UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

FOR THE QUARTERLY PERIOD ENDED August 31, 2023

OR

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

FOR THE TRANSITION PERIOD FROM TO__________

Commission File Number: 1-15829

FedEx Corporation

(Exact name of registrant as specified in its charter)

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

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

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

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

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

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

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

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

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

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

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

Common Stock	Outstanding Shares at September 18, 2023
Common Stock, par value $0.10 per share	251,420,447

FEDEX CORPORATION

INDEX

	PAGE
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Condensed Consolidated Balance Sheets August 31, 2023 and May 31, 2023	3
Condensed Consolidated Statements of Income Three Months Ended August 31, 2023 and 2022	5
Condensed Consolidated Statements of Comprehensive Income Three Months Ended August 31, 2023 and 2022	6
Condensed Consolidated Statements of Cash Flows Three Months Ended August 31, 2023 and 2022	7
Condensed Consolidated Statements of Changes In Common Stockholders’ Investment Three Months Ended August 31, 2023 and 2022	8
Notes to Condensed Consolidated Financial Statements	9
Report of Independent Registered Public Accounting Firm	21
ITEM 2. Management’s Discussion and Analysis of Results of Operations and Financial Condition	22
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk	42
ITEM 4. Controls and Procedures	42
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings	43
ITEM 1A. Risk Factors	43
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds	43
ITEM 5. Other Information	43
ITEM 6. Exhibits	44
Signature	45
Exhibit 10.3
Exhibit 10.4
Exhibit 15.1
Exhibit 22
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2
Exhibit 101.1 Interactive Data Files Exhibit 104.1 Cover Page Interactive Data File

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FEDEX CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(IN MILLIONS)

	August 31, 2023 (Unaudited)		May 31, 2023
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	7,055	$	6,856
Receivables, less allowances of $762 and $800		10,207		10,188
Spare parts, supplies, and fuel, less allowances of $281 and $276		631		604
Prepaid expenses and other		994		962
Total current assets		18,887		18,610
PROPERTY AND EQUIPMENT, AT COST		81,992		80,624
Less accumulated depreciation and amortization		40,818		39,926
Net property and equipment		41,174		40,698
OTHER LONG-TERM ASSETS
Operating lease right-of-use assets, net		17,327		17,347
Goodwill		6,422		6,435
Other assets		3,766		4,053
Total other long-term assets		27,515		27,835
	$	87,576	$	87,143

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

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FEDEX CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(IN MILLIONS, EXCEPT SHARE DATA)

	August 31, 2023 (Unaudited)			May 31, 2023
LIABILITIES AND COMMON STOCKHOLDERS’ INVESTMENT
CURRENT LIABILITIES
Current portion of long-term debt	$	351		$	126
Accrued salaries and employee benefits		2,365			2,475
Accounts payable		3,794			3,848
Operating lease liabilities		2,382			2,390
Accrued expenses		4,919			4,747
Total current liabilities		13,811			13,586
LONG-TERM DEBT, LESS CURRENT PORTION		20,145			20,453
OTHER LONG-TERM LIABILITIES
Deferred income taxes		4,450			4,489
Pension, postretirement healthcare, and other benefit obligations		3,021			3,130
Self-insurance accruals		3,583			3,339
Operating lease liabilities		15,338			15,363
Other liabilities		694			695
Total other long-term liabilities		27,086			27,016
COMMITMENTS AND CONTINGENCIES
COMMON STOCKHOLDERS’ INVESTMENT
Common stock, $0.10 par value; 800 million shares authorized; 318 million shares    issued as of August 31, 2023 and May 31, 2023		32			32
Additional paid-in capital		3,800			3,769
Retained earnings		36,021			35,259
Accumulated other comprehensive loss		(1,356	)		(1,327	)
Treasury stock, at cost		(11,963	)		(11,645	)
Total common stockholders’ investment		26,534			26,088
	$	87,576		$	87,143

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

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FEDEX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)

	Three Months Ended August 31,
	2023			2022
REVENUE	$	21,681		$	23,242
OPERATING EXPENSES:
Salaries and employee benefits		7,785			7,859
Purchased transportation		5,036			5,767
Rentals and landing fees		1,151			1,159
Depreciation and amortization		1,071			1,024
Fuel		1,101			1,822
Maintenance and repairs		824			904
Business optimization and realignment costs		105			38
Other		3,123			3,478
		20,196			22,051
OPERATING INCOME		1,485			1,191
OTHER (EXPENSE) INCOME:
Interest, net		(91	)		(142	)
Other retirement plans, net		39			101
Other, net		(10	)		4
		(62	)		(37	)
INCOME BEFORE INCOME TAXES		1,423			1,154
PROVISION FOR INCOME TAXES		345			279
NET INCOME	$	1,078		$	875
EARNINGS PER COMMON SHARE:
Basic	$	4.28		$	3.37
Diluted	$	4.23		$	3.33
DIVIDENDS DECLARED PER COMMON SHARE	$	1.26		$	2.30

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

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FEDEX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

(IN MILLIONS)

	Three Months Ended
	August 31,
	2023			2022
NET INCOME	$	1,078		$	875
OTHER COMPREHENSIVE INCOME (LOSS):
Foreign currency translation adjustments, net of tax benefit of $4 in 2023 and $18 in 2022		(28	)		(209	)
Amortization of prior service credit, net of benefit of $0 in 2023 and $0 in 2022		(1	)		(2	)
		(29	)		(211	)
COMPREHENSIVE INCOME	$	1,049		$	664

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

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FEDEX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(IN MILLIONS)

	Three Months Ended August 31,
	2023			2022
Operating Activities:
Net income	$	1,078		$	875
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization		1,071			1,024
Provision for uncollectible accounts		103			245
Stock-based compensation		56			68
Other noncash items including leases and deferred income taxes		728			774
Business optimization and realignment costs, net of payments		(73	)		(14	)
Changes in assets and liabilities:
Receivables		(126	)		259
Other assets		(131	)		(170	)
Accounts payable and other liabilities		(470	)		(1,473	)
Other, net		(6	)		19
Cash provided by operating activities		2,230			1,607
Investing Activities:
Capital expenditures		(1,290	)		(1,284	)
Purchase of investments		(2	)		(35	)
Proceeds from asset dispositions and other		12			10
Cash used in investing activities		(1,280	)		(1,309	)
Financing Activities:
Principal payments on debt		(66	)		(29	)
Proceeds from stock issuances		157			81
Dividends paid		(318	)		(299	)
Purchase of treasury stock		(500	)		—
Cash used in financing activities		(727	)		(247	)
Effect of exchange rate changes on cash		(24	)		(98	)
Net increase (decrease) in cash and cash equivalents		199			(47	)
Cash and cash equivalents at beginning of period		6,856			6,897
Cash and cash equivalents at end of period	$	7,055		$	6,850

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

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FEDEX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN COMMON STOCKHOLDERS’ INVESTMENT

(UNAUDITED)

(IN MILLIONS, EXCEPT SHARE DATA)

	Three Months Ended
	August 31,
	2023			2022
Common Stock
Beginning Balance	$	32		$	32
Ending Balance		32			32
Additional Paid-in Capital
Beginning Balance		3,769			3,712
Purchase of treasury stock		(36	)		—
Employee incentive plans and other		67			39
Ending Balance		3,800			3,751
Retained Earnings
Beginning Balance		35,259			32,782
Net Income		1,078			875
Cash dividends declared ($1.26 and $2.30 per share)		(316	)		(597	)
Ending Balance		36,021			33,060
Accumulated Other Comprehensive Loss
Beginning Balance		(1,327	)		(1,103	)
Other comprehensive loss, net of tax benefit of $4 and $18		(29	)		(211	)
Ending Balance		(1,356	)		(1,314	)
Treasury Stock
Beginning Balance		(11,645	)		(10,484	)
Purchase of treasury stock (2.0 and 0.0 million shares)		(464	)		—
Employee incentive plans and other (1.1 and 0.7 million shares)		146			95
Ending Balance		(11,963	)		(10,389	)
Total Common Stockholders’ Investment Balance	$	26,534		$	25,140

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

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FEDEX CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(1) General

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. These interim financial statements of FedEx Corporation (“FedEx”) have been prepared in accordance with accounting principles generally accepted in the United States and Securities and Exchange Commission (“SEC”) instructions for interim financial information, and should be read in conjunction with our Annual Report on Form 10-K for the year ended May 31, 2023 (“Annual Report”). Significant accounting policies and other disclosures normally provided have been omitted since such items are disclosed in our Annual Report.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments (including normal recurring adjustments) necessary to present fairly our financial position as of August 31, 2023, and the results of our operations for the three-month periods ended August 31, 2023 and 2022, cash flows for the three-month periods ended August 31, 2023 and 2022, and changes in common stockholders’ investment for the three-month periods ended August 31, 2023 and 2022. Operating results for the three-month period ended August 31, 2023 are not necessarily indicative of the results that may be expected for the year ending May 31, 2024.

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

REVENUE RECOGNITION.

Contract Assets and Liabilities

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

Gross contract assets related to in-transit shipments totaled $688 million and $686 million at August 31, 2023 and May 31, 2023, respectively. Contract assets net of deferred unearned revenue were $466 million and $484 million at August 31, 2023 and May 31, 2023, respectively. Contract assets are included within current assets in the accompanying unaudited condensed consolidated balance sheets. Contract liabilities related to advance payments from customers were $21 million and $19 million at August 31, 2023 and May 31, 2023, respectively. Contract liabilities are included within current liabilities in the accompanying unaudited condensed consolidated balance sheets.

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Disaggregation of Revenue

The following table provides revenue by service type (in millions) for the periods ended August 31. This presentation is consistent with how we organize our segments internally for making operating decisions and measuring performance.

	Three Months Ended
	2023		2022
REVENUE BY SERVICE TYPE
FedEx Express segment:
Package:
U.S. overnight box	$	2,188	$	2,316
U.S. overnight envelope		485		525
U.S. deferred		1,187		1,287
Total U.S. domestic package revenue		3,860		4,128
International priority		2,327		2,897
International economy		1,021		707
Total international export package revenue		3,348		3,604
International domestic(1)		1,024		974
Total package revenue		8,232		8,706
Freight:
U.S.		582		796
International priority		553		888
International economy		425		377
International airfreight		32		41
Total freight revenue		1,592		2,102
Other		261		319
Total FedEx Express segment		10,085		11,127
FedEx Ground segment		8,420		8,160
FedEx Freight segment		2,291		2,723
FedEx Services segment		72		70
Other and eliminations(2)		813		1,162
	$	21,681	$	23,242

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

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

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

STOCK-BASED COMPENSATION. We have two types of equity-based compensation: stock options and restricted stock. The key terms of the stock option and restricted stock awards granted under our outstanding incentive stock plans and financial disclosures about these programs are set forth in our Annual Report.

Our stock-based compensation expense was $56 million for the three-month period ended August 31, 2023 and $68 million for the three-month period ended August 31, 2022. Due to its immateriality, additional disclosures related to stock-based compensation have been excluded from this quarterly report.

BUSINESS OPTIMIZATION AND REALIGNMENT COSTS. In the second quarter of 2023, FedEx announced DRIVE, a comprehensive program to improve the company’s long-term profitability. This program includes a business optimization plan to drive efficiency among our transportation segments, lower our overhead and support costs, and transform our digital capabilities. We plan to consolidate our sortation facilities and equipment, reduce pickup-and-delivery routes, and optimize our enterprise linehaul network by moving beyond discrete collaboration to an end-to-end optimized network through Network 2.0.

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In the fourth quarter of 2023, we announced one FedEx, a consolidation plan to ultimately bring FedEx Express, FedEx Ground Package System, Inc. (“FedEx Ground”), FedEx Corporate Services, Inc. (“FedEx Services”), and other FedEx operating companies into Federal Express Corporation, becoming a single company operating a unified, fully integrated air-ground network under the respected FedEx brand. FedEx Freight, Inc. will continue to provide less-than-truckload (“LTL”) freight transportation services as a stand-alone and separate company under Federal Express Corporation. The organizational redesign will be implemented in phases with full implementation expected in June 2024. One FedEx will help facilitate our DRIVE transformation program to improve long-term profitability, including Network 2.0, the multi-year effort to improve the efficiency with which FedEx picks up, transports, and delivers packages in the U.S. and Canada.

We have announced the implementation of Network 2.0 in more than 20 markets, including the phased transition of all FedEx Ground operations and personnel in Canada to FedEx Express beginning in April 2024. Under Network 2.0, FedEx will continue to utilize both employee couriers and contracted service providers.

We incurred costs associated with our business optimization activities of $105 million ($81 million, net of tax, or $0.32 per diluted share) in the first quarter of 2024. We recognized $24 million ($19 million, net of tax, or $0.07 per diluted share) of costs under this program in the first quarter of 2023. These costs were primarily related to professional services and severance. Business optimization costs are included in Corporate, other, and eliminations, FedEx Ground, and FedEx Express.

In 2021, FedEx Express announced a workforce reduction plan in Europe related to the network integration of TNT Express. The plan affected approximately 5,000 employees in Europe across operational teams and back-office functions and was completed in 2023. We incurred costs associated with our business realignment activities of $14 million ($11 million, net of tax, or $0.04 per diluted share) in the first quarter of 2023. These costs were related to certain employee severance arrangements. The pre-tax cost of our business realignment activities through 2023 was approximately $430 million.

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

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

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If a derivative is designated as a cash flow hedge, the entire change in the fair value of the hedging instrument included in the assessment of hedge effectiveness is recorded in other comprehensive income. For net investment hedges, the entire change in the fair value is recorded in other comprehensive income. Any portion of a change in the fair value of a derivative that is considered to be ineffective, along with the change in fair value of any derivatives not designated in a hedging relationship, is immediately recognized in the income statement. We do not have any derivatives designated as a cash flow hedge for any period presented. As of August 31, 2023, we had €158 million of debt designated as a net investment hedge to reduce the volatility of the U.S. dollar value of a portion of our net investment in a euro-denominated consolidated subsidiary. As of August 31, 2023, the hedge remains effective.

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

Amounts due to our suppliers that participate in the SCF program are included in accounts payable in our consolidated balance sheets. We have been informed by the participating financial institutions that as of August 31, 2023 and May 31, 2023, suppliers have been approved to sell to them $74 million and $76 million, respectively, of our outstanding payment obligations.

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

Recently Adopted Accounting Standards

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

Accounting Standards Not Yet Adopted

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848), and in December 2022 subsequently issued ASU 2022-06, to temporarily ease the potential burden in accounting for reference rate reform. The standards provide optional expedients and exceptions for applying accounting principles generally accepted in the United States to existing contracts, hedging relationships, and other transactions affected by reference rate reform. The standards apply only to contracts and hedging relationships that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate to be discontinued because of reference rate reform. The standards were effective upon issuance and can generally be applied through December 31, 2024. While there has been no material effect to our financial condition, results of operations, or cash flows from reference rate reform as of August 31, 2023, we continue to monitor our contracts and transactions for potential application of these ASUs.

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

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

As of August 31, 2023, these investments were not material to our financial position or results of operations.

TREASURY SHARES. In December 2021, our Board of Directors authorized a stock repurchase program of up to $5 billion of FedEx common stock. As part of the repurchase program, we entered into an accelerated share repurchase (“ASR”) agreement with a bank in June 2023 to repurchase an aggregate $500 million of our common stock.

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During the first quarter of 2024, 2.0 million shares were repurchased under the ASR agreement at an average price of $256.41 per share for a total of $500 million. The final number of shares delivered upon settlement of the ASR agreement was determined based on a discount to the volume-weighted average price of our stock during the term of the transaction. The repurchased shares were accounted for as a reduction to common stockholders’ investment in the accompanying consolidated balance sheet and resulted in a reduction of the outstanding shares used to calculate the weighted-average common shares outstanding for basic and diluted earnings per share.

The 2.0 million shares delivered under the ASR agreement were the only shares of FedEx common stock we purchased during the first quarter of 2024. We did not repurchase any shares of FedEx common stock during the first quarter of 2023. As of August 31, 2023, approximately $2.1 billion remained available to use for repurchases under the program.

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

DIVIDENDS DECLARED PER COMMON SHARE. On August 18, 2023, our Board of Directors declared a quarterly dividend of $1.26 per share of common stock. The dividend will be paid on October 2, 2023 to stockholders of record as of the close of business on September 11, 2023. Each quarterly dividend payment is subject to review and approval by our Board of Directors, and we evaluate our dividend payment amount on an annual basis. There are no material restrictions on our ability to declare dividends, nor are there any material restrictions on the ability of our subsidiaries to transfer funds to us in the form of cash dividends, loans, or advances.

(2) Credit Losses

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

Credit losses were $103 million for the three-month period ended August 31, 2023 and $245 million for the three-month period ended August 31, 2022. Our allowance for credit losses was $441 million at August 31, 2023 and $472 million at May 31, 2023.

(3) Accumulated Other Comprehensive Loss

The following table provides changes in accumulated other comprehensive income (“AOCI”), net of tax, reported in our unaudited condensed consolidated financial statements for the three-month periods ended August 31 (in millions; amounts in parentheses indicate debits to AOCI):

	2023			2022
Foreign currency translation loss:
Balance at beginning of period	$	(1,362	)	$	(1,148	)
Translation adjustments		(28	)		(209	)
Balance at end of period		(1,390	)		(1,357	)
Retirement plans adjustments:
Balance at beginning of period		35			45
Reclassifications from AOCI		(1	)		(2	)
Balance at end of period		34			43
Accumulated other comprehensive (loss) at end of period	$	(1,356	)	$	(1,314	)

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The following table presents details of the reclassifications from AOCI for the three-month periods ended August 31 (in millions; amounts in parentheses indicate debits to earnings):

	Amount Reclassified from AOCI				Affected Line Item in the Income Statement
	2023		2022
Amortization of retirement plans    prior service credits, before tax	$	1	$	2	Other retirement plans, net
Income tax benefit		—		—	Provision for income taxes
AOCI reclassifications, net of tax	$	1	$	2	Net income

(4) Financing Arrangements

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

FedEx Express has issued $970 million of Pass-Through Certificates, Series 2020-1AA (the “Certificates”) with a fixed interest rate of 1.875% due in February 2034 utilizing pass-through trusts. The Certificates are secured by 19 Boeing aircraft with a net book value of $1.7 billion at August 31, 2023. The payment obligations of FedEx Express in respect of the Certificates are fully and unconditionally guaranteed by FedEx.

We have a $2.0 billion five-year credit agreement (the “Five-Year Credit Agreement”) and a $1.5 billion three-year credit agreement (the “Three-Year Credit Agreement” and together with the Five-Year Credit Agreement, the “Credit Agreements”). The Five-Year Credit Agreement expires in March 2026 and includes a $250 million letter of credit sublimit. The Three-Year Credit Agreement expires in March 2025. The Credit Agreements are available to finance our operations and other cash flow needs. As of August 31, 2023, no amounts were outstanding under the Credit Agreements, no commercial paper was outstanding, and $250 million of the letter of credit sublimit was unused under the Five-Year Credit Agreement. Outstanding commercial paper reduces the amount available to borrow under the Credit Agreements.

Our Credit Agreements contain a financial covenant requiring us to maintain a ratio of debt to consolidated earnings (excluding noncash retirement plans mark-to-market adjustments, noncash pension service costs, and noncash asset impairment charges) before interest, taxes, depreciation, and amortization (“adjusted EBITDA”) of not more than 3.5 to 1.0, calculated as of the last day of each fiscal quarter on a rolling four-quarters basis. The ratio of our debt to adjusted EBITDA was 2.01 to 1.0 at August 31, 2023.

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

Long-term debt, including current maturities and exclusive of finance leases, had carrying values of $19.8 billion at August 31, 2023 and $19.8 billion at May 31, 2023, compared with estimated fair values of $17.4 billion at August 31, 2023 and $17.5 billion at May 31, 2023. The annualized weighted-average interest rate on long-term debt was 3.5% at August 31, 2023. The estimated fair values were determined based on quoted market prices and the current rates offered for debt with similar terms and maturities. The fair value of our long-term debt is classified as Level 2 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 liability, either directly or indirectly.

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(5) Computation of Earnings Per Share

The calculation of basic and diluted earnings per common share for the three-month periods ended August 31 was as follows (in millions, except per share amounts):

	2023		2022
Basic earnings per common share:
Net earnings allocable to common shares(1)	$	1,077	$	874
Weighted-average common shares		251		259
Basic earnings per common share	$	4.28	$	3.37
Diluted earnings per common share:
Net earnings allocable to common shares(1)	$	1,077	$	874
Weighted-average common shares		251		259
Dilutive effect of share-based awards		3		3
Weighted-average diluted shares		254		262
Diluted earnings per common share	$	4.23	$	3.33
Anti-dilutive options excluded from diluted earnings per    common share		6.2		5.7

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

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(6) Retirement Plans

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

Our retirement plans costs for the three-month periods ended August 31 were as follows (in millions):

	2023		2022
Defined benefit pension plans, net	$	91	$	59
Defined contribution plans		240		244
Postretirement healthcare plans		23		23
	$	354	$	326

Net periodic benefit cost of the pension and postretirement healthcare plans for the three-month periods ended August 31 included the following components (in millions):