8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): September 17, 2009

FEDEX CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	1-15829	62-1721435
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

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

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

FEDERAL EXPRESS CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	1-7806	71-0427007
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

3610 Hacks Cross Road, Memphis, Tennessee	38125
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (901) 369-3600

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

EXPLANATORY NOTE

The information in this Report, including the exhibit, is being furnished pursuant to Item 2.02 of Form 8-K and General Instruction B.2 thereunder. Such information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended.

SECTION 2. FINANCIAL INFORMATION.

Item 2.02. Results of Operations and Financial Condition.

Attached as Exhibit 99.1 and incorporated herein by reference is a copy of FedEx Corporation’s press release, dated September 17, 2009, announcing its and its wholly owned subsidiary Federal Express Corporation’s financial results for the fiscal quarter ended August 31, 2009.

SECTION 9. FINANCIAL STATEMENTS AND EXHIBITS.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits. The following exhibit is being furnished as part of this Report.

Exhibit
Number		Description
	99.1	Press Release of FedEx Corporation dated September 17, 2009.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned hereunto duly authorized.

	FedEx Corporation
Date: September 17, 2009	By:	/s/ HERBERT C. NAPPIER
		Herbert C. Nappier
		Staff Vice President and Corporate Controller
	Federal Express Corporation
Date: September 17, 2009	By:	/s/ J. RICK BATEMAN
		J. Rick Bateman
		Vice President and Worldwide Controller

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EXHIBIT INDEX

Exhibit
Number		Description
	99.1	Press Release of FedEx Corporation dated September 17, 2009.

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EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

FedEx Corp. Reports First Quarter Earnings
FedEx Express Announces 2010 Rate Increase

MEMPHIS, Tenn., September 17, 2009 ... FedEx Corp. (NYSE: FDX) today reported earnings of $0.58 per diluted share for the first quarter ended August 31, compared to $1.23 per diluted share a year ago.

“Better-than-expected FedEx International Priority^® volume, decisive management actions and our dedicated team members helped drive financial performance above our initial expectations in the first quarter,” said Frederick W. Smith, FedEx Corp. chairman, president and chief executive officer. “For more than a year, we have vigilantly managed costs without sacrificing service, invested wisely and minimized job losses so that FedEx will emerge a stronger, more profitable company as the global economic recovery takes hold.”

First Quarter Results

FedEx Corp. reported the following consolidated results for the first quarter:

• Revenue of $8.01 billion, down 20% from $9.97 billion a year ago

• Operating income of $315 million, down 50% from $630 million last year

• Operating margin of 3.9%, down from 6.3% the previous year

• Net income of $181 million, down 53% from last year’s $384 million

Revenue and profitability continued to be negatively affected year over year by the global recession. Fuel was also a significantly negative factor in the quarter, primarily due to the substantial decline in fuel surcharges year over year. Strict cost controls and one additional operating day at each of the transportation segments benefited results.

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Outlook

FedEx reiterates its earnings expectation of $0.65 to $0.95 per diluted share in the second quarter, which reflects the current outlook for fuel prices and a continued modest recovery in the global economy. A substantial decline is expected from $1.58 per diluted share a year ago, when the company significantly benefited from rapidly declining fuel prices and the timing lag that exists between when fuel prices change and when indexed fuel surcharges automatically adjust. The company’s capital spending forecast remains $2.6 billion.

“While we see signs of improvement in the economy, the year-over-year comparisons will remain very difficult for our second quarter,” said Alan B. Graf Jr., FedEx Corp. executive vice president and chief financial officer. “We remain focused on managing our expenses and generating positive cash flow.”

2010 Rate Increase

FedEx Express will increase shipping rates by an average of 5.9% for U.S. domestic and U.S. export services, effective January 4, 2010. The rate increase will be partially offset by adjusting the fuel price at which the fuel surcharge begins, reducing the fuel surcharge by two percentage points. Additional changes will be made to other FedEx Express surcharges, details of which can be found at www.fedex.com/us/2010rates. The FedEx Ground and FedEx SmartPost rate and surcharge changes for 2010 will be announced later this year.

FedEx Express Segment

For the first quarter, the FedEx Express segment reported:

• Revenue of $4.92 billion, down 23% from $6.42 billion a year ago

• Operating income of $104 million, down 70% from $345 million last year

• Operating margin of 2.1%, down from 5.4% the previous year

U.S. domestic package revenue declined 22%, driven by a 23% drop in revenue per package due to lower fuel surcharges, rate per pound and weight per package. U.S. domestic package volume grew slightly. FedEx International Priority (IP) package revenue declined 22%. IP revenue per package declined 20% due to lower fuel surcharges, unfavorable exchange rates and lower package weights, while IP package volume fell 4%.

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Results were negatively impacted by continued global economic weakness and substantially lower fuel surcharges, partially offset by gains from DHL’s exit from the U.S. domestic package market. Expenses improved due to lower fuel prices and consumption, continued reductions in flight hours, labor hours, purchased transportation and other aggressive actions to control spending.

FedEx Ground Segment

For the first quarter, the FedEx Ground segment reported:

• Revenue of $1.73 billion, down 2% from last year’s $1.76 billion

• Operating income of $209 million, up 7% from $196 million a year ago

• Operating margin of 12.1%, up from 11.1% the previous year

FedEx Ground average daily package volume was down 1% compared to the prior year. Yield decreased 3% primarily due to lower fuel surcharges. FedEx SmartPost average daily volume grew 73% largely due to market share gains, including gains from DHL’s exit from the U.S. domestic package market. FedEx SmartPost yield decreased 34% due to changes in customer and service mix.

FedEx Freight Segment

For the first quarter, the FedEx Freight segment reported:

• Revenue of $982 million, down 27% from last year’s $1.35 billion

• Operating income of $2 million, down 98% from $89 million a year ago

• Operating margin of 0.2%, down from 6.6% the previous year

Less-than-truckload (LTL) average daily shipments decreased 14% and yield decreased 13% year over year, reflecting the continued weak economy and resulting excess industry capacity, as well as an increasingly competitive pricing environment. LTL yield was also negatively impacted by lower fuel surcharges. Average daily LTL shipments improved sequentially month over month throughout the quarter.

Operating income and margin decreased in the quarter due to the lower average daily LTL shipments and the competitive pricing environment, partially offset by cost-reduction actions.

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FedEx Services Segment

FedEx Services segment revenue for the first quarter, which included the operations of FedEx Office and FedEx Global Supply Chain Services, was down 12% year over year, primarily due to declines in copy product revenues.

Corporate Overview

FedEx Corp. (NYSE: FDX) provides customers and businesses worldwide with a broad portfolio of transportation, e-commerce and business services. With annual revenues of $34 billion, the company offers integrated business applications through operating companies competing collectively and managed collaboratively, under the respected FedEx brand. Consistently ranked among the world’s most admired and trusted employers, FedEx inspires its more than 275,000 employees and contractors to remain “absolutely, positively” focused on safety, the highest ethical and professional standards and the needs of their customers and communities. For more information, visit news.fedex.com.

Additional information and operating data are contained in the company’s annual report, Form 10-K, Form 10-Qs and first quarter fiscal 2010 Statistical Book. These materials, as well as a Webcast of the earnings release conference call to be held at 8:30 a.m. EDT on September 17 are available on the company’s Web site at www.fedex.com/us/investorrelations. A replay of the conference call Webcast will be posted on our Web site following the call.

Certain statements in this press release may be considered forward-looking statements, such as statements relating to management’s views with respect to future events and financial performance. Such forward-looking statements are subject to risks, uncertainties and other factors which could cause actual results to differ materially from historical experience or from future results expressed or implied by such forward-looking statements. Potential risks and uncertainties include, but are not limited to, economic conditions in the global markets in which we operate, legal challenges or changes related to FedEx Ground’s owner-operators, new U.S. domestic or international government regulation, the impact from any terrorist activities or international conflicts, our ability to effectively operate, integrate and leverage acquired businesses, changes in fuel prices and currency exchange rates, our ability to match capacity to shifting volume levels and other factors which can be found in FedEx Corp.’s and its subsidiaries’ press releases and filings with the SEC.

Media Contact: Jess Bunn 901-818-7463
Investor Contact: Mickey Foster 901-818-7468
Home Page: fedex.com

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FEDEX CORP. FINANCIAL HIGHLIGHTS

First Quarter Fiscal 2010
(In millions, except earnings per share and FTEs)
(Unaudited)

	Three Months Ended
	August 31
	2009			2008			%
Revenue:
FedEx Express segment	$	4,924		$	6,419			(23	%)
FedEx Ground segment		1,730			1,761			(2	%)
FedEx Freight segment		982			1,353			(27	%)
FedEx Services segment		451			513			(12	%)
Other & eliminations		(78	)		(76	)	NM
Total Revenue		8,009			9,970			(20	%)
Operating Expenses:
Salaries and employee benefits		3,377			3,585			(6	%)
Purchased transportation		1,054			1,278			(18	%)
Rentals and landing fees		578			617			(6	%)
Depreciation and amortization		495			492			1	%
Fuel		666			1,528			(56	%)
Maintenance and repairs		401			537			(25	%)
Other		1,123			1,303			(14	%)
Total Operating Expenses		7,694			9,340			(18	%)
Operating Income:
FedEx Express segment		104			345			(70	%)
FedEx Ground segment		209			196			7	%
FedEx Freight segment		2			89			(98	%)
FedEx Services segment		—			—		NM
Total Operating Income		315			630			(50	%)
Other Income (Expense):
Interest, net		(18	)		(9	)	NM
Other, net		(3	)		(3	)	NM
Total Other Income (Expense)		(21	)		(12	)	NM
Income Before Income Taxes		294			618			(52	%)
Provision for Income Taxes		113			234			(52	%)
Net Income	$	181		$	384			(53	%)
Diluted Earnings Per Share	$	0.58		$	1.23			(53	%)
Weighted Average Common and Common Equivalent Shares		312			313			(0	%)
Capital Expenditures	$	880		$	636			38	%
Average Full-Time Equivalents (in thousands)		239			252			(5	%)

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FEDEX CORP. CONDENSED CONSOLIDATED BALANCE SHEETS

First Quarter Fiscal 2010
(In millions)

	August 31, 2009
	(Unaudited)		May 31, 2009
ASSETS
Current Assets:
Cash and cash equivalents	$	1,789	$	2,292
Other current assets		4,599		4,824
Total Current Assets		6,388		7,116
Net Property and Equipment		13,538		13,417
Other Long-Term Assets		3,931		3,711
	$	23,857	$	24,244
LIABILITIES AND STOCKHOLDERS’ INVESTMENT
Current Liabilities:
Current portion of long-term debt	$	158	$	653
Other current liabilities		3,728		3,871
Total Current Liabilities		3,886		4,524
Long-Term Debt, Less Current Portion		1,918		1,930
Other Long-Term Liabilities		4,267		4,164
Total Common Stockholders’ Investment		13,786		13,626
	$	23,857	$	24,244

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FEDEX CORP. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

First Quarter Fiscal 2010
(In millions)
(Unaudited)

	Three Months Ended
	August 31
	2009			2008
Operating Activities:
Net income	$	181		$	384
Noncash charges:
Depreciation and amortization		495			492
Other, net		122			103
Changes in operating assets and liabilities, net		100			(281	)
Net cash provided by operating activities		898			698
Investing Activities:
Capital expenditures		(880	)		(636	)
Proceeds from asset dispositions and other		26			15
Net cash used in investing activities		(854	)		(621	)
Financing Activities:
Principal payments on debt		(508	)		(1	)
Dividends paid		(34	)		(34	)
Other, net		(8	)		5
Net cash used in financing activities		(550	)		(30	)
Effect of exchange rate changes on cash		3			(13	)
Net (decrease) increase in cash and cash equivalents		(503	)		34
Cash and cash equivalents at beginning of period		2,292			1,539
Cash and cash equivalents at end of period	$	1,789		$	1,573

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FEDEX EXPRESS SEGMENT FINANCIAL AND OPERATING HIGHLIGHTS

First Quarter Fiscal 2010
(Dollars in millions)
(Unaudited)

	Three Months Ended
	August 31
	2009			2008			%
FINANCIAL HIGHLIGHTS
Revenue	$	4,924		$	6,419			(23	%)
Operating Expenses:
Salaries and employee benefits		2,043			2,129			(4	%)
Purchased transportation		255			336			(24	%)
Rentals and landing fees		385			417			(8	%)
Depreciation and amortization		252			239			5	%
Fuel		571			1,319			(57	%)
Maintenance and repairs		261			394			(34	%)
Intercompany charges		469			533			(12	%)
Other		584			707			(17	%)
Total Operating Expenses		4,820			6,074			(21	%)
Operating Income	$	104		$	345			(70	%)
Operating Margin		2.1	%		5.4	%	(3.3		pts)
OPERATING STATISTICS
Operating Weekdays		65			64			2	%
AVG DAILY VOLUME / POUNDS
Average Daily Package Volume (000s):
U.S. Overnight Box		1,128			1,103			2	%
U.S. Overnight Envelope		617			629			(2	%)
U.S. Deferred		823			828			(1	%)
Total U.S. Domestic Package		2,568			2,560			0	%
International Priority		475			495			(4	%)
International Domestic		293			307			(5	%)
Total Average Daily Packages		3,336			3,362			(1	%)
Average Daily Freight Pounds (000s):
U.S.		6,584			7,296			(10	%)
International Priority		2,142			2,312			(7	%)
International Airfreight		1,297			1,866			(30	%)
Total Avg Daily Freight Pounds		10,023			11,474			(13	%)
YIELD
Revenue Per Package:
U.S. Overnight Box	$	18.16		$	24.24			(25	%)
U.S. Overnight Envelope		10.17			13.04			(22	%)
U.S. Deferred		11.23			14.38			(22	%)
Total U.S. Domestic Package		14.02			18.30			(23	%)
International Priority		51.61			64.54			(20	%)
International Domestic		7.05			8.63			(18	%)
Composite Package Yield	$	18.76		$	24.23			(23	%)
Revenue Per Freight Pound:
U.S.	$	1.05		$	1.28			(18	%)
International Priority		1.87			2.30			(19	%)
International Airfreight		0.72			1.10			(35	%)
Composite Freight Yield	$	1.18		$	1.46			(19	%)
Average Full-Time Equivalents (000s)		125			130			(4	%)

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FEDEX GROUND SEGMENT FINANCIAL AND OPERATING HIGHLIGHTS

First Quarter Fiscal 2010
(Dollars in millions)
(Unaudited)

	Three Months Ended
	August 31
	2009			2008			%
FINANCIAL HIGHLIGHTS
Revenue	$	1,730		$	1,761			(2	%)
Operating Expenses:
Salaries and employee benefits		282			267			6	%
Purchased transportation		693			771			(10	%)
Rentals		58			51			14	%
Depreciation and amortization		85			80			6	%
Fuel		1			2			(50	%)
Maintenance and repairs		38			37			3	%
Intercompany charges		184			178			3	%
Other		180			179			1	%
Total Operating Expenses		1,521			1,565			(3	%)
Operating Income	$	209		$	196			7	%
Operating Margin		12.1	%		11.1	%	1.0		pts
OPERATING STATISTICS
Operating Weekdays		65			64			2	%
Average Daily Package Volume (000s)
FedEx Ground		3,311			3,339			(1	%)
FedEx SmartPost		1,009			584			73	%
Yield (Revenue Per Package)
FedEx Ground	$	7.60		$	7.86			(3	%)
FedEx SmartPost	$	1.41		$	2.14			(34	%)

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FEDEX FREIGHT SEGMENT FINANCIAL AND OPERATING HIGHLIGHTS

First Quarter Fiscal 2010
(Dollars in millions)
(Unaudited)

	Three Months Ended
	August 31
	2009			2008			%
FINANCIAL HIGHLIGHTS
Revenue	$	982		$	1,353			(27	%)
Operating Expenses:
Salaries and employee benefits		507			614			(17	%)
Purchased transportation		118			180			(34	%)
Rentals and landing fees		29			33			(12	%)
Depreciation and amortization		55			54			2	%
Fuel		94			206			(54	%)
Maintenance and repairs		34			43			(21	%)
Intercompany charges 1		52			22			136	%
Other		91			112			(19	%)
Total Operating Expenses		980			1,264			(22	%)
Operating Income	$	2		$	89			(98	%)
Operating Margin		0.2	%		6.6	%	(6.4		pts)
OPERATING STATISTICS
LTL Operating Weekdays		65			64			2	%
LTL Shipments Per Day (000s)		71.4			82.7			(14	%)
Weight Per LTL Shipment (lbs)		1,109			1,140			(3	%)
LTL Revenue/CWT	$	17.87		$	20.44			(13	%)

1- During the first quarter of fiscal 2010, approximately 2,700 FedEx Freight segment employees were transferred to the FedEx Services segment. These employees represented the sales, marketing, IT, pricing, customer service, claims and credit and collection functions of the FedEx Freight segment. For 2010, the costs of these functions will be allocated to the FedEx Freight segment through intercompany charges. There is no net impact to the FedEx Freight segment operating income and margin.

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