1、 UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549 FORM 10-Q(Mark One)QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934FOR THE QUARTERLY PERIOD ENDED February 28,2025OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE

2、ACT OF 1934FOR THE TRANSITION PERIOD FROM TO_Commission File Number:1-15829 FedEx Corporation(Exact name of registrant as specified in its charter)Delaware62-1721435(State or other jurisdiction ofincorporation or organization)(I.R.S.EmployerIdentification No.)942 South Shady Grove Road,Memphis,Tenne

3、ssee38120(Address of principal executive offices)(ZIP Code)Registrants telephone number,including area code:(901)818-7500Securities registered pursuant to Section 12(b)of the Act:Title of each class Trading Symbol Name of each exchange on which registeredCommon Stock,par value$0.10 per share FDX New

4、 York Stock Exchange0.450%Notes due 2025 FDX 25A New York Stock Exchange1.625%Notes due 2027 FDX 27 New York Stock Exchange0.450%Notes due 2029 FDX 29A New York Stock Exchange1.300%Notes due 2031 FDX 31 New York Stock Exchange0.950%Notes due 2033 FDX 33 New York Stock ExchangeIndicate by check mark

5、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

6、 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 requir

7、ed 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 com

8、pany,”and“emerging growth company”in Rule 12b-2 of the Exchange Act.Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company Emerging growth company If an emerging growth company,indicate by check mark if the registrant has elected not to use the extended transition

9、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

10、 the issuers classes of common stock,as of the latest practicable date.Common Stock Outstanding Shares at March 18,2025Common Stock,par value$0.10 per share 239,598,919 -2-FEDEX CORPORATIONINDEX PAGE PART I.FINANCIAL INFORMATION ITEM 1.Financial Statements Condensed Consolidated Balance SheetsFebrua

11、ry 28,2025 and May 31,2024 3Condensed Consolidated Statements of IncomeThree and Nine Months Ended February 28,2025 and February 29,2024 5Condensed Consolidated Statements of Comprehensive IncomeThree and Nine Months Ended February 28,2025 and February 29,2024 6Condensed Consolidated Statements of C

12、ash FlowsNine Months Ended February 28,2025 and February 29,2024 7Condensed Consolidated Statements of Changes In Common Stockholders InvestmentThree and Nine Months Ended February 28,2025 and February 29,2024 8Notes to Condensed Consolidated Financial Statements 9Report of Independent Registered Pu

13、blic Accounting Firm 20ITEM 2.Managements Discussion and Analysis of Results of Operations and Financial Condition 21ITEM 3.Quantitative and Qualitative Disclosures About Market Risk 41ITEM 4.Controls and Procedures 42 PART II.OTHER INFORMATION ITEM 1.Legal Proceedings 42ITEM 1A.Risk Factors 42ITEM

14、2.Unregistered Sales of Equity Securities and Use of Proceeds 45ITEM 5.Other Information 45ITEM 6.Exhibits 46Signature 49 -3-FEDEX CORPORATIONCONDENSED CONSOLIDATED BALANCE SHEETS(IN MILLIONS)February 28,2025(Unaudited)May 31,2024 ASSETS CURRENT ASSETS Cash and cash equivalents$5,135$6,501 Receivabl

15、es,less allowances of$725 and$775 10,230 10,087 Spare parts,supplies,and fuel,less allowances of$301 and$288 617 614 Prepaid expenses and other 1,232 1,005 Total current assets 17,214 18,207 PROPERTY AND EQUIPMENT,AT COST 86,565 84,391 Less accumulated depreciation and amortization 45,601 42,900 Net

16、 property and equipment 40,964 41,491 OTHER LONG-TERM ASSETS Operating lease right-of-use assets,net 16,468 17,115 Goodwill 6,332 6,423 Other assets 4,065 3,771 Total other long-term assets 26,865 27,309$85,043$87,007 The accompanying notes are an integral part of these condensed consolidated financ

17、ial statements.-4-FEDEX CORPORATIONCONDENSED CONSOLIDATED BALANCE SHEETS(IN MILLIONS,EXCEPT SHARE DATA)February 28,2025(Unaudited)May 31,2024 LIABILITIES AND COMMON STOCKHOLDERS INVESTMENT CURRENT LIABILITIES Current portion of long-term debt$611$68 Accrued salaries and employee benefits 2,601 2,673

18、 Accounts payable 3,604 3,189 Operating lease liabilities 2,524 2,463 Accrued expenses 4,556 4,962 Total current liabilities 13,896 13,355 LONG-TERM DEBT,LESS CURRENT PORTION 19,530 20,135 OTHER LONG-TERM LIABILITIES Deferred income taxes 4,308 4,482 Pension,postretirement healthcare,and other benef

19、it obligations 1,664 2,010 Self-insurance accruals 3,914 3,701 Operating lease liabilities 14,366 15,053 Other liabilities 657 689 Total other long-term liabilities 24,909 25,935 COMMITMENTS AND CONTINGENCIES COMMON STOCKHOLDERS INVESTMENT Common stock,$0.10 par value;800 million shares authorized;3

20、18 million shares issued as of February 28,2025 and May 31,2024 32 32 Additional paid-in capital 4,245 3,988 Retained earnings 39,754 38,649 Accumulated other comprehensive loss (1,499)(1,359)Treasury stock,at cost;78 million shares as of February 28,2025 and 72 million shares as of May 31,2024 (15,

21、824)(13,728)Total common stockholders investment 26,708 27,582$85,043$87,007 The accompanying notes are an integral part of these condensed consolidated financial statements.-5-FEDEX CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF INCOME(UNAUDITED)(IN MILLIONS,EXCEPT PER SHARE AMOUNTS)Three Months E

22、nded Nine Months Ended February 28,2025 February 29,2024 February 28,2025 February 29,2024 REVENUE$22,160$21,738$65,706$65,584 OPERATING EXPENSES:Salaries and employee benefits 7,879 7,693 23,543 23,311 Purchased transportation 5,634 5,345 16,409 15,776 Rentals and landing fees 1,178 1,145 3,507 3,4

23、34 Depreciation and amortization 1,066 1,072 3,207 3,183 Fuel 889 1,140 2,911 3,569 Maintenance and repairs 783 804 2,443 2,482 Business optimization costs 179 114 633 364 Other 3,260 3,182 9,629 9,461 20,868 20,495 62,282 61,580 OPERATING INCOME 1,292 1,243 3,424 4,004 OTHER(EXPENSE)INCOME:Interest

24、,net (116)(91)(302)(279)Other retirement plans,net 50 40 149 120 Other,net (45)(9)(53)(37)(111)(60)(206)(196)INCOME BEFORE INCOME TAXES 1,181 1,183 3,218 3,808 PROVISION FOR INCOME TAXES 272 304 774 951 NET INCOME$909$879$2,444$2,857 EARNINGS PER COMMON SHARE:Basic$3.79$3.55$10.09$11.43 Diluted$3.76

25、$3.51$9.99$11.31 DIVIDENDS DECLARED PER COMMON SHARE$1.38$1.26$5.52$3.78 The accompanying notes are an integral part of these condensed consolidated financial statements.-6-FEDEX CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(UNAUDITED)(IN MILLIONS)Three Months Ended Nine Month

26、s Ended February 28,2025 February 29,2024 February 28,2025 February 29,2024 NET INCOME$909$879$2,444$2,857 OTHER COMPREHENSIVE INCOME(LOSS):Foreign currency translation adjustments,net of tax benefit/(expense)of$2 and$0 in 2025 and$2 and$3 in 2024 17 (39)(135)(39)Prior service credit arising during

27、period,net of tax(expense)of$0 and($11)in 2024 36 Amortization of prior service credit,net of tax benefit of$1 and$2 in 2025 and$0 and$0 in 2024 (1)(2)(5)(5)16 (41)(140)(8)COMPREHENSIVE INCOME$925$838$2,304$2,849 The accompanying notes are an integral part of these condensed consolidated financial s

28、tatements.-7-FEDEX CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(UNAUDITED)(IN MILLIONS)Nine Months Ended February 28,2025 February 29,2024 Operating Activities:Net income$2,444$2,857 Adjustments to reconcile net income to cash provided by operating activities:Depreciation and amortizat

29、ion 3,207 3,183 Provision for uncollectible accounts 382 323 Other noncash items including leases and deferred income taxes 2,353 2,141 Stock-based compensation 116 130 Business optimization costs,net of payments 114 (50)Changes in assets and liabilities:Receivables (692)(110)Other assets (68)(119)A

30、ccounts payable and other liabilities (3,383)(2,711)Other,net 44 (30)Cash provided by operating activities 4,517 5,614 Investing Activities:Capital expenditures (2,582)(3,974)Purchase of investments (197)(110)Proceeds from sale of investments 77 24 Proceeds from asset dispositions and other 42 94 Ca

31、sh used in investing activities (2,660)(3,966)Financing Activities:Principal payments on debt (89)(143)Proceeds from stock issuances 472 265 Dividends paid (1,008)(949)Purchases of common stock (2,517)(2,000)Other (30)(7)Cash used in financing activities (3,172)(2,834)Effect of exchange rate changes

32、 on cash (51)(26)Net decrease in cash and cash equivalents (1,366)(1,212)Cash and cash equivalents at beginning of period 6,501 6,856 Cash and cash equivalents at end of period$5,135$5,644 The accompanying notes are an integral part of these condensed consolidated financial statements.-8-FEDEX CORPO

33、RATIONCONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN COMMON STOCKHOLDERS INVESTMENT(UNAUDITED)(IN MILLIONS,EXCEPT SHARE DATA)Three Months Ended Nine Months Ended February 28,2025 February 29,2024 February 28,2025 February 29,2024 Common Stock Beginning Balance$32$32$32$32 Ending Balance 32 32 32 32

34、 Additional Paid-in Capital Beginning Balance 4,165 3,849 3,988 3,769 Purchases of common stock 4 (21)(30)Issuance of treasury stock for acquisition 42 42 Employee incentive plans and other 38 45 236 159 Ending Balance 4,245 3,898 4,245 3,898 Retained Earnings Beginning Balance 39,175 36,605 38,649

35、35,259 Net Income 909 879 2,444 2,857 Cash dividends declared($1.38,$1.26,$5.52,and$3.78 per share)(330)(310)(1,339)(942)Ending Balance 39,754 37,174 39,754 37,174 Accumulated Other Comprehensive Loss Beginning Balance (1,515)(1,294)(1,359)(1,327)Other comprehensive(loss)/income,net of tax benefit/(

36、expense)of$3,$2,$2,and($8)16 (41)(140)(8)Ending Balance (1,499)(1,335)(1,499)(1,335)Treasury Stock Beginning Balance (15,397)(12,426)(13,728)(11,645)Purchases of common stock(1.8,4.1,8.9,and 8.0 million shares)(500)(1,011)(2,495)(1,985)Issuance of treasury stock for acquisition 48 48 Employee incent

37、ive plans and other(0.2,0.3,2.6,and 1.8 million shares)25 43 351 236 Ending Balance (15,824)(13,394)(15,824)(13,394)Total Common Stockholders Investment Balance$26,708$26,375$26,708$26,375 The accompanying notes are an integral part of these condensed consolidated financial statements.-9-FEDEX CORPO

38、RATIONNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)NOTE 1:DESCRIPTION OF BUSINESS SEGMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESDESCRIPTION OF BUSINESS SEGMENTS.FedEx Corporation(“FedEx”)provides a broad portfolio of transportation,e-commerce,and business services,offering

39、 integrated business solutions utilizing our flexible,efficient,and intelligent global network.Our primary operating companies are Federal Express Corporation(“Federal Express”),the worlds largest express transportation company and a leading North American provider of small-package ground delivery s

40、ervices,and FedEx Freight,Inc.(“FedEx Freight”),a leading North American provider of less-than-truckload(“LTL”)freight transportation services.In connection with our one FedEx consolidation plan,on June 1,2024,FedEx Ground Package System,Inc.(“FedEx Ground”)and FedEx Corporate Services,Inc.were merg

41、ed into Federal Express,becoming a single company operating a unified,fully integrated air-ground express network under the respected FedEx brand.FedEx Freight continues to provide LTL freight transportation services as a separate subsidiary.Beginning in the first quarter of 2025,Federal Express and

42、 FedEx Freight represent our major service lines and constitute our reportable segments.Additionally,the results of FedEx Custom Critical,Inc.(“FedEx Custom Critical”)are included in the FedEx Freight segment instead of the Federal Express segment in 2025.Prior-year amounts were revised to reflect t

43、his presentation.We evaluated our reporting units with significant recorded goodwill during the fourth quarter of 2024,and the estimated fair value of each reporting unit exceeded its carrying value as of the end of 2024 immediately before our one FedEx consolidation.We reevaluated the conclusion of

44、 our 2024 goodwill impairment tests as of June 1,2024 immediately after our one FedEx consolidation and concluded that the estimated fair values of our reporting units with significant goodwill continued to exceed their respective carrying values.In December 2024,we announced that FedExs Board of Di

45、rectors decided to pursue a full separation of FedEx Freight through the capital markets,creating a new publicly traded company.The transaction,which would be implemented through the spin-off of shares of the new company to FedEx stockholders,is expected to be tax-free for U.S.federal income tax pur

46、poses for FedEx stockholders and is expected to be completed by June 2026.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.These interim financial statements of FedEx have been prepared in accordance with accounting principles generally accepted in the United States and Securities and Exchange Commission(

47、“SEC”)instructions for interim financial information,and should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended May 31,2024(“Annual Report”).Significant accounting policies and other disclosures normally provided have been omitted since such items are disclosed i

48、n 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 28,2025,and the results of our operations for the t

49、hree-and nine-month periods ended February 28,2025 and February 29,2024,cash flows for the nine-month periods ended February 28,2025 and February 29,2024,and changes in common stockholders investment for the three-and nine-month periods ended February 28,2025 and February 29,2024.Operating results f

50、or the three-and nine-month periods ended February 28,2025 are not necessarily indicative of the results that may be expected for the year ending May 31,2025.In January 2025,the Board of Directors approved a change in FedExs fiscal year end from May 31 to December 31.The fiscal year change will be e

51、ffective June 1,2026.Except as otherwise specified,references to years indicate our fiscal year ending May 31,2025 or ended May 31 of the year referenced and comparisons are to the corresponding period of the prior year.CONTRACT ASSETS AND LIABILITIES.Contract assets include billed and unbilled amou

52、nts 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

53、 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$670 milli

54、on and$672 million at February 28,2025 and May 31,2024,respectively.Contract assets net of deferred unearned revenue were$493 million and$463 million at February 28,2025 and May 31,2024,respectively.Contract assets are included within“Receivables”in the accompanying unaudited condensed consolidated

55、balance sheets.Contract liabilities related to advance payments from customers were$23 million and$23 million at February 28,2025 and May 31,2024,respectively.Contract liabilities are included within“Accrued expenses”in the accompanying unaudited condensed consolidated balance sheets.-10-DISAGGREGAT

56、ION OF REVENUE.The following table provides revenue by service type(in millions)for the three-and nine-month periods ended February 28,2025 and February 29,2024.This presentation is consistent with how we organize our segments internally for making operating decisions and measuring performance.Three

57、 Months Ended Nine Months Ended 2025 2024 2025 2024 REVENUE BY SERVICE TYPE Federal Express segment:Package:U.S.priority$2,646$2,595$7,800$7,873 U.S.deferred 1,386 1,316 3,736 3,710 U.S.ground 8,986 8,363 25,298 24,805 Total U.S.domestic package revenue 13,018 12,274 36,834 36,388 International prio

58、rity 2,097 2,317 6,534 7,034 International economy 1,465 1,107 4,413 3,407 Total international export package revenue 3,562 3,424 10,947 10,441 International domestic 1,078 1,139 3,380 3,492 Total package revenue 17,658 16,837 51,161 50,321 Freight:U.S.286 641 1,238 1,795 International priority 551

59、520 1,717 1,641 International economy 470 438 1,462 1,380 Total freight revenue 1,307 1,599 4,417 4,816 Other 216 236 749 734 Total Federal Express segment 19,181 18,672 56,327 55,871 FedEx Freight segment 2,089 2,205 6,595 7,042 Other and eliminations 890 861 2,784 2,671$22,160$21,738$65,706$65,584

60、 International domestic revenue relates to our international intra-country operations.Includes the FedEx Dataworks,Inc.(“FedEx Dataworks”),FedEx Office and Print Services,Inc.(“FedEx Office”),and FedEx Logistics,Inc.(“FedEx Logistics”)operating segments.EMPLOYEES UNDER COLLECTIVE BARGAINING ARRANGEM

61、ENTS.The pilots of Federal Express,who are a small number of its total employees,are represented by the Air Line Pilots Association,International(“ALPA”)and are employed under a collective bargaining agreement that took effect on November 2,2015.The agreement became amendable in November 2021.Bargai

62、ning for a successor agreement began in May 2021,and in November 2022 the National Mediation Board(“NMB”),which is the U.S.governmental agency that oversees labor agreements for entities covered by the Railway Labor Act of 1926,as amended,began actively mediating the negotiations.In July 2023,Federa

63、l Expresss pilots failed to ratify the tentative successor agreement that was approved by ALPAs FedEx Master Executive Council the prior month.Bargaining for a successor agreement continues.In April 2024,the NMB rejected ALPAs request for a proffer of arbitration,and the parties remain in mediated n

64、egotiations.The conduct of mediated negotiations has no effect on our operations.A small number of our other employees are members of unions.STOCK-BASED COMPENSATION.We have three types of equity-based compensation:stock options,restricted stock,and,for outside directors,restricted stock units.The k

65、ey terms of our equity-based compensation plans and financial disclosures about these programs are set forth in our Annual Report.Our stock-based compensation expense was$31 million for the three-month period ended February 28,2025 and$116 million for the nine-month period ended February 28,2025.Our

66、 stock-based compensation expense was$34 million for the three-month period ended February 29,2024 and$130 million for the nine-month period ended February 29,2024.Due to its immateriality,additional disclosures related to stock-based compensation have been excluded from this quarterly report.BUSINE

67、SS OPTIMIZATION COSTS.In the second quarter of 2023,we announced DRIVE,a comprehensive program to improve long-term profitability.This program includes a business optimization plan to drive efficiency within and among our transportation segments,lower our overhead and support costs,and transform our

68、 digital capabilities.We have commenced our plan to consolidate our sortation facilities and equipment,reduce pickup-and-delivery routes,and optimize our enterprise linehaul network by moving beyond discrete collaboration to an end-to-end optimized network through Network 2.0,the multi-year effort t

69、o improve the efficiency with which we pick up,transport,and deliver packages in the U.S.and Canada.(1)(2)(1)(2)-11-We have implemented Network 2.0 optimization in more than 200 locations in the U.S.and Canada.Contracted service providers will handle the pickup and delivery of Federal Express packag

70、es in some locations while employee couriers will handle others.In June 2024,Federal Express announced a workforce reduction plan in Europe as part of its ongoing measures to reduce structural costs.The plan will impact approximately 1,500 employees in Europe across back-office and commercial functi

71、ons.The execution of the plan is subject to a consultation process that is expected to occur over an 18-month period in accordance with local country processes and regulations.In the nine-month period ended February 28,2025,we incurred$220 million of costs related to this plan.We expect the pre-tax

72、cost of the severance benefits and legal and professional fees to be provided under and related to the plan to range from$250 million to$300 million in cash expenditures.These charges are expected to be incurred through fiscal year 2026 and will be classified as business optimization expenses.We inc

73、urred costs associated with our business optimization activities,including the workforce reduction plan in Europe,of$179 million($137 million,net of tax,or$0.56 per diluted share)in the three-month period ended February 28,2025 and$633 million($484 million,net of tax,or$1.98 per diluted share)in the

74、 nine-month period ended February 28,2025.These costs were primarily related to severance and professional services and are included in Federal Express and Corporate,other,and eliminations.We recognized$114 million($87 million,net of tax,or$0.35 per diluted share)in the three-month period ended Febr

75、uary 29,2024 and$364 million($278 million,net of tax,or$1.10 per diluted share)in the nine-month period ended February 29,2024.These costs were primarily related to professional services and severance and are included in Corporate,other,and eliminations and Federal Express.FEDEX FREIGHT SPIN-OFF COS

76、TS.We incurred costs related to the planned spin-off of FedEx Freight of$23 million($17 million,net of tax,or$0.07 per diluted share)in the third quarter of 2025.These costs consist of$18 million related to the debt exchange offer and consent solicitation transactions discussed in Note 4 below which

77、 is included in interest,net and$5 million of professional fees which is included in other.We did not incur any FedEx Freight spin-off costs in the first half of 2025 or in the three or nine months of 2024.DERIVATIVE FINANCIAL INSTRUMENTS.We enter into derivative financial instruments to reduce the

78、effects of volatility in foreign currency exchange exposure on operating results and cash flows.Our derivative financial instruments are used to manage differences in the amount,timing,and duration of cash receipts and cash payments principally related to our investments.We use debt denominated in f

79、oreign currency and fixed-to-fixed cross-currency swaps to hedge our exposure to changes in foreign exchange rates on certain of our foreign investments.As of February 28,2025,we had 153 million of debt designated as a net investment hedge to reduce the volatility of the U.S.dollar value of a portio

80、n of our net investment in a euro-denominated consolidated subsidiary.As of February 28,2025,we had four cross-currency swaps outstanding,and the fair value of the swaps classified as assets and liabilities was$18 million and$13 million,respectively.As of May 31,2024,the fair value of the swaps clas

81、sified as assets and liabilities was$8 million and$14 million,respectively.We record all derivatives on the balance sheet at fair value within either“Prepaid expenses and other”or“Other liabilities”in the accompanying unaudited condensed consolidated balance sheets.For debt and foreign currency deri

82、vatives designated as net investment hedges,the gain or loss on the derivative is reported in“Accumulated other comprehensive loss”(“AOCL”)as part of the cumulative translation adjustment.The estimated fair values were determined using pricing models that rely on market-based inputs such as foreign

83、currency exchange rates and yield curves,and are classified as Level 2 within the fair value hierarchy.This classification is defined as a fair value determined using market-based inputs other than quoted prices that are observable for the derivative financial instruments,either directly or indirect

84、ly.As of February 28,2025,our net investment hedges remain effective.SUPPLIER FINANCE PROGRAM.We offer voluntary Supply Chain Finance(“SCF”)programs through financial institutions to certain of our suppliers.We agree to commercial terms with our suppliers,including prices,quantities,and payment term

85、s,and they issue invoices to us based on the agreed-upon contractual terms.If our suppliers choose to participate in the SCF programs,they determine which invoices,if any,to sell to the financial institutions to receive an early discounted payment,while we settle the net payment amount with the fina

86、ncial institutions on the payment due dates.We guarantee these payments with the financial institutions.Amounts due to our suppliers that participate in the SCF programs are included in“Accounts payable”in the accompanying unaudited condensed consolidated balance sheets.We have been informed by the

87、participating financial institutions that as of February 28,2025 and May 31,2024,suppliers have been approved to sell to them$87 million and$94 million,respectively,of our outstanding payment -12-obligations.A rollforward of obligations confirmed and paid during the nine-month period ended February

88、28,2025 is presented below(in millions):Confirmed obligations outstanding at beginning of period$94 Invoices confirmed during the period 457 Confirmed invoices paid during the period (460)Currency translation adjustments (4)Confirmed obligations outstanding at end of period$87 RECENT ACCOUNTING GUID

89、ANCE.New accounting rules and disclosure requirements can significantly affect our reported results and the comparability of our financial statements.We believe the following new accounting guidance is relevant to the readers of our financial statements.Accounting Standards Not Yet AdoptedIn March 2

90、020,the Financial Accounting Standards Board(“FASB”)issued Accounting Standards Update(“ASU”)2020-04,Reference Rate Reform(Topic 848),and in December 2022 subsequently issued ASU 2022-06,to temporarily ease the potential burden in accounting for reference rate reform.The standards provide optional e

91、xpedients 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

92、 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

93、from reference rate reform as of February 28,2025,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 p

94、ublic entitys reportable segments and requires more enhanced information about a reportable segments expenses,interim segment profit or loss,and how a public entitys chief operating decision maker uses reported segment profit or loss information in assessing segment performance and allocating resour

95、ces.The update will be effective for annual periods beginning after December 15,2023,and interim periods within annual periods beginning after December 15,2024.We are assessing the effect of this update on our consolidated financial statements and related disclosures.In December 2023,the FASB issued

96、 ASU 2023-09,Income Taxes(Topic 740):Improvements to Income Tax Disclosures,which expands disclosures in an entitys 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

97、,2024.We are assessing the effect of this update on our consolidated financial statements and related disclosures.In March 2024,the SEC adopted final rules requiring public entities to provide certain climate-related information in their registration statements and annual reports.As part of the disc

98、losures,entities will be required to quantify certain effects of severe weather events and other natural conditions in a note to their audited financial statements.The rules were originally scheduled to be effective for annual periods beginning in calendar 2025.In April 2024,the SEC voluntarily stay

99、ed implementation of the final rules pending certain legal challenges and in February 2025 requested that the court not schedule the matter for argument in order to allow time for the SEC to determine appropriate next steps.We are assessing the effect of the new rules on our consolidated financial s

100、tatements and related disclosures.In November 2024,the FASB issued ASU 2024-03,Income StatementReporting Comprehensive IncomeExpense Disaggregation Disclosures(Subtopic 220-40):Disaggregation of Income Statement Expenses,which expands disclosures about specific expense categories at interim and annu

101、al reporting periods.The update will be effective for annual periods beginning after December 15,2026 and interim periods beginning after December 15,2027.We are assessing the effect of this update on our consolidated financial statements and related disclosures.INVESTMENTS IN EQUITY AND DEBT SECURI

102、TIES.Investments in equity securities with a readily determinable fair value are carried at fair value and are classified as Level 1 investments in the fair value hierarchy.Level 1 investments are valued at the closing price or last trade reported on the major market on which the individual securiti

103、es are traded.For equity securities without readily determinable fair values that qualify for the net asset value(“NAV”)practical expedient,we have elected to apply the NAV practical expedient to estimate fair value.Changes in fair value are recognized in“Other(expense)income”in the accompanying una

104、udited condensed consolidated statements of income.We apply the measurement alternative to all other investments in equity securities without a readily determinable fair value.Under the measurement alternative these equity securities are accounted for at cost,with adjustments for observable changes

105、in prices and impairments recognized in“Other(expense)income”on our accompanying unaudited condensed consolidated statements of income.-13-We perform a qualitative assessment each reporting period to evaluate whether these equity securities are impaired.Our assessment includes a review of recent ope

106、rating results and trends and other publicly available data.If an investment is impaired,we write it down to its estimated fair value.Equity securities totaled$447 million and$360 million at February 28,2025 and May 31,2024,respectively.Equity securities are recorded within“Other assets”in the accom

107、panying unaudited condensed consolidated balance sheets.Debt securities,which are considered short-term investments,are classified as“available-for-sale”and are carried at fair value.Debt securities are Level 2 within the fair value hierarchy.Realized gains and losses on available-for-sale debt secu

108、rities are included in net income,while unrealized gains and losses,net of tax,are included in AOCL in the accompanying unaudited condensed consolidated balance sheets.Debt securities totaled$72 million and$77 million at February 28,2025 and May 31,2024,respectively.Debt securities are recorded with

109、in“Prepaid expenses and other”in the accompanying unaudited condensed consolidated balance sheets.TREASURY SHARES.In December 2021,our Board of Directors authorized a stock repurchase program of up to$5.0 billion of FedEx common stock.In March 2024,our Board of Directors authorized a new stock repur

110、chase program for additional repurchases of up to$5.0 billion of FedEx common stock.As of May 31,2024,$64 million remained available to be used for repurchases under the 2021 program.During the three-month period ended February 28,2025,1.8 million shares were repurchased through open market transact

111、ions at an average price of$276.26 per share for a total of$497 million.During the nine-month period ended February 28,2025,we repurchased 8.9 million shares of FedEx common stock through accelerated share repurchase(“ASR”)and open market transactions at an average price of$281.74 per share for a to

112、tal of$2.5 billion.As of February 28,2025,$2.6 billion remained available to use for repurchases under the 2024 stock repurchase program.The final number of shares delivered upon settlement of the ASR agreements was determined based on a discount to the volume-weighted average price of our stock dur

113、ing the term of the transaction.The repurchased shares were accounted for as a reduction to common stockholders investment in the accompanying unaudited condensed consolidated balance sheet and resulted in a reduction of the outstanding shares used to calculate the weighted-average common shares out

114、standing for basic and diluted earnings per share.During the nine-month period ended February 29,2024,8.0 million shares were repurchased at an average price of$250.95 per share for a total of$2.0 billion.Shares under the 2024 repurchase program may be repurchased from time to time in the open marke

115、t or in privately negotiated transactions.The timing and volume of repurchases are at the discretion of management,based on the capital needs of the business,the market price of FedEx common stock,and general market conditions.No time limits were set for the completion of the program;however,we may

116、decide to suspend or discontinue the program at any time.DIVIDENDS DECLARED PER COMMON SHARE.On February 14,2025,our Board of Directors declared a quarterly cash dividend of$1.38 per share of common stock.The dividend will be paid on April 1,2025 to stockholders of record as of the close of business

117、 on March 10,2025.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 o

118、f our subsidiaries to transfer funds to us in the form of cash dividends,loans,or advances.NOTE 2:CREDIT LOSSESWe are exposed to credit losses primarily through our trade receivables.We assess ability to pay for certain customers by conducting a credit review,which considers the customers establishe

119、d credit rating and our assessment of creditworthiness.We determine the allowance for credit losses on accounts receivable using a combination of specific reserves for accounts that are deemed to exhibit credit loss indicators and general reserves that are determined using loss rates based on histor

120、ical write-offs by geography and recent forecast information,including underlying economic expectations.We update our estimate of credit loss reserves quarterly.Credit losses were$132 million for the three-month period ended February 28,2025 and$382 million for the nine-month period ended February 2

121、8,2025.Credit losses were$106 million for the three-month period ended February 29,2024 and$323 million for the nine-month period ended February 29,2024.Our allowance for credit losses was$415 million at February 28,2025 and$436 million at May 31,2024.-14-NOTE 3:ACCUMULATED OTHER COMPREHENSIVE LOSST

122、he following table provides changes in AOCL,net of tax,reported in our unaudited condensed consolidated financial statements for the periods ended February 28,2025 and February 29,2024(in millions;amounts in parentheses indicate debits to AOCL):Three Months Ended Nine Months Ended 2025 2024 2025 202

123、4 Foreign currency translation loss:Balance at beginning of period$(1,574)$(1,362)$(1,422)$(1,362)Translation adjustments 17 (39)(135)(39)Balance at end of period (1,557)(1,401)(1,557)(1,401)Retirement plans adjustments:Balance at beginning of period 59 68 63 35 Prior service credit arising during p

124、eriod 36 Reclassifications from AOCL (1)(2)(5)(5)Balance at end of period 58 66 58 66 AOCL at end of period$(1,499)$(1,335)$(1,499)$(1,335)NOTE 4:FINANCING ARRANGEMENTSWe have a shelf registration statement filed with the SEC that allows us to sell,in one or more future offerings,any combination of

125、our unsecured debt securities and common stock and allows pass-through trusts formed by Federal Express to sell,in one or more future offerings,pass-through certificates.Federal Express has issued$970 million of Pass-Through Certificates,Series 2020-1AA(the“Certificates”)with a fixed interest rate o

126、f 1.875%due in February 2034 utilizing pass-through trusts.The Certificates are secured by 19 Boeing aircraft with a net book value of$1.6 billion at February 28,2025.The payment obligations of Federal Express in respect of the Certificates are fully and unconditionally guaranteed by FedEx.We have a

127、$1.75 billion three-year credit agreement(the“Three-Year Credit Agreement”)and a$1.75 billion five-year credit agreement(the“Five-Year Credit Agreement”and together with the Three-Year Credit Agreement,the“Credit Agreements”).The Three-Year Credit Agreement and the Five-Year Credit Agreement expire

128、in March 2027 and March 2029,respectively,and each has a$125 million letter of credit sublimit.The Credit Agreements are available to finance our operations and other cash flow needs.As of February 28,2025,no amounts were outstanding under the Credit Agreements,no commercial paper was outstanding,an

129、d we had$250 million of the letter of credit sublimit unused under the Credit Agreements.Outstanding commercial paper reduces the amount available to borrow under the Credit Agreements.The Credit Agreements contain a financial covenant requiring us to maintain a ratio of debt to consolidated earning

130、s(excluding noncash retirement plans mark-to-market adjustments,noncash pension service costs,noncash asset impairment charges,business optimization and restructuring expenses,and pro forma cost savings and synergies associated with an acquisition)before interest,taxes,depreciation,and amortization(

131、“adjusted EBITDA”)of not more than 3.5 to 1.0,calculated as of the last day of each fiscal quarter on a rolling four-quarters basis.The ratio of our debt to adjusted EBITDA was 1.8 at February 28,2025.Additional information on the financial covenant can be found in our Annual Report.The financial co

132、venant discussed above is the only significant restrictive covenant in the Credit Agreements.The Credit Agreements contain other customary covenants that do not,individually or in the aggregate,materially restrict the conduct of our business.We are in compliance with the financial covenant and all o

133、ther covenants in the Credit Agreements and do not expect the covenants to affect our operations,including our liquidity or expected funding needs.If we failed to comply with the financial covenant or any other covenants in the Credit Agreements,our access to financing could become limited.Our comme

134、rcial paper program is backed by unused commitments under the Credit Agreements,and borrowings under the program reduce the amount available under the Credit Agreements.Long-term debt,including current maturities and exclusive of finance leases,had carrying values of$19.6 billion at February 28,2025

135、 and$19.8 billion at May 31,2024,compared with estimated fair values of$17.5 billion at February 28,2025 and$17.5 billion at May 31,2024.The annualized weighted-average interest rate on long-term debt was 3.5%at February 28,2025.The estimated fair values were determined based on quoted market prices

136、 and the current rates offered for debt with similar terms and maturities.The fair value of our long-term debt is classified as Level 2 within the fair value hierarchy.DEBT EXCHANGE OFFERS AND CONSENT SOLICITATIONS.In January 2025,in connection with the planned separation of FedEx Freight,we commenc

137、ed offers to exchange any and all of$16.2 billion of FedExs outstanding senior notes(22 series in total)for new notes to be issued by FedEx.Concurrently with the exchange offers,we also solicited consents from eligible holders of such -15-notes to adopt certain proposed amendments to each of the ind

138、entures governing such notes to provide for the automatic and unconditional release and discharge of the guarantee of FedEx Freight with respect to that series of notes at the time FedEx Freight ceases to be a subsidiary of FedEx in connection with the planned separation(the“Proposed Amendments”).We

139、 completed the exchange offers and consent solicitations in February 2025.An aggregate of$10.7 billion principal amount of U.S.dollar-denominated notes and 940 million principal amount of euro-denominated notes were validly tendered and not properly withdrawn,and the requisite consents were received

140、 to adopt the Proposed Amendments with respect to an aggregate of$15.9 billion principal amount of our outstanding senior notes(21 of the 22 series in scope).The new notes issued in connection with the exchange offer have the same interest rate,interest payment dates,maturity date,and optional redem

141、ption provisions as the corresponding series of existing notes;provided that(a)the methodology for calculating any make-whole redemption price for the USD-denominated notes will reflect the SIFMA model provisions and(b)FedEx will be permitted to deliver notices of redemption that are subject to one

142、or more conditions precedent with respect to the notes.NOTE 5:ACQUISITIONSOn February 4,2025,we acquired RouteSmart Technologies,Inc.(“RouteSmart”),a global leader in route planning and optimization solutions,for$113 million in FedEx common shares from treasury stock and cash from operations.The maj

143、ority of the purchase price was allocated to intangible assets and goodwill.The financial results of RouteSmart are included in the FedEx Dataworks operating segment under“Corporate,other and eliminations”from the date of acquisition and were not material to our results of operations or financial co

144、ndition;therefore,pro forma financial information has not been provided.NOTE 6:COMPUTATION OF EARNINGS PER SHARE The calculation of basic and diluted earnings per common share for the periods ended February 28,2025 and February 29,2024 was as follows(in millions,except per share amounts):Three Month

145、s Ended Nine Months Ended 2025 2024 2025 2024 Basic earnings per common share:Net earnings allocable to common shares$908$878$2,441$2,853 Weighted-average common shares 240 247 242 249 Basic earnings per common share$3.79$3.55$10.09$11.43 Diluted earnings per common share:Net earnings allocable to c

146、ommon shares$908$878$2,441$2,853 Weighted-average common shares 240 247 242 249 Dilutive effect of share-based awards 2 3 2 3 Weighted-average diluted shares 242 250 244 252 Diluted earnings per common share$3.76$3.51$9.99$11.31 Anti-dilutive options excluded from diluted earnings per common share 4

147、.1 6.3 4.1 6.3 Net earnings available to participating securities were$1 million and$1 million for the three-month periods ended February 28,2025 and February 29,2024,respectively,and$3 million and$4 million for the nine-month periods ended February 28,2025 and February 29,2024,respectively.NOTE 7:R

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

149、sts for the periods ended February 28,2025 and February 29,2024 were as follows(in millions):Three Months Ended Nine Months Ended 2025 2024 2025 2024 Defined benefit pension plans$69$92$209$274 Defined contribution plans 278 240 853 722 Postretirement healthcare plans 22 20 65 64$369$352$1,127$1,060

150、 (1)(1)(1)-16-Net periodic benefit cost of the pension and postretirement healthcare plans for the periods ended February 28,2025 and February 29,2024 included the following components(in millions):Three Months Ended U.S.Pension Plans International Pension Plans Postretirement Healthcare Plans 2025

151、2024 2025 2024 2025 2024 Service cost$125$136$9$9$6$7 Other retirement plans expense(income):Interest cost 361 341 10 10 17 15 Expected return on plan assets (430)(400)(4)(2)Amortization of prior service credit and other (2)(2)(1)(2)(71)(61)6 8 16 13 Net periodic benefit cost$54$75$15$17$22$20 Nine

152、Months Ended U.S.Pension Plans International Pension Plans Postretirement Healthcare Plans 2025 2024 2025 2024 2025 2024 Service cost$374$408$29$29$19$21 Other retirement plans expense(income):Interest cost 1,085 1,022 32 32 49 45 Expected return on plan assets (1,290)(1,199)(16)(13)Amortization of

153、prior service credit and other (6)(5)1 (3)(2)(211)(182)17 19 46 43 Net periodic benefit cost$163$226$46$48$65$64 For 2025,no pension contributions are required for our tax-qualified U.S.domestic pension plan(“U.S.Pension Plan”)as it is fully funded under the Employee Retirement Income Security Act.W

154、e made voluntary contributions of$800 million to our U.S.Pension Plan during the nine-month period ended February 28,2025.NOTE 8:BUSINESS SEGMENT INFORMATIONWe provide a broad portfolio of transportation,e-commerce,and business services,offering integrated business solutions utilizing our flexible,e

155、fficient,and intelligent global network.Our primary operating companies are Federal Express,the worlds largest express transportation company and a leading North American provider of small-package ground delivery services,and FedEx Freight,a leading North American provider of LTL freight transportat

156、ion services.These companies represent our major service lines and constitute our reportable segments.Our reportable segments include the following businesses:Federal Express SegmentFederal Express(express transportation,small-package ground delivery,and freight transportation)FedEx Freight SegmentF

157、edEx Freight(LTL freight transportation)FedEx Custom Critical(time-critical transportation)References to our transportation segments include,collectively,the Federal Express segment and the FedEx Freight segment.The Federal Express segment operates combined sales,marketing,administrative,and informa

158、tion-technology functions in shared service operations for U.S.customers of our major business units and certain back-office support to FedEx Freight and our other operating segments which allows us to obtain synergies from the combination of these functions.We allocate the net operating costs of th

159、ese services to reflect the full cost of operating our businesses in the results of those segments.We review and evaluate the performance of FedEx Freight and our other operating segments based on operating income inclusive of these allocations.Operating expenses for our FedEx Freight segment includ

160、e allocations of these services from the Federal Express segment.These allocations also include charges and credits for administrative services provided between operating companies.The allocations of net operating costs are based on metrics such as relative revenue or estimated services provided.We

161、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.-17-Corporate,Other,and Eliminations Corporate and other includes corporate headquarters costs for executive officer

162、s and certain legal and finance functions,certain other costs and credits not attributed to our core business,and certain costs associated with developing integrated business solutions through our FedEx Dataworks operating segment.FedEx Dataworks is focused on creating solutions to transform the dig

163、ital and physical experiences of our customers and team members.Also included in Corporate and other are 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 o

164、perating 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 provi

165、de transportation and related services for other FedEx companies outside their reportable segment in order to optimize our resources.Billings for such services are based on negotiated rates and are reflected as revenue of the billing segment.These rates are adjusted from time to time based on market

166、 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(l

167、oss)to our unaudited condensed consolidated financial statement totals for the periods ended February 28,2025 and February 29,2024(in millions):Three Months Ended Nine Months Ended 2025 2024 2025 2024 Revenue:Federal Express segment$19,181$18,672$56,327$55,871 FedEx Freight segment 2,089 2,205 6,595

168、 7,042 Other and eliminations 890 861 2,784 2,671$22,160$21,738$65,706$65,584 Operating income(loss):Federal Express segment$1,294$1,173$3,299$3,514 FedEx Freight segment 261 341 1,012 1,314 Corporate,other,and eliminations (263)(271)(887)(824)$1,292$1,243$3,424$4,004 The following table provides a

169、reconciliation of reportable segment assets to our unaudited condensed consolidated financial statement totals as of the periods presented(in millions):February 28,2025(Unaudited)May 31,2024 Total assets:Federal Express segment$72,252$73,259 FedEx Freight segment 12,479 11,615 Corporate,other,and el

170、iminations 312 2,133$85,043$87,007 -18-NOTE 9:COMMITMENTS As of February 28,2025,our purchase commitments under various contracts for the remainder of 2025 and annually thereafter were as follows(in millions):Aircraft and Aircraft Related Other Total 2025(remainder)$429$192$621 2026 925 800 1,725 20

171、27 278 560 838 2028 587 395 982 2029 393 323 716 Thereafter 1,258 100 1,358 Total$3,870$2,370$6,240(1)Primarily software and advertising.The amounts reflected in the table above for purchase commitments represent noncancelable agreements to purchase goods or services.Open purchase orders that are ca

172、ncelable are not considered unconditional purchase obligations for financial reporting purposes and are not included in the table above.As of February 28,2025,we had$594 million in deposits and progress payments on aircraft purchases and other planned aircraft-related transactions.These deposits are

173、 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 28,2025 with the year of expect

174、ed delivery:Cessna SkyCourier 408 ATR 72-600F B767F B777F Total 2025(remainder)5 1 2 2 10 2026 18 6 7 31 2027 2028 4 2 6 2029 4 4 Thereafter 2 2 Total 23 17 9 4 53 A summary of future minimum lease payments under noncancelable operating and finance leases with an initial or remaining term in excess

175、of one year as of February 28,2025 is as follows(in millions):Aircraftand RelatedEquipment Facilitiesand Other TotalOperatingLeases Finance Leases Total Leases 2025(remainder)$32$603$635$13$648 2026 125 3,065 3,190 57 3,247 2027 124 2,684 2,808 56 2,864 2028 124 2,338 2,462 56 2,518 2029 117 1,959 2

176、,076 53 2,129 Thereafter 138 9,179 9,317 655 9,972 Total lease payments 660 19,828 20,488 890 21,378 Less imputed interest (73)(3,525)(3,598)(328)(3,926)Present value of lease liability$587$16,303$16,890$562$17,452 While certain of our lease agreements contain covenants governing the use of the leas

177、ed assets or require us to maintain certain levels of insurance,none of our lease agreements include material financial covenants or limitations.As of February 28,2025,FedEx has entered into additional leases which have not yet commenced and are therefore not part of the right-of-use asset and liabi

178、lity.These leases are generally for build-to-suit facilities and have undiscounted future payments of(1)-19-approximately$0.9 billion that will commence when FedEx gains beneficial access to the leased asset.Commencement dates are expected to be from 2025 to 2027.In March 2025,Federal Express exerci

179、sed options to purchase eight B777F aircraft,three of which are expected to be delivered in calendar year 2026 and five of which are expected to be delivered in calendar year 2027.NOTE 10:CONTINGENCIESService Provider Lawsuits.Federal Express,as successor to FedEx Ground,is defending against lawsuit

180、s in which it is alleged that Federal Express should be treated as an employer or joint employer of drivers employed by service providers engaged by Federal Express.These cases are in varying stages of litigation,and we are not currently able to estimate an amount or range of potential loss in all o

181、f these matters.However,we do not expect to incur,individually or in the aggregate,a material loss in these matters.Nevertheless,adverse determinations in these matters could,among other things,entitle service providers drivers to certain payments,including wages and penalties,from the service provi

182、ders and Federal Express and result in employment and withholding tax and benefit liability for Federal Express.We continue to believe that Federal Express is not an employer or joint employer of the drivers of these independent businesses.FedEx Ground Negligence Lawsuit.In December 2022,FedEx Groun

183、d was named as a defendant in a lawsuit filed in Texas state court related to the alleged kidnapping and first-degree murder of a minor by a driver employed by a service provider engaged by FedEx Ground.The complaint alleged compensatory and punitive damages against FedEx Ground for negligence and g

184、ross negligence,hiring and retention,as well as negligent entrustment.The service provider and driver were also named as defendants in the lawsuit.In February 2025,we reached an agreement to settle the lawsuit for an amount below the previously established immaterial accrual.The accrual now reflects

185、 the amount of the settlement.Other Matters.FedEx and its subsidiaries are subject to other legal proceedings that arise in the ordinary course of business,including certain lawsuits containing various class-action allegations of wage-and-hour violations in which plaintiffs claim,among other things,

186、that they were forced to work“off the clock,”were not paid overtime,or were not provided work breaks or other benefits,as well as other lawsuits containing allegations that FedEx and its subsidiaries are responsible for third-party losses related to vehicle accidents that could exceed our insurance

187、coverage for such losses.In the opinion of management,the aggregate liability,if any,with respect to these other actions will not have a material adverse effect on our financial position,results of operations,or cash flows.Environmental Matters.SEC regulations require us to disclose certain informat

188、ion about proceedings arising under federal,state,or local environmental provisions involving a governmental authority as a party if we reasonably believe that such proceedings may result in monetary sanctions above a stated threshold.Pursuant to the SEC regulations,FedEx uses a threshold of$1 milli

189、on or more for purposes of determining whether disclosure of any such proceedings is required.Applying this threshold,there are no environmental matters required to be disclosed for this period.NOTE 11:SUPPLEMENTAL CASH FLOW INFORMATIONCash paid for interest expense and income taxes for the nine-mon

190、th periods ended February 28,2025 and February 29,2024 was as follows(in millions):2025 2024 Cash payments for:Interest(net of capitalized interest)$582$538 Income taxes$1,223$1,265 Income tax refunds received (26)(97)Cash tax payments/(refunds),net$1,197$1,168 Noncash investing and financing activi

191、ties for the nine-month periods ended February 28,2025 and February 29,2024 was as follows(in millions):2025 2024 Assets obtained in exchange for finance lease obligations$167$10 Shares of common stock issued from treasury stock for acquisition$90$-20-REPORT OF INDEPENDENT REGISTEREDPUBLIC ACCOUNTIN

192、G FIRM To the Stockholders and Board of Directors ofFedEx CorporationResults of Review of Interim Financial StatementsWe have reviewed the accompanying condensed consolidated balance sheet of FedEx Corporation(the Company)as of February 28,2025,the related condensed consolidated statements of income

193、,comprehensive income,and changes in common stockholders investment for the three-and nine-month periods ended February 28,2025 and February 29,2024,the condensed consolidated statements of cash flows for the nine-month periods ended February 28,2025 and February 29,2024,and the related notes(collec

194、tively 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 princ

195、iples.We have previously audited,in accordance with the standards of the Public Company Accounting Oversight Board(United States)(PCAOB),the consolidated balance sheet of the Company as of May 31,2024,the related consolidated statements of income,comprehensive income,cash flows,and changes in common

196、 stockholders investment for the year then ended,and the related notes(not presented herein);and in our report dated July 15,2024,we expressed an unqualified audit opinion on those consolidated financial statements.In our opinion,the information set forth in the accompanying condensed consolidated b

197、alance sheet as of May 31,2024,is fairly stated,in all material respects,in relation to the consolidated balance sheet from which it has been derived.Basis for Review Results These financial statements are the responsibility of the Companys management.We are a public accounting firm registered with

198、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

199、 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 rega

200、rding the financial statements taken as a whole.Accordingly,we do not express such an opinion./s/Ernst&Young LLP Memphis,TennesseeMarch 20,2025-21-ITEM 2.MANAGEMENTS DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITIONGENERALThe following Managements Discussion and Analysis of Re

201、sults 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 c

202、ondensed consolidated financial statements and our Annual Report on Form 10-K for the year ended May 31,2024(“Annual Report”).Our Annual Report includes additional information about our significant accounting policies,practices,and the transactions that underlie our financial results,as well as a de

203、tailed discussion of the most significant risks and uncertainties associated with our financial condition and operating results.We provide a broad portfolio of transportation,e-commerce,and business services,offering integrated business solutions utilizing our flexible,efficient,and intelligent glob

204、al network.Our primary operating companies are Federal Express Corporation(“Federal Express”),the worlds largest express transportation company and a leading North American provider of small-package ground delivery services,and FedEx Freight,Inc.(“FedEx Freight”),a leading North American provider of

205、 less-than-truckload(“LTL”)freight transportation services.See“Reportable Segments”for further discussion.Additional information on our businesses can be found in our Annual Report.In connection with our one FedEx consolidation plan,on June 1,2024,FedEx Ground Package System,Inc.(“FedEx Ground”)and

206、FedEx Corporate Services,Inc.(“FedEx Services”)were merged into Federal Express,becoming a single company operating a unified,fully integrated air-ground express network under the respected FedEx brand.FedEx Freight continues to provide LTL freight transportation services as a separate subsidiary.Be

207、ginning in the first quarter of 2025,Federal Express and FedEx Freight represent our major service lines and constitute our reportable segments.Additionally,the results of FedEx Custom Critical,Inc.(“FedEx Custom Critical”)are included in the FedEx Freight segment instead of the Federal Express segm

208、ent in 2025.Prior-year amounts were revised to reflect this presentation.In December 2024,we announced that FedExs Board of Directors decided to pursue a full separation of FedEx Freight through the capital markets,creating a new publicly traded company.The transaction,which would be implemented thr

209、ough the spin-off of shares of the new company to FedEx stockholders,is expected to be tax-free for U.S.federal income tax purposes for FedEx stockholders and be completed by June 2026.See Part II,Item 1A.“Risk Factors The planned spin-off of FedEx Freight may not be completed on the terms or timeli

210、ne currently contemplated,if at all,and there is no guarantee that the spin-off,if completed,will achieve the intended financial and strategic benefits.”In January 2025,the Board of Directors approved a change in FedExs fiscal year end from May 31 to December 31.The fiscal year change will be effect

211、ive June 1,2026.Except as otherwise specified,references to years indicate our fiscal year ending May 31,2025 or ended May 31 of the year referenced,and comparisons are to the corresponding period of the prior year.References to our transportation segments include,collectively,the Federal Express se

212、gment and the FedEx Freight segment.The key indicators necessary to understand our operating results include:the overall customer demand for our various services based on macroeconomic factors and the global economy;the volumes of transportation services provided through our networks,primarily measu

213、red by our average daily volume and shipment weight and size;the mix of services purchased by our customers;the prices we obtain for our services,primarily measured by yield(revenue per package or pound or revenue per shipment or hundredweight for LTL freight shipments);our ability to manage our cos

214、t structure(capital expenditures and operating expenses)to match shifting volume levels;andthe timing and amount of fluctuations in fuel prices and our ability to recover incremental fuel costs through our fuel surcharges.-22-Trends Affecting Our BusinessThe following trends significantly affect the

215、 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

216、 Optimization Costs and Outlook”and“Financial Condition Liquidity Outlook”below for additional information on efforts we are taking to mitigate adverse trends.Macroeconomic ConditionsWhile macroeconomic risks apply to most companies,we are particularly vulnerable.The transportation industry is highl

217、y cyclical and especially susceptible to trends in economic activity.Our primary business is to transport goods,so our business levels are directly tied to the purchase and production of goods and the rate of global trade growth.The decline in U.S.imports of consumer goods that started in late 2022,

218、along with slowed global industrial production,has contributed to weakened business conditions for the transportation industry.Consequently,this environment has led to lower shipments at FedEx Freight,negatively affecting our results in the third quarter and nine months of 2025.Additionally,the U.S.

219、presidential administration is in the process of significantly increasing the rates and broadening the scope of tariffs imposed on goods imported into the U.S.In response,several foreign governments have imposed new tariffs on certain goods imported from the U.S.,and additional retaliatory measures

220、against U.S.goods are expected.These or additional changes in U.S.or international trade policy,along with continued uncertainty surrounding such policies,could lead to further weakened business conditions for the transportation industry.Inflation and Interest RatesDuring the third quarter and nine

221、months of 2025,global inflation decelerated year-over-year but continues to be above historical levels.Additionally,global interest rates remained elevated in an effort to curb inflation.We are experiencing pressure on demand for our transportation services,particularly our priority services,as elev

222、ated inflation and interest rates are negatively affecting consumer and business spending.We expect inflation and high interest rates to continue to negatively affect our results of operations for the remainder of 2025.The changes in trade policy discussed above under“Macroeconomic Conditions”could

223、exacerbate global inflation.FuelWe 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 cost

224、s through our fuel surcharges can significantly affect our operating results either positively or negatively in the short-term.During the third quarter and nine months of 2025,lower fuel prices negatively affected yields through lower fuel surcharges at FedEx Freight and reduced fuel expense at both

225、 of our transportation segments.Geopolitical ConflictsGiven the nature of our business and global operations,geopolitical conflicts may adversely affect our business and results of operations.While we do not expect ongoing geopolitical conflicts between Russia and Ukraine and in the Middle East to h

226、ave a direct material effect on our business or results of operations,the broader consequences are adversely affecting the global economy and may also have the effect of heightening other risks disclosed in our Annual Report.RESULTS OF OPERATIONSMany of our operating expenses are directly affected b

227、y 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 r

228、elated to changes in revenue and volumes.The line item“Other”includes costs associated with outside service contracts(such as information technology services,temporary labor,facilities services,and security),insurance,professional fees,and operational supplies.-23-CONSOLIDATED RESULTSThe following t

229、ables compare summary operating results and changes in revenue and operating income(loss)(dollars in millions,except per share amounts)for the periods ended February 28,2025 and February 29,2024:Three Months Ended Percent Nine Months Ended Percent 2025 2024 Change 2025 2024 Change Revenue$22,160$21,

230、738 2$65,706$65,584 Operating income(loss):Federal Express segment 1,294 1,173 10 3,299 3,514 (6)FedEx Freight segment 261 341 (23)1,012 1,314 (23)Corporate,other,and eliminations (263)(271)3 (887)(824)(8)Consolidated operating income 1,292 1,243 4 3,424 4,004 (14)Operating margin:Federal Express se

231、gment 6.7%6.3%40 bp 5.9%6.3%(40)bpFedEx Freight segment 12.5%15.5%(300)bp 15.3%18.7%(340)bpConsolidated operating margin 5.8%5.7%10 bp 5.2%6.1%(90)bpConsolidated net income$909$879 3$2,444$2,857 (14)Diluted earnings per share$3.76$3.51 7$9.99$11.31 (12)Year-over-Year Changes Revenue Operating Income

232、(Loss)Three MonthsEnded Nine Months Ended Three MonthsEnded Nine Months Ended Federal Express segment$509$456$121$(215)FedEx Freight segment (116)(447)(80)(302)Corporate,other,and eliminations 29 113 8 (63)$422$122$49$(580)OverviewOperating income increased 4%in the third quarter and decreased 14%in

233、 the nine months of 2025.Operating income for the third quarter and nine months of 2025 was positively affected by continued savings related to DRIVE,increased transportation segment base yields,and higher demand for U.S.ground and international export package services.Our DRIVE initiatives for the

234、nine months of 2025 included the continued transformation of our structural network,improving the efficiency of our information technology and back-office functions,optimizing operations in Europe,and increasing linehaul efficiencies.Operating income for the third quarter and nine months of 2025 was

235、 negatively affected by increased purchased transportation and wage rates,the expiration of our contract with the U.S.Postal Service(“USPS”),higher business optimization costs,and lower fuel surcharges at FedEx Freight.The results for the nine months of 2025 were also negatively affected by one fewe

236、r operating day.Operating income includes expenses of$179 million($137 million,net of tax,or$0.56 per diluted share)in the third quarter and$633 million($484 million,net of tax,or$1.98 per diluted share)in the nine months of 2025 associated with our business optimization strategy to drive efficiency

237、 and lower our overhead and support costs.We recognized$114 million($87 million,net of tax,or$0.35 per diluted share)of expenses in the third quarter and$364 million($278 million,net of tax,or$1.10 per diluted share)in the nine months of 2024 under this program.See the“Business Optimization Costs”se

238、ction of this MD&A for more information.Operating income includes net expenses of$38 million($29 million,net of tax,or$0.12 per diluted share)in the third quarter of 2025 for international regulatory and legacy FedEx Ground legal matters.We incurred costs related to the planned spin-off of FedEx Fre

239、ight of$23 million($17 million,net of tax,or$0.07 per diluted share)in the third quarter of 2025.These costs consist of$18 million related to the debt exchange offer and consent solicitation transactions discussed in Note 4 of the accompanying unaudited condensed consolidated financial statements wh

240、ich is included in interest,net and$5 million of professional fees which is included in other.We did not incur any FedEx Freight spin-off costs in the first half of 2025 or in the three or nine months of 2024.We repurchased an aggregate of$497 million of our common stock through open market transact

241、ions during the third quarter of 2025.During the nine-month period ended February 28,2025,we repurchased 8.9 million shares of FedEx common stock through accelerated share repurchase(“ASR”)and open market transactions at an average price of$281.74 per share for a total of$2.5 billion.Share repurchas

242、es had a benefit of$0.12 per diluted share for the third quarter and$0.21 per diluted share for the nine months of 2025.As of February 28,2025,$2.6 billion remained available to be used for repurchases under the 2024 stock repurchase program.-24-See Note 1 of the accompanying unaudited condensed con

243、solidated financial statements,“Financial Condition Liquidity and Liquidity Outlook”below,and Part II,Item 2.“Unregistered Sales of Equity Securities and Use of Proceeds”of this Form 10-Q for additional information.Prior year statistical information has been revised to conform to the current year pr

244、esentation.The following graphs for Federal Express and FedEx Freight show selected volume trends(in thousands)calculated on a 5-day-per-week basis over the five most recent quarters:International domestic average daily package volume relates to our international intra-country operations.Internation

245、al export average daily package volume relates to our international priority and economy services.International average daily freight pounds relate to our international priority and economy services.(1)(2)-25-Prior year statistical information has been revised to conform to the current year presenta

246、tion.The following graphs for Federal Express and FedEx Freight show selected yield trends over the five most recent quarters:International export revenue per package relates to our international priority and economy services.International domestic revenue per package relates to our international in

247、tra-country operations.International freight revenue per pound relates to our international priority and economy services.(1)(2)-26-RevenueRevenue increased 2%in the third quarter and was flat in the nine months of 2025 primarily due to base yield improvement at both of our transportation segments a

248、nd higher volume at Federal Express,offset by lower volume and fuel surcharges at FedEx Freight and unfavorable currency exchange rates.The increases in revenue during the nine months of 2025 were also offset by one fewer operating day at both of our transportation segments and reduced demand surcha

249、rges at Federal Express.Federal Express segment revenue increased 3%in the third quarter and 1%in the nine months of 2025 primarily due to increased deferred and U.S.ground package volume and improved base yields,offset by lower priority package volume,the expiration of our contract with the USPS on

250、 September 29,2024,and unfavorable currency exchange rates.Federal Express revenue for the nine months of 2025 was also negatively affected by one fewer operating day and reduced demand surcharges.FedEx Freight revenue decreased 5%in the third quarter and 6%in the nine months of 2025 primarily due t

251、o lower shipments,fuel surcharges,and weight per shipment,partially offset by base yield improvement.FedEx Freight revenue for the nine months of 2025 was also negatively affected by one fewer operating day.Revenue at Corporate,other,and eliminations increased in the third quarter and nine months of

252、 2025 primarily due to higher yields and volume at FedEx Logistics,Inc.(“FedEx Logistics”).Operating ExpensesThe following table compares operating expenses expressed as dollar amounts(in millions)and as a percent of revenue for the periods ended February 28,2025 and February 29,2024:Three Months En

253、ded Percent Nine Months Ended Percent 2025 2024 Change 2025 2024 Change Operating expenses:Salaries and employee benefits$7,879$7,693 2$23,543$23,311 1 Purchased transportation 5,634 5,345 5 16,409 15,776 4 Rentals and landing fees 1,178 1,145 3 3,507 3,434 2 Depreciation and amortization 1,066 1,07

254、2 (1)3,207 3,183 1 Fuel 889 1,140 (22)2,911 3,569 (18)Maintenance and repairs 783 804 (3)2,443 2,482 (2)Business optimization costs 179 114 57 633 364 74 Other 3,260 3,182 2 9,629 9,461 2 Total operating expenses 20,868 20,495 2 62,282 61,580 1 Operating income$1,292$1,243 4$3,424$4,004 (14)Percent

255、of Revenue Three Months Ended Nine Months Ended 2025 2024 2025 2024 Operating expenses:Salaries and employee benefits 35.6%35.4%35.8%35.5%Purchased transportation 25.4 24.6 25.0 24.1 Rentals and landing fees 5.3 5.3 5.3 5.2 Depreciation and amortization 4.8 4.9 4.9 4.9 Fuel 4.0 5.3 4.4 5.4 Maintenan

256、ce and repairs 3.6 3.7 3.7 3.8 Business optimization costs 0.8 0.5 1.0 0.6 Other 14.7 14.6 14.7 14.4 Total operating expenses 94.2 94.3 94.8 93.9 Operating margin 5.8%5.7%5.2%6.1%Operating income increased 4%in the third quarter and decreased 14%in the nine months of 2025.Operating income for the th

257、ird quarter and nine months of 2025 was positively affected by continued savings related to DRIVE,increased transportation segment base yields,and higher demand for U.S.ground and international export package services.Operating income for the third quarter and nine months of 2025 was negatively affe

258、cted by increased purchased transportation and wage rates,the expiration of our contract with the USPS,higher business optimization costs,and lower fuel surcharges at FedEx Freight.The results for the nine months of 2025 were also negatively affected by one fewer operating day.Purchased transportati

259、on expense increased 5%in the third quarter and 4%in the nine months of 2025 primarily due to higher rates as well as an increase in commercial linehaul to support international economy volume growth and network changes,partially offset by savings from our DRIVE initiatives,lower fuel prices,and fav

260、orable currency exchange rates.Purchased transportation also increased -27-in the third quarter of 2025 due to higher U.S.ground volume.Salaries and employee benefits expense increased 2%in the third quarter and 1%in the nine months of 2025 primarily due to an increase in wage rates,increased staffi

261、ng to align with higher volume,and an increase in retirement benefits due to changes in our deferred contribution plan that increased the number of eligible employees at Federal Express,partially offset by savings from our DRIVE initiatives and favorable currency exchange rates.Variable incentive co

262、mpensation had a negative effect on salaries and employee benefits expense for the third quarter and a positive effect for the nine months of 2025.Other operating expenses increased 2%in both the third quarter and nine months of 2025 primarily due to an increase in self-insurance accruals.Fuel expen

263、se decreased 22%in the third quarter and 18%in the nine months of 2025 primarily due to a decrease in fuel prices and usage.Business Optimization CostsIn the second quarter of 2023,we announced DRIVE,a comprehensive program to improve long-term profitability.This program includes a business optimiza

264、tion plan to drive efficiency within and among our transportation segments,lower our overhead and support costs,and transform our digital capabilities.We have commenced our plan to consolidate our sortation facilities and equipment,reduce pickup-and-delivery routes,and optimize our enterprise lineha

265、ul network by moving beyond discrete collaboration to an end-to-end optimized network through Network 2.0,the multi-year effort to improve the efficiency with which FedEx picks up,transports,and delivers packages in the U.S.and Canada.We have implemented Network 2.0 optimization in more than 200 loc

266、ations in the U.S.and Canada.Contracted service providers will handle the pickup and delivery of Federal Express packages in some locations while employee couriers will handle others.In June 2024,Federal Express announced a workforce reduction plan in Europe as part of its ongoing measures to reduce

267、 structural costs.The plan will impact approximately 1,500 employees in Europe across back-office and commercial functions.The execution of the plan is subject to a consultation process that is expected to occur over an 18-month period in accordance with local country processes and regulations.We ex

268、pect savings from the plan to be between$125 million and$175 million on an annualized basis beginning in 2027.We incurred business optimization costs,including the workforce reduction plan in Europe,of$179 million($137 million,net of tax,or$0.56 per diluted share)in the third quarter and$633 million

269、($484 million,net of tax,or$1.98 per diluted share)in the nine months of 2025.These costs were primarily related to professional services and severance and are included in Federal Express and Corporate,other,and eliminations.We incurred business optimization costs of$114 million($87 million,net of t

270、ax,or$0.35 per diluted share)in the third quarter and$364 million($278 million,net of tax,or$1.10 per diluted share)in the nine months of 2024.These costs were primarily related to professional services and severance and are included in Corporate,other,and eliminations and Federal Express.We expect

271、the pre-tax cost of the severance benefits and legal and professional fees to be provided under and related to our workforce reduction plan in Europe to range from$250 million to$300 million in cash expenditures through 2026.In the nine months of 2025,we incurred$220 million of costs related to this

272、 plan.We expect the aggregate pre-tax cost of our business optimization activities to be approximately$1.7 billion through 2025.The timing and amount of our business optimization expenses and the related cost savings from the workforce reduction plan may change as we revise and implement our plans.T

273、he identification of costs as business optimization-related expenditures is subject to our disclosure controls and procedures.FedEx Freight Spin-Off CostsWe incurred costs related to the planned spin-off of FedEx Freight of$23 million($17 million,net of tax,or$0.07 per diluted share)in the third qua

274、rter of 2025.These costs are included in Corporate,other,and eliminations and consist of$18 million related to the debt exchange offer and consent solicitation transactions discussed in Note 4 of the accompanying unaudited condensed consolidated financial statements which is included in interest,net

275、 and$5 million of professional fees which is included in other.We did not incur any FedEx Freight spin-off costs in the first half of 2025 or in the three or nine months of 2024.Income TaxesOur effective tax rate was 23.0%for the third quarter and 24.1%for the nine months of 2025,compared to 25.7%fo

276、r the third quarter and 25.0%for the nine months of 2024.The third quarter 2025 tax rate was favorably impacted by a net tax benefit of$46 million arising primarily from changes in our corporate legal entity structure and revisions of prior year estimates for actual tax return results.We are subject

277、 to taxation in the U.S.and various U.S.state,local,and foreign jurisdictions.We are currently under examination by the Internal Revenue Service for the 2016 through 2021 tax years.It is reasonably possible that certain income tax return proceedings will be completed during the next 12 months and co

278、uld 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.-28-During 2021,we filed suit in U.S.District Court for the Western District of Tennessee challenging

279、the validity of a tax regulation related to the one-time transition tax on foreign earnings not repatriated,which was enacted as part of the Tax Cuts and Jobs Act(“TCJA”).Our lawsuit seeks to have the court declare this regulation invalid and order the refund of overpayments of U.S.federal income ta

280、xes for 2018 and 2019 attributable to the denial of foreign tax credits under the regulation.We have recorded a cumulative benefit of$226 million attributable to our interpretation of the TCJA and the Internal Revenue Code.In March 2023,the District Court ruled that the regulation is invalid and con

281、tradicts the plain terms of the tax code.On February 13,2025,the District Court ruled again in our favor with regard to a new argument raised by the U.S.government.We continue to work towards obtaining a final judgment for the applicable refund amounts due to the regulation being invalid.Once the Di

282、strict 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.OutlookIn the remainder of 2025,we expect revenue

283、 to continue to be pressured by macroeconomic conditions,including uncertainty related to international trade,negatively affecting customer demand and constraining yield growth.We anticipate a continued mix shift to deferred services offerings to negatively affect results.We will continue to execute

284、 on our DRIVE program initiatives focused on reducing our permanent cost structure,aligning our cost base with demand,and increasing the flexibility of our network.We will also continue to execute on our revenue quality strategy and pursue profitable revenue growth opportunities to mitigate the impa

285、ct of the service mix shift on our yield as well as base yield pressures through surcharge management and optimizing our customer mix.We expect the benefits from DRIVE and revenue quality initiatives to be partially offset by expense headwinds related to higher global inflation,the unfavorable effec

286、t of the expiration in September 2024 of the contract for Federal Express to provide the USPS U.S.domestic transportation services,and one fewer operating day in the fourth quarter.See the“Business Optimization Costs”section of this MD&A for additional information on our DRIVE program,workforce redu

287、ction plan in Europe,and other cost savings initiatives.Our capital expenditures for 2025 are expected to be approximately$4.9 billion,$0.3 billion lower than 2024,as we continue to reduce our capital intensity relative to revenue.Aircraft spend is expected to decline,partially offset by increased i

288、nvestments in network optimization and modernization of our facilities.We will continue to evaluate our investments in critical long-term strategic projects to ensure our capital expenditures are expected to generate high returns on investment and are balanced with our outlook for global economic co

289、nditions.For additional details on key 2025 capital projects,refer to the“Financial Condition Capital Resources”and“Financial Condition Liquidity Outlook”sections of this MD&A.The uncertainty of a slowdown in the global economy,global inflation,geopolitical challenges,developments in international t

290、rade,and the effects these factors will have on the rate of growth of global trade,supply chains,fuel prices,and our business in particular,make any expectations for the remainder of 2025 inherently less certain.See“Item 1A.Risk Factors”for more information.See the“Trends Affecting Our Business,”“Cr

291、itical Accounting Estimates,”and“Forward-Looking Statements”sections of this MD&A for additional information.RECENT ACCOUNTING GUIDANCESee Note 1 of the accompanying unaudited condensed consolidated financial statements for a discussion of recent accounting guidance.REPORTABLE SEGMENTSFederal Expres

292、s and FedEx Freight represent our major service lines and constitute our reportable segments.Our reportable segments include the following businesses:Federal Express SegmentFederal Express(express transportation,small-package ground delivery,and freight transportation)FedEx Freight SegmentFedEx Frei

293、ght(LTL freight transportation)FedEx Custom Critical(time-critical transportation)The Federal Express segment operates combined sales,marketing,administrative,and information-technology functions in shared service operations for U.S.customers of our major business units and certain back-office suppo

294、rt to FedEx Freight and our other operating segments which allows us to obtain synergies from the combination of these functions.We allocate the net operating costs -29-of these services to reflect the full cost of operating our businesses in the results of those segments.We review and evaluate the

295、performance of FedEx Freight and our other operating segments based on operating income inclusive of these allocations.Operating expenses for our FedEx Freight segment include allocations of these services from the Federal Express segment.These allocations also include charges and credits for admini

296、strative 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 perio

297、dically,as necessary,to reflect changes in our businesses.CORPORATE,OTHER,AND ELIMINATIONSCorporate and other includes corporate headquarters costs for executive officers and certain legal and finance functions,certain other costs and credits not attributed to our core business,and certain costs ass

298、ociated with developing integrated business solutions through our FedEx Dataworks,Inc.(“FedEx Dataworks”)operating segment.FedEx Dataworks is focused on creating solutions to transform the digital and physical experiences of our customers and team members.Also included in Corporate and other are the

299、 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 operating segment,which provides integrated supply chain management so

300、lutions,specialty transportation,customs brokerage,and global ocean and air freight forwarding.The results of Corporate,other,and eliminations are not allocated to the other business segments.Operating results in Corporate,other,and eliminations improved in the third quarter and declined in the nine

301、 months of 2025.Increased business optimization costs and outside service contracts expense at FedEx Dataworks were partially offset by lower salaries and employee benefits expense at FedEx Office in both the third quarter and nine months of 2025.FedEx Logistics results also improved in the third qu

302、arter of 2025 primarily due to higher revenue and lower salaries and employee benefits expense and other operating expense,which were partially offset by higher purchased transportation expense.Certain FedEx operating companies provide transportation and related services for other FedEx companies ou

303、tside their reportable segment in order to optimize our resources.For example,during the third quarter and nine months of 2025 FedEx Freight provided road and intermodal support for Federal Express.In addition,Federal Express works with FedEx Logistics to secure air charters and other cargo space fo

304、r U.S.customers.Billings for such services are based on negotiated rates and are reflected as revenue of the billing segment.These rates are adjusted from time to time based on market conditions.Such intersegment revenue and expenses are eliminated in our consolidated results and are not separately

305、identified in the following segment information because the amounts are not material.-30-FEDERAL EXPRESS SEGMENTFederal 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

306、delivery on a time-definite or day-definite basis.The following table compares revenue,operating expenses,operating income(dollars in millions),operating margin,and operating expenses as a percent of revenue for the periods ended February 28,2025 and February 29,2024:Three Months Ended Percent Nine

307、Months Ended Percent 2025 2024 Change 2025 2024 Change Revenue:Package:U.S.priority$2,646$2,595 2$7,800$7,873 (1)U.S.deferred 1,386 1,316 5 3,736 3,710 1 U.S.ground 8,986 8,363 7 25,298 24,805 2 Total U.S.domestic package revenue 13,018 12,274 6 36,834 36,388 1 International priority 2,097 2,317 (9)

308、6,534 7,034 (7)International economy 1,465 1,107 32 4,413 3,407 30 Total international export package revenue 3,562 3,424 4 10,947 10,441 5 International domestic 1,078 1,139 (5)3,380 3,492 (3)Total package revenue 17,658 16,837 5 51,161 50,321 2 Freight:U.S.286 641 (55)1,238 1,795 (31)International

309、 priority 551 520 6 1,717 1,641 5 International economy 470 438 7 1,462 1,380 6 Total freight revenue 1,307 1,599 (18)4,417 4,816 (8)Other 216 236 (8)749 734 2 Total revenue 19,181 18,672 3 56,327 55,871 1 Operating expenses:Salaries and employee benefits 6,390 6,141 4 18,920 18,520 2 Purchased tran

310、sportation 5,196 4,954 5 15,064 14,611 3 Rentals and landing fees 1,002 968 4 2,975 2,906 2 Depreciation and amortization 926 933 (1)2,779 2,787 Fuel 777 1,005 (23)2,566 3,130 (18)Maintenance and repairs 672 697 (4)2,106 2,151 (2)Business optimization costs 92 45 104 341 149 129 Intercompany allocat

311、ions (199)(167)19 (591)(510)16 Other 3,031 2,923 4 8,868 8,613 3 Total operating expenses 17,887 17,499 2 53,028 52,357 1 Operating income$1,294$1,173 10$3,299$3,514 (6)Operating margin 6.7%6.3%40 bp 5.9%6.3%(40)bpInternational domestic revenue relates to our international intra-country operations.(

312、1)(1)-31-Percent of Revenue Three Months Ended Nine Months Ended 2025 2024 2025 2024 Operating expenses:Salaries and employee benefits 33.3%32.9%33.6%33.1%Purchased transportation 27.1 26.5 26.7 26.2 Rentals and landing fees 5.2 5.2 5.3 5.2 Depreciation and amortization 4.8 5.0 4.9 5.0 Fuel 4.1 5.4

313、4.6 5.6 Maintenance and repairs 3.5 3.7 3.7 3.8 Business optimization costs 0.5 0.2 0.6 0.3 Intercompany allocations (1.0)(0.9)(1.0)(0.9)Other 15.8 15.7 15.7 15.4 Total operating expenses 93.3 93.7 94.1 93.7 Operating margin 6.7%6.3%5.9%6.3%-32-Prior year statistical information has been revised to

314、conform to the current year presentation.The following table compares selected statistics(in thousands,except yield amounts)for the periods ended February 28,2025 and February 29,2024:Three Months Ended Percent Nine Months Ended Percent 2025 2024 Change 2025 2024 Change Package Statistics Average da

315、ily package volume(ADV):U.S.priority 1,588 1,634 (3)1,597 1,664 (4)U.S.deferred 1,162 1,104 5 1,048 1,027 2 U.S.ground commercial 4,181 4,189 4,260 4,289 (1)U.S.ground home delivery/economy 7,887 7,090 11 7,092 6,826 4 Total U.S.domestic ADV 14,818 14,017 6 13,997 13,806 1 International priority 558

316、 663 (16)592 665 (11)International economy 583 393 48 552 388 42 Total international export ADV 1,141 1,056 8 1,144 1,053 9 International domestic 1,908 1,883 1 1,930 1,954 (1)Total ADV 17,867 16,956 5 17,071 16,813 2 Revenue per package(yield):U.S.priority$26.44$25.20 5$25.70 24.78 4 U.S.deferred 1

317、8.94 18.93 18.77 18.91 (1)U.S.ground 11.82 11.77 11.73 11.68 U.S.domestic composite 13.95 13.90 13.85 13.80 International priority 59.65 55.48 8 58.11 55.40 5 International economy 39.92 44.71 (11)42.03 46.00 (9)International export composite 49.57 51.47 (4)50.35 51.94 (3)International domestic 8.96

318、 9.59 (7)9.22 9.35 (1)Composite package yield 15.69 15.76 15.77 15.67 1 Freight Statistics Average daily freight pounds:U.S.2,201 6,067 (64)3,440 5,674 (39)International priority 4,485 4,353 3 4,625 4,405 5 International economy 10,990 11,072 (1)11,387 11,307 1 Total average daily freight pounds 17,

319、676 21,492 (18)19,452 21,386 (9)Revenue per pound(yield):U.S.$2.06$1.68 23$1.89$1.66 14 International priority 1.95 1.90 3 1.95 1.95 International economy 0.68 0.63 8 0.68 0.64 6 Composite freight yield 1.17 1.18 (1)1.20 1.18 2 ADV is calculated on a 5-day-per-week basis.International domestic stati

320、stics relate to our international intra-country operations.(1)(2)(2)(1)(2)-33-Federal Express Segment RevenueFederal Express segment revenue increased 3%in the third quarter and 1%in the nine months of 2025 primarily due to increased deferred and U.S.ground package volume and improved yields,partial

321、ly offset by decreases from lower priority package and U.S.freight volume and unfavorable currency exchange rates.Revenue in the nine months of 2025 was also negatively affected by one fewer operating day and reduced demand surcharges.Yield:U.S.domestic composite package yield increased slightly in

322、both the third quarter and nine months of 2025 primarily due to higher base rates from our continued focus on revenue quality.U.S.freight yield increased 23%in the third quarter and 14%in the nine months of 2025 primarily due to the expiration of our contract with the USPS on September 29,2024.Inter

323、national export composite package yield decreased 4%in the third quarter and 3%in the nine months of 2025 primarily due to unfavorable service mix.Package and freight yields were also negatively affected by reduced demand surcharges in the nine months of 2025.Volume:International economy package vol

324、ume increased 48%in the third quarter and 42%in the nine months of 2025 primarily due to continued growth in our deferred service offerings as a result of strengthening e-commerce.U.S.ground home delivery/economy package volume increased 11%in the third quarter and 4%in the nine months of 2025 prima

325、rily due to increased demand for our services and,in the third quarter of 2025,the timing of cyber week.International priority package volume decreased 16%in the third quarter and 11%in the nine months of 2025 driven by softness in the global industrial economy.U.S.average daily freight pounds decre

326、ased 64%in the third quarter and 39%in the nine months of 2025 primarily due to the expiration of our contract with the USPS on September 29,2024.U.S.priority package volume decreased 3%in the third quarter and 4%in the nine months of 2025 primarily due to economic softness and lower consumer spendi

327、ng.Federal Express Segment Operating IncomeFederal Express segment operating income increased 10%in the third quarter of 2025 due to higher base yields and volume,partially offset by increased operating expenses.Federal Express segment operating income decreased 6%in the nine months of 2025 due to i

328、ncreased operating expenses and one fewer operating day,partially offset by higher base yields and volume.The increase in operating expenses in the third quarter and nine months of 2025 was driven by increased wage and purchased transportation rates,business optimization costs,and increased employee

329、 benefits,partially offset by lower fuel prices and continued benefits from DRIVE initiatives that drove a reduction in our permanent cost structure.These initiatives included the continued transformation of our structural network,improving the efficiency of our information technology and back-offic

330、e functions,optimizing operations in Europe,and increasing linehaul efficiencies.Currency exchange rates had a negative effect on revenue and a positive effect on expenses and operating income in the third quarter and nine months of 2025.Purchased transportation expense increased 5%in the third quar

331、ter and 3%in the nine months of 2025 primarily due to higher rates as well as an increase in commercial linehaul to support international economy volume growth and network changes,partially offset by savings from our DRIVE initiatives and lower fuel prices.Purchased transportation also increased in

332、the third quarter of 2025 due to higher U.S.ground volume.Salaries and employee benefits expense increased 4%in the third quarter and 2%in the nine months of 2025 primarily due to an increase in wage rates,increased staffing to align with peak demand,and an increase in retirement benefits due to cha

333、nges to our defined contribution plan which increased the number of eligible employees,partially offset by savings from our DRIVE initiatives.In addition,variable incentive compensation was higher in the third quarter and lower in the nine months of 2025.Other operating expense increased 4%in the third quarter and 3%in the nine months of 2025 primarily due to higher self-insurance accruals.Fuel ex