FedEx (FDX) 10-K risk factor changes: FY2017 vs FY2016

We present information about our risk factors on pages [removed: 81] [added: 70] through [removed: 87] [added: 76] of this Annual Report on Form 10-K.

\- 19 -

Management’s discussion and analysis of results of operations and financial condition is presented on pages [removed: 41] [added: 33] through [removed: 88] [added: 77] of this Annual Report on Form 10-K.

Quantitative and qualitative information about market risk is presented on page [removed: 147] [added: 126] of this Annual Report on Form 10-K.

Overview

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

FedEx provides a broad portfolio of transportation, e-commerce and business services through companies competing collectively, operating independently and managed collaboratively, under the respected FedEx brand.

These companies are included in the following business segments:

| | • | FedEx Express: Federal Express Corporation (“FedEx Express”) is the world’s largest express transportation company, offering time-definite delivery to more than 220 countries and territories, connecting markets that comprise more than 99% of the world’s gross domestic product. The FedEx Express segment also includes FedEx Trade Networks, Inc. (“FedEx Trade Networks”), which provides international trade services, specializing in customs brokerage and global ocean and air freight forwarding, and FedEx CrossBorder, LLC (“FedEx Cross Border”), which provides e-commerce technologies that enable international transactions for e-tailers and consumers worldwide. During 2017, we announced that effective June 1, 2017 products and solutions offered by FedEx SupplyChain Systems, Inc. (“FedEx SupplyChain Systems”) would be combined with similar offerings within FedEx Custom Critical, Inc. (“FedEx Custom Critical”), FedEx Express and FedEx Supply Chain Distribution System, Inc. (“FedEx Supply Chain”), formerly GENCO Distribution System, Inc. (“GENCO”). |

| --- | --- | --- |

| | • | TNT Express: Acquired near the end of our 2016 fourth quarter, TNT Express B.V. (“TNT Express”) is an international express transportation, small-package ground delivery and freight transportation company. TNT Express services are primarily classified by the speed, distance, weight and size of consignments. While a majority of its shipments are between businesses, TNT Express also offers business-to-consumer services to select key customers. TNT Express provides road and air delivery services in Europe, the Middle East and Africa, Asia-Pacific and the Americas. |

| --- | --- | --- |

| | • | FedEx Ground: FedEx Ground Package System, Inc. (“FedEx Ground”) is a leading North American provider of small-package ground delivery services. FedEx Ground provides low-cost, day-certain service to any business address in the U.S. and Canada, as well as residential delivery to 100% of U.S. residences through its FedEx Home Delivery service. FedEx SmartPost is a FedEx Ground service that specializes in the consolidation and delivery of high volumes of low-weight, less time-sensitive business-to-consumer packages primarily using the U.S. Postal Service (“USPS”) for final delivery to residences. The FedEx Ground segment also includes FedEx Supply Chain, which provides integrated supply chain management solutions. |

| --- | --- | --- |

| | • | FedEx Freight: FedEx Freight, Inc. (“FedEx Freight”) is a leading U.S. provider of less-than-truckload (“LTL”) freight services across all lengths of haul, offering: FedEx Freight Priority, when speed is critical to meet a customer’s supply chain needs; and FedEx Freight Economy, when a customer can trade time for cost savings. The FedEx Freight segment also offers freight delivery service to most points in Canada, Mexico, Puerto Rico and the U.S. Virgin Islands, and includes FedEx Custom Critical, a leading North American provider of time-specific, critical shipment services. |

| --- | --- | --- |

| | • | FedEx Services: FedEx Corporate Services, Inc. (“FedEx Services”) provides sales, marketing, information technology, communications, customer service, technical support, billing and collections services for U.S. customers of our major business units and certain back-office functions that support our other companies. The FedEx Services segment includes FedEx Office and Print Services, Inc. (“FedEx Office”), which provides document and business services and retail access to our package transportation businesses. |

| --- | --- | --- |

In 2017, TNT Express’s results are disclosed as a reportable segment and are also combined with the FedEx Express reportable segment to reflect a management reporting structure referred to as the FedEx Express group.

As described in more detail below, the integration of FedEx Express and TNT Express has proceeded in a manner such that in the first quarter of 2018 we will report one integrated FedEx Express segment (currently reported as the FedEx Express group).

For more information about the FedEx Express group and our reportable segments, please see “Business Segments.” For financial information concerning our reportable business segments, refer to the accompanying financial section, which includes management’s discussion and analysis of results of operations and financial condition and our consolidated financial statements.

\- 3 -

Our website is located at fedex.com.

Detailed information about our services, e-commerce tools and solutions, and citizenship efforts can be found on our website.

In addition, we make our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to such reports available, free of charge, through our website, as soon as reasonably practicable after they are filed with or furnished to the Securities and Exchange Commission (“SEC”).

The Investor Relations page of our website, http://investors.fedex.com, contains a significant amount of information about FedEx, including our SEC filings and financial and other information for investors.

The information that we post on our Investor Relations website could be deemed to be material information.

We encourage investors, the media and others interested in FedEx to visit this website from time to time, as information is updated and new information is posted.

The information on our website, however, is not incorporated by reference in, and does not form part of, this Annual Report on Form 10-K.

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

TNT Express Cyber-Attack

In June 2017, TNT Express worldwide operations were significantly affected due to the infiltration of an information technology virus known as Petya.

For further information about the cyber-attack, see the section titled “TNT Express Cyber-Attack” included in Item 7 of this Annual Report on Form 10-K (“Management’s Discussion and Analysis of Results of Operations and Financial Condition”).

Strategy

FedEx has developed a unique business strategy whereby our companies compete collectively, operate independently and manage collaboratively, which allows us to provide a broad portfolio of transportation, e-commerce and business services to our customers.

Our companies compete collectively by standing as one brand worldwide and speaking with one voice, they operate independently by focusing on our independent networks to meet distinct customer needs, and they manage collaboratively by working together to sustain loyal relationships with our workforce, customers and investors.

Our “compete collectively, operate independently, manage collaboratively” strategy allows us to manage our business as a portfolio, in the long-term best interest of the enterprise, not a particular operating company.

As a result, we base decisions on capital investment, expansion of delivery, information technology and retail networks, and service additions or enhancements upon achieving the highest overall long-term return on capital for our business as a whole.

For each FedEx company, we focus on making appropriate investments in the technology and assets necessary to optimize our long-term earnings performance and cash flow.

Our business strategy also provides flexibility in sizing our operating companies to align with varying macroeconomic conditions and customer demand for the market segments in which they operate, allowing us to leverage and manage change.

Volatility and uncertainty have become the norms in the global transportation market, and we are able to use our flexibility to accommodate changing conditions in the global economy.

To that end, we continue to modernize our aircraft fleet with more fuel efficient and lower-emission aircraft and expand and rationalize network capacity at FedEx Ground where we continue to see growing package volumes.

While our business strategy guides our operating companies to compete collectively and manage collaboratively, we continue to believe that operating independent networks, each focused on its own respective markets, results in optimal service quality and reliability from each business unit.

Each FedEx company focuses exclusively on the market sectors in which it has the most expertise and can be independently enhanced and managed to provide outstanding service to our customers.

FedEx and its subsidiaries are subject to legal proceedings and claims that arise in the ordinary course of their business.

For a description of material pending legal proceedings, see Note 18 of the accompanying consolidated financial statements.

\- 22 -

[removed: 10-K 1 d207174d10k.htm] FORM 10-K

[removed: ##### [Table of Contents](#toc)][added: TABLE OF CONTENTS]

[removed: UNITED STATES][added: UNITED STATES]

[removed: SECURITIES] [added: SECURITIES] AND EXCHANGE [removed: COMMISSION][added: COMMISSION]

[removed: Washington,] [added: Washington,] D.C. [removed: 20549][added: 20549]

[removed: (Mark One)][added: (Mark One)]

| | [removed: þ] [added: ☑] | [removed: ANNUAL] [added: ANNUAL] REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF [removed: 1934] [added: 1934] |

[removed: For] [added: For] the fiscal year ended May 31, [removed: 2016.][added: 2017.]

| | [removed: ¨] [added: ☐] | [removed: TRANSITION] [added: TRANSITION] REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF [removed: 1934] [added: 1934] |

[removed: For] [added: For] the transition period from to [removed: .][added: .]

[removed: Commission] [added: Commission] file number [removed: 1-15829][added: 1-15829]

[removed: FEDEX CORPORATION][added: FEDEX CORPORATION]

[removed: _(Exact] [added: (Exact] Name of Registrant as Specified in its [removed: Charter)_][added: Charter)]

| [removed: Delaware |] [added: Delaware] | [removed: 62-1721435] [added: 62-1721435] |

| [removed: _(State] [added: (State] or Other Jurisdiction [removed: of_ _Incorporation] [added: of Incorporation] or [removed: Organization)_ |] [added: Organization)] | [removed: _(I.R.S. Employer_ _Identification No.)_] [added: (I.R.S. Employer Identification No.)] |

| [removed: 942] [added: 942] South Shady Grove Road, Memphis, [removed: Tennessee |] [added: Tennessee] | [removed: 38120] [added: 38120] |

| [removed: _(Address] [added: (Address] of Principal Executive [removed: Offices)_ |] [added: Offices)] | [removed: _(ZIP Code)_] [added: (ZIP Code)] |

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

| Title of each class | [removed: |] Name of each exchange on which registered |

| [removed: Common] [added: Common] Stock, par value $0.10 per [removed: share |] [added: share] | [removed: New] [added: New] York Stock [removed: Exchange] [added: Exchange] |

| [removed: Floating] [added: Floating] Rate Notes due [removed: 2019 |] [added: 2019] | [removed: New] [added: New] York Stock [removed: Exchange] [added: Exchange] |

| [removed: 0.500%] [added: 0.500%] Notes due [removed: 2020 |] [added: 2020] | [removed: New] [added: New] York Stock [removed: Exchange] [added: Exchange] |

| [removed: 1.000%] [added: 1.000%] Notes due [removed: 2023 |] [added: 2023] | [removed: New] [added: New] York Stock [removed: Exchange] [added: Exchange] |

| [removed: 1.625%] [added: 1.625%] Notes due [removed: 2027 |] [added: 2027] | [removed: New] [added: New] York Stock [removed: Exchange] [added: Exchange] |

Securities registered pursuant to Section 12(g) of the Act: [removed: None][added: None]

Yes [removed: þ] [added: ☑] No [removed: ¨][added: ☐]

Yes [removed: ¨] [added: ☐] No [removed: þ][added: ☑]

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate website, if any, every Interactive [removed: Date] [added: 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).

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, [removed: or] a smaller reporting [added: company, or an emerging growth] company.

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

| Large accelerated filer [removed: þ |] [added: ☑] | Accelerated filer [removed: ¨ |] [added: ☐] | Non-accelerated filer [removed: ¨ |] [added: ☐] | Smaller reporting company [removed: ¨] [added: ☐] | [added: Emerging growth company ☐ |]

| | | (Do not check if a smaller reporting company) | | | [removed: | |]

The aggregate market value of the common stock held by non-affiliates of the Registrant, computed by reference to the closing price as of the last business day of the Registrant’s most recently completed second fiscal quarter, November 30, [removed: 2015,] [added: 2016,] was approximately [removed: $40.6] [added: $47.2] billion.

As of July [removed: 14, 2016, 265,524,323] [added: 13, 2017, 268,257,434] shares of the Registrant’s common stock were outstanding.

[removed: DOCUMENTS] [added: DOCUMENTS] INCORPORATED BY [removed: REFERENCE][added: REFERENCE]

Portions of the Registrant’s definitive proxy statement to be delivered to stockholders in connection with the [removed: 2016] [added: 2017] annual meeting of stockholders to be held on September [removed: 26, 2016] [added: 25, 2017] are incorporated by reference in response to Part III of this Report.

[removed: TABLE OF CONTENTS][added: | [Table of Contents](#FINANCIAL_SECTION_TABLE_CONTENTS) | 32 |]

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| [removed: [PART I](#tx207174_1) | | |] [added: PART I] | |

| [ITEM 1. [removed: Business](#tx207174_2) | |] [added: Business](#ITEM_1_BUSINESS)] | 3 | [removed: |]

10-K 1 fdx-10k_20170531.htm FORM 10-K

OR

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Yes ☑ No ☐

Yes ☑ No ☐

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.

Yes ☐ No ☑

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| [Other Financial Information](#QUANTITATIVE_QUALITATIVE_DISCLOSURES_ABO) | 126 |

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| [Exhibit 12](#COMPUTATION_RATIO_EARNINGS_TO_FIXED_CHAR) | |

| [Exhibit 24](#SIGNATURES) | |

| EX-101 INSTANCE DOCUMENT | |

| EX-101 SCHEMA DOCUMENT | |

| EX-101 CALCULATION LINK BASE DOCUMENT | |

| EX-101 DEFINITIONS LINK BASE DOCUMENT | |

| EX-101 LABELS LINK BASE DOCUMENT | |

| EX-101 PRESENTATION LINK BASE DOCUMENT | |

FORM 10-K

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OR

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| [Table of Contents](#tx207174_28) | | | 39 | |

| [Other Financial Information](#tx207174_31) | | | 147 | |

| |

| --- |

| [Exhibit 12](#tx207174_ex12) |

| [Exhibit 21](https://www.sec.gov/Archives/edgar/data/1048911/000119312516650267/d207174dex21.htm) |

| [Exhibit 23](https://www.sec.gov/Archives/edgar/data/1048911/000119312516650267/d207174dex23.htm) |

| [Exhibit 24](https://www.sec.gov/Archives/edgar/data/1048911/000119312516650267/d207174dex24.htm) |

| [Exhibit 31.1](https://www.sec.gov/Archives/edgar/data/1048911/000119312516650267/d207174dex311.htm) |

| [Exhibit 31.2](https://www.sec.gov/Archives/edgar/data/1048911/000119312516650267/d207174dex312.htm) |

| [Exhibit 32.1](https://www.sec.gov/Archives/edgar/data/1048911/000119312516650267/d207174dex321.htm) |

| [Exhibit 32.2](https://www.sec.gov/Archives/edgar/data/1048911/000119312516650267/d207174dex322.htm) |

| [EX-101 INSTANCE DOCUMENT](https://www.sec.gov/Archives/edgar/data/1048911/000119312516650267/fdx-20160531.xml) |

| [EX-101 SCHEMA DOCUMENT](https://www.sec.gov/Archives/edgar/data/1048911/000119312516650267/fdx-20160531.xsd) |

| [EX-101 CALCULATION LINK BASE DOCUMENT](https://www.sec.gov/Archives/edgar/data/1048911/000119312516650267/fdx-20160531_cal.xml) |

| [EX-101 DEFINITIONS LINK BASE DOCUMENT](https://www.sec.gov/Archives/edgar/data/1048911/000119312516650267/fdx-20160531_def.xml) |

| [EX-101 LABELS LINK BASE DOCUMENT](https://www.sec.gov/Archives/edgar/data/1048911/000119312516650267/fdx-20160531_lab.xml) |

| [EX-101 PRESENTATION LINK BASE DOCUMENT](https://www.sec.gov/Archives/edgar/data/1048911/000119312516650267/fdx-20160531_pre.xml) |

| ITEM 1. | BUSINESS |

Overview

FedEx Corporation (“FedEx”) provides a broad portfolio of transportation, e-commerce and business services through companies competing collectively, operating independently and managed collaboratively, under the respected FedEx brand.

These companies are included in the following business segments:

| • | | _FedEx Express_: Federal Express Corporation (“FedEx Express”) is the world’s largest express transportation company, offering time-definite delivery to more than 220 countries and territories, connecting markets that comprise more than 90% of the world’s gross domestic product. The FedEx Express segment also includes FedEx Trade Networks, Inc. (“FedEx Trade Networks”), which provides international trade services, specializing in customs brokerage and global ocean and air freight forwarding, FedEx SupplyChain Systems, Inc. (“FedEx SupplyChain”), which offers a range of supply chain solutions, and FedEx CrossBorder, LLC, formerly Bongo International, LLC (“FedEx CrossBorder”), which is a leader in cross-border enablement technology and solutions. |

| • | | _TNT Express_: Acquired near the end of our 2016 fourth quarter, TNT Express B.V., formerly TNT Express N.V. (“TNT Express”), is an international express transportation, small-package ground delivery and freight transportation company. TNT Express services are primarily classified by the speed, distance, weight and size of consignments. While a majority of its shipments are between businesses, TNT Express also offers business-to-consumer services to select key customers. TNT Express operates road transportation networks and delivers to over 200 countries. |

| • | | _FedEx Ground_: FedEx Ground Package System, Inc. (“FedEx Ground”) is a leading North American provider of small-package ground delivery services. FedEx Ground provides low-cost, day-certain service to any business address in the U.S. and Canada, as well as residential delivery to 100% of U.S. residences through its FedEx Home Delivery service. On August 31, 2015, our FedEx SmartPost business was merged into FedEx Ground. The FedEx SmartPost service specializes in the consolidation and delivery of high volumes of low-weight, less time-sensitive business-to-consumer packages using the U.S. Postal Service (“USPS”) for final delivery to any residential address or PO Box in the U.S. and remains an important component of our FedEx Ground service offerings. The FedEx Ground segment also includes GENCO Distribution System, Inc. (“GENCO”), which is a leading North American third-party logistics provider. |

| • | | _FedEx Freight_: FedEx Freight, Inc. (“FedEx Freight”) is a leading U.S. provider of less-than-truckload (“LTL”) freight services across all lengths of haul, offering: FedEx Freight Priority, when speed is critical to meet supply chain needs; and FedEx Freight Economy, when time can be traded for cost savings. The FedEx Freight segment also offers freight delivery service to most points in Canada, Mexico, Puerto Rico and the U.S. Virgin Islands, and includes FedEx Custom Critical, Inc. (“FedEx Custom Critical”), a leading North American provider of time-specific, critical shipment services. |

| • | | _FedEx Services_: FedEx Corporate Services, Inc. (“FedEx Services”) provides sales, marketing, information technology, communications and back-office functions that support our other companies. The FedEx Services segment includes FedEx Office and Print Services, Inc. (“FedEx Office”), which provides document and business services and retail access to our package transportation businesses. On May 31, 2016, FedEx TechConnect, Inc. (“FedEx TechConnect”) was merged into FedEx Services. Following the merger, the services previously provided by FedEx TechConnect, including customer service and billing and collection services for our U.S. customers and technical support services, are now performed by FedEx Services. |

\- 3 -

In 2017, TNT Express’s results will be disclosed as a reportable segment and combined with the FedEx Express reportable segment in a new reporting structure referred to as the FedEx Express Group.

For more information about the FedEx Express Group and our reportable segments, please see “Business Segments” beginning on page 9 of this Annual Report on Form 10-K.

For financial information concerning our reportable business segments, refer to the accompanying financial section, which includes management’s discussion and analysis of results of operations and financial condition and our consolidated financial statements.

Our website is located at _fedex.com_.

| ITEM 2. | PROPERTIES |

| --- | --- |

FedEx Express Group

_FedEx Express Segment_

FedEx Express’s principal owned and leased properties include its aircraft, vehicles, national, regional and metropolitan sorting facilities, administration buildings, FedEx Drop Boxes and data processing and telecommunications equipment.

\- 25 -

##### [Table of Contents](#toc)

_Aircraft and Vehicles_

As of May 31, 2016, FedEx Express’s aircraft fleet consisted of the following:

| | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Description | | Owned | | | | Leased | | | | Total | | | | Maximum Gross Structural Payload (Pounds per Aircraft)(1) | | |

| Boeing B777F | | | 27 | | | | 0 | | | | 27 | | | | 233,300 | |

| Boeing MD11 | | | 32 | | | | 24 | | | | 56 | | | | 192,600 | |

| Boeing MD10-30 | | | 12 | | | | 1 | | | | 13 | | | | 175,900 | |

| Boeing MD10-10 | | | 30 | | | | 0 | | | | 30 | | | | 137,500 | |

| Boeing 747-400 | | | 2 | | | | 0 | | | | 2 | | | | 261,400 | |

| Boeing 767F | | | 29 | | | | 3 | | | | 32 | | | | 127,100 | |

| Airbus A300-600 | | | 32 | | | | 36 | | | | 68 | | | | 106,600 | |

| Airbus A310-300 | | | 10 | | | | 0 | | | | 10 | | | | 83,170 | |

| Boeing B757-200 | | | 119 | | | | 0 | | | | 119 | (2) | | | 63,000 | |

| ATR 72-202/212 | | | 21 | | | | 0 | | | | 21 | | | | 17,970 | |

| ATR 42-300/320 | | | 26 | | | | 0 | | | | 26 | | | | 12,070 | |

| Cessna 208B | | | 239 | | | | 0 | | | | 239 | | | | 2,830 | |

| Total | | | 579 | | | | 64 | | | | 643 | | | | | |

| (1) | Maximum gross structural payload includes revenue payload and container weight. |

| (2) | Includes seven aircraft not currently in operation and awaiting completion of modification. |

| • | | The B777Fs are two-engine, wide-bodied cargo aircraft that have a longer range and larger capacity than any other aircraft we operate. |

| --- | --- | --- |

| • | | The MD11s are three-engine, wide-bodied aircraft that have a longer range and larger capacity than MD10s. |

| • | | The MD10s are three-engine, wide-bodied aircraft that have received an Advanced Common Flightdeck modification, which includes a conversion to a two-pilot cockpit, as well as upgrades of electrical and other systems. |

| • | | The B747s are four-engine, long-range, wide-bodied cargo aircraft. These aircraft are leased to and operated by a third party. |

| • | | The B767Fs are two-engine, long-range, wide-bodied cargo aircraft. |

| • | | The A300s and A310s are two-engine, wide-bodied aircraft that have a longer range and more capacity than B757s. |

| • | | The B757s are two-engine, narrow-bodied aircraft configured for cargo service. |

| • | | The ATR and Cessna 208 turbo-prop aircraft are leased to independent operators to support FedEx Express operations in areas where demand does not justify use of a larger aircraft. These operators use the aircraft to move FedEx packages to and from airports served by FedEx Express’s larger jet aircraft. The lease agreements generally call for the lessee to provide the flight crews, maintenance, fuel and other supplies required to operate the aircraft, and FedEx Express reimburses the lessee for these items. The lease agreements are for terms not exceeding one year and are generally cancelable upon 30 days’ notice. |

An inventory of spare engines and parts is maintained for each aircraft type.

At May 31, 2016, FedEx Express operated approximately 57,000 ground transport vehicles, including pickup-and-delivery vans, larger trucks called container transport vehicles and over-the-road tractors and trailers.

\- 26 -

_Aircraft Purchase Commitments_

FedEx Express Segment

FedEx Express’s principal owned and leased properties include its aircraft, vehicles, major sorting and handling facilities, administration buildings, FedEx Drop Boxes and data processing and telecommunications equipment.

Aircraft and Vehicles

As of May 31, 2017, FedEx Express’s aircraft fleet consisted of the following:

| Description | | Owned | | | | Leased | | | | Total | | | | Maximum Gross Structural Payload (Pounds per Aircraft)(1) | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Boeing 747-400 | | | 2 | | | | — | | | | 2 | | | | 261,400 | |

| Boeing B777F | | | 27 | | | | 3 | | | | 30 | | | | 233,300 | |

| Boeing MD11 | | | 41 | | | | 16 | | | | 57 | | | | 192,600 | |

| Boeing MD10-30 | | | 12 | | | | 1 | | | | 13 | | | | 175,900 | |

| Boeing MD10-10 | | | 26 | | | | — | | | | 26 | | | | 137,500 | |

| Boeing 767F | | | 43 | | | | 3 | | | | 46 | (2) | | | 127,100 | |

| Airbus A300-600 | | | 32 | | | | 36 | | | | 68 | | | | 106,600 | |

| Airbus A310-300 | | | 10 | | | | — | | | | 10 | | | | 83,170 | |

| Boeing B757-200 | | | 119 | | | | — | | | | 119 | | | | 63,000 | |

| ATR-72 | | | 21 | | | | — | | | | 21 | | | | 17,970 | |

| ATR-42 | | | 26 | | | | — | | | | 26 | | | | 12,070 | |

| Cessna 208B | | | 239 | | | | — | | | | 239 | | | | 2,830 | |

| Total | | | 598 | | | | 59 | | | | 657 | | | | | |

| (1) | Maximum gross structural payload includes revenue payload and container weight. |

| --- | --- |

| (2) | Includes one aircraft not currently in operation and undergoing modification. |

| --- | --- |

At May 31, 2017, FedEx Express operated approximately 58,000 vehicles and trailers.

Aircraft Purchase Commitments

The following table is a summary of the number and type of aircraft we were committed to purchase as of May 31, 2017, with the year of expected delivery:

| | | B767F(1) | | | | B777F(2) | | | | Total | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| 2018 | | | 14 | | | | 4 | | | | 18 | |

| 2019 | | | 15 | | | | 2 | | | | 17 | |

| 2020 | | | 16 | | | | 3 | | | | 19 | |

| 2021 | | | 10 | | | | 3 | | | | 13 | |

| 2022 | | | 10 | | | | 4 | | | | 14 | |

| Thereafter | | | 6 | | | | — | | | | 6 | |

| Total | | | 71 | | | | 16 | | | | 87 | |

| (1) | As of May 31, 2017, our obligation to purchase four of these aircraft was conditioned upon there being no event that causes FedEx Express or its employees to not be covered by the RLA. |

| --- | --- |

| (2) | As of May 31, 2017, our obligation to purchase six of these aircraft was conditioned upon there being no event that causes FedEx Express or its employees to not be covered by the RLA. |

| --- | --- |

As of May 31, 2017, deposits and progress payments of $729 million had been made toward aircraft purchases and other planned aircraft-related transactions.

Not applicable.

\- 23 -

EXECUTIVE OFFICERS OF THE REGISTRANT

Information regarding executive officers of FedEx is as follows (included herein pursuant to Instruction 3 to Item 401(b) of Regulation S-K and General Instruction G(3) of Form 10-K):

| | | |

| --- | --- | --- |

| Name and Office | Age | Positions and Offices Held and Business Experience |

| Frederick W. Smith Chairman and Chief Executive Officer | 72 | Chairman and Chief Executive Officer of FedEx since January 1998; Chairman of FedEx Express since 1975; President of FedEx from January 1998 to February 2017; Chairman, President and Chief Executive Officer of FedEx Express from April 1983 to January 1998; Chief Executive Officer of FedEx Express from 1977 to January 1998; and President of FedEx Express from June 1971 to February 1975. |

| | | |

| David J. Bronczek President and Chief Operating Officer | 63 | President and Chief Operating Officer of FedEx since February 2017; President and Chief Executive Officer of FedEx Express from January 2000 to February 2017; Executive Vice President and Chief Operating Officer of FedEx Express from January 1998 to January 2000; Senior Vice President — Europe, Middle East and Africa of FedEx Express from June 1995 to January 1998; Senior Vice President — Europe, Africa and Mediterranean of FedEx Express from June 1993 to June 1995; Vice President — Canadian Operations of FedEx Express from February 1987 to March 1993; and various management positions in sales and operations at FedEx Express from 1976 to 1987. Mr. Bronczek serves as a director of International Paper Company, an uncoated paper and packaging company. |

| | | |

| Robert B. Carter Executive Vice President — FedEx Information Services and Chief Information Officer | 58 | Executive Vice President — FedEx Information Services and Chief Information Officer of FedEx since January 2007; Executive Vice President and Chief Information Officer of FedEx from June 2000 to January 2007; Corporate Vice President and Chief Technology Officer of FedEx from February 1998 to June 2000; Vice President — Corporate Systems Development of FedEx Express from September 1993 to February 1998; Managing Director — Systems Development of FedEx Express from April 1993 to September 1993. Mr. Carter serves as a director of New York Life Insurance Company, a mutual life insurance company. |

| | | |

| Donald F. Colleran Executive Vice President — Chief Sales Officer | 61 | Executive Vice President — Chief Sales Officer of FedEx since January 2017; Executive Vice President — Global Sales of FedEx Services from 2006 to January 2017; Senior Vice President — International Sales from 2003 to 2006; Senior Vice President — Canada of FedEx Express from 2000 to 2003; Vice President — Sales/APAC from 1997 to 2000; and various management positions in sales from 1989 to 1997. |

| | | |

| David L. Cunningham, Jr. President and Chief Executive Officer, FedEx Express | 55 | President and Chief Executive Officer of FedEx Express since February 2017; Executive Vice President and Chief Operating Officer of FedEx Express from 2015 to February 2017; Regional President — APAC of FedEx Express from 1999 to 2015; Vice President — South Pacific of FedEx Express from 1997 to 1999; Vice President — Finance, Asia/Pacific of FedEx Express from 1994 to 1997; and various management positions in finance from 1989 to 1994. |

| | | |

| Michael L. Ducker President and Chief Executive Officer, FedEx Freight Corporation | 63 | President and Chief Executive Officer of FedEx Freight since January 2015; Executive Vice President and Chief Operating Officer and President of International for FedEx Express from December 2009 to January 2015; Executive Vice President and President of International of FedEx Express from December 1999 to December 2009; Senior Vice President of Asia/Pacific of FedEx Express from September 1995 to December 1999; and various management positions in operations at FedEx Express from 1978 to 1995. Mr. Ducker serves as a director of International Flavors & Fragrances Inc., a global creator of flavors and fragrances used in consumer products. |

| | | |

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| | | |

| --- | --- | --- |

| Name and Office | Age | Positions and Offices Held and Business Experience |

| Alan B. Graf, Jr. Executive Vice President and Chief Financial Officer | 63 | Executive Vice President and Chief Financial Officer of FedEx since January 1998; Executive Vice President and Chief Financial Officer of FedEx Express from February 1996 to January 1998; Senior Vice President and Chief Financial Officer of FedEx Express from December 1991 to February 1996; Vice President and Treasurer of FedEx Express from August 1987 to December 1991; and various management positions in finance and a senior financial analyst of FedEx Express from 1980 to 1987. Mr. Graf serves as a director of Mid-America Apartment Communities, Inc., a real estate investment trust that focuses on acquiring, constructing, developing, owning and operating apartment communities, and as a director of NIKE, Inc., a designer and marketer of athletic footwear, apparel, equipment and accessories for sports and fitness activities. |

| | | |

| Henry J. Maier President and Chief Executive Officer, FedEx Ground | 63 | President and Chief Executive Officer of FedEx Ground since June 2013; Executive Vice President — Strategic Planning and Communications of FedEx Ground from September 2009 to June 2013; Senior Vice President — Strategic Planning and Communications of FedEx Ground from December 2006 to September 2009; Vice President — Marketing of FedEx Services from March 2000 to December 2006; Vice President — Marketing and Communications of FedEx Ground from June 1999 to March 2000; and various management positions in logistics, sales, marketing and communications with RPS, Inc. and Caliber Logistics, Inc. from 1986 to 1999. Mr. Maier serves as a director of Kansas City Southern, a transportation holding company that has railroad investments in the U.S., Mexico and Panama. |

| | | |

| Christine P. Richards Executive Vice President, General Counsel and Secretary | 62 | Executive Vice President, General Counsel and Secretary of FedEx since June 2005; Corporate Vice President — Customer and Business Transactions of FedEx from March 2001 to June 2005; Senior Vice President and General Counsel of FedEx Services from March 2000 to June 2005; Staff Vice President — Customer and Business Transactions of FedEx from November 1999 to March 2001; Vice President — Customer and Business Transactions of FedEx Express from 1998 to November 1999; and various legal positions with FedEx Express from 1984 to 1998. |

| | | |

| Rajesh Subramaniam Executive Vice President — Chief Marketing and Communications Officer | 51 | Executive Vice President — Chief Marketing & Communications Officer of FedEx since January 2017; Executive Vice President — Marketing & Communications of FedEx Services from 2013 to January 2017; Senior Vice President — Marketing from 2006 to 2013; Senior Vice President — Canada of FedEx Express from 2003 to 2006; Vice President — Marketing/APAC of FedEx Express from 2000 to 2003; Vice President — APAC, EC & CS of FedEx Express from 1999 to 2000; various management and marketing analyst positions from 1991 to 1999. Mr. Subramaniam serves as a director of First Horizon National Corporation, a financial services holding company. |

Executive officers are elected by, and serve at the discretion of, the Board of Directors.

There is no arrangement or understanding between any executive officer and any person, other than a director or executive officer of FedEx or of any of its subsidiaries acting in his or her official capacity, pursuant to which any executive officer was selected.

There are no family relationships between any executive officer and any other executive officer or director of FedEx.

\- 25 -

PART II

FedEx’s common stock is listed on the New York Stock Exchange under the symbol “FDX.” As of July [removed: 14, 2016,] [added: 13, 2017,] there were [removed: 12,453] [added: 12,218] holders of record of our common stock.

| | | [removed: Sale Prices] [added: Sale Prices] | | | | | | | | | | |

| | | [removed: High] [added: High] | | | | [removed: Low] [added: Low] | | | | [removed: Dividend] [added: Dividend] | | |

| First Quarter | | | 185.19 | | | | [removed: 130.13] [added: 130.01] | | | | 0.25 | |

| Fiscal Year Ended May 31, [removed: 2015] [added: 2017] | | | | | | | | | | | | |

FedEx also paid a cash dividend on July [removed: 1, 2016 ($0.40] [added: 6, 2017 ($0.50] per share).

The following table provides information on FedEx’s repurchases of our common stock during the fourth quarter of [removed: 2016.][added: 2017.]

[removed: ISSUER] [added: ISSUER] PURCHASES OF EQUITY [removed: SECURITIES][added: SECURITIES]

As of July [removed: 14, 2016, 17.6] [added: 13, 2017, 15.8] million shares remained authorized for purchase under the January 2016 stock repurchase program, which is the only such program that currently exists.

| Fourth Quarter | | $ | 199.17 | | | $ | 182.89 | | | $ | 0.40 | |

| Third Quarter | | | 201.57 | | | | 183.87 | | | | 0.40 | |

| Second Quarter | | | 192.58 | | | | 158.20 | | | | 0.40 | |

| First Quarter | | | 169.57 | | | | 145.00 | | | | 0.40 | |

| Mar. 1-31, 2017 | | | 75,000 | | | $ | 189.09 | | | | 75,000 | | | | 16,735,000 | |

| Apr. 1-30, 2017 | | | 340,000 | | | | 190.29 | | | | 340,000 | | | | 16,395,000 | |

| May 1-31, 2017 | | | 375,000 | | | | 190.90 | | | | 375,000 | | | | 16,020,000 | |

| Total | | | 790,000 | | | $ | 190.47 | | | | 790,000 | | | | | |

\- 26 -

| | | | | | | | | | | | | |

| Fourth Quarter | | $ | 178.79 | | | $ | 163.60 | | | $ | 0.20 | |

| Third Quarter | | | 183.51 | | | | 163.57 | | | | 0.20 | |

| Second Quarter | | | 179.79 | | | | 148.37 | | | | 0.20 | |

| First Quarter | | | 155.31 | | | | 138.30 | | | | 0.20 | |

| | | | | | | | | | | | | | | | | |

| Mar. 1-31, 2016 | | | 1,570,000 | | | $ | 146.02 | | | | 1,570,000 | | | | 21,180,000 | |

| Apr. 1-30, 2016 | | | 1,043,000 | | | | 164.68 | | | | 1,043,000 | | | | 20,137,000 | |

| May 1-31, 2016 | | | 1,162,000 | | | | 162.36 | | | | 1,162,000 | | | | 18,975,000 | |

| Total | | | 3,775,000 | | | $ | 156.21 | | | | 3,775,000 | | | | | |

\- 33 -

##### [Table of Contents](#toc)

Selected financial data as of and for the five years ended May 31, [removed: 2016] [added: 2017] is presented on page [removed: 148] [added: 127] of this Annual Report on Form 10-K.

FedEx’s consolidated financial statements, together with the notes thereto and the report of Ernst & Young LLP dated July [removed: 18, 2016] [added: 17, 2017] thereon, are presented on pages [removed: 91] [added: 80] through [removed: 146] [added: 125] of this Annual Report on Form 10-K.

[removed: Management’s] [added: Management’s] Evaluation of Disclosure Controls and [removed: Procedures][added: Procedures]

Based on such evaluation, our principal executive and financial officers have concluded that such disclosure controls and procedures were effective as of May 31, [removed: 2016] [added: 2017] (the end of the period covered by this Annual Report on Form 10-K).

[removed: Assessment] [added: Assessment] of Internal Control Over Financial [removed: Reporting][added: Reporting]

Management’s report on our internal control over financial reporting is presented on page [removed: 89] [added: 78] of this Annual Report on Form 10-K.

The report of Ernst & Young LLP with respect to our internal control over financial reporting is presented on page [removed: 90] [added: 79] of this Annual Report on Form 10-K.

[removed: Changes] [added: Changes] in Internal Control Over Financial [removed: Reporting][added: Reporting]

[removed: Other than as explained below,] [added: During our fiscal quarter ended May 31, 2017,] no change occurred in our internal control over financial reporting [removed: during the fiscal year ended May 31, 2016,] that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

On May 25, 2016, we acquired TNT Express.

As permitted by Securities and Exchange Commission rules, we elected to exclude TNT Express from our assessment of internal control over financial reporting as of May 31, 2016.

Our integration of TNT Express’s systems and processes could cause changes to our internal controls over financial reporting in future periods.

[removed: PART III][added: PART III]

\- 27 -

\- 34 -

##### [Table of Contents](#toc)

Information regarding members of the Board of Directors, compliance with Section 16(a) of the Securities Exchange Act of 1934, as amended, FedEx’s Code of Business Conduct and Ethics and certain other aspects of FedEx’s corporate governance (such as the procedures by which FedEx’s stockholders may recommend nominees to the Board of Directors and information about the Audit Committee, including its members and our “audit committee financial expert”) will be presented in FedEx’s definitive proxy statement for its [removed: 2016] [added: 2017] annual meeting of stockholders, which will be held on September [removed: 26, 2016,] [added: 25, 2017,] and is incorporated herein by reference.

Information regarding director and executive compensation will be presented in FedEx’s definitive proxy statement for its [removed: 2016] [added: 2017] annual meeting of stockholders, which will be held on September [removed: 26, 2016,] [added: 25, 2017,] and is incorporated herein by reference.

Information regarding security ownership of certain beneficial owners and management and related stockholder matters, as well as equity compensation plan information, will be presented in FedEx’s definitive proxy statement for its [removed: 2016] [added: 2017] annual meeting of stockholders, which will be held on September [removed: 26, 2016,] [added: 25, 2017,] and is incorporated herein by reference.

Information regarding certain relationships and transactions with related persons (including FedEx’s policies and procedures for the review and preapproval of related person transactions) and director independence will be presented in FedEx’s definitive proxy statement for its [removed: 2016] [added: 2017] annual meeting of stockholders, which will be held on September [removed: 26, 2016,] [added: 25, 2017,] and is incorporated herein by reference.

Information regarding the fees for services provided by Ernst & Young LLP during [removed: 2016] [added: 2017] and [removed: 2015] [added: 2016] and the Audit Committee’s administration of the engagement of Ernst & Young LLP, including the Committee’s preapproval policies and procedures (such as FedEx’s Policy on Engagement of Independent Auditor), will be presented in FedEx’s definitive proxy statement for its [removed: 2016] [added: 2017] annual meeting of stockholders, which will be held on September [removed: 26, 2016,] [added: 25, 2017,] and is incorporated herein by reference.

[removed: PART IV][added: PART IV]

\- 28 -

\- 35 -

##### [Table of Contents](#toc)

[removed: (a)(1)] [added: (a)(1)] and (2) Financial Statements; Financial Statement [removed: Schedules][added: Schedules]

FedEx’s consolidated financial statements, together with the notes thereto and the report of Ernst & Young LLP dated July [removed: 18, 2016] [added: 17, 2017] thereon, are listed on [removed: pages 39 through 40] [added: page 32] and presented on pages [removed: 91] [added: 80] through [removed: 146] [added: 125] of this Annual Report on Form 10-K.

FedEx’s “Schedule II — Valuation and Qualifying Accounts,” together with the report of Ernst & Young LLP dated July [removed: 18, 2016] [added: 17, 2017] thereon, is presented on pages [removed: 150] [added: 129] through [removed: 151] [added: 130] of this Annual Report on Form 10-K.

[removed: (a)(3) Exhibits][added: (a)(3) Exhibits]

See the Exhibit Index on pages E-1 through [removed: E-15] [added: E-14] for a list of the exhibits being filed or furnished with or incorporated by reference into this Annual Report on Form 10-K.

[removed: ##### [Table of Contents](#toc)][added: FINANCIAL SECTION TABLE OF CONTENTS]

[removed: SIGNATURES][added: SIGNATURES]

| | [removed: |] FEDEX CORPORATION | | | [removed: | |]

| Dated: July [removed: 18, 2016 |] [added: 17, 2017] | By: | [removed: |] /s/ [removed: FREDERICK] [added: Frederick] W. [removed: SMITH |] [added: Smith] | |

| | | [removed: | |] Frederick W. Smith | | [removed: |]

| | | [removed: | |] [added: Chairman and] Chief Executive Officer | | [removed: |]

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons on behalf of the Registrant [added: and] in the capacities and on the dates indicated.

| [removed: Signature | | Capacity] [added: Signature] | [added: Capacity] | [removed: Date] [added: Date] |

| /s/ [removed: FREDERICK] [added: Frederick] W. [removed: SMITH |] [added: Smith] | [removed: Chairman, President] [added: Chairman] and Chief Executive Officer and Director [removed: _(Principal] [added: (Principal] Executive [removed: Officer)_ |] [added: Officer)] | July [removed: 18, 2016] [added: 17, 2017] |

| Frederick W. Smith | | | [removed: | |]

| /s/ [removed: ALAN] [added: Alan] B. [removed: GRAF, JR. |] [added: Graf, Jr.] | Executive Vice President and Chief Financial Officer [removed: _(Principal] [added: (Principal] Financial [removed: Officer)_ |] [added: Officer)] | July [removed: 18, 2016] [added: 17, 2017] |

| Alan B. Graf, Jr. | | | [removed: | |]

| /s/ [removed: JOHN] [added: John] L. [removed: MERINO |] [added: Merino] | Corporate Vice President and Principal Accounting Officer [removed: _(Principal] [added: (Principal] Accounting [removed: Officer)_ |] [added: Officer)] | July [removed: 18, 2016] [added: 17, 2017] |

| John L. Merino | | | [removed: | |]

| /s/ [removed: JAMES] [added: James] L. [removed: BARKSDALE * |] [added: Barksdale] | Director | [removed: |] July [removed: 18, 2016] [added: 17, 2017] |

| James L. Barksdale | | | [removed: | |]

| /s/ [removed: JOHN] [added: John] A. [removed: EDWARDSON * |] [added: Edwardson] | Director | [removed: |] July [removed: 18, 2016] [added: 17, 2017] |

| John A. Edwardson | | | [removed: | |]

| /s/ [removed: MARVIN] [added: Marvin] R. [removed: ELLISON * |] [added: Ellison] | Director | [removed: |] July [removed: 18, 2016] [added: 17, 2017] |

| Marvin R. Ellison | | | [removed: | |]

| /s/ [removed: JOHN] [added: John] C. [removed: INGLIS * |] [added: (“Chris”) Inglis] | Director | [removed: |] July [removed: 18, 2016] [added: 17, 2017] |

| John C. [added: (“Chris”)] Inglis | | | [removed: | |]

| /s/ [removed: KIMBERLY] [added: Kimberly] A. [removed: JABAL * |] [added: Jabal] | Director | [removed: |] July [removed: 18, 2016] [added: 17, 2017] |

| Kimberly A. Jabal | | | [removed: | |]

| /s/ [removed: SHIRLEY ANN JACKSON * |] [added: Shirley Ann Jackson] | Director | [removed: |] July [removed: 18, 2016] [added: 17, 2017] |

| Shirley Ann Jackson | | | [removed: | |]

| /s/ R. [removed: BRAD MARTIN * |] [added: Brad Martin] | Director | [removed: |] July [removed: 18, 2016] [added: 17, 2017] |

| R. Brad Martin | | | [removed: | |]

| /s/ [removed: JOSHUA COOPER RAMO * |] [added: Joshua Cooper Ramo] | Director | [removed: |] July [removed: 18, 2016] [added: 17, 2017] |

| Joshua Cooper Ramo | | | [removed: | |]

| /s/ [removed: SUSAN] [added: Susan] C. [removed: SCHWAB * |] [added: Schwab] | Director | [removed: |] July [removed: 18, 2016] [added: 17, 2017] |

| Susan C. Schwab | | | [removed: | |]

| /s/ [removed: DAVID] [added: David] P. [removed: STEINER * |] [added: Steiner] | Director | [removed: |] July [removed: 18, 2016] [added: 17, 2017] |

| David P. Steiner | | | [removed: | |]

| /s/ [removed: PAUL] [added: Paul] S. [removed: WALSH * |] [added: Walsh] | Director | [removed: |] July [removed: 18, 2016] [added: 17, 2017] |

| Paul S. Walsh | | | [removed: | |]

[removed: FINANCIAL SECTION TABLE OF CONTENTS][added: | [Overview of Financial Section](#OVERVIEW_FINANCIAL_SECTION) | 33 |]

| | [removed: |] PAGE | [removed: | |]

| [removed: [Management’s] [added: [Management’s] Discussion and Analysis of Results of Operations and Financial [removed: Condition](#tx207174_1a) | | |] [added: Condition](#MANAGEMENTS_DISCUSSION_ANALYSIS_RESULTS_)] | |

[removed: | [Overview of Financial Section](#tx207174_2a) | | | 41 | |][added: OVERVIEW OF FINANCIAL SECTION]

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| | | | |

Power of Attorney.

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Frederick W.

Smith, Alan B.

Graf, Jr. and John L.

Merino, and each of them, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with any and all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, and hereby grants to such attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

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| Signature | Capacity | Date |

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| [TNT Express Segment](#TNT_EXPRESS_SEGMENT) | 55 |

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| --- | --- | --- | --- | --- | --- | --- |

| | | | | Chairman, President and | | |

| | | | | |

| --- | --- | --- | --- | --- |

| /s/ GARY W. LOVEMAN * | | Director | | July 18, 2016 |

| Gary W. Loveman | | | | |

| *By: /s/ JOHN L. MERINO | | | | July 18, 2016 |

| Attorney-in-Fact | | | | |

| [Liquidity](#tx207174_11a) | | | 68 | |

| [Contingencies](#tx207174_19a) | | | 79 | |

OVERVIEW OF FINANCIAL SECTION

This reporting structure will continue throughout the integration of the TNT Express and FedEx Express businesses.

Once these businesses are integrated, our segment reporting structure could change based on how we are operating, managing and assessing the performance of the integrated businesses.

| | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

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| | | $ | 2,912 | | | $ | 1,886 | | | $ | 1,210 | | | $ | (1,948 | ) |

We acquired TNT Express on May 25, 2016.

In 2016, we repurchased an aggregate of $2.7 billion of our common stock through open market purchases.

While these charges significantly impacted our consolidated results, each of our transportation segments had strong performance during 2015.

All of our transportation segments experienced higher volumes, coupled with improved yields at FedEx Ground and FedEx Freight.

In addition, our results benefited from our profit improvement program commenced in 2013, the positive net impact of fuel, and a lower year-over-year impact from severe winter weather.

Our 2015 results include higher maintenance expense, primarily due to the timing of aircraft maintenance events at FedEx Express, and higher incentive compensation accruals, which were not affected by the mark-to-market accounting adoption, the aircraft impairment or the legal reserve adjustment described above.

In 2015, we repurchased an aggregate of $1.3 billion of our common stock through open market purchases.

Revenues increased 4% in 2015 due to improved performance at all our transportation segments.

At FedEx Ground, revenues increased 12% in 2015 due to higher volume from continued growth in both our FedEx Home Delivery service and commercial business, the inclusion of GENCO results from the date of acquisition and increased yields.

Revenues at FedEx Express were flat during 2015, as U.S. domestic and international package volume growth was offset by lower fuel surcharges and the negative impact of exchange rates.

| | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| (3) | Includes a $197 million charge in the fourth quarter to increase the legal reserve associated with the settlement of a legal matter at FedEx Ground to the amount of the settlement. |

Our operating expenses for 2016 include a $1.5 billion loss ($946 million, net of tax) associated with our annual MTM adjustment described above.

Our operating expenses for 2015 included a $2.2 billion loss ($1.4 billion, net of tax) associated with our mark-to-market pension accounting as described above.

Our 2015 operating expenses also increased primarily due to volume-related growth in salaries and employee benefits and purchased transportation expenses, higher maintenance and repairs expense and higher incentive compensation accruals.

However, operating margin benefited from revenue growth, our profit improvement program, which we commenced in 2013, the net impact of fuel (as further described below) and a lower year-over-year impact from severe winter weather.

These factors were partially offset by the positive impact of our voluntary buyout program completed in 2014.

Other expenses were driven 8% higher in 2015 due to the legal reserve increase discussed above and the inclusion of GENCO results.

Purchased transportation costs increased 6% in 2015 due to volume growth and higher service provider rates at FedEx Ground and volume growth, higher utilization and higher service provider rates at FedEx Freight.

The timing of aircraft maintenance events at FedEx Express primarily drove an increase in maintenance and repairs expense of 13% in 2015.