Interest Rates. Our consolidated financial statements do not include an attribution of FedEx’s third-party debt or interest expense from FedEx because we are not the legal obligor of the debt and the borrowings were not directly attributable to our business. We incurred indebtedness in contemplation of the Spin-Off, creating interest rate risk on the balance sheet. As discussed in Note 5, Long-Term Debt, to the accompanying consolidated financial statements, we have outstanding long-term debt (exclusive of finance leases) with an estimated fair value of $4.2 billion. Market risk for long-term debt is estimated as the potential decrease in fair value resulting from a hypothetical 10% increase in interest rates and amounts to approximately $91 million. The underlying fair value of our long-term debt was estimated based on quoted market prices or on the current rates offered for debt with similar terms and maturities. Foreign Currency. While we are a provider of transportation services within North America, the majority of our transactions during the periods presented in this Annual Report are denominated in U.S. dollars. The only foreign currency exchange rate risks to which we are exposed are the Canadian dollar and Mexican peso. The result of a hypothetical 10% adverse movement in the value of the dollar relative to the currencies in which our transactions are denominated would not be material to our financial position, results of operations, or cash flows, in all periods presented. In addition to the direct effects of changes in exchange rates, fluctuations in exchange rates also affect the volume of sales or the foreign currency sales price as competitors’ services become more or less attractive. The sensitivity analysis of the effects of changes in foreign currency exchange rates does not factor in a potential change in sales levels or local currency prices. Commodity. While we have market risk for changes in the price of vehicle fuel, this risk is largely mitigated by our indexed fuel surcharges. For additional discussion of our indexed fuel surcharges, see “— Results of Operations — Fuel.” -32- Table of Contents