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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

FOR THE QUARTERLY PERIOD ENDED November 30, 2024

OR

☐ |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO__________

Commission File Number: 1-15829

FedEx Corporation

(Exact name of registrant as specified in its charter)

Delaware | 62-1721435
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.)
942 South Shady Grove Road, Memphis, Tennessee | 38120
(Address of principal executive offices) | (ZIP Code)

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

Securities registered pursuant to Section 12(b) of the Act:

Title of each class |  | Trading Symbol |  | Name of each exchange on which registered
Common Stock, par value $0.10 per share |  | FDX |  | New York Stock Exchange
0.450% Notes due 2025 |  | FDX 25A |  | New York Stock Exchange
1.625% Notes due 2027 |  | FDX 27 |  | New York Stock Exchange
0.450% Notes due 2029 |  | FDX 29A |  | New York Stock Exchange
1.300% Notes due 2031 |  | FDX 31 |  | New York Stock Exchange
0.950% Notes due 2033 |  | FDX 33 |  | New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☑ | Accelerated filer ☐ | Non-accelerated filer ☐ | Smaller reporting company ☐ | Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

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

Common Stock |  | Outstanding Shares at December 17, 2024
Common Stock, par value $0.10 per share |  | 240,850,603

FEDEX CORPORATION

INDEX

|  | PAGE
PART I. FINANCIAL INFORMATION |  |
ITEM 1. Financial Statements |  |
Condensed Consolidated Balance Sheets November 30, 2024 and May 31, 2024 |  | 3
Condensed Consolidated Statements of Income Three and Six Months Ended November 30, 2024 and 2023 |  | 5
Condensed Consolidated Statements of Comprehensive Income Three and Six Months Ended November 30, 2024 and 2023 |  | 6
Condensed Consolidated Statements of Cash Flows Six Months Ended November 30, 2024 and 2023 |  | 7
Condensed Consolidated Statements of Changes In Common Stockholders’ Investment Three and Six Months Ended November 30, 2024 and 2023 |  | 8
Notes to Condensed Consolidated Financial Statements |  | 9
Report of Independent Registered Public Accounting Firm |  | 20
ITEM 2. Management’s Discussion and Analysis of Results of Operations and Financial Condition |  | 21
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk |  | 40
ITEM 4. Controls and Procedures |  | 41
PART II. OTHER INFORMATION |  |
ITEM 1. Legal Proceedings |  | 41
ITEM 1A. Risk Factors |  | 41
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds |  | 44
ITEM 5. Other Information |  | 44
ITEM 6. Exhibits |  | 46
Signature |  | 47

- 2 -

FEDEX CORPORATION

CONDENSED CONSOLIDA TED BALANCE SHEETS

(IN MILLIONS)

|  | November 30, 2024 (Unaudited) |  |  | May 31, 2024 |
ASSETS |  |  |  |  |  |
CURRENT ASSETS |  |  |  |  |  |
Cash and cash equivalents |  | $ | 5,029 |  |  | $ | 6,501 |
Receivables, less allowances of $702 and $775 |  |  | 10,737 |  |  |  | 10,087 |
Spare parts, supplies, and fuel, less allowances of $293 and $288 |  |  | 620 |  |  |  | 614 |
Prepaid expenses and other |  |  | 1,335 |  |  |  | 1,005 |
Total current assets |  |  | 17,721 |  |  |  | 18,207 |
PROPERTY AND EQUIPMENT, AT COST |  |  | 85,658 |  |  |  | 84,391 |
Less accumulated depreciation and amortization |  |  | 44,652 |  |  |  | 42,900 |
Net property and equipment |  |  | 41,006 |  |  |  | 41,491 |
OTHER LONG-TERM ASSETS |  |  |  |  |  |
Operating lease right-of-use assets, net |  |  | 16,821 |  |  |  | 17,115 |
Goodwill |  |  | 6,290 |  |  |  | 6,423 |
Other assets |  |  | 3,643 |  |  |  | 3,771 |
Total other long-term assets |  |  | 26,754 |  |  |  | 27,309 |
|  | $ | 85,481 |  |  | $ | 87,007 |

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

- 3 -

FEDEX CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(IN MILLIONS, EXCEPT SHARE DATA)

|  | November 30, 2024 (Unaudited) |  |  | May 31, 2024 |
LIABILITIES AND COMMON STOCKHOLDERS’ INVESTMENT |  |  |  |  |  |
CURRENT LIABILITIES |  |  |  |  |  |
Current portion of long-term debt |  | $ | 592 |  |  | $ | 68 |
Accrued salaries and employee benefits |  |  | 2,710 |  |  |  | 2,673 |
Accounts payable |  |  | 3,896 |  |  |  | 3,189 |
Operating lease liabilities |  |  | 2,536 |  |  |  | 2,463 |
Accrued expenses |  |  | 4,658 |  |  |  | 4,962 |
Total current liabilities |  |  | 14,392 |  |  |  | 13,355 |
LONG-TERM DEBT, LESS CURRENT PORTION |  |  | 19,433 |  |  |  | 20,135 |
OTHER LONG-TERM LIABILITIES |  |  |  |  |  |
Deferred income taxes |  |  | 4,436 |  |  |  | 4,482 |
Pension, postretirement healthcare, and other benefit obligations |  |  | 1,571 |  |  |  | 2,010 |
Self-insurance accruals |  |  | 3,825 |  |  |  | 3,701 |
Operating lease liabilities |  |  | 14,713 |  |  |  | 15,053 |
Other liabilities |  |  | 651 |  |  |  | 689 |
Total other long-term liabilities |  |  | 25,196 |  |  |  | 25,935 |
COMMITMENTS AND CONTINGENCIES |  |  |  |  |  |
COMMON STOCKHOLDERS’ INVESTMENT |  |  |  |  |  |
Common stock, $0.10 par value; 800 million shares authorized; 318 million shares issued as of November 30, 2024 and May 31, 2024 |  |  | 32 |  |  |  | 32 |
Additional paid-in capital |  |  | 4,165 |  |  |  | 3,988 |
Retained earnings |  |  | 39,175 |  |  |  | 38,649 |
Accumulated other comprehensive loss |  |  | (1,515 | ) |  |  | (1,359 | )
Treasury stock, at cost |  |  | (15,397 | ) |  |  | (13,728 | )
Total common stockholders’ investment |  |  | 26,460 |  |  |  | 27,582 |
|  | $ | 85,481 |  |  | $ | 87,007 |

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

- 4 -

FEDEX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)

|  | Three Months Ended |  |  | Six Months Ended |
|  | November 30, 2024 |  |  | November 30, 2023 |  |  | November 30, 2024 |  |  | November 30, 2023 |
REVENUE |  | $ | 21,967 |  |  | $ | 22,165 |  |  | $ | 43,546 |  |  | $ | 43,846 |
OPERATING EXPENSES: |  |  |  |  |  |  |  |  |  |  |  |
Salaries and employee benefits |  |  | 7,879 |  |  |  | 7,833 |  |  |  | 15,664 |  |  |  | 15,618 |
Purchased transportation |  |  | 5,500 |  |  |  | 5,395 |  |  |  | 10,775 |  |  |  | 10,431 |
Rentals and landing fees |  |  | 1,168 |  |  |  | 1,138 |  |  |  | 2,329 |  |  |  | 2,289 |
Depreciation and amortization |  |  | 1,063 |  |  |  | 1,040 |  |  |  | 2,141 |  |  |  | 2,111 |
Fuel |  |  | 947 |  |  |  | 1,328 |  |  |  | 2,022 |  |  |  | 2,429 |
Maintenance and repairs |  |  | 831 |  |  |  | 854 |  |  |  | 1,660 |  |  |  | 1,678 |
Business optimization costs |  |  | 326 |  |  |  | 145 |  |  |  | 454 |  |  |  | 250 |
Other |  |  | 3,201 |  |  |  | 3,156 |  |  |  | 6,369 |  |  |  | 6,279 |
|  |  | 20,915 |  |  |  | 20,889 |  |  |  | 41,414 |  |  |  | 41,085 |
OPERATING INCOME |  |  | 1,052 |  |  |  | 1,276 |  |  |  | 2,132 |  |  |  | 2,761 |
OTHER (EXPENSE) INCOME: |  |  |  |  |  |  |  |  |  |  |  |
Interest, net |  |  | (102 | ) |  |  | (97 | ) |  |  | (186 | ) |  |  | (188 | )
Other retirement plans, net |  |  | 50 |  |  |  | 41 |  |  |  | 99 |  |  |  | 80 |
Other, net |  |  | (19 | ) |  |  | (18 | ) |  |  | (8 | ) |  |  | (28 | )
|  |  | (71 | ) |  |  | (74 | ) |  |  | (95 | ) |  |  | (136 | )
INCOME BEFORE INCOME TAXES |  |  | 981 |  |  |  | 1,202 |  |  |  | 2,037 |  |  |  | 2,625 |
PROVISION FOR INCOME TAXES |  |  | 240 |  |  |  | 302 |  |  |  | 502 |  |  |  | 647 |
NET INCOME |  | $ | 741 |  |  | $ | 900 |  |  | $ | 1,535 |  |  | $ | 1,978 |
EARNINGS PER COMMON SHARE: |  |  |  |  |  |  |  |  |  |  |  |
Basic |  | $ | 3.06 |  |  | $ | 3.59 |  |  | $ | 6.30 |  |  | $ | 7.88 |
Diluted |  | $ | 3.03 |  |  | $ | 3.55 |  |  | $ | 6.24 |  |  | $ | 7.79 |
DIVIDENDS DECLARED PER COMMON SHARE |  | $ | 1.38 |  |  | $ | 1.26 |  |  | $ | 4.14 |  |  | $ | 2.52 |

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

- 5 -

FEDEX CORPORATION

CONDENSED CONSOLIDATED STATEM ENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

(IN MILLIONS)

|  | Three Months Ended |  |  | Six Months Ended |
|  | November 30, 2024 |  |  | November 30, 2023 |  |  | November 30, 2024 |  |  | November 30, 2023 |
NET INCOME |  | $ | 741 |  |  | $ | 900 |  |  | $ | 1,535 |  |  | $ | 1,978 |
OTHER COMPREHENSIVE INCOME (LOSS): |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency translation adjustments, net of tax benefit/(expense) of $2 and ($2) in 2024 and ($3) and $1 in 2023 |  |  | (181 | ) |  |  | 28 |  |  |  | (152 | ) |  |  | — |
Prior service credit arising during period, net of tax (expense) of ($11) and ($11) in 2023 |  |  | — |  |  |  | 36 |  |  |  | — |  |  |  | 36 |
Amortization of prior service credit, net of tax benefit of $0 and $1 in 2024 and $0 and $0 in 2023 |  |  | (2 | ) |  |  | (2 | ) |  |  | (4 | ) |  |  | (3 | )
|  |  | (183 | ) |  |  | 62 |  |  |  | (156 | ) |  |  | 33 |
COMPREHENSIVE INCOME |  | $ | 558 |  |  | $ | 962 |  |  | $ | 1,379 |  |  | $ | 2,011 |

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

- 6 -

FEDEX CORPORATION

CONDENSED CONSOLIDATED S TATEMENTS OF CASH FLOWS

(UNAUDITED)

(IN MILLIONS)

|  | Six Months Ended |
|  | November 30, 2024 |  |  | November 30, 2023 |
Operating Activities: |  |  |  |  |  |
Net income |  | $ | 1,535 |  |  | $ | 1,978 |
Adjustments to reconcile net income to cash provided by operating activities: |  |  |  |  |  |
Depreciation and amortization |  |  | 2,141 |  |  |  | 2,111 |
Provision for uncollectible accounts |  |  | 250 |  |  |  | 216 |
Other noncash items including leases and deferred income taxes |  |  | 1,589 |  |  |  | 1,427 |
Stock-based compensation |  |  | 84 |  |  |  | 96 |
Business optimization costs, net of payments |  |  | 125 |  |  |  | (28 | )
Changes in assets and liabilities: |  |  |  |  |  |
Receivables |  |  | (1,079 | ) |  |  | (687 | )
Other assets |  |  | (111 | ) |  |  | (110 | )
Accounts payable and other liabilities |  |  | (2,087 | ) |  |  | (975 | )
Other, net |  |  | 58 |  |  |  | (24 | )
Cash provided by operating activities |  |  | 2,505 |  |  |  | 4,004 |
Investing Activities: |  |  |  |  |  |
Capital expenditures |  |  | (1,585 | ) |  |  | (2,595 | )
Purchase of investments |  |  | (107 | ) |  |  | (75 | )
Proceeds from sale of investments |  |  | 52 |  |  |  | — |
Proceeds from asset dispositions and other |  |  | 34 |  |  |  | 62 |
Cash used in investing activities |  |  | (1,606 | ) |  |  | (2,608 | )
Financing Activities: |  |  |  |  |  |
Principal payments on debt |  |  | (47 | ) |  |  | (94 | )
Proceeds from stock issuances |  |  | 440 |  |  |  | 211 |
Dividends paid |  |  | (676 | ) |  |  | (635 | )
Purchase of treasury stock |  |  | (2,020 | ) |  |  | (1,000 | )
Other |  |  | (6 | ) |  |  | — |
Cash used in financing activities |  |  | (2,309 | ) |  |  | (1,518 | )
Effect of exchange rate changes on cash |  |  | (62 | ) |  |  | (5 | )
Net decrease in cash and cash equivalents |  |  | (1,472 | ) |  |  | (127 | )
Cash and cash equivalents at beginning of period |  |  | 6,501 |  |  |  | 6,856 |
Cash and cash equivalents at end of period |  | $ | 5,029 |  |  | $ | 6,729 |

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

- 7 -

FEDEX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CHA NGES IN COMMON STOCKHOLDERS’ INVESTMENT

(UNAUDITED)

(IN MILLIONS, EXCEPT SHARE DATA)

|  | Three Months Ended |  |  | Six Months Ended |
|  | November 30, 2024 |  |  | November 30, 2023 |  |  | November 30, 2024 |  |  | November 30, 2023 |
Common Stock |  |  |  |  |  |  |  |  |  |  |  |
Beginning Balance |  | $ | 32 |  |  | $ | 32 |  |  | $ | 32 |  |  | $ | 32 |
Ending Balance |  |  | 32 |  |  |  | 32 |  |  |  | 32 |  |  |  | 32 |
Additional Paid-in Capital |  |  |  |  |  |  |  |  |  |  |  |
Beginning Balance |  |  | 4,134 |  |  |  | 3,800 |  |  |  | 3,988 |  |  |  | 3,769 |
Purchase of treasury stock |  |  | (12 | ) |  |  | 2 |  |  |  | (21 | ) |  |  | (34 | )
Employee incentive plans and other |  |  | 43 |  |  |  | 47 |  |  |  | 198 |  |  |  | 114 |
Ending Balance |  |  | 4,165 |  |  |  | 3,849 |  |  |  | 4,165 |  |  |  | 3,849 |
Retained Earnings |  |  |  |  |  |  |  |  |  |  |  |
Beginning Balance |  |  | 38,767 |  |  |  | 36,021 |  |  |  | 38,649 |  |  |  | 35,259 |
Net Income |  |  | 741 |  |  |  | 900 |  |  |  | 1,535 |  |  |  | 1,978 |
Cash dividends declared ($1.38, $1.26, $4.14, and $2.52 per share) |  |  | (333 | ) |  |  | (316 | ) |  |  | (1,009 | ) |  |  | (632 | )
Ending Balance |  |  | 39,175 |  |  |  | 36,605 |  |  |  | 39,175 |  |  |  | 36,605 |
Accumulated Other Comprehensive Loss |  |  |  |  |  |  |  |  |  |  |  |
Beginning Balance |  |  | (1,332 | ) |  |  | (1,356 | ) |  |  | (1,359 | ) |  |  | (1,327 | )
Other comprehensive (loss)/income, net of tax benefit/(expense) of $2, ($14), ($1), and ($10) |  |  | (183 | ) |  |  | 62 |  |  |  | (156 | ) |  |  | 33 |
Ending Balance |  |  | (1,515 | ) |  |  | (1,294 | ) |  |  | (1,515 | ) |  |  | (1,294 | )
Treasury Stock |  |  |  |  |  |  |  |  |  |  |  |
Beginning Balance |  |  | (14,425 | ) |  |  | (11,963 | ) |  |  | (13,728 | ) |  |  | (11,645 | )
Purchase of treasury stock (3.7, 2.0, 7.1, and 3.9 million shares) |  |  | (1,001 | ) |  |  | (509 | ) |  |  | (1,995 | ) |  |  | (974 | )
Employee incentive plans and other (0.2, 0.4, 2.4, and 1.5 million shares) |  |  | 29 |  |  |  | 46 |  |  |  | 326 |  |  |  | 193 |
Ending Balance |  |  | (15,397 | ) |  |  | (12,426 | ) |  |  | (15,397 | ) |  |  | (12,426 | )
Total Common Stockholders’ Investment Balance |  | $ | 26,460 |  |  | $ | 26,766 |  |  | $ | 26,460 |  |  | $ | 26,766 |

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

- 8 -

FEDEX CORPORATION

NOTES TO CONDENSED CONSOLI DATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1: Description of Business Segments and Summary of Significant Accounting Policies

DESCRIPTION OF BUSINESS SEGMENTS. FedEx Corporation (“FedEx”) provides a broad portfolio of transportation, e-commerce, and business services, offering integrated business solutions utilizing our flexible, efficient, and intelligent global network. Our primary operating companies are Federal Express Corporation (“Federal Express”), the world’s largest express transportation company and a leading North American provider of small-package ground delivery services, and FedEx Freight, Inc. (“FedEx Freight”), a leading North American provider of less-than-truckload (“LTL”) freight transportation services.

In connection with our one FedEx consolidation plan, on June 1, 2024, FedEx Ground Package System, Inc. (“FedEx Ground”) and FedEx Corporate Services, Inc. (“FedEx Services”) were merged into Federal Express, becoming a single company operating a unified, fully integrated air-ground express network under the respected FedEx brand. FedEx Freight continues to provide LTL freight transportation services as a separate subsidiary. Beginning in the first quarter of 2025, Federal Express and FedEx Freight represent our major service lines and constitute our reportable segments. Additionally, the results of FedEx Custom Critical, Inc. (“FedEx Custom Critical”) are included in the FedEx Freight segment instead of the Federal Express segment in 2025. Prior-year amounts were revised to reflect this presentation.

We evaluated our reporting units with significant recorded goodwill during the fourth quarter of 2024, and the estimated fair value of each reporting unit exceeded its carrying value as of the end of 2024 immediately before our one FedEx consolidation. We reevaluated the conclusion of our 2024 goodwill impairment tests as of June 1, 2024 immediately after our one FedEx consolidation and concluded that the estimated fair values of our reporting units with significant goodwill continued to exceed their respective carrying values.

In June 2024, we announced that FedEx’s management and Board of Directors were conducting an assessment of the role of FedEx Freight in the company’s portfolio structure. On December 19, 2024, we announced that the Board of Directors concluded that assessment and decided to pursue a full separation of FedEx Freight through the capital markets, creating a new publicly traded company. The transaction is intended to qualify as a tax-free separation for U.S. federal income tax purposes for FedEx stockholders and is expected to be executed within the next 18 months.

SUMMARY OF SIGNIFICANT ACCOUNTING POLIC IES. These interim financial statements of FedEx have been prepared in accordance with accounting principles generally accepted in the United States and Securities and Exchange Commission (“SEC”) instructions for interim financial information, and should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended May 31, 2024 (“Annual Report”). Significant accounting policies and other disclosures normally provided have been omitted since such items are disclosed in our Annual Report.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments (including normal recurring adjustments) necessary to present fairly our financial position as of November 30, 2024, and the results of our operations for the three- and six-month periods ended November 30, 2024 and 2023, cash flows for the six-month periods ended November 30, 2024 and 2023, and changes in common stockholders’ investment for the three- and six-month periods ended November 30, 2024 and 2023. Operating results for the three- and six-month periods ended November 30, 2024 are not necessarily indicative of the results that may be expected for the year ending May 31, 2025.

Except as otherwise specified, references to years indicate our fiscal year ending May 31, 2025 or ended May 31 of the year referenced and comparisons are to the corresponding period of the prior year.

Contract Assets and Liabilities. Contract assets include billed and unbilled amounts resulting from in-transit shipments, as we have an unconditional right to payment only once all performance obligations have been completed (e.g., packages have been delivered). Contract assets are generally classified as current, and the full balance is converted each quarter based on the short-term nature of the transactions. Our contract liabilities consist of advance payments and billings in excess of revenue. The full balance of deferred revenue is converted each quarter based on the short-term nature of the transactions.

Gross contract assets related to in-transit shipments to taled $693 million and $672 million at November 30, 2024 and May 31, 2024, respectively. Contract assets net of deferred unearned revenue were $531 million and $463 million at November 30, 2024 and May 31, 2024, respectively. Contract assets are included within current assets in the accompanying unaudited condensed consolidated balance sheets. Contract liabilities related to advance payments from customers were $22 million and $23 million at November 30, 2024 and May 31, 2024, respectively. Contract liabilities are included within current liabilities in the accompanying unaudited condensed consolidated balance sheets.

- 9 -

Disaggregation of Revenue. The following table provides revenue by service type (in millions) for the three- and six-month periods ended November 30. This presentation is consistent with how we organize our segments internally for making operating decisions and measuring performance.

|  | Three Months Ended |  |  | Six Months Ended |
|  | November 30, |  |  | November 30, |
|  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
REVENUE BY SERVICE TYPE |  |  |  |  |  |  |  |  |  |  |  |
Federal Express segment: |  |  |  |  |  |  |  |  |  |  |  |
Package: |  |  |  |  |  |  |  |  |  |  |  |
U.S. priority |  | $ | 2,563 |  |  | $ | 2,605 |  |  | $ | 5,154 |  |  | $ | 5,278 |
U.S. deferred |  |  | 1,199 |  |  |  | 1,207 |  |  |  | 2,350 |  |  |  | 2,394 |
U.S. ground |  |  | 8,256 |  |  |  | 8,309 |  |  |  | 16,312 |  |  |  | 16,442 |
Total U.S. domestic package revenue |  |  | 12,018 |  |  |  | 12,121 |  |  |  | 23,816 |  |  |  | 24,114 |
International priority |  |  | 2,231 |  |  |  | 2,390 |  |  |  | 4,437 |  |  |  | 4,717 |
International economy |  |  | 1,588 |  |  |  | 1,183 |  |  |  | 2,948 |  |  |  | 2,300 |
Total international export package revenue |  |  | 3,819 |  |  |  | 3,573 |  |  |  | 7,385 |  |  |  | 7,017 |
International domestic(1) |  |  | 1,190 |  |  |  | 1,213 |  |  |  | 2,302 |  |  |  | 2,353 |
Total package revenue |  |  | 17,027 |  |  |  | 16,907 |  |  |  | 33,503 |  |  |  | 33,484 |
Freight: |  |  |  |  |  |  |  |  |  |  |  |
U.S. |  |  | 383 |  |  |  | 577 |  |  |  | 952 |  |  |  | 1,154 |
International priority |  |  | 640 |  |  |  | 568 |  |  |  | 1,166 |  |  |  | 1,121 |
International economy |  |  | 529 |  |  |  | 470 |  |  |  | 992 |  |  |  | 942 |
Total freight revenue |  |  | 1,552 |  |  |  | 1,615 |  |  |  | 3,110 |  |  |  | 3,217 |
Other |  |  | 262 |  |  |  | 251 |  |  |  | 533 |  |  |  | 498 |
Total Federal Express segment |  |  | 18,841 |  |  |  | 18,773 |  |  |  | 37,146 |  |  |  | 37,199 |
FedEx Freight segment |  |  | 2,177 |  |  |  | 2,452 |  |  |  | 4,506 |  |  |  | 4,837 |
Other and eliminations(2) |  |  | 949 |  |  |  | 940 |  |  |  | 1,894 |  |  |  | 1,810 |
|  | $ | 21,967 |  |  | $ | 22,165 |  |  | $ | 43,546 |  |  | $ | 43,846 |

(1)
International domestic revenue relates to our international intra-country operations.
(2)
Includes the FedEx Dataworks, Inc. (“FedEx Dataworks”), FedEx Office and Print Services, Inc. (“FedEx Office”), and FedEx Logistics, Inc. (“FedEx Logistics”) operating segments.

EMPLOYEES UNDER COLLECTIVE BARGAINING ARRANGEMENTS. The pilots of Federal Express, who are a small number of its total employees, are represented by the Air Line Pilots Association, International (“ALPA”) and are employed under a collective bargaining agreement that took effect on November 2, 2015. The agreement became amendable in November 2021. Bargaining for a successor agreement began in May 2021, and in November 2022 the National Mediation Board (“NMB”), which is the U.S. governmental agency that oversees labor agreements for entities covered by the Railway Labor Act of 1926, as amended, began actively mediating the negotiations. In July 2023, Federal Express’s pilots failed to ratify the tentative successor agreement that was approved by ALPA’s FedEx Master Executive Council the prior month. Bargaining for a successor agreement continues. In April 2024, the NMB rejected ALPA’s request for a proffer of arbitration, and the parties remain in mediated negotiations. The conduct of mediated negotiations has no effect on our operations. A small number of our other employees are members of unions.

STOCK-BASED COMPENSATION. We have three types of equity-based compensation: stock options, restricted stock, and, for outside directors, restricted stock units. The key terms of our equity-based compensation plans and financial disclosures about these programs are set forth in our Annual Report. Our stock-based compensation expense was $36 million for the three-month period ended November 30, 2024 and $84 million for the six-month period ended November 30, 2024. Our stock-based compensation expense was $40 million for the three-month period ended November 30, 2023 and $96 million for the six-month period ended November 30, 2023. Due to its immateriality, additional disclosures related to stock-based compensation have been excluded from this quarterly report.

BUSINESS OPTIMIZATION COSTS. In the second quarter of 2023, we announced DRIVE, a comprehensive program to improve long-term profitability. This program includes a business optimization plan to drive efficiency within and among our transportation segments, lower our overhead and support costs, and transform our digital capabilities. We have commenced our plan to consolidate our sortation facilities and equipment, reduce pickup-and-delivery routes, and optimize our enterprise linehaul network by moving beyond discrete collaboration to an end-to-end optimized network through Network 2.0, the multi-year effort to improve the efficiency with which we pick up, transport, and deliver packages in the U.S. and Canada.

- 10 -

We have implemented Network 2.0 optimization in more than 200 locations in the U.S. and Canada. Contracted service providers will handle the pickup and delivery of packages in some locations while employee couriers will handle others.

In June 2024, Federal Express announced a workforce reduction plan in Europe as part of its ongoing measures to reduce structural costs. The plan will impact between 1,700 and 2,000 employees in Europe across back-office and commercial functions. The execution of the plan is subject to a consultation process that is expected to occur over an 18-month period in accordance with local country processes and regulations. In the six-month period ended November 30, 2024, we incurred $176 million of costs related to this plan. We expect the pre-tax cost of the severance benefits and legal and professional fees to be provided under and related to the plan to range from $250 million to $375 million in cash expenditures. These charges are expected to be incurred through fiscal 2026 and will be classified as business optimization expenses.

We incurred costs associated with our business optimization activities, including the workforce reduction plan in Europe, of $326 million ($249 million, net of tax, or $1.02 per diluted share) in the three-month period ended November 30, 2024 and $454 million ($347 million, net of tax, or $1.41 per diluted share) in the six-month period ended November 30, 2024. These costs were primarily related to severance and professional services and are included in Federal Express and Corporate, other, and eliminations. We recognized $145 million ($110 million, net of tax, or $0.44 per diluted share) in the three-month period ended November 30, 2023 and $250 million ($191 million, net of tax, or $0.75 per diluted share) in the six-month period ended November 30, 2023.These costs were primarily related to professional services and severance and are included in Federal Express and Corporate, other, and eliminations.

DERIVATIVE FINANCIAL INSTRUMENTS. We enter into derivative financial instruments to reduce the effects of volatility in foreign currency exchange exposure on operating results and cash flows. Our derivative financial instruments are used to manage differences in the amount, timing, and duration of cash receipts and cash payments principally related to our investments. We use debt denominated in foreign currency and fixed-to-fixed cross-currency swaps to hedge our exposure to changes in foreign exchange rates on certain of our foreign investments.

As of November 30, 2024, we had €159 million of debt designated as a net investment hedge to reduce the volatility of the U.S. dollar value of a portion of our net investment in a euro-denominated consolidated subsidiary.

As of November 30, 2024, we had four cross-currency swaps outstanding, and the fair value of the swaps classified as assets and liabilities was $19 million and $17 million, respectively. As of May 31, 2024, the fair value of the swaps classified as assets and liabilities was $8 million and $14 million, respectively. We record all derivatives on the balance sheet at fair value within either “Prepaid expenses and other” or “Other liabilities” in the accompanying unaudited condensed consolidated balance sheets. For debt and foreign currency derivatives designated as net investment hedges, the gain or loss on the derivative is reported in AOCL as part of the cumulative translation adjustment. The estimated fair values were determined using pricing models that rely on market-based inputs such as foreign currency exchange rates and yield curves, and are classified as Level 2 within the fair value hierarchy. This classification is defined as a fair value determined using market-based inputs other than quoted prices that are observable for the derivative financial instruments, either directly or indirectly.

As of November 30, 2024, our net investment hedges remain effective.

SUPPLIER FINANCE PROGRAM. We offer voluntary Supply Chain Finance (“SCF”) programs through financial institutions to certain of our suppliers. We agree to commercial terms with our suppliers, including prices, quantities, and payment terms, and they issue invoices to us based on the agreed-upon contractual terms. If our suppliers choose to participate in the SCF programs, they determine which invoices, if any, to sell to the financial institutions to receive an early discounted payment, while we settle the net payment amount with the financial institutions on the payment due dates. We guarantee these payments with the financial institutions.

Amounts due to our suppliers that participate in the SCF programs are included in “Accounts payable” in the accompanying unaudited condensed consolidated balance sheets. We have been informed by the participating financial institutions that as of November 30, 2024 and May 31, 2024, suppliers have been approved to sell to them $104 million and $94 million, respectively, of our outstanding payment obligations. A rollforward of obligations confirmed and paid during the six-month period ended November 30, 2024 is presented below (in millions):

|  | 2024 |
Confirmed obligations outstanding at beginning of period |  | $ | 94 |
Invoices confirmed during the period |  |  | 330 |
Confirmed invoices paid during the period |  |  | (315 | )
Currency translation adjustments |  |  | (5 | )
Confirmed obligations outstanding at end of period |  | $ | 104 |

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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.

Accounting Standards Not Yet Adopted

In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848), and in December 2022 subsequently issued ASU 2022-06, to temporarily ease the potential burden in accounting for reference rate reform. The standards provide optional expedients and exceptions for applying accounting principles generally accepted in the United States to existing contracts, hedging relationships, and other transactions affected by reference rate reform. The standards apply only to contracts and hedging relationships that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate to be discontinued because of reference rate reform. The standards were effective upon issuance and can generally be applied through December 31, 2024. While there has been no material effect to our financial condition,

results of operations, or cash flows from reference rate reform as of November 30, 2024, we continue to monitor our contracts and transactions for potential application of these ASUs.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which expands disclosures about a public entity’s reportable segments and requires more enhanced information about a reportable segment’s expenses, interim segment profit or loss, and how a public entity’s chief operating decision maker uses reported segment profit or loss information in assessing segment performance and allocating resources. The update will be effective for annual periods beginning after December 15, 2023 (fiscal 2025), and interim periods within annual periods beginning after December 15, 2024 (fiscal 2026). We are assessing the effect of this update on our consolidated financial statements and related disclosures.

In December 2023, the FASB issued 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 U.S. and foreign jurisdictions. The update will be effective for annual periods beginning after December 15, 2024 (fiscal 2026). We are assessing the effect of this update on our consolidated financial statements and related disclosures.

In March 2024, the SEC adopted final rules requiring public entities to provide certain climate-related information in their registration statements and annual reports. As part of the disclosures, entities will be required to quantify certain effects of severe weather events and other natural conditions in a note to their audited financial statements. The rules were originally scheduled to be effective for annual periods beginning in calendar 2025 (fiscal 2026). In April 2024, the SEC voluntarily stayed implementation of the final rules pending certain legal challenges. We are assessing the effect of the new rules 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 (fiscal 2028) and interim periods beginning after December 15, 2027 (fiscal 2028). We are assessing the effect of this update on our consolidated financial statements and related disclosures.

INVESTMENTS IN EQUITY AND DEBT SECURITIES. Investments in equity securities with a readily determinable fair value are carried at fair value and are classified as Level 1 investments in the fair value hierarchy. Level 1 investments are valued at the closing price or last trade reported on the major market on which the individual securities are traded. For equity securities without readily determinable fair values that qualify for the net asset value (“NAV”) practical expedient, we have elected to apply the NAV practical expedient to estimate fair value. Changes in fair value are recognized in “Other (expense) income” in the accompanying unaudited condensed consolidated statements of income.

We apply the measurement alternative to all other investments in equity securities without a readily determinable fair value. Under the measurement alternative these equity securities are accounted for at cost, with adjustments for observable changes in prices and impairments recognized in “Other (expense) income” on our accompanying unaudited condensed consolidated statements of income. We perform a qualitative assessment each reporting period to evaluate whether these equity securities are impaired. Our assessment includes a review of recent operating results and trends and other publicly available data. If an investment is impaired, we write it down to its estimated fair value.

Equity securities totaled $400 million and $360 million at November 30, 2024 and May 31, 2024, respectively. Equity securities are recorded within “Other assets” in the accompanying unaudited condensed consolidated balance sheets.

Debt securities, which are considered short-term investments, are classified as “available-for-sale” and are carried at fair value. Debt securities are Level 2 within the fair value hierarchy. Realized gains and losses on available-for-sale debt securities are included in net

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income, while unrealized gains and losses, net of tax, are included in “Accumulated other comprehensive loss” (“AOCL”) in the accompanying unaudited condensed consolidated balance sheets.

Debt securities totaled $77 million and $77 million at November 30, 2024 and May 31, 2024, respectively. Debt securities are recorded within “Prepaid expenses and other” in the accompanying unaudited condensed consolidated balance sheets.

TREASURY SHARES. In December 2021, our Board of Directors authorized a stock repurchase program of up to $5.0 billion of FedEx common stock. In March 2024, our Board of Directors authorized a new stock repurchase program for additional repurchases of up to $5.0 billion of FedEx common stock. As of May 31, 2024, $64 million remained available to be used for repurchases under the 2021 program.

During the three-month period ended November 30, 2024, 3.7 million shares were repurchased through accelerated share repurchase (“ASR”) transactions with two banks and open market transactions at an average price of $271.39 per share for a total of $1.0 billion. T he final number of shares delivered upon settlement of the ASR agreements was determined based on a discount to the volume-weighted average price of our stock during the term of the transaction. The repurchased shares were accounted for as a reduction to common stockholders’ investment in the accompanying unaudited condensed consolidated balance sheet and resulted in a reduction of the outstanding shares used to calculate the weighted-average common shares outstanding for basic and diluted earnings per share.

During the six-month period ended November 30, 2024, we repurchased 7.1 million shares of FedEx common stock through ASR transactions and open market purchases at an average price of $283.13 per share for a total of $2.0 billio n. During the six-month period ended November 30, 2023, 3.9 million shares were repurchased at an average price of $256.33 per share for a total of $1.0 billion. As of November 30, 2024, $3.1 billion remained available to use for repurchases under the 2024 stock repurchase program.

Shares under the 2024 repurchase program may be repurchased from time to time in the open market or in privately negotiated transactions. The timing and volume of repurchases are at the discretion of management, based on the capital needs of the business, the market price of FedEx common stock, and general market conditions. No time limits were set for the completion of the program; however, we may decide to suspend or discontinue the program at any time.

DIVIDENDS DECLARED PER COMMON SHARE. On November 15, 2024, our Board of Directors declared a quarterly cash dividend of $1.38 per share of common stock. The dividend will be paid on January 3, 2025 to stockholders of record as of the close of business on December 9, 2024. Each quarterly dividend payment is subject to review and approval by our Board of Directors, and we evaluate our dividend payment amount on an annual basis. There are no material restrictions on our ability to declare dividends, nor are there any material restrictions on the ability of our subsidiaries to transfer funds to us in the form of cash dividends, loans, or advances.

NOTE 2: Credit Losses

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

Credit losses were $121 million for the three-month period ended November 30, 2024 and $250 million for the six-month period ended November 30, 2024. Credit losses were $113 million for the three-month period ended November 30, 2023 and $216 million for the six-month period ended November 30, 2023. Our allowance for credit losses was $385 million at November 30, 2024 and $436 million at May 31, 2024.

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NOTE 3: Accumulated Other Comprehensive Loss

The following table provides changes in AOCL, net of tax, reported in our unaudited condensed consolidated financial statements for the periods ended November 30 (in millions; amounts in parentheses indicate debits to AOCL):

|  | Three Months Ended |  |  | Six Months Ended |
|  | November 30, 2024 |  |  | November 30, 2023 |  |  | November 30, 2024 |  |  | November 30, 2023 |
Foreign currency translation loss: |  |  |  |  |  |  |  |  |  |  |  |
Balance at beginning of period |  | $ | (1,393 | ) |  | $ | (1,390 | ) |  | $ | (1,422 | ) |  | $ | (1,362 | )
Translation adjustments |  |  | (181 | ) |  |  | 28 |  |  |  | (152 | ) |  |  | — |
Balance at end of period |  |  | (1,574 | ) |  |  | (1,362 | ) |  |  | (1,574 | ) |  |  | (1,362 | )
Retirement plans adjustments: |  |  |  |  |  |  |  |  |  |  |  |
Balance at beginning of period |  |  | 61 |  |  |  | 34 |  |  |  | 63 |  |  |  | 35 |
Prior service credit arising during period |  |  | — |  |  |  | 36 |  |  |  | — |  |  |  | 36 |
Reclassifications from AOCL |  |  | (2 | ) |  |  | (2 | ) |  |  | (4 | ) |  |  | (3 | )
Balance at end of period |  |  | 59 |  |  |  | 68 |  |  |  | 59 |  |  |  | 68 |
AOCL at end of period |  | $ | (1,515 | ) |  | $ | (1,294 | ) |  | $ | (1,515 | ) |  | $ | (1,294 | )

NOTE 4: Financing Arrangements

We have a shelf registration statement filed with the SEC that allows us to sell, in one or more future offerings, any combination of our unsecured debt securities and common stock and allows pass-through trusts formed by Federal Express to sell, in one or more future offerings, pass-through certificates.

Federal Express has issued $970 million of Pass-Through Certificates, Series 2020-1AA (the “Certificates”) with a fixed interest rate of 1.875% due in February 2034 utilizing pass-through trusts. The Certificates are secured by 19 Boeing aircraft with a net book value of $1.6 billion a t November 30, 2024. The payment obligations of Federal Express in respect of the Certificates are fully and unconditionally guaranteed by FedEx.

We have a $1.75 billion three-year credit agreement (the “Three-Year Credit Agreement”) and a $1.75 billion five-year credit agreement (the “Five-Year Credit Agreement” and together with the Three-Year Credit Agreement, the “Credit Agreements”). The Three-Year Credit Agreement and the Five-Year Credit Agreement expire in March 2027 and March 2029, respectively, and each has a $125 million letter of credit sublimit. The Credit Agreements are available to finance our operations and other cash flow needs. As of November 30, 2024, no amounts were outstanding under the Credit Agreements, no commercial paper was outstanding, and we had $250 million of the letter of credit sublimit unused under the Credit Agreements. Outstanding commercial paper reduces the amount available to borrow under the Credit Agreements.

The Credit Agreements contain a financial covenant requiring us to maintain a ratio of debt to consolidated earnings (excluding noncash retirement plans mark-to-market adjustments, noncash pension service costs, noncash asset impairment charges, business optimization and restructuring expenses, and pro forma cost savings and synergies associated with an acquisition) before interest, taxes, depreciation, and amortization (“adjusted EBITDA”) of not more than 3.5 to 1.0, calculated as of the last day of each fiscal quarter on a rolling four-quarters basis. The ratio of our debt to adjusted EBITDA was 1.8 at November 30, 2024. Additional information on the financial covenant can be found in our Annual Report.

The financial covenant discussed above is the only significant restrictive covenant in the Credit Agreements. The Credit Agreements contain other customary covenants that do not, individually or in the aggregate, materially restrict the conduct of our business. We are in compliance with the financial covenant and all other covenants in the Credit Agreements and do not expect the covenants to affect our operations, including our liquidity or expected funding needs. If we failed to comply with the financial covenant or any other covenants in the Credit Agreements, our access to financing could become limited. Our commercial paper program is backed by unused commitments under the Credit Agreements, and borrowings under the program reduce the amount available under the Credit Agreements.

Long-term debt, including current maturities and exclusive of finance leases, had carrying val ues of $19.6 billion at November 30, 2024 a nd $19.8 billion at May 31, 2024, compared with estimated fair values of $17.9 billion a t November 30, 2024 and $17.5 billion a t May 31, 2024. The annualized weighted-average interest rate on long-term debt was 3.5% at November 30, 2024. The estimated fair values were determined based on quoted market prices and the current rates offered for debt with similar terms and maturities. The fair value of our long-term debt is classified as Level 2 w ithin the fair value hierarchy. This classification is defined as a fair value determined using market-based inputs other than quoted prices that are observable for the liability, either directly or indirectly.

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NOTE 5: Computation of Earnings Per Share

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

|  | Three Months Ended |  |  | Six Months Ended |
|  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
Basic earnings per common share: |  |  |  |  |  |  |  |  |  |  |  |
Net earnings allocable to common shares(1) |  | $ | 739 |  |  | $ | 898 |  |  | $ | 1,533 |  |  | $ | 1,975 |
Weighted-average common shares |  |  | 242 |  |  |  | 250 |  |  |  | 243 |  |  |  | 251 |
Basic earnings per common share |  | $ | 3.06 |  |  | $ | 3.59 |  |  | $ | 6.30 |  |  | $ | 7.88 |
Diluted earnings per common share: |  |  |  |  |  |  |  |  |  |  |  |
Net earnings allocable to common shares(1) |  | $ | 739 |  |  | $ | 898 |  |  | $ | 1,533 |  |  | $ | 1,975 |
Weighted-average common shares |  |  | 242 |  |  |  | 250 |  |  |  | 243 |  |  |  | 251 |
Dilutive effect of share-based awards |  |  | 2 |  |  |  | 3 |  |  |  | 3 |  |  |  | 3 |
Weighted-average diluted shares |  |  | 244 |  |  |  | 253 |  |  |  | 246 |  |  |  | 254 |
Diluted earnings per common share |  | $ | 3.03 |  |  | $ | 3.55 |  |  | $ | 6.24 |  |  | $ | 7.79 |
Anti-dilutive options excluded from diluted earnings per common share |  |  | 4.0 |  |  |  | 6.3 |  |  |  | 4.2 |  |  |  | 6.3 |

(1)
Net earnings available to participating securities were $2 million and $2 million for the three-month periods ended November 30, 2024 and 2023, respectively, and $2 million and $3 million for the six-month periods ended November 30, 2024 and 2023, respectively.

NOTE 6: Retirement Plans

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

Our retirement plans costs for the periods ended November 30 were as follows (in millions):

|  | Three Months Ended |  |  | Six Months Ended |
|  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
Defined benefit pension plans |  | $ | 70 |  |  | $ | 91 |  |  | $ | 140 |  |  | $ | 182 |
Defined contribution plans |  |  | 288 |  |  |  | 242 |  |  |  | 575 |  |  |  | 482 |
Postretirement healthcare plans |  |  | 21 |  |  |  | 21 |  |  |  | 43 |  |  |  | 44 |
|  | $ | 379 |  |  | $ | 354 |  |  | $ | 758 |  |  | $ | 708 |

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

|  | Three Months Ended |
|  | U.S. Pension Plans |  |  | International Pension Plans |  |  | Postretirement Healthcare Plans |
|  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
Service cost |  | $ | 124 |  |  | $ | 136 |  |  | $ | 11 |  |  | $ | 10 |  |  | $ | 6 |  |  | $ | 7 |
Other retirement plans expense (income): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest cost |  |  | 363 |  |  |  | 340 |  |  |  | 10 |  |  |  | 12 |  |  |  | 16 |  |  |  | 14 |
Expected return on plan assets |  |  | (430 | ) |  |  | (399 | ) |  |  | (7 | ) |  |  | (7 | ) |  |  | — |  |  |  | — |
Amortization of prior service credit and other |  |  | (2 | ) |  |  | (1 | ) |  |  | 1 |  |  |  | — |  |  |  | (1 | ) |  |  | — |
|  |  | (69 | ) |  |  | (60 | ) |  |  | 4 |  |  |  | 5 |  |  |  | 15 |  |  |  | 14 |
Net periodic benefit cost |  | $ | 55 |  |  | $ | 76 |  |  | $ | 15 |  |  | $ | 15 |  |  | $ | 21 |  |  | $ | 21 |

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|  | Six Months Ended |
|  | U.S. Pension Plans |  |  | International Pension Plans |  |  | Postretirement Healthcare Plans |
|  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
Service cost |  | $ | 249 |  |  | $ | 272 |  |  | $ | 20 |  |  | $ | 20 |  |  | $ | 13 |  |  | $ | 14 |
Other retirement plans expense (income): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest cost |  |  | 724 |  |  |  | 681 |  |  |  | 22 |  |  |  | 22 |  |  |  | 32 |  |  |  | 30 |
Expected return on plan assets |  |  | (860 | ) |  |  | (799 | ) |  |  | (12 | ) |  |  | (11 | ) |  |  | — |  |  |  | — |
Amortization of prior service credit and other |  |  | (4 | ) |  |  | (3 | ) |  |  | 1 |  |  |  | — |  |  |  | (2 | ) |  |  | — |
|  |  | (140 | ) |  |  | (121 | ) |  |  | 11 |  |  |  | 11 |  |  |  | 30 |  |  |  | 30 |
Net periodic benefit cost |  | $ | 109 |  |  | $ | 151 |  |  | $ | 31 |  |  | $ | 31 |  |  | $ | 43 |  |  | $ | 44 |

For 2025, no pension contributions are required for our tax-q ualified U.S. domestic pension plan (“U.S. Pension Plan”) as it is fully funded under the Employee Retirement Income Security Act. We made voluntary contributions of $600 million to our U.S. Pension Plan during the six-month period ended November 30, 2024.

NOTE 7: Business Segment Information

We provide a broad portfolio of transportation, e-commerce, and business services, offering integrated business solutions utilizing our flexible, efficient, and intelligent global network. Our primary operating companies are Federal Express, the world’s largest express transportation company and a leading North American provider of small-package ground delivery services, and FedEx Freight, a leading North American provider of LTL freight transportation services. These companies represent our major service lines and constitute our reportable segments. Our reportable segments include the following businesses:

Federal Express Segment | Federal Express (express transportation, small-package ground delivery, and freight transportation)
FedEx Freight Segment | FedEx Freight (LTL freight transportation) FedEx Custom Critical (time-critical transportation)

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

The Federal Express segment operates combined sales, marketing, administrative, and information-technology functions in shared service operations for U.S. customers of our major business units and certain back-office support to FedEx Freight and our other operating segments which allows us to obtain synergies from the combination of these functions. We allocate the net operating costs of these services to reflect the full cost of operating our businesses in the results of those segments. We review and evaluate the performance of FedEx Freight and our other operating segments based on operating income inclusive of these allocations.

Operating expenses for our FedEx Freight segment include allocations of these services from the Federal Express segment. These allocations also include charges and credits for administrative services provided between operating companies. The allocations of net operating costs are based on metrics such as relative revenue or estimated services provided. We believe these allocations approximate the net cost of providing these functions. Our allocation methodologies are refined periodically, as necessary, to reflect changes in our businesses.

Corporate, Other, and Eliminations

Corporate and other includes corporate headquarters costs for executive officers and certain legal and finance functions, certain other costs and credits not attributed to our core business, and certain costs associated with developing integrated business solutions through our FedEx Dataworks operating segment. FedEx Dataworks is focused on creating solutions to transform the digital and physical experiences of our customers and team members.

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

The results of Corporate, other, and eliminations are not allocated to the other business segments.

Certain FedEx operating companies provide transportation and related services for other FedEx companies outside their reportable segment in order to optimize our resources. Billings for such services are based on negotiated rates, and are reflected as revenue of the billing segment. These rates are adjusted from time to time based on market conditions. Such intersegment revenue and expenses are

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eliminated in our consolidated results and are not separately identified in the following segment information because the amounts are not material.

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

|  | Three Months Ended |  |  | Six Months Ended |
|  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
Revenue: |  |  |  |  |  |  |  |  |  |  |  |
Federal Express segment |  | $ | 18,841 |  |  | $ | 18,773 |  |  | $ | 37,146 |  |  | $ | 37,199 |
FedEx Freight segment |  |  | 2,177 |  |  |  | 2,452 |  |  |  | 4,506 |  |  |  | 4,837 |
Other and eliminations |  |  | 949 |  |  |  | 940 |  |  |  | 1,894 |  |  |  | 1,810 |
|  | $ | 21,967 |  |  | $ | 22,165 |  |  | $ | 43,546 |  |  | $ | 43,846 |
Operating income (loss): |  |  |  |  |  |  |  |  |  |  |  |
Federal Express segment |  | $ | 1,052 |  |  | $ | 1,035 |  |  | $ | 2,005 |  |  | $ | 2,341 |
FedEx Freight segment |  |  | 312 |  |  |  | 491 |  |  |  | 751 |  |  |  | 973 |
Corporate, other, and eliminations |  |  | (312 | ) |  |  | (250 | ) |  |  | (624 | ) |  |  | (553 | )
|  | $ | 1,052 |  |  | $ | 1,276 |  |  | $ | 2,132 |  |  | $ | 2,761 |

The following table provides a reconciliation of reportable segment assets to our unaudited condensed consolidated financial statement totals as of the periods presented (in millions):

|  | November 30, 2024 (Unaudited) |  |  | May 31, 2024 |
Total assets: |  |  |  |  |  |
Federal Express segment |  | $ | 72,881 |  |  | $ | 73,259 |
FedEx Freight segment |  |  | 12,284 |  |  |  | 11,615 |
Corporate, other, and eliminations |  |  | 316 |  |  |  | 2,133 |
|  | $ | 85,481 |  |  | $ | 87,007 |

NOTE 8: Commitments

As of November 30, 2024, our purchase commitments under various contracts for the remainder of 2025 and annually thereafter were as follows (in millions):

|  | Aircraft and Aircraft Related |  |  | Other(1) |  |  | Total |
2025 (remainder) |  | $ | 1,041 |  |  | $ | 297 |  |  | $ | 1,338 |
2026 |  |  | 714 |  |  |  | 807 |  |  |  | 1,521 |
2027 |  |  | 257 |  |  |  | 556 |  |  |  | 813 |
2028 |  |  | 295 |  |  |  | 400 |  |  |  | 695 |
2029 |  |  | 310 |  |  |  | 328 |  |  |  | 638 |
Thereafter |  |  | 1,226 |  |  |  | 100 |  |  |  | 1,326 |
Total |  | $ | 3,843 |  |  | $ | 2,488 |  |  | $ | 6,331 |

(1) Primarily software and advertising.

The amounts reflected in the table above for purchase commitments represent noncancelable agreements to purchase goods or services. Open purchase orders that are cancelable are not considered unconditional purchase obligations for financial reporting purposes and are not included in the table above.

As of November 30, 2024, we had $462 million in deposits and progress payments on aircraft purchases and other planned aircraft-related transactions. These deposits are classified in the “Other assets” caption of our accompanying unaudited condensed

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consolidated balance sheets. Aircraft and related contracts are subject to price escalations. The following table is a summary of the key aircraft we are committed to purchase as of November 30, 2024 with the year of expected delivery:

|  | Cessna SkyCourier 408 |  |  | ATR 72-600F |  |  | B767F |  |  | B777F |  |  | Total |
2025 (remainder) |  |  | 12 |  |  |  | 2 |  |  |  | 8 |  |  |  | 2 |  |  |  | 24 |
2026 |  |  | 14 |  |  |  | 5 |  |  |  | 3 |  |  |  | — |  |  |  | 22 |
2027 |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
2028 |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
2029 |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Thereafter |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total |  |  | 26 |  |  |  | 7 |  |  |  | 11 |  |  |  | 2 |  |  |  | 46 |

A summary of future minimum lease payments under noncancelable operating and finance leases with an initial or remaining term in excess of one year as of November 30, 2024 is as follows (in millions):

|  | Aircraft and Related Equipment |  |  | Facilities and Other |  |  | Total Operating Leases |  |  | Finance Leases |  |  | Total Leases |
2025 (remainder) |  | $ | 63 |  |  | $ | 1,425 |  |  | $ | 1,488 |  |  | $ | 16 |  |  | $ | 1,504 |
2026 |  |  | 124 |  |  |  | 2,961 |  |  |  | 3,085 |  |  |  | 29 |  |  |  | 3,114 |
2027 |  |  | 124 |  |  |  | 2,618 |  |  |  | 2,742 |  |  |  | 22 |  |  |  | 2,764 |
2028 |  |  | 124 |  |  |  | 2,279 |  |  |  | 2,403 |  |  |  | 21 |  |  |  | 2,424 |
2029 |  |  | 117 |  |  |  | 1,911 |  |  |  | 2,028 |  |  |  | 19 |  |  |  | 2,047 |
Thereafter |  |  | 138 |  |  |  | 9,033 |  |  |  | 9,171 |  |  |  | 629 |  |  |  | 9,800 |
Total lease payments |  |  | 690 |  |  |  | 20,227 |  |  |  | 20,917 |  |  |  | 736 |  |  |  | 21,653 |
Less imputed interest |  |  | (78 | ) |  |  | (3,590 | ) |  |  | (3,668 | ) |  |  | (316 | ) |  |  | (3,984 | )
Present value of lease liability |  | $ | 612 |  |  | $ | 16,637 |  |  | $ | 17,249 |  |  | $ | 420 |  |  | $ | 17,669 |

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.

As of November 30, 2024, FedEx has entered into additional leases which have not yet commenced and are therefore not part of the right-of-use asset and liability. These leases are generally for build-to-suit facilities and have undiscounted future payments of approximatel y $0.9 billion that will commence when FedEx gains beneficial access to the leased asset. Commencement dates are expected to be from 2025 to 2027.

NOTE 9: Contingencies

Service Provider Lawsuits. Federal Express, as successor to FedEx Ground, is defending against lawsuits in which it is alleged that Federal Express should be treated as an employer or joint employer of drivers employed by service providers engaged by Federal Express. These cases are in varying stages of litigation, and we are not currently able to estimate an amount or range of potential loss in all of these matters. However, we do not expect to incur, individually or in the aggregate, a material loss in these matters. Nevertheless, adverse determinations in these matters could, among other things, entitle service providers’ drivers to certain payments, including wages and penalties, from the service providers and Federal Express and result in employment and withholding tax and benefit liability for Federal Express. We continue to believe that Federal Express is not an employer or joint employer of the drivers of these independent businesses.

FedEx Services Employment Lawsuit. In May 2021, FedEx Services was named as a defendant in a lawsuit filed in the U.S. District Court for the Southern District of Texas related to the termination of a former FedEx Services employee. The complaint alleged race discrimination and retaliation for complaints of discrimination under Section 1981 of the Civil Rights Act of 1866 and Title VII of the Civil Rights Act of 1964. After trial, in October 2022, the jury found in favor of FedEx Services on the race discrimination claims but awarded the plaintiff compensatory damages of approximately $1.0 million for emotional distress and punitive damages of $365 million for the retaliation claims. The court entered final judgment in the amount of approximately $366 million. FedEx Services appealed the verdict to the U.S. Court of Appeals for the Fifth Circuit. FedEx Services argued on appeal that FedEx Services is entitled to judgment as a matter of law on the retaliation claims, plaintiff’s claims were not timely filed, punitive damages are not available as a matter of law and, if allowed, must be reduced to no greater than a single-digit multiple of the award for compensatory damages based on the United States Supreme Court’s ruling in State Farm v. Campbell, and the compensatory damages award must be reduced to conform with the evidence and the Fifth Circuit’s maximum recovery rule. FedEx Services argued in the alternative that a new trial should be granted.

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In February 2024, a three-judge panel of the U.S. Court of Appeals for the Fifth Circuit reduced the jury’s emotional distress award of approximately $1.0 million to approximately $250,000 and vacated the jury’s $365 million award for punitive damages based on its finding that FedEx Services made good faith efforts to comply with the law. In March 2024, the full Fifth Circuit unanimously denied plaintiff’s petition for rehearing. In June 2024, plaintiff petitioned the U.S. Supreme Court for review of the Fifth Circuit’s reduction of the emotional distress award and determination that FedEx Services’s employment agreement provides a reasonable time for filing Section 1981 claims. The petition did not challenge the Fifth’s Circuit’s decision to vacate the punitive damages award. In October 2024, the U.S. Supreme Court denied the petition.

FedEx Ground Negligence Lawsuit. In December 2022, FedEx Ground was named as a defendant in a lawsuit filed in Texas state court related to the alleged kidnapping and first-degree murder of a minor by a driver employed by a service provider engaged by FedEx Ground. The complaint alleges compensatory and punitive damages against FedEx Ground for negligence and gross negligence, hiring and retention, as well as negligent entrustment. The service provider and driver are also named as defendants in the lawsuit. An immaterial loss accrual has been recorded in FedEx’s consolidated financial statements. It is reasonably possible that an additional material loss could be incurred. At this stage of the litigation, we cannot estimate the amount or range of such additional loss, if any.

Other Matters. FedEx and its subsidiaries are subject to other legal proceedings that arise in the ordinary course of business, including certain lawsuits containing various class-action allegations of wage-and-hour violations in which plaintiffs claim, among other things, that they were forced to work “off the clock,” were not paid overtime, or were not provided work breaks or other benefits, 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 if we reasonably believe that such proceedings may result in monetary sanctions above a stated threshold. Pursuant to the SEC regulations, FedEx uses a threshold of $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 10: Supplemental Cash Flow Information

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

|  | 2024 |  |  | 2023 |
Cash payments for: |  |  |  |  |  |
Interest (net of capitalized interest) |  | $ | 376 |  |  | $ | 357 |
Income taxes |  | $ | 918 |  |  | $ | 843 |
Income tax refunds received |  |  | (15 | ) |  |  | (82 | )
Cash tax payments/(refunds), net |  | $ | 903 |  |  | $ | 761 |

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REPORT O F INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of

FedEx Corporation

Results of Review of Interim Financial Statements

We have reviewed the accompanying condensed consolidated balance sheet of FedEx Corporation (the Company) as of November 30, 2024, the related condensed consolidated statements of income, comprehensive income, and changes in common stockholders’ investment for the three- and six-month periods ended November 30, 2024 and 2023, the condensed consolidated statements of cash flows for the six-month periods ended November 30, 2024 and 2023, and the related notes (collectively referred to as the “condensed consolidated interim financial statements”). Based on our reviews, we are not aware of any material modifications that should be made to the condensed consolidated interim financial statements for them to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of May 31, 2024, the related consolidated statements of income, comprehensive income, cash flows, and changes in common stockholders’ investment for the year then ended, and the related notes (not presented herein); and in our report dated July 15, 2024, we expressed an unqualified audit opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of May 31, 2024, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

These financial statements are the responsibility of the Company’s management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the SEC and the PCAOB. We conducted our review in accordance with the standards of the PCAOB. A review of interim financial statements consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

/s/ Ernst & Young LLP

Memphis, Tennessee

December 19, 2024

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

GENERAL

The following Management’s Discussion and Analysis of Results of Operations and Financial Condition (“MD&A”) describes the principal factors affecting the results of operations, liquidity, capital resources, and critical accounting estimates of FedEx Corporation (“FedEx”). This discussion should be read in conjunction with the accompanying quarterly unaudited condensed consolidated financial statements and our Annual Report on Form 10-K for the year ended May 31, 2024 (“Annual Report”). Our Annual Report includes additional information about our significant accounting policies, practices, and the transactions that underlie our financial results, as well as a detailed discussion of the most significant risks and uncertainties associated with our financial condition and operating results.

We provide a broad portfolio of transportation, e-commerce, and business services, offering integrated business solutions utilizing our flexible, efficient, and intelligent global network. Our primary operating companies are Federal Express Corporation (“Federal Express”), the world’s largest express transportation company and a leading North American provider of small-package ground delivery services, and FedEx Freight, Inc. (“FedEx Freight”), a leading North American provider of less-than-truckload (“LTL”) freight transportation services. See “Reportable Segments” for further discussion. Additional information on our businesses can be found in our Annual Report.

In connection with our one FedEx consolidation plan, on June 1, 2024, FedEx Ground Package System, Inc. (“FedEx Ground”) and FedEx Corporate Services, Inc. (“FedEx Services”) were merged into Federal Express, becoming a single company operating a unified, fully integrated air-ground express network under the respected FedEx brand. FedEx Freight continues to provide LTL freight transportation services as a separate subsidiary. Beginning in the first quarter of 2025, Federal Express and FedEx Freight represent our major service lines and constitute our reportable segments. Additionally, the results of FedEx Custom Critical, Inc. (“FedEx Custom Critical”) are included in the FedEx Freight segment instead of the Federal Express segment in 2025. Prior-year amounts were revised to reflect this presentation.

In June 2024, we announced that FedEx’s management and Board of Directors were conducting an assessment of the role of FedEx Freight in the company’s portfolio structure. On December 19, 2024, we announced that the Board of Directors concluded that assessment and decided to pursue a full separation of FedEx Freight through the capital markets, creating a new publicly traded company. The transaction is expected to qualify as a tax-free separation for U.S. federal income tax purposes for FedEx stockholders and be executed within the next 18 months. See Part II, Item 1A. “Risk Factors – The planned separation of FedEx Freight may not be completed on the terms or timeline currently contemplated, if at all, and there is no guarantee that the separation, if completed, will achieve the intended financial and strategic benefits.”

Except as otherwise specified, references to years indicate our fiscal year ending May 31, 2025 or ended May 31 of the year referenced, and comparisons are to the corresponding period of the prior year. References to our transportation segments include, collectively, the Federal Express segment and the FedEx Freight segment.

The key indicators necessary to understand our operating results include:

•
the overall customer demand for our various services based on macroeconomic factors and the global economy;
•
the volumes of transportation services provided through our networks, primarily measured by our average daily volume and shipment weight and size;
•
the mix of services purchased by our customers;
•
the prices we obtain for our services, primarily measured by yield (revenue per package or pound or revenue per shipment or hundredweight for LTL freight shipments);
•
our ability to manage our cost structure (capital expenditures and operating expenses) to match shifting volume levels; and
•
the timing and amount of fluctuations in fuel prices and our ability to recover incremental fuel costs through our fuel surcharges.

Trends Affecting Our Business

The following trends significantly affect the indicators discussed above, as well as our business and operating results. See the risk factors identified under Part I, Item 1A. “Risk Factors” in our Annual Report, as updated by our quarterly reports on Form 10-Q, for more information. Additionally, see “Results of Operations – Consolidated Results – Business Optimization Costs and – Outlook” and “Financial Condition – Liquidity Outlook” below for additional information on efforts we are taking to mitigate adverse trends.

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Macroeconomic Conditions

While macroeconomic risks apply to most companies, we are particularly vulnerable. The transportation industry is highly cyclical and especially susceptible to trends in economic activity. Our primary business is to transport goods, so our business levels are directly tied to the purchase and production of goods and the rate of global trade growth. The decline in U.S. imports of consumer goods that started in late 2022, along with slowed global industrial production, has contributed to weakened economic conditions for the transportation industry. Consequently, this environment has led to lower shipments at FedEx Freight and pressured package and freight volumes at Federal Express, negatively affecting our results in the second quarter and first half of 2025. Additionally, the incoming U.S. presidential administration has indicated a desire to significantly increase the rates and broaden the scope of tariffs imposed on goods imported into the U.S.

Inflation and Interest Rates

During the second quarter and first half of 2025, global inflation decelerated year-over-year but continues to be above historical levels. Additionally, global interest rates remained elevated in an effort to curb inflation. We are experiencing pressure on demand for our transportation services, particularly our priority services, as elevated inflation and interest rates are negatively affecting consumer and business spending. We expect inflation and high interest rates to continue to negatively affect our results of operations for the remainder of 2025.

Fuel

We must purchase large quantities of fuel to operate our aircraft and vehicles, and the price and availability of fuel is beyond our control and can be highly volatile. The timing and amount of fluctuations in fuel prices and our ability to recover incremental fuel costs through our fuel surcharges can significantly affect our operating results either positively or negatively in the short-term. During the second quarter and first half of 2025, lower fuel prices negatively affected yields through lower fuel surcharges and reduced fuel expense at both of our transportation segments.

Geopolitical Conflicts

Given the nature of our business and global operations, geopolitical conflicts may adversely affect our business and results of operations. While we do not expect ongoing geopolitical conflicts between Russia and Ukraine and in the Middle East to have a direct material effect on our business or results of operations, the broader consequences are adversely affecting the global economy and may also have the effect of heightening other risks disclosed in our Annual Report.

RESULTS OF OPERATIONS

Many of our operating expenses are directly affected by revenue and volume levels, and we expect these operating expenses to fluctuate on a year-over-year basis consistent with changes in revenue and volumes. Therefore, the discussion of operating expense captions focuses on the key drivers and trends affecting expenses other than those factors strictly related to changes in revenue and volumes. The line item “Other” includes costs associated with outside service contracts (such as information technology services, temporary labor, security, and facilities services), insurance, professional fees, and operational supplies.

CONSOLIDATED RESULTS

The following tables compare summary operating results and changes in revenue and operating income (loss) (dollars in millions, except per share amounts) for the periods ended November 30:

|  | Three Months Ended |  |  | Percent |  |  |  | Six Months Ended |  |  | Percent |  |
|  | 2024 |  |  | 2023 |  |  | Change |  |  |  | 2024 |  |  | 2023 |  |  | Change |  |
Revenue |  | $ | 21,967 |  |  | $ | 22,165 |  |  |  | (1 | ) |  |  | $ | 43,546 |  |  | $ | 43,846 |  |  |  | (1 | ) |
Operating income (loss): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Federal Express segment |  |  | 1,052 |  |  |  | 1,035 |  |  |  | 2 |  |  |  |  | 2,005 |  |  |  | 2,341 |  |  |  | (14 | ) |
FedEx Freight segment |  |  | 312 |  |  |  | 491 |  |  |  | (36 | ) |  |  |  | 751 |  |  |  | 973 |  |  |  | (23 | ) |
Corporate, other, and eliminations |  |  | (312 | ) |  |  | (250 | ) |  |  | (25 | ) |  |  |  | (624 | ) |  |  | (553 | ) |  |  | (13 | ) |
Consolidated operating income |  |  | 1,052 |  |  |  | 1,276 |  |  |  | (18 | ) |  |  |  | 2,132 |  |  |  | 2,761 |  |  |  | (23 | ) |
Operating margin: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Federal Express segment |  |  | 5.6 | % |  |  | 5.5 | % |  |  | 10 |  | bp |  |  | 5.4 | % |  |  | 6.3 | % |  |  | (90 | ) | bp
FedEx Freight segment |  |  | 14.3 | % |  |  | 20.0 | % |  |  | (570 | ) | bp |  |  | 16.7 | % |  |  | 20.1 | % |  |  | (340 | ) | bp
Consolidated operating margin |  |  | 4.8 | % |  |  | 5.8 | % |  |  | (100 | ) | bp |  |  | 4.9 | % |  |  | 6.3 | % |  |  | (140 | ) | bp
Consolidated net income |  | $ | 741 |  |  | $ | 900 |  |  |  | (18 | ) |  |  | $ | 1,535 |  |  | $ | 1,978 |  |  |  | (22 | ) |
Diluted earnings per share |  | $ | 3.03 |  |  | $ | 3.55 |  |  |  | (15 | ) |  |  | $ | 6.24 |  |  | $ | 7.79 |  |  |  | (20 | ) |

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|  | Year-over-Year Changes |
|  | Revenue |  |  | Operating Income (Loss) |
|  | Three Months Ended |  |  | Six Months Ended |  |  | Three Months Ended |  |  | Six Months Ended |
Federal Express segment |  | $ | 68 |  |  | $ | (53 | ) |  | $ | 17 |  |  | $ | (336 | )
FedEx Freight segment |  |  | (275 | ) |  |  | (331 | ) |  |  | (179 | ) |  |  | (222 | )
Corporate, other, and eliminations |  |  | 9 |  |  |  | 84 |  |  |  | (62 | ) |  |  | (71 | )
|  | $ | (198 | ) |  | $ | (300 | ) |  | $ | (224 | ) |  | $ | (629 | )

Overview

Operating income declined 18% for the second quarter and 23% for the first half of 2025 primarily due to lower demand for U.S. domestic package and freight LTL services driven by macroeconomic factors, increased purchased transportation and wage rates, and higher business optimization costs. This decline in operating income was partially offset by increased demand for our international export package services, base yield improvements at Federal Express and FedEx Freight, and continued cost savings related to DRIVE. Our DRIVE initiatives for the first half of 2025 included the continued transformation of our structural network, improving the efficiency of our information technology and back office functions, optimizing operations in Europe, and increasing linehaul efficiencies. The results for the first half of 2025 were also negatively affected by one fewer operating day and lower demand surcharges.

Operating income includes expenses of $326 million ($249 million, net of tax, or $1.02 per diluted share) in the second quarter and $454 million ($347 million, net of tax, or $1.41 per diluted share) in the first half of 2025 associated with our business optimization strategy to drive efficiency and lower our overhead and support costs. We recognized $145 million ($110 million, net of tax, or $0.44 per diluted share) of expenses in the second quarter and $250 million ($191 million, net of tax, or $0.75 per diluted share) in the first half of 2024 under this program. See the “Business Optimization Costs” section of this MD&A for more information.

We repurchased an aggregate of $1.0 billion of our common stock through accelerated share repurchase (“ASR”) transactions with two banks and open market transactions during the second quarter of 2025. During the six-month period ended November 30, 2024, we repurchased 7.1 million shares of FedEx common stock through ASR and open market transactions at an average price of $283.13 per share for a total of $2.0 billion. Share repurchases had a benefit of $0.07 per diluted share for the second quarter and $0.10 per diluted share for the first half of 2025. As of November 30, 2024, $3.1 billion remained available to be used for repurchases under the 2024 stock repurchase program. See Note 1 of the accompanying unaudited condensed consolidated financial statements, “Financial Condition – Liquidity and – Liquidity Outlook” below, and Part II, Item 2. “Unregistered Sales of Equity Securities and Use of Proceeds” of this Form 10-Q for additional information.

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Prior year statistical information has been revised to conform to the current year presentation. The following graphs for Federal Express and FedEx Freight show selected volume trends (in thousands) calculated on a 5-day-per-week basis over the five most recent quarters:

(1)
International domestic average daily package volume relates to our international intra-country operations. International export average daily package volume relates to our international priority and economy services.
(2)
International average daily freight pounds relate to our international priority and economy services.

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Prior year statistical information has been revised to conform to the current year presentation. The following graphs for Federal Express and FedEx Freight show selected yield trends over the five most recent quarters:

(1)
International export revenue per package relates to our international priority and economy services. International domestic revenue per package relates to our international intra-country operations.
(2)
International freight revenue per pound relates to our international priority and economy services.

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Revenue

Revenue decreased 1% in the second quarter and first half of 2025 primarily due to lower volume and fuel surcharges, partially offset by base yield improvement, at both of our transportation segments. Additionally, revenue during the first half of 2025 was negatively affected by one fewer operating day at both of our transportation segments and reduced demand surcharges at Federal Express.

Federal Express segment revenue was flat in the second quarter and first half of 2025 primarily due to increased deferred package volume and improved base yields, partially offset by lower priority package volume, the expiration on September 29, 2024 of our contract with the U.S. Postal Service (“USPS”) to provide the USPS domestic transportation services, and reduced fuel surcharges. Federal Express revenue for the first half of 2025 was also negatively affected by one fewer operating day and reduced demand surcharges. FedEx Freight revenue decreased 11% in the second quarter and 7% in the first half of 2025 primarily due to lower shipments, fuel surcharges, and weight per shipment, partially offset by base yield improvement. FedEx Freight revenue for the first half of 2025 was also negatively affected by one fewer operating day. Revenue at Corporate, other, and eliminations increased in the second quarter and first half of 2025 primarily due to higher yields and volume at FedEx Logistics, Inc. (“FedEx Logistics”).

Operating Expenses

The following table compares operating expenses expressed as dollar amounts (in millions) and as a percent of revenue for the periods ended November 30:

|  | Three Months Ended |  |  | Percent |  |  | Six Months Ended |  |  | Percent |
|  | 2024 |  |  | 2023 |  |  | Change |  |  | 2024 |  |  | 2023 |  |  | Change |
Operating expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Salaries and employee benefits |  | $ | 7,879 |  |  | $ | 7,833 |  |  |  | 1 |  |  | $ | 15,664 |  |  | $ | 15,618 |  |  |  | — |
Purchased transportation |  |  | 5,500 |  |  |  | 5,395 |  |  |  | 2 |  |  |  | 10,775 |  |  |  | 10,431 |  |  |  | 3 |
Rentals and landing fees |  |  | 1,168 |  |  |  | 1,138 |  |  |  | 3 |  |  |  | 2,329 |  |  |  | 2,289 |  |  |  | 2 |
Depreciation and amortization |  |  | 1,063 |  |  |  | 1,040 |  |  |  | 2 |  |  |  | 2,141 |  |  |  | 2,111 |  |  |  | 1 |
Fuel |  |  | 947 |  |  |  | 1,328 |  |  |  | (29 | ) |  |  | 2,022 |  |  |  | 2,429 |  |  |  | (17 | )
Maintenance and repairs |  |  | 831 |  |  |  | 854 |  |  |  | (3 | ) |  |  | 1,660 |  |  |  | 1,678 |  |  |  | (1 | )
Business optimization costs |  |  | 326 |  |  |  | 145 |  |  |  | 125 |  |  |  | 454 |  |  |  | 250 |  |  |  | 82 |
Other |  |  | 3,201 |  |  |  | 3,156 |  |  |  | 1 |  |  |  | 6,369 |  |  |  | 6,279 |  |  |  | 1 |
Total operating expenses |  |  | 20,915 |  |  |  | 20,889 |  |  |  | — |  |  |  | 41,414 |  |  |  | 41,085 |  |  |  | 1 |
Operating income |  | $ | 1,052 |  |  | $ | 1,276 |  |  |  | (18 | ) |  | $ | 2,132 |  |  | $ | 2,761 |  |  |  | (23 | )

|  | Percent of Revenue |  |
|  | Three Months Ended |  |  | Six Months Ended |  |
|  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |  |
Operating expenses: |  |  |  |  |  |  |  |  |  |  |  |  |
Salaries and employee benefits |  |  | 35.9 |  | % |  | 35.3 |  | % |  | 36.0 |  | % |  | 35.6 |  | %
Purchased transportation |  |  | 25.0 |  |  |  | 24.3 |  |  |  | 24.8 |  |  |  | 23.8 |  |
Rentals and landing fees |  |  | 5.3 |  |  |  | 5.1 |  |  |  | 5.4 |  |  |  | 5.2 |  |
Depreciation and amortization |  |  | 4.8 |  |  |  | 4.7 |  |  |  | 4.9 |  |  |  | 4.8 |  |
Fuel |  |  | 4.3 |  |  |  | 6.0 |  |  |  | 4.6 |  |  |  | 5.6 |  |
Maintenance and repairs |  |  | 3.8 |  |  |  | 3.9 |  |  |  | 3.8 |  |  |  | 3.8 |  |
Business optimization costs |  |  | 1.5 |  |  |  | 0.7 |  |  |  | 1.0 |  |  |  | 0.6 |  |
Other |  |  | 14.6 |  |  |  | 14.2 |  |  |  | 14.6 |  |  |  | 14.3 |  |
Total operating expenses |  |  | 95.2 |  |  |  | 94.2 |  |  |  | 95.1 |  |  |  | 93.7 |  |
Operating margin |  |  | 4.8 |  | % |  | 5.8 |  | % |  | 4.9 |  | % |  | 6.3 |  | %

Operating income declined 18% for the second quarter and 23% for the first half of 2025 primarily due to lower demand for U.S. domestic package and freight LTL services driven by macroeconomic factors, increased purchased transportation and wage rates, and higher business optimization costs. The decline in operating income was partially offset by increased demand for our international export package services, base yield improvements at Federal Express and FedEx Freight, and continued cost savings related to DRIVE. The results for the first half of 2025 were also negatively affected by one fewer operating day and lower demand surcharges.

Purchased transportation expense increased 2% in the second quarter and 3% in the first half of 2025 primarily due to higher rates and an increase in commercial linehaul to support international economy volume growth and network changes, partially offset by lower fuel prices and savings from our DRIVE initiatives. Other operating expenses increased 1% in the second quarter and first half of 2025 primarily due to an increase in self-insurance accruals and higher outside service contracts expense. Salaries and employee benefits expense increased 1% in the second quarter and slightly in the first half of 2025 primarily due to an increase in wage rates as well as an increase in retirement benefits due to changes in our deferred contribution plan that increased the number of eligible employees at

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Federal Express, partially offset by savings from our DRIVE initiatives and lower variable incentive compensation. Fuel expense decreased 29% in the second quarter and 17% in the first half of 2025 primarily due to a decrease in fuel prices and usage.

Business Optimization Costs

In the second quarter of 2023, we announced DRIVE, a comprehensive program to improve long-term profitability. This program includes a business optimization plan to drive efficiency within and among our transportation segments, lower our overhead and support costs, and transform our digital capabilities. We have commenced our plan to consolidate our sortation facilities and equipment, reduce pickup-and-delivery routes, and optimize our enterprise linehaul network by moving beyond discrete collaboration to an end-to-end optimized network through Network 2.0, the multi-year effort to improve the efficiency with which FedEx picks up, transports, and delivers packages in the U.S. and Canada.

We have implemented Network 2.0 optimization in more than 200 locations in the U.S. and Canada. Contracted service providers will handle the pickup and delivery of Federal Express packages in some locations while employee couriers will handle others.

In June 2024, Federal Express announced a workforce reduction plan in Europe as part of its ongoing measures to reduce structural costs. The plan will impact between 1,700 and 2,000 employees in Europe across back-office and commercial functions. The execution of the plan is subject to a consultation process that is expected to occur over an 18-month period in accordance with local country processes and regulations. We expect savings from the plan to be between $125 million and $175 million on an annualized basis beginning in 2027.

We incurred business optimization costs, including the workforce reduction plan in Europe, of $326 million ($249 million, net of tax, or $1.02 per diluted share) in the second quarter and $454 million ($347 million, net of tax, or $1.41 per diluted share) in the first half of 2025. These costs were primarily related to severance and professional services and are included in Federal Express and Corporate, other, and eliminations. We incurred business optimization costs of $145 million ($110 million, net of tax, or $0.44 per diluted share) in the second quarter and $250 million ($191 million, net of tax, or $0.75 per diluted share) in the first half of 2024. These costs were primarily related to professional services and severance and are included in Corporate, other, and eliminations and Federal Express.

We expect the pre-tax cost of the severance benefits and legal and professional fees to be provided under and related to our workforce reduction plan in Europe to range from $250 million to $375 million in cash expenditures through 2026. In the first half of 2025, we incurred $176 million of costs related to this plan. We expect the aggregate pre-tax cost of our other business optimization activities to be approximately $1.7 billion through 2025. The timing and amount of our business optimization expenses and the related cost savings from the workforce reduction plan may change as we revise and implement our plans. The identification of costs as business optimization-related expenditures is subject to our disclosure controls and procedures.

Income Taxes

Our effective tax rate was 24.5% for the second quarter and 24.6% for the first half of 2025, compared to 25.1% for the second quarter and 24.6% for the first half of 2024. The second quarter 2025 tax rate was favorably impacted by higher earnings in certain non-U.S. jurisdictions.

We are subject to taxation in the U.S. and various U.S. state, local, and foreign jurisdictions. We are currently under examination by the Internal Revenue Service for the 2016 through 2021 tax years. It is reasonably possible that certain income tax return proceedings will be completed during the next 12 months and could result in a change in our balance of unrecognized tax benefits. However, we believe we have recorded adequate amounts of tax, including interest and penalties, for any adjustments expected to occur.

During 2021, we filed suit in U.S. District Court for the Western District of Tennessee challenging the validity of a tax regulation related to the one-time transition tax on foreign earnings not repatriated, which was enacted as part of the Tax Cuts and Jobs Act (“TCJA”). Our lawsuit seeks to have the court declare this regulation invalid and order the refund of overpayments of U.S. federal income taxes for 2018 and 2019 attributable to the denial of foreign tax credits under the regulation. We have recorded a cumulative benefit of $226 million attributable to our interpretation of the TCJA and the Internal Revenue Code. In March 2023, the District Court ruled that the regulation is invalid and contradicts the plain terms of the tax code. We continue to work towards obtaining a final judgment for the applicable refund amounts due to the regulation being invalid. Once the District Court enters a final judgment, the U.S. government could file an appeal with the U.S. Court of Appeals for the Sixth Circuit. If we are ultimately unsuccessful in defending our position, we may be required to reverse the benefit previously recorded.

Outlook

During 2025, we expect revenue growth to be constrained as the macroeconomic environment remains challenging while customer demand further shifts to deferred service offerings. We will continue to execute on our DRIVE program initiatives focused on reducing our permanent cost structure, aligning our cost base with demand, and increasing the flexibility of our network. We will also continue to execute on our revenue quality strategy and pursue profitable revenue growth opportunities to mitigate the impact of the

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service mix shift on our yield as well as base yield pressures through surcharge management and optimizing our customer mix. We expect the benefits from DRIVE and revenue quality initiatives to be partially offset by expense headwinds related to higher global inflation, the unfavorable effect of the expiration in September 2024 of the contract for Federal Express to provide the USPS U.S. domestic transportation services, and two fewer operating days.

See the “Business Optimization Costs” section of this MD&A for additional information on our DRIVE program, workforce reduction plan in Europe, and other cost savings initiatives.

Our capital expenditures for 2025 are expected to be approximately $5.2 billion, in line with 2024, as we continue to reduce our capital intensity relative to revenue. Aircraft spend is expected to decline, partially offset by increased investments in network optimization and modernization of our facilities.

We will continue to evaluate our investments in critical long-term strategic projects to ensure our capital expenditures are expected to generate high returns on investment and are balanced with our outlook for global economic conditions. For additional details on key 2025 capital projects, refer to the “Financial Condition – Capital Resources” and “Financial Condition – Liquidity Outlook” sections of this MD&A.

The uncertainty of a slowdown in the global economy, global inflation, geopolitical challenges, and the effects these factors will have on the rate of growth of global trade, supply chains, fuel prices, and our business in particular, make any expectations for the remainder of 2025 inherently less certain. See “Item 1A. Risk Factors” for more information.

See the “Trends Affecting Our Business,” “Critical Accounting Estimates,” and “Forward-Looking Statements” sections of this MD&A for additional information.

RECENT ACCOUNTING GUIDANCE

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

REPORTABLE SEGMENTS

Federal Express and FedEx Freight represent our major service lines and constitute our reportable segments. Our reportable segments include the following businesses:

Federal Express Segment | Federal Express (express transportation, small-package ground delivery, and freight transportation)
FedEx Freight Segment | FedEx Freight (LTL freight transportation) FedEx Custom Critical (time-critical transportation)

The Federal Express segment operates combined sales, marketing, administrative, and information-technology functions in shared service operations for U.S. customers of our major business units and certain back-office support to FedEx Freight and our other operating segments which allows us to obtain synergies from the combination of these functions. We allocate the net operating costs of these services to reflect the full cost of operating our businesses in the results of those segments. We review and evaluate the performance of FedEx Freight and our other operating segments based on operating income inclusive of these allocations.

Operating expenses for our FedEx Freight segment include allocations of these services from the Federal Express segment. These allocations also include charges and credits for administrative services provided between operating companies. The allocations of net operating costs are based on metrics such as relative revenue or estimated services provided. We believe these allocations approximate the net cost of providing these functions. Our allocation methodologies are refined periodically, as necessary, to reflect changes in our businesses.

CORPORATE, OTHER, AND ELIMINATIONS

Corporate and other includes corporate headquarters costs for executive officers and certain legal and finance functions, certain other costs and credits not attributed to our core business, and certain costs associated with developing integrated business solutions through our FedEx Dataworks, Inc. (“FedEx Dataworks”) operating segment. FedEx Dataworks is focused on creating solutions to transform the digital and physical experiences of our customers and team members.

Also included in Corporate and other are the FedEx Office and Print Services, Inc. (“FedEx Office”) operating segment, which provides an array of document and business services and retail access to our customers for our package transportation businesses, and

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the FedEx Logistics operating segment, which provides integrated supply chain management solutions, specialty transportation, customs brokerage, and global ocean and air freight forwarding.

The results of Corporate, other, and eliminations are not allocated to the other business segments.

Operating results in Corporate, other, and eliminations declined in the second quarter and first half of 2025 primarily due to increased business optimization costs and outside service contracts expense at FedEx Dataworks.

Certain FedEx operating companies provide transportation and related services for other FedEx companies outside their reportable segment in order to optimize our resources. For example, during the second quarter and first half of 2025 FedEx Freight provided road and intermodal support for Federal Express. In addition, Federal Express works with FedEx Logistics to secure air charters and other cargo space for U.S. customers. Billings for such services are based on negotiated rates and are reflected as revenue of the billing segment. These rates are adjusted from time to time based on market conditions. Such intersegment revenue and expenses are eliminated in our consolidated results and are not separately identified in the following segment information because the amounts are not material.

FEDERAL EXPRESS SEGMENT

Federal Express offers a wide range of U.S. domestic and international shipping services for delivery of packages and freight including priority, deferred, and economy services, which provide delivery on a time-definite or day-definite basis. The following table compares revenue, operating expenses, operating income (dollars in millions), operating margin, and operating expenses as a percent of revenue for the periods ended November 30:

|  | Three Months Ended |  |  | Percent |  |  | Six Months Ended |  |  | Percent |  |
|  | 2024 |  |  | 2023 |  |  | Change |  |  | 2024 |  |  | 2023 |  |  | Change |  |
Revenue: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Package: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. priority |  | $ | 2,563 |  |  | $ | 2,605 |  |  |  | (2 | ) |  | $ | 5,154 |  |  | $ | 5,278 |  |  |  | (2 | ) |
U.S. deferred |  |  | 1,199 |  |  |  | 1,207 |  |  |  | (1 | ) |  |  | 2,350 |  |  |  | 2,394 |  |  |  | (2 | ) |
U.S. ground |  |  | 8,256 |  |  |  | 8,309 |  |  |  | (1 | ) |  |  | 16,312 |  |  |  | 16,442 |  |  |  | (1 | ) |
Total U.S. domestic package revenue |  |  | 12,018 |  |  |  | 12,121 |  |  |  | (1 | ) |  |  | 23,816 |  |  |  | 24,114 |  |  |  | (1 | ) |
International priority |  |  | 2,231 |  |  |  | 2,390 |  |  |  | (7 | ) |  |  | 4,437 |  |  |  | 4,717 |  |  |  | (6 | ) |
International economy |  |  | 1,588 |  |  |  | 1,183 |  |  |  | 34 |  |  |  | 2,948 |  |  |  | 2,300 |  |  |  | 28 |  |
Total international export package revenue |  |  | 3,819 |  |  |  | 3,573 |  |  |  | 7 |  |  |  | 7,385 |  |  |  | 7,017 |  |  |  | 5 |  |
International domestic(1) |  |  | 1,190 |  |  |  | 1,213 |  |  |  | (2 | ) |  |  | 2,302 |  |  |  | 2,353 |  |  |  | (2 | ) |
Total package revenue |  |  | 17,027 |  |  |  | 16,907 |  |  |  | 1 |  |  |  | 33,503 |  |  |  | 33,484 |  |  |  | — |  |
Freight: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. |  |  | 383 |  |  |  | 577 |  |  |  | (34 | ) |  |  | 952 |  |  |  | 1,154 |  |  |  | (18 | ) |
International priority |  |  | 640 |  |  |  | 568 |  |  |  | 13 |  |  |  | 1,166 |  |  |  | 1,121 |  |  |  | 4 |  |
International economy |  |  | 529 |  |  |  | 470 |  |  |  | 13 |  |  |  | 992 |  |  |  | 942 |  |  |  | 5 |  |
Total freight revenue |  |  | 1,552 |  |  |  | 1,615 |  |  |  | (4 | ) |  |  | 3,110 |  |  |  | 3,217 |  |  |  | (3 | ) |
Other |  |  | 262 |  |  |  | 251 |  |  |  | 4 |  |  |  | 533 |  |  |  | 498 |  |  |  | 7 |  |
Total revenue |  |  | 18,841 |  |  |  | 18,773 |  |  |  | — |  |  |  | 37,146 |  |  |  | 37,199 |  |  |  | — |  |
Operating expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Salaries and employee benefits |  |  | 6,329 |  |  |  | 6,208 |  |  |  | 2 |  |  |  | 12,530 |  |  |  | 12,379 |  |  |  | 1 |  |
Purchased transportation |  |  | 5,067 |  |  |  | 4,980 |  |  |  | 2 |  |  |  | 9,868 |  |  |  | 9,657 |  |  |  | 2 |  |
Rentals and landing fees |  |  | 987 |  |  |  | 963 |  |  |  | 2 |  |  |  | 1,973 |  |  |  | 1,938 |  |  |  | 2 |  |
Depreciation and amortization |  |  | 918 |  |  |  | 925 |  |  |  | (1 | ) |  |  | 1,853 |  |  |  | 1,854 |  |  |  | — |  |
Fuel |  |  | 835 |  |  |  | 1,164 |  |  |  | (28 | ) |  |  | 1,789 |  |  |  | 2,125 |  |  |  | (16 | ) |
Maintenance and repairs |  |  | 715 |  |  |  | 732 |  |  |  | (2 | ) |  |  | 1,434 |  |  |  | 1,454 |  |  |  | (1 | ) |
Business optimization costs |  |  | 206 |  |  |  | 77 |  |  |  | 168 |  |  |  | 249 |  |  |  | 104 |  |  |  | 139 |  |
Intercompany allocations |  |  | (205 | ) |  |  | (168 | ) |  |  | 22 |  |  |  | (392 | ) |  |  | (343 | ) |  |  | 14 |  |
Other |  |  | 2,937 |  |  |  | 2,857 |  |  |  | 3 |  |  |  | 5,837 |  |  |  | 5,690 |  |  |  | 3 |  |
Total operating expenses |  |  | 17,789 |  |  |  | 17,738 |  |  |  | — |  |  |  | 35,141 |  |  |  | 34,858 |  |  |  | 1 |  |
Operating income |  | $ | 1,052 |  |  | $ | 1,035 |  |  |  | 2 |  |  | $ | 2,005 |  |  | $ | 2,341 |  |  |  | (14 | ) |
Operating margin |  |  | 5.6 | % |  |  | 5.5 | % |  |  | 10 |  | bp |  | 5.4 | % |  |  | 6.3 | % |  |  | (90 | ) | bp

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

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|  | Percent of Revenue |  |
|  | Three Months Ended |  |  | Six Months Ended |  |
|  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |  |
Operating expenses: |  |  |  |  |  |  |  |  |  |  |  |  |
Salaries and employee benefits |  |  | 33.6 |  | % |  | 33.1 |  | % |  | 33.7 |  | % |  | 33.3 |  | %
Purchased transportation |  |  | 26.9 |  |  |  | 26.5 |  |  |  | 26.6 |  |  |  | 25.9 |  |
Rentals and landing fees |  |  | 5.2 |  |  |  | 5.2 |  |  |  | 5.3 |  |  |  | 5.2 |  |
Depreciation and amortization |  |  | 4.9 |  |  |  | 4.9 |  |  |  | 5.0 |  |  |  | 5.0 |  |
Fuel |  |  | 4.4 |  |  |  | 6.2 |  |  |  | 4.8 |  |  |  | 5.7 |  |
Maintenance and repairs |  |  | 3.8 |  |  |  | 3.9 |  |  |  | 3.9 |  |  |  | 3.9 |  |
Business optimization costs |  |  | 1.1 |  |  |  | 0.4 |  |  |  | 0.7 |  |  |  | 0.3 |  |
Intercompany allocations |  |  | (1.1 | ) |  |  | (0.9 | ) |  |  | (1.1 | ) |  |  | (0.9 | ) |
Other |  |  | 15.6 |  |  |  | 15.2 |  |  |  | 15.7 |  |  |  | 15.3 |  |
Total operating expenses |  |  | 94.4 |  |  |  | 94.5 |  |  |  | 94.6 |  |  |  | 93.7 |  |
Operating margin |  |  | 5.6 |  | % |  | 5.5 |  | % |  | 5.4 |  | % |  | 6.3 |  | %

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Prior year statistical information has been revised to conform to the current year presentation. The following table compares selected statistics (in thousands, except yield amounts) for the periods ended November 30:

|  | Three Months Ended |  |  | Percent |  |  | Six Months Ended |  |  | Percent |
|  | 2024 |  |  | 2023 |  |  | Change |  |  | 2024 |  |  | 2023 |  |  | Change |
Package Statistics |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Average daily package volume (ADV)(1): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. priority |  |  | 1,603 |  |  |  | 1,676 |  |  |  | (4 | ) |  |  | 1,601 |  |  |  | 1,678 |  |  |  | (5 | )
U.S. deferred |  |  | 1,014 |  |  |  | 1,009 |  |  |  | — |  |  |  | 991 |  |  |  | 989 |  |  |  | — |
U.S. ground commercial |  |  | 4,309 |  |  |  | 4,392 |  |  |  | (2 | ) |  |  | 4,299 |  |  |  | 4,339 |  |  |  | (1 | )
U.S. ground home delivery/economy |  |  | 6,962 |  |  |  | 6,991 |  |  |  | — |  |  |  | 6,698 |  |  |  | 6,696 |  |  |  | — |
Total U.S. domestic ADV |  |  | 13,888 |  |  |  | 14,068 |  |  |  | (1 | ) |  |  | 13,589 |  |  |  | 13,702 |  |  |  | (1 | )
International priority |  |  | 594 |  |  |  | 673 |  |  |  | (12 | ) |  |  | 608 |  |  |  | 666 |  |  |  | (9 | )
International economy |  |  | 586 |  |  |  | 406 |  |  |  | 44 |  |  |  | 538 |  |  |  | 385 |  |  |  | 40 |
Total international export ADV |  |  | 1,180 |  |  |  | 1,079 |  |  |  | 9 |  |  |  | 1,146 |  |  |  | 1,051 |  |  |  | 9 |
International domestic(2) |  |  | 2,060 |  |  |  | 2,085 |  |  |  | (1 | ) |  |  | 1,941 |  |  |  | 1,989 |  |  |  | (2 | )
Total ADV |  |  | 17,128 |  |  |  | 17,232 |  |  |  | (1 | ) |  |  | 16,676 |  |  |  | 16,742 |  |  |  | — |
Revenue per package (yield): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. priority |  | $ | 25.38 |  |  | $ | 24.67 |  |  |  | 3 |  |  | $ | 25.34 |  |  |  | 24.58 |  |  |  | 3 |
U.S. deferred |  |  | 18.76 |  |  |  | 19.00 |  |  |  | (1 | ) |  |  | 18.68 |  |  |  | 18.91 |  |  |  | (1 | )
U.S. ground |  |  | 11.63 |  |  |  | 11.59 |  |  |  | — |  |  |  | 11.68 |  |  |  | 11.64 |  |  |  | — |
U.S. domestic composite |  |  | 13.73 |  |  |  | 13.68 |  |  |  | — |  |  |  | 13.80 |  |  |  | 13.75 |  |  |  | — |
International priority |  |  | 59.59 |  |  |  | 56.37 |  |  |  | 6 |  |  |  | 57.41 |  |  |  | 55.37 |  |  |  | 4 |
International economy |  |  | 43.03 |  |  |  | 46.19 |  |  |  | (7 | ) |  |  | 43.17 |  |  |  | 46.65 |  |  |  | (7 | )
International export composite |  |  | 51.37 |  |  |  | 52.54 |  |  |  | (2 | ) |  |  | 50.73 |  |  |  | 52.17 |  |  |  | (3 | )
International domestic(2) |  |  | 9.18 |  |  |  | 9.24 |  |  |  | (1 | ) |  |  | 9.34 |  |  |  | 9.24 |  |  |  | 1 |
Composite package yield |  |  | 15.78 |  |  |  | 15.57 |  |  |  | 1 |  |  |  | 15.82 |  |  |  | 15.62 |  |  |  | 1 |
Freight Statistics |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Average daily freight pounds: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. |  |  | 2,772 |  |  |  | 5,663 |  |  |  | (51 | ) |  |  | 4,056 |  |  |  | 5,481 |  |  |  | (26 | )
International priority |  |  | 4,927 |  |  |  | 4,472 |  |  |  | 10 |  |  |  | 4,694 |  |  |  | 4,431 |  |  |  | 6 |
International economy |  |  | 12,475 |  |  |  | 11,857 |  |  |  | 5 |  |  |  | 11,584 |  |  |  | 11,422 |  |  |  | 1 |
Total average daily freight pounds |  |  | 20,174 |  |  |  | 21,992 |  |  |  | (8 | ) |  |  | 20,334 |  |  |  | 21,334 |  |  |  | (5 | )
Revenue per pound (yield): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. |  | $ | 2.19 |  |  | $ | 1.62 |  |  |  | 35 |  |  | $ | 1.85 |  |  | $ | 1.65 |  |  |  | 12 |
International priority |  |  | 2.06 |  |  |  | 2.02 |  |  |  | 2 |  |  |  | 1.96 |  |  |  | 1.98 |  |  |  | (1 | )
International economy |  |  | 0.67 |  |  |  | 0.63 |  |  |  | 6 |  |  |  | 0.67 |  |  |  | 0.64 |  |  |  | 5 |
Composite freight yield |  |  | 1.22 |  |  |  | 1.17 |  |  |  | 4 |  |  |  | 1.20 |  |  |  | 1.18 |  |  |  | 2 |

(1)
ADV is calculated on a 5-day-per-week basis.
(2)
International domestic statistics relate to our international intra-country operations.

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Federal Express Segment Revenue

Federal Express segment revenue was flat in the second quarter and first half of 2025 primarily due to increased deferred package volume and improved yields, partially offset by decreases from lower priority package and U.S. freight volume. Revenue in the first half of 2025 was also negatively affected by one fewer operating day and reduced demand surcharges.

Volume:

International priority package volume decreased 12% in the second quarter and 9% in the first half of 2025 driven by softer global industrial production. U.S. average daily freight pounds decreased 51% in the second quarter and 26% in the first half of 2025 primarily due to the expiration of our contract with the USPS on September 29, 2024. U.S. priority package volume decreased 4% in the second quarter and 5% in the first half of 2025 primarily due to economic softness and lower consumer spending. International economy package volume increased 44% in the second quarter and 40% in the first half of 2025 primarily due to continued growth in our deferred service offerings as a result of global macroeconomic conditions.

Yield:

U.S. priority package yield increased 3% in the second quarter and first half of 2025 primarily due to higher base rates. Composite freight yield increased 4% in the second quarter and 2% in the first half of 2025 primarily due to improved U.S. freight yield resulting from the expiration of our contract with the USPS on September 29, 2024 and an increase in international economy freight yield due to improved market strength. These improvements were partially offset by a decrease in international export composite package yield of 2% in the second quarter and 3% in the first half of 2025 primarily due to unfavorable service mix. Package and freight yields were also negatively affected by lower fuel surcharges in the second quarter and first half of 2025 and reduced demand surcharges in the first half of 2025.

Federal Express Segment Operating Income

Federal Express segment operating income increased 2% in the second quarter of 2025 due to higher base yields, partially offset by increased operating expenses. Federal Express segment operating income decreased 14% in the first half of 2025 due to increased operating expenses and one fewer operating day, partially offset by higher base yields. The increase in operating expenses in the second quarter and first half of 2025 was driven by increased wage and purchased transportation rates, business optimization costs, and increased employee benefits, partially offset by lower fuel prices and continued benefits from DRIVE initiatives that drove a reduction in our permanent cost structure. These initiatives included the continued transformation of our structural network, improving the efficiency of our information technology and back office functions, optimizing operations in Europe, and increasing linehaul efficiencies.

Purchased transportation expense increased 2% in the second quarter and first half of 2025 primarily due to higher rates as well as an increase in commercial linehaul to support international economy volume growth and network changes, partially offset by lower fuel prices and savings from our DRIVE initiatives. Salaries and employee benefits increased 2% in the second quarter and 1% in the first half of 2025 primarily due to an increase in wage rates as well as an increase in retirement benefits due to changes to our defined contribution plan which increased the number of eligible employees, partially offset by savings from our DRIVE initiatives and lower variable incentive compensation. Other operating expense increased 3% in the second quarter and first half of 2025 primarily due to higher outside service contracts expense resulting from increased information technology spending and higher self-insurance accruals. Fuel expense decreased 28% in the second quarter and 16% in the first half of 2025 due to decreases in fuel prices and usage resulting from lower flight hours.

Federal Express segment results include business optimization costs of $206 million in the second quarter and $249 million in the first half of 2025. Federal Express segment results include business optimization costs of $77 million in the second quarter and $104 million in the first half of 2024. See the “Business Optimization Costs” section of this MD&A for more information.

In July 2023, Federal Express’s pilots failed to ratify the tentative successor agreement that was approved by the Air Line Pilots Association, International’s FedEx Master Executive Council in the prior month. The ongoing bargaining process has no effect on our operations. See Note 1 of the accompanying unaudited condensed consolidated financial statements for additional information.

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FEDEX FREIGHT SEGMENT

FedEx Freight LTL service offerings include priority services when speed is critical and economy services when time can be traded for savings. The following table compares revenue, operating expenses, operating income (dollars in millions), operating margin, selected statistics, and operating expenses as a percent of revenue for the periods ended November 30:

|  | Three Months Ended |  |  | Percent |  |  | Six Months Ended |  |  | Percent |  |
|  | 2024 |  |  | 2023 |  |  | Change |  |  | 2024 |  |  | 2023 |  |  | Change |  |
Revenue |  | $ | 2,177 |  |  | $ | 2,452 |  |  |  | (11 | ) |  | $ | 4,506 |  |  | $ | 4,837 |  |  |  | (7 | ) |
Operating expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Salaries and employee benefits |  |  | 976 |  |  |  | 1,018 |  |  |  | (4 | ) |  |  | 1,960 |  |  |  | 2,003 |  |  |  | (2 | ) |
Purchased transportation |  |  | 197 |  |  |  | 231 |  |  |  | (15 | ) |  |  | 400 |  |  |  | 450 |  |  |  | (11 | ) |
Rentals |  |  | 72 |  |  |  | 70 |  |  |  | 3 |  |  |  | 143 |  |  |  | 139 |  |  |  | 3 |  |
Depreciation and amortization |  |  | 112 |  |  |  | 81 |  |  |  | 38 |  |  |  | 222 |  |  |  | 189 |  |  |  | 17 |  |
Fuel |  |  | 111 |  |  |  | 164 |  |  |  | (32 | ) |  |  | 232 |  |  |  | 303 |  |  |  | (23 | ) |
Maintenance and repairs |  |  | 88 |  |  |  | 94 |  |  |  | (6 | ) |  |  | 170 |  |  |  | 169 |  |  |  | 1 |  |
Intercompany charges |  |  | 143 |  |  |  | 134 |  |  |  | 7 |  |  |  | 291 |  |  |  | 273 |  |  |  | 7 |  |
Other |  |  | 166 |  |  |  | 169 |  |  |  | (2 | ) |  |  | 337 |  |  |  | 338 |  |  |  | — |  |
Total operating expenses |  |  | 1,865 |  |  |  | 1,961 |  |  |  | (5 | ) |  |  | 3,755 |  |  |  | 3,864 |  |  |  | (3 | ) |
Operating income |  | $ | 312 |  |  | $ | 491 |  |  |  | (36 | ) |  | $ | 751 |  |  | $ | 973 |  |  |  | (23 | ) |
Operating margin |  |  | 14.3 | % |  |  | 20.0 | % |  |  | (570 | ) | bp |  | 16.7 | % |  |  | 20.1 | % |  |  | (340 | ) | bp
Average daily shipments (in thousands): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Priority |  |  | 62.5 |  |  |  | 68.5 |  |  |  | (9 | ) |  |  | 62.7 |  |  |  | 67.3 |  |  |  | (7 | ) |
Economy |  |  | 28.5 |  |  |  | 30.5 |  |  |  | (7 | ) |  |  | 28.8 |  |  |  | 29.5 |  |  |  | (2 | ) |
Total average daily shipments |  |  | 91.0 |  |  |  | 99.0 |  |  |  | (8 | ) |  |  | 91.5 |  |  |  | 96.8 |  |  |  | (5 | ) |
Weight per shipment (lbs): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Priority |  |  | 935 |  |  |  | 975 |  |  |  | (4 | ) |  |  | 946 |  |  |  | 982 |  |  |  | (4 | ) |
Economy |  |  | 865 |  |  |  | 880 |  |  |  | (2 | ) |  |  | 866 |  |  |  | 878 |  |  |  | (1 | ) |
Composite weight per shipment |  |  | 913 |  |  |  | 946 |  |  |  | (3 | ) |  |  | 921 |  |  |  | 950 |  |  |  | (3 | ) |
Revenue per shipment: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Priority |  | $ | 352.84 |  |  | $ | 365.55 |  |  |  | (3 | ) |  | $ | 358.51 |  |  | $ | 359.24 |  |  |  | — |  |
Economy |  |  | 400.00 |  |  |  | 415.82 |  |  |  | (4 | ) |  |  | 404.41 |  |  |  | 411.95 |  |  |  | (2 | ) |
Composite revenue per shipment |  | $ | 367.60 |  |  | $ | 381.05 |  |  |  | (4 | ) |  | $ | 372.96 |  |  | $ | 375.30 |  |  |  | (1 | ) |
Revenue per hundredweight: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Priority |  | $ | 37.73 |  |  | $ | 37.48 |  |  |  | 1 |  |  | $ | 37.90 |  |  | $ | 36.58 |  |  |  | 4 |  |
Economy |  |  | 46.26 |  |  |  | 47.26 |  |  |  | (2 | ) |  |  | 46.69 |  |  |  | 46.93 |  |  |  | (1 | ) |
Composite revenue per hundredweight |  | $ | 40.26 |  |  | $ | 40.29 |  |  |  | — |  |  | $ | 40.50 |  |  | $ | 39.49 |  |  |  | 3 |  |

|  | Percent of Revenue |  |
|  | Three Months Ended |  |  | Six Months Ended |  |
|  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |  |
Operating expenses: |  |  |  |  |  |  |  |  |  |  |  |  |
Salaries and employee benefits |  |  | 44.8 |  | % |  | 41.5 |  | % |  | 43.5 |  | % |  | 41.4 |  | %
Purchased transportation |  |  | 9.1 |  |  |  | 9.4 |  |  |  | 8.9 |  |  |  | 9.3 |  |
Rentals |  |  | 3.3 |  |  |  | 2.9 |  |  |  | 3.2 |  |  |  | 2.9 |  |
Depreciation and amortization |  |  | 5.2 |  |  |  | 3.3 |  |  |  | 4.9 |  |  |  | 3.9 |  |
Fuel |  |  | 5.1 |  |  |  | 6.7 |  |  |  | 5.1 |  |  |  | 6.3 |  |
Maintenance and repairs |  |  | 4.0 |  |  |  | 3.8 |  |  |  | 3.8 |  |  |  | 3.5 |  |
Intercompany charges |  |  | 6.6 |  |  |  | 5.5 |  |  |  | 6.4 |  |  |  | 5.6 |  |
Other |  |  | 7.6 |  |  |  | 6.9 |  |  |  | 7.5 |  |  |  | 7.0 |  |
Total operating expenses |  |  | 85.7 |  |  |  | 80.0 |  |  |  | 83.3 |  |  |  | 79.9 |  |
Operating margin |  |  | 14.3 |  | % |  | 20.0 |  | % |  | 16.7 |  | % |  | 20.1 |  | %

FedEx Freight Segment Revenue

FedEx Freight segment revenue decreased 11% in the second quarter and 7% in the first half of 2025 primarily due to lower shipments and yields. Revenue was also negatively affected by one fewer operating day in the first half of 2025.

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Average daily shipments decreased 8% in the second quarter and 5% in the first half of 2025 due to reduced demand for our services, primarily resulting from macroeconomic conditions. Revenue per shipment decreased 4% in the second quarter and 1% in the first half of 2025 primarily due to lower fuel surcharges and weight per shipment, partially offset by base yield improvement resulting from our continued focus on revenue quality.

FedEx Freight Segment Operating Income

FedEx Freight segment operating income decreased 36% in the second quarter and 23% in the first half of 2025 primarily due to lower revenue, partially offset by reduced operating expenses. Operating income was also negatively affected by one fewer operating day in the first half of 2025.

Combined fuel and purchased transportation expense decreased 22% in the second quarter and 16% in the first half of 2025 due to decreased shipments and lower fuel prices. Salaries and employee benefits expense decreased 4% in the second quarter and 2% in the first half of 2025 primarily due to reduced staffing to align with lower volumes, partially offset by higher wage rates. Depreciation expense increased 38% in the second quarter and 17% in the first half of 2025 primarily due to a gain on the sale of facilities in the second quarter of 2024.

FINANCIAL CONDITION

LIQUIDITY

Cash and cash equivalents totaled $5.0 billion at November 30, 2024, compared to $6.5 billion at May 31, 2024. The following table provides a summary of our cash flows for the six-month periods ended November 30, 2024 and 2023 (in millions):

|  | 2024 |  |  | 2023 |
Operating activities: |  |  |  |  |  |
Net income |  | $ | 1,535 |  |  | $ | 1,978 |
Business optimization costs, net of payments |  |  | 125 |  |  |  | (28 | )
Other noncash charges and credits |  |  | 4,064 |  |  |  | 3,850 |
Changes in assets and liabilities |  |  | (3,219 | ) |  |  | (1,796 | )
Cash provided by operating activities |  |  | 2,505 |  |  |  | 4,004 |
Investing activities: |  |  |  |  |  |
Capital expenditures |  |  | (1,585 | ) |  |  | (2,595 | )
Purchase of investments |  |  | (107 | ) |  |  | (75 | )
Proceeds from sale of investments |  |  | 52 |  |  |  | — |
Proceeds from asset dispositions and other |  |  | 34 |  |  |  | 62 |
Cash used in investing activities |  |  | (1,606 | ) |  |  | (2,608 | )
Financing activities: |  |  |  |  |  |
Principal payments on debt |  |  | (47 | ) |  |  | (94 | )
Proceeds from stock issuances |  |  | 440 |  |  |  | 211 |
Dividends paid |  |  | (676 | ) |  |  | (635 | )
Purchase of treasury stock |  |  | (2,020 | ) |  |  | (1,000 | )
Other |  |  | (6 | ) |  |  | — |
Cash used in financing activities |  |  | (2,309 | ) |  |  | (1,518 | )
Effect of exchange rate changes on cash |  |  | (62 | ) |  |  | (5 | )
Net decrease in cash and cash equivalents |  | $ | (1,472 | ) |  | $ | (127 | )
Cash and cash equivalents at the end of period |  | $ | 5,029 |  |  | $ | 6,729 |

Cash Provided by Operating Activities. Cash flows from operating activities decreased $1.5 billion in the first half of 2025 primarily due to working capital changes driven by a decrease in accrued incentive compensation and other liabilities and an increase in accounts receivable, partially offset by an increase in accounts payable from the first half of 2024.

Cash Used in Investing Activities. Capital expenditures decreased during the first half of 2025 primarily due to decreased spending on aircraft and related equipment. See “Capital Resources” for a discussion of capital expenditures during 2025.

Financing Activities. We repurchased an aggregate of $1.0 billion of our common stock through ASR transactions with two banks and open market purchases during the second quarter of 2025. During the first half of 2025, we repurchased 7.1 million shares of FedEx common stock through ASR transactions and open market purchases at an average price of $283.13 per share for a total of $2.0 billion. See Note 1 of the accompanying unaudited condensed consolidated financial statements, “Liquidity Outlook” below, and Part II, Item 2. “Unregistered Sales of Equity Securities and Use of Proceeds” for additional information.

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CAPITAL RESOURCES

Our operations are capital intensive, characterized by significant investments in aircraft, package handling and sort equipment, technology, vehicles and trailers, and facilities. The amount and timing of capital investments depend on various factors, including pre-existing contractual commitments, anticipated volume growth, domestic and international economic conditions, new or enhanced services, geographical expansion of services, availability of satisfactory financing, and actions of regulatory authorities.

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

|  | Three Months Ended |  |  | Six Months Ended |  |  | Percent Change |
|  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |  |  | Three Months Ended |  |  | Six Months Ended |
Aircraft and related equipment |  | $ | 82 |  |  | $ | 601 |  |  | $ | 263 |  |  | $ | 1,155 |  |  |  | (86 | ) |  |  | (77 | )
Package handling and ground support equipment |  |  | 213 |  |  |  | 209 |  |  |  | 410 |  |  |  | 427 |  |  |  | 2 |  |  |  | (4 | )
Information technology |  |  | 106 |  |  |  | 142 |  |  |  | 259 |  |  |  | 295 |  |  |  | (25 | ) |  |  | (12 | )
Vehicles and trailers |  |  | 184 |  |  |  | 129 |  |  |  | 274 |  |  |  | 296 |  |  |  | 43 |  |  |  | (7 | )
Facilities and other |  |  | 233 |  |  |  | 224 |  |  |  | 379 |  |  |  | 422 |  |  |  | 4 |  |  |  | (10 | )
Total capital expenditures |  | $ | 818 |  |  | $ | 1,305 |  |  | $ | 1,585 |  |  | $ | 2,595 |  |  |  | (37 | ) |  |  | (39 | )
Federal Express segment |  | $ | 598 |  |  | $ | 1,234 |  |  | $ | 1,301 |  |  | $ | 2,406 |  |  |  | (52 | ) |  |  | (46 | )
FedEx Freight segment |  |  | 195 |  |  |  | 50 |  |  |  | 230 |  |  |  | 141 |  |  |  | 290 |  |  |  | 63 |
Other |  |  | 25 |  |  |  | 21 |  |  |  | 54 |  |  |  | 48 |  |  |  | 19 |  |  |  | 13 |
Total capital expenditures |  | $ | 818 |  |  | $ | 1,305 |  |  | $ | 1,585 |  |  | $ | 2,595 |  |  |  | (37 | ) |  |  | (39 | )

Capital expenditures decreased in the second quarter and first half of 2025 primarily due to decreased spending on aircraft and related equipment and vehicles and trailers at Federal Express, partially offset by increased spending on vehicles and trailers at FedEx Freight.

GUARANTOR FINANCIAL IN FORMATION

We are providing the following information in compliance with Rule 13-01 of Regulation S-X, “Financial Disclosures about Guarantors and Issuers of Guaranteed Securities” with respect to our senior unsecured debt securities and Pass-Through Certificates, Series 2020-1AA (the “Certificates”).

The $19.0 billion principal amount of the senior unsecured notes were issued by FedEx under a shelf registration statement and are guaranteed by certain direct and indirect subsidiaries of FedEx (“Guarantor Subsidiaries”). FedEx owns, directly or indirectly, 100% of each Guarantor Subsidiary. The guarantees are (1) unsecured obligations of the respective Guarantor Subsidiary, (2) rank equally with all of their other unsecured and unsubordinated indebtedness, and (3) are full and unconditional and joint and several. If we sell, transfer, or otherwise dispose of all of the capital stock or all or substantially all of the assets of a Guarantor Subsidiary to any person that is not an affiliate of FedEx, the guarantee of that Guarantor Subsidiary will terminate, and holders of debt securities will no longer have a direct claim against such subsidiary under the guarantee.

Additionally, FedEx fully and unconditionally guarantees the payment obligation of Federal Express in respect of the $763 million principal amount of the Certificates. See Note 4 of the accompanying unaudited condensed consolidated financial statements and Note 6 to the financial statements included in our Annual Report for additional information regarding the terms of the Certificates.

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

Parent and Guarantor Subsidiaries

The following table presents the summarized balance sheet information as of November 30, 2024 and May 31, 2024 (in millions):

|  | November 30, 2024 |  |  | May 31, 2024 |
Current Assets |  | $ | 9,615 |  |  | $ | 10,618 |
Intercompany Receivable |  |  | 4,313 |  |  |  | 4,625 |
Total Assets |  |  | 82,284 |  |  |  | 83,880 |
Current Liabilities |  |  | 10,373 |  |  |  | 9,658 |
Intercompany Payable |  |  | — |  |  |  | — |
Total Liabilities |  |  | 51,878 |  |  |  | 52,551 |

The following table presents the summarized statement of income information for the six-month period ended November 30, 2024 (in millions):

Revenue |  | $ | 31,852 |
Intercompany Charges, net |  |  | (2,074 | )
Operating Income |  |  | 1,901 |
Intercompany Charges, net |  |  | 115 |
Income Before Income Taxes |  |  | 1,490 |
Net Income |  | $ | 1,024 |

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

Parent Guarantor and Subsidiary Issuer

The following table presents the summarized balance sheet information as of November 30, 2024 and May 31, 2024 (in millions):

|  | November 30, 2024 |  |  | May 31, 2024 |
Current Assets |  | $ | 9,588 |  |  | $ | 4,473 |
Intercompany Receivable |  |  | 1,112 |  |  |  | 7,399 |
Total Assets |  |  | 71,290 |  |  |  | 62,900 |
Current Liabilities |  |  | 9,492 |  |  |  | 5,958 |
Intercompany Payable |  |  | — |  |  |  | — |
Total Liabilities |  |  | 48,761 |  |  |  | 38,962 |

The following table presents the summarized statement of income information for the six-month period ended November 30, 2024 (in millions):

Revenue |  | $ | 27,217 |
Intercompany Charges, net |  |  | (2,481 | )
Operating Income |  |  | 1,302 |
Intercompany Charges, net |  |  | (29 | )
Income Before Income Taxes |  |  | 1,501 |
Net Income |  | $ | 1,143 |

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LIQUIDITY OUTLOOK

In response to current business and economic conditions as referenced above in the “Outlook” section of this MD&A, we are continuing to actively manage and optimize our capital allocation in response to the slowdown in the economy, inflationary pressures, changing fuel prices, and geopolitical conflicts. We held $5.0 billion in cash and cash equivalents at November 30, 2024 and had $3.5 billion in available liquidity under our $1.75 billion three-year credit agreement (the “Three-Year Credit Agreement”) and $1.75 billion five-year credit agreement (the “Five-Year Credit Agreement” and together with the Three-Year Credit Agreement, the “Credit Agreements”), and we believe that our cash and cash equivalents, cash from operations, and available financing sources will be adequate to meet our liquidity needs, which include operational requirements, expected capital expenditures, voluntary pension contributions, dividend payments, and stock repurchases. Beginning in the second half of 2025, we will incur costs and expenses related to the separation of FedEx Freight, which are expected to be significant but will not materially adversely affect our liquidity.

We repurchased an aggregate of $1.0 billion of our common stock in the second quarter of 2025 consisting of $730 million through ASR agreements with two banks and $273 million through open market repurchases. For the first half of 2025, we completed $2.0 billion in share repurchases. We expect to repurchase an additional $500 million of our common stock in 2025. See Note 1 of the accompanying unaudited condensed consolidated financial statements and “Item 2. Unregistered Sales of Equity Securities and Use of Proceeds” for more information.

Our cash and cash equivalents balance at November 30, 2024 includes $2.7 billion of cash in foreign jurisdictions associated with our permanent reinvestment strategy. We are able to access the majority of this cash without a material tax cost and do not believe that the indefinite reinvestment of these funds impairs our ability to meet our U.S. domestic debt or working capital obligations.

Our capital expenditures for 2025 are expected to be approximately $5.2 billion, in line with 2024, as we continue to reduce our capital intensity relative to revenue. Aircraft spend is expected to decline, partially offset by increased investments in network optimization and modernization of our facilities.

There have been no material changes to the contractual commitments described in Part II, Item 7 in our Annual Report. We do not have any guarantees or other off-balance sheet financing arrangements, including variable interest entities, which we believe could have a material effect on our financial condition or liquidity.

We have several aircraft modernization programs under way that are supported by the purchase of Boeing 777 Freighter and Boeing 767-300 Freighter aircraft. These aircraft are significantly more fuel-efficient per unit than the aircraft types previously utilized, and these expenditures are necessary to achieve significant long-term operating savings and to replace older aircraft. Our ability to delay the timing of these aircraft-related expenditures is limited without incurring significant costs to modify existing purchase agreements.

The Three-Year Credit Agreement and the Five-Year Credit Agreement expire in March 2027 and March 2029, respectively. Each of the Credit Agreements has a $125 million letter of credit sublimit. The Credit Agreements are available to finance our operations and other cash flow needs. See Note 4 of the accompanying unaudited condensed consolidated financial statements for more information.

We have a shelf registration statement filed with the Securities and Exchange Commission (“SEC”) that allows us to sell, in one or more future offerings, any combination of our unsecured debt securities and common stock and allows pass-through trusts formed by Federal Express to sell, in one or more future offerings, pass-through certificates.

During the first half of 2025, we made voluntary contributions of $600 million to our tax-qualified U.S. domestic pension plan (“U.S. Pension Plan”). We anticipate making $200 million of additional voluntary contributions during the remainder of 2025. There are currently no required minimum contributions to our U.S. Pension Plan, and we maintain a credit balance related to our cumulative excess voluntary pension contributions over those required that exceeds $3.0 billion. The credit balance is subtracted from plan assets to determine the minimum funding requirements. Therefore, we have the flexibility to eliminate all required contributions to our principal U.S. Pension Plan for several years. Our U.S. Pension Plan has ample funds to meet expected benefit payments.

On November 15, 2024, our Board of Directors declared a quarterly cash dividend of $1.38 per share of common stock. The dividend will be paid on January 3, 2025 to stockholders of record as of the close of business on December 9, 2024. Each quarterly dividend payment is subject to review and approval by our Board of Directors, and we evaluate our dividend payment amount on an annual basis.

Standard & Poor’s has assigned us a senior unsecured debt credit rating of BBB, a Certificates rating of AA-, a commercial paper rating of A-2, and a ratings outlook of “stable.” Moody’s Investors Service has assigned us an unsecured debt credit rating of Baa2, a Certificates rating of Aa3, a commercial paper rating of P-2, and a ratings outlook of “stable.” Our interest expense may increase in the event of a reduction in our credit rating. If our unsecured debt or commercial paper ratings are reduced to below investment grade, our access to the capital markets may become limited.

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CRITICAL ACCOUNTING ESTIMATES

The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make significant judgments and estimates to develop amounts reflected and disclosed in the financial statements. In many cases, there are alternative policies or estimation techniques that could be used. We maintain a thorough process to review the application of our accounting policies and to evaluate the appropriateness of the many estimates that are required to prepare the financial statements of a complex, global corporation. However, even under optimal circumstances, estimates routinely require adjustment based on changing circumstances and new or better information.

GOODWILL. Goodwill is tested for impairment between annual tests whenever events or circumstances make it more likely than not that the fair value of a reporting unit has fallen below its carrying value. In connection with our one FedEx consolidation plan, we reevaluated the conclusion of our 2024 goodwill impairment tests as of June 1, 2024, and concluded that the estimated fair values of our reporting units with significant goodwill continued to exceed their carrying values. We do not believe there has been any additional change of events or circumstances that would indicate that additional reevaluation of the goodwill of our reporting units is required as of November 30, 2024, nor do we believe the goodwill of our reporting units is at risk of failing impairment testing. For additional details on goodwill impairment testing, refer to Note 1 to the financial statements included in our Annual Report.

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

FORWARD-LOOKING STATEMENTS

Certain statements in this report, including (but not limited to) those contained in “Trends Affecting Our Business,” “Business Optimization Costs,” “Income Taxes,” “Outlook,” “Liquidity Outlook,” “Critical Accounting Estimates,” “Legal Proceedings,” and “Risk Factors” and the “Description of Business Segments and Summary of Significant Accounting Policies,” “Financing Arrangements,” “Retirement Plans,” “Commitments,” and “Contingencies” notes to our unaudited condensed consolidated financial statements, are “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the “PSLRA”) with respect to our financial condition, results of operations, cash flows, plans, objectives, future performance, and business and the assumptions underlying such statements. Forward-looking statements include those preceded by, followed by, or that include the words “will,” “may,” “could,” “would,” “should,” “believes,” “expects,” “anticipates,” “plans,” “estimates,” “targets,” “forecasts,” “projects,” “intends,” or similar expressions. These forward-looking statements, which are intended to enjoy the protection of the safe harbor for forward-looking statements provided by the PSLRA as well as protections afforded by other federal securities laws, involve risks and uncertainties. Actual results may differ materially from those contemplated (expressed or implied) by such forward-looking statements because of, among other things, potential risks and uncertainties, such as:

•
economic conditions in the global markets in which we operate;
•
significant changes in the volumes of shipments transported through our networks, customer demand for our various services, or the prices we obtain for our services;
•
geopolitical developments and additional changes in international trade policies and relations;
•
the price and availability of jet and vehicle fuel;
•
failure to successfully implement our business strategy and effectively respond to changes in market dynamics and customer preferences;
•
our ability to execute our DRIVE transformation, including Network 2.0 and the redesign of the Federal Express international air network, in the expected time frame and at the expected cost and achieve the expected operational efficiencies and network flexibility, alignment of our cost base with demand, cost savings and reductions to our permanent cost structure, and other benefits while managing the potential risks;
•
our ability to successfully implement the planned tax-free full separation of the FedEx Freight business into a new publicly traded company and achieve the anticipated benefits of such transaction;
•
the timing and amount of any costs or benefits or any specific outcome, transaction, or change (of which there can be no assurance), or the terms, timing, and structure thereof, related to our global transformation program and other ongoing reviews and initiatives, including the assessment of the role of FedEx Freight in our portfolio structure;
•
our ability to successfully implement our workforce reduction in Europe;

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•
a significant data breach or other disruption to our technology infrastructure, and our ability to mitigate the technological, operational, legal and regulatory, and reputational risks related to emerging technologies such as autonomous technology and artificial intelligence;
•
failure to remove costs related to services provided to the USPS under the contract for Federal Express to provide the USPS domestic transportation services, which expired on September 29, 2024;
•
the future rate of e-commerce growth and our ability to successfully expand our e-commerce services portfolio;
•
increased insurance and claims expenses related to vehicle accidents, workers’ compensation claims, property and cargo loss, general business liabilities, and benefits paid under employee disability programs;
•
failure to receive or collect expected insurance coverage;
•
the effect of any international conflicts or terrorist activities on the United States and global economies in general, the transportation industry, or FedEx in particular;
•
failure of third-party service providers to perform as expected, or disruptions in our relationships with those providers or their provision of services to FedEx;
•
widespread outbreak of an illness or any other communicable disease or public health crisis;
•
damage to our reputation or loss of brand equity;
•
the effect of intense competition on our ability to maintain or increase our prices (including our fuel surcharges) or to maintain or grow our revenue and market share;
•
our ability to manage our network capacity and cost structure for capital expenditures and operating expenses, and match it to shifting and future customer volume levels;
•
our ability to execute and effectively operate, integrate, leverage, and grow acquired businesses, and to continue to support the value we allocate to these acquired businesses;
•
noncash impairment charges related to our goodwill and certain deferred tax assets;
•
failure to attract and retain employee talent and our ability to meet our labor and purchased transportation needs while controlling related costs and maintain our company culture;
•
our ability to maintain good relationships with our employees and avoid attempts by labor organizations to organize groups of our employees, which could significantly increase our operating costs and reduce our operational flexibility, as well as the outcome of negotiations to reach new collective bargaining agreements (including with the pilots of Federal Express);
•
the effect of costs related to lawsuits in which it is alleged that Federal Express should be treated as an employer or joint employer of drivers employed by service providers engaged by Federal Express;
•
increasing costs, the volatility of costs and funding requirements, and other legal mandates for employee benefits, especially pension and healthcare benefits;
•
the effects of global climate change;
•
our ability to achieve or demonstrate progress on our goal of carbon neutrality for our global operations by calendar 2040;
•
our ability to quickly and effectively restore operations following adverse weather or a localized disaster or disturbance in a key geography;
•
any effects on our businesses resulting from evolving or new U.S. domestic or international government regulations, laws, policies, and actions, which could be unfavorable to our business, including labor (such as joint employment standards or changes to the Railway Labor Act of 1926, as amended, affecting Federal Express employees); regulatory or other actions affecting data protection; global aviation or other transportation rights; increased air cargo, pilot flight and duty time, and other security or safety requirements; import and export controls; the use of new technology and accounting; trade (such as protectionist measures, tariffs, or restrictions on free trade); foreign exchange intervention in response to currency volatility; environmental (such as global climate change legislation); or postal rules;
•
adverse changes in tax laws, regulations, and interpretations or challenges to our tax positions;
•
increasing costs related to changing and heightened regulations and enforcement related to data protection;

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•
the increasing costs of compliance with federal, state, and foreign governmental agency mandates (including the Foreign Corrupt Practices Act and the U.K. Bribery Act) and defending against inappropriate or unjustified enforcement or other actions by such agencies;
•
changes in foreign currency exchange rates, especially in the euro, Chinese yuan, British pound, Canadian dollar, Australian dollar, Mexican peso, Hong Kong dollar, and Japanese yen, which can affect our sales levels and foreign currency sales prices;
•
loss or delay in the collection of accounts receivable;
•
any liability resulting from and the costs of defending against class-action, derivative, and other litigation, such as wage-and-hour, joint employment, securities, vehicle accident, and discrimination and retaliation claims, claims related to our reporting and disclosure of climate change and other environmental, social, and governance topics, and any other legal or governmental proceedings, including the matters discussed in Note 9 of the accompanying unaudited condensed consolidated financial statements;
•
adverse rulings on appeals and in other future judicial decisions, subsequent adverse jury findings, and changes in judicial precedent;
•
the sufficiency of insurance coverage we purchase;
•
the effect of technology developments (including artificial intelligence and machine learning) on our operations and on demand for our services, and our ability to continue to identify and eliminate unnecessary information-technology redundancy and complexity throughout the organization;
•
disruptions in global supply chains, which can limit the access of FedEx and our service providers to vehicles and other key capital resources and increase our costs;
•
difficulties experienced by the companies with which we contract to fly smaller regional “feeder” aircraft in attracting and retaining pilots, which could cause a reduction of service offered to certain locations, service disruptions, increased costs of operations, and other difficulties;
•
governmental underinvestment in transportation infrastructure, which could increase our costs and adversely affect our service levels due to traffic congestion, prolonged closure of key thoroughfares, or sub-optimal routing of our vehicles and aircraft;
•
successful completion of our planned stock repurchases;
•
constraints, volatility, or disruption in the capital markets, our ability to maintain our current credit ratings, commercial paper ratings, and senior unsecured debt and pass-through certificate credit ratings, and our ability to meet credit agreement financial covenants; and
•
other risks and uncertainties you can find in our press releases and SEC filings, including the risk factors identified under Part I, Item IA. “Risk Factors” in our Annual Report, as updated by our quarterly reports on Form 10-Q and current reports on Form 8-K.

As a result of these and other factors, no assurance can be given as to our future results and achievements. Accordingly, a forward-looking statement is neither a prediction nor a guarantee of future events or circumstances and those future events or circumstances may not occur. You should not place undue reliance on the forward-looking statements, which speak only as of the date of this report. We are under no obligation, and we expressly disclaim any obligation, to update or alter any forward-looking statements, whether as a result of new information, future events, or otherwise.

Item 3. Quantitative and Qualitat ive Disclosures About Market Risk

As of November 30, 2024, there were no material changes in our market risk sensitive instruments and positions since our disclosures in our Annual Report.

The principal foreign currency exchange rate risks to which we are exposed relate to the euro, Chinese yuan, British pound, Canadian dollar, Australian dollar, Mexican peso, Hong Kong dollar, and Japanese yen. Historically, our exposure to foreign currency fluctuations is more significant with respect to our revenue than our expenses, as a significant portion of our expenses are denominated in U.S. dollars, such as aircraft and fuel expenses. During the first half of 2025, the U.S. dollar was weaker relative to the currencies of the foreign countries in which we operate, and the weaker dollar had a slightly positive effect on our results.

While we have market risk for changes in the price of vehicle and jet fuel, this risk is largely mitigated by our indexed fuel surcharges. For additional discussion of our indexed fuel surcharges, see the “Results of Operations and Outlook — Consolidated Results —Fuel”

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section of “Item 7. Management’s Discussion and Analysis of Results of Operations and Financial Condition” included in our Annual Report.

Item 4. Controls and Procedures

The management of FedEx, with the participation of our principal executive and financial officers, has evaluated the effectiveness of our disclosure controls and procedures in ensuring that the information required to be disclosed in our filings under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, including ensuring that such information is accumulated and communicated to FedEx management as appropriate to allow timely decisions regarding required disclosure. Based on such evaluation, our principal executive and financial officers have concluded that such disclosure controls and procedures were effective as of November 30, 2024 (the end of the period covered by this Quarterly Report on Form 10-Q).

During our fiscal quarter ended November 30, 2024, no change occurred in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

For a description of all material pending legal proceedings, see Note 9 of the accompanying unaudited condensed consolidated financial statements, which is incorporated by reference herein. In connection with the one FedEx consolidation, effective June 1, 2024, Federal Express assumed liability for all pending litigation to which FedEx Ground and FedEx Services were previously party.

Item 1A. Ri sk Factors

Other than the risk factors set forth below, there have been no material changes from the risk factors disclosed in our Annual Report in response to Part I, Item 1A of Form 10-K. Additional risks not currently known to us or that we currently deem to be immaterial also may materially affect our business, results of operations, financial condition, and the price of our common stock.

The planned separation of FedEx Freight may not be completed on the terms or timeline currently contemplated, if at all, and there is no guarantee that the separation, if completed, will achieve the intended financial and strategic benefits. On December 19, 2024, we announced our intention to separate FedEx Freight from our portfolio structure through the creation of a separate publicly traded company (“NewCo”). The planned separation is intended to be tax-free for FedEx’s U.S. stockholders for U.S. federal income tax purposes and is expected to be executed within the next 18 months. Completion of the planned separation is subject to the final approval of our Board of Directors and will be dependent on a number of factors that may be beyond our control, including, among other things, market conditions, industry trends, the receipt and continuing validity of a private letter ruling from the Internal Revenue Service (“IRS”) and/or favorable opinions of our U.S. tax advisors with respect to the tax-free nature of the transaction, the receipt of other regulatory and contractual approvals, and the availability of financing for NewCo on satisfactory terms. The proposed separation is complex in nature, and unanticipated changes or developments could delay or prevent the completion of the separation or cause the separation to occur on terms or conditions that are different or less favorable than expected.

Whether or not we complete the separation, we may face significant challenges in connection with the transaction, including, without limitation:

•
the diversion of the attention of our Board of Directors and senior management from the pursuit of our business strategy and long-term planning and of our management and employees from day-to-day operations;
•
our ability to maintain NewCo’s continued support of our DRIVE transformation, Network 2.0, the redesign of the Federal Express international air network, and other strategic initiatives;
•
our ability to maintain operational, commercial, data and information technology, brand and intellectual property, human resources, finance, legal, sales, and marketing continuity where necessary between FedEx and NewCo;
•
the risk that if the IRS determines that certain steps of the planned separation do not qualify for tax-free treatment for U.S. federal income tax purposes, FedEx and its stockholders could incur significant tax liabilities;
•
costs and expenses related to the planned separation (which are expected to be significant), including costs related to commercial and operational dis-synergies; restructuring and other transaction expenses; expenses related to establishing stand-alone operational, commercial, personnel, and digital and technology infrastructure at NewCo; and accounting, tax, legal, and other professional services expenses, any of which may be higher than initially expected;

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•
retaining existing business and operational relationships, including with customers, suppliers, employees, and other counterparties;
•
addressing employee issues so as to promote retention and motivation and maintain efficient and effective labor and employee relations;
•
obtaining any required regulatory licenses, operating authority, or contractual consents;
•
determining the appropriate allocations of assets and liabilities between FedEx and NewCo, as well as the terms governing the relationship between FedEx and NewCo following the separation; and
•
potential negative reactions from investors and other external stakeholders.

There can be no assurance that the separation, if completed, will achieve the intended financial and strategic benefits (which are based on a number of assumptions, some or all of which may prove to be incorrect) or provide greater value to our stockholders than that reflected in the current price of our common stock, or that the dis-synergies of the transaction (including costs of related restructuring transactions) will not exceed the anticipated amounts. The market price of our common stock could be subject to significant fluctuation or otherwise be adversely affected by the uncertainties described above. Changes in the stockholder base of FedEx and/or NewCo following the planned separation could also cause the price of either company’s common stock to fluctuate.

If the planned separation occurs, FedEx and NewCo will each be smaller, less diversified companies with more concentrated areas of focus. As a result, FedEx and NewCo may become more vulnerable to changing macroeconomic and market conditions; the results of operations, cash flows, effective tax rate, and other financial and operating metrics of each company may be subject to increased volatility; and the ability of each company to fund capital expenditures and investments, pay dividends, and service debt may be diminished.

To the extent challenges related to the planned separation of NewCo adversely affect our business, they may also have the effect of heightening other risks disclosed in our Annual Report, any of which could materially and adversely affect our business, results of operations, and the price of our common stock. Such risks include, but are not limited to, our ability to execute our DRIVE transformation, Network 2.0, and broader business strategy and effectively respond to changes in market dynamics and customer preferences; disruptions to our technology infrastructure, including through cyberattack or cyber-intrusion, ransomware attack, or malware attack; our ability to achieve or demonstrate progress on our goal of carbon neutrality for our global operations by calendar 2040; and our ability to maintain our strong reputation and the value of the FedEx brand.

A significant data breach or other disruption to our technology infrastructure could disrupt our operations and result in the loss of critical sensitive or confidential information, adversely affecting our reputation, business, or results of operations. Our ability to attract and retain customers, efficiently operate our businesses, execute our DRIVE transformation, and compete effectively increasingly depend in part upon the sophistication, security, and reliability of our technology network, including our ability to provide features of service that are important to our customers, to protect our confidential business information and the information provided by our customers, and to maintain customer confidence in our ability to protect our systems and to provide services consistent with their expectations. For example, we rely on information technology to receive shipment information in advance of physical receipt of packages, to track items that move through our delivery systems, to efficiently plan deliveries, to clear shipments through customs, to execute billing processes, and to track and report financial and operational data. We are subject to risks imposed by data breaches and operational disruptions, both random and targeted, including through cyberattack or cyber-intrusion, ransomware attack, malware attack, or denial of service attack by computer hackers, foreign governments and state-sponsored actors, cyber terrorists and hacktivists, cyber criminals, malicious employees or other insiders of FedEx or third-party service providers, and other groups and individuals. Data breaches and other technology disruptions of companies and governments continue to increase as the number, intensity, and sophistication of attempted attacks and intrusions from around the world have increased and we, our customers, and third parties increasingly store and transmit data by means of connected information technology systems. Additionally, risks such as code anomalies, “Acts of God,” transitional challenges in migrating operating company functionality to our FedEx enterprise automation platforms, data leakage, cyber-fraud, and human error pose a direct threat to our products, services, systems, and data and could result in unauthorized or block legitimate access to sensitive or confidential data regarding our operations, customers, employees, and suppliers, including personal information.

The technology infrastructure of acquired businesses, as well as their practices related to the use and maintenance of data, could also present issues that we were not able to identify prior to the acquisition. For example, ShopRunner, which we acquired in 2021, collects and stores certain personal data of its merchants and their buyers, its partners, consumers with whom it has a direct relationship, and users of its applications. Additionally, it uses third-party service providers and subprocessors to help deliver services to merchants and their buyers. These service providers and subprocessors may store or access personal data and/or other confidential information. The foregoing factors increase the risk of data incidents and the amount of potential exposure in the event of a data breach.

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We also depend on and interact with the technology and systems of third parties, including our customers and third-party service providers such as cloud service providers and delivery services. Certain third parties host, process, or have access to information we maintain about our company, customers, employees, and vendors and/or operate systems that are critical to our business operations and services. Like us, these third parties are subject to risks imposed by data breaches, cyberattacks, and other events or actions that could damage, disrupt, or close down their networks or systems. We have security processes, protocols, and standards in place, including contractual provisions requiring such security measures, that are applicable to such third parties and are designed to protect information that is held by them, or to which they have access, as a result of their engagements with us. A cyberattack has and may in the future defeat one or more of such third parties’ security measures, allowing an attacker to obtain information about our company, customers, employees, and vendors or disrupt our operations. Certain third parties also have and may in the future experience operational disruptions or human error that could result in unauthorized access to sensitive or confidential data regarding our operations, customers, employees, and suppliers, including personal information. See “Failure of third-party service providers to perform as expected, or disruptions in our relationships with those providers or their provision of services to FedEx, could have a material adverse effect on our business and results of operations” under “Item 1A. Risk Factors” of our Annual Report for more information. The information systems of one of our third-party service providers recently experienced a security breach that resulted in unauthorized access to the third-party’s cloud environment, including certain systems that contained our data. To date this incident has not had a material adverse effect on our business or results of operations. However, there can be no assurance that this incident or similar events will not have such an effect in the future.

From time to time we experience disruptions to our complex, global technology infrastructure, including our computer systems and websites. Such events could result in the loss of confidential business or customer information; require substantial repairs or replacements, resulting in significant costs; and lead to the temporary or permanent transfer by customers of some or all of their business to our competitors. The foregoing could harm our reputation and adversely affect our business, customer service, and results of operations. Additionally, a security breach could require us to devote significant management resources to address the problems created. These types of adverse effects could also occur in the event the confidentiality, integrity, or availability of company and customer information was compromised due to a data loss by FedEx or a trusted third party.

We or the third parties with which we share information may not discover any security breach and loss of information for a significant period of time after the security breach occurs. Even if we detect a cybersecurity incident, the nature and extent of the incident may not be immediately clear. It may also not be clear how best to contain and remediate any harm caused by the cybersecurity incident, and certain errors or actions could be repeated or compounded before they are discovered and remediated. Based on the sophistication of threat actors and the size and complexity of our information systems and network environment, among other factors, an investigation into a cybersecurity incident could take a significant amount of time to complete. In addition, while the investigation of a cybersecurity incident is ongoing, we may not know the full extent of the harm caused by a threat actor, and such harm may spread both internally and to certain customers, vendors, or other third parties. Additionally, our logging capabilities and the logging capabilities of third parties are not always complete or sufficiently detailed, which could affect our ability to fully investigate and understand the scope of security events. Given the age, size, and complexity of our computer systems and network environment, patches for certain vulnerabilities may not exist and, even where patches or other risk-mitigating activities are available, the development of patches or execution of risk-mitigating actions may not occur before an underlying vulnerability is exploited or results in the compromise of our information systems or data. A significant number of our employees as well as customers and others with whom we do business continue to work remotely or in hybrid models, which may heighten these risks. These risks may also be heightened by our DRIVE transformation, including Network 2.0 and our recently completed one FedEx consolidation.

Furthermore, we are subject to an increasing number of cybersecurity compliance and reporting obligations in different jurisdictions that vary in their scope and application, creating conflicting reporting requirements. These factors and the time spent to comply may inhibit our ability to quickly provide complete and reliable information about the cybersecurity incident to customers, counterparties, and regulators, as well as the public. Any or all of these factors could further increase the costs and consequences of a cybersecurity incident on our business and results of operations. See “Our business is subject to complex and evolving U.S. and foreign laws and regulations regarding data protection.” under “Item 1A. Risk Factors” of our Annual Report for additional information on risks related to legal and regulatory developments with respect to data protection.

We have invested and continue to invest in technology security initiatives, information-technology risk management, business continuity, and disaster recovery plans, including investments to retire and replace end-of-life systems. The development and maintenance of these measures is costly and requires ongoing monitoring and updating as technologies change and efforts to overcome security measures become increasingly more frequent, intense, and sophisticated. Despite our efforts, we are not fully insulated from data breaches, technology disruptions, data loss, and cyber-fraud, which could adversely affect our competitiveness and results of operations. See “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended May 31, 2021 for information regarding the 2017 NotPetya cyberattack at TNT Express and immaterial cyber incidents we experienced in 2017 and 2018. Additionally, we and our third-party service providers, vendors, and suppliers have experienced repeated attempts by cyber criminals, some of which have been successful, to gain access to customer accounts for the purposes of fraudulently diverting and misappropriating items being transported in our network, fraudulently charging shipment fees to customer or franchisee accounts, and

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fraudulently sending e-mails to recipients purporting to be from FedEx. To date, none of these fraudulent cyber activities have caused a material disruption to our systems or resulted in any material costs to FedEx.

Our security processes and initiatives may be unable to detect or prevent a breach or disruption in the future. Additionally, the rapid ongoing evolution and increased adoption of emerging technologies such as artificial intelligence and machine learning may make it more difficult to anticipate and implement protective measures to recognize, detect, and prevent the occurrence of any of the cyber events described above. While we have insurance coverage designed to address certain aspects of cyber risks in place, we cannot be certain that such coverage will be sufficient to cover claims, that we will continue to be able to obtain such coverage in amounts we deem sufficient, that our insurance carriers will pay on our insurance claims, or that we will not experience a claim for which coverage is not provided.

Item 2. Unregistered Sales of E quity Securities and Use of Proceeds

The following table provides information on FedEx’s repurchases of our common stock during the second quarter of 2025:

ISSUER PURCHASES OF EQUITY SECURITIES

Period |  | Total Number of Shares Purchased |  |  | Average Price Paid per Share |  |  | Total Number of Shares Purchased as Part of Publicly Announced Program |  |  |  | Approximate Dollar Value of Shares That May Yet Be Purchased Under the Program ($ in millions) |
Sep. 1-30, 2024 |  |  | 3,253,763 |  |  | $ | 270.93 |  |  |  | 3,253,763 |  |  |  | $ | 3,061 |
Oct. 1-31, 2024 |  |  | — |  |  | $ | — |  |  |  | — |  |  |  | $ | 3,061 |
Nov. 1-30, 2024 |  |  | 443,010 |  |  | $ | 274.74 |  |  |  | 443,010 |  |  |  | $ | 3,061 |
Total |  |  | 3,696,773 |  |  |  |  |  |  | 3,696,773 |  |  |  | $ | 3,061 |

In December 2021, our Board of Directors approved a stock repurchase program of up to $5.0 billion of FedEx common stock. In March 2024, our Board of Directors authorized a new stock repurchase program for additional repurchases of up to $5.0 billion of FedEx common stock. As of May 31, 2024, $64 million remained available to be used for repurchases under the 2021 program.

As part of the 2021 and 2024 repurchase programs, we entered into accelerated share repurchase (“ASR”) transactions with two banks in September 2024 to repurchase an aggregate of $730 million of our common stock. During the second quarter of 2025, the ASR transactions were completed, and 2.7 million shares were delivered under the ASR agreements. Additionally, we repurchased 1.0 million shares for $273 million in the open market during the second quarter of 2025.

As of December 19, 2024, approximately $3.1 billion remained available to be used for repurchases under the 2024 stock repurchase program (no shares remain available to be used for repurchases under the 2021 stock repurchase program). Shares under the program may be repurchased from time to time in the open market or in privately negotiated transactions. No time limits were set for completion of the program; however, we may decide to suspend or discontinue the program.

See Note 1 of the accompanying unaudited condensed consolidated financial statements for additional information regarding the ASR transactions and “Item 2. Management’s Discussion and Analysis of Results of Operations and Financial Condition – Financial Condition – Liquidity Outlook” for information regarding our expected stock repurchases during the remainder of 2025.

Item 5. Other Information

During the quarter ended November 30, 2024, no director or officer of FedEx adopted, modified, or terminated any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement, as such terms are defined in Item 408(a) of Regulation S-K.

As previously disclosed, Mark R. Allen stepped down as Executive Vice President, General Counsel and Secretary of FedEx on September 23, 2024, and has served as Executive Vice President and Senior Advisor since September 24, 2024. On December 18, 2024, the FedEx Board of Directors approved the extension of Mr. Allen’s retirement date from December 31, 2024, to May 31, 2025, and Mr. Allen will remain employed by FedEx as Executive Vice President and Senior Advisor through his new retirement date. As previously disclosed, FedEx will provide Mr. Allen with security services, computer and communications support, and digital protection services through December 31, 2025. There were no changes to Mr. Allen’s compensation made as a result of the change in his retirement date.

Disclosure Pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012 and Section 13(r) of the Exchange Act. As part of its intellectual property (“IP”) protection efforts, FedEx has obtained and maintains patents and trademarks in Iran. Periodically, FedEx pays renewal fees, through IP service providers located in Lebanon, to the Iran Intellectual Property

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Office (“IIPO”) for these patents and trademarks and has sought to prosecute and defend such trademarks. On August 18, 2023, OFAC granted FedEx a specific license to make payments to IIPO at its account in Bank Melli, which was designated on November 5, 2018 by OFAC under its counterterrorism authority pursuant to Executive Order 13224. As authorized by OFAC’s specific license, in the quarter ended November 30, 2024, FedEx paid $160 to IIPO as part of its intellectual property protection efforts in Iran. FedEx plans to continue maintenance and payment of renewal fees to the IIPO, or any successor entity, pursuant to applicable OFAC licenses.

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Item 6. Exhibits

Exhibit Number |  | Description of Exhibit
3.1 |  | Restated Certificate of Incorporation of FedEx.
3.2 |  | Amended and Restated Bylaws of FedEx. (Filed as Exhibit 3.1 to FedEx’s Current Report on Form 8-K dated and filed March 11, 2024, and incorporated herein by reference).
*10.1 |  | Seventeenth Amendment dated September 30, 2024 (but effective as of September 1, 2024) to the Composite Lease Agreement dated May 21, 2007 (but effective as of January 1, 2007) between the Memphis-Shelby County Airport Authority and Federal Express Corporation.
15.1 |  | Letter re: Unaudited Interim Financial Statements.
22 |  | List of Guarantor Subsidiaries and Subsidiary Issuers of Guaranteed Securities.
31.1 |  | Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2 |  | Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1 |  | Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2 |  | Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.1 |  | Interactive Data Files pursuant to Rule 405 of Regulation S-T formatted in Inline Extensible Business Reporting Language (“Inline XBRL”).
104.1 |  | Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101.1).

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

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SIGNA TURE

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

|  |  | FedEx Corporation
Date: December 19, 2024 |  |  | /s/ Guy M. Erwin II
|  |  | Guy M. Erwin II
|  |  | Corporate Vice President and
|  |  | Chief Accounting Officer

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