DESCRIPTION OF BUSINESS. FedEx Corporation (“FedEx”) provides a broad portfolio of transportation, e-commerce, and business services, offering integrated business solutions utilizing our flexible, efficient, and intelligent global network. FedEx is the world’s largest express transportation company and a leading North American provider of small-package ground delivery services.

PRINCIPLES OF CONSOLIDATION. These interim unaudited financial statements of FedEx have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and the Securities and Exchange Commission (“SEC”) instructions for interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. All material adjustments, including normal recurring adjustments, necessary to present fairly the results for the periods presented have been reflected. The results reported in these interim unaudited financial statements should not be regarded as indicative of results that may be expected for any other period. Amounts are reported in millions of dollars, except per share amounts, unless otherwise noted. These interim financial statements should be read in conjunction with our Annual Report on Form 10-K for the twelve months ended May 31, 2026 (“Annual Report”).

SPIN-OFF. On May 13, 2026, the FedEx Board of Directors declared a pro rata dividend of 80.1% of the outstanding shares of common stock of FedEx Freight Holding Company, Inc. (“FedEx Freight”) to FedEx’s stockholders of record as of the close of business on May 15, 2026 (the “Record Date”) to achieve the separation (the “Spin-Off”). The pro rata distribution of shares was completed on June 1, 2026. FedEx Freight includes FedEx Freight, Inc., FedEx’s less-than-truckload freight transportation services business, FedEx Custom Critical, Inc., LTL Select, and other operations that historically represented our FedEx Freight reporting segment. The Spin-Off resulted in a $464 million increase to retained earnings, which is reflected in the condensed consolidated statements of changes in common stockholders’ investment. Results of operations and the financial position for FedEx Freight are reported as discontinued operations for all periods presented. The statement of cash flows has not been recast to reflect discontinued operations for any periods presented. Supplemental disclosure of operating and investing cash flows from discontinued operations is included in Note 2. Unless otherwise noted, information in these notes to the unaudited condensed consolidated financial statements relates to continuing operations. See Note 2 for additional information.

Effective following the Spin-Off, FedEx realigned certain of its business units as reflected in Note 9, which impacted the composition of its reportable segments. This resulted in the identification of two new reportable segments: Express U.S. Domestic and Express International. We performed goodwill impairment tests of our reporting units immediately prior to the Spin-Off and of our new reporting units as of June 1, 2026. Neither of these tests indicated goodwill impairment. We have recast historical periods to reflect this change in segment presentation, including the reallocation of goodwill on a relative fair value basis.

FISCAL YEAR END CHANGE. On June 1, 2026, FedEx changed its fiscal year end from May 31 to December 31. Accordingly, historical financial information presented herein has been recast to reflect the new fiscal calendar, with the comparative prior periods conforming to the current presentation. To facilitate the transition to the new fiscal reporting cycle, supplemental unaudited condensed consolidated statements of income for the one-month transition periods ended June 30, 2026 and June 30, 2025 are presented in Note 13.

SUPPLY CHAIN HELD FOR SALE. On July 1, 2026, FedEx announced that it would sell its FedEx Supply Chain business (“Supply Chain”) to CMA CGM Group as part of a strategic portfolio streamlining effort. The table below summarizes the assets and liabilities of Supply Chain that were classified as held for sale and where amounts are included within the accompanying unaudited condensed consolidated balance sheets (in millions):

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

Contract assets were $714 million and $684 million at September 30, 2026 and May 31, 2026, respectively. Contract assets are included within “Receivables” in the accompanying unaudited condensed consolidated balance sheets. Contract liabilities related to advance payments from customers were $17 million and $20 million at September 30, 2026 and May 31, 2026, respectively. Contract liabilities are included within “Accrued and other liabilities” in the accompanying unaudited condensed consolidated balance sheets.

GOODWILL. Goodwill is evaluated for impairment indicators between annual tests and tested for impairment whenever events or circumstances make it more likely than not that the fair value of a reporting unit has fallen below its carrying value. We do not believe there have been any additional change of events or circumstances that would indicate that additional reevaluation of the goodwill of our reporting units is required as of September 30, 2026, nor do we believe the goodwill of our reporting units is at risk of failing impairment testing. For additional details on goodwill impairment testing, refer to Note 1 of the financial statements included in our Annual Report.

IEEPA TARIFF REFUND PROGRAM. On February 20, 2026, the U.S. Supreme Court issued a decision invalidating tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”). On April 20, 2026, FedEx began filing refund claims through the U.S. Customs and Border Protection’s (“CBP’s”) Consolidated Administration and Processing of Entries (“CAPE”) system. FedEx recognizes amounts receivable associated with these claims when cash is received or when realization is otherwise considered probable and estimable. To the extent customers have previously paid amounts associated with these tariffs, FedEx remits corresponding refunds as soon as practicable. We recognize a liability when cash is received, which is relieved when the refund is paid. Certain amounts associated with these tariffs were not collected from customers and were previously written off as credit losses. Recoveries of such amounts are recognized in the period cash is received or when realization is reasonably assured which is generally when cash is received and are recorded as reductions of bad debt expense.

We continue to submit additional refund claims, pursuant to the CBP process, and expect to receive additional refunds as these claims are processed by CBP. The ultimate amount and timing of refunds remain uncertain due to ongoing administrative processes and potential legal developments. As of September 30, 2026 and May 31, 2026, we have submitted claims totaling $4.6 billion and $3.3 billion, respectively, and we have received cash refunds of approximately $3.3 billion and $800 million, respectively. We also have recorded $2.7 billion and $749 million as of September 30, 2026 and May 31, 2026, respectively, representing estimated customer refund obligations for cash refunds received.

Equity Method Investment: Investments in companies which we do not control but over which we exercise significant influence are accounted for under the equity method. We record the investment at cost and subsequently increase or decrease the carrying amount of the investment by our proportionate share of the net earnings or losses and other comprehensive income of the investee. The investment is evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of the investment might not be recoverable. Our equity method investment is included in “Equity method investment” in the accompanying unaudited condensed consolidated balance sheets.

Equity Securities: Investments in equity securities with a readily determinable fair value are carried at fair value and are classified as Level 1 investments in the fair value hierarchy. Level 1 investments are valued at the closing price or last trade reported on the major market on which the individual securities are traded. For equity securities without readily determinable fair values that qualify for the net asset value (“NAV”) practical expedient, we have elected to apply the NAV practical expedient to estimate fair value. Changes in fair value are recognized in “Other

We apply the measurement alternative to all other investments in equity securities without a readily determinable fair value. Under the measurement alternative these equity securities are accounted for at cost, with adjustments for observable changes in prices and impairments recognized in “Other non-operating, net” on our accompanying unaudited condensed consolidated statements of income.

We perform an assessment each reporting period to evaluate whether these equity securities are impaired. Our assessment includes a review of recent operating results and trends and other publicly available data. If an investment is impaired, we write it down to its estimated fair value.

Debt Securities: Debt securities, which are considered short-term investments, are classified as “available-for-sale” and are carried at fair value. Debt securities are Level 2 within the fair value hierarchy. Realized gains and losses on available-for-sale debt securities are included in net income, while unrealized gains and losses, net of tax, are included in accumulated other comprehensive loss (“AOCL”) in the accompanying unaudited condensed consolidated balance sheets.

EMPLOYEES UNDER COLLECTIVE BARGAINING ARRANGEMENTS. The pilots at 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 newly ratified collective bargaining agreement (“CBA”) that took effect on June 29, 2026, which is scheduled to become amendable in December 2030. The agreement included new work rule changes, pay rate increases, and pension plan modifications, including an initial pay rate increase of 40%. The agreement included a provision for a one-time payment of $625 million associated with the pay rate increase, which was paid in the quarter ended September 30, 2026. See Note 6 for further information regarding the pension plan modifications.

STOCK-BASED COMPENSATION. We have four types of equity-based compensation: stock options, restricted stock, performance stock units, and restricted stock units. The key terms of our equity-based compensation plans and financial disclosures about these programs are set forth in our Annual Report. Our stock-based compensation expense was $37 million for the three-month period ended September 30, 2026 and $97 million for the four-month period ended September 30, 2026. Our stock-based compensation expense was $41 million for the three-month period ended September 30, 2025 and $70 million for the four-month period ended September 30, 2025. Due to its immateriality, additional disclosures related to stock-based compensation have been excluded from this quarterly report.

RESTRUCTURING AND EXIT COSTS. We periodically undertake restructuring, business realignment, and exit activities designed to improve operating efficiency, reduce costs, or optimize our business portfolio. Such activities may include workforce reductions, facility consolidations, contract termination costs, and actions associated with the disposal or exit of certain businesses or operations. All restructuring and exit costs are included within “Other, net” in the accompanying unaudited condensed consolidated statements of income. Liabilities associated with these activities are recognized when incurred and adjusted as facts and circumstances change. We continue to execute restructuring and exit programs initiated in prior periods. The table below summarizes the changes to amounts accrued associated with restructuring and exit costs during the four-month periods ended September 30, 2026 and 2025 (in millions):

Our effective tax rate was 31.6% and 5.4% for the three- and four-month periods ended September 30, 2026, respectively, compared to 29.4% and 28.6% for the corresponding prior-year periods. The increase in the three-month rate was primarily driven by a $1.2 billion non-deductible loss recognized on our 19.9% ownership interest in FedEx Freight, which was partially offset by a $263 million deferred tax benefit related to FedEx Supply Chain assets held for sale. Conversely, the significant decrease in our four-month rate to 5.4% was primarily driven by the recognition of a $3.3 billion non-taxable gain associated with our FedEx Freight ownership interest.

Risk Management Objective of Using Derivatives: We enter into derivative financial instruments to reduce the effects of volatility in foreign currency exchange exposure or interest rates 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 and debts. Due to their immateriality, disclosures related to our interest rate swaps and foreign exchange contracts have been excluded from this quarterly report.

Net Investment Hedges: We use debt denominated in foreign currency and fixed-to-fixed cross-currency swaps to hedge our exposure to changes in foreign exchange rates on certain of our foreign investments. Cross-currency swaps involve the receipt of functional-currency-fixed rate amounts from a counterparty in exchange for us making foreign-currency-fixed rate payments over the life of the agreement. Cross-currency swaps also involve final exchanges of the functional-currency principal amounts for the foreign-currency principal amounts between us and the counterparty.

For debt and foreign currency derivatives designated as net investment hedges, the gain or loss on the derivative is reported in AOCL as part of the cumulative translation adjustment. Amounts are reclassified out of AOCL into earnings when the hedged net investment is either sold or substantially liquidated.

We recognized losses of $2 million and $11 million, respectively, in AOCL related to our cross-currency swaps for the three-month periods ended September 30, 2026 and 2025. For the four-month periods ended September 30, 2026 and 2025, we recognized gains of $23 million and losses of $20 million, respectively. Gains recognized in AOCL related to our debt designated as a net investment hedge, which excludes any adjustments for the impact of deferred income taxes, were $14 million and losses of $9 million for the three-month periods ended September 30, 2026 and 2025, and gains of $23 million and losses of $20 million for the four-month periods ended September 30, 2026 and 2025.

As of September 30, 2026 and May 31, 2026, we had not posted any collateral related to our derivatives. No amounts have been reclassified out of AOCL during 2026 or 2025 for our net investment hedges. No hedge ineffectiveness was recognized in earnings during the three and four-month periods ended September 30, 2026 and 2025.

SUPPLIER FINANCE PROGRAM. We maintain voluntary Supply Chain Finance (“SCF”) programs that allow participating suppliers to obtain early payment from financial institutions. As of September 30, 2026 and May 31, 2026, there were $92 million and $109 million, respectively, of outstanding obligations confirmed as valid under these programs. Such obligations, when outstanding, are presented in “Accounts and notes payable”.

TREASURY SHARES. In March 2024, our Board of Directors authorized a stock repurchase program for repurchases of up to $5.0 billion of FedEx common stock (“2024 program”), and in July 2026, our Board of Directors authorized a new program for additional repurchases of up to $5.0 billion (“2026 program”). As of September 30, 2026, the 2024 program was complete and $4.3 billion remained available for repurchases under the 2026 program.


	Three Months Ended						Four Months Ended
	September 30, 2026			September 30, 2025			September 30, 2026			September 30, 2025
2026 program
Shares repurchased	2.3 million			—			2.3 million			—
Average price per share	$329.75			—			$329.75			—
Total amount repurchased	$	0.7	billion	—			$	0.7	billion	—
2024 program
Shares repurchased	0.7 million			2.7 million			4.0 million			3.3 million
Average price per share	$263.22			$235.13			$313.93			$233.07
Total amount repurchased	$	0.2	billion	$	0.6	billion	$	1.3	billion	$	0.8	billion

In the four-month period ended September 30, 2026, we repurchased $2.0 billion of common stock through open market transactions and/or accelerated share repurchase agreements. The repurchased shares were accounted for as a reduction to common stockholders’ investment in the accompanying unaudited condensed consolidated balance sheet and resulted in a reduction of the outstanding shares used to calculate the weighted-average common shares outstanding for basic and diluted earnings per share.

DIVIDENDS DECLARED PER COMMON SHARE. On August 21, 2026, our Board of Directors declared a quarterly cash dividend of $1.22 per share of common stock. The dividend was paid on October 1, 2026, to stockholders of record as of the close of business on September 14, 2026. Each quarterly dividend payment is subject to review and approval by our Board of Directors, and we evaluate our dividend payment amount on an annual basis. There are no material restrictions on our ability to declare dividends, nor are there any material restrictions on the ability of our subsidiaries to transfer funds to us in the form of cash dividends, loans, or advances.

RECENT ACCOUNTING GUIDANCE. New accounting rules and disclosure requirements can significantly affect our reported results and the comparability of our financial statements. We believe the following new accounting guidance is relevant to the readers of our financial statements.

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The new requirements enhance detail regarding the amount of cash taxes paid and the reconciliation of our effective tax rate. We adopted this standard effective June 1, 2025 (fiscal 2026) on a prospective basis.

In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which simplifies the application of the current expected credit loss model for current accounts receivable and current contract assets under Accounting Standards Codification 606. The Company adopted this guidance during the current quarter end and elected the practical expedient provided by the update. The adoption of ASU 2025-05 did not have a material impact on the Company's allowance for credit losses, consolidated financial statements, or related disclosures.

In May 2026, the FASB issued ASU 2026-02, Environmental Credits and Environmental Credit Obligations (Topic 818), which establishes accounting requirements for environmental credits and environmental credit obligations (“ECOs”). The ASU introduces a comprehensive model that establishes recognition, measurement, presentation, and disclosure requirements for environmental credits and, when applicable, compliance obligations that may be settled by using environmental credits. The new accounting standard will be effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. We are assessing the effect of this update on our consolidated financial statements and related disclosures.

In December 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which clarifies the applicability of the interim reporting guidance, the types of interim reporting, and the form and content of interim financial statements in accordance with U.S. generally accepted accounting principles. Per the FASB, the amendment does not intend to change the fundamental nature of interim reporting or expand or reduce current interim disclosure requirements but rather provide clarity and improve navigability of the existing interim reporting requirements. The update will be effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. We are assessing the effect of this update on our consolidated financial statements and related disclosures.