FedEx Freight Holding Company, Inc. Index to Consolidated Financial Statements Page Report of Independent Registered Public Accounting Firm (PCAOB ID: 42) 34 Consolidated Balance Sheets 36 Consolidated Statements of Income 38 Consolidated Statements of Cash Flows 39 Consolidated Statements of Changes in Equity 40 -33- Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of FedEx Freight Holding Company, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of FedEx Freight Holding Company, Inc. (the Company) as of May 31, 2026 and 2025, the related consolidated statements of income, cash flows and changes in equity for each of the three years in the period ended May 31, 2026, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at May 31, 2026 and 2025, and the results of its operations and its cash flows for each of the three years in the period ended May 31, 2026, in conformity with U.S. generally accepted accounting principles. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates. Valuation of Self-Insurance Reserves Description of the Matter As disclosed in Note 2 to the consolidated financial statements, a portion of FedEx Corporation’s self-insurance reserve associated with workers’ compensation claims, vehicle accidents, and property and general business liabilities is attributable to the Company. These reserves are based on actuarially estimated claim costs incurred by the Company as of the balance sheet date. As of May 31, 2026, $330 million of self-insurance reserves attributable to the Company were assumed by FedEx Corporation and included in net transfers from (to) Parent in the consolidated statement of changes in equity. Auditing the estimated self-insurance claims costs attributable to the Company and assumed by FedEx Corporation for workers’ compensation claims and vehicle accidents is complex due to the significant measurement uncertainty inherent to the estimate, the application of management judgment, and the use of various actuarial methods. In addition, these estimates are sensitive due to the volume of claims and the amount of time that can pass before the final cost is known. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design of controls and tested the operating effectiveness of controls over management’s process for estimating self-insurance reserves, including the review of actuarial estimates and underlying data for determining the appropriate amount to be assumed by FedEx Corporation. -34- Table of Contents To evaluate the self-insurance claims costs attributable to the Company and assumed by FedEx Corporation, our audit procedures included, among others, testing the completeness and accuracy of the underlying claims data used in the actuarial analyses. We involved our actuarial specialists to assist in evaluating the actuarial methodologies and assumptions used by management and in independently developing a range of reasonable reserve estimates for comparison to management’s estimate. In addition, we compared the Company’s historical estimates of expected incurred losses to actual losses experienced during the current year. We also evaluated the Company’s disclosures in relation to these reserves. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2025. Memphis, Tennessee August 5, 2026 -35- Table of Contents FEDEX FREIGHT HOLDING COMPANY, INC. CONSOLIDATED BALANCE SHEETS (IN MILLIONS, EXCEPT SHARE DATA) May 31, 2026 2025 ASSETS CURRENT ASSETS Cash $ 251 $ 109 Receivables, less allowances of $204 and $14 1,154 132 Due from Parent 18 — Prepaid expenses and other 83 43 Total current assets 1,506 284 PROPERTY AND EQUIPMENT, AT COST Vehicles and trailers 3,850 3,964 Facilities and other 1,672 1,512 Ground support and dock equipment 628 621 Information technology 520 397 Total property and equipment, at cost 6,670 6,494 Less accumulated depreciation and amortization 3,747 3,714 Net property and equipment 2,923 2,780 OTHER LONG-TERM ASSETS Operating lease right-of-use assets, net 1,824 1,352 Goodwill 602 602 Other assets 29 4 Total other long-term assets 2,455 1,958 TOTAL ASSETS $ 6,884 $ 5,022 The accompanying notes are an integral part of these consolidated financial statements. -36- Table of Contents FEDEX FREIGHT HOLDING COMPANY, INC. CONSOLIDATED BALANCE SHEETS (IN MILLIONS, EXCEPT SHARE DATA) May 31, 2026 2025 LIABILITIES AND (DEFICIT) EQUITY CURRENT LIABILITIES Current portion of long-term debt $ 43 $ 7 Accrued salaries and employee benefits 389 227 Accounts payable 106 150 Due to Parent, net — 5 Operating lease liabilities 172 172 Accrued expenses 283 212 Total current liabilities 993 773 LONG-TERM LIABILITIES Long-term debt, less current portion 4,484 66 Deferred income taxes 220 235 Self-insurance accruals 13 315 Operating lease liabilities 1,666 1,188 Other liabilities 5 52 Total long-term liabilities 6,388 1,856 CONTINGENCIES (DEFICIT) EQUITY Common stock, $0.10 par value; 149,505,248 shares authorized, issued, and outstanding as of May 31, 2026 15 — Additional paid-in capital — — (Accumulated deficit) Retained earnings (509) 2,400 Accumulated other comprehensive loss (3) (7) Total (deficit) equity (497) 2,393 TOTAL LIABILITIES AND (DEFICIT) EQUITY $ 6,884 $ 5,022 The accompanying notes are an integral part of these consolidated financial statements -37- Table of Contents FEDEX FREIGHT HOLDING COMPANY, INC. CONSOLIDATED STATEMENTS OF INCOME (IN MILLIONS, EXCEPT PER SHARE DATA) Years ended May 31, 2026 2025 2024 Revenue $ 8,795 $ 8,892 $ 9,424 Operating expenses: Salaries and employee benefits 4,276 4,157 4,177 Purchased transportation 807 807 873 Rentals 308 295 287 Depreciation and amortization 512 471 455 Fuel 486 457 571 Maintenance and repairs 343 362 358 Separation and other costs 492 — — Other 1,031 939 950 Total operating expenses 8,255 7,488 7,671 Operating income 540 1,404 1,753 Other income (expense): Related party interest income 351 388 330 Interest expense (57) — — Interest income 41 — — Other, net 9 10 (4) Total other income 344 398 326 Income before income taxes 884 1,802 2,079 Provision for income taxes 229 456 505 Net income $ 655 $ 1,346 $ 1,574 Earnings per share: Basic $ 4.38 $ 9.00 $ 10.53 Diluted $ 4.38 $ 9.00 $ 10.53 Weighted-average shares outstanding: Basic 149,505,248 149,505,248 149,505,248 Diluted 149,505,248 149,505,248 149,505,248 The accompanying notes are an integral part of these consolidated financial statements. -38- Table of Contents FEDEX FREIGHT HOLDING COMPANY, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (IN MILLIONS) Years ended May 31, 2026 2025 2024 OPERATING ACTIVITIES Net income $ 655 $ 1,346 $ 1,574 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization 449 416 404 Provision for uncollectible accounts 91 19 11 Other noncash items including leases and deferred income taxes 237 228 157 Stock-based compensation 13 10 12 Separation and other costs, net of payments 135 — — Changes in assets and liabilities: Receivables (1,153) — (9) Other current assets (39) 16 22 Accounts payable and other liabilities (169) (255) (233) Due to Parent, net (32) (255) (397) Other, net (20) 6 — Cash provided by operating activities 167 1,531 1,541 INVESTING ACTIVITIES Capital expenditures (379) (437) (461) Proceeds from asset dispositions and other 16 52 58 Cash used in investing activities (363) (385) (403) FINANCING ACTIVITIES Principal payments on debt (26) (63) (1) Proceeds from debt issuances 4,271 — — Net transfers to Parent (3,910) (1,077) (1,125) Cash provided by (used in) financing activities 335 (1,140) (1,126) Effect of exchange rate changes on cash 3 (3) 1 Net increase in cash 142 3 13 Cash at beginning of period 109 106 93 Cash at end of period $ 251 $ 109 $ 106 The accompanying notes are an integral part of these consolidated financial statements. -39- Table of Contents FEDEX FREIGHT HOLDING COMPANY, INC. CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (IN MILLIONS) Common Stock Additional Paid-in Capital Retained Earnings (Accumulated Deficit) Accumulated Other Comprehensive Loss Total Balance at May 31, 2023 $ — $ — $ 1,674 $ (3) $ 1,671 Net income — — 1,574 — 1,574 Net transfers to Parent(1) — — (1,121) — (1,121) Balance at May 31, 2024 — — 2,127 (3) 2,124 Net income — — 1,346 — 1,346 Foreign currency translation adjustments — — — (4) (4) Net transfers to Parent(1) — — (1,073) — (1,073) Balance at May 31, 2025 — — 2,400 (7) 2,393 Net income — — 655 — 655 Foreign currency translation adjustments — — — 4 4 Recapitalization 15 — (15) — — Net transfers from (to) Parent(1) — — (3,549) — (3,549) Balance at May 31, 2026 $ 15 $ — $ (509) $ (3) $ (497) ___________________ (1)Refer to Note 10, Related Party Transactions, for additional information on Net transfers from (to) Parent. The accompanying notes are an integral part of these consolidated financial statements. -40- Table of Contents FEDEX FREIGHT HOLDING COMPANY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1: DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION BACKGROUND. FedEx Freight Holding Company, Inc. (“FedEx Freight,” the “Company,” “we,” or “our”) was incorporated in Delaware on July 14, 2025, for the purpose of receiving, pursuant to a reorganization, all of the outstanding equity interests of FedEx Freight, Inc., an indirect wholly owned subsidiary of FedEx Corporation (the “Parent” or “FedEx”). On June 1, 2026 (the “Distribution Date”), FedEx completed the previously announced spin-off of FedEx Freight (the “Spin-Off” or the “Separation”), which was tax-free for U.S. federal income tax purposes. The Separation was completed through the distribution of approximately 80.1% of the Company’s outstanding common stock to holders of record of FedEx common stock as of the close of business on May 15, 2026 (the “Distribution”), which resulted in the issuance of approximately 150 million shares of common stock inclusive of FedEx’s retained stake. Prior to the Distribution, the Company issued 100 shares of common stock in exchange for a subscription receivable of $10, all of which were held by FedEx and subsequently reclassified and converted into 149,505,248 shares of common stock as described below. As a result of the Distribution, the Company became an independent, publicly traded company. Our common stock is listed under the symbol "FDXF" on the New York Stock Exchange. Unless the context otherwise requires, references to “FedEx Freight,” the “Company,” “we,” or “our” refer to (i) FedEx Freight Holding Company, Inc. and its direct and indirect subsidiaries after giving effect to the reorganization completed on May 29, 2026 in preparation for the Spin-Off and (ii) FedEx Freight, Inc. when referencing the time period prior to the reorganization. DESCRIPTION OF BUSINESS. FedEx Freight is a leading North American provider of less-than-truckload (“LTL”) freight transportation services. We offer a range of services designed to meet the diverse needs of LTL shippers including time-critical transportation needs leveraging our advanced tracking capabilities and a comprehensive network of service centers and hubs that facilitate efficient delivery and pickup. FedEx Freight service offerings include priority services when speed is critical and economy services when time can be traded for savings. FedEx Freight is our sole reportable segment based upon the information used by our chief operating decision maker (“CODM”) in evaluating the performance of our business and allocating resources and capital. FedEx Freight, Inc. was created through several acquisitions by FedEx, including Viking Freight, Inc. in January 1998, American Freightways, Inc. in February 2001, and Watkins Motor Lines in May 2006. In April 2002, American Freightways, Inc. was renamed FedEx Freight East, Inc. and Viking Freight, Inc. was renamed FedEx Freight West, Inc. In May 2006, the Watkins Motor Lines business was renamed FedEx National LTL, Inc. In December 2008, FedEx Freight East, Inc. and FedEx Freight West, Inc. merged and became FedEx Freight, Inc., which was wholly owned by FedEx Freight Corporation. In January 2011, FedEx National LTL, Inc. merged into FedEx Freight, Inc. On June 1, 2024, FedEx Freight Corporation merged into FedEx Freight, Inc., and ownership of FedEx Custom Critical, Inc. (“FedEx Custom Critical”) was transferred from another FedEx subsidiary to FedEx Freight, Inc. On September 1, 2024, FedEx Freight Canada Holding Company, Inc., formerly a subsidiary of FedEx Freight Corporation, merged into FedEx Freight, Inc. and its subsidiary, FedEx Freight Canada Corp. (“FedEx Freight Canada”), became a subsidiary of FedEx Freight, Inc. On July 14, 2025, FedEx Freight Holding Company, Inc. was incorporated to serve as the ultimate parent company of FedEx Freight, Inc. in connection with the planned Spin-Off. Subsequently, on February 11, 2026, FDXF Holding Corporation was formed as an intermediate holding company to become a direct subsidiary of FedEx Freight Holding Company, Inc. On May 29, 2026, ownership of FedEx Freight, Inc. and its subsidiaries was transferred from another FedEx subsidiary to FDXF Holding Corporation. Immediately thereafter, ownership of FDXF Holding Corporation and its subsidiaries was transferred to FedEx Freight Holding Company, Inc. Collectively, these ownership transfers completed the reorganization. The consolidated financial statements include the consolidated results of operations, financial position, and cash flows of FedEx Freight Holding Company, Inc. and its subsidiaries for all periods presented since the reorganizations were transactions under common control. On May 27, 2026, the Company effected a recapitalization pursuant to an amendment to its certificate of incorporation, whereby our 100 issued and outstanding shares of common stock were reclassified and converted into 149,505,248 shares of common stock. As the common stock par value remained $0.10 per share, the recapitalization resulted in a corresponding increase in Common Stock in the accompanying Consolidated Balance Sheets. FISCAL YEARS. Except as otherwise specified, references to years indicate our fiscal year ended May 31, 2026, or ended May 31 of the year referenced. Effective for the period beginning June 1, 2026, the Company's fiscal year-end will change from May 31 to December 31. BASIS OF PRESENTATION. Throughout the periods included in these consolidated financial statements, FedEx Freight operated as part of FedEx and consisted of several legal entities. As stated above, FedEx Custom Critical’s and FedEx Freight Canada’s results have been included retrospectively for all periods presented as the contribution of these entities to FedEx Freight was a transaction under common control. Separate financial statements have not historically been prepared for FedEx Freight. These consolidated financial statements have been derived from FedEx’s historical accounting records as if FedEx Freight’s operations had been conducted independently from FedEx, using the historical accounting policies applied by FedEx. These consolidated financial statements were prepared on a stand-alone basis in accordance with U.S. generally accepted accounting principles (“GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). -41- Table of Contents FEDEX FREIGHT HOLDING COMPANY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The historical results of operations, financial position, and cash flows of FedEx Freight presented in these consolidated financial statements may not be indicative of what they would have been had FedEx Freight been an independent stand-alone entity, nor are they necessarily indicative of FedEx Freight’s future results of operations, comprehensive income, financial position, and cash flows. The consolidated financial statements include all revenue and costs directly attributable to FedEx Freight and an allocation of expenses related to certain FedEx corporate and shared functions as described in Note 10, Related Party Transactions. These expenses have been allocated to FedEx Freight based on direct usage or benefit where specifically identifiable, with the remainder allocated pro rata based on an applicable measure of total revenue, headcount, specific revenue by function, transaction volume, or other relevant measures. Management considers these allocations to be a reasonable reflection of the utilization of services or the benefit received. The consolidated financial statements include all of the assets and liabilities specifically attributable to FedEx Freight and its subsidiaries, all of which are wholly owned. All intercompany transactions and balances within FedEx Freight have been eliminated in these consolidated financial statements. As described in Note 10, Related Party Transactions, certain transactions between FedEx Freight and FedEx have been included in these consolidated financial statements. FedEx uses a centralized approach to cash management and financing of its domestic operations. The related balances were increased through daily cash deposits by the Company to FedEx and decreased by cash distributions and disbursements made by FedEx on behalf of FedEx Freight for operating expenses. This arrangement is not reflective of the manner in which we would have financed our domestic operations had we been a stand-alone business separate from FedEx during the periods presented. As a result of this arrangement, we were dependent on transfers of cash from FedEx to fund our operations in certain situations. The amounts associated with this arrangement are reported in the caption “(Accumulated deficit) Retained earnings” as a component of (deficit) equity in the accompanying Consolidated Balance Sheets and as a financing activity on the accompanying Consolidated Statements of Cash Flows. Refer to Note 10, Related Party Transactions, for further discussion. On May 29, 2026, the Company’s cash pooling arrangement with FedEx was terminated in preparation for the Spin-Off. FedEx’s third-party debt and related interest expense have not been attributed to FedEx Freight for the periods presented because FedEx’s borrowings are neither directly attributable to FedEx Freight nor is FedEx Freight the legal obligor of such borrowings. Refer to Note 13, Contingencies, for further discussion of our guarantees of FedEx’s third-party debt during the periods presented. In connection with the Spin-Off, we entered into a series of financing arrangements for which both FedEx and certain of the Company’s subsidiaries were jointly and severally liable until completion of the Spin-Off. Upon completion of the Spin-Off, FedEx will automatically be released from its guarantee of these financing arrangements, and FedEx Custom Critical will become a guarantor of the Notes. The borrowings under such financing arrangements are reflected in the “Long-term debt, less current portion” caption on the accompanying Consolidated Balance Sheets, with a corresponding amount reflected as a Net transfer to Parent. Refer to Note 5, Long-Term Debt, for further discussion on the composition of debt during the periods presented. FedEx and its affiliates provide a variety of services to FedEx Freight. Certain services and support functions such as information technology, marketing, sales, financial services, support services, customer experience, and various other FedEx shared services, are routinely allocated to FedEx Freight. In circumstances where charges were not historically billed to FedEx Freight by FedEx (or charges billed were not reflective of the full costs of doing business), those charges have been allocated to FedEx Freight and are reflected within the respective operating expense line item in the accompanying Consolidated Statements of Income. Where specific identification of charges was not practicable, a reasonable method of allocation was applied to those charges primarily based on a proportional share of total revenue. Refer to Note 10, Related Party Transactions, for further discussion. Where allocations of amounts were necessary, the allocations of these amounts were determined on a reasonable basis and the methods were applied consistently for the periods presented and reflect all of the costs of FedEx Freight. These allocated amounts are not necessarily indicative of the actual amounts that might have been incurred or realized had FedEx Freight operated as an independent, stand-alone entity during the periods presented, nor are they indicative of FedEx Freight’s future operations. Consequently, the consolidated financial statements do not necessarily represent the results the Company would have achieved if the Company had operated as a separate, stand-alone entity during the periods presented. It is not practicable to estimate actual costs that would have been incurred had the Company been a separate, stand-alone company during the periods presented. During the periods presented in these consolidated financial statements, the operations of FedEx Freight were included in the consolidated U.S. federal and state income tax returns filed by FedEx. Income tax expense and other income tax-related information contained in these consolidated financial statements are presented on a separate return basis as if FedEx Freight had filed its own tax returns. The deferred income taxes of FedEx Freight as presented in these consolidated financial statements, including tax attributes such as net operating losses or credit carryforwards, may not be indicative of the deferred tax assets available to FedEx Freight in the future. FedEx Freight’s uncertain tax positions recorded under the separate return method may also differ from those recorded in FedEx’s financial statements. Certain prior year balances have been reclassified to conform to current year presentation. -42- Table of Contents FEDEX FREIGHT HOLDING COMPANY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES REVENUE RECOGNITION. Satisfaction of Performance Obligation A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the basis of revenue recognition in accordance with GAAP. To determine the proper revenue recognition method for contracts, we evaluate whether two or more contracts should be combined and accounted for as one single contract and whether the combined or single contract should be accounted for as more than one performance obligation. For most of our contracts, the customer contracts with us to provide distinct transportation services within a single contract. Substantially all of our transportation service contracts with customers include only one performance obligation, the transportation services themselves. However, if a contract is separated into more than one performance obligation, we allocate the total transaction price to each performance obligation in an amount based on the estimated relative stand-alone selling prices of the promised services underlying each performance obligation. We frequently sell standard transportation services with observable stand-alone sales prices. In these instances, the observable stand-alone sales are used to determine the stand-alone selling price. For transportation services, revenue is recognized over time as we perform the services in the contract because of the continuous transfer of control to the customer. Our customers receive the benefit of our services as the goods are transported from one location to another. If we were unable to complete delivery to the final location, another entity would not need to reperform the transportation service already performed. As control transfers over time, revenue is recognized based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the services to be provided. We use an output method of progress based on time-in-transit because it depicts the transfer of control to the customer that occurs throughout the time-in-transit. Contract Modification Contracts are often modified to account for changes in the rates we charge our customers or to add distinct services. We consider contract modifications to exist when the modification either creates new enforceable rights and obligations or alters the existing arrangement. Contract modifications that add distinct services are treated as separate contracts. Contract modifications that do not add distinct services typically change the price of existing services. These contract modifications are accounted for prospectively as the remaining performance obligations are distinct. Variable Consideration Certain contracts contain customer incentives, guaranteed service refunds, and other provisions that can either increase or decrease the transaction price. These incentives are generally awarded based upon achieving certain performance metrics. We estimate variable consideration as the most likely amount to which we expect to be entitled. We include estimated amounts of revenue, which may be reduced by incentives or other contract provisions, in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Our estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based on an assessment of anticipated customer spending and all information (historical, current, and forecasted) that is reasonably available to us. Contract Assets 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., delivery has occurred). Contract assets are generally classified as current, and the full balance is converted each quarter based on the short-term nature of the transactions. The Company’s contract assets were historically included in the balances sold to FedEx pursuant to the Company’s historical factoring arrangement. On November 30, 2025, the Company’s factoring agreement with FedEx was terminated in preparation for the Spin-Off. Additionally, on November 18, 2025, the Company entered into a True Sale and Assignment Agreement with FedEx, effective December 1, 2025, under which the Company reacquired all outstanding U.S. trade receivables previously sold to FedEx. Refer to Note 10, Related Party Transactions, for additional information related to the Company’s participation in the historical factoring agreement with FedEx. Gross contract assets related to in-transit shipments totaled $150 million at May 31, 2026, and were not material at May 31, 2025. Contract assets net of deferred unearned revenue were $76 million at May 31, 2026, and were not material at May 31, 2025. Contract assets are included within “Receivables” in the accompanying Consolidated Balance Sheets. Payment Terms Certain of our revenue-producing transactions are subject to taxes and duties, such as sales tax, assessed by governmental authorities. We present these revenues net of tax. Under the typical payment terms of our customer contracts, the customer pays at periodic intervals (e.g., every 15 days, 30 days, 45 days) for shipments included on invoices received. It is not customary business practice to extend payment terms past 90 days, and as such, we do not have a practice of including a significant financing component within our revenue contracts with customers. -43- Table of Contents FEDEX FREIGHT HOLDING COMPANY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FACTORING AGREEMENTS. We historically sold certain of our trade accounts receivable on a non-recourse basis to FedEx under a legally enforceable factoring agreement. We accounted for these transactions as sales of receivables and reflected the transfer of receivables as a reduction of “Receivables” on the accompanying Consolidated Balance Sheets. The cash proceeds from the factoring agreement were presented as “Cash provided by operating activities” in the accompanying Consolidated Statements of Cash Flows. On November 30, 2025, the Company’s factoring agreement with FedEx was terminated in preparation for the Spin-Off. As a result, no customer receivables were sold during the second half of the year ended May 31, 2026. On November 18, 2025, the Company entered into a True Sale and Assignment Agreement with FedEx, effective December 1, 2025, under which the Company reacquired all outstanding U.S. trade receivables previously sold to FedEx under the Company’s factoring arrangement. See Note 10, Related Party Transactions, for additional information. CREDIT RISK. We routinely grant credit to many of our customers without collateral. The risk of credit loss in our non-factored trade receivables is substantially mitigated by our credit evaluation process, short collection terms, and our broad and diverse customer base. Allowances for potential credit losses are updated monthly and determined on accounts receivable using historical experience and the impact of current economic conditions. Historically, credit losses have been within management’s expectations. Activity related to receivables historically sold under the Company’s factoring agreement with FedEx is excluded from the changes in the allowance for credit losses and allowance for revenue adjustments for periods prior to December 1, 2025. Refer to Note 10, Related Party Transactions, for additional information related to the Company’s participation in the historical factoring agreement with FedEx and factoring fees incurred. Changes in the allowance for credit losses for the years ended May 31 were as follows: 2026 2025 2024 Allowance, beginning of period $ 12 $ 8 $ 8 Repurchases of previously factored accounts receivable 96 — — Current period provision for expected credit losses 91 19 11 Write-offs charged against allowance (62) (15) (11) Recoveries collected 3 — — Allowance, end of period $ 140 $ 12 $ 8 Changes in the allowance for revenue adjustments for the years ended May 31 were as follows: 2026 2025 2024 Allowance, beginning of period $ 2 $ 3 $ 3 Repurchases of previously factored accounts receivable 63 — — Current period provision for expected revenue adjustments 101 8 11 Write-offs charged against allowance (102) (9) (11) Allowance, end of period $ 64 $ 2 $ 3 Excluded from the table above are adjustments to revenue recognized prior to the termination of the factoring agreement. These revenue adjustments were $83 million in 2026, $111 million in 2025, and $235 million in 2024. Refer to Note 10, Related Party Transactions, for additional information related to the Company’s participation in the historical factoring agreement with FedEx. CASH. Cash held in FedEx Freight bank accounts as of May 31, 2026 and 2025 are included in the Consolidated Balance Sheets. FedEx reviews excess cash in certain jurisdictions that accumulates based on customer payer location and executes periodic dividend payments from its subsidiaries for company-wide use. In 2026, the Company made a $48 million dividend payment to FedEx from cash held in a foreign jurisdiction. Dividend payments to FedEx were not material in 2025 and 2024. See Note 1, Description of Business and Basis of Presentation, for discussion of our participation in FedEx’s centralized cash management program for domestic cash balances. On May 31, 2026, we distributed approximately $4.1 billion of cash, from our debt proceeds, to FedEx as part of the consideration for the assets to be contributed to us by FedEx in connection with the Spin-Off. PROPERTY AND EQUIPMENT. Expenditures for major additions, improvements, and equipment modifications are capitalized when such costs are determined to extend the useful life of the asset or are part of the cost of acquiring the asset. Maintenance and repairs costs are charged to expense as incurred. We capitalize certain direct internal and external costs associated with the development of internal-use software, including implementation of cloud computing service arrangements. Gains and losses on sales of property used in operations are classified within operating expenses and historically have been nominal. For financial reporting purposes, we record depreciation and amortization of property and equipment on a straight-line basis over the asset’s service life or related lease term, if shorter. For income tax purposes, depreciation is computed using accelerated methods when applicable. -44- Table of Contents FEDEX FREIGHT HOLDING COMPANY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The depreciable lives and net book value of our property and equipment are as follows (dollars in millions): Net Book Value at May 31, Range 2026 2025 Vehicles and trailers 3 – 15 years $ 1,582 $ 1,553 Facilities and other 10 – 33 years 956 890 Ground support and dock equipment 3 – 15 years 233 255 Information technology 3 – 7 years 152 82 Substantially all property and equipment have no material residual values. We periodically evaluate the estimated service lives and residual values used to depreciate our property and equipment. Finance right-of-use assets included in property and equipment were $258 million and $44 million as of May 31, 2026 and 2025, respectively. Depreciation and amortization expense, excluding amounts allocated to us by FedEx and gains and losses on sales of property and equipment used in operations, was $459 million in 2026, $456 million in 2025, and $444 million in 2024. Depreciation and amortization expense includes amortization of assets under finance leases. See Note 10, Related Party Transactions for amounts allocated to us by FedEx. Gains on sales of property and equipment used in operations were primarily due to facility closures. We incurred gains on sales of property and equipment of $10 million in 2026, $40 million in 2025, and $40 million in 2024, which are included in the “Depreciation and amortization” line item in the accompanying Consolidated Statements of Income. IMPAIRMENT OF LONG-LIVED ASSETS. Long-lived assets are reviewed for impairment when circumstances indicate the carrying value of an asset may not be recoverable. For assets that are to be held and used, an impairment is recognized when the estimated undiscounted cash flows associated with the asset or group of assets is less than their carrying value. If impairment exists, an adjustment is made to write the asset down to its fair value, and a loss is recorded as the difference between the carrying value and fair value. Fair values are determined based on quoted market values, discounted cash flows, or internal and external appraisals, as applicable. Assets to be disposed of are carried at the lower of carrying value or estimated net realizable value. We operate an integrated transportation network so cash flows for most of our operating assets to be held and used are assessed for impairment at the network level. GEOGRAPHIC INFORMATION. Non-current assets include property and equipment, operating lease right-of-use assets, and other long-term assets. Non-current assets in the United States were $4.6 billion at May 31, 2026, and $4.1 billion at May 31, 2025. Non-current assets in international jurisdictions were $150 million and $51 million at May 31, 2026 and 2025, respectively. GOODWILL. Goodwill is recognized for the excess of the purchase price over the fair value of tangible and identifiable intangible net assets of businesses acquired. Several factors give rise to goodwill in our acquisitions, such as the expected benefits from synergies of the combination and the existing workforce of the acquired business. Goodwill is reviewed at least annually for impairment. In our evaluation of goodwill impairment, we perform a qualitative assessment to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the qualitative assessment is not conclusive, we proceed to test goodwill for impairment, including comparing the fair value of the reporting unit to its carrying value (including attributable goodwill). Fair value for our reporting units is determined using an income or market approach incorporating market participant considerations and management’s assumptions on revenue growth rates, operating margins, discount rates, and expected capital expenditures. Fair value determinations may include both internal and third-party valuations. Unless circumstances otherwise dictate, we perform our annual impairment testing in the fourth quarter. We evaluated our reporting units during the fourth quarters of 2026, 2025, and 2024, and the estimated fair value of each reporting unit exceeded its carrying value as of the end of 2026, 2025, and 2024; therefore, no impairment was recorded during any of the years presented. The net carrying amount of goodwill was $602 million as of the end of 2026, 2025, and 2024. Accumulated goodwill impairment charges were $108 million for all periods presented. EMPLOYEE BENEFIT PLANS. Defined Benefit Plans For all periods presented, certain of our U.S. employees and retirees participated in defined benefit pension and postretirement healthcare plans sponsored by FedEx. Our participation in the defined benefit pension and postretirement healthcare plans sponsored by FedEx is accounted for under the multiemployer approach. Accordingly, we did not record an asset or liability to recognize the funded status of the plans in the accompanying Consolidated Balance Sheets as of May 31, 2026 and 2025. The accompanying Consolidated Statements of Income reflect a proportionate allocation of net periodic benefit costs for the multiemployer plans associated with FedEx Freight employees for all periods presented. These expenses are reflected within “Salaries and employee benefits” and “Other, net” as applicable in the accompanying Consolidated Statements of Income. Expenses associated with our -45- Table of Contents FEDEX FREIGHT HOLDING COMPANY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS employees’ participation in FedEx-sponsored defined benefit plans, as well as an allocation of shared employee net periodic benefit costs, were $34 million, $43 million, and $65 million in 2026, 2025, and 2024, respectively. Defined Contribution Plans Certain of our employees in Canada participate in a defined contribution plan sponsored by FedEx Freight while certain of our employees in the United States participate in a defined contribution plan sponsored by FedEx. All contributions in the United States are subject to maximum compensation and contribution limits for a tax-qualified defined contribution plan as prescribed by the Internal Revenue Service. Expenses associated with our employees’ participation in all defined contribution plans and an allocation of shared employee costs are reflected within “Salaries and employee benefits” in the accompanying Consolidated Statements of Income and were $146 million, $132 million, and $137 million in 2026, 2025, and 2024, respectively. INCOME TAXES. The Company’s income tax provision was prepared following the separate return method. The separate return method applies Accounting Standard Codification 740, Income Taxes, to the stand-alone financial statements of each member of the combined group as if the group members were a separate taxpayer. The calculation of the Company’s income taxes on a separate return basis requires a considerable amount of judgment and use of both estimates and allocations. Furthermore, the tax treatment of certain items reflected in the accompanying consolidated financial statements of the Company may not be reflected in the consolidated financial statements and tax returns of FedEx. Such items, including net operating losses, credit carry-forwards, and valuation allowances, may exist in the accompanying consolidated financial statements that may or may not exist in FedEx’s consolidated financial statements. As a result, the income taxes of the Company as presented in the accompanying consolidated financial statements may not be indicative of the income taxes that the Company will generate in the future. Furthermore, current obligations for taxes where the Company’s operations were included in tax returns with the activities of FedEx are deemed settled with FedEx as a component of “(Accumulated deficit) Retained earnings” for purposes of the accompanying consolidated financial statements. Deferred income taxes are provided for the tax effect of temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements. The liability method is used to account for income taxes, which requires deferred taxes to be recorded at the statutory rate expected to be in effect when the taxes are paid. Deferred income tax assets represent amounts available to reduce income taxes payable on taxable income in future years. Such assets arise because of temporary differences between the financial reporting and tax bases of assets and liabilities, as well as from net operating loss, capital loss, and tax credit carryforwards. We evaluate the recoverability of these future tax deductions and credits by assessing the adequacy of future expected taxable income from all sources, including reversal of taxable temporary differences, forecasted operating earnings, and available tax planning strategies. These sources of income rely heavily on estimates to make this determination and, as a result, there is a risk that these estimates will have to be revised as new information is received. To the extent we do not consider it more likely than not that a deferred tax asset will be recovered, a valuation allowance is established. We believe we will generate sufficient future taxable income to realize the tax benefits related to the remaining net deferred tax assets in the accompanying Consolidated Balance Sheets that are not subject to valuation allowances. We record the taxes for global intangible low-taxed income as a period cost. We recognize liabilities for uncertain income tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step requires us to estimate and measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. It is inherently difficult and subjective to estimate such amounts, as we must determine the probability of various possible outcomes. We reevaluate these uncertain tax positions on a quarterly basis or when new information becomes available to management. These reevaluations are based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, successfully settled issues under audit, and new audit activity. Such a change in recognition or measurement could result in the recognition of a tax benefit or an increase to the related provision. We classify interest related to income tax liabilities as interest expense, and if applicable, penalties are recognized as a component of income tax expense. The income tax liabilities and accrued interest and penalties that are due within one year of the balance sheet date are presented as current liabilities. The noncurrent portion of our income tax liabilities and accrued interest and penalties are included within “Other liabilities” in the accompanying Consolidated Balance Sheets. SELF-INSURANCE ACCRUALS. FedEx is self-insured for costs associated with workers’ compensation claims, vehicle accidents, property and cargo loss, general business liabilities, and benefits paid under employee health and disability programs. Accruals are primarily based on the actuarially estimated cost of claims incurred as of the balance sheet date. FedEx self-insures up to certain limits that vary by operating company and type of risk. Claims costs are recognized on a gross basis and a receivable is recorded for amounts covered by third-party insurance, as well as FedEx’s captive insurance program. Periodically, FedEx evaluates the level of insurance coverage and adjusts insurance levels based on risk tolerance and premium expense. A portion of FedEx’s self-insurance reserve is attributable to FedEx Freight, up to a certain limit, representing FedEx Freight’s obligation. As of May 31, 2026, FedEx assumed substantially all of the self-insurance reserves related to workers’ compensation claims, vehicle accidents, and property and general business liabilities attributable to FedEx Freight, amounting to $330 million. This amount is included in “Net transfers from (to) Parent” in the accompanying Consolidated Statements of Changes in Equity. FedEx Freight has retained self-insurance reserves related to cargo loss, certain employee group health claims, disability claims, and certain workers’ -46- Table of Contents FEDEX FREIGHT HOLDING COMPANY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS compensation claims due to local jurisdiction requirements. In April 2026, approximately $34 million of liabilities attributable to FedEx Freight for benefits paid under long-term disability programs were assumed by a third-party insurance company. Any remaining long-term disability benefits are expected to be assumed by a third-party insurance company by December 31, 2026. The current portion of self-insurance accruals related to FedEx Freight are included within “Accrued expenses” in the accompanying Consolidated Balance Sheets. Liabilities for the risks we retain are not discounted and are estimated, in part, by considering historical cost experience, demographic and severity factors, and judgments about current and expected levels of cost per claim and retention levels. Changes in these assumptions and factors can impact actual costs paid to settle the claims and those amounts may be different than our estimates. LEASES. We lease certain facilities and vehicles under operating and finance leases. A determination of whether a contract contains a lease is made at the inception of the arrangement. Our leased facilities include service centers and administrative space. Our leases generally contain options to extend or terminate the lease. We reevaluate our leases on a regular basis to consider the economic and strategic incentives of exercising the renewal options, and how they align with our operating strategy. Therefore, substantially all the renewal option periods are not included within the lease term and the associated payments are not included in the measurement of the right-of-use asset and lease liability as the options to extend are not reasonably certain at lease commencement. Short-term leases with an initial term of 12 months or less are not recognized in the right-of-use asset and lease liability within the accompanying Consolidated Balance Sheets. The lease liabilities are measured at the lease commencement date and determined using the present value of the minimum lease payments not yet paid and our incremental borrowing rate, which approximates the rate at which we would borrow, on a collateralized basis, over the term of a lease in the applicable currency environment. The interest rate implicit in the lease is generally not determinable in transactions where we are the lessee. The incremental borrowing rate applied to the measurement of lease liabilities for the periods presented is not necessarily indicative of the incremental borrowing rate incurred had FedEx Freight operated as an independent, stand-alone entity during the periods presented, nor is it indicative of FedEx Freight’s future incremental borrowing rate. For real estate leases, we account for lease components and non-lease components (such as common area maintenance) as a single lease component. Certain real estate leases require additional payments based on sales volume and index-based rate increases, as well as reimbursement for real estate taxes, common area maintenance, and insurance, which are expensed as incurred as variable lease costs. Certain leases contain fixed lease payments for items such as real estate taxes, common area maintenance, and insurance. These fixed payments are considered part of the lease payment and included in the right-of-use asset and lease liability. See Note 6, Leases, for additional information. FOREIGN CURRENCY TRANSLATION. Translation gains and losses of foreign operations that use local currencies as the functional currency are accumulated and reported, net of applicable deferred income taxes, as a component of “Accumulated other comprehensive loss” (“AOCL”) within equity in the accompanying Consolidated Balance Sheets. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the local currency are included within “Other, net” in the accompanying Consolidated Statements of Income and were immaterial for each period presented. STOCK-BASED COMPENSATION. Certain of our employees participate in the stock-based compensation plans sponsored by FedEx for the periods presented. The accounting guidance related to share-based payments requires recognition of compensation expense for stock-based awards using a fair value method. FedEx uses the Black-Scholes option pricing model to calculate the fair value of stock options. The value of restricted stock awards is based on the stock price of the award on the grant date. Expenses associated with our employees’ participation in the stock-based compensation plans and an allocation of shared employee costs are reflected within “Salaries and employee benefits” in the accompanying Consolidated Statements of Income and were $13 million in 2026, $10 million in 2025, and $12 million in 2024. As of May 31, 2026, there was $17 million of total unrecognized compensation cost, net of estimated forfeitures, related to unvested share-based compensation arrangements. This compensation expense is expected to be recognized on a straight-line basis over the remaining weighted-average vesting period of approximately 2 years. SEGMENT INFORMATION. As described in Note 1, Description of Business and Basis of Presentation, we operate as one reportable segment. John A. Smith, President and Chief Executive Officer of FedEx Freight, is our CODM and utilizes operating income as the primary measure of segment performance because it reflects the underlying business performance and provides the CODM with a basis for making resource allocation decisions. Operating income is defined as income before other income (expense) and income tax expense. Our CODM utilizes operating income in the annual budget and monthly forecasting processes, and considers forecast-to-actual variances on a monthly basis, when making resource allocation decisions. Our CODM regularly reviews significant expense details, which include salaries and employee benefits, purchased transportation, rentals, depreciation and amortization, fuel, maintenance and repairs, separation and other costs, and other operating expenses. These expense categories are included within operating expenses in the accompanying Consolidated Statements of Income and are used by the CODM in assessing performance and allocating resources. -47- Table of Contents FEDEX FREIGHT HOLDING COMPANY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINGENCIES. Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties, and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. Refer to Note 13, Contingencies, for further discussion. USE OF ESTIMATES. The preparation of our consolidated financial statements requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, the reported amounts of revenue and expenses, and the disclosure of contingent liabilities. Management makes its best estimate of the ultimate outcome for these items based on historical trends and other information available when the financial statements are prepared. Changes in estimates are recognized in accordance with the accounting rules for the estimate, which is typically in the period when new information becomes available to management. Areas where the nature of the estimate makes it reasonably possible that actual results could materially differ from amounts estimated include self-insurance accruals, retirement plan obligations, long-term incentive accruals, tax liabilities, loss contingencies, litigation claims, impairment assessments on long-lived assets (including goodwill) that rely on projections of future cash flows, purchase price allocations, and allocations of shared services and general corporate costs. NOTE 3: RECENT ACCOUNTING GUIDANCE New accounting rules and disclosure requirements can significantly affect our reported results and the comparability of our financial statements. We believe the following new accounting guidance is relevant to the readers of our financial statements. Recently Adopted Accounting Standards In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which expands disclosures in an entity’s income tax rate reconciliation table and regarding cash taxes paid both in the United States and foreign jurisdictions. We adopted this standard effective June 1, 2025 on a prospective basis. While the new accounting rules did not have any impact on our financial condition, results of operations, or cash flows, the adoption of the new accounting rules resulted in additional disclosures, which are included in Note 8, Income Taxes. New Accounting Standards and Accounting Standards Not Yet Adopted In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which clarifies the applicability of the interim reporting guidance, the types of interim reporting, and the form and content of interim financial statements in accordance with U.S. GAAP. Per the FASB, the amendment does not intend to change the fundamental nature of interim reporting or expand or reduce current interim disclosure requirements but rather provide clarity and improve navigability of the existing interim reporting requirements. The update will be effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. We are assessing the effect of this update on our consolidated financial statements and related disclosures. In September 2025, the FASB issued ASU 2025-06, Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40): Targeted Improvements to Accounting for Internal-Use Software, which updates the accounting for internal-use software by eliminating the concept of development stages. Under the updated guidance, software costs are capitalized once management has authorized and committed to funding the project, and it is probable the project will be completed and the software will be used to perform the function intended. The update will be effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Early adoption is permitted. We are assessing the effect of this update on our consolidated financial statements and related disclosures. In July 2025, the FASB issued ASU 2025-05, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which simplifies the application of the current expected credit loss model for current accounts receivable and current contract assets under Accounting Standards Codification 606. The update is effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted. We are assessing the effect of this update on our consolidated financial statements and related disclosures. In November 2024, the FASB issued ASU 2024-03, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which expands disclosures about specific expense categories at interim and annual reporting periods. The update will be effective for annual periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027. We are assessing the effect of this update on our consolidated financial statements and related disclosures. -48- Table of Contents FEDEX FREIGHT HOLDING COMPANY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 4: SELECTED CURRENT ASSETS AND LIABILITIES The components of selected current asset and liability captions at May 31 were as follows (in millions): 2026 2025 Prepaid expenses and other Prepaid taxes and licenses $ 22 $ 20 Prepaid maintenance and other 40 2 Spare parts, supplies, and fuel 21 21 $ 83 $ 43 Accrued salaries and employee benefits Salaries $ 174 $ 44 Employee benefits, including variable compensation 107 81 Compensated absences 108 102 $ 389 $ 227 Accrued expenses Self-insurance accruals $ 56 $ 103 Accrued interest payable 57 — Accrued separation costs 43 — Taxes other than income taxes 33 45 Other 94 64 $ 283 $ 212 NOTE 5: LONG-TERM DEBT The components of long-term debt (net of discounts and debt issuance costs), along with maturity dates for the years subsequent to May 31, 2026, are as follows (in millions): Interest Rate % Fiscal Year of Maturity May 31, 2026 2025 Unsecured debt: Term loan facility 4.91 % 2029 $ 599 $ — Senior unsecured note 4.30 % 2029 993 — Senior unsecured note 4.65 % 2031 991 — Senior unsecured note 4.95 % 2033 693 — Senior unsecured note 5.25 % 2036 988 — Total unsecured debt 4,264 — Finance lease liabilities 263 73 4,527 73 Less current portion(1) 43 7 $ 4,484 $ 66 (1)The current portion of long-term debt relates to the current portion of finance lease liabilities. Amounts included in “Current portion of long-term debt” and “Long-term debt, less current portion” related to finance lease liabilities for 2025 were reclassified from “Finance lease obligations” to conform to the current period presentation. This change had no impact on total current or long-term liabilities. In preparation for the Spin-Off, FedEx Freight Holding Company, Inc. issued $3.7 billion of senior unsecured notes (the “Notes”) and borrowed $0.6 billion under a delayed draw term loan agreement (the “Term Loan Facility”) as further described below. Substantially all of the proceeds from the Notes and Term Loan Facility were used to fund a portion of the distribution of approximately $4.1 billion in cash to FedEx at the closing of the Spin-Off, as further described below and in Note 2, Summary of Significant Accounting Policies. Obligations under the Notes and Term Loan Facility were jointly and severally guaranteed by FedEx and FedEx Freight, Inc. until completion of the Spin-Off, when FedEx will be automatically released from its guarantees and FedEx Custom Critical will join FedEx Freight, Inc. as a guarantor. At May 31, 2026, long-term debt, exclusive of finance leases, had a carrying value of $4.3 billion, a fair value of $4.2 billion, and an annualized weighted-average interest rate of 4.79%. The underlying fair value of our long-term debt was estimated based on quoted -49- Table of Contents FEDEX FREIGHT HOLDING COMPANY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS market prices or on 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. The following table sets forth the aggregate annual principal payments on our long-term debt due for the next five years ending May 31 and thereafter, excluding finance lease liabilities (in millions): Year Debt Principal 2027 $ — 2028 — 2029 1,600 2030 — 2031 1,000 Thereafter 1,700 Subtotal 4,300 Discount and debt issuance costs (36) Total $ 4,264 SENIOR UNSECURED NOTES. On February 5, 2026, FedEx Freight Holding Company, Inc. issued the Notes in an aggregate principal amount of $3.7 billion in preparation for the Spin-Off. Interest on each series of the Notes is payable semi-annually in arrears on March 15 and September 15 of each year, commencing on September 15, 2026. The Notes contain customary terms and covenants, including, but not limited to, provisions relating to the payment of principal and interest and events of default, and rank equally in right of payment with our existing and future unsecured indebtedness, liabilities, and other obligations, including borrowings under the Credit Facilities. We agreed to file with the SEC an exchange registration statement with respect to an exchange offer for the Notes and the related guarantees or a shelf registration statement for the resale of the Notes and the related guarantees. CREDIT FACILITIES. On January 15, 2026, FedEx Freight Holding Company, Inc. entered into (a) a five-year revolving credit facility in an aggregate committed amount of $1.2 billion (including a letter of credit sub-facility in an aggregate face amount of up to $50 million) (the “Revolving Credit Facility”) and (b) a three-year delayed draw Term Loan Facility in the aggregate principal amount of $0.6 billion (together with the Revolving Credit Facility, the “Credit Facilities”). The availability of borrowings under the commitments in respect of the Revolving Credit Facility was conditioned on the completion of the Spin-Off and the funding of the term loan facility was conditioned on the good faith anticipation of the Spin-Off occurring within five business days after such funding. Borrowings under the Credit Facilities bear interest at a rate per annum equal to either of the following, plus, in each case, an applicable margin: (a) the base rate or (b) a benchmark reference rate (initially based on a forward-looking term SOFR-based rate). The applicable margin for borrowings under the Credit Facilities ranges from 0.00% to 0.75% with respect to base rate borrowings and 1.00% to 1.75% with respect to benchmark rate borrowings, in each case, based on FedEx Freight’s credit rating. In addition to paying interest on outstanding principal under the Credit Facilities, we will pay (i) with respect to the Credit Facilities, customary agency fees; (ii) with respect to the Revolving Credit Facility, (a) a commitment fee in respect of the unutilized commitments thereunder and (b) customary letter of credit fees; and (iii) with respect to the Term Loan Facility, a ticking fee in respect of the undrawn commitments thereunder. The commitment fees in respect of the Revolving Credit Facility, and the ticking fees in respect of the Term Loan Facility, range from 0.09% to 0.25% of unutilized commitments thereunder per annum, based on our credit rating. The Credit Facilities require that we maintain, on a quarterly basis, beginning with the first full fiscal quarter ending after the Spin-Off, a total leverage ratio of no more than (a) in the case of any fiscal quarter ending prior to the date that is seven months after the date of the Spin-Off, 3.75:1.00 and (b) in the case of any fiscal quarter ending on or after the date that is seven months after the date of the Spin-Off, 3.50:1.00. Following the consummation of an acquisition for which the aggregate cash consideration is at least $0.5 billion, we may elect to increase the total leverage ratio to 4.00:1.00 with respect to the fiscal quarter during which such acquisition is consummated and the immediately following three fiscal quarters, provided that there must be at least two consecutive fiscal quarters between such elections during which no increase to the total leverage ratio is in effect. The Credit Facilities contain certain negative covenants that, among other things and subject to certain exceptions, restrict our ability to (i) incur additional indebtedness (including guarantees thereof); (ii) create liens on our assets; (iii) merge, consolidate, or enter into analogous transactions with other persons, or sell all or substantially all of our assets; and (iv) repurchase common stock, pay dividends, or make similar distributions of capital while an event of default has occurred and is continuing. The Credit Facilities also contain customary conditions precedent, representations and warranties, affirmative covenants, and events of default (including as the result of a change of control). The Credit Facilities allow us to voluntarily prepay outstanding loans under the Credit Facilities at any time without premium or penalty, other than customary “breakage” costs. We may borrow, prepay, and reborrow amounts under the Revolving Credit Facility. Amounts borrowed and repaid or prepaid under the Term Loan Facility may not be reborrowed. The Credit Facilities allow us to voluntarily reduce the unutilized portion of the commitments. -50- Table of Contents FEDEX FREIGHT HOLDING COMPANY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Any revolving loans outstanding under the Revolving Credit Facility will be due and payable in full on June 1, 2031. All outstanding amounts under the Term Loan Facility will be due and payable in full on May 25, 2029. As of May 31, 2026, $600 million was outstanding under the Term Loan Facility and no amounts were outstanding under the Revolving Credit Facility. The proceeds of the borrowings under the Revolving Credit Facility will be used for general corporate purposes and to pay fees and expenses related to the Spin-Off. Letters of credit issued under the Revolving Credit Facility will be used for general corporate purposes. NOTE 6: LEASES The following table is a summary of the components of net lease cost for the period ended May 31 (in millions): 2026 2025 2024 Operating lease cost $ 258 $ 245 $ 236 Finance lease cost: Amortization of right-of-use assets 16 3 2 Interest on lease liabilities 7 3 3 Total finance lease cost 23 6 5 Short-term lease cost 8 9 8 Variable lease cost 42 39 41 Net lease cost $ 331 $ 299 $ 290 Supplemental cash flow information related to leases for the period ended May 31 is as follows (in millions): 2026 2025 2024 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows paid for operating leases $ 250 $ 239 $ 232 Operating cash flows paid for interest portion of finance leases 7 3 3 Financing cash flows paid for principal portion of finance leases(1) 23 63 1 Right-of-use assets obtained in exchange for new operating lease liabilities 579 132 136 Right-of-use assets obtained in exchange for new finance lease liabilities 212 94 — (1)“Principal payments on debt” in financing activities of the accompanying Consolidated Statements of Cash Flows includes finance lease liabilities. Supplemental information related to leases as of May 31 is as follows (dollars in millions): 2026 2025 Weighted-average remaining lease term: Operating leases 9.2 8.3 Finance leases 6.1 9.1 Weighted-average discount rate: Operating leases 4.42 % 3.96 % Finance leases 4.89 % 5.50 % We utilize certain facilities and vehicles under finance and operating leases that expire at various dates through 2044. Our leased facilities include service centers and administrative space. -51- Table of Contents FEDEX FREIGHT HOLDING COMPANY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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 May 31, 2026 is as follows (in millions): Operating Leases Finance Leases Total Leases 2027 $ 261 $ 55 $ 316 2028 259 56 315 2029 238 56 294 2030 228 55 283 2031 216 32 248 Thereafter 1,162 55 1,217 Total lease payments 2,364 309 2,673 Less imputed interest (526) (46) (572) Present value of lease liability $ 1,838 $ 263 $ 2,101 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. Certain of our lease agreements include guarantees from FedEx. We and FedEx are currently using commercially reasonable efforts to terminate all such guarantees; however, some guarantees will remain in place following the Separation until terminated. See Note 10, Related Party Transactions, for further discussion. As of May 31, 2026, we have 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 $280 million and will commence when we gain beneficial access to the leased asset. Commencement dates are expected to be from 2027 to 2028. NOTE 7: COMPUTATION OF EARNINGS PER SHARE On May 27, 2026, the Company effected a recapitalization pursuant to an amendment to its certificate of incorporation, whereby our 100 issued and outstanding shares of common stock were reclassified and converted into 149,505,248 shares of common stock. As the common stock par value remained $0.10 per share, the recapitalization resulted in a corresponding increase in Common Stock in the accompanying Consolidated Balance Sheets. All historical share and per-share amounts presented herein have been retrospectively adjusted to reflect this recapitalization. There were no shares that had a dilutive effect during 2026, 2025, and 2024, and therefore the weighted-average common shares outstanding used to calculate both basic and diluted earnings per share are the same. The calculation of basic and diluted earnings per common share for the years ended May 31 was as follows (in millions, except share and per share amounts): 2026 2025 2024 Basic and diluted earnings per common share: Net earnings allocable to common shares $ 655 $ 1,346 $ 1,574 Weighted-average common shares 149,505,248 149,505,248 149,505,248 Basic and diluted earnings per common share $ 4.38 $ 9.00 $ 10.53 NOTE 8: INCOME TAXES The Company’s income tax provision was prepared using the separate return method. The separate return method applies the accounting guidance for income taxes to the stand-alone financial statements of each member of the consolidated group as if the group members were a separate taxpayer. The components of income before income taxes for the years ended May 31 are as follows (in millions): 2026 2025 2024 Domestic $ 829 $ 1,735 $ 1,995 Foreign 55 67 84 Total income before income taxes $ 884 $ 1,802 $ 2,079 -52- Table of Contents FEDEX FREIGHT HOLDING COMPANY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The components of the provision for income taxes for the years ended May 31 were as follows (in millions): 2026 2025 2024 Current provision Domestic: Federal $ 235 $ 363 $ 453 State and local 66 89 106 Foreign 18 21 22 Total current provision 319 473 581 Deferred benefit: Domestic: Federal (75) (15) (65) State and local (12) (1) (10) Foreign (3) (1) (1) Total deferred benefit (90) (17) (76) Total provision for income taxes $ 229 $ 456 $ 505 As discussed in Note 3, Recent Accounting Guidance, the Company prospectively adopted ASU 2023-09 effective for the fiscal year ended May 31, 2026. ASU 2023-09 requires disaggregation of information in the effective income tax rate reconciliation and income taxes paid disclosures. A reconciliation between the effective income tax rate and the U.S. statutory rate (in accordance with the new guidance) for May 31, 2026 (in millions) is as follows: 2026 Taxes computed at federal statutory rate $ 186 21.0 % State and local income taxes, net of federal benefit (1) 42 4.8 % Foreign tax effects 9 1.0 % Tax credits (6) (0.7) % Changes in valuation allowance 4 0.5 % Other, net (6) (0.7) % Income Tax Expense $ 229 25.9 % (1)State taxes in California, Florida, Georgia, Illinois, Indiana, Iowa, Michigan, New Jersey, and Pennsylvania made up the majority (greater than 50%) of the tax effect of this category. A reconciliation between the effective income tax rate and the U.S. statutory rate (as previously reported in accordance with guidance prior to the adoption of the new accounting standard) for May 31, 2025, and 2024 (in millions) is as follows: 2025 2024 Taxes computed at federal statutory rate $ 378 $ 438 Increases (decreases) in income tax from: Prior period adjustments 3 (10) State and local income taxes, net of federal benefit 69 75 Foreign operations 7 6 Tax credits (4) (6) Valuation allowance 3 2 Provision for income taxes $ 456 $ 505 Effective income tax rate 25.3 % 24.3 % The Company’s effective income tax rate for the years ended May 31, 2026, 2025, and 2024, varied from the statutory tax rate primarily due to the impact of U.S. state and local income taxes. We regularly assess the need for cash in the United States, as well as in our foreign subsidiaries, and will occasionally repatriate back to the United States excess earnings above working capital needs that can be repatriated with an immaterial tax cost. We assert all -53- Table of Contents FEDEX FREIGHT HOLDING COMPANY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS other historical earnings in our foreign subsidiaries are permanently reinvested and therefore no deferred taxes or withholding taxes have been provided. Determination of the amount of unrecognized deferred income tax liability related to any remaining undistributed foreign earnings and additional outside basis differences is not practicable. The significant components of deferred tax assets and liabilities as of May 31 were as follows (in millions): 2026 2025 Deferred tax asset Deferred tax liabilities Deferred tax asset Deferred tax liabilities Property, equipment, leases and intangibles $ 503 $ (825) $ 375 $ (758) Employee benefits 84 — 52 — Self-insurance accruals 16 — 111 — Other 30 (22) 20 (33) Net operating loss/credit carryforwards 12 — 8 — Valuation allowances (12) — (8) — $ 633 $ (847) $ 558 $ (791) The net deferred tax liabilities as of May 31 have been classified in the balance sheet as follows (in millions): 2026 2025 Noncurrent deferred tax assets(1) $ 6 $ 2 Noncurrent deferred tax liabilities (220) (235) $ (214) $ (233) (1)Noncurrent deferred tax assets are included within “Other Assets” in the accompanying Consolidated Balance Sheets. The valuation allowances primarily represent amounts reserved for foreign tax credits, which expire over varying periods starting in 2034. We establish valuation allowances if it is more likely than not that deferred income tax assets will not be realized. We believe that we will generate sufficient future taxable income to realize the tax benefits related to the remaining net deferred tax assets in our Consolidated Balance Sheets. The net change in the total valuation allowance for the year ended May 31, 2026, and May 31, 2025, was $4 million and $3 million, respectively, which primarily relates to foreign tax credits. Our liabilities for uncertain tax positions are less than $1 million for 2026, 2025, and 2024 associated with positions that, if favorably resolved, would provide a benefit to our income tax expense. We classify interest related to income tax liabilities as interest expense and, if applicable, penalties are recognized as a component of income tax expense. The balance of accrued interest and penalties is immaterial for all periods presented. It is difficult to predict the ultimate outcome or the timing of resolution for tax positions. Changes may result from the conclusion of ongoing audits, appeals, or litigation in state, local, federal, and foreign tax jurisdictions, or from the resolution of various proceedings between U.S. and foreign tax authorities. It is reasonably possible that the amount of the benefit with respect to certain of our unrecognized tax positions will increase or decrease within the next 12 months. However, estimates of the amounts or ranges for individual matters where a material change is reasonably possible cannot be made. We believe we have recorded adequate amounts of tax reserves, including interest and penalties, for any adjustments that may occur. Income taxes paid (net of refunds received) consisted of the following for year ended May 31 (in millions): 2026 U.S. federal $ — Pennsylvania 2 Other U.S. state & local 9 Canada 15 Mexico 2 Other foreign 1 Total income taxes paid, net of refunds $ 29 The consolidated financial statements reflect income taxes paid to U.S. states and foreign jurisdictions where the Company does not file a consolidated tax return with FedEx. -54- Table of Contents FEDEX FREIGHT HOLDING COMPANY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 9: DISAGGREGATED REVENUE The following table presents revenue by service type and geographic information for the years ended May 31 (in millions): 2026 2025 2024 Revenue by service type: Priority $ 5,560 $ 5,584 $ 5,957 Economy 2,827 2,891 3,034 Other 408 417 433 Total Revenue $ 8,795 $ 8,892 $ 9,424 Geographical information: U.S. $ 8,552 $ 8,645 $ 9,158 International 243 247 266 Total Revenue $ 8,795 $ 8,892 $ 9,424 International revenue includes shipments that either originate in or are destined to locations outside the United States, which could include U.S. payors. NOTE 10: RELATED PARTY TRANSACTIONS Related Party Revenue and Purchases. FedEx Freight often provides transportation services to and receives services from other FedEx businesses. The nature of the services provided is similar to the services that FedEx Freight provides to its third-party customers. Revenue for these services was $158 million in 2026, $171 million in 2025, and $136 million in 2024. The costs for these services are reflected in the “Purchased transportation” line item in the accompanying Consolidated Statements of Income and were $6 million in 2026, $10 million in 2025, and $13 million in 2024. All significant intercompany transactions between FedEx Freight and FedEx, other than those pertaining to centralized cash management, have been included in these accompanying consolidated financial statements and are considered to have been effectively settled at the time the transactions were recorded or are expected to be settled for cash. These amounts are included in the accompanying Consolidated Balance Sheets in the captions “Due from Parent” and “Due to Parent, net.” The total net effect of the settlement of these intercompany transactions is reflected in the accompanying Consolidated Statements of Cash Flows as an operating activity. Shared Services and Corporate Allocations. Prior to the Spin-Off, FedEx Freight operated as part of FedEx and not as a stand-alone company. Accordingly, FedEx has historically allocated certain shared services and general corporate costs to FedEx Freight that are reflected as expenses in these accompanying consolidated financial statements including, but not limited to, information technology, marketing, sales, financial services, support services, customer experience, and corporate executives’ salaries and employee benefits. It is not practicable to estimate actual costs that would have been incurred had FedEx Freight been an independent, stand-alone company during the periods presented. The allocation methods used include specific identification when available or a pro rata basis of total revenue, headcount, specific revenue by function, transaction volume, or other relevant measures. Management considers these allocations to be a reasonable reflection of the utilization of services by, or the benefits provided to, FedEx Freight. Allocations for shared services and general corporate costs provided to FedEx Freight are reflected in the accompanying Consolidated Statements of Income as follows (in millions): Years ended May 31, 2026 2025 2024 Operating expenses: Salaries and employee benefits $ 285 $ 292 $ 253 Rentals 7 8 8 Depreciation and amortization 63 55 51 Maintenance and repairs 29 29 28 Other 232 244 233 Total operating expenses $ 616 $ 628 $ 573 Transaction Costs. Costs of $252 million were recognized by FedEx in connection with the Spin-Off and $492 million of Spin-Off-related costs were recognized by FedEx Freight for the year ended May 31, 2026. These costs include legal, consulting, and advisory services and an employee incentive plan associated with the Spin-Off and were recorded in the "Separation and other costs" line item in -55- Table of Contents FEDEX FREIGHT HOLDING COMPANY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS these accompanying Consolidated Statements of Income. Approximately $56 million of costs related to the Spin-Off were incurred by FedEx in the year ended May 31, 2025. None of these costs were allocated to FedEx Freight’s consolidated financial statements. Employee Benefits. Refer to Note 2, Summary of Significant Accounting Policies, for discussion of FedEx Freight’s participation in defined benefit, defined contribution, and stock-based compensation plans managed by FedEx. Cash Management. The Company participated in FedEx’s centralized cash management program. Interest income received from FedEx for the cumulative amount of cash swept from FedEx Freight to FedEx is included in “Related party interest income” in the accompanying Consolidated Statements of Income and was $351 million in 2026, $388 million in 2025, and $330 million in 2024. On May 29, 2026, the Company's cash pooling arrangement with FedEx was terminated in preparation for the Spin-Off. See Note 1, Description of Business and Basis of Presentation, for additional information related to FedEx’s centralized cash management program. Receivables. The Company historically factored certain U.S. trade receivables through another subsidiary of FedEx on a non-recourse basis pursuant to a factoring agreement. On November 30, 2025, the Company's factoring agreement with FedEx was terminated in preparation for the Spin-Off. As a result, no customer receivables were sold during the second half of the year ended May 31, 2026. The Company sold customer receivables of $4.1 billion in 2026, $8.3 billion in 2025, and $8.8 billion in 2024. Prior to the termination of the factoring agreement, these receivables were not recognized on the Company's Consolidated Balance Sheets. We incurred finance charges of $70 million in 2026, $151 million in 2025, and $150 million in 2024, which are included in the “Other” line item in the accompanying Consolidated Statements of Income. There is no guarantee that the Company, if it desires to enter into a similar financing arrangement, will be able to enter into such an arrangement with a third-party or be able to sell similar volumes of U.S. trade receivables compared to the amounts historically sold to FedEx. On November 18, 2025, the Company entered into a True Sale and Assignment Agreement with FedEx, effective December 1, 2025, under which the Company reacquired all outstanding U.S. trade receivables previously sold to FedEx under the Company's factoring arrangement described above for approximately $1.0 billion. This transaction was structured as a true sale without recourse, resulting in the Company resuming ownership and collection of its outstanding receivable balances. Additionally, as a result of this transaction and the termination of the Company's factoring agreement, accounts receivable balances presented in the accompanying Consolidated Balance Sheets as of May 31, 2026 have materially increased compared to the accounts receivables balances as of May 31, 2025. Leases. FedEx is a named guarantor for certain of FedEx Freight’s third-party lease agreements for the periods presented. In 2025, we began the process of releasing FedEx as a guarantor to our lessors in contemplation of the Spin-Off. We and FedEx are currently using commercially reasonable efforts to terminate all such guarantees; however, some guarantees will remain in place following the Spin-Off until terminated. Net Transfers to Parent. As described in Note 1, Description of Business and Basis of Presentation, net transfers to Parent represents FedEx’s historical investment in FedEx Freight and includes the net effect of transactions with and allocations from FedEx, FedEx Freight's cash distribution to FedEx, and FedEx Freight's accumulated earnings. Net transfers to and from Parent are included within “Net Transfers to Parent” in the accompanying Consolidated Statements of Changes in Equity and Consolidated Statements of Cash Flows for the years ended May 31 as follows (in millions): 2026 2025 2024 Cash pooling and general financing activities / other $ 16 $ (1,102) $ (1,185) Transfer of net assets from FedEx, net 357 — — Cash distribution to FedEx (4,122) — — Corporate and other allocations 54 36 12 Income taxes 146 (7) 52 Total net transfers to Parent per Consolidated Statements of Changes in Equity (3,549) (1,073) (1,121) Stock-based compensation – equity-classified awards (4) (4) (4) Transfer of net assets from FedEx, net $ (357) — — Total net transfers to Parent per Consolidated Statements of Cash Flows $ (3,910) $ (1,077) $ (1,125) NOTE 11: SUPPLEMENTAL CASH FLOW INFORMATION Cash paid for interest expense and income taxes for the years ended May 31 was as follows (in millions): 2026 2025 2024 Cash payments for: Interest (net of capitalized interest) $ 7 $ 3 $ 3 Income taxes 29 36 37 -56- Table of Contents FEDEX FREIGHT HOLDING COMPANY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 12: GUARANTEES AND INDEMNIFICATIONS In conjunction with certain transactions, primarily the lease, sale, or purchase of real estate, operating assets, or services in the ordinary course of business, we may provide routine guarantees or indemnifications (e.g., environmental, fuel, tax, and intellectual property infringement), the terms of which range in duration, and often they are not limited and have no specified maximum obligation. The overall maximum potential amount of the obligation under such guarantees and indemnifications cannot be reasonably estimated. Historically, we have not been required to make significant payments under our guarantee or indemnification obligations and no material amounts have been recognized in our financial statements for the underlying fair value of these obligations. NOTE 13: CONTINGENCIES Historical Guarantees of Parent’s Third-Party Debt. FedEx Freight was a named guarantor for the majority of FedEx’s third-party debt arrangements for the periods presented. We have not recognized a loss contingency in relation to these guarantees as FedEx has not experienced events of default and has not demonstrated indicators that it will be unable to settle its debt through its current operating cash flows. In 2025, FedEx began the process of releasing FedEx Freight as a guarantor in contemplation of the Spin-Off. Upon the completion of the Spin-Off, all guarantees of FedEx debt will be released, with one exception, for which FedEx will indemnify FedEx Freight from any liability arising from such guarantee. Other Matters. FedEx Freight is subject to 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, as well as other 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. Environmental Matters. SEC regulations require us to disclose certain information about proceedings arising under federal, state, or local environmental provisions involving a governmental authority as a party if we reasonably believe that such proceedings may result in monetary sanctions above a stated threshold. Pursuant to the SEC regulations, we use a threshold of $1 million 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. NOTE 14: SUBSEQUENT EVENTS Completion of the Spin-Off. Immediately prior to the Spin-Off on June 1, 2026, FedEx transferred to us pension plan obligations associated with our active U.S. employees, which were measured using an actuarial valuation at the date of legal transfer. A portion of the related plan assets were also transferred to us based on the requirements of Section 414(l) of the Code and applicable other local regulations. Remaining plan assets will be transferred to us in a reasonable amount of time after the Spin-Off based on regulatory requirements. The net pension liability transferred to us, including the remaining plan asset transfers, is expected to be immaterial. On June 1, 2026, the Spin-Off was completed through the Distribution of approximately 80.1% of outstanding shares of the Company to FedEx stockholders who held shares of FedEx common stock as of the close of business on May 15, 2026, the record date for the Distribution. As a result of the Distribution, FedEx stockholders, as of the record date, received one share of the Company’s stock for every two shares of FedEx common stock. On June 1, 2026, the Company began trading as an independent, publicly traded company under the stock symbol “FDXF” on the New York Stock Exchange. In connection with the Spin-Off, the Company entered into several agreements that provide the framework for the relationship with FedEx following the Spin-Off, including but not limited to the following: •Separation and Distribution Agreement – sets forth the principal actions to be taken in connection with the Spin-Off, including the transfer of assets and assumption of liabilities, and establishes certain rights and obligations between the Company and FedEx following the Distribution, including procedures with respect to claims subject to indemnification and related matters. •Transition Services Agreement – governs all matters relating to the provision of services between the Company and FedEx on a transitional basis. The Company will receive certain transition services from FedEx following the Spin-Off, including support functions, such as order creation, customer data management, clearance, data and analytics, and other services, as well as technology operations and support technologies required for those functions for a limited time, generally no longer than two years following the effective date of the Spin-Off. •Tax Matters Agreement (“TMA”) – governs the respective rights, responsibilities, and obligations between the Company and FedEx with respect to all tax matters including the allocation of tax liabilities, preparation and filing of tax returns, control of tax contests, indemnification obligations, information sharing, and cooperation related to maintaining the intended tax treatment of the Spin-Off and Distribution. •Employee Matters Agreement – addresses certain employment, compensation, and benefits matters, including the allocation of responsibilities relating to payroll administration, employee compensation and benefit plans, incentive compensation, severance, workers' compensation, pension and welfare benefits, employment tax reporting, employee records, and related -57- cooperation and information-sharing matters between the Company and FedEx and the allocation and treatment of certain assets and liabilities relating to our employees and former employees. •Intellectual Property Cross-License Agreement – governs the relationship between the Company and FedEx pursuant to which each party granted the other certain licenses and related rights to specified intellectual property used in their respective businesses. The agreement is intended to facilitate the continued operation of each company's business following the Spin-Off while preserving ownership of the underlying intellectual property rights. •Trademark License Agreement – governs the agreement entered into between the Company and FedEx pursuant to which FedEx Freight received rights to use certain FedEx trademarks and related branding on a transitional basis in connection with the Company’s business operations. The agreement governs the parties' respective rights and restrictions relating to the use of licensed trademarks, including quality control standards, advertising and branding requirements, ownership protections, and related intellectual property matters. Effective as of June 1, 2026, the Company adopted the FedEx Freight Holding Company, Inc. 2026 Employee Stock Purchase Plan (the “Stock Purchase Plan”). The purpose of the Stock Purchase Plan is to provide employees of the Company and its subsidiaries with an opportunity to purchase shares of our common stock through accumulated after-tax payroll deductions. Additionally, effective June 1, 2026, the Company also adopted the FedEx Freight Holding Company, Inc. 2026 Omnibus Stock Incentive Plan (the “Stock Incentive Plan”). The purpose of the Stock Incentive Plan is to aid the Company and its affiliates in retaining, attracting, and rewarding non-management directors and designated employees and to motivate them to exert their best efforts to achieve the long-term goals of the Company and its affiliates. Accordingly, the Stock Incentive Plan authorizes the grant of equity incentive and other awards to designated employees of the Company and its affiliates and to non-management directors of the Company. Fiscal Year-End Change. On January 27, 2025, the FedEx Board of Directors approved a change in our fiscal year end from May 31 to December 31, which was subsequently reapproved by FedEx Freight’s Board of Directors on June 1, 2026. The fiscal year change became effective June 1, 2026. As a result of the change, our next fiscal year-end will be December 31, 2026. We will file a Transition Report on Form 10-KT for the seven-month transition period from June 1, 2026 through December 31, 2026. The reporting periods and applicable reports preceding and following the effective date of the fiscal year change will be as follows: Fiscal Period Reporting Period Report to be Filed Fiscal year 2026 June 1, 2025 to May 31, 2026 Annual Report on Form 10-K Third quarter of calendar year 2026 July 1, 2026 to September 30, 2026 Quarterly Report on Form 10-Q(1) Transition Period June 1, 2026 to December 31, 2026 Transition Report on Form 10-KT (1)This report will also include discrete financial information for the one-month periods ending June 30, 2026 and 2025. -58- Table of Contents