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 ~~and posted on its corporate website, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ 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.

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.

	February 28, 2018 (Unaudited)		May 31, 2017		November 30, 2020 (Unaudited)		May 31, 2020
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	2,789	$	3,969	$	8,339	$	4,881
Receivables, less allowances of $373 and $252		8,671		7,599
Spare parts, supplies and fuel, less allowances of $258 and $237		523		514
Receivables, less allowances of $617 and $390						11,417		10,102
Spare parts, supplies and fuel, less allowances of $341 and $335						587		572
Prepaid expenses and other		1,592		546		922		828
Total current assets		13,575		12,628		21,265		16,383
PROPERTY AND EQUIPMENT, AT COST		54,377		50,626		67,514		65,024
Less accumulated depreciation and amortization		26,680		24,645		32,904		31,416
Net property and equipment		27,697		25,981		34,610		33,608
OTHER LONG-TERM ASSETS
Operating lease right-of-use assets, net						14,845		13,917
Goodwill		7,464		7,154		6,702		6,372
Other assets		3,115		2,789		3,734		3,257
Total other long-term assets		10,579		9,943		25,281		23,546
	$	51,851	$	48,552	$	81,156	$	73,537

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

	February 28, 2018 (Unaudited)			May 31, 2017			November 30, 2020 (Unaudited)			May 31, 2020
LIABILITIES AND STOCKHOLDERS’ INVESTMENT
LIABILITIES AND COMMON STOCKHOLDERS’ INVESTMENT
CURRENT LIABILITIES
Short-term borrowings	$	799		$	—
Current portion of long-term debt		764			22		$	97		$	51
Accrued salaries and employee benefits		1,945			1,914			2,159			1,569
Accounts payable		3,102			2,752			3,733			3,269
Operating lease liabilities								2,123			1,923
Accrued expenses		2,893			3,230			4,003			3,532
Total current liabilities		9,503			7,918			12,115			10,344
LONG-TERM DEBT, LESS CURRENT PORTION		16,017			14,909			23,221			21,952
OTHER LONG-TERM LIABILITIES
Deferred income taxes		2,401			2,485			3,471			3,162
Pension, postretirement healthcare and other benefit obligations		2,181			4,487			5,088			5,019
Self-insurance accruals		1,715			1,494			2,250			2,104
Deferred lease obligations		532			531
Deferred gains, principally related to aircraft transactions		124			137
Operating lease liabilities								13,009			12,195
Other liabilities		484			518			963			466
Total other long-term liabilities		7,437			9,652			24,781			22,946
COMMITMENTS AND CONTINGENCIES
COMMON STOCKHOLDERS’ INVESTMENT
Common stock, $0.10 par value; 800 million shares authorized; 318 million shares issued as of February 28, 2018 and May 31, 2017		32			32
Common stock, $0.10 par value; 800 million shares authorized; 318 million shares issued as of November 30, 2020 and May 31, 2020								32			32
Additional paid-in capital		3,085			3,005			3,400			3,356
Retained earnings		23,710			20,833			27,208			25,216
Accumulated other comprehensive loss		(357	)		(415	)		(898	)		(1,147	)
Treasury stock, at cost		(7,576	)		(7,382	)		(8,703	)		(9,162	)
Total common stockholders’ investment		18,894			16,073			21,039			18,295
	$	51,851		$	48,552		$	81,156		$	73,537

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

	Three Months Ended						Nine Months Ended						Three Months Ended November 30,						Six Months Ended November 30,
	February 28,						February 28,						2020			2019			2020			2019
	2018			2017			2018			2017
REVENUES	$	16,526		$	14,997		$	48,136		$	44,591
REVENUE													$	20,563		$	17,324		$	39,884		$	34,372
OPERATING EXPENSES:
Salaries and employee benefits		5,981			5,395			17,241			16,059			7,443			6,235			14,295			12,322
Purchased transportation		3,935			3,498			11,220			10,169			5,407			4,328			10,384			8,356
Rentals and landing fees		873			834			2,526			2,426			1,006			924			1,942			1,844
Depreciation and amortization		786			762			2,293			2,241			936			901			1,862			1,780
Fuel		914			735			2,435			2,043			625			890			1,190			1,760
Maintenance and repairs		628			588			1,968			1,765			815			774			1,621			1,542
Asset impairment charges														—			66			—			66
Other		2,408			2,160			7,073			6,432			2,866			2,652			5,535			5,171
		15,525			13,972			44,756			41,135			19,098			16,770			36,829			32,841
OPERATING INCOME		1,001			1,025			3,380			3,456			1,465			554			3,055			1,531
OTHER INCOME (EXPENSE):
OTHER (EXPENSE) INCOME:
Interest, net		(125	)		(122	)		(363	)		(354	)		(184	)		(151	)		(368	)		(288	)
Other retirement plans income														150			168			351			336
Other, net		(2	)		(4	)		(22	)		17			(25	)		1			(26	)		(11	)
		(127	)		(126	)		(385	)		(337	)		(59	)		18			(43	)		37
INCOME BEFORE INCOME TAXES		874			899			2,995			3,119			1,406			572			3,012			1,568
PROVISION FOR INCOME TAXES		(1,200	)		337			(450	)		1,142			180			12			541			263
NET INCOME	$	2,074		$	562		$	3,445		$	1,977		$	1,226		$	560		$	2,471		$	1,305
EARNINGS PER COMMON SHARE:
Basic	$	7.74		$	2.11		$	12.85		$	7.43		$	4.64		$	2.15		$	9.40		$	5.00
Diluted	$	7.59		$	2.07		$	12.63		$	7.31		$	4.55		$	2.13		$	9.26		$	4.97
DIVIDENDS DECLARED PER COMMON SHARE	$	0.50		$	0.40		$	2.00		$	1.60		$	0.65		$	0.65		$	1.95		$	1.95

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

	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	February 28,						February 28,						November 30,						November 30,
	2018			2017			2018			2017			2020			2019			2020			2019
NET INCOME	$	2,074		$	562		$	3,445		$	1,977		$	1,226		$	560		$	2,471		$	1,305
OTHER COMPREHENSIVE INCOME (LOSS):
Foreign currency translation adjustments, net of tax of $9, $3, $26, and $19		100			110			119			(108	)
Amortization of prior service credit, net of tax of $7, $12, $29, and $34		(23	)		(19	)		(61	)		(57	)
Foreign currency translation adjustments, net of tax expense of $6 and $4 in 2020 and $7 and $4 in 2019														124			72			253			(11	)
Amortization of prior service credit, net of tax benefit of $0 and $1 in 2020 and $6 and $12 in 2019														(2	)		(20	)		(4	)		(41	)
		77			91			58			(165	)		122			52			249			(52	)
COMPREHENSIVE INCOME	$	2,151		$	653		$	3,503		$	1,812		$	1,348		$	612		$	2,720		$	1,253

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

	Nine Months Ended
	February 28,						Six Months Ended November 30,
	2018			2017			2020			2019
Operating Activities:
Net income	$	3,445		$	1,977		$	2,471		$	1,305
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization		2,293			2,241			1,862			1,780
Asset impairment charges								—			66
Provision for uncollectible accounts		177			115			291			208
Stock-based compensation		135			123			121			104
Deferred income taxes and other noncash items		(914	)		474
Gain from sale of investment		—			(35	)
Retirement plan mark-to-market adjustment								52			—
Other noncash items and deferred income taxes								1,482			1,164
Changes in assets and liabilities:
Receivables		(986	)		(340	)		(1,100	)		(684	)
Other assets		(151	)		(235	)		(56	)		(162	)
Accounts payable and other liabilities		(2,781	)		(1,642	)		241			(1,691	)
Other, net		(56	)		(33	)		(134	)		(16	)
Cash provided by operating activities		1,162			2,645			5,230			2,074
Investing Activities:
Capital expenditures		(3,994	)		(3,790	)		(2,826	)		(3,266	)
Business acquisitions, net of cash acquired		(44	)		—
Proceeds from asset dispositions and other		21			123			14			4
Cash used in investing activities		(4,017	)		(3,667	)		(2,812	)		(3,262	)
Financing Activities:
Proceeds from short-term borrowings, net		797			—			—			150
Principal payments on debt		(31	)		(49	)		(75	)		(1,021	)
Proceeds from debt issuances		1,481			1,190			970			2,093
Proceeds from stock issuances		284			265			431			26
Dividends paid		(402	)		(319	)		(341	)		(339	)
Purchase of treasury stock		(558	)		(358	)		—			(3	)
Other, net		6			2			(12	)		(5	)
Cash provided by financing activities		1,577			731			973			901
Effect of exchange rate changes on cash		98			(70	)		67			(1	)
Net decrease in cash and cash equivalents		(1,180	)		(361	)
Net increase (decrease) in cash and cash equivalents								3,458			(288	)
Cash and cash equivalents at beginning of period		3,969			3,534			4,881			2,319
Cash and cash equivalents at end of period	$	2,789		$	3,173		$	8,339		$	2,031

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

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN COMMON STOCKHOLDERS’ INVESTMENT

	Three Months Ended						Six Months Ended
	November 30,						November 30,
	2020			2019			2020			2019
Common Stock
Beginning Balance	$	32		$	32		$	32		$	32
Ending Balance		32			32			32			32
Additional Paid-in Capital
Beginning Balance		3,375			3,257			3,356			3,231
Employee incentive plans and other		25			30			44			56
Ending Balance		3,400			3,287			3,400			3,287
Retained Earnings
Beginning Balance		26,108			25,048			25,216			24,648
Net Income		1,226			560			2,471			1,305
Cash dividends declared ($0.65, $0.65, $1.95 and $1.95 per share)		(172	)		(170	)		(513	)		(509	)
Employee incentive plans and other		46			(7	)		34			(9	)
Adoption of new accounting standards on June 1, 2019⁽¹⁾		—			—			—			(4	)
Ending Balance		27,208			25,431			27,208			25,431
Accumulated Other Comprehensive Income
Beginning Balance		(1,020	)		(918	)		(1,147	)		(865	)
Other comprehensive income, net of tax (expense)/benefit of ($6), ($1), ($3) and $8		122			52			249			(52	)
Reclassification to retained earnings due to the adoption of a new accounting standard on June 1, 2019⁽²⁾		—			—			—			51
Ending Balance		(898	)		(866	)		(898	)		(866	)
Treasury Stock
Beginning Balance		(9,033	)		(9,253	)		(9,162	)		(9,289	)
Purchase of treasury stock (0.02 million shares)		—			—			—			(3	)
Employee incentive plans and other (2.4, 0.2, 3.4 and 0.5 million shares)		330			28			459			67
Ending Balance		(8,703	)		(9,225	)		(8,703	)		(9,225	)
Total Common Stockholders’ Investment Balance	$	21,039		$	18,659		$	21,039		$	18,659

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

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, ~~2017~~2020 (“Annual Report”). ~~Accordingly, significant~~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, 2018,~~November 30, 2020, and the results of our operations for the three- and ~~nine-month~~six-month periods ended ~~February 28, 2018~~November 30, 2020 and ~~2017, and~~2019, cash flows for the ~~nine-month~~six-month periods ended ~~February 28, 2018~~November 30, 2020 and ~~2017.~~2019, and changes in common stockholders’ investment for the three- and six-month periods ended November 30, 2020 and 2019. Operating results for the three- and ~~nine-month~~six-month periods ended ~~February 28, 2018~~November 30, 2020 are not necessarily indicative of the results that may be expected for the year ending May 31, ~~2018.~~2021.

~~BUSINESS ACQUISITION.~~ ~~On October 13, 2017, FedEx acquired Northwest Research, Inc.~~Contract Assets and Liabilities

Contract assets include billed and unbilled amounts resulting from in-transit shipments, as we have an unconditional right to payment only once all performance obligations have been completed (e.g., ~~a leader in inventory research~~packages have been delivered). Contract assets are generally classified as current and ~~management, for $50 million in cash from operations. The majority~~the full balance is converted each quarter based on the short-term nature of the ~~purchase price was allocated~~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 ~~property~~in-transit shipments totaled $701 million and ~~equipment.~~ $563 million at November 30, 2020 and May 31, 2020, respectively. Contract assets net of deferred unearned revenue were $499 million and $456 million at November 30, 2020 and May 31, 2020, 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 $10 million at November 30, 2020 and May 31, 2020, respectively. Contract liabilities are included within current liabilities in the accompanying unaudited condensed consolidated balance sheets.

EMPLOYEES UNDER COLLECTIVE BARGAINING ARRANGEMENTS. The pilots of ~~Federal~~FedEx Express, ~~Corporation (“FedEx Express”),~~ who ~~represent~~are a small number of its total employees, are employed under a collective bargaining agreement that took effect on November 2, 2015. ~~This~~The collective bargaining agreement is scheduled to become amendable in November ~~2021, after a six-year term. In addition to our~~2021. Other than the pilots at FedEx Express, ~~FedEx Supply Chain Distribution System, Inc. (“FedEx Supply Chain”) has~~ a small number of our employees ~~who~~ are members of ~~unions,~~unions.

BUSINESS ACQUISITION. On December 2, 2020, we agreed to acquire ShopRunner, Inc. (“ShopRunner”), an e-commerce platform that directly connects brands and ~~certain non-U.S. employees~~merchants with online shoppers. The cost of the acquisition will not be material and will be funded with cash from operations. This acquisition is expected to be completed in December 2020, subject to customary conditions, including regulatory approval. The financial results of ShopRunner will be included in “Corporate, other and eliminations” from the date of acquisition and are ~~unionized.~~not expected to be material to our results of operations in 2021.

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 outstanding incentive stock plans and all financial disclosures about these programs are set forth in our Annual Report.

Our stock-based compensation expense was ~~$32~~$46 million for the three-month period ended ~~February 28, 2018~~November 30, 2020 and ~~$135~~$121 million for the ~~nine-month~~six-month period ended ~~February 28, 2018.~~November 30, 2020. Our stock-based compensation expense was ~~$31~~$37 million for the three-month period ended ~~February 28, 2017~~November 30, 2019 and ~~$123~~$104 million for the ~~nine-month~~six-month period ended ~~February 28, 2017.~~November 30, 2019. Due to its immateriality, additional disclosures related to stock-based compensation have been excluded from this quarterly report.

DERIVATIVE FINANCIAL INSTRUMENTS. Our risk management strategy includes the select use of derivative instruments to reduce the effects of volatility in foreign currency exchange exposure on operating results and cash flows. In accordance with our risk management policies, we do not hold or issue derivative instruments for trading or speculative purposes. All derivative instruments are recognized in the financial statements at fair value, regardless of the purpose or intent for holding them.

When we become a party to a derivative instrument and intend to apply hedge accounting, we formally document the hedge relationship and the risk management objective for undertaking the hedge, which includes designating the instrument for financial reporting purposes as a fair value hedge, a cash flow hedge or a net investment hedge.

If a derivative is designated as a cash flow hedge, the entire change in the fair value of the hedging instrument included in the assessment of hedge effectiveness is recorded in other comprehensive income. For net investment hedges, the entire change in the fair value is recorded in other comprehensive income. Any portion of a change in the fair value of a derivative that is considered to be ineffective, along with the change in fair value of any derivatives not designated in a hedging relationship, is immediately recognized in the income statement. We do not have any derivatives designated as a cash flow hedge for any period presented. We have €640 million of debt designated as a net investment hedge to reduce the volatility of the U.S. dollar value of a portion of our net investment in a euro-denominated subsidiary. As of November 30, 2020, the hedge remains effective.

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.

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”). See Note 5 for further discussion related to applying this guidance.

~~During the first quarter of 2018, we early adopted the Accounting Standards Update issued by~~June 2016, the Financial Accounting Standards Board (“FASB”) ~~related to Intra-Entity Transfers of Assets Other Than Inventory. This update requires companies to recognize~~issued ASU 2016-13 that amends the ~~income tax consequences of intra-entity transfers of~~impairment model for most financial assets and certain other ~~than inventory when the transfer occurs, as opposed to when the assets~~instruments that are ~~ultimately sold to an outside party. This new guidance had an immaterial impact on our accounting and financial reporting for the third quarter and nine months of 2018.~~

In January 2017, the FASB issued an Accounting Standards Update that simplifies the subsequent measurement of goodwill, eliminating Step 2 from the goodwill impairment test. Under this new guidance, an entity should perform its annual or interim goodwill impairment test by comparing thenot measured at fair value through net income, including trade receivables, to utilize an expected loss methodology in place of ~~a reporting unit with its carrying amount. An entity should recognize an~~

~~impairment charge for~~ the ~~amount by which the carrying amount exceeds the reporting unit’s fair value; however, the~~incurred loss ~~recognized should not exceed the total amount of goodwill allocated to that reporting unit.~~ ~~This guidance will be applied prospectively and will be~~methodology. We adopted this standard effective ~~for us beginning~~ June 1, ~~2020 (fiscal 2021). Early adoption is permitted~~2020. We updated our process for ~~annual and interim goodwill impairment testing dates after January 1, 2017. We expect~~estimating the expected credit loss to ~~early adopt~~include a review of forecast information that may impact expected collectability over the ~~guidance during the fourth quarter of 2018.~~

In 2014, the FASB and International Accounting Standards Board issued a new accounting standard that will supersede virtually all existing revenue recognition guidance under generally accepted accounting principles in the United States. This standard will be effective for us beginning June 1, 2018 (fiscal 2019). The fundamental principleslifetime of the ~~new guidance are that companies should recognize revenue in~~asset. See Note 2 for additional information. The adoption of this standard did not have 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 are finalizing the assessment of thematerial impact ~~this new standard will have~~ on our consolidated financial statements and related ~~disclosures, including ongoing contract reviews, which will be completed by~~disclosures.

In August 2018, the ~~end~~FASB issued ASU 2018-15 that reduces the complexity of ~~2018.~~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. We doadopted this standard effective June 1, 2020 and applied these changes prospectively. The adoption of this standard did not ~~anticipate that the new guidance will~~ have a material impact on our ~~revenue recognition policies, practices or systems.~~consolidated financial statements and related disclosures.

In ~~March 2017,~~December 2019, the FASB issued ~~an Accounting Standards Update that changes how employers that sponsor defined benefit pension or other postretirement benefit plans present~~ASU 2019-12, which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the ~~net periodic benefit cost~~general principles in ~~the income statement. This new~~Topic 740 and also clarifies and amends existing guidance ~~requires entities~~ to ~~report the service cost component in the same line item or items as other compensation costs.~~improve consistent application. We early adopted this standard effective June 1, 2020. The ~~other components~~adoption 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~~this standard ~~will impact our operating income but will~~did not have noa material impact on our net income or earnings per share. For example, adoption of this guidance would have reduced operating income by $143 million in the third quarter and $436 million in the nine months of 2018, and by $113 million in the third quarter and $337 million in the nine months of 2017, but would not have impacted our net income in these periods. This new guidance will be effective June 1, 2018 and will be applied retrospectively.

~~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~~consolidated financial 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 in excess of $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 the company’s lease portfolio as of the adoption date. We are currently in the process of evaluating our existing lease portfolio, including 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).disclosures.

In February 2018, the FASB issued an Accounting Standards Update 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).- 11 -

TREASURY SHARES. In January 2016, our Board of Directors ~~authorized~~approved a ~~share~~stock repurchase program of up to 25 million shares. We did 0t repurchase any shares of FedEx common stock during the first half of 2021. As of November 30, 2020, 5.1 million shares remained under the stock repurchase authorization. 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 2020, we amended our amended and restated $2.0 billion five-year credit agreement (the “Five-Year Credit Agreement”) and our $1.5 billion 364-day credit agreement (the “364-Day Credit Agreement” and together with the ~~third quarter of 2018, we repurchased 1.2 million~~Five-Year Credit Agreement, the “Credit Agreements”). The amendments to the Credit Agreements, among other things, temporarily restrict us from repurchasing any shares of ~~FedEx~~our common stock ~~at an average price of $248.73 per share~~between May 27, 2020 and May 31, 2021.

See Note 4 for ~~a total of $288 million. During~~more information on the nine months of 2018, we repurchased 2.4 million shares of FedEx common stock at an average price of $232.00 per share for a total of $558 million. As of February 28, 2018, 13.6 million shares remained underamendments to the ~~current share repurchase authorization.~~Credit Agreements.

DIVIDENDS DECLARED PER COMMON SHARE. On ~~February 16, 2018,~~November 20, 2020, our Board of Directors declared a quarterly dividend of ~~$0.50~~$0.65 per share of common stock. The dividend will be paid on ~~April 2, 2018~~December 28, 2020 to stockholders of record as of the close of business on ~~March 12, 2018.~~December 14, 2020. 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~~basis. The amendments to the Credit Agreements discussed above under “Treasury Shares” temporarily restrict us from increasing the amount of our quarterly dividend payable per share of common stock from $0.65 per share between May 27, 2020 and May 31, 2021. There are no other material restrictions on our ability to declare dividends, nor are there any material restrictions on the ability of our subsidiaries to transfer funds to us in the form of cash dividends, loans or advances.

We are exposed to credit losses primarily through our trade receivables. We assess ability to pay for certain customers by conducting a credit review, which considers the customer’s established credit rating and our assessment of creditworthiness. We determine the allowance for credit losses on accounts receivable using a combination of specific reserves for accounts that are deemed to exhibit credit loss indicators and general reserves that are determined using loss rates based on historical write-offs by geography and recent forecast information, including underlying economic expectations. We update our estimate of credit loss reserves quarterly, considering recent write-offs, collections information and underlying economic expectations.

Credit losses were $148 million for the three-month period ended November 30, 2020 and $291 million for the six-month period ended November 30, 2020. Credit losses were $102 million for the three-month period ended November 30, 2019 and $208 million for the six-month period ended November 30, 2019. Our allowance for credit losses was $296 million as of November 30, 2020 and $175 million at ~~the end of each fiscal year.~~May 31, 2020.

The following table provides changes in ~~AOCI,~~accumulated other comprehensive income (“AOCI”), net of tax, reported in our unaudited condensed consolidated financial statements for the periods ended ~~February 28~~November 30 (in millions; amounts in parentheses indicate debits to AOCI):

	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	2018			2017			2018			2017			2020			2019			2020			2019
Foreign currency translation loss:
Balance at beginning of period	$	(666	)	$	(732	)	$	(685	)	$	(514	)	$	(1,078	)	$	(1,036	)	$	(1,207	)	$	(954	)
Translation adjustments		100			110			119			(108	)		124			72			253			(11	)
Reclassification to retained earnings due to the adoption of ASU 2018-02														—			—			—			1
Balance at end of period		(566	)		(622	)		(566	)		(622	)		(954	)		(964	)		(954	)		(964	)
Retirement plans adjustments:
Balance at beginning of period		232			307			270			345			58			118			60			89
Reclassifications from AOCI		(23	)		(19	)		(61	)		(57	)		(2	)		(20	)		(4	)		(41	)
Reclassification to retained earnings due to the adoption of ASU 2018-02														—			—			—			50
Balance at end of period		209			288			209			288			56			98			56			98
Accumulated other comprehensive (loss) at end of period	$	(357	)	$	(334	)	$	(357	)	$	(334	)	$	(898	)	$	(866	)	$	(898	)	$	(866	)

The following table presents details of the reclassifications from AOCI for the periods ended ~~February 28~~November 30 (in millions; amounts in parentheses indicate debits to earnings):

	Amount Reclassified from AOCI												Affected Line Item in the Income Statement	Amount Reclassified from AOCI											Affected Line Item in the Income Statement
	Three Months Ended						Nine Months Ended							Three Months Ended					Six Months Ended
	2018			2017			2018			2017				2020		2019			2020			2019
Amortization of retirement plans prior service credits, before tax	$	30		$	31		$	90		$	91		Salaries and employee benefits	$	2	$	26		$	5		$	53		Other retirement plans income
Income tax benefit		(7	)		(12	)		(29	)		(34	)	Provision for income taxes		—		(6	)		(1	)		(12	)	Provision for income taxes
AOCI reclassifications, net of tax	$	23		$	19		$	61		$	57		Net income	$	2	$	20		$	4		$	41		Net income

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.~~stock and allows pass through trusts formed by FedEx Express to sell, in one or more future offerings, pass through certificates.

During ~~the third quarter of 2018, we~~August 2020, FedEx Express issued ~~$1.5 billion of senior unsecured debt under our current shelf registration statement, comprised of $500~~$970 million of ~~3.40% fixed-rate notes~~Pass Through Certificates, Series 2020-1AA (the “Certificates”) with a fixed interest rate of 1.875% due in February ~~2028,~~2034 utilizing pass through trusts (the “Trusts”). The Certificates are secured by 19 Boeing aircraft with a net book value of $1.9 billion at November 30, 2020. The payment obligations of FedEx Express in respect of the Certificates are fully and $1unconditionally guaranteed by FedEx. FedEx Express is using the proceeds from the issuance for general corporate purposes.

Each Trust meets the definition of a variable interest entity, or VIE, as defined in the Consolidations topic of the Codification (ASC 810), and must be considered for consolidation in our financial statements. Our assessment of the Trusts considers both quantitative and qualitative factors, including the purpose for which the Trust was established and the nature of the risks related to the Trusts. Neither FedEx nor FedEx Express invests in or possesses a financial interest in the Trusts. Rather, FedEx Express has an obligation to make interest and principal payments, which are fully and unconditionally guaranteed by FedEx, and is not the primary beneficiary of the Trusts. Based on this analysis, we determined that we are not required to consolidate the Trusts.

We have a $2.0 billion ~~of 4.05% fixed-rate notes due in February 2048. Interest on these notes is paid semi-annually. We used the net proceeds for~~Five-Year Credit Agreement and a ~~voluntary incremental contribution in February 2018 to our tax-qualified U.S. domestic pension plans (“U.S. Pension Plans”).~~

~~During the quarter, we amended our five-year revolving credit facility to increase the aggregate amount available under the facility from $1.75~~$1.5 billion ~~to $2.0 billion.~~364-Day Credit Agreement. The ~~facility, which~~Five-Year Credit Agreement expires in ~~November 2020~~March 2025 and includes a ~~$500~~$250 million letter of credit ~~sublimit, is~~sublimit. The 364-Day Credit Agreement expires in March 2021. The Credit Agreements are available to finance our operations and other cash flow needs. The ~~agreement contains~~Credit Agreements contain a financial covenant ~~which requires~~requiring us to maintain a ratio of debt to consolidated earnings (excluding ~~non-cash pension~~noncash retirement plans mark-to-market adjustments, noncash pension service costs and ~~non-cash~~noncash asset impairment charges) before interest, taxes, depreciation and amortization (“adjusted EBITDA”) of not more than ~~3.5~~4.9 to 1.0, calculated as of ~~the end of the applicable quarter~~November 30, 2020 on a rolling four-quarters basis. The ratio of our debt to adjusted EBITDA was ~~2.2~~2.6 to 1.0 at ~~February 28, 2018.~~November 30, 2020. The Credit Agreements also contain the temporary covenants discussed in Note 1. We believe ~~this covenant is~~these covenants are the only significant restrictive ~~covenant~~covenants in ~~our revolving credit agreement. Our revolving credit agreement contains~~the Credit Agreements. The Credit Agreements contain other customary covenants that do not, individually or in the aggregate, materially restrict the conduct of our business. We are in compliance with ~~this~~the financial covenant and all other covenants ~~of our revolving credit agreement~~in the Credit Agreements and do not expect the covenants to affect our operations, including our liquidity or expected funding needs. If we failed to comply with the financial covenant or any other covenants in the Credit Agreements, our access to financing could become limited.

~~During~~Information regarding changes to the ~~third~~ratio of debt to adjusted EBITDA required to be maintained under the Credit Agreements through the fourth quarter of ~~2018, we issued~~2021 is provided in our Annual Report.

Outstanding commercial paper which provided us with additional short-term liquidity. The maximum outstanding during the quarter was $800 million. Our commercial paper program is backed by unused commitments under the revolving credit facility and borrowings under the program reducereduces the amount available to borrow under the ~~credit facility.~~Credit Agreements. As of ~~February 28, 2018, $800 million of~~November 30, 2020, 0 commercial paper was outstanding and ~~$54~~$0.3 million in letters of credit were outstanding, leaving ~~$1.146~~$3.5 billion available under the ~~revolving credit facility~~Credit Agreements for future borrowings.

Long-term debt, including current maturities and exclusive of ~~capital~~finance leases, had carrying values of ~~$16.7~~$22.8 billion at ~~February 28, 2018~~November 30, 2020 and ~~$14.9~~$21.5 billion at May 31, ~~2017,~~2020, compared with estimated fair values of ~~$17.0~~$27.2 billion at ~~February 28, 2018~~November 30, 2020 and ~~$15.5~~$22.8 billion at May 31, ~~2017.~~2020. The annualized

weighted-average interest rate on long-term debt was ~~3.6%~~3.5% at ~~February 28, 2018.~~November 30, 2020. 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.

The calculation of basic and diluted earnings per common share for the periods ended ~~February 28~~November 30 was as follows (in millions, except per share amounts):

	Three Months Ended				Nine Months Ended				Three Months Ended				Six Months Ended
	2018		2017		2018		2017		2020		2019		2020		2019
Basic earnings per common share:
Net earnings allocable to common shares⁽¹⁾	$	2,071	$	561	$	3,441	$	1,974	$	1,224	$	559	$	2,466	$	1,303
Weighted-average common shares		268		266		268		266		264		261		263		261
Basic earnings per common share	$	7.74	$	2.11	$	12.85	$	7.43	$	4.64	$	2.15	$	9.40	$	5.00
Diluted earnings per common share:
Net earnings allocable to common shares⁽¹⁾	$	2,071	$	561	$	3,441	$	1,974	$	1,224	$	559	$	2,466	$	1,303
Weighted-average common shares		268		266		268		266		264		261		263		261
Dilutive effect of share-based awards		5		5		4		4		5		1		3		1
Weighted-average diluted shares		273		271		272		270		269		262		266		262
Diluted earnings per common share	$	7.59	$	2.07	$	12.63	$	7.31	$	4.55	$	2.13	$	9.26	$	4.97
Anti-dilutive options excluded from diluted earnings per common share		1.9		4.0		2.6		4.7		1.3		11.2		5.1		11.0

Our effective tax rate was 12.8% for the second quarter and 18.0% for the first half of 2021, compared to ~~participating securities were immaterial~~2.1% for the second quarter and 16.8% for the first half of 2020. The 2021 tax rates include a benefit of $191 million from an increase in ~~all periods presented.~~

~~On December 22, 2017,~~our 2020 tax loss that the ~~United States government enacted comprehensive tax legislation through~~Coronavirus Aid, Relief, and Economic Security Act will allow to be carried back to 2015, when the ~~TCJA. The TCJA significantly changes the~~ U.S. ~~corporate income tax system including, among other things, lowering the statutory~~ federal income tax rate was 35%. The increase in our estimated 2020 tax loss is attributable to our Application for Change in Accounting Method filed with the Internal Revenue Service (“IRS”) during the fourth quarter of 2020 discussed below and other accelerated deductions to be claimed on the 2020 tax return. The 2020 tax rates included a $133 million benefit from ~~35%~~a valuation allowance reduction which, when combined with substantially lower consolidated earnings, produced a significantly lower rate for the second quarter of 2020 compared to ~~21%, eliminating or reducing~~the second quarter of 2021.

We filed an application with the IRS in 2020 requesting approval to change our accounting method for depreciation to allow retroactive application of tax regulations issued during 2020 on certain assets placed in service during 2018 and 2019. During the second quarter of 2021, the IRS issued guidance granting automatic approval to change the method of accounting for these assets resulting in an income tax deductions, and implementing a modified territorial tax system that includes a one-time transition tax on previously deferred foreign earnings. Due to our May 31 fiscal year end, the lower rate will be phased in, resulting in a U.S. statutory federal ratebenefit of ~~29.2% for 2018 and a 21% statutory federal rate for subsequent years.~~

~~In December 2017, the SEC staff issued SAB 118, which provides guidance on accounting~~$130 million for the ~~tax effects~~second quarter.

During the second quarter of ~~the TCJA. SAB 118 provides for a measurement period of up to one year from the enactment date for companies to complete the accounting~~2021, we filed suit in U.S. District Court for the ~~initial income~~Western District of Tennessee challenging the validity of a tax effects of the TCJA. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the TCJA for which the accounting is complete and provide a provisional estimate (where determinable) of the income tax effects of the TCJA where the accounting is incomplete. The provisional estimate is required to be updated throughout the measurement period.

As of February 28, 2018, we have not completed our initial accounting of the tax effects of the TCJA; however, where determinable, we have made an estimate of the effects on our existing deferred tax balances and the one-time transition tax. During the quarter, we recognized a provisional benefit of $1.15 billionregulation related to ~~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~~unrepatriated foreign ~~earnings.~~

~~In addition~~earnings, which was enacted as part of the Tax Cuts and Jobs Act (“TCJA”). Our lawsuit seeks to have the court declare this regulation invalid and order the refund of overpayments of U.S. federal income taxes for 2018 and 2019 attributable to the ~~provisional amounts above, we recognized~~denial of foreign tax credits under the regulation. We have recorded a ~~one-time~~cumulative benefit of ~~$204~~$233 million ~~from a $1.5 billion contribution~~through 2019 attributable to our ~~U.S. Pension Plans in February 2018 and a benefit of $165 million related to a lower statutory income tax rate on fiscal 2018 year-to-date earnings.~~

~~The following table provides a reconciliation of the 2017 effective tax rates to the 2018 effective tax rates, including the impact~~interpretation of the TCJA ~~for~~and the ~~periods ended February 28:~~Internal Revenue Code. If we are ultimately unsuccessful in defending our position, we may be required to reverse the benefit previously recorded.

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~~November 30 were as follows (in millions):

	Three Months Ended				Nine Months Ended				Three Months Ended				Six Months Ended
	2018		2017		2018		2017		2020		2019		2020		2019
Defined benefit pension plans	$	39	$	57	$	113	$	173
Defined benefit pension plans, net									$	27	$	37	$	52	$	74
Defined contribution plans		135		117		386		348		153		136		311		278
Postretirement healthcare plans		19		19		56		57		20		21		41		43
Retirement plan mark-to-market (“MTM”) net loss										52		—		52		—
	$	193	$	193	$	555	$	578	$	252	$	194	$	456	$	395

Net periodic benefit cost of the pension and postretirement healthcare plans for the periods ended ~~February 28~~November 30 included the following components (in millions):

Three Months Ended

U.S. Pension Plans

International Pension Plans

Postretirement Healthcare Plans

2018

2017

2018

2017

2018

2017

Service cost

$
169

$
160

$
23

$
20

$
9

$
9

Interest cost

279

282

12

11

10

10

Expected return on plan assets

(406
)

(375
)

(10
)

(9
)

—

—

Amortization of prior service credit and other

(29
)

(30
)

1

(2
)

—

—

$
13

$
37

$
26

$
20

$
19

$
19

Nine Months Ended

U.S. Pension Plans

International Pension Plans

Postretirement Healthcare Plans

2018

2017

2018

2017

2018

2017

Service cost

$
509

$
479

$
69

$
61

$
27

$
27

Interest cost

836

846

37

33

29

30

Expected return on plan assets

(1,218
)

(1,126
)

(32
)

(30
)

—

—

Amortization of prior service credit and other

(88
)

(89
)

—

(1
)

—

—

$
39

$
110

$
74

$
63

$
56

$
57

	Three Months Ended
	U.S. Pension Plans						International Pension Plans						Postretirement Healthcare Plans
	2020			2019			2020			2019			2020		2019
Service cost	$	212		$	192		$	26		$	24		$	11	$	10
Other retirement plans (income) expense:
Interest cost		239			250			11			11			9		11
Expected return on plan assets		(446	)		(401	)		(13	)		(13	)		—		—
Amortization of prior service credit and other		(2	)		(25	)		—			(1	)		—		—
MTM net loss		—			—			52			—			—		—
		(209	)		(176	)		50			(3	)		9		11
	$	3		$	16		$	76		$	21		$	20	$	21

	Six Months Ended
	U.S. Pension Plans						International Pension Plans						Postretirement Healthcare Plans
	2020			2019			2020			2019			2020		2019
Service cost	$	425		$	384		$	49		$	48		$	22	$	21
Other retirement plans (income) expense:
Interest cost		479			500			21			22			19		22
Expected return on plan assets		(892	)		(801	)		(25	)		(26	)		—		—
Amortization of prior service credit and other		(4	)		(52	)		(1	)		(1	)		—		—
MTM net loss		—			—			52			—			—		—
		(417	)		(353	)		47			(5	)		19		22
	$	8		$	31		$	96		$	43		$	41	$	43

~~Contributions to~~For 2021, 0 pension contributions are required for our tax-qualified U.S. domestic pension plans (“U.S. Pension ~~Plans for~~Plans”) as they are fully funded under the ~~nine-month periods ended February 28 were as follows (in millions):~~

~~During the third quarter of 2018, we~~Employee Retirement Income Security Act. We made voluntary contributions to our U.S. Pension Plans of ~~$1.75 billion.~~$1.0 billion during the first half of 2020.

~~(7)~~ We incurred a pre-tax, noncash MTM net loss of $52 million in the second quarter of 2021 related to amendments to the TNT Express Netherlands Pension Plan. Benefits for approximately 2,100 employees will be frozen effective December 31, 2020. Effective January 1, 2021, these employees will begin earning pension benefits under a separate, multi-employer pension plan. This $52 million net loss consists of a $106 million MTM loss due to a lower discount rate and a $54 million curtailment gain.

We provide a broad portfolio of transportation, e-commerce and business services through companies competing collectively, operating ~~independently~~collaboratively and ~~managed collaboratively,~~innovating digitally, under the respected FedEx brand. Our primary operating companies are 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 ~~Inc.~~Corporation (“FedEx Freight”), a leading ~~U.S.~~North American provider of less-than-truckload (“LTL”) freight transportation services. These companies represent our major service lines and, along with FedEx Corporate Services, ~~form the core of~~Inc. (“FedEx Services”), constitute our reportable segments.

~~As discussed in~~References to our ~~Annual Report, in the first quarter of 2018, we began to report TNT Express as part of~~transportation segments include, collectively, the FedEx Express ~~segment. Prior year amounts have been revised to conform to the current year presentation.~~

~~Effective March 1, 2018, we realigned our specialty logistics and e-commerce solutions in a new organizational structure under FedEx Trade Networks, Inc. in~~segment, the FedEx ~~Express~~Ground segment and the FedEx Freight segment. The realignment allows us to improve our ability to deliver the capabilities of our specialty companies to customers. The new structure includes FedEx Custom Critical, FedEx Cross Border, FedEx Supply Chain, FedEx Trade Networks Transport & Brokerage and, effective June 1, 2018, a new company called FedEx Forward Depots. Prior period segment results will be recast to conform to current year presentation beginning in the fourth quarter of 2018.

The FedEx Services segment operates combined sales, marketing, administrative and ~~information technology~~information-technology functions ~~that~~in shared services operations for U.S. customers of our major business units and certain back-office support to our ~~transportation businesses and allow~~operating segments which allows 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,~~operating segments, 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~~operating 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~~revenue or estimated services provided. We believe these allocations approximate the net cost of providing these functions. Our allocation methodologies are refined periodically, as necessary, to reflect changes in our businesses.

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

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~~revenue of the billing segment. These rates are adjusted from time to time based on market conditions. Such intersegment ~~revenues~~revenue and expenses are eliminated in our consolidated results and are not separately identified in the following segment information because the amounts are not material.

Corporate and other includes corporate headquarters costs for executive officers and certain legal and financial functions, as well as certain other costs and credits not attributed to our core business. These costs are not allocated to the business segments.

The following table provides a reconciliation of reportable segment ~~revenues~~revenue and operating income (loss) to our unaudited condensed consolidated financial statement totals for the periods ended ~~February 28~~November 30 (in millions):

	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	2018			2017			2018			2017			2020			2019			2020			2019
Revenues
Revenue:
FedEx Express segment	$	9,370		$	8,569		$	27,376		$	25,671		$	10,368		$	9,084		$	20,015		$	18,029
FedEx Ground segment		5,222			4,688			14,790			13,397			7,344			5,315			14,384			10,494
FedEx Freight segment		1,694			1,492			5,208			4,747			1,936			1,844			3,762			3,749
FedEx Services segment		397			389			1,213			1,198			8			5			16			9
Eliminations and other		(157	)		(141	)		(451	)		(422	)
Other and eliminations														907			1,076			1,707			2,091
	$	16,526		$	14,997		$	48,136		$	44,591		$	20,563		$	17,324		$	39,884		$	34,372
Operating Income
Operating income (loss):
FedEx Express segment	$	424		$	557		$	1,574		$	1,873		$	900		$	236		$	1,610		$	521
FedEx Ground segment		634			515			1,781			1,590			552			342			1,386			986
FedEx Freight segment		55			41			349			264			252			141			526			335
Eliminations, corporate and other		(112	)		(88	)		(324	)		(271	)
Corporate, other and eliminations														(239	)		(165	)		(467	)		(311	)
	$	1,001		$	1,025		$	3,380		$	3,456		$	1,465		$	554		$	3,055		$	1,531

As of ~~February 28, 2018,~~November 30, 2020, our purchase commitments under various contracts for the remainder of ~~2018~~2021 and annually thereafter were as follows (in millions):

The amounts reflected in the table above for purchase commitments represent noncancelable agreements to purchase goods or services. As of ~~February 28, 2018,~~November 30, 2020, our obligation to purchase ~~four Boeing 767-300 Freighter (“B767F”) aircraft and three~~6 Boeing 777 Freighter (“B777F”) 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.

During the first quarter of 2021, FedEx Express ~~entered into an agreement to accelerate the delivery~~executed a contract amendment rescheduling Boeing 767-300 Freighter (“B767F”) aircraft deliveries as follows: 2021 – 18 aircraft; 2022 – 11 aircraft; 2023 – 13 aircraft; and 2024 – 4 aircraft.

As of ~~two B777F aircraft from 2021 to~~November 30, 2020, ~~one B777F aircraft from 2021 to 2019, and one B777F aircraft from 2022 to 2020.~~

Wewe had ~~$922~~$830 million in deposits and progress payments ~~as of February 28, 2018~~ 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 ~~aircraft-related~~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, 2018~~November 30, 2020 with the year of expected delivery:

A summary of future minimum lease payments under noncancelable operating and finance leases with an initial or remaining term in excess of one year at ~~February 28, 2018~~November 30, 2020 is as follows (in millions):

~~Future minimum lease payments under capital leases were immaterial at February 28, 2018.~~ 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~~As of November 30, 2020, FedEx has entered into additional leases which have not yet commenced and are therefore not part of the right-of-use asset and liability. These leases are generally for build-to-suit facilities and have undiscounted future payments of approximately $1.6 billion, and will commence when FedEx gains beneficial access to the leased asset. Commencement dates are expected to be from 2021 to 2022.

Service Provider Lawsuits ~~and Administrative Proceedings.~~. FedEx Ground is ~~involved~~defending lawsuits in lawsuits and administrative proceedings claiming that owner-operators engaged under a contractor model no longer in use should have been treated as employees of FedEx Ground, rather than independent contractors. In addition, we are defending joint-employer cases wherewhich it is alleged that FedEx Ground should be treated as ana joint employer of ~~the~~ drivers employed by ~~owner-operators~~service providers 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 these 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~~service providers’ drivers to certain wage payments from the ~~benefit of wage-and-hour laws,~~service providers 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 ~~employed by~~of these ~~owner-operators.~~independent businesses.

Federal Securities Litigation. On June 26, 2019 and July 2, 2019, FedEx and certain present and former officers were named as defendants in two putative class action securities lawsuits filed in the U.S. District Court for the Southern District of New York. The complaints, which have been consolidated, allege violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder relating to alleged misstatements or omissions in FedEx’s public filings with the SEC and other public statements during the period from September 19, 2017 to December 18, 2018. We are not currently able to estimate the probability of loss or the amount or range of potential loss, if any, at this stage of the litigation.

~~City and State of~~Derivative Lawsuit Related to New York Cigarette ~~Suit.~~Litigation. On October 3, 2019, FedEx and certain present and former FedEx directors and officers were named as defendants in a stockholder derivative lawsuit filed in the Delaware Court of Chancery. The complaint alleges the defendants breached their fiduciary duties in connection with the activities alleged in lawsuits filed by 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~~and against FedEx ~~Ground’s~~Ground and FedEx Freight in July 2017. The underlying lawsuits related to the alleged ~~shipments~~shipment 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. In April 2016,~~claims, and were dismissed by the ~~two lawsuits were consolidated and will now proceed as one lawsuit.~~court in December 2018 following entry into a final settlement agreement for approximately $35 million. The ~~first-filed lawsuit alleges that~~settlement did not include any admission of liability by FedEx Ground ~~provided delivery services on behalf of four shippers, and the second-filed lawsuit alleges that~~or FedEx Ground provided delivery services on behalf of six additional shippers; none of these shippers continue to ship in our network. Following motions to dismiss filed in both lawsuits, some of the claims were dismissed entirely or limited.Freight. In the first-filed lawsuit, the New York Public Health Law and common law nuisance claims were dismissed and the plaintiffs voluntarily dismissed another claim. In the second-filed lawsuit, the common law nuisance claim was dismissed entirely and the New York Public Health Law claim has been limited to claims arising after September 27, 2013, when an amendment to that law provided enforcement authorityaddition to the ~~City of New York and State of New York. Other claims, including~~settlement amount, we recognized approximately $10 million for certain attorney’s fees in connection with the ~~RICO claims, remain in both~~

underlying lawsuits. ~~The likelihood~~We are not currently able to estimate the probability of loss ~~is reasonably possible, but~~or the amount or range of potential loss, if any, ~~cannot be estimated~~ at this stage of the ~~litigation. We expect the amount of any loss to be immaterial.~~

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 identifies no shippers or shipments, but generally alleges violations of the same laws that are the subject of the other two lawsuits. The amount or range of loss, if any, cannot be estimated at this stage of the lawsuit.

~~Environmental Matters~~. SEC regulations require disclosure of certain environmental matters when a governmental authority is a party to the proceedings and the proceedings involve potential monetary sanctions that management reasonably believes could exceed $100,000.

On September 9, 2016, FedEx Supply Chain received a written offer from several District Attorneys’ Offices in California to settle a civil action that the District Attorneys intend to file against FedEx Supply Chain for alleged violations of the state’s hazardous waste regulations. Specifically, the District Attorneys’ Offices allege FedEx Supply Chain unlawfully disposed of hazardous waste at one of its California facilities and caused the illegal transportation and disposal of hazardous waste from the retail stores of a FedEx Supply Chain customer at this same facility. The District Attorneys allege these violations began in 2006 and continued until the facility closed in the spring of 2015. In March 2018, we settled this matter for an immaterial amount, and the settlement agreement has been approved by the court. We have been reimbursed by the sellers of GENCO for the amount of the settlement.

Other ~~Matters.~~ During the third quarter of 2017, FedEx Trade Networks informed U.S. Customs and Border Protection (“CBP”) that in connection with certain customs entries it may have made improper claims for (i) reduced-duty treatment and (ii) duty-free treatment. In the fourth quarter of 2017 we established accruals totaling $39.3 million for the then-current estimated probable loss for these matters. In the first quarter of 2018, FedEx Trade Networks tendered payments to CBP in these matters totaling $46.5 million, and an additional expense of $7.2 million was recognized. CBP acknowledged receipt of the amounts tendered in these matters, and we are awaiting a response indicating whether these matters are fully resolved.

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.~~benefits, as well as lawsuits containing allegations that FedEx and its subsidiaries are responsible for third-party losses related to vehicle accidents that could exceed our insurance coverage for such losses. In the opinion of management, the aggregate liability, if any, with respect to these other actions will not have a material adverse effect on our financial position, results of operations or cash flows.

~~(10)~~ Environmental Matters. SEC regulations require us to disclose certain information about proceedings arising under federal, state, or local environmental provisions if we reasonably believe that such proceedings may result in monetary sanctions above a stated threshold. Pursuant to the SEC regulations, FedEx uses a threshold of $1million or more for purposes of determining whether disclosure of any such proceedings is required. Applying this threshold, there are no environmental matters required to be disclosed for this period.

Cash paid for interest expense and income taxes for the ~~nine-month~~six-month periods ended ~~February 28~~November 30 was as follows (in millions):

	2018			2017			2020			2019
Cash payments for:
Interest (net of capitalized interest)	$	430		$	400		$	377		$	279
Income taxes	$	707		$	294		$	526		$	162
Income tax refunds received		(59	)		(16	)		(22	)		(23	)
Cash tax payments, net	$	648		$	278		$	504		$	139

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 $16.6 billion of our long-term 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):~~

Guarantor

Non-guarantor

Parent

Subsidiaries

Subsidiaries

Eliminations

Consolidated

ASSETS

CURRENT ASSETS

Cash and cash equivalents

$
957

$
375

$
1,494

$
(37
)

$
2,789

Receivables, less allowances

1

5,308

3,462

(100
)

8,671

Spare parts, supplies, fuel, prepaid expenses and other,
less allowances

920

928

267

—

2,115

Total current assets

1,878

6,611

5,223

(137
)

13,575

PROPERTY AND EQUIPMENT, AT COST

22

50,601

3,754

—

54,377

Less accumulated depreciation and amortization

18

24,999

1,663

—

26,680

Net property and equipment

4

25,602

2,091

—

27,697

INTERCOMPANY RECEIVABLE

1,401

2,508

130

(4,039
)

—

GOODWILL

—

1,571

5,893

—

7,464

INVESTMENT IN SUBSIDIARIES

31,295

2,928

—

(34,223
)

—

OTHER ASSETS

2,706

1,566

1,268

(2,425
)

3,115

$
37,284

$
40,786

$
14,605

$
(40,824
)

$
51,851

LIABILITIES AND STOCKHOLDERS’ INVESTMENT

CURRENT LIABILITIES

Short-term borrowings

$
799

$
—

$
—

$
—

$
799

Current portion of long-term debt

750

6

8

—

764

Accrued salaries and employee benefits

69

1,362

514

—

1,945

Accounts payable

149

1,483

1,607

(137
)

3,102

Accrued expenses

379

1,605

909

—

2,893

Total current liabilities

2,146

4,456

3,038

(137
)

9,503

LONG-TERM DEBT, LESS CURRENT PORTION

15,713

288

16

—

16,017

INTERCOMPANY PAYABLE

—

—

4,039

(4,039
)

—

OTHER LONG-TERM LIABILITIES

Deferred income taxes

—

4,285

541

(2,425
)

2,401

Other liabilities

531

3,605

900

—

5,036

Total other long-term liabilities

531

7,890

1,441

(2,425
)

7,437

STOCKHOLDERS’ INVESTMENT

18,894

28,152

6,071

(34,223
)

18,894

$
37,284

$
40,786

$
14,605

$
(40,824
)

$
51,851

~~CONDENSED CONSOLIDATING BALANCE SHEETS~~Report of Independent Registered Public Accounting Firm

Guarantor

Non-guarantor

Parent

Subsidiaries

Subsidiaries

Eliminations

Consolidated

ASSETS

CURRENT ASSETS

Cash and cash equivalents

$
1,884

$
325

$
1,807

$
(47
)

$
3,969

Receivables, less allowances

3

4,729

2,928

(61
)

7,599

Spare parts, supplies, fuel, prepaid expenses and other,
less allowances

25

787

248

—

1,060

Total current assets

1,912

5,841

4,983

(108
)

12,628

PROPERTY AND EQUIPMENT, AT COST

22

47,201

3,403

—

50,626

Less accumulated depreciation and amortization

18

23,211

1,416

—

24,645

Net property and equipment

4

23,990

1,987

—

25,981

INTERCOMPANY RECEIVABLE

1,521

2,607

—

(4,128
)

—

GOODWILL

—

1,571

5,583

—

7,154

INVESTMENT IN SUBSIDIARIES

27,712

2,636

—

(30,348
)

—

OTHER ASSETS

3,494

1,271

1,249

(3,225
)

2,789

$
34,643

$
37,916

$
13,802

$
(37,809
)

$
48,552

LIABILITIES AND STOCKHOLDERS’ INVESTMENT

CURRENT LIABILITIES

Current portion of long-term debt

$
—

$
9

$
13

$
—

$
22

Accrued salaries and employee benefits

72

1,335

507

—

1,914

Accounts payable

10

1,411

1,439

(108
)

2,752

Accrued expenses

991

1,522

717

—

3,230

Total current liabilities

1,073

4,277

2,676

(108
)

7,918

LONG-TERM DEBT, LESS CURRENT PORTION

14,641

244

24

—

14,909

INTERCOMPANY PAYABLE

—

—

4,128

(4,128
)

—

OTHER LONG-TERM LIABILITIES

Deferred income taxes

—

5,472

238

(3,225
)

2,485

Other liabilities

2,856

3,448

863

—

7,167

Total other long-term liabilities

2,856

8,920

1,101

(3,225
)

9,652

STOCKHOLDERS’ INVESTMENT

16,073

24,475

5,873

(30,348
)

16,073

$
34,643

$
37,916

$
13,802

$
(37,809
)

$
48,552

Parent

Guarantor
Subsidiaries

Non-guarantor
Subsidiaries

Eliminations

Consolidated

REVENUES

$
—

$
12,433

$
4,229

$
(136
)

$
16,526

OPERATING EXPENSES:

Salaries and employee benefits

39

4,623

1,319

—

5,981

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

—

11,597

4,064

(136
)

15,525

OPERATING INCOME

—

836

165

—

1,001

OTHER INCOME (EXPENSE):

Equity in earnings of subsidiaries

2,074

2

—

(2,076
)

—

Interest, net

(137
)

11

1

—

(125
)
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

Parent

Guarantor
Subsidiaries

Non-guarantor
Subsidiaries

Eliminations

Consolidated

REVENUES

$
—

$
11,275

$
3,794

$
(72
)

$
14,997

OPERATING EXPENSES:

Salaries and employee benefits

29

4,210

1,156

—

5,395

Purchased transportation

—

2,219

1,306

(27
)

3,498

Rentals and landing fees

1

657

177

(1
)

834

Depreciation and amortization

1

649

112

—

762

Fuel

—

657

78

—

735

Maintenance and repairs

1

514

73

—

588

Intercompany charges, net

(87
)

(33
)

120

—

—

Other

55

1,428

721

(44
)

2,160

—

10,301

3,743

(72
)

13,972

OPERATING INCOME

—

974

51

—

1,025

OTHER INCOME (EXPENSE):

Equity in earnings of subsidiaries

562

(41
)

—

(521
)

—

Interest, net

(129
)

6

1

—

(122
)
Intercompany charges, net

130

(79
)

(51
)

—

—

Other, net

(1
)

(118
)

115

—

(4
)
INCOME BEFORE INCOME TAXES

562

742

116

(521
)

899

Provision for income taxes

—

280

57

—

337

NET INCOME

$
562

$
462

$
59

$
(521
)

$
562

COMPREHENSIVE INCOME

$
543

$
444

$
187

$
(521
)

$
653

Parent

Guarantor
Subsidiaries

Non-guarantor
Subsidiaries

Eliminations

Consolidated

REVENUES

$
—

$
36,044

$
12,445

$
(353
)

$
48,136

OPERATING EXPENSES:

Salaries and employee benefits

112

13,289

3,840

—

17,241

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

—

32,945

12,164

(353
)

44,756

OPERATING INCOME

—

3,099

281

—

3,380

OTHER INCOME (EXPENSE):

Equity in earnings of subsidiaries

3,445

39

—

(3,484
)

—

Interest, net

(396
)

35

(2
)

—

(363
)
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

Parent

Guarantor
Subsidiaries

Non-guarantor
Subsidiaries

Eliminations

Consolidated

REVENUES

$
—

$
33,175

$
11,628

$
(212
)

$
44,591

OPERATING EXPENSES:

Salaries and employee benefits

94

12,477

3,488

—

16,059

Purchased transportation

—

6,210

4,040

(81
)

10,169

Rentals and landing fees

4

1,902

524

(4
)

2,426

Depreciation and amortization

1

1,894

346

—

2,241

Fuel

—

1,819

224

—

2,043

Maintenance and repairs

1

1,544

220

—

1,765

Intercompany charges, net

(266
)

67

199

—

—

Other

166

4,230

2,163

(127
)

6,432

—

30,143

11,204

(212
)

41,135

OPERATING INCOME

—

3,032

424

—

3,456

OTHER INCOME (EXPENSE):

Equity in earnings of subsidiaries

1,977

69

—

(2,046
)

—

Interest, net

(374
)

19

1

—

(354
)
Intercompany charges, net

376

(224
)

(152
)

—

—

Other, net

(2
)

(128
)

147

—

17

INCOME BEFORE INCOME TAXES

1,977

2,768

420

(2,046
)

3,119

Provision for income taxes

—

951

191

—

1,142

NET INCOME

$
1,977

$
1,817

$
229

$
(2,046
)

$
1,977

COMPREHENSIVE INCOME

$
1,921

$
1,781

$
156

$
(2,046
)

$
1,812

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 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

Parent

Guarantor
Subsidiaries

Non-guarantor
Subsidiaries

Eliminations

Consolidated

CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES

$
(1,497
)

$
3,615

$
529

$
(2
)

$
2,645

INVESTING ACTIVITIES

Capital expenditures

—

(3,456
)

(334
)

—

(3,790
)
Proceeds from asset dispositions and other

85

16

22

—

123

CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES

85

(3,440
)

(312
)

—

(3,667
)
FINANCING ACTIVITIES

Net transfers from (to) Parent

117

(148
)

31

—

—

Payment on loan between subsidiaries

36

(15
)

(21
)

—

—

Intercompany dividends

—

1

(1
)

—

—

Principal payments on debt

—

(33
)

(16
)

—

(49
)
Proceeds from debt issuances

1,190

—

—

—

1,190

Proceeds from stock issuances

265

—

—

—

265

Dividends paid

(319
)

—

—

—

(319
)
Purchase of treasury stock

(358
)

—

—

—

(358
)
Other, net

(8
)

(12
)

22

—

2

CASH (USED IN) PROVIDED BY FINANCING
ACTIVITIES

923

(207
)

15

—

731

Effect of exchange rate changes on cash

(10
)

7

(67
)

—

(70
)
Net (decrease) increase in cash and cash equivalents

(499
)

(25
)

165

(2
)

(361
)
Cash and cash equivalents at beginning of period

1,974

326

1,277

(43
)

3,534

Cash and cash equivalents at end of period

$
1,475

$
301

$
1,442

$
(45
)

$
3,173

We have reviewed the accompanying condensed consolidated balance sheet of FedEx Corporation (the Company) as of ~~February 28, 2018, and~~November 30, 2020, the related condensed consolidated statements of income, ~~and~~ comprehensive income and changes in common stockholders’ investment for the ~~three-month~~three- and ~~nine-month~~six-month periods ended ~~February 28, 2018~~November 30, 2020 and ~~February 28, 2017 and~~2019, the condensed consolidated statements of cash flows for the ~~nine-month~~six-month periods ended ~~February 28, 2018~~November 30, 2020 and ~~February 28, 2017. These~~2019, 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 ~~are the responsibility of the Company’s management.~~for them to be in conformity with U.S. generally accepted accounting principles.

We ~~conducted our review~~have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States). (PCAOB), the consolidated balance sheet of the Company as of May 31, 2020, the related consolidated statements of income, comprehensive income, cash flows and changes in common stockholders’ investment for the year then ended, and the related notes (not presented herein); and in our report dated July 20, 2020, 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, 2020, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

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 ~~information~~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 ~~Public Company Accounting Oversight Board (United States),~~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.

Based on our review, we are not aware of any material modifications that should be made to the condensed consolidated financial statements referred to above 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), the consolidated balance sheet of FedEx Corporation as of May 31, 2017, and the related consolidated statements of income, comprehensive income, changes in stockholders’ investment, and cash flows for the year then ended (not presented herein) and we expressed an unqualified audit opinion on those consolidated financial statements in our report dated July 17, 2017. In our opinion, the accompanying condensed consolidated balance sheet of FedEx Corporation as of May 31, 2017, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

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

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, ~~2017~~2020 (“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~~collaboratively and ~~managed collaboratively,~~innovating digitally, 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 ~~Inc.~~Corporation (“FedEx Freight”), a leading ~~U.S.~~North American provider of less-than-truckload (“LTL”) freight transportation services. These companies represent our major service lines and, along with FedEx Corporate Services, Inc. (“FedEx Services”), ~~form the core of~~constitute our reportable segments.

As noted in our Annual Report, beginning in the first quarter of 2018, we began to report TNT Express as part of the FedEx Express segment. Prior year amounts have been revised to conform to the current year presentation. See Note 7 of the accompanying unaudited condensed consolidated financial statements for further discussion.

Our FedEx Services segment provides sales, marketing, information technology, communications, customer service, technical support, billing and collection services, and certain back-office ~~support~~ functions that support our ~~transportation~~operating segments. ~~In addition,~~See the ~~FedEx Services segment 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” section of this MD&A for further discussion. Additional information on our businesses can ~~also~~ be found in our Annual Report.

~~The majority~~Many of our operating expenses are directly impacted by revenue and volume ~~levels. Accordingly,~~levels, and we expect these operating expenses to fluctuate on a year-over-year basis consistent with ~~the change~~changes in ~~revenues~~revenue and volumes. Therefore, the discussion of operating expense captions focuses on the key drivers and trends impacting expenses other than those factors strictly related to changes in ~~revenues~~revenue and ~~volume.~~volumes. The line item “Other operating ~~expenses” predominantly~~expense” includes costs associated with outside service contracts (such as facility services and cargo handling, temporary labor and security), insurance, uniforms and professional ~~fees, taxes and licenses and uniforms.~~fees.

Except as otherwise specified, references to years indicate our fiscal year ending May 31, ~~2018~~2021 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.

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

	Three Months Ended						Percent				Nine Months Ended						Percent				Three Months Ended						Percent				Six Months Ended						Percent
	2018			2017			Change				2018			2017			Change				2020			2019			Change				2020			2019			Change
Revenues	$	16,526		$	14,997			10			$	48,136		$	44,591			8
Operating income:
Revenue																					$	20,563		$	17,324			19			$	39,884		$	34,372			16
Operating income (loss):
FedEx Express segment		424			557			(24	)			1,574			1,873			(16	)			900			236			281				1,610			521			209
FedEx Ground segment		634			515			23				1,781			1,590			12				552			342			61				1,386			986			41
FedEx Freight segment		55			41			34				349			264			32				252			141			79				526			335			57
Eliminations, corporate and other		(112	)		(88	)		(27	)			(324	)		(271	)		(20	)
Corporate, other and eliminations																						(239	)		(165	)		(45	)			(467	)		(311	)		(50	)
Consolidated operating income		1,001			1,025			(2	)			3,380			3,456			(2	)			1,465			554			164				3,055			1,531			100
Operating margin:
FedEx Express segment		4.5	%		6.5	%		(200	)	bp		5.7	%		7.3	%		(160	)	bp		8.7	%		2.6	%		610		bp		8.0	%		2.9	%		510		bp
FedEx Ground segment		12.1	%		11.0	%		110		bp		12.0	%		11.9	%		10		bp		7.5	%		6.4	%		110		bp		9.6	%		9.4	%		20		bp
FedEx Freight segment		3.2	%		2.7	%		50		bp		6.7	%		5.6	%		110		bp		13.0	%		7.6	%		540		bp		14.0	%		8.9	%		510		bp
Consolidated operating margin		6.1	%		6.8	%		(70	)	bp		7.0	%		7.8	%		(80	)	bp		7.1	%		3.2	%		390		bp		7.7	%		4.5	%		320		bp
Consolidated net income	$	2,074		$	562			269			$	3,445		$	1,977			74			$	1,226		$	560			119			$	2,471		$	1,305			89
Diluted earnings per share	$	7.59		$	2.07			267			$	12.63		$	7.31			73			$	4.55		$	2.13			114			$	9.26		$	4.97			86

	Change in Revenue						Change in Operating Income						Change in Revenue						Change in Operating Income (Loss)
	Three Months Ended			Nine Months Ended			Three Months Ended			Nine Months Ended			Three Months Ended			Six Months Ended			Three Months Ended			Six Months Ended
FedEx Express segment	$	801		$	1,705		$	(133	)	$	(299	)	$	1,284		$	1,986		$	664		$	1,089
FedEx Ground segment		534			1,393			119			191			2,029			3,890			210			400
FedEx Freight segment		202			461			14			85			92			13			111			191
FedEx Services segment		8			15			—			—			3			7			—			—
Eliminations, corporate and other		(16	)		(29	)		(24	)		(53	)
Corporate, other and eliminations														(169	)		(384	)		(74	)		(156	)
	$	1,529		$	3,545		$	(24	)	$	(76	)	$	3,239		$	5,512		$	911		$	1,524

~~Our~~Elevated demand for our residential delivery services, resulting from the ongoing impact of the coronavirus (“COVID-19”) pandemic, continued during the second quarter of 2021. In addition, demand for our business-to-business delivery services strengthened relative to the first quarter of 2021 as COVID-19-related restrictions moderated globally during the second quarter. As a result, our revenue and operating income ~~declined slightly~~improved during the second quarter and first half of 2021. We continued to incur increased operating expenses to support elevated levels of demand for our services in the ~~third~~COVID-19 pandemic environment, including additional labor expenses, costs of operating our seven-day network at FedEx Ground and costs of operating our air network to support higher demand in key international supply chains impacted by constrained commercial air capacity. We also incurred increased operating expenses related to personal protective equipment and medical/safety supplies, as well as additional security and cleaning services, in order to protect our team members and customers during the COVID-19 pandemic, of approximately $50 million in the second quarter and $150 million in the first half of ~~2018 primarily~~2021. In addition, we incurred costs associated with network contingencies, including additional personnel to support operations through the peak season during the pandemic.

Our consolidated operating income improved during both the second quarter and first half of 2021 due to ~~significantly higher incentive compensation accruals (described below), higher peak-related costs~~international export and U.S. domestic package volume growth at FedEx Express, increased TNT Express integration expenses and the negative impacts of inclement winter weather at FedEx Express. These factors were partially offset by increased yields and the favorable net impact of fuel at all of our transportation segments andresidential volume growth at FedEx Ground and pricing initiatives across all of our transportation segments. Higher purchased transportation expenses at FedEx ~~Freight. The NotPetya cyberattack (described below)~~Ground are also ~~drove lower results~~driven by increased residential product mix in both the ~~nine months of 2018.~~

~~Net income for the third~~second quarter and ~~nine months~~first half of ~~2018 was positively~~2021. Additionally, higher variable incentive compensation expense negatively impacted year-over-year second quarter comparisons by approximately $215 million and first half comparisons by approximately $410 million.

The loss of business from a provisional benefit of $1.15 billion ($4.21 per diluted share) attributable to the enactment of the Tax Cuts and Jobs Act (“TCJA”), specifically related to the remeasurement of our net U.S. deferred tax liability.large customer negatively impacted earnings in 2020. In addition, during the second quarter of 2020, we ~~recognized a one-time benefit~~recorded asset impairment charges of ~~$204~~$66 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 a benefit of $165 million ($0.60 per diluted share) related to a lower statutory income tax rate on fiscal 2018 year- to-date earnings. See the “Income Taxes” section below for further information.

During the third quarter of 2018 we announced more than $3.2 billion in wage increases, bonuses, pension funding and expanded U.S. capital investment following the passage of the TCJA. In connection with this, during the third quarter of 2018 we made a pension funding contribution (noted above) and funded increases in performance-based incentive compensation plans. The incentive compensation adjustments made in the third quarter of 2018 include the year-to-date impact of the announced changes. Expenses related to wage increases will start to be recognized during the fourth quarter of 2018.

~~We incurred TNT Express integration expenses totaling an aggregate of $106 million ($92~~50 million, net of tax, or ~~$0.34~~$0.19 per diluted share) associated with the decision to permanently retire certain aircraft and related engines at FedEx Express. See Note 1 of the accompanying unaudited condensed consolidated financial statements for additional information.

We incurred integration expenses totaling $48 million ($36 million, net of tax, or $0.13 per diluted share) in the ~~third~~second quarter ~~of 2018, a $28~~and $97 million ~~increase from the third quarter of 2017. TNT Express integration expenses were an aggregate $341 million~~ ($~~265~~74 million, net of tax, or ~~$0.97~~$0.28 per diluted share) in the ~~nine months~~first half of ~~2018,~~2021, a ~~$137~~$16 million ~~increase~~decrease from

the ~~nine months~~second quarter and a $38 million decrease from the first half of ~~2017.~~2020. The integration expenses are predominantly incremental costs directly associated with the integration of TNT Express, including professional and legal fees, salaries and ~~wages, advertising expenses and~~employee benefits, travel and ~~include any restructuring charges at TNT Express.~~advertising expenses. Internal salaries and ~~wages~~employee benefits are included only to the extent the individuals are assigned ~~full time~~full-time to integration activities. These costs were incurred at FedEx Express and FedEx ~~Corporation.~~Corporate. The identification of these costs as integration-related expenditures is subject to our disclosure controls and procedures.

~~As previously announced, on June 27, 2017,~~Consolidated net income in the ~~worldwide operations~~second quarter and first half of 2021 includes a pre-tax, noncash mark-to-market (“MTM”) net loss of $52 million ($41 million, net of tax, or $0.15 per diluted share) associated with freezing our TNT Express ~~were significantly~~Netherlands Pension Plan. See the “Retirement Plan MTM Adjustment” section of this MD&A and Note 7 of the accompanying unaudited condensed consolidated financial statements for additional information.

The comparison of net income between 2021 and 2020 is affected by the cyberattack known as NotPetya. Immediately following the attack, contingency plans were implemented to recover TNT Express operations and communications systems, and substantially all TNT Express services were fully restoreda tax benefit of $191 million ($0.71 per diluted share) recognized during ~~the first quarter of 2018. As of~~ the second quarter of ~~2018, all~~2021, primarily attributable to guidance issued by the Internal Revenue Service (“IRS”) during the quarter, and a tax benefit of ~~TNT Express’s critical operational systems were fully restored, critical business data was recovered~~$133 million ($0.51 per diluted share) from the reduction of a valuation allowance recognized during the second quarter and ~~shipping services and solutions were back in place.~~

~~Our results for the~~ first half of ~~2018 were negatively impacted by~~2020. See the ~~NotPetya cyberattack by an estimated $400 million ($1.14 per diluted share~~“Income Taxes” section of this MD&A for the nine months of 2018), primarily from loss of revenue due to decreased shipments in the TNT Express network, as well as incremental costs to restore information technology systems. In addition, we continued to experience lingering revenue impacts from the NotPetya cyberattack in the third quarter of 2018 in the form of lower volumes at TNT Express.further information.

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

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

~~Revenues~~ increased ~~10%~~19% in the ~~third~~second quarter and 8%16% in the ~~nine months~~first half of ~~2018~~2021 primarily due to ~~improved performance~~volume growth in residential delivery services at FedEx Ground and U.S. domestic package volume growth at FedEx Express, both reflecting increased e-commerce demand resulting from the ongoing impact of the COVID-19 pandemic. In addition, demand for our business-to-business delivery services strengthened relative to the first quarter of 2021 as COVID-19-related restrictions moderated globally during the second quarter. International export package volume growth at FedEx Express and pricing initiatives across all of our transportation ~~segments. Revenues at FedEx Express increased 9%~~segments also contributed to the increase in revenue during the ~~third~~second quarter and ~~7% in the nine months~~first half of 2018 due to improved base yields and favorable exchange rates, despite impacts from the NotPetya cyberattack discussed above. At FedEx Ground, revenues increased 11% in the third quarter and 10% in the nine months of 2018 due to volume growth and increased yields. FedEx Freight revenues increased 14% in the third quarter and 10% in the nine months of 2018 due to higher LTL revenue per shipment and average daily LTL shipments. Higher fuel surcharges had a positive impact on revenues2021. Additionally, one additional operating day at all of our transportation segments positively impacted revenue in the ~~third~~first half of 2021. These positive factors were partially offset by lower fuel surcharges at all of our transportation segments during both the second quarter and ~~nine months~~first half of ~~2018.~~2021.

At FedEx Ground, revenue increased 38% in the second quarter and 37% in the first half of 2021 primarily due to residential delivery volume growth. This sharp increase in demand is the result of a shift in consumer shopping patterns accelerated by the COVID-19 pandemic. Revenue at FedEx Express increased 14% in the second quarter and 11% in the first half of 2021 due to international export and U.S. domestic package volume growth. FedEx Freight revenue increased 5% in the second quarter of 2021 primarily due to higher revenue per shipment. Revenue at FedEx Freight remained flat in the first half of 2021 due to higher revenue per shipment, partially offset by decreased average daily shipments.

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				Nine Months Ended				Three Months Ended				Percent			Six Months Ended				Percent
	2018		2017		2018		2017		2020		2019		Change			2020		2019		Change
Operating expenses:
Salaries and employee benefits	$	5,981	$	5,395	$	17,241	$	16,059	$	7,443	$	6,235		19		$	14,295	$	12,322		16
Purchased transportation		3,935		3,498		11,220		10,169		5,407		4,328		25			10,384		8,356		24
Rentals and landing fees		873		834		2,526		2,426		1,006		924		9			1,942		1,844		5
Depreciation and amortization		786		762		2,293		2,241		936		901		4			1,862		1,780		5
Fuel		914		735		2,435		2,043		625		890		(30	)		1,190		1,760		(32	)
Maintenance and repairs		628		588		1,968		1,765		815		774		5			1,621		1,542		5
Asset impairment charges										—		66	NM				—		66	NM
Other		2,408		2,160		7,073		6,432		2,866		2,652		8			5,535		5,171		7
Total operating expenses	$	15,525	$	13,972	$	44,756	$	41,135		19,098		16,770		14			36,829		32,841		12
Operating income	$	1,001	$	1,025	$	3,380	$	3,456	$	1,465	$	554		164		$	3,055	$	1,531		100

	Percent of Revenue												Percent of Revenue
	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	2018			2017			2018			2017			2020			2019			2020			2019
Operating expenses:
Salaries and employee benefits		36.2	%		36.0	%		35.8	%		36.0	%		36.2	%		36.0	%		35.8	%		35.8	%
Purchased transportation		23.8			23.3			23.3			22.8			26.3			25.0			26.0			24.3
Rentals and landing fees		5.3			5.6			5.2			5.4			4.9			5.3			4.9			5.4
Depreciation and amortization		4.7			5.1			4.8			5.0			4.6			5.2			4.7			5.2
Fuel		5.5			4.9			5.1			4.6			3.0			5.1			3.0			5.1
Maintenance and repairs		3.8			3.9			4.1			4.0			4.0			4.5			4.0			4.5
Asset impairment charges														—			0.4			—			0.2
Other		14.6			14.4			14.7			14.4			13.9			15.3			13.9			15.0
Total operating expenses		93.9			93.2			93.0			92.2			92.9			96.8			92.3			95.5
Operating margin		6.1	%		6.8	%		7.0	%		7.8	%		7.1	%		3.2	%		7.7	%		4.5	%

~~Operating margin declined~~Volume growth, as discussed in the ~~third~~“Revenue” section of this MD&A, contributed to a 25% increase in purchased transportation costs in the second quarter and a 24% increase in the first half of ~~2018 primarily~~2021, as ~~a result~~well as an increase in salaries and employee benefits expense of ~~significantly~~19% in the second quarter and 16% in the first half of 2021. Purchased transportation costs were also higher ~~incentive compensation accruals, higher peak-related costs~~in both the second quarter and first half of 2021 driven by increased residential product mix at FedEx Express, the negative impacts of inclement winter weather at FedEx Express and increased TNT Express integration expenses. The impacts of the NotPetya cyberattack discussed above also drove the operating margin decline in the nine months of 2018.

~~Salaries~~Ground. In addition, salaries and employee benefits expense increased ~~11%~~ in both the ~~third~~second quarter and ~~7% in the nine months~~first half of 2018 primarily due to merit increases and significantly higher incentive compensation accruals at all of our transportation segments, unfavorable exchange rates at FedEx Express and higher staffing at FedEx Ground and FedEx Freight. Purchased transportation costs increased 12% in the third quarter and 10% in the nine months of 2018 primarily2021 due to higher ~~volumes at all of our transportation segments, unfavorable exchange rates at FedEx Express~~variable incentive compensation expense and increased rates and higher fuel expenses at FedEx Ground. Other expenses increased 11% in the third quarter of 2018 primarily due to unfavorable exchange rates, increased outside service contracts at FedEx Express and TNT Express integration expenses. Other expenses increased 10% in the nine months of 2018 due to these same factors as well as higher self-insurance reserves at FedEx Ground. Maintenance and repairs expense increased 12% in the nine months of 2018 primarily due to the timing of aircraft engine maintenance events at FedEx Express.merit increases.

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 ~~increased 24%~~decreased 30% in the ~~third~~second quarter and ~~19%~~32% in the ~~nine months~~first half of ~~2018 primarily~~2021 due to ~~increased~~lower fuel prices. Fuel prices represent only one component of the ~~two~~ 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 quarter~~second quarters of ~~2018~~2021 and ~~2017~~2020 in the accompanying ~~discussions~~discussion of each of our transportation segments.

Effective February 6, 2017, FedEx Express and FedEx Ground 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. The index used to determine the fuel surcharge percentage for our FedEx Freight business continues to adjust weekly. Some FedEx Express international fuel surcharges continue to incorporate a timing lag of approximately six to eight weeks.

Prior to February 6, 2017, our fuel surcharges for the FedEx Express and FedEx Ground businesses incorporated a timing lag of approximately six to eight weeks before they were adjusted for changes in fuel prices. For example, the fuel surcharge index in effect at FedEx Express in January 2017 was set based on November 2016 fuel prices.

Beyond these factors, 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. The net impact of fuel on operating income described below and for each segment below excludes the impact from these table changes.

The net impact of fuel had a ~~significant~~slight benefit to operating income in the ~~third~~second quarter and ~~nine months~~first half of ~~2018~~2021 as ~~higher~~decreased fuel ~~surcharges more than offset increased~~prices outpaced lower fuel ~~prices.~~surcharges.

During the second quarter of 2020, we made the decision to permanently retire from service 10 Airbus A310-300 aircraft and 12 related engines at FedEx Express to align with the needs of the U.S. domestic network and modernize its aircraft fleet. As a consequence of this decision, noncash impairment charges of $66 million ($50 million, 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~~tax, or $0.19 per diluted share) were recorded in the ~~mix~~FedEx Express segment in the second quarter of services purchased by our customers. 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.2020.

We incurred a pre-tax, noncash MTM net loss of $52 million ($41 million, net of tax, or $0.15 per diluted share) in the second quarter of 2021 related to amendments to the TNT Express Netherlands Pension Plan. Benefits for approximately 2,100 employees will be frozen effective December 31, 2020. Effective January 1, 2021, these employees will begin earning pension benefits under a separate, multi-employer pension plan. See Note 7 of the accompanying unaudited condensed consolidated financial statements for additional information.

~~On December 22, 2017,~~Our effective tax rate was 12.8% for the ~~United States government enacted comprehensive~~second quarter and 18.0% for the first half of 2021, compared to 2.1% for the second quarter and 16.8% for the first half of 2020. The 2021 tax ~~legislation through~~rates include a benefit of $191 million from an increase in our 2020 tax loss that the ~~TCJA. The TCJA significantly changes~~Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) will allow to be carried back to 2015, when the U.S. ~~corporate income tax system including, among other things, lowering the statutory~~ federal income tax rate was 35%. The increase in our estimated 2020 tax loss is attributable to our Application for Change in Accounting Method filed with the IRS during the fourth quarter of 2020 discussed below and other accelerated deductions to be claimed on the 2020 tax return. The 2020 tax rates included a $133 million benefit from ~~35%~~a valuation allowance reduction which, when combined with substantially lower consolidated earnings, produced a significantly lower rate for the second quarter of 2020 compared to ~~21%, eliminating or reducing~~the second quarter of 2021.

~~In December 2017, the Securities and Exchange Commission (“SEC”) staff issued Staff Accounting Bulletin (“SAB”) 118, which provides guidance on accounting~~$130 million for the tax effects of the TCJA. SAB 118 provides for a measurement period of up to one year from the enactment date for companies to complete the accounting for the initial income tax effects of the TCJA. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the TCJA for which the accounting is complete and provide a provisional estimate (where determinable) of the income tax effects of the TCJA where the accounting is incomplete. The provisional estimate is required to be updated throughout the measurement period. second quarter.

As of February 28, 2018, we have not completed our initial accounting of the tax effects of the TCJA; however, where determinable, we have made an estimate of the effects on our existing deferred tax balances and the one-time transition tax. During the quarter, we recognized a provisional benefit of $1.15 billion related to 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 the provisional amounts above, we recognized a one-time benefit of $204 million from a $1.5 billion contribution to our U.S. Pension Plans in February 2018 and a benefit of $165 million related to a lower statutory income tax rate on fiscal 2018 year-to-date earnings.

~~The following table provides a reconciliation of the 2017 effective tax rates to the 2018 effective tax rates, including the impact of the TCJA, for the periods ended February 28:~~

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”)~~IRS for the ~~2014~~2016 and ~~2015~~2017 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 ~~expected~~ impact of any changes ~~would~~is not expected to be material to our consolidated financial statements. As

During the second quarter of ~~February 28,~~2021, we filed suit in U.S. District Court for the Western District of Tennessee challenging the validity of a tax regulation related to the one-time transition tax on unrepatriated foreign earnings, which was enacted as part of the Tax Cuts and Jobs Act (“TCJA”). Our lawsuit seeks to have the court declare this regulation invalid and order the refund of overpayments of U.S. federal income taxes for 2018 ~~there were no material changes~~and 2019 attributable to the denial of foreign tax credits under the regulation. We have recorded a cumulative benefit of $233 million through 2019 attributable to our ~~liabilities for unrecognized tax benefits subsequent to May 31, 2017.~~

~~See Note 5~~interpretation of the ~~accompanying unaudited condensed consolidated financial statements for further discussion related~~TCJA and the Internal Revenue Code. If we are ultimately unsuccessful in defending our position, we may be required to ~~income taxes.~~reverse the benefit previously recorded.

On ~~October 13, 2017, FedEx acquired Northwest Research,~~December 2, 2020, we agreed to acquire ShopRunner, Inc. (“ShopRunner”), ~~a leader in inventory research~~an e-commerce platform that directly connects brands and ~~management, for $50 million in~~merchants with online shoppers. The cost of the acquisition will not be material and will be funded with cash from operations. ~~The majority of the purchase price was allocated~~This acquisition is expected to ~~property and equipment.~~be completed in December 2020, subject to customary conditions, including regulatory approval. The financial results of ~~this acquired business are~~ShopRunner will be included in ~~the FedEx Services segment~~“Corporate, other and eliminations” from the date of acquisition and ~~were~~are not expected to be material to our results of ~~operations.~~operations in 2021.

We ~~expect yield~~anticipate the continuing impacts of the COVID-19 pandemic will drive increased demand for our FedEx Ground and ~~volume growth at all~~FedEx Express services in the second half of ~~our transportation segments to support~~the fiscal year resulting in improved year-over-year revenue and ~~earnings growth in the fourth quarter and full year of 2018, prior to any mark-to-market benefit plans adjustment. We expect to continue implementing various cost management plans~~operating income at ~~FedEx Ground~~those two segments for the remainder of ~~2018. Our fourth quarter~~2021. In addition, yield management and ~~full-year 2018 results will be negatively affected by our TNT Express integration activities~~improved productivity is anticipated to contribute to revenue and operating income growth at the FedEx Freight segment in 2021. However, the uncertainty concerning the COVID-19 pandemic, as well as the potential for additional government-related restrictions, continues to make any expectations for the second half of 2021 inherently less certain. If our current trends continue, we expect certain expenses, including higher variable incentive compensation accruals, rising labor costs and increased ~~compensation~~supply and other costs related to the COVID-19 pandemic, to continue to be incurred during the remainder of 2021. We also expect headwinds related to the December 31, 2020 expiration of the aviation excise tax holiday created by the CARES Act and a higher effective income tax rate for ~~certain~~the second half of 2021.

Government travel warnings as well as existing restrictions related to the COVID-19 pandemic are expected to continue to impact the demand for commercial air travel, thereby reducing available air freight capacity. As a result of these ongoing capacity constraints, we expect continued strong demand for international priority shipments for the remainder of 2021 to necessitate increased usage of our ~~hourly team members~~assets to support demand in key international supply chains. In addition, we anticipate a modest increase in volumes from the delivery of COVID-19 vaccines. We will continue managing network capacity, flexing our network and ~~higher incentive compensation for~~making adjustments as needed to align with volumes and operating conditions.

In response to current business conditions, we are extending certain surcharges beyond the peak shipping period, although at a reduced rate. These surcharges will begin on January 18, 2021 and may be adjusted in future periods as business or market conditions evolve.

We have expanded FedEx Ground seven-day residential delivery coverage to nearly 95 percent of the U.S. population and will continue to optimize our ~~salaried personnel. Our expectations for earnings growth in 2018 assumes moderate economic growth.~~

network capacity to meet evolving customer needs. During the remainder of ~~2018,~~2021, we will ~~continue~~focus on last-mile residential delivery optimization, including by directing certain U.S. day-definite residential FedEx Express shipments into the FedEx Ground network to increase efficiency and lower our cost-to-serve. We also are focused on improving revenue quality and lowering costs through advanced technology aimed at improving productivity and safety.

We are continuing to execute our TNT Express integration ~~plans.~~plans and are scheduled to complete the integration of the FedEx Express and TNT Express linehaul and pickup-and-delivery operations and begin offering an enhanced portfolio of international services in 2021. We will leverage the capabilities that TNT Express adds to our portfolio, which are expected to improve our European revenue and profitability, which continue to underperform our expectations for that market. We expect to complete the final phase of international air network interoperability in early calendar 2022.

We expect to incur approximately $80 million of integration expenses in the remainder of 2021 in the form of professional fees, outside service contracts, salaries and wages and other operating expenses. We expect the aggregate integration program ~~expense, including restructuring charges at~~expenses to be $1.7 billion through the completion of the physical network integration of TNT Express ~~over~~into FedEx Express in 2022.

As we approach the ~~four years~~completion of the physical network integration of TNT Express in 2022, we are evaluating opportunities and pursuing initiatives in addition to ~~be approximately $1.4 billion~~the integration to continue to transform and optimize the FedEx Express international business, particularly in Europe. These actions are focused on reducing the complexity and fragmentation of our international business, improving efficiency to meet changing customer expectations and business dynamics, lowering costs, increasing profitability and improving service levels. We expect to incur ~~approximately $450 million of these~~additional costs, ~~during 2018. The timing and amount of integration expenses~~over multiple years, which may be material, including transformation costs and capital investments ~~in any future period may change as we implement our plans.~~related to these actions.

~~The integration process is complex as it spans over 200 countries and involves combining our pickup and delivery operations at a local level, our~~Our expectations for the remainder of 2021 are dependent on key external factors, including no further weakening of global ~~and regional air and ground networks, and our extensive operations, customs clearance, sales and back-office information technology systems. In addition, a portion of our integration expenses relate~~economic conditions or additional shut-downs related to the ~~ongoing establishment of our new~~COVID-19 pandemic, current fuel price expectations, and no additional adverse developments in international corporate structure which will leverage synergies to maximize our international profitability, ultimately benefiting our effective tax rate. The integration is expected to be substantially complete by the end of 2020. We are targeting operating income improvement at the FedEx Express segment of $1.2 billion to $1.5 billion in 2020 from 2017 assuming moderate economic growthtrade policies and current accounting rules and tax laws. This target includes TNT Express synergies as well as base business and other operational improvements across the global FedEx Express network. Although we are targeting to complete our integration program by the end of 2020, we are investing in opportunities to improve the capabilities of the integrated business for future profitability, including periods beyond 2020.

As noted above, we recorded a provisional reduction to our net U.S. deferred tax liability during the third quarter of 2018 in connection with the recently enacted TCJA. The final impact of the TCJA on our reported results for fiscal year 2018 and beyond may differ from the estimates recorded, possibly materially, due to changes in interpretations and assumptions we have made, future guidance that may be issued, and other changes that may occur as we complete our analysis of the TCJA. relations.

Other Outlook Matters. For details on key ~~2018~~2021 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 is expected to be completed in the second half of calendar 2020. As of February 28, 2018, 64% 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.

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

FedEx Express, FedEx Ground and FedEx Freight represent our major service lines and, along with FedEx Services, ~~form the core of~~constitute our reportable segments. Our reportable segments include the following businesses:

Effective March 1, 2018, we realigned our specialty logistics and e-commerce solutions in a new organizational structure under FedEx Trade Networks, Inc. in the FedEx Express segment. The realignment allows us to improve our ability to deliver the capabilities of our specialty companies to customers. The new structure includes FedEx Custom Critical, FedEx Cross Border, FedEx Supply Chain, FedEx Trade Networks Transport & Brokerage and, effective June 1, 2018, a new company called FedEx Forward Depots. Prior period segment results will be recast to conform to current year presentation beginning in the fourth quarter of 2018.

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~~operating segments. The allocations of net operating costs are based on metrics such as relative ~~revenues~~revenue or estimated services provided.

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, the results of the FedEx Logistics, Inc. (“FedEx Logistics”) and FedEx Office and Print Services, Inc. (“FedEx Office”) operating segments are included in corporate and other. FedEx Office provides an array of document and business services and retail access to our customers for our package transportation businesses. FedEx Logistics provides integrated supply chain management solutions, specialty transportation, customs brokerage and global ocean and air freight forwarding.

In the second quarter and first half of 2021, the decrease in revenue in “Corporate, other and eliminations” was due to a significant decline in non-shipping revenue at FedEx Office resulting from the COVID-19 pandemic. The transfer of FedEx Custom Critical and FedEx Cross Border into the FedEx Express segment contributed to the decrease in revenue in the second quarter and first half of 2021.

Certain FedEx operating companies provide transportation and related services for other FedEx companies outside their reportable ~~segment.~~segment in order to optimize our resources. For example, during the second quarter and first half of 2021, FedEx Freight provided road and intermodal support for both FedEx Ground and FedEx Express and FedEx Ground provided delivery support for certain FedEx Express packages as part of our last-mile optimization efforts. Billings for such services are based on negotiated rates, which we believe approximate fair value, and are reflected as ~~revenues~~revenue of the billing segment. These rates are adjusted from time to time based on market conditions. Such intersegment ~~revenues~~revenue and expenses are eliminated in our consolidated results and are not separately identified in the following segment information because the amounts are not material.

FedEx Express offers a wide range of U.S. domestic and international shipping services for delivery of packages and freight including priority, deferred orand economy services, which provide delivery on a time-definite or day-definite basis. As discussed in our Annual Report, we are reporting TNT Express as part of the FedEx Express segment. Prior year amounts have been revised to conform to the current year presentation, including revised statistical information. The following tables compare ~~revenues,~~revenue, 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				Three Months Ended						Percent				Six Months Ended						Percent
	2018			2017			Change				2018			2017			Change				2020			2019			Change				2020			2019			Change
Revenues:
Revenue:
Package:
U.S. overnight box	$	1,836		$	1,742			5			$	5,373		$	5,173			4			$	2,012		$	1,864			8			$	3,873		$	3,730			4
U.S. overnight envelope		435			422			3				1,317			1,287			2				435			457			(5	)			861			936			(8	)
U.S. deferred		996			954			4				2,796			2,598			8				1,204			980			23				2,300			1,936			19
Total U.S. domestic package revenue		3,267			3,118			5				9,486			9,058			5				3,651			3,301			11				7,034			6,602			7
International priority		1,813			1,667			9				5,393			5,144			5				2,510			1,817			38				4,827			3,634			33
International economy		793			692			15				2,378			2,101			13				658			873			(25	)			1,274			1,728			(26	)
Total international export package revenue		2,606			2,359			10				7,771			7,245			7				3,168			2,690			18				6,101			5,362			14
International domestic⁽¹⁾		1,128			1,033			9				3,386			3,136			8				1,206			1,165			4				2,294			2,241			2
Total package revenue		7,001			6,510			8				20,643			19,439			6				8,025			7,156			12				15,429			14,205			9
Freight:
U.S.		739			667			11				2,040			1,895			8				799			698			14				1,632			1,393			17
International priority		551			471			17				1,581			1,396			13				737			473			56				1,390			937			48
International economy		492			437			13				1,354			1,265			7				408			541			(25	)			779			1,057			(26	)
International airfreight		86			84			2				259			270			(4	)			65			70			(7	)			140			136			3
Total freight revenue		1,868			1,659			13				5,234			4,826			8				2,009			1,782			13				3,941			3,523			12
Other⁽²⁾		501			400			25				1,499			1,406			7				334			146			129				645			301			114
Total revenues		9,370			8,569			9				27,376			25,671			7
Total revenue																						10,368			9,084			14				20,015			18,029			11
Operating expenses:
Salaries and employee benefits		3,484			3,170			10				10,001			9,393			6				3,922			3,405			15				7,664			6,777			13
Purchased transportation		1,478			1,286			15				4,346			3,963			10				1,449			1,267			14				2,753			2,499			10
Rentals and landing fees		532			511			4				1,520			1,483			2				542			505			7				1,046			1,018			3
Depreciation and amortization		425			420			1				1,254			1,252			—				482			469			3				959			931			3
Fuel		782			633			24				2,088			1,753			19				529			754			(30	)			1,025			1,497			(32	)
Maintenance and repairs		420			386			9				1,327			1,158			15				542			514			5				1,093			1,031			6
Asset impairment charges																						—			66		NM					—			66		NM
Intercompany charges		528			473			12				1,521			1,403			8				486			500			(3	)			947			969			(2	)
Other		1,297			1,133			14				3,745			3,393			10				1,516			1,368			11				2,918			2,720			7
Total operating expenses		8,946			8,012			12				25,802			23,798			8				9,468			8,848			7				18,405			17,508			5
Operating income	$	424		$	557			(24	)		$	1,574		$	1,873			(16	)		$	900		$	236			281			$	1,610		$	521			209
Operating margin		4.5	%		6.5	%		(200	)	bp		5.7	%		7.3	%		(160	)	bp		8.7	%		2.6	%		610		bp		8.0	%		2.9	%		510		bp

	Percent of Revenue												Percent of Revenue
	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	2018			2017			2018			2017			2020			2019			2020			2019
Operating expenses:
Salaries and employee benefits		37.2	%		37.0	%		36.5	%		36.6	%		37.8	%		37.5	%		38.3	%		37.6	%
Purchased transportation		15.8			15.0			15.9			15.4			14.0			13.9			13.8			13.9
Rentals and landing fees		5.7			6.0			5.6			5.8			5.2			5.6			5.2			5.6
Depreciation and amortization		4.5			4.9			4.6			4.9			4.7			5.2			4.8			5.1
Fuel		8.4			7.4			7.6			6.8			5.1			8.3			5.1			8.3
Maintenance and repairs		4.5			4.5			4.8			4.5			5.2			5.6			5.5			5.7
Asset impairment charges														—			0.7			—			0.4
Intercompany charges		5.6			5.5			5.6			5.5			4.7			5.5			4.7			5.4
Other		13.8			13.2			13.7			13.2			14.6			15.1			14.6			15.1
Total operating expenses		95.5			93.5			94.3			92.7			91.3			97.4			92.0			97.1
Operating margin		4.5	%		6.5	%		5.7	%		7.3	%		8.7	%		2.6	%		8.0	%		2.9	%

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			Three Months Ended				Percent			Six Months Ended				Percent
	2018		2017		Change			2018		2017		Change			2020		2019		Change			2020		2019		Change
Package Statistics⁽¹⁾
Average daily package volume (ADV):
U.S. overnight box		1,315		1,322		(1	)		1,249		1,286		(3	)		1,453		1,244		17			1,369		1,231		11
U.S. overnight envelope		541		549		(1	)		548		559		(2	)		512		547		(6	)		497		554		(10	)
U.S. deferred		1,026		1,025		—			946		904		5			1,339		1,012		32			1,272		994		28
Total U.S. domestic ADV		2,882		2,896		—			2,743		2,749		—			3,304		2,803		18			3,138		2,779		13
International priority		529		535		(1	)		525		522		1			748		565		32			722		548		32
International economy		266		253		5			265		250		6			296		315		(6	)		277		304		(9	)
Total international export ADV		795		788		1			790		772		2			1,044		880		19			999		852		17
International domestic⁽²⁾⁽¹⁾		2,445		2,471		(1	)		2,447		2,391		2			2,635		2,669		(1	)		2,464		2,509		(2	)
Total ADV		6,122		6,155		(1	)		5,980		5,912		1			6,983		6,352		10			6,601		6,140		8
Revenue per package (yield):
U.S. overnight box	$	22.53	$	21.24		6		$	22.64	$	21.17		7		$	21.98	$	23.78		(8	)	$	22.10	$	23.86		(7	)
U.S. overnight envelope		12.97		12.41		5			12.64		12.12		4			13.50		13.26		2			13.53		13.29		2
U.S. deferred		15.66		15.00		4			15.56		15.13		3			14.27		15.39		(7	)		14.12		15.34		(8	)
U.S. domestic composite		18.29		17.36		5			18.20		17.34		5			17.54		18.70		(6	)		17.51		18.71		(6	)
International priority		55.26		50.28		10			54.06		51.82		4			53.26		51.03		4			52.24		52.25		—
International economy		48.01		44.05		9			47.24		44.24		7			35.29		43.94		(20	)		35.84		44.71		(20	)
International export composite		52.83		48.27		9			51.77		49.37		5			48.17		48.49		(1	)		47.69		49.55		(4	)
International domestic⁽²⁾⁽¹⁾		7.44		6.74		10			7.29		6.90		6			7.27		6.92		5			7.27		7.03		3
Composite package yield		18.45		17.06		8			18.17		17.31		5		$	18.24	$	17.88		2		$	18.26	$	18.21		—
Freight Statistics⁽¹⁾
Average daily freight pounds:
U.S.		8,757		8,458		4			8,311		8,231		1			9,511		8,364		14			9,175		8,188		12
International priority		5,430		5,238		4			5,342		5,145		4			6,234		5,230		19			5,862		5,010		17
International economy		13,209		12,578		5			12,215		12,095		1			13,560		15,241		(11	)		12,581		14,473		(13	)
International airfreight		1,757		1,995		(12	)		1,850		1,941		(5	)		1,605		1,726		(7	)		1,590		1,640		(3	)
Total average daily freight pounds		29,153		28,269		3			27,718		27,412		1			30,910		30,561		1			29,208		29,311		—
Revenue per pound (yield):
U.S.	$	1.36	$	1.27		7		$	1.29	$	1.21		7		$	1.33	$	1.32		1		$	1.39	$	1.34		4
International priority		1.64		1.45		13			1.56		1.43		9			1.88		1.43		31			1.85		1.47		26
International economy		0.60		0.56		7			0.58		0.55		5			0.48		0.56		(14	)		0.48		0.57		(16	)
International airfreight		0.78		0.68		15			0.74		0.73		1			0.64		0.65		(2	)		0.69		0.65		6
Composite freight yield		1.02		0.95		7			0.99		0.93		6		$	1.03	$	0.93		11		$	1.05	$	0.95		11

FedEx Express segment ~~revenues~~revenue increased 9%14% in the ~~third~~second quarter and 7%11% in the ~~nine months~~first half of ~~2018~~2021 due to international export and U.S. domestic package volume growth, partially offset by lower fuel surcharges. The demand for our U.S. domestic residential service offerings continued to accelerate during the second quarter of 2021 due to the COVID-19 pandemic. Revenue was also positively impacted by pricing initiatives resulting from global air freight capacity constraints in the second quarter and first half of 2021 and one additional operating day in the first half of 2021. FedEx Express segment revenue includes a benefit from a reduction in aviation excise taxes on cargo provided by the CARES Act in the second quarter and first half of 2021.

International export package average daily volumes increased 19% in the second quarter and 17% in the first half of 2021 led by volume growth from Asia-Pacific and Europe. International export package yields decreased 4% in the first half of 2021 primarily due to lower fuel surcharges and base yield declines driven by lower weight per package, partially offset by favorable exchange rates and pricing initiatives resulting from global air freight capacity constraints. U.S. domestic package average daily volumes increased 18% in the second quarter and 13% in the first half of 2021 driven by growth in deferred service offerings, reflecting increased e-commerce demand resulting from the COVID-19 pandemic. U.S. domestic package yields decreased 6% in both the second quarter and first half of 2021 due to decreased base yields driven by lower weight per package, as well as lower fuel surcharges. Composite freight yields increased 11% in both the second quarter and first half of 2021 primarily due to improved base yields, ~~favorable exchange rates and higher fuel surcharges, despite impacts from the NotPetya cyberattack discussed above.~~

International export package yields increased 9% in the third quarter of 2018 due to higher fuel surcharges, favorable exchange rates and higher base rates. International export package yields increased 5% in the nine months of 2018 due to higher fuel surcharges and favorable exchange rates. International export average daily volumes increased 1% in the third quarter and 2% in the nine months of 2018 primarily due to increased international economy shipments. This benefit was partially offset by lower fuel surcharges. Other revenue increased 129% in the ~~decrease~~second quarter and 114% in ~~volume~~the first half of 2021 due to the ~~NotPetya cyberattack. U.S. domestic package yields increased 5% in~~transfer of FedEx Custom Critical and FedEx Cross Border into the third quarter and nine months of 2018 primarily due to higher base rates and fuel surcharges. Freight yields increased 7% in the third quarter and 6% in the nine months of 2018 primarily due to higher base rates, favorable exchange rates and higher fuel surcharges. Average daily freight pounds increased 3% in the third quarter of 2018 primarily due to higher volume in international and U.S. freight services.FedEx Express segment.

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

	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	2018			2017			2018			2017			2020			2019			2020			2019
U.S. Domestic and Outbound Fuel Surcharge:
Low		5.05	%		2.50	%		2.21	%		0.96	%		3.50	%		7.21	%		2.73	%		7.21	%
High		5.91			3.40			5.91			3.40			3.83			8.45			4.12			8.45
Weighted-average		5.56			2.97			4.31			2.30			3.64			7.53			3.54			7.54
International Fuel Surcharges:
International Export and Freight Fuel Surcharge:
Low		6.25			2.60			3.38			1.16			1.17			6.74			0.28			6.74
High		15.87			11.25			15.87			11.25			16.52			18.56			17.00			18.56
Weighted-average		12.24			8.21			10.53			7.48			10.67			15.64			10.49			15.59
International Domestic Fuel Surcharge:
Low														2.62			3.20			2.62			3.20
High														19.21			19.40			20.33			19.47
Weighted-average														5.91			7.29			5.92			7.39

Effective 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. Effective February 6, 2017, FedEx Express fuel surcharges are adjusted on a weekly basis compared to the previous monthly adjustment. On January 2, 2017, FedEx Express implemented a 3.9% average list price increase for U.S. domestic, U.S. export and U.S. import services and a change to the U.S. domestic dimensional weight divisor.

FedEx Express segment operating income ~~and margin decreased~~increased 281% in the ~~third~~second quarter ~~of 2018 due to higher incentive compensation accruals, higher peak-related costs, increased TNT Express integration expenses, the negative impacts of inclement winter weather~~ and ~~unfavorable exchange rates, partially offset by yield growth and positive net impact of fuel. The NotPetya cyberattack discussed above also drove declining results~~209% in ~~the nine months of 2018.~~

~~The NotPetya cyberattack had an estimated $400 million negative impact for~~ the first half of ~~2018 with lingering impacts~~2021 due to international export and U.S. domestic package volume growth. FedEx Express segment operating results include approximately $70 million in the ~~third~~second quarter and $135 million in the first half of ~~2018.~~2021 related to a benefit from a reduction in aviation excise taxes provided by the CARES Act. Results ~~also included $86~~for the second quarter and first half of 2020 were negatively impacted by $66 million of ~~TNT~~asset impairment charges associated with the decision to permanently retire certain aircraft and related engines at FedEx Express. These factors were partially offset by higher variable incentive compensation expense of approximately $120 million in the second quarter and $230 million in the first half of 2021. In addition, we continued to incur increased operating expenses to support elevated levels of demand for our services in the COVID-19 pandemic environment in the second quarter and first half of 2021, including costs of operating our global network to support higher demand, which is partially impacted by constrained commercial air capacity.

FedEx Express segment results included $43 million of integration expenses in the ~~third~~second quarter and ~~$270~~$80 million of such expenses in the ~~nine months~~first half of ~~2018,~~2021, a ~~$33~~$6 million ~~increase~~decrease from the ~~third~~second quarter and ~~$148~~a $26 million ~~increase~~decrease from the ~~nine months~~first half of ~~2017.~~2020.

Salaries and employee benefits ~~increased 10% in the third quarter and 6% in the nine months of 2018 primarily due to merit increases, unfavorable exchange rates and higher incentive compensation accruals. Purchased transportation~~expense increased 15% in the ~~third~~second quarter and 13% in the first half of 2021 primarily due to staffing to support volume growth and higher variable incentive compensation expense. In addition, increased costs associated with network contingencies as a result of the COVID-19 pandemic contributed to the increase in salaries and employee benefits expense in both the second quarter and first half of 2021. Purchased transportation expense increased 14% in the second quarter and 10% in the ~~nine months~~first half of ~~2018 due to unfavorable exchange rates and increased international volume. Other expenses increased 14% in the third quarter and 10% in the nine months of 2018~~2021 primarily due to ~~unfavorable exchange rates,~~the transfer of FedEx Custom Critical and FedEx Cross Border into the FedEx Express segment. Other operating expense increased ~~outside service contracts and TNT Express integration expenses. Intercompany charges increased 12%~~11% in the ~~third~~second quarter and 7% in the first half of ~~2018~~2021 primarily due to higher ~~incentive compensation accruals. Maintenance~~outside service contract expense and ~~repairs increased 15%~~bad debt expense. Additionally, higher operating supplies, partially offset by decreased travel, both driven by the COVID-19 pandemic, negatively impacted other operating expense in both the ~~nine months~~second quarter and first half of ~~2018 primarily due to the timing of aircraft engine maintenance events.~~2021.

Fuel expense ~~increased 24%~~decreased 30% in the ~~third~~second quarter and ~~19%~~32% in the ~~nine months~~first half of ~~2018~~2021 due to ~~increased~~lower fuel prices. ~~However, the~~The net impact of fuel had a ~~moderate benefit~~slightly negative impact to operating income in the ~~third~~second quarter and first half of ~~2018 and a significant benefit to operating income in the nine months of 2018~~2021 as ~~higher~~lower fuel surcharges ~~more than offset increased~~outpaced decreased 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.

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,~~revenue, operating expenses, operating income (dollars in millions), operating margin, selected package statistics (in thousands, except yield amounts) and operating expenses as a percent of revenue for the periods ended ~~February 28:~~

	Three Months Ended						Percent				Nine Months Ended							Percent			Three Months Ended						Percent			Six Months Ended						Percent
	2018			2017			Change				2018			2017				Change			2020			2019			Change			2020			2019			Change
Revenues:
FedEx Ground	$	4,824		$	4,296			12			$	13,586		$	12,202				11
FedEx Supply Chain		398			392			2				1,204			1,195				1
Total revenues		5,222			4,688			11				14,790			13,397				10
Revenue																					$	7,344		$	5,315			38		$	14,384		$	10,494			37
Operating expenses:
Salaries and employee benefits		956			834			15				2,711			2,420				12			1,557			971			60			2,831			1,842			54
Purchased transportation		2,235			2,015			11				6,194			5,568				11			3,488			2,561			36			6,779			4,864			39
Rentals		209			197			6				617			567				9			289			249			16			553			488			13
Depreciation and amortization		187			177			6				537			508				6			205			195			5			409			388			5
Fuel		4			3			33				10			8				25			5			4			25			9			7			29
Maintenance and repairs		82			83			(1	)			249			237				5			124			98			27			231			185			25
Intercompany charges		371			330			12				1,087			983		��		11			446			394			13			878			769			14
Other		544			534			2				1,604			1,516				6			678			501			35			1,308			965			36
Total operating expenses		4,588			4,173			10				13,009			11,807				10			6,792			4,973			37			12,998			9,508			37
Operating income	$	634		$	515			23			$	1,781		$	1,590				12		$	552		$	342			61		$	1,386		$	986			41
Operating margin		12.1	%		11.0	%		110		bp		12.0	%		11.9	%			10	bp		7.5	%		6.4	%		110	bp		9.6	%		9.4	%		20	bp
Average daily package volume																						12,315			9,556			29			11,931			9,192			30
FedEx Ground		8,993			8,522			6				8,408			7,963				6
Revenue per package (yield)																					$	9.42		$	8.80			7		$	9.38		$	8.96			5
FedEx Ground	$	8.64		$	8.12			6			$	8.49		$	8.05				5

	Percent of Revenue												Percent of Revenue
	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	2018			2017			2018			2017			2020			2019			2020			2019
Operating expenses:
Salaries and employee benefits		18.3	%		17.8	%		18.3	%		18.1	%		21.2	%		18.3	%		19.7	%		17.6	%
Purchased transportation		42.8			43.0			41.9			41.5			47.5			48.2			47.1			46.3
Rentals		4.0			4.2			4.2			4.2			3.9			4.7			3.9			4.6
Depreciation and amortization		3.6			3.7			3.6			3.8			2.8			3.7			2.8			3.7
Fuel		0.1			0.1			0.1			0.1			0.1			0.1			0.1			0.1
Maintenance and repairs		1.6			1.8			1.7			1.8			1.7			1.8			1.6			1.8
Intercompany charges		7.1			7.0			7.3			7.3			6.1			7.4			6.1			7.3
Other		10.4			11.4			10.9			11.3			9.2			9.4			9.1			9.2
Total operating expenses		87.9			89.0			88.0			88.1			92.5			93.6			90.4			90.6
Operating margin		12.1	%		11.0	%		12.0	%		11.9	%		7.5	%		6.4	%		9.6	%		9.4	%

FedEx Ground segment ~~revenues~~revenue increased ~~11%~~38% in the ~~third~~second quarter and ~~10%~~37% in the ~~nine months~~first half of ~~2018~~2021 primarily due to residential delivery volume ~~growth~~growth. This sharp increase in demand resulted from a shift in consumer shopping patterns accelerated by the COVID-19 pandemic. In addition, we experienced increased demand for our business-to-business delivery services relative to the first quarter of 2021 as COVID-19-related restrictions moderated during the second quarter. Additionally, revenue was positively impacted by yield management in the second quarter and ~~increased yields.~~ first half of 2021 and one additional operating day in the first half of 2021.

Average daily volume ~~at FedEx Ground~~ increased 6%29% in the ~~third~~second quarter and ~~nine months~~30% in the first half of ~~2018~~2021 primarily due to continued growth in ~~our~~ residential ~~services.~~services driven by e-commerce. FedEx Ground ~~yield~~yields increased ~~6% during~~7% in the ~~third~~second quarter and 5% ~~during~~in the ~~nine months~~first half of ~~2018~~2021 primarily ~~driven~~due to yield improvement actions, partially offset by ~~higher base rates and higher~~lower fuel surcharges.

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. ~~Our~~The fuel surcharge ranged as follows for the periods ended ~~February 28:~~

	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	2018			2017			2018			2017			2020			2019			2020			2019
Low		5.30	%		4.00	%		4.00	%		3.30	%		5.50	%		6.75	%		5.50	%		6.75	%
High		5.80			4.50			5.80			4.50			5.75			7.00			5.75			7.25
Weighted-average		5.50			4.10			5.00			3.90			5.73			6.92			5.74			6.98

Effective January 1, 2018, FedEx Ground announced 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. Effective February 6, 2017, FedEx Ground fuel surcharges are adjusted on a weekly basis compared to the previous monthly adjustment. On January 2, 2017, FedEx Ground implemented a 4.9% average list price increase and a change to the U.S. domestic dimensional weight divisor.

FedEx Ground segment operating income increased ~~23%~~61% in the ~~third~~second quarter and ~~12%~~41% in the ~~nine months~~first half of ~~2018~~2021 primarily due to residential delivery volume growth ~~increased yields~~ and ~~benefits associated with ongoing cost management. Higher~~yield improvement. These factors were partially offset by higher purchased transportation ~~seasonal staffing and network expansion costs~~contractor settlement rates resulting from residential product mix, as well as additional labor expenses and higher ~~incentive compensation~~self-insurance accruals ~~partially offset these benefits.~~in the second quarter and first half of 2021.

Purchased transportation expense increased ~~11%~~36% in the ~~third~~second quarter and ~~nine months~~39% in the first half of ~~2018 primarily~~2021 due to higher ~~volumes,~~volume and increased ~~rates and higher fuel expenses.~~residential product mix. Salaries and employee benefits expense increased ~~15%~~60% in the ~~third~~second quarter and ~~12%~~54% in the ~~nine months~~first half of ~~2018~~2021 due to additional staffing to support volume growth, including costs associated with operating our seven-day network, merit increases and higher variable incentive compensation ~~accruals,~~expense. In addition, increased costs associated with network ~~expansion~~contingencies as a result of the COVID-19 pandemic contributed to the increase in salaries and ~~merit increases. Intercompany charges~~employee benefits expense in both the second quarter and first half of 2021. Other operating expense increased ~~12%~~35% in the ~~third~~second quarter and ~~11%~~36% in the ~~nine months~~first half of ~~2018 primarily due to higher incentive compensation accruals. Other expenses increased 6% in the nine months of 2018~~2021 primarily due to higher self-insurance ~~reserves. Rentals~~accruals and ~~depreciation and amortization expense increased 6%~~higher operating supplies driven by the COVID-19 pandemic.

The net impact of fuel had a moderate benefit to operating income in the ~~third~~second quarter and ~~7% in~~first half of 2021 as decreased fuel prices outpaced lower fuel surcharges. See the ~~nine months~~“Fuel” section of ~~2018 due to network expansion.~~

~~FedEx Ground is involved in lawsuits~~this MD&A for a description and administrative proceedings claiming that owner-operators engaged under a contractor model no longer in use 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 employeradditional discussion of the ~~drivers employed by owner-operators engaged by FedEx Ground. These cases are in varying stages~~net impact 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 of the drivers employed by these owner-operators.

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

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,~~revenue, 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			Three Months Ended						Percent				Six Months Ended						Percent
	2018			2017			Change				2018			2017			Change			2020			2019			Change				2020			2019			Change
Revenues	$	1,694		$	1,492			14			$	5,208		$	4,747	��		10
Revenue																				$	1,936		$	1,844			5			$	3,762		$	3,749			—
Operating expenses:
Salaries and employee benefits		825			733			13				2,455			2,266			8			915			900			2				1,773			1,819			(3	)
Purchased transportation		263			230			14				792			739			7			209			187			12				379			374			1
Rentals		41			36			14				114			101			13			59			52			13				115			104			11
Depreciation and amortization		77			69			12				219			199			10			105			97			8				211			191			10
Fuel		127			99			28				336			282			19			90			132			(32	)			155			255			(39	)
Maintenance and repairs		52			50			4				169			159			6			57			68			(16	)			110			133			(17	)
Intercompany charges		130			120			8				384			370			4			122			130			(6	)			241			256			(6	)
Other		124			114			9				390			367			6			127			137			(7	)			252			282			(11	)
Total operating expenses		1,639			1,451			13				4,859			4,483			8			1,684			1,703			(1	)			3,236			3,414			(5	)
Operating income	$	55		$	41			34			$	349		$	264			32		$	252		$	141			79			$	526		$	335			57
Operating margin		3.2	%		2.7	%		50		bp		6.7	%		5.6	%		110	bp		13.0	%		7.6	%		540		bp		14.0	%		8.9	%		510		bp
Average daily LTL shipments (in thousands)
Average daily shipments (in thousands):
Priority		69.7			65.6			6				73.5			70.3			5			78.1			77.4			1				74.6			78.0			(4	)
Economy		30.6			29.0			6				31.5			30.9			2			32.9			32.6			1				31.5			32.7			(4	)
Total average daily LTL shipments		100.3			94.6			6				105.0			101.2			4
Weight per LTL shipment (lbs)
Total average daily shipments																					111.0			110.0			1				106.1			110.7			(4	)
Weight per shipment (lbs):
Priority		1,232			1,179			4				1,205			1,173			3			1,106			1,139			(3	)			1,101			1,147			(4	)
Economy		1,133			1,155			(2	)			1,144			1,121			2			1,015			983			3				1,006			971			4
Composite weight per LTL shipment		1,202			1,172			3				1,187			1,157			3
LTL revenue per shipment
Composite weight per shipment																					1,079			1,092			(1	)			1,073			1,095			(2	)
Revenue per shipment:
Priority	$	242.49		$	224.63			8			$	233.31		$	220.64			6		$	264.05		$	258.90			2			$	262.02		$	257.14			2
Economy		295.31			272.74			8				285.99			262.72			9			313.35			295.29			6				308.15			295.53			4
Composite LTL revenue per shipment	$	259.20		$	239.82			8			$	249.32		$	233.64			7
LTL yield (revenue per hundredweight)
Composite revenue per shipment																				$	278.66		$	270.38			3			$	275.71		$	268.83			3
Revenue per hundredweight:
Priority	$	19.67		$	19.06			3			$	19.37		$	18.81			3		$	23.86		$	22.74			5			$	23.79		$	22.41			6
Economy		26.07			23.61			10				24.99			23.44			7			30.88			30.05			3				30.62			30.43			1
Composite LTL yield	$	21.56		$	20.47			5			$	21.01		$	20.19			4
Composite revenue per hundredweight																				$	25.82		$	24.75			4			$	25.69		$	24.54			5

	Percent of Revenue												Percent of Revenue
	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	2018			2017			2018			2017			2020			2019			2020			2019
Operating expenses:
Salaries and employee benefits		48.7	%		49.1	%		47.1	%		47.7	%		47.3	%		48.8	%		47.1	%		48.5	%
Purchased transportation		15.5			15.4			15.2			15.6			10.8			10.1			10.1			10.0
Rentals		2.4			2.4			2.2			2.1			3.0			2.8			3.1			2.8
Depreciation and amortization		4.6			4.6			4.2			4.2			5.4			5.3			5.6			5.1
Fuel		7.5			6.6			6.5			5.9			4.7			7.2			4.1			6.8
Maintenance and repairs		3.1			3.4			3.2			3.4			2.9			3.7			2.9			3.6
Intercompany charges		7.7			8.1			7.4			7.8			6.3			7.1			6.4			6.8
Other		7.3			7.7			7.5			7.7			6.6			7.4			6.7			7.5
Total operating expenses		96.8			97.3			93.3			94.4			87.0			92.4			86.0			91.1
Operating margin		3.2	%		2.7	%		6.7	%		5.6	%		13.0	%		7.6	%		14.0	%		8.9	%

FedEx Freight segment ~~revenues~~revenue increased ~~14%~~5% in the ~~third~~second quarter ~~and 10% in the nine months~~ of ~~2018~~2021 primarily due to higher ~~LTL~~revenue per shipment. FedEx Freight segment revenue remained flat in the first half of 2021 due to higher revenue per shipment, ~~and~~partially offset by decreased average daily ~~LTL~~ shipments. ~~LTL revenue~~

Revenue per shipment increased 8%3% in both the ~~third~~second quarter and ~~7% in the nine months~~first half of ~~2018~~2021 primarily due to higher base rates ~~driven by~~reflecting our ongoing ~~yield management~~revenue quality initiatives, ~~higher~~partially offset by lower fuel surcharges and ~~higher~~lower weight per shipment. Average daily ~~LTL~~ shipments increased 6%1% in the ~~third~~second quarter ~~and 4%~~of 2021 due to volumes returning to pre-COVID-19 levels. Despite the increased demand in the ~~nine months~~second quarter of ~~2018 due to higher~~2021, demand for our ~~LTL~~ service ~~offerings.~~offerings in the first half of 2021 was negatively impacted by the COVID-19 pandemic and related supply chain disruptions, resulting in a 4% decrease in average daily shipments.

The weekly indexed ~~LTL~~ fuel surcharge is based on the average of the ~~national~~ U.S. on-highway ~~average~~ prices for a gallon of diesel fuel, as published by the Department of Energy. The indexed ~~LTL~~FedEx Freight fuel surcharge ranged as follows for the periods ended ~~February 28:~~

	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	2018			2017			2018			2017			2020			2019			2020			2019
Low		23.10	%		21.00	%		20.90	%		20.20	%		21.00	%		23.50	%		21.00	%		23.50	%
High		24.00			21.60			24.00			21.60			21.40			24.00			21.40			24.40
Weighted-average		23.59			21.40			22.46			20.80			21.10			23.80			21.20			23.80

Effective January 1, 2018, FedEx Freight implemented a 4.9% average increase in certain U.S. and other shipping rates. On January 2, 2017, FedEx Freight implemented a 4.9% average increase in certain U.S. and other shipping rates.

FedEx Freight segment operating income increased ~~34%~~79% in the ~~third~~second quarter and ~~32%~~57% in the ~~nine months~~first half of ~~2018 primarily~~2021 driven by ~~higher LTL~~continued focus on revenue ~~per shipment.~~ quality initiatives, aligning our cost structure with current business levels and improving operational efficiencies. These positive factors more than offset the negative impact on volumes from the COVID-19 pandemic and weaker economic conditions for the first half of 2021.

Salaries and employee benefits expense increased ~~13%~~only 2% in the ~~third~~second quarter of 2021 primarily due to improved operational productivity, in spite of higher variable incentive compensation expense, merit increases and 8%higher volumes. Salaries and employee benefits expense decreased 3% in the ~~nine months~~first half of ~~2018 driven~~2021 primarily due to improved operational productivity and lower volumes, partially offset by higher ~~staffing levels to support volume growth, higher~~variable incentive compensation ~~accruals~~expense and merit increases. Purchased transportation expense increased ~~14%~~12% in the ~~third~~second quarter ~~and 7% in the nine months~~ of ~~2018~~2021 primarily due to higher ~~volumes~~utilization of third-party rail providers and increased ~~rates.~~rates from third-party motor providers.

Fuel expense ~~increased 28%~~decreased 32% in the ~~third~~second quarter and ~~19%~~39% in the ~~nine months~~first half of ~~2018~~2021 primarily due to ~~higher~~lower fuel prices. The net impact of fuel had a ~~moderate benefit~~slightly negative impact to operating income in the ~~third~~second quarter and ~~nine months~~first half of ~~2018~~2021 as ~~higher~~lower fuel surcharges ~~more than offset increased~~outpaced decreased 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.

Cash and cash equivalents totaled ~~$2.8~~$8.3 billion at ~~February 28, 2018,~~November 30, 2020, compared to ~~$4.0~~$4.9 billion at May 31, ~~2017.~~2020. The following table provides a summary of our cash flows for the ~~nine-month~~six-month periods ended ~~February 28~~November 30 (in millions):

	2018			2017			2020			2019
Operating activities:
Net income	$	3,445		$	1,977		$	2,471		$	1,305
Noncash charges and credits		1,691			2,953			3,808			3,322
Gain from sale of investment		—			(35	)
Changes in assets and liabilities		(3,974	)		(2,250	)		(1,049	)		(2,553	)
Cash provided by operating activities		1,162			2,645			5,230			2,074
Investing activities:
Capital expenditures		(3,994	)		(3,790	)		(2,826	)		(3,266	)
Business acquisitions, net of cash acquired		(44	)		—
Proceeds from asset dispositions and other		21			123			14			4
Cash used in investing activities		(4,017	)		(3,667	)		(2,812	)		(3,262	)
Financing activities:
Proceeds from short-term borrowings, net		797			—			—			150
Principal payments on debt		(31	)		(49	)		(75	)		(1,021	)
Proceeds from debt issuances		1,481			1,190			970			2,093
Proceeds from stock issuances		284			265			431			26
Dividends paid		(402	)		(319	)		(341	)		(339	)
Purchase of treasury stock		(558	)		(358	)		—			(3	)
Other		6			2
Other, net								(12	)		(5	)
Cash provided by financing activities		1,577			731			973			901
Effect of exchange rate changes on cash		98			(70	)		67			(1	)
Net decrease in cash and cash equivalents	$	(1,180	)	$	(361	)
Net increase (decrease) in cash and cash equivalents							$	3,458		$	(288	)
Cash and cash equivalents at the end of period	$	2,789		$	3,173		$	8,339		$	2,031

Cash flows from operating activities ~~decreased $1.5~~increased $3.2 billion in the ~~nine months~~first half of ~~2018~~2021 primarily due to ~~voluntary~~higher net income and lower pension ~~contributions, the payment of a previously accrued legal settlement and the NotPetya cyberattack.~~contributions. Capital expenditures ~~increased~~decreased during the ~~nine months~~first half of ~~2018~~2021 primarily due to ~~aircraft~~lower spending related to vehicles and ~~related equipment purchases at FedEx Express, increased spending on~~ facilities ~~and other at~~across all of our transportation ~~segments and increased vehicle purchases at FedEx Freight, partially offset by lower spending related to package handling and ground support equipment at FedEx Ground.~~segments. See the “Capital Resources” section of this MD&A for a discussion of capital expenditures during ~~2018~~2021 and ~~2017.~~2020.

During ~~the third quarter~~August 2020, FedEx Express issued $970 million of ~~2018, we issued $1.5 billion~~Pass Through Certificates, Series 2020-1AA (the “Certificates”) with a fixed interest rate of ~~senior unsecured debt under our current shelf registration statement. We used the net proceeds for a voluntary incremental contribution~~1.875% due in February ~~2018 to our U.S. Pension Plans.~~2034 utilizing pass through trusts. The Certificates are secured by 19 Boeing aircraft. The payment obligations of FedEx Express in respect of the Certificates are fully and unconditionally guaranteed by FedEx. FedEx Express is using the proceeds from the issuance for general corporate purposes. See Note 34 of the accompanying ~~unaudited condensed~~ consolidated financial statements for ~~further discussion of this debt issuance.~~

~~During~~additional information regarding the ~~third quarter of 2018, we issued commercial paper which provided us with additional short-term liquidity. As of February 28, 2018, we have $800 million of commercial paper outstanding. See Note 3~~terms of the ~~accompanying unaudited condensed consolidated financial statements for further discussion.~~

In January 2016, our Board of Directors authorized a share repurchase program of up to 25 million shares. During the third quarter of 2018, we repurchased 1.2 million shares of FedEx common stock at an average price of $248.73 per share for a total of $288 million. During the nine months of 2018, we repurchased 2.4 million shares of FedEx common stock at an average price of $232.00 per share for a total of $558 million. As of February 28, 2018, 13.6 million shares remained under the current share repurchase authorization. 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.Certificates.

Our operations are capital intensive, characterized by significant investments in aircraft, vehicles and trailers, 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 ~~tax laws~~ and actions of regulatory authorities.

The following table compares capital expenditures by asset category and reportable segment for the periods ended ~~February 28~~November 30 (in millions):

									Percent Change
									2020/2019
	Three Months Ended				Six Months Ended				Three Months			Six Months
	2020		2019		2020		2019		Ended			Ended
Aircraft and related equipment	$	500	$	587	$	1,273	$	1,128		(15	)		13
Package handling and ground support equipment		344		267		561		408		29			38
Vehicles and trailers		104		399		141		660		(74	)		(79	)
Information technology		177		243		371		465		(27	)		(20	)
Facilities and other		277		352		480		605		(21	)		(21	)
Total capital expenditures	$	1,402	$	1,848	$	2,826	$	3,266		(24	)		(13	)

FedEx Express segment	$	804	$	1,061	$	1,832	$	2,012		(24	)		(9	)
FedEx Ground segment		387		447		591		543		(13	)		9
FedEx Freight segment		59		131		98		317		(55	)		(69	)
FedEx Services segment		129		154		247		305		(16	)		(19	)
Other		23		55		58		89		(58	)		(35	)
Total capital expenditures	$	1,402	$	1,848	$	2,826	$	3,266		(24	)		(13	)

Capital expenditures decreased during the first half of 2021 primarily due to lower spending related to vehicles and facilities across all of our transportation segments, as well as decreased spending on information technology at FedEx Services and FedEx Freight, partially offset by increased spending on package handling equipment at FedEx Ground and higher spending related to aircraft at FedEx Express.

We are providing the following information in compliance with Rule 13-01 of Regulation S-X, “Financial Disclosures aboutGuarantors and Issuers of Guaranteed Securities” with respect to our senior unsecured debt securities and the Certificates. As of November 30, 2020, we had outstanding $21.9 billion of senior unsecured debt securities and $970 million of Certificates.

Substantially all of the senior unsecured notes were issued by FedEx under a shelf registration statement and are guaranteed by certain direct and indirect subsidiaries of FedEx (“Guarantor Subsidiaries”). FedEx owns, directly or indirectly, 100% of each Guarantor Subsidiary. The guarantees are (1) unsecured obligations of the respective Guarantor Subsidiary, (2) rank equally with all of their other unsecured and unsubordinated indebtedness, and (3) are full and unconditional and joint and several. If we sell, transfer or otherwise dispose of all of the capital stock or all or substantially all of the assets of a Guarantor Subsidiary to any person that is not an affiliate of FedEx, the guarantee of that Guarantor Subsidiary will terminate and holders of debt securities will no longer have a direct claim against such subsidiary under the guarantee.

Additionally, FedEx fully and unconditionally guarantees the payment obligations of FedEx Express in respect of the Certificates. See Note 6 to the financial statements included in our Annual Report for additional information regarding the terms of the senior unsecured debt securities and Note 4 of the accompanying consolidated financial statements for additional information regarding the terms of the Certificates.

The following tables present summarized financial information for FedEx (as Parent) and the Guarantor Subsidiaries on a combined basis after transactions and balances within the combined entities have been eliminated.

The following table presents the summarized balance sheet information as of November 30, 2020 and May 31, 2020 (in millions):

Percent Change

2018/2017

Three Months Ended

Nine Months Ended

Three Months

Nine Months

2018

2017

2018

2017

Ended

Ended

Aircraft and related equipment

$
591

$
284

$
1,631

$
1,319

108

24

Package handling and ground support equipment

207

295

621

819

(30
)

(24
)
Vehicles

237

219

748

737

8

1

Information technology

116

134

378

412

(13
)

(8
)
Facilities and other

221

177

616

503

25

22

Total capital expenditures

$
1,372

$
1,109

$
3,994

$
3,790

24

5

FedEx Express segment

$
860

$
479

$
2,316

$
2,034

80

14

FedEx Ground segment

227

387

974

1,127

(41
)

(14
)
FedEx Freight segment

198

152

397

360

30

10

FedEx Services segment

87

91

307

269

(4
)

14

Total capital expenditures

$
1,372

$
1,109

$
3,994

$
3,790

24

5

	November 30, 2020		May 31, 2020
Current Assets	$	14,448	$	11,014
Intercompany Receivable		3,866		3,985
Total Assets		81,975		62,089
Current Liabilities		8,392		7,030
Intercompany Payable		—		519
Total Liabilities		53,505		49,844

The following table presents the summarized statement of income information for the six-month period ended November 30, 2020 (in millions):

The following tables present summarized financial information for FedEx (as Parent Guarantor) and FedEx Express (as Subsidiary Issuer) on a combined basis after transactions and balances within the combined entities have been eliminated.

The following table presents the summarized balance sheet information as of November 30, 2020 and May 31, 2020 (in millions):

~~Capital~~The following table presents the summarized statement of income information for the six-month period ended November 30, 2020 (in millions):

In response to current business and economic conditions as referenced above in the “Outlook” section of this MD&A, we have and will continue to actively manage our cash flow, defer certain expenditures ~~increased during~~and seek to protect capital for unforeseen challenges from the ~~nine months of 2018 primarily due to aircraft~~ongoing pandemic. With over $8.3 billion in cash and ~~related equipment purchases at FedEx Express, which included~~ $3.5 billion in available liquidity under our $2.0 billion five-year credit agreement (the “Five-Year Credit Agreement”) and $1.5 billion 364-day credit agreement (“the ~~delivery of ten Boeing 767-300 Freighter aircraft~~364-Day Credit Agreement” and ~~three Boeing 777 Freighter (“B777F”~~together with the Five-Year Credit Agreement, the “Credit Agreements”) aircraft, increased spending on facilities and other at all of our transportation segments and increased vehicle purchases at FedEx Freight, partially offset by lower spending related to package handling and ground support equipment at FedEx Ground.

We, we believe that our cash and cash equivalents, cash flow from operations and available financing sources ~~are~~will be adequate to meet internal and external liquidity needs. As business and economic conditions improve, we will be evaluating our ~~liquidity needs, including working~~ capital ~~capital expenditure requirements and debt payment obligations.~~ allocation strategy with a priority on strengthening our balance sheet.

Our cash and cash equivalents balance at ~~February 28, 2018 included $1.1~~November 30, 2020 includes $1.9 billion of cash in foreign jurisdictions associated with our permanent reinvestment strategy. We are able to access the majority of this cash without a material tax cost, 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. ~~Although we expect higher~~

Our capital expenditures are expected to be approximately $5.1 billion in ~~2018,~~2021, a $0.8 billion decrease from 2020. The slight increase in our expected capital expenditures from the estimate in our Annual Report is due to capital investment for additional capacity initiatives in support of increased volumes. Total capital expenditures will include aircraft modernization at FedEx Express and strategic investments to improve productivity and safety. We invested $1.3 billion in aircraft and related equipment in the first half of 2021 and expect to invest an additional $450 million for aircraft and related equipment during the remainder of 2021. In addition, we are making investments over multiple years of approximately $1.5 billion to significantly expand the FedEx Express Indianapolis hub and approximately $1.5 billion to modernize the FedEx Express Memphis World Hub. We expect these investments in hubs will provide productivity gains. We anticipate that our cash flow from operations will be sufficient to fund ~~these expenditures.~~our capital expenditures for the remainder of 2021. 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. We are currently re-evaluating our permanent reinvestment strategy as a result of the TCJA and, as of the date of this filing, any deferred tax liability associated with a change of assertion is not expected to be material.

Our capital expenditures are expected to be approximately $5.8 billion in 2018 and include spending for aircraft and aircraft-related equipment at FedEx Express, sort facility expansion, primarily at FedEx Ground, and new and replacement vehicles at all of our transportation segments. We expect to invest an additional $867 million for aircraft and aircraft-related equipment during the remainder of 2018. In addition, over multiple years, we will be investing over $1.5 billion to significantly expand the FedEx Express Indianapolis hub and over $1 billion to modernize and expand the Memphis SuperHub.

During the first quarter of 2021, FedEx Express ~~entered into an agreement to accelerate the delivery of two B777F~~executed a contract amendment rescheduling Boeing 767-300 Freighter aircraft ~~from~~deliveries as follows: 2021 ~~to 2020, one B777F aircraft from 2021 to 2019,~~– 18 aircraft; 2022 – 11 aircraft; 2023 – 13 aircraft; and ~~one B777F aircraft from 2022 to 2020.~~

Upon maturity of commercial paper during the fourth quarter of 2018, we will re-evaluate our short-term liquidity needs and assess whether to issue additional commercial paper in order to maintain this short-term liquidity.2024 – 4 aircraft.

We have a shelf registration statement filed with the ~~SEC~~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.~~stock and allows pass through trusts formed by FedEx Express to sell, in one or more future offerings, pass through certificates.

~~During the quarter, we amended our five-year revolving credit facility to increase the aggregate amount available under the facility from $1.75 billion to $2.0 billion.~~ The ~~facility~~Five-Year Credit Agreement expires in ~~November 2020.~~March 2025 and includes a $250 million letter of credit sublimit. The 364-Day Credit Agreement expires in March 2021. The Credit Agreements are available to finance our operations and other cash flow needs. See Note 31 and Note 4 of the accompanying unaudited condensed consolidated financial statements for a description of the terms and significant covenants of ~~our revolving credit facility.~~the Credit Agreements.

~~During the nine months of 2018, we have made contributions totaling $2.5 billion~~Contributions to our tax-qualified U.S. domestic pension plans (“U.S. Pension ~~Plans,~~Plans”) are not required during 2021; however, we may make voluntary contributions in the second half of ~~which $22 million were required. We do not expect to make any additional contributions to our U.S. Pension Plans during the fourth quarter of 2018.~~2021. 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, ~~and~~a commercial paper rating of A-2 and a ratings outlook of ~~“stable.~~“negative.” Moody’s Investors Service has assigned ~~our~~us an unsecured debt a credit rating of Baa2, ~~and our~~a commercial paper a rating of P-2 and a ratings outlook of ~~“stable.~~“negative.” 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.

~~The following table sets forth a summary of our~~There have been no material changes to the contractual ~~cash obligations as of February 28, 2018. Certain of these contractual obligations are reflected~~commitments described in Part II, Item 7 in our ~~balance~~Annual Report.

We do not have any guarantees or other off-balance sheet ~~while others are disclosed as future obligations under accounting principles generally accepted in the United States. Except for the current portion of~~financing arrangements, including variable interest entities, which we believe could have a material impact on ~~long-term debt, this table does not include amounts already recorded in~~ our balance sheet as current liabilities at February 28, 2018. 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. 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.financial condition or liquidity.

Payments Due by Fiscal Year (Undiscounted)
(in millions)

2018 ⁽¹⁾

2019

2020

2021

2022

Thereafter

Total

Operating activities:

Operating leases

$
632

$
2,408

$
2,115

$
1,878

$
1,695

$
9,193

$
17,921

Non-capital purchase obligations and other

254

794

683

480

304

2,925

5,440

Interest on long-term debt

104

607

543

531

531

9,877

12,193

Quarterly contributions to our U.S. Pension
Plans

—

—

—

—

—

—

—

Investing activities:

Aircraft and aircraft-related capital
commitments

492

1,717

1,868

1,162

1,310

890

7,439

Other capital purchase obligations

73

3

1

2

1

7

87

Financing activities:

Debt

3

1,367

1,015

—

—

14,500

16,885

Total

$
1,558

$
6,896

$
6,225

$
4,053

$
3,841

$
37,392

$
59,965

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 89 of the accompanying unaudited condensed consolidated financial statements for ~~more information.~~

The amounts reflected in the table above for operating leases represent future minimum lease payments under noncancelable operating leases (principally aircraft and facilities) with an initial or remaining term in excess of one year at February 28, 2018.additional information on our purchase commitments.

On June 24, 2019, FedEx filed suit in U.S. District Court in the ~~table above within~~District of Columbia seeking to enjoin the ~~caption entitled “Non-capital purchase obligations and other” is our estimate~~U.S. Department of the current portion of the liability ($49 million) for uncertain tax positions and amounts for purchase obligations that represent noncancelable agreements to purchase goods or services that are not capital related. Such contracts include those for printing and advertising and promotions contracts. We cannot reasonably estimate the timing of the long-term payments or the amount by which the liability for uncertain tax positions will increase or decrease over time; therefore, the long-term portion of the liability for uncertain tax positions ($32 million) is excludedCommerce (the “DOC”) from ~~the table.~~

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

~~The amounts reflected in~~Export Administration Regulations against FedEx. On September 11, 2020, the ~~table above for capital purchase obligations represent noncancelable agreements~~court granted the DOC’s motion to ~~purchase capital-related equipment. Such contracts include those for certain purchases of aircraft, aircraft modifications, vehicles, facilities, computers and other equipment.~~

~~We had $922 million in deposits and progress payments as of February 28, 2018 on aircraft purchases and other planned aircraft-related transactions.~~

~~The amounts reflected in~~dismiss the ~~table above for long-term debt represent future scheduled principal payments on our long-term debt.~~lawsuit. On November 5, 2020, we appealed this decision.

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

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, 2018,~~November 30, 2020, 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.

Certain statements in this report, including (but not limited to) those contained in “Income Taxes,” ~~“Outlook,~~“Business Acquisitions,” ~~“Liquidity,”~~“Outlook” and “Liquidity ~~Outlook,” “Contractual Cash Obligations and Off-Balance Sheet Arrangements” and “Critical Accounting Estimates,”~~Outlook” and the “General,” “Financing Arrangements,” “Income Taxes,” “Retirement Plans,” “Commitments” and “Contingencies” notes to ~~the~~our unaudited condensed 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.~~business and the assumptions underlying such statements. Forward-looking statements include those preceded by, followed by or that include the words “will,” “may,” “could,” “would,” “should,~~” “will,~~” “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:

~~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 can adversely affect our reputation, business or results of operations;~~

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

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.

Item 3. Quantitative and ~~Qualitative~~Qualitative Disclosures About Market Risk

As of ~~February 28, 2018,~~November 30, 2020, 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 ~~are in~~relate to the euro, Chinese yuan, British pound, ~~Brazilian real,~~ Canadian dollar, Australian dollar and Mexican peso. Historically, our exposure to foreign currency fluctuations is more significant with respect to our ~~revenues~~revenue 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~~first half of ~~2018,~~2021, the U.S. dollar weakened relative to the currencies of the foreign countries in which we operate, as compared to ~~May 31, 2017,~~the first six months of 2020, and this weakening had a slightly ~~negative~~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.”

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, 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, 2018~~November 30, 2020 (the end of the period covered by this Quarterly Report on Form 10-Q).

During our fiscal quarter ended ~~February 28, 2018,~~November 30, 2020, 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. Due to the COVID-19 pandemic, the majority of our accounting, finance and legal employees continued working remotely. We continue to monitor the COVID-19 pandemic and its effects on the design and operating effectiveness of our internal control over financial reporting.

For a description of all material pending legal proceedings, see Note 910 of the accompanying unaudited condensed consolidated financial statements.

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.

The COVID-19 pandemic has had certain adverse effects on our ~~technology infrastructure could disrupt our~~business, results of operations and ~~result~~financial condition, and we expect such adverse effects will continue. The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains and created significant volatility and disruption of financial markets. Due to the crucial role we play in ~~the loss of~~moving supply chains and delivering critical ~~confidential information, adversely impacting our reputation,~~relief, we are considered an essential business ~~or results of operations.~~ ~~Our ability~~and we continue to ~~attract~~operate under and ~~retain customers,~~respond to ~~efficiently operate our businesses,~~evolving governmental and to compete effectively depends in part upon the sophistication and reliability of our technology network, including our ability to provide features of service that are important to our customers, to protect our confidential business information and the information provided by our customers, and to maintain customer confidence in our ability to protect our systems and to provide services consistent with their expectations. We are subject to risks imposed by data breaches and operational disruptions, particularly through cyber-attack or cyber-intrusion, including by computer hackers, foreign governments and cyber terrorists. Data breaches of companies and governments have increased in recent years as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. Additionally, risks such as code anomalies, “Acts of God,” transitional challenges in migrating operating company functionality to our FedEx enterprise automation platform, data leakage and human error pose a direct threat to our products, services and data and could result in unauthorized access to sensitive or confidential data regarding our operations, customers, employees, and suppliers, including personal information.

We also use technology and systems from third-party service providers, including cloud service providers, for a variety of reasons and such providers may have access to information we maintain about our company, customers, employees and vendors or operate systems that are critical to our business operations and services. Like us, our third-party service providers are subject to risks imposed by data breaches and cyber-attacks. We have security processes, protocols and standards in place, including contractual provisions requiring such security measures, that are applicable to our service providers and are designed to protect information that is held by them, or to which they have access, as a result of their engagements with us. Nevertheless, a cyber-attack could defeat one or more of our third-party service providers’ security measures, allowing an attacker to obtain information about our company, customers, employees and vendors or disrupt our operations. Our third-party service providers may also experience operational disruptions or human error that could result in unauthorized access to sensitive or confidential data regarding our operations, customers, employees and suppliers, including personal information.

Any disruption to our complex, global technology infrastructure, including those impacting our computer systems and websites, could result in the loss of confidential business or customer information, adversely impact our operations, customer service, volumes and revenues, or could lead to litigation or investigations, resulting in significant costs. These types of adverse impacts could also occur in the event the confidentiality, integrity or availability of company and customer information was compromised due to a data loss by FedEx or a trusted third party. Recently, there has also been heightened regulatory and enforcement focus on data protectionother restrictions issued in the U.S. and ~~abroad,~~globally. The disruption of global supply chains and ~~failure~~the global economy has materially affected our business, results of operations and financial condition. We expect the full impact of the COVID-19 pandemic, including the extent of its effect on our financial condition and results of operations, to be dictated by future developments which remain uncertain and cannot be predicted, such as its duration and spread, the success of efforts to contain it and treat its impact, the possibility of additional subsequent widespread outbreaks, and the impact of actions taken in response. The COVID-19 pandemic has had, and we expect will continue to have, certain negative impacts on our business, including, but not limited to, the following:

To the extent the COVID-19 pandemic adversely affects our business and financial results, it may also have the effect of heightening many other risks described under the heading “Risk Factors” in our Annual Report, any of which could materially and adversely affect our business, results of operations and financial condition. Such risks include, but are not limited to, additional changes in international trade policies and relations; 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; our strong reputation and the value of the FedEx brand; our ability to manage our capital intensive businesses; changes to the business and financial soundness of the U.S. Postal Service; workforce availability; employee healthcare benefit costs; constraints, volatility or ~~foreign data protection regulations~~disruption in the capital markets and our ability to access sources of financing and liquidity; and the impact of litigation or claims from customers, team members, suppliers, regulators or other ~~data protection standards may expose us~~third parties relating to ~~litigation, fines, sanctions~~the COVID-19 pandemic or ~~other penalties, which~~our actions in response to the pandemic.

The United Kingdom’s withdrawal from the European Union (“EU”) could ~~harm our reputation and~~ adversely impact our business, results of operations and financial condition.

~~We have invested~~On January 31, 2020, the United Kingdom left the EU (“Brexit”). The United Kingdom and ~~continue~~EU are now in a transitional period during which the United Kingdom will maintain access to ~~invest in technology security initiatives, information technology risk management~~the EU single market and ~~disaster recovery plans. The development and maintenance of these measures is costly and requires ongoing monitoring and updating as technologies change and efforts~~ to overcome security measures become increasingly more sophisticated. Despite our efforts, we are not fully insulated from data breaches, technology disruptions or data loss, which could adversely impact our competitiveness and results of operations. For instance, in May 2017 FedEx was one of many companies attackedthe global trade deals negotiated by the ~~rapidly spreading ransomware described as WannaCry that exploited vulnerability in Microsoft Windows~~EU on behalf of its members, and ~~infected computers using that program, encrypting files~~remain subject to EU law, until December 31, 2020.

The uncertainty regarding the status of Brexit has negatively impacted the United Kingdom’s and ~~holding them for ransom. Additionally, during~~ the ~~third quarter~~EU’s economies. This negative impact will likely continue until the United Kingdom and EU reach and implement a definitive resolution on their future trading relationship. Any additional impact of ~~2018 we discovered an unsecured server hosted by~~Brexit will depend on the terms of such resolution, if one of our third-party cloud service providers, which exposed some archived account information related to a service discontinued after our 2015 acquisition of Bongo International, LLC. The server has been secured, and we have found no indication that any information has been misappropriated in connection withis ultimately reached. Even if the incident. Neither incident caused a material disruption to our systems or resulted in any material costs to FedEx. In addition, in June 2017 TNT Express worldwide operations were significantly affected dueUnited Kingdom maintains access to the ~~infiltration~~EU single market and trade deals following the transition period, Brexit could result in further economic downturn globally. If the United Kingdom ultimately loses access to the EU single market and trade deals, significant market and economic disruption would likely occur, our customer experience, service quality and international operations would likely be negatively impacted, and the demand for our services could be depressed. As of ~~an information technology virus known as NotPetya, as further described in~~December 17, 2020, the ~~following risk factor.~~

~~While we~~United Kingdom and EU have ~~significant security processes and initiatives in place, we may be unable to detect or prevent~~not reached a ~~material breach or disruption in the future.~~resolution regarding their future trading relationship beyond December 31, 2020.

~~TNT Express experienced a significant cyberattack~~Additionally, we may face new regulations regarding trade, aviation, tax, security and employees, among others, in the first quarter of fiscal 2018 and the ongoing impact could negatively affect our results of operations and financial condition in the future, particularly if our continuing recovery efforts do not proceed as expected. On June 28, 2017, we announced that the worldwide operations of TNT Express were significantly affected by the cyberattack known as NotPetya, which involved the spread of an information technology virus that infiltrated TNT Express systems and encrypted its data. While TNT Express’s critical operational systems have been fully restored, critical business data has been recovered and shipping services and solutions are back in place, not all customers are shipping at pre-attack volume levels and we are continuing to engage in related recovery efforts. Our results of operations and financial conditionUnited Kingdom. Compliance with such regulations could be costly, negatively ~~impacted in the future if~~impacting our recovery efforts do not proceed as expected, particularly if lost revenues or incremental costs associated with the cyberattack exceed our expectations. The following consequences or potential consequences of the cyberattack could have an adverse impact on our results of operations and financial condition in the future:

~~We could be subject to adverse changes in regulations and interpretations or challenges to our tax positions relating to the Tax Cuts and Jobs Act.~~ We are subject to taxation in the U.S. and numerous foreign jurisdictions. From time to time, changes in tax laws or regulations may be proposed or enacted that could significantly affect our overall tax liability. For example, on December 22, 2017, the United States government enacted comprehensive tax legislation through the TCJA, which significantly changes the U.S. corporate income tax system. The TCJA requires complex computations to be performed that were not previously required in U.S. tax law, significant judgments, estimates and calculations to be made in interpreting its provisions, and the preparation and analysis of information not previously relevant or regularly produced. The U.S. Treasury Department, the IRS, and other standard-setting bodies could interpret or issue guidance on how provisions of the TCJA will be applied or otherwise administered that is different from our interpretation. In addition, further legislative action could be taken to address questions or issues caused by the TCJA. As we complete our analysis of the TCJA, collect and prepare necessary data, and interpret any additional guidance, we may make adjustments to provisional amounts that we have recorded that may adversely impact our results of operations and financial condition. ~~Additionally, state~~Brexit could also adversely affect European and worldwide economic and market conditions and could contribute to instability in global financial and foreign ~~governments may enact tax laws~~exchange markets, including volatility in ~~response to~~ the ~~TCJA or other global initiatives that could result in further changes to our taxation~~value of the euro and ~~adversely impact our results of operations and financial condition.~~the British pound.

~~The following table provides information on FedEx’s repurchases~~We did not repurchase any shares of ~~our~~FedEx common stock during the ~~third~~second quarter of ~~2018:~~2021.

~~The repurchases were made under the~~On January 26, 2016, we announced a 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 20, 2018, 13.2~~December 15, 2020, 5.1 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. See Note 1 of the accompanying unaudited condensed consolidated financial statements for further discussion.

In June 2020, we announced that given then-current economic and business uncertainty resulting from the COVID-19 pandemic, there would not be an annual incentive compensation plan for executive officers for fiscal 2021. In September 2020, based on strong financial results for the first quarter of fiscal 2021, FedEx’s Board, upon the recommendation of its Compensation Committee, approved an annual incentive plan for FedEx’s employees, excluding executive officers (the “fiscal 2021 AIC Plan”). On December 14, 2020, the Board, upon the recommendation of its Compensation Committee, approved including FedEx’s executive officers in the fiscal 2021 AIC Plan. The decision to include executive officers in the plan was based on FedEx’s strong financial results for the first half of fiscal 2021 due in part to the leadership provided by the executive officers and successful execution of FedEx’s strategies during the COVID-19 pandemic.

In order to continue motivating management to improve FedEx’s overall financial performance, the performance measure selected for the fiscal 2021 AIC Plan is consolidated operating income. The consolidated operating income threshold, target, and maximum objectives under the fiscal 2021 AIC plan are specified levels of fiscal 2021 consolidated operating income. Actual consolidated operating income performance that exceeds the fiscal 2021 target objective for consolidated operating income under the fiscal 2021 AIC plan will result in an above-target payout opportunity, up to the maximum payout amount.

The maximum payout opportunity under the plan for each executive officer is 150% of the target amount. However, the actual payout for plan participants, including all executive officers other than FedEx’s Chairman of the Board and Chief Executive Officer (“Chairman and CEO”), may be adjusted downward depending on the achievement level of their respective individual performance objectives, as determined by the Chairman and CEO or President and Chief Operating Officer, as applicable. The AIC payout amount for the Chairman and CEO may be adjusted upward or downward by the independent Board members based on their annual evaluation of his performance, which will consider factors including (but not limited to) FedEx’s stock price performance, market share, analyst ratings, and performance versus competitors. In addition, the independent directors will consider the achievement of the Chairman and CEO’s individual objectives for fiscal 2021.

The fiscal 2021 AIC target payouts for FedEx’s named executive officers, as a percentage of their respective base salary actually paid during fiscal 2021, are as follows:

* Mr. Graf served as FedEx’s Executive Vice President and Chief Financial Officer until September 21, 2020 and will retire effective December 31, 2020. He is eligible to receive a pro rata payout under the fiscal 2021 AIC plan based on the portion of the plan period during which he is employed.

˄Certain attachments have been omitted pursuant to Item 601(a)(5) of Regulation S-K because the information contained therein is not material and is not otherwise publicly disclosed. FedEx will furnish supplementally a copy of such attachments to the SEC or its staff upon request.

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.

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)


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $0.10 per share	FDX	New York Stock Exchange
0.700% Notes due 2022	FDX 22B	New York Stock Exchange
1.000% Notes due 2023	FDX 23A	New York Stock Exchange
0.450% Notes due 2025	FDX 25A	New York Stock Exchange
1.625% Notes due 2027	FDX 27	New York Stock Exchange
1.300% Notes due 2031	FDX 31	New York Stock Exchange

Large accelerated filer ☑	Accelerated filer ☐	Non-accelerated filer ☐	Smaller reporting company ☐	Emerging growth company ☐
		~~(Do not check if a smaller reporting company)~~

Common Stock		Outstanding Shares at ~~March 19, 2018~~December 15, 2020
Common Stock, par value $0.10 per share		~~267,215,207~~265,070,592

		PAGE

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements
Condensed Consolidated Balance Sheets ~~February 28, 2018~~November 30, 2020 and May 31, ~~2017~~2020		3
Condensed Consolidated Statements of Income Three and ~~Nine~~Six Months Ended ~~February 28, 2018~~November 30, 2020 and ~~2017~~2019		5
Condensed Consolidated Statements of Comprehensive Income Three and ~~Nine~~Six Months Ended ~~February 28, 2018~~November 30, 2020 and ~~2017~~2019		6
Condensed Consolidated Statements of Cash Flows ~~Nine~~Six Months Ended ~~February 28, 2018~~November 30, 2020 and ~~2017~~2019		7
Condensed Consolidated Statements of Changes In Common Stockholders’ Investment Three and Six Months Ended November 30, 2020 and 2019		8
Notes to Condensed Consolidated Financial Statements		89
Report of Independent Registered Public Accounting Firm		2720
ITEM 2. Management’s Discussion and Analysis of Results of Operations and Financial Condition		2821
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk		5146
ITEM 4. Controls and Procedures		5146

PART II. OTHER INFORMATION

ITEM 1. Legal Proceedings		5247
ITEM 1A. Risk Factors		5247
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds		5449
ITEM 5. Other Information		49
ITEM 6. Exhibits		5551
Signature		57
~~Exhibit Index~~		~~E-1~~52

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 ~~10.10~~15.1
Exhibit ~~12.1~~
~~Exhibit 15.1~~22
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2
Exhibit 101.1 Interactive Data Files Exhibit 104.1 Cover Page Interactive Data File




FedEx Express Segment	FedEx Express (express ~~transportation)~~
	~~TNT Express (international express~~ transportation, small-package ground delivery and freight transportation)
	FedEx ~~Trade Networks (air and ocean freight forwarding, customs brokerage and cross-border enablement~~Custom Critical (time-critical transportation) FedEx Cross Border (cross-border e-commerce technology and e-commerce transportation solutions)


FedEx Ground Segment	FedEx Ground (small-package ground delivery)
	~~FedEx Supply Chain (third-party logistics)~~


FedEx Freight Segment	FedEx Freight (LTL freight transportation)
	~~FedEx Custom Critical (time-critical 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)~~

	Aircraft and Aircraft-Related		Other⁽¹⁾		Total
2018 (remainder)	$	516	$	254	$	770
2019		1,789		725		2,514
2020		1,931		621		2,552
2021		1,244		400		1,644
2022		1,364		251		1,615
Thereafter		3,314		508		3,822
Total	$	10,158	$	2,759	$	12,917

	Aircraft and Related		Other⁽¹⁾		Total
2021 (remainder)	$	771	$	550	$	1,321
2022		2,203		678		2,881
2023		2,389		461		2,850
2024		1,000		302		1,302
2025		602		226		828
Thereafter		2,679		397		3,076
Total	$	9,644	$	2,614	$	12,258

	Cessna SkyCourier 408		ATR 72-600F		B767F		B777F		Total
2018 (remainder)		-		-		4		1		5
2019		-		-		15		3		18
2020		-		-		16		6		22
2021		12		5		10		-		27
2022		12		6		10		3		31
Thereafter		26		19		6		-		51
Total		50		30		61		13		154

	Aircraft and Related Equipment		Facilities and Other		Total Operating Leases
2018 (remainder)	$	47	$	585	$	632
2019		343		2,065		2,408
2020		261		1,854		2,115
2021		203		1,675		1,878
2022		185		1,510		1,695
Thereafter		175		9,018		9,193
Total	$	1,214	$	16,707	$	17,921

			Guarantor		Non-guarantor
	Parent		Subsidiaries		Subsidiaries		Eliminations			Consolidated
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	957	$	375	$	1,494	$	(37	)	$	2,789
Receivables, less allowances		1		5,308		3,462		(100	)		8,671
Spare parts, supplies, fuel, prepaid expenses and other, less allowances		920		928		267		—			2,115
Total current assets		1,878		6,611		5,223		(137	)		13,575
PROPERTY AND EQUIPMENT, AT COST		22		50,601		3,754		—			54,377
Less accumulated depreciation and amortization		18		24,999		1,663		—			26,680
Net property and equipment		4		25,602		2,091		—			27,697
INTERCOMPANY RECEIVABLE		1,401		2,508		130		(4,039	)		—
GOODWILL		—		1,571		5,893		—			7,464
INVESTMENT IN SUBSIDIARIES		31,295		2,928		—		(34,223	)		—
OTHER ASSETS		2,706		1,566		1,268		(2,425	)		3,115
	$	37,284	$	40,786	$	14,605	$	(40,824	)	$	51,851
LIABILITIES AND STOCKHOLDERS’ INVESTMENT
CURRENT LIABILITIES
Short-term borrowings	$	799	$	—	$	—	$	—		$	799
Current portion of long-term debt		750		6		8		—			764
Accrued salaries and employee benefits		69		1,362		514		—			1,945
Accounts payable		149		1,483		1,607		(137	)		3,102
Accrued expenses		379		1,605		909		—			2,893
Total current liabilities		2,146		4,456		3,038		(137	)		9,503
LONG-TERM DEBT, LESS CURRENT PORTION		15,713		288		16		—			16,017
INTERCOMPANY PAYABLE		—		—		4,039		(4,039	)		—
OTHER LONG-TERM LIABILITIES
Deferred income taxes		—		4,285		541		(2,425	)		2,401
Other liabilities		531		3,605		900		—			5,036
Total other long-term liabilities		531		7,890		1,441		(2,425	)		7,437
STOCKHOLDERS’ INVESTMENT		18,894		28,152		6,071		(34,223	)		18,894
	$	37,284	$	40,786	$	14,605	$	(40,824	)	$	51,851

	Parent			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
REVENUES	$	—		$	12,433		$	4,229		$	(136	)	$	16,526
OPERATING EXPENSES:
Salaries and employee benefits		39			4,623			1,319			—			5,981
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
		—			11,597			4,064			(136	)		15,525
OPERATING INCOME		—			836			165			—			1,001
OTHER INCOME (EXPENSE):
Equity in earnings of subsidiaries		2,074			2			—			(2,076	)		—
Interest, net		(137	)		11			1			—			(125	)
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

									Percent Change
									2018/2017
	Three Months Ended				Nine Months Ended				Three Months			Nine Months
	2018		2017		2018		2017		Ended			Ended
Aircraft and related equipment	$	591	$	284	$	1,631	$	1,319		108			24
Package handling and ground support equipment		207		295		621		819		(30	)		(24	)
Vehicles		237		219		748		737		8			1
Information technology		116		134		378		412		(13	)		(8	)
Facilities and other		221		177		616		503		25			22
Total capital expenditures	$	1,372	$	1,109	$	3,994	$	3,790		24			5
FedEx Express segment	$	860	$	479	$	2,316	$	2,034		80			14
FedEx Ground segment		227		387		974		1,127		(41	)		(14	)
FedEx Freight segment		198		152		397		360		30			10
FedEx Services segment		87		91		307		269		(4	)		14
Total capital expenditures	$	1,372	$	1,109	$	3,994	$	3,790		24			5

Revenue	$	29,141
Intercompany Charges, net		(1,434	)
Operating Income		2,206
Intercompany Charges, net		71
Income Before Income Taxes		2,354
Net Income	$	2,028

Revenue	$	10,988
Intercompany Charges, net		(575	)
Operating Income		667
Intercompany Charges, net		274
Income Before Income Taxes		1,773
Net Income	$	1,727

	2018		2017
Required	$	22	$	444
Voluntary		2,478		1,306
	$	2,500	$	1,750

	Payments Due by Fiscal Year (Undiscounted) (in millions)
	2018 ⁽¹⁾		2019		2020		2021		2022		Thereafter		Total
Operating activities:
Operating leases	$	632	$	2,408	$	2,115	$	1,878	$	1,695	$	9,193	$	17,921
Non-capital purchase obligations and other		254		794		683		480		304		2,925		5,440
Interest on long-term debt		104		607		543		531		531		9,877		12,193
Quarterly contributions to our U.S. Pension Plans		—		—		—		—		—		—		—
Investing activities:
Aircraft and aircraft-related capital commitments		492		1,717		1,868		1,162		1,310		890		7,439
Other capital purchase obligations		73		3		1		2		1		7		87
Financing activities:
Debt		3		1,367		1,015		—		—		14,500		16,885
Total	$	1,558	$	6,896	$	6,225	$	4,053	$	3,841	$	37,392	$	59,965

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, 2017		195,000	$	241.14		195,000		14,580,000
Jan. 1-31, 2018		272,800		266.12		272,800		14,307,200
Feb. 1-28, 2018		690,000		244.00		690,000		13,617,200
Total		1,157,800	$	248.73		1,157,800

Name	Target Payout (as a percentage of base salary)
Frederick W. Smith Chairman of the Board and Chief Executive Officer	165	%
Michael C. Lenz Executive Vice President and Chief Financial Officer	120	%
Rajesh Subramaniam President and Chief Operating Officer	140	%
Donald F. Colleran President and Chief Executive Officer Federal Express Corporation	120	%
Robert B. Carter Executive Vice President, FedEx Information Services and Chief Information Officer	120	%
Alan B. Graf, Jr.* Former Chief Financial Officer	120	%

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. 5, dated as of January 31, 2018, 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 31, 2018, and incorporated herein by reference.)

~~4.3~~		~~Form of 3.400% Note due 2028. (Included in Exhibit 4.2 to FedEx’s Current Report on Form 8-K dated and filed January 31, 2018, and incorporated herein by reference.)~~

~~4.4~~		~~Form of 4.050% Note due 2048. (Included in Exhibit 4.2 to FedEx’s Current Report on Form 8-K dated and filed January 31, 2018, and incorporated herein by reference.)~~

*˄10.1		Amendment dated ~~December 8, 2017~~September 4, 2020 (but effective as of ~~August 28, 2017)~~January 6, 2020), 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~~

*˄10.2		Amendment dated September 4, 2020 (but effective as of February 3, 2020), amending the ~~Securities Exchange Act~~USPS Transportation Agreement.

*˄10.3		Amendment dated September 30, 2020 (but effective as of ~~1934,~~March 2, 2020), amending the USPS Transportation Agreement.

*˄10.4		Amendment dated October 22, 2020 (but effective as ~~amended (the “Exchange Act”)~~of June 29, 2020), amending the USPS TransportationAgreement.

*˄10.5		Amendment dated October 22, 2020 (but effective as of August 3, 2020), amending the USPS Transportation Agreement.

~~10.2~~*˄10.6		Amendment dated ~~December 8, 2017~~October 22, 2020 (but effective as of ~~November 27, 2017)~~August 31, 2020), 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.~~Agreement.

~~10.3~~*˄10.7		Amendment dated ~~December 8, 2017~~October 22, 2020 (but effective as of ~~October 2, 2017)~~March 30, 2020), 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.~~Agreement.

~~10.4~~ 10.8		Amendment dated ~~January 8, 2018~~October 30, 2020 (but effective as of ~~January 1, 2018)~~October 23, 2020), 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.~~Agreement.

~~10.5~~*˄10.9		Amendment dated ~~January 11, 2018~~November 5, 2020 (but effective as of ~~October 30, 2017)~~May 4, 2020), 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.~~Agreement.

~~10.6~~		Amendment dated January 26, 2018 (but effective as of November 27, 2017), 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 February 16, 2018 (but effective as of January 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.

~~10.8~~		~~Supplemental Agreement No. 28 (and related side letter) dated as of January 26, 2018, amending the Boeing 777~~ ~~Freighter~~ Purchase Agreement dated as of November 7, 2006, between The Boeing Company and FedEx Express (the “Boeing 777 Freighter Purchase Agreement”). Confidential treatment has been requested for confidential commercial and financial information, pursuant to Rule 24b-2 under the Exchange Act.

~~10.9~~		~~Supplemental Agreement No. 29 (and related side letters) dated as of February 2, 2018, amending the Boeing 777~~ ~~Freighter~~ ~~Purchase Agreement. Confidential treatment has been requested for confidential commercial and financial information, pursuant to Rule 24b-2 under the Exchange Act.~~

~~10.10~~		First Amendment dated as of January 26, 2018, between FedEx and JPMorgan Chase Bank, N.A., as administrative agent, amending the Five-Year Credit Agreement dated as of November 13, 2015, among FedEx, JPMorgan Chase Bank, N.A., individually and as administrative agent, and certain lenders.

~~12.1~~		~~Computation of Ratio of Earnings to Fixed Charges.~~

15.1		Letter re: Unaudited Interim Financial Statements.

~~Exhibit~~ ~~Number~~22		~~Description~~List of ~~Exhibit~~Guarantor Subsidiaries and Subsidiary Issuers of Guaranteed Securities.

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.~~Files pursuant to Rule 405 of Regulation S-T formatted in Inline Extensible Business Reporting Language (“Inline XBRL”).

104.1		Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101.1).

			FEDEX CORPORATION

Date: ~~March 21, 2018~~December 17, 2020			/s/ JOHN L. MERINO
			JOHN L. MERINO
			CORPORATE VICE PRESIDENT AND
			PRINCIPAL ACCOUNTING OFFICER

~~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. 5, dated as of January 31, 2018, 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 31, 2018, and incorporated herein by reference.)

~~4.3~~		~~Form of 3.400% Note due 2028. (Included in Exhibit 4.2 to FedEx’s Current Report on Form 8-K dated and filed January 31, 2018, and incorporated herein by reference.)~~

~~4.4~~		~~Form of 4.050% Note due 2048. (Included in Exhibit 4.2 to FedEx’s Current Report on Form 8-K dated and filed January 31, 2018, and incorporated herein by reference.)~~

~~10.1~~		Amendment dated December 8, 2017 (but effective as of August 28, 2017), 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 Securities Exchange Act of 1934, as amended (the “Exchange Act”).

~~10.2~~		Amendment dated December 8, 2017 (but effective as of November 27, 2017), 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 8, 2017 (but effective as of October 2, 2017), 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 8, 2018 (but effective as of January 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 11, 2018 (but effective as of October 30, 2017), 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 26, 2018 (but effective as of November 27, 2017), 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 February 16, 2018 (but effective as of January 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.

~~10.8~~		~~Supplemental Agreement No. 28 (and related side letter) dated as of January 26, 2018, amending the Boeing 777~~ ~~Freighter~~ Purchase Agreement dated as of November 7, 2006, between The Boeing Company and FedEx Express (the “Boeing 777 Freighter Purchase Agreement”). Confidential treatment has been requested for confidential commercial and financial information, pursuant to Rule 24b-2 under the Exchange Act.

~~10.9~~		~~Supplemental Agreement No. 29 (and related side letters) dated as of February 2, 2018, amending the Boeing 777~~ ~~Freighter~~ ~~Purchase Agreement. Confidential treatment has been requested for confidential commercial and financial information, pursuant to Rule 24b-2 under the Exchange Act.~~

~~10.10~~		First Amendment dated as of January 26, 2018, between FedEx and JPMorgan Chase Bank, N.A., as administrative agent, amending the Five-Year Credit Agreement dated as of November 13, 2015, among FedEx, JPMorgan Chase Bank, N.A., individually and as administrative agent, and certain lenders.

~~12.1~~		~~Computation of Ratio of Earnings to Fixed Charges.~~

~~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.~~

~~Exhibit~~ ~~Number~~		~~Description of Exhibit~~


~~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.~~