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 22, 2011

FEDEX CORPORATION

(Exact name of registrant as specified in its charter)

Commission File Number 1-15829

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

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

FEDERAL EXPRESS CORPORATION

(Exact name of registrant as specified in its charter)

Commission File Number 1-7806

Delaware (State or other jurisdiction of incorporation)	71-0427007 (IRS Employer Identification No.)
3610 Hacks Cross Road, Memphis, Tennessee (Address of principal executive offices)	38125 (ZIP Code)

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

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 22, 2011, announcing its and its wholly owned subsidiary Federal Express Corporation’s financial results for the fiscal quarter ended August 31, 2011.

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 22, 2011.

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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 22, 2011	By:	/s/ HERBERT C. NAPPIER
		Herbert C. Nappier
		Staff Vice President and Corporate Controller
	Federal Express Corporation
Date: September 22, 2011	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 22, 2011.

E-1

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

FedEx Corp. Reports Higher Revenue and Earnings
FedEx Ground Margin Improves to 17.9%
FedEx Express Announces 2012 Rate Increase

MEMPHIS, Tenn., September 22, 2011 ... FedEx Corp. (NYSE: FDX) today reported earnings of $1.46 per diluted share for the first quarter ended August 31, compared to $1.20 per diluted share a year ago, a year-over-year increase of 22%.

“Revenue and earnings increased significantly in the quarter due to strong FedEx Ground performance, improved FedEx Freight results and the continued success of the company’s yield management actions,” said Frederick W. Smith, FedEx Corp. chairman, president and chief executive officer. “While the economic environment is challenging, we remain confident FedEx will improve earnings, margins and cash flows this fiscal year.”

First Quarter Results

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

• Revenue of $10.52 billion, up 11% from $9.46 billion the previous year

• Operating income of $737 million, up 17% from $628 million last year

• Operating margin of 7.0%, up from 6.6% the previous year

• Net income of $464 million, up 22% from last year’s $380 million

During the quarter, improved FedEx Ground and FedEx Freight results offset the effect of slowing global economic growth, which especially impacted volume levels and drove lower productivity at FedEx Express. Results also reflect wage increases, higher funding of incentive compensation programs and the reinstatement of full 401(k) company-matching contributions.

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Outlook

FedEx projects earnings to be $1.40 to $1.60 per diluted share in the second quarter and $6.25 to $6.75 per diluted share for fiscal 2012, compared to the company’s previous full year forecast of $6.35 to $6.85 per diluted share. This guidance assumes the current market outlook for fuel prices and moderate growth in the global economy. The company reported earnings of $0.89 per diluted share in last year’s second quarter, which included charges of $0.27 per diluted share. The capital spending forecast for fiscal 2012 remains $4.2 billion.

“The U.S. and global economy grew at a slower rate than we anticipated during the quarter,” said Alan B. Graf, Jr., FedEx Corp. executive vice president and chief financial officer. “While FedEx Ground and FedEx Freight achieved improved operating results despite lower than expected growth, the more rapid decline in demand for FedEx Express services, particularly from Asia, outpaced our ability to reduce operating costs. We have slightly reduced our earnings forecast to reflect current business conditions and are aggressively working to adjust our cost structure to match demand levels.”

The company plans to begin acquiring FedEx common shares. A total of 5.7 million shares may be repurchased under existing share repurchase authorizations. The repurchases will be subject to market conditions and will be made from time to time either in the open market or through private transactions in accordance with the requirements of the Securities and Exchange Commission. The company’s repurchase program may be suspended, discontinued or resumed at any time.

2012 Rate Increases

FedEx Express will increase shipping rates by a net average of 3.9% for U.S. domestic, U.S. export and U.S. import services effective January 2, 2012. The full average rate increase of 5.9% will be partially offset by adjusting the fuel price threshold at which the fuel surcharge begins, reducing the fuel surcharge by two percentage points. The FedEx Ground and FedEx SmartPost pricing changes for 2012 will be announced later this year. FedEx Freight implemented a 6.75% general rate increase on September 6, 2011.

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FedEx Express Segment

For the first quarter, the FedEx Express segment reported:

• Revenue of $6.59 billion, up 12% from last year’s $5.91 billion

• Operating income of $288 million, down 19% from $357 million a year ago

• Operating margin of 4.4%, down from 6.0% the previous year

U.S. domestic revenue per package grew 13% due to higher fuel surcharges, yield management actions and increased weight per package, while average daily package volume declined 3%. FedEx International Priority^® (IP) revenue per package grew 16% due to higher fuel surcharges, the favorable impact of exchange rates, yield management actions and increased weight per package. IP average daily package volume decreased 4% driven by declines from Asia. IP freight pounds increased 3% with revenue per pound up 7% due to higher fuel surcharges and the favorable impact of exchange rates. In total, IP package and freight pounds increased 2% and revenue increased 11% year-over-year.

Operating income and margin decreased as package volume declines accelerated during the quarter due to slowing global economic growth. The package volume declines were more pronounced in certain premium services. Expense reductions related to volume also accelerated during the quarter but only partially offset increases in wages, incentive compensation programs, benefits and fixed costs.

FedEx Ground Segment

For the first quarter, the FedEx Ground segment reported:

• Revenue of $2.28 billion, up 16% from last year’s $1.96 billion

• Operating income of $407 million, up 42% from $287 million a year ago

• Operating margin of 17.9%, up from 14.6% the previous year

FedEx Ground average daily package volume grew 5% in the first quarter driven by increases in the business-to-business market as well as the FedEx Home Delivery service. Revenue per package increased 9% primarily due to higher fuel surcharges and yield management actions. FedEx SmartPost average daily volume increased 29% due to growth in e-commerce and gains in market share. FedEx SmartPost revenue per package increased 5% primarily due to increased fuel surcharges.

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Operating income and margin increased primarily due to higher package yield and increased volume.

FedEx Freight Segment

For the first quarter, the FedEx Freight segment reported:

• Revenue of $1.33 billion, up 6% from last year’s $1.26 billion

• Operating income of $42 million, compared with an operating loss of $16 million a year ago

• Operating margin of 3.2%, up from (1.3%) the previous year

Less-than-truckload (LTL) yield increased 11% primarily due to higher LTL fuel surcharges and ongoing yield management actions. LTL average daily shipments decreased 7% as a result of the yield management actions.

Operating income in the quarter was driven by strong yield growth and efficiencies resulting from the January 30, 2011 combination of the FedEx Freight and FedEx National LTL operations.

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 $40 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 290,000 team members 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 2012 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 22 are available on the company’s Web site at investors.fedex.com. A replay of the conference call Webcast will be posted on our Web site following the call.

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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 2012
(In millions, except earnings per share and FTEs)
(Unaudited)

	Three Months Ended
	August 31
	2011			2010			%
Revenue:
FedEx Express segment	$	6,592		$	5,912			12	%
FedEx Ground segment		2,278			1,961			16	%
FedEx Freight segment		1,328			1,258			6	%
FedEx Services segment		411			415			(1	%)
Other & eliminations		(88	)		(89	)		(1	%)
Total Revenue		10,521			9,457			11	%
Operating Expenses:
Salaries and employee benefits		4,004			3,803			5	%
Purchased transportation		1,518			1,327			14	%
Rentals and landing fees		620			601			3	%
Depreciation and amortization		509			479			6	%
Fuel		1,244			887			40	%
Maintenance and repairs		551			517			7	%
Other		1,338			1,215			10	%
Total Operating Expenses		9,784			8,829			11	%
Operating Income (Loss):
FedEx Express segment		288			357			(19	%)
FedEx Ground segment		407			287			42	%
FedEx Freight segment		42			(16	)	NM
Total Operating Income		737			628			17	%
Other Income (Expense):
Interest, net		(11	)		(18	)		(39	%)
Other, net		(2	)		(7	)		(71	%)
Total Other Income (Expense)		(13	)		(25	)		(48	%)
Income Before Income Taxes		724			603			20	%
Provision for Income Taxes		260			223			17	%
Net Income	$	464		$	380			22	%
Diluted Earnings Per Share	$	1.46		$	1.20			22	%
Weighted Average Common and Common Equivalent Shares		318			315			1	%
Capital Expenditures	$	1,110		$	1,012			10	%
Average Full-Time Equivalents (in thousands)		259			252			3	%

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FEDEX CORP. CONDENSED CONSOLIDATED BALANCE SHEETS

First Quarter Fiscal 2012
(In millions)

	August 31, 2011
	(Unaudited)			May 31, 2011
ASSETS
Current Assets
Cash and cash equivalents	$	1,959		$	2,328
Receivables, less allowances		4,624			4,581
Spare parts, supplies and fuel, less allowances		418			437
Deferred income taxes		610			610
Prepaid expenses and other		352			329
Total current assets		7,963			8,285
Property and Equipment, at Cost		34,224			33,686
Less accumulated depreciation and amortization		18,404			18,143
Net property and equipment		15,820			15,543
Other Long-Term Assets
Goodwill		2,435			2,326
Other assets		1,620			1,231
Total other long-term assets		4,055			3,557
	$	27,838		$	27,385
LIABILITIES AND STOCKHOLDERS’ INVESTMENT
Current Liabilities
Current portion of long-term debt	$	301		$	18
Accrued salaries and employee benefits		1,245			1,268
Accounts payable		1,563			1,702
Accrued expenses		1,872			1,894
Total current liabilities		4,981			4,882
Long-Term Debt, Less Current Portion		1,367			1,667
Other Long-Term Liabilities
Deferred income taxes		1,441			1,336
Pension, postretirement healthcare and other benefit obligations		2,123			2,124
Self-insurance accruals		964			977
Deferred lease obligations		824			779
Deferred gains, principally related to aircraft transactions		240			246
Other liabilities		184			154
Total other long-term liabilities		5,776			5,616
Commitments and Contingencies
Common Stockholders’ Investment
Common stock, $0.10 par value, 800 million shares authorized		32			32
Additional paid-in capital		2,547			2,484
Retained earnings		15,648			15,266
Accumulated other comprehensive loss		(2,501	)		(2,550	)
Treasury stock, at cost		(12	)		(12	)
Total common stockholders’ investment		15,714			15,220
	$	27,838		$	27,385

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FEDEX CORP. CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS

First Quarter Fiscal 2012
(In millions)
(Unaudited)

	Three Months Ended
	August 31
	2011			2010
Operating Activities:
Net income	$	464		$	380
Noncash charges:
Depreciation and amortization		509			479
Other, net		211			98
Changes in operating assets and liabilities, net		(324	)		(161	)
Net cash provided by operating activities		860			796
Investing Activities:
Capital expenditures		(1,110	)		(1,012	)
Business acquisitions, net of cash acquired		(111	)		—
Proceeds from asset dispositions and other		5			3
Net cash used in investing activities		(1,216	)		(1,009	)
Financing Activities:
Principal payments on debt		(17	)		(12	)
Dividends paid		(41	)		(38	)
Other, net		32			9
Net cash used in financing activities		(26	)		(41	)
Effect of exchange rate changes on cash		13			11
Net decrease in cash and cash equivalents		(369	)		(243	)
Cash and cash equivalents at beginning of period		2,328			1,952
Cash and cash equivalents at end of period	$	1,959		$	1,709

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FEDEX EXPRESS SEGMENT FINANCIAL AND OPERATING HIGHLIGHTS

First Quarter Fiscal 2012
(Dollars in millions)
(Unaudited)

	Three Months Ended
	August 31
	2011			2010			%
FINANCIAL HIGHLIGHTS
Revenue	$	6,592		$	5,912			12	%
Operating Expenses:
Salaries and employee benefits		2,413			2,258			7	%
Purchased transportation		449			369			22	%
Rentals and landing fees		423			403			5	%
Depreciation and amortization		282			255			11	%
Fuel		1,077			754			43	%
Maintenance and repairs		380			352			8	%
Intercompany charges		548			513			7	%
Other		732			651			12	%
Total Operating Expenses		6,304			5,555			13	%
Operating Income	$	288		$	357			(19	%)
Operating Margin		4.4	%		6.0	%		(1.6	pts)
OPERATING STATISTICS
Operating Weekdays		65			65			—
AVG DAILY VOLUME / POUNDS
Average Daily Package Volume (000s):
U.S. Overnight Box		1,134			1,168			(3	%)
U.S. Overnight Envelope		596			624			(4	%)
U.S. Deferred		829			846			(2	%)
Total U.S. Domestic Package		2,559			2,638			(3	%)
International Priority		543			566			(4	%)
International Domestic1		445			323			38	%
Total Average Daily Packages		3,547			3,527			1	%
Average Daily Freight Pounds (000s):
U.S.		6,969			6,908			1	%
International Priority		3,132			3,027			3	%
International Airfreight		1,165			1,240			(6	%)
Total Avg Daily Freight Pounds		11,266			11,175			1	%
YIELD
Revenue Per Package:
U.S. Overnight Box	$	22.24		$	19.65			13	%
U.S. Overnight Envelope		11.64			10.64			9	%
U.S. Deferred		13.57			12.01			13	%
Total U.S. Domestic Package		16.97			15.07			13	%
International Priority		62.30			53.70			16	%
International Domestic1		7.16			7.04			2	%
Composite Package Yield	$	22.67		$	20.52			10	%
Revenue Per Freight Pound:
U.S.	$	1.31		$	1.16			13	%
International Priority		2.21			2.06			7	%
International Airfreight		1.02			0.87			17	%
Composite Freight Yield	$	1.53		$	1.38			11	%
Average Full-Time Equivalents (000s)		136			132			3	%

1 — International Domestic includes the operations of a February 2011 business acquisition in India and a July 2011 business acquisition in Mexico.

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FEDEX GROUND SEGMENT FINANCIAL AND OPERATING HIGHLIGHTS

First Quarter Fiscal 2012
(Dollars in millions)
(Unaudited)

	Three Months Ended
	August 31
	2011			2010			%
FINANCIAL HIGHLIGHTS
Revenues:
FedEx Ground	$	2,116		$	1,839			15	%
FedEx SmartPost		162			122			33	%
Total Revenues		2,278			1,961			16	%
Operating Expenses:
Salaries and employee benefits		351			307			14	%
Purchased transportation		886			782			13	%
Rentals		66			62			6	%
Depreciation and amortization		93			82			13	%
Fuel		2			1		NM
Maintenance and repairs		44			44			—
Intercompany charges		241			221			9	%
Other		188			175			7	%
Total Operating Expenses		1,871			1,674			12	%
Operating Income	$	407		$	287			42	%
Operating Margin		17.9	%		14.6	%	3.3		pts
OPERATING STATISTICS
Operating Weekdays		65			65			—
Average Daily Package Volume (000s)
FedEx Ground		3,722			3,534			5	%
FedEx SmartPost		1,415			1,100			29	%
Yield (Revenue Per Package)
FedEx Ground	$	8.73		$	7.99			9	%
FedEx SmartPost	$	1.76		$	1.68			5	%

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FEDEX FREIGHT SEGMENT FINANCIAL AND OPERATING HIGHLIGHTS

First Quarter Fiscal 2012
(Dollars in millions)
(Unaudited)

	Three Months Ended
	August 31
	2011			2010			%
FINANCIAL HIGHLIGHTS
Revenue	$	1,328		$	1,258			6	%
Operating Expenses:
Salaries and employee benefits		578			600			(4	%)
Purchased transportation		207			204			1	%
Rentals		28			34			(18	%)
Depreciation and amortization		44			48			(8	%)
Fuel		165			131			26	%
Maintenance and repairs		50			46			9	%
Intercompany charges		109			109			—
Other		105			102			3	%
Total Operating Expenses		1,286			1,274			1	%
Operating Income (Loss)	$	42		$	(16	)	NM
Operating Margin		3.2	%		(1.3	%)	4.5		pts
OPERATING STATISTICS
LTL Operating Weekdays		65			65			—
LTL Shipments Per Day (000s)		85.0			91.8			(7	%)
Weight Per LTL Shipment (lbs)		1,157			1,134			2	%
LTL Revenue/CWT	$	19.29		$	17.32			11	%

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