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.

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

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

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


	February 28, 2023 (Unaudited)		May 31, 2022		November 30, 2023 (Unaudited)		May 31, 2023
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	5,373	$	6,897	$	6,729	$	6,856
Receivables, less allowances of $784 and $692		10,721		11,863
Spare parts, supplies, and fuel, less allowances of $275 and $360		631		637
Receivables, less allowances of $767 and $800						10,665		10,188
Spare parts, supplies, and fuel, less allowances of $286 and $276						632		604
Prepaid expenses and other		1,219		968		1,091		962
Total current assets		17,944		20,365		19,117		18,610
PROPERTY AND EQUIPMENT, AT COST		79,335		75,275		83,281		80,624
Less accumulated depreciation and amortization		39,486		37,184		41,749		39,926
Net property and equipment		39,849		38,091		41,532		40,698
OTHER LONG-TERM ASSETS
Operating lease right-of-use assets, net		17,410		16,613		17,243		17,347
Goodwill		6,455		6,544		6,468		6,435
Other assets		4,117		4,381		3,691		4,053
Total other long-term assets		27,982		27,538		27,402		27,835
	$	85,775	$	85,994	$	88,051	$	87,143

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


	February 28, 2023 (Unaudited)			May 31, 2022			November 30, 2023 (Unaudited)			May 31, 2023
LIABILITIES AND COMMON STOCKHOLDERS’ INVESTMENT
CURRENT LIABILITIES
Current portion of long-term debt	$	147		$	82		$	334		$	126
Accrued salaries and employee benefits		2,266			2,531			2,732			2,475
Accounts payable		3,987			4,030			4,002			3,848
Operating lease liabilities		2,446			2,443			2,433			2,390
Accrued expenses		4,734			5,188			4,747			4,747
Total current liabilities		13,580			14,274			14,248			13,586
LONG-TERM DEBT, LESS CURRENT PORTION		20,122			20,182			20,193			20,453
OTHER LONG-TERM LIABILITIES
Deferred income taxes		4,313			4,093			4,386			4,489
Pension, postretirement healthcare, and other benefit obligations		3,779			4,448			2,854			3,130
Self-insurance accruals		3,201			2,889			3,688			3,339
Operating lease liabilities		15,373			14,487			15,222			15,363
Other liabilities		674			682			694			695
Total other long-term liabilities		27,340			26,599			26,844			27,016
COMMITMENTS AND CONTINGENCIES
COMMON STOCKHOLDERS’ INVESTMENT
Common stock, $0.10 par value; 800 million shares authorized; 318 million shares issued as of February 28, 2023 and May 31, 2022		32			32
Common stock, $0.10 par value; 800 million shares authorized; 318 million shares issued as of November 30, 2023 and May 31, 2023								32			32
Additional paid-in capital		3,735			3,712			3,849			3,769
Retained earnings		34,040			32,782			36,605			35,259
Accumulated other comprehensive loss		(1,308	)		(1,103	)		(1,294	)		(1,327	)
Treasury stock, at cost		(11,766	)		(10,484	)		(12,426	)		(11,645	)
Total common stockholders’ investment		24,733			24,939			26,766			26,088
	$	85,775		$	85,994		$	88,051		$	87,143

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


	Three Months Ended February 28,						Nine Months Ended February 28,						Three Months Ended November 30,						Six Months Ended November 30,
	2023			2022			2023			2022			2023			2022			2023			2022

REVENUE	$	22,169		$	23,641		$	68,225		$	69,118		$	22,165		$	22,814		$	43,846		$	46,056
OPERATING EXPENSES:
Salaries and employee benefits		7,817			8,244			23,468			24,155			7,833			7,792			15,618			15,651
Purchased transportation		5,402			6,272			16,834			18,172			5,395			5,665			10,431			11,432
Rentals and landing fees		1,205			1,225			3,559			3,535			1,138			1,195			2,289			2,354
Depreciation and amortization		1,031			986			3,101			2,952			1,040			1,046			2,111			2,070
Fuel		1,350			1,201			4,765			3,355			1,328			1,593			2,429			3,415
Maintenance and repairs		789			822			2,575			2,530			854			882			1,678			1,786
Business optimization and realignment costs		123			107			197			218			145			36			250			74
Other		3,410			3,458			10,317			9,880			3,156			3,429			6,279			6,907
		21,127			22,315			64,816			64,797			20,889			21,638			41,085			43,689
OPERATING INCOME		1,042			1,326			3,409			4,321			1,276			1,176			2,761			2,367
OTHER (EXPENSE) INCOME:
Interest, net		(122	)		(163	)		(391	)		(478	)		(97	)		(127	)		(188	)		(269	)
Other retirement plans, net		102			211			304			380			41			101			80			202
Other, net		—			1			(87	)		(11	)		(18	)		(91	)		(28	)		(87	)
		(20	)		49			(174	)		(109	)		(74	)		(117	)		(136	)		(154	)
INCOME BEFORE INCOME TAXES		1,022			1,375			3,235			4,212			1,202			1,059			2,625			2,213
PROVISION FOR INCOME TAXES		251			263			801			944			302			271			647			550
NET INCOME	$	771		$	1,112		$	2,434		$	3,268		$	900		$	788		$	1,978		$	1,663
EARNINGS PER COMMON SHARE:
Basic	$	3.07		$	4.26		$	9.52		$	12.36		$	3.59		$	3.08		$	7.88		$	6.46
Diluted	$	3.05		$	4.20		$	9.46		$	12.17		$	3.55		$	3.07		$	7.79		$	6.41
DIVIDENDS DECLARED PER COMMON SHARE	$	1.15		$	0.75		$	4.60		$	3.00		$	1.26		$	1.15		$	2.52		$	3.45

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


	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	February 28,						February 28,						November 30,						November 30,
	2023			2022			2023			2022			2023			2022			2023			2022
NET INCOME	$	771		$	1,112		$	2,434		$	3,268		$	900		$	788		$	1,978		$	1,663
OTHER COMPREHENSIVE INCOME (LOSS):
Foreign currency translation adjustments, net of tax (expense)/benefit of ($5) and $22 in 2023 and ($3) and $1 in 2022		80			91			(199	)		(150	)
Amortization of prior service credit, net of tax benefit of $0 and $1 in 2023 and $1 and $2 in 2022		(3	)		(1	)		(6	)		(5	)
Foreign currency translation adjustments, net of tax (expense) benefit of ($3) and $1 in 2023 and $9 and $27 in 2022														28			(70	)		—			(279	)
Prior service credit arising during period, net of tax (expense) of ($11) and ($11) in 2023 and $0 and $0 in 2022														36			—			36			—
Amortization of prior service credit, net of benefit of $0 and $0 in 2023 and $1 and $1 in 2022														(2	)		(1	)		(3	)		(3	)
		77			90			(205	)		(155	)		62			(71	)		33			(282	)
COMPREHENSIVE INCOME	$	848		$	1,202		$	2,229		$	3,113		$	962		$	717		$	2,011		$	1,381

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


	Nine Months Ended February 28,						Six Months Ended November 30,
	2023			2022			2023			2022
Operating Activities:
Net income	$	2,434		$	3,268		$	1,978		$	1,663
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization		3,101			2,952			2,111			2,070
Provision for uncollectible accounts		536			327			216			425
Stock-based compensation		142			151			96			108
Retirement plans mark-to-market adjustments		—			260
Other noncash items including leases and deferred income taxes		2,425			2,498			1,427			1,589
Business optimization and realignment costs/(payments), net		20			128
Business optimization and realignment costs, net of payments								(28	)		(40	)
Changes in assets and liabilities:
Receivables		373			(66	)		(687	)		(512	)
Other assets		(110	)		(235	)		(110	)		(214	)
Accounts payable and other liabilities		(3,534	)		(2,892	)		(975	)		(1,994	)
Other, net		14			(61	)		(24	)		30
Cash provided by operating activities		5,401			6,330			4,004			3,125
Investing Activities:
Capital expenditures		(4,420	)		(4,379	)		(2,595	)		(3,142	)
Purchase of investments		(82	)		(145	)		(75	)		(78	)
Proceeds from asset dispositions and other		72			71			62			20
Cash used in investing activities		(4,430	)		(4,453	)		(2,608	)		(3,200	)
Financing Activities:
Principal payments on debt		(123	)		(113	)		(94	)		(32	)
Proceeds from stock issuances		114			151			211			89
Dividends paid		(888	)		(598	)		(635	)		(598	)
Purchase of treasury stock		(1,500	)		(2,248	)		(1,000	)		(1,500	)
Other, net		1			—			—			1
Cash used in financing activities		(2,396	)		(2,808	)		(1,518	)		(2,040	)
Effect of exchange rate changes on cash		(99	)		(91	)		(5	)		(136	)
Net decrease in cash and cash equivalents		(1,524	)		(1,022	)		(127	)		(2,251	)
Cash and cash equivalents at beginning of period		6,897			7,087			6,856			6,897
Cash and cash equivalents at end of period	$	5,373		$	6,065		$	6,729		$	4,646

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

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN COMMON STOCKHOLDERS’ INVESTMENT

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

(1) General

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. These interim financial statements of FedEx Corporation (“FedEx”) have been prepared in accordance with accounting principles generally accepted in the United States and Securities and Exchange Commission (“SEC”) instructions for interim financial information, and should be read in conjunction with our Annual Report on Form 10-K for the year ended May 31, ~~2022~~2023 (“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 ~~February 28,~~November 30, 2023, and the results of our operations for the three- and ~~nine-month~~six-month periods ended ~~February 28,~~November 30, 2023 and 2022, cash flows for the ~~nine-month~~six-month periods ended ~~February 28,~~November 30, 2023 and 2022, and changes in common stockholders’ investment for the three- and ~~nine-month~~six-month periods ended ~~February 28,~~November 30, 2023 and 2022. Operating results for the three- and ~~nine-month periods~~six-month period ended ~~February 28,~~November 30, 2023 are not necessarily indicative of the results that may be expected for the year ending May 31, ~~2023.~~2024.

Except as otherwise specified, references to years indicate our fiscal year ending May 31, ~~2023~~2024 or ended May 31 of the year referenced and comparisons are to the corresponding period of the prior year.

REVENUE RECOGNITION.

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 totaled $~~737~~828 million and $~~861~~686 million at ~~February 28,~~November 30, 2023 and May 31, ~~2022,~~2023, respectively. Contract assets net of deferred unearned revenue were $~~527~~591 million and $~~623~~484 million at ~~February 28,~~November 30, 2023 and May 31, ~~2022,~~2023, 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 $1521 million and $819 million at ~~February 28,~~November 30, 2023 and May 31, ~~2022,~~2023, 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 periods ended ~~February 28.~~November 30. This presentation is consistent with how we organize our segments internally for making operating decisions and measuring performance.


	Three Months Ended				Nine Months Ended				Three Months Ended				Six Months Ended
	2023		2022		2023		2022		2023		2022		2023		2022
REVENUE BY SERVICE TYPE
FedEx Express segment:
Package:
U.S. overnight box	$	2,165	$	2,275	$	6,718	$	6,694	$	2,158	$	2,237	$	4,346	$	4,553
U.S. overnight envelope		478		479		1,477		1,435		447		474		932		999
U.S. deferred		1,346		1,422		3,886		3,960		1,208		1,253		2,395		2,540
Total U.S. domestic package revenue		3,989		4,176		12,081		12,089		3,813		3,964		7,673		8,092
International priority		2,566		2,991		8,286		8,937		2,390		2,823		4,717		5,720
International economy		698		697		2,116		2,072		1,088		711		2,109		1,418
Total international export package revenue		3,264		3,688		10,402		11,009		3,478		3,534		6,826		7,138
International domestic(1)		1,003		1,016		3,013		3,277		1,086		1,036		2,110		2,010
Total package revenue		8,256		8,880		25,496		26,375		8,377		8,534		16,609		17,240
Freight:
U.S.		719		712		2,299		2,262		584		784		1,166		1,580
International priority		687		948		2,387		2,815		569		811		1,122		1,699
International economy		358		378		1,123		1,230		422		388		847		765
International airfreight		47		40		126		134		29		39		61		80
Total freight revenue		1,811		2,078		5,935		6,441		1,604		2,022		3,196		4,124
Other		278		346		905		1,059		273		308		534		627
Total FedEx Express segment		10,345		11,304		32,336		33,875		10,254		10,864		20,339		21,991
FedEx Ground segment		8,658		8,800		25,211		24,741		8,639		8,393		17,059		16,553
FedEx Freight segment		2,186		2,253		7,363		6,776		2,360		2,454		4,651		5,177
FedEx Services segment		87		65		225		177		65		68		137		138
Other and eliminations(2)		893		1,219		3,090		3,549		847		1,035		1,660		2,197
	$	22,169	$	23,641	$	68,225	$	69,118	$	22,165	$	22,814	$	43,846	$	46,056

(1)

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

(2)

Includes the FedEx Office and Print Services, Inc. (“FedEx Office”), FedEx Logistics, Inc. (“FedEx Logistics”), and FedEx Dataworks, Inc. (“FedEx Dataworks”) operating segments.

EMPLOYEES UNDER COLLECTIVE BARGAINING ARRANGEMENTS. The pilots of Federal Express Corporation (“FedEx 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, and~~2015. The agreement became amendable in November 2021. Bargaining for a successor agreement began in May 2021, and ~~continues. In~~in November 2022 the National Mediation Board, ~~(“NMB”) began actively mediating the negotiations. The NMB~~which is the U.S. governmental agency that oversees labor agreements for entities covered by the Railway Labor Act of 1926, as ~~amended.~~amended, began actively mediating the negotiations. In July 2023, FedEx Express’s pilots failed to ratify the tentative successor agreement that was approved by ALPA’s FedEx Express Master Executive Council the prior month. Bargaining for a successor agreement continues. The conduct of mediated negotiations has no ~~impact~~effect on our operations. A small number of our other employees are members of unions.

STOCK-BASED COMPENSATION. We have ~~two~~three types of equity-based compensation: stock options, restricted stock, and, for outside directors, restricted ~~stock.~~stock units. The key terms of the stock option and restricted stock awards granted under our outstanding incentive stock plans and ~~all~~ financial disclosures about these programs are set forth in our Annual Report. The key terms of the restricted stock units granted to our outside directors are set forth in our Current Report on Form 8-K dated September 21, 2023 and filed with the SEC on September 22, 2023.

Our stock-based compensation expense was $3440 million for the three-month period ended ~~February 28,~~November 30, 2023 and $~~142~~96 million for the ~~nine-month~~six-month period ended ~~February 28,~~November 30, 2023. Our stock-based compensation expense was $3940 million for the three-month period ended ~~February 28,~~November 30, 2022 and $~~151~~108 million for the ~~nine-month~~six-month period ended ~~February 28,~~November 30, 2022. Due to its immateriality, additional disclosures related to stock-based compensation have been excluded from this quarterly report.

- 10 -

BUSINESS OPTIMIZATION AND REALIGNMENT COSTS. In the ~~first~~second quarter of 2023, FedEx announced DRIVE, a comprehensive program to improve the company’s long-term profitability. This program includes a business optimization plan to drive efficiency among our transportation segments, ~~and~~ lower our overhead and support ~~costs. At FedEx Express, we~~costs, and transform our digital capabilities. We plan to reconfigure the air network, optimize sorts and surface linehaul, drive efficiencies in Europe, and harmonize the global clearance process. At FedEx Ground Package System, Inc. (“FedEx Ground”), we are transformingconsolidate our pickup-and-delivery, package sortation, and transportation operations through enhanced planning tools, advanced data analytics, and increased focus on investment returns in order to drive efficiency improvements. Additionally, we plan to transform our back-office operations through automation, modernizing our infrastructure, and further consolidating the shared-services functions, resulting in procurement and other cost savings from shared and allocated overhead expenses. The DRIVE program will also facilitate the achievement of Network 2.0, a plan to consolidate sortation facilities and equipment, reduce pickup-and-delivery routes, and optimize our enterprise linehaul ~~networks~~network by moving beyond discrete collaboration to an end-to-end optimized ~~network.~~network through Network 2.0.

In the fourth quarter of 2023, we announced one FedEx, a consolidation plan to ultimately bring FedEx Express, FedEx Ground Package System, Inc. (“FedEx Ground”), FedEx Corporate Services, Inc. (“FedEx Services”), and other FedEx operating companies into Federal Express Corporation, becoming a single company operating a unified, fully integrated air-ground network under the respected FedEx brand. FedEx Freight, Inc. will continue to provide less-than-truckload (“LTL”) freight transportation services as a stand-alone and separate company under Federal Express Corporation. The organizational redesign will be implemented in phases with the new legal structure complete by June 2024. One FedEx will help facilitate our DRIVE transformation program to improve long-term profitability, including 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 announced the implementation of Network 2.0 in more than 20 markets, including the phased transition of all FedEx Ground operations and personnel in Canada to FedEx Express beginning in April 2024. Under Network 2.0, FedEx will continue to utilize both employee couriers and contracted service providers.

We incurred costs associated with our business optimization activities of $~~120~~145 million ($92110 million, net of tax, or $~~0.36~~0.44 per diluted share) in the ~~third~~second quarter and $~~180~~250 million ($~~138~~191 million, net of tax, or $~~0.53~~0.75 per diluted share) in the ~~nine months~~first half of 2024. These costs were primarily related to professional services and severance. We recognized $36 million ($27 million, net of tax, or $0.11 per diluted share) of costs under this program, including idling our operations in Russia, in the second quarter and $60 million ($46 million, net of tax, or $0.18 per diluted share) in the first half of 2023. These costs were primarily related to consulting ~~services, severance and related costs associated with organizational changes announced in the third quarter of 2023, and idling our operations in Russia. These business~~services. Business optimization costs are included in Corporate, other, and eliminations, FedEx Express, and FedEx ~~Express.~~Ground.

In 2021, FedEx Express announced a workforce reduction plan in Europe related to the network integration of TNT Express. The plan affected approximately 5,000 employees in Europe across operational teams and back-office functions and ~~is substantially complete as of February 28,~~was completed in 2023.

~~We incurred costs associated with our~~No business realignment ~~activities of $~~3 ~~million ($~~2 ~~million, net of tax, or $0.01~~ ~~per diluted share)~~costs were incurred in the ~~third~~second quarter ~~and $~~17 ~~million ($~~13 ~~million, net of tax, or $0.05~~ ~~per diluted share) in the nine months~~ of 2023. We incurred costs associated with our business realignment activities of $~~107~~14 million ($8211 million, net of tax, or $~~0.31~~0.04 per diluted share) in the ~~third quarter and $218~~ ~~million ($168~~ ~~million, net~~first half of ~~tax, or $0.63~~ ~~per diluted share) in the nine months of 2022.~~2023. These costs ~~are~~were related to certain employee severance arrangements. ~~Payments under this program totaled approximately $~~18 ~~million in the third quarter and $102~~ ~~million in the nine months of 2023. We expect the~~The pre-tax cost of our business realignment activities ~~to be~~through 2023 was approximately $~~415~~430 ~~million through 2023.~~

For additional information about the business optimization and realignment costs, see the section titled “Business Optimization and Realignment Costs” included in Item 2 of this Form 10-Q (“Management’s Discussion and Analysis of Results of Operations and Financial Condition”).million.

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

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

If a derivative is designated as a cash flow hedge, the entire change in the fair value of the hedging instrument included in the assessment of hedge effectiveness is recorded in other comprehensive income. For net investment hedges, the entire change in the fair value is recorded in other comprehensive income. Any portion of a change in the fair value of a derivative that is considered to be ineffective, along with the change in fair value of any derivatives not designated in a hedging relationship, is immediately recognized in the income statement. We do not have any derivatives designated as a cash flow hedge for any period presented. As of ~~February 28,~~November 30, 2023, we had €~~136~~165 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 ~~February 28,~~November 30, 2023, the hedge remains effective.

- 11 -

SUPPLIER FINANCE PROGRAM. We offer a voluntary Supply Chain Finance (“SCF”) program through one of our 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 program, they determine which invoices, if any, to sell to the financial institution to receive an early discounted payment, while we settle the net payment amount with our financial institution on the payment due dates. We guarantee these payments with the financial institution.

Amounts due to our suppliers that participate in the SCF program are included in accounts payable in our consolidated balance sheets. We have been informed by the participating financial institutions that as of November 30, 2023 and May 31, 2023, suppliers have been approved to sell to them $76 million and $76 million, respectively, of our outstanding payment obligations.

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.

~~- 11 -~~

~~New~~Recently Adopted Accounting Standards ~~and Accounting Standards Not Yet Adopted~~

In ~~March 2020,~~September 2022, 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 standard provides 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 amendments 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 guidance was 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 February 28, 2023, we continue to monitor our contracts and transactions for potential application of this ASU.

In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832), which requires annual disclosures that increase the transparency of transactions involving government grants, including (1) the types of transactions, (2) the accounting for those transactions, and (3) the effect of those transactions on an entity’s financial statements. The adoption of this standard did not have a material effect on our consolidated financial statements and related disclosures.

In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, which clarifies the guidance of measuring the fair value of equity securities subject to contractual restrictions that prohibit the sale of the equity securities. Our historical accounting is consistent with these clarifications. We early adopted this standard effective September 1, 2022. The adoption of this standard did not have an effect on our consolidated financial statements and related disclosures.

~~In September 2022, the FASB issued ASU~~ 2022-04, Liabilities-Supplier Finance Programs (Topic 405-50): Disclosure of Supplier Finance Program Obligations, which requires a buyer in a supplier finance program (e.g., reverse factoring) to disclose sufficient information about the program to allow a user of financial statements to understand the program’s nature, activity during the period, changes from period to period, and potential magnitude. The amendments do not affect the recognition, measurement, or financial statement presentation of obligations covered by supplier finance programs. We adopted this standard effective June 1, 2023. The ~~changes~~adoption of this standard did not have a material effect on our consolidated financial statements and related disclosures.

Accounting Standards Not Yet Adopted

In March 2020, the FASB issued 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, 2023, 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 ~~June 1,~~for annual periods beginning after December 15, 2023 (fiscal ~~2024)~~2025). We are assessing the effect of this ~~new standard~~update on our consolidated financial ~~statements.~~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.

EQUITY AND OTHER INVESTMENTS. Equity investments in private companies for which we do not have the ability to exercise significant influence are accounted for at cost, with adjustments for observable changes in prices or impairments, and are classified as “Other assets” on our consolidated balance sheets with adjustments recognized in “Other (expense) income, net” on our consolidated statements of income. Each reporting period, we perform a qualitative assessment to evaluate whether the investment is impaired. Our assessment includes a review of available recent operating results and trends, recent sales/acquisitions of the investee securities, and other publicly available data. If the investment is impaired, we write it down to its estimated fair value.

Equity investments that have readily determinable fair values, including investments for which we have elected the fair value option, are included in “Other assets” on our consolidated balance sheets and measured at fair value with changes recognized in “Other (expense) income, net” on our consolidated statements of income.

- 12 -

During the second quarter of 2024, we purchased $100 million of debt securities with effective maturities ranging from less than one year to approximately three years. These investments have been recognized in “Cash and cash equivalents” and “Other assets” on our consolidated balance sheets.

As of ~~February 28,~~November 30, 2023, these investments ~~were~~are not material to our financial position or results of operations.

TREASURY SHARES. In December 2021, our Board of Directors authorized a ~~new~~ stock repurchase program of up to $5 billion of FedEx common stock. As part of the repurchase program, we ~~entered into~~completed an accelerated share repurchase (“ASR”) agreement with a bank ~~in October 2022~~during the second quarter of 2024 to repurchase an aggregate of $~~1.5~~500 ~~billion~~million of our common stock.

During the ~~third~~second quarter of ~~2023, the ASR transaction was completed, and~~2024, ~~1.3~~2.0 million shares were ~~delivered~~repurchased under the ASR ~~agreement.~~agreement at an average price of $256.24 per share for a total of $500 million. The final number of shares delivered upon settlement of the ASR agreement 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 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. ~~The~~ ~~1.3~~ ~~million shares delivered under the ASR agreement were the only shares of FedEx common stock we repurchased during the third quarter of 2023.~~

During the ~~nine~~six months ended ~~February 28,~~November 30, 2023, we repurchased ~~9.2~~3.9 million shares of FedEx common stock under ASR agreements at an average price of $~~163.39~~256.33 per share for a total of $~~1.5~~1.0 billion. During the six months ended November 30, 2022, we repurchased 7.9 million shares of FedEx common stock under an ASR agreement at an average price of $151.46 per share for a total of $1.2 billion. As of ~~February 28,~~November 30, 2023, approximately $~~2.6~~1.6 billion remained available to use for repurchases under the program.

~~- 12 -~~

Shares under the 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, and the program may be suspended or discontinued at any time.

DIVIDENDS DECLARED PER COMMON SHARE.On ~~February~~November 17, 2023, our Board of Directors declared a quarterly dividend of $~~1.15~~1.26 per share of common stock. The dividend will be paid on ~~April 3, 2023~~January 2, 2024 to stockholders of record as of the close of business on ~~March 13,~~December 11, 2023. 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.

(3) Accumulated Other Comprehensive Loss

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


	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	2023			2022			2023			2022			2023			2022			2023			2022
Foreign currency translation loss:
Balance at beginning of period	$	(1,427	)	$	(1,026	)	$	(1,148	)	$	(785	)	$	(1,390	)	$	(1,357	)	$	(1,362	)	$	(1,148	)
Translation adjustments		80			91			(199	)		(150	)		28			(70	)		—			(279	)
Balance at end of period		(1,347	)		(935	)		(1,347	)		(935	)		(1,362	)		(1,427	)		(1,362	)		(1,427	)
Retirement plans adjustments:
Balance at beginning of period		42			49			45			53			34			43			35			45
Prior service credit arising during period														36			—			36			—
Reclassifications from AOCI		(3	)		(1	)		(6	)		(5	)		(2	)		(1	)		(3	)		(3	)
Balance at end of period		39			48			39			48			68			42			68			42
Accumulated other comprehensive (loss) at end of period	$	(1,308	)	$	(887	)	$	(1,308	)	$	(887	)	$	(1,294	)	$	(1,385	)	$	(1,294	)	$	(1,385	)

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


	Amount Reclassified from AOCI											Affected Line Item in the Income Statement	Amount Reclassified from AOCI										Affected Line Item in the Income Statement
	Three Months Ended					Nine Months Ended							Three Months Ended					Six Months Ended
	2023		2022			2023			2022				2023		2022			2023		2022
Amortization of retirement plans prior service credits, before tax	$	3	$	2		$	7		$	7		Other retirement plans, net	$	2	$	2		$	3	$	4		Other retirement plans, net
Income tax benefit		—		(1	)		(1	)		(2	)	Provision for income taxes
Income tax expense (benefit)														—		(1	)		—		(1	)	Provision for income taxes
AOCI reclassifications, net of tax	$	3	$	1		$	6		$	5		Net income	$	2	$	1		$	3	$	3		Net income

(5) Computation of Earnings Per Share

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


	Three Months Ended				Nine Months Ended				Three Months Ended				Six Months Ended
	2023		2022		2023		2022		2023		2022		2023		2022
Basic earnings per common share:
Net earnings allocable to common shares(1)	$	770	$	1,110	$	2,430	$	3,262	$	898	$	786	$	1,975	$	1,660
Weighted-average common shares		251		261		255		264		250		255		251		257
Basic earnings per common share	$	3.07	$	4.26	$	9.52	$	12.36	$	3.59	$	3.08	$	7.88	$	6.46
Diluted earnings per common share:
Net earnings allocable to common shares(1)	$	770	$	1,110	$	2,430	$	3,262	$	898	$	786	$	1,975	$	1,660
Weighted-average common shares		251		261		255		264		250		255		251		257
Dilutive effect of share-based awards		2		4		2		4		3		1		3		2
Weighted-average diluted shares		253		265		257		268		253		256		254		259
Diluted earnings per common share	$	3.05	$	4.20	$	9.46	$	12.17	$	3.55	$	3.07	$	7.79	$	6.41
Anti-dilutive options excluded from diluted earnings per common share		7.8		4.4		7.7		3.8		6.3		9.5		6.3		7.6

(1) Net earnings available to participating securities were immaterial in all periods presented.

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


	Three Months Ended																Three Months Ended
	U.S. Pension Plans						International Pension Plans						Postretirement Healthcare Plans				U.S. Pension Plans						International Pension Plans						Postretirement Healthcare Plans
	2023			2022			2023			2022			2023		2022		2023			2022			2023			2022			2023		2022
Service cost	$	162		$	209		$	13		$	14		$	10	$	12	$	136		$	163		$	10		$	10		$	7	$	9
Other retirement plans expense (income):
Interest cost		304			254			8			8			14		10		340			305			12			8			14		14
Expected return on plan assets		(422	)		(478	)		(3	)		(3	)		—		—		(399	)		(422	)		(7	)		(4	)		—		—
Amortization of prior service credit and other		(1	)		(1	)		(2	)		(1	)		—		—		(1	)		(2	)		—			—			—		—
		(119	)		(225	)		3			4			14		10		(60	)		(119	)		5			4			14		14
	$	43		$	(16	)	$	16		$	18		$	24	$	22	$	76		$	44		$	15		$	14		$	21	$	23

Nine Months Ended

U.S. Pension Plans

International Pension Plans

Postretirement Healthcare Plans

2023

2022

2023

2022

2023

2022

Service cost

$
488

$
625

$
34

$
43

$
28

$
36

Other retirement plans expense (income):

Interest cost

913

765

25

27

42

31

Expected return on plan assets

(1,266
)

(1,433
)

(11
)

(23
)

—

—

Amortization of prior service credit and other

(5
)

(5
)

(2
)

(2
)

—

—

MTM net loss

—

36

—

224

—

—

(358
)

(637
)

12

226

42

31

$
130

$
(12
)

$
46

$
269

$
70

$
67

- 15 -


	Six Months Ended
	U.S. Pension Plans						International Pension Plans						Postretirement Healthcare Plans
	2023			2022			2023			2022			2023		2022
Service cost	$	272		$	326		$	20		$	21		$	14	$	18
Other retirement plans expense (income):
Interest cost		681			609			22			17			30		28
Expected return on plan assets		(799	)		(844	)		(11	)		(8	)		—		—
Amortization of prior service credit and other		(3	)		(4	)		—			—			—		—
		(121	)		(239	)		11			9			30		28
	$	151		$	87		$	31		$	30		$	44	$	46

For ~~2023,~~2024, no pension contributions are required for our tax-qualified U.S. domestic pension ~~plans~~plan (“U.S. Pension ~~Plans”~~Plan”) as ~~they are~~it is fully funded under the Employee Retirement Income Security Act. We made voluntary contributions of $400 million to our U.S. Pension ~~Plans~~Plan during the first half of 2024 and anticipate making $~~800~~400 million of additional voluntary contributions during the ~~nine months~~remainder of ~~2023.~~

~~In the second quarter of 2022, we incurred a pre-tax, noncash MTM net loss of $~~36 ~~million related to the U.S. FedEx Freight Pension Plan. During the second quarter of 2022,~~ 21% of FedEx Freight Corporation (“FedEx Freight”) employees elected to move from a pension/401(k) benefit structure to a new 401(k)-only structure with a higher company match effective January 1, 2022. The $36 ~~million net loss consisted of a $~~75 ~~million MTM loss due to a lower discount rate, partially offset by a $~~39 ~~million curtailment gain.~~

~~We incurred an additional pre-tax, noncash MTM net loss of $224~~ million in the second quarter of 2022 related to the termination of the TNT Express Netherlands Pension Plan. Effective October 1, 2021, the responsibility of all pension assets and liabilities of this plan was transferred to a separate, multi-employer pension plan.2024.

(7) Business Segment Information

We provide a broad portfolio of transportation, e-commerce, and business services through companies competing collectively, operating collaboratively, and innovating digitally ~~under the respected FedEx brand.~~as one FedEx. Our primary operating companies are FedEx Express, the world’s largest express transportation company; FedEx Ground, a leading North American provider of small-package ground delivery services; and FedEx Freight Corporation (“FedEx Freight”), a leading North American provider of ~~less-than-truckload (“LTL”)~~LTL freight transportation services. These companies represent our major service lines and, along with FedEx ~~Corporate~~ Services, ~~Inc. (“FedEx Services”),~~ constitute our reportable segments.

Our reportable segments include the following businesses:


FedEx Express Segment	FedEx Express (express transportation, small-package ground delivery, and freight transportation)
	FedEx Custom Critical, Inc. (time-critical transportation)
FedEx Ground Segment	FedEx Ground (small-package ground delivery)

FedEx Freight Segment	FedEx Freight (LTL freight transportation)

FedEx Services Segment	FedEx Services (sales, marketing, information technology, communications, customer service, technical support, billing and collection services, and back-office functions)

In the fourth quarter of 2023, FedEx announced one FedEx, a consolidation plan to ultimately bring FedEx Express, FedEx Ground, FedEx Services, and other FedEx operating companies into Federal Express Corporation, becoming a single company operating a unified, fully integrated air-ground network under the respected FedEx brand. The organizational redesign will be implemented in phases with the new legal structure complete by June 2024. During the implementation process in 2024, each of our current reportable segments will continue to have discrete financial information that will be regularly reviewed when evaluating performance and making resource allocation decisions, and aligns with our management reporting structure and our internal financial reporting. In the first quarter of 2025 when the consolidation plan has been completed, we expect to begin reporting a new segment structure that will align with an updated management reporting structure and how management will evaluate performance and make resource allocation decisions under one FedEx.

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

FedEx Services Segment

The FedEx Services segment operates combined sales, marketing, administrative, and information-technology functions in shared services operations for U.S. customers of our major business units and certain back-office support to our operating segments which allows us to obtain synergies from the combination of these functions. For the international regions of FedEx Express, some of these functions are performed on a regional basis and reported by FedEx Express in their natural expense line items.

- 16 -

The FedEx Services segment provides direct and indirect support to our operating segments, and we allocate all of the net operating costs of the FedEx Services segment to reflect the full cost of operating our businesses in the results of those segments. We review and evaluate the performance of our transportation segments based on operating income (inclusive of FedEx Services segment allocations). For the FedEx Services segment, performance is evaluated based on the effect of its total allocated net operating costs on our operating segments.

Operating expenses for each of our transportation segments include the allocations from the FedEx Services segment to the respective transportation segments. These allocations also include charges and credits for administrative services provided between operating companies. The allocations of net operating costs are based on metrics such as relative 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.

~~- 16 -~~

Corporate, Other, and Eliminations

Corporate and other includes corporate headquarters costs for executive officers and certain legal and finance functions, including certain other costs and credits not attributed to our core business, as well as certain costs associated with developing our “innovate digitally” strategic pillar 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. ~~ShopRunner, Inc. was merged into FedEx Dataworks during the third quarter of 2023.~~

Also included in Corporate and other ~~are~~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, which we believe approximate fair value, 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.

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 ~~February 28~~November 30 (in millions):


	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	2023			2022			2023			2022			2023			2022			2023			2022
Revenue:
FedEx Express segment	$	10,345		$	11,304		$	32,336		$	33,875		$	10,254		$	10,864		$	20,339		$	21,991
FedEx Ground segment		8,658			8,800			25,211			24,741			8,639			8,393			17,059			16,553
FedEx Freight segment		2,186			2,253			7,363			6,776			2,360			2,454			4,651			5,177
FedEx Services segment		87			65			225			177			65			68			137			138
Other and eliminations		893			1,219			3,090			3,549			847			1,035			1,660			2,197
	$	22,169		$	23,641		$	68,225		$	69,118		$	22,165		$	22,814		$	43,846		$	46,056
Operating income (loss):
FedEx Express segment	$	119		$	520		$	634		$	2,036		$	137		$	341		$	342		$	515
FedEx Ground segment		844			641			2,136			1,793			900			598			2,003			1,292
FedEx Freight segment		386			337			1,477			1,061			487			440			968			1,091
Corporate, other, and eliminations		(307	)		(172	)		(838	)		(569	)		(248	)		(203	)		(552	)		(531	)
	$	1,042		$	1,326		$	3,409		$	4,321		$	1,276		$	1,176		$	2,761		$	2,367

- 17 -

(8) Commitments

As of ~~February 28,~~November 30, 2023, our purchase commitments under various contracts for the remainder of ~~2023~~2024 and annually thereafter were as follows (in millions):


	Aircraft and Related		Other(1)		Total		Aircraft and Aircraft Related		Other(1)		Total
2023 (remainder)	$	271	$	228	$	499
2024		1,944		717		2,661
2024 (remainder)							$	485	$	333	$	818
2025		1,565		550		2,115		1,626		659		2,285
2026		568		442		1,010		591		498		1,089
2027		296		172		468		290		226		516
2028								264		138		402
Thereafter		1,913		139		2,052		1,646		85		1,731
Total	$	6,557	$	2,248	$	8,805	$	4,902	$	1,939	$	6,841

(1)

Primarily ~~equipment~~information technology and ~~advertising contracts.~~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.

~~- 17 -~~

As of ~~February 28,~~November 30, 2023, we had $~~930~~576 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 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 ~~February 28,~~November 30, 2023 with the year of expected delivery:


	Cessna SkyCourier 408		ATR 72-600F		B767F		B777F		Total		Cessna SkyCourier 408		ATR 72-600F		B767F		B777F		Total
2023 (remainder)		5		4		3		—		12
2024		13		8		14		4		39
2024 (remainder)												9		5		5		—		19
2025		12		6		10		2		30		12		8		10		2		32
2026		14		1		—		—		15		14		1		2		—		17
2027		—		—		—		—		—		—		—		—		—		—
2028												—		—		—		—		—
Thereafter		—		—		—		—		—		—		—		—		—		—
Total		44		19		27		6		96		35		14		17		2		68

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 ~~February 28,~~November 30, 2023 is as follows (in millions):


	Aircraft and Related Equipment			Facilities and Other			Total Operating Leases			Finance Leases			Total Leases			Aircraft and Related Equipment			Facilities and Other			Total Operating Leases			Finance Leases			Total Leases
2023 (remainder)	$	34		$	570		$	604		$	34		$	638
2024		103			2,905			3,008			91			3,099
2024 (remainder)																$	64		$	1,364		$	1,428		$	278		$	1,706
2025		84			2,600			2,684			38			2,722			118			2,912			3,030			38			3,068
2026		81			2,322			2,403			30			2,433			115			2,607			2,722			30			2,752
2027		80			2,046			2,126			22			2,148			114			2,306			2,420			22			2,442
2028																	114			1,983			2,097			21			2,118
Thereafter		170			9,790			9,960			669			10,629			243			8,867			9,110			649			9,759
Total lease payments		552			20,233			20,785			884			21,669			768			20,039			20,807			1,038			21,845
Less imputed interest		(43	)		(2,923	)		(2,966	)		(345	)		(3,311	)		(96	)		(3,056	)		(3,152	)		(332	)		(3,484	)
Present value of lease liability	$	509		$	17,310		$	17,819		$	539		$	18,358		$	672		$	16,983		$	17,655		$	706		$	18,361

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 ~~February 28,~~November 30, 2023, FedEx has entered into additional leases which have not yet commenced and are therefore not part of the right-of-use asset and liability. These leases are generally for build-to-suit facilities and have undiscounted future payments of approximately $~~2.3~~1.7 billion that will commence when FedEx gains beneficial access to the leased asset. Commencement dates are expected to be from ~~2023~~2024 to ~~2024~~2027.

We have reviewed the accompanying condensed consolidated balance sheet of FedEx Corporation (the Company) as of ~~February 28,~~November 30, 2023, the related condensed consolidated statements of income, comprehensive income, and changes in common stockholders’ investment for the three- and ~~nine-month~~six-month periods ended ~~February 28,~~November 30, 2023 and 2022, the condensed consolidated statements of cash flows for the ~~nine-month~~six-month periods ended ~~February 28,~~November 30, 2023 and 2022, 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, ~~2022,~~2023, 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 ~~18, 2022,~~17, 2023, 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, ~~2022~~2023, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

These financial statements are the responsibility of the Company’s management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the SEC and the PCAOB. We conducted our review in accordance with the standards of the PCAOB. A review of interim financial 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.

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

The following Management’s Discussion and Analysis of Results of Operations and Financial Condition (“MD&A”) describes the principal factors affecting the results of operations, liquidity, capital resources, 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, ~~2022~~2023 (“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 through operating companies competing collectively, operating collaboratively, and innovating digitally ~~under the respected FedEx brand.~~as one FedEx. Our primary operating companies are Federal Express Corporation (“FedEx Express”), the world’s largest express transportation company; FedEx Ground Package System, Inc. (“FedEx Ground”), a leading North American provider of small-package ground delivery services; and FedEx Freight Corporation (“FedEx Freight”), a leading North American provider of less-than-truckload (“LTL”) freight transportation services. These companies represent our major service lines and, along with FedEx Corporate Services, Inc. (“FedEx Services”), constitute our reportable segments.

Our FedEx Services segment provides sales, marketing, information technology, communications, customer service, technical support, billing and collection services, and certain back-office functions that support our operating segments. For the international regions of FedEx Express, some of these functions are performed on a regional basis and reported by FedEx Express in their natural expense line items. See “Reportable Segments” for further discussion. Additional information on our businesses can be found in our Annual Report.

Except as otherwise specified, references to years indicate our fiscal year ending May 31, ~~2023~~2024 or ended May 31 of the year referenced, and comparisons are to the corresponding period of the prior year. References to our transportation segments include, collectively, the FedEx Express segment, the FedEx Ground segment, and the FedEx Freight segment.

The following trends significantly ~~impact~~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 and Realignment Costs and – Outlook” and ~~“Results of Operations – Consolidated Results~~“Financial Condition – Liquidity Outlook” below for additional information on efforts we are taking to mitigate adverse trends.

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 ~~growth of~~ global ~~trade.~~trade growth. Our results for the ~~third~~second quarter and ~~nine months~~first half of ~~2023~~2024 were ~~adversely impacted~~negatively affected by ~~lower~~continued weak global ~~volumes due to weak~~ economic conditions.

The coronavirus (“COVID-19”) pandemic had varying impacts on the demand for our services and our business operations and has contributed to global supply chain disruptions, particularly in 2022. We are shifting to operating in a more stable post-COVID-19 environment with less restrictions. Supply and demand trends are beginning to normalize resulting in improvements in the availability of labor and vehicles, trailers, and other package handling equipment.

~~Global~~During the second quarter and first half of 2024, global inflation ~~is well~~decelerated year over year but continues to be above ~~normal and~~ historical ~~levels, impacting all areas of our business.~~levels. Additionally, global interest rates ~~are rising~~continued to rise in an effort to curb inflation. We are experiencing a decline in demand for our transportation services as elevated inflation and interest ~~rate increases~~rates are negatively affecting consumer and business spending. ~~Additionally, we are experiencing higher costs to serve through higher fuel prices, wage rates, purchased transportation costs, and other direct operating expenses such as operational supplies.~~ We expect inflation and high interest rates to continue to negatively affect our results of operations for the remainder of ~~2023.~~2024.

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. While~~results either positively or negatively in the short-term. Lower fuel prices negatively affected yields through lower fuel surcharges and drove a decrease in fuel expense ~~increased~~ during the ~~third~~second quarter and ~~nine months~~first half of ~~2023 compared to the third quarter and nine months~~2024 at all of ~~2022 due to higher fuel prices, we were able to offset higher prices through yield management actions.~~our transportation segments.

Given the nature of ~~our business and~~ our global operations, geopolitical conflicts may adversely affect our business and results of operations. The conflict between Russia and Ukraine that began in February 2022 continues as of the date of this quarterly report. The safety of our team members in Ukraine is our top priority. As we focus on the safety of our team members, we have suspended all services in Ukraine and Belarus. We also temporarily idled our operations in Russia and reduced our presence to the minimum required for purposes of maintaining a legal presence with active transport licenses. As a result, we incurred an immaterial amount of severance and other related expenses in the second quarter of 2023, which is included in business optimization expenses at FedEx Express for the nine months of 2023. While we do not expect ~~this conflict~~ongoing geopolitical conflicts to have a direct material ~~impact~~effect on our business or results of operations, the broader consequences are adversely affecting the global economy and ~~fuel prices generally and~~ may also have the effect of heightening other risks disclosed in our Annual Report. ~~See “Results of Operations – Consolidated Results – Business Optimization and Realignment Costs” below for additional information.~~

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 operating expense” includes costs associated with outside service contracts (such as temporary labor, security, and facility services and cargo ~~handling, temporary labor, and security)~~handling), insurance, professional fees, and operational ~~supplies, and bad debt.~~supplies.

The following tables compare summary operating results and changes in revenue and operating results (dollars in millions, except per share amounts) for the periods ended ~~February 28:~~November 30:


	Three Months Ended						Percent				Nine Months Ended						Percent				Three Months Ended						Percent				Six Months Ended						Percent
	2023			2022			Change				2023			2022			Change				2023			2022			Change				2023			2022			Change
Revenue	$	22,169		$	23,641			(6	)		$	68,225		$	69,118			(1	)		$	22,165		$	22,814			(3	)		$	43,846		$	46,056			(5	)
Operating income (loss):
FedEx Express segment		119			520			(77	)			634			2,036			(69	)			137			341			(60	)			342			515			(34	)
FedEx Ground segment		844			641			32				2,136			1,793			19				900			598			51				2,003			1,292			55
FedEx Freight segment		386			337			15				1,477			1,061			39				487			440			11				968			1,091			(11	)
Corporate, other, and eliminations		(307	)		(172	)		(78	)			(838	)		(569	)		(47	)			(248	)		(203	)		(22	)			(552	)		(531	)		(4	)
Consolidated operating income		1,042			1,326			(21	)			3,409			4,321			(21	)			1,276			1,176			9				2,761			2,367			17
Operating margin:
FedEx Express segment		1.2	%		4.6	%		(340	)	bp		2.0	%		6.0	%		(400	)	bp		1.3	%		3.1	%		(180	)	bp		1.7	%		2.3	%		(60	)	bp
FedEx Ground segment		9.7	%		7.3	%		240		bp		8.5	%		7.2	%		130		bp		10.4	%		7.1	%		330		bp		11.7	%		7.8	%		390		bp
FedEx Freight segment		17.7	%		15.0	%		270		bp		20.1	%		15.7	%		440		bp		20.6	%		17.9	%		270		bp		20.8	%		21.1	%		(30	)	bp
Consolidated operating margin		4.7	%		5.6	%		(90	)	bp		5.0	%		6.3	%		(130	)	bp		5.8	%		5.2	%		60		bp		6.3	%		5.1	%		120		bp
Consolidated net income	$	771		$	1,112			(31	)		$	2,434		$	3,268			(26	)		$	900		$	788			14			$	1,978		$	1,663			19
Diluted earnings per share	$	3.05		$	4.20			(27	)		$	9.46		$	12.17			(22	)		$	3.55		$	3.07			16			$	7.79		$	6.41			22


													Year-over-Year Changes
	Change in Revenue						Change in Operating Results						Revenue						Operating Results
	Three Months Ended			Nine Months Ended			Three Months Ended			Nine Months Ended			Three Months Ended			Six Months Ended			Three Months Ended			Six Months Ended
FedEx Express segment	$	(959	)	$	(1,539	)	$	(401	)	$	(1,402	)	$	(610	)	$	(1,652	)	$	(204	)	$	(173	)
FedEx Ground segment		(142	)		470			203			343			246			506			302			711
FedEx Freight segment		(67	)		587			49			416			(94	)		(526	)		47			(123	)
FedEx Services segment		22			48			—			—			(3	)		(1	)		—			—
Corporate, other, and eliminations		(326	)		(459	)		(135	)		(269	)		(188	)		(537	)		(45	)		(21	)
	$	(1,472	)	$	(893	)	$	(284	)	$	(912	)	$	(649	)	$	(2,210	)	$	100		$	394

~~Our results for~~Operating income improved 9% in the ~~third~~second quarter and 17% in the first half of ~~2023~~2024 due to execution of our DRIVE program initiatives and our continued to be negatively impacted by macroeconomic conditions, including inflation well above normal and historical levels, and rising global interest rates. In response to market conditions, we continued implementing cost reductions and focusingfocus on ~~yield improvement and~~ revenue quality, to mitigate the effect of volume declines. These cost reductions include reducing flight hours, temporarily parking aircraft, improving productivity, reducing certain peak wage programs, consolidating and closing sorts, canceling network capacity projects, and reducing select Sunday operations. Volume declines were partially offset by ~~yield improvements, including~~reduced demand, driven by challenging macroeconomic conditions, and lower fuel ~~surcharge increases, resulting in a decrease in revenue in~~surcharges. Our DRIVE initiatives included increasing linehaul efficiencies and improving dock productivity at FedEx Ground, as well as optimizing the ~~third quarter~~air network at FedEx Express through structural flight takedowns, improving hub sort efficiency, and ~~nine months of 2023.~~international route optimization.

Operating income includes ~~$120~~expenses of $145 million ($92110 million, net of tax, or ~~$0.36~~$0.44 per diluted share) in the ~~third~~second quarter and ~~$180~~$250 million ($~~138~~191 million, net of tax, or ~~$0.53~~$0.75 per diluted share) in the ~~nine months~~first half of ~~2023~~2024 associated with our business optimization strategy announced in 2023. We recognized $36 million ($27 million, net of tax, or $0.11 per diluted share) in the second quarter and $60 million ($46 million, net of tax, or $0.18 per diluted share) in the first half of 2023 under this program. Operating income ~~also~~ includes business realignment costs of $3$14 million ($211 million, net of tax, or ~~$0.01~~$0.04 per diluted share) in the ~~third quarter and $17 million ($13 million, net of tax, or $0.05 per diluted share) in the nine months~~first half of 2023 associated with our workforce reduction plan in Europe previously announced in 2021. ~~We recognized $107 million ($82 million, net of tax, or $0.31 per diluted share) of~~No business realignment costs were incurred in the ~~third~~second quarter of ~~2022 and $218 million ($168 million, net of tax, or $0.63 per diluted share) in the nine months of 2022 under this program.~~2023. See the “Business Optimization and Realignment Costs” section of this MD&A for more information.

Operating income included TNT Express integration expenses of $29 million ($23 million, net of tax, or $0.08 per diluted share) in the third quarter and $92 million ($71 million, net of tax, or $0.27 per diluted share) in the nine months of 2022.

Consolidated net income in the nine months of 2022 included a pre-tax, noncash net loss of $260 million ($195 million, net of tax; $0.73 per diluted share) associated with our mark-to-market retirement plans accounting adjustments. See Note 6 of the accompanying unaudited condensed consolidated financial statements for more information.

The comparison of net income between 2023 and 2022 is affected by a tax benefit of $78 million ($0.29 per diluted share) recognized in 2022 related to revisions of prior-year tax estimates for actual tax return results. See the “Income Taxes” section of this MD&A for additional information.

In December 2021, our Board of Directors authorized a stock repurchase program of up to $5 billion of FedEx common stock. As part of the repurchase program, we ~~entered into~~completed an accelerated share repurchase (“ASR”) agreement with a bank ~~in October 2022, which was completed in December 2022,~~during the second quarter of 2024 to repurchase an aggregate of ~~$1.5 billion~~$500 million of our common stock. During the six months ended November 30, 2023, we repurchased 3.9 million shares of FedEx common stock under ASR agreements at an average price of $256.33 per share for a total of $1.0 billion. Share repurchases had a benefit of ~~$0.10~~$0.05 per diluted share for the ~~third~~second quarter and ~~$0.17~~$0.07 per diluted share for the ~~nine months~~first half of ~~2023.~~2024. See Note 1 of the accompanying unaudited condensed consolidated financial statements, “Financial ~~Condition—Liquidity”~~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 on our repurchase program.

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

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

Revenue decreased 6%3% in the ~~third~~second quarter and 1%5% in the ~~nine months~~first half of ~~2023~~2024 primarily due to ~~global volume declines~~lower fuel surcharges at all of our transportation segments and volume declines at FedEx Express and FedEx Freight, partially offset by base yield improvement ~~including higher fuel surcharges.~~at FedEx Ground and FedEx Freight.

FedEx Express revenue decreased 6% in the second quarter and 8% in the ~~third quarter and 5% in the nine months~~first half of ~~2023~~2024 primarily due to lower ~~global~~ volume, lower fuel surcharges, reduced demand surcharges, and unfavorable ~~foreign currency, partially offset by yield improvement, including higher fuel surcharges. In the third quarter and nine months of 2023, revenue~~international service mix. Revenue at Corporate, other, and eliminations decreased during the second quarter and first half of 2024 primarily due to lower ~~volumes and~~ yields at FedEx Logistics, Inc. (“FedEx Logistics”). FedEx Freight revenue decreased 3%4% in the ~~third~~second quarter and ~~increased 9%~~10% in the ~~nine months~~first half of ~~2023. The third quarter decrease was~~2024 primarily due to lower shipments, fuel surcharges, and weight per shipment, partially offset by base yield improvement. FedEx Ground revenue increased 3% during the second quarter and first half of 2024 primarily due to base yield improvement and higher volumes, partially offset by ~~yield improvement, including higher~~lower fuel surcharges. The nine-months increase was primarily due to yield improvement, including higher fuel surcharges, partially offset by lower volume. Revenue at FedEx Ground decreased 2% in the third quarter and increased 2% in the nine months of 2023. The third quarter decrease was primarily due to lower volumes, partially offset by yield improvement, including higher fuel surcharges. The nine-months increase was primarily due to yield improvement, including higher fuel surcharges, partially offset by lower volumes.

The following table compares operating expenses expressed as dollar amounts (in millions) and as a percent of revenue for the periods ended ~~February 28:~~November 30:


	Three Months Ended				Percent			Nine Months Ended				Percent			Three Months Ended				Percent			Six Months Ended				Percent
	2023		2022		Change			2023		2022		Change			2023		2022		Change			2023		2022		Change
Operating expenses:
Salaries and employee benefits	$	7,817	$	8,244		(5	)	$	23,468	$	24,155		(3	)	$	7,833	$	7,792		1		$	15,618	$	15,651		—
Purchased transportation		5,402		6,272		(14	)		16,834		18,172		(7	)		5,395		5,665		(5	)		10,431		11,432		(9	)
Rentals and landing fees		1,205		1,225		(2	)		3,559		3,535		1			1,138		1,195		(5	)		2,289		2,354		(3	)
Depreciation and amortization		1,031		986		5			3,101		2,952		5			1,040		1,046		(1	)		2,111		2,070		2
Fuel		1,350		1,201		12			4,765		3,355		42			1,328		1,593		(17	)		2,429		3,415		(29	)
Maintenance and repairs		789		822		(4	)		2,575		2,530		2			854		882		(3	)		1,678		1,786		(6	)
Business optimization and realignment costs		123		107		15			197		218		(10	)		145		36		303			250		74		238
Other		3,410		3,458		(1	)		10,317		9,880		4			3,156		3,429		(8	)		6,279		6,907		(9	)
Total operating expenses		21,127		22,315		(5	)		64,816		64,797		—			20,889		21,638		(3	)		41,085		43,689		(6	)
Operating income	$	1,042	$	1,326		(21	)	$	3,409	$	4,321		(21	)	$	1,276	$	1,176		9		$	2,761	$	2,367	$	17


	Percent of Revenue												Percent of Revenue
	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	2023			2022			2023			2022			2023			2022			2023			2022
Operating expenses:
Salaries and employee benefits		35.3	%		34.9	%		34.4	%		34.9	%		35.3	%		34.1	%		35.6	%		34.0	%
Purchased transportation		24.4			26.5			24.7			26.3			24.3			24.8			23.8			24.8
Rentals and landing fees		5.4			5.2			5.2			5.1			5.1			5.2			5.2			5.1
Depreciation and amortization		4.6			4.2			4.5			4.3			4.7			4.6			4.8			4.5
Fuel		6.1			5.1			7.0			4.8			6.0			7.0			5.6			7.4
Maintenance and repairs		3.6			3.5			3.8			3.7			3.9			3.9			3.8			3.9
Business optimization and realignment costs		0.5			0.4			0.3			0.3			0.7			0.2			0.6			0.2
Other		15.4			14.6			15.1			14.3			14.2			15.0			14.3			15.0
Total operating expenses		95.3			94.4			95.0			93.7			94.2			94.8			93.7			94.9
Operating margin		4.7	%		5.6	%		5.0	%		6.3	%		5.8	%		5.2	%		6.3	%		5.1	%

Operating income ~~declined~~increased 9% in the ~~third~~second quarter and ~~nine months~~17% in the first half of ~~2023~~2024 primarily due to our DRIVE program initiatives and base yield improvements at FedEx Ground and FedEx Freight, partially offset by lower volumes at FedEx Freight and FedEx Express, driven primarily by challenging macroeconomic conditions, and lower fuel surcharges.

Purchased transportation decreased 5% in the second quarter and 9% in the first half of 2024 primarily due to lower volumes ~~at each of our~~and fuel prices, and a shift from third-party over-the-road transportation segments, partially offset by yield improvement, including higher fuel surcharges, as well as cost reductions such as reducing flight hours, temporarily parking aircraft, improving productivity, reducing certain peak wage programs, consolidating and closing sorts, and reducing select Sunday operations. These cost reductions more than offset the effects of global inflation, which drove higher operating expenses related to ~~fuel, other operating expenses, salaries and employee benefits, and purchased transportation.~~

rail usage. Fuel expense ~~increased 12%~~decreased 17% in the ~~third~~second quarter and ~~42%~~29% in the ~~nine months~~first half of ~~2023~~2024 primarily due to ~~higher~~lower fuel prices ~~partially offset by lower~~and usage. Other operating expenses ~~increased 4%~~decreased 8% in the ~~nine months~~second quarter and 9% in the first half of ~~2023~~2024 primarily due to ~~higher self-insurance accruals and~~lower bad debt ~~partially offset by favorable foreign currency impacts, lower professional fees,~~expense and ~~lower~~ outside service ~~contract~~contracts expense. ~~Purchased transportation~~Maintenance and repairs decreased ~~14%~~3% in the ~~third~~second quarter and 7%6% in the ~~nine months~~first half of 2024 primarily due to lower ~~volume and favorable currency impacts, partially offset by increased fuel prices and lower productivity. Salaries and employee benefits decreased 5%~~aircraft maintenance resulting from an increase in the third quarter and 3% in the nine months due to decreased staffing to align with lower volumes, favorable currency impacts, and lower variable incentive compensation, partially offset by increased wage rates.temporarily parked aircraft.

In the ~~first~~second quarter of 2023, FedEx announced DRIVE, a comprehensive program to improve the company’s long-term profitability. This program includes a business optimization plan to drive efficiency among our transportation segments, ~~and~~ lower our overhead and support ~~costs. At FedEx Express, we~~costs, and transform our digital capabilities. We plan to ~~reconfigure the air network, optimize sorts and surface linehaul, drive efficiencies in Europe, and harmonize the global clearance process. At FedEx Ground, we are transforming~~consolidate our pickup-and-delivery, package sortation, and transportation operations through enhanced planning tools, advanced data analytics, and increased focus on investment returns in order to drive efficiency improvements. Additionally, we plan to transform our back-office operations through automation, modernizing our infrastructure, and further consolidating the shared-services functions, resulting in procurement and other cost savings from shared and allocated overhead expenses. The DRIVE program will also facilitate the achievement of Network 2.0, a plan to consolidate 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.~~network through Network 2.0.

In the fourth quarter of 2023, we announced one FedEx, a consolidation plan to ultimately bring FedEx Express, FedEx Ground, FedEx Services, and other FedEx operating companies into Federal Express Corporation, becoming a single company operating a unified, fully integrated air-ground network under the respected FedEx brand. FedEx Freight, Inc. will continue to provide LTL freight transportation services as a stand-alone and separate company under Federal Express Corporation. The organizational redesign will be implemented in phases with the new legal structure complete by June 2024. One FedEx will help facilitate our DRIVE transformation program to improve long-term profitability, including 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 incurred costs associated with our business optimization activities of ~~$120~~$145 million ($92110 million, net of tax, or ~~$0.36~~$0.44 per diluted share) in the ~~third~~second quarter and ~~$180~~$250 million ($~~138~~191 million, net of tax, or ~~$0.53~~$0.75 per diluted share) in the ~~nine months~~first half of ~~2023.~~2024. These costs were primarily related to professional services and severance. We recognized $36 million ($27 million, net of tax, or $0.11 per diluted share) in the second quarter, including idling our operations in Russia, and $60 million ($46 million, net of tax, or $0.18 per diluted share) in the first half of 2023 under this program. These costs were primarily related to consulting ~~services, severance and related costs associated with organizational changes announced in the third quarter of 2023, and idling our operations in Russia. These business~~services. Business optimization costs are included in Corporate, other, and eliminations, FedEx Ground, and FedEx Express. The identification of these costs as business optimization-related expenditures is subject to our disclosure controls and procedures. We expect the pre-tax cost of our business optimization activities to be approximately $550 million in 2024 and approximately $2.0 billion through 2025. The timing and amount of our business optimization expenses may change as we revise and implement our plans.

~~We incurred costs associated with our~~ No business realignment ~~activities of $3 million ($2 million, net of tax, or $0.01 per diluted share)~~costs were incurred in the ~~third~~second quarter ~~and $17 million ($13 million, net of tax, or $0.05 per diluted share) in the nine months~~ of 2023. We incurred costs associated with our business realignment activities of ~~$107~~$14 million ($8211 million, net of tax, or ~~$0.31~~$0.04 per diluted share) in the ~~third quarter and $218 million ($168 million, net~~first half of ~~tax, or $0.63 per diluted share) in the nine months of 2022.~~2023. These costs ~~are~~were related to certain employee severance arrangements. ~~Payments under this program totaled approximately $18 million in the third quarter and $102 million in the nine months of 2023. We expect the~~The pre-tax cost of our business realignment activities ~~to be~~through 2023 was approximately ~~$415 million through 2023. We expect savings from our business realignment activities to be approximately $275 million on an annualized basis beginning in 2024.~~$430 million.

Our effective tax rate was 25.1% for the second quarter and 24.6% for the ~~third~~first half of 2024, compared to 25.6% for the second quarter and ~~24.8%~~24.9% for the ~~nine months~~first half of ~~2023, compared to 19.1% for the third quarter and 22.4% for the nine months of 2022.~~2023. The ~~2023~~2024 tax rates were ~~unfavorably impacted~~favorably affected by an increase in consolidated earnings, primarily ~~by lower earnings~~ in ~~certain non-U.S. jurisdictions. The tax rates for 2022 include a benefit of $78 million related to revisions of prior-year tax estimates for actual tax return results.~~

~~On August 16, 2022,~~ the president signed the Inflation Reduction Act (“IRA”) into law. The IRA enacted a 15% corporate minimum tax effective in 2024, a 1% tax on share repurchases after December 31, 2022, and created and extended certain tax-related energy incentives. We currently do not expect the tax-related provisions of the IRA to have a material effect on our financial results.U.S.

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 2019 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 unrepatriated foreign earnings, which was enacted as part of the Tax Cuts and Jobs Act (“TCJA”). Our lawsuit seeks to have the court declare this regulation invalid and order the refund of overpayments of U.S. federal income taxes for 2018 and 2019 attributable to the denial of foreign tax credits under the regulation. We have recorded a cumulative benefit of ~~$223~~$226 million through the ~~third~~second quarter of ~~2023~~2024 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 ~~pursue this lawsuit; however, if~~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.

In the ~~fourth quarter~~remainder of ~~2023,~~2024, we expect revenue will continue to be pressured by volatile macroeconomic conditions ~~to continue to~~ negatively ~~impact revenue and operating profit. In addition, we expect reduced~~affecting customer demand for our ~~U.S. freight product at~~services across our transportation companies. At FedEx ~~Express.~~Express, we expect a continued shift in service mix to negatively affect revenue and operating income in 2024.

Operating income is expected to improve in the remainder of the year as a result of our DRIVE program initiatives focused on aligning our cost base with demand, reducing our permanent cost structure, and increasing the flexibility of our network. We will also continue to execute on ~~the previously identified cost reduction actions and identify additional opportunities to reduce cost in order~~our revenue quality strategy to mitigate yield pressures through surcharge management and optimizing our customer and service mix. We expect the impact of volume declines on our operating results. As part of these reductions, we will manage capacity to lower demand levels, including further reducing flight hours at FedEx Express, and reducing Sunday operations, closing certain sort operations, and taking other linehaul expense actions at FedEx Ground. We are executing targeted actions to reduce shared and allocated overhead expenses, reducing vendor utilization, deferring certain technology projects, and discontinuing Same Day City operations at FedEx Office. In addition, we expect to achieve savings related to headcount attrition, and the elimination of certain global officer and director positions, previously announced in the third quarter of 2023. We remain focused on yield improvementbenefits from DRIVE and revenue quality ~~to mitigate inflationary cost pressures and expect higher yields to have a favorable effect on our 2023 operating profit.~~

In the first quarter of 2023, FedEx announced DRIVE, a comprehensive program to improve the company’s long-term profitability. This program includes a business optimization plan to drive efficiency among our transportation segments and lower our overhead and support costs. We 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. We expect the pre-tax cost of our business optimization activitiesinitiatives to be ~~approximately $2.0 billion through 2025.~~

~~During 2023, we expect~~partially offset by the effect of macroeconomic pressures on revenue, as well as expense headwinds related to ~~complete the initial scope of initiatives aimed to transform~~higher global inflation and optimize the FedEx Express international business, particularly in Europe. These actions are focused on reducing the complexity and fragmentation of our international business, improving efficiency to meet changing customer expectations and business dynamics, lowering costs, increasing profitability, and improving service levels. As part of this strategy, in 2021 we announced a workforce reduction plan in Europe, which is substantially complete as of February 28, 2023. We expect savings from our business realignment activities to be approximately $275 million on an annualized basis beginning in 2024.variable incentive compensation.

See the “Business Optimization and Realignment Costs” section of this MD&A for additional information.

Our capital expenditures for 2024 are expected to be approximately $5.7 billion, a decrease of $0.5 billion from 2023, as we continue to reduce our capital intensity relative to revenue. We expect lower aircraft spend and reduced investments in capacity projects to be partially offset by investments to optimize our networks and modernize 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 2024 capital projects, refer to the “Financial Condition – Capital Resources” and “Financial Condition – Liquidity Outlook” sections of this MD&A.

The uncertainty of a ~~slowing~~slowdown in the global economy, global inflation, ~~well above normal and historical levels,~~ geopolitical challenges, ~~including the ongoing conflict between Russia and Ukraine,~~ and the ~~impact~~effect 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 ~~2023~~2024 inherently less certain. See “Item 1A. Risk Factors” for more information.

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

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

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

In the fourth quarter of 2023, FedEx announced one FedEx, a consolidation plan to ultimately bring FedEx Express, FedEx Ground, FedEx Services, and other FedEx operating companies into Federal Express Corporation, becoming a single company operating a unified, fully integrated air-ground network under the respected FedEx brand. The organizational redesign will be implemented in phases with the new legal structure complete by June 2024. During the implementation process in 2024, each of our current reportable segments will continue to have discrete financial information that will be regularly reviewed when evaluating performance and making resource allocation decisions, and aligns with our management reporting structure and our internal financial reporting. In the first quarter of 2025, when the consolidation plan has been completed, we expect to begin reporting a new segment structure that will align with an updated management reporting structure and how management will evaluate performance and make resource allocation decisions under one FedEx.

Operating expenses for each of our transportation segments include the allocations from the FedEx Services segment to the respective transportation segments. These allocations 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 and other includes corporate headquarters costs for executive officers and certain legal and finance functions, including certain other costs and credits not attributed to our core business, as well as certain costs associated with developing our “innovate digitally” strategic pillar 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. ~~ShopRunner, Inc. was merged into FedEx Dataworks during the third quarter of 2023.~~

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 the FedEx Logistics ~~Inc.~~ 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.

~~In the third quarter and nine months of 2023, the decrease in operating~~- 29 -

Operating results in Corporate, other, and eliminations declined in the second quarter and first half of 2024. The decline in operating results in the second quarter of 2024 was primarily due to ~~lower~~increased business optimization expenses at FedEx Corporate and a decline in operating ~~income~~results at FedEx Logistics, ~~due to~~primarily driven by decreased revenue ~~and an increase in bad debt,~~ partially offset by ~~decreased~~lower operating expenses. The lower operating expenses at FedEx Logistics were primarily due to lower purchased transportation, salaries and employee benefits, and outside service contracts expense. ~~Additionally,~~The decrease in operating results in ~~Corporate, other, and eliminations were negatively impacted by~~the first half of 2024 was primarily due to increased business optimization ~~costs~~expenses at FedEx ~~Corporate.~~Corporate, partially offset by improved operating results at FedEx Logistics and FedEx Office. The improved operating results at FedEx Logistics were primarily due to lower purchased transportation, bad debt, outside service contracts, and salaries and employee benefits expense, which more than offset decreased revenue. The improved operating results at FedEx Office were primarily due to lower salaries and employee benefits expense, which more than offset decreased revenue.

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 ~~third~~second quarter and ~~nine months~~first half of ~~2023~~2024 FedEx Ground provided delivery support for certain FedEx Express packages as part of our last-mile optimization efforts, and FedEx Freight provided road and intermodal support for both FedEx Ground and FedEx Express. In addition, FedEx Express is working with FedEx Logistics to secure air charters and other cargo space for U.S. customers. Billings for such services are based on negotiated rates, which we believe approximate fair value, 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.

FedEx 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 ~~tables compare~~table compares revenue, operating expenses, operating income (dollars in millions), operating margin, and operating expenses as a percent of revenue for the periods ended ~~February 28:~~November 30:


	Three Months Ended						Percent				Nine Months Ended						Percent				Three Months Ended						Percent				Six Months Ended						Percent
	2023			2022			Change				2023			2022			Change				2023			2022			Change				2023			2022			Change
Revenue:
Package:
U.S. overnight box	$	2,165		$	2,275			(5	)		$	6,718		$	6,694			—			$	2,158		$	2,237			(4	)		$	4,346			4,553			(5	)
U.S. overnight envelope		478			479			—				1,477			1,435			3				447			474			(6	)			932			999			(7	)
U.S. deferred		1,346			1,422			(5	)			3,886			3,960			(2	)			1,208			1,253			(4	)			2,395			2,540			(6	)
Total U.S. domestic package revenue		3,989			4,176			(4	)			12,081			12,089			—				3,813			3,964			(4	)			7,673			8,092			(5	)
International priority		2,566			2,991			(14	)			8,286			8,937			(7	)			2,390			2,823			(15	)			4,717			5,720			(18	)
International economy		698			697			—				2,116			2,072			2				1,088			711			53				2,109			1,418			49
Total international export package revenue		3,264			3,688			(11	)			10,402			11,009			(6	)			3,478			3,534			(2	)			6,826			7,138			(4	)
International domestic(1)		1,003			1,016			(1	)			3,013			3,277			(8	)			1,086			1,036			5				2,110			2,010			5
Total package revenue		8,256			8,880			(7	)			25,496			26,375			(3	)			8,377			8,534			(2	)			16,609			17,240			(4	)
Freight:
U.S.		719			712			1				2,299			2,262			2				584			784			(26	)			1,166			1,580			(26	)
International priority		687			948			(28	)			2,387			2,815			(15	)			569			811			(30	)			1,122			1,699			(34	)
International economy		358			378			(5	)			1,123			1,230			(9	)			422			388			9				847			765			11
International airfreight		47			40			18				126			134			(6	)			29			39			(26	)			61			80			(24	)
Total freight revenue		1,811			2,078			(13	)			5,935			6,441			(8	)			1,604			2,022			(21	)			3,196			4,124			(23	)
Other		278			346			(20	)			905			1,059			(15	)			273			308			(11	)			534			627			(15	)
Total revenue		10,345			11,304			(8	)			32,336			33,875			(5	)			10,254			10,864			(6	)			20,339			21,991			(8	)
Operating expenses:
Salaries and employee benefits		4,015			4,182			(4	)			12,003			12,407			(3	)			3,964			3,938			1				7,947			7,988			(1	)
Purchased transportation		1,373			1,566			(12	)			4,283			4,740			(10	)			1,458			1,432			2				2,832			2,910			(3	)
Rentals and landing fees		588			667			(12	)			1,751			1,951			(10	)			515			586			(12	)			1,051			1,163			(10	)
Depreciation and amortization		533			490			9				1,566			1,492			5				542			520			4				1,080			1,033			5
Fuel		1,177			1,040			13				4,133			2,897			43				1,155			1,372			(16	)			2,109			2,956			(29	)
Maintenance and repairs		456			509			(10	)			1,552			1,607			(3	)			494			534			(7	)			990			1,096			(10	)
Business optimization and realignment costs		3			107			(97	)			28			218			(87	)			41			11			273				51			25			104
Intercompany charges		459			494			(7	)			1,420			1,499			(5	)			469			477			(2	)			961			961			0
Other		1,622			1,729			(6	)			4,966			5,028			(1	)			1,479			1,653			(11	)			2,976			3,344			(11	)
Total operating expenses		10,226			10,784			(5	)			31,702			31,839			—				10,117			10,523			(4	)			19,997			21,476			(7	)
Operating income	$	119		$	520			(77	)		$	634		$	2,036			(69	)		$	137		$	341			(60	)		$	342		$	515			(34	)
Operating margin		1.2	%		4.6	%		(340	)	bp		2.0	%		6.0	%		(400	)	bp		1.3	%		3.1	%		(180	)	bp		1.7	%		2.3	%		(60	)	bp


	Percent of Revenue												Percent of Revenue
	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	2023			2022			2023			2022			2023			2022			2023			2022
Operating expenses:
Salaries and employee benefits		38.8	%		37.0	%		37.1	%		36.6	%		38.7	%		36.3	%		39.1	%		36.3	%
Purchased transportation		13.3			13.9			13.2			14.0			14.2			13.2			13.9			13.2
Rentals and landing fees		5.7			5.9			5.4			5.8			5.0			5.4			5.2			5.3
Depreciation and amortization		5.1			4.3			4.8			4.4			5.3			4.8			5.3			4.7
Fuel		11.4			9.2			12.8			8.6			11.3			12.6			10.4			13.5
Maintenance and repairs		4.4			4.5			4.8			4.8			4.8			4.9			4.9			5.0
Business optimization and realignment costs		—			0.9			0.1			0.6			0.4			0.1			0.2			0.1
Intercompany charges		4.4			4.4			4.4			4.4			4.6			4.4			4.7			4.4
Other		15.7			15.3			15.4			14.8			14.4			15.2			14.6			15.2
Total operating expenses		98.8			95.4			98.0			94.0			98.7			96.9			98.3			97.7
Operating margin		1.2	%		4.6	%		2.0	%		6.0	%		1.3	%		3.1	%		1.7	%		2.3	%

The following table compares selected statistics (in thousands, except yield amounts) for the periods ended ~~February 28:~~November 30:


	Three Months Ended				Percent			Nine Months Ended				Percent			Three Months Ended				Percent			Six Months Ended				Percent
	2023		2022		Change			2023		2022		Change			2023		2022		Change			2023		2022		Change
Package Statistics
Average daily package volume (ADV):
U.S. overnight box		1,255		1,457		(14	)		1,275		1,448		(12	)		1,245		1,283		(3	)		1,236		1,284		(4	)
U.S. overnight envelope		454		497		(9	)		466		510		(9	)		431		458		(6	)		442		471		(6	)
U.S. deferred		1,141		1,357		(16	)		1,084		1,297		(16	)		1,009		1,042		(3	)		989		1,057		(6	)
Total U.S. domestic ADV		2,850		3,311		(14	)		2,825		3,255		(13	)		2,685		2,783		(4	)		2,667		2,812		(5	)
International priority		701		799		(12	)		712		801		(11	)		673		736		(9	)		666		718		(7	)
International economy		280		282		(1	)		275		278		(1	)		373		285		31			353		272		30
Total international export ADV		981		1,081		(9	)		987		1,079		(9	)		1,046		1,021		2			1,019		990		3
International domestic(1)		1,805		1,866		(3	)		1,819		2,004		(9	)		1,907		1,950		(2	)		1,823		1,826		—
Total ADV		5,636		6,258		(10	)		5,631		6,338		(11	)		5,638		5,754		(2	)		5,509		5,628		(2	)
Revenue per package (yield):
U.S. overnight box	$	27.81	$	25.18		10		$	27.74	$	24.32		14		$	27.50	$	27.69		(1	)	$	27.47	$	27.71		(1	)
U.S. overnight envelope		17.01		15.54		9			16.69		14.82		13			16.48		16.44		—			16.49		16.55		—
U.S. deferred		19.02		16.90		13			18.86		16.07		17			19.02		19.06		—			18.92		18.77		1
U.S. domestic composite		22.57		20.34		11			22.51		19.55		15			22.55		22.61		—			22.48		22.48		—
International priority		59.05		60.43		(2	)		61.24		58.74		4			56.36		60.87		(7	)		55.37		62.28		(11	)
International economy		40.20		39.85		1			40.51		39.26		3			46.27		39.58		17			46.69		40.66		15
International export composite		53.67		55.06		(3	)		55.47		53.72		3			52.76		54.93		(4	)		52.36		56.33		(7	)
International domestic(1)		8.96		8.78		2			8.72		8.60		1			9.03		8.43		7			9.04		8.60		5
Composite package yield	$	23.63	$	22.89		3		$	23.83	$	21.90		9		$	23.58	$	23.54		—		$	23.56	$	23.93		(2	)
Freight Statistics
Average daily freight pounds:
U.S.		6,681		7,370		(9	)		7,170		8,029		(11	)		5,681		7,503		(24	)		5,497		7,406		(26	)
International priority		5,290		6,595		(20	)		5,702		6,719		(15	)		4,472		5,757		(22	)		4,431		5,902		(25	)
International economy		10,345		11,640		(11	)		10,738		12,126		(11	)		10,350		11,668		(11	)		10,001		10,928		(8	)
International airfreight		1,142		1,123		2			1,014		1,198		(15	)		698		948		(26	)		701		952		(26	)
Total average daily freight pounds		23,458		26,728		(12	)		24,624		28,072		(12	)		21,201		25,876		(18	)		20,630		25,188		(18	)
Revenue per pound (yield):
U.S.	$	1.74	$	1.56		12		$	1.69	$	1.48		14		$	1.63	$	1.66		(2	)	$	1.66	$	1.67		(1	)
International priority		2.10		2.32		(9	)		2.20		2.20		—			2.02		2.24		(10	)		1.98		2.25		(12	)
International economy		0.56		0.52		8			0.55		0.53		4			0.65		0.53		23			0.66		0.55		20
International airfreight		0.66		0.58		14			0.66		0.59		12			0.65		0.65		—			0.68		0.66		3
Composite freight yield	$	1.25	$	1.25		—		$	1.27	$	1.21		5		$	1.20	$	1.24		(3	)	$	1.21	$	1.28		(5	)

FedEx Express segment revenue decreased 6% in the second quarter and 8% in the ~~third~~first half of 2024 primarily due to volume declines, lower fuel surcharges, reduced demand surcharges, and a decline in international package and freight base yields, partially offset by favorable exchange rates.

Global average daily freight pounds decreased 18% in the second quarter and the first half of 2024 primarily as a result of weak macroeconomic conditions as well as lower volume from the U.S. Postal Service. U.S. domestic average daily package volumes declined 4% in the second quarter and 5% in the ~~nine months~~first half of ~~2023 due to decreased global volume and unfavorable exchange rates, partially offset by package yield improvement.~~

Total average daily package volume decreased 10% in the third quarter and 11% in the nine months of 2023, and total average daily freight pounds decreased 12% in the third quarter and nine months of 2023, due2024 as macroeconomic factors led to reduced demand for our services. ~~Yield improvement, including higher fuel surcharges, drove increases~~These declines were partially offset by an increase in ~~U.S. domestic package yield of 11% in the third quarter and 15% in the nine months of 2023,~~ international export package ~~yield~~volume of 2% in the second quarter and 3% in the ~~nine months~~first half of ~~2023,~~2024.

Lower fuel surcharges had a significant negative effect on yield across all package and freight services during the second quarter and first half of 2024. In addition, international export composite ~~freight~~package yield ~~of 5%~~decreased 4% in the ~~nine months~~second quarter and 7% in the first half of ~~2023. International export package~~2024 driven by reduced demand surcharges, a larger mix of e-commerce volume, and an increase in lower-yielding deferred volume related to the full reopening of the international economy service. Composite freight yield decreased 3% in the ~~third~~second quarter and 5% in the first half of ~~2023~~2024 due to ~~unfavorable~~reduced demand surcharges and an increased mix of deferred freight, also driven by the reopening of international economy service. Favorable currency exchange rates ~~and base yield declines, partially offset by higher fuel surcharges. Additionally, unfavorable exchange rates negatively impacted~~positively affected all international package and freight ~~yields in the third quarter and nine months of 2023.~~yields.

FedEx Express segment operating income decreased ~~77%~~60% in the ~~third~~second quarter and ~~69%~~34% in the ~~nine months~~first half of ~~2023 primarily~~2024 due to ~~global volume declines,~~reduced revenue, partially offset by ~~yield improvement, including higher fuel surcharges. We continued~~operating expense improvements resulting from lower volumes, as well as DRIVE initiatives which drove a reduction in our permanent cost ~~reductions during~~structure. These initiatives include optimizing the ~~third quarter of 2023 to mitigate the impact of volume declines, including reducing flight hours, temporarily parking aircraft,~~air network and improving ~~productivity,~~hub sort efficiency and consolidating routes and closing sorts. The impact of these cost reductions lagged volume declines, and operating expenses remained high relative to demand in the third quarter and nine months of 2023. Currency exchange rates had a negative effect on revenue, a positive effect on expenses, and a slightly negative effect on operating income in the third quarter and nine months of 2023.international pickup-and-delivery route optimization.

Fuel expense ~~increased 13%~~decreased 16% in the ~~third~~second quarter and ~~43%~~29% in the ~~nine months~~first half of ~~2023. The third quarter increase was~~2024 due to ~~a 31% increase~~decreases in fuel prices and total fuel gallons. Other operating expense decreased 11% in the second quarter and the first half of 2024 primarily due to lower bad debt expense and lower outside service contracts expense resulting from a decrease in temporary labor usage, partially offset by a 13% decline in total fuel gallons. The nine-months increase was due to a 54% increase in fuel prices, partially offset by a 7% decline in total fuel gallons. Purchased transportation expense decreased 12% in the third quarter and 10% in the nine months of 2023 primarily due to favorable exchange rates and lower utilization. Salaries and employee benefits decreased 4% in the third quarter and 3% in the nine months of 2023 due to favorableunfavorable currency exchange ~~rates, decreased staffing to align with lower volume, and lower variable incentive compensation, partially offset by increased wage~~ rates.Rentals and landing fees decreased 12% in the ~~third~~second quarter and 10% in the ~~nine months~~first half of ~~2023~~2024 primarily due to fewer aircraft leases. Maintenance and repairs decreased 7% in the second quarter and 10% in the first half of 2024 primarily due to lower aircraft ~~leases and favorable~~maintenance resulting from an increase in aircraft temporarily parked. Purchased transportation increased 2% in the second quarter primarily due to unfavorable currency exchange rates. ~~Other operating expense~~Purchased transportation decreased 6%3% in the ~~third quarter~~first half of 2024 primarily due to lower volume, partially offset by unfavorable currency exchange rates. Salaries and employee benefits expense increased 1% in the ~~nine months of 2023~~second quarter primarily due to ~~favorable~~higher wage rates, increased variable incentive compensation, and unfavorable currency exchange rates, ~~and lower outside service contract expense,~~ partially offset by ~~higher bad debt expense.~~decreased staffing to align with lower volume.

FedEx Express segment results include business ~~realignment~~optimization costs of $3$41 million in the ~~third~~second quarter and ~~$17~~$51 million in the ~~nine months~~first half of ~~2023~~2024 associated with our ~~workforce reduction~~ plan ~~in Europe. We recognized $107 million of costs in the third quarter of 2022~~to drive efficiency and ~~$218 million in the nine months of 2022 under this program. No business optimization costs were incurred in the third quarter of 2023 at FedEx Express.~~lower our overhead and support costs. Additionally, FedEx Express segment results include business optimization costs of $11 million in the ~~nine months~~second quarter and first half of 2023, which includes costs associated with idling our business in Russia. ~~See the “Business Optimization and Realignment Costs” section of this MD&A for more information.~~

We incurred costs associated with our business realignment activities of $14 million in the first half of 2023 associated with our workforce reduction plan in Europe. No business realignment costs were incurred in the second quarter of 2023.

During the first quarter of 2024, FedEx Express’s pilots failed to ratify the tentative successor agreement that was approved by the Air Line Pilots Association, International’s FedEx Express ~~segment results include $24 million~~Master Executive Council in June 2023. Bargaining for a successor agreement continues. The conduct of ~~TNT Express integration expenses in~~mediated negotiations has no effect on our operations. See Note 1 of the ~~third quarter and $77 million of such expenses in the nine months of 2022.~~accompanying unaudited condensed consolidated financial statements for additional information.

FedEx Ground service offerings include day-certain delivery to businesses in the U.S. and Canada and to 100% of U.S. residences. The following ~~tables compare~~table compares revenue, operating expenses, operating income (dollars in millions), operating margin, selected package statistics (in thousands, except yield amounts), and operating expenses as a percent of revenue for the periods ended ~~February 28:~~November 30:


	Three Months Ended						Percent				Nine Months Ended						Percent				Three Months Ended						Percent				Six Months Ended						Percent
	2023			2022			Change				2023			2022			Change				2023			2022			Change				2023			2022			Change
Revenue	$	8,658		$	8,800			(2	)		$	25,211		$	24,741			2			$	8,639		$	8,393			3			$	17,059		$	16,553			3
Operating expenses:
Salaries and employee benefits		1,759			1,950			(10	)			5,123		$	5,418			(5	)			1,739			1,727			1				3,406			3,364			1
Purchased transportation		3,722			4,023			(7	)			11,263			11,441			(2	)			3,682			3,828			(4	)			7,109			7,541			(6	)
Rentals		426			373			14				1,230			1,039			18				433			414			5				856			804			6
Depreciation and amortization		258			233			11				753			682			10				279			249			12				552			495			12
Fuel		9			9			—				28			22			27				9			10			(10	)			16			19			(16	)
Maintenance and repairs		155			148			5				472			433			9				173			162			7				332			317			5
Business optimization and realignment costs																						36			—		NM					53			—		NM
Intercompany charges		483			489			(1	)			1,466			1,460			—				489			493			(1	)			997			983			1
Other		1,002			934			7				2,740			2,453			12				899			912			(1	)			1,735			1,738			—
Total operating expenses		7,814			8,159			(4	)			23,075			22,948			1				7,739			7,795			(1	)			15,056			15,261			(1	)
Operating income	$	844		$	641			32			$	2,136		$	1,793			19			$	900		$	598			51			$	2,003		$	1,292			55
Operating margin		9.7	%		7.3	%		240		bp		8.5	%		7.2	%		130		bp		10.4	%		7.1	%		330		bp		11.7	%		7.8	%		390		bp
Average daily package volume (ADV)(1):
Ground commercial		4,226			4,503			(6	)			4,372			4,565			(4	)			4,609			4,523			2				4,543			4,445			2
Home delivery		4,359			4,860			(10	)			4,115			4,305			(4	)			4,076			4,084			—				3,960			3,997			(1	)
Economy		843			1,207			(30	)			800			1,216			(34	)			874			828			6				804			778			3
Total ADV		9,428			10,570			(11	)			9,287			10,086			(8	)			9,559			9,435			1				9,307			9,220			1
Revenue per package (yield)	$	11.80		$	10.62			11			$	11.61		$	10.40			12			$	11.69		$	11.55			1			$	11.74		$	11.52			2


	Percent of Revenue												Percent of Revenue
	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	2023			2022			2023			2022			2023			2022			2023			2022
Operating expenses:
Salaries and employee benefits		20.3	%		22.2	%		20.3	%		21.9	%		20.2	%		20.6	%		20.0	%		20.3	%
Purchased transportation		43.0			45.7			44.7			46.2			42.6			45.6			41.7			45.6
Rentals		4.9			4.2			4.9			4.2			5.0			4.9			5.0			4.9
Depreciation and amortization		3.0			2.6			3.0			2.8			3.2			3.0			3.2			3.0
Fuel		0.1			0.1			0.1			0.1			0.1			0.1			0.1			0.1
Maintenance and repairs		1.8			1.7			1.9			1.8			2.0			1.9			2.0			1.9
Business optimization and realignment costs														0.4			—			0.3			—
Intercompany charges		5.6			5.6			5.8			5.9			5.7			5.9			5.8			5.9
Other		11.6			10.6			10.8			9.9			10.4			10.9			10.2			10.5
Total operating expenses		90.3			92.7			91.5			92.8			89.6			92.9			88.3			92.2
Operating margin		9.7	%		7.3	%		8.5	%		7.2	%		10.4	%		7.1	%		11.7	%		7.8	%

FedEx Ground segment revenue ~~decreased~~increased 3% in the second quarter and the first half of 2024 primarily due to yield improvement and higher volumes. FedEx Ground yield increased 1% in the second quarter and 2% in the ~~third quarter and increased 2% in the nine months~~first half of ~~2023. The third quarter decrease was~~2024 primarily due to ~~lower volumes, partially offset by yield improvement. The nine-months increase was primarily due to~~base yield improvement, partially offset by lower ~~volumes.~~

~~FedEx Ground yield increased 11% in the third quarter and 12% in the nine months of 2023 primarily due to higher~~ fuel ~~surcharges, base yield improvement, and a mix shift towards higher-yielding business-to-consumer products in the third quarter and nine months of 2023.~~surcharges. Total average daily volume ~~decreased 11%~~increased 1% in the ~~third~~second quarter and ~~8% in~~ the ~~nine months~~first half of ~~2023~~2024 primarily due to ~~reduced~~increased demand for our ~~services.~~commercial services related to changing market conditions.

FedEx Ground segment operating income increased ~~32%~~51% in the ~~third~~second quarter and ~~19%~~55% in the ~~nine months~~first half of ~~2023~~2024 primarily due to yield improvement, ~~including~~lower purchased transportation expense, and higher ~~fuel surcharges, partially offset by lower volume and other operating expenses. The third~~volumes. We lowered our costs in the second quarter and ~~nine months~~first half of ~~2023 results benefited~~2024 through DRIVE initiatives focused on increasing linehaul efficiencies and improving dock productivity. In addition, we also continued to realize benefits from ~~certain cost reductions to mitigate the effect of volume declines, primarily a reduction in peak wage programs, the consolidation and closing of certain~~consolidated sort ~~and linehaul~~ operations ~~cancellation of network capacity projects,~~ and reduced Sunday ~~delivery coverage.~~deliveries during the first half of 2024.

~~Salaries and employee benefits~~Purchased transportation expense decreased ~~10%~~4% in the ~~third~~second quarter and 5%6% in the ~~nine months~~first half of ~~2023~~2024 primarily due to ~~decreased staffing~~lower fuel prices and a shift to ~~align with lower volume, lower variable incentive compensation, and~~ increased ~~productivity,~~third-party rail usage, partially offset by higher ~~wage rates. Purchased transportation~~volume. Depreciation and rentals expense ~~decreased 7%~~increased 12% and 5%, respectively, in the ~~third quarter and 2% in the nine months of 2023 primarily due to lower volumes, partially offset by higher fuel prices and lower productivity. Other operating expense increased 7% in the third~~second quarter and 12% and 6%, respectively, in the ~~nine months~~first half of ~~2023~~2024 primarily due to higher self-insurance accruals and higher outside service contracts expense, partially offset by lower bad debt expense. Rentals increased 14% in the third quarter and 18% in the nine months of 2023 due to the completion of previously committed multi-year expansion projects. Salaries and employee benefits expense increased 1% in the second quarter and the first half of 2024 primarily due to higher wage rates, increased variable incentive compensation, and increased staffing to align with volume levels, partially offset by an increase in productivity.

FedEx Ground segment results include business optimization costs of $36 million in the second quarter and $53 million in the first half of 2024 associated with our plan to drive efficiency and lower our overhead and support costs.

FedEx Freight LTL service offerings include priority services when speed is critical and economy services when time can be traded for savings. The following ~~tables compare~~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 ~~February 28:~~November 30:


	Three Months Ended						Percent				Nine Months Ended						Percent				Three Months Ended						Percent				Six Months Ended						Percent
	2023			2022			Change				2023			2022			Change				2023			2022			Change				2023			2022			Change
Revenue	$	2,186		$	2,253			(3	)		$	7,363		$	6,776			9			$	2,360		$	2,454			(4	)		$	4,651		$	5,177			(10	)
Operating expenses:
Salaries and employee benefits		946			1,014			(7	)			3,044			3,031			—				1,007			1,039			(3	)			1,980			2,098			(6	)
Purchased transportation		172			237			(27	)			580			720			(19	)			163			187			(13	)			312			408			(24	)
Rentals		67			61			10				198			182			9				68			66			3				136			131			4
Depreciation and amortization		74			99			(25	)			283			303			(7	)			81			103			(21	)			188			209			(10	)
Fuel		162			152			7				601			434			38				165			211			(22	)			303			439			(31	)
Maintenance and repairs		76			65			17				244			195			25				93			88			6				168			168			—
Intercompany charges		131			128			2				393			386			2				130			130			—				265			262			1
Other		172			160			8				543			464			17				166			190			(13	)			331			371			(11	)
Total operating expenses		1,800			1,916			(6	)			5,886			5,715			3				1,873			2,014			(7	)			3,683			4,086			(10	)
Operating income	$	386		$	337			15			$	1,477		$	1,061			39			$	487		$	440			11			$	968		$	1,091			(11	)
Operating margin		17.7	%		15.0	%		270		bp		20.1	%		15.7	%		440		bp		20.6	%		17.9	%		270		bp		20.8	%		21.1	%		(30	)	bp
Average daily shipments (in thousands):
Priority		65.4			75.0			(13	)			71.7			78.9			(9	)			68.5			73.3			(7	)			67.3			74.8			(10	)
Economy		27.7			30.4			(9	)			30.3			32.4			(6	)			30.5			31.0			(2	)			29.5			31.6			(7	)
Total average daily shipments		93.1			105.4			(12	)			102.0			111.3			(8	)			99.0			104.3			(5	)			96.8			106.4			(9	)
Weight per shipment (lbs):
Priority		1,014			1,104			(8	)			1,034			1,092			(5	)			975			1,029			(5	)			982			1,042			(6	)
Economy		890			959			(7	)			924			945			(2	)			880			940			(6	)			878			939			(6	)
Composite weight per shipment		977			1,062			(8	)			1,001			1,049			(5	)			946			1,002			(6	)			950			1,011			(6	)
Revenue per shipment:
Priority	$	366.17		$	329.05			11			$	365.88		$	307.86			19			$	365.55		$	361.57			1			$	359.24		$	365.76			(2	)
Economy		418.65			376.76			11				419.35			352.50			19				415.82			415.35			—				411.95			419.64			(2	)
Composite revenue per shipment	$	381.77		$	342.83			11			$	381.75		$	320.85			19			$	381.05		$	377.53			1			$	375.30		$	381.74			(2	)
Revenue per hundredweight:
Priority	$	36.12		$	29.81			21			$	35.40		$	28.20			26			$	37.48		$	35.14			7			$	36.58		$	35.10			4
Economy		47.06			39.28			20				45.37			37.29			22				47.26			44.21			7				46.93			44.70			5
Composite revenue per hundredweight	$	39.08		$	32.28			21			$	38.13		$	30.58			25			$	40.29		$	37.66			7			$	39.49		$	37.74			5


	Percent of Revenue												Percent of Revenue
	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	2023			2022			2023			2022			2023			2022			2023			2022
Operating expenses:
Salaries and employee benefits		43.3	%		45.0	%		41.3	%		44.7	%		42.7	%		42.3	%		42.6	%		40.5	%
Purchased transportation		7.8			10.5			7.9			10.6			6.9			7.6			6.7			7.9
Rentals		3.0			2.7			2.7			2.7			2.9			2.7			2.9			2.5
Depreciation and amortization		3.4			4.4			3.8			4.5			3.4			4.2			4.1			4.0
Fuel		7.4			6.7			8.2			6.4			7.0			8.6			6.5			8.5
Maintenance and repairs		3.5			2.9			3.3			2.9			4.0			3.6			3.6			3.2
Intercompany charges		6.0			5.7			5.3			5.7			5.5			5.3			5.7			5.1
Other		7.9			7.1			7.4			6.8			7.0			7.8			7.1			7.2
Total operating expenses		82.3			85.0			79.9			84.3			79.4			82.1			79.2			78.9
Operating margin		17.7	%		15.0	%		20.1	%		15.7	%		20.6	%		17.9	%		20.8	%		21.1	%

FedEx Freight segment revenue decreased 3%4% in the ~~third~~second quarter and ~~increased 9%~~10% in the ~~nine months~~first half of ~~2023. The third quarter decrease was~~2024 primarily due to lower ~~volumes,~~shipments, fuel surcharges, and weight per shipment, partially offset by base yield improvement. ~~The nine-months increase was primarily due to yield improvement, partially offset by lower volumes.~~

Revenue per shipment increased 11% in the third quarter and 19% in the nine months of 2023 primarily due to continued focus on revenue quality, including higher fuel surcharges, partially offset by lower weight per shipment. Average daily shipments decreased ~~12%~~5% in the ~~third~~second quarter and 8%9% in the ~~nine months~~first half of ~~2023~~2024 due to reduced demand for our ~~services.~~services, primarily resulting from macroeconomic conditions. Revenue per shipment increased 1% in the second quarter primarily due to base yield improvement resulting from our continued focus on revenue quality, partially offset by lower fuel surcharges. Revenue per shipment decreased 2% in the first half of 2024 primarily due to lower fuel surcharges, partially offset by base yield improvement.

FedEx Freight segment operating income increased ~~15%~~11% in the ~~third~~second quarter and ~~39%~~decreased 11% in the ~~nine months~~first half of ~~2023~~2024. The second quarter increase was driven primarily by base yield improvement, ~~including higher fuel surcharges,~~ partially offset by lower ~~volumes. Additionally, FedEx Freight results were positively affected~~fuel surcharges and shipments. The first half decrease was driven primarily by ~~a gain on the sale of a facility during the third quarter of 2023.~~lower fuel surcharges and shipments, partially offset by base yield improvement.

~~Purchased transportation~~Fuel expense decreased ~~27%~~22% in the ~~third-quarter~~second quarter and ~~19%~~31% in the ~~nine months~~first half of ~~2023~~2024 due to lower fuel prices and decreased shipments. Salaries and benefits decreased 3% in the second quarter and 6% in the first half of 2024 primarily due to lower ~~volumes~~staffing to align with decreased shipments and ~~reduced utilization due to a shift to company linehaul. Fuel expense increased 7%~~an increase in the third quarter and 38% in the nine months of 2023 primarily due to increased fuel prices partially offset by lower volume. Other operating expense increased 8% in the third quarter and 17% in the nine months of 2023. The third-quarter increase was primarily due to higher self-insurance accruals, and the nine-months increase was primarily due to higher self-insurance accruals and bad debt expense. Maintenance and repairs expense increased 17% in the third quarter and 25% in the nine months of 2023 primarily due to higher costs associated with vehicle parts, outside vendor labor, and facility maintenance. Salaries and employee benefits expense decreased 7% in the third quarter primarily due to lower volumes,productivity, partially offset by higher wage rates and variable incentive compensation. Purchased transportation expense decreased 13% in the second quarter and 24% in the first half of 2024 primarily due to decreased shipments and lower ~~productivity.~~fuel prices. Other operating expense decreased 13% in the second quarter and 11% in the first half of 2024 primarily due to lower self-insurance accruals in the second quarter, and lower self-insurance accruals, bad debt expense, and outside service contracts expense in the first half of 2024. Depreciation expense decreased 21% in the second quarter and 10% in the first half of 2024 primarily due to a gain on the sale of certain of our facilities during the first half of 2024.

Cash and cash equivalents totaled ~~$5.4~~$6.7 billion at ~~February 28,~~November 30, 2023, compared to $6.9 billion at May 31, ~~2022, respectively.~~2023. The following table provides a summary of our cash flows for the ~~nine-month~~six-month periods ended ~~February 28~~November 30 (in millions):


	2023			2022			2023			2022
Operating activities:
Net income	$	2,434		$	3,268		$	1,978		$	1,663
Business optimization and realignment costs/(payments), net		20			128
Business optimization and realignment costs, net of payments								(28	)		(40	)
Other noncash charges and credits		6,204			6,188			3,850			4,192
Changes in assets and liabilities		(3,257	)		(3,254	)		(1,796	)		(2,690	)
Cash provided by operating activities		5,401			6,330			4,004			3,125
Investing activities:
Capital expenditures		(4,420	)		(4,379	)		(2,595	)		(3,142	)
Purchase of investments		(82	)		(145	)		(75	)		(78	)
Proceeds from asset dispositions and other		72			71			62			20
Cash used in investing activities		(4,430	)		(4,453	)		(2,608	)		(3,200	)
Financing activities:
Principal payments on debt		(123	)		(113	)		(94	)		(32	)
Proceeds from stock issuances		114			151			211			89
Dividends paid		(888	)		(598	)		(635	)		(598	)
Purchase of treasury stock		(1,500	)		(2,248	)		(1,000	)		(1,500	)
Other, net		1			—			—			1
Cash used in financing activities		(2,396	)		(2,808	)		(1,518	)		(2,040	)
Effect of exchange rate changes on cash		(99	)		(91	)		(5	)		(136	)
Net decrease in cash and cash equivalents	$	(1,524	)	$	(1,022	)	$	(127	)	$	(2,251	)
Cash and cash equivalents at the end of period	$	5,373		$	6,065		$	6,729		$	4,646

Cash flows from operating activities ~~decreased $929~~increased $879 million in the ~~nine months~~first half of ~~2023~~2024 primarily due to ~~lower net income.~~working capital changes, driven by an increase in accounts payable, accrued incentive compensation, and other liabilities, partially offset by a decrease in accounts receivable from the first half of 2023. Capital expenditures ~~increased~~decreased during the ~~nine months~~first half of ~~2023~~2024 due to ~~increased~~decreased spending on package handling equipment at FedEx Ground, information technology at FedEx Services and FedEx Express, facilities and other at FedEx Ground and FedEx Express, and vehicles and trailers at FedEx Freight. These decreases were partially offset by ~~decreased~~increased spending on aircraft and ~~information technology spending.~~related equipment at FedEx Express. See “Capital Resources” for a discussion of capital expenditures during ~~2023~~2024 and ~~2022.~~2023.

In December 2021, our Board of Directors authorized a stock repurchase program of up to $5 billion of FedEx common stock. As part of the repurchase program, ~~during the third quarter of 2023,~~ we completed an ASR ~~agreement~~transaction during the second quarter of 2024 with a bank to repurchase an aggregate of ~~$1.5 billion~~$500 million of our common stock. During the six months ended November 30, 2023, we repurchased 3.9 million shares of FedEx common stock under ASR agreements at an average price of $256.33 per share for a total of $1.0 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. As of ~~February 28,~~November 30, 2023, ~~$2.6~~$1.6 billion remained available for repurchases under the current stock repurchase program. Shares under the current repurchase program may be repurchased from time to time in the open market or in privately negotiated transactions. The timing and volume of repurchases are at the discretion of management based on the capital needs of the business, the market price of FedEx common stock, and general market conditions. No time limits were set for the completion of the program, and the program may be suspended or discontinued at any time.

Our operations are capital intensive, characterized by significant investments in aircraft, package handling and sort equipment, vehicles and trailers, technology, 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 ~~February 28~~November 30 (in millions):


									Percent Change 2023/2022														Percent Change
	Three Months Ended				Nine Months Ended				Three Months			Nine Months			Three Months Ended				Six Months Ended				Three Months			Six Months
	2023		2022		2023		2022		Ended			Ended			2023		2022		2023		2022		Ended			Ended

Aircraft and related equipment	$	389	$	136	$	1,263	$	1,482		186			(15	)	$	601	$	671	$	1,155	$	874		(10	)		32
Package handling and ground support equipment		383		410		1,324		1,120		(7	)		18			209		505		427		941		(59	)		(55	)
Vehicles and trailers		154		227		503		373		(32	)		35			129		132		296		349		(2	)		(15	)
Information technology		111		167		560		634		(34	)		(12	)		142		248		295		449		(43	)		(34	)
Facilities and other		241		296		770		770		(19	)		—			224		302		422		529		(26	)		(20	)
Total capital expenditures	$	1,278	$	1,236	$	4,420	$	4,379		3			1		$	1,305	$	1,858	$	2,595	$	3,142		(30	)		(17	)

FedEx Express segment	$	653	$	462	$	2,177	$	2,339		41			(7	)	$	871	$	994	$	1,753	$	1,524		(12	)		15
FedEx Ground segment		456		572		1,469		1,379		(20	)		7			286		572		478		1,013		(50	)		(53	)
FedEx Freight segment		104		84		344		125		24			175			50		90		141		240		(44	)		(41	)
FedEx Services segment		37		94		334		464		(61	)		(28	)		77		168		175		297		(54	)		(41	)
Other		28		24		96		72		17			33			21		34		48		68		(38	)		(29	)
Total capital expenditures	$	1,278	$	1,236	$	4,420	$	4,379		3			1		$	1,305	$	1,858	$	2,595	$	3,142		(30	)		(17	)

Capital expenditures ~~increased~~decreased in the ~~third~~second quarter of ~~2023~~2024 primarily due to ~~increased spending on aircraft and related equipment at FedEx Express, partially offset by~~ decreased spending on ~~vehicles and trailers~~package handling equipment at FedEx Ground, information technology at FedEx Services and FedEx Express, facilities and other at FedEx Express and FedEx ~~Ground.~~Ground, and aircraft and related equipment at FedEx Express. Capital expenditures ~~increased~~decreased in the ~~nine months~~first half of ~~2023~~2024 primarily due to ~~increased~~decreased spending on package handling equipment at FedEx Ground, information technology at FedEx Services and FedEx Express, facilities and other at FedEx Ground and FedEx Express, and vehicles and trailers at FedEx ~~Freight,~~Freight. These decreases were partially offset by ~~decreased~~increased spending on aircraft and related equipment at FedEx ~~Express and information technology at FedEx Services.~~Express.

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 ~~$19.1~~$19.2 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 FedEx Express in respect of the ~~$840~~$814 million principal amount of the Certificates. See Note 4 of the accompanying unaudited condensed consolidated financial statements and Note 76 to the financial statements included in our Annual Report for additional information regarding the terms of the Certificates.

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

The following table presents the summarized balance sheet information as of ~~February 28,~~November 30, 2023 and May 31, ~~2022~~2023 (in millions):


	February 28, 2023		May 31, 2022		November 30, 2023		May 31, 2023
Current Assets	$	10,265	$	11,768	$	10,856	$	10,758
Intercompany Receivable		3,310		4,157		3,739		3,566
Total Assets		89,572		88,331		84,757		89,947
Current Liabilities		9,840		10,324		10,475		9,933
Intercompany Payable		—		—		—		—
Total Liabilities		60,741		58,883		54,365		59,837

The following table presents the summarized statement of income information for the ~~nine-month~~six-month period ended ~~February 28,~~November 30, 2023 (in millions):


Revenue	$	50,758		$	32,867
Intercompany Charges, net		(3,742	)		(1,881	)
Operating Income		3,225			2,280
Intercompany Charges, net		121			101
Income Before Income Taxes		3,036			2,041
Net Income	$	2,308		$	1,586

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

The following table presents the summarized balance sheet information as of ~~February 28,~~November 30, 2023 and May 31, ~~2022~~2023 (in millions):


	February 28, 2023		May 31, 2022		November 30, 2023		May 31, 2023
Current Assets	$	3,711	$	4,687	$	4,052	$	4,408
Intercompany Receivable		—		—		—		—
Total Assets		69,997		68,449		72,231		70,016
Current Liabilities		5,214		5,155		6,476		5,100
Intercompany Payable		10,592		7,473		10,570		11,011
Total Liabilities		49,661		47,830		50,224		48,246

The following table presents the summarized statement of income information for the ~~nine-month~~six-month period ended ~~February 28,~~November 30, 2023 (in millions):


Revenue	$	18,096		$	11,103
Intercompany Charges, net		(2,627	)		(1,132	)
Operating Income		200			(361	)
Intercompany Charges, net		189			14
Income Before Income Taxes		1,553			588
Net Income	$	1,495		$	669

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 ~~challenging macroeconomic environment,~~slowdown in the economy, inflationary pressures, rising fuel prices, and geopolitical conflicts. We have ~~$5.4~~$6.7 billion in cash at ~~February 28,~~November 30, 2023 and $3.5 billion in available liquidity under our $1.5 billion three-year credit agreement (the “Three-Year Credit Agreement”) and $2.0 billion five-year credit agreement (the “Five-Year Credit Agreement”~~) and $1.5 billion three-year credit agreement (the “Three-Year Credit Agreement”~~ and together with the ~~Five-Year~~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, and dividend payments.

The Three-Year Credit Agreement expires in March 2025. The Five-Year Credit Agreement expires in March 2026 and includes a $250 million letter of credit sublimit. The Credit Agreements are available to finance our operations and other cash flow needs.

We executed an ASR agreement in September 2023 to repurchase an aggregate of $500 million of our common stock that was completed in October 2023. See Note 1 of the accompanying unaudited condensed consolidated financial statements for more information. We expect to repurchase an additional $1.0 billion of our common stock in 2024.

Our cash and cash equivalents balance at ~~February 28,~~November 30, 2023 includes ~~$2.3~~$3.1 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.

~~We expect~~Our capital expenditures of approximately $5.9 billion in 2023. We expect our capital spend to be lower compared to 2022 due to lower aircraft fleet modernization spend. We invested $1.3 billion in aircraft and related equipment in the nine months of 2023 and expect to invest an additional $0.2 billion for aircraft and related equipment during the remainder of 2023. Included within our expected 2023 capital expenditures are our continued investments in the FedEx Express Indianapolis hub and FedEx Express Memphis World Hub, which2024 are expected to ~~total $1.5~~be approximately $5.7 billion, ~~and $1.8~~a decrease of $0.5 billion ~~respectively, over the life of each project. While~~from 2023, as we continue to ~~invest in~~reduce our ~~business, the~~ capital intensity relative to ~~revenue is expected~~revenue. We expect lower aircraft spend and reduced capacity investment to ~~remain below historical levels.~~be partially offset by investments to optimize our networks and modernize 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 ~~impact~~effect on our financial condition or liquidity.

We have several aircraft modernization programs ~~underway~~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.

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 FedEx Express to sell, in one or more future offerings, pass-through certificates.

The Five-Year Credit Agreement expires in March 2026 and includes a $250 million letter of credit sublimit. The Three-Year Credit Agreement expires in March 2025. The Credit Agreements are available to finance our operations and other cash flow needs.

During the ~~nine months~~first half of ~~2023,~~2024, we made voluntary contributions totaling ~~$800~~$400 million to our tax-qualified U.S. domestic pension ~~plans~~plan (“U.S. Pension ~~Plans”~~Plan”). We ~~do not expect to make any~~anticipate making $400 million of additional voluntary contributions ~~to our U.S. Pension Plans in~~during the ~~fourth quarter~~remainder of ~~2023.~~2024. There are currently no required minimum contributions to our U.S. Pension ~~Plans based on our funded status~~Plan, and ~~the fact~~ we ~~have~~maintain a credit balance related to our cumulative excess voluntary pension contributions over those required that exceeds ~~$3.8~~$3.0 billion. The credit balance is subtracted from plan assets to determine the minimum funding requirements. Therefore, we ~~could~~have the flexibility to eliminate all required contributions to our principal U.S. Pension ~~Plans~~Plan for several ~~years if we were to choose to waive part of that credit balance in any given year.~~years. Our U.S. Pension ~~Plans have~~Plan has ample funds to meet expected benefit payments.

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.” ~~If our credit ratings drop, our~~Our interest expense may ~~increase.~~increase in the event of a reduction in our credit rating. If our unsecured debt or commercial paper ratings ~~drop below current levels, we may have difficulty utilizing the commercial paper market. If our senior unsecured debt credit ratings drop~~are reduced to below investment grade, our access to ~~financing~~the capital markets may become limited.

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. ~~Ongoing weak global economic conditions had~~We do not believe there has been any change of events or circumstances that would indicate that a ~~negative impact on our overall earnings and~~reevaluation of the ~~profitability~~goodwill of our reporting units ~~during~~is required as of November 30, 2023, ~~which has reduced our market capitalization. However,~~nor do we ~~do not~~ believe ~~that these factors indicate that~~ the ~~fair value~~goodwill of our reporting units ~~has more likely than not fallen below their carrying values as~~is at risk of ~~February 28, 2023. There is risk, however, if economic conditions deteriorate further, that we could record a noncash~~failing impairment ~~charge relating to goodwill during the fourth quarter of 2023 in connection with our annual impairment tests for one or more of our reporting units, particularly at FedEx Express.~~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.

Certain statements in this report, including (but not limited to) those contained in “Trends Affecting Our Business,” “Business Optimization and Realignment Costs,” “Income Taxes,” “Outlook,” “Liquidity Outlook,” “Critical Accounting Estimates,” and “Legal Proceedings,” and the “General,” “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 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 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:

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.

As of ~~February 28,~~November 30, 2023, 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, Hong Kong dollar, Australian dollar, Japanese yen, and Mexican peso. 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 ~~nine months~~half of ~~2023,~~2024, the U.S. dollar ~~strengthened~~fluctuations relative to the currencies of the foreign countries in which we operate ~~as compared to the first nine months of 2022, and this strengthening had a slightly negative~~did not have an 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” section of “Item 7. Management’s Discussion and Analysis of Results of Operations and Financial Condition” included in our Annual Report.

The management of FedEx, with the participation of our principal executive and financial officers, has evaluated the effectiveness of our disclosure controls and procedures in ensuring that the information required to be disclosed in our filings under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, including ensuring that such information is accumulated and communicated to FedEx management as appropriate to allow timely decisions regarding required disclosure. Based on such evaluation, our principal executive and financial officers have concluded that such disclosure controls and procedures were effective as of ~~February 28,~~November 30, 2023 (the end of the period covered by this Quarterly Report on Form 10-Q).

During the third quarter of 2023, we successfully completed a significant migration to an enterprise resource planning cloud-based financial system for a number of our domestic operating companies, building on the phased migration plan which began with our international operating companies in prior years. We implemented new internal controls in conjunction with the migration. During our fiscal quarter ended ~~February 28,~~November 30, 2023, no change occurred in our internal control over financial reporting ~~including the new controls described above,~~ that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. ~~We continue to monitor and assess the effects of remote work on our internal controls to minimize the impact on the design and operating effectiveness of our internal control over financial reporting.~~

Additional migrations to the cloud-based financial system will occur through 2024 and will result in further changes to our internal controls over financial reporting. As changes occur, we will evaluate quarterly whether such changes materially affect our internal control over financial reporting.

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.

~~Other than the risk factors set forth below, there~~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.

Our future financial results will suffer, and we may not be able to achieve our 2025 financial performance goals, if we fail to successfully implement our cost reductions and program to improve long-term profitability. We are making significant decisions in connection with our long-term business strategy. In addition to the initiatives and enhancements discussed in our Annual Report, in the first quarter of 2023, we announced a comprehensive program to improve FedEx’s long-term profitability. We are also continuing to implement cost reductions to mitigate the effect of volume declines. See Item 2 of this quarterly report (“Management’s Discussion and Analysis of Results of Operations and Financial Condition”) under “Results of Operations – Consolidated Results – Outlook” for additional information.

We may not be able to achieve the expected operational efficiencies, cost savings, and other benefits from these initiatives and enhancements. The actual amount and timing of costs to be incurred and related cost savings resulting from these initiatives and enhancements may differ from our current expectations and estimates. These initiatives and enhancements could result in asset impairment charges. Changes in our business strategy may also expose us to new and heightened risks. If we are not able to successfully implement our cost reductions and program to improve long-term profitability, our future financial results will suffer and we may not be able to achieve our 2025 financial performance goals.

~~Our failure to meet our purchased transportation needs, as well as increases in purchased transportation costs, could adversely impact our business and results of operations.~~ Our ability to meet our purchased transportation needs while controlling related costs is generally subject to numerous external factors, including the availability of qualified service providers and persons in the markets where service providers operate and unemployment levels within these markets, prevailing and competitive wage rates and other benefits, fuel and energy prices and availability, changes in the business or financial soundness of service providers, interest in contracting with FedEx, inflation, safety levels of our operations, our reputation within the transportation market, the effect of a widespread public health crisis, the availability of child care, and vaccine mandates that may be announced in jurisdictions in which our service providers operate. Additionally, certain service providers (acting collectively or in coordination in some instances) may seek to increase pay rates or modify contract terms and may refuse to provide service to FedEx in connection with such initiatives. While we believe we will be able to effectively meet our purchased transportation needs during the remainder of 2023, our inability to do so could increase our costs, hinder our ability to execute our business strategy, negatively impact service levels, and adversely affect our business and results of operations.

Changes in the business or financial soundness of the U.S. Postal Service (“USPS”), including strategic changes to its operations to reduce its reliance on the air network of FedEx Express, are likely to have an adverse effect on our results of operations and financial condition. The USPS is the largest customer of FedEx Express, which provides domestic air transportation services for the USPS’s First Class Mail, Priority Mail Express, and Priority Mail and transportation and delivery for the USPS’s international delivery service. See “Item 1. Business” of our Annual Report under “FedEx Express Segment” for more information.

Pursuant to previously announced plans to restructure its operations, the USPS continues to implement strategic changes to its operations to reduce its reliance on the air network of FedEx Express, which had an immaterial negative impact on our results of operations in the third quarter of 2023. FedEx Express expects lower volumes from the USPS in the fourth quarter of 2023 and in 2024. Additional changes in the USPS’s business, including further structural changes to its operations, network, volume levels, service offerings, service commitments, or pricing, could have additional negative impacts on our revenue, results of operations, and financial condition. The USPS’s contract with FedEx Express for domestic services expires on September 29, 2024, and there is no assurance that the contract will be renewed on terms that are commercially acceptable to FedEx.

The following table provides information on FedEx’s repurchases of our common stock during the ~~third~~second quarter of ~~2023:~~2024:

In December 2021, our Board of Directors approved a stock repurchase program of up to $5 billion of FedEx common stock. Shares under the program may be repurchased from time to time in the open market or in privately negotiated transactions. As of ~~March 14,~~December 19, 2023, ~~$2.6~~$1.6 billion remains available to be used for repurchases under the program, which is the only such program that currently exists. The program does not have an expiration date and may be suspended or discontinued at any time.

As part of the repurchase program, we entered into an ASR ~~agreement~~transaction with a bank in ~~October 2022~~September 2023 to repurchase ~~$1.5 billion~~$500 million of our common stock. During the ~~third~~second quarter of ~~2023,~~2024, the ASR transaction was completed, and ~~1.3~~2.0 million shares were delivered under the ASR agreement. The shares delivered under the ASR agreement were the only shares of FedEx common stock we repurchased during the ~~third~~second quarter of ~~2023.~~2024.

See Note 1 of the accompanying unaudited condensed consolidated financial statements for additional information regarding the ASR ~~transaction.~~transaction 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 2024.

~~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 Office (“IIPO”) for these patents and trademarks and has sought to prosecute and defend such trademarks. On September 15, 2021, 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, inDuring the quarter ended ~~February 28,~~November 30, 2023, no director or officer of FedEx ~~paid $120 to IIPO~~adopted, modified, or terminated any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement, as ~~part~~such terms are defined in Item 408(a) of ~~its intellectual property protection efforts in Iran. FedEx plans to continue these activities, as authorized under the specific license.~~Regulation S-K.

^ Information in this exhibit identified by brackets is confidential and has been excluded pursuant to Item 601(b)(10)(iv) of Regulation S-K because it (i) is ~~both (i)~~ not material and (ii) ~~the type~~would likely cause competitive harm to FedEx ~~treats as private or confidential.~~if publicly disclosed.

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

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


Delaware	62-1721435
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

942 South Shady Grove Road, Memphis, Tennessee	38120
(Address of principal executive offices)	(ZIP Code)



Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $0.10 per share	FDX	New York Stock Exchange
0.450% 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


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


Common Stock		Outstanding Shares at ~~March 14,~~December 18, 2023
Common Stock, par value $0.10 per share		~~251,351,937~~249,892,548


		PAGE

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements
Condensed Consolidated Balance Sheets ~~February 28,~~November 30, 2023 and May 31, ~~2022~~2023		3
Condensed Consolidated Statements of Income Three and ~~Nine~~Six Months Ended ~~February 28,~~November 30, 2023 and 2022		5
Condensed Consolidated Statements of Comprehensive Income Three and ~~Nine~~Six Months Ended ~~February 28,~~November 30, 2023 and 2022		6
Condensed Consolidated Statements of Cash Flows ~~Nine~~Six Months Ended ~~February 28,~~November 30, 2023 and 2022		7
Condensed Consolidated Statements of Changes In Common Stockholders’ Investment Three and ~~Nine~~Six Months Ended ~~February 28,~~November 30, 2023 and 2022		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		43
ITEM 4. Controls and Procedures		4443

PART II. OTHER INFORMATION

ITEM 1. Legal Proceedings		4443
ITEM 1A. Risk Factors		44
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds		4644
ITEM 5. Other Information		4644
ITEM 6. Exhibits		4745
Signature		4846

Exhibit 10.1
Exhibit 10.2
Exhibit 10.3
Exhibit 10.4
Exhibit 10.5
Exhibit 15.1
Exhibit 22
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2
Exhibit 101.1 Interactive Data Files Exhibit 104.1 Cover Page Interactive Data File


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


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


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)
Dec. 1-31, 2022		1,257,868	$	163.39		1,257,868	$	2,570
Jan. 1-31, 2023		—		—		—		—
Feb. 1-28, 2023		—		—		—		—
Total		1,257,868				1,257,868		2,570


Exhibit Number		Description of Exhibit

~~3.1~~		~~Amended and Restated Bylaws of FedEx. (Filed as Exhibit 3.1 to FedEx’s Current Report on Form 8-K dated March 6, 2023 and filed March 6, 2023, and incorporated herein by reference.)~~

*^10.1		Letter Agreement, dated as of ~~December 15, 2022,~~September 20, 2023, amending the Boeing ~~777 Freighter Purchase Agreement dated as of November 7, 2006 between The Boeing Company and FedEx Express and the Boeing 767-3S2~~767-3S2F Freighter Purchase Agreement dated as of December 14, 2011 between The Boeing Company and FedEx Express (the “Boeing 767-3S2 Freighter Purchase Agreement”).

^10.2		Letter Agreement, dated as of September 29, 2023, amending the Boeing 777 Freighter Purchase Agreement, dated as of November 7, 2006 between The Boeing Company and FedEx Express (the “Boeing 777 Freighter Purchase Agreement”).

^10.3		Letter Agreement, dated as of September 29, 2023, amending the Boeing 767-3S2F Freighter Purchase Agreement.

^10.4		Letter Agreement, dated as of November 2, 2023, amending the Boeing 777 Freighter Purchase Agreement.

^*10.5		Supplemental Agreement No. 37 (and related side letters), dated as of November 9, 2023, amending the Boeing 777 Freighter Purchase Agreement.

**10.6		Second Amendment to the FedEx Retirement Parity Pension Plan, effective September 30, 2023. (Filed as Exhibit 10.4 to FedEx’s FY24 First Quarter Report on Form 10-Q, and incorporated herein by reference).

~~^10.2~~10.7		~~Letter~~Form of Restricted Stock Unit Agreement for Non-Management Directors pursuant to the 2019 Omnibus Stock Incentive Plan (Filed as Exhibit 10.1 to FedEx’s Current Report on Form 8-K dated ~~as of January 31,~~September 21, 2023 ~~amending~~and filed with the ~~Boeing 767-3S2 Freighter Purchase Agreement.~~SEC on September 22, 2023).

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).


			FedEx Corporation

Date: ~~March 16,~~December 19, 2023			/s/ ~~Jennifer L. Johnson~~Guy M. Erwin II
			~~Jennifer L. Johnson~~Guy M. Erwin II
			~~Corporate~~Staff Vice President, ~~and~~Corporate Controller
			and Interim Principal Accounting Officer