FORM 10-Q Cover Page [Registrant Information](index=1&type=section&id=Registrant%20Information) This section provides FedEx Corporation's identification details, registered securities, filing status, and common shares outstanding - FedEx Corporation is incorporated in Delaware with its principal executive offices in Memphis, Tennessee[3](index=3&type=chunk) Securities Registered on New York Stock Exchange | 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 | | 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 | | 3.500% Notes due 2032 | FDX 32 | New York Stock Exchange | | 0.950% Notes due 2033 | FDX 33 | New York Stock Exchange | | 4.125% Notes due 2037 | FDX 37 | New York Stock Exchange | - The registrant is a large accelerated filer[6](index=6&type=chunk) Common Stock Outstanding Shares | Metric | Value | | :----- | :---- | | Common Stock Outstanding Shares at September 16, 2025 | 235,955,461 | PART I. FINANCIAL INFORMATION [ITEM 1. Financial Statements](index=5&type=section&id=ITEM%201.%20Financial%20Statements) This section presents FedEx Corporation's unaudited condensed consolidated financial statements, including balance sheets, income statements, comprehensive income, cash flows, and stockholders' investment, with accompanying notes [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This statement provides a snapshot of FedEx's financial position, detailing assets, liabilities, and common stockholders' investment Condensed Consolidated Balance Sheet Highlights (in millions) | Category | August 31, 2025 | May 31, 2025 | | :-------------------------------- | :-------------- | :----------- | | Total current assets | $19,344 | $18,386 | | Net property and equipment | $41,384 | $41,642 | | Total other long-term assets | $27,688 | $27,599 | | **Total Assets** | **$88,416** | **$87,627** | | Total current liabilities | $15,524 | $15,411 | | Long-term debt, less current portion | $20,291 | $19,151 | | Total other long-term liabilities | $24,830 | $24,991 | | **Total Liabilities** | **$60,645** | **$59,553** | | Total common stockholders' investment | $27,771 | $28,074 | | **Total Liabilities and Common Stockholders' Investment** | **$88,416** | **$87,627** | [Condensed Consolidated Statements of Income](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) This statement outlines the company's financial performance, including revenue, operating expenses, operating income, net income, and earnings per share Condensed Consolidated Statements of Income Highlights (in millions, except per share amounts) | Metric | Three Months Ended August 31, 2025 | Three Months Ended August 31, 2024 | | :-------------------------------- | :--------------------------------- | :--------------------------------- | | Revenue | $22,244 | $21,579 | | Operating expenses | $21,058 | $20,499 | | Operating income | $1,186 | $1,080 | | Income before income taxes | $1,134 | $1,056 | | Provision for income taxes | $310 | $262 | | Net income | $824 | $794 | | Basic earnings per common share | $3.48 | $3.24 | | Diluted earnings per common share | $3.46 | $3.21 | | Dividends declared per common share | $2.90 | $2.76 | - Revenue increased by **3.1%** year-over-year, from **$21,579 million** in Q1 2024 to **$22,244 million** in Q1 2025[20](index=20&type=chunk) - Operating income grew by **9.8%** year-over-year, from **$1,080 million** in Q1 2024 to **$1,186 million** in Q1 2025[20](index=20&type=chunk) - Diluted EPS increased by **7.8%** year-over-year, from **$3.21** in Q1 2024 to **$3.46** in Q1 2025[20](index=20&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This statement presents net income and other comprehensive income (loss) components, including foreign currency translation adjustments and amortization of prior service credit Condensed Consolidated Statements of Comprehensive Income Highlights (in millions) | Metric | Three Months Ended August 31, 2025 | Three Months Ended August 31, 2024 | | :-------------------------------- | :--------------------------------- | :--------------------------------- | | Net income | $824 | $794 | | Other comprehensive income (loss) | ($9) | $27 | | Comprehensive income | $815 | $821 | - Comprehensive income decreased by **0.7%** year-over-year, from **$821 million** in Q1 2024 to **$815 million** in Q1 2025, primarily due to a foreign currency translation loss in 2025 compared to a gain in 2024[22](index=22&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement details cash inflows and outflows from operating, investing, and financing activities, showing the net change in cash and cash equivalents Condensed Consolidated Statements of Cash Flows Highlights (in millions) | Activity | Three Months Ended August 31, 2025 | Three Months Ended August 31, 2024 | | :-------------------------------- | :--------------------------------- | :--------------------------------- | | Cash provided by operating activities | $1,716 | $1,187 | | Cash used in investing activities | ($619) | ($802) | | Cash used in financing activities | ($460) | ($969) | | Net increase (decrease) in cash and cash equivalents | $664 | ($558) | | Cash and cash equivalents at end of period | $6,166 | $5,943 | - Cash provided by operating activities increased by **$529 million (44.6%)** year-over-year[25](index=25&type=chunk) - Cash used in investing activities decreased by **$183 million (22.8%)** year-over-year, primarily due to lower capital expenditures[25](index=25&type=chunk) - Cash used in financing activities decreased by **$509 million (52.5%)** year-over-year, driven by debt issuances and lower common stock repurchases[25](index=25&type=chunk) [Condensed Consolidated Statements of Changes In Common Stockholders' Investment](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20In%20Common%20Stockholders%27%20Investment) This statement details changes in common stockholders' investment components, including common stock, additional paid-in capital, retained earnings, AOCL, and treasury stock Changes in Common Stockholders' Investment (in millions) | Component | August 31, 2025 | August 31, 2024 | | :-------------------------------- | :-------------- | :-------------- | | Common Stock (Ending Balance) | $32 | $32 | | Additional Paid-in Capital (Ending Balance) | $4,327 | $4,134 | | Retained Earnings (Ending Balance) | $41,538 | $38,767 | | Accumulated Other Comprehensive Loss (Ending Balance) | ($1,371) | ($1,332) | | Treasury Stock (Ending Balance) | ($16,755) | ($14,425) | | **Total Common Stockholders' Investment Balance** | **$27,771** | **$27,176** | - Total common stockholders' investment increased by **$595 million (2.2%)** year-over-year[27](index=27&type=chunk) - Cash dividends declared were **$2.90 per share** in Q1 2025 and **$2.76 per share** in Q1 2024[27](index=27&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide additional disclosures for the condensed consolidated financial statements, covering segments, accounting policies, credit losses, comprehensive income, financing, EPS, retirement plans, segment performance, commitments, and contingencies [NOTE 1: DESCRIPTION OF BUSINESS SEGMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=11&type=section&id=NOTE%201%3A%20DESCRIPTION%20OF%20BUSINESS%20SEGMENTS%20AND%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note describes FedEx's business segments, significant accounting policies, business optimization costs, separation costs, and details on stock repurchases and dividends - FedEx's primary operating companies are Federal Express (express transportation, small-package ground delivery) and FedEx Freight (less-than-truckload freight transportation)[30](index=30&type=chunk) - Business optimization costs for Q1 2026 were **$67 million** (**$52 million** net of tax, or **$0.22 per diluted share**), down from **$128 million** in Q1 2025, primarily related to professional services and severance for Network 2.0 and the Europe workforce reduction plan[42](index=42&type=chunk) - The Europe workforce reduction plan is expected to impact approximately **1,400 employees** and generate annualized savings of approximately **$150 million** starting in calendar 2026, with pre-tax costs of about **$250 million** incurred through fiscal 2026[44](index=44&type=chunk)[45](index=45&type=chunk) - Costs related to the planned spin-off of FedEx Freight were **$43 million** (**$33 million** net of tax, or **$0.14 per diluted share**) in Q1 2026, with the transaction expected to be completed by June 2026[46](index=46&type=chunk)[47](index=47&type=chunk) - FedEx's Board approved a change in fiscal year end from May 31 to December 31, effective June 1, 2026, incurring **$4 million** in costs in Q1 2026[48](index=48&type=chunk) - During Q1 2026, **2.2 million shares** were repurchased for **$500 million** at an average price of **$232.25 per share**; **$1.6 billion** remained available under the 2024 stock repurchase program as of August 31, 2025[59](index=59&type=chunk)[61](index=61&type=chunk) - A quarterly cash dividend of **$1.45 per share** was declared on August 7, 2025, payable October 1, 2025[62](index=62&type=chunk) [NOTE 2: CREDIT LOSSES](index=14&type=section&id=NOTE%202%3A%20CREDIT%20LOSSES) This note details FedEx's credit loss exposure, primarily from trade receivables, and the methodology for determining the allowance for credit losses - Credit losses were **$219 million** for the three-month period ended August 31, 2025, an increase from **$129 million** for the same period in 2024[68](index=68&type=chunk) - The allowance for credit losses increased to **$492 million** at August 31, 2025, from **$438 million** at May 31, 2025[68](index=68&type=chunk) [NOTE 3: ACCUMULATED OTHER COMPREHENSIVE LOSS](index=15&type=section&id=NOTE%203%3A%20ACCUMULATED%20OTHER%20COMPREHENSIVE%20LOSS) This note presents changes in Accumulated Other Comprehensive Loss (AOCL), net of tax, primarily driven by foreign currency translation and retirement plan adjustments Changes in AOCL (in millions) | Component | August 31, 2025 | August 31, 2024 | | :-------------------------------- | :-------------- | :-------------- | | Foreign currency translation loss (end of period) | ($1,427) | ($1,393) | | Retirement plans adjustments (end of period) | $56 | $61 | | **AOCL at end of period** | **($1,371)** | **($1,332)** | - AOCL increased to a loss of **$1,371 million** at August 31, 2025, from a loss of **$1,332 million** at August 31, 2024, primarily due to foreign currency translation adjustments[69](index=69&type=chunk) [NOTE 4: FINANCING ARRANGEMENTS](index=15&type=section&id=NOTE%204%3A%20FINANCING%20ARRANGEMENTS) This note details FedEx's financing arrangements, including long-term debt issuances, credit agreements, and compliance with financial covenants - On July 30, 2025, FedEx issued **€850 million** of senior unsecured debt (**€500 million** of 3.50% notes due 2032 and **€350 million** of 4.125% notes due 2037), using a portion of proceeds to repay **€500 million** of 0.45% notes due August 2025[71](index=71&type=chunk) Long-Term Debt Carrying and Fair Values (in millions) | Metric | August 31, 2025 | May 31, 2025 | | :-------------------------------- | :-------------- | :----------- | | Long-term debt (carrying value) | $20,400 | $19,900 | | Long-term debt (estimated fair value) | $18,200 | $17,200 | | Annualized weighted-average interest rate | 3.6% | N/A | - FedEx maintains a **$1.75 billion** three-year credit agreement (expiring March 2027) and a **$1.75 billion** five-year credit agreement (expiring March 2029), with no amounts outstanding as of August 31, 2025[74](index=74&type=chunk) - The ratio of debt to adjusted EBITDA was **1.9** at August 31, 2025, well within the covenant limit of not more than **3.5 to 1.0**[75](index=75&type=chunk) [NOTE 5: COMPUTATION OF EARNINGS PER SHARE](index=17&type=section&id=NOTE%205%3A%20COMPUTATION%20OF%20EARNINGS%20PER%20SHARE) This note provides the detailed calculation of basic and diluted earnings per common share for the reported periods Earnings Per Share Calculation (in millions, except per share amounts) | Metric | Three Months Ended August 31, 2025 | Three Months Ended August 31, 2024 | | :-------------------------------- | :--------------------------------- | :--------------------------------- | | Net earnings allocable to common shares | $823 | $793 | | Weighted-average common shares (basic) | 236 | 244 | | Basic earnings per common share | $3.48 | $3.24 | | Weighted-average diluted shares | 238 | 247 | | Diluted earnings per common share | $3.46 | $3.21 | | Anti-dilutive options excluded | 7.1 | 4.3 | [NOTE 6: RETIREMENT PLANS](index=17&type=section&id=NOTE%206%3A%20RETIREMENT%20PLANS) This note outlines costs associated with FedEx's defined benefit pension, defined contribution, and postretirement healthcare plans Retirement Plans Costs (in millions) | Plan Type | Three Months Ended August 31, 2025 | Three Months Ended August 31, 2024 | | :-------------------------------- | :--------------------------------- | :--------------------------------- | | Defined benefit pension plans | $47 | $70 | | Defined contribution plans | $306 | $287 | | Postretirement healthcare plans | $22 | $22 | | **Total retirement plans costs** | **$375** | **$379** | - FedEx made voluntary contributions of **$200 million** to its U.S. Pension Plan during Q1 2026, with no required contributions for fiscal 2026 as the plan is fully funded[79](index=79&type=chunk) [NOTE 7: BUSINESS SEGMENTS AND DISAGGREGATED REVENUE](index=18&type=section&id=NOTE%207%3A%20BUSINESS%20SEGMENTS%20AND%20DISAGGREGATED%20REVENUE) This note provides detailed financial information for FedEx's reportable segments, disaggregated revenue by service type and geographic region, and segment capital expenditures Segment Operating Results (Three Months Ended August 31, 2025, in millions) | Segment | Revenue | Operating Expenses | Operating Income | | :-------------------------------- | :------ | :----------------- | :--------------- | | Federal Express Segment | $19,116 | $17,978 | $1,138 | | FedEx Freight Segment | $2,257 | $1,897 | $360 | | Corporate, other, and eliminations | $871 | $1,183 | ($312) | | **Consolidated Total** | **$22,244** | **$21,058** | **$1,186** | Segment Operating Results (Three Months Ended August 31, 2024, in millions) | Segment | Revenue | Operating Expenses | Operating Income | | :-------------------------------- | :------ | :----------------- | :--------------- | | Federal Express Segment | $18,305 | $17,352 | $953 | | FedEx Freight Segment | $2,329 | $1,890 | $439 | | Corporate, other, and eliminations | $945 | $1,257 | ($312) | | **Consolidated Total** | **$21,579** | **$20,499** | **$1,080** | Revenue by Service Type (Three Months Ended August 31, in millions) | Service Type | 2025 | 2024 | | :-------------------------------- | :----- | :----- | | Federal Express segment: | | | | Total U.S. domestic package revenue | $12,694 | $11,798 | | Total international export package revenue | $3,612 | $3,566 | | International domestic | $1,135 | $1,112 | | Total package revenue | $17,441 | $16,476 | | Total freight revenue | $1,426 | $1,558 | | Other | $249 | $271 | | **Total Federal Express Segment** | **$19,116** | **$18,305** | | **FedEx Freight Segment** | **$2,257** | **$2,329** | | Other and eliminations | $871 | $945 | | **Total Revenue** | **$22,244** | **$21,579** | Geographic Revenue Information (Three Months Ended August 31, in millions) | Region | 2025 | 2024 | | :-------------------------------- | :----- | :----- | | U.S. | $15,975 | $15,496 | | International | $6,269 | $6,083 | | **Total Revenue** | **$22,244** | **$21,579** | Segment Capital Expenditures (Three Months Ended August 31, in millions) | Segment | 2025 | 2024 | | :-------------------------------- | :----- | :----- | | Federal Express Segment | $568 | $703 | | FedEx Freight Segment | $32 | $35 | | Corporate, other, and eliminations | $23 | $29 | | **Consolidated Total** | **$623** | **$767** | [NOTE 8: COMMITMENTS](index=22&type=section&id=NOTE%208%3A%20COMMITMENTS) This note outlines FedEx's future purchase commitments for aircraft and other items, and minimum lease payments under noncancelable operating and finance leases Purchase Commitments as of August 31, 2025 (in millions) | Fiscal Year | Aircraft and Aircraft Related | Other | Total | | :-------------------------------- | :---------------------------- | :---- | :---- | | 2026 (remainder) | $808 | $626 | $1,434 | | 2027 | $1,119 | $712 | $1,831 | | 2028 | $993 | $545 | $1,538 | | 2029 | $413 | $461 | $874 | | 2030 | $205 | $35 | $240 | | Thereafter | $1,073 | $90 | $1,163 | | **Total** | **$4,611** | **$2,469** | **$7,080** | Aircraft Purchase Commitments as of August 31, 2025 | Aircraft Type | 2026 (remainder) | 2027 | 2028 | 2029 | 2030 | Total | | :-------------------------------- | :--------------- | :--- | :--- | :--- | :--- | :---- | | Cessna SkyCourier 408 | 15 | 4 | — | — | — | 19 | | ATR 72-600F | 3 | 4 | 4 | 4 | 2 | 17 | | B767F | 6 | — | — | — | — | 6 | | B777F | — | 5 | 5 | — | — | 10 | | **Total Aircraft** | **24** | **13** | **9** | **4** | **2** | **52** | Future Minimum Lease Payments as of August 31, 2025 (in millions) | Fiscal Year | Operating Leases | Finance Leases | Total Leases | | :-------------------------------- | :--------------- | :------------- | :----------- | | 2026 (remainder) | $2,332 | $85 | $2,417 | | 2027 | $3,041 | $116 | $3,157 | | 2028 | $2,663 | $115 | $2,778 | | 2029 | $2,260 | $112 | $2,372 | | 2030 | $1,842 | $95 | $1,937 | | Thereafter | $8,086 | $619 | $8,705 | | **Total lease payments** | **$20,224** | **$1,142** | **$21,366** | | Less imputed interest | ($3,492) | ($347) | ($3,839) | | **Present value of lease liability** | **$16,732** | **$795** | **$17,527** | [NOTE 9: CONTINGENCIES](index=23&type=section&id=NOTE%209%3A%20CONTINGENCIES) This note addresses various legal proceedings and claims against FedEx and its subsidiaries, and confirms no material environmental matters requiring disclosure - FedEx is subject to various legal proceedings and claims, including lawsuits alleging employer/joint employer status for service provider drivers, wage-and-hour violations, and responsibility for third-party losses from vehicle accidents[98](index=98&type=chunk) - Management believes the aggregate liability from these actions will not have a material adverse effect on financial position, results of operations, or cash flows[98](index=98&type=chunk) - No environmental matters required to be disclosed for this period, based on the SEC's **$1 million** threshold[99](index=99&type=chunk) [NOTE 10: SUPPLEMENTAL CASH FLOW INFORMATION](index=23&type=section&id=NOTE%2010%3A%20SUPPLEMENTAL%20CASH%20FLOW%20INFORMATION) This note provides supplemental cash flow details, specifically cash payments for interest expense and income taxes Supplemental Cash Flow Information (in millions) | Cash Payments for | Three Months Ended August 31, 2025 | Three Months Ended August 31, 2024 | | :-------------------------------- | :--------------------------------- | :--------------------------------- | | Interest (net of capitalized interest) | $195 | $158 | | Income taxes | $112 | $75 | | Income tax refunds received | ($27) | ($12) | | **Cash tax payments/(refunds), net** | **$85** | **$63** | [Report of Independent Registered Public Accounting Firm](index=24&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Ernst & Young LLP reviewed FedEx's interim financial statements, finding no material modifications necessary for U.S. GAAP conformity and confirming the fair statement of the May 31, 2025, balance sheet - The independent registered public accounting firm is 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. GAAP[102](index=102&type=chunk) - The information in the condensed consolidated balance sheet as of May 31, 2025, is fairly stated in all material respects[103](index=103&type=chunk) [ITEM 2. Management's Discussion and Analysis of Results of Operations and Financial Condition](index=25&type=section&id=ITEM%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Results%20of%20Operations%20and%20Financial%20Condition) This section provides management's perspective on FedEx's financial performance, liquidity, capital resources, and critical accounting estimates, discussing key trends and segment-specific results [GENERAL](index=25&type=section&id=GENERAL) This section outlines FedEx's business, primary operating companies, and recent strategic decisions, including the planned FedEx Freight spin-off and fiscal year end change - FedEx provides a broad portfolio of transportation, e-commerce, and business services through its global network[107](index=107&type=chunk) - FedEx's Board decided to pursue a full separation of FedEx Freight through a tax-free spin-off to stockholders, expected to be completed by June 2026[109](index=109&type=chunk) - The Board approved a change in FedEx's fiscal year end from May 31 to December 31, effective June 1, 2026[110](index=110&type=chunk) [Trends Affecting Our Business](index=25&type=section&id=Trends%20Affecting%20Our%20Business) This section discusses significant macroeconomic, inflationary, fuel price, and geopolitical trends impacting FedEx's business and the transportation industry - Weakened business conditions in the transportation industry are attributed to a decline in U.S. imports of consumer goods and slowed global industrial production, negatively affecting FedEx Freight shipments[113](index=113&type=chunk) - Changes in the global trade environment, such as the removal of the de minimis exemption for U.S. imports from non-China countries, have contributed to lower international export package volumes[114](index=114&type=chunk) - Elevated global inflation and steady interest rates continue to negatively affect consumer and business spending, pressuring demand for FedEx's transportation services, particularly priority services[115](index=115&type=chunk) - Lower fuel prices in Q1 2026 negatively affected yields due to reduced fuel surcharges but also led to decreased fuel expense across transportation segments[116](index=116&type=chunk) [RESULTS OF OPERATIONS](index=27&type=section&id=RESULTS%20OF%20OPERATIONS) This section analyzes FedEx's operating results, covering consolidated performance, revenue and expense drivers, business optimization and separation costs, income taxes, and the company's outlook Consolidated Operating Results (Three Months Ended August 31, in millions, except per share amounts) | Metric | 2025 | 2024 | Percent Change | | :-------------------------------- | :----- | :----- | :------------- | | Revenue | $22,244 | $21,579 | 3% | | Consolidated operating income | $1,186 | $1,080 | 10% | | Consolidated net income | $824 | $794 | 4% | | Diluted earnings per share | $3.46 | $3.21 | 8% | | Consolidated operating margin | 5.3% | 5.0% | 30 bp | | Federal Express segment operating income | $1,138 | $953 | 19% | | FedEx Freight segment operating income | $360 | $439 | (18)% | | Corporate, other, and eliminations operating income | ($312) | ($312) | — | | Federal Express segment operating margin | 6.0% | 5.2% | 80 bp | | FedEx Freight segment operating margin | 16.0% | 18.8% | (280) bp | - Operating income was positively impacted by improved yields for U.S. domestic and international priority package services, structural cost reductions from business optimization initiatives, and higher U.S. domestic package demand at Federal Express[121](index=121&type=chunk) - Negative impacts included increased operating expenses, decreased yields for international economy package services, lower international package export volume due to global trade policies, the expiration of the USPS contract, and lower revenue at FedEx Freight[121](index=121&type=chunk) - Business optimization costs were **$67 million** in Q1 2026, down from **$128 million** in Q1 2025[122](index=122&type=chunk) - Costs related to the FedEx Freight spin-off were **$43 million** in Q1 2026[123](index=123&type=chunk) - FedEx repurchased **$500 million** of common stock in Q1 2026, benefiting diluted EPS by **$0.02**[124](index=124&type=chunk) [CONSOLIDATED RESULTS](index=28&type=section&id=CONSOLIDATED%20RESULTS) Consolidated operating income increased by **10%** in Q1 2026, driven by improved yields, structural cost reductions, and higher U.S. domestic package demand at Federal Express [Revenue](index=31&type=section&id=Revenue) Consolidated revenue increased by **3%** in Q1 2026, driven by Federal Express yield improvements and volume, partially offset by USPS contract expiration and FedEx Freight declines - Consolidated revenue increased **3%** in Q1 2026 to **$22,244 million**[130](index=130&type=chunk) - Federal Express segment revenue increased **4%** due to improved base yields, increased U.S. domestic and international economy package volumes, and favorable exchange rates[131](index=131&type=chunk) - FedEx Freight revenue decreased **3%** due to lower volume and lower base yields[131](index=131&type=chunk) [Operating Expenses](index=31&type=section&id=Operating%20Expenses) Total operating expenses increased by **3%** in Q1 2026, driven by higher salaries and purchased transportation, partially offset by a significant decrease in fuel expense Operating Expenses (Three Months Ended August 31, in millions) | Expense Category | 2025 | 2024 | Percent Change | | :-------------------------------- | :----- | :----- | :------------- | | Salaries and employee benefits | $8,062 | $7,785 | 4% | | Purchased transportation | $5,488 | $5,275 | 4% | | Fuel | $873 | $1,075 | (19)% | | Separation and other costs | $45 | — | NM | | Business optimization costs | $67 | $128 | (48)% | | Other | $3,396 | $3,168 | 7% | | **Total operating expenses** | **$21,058** | **$20,499** | **3%** | - Salaries and employee benefits increased **4%** due to higher wage rates, unfavorable exchange rates, and higher employee benefits, partially offset by lower variable incentive compensation[133](index=133&type=chunk) - Purchased transportation expense increased **4%** due to higher rates and volume[133](index=133&type=chunk) - Fuel expense decreased **19%** due to lower fuel prices and the expiration of the USPS contract[133](index=133&type=chunk) - Other operating expenses increased **7%** primarily due to higher professional fees, credit losses, and self-insurance accruals[133](index=133&type=chunk) [Business Optimization Costs](index=32&type=section&id=Business%20Optimization%20Costs) FedEx incurred **$67 million** in business optimization costs in Q1 2026, a **48%** decrease, related to Network 2.0 and the Europe workforce reduction plan - Business optimization costs were **$67 million** (**$52 million** net of tax, or **$0.22 per diluted share**) in Q1 2026, down from **$128 million** in Q1 2025[135](index=135&type=chunk) - These costs are primarily related to professional services and severance for Network 2.0 and the Europe workforce reduction plan[135](index=135&type=chunk) - Network 2.0, a multi-year effort to improve U.S. and Canada package efficiency, has been implemented in approximately **360 locations** as of August 31, 2025, with U.S. implementation expected by end of calendar 2027[136](index=136&type=chunk) - The Europe workforce reduction plan is expected to yield approximately **$150 million** in annualized savings starting calendar 2026, with pre-tax costs of about **$250 million** through fiscal 2026[137](index=137&type=chunk)[138](index=138&type=chunk) [Separation and Other Costs](index=32&type=section&id=Separation%20and%20Other%20Costs) FedEx incurred **$43 million** for the FedEx Freight spin-off and **$4 million** for the fiscal year change in Q1 2026, primarily for professional services - Costs for the planned FedEx Freight spin-off were **$43 million** (**$33 million** net of tax, or **$0.14 per diluted share**) in Q1 2026, mainly for professional services[139](index=139&type=chunk) - Costs for the fiscal year change were **$4 million** (**$3 million** net of tax, or **$0.01 per diluted share**) in Q1 2026, primarily for professional fees[140](index=140&type=chunk) [Income Taxes](index=32&type=section&id=Income%20Taxes) The effective tax rate for Q1 2026 was **27.3%**, unfavorably impacted by a non-recurring expense, with ongoing evaluation of new legislation and tax examinations - The effective tax rate was **27.3%** for Q1 2026, up from **24.8%** in Q1 2025, due to a non-recurring income tax expense of **$16 million** (**$0.07 per diluted share**)[141](index=141&type=chunk) - FedEx is evaluating the implications of the 'One Big Beautiful Bill Act' signed in July 2025[142](index=142&type=chunk) - The company is under IRS examination for tax years 2016-2021 and is litigating a challenge to a tax regulation related to the TCJA's transition tax, having recorded a cumulative benefit of **$249 million**[143](index=143&type=chunk)[144](index=144&type=chunk) [Outlook](index=33&type=section&id=Outlook) FedEx anticipates continued demand pressure for higher-yielding services, expects **$1.0 billion** in structural cost reduction benefits in fiscal 2026, and projects **$4.5 billion** in capital expenditures - The industrial economy is expected to continue pressuring demand for higher-yielding business-to-business services, with a shift towards deferred service offerings[145](index=145&type=chunk) - FedEx expects an incremental **$1.0 billion** in structural cost reduction benefits from DRIVE and Network 2.0 in fiscal 2026[146](index=146&type=chunk) - Capital expenditures for fiscal 2026 are expected to be approximately **$4.5 billion**, a **$0.4 billion** increase from 2025, driven by Network 2.0 and modernization efforts[148](index=148&type=chunk) - Aircraft spend is expected to decline to approximately **$1.0 billion** in fiscal 2026, **$0.3 billion** lower than 2025[148](index=148&type=chunk) - The full separation of FedEx Freight through capital markets is expected to be executed by June 2026[150](index=150&type=chunk) [RECENT ACCOUNTING GUIDANCE](index=33&type=section&id=RECENT%20ACCOUNTING%20GUIDANCE) This section refers to Note 1 for a discussion of recent accounting guidance, including new accounting standards and those not yet adopted - Refer to Note 1 for a discussion of recent accounting guidance, including ASU 2025-05 (Financial Instruments—Credit Losses), ASU 2023-09 (Income Taxes Disclosures), and ASU 2024-03 (Income Statement–Expense Disaggregation Disclosures)[153](index=153&type=chunk)[64](index=64&type=chunk)[65](index=65&type=chunk)[66](index=66&type=chunk) [REPORTABLE SEGMENTS](index=34&type=section&id=REPORTABLE%20SEGMENTS) FedEx's reportable segments are Federal Express and FedEx Freight, with Federal Express operating combined sales, marketing, administrative, and IT functions - Federal Express and FedEx Freight are the major service lines and reportable segments[154](index=154&type=chunk) - The Federal Express segment operates combined sales, marketing, administrative, and IT functions, with net operating costs allocated to other segments based on metrics like relative revenue or estimated services provided[154](index=154&type=chunk)[155](index=155&type=chunk) [CORPORATE, OTHER, AND ELIMINATIONS](index=34&type=section&id=CORPORATE%2C%20OTHER%2C%20AND%20ELIMINATIONS) This category includes corporate headquarters, FedEx Dataworks, FedEx Office, and FedEx Logistics costs, with operating results flat in Q1 2026 due to offsetting factors - Corporate, other, and eliminations includes corporate headquarters, FedEx Dataworks, FedEx Office, and FedEx Logistics[156](index=156&type=chunk)[157](index=157&type=chunk) - Operating results were flat in Q1 2026, driven by decreased purchased transportation costs at FedEx Logistics offset by higher professional fees at corporate headquarters and FedEx Dataworks[158](index=158&type=chunk) [FEDERAL EXPRESS SEGMENT](index=35&type=section&id=FEDERAL%20EXPRESS%20SEGMENT) The Federal Express segment reported a **4%** revenue increase and **19%** operating income increase in Q1 2026, driven by improved yields and higher U.S. domestic and international economy package volumes Federal Express Segment Revenue (Three Months Ended August 31, in millions) | Revenue Category | 2025 | 2024 | Percent Change | | :-------------------------------- | :----- | :----- | :------------- | | Total U.S. domestic package revenue | $12,694 | $11,798 | 8% | | Total international export package revenue | $3,612 | $3,566 | 1% | | International domestic | $1,135 | $1,112 | 2% | | Total package revenue | $17,441 | $16,476 | 6% | | Total freight revenue | $1,426 | $1,558 | (8)% | | Other | $249 | $271 | (8)% | | **Total revenue** | **$19,116** | **$18,305** | **4%** | | **Operating income** | **$1,138** | **$953** | **19%** | | **Operating margin** | **6.0%** | **5.2%** | **80 bp** | Federal Express Segment Package Statistics (Three Months Ended August 31, in thousands, except yield) | Metric | 2025 | 2024 | Percent Change | | :-------------------------------- | :----- | :----- | :------------- | | Total U.S. domestic ADV | 13,920 | 13,295 | 5% | | International priority ADV | 562 | 622 | (10)% | | International economy ADV | 518 | 491 | 5% | | Total international export ADV | 1,080 | 1,113 | (3)% | | U.S. domestic composite package yield | $14.25 | $13.87 | 3% | | International priority package yield | $62.77 | $55.37 | 13% | | International economy package yield | $40.87 | $43.33 | (6)% | | Composite package yield | $16.22 | $15.86 | 2% | - U.S. average daily freight pounds decreased **59%** due to the expiration of the USPS contract[164](index=164&type=chunk) - Operating expenses increased primarily due to higher wage and purchased transportation rates and higher credit losses, partially offset by a **20%** decrease in fuel expense[166](index=166&type=chunk)[167](index=167&type=chunk) - The segment incurred **$21 million** in business optimization costs, **$4 million** for the fiscal year change, and **$1 million** for the FedEx Freight spin-off in Q1 2026[168](index=168&type=chunk) [FEDEX FREIGHT SEGMENT](index=39&type=section&id=FEDEX%20FREIGHT%20SEGMENT) The FedEx Freight segment experienced a **3%** revenue decrease and an **18%** operating income decrease in Q1 2026, primarily due to lower volume, base yields, and increased intercompany charges FedEx Freight Segment Operating Results (Three Months Ended August 31, in millions, except per shipment/hundredweight) | Metric | 2025 | 2024 | Percent Change | | :-------------------------------- | :----- | :----- | :------------- | | **Revenue** | **$2,257** | **$2,329** | **(3)%** | | **Operating income** | **$360** | **$439** | **(18)%** | | **Operating margin** | **16.0%** | **18.8%** | **(280) bp** | | Total average daily shipments (thousands) | 90.0 | 92.0 | (2)% | | Composite revenue per shipment | $374.62 | $378.09 | (1)% | | Composite revenue per hundredweight | $40.50 | $40.73 | (1)% | - Average daily shipments decreased **2%** due to reduced demand from macroeconomic conditions[172](index=172&type=chunk) - Intercompany charges increased **9%** due to increased sales staffing for the planned spin-off[174](index=174&type=chunk) - Fuel expense decreased **7%** due to fewer shipments and lower fuel prices[174](index=174&type=chunk) - The segment incurred **$9 million** in costs related to the planned spin-off of FedEx Freight in Q1 2026[175](index=175&type=chunk) [FINANCIAL CONDITION](index=41&type=section&id=FINANCIAL%20CONDITION) This section assesses FedEx's financial condition, covering liquidity, capital resources, guarantor financial information, and the liquidity outlook [LIQUIDITY](index=41&type=section&id=LIQUIDITY) FedEx's cash and cash equivalents increased to **$6.2 billion**, driven by significantly increased operating cash flows and decreased investing and financing activities Cash Flow Summary (Three Months Ended August 31, in millions) | Activity | 2025 | 2024 | | :-------------------------------- | :----- | :----- | | Cash provided by operating activities | $1,716 | $1,187 | | Cash used in investing activities | ($619) | ($802) | | Cash used in financing activities | ($460) | ($969) | | Net increase (decrease) in cash and cash equivalents | $664 | ($558) | | Cash and cash equivalents at end of period | $6,166 | $5,943 | - Cash flows from operating activities increased by **$0.5 billion** in Q1 2026, primarily due to working capital changes[176](index=176&type=chunk) - Capital expenditures decreased in Q1 2026, leading to a decrease in cash used in investing activities[177](index=177&type=chunk) - Cash used in financing activities decreased by **$0.5 billion**, driven by lower common stock repurchases and new debt issuances[178](index=178&type=chunk) [CAPITAL RESOURCES](index=41&type=section&id=CAPITAL%20RESOURCES) FedEx's capital expenditures decreased by **19%** in Q1 2026, primarily due to reduced spending on aircraft, vehicles, and IT, partially offset by increased facilities spending Capital Expenditures by Asset Category (Three Months Ended August 31, in millions) | Asset Category | 2025 | 2024 | Percent Change | | :-------------------------------- | :----- | :----- | :------------- | | Aircraft and related equipment | $60 | $181 | (67)% | | Package handling and ground support equipment | $205 | $197 | 4% | | Information technology | $118 | $153 | (23)% | | Vehicles and trailers | $47 | $90 | (48)% | | Facilities and other | $193 | $146 | 32% | | **Total capital expenditures** | **$623** | **$767** | **(19)%** | Capital Expenditures by Segment (Three Months Ended August 31, in millions) | Segment | 2025 | 2024 | Percent Change | | :-------------------------------- | :----- | :----- | :------------- | | Federal Express segment | $568 | $703 | (19)% | | FedEx Freight segment | $32 | $35 | (9)% | | Other | $23 | $29 | (21)% | | **Total capital expenditures** | **$623** | **$767** | **(19)%** | - Decreased spending on aircraft and related equipment, vehicles and trailers, and information and technology investments at Federal Express and FedEx Freight[180](index=180&type=chunk) [GUARANTOR FINANCIAL INFORMATION](index=42&type=section&id=GUARANTOR%20FINANCIAL%20INFORMATION) This section provides summarized financial information for FedEx (Parent) and its Guarantor Subsidiaries, and for FedEx (Parent Guarantor) and Federal Express (Subsidiary Issuer) - FedEx's senior unsecured debt securities are guaranteed by certain direct and indirect subsidiaries, which are **100%** owned by FedEx, with guarantees being full, unconditional, and joint and several[182](index=182&type=chunk) - FedEx fully and unconditionally guarantees the payment obligations of Federal Express for its **$711 million** Pass-Through Certificates[183](index=183&type=chunk) Parent and Guarantor Subsidiaries Summarized Balance Sheet (in millions) | Category | August 31, 2025 | May 31, 2025 | | :-------------------------------- | :-------------- | :----------- | | Current Assets | $9,924 | $9,514 | | Intercompany Receivable | $5,145 | $4,278 | | Total Assets | $84,186 | $83,125 | | Current Liabilities | $11,439 | $11,202 | | Total Liabilities | $53,492 | $52,324 | Parent and Guarantor Subsidiaries Summarized Statement of Income (Three Months Ended August 31, 2025, in millions) | Metric | Amount | | :-------------------------------- | :----- | | Revenue | $16,643 | | Intercompany Charges, net | ($1,106) | | Operating Income | $1,265 | | Income Before Income Taxes | $1,043 | | Net Income | $691 | Parent Guarantor and Subsidiary Issuer Summarized Balance Sheet (in millions) | Category | August 31, 2025 | May 31, 2025 | | :-------------------------------- | :-------------- | :----------- | | Current Assets | $9,856 | $9,504 | | Intercompany Receivable | $1,187 | $581 | | Total Assets | $73,227 | $72,044 | | Current Liabilities | $10,598 | $10,310 | | Total Liabilities | $50,346 | $49,200 | Parent Guarantor and Subsidiary Issuer Summarized Statement of Income (Three Months Ended August 31, 2025, in millions) | Metric | Amount | | :-------------------------------- | :----- | | Revenue | $14,302 | | Intercompany Charges, net | ($1,261) | | Operating Income | $894 | | Income Before Income Taxes | $1,035 | | Net Income | $772 | [LIQUIDITY OUTLOOK](index=43&type=section&id=LIQUIDITY%20OUTLOOK) FedEx expects to meet liquidity needs through existing cash, operating cash flows, and available financing, while continuing stock repurchases, voluntary pension contributions, and quarterly dividends - FedEx held **$6.2 billion** in cash and cash equivalents and had **$3.5 billion** in available liquidity under its credit agreements at August 31, 2025[190](index=190&type=chunk) - Costs related to the FedEx Freight spin-off are expected to be significant but not adversely affect liquidity[190](index=190&type=chunk) - The company expects to continue repurchasing additional shares of common stock during the remainder of 2026[191](index=191&type=chunk) - Capital expenditures for 2026 are expected to be approximately **$4.5 billion**, with aircraft spend declining to **$1.0 billion**[193](index=193&type=chunk) - Voluntary contributions of **$200 million** were made to the U.S. Pension Plan in Q1 2026, with up to **$200 million** more anticipated for the remainder of 2026; no minimum contributions are required[198](index=198&type=chunk) - Standard & Poor's and Moody's Investors Service have assigned investment-grade credit ratings with a 'stable' outlook[200](index=200&type=chunk) [CRITICAL ACCOUNTING ESTIMATES](index=44&type=section&id=CRITICAL%20ACCOUNTING%20ESTIMATES) Management continuously reviews accounting policies and estimates, with no additional events indicating goodwill impairment testing is required or at risk as of August 31, 2025 - Management does not believe there has been any additional change of events or circumstances that would indicate that additional reevaluation of the goodwill of our reporting units is required as of August 31, 2025, nor do we believe the goodwill of our reporting units is at risk of failing impairment testing[202](index=202&type=chunk) [FORWARD-LOOKING STATEMENTS](index=44&type=section&id=FORWARD-LOOKING%20STATEMENTS) This section provides a cautionary statement regarding forward-looking statements, emphasizing that actual results may differ materially due to various risks and uncertainties - Forward-looking statements involve risks and uncertainties, and actual results may differ materially from those contemplated[205](index=205&type=chunk) - Key risks include economic conditions, changes in shipment volumes and prices, geopolitical developments, fuel price volatility, ability to implement business strategy and transformation initiatives (Network 2.0, FedEx Freight spin-off), data breaches, e-commerce growth, and regulatory changes[205](index=205&type=chunk)[215](index=215&type=chunk) - The company is under no obligation to update or alter any forward-looking statements[207](index=207&type=chunk) [ITEM 3. Quantitative and Qualitative Disclosures About Market Risk](index=48&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section reports no material changes in market risk sensitive instruments, identifying foreign currency exchange rates and fuel prices as principal market risks - No material changes in market risk sensitive instruments and positions since the Annual Report[208](index=208&type=chunk) - Principal foreign currency exchange rate risks relate to the euro, Chinese yuan, British pound, Canadian dollar, Australian dollar, Mexican peso, Hong Kong dollar, and Japanese yen[209](index=209&type=chunk) - The U.S. dollar's weaker performance relative to foreign currencies had a slightly negative effect on results in Q1 2026[209](index=209&type=chunk) - Market risk for changes in vehicle and jet fuel prices is largely mitigated by indexed fuel surcharges[210](index=210&type=chunk) [ITEM 4. Controls and Procedures](index=48&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of August 31, 2025, with no material changes in internal control over financial reporting during the quarter - Disclosure controls and procedures were effective as of August 31, 2025[211](index=211&type=chunk) - No material changes occurred in internal control over financial reporting during the quarter ended August 31, 2025[212](index=212&type=chunk) PART II. OTHER INFORMATION [ITEM 1. Legal Proceedings](index=48&type=section&id=ITEM%201.%20Legal%20Proceedings) This section refers to Note 9 of the condensed consolidated financial statements for a description of all material pending legal proceedings - For a description of all material pending legal proceedings, refer to Note 9 of the accompanying unaudited condensed consolidated financial statements[213](index=213&type=chunk) [ITEM 1A. Risk Factors](index=48&type=section&id=ITEM%201A.%20Risk%20Factors) This section states that there have been no material changes from the risk factors disclosed in the Annual Report on Form 10-K - There have been no material changes from the risk factors disclosed in the Annual Report on Form 10-K[214](index=214&type=chunk) [ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=49&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the issuance of unregistered common stock for an acquisition and FedEx's common stock repurchases during Q1 2026 - FedEx issued **359,052 unregistered shares** of common stock (valued at approximately **$90 million**) in February 2025 and an additional **296 shares** in August 2025 as partial consideration for the acquisition of RouteSmart Technologies, Inc[216](index=216&type=chunk) Issuer Purchases of Equity Securities (Q1 2026) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Program | Approximate Dollar Value of Shares That May Yet Be Purchased Under Program ($ in millions) | | :---------------- | :------------------------------- | :--------------------------- | :------------------------------------------------------------------- | :------------------------------------------------------------------------------------- | | Jun. 1-30, 2025 | 650,000 | $224.56 | 650,000 | $1,918 | | Jul. 1-31, 2025 | 1,502,645 | $235.58 | 1,502,645 | $1,564 | | Aug. 1-31, 2025 | — | — | — | $1,564 | | **Total** | **2,152,645** | | **2,152,645** | **$1,564** | - FedEx repurchased **2.2 million shares** for **$500 million** in Q1 2026 under its **$5.0 billion** stock repurchase program, with approximately **$1.6 billion** remaining available as of September 18, 2025[219](index=219&type=chunk)[220](index=220&type=chunk) [ITEM 5. Other Information](index=49&type=section&id=ITEM%205.%20Other%20Information) No director or officer adopted, modified, or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter ended August 31, 2025 - No director or officer adopted, modified, or terminated any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the quarter ended August 31, 2025[222](index=222&type=chunk) [ITEM 6. Exhibits](index=50&type=section&id=ITEM%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including organizational documents, indentures, certifications, and interactive data files - The exhibits include the Restated Certificate of Incorporation, Amended and Restated Bylaws, Indentures for debt securities, certifications of principal executive and financial officers, and Interactive Data Files (Inline XBRL)[223](index=223&type=chunk) Signature [Official Signature](index=51&type=section&id=Official%20Signature) This section contains the official signature block, confirming the report was signed on behalf of FedEx Corporation by its Corporate Vice President and Chief Accounting Officer - The report is signed by Guy M. Erwin II, Corporate Vice President and Chief Accounting Officer of FedEx Corporation, on September 18, 2025[226](index=226&type=chunk)

**Executive Summary & First Quarter Performance**](index=1&type=section&id=Executive%20Summary%20%26%20First%20Quarter%20Performance) FedEx reported year-over-year earnings growth in Q1 FY2026, driven by strategic initiatives and cost reductions, with adjusted diluted EPS increasing to $3.83 [**Consolidated Financial Results (GAAP & Adjusted)**](index=1&type=section&id=Consolidated%20Financial%20Results%20(GAAP%20%26%20Adjusted)) FedEx reported year-over-year earnings growth in Q1 FY2026, with adjusted diluted EPS increasing to $3.83 from $3.60. Revenue grew to $22.2 billion from $21.6 billion, and adjusted operating income improved to $1.30 billion from $1.21 billion, reflecting successful strategic initiatives and cost reductions Consolidated Results (GAAP & Adjusted) | | Fiscal 2026 | | Fiscal 2025 | | | --- | --- | --- | --- | --- | | | As Reported (GAAP) | Adjusted (non-GAAP) | As Reported (GAAP) | Adjusted (non-GAAP) | | Revenue | $22.2 billion | $22.2 billion | $21.6 billion | $21.6 billion | | Operating income | $1.19 billion | $1.30 billion | $1.08 billion | $1.21 billion | | Operating margin | 5.3% | 5.8% | 5.0% | 5.6% | | Net income | $0.82 billion | $0.91 billion | $0.79 billion | $0.89 billion | | Diluted EPS | $3.46 | $3.83 | $3.21 | $3.60 | - Earnings growth is attributed to the success of strategic initiatives, including flexing the network, reducing cost-to-serve, and enhancing value proposition and customer experience[1](index=1&type=chunk) - Consolidated operating results improved, reflecting strength in U.S. domestic package revenue and continued structural cost reduction, despite an unfavorable non-recurring income tax expense of **$16 million ($0.07 per diluted share)**[1](index=1&type=chunk) [**Segment Performance Overview**](index=1&type=section&id=Segment%20Performance%20Overview) The Federal Express segment improved due to higher U.S. domestic and international priority package yields and increased U.S. domestic package volume, while the FedEx Freight segment saw decreased operating results from lower revenue and higher costs [**Federal Express Segment**](index=1&type=section&id=Federal%20Express%20Segment%20Performance) The Federal Express segment improved due to higher U.S. domestic and international priority package yields and increased U.S. domestic package volume, despite higher costs and global trade impacts - Federal Express segment operating results improved during the quarter, driven by higher U.S. domestic and international priority package yields, continued cost savings from transformation initiatives, and increased U.S. domestic package volume[2](index=2&type=chunk) - These positive factors were partially offset by higher wage and purchased transportation rates, the impact of the evolving global trade environment on international export package demand, and the expiration of the U.S. Postal Service contract[2](index=2&type=chunk)[3](index=3&type=chunk) [**FedEx Freight Segment**](index=2&type=section&id=FedEx%20Freight%20Segment%20Performance) The FedEx Freight segment experienced decreased operating results due to lower revenue, higher wage rates, and increased sales professional hiring - FedEx Freight segment operating results decreased during the quarter due to lower revenue, higher wage rates, and the hiring of additional dedicated LTL sales professionals[3](index=3&type=chunk) **Strategic Initiatives & Business Updates**](index=2&type=section&id=Strategic%20Initiatives%20%26%20Business%20Updates) FedEx advanced strategic initiatives including share repurchases, the planned spin-off of FedEx Freight, and announced upcoming rate increases [**Share Repurchase Program**](index=2&type=section&id=Share%20Repurchase%20Program) FedEx completed $0.5 billion in share repurchases during the quarter, buying back approximately 2.2 million shares, which positively impacted diluted EPS by $0.02. The company expects to continue repurchasing shares, with $1.6 billion remaining under the 2024 authorization - FedEx completed **$0.5 billion** in share repurchases via open market transactions during the quarter, repurchasing approximately **2.2 million shares**[4](index=4&type=chunk) - The decrease in outstanding shares benefited first quarter results by **$0.02 per diluted share**[4](index=4&type=chunk) - As of August 31, 2025, **$1.6 billion** remained available for repurchases under the company's 2024 stock repurchase authorization[5](index=5&type=chunk) [**FedEx Freight Separation On Track**](index=2&type=section&id=FedEx%20Freight%20Separation%20On%20Track) The planned spin-off of FedEx Freight into a new publicly traded company (FDXF) is on track for completion by June 2026, expected to be tax-efficient for stockholders. The company submitted its confidential Form 10 to the SEC and requested a private letter ruling from the IRS - The planned spin-off of FedEx Freight into a new publicly traded company (FDXF) continues to advance and is expected to be achieved in a tax-efficient manner for FedEx stockholders and executed by June 2026[6](index=6&type=chunk) - In August, the company submitted its confidential Form 10 to the SEC, and in September, submitted a request for a private letter ruling on the tax treatment of the transaction to the IRS[7](index=7&type=chunk) [**2026 Rate Increases**](index=2&type=section&id=2026%20Rate%20Increases) Effective January 5, 2026, FedEx parcel and FedEx Freight LTL shipping rates will increase by an average of 5.9% - Effective January 5, 2026, FedEx parcel and FedEx Freight LTL shipping rates will increase by an **average of 5.9%**[8](index=8&type=chunk) **Fiscal 2026 Outlook**](index=2&type=section&id=Outlook) FedEx initiated its fiscal 2026 outlook, forecasting revenue growth and adjusted diluted EPS, based on current economic and fuel price assumptions [**Financial Forecasts**](index=3&type=section&id=Financial%20Forecasts) FedEx initiated its full-year fiscal 2026 earnings outlook, forecasting 4% to 6% revenue growth. Adjusted diluted EPS is projected to be $17.20 to $19.00 (excluding MTM retirement adjustments, business optimization, spin-off, and fiscal year change costs). The company also expects $1 billion in permanent cost reductions and $4.5 billion in capital spending Fiscal 2026 Forecasts (Non-GAAP) | Metric | Forecast | | :--- | :--- | | Revenue growth rate year over year | 4% to 6% | | Diluted EPS (before MTM retirement plans accounting adjustments) | $14.20 to $16.00 | | Diluted EPS (after excluding business optimization, FedEx Freight spin-off, and fiscal year change costs) | $17.20 to $19.00 | | ETR (prior to MTM retirement plans accounting adjustments) | Approximately 25% | | Pension contributions | Up to $400 million (vs. prior $600 million) | | Permanent cost reductions (transformation-related savings) | $1 billion | | Capital spending | $4.5 billion | - Reaffirmed fiscal 2026 forecast includes **$1 billion in permanent cost reductions** from structural cost reductions and the advancement of Network 2.0[12](index=12&type=chunk) - Capital spending of **$4.5 billion**, with a priority on investments in network optimization and efficiency improvement, including fleet and facility modernization and automation[12](index=12&type=chunk) [**Key Assumptions**](index=3&type=section&id=Key%20Assumptions) The forecasts assume current economic conditions and fuel price expectations, with no additional adverse economic, geopolitical, or international trade-related developments. The company is unable to provide a GAAP EPS or ETR outlook due to the unpredictability of mark-to-market retirement plan accounting adjustments - Forecasts assume the company's current economic forecast and fuel price expectations, and no additional adverse economic, geopolitical, or international trade-related developments[10](index=10&type=chunk) - FedEx is unable to forecast the fiscal 2026 mark-to-market ("MTM") retirement plans accounting adjustments, and thus cannot provide a GAAP EPS or effective tax rate ("ETR") outlook[9](index=9&type=chunk)[10](index=10&type=chunk) **Corporate Information & Disclosures**](index=3&type=section&id=Corporate%20Information%20%26%20Disclosures) This section provides an overview of FedEx, details investor resources, outlines forward-looking statements and associated risks, and lists contact information [**Corporate Overview**](index=3&type=section&id=Corporate%20Overview) FedEx Corp. (NYSE: FDX) is a global transportation, e-commerce, and business services provider with $89 billion in annual revenue and over 500,000 employees. The company offers integrated business solutions and aims for carbon-neutral operations by 2040 - FedEx Corp. provides customers and businesses worldwide with a broad portfolio of transportation, e-commerce and business services, with annual revenue of **$89 billion** and over **500,000 employees**[11](index=11&type=chunk) - FedEx is committed to connecting people and possibilities around the world responsibly and resourcefully, with a goal to achieve carbon-neutral operations by **2040**[13](index=13&type=chunk) [**Additional Information & Investor Resources**](index=4&type=section&id=Additional%20Information%20%26%20Investor%20Resources) Additional operating data and SEC filings (10-K, 10-Q, 8-K) are available on the company's investor relations website, investors.fedex.com, which also hosts webcasts of earnings calls and other material information - Additional information and operating data are contained in the company's annual report, Form 10-K, Form 10-Qs, Form 8-Ks and Statistical Books, available on investors.fedex.com[14](index=14&type=chunk) - The Investor Relations page of the website, investors.fedex.com, contains a significant amount of information about FedEx, including SEC filings and financial and other information for investors[15](index=15&type=chunk) [**Forward-Looking Statements & Risk Factors**](index=4&type=section&id=Forward-Looking%20Statements%20%26%20Risk%20Factors) The press release contains forward-looking statements subject to various risks and uncertainties, including economic conditions, global trade volatility, ability to implement strategies, cost reduction achievement, data breaches, labor costs, international conflicts, regulatory changes, fuel prices, competition, and successful spin-off of FedEx Freight - Certain statements in this press release may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act, subject to risks, uncertainties and other factors which could cause actual results to differ materially[16](index=16&type=chunk) - Potential risks and uncertainties include economic conditions in global markets, uncertainty and volatility in the global trade environment, ability to successfully implement business strategies and achieve cost reduction initiatives, and the successful implementation of the FedEx Freight Spin-Off[16](index=16&type=chunk)[17](index=17&type=chunk) - Other risks include a significant data breach, ability to meet labor and purchased transportation needs, international conflicts, evolving laws and government regulations, changes in fuel prices or currency exchange rates, and intense competition[17](index=17&type=chunk) [**Contacts**](index=5&type=section&id=Contacts) Contact information for Media Relations and Investor Relations is provided for inquiries - Media Contact: Caitlin Maier (901-434-8100, mediarelations@fedex.com)[18](index=18&type=chunk) - Investor Relations Contact: Jeni Hollander (901-818-7200, ir@fedex.com)[18](index=18&type=chunk) **Reconciliations of Non-GAAP Financial Measures to GAAP Financial Measures**](index=6&type=section&id=RECONCILIATIONS%20OF%20NON-GAAP%20FINANCIAL%20MEASURES%20TO%20GAAP%20FINANCIAL%20MEASURES) This section reconciles non-GAAP financial measures to GAAP, explaining adjustments for business optimization, spin-off, and fiscal year change costs for Q1 FY2026 and FY2025, and the FY2026 EPS forecast [**Explanation of Non-GAAP Adjustments**](index=6&type=section&id=Explanation%20of%20Non-GAAP%20Adjustments) FedEx uses non-GAAP financial measures, excluding business optimization costs, FedEx Freight spin-off costs, and fiscal year change costs, to provide a clearer view of core operating performance and assist investors in assessing underlying business trends. These adjustments are consistent with management's view and decision-making processes - Non-GAAP financial measures exclude business optimization costs, FedEx Freight spin-off costs, and fiscal year change costs[20](index=20&type=chunk)[21](index=21&type=chunk)[22](index=22&type=chunk)[23](index=23&type=chunk) - These adjustments are made to facilitate analysis and comparisons of ongoing business operations by excluding items that may not be indicative of, or are unrelated to, the company's and business segments' core operating performance[26](index=26&type=chunk) - Management uses these non-GAAP financial measures in making financial, operating and planning decisions and evaluating the company's and each business segments' ongoing performance[26](index=26&type=chunk) [**First Quarter Fiscal 2026 Reconciliations**](index=8&type=section&id=First%20Quarter%20Fiscal%202026%20Reconciliations) Detailed reconciliation tables are provided for FedEx Corporation, Federal Express Segment, and FedEx Freight Segment, showing the impact of business optimization, FedEx Freight spin-off, and fiscal year change costs on operating income, net income, and diluted EPS for Q1 FY2026 [**First Quarter Fiscal 2026 FedEx Corporation**](index=8&type=section&id=First%20Quarter%20Fiscal%202026%20FedEx%20Corporation) First Quarter Fiscal 2026 FedEx Corporation Reconciliation | Dollars in millions, except EPS | | Operating Income | Margin | | Income Taxes | Net Income | Diluted Earnings Per Share | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | GAAP measure | $ | 1,186 | 5.3 % | $ | 310 | $ 824 | $ 3.46 | | Business optimization costs | | 67 | 0.3 % | | 15 | 52 | 0.22 | | FedEx Freight spin-off costs | | 41 | 0.2 % | | 10 | 33 | 0.14 | | Fiscal year change costs | | 4 | — % | | 1 | 3 | 0.01 | | Non-GAAP measure | $ | 1,298 | 5.8 % | $ | 336 | $ 912 | $ 3.83 | [**Federal Express Segment**](index=8&type=section&id=First%20Quarter%20Fiscal%202026%20Federal%20Express%20Segment) First Quarter Fiscal 2026 Federal Express Segment Reconciliation | Dollars in millions | Operating Income | Margin | | :--- | :--- | :--- | | GAAP measure | $ 1,138 | 6.0 % | | Business optimization costs | 21 | 0.1 % | | FedEx Freight spin-off costs | 1 | — % | | Fiscal year change costs | 4 | — % | | Non-GAAP measure | $ 1,164 | 6.1 % | [**FedEx Freight Segment**](index=8&type=section&id=First%20Quarter%20Fiscal%202026%20FedEx%20Freight%20Segment) First Quarter Fiscal 2026 FedEx Freight Segment Reconciliation | Dollars in millions | Operating Income | Margin | | :--- | :--- | :--- | | GAAP measure | $ 360 | 16.0 % | | FedEx Freight spin-off costs | 9 | 0.4 % | | Non-GAAP measure | $ 369 | 16.3 % | [**First Quarter Fiscal 2025 Reconciliations**](index=9&type=section&id=First%20Quarter%20Fiscal%202025%20Reconciliations) Detailed reconciliation tables are provided for FedEx Corporation and Federal Express Segment, showing the impact of business optimization costs on operating income, net income, and diluted EPS for Q1 FY2025 [**FedEx Corporation**](index=9&type=section&id=First%20Quarter%20Fiscal%202025%20FedEx%20Corporation) First Quarter Fiscal 2025 FedEx Corporation Reconciliation | Dollars in millions, except EPS | Operating Income | Margin | | Income Taxes | Net Income | Diluted Earnings Per Share | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | GAAP measure | $ 1,080 | 5.0 % | $ | 262 | $ 794 | $ 3.21 | | Business optimization costs | 128 | 0.6 % | | 30 | 98 | 0.39 | | Non-GAAP measure | $ 1,208 | 5.6 % | $ | 292 | $ 892 | $ 3.60 | [**Federal Express Segment**](index=9&type=section&id=First%20Quarter%20Fiscal%202025%20Federal%20Express%20Segment) First Quarter Fiscal 2025 Federal Express Segment Reconciliation | Dollars in millions | Operating Income | Margin | | :--- | :--- | :--- | | GAAP measure | $ 953 | 5.2 % | | Business optimization costs | 43 | 0.2 % | | Non-GAAP measure | $ 996 | 5.4 % | [**Fiscal 2026 Diluted Earnings Per Share Forecast**](index=11&type=section&id=Fiscal%202026%20Diluted%20Earnings%20Per%20Share%20Forecast) The fiscal 2026 diluted EPS forecast is a non-GAAP measure, excluding MTM retirement plans accounting adjustments and estimated costs for business optimization, FedEx Freight spin-off, and fiscal year change. A table outlines the effects of these exclusions, except for MTM adjustments which are impracticable to predict - The fiscal 2026 EPS forecast is a non-GAAP financial measure because it excludes fiscal 2026 MTM retirement plans accounting adjustments and estimated costs related to business optimization initiatives, the planned spin-off of FedEx Freight, and the planned fiscal year change[28](index=28&type=chunk) Fiscal 2026 Diluted Earnings Per Share Forecast Adjustments | Dollars in millions, except EPS | Adjustments | Diluted Earnings Per Share | | :--- | :--- | :--- | | Diluted earnings per share before MTM retirement plans accounting adjustments (non-GAAP) | | $14.20 to $16.00 | | FedEx Freight spin-off costs | $600 | | | Business optimization | 310 | | | Fiscal year change costs | 30 | | | Total adjustments | $940 | | | Income tax effect | (215) | | | Net of tax effect | $725 | 3.00 | | Diluted earnings per share with adjustments (non-GAAP) | | $17.20 to $19.00 | **Detailed Financial Statements**](index=12&type=section&id=Detailed%20Financial%20Statements) This section presents detailed unaudited consolidated financial statements, including income statements, balance sheets, cash flows, and segment-specific financial and operating highlights [**FedEx Corp. Financial Highlights (Consolidated Income Statement)**](index=12&type=section&id=FEDEX%20CORP.%20FINANCIAL%20HIGHLIGHTS) Presents the unaudited consolidated income statement for the three months ended August 31, 2025, and 2024, detailing revenue by segment, operating expenses, operating income, other income/expense, income before taxes, provision for income taxes, net income, and diluted EPS FedEx Corp. Financial Highlights (Consolidated Income Statement) | | | Three Months Ended | | | | :--- | :--- | :--- | :--- | :--- | :--- | | | | August 31, 2025 | | August 31, 2024 | Percent Change | | Revenue: | | | | | | | Federal Express segment | $ | 19,116 | $ | 18,305 | 4 | | FedEx Freight segment | | 2,257 | | 2,329 | (3) | | (1) Other and eliminations | | 871 | | 945 | (8) | | Total Revenue | | 22,244 | | 21,579 | 3 | | Operating Expenses: | | | | | | | Salaries and employee benefits | | 8,062 | | 7,785 | 4 | | Purchased transportation | | 5,488 | | 5,275 | 4 | | Rentals and landing fees | | 1,192 | | 1,161 | 3 | | Depreciation and amortization | | 1,092 | | 1,078 | 1 | | Fuel | | 873 | | 1,075 | (19) | | Maintenance and repairs | | 843 | | 829 | 2 | | Separation and other costs | | 45 | | — | NM | | Business optimization costs | | 67 | | 128 | (48) | | Other | | 3,396 | | 3,168 | 7 | | Total Operating Expenses | | 21,058 | | 20,499 | 3 | | Operating income (loss): | | | | | | | Federal Express segment | | 1,138 | | 953 | 19 | | FedEx Freight segment | | 360 | | 439 | (18) | | (1) Corporate, other, and eliminations | | (312) | | (312) | — | | Total Operating Income | | 1,186 | | 1,080 | 10 | | Other (Expense) Income: | | | | | | | Interest, net | | (119) | | (84) | 42 | | Other retirement plans, net | | 60 | | 49 | 22 | | Other, net | | 7 | | 11 | (36) | | Total Other (Expense) Income | | (52) | | (24) | 117 | | Income Before Income Taxes | | 1,134 | | 1,056 | 7 | | Provision for Income Taxes | | 310 | | 262 | 18 | | Net Income | $ | 824 | $ | 794 | 4 | | Diluted Earnings Per Share | $ | 3.46 | $ | 3.21 | 8 | | Weighted Average Common and Common Equivalent Shares | | 238 | | 247 | (4) | | Capital Expenditures | $ | 623 | $ | 767 | (19) | [**FedEx Corp. Condensed Consolidated Balance Sheets**](index=13&type=section&id=FEDEX%20CORP.%20CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) Provides the unaudited condensed consolidated balance sheets as of August 31, 2025, and May 31, 2025, detailing current and long-term assets, liabilities, and common stockholders' investment FedEx Corp. Condensed Consolidated Balance Sheets | | August 31, 2025 | | | | | :--- | :--- | :--- | :--- | :--- | | | (Unaudited) | | | May 31, 2025 | | ASSETS | | | | | | Current Assets | | | | | | Cash and cash equivalents | $ | 6,166 | $ | 5,502 | | Receivables, less allowances | | 11,516 | | 11,368 | | Spare parts, supplies, and fuel, less allowances | | 604 | | 602 | | Prepaid expenses and other | | 1,058 | | 914 | | Total current assets | | 19,344 | | 18,386 | | Property and Equipment, at Cost | | 88,126 | | 87,622 | | Less accumulated depreciation and amortization | | 46,742 | | 45,980 | | Net property and equipment | | 41,384 | | 41,642 | | Other Long-Term Assets | | | | | | Operating lease right-of-use assets, net | | 16,368 | | 16,453 | | Goodwill | | 6,672 | | 6,603 | | Other assets | | 4,648 | | 4,543 | | Total other long-term assets | | 27,688 | | 27,599 | | | $ | 88,416 | $ | 87,627 | | LIABILITIES AND COMMON STOCKHOLDERS' INVESTMENT | | | | | | Current Liabilities | | | | | | Current portion of long-term debt | $ | 883 | $ | 1,428 | | Accrued salaries and employee benefits | | 2,333 | | 2,731 | | Accounts payable | | 4,223 | | 3,692 | | Operating lease liabilities | | 2,591 | | 2,565 | | Accrued expenses | | 5,494 | | 4,995 | | Total current liabilities | | 15,524 | | 15,411 | | Long-Term Debt, Less Current Portion | | 20,291 | | 19,151 | | Other Long-Term Liabilities | | | | | | Deferred income taxes | | 4,050 | | 4,205 | | Pension, postretirement healthcare, and other benefit obligations | | 1,690 | | 1,698 | | Self-insurance accruals | | 4,132 | | 4,033 | | Operating lease liabilities | | 14,141 | | 14,272 | | Other liabilities | | 817 | | 783 | | Total other long-term liabilities | | 24,830 | | 24,991 | | Commitments and Contingencies | | | | | | Common Stockholders' Investment | | | | | | Common stock, $0.10 par value, 800 million shares authorized | | 32 | | 32 | | Additional paid-in capital | | 4,327 | | 4,290 | | Retained earnings | | 41,538 | | 41,402 | | Accumulated other comprehensive loss | | (1,371) | | (1,362) | | Treasury stock, at cost | | (16,755) | | (16,288) | | Total common stockholders' investment | | 27,771 | | 28,074 | | | $ | 88,416 | $ | 87,627 | [**FedEx Corp. Condensed Consolidated Statements of Cash Flows**](index=14&type=section&id=FEDEX%20CORP.%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) Presents the unaudited condensed consolidated statements of cash flows for the three months ended August 31, 2025, and 2024, outlining cash flows from operating, investing, and financing activities FedEx Corp. Condensed Consolidated Statements of Cash Flows | | | Three Months Ended | | | :--- | :--- | :--- | :--- | :--- | | | August 31, 2025 | | | August 31, 2024 | | Operating Activities: | | | | | | Net income | $ | 824 | $ | 794 | | Adjustments to reconcile net income to cash provided by operating activities: | | | | | | Depreciation and amortization | | 1,092 | | 1,078 | | Other, net | | 910 | | 925 | | Changes in operating assets and liabilities, net | | (1,110) | | (1,610) | | Cash provided by operating activities | | 1,716 | | 1,187 | | Investing Activities: | | | | | | Capital expenditures | | (623) | | (767) | | Purchase of investments | | (34) | | (61) | | Proceeds from sale of investments | | 30 | | 13 | | Proceeds from asset dispositions and other investing activities, net | | 8 | | 13 | | Cash used in investing activities | | (619) | | (802) | | Financing Activities: | | | | | | Proceeds from debt issuances | | 997 | | — | | Principal payments on debt | | (625) | | (34) | | Proceeds from stock issuances | | 18 | | 404 | | Dividends paid | | (345) | | (339) | | Purchases of common stock | | (500) | | (1,000) | | Other | | (5) | | — | | Cash used in financing activities | | (460) | | (969) | | Effect of exchange rate changes on cash | | 27 | | 26 | | Net increase (decrease) in cash and cash equivalents | | 664 | | (558) | | Cash and cash equivalents at beginning of period | | 5,502 | | 6,501 | | Cash and cash equivalents at end of period | $ | 6,166 | $ | 5,943 | [**Federal Express Segment Financial & Operating Highlights**](index=15&type=section&id=FEDERAL%20EXPRESS%20SEGMENT%20FINANCIAL%20HIGHLIGHTS) Details the financial and operating performance of the Federal Express segment for the three months ended August 31, 2025, and 2024, including revenue breakdown by package type and freight, operating expenses, operating income, operating margin, and key package and freight statistics (volume, yield) Federal Express Segment Financial Highlights | | | Three Months Ended | | | | :--- | :--- | :--- | :--- | :--- | :--- | | | | August 31, 2025 | | August 31, 2024 | Percent Change | | Revenue: | | | | | | | Package: | | | | | | | U.S. priority | $ | 2,767 | $ | 2,591 | 7 | | U.S. deferred | | 1,273 | | 1,151 | 11 | | U.S. ground | | 8,654 | | 8,056 | 7 | | Total U.S. domestic package revenue | | 12,694 | | 11,798 | 8 | | International priority | | 2,258 | | 2,206 | 2 | | International economy | | 1,354 | | 1,360 | — | | Total international export package revenue | | 3,612 | | 3,566 | 1 | | (1) International domestic | | 1,135 | | 1,112 | 2 | | Total package revenue | | 17,441 | | 16,476 | 6 | | Freight: | | | | | | | U.S. | | 303 | | 569 | (47) | | International priority | | 595 | | 526 | 13 | | International economy | | 528 | | 463 | 14 | | Total freight revenue | | 1,426 | | 1,558 | (8) | | Other | | 249 | | 271 | (8) | | Total revenue | | 19,116 | | 18,305 | 4 | | Operating expenses: | | | | | | | Salaries and employee benefits | | 6,516 | | 6,201 | 5 | | Purchased transportation | | 5,073 | | 4,801 | 6 | | Rentals and landing fees | | 1,013 | | 986 | 3 | | Depreciation and amortization | | 954 | | 935 | 2 | | Fuel | | 760 | | 954 | (20) | | Maintenance and repairs | | 737 | | 719 | 3 | | Separation and other costs | | 5 | | — | NM | | Business optimization costs | | 21 | | 43 | (51) | | Intercompany allocations | | (233) | | (187) | 25 | | Other | | 3,132 | | 2,900 | 8 | | Total operating expenses | | 17,978 | | 17,352 | 4 | | Operating income | $ | 1,138 | $ | 953 | 19 | | Operating margin | | 6.0 % | | 5.2 % | 80 bp | Federal Express Segment Operating Highlights (Package Statistics) | PACKAGE STATISTICS | | | Three Months Ended | | | | :--- | :--- | :--- | :--- | :--- | :--- | | (1) Avg. daily package volume (ADV) (000s) : | | | | | | | U.S. priority | | 1,654 | | 1,600 | 3 | | U.S. deferred | | 1,061 | | 968 | 10 | | U.S. ground commercial | | 4,290 | | 4,289 | — | | U.S. ground home delivery/economy | | 6,915 | | 6,438 | 7 | | Total U.S. domestic ADV | | 13,920 | | 13,295 | 5 | | International priority | | 562 | | 622 | (10) | | International economy | | 518 | | 491 | 5 | | Total international export ADV | | 1,080 | | 1,113 | (3) | | (2) International domestic | | 1,806 | | 1,823 | (1) | | Total ADV | | 16,806 | | 16,231 | 4 | | Revenue per package (yield): | | | | | | | U.S. priority | $ | 26.13 | $ | 25.30 | 3 | | U.S. deferred | | 18.76 | | 18.59 | 1 | | U.S. ground | | 12.07 | | 11.73 | 3 | | U.S. domestic composite | | 14.25 | | 13.87 | 3 | | International priority | | 62.77 | | 55.37 | 13 | | International economy | | 40.87 | | 43.33 | (6) | | International export composite | | 52.27 | | 50.06 | 4 | | (2) International domestic | | 9.81 | | 9.53 | 3 | | Composite package yield | $ | 16.22 | $ | 15.86 | 2 | Federal Express Segment Operating Highlights (Freight Statistics) | FREIGHT STATISTICS | | | Three Months Ended | | | | :--- | :--- | :--- | :--- | :--- | :--- | | Average daily freight pounds (000s): | | | | | | | U.S. | | 2,165 | | 5,319 | (59) | | International priority | | 4,647 | | 4,465 | 4 | | International economy | | 11,222 | | 10,706 | 5 | | Total average daily freight pounds | | 18,034 | | 20,490 | (12) | | Revenue per pound (yield): | | | | | | | U.S. | $ | 2.18 | $ | 1.67 | 31 | | International priority | | 2.00 | | 1.84 | 9 | | International economy | | 0.74 | | 0.68 | 9 | | Composite freight yield | $ | 1.24 | $ | 1.19 | 4 | | Operating weekdays | | 64 | | 64 | — | [**FedEx Freight Segment Financial & Operating Highlights**](index=17&type=section&id=FEDEX%20FREIGHT%20SEGMENT%20FINANCIAL%20AND%20OPERATING%20HIGHLIGHTS) Details the financial and operating performance of the FedEx Freight segment for the three months ended August 31, 2025, and 2024, including revenue, operating expenses, operating income, operating margin, and key operating statistics (average daily shipments, weight per shipment, revenue per shipment, revenue per hundredweight) FedEx Freight Segment Financial Highlights | FINANCIAL HIGHLIGHTS | | | Three Months Ended | | | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | $ | 2,257 | $ | 2,329 | (3) | | Operating expenses: | | | | | | | Salaries and employee benefits | | 975 | | 984 | (1) | | Purchased transportation | | 201 | | 203 | (1) | | Rentals | | 74 | | 71 | 4 | | Depreciation and amortization | | 110 | | 110 | — | | Fuel | | 113 | | 121 | (7) | | Maintenance and repairs | | 81 | | 82 | (1) | | Separation and other costs | | 9 | | — | NM | | Intercompany charges | | 162 | | 148 | 9 | | Other | | 172 | | 171 | 1 | | Total operating expenses | | 1,897 | | 1,890 | — | | Operating income | $ | 360 | $ | 439 | (18) | | Operating margin | | 16.0 % | | 18.8 % | (280) bp | FedEx Freight Segment Operating Statistics | OPERATING STATISTICS | | | Three Months Ended | | | | :--- | :--- | :--- | :--- | :--- | :--- | | Operating weekdays | | 64 | | 64 | — | | Average daily shipments (000s): | | | | | | | Priority | | 62.0 | | 62.9 | (1) | | Economy | | 28.0 | | 29.1 | (4) | | Total average daily shipments | | 90.0 | | 92.0 | (2) | | Weight per shipment (lbs): | | | | | | | Priority | | 933 | | 956 | (2) | | Economy | | 907 | | 868 | 4 | | Composite weight per shipment | | 925 | | 928 | — | | Revenue per shipment: | | | | | | | Priority | $ | 359.54 | $ | 363.97 | (1) | | Economy | | 408.05 | | 408.60 | — | | Composite revenue per shipment | $ | 374.62 | $ | 378.09 | (1) | | Revenue per hundredweight: | | | | | | | Priority | $ | 38.54 | $ | 38.06 | 1 | | Economy | | 44.98 | | 47.09 | (4) | | Composite revenue per hundredweight | $ | 40.50 | $ | 40.73 | (1) |

Fiscal 2026 Q1 Review [Executive Summary & CEO Commentary](index=1&type=section&id=Executive%20Summary%20%26%20CEO%20Commentary) Scholastic reported a seasonal Q1 operating loss, with CEO Peter Warwick highlighting steady progress in book fairs, Entertainment IP, and strategic Education efforts, alongside real estate monetization plans - The company typically generates an **operating loss** in the first quarter due to **seasonality** when schools are not in session[1](index=1&type=chunk)[2](index=2&type=chunk) - **Fall book fair bookings are encouraging and exceed prior year bookings**, showing **strong engagement with hosts**[3](index=3&type=chunk) - Scholastic Entertainment is **expanding IP reach and value**, creating new brands, and building **higher-margin digital and licensing revenue streams**, leveraging 9 Story Media Group capabilities[3](index=3&type=chunk) - The Education division faced pressure from a **difficult and volatile funding environment**, leading to **delayed or reduced school purchases**[4](index=4&type=chunk) - The company is **evaluating potential sale-leasebacks of key real estate assets** to **enhance shareholder value**, which have **drawn substantial interest**[5](index=5&type=chunk) [Consolidated Financial Highlights](index=1&type=section&id=Consolidated%20Financial%20Highlights) Q1 FY26 saw a **5% revenue decrease** to **$225.6 million**, a **4% operating loss increase** to **$92.2 million**, and a **28% diluted loss per share widening**, while **Adjusted EBITDA improved 8%** to a **$55.7 million loss** | In $ millions (except per share data) | Fiscal 2026 | Fiscal 2025 | Change ($) | Change (%) | | :----------------------------------- | :---------- | :---------- | :--------- | :--------- | | Revenues | $ 225.6 | $ 237.2 | $ (11.6) | (5)% | | Operating income (loss) | $ (92.2) | $ (88.5) | $ (3.7) | (4)% | | Earnings (loss) before taxes | $ (97.0) | $ (91.8) | $ (5.2) | (6)% | | Diluted earnings (loss) per share | $ (2.83) | $ (2.21) | $ (0.62) | (28)% | | Operating income (loss), ex. one-time items * | $ (81.9) | $ (85.6) | $ 3.7 | 4 % | | Diluted earnings (loss) per share, ex. one-time items * | $ (2.52) | $ (2.13) | $ (0.39) | (18)% | | Adjusted EBITDA * | $ (55.7) | $ (60.5) | $ 4.8 | 8 % | [Overall Financial Performance](index=1&type=section&id=Overall%20Financial%20Performance) Consolidated revenues **decreased 5%** to **$225.6 million** due to lower Education Solutions sales, resulting in a **$92.2 million operating loss**, though **Adjusted EBITDA improved 8%** to a **$55.7 million loss** - Revenues **decreased 5% to $225.6 million**, mainly due to **lower Education Solutions sales** amid a **volatile funding environment**[7](index=7&type=chunk) - Operating loss **increased 4% to $92.2 million** (including one-time charges), but **improved by $3.7 million excluding these charges**[8](index=8&type=chunk) - **Adjusted EBITDA improved 8% to a loss of $55.7 million**, reflecting **reduced discretionary overhead** and **higher Children's Book Publishing and Distribution revenues**[8](index=8&type=chunk)[9](index=9&type=chunk) Quarterly Results by Segment [Children's Book Publishing and Distribution](index=2&type=section&id=Children's%20Book%20Publishing%20and%20Distribution) This segment's revenues **increased 4%** to **$109.4 million**, driven by an **18% rise in Book Fairs**, despite a **33% drop in Book Clubs**, leading to an improved operating loss of **$35.1 million** | Metric | FY26 Q1 ($M) | FY25 Q1 ($M) | Change ($M) | Change (%) | | :---------------------- | :----------- | :----------- | :---------- | :--------- | | Total Revenues | 109.4 | 105.4 | 4.0 | 4 % | | Book Fairs Revenues | 34.1 | 28.8 | 5.3 | 18 % | | Book Clubs Revenues | 1.8 | 2.7 | (0.9) | (33)% | | Consolidated Trade | 73.5 | 73.9 | (0.4) | (1)% | | Operating income (loss) | (35.1) | (36.6) | 1.5 | 4 % | - **Higher redemptions of Scholastic Dollars** in Book Fairs are indicative of **positive engagement with Book Fair hosts**[11](index=11&type=chunk) [Education Solutions](index=2&type=section&id=Education%20Solutions) Education Solutions revenues significantly **decreased 28%** to **$40.1 million** due to school funding uncertainty, resulting in an **increased operating loss of $21.2 million** | Metric | FY26 Q1 ($M) | FY25 Q1 ($M) | Change ($M) | Change (%) | | :---------------------- | :----------- | :----------- | :---------- | :--------- | | Revenues | 40.1 | 55.7 | (15.6) | (28)% | | Operating income (loss) | (21.2) | (17.0) | (4.2) | (25)% | - The division continues to execute on **more focused product, marketing, and sales strategies** with the long-term goal of **regaining market share**[12](index=12&type=chunk) [Entertainment](index=2&type=section&id=Entertainment) Entertainment revenues **decreased 18%** to **$13.6 million** due to production delays, widening the operating loss to **$4.0 million**, partly from **$2.5 million in intangible amortization** related to the 9 Story transaction | Metric | FY26 Q1 ($M) | FY25 Q1 ($M) | Change ($M) | Change (%) | | :---------------------- | :----------- | :----------- | :---------- | :--------- | | Revenues | 13.6 | 16.6 | (3.0) | (18)% | | Operating income (loss) | (4.0) | (0.5) | (3.5) | NM | - The company incurred **$2.5 million in intangible amortization** related to the **9 Story transaction** during the quarter[13](index=13&type=chunk) [International](index=2&type=section&id=International) International revenues grew **4%** to **$59.4 million** (excluding currency impact), driven by Australia, UK, and Asia, leading to a **49% improved operating loss** of **$4.2 million** | Metric | FY26 Q1 ($M) | FY25 Q1 ($M) | Change ($M) | Change (%) | | :---------------------- | :----------- | :----------- | :---------- | :--------- | | Revenues | 59.4 | 56.8 | 2.6 | 5 % | | Operating income (loss) | (4.2) | (8.3) | 4.1 | 49 % | - **Excluding favorable foreign currency exchange of $0.2 million**, International revenues **increased 4%**[14](index=14&type=chunk) - **Adjusted operating loss improved by $4.2 million**, driven by **higher revenues and operational efficiencies**[14](index=14&type=chunk) [Overhead](index=2&type=section&id=Overhead) Overhead costs were **$27.7 million**, but adjusted costs **decreased $6.6 million** excluding **$9.4 million in one-time charges**, reflecting successful cost-saving initiatives | Metric | FY26 Q1 ($M) | FY25 Q1 ($M) | Change ($M) | Change (%) | | :---------------------- | :----------- | :----------- | :---------- | :--------- | | Operating income (loss) | (27.7) | (26.1) | (1.6) | (6)% | - **Excluding one-time charges**, adjusted overhead costs **decreased $6.6 million** due to **cost-saving initiatives**[15](index=15&type=chunk) Capital Position and Liquidity [Cash Flow and Debt](index=3&type=section&id=Cash%20Flow%20and%20Debt) Net cash used by operating activities **increased 95%** to **$81.8 million**, and net debt rose to **$242.8 million**, reflecting working capital needs, dividends, and share repurchases | In $ millions | Fiscal 2026 | Fiscal 2025 | Change ($) | Change (%) | | :------------------------------------------------ | :---------- | :---------- | :--------- | :--------- | | Net cash (used) provided by operating activities | $ (81.8) | $ (41.9) | $ (39.9) | (95)% | | Additions to property, plant and equipment and prepublication expenditures | (14.9) | (24.4) | 9.5 | 39 % | | Net of borrowings (repayments) film related obligations | (3.5) | (2.4) | (1.1) | (46)% | | Free cash flow (use)* | $ (100.2) | $ (68.7) | $ (31.5) | (46)% | | Net cash (debt)* | $ (242.8) | $ (152.1) | $ (90.7) | (60)% | - Net cash used by operating activities **increased by 95% to $81.8 million**, driven by **lower net income** and **seasonal working capital**[17](index=17&type=chunk) - Net debt **increased to $242.8 million from $152.1 million**, reflecting **working capital, dividends, and share repurchases**[18](index=18&type=chunk) - The Company **distributed $5.2 million in dividends** and has **$70.0 million remaining for share repurchases**[18](index=18&type=chunk) [Real Estate Monetization Initiatives](index=3&type=section&id=Real%20Estate%20Monetization%20Initiatives) Scholastic is evaluating potential sale-leaseback transactions for its NYC and Missouri real estate, expecting **significant additional liquidity** for **debt reduction and share repurchases** this fall - Scholastic has **retained Newmark Group** to identify investment partners for **potential sale-leaseback transactions** of its owned real estate assets[19](index=19&type=chunk) - These processes are expected to **conclude this fall** and could provide **significant additional liquidity** for **debt reduction and share repurchases**[19](index=19&type=chunk) Additional Information [Non-GAAP Financial Measures](index=3&type=section&id=Non-GAAP%20Financial%20Measures) The company provides **non-GAAP measures** like **Adjusted EBITDA** and **Free Cash Flow** for supplemental understanding, not as substitutes for GAAP financial information - **Non-GAAP measures** like **"Adjusted EBITDA"** and **"Free Cash Flow"** are included to **supplement GAAP financial statements**[20](index=20&type=chunk) - This information is **supplemental and not a substitute for GAAP financial information**[20](index=20&type=chunk) [Conference Call Details](index=3&type=section&id=Conference%20Call%20Details) Scholastic discussed **Q1 results** on a September 18, 2025 conference call, with a webcast and slides available on its investor relations website - A conference call was held on **September 18, 2025, at 4:30 p.m. ET** to discuss results, moderated by **Peter Warwick and Haji Glover**[21](index=21&type=chunk) - **Access to the live webcast and dial-in details were provided**, with an **archived webcast and slides available at investor.scholastic.com**[22](index=22&type=chunk) [About Scholastic](index=3&type=section&id=About%20Scholastic) **Scholastic Corporation** is a **global children's publishing, education, and media company** with over 100 years of history, empowering literacy through diverse content and channels worldwide - **Scholastic Corporation (NASDAQ: SCHL)** is a **global children's publishing, education, and media company** with **over 100 years of history**[23](index=23&type=chunk) - The company's mission is to **empower children to become lifelong readers and learners** through **bestselling books, literacy resources, and entertaining media**[23](index=23&type=chunk) - Scholastic **operates globally, reaching over 135 countries** through **school-based book clubs, book fairs, libraries, retail, and online platforms**[23](index=23&type=chunk) [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) This news release contains **forward-looking statements** subject to market and product acceptance risks, where **actual results could differ materially** from current expectations - The news release contains **forward-looking statements** subject to **risks and uncertainties**, including **market conditions and product acceptance**[25](index=25&type=chunk) - **Actual results could differ materially** from those currently anticipated[25](index=25&type=chunk) Unaudited Financial Statements [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) This section details revenues, operating costs, and net income (loss) for the three months ended August 31, 2025, and August 31, 2024 | | Three months ended | | | | :-------------------------------------- | :--------- | :--------- | :--------- | | | 08/31/25 | 08/31/24 | | | Revenues | $ 225.6 | $ 237.2 | | | Operating costs and expenses: | | | | | Cost of goods sold | 123.5 | 128.3 | | | Selling, general and administrative expense | 177.2 | 182.1 | | | Depreciation and amortization | 16.3 | 15.3 | | | Asset impairments and write downs | 0.8 | — | | | Total operating costs and expenses | 317.8 | 325.7 | | | Operating income (loss) | (92.2) | (88.5) | | | Interest income (expense), net | (4.5) | (3.0) | | | Other components of net periodic benefit (cost) | (0.3) | (0.3) | | | Earnings (loss) before income taxes | (97.0) | (91.8) | | | Provision (benefit) for income taxes | (25.9) | (29.3) | | | Net income (loss) | (71.1) | (62.5) | | | Basic and diluted earnings (loss) per share of Class A and Common Stock | | | | | Basic | $ (2.83) | $ (2.21) | | | Diluted | $ (2.83) | $ (2.21) | | | Basic weighted average shares outstanding | 25,161 | 28,290 | | | Diluted weighted average shares outstanding | 25,410 | 28,908 | [Segment Results](index=6&type=section&id=Segment%20Results) This section presents revenues and operating income (loss) for each operating segment for the three months ended August 31, 2025, and August 31, 2024 | | | | Three months ended | | | Change | | | :----------------------------------- | :------- | :------- | :------- | :------- | :------- | :------- | :------- | | | 08/31/25 | | | 08/31/24 | | $ | % | | Children's Book Publishing and Distribution | | | | | | | | | Revenues | | | | | | | | | Books Clubs | $ 1.8 | | $ 2.7 | | $ (0.9) | (33)% | | Book Fairs | 34.1 | | 28.8 | | 5.3 | 18 % | | School Reading Events | 35.9 | | 31.5 | | 4.4 | 14 % | | Consolidated Trade | 73.5 | | 73.9 | | (0.4) | (1)% | | Total Revenues | 109.4 | | 105.4 | | 4.0 | 4 % | | Operating income (loss) | (35.1) | | (36.6) | | 1.5 | 4 % | | Operating margin | NM | | NM | | | | | Education Solutions | | | | | | | | | Revenues | 40.1 | | 55.7 | | (15.6) | (28)% | | Operating income (loss) | (21.2) | | (17.0) | | (4.2) | (25)% | | Operating margin | NM | | NM | | | | | Entertainment | | | | | | | | | Revenues | 13.6 | | 16.6 | | (3.0) | (18)% | | Operating income (loss) | (4.0) | | (0.5) | | (3.5) | NM | | Operating margin | NM | | NM | | | | | International | | | | | | | | | Revenues | 59.4 | | 56.8 | | 2.6 | 5 % | | Operating income (loss) | (4.2) | | (8.3) | | 4.1 | 49 % | | Operating margin | NM | | NM | | | | | Overhead | | | | | | | | | Revenues | 3.1 | | 2.7 | | 0.4 | 15 % | | Operating income (loss) | (27.7) | | (26.1) | | (1.6) | (6)% | | Operating income (loss) | $ (92.2) | $ | (88.5) | $ | (3.7) | (4)% | [Supplemental Balance Sheet and Cash Flow Items](index=7&type=section&id=Supplemental%20Balance%20Sheet%20and%20Cash%20Flow%20Items) This section provides selected balance sheet items and cash flow details, including net cash from operating activities and free cash flow (use) | Selected Balance Sheet Items | | | | | :--------------------------- | :--------- | :--------- | :--------- | | | 08/31/25 | | 08/31/24 | | Cash and cash equivalents | $ 94.3 | | $ 84.1 | | Accounts receivable, net | 187.0 | | 201.1 | | Inventories, net | 322.2 | | 310.3 | | Accounts payable | 175.8 | | 184.0 | | Deferred revenue | 181.0 | | 173.9 | | Accrued royalties | 86.6 | | 77.5 | | Film related obligations | 14.7 | | 34.1 | | Lines of credit and long-term debt | 331.2 | | 231.1 | | (1) Net cash (debt) | (242.8) | | (152.1) | | Total stockholders' equity | 878.0 | | 957.3 | | Selected Cash Flow Items | | | | | | | Three months ended | | | | 08/31/25 | | 08/31/24 | | Net cash provided by (used in) operating activities | $ (81.8) | | $ (41.9) | | Property, plant and equipment additions | (10.0) | | (20.0) | | Prepublication expenditures | (4.9) | | (4.4) | | Net borrowings (repayments) of film related obligations | (3.5) | | (2.4) | | (2) Free cash flow (use) | $ (100.2) | | $ (68.7) | - **Net cash (debt)** is defined as **cash and cash equivalents less production cash, net of lines of credit and short-term and long-term debt, excluding film related obligations**[32](index=32&type=chunk) - **Free cash flow (use)** is defined as **net cash from operating activities, adjusted for acquisitions, asset sales, capital expenditures, prepublication costs, and film related obligations**[33](index=33&type=chunk) [Supplemental Results - Excluding One-Time Items](index=8&type=section&id=Supplemental%20Results%20-%20Excluding%20One-Time%20Items) This table reconciles reported financial results to those excluding **one-time items** for diluted EPS, net income, earnings before taxes, and segment operating income | | | | | Three months ended | | | | | | | | | :----------------------------------- | :------- | :------- | :------- | :------- | :------- | :------- | :------- | :------- | :------- | :------- | :------- | :------- | :------- | | | | | 08/31/2025 | | | | | 08/31/2024 | | | | | | | Reported | One-time items | | Excluding One-time items | | | Reported | One-time items | | Excluding One-time items | | | Diluted earnings (loss) per (1) share | $ (2.83) | $ 0.31 | $ (2.52) | | $ (2.21) | $ 0.08 | $ (2.13) | | | (2) Net income (loss) | $ (71.1) | $ 7.8 | $ (63.3) | | $ (62.5) | $ 2.2 | $ (60.3) | | | Earnings (loss) before income taxes | $ (97.0) | $ 10.3 | $ (86.7) | | $ (91.8) | $ 2.9 | $ (88.9) | | | Children's Book Publishing (3) and Distribution | $ (35.1) | $ 0.8 | $ (34.3) | | $ (36.6) | $ — | $ (36.6) | | | Education Solutions | (21.2) | — | (21.2) | | (17.0) | — | (17.0) | | | (4) Entertainment | (4.0) | 0.0 | (4.0) | | (0.5) | 1.7 | 1.2 | | | (5) International | (4.2) | 0.1 | (4.1) | | (8.3) | — | (8.3) | | | (6) Overhead | (27.7) | 9.4 | (18.3) | | (26.1) | 1.2 | (24.9) | | | Operating income (loss) | $ (92.2) | $ 10.3 | $ (81.9) | | $ (88.5) | $ 2.9 | $ (85.6) | | - **One-time items for Q1 FY26** included **$0.8M asset impairment** in Children's Book Publishing, **less than $0.1M acquisition costs** in Entertainment, **$0.1M severance** in International, and **$8.7M severance plus $0.7M other expenses** in Overhead[36](index=36&type=chunk)[37](index=37&type=chunk) [Adjusted EBITDA (Consolidated & Segment)](index=9&type=section&id=Adjusted%20EBITDA%20(Consolidated%20%26%20Segment)) This section calculates consolidated and segment **Adjusted EBITDA**, reconciling it from earnings before income taxes, excluding **one-time items**, interest, depreciation, and amortization | | | Three months ended | | | | :------------------------------------------ | :------- | :------- | :------- | :------- | | | 08/31/25 | | 08/31/24 | | | Earnings (loss) before income taxes as reported | $ (97.0) | | $ (91.8) | | | One-time items before income taxes | 10.3 | | 2.9 | | | Earnings (loss) before income taxes excluding one-time items | (86.7) | | (88.9) | | | (1) Interest (income) expense | 4.5 | | 3.4 | | | Depreciation and amortization | 26.5 | | 25.0 | | | (2) Adjusted EBITDA | $ (55.7) | | $ (60.5) | | | | | | | | | | Three months ended | | | | | | | | :----------------------------------- | :------- | :------- | :------- | :------- | :------- | :------- | :------- | :------- | :------- | :------- | :------- | :------- | :------- | | | CBPD (1) | EDUC (1) | ENT (1) | INTL (1) | OVH (1) | | Total | | | Earnings (loss) before income taxes as reported | $ (35.1) | $ (21.2) | $ (4.5) | $ (4.7) | $ (31.5) | | $ (97.0) | | | One-time items before income taxes | 0.8 | — | 0.0 | 0.1 | 9.4 | | 10.3 | | | Earnings (loss) before income taxes excluding one-time items | (34.3) | (21.2) | (4.5) | (4.6) | (22.1) | | (86.7) | | | (2) Interest (income) expense | 0.0 | 0.0 | 0.5 | (0.0) | 4.0 | | 4.5 | | | (3) Depreciation and amortization | 7.6 | 6.1 | 4.8 | 1.9 | 6.1 | | 26.5 | | | Adjusted EBITDA | $ (26.7) | $ (15.1) | $ 0.8 | $ (2.7) | $ (12.0) | | $ (55.7) | | | | | | | | | | Three months ended | | | | | | | | | | | | | | | 08/31/24 | | | | | | | | | CBPD (1) | EDUC (1) | ENT (1) | INTL (1) | OVH (1) | | Total | | | Earnings (loss) before income taxes as reported | $ (36.6) | $ (17.0) | $ (1.1) | $ (8.7) | $ (28.4) | | $ (91.8) | | | One-time items before income taxes | — | — | 1.7 | — | 1.2 | | 2.9 | | | Earnings (loss) before income taxes excluding one-time items | (36.6) | (17.0) | 0.6 | (8.7) | (27.2) | | (88.9) | | | (2) Interest (income) expense | 0.0 | — | 1.1 | (0.0) | 2.3 | | 3.4 | | | (3) Depreciation and amortization | 7.5 | 6.2 | 3.5 | 1.9 | 5.9 | | 25.0 | | | Adjusted EBITDA | $ (29.1) | $ (10.8) | $ 5.2 | $ (6.8) | $ (19.0) | | $ (60.5) | | - **Adjusted EBITDA** is defined as **earnings (loss), excluding one-time items, before interest, taxes, depreciation, and amortization**, and is considered a **meaningful measure of operating profitability**[40](index=40&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K _________________________________________________________________________________ ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended August 3, 2025 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: 1-3822 THE CAMPBELL'S COMPANY (Ex ...

Exhibit 99.1 Darden Restaurants Reports Fiscal 2026 First Quarter Results; Declares Quarterly Dividend; And Updates Fiscal 2026 Financial Outlook ORLANDO, Fla., September 18, 2025 /PRNewswire/ -- Darden Restaurants, Inc. (NYSE:DRI) today reported its financial results for the first quarter ended August 24, 2025. First Quarter 2026 Financial Highlights, Comparisons Versus Same Fiscal Quarter Last Year • Total sales increased 10.4% to $3.0 billion, driven by a blended same-restaurant sales increase of 4.7% an ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 20-F (Mark One) ☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended June 30, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 D ...

News Release I For Immediate Release FactSet Reports Results for Fourth Quarter and Fiscal 2025 NORWALK, Conn., September 18, 2025 - FactSet ("FactSet" or the "Company") (NYSE:FDS) (NASDAQ:FDS), a global financial digital platform and enterprise solutions provider, today announced results for its fourth quarter and full year fiscal 2025 ended August 31, 2025. Fourth Quarter Fiscal 2025 Highlights (1) References to "organic" figures in this press release exclude the current year impact of acquisitions and di ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended June 30, 2025 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 001-42627 WINCHESTER BANCORP, INC. (Exact name of Registrant as specified in its Charter) (State or other jurisdiction of incorporation or or ...

[PART I – Financial Information](index=4&type=section&id=PART%20I%20%E2%80%93%20Financial%20Information) This section presents General Mills' unaudited consolidated financial statements and management's discussion for Q1 FY26 [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents General Mills' unaudited consolidated financial statements and notes for the quarter ended August 24, 2025 [Consolidated Statements of Earnings](index=4&type=section&id=Consolidated%20Statements%20of%20Earnings) The Consolidated Statements of Earnings show a significant increase in operating profit and net earnings for Q1 FY26, driven by a divestiture gain | Metric | Quarter Ended Aug. 24, 2025 (Millions) | Quarter Ended Aug. 25, 2024 (Millions) | Change (%) | | :--------------------------------------- | :------------------------------------- | :------------------------------------- | :--------- | | Net sales | $4,517.5 | $4,848.1 | -6.8% | | Operating profit | $1,725.8 | $831.5 | 107.6% | | Net earnings attributable to General Mills | $1,204.2 | $579.9 | 107.7% | | Earnings per share – diluted | $2.22 | $1.03 | 115.5% | - Operating profit and net earnings significantly increased due to a **$1,054.4 million divestitures gain** in the current quarter[12](index=12&type=chunk) [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Total comprehensive income for General Mills more than doubled year-over-year, driven by higher net earnings | Metric | Quarter Ended Aug. 24, 2025 (Millions) | Quarter Ended Aug. 25, 2024 (Millions) | Change (%) | | :------------------------------------- | :------------------------------------- | :------------------------------------- | :--------- | | Net earnings | $1,204.0 | $583.6 | 106.3% | | Other comprehensive loss, net of tax | $(55.0) | $(56.3) | -2.3% | | Total comprehensive income | $1,149.0 | $527.3 | 117.9% | | Comprehensive income attributable to General Mills | $1,148.7 | $523.1 | 119.6% | [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) The balance sheet shows a slight decrease in total assets and liabilities, while total equity increased, driven by higher retained earnings | Metric | Aug. 24, 2025 (Millions) | May 25, 2025 (Millions) | Change (%) | | :--------------------------------- | :----------------------- | :---------------------- | :--------- | | Cash and cash equivalents | $952.9 | $363.9 | 161.8% | | Total current assets | $5,239.8 | $5,275.7 | -0.7% | | Total assets | $33,015.6 | $33,071.1 | -0.2% | | Total current liabilities | $7,959.6 | $7,857.3 | 1.3% | | Total liabilities | $23,496.7 | $23,859.9 | -1.5% | | Total equity | $9,518.9 | $9,211.2 | 3.3% | - Assets held for sale decreased from **$740.4 million** to **$0**, indicating the completion of divestitures[16](index=16&type=chunk) [Consolidated Statements of Total Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Total%20Equity) Total equity increased quarter-over-quarter, primarily due to net earnings, partially offset by cash dividends and share repurchases | Metric | Quarter Ended Aug. 24, 2025 (Millions) | Quarter Ended Aug. 25, 2024 (Millions) | Change (%) | | :--------------------------------------- | :------------------------------------- | :------------------------------------- | :--------- | | Total equity, beginning balance | $9,211.2 | $9,648.5 | -4.5% | | Net earnings attributable to General Mills | $1,204.2 | $579.9 | 107.7% | | Cash dividends declared | $(330.9) | $(337.8) | -2.0% | | Common stock in treasury, ending balance | $(11,866.6) | $(10,601.9) | 11.9% | | Total equity, ending balance | $9,518.9 | $9,526.6 | -0.1% | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash from operations decreased, while investing activities generated significant cash due to divestitures, and financing activities used more cash | Metric | Quarter Ended Aug. 24, 2025 (Millions) | Quarter Ended Aug. 25, 2024 (Millions) | Change (Millions) | | :------------------------------------- | :------------------------------------- | :------------------------------------- | :---------------- | | Net cash provided by operating activities | $397.0 | $624.2 | $(227.2) | | Net cash provided by (used by) investing activities | $1,694.8 | $(148.0) | $1,842.8 | | Net cash used by financing activities | $(1,507.2) | $(429.4) | $(1,077.8) | | Increase in cash and cash equivalents | $589.0 | $50.1 | $538.9 | | Cash and cash equivalents - end of period | $952.9 | $468.1 | $484.8 | - Investing activities were significantly boosted by **$1,803.4 million** in proceeds from divestitures in Q1 FY26[20](index=20&type=chunk) - Financing activities saw a substantial increase in cash used, primarily due to **$654.8 million** in net debt payments and **$500.0 million** in common stock repurchases[20](index=20&type=chunk) [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes provide essential context and detail for the financial statements, covering accounting policies, significant transactions, and segment performance [(1) Background](index=9&type=section&id=(1)%20Background) Interim financial statements are prepared under GAAP, and Q1 FY26 results are not indicative of the full fiscal year - Interim financial statements are prepared under GAAP, and Q1 FY26 results are not necessarily indicative of the full fiscal year[22](index=22&type=chunk) - Accounting policies are consistent with the Annual Report on Form 10-K for the fiscal year ended May 25, 2025[23](index=23&type=chunk) [(2) Acquisition and Divestitures](index=9&type=section&id=(2)%20Acquisition%20and%20Divestitures) General Mills completed the sale of its U.S. yogurt business in Q1 FY26, recording a significant pre-tax gain, and acquired Whitebridge Pet Brands - Completed the sale of the United States yogurt business in Q1 FY26, recording a pre-tax gain of **$1,046.5 million**[25](index=25&type=chunk) - Recorded a **$7.9 million** increase to the pre-tax gain from the sale of the Canada yogurt business in Q1 FY26[25](index=25&type=chunk) - Acquired NX Pet Holding, Inc. (Whitebridge Pet Brands) for **$1.4 billion** in Q3 FY25, adding **$1,086.7 million** in goodwill and **$289.0 million** for the Tiki Pets brand[26](index=26&type=chunk) [(3) Restructuring, Transformation, Impairment, and Other Exit Costs](index=9&type=section&id=(3)%20Restructuring,%20Transformation,%20Impairment,%20and%20Other%20Exit%20Costs) The company recorded **$18.3 million** in restructuring and transformation charges in Q1 FY26, an increase from the prior year | Metric | Quarter Ended Aug. 24, 2025 (Millions) | Quarter Ended Aug. 25, 2024 (Millions) | | :------------------------------------------------ | :------------------------------------- | :------------------------------------- | | Restructuring, transformation, impairment, and other exit costs | $16.3 | $2.2 | | Cost of sales (restructuring charges) | $2.0 | $0.7 | | Total restructuring, transformation, and impairment charges | $18.3 | $2.9 | - Net cash paid for restructuring and transformation actions increased from **$2.7 million** in Q1 FY25 to **$21.0 million** in Q1 FY26[28](index=28&type=chunk) Reserve Balance for Restructuring and Transformation Actions | Metric | Amount (Millions) | | :---------------------------------- | :---------------- | | Reserve balance as of May 25, 2025 | $77.1 | | Fiscal 2026 charges | $0.6 | | Utilized in fiscal 2026 | $(8.4) | | Reserve balance as of Aug. 24, 2025 | $69.3 | [(4) Goodwill and Other Intangible Assets](index=10&type=section&id=(4)%20Goodwill%20and%20Other%20Intangible%20Assets) Goodwill and other intangible assets saw minor changes in Q1 FY26, primarily due to foreign currency translation | Metric | Aug. 24, 2025 (Millions) | May 25, 2025 (Millions) | | :---------------------------------- | :----------------------- | :---------------------- | | Goodwill | $15,660.2 | $15,622.4 | | Other intangible assets | $7,087.3 | $7,081.4 | | Total | $22,747.5 | $22,703.8 | - Annual amortization expense for finite-lived intangible assets is estimated at approximately **$20 million** for each of the next five fiscal years[31](index=31&type=chunk) - The company monitors Progresso, Nudges, True Chews, and Kitano brand intangible assets for potential impairment[34](index=34&type=chunk) [(5) Inventories](index=11&type=section&id=(5)%20Inventories) Total inventories increased from May 25, 2025, to August 24, 2025, primarily driven by an increase in finished goods | Component | Aug. 24, 2025 (Millions) | May 25, 2025 (Millions) | | :-------------------------- | :----------------------- | :---------------------- | | Finished goods | $2,068.0 | $1,883.9 | | Raw materials and packaging | $496.0 | $460.0 | | Grain | $77.8 | $112.5 | | Excess of FIFO over LIFO cost | $(590.3) | $(545.6) | | Total | $2,051.5 | $1,910.8 | [(6) Risk Management Activities](index=11&type=section&id=(6)%20Risk%20Management%20Activities) General Mills uses derivatives to manage market price risks for commodities and foreign currency, aiming for price certainty - Derivatives are used to manage price risk for principal ingredients (grains, oils, dairy) and energy costs to achieve future price certainty[36](index=36&type=chunk) - Changes in derivative values are recorded in cost of sales, with gains/losses reclassified from unallocated corporate items to segment operating profit[37](index=37&type=chunk)[38](index=38&type=chunk) Net Loss on Mark-to-Market Valuation of Commodity Positions | Metric | Quarter Ended Aug. 24, 2025 (Millions) | Quarter Ended Aug. 25, 2024 (Millions) | | :---------------------------------------------------------------- | :------------------------------------- | :------------------------------------- | | Net loss on mark-to-market valuation of certain commodity positions | $(0.5) | $(37.7) | | Net mark-to-market valuation of certain commodity positions recognized in unallocated corporate items | $(8.5) | $(28.8) | [(7) Debt](index=12&type=section&id=(7)%20Debt) Notes payable significantly decreased, primarily due to the reduction in U.S. commercial paper, while maintaining substantial credit facilities Notes Payable | Metric | Aug. 24, 2025 (Millions) | May 25, 2025 (Millions) | Weighted Average Interest Rate (Aug. 24, 2025) | | :----------------------- | :----------------------- | :---------------------- | :--------------------------------------------- | | U.S. commercial paper | $- | $669.4 | -% | | Financial institutions | $22.1 | $7.6 | 6.0% | | Total notes payable | $22.1 | $677.0 | 6.0% | Credit Facilities | Credit Facility | Borrowing Capacity (Millions) | Borrowed Amount (Millions) | | :------------------------------------ | :---------------------------- | :------------------------- | | Committed credit facility expiring October 2029 | $2,700.0 | $- | | Uncommitted credit facilities and lines of credit | $774.8 | $22.1 | | Total | $3,474.8 | $22.1 | - The company was in compliance with all credit facility covenants, including maintaining a fixed charge coverage ratio of at least **2.5 times**, as of August 24, 2025[44](index=44&type=chunk)[49](index=49&type=chunk) [(8) Noncontrolling Interests](index=13&type=section&id=(8)%20Noncontrolling%20Interests) General Mills purchased the outstanding Class A limited membership interests of General Mills Cereals, LLC in Q4 FY25 for **$252.8 million** - In Q4 FY25, General Mills purchased the outstanding GMC Class A limited membership interests for **$252.8 million**, which represented its principal noncontrolling interest[50](index=50&type=chunk) [(9) Stockholders' Equity](index=13&type=section&id=(9)%20Stockholders'%20Equity) Stockholders' equity details the components of comprehensive income and accumulated other comprehensive loss, showing various impacts Comprehensive Income Attributable to General Mills | Metric | Quarter Ended Aug. 24, 2025 (Millions) | Quarter Ended Aug. 25, 2024 (Millions) | | :------------------------------------------------ | :------------------------------------- | :------------------------------------- | | Net earnings attributable to General Mills | $1,204.2 | $579.9 | | Other comprehensive (loss) income attributable to General Mills | $(55.5) | $(56.8) | | Total comprehensive income attributable to General Mills | $1,148.7 | $523.1 | Accumulated Other Comprehensive Loss (AOCI) | Component of AOCI | Aug. 24, 2025 (Millions) | May 25, 2025 (Millions) | | :------------------------------------------ | :----------------------- | :---------------------- | | Foreign currency translation adjustments | $(941.9) | $(876.7) | | Unrealized loss from hedge derivatives | $(1.6) | $(7.4) | | Pension, other postretirement, and postemployment benefits: Net actuarial loss | $(1,718.9) | $(1,726.8) | | Prior service credits | $61.9 | $65.9 | | Accumulated other comprehensive loss | $(2,600.5) | $(2,545.0) | [(10) Stock Plans](index=13&type=section&id=(10)%20Stock%20Plans) Compensation expense related to stock-based payments decreased in Q1 FY26, with fair value estimated using a Black-Scholes model Stock-Based Payments | Metric | Quarter Ended Aug. 24, 2025 (Millions) | Quarter Ended Aug. 25, 2024 (Millions) | | :------------------------------------------ | :------------------------------------- | :------------------------------------- | | Compensation expense related to stock-based payments | $15.1 | $20.3 | | (Shortfall) windfall tax impacts of stock-based payments | $(1.5) | $2.8 | - Unrecognized compensation expense for non-vested stock awards was **$181.6 million** as of August 24, 2025, to be recognized over an average of **28 months**[55](index=55&type=chunk) Stock Option Valuation Assumptions | Assumption | Quarter Ended Aug. 24, 2025 | Quarter Ended Aug. 25, 2024 | | :------------------------ | :-------------------------- | :-------------------------- | | Risk-free interest rate | 4.2% | 4.5% | | Expected term | 8.0 years | 8.5 years | | Expected volatility | 22.3% | 21.6% | | Dividend yield | 4.7% | 3.8% | [(11) Earnings Per Share](index=15&type=section&id=(11)%20Earnings%20Per%20Share) Basic and diluted EPS significantly increased in Q1 FY26, driven by higher net earnings and fewer diluted shares outstanding | Metric | Quarter Ended Aug. 24, 2025 | Quarter Ended Aug. 25, 2024 | | :------------------------------------------ | :-------------------------- | :-------------------------- | | Net earnings attributable to General Mills (Millions) | $1,204.2 | $579.9 | | Average number of common shares – basic EPS (Millions) | 541.3 | 560.5 | | Average number of common shares – diluted EPS (Millions) | 542.5 | 563.8 | | Earnings per share – basic | $2.22 | $1.03 | | Earnings per share – diluted | $2.22 | $1.03 | - Anti-dilutive stock options, restricted stock units, and performance share units increased from **4.4 million** in Q1 FY25 to **11.6 million** in Q1 FY26[58](index=58&type=chunk) [(12) Share Repurchases](index=15&type=section&id=(12)%20Share%20Repurchases) General Mills repurchased a higher number of shares for a greater aggregate price in Q1 FY26, primarily through ASR agreements Share Repurchase Activity | Metric | Quarter Ended Aug. 24, 2025 (Millions) | Quarter Ended Aug. 25, 2024 (Millions) | | :-------------------------- | :------------------------------------- | :------------------------------------- | | Shares of common stock | 8.7 | 4.5 | | Aggregate purchase price | $454.0 | $302.2 | - Entered into two ASR agreements totaling **$500.0 million** in Q1 FY26, receiving an initial delivery of **7.5 million shares**, funded by divestiture proceeds[59](index=59&type=chunk) - The delivery of **8.7 million shares** under ASR agreements reduced outstanding shares for EPS calculation in Q1 FY26[62](index=62&type=chunk) [(13) Statements of Cash Flows (Supplemental)](index=16&type=section&id=(13)%20Statements%20of%20Cash%20Flows%20(Supplemental)) Supplemental cash flow information shows an increase in both net cash interest payments and net income tax payments for Q1 FY26 | Metric | Quarter Ended Aug. 24, 2025 (Millions) | Quarter Ended Aug. 25, 2024 (Millions) | | :------------------------- | :------------------------------------- | :------------------------------------- | | Net cash interest payments | $125.9 | $83.7 | | Net income tax payments | $24.8 | $18.7 | [(14) Retirement and Postemployment Benefits](index=16&type=section&id=(14)%20Retirement%20and%20Postemployment%20Benefits) Net periodic benefit expense for defined benefit pension plans decreased, while other postretirement benefit plans generated net income | Benefit Plan | Quarter Ended Aug. 24, 2025 (Millions) | Quarter Ended Aug. 25, 2024 (Millions) | | :-------------------------------- | :------------------------------------- | :------------------------------------- | | Defined Benefit Pension Plans | $8.7 | $10.1 | | Other Postretirement Benefit Plans | $(15.4) | $(13.3) | | Postemployment Benefit Plans | $4.4 | $5.2 | [(15) Income Taxes](index=16&type=section&id=(15)%20Income%20Taxes) The effective tax rate increased in Q1 FY26, primarily due to unfavorable tax components related to the U.S. yogurt business sale - The effective tax rate for Q1 FY26 was **25.6%**, up from **21.8%** in Q1 FY25, primarily due to unfavorable tax components from the U.S. yogurt business sale and earnings mix[90](index=90&type=chunk) - The One Big Beautiful Bill Act (OBBBA) was signed into law on July 4, 2025, with no material impact on income tax expense for Q1 FY26[65](index=65&type=chunk)[91](index=91&type=chunk) - OECD Pillar 2 rules, effective for fiscal 2025 in numerous countries, had no material impact on consolidated financial statements[66](index=66&type=chunk) [(16) Business Segment and Geographic Information](index=16&type=section&id=(16)%20Business%20Segment%20and%20Geographic%20Information) General Mills operates in four segments, with segment operating profit being the primary metric for performance assessment - Operating segments include North America Retail, International, North America Pet, and North America Foodservice[68](index=68&type=chunk) - Segment operating profit excludes unallocated corporate items, divestiture gains/losses, and restructuring costs, as these are centrally managed[74](index=74&type=chunk) Segment Net Sales and Operating Profit | Segment | Q1 FY26 Net Sales (Millions) | Q1 FY25 Net Sales (Millions) | Q1 FY26 Operating Profit (Millions) | Q1 FY25 Operating Profit (Millions) | | :------------------------ | :--------------------------- | :--------------------------- | :---------------------------------- | :---------------------------------- | | North America Retail | $2,625.5 | $3,016.6 | $564.2 | $745.7 | | International | $760.2 | $717.0 | $65.7 | $20.9 | | North America Pet | $610.0 | $576.1 | $112.9 | $119.4 | | North America Foodservice | $516.7 | $536.2 | $70.6 | $71.5 | | Total Segment | $4,512.4 | $4,845.9 | $813.4 | $957.5 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's analysis of General Mills' financial performance, liquidity, and critical accounting estimates for Q1 FY26 [Introduction](index=20&type=section&id=Introduction) General Mills' key priorities for fiscal 2026 include returning North America Retail to volume growth and accelerating North America Pet growth - Key priorities for fiscal 2026 are to return North America Retail to volume growth, accelerate North America Pet growth, and drive efficiencies for reinvestment[78](index=78&type=chunk) - Category growth is expected to be below long-term projections due to less benefit from net price realization and mix amid a challenging consumer backdrop[78](index=78&type=chunk) - Strategic investment includes launching Blue Buffalo into the U.S. fresh pet food sub-category in calendar 2025[78](index=78&type=chunk) - The net impact of North American yogurt divestitures and Whitebridge Pet Brands acquisition is expected to reduce adjusted operating profit growth by approximately **5 points** in fiscal 2026[78](index=78&type=chunk) [Consolidated Results of Operations](index=20&type=section&id=Consolidated%20Results%20of%20Operations) In Q1 FY26, net sales decreased **7%** (3% organic), while operating profit surged **108%** due to a divestiture gain Consolidated Financial Highlights | Metric | Q1 FY26 Value (Millions) | Q1 FY25 Value (Millions) | % Change | Constant Currency Growth (a) | | :--------------------------------------- | :----------------------- | :----------------------- | :------- | :--------------------------- | | Net sales | $4,517.5 | $4,848.1 | (7)% | | | Operating profit | $1,725.8 | $831.5 | 108% | | | Net earnings attributable to General Mills | $1,204.2 | $579.9 | 108% | | | Diluted earnings per share | $2.22 | $1.03 | 116% | | | Organic net sales growth rate | | | (3)% | | | Adjusted operating profit | $711.2 | $865.3 | (18)% | (18)% | | Adjusted diluted earnings per share | $0.86 | $1.07 | (20)% | (20)% | - The **108%** increase in operating profit was primarily driven by a **$1,054.4 million** divestiture gain from the sale of the U.S. yogurt business[79](index=79&type=chunk)[87](index=87&type=chunk) Net Sales Growth Components | Component of Net Sales Growth | Q1 FY26 vs. Q1 FY25 | | :---------------------------- | :------------------ | | Contributions from volume growth | (8) pts | | Net price realization and mix | 1 pt | | Foreign currency exchange | Flat | | Net sales growth | (7)% | Organic Net Sales Growth Components | Component of Organic Net Sales Growth | Q1 FY26 vs. Q1 FY25 | | :------------------------------------ | :------------------ | | Contributions from organic volume growth | (1) pt | | Organic net price realization and mix | (2) pts | | Organic net sales growth | (3) pts | [Segment Operating Results](index=22&type=section&id=Segment%20Operating%20Results) Segment results show varied performance, with North America Retail declining, International growing, and North America Pet sales up but profit down [North America Retail Segment Results](index=22&type=section&id=North%20America%20Retail%20Segment%20Results) North America Retail net sales decreased **13%** (5% organic) in Q1 FY26, primarily due to lower volume and divestitures North America Retail Financial Highlights | Metric | Q1 FY26 Net Sales (Millions) | Q1 FY25 Net Sales (Millions) | % Change | | :-------------------------------- | :--------------------------- | :--------------------------- | :------- | | Net sales | $2,625.5 | $3,016.6 | (13)% | | Segment operating profit | $564.2 | $745.7 | (24)% | North America Retail Net Sales Growth Components | Component of Net Sales Growth | Q1 FY26 vs. Q1 FY25 | | :---------------------------- | :------------------ | | Contributions from volume growth | (16) pts | | Net price realization and mix | 3 pts | | Divestitures | (8) pts | | Net sales growth | (13)% | - Organic net sales decreased **5%**, driven by unfavorable organic net price realization and mix and a decrease in organic volume growth[99](index=99&type=chunk) [International Segment Results](index=23&type=section&id=International%20Segment%20Results) International net sales increased **6%** (4% organic) in Q1 FY26, driven by favorable net price realization and foreign currency International Financial Highlights | Metric | Q1 FY26 Net Sales (Millions) | Q1 FY25 Net Sales (Millions) | % Change | | :-------------------------------- | :--------------------------- | :--------------------------- | :------- | | Net sales | $760.2 | $717.0 | 6% | | Segment operating profit | $65.7 | $20.9 | 214% | International Net Sales Growth Components | Component of Net Sales Growth | Q1 FY26 vs. Q1 FY25 | | :---------------------------- | :------------------ | | Contributions from volume growth | (2) pts | | Net price realization and mix | 6 pts | | Foreign currency exchange | 3 pts | | Net sales growth | 6% | - International organic net sales increased **4%**, driven by favorable organic net price realization and mix, partially offset by a decrease in organic volume growth[105](index=105&type=chunk) [North America Pet Segment Results](index=24&type=section&id=North%20America%20Pet%20Segment%20Results) North America Pet net sales increased **6%** in Q1 FY26, but segment operating profit decreased **5%** due to higher costs North America Pet Financial Highlights | Metric | Q1 FY26 Net Sales (Millions) | Q1 FY25 Net Sales (Millions) | % Change | | :-------------------------------- | :--------------------------- | :--------------------------- | :------- | | Net sales | $610.0 | $576.1 | 6% | | Segment operating profit | $112.9 | $119.4 | (5)% | North America Pet Net Sales Growth Components | Component of Net Sales Growth | Q1 FY26 vs. Q1 FY25 | | :---------------------------- | :------------------ | | Contributions from volume growth | 1 pt | | Net price realization and mix | 5 pts | | Acquisition | 11 pts | | Organic net sales growth | (5) pts | | Net sales growth | 6% | - Organic net sales for North America Pet decreased **5%**, driven by a decrease in contributions from organic volume growth[110](index=110&type=chunk) [North America Foodservice Segment Results](index=25&type=section&id=North%20America%20Foodservice%20Segment%20Results) North America Foodservice net sales decreased **4%** in Q1 FY26, primarily due to lower volume and unfavorable net price realization North America Foodservice Financial Highlights | Metric | Q1 FY26 Net Sales (Millions) | Q1 FY25 Net Sales (Millions) | % Change | | :-------------------------------- | :--------------------------- | :--------------------------- | :------- | | Net sales | $516.7 | $536.2 | (4)% | | Segment operating profit | $70.6 | $71.5 | (1)% | North America Foodservice Net Sales Growth Components | Component of Net Sales Growth | Q1 FY26 vs. Q1 FY25 | | :---------------------------- | :------------------ | | Contributions from volume growth | (2) pts | | Net price realization and mix | (2) pts | | Divestitures | (5) pts | | Organic net sales growth | 1 pt | | Net sales growth | (4)% | - Organic net sales for North America Foodservice increased **1%**, driven by an increase in contributions from organic volume growth[115](index=115&type=chunk) [Unallocated Corporate Items](index=25&type=section&id=Unallocated%20Corporate%20Items) Unallocated corporate expenses remained relatively stable in Q1 FY26, with transaction costs related to the U.S. yogurt business sale | Metric | Q1 FY26 (Millions) | Q1 FY25 (Millions) | | :---------------------------------------------------------------- | :----------------- | :----------------- | | Unallocated corporate expenses | $126 | $124 | | Transaction costs related to U.S. yogurt business sale | $12 | $- | | Net increase in expense from mark-to-market valuation of commodity positions and grain inventories | $8 | $29 | | Acquisition integration costs | $1 | $2 | [Liquidity and Capital Resources](index=26&type=section&id=Liquidity%20and%20Capital%20Resources) Cash from operations decreased, while investing activities generated significant cash due to divestitures, and financing activities used more cash Cash Flow Activities | Cash Flow Activity | Q1 FY26 (Millions) | Q1 FY25 (Millions) | Change (Millions) | | :-------------------------------- | :----------------- | :----------------- | :---------------- | | Net cash provided by operating activities | $397 | $624 | $(227) | | Net cash provided by investing activities | $1,695 | $(148) | $1,843 | | Net cash used by financing activities | $(1,507) | $(429) | $(1,078) | - Investing activities were significantly boosted by **$1,798 million** cash from the sale of the U.S. yogurt business[119](index=119&type=chunk) - The company has **$2,166 million** of long-term debt maturing in the next **12 months** and expects adequate liquidity[124](index=124&type=chunk) [Critical Accounting Estimates](index=26&type=section&id=Critical%20Accounting%20Estimates) Critical accounting estimates remain consistent with the prior annual report, with no impairment found in the fiscal 2025 annual test - Critical accounting estimates, such as revenue recognition and valuation of assets, use the same assumptions and methodologies as described in the FY25 Form 10-K[126](index=126&type=chunk) - No impairment was determined for goodwill and indefinite-lived intangible assets in the fiscal 2025 annual test, but certain brands are being monitored for potential impairment[127](index=127&type=chunk) [Recently Issued Accounting Pronouncements](index=27&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) General Mills is analyzing the impact of two recently issued FASB ASUs requiring additional income statement and income tax disclosures - FASB ASU 2024-03, requiring disaggregation of income statement expenses, is effective for annual periods beginning after December 15, 2026 (FY28)[128](index=128&type=chunk) - FASB ASU 2023-09, requiring enhanced income tax disclosures, is effective for annual periods beginning after December 15, 2024 (FY26)[129](index=129&type=chunk) [Non-GAAP Measures](index=27&type=section&id=Non-GAAP%20Measures) This section provides reconciliations and explanations for non-GAAP financial measures used by management to show underlying performance - Non-GAAP measures are used to provide useful information to investors and management by offering transparency to underlying performance[130](index=130&type=chunk)[131](index=131&type=chunk)[142](index=142&type=chunk) Reconciliation of Operating Profit to Adjusted Operating Profit | Metric | Q1 FY26 Value (Millions) | Q1 FY25 Value (Millions) | % of Net Sales (Q1 FY26) | % of Net Sales (Q1 FY25) | | :--------------------------------------- | :----------------------- | :----------------------- | :----------------------- | :----------------------- | | Operating profit as reported | $1,725.8 | $831.5 | 38.2% | 17.2% | | Divestitures gain | $(1,054.4) | $- | (23.3)% | -% | | Restructuring and transformation charges | $18.3 | $2.9 | 0.4% | 0.1% | | Transaction costs | $11.8 | $- | 0.3% | -% | | Mark-to-market effects | $8.5 | $28.8 | 0.2% | 0.6% | | Acquisition integration costs | $1.4 | $1.6 | -% | -% | | Adjusted operating profit | $711.2 | $865.3 | 15.7% | 17.8% | Reconciliation of Diluted Earnings Per Share to Adjusted Diluted Earnings Per Share | Metric | Q1 FY26 | Q1 FY25 | Change (%) | Constant-currency Growth (%) | | :------------------------------------------ | :------ | :------ | :--------- | :--------------------------- | | Diluted earnings per share, as reported | $2.22 | $1.03 | 116% | | | Divestitures gain | $(1.43) | $- | | | | Restructuring and transformation charges | $0.03 | $- | | | | CPW asset impairments and transaction costs | $0.02 | $- | | | | Transaction costs | $0.02 | $- | | | | Mark-to-market effects | $0.01 | $0.04 | | | | Adjusted diluted earnings per share | $0.86 | $1.07 | (20)% | (20)% | [Glossary](index=32&type=section&id=Glossary) This section defines key financial and operational terms used throughout the report, including GAAP and non-GAAP measures - Provides definitions for key terms such as 'Adjusted diluted EPS', 'Adjusted operating profit', 'Constant currency', 'Derivatives', 'Fair value hierarchy', 'Goodwill', 'Holistic Margin Management (HMM)', 'Organic net sales growth', and 'Strategic Revenue Management (SRM)'[159](index=159&type=chunk)[160](index=160&type=chunk)[161](index=161&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk)[165](index=165&type=chunk)[167](index=167&type=chunk)[173](index=173&type=chunk)[176](index=176&type=chunk) [CAUTIONARY STATEMENT RELEVANT TO FORWARD -LOOKING INFORMATION FOR THE PURPOSE OF "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995](index=34&type=section&id=CAUTIONARY%20STATEMENT%20RELEVANT%20TO%20FORWARD%20-LOOKING%20INFORMATION%20FOR%20THE%20PURPOSE%20OF%20%22SAFE%20HARBOR%22%20PROVISIONS%20OF%20THE%20PRIVATE%20SECURITIES%20LITIGATION%20REFORM%20ACT%20OF%201995) This cautionary statement identifies various risks and uncertainties that could cause actual results to differ materially from forward-looking projections - Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from projections[179](index=179&type=chunk) - Key risk factors include tariffs, supply chain disruptions, competitive dynamics, economic conditions, and regulatory changes[181](index=181&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=34&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company provides a quantitative disclosure of its estimated maximum potential value-at-risk (VaR) for various market-risk-sensitive instruments Value-at-Risk (VaR) for Market-Risk-Sensitive Instruments | Instrument Type | One-day Risk of Loss (Millions) | Change During Quarter Ended Aug. 24, 2025 (Millions) | Analysis of Change | | :------------------------ | :------------------------------ | :--------------------------------------------------- | :----------------------- | | Interest rate instruments | $41 | $(5) | Decrease in interest rate volatility | | Foreign currency instruments | $54 | $3 | Immaterial | | Commodity instruments | $2 | $(1) | Immaterial | | Equity instruments | $3 | $- | Immaterial | [Item 4. Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of August 24, 2025 - Disclosure controls and procedures were evaluated and deemed effective as of August 24, 2025[184](index=184&type=chunk) - No material changes occurred in internal control over financial reporting during the quarter ended August 24, 2025[185](index=185&type=chunk) [PART II – Other Information](index=35&type=section&id=PART%20II%20%E2%80%93%20Other%20Information) This section contains other required information, including equity security sales, market risk, controls, and exhibits [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=35&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) General Mills repurchased **8.7 million** shares for **$454.0 million** in Q1 FY26, primarily through ASR agreements Common Stock Repurchases | Period | Total Number of Shares Purchased (a) | Average Price Paid Per Share (b) | Total Number of Shares Purchased as Part of a Publicly Announced Program (c) | Maximum Number of Shares that may yet be Purchased Under the Program (c) | | :------------------------ | :----------------------------------- | :------------------------------- | :----------------------------------------------------------------------- | :----------------------------------------------------------------------- | | May 26, 2025 - June 29, 2025 | - | $- | - | 36,918,163 | | June 30, 2025 - July 27, 2025 | 7,520,212 | $49.92 | 7,520,212 | 29,397,951 | | July 28, 2025 - August 24, 2025 | 1,199,631 | $50.41 | 1,199,631 | 28,198,320 | | Total | 8,719,843 | $49.99 | 8,719,843 | 28,198,320 | - The company entered into two ASR agreements totaling **$500.0 million** in Q1 FY26, receiving an initial delivery of **7.5 million shares**[190](index=190&type=chunk) - The Board of Directors authorized the repurchase of up to **100,000,000 shares** of common stock on June 27, 2022, with no expiration date[189](index=189&type=chunk) [Item 5. Other Information](index=35&type=section&id=Item%205.%20Other%20Information) No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter - No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter[191](index=191&type=chunk) [Item 6. Exhibits](index=36&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including stock award agreements, CEO/CFO certifications, and iXBRL financial statements - Exhibits include forms of Performance Stock Unit, Stock Option, and Restricted Stock Unit Award Agreements[193](index=193&type=chunk) - Certifications from the Chief Executive Officer and Chief Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 are included[193](index=193&type=chunk) - Financial Statements from the Quarterly Report on Form 10-Q are formatted in Inline Extensible Business Reporting Language (iXBRL)[193](index=193&type=chunk) [Signatures](index=37&type=section&id=Signatures) The report is duly signed on behalf of General Mills, Inc. by Mark A. Pallot, Vice President, Chief Accounting Officer - The report is signed by Mark A. Pallot, Vice President, Chief Accounting Officer, on September 17, 2025[196](index=196&type=chunk)

PART I [Item 1. Business](index=6&type=section&id=Item%201.%20Business) Rezolute, Inc. is a late-stage rare disease company focused on treating hypoglycemia caused by hyperinsulinism (HI) with its lead clinical asset, ersodetug. The company is advancing ersodetug through Phase 3 studies for congenital HI (sunRIZE study, topline results expected **Dec 2025**) and tumor HI (upLIFT study, topline results expected **H2 2026**), both of which have received Breakthrough Therapy Designation from the FDA. The company protects its intellectual property, faces competition, and operates under significant government regulation, with R&D expenses increasing in **FY2025** - Rezolute, Inc. is a late-stage rare disease company focused on significantly improving outcomes for individuals with hypoglycemia caused by hyperinsulinism (HI)[18](index=18&type=chunk) - Lead clinical asset, ersodetug, is an intravenously administered human monoclonal antibody that down-modulates insulin's binding, signaling, and action to counteract elevated insulin effects[19](index=19&type=chunk)[20](index=20&type=chunk) - The sunRIZE Phase 3 study for congenital HI completed enrollment in **May 2025**, with topline results anticipated in **December 2025**[21](index=21&type=chunk) - Ersodetug received Orphan Drug Designation (U.S., EU), Rare Pediatric Disease Designation (U.S.), PRIME designation (EMA), ILAP designation (UK), and Breakthrough Therapy Designation (FDA) for congenital HI[27](index=27&type=chunk) - The upLIFT Phase 3 study for tumor HI initiated in **mid-2025**, with topline results anticipated in the **second half of calendar 2026**. The study design was modified to a single-arm open-label trial with as few as **16 participants**[29](index=29&type=chunk)[30](index=30&type=chunk) - Ersodetug received Breakthrough Therapy Designation by the FDA in **May 2025** for tumor HI[28](index=28&type=chunk) [Summary of Clinical Assets](index=6&type=section&id=Summary%20of%20Clinical%20Assets) This section details the company's lead asset, ersodetug, and its development for congenital and tumor hyperinsulinism, with the sunRIZE Phase 3 study for congenital HI completing enrollment in **May 2025** and results expected in **December 2025**, and the upLIFT Phase 3 study for tumor HI starting in **mid-2025** with results expected in **H2 2026**, both indications having received significant regulatory designations - Ersodetug is a potential treatment for hypoglycemia caused by multiple forms of hyperinsulinism, acting by down-modulating insulin's effects[19](index=19&type=chunk)[20](index=20&type=chunk) - sunRIZE Phase 3 study for congenital HI completed enrollment in **May 2025**, exceeding its target of **56 participants** with **62 enrolled**. Topline results are expected in **December 2025**[21](index=21&type=chunk)[149](index=149&type=chunk) - Preliminary data from sunRIZE showed an average participant age of **3.4 years**, with **35% under 2**, **95% on standard treatments**, and an average of **15 hypoglycemia events** per week[23](index=23&type=chunk) - Ersodetug has received Orphan Drug, Rare Pediatric Disease, PRIME (EMA), ILAP (UK), and Breakthrough Therapy (FDA) designations for congenital HI[27](index=27&type=chunk) - upLIFT Phase 3 study for tumor HI initiated in **mid-2025**, with topline results expected in **H2 2026**. The FDA agreed to modify the study design to a single-arm open-label trial with as few as **16 participants**[29](index=29&type=chunk)[30](index=30&type=chunk)[150](index=150&type=chunk) - The addressable market for congenital HI and tumor HI in the U.S. is estimated at over **1,500 patients** each[26](index=26&type=chunk)[37](index=37&type=chunk) [Expanded Access Program ("EAP")](index=10&type=section&id=Expanded%20Access%20Program%20(%22EAP%22)) The EAP provides ersodetug on a compassionate use basis for severe, unmanageable hypoglycemia across various HI indications, showing substantial improvement and good tolerability in **13 tumor HI patients** and **5 congenital HI patients**, many of whom were refractory to standard care - The EAP makes ersodetug available for compassionate use when therapeutic options have failed and an individual's hypoglycemia is unmanageable[38](index=38&type=chunk) - **13 tumor HI patients** and **5 congenital HI patients** have received ersodetug through the EAP, demonstrating substantial improvement in hypoglycemia and good tolerability[38](index=38&type=chunk)[39](index=39&type=chunk)[40](index=40&type=chunk) - Tumor HI patients in the EAP often required continuous intravenous dextrose and were hospitalized; ersodetug led to discontinuation or substantial reduction of IV dextrose and outpatient maintenance[38](index=38&type=chunk)[39](index=39&type=chunk) [Intellectual Property](index=12&type=section&id=Intellectual%20Property) Rezolute protects its intellectual property through patents, trade secrets, and trademarks, holding an exclusive worldwide license from XOMA for ersodetug, with patents expiring between **2030 and 2036**, and expects further data and marketing exclusivity - The company maintains and builds its patent portfolio through new filings, prosecution, and licensing, and protects know-how, trade secrets, and trademarks[42](index=42&type=chunk) - Holds a worldwide, exclusive license from XOMA for ersodetug, covering **38 issued patents** (**4 U.S.**) and pending applications, with patents expiring between **2030 and 2036**[44](index=44&type=chunk) - Expects further exclusivity for product candidates through data and marketing exclusivity under pharmaceutical regulatory laws, potentially up to **12 years** from BLA approval[44](index=44&type=chunk) [Competition](index=12&type=section&id=Competition) Rezolute faces competition from pharmaceutical and biotechnology companies, academic institutions, and governmental agencies in talent acquisition and technology development, with several companies, including Amylyx Pharmaceuticals, Hanmi Pharmaceuticals, and Zealand Pharma, developing therapies for HI that could compete with ersodetug - Competition exists from pharmaceutical and biotechnology companies, academic institutions, governmental agencies, and private research organizations in personnel and technology[45](index=45&type=chunk) - Potential competitors for ersodetug in HI include Amylyx Pharmaceuticals, Hanmi Pharmaceuticals, and Zealand Pharma[45](index=45&type=chunk) [Government Regulation](index=12&type=section&id=Government%20Regulation) The company's products require extensive regulatory approval from governmental agencies like the FDA and foreign authorities, involving rigorous preclinical testing and clinical trials, and is also subject to various federal, state, and local laws regarding manufacturing, safety, and hazardous substance handling - All potential products require regulatory approval by governmental agencies (e.g., FDA, EMA) prior to commercialization, involving rigorous preclinical testing and clinical trials[46](index=46&type=chunk) - The company is subject to federal, state, and local laws and regulations concerning safe working conditions, laboratory practices, animal use, and hazardous substance handling[47](index=47&type=chunk)[48](index=48&type=chunk) [Research and Development](index=14&type=section&id=Research%20and%20Development) R&D expenses were **$61.5 million** in **FY2025**, an increase from **$55.7 million** in **FY2024**, primarily driven by increased clinical and manufacturing costs for ersodetug Research and Development Expenses | Fiscal Year Ended June 30 | 2025 (Millions) | 2024 (Millions) | | :------------------------ | :-------------- | :-------------- | | R&D Expenses | **$61.5** | **$55.7** | - The increase in R&D expenses was primarily due to a **$11.8 million** increase in ersodetug clinical and manufacturing costs, partially offset by a **$7.0 million** decrease in RZ402 costs[176](index=176&type=chunk) [Human Capital Management](index=14&type=section&id=Human%20Capital%20Management) As of **June 30, 2025**, Rezolute had **71 full-time employees**, with **52 in R&D**. The company prioritizes diversity and inclusion, and focuses on attracting, developing, and retaining talent through various programs and benefits, including equity compensation - As of **June 30, 2025**, the company had **71 full-time employees**, with **52 in research and development** and **19 in general and administrative functions**, all located in the United States[50](index=50&type=chunk) - The company adopted an equity and inclusion policy on **May 30, 2023**, and leverages formal and informal programs to identify, foster, and retain top talent, offering benefits and equity compensation[51](index=51&type=chunk)[52](index=52&type=chunk) [Corporate Information](index=14&type=section&id=Corporate%20Information) Rezolute, Inc. was incorporated in Delaware in **2010**, reincorporated in Nevada in **2021**, and maintains its executive office in Redwood City, CA. The company files reports with the SEC, which are available on www.sec.gov - Incorporated in Delaware in **2010**, reincorporated in Nevada in **June 2021**[54](index=54&type=chunk) - Maintains an executive office at 275 Shoreline Drive, Suite 500, Redwood City, CA 94065[54](index=54&type=chunk) - Files annual, quarterly, current reports, proxy statements, and other information with the Securities and Exchange Commission (SEC), available at www.sec.gov[54](index=54&type=chunk)[55](index=55&type=chunk) [Item 1A. Risk Factors](index=16&type=section&id=Item%201A.%20Risk%20Factors) This section outlines significant risks that could adversely affect Rezolute's business, financial condition, and results of operations, including potential delays or failures in clinical trials and regulatory approvals, product liability exposure, the need for substantial additional capital, and challenges in intellectual property protection, as well as risks related to its history of losses, potential loss of 'smaller reporting company' status, and global economic conditions - Delays or termination of clinical trials could increase costs, delay revenue generation, and adversely affect commercial prospects[57](index=57&type=chunk)[58](index=58&type=chunk) - Product candidates may produce serious adverse events, leading to trial interruptions, delays, or denial of regulatory approval[61](index=61&type=chunk) - The company has a history of losses (**$74.4 million** in **FY2025**, **$68.5 million** in **FY2024**) and will need substantial additional capital to fund operations and achieve profitability[87](index=87&type=chunk)[174](index=174&type=chunk) - Product liability claims from clinical studies or commercial sales could result in substantial liabilities, reputational damage, and financial losses, potentially exceeding insurance coverage[91](index=91&type=chunk)[92](index=92&type=chunk) - The company's intellectual property portfolio may not adequately protect product candidates, leading to direct competition, and patent litigation can be expensive and time-consuming[113](index=113&type=chunk)[117](index=117&type=chunk) - Federal and state laws impose substantial restrictions on the utilization of net operating loss (NOL) carryforwards due to ownership changes, potentially limiting future profitability[93](index=93&type=chunk)[345](index=345&type=chunk) [Risks Related to Our Product Development and Commercialization](index=16&type=section&id=Risks%20Related%20to%20Our%20Product%20Development%20and%20Commercialization) Significant risks include delays or termination of clinical trials due to regulatory disagreements, enrollment issues, adverse events, or manufacturing problems; failure to meet safety or efficacy requirements will prevent regulatory approval and commercialization, and reliance on third parties for trials and manufacturing introduces additional risks - Clinical testing is expensive, time-consuming, and uncertain; delays can arise from regulatory disagreements, investigator/site activation, IRB/EC approvals, protocol changes, manufacturing issues, patient enrollment/retention, funding, and adverse effects[58](index=58&type=chunk)[59](index=59&type=chunk) - Adverse events in clinical trials could force the company to stop development or prevent regulatory approval[61](index=61&type=chunk) - Failure to obtain regulatory approval for product candidates will prevent marketing and sales, hindering profitability[69](index=69&type=chunk) - Reliance on contract research organizations (CROs) and third-party suppliers for clinical trials and manufacturing means less control over timing, conduct, expense, and potential supply chain delays[78](index=78&type=chunk)[79](index=79&type=chunk)[80](index=80&type=chunk) [Risks Related to Our Business](index=23&type=section&id=Risks%20Related%20to%20Our%20Business) The company has a history of net losses (**$74.4 million** in **FY2025**) and an accumulated deficit of **$403.9 million**, requiring substantial additional capital; other risks include product liability exposure, limitations on net operating loss (NOL) carryforwards, potential future loss of "smaller reporting company" status, and adverse effects from global economic conditions and foreign operations Key Financial Metrics | Fiscal Year Ended June 30 | 2025 (Millions) | 2024 (Millions) | | :------------------------ | :-------------- | :-------------- | | Net Losses | **$(74.4)** | **$(68.5)** | | Accumulated Deficit | **$(403.9)** | **$(329.4)** | | Cash Used in Operating Activities | **$(69.1)** | **$(57.4)** | - As of **June 30, 2025**, cash and cash equivalents were **$94.1 million** and investments in marketable debt securities were **$73.8 million**, expected to provide adequate capital for at least **12 months**[87](index=87&type=chunk)[188](index=188&type=chunk) - Product liability claims could result in substantial liabilities, reputational damage, and financial losses, potentially exceeding insurance coverage[91](index=91&type=chunk)[92](index=92&type=chunk) - U.S. federal NOL carryforwards of **$201.4 million** are subject to significant limitations under IRC Section 382 due to ownership changes, with **$33.4 million** expiring without utilization[93](index=93&type=chunk)[346](index=346&type=chunk) - If market capitalization increases, the company may no longer qualify as a "smaller reporting company," leading to enhanced disclosure requirements and increased compliance costs[97](index=97&type=chunk) - Operations outside the U.S. are subject to different local politics, business factors, and regulatory requirements, including data privacy laws like HIPAA and GDPR[98](index=98&type=chunk)[100](index=100&type=chunk)[101](index=101&type=chunk) [Risks Related to Our Intellectual Property](index=30&type=section&id=Risks%20Related%20to%20Our%20Intellectual%20Property) The company's success depends on its intellectual property, but current patent positions may not cover all necessary rights, and future licenses may not be available on reasonable terms; patents can be challenged, invalidated, or circumvented, and trade secrets are difficult to protect; litigation regarding intellectual property is expensive and could delay product commercialization - Current patent positions and license portfolio may not include all patent rights needed for full development and commercialization, and future necessary rights may not be available on commercially reasonable terms[107](index=107&type=chunk)[108](index=108&type=chunk)[110](index=110&type=chunk) - Patents may be challenged, deemed unenforceable, invalidated, or circumvented, and the coverage claimed in a patent application can be significantly reduced[114](index=114&type=chunk) - Reliance on trade secrets is risky as they are difficult to protect and may be independently discovered or disclosed despite confidentiality agreements[115](index=115&type=chunk) - Litigation regarding patents and other proprietary rights is expensive, time-consuming, and could cause delays in bringing product candidates to market[117](index=117&type=chunk)[118](index=118&type=chunk) [Risks Related to Our Common Stock](index=34&type=section&id=Risks%20Related%20to%20Our%20Common%20Stock) The market price of common stock could decline due to the sale of a substantial number of shares (overhang) or changes in investor relations activities; changes in U.S. tax law, including the recent OBBBA, could also adversely affect the business - Offers or availability for sale of a substantial number of shares of common stock (overhang) could cause the price to decline and make additional financing more difficult[122](index=122&type=chunk)[124](index=124&type=chunk) - Investor relations activities and supply and demand factors may affect the price of common stock[125](index=125&type=chunk) - Changes in U.S. tax law, including the recent enactment of the One Big Beautiful Bill Act (OBBBA), could adversely affect the business[126](index=126&type=chunk)[127](index=127&type=chunk) [Item 1B. Unresolved Staff Comments.](index=36&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments.) As a smaller reporting company, Rezolute is not required to provide information on unresolved staff comments - The company is a smaller reporting company and is not required to provide information on unresolved staff comments[128](index=128&type=chunk) [Item 1C. Cybersecurity.](index=36&type=section&id=Item%201C.%20Cybersecurity.) Rezolute has established processes for assessing, identifying, and managing cybersecurity risks, including physical, procedural, and technical safeguards, response plans, regular tests, and employee training; external consultants are engaged, and the Audit Committee provides oversight; no material cybersecurity incidents occurred in **FY2025**, and management does not believe there are currently any known risks likely to materially affect the business - Established processes for assessing, identifying, and managing cybersecurity risks, including safeguards, response plans, regular tests, and policy reviews[129](index=129&type=chunk) - Engages external risk management consultants and computer security firms to enhance cybersecurity oversight and provides periodic employee training[130](index=130&type=chunk) - The Audit Committee of the Board of Directors provides direct cybersecurity risk oversight[132](index=132&type=chunk) - No known risks from cybersecurity threats are reasonably likely to materially affect the business, and no cybersecurity incidents occurred in **fiscal year 2025**[133](index=133&type=chunk) [Item 2. Properties.](index=38&type=section&id=Item%202.%20Properties.) Rezolute leases two office facilities: a corporate headquarters in Redwood City, CA (**9,300 sq ft**, lease until **Oct 2027**) and an office in Bend, OR (**5,000 sq ft**, lease until **Feb 2027**); the company believes its current properties are sufficient for its needs - Leases a **9,300 square feet** corporate headquarters facility in Redwood City, CA, with a lease term through **October 2027**[134](index=134&type=chunk) - Leases a **5,000 square feet** office space in Bend, OR, with a lease term through **February 2027**[135](index=135&type=chunk) - Believes current physical properties are sufficient and adequate to meet current and projected requirements[135](index=135&type=chunk) [Item 3. Legal Proceedings.](index=38&type=section&id=Item%203.%20Legal%20Proceedings.) For a discussion of the company's legal proceedings, refer to "Notes to Consolidated Financial Statements - Commitments and Contingencies" in Part II, Item 8 - For a discussion of the Company's legal proceedings, see "Notes to Consolidated Financial Statements - Commitments and Contingencies" in Part II. Item 8[136](index=136&type=chunk) [Item 4. Mine Safety Disclosures.](index=38&type=section&id=Item%204.%20Mine%20Safety%20Disclosures.) This item is not applicable to Rezolute, Inc - This item is not applicable[137](index=137&type=chunk) PART II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.](index=38&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities.) Rezolute's common stock has traded on Nasdaq under the symbol "RZLT" since **November 9, 2020**; as of **September 15, 2025**, there were **246 holders** of record; the company has never paid cash dividends and has no plans to do so in the foreseeable future, intending to reinvest all available funds into business development - Common stock has traded on Nasdaq under the symbol "RZLT" since **November 9, 2020**[140](index=140&type=chunk) - As of **September 15, 2025**, there were **246 holders** of record of the company's common stock[141](index=141&type=chunk) - The company has never paid cash dividends and intends to employ all available funds in the development of its business, with no plans to pay cash dividends in the foreseeable future[143](index=143&type=chunk) - No recent sales of unregistered securities[144](index=144&type=chunk) [Item 6. [Reserved]](index=40&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved and contains no information - This item is reserved[146](index=146&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.](index=40&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) This section provides an overview of Rezolute's financial condition and results of operations for the fiscal years ended **June 30, 2025** and **2024**; the company remains in a clinical stage with no meaningful revenue, focusing on advancing ersodetug through Phase 3 trials for congenital and tumor HI; it incurred net losses and relies on equity financings for liquidity, with management believing current resources are sufficient for at least **12 months**, but additional long-term financing will be needed - The company's priorities for **H2 2025** and **H1 2026** are to complete the sunRIZE study (topline data **Dec 2025**), continue enrollment in the tumor HI study, and submit a Biologics License Application (BLA) for ersodetug in **mid-2026**, assuming supportive data[148](index=148&type=chunk) - The company has not generated any meaningful revenues since inception and expects to incur operating losses for the foreseeable future, requiring additional capital[155](index=155&type=chunk)[156](index=156&type=chunk) Key Financial Metrics | Metric | FY2025 (Millions) | FY2024 (Millions) | | :----- | :---------------- | :---------------- | | Net loss | **$(74.4)** | **$(68.5)** | Cash Flow Summary | Cash Flow Type | FY2025 (Millions) | FY2024 (Millions) | | :------------- | :---------------- | :---------------- | | Operating activities | **$(69.1)** | **$(57.4)** | - The company raised **$107.0 million** in net proceeds from the issuance of equity securities in **FY2025** and **$62.6 million** in **FY2024**[185](index=185&type=chunk) [Executive Summary](index=40&type=section&id=Executive%20Summary) Rezolute's immediate priorities are to execute on two Phase 3 clinical trials for ersodetug: completing the sunRIZE study for congenital HI (topline data expected **Dec 2025**) and continuing enrollment in the upLIFT study for tumor HI (topline data expected **H2 2026**), with a goal to submit a Biologics License Application (BLA) in **mid-2026** - Priorities for **H2 2025** and **H1 2026** include completing the sunRIZE study for congenital HI (topline data **Dec 2025**), continuing enrollment in the tumor HI study, and submitting a BLA for ersodetug in **mid-2026**[148](index=148&type=chunk) [Clinical Development](index=40&type=section&id=Clinical%20Development) The company is focused on advancing ersodetug for all forms of HI; the pivotal Phase 3 sunRIZE study for congenital HI completed enrollment in **May 2025**, exceeding its target, with topline results expected in **December 2025**; the upLIFT study for tumor HI is enrolling in the U.S. and Europe, with its design modified to a single-arm open-label trial, and topline results expected in **H2 2026** - Completed enrollment in the pivotal Phase 3 sunRIZE clinical study of ersodetug for congenital HI in **May 2025**, exceeding the target with **62 participants**. Topline results are anticipated in **December 2025**[149](index=149&type=chunk) - The upLIFT study in tumor HI is currently enrolling in the U.S. and Europe. The FDA agreed to modifications to the study design, including removing the need for a double-blind randomized placebo-controlled trial, limiting it to a single-arm open-label portion with as few as **16 participants**. Topline results are anticipated in the **second half of 2026**[150](index=150&type=chunk)[151](index=151&type=chunk) [Recent Developments](index=42&type=section&id=Recent%20Developments) Recent developments include the appointment of Sunil Karnawat as Chief Commercial Officer in **August 2025**, with a compensation package including salary, bonus, and equity grants; the company also completed a private placement in **May 2025** (**$4.2 million** net proceeds) and an underwritten public offering in **April 2025** (**$96.8 million** net proceeds) - Sunil Karnawat was appointed Chief Commercial Officer on **August 18, 2025**, with an annual base salary of **$475,000**, a signing bonus of **$65,000**, and eligibility for an annual performance bonus target of **40%** of base salary[152](index=152&type=chunk) - Mr. Karnawat received an inducement grant of stock options to purchase **275,000 shares** and **25,000 shares** of RSUs[152](index=152&type=chunk) - Completed a private placement in **May 2025**, selling **1,295,383 shares** of common stock for net proceeds of **$4.2 million**[153](index=153&type=chunk) - Completed an underwritten public offering in **April 2025**, issuing **20,786,923 common shares** and **6,905,385 pre-funded warrants**, generating **$96.8 million** in net proceeds after deducting offering costs[154](index=154&type=chunk) [Factors Impacting our Results of Operations](index=42&type=section&id=Factors%20Impacting%20our%20Results%20of%20Operations) The company has not generated meaningful revenue since inception and expects continued operating losses due to the time required for clinical trials and regulatory approval; it anticipates needing additional capital from external sources to fund operations and product commercialization - The company has not generated any meaningful revenues since its inception and anticipates it will be some time before substantial revenues are generated, if ever, due to the time required for clinical trials and regulatory approval[155](index=155&type=chunk)[156](index=156&type=chunk) - Expects to generate operating losses for the foreseeable future and will need additional capital from external sources, which may be costly or require unfavorable terms[156](index=156&type=chunk) [Key Components of Consolidated Statements of Operations](index=42&type=section&id=Key%20Components%20of%20Consolidated%20Statements%20of%20Operations) This section defines the key components of the consolidated statements of operations: Research and Development (R&D) expenses, General and Administrative (G&A) expenses, Interest and other income, and Loss from change in fair value of derivative liabilities; R&D includes clinical trial costs, personnel, licensing, and consultants; G&A covers administrative personnel, legal, auditing, and investor relations - Research and development (R&D) expenses primarily consist of clinical trial costs, compensation and benefits for R&D personnel, licensing costs, and consultants and outside services[157](index=157&type=chunk) - General and administrative (G&A) expenses primarily include compensation and benefits for administrative, finance, accounting, and executive functions, as well as travel, legal, auditing, and investor relations costs[160](index=160&type=chunk) - Interest and other income primarily consists of interest income earned on marketable debt securities and temporary cash investments[161](index=161&type=chunk) - Loss from change in fair value of derivative liabilities reflects adjustments to fair value for warrant and embedded derivative liabilities[162](index=162&type=chunk) [Critical Accounting Policies and Significant Judgments and Estimates](index=44&type=section&id=Critical%20Accounting%20Policies%20and%20Significant%20Judgments%20and%20Estimates) The preparation of financial statements requires significant judgments and estimates, particularly for marketable debt securities (fair value, credit losses), derivative liabilities (fair value), share-based compensation (fair value, vesting), and clinical trial accruals (work completion estimates) - Significant accounting estimates include determining allowances for credit losses on marketable debt securities, fair value of derivative liabilities, fair value of share-based compensation, and estimates related to clinical trial accrued liabilities[163](index=163&type=chunk)[164](index=164&type=chunk)[238](index=238&type=chunk) - Investments in marketable debt securities are accounted for as available-for-sale, recorded at fair value, with unrealized gains and losses reported in shareholders' equity. Credit losses are recognized if declines in fair value are credit-related[165](index=165&type=chunk)[244](index=244&type=chunk) - Research and development costs are expensed as incurred, and clinical trial activities performed by third parties are accrued based on estimates of work completed[168](index=168&type=chunk)[169](index=169&type=chunk)[250](index=250&type=chunk) - Share-based compensation is measured at fair value using the Black-Scholes Merton option-pricing model for stock options and the closing market price for RSUs, recognized over the vesting period[170](index=170&type=chunk)[252](index=252&type=chunk) - Warrant and embedded derivative liabilities are adjusted to fair value at each reporting period, with changes recognized as gains and losses in the consolidated statements of operations[172](index=172&type=chunk)[256](index=256&type=chunk) [Results of Operations](index=47&type=section&id=Results%20of%20Operations) Rezolute reported net losses of **$74.4 million** in **FY2025**, an increase from **$68.5 million** in **FY2024**; R&D expenses increased by **10%** to **$61.5 million**, primarily due to ersodetug clinical and manufacturing costs; G&A expenses increased by **25%** to **$18.4 million**, driven by compensation and professional fees; interest income increased, while derivative liability losses decreased significantly as warrants were reclassified to equity Consolidated Results of Operations | Metric | FY2025 (Thousands) | FY2024 (Thousands) | Change (Amount) | Change (%) | | :------------------------------------------ | :----------------- | :----------------- | :-------------- | :--------- | | Operating expenses: | | | | | | Research and development | **$61,527** | **$55,743** | **$5,784** | **10%** | | General and administrative | **$18,367** | **$14,680** | **$3,687** | **25%** | | Total operating expenses | **$79,894** | **$70,423** | **$9,471** | **13%** | | Operating loss | **$(79,894)** | **$(70,423)** | **$(9,471)** | **13%** | | Non-operating income (expense): | | | | | | Interest and other income | **$5,482** | **$4,870** | **$612** | **13%** | | Loss from change in fair value of warrant derivative liability | **$0** | **$(2,850)** | **$2,850** | **100%** | | Loss from change in fair value of embedded derivative liabilities | **$0** | **$(56)** | **$56** | **100%** | | Total non-operating income (expense), net | **$5,482** | **$1,964** | **$3,518** | **179%** | | Net loss | **$(74,412)** | **$(68,459)** | **$(5,953)** | **9%** | - No revenue was generated for the fiscal years ended **June 30, 2025** and **2024**, as the company is in a clinical stage[175](index=175&type=chunk) - R&D expenses increased by **$5.8 million** (**10%**) in **FY2025**, primarily due to an **$11.8 million** increase in ersodetug clinical and manufacturing costs, partially offset by a **$7.0 million** decrease in RZ402 costs[176](index=176&type=chunk) - Ersodetug program costs increased by **$11.8 million**, driven by **$6.7 million** in manufacturing costs, **$3.2 million** for the tumor HI Phase 3 study, and **$1.9 million** for the sunRIZE clinical trial[177](index=177&type=chunk) - G&A expenses increased by **$3.7 million** (**25%**) in **FY2025**, mainly due to a **$1.8 million** increase in G&A compensation and benefits (due to more employees and higher bonuses) and a **$1.8 million** increase in professional fees for pre-commercial planning[180](index=180&type=chunk) - Interest and other income increased by **$0.6 million** (**13%**) in **FY2025** due to a higher average balance of investments in marketable debt securities[181](index=181&type=chunk) [Liquidity and Capital Resources](index=49&type=section&id=Liquidity%20and%20Capital%20Resources) As of **June 30, 2025**, Rezolute had **$167.9 million** in total capital resources (**$94.1 million** cash, **$73.8 million** marketable debt securities) and **$159.2 million** in working capital; the company has incurred cumulative net losses of **$403.9 million** and relies on equity financings, having raised **$107.0 million** in **FY2025**; management believes current resources are sufficient for at least **12 months** but will need additional financing for long-term obligations, including significant milestone payments for license agreements Capital Resources and Working Capital | Metric | June 30, 2025 (Thousands) | June 30, 2024 (Thousands) | | :-------------------------------- | :------------------------ | :------------------------ | | Cash and cash equivalents | **$94,107** | **$70,396** | | Investments in marketable debt securities | **$73,751** | **$56,478** | | Total Capital Resources | **$167,858** | **$126,874** | | Working Capital | **$159,233** | **$119,047** | | Cumulative Net Losses | **$(403,856)** | **$(329,444)** | - Primary source of liquidity has historically been from private placements and public offerings of equity securities, with net proceeds of **$107.0 million** in **FY2025** and **$62.6 million** in **FY2024**[185](index=185&type=chunk) - Management believes current capital resources are adequate to meet contractual obligations and fund planned activities for at least **12 months** from the issuance date of the consolidated financial statements[188](index=188&type=chunk)[273](index=273&type=chunk) - Significant long-term contractual obligations include a **$25.0 million** regulatory milestone payment to XOMA upon ersodetug approval and additional clinical and regulatory milestone payments up to **$25.0 million** to ActiveSite[189](index=189&type=chunk)[270](index=270&type=chunk) - Future commercialization of ersodetug and RZ402 could trigger additional milestone payments and royalties up to **$202.5 million** (**$185.0 million** to XOMA and **$17.5 million** to ActiveSite)[190](index=190&type=chunk) Cash Flow Summary | Cash Flow Type | FY2025 (Thousands) | FY2024 (Thousands) | Change (Thousands) | | :----------------------------- | :----------------- | :----------------- | :----------------- | | Operating activities | **$(69,075)** | **$(57,368)** | **$(11,707)** | | Investing activities | **$(14,541)** | **$48,699** | **$(63,240)** | | Financing activities | **$107,327** | **$63,029** | **$44,298** | [Off-Balance Sheet Arrangements](index=53&type=section&id=Off-Balance%20Sheet%20Arrangements) The company did not have any off-balance sheet arrangements with unconsolidated organizations or financial partnerships during the fiscal years ended **June 30, 2025** and **2024** - The company did not have any relationships with unconsolidated organizations or financial partnerships for off-balance sheet arrangements during the fiscal years ended **June 30, 2025** and **2024**[205](index=205&type=chunk) [Recently Issued Accounting Pronouncements](index=53&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) This section refers to Note 1 of the consolidated financial statements for the impact of recently issued accounting pronouncements - Information regarding the impact of certain recently issued accounting pronouncements on the consolidated financial statements is provided in Note 1[206](index=206&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk.](index=53&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) As a smaller reporting company, Rezolute is not required to provide quantitative and qualitative disclosures about market risk - The company is a smaller reporting company and is not required to provide the information under this item[207](index=207&type=chunk) [Item 8. Financial Statements and Supplementary Data.](index=54&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data.) This item presents the audited consolidated financial statements for Rezolute, Inc. and its subsidiaries for the fiscal years ended **June 30, 2025** and **2024**, including the Report of Independent Registered Public Accounting Firm, balance sheets, statements of operations and comprehensive loss, statements of shareholders' equity, statements of cash flows, and comprehensive notes to the financial statements; the financial statements are prepared in conformity with GAAP and received an unqualified opinion from Grant Thornton LLP - Includes the Report of Independent Registered Public Accounting Firm, consolidated balance sheets, statements of operations and comprehensive loss, statements of shareholders' equity, and statements of cash flows for the fiscal years ended **June 30, 2025** and **2024**[210](index=210&type=chunk) - The consolidated financial statements present fairly, in all material respects, the financial position and results of operations in conformity with accounting principles generally accepted in the United States of America[213](index=213&type=chunk) - No critical audit matters were identified by the independent registered public accounting firm[217](index=217&type=chunk) [Report of Independent Registered Public Accounting Firm](index=55&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Grant Thornton LLP, the independent registered public accounting firm, issued an unqualified opinion on Rezolute's consolidated financial statements for the fiscal years ended **June 30, 2025** and **2024**, stating they present fairly the financial position and results of operations in conformity with GAAP; no critical audit matters were identified - Grant Thornton LLP provided an unqualified opinion on the consolidated financial statements for the fiscal years ended **June 30, 2025** and **2024**[213](index=213&type=chunk) - The audit was conducted in accordance with PCAOB standards, and no critical audit matters were identified[215](index=215&type=chunk)[217](index=217&type=chunk) [Consolidated Balance Sheets](index=57&type=section&id=Consolidated%20Balance%20Sheets) The consolidated balance sheets show total assets increased to **$175.5 million** in **FY2025** from **$132.7 million** in **FY2024**, driven by increases in cash and marketable debt securities; total liabilities increased to **$13.4 million** from **$11.7 million**, while total shareholders' equity increased to **$162.1 million** from **$121.0 million** Consolidated Balance Sheet Summary | Asset/Liability/Equity | June 30, 2025 (Thousands) | June 30, 2024 (Thousands) | | :-------------------------------- | :------------------------ | :------------------------ | | **Assets:** | | | | Cash and cash equivalents | **$94,107** | **$70,396** | | Investments in marketable debt securities | **$73,751** | **$56,478** | | Total current assets | **$171,145** | **$128,653** | | Total assets | **$175,490** | **$132,737** | | **Liabilities:** | | | | Total current liabilities | **$11,912** | **$9,606** | | Total liabilities | **$13,363** | **$11,734** | | **Shareholders' Equity:** | | | | Additional paid-in capital | **$565,903** | **$450,473** | | Accumulated deficit | **$(403,856)** | **$(329,444)** | | Total shareholders' equity | **$162,127** | **$121,003** | - Total assets increased by **$42.7 million**, primarily due to increases in cash and cash equivalents (**$23.7 million**) and marketable debt securities (**$17.3 million**)[221](index=221&type=chunk) - Accumulated deficit increased by **$74.4 million** to **$403.9 million**, reflecting ongoing net losses[221](index=221&type=chunk) [Consolidated Statements of Operations and Comprehensive Loss](index=58&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) The company reported a net loss of **$74.4 million** in **FY2025**, an increase from **$68.5 million** in **FY2024**; operating expenses rose by **13%** to **$79.9 million**, driven by R&D and G&A increases; interest and other income increased, while losses from derivative liabilities were zero in **FY2025** compared to **$2.9 million** in **FY2024**; basic and diluted net loss per common share was **$(0.98)** in **FY2025**, an improvement from **$(1.33)** in **FY2024** due to a higher weighted average share count Consolidated Statements of Operations Summary | Metric | FY2025 (Thousands) | FY2024 (Thousands) | | :------------------------------------------ | :----------------- | :----------------- | | Research and development | **$61,527** | **$55,743** | | General and administrative | **$18,367** | **$14,680** | | Total operating expenses | **$79,894** | **$70,423** | | Operating loss | **$(79,894)** | **$(70,423)** | | Interest and other income, net | **$5,482** | **$4,870** | | Loss from change in fair value of embedded derivative liability | **$0** | **$(56)** | | Loss from change in fair value of warrant derivative liability | **$0** | **$(2,850)** | | Net loss | **$(74,412)** | **$(68,459)** | | Comprehensive loss | **$(74,340)** | **$(68,187)** | | Net loss per common share: Basic and diluted | **$(0.98)** | **$(1.33)** | | Weighted average number of common shares outstanding: Basic and diluted | **75,999,290** | **51,466,150** | - Net loss increased by **$5.9 million** (**9%**) in **FY2025** compared to **FY2024**[174](index=174&type=chunk)[223](index=223&type=chunk) - Basic and diluted net loss per common share improved from **$(1.33)** in **FY2024** to **$(0.98)** in **FY2025**, despite a higher net loss, due to a significant increase in weighted average shares outstanding[223](index=223&type=chunk) [Consolidated Statements of Shareholders' Equity](index=59&type=section&id=Consolidated%20Statements%20of%20Shareholders'%20Equity) Total shareholders' equity increased to **$162.1 million** in **FY2025** from **$121.0 million** in **FY2024**; this increase was primarily driven by **$107.5 million** in proceeds from equity issuances (underwritten offerings and private placements) and **$7.1 million** in share-based compensation, partially offset by a net loss of **$74.4 million** Shareholders' Equity Changes | Metric | June 30, 2024 (Thousands) | Equity Changes in FY2025 (Thousands) | June 30, 2025 (Thousands) | | :-------------------------------- | :------------------------ | :--------------------------- | :------------------------ | | Common Stock | **$53** | **$33** | **$87** | | Additional Paid-in Capital | **$450,473** | **$115,430** | **$565,903** | | Accumulated Other Comprehensive Loss | **$(79)** | **$72** | **$(7)** | | Accumulated Deficit | **$(329,444)** | **$(74,412)** | **$(403,856)** | | Total Shareholders' Equity | **$121,003** | **$41,124** | **$162,127** | - Proceeds from equity securities in the **2025** Underwritten Offering (net of underwriting discounts) contributed **$76.194 million** to additional paid-in capital[227](index=227&type=chunk) - Proceeds from **2025** Pre-Funded Warrants contributed **$21.089 million** to additional paid-in capital[227](index=227&type=chunk) - Gross proceeds from the **2024** and **2025** Private Placements contributed **$6.0 million** and **$4.210 million**, respectively[227](index=227&type=chunk) - Share-based compensation added **$7.121 million** to additional paid-in capital in **FY2025**[227](index=227&type=chunk) - Net loss of **$74.412 million** reduced accumulated deficit[227](index=227&type=chunk) [Consolidated Statements of Cash Flows](index=60&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities increased to **$69.1 million** in **FY2025** from **$57.4 million** in **FY2024**, primarily due to higher net losses; net cash used in investing activities was **$14.5 million** in **FY2025**, a shift from **$48.7 million** provided in **FY2024**, reflecting increased purchases of marketable debt securities; net cash provided by financing activities significantly increased to **$107.3 million** in **FY2025** from **$63.0 million** in **FY2024**, driven by proceeds from equity offerings Cash Flow Summary | Cash Flow Type | FY2025 (Thousands) | FY2024 (Thousands) | | :------------------------------------------ | :----------------- | :----------------- | | Net Cash Used in Operating Activities | **$(69,075)** | **$(57,368)** | | Net Cash Provided by (Used in) Investing Activities | **$(14,541)** | **$48,699** | | Net Cash Provided by Financing Activities | **$107,327** | **$63,029** | | Net increase in cash and cash equivalents | **$23,711** | **$54,360** | | Cash and cash equivalents at end of fiscal year | **$94,107** | **$70,396** | - The increase in cash used in operating activities was mainly due to a higher net loss (**$74.4 million** in **FY2025** vs. **$68.5 million** in **FY2024**)[197](index=197&type=chunk) - Investing activities shifted from providing cash to using cash, primarily due to increased purchases of marketable debt securities (**$128.1 million** in **FY2025** vs. **$66.4 million** in **FY2024**)[202](index=202&type=chunk) - Financing activities were significantly boosted by proceeds from the **2025** Underwritten Offering (**$97.3 million**) and private placements (**$10.2 million**)[203](index=203&type=chunk) [Notes to Consolidated Financial Statements](index=62&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed disclosures on the company's accounting policies, liquidity, investments, leases, license agreements, derivative liabilities, shareholders' equity, share-based compensation, income taxes, commitments, related party transactions, supplemental financial information, net loss per share, financial instruments, and segment disclosures; it also includes information on recently adopted and future accounting pronouncements and subsequent events - The company is a clinical stage biopharmaceutical company operating as a single reportable segment[233](index=233&type=chunk)[237](index=237&type=chunk)[392](index=392&type=chunk) - Management believes current capital resources are adequate for at least **12 months**, but additional financing will be needed for long-term obligations[273](index=273&type=chunk)[191](index=191&type=chunk) - Investments in marketable debt securities totaled **$73.8 million** as of **June 30, 2025**, all maturing within **12 months**[274](index=274&type=chunk) - Lease obligations include a corporate headquarters in Redwood City, CA, and an office in Bend, OR, with total lease payments of **$1.744 million** through **FY2028**[281](index=281&type=chunk)[286](index=286&type=chunk) - License agreements with XOMA and ActiveSite involve significant milestone payments, including **$25.0 million** to XOMA upon ersodetug regulatory approval and up to **$25.0 million** to ActiveSite for clinical/regulatory milestones[288](index=288&type=chunk)[291](index=291&type=chunk) - As of **June 30, 2025**, the company had U.S. federal NOL carryforwards of **$201.4 million**, subject to IRC Section 382 limitations[346](index=346&type=chunk) [NOTE 1 — NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=62&type=section&id=NOTE%201%20%E2%80%94%20NATURE%20OF%20OPERATIONS%20AND%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) Rezolute, Inc. is a clinical-stage rare disease company focused on hyperinsulinism; its financial statements are consolidated and prepared under GAAP, requiring significant estimates for areas like marketable debt securities, derivative liabilities, share-based compensation, and clinical trial accruals; the company operates as a single reportable segment; recently adopted ASU 2023-07 on segment reporting had no material impact, and ASU 2023-09 on income tax disclosures will be adopted in **FY2026** - Rezolute, Inc. is a late-stage rare disease company focused on significantly improving outcomes for individuals with hypoglycemia caused by hyperinsulinism, with ersodetug as its primary clinical asset[233](index=233&type=chunk) - Consolidated financial statements are prepared in accordance with GAAP, requiring management judgments, estimates, and assumptions for various financial items[235](index=235&type=chunk)[238](index=238&type=chunk) - The company operates as a single reportable operating segment, with its Chief Executive Officer serving as the chief operating decision maker[237](index=237&type=chunk)[392](index=392&type=chunk) - Investments in marketable debt securities are classified as available-for-sale and recorded at fair value, with credit risk assessment for declines in fair value[244](index=244&type=chunk) - Research and development costs are expensed as incurred, and clinical trial activities performed by third parties are accrued based on estimates of work completed[250](index=250&type=chunk)[251](index=251&type=chunk) - Share-based compensation is measured at fair value using the Black-Scholes-Merton model for stock options and the closing market price for RSUs[252](index=252&type=chunk) [NOTE 2 — LIQUIDITY](index=68&type=section&id=NOTE%202%20%E2%80%94%20LIQUIDITY) Rezolute is a clinical-stage company with no revenue, incurring a **$74.4 million** net loss in **FY2025** and an accumulated deficit of **$403.9 million**; as of **June 30, 2025**, it had **$167.9 million** in cash and marketable debt securities, primarily from equity financings (**$107.0 million** in **FY2025**); management believes these resources are sufficient for at least **12 months**, but significant future milestone payments under license agreements will require additional long-term financing - Incurred a net loss of **$74.4 million** and used **$69.1 million** in operating activities in **FY2025**, with an accumulated deficit of **$403.9 million**[268](index=268&type=chunk) - Total capital resources (cash, cash equivalents, and marketable debt securities) were **$167.9 million** as of **June 30, 2025**[268](index=268&type=chunk) - Primary source of liquidity has historically been from private placements and public offerings of equity securities, with **$107.0 million** net proceeds in **FY2025**[269](index=269&type=chunk) - Management believes the company's cash and cash equivalents and investments in marketable debt securities will be adequate to meet contractual obligations and carry out planned activities for at least **12 months**[273](index=273&type=chunk) - A **$25.0 million** milestone payment to XOMA is due upon regulatory approval of ersodetug, not expected to be recognized as a liability within the next **12 months**[270](index=270&type=chunk) [NOTE 3 — INVESTMENTS IN MARKETABLE DEBT SECURITIES](index=70&type=section&id=NOTE%203%20%E2%80%94%20INVESTMENTS%20IN%20MARKETABLE%20DEBT%20SECURITIES) As of **June 30, 2025**, total investments in marketable debt securities were **$73.8 million**, all classified as short-term and maturing within **12 months**; the company invests in liquid, high-quality debt securities with maturities generally **two years or less**; no sales prior to maturity or credit loss allowances were recognized in **FY2025** or **FY2024** Marketable Debt Securities Summary | Investment Type | June 30, 2025 (Thousands) | June 30, 2024 (Thousands) | | :------------------------------ | :------------------------ | :------------------------ | | Short-term investments | **$73,751** | **$56,478** | | Long-term investments | **$0** | **$263** | | Total investments | **$73,751** | **$56,741** | - All marketable debt securities (**$73.8 million**) as of **June 30, 2025**, are scheduled to mature during the **12-month period** ending **June 30, 2026**[274](index=274&type=chunk) - No marketable debt securities were sold prior to maturity, and no allowance for credit losses or other-than-temporary impairment was recognized for the fiscal years ended **June 30, 2025** and **2024**[275](index=275&type=chunk)[276](index=276&type=chunk) Marketable Debt Securities Details | Investment Type | Amortized Cost (Thousands) | Gross Unrealized Gains (Thousands) | Gross Unrealized Losses (Thousands) | Fair Value (Thousands) | | :------------------------------ | :------------------------- | :------------------------- | :-------------------------- | :--------------------- | | Corporate commercial paper | **$16,595** | **$1** | **$(8)** | **$16,588** | | Obligations of U.S. government agencies | **$5,447** | **$0** | **$(2)** | **$5,445** | | U.S. Treasury obligations | **$1,485** | **$0** | **$(1)** | **$1,484** | | Corporate notes and bonds | **$50,231** | **$18** | **$(15)** | **$50,234** | | Total | **$73,758** | **$19** | **$(26)** | **$73,751** | [NOTE 4 — LEASES](index=71&type=section&id=NOTE%204%20%E2%80%94%20LEASES) Rezolute has operating leases for its Redwood City, CA headquarters (**9,300 sq ft**, **$48,000/month** average base rent, expires **Nov 2027**) and Bend, OR office (**5,000 sq ft**, **$9,000/month** average base rent, expires **Feb 2027**); total operating lease liabilities were **$1.6 million** as of **June 30, 2025**, with a weighted-average remaining lease term of **2.3 years**; lease expense was **$0.7 million** in **FY2025** - The lease for the Bend, Oregon office was extended to **February 2027**, with an average base rent of approximately **$9,000 per month**[280](index=280&type=chunk) - The corporate headquarters in Redwood City, California, has a lease through **November 2027**, with an average base rent of approximately **$48,000 per month**[281](index=281&type=chunk) Lease Liabilities and Right-of-Use Assets | Metric | June 30, 2025 (Thousands) | June 30, 2024 (Thousands) | | :-------------------------------- | :------------------------ | :------------------------ | | Right-of-use assets | **$1,348** | **$1,880** | | Current operating lease liabilities | **$632** | **$568** | | Long-term operating lease liabilities | **$983** | **$1,660** | | Total operating lease liabilities | **$1,615** | **$2,228** | Lease Expense | Expense Type | FY2025 (Thousands) | FY2024 (Thousands) | | :------------------------ | :----------------- | :----------------- | | Research and development | **$489** | **$484** | | General and administrative | **$178** | **$196** | | Total | **$667** | **$680** | - As of **June 30, 2025**, the weighted-average remaining lease term was **2.3 years**, and the weighted-average discount rate used was **7.1%**[285](index=285&type=chunk) Future Lease Payments | Fiscal Year Ending June 30 | Amount (Thousands) | | :------------------------- | :----------------- | | 2026 | **$770** | | 2027 | **$750** | | 2028 | **$224** | | Total lease payments | **$1,744** | | Less imputed interest | **$(129)** | | Present value of operating lease liabilities | **$1,615** | [NOTE 5 — LICENSE AGREEMENTS](index=72&type=section&id=NOTE%205%20%E2%80%94%20LICENSE%20AGREEMENTS) Rezolute has license agreements with XOMA and ActiveSite; under the XOMA License Agreement for ersodetug, milestone payments totaling **$12.0 million** have been made, with a **$25.0 million** payment due upon first regulatory approval; additional sales-based milestones up to **$185.0 million** and royalties are also due; under the ActiveSite License Agreement for the PKI Portfolio (including RZ402), **$4.0 million** in milestone payments have been made, with **$5.0 million** due upon first dosing in a Phase 3 trial, and up to **$17.5 million** for commercial success/alternative indications, plus **2.0%** royalties on sales - The XOMA License Agreement grants an exclusive global license to develop and commercialize ersodetug. Milestone payments made to date include **$2.0 million** (Phase 2 last patient), **$5.0 million** (Phase 3 first patient), and **$5.0 million** (Phase 3 last patient dosed)[288](index=288&type=chunk) - A **$25.0 million** milestone payment to XOMA will be due upon the first regulatory approval of ersodetug by any regulatory authority[288](index=288&type=chunk) - Upon future commercialization of ersodetug, royalties based on net sales and additional milestone payments up to **$185.0 million** related to annual net sales targets will be required[288](index=288&type=chunk) - The ActiveSite License Agreement for the PKI Portfolio (RZ402) requires various milestone payments up to **$46.5 million**. **$1.0 million** was paid (IND clearance) and **$3.0 million** was paid (Phase 2 first patient)[291](index=291&type=chunk) - The next milestone payment to ActiveSite is **$5.0 million** upon the first dosing of a patient in a Phase 3 clinical trial[291](index=291&type=chunk) - The company is also required to pay royalties equal to **2.0%** of any sales of products that use the PKI Portfolio and additional milestone payments up to **$17.5 million** for commercial success or alternative indication approvals[291](index=291&type=chunk) [NOTE 6 — EMBEDDED DERIVATIVE LIABILITY](index=73&type=section&id=NOTE%206%20%E2%80%94%20EMBEDDED%20DERIVATIVE%20LIABILITY) The company accounts for an exit fee agreement from a terminated **$30.0 million** loan as an embedded derivative liability; this fee of **4.00%** (**$0.6 million**) is triggered by certain "Exit Events" before **April 13, 2031**; the estimated fair value of this liability was **$0.5 million** as of **June 30, 2025** and **2024** - An exit fee agreement from a terminated **$30.0 million** Loan and Security Agreement is accounted for as an embedded derivative liability[293](index=293&type=chunk) - The exit fee is **4.00%** of the funded principal balance (**$0.6 million**) and is triggered by certain "Exit Events" occurring prior to **April 13, 2031**[293](index=293&type=chunk) - The estimated fair value of the embedded derivative liability was **$0.5 million** as of **June 30, 2025** and **2024**[293](index=293&type=chunk) [NOTE 7 — SHAREHOLDERS' EQUITY](index=73&type=section&id=NOTE%207%20%E2%80%94%20SHAREHOLDERS'%20EQUITY) Shareholders approved an increase in authorized common shares to **165.0 million** in **December 2024**; the company issued fully vested pre-funded warrants (PFWs) for **28.2 million shares** between **Oct 2021** and **Apr 2025**, all classified as equity; recent equity financings include the **2025** Private Placement (**$4.2 million** net proceeds) and the **2025** Underwritten Offering (**$96.8 million** net proceeds); an Exchange Agreement in **March 2024** involved purchasing **3.0 million common shares** and issuing Exchange PFWs, which were reclassified from derivative liability to equity in **May 2024** - On **December 5, 2024**, shareholders approved an increase in the authorized number of common shares from **100.0 million** to **165.0 million shares**[294](index=294&type=chunk) - Between **October 2021** and **April 2025**, the company issued fully vested pre-funded warrants (PFWs) exercisable to purchase an aggregate of **28.2 million shares** of common stock, all classified in shareholders' equity[295](index=295&type=chunk) Pre-Funded Warrants Activity | PFW Type | Outstanding, June 30, 2024 (Shares) | Issuance in FY2025 (Shares) | Cashless Exercise in FY2025 (Shares) | Outstanding, June 30, 2025 (Shares) | | :---------------- | :---------------------------------- | :-------------------------- | :----------------------------------- | :---------------------------------- | | 2021 PFWs | **123,000** | — | — | **123,000** | | 2022 PFWs | **8,147,371** | — | **(2,526,318)** | **5,621,053** | | Exchange PFWs | **3,000,000** | — | **(3,000,000)** | — | | 2024 PFWs | **3,750,000** | — | — | **3,750,000** | | 2025 PFWs | — | **6,905,385** | — | **6,905,385** | | Total | **15,020,3