018 pension contribution(b)		23.3			6.8
Lower statutory tax rate on first-half 2018 earnings (35% to 29.2%)(c)		12.5			—
Reduction of valuation allowance on tax loss carryforwards in 2019		(10.3	)		(3.0	)
Lower statutory tax rate on 2019 earnings (29.2% to 21%)(c)		(7.6	)		(7.6	)
Remeasurement of net Dutch deferred tax asset in 2019		5.3			1.5
Transition tax provisional benefit in 2018		4.1			1.2
Foreign tax credits on foreign dividends in 2018		1.2			2.9
Accelerated deductions claimed in 2019 on the 2018 U.S. income tax return		—			(1.8	)
Other, net(d)		(2.1	)		(1.7	)
2019 Effective Tax Rate(a)		20.6	%		21.8	%

^(a) 2018 includes a blended U.S. statutory federal income tax rate of 29.2% while 2019 includes the fully phased-in rate of 21%.

^(b) The benefit is from the pension contribution deducted on our 2017 tax return at a tax rate of 35%.

^(c) Due to our May 31 fiscal year-end, the TCJA’s lower U.S. statutory federal income tax rate that went into effect on December 22, 2017 was phased in resulting in a rate of 29.2% for 2018 and a rate of 21% for subsequent years.

^(d) The 2018 tax rates were negatively impacted by the effect of the NotPetya cyberattack, costs incurred in connection with the integration of foreign operations of FedEx Express and TNT Express B.V. (“TNT Express”), changes in uncertain tax positions and tax rate impacts on changes in deferred tax items after the TCJA enactment, and were favorably impacted from tax benefits from share-based payments.

- 16 -

FEDEX CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(6) Retirement Plans

We sponsor programs that provide retirement benefits to most of our employees. These programs include defined benefit pension plans, defined contribution plans and postretirement healthcare plans. Key terms of our retirement plans are provided in our Annual Report.

Our retirement plans costs for the periods ended February 28 were as follows (in millions):

	Three Months Ended				Nine Months Ended
	2019		2018		2019		2018
Defined benefit pension plans, net	$	28	$	39	$	85	$	113
Defined contribution plans		138		135		415		386
Postretirement healthcare plans		19		19		56		56
	$	185	$	193	$	556	$	555

Net periodic benefit cost of the pension and postretirement healthcare plans for the periods ended February 28 included the following components (in millions):

	Three Months Ended
	U.S. Pension Plans						International Pension Plans						Postretirement Healthcare Plans
	2019			2018			2019			2018			2019		2018
Service cost	$	173		$	169		$	23		$	23		$	9	$	9
Other retirement plans (income) expense:
Interest cost		237			279			13			12			10		10
Expected return on plan assets		(376	)		(406	)		(12	)		(10	)		—		—
Amortization of prior service credit and other		(30	)		(29	)		—			1			—		—
		(169	)		(156	)		1			3			10		10
	$	4		$	13		$	24		$	26		$	19	$	19
	Nine Months Ended
	U.S. Pension Plans						International Pension Plans						Postretirement Healthcare Plans
	2019			2018			2019			2018			2019		2018
Service cost	$	517		$	509		$	72		$	69		$	26	$	27
Other retirement plans (income) expense:
Interest cost		713			836			38			37			30		29
Expected return on plan assets		(1,129	)		(1,218	)		(36	)		(32	)		—		—
Amortization of prior service credit and other		(89	)		(88	)		(1	)		—			—		—
		(505	)		(470	)		1			5			30		29
	$	12		$	39		$	73		$	74		$	56	$	56

Contributions to our U.S. Pension Plans for the nine-month periods ended February 28 were as follows (in millions):

	2019		2018
Required	$	—	$	22
Voluntary		1,000		2,478
	$	1,000	$	2,500

- 17 -

FEDEX CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(7) Business Segment Information

We provide a broad portfolio of transportation, e-commerce and business services through companies competing collectively, operating independently and managed collaboratively, under the respected FedEx brand. Our primary operating companies are FedEx Express, including TNT 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 U.S. provider of less-than-truckload (“LTL”) freight transportation services. These companies 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)
	TNT Express (international express transportation, small-package ground delivery and freight    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)
	FedEx Office (document and business services and package acceptance)

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

FedEx Services Segment

The FedEx Services segment operates combined sales, marketing, administrative and information-technology functions in shared services operations that support our transportation businesses and allow us to obtain synergies from the combination of these functions. For the international regions of FedEx Express, some of these functions are performed on a regional basis and reported by FedEx Express in their natural expense line items. The FedEx Services segment includes: FedEx Services, which provides sales, marketing, information technology, communications, customer service, technical support, billing and collection services for U.S. customers of our major business units and certain back-office support to our other companies; and FedEx Office and Print Services, Inc. (“FedEx Office”), which provides an array of document and business services and retail access to our customers for our package transportation businesses.

The FedEx Services segment provides direct and indirect support to our transportation businesses, and we allocate all of the net operating costs of the FedEx Services segment (including the net operating results of FedEx Office) to reflect the full cost of operating our transportation businesses in the results of those segments. Within the FedEx Services segment allocation, the net operating results of FedEx Office, which are an immaterial component of our allocations, are allocated to FedEx Express and FedEx Ground. 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 transportation segments.

Operating expenses for each of our transportation segments include the allocations from the FedEx Services segment to the respective transportation segments. These allocations also include charges and credits for administrative services provided between operating companies. The allocations of net operating costs are based on metrics such as relative revenues 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, as well as certain other costs and credits not attributed to our core business. These costs are not allocated to the other business segments.

- 18 -

FEDEX CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Also included in corporate and other is the FedEx Logisticsoperating segment, which provides customs brokerage and global ocean and air freight forwarding through FedEx Trade Networks Transport & Brokerage, Inc.; cross-border enablement and technology solutions and e-commerce transportation solutions through FedEx Cross Border Technologies, Inc.; integrated supply chain management solutions through FedEx Supply Chain; time-critical shipment services through FedEx Custom Critical, Inc.; and, effective September 1, 2018, critical inventory and service parts logistics, 3-D printing and technology repair through FedEx Forward Depots, Inc.

Certain FedEx operating companies provide transportation and related services for other FedEx companies outside their reportable segment. Billings for such services are based on negotiated rates, which we believe approximate fair value, and are reflected as revenues of the billing segment. These rates are adjusted from time to time based on market conditions. Such intersegment revenues and expenses are eliminated in our consolidated results and are not separately identified in the following segment information because the amounts are not material.

The following table provides a reconciliation of reportable segment revenues and operating income (loss) to our unaudited condensed consolidated financial statement totals for the periods ended February 28 (in millions):

	Three Months Ended						Nine Months Ended
	2019			2018			2019			2018
Revenues:
FedEx Express segment	$	9,005		$	9,098		$	27,831		$	26,574
FedEx Ground segment		5,261			4,828			15,202			13,598
FedEx Freight segment		1,750			1,613			5,627			4,950
FedEx Services segment		402			397			1,248			1,213
Other and eliminations		592			590			1,978			1,801
	$	17,010		$	16,526		$	51,886		$	48,136
Operating income (loss):
FedEx Express segment	$	370		$	317		$	1,357		$	1,238
FedEx Ground segment		577			614			1,830			1,716
FedEx Freight segment		97			49			421			322
Corporate, other and eliminations		(133	)		(122	)		(458	)		(332	)
	$	911		$	858		$	3,150		$	2,944

(8) Commitments

As of February 28, 2019, our purchase commitments under various contracts for the remainder of 2019 and annually thereafter were as follows (in millions):

	Aircraft and Related		Other(1)		Total
2019 (remainder)	$	421	$	296	$	717
2020		1,998		833		2,831
2021		2,276		597		2,873
2022		1,874		433		2,307
2023		1,586		275		1,861
Thereafter		3,079		535		3,614
Total	$	11,234	$	2,969	$	14,203

⁽¹⁾ Primarily equipment and advertising contracts.

The amounts reflected in the table above for purchase commitments represent noncancelable agreements to purchase goods or services. As of February 28, 2019, our obligation to purchase six Boeing 777 Freighter (“B777F”) aircraft and five Boeing 767-300 Freighter (“B767F”) aircraft is conditioned upon there being no event that causes FedEx Express or its employees not to be covered by the Railway Labor Act of 1926, as amended. Open purchase orders that are cancelable are not considered unconditional purchase obligations for financial reporting purposes and are not included in the table above.

- 19 -

FEDEX CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

As of February 28, 2019, we had $965 million in deposits and progress payments on aircraft purchases and other planned aircraft-related transactions. These deposits are classified in the “Other assets” caption of our accompanying unaudited condensed consolidated balance sheets. Aircraft and related contracts are subject to price escalations. The following table is a summary of the key aircraft we are committed to purchase as of February 28, 2019 with the year of expected delivery:

	Cessna SkyCourier 408		ATR 72-600F		B767F		B777F		Total
2019 (remainder)		-		-		4		1		5
2020		-		-		17		5		22
2021		12		5		18		2		37
2022		12		6		12		3		33
2023		12		6		6		4		28
Thereafter		14		13		-		6		33
Total		50		30		57		21		158

A summary of future minimum lease payments under noncancelable operating leases with an initial or remaining term in excess of one year at February 28, 2019 is as follows (in millions):

	Aircraft and Related Equipment		Facilities and Other		Total Operating Leases
2019 (remainder)	$	26	$	571	$	597
2020		261		2,083		2,344
2021		203		1,923		2,126
2022		185		1,728		1,913
2023		127		1,555		1,682
Thereafter		48		8,926		8,974
Total	$	850	$	16,786	$	17,636

Future minimum lease payments under capital leases were immaterial at February 28, 2019. While certain of our lease agreements contain covenants governing the use of the leased assets or require us to maintain certain levels of insurance, none of our lease agreements include material financial covenants or limitations.

(9) Contingencies

Independent Contractor — Lawsuits and Administrative Proceedings. FedEx Ground is involved in lawsuits and administrative proceedings claiming that owner-operators engaged under operating agreements no longer in place should have been treated as employees of FedEx Ground, rather than independent contractors. In addition, we are defending joint-employer cases where it is alleged that FedEx Ground should be treated as an employer of the drivers employed by owner-operators engaged by FedEx Ground. These cases are in varying stages of litigation, and we are not currently able to estimate an amount or range of potential loss in all of these matters. However, we do not expect to incur, individually or in the aggregate, a material loss in these matters. Nevertheless, adverse determinations in matters related to owner-operators engaged by FedEx Ground could, among other things, entitle certain owner-operators to the reimbursement of certain expenses, and their drivers to certain wage payments from the owner-operators and FedEx Ground, and result in employment and withholding tax and benefit liability for FedEx Ground. We continue to believe that owner-operators engaged by FedEx Ground are properly classified as independent contractors and that FedEx Ground is not an employer or joint employer of the drivers of these independent contractors.

City and State of New York Cigarette Suit. The City of New York and the State of New York filed two related lawsuits against FedEx Ground in December 2013 and November 2014 arising from FedEx Ground’s alleged shipments of cigarettes to New York residents in contravention of several statutes, including the Racketeer Influenced and Corrupt Organizations Act (“RICO”) and New York’s Public Health Law, as well as common law nuisance claims. The first-filed lawsuit alleged that FedEx Ground provided delivery services on behalf of four shippers, and the second-filed lawsuit alleged that FedEx Ground provided delivery services on behalf of six additional shippers; none of these shippers continue to ship in our network. On July 10, 2017, the City of New York and the State of New York filed a third lawsuit against FedEx Ground and included FedEx Freight as a co-defendant. This additional case identified no shippers or shipments, but generally alleged violations of the same laws that were the subject of the other two lawsuits.

- 20 -

FEDEX CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

On October 10, 2018, FedEx Ground and the City and State of New York reached an agreement in principle to settle the lawsuits arising from FedEx Ground’s and FedEx Freight’s alleged shipments of cigarettes to New York residents for $35.4 million. The settlement does not include any admission of liability by FedEx Ground or FedEx Freight. In addition to the settlement amount, we recognized approximately $10 million for certain attorney’s fees in connection with this matter. In December 2018, the parties entered into a final settlement agreement and, subsequently, the settlement amount was paid and the lawsuits were dismissed by the court.

Other Matters. FedEx and its subsidiaries are subject to other legal proceedings that arise in the ordinary course of business, including certain lawsuits containing various class-action allegations of wage-and-hour violations in which plaintiffs claim, among other things, that they were forced to work “off the clock,” were not paid overtime or were not provided work breaks or other benefits. In the opinion of management, the aggregate liability, if any, with respect to these other actions will not have a material adverse effect on our financial position, results of operations or cash flows.

(10) Supplemental Cash Flow Information

Cash paid for interest expense and income taxes for the nine-month periods ended February 28 was as follows (in millions):

	2019			2018
Cash payments for:
Interest (net of capitalized interest)	$	498		$	430
Income taxes	$	346		$	707
Income tax refunds received		(34	)		(59	)
Cash tax payments, net	$	312		$	648

(11) Condensed Consolidating Financial Statements

We are required to present condensed consolidating financial information in order for the subsidiary guarantors of our public debt to continue to be exempt from reporting under the Securities Exchange Act of 1934, as amended.

The guarantor subsidiaries, which are 100% owned by FedEx, guarantee $18.1 billion of our public debt. The guarantees are full and unconditional and joint and several. Our guarantor subsidiaries were not determined using geographic, service line or other similar criteria, and as a result, the “Guarantor Subsidiaries” and “Non-guarantor Subsidiaries” columns each include portions of our domestic and international operations. Accordingly, this basis of presentation is not intended to present our financial condition, results of operations or cash flows for any purpose other than to comply with the specific requirements for subsidiary guarantor reporting.

- 21 -

Condensed consolidating financial statements for our guarantor subsidiaries and non-guarantor subsidiaries are presented in the following tables (in millions):

CONDENSED CONSOLIDATING BALANCE SHEETS

(UNAUDITED)

February 28, 2019

			Guarantor		Non-guarantor
	Parent		Subsidiaries		Subsidiaries		Eliminations			Consolidated
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	1,413	$	204	$	1,296	$	(41	)	$	2,872
Receivables, less allowances		45		5,474		3,600		(82	)		9,037
Spare parts, supplies, fuel, prepaid expenses and other,    less allowances		313		979		299		—			1,591
Total current assets		1,771		6,657		5,195		(123	)		13,500
PROPERTY AND EQUIPMENT, AT COST		23		53,997		4,144		—			58,164
Less accumulated depreciation and amortization		17		26,384		1,995		—			28,396
Net property and equipment		6		27,613		2,149		—			29,768
INTERCOMPANY RECEIVABLE		661		2,157		—		(2,818	)		—
GOODWILL		—		1,598		5,318		—			6,916
INVESTMENT IN SUBSIDIARIES		35,803		4,904		—		(40,707	)		—
OTHER ASSETS		891		1,670		1,857		(138	)		4,280
	$	39,132	$	44,599	$	14,519	$	(43,786	)	$	54,464
LIABILITIES AND COMMON STOCKHOLDERS’ INVESTMENT
CURRENT LIABILITIES
Short-term borrowings	$	225	$	—	$	—	$	—		$	225
Current portion of long-term debt		966		2		5		—			973
Accrued salaries and employee benefits		52		1,149		458		—			1,659
Accounts payable		188		1,430		1,656		(118	)		3,156
Accrued expenses		510		1,848		890		(5	)		3,243
Total current liabilities		1,941		4,429		3,009		(123	)		9,256
LONG-TERM DEBT, LESS CURRENT PORTION		16,921		287		10		—			17,218
INTERCOMPANY PAYABLE		—		—		2,818		(2,818	)		—
OTHER LONG-TERM LIABILITIES
Deferred income taxes		—		3,252		97		(138	)		3,211
Other liabilities		376		3,502		1,007		—			4,885
Total other long-term liabilities		376		6,754		1,104		(138	)		8,096
COMMON STOCKHOLDERS’ INVESTMENT		19,894		33,129		7,578		(40,707	)		19,894
	$	39,132	$	44,599	$	14,519	$	(43,786	)	$	54,464

- 22 -

CONDENSED CONSOLIDATING BALANCE SHEETS

May 31, 2018

			Guarantor		Non-guarantor
	Parent		Subsidiaries		Subsidiaries		Eliminations			Consolidated
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	1,485	$	257	$	1,538	$	(15	)	$	3,265
Receivables, less allowances		3		4,970		3,586		(78	)		8,481
Spare parts, supplies, fuel, prepaid expenses and other,    less allowances		425		878		292		—			1,595
Total current assets		1,913		6,105		5,416		(93	)		13,341
PROPERTY AND EQUIPMENT, AT COST		21		51,232		3,868		—			55,121
Less accumulated depreciation and amortization		17		25,111		1,839		—			26,967
Net property and equipment		4		26,121		2,029		—			28,154
INTERCOMPANY RECEIVABLE		1,487		924		—		(2,411	)		—
GOODWILL		—		1,709		5,264		—			6,973
INVESTMENT IN SUBSIDIARIES		33,370		4,082		—		(37,452	)		—
OTHER ASSETS		75		1,854		1,829		104			3,862
	$	36,849	$	40,795	$	14,538	$	(39,852	)	$	52,330
LIABILITIES AND COMMON STOCKHOLDERS’ INVESTMENT
CURRENT LIABILITIES
Current portion of long-term debt	$	1,332	$	1	$	9	$	—		$	1,342
Accrued salaries and employee benefits		65		1,506		606		—			2,177
Accounts payable		16		1,332		1,719		(90	)		2,977
Accrued expenses		460		1,778		896		(3	)		3,131
Total current liabilities		1,873		4,617		3,230		(93	)		9,627
LONG-TERM DEBT, LESS CURRENT PORTION		14,942		288		13		—			15,243
INTERCOMPANY PAYABLE		—		—		2,411		(2,411	)		—
OTHER LONG-TERM LIABILITIES
Deferred income taxes		—		2,626		137		104			2,867
Other liabilities		619		3,432		1,126		—			5,177
Total other long-term liabilities		619		6,058		1,263		104			8,044
COMMON STOCKHOLDERS’ INVESTMENT		19,415		29,832		7,621		(37,452	)		19,416
	$	36,849	$	40,795	$	14,538	$	(39,852	)	$	52,330

- 23 -

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

Three Months Ended February 28, 2019

	Parent			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
REVENUES	$	—		$	12,443		$	4,667		$	(100	)	$	17,010
OPERATING EXPENSES:
Salaries and employee benefits		28			4,720			1,321			—			6,069
Purchased transportation		—			2,749			1,547			(43	)		4,253
Rentals and landing fees		1			677			197			(1	)		874
Depreciation and amortization		—			731			120			—			851
Fuel		—			838			69			—			907
Maintenance and repairs		—			573			87			(2	)		658
Business realignment costs		4			—			—			—			4
Intercompany charges, net		(93	)		(397	)		490			—			—
Other		60			1,771			698			(46	)		2,483
		—			11,662			4,529			(92	)		16,099
OPERATING INCOME		—			781			138			(8	)		911
OTHER INCOME (EXPENSE):
Equity in earnings of subsidiaries		739			16			—			(755	)		—
Interest, net		(109	)		(54	)		28			—			(135	)
Other retirement plans income		—			155			3			—			158
Intercompany charges, net		149			(89	)		(60	)		—			—
Other, net		(40	)		71			(42	)		8			(3	)
INCOME BEFORE INCOME TAXES		739			880			67			(755	)		931
Provision for income taxes		—			147			45			—			192
NET INCOME	$	739		$	733		$	22		$	(755	)	$	739
COMPREHENSIVE INCOME	$	713		$	732		$	129		$	(755	)	$	819

- 24 -

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

Three Months Ended February 28, 2018

	Parent			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
REVENUES	$	—		$	12,433		$	4,229		$	(136	)	$	16,526
OPERATING EXPENSES:
Salaries and employee benefits		39			4,764			1,321			—			6,124
Purchased transportation		—			2,459			1,560			(84	)		3,935
Rentals and landing fees		2			684			189			(2	)		873
Depreciation and amortization		1			670			115			—			786
Fuel		—			837			77			—			914
Maintenance and repairs		1			543			84			—			628
Intercompany charges, net		(114	)		185			(71	)		—			—
Other		71			1,596			791			(50	)		2,408
		—			11,738			4,066			(136	)		15,668
OPERATING INCOME		—			695			163			—			858
OTHER INCOME (EXPENSE):
Equity in earnings of subsidiaries		2,074			2			—			(2,076	)		—
Interest, net		(137	)		11			1			—			(125	)
Other retirement plans income		—			141			2			—			143
Intercompany charges, net		140			(78	)		(62	)		—			—
Other, net		(3	)		104			(103	)		—			(2	)
INCOME BEFORE INCOME TAXES		2,074			875			1			(2,076	)		874
Provision for income taxes		—			(1,197	)		(3	)		—			(1,200	)
NET INCOME	$	2,074		$	2,072		$	4		$	(2,076	)	$	2,074
COMPREHENSIVE INCOME	$	2,051		$	2,069		$	107		$	(2,076	)	$	2,151

- 25 -

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

Nine Months Ended February 28, 2019

	Parent			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
REVENUES	$	—		$	37,685		$	14,503		$	(302	)	$	51,886
OPERATING EXPENSES:
Salaries and employee benefits		110			14,300			4,179			—			18,589
Purchased transportation		—			7,780			4,912			(126	)		12,566
Rentals and landing fees		4			1,948			585			(4	)		2,533
Depreciation and amortization		1			2,133			353			—			2,487
Fuel		—			2,708			237			—			2,945
Maintenance and repairs		1			1,874			271			(2	)		2,144
Business realignment costs		4			—			—			—			4
Intercompany charges, net		(357	)		(772	)		1,129			—			—
Other		238			4,991			2,410			(171	)		7,468
		1			34,962			14,076			(303	)		48,736
OPERATING INCOME		(1	)		2,723			427			1			3,150
OTHER INCOME (EXPENSE):
Equity in earnings of subsidiaries		2,509			145			—			(2,654	)		—
Interest, net		(439	)		44			2			—			(393	)
Other retirement plans income		—			466			8			—			474
Intercompany charges, net		454			(335	)		(119	)		—			—
Other, net		(14	)		18			(26	)		—			(22	)
INCOME BEFORE INCOME TAXES		2,509			3,061			292			(2,653	)		3,209
Provision for income taxes		—			579			121			—			700
NET INCOME	$	2,509		$	2,482		$	171		$	(2,653	)	$	2,509
COMPREHENSIVE INCOME	$	2,443		$	2,514		$	46		$	(2,653	)	$	2,350

- 26 -

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

Nine Months Ended February 28, 2018

	Parent			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
REVENUES	$	—		$	36,044		$	12,445		$	(353	)	$	48,136
OPERATING EXPENSES:
Salaries and employee benefits		112			13,713			3,852			—			17,677
Purchased transportation		—			6,836			4,600			(216	)		11,220
Rentals and landing fees		4			1,951			577			(6	)		2,526
Depreciation and amortization		1			1,958			334			—			2,293
Fuel		—			2,220			215			—			2,435
Maintenance and repairs		1			1,729			238			—			1,968
Intercompany charges, net		(325	)		298			27			—			—
Other		207			4,664			2,333			(131	)		7,073
		—			33,369			12,176			(353	)		45,192
OPERATING INCOME		—			2,675			269			—			2,944
OTHER INCOME (EXPENSE):
Equity in earnings of subsidiaries		3,445			39			—			(3,484	)		—
Interest, net		(396	)		35			(2	)		—			(363	)
Other retirement plans income		—			424			12			—			436
Intercompany charges, net		403			(220	)		(183	)		—			—
Other, net		(7	)		88			(103	)		—			(22	)
INCOME BEFORE INCOME TAXES		3,445			3,041			(7	)		(3,484	)		2,995
Provision for income taxes		—			(573	)		123			—			(450	)
NET INCOME	$	3,445		$	3,614		$	(130	)	$	(3,484	)	$	3,445
COMPREHENSIVE INCOME	$	3,385		$	3,605		$	(3	)	$	(3,484	)	$	3,503

- 27 -

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(UNAUDITED)

Nine Months Ended February 28, 2019

	Parent			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
CASH PROVIDED BY (USED IN) OPERATING    ACTIVITIES	$	(109	)	$	3,136		$	322		$	(26	)	$	3,323
INVESTING ACTIVITIES
Capital expenditures		(3	)		(3,359	)		(395	)		—			(3,757	)
Proceeds from asset dispositions and other		(45	)		86			21			—			62
CASH USED IN INVESTING    ACTIVITIES		(48	)		(3,273	)		(374	)		—			(3,695	)
FINANCING ACTIVITIES
Proceeds from short-term borrowings, net		220			—			—			—			220
Net transfers from (to) Parent		2			(31	)		29			—			—
Payment on loan between subsidiaries		(29	)		—			29			—			—
Intercompany dividends		—			114			(114	)		—			—
Proceeds from debt issuances		2,463			—			—			—			2,463
Principal payments on debt		(750	)		(117	)		(7	)		—			(874	)
Proceeds from stock issuances		58			—			—			—			58
Dividends paid		(514	)		—			—			—			(514	)
Purchase of treasury stock		(1,365	)		—			—			—			(1,365	)
Other, net		—			127			(122	)		—			5
CASH (USED IN) PROVIDED BY FINANCING    ACTIVITIES		85			93			(185	)		—			(7	)
Effect of exchange rate changes on cash		—			(9	)		(5	)		—			(14	)
Net (decrease) increase in cash and cash equivalents		(72	)		(53	)		(242	)		(26	)		(393	)
Cash and cash equivalents at beginning of period		1,485			257			1,538			(15	)		3,265
Cash and cash equivalents at end of period	$	1,413		$	204		$	1,296		$	(41	)	$	2,872

- 28 -

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(UNAUDITED)

Nine Months Ended February 28, 2018

	Parent			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
CASH PROVIDED BY (USED IN) OPERATING    ACTIVITIES	$	(3,537	)	$	4,664		$	25		$	10		$	1,162
INVESTING ACTIVITIES
Capital expenditures		—			(3,746	)		(248	)		—			(3,994	)
Business acquisitions, net of cash acquired		—			(44	)		—			—			(44	)
Proceeds from asset dispositions and other		(5	)		23			3			—			21
CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES		(5	)		(3,767	)		(245	)		—			(4,017	)
FINANCING ACTIVITIES
Proceeds from short-term borrowings, net		797			—			—			—			797
Net transfers from (to) Parent		807			(895	)		88			—			—
Payment on loan between subsidiaries		210			—			(210	)		—			—
Proceeds from debt issuances		1,481			—			—			—			1,481
Principal payments on debt		—			(17	)		(14	)		—			(31	)
Proceeds from stock issuances		284			—			—			—			284
Dividends paid		(402	)		—			—			—			(402	)
Purchase of treasury stock		(558	)		—			—			—			(558	)
Other, net		2			4			—			—			6
CASH (USED IN) PROVIDED BY FINANCING    ACTIVITIES		2,621			(908	)		(136	)		—			1,577
Effect of exchange rate changes on cash		(6	)		61			43			—			98
Net (decrease) increase in cash and cash equivalents		(927	)		50			(313	)		10			(1,180	)
Cash and cash equivalents at beginning of period		1,884			325			1,807			(47	)		3,969
Cash and cash equivalents at end of period	$	957		$	375		$	1,494		$	(37	)	$	2,789

- 29 -

REPORT OF INDEPENDENT REGISTERED

PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders

FedEx Corporation

Results of Review of Interim Financial Statements

We have reviewed the accompanying condensed consolidated balance sheet of FedEx Corporation as of February 28, 2019, and the related condensed consolidated statements of income and comprehensive income for the three-month and nine-month periods ended February 28, 2019 and February 28, 2018, the condensed consolidated statements of cash flows for the nine-month periods ended February 28, 2019 and February 28, 2018, and the consolidated statements of changes in common stockholders’ investment for the three-month and nine-month periods ended February 28, 2019 and February 28, 2018, and the related notes (collectively referred to as the “condensed consolidated interim financial statements”). Based on our reviews, we are not aware of any material modifications that should be made to the condensed consolidated interim financial statements for them to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of FedEx Corporation as of May 31, 2018, and the related consolidated statements of income, comprehensive income, changes in stockholders’ investment, and cash flows for the year then ended, and the related notes and schedules (not presented herein); and in our report dated July 16, 2018, we expressed an unqualified audit opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of May 31, 2018, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

These financial statements are the responsibility of the Company’s management. 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 SEC and the PCAOB. We conducted our review in accordance with the standards of the PCAOB. A review of interim financial statements consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

/s/ Ernst & Young LLP

Memphis, Tennessee

March 19, 2019

- 30 -

Item 2. Management’s Discussion and Analysis of Results of Operations and Financial Condition

GENERAL

The following Management’s Discussion and Analysis of Results of Operations and Financial Condition (“MD&A”) describes the principal factors affecting the results of operations, liquidity, capital resources, contractual cash obligations and critical accounting estimates of FedEx Corporation (“FedEx”). This discussion should be read in conjunction with the accompanying quarterly unaudited condensed consolidated financial statements and our Annual Report on Form 10-K for the year ended May 31, 2018 (“Annual Report”). Our Annual Report includes additional information about our significant accounting policies, practices and the transactions that underlie our financial results, as well as a detailed discussion of the most significant risks and uncertainties associated with our financial condition and operating results.

We provide a broad portfolio of transportation, e-commerce and business services through companies competing collectively, operating independently and managed collaboratively, under the respected FedEx brand. Our primary operating companies are Federal Express Corporation (“FedEx Express”), including TNT Express B.V. (“TNT 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 U.S. 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 transportation segments. The FedEx Services segment also provides customers with retail access to FedEx Express and FedEx Ground shipping services through FedEx Office and Print Services, Inc. (“FedEx Office”). See “Reportable Segments” for further discussion. Additional information on our businesses can be found in our Annual Report.

As discussed in our Annual Report, the FedEx Logistics, Inc. (“FedEx Logistics” (formerly FedEx Trade Networks, Inc.)) operating segment results are included in “Corporate, other and eliminations” in our segment reporting. Prior year amounts have been revised to conform to the current year presentation.

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 revenues 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 revenues and volumes. The line item “Other operating expenses” includes costs associated with outside service contracts (such as facility services and cargo handling, temporary labor and security), professional fees, insurance, uniforms and taxes and licenses.

Except as otherwise specified, references to years indicate our fiscal year ending May 31, 2019 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.

- 31 -

RESULTS OF OPERATIONS

CONSOLIDATED RESULTS

The following tables compare summary operating results and changes in revenue and operating income (dollars in millions, except per share amounts) for the periods ended February 28:

	Three Months Ended						Percent				Nine Months Ended						Percent
	2019			2018			Change				2019			2018			Change
Revenues	$	17,010		$	16,526			3			$	51,886		$	48,136			8
Operating income (loss):
FedEx Express segment		370			317			17				1,357			1,238			10
FedEx Ground segment		577			614			(6	)			1,830			1,716			7
FedEx Freight segment		97			49			98				421			322			31
Corporate, other and eliminations		(133	)		(122	)		(9	)			(458	)		(332	)		(38	)
Consolidated operating income		911			858			6				3,150			2,944			7
Operating margin:
FedEx Express segment		4.1	%		3.5	%		60		bp		4.9	%		4.7	%		20		bp
FedEx Ground segment		11.0	%		12.7	%		(170	)	bp		12.0	%		12.6	%		(60	)	bp
FedEx Freight segment		5.5	%		3.0	%		250		bp		7.5	%		6.5	%		100		bp
Consolidated operating margin		5.4	%		5.2	%		20		bp		6.1	%		6.1	%		—		bp
Consolidated net income	$	739		$	2,074			(64	)		$	2,509		$	3,445			(27	)
Diluted earnings per share	$	2.80		$	7.59			(63	)		$	9.41		$	12.63			(25	)

	Change in Revenue					Change in Operating Income
	Three Months Ended			Nine Months Ended		Three Months Ended			Nine Months Ended
FedEx Express segment	$	(93	)	$	1,257	$	53		$	119
FedEx Ground segment		433			1,604		(37	)		114
FedEx Freight segment		137			677		48			99
FedEx Services segment		5			35		—			—
Corporate, other and eliminations		2			177		(11	)		(126	)
	$	484		$	3,750	$	53		$	206

Pension Accounting Change

As of June 1, 2018, we adopted new accounting guidance that changes how employers that sponsor defined benefit pension or other postretirement benefit plans present net periodic benefit cost in their income statement. This new guidance requires us to report only the service cost component in the salaries and employee benefits line item. The other components of net benefit cost are required to be presented in the income statement in other income, outside of income from operations. This new guidance impacts operating income and margin but has no impact on net income or earnings per share. We have applied these changes retrospectively.

Overview

Consolidated operating income improved during the third quarter and nine months of 2019 primarily due to lower variable incentive compensation expenses, volume growth, the favorable net impact of fuel at all of our transportation segments and increased yields at FedEx Freight and FedEx Ground. Lower variable incentive compensation expenses benefited our results by approximately $350 million in the third quarter and the nine months of 2019. During the third quarter and nine months of 2019, softening global economic conditions negatively impacted international package volumes at FedEx Express. Lower weights in U.S. domestic package shipments at FedEx Express also negatively impacted our results. Compounding these factors, we also experienced a product mix shift to lower yielding services due in part to an increase in e-commerce traffic at FedEx Express. In addition, higher purchased transportation costs, resulting from increased contractor settlement rates at FedEx Ground and expanding the FedEx Ground network operations to six days year-round, starting in January 2019, negatively affected our results. Comparables for the nine months of 2019 are affected by the impact of the NotPetya cyberattack, which reduced earnings in the first half of 2018 by approximately $400 million ($1.14 per diluted share). Winter weather conditions in 2019 did not have a material effect on comparisons to 2018 for either the third-quarter or nine-month periods.

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The comparison of net income between 2019 and 2018 is significantly affected by a provisional benefit of $1.15 billion ($4.21 per diluted share) attributable to the enactment of the Tax Cuts and Jobs Act (“TCJA”) recognized during the third quarter of 2018, specifically related to the remeasurement of our net U.S. deferred tax liability. Net income for the third quarter of 2019 includes tax benefits of $90 million ($0.34 per diluted share) from the reduction of a valuation allowance on certain tax loss carryforwards and$60 million ($0.23 per diluted share) primarily related to a lower statutory income tax rate under the TCJA. These items were partially offset by tax expense of $50 million ($0.19 per diluted share) related toa recently enacted lower tax rate in the Netherlands applied to our deferred tax balances.Additionally, we recognized an income tax benefit of approximately $230 million ($0.86 per diluted share) in thenine months of 2019, primarily related to a lower statutory income tax rateunder the TCJA. Our results for the third quarter of 2018 included tax benefits of $204 million ($0.75 per diluted share) from a $1.5 billion contribution to our tax-qualified U.S. domestic pension plans (“U.S. Pension Plans”) in February 2018 and $165 million ($0.60 per diluted share) related to the phase-in of a reduced statutory tax rate on 2018 year-to-date earnings, of which approximately $120 million ($0.44 per diluted share) was recorded in the third quarter and attributable to the first half of 2018 earnings. See the “Income Taxes” section below for further information.

We incurred TNT Express integration expenses totaling $69 million ($55 million, net of tax, or $0.21 per diluted share) in the third quarter of 2019, a $37 million decrease from the third quarter of 2018. TNT Express integration expenses were $304 million ($243 million, net of tax, or $0.92 per diluted share) in the nine months of 2019, a $37 million decrease from the nine months of 2018. The integration expenses are predominantly incremental costs directly associated with the integration of TNT Express, including professional and legal fees, salaries and employee benefits, travel and advertising expenses, and include any restructuring charges at TNT Express. Internal salaries and employee benefits are included only to the extent the individuals are assigned full-time to integration activities. These costs were incurred at FedEx Express and FedEx Corporate. The identification of these costs as integration-related expenditures is subject to our disclosure controls and procedures.

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The following graphs for FedEx Express, FedEx Ground and FedEx Freight show selected volume trends (in thousands) over the five most recent quarters:

⁽¹⁾ International domestic average daily package volume relates to our international intra-country operations.

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The following graphs for FedEx Express, FedEx Ground and FedEx Freight show selected yield trends over the five most recent quarters:

⁽¹⁾ International domestic revenue per package relates to our international intra-country operations.

Revenue

Revenues increased 3% in the third quarter and 8% in the nine months of 2019 due to higher volumes at all of our transportation segments and increased yields at FedEx Ground and FedEx Freight. At FedEx Ground, revenues increased 9% in the third quarter and 12% in the nine months of 2019 due to volume growth and increased yields. FedEx Freight revenues increased 8% in the third quarter and 14% in the nine months of 2019 due to higher revenue per shipment and average daily shipments. Revenues at FedEx Express decreased 1% in the third quarter of 2019 primarily due to lower international priority and international domestic package revenue. At FedEx Express, unfavorable exchange rates, lower base rates and decreased weights contributed to the decline in international revenue in the third quarter of 2019. Currency exchange rates had a negative impact on revenues at FedEx Express but did not have an impact on operating income in the third quarter of 2019. Revenues at FedEx Express increased 5% in the nine months of 2019 primarily due to U.S. domestic package volume growth and international package and freight volume recovery from the NotPetya cyberattack, partially offset by package yield declines. FedEx Express revenue during the third quarter and nine months of 2019 was negatively impacted by continued softness in international package volume growth resulting from weakening global economic conditions. Higher fuel surcharges had a positive impact on revenues at all of our transportation segments in the third quarter and nine months of 2019.

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Operating Expenses

The following tables compare operating expenses expressed as dollar amounts (in millions) and as a percent of revenue for the periods ended February 28:

	Three Months Ended				Percent			Nine Months Ended				Percent
	2019		2018		Change			2019		2018		Change
Operating expenses:
Salaries and employee benefits	$	6,069	$	6,124		(1	)	$	18,589	$	17,677		5
Purchased transportation		4,253		3,935		8			12,566		11,220		12
Rentals and landing fees		874		873		—			2,533		2,526		—
Depreciation and amortization		851		786		8			2,487		2,293		8
Fuel		907		914		(1	)		2,945		2,435		21
Maintenance and repairs		658		628		5			2,144		1,968		9
Business realignment costs(1)		4		—	NM				4		—	NM
Other		2,483		2,408		3			7,468		7,073		6
Total operating expenses	$	16,099	$	15,668		3		$	48,736	$	45,192		8
Operating income	$	911	$	858		6		$	3,150	$	2,944		7

⁽¹⁾ Predominantly costs associated with our U.S.-based voluntary employee buyout program.

	Percent of Revenue
	Three Months Ended						Nine Months Ended
	2019			2018			2019			2018
Operating expenses:
Salaries and employee benefits		35.7	%		37.1	%		35.8	%		36.7	%
Purchased transportation		25.0			23.8			24.2			23.3
Rentals and landing fees		5.1			5.3			4.9			5.2
Depreciation and amortization		5.0			4.7			4.8			4.8
Fuel		5.3			5.5			5.7			5.1
Maintenance and repairs		3.9			3.8			4.1			4.1
Business realignment costs(1)		0.0			—			0.0			—
Other		14.6			14.6			14.4			14.7
Total operating expenses		94.6			94.8			93.9			93.9
Operating margin		5.4	%		5.2	%		6.1	%		6.1	%

⁽¹⁾ Predominantly costs associated with our U.S.-based voluntary employee buyout program.

Operating margin improved in the third quarter of 2019 primarily due to lower variable incentive compensation expenses, partially offset by higher operating costs in purchased transportation, driven by higher rates at FedEx Ground and FedEx Freight as well as expanding the FedEx Ground network operations to six days year-round, starting in January 2019. In addition, lower yields at FedEx Express negatively affected operating margin in the third quarter of 2019. Operating margin remained flat in the nine months of 2019 primarily due to increased revenue and lower variable incentive compensation expenses, offset by higher operating costs. An overall product mix shift at FedEx Express from international priority volume to international deferred volume, as well as continued softness in international volumes at FedEx Express resulting from weakening global economic conditions, negatively impacted operating margin during the third quarter and nine months of 2019.

Purchased transportation costs increased 8% in the third quarter and 12% in the nine months of 2019 primarily due to higher volumes at all of our transportation segments and increased rates, including fuel costs, at FedEx Ground and FedEx Freight, reflecting the inflationary impact of the tight labor market on our rates. Salaries and employee benefits expense decreased 1% in the third quarter of 2019 primarily due to lower variable incentive compensation expenses, partially offset by higher staffing to support volume growth and annual merit increases. Salaries and employee benefits expense increased 5% in the nine months of 2019 primarily due to higher staffing and merit increases, partially offset by lower variable incentive compensation expenses. Depreciation and amortization expense increased 8% in the third quarter and nine months of 2019 primarily due to continued investment in aircraft and related equipment at FedEx Express. Maintenance and repairs expense increased 5% in the third quarter and 9% in the nine months of 2019 primarily due to increased aircraft engine maintenance expense at FedEx Express.

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Fuel

The following graph for our transportation segments shows our average cost of jet and vehicle fuel per gallon for the five most recent quarters:

Fuel expense decreased 1% in the third quarter of 2019 primarily due to decreased fuel prices at FedEx Express, offset by higher mileage at FedEx Freight. Fuel expense increased 21% in the nine months of 2019 primarily due to increased fuel prices. However, fuel prices represent only one component of the factors we consider meaningful in understanding the impact of fuel on our business. Consideration must also be given to the fuel surcharge revenue we collect. Accordingly, we believe discussion of the net impact of fuel on our results, which is a comparison of the year-over-year change in these two factors, is important to understand the impact of fuel on our business. 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 the third quarters of 2019 and 2018 in the accompanying discussion of each of our transportation segments.

Most of our 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 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 to the index price for the preceding month, 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.

We routinely review our fuel surcharges. On March 18, 2019, we updated the tables used to determine our fuel surcharges for FedEx Express U.S. domestic services and at FedEx Ground. On September 10, 2018, we updated the tables used to determine our fuel surcharges at FedEx Express and FedEx Ground.

The net impact of fuel had a significant benefit to operating income in the third quarter and nine months of 2019 as higher fuel surcharges more than offset 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 may be impacted by fuel costs. 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 the level of pricing discounts offered.

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Income Taxes

Our effective tax rate was 20.6% for the third quarter and 21.8% for the nine months of 2019, compared with (137.3)% for the third quarter and (15.0)% for the nine months of 2018. The 2019 tax rates include a benefit of $90 million from the reduction of a valuation allowance on certain tax loss carryforwards and an expense of $50 million from the impact on our deferred taxes attributable to a recently enacted lower tax rate in the Netherlands. The 2019 tax rates were also favorably impacted by the TCJA, which resulted in benefits of approximately $60 million during the third quarter and $230 million for the nine months of 2019, primarily from the lower statutory tax rate on fiscal 2019 earnings. The tax rate for the nine months of 2019 also benefited by approximately $60 million from accelerated deductions claimed on our 2018 U.S. income tax return. The 2018 tax rates were favorably impacted by a provisional benefit of $1.15 billion from the remeasurement of our net U.S. deferred tax liability and a provisional benefit of $36 million from foreign tax credits exceeding the one-time transition tax on previously deferred foreign earnings. In addition to these provisional amounts, we recognized a $204 million benefit from a $1.5 billion contribution to our U.S. Pension Plans in February 2018 and $165 million related to the phase-in of a reduced statutory tax rate on 2018 year-to-date earnings, of which approximately $120 million was recorded in the third quarter and attributable to the first half of 2018 earnings.

On January 15, 2019, the U.S. Treasury Department issued final regulations covering the one-time transition tax on unrepatriated foreign earnings, which was enacted as part of the TCJA. Certain guidance included in these final regulations is inconsistent with our interpretation that led to the recognition of a $225 million ($0.94 per diluted share) benefit in 2018 (the “2018 Benefit”). Notwithstanding this inconsistency, we remain confident in our interpretation of the TCJA and intend to defend this position through litigation, if necessary. However, if we are ultimately unsuccessful in defending our position, we may be required to reverse the 2018 Benefit.

During the third quarter of 2019, we completed our accounting for the tax effects of the TCJA. No additional adjustments were made during the quarter. As a result, the only adjustment to the amounts initially recorded on a provisional basis in 2018 was a tax expense of $4 million recognized in the second quarter of 2019 as a revision of the provisional benefit associated with the remeasurement of our net U.S. deferred tax liability. See Note 1 of the accompanying unaudited condensed consolidated financial statements for further discussion.  

The TCJA, enacted during the third quarter of fiscal 2018, significantly changed the U.S. corporate income tax system including, among other things, lowering the statutory federal income tax rate from 35% to 21%. Due to our May 31 fiscal year-end, the lower rate was phased in, resulting in a U.S. statutory federal rate of 29.2% for 2018 and a statutory federal rate of 21% for subsequent years.

The following table provides a reconciliation of the 2018 effective tax rates to the 2019 effective tax rates, including the impacts of the TCJA, for the periods ended February 28:

	Three Months Ended			Nine Months Ended
2018 Effective Tax Rate(a)		(137.3	)%		(15.0	)%
Remeasurement of net U.S. deferred tax liability in 2018		131.5			38.5
Effect of February 2018 pension contribution(b)		23.3			6.8
Lower statutory tax rate on first-half 2018 earnings (35% to 29.2%)(c)		12.5			—
Reduction of valuation allowance on tax loss carryforwards in 2019		(10.3	)		(3.0	)
Lower statutory tax rate on 2019 earnings (29.2% to 21%)(c)		(7.6	)		(7.6	)
Remeasurement of net Dutch deferred tax asset in 2019		5.3			1.5
Transition tax provisional benefit in 2018		4.1			1.2
Foreign tax credits on foreign dividends in 2018		1.2			2.9
Accelerated deductions claimed in 2019 on the 2018 U.S. income tax return		—			(1.8	)
Other, net(d)		(2.1	)		(1.7	)
2019 Effective Tax Rate(a)		20.6	%		21.8	%

^(a) 2018 includes a blended U.S. statutory federal income tax rate of 29.2% while 2019 includes the fully phased-in rate of 21%.

^(b) The benefit is from the pension contribution deducted on our 2017 tax return at a tax rate of 35%.

^(c) Due to our May 31 fiscal year-end, the TCJA’s lower U.S. statutory federal income tax rate that went into effect on December 22, 2017 was phased in resulting in a rate of 29.2% for 2018 and a rate of 21% for subsequent years.

^(d) The 2018 tax rates were negatively impacted by the effect of the NotPetya cyberattack, costs incurred in connection with the integration of foreign operations of FedEx Express and TNT Express, changes in uncertain tax positions and tax rate impacts on changes in deferred tax items after the TCJA enactment, and were favorably impacted from tax benefits from share-based payments.

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We are subject to taxation in the United States and various U.S. state, local and foreign jurisdictions. We are currently under examination by the Internal Revenue Service (“IRS”) for the 2016 and 2017 tax years. In addition, we have initiated appeals proceedings with respect to the IRS’s proposed audit adjustment for the 2014 and 2015 tax years. It is reasonably possible that certain income tax return proceedings will be completed during the next twelve months and could result in a change in our balance of unrecognized tax benefits. The impact of any changes is not expected to be material to our consolidated financial statements. As of February 28, 2019, there were no material changes to our liabilities for unrecognized tax benefits subsequent to May 31, 2018.

Business Realignment Costs

In December 2018, we announced cost-reduction programs primarily through initiatives at FedEx Express and FedEx Services in response to current business and economic conditions that include the following:

• A U.S.-based voluntary employee buyout program for eligible employees;

• Limited hiring in staff functions; and

• Reductions in discretionary spending.

During the third quarter of 2019, we began offering voluntary cash buyouts to eligible U.S.-based employees in certain staff functions. The U.S.-based voluntary employee buyout program includes voluntary severance payments and funding to healthcare reimbursement accounts, with the voluntary severance payment calculated based on four weeks of gross base salary for every year of continuous FedEx service up to a maximum payment of two years of pay. Eligible employees will be scheduled to vacate positions in phases to ensure a smooth transition in the impacted functions so that we maintain service levels to our customers. Employees in the first phase will vacate their positions on May 31, 2019, and we expect all employees who accept the buyout to vacate their positions by the end of 2020. Costs of the benefits provided under the program will be recognized as special termination benefits in the period employees accept their offers, which is expected to be predominantly in the fourth quarter of 2019.

We incurred costs of approximately $4 million ($3 million, net of tax, or $0.01 per diluted share) during the third quarter of 2019 associated with our business realignment activities. These costs related to certain employee severance arrangements and other external costs directly attributable to our business realignment activities, such as professional fees. We expect the 2019 pre-tax cost of our business realignment activities, including the U.S.-based voluntary employee buyout program, to range from $450 million to $575 million in pre-tax cash expenditures, but actual costs will depend on acceptance rates. Severance payments will be made at the time of departure. Additional costs are expected to be incurred beyond 2019, primarily related to professional fees. We expect savings from our business realignment activities to be between $225 million to $275 million in 2020.

Outlook

We expect continued revenue and earnings growth at FedEx Freight in the fourth quarter of 2019 to be driven by volume and yield growth. While FedEx Ground revenue growth is expected to remain strong in the fourth quarter of 2019, higher operating costs are expected to continue to negatively impact results, as we continue to focus on growing volumes to fill the capacity of our new six-day network. While the launch of six-day operations will continue to be a modest headwind, we believe it will allow for the more efficient use of our existing assets, which ultimately will drive improved performance and enhance our competitive position. At FedEx Ground and FedEx Freight, we will continue to concentrate on operational improvement programs for the remainder of 2019 that are designed to increase operational efficiency and safety, enhance service offerings to our customers and manage our cost structure. We expect earnings to decrease at FedEx Express in the fourth quarter of 2019 due to lower yields and continued softness in international package volumes resulting from slowing global economic conditions, particularly in Asia and Europe. As a response to these negative business trends, we are implementing revenue-quality enhancement and cost-reduction actions; however, the full benefits of these actions will not be realized immediately.

Our expectations for the remainder of 2019 are dependent on key external factors, including fuel prices, moderate U.S. domestic economic growth and no further weakening in international economic conditions from our current forecast.

We continue to execute our TNT Express integration plans. The integration process is complex as it spans over 200 countries and territories and involves combining our pickup-and-delivery operations at a local level, our global and regional air and ground networks, and our extensive operations, customs clearance, sales and back-office information technology systems. We have completed the operational integration in the U.S., Canada and Middle East, and expect to have the sales forces substantially integrated by the end of 2019. The sales force integration will allow both the FedEx Express and TNT Express sales teams to sell our full suite of services to customers.

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A significant milestone in the integration includes key projects that enable the injection of FedEx Express shipments into the TNT Express European road network. This integration milestone will allow FedEx Express customers to benefit from transit time improvements for their intra-European shipments. We began rolling out this service in Europe in February 2019 and expect to have this service improvement completed in June 2019. In addition, by the end of 2020, we expect to complete projects across our European hub and station locations that will allow interoperability between networks for both FedEx Express and TNT Express packages, which will further lower costs as the related FedEx Express linehaul operations are optimized.

In 2019, we have begun the operational network integration process for the key countries in Europe, which represent a significant percentage of international revenue, workforces and facilities. Integration activities in Europe are complex and require consultations with works councils and employee representatives in a number of countries. While we expect to make significant progress on integration activities in 2020, particularly in Europe, integration work will continue into 2021.  

We currently estimate integration program expenses to exceed $1.5 billion through 2021 and we may incur additional costs related to investments that will further transform and optimize the combined business. The timing and amount of integration expenses and other investments in any future period may change as we revise and implement our plans. We expect to incur approximately $435 million of integration expenses in 2019, down from our previous estimate of $450 million.

Other Outlook Matters. For details on key 2019 capital projects, refer to the “Liquidity Outlook” section of this MD&A.

FedEx Ground previously announced plans to implement the Independent Service Provider (“ISP”) model throughout its entire U.S. pickup-and-delivery network. The transition to the ISP model is being accomplished on a district-by-district basis and we are now targeting the transition to be completed during the second quarter of 2020. As of February 28, 2019, over two-thirds of FedEx Ground volume was being delivered by small businesses operating under the ISP model. The costs associated with these transitions will be recognized in the periods incurred and are not expected to be material to any future quarter.

See “Forward-Looking Statements” and Part II, Item 1A “Risk Factors” for a discussion of these and other potential risks and uncertainties that could materially affect our future performance.

RECENT ACCOUNTING GUIDANCE

See Note 1 of the accompanying unaudited condensed consolidated financial statements for a discussion of recent accounting guidance.

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)
	TNT Express (international express transportation, small-package ground delivery and freight 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)
	FedEx Office (document and business services and package acceptance)

FEDEX SERVICES SEGMENT

The operating expense line item “Intercompany charges” on the accompanying unaudited condensed consolidated financial statements of our transportation segments reflects the allocations from the FedEx Services segment to the respective transportation segments. The allocations of net operating costs are based on metrics such as relative revenues or estimated services provided.

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The FedEx Services segment provides direct and indirect support to our transportation businesses, and we allocate all of the net operating costs of the FedEx Services segment (including the net operating results of FedEx Office) to reflect the full cost of operating our transportation businesses in the results of those segments. Within the FedEx Services segment allocation, the net operating results of FedEx Office, which are an immaterial component of our allocations, are allocated to FedEx Express and FedEx Ground. 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 transportation segments. 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, as well as certain other costs and credits not attributed to our core business. These costs are not allocated to the other business segments.

Also included in corporate and other is the FedEx Logistics operating segment, which provides customs brokerage and global ocean and air freight forwarding through FedEx Trade Networks Transport & Brokerage, Inc.; cross-border enablement and technology solutions and e-commerce transportation solutions through FedEx Cross Border Technologies, Inc.; integrated supply chain management solutions through FedEx Supply Chain Distribution System, Inc. (“FedEx Supply Chain”); time-critical shipment services through FedEx Custom Critical, Inc.; and, effective September 1, 2018, critical inventory and service parts logistics, 3-D printing and technology repair through FedEx Forward Depots, Inc. (“FedEx Forward Depots”). In the third quarter and nine months of 2019, the operating loss increase in “Corporate, other and eliminations” was driven primarily by FedEx Logistics resulting from operating losses, the inclusion of FedEx Forward Depots following the realignment of FedEx Logistics and lower transportation volumes due to weakness in the global economy. In addition, costs incurred in connection with the settlement of a legal matter involving FedEx Ground, including certain professional fees, negatively impacted our results during the nine months of 2019.

Certain FedEx operating companies provide transportation and related services for other FedEx companies outside their reportable segment. Billings for such services are based on negotiated rates, which we believe approximate fair value, and are reflected as revenues of the billing segment. These rates are adjusted from time to time based on market conditions. Such intersegment revenues and expenses are eliminated in our consolidated results and are not separately identified in the following segment information because the amounts are not material.

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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. Prior year amounts have been revised to conform to the current year presentation, including revised statistical information. The following tables compare revenues, operating expenses, operating income (dollars in millions), operating margin and operating expenses as a percent of revenue for the periods ended February 28:

	Three Months Ended						Percent				Nine Months Ended						Percent
	2019			2018			Change				2019			2018			Change
Revenues:
Package:
U.S. overnight box	$	1,844		$	1,836			—			$	5,678		$	5,373			6
U.S. overnight envelope		433			435			—				1,345			1,317			2
U.S. deferred		1,119			996			12				3,131			2,796			12
Total U.S. domestic package revenue		3,396			3,267			4				10,154			9,486			7
International priority		1,738			1,841			(6	)			5,508			5,469			1
International economy		806			793			2				2,541			2,378			7
Total international export package revenue		2,544			2,634			(3	)			8,049			7,847			3
International domestic(1)		1,078			1,140			(5	)			3,412			3,424			—
Total package revenue		7,018			7,041			—				21,615			20,757			4
Freight:
U.S.		772			739			4				2,294			2,040			12
International priority		477			532			(10	)			1,574			1,527			3
International economy		495			492			1				1,568			1,354			16
International airfreight		76			93			(18	)			244			276			(12	)
Total freight revenue		1,820			1,856			(2	)			5,680			5,197			9
Other		167			201			(17	)			536			620			(14	)
Total revenues		9,005			9,098			(1	)			27,831			26,574			5
Operating expenses:
Salaries and employee benefits		3,389			3,493			(3	)			10,303			10,046			3
Purchased transportation		1,267			1,285			(1	)			3,928			3,773			4
Rentals and landing fees		504			526			(4	)			1,448			1,502			(4	)
Depreciation and amortization		456			423			8				1,341			1,248			7
Fuel		771			782			(1	)			2,515			2,088			20
Maintenance and repairs		433			419			3				1,449			1,323			10
Intercompany charges		505			536			(6	)			1,571			1,547			2
Other		1,310			1,317			(1	)			3,919			3,809			3
Total operating expenses		8,635			8,781			(2	)			26,474			25,336			4
Operating income	$	370		$	317			17			$	1,357		$	1,238			10
Operating margin		4.1	%		3.5	%		60		bp		4.9	%		4.7	%		20		bp

⁽¹⁾ International domestic revenues relate to our international intra-country operations.

- 42 -

	Percent of Revenue
	Three Months Ended						Nine Months Ended
	2019			2018			2019			2018
Operating expenses:
Salaries and employee benefits		37.6	%		38.4	%		37.0	%		37.8	%
Purchased transportation		14.1			14.1			14.1			14.2
Rentals and landing fees		5.6			5.8			5.2			5.6
Depreciation and amortization		5.1			4.6			4.8			4.7
Fuel		8.6			8.6			9.1			7.9
Maintenance and repairs		4.8			4.6			5.2			5.0
Intercompany charges		5.6			5.9			5.6			5.8
Other		14.5			14.5			14.1			14.3
Total operating expenses		95.9			96.5			95.1			95.3
Operating margin		4.1	%		3.5	%		4.9	%		4.7	%

The following table compares selected statistics (in thousands, except yield amounts) for the periods ended February 28:

	Three Months Ended				Percent			Nine Months Ended				Percent
	2019		2018		Change			2019		2018		Change
Package Statistics
Average daily package volume (ADV):
U.S. overnight box		1,307		1,315		(1	)		1,282		1,249		3
U.S. overnight envelope		524		541		(3	)		536		548		(2	)
U.S. deferred		1,224		1,026		19			1,071		946		13
Total U.S. domestic ADV		3,055		2,882		6			2,889		2,743		5
International priority		530		537		(1	)		537		532		1
International economy		289		266		9			289		265		9
Total international export ADV		819		803		2			826		797		4
International domestic(1)		2,410		2,467		(2	)		2,491		2,473		1
Total ADV		6,284		6,152		2			6,206		6,013		3
Revenue per package (yield):
U.S. overnight box	$	22.75	$	22.53		1		$	23.32	$	22.64		3
U.S. overnight envelope		13.31		12.97		3			13.21		12.64		5
U.S. deferred		14.76		15.66		(6	)		15.38		15.56		(1	)
U.S. domestic composite		17.93		18.29		(2	)		18.50		18.20		2
International priority		52.95		55.25		(4	)		54.01		54.10		—
International economy		44.94		48.01		(6	)		46.28		47.24		(2	)
International export composite		50.12		52.85		(5	)		51.31		51.82		(1	)
International domestic(1)		7.21		7.45		(3	)		7.21		7.29		(1	)
Composite package yield		18.01		18.46		(2	)		18.33		18.17		1
Freight Statistics
Average daily freight pounds:
U.S.		8,905		8,757		2			8,705		8,311		5
International priority		5,030		5,389		(7	)		5,326		5,302		—
International economy		14,067		13,209		6			14,292		12,215		17
International airfreight		1,615		1,951		(17	)		1,697		1,982		(14	)
Total average daily freight pounds		29,617		29,306		1			30,020		27,810		8
Revenue per pound (yield):
U.S.	$	1.40	$	1.36		3		$	1.39	$	1.29		8
International priority		1.53		1.60		(4	)		1.56		1.52		3
International economy		0.57		0.60		(5	)		0.58		0.58		—
International airfreight		0.76		0.77		(1	)		0.76		0.73		4
Composite freight yield		0.99		1.02		(3	)		1.00		0.98		2

⁽¹⁾ International domestic statistics relate to our international intra-country operations.

- 43 -

FedEx Express Segment Revenues

FedEx Express segment revenues decreased 1% in the third quarter of 2019 primarily due to lower international package yields driven by unfavorable exchange rates, lower base rates and decreased weights. Currency exchange rates had a negative impact on revenues but did not have an impact on operating income in the third quarter of 2019. In addition, lower U.S. domestic package yields due to decreased weight and increased deferred volume contributed to the decline in the third quarter of 2019. U.S. domestic package volume growth partially offset these negative impacts. FedEx Express segment revenues increased 5% in the nine months of 2019 primarily due to U.S. domestic package volume growth and international package and freight volume recovery from the NotPetya cyberattack. Continued softness in international package volumes resulting from weakening global economic conditions negatively impacted revenues for the third quarter and nine months of 2019. Higher fuel surcharges positively impacted revenue in both the third quarter and the nine months of 2019.

U.S. domestic package average daily volumes increased 6% in the third quarter and 5% in the nine months of 2019 driven by deferred services, as e-commerce continues to drive growth. U.S. domestic package yields decreased 2% in the third quarter of 2019 primarily due to base yield declines driven by lower package weights and increased deferred volume. U.S. domestic package yields increased 2% in the nine months of 2019 driven primarily by higher fuel surcharges. Average daily freight pounds increased 1% in the third quarter and 8% in the nine months of 2019 primarily due to higher volume in international freight services, reflecting recovery from the NotPetya cyberattack and an overall product mix shift from package to freight. Freight yields decreased 3% in the third quarter of 2019 primarily due to unfavorable exchange rates, partially offset by higher fuel surcharges. Freight yields increased 2% in the nine months of 2019 primarily due to higher fuel surcharges on U.S. domestic freight services. International export average daily volumes increased 2% in the third quarter and 4% in the nine months of 2019 primarily due to the recovery from the NotPetya cyberattack. However, international package volume growth has slowed across most regions, as discussed above. International export package yields decreased 5% in the third quarter and 1% in the nine months of 2019 driven by base yield declines and unfavorable exchange rates, partially offset by higher fuel surcharges.

FedEx Express’s U.S. domestic and outbound fuel surcharge and international fuel surcharges ranged as follows for the periods ended February 28:

	Three Months Ended						Nine Months Ended
	2019			2018			2019			2018
U.S. Domestic and Outbound Fuel Surcharge:
Low		5.47	%		5.05	%		5.47	%		2.21	%
High		8.23			5.91			10.80			5.91
Weighted-average		6.21			5.56			7.32			4.31
International Fuel Surcharges:
Low		6.22			6.25			6.22			3.38
High		17.88			15.87			18.82			15.87
Weighted-average		14.89			12.24			16.05			10.53

Effective January 7, 2019, FedEx Express implemented a 4.9% average list price increase for U.S. domestic, U.S. export and U.S. import services. On January 1, 2018, FedEx Express implemented a 4.9% average list price increase for U.S. domestic, U.S. export and U.S. import services.

FedEx Express Segment Operating Income

FedEx Express segment operating income increased 17% in the third quarter of 2019 due to lower variable incentive compensation expenses, the favorable net impact of fuel and volume growth, partially offset by lower package yields. FedEx Express segment operating income increased 10% in the nine months of 2019 due to the favorable net impact of fuel, higher revenues and lower variable incentive compensation expenses, partially offset by higher operating costs in salaries and employee benefits, purchased transportation, maintenance and repairs and depreciation and amortization. Lower variable incentive compensation expenses benefited operating margin and operating income by approximately $200 million in the third quarter and the nine months of 2019. An overall product mix shift from international package volume to international freight volume, growth in deferred services driven by e-commerce and continued softness in international volumes partially offset the operating income and operating margin increases in the third quarter and nine months of 2019. The NotPetya cyberattack discussed above drove lower results in the nine months of 2018.

FedEx Express segment results included approximately $56 million of TNT Express integration expenses in the third quarter and $257 million of such expenses in the nine months of 2019, a $30 million decrease from the third quarter and a $13 million decrease from the nine months of 2018.

- 44 -

Salaries and employee benefits expense decreased 3% in the third quarter of 2019primarily due to lower variable incentive compensation expenses. Salaries and employee benefits increased 3% in the nine months of 2019 primarily due to merit increases and higher staffing to support volume growth, partially offset by lower variable incentive compensation expenses and favorable exchange rates. Purchased transportation expense decreased 1% in the third quarter of 2019 primarily due to favorable exchange rates, partially offset by higher volume. Purchased transportation expense increased 4% in the nine months of 2019 primarily due to higher volume, partially offset by favorable exchange rates. Maintenance and repairs expense increased 3% in the third quarter and 10% in the nine months of 2019 primarily due to increasedaircraft engine maintenance expense. Depreciation and amortization expense increased 8% in the third quarter and 7% in the nine months of 2019 primarily due to continued investment in aircraft and related equipment. Intercompany charges expense declined 6% in the third quarter of 2019 due to lower variable incentive compensation expenses and spending controls at FedEx Services.

Fuel expense decreased 1% in the third quarter of 2019 due to decreased fuel prices. Fuel expense increased 20% in the nine months of 2019 due to higher fuel prices. The net impact of fuel had a significant benefit to operating income in the third quarter and nine months of 2019, as higher fuel surcharges more than offset increased fuel prices. See the “Fuel” section of this MD&A for a description and additional discussion of the net impact of fuel on our operating results.

- 45 -

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. The following tables compare revenues, 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 periods ended February 28:

	Three Months Ended						Percent				Nine Months Ended						Percent
	2019			2018			Change				2019			2018			Change
Revenues	$	5,261		$	4,828			9			$	15,202		$	13,598			12
Operating expenses:
Salaries and employee benefits		874			799			9				2,570			2,246			14
Purchased transportation		2,466			2,154			14				6,870			5,944			16
Rentals		204			192			6				595			566			5
Depreciation and amortization		185			177			5				538			504			7
Fuel		4			4			—				11			10			10
Maintenance and repairs		86			75			15				247			227			9
Intercompany charges		371			374			(1	)			1,162			1,099			6
Other		494			439			13				1,379			1,286			7
Total operating expenses		4,684			4,214			11				13,372			11,882			13
Operating income	$	577		$	614			(6	)		$	1,830		$	1,716			7
Operating margin		11.0	%		12.7	%		(170	)	bp		12.0	%		12.6	%		(60	)	bp
Average daily package volume		9,550			8,993			6				8,992			8,408			7
Revenue per package (yield)	$	8.87		$	8.64			3			$	8.88		$	8.49			5

	Percent of Revenue
	Three Months Ended						Nine Months Ended
	2019			2018			2019			2018
Operating expenses:
Salaries and employee benefits		16.6	%		16.5	%		16.9	%		16.5	%
Purchased transportation		46.9			44.6			45.2			43.7
Rentals		3.9			4.0			3.9			4.2
Depreciation and amortization		3.5			3.7			3.5			3.7
Fuel		0.1			0.1			0.1			0.1
Maintenance and repairs		1.6			1.6			1.6			1.7
Intercompany charges		7.0			7.7			7.7			8.1
Other		9.4			9.1			9.1			9.4
Total operating expenses		89.0			87.3			88.0			87.4
Operating margin		11.0	%		12.7	%		12.0	%		12.6	%

FedEx Ground Segment Revenues

FedEx Ground segment revenues increased 9% in the third quarter and 12% in the nine months of 2019 due to volume growth and increased yields. Average daily volume increased 6% in the third quarter and 7% in the nine months of 2019 primarily due to continued growth in residential services driven by e-commerce. FedEx Ground yields increased 3% in the third quarter and 5% in the nine months of 2019 primarily due to by higher fuel surcharges, product mix and base yields.

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 periods ended February 28:

	Three Months Ended						Nine Months Ended
	2019			2018			2019			2018
Low		6.50	%		5.30	%		6.25	%		4.00	%
High		7.50			5.80			7.75			5.80
Weighted-average		6.84			5.50			6.86			5.00

- 46 -

Effective January 7, 2019, FedEx Ground announced a 4.9% average list price increase. On January 1, 2018, FedEx Ground implemented a 4.9% average list price increase. In addition, as announced on September 18, 2017, dimensional weight pricing applies to the majority of FedEx SmartPost shipments effective January 22, 2018.

FedEx Ground Segment Operating Income

FedEx Ground segment operating income decreased 6% in the third quarter of 2019 due to higher operating costs driven by higher purchased transportation, resulting from increased contractor settlement rates and expanding the operations of the FedEx Ground network to six days per week year-round starting in January 2019, staffing and network expansion costs. Higher revenues and the favorable net impact of fuel partially offset these factors. Higher operating costs also contributed to the operating margin decline in the third quarter and nine months of 2019. FedEx Ground segment operating income increased 7% in the nine months of 2019 due to volume growth, increased yields and the favorable net impact of fuel. In addition, lower variable incentive compensation expenses benefited operating income by approximately $75 million in the third quarter and nine months of 2019.

Purchased transportation expense increased 14% in the third quarter and 16% in the nine months of 2019 primarily due to higher volumes, increased contractor settlement rates and expanding to six-day operations year-round. Higher fuel costs also contributed to an increase in purchased transportation expense in the nine months of 2019. Salaries and employee benefits expense increased 9% in the third quarter and 14% in the nine months of 2019 primarily due to additional staffing to support volume growth, merit increases and network expansion, partially offset by lower variable incentive compensation expenses.

The net impact of fuel had a moderate benefit to operating income in the third quarter and nine months of 2019, as higher fuel surcharges more than offset increased fuel prices. See the “Fuel” section of this MD&A for a description and additional discussion of the net impact of fuel on our operating results.

Independent Contractor Model

FedEx Ground is involved in lawsuits and administrative proceedings claiming that owner-operators engaged under operating agreements no longer in place should have been treated as employees of FedEx Ground, rather than independent contractors. In addition, we are defending joint-employer cases where it is alleged that FedEx Ground should be treated as an employer of the drivers employed by owner-operators engaged by FedEx Ground. These cases are in varying stages of litigation. We will continue to vigorously defend ourselves in these proceedings and continue to believe that owner-operators engaged by FedEx Ground are properly classified as independent contractors and that FedEx Ground is not an employer or joint employer of the drivers of these independent contractors.

For additional information on the FedEx Ground ISP model, see “Other Outlook Matters” under Consolidated Results of this MD&A.

- 47 -

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 tables compare revenues, operating expenses, operating income (dollars in millions), operating margin, selected statistics and operating expenses as a percent of revenue for the periods ended February 28:

	Three Months Ended						Percent				Nine Months Ended						Percent
	2019			2018			Change				2019			2018			Change
Revenues	$	1,750		$	1,613			8			$	5,627		$	4,950			14
Operating expenses:
Salaries and employee benefits		865			816			6				2,712			2,429			12
Purchased transportation		213			204			4				722			610			18
Rentals		45			41			10				129			114			13
Depreciation and amortization		88			76			16				242			216			12
Fuel		131			127			3				418			336			24
Maintenance and repairs		53			52			2				178			167			7
Intercompany charges		128			129			(1	)			403			381			6
Other		130			119			9				402			375			7
Total operating expenses		1,653			1,564			6				5,206			4,628			12
Operating income	$	97		$	49			98			$	421		$	322			31
Operating margin		5.5	%		3.0	%		250		bp		7.5	%		6.5	%		100		bp
Average daily shipments (in thousands):
Priority		73.2			69.7			5				78.7			73.5			7
Economy		32.7			30.6			7				34.3			31.5			9
Total average daily shipments		105.9			100.3			6				113.0			105.0			8
Weight per shipment (lbs):
Priority		1,210			1,232			(2	)			1,211			1,205			—
Economy		1,106			1,133			(2	)			1,050			1,144			(8	)
Composite weight per shipment		1,178			1,202			(2	)			1,162			1,187			(2	)
Revenue per shipment:
Priority	$	253.35		$	242.49			4			$	249.78		$	233.31			7
Economy		308.44			295.31			4				299.17			285.99			5
Composite revenue per shipment	$	270.82		$	259.20			4			$	264.89		$	249.32			6
Revenue per hundredweight:
Priority	$	20.94		$	19.67			6			$	20.63		$	19.37			7
Economy		27.89			26.07			7				28.48			24.99			14
Composite revenue per hundredweight	$	22.99		$	21.56			7			$	22.79		$	21.01			8

	Percent of Revenue
	Three Months Ended						Nine Months Ended
	2019			2018			2019			2018
Operating expenses:
Salaries and employee benefits		49.4	%		50.6	%		48.2	%		49.1	%
Purchased transportation		12.2			12.7			12.8			12.3
Rentals		2.6			2.5			2.3			2.3
Depreciation and amortization		5.0			4.7			4.3			4.3
Fuel		7.5			7.9			7.4			6.8
Maintenance and repairs		3.0			3.2			3.2			3.4
Intercompany charges		7.3			8.0			7.2			7.7
Other		7.5			7.4			7.1			7.6
Total operating expenses		94.5			97.0			92.5			93.5
Operating margin		5.5	%		3.0	%		7.5	%		6.5	%

- 48 -

FedEx Freight Segment Revenues

FedEx Freight segment revenues increased 8% in the third quarter and 14% in the nine months of 2019 due to higher revenue per shipment and average daily shipments. Revenue per shipment increased 4% in the third quarter and 6% in the nine months of 2019 primarily due to higher base rates driven by our ongoing yield management initiatives and higher fuel surcharges. Average daily shipments increased 6% in the third quarter and 8% in the nine months of 2019 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 periods ended February 28:

	Three Months Ended						Nine Months Ended
	2019			2018			2019			2018
Low		23.40	%		23.10	%		23.40	%		20.90	%
High		24.60			24.00			25.60			24.00
Weighted-average		23.77			23.59			24.62			22.46

Effective January 7, 2019, FedEx Freight announced a 5.9% average list price increase in certain U.S. and other shipping rates. On January 1, 2018, FedEx Freight implemented a 4.9% average increase in certain U.S. and other shipping rates.

FedEx Freight Segment Operating Income

FedEx Freight segment operating income increased 98% and operating margin improved 250 basis points in the third quarter of 2019. Additionally, FedEx Freight segment operating income increased 31% and operating margin improved 100 basis points in the nine months of 2019. These positive results were achieved primarily by higher revenue per shipment. In addition, lower variable incentive compensation expenses benefited operating income by approximately $40 million in the third quarter and nine months of 2019.

Salaries and employee benefits expense increased 6% in the third quarter and 12% in the nine months of 2019 reflecting higher staffing levels to support volume growth and merit increases, partially offset by lower variable incentive compensation expenses. Purchased transportation expense increased 4% in the third quarter and 18% in the nine months of 2019 due to increased rates and higher volumes. Higher fuel costs also contributed to an increase in purchased transportation expense in the nine months of 2019.

Fuel expense increased 3% in the third quarter of 2019 primarily due to higher mileage. Fuel expense increased 24% in the nine months of 2019 primarily due to higher fuel prices. The net impact of fuel had a moderate benefit to operating income in the third quarter of 2019 and a significant benefit to operating income in the nine months of 2019 as higher fuel surcharges more than offset increased fuel prices. See the “Fuel” section of this MD&A for a description and additional discussion of the net impact of fuel on our operating results.

- 49 -

FINANCIAL CONDITION

LIQUIDITY

Cash and cash equivalents totaled $2.9 billion at February 28, 2019, compared to $3.3 billion at May 31, 2018. The following table provides a summary of our cash flows for the nine-month periods ended February 28 (in millions):

	2019			2018
Operating activities:
Net income	$	2,509		$	3,445
Noncash charges and credits		3,099			1,691
Changes in assets and liabilities		(2,285	)		(3,974	)
Cash provided by operating activities		3,323			1,162
Investing activities:
Capital expenditures		(3,757	)		(3,994	)
Business acquisitions, net of cash acquired		—			(44	)
Proceeds from asset dispositions and other		62			21
Cash used in investing activities		(3,695	)		(4,017	)
Financing activities:
Proceeds from short-term borrowings, net		220			797
Proceeds from debt issuances		2,463			1,481
Principal payments on debt		(874	)		(31	)
Proceeds from stock issuances		58			284
Dividends paid		(514	)		(402	)
Purchase of treasury stock		(1,365	)		(558	)
Other		5			6
Cash (used in) provided by financing activities		(7	)		1,577
Effect of exchange rate changes on cash		(14	)		98
Net decrease in cash and cash equivalents	$	(393	)	$	(1,180	)
Cash and cash equivalents at the end of period	$	2,872		$	2,789

Cash flows from operating activities increased $2.2 billion in the nine months of 2019 due to lower pension contributions, higher net income and decreased tax payments, partially offset by higher variable incentive compensation payments. Capital expenditures decreased slightly during the nine months of 2019 primarily due to lower spending related to facilities, equipment and vehicles at FedEx Ground, as well as lower spending on aircraft and related equipment at FedEx Express, partially offset by increased spending related to facilities and equipment at FedEx Express. See “Capital Resources” for a discussion of capital expenditures during 2019 and 2018.

During the third quarter of 2019, we issued $1.2 billion of senior unsecured debt under our current shelf registration statement, comprised of €640 million of 0.7% fixed-rate notes due in May 2022 and $500 million of 3.4% fixed-rate notes due in January 2022. We will use the net proceeds to pay the €500 million aggregate principal amount of floating rate notes due at maturity on April 11, 2019, and for general corporate purposes.

During the second quarter of 2019, we issued $1.25 billion of senior unsecured debt under our current shelf registration statement, comprised of $400 million of 4.20% fixed-rate notes due in October 2028 and $850 million of 4.95% fixed-rate notes due in October 2048. Interest on these notes is paid semi-annually. We used the net proceeds to redeem the $750 million aggregate principal amount of 8.00% notes due January 15, 2019, and for general corporate purposes.

During the third quarter of 2019, we issued commercial paper to provide us with additional short-term liquidity. As of February 28, 2019, we had $225 million of commercial paper outstanding. See Note 3 of the accompanying unaudited condensed consolidated financial statements for further discussion.

- 50 -

In January 2016, our Board of Directors approved a share repurchase program of up to 25 million shares. During the third quarter of 2019, we repurchased 0.6 million shares of FedEx common stock at an average price of $168.43 per share for a total of $93 million. During the nine months of 2019, we repurchased 6.0 million shares of FedEx common stock at an average price of $227.42 per share for a total of $1.4 billion. As of February 28, 2019, 5.7 million shares remained under the current share repurchase authorization. Shares under this repurchase program may be repurchased from time to time in the open market or in privately negotiated transactions. The timing and volume of repurchases are at the discretion of management, based on the capital needs of the business, the market price of FedEx common stock and general market conditions. No time limit was set for the completion of the program, and the program may be suspended or discontinued at any time.

CAPITAL RESOURCES

Our operations are capital intensive, characterized by significant investments in aircraft, vehicles, technology, facilities, and package- handling and sort equipment. The amount and timing of capital additions 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 periods ended February 28 (in millions):

									Percent Change
									2019/2018
	Three Months Ended				Nine Months Ended				Three Months			NineMonths
	2019		2018		2019		2018		Ended			Ended
Aircraft and related equipment	$	397	$	591	$	1,472	$	1,631		(33	)		(10	)
Package handling and ground support equipment		167		207		584		621		(19	)		(6	)
Vehicles		206		237		640		748		(13	)		(14	)
Information technology		182		116		515		378		57			36
Facilities and other		171		221		546		616		(23	)		(11	)
Total capital expenditures	$	1,123	$	1,372	$	3,757	$	3,994		(18	)		(6	)
FedEx Express segment	$	673	$	858	$	2,364	$	2,312		(22	)		2
FedEx Ground segment		137		221		566		936		(38	)		(40	)
FedEx Freight segment		177		198		403		397		(11	)		2
FedEx Services segment		127		87		387		306		46			26
Other		9		8		37		43		13			(14	)
Total capital expenditures	$	1,123	$	1,372	$	3,757	$	3,994		(18	)		(6	)

Capital expenditures decreased slightly during the nine months of 2019 primarily due to lower spending related to facilities, equipment and vehicles at FedEx Ground, as well as lower spending on aircraft and related equipment at FedEx Express, partially offset by increased spending related to facilities and equipment at FedEx Express.

LIQUIDITY OUTLOOK

We believe that our cash and cash equivalents, cash flow from operations and available financing sources will be adequate to meet our liquidity needs, including working capital, capital expenditure requirements, debt payment obligations, pension contributions, TNT Express integration expenses and business realignment activities (including the U.S.-based voluntary employee buyout program). Our cash and cash equivalents balance at February 28, 2019 includes $1.0 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, as the enactment of the TCJA significantly reduced the cost of repatriating foreign earnings from a U.S. tax perspective. We do not believe that the indefinite reinvestment of these funds impairs our ability to meet our U.S. domestic debt or working capital obligations.

Our capital expenditures are expected to be approximately $5.6 billion in 2019, and include spending for aircraft modernization at FedEx Express and spending on facilities and sort equipment, primarily at FedEx Express and FedEx Ground. We invested $1.5 billion in aircraft and related equipment in the nine months of 2019 and expect to invest an additional $0.6 billion for aircraft and related equipment during the remainder of 2019. In addition, over the next several years, we will be investing a total of approximately $1.5 billion to significantly expand the FedEx Express Indianapolis hub and a total of approximately $1.0 billion to modernize the FedEx Express Memphis World Hub. We anticipate that our cash flow from operations will be sufficient to fund our capital expenditures in 2019. Historically, we have been successful in obtaining unsecured financing, from both domestic and international sources, although the marketplace for such investment capital can become restricted depending on a variety of economic factors.

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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.

We have a five-year $2.0 billion revolving credit facility that expires in November 2020. See Note 3 of the accompanying unaudited condensed consolidated financial statements for a description of the terms and significant covenants of our revolving credit facility.

During the nine months of 2019, we made voluntary contributions totaling $1.0 billion to our U.S. Pension Plans. We do not expect to make any additional contributions to our U.S. Pension Plans during the fourth quarter of 2019. Our U.S. Pension Plans have ample funds to meet expected benefit payments.

Standard & Poor’s has assigned us a senior unsecured debt credit rating of BBB, 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 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.

CONTRACTUAL CASH OBLIGATIONS AND OFF-BALANCE SHEET ARRANGEMENTS

The following table sets forth a summary of our contractual cash obligations as of February 28, 2019. Certain of these contractual obligations are reflected in our balance sheet, while others are disclosed as future obligations under accounting principles generally accepted in the United States. Except for the current portion of interest on long-term debt, this table does not include amounts already recorded in our balance sheet as current liabilities at February 28, 2019. We have certain contingent liabilities that are not accrued in our balance sheet in accordance with accounting principles generally accepted in the United States. These contingent liabilities are not included in the table below. We have other long-term liabilities reflected in our balance sheet, including deferred income taxes, qualified and nonqualified pension and postretirement healthcare plan liabilities and other self-insurance accruals. Unless statutorily required, the payment obligations associated with these liabilities are not reflected in the table below due to the absence of scheduled maturities. Accordingly, this table is not meant to represent a forecast of our total cash expenditures for any of the periods presented.

	Payments Due by Fiscal Year (Undiscounted) (in millions)
	2019 (1)		2020		2021		2022		2023		Thereafter		Total
Operating activities:
Operating leases	$	597	$	2,344	$	2,126	$	1,913	$	1,682	$	8,974	$	17,636
Non-capital purchase obligations and other		397		873		662		476		309		2,952		5,669
Interest on long-term debt		126		621		609		609		580		10,510		13,055
Investing activities:
Aircraft and related capital    commitments		396		1,930		2,186		1,808		1,529		656		8,505
Other capital purchase obligations		48		28		25		23		23		6		153
Financing activities:
Debt		569		967		—		1,226		1,600		13,957		18,319
Total	$	2,133	$	6,763	$	5,608	$	6,055	$	5,723	$	37,055	$	63,337

⁽¹⁾ Cash obligations for the remainder of 2019.

Open purchase orders that are cancelable are not considered unconditional purchase obligations for financial reporting purposes and are not included in the table above. Such purchase orders often represent authorizations to purchase rather than binding agreements. See Note 8 of the accompanying unaudited condensed consolidated financial statements for more information on such purchase orders.

Operating Activities

The amounts reflected in the table above for operating leases represent undiscounted future minimum lease payments under noncancelable operating leases (principally facilities and aircraft) with an initial or remaining term in excess of one year at February 28, 2019.

Included in the table above within the caption entitled “Non-capital purchase obligations and other” is our estimate of the current portion of the liability ($124 million) for uncertain tax positions. We cannot reasonably estimate the timing of the long-term payments or the amount by which the liability will increase or decrease over time; therefore, the long-term portion of the liability ($38 million) is excluded from the table.

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The amounts reflected in the table above for interest on long-term debt represent future interest payments due on our long-term debt.

Investing Activities

The amounts reflected in the table above for capital purchase obligations represent noncancelable agreements to purchase capital-related equipment. Such contracts include those for certain purchases of aircraft, spare engines, vehicles, facilities, computers and other equipment.

We had $965 million in deposits and progress payments as of February 28, 2019 on aircraft purchases and other planned aircraft-related transactions.

Financing Activities

The amounts reflected in the table above for long-term debt represent future scheduled principal payments on our long-term debt.

Additional information on amounts included within the operating, investing and financing activities captions in the table above can be found in our Annual Report.

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.

GOODWILL. Goodwill is tested for impairment between annual tests whenever events or circumstances make it more likely than not that the fair value of a reporting unit has fallen below its carrying value. We do not believe there has been any other change of events or circumstances that would indicate that a reevaluation of the goodwill of our reporting units is required as of February 28, 2019, nor do we believe the goodwill of our reporting units is at risk of failing impairment testing. For additional details on goodwill impairment testing, refer to Note 1 to the financial statements included in our Annual Report.

Information regarding our critical accounting estimates can be found in our Annual Report, including Note 1 to the financial statements therein. Management has discussed the development and selection of these critical accounting estimates with the Audit Committee of our Board of Directors and with our independent registered public accounting firm.

FORWARD-LOOKING STATEMENTS

Certain statements in this report, including (but not limited to) those contained in “General,” “Fuel,” “Income Taxes,” “Outlook,” “Independent Contractor Model,” “Liquidity,” “Liquidity Outlook,” “Contractual Cash Obligations and Off-Balance Sheet Arrangements” and “Critical Accounting Estimates,” and the “General,” “Financing Arrangements,” “Income Taxes,” “Commitments” and “Contingencies” notes to the consolidated financial statements, 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,” “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, potential risks and uncertainties, such as:

• economic conditions in the global markets in which we operate;

• significant changes in the volumes of shipments transported through our networks, customer demand for our various services or the prices we obtain for our services;

• a significant data breach or other disruption to our technology infrastructure, which could adversely affect our reputation, business or results of operations;

• anti-trade measures and changes in international trade policies;

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• our ability to successfully integrate the businesses and operations of FedEx Express and TNT Express in the expected time frame and at the expected cost and to achieve the expected benefits from the combined businesses;

• the impact of the United Kingdom’s vote to leave the European Union and the terms of the United Kingdom’s withdrawal, if it ultimately occurs;

• damage to our reputation or loss of brand equity;

• the price and availability of jet and vehicle fuel;

• our ability to manage our network capacity and cost structure for capital expenditures and operating expenses, and match it to shifting and future customer volume levels;

• the impact of intense competition on our ability to maintain or increase our prices (including our fuel surcharges in response to rising fuel costs) or to maintain or grow our revenues and market share;

• any impacts on our businesses resulting from evolving or new U.S. domestic or international government regulations, laws, and policies, which could be unfavorable to our business, including regulatory actions affecting data privacy and sovereignty, global aviation or other transportation rights, increased air cargo and other security or safety requirements, the use of new technology and tax, accounting, trade (such as protectionist measures or restrictions on free trade), foreign exchange intervention, labor (such as card-check legislation, joint employment standards or changes to the Railway Labor Act of 1926, as amended, affecting FedEx Express employees), environmental (such as global climate change legislation) or postal rules;

• future guidance, regulations, interpretations, or challenges to our tax positions relating to the TCJA and our ability to defend our interpretations and realize the benefits of certain provisions of the TCJA;

• our ability to effectively operate, integrate, leverage and grow acquired businesses, and to continue to support the value we allocate to these acquired businesses, including their goodwill and other intangible assets;

• our ability to successfully implement our cost-reduction initiatives and productivity enhancements;

• the acceptance rate of the U.S.-based voluntary cash buyout offers and the timing of such acceptances, and our ability to realize the expected savings from the U.S.-based voluntary employee buyout program;

• our ability to maintain good relationships with our employees and avoid attempts by labor organizations to organize groups of our employees, which could significantly increase our operating costs and reduce our operational flexibility;

• the impact of costs related to (i) challenges to the status of owner-operators engaged by FedEx Ground as independent contractors and direct employers of drivers providing services on their behalf, and (ii) any related changes to our relationship with these owner-operators and their drivers;

• any impact on our business from disruptions or modifications in service by, or changes in the business or financial soundness of, the U.S. Postal Service, which is a significant customer and vendor of FedEx;

• the impact of any international conflicts or terrorist activities on the United States and global economies in general, the transportation industry or us in particular, and what effects these events will have on our costs or the demand for our services;

• adverse weather or localized disasters in key geographic areas, such as earthquakes, volcanoes, wildfires, hurricanes, conflicts or unrest, or terrorist attacks, which can disrupt our electrical service, damage our property, disrupt our operations, increase our fuel costs and adversely impact demand for our services;

• increasing costs, the volatility of costs and funding requirements and other legal mandates for employee benefits, especially pension and healthcare benefits;

• changes in our ability to attract and retain pilots, drivers and package and freight handlers;

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• 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, Brazilian real and Mexican peso, which can affect our sales levels and foreign currency sales prices;

• market acceptance of our new service and growth initiatives;

• any liability resulting from and the costs of defending against class-action litigation, such as wage-and-hour, joint employment, and discrimination and retaliation claims, and any other legal or governmental proceedings;

• the outcome of future negotiations to reach new collective bargaining agreements — including with the union that represents the pilots of FedEx Express (the current pilot agreement is scheduled to become amendable in November 2021), with the union elected in 2015 to represent drivers at a FedEx Freight, Inc. facility in the U.S., and with the union certified in 2019 to represent owner-drivers at a FedEx Freight, Inc. facility in Canada;

• the impact of technology developments on our operations and on demand for our services, and our ability to successfully mitigate unique operational and regulatory risks relating to such developments and continue to identify and eliminate unnecessary information-technology redundancy and complexity throughout the organization;

• governmental underinvestment in transportation infrastructure, which could increase our costs and adversely impact our service levels due to traffic congestion or sub-optimal routing of our vehicles and aircraft;

• widespread outbreak of an illness or any other communicable disease, or any other public health crisis;

• availability of financing on terms acceptable to us and our ability to maintain our current credit ratings, especially given the capital intensity of our operations; and

• other risks and uncertainties you can find in our press releases and SEC filings, including the risk factors identified under the heading “Risk Factors” in “Management’s Discussion and Analysis of Results of Operations and Financial Condition” in our Annual Report, as updated by our quarterly reports on Form 10-Q.

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.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

As of February 28, 2019, there were no material changes in our market risk sensitive instruments and positions since our disclosures in our Annual Report.

The principal foreign currency exchange rate risks to which we are exposed relate to the euro, Chinese yuan, British pound, Canadian dollar, Brazilian real and Mexican peso. Historically, our exposure to foreign currency fluctuations is more significant with respect to our revenues than our expenses, as a significant portion of our expenses are denominated in U.S. dollars, such as aircraft and fuel expenses. During the nine months of 2019, the U.S. dollar strengthened relative to the currencies of the foreign countries in which we operate, as compared to May 31, 2018, and this strengthening had a slightly positive impact on our results.

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 “Fuel” section of “Management’s Discussion and Analysis of Results of Operations and Financial Condition.”

Item 4. Controls and Procedures

The management of FedEx, with the participation of our principal executive and financial officers, has evaluated the effectiveness of our disclosure controls and procedures in ensuring that the information required to be disclosed in our filings under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, including ensuring that such information is accumulated and communicated to FedEx management as appropriate to allow timely decisions regarding required disclosure. Based on such evaluation, our principal executive and financial officers have concluded that such disclosure controls and procedures were effective as of February 28, 2019 (the end of the period covered by this Quarterly Report on Form 10-Q).

During our fiscal quarter ended February 28, 2019, no change occurred in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

For a description of all material pending legal proceedings, see Note 9 of the accompanying unaudited condensed consolidated financial statements.

Item 1A. Risk Factors

Other than the risk factors set forth below, there have been no material changes from the risk factors disclosed in our Annual Report (under the heading “Risk Factors” in “Management’s Discussion and Analysis of Results of Operations and Financial Condition”) in response to Part I, Item 1A of Form 10-K, as updated by our quarterly reports on Form 10-Q.

The United Kingdom’s vote to leave the European Union could adversely impact our business, results of operations and financial condition. There is substantial uncertainty surrounding the United Kingdom’s 2016 vote to leave the European Union (“Brexit”), which is scheduled for March 29, 2019. Any impact of Brexit depends on the terms of the United Kingdom’s withdrawal from the European Union. The ongoing uncertainty within the United Kingdom’s government and Parliament on the status of a withdrawal agreement with the European Union sustains the possibility of the United Kingdom leaving the European Union without a withdrawal agreement and associated transition period in place, which would likely cause significant market and economic disruption and negatively impact customer experience and service quality, and could depress the demand for our services.

Even if an agreement setting forth the terms of the United Kingdom’s withdrawal from the European Union is approved, the withdrawal could result in a global economic downturn. The United Kingdom also could lose access to the single European Union market and to the global trade deals negotiated by the European Union on behalf of its members, depressing trade between the United Kingdom and other countries, which would negatively impact our international operations. Additionally, we may face new regulations regarding trade, aviation, security and employees, among others, in the United Kingdom. Compliance with such regulations could be costly, negatively impacting our business, results of operations and financial condition. Brexit could also adversely affect European and worldwide economic and market conditions and could contribute to instability in global financial and foreign exchange markets, including volatility in the value of the euro and the British pound.

Our autonomous delivery strategy is dependent upon our ability to successfully mitigate unique technological, operational and regulatory risks. We recently announced the development through a partnership of an autonomous delivery device designed to help retailers make same-day and last-mile deliveries to their customers. 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 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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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides information on FedEx’s repurchases of our common stock during the third quarter of 2019:

ISSUER PURCHASES OF EQUITY SECURITIES

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Program		Maximum Number of Shares That May Yet Be Purchased Under the Program
Dec. 1-31, 2018		100,000	$	156.50		100,000		6,192,200
Jan. 1-31, 2019		305,000		166.48		305,000		5,887,200
Feb. 1-28, 2019		150,000		180.37		150,000		5,737,200
Total		555,000	$	168.43		555,000

The repurchases were made under the stock repurchase program approved by our Board of Directors and announced on January 26, 2016 and through which we are authorized to purchase, in the open market or in privately negotiated transactions, up to an aggregate of 25 million shares of our common stock. As of March 18, 2019, 5.6 million shares remained authorized for purchase under the January 2016 stock repurchase program, which is the only such program that currently exists. The program does not have an expiration date.

Item 5. Other Information

Disclosure Pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012 and Section 13(r) of the Exchange Act. We have comprehensive export controls and economic sanctions programs designed to ensure compliance with United States and other applicable export controls and sanctions laws, rules and regulations. We recently identified the shipments described below involving P2P Mailing Limited (“P2P”), an e-commerce transportation solutions company that FedEx acquired in March 2018. P2P is based in the United Kingdom and organized under the laws of England and Wales. These shipments were not made in accordance with our internal policies and procedures and require disclosure pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012 and Section 13(r) of the Exchange Act.

P2P provides customers with unique low-cost international transportation solutions, leveraging its relationships with private, postal, retail and clearance providers in over 200 countries and territories. Its technology and processes provide plug-and-play options with carrier networks and customer systems. It recently came to our attention that from the date FedEx acquired P2P in March 2018 through early February 2019, P2P facilitated the shipment into Iran of approximately 120 packages through its TrakPak service offering and approximately 960 packages through its Untrak service offering. All of P2P’s customers that shipped packages to Iran sell consumer goods. The aggregate gross revenue for these shipments was £16,067 (approximately $21,300) and the aggregate profit was £5,083 (approximately $6,700). In the case of the TrakPak shipments, one of P2P’s vendors used Iran Air, an entity identified by the United States Treasury Department’s Office of Foreign Assets Control (“OFAC”) as owned or controlled by the Government of Iran (“GoI”), to move the shipments from the United Kingdom into Iran. Because all of the shipments in question were postal shipments, Iran Post, an entity FedEx understands to be owned or controlled by the GoI, provided the last-mile delivery for both the TrakPak and Untrak shipments after they arrived in Iran. P2P did not directly contract with, provide payment to or otherwise transact with Iran Air or Iran Post.

P2P does not intend to continue this activity. Promptly upon learning of these shipments, we put in place a mechanism designed to prevent shipments into Iran through P2P’s service offerings, and P2P has not facilitated any such shipments since that time. Additionally, we have implemented enhanced controls, procedures and other measures to ensure P2P’s compliance with our export controls and economic sanctions programs.

We have made an initial notification of voluntary self-disclosure to OFAC and will perfect the disclosure at the appropriate time. We intend to fully cooperate with OFAC regarding these matters.

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Item 6. Exhibits

Exhibit Number	Description of Exhibit
4.1	Indenture, dated as of October 23, 2015, between FedEx, the Guarantors named therein and Wells Fargo Bank, National Association, as trustee. (Filed as Exhibit 4.1 to FedEx’s Current Report on Form 8-K dated and filed October 23, 2015, and incorporated herein by reference.)
4.2	Supplemental Indenture No. 7, dated as of January 16, 2019, between FedEx, the Guarantors named therein and Wells Fargo Bank, National Association, as trustee. (Filed as Exhibit 4.2 to FedEx’s Current Report on Form 8-K dated and filed January 16, 2019, and incorporated herein by reference.)
4.3	Form of 3.400% Note due 2022. (Included in Exhibit 4.2 to FedEx’s Current Report on Form 8-K dated and filed January 16, 2019, and incorporated herein by reference.)
4.4	Supplemental Indenture No. 8, dated as of January 18, 2019, between FedEx, the Guarantors named therein, Wells Fargo Bank, National Association, as trustee, and Elavon Financial Services DAC, UK Branch, as paying agent. (Filed as Exhibit 4.2 to FedEx’s Current Report on Form 8-K dated and filed January 18, 2019, and incorporated herein by reference.)
4.5	Form of 0.700% Note due 2022. (Included in Exhibit 4.2 to FedEx’s Current Report on Form 8-K dated and filed January 18, 2019, and incorporated herein by reference.)
10.1	Amendment dated December 11, 2018 (but effective as of October 29, 2018), amending the Transportation Agreement dated April 23, 2013 between the United States Postal Service and FedEx Express (the “USPS Transportation Agreement”).  Confidential treatment has been requested for confidential commercial and financial information, pursuant to Rule 24b-2 under the Exchange Act.
10.2	Amendment dated December 20, 2018 (but effective as of September 3, 2018), amending the USPS Transportation Agreement.  Confidential treatment has been requested for confidential commercial and financial information, pursuant to Rule 24b-2 under the Exchange Act.
10.3	Amendment dated December 20, 2018 (but effective as of November 26, 2018), amending the USPS Transportation Agreement.  Confidential treatment has been requested for confidential commercial and financial information, pursuant to Rule 24b-2 under the Exchange Act.
10.4	Amendment dated January 3, 2019 (but effective as of October 1, 2018), amending the USPS Transportation Agreement.  Confidential treatment has been requested for confidential commercial and financial information, pursuant to Rule 24b-2 under the Exchange Act.
10.5	Amendment dated January 15, 2019 (but effective as of October 29, 2018), amending the USPS Transportation Agreement.  Confidential treatment has been requested for confidential commercial and financial information, pursuant to Rule 24b-2 under the Exchange Act.
10.6	Amendment dated January 15, 2019 (but effective as of October 29, 2018), amending the USPS Transportation Agreement.  Confidential treatment has been requested for confidential commercial and financial information, pursuant to Rule 24b-2 under the Exchange Act.
10.7	Amendment dated January 29, 2019 (but effective as of December 31, 2018), amending the USPS Transportation Agreement.  Confidential treatment has been requested for confidential commercial and financial information, pursuant to Rule 24b-2 under the Exchange Act.
10.8	Amendment dated February 7, 2019 (but effective as of November 26, 2018), amending the USPS Transportation Agreement.  Confidential treatment has been requested for confidential commercial and financial information, pursuant to Rule 24b-2 under the Exchange Act.
10.9	Eleventh Amendment dated January 22, 2019 (but effective as of January 1, 2019) to the Composite Lease Agreement dated May 21, 2007 (but effective as of January 1, 2007) between the Memphis-Shelby County Airport Authority and FedEx Express.
10.10	Separation and Release Agreement, dated December 3, 2018, between FedEx Express and David L. Cunningham, Jr. (Filed as Exhibit 99.1 to FedEx’s Current Report on Form 8-K dated December 3, 2018 and filed December 7, 2018, and incorporated herein by reference.)

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Exhibit Number	Description of Exhibit
10.11	Separation and Release Agreement, dated February 13, 2019, between FedEx and David J. Bronczek. (Filed as Exhibit 99.1 to FedEx’s Current Report on Form 8-K dated February 13, 2019 and filed February 14, 2019, and incorporated herein by reference.)
15.1	Letter re: Unaudited Interim Financial Statements.
31.1	Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.1	Interactive Data Files.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	FEDEX CORPORATION
Date: March 19, 2019	/s/ JOHN L. MERINO
	JOHN L. MERINO
	CORPORATE VICE PRESIDENT AND
	PRINCIPAL ACCOUNTING OFFICER

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EX-10.1

Exhibit 10.1

AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT	1. CONTRACT ID CODE	PAGE	OF
		1	3

2. AMENDMENT/MODIFICATION NO. 141	3. EFFECTIVE DATE   10/29/2018	4. REQUISITION/PURCHASE REQ. NO.	5. PROJECT NO. (If applicable)
6. ISSUED BY                                                CODE	5ACAAQ	7. ADMINISTERED BY (IF OTHER THAN ITEM 6)	CODE	5ACAAQ
DALE D. PARSAN Cargo Air Acquisitions Air Transportation CMC United States Postal Service 475 L’Enfant Plaza SW, Room 1P650 Washington DC 20260-0650 (202) 268-2223		Cargo Air Acquisitions Air Transportation CMC United States Postal Service 475 L’Enfant Plaza SW, Room 1P650 Washington DC 20260-0650

8. NAME AND ADDRESS OF CONTRACTOR (No., Street, County,  State, and Zip Code)		(x)	9A. AMENDMENT OF SOLICITATION NO.
FEDERAL EXPRESS CORPORATION
3610 HACKS CROSS ROAD MEMPHIS TN 38125-8800			9B. DATED (SEE ITEM 11)
		x	10A. MODIFICATION OF CONTRACT/ORDER NO. ACN-13-FX
			10B. DATED (SEE ITEM 13)
SUPPLIER CODE:      000389122	FACILITY CODE		04/23/2013
11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS

☐     ☐  is extended,        ☐  is not  extended.

Offers must acknowledge receipt of this amendment prior to the hour and date specified in the solicitation or as amended, by one of the following methods: (a) By completing items 8 and 15, and returning              copies of the amendment; (b) By acknowledging receipt of this amendment on each copy of the offer submitted; or (c) By separate letter or telegram which includes a reference to the solicitation and amendment number. FAILURE OF YOUR ACKNOWLEDGEMENT TO BE RECEIVED AT THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue of this amendment you desire to change an offer already submitted, such change may be made by telegram or letter, provided each telegram or letter makes reference to the solicitation and this amendment, and is received prior to the opening hour and date specified.

12. ACCOUNTING AND APPROPRIATION DATA (If required.) See Schedule Net Increase:      [*]

13. THIS ITEM APPLIES ONLY TO MODIFICATIONS OF CONTRACTS/ORDERS. IT MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14.

(x)	A. THIS CHANGE BY CLAUSE IS ISSUED PURSUANT TO: (Specify clause) THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN ITEM 10A.
☐
☐	B. THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE ADMINISTRATIVE CHANGES (such as changes in paying office, appropriation date, etc.) SET FORTH IN ITEM 14.
☐	C. THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO THE AUTHORITY OF: THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN ITEM 10A.
☒	D. OTHER (such as no cost change/cancellation, termination, etc.) (Specify type of modification and authority): THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN ITEM 10A. Mutual Agreement of the Contracting Parties

E. IMPORTANT: Contractor      ☐    is not,      ☒    is required to sign this document and return         1     copies to the issuing office.

14. DESCRIPTION OF AMENDMENT/MODIFICATION (Organized by UCF section headings, including solicitation/contract subject matter where feasible.)

The purpose of this modification is to execute the following change to the ACN-13-FX contract:

In accordance with contract ACN-13-FX and the “Fuel Adjustment” section, the following Line Haul Rate (fuel) for the Day Network as set out in Attachment 10 is modified for performance during the period of October 29, 2018 to November 25, 2018 (Operating Period 62) as follows:

TIERS: Base – Tier 5

From:

Continued…

Except as provided herein, all terms and conditions of the document referenced in Item 9A or 10A, as heretofore changed, remains unchanged and in full force and effect.

15A. NAME AND TITLE OF SIGNER (Type or print) Ron D. Stevens, Vice President		16A. NAME AND TITLE OF CONTRACTING OFFICER (Type or print)     Brian Mckain
15B. CONTRACTOR/OFFEROR /s/ RON D. STEVENS (Signature of person authorized to sign)	15C. DATE SIGNED   12-4-18	16B. CONTRACT AUTHORITY /s/ BRIAN MCKAIN (Signature of Contracting Officer)	16C. DATE SIGNED 12/11/18

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

CONTINUATION SHEET REQUISITION NO. Page   2     Of       3

CONTRACT/ORDER NO.   ACN-13-FX/141 AWARD/ EFFECTIVE DATE     10/29/2018 MASTER/AGENCY CONTRACT NO     SOLICITATION NO.                 SOLICITATION            ISSUE DATE

ITEM NO	SCHEDULE OF SUPPLIES/SERVICES	QUANTITY	UNIT	UNIT PRICE	AMOUNT
	[*] per cubic foot To: [*] per cubic foot This is an increase of [*]. TIERS: 6 - 8 TIER 6: From: [*] per cubic foot To: [*] per cubic foot This is an increase of [*]. TIER 7: From: [*] per cubic foot To: [*] per cubic foot This is an increase of [*]. TIER 8: From: [*] per cubic foot To: [*] per cubic foot This is an increase of [*]. [*] — Sub Rept Req’d: Y Carrier Code: FX Route Termini S: Various Route Termini End: Various Payment Terms: SEE CONTRACT Delivery: 11/28/2016 Discount Terms: See Schedule Accounting Info: BFN: 670167 FOB: Destination Period of Performance: 09/30/2013 to 09/29/2024 Change Item 1 to read as follows:
1	Day Network Account Number: 53503 Continued…				[*]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

CONTINUATION SHEET REQUISITION NO. PAGE   3     OF       3

CONTRACT/ORDER NO.   ACN-13-FX/141 AWARD/ EFFECTIVE DATE     10/29/2018 MASTER/AGENCY CONTRACT NO.     SOLICITATION NO.                 SOLICITATION            ISSUE DATE

ITEM NO	SCHEDULE OF SUPPLIES/SERVICES	QUANTITY	UNIT	UNIT PRICE	AMOUNT
	This is for estimation purposes only and is not a guarantee of contract value.

EX-10.2

Exhibit 10.2

AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT	1. CONTRACT ID CODE	PAGE	OF
		1	2

2. AMENDMENT/MODIFICATION NO. 142	3. EFFECTIVE DATE   09/03/2018	4. REQUISITION/PURCHASE REQ. NO.	5. PROJECT NO. (If applicable)
6. ISSUED BY                                                CODE	5ACAAQ	7. ADMINISTERED BY (IF OTHER THAN ITEM 6)	CODE	5ACAAQ
DALE D. PARSAN Cargo Air Acquisitions Air Transportation CMC United States Postal Service 475 L’Enfant Plaza SW, Room 1P650 Washington DC 20260-0650 (202) 268-2223		Cargo Air Acquisitions Air Transportation CMC United States Postal Service 475 L’Enfant Plaza SW, Room 1P650 Washington DC 20260-0650

8. NAME AND ADDRESS OF CONTRACTOR (No., Street, County,  State, and Zip Code)		(x)	9A. AMENDMENT OF SOLICITATION NO.
FEDERAL EXPRESS CORPORATION
3610 HACKS CROSS ROAD MEMPHIS TN 38125-8800			9B. DATED (SEE ITEM 11)
		x	10A. MODIFICATION OF CONTRACT/ORDER NO. ACN-13-FX
			10B. DATED (SEE ITEM 13)
SUPPLIER CODE:      000389122	FACILITY CODE		04/23/2013
11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS

☐     ☐  is extended,        ☐  is not  extended.

Offers must acknowledge receipt of this amendment prior to the hour and date specified in the solicitation or as amended, by one of the following methods: (a) By completing items 8 and 15, and returning              copies of the amendment; (b) By acknowledging receipt of this amendment on each copy of the offer submitted; or (c) By separate letter or telegram which includes a reference to the solicitation and amendment number. FAILURE OF YOUR ACKNOWLEDGEMENT TO BE RECEIVED AT THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue of this amendment you desire to change an offer already submitted, such change may be made by telegram or letter, provided each telegram or letter makes reference to the solicitation and this amendment, and is received prior to the opening hour and date specified.

12. ACCOUNTING AND APPROPRIATION DATA (If required.) See Schedule Net Increase:      [*]

13. THIS ITEM APPLIES ONLY TO MODIFICATIONS OF CONTRACTS/ORDERS. IT MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14.

(x)	A. THIS CHANGE BY CLAUSE IS ISSUED PURSUANT TO: (Specify clause) THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN ITEM 10A.
☐
☐	B. THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE ADMINISTRATIVE CHANGES (such as changes in paying office, appropriation date, etc.) SET FORTH IN ITEM 14.
☐	C. THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO THE AUTHORITY OF: THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN ITEM 10A.
☒	D. OTHER (such as no cost change/cancellation, termination, etc.) (Specify type of modification and authority): THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN ITEM 10A. Mutual Agreement of the Contracting Parties

E. IMPORTANT: Contractor      ☐    is not,      ☒    is required to sign this document and return         1     copies to the issuing office.

14. DESCRIPTION OF AMENDMENT/MODIFICATION (Organized by UCF section headings, including solicitation/contract subject matter where feasible.)

The purpose of this modification is to incorporate Operating Period 60 (September) Unplanned

Charters into the ACN-13-FX contract, with the following conditions:

A) Once the Charters are scheduled they cannot be canceled.

B) All Service and Scan penalties (reductions in payment), related to the Day Network only, will be eliminated. This relief does not apply to the Night Network.

C) Volume will be inducted into the network at the Memphis Hub and will incur appropriate tier pricing and will be processed normally.

Continued…

Except as provided herein, all terms and conditions of the document referenced in Item 9A or 10A, as heretofore changed, remains unchanged and in full force and effect.

15A. NAME AND TITLE OF SIGNER (Type or print)     Ron D. Stevens, Vice President		16A. NAME AND TITLE OF CONTRACTING OFFICER (Type or print)     Brian Mckain
15B. CONTRACTOR/OFFEROR /s/  RON D. STEVENS (Signature of person authorized to sign)	15C. DATE SIGNED   12-18-18	16B. CONTRACT AUTHORITY /s/ BRIAN MCKAIN (Signature of Contracting Officer)	16C. DATE SIGNED 12/20/18

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

CONTINUATION SHEET REQUISITION NO. PAGE   2     OF       2

CONTRACT/ORDER NO.   ACN-13-FX/142 AWARD/ EFFECTIVE DATE     09/03/2018 MASTER/AGENCY CONTRACT NO.     SOLICITATION NO.                 SOLICITATION            ISSUE DATE

ITEM NO	SCHEDULE OF SUPPLIES/SERVICES	QUANTITY	UNIT	UNIT PRICE	AMOUNT
	FedEx will notify the Postal Service if the tender requirement is different than what is currently in the contract. Delivery does not change. Payments for said charters will be paid as part of the Operating Period reconciliation. — Sub Rept Req’d: Y Carrier Code: FX Route Termini S: Various Route Termini End: Various Payment Terms: SEE CONTRACT Delivery: 03/23/2018 Discount Terms: See Schedule Accounting Info: BFN: 670167 FOB: Destination Period of Performance: 09/30/2013 to 09/29/2024 Change Item 9 to read as follows:
9	Ad Hoc Charter Option Account Number: 53703 This value is for estimation purposes only.				[*]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

September 18 Operating Period

Charter Request and Accounting

Week 1

Origin

Operating Day

Cubic Feet Requested

Mon (09/03) Labor Day

Tue (09/04)

Wed (09/05)

Thu (09/06)

Fri (09/07)

Sat (09/08)

Sun (09/09)

Weekly Total

A/C Type Equivalent

Rate

Planned  Charters

Unplanned  Charters

Total Ad Hoc Charters

SJU

Wed, Fri, Sat

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

MD-11

[*]

[*]

[*]

LAX - S

Wed

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

[*]

OAK

Wed

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

SLC - S

Wed

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

LAS - S

Wed

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

BDL - S

Wed

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

DEN - S

Wed

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

PHL - S

Wed

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

[*]

PHX - S

Wed

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

[*]

EWR

Wed

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

PHL

Thu

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

LAS - S

Thu

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

LAX

Thu

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

[*]

EWR

Thu

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

OAK

Thu

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

[*]

SLC - S

Fri

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

[*]

LAS - S

Fri

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

LAX

Sat

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

[*]

OAK

Sat

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

[*]

Week 1 Total

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

Week 2

Origin

Operating Day

Cubic Feet  Requested

Mon (09/10)

Tue (09/11)

Wed (09/12)

Thu (09/13)

Fri (09/14)

Sat (09/15)

Sun (09/16)

Weekly Total

A/C Type Equivalent

Rate

Planned  Charters

Unplanned  Charters

Total Ad Hoc Charters

DEN - S

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

LAS - S

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

SJU

Tue, Thu, Sat

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

MD-11

[*]

[*]

[*]

OAK - ONT - MEM

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

OAK

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

MD-10

[*]

[*]

[*]

SLC - S

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

[*]

PHL - S

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

LAS - S

Wed

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

LAS - S

Thu

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

LAX

Thu

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

[*]

LAS - S

Fri

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

FLL - MIA - EWR - MIA

Fri

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

MD-10

[*]

[*]

[*]

MIA - TPA - EWR - TPA

Sat

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

MD-10

[*]

[*]

[*]

TPA - EWR - TPA - FLL

Sun

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

MD-10

[*]

[*]

[*]

Week 2 Total

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Week 3

Origin

Operating Day

Cubic Feet  Requested

Mon (09/17)

Tue (09/18)

Wed (09/19)

Thu (09/20)

Fri (09/21)

Sat (09/22)

Sun (09/23)

Weekly Total

A/C Type  Equivalent

Rate

Planned Charters

Unplanned  Charters

Total Ad Hoc Charters

PHL - S

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

LAX - S

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

OAK

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

[*]

DEN - S

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

LAS - S

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

SLC - S

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

[*]

LAS - S

Wed

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

LAX

Wed

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

LAS - S

Thu

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

LAS - S

Fri

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

LAS - S

Sat

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

Week 3 Total

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

Week 4

Origin

Operating Day

Cubic Feet Requested

Mon (09/24)

Tue (09/25)

Wed (09/26)

Thu (09/27)

Fri (09/28)

Sat (09/29)

Sun (09/30)

Weekly Total

A/C Type Equivalent

Rate

Planned Charters

Unplanned Charters

Total Ad Hoc Charters

PHL

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

LAX

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

OAK

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

[*]

DEN

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

LAS - S

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

SLC - S

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

LAX - S

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

[*]

LAS - S

Wed

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

LAS - S

Thu

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

LAS - S

Fri

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

OAK

Sat

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

SMF (OAK)

Sat

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

MD-11

[*]

[*]

[*]

MEM - SJU

Sat

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

MD-10

[*]

[*]

[*]

LAX

Sun

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

[*]

OAK

Sun

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

[*]

SMF (OAK)

Sun

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

MD-11

[*]

[*]

[*]

Week 4 Total

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

GRAND TOTAL

September Total

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

EX-10.3

Exhibit 10.3

AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT	1. CONTRACT ID CODE	PAGE	OF
		1	3

2. AMENDMENT/MODIFICATION NO. 143		3. EFFECTIVE DATE   11/26/2018	4. REQUISITION/PURCHASE REQ. NO.	5. PROJECT NO. (If applicable)
6. ISSUED BY	CODE	5ACAAQ	7. ADMINISTERED BY (IF OTHER THAN ITEM 6)	CODE	5ACAAQ
DALE D. PARSAN Cargo Air Acquisitions Air Transportation CMC United States Postal Service 475 L’Enfant Plaza SW, Room 1P650 Washington DC 20260-0650 (202) 268-2223			Cargo Air Acquisitions Air Transportation CMC United States Postal Service 475 L’Enfant Plaza SW, Room 1P650 Washington DC 20260-0650

8. NAME AND ADDRESS OF CONTRACTOR (No., Street, County,  State, and Zip Code)		(x)	9A. AMENDMENT OF SOLICITATION NO.
FEDERAL EXPRESS CORPORATION
3610 HACKS CROSS ROAD MEMPHIS TN 38125-8800			9B. DATED (SEE ITEM 11)
		x	10A. MODIFICATION OF CONTRACT/ORDER NO. ACN-13-FX
			10B. DATED (SEE ITEM 13)
SUPPLIER CODE:      000389122	FACILITY CODE		04/23/2013
11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS

☐     ☐  is extended,        ☐  is not  extended.

Offers must acknowledge receipt of this amendment prior to the hour and date specified in the solicitation or as amended, by one of the following methods: (a) By completing items 8 and 15, and returning                  copies of the amendment; (b) By acknowledging receipt of this amendment on each copy of the offer submitted; or (c) By separate letter or telegram which includes a reference to the solicitation and amendment number. FAILURE OF YOUR ACKNOWLEDGEMENT TO BE RECEIVED AT THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue of this amendment you desire to change an offer already submitted, such change may be made by telegram or letter, provided each telegram or letter makes reference to the solicitation and this amendment, and is received prior to the opening hour and date specified.

12. ACCOUNTING AND APPROPRIATION DATA (If required.) See Schedule Net Increase:      [*]

13. THIS ITEM APPLIES ONLY TO MODIFICATIONS OF CONTRACTS/ORDERS. IT MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14.

(x)	A. THIS CHANGE BY CLAUSE IS ISSUED PURSUANT TO: (Specify clause) THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN ITEM 10A.
☐
☐	B. THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE ADMINISTRATIVE CHANGES (such as changes in paying office, appropriation date, etc.) SET FORTH IN ITEM 14.
☐	C. THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO THE AUTHORITY OF: THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN ITEM 10A.
☒	D. OTHER (such as no cost change/cancellation, termination, etc.) (Specify type of modification and authority): THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN ITEM 10A. Mutual Agreement of the Contracting Parties

E. IMPORTANT: Contractor      ☐    is not,      ☒    is required to sign this document and return         1     copies to the issuing office.

14. DESCRIPTION OF AMENDMENT/MODIFICATION (Organized by UCF section headings, including solicitation/contract subject matter where feasible.)

The purpose of this modification is to execute the following change to the ACN-13-FX contract:

In accordance with contract ACN-13-FX and the “Fuel Adjustment” section, the following Line Haul Rate (fuel) for the Day Network as set out in Attachment 10 is modified for performance during the period of November 26, 2018 to December 30, 2018 (Operating Period 63) as follows:

TIERS: Base – Tier 5

From:

[*] per cubic foot

Continued…

Except as provided herein, all terms and conditions of the document referenced in Item 9A or 10A, as heretofore changed, remains unchanged and in full force and effect.

15A. NAME AND TITLE OF SIGNER (Type or print)     Ron D. Stevens, Vice President		16A. NAME AND TITLE OF CONTRACTING OFFICER (Type or print)     Brian Mckain
15B. CONTRACTOR/OFFEROR /s/ RON D. STEVENS (Signature of person authorized to sign)	15C. DATE SIGNED    12-18-18	16B. CONTRACT AUTHORITY /s/ BRIAN MCKAIN (Signature of Contracting Officer)	16C. DATE SIGNED 12/20/18

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

CONTINUATION SHEET REQUISITION NO. Page   2     Of       3

CONTRACT/ORDER NO.   ACN-13-FX/143 AWARD/ EFFECTIVE DATE     11/26/2018 MASTER/AGENCY CONTRACT NO     SOLICITATION NO.                 SOLICITATION            ISSUE DATE

ITEM NO	SCHEDULE OF SUPPLIES/SERVICES	QUANTITY	UNIT	UNIT PRICE	AMOUNT
	To: [*] per cubic foot This is an increase of [*]. TIERS: 6 - 8 TIER 6: From: [*] per cubic foot To: [*] per cubic foot This is an increase of [*]. TIER 7: From: [*] per cubic foot To: [*] per cubic foot This is an increase of [*]. TIER 8: From: [*] per cubic foot To: [*] per cubic foot This is an increase of [*]. [*] — Sub Rept Req’d: Y Carrier Code: FX Route Termini S: Various Route Termini End: Various Payment Terms: SEE CONTRACT Delivery: 11/28/2016 Discount Terms:                                  See Schedule Accounting Info: BFN: 670167 FOB: Destination Period of Performance: 09/30/2013 to 09/29/2024 Change Item 1 to read as follows:
1	Day Network Account Number: 53503				[*]
	Continued…

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

CONTINUATION SHEET REQUISITION NO. Page   3     Of       3

CONTRACT/ORDER NO.   ACN-13-FX/143 AWARD/ EFFECTIVE DATE     11/26/2018 MASTER/AGENCY CONTRACT NO.     SOLICITATION NO.                 SOLICITATION            ISSUE DATE

ITEM NO	SCHEDULE OF SUPPLIES/SERVICES	QUANTITY	UNIT	UNIT PRICE	AMOUNT
	This is for estimation purposes only and is not a guarantee of contract value.

EX-10.4

Exhibit 10.4

AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT	1. CONTRACT ID CODE	PAGE	OF
		1	2

2. AMENDMENT/MODIFICATION NO. 144	3. EFFECTIVE DATE   10/01/2018	4. REQUISITION/PURCHASE REQ. NO.	5. PROJECT NO. (If applicable)
6. ISSUED BY                                                CODE	5ACAAQ	7. ADMINISTERED BY (IF OTHER THAN ITEM 6)	CODE	5ACAAQ
DALE D. PARSAN Cargo Air Acquisitions Air Transportation CMC United States Postal Service 475 L’Enfant Plaza SW, Room 1P650 Washington DC 20260-0650 (202) 268-2223		Cargo Air Acquisitions Air Transportation CMC United States Postal Service 475 L’Enfant Plaza SW, Room 1P650 Washington DC 20260-0650

8. NAME AND ADDRESS OF CONTRACTOR (No., Street, County,  State, and Zip Code)		(x)	9A. AMENDMENT OF SOLICITATION NO.
FEDERAL EXPRESS CORPORATION
3610 HACKS CROSS ROAD MEMPHIS TN 38125-8800			9B. DATED (SEE ITEM 11)
		x	10A. MODIFICATION OF CONTRACT/ORDER NO. ACN-13-FX
			10B. DATED (SEE ITEM 13)
SUPPLIER CODE:      000389122	FACILITY CODE		04/23/2013
11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS

☐     ☐  is extended,        ☐  is not  extended.

Offers must acknowledge receipt of this amendment prior to the hour and date specified in the solicitation or as amended, by one of the following methods: (a) By completing items 8 and 15, and returning              copies of the amendment; (b) By acknowledging receipt of this amendment on each copy of the offer submitted; or (c) By separate letter or telegram which includes a reference to the solicitation and amendment number. FAILURE OF YOUR ACKNOWLEDGEMENT TO BE RECEIVED AT THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue of this amendment you desire to change an offer already submitted, such change may be made by telegram or letter, provided each telegram or letter makes reference to the solicitation and this amendment, and is received prior to the opening hour and date specified.

12. ACCOUNTING AND APPROPRIATION DATA (If required.) See Schedule Net Increase:      [*]

13. THIS ITEM APPLIES ONLY TO MODIFICATIONS OF CONTRACTS/ORDERS. IT MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14.

(x)	A. THIS CHANGE BY CLAUSE IS ISSUED PURSUANT TO: (Specify clause) THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN ITEM 10A.
☐
☐	B. THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE ADMINISTRATIVE CHANGES (such as changes in paying office, appropriation date, etc.) SET FORTH IN ITEM 14.
☐	C. THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO THE AUTHORITY OF: THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN ITEM 10A.
☒	D. OTHER (such as no cost change/cancellation, termination, etc.) (Specify type of modification and authority): THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN ITEM 10A. Mutual Agreement of the Contracting Parties

E. IMPORTANT: Contractor      ☐    is not,      ☒    is required to sign this document and return         1     copies to the issuing office.

14. DESCRIPTION OF AMENDMENT/MODIFICATION (Organized by UCF section headings, including solicitation/contract subject matter where feasible.)

The purpose of this modification is to incorporate Operating Period 61 (October) Unplanned

Charters into the ACN-13-FX contract, with the following conditions:

A) Once the Charters are scheduled they cannot be canceled.

B) All Service and Scan penalties (reductions in payment), related to the Day Network only, will be eliminated. This relief does not apply to the Night Network.

C) Volume will be inducted into the network at the Memphis Hub and will incur appropriate tier pricing and will be processed normally.

Continued…

Except as provided herein, all terms and conditions of the document referenced in Item  9A or 10A, as heretofore changed, remains unchanged and in full force and effect.

15A. NAME AND TITLE OF SIGNER (Type or print)     Ron D. Stevens, Vice President		16A. NAME AND TITLE OF CONTRACTING OFFICER (Type or print)     Brian Mckain
15B. CONTRACTOR/OFFEROR /s/ RON D. STEVENS (Signature of person authorized to sign)	15C. DATE SIGNED   12-19-18	16B. CONTRACT AUTHORITY /s/ BRIAN MCKAIN (Signature of Contracting Officer)	16C. DATE SIGNED 1/3/19

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

CONTINUATION SHEET REQUISITION NO. PAGE   2     OF       2

CONTRACT/ORDER NO.   ACN-13-FX/144 AWARD/ EFFECTIVE DATE     10/01/2018 MASTER/AGENCY CONTRACT NO.     SOLICITATION NO.                 SOLICITATION            ISSUE DATE

ITEM NO	SCHEDULE OF SUPPLIES/SERVICES	QUANTITY	UNIT	UNIT PRICE	AMOUNT
	FedEx will notify the Postal Service if the tender requirement is different than what is currently in the contract. Delivery does not change. Payments for said charters will be paid as part of the Operating Period reconciliation. — Sub Rept Req’d: Y Carrier Code: FX Route Termini S: Various Route Termini End: Various Payment Terms: SEE CONTRACT Delivery: 03/23/2018 Discount Terms: See Schedule Accounting Info: BFN: 670167 FOB: Destination Period of Performance: 09/30/2013 to 09/29/2024 Change Item 9 to read as follows:
9	Ad Hoc Charter Option Account Number: 53703 This value is for estimation purposes only.				[*]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

October 18 Operating Period

Charter Request and Accounting

Week 1

Origin

Operating Day

Cubic Feet  Requested

Mon (10/01)

Tue (10/02)

Wed (10/03)

Thu (10/04)

Fri (10/05)

Sat (10/06)

Sun (10/07)

Weekly  Total

A/C Type  Equivalent

Rate

Ad Hoc  Charters

EWR - S

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

OAK

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

SLC

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

IAD

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

SMF (OAK)

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

MD-11

[*]

[*]

LAX - S

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

DEN

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

LAS

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

SLC

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

SMF

Wed

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

OAK

Thu

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

LAX

Thu

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

SMF (OAK) - S

Thu

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

MD-11

[*]

[*]

IAD - S

Thu

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

SLC - S

Thu

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

SMF (OAK)

Fri

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

767

[*]

[*]

SMF (OAK) - S

Fri

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

SMF (OAK) - S

Sat

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

767

[*]

[*]

MEM - SJU

Sat

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

MD-10

[*]

[*]

OAK

Sun

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

Week 1 Total

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Week 2

Origin

Operating   Day

Cubic Feet   Requested

Mon (10/08)

Tue (10/09)

Wed (10/10)

Thu (10/11)

Fri (10/12)

Sat (10/13)

Sun (10/14)

Weekly   Total

A/C Type   Equivalent

Rate

Ad Hoc   Charters

EWR - S

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

PHX - S

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

MEM - SJU

Wed, Fri

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

MD-11

[*]

[*]

EWR - S

Wed

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

PHX - S

Wed

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

IAD

Wed

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

PHL

Wed

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-310

[*]

[*]

PIT - S

Wed

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

LAX - S

Wed

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

MD-10

[*]

[*]

OAK

Wed

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

DEN - S

Wed

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

SLC - S

Wed

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

LAS - S

Wed

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

MEM - HNL - MEM

Wed

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

MD-11

[*]

[*]

EWR

Thu

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

LAX

Thu

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

OAK

Thu

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

PHX - S

Thu

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

IAD

Thu

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

PHL

Thu

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-310

[*]

[*]

BDL - S

Thu

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

PHL

Thu

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

OAK

Thu

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

SLC - S

Thu

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

MEM - SJU

Sat

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

MD-11

[*]

[*]

SLC - S

Sun

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

Week 2 Total

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Week 3

Origin

Operating Day

Cubic Feet Requested

Mon (10/15)

Tue (10/16)

Wed (10/17)

Thu (10/18)

Fri (10/19)

Sat (10/20)

Sun (10/21)

Weekly Total

A/C Type Equivalent

Rate

Ad Hoc Charters

OAK

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

DEN - S

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

LAS - S

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

SLC - S

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

MEM - HNL - MEM

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

MEM - HNL - MEM

Wed

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

SLC - S

Thu

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

MEM - HNL - MEM

Fri

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

MD-10

[*]

[*]

MEM - SJU

Sat

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

MD-10

[*]

[*]

SLC - S

Sun

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

Week 3 Total

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

Week 4

Origin

Operating Day

Cubic Feet Requested

Mon (10/22)

Tue (10/23)

Wed (10/24)

Thu (10/25)

Fri (10/26)

Sat (10/27)

Sun (10/28)

Weekly Total

A/C Type Equivalent

Rate

Ad Hoc Charters

LAS - S

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

DEN - S

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

OAK

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

SLC - S

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

SLC - S

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

MEM - HNL - MEM

Wed

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

MD-10

[*]

[*]

LAS

Thu

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

LAS

Fri

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

SLC - S

Fri

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

MEM - SJU

Sat

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

MD-11

[*]

[*]

Week 3 Total

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

October Total

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

EX-10.5

Exhibit 10.5

AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT	1. CONTRACT ID CODE	PAGE	OF
		1	2

2. AMENDMENT/MODIFICATION NO. 145	3. EFFECTIVE DATE   10/29/2018	4. REQUISITION/PURCHASE REQ. NO.	5. PROJECT NO. (If applicable)
6. ISSUED BY                                                CODE	5ACAAQ	7. ADMINISTERED BY (IF OTHER THAN ITEM 6)	CODE	5ACAAQ
DALE D. PARSAN Cargo Air Acquisitions Air Transportation CMC United States Postal Service 475 L’Enfant Plaza SW, Room 1P650 Washington DC 20260-0650 (202) 268-2223		Cargo Air Acquisitions Air Transportation CMC United States Postal Service 475 L’Enfant Plaza SW, Room 1P650 Washington DC 20260-0650

8. NAME AND ADDRESS OF CONTRACTOR (No., Street, County,  State, and Zip Code)		(x)	9A. AMENDMENT OF SOLICITATION NO.
FEDERAL EXPRESS CORPORATION
3610 HACKS CROSS ROAD MEMPHIS TN 38125-8800			9B. DATED (SEE ITEM 11)
		x	10A. MODIFICATION OF CONTRACT/ORDER NO. ACN-13-FX
			10B. DATED (SEE ITEM 13)
SUPPLIER CODE:      000389122	FACILITY CODE		04/23/2013
11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS

☐     ☐  is extended,        ☐  is not  extended.

Offers must acknowledge receipt of this amendment prior to the hour and date specified in the solicitation or as amended, by one of the following methods: (a) By completing items 8 and 15, and returning            copies of the amendment; (b) By acknowledging receipt of this amendment on each copy of the offer submitted; or (c) By separate letter or telegram which includes a reference to the solicitation and amendment number. FAILURE OF YOUR ACKNOWLEDGEMENT TO BE RECEIVED AT THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue of this amendment you desire to change an offer already submitted, such change may be made by telegram or letter, provided each telegram or letter makes reference to the solicitation and this amendment, and is received prior to the opening hour and date specified.

12. ACCOUNTING AND APPROPRIATION DATA (If required.) See Schedule Net Increase:      [*]

13. THIS ITEM APPLIES ONLY TO MODIFICATIONS OF CONTRACTS/ORDERS. IT MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14.

(x)	A. THIS CHANGE BY CLAUSE IS ISSUED PURSUANT TO: (Specify clause) THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN ITEM 10A.
☐
☐	B. THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE ADMINISTRATIVE CHANGES (such as changes in paying office, appropriation date, etc.) SET FORTH IN ITEM 14.
☐	C. THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO THE AUTHORITY OF: THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN ITEM 10A.
☒	D. OTHER (such as no cost change/cancellation, termination, etc.) (Specify type of modification and authority): THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN ITEM 10A. Mutual Agreement of the Contracting Parties

E. IMPORTANT: Contractor      ☐    is not,      ☒    is required to sign this document and return         1     copies to the issuing office.

14. DESCRIPTION OF AMENDMENT/MODIFICATION (Organized by UCF section headings, including solicitation/contract subject matter where feasible.)

The purpose of this modification is to incorporate Operating Period 62 (November) Unplanned

Charters into the ACN-13-FX contract, with the following conditions:

A) Once the Charters are scheduled they cannot be canceled.

B) All Service and Scan penalties (reductions in payment), related to the Day Network only, will be eliminated. This relief does not apply to the Night Network.

C) Volume will be inducted into the network at the Memphis Hub and will incur appropriate tier pricing and will be processed normally.

Continued…

Except as provided herein, all terms and conditions of the document referenced in Item 9A or 10A, as heretofore changed, remains unchanged and in full force and effect.

15A. NAME AND TITLE OF SIGNER (Type or print) Ron D. Stevens, Vice President		16A. NAME AND TITLE OF CONTRACTING OFFICER (Type or print)     Brian Mckain
15B. CONTRACTOR/OFFEROR /s/ RON D. STEVENS (Signature of person authorized to sign)	15C. DATE SIGNED   1-8-19	16B. CONTRACT AUTHORITY /s/ BRIAN MCKAIN (Signature of Contracting Officer)	16C. DATE SIGNED 1/15/19

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

CONTINUATION SHEET REQUISITION NO. PAGE   2     OF       2

CONTRACT/ORDER NO.   ACN-13-FX/145 AWARD/ EFFECTIVE DATE     10/29/2018 MASTER/AGENCY CONTRACT NO.     SOLICITATION NO. SOLICITATION         ISSUE DATE

ITEM NO	SCHEDULE OF SUPPLIES/SERVICES	QUANTITY	UNIT	UNIT PRICE	AMOUNT
	FedEx will notify the Postal Service if the tender requirement is different than what is currently in the contract. Delivery does not change. Payments for said charters will be paid as part of the Operating Period reconciliation. — Sub Rept Req’d: Y Carrier Code: FX Route Termini S: Various Route Termini End: Various Payment Terms: SEE CONTRACT Delivery: 03/23/2018 Discount Terms: See Schedule Accounting Info: BFN: 670167 FOB: Destination Period of Performance: 09/30/2013 to 09/29/2024 Change Item 9 to read as follows:
9	Ad Hoc Charter Option Account Number: 53703 This value is for estimation purposes only.				[*]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

November 18 Operating Period

Charter Request and Accounting

Week 1

Origin

Operating Day

Cubic Feet  Requested

Mon (10/29)

Tue (10/30)

Wed (10/31)

Thu (11/01)

Fri (11/02)

Sat (11/03)

Sun (11/04)

Weekly Total

A/C Type     Equivalent

Rate

Unscheduled Charters

Total Ad Hoc Charters

SLC - S

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

PHL - S

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

ROC - S

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

OAK

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

[*]

LAX

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

[*]

LAS - S

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

[*]

SLC - S

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

SEA

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

DEN - S

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

MEM - HNL

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

MD-10

[*]

[*]

[*]

SLC - S

Wed

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

LAS - S

Wed

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

MEM - SJU

Wed

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

MD-10

[*]

[*]

[*]

LAS - S

Thu

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

SLC - S

Thu

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

LAS - S

Fri

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

MEM - SJU

Sat

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

MD-10

[*]

[*]

[*]

Week 1 Total

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

Week 2

Origin

Operating Day

Cubic Feet Requested

Mon (11/05)

Tue (11/06)

Wed (11/07)

Thu (11/08)

Fri (11/09)

Sat  (11/10)

Sun (11/11)  Vets’ Day

Weekly Total

A/C Type Equivalent

Rate

Unscheduled  Charters

Total Ad Hoc Charters

LAX

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

ONT

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

SMF

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

SLC - S

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

PHL - S

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

ROC - S

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

OAK

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

[*]

LAX

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

SLC - S

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

DEN - S

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

MEM - HNL

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

MD-11

[*]

[*]

[*]

MEM - SJU

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

MD-10

[*]

[*]

[*]

SLC - S

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

LAS - S

Thu

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

MEM - SJU

Fri

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

MD-10

[*]

[*]

[*]

MEM - HNL

Fri

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

MD-11

[*]

[*]

[*]

MEM - SJU

Sat

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

MD-10

[*]

[*]

[*]

LAX

Sat

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

[*]

SLC - S

Sun

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

Week 2 Total

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Week 3

Origin

Operating Day

Cubic Feet  Requested

Mon (11/12) Vets’ Day Observed

Tue (11/13)

Wed (11/14)

Thu (11/15)

Fri (11/16)

Sat (11/17)

Sun (11/18)

Weekly Total

A/C Type     Equivalent

Rate

Unscheduled Charters

Total Ad Hoc Charters

SLC - S

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

LAX

Wed

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

SLC - S

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

PHL - S

Wed

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

[*]

ROC - S

Wed

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

EWR - S

Wed

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

[*]

LAX

Wed

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

MD-11

[*]

[*]

[*]

OAK

Wed

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

[*]

SLC - S

Wed

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

LAS - S

Wed

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

IAD

Wed

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

DEN - S

Wed

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

SEA - S

Wed

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

PHL

Thu

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

OAK

Thu

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

LAS - S

Thu

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

SLC - S

Thu

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

BDL

Thu

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

[*]

EWR

Thu

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

IAD

Thu

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

PDX

Thu

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

PHX

Thu

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

LAX

Thu

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

OAK

Thu

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

TPA

Fri

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

LAS - S

Fri

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

MEM- HNL

Fri

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

MD-11

[*]

[*]

[*]

MEM - SJU

Sat

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

MD-10

[*]

[*]

[*]

PHX

Sat

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

EWR

Sat

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

[*]

OAK

Sat

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

SLC - S

Sat

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

[*]

PHX

Sun

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

[*]

Week 3 Total

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Week 4

Origin

Operating Day

Cubic Feet Requested

Mon (11/19)

Tue (11/20)

Wed (11/21)

Thu (11/22) T’Giving

Fri (11/23)

Sat (11/24)

Sun (11/25)

Weekly Total

A/C Type     Equivalent

Rate

Unscheduled Charters

Total Ad Hoc Charters

MEM - SJU

Mon

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

MD-11

[*]

[*]

[*]

MEM - HNL

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

MD-11

[*]

[*]

[*]

MEM - SJU

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

MD-11

[*]

[*]

[*]

ONT

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

SMF

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

SLC - S

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

PHL - S

Wed

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

ROC

Wed

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

LAX

Wed

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

MD-11

[*]

[*]

[*]

LAX

Wed

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

[*]

OAK

Wed

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

MD-10

[*]

[*]

[*]

OAK

Wed

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

767

[*]

[*]

[*]

DEN - S

Wed

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

LAS - S

Wed

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

[*]

SEA

Wed

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

SLC - S

Wed

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

[*]

IAD

Fri

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

PHL

Fri

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-310

[*]

[*]

[*]

PIT

Fri

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

EWR

Fri

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

[*]

LAX

Fri

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

767

[*]

[*]

[*]

LAX - S

Fri

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

[*]

OAK

Fri

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

MD-10

[*]

[*]

[*]

MIA

Fri

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

[*]

TPA

Fri

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

[*]

LAS

Fri

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

[*]

SLC

Fri

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

[*]

PDX

Fri

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

MEM - HNL

Fri

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

MD-11

[*]

[*]

[*]

LAX

Sat

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

767

[*]

[*]

[*]

OAK

Sat

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

[*]

PHX - S

Sat

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

767

[*]

[*]

[*]

LAX

Sat

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

LAX

Sat

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

OAK

Sat

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

MIA

Sat

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

SEA

Sat

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

LAX

Sun

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

MD-11

[*]

[*]

[*]

OAK

Sun

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

PHX

Sun

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

SLC - S

Sun

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

[*]

Week 4 Total

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

GRAND TOTAL

November Total

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

EX-10.6

Exhibit 10.6

AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT	1. CONTRACT ID CODE	PAGE	OF
		1	2

2. AMENDMENT/MODIFICATION NO. 146	3. EFFECTIVE DATE   10/29/2018	4. REQUISITION/PURCHASE REQ. NO.	5. PROJECT NO. (If applicable)
6. ISSUED BY                                                CODE	5ACAAQ	7. ADMINISTERED BY (IF OTHER THAN ITEM 6)	CODE	5ACAAQ
DALE D. PARSAN Cargo Air Acquisitions Air Transportation CMC United States Postal Service 475 L’Enfant Plaza SW, Room 1P650 Washington DC 20260-0650 (202) 268-2223		Cargo Air Acquisitions Air Transportation CMC United States Postal Service 475 L’Enfant Plaza SW, Room 1P650 Washington DC 20260-0650

8. NAME AND ADDRESS OF CONTRACTOR (No., Street, County,  State, and Zip Code)		(x)	9A. AMENDMENT OF SOLICITATION NO.
FEDERAL EXPRESS CORPORATION
3610 HACKS CROSS ROAD MEMPHIS TN 38125-8800			9B. DATED (SEE ITEM 11)
		x	10A. MODIFICATION OF CONTRACT/ORDER NO. ACN-13-FX
			10B. DATED (SEE ITEM 13)
SUPPLIER CODE:      000389122	FACILITY CODE		04/23/2013
11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS

☐     ☐  is extended,        ☐  is not  extended.

Offers must acknowledge receipt of this amendment prior to the hour and date specified in the solicitation or as amended, by one of the following methods: (a) By completing items 8 and 15, and returning                  copies of the amendment; (b) By acknowledging receipt of this amendment on each copy of the offer submitted; or (c) By separate letter or telegram which includes a reference to the solicitation and amendment number. FAILURE OF YOUR ACKNOWLEDGEMENT TO BE RECEIVED AT THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue of this amendment you desire to change an offer already submitted, such change may be made by telegram or letter, provided each telegram or letter makes reference to the solicitation and this amendment, and is received prior to the opening hour and date specified.

12. ACCOUNTING AND APPROPRIATION DATA (If required.) See Schedule Net Increase:      [*]

13. THIS ITEM APPLIES ONLY TO MODIFICATIONS OF CONTRACTS/ORDERS. IT MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14.

(x)	A. THIS CHANGE BY CLAUSE IS ISSUED PURSUANT TO: (Specify clause) THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN ITEM 10A.
☐
☐	B. THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE ADMINISTRATIVE CHANGES (such as changes in paying office, appropriation date, etc.) SET FORTH IN ITEM 14.
☐	C. THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO THE AUTHORITY OF: THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN ITEM 10A.
☒	D. OTHER (such as no cost change/cancellation, termination, etc.) (Specify type of modification and authority): THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN ITEM 10A. Mutual Agreement of the Contracting Parties

E. IMPORTANT: Contractor      ☐    is not,      ☒    is required to sign this document and return         1     copies to the issuing office.

14. DESCRIPTION OF AMENDMENT/MODIFICATION (Organized by UCF section headings, including solicitation/contract subject matter where feasible.)

The purpose of this modification is to incorporate Operating Period 62 (November) Planned

Charters into the ACN-13-FX contract, with the following conditions:

A) Once the Charters are scheduled they cannot be canceled.

B) All Service and Scan penalties (reductions in payment), related to the Day Network only, will be eliminated. This relief does not apply to the Night Network.

C) Volume will be inducted into the network at the Memphis Hub and will incur appropriate tier pricing and will be processed normally.

Continued…

Except as provided herein, all terms and conditions of the document referenced in Item 9A or 10A, as heretofore changed, remains unchanged and in full force and effect.

15A. NAME AND TITLE OF SIGNER (Type or print)     Ron D. Stevens, Vice President		16A. NAME AND TITLE OF CONTRACTING OFFICER (Type or print)     Brian Mckain
15B. CONTRACTOR/OFFEROR /s/  RON D. STEVENS (Signature of person authorized to sign)	15C. DATE SIGNED   1-8-19	16B. CONTRACT AUTHORITY /s/ BRIAN MCKAIN (Signature of Contracting Officer)	16C. DATE SIGNED 1/15/19

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

CONTINUATION SHEET REQUISITION NO. PAGE   2     OF       2

CONTRACT/ORDER NO.   ACN-13-FX/146 AWARD/ EFFECTIVE DATE     10/29/2018 MASTER/AGENCY CONTRACT NO     SOLICITATION NO.                 SOLICITATION            ISSUE DATE

ITEM NO	SCHEDULE OF SUPPLIES/SERVICES	QUANTITY	UNIT	UNIT PRICE	AMOUNT
	FedEx will notify the Postal Service if the tender requirement is different than what is currently in the contract. Delivery does not change. Payments for said charters will be paid as part of the Operating Period reconciliation. — Sub Rept Req’d: Y Carrier Code: FX Route Termini S: Various Route Termini End: Various Payment Terms: SEE CONTRACT Delivery: 03/23/2018 Discount Terms: See Schedule Accounting Info: BFN: 670167 FOB: Destination Period of Performance: 09/30/2013 to 09/29/2024 Change Item 9 to read as follows:
9	Ad Hoc Charter Option Account Number: 53703 This value is for estimation purposes only.				[*]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

November 18 Operating Period

Charter Request and Accounting

Week 1

Origin

Operating Day

Cubic Feet Requested

Mon (10/29)

Tue (10/30)

Wed (10/31)

Thu (11/01)

Fri (11/02)

Sat (11/03)

Sun (11/04)

Weekly Total

A/C Type Equivalent

Rate

Scheduled Charters

Total Ad Hoc Charters

LAX

Thu

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

[*]

LAX - S

Sat

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

767

[*]

[*]

[*]

Week 1 Total

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

Week 2

Origin

Operating Day

Cubic Feet Requested

Mon (11/05)

Tue (11/06)

Wed (11/07)

Thu (11/08)

Fri (11/09)

Sat (11/10)

Sun (11/11) Vets’ Day

Weekly Total

A/C Type Equivalent

Rate

Scheduled Charters

Total Ad Hoc Charters

LAS - S

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

LAX

Wed

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

[*]

Week 2 Total

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

Week 3

Origin

Operating Day

Cubic Feet Requested

Mon (11/12) Vets’ Day Observed

Tue (11/13)

Wed (11/14)

Thu (11/15)

Fri (11/16)

Sat (11/17)

Sun (11/18)

Weekly Total

A/C Type Equivalent

Rate

Scheduled Charters

Total Ad Hoc Charters

LAX

Thu

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

[*]

LAX

Fri

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

[*]

LAX - S

Sat

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

767

[*]

[*]

[*]

Week 3 Total

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

Week 4

Origin

Operating Day

Cubic Feet Requested

Mon (11/19)

Tue (11/20)

Wed (11/21)

Thu (11/22) T’Giving

Fri (11/23)

Sat (11/24)

Sun (11/25)

Weekly Total

A/C Type Equivalent

Rate

Scheduled Charters

Total Ad Hoc Charters

LAS - S

Tue

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

Week 4 Total

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

GRAND TOTAL

November Total

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

EX-10.7

Exhibit 10.7

AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT	1. CONTRACT ID CODE	PAGE	OF
		1	3

2. AMENDMENT/MODIFICATION NO. 147	3. EFFECTIVE DATE   12/31/2018	4. REQUISITION/PURCHASE REQ. NO.	5. PROJECT NO. (If applicable)
6. ISSUED BY                                                CODE	5ACAAQ	7. ADMINISTERED BY (IF OTHER THAN ITEM 6)	CODE	5ACAAQ
DALE D. PARSAN Cargo Air Acquisitions Air Transportation CMC United States Postal Service 475 L’Enfant Plaza SW, Room 1P650 Washington DC 20260-0650 (202) 268-2223		Cargo Air Acquisitions Air Transportation CMC United States Postal Service 475 L’Enfant Plaza SW, Room 1P650 Washington DC 20260-0650

8. NAME AND ADDRESS OF CONTRACTOR (No., Street, County,  State, and Zip Code)		(x)	9A. AMENDMENT OF SOLICITATION NO.
FEDERAL EXPRESS CORPORATION
3610 HACKS CROSS ROAD MEMPHIS TN 38125-8800			9B. DATED (SEE ITEM 11)
		x	10A. MODIFICATION OF CONTRACT/ORDER NO. ACN-13-FX
			10B. DATED (SEE ITEM 13)
SUPPLIER CODE:      000389122	FACILITY CODE		04/23/2013
11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS

☐     ☐  is extended,        ☐  is not  extended.

Offers must acknowledge receipt of this amendment prior to the hour and date specified in the solicitation or as amended, by one of the following methods: (a) By completing items 8 and 15, and returning                  copies of the amendment; (b) By acknowledging receipt of this amendment on each copy of the offer submitted; or (c) By separate letter or telegram which includes a reference to the solicitation and amendment number. FAILURE OF YOUR ACKNOWLEDGEMENT TO BE RECEIVED AT THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue of this amendment you desire to change an offer already submitted, such change may be made by telegram or letter, provided each telegram or letter makes reference to the solicitation and this amendment, and is received prior to the opening hour and date specified.

12. ACCOUNTING AND APPROPRIATION DATA (If required.) See Schedule Net Decrease:      [*]

13. THIS ITEM APPLIES ONLY TO MODIFICATIONS OF CONTRACTS/ORDERS. IT MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14.

(x)	A. THIS CHANGE BY CLAUSE IS ISSUED PURSUANT TO: (Specify clause) THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN ITEM 10A.
☐
☐	B. THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE ADMINISTRATIVE CHANGES (such as changes in paying office, appropriation date, etc.) SET FORTH IN ITEM 14.
☐	C. THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO THE AUTHORITY OF: THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN ITEM 10A.
☒	D. OTHER (such as no cost change/cancellation, termination, etc.) (Specify type of modification and authority): THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN ITEM 10A. Mutual Agreement of the Contracting Parties

E. IMPORTANT: Contractor      ☐    is not,      ☒    is required to sign this document and return         1     copies to the issuing office.

14. DESCRIPTION OF AMENDMENT/MODIFICATION (Organized by UCF section headings, including solicitation/contract subject matter where feasible.)

The purpose of this modification is to execute the following change to the ACN-13-FX contract:

In accordance with contract ACN-13-FX and the “Fuel Adjustment” section, the following Line Haul Rate (fuel) for the Day Network as set out in Attachment 10 is modified for performance during the period of December 31, 2018 to January 27, 2019 (Operating Period 64) as follows:

TIERS: Base – Tier 5

From:

[*] per cubic foot

Continued…

Except as provided herein, all terms and conditions of the document referenced in Item 9A or 10A, as heretofore changed, remains unchanged and in full force and effect.

15A. NAME AND TITLE OF SIGNER (Type or print)     Ron D. Stevens, Vice President		16A. NAME AND TITLE OF CONTRACTING OFFICER (Type or print)     Brian Mckain
15B. CONTRACTOR/OFFEROR /s/  RON D. STEVENS (Signature of person authorized to sign)	15C. DATE SIGNED   1-29-19	16B. CONTRACT AUTHORITY /s/ BRIAN MCKAIN (Signature of Contracting Officer)	16C. DATE SIGNED 1/29/19

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

CONTINUATION SHEET REQUISITION NO. Page   2     Of       3

CONTRACT/ORDER NO.   ACN-13-FX/147 AWARD/ EFFECTIVE DATE     12/31/2018 MASTER/AGENCY CONTRACT NO     SOLICITATION NO.                 SOLICITATION            ISSUE DATE

ITEM NO	SCHEDULE OF SUPPLIES/SERVICES	QUANTITY	UNIT	UNIT PRICE	AMOUNT
	To: [*] per cubic foot This is a decrease of [*]. TIERS: 6 - 8 TIER 6: From: [*] per cubic foot To: [*] per cubic foot This is a decrease of [*]. TIER 7: From: [*] per cubic foot To: [*] per cubic foot This is a decrease of [*]. TIER 8: From: [*] per cubic foot To: [*] per cubic foot This is a decrease of [*]. [*] — Sub Rept Req’d: Y Carrier Code: FX Route Termini S: Various Route Termini End: Various Payment Terms: SEE CONTRACT Delivery: 11/28/2016 Discount Terms: See Schedule Accounting Info: BFN: 670167 FOB: Destination Period of Performance: 09/30/2013 to 09/29/2024 Change Item 1 to read as follows:
1	Day Network Account Number: 53503 Continued...				[*]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

CONTINUATION SHEET REQUISITION NO. PAGE   3     OF       3

CONTRACT/ORDER NO.   ACN-13-FX/147 AWARD/ EFFECTIVE DATE     12/31/2018 MASTER/AGENCY CONTRACT NO.     SOLICITATION NO.                 SOLICITATION            ISSUE DATE

ITEM NO	SCHEDULE OF SUPPLIES/SERVICES	QUANTITY	UNIT	UNIT PRICE	AMOUNT
	This is for estimation purposes only and is not a guarantee of contract value.

EX-10.8

Exhibit 10.8

AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT	1. CONTRACT ID CODE	PAGE	OF
		1	2

2. AMENDMENT/MODIFICATION NO. 148	3. EFFECTIVE DATE   11/26/2018	4. REQUISITION/PURCHASE REQ. NO.	5. PROJECT NO. (If applicable)
6. ISSUED BY                                                CODE	5ACAAQ	7. ADMINISTERED BY (IF OTHER THAN ITEM 6)	CODE	5ACAAQ
DALE D. PARSAN Cargo Air Acquisitions Air Transportation CMC United States Postal Service 475 L’Enfant Plaza SW, Room 1P650 Washington DC 20260-0650 (202) 268-2223		Cargo Air Acquisitions Air Transportation CMC United States Postal Service 475 L’Enfant Plaza SW, Room 1P650 Washington DC 20260-0650

8. NAME AND ADDRESS OF CONTRACTOR (No., Street, County,  State, and Zip Code)		(x)	9A. AMENDMENT OF SOLICITATION NO.
FEDERAL EXPRESS CORPORATION
3610 HACKS CROSS ROAD MEMPHIS TN 38125-8800			9B. DATED (SEE ITEM 11)
		x	10A. MODIFICATION OF CONTRACT/ORDER NO. ACN-13-FX
			10B. DATED (SEE ITEM 13)
SUPPLIER CODE:      000389122	FACILITY CODE		04/23/2013
11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS

☐     ☐  is extended,        ☐  is not  extended.

Offers must acknowledge receipt of this amendment prior to the hour and date specified in the solicitation or as amended, by one of the following methods: (a) By completing items 8 and 15, and returning                  copies of the amendment; (b) By acknowledging receipt of this amendment on each copy of the offer submitted; or (c) By separate letter or telegram which includes a reference to the solicitation and amendment number. FAILURE OF YOUR ACKNOWLEDGEMENT TO BE RECEIVED AT THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue of this amendment you desire to change an offer already submitted, such change may be made by telegram or letter, provided each telegram or letter makes reference to the solicitation and this amendment, and is received prior to the opening hour and date specified.

12. ACCOUNTING AND APPROPRIATION DATA (If required.) See Schedule Net Increase:      [*]

13. THIS ITEM APPLIES ONLY TO MODIFICATIONS OF CONTRACTS/ORDERS. IT MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14.

(x)	A. THIS CHANGE BY CLAUSE IS ISSUED PURSUANT TO: (Specify clause) THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN ITEM 10A.
☐
☐	B. THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE ADMINISTRATIVE CHANGES (such as changes in paying office, appropriation date, etc.) SET FORTH IN ITEM 14.
☐	C. THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO THE AUTHORITY OF: THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN ITEM 10A.
☒	D. OTHER (such as no cost change/cancellation, termination, etc.) (Specify type of modification and authority): THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN ITEM 10A. Mutual Agreement of the Contracting Parties

E. IMPORTANT: Contractor      ☐    is not,      ☒    is required to sign this document and return         1     copies to the issuing office.

14. DESCRIPTION OF AMENDMENT/MODIFICATION (Organized by UCF section headings, including solicitation/contract subject matter where feasible.)

The purpose of this modification is to incorporate Operating Period 63 (December 2018)

Charters into the ACN-13-FX contract, with the following conditions:

A) Once the Charters are scheduled they cannot be canceled.

B) All Service and Scan penalties (reductions in payment), related to the Day Network only, will be eliminated. This relief does not apply to the Night Network.

C) Volume will be inducted into the network at the Memphis Hub and will incur appropriate tier pricing and will be processed normally.

Continued…

Except as provided herein, all terms and conditions of the document referenced in Item 9A or 10A, as heretofore changed, remains unchanged and in full force and effect.

15A. NAME AND TITLE OF SIGNER (Type or print)     Ron D. Stevens, Vice President		16A. NAME AND TITLE OF CONTRACTING OFFICER (Type or print)     Brian Mckain
15B. CONTRACTOR/OFFEROR /s/  RON D. STEVENS (Signature of person authorized to sign)	15C. DATE SIGNED   2-5-19	16B. CONTRACT AUTHORITY /s/ BRIAN MCKAIN (Signature of Contracting Officer)	16C. DATE SIGNED 2/7/19

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

CONTINUATION SHEET REQUISITION NO. PAGE   2     OF       2

CONTRACT/ORDER NO.   ACN-13-FX/148 AWARD/ EFFECTIVE DATE     11/26/2018 MASTER/AGENCY CONTRACT NO     SOLICITATION NO.                 SOLICITATION            ISSUE DATE

ITEM NO	SCHEDULE OF SUPPLIES/SERVICES	QUANTITY	UNIT	UNIT PRICE	AMOUNT
	FedEx will notify the Postal Service if the tender requirement is different than what is currently in the contract. Delivery does not change. Payments for said charters will be paid as part of the Operating Period reconciliation. — Sub Rept Req’d: Y Carrier Code: FX Route Termini S: Various Route Termini End: Various Payment Terms: SEE CONTRACT Delivery: 03/23/2018 Discount Terms:                                    See Schedule Accounting Info: BFN: 670167 FOB: Destination Period of Performance: 09/30/2013 to 09/29/2024 Change Item 9 to read as follows:
9	Ad Hoc Charter Option Account Number: 53703				[*]
	This value is for estimation purposes only.

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

December 18 Operating Period

Charter Request and Accounting

Week 1

Origin

Operating Day

Cubic Feet  Requested

Mon  (11/26)

Tue  (11/27)

Wed  (11/28)

Thu  (11/29)

Fri  (11/30)

Sat  (12/01)

Sun  (12/02)

Weekly   Total

A/C Type       Equivalent

Rate

Unplanned Charters

Total Ad Hoc  Charters

MEM -SJU

Wed

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

MD-11

[*]

[*]

[*]

MEM -SJU

Fri

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

MD-11

[*]

[*]

[*]

MEM - SJU

Sat

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

MD-11

[*]

[*]

[*]

SLC - S

Sat

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

OAK

Sun

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

767

[*]

[*]

[*]

DEN

Sun

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

SLC - S

Sun

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

[*]

Week 1 Total

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

Week 2

Origin

Operating Day

Cubic Feet   Requested

Mon  (12/03)

Tue  (12/04)

Wed  (12/05)

Thu  (12/06)

Fri  (12/07)

Sat  (12/08)

Sun  (12/09)

Weekly  Total

A/C Type       Equivalent

Rate

Unplanned Charters

Total Ad Hoc  Charters

LAX

Mon

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

MD-11

[*]

[*]

[*]

LAX

Mon

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

MD-11

[*]

[*]

[*]

MEM - SJU

Fri

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

MD-10

[*]

[*]

[*]

MEM - SJU

Sat

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

MD-11

[*]

[*]

[*]

OAK

Sat

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

[*]

Week 2 Total

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

Week 3

Origin

Operating Day

Cubic Feet  Requested

Mon  (12/10)

Tue  (12/11)

Wed  (12/12)

Thu  (12/13)

Fri  (12/14)

Sat  (12/15)

Sun  (12/16)

Weekly  Total

A/C Type       Equivalent

Rate

Unplanned Charters

Total Ad Hoc  Charters

LAX

Mon

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

MD-11

[*]

[*]

[*]

LAX

Mon

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

MD-11

[*]

[*]

[*]

MEM - SJU

Fri

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

MD-11

[*]

[*]

[*]

MEM - SJU

Sat

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

MD-11

[*]

[*]

[*]

OAK

Sun

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

A-300

[*]

[*]

[*]

Week 3 Total

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

Week 4

Origin

Operating Day

Cubic Feet  Requested

Mon (12/17)   Special Sort

Tue  (12/18)

Wed  (12/19)

Thu  (12/20)

Fri  (12/21)

Sat  (12/22)

Sun  (12/23)

Weekly  Total

A/C Type       Equivalent

Rate

Unplanned Charters

Total Ad Hoc  Charters

LAX

Mon

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

MD-11

[*]

[*]

[*]

LAX

Mon

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

MD-11

[*]

[*]

[*]

MEM—SJU

Fri

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

MD-11

[*]

[*]

[*]

MEM—SJU

Sat

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

MD-11

[*]

[*]

[*]

OAK

Sat

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

757

[*]

[*]

[*]

Week 4 Total

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

Week 5

Origin

Operating Day

Cubic Feet  Requested

Mon  (12/24)

Tue  (12/25)

Wed  (12/26)

Thu  (12/27)

Fri  (12/28)

Sat  (12/29)

Sun  (12/30)

Weekly  Total

A/C Type       Equivalent

Rate

Unplanned Charters

Total Ad Hoc  Charters

MEM - SJU

Sat

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

MD-10

[*]

[*]

[*]

Week 5 Total

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

GRAND TOTAL

December Total

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

EX-10.9

Exhibit 10.9

ELEVENTH AMENDMENT

to the

COMPOSITE LEASE AGREEMENT

By and Between

MEMPHIS-SHELBY COUNTY AIRPORT AUTHORITY

and

FEDERAL EXPRESS CORPORATION

Effective as of January 1, 2019

ELEVENTH AMENDMENT

TO THE COMPOSITE LEASE AGREEMENT

This ELEVENTH Amendment is made and entered into as of January 22, 2019 by and between MEMPHIS-SHELBY COUNTY AIRPORT AUTHORITY (herein referred to as “Authority”), a body politic and corporate, organized and existing under the laws of the State of Tennessee, and FEDERAL EXPRESS CORPORATION (herein referred to as “Tenant”), a corporation duly organized and existing under the laws of the State of Delaware and authorized to do business in the State of Tennessee.

W I T N E S S E T H:

WHEREAS Authority and Tenant executed a “Composite Lease Agreement”, effective January 1, 2007, which was modified by a First Amendment effective September 1, 2008; a Second Amendment effective June 1, 2009; a Third Amendment effective July 1, 2009; a Fourth Amendment effective December 15, 2011; a Fifth Amendment effective January 1, 2013; a Sixth Amendment effective July 1, 2014; a Seventh Amendment effective April 1, 2016; an Eighth Amendment effective April 1, 2017; a Ninth Amendment effective September 1, 2017; and a Tenth Amendment effective May 1, 2018; collectively referred to herein as the “Composite Lease Agreement”; and,

WHEREAS, a schedule identifying each parcel of real property the Authority leases to Tenant is attached as hereto as EXHIBIT “A” to the Composite Lease Agreement, and the schedule states the portion of the Term (as defined in the Composite Lease Agreement) during which the lease of each parcel will be in effect, and the rent that Tenant is subject to pay Authority for each parcel; and

WHEREAS, the parties wish to amend the Composite Lease Agreement to remove certain buildings, which are considered end of life and out-dated facilities, by deleting a total of 160,372 square feet as part of Parcel 34 , originally included as Parcel 17, but more particularly identified in EXHIBIT A, Note 15, effective 1-1-2019, as these four affected buildings : (i) Hangar 6 ( Building Number 2879); (ii) Hangar 7 (Building Number 2837); (iii) Administration Building (Building Number 2861); and (iv) Boiler Room (Building Number 2838), and these properties are highlighted and identified in and attached hereto as EXHIBIT “B”, creating an annual reduction of $190,442.45 for the rental costs of these four (4) identified buildings located on Parcel 34, effective January 1, 2019.

Composite Lease Agreement – Eleventh Amendment

Federal Express Corporation

WHEREAS, Tenant acknowledges that the demolition and deconstruction of these identified four buildings will cause Tenant to have specific responsibilities to the Federal Aviation Administration (FAA) to assure that demolition and documentation of the historic properties located thereon are carried out in accordance with the parties’ Memorandum of Agreement, identified herein and attached hereto as EXHIBIT “C”; and

WHEREAS, by letter dated October 16, 2018, identified herein and attached hereto as EXHIBIT “D”, the Tennessee Historical Commission, State Historic Preservation Office acknowledges that Stipulation II of the Memorandum of Agreement (EXHIBIT “C”) has been fulfilled, and demolition and deconstruction can proceed of (i) Hangar 6 (Parcel 34 Building No. 2879); (ii) Hangar 7 (Parcel 34 Building No. 2837); (iii) the Administration Building (Parcel 34 Building No. 2861); and (iv) a Boiler Room (Parcel 34 Building No. 2838); and

WHEREAS, now the Authority concurs and gives Tenant permission to proceed with demolishing and deconstructing the same properties; and

NOW, THEREFORE, for and in consideration of the promises, covenants and agreements hereinafter contained to be kept and performed by the parties hereto and upon the provisions and conditions hereinafter set forth, Authority and Tenant do hereby covenant and agree as follows:

SECTION 1. Definitions. Except as otherwise provided herein, and unless the context shall clearly require otherwise, all words and terms used in this ELEVENTH Amendment shall have the respective meanings given to them in the Composite Lease Agreement for all purposes of this ELEVENTH Amendment.

SECTION 2. Modification of Composite Lease Agreement and the Applicable Rent. The parties amend the Composite Lease Agreement to reflect a reduction of Parcel 34 as described in the attached Listing of Buildings shown on EXHIBIT “B”. As of the Effective Date, the parties incorporate the Listing of Buildings of Parcel 34 to be part of EXHIBIT “A” to the Composite Lease Agreement. The inclusion of Parcel 34 Listing of Buildings in EXHIBIT “A” will accomplish the following:

Composite Lease Agreement – Eleventh Amendment

Federal Express Corporation

(a) Effective on the effective date, the Parcel 34 annual rent will be reduced by an amount equal to the product achieved by multiplying the Hangar Office Area of Parcel 34: 81,186 Square Feet by $1.465; and multiplying the Hangar Property Area of Parcel 34: 79,186 Square Feet by $0.903 based on 1995 rental rates as follows:

LOCATION	HANGAR	OFFICE AREA SQUARE FEET	RATE		ANNUAL REDUCTION
Bldg. 2879	Hangar 6	13,328
Bldg. 2837	Hangar 7	16,000
Bldg. 2861	Administration Bldg.	50,077
Bldg. 2838	Boiler Room	1,781
Total Office Areas		81,186	$	1.465	$	118,937.49
LOCATION	HANGAR—OTHER PROPERTY SQ. FT.		RATE		ANNUAL REDUCTION
Bldg. 2879	Hangar 6	45,119
Bldg. 2837	Hangar 7	34,067
Total Other Property		79,186	$	0.903	$	71,504.96
Total Office Area and Hangar Property Area Annual Rent Reduction					$	190,442.45

(b) The rent, as adjusted in accordance with the foregoing, will continue to be subject to adjustment in accordance with the terms of Section 2.03(a)(i) of the Composite Lease Agreement.

SECTION 3. Demolition and Deconstruction by Tenant

(a) Effective January 1, 2019, Authority hereby grants to Tenant for use by Tenant and its servants, agents, employees and independent contractors, working on or in connection with Tenant’s demolition and deconstruction of the identified four buildings located on

Composite Lease Agreement – Eleventh Amendment

Federal Express Corporation

Parcel 34, all necessary or appropriate rights of reasonable access, ingress and egress to and from Parcel 34, and the right to do all such other things as may be incidental to Tenant’s demolition and deconstruction of the identified four buildings.

(b) Tenant shall obtain, at Tenant’s sole expense, all certificates and approvals relating to Tenant’s demolition and deconstruction of the identified four buildings located on Parcel 34.

(c) As part of its demolition and deconstruction of the identified four buildings on Parcel 34 under this Section, Tenant shall (i) remain in compliance with all applicable Environmental Laws and (ii) undertake, in compliance with the rules and regulations of any Governmental Authority having jurisdiction over the Parcel 34, all required cleanup activities with respect to environmental conditions caused by, arising out of or resulting from its demolition and deconstruction for the identified four buildings on Parcel 34.

SECTION 4. Remainder of Composite Lease in Effect. All other terms, provisions, conditions, covenants and agreements of the Composite Lease shall continue in full force and effect.

SECTION 5. Effective Dates of this ELEVENTH Amendment. This ELEVENTH Amendment shall become effective as of January 1, 2019.

EXHIBIT “A”, EXHIBIT “B”, EXHIBIT “C”, and EXHIBIT “D”, attached hereto, shall be incorporated herein by reference.

This remainder of this page intentionally left blank.

Signature page to follow.

Composite Lease Agreement – Eleventh Amendment

Federal Express Corporation

IN WITNESS WHEREOF, the parties have caused their duly authorized representatives to execute this ELEVENTH Amendment to the Composite Lease Agreement.

MEMPHIS-SHELBY COUNTY AIRPORT AUTHORITY		FEDERAL EXPRESS CORPORATION
By:	/s/ Scott A. Brockman	By:	/s/ Wiley Johnson, Jr.
	Scott A. Brockman, A.A.E.	Title:	Managing Director, Real Estate and Airport Development
	President and Chief Executive Officer
	Approved as to Content:
By:	/s/ Forrest B. Artz
	Forrest B. Artz
	Vice President of Finance and Administration/CFO
Approved as to Form and Legality:
/s/ Janet Shipman
Janet Shipman
Associate Airport Counsel
Reviewed and Approved:
/s/ Angela Washington
Director of Properties

Composite Lease Agreement – Eleventh Amendment

Federal Express Corporation

EXHIBIT A to the Composite Lease Agreement as amended by the ELEVENTH Amendment effective January 1, 2019.

								2012			2013				2014			2015-17			2018—2019
PARCEL NUMBER	FEDEX LEASE NUMBER	SUPPLEMENTAL	USE OR LOCATION	PARCEL ID	EFFECTIVE DATE	SQUARE FEET	EFFECTIVE DATE RATE	EFFECTIVE SEPTEMBER 2012			EFFECTIVE July 1, 2013				EFFECTIVE July 1, 2014			EFFECTIVE April 1, 2015			EFFECTIVE January 1, 2019
								RATES	MONTHLY	ANNUAL	ESCALATION (3)	RATES	MONTHLY	ANNUAL	RATES	MONTHLY	ANNUAL	RATES	MONTHLY	ANNUAL	RATES	MONTHLY	ANNUAL
1	07-0958	N/A	TAXIWAY N	N/A	2/1/2009	100,035	$0.1906	$0.1906	$1,588.89	$19,066.67	CPI OR 13%	$0.2077	$1,731.41	$20,776.95	$0.2077	$1,731.41	$20,776.95	$0.21	$1,731.41	$20,776.95	$0.21	$1,731.41	$20,776.95
2	07-0959	SUPPLEMENTAL 26	AMR FACILITIES/LANDLOCKED PARCELS	A-G	1/1/2007	1,082,446	Varies (1)	Varies (1)	$28,533.41	$342,400.87	CPI OR 13%	Varies (1)	$31,092.85	$373,114.23	Varies (1)	$31,092.85	$373,114.23	Varies (1)	$31,092.85	$373,114.23	Varies (1)	$31,092.85	$373,114.23
		N/A 5th Amendment to Composite Lease	UNIMPROVED GROUND		11/1/2013 (9)	44,344	$0.2077	N/A	N/A	N/A	CPI OR 13%	0.2077 (9)	N/A	N/A	$0.2077	$767.52	$9,210.25	$0.21	$767.52	$9,210.25	$0.21	$767.52	$9,210.25
3	07-0960	SUPPLEMENTALS	WEST RAMP
		18, 19, 20, 21, 22 & 23	UNIMPROVED GROUND	N/A	1/1/2007	3,111,647	$0.1525	$0.1906	$49,423.33	$593,079.92	CPI OR 13%	$0.2077	$53,856.60	$646,279.19	$0.2077	$53,856.60	$646,279.19	$0.21	$53,856.60	$646,279.19	$0.21	$53,856.60	$646,279.19
		22, 24 & 25	UNIMPROVED GROUND	N/A	1/1/2007	914,283	$0.1525	$0.1906	$14,521.86	$174,262.34	CPI OR 13%	$0.2077	$15,824.47	$189,893.67	$0.2077	$15,824.47	$189,893.67	$0.21	$15,824.47	$189,893.67	$0.21	$15,824.47	$189,893.67
		N/A 5th Amendment to Composite Lease	UNIMPROVED GROUND		11/1/2013 (9)	2,744	$0.2077	N/A	N/A	N/A	CPI OR 13%	N/A	N/A	N/A	$0.2077	$47.49	$569.92	$0.21	$47.49	$569.92	$0.21	$47.49	$569.92
4	07-0961	N/A	TAXIWAY C	N/A	2/1/2009	731,098	$0.2400	$0.2400	$14,621.96	$175,463.52	CPI OR 13%	$0.2615	$15,933.55	$191,202.60	$0.2615	$15,933.55	$191,202.60	$0.26	$15,933.55	$191,202.60	$0.26	$15,933.55	$191,202.60
5	07-0962	SUPPLEMENTAL 13	UNIMPROVED APRON/GRACELAND RAMP	33	1/1/2007	515,496	$0.1525	$0.1906	$8,187.79	$98,253.48	CPI OR 13%	$0.2077	$8,922.24	$107,066.88	$0.2077	$8,922.24	$107,066.88	$0.21	$8,922.24	$107,066.88	$0.21	$8,922.24	$107,066.88
		SUPPLEMENTAL 17	UNIMPROVED APRON/SIERRA RAMP	37	1/1/2007		$0.1525				CPI OR 13%
6	07-0963	AGREEMENT#92-0833	IRS/AOD	N/A	1/1/2007	2,248,286	N/A (6)	N/A (6)	$125,000.00	$1,500,000.00	15% (7)	N/A (6)	$143,750.00	$1,725,000.00	N/A (6)	$143,750.00	$1,725,000.00	N/A (6)	$143,750.00	$1,725,000.00	N/A (6)	$143,750.00	$1,725,000.00
7	07-0964	SOUTHWIDE#90-0242	GRAEBER ASSIGNMENT	23	1/1/2007	427,030	N/A (6)	N/A (6)	$2,506.15	$30,073.80	CPI OR 13%	N/A (6)	$2,730.95	$32,771.42	N/A (6)	$2,730.95	$32,771.42	N/A (6)	$2,730.95	$32,771.42	N/A (6)	$2,730.95	$32,771.42
8	07-0965	SOUTHWIDE ASGMT. #80-0223	EQUITABLE LIFE	24	1/1/2007	451,370	N/A (6)	N/A (6)	$2,340.16	$28,081.92	CPI OR 13%	N/A (6)	$2,550.07	$30,600.87	N/A (6)	$2,550.07	$30,600.87	N/A (6)	$2,550.07	$30,600.87	N/A (6)	$2,550.07	$30,600.87
9	07—0966	SUPPLEMENTAL 15 (INTERNATIONAL PARK)	FEDEX PARKING—TCHULAHOMA	21	1/1/2007	833,458	$0.2673	$0.2673	$18,565.28	$222,783.32	CPI OR 13%	$0.2913	$20,230.58	$242,766.99	$0.2913	$20,230.58	$242,766.99	$0.29	$20,230.58	$242,766.99	$0.29	$20,230.58	$242,766.99
10	07-0967	SUPPLEMENTAL 16 (INTERNATIONAL PARK)	FEDEX CONSTRUCTION STORAGE AREA	22A	1/1/2007 (2)	140,617	$0.2673	$0.2673	$3,132.24	$37,586.92	CPI OR 13%	$0.2913	$3,413.21	$40,958.47	$0.2913	$3,413.21	$40,958.47	$0.29	$3,413.21	$40,958.47	$0.29	$3,413.21	$40,958.47
11	07-0968	SUPPLEMENTAL 13	UNIMPROVED GROUND/GSE STORAGE	36	1/1/2007	187,217	$0.1525	$0.1906	$2,973.63	$35,683.56	CPI OR 13%	$0.2077	$3,240.36	$38,884.38	$0.2077	$3,240.36	$38,884.38	$0.21	$3,240.36	$38,884.38	$0.21	$3,240.36	$38,884.38
12	07-0969	SUPPLEMENTAL 27	A-380 GSE STORAGE	N/A	12/01/07	187,618	$0.1525	$0.1525	$2,384.31	$28,611.75	CPI OR 13%	$0.1662	$2,598.18	$31,178.22	$0.1662	$2,598.18	$31,178.22	$0.17	$2,598.18	$31,178.22	$0.17	$2,598.18	$31,178.22
13	07-0970	SUPPLEMENTAL 23	A-380 RAMP	N/A	1/1/2007	1,897,879	$0.1220	$0.1220	#REF!	#REF!	CPI OR 13%	$0.1329	$21,025.87	$252,310.49	$0.1329	$21,025.87	$252,310.49	$0.13	$21,025.87	$252,310.49	$0.13	$21,025.87	$252,310.49
		SUPPLEMENTAL 25	A-380 GSE RAMP	N/A	1/1/2007	319,113	$0.1525	$0.1906	#REF!	#REF!	CPI OR 13%	$0.2077	$5,523.23	$66,278.76	$0.2077	$5,523.23	$66,278.76	$0.21	$5,523.23	$66,278.76	$0.21	$5,523.23	$66,278.76
14	07-0971	SUPPLEMENTAL 14	UNIMPROVED APRON/DE-ICING EQUIPMENT STORAGE	34	1/1/2007	428,616	$0.1525	$0.1906	#REF!	#REF!	CPI OR 13%	$0.2077	$7,418.52	$89,022.18	$0.2077	$7,418.52	$89,022.18	$0.21	$7,418.52	$89,022.18	$0.21	$7,418.52	$89,022.18
15	07-0972	N/A	SPRANKLE ROAD	N/A	1/1/2007	200,695	$0.0000	$0.0000	$0.0000	$0.0000	N/A	$0.0000	$0.0000	$0.0000	$0.0000	$0.0000	$0.0000	$0.0000	$0.0000	$0.0000	$0.0000	$0.0000	$0.0000
16	07-0973	N/A	REPUBLIC ROAD	N/A	1/1/2007	113,179	$0.0000	$0.0000	$0.0000	$0.0000	N/A	$0.0000	$0.0000	$0.0000	$0.0000	$0.0000	$0.0000	$0.0000	$0.0000	$0.0000	$0.0000	$0.0000	$0.0000
	07-0974	SUPPLEMENTALS		0
		1 Parcel 1, 2, 3, 4, 6 & 9 (UNIMP GROUND)		1,2,3,4,6,9	1/1/2007	1,662,877	$0.1525	$0.1906	#REF!	#REF!	CPI OR 13%	$0.2077	$28,781.19	$345,374.26	$0.2077	$28,781.19	$345,374.26	$0.21	$28,781.19	$345,374.26	$0.21	$28,781.19	$345,374.26
		1 Parcel 1, 2, 7, 9 (IMP APRON)		1,2,7,9	1/1/2007	1,908,290	$0.1906	$0.2383	#REF!	#REF!	CPI OR 13%	$0.2597	$41,294.68	$495,536.18	$0.2597	$41,294.68	$495,536.18	$0.26	$41,294.68	$495,536.18	$0.26	$41,294.68	$495,536.18
		Parcel 5 (INTERNATIONAL PARK)		5	1/1/2007	24,000	$0.2673	$0.3341	#REF!	#REF!	CPI OR 13%	$0.3641	$728.14	$8,737.65	$0.3641	$728.14	$8,737.65	$0.36	$728.14	$8,737.65	$0.36	$728.14	$8,737.65
		1 Parcel 8 (INTERNATIONAL PARK)	FUEL TANKS	8	1/1/2007	247,254	$0.2673	$0.3341	#REF!	#REF!	CPI OR 13%	$0.3641	$7,501.45	$90,017.46	$0.3641	$7,501.45	$90,017.46	$0.36	$7,501.45	$90,017.46	$0.36	$7,501.45	$90,017.46
		1 & 8 Parcel 12 (INETRNATIONAL PARK)	ARTC TRAINING BUILDING	12	1/1/2007	117,915	$0.2673	$0.3341	#REF!	#REF!	CPI OR 13%	$0.3641	$3,577.43	$42,929.17	$0.3641	$3,577.43	$42,929.17	$0.36	$3,577.43	$42,929.17	$0.36	$3,577.43	$42,929.17
		1 & 8 Parcel 11 (INTERNATIONAL PARK)	GAS STATION	11	1/1/2007	45,359	$0.2673	$0.3341	#REF!	#REF!	CPI OR 13%	$0.3641	$1,376.15	$16,513.80	$0.3641	$1,376.15	$16,513.80	$0.36	$1,376.15	$16,513.80	$0.36	$1,376.15	$16,513.80
		8 Parcel 9 (INTERNATIONAL PARK)	SOUTH RAMP, COURTYARD, SOUTHGATES	9, 10, 17	1/1/2007	1,586,172	$0.2673	$0.3341	#REF!	#REF!	CPI OR 13%	$0.3641	$48,122.97	$577,475.69	$0.3641	$48,122.97	$577,475.69	$0.36	$48,122.97	$577,475.69	$0.36	$48,122.97	$577,475.69
		Parcel 10 (INTERNATIONAL PARK)	SOUTHEASTERN RAMP, NORTH SECONDARY,		1/1/2007	70,200	$0.2673	$0.3341	#REF!	#REF!	CPI OR 13%	$0.3641	$2,129.80	$25,557.63	$0.3641	$2,129.80	$25,557.63	$0.36	$2,129.80	$25,557.63	$0.36	$2,129.80	$25,557.63
17		Parcel 17 (INTERNATIONAL PARK)	NORTH INPUT, PRIMARY SORT,	17	1/1/2007	4,333,659	$0.2673	$0.3341	#REF!	#REF!	CPI OR 13%	$0.3641	$131,479.16	$1,577,749.90	$0.3641	$131,479.16	$1,577,749.90	$0.36	$131,479.16	$1,577,749.90	$0.36	$131,479.16	$1,577,749.90
			SMALL PACKAGE SORT SYSTEM,
			INTERNATIONAL INPUT, HEAVY WEIGHT, EAST RAMP
			TAB-LINE MAINTENANCE	14	1/1/2007	556,334	$0.2673	$0.3341	#REF!	#REF!	CPI OR 13%	$0.3641	$16,878.65	$202,543.84	$0.3641	$16,880.10	$202,561.21	$0.36	$16,879.91	$202,558.92	$0.36	$16,879.91	$202,558.92
		10 Parcel 27A (IMP APRON)	PARCEL 27A	27	1/1/2007	487,512	$0.1906	$0.2383	#REF!	#REF!	CPI OR 13%	$0.2597	$10,549.58	$126,594.93	$0.2597	$10,549.58	$126,594.93	$0.26	$10,549.58	$126,594.93	$0.26	$10,549.58	$126,594.93
		11 Parcel A & B West (UNIMP GROUND)	NORTH RAMP	27A & 27B	1/1/2007	527,676	$0.1525	$0.1906	#REF!	#REF!	CPI OR 13%	$0.2077	$9,133.05	$109,596.63	$0.2077	$9,133.05	$109,596.63	$0.21	$9,133.05	$109,596.63	$0.21	$9,133.05	$109,596.63
		5 Parcel 16 (INTERNATIONAL PARK)		16	1/1/2007	796,312	$0.2673	$0.3341	#REF!	#REF!	CPI OR 13%	$0.3641	$24,159.36	$289,912.33	$0.3641	$24,159.36	$289,912.33	$0.36	$24,159.36	$289,912.33	$0.36	$24,159.36	$289,912.33
		23	GRAEBER ASSIGNMENT/TRUCKING OPERATION		1/1/2007	261,460	$0.1029	$0.1286	#REF!	#REF!	CPI OR 13%	$0.1401	$3,053.32	$36,639.83	$0.1401	$3,053.32	$36,639.83	$0.14	$3,053.32	$36,639.83	$0.14	$3,053.32	$36,639.83
		SUPPLEMENTAL 9 (INTERNATIONAL PARK)	PARKING AREA	25	1/1/2007	18,933	$0.2673	$0.3341	#REF!	#REF!	CPI OR 13%	$0.3641	$574.41	$6,892.91	$0.3641	$574.41	$6,892.91	$0.36	$574.41	$6,892.91	$0.36	$574.41	$6,892.91
18	07-0975	SUPPLEMENTAL 8 (INTERNATIONAL PARK)	DC-10 HANGAR (LAND)	15	1/1/2007	552,730	$0.2673	$0.2673	#REF!	#REF!	CPI OR 13%	$0.2913	$13,416.45	$160,997.43	$0.2913	$13,416.45	$160,997.43	$0.29	$13,416.45	$160,997.43	$0.29	$13,416.45	$160,997.43
18A	07-0976	BUILDING HAVING AN AREA OF 72,378 SQ FT & OTHER IMPROVEMENTS	DC-10 HANGAR (BUILDING)		9/1/2012 (4)	72,378	$1.2600	$1.2600	$7,599.69	$91,196.28	CPI OR 13%	$1.3730	$8,281.38	$99,376.59	$1.3730	$8,281.38	$99,376.59	$1.37	$8,281.38	$99,376.59	$1.37	$8,281.38	$99,376.59
		CONSTRUCTED ON PARCEL 18
19	07-0977	SUPPLEMENTAL 8 (INTERNATIONAL PARK)	ENGINE SHOP	13 & 18	1/1/2007	418,016	$0.2673	$0.2673	#REF!	#REF!	CPI OR 13%	$0.2913	$10,146.53	$121,758.37	$0.2913	$10,146.53	$121,758.37	$0.29	$10,146.53	$121,758.37	$0.29	$10,146.53	$121,758.37
20	07-0978	SUPPLEMENTAL 27	WEST SIDE OF TANG	N/A	3/1/2008	108,051	$0.1525	$0.1525	#REF!	#REF!	CPI OR 13%	$0.1662	$1,496.32	$17,955.83	$0.1662	$1,496.32	$17,955.83	$0.17	$1,496.32	$17,955.83	$0.17	$1,496.32	$17,955.83
21	07-0979	SUPPLEMENTAL 7	DEMOCRAT VEHICLE PARKING	19	1/1/2007	1,812,363	$0.1525	$0.1906	#REF!	#REF!	CPI OR 13%	$0.2077	$31,368.50	$376,422.03	$0.2077	$31,368.50	$376,422.03	$0.21	$31,368.50	$376,422.03	$0.21	$31,368.50	$376,422.03
22	07-0980	SUPPLEMENTAL 9	DEMOCRAT VEHICLE PARKING	20	1/1/2007	491,127	$0.1525	$0.1906	#REF!	#REF!	CPI OR 13%	$0.2077	$8,500.46	$102,005.52	$0.2077	$8,500.46	$102,005.52	$0.21	$8,500.46	$102,005.52	$0.21	$8,500.46	$102,005.52
23	07-0981	N/A	TAXIWAY SIERRA		2/1/2009	248,711	$0.2400	$0.2400	#REF!	#REF!	CPI OR 13%	$0.2615	$5,420.41	$65,044.89	$0.2615	$5,420.41	$65,044.89	$0.26	$5,420.41	$65,044.89	$0.26	$5,420.41	$65,044.89
24	07-0982	N/A	SORT FACILITY		9/1/2009 (5)	292,000	$1.2600	$1.2600	$30,660.00	$367,920.00	CPI OR 13%	$1.3730	$33,410.20	$400,922.42	$1.3730	$33,410.20	$400,922.42	$1.37	$33,410.20	$400,922.42	$1.37	$33,410.20	$400,922.42
25	07-0983	N/A	DEMOCRAT PARKING AREA		12/15/11 (8)	36,128	$0.1906	$0.1906	$573.83	$6,885.99	CPI OR 13%	$0.2077	$625.31	$7,503.67	$0.2077	$625.31	$7,503.67	$0.21	$625.31	$7,503.67	$0.21	$625.31	$7,503.67
26	07-0985	N/A	CORPORATE AVIATION HANGAR (BUILDING)		7/1/2014	35,070	$1.4238	N/A	N/A	N/A	CPI OR 13%	N/A	N/A	N/A	$1.4238	$4,161.06	$49,932.67	$1.42	$4,161.06	$49,932.67	$1.42	$4,161.06	$49,932.67
			CORPORATE AVIATION HANGAR (LAND)		7/1/2014	161,334	$0.0000	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
27	07-0984	N/A	HANGAR 11 (BUILDING)		7/1/2014	58,265	$1.4238	N/A	N/A	N/A	CPI OR 13%	N/A	N/A	N/A	$1.4238	$6,913.14	$82,957.71	$1.42	$6,913.14	$82,957.71	$1.42	$6,913.14	$82,957.71
		N/A	HANGAR 12 (BUILDING)		7/1/2014	117,306	$1.4238	N/A	N/A	N/A	CPI OR 13%	N/A	N/A	N/A	$1.4238	$13,918.36	$167,020.28	$1.42	$13,918.36	$167,020.28	$1.42	$13,918.36	$167,020.28
			HANGARS 11 AND 12 (LAND)		7/1/2014	1,290,083	$0.0000	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
28	07-0986	N/A	EAST GSE RAMP		7/1/2014 (10)	1,000,681	$0.1741	N/A	N/A	N/A	CPI OR 13%	N/A	N/A	N/A	$0.1741	$14,518.21	$174,218.56	$0.17	$14,518.21	$174,218.56	$0.17	$14,518.21	$174,218.56
29		7TH AMENDMENT	COLD CHAIN STORAGE PARKING		4/1/2016 (11)	29,174	$0.2077	N/A	N/A	N/A	N/A	N/A	N/A	N/A				$0.2077	$504.95	$6,059.44	$0.2077	$504.95	$6,059.44
30		8TH AMENDMENT	3505 TCHULAHOMA ROAD (BUILDING)		4/1/2017 (13)	38,345	$2.8500											$2.8500	$9,106.94	$109,283.25	$2.8500	$9,106.94	$109,283.25
		8TH AMENDMENT	3505 TCHULAHOMA ROAD (IMPROVED GROUND)		4/1/2017 (13)	58,810	$0.2597											$0.2597	$1,272.75	$15,272.96	$0.2597	$1,272.75	$15,272.96
		8TH AMENDMENT	3505 TCHULAHOMA ROAD (UNIMPROVED GROUND)		4/1/2017 (13)	64,702	$0.2077											$0.2077	$1,119.88	$13,438.61	$0.2077	$1,119.88	$13,438.61
31		8TH AMENDMENT	3318 WINCHESTER ROAD (BUILDING)		8/1/2017 (12)	113,461	$2.8500											$2.8500	$26,946.99	$323,363.85	$2.8500	$26,946.99	$323,363.85
		8TH AMENDMENT	3318 WINCHESTER ROAD (IMPROVED GROUND)		8/1/2017 (12)	196,782	$0.2597											$0.2597	$4,258.69	$51,104.29	$0.2597	$4,258.69	$51,104.29
		8TH AMENDMENT	3318 WINCHESTER ROAD (UNIMPROVED GROUND)		8/1/2017 (12)	164,498	$0.2077											$0.2077	$2,847.19	$34,166.23	$0.2077	$2,847.19	$34,166.23
32		9TH AMENDMENT	2860 SOUTHWIDE DR (UNIMPROVED GROUND) GSE Storage		09/01/2018 (14)	72,172	$0.2077														$0.2077	$1,249.18	$14,990.12
33		10TH AMENDMENT	GOLDEN TRIANGLE RAMP AREA		5/1/2018	698,965	$0.2077														$0.2077	$12,097.92	$145,175.03
34		11TH AMENDMENT	MSCAA DEMO HANGARS/OFFICE BLDGS		1/1/2019 (15)	-81,186	$1.4650															-$9,911.46	-$118,937.49
			MSCAA DEMO HANGAR PROPERTY		1/1/2019 (15)	-79,186	$0.9030															-$5,958.75	-$71,504.96
35		12TH AMENDMENT	GLYCOL TANK STORAGE AREA
												Totals	$781,847.02	$9,382,164.23		$822,174.25	$9,866,090.99	Totals	$868,231.45	$10,418,777.34	Totals	$865,708.34	$10,388,500.04

Note 1:

(a) Hangar 26 has been removed from Parcel 2 and, effective July 1, 2009, rent for Parcel 2 has been reduced by $1,322.50 per month, $15,870.00 per year.

(b) As of December 14, 2010, the date of Tenant’s beneficial occupancy of the Replacement Hangar, as defined in the Third Amendment to the Composite Lease Agreement, the annual rent will be reduced by $44,246.00 ($3,687.17 monthly). The rent rate for the 35,000 square foot Replacement Hangar will be $0.1906.

(c) As of December 14, 2010, the date of Tenant’s benefical occupancy of renovated Hangars 24, 25 and 27, the combined annual rent for these Hangars will be reduced by $23,458.05 (30% of $78,193.49).

Note 2: In accordance with the Second Amendment to the Composite Lease Agreement, Parcel 10 will not be part of the demised premises between May 1, 2010, and December 31, 2011, and no rent will be payable with respect to that Parcel during that time period.

Note 3: Refer to Section 2.03(a)(i) of the Composite Lease Agreement for a further description of the rent adjustment summarized in this column.

Note 4: The Effective Date is subject to the operation and effect of Section 1.04(b) of the Composite Lease Agreement. When the Effective Date occurs, the rent for Parcel 18A will be calculated based upon a rental rate of $1.26 per square foot of building footprint area.

Note 5: The Effective Date is subject to the operation and effect of Section 1.04(b) of the Composite Lease Agreement. When the Effective Date occurs, the rent for Parcel 24 will be calculated based upon a rental rate of $1.26 per square foot of building footprint area.

Note 6: For Parcels 6, 7, and 8, the monthly rent for each is an amount previously agreed upon by the Parties, and is not calculated on any applicable current rate.

Note 7: Section 2.03(a)(i) of the Composite Lease Agreement will govern the escalation of the rent for Parcel 6 beginning July 1, 2018.

Note 8: In accordance with the terms of the 4th Amendment to the Composite Lease, rent for Parcel 25 began to accrue March 1, 2012 at the rate of $0.1906

Note 9: In accordance with the terms of the 5th Amendment to the Composite Lease, rent for the unimproved property that the 5th Amendment adds to Parcels 2 and 3 will begin to accrue on November 1, 2013 at the July 1, 2013 rental rate for unimproved property. (See Notes 3 and 7)

Note 10: Rate agreed upon by the parties and as defined in the 6th Amendment to the Composite Lease

Note 11: Parcel 29 adds the lot used for Cold Chain Storage Parking effective April 1, 2015 and should be added.

Note 12: Parcel 30 adds the office building and warehouse at 3505 Tchulahoma Road effective April 1, 2017. Rent will begin to accrue on the earlier of the Parcel 30 Substantial Completion Date or April 1, 2018.

Note 13: Parcel 31 adds the maintenance facility at 3318 Winchester Road effective September 1, 2017. Rent will begin to accrue on the earlier of the Parcel 31 Substantial Completion Date or September 1, 2018.

Note 14: Parcel 32 adds GSE equipment and storage location at 2860 Southwide Dr. near the parcels 31 & 32. Rent commencing sooner of date of beneficial occupancy or Feburary 1, 2018.

Note 15: Parcel 34—(Parcels ORIGINALLY included in Parcel 17): Annual credit due to demolition of (Hangar 6 13,328 sf Hangar 7 16,000 sf, Admin Bldg 50,077 sf and Boiler room 1,781sf at old may 1995 rate of $1.1.465) and Hangar 6 & & property at 79,186 sq f at old may 1995 ratre $0.903)

RATE & RATE ESCALATION	7/1/2008		7/1/2013		7/1/2018
IMPROVED GROUND	N/A	$	0.2597	$	0.2600
UNIMPROVED GROUND	N/A	$	0.2077	$	0.2100

EXHIBIT B – LISTING OF BUILDINGS

EXHIBIT “C”

Memorandum of Agreement between FAA, Tennessee Historical Commission, MSCAA and Federal Express effective September 24, 2018

MEMORANDUM OF AGREEMENT

AMONG FEDERAL AVIATION ADMINISTRATION, TENNESSEE

HISTORICAL COMMISSION, MEMPHIS-SHELBY COUNTY AIRPORT

AUTHORITY, AND FEDERAL EXPRESS

REGARDING THE FEDERAL EXPRESS TRANSFORMATION PROJECT AT

MEMPHIS INTERNATIONAL AIRPORT

WHEREAS, the Federal Aviation Administration (FAA) has determined that the demolition of 24 outdated structures constitutes a federal undertaking because of the change to the Airport Layout Plan (ALP); and

WHEREAS, Federal Express (FedEx) proposes to deconstruct or demolish 24 outdated structures that are located in the middle of its 880-acre Hub at Memphis International Airport (MEM) in order to construct several new facilities.

WHEREAS, the Federal Aviation Administration (FAA) has determined that the demolition of these structures constitutes a federal undertaking under Section 106 of the National Historic Preservation Act because of the change to the Airport Layout Plan (ALP) that will be necessitated by the proposed development; and

WHEREAS, FAA has defined the undertaking’s Area of Potential Effects as the project site, as described in the Attached Historic and Architectural Assessment and Section 4(f) Evaluation; and

WHEREAS, FAA has determined that the undertaking will have an adverse effect on the Administration Building (2861), Hangar 6 (2879), Hangar 7 (2837), and Boiler Room (2838) (collectively, the “Hangar Complex”), which are eligible for listing in the National Register of Historic Places, and has consulted with the Tennessee Historic Preservation Officer (SHPO) pursuant to 36 CFR Part 800, the regulations implementing Section 106 of the National Historic Preservation Act (16 U.S.C. § 470f); and

WHEREAS, the Memphis-Shelby County Airport Authority (Authority), the operator of the airport and the applicant for the approval of the project, has participated in the consultation process, has specific responsibilities to carry out the terms of this Memorandum of Agreement (Memorandum) regarding the effects of the undertaking on historic properties and FAA has invited them to sign this Memorandum as an invited signatory; and

WHEREAS, FedEx, the lessee of the airport property where the demolition of the buildings will take place, has specific responsibilities to make sure that the demolition and documentation of the historic properties are carried out in accordance with this Memorandum, and FAA has invited them to sign this Memorandum as an invited signatory.

1

WHEREAS, the Shelby County Historian, Memphis Area Association of Governments, Association for the Preservation of Tennessee Antiquities, Memphis and Shelby County Division of Planning and Development, Center for Southern Folklore, Shelby County Historical Commission, West Tennessee Historical Society, Memphis Heritage, Inc., and Memphis Landmarks Commission have been invited to consult; and no parties wished to become a consulting party; and

WHEREAS, in accordance with 36 CFR § 800.6(a)(l), FAA has notified the Advisory Council on Historic Preservation (ACHP) of its adverse effect determination with specified documentation, and the ACHP has chosen not to participate in the consultation; and

NOW THEREFORE, The FAA, the Tennessee Historical Commission (Commission), Fed-Ex, and the Authority agree that the undertaking will be implemented in accordance with the following stipulations in order to take into account the potential effect of the undertaking on historic properties, and that these measures shall constitute full, complete, and adequate mitigation measures under the National Historic Preservation Act and the implementing regulations of the Advisory Council on Historic Preservation (Advisory Council).

STIPULATIONS

The FAA, through coordination with the Authority, Fed-Ex, and the Commission, will ensure that the following measures are carried out:

STIPULATION I. PROFESSIONAL QUALIFICATIONS

All historic preservation work carried out pursuant to this Memorandum will be performed by or under the direct supervision of a person or persons meeting at a minimum the Secretary of the Interior’s Professional Qualification Standards (48 FR 44738-9). The FAA will consult with the SHPO to determine and ensure that the preservation professionals responsible for carrying out the historic and archaeological documentation covered by this Memorandum meet the Secretary of Interior’s Standards and the professional requirements set forth in the Tennessee SHPO Standards and Guidelines for Archaeological Resource Management Studies (Revised 2008).

STIPULATION II. DOCUMENTATION

During the Historic and Architectural Assessment and Section 4(f) Evaluation, four sites including the Administration Building (2861), Hangar 6 (2879), Hangar 7 (2837), and Boiler Room (2838), within the Area of Potential Effects were identified as eligible for the National Register of Historic Places. FAA and the Authority have determined that it is not possible to complete the project without impacting these sites.

1. FedEx shall mitigate the adverse effects to the potentially eligible structures caused by their demolition through the completion of documentation that meets Historic American Buildings Survey (HABS) Level II documentation standards

2

for the eligible structures as requested by the Commission. Utilization of HABS standards is understood to meet the Secretary of the Interior’s Standards for Historical Documentation as they apply to architectural, engineering, and landscape documentation.

2. FedEx will provide documentation to the Commission meeting HABS Level II documentation standards. This documentation will include a digital copy of the relevant drawings and photographs. Drawings will include floor plans for the four structures included in the Hanger Complex.

It is understood that peeling of the structures within the Hanger Complex is not necessary and that the structures will be documented in their current state of use. The above mentioned documentation will be provided to the Commission by October 12, 2018. HABS documentation will be reviewed and approved by the Commission prior to demolition. No demolition activities will occur prior to the Commission providing written approval.

3. FedEx, with the assistance of the Authority, will develop and provide an architectural history and context report (AHC) for the airport. The AHC will be submitted separately from the HABS documentation and will provide a succinct and holistic history of the airport to provide context for the Hanger Complex’s historic significance. The AHC will address the history of the airport from its inception to the present with an emphasis on how and why the Hangar Complex was developed and incorporated into the war effort as well as how it has affected the transformation of the Memphis International Airport. The AHC will address growth and development patterns, which may be presented in mapped format with contextual explanations. The AHC will include current floorplan drawings of the Hanger Complex structures and may include original drawings if readily available. The AHC will utilize primary sources when available, but may rely on secondary sources as necessary.

The AHC will be approximately 20-30 pages in length, including figures and maps. It is understood that the AHC is not a survey of the airport and will not include survey information or details for individual buildings outside of the Hanger Complex. This documentation will be provided to the Commission after demolition activities. The information will also be made available to the public through its incorporation in the history section of the Authority’s website.

STIPULATION III. POST-REVIEW DISCOVERIES

If, during the implementation of the project, a previously unidentified property is discovered or a previously identified historic property is affected in an unanticipated manner, all work within a minimum of 50 feet around the area of the discovery shall cease until a treatment plan can be developed and implemented. The SHPO and FAA shall be notified at the earliest opportunity and the Authority shall require its contractor to take all reasonable measures to avoid harm to the property until FAA concludes consultation with the SHPO and, to the extent appropriate, other consulting parties.

3

No human remains, associated or unassociated funerary objects, sacred objects, or objects of cultural patrimony are expected to be encountered in the archaeological investigations. However, should human remains be encountered during the survey, all ground disturbing activities in the vicinity of the human remains will be ceased immediately. The treatment of any human remains and associated funerary objects inadvertently discovered within the project area will comply with all applicable Tennessee State laws concerning archaeological sites and treatment of human remains.

STIPULATION IV: DISPUTE RESOLUTION

Should any party to this Memorandum object in writing within 30 days to any action taken pursuant hereto, the FAA shall consult with the party to resolve the concerns. If the FAA determines that the objection cannot be resolved, the FAA shall request further comments or recommendations of the ACHP concerning the dispute pursuant to 36 C.F.R. Part 800. Any comments on the subject of the dispute provided by the ACHP in response to such a request will be considered by the FAA in accordance with 36 C.F.R. Part 800. The FAA’s right and responsibility to carry out all actions under this Memorandum that are not the subject of the dispute will remain unchanged.

STIPULATION V: DURATION

If the terms of this Memorandum are not implemented within two years of ratification, the FAA shall provide the ACHP with the opportunity to comment on the effects and propose mitigation alternatives.

STIPULATION VI: TERMINATION

This Memorandum may be terminated by any party upon 30 days written notice to the other parties sent by certified mail, postage prepaid or by facsimile transmission and addressed to the respective parties.

If one party should provide such written notice of termination, all parties will consult during the 30 days prior to termination in order to attempt to reach agreement on amendments or other actions which would avoid termination. In the event of termination, the FAA agrees to comply with the 36 CFR 800.4 through 800.6 with regard to the matters covered by this Memorandum.

This agreement shall be null and void if its terms are not carried out within 2 years from the date of execution, unless the parties agree in writing to an extension for carrying out its terms.

4

Execution of this Memorandum and implementation of its terms is evidence, and shall be considered as such, that FAA has afforded the ACHP and the Tennessee SHPO the opportunity to comment on the proposed project and that the FAA has taken into account the effects of said construction on historic properties.

SIGNATORIES:
FEDERAL AVIATION ADMINISTRATION
By:	/s/ Phillip J. Braden	Date: August 27, 2018
Phillip J. Braden, Manager
Memphis Airports District Office
TENNESSEE HISTORICAL COMMISSION
By:	/s/ E. Patrick McIntyre, Jr.	Date: September 10, 2018
E. Patrick McIntyre, Jr.
Executive Director and
State Historic Preservation Officer
INVITED SIGNATORIES:
MEMPHIS-SHELBY COUNTY AIRPORT AUTHORITY
By:	/s/ Scott Brockman	Date: September 24, 2018
Scott Brockman
President/CEO
Memphis-Shelby County Airport Authority
FEDERAL EXPRESS
By:	/s/ Karen Blanks Ellis	Date: September 24, 2018
Karen Blanks Ellis
Managing Director
Federal Express

5

EXHIBIT “D”

Tennessee Historical Commission—Letter of Demolition Approval dated

October 16, 2018

TENNESSEE HISTORICAL COMMISSION

STATE HISTORIC PRESERVATION OFFICE

2941 LEBANON PIKE

NASHVILLE, TENNESSEE 37243-0442

OFFICE: (615) 532-1550

www.tnhistoricalcommission.org

October 16, 2018

Ms. Kristi Ashley

Memphis Airports District Office

Memphis Airports District Office

2862 Business Park Drive, Building G

Memphis, TN 38118-1555

RE: FAA I Federal Aviation Administration, FedEx Transformation Project at Memphis International Airport, Memphis, Shelby County, TN

Dear Ms. Ashley:

We have reviewed the documents you submitted regarding your proposed undertaking . The HABS Level II documentation you submitted fulfills Stipulation II of the Memorandum of Agreement between our office, the Federal Aviation Administration, the Memphis-Shelby County Airport Authority, and Federal Express regarding the Federal Express Transformation Project at Memphis International Airport, ratified on September 24,2018. Demolition can proceed on these buildings. Questions and comments may be directed to Casey Lee (615 253-3163). We appreciate your cooperation.

Sincerely,

/s/ E. Patrick McIntyre, Jr.

E. Patrick McIntyre, Jr.

Executive Director and

State Historic Preservation Officer

EPM/cjI

EX-15.1

EXHIBIT 15.1

The Board of Directors and Stockholders

FedEx Corporation

We are aware of the incorporation by reference in the Registration Statements (Form S-8 Nos. 333-222198, 333-192957, 333-171232, 333-45037, 333-34934, 333-100572, 333-111399, 333-121418, 333-130619, and 333-156333 and Form S-3 No. 333-226426) of FedEx Corporation and in the related Prospectuses of our report dated March 19, 2019, relating to the unaudited condensed consolidated interim financial statements of FedEx Corporation that are included in its Form 10-Q for the quarter ended February 28, 2019.

/s/ Ernst & Young LLP

Memphis, Tennessee

March 19, 2019

EX-31.1

EXHIBIT 31.1

CERTIFICATION PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Frederick W. Smith, certify that:

1. I have reviewed this quarterly report on Form 10-Q of FedEx Corporation (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 19, 2019

/s/ Frederick W. Smith

Frederick W. Smith

Chairman and

Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Alan B. Graf, Jr., certify that:

1. I have reviewed this quarterly report on Form 10-Q of FedEx Corporation (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 19, 2019

/s/ Alan B. Graf, Jr.

Alan B. Graf, Jr.

Executive Vice President and

Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of FedEx Corporation (“FedEx”) on Form 10-Q for the period ended February 28, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Frederick W. Smith, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of FedEx.

Date: March 19, 2019

/s/ Frederick W. Smith

Frederick W. Smith

Chairman and

Chief Executive Officer

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of FedEx Corporation (“FedEx”) on Form 10-Q for the period ended February 28, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Alan B. Graf, Jr., certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of FedEx.

Date: March 19, 2019

/s/ Alan B. Graf, Jr.

Alan B. Graf, Jr.

Executive Vice President and

Chief Financial Officer

XML

Document and Entity Information - shares	9 Months Ended
	Feb. 28, 2019	Mar. 15, 2019
Document And Entity Information [Abstract]
Document Type	10-Q
Document Period End Date	Feb. 28, 2019
Amendment Flag	false
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q3
Entity Registrant Name	FedEx Corporation
Entity Central Index Key	0001048911
Current Fiscal Year End Date	--05-31
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding		260,574,612
Trading Symbol	FDX

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Millions	Feb. 28, 2019	May 31, 2018
CURRENT ASSETS
Cash and cash equivalents	$ 2,872	$ 3,265
Receivables, less allowances of $318 and $401	9,037	8,481
Spare parts, supplies and fuel, less allowances of $339 and $268	546	525
Prepaid expenses and other	1,045	1,070
Total current assets	13,500	13,341
PROPERTY AND EQUIPMENT, AT COST	58,164	55,121
Less accumulated depreciation and amortization	28,396	26,967
Net property and equipment	29,768	28,154
OTHER LONG-TERM ASSETS
Goodwill	6,916	6,973
Other assets	4,280	3,862
Total other long-term assets	11,196	10,835
ASSETS	54,464	52,330
CURRENT LIABILITIES
Short-term borrowings	225
Current portion of long-term debt	973	1,342
Accrued salaries and employee benefits	1,659	2,177
Accounts payable	3,156	2,977
Accrued expenses	3,243	3,131
Total current liabilities	9,256	9,627
LONG-TERM DEBT, LESS CURRENT PORTION	17,218	15,243
OTHER LONG-TERM LIABILITIES
Deferred income taxes	3,211	2,867
Pension, postretirement healthcare and other benefit obligations	1,847	2,187
Self-insurance accruals	1,861	1,784
Deferred lease obligations	512	551
Deferred gains, principally related to aircraft transactions	118	121
Other liabilities	547	534
Total other long-term liabilities	8,096	8,044
COMMITMENTS AND CONTINGENCIES
COMMON STOCKHOLDERS' INVESTMENT
Common stock, $0.10 par value; 800 million shares authorized; 318 million shares issued as of February 28, 2019 and May 31, 2018	32	32
Additional paid-in capital	3,209	3,117
Retained earnings	26,650	24,823
Accumulated other comprehensive loss	(737)	(578)
Treasury stock, at cost	(9,260)	(7,978)
Total common stockholders’ investment	19,894	19,416
LIABILITIES AND COMMON STOCKHOLDERS' INVESTMENT	$ 54,464	$ 52,330

XML

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions	Feb. 28, 2019	May 31, 2018
CURRENT ASSETS
Allowances for receivables	$ 318	$ 401
Allowances for spare parts, supplies and fuel	$ 339	$ 268
COMMON STOCKHOLDERS' INVESTMENT
Common stock, par value	$ 0.10	$ 0.10
Common stock, shares authorized	800,000,000	800,000,000
Common stock, shares issued	318,000,000	318,000,000

XML

Condensed Consolidated Statements of Income - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Feb. 28, 2019	Feb. 28, 2018	Feb. 28, 2019	Feb. 28, 2018
Income Statement [Abstract]
REVENUES	$ 17,010	$ 16,526	$ 51,886	$ 48,136
OPERATING EXPENSES:
Salaries and employee benefits	6,069	6,124	18,589	17,677
Purchased transportation	$ 4,253	$ 3,935	$ 12,566	$ 11,220
Type of cost, good or service [extensible list]	us-gaap:ShippingAndHandlingMember	us-gaap:ShippingAndHandlingMember	us-gaap:ShippingAndHandlingMember	us-gaap:ShippingAndHandlingMember
Rentals and landing fees	$ 874	$ 873	$ 2,533	$ 2,526
Depreciation and amortization	851	786	2,487	2,293
Fuel	907	914	2,945	2,435
Maintenance and repairs	658	628	2,144	1,968
Business realignment costs	4	0	4	0
Other	2,483	2,408	7,468	7,073
OPERATING EXPENSES	16,099	15,668	48,736	45,192
OPERATING INCOME	911	858	3,150	2,944
OTHER INCOME (EXPENSE):
Interest, net	(135)	(125)	(393)	(363)
Other retirement plans income	158	143	474	436
Other, net	(3)	(2)	(22)	(22)
OTHER INCOME (EXPENSE)	20	16	59	51
INCOME BEFORE INCOME TAXES	931	874	3,209	2,995
PROVISION FOR INCOME TAXES	192	(1,200)	700	(450)
NET INCOME	$ 739	$ 2,074	$ 2,509	$ 3,445
EARNINGS PER COMMON SHARE:
Basic	$ 2.83	$ 7.74	$ 9.55	$ 12.85
Diluted	2.80	7.59	9.41	12.63
DIVIDENDS DECLARED PER COMMON SHARE	$ 0.65	$ 0.50	$ 2.60	$ 2.00

XML

Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Feb. 28, 2019	Feb. 28, 2018	Feb. 28, 2019	Feb. 28, 2018
Statement Of Income And Comprehensive Income [Abstract]
NET INCOME	$ 739	$ 2,074	$ 2,509	$ 3,445
OTHER COMPREHENSIVE INCOME (LOSS):
Foreign currency translation adjustments, net of tax expense of $9 and tax benefit of $22 in 2019 and tax expense of $9 and $26 in 2018	103	100	(90)	119
Amortization of prior service credit, net of tax benefit of $7 and $21 in 2019 and tax benefit of $7 and $29 in 2018	(23)	(23)	(69)	(61)
Other comprehensive income (loss)	80	77	(159)	58
COMPREHENSIVE INCOME	$ 819	$ 2,151	$ 2,350	$ 3,503

XML

Condensed Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Feb. 28, 2019	Feb. 28, 2018	Feb. 28, 2019	Feb. 28, 2018
Other Comprehensive Income, Tax Amounts
Foreign currency translation adjustments, tax expense (benefit)	$ 9	$ 9	$ (22)	$ 26
Amortization of prior service credit, tax expense/benefit	$ 7	$ 7	$ 21	$ 29

XML

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions	9 Months Ended
	Feb. 28, 2019	Feb. 28, 2018
Operating Activities:
Net income	$ 2,509	$ 3,445
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	2,487	2,293
Provision for uncollectible accounts	221	177
Stock-based compensation	141	135
Deferred income taxes and other noncash items	250	(914)
Changes in assets and liabilities:
Receivables	(780)	(986)
Other assets	(96)	(151)
Accounts payable and other liabilities	(1,307)	(2,781)
Other, net	(102)	(56)
Cash provided by operating activities	3,323	1,162
Investing Activities:
Capital expenditures	(3,757)	(3,994)
Business acquisitions, net of cash acquired		(44)
Proceeds from asset dispositions and other	62	21
Cash used in investing activities	(3,695)	(4,017)
Financing Activities:
Proceeds from short-term borrowings, net	220	797
Principal payments on debt	(874)	(31)
Proceeds from debt issuances	2,463	1,481
Proceeds from stock issuances	58	284
Dividends paid	(514)	(402)
Purchase of treasury stock	(1,365)	(558)
Other, net	5	6
Cash (used in) provided by financing activities	(7)	1,577
Effect of exchange rate changes on cash	(14)	98
Net (decrease) increase in cash and cash equivalents	(393)	(1,180)
Cash and cash equivalents at beginning of period	3,265	3,969
Cash and cash equivalents at end of period	$ 2,872	$ 2,789

XML

Condensed Consolidated Statements of Changes in Common Shareholders Investment - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Feb. 28, 2019	Feb. 28, 2018	Feb. 28, 2019	Feb. 28, 2018
Beginning Balance			$ 19,416
NET INCOME	$ 739	$ 2,074	2,509	$ 3,445
Other comprehensive income, net of tax (expense)/benefit	80	77	(159)	58
Ending Balance	19,894	18,894	19,894	18,894
Common Stock
Beginning Balance	32	32	32	32
Ending Balance	32	32	32	32
Additional Paid-In Capital
Beginning Balance	3,185	3,055	3,117	3,005
Employee incentive plans and other	24	30	92	80
Ending Balance	3,209	3,085	3,209	3,085
Retained Earnings
Beginning Balance	26,080	21,785	24,823	20,833
NET INCOME	739	2,074	2,509	3,445
Cash dividends declared	(169)	(133)	(683)	(535)
Employee incentive plans and other		(16)	1	(33)
Ending Balance	26,650	23,710	26,650	23,710
Accumulated Other Comprehensive Income
Beginning Balance	(817)	(434)	(578)	(415)
Other comprehensive income, net of tax (expense)/benefit	80	77	(159)	58
Ending Balance	(737)	(357)	(737)	(357)
Treasury Stock
Beginning Balance	(9,186)	(7,383)	(7,978)	(7,382)
Purchase of treasury stock	(93)	(288)	(1,365)	(558)
Employee incentive plans and other	19	95	83	364
Ending Balance	$ (9,260)	$ (7,576)	$ (9,260)	$ (7,576)

XML

Condensed Consolidated Statements of Changes in Common Shareholders Investment (Parenthetical) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Feb. 28, 2019	Feb. 28, 2018	Feb. 28, 2019	Feb. 28, 2018
Statement Of Stockholders Equity [Abstract]
Cash dividends declared, per share	$ 0.65	$ 0.50	$ 2.60	$ 2.00
Other comprehensive income, tax (expense)/benefit	$ (2)	$ (2)	$ 43	$ 3
Purchase of treasury stock	600,000	1,200,000	6,000,000	2,400,000
Employee incentive plans and other, shares issued	100,000	700,000	600,000	2,700,000

XML

General

9 Months Ended

Feb. 28, 2019

General [Abstract]

General

(1) General

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. These interim financial statements of FedEx Corporation (“FedEx”) have been prepared in accordance with accounting principles generally accepted in the United States and Securities and Exchange Commission (“SEC”) instructions for interim financial information, and should be read in conjunction with our Annual Report on Form 10-K for the year ended May 31, 2018 (“Annual Report”). Significant accounting policies and other disclosures normally provided have been omitted since such items are disclosed in our Annual Report.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments (including normal recurring adjustments) necessary to present fairly our financial position as of February 28, 2019, and the results of our operations for the three- and nine-month periods ended February 28, 2019 and 2018, cash flows for the nine-month periods ended February 28, 2019 and 2018, and changes in common stockholders’ investment for the three- and nine-month periods ended February 28, 2019 and 2018. Operating results for the three- and nine-month periods ended February 28, 2019 are not necessarily indicative of the results that may be expected for the year ending May 31, 2019.

Except as otherwise specified, references to years indicate our fiscal year ending May 31, 2019 or ended May 31 of the year referenced and comparisons are to the corresponding period of the prior year.

RECLASSIFICATIONS. Certain reclassifications have been made to the prior years’ condensed consolidated financial statements to conform to the current year presentation.

REVENUE RECOGNITION. 

Satisfaction of Performance Obligation

We recognize revenue upon delivery of shipments for our transportation businesses and upon completion of services for our business services, logistics and trade services businesses. Transportation services are provided with the use of employees and independent businesses that contract with FedEx. 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 unaudited condensed consolidated statements of income.

For shipments in transit, revenue is recorded based on the percentage of service completed at the balance sheet date which results in our recognizing revenue 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 vast majority of our contracts include only one performance obligation, which is short in duration and spans only a few days. 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 stand-alone selling prices of the promised goods or services underlying each performance obligation. We frequently sell standard transportation services with observable stand-alone sales prices. In these instances, the observable stand-alone sales are used to determine the stand-alone selling price.

We sell customized customer-specific solutions, such as logistics, through which we provide the service of integrating a complex set of tasks and components into a single capability (even if that single capability results in the delivery of multiple units). Therefore, the entire contract is accounted for as one performance obligation. In these cases, we typically use the expected cost plus a margin approach to estimate the stand-alone selling price of each performance obligation.

Variable Consideration

It is common for our contracts to contain customer incentives, guaranteed service refunds or other provisions that can either increase or decrease the transaction price. These variable amounts are generally awarded based upon certain incentive achievements or performance metrics. We estimate variable consideration as the most likely amount to which we expect to be entitled. Estimates for adjustments to revenue and accounts receivable are recognized at the time of shipment for certain customer initiatives, money-back service guarantees and billing corrections based on our assessment of historical, current and forecasted information available. Delivery costs are accrued as incurred.

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 executed.

Contract Assets and Liabilities

Contract assets include billed and unbilled amounts resulting from in-transit packages, 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 packages totaled $526 million and $542 million at February 28, 2019 and May 31, 2018, respectively. Contract assets net of deferred unearned revenue were $353 million and $363 million at February 28, 2019 and May 31, 2018, respectively. Contract assets are included within current assets in the accompanying unaudited condensed consolidated balance sheets. Contract liabilities related to advance payments from customers were $9 million and $13 million at February 28, 2019 and May 31, 2018, respectively. Contract liabilities are included within current liabilities in the accompanying unaudited condensed consolidated balance sheets.

Our contract logistics, global trade services and certain transportation businesses engage in some 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.

Certain of our revenue-producing transactions are subject to taxes, 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

The following table provides revenue by service type (dollars in millions) for the periods ended February 28. This presentation is consistent with how we organize our segments internally for making operating decisions and measuring performance.

	Three Months Ended				Nine Months Ended
	2019		2018		2019		2018
REVENUE BY SERVICE TYPE
FedEx Express segment:
Package:
U.S. overnight box	$	1,844	$	1,836	$	5,678	$	5,373
U.S. overnight envelope		433		435		1,345		1,317
U.S. deferred		1,119		996		3,131		2,796
Total U.S. domestic package revenue		3,396		3,267		10,154		9,486
International priority		1,738		1,841		5,508		5,469
International economy		806		793		2,541		2,378
Total international export package revenue		2,544		2,634		8,049		7,847
International domestic(1)		1,078		1,140		3,412		3,424
Total package revenue		7,018		7,041		21,615		20,757
Freight:
U.S.		772		739		2,294		2,040
International priority		477		532		1,574		1,527
International economy		495		492		1,568		1,354
International airfreight		76		93		244		276
Total freight revenue		1,820		1,856		5,680		5,197
Other		167		201		536		620
Total FedEx Express segment		9,005		9,098		27,831		26,574
FedEx Ground segment		5,261		4,828		15,202		13,598
FedEx Freight segment		1,750		1,613		5,627		4,950
FedEx Services segment		402		397		1,248		1,213
Other and eliminations(2)		592		590		1,978		1,801
	$	17,010	$	16,526	$	51,886	$	48,136

⁽¹⁾ International domestic revenues relate to our intra-country operations.

⁽²⁾ Includes the FedEx Logistics, Inc. (“FedEx Logistics” (formerly FedEx Trade Networks, Inc.)) operating segment.

EMPLOYEES UNDER COLLECTIVE BARGAINING ARRANGEMENTS. The pilots of Federal Express Corporation (“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. The collective bargaining agreement is scheduled to become amendable in November 2021. 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 Distribution System, Inc. (“FedEx Supply Chain” (formerly GENCO Distribution System, Inc.)) 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, and a union has been certified to represent owner-drivers at a FedEx Freight, Inc. facility in Canada.

STOCK-BASED COMPENSATION. We have two types of equity-based compensation: stock options and restricted stock. The key terms of the stock option and restricted stock awards granted under our incentive stock plans and all financial disclosures about these programs are set forth in our Annual Report.

Our stock-based compensation expense was $33 million for the three-month period ended February 28, 2019 and $141 million for the nine-month period ended February 28, 2019. Our stock-based compensation expense was $32 million for the three-month period ended February 28, 2018 and $135 million for the nine-month period ended February 28, 2018. Due to its immateriality, additional disclosures related to stock-based compensation have been excluded from this quarterly report.

BUSINESS REALIGNMENT COSTS. In December 2018, we announced cost-reduction programs primarily through initiatives at FedEx Express and FedEx Corporate Services, Inc. (“FedEx Services”), including a U.S.-based voluntary employee buyout program.

During the third quarter of 2019, we began offering voluntary cash buyouts to eligible U.S.-based employees in certain staff functions. The U.S.-based voluntary employee buyout program includes voluntary severance payments and funding to healthcare reimbursement accounts, with the voluntary severance payment calculated based on four weeks of gross base salary for every year of continuous FedEx service up to a maximum payment of two years of pay. Eligible employees will be scheduled to vacate positions in phases to ensure a smooth transition in the impacted functions so that we maintain service levels to our customers. Costs of the benefits provided under the program will be recognized as special termination benefits in the period employees accept their offers.

We incurred costs of approximately $4 million ($3 million, net of tax, or $0.01 per diluted share) during the third quarter of 2019 associated with our business realignment activities. These costs related to certain employee severance arrangements and other external costs directly attributable to our business realignment activities, such as professional fees. Total costs of the U.S.-based voluntary employee buyout program will depend on acceptance rates and severance payments will be made at the time of departure. The cost of our business realignment activities is included in the caption “Business realignment costs” in our unaudited condensed consolidated statements of income.

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

Recently Adopted Accounting Standards

In December 2017, the SEC staff issued Staff Accounting Bulletin (“SAB”) 118 to provide guidance to registrants in accounting for income taxes under the Tax Cuts and Jobs Act (“TCJA”). SAB 118 was issued to address the application of U.S. generally accepted accounting principles (“GAAP”) in situations when a registrant does not have the necessary information available, prepared, or analyzed in reasonable detail to finalize the calculations for certain income tax effects of the TCJA. In accordance with SAB 118, we made reasonable estimates and recorded provisional amounts for the TCJA during 2018. Under the transitional provisions of SAB 118, we had a one-year measurement period to complete the accounting for the initial tax effects of the TCJA. As of December 22, 2018, our accounting is complete for the tax effects of the TCJA, including the following elements initially recorded on a provisional basis:

• In 2018, we recognized a provisional benefit related to the revaluation of U.S. deferred tax assets and liabilities. During the second quarter of 2019, we revised the provisional benefit associated with the remeasurement of our net U.S. deferred tax liability. As a result, we recognized a $4 million tax expense, which decreased the $1.15 billion provisional benefit recorded in 2018.

• We previously recognized an immaterial provisional benefit from foreign tax credits exceeding the one-time transition tax on previously deferred foreign earnings. No adjustments were made to the provisional estimate recorded in 2018.

• We have determined to record the taxes for the global intangible low-taxed income (GILTI) as a period cost.

In 2014, the Financial Accounting Standards Board (“FASB”) and International Accounting Standards Board issued a new accounting standard that supersedes virtually all existing revenue recognition guidance under generally accepted accounting principles in the United States. The fundamental principles of the new guidance are that companies should recognize revenue in a manner that reflects the timing of the transfer of services to customers and the amount of revenue recognized reflects the consideration that a company expects to receive for the goods and services provided. The new guidance establishes a five-step approach for the recognition of revenue. We adopted this standard as of June 1, 2018 (fiscal 2019) using the modified retrospective method of adoption as permitted by the standard. The new guidance did not have an impact on our revenue recognition policies, practices or systems; therefore, there was no cumulative-effect adjustment to retained earnings as of June 1, 2018.

In March 2017, the FASB issued an Accounting Standards Update (ASU 2017-07) that changes how employers that sponsor defined benefit pension or other postretirement benefit plans present the net periodic benefit cost in the income statement. This new guidance requires entities to report the service cost component in the same line item or items as other compensation costs. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component outside of income from operations. This standard impacts our operating income but has no impact on our net income or earnings per share. We adopted this standard effective June 1, 2018 (fiscal 2019) and applied these changes retrospectively. As such, prior year financial results are recast to conform to these new rules upon adoption.

The following table presents our results under our historical method of accounting and as adjusted to reflect our adoption of ASU 2017-07 (in millions):

	Three Months Ended February 28, 2018								Nine Months Ended February 28, 2018
	Reported			Effect of Adoption of ASU 2017-07			As Adjusted		Reported			Effect of Adoption of ASU 2017-07			As Adjusted
Revenue	$	16,526		$	—		$	16,526	$	48,136		$	—		$	48,136
Operating Income		1,001			(143	)		858		3,380			(436	)		2,944
Other Income (Expense), net		(127	)		143			16		(385	)		436			51
Net Income		2,074			—			2,074		3,445			—			3,445

In August 2018, the SEC published Release No. 33-10532, Disclosure Update and Simplification (“DUSTR”), which adopted amendments to certain disclosure requirements that have become redundant, duplicative, overlapping, outdated or superseded, in light of other SEC disclosure requirements, GAAP, or changes in the information environment. While most of the DUSTR amendments eliminate outdated or duplicative disclosure requirements, the final rule amends the interim financial statement requirements to include a reconciliation of changes in common stockholders’ investment in the notes or as a separate statement for each period for which a statement of comprehensive income is required to be filed. The new interim reconciliation of changes in common stockholders’ investment is included herein as a separate statement.

New Accounting Standards and Accounting Standards Not Yet Adopted

In 2016, the FASB issued a new lease accounting standard which requires lessees to put most leases on their balance sheets but recognize the expenses in their income statements in a manner similar to current practice. The new standard states that a lessee will recognize a lease liability for the obligation to make lease payments and a right-of-use asset for the right to use the underlying asset for the lease term. Expenses related to leases determined to be operating leases will be recognized on a straight-line basis, while those determined to be financing leases will be recognized following a front-loaded expense profile in which interest and amortization are presented separately in the income statement. Based on our lease portfolio, we currently anticipate recognizing a lease liability and related right-of-use asset on our balance sheet of approximately $13 billion, with an immaterial impact on our income statement compared to the current lease accounting model. However, the ultimate impact of the standard will depend on our lease portfolio as of the adoption date. We are currently accumulating all of the necessary information required to properly account for the leases under the new standard. Additionally, we are implementing an enterprise-wide lease management system to assist in the accounting and are evaluating additional changes to our processes and internal controls to ensure we meet the standard’s reporting and disclosure requirements. These changes will be effective June 1, 2019 (fiscal 2020).

In February 2018, the FASB issued an Accounting Standards Update (ASU 2018-02) that will permit companies to reclassify the income tax effect of the TCJA on items within accumulated other comprehensive income (loss) (“AOCI”) to retained earnings. These changes will be effective June 1, 2019 (fiscal 2020). We are continuing to assess the impact of this new standard on our consolidated financial statements and related disclosures.

In August 2018, the FASB issued an Accounting Standards Update (ASU 2018-14) that modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement benefit plans. The guidance removes disclosures that are no longer considered cost beneficial, clarifies the specific requirements of disclosures and adds disclosure requirements identified as relevant. We expect this new guidance will have minimal impact on our financial reporting. These changes will be effective June 1, 2020 (fiscal 2021) and will be applied retrospectively. We plan to early adopt these new rules in the fourth quarter of 2019.

In August 2018, the FASB issued an Accounting Standards Update (ASU 2018-15) that reduces the complexity for accounting for costs of implementing a cloud computing service arrangement and aligns the accounting for capitalizing implementation costs of hosting arrangements, regardless of whether they convey a license to the hosted software. These changes will be effective June 1, 2020 (fiscal 2021). We are assessing the impact of this new standard on our consolidated financial statements and related disclosures.

TREASURY SHARES. In January 2016, our Board of Directors authorized a share repurchase program of up to 25 million shares. Shares under the current repurchase program may be repurchased from time to time in the open market or in privately negotiated transactions. The timing and volume of repurchases are at the discretion of management, based on the capital needs of the business, the market price of FedEx common stock and general market conditions. No time limit was set for the completion of the program, and the program may be suspended or discontinued at any time.

During the third quarter of 2019, we repurchased 0.6 million shares of FedEx common stock at an average price of $168.43 per share for a total of $93 million. During the nine months of 2019, we repurchased 6.0 million shares of FedEx common stock at an average price of $227.42 per share for a total of $1.4 billion. As of February 28, 2019, 5.7 million shares remained under the current share repurchase authorization.

DIVIDENDS DECLARED PER COMMON SHARE. On February 15, 2019, our Board of Directors declared a quarterly dividend of $0.65 per share of common stock. The dividend will be paid on April 1, 2019 to stockholders of record as of the close of business on March 11, 2019. 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.

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Accumulated Other Comprehensive Loss

9 Months Ended

Feb. 28, 2019

Accumulated Other Comprehensive Income Loss Net Of Tax [Abstract]

Accumulated Other Comprehensive Loss

(2) Accumulated Other Comprehensive Loss

The following table provides changes in AOCI, net of tax, reported in our unaudited condensed consolidated financial statements for the periods ended February 28 (in millions; amounts in parentheses indicate debits to AOCI):

	Three Months Ended						Nine Months Ended
	2019			2018			2019			2018
Foreign currency translation loss:
Balance at beginning of period	$	(952	)	$	(666	)	$	(759	)	$	(685	)
Translation adjustments		103			100			(90	)		119
Balance at end of period		(849	)		(566	)		(849	)		(566	)
Retirement plans adjustments:
Balance at beginning of period		135			232			181			270
Reclassifications from AOCI		(23	)		(23	)		(69	)		(61	)
Balance at end of period		112			209			112			209
Accumulated other comprehensive (loss) at end of period	$	(737	)	$	(357	)	$	(737	)	$	(357	)

The following table presents details of the reclassifications from AOCI for the periods ended February 28 (in millions; amounts in parentheses indicate debits to earnings):

	Amount Reclassified from AOCI												Affected Line Item in the Income Statement
	Three Months Ended						Nine Months Ended
	2019			2018			2019			2018
Amortization of retirement plans    prior service credits, before tax	$	30		$	30		$	90		$	90		Salaries and employee benefits
Income tax benefit		(7	)		(7	)		(21	)		(29	)	Provision for income taxes
AOCI reclassifications, net of tax	$	23		$	23		$	69		$	61		Net income

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Financing Arrangements

9 Months Ended

Feb. 28, 2019

Debt And Capital Lease Obligations [Abstract]

Financing Arrangements

(3) Financing Arrangements

We have a shelf registration statement filed with the SEC that allows us to sell, in one or more future offerings, any combination of our unsecured debt securities and common stock.

During the third quarter of 2019, we issued $1.2 billion of senior unsecured debt under our current shelf registration statement, comprised of €640 million of 0.7% fixed-rate notes due in May 2022 and $500 million of 3.4% fixed-rate notes due in January 2022. We will use the net proceeds to pay the €500 million aggregate principal amount of floating rate notes due at maturity on April 11, 2019, and for general corporate purposes.

During the second quarter of 2019, we issued $1.25 billion of senior unsecured debt under our current shelf registration statement, comprised of $400 million of 4.20% fixed-rate notes due in October 2028 and $850 million of 4.95% fixed-rate notes due in October 2048. Interest on these notes is paid semi-annually. We used the net proceeds to redeem the $750 million aggregate principal amount of 8.00% notes due January 15, 2019, and for general corporate purposes.

We have a five-year $2.0 billion revolving credit facility that expires in November 2020. The facility, which includes a $500 million letter of credit sublimit, is available to finance our operations and other cash flow needs. The agreement contains a financial covenant, which requires us to maintain a ratio of debt to consolidated earnings (excluding non-cash retirement plans mark-to-market adjustments and non-cash asset impairment charges) before interest, taxes, depreciation and amortization (“adjusted EBITDA”) of not more than 3.5 to 1.0, calculated as of the end of the applicable quarter on a rolling four-quarters basis. The ratio of our debt to adjusted EBITDA was 2.2 to 1.0 at February 28, 2019. We believe this covenant is the only significant restrictive covenant in our revolving credit agreement. Our revolving credit agreement contains other customary covenants that do not, individually or in the aggregate, materially restrict the conduct of our business. We are in compliance with this financial covenant and all other covenants of our revolving credit agreement and do not expect the covenants to affect our operations, including our liquidity or expected funding needs.

During the third quarter of 2019, we issued commercial paper to provide us with additional short-term liquidity. The maximum amount outstanding during the quarter was $750 million. Our commercial paper program is backed by unused commitments under the revolving credit facility, and borrowings under the program reduce the amount available under the credit facility. As of February 28, 2019, $225 million of commercial paper and $53 million in letters of credit were outstanding, leaving $1.722 billion available under the revolving credit facility for future borrowings.

Long-term debt, including current maturities and exclusive of capital leases, had carrying values of $18.1 billion at February 28, 2019 and $16.5 billion at May 31, 2018, compared with estimated fair values of $17.8 billion at February 28, 2019 and $16.6 billion at May 31, 2018. The annualized weighted-average interest rate on long-term debt was 3.4% at February 28, 2019. The estimated fair values were determined based on quoted market prices and the current rates offered for debt with similar terms and maturities. The fair value of our long-term debt is classified as Level 2 within the fair value hierarchy. This classification is defined as a fair value determined using market-based inputs other than quoted prices that are observable for the liability, either directly or indirectly.

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Computation of Earnings Per Share

9 Months Ended

Feb. 28, 2019

Earnings Per Share [Abstract]

Computation of Earnings Per Share

(4) Computation of Earnings Per Share

The calculation of basic and diluted earnings per common share for the periods ended February 28 was as follows (in millions, except per share amounts):

	Three Months Ended				Nine Months Ended
	2019		2018		2019		2018
Basic earnings per common share:
Net earnings allocable to common shares(1)	$	738	$	2,071	$	2,506	$	3,441
Weighted-average common shares		261		268		262		268
Basic earnings per common share	$	2.83	$	7.74	$	9.55	$	12.85
Diluted earnings per common share:
Net earnings allocable to common shares(1)	$	738	$	2,071	$	2,506	$	3,441
Weighted-average common shares		261		268		262		268
Dilutive effect of share-based awards		2		5		4		4
Weighted-average diluted shares		263		273		266		272
Diluted earnings per common share	$	2.80	$	7.59	$	9.41	$	12.63
Anti-dilutive options excluded from diluted earnings per    common share		7.2		1.9		5.0		2.6

⁽¹⁾Net earnings available to participating securities were immaterial in all periods presented.

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Income Taxes

9 Months Ended

Feb. 28, 2019

Income Tax Disclosure [Abstract]

Income Taxes

(5) Income Taxes

Our effective tax rate was 20.6% for the third quarter and 21.8% for the nine months of 2019, compared with (137.3)% for the third quarter and (15.0)% for the nine months of 2018. The 2019 tax rates include a benefit of $90 million from the reduction of a valuation allowance on certain tax loss carryforwards and an expense of $50 million from the impact on our deferred taxes attributable to a recently enacted lower tax rate in the Netherlands. The 2019 tax rates were also favorably impacted by the TCJA, which resulted in benefits of approximately $60 million during the third quarter and $230 million for the nine months of 2019, primarily from the lower statutory tax rate on fiscal 2019 earnings. The tax rate for the nine months of 2019 also benefited by approximately $60 million from accelerated deductions claimed on our 2018 U.S. income tax return. The 2018 tax rates were favorably impacted by a provisional benefit of $1.15 billion from the remeasurement of our net U.S. deferred tax liability and a provisional benefit of $36 million from foreign tax credits exceeding the one-time transition tax on previously deferred foreign earnings. In addition to these provisional amounts, we recognized a $204 million benefit from a $1.5 billion contribution to our tax-qualified U.S. domestic pension plans (“U.S. Pension Plans”) in February 2018 and $165 million related to the phase-in of a reduced statutory tax rate on 2018 year-to-date earnings, of which approximately $120 million was recorded in the third quarter and attributable to the first half of 2018 earnings.

On January 15, 2019, the U.S. Treasury Department issued final regulations covering the one-time transition tax on unrepatriated foreign earnings, which was enacted as part of the TCJA. Certain guidance included in these final regulations is inconsistent with our interpretation that led to the recognition of a $225 million ($0.94 per diluted share) benefit in 2018 (the “2018 Benefit”). Notwithstanding this inconsistency, we remain confident in our interpretation of the TCJA and intend to defend this position through litigation, if necessary. However, if we are ultimately unsuccessful in defending our position, we may be required to reverse the 2018 Benefit.

During the third quarter of 2019, we completed our accounting for the tax effects of the TCJA. No additional adjustments were made during the quarter. As a result, the only adjustment to the amounts initially recorded on a provisional basis in 2018 was a tax expense of $4 million recognized in the second quarter of 2019 as a revision of the provisional benefit associated with the remeasurement of our net U.S. deferred tax liability.  

The TCJA, enacted during the third quarter of fiscal 2018, significantly changed the U.S. corporate income tax system including, among other things, lowering the statutory federal income tax rate from 35% to 21%. Due to our May 31 fiscal year-end, the lower rate was phased in, resulting in a U.S. statutory federal rate of 29.2% for 2018 and a statutory federal rate of 21% for subsequent years.

The following table provides a reconciliation of the 2018 effective tax rates to the 2019 effective tax rates, including the impacts of the TCJA, for the periods ended February 28:

	Three Months Ended			Nine Months Ended
2018 Effective Tax Rate(a)		(137.3	)%		(15.0	)%
Remeasurement of net U.S. deferred tax liability in 2018		131.5			38.5
Effect of February 2018 pension contribution(b)		23.3			6.8
Lower statutory tax rate on first-half 2018 earnings (35% to 29.2%)(c)		12.5			—
Reduction of valuation allowance on tax loss carryforwards in 2019		(10.3	)		(3.0	)
Lower statutory tax rate on 2019 earnings (29.2% to 21%)(c)		(7.6	)		(7.6	)
Remeasurement of net Dutch deferred tax asset in 2019		5.3			1.5
Transition tax provisional benefit in 2018		4.1			1.2
Foreign tax credits on foreign dividends in 2018		1.2			2.9
Accelerated deductions claimed in 2019 on the 2018 U.S. income tax return		—			(1.8	)
Other, net(d)		(2.1	)		(1.7	)
2019 Effective Tax Rate(a)		20.6	%		21.8	%

^(a) 2018 includes a blended U.S. statutory federal income tax rate of 29.2% while 2019 includes the fully phased-in rate of 21%.

^(b) The benefit is from the pension contribution deducted on our 2017 tax return at a tax rate of 35%.

^(c) Due to our May 31 fiscal year-end, the TCJA’s lower U.S. statutory federal income tax rate that went into effect on December 22, 2017 was phased in resulting in a rate of 29.2% for 2018 and a rate of 21% for subsequent years.

^(d) The 2018 tax rates were negatively impacted by the effect of the NotPetya cyberattack, costs incurred in connection with the integration of foreign operations of FedEx Express and TNT Express B.V. (“TNT Express”), changes in uncertain tax positions and tax rate impacts on changes in deferred tax items after the TCJA enactment, and were favorably impacted from tax benefits from share-based payments.

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Retirement Plans

9 Months Ended

Feb. 28, 2019

Compensation And Retirement Disclosure [Abstract]

Retirement Plans

(6) Retirement Plans

We sponsor programs that provide retirement benefits to most of our employees. These programs include defined benefit pension plans, defined contribution plans and postretirement healthcare plans. Key terms of our retirement plans are provided in our Annual Report.

Our retirement plans costs for the periods ended February 28 were as follows (in millions):

	Three Months Ended				Nine Months Ended
	2019		2018		2019		2018
Defined benefit pension plans, net	$	28	$	39	$	85	$	113
Defined contribution plans		138		135		415		386
Postretirement healthcare plans		19		19		56		56
	$	185	$	193	$	556	$	555

Net periodic benefit cost of the pension and postretirement healthcare plans for the periods ended February 28 included the following components (in millions):

	Three Months Ended
	U.S. Pension Plans						International Pension Plans						Postretirement Healthcare Plans
	2019			2018			2019			2018			2019		2018
Service cost	$	173		$	169		$	23		$	23		$	9	$	9
Other retirement plans (income) expense:
Interest cost		237			279			13			12			10		10
Expected return on plan assets		(376	)		(406	)		(12	)		(10	)		—		—
Amortization of prior service credit and other		(30	)		(29	)		—			1			—		—
		(169	)		(156	)		1			3			10		10
	$	4		$	13		$	24		$	26		$	19	$	19
	Nine Months Ended
	U.S. Pension Plans						International Pension Plans						Postretirement Healthcare Plans
	2019			2018			2019			2018			2019		2018
Service cost	$	517		$	509		$	72		$	69		$	26	$	27
Other retirement plans (income) expense:
Interest cost		713			836			38			37			30		29
Expected return on plan assets		(1,129	)		(1,218	)		(36	)		(32	)		—		—
Amortization of prior service credit and other		(89	)		(88	)		(1	)		—			—		—
		(505	)		(470	)		1			5			30		29
	$	12		$	39		$	73		$	74		$	56	$	56

Contributions to our U.S. Pension Plans for the nine-month periods ended February 28 were as follows (in millions):

	2019		2018
Required	$	—	$	22
Voluntary		1,000		2,478
	$	1,000	$	2,500

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Business Segment Information

9 Months Ended

Feb. 28, 2019

Segment Reporting Disclosure Of Entitys Reportable Segments [Abstract]

Business Segment Information

(7) Business Segment Information

We provide a broad portfolio of transportation, e-commerce and business services through companies competing collectively, operating independently and managed collaboratively, under the respected FedEx brand. Our primary operating companies are FedEx Express, including TNT 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 U.S. provider of less-than-truckload (“LTL”) freight transportation services. These companies 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)
	TNT Express (international express transportation, small-package ground delivery and freight    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)
	FedEx Office (document and business services and package acceptance)

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

FedEx Services Segment

The FedEx Services segment operates combined sales, marketing, administrative and information-technology functions in shared services operations that support our transportation businesses and allow us to obtain synergies from the combination of these functions. For the international regions of FedEx Express, some of these functions are performed on a regional basis and reported by FedEx Express in their natural expense line items. The FedEx Services segment includes: FedEx Services, which provides sales, marketing, information technology, communications, customer service, technical support, billing and collection services for U.S. customers of our major business units and certain back-office support to our other companies; and FedEx Office and Print Services, Inc. (“FedEx Office”), which provides an array of document and business services and retail access to our customers for our package transportation businesses.

The FedEx Services segment provides direct and indirect support to our transportation businesses, and we allocate all of the net operating costs of the FedEx Services segment (including the net operating results of FedEx Office) to reflect the full cost of operating our transportation businesses in the results of those segments. Within the FedEx Services segment allocation, the net operating results of FedEx Office, which are an immaterial component of our allocations, are allocated to FedEx Express and FedEx Ground. 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 transportation segments.

Operating expenses for each of our transportation segments include the allocations from the FedEx Services segment to the respective transportation segments. These allocations also include charges and credits for administrative services provided between operating companies. The allocations of net operating costs are based on metrics such as relative revenues 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, as well as certain other costs and credits not attributed to our core business. These costs are not allocated to the other business segments.

Also included in corporate and other is the FedEx Logistics operating segment, which provides customs brokerage and global ocean and air freight forwarding through FedEx Trade Networks Transport & Brokerage, Inc.; cross-border enablement and technology solutions and e-commerce transportation solutions through FedEx Cross Border Technologies, Inc.; integrated supply chain management solutions through FedEx Supply Chain; time-critical shipment services through FedEx Custom Critical, Inc.; and, effective September 1, 2018, critical inventory and service parts logistics, 3-D printing and technology repair through FedEx Forward Depots, Inc.

Certain FedEx operating companies provide transportation and related services for other FedEx companies outside their reportable segment. Billings for such services are based on negotiated rates, which we believe approximate fair value, and are reflected as revenues of the billing segment. These rates are adjusted from time to time based on market conditions. Such intersegment revenues and expenses are eliminated in our consolidated results and are not separately identified in the following segment information because the amounts are not material.

The following table provides a reconciliation of reportable segment revenues and operating income (loss) to our unaudited condensed consolidated financial statement totals for the periods ended February 28 (in millions):

	Three Months Ended						Nine Months Ended
	2019			2018			2019			2018
Revenues:
FedEx Express segment	$	9,005		$	9,098		$	27,831		$	26,574
FedEx Ground segment		5,261			4,828			15,202			13,598
FedEx Freight segment		1,750			1,613			5,627			4,950
FedEx Services segment		402			397			1,248			1,213
Other and eliminations		592			590			1,978			1,801
	$	17,010		$	16,526		$	51,886		$	48,136
Operating income (loss):
FedEx Express segment	$	370		$	317		$	1,357		$	1,238
FedEx Ground segment		577			614			1,830			1,716
FedEx Freight segment		97			49			421			322
Corporate, other and eliminations		(133	)		(122	)		(458	)		(332	)
	$	911		$	858		$	3,150		$	2,944

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Commitments

9 Months Ended

Feb. 28, 2019

Commitments [Abstract]

Commitments

(8) Commitments

As of February 28, 2019, our purchase commitments under various contracts for the remainder of 2019 and annually thereafter were as follows (in millions):

	Aircraft and Related		Other(1)		Total
2019 (remainder)	$	421	$	296	$	717
2020		1,998		833		2,831
2021		2,276		597		2,873
2022		1,874		433		2,307
2023		1,586		275		1,861
Thereafter		3,079		535		3,614
Total	$	11,234	$	2,969	$	14,203

⁽¹⁾ Primarily equipment and advertising contracts.

The amounts reflected in the table above for purchase commitments represent noncancelable agreements to purchase goods or services. As of February 28, 2019, our obligation to purchase six Boeing 777 Freighter (“B777F”) aircraft and five Boeing 767-300 Freighter (“B767F”) aircraft is conditioned upon there being no event that causes FedEx Express or its employees not to be covered by the Railway Labor Act of 1926, as amended. Open purchase orders that are cancelable are not considered unconditional purchase obligations for financial reporting purposes and are not included in the table above.

As of February 28, 2019, we had $965 million in deposits and progress payments on aircraft purchases and other planned aircraft-related transactions. These deposits are classified in the “Other assets” caption of our accompanying unaudited condensed consolidated balance sheets. Aircraft and related contracts are subject to price escalations. The following table is a summary of the key aircraft we are committed to purchase as of February 28, 2019 with the year of expected delivery:

	Cessna SkyCourier 408		ATR 72-600F		B767F		B777F		Total
2019 (remainder)		-		-		4		1		5
2020		-		-		17		5		22
2021		12		5		18		2		37
2022		12		6		12		3		33
2023		12		6		6		4		28
Thereafter		14		13		-		6		33
Total		50		30		57		21		158

A summary of future minimum lease payments under noncancelable operating leases with an initial or remaining term in excess of one year at February 28, 2019 is as follows (in millions):

	Aircraft and Related Equipment		Facilities and Other		Total Operating Leases
2019 (remainder)	$	26	$	571	$	597
2020		261		2,083		2,344
2021		203		1,923		2,126
2022		185		1,728		1,913
2023		127		1,555		1,682
Thereafter		48		8,926		8,974
Total	$	850	$	16,786	$	17,636

Future minimum lease payments under capital leases were immaterial at February 28, 2019. While certain of our lease agreements contain covenants governing the use of the leased assets or require us to maintain certain levels of insurance, none of our lease agreements include material financial covenants or limitations.

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Contingencies

9 Months Ended

Feb. 28, 2019

Loss Contingency [Abstract]

Contingencies

(9) Contingencies

Independent Contractor — Lawsuits and Administrative Proceedings. FedEx Ground is involved in lawsuits and administrative proceedings claiming that owner-operators engaged under operating agreements no longer in place should have been treated as employees of FedEx Ground, rather than independent contractors. In addition, we are defending joint-employer cases where it is alleged that FedEx Ground should be treated as an employer of the drivers employed by owner-operators engaged by FedEx Ground. These cases are in varying stages of litigation, and we are not currently able to estimate an amount or range of potential loss in all of these matters. However, we do not expect to incur, individually or in the aggregate, a material loss in these matters. Nevertheless, adverse determinations in matters related to owner-operators engaged by FedEx Ground could, among other things, entitle certain owner-operators to the reimbursement of certain expenses, and their drivers to certain wage payments from the owner-operators and FedEx Ground, and result in employment and withholding tax and benefit liability for FedEx Ground. We continue to believe that owner-operators engaged by FedEx Ground are properly classified as independent contractors and that FedEx Ground is not an employer or joint employer of the drivers of these independent contractors.

City and State of New York Cigarette Suit. The City of New York and the State of New York filed two related lawsuits against FedEx Ground in December 2013 and November 2014 arising from FedEx Ground’s alleged shipments of cigarettes to New York residents in contravention of several statutes, including the Racketeer Influenced and Corrupt Organizations Act (“RICO”) and New York’s Public Health Law, as well as common law nuisance claims. The first-filed lawsuit alleged that FedEx Ground provided delivery services on behalf of four shippers, and the second-filed lawsuit alleged that FedEx Ground provided delivery services on behalf of six additional shippers; none of these shippers continue to ship in our network. On July 10, 2017, the City of New York and the State of New York filed a third lawsuit against FedEx Ground and included FedEx Freight as a co-defendant. This additional case identified no shippers or shipments, but generally alleged violations of the same laws that were the subject of the other two lawsuits.

On October 10, 2018, FedEx Ground and the City and State of New York reached an agreement in principle to settle the lawsuits arising from FedEx Ground’s and FedEx Freight’s alleged shipments of cigarettes to New York residents for $35.4 million. The settlement does not include any admission of liability by FedEx Ground or FedEx Freight. In addition to the settlement amount, we recognized approximately $10 million for certain attorney’s fees in connection with this matter. In December 2018, the parties entered into a final settlement agreement and, subsequently, the settlement amount was paid and the lawsuits were dismissed by the court.

Other Matters. FedEx and its subsidiaries are subject to other legal proceedings that arise in the ordinary course of business, including certain lawsuits containing various class-action allegations of wage-and-hour violations in which plaintiffs claim, among other things, that they were forced to work “off the clock,” were not paid overtime or were not provided work breaks or other benefits. In the opinion of management, the aggregate liability, if any, with respect to these other actions will not have a material adverse effect on our financial position, results of operations or cash flows.

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Supplemental Cash Flow Information

9 Months Ended

Feb. 28, 2019

Supplemental Cash Flow Information [Abstract]

Supplemental Cash Flow Information

(10) Supplemental Cash Flow Information

Cash paid for interest expense and income taxes for the nine-month periods ended February 28 was as follows (in millions):

	2019			2018
Cash payments for:
Interest (net of capitalized interest)	$	498		$	430
Income taxes	$	346		$	707
Income tax refunds received		(34	)		(59	)
Cash tax payments, net	$	312		$	648

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Condensed Consolidating Financial Statements

9 Months Ended

Feb. 28, 2019

Condensed Financial Information Of Parent Company Only Disclosure [Abstract]

Condensed Consolidating Financial Statements

(11) Condensed Consolidating Financial Statements

We are required to present condensed consolidating financial information in order for the subsidiary guarantors of our public debt to continue to be exempt from reporting under the Securities Exchange Act of 1934, as amended.

The guarantor subsidiaries, which are 100% owned by FedEx, guarantee $18.1 billion of our public debt. The guarantees are full and unconditional and joint and several. Our guarantor subsidiaries were not determined using geographic, service line or other similar criteria, and as a result, the “Guarantor Subsidiaries” and “Non-guarantor Subsidiaries” columns each include portions of our domestic and international operations. Accordingly, this basis of presentation is not intended to present our financial condition, results of operations or cash flows for any purpose other than to comply with the specific requirements for subsidiary guarantor reporting.

Condensed consolidating financial statements for our guarantor subsidiaries and non-guarantor subsidiaries are presented in the following tables (in millions):

CONDENSED CONSOLIDATING BALANCE SHEETS

(UNAUDITED)

February 28, 2019

			Guarantor		Non-guarantor
	Parent		Subsidiaries		Subsidiaries		Eliminations			Consolidated
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	1,413	$	204	$	1,296	$	(41	)	$	2,872
Receivables, less allowances		45		5,474		3,600		(82	)		9,037
Spare parts, supplies, fuel, prepaid expenses and other,    less allowances		313		979		299		—			1,591
Total current assets		1,771		6,657		5,195		(123	)		13,500
PROPERTY AND EQUIPMENT, AT COST		23		53,997		4,144		—			58,164
Less accumulated depreciation and amortization		17		26,384		1,995		—			28,396
Net property and equipment		6		27,613		2,149		—			29,768
INTERCOMPANY RECEIVABLE		661		2,157		—		(2,818	)		—
GOODWILL		—		1,598		5,318		—			6,916
INVESTMENT IN SUBSIDIARIES		35,803		4,904		—		(40,707	)		—
OTHER ASSETS		891		1,670		1,857		(138	)		4,280
	$	39,132	$	44,599	$	14,519	$	(43,786	)	$	54,464
LIABILITIES AND COMMON STOCKHOLDERS’ INVESTMENT
CURRENT LIABILITIES
Short-term borrowings	$	225	$	—	$	—	$	—		$	225
Current portion of long-term debt		966		2		5		—			973
Accrued salaries and employee benefits		52		1,149		458		—			1,659
Accounts payable		188		1,430		1,656		(118	)		3,156
Accrued expenses		510		1,848		890		(5	)		3,243
Total current liabilities		1,941		4,429		3,009		(123	)		9,256
LONG-TERM DEBT, LESS CURRENT PORTION		16,921		287		10		—			17,218
INTERCOMPANY PAYABLE		—		—		2,818		(2,818	)		—
OTHER LONG-TERM LIABILITIES
Deferred income taxes		—		3,252		97		(138	)		3,211
Other liabilities		376		3,502		1,007		—			4,885
Total other long-term liabilities		376		6,754		1,104		(138	)		8,096
COMMON STOCKHOLDERS’ INVESTMENT		19,894		33,129		7,578		(40,707	)		19,894
	$	39,132	$	44,599	$	14,519	$	(43,786	)	$	54,464

CONDENSED CONSOLIDATING BALANCE SHEETS

May 31, 2018

			Guarantor		Non-guarantor
	Parent		Subsidiaries		Subsidiaries		Eliminations			Consolidated
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	1,485	$	257	$	1,538	$	(15	)	$	3,265
Receivables, less allowances		3		4,970		3,586		(78	)		8,481
Spare parts, supplies, fuel, prepaid expenses and other,    less allowances		425		878		292		—			1,595
Total current assets		1,913		6,105		5,416		(93	)		13,341
PROPERTY AND EQUIPMENT, AT COST		21		51,232		3,868		—			55,121
Less accumulated depreciation and amortization		17		25,111		1,839		—			26,967
Net property and equipment		4		26,121		2,029		—			28,154
INTERCOMPANY RECEIVABLE		1,487		924		—		(2,411	)		—
GOODWILL		—		1,709		5,264		—			6,973
INVESTMENT IN SUBSIDIARIES		33,370		4,082		—		(37,452	)		—
OTHER ASSETS		75		1,854		1,829		104			3,862
	$	36,849	$	40,795	$	14,538	$	(39,852	)	$	52,330
LIABILITIES AND COMMON STOCKHOLDERS’ INVESTMENT
CURRENT LIABILITIES
Current portion of long-term debt	$	1,332	$	1	$	9	$	—		$	1,342
Accrued salaries and employee benefits		65		1,506		606		—			2,177
Accounts payable		16		1,332		1,719		(90	)		2,977
Accrued expenses		460		1,778		896		(3	)		3,131
Total current liabilities		1,873		4,617		3,230		(93	)		9,627
LONG-TERM DEBT, LESS CURRENT PORTION		14,942		288		13		—			15,243
INTERCOMPANY PAYABLE		—		—		2,411		(2,411	)		—
OTHER LONG-TERM LIABILITIES
Deferred income taxes		—		2,626		137		104			2,867
Other liabilities		619		3,432		1,126		—			5,177
Total other long-term liabilities		619		6,058		1,263		104			8,044
COMMON STOCKHOLDERS’ INVESTMENT		19,415		29,832		7,621		(37,452	)		19,416
	$	36,849	$	40,795	$	14,538	$	(39,852	)	$	52,330

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

Three Months Ended February 28, 2019

	Parent			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
REVENUES	$	—		$	12,443		$	4,667		$	(100	)	$	17,010
OPERATING EXPENSES:
Salaries and employee benefits		28			4,720			1,321			—			6,069
Purchased transportation		—			2,749			1,547			(43	)		4,253
Rentals and landing fees		1			677			197			(1	)		874
Depreciation and amortization		—			731			120			—			851
Fuel		—			838			69			—			907
Maintenance and repairs		—			573			87			(2	)		658
Business realignment costs		4			—			—			—			4
Intercompany charges, net		(93	)		(397	)		490			—			—
Other		60			1,771			698			(46	)		2,483
		—			11,662			4,529			(92	)		16,099
OPERATING INCOME		—			781			138			(8	)		911
OTHER INCOME (EXPENSE):
Equity in earnings of subsidiaries		739			16			—			(755	)		—
Interest, net		(109	)		(54	)		28			—			(135	)
Other retirement plans income		—			155			3			—			158
Intercompany charges, net		149			(89	)		(60	)		—			—
Other, net		(40	)		71			(42	)		8			(3	)
INCOME BEFORE INCOME TAXES		739			880			67			(755	)		931
Provision for income taxes		—			147			45			—			192
NET INCOME	$	739		$	733		$	22		$	(755	)	$	739
COMPREHENSIVE INCOME	$	713		$	732		$	129		$	(755	)	$	819

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

Three Months Ended February 28, 2018

	Parent			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
REVENUES	$	—		$	12,433		$	4,229		$	(136	)	$	16,526
OPERATING EXPENSES:
Salaries and employee benefits		39			4,764			1,321			—			6,124
Purchased transportation		—			2,459			1,560			(84	)		3,935
Rentals and landing fees		2			684			189			(2	)		873
Depreciation and amortization		1			670			115			—			786
Fuel		—			837			77			—			914
Maintenance and repairs		1			543			84			—			628
Intercompany charges, net		(114	)		185			(71	)		—			—
Other		71			1,596			791			(50	)		2,408
		—			11,738			4,066			(136	)		15,668
OPERATING INCOME		—			695			163			—			858
OTHER INCOME (EXPENSE):
Equity in earnings of subsidiaries		2,074			2			—			(2,076	)		—
Interest, net		(137	)		11			1			—			(125	)
Other retirement plans income		—			141			2			—			143
Intercompany charges, net		140			(78	)		(62	)		—			—
Other, net		(3	)		104			(103	)		—			(2	)
INCOME BEFORE INCOME TAXES		2,074			875			1			(2,076	)		874
Provision for income taxes		—			(1,197	)		(3	)		—			(1,200	)
NET INCOME	$	2,074		$	2,072		$	4		$	(2,076	)	$	2,074
COMPREHENSIVE INCOME	$	2,051		$	2,069		$	107		$	(2,076	)	$	2,151

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

Nine Months Ended February 28, 2019

	Parent			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
REVENUES	$	—		$	37,685		$	14,503		$	(302	)	$	51,886
OPERATING EXPENSES:
Salaries and employee benefits		110			14,300			4,179			—			18,589
Purchased transportation		—			7,780			4,912			(126	)		12,566
Rentals and landing fees		4			1,948			585			(4	)		2,533
Depreciation and amortization		1			2,133			353			—			2,487
Fuel		—			2,708			237			—			2,945
Maintenance and repairs		1			1,874			271			(2	)		2,144
Business realignment costs		4			—			—			—			4
Intercompany charges, net		(357	)		(772	)		1,129			—			—
Other		238			4,991			2,410			(171	)		7,468
		1			34,962			14,076			(303	)		48,736
OPERATING INCOME		(1	)		2,723			427			1			3,150
OTHER INCOME (EXPENSE):
Equity in earnings of subsidiaries		2,509			145			—			(2,654	)		—
Interest, net		(439	)		44			2			—			(393	)
Other retirement plans income		—			466			8			—			474
Intercompany charges, net		454			(335	)		(119	)		—			—
Other, net		(14	)		18			(26	)		—			(22	)
INCOME BEFORE INCOME TAXES		2,509			3,061			292			(2,653	)		3,209
Provision for income taxes		—			579			121			—			700
NET INCOME	$	2,509		$	2,482		$	171		$	(2,653	)	$	2,509
COMPREHENSIVE INCOME	$	2,443		$	2,514		$	46		$	(2,653	)	$	2,350

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

Nine Months Ended February 28, 2018

	Parent			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
REVENUES	$	—		$	36,044		$	12,445		$	(353	)	$	48,136
OPERATING EXPENSES:
Salaries and employee benefits		112			13,713			3,852			—			17,677
Purchased transportation		—			6,836			4,600			(216	)		11,220
Rentals and landing fees		4			1,951			577			(6	)		2,526
Depreciation and amortization		1			1,958			334			—			2,293
Fuel		—			2,220			215			—			2,435
Maintenance and repairs		1			1,729			238			—			1,968
Intercompany charges, net		(325	)		298			27			—			—
Other		207			4,664			2,333			(131	)		7,073
		—			33,369			12,176			(353	)		45,192
OPERATING INCOME		—			2,675			269			—			2,944
OTHER INCOME (EXPENSE):
Equity in earnings of subsidiaries		3,445			39			—			(3,484	)		—
Interest, net		(396	)		35			(2	)		—			(363	)
Other retirement plans income		—			424			12			—			436
Intercompany charges, net		403			(220	)		(183	)		—			—
Other, net		(7	)		88			(103	)		—			(22	)
INCOME BEFORE INCOME TAXES		3,445			3,041			(7	)		(3,484	)		2,995
Provision for income taxes		—			(573	)		123			—			(450	)
NET INCOME	$	3,445		$	3,614		$	(130	)	$	(3,484	)	$	3,445
COMPREHENSIVE INCOME	$	3,385		$	3,605		$	(3	)	$	(3,484	)	$	3,503

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(UNAUDITED)

Nine Months Ended February 28, 2019

	Parent			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
CASH PROVIDED BY (USED IN) OPERATING    ACTIVITIES	$	(109	)	$	3,136		$	322		$	(26	)	$	3,323
INVESTING ACTIVITIES
Capital expenditures		(3	)		(3,359	)		(395	)		—			(3,757	)
Proceeds from asset dispositions and other		(45	)		86			21			—			62
CASH USED IN INVESTING    ACTIVITIES		(48	)		(3,273	)		(374	)		—			(3,695	)
FINANCING ACTIVITIES
Proceeds from short-term borrowings, net		220			—			—			—			220
Net transfers from (to) Parent		2			(31	)		29			—			—
Payment on loan between subsidiaries		(29	)		—			29			—			—
Intercompany dividends		—			114			(114	)		—			—
Proceeds from debt issuances		2,463			—			—			—			2,463
Principal payments on debt		(750	)		(117	)		(7	)		—			(874	)
Proceeds from stock issuances		58			—			—			—			58
Dividends paid		(514	)		—			—			—			(514	)
Purchase of treasury stock		(1,365	)		—			—			—			(1,365	)
Other, net		—			127			(122	)		—			5
CASH (USED IN) PROVIDED BY FINANCING    ACTIVITIES		85			93			(185	)		—			(7	)
Effect of exchange rate changes on cash		—			(9	)		(5	)		—			(14	)
Net (decrease) increase in cash and cash equivalents		(72	)		(53	)		(242	)		(26	)		(393	)
Cash and cash equivalents at beginning of period		1,485			257			1,538			(15	)		3,265
Cash and cash equivalents at end of period	$	1,413		$	204		$	1,296		$	(41	)	$	2,872

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(UNAUDITED)

Nine Months Ended February 28, 2018

	Parent			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
CASH PROVIDED BY (USED IN) OPERATING    ACTIVITIES	$	(3,537	)	$	4,664		$	25		$	10		$	1,162
INVESTING ACTIVITIES
Capital expenditures		—			(3,746	)		(248	)		—			(3,994	)
Business acquisitions, net of cash acquired		—			(44	)		—			—			(44	)
Proceeds from asset dispositions and other		(5	)		23			3			—			21
CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES		(5	)		(3,767	)		(245	)		—			(4,017	)
FINANCING ACTIVITIES
Proceeds from short-term borrowings, net		797			—			—			—			797
Net transfers from (to) Parent		807			(895	)		88			—			—
Payment on loan between subsidiaries		210			—			(210	)		—			—
Proceeds from debt issuances		1,481			—			—			—			1,481
Principal payments on debt		—			(17	)		(14	)		—			(31	)
Proceeds from stock issuances		284			—			—			—			284
Dividends paid		(402	)		—			—			—			(402	)
Purchase of treasury stock		(558	)		—			—			—			(558	)
Other, net		2			4			—			—			6
CASH (USED IN) PROVIDED BY FINANCING    ACTIVITIES		2,621			(908	)		(136	)		—			1,577
Effect of exchange rate changes on cash		(6	)		61			43			—			98
Net (decrease) increase in cash and cash equivalents		(927	)		50			(313	)		10			(1,180	)
Cash and cash equivalents at beginning of period		1,884			325			1,807			(47	)		3,969
Cash and cash equivalents at end of period	$	957		$	375		$	1,494		$	(37	)	$	2,789

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General (Policies)

9 Months Ended

Feb. 28, 2019

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. These interim financial statements of FedEx Corporation (“FedEx”) have been prepared in accordance with accounting principles generally accepted in the United States and Securities and Exchange Commission (“SEC”) instructions for interim financial information, and should be read in conjunction with our Annual Report on Form 10-K for the year ended May 31, 2018 (“Annual Report”). Significant accounting policies and other disclosures normally provided have been omitted since such items are disclosed in our Annual Report.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments (including normal recurring adjustments) necessary to present fairly our financial position as of February 28, 2019, and the results of our operations for the three- and nine-month periods ended February 28, 2019 and 2018, cash flows for the nine-month periods ended February 28, 2019 and 2018, and changes in common stockholders’ investment for the three- and nine-month periods ended February 28, 2019 and 2018. Operating results for the three- and nine-month periods ended February 28, 2019 are not necessarily indicative of the results that may be expected for the year ending May 31, 2019.

Except as otherwise specified, references to years indicate our fiscal year ending May 31, 2019 or ended May 31 of the year referenced and comparisons are to the corresponding period of the prior year.

Reclassifications

RECLASSIFICATIONS. Certain reclassifications have been made to the prior years’ condensed consolidated financial statements to conform to the current year presentation.

Revenue Recognition

REVENUE RECOGNITION. 

Satisfaction of Performance Obligation

We recognize revenue upon delivery of shipments for our transportation businesses and upon completion of services for our business services, logistics and trade services businesses. Transportation services are provided with the use of employees and independent businesses that contract with FedEx. 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 unaudited condensed consolidated statements of income.

For shipments in transit, revenue is recorded based on the percentage of service completed at the balance sheet date which results in our recognizing revenue 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 vast majority of our contracts include only one performance obligation, which is short in duration and spans only a few days. 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 stand-alone selling prices of the promised goods or services underlying each performance obligation. We frequently sell standard transportation services with observable stand-alone sales prices. In these instances, the observable stand-alone sales are used to determine the stand-alone selling price.

We sell customized customer-specific solutions, such as logistics, through which we provide the service of integrating a complex set of tasks and components into a single capability (even if that single capability results in the delivery of multiple units). Therefore, the entire contract is accounted for as one performance obligation. In these cases, we typically use the expected cost plus a margin approach to estimate the stand-alone selling price of each performance obligation.

Variable Consideration

It is common for our contracts to contain customer incentives, guaranteed service refunds or other provisions that can either increase or decrease the transaction price. These variable amounts are generally awarded based upon certain incentive achievements or performance metrics. We estimate variable consideration as the most likely amount to which we expect to be entitled. Estimates for adjustments to revenue and accounts receivable are recognized at the time of shipment for certain customer initiatives, money-back service guarantees and billing corrections based on our assessment of historical, current and forecasted information available. Delivery costs are accrued as incurred.

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 executed.

Contract Assets and Liabilities

Contract assets include billed and unbilled amounts resulting from in-transit packages, 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 packages totaled $526 million and $542 million at February 28, 2019 and May 31, 2018, respectively. Contract assets net of deferred unearned revenue were $353 million and $363 million at February 28, 2019 and May 31, 2018, respectively. Contract assets are included within current assets in the accompanying unaudited condensed consolidated balance sheets. Contract liabilities related to advance payments from customers were $9 million and $13 million at February 28, 2019 and May 31, 2018, respectively. Contract liabilities are included within current liabilities in the accompanying unaudited condensed consolidated balance sheets.

Our contract logistics, global trade services and certain transportation businesses engage in some 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.

Certain of our revenue-producing transactions are subject to taxes, 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

The following table provides revenue by service type (dollars in millions) for the periods ended February 28. This presentation is consistent with how we organize our segments internally for making operating decisions and measuring performance.

	Three Months Ended				Nine Months Ended
	2019		2018		2019		2018
REVENUE BY SERVICE TYPE
FedEx Express segment:
Package:
U.S. overnight box	$	1,844	$	1,836	$	5,678	$	5,373
U.S. overnight envelope		433		435		1,345		1,317
U.S. deferred		1,119		996		3,131		2,796
Total U.S. domestic package revenue		3,396		3,267		10,154		9,486
International priority		1,738		1,841		5,508		5,469
International economy		806		793		2,541		2,378
Total international export package revenue		2,544		2,634		8,049		7,847
International domestic(1)		1,078		1,140		3,412		3,424
Total package revenue		7,018		7,041		21,615		20,757
Freight:
U.S.		772		739		2,294		2,040
International priority		477		532		1,574		1,527
International economy		495		492		1,568		1,354
International airfreight		76		93		244		276
Total freight revenue		1,820		1,856		5,680		5,197
Other		167		201		536		620
Total FedEx Express segment		9,005		9,098		27,831		26,574
FedEx Ground segment		5,261		4,828		15,202		13,598
FedEx Freight segment		1,750		1,613		5,627		4,950
FedEx Services segment		402		397		1,248		1,213
Other and eliminations(2)		592		590		1,978		1,801
	$	17,010	$	16,526	$	51,886	$	48,136

⁽¹⁾ International domestic revenues relate to our intra-country operations.

⁽²⁾ Includes the FedEx Logistics, Inc. (“FedEx Logistics” (formerly FedEx Trade Networks, Inc.)) operating segment.

Employees Under Collective Bargaining Arrangements

EMPLOYEES UNDER COLLECTIVE BARGAINING ARRANGEMENTS. The pilots of Federal Express Corporation (“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. The collective bargaining agreement is scheduled to become amendable in November 2021. 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 Distribution System, Inc. (“FedEx Supply Chain” (formerly GENCO Distribution System, Inc.)) 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, and a union has been certified to represent owner-drivers at a FedEx Freight, Inc. facility in Canada.

Stock-based Compensation

STOCK-BASED COMPENSATION. We have two types of equity-based compensation: stock options and restricted stock. The key terms of the stock option and restricted stock awards granted under our incentive stock plans and all financial disclosures about these programs are set forth in our Annual Report.

Our stock-based compensation expense was $33 million for the three-month period ended February 28, 2019 and $141 million for the nine-month period ended February 28, 2019. Our stock-based compensation expense was $32 million for the three-month period ended February 28, 2018 and $135 million for the nine-month period ended February 28, 2018. Due to its immateriality, additional disclosures related to stock-based compensation have been excluded from this quarterly report.

Business Realignment Costs

BUSINESS REALIGNMENT COSTS. In December 2018, we announced cost-reduction programs primarily through initiatives at FedEx Express and FedEx Corporate Services, Inc. (“FedEx Services”), including a U.S.-based voluntary employee buyout program.

During the third quarter of 2019, we began offering voluntary cash buyouts to eligible U.S.-based employees in certain staff functions. The U.S.-based voluntary employee buyout program includes voluntary severance payments and funding to healthcare reimbursement accounts, with the voluntary severance payment calculated based on four weeks of gross base salary for every year of continuous FedEx service up to a maximum payment of two years of pay. Eligible employees will be scheduled to vacate positions in phases to ensure a smooth transition in the impacted functions so that we maintain service levels to our customers. Costs of the benefits provided under the program will be recognized as special termination benefits in the period employees accept their offers.

We incurred costs of approximately $4 million ($3 million, net of tax, or $0.01 per diluted share) during the third quarter of 2019 associated with our business realignment activities. These costs related to certain employee severance arrangements and other external costs directly attributable to our business realignment activities, such as professional fees. Total costs of the U.S.-based voluntary employee buyout program will depend on acceptance rates and severance payments will be made at the time of departure. The cost of our business realignment activities is included in the caption “Business realignment costs” in our unaudited condensed consolidated statements of income.

Recent Accounting Guidance

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

Recently Adopted Accounting Standards

In December 2017, the SEC staff issued Staff Accounting Bulletin (“SAB”) 118 to provide guidance to registrants in accounting for income taxes under the Tax Cuts and Jobs Act (“TCJA”). SAB 118 was issued to address the application of U.S. generally accepted accounting principles (“GAAP”) in situations when a registrant does not have the necessary information available, prepared, or analyzed in reasonable detail to finalize the calculations for certain income tax effects of the TCJA. In accordance with SAB 118, we made reasonable estimates and recorded provisional amounts for the TCJA during 2018. Under the transitional provisions of SAB 118, we had a one-year measurement period to complete the accounting for the initial tax effects of the TCJA. As of December 22, 2018, our accounting is complete for the tax effects of the TCJA, including the following elements initially recorded on a provisional basis:

• In 2018, we recognized a provisional benefit related to the revaluation of U.S. deferred tax assets and liabilities. During the second quarter of 2019, we revised the provisional benefit associated with the remeasurement of our net U.S. deferred tax liability. As a result, we recognized a $4 million tax expense, which decreased the $1.15 billion provisional benefit recorded in 2018.

• We previously recognized an immaterial provisional benefit from foreign tax credits exceeding the one-time transition tax on previously deferred foreign earnings. No adjustments were made to the provisional estimate recorded in 2018.

• We have determined to record the taxes for the global intangible low-taxed income (GILTI) as a period cost.

In 2014, the Financial Accounting Standards Board (“FASB”) and International Accounting Standards Board issued a new accounting standard that supersedes virtually all existing revenue recognition guidance under generally accepted accounting principles in the United States. The fundamental principles of the new guidance are that companies should recognize revenue in a manner that reflects the timing of the transfer of services to customers and the amount of revenue recognized reflects the consideration that a company expects to receive for the goods and services provided. The new guidance establishes a five-step approach for the recognition of revenue. We adopted this standard as of June 1, 2018 (fiscal 2019) using the modified retrospective method of adoption as permitted by the standard. The new guidance did not have an impact on our revenue recognition policies, practices or systems; therefore, there was no cumulative-effect adjustment to retained earnings as of June 1, 2018.

In March 2017, the FASB issued an Accounting Standards Update (ASU 2017-07) that changes how employers that sponsor defined benefit pension or other postretirement benefit plans present the net periodic benefit cost in the income statement. This new guidance requires entities to report the service cost component in the same line item or items as other compensation costs. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component outside of income from operations. This standard impacts our operating income but has no impact on our net income or earnings per share. We adopted this standard effective June 1, 2018 (fiscal 2019) and applied these changes retrospectively. As such, prior year financial results are recast to conform to these new rules upon adoption.

The following table presents our results under our historical method of accounting and as adjusted to reflect our adoption of ASU 2017-07 (in millions):

	Three Months Ended February 28, 2018								Nine Months Ended February 28, 2018
	Reported			Effect of Adoption of ASU 2017-07			As Adjusted		Reported			Effect of Adoption of ASU 2017-07			As Adjusted
Revenue	$	16,526		$	—		$	16,526	$	48,136		$	—		$	48,136
Operating Income		1,001			(143	)		858		3,380			(436	)		2,944
Other Income (Expense), net		(127	)		143			16		(385	)		436			51
Net Income		2,074			—			2,074		3,445			—			3,445

In August 2018, the SEC published Release No. 33-10532, Disclosure Update and Simplification (“DUSTR”), which adopted amendments to certain disclosure requirements that have become redundant, duplicative, overlapping, outdated or superseded, in light of other SEC disclosure requirements, GAAP, or changes in the information environment. While most of the DUSTR amendments eliminate outdated or duplicative disclosure requirements, the final rule amends the interim financial statement requirements to include a reconciliation of changes in common stockholders’ investment in the notes or as a separate statement for each period for which a statement of comprehensive income is required to be filed. The new interim reconciliation of changes in common stockholders’ investment is included herein as a separate statement.

New Accounting Standards and Accounting Standards Not Yet Adopted

In 2016, the FASB issued a new lease accounting standard which requires lessees to put most leases on their balance sheets but recognize the expenses in their income statements in a manner similar to current practice. The new standard states that a lessee will recognize a lease liability for the obligation to make lease payments and a right-of-use asset for the right to use the underlying asset for the lease term. Expenses related to leases determined to be operating leases will be recognized on a straight-line basis, while those determined to be financing leases will be recognized following a front-loaded expense profile in which interest and amortization are presented separately in the income statement. Based on our lease portfolio, we currently anticipate recognizing a lease liability and related right-of-use asset on our balance sheet of approximately $13 billion, with an immaterial impact on our income statement compared to the current lease accounting model. However, the ultimate impact of the standard will depend on our lease portfolio as of the adoption date. We are currently accumulating all of the necessary information required to properly account for the leases under the new standard. Additionally, we are implementing an enterprise-wide lease management system to assist in the accounting and are evaluating additional changes to our processes and internal controls to ensure we meet the standard’s reporting and disclosure requirements. These changes will be effective June 1, 2019 (fiscal 2020).

In February 2018, the FASB issued an Accounting Standards Update (ASU 2018-02) that will permit companies to reclassify the income tax effect of the TCJA on items within accumulated other comprehensive income (loss) (“AOCI”) to retained earnings. These changes will be effective June 1, 2019 (fiscal 2020). We are continuing to assess the impact of this new standard on our consolidated financial statements and related disclosures.

In August 2018, the FASB issued an Accounting Standards Update (ASU 2018-14) that modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement benefit plans. The guidance removes disclosures that are no longer considered cost beneficial, clarifies the specific requirements of disclosures and adds disclosure requirements identified as relevant. We expect this new guidance will have minimal impact on our financial reporting. These changes will be effective June 1, 2020 (fiscal 2021) and will be applied retrospectively. We plan to early adopt these new rules in the fourth quarter of 2019.

In August 2018, the FASB issued an Accounting Standards Update (ASU 2018-15) that reduces the complexity for accounting for costs of implementing a cloud computing service arrangement and aligns the accounting for capitalizing implementation costs of hosting arrangements, regardless of whether they convey a license to the hosted software. These changes will be effective June 1, 2020 (fiscal 2021). We are assessing the impact of this new standard on our consolidated financial statements and related disclosures.

Treasury Shares

TREASURY SHARES. In January 2016, our Board of Directors authorized a share repurchase program of up to 25 million shares. Shares under the current repurchase program may be repurchased from time to time in the open market or in privately negotiated transactions. The timing and volume of repurchases are at the discretion of management, based on the capital needs of the business, the market price of FedEx common stock and general market conditions. No time limit was set for the completion of the program, and the program may be suspended or discontinued at any time.

During the third quarter of 2019, we repurchased 0.6 million shares of FedEx common stock at an average price of $168.43 per share for a total of $93 million. During the nine months of 2019, we repurchased 6.0 million shares of FedEx common stock at an average price of $227.42 per share for a total of $1.4 billion. As of February 28, 2019, 5.7 million shares remained under the current share repurchase authorization.

Dividends Declared Per Common Share

DIVIDENDS DECLARED PER COMMON SHARE. On February 15, 2019, our Board of Directors declared a quarterly dividend of $0.65 per share of common stock. The dividend will be paid on April 1, 2019 to stockholders of record as of the close of business on March 11, 2019. 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.

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General (Tables)

9 Months Ended

Feb. 28, 2019

Accounting Policies [Abstract]

Schedule of Revenue by Service Type

The following table provides revenue by service type (dollars in millions) for the periods ended February 28. This presentation is consistent with how we organize our segments internally for making operating decisions and measuring performance.

	Three Months Ended				Nine Months Ended
	2019		2018		2019		2018
REVENUE BY SERVICE TYPE
FedEx Express segment:
Package:
U.S. overnight box	$	1,844	$	1,836	$	5,678	$	5,373
U.S. overnight envelope		433		435		1,345		1,317
U.S. deferred		1,119		996		3,131		2,796
Total U.S. domestic package revenue		3,396		3,267		10,154		9,486
International priority		1,738		1,841		5,508		5,469
International economy		806		793		2,541		2,378
Total international export package revenue		2,544		2,634		8,049		7,847
International domestic(1)		1,078		1,140		3,412		3,424
Total package revenue		7,018		7,041		21,615		20,757
Freight:
U.S.		772		739		2,294		2,040
International priority		477		532		1,574		1,527
International economy		495		492		1,568		1,354
International airfreight		76		93		244		276
Total freight revenue		1,820		1,856		5,680		5,197
Other		167		201		536		620
Total FedEx Express segment		9,005		9,098		27,831		26,574
FedEx Ground segment		5,261		4,828		15,202		13,598
FedEx Freight segment		1,750		1,613		5,627		4,950
FedEx Services segment		402		397		1,248		1,213
Other and eliminations(2)		592		590		1,978		1,801
	$	17,010	$	16,526	$	51,886	$	48,136

⁽¹⁾ International domestic revenues relate to our intra-country operations.

⁽²⁾ Includes the FedEx Logistics, Inc. (“FedEx Logistics” (formerly FedEx Trade Networks, Inc.)) operating segment.

Schedule of Recently Adopted Accounting Standards

The following table presents our results under our historical method of accounting and as adjusted to reflect our adoption of ASU 2017-07 (in millions):

	Three Months Ended February 28, 2018								Nine Months Ended February 28, 2018
	Reported			Effect of Adoption of ASU 2017-07			As Adjusted		Reported			Effect of Adoption of ASU 2017-07			As Adjusted
Revenue	$	16,526		$	—		$	16,526	$	48,136		$	—		$	48,136
Operating Income		1,001			(143	)		858		3,380			(436	)		2,944
Other Income (Expense), net		(127	)		143			16		(385	)		436			51
Net Income		2,074			—			2,074		3,445			—			3,445

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Accumulated Other Comprehensive Loss (Tables)

9 Months Ended

Feb. 28, 2019

Accumulated Other Comprehensive Income Loss Tables [Abstract]

Schedule of Accumulated Other Comprehensive Loss

The following table provides changes in AOCI, net of tax, reported in our unaudited condensed consolidated financial statements for the periods ended February 28 (in millions; amounts in parentheses indicate debits to AOCI):

	Three Months Ended						Nine Months Ended
	2019			2018			2019			2018
Foreign currency translation loss:
Balance at beginning of period	$	(952	)	$	(666	)	$	(759	)	$	(685	)
Translation adjustments		103			100			(90	)		119
Balance at end of period		(849	)		(566	)		(849	)		(566	)
Retirement plans adjustments:
Balance at beginning of period		135			232			181			270
Reclassifications from AOCI		(23	)		(23	)		(69	)		(61	)
Balance at end of period		112			209			112			209
Accumulated other comprehensive (loss) at end of period	$	(737	)	$	(357	)	$	(737	)	$	(357	)

Reclassification Out of Accumulated Other Comprehensive Loss

The following table presents details of the reclassifications from AOCI for the periods ended February 28 (in millions; amounts in parentheses indicate debits to earnings):

	Amount Reclassified from AOCI												Affected Line Item in the Income Statement
	Three Months Ended						Nine Months Ended
	2019			2018			2019			2018
Amortization of retirement plans    prior service credits, before tax	$	30		$	30		$	90		$	90		Salaries and employee benefits
Income tax benefit		(7	)		(7	)		(21	)		(29	)	Provision for income taxes
AOCI reclassifications, net of tax	$	23		$	23		$	69		$	61		Net income

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Computation of Earnings Per Share (Tables)

9 Months Ended

Feb. 28, 2019

Computation Of Earnings Per Share Tables [Abstract]

Schedule of basic and diluted earnings per common share

The calculation of basic and diluted earnings per common share for the periods ended February 28 was as follows (in millions, except per share amounts):

	Three Months Ended				Nine Months Ended
	2019		2018		2019		2018
Basic earnings per common share:
Net earnings allocable to common shares(1)	$	738	$	2,071	$	2,506	$	3,441
Weighted-average common shares		261		268		262		268
Basic earnings per common share	$	2.83	$	7.74	$	9.55	$	12.85
Diluted earnings per common share:
Net earnings allocable to common shares(1)	$	738	$	2,071	$	2,506	$	3,441
Weighted-average common shares		261		268		262		268
Dilutive effect of share-based awards		2		5		4		4
Weighted-average diluted shares		263		273		266		272
Diluted earnings per common share	$	2.80	$	7.59	$	9.41	$	12.63
Anti-dilutive options excluded from diluted earnings per    common share		7.2		1.9		5.0		2.6

⁽¹⁾Net earnings available to participating securities were immaterial in all periods presented.

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Income Taxes (Tables)

9 Months Ended

Feb. 28, 2019

Income Tax Disclosure [Abstract]

Summary of Reconciliation of Effective Tax Rates

The following table provides a reconciliation of the 2018 effective tax rates to the 2019 effective tax rates, including the impacts of the TCJA, for the periods ended February 28:

	Three Months Ended			Nine Months Ended
2018 Effective Tax Rate(a)		(137.3	)%		(15.0	)%
Remeasurement of net U.S. deferred tax liability in 2018		131.5			38.5
Effect of February 2018 pension contribution(b)		23.3			6.8
Lower statutory tax rate on first-half 2018 earnings (35% to 29.2%)(c)		12.5			—
Reduction of valuation allowance on tax loss carryforwards in 2019		(10.3	)		(3.0	)
Lower statutory tax rate on 2019 earnings (29.2% to 21%)(c)		(7.6	)		(7.6	)
Remeasurement of net Dutch deferred tax asset in 2019		5.3			1.5
Transition tax provisional benefit in 2018		4.1			1.2
Foreign tax credits on foreign dividends in 2018		1.2			2.9
Accelerated deductions claimed in 2019 on the 2018 U.S. income tax return		—			(1.8	)
Other, net(d)		(2.1	)		(1.7	)
2019 Effective Tax Rate(a)		20.6	%		21.8	%

^(a) 2018 includes a blended U.S. statutory federal income tax rate of 29.2% while 2019 includes the fully phased-in rate of 21%.

^(b) The benefit is from the pension contribution deducted on our 2017 tax return at a tax rate of 35%.

^(c) Due to our May 31 fiscal year-end, the TCJA’s lower U.S. statutory federal income tax rate that went into effect on December 22, 2017 was phased in resulting in a rate of 29.2% for 2018 and a rate of 21% for subsequent years.

^(d) The 2018 tax rates were negatively impacted by the effect of the NotPetya cyberattack, costs incurred in connection with the integration of foreign operations of FedEx Express and TNT Express B.V. (“TNT Express”), changes in uncertain tax positions and tax rate impacts on changes in deferred tax items after the TCJA enactment, and were favorably impacted from tax benefits from share-based payments.

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Retirement Plans (Tables)

9 Months Ended

Feb. 28, 2019

Retirement Plan Tables [Abstract]

Schedule of Retirement Plan Costs

Our retirement plans costs for the periods ended February 28 were as follows (in millions):

	Three Months Ended				Nine Months Ended
	2019		2018		2019		2018
Defined benefit pension plans, net	$	28	$	39	$	85	$	113
Defined contribution plans		138		135		415		386
Postretirement healthcare plans		19		19		56		56
	$	185	$	193	$	556	$	555

Schedule of Net Periodic Benefit Cost

Net periodic benefit cost of the pension and postretirement healthcare plans for the periods ended February 28 included the following components (in millions):

	Three Months Ended
	U.S. Pension Plans						International Pension Plans						Postretirement Healthcare Plans
	2019			2018			2019			2018			2019		2018
Service cost	$	173		$	169		$	23		$	23		$	9	$	9
Other retirement plans (income) expense:
Interest cost		237			279			13			12			10		10
Expected return on plan assets		(376	)		(406	)		(12	)		(10	)		—		—
Amortization of prior service credit and other		(30	)		(29	)		—			1			—		—
		(169	)		(156	)		1			3			10		10
	$	4		$	13		$	24		$	26		$	19	$	19
	Nine Months Ended
	U.S. Pension Plans						International Pension Plans						Postretirement Healthcare Plans
	2019			2018			2019			2018			2019		2018
Service cost	$	517		$	509		$	72		$	69		$	26	$	27
Other retirement plans (income) expense:
Interest cost		713			836			38			37			30		29
Expected return on plan assets		(1,129	)		(1,218	)		(36	)		(32	)		—		—
Amortization of prior service credit and other		(89	)		(88	)		(1	)		—			—		—
		(505	)		(470	)		1			5			30		29
	$	12		$	39		$	73		$	74		$	56	$	56

Schedule of Tax Qualified Pension Plans Contributions

Contributions to our U.S. Pension Plans for the nine-month periods ended February 28 were as follows (in millions):

	2019		2018
Required	$	—	$	22
Voluntary		1,000		2,478
	$	1,000	$	2,500

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Business Segment Information (Tables)

9 Months Ended

Feb. 28, 2019

Segment Reporting Disclosure Of Entitys Reportable Segments [Abstract]

Schedule of Segment Information

The following table provides a reconciliation of reportable segment revenues and operating income (loss) to our unaudited condensed consolidated financial statement totals for the periods ended February 28 (in millions):

	Three Months Ended						Nine Months Ended
	2019			2018			2019			2018
Revenues:
FedEx Express segment	$	9,005		$	9,098		$	27,831		$	26,574
FedEx Ground segment		5,261			4,828			15,202			13,598
FedEx Freight segment		1,750			1,613			5,627			4,950
FedEx Services segment		402			397			1,248			1,213
Other and eliminations		592			590			1,978			1,801
	$	17,010		$	16,526		$	51,886		$	48,136
Operating income (loss):
FedEx Express segment	$	370		$	317		$	1,357		$	1,238
FedEx Ground segment		577			614			1,830			1,716
FedEx Freight segment		97			49			421			322
Corporate, other and eliminations		(133	)		(122	)		(458	)		(332	)
	$	911		$	858		$	3,150		$	2,944

XML

Commitments (Tables)

9 Months Ended

Feb. 28, 2019

Commitments Tables [Abstract]

Schedule of Purchase Commitments

As of February 28, 2019, our purchase commitments under various contracts for the remainder of 2019 and annually thereafter were as follows (in millions):

	Aircraft and Related		Other(1)		Total
2019 (remainder)	$	421	$	296	$	717
2020		1,998		833		2,831
2021		2,276		597		2,873
2022		1,874		433		2,307
2023		1,586		275		1,861
Thereafter		3,079		535		3,614
Total	$	11,234	$	2,969	$	14,203

⁽¹⁾ Primarily equipment and advertising contracts.

Schedule of Aircraft Purchase Commitments

The following table is a summary of the key aircraft we are committed to purchase as of February 28, 2019 with the year of expected delivery:

	Cessna SkyCourier 408		ATR 72-600F		B767F		B777F		Total
2019 (remainder)		-		-		4		1		5
2020		-		-		17		5		22
2021		12		5		18		2		37
2022		12		6		12		3		33
2023		12		6		6		4		28
Thereafter		14		13		-		6		33
Total		50		30		57		21		158

Schedule of Future Minimum Lease Payments, Operating Leases

A summary of future minimum lease payments under noncancelable operating leases with an initial or remaining term in excess of one year at February 28, 2019 is as follows (in millions):

	Aircraft and Related Equipment		Facilities and Other		Total Operating Leases
2019 (remainder)	$	26	$	571	$	597
2020		261		2,083		2,344
2021		203		1,923		2,126
2022		185		1,728		1,913
2023		127		1,555		1,682
Thereafter		48		8,926		8,974
Total	$	850	$	16,786	$	17,636

XML

Supplemental Cash Flow Information (Tables)

9 Months Ended

Feb. 28, 2019

Supplemental Cash Flow Tables [Abstract]

Supplemental Cash Flow

Cash paid for interest expense and income taxes for the nine-month periods ended February 28 was as follows (in millions):

	2019			2018
Cash payments for:
Interest (net of capitalized interest)	$	498		$	430
Income taxes	$	346		$	707
Income tax refunds received		(34	)		(59	)
Cash tax payments, net	$	312		$	648

XML

Condensed Consolidating Financial Statements (Tables)

9 Months Ended

Feb. 28, 2019

Condensed Consolidating Financial Statements Tables [Abstract]

Condensed Consolidating Balance Sheets

CONDENSED CONSOLIDATING BALANCE SHEETS

(UNAUDITED)

February 28, 2019

			Guarantor		Non-guarantor
	Parent		Subsidiaries		Subsidiaries		Eliminations			Consolidated
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	1,413	$	204	$	1,296	$	(41	)	$	2,872
Receivables, less allowances		45		5,474		3,600		(82	)		9,037
Spare parts, supplies, fuel, prepaid expenses and other,    less allowances		313		979		299		—			1,591
Total current assets		1,771		6,657		5,195		(123	)		13,500
PROPERTY AND EQUIPMENT, AT COST		23		53,997		4,144		—			58,164
Less accumulated depreciation and amortization		17		26,384		1,995		—			28,396
Net property and equipment		6		27,613		2,149		—			29,768
INTERCOMPANY RECEIVABLE		661		2,157		—		(2,818	)		—
GOODWILL		—		1,598		5,318		—			6,916
INVESTMENT IN SUBSIDIARIES		35,803		4,904		—		(40,707	)		—
OTHER ASSETS		891		1,670		1,857		(138	)		4,280
	$	39,132	$	44,599	$	14,519	$	(43,786	)	$	54,464
LIABILITIES AND COMMON STOCKHOLDERS’ INVESTMENT
CURRENT LIABILITIES
Short-term borrowings	$	225	$	—	$	—	$	—		$	225
Current portion of long-term debt		966		2		5		—			973
Accrued salaries and employee benefits		52		1,149		458		—			1,659
Accounts payable		188		1,430		1,656		(118	)		3,156
Accrued expenses		510		1,848		890		(5	)		3,243
Total current liabilities		1,941		4,429		3,009		(123	)		9,256
LONG-TERM DEBT, LESS CURRENT PORTION		16,921		287		10		—			17,218
INTERCOMPANY PAYABLE		—		—		2,818		(2,818	)		—
OTHER LONG-TERM LIABILITIES
Deferred income taxes		—		3,252		97		(138	)		3,211
Other liabilities		376		3,502		1,007		—			4,885
Total other long-term liabilities		376		6,754		1,104		(138	)		8,096
COMMON STOCKHOLDERS’ INVESTMENT		19,894		33,129		7,578		(40,707	)		19,894
	$	39,132	$	44,599	$	14,519	$	(43,786	)	$	54,464

CONDENSED CONSOLIDATING BALANCE SHEETS

May 31, 2018

			Guarantor		Non-guarantor
	Parent		Subsidiaries		Subsidiaries		Eliminations			Consolidated
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	1,485	$	257	$	1,538	$	(15	)	$	3,265
Receivables, less allowances		3		4,970		3,586		(78	)		8,481
Spare parts, supplies, fuel, prepaid expenses and other,    less allowances		425		878		292		—			1,595
Total current assets		1,913		6,105		5,416		(93	)		13,341
PROPERTY AND EQUIPMENT, AT COST		21		51,232		3,868		—			55,121
Less accumulated depreciation and amortization		17		25,111		1,839		—			26,967
Net property and equipment		4		26,121		2,029		—			28,154
INTERCOMPANY RECEIVABLE		1,487		924		—		(2,411	)		—
GOODWILL		—		1,709		5,264		—			6,973
INVESTMENT IN SUBSIDIARIES		33,370		4,082		—		(37,452	)		—
OTHER ASSETS		75		1,854		1,829		104			3,862
	$	36,849	$	40,795	$	14,538	$	(39,852	)	$	52,330
LIABILITIES AND COMMON STOCKHOLDERS’ INVESTMENT
CURRENT LIABILITIES
Current portion of long-term debt	$	1,332	$	1	$	9	$	—		$	1,342
Accrued salaries and employee benefits		65		1,506		606		—			2,177
Accounts payable		16		1,332		1,719		(90	)		2,977
Accrued expenses		460		1,778		896		(3	)		3,131
Total current liabilities		1,873		4,617		3,230		(93	)		9,627
LONG-TERM DEBT, LESS CURRENT PORTION		14,942		288		13		—			15,243
INTERCOMPANY PAYABLE		—		—		2,411		(2,411	)		—
OTHER LONG-TERM LIABILITIES
Deferred income taxes		—		2,626		137		104			2,867
Other liabilities		619		3,432		1,126		—			5,177
Total other long-term liabilities		619		6,058		1,263		104			8,044
COMMON STOCKHOLDERS’ INVESTMENT		19,415		29,832		7,621		(37,452	)		19,416
	$	36,849	$	40,795	$	14,538	$	(39,852	)	$	52,330

Condensed Consolidating Statements of Comprehensive Income

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

Three Months Ended February 28, 2019

	Parent			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
REVENUES	$	—		$	12,443		$	4,667		$	(100	)	$	17,010
OPERATING EXPENSES:
Salaries and employee benefits		28			4,720			1,321			—			6,069
Purchased transportation		—			2,749			1,547			(43	)		4,253
Rentals and landing fees		1			677			197			(1	)		874
Depreciation and amortization		—			731			120			—			851
Fuel		—			838			69			—			907
Maintenance and repairs		—			573			87			(2	)		658
Business realignment costs		4			—			—			—			4
Intercompany charges, net		(93	)		(397	)		490			—			—
Other		60			1,771			698			(46	)		2,483
		—			11,662			4,529			(92	)		16,099
OPERATING INCOME		—			781			138			(8	)		911
OTHER INCOME (EXPENSE):
Equity in earnings of subsidiaries		739			16			—			(755	)		—
Interest, net		(109	)		(54	)		28			—			(135	)
Other retirement plans income		—			155			3			—			158
Intercompany charges, net		149			(89	)		(60	)		—			—
Other, net		(40	)		71			(42	)		8			(3	)
INCOME BEFORE INCOME TAXES		739			880			67			(755	)		931
Provision for income taxes		—			147			45			—			192
NET INCOME	$	739		$	733		$	22		$	(755	)	$	739
COMPREHENSIVE INCOME	$	713		$	732		$	129		$	(755	)	$	819

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

Three Months Ended February 28, 2018

	Parent			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
REVENUES	$	—		$	12,433		$	4,229		$	(136	)	$	16,526
OPERATING EXPENSES:
Salaries and employee benefits		39			4,764			1,321			—			6,124
Purchased transportation		—			2,459			1,560			(84	)		3,935
Rentals and landing fees		2			684			189			(2	)		873
Depreciation and amortization		1			670			115			—			786
Fuel		—			837			77			—			914
Maintenance and repairs		1			543			84			—			628
Intercompany charges, net		(114	)		185			(71	)		—			—
Other		71			1,596			791			(50	)		2,408
		—			11,738			4,066			(136	)		15,668
OPERATING INCOME		—			695			163			—			858
OTHER INCOME (EXPENSE):
Equity in earnings of subsidiaries		2,074			2			—			(2,076	)		—
Interest, net		(137	)		11			1			—			(125	)
Other retirement plans income		—			141			2			—			143
Intercompany charges, net		140			(78	)		(62	)		—			—
Other, net		(3	)		104			(103	)		—			(2	)
INCOME BEFORE INCOME TAXES		2,074			875			1			(2,076	)		874
Provision for income taxes		—			(1,197	)		(3	)		—			(1,200	)
NET INCOME	$	2,074		$	2,072		$	4		$	(2,076	)	$	2,074
COMPREHENSIVE INCOME	$	2,051		$	2,069		$	107		$	(2,076	)	$	2,151

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

Nine Months Ended February 28, 2019

	Parent			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
REVENUES	$	—		$	37,685		$	14,503		$	(302	)	$	51,886
OPERATING EXPENSES:
Salaries and employee benefits		110			14,300			4,179			—			18,589
Purchased transportation		—			7,780			4,912			(126	)		12,566
Rentals and landing fees		4			1,948			585			(4	)		2,533
Depreciation and amortization		1			2,133			353			—			2,487
Fuel		—			2,708			237			—			2,945
Maintenance and repairs		1			1,874			271			(2	)		2,144
Business realignment costs		4			—			—			—			4
Intercompany charges, net		(357	)		(772	)		1,129			—			—
Other		238			4,991			2,410			(171	)		7,468
		1			34,962			14,076			(303	)		48,736
OPERATING INCOME		(1	)		2,723			427			1			3,150
OTHER INCOME (EXPENSE):
Equity in earnings of subsidiaries		2,509			145			—			(2,654	)		—
Interest, net		(439	)		44			2			—			(393	)
Other retirement plans income		—			466			8			—			474
Intercompany charges, net		454			(335	)		(119	)		—			—
Other, net		(14	)		18			(26	)		—			(22	)
INCOME BEFORE INCOME TAXES		2,509			3,061			292			(2,653	)		3,209
Provision for income taxes		—			579			121			—			700
NET INCOME	$	2,509		$	2,482		$	171		$	(2,653	)	$	2,509
COMPREHENSIVE INCOME	$	2,443		$	2,514		$	46		$	(2,653	)	$	2,350

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

Nine Months Ended February 28, 2018

	Parent			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
REVENUES	$	—		$	36,044		$	12,445		$	(353	)	$	48,136
OPERATING EXPENSES:
Salaries and employee benefits		112			13,713			3,852			—			17,677
Purchased transportation		—			6,836			4,600			(216	)		11,220
Rentals and landing fees		4			1,951			577			(6	)		2,526
Depreciation and amortization		1			1,958			334			—			2,293
Fuel		—			2,220			215			—			2,435
Maintenance and repairs		1			1,729			238			—			1,968
Intercompany charges, net		(325	)		298			27			—			—
Other		207			4,664			2,333			(131	)		7,073
		—			33,369			12,176			(353	)		45,192
OPERATING INCOME		—			2,675			269			—			2,944
OTHER INCOME (EXPENSE):
Equity in earnings of subsidiaries		3,445			39			—			(3,484	)		—
Interest, net		(396	)		35			(2	)		—			(363	)
Other retirement plans income		—			424			12			—			436
Intercompany charges, net		403			(220	)		(183	)		—			—
Other, net		(7	)		88			(103	)		—			(22	)
INCOME BEFORE INCOME TAXES		3,445			3,041			(7	)		(3,484	)		2,995
Provision for income taxes		—			(573	)		123			—			(450	)
NET INCOME	$	3,445		$	3,614		$	(130	)	$	(3,484	)	$	3,445
COMPREHENSIVE INCOME	$	3,385		$	3,605		$	(3	)	$	(3,484	)	$	3,503

Condensed Consolidating Statements of Cash Flows

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(UNAUDITED)

Nine Months Ended February 28, 2019

	Parent			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
CASH PROVIDED BY (USED IN) OPERATING    ACTIVITIES	$	(109	)	$	3,136		$	322		$	(26	)	$	3,323
INVESTING ACTIVITIES
Capital expenditures		(3	)		(3,359	)		(395	)		—			(3,757	)
Proceeds from asset dispositions and other		(45	)		86			21			—			62
CASH USED IN INVESTING    ACTIVITIES		(48	)		(3,273	)		(374	)		—			(3,695	)
FINANCING ACTIVITIES
Proceeds from short-term borrowings, net		220			—			—			—			220
Net transfers from (to) Parent		2			(31	)		29			—			—
Payment on loan between subsidiaries		(29	)		—			29			—			—
Intercompany dividends		—			114			(114	)		—			—
Proceeds from debt issuances		2,463			—			—			—			2,463
Principal payments on debt		(750	)		(117	)		(7	)		—			(874	)
Proceeds from stock issuances		58			—			—			—			58
Dividends paid		(514	)		—			—			—			(514	)
Purchase of treasury stock		(1,365	)		—			—			—			(1,365	)
Other, net		—			127			(122	)		—			5
CASH (USED IN) PROVIDED BY FINANCING    ACTIVITIES		85			93			(185	)		—			(7	)
Effect of exchange rate changes on cash		—			(9	)		(5	)		—			(14	)
Net (decrease) increase in cash and cash equivalents		(72	)		(53	)		(242	)		(26	)		(393	)
Cash and cash equivalents at beginning of period		1,485			257			1,538			(15	)		3,265
Cash and cash equivalents at end of period	$	1,413		$	204		$	1,296		$	(41	)	$	2,872

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(UNAUDITED)

Nine Months Ended February 28, 2018

	Parent			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
CASH PROVIDED BY (USED IN) OPERATING    ACTIVITIES	$	(3,537	)	$	4,664		$	25		$	10		$	1,162
INVESTING ACTIVITIES
Capital expenditures		—			(3,746	)		(248	)		—			(3,994	)
Business acquisitions, net of cash acquired		—			(44	)		—			—			(44	)
Proceeds from asset dispositions and other		(5	)		23			3			—			21
CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES		(5	)		(3,767	)		(245	)		—			(4,017	)
FINANCING ACTIVITIES
Proceeds from short-term borrowings, net		797			—			—			—			797
Net transfers from (to) Parent		807			(895	)		88			—			—
Payment on loan between subsidiaries		210			—			(210	)		—			—
Proceeds from debt issuances		1,481			—			—			—			1,481
Principal payments on debt		—			(17	)		(14	)		—			(31	)
Proceeds from stock issuances		284			—			—			—			284
Dividends paid		(402	)		—			—			—			(402	)
Purchase of treasury stock		(558	)		—			—			—			(558	)
Other, net		2			4			—			—			6
CASH (USED IN) PROVIDED BY FINANCING    ACTIVITIES		2,621			(908	)		(136	)		—			1,577
Effect of exchange rate changes on cash		(6	)		61			43			—			98
Net (decrease) increase in cash and cash equivalents		(927	)		50			(313	)		10			(1,180	)
Cash and cash equivalents at beginning of period		1,884			325			1,807			(47	)		3,969
Cash and cash equivalents at end of period	$	957		$	375		$	1,494		$	(37	)	$	2,789

XML

General - Additional Information (Details) - USD ($) $ / shares in Units, $ in Millions		3 Months Ended			9 Months Ended
	May 31, 2018	Feb. 28, 2019	Nov. 30, 2018	Feb. 28, 2018	Feb. 28, 2019	Feb. 28, 2018	Jan. 26, 2016
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Gross contract assets related to in-transit packages	$ 542	$ 526			$ 526
Contract assets net of deferred unearned revenue	363	353			353
Contract liabilities related to advance payments from customers	13	9			$ 9
Payment terms of customer contracts					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.
Stock-based compensation		33		$ 32	$ 141	$ 135
Business realignment costs		$ 4		$ 0	$ 4	$ 0
Diluted		$ 2.80		$ 7.59	$ 9.41	$ 12.63
Provisional benefit related to remeasurement of net U.S. deferred tax liability, income tax expense amount recognized		$ 4	$ 4
Provisional benefit related to remeasurement of net U.S. deferred tax liability	$ (1,150)				$ (1,150)
Lease liability and related right-of-use asset		$ 13,000			$ 13,000
Stock Repurchase Program Number Of Shares Authorized To Be Repurchased							25,000,000
Number of Shares Repurchased		600,000		1,200,000	6,000,000	2,400,000
Treasury Stock Acquired, Average Cost Per Share		$ 168.43			$ 227.42
Payments for Repurchase of Common Stock		$ 93			$ 1,365	$ 558
Stock Repurchase Program, Remaining Number of Shares Authorized to be Repurchased		5,700,000			5,700,000
Dividends Payable, Date Declared					Feb. 15, 2019
Dividends Payable Amount Per Share		$ 0.65			$ 0.65
Dividends Payable, Date To Be Paid					Apr. 01, 2019
Dividends Payable, Date Of Record					Mar. 11, 2019
Business Realignment Activities [Member]
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Business realignment costs		$ 4
Business realignment costs, net of tax		$ 3
Diluted		$ 0.01

XML

General - Schedule of Revenue by Service Type (Details) - USD ($) $ in Millions		3 Months Ended		9 Months Ended
		Feb. 28, 2019	Feb. 28, 2018	Feb. 28, 2019	Feb. 28, 2018
Entity Wide Information Revenue From External Customer [Line Items]
Revenues		$ 17,010	$ 16,526	$ 51,886	$ 48,136
Operating Segments | FedEx Express Segment [Member]
Entity Wide Information Revenue From External Customer [Line Items]
Revenues		9,005	9,098	27,831	26,574
Operating Segments | FedEx Express Segment [Member] | U.S. overnight box [Member]
Entity Wide Information Revenue From External Customer [Line Items]
Revenues		1,844	1,836	5,678	5,373
Operating Segments | FedEx Express Segment [Member] | U.S. overnight envelope [Member]
Entity Wide Information Revenue From External Customer [Line Items]
Revenues		433	435	1,345	1,317
Operating Segments | FedEx Express Segment [Member] | U.S. deferred [Member]
Entity Wide Information Revenue From External Customer [Line Items]
Revenues		1,119	996	3,131	2,796
Operating Segments | FedEx Express Segment [Member] | Total U.S. domestic package revenue [Member]
Entity Wide Information Revenue From External Customer [Line Items]
Revenues		3,396	3,267	10,154	9,486
Operating Segments | FedEx Express Segment [Member] | International priority [Member]
Entity Wide Information Revenue From External Customer [Line Items]
Revenues		1,738	1,841	5,508	5,469
Operating Segments | FedEx Express Segment [Member] | International economy [Member]
Entity Wide Information Revenue From External Customer [Line Items]
Revenues		806	793	2,541	2,378
Operating Segments | FedEx Express Segment [Member] | Total international export package revenue [Member]
Entity Wide Information Revenue From External Customer [Line Items]
Revenues		2,544	2,634	8,049	7,847
Operating Segments | FedEx Express Segment [Member] | International domestic [Member]
Entity Wide Information Revenue From External Customer [Line Items]
Revenues	[1]	1,078	1,140	3,412	3,424
Operating Segments | FedEx Express Segment [Member] | Total package revenue [Member]
Entity Wide Information Revenue From External Customer [Line Items]
Revenues		7,018	7,041	21,615	20,757
Operating Segments | FedEx Express Segment [Member] | U.S. freight [Member]
Entity Wide Information Revenue From External Customer [Line Items]
Revenues		772	739	2,294	2,040
Operating Segments | FedEx Express Segment [Member] | International priority freight [Member]
Entity Wide Information Revenue From External Customer [Line Items]
Revenues		477	532	1,574	1,527
Operating Segments | FedEx Express Segment [Member] | International Economy Freight
Entity Wide Information Revenue From External Customer [Line Items]
Revenues		495	492	1,568	1,354
Operating Segments | FedEx Express Segment [Member] | International Airfreight [Member]
Entity Wide Information Revenue From External Customer [Line Items]
Revenues		76	93	244	276
Operating Segments | FedEx Express Segment [Member] | Total freight revenue [Member]
Entity Wide Information Revenue From External Customer [Line Items]
Revenues		1,820	1,856	5,680	5,197
Operating Segments | FedEx Express Segment [Member] | Other [Member]
Entity Wide Information Revenue From External Customer [Line Items]
Revenues		167	201	536	620
Operating Segments | FedEx Ground Segment [Member]
Entity Wide Information Revenue From External Customer [Line Items]
Revenues		5,261	4,828	15,202	13,598
Operating Segments | FedEx Freight Segment [Member]
Entity Wide Information Revenue From External Customer [Line Items]
Revenues		1,750	1,613	5,627	4,950
Operating Segments | FedEx Services Segment [Member]
Entity Wide Information Revenue From External Customer [Line Items]
Revenues		402	397	1,248	1,213
Other and eliminations [Member]
Entity Wide Information Revenue From External Customer [Line Items]
Revenues	[2]	$ 592	$ 590	$ 1,978	$ 1,801

[1] International domestic revenues relate to our intra-country operations.

[2] Includes the FedEx Logistics, Inc. (“FedEx Logistics” (formerly FedEx Trade Networks, Inc.)) operating segment.

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General - Schedule of Recently Adopted Accounting Standards (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Feb. 28, 2019	Feb. 28, 2018	Feb. 28, 2019	Feb. 28, 2018
New Accounting Pronouncements Or Change In Accounting Principle [Line Items]
Revenues	$ 17,010	$ 16,526	$ 51,886	$ 48,136
Operating Income	911	858	3,150	2,944
Other Income (Expense), net	20	16	59	51
NET INCOME	$ 739	2,074	$ 2,509	3,445
Effect of Adoption of ASU 2017-07 [Member]
New Accounting Pronouncements Or Change In Accounting Principle [Line Items]
Operating Income		(143)		(436)
Other Income (Expense), net		143		436
Reported [Member]
New Accounting Pronouncements Or Change In Accounting Principle [Line Items]
Revenues		16,526		48,136
Operating Income		1,001		3,380
Other Income (Expense), net		(127)		(385)
NET INCOME		$ 2,074		$ 3,445

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Accumulated Other Comprehensive Loss - Schedule of Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Feb. 28, 2019	Feb. 28, 2018	Feb. 28, 2019	Feb. 28, 2018
Accumulated Other Comprehensive Income Loss [Line Items]
Beginning Balance			$ 19,416
Translation adjustments	$ 103	$ 100	(90)	$ 119
Ending Balance	19,894	18,894	19,894	18,894
Foreign Currency Translation Loss [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Beginning Balance	(952)	(666)	(759)	(685)
Translation adjustments	103	100	(90)	119
Ending Balance	(849)	(566)	(849)	(566)
Retirement Plans Adjustments [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Beginning Balance	135	232	181	270
Reclassifications from AOCI	(23)	(23)	(69)	(61)
Ending Balance	112	209	112	209
Accumulated Other Comprehensive (Loss) [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Beginning Balance	(817)	(434)	(578)	(415)
Ending Balance	$ (737)	$ (357)	$ (737)	$ (357)

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Accumulated Other Comprehensive Loss - Reclassification Out of Accumulated Other Comprehensive Loss (Details) - Reclassification Out of Accumulated Other Comprehensive Income (Loss) [Member] - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Feb. 28, 2019	Feb. 28, 2018	Feb. 28, 2019	Feb. 28, 2018
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items]
Salaries and employee benefits	$ 30	$ 30	$ 90	$ 90
Provision for income taxes	(7)	(7)	(21)	(29)
Net income	$ 23	$ 23	$ 69	$ 61

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Financing Arrangements - Additional Information (Details) € in Millions	3 Months Ended		9 Months Ended
	Feb. 28, 2019 USD ($)	Nov. 30, 2018 USD ($)	Feb. 28, 2019 USD ($)	Feb. 28, 2019 EUR (€)	May 31, 2018 USD ($)
Line Of Credit Facility [Line Items]
Line of Credit Facility, Expiration Date	Nov. 13, 2020
Letter of Credit Maximum Sublimit Amount	$ 500,000,000		$ 500,000,000
Financial Covenant Terms Ratio	350.00%		350.00%	350.00%
Financial Covenant Compliance Ratio	220.00%		220.00%	220.00%
Commercial paper outstanding	$ 225,000,000		$ 225,000,000
Letters Of Credit Outstanding	53,000,000		53,000,000
Long Term Debt, Including Current Maturities and Exclusive of Capital Leases Carrying Value	18,100,000,000		18,100,000,000		$ 16,500,000,000
Long Term Debt, Including Current Maturities and Exclusive of Capital Leases Fair Value	$ 17,800,000,000		$ 17,800,000,000		$ 16,600,000,000
Long-term debt weighted-average interest rate	3.40%		3.40%	3.40%
Maximum [Member]
Line Of Credit Facility [Line Items]
Commercial paper outstanding	$ 750,000,000		$ 750,000,000
Revolving Credit Facility [Member]
Line Of Credit Facility [Line Items]
Line of Credit Facility, Term	5 years
Line Of Credit Facility Maximum Borrowing Capacity	$ 2,000,000,000		2,000,000,000
Line of credit facility outstanding for future borrowings	1,722,000,000		1,722,000,000
Senior Unsecured Debt [Member]
Line Of Credit Facility [Line Items]
Debt instrument, face amount	$ 1,200,000,000	$ 1,250,000,000	$ 1,200,000,000
Debt instrument, frequency of interest payment			semi-annually
0.7% Fixed-Rate Notes Due in May 2022 [Member]
Line Of Credit Facility [Line Items]
Debt instrument, face amount | €				€ 640
Fixed interest rate	0.70%		0.70%	0.70%
Debt instrument, maturity date	May 13, 2022
3.4% Fixed-Rate Notes Due in January 2022 [Member]
Line Of Credit Facility [Line Items]
Debt instrument, face amount	$ 500,000,000		$ 500,000,000
Fixed interest rate	3.40%		3.40%	3.40%
Debt instrument, maturity date	Jan. 14, 2022
Floating Rate Notes Due April 11, 2019 [Member]
Line Of Credit Facility [Line Items]
Debt instrument, face amount | €				€ 500
Debt instrument, maturity date	Apr. 11, 2019
4.20% Fixed-rate Notes Due in October 2028 [Member]
Line Of Credit Facility [Line Items]
Debt instrument, face amount		$ 400,000,000
Fixed interest rate		4.20%
Debt instrument, maturity date		Oct. 17, 2028
4.95% Fixed-rate Notes Due in October 2048 [Member]
Line Of Credit Facility [Line Items]
Debt instrument, face amount		$ 850,000,000
Fixed interest rate		4.95%
Debt instrument, maturity date		Oct. 17, 2048
8.000% Notes Due January 15, 2019 [Member]
Line Of Credit Facility [Line Items]
Debt instrument, face amount		$ 750,000,000
Fixed interest rate		8.00%
Debt instrument, maturity date		Jan. 15, 2019

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Computation of Earnings Per Share - Schedule of Basic and Diluted Earnings per Common Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions		3 Months Ended		9 Months Ended
		Feb. 28, 2019	Feb. 28, 2018	Feb. 28, 2019	Feb. 28, 2018
Basic earnings per common share:
Net earnings allocable to common shares	[1]	$ 738	$ 2,071	$ 2,506	$ 3,441
Weighted-average common shares		261.0	268.0	262.0	268.0
Basic earnings per common share		$ 2.83	$ 7.74	$ 9.55	$ 12.85
Diluted earnings per common share:
Net earnings allocable to common shares	[1]	$ 738	$ 2,071	$ 2,506	$ 3,441
Weighted-average common shares		261.0	268.0	262.0	268.0
Dilutive effect of share-based awards		2.0	5.0	4.0	4.0
Weighted-average diluted shares		263.0	273.0	266.0	272.0
Diluted earnings per common share		$ 2.80	$ 7.59	$ 9.41	$ 12.63
Anti-dilutive options excluded from diluted earnings per common share		7.2	1.9	5.0	2.6

[1] Net earnings available to participating securities were immaterial in all periods presented.

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Income Taxes - Additional Information (Details) - USD ($) $ / shares in Units, $ in Millions			1 Months Ended	3 Months Ended			7 Months Ended	9 Months Ended		12 Months Ended
		May 31, 2018	Feb. 28, 2018	Feb. 28, 2019	Nov. 30, 2018	Feb. 28, 2018	Dec. 31, 2017	Feb. 28, 2019	Feb. 28, 2018	May 31, 2018	May 31, 2017
Income Taxes [Line Items]
Effective tax rate	[1]			20.60%		(137.30%)		21.80%	(15.00%)
Income tax benefit related to lower statutory Income tax rate on earnings				$ 60		$ 120		$ 230	$ 165
Income tax benefit from accelerated deductions to be claimed on 2018 tax return								60
Provisional benefit related to remeasurement of net U.S. deferred tax liability		$ (1,150)						(1,150)
Expense from the impact on deferred taxes attributable to a lower enacted tax rate				50
Provisional benefit related to foreign tax credits								36
Effective income tax rate reconciliation, change in deferred tax assets valuation allowance, amount								90
Recognition of benefit from TCJA										$ 225
Tax Cuts And Jobs Act Of 2017,Recognition of Benefit per diluted share										$ 0.94
Provisional benefit related to remeasurement of net U.S. deferred tax liability, income tax expense amount recognized				$ 4	$ 4
Effective income tax rate reconciliation, at federal statutory income tax rate, percent				21.00%			35.00%			29.20%	35.00%
U.S. Pension Plans [Member]
Income Taxes [Line Items]
Income tax benefit related to lower statutory Income tax rate on earnings			$ 204
Defined benefit plan contributions by employer			$ 1,500					$ 1,000	$ 2,500

[1] 2018 includes a blended U.S. statutory federal income tax rate of 29.2% while 2019 includes the fully phased-in rate of 21%.

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Income Taxes - Summary of Reconciliation of Effective Tax Rates (Details)		3 Months Ended		9 Months Ended
		Feb. 28, 2019	Feb. 28, 2018	Feb. 28, 2019	Feb. 28, 2018
Operating Loss Carryforwards [Line Items]
Effective tax rate	[1]	20.60%	(137.30%)	21.80%	(15.00%)
Remeasurement of net U.S. deferred tax liability in 2018		131.50%		38.50%
Effect of February 2018 pension contribution	[2]	23.30%		6.80%
Reduction of valuation allowance on tax loss carryforwards in 2019		(10.30%)		(3.00%)
Remeasurement of net Dutch deferred tax asset in 2019		5.30%		1.50%
Transition tax provisional benefit in 2018		4.10%		1.20%
Foreign tax credits on foreign dividends in 2018		1.20%		2.90%
Accelerated deductions claimed in 2019 on the 2018 U.S. income tax return				(1.80%)
Other, net	[3]	(2.10%)		(1.70%)
2018 [Member]
Operating Loss Carryforwards [Line Items]
Lower statutory tax rate	[4]	12.50%
2019 [Member]
Operating Loss Carryforwards [Line Items]
Lower statutory tax rate	[4]	(7.60%)		(7.60%)

[1] 2018 includes a blended U.S. statutory federal income tax rate of 29.2% while 2019 includes the fully phased-in rate of 21%.

[2] The benefit is from the pension contribution deducted on our 2017 tax return at a tax rate of 35%.

[3] The 2018 tax rates were negatively impacted by the effect of the NotPetya cyberattack, costs incurred in connection with the integration of foreign operations of FedEx Express and TNT Express B.V. (“TNT Express”), changes in uncertain tax positions and tax rate impacts on changes in deferred tax items after the TCJA enactment, and were favorably impacted from tax benefits from share-based payments

[4] Due to our May 31 fiscal year-end, the TCJA’s lower U.S. statutory federal income tax rate that went into effect on December 22, 2017 was phased in resulting in a rate of 29.2% for 2018 and a rate of 21% for subsequent years

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Income Taxes - Summary of Reconciliation Tax Rates (Parenthetical) (Details)	3 Months Ended	7 Months Ended	12 Months Ended
	Feb. 28, 2019	Dec. 31, 2017	May 31, 2018	May 31, 2017
Income Taxes [Line Items]
Effective income tax rate reconciliation, at federal statutory income tax rate, percent	21.00%	35.00%	29.20%	35.00%
2018 [Member]
Income Taxes [Line Items]
Effective income tax rate reconciliation, at federal statutory income tax rate, percent			29.20%
2019 [Member]
Income Taxes [Line Items]
Effective income tax rate reconciliation, at federal statutory income tax rate, percent	21.00%

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Retirement Plans - Schedule of Retirement Plan Costs (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Feb. 28, 2019	Feb. 28, 2018	Feb. 28, 2019	Feb. 28, 2018
Pension And Other Postretirement Benefit Expense [Abstract]
Defined benefit pension plans, net	$ 28	$ 39	$ 85	$ 113
Defined contribution plans	138	135	415	386
Postretirement healthcare plans	19	19	56	56
Retirement plans costs	$ 185	$ 193	$ 556	$ 555

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Retirement Plans - Schedule of Net Periodic Benefit Cost (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Feb. 28, 2019	Feb. 28, 2018	Feb. 28, 2019	Feb. 28, 2018
Pension Plans [Member] | U.S. Pension Plans [Member]
Net Periodic Benefit Cost
Service cost	$ 173	$ 169	$ 517	$ 509
Other retirement plans (income) expense:
Interest cost	237	279	713	836
Expected return on plan assets	(376)	(406)	(1,129)	(1,218)
Amortization of prior service credit and other	(30)	(29)	(89)	(88)
Other retirement plans (income) expense	(169)	(156)	(505)	(470)
Total net periodic benefit cost	4	13	12	39
Pension Plans [Member] | International Pension Plans [Member]
Net Periodic Benefit Cost
Service cost	23	23	72	69
Other retirement plans (income) expense:
Interest cost	13	12	38	37
Expected return on plan assets	(12)	(10)	(36)	(32)
Amortization of prior service credit and other		1	(1)
Other retirement plans (income) expense	1	3	1	5
Total net periodic benefit cost	24	26	73	74
Postretirement Healthcare Plans [Member]
Net Periodic Benefit Cost
Service cost	9	9	26	27
Other retirement plans (income) expense:
Interest cost	10	10	30	29
Other retirement plans (income) expense	10	10	30	29
Total net periodic benefit cost	$ 19	$ 19	$ 56	$ 56

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Retirement Plans - Schedule of Pension Plans Contributions (Details) - U.S. Pension Plans [Member] - USD ($) $ in Millions	1 Months Ended	9 Months Ended
	Feb. 28, 2018	Feb. 28, 2019	Feb. 28, 2018
Defined Benefit Plan Disclosure [Line Items]
Defined benefit plan contributions by employer	$ 1,500	$ 1,000	$ 2,500
Required Contribution [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined benefit plan contributions by employer			22
Voluntary Contribution [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined benefit plan contributions by employer		$ 1,000	$ 2,478

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Business Segment Information - Schedule of Segment Information (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Feb. 28, 2019	Feb. 28, 2018	Feb. 28, 2019	Feb. 28, 2018
Segment Reporting Information [Line Items]
Revenues	$ 17,010	$ 16,526	$ 51,886	$ 48,136
Operating income (loss)	911	858	3,150	2,944
FedEx Express Segment [Member]
Segment Reporting Information [Line Items]
Revenues	9,005	9,098	27,831	26,574
Operating income (loss)	370	317	1,357	1,238
FedEx Ground Segment [Member]
Segment Reporting Information [Line Items]
Revenues	5,261	4,828	15,202	13,598
Operating income (loss)	577	614	1,830	1,716
FedEx Freight Segment [Member]
Segment Reporting Information [Line Items]
Revenues	1,750	1,613	5,627	4,950
Operating income (loss)	97	49	421	322
FedEx Services Segment [Member]
Segment Reporting Information [Line Items]
Revenues	402	397	1,248	1,213
Corporate, Other and Eliminations [Member]
Segment Reporting Information [Line Items]
Revenues	592	590	1,978	1,801
Operating income (loss)	$ (133)	$ (122)	$ (458)	$ (332)

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Commitments - Schedule of Purchase Commitments (Details) $ in Millions	Feb. 28, 2019 USD ($)
Unrecorded Unconditional Purchase Obligation [Line Items]
2019 (remainder)	$ 717
2020	2,831
2021	2,873
2022	2,307
2023	1,861
Thereafter	3,614
Total	14,203
Aircraft And Related Equipment Commitments [Member]
Unrecorded Unconditional Purchase Obligation [Line Items]
2019 (remainder)	421
2020	1,998
2021	2,276
2022	1,874
2023	1,586
Thereafter	3,079
Total	11,234
Other Commitments [Member]
Unrecorded Unconditional Purchase Obligation [Line Items]
2019 (remainder)	296	[1]
2020	833	[1]
2021	597	[1]
2022	433	[1]
2023	275	[1]
Thereafter	535	[1]
Total	$ 2,969	[1]

[1] Primarily equipment and advertising contracts.

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Commitments - Additional Information (Details) $ in Millions	9 Months Ended
	Feb. 28, 2019 USD ($) air-craft
Other Aircraft Commitments Disclosure [Abstract]
Deposit and Progress Payments | $	$ 965
B767F [Member]
Other Aircraft Commitments Disclosure [Abstract]
Conditional Aircraft Commitments	5
B777F [Member]
Other Aircraft Commitments Disclosure [Abstract]
Conditional Aircraft Commitments	6

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Commitments - Schedule of Aircraft Purchase Commitments (Details)	9 Months Ended
	Feb. 28, 2019 air-craft
Schedule of Aircraft Commitments [Line Items]
2019 (remainder)	5
2020	22
2021	37
2022	33
2023	28
Thereafter	33
Total	158
Cessna SkyCourier 408 [Member]
Schedule of Aircraft Commitments [Line Items]
2021	12
2022	12
2023	12
Thereafter	14
Total	50
ATR 72-600F [Member]
Schedule of Aircraft Commitments [Line Items]
2021	5
2022	6
2023	6
Thereafter	13
Total	30
B767F [Member]
Schedule of Aircraft Commitments [Line Items]
2019 (remainder)	4
2020	17
2021	18
2022	12
2023	6
Total	57
B777F [Member]
Schedule of Aircraft Commitments [Line Items]
2019 (remainder)	1
2020	5
2021	2
2022	3
2023	4
Thereafter	6
Total	21

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Commitments - Schedule of Future Minimum Lease Payments, Operating Leases (Details) $ in Millions	Feb. 28, 2019 USD ($)
Schedule of Future Minimum Operating Lease Payments [Line Items]
2019 (remainder)	$ 597
2020	2,344
2021	2,126
2022	1,913
2023	1,682
Thereafter	8,974
Total	17,636
Aircraft and Related Equipment [Member]
Schedule of Future Minimum Operating Lease Payments [Line Items]
2019 (remainder)	26
2020	261
2021	203
2022	185
2023	127
Thereafter	48
Total	850
Facilities and Other [Member]
Schedule of Future Minimum Operating Lease Payments [Line Items]
2019 (remainder)	571
2020	2,083
2021	1,923
2022	1,728
2023	1,555
Thereafter	8,926
Total	$ 16,786

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Contingencies - Additional Information (Details) $ in Millions	Oct. 10, 2018 USD ($)
Loss Contingencies [Line Items]
Accrued attorney's fees	$ 10.0
The City and State of New York [Member]
Loss Contingencies [Line Items]
Litigation settlement expense	$ 35.4

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Supplemental Cash Flow Information -Supplemental Cash Flow (Details) - USD ($) $ in Millions	9 Months Ended
	Feb. 28, 2019	Feb. 28, 2018
Supplemental Cash Flow Information [Abstract]
Interest (net of capitalized interest)	$ 498	$ 430
Income taxes	346	707
Income tax refunds received	(34)	(59)
Cash tax payments, net	$ 312	$ 648

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Condensed Consolidating Financial Statements - Additional Information (Details)	Feb. 28, 2019 USD ($)
Guarantor Obligations [Abstract]
Debt Guarantee	$ 18,100,000,000

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Condensed Consolidating Balance Sheets (Details) - USD ($) $ in Millions	Feb. 28, 2019	May 31, 2018	Feb. 28, 2018	May 31, 2017
CURRENT ASSETS
Cash and cash equivalents	$ 2,872	$ 3,265	$ 2,789	$ 3,969
Receivables, less allowances	9,037	8,481
Spare parts, supplies, fuel, prepaid expenses and other, less allowances	1,591	1,595
Total current assets	13,500	13,341
PROPERTY AND EQUIPMENT, AT COST	58,164	55,121
Less accumulated depreciation and amortization	28,396	26,967
Net property and equipment	29,768	28,154
GOODWILL	6,916	6,973
OTHER ASSETS	4,280	3,862
ASSETS	54,464	52,330
CURRENT LIABILITIES
Short-term borrowings	225
Current portion of long-term debt	973	1,342
Accrued salaries and employee benefits	1,659	2,177
Accounts payable	3,156	2,977
Accrued expenses	3,243	3,131
Total current liabilities	9,256	9,627
LONG-TERM DEBT, LESS CURRENT PORTION	17,218	15,243
OTHER LONG-TERM LIABILITIES
Deferred income taxes	3,211	2,867
Other liabilities	4,885	5,177
Total other long-term liabilities	8,096	8,044
COMMON STOCKHOLDERS’ INVESTMENT	19,894	19,416	18,894
LIABILITIES AND COMMON STOCKHOLDERS' INVESTMENT	54,464	52,330
Consolidation Eliminations [Member]
CURRENT ASSETS
Cash and cash equivalents	(41)	(15)	(37)	(47)
Receivables, less allowances	(82)	(78)
Total current assets	(123)	(93)
INTERCOMPANY RECEIVABLE	(2,818)	(2,411)
INVESTMENT IN SUBSIDIARIES	(40,707)	(37,452)
OTHER ASSETS	(138)	104
ASSETS	(43,786)	(39,852)
CURRENT LIABILITIES
Accounts payable	(118)	(90)
Accrued expenses	(5)	(3)
Total current liabilities	(123)	(93)
INTERCOMPANY PAYABLE	(2,818)	(2,411)
OTHER LONG-TERM LIABILITIES
Deferred income taxes	(138)	104
Total other long-term liabilities	(138)	104
COMMON STOCKHOLDERS’ INVESTMENT	(40,707)	(37,452)
LIABILITIES AND COMMON STOCKHOLDERS' INVESTMENT	(43,786)	(39,852)
Parent Company [Member] | Reportable Legal Entities [Member]
CURRENT ASSETS
Cash and cash equivalents	1,413	1,485	957	1,884
Receivables, less allowances	45	3
Spare parts, supplies, fuel, prepaid expenses and other, less allowances	313	425
Total current assets	1,771	1,913
PROPERTY AND EQUIPMENT, AT COST	23	21
Less accumulated depreciation and amortization	17	17
Net property and equipment	6	4
INTERCOMPANY RECEIVABLE	661	1,487
INVESTMENT IN SUBSIDIARIES	35,803	33,370
OTHER ASSETS	891	75
ASSETS	39,132	36,849
CURRENT LIABILITIES
Short-term borrowings	225
Current portion of long-term debt	966	1,332
Accrued salaries and employee benefits	52	65
Accounts payable	188	16
Accrued expenses	510	460
Total current liabilities	1,941	1,873
LONG-TERM DEBT, LESS CURRENT PORTION	16,921	14,942
OTHER LONG-TERM LIABILITIES
Other liabilities	376	619
Total other long-term liabilities	376	619
COMMON STOCKHOLDERS’ INVESTMENT	19,894	19,415
LIABILITIES AND COMMON STOCKHOLDERS' INVESTMENT	39,132	36,849
Guarantor Subsidiaries [Member[ | Reportable Legal Entities [Member]
CURRENT ASSETS
Cash and cash equivalents	204	257	375	325
Receivables, less allowances	5,474	4,970
Spare parts, supplies, fuel, prepaid expenses and other, less allowances	979	878
Total current assets	6,657	6,105
PROPERTY AND EQUIPMENT, AT COST	53,997	51,232
Less accumulated depreciation and amortization	26,384	25,111
Net property and equipment	27,613	26,121
INTERCOMPANY RECEIVABLE	2,157	924
GOODWILL	1,598	1,709
INVESTMENT IN SUBSIDIARIES	4,904	4,082
OTHER ASSETS	1,670	1,854
ASSETS	44,599	40,795
CURRENT LIABILITIES
Current portion of long-term debt	2	1
Accrued salaries and employee benefits	1,149	1,506
Accounts payable	1,430	1,332
Accrued expenses	1,848	1,778
Total current liabilities	4,429	4,617
LONG-TERM DEBT, LESS CURRENT PORTION	287	288
OTHER LONG-TERM LIABILITIES
Deferred income taxes	3,252	2,626
Other liabilities	3,502	3,432
Total other long-term liabilities	6,754	6,058
COMMON STOCKHOLDERS’ INVESTMENT	33,129	29,832
LIABILITIES AND COMMON STOCKHOLDERS' INVESTMENT	44,599	40,795
Non Guarantor Subsidiaries [Member] | Reportable Legal Entities [Member]
CURRENT ASSETS
Cash and cash equivalents	1,296	1,538	$ 1,494	$ 1,807
Receivables, less allowances	3,600	3,586
Spare parts, supplies, fuel, prepaid expenses and other, less allowances	299	292
Total current assets	5,195	5,416
PROPERTY AND EQUIPMENT, AT COST	4,144	3,868
Less accumulated depreciation and amortization	1,995	1,839
Net property and equipment	2,149	2,029
GOODWILL	5,318	5,264
OTHER ASSETS	1,857	1,829
ASSETS	14,519	14,538
CURRENT LIABILITIES
Current portion of long-term debt	5	9
Accrued salaries and employee benefits	458	606
Accounts payable	1,656	1,719
Accrued expenses	890	896
Total current liabilities	3,009	3,230
LONG-TERM DEBT, LESS CURRENT PORTION	10	13
INTERCOMPANY PAYABLE	2,818	2,411
OTHER LONG-TERM LIABILITIES
Deferred income taxes	97	137
Other liabilities	1,007	1,126
Total other long-term liabilities	1,104	1,263
COMMON STOCKHOLDERS’ INVESTMENT	7,578	7,621
LIABILITIES AND COMMON STOCKHOLDERS' INVESTMENT	$ 14,519	$ 14,538

XML

Condensed Consolidating Statements of Comprehensive Income (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Feb. 28, 2019	Feb. 28, 2018	Feb. 28, 2019	Feb. 28, 2018
Condensed Statement Of Income Captions [Line Items]
REVENUES	$ 17,010	$ 16,526	$ 51,886	$ 48,136
OPERATING EXPENSES:
Salaries and employee benefits	6,069	6,124	18,589	17,677
Purchased transportation	$ 4,253	$ 3,935	$ 12,566	$ 11,220
Type of cost, good or service [extensible list]	us-gaap:ShippingAndHandlingMember	us-gaap:ShippingAndHandlingMember	us-gaap:ShippingAndHandlingMember	us-gaap:ShippingAndHandlingMember
Rentals and landing fees	$ 874	$ 873	$ 2,533	$ 2,526
Depreciation and amortization	851	786	2,487	2,293
Fuel	907	914	2,945	2,435
Maintenance and repairs	658	628	2,144	1,968
Business realignment costs	4	0	4	0
Other	2,483	2,408	7,468	7,073
OPERATING EXPENSES	16,099	15,668	48,736	45,192
OPERATING INCOME	911	858	3,150	2,944
OTHER INCOME (EXPENSE):
Interest, net	(135)	(125)	(393)	(363)
Other retirement plans income	158	143	474	436
Other, net	(3)	(2)	(22)	(22)
INCOME BEFORE INCOME TAXES	931	874	3,209	2,995
Provision for income taxes	192	(1,200)	700	(450)
NET INCOME	739	2,074	2,509	3,445
COMPREHENSIVE INCOME	819	2,151	2,350	3,503
Consolidation Eliminations [Member]
Condensed Statement Of Income Captions [Line Items]
REVENUES	(100)	(136)	(302)	(353)
OPERATING EXPENSES:
Purchased transportation	$ (43)	$ (84)	$ (126)	$ (216)
Type of cost, good or service [extensible list]	us-gaap:ShippingAndHandlingMember	us-gaap:ShippingAndHandlingMember	us-gaap:ShippingAndHandlingMember	us-gaap:ShippingAndHandlingMember
Rentals and landing fees	$ (1)	$ (2)	$ (4)	$ (6)
Maintenance and repairs	(2)		(2)
Other	(46)	(50)	(171)	(131)
OPERATING EXPENSES	(92)	(136)	(303)	(353)
OPERATING INCOME	(8)		1
OTHER INCOME (EXPENSE):
Equity in earnings of subsidiaries	(755)	(2,076)	(2,654)	(3,484)
Other, net	8
INCOME BEFORE INCOME TAXES	(755)	(2,076)	(2,653)	(3,484)
NET INCOME	(755)	(2,076)	(2,653)	(3,484)
COMPREHENSIVE INCOME	(755)	(2,076)	(2,653)	(3,484)
Parent Company [Member] | Reportable Legal Entities [Member]
OPERATING EXPENSES:
Salaries and employee benefits	$ 28	$ 39	$ 110	$ 112
Type of cost, good or service [extensible list]	us-gaap:ShippingAndHandlingMember	us-gaap:ShippingAndHandlingMember	us-gaap:ShippingAndHandlingMember	us-gaap:ShippingAndHandlingMember
Rentals and landing fees	$ 1	$ 2	$ 4	$ 4
Depreciation and amortization		1	1	1
Maintenance and repairs		1	1	1
Business realignment costs	4		4
Intercompany charges, net	(93)	(114)	(357)	(325)
Other	60	71	238	207
OPERATING EXPENSES			1
OPERATING INCOME			(1)
OTHER INCOME (EXPENSE):
Equity in earnings of subsidiaries	739	2,074	2,509	3,445
Interest, net	(109)	(137)	(439)	(396)
Intercompany charges, net	149	140	454	403
Other, net	(40)	(3)	(14)	(7)
INCOME BEFORE INCOME TAXES	739	2,074	2,509	3,445
NET INCOME	739	2,074	2,509	3,445
COMPREHENSIVE INCOME	713	2,051	2,443	3,385
Guarantor Subsidiaries [Member[ | Reportable Legal Entities [Member]
Condensed Statement Of Income Captions [Line Items]
REVENUES	12,443	12,433	37,685	36,044
OPERATING EXPENSES:
Salaries and employee benefits	4,720	4,764	14,300	13,713
Purchased transportation	$ 2,749	$ 2,459	$ 7,780	$ 6,836
Type of cost, good or service [extensible list]	us-gaap:ShippingAndHandlingMember	us-gaap:ShippingAndHandlingMember	us-gaap:ShippingAndHandlingMember	us-gaap:ShippingAndHandlingMember
Rentals and landing fees	$ 677	$ 684	$ 1,948	$ 1,951
Depreciation and amortization	731	670	2,133	1,958
Fuel	838	837	2,708	2,220
Maintenance and repairs	573	543	1,874	1,729
Intercompany charges, net	(397)	185	(772)	298
Other	1,771	1,596	4,991	4,664
OPERATING EXPENSES	11,662	11,738	34,962	33,369
OPERATING INCOME	781	695	2,723	2,675
OTHER INCOME (EXPENSE):
Equity in earnings of subsidiaries	16	2	145	39
Interest, net	(54)	11	44	35
Other retirement plans income	155	141	466	424
Intercompany charges, net	(89)	(78)	(335)	(220)
Other, net	71	104	18	88
INCOME BEFORE INCOME TAXES	880	875	3,061	3,041
Provision for income taxes	147	(1,197)	579	(573)
NET INCOME	733	2,072	2,482	3,614
COMPREHENSIVE INCOME	732	2,069	2,514	3,605
Non Guarantor Subsidiaries [Member] | Reportable Legal Entities [Member]
Condensed Statement Of Income Captions [Line Items]
REVENUES	4,667	4,229	14,503	12,445
OPERATING EXPENSES:
Salaries and employee benefits	1,321	1,321	4,179	3,852
Purchased transportation	$ 1,547	$ 1,560	$ 4,912	$ 4,600
Type of cost, good or service [extensible list]	us-gaap:ShippingAndHandlingMember	us-gaap:ShippingAndHandlingMember	us-gaap:ShippingAndHandlingMember	us-gaap:ShippingAndHandlingMember
Rentals and landing fees	$ 197	$ 189	$ 585	$ 577
Depreciation and amortization	120	115	353	334
Fuel	69	77	237	215
Maintenance and repairs	87	84	271	238
Intercompany charges, net	490	(71)	1,129	27
Other	698	791	2,410	2,333
OPERATING EXPENSES	4,529	4,066	14,076	12,176
OPERATING INCOME	138	163	427	269
OTHER INCOME (EXPENSE):
Interest, net	28	1	2	(2)
Other retirement plans income	3	2	8	12
Intercompany charges, net	(60)	(62)	(119)	(183)
Other, net	(42)	(103)	(26)	(103)
INCOME BEFORE INCOME TAXES	67	1	292	(7)
Provision for income taxes	45	(3)	121	123
NET INCOME	22	4	171	(130)
COMPREHENSIVE INCOME	$ 129	$ 107	$ 46	$ (3)

XML

Condensed Consolidating Statements of Cash Flows (Details) - USD ($) $ in Millions	3 Months Ended	9 Months Ended
	Feb. 28, 2019	Feb. 28, 2019	Feb. 28, 2018
Condensed Cash Flow Statements Captions [Line Items]
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		$ 3,323	$ 1,162
INVESTING ACTIVITIES
Capital expenditures		(3,757)	(3,994)
Business acquisitions, net of cash acquired			(44)
Proceeds from asset dispositions and other		62	21
Cash used in investing activities		(3,695)	(4,017)
FINANCING ACTIVITIES
Proceeds from short-term borrowings, net		220	797
Proceeds from debt issuances		2,463	1,481
Principal payments on debt		(874)	(31)
Proceeds from stock issuances		58	284
Dividends paid		(514)	(402)
Purchase of treasury stock	$ (93)	(1,365)	(558)
Other, net		5	6
Cash (used in) provided by financing activities		(7)	1,577
Effect of exchange rate changes on cash		(14)	98
Net (decrease) increase in cash and cash equivalents		(393)	(1,180)
Cash and cash equivalents at beginning of period		3,265	3,969
Cash and cash equivalents at end of period	2,872	2,872	2,789
Consolidation Eliminations [Member]
Condensed Cash Flow Statements Captions [Line Items]
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		(26)	10
FINANCING ACTIVITIES
Net (decrease) increase in cash and cash equivalents		(26)	10
Cash and cash equivalents at beginning of period		(15)	(47)
Cash and cash equivalents at end of period	(41)	(41)	(37)
Parent Company [Member] | Reportable Legal Entities [Member]
Condensed Cash Flow Statements Captions [Line Items]
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		(109)	(3,537)
INVESTING ACTIVITIES
Capital expenditures		(3)
Proceeds from asset dispositions and other		(45)	(5)
Cash used in investing activities		(48)	(5)
FINANCING ACTIVITIES
Proceeds from short-term borrowings, net		220	797
Net transfers from (to) Parent		2	807
Payment on loan between subsidiaries		(29)	210
Proceeds from debt issuances		2,463	1,481
Principal payments on debt		(750)
Proceeds from stock issuances		58	284
Dividends paid		(514)	(402)
Purchase of treasury stock		(1,365)	(558)
Other, net			2
Cash (used in) provided by financing activities		85	2,621
Effect of exchange rate changes on cash			(6)
Net (decrease) increase in cash and cash equivalents		(72)	(927)
Cash and cash equivalents at beginning of period		1,485	1,884
Cash and cash equivalents at end of period	1,413	1,413	957
Guarantor Subsidiaries [Member[ | Reportable Legal Entities [Member]
Condensed Cash Flow Statements Captions [Line Items]
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		3,136	4,664
INVESTING ACTIVITIES
Capital expenditures		(3,359)	(3,746)
Business acquisitions, net of cash acquired			(44)
Proceeds from asset dispositions and other		86	23
Cash used in investing activities		(3,273)	(3,767)
FINANCING ACTIVITIES
Net transfers from (to) Parent		(31)	(895)
Intercompany dividends		114
Principal payments on debt		(117)	(17)
Other, net		127	4
Cash (used in) provided by financing activities		93	(908)
Effect of exchange rate changes on cash		(9)	61
Net (decrease) increase in cash and cash equivalents		(53)	50
Cash and cash equivalents at beginning of period		257	325
Cash and cash equivalents at end of period	204	204	375
Non Guarantor Subsidiaries [Member] | Reportable Legal Entities [Member]
Condensed Cash Flow Statements Captions [Line Items]
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		322	25
INVESTING ACTIVITIES
Capital expenditures		(395)	(248)
Proceeds from asset dispositions and other		21	3
Cash used in investing activities		(374)	(245)
FINANCING ACTIVITIES
Net transfers from (to) Parent		29	88
Payment on loan between subsidiaries		29	(210)
Intercompany dividends		(114)
Principal payments on debt		(7)	(14)
Other, net		(122)
Cash (used in) provided by financing activities		(185)	(136)
Effect of exchange rate changes on cash		(5)	43
Net (decrease) increase in cash and cash equivalents		(242)	(313)
Cash and cash equivalents at beginning of period		1,538	1,807
Cash and cash equivalents at end of period	$ 1,296	$ 1,296	$ 1,494