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):  March 17, 2005

FEDEX CORPORATION

(Exact name of registrant as specified in its charter)

Commission file number 1-15829

Delaware	62-1721435
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	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)

Commission file number 1-7806

Delaware	71-0427007
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	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

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)

oPre-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 March 17, 2005, announcing its and its wholly owned subsidiary Federal Express Corporation’s financial results for the fiscal quarter ended February 28, 2005.

SECTION 9.  FINANCIAL STATEMENTS AND EXHIBITS.

Item 9.01.  Financial Statements and Exhibits.

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

Exhibit Number	Description
99.1	Press Release of FedEx Corporation dated March 17, 2005.

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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: March 17, 2005	By:	/s/ JOHN L. MERINO
		John L. Merino
		Corporate Vice President and
		Principal Accounting Officer
	Federal Express Corporation
Date: March 17, 2005	By:	/s/ JAY L. COFIELD
		Jay L. Cofield
		Vice President and
		Worldwide Controller

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EXHIBIT INDEX

Exhibit Number	Description
99.1	Press Release of FedEx Corporation dated March 17, 2005.

E-1

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

FedEx Reports Strong Revenue and Earnings

Growth in Third Quarter

Express and Ground Package Volume Grows a Combined 10%

MEMPHIS, Tenn., March 17, 2005 ... FedEx Corporation (NYSE: FDX) today reported earnings of $1.03 per diluted share for the third quarter ended February 28, compared to $0.68 per diluted share a year ago, a year-over-year increase of 51%.

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

•      Revenue of $7.34 billion, up 21% from $6.06 billion the previous year

•      Operating income of $552 million, up 48% from $372 million a year ago

•      Operating margin of 7.5%, up from last year’s 6.1%

•      Net income of $317 million, up 53% from $207 million the previous year

“We have solid momentum in the business and customer demand is strong,” said Frederick W. Smith, chairman, president and chief executive officer.  “Economic conditions remain favorable, and we are optimistic about future growth prospects.  We are executing our plans very well and our unique business strategy is paying off.”

Total average daily package volume at FedEx Express and FedEx Ground combined grew more than 10% year over year for the quarter, led by double-digit growth in ground and FedEx International Priority^® shipments.  FedEx Freight average daily less-than-truckload (LTL) shipment volume increased 9%.  FedEx Express, FedEx Ground and FedEx Freight each reported solid yield improvement.

Third quarter revenues included $499 million from FedEx Kinko’s, which was acquired in February 2004, compared to approximately $100 million in revenue last year.  Last year’s third quarter included $14 million, or $0.03 per diluted share, of

- more -

business realignment expenses associated with voluntary early retirement and severance programs.

During the quarter, operating income benefited from the timing of adjustments to the company’s indexed fuel surcharges, as fuel costs declined from second quarter levels.  However, should the recent trend of fuel cost increases continue, fourth quarter margins could be negatively impacted.

FedEx ranked in the “Top 10” of FORTUNE magazine’s most recent “America’s Most Admired Companies” and “World’s Most Admired Companies” lists.  The company also ranked first in the “Delivery” industry in the FORTUNE survey.  FedEx continues to place in the FORTUNE “100 Best Companies to Work For” list and has the largest employee base on that list.

Outlook

Earnings are expected to be $1.40 to $1.50 per diluted share in the fourth quarter.  Capital expenditures for fiscal 2005 are expected to be approximately $2.3 billion.

“Customer demand is driving additional investment in aircraft, facilities and technology,” said Alan B. Graf, Jr., executive vice president and chief financial officer.  “We remain diligent in allocating our capital expenditures to the fastest growing and most profitable opportunities.  This investment positions us well to capitalize on additional future growth and we expect to generate a solid return on our investment.”

FedEx Express Segment

For the third quarter, the FedEx Express segment reported:

•Revenue of $4.92 billion, up 12% from last year’s $4.37 billion

•Operating income of $340 million, up 56% from $218 million a year ago

•Operating margin of 6.9%, up from 5.0% the previous year

FedEx International Priority (IP) revenue continued its strong growth, increasing 19% for the quarter.  IP average daily package volume grew 11%, with strong growth in

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U.S. export, Asia and Europe.  IP revenue per package grew 9%, primarily due to fuel surcharges, an increase in average weight per package and favorable exchange rate differences.  U.S. domestic express package revenue increased 9%, as average daily package volume increased 6%.  U.S. domestic express revenue per package increased 5% due to higher fuel surcharge revenue and increases in average weight per package and average rate per pound.

Operating income improved dramatically year over year despite one fewer operating day in the quarter, benefiting from revenue growth and the timing of adjustments to fuel surcharges, ongoing cost control efforts and savings from business realignment programs.

FedEx Express recently launched the express industry’s first direct flight from mainland China to Europe.  The westbound around-the-world flight is the initial phase of a plan which extends the company’s global connectivity leadership and will be followed by a second around-the-world flight on an eastbound pattern later this calendar year.  Both flights will further enhance FedEx Express’ service offerings between the fastest growing economies in Europe and Asia, providing daily service from Shanghai, China to Cologne, Germany.  FedEx Express also received tentative approval from the U.S. Department of Transportation for three new flight frequencies into China, effective March 2006.  This will provide the company a total of 26 weekly flights to China.

In February, the Sixth Circuit Court of Appeals reaffirmed the favorable ruling previously received by FedEx in a lawsuit filed by the company over the tax treatment of jet engine maintenance costs.  This decision did not have any impact on the company’s financial condition, results of operations or tax rate during the third quarter.

FedEx Ground Segment

For the third quarter, the FedEx Ground segment reported:

•      Revenue of $1.20 billion, up 25% from last year’s $960 million

•      Operating income of $149 million, up 33% from $112 million a year ago

•      Operating margin of 12.4%, up from 11.6% the previous year

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FedEx Ground average daily package volume grew 16% year over year in the third quarter, consistent with first half growth rates.  Yield improved 4% primarily due to an increase in extra services revenue and general rate increases, partially offset by a lower average weight per package.  In addition, FedEx Ground reintroduced a fuel surcharge on January 3, 2005.

The operating margin for the FedEx Ground segment increased year over year because of excellent revenue growth, aided by one more operating day in this year’s quarter for the Ground package unit, and significantly improved field productivity.

FedEx Freight Segment

For the third quarter, the FedEx Freight segment reported:

•      Revenue of $747 million, up 19% from last year’s $630 million

•      Operating income of $54 million, up 46% from $37 million a year ago

•      Operating margin of 7.2%, up from 5.9% the previous year

Average daily LTL shipments increased 9% year over year due to market-share gains and continued strong demand for services.  LTL yield improved 9% year over year reflecting incremental fuel surcharges, growth in interregional freight service and higher rates.  Operating margin was up significantly compared to the previous year due to LTL volume and yield growth and productivity gains.

FedEx Kinko’s Segment

For the third quarter, the FedEx Kinko’s segment reported:

•      Revenue of $499 million

•      Operating income of $11 million

•      Operating margin of 2.2%

FedEx Kinko’s revenue and operating margin during the third quarter reflect a decrease in business levels as compared to the second quarter due to the slower winter months.

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The operating margin for the third quarter was adversely impacted by integration activities, including facility rebranding expenses, ramp-up costs associated with the offering of packaging and shipping services at its U.S. locations and the centralization of the FedEx Kinko’s corporate support 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 $29 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 250,000 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 fedex.com.

Additional information and operating data are contained in the company’s annual report, Form 10-K, Form 10-Qs and third quarter FY2005 Statistical Book.  These materials, as well as a Webcast of the earnings release conference call to be held at 8:30 a.m. EST on March 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, any impacts on our business resulting from the duration and magnitude of the U.S. domestic economic recovery, 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 the FedEx Kinko’s business, the impact of 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:  Jim Clippard 901-818-7468

Home Page:  fedex.com

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FEDEX CORP. FINANCIAL HIGHLIGHTS

Third Quarter Fiscal 2005

(In millions, except earnings per share and FTEs)

(Unaudited)

	Three Months Ended							Nine Months Ended
	Feb. 28, 2005			Feb. 29, 2004			%	Feb. 28, 2005			Feb. 29, 2004			%
Revenue:
FedEx Express segment	$	4,915		$	4,374		12%	$	14,365		$	12,790		12%
FedEx Ground segment	1,200			960			25%	3,447			2,852			21%
FedEx Freight segment	747			630			19%	2,374			1,931			23%
FedEx Kinko’s segment	499			—			NM	1,513			—			NM
Other & eliminations	(22		)	98			NM	(51		)	96			NM
Total Revenue	7,339			6,062			21%	21,648			17,669			23%
Operating Expenses:
Salaries and employee benefits	3,026			2,649			14%	8,876			7,778			14%
Purchased transportation	748			602			24%	2,176			1,755			24%
Rentals and landing fees	585			474			23%	1,728			1,350			28%
Depreciation and amortization	368			340			8%	1,091			1,010			8%
Fuel	570			402			42%	1,645			1,088			51%
Maintenance and repairs	413			380			9%	1,248			1,114			12%
Airline Stabilization Act charge	—			—			NM	48			—			NM
Business realignment costs	—			14			NM	—			429			NM
Other	1,077			829			30%	3,105			2,390			30%
Total Operating Expenses	6,787			5,690			19%	19,917			16,914			18%
Operating Income:
FedEx Express segment	340			218			56%	983			222			343%
FedEx Ground segment	149			112			33%	431			363			19%
FedEx Freight segment	54			37			46%	259			164			58%
FedEx Kinko’s segment	11			—			NM	59			—			NM
Other & eliminations	(2		)	5			NM	(1		)	6			NM
Total Operating Income	552			372			48%	1,731			755			129%
Other Income (Expense):
Interest, net	(34		)	(36		)	(6)%	(111		)	(76		)	46%
Other, net	(4		)	(2		)	100%	(18		)	(3		)	NM
Total Other Income (Expense)	(38		)	(38		)	0%	(129		)	(79		)	63%
Pretax Income	514			334			54%	1,602			676			137%
Provision for Income Taxes	197			127			55%	601			250			140%
Net Income	$	317		$	207		53%	$	1,001		$	426		135%
Diluted Earnings Per Share	$	1.03		$	0.68		51%	$	3.26		$	1.40		133%
Weighted Average Common and Common Equivalent Shares	308			303			2%	307			304			1%
Capital Expenditures	$	486		$	284		71%	$	1,661		$	892		86%
Average Full-Time Equivalents (FTEs in thousands)	219			206			6%	215			206			4%

Note:  Certain prior period amounts have been reclassified to conform to the current period’s presentation.

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FEDEX CORP. CONDENSED CONSOLIDATED BALANCE SHEETS

Third Quarter Fiscal 2005

(In millions)

	Feb. 28, 2005		May 31, 2004
	(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	1,084	$	1,046
Other current assets	4,188		3,924
Total Current Assets	5,272		4,970
Net Property and Equipment	9,391		9,037
Other Long-Term Assets	5,712		5,127
	$	20,375	$	19,134
LIABILITIES AND STOCKHOLDERS’ INVESTMENT
Current Liabilities:
Current portion of long-term debt	$	973	$	750
Other current liabilities	4,207		3,982
Total Current Liabilities	5,180		4,732
Long-Term Debt, Less Current Portion	2,441		2,837
Other Long-Term Liabilities	3,632		3,529
Total Common Stockholders’ Investment	9,122		8,036
	$	20,375	$	19,134

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FEDEX CORP. CONDENSED CONSOLIDATED

STATEMENTS OF CASH FLOWS

Third Quarter Fiscal 2005

(In millions)

(Unaudited)

	Nine Months Ended
	Feb. 28, 2005			Feb. 29, 2004
Operating Activities:
Net income	$	1,001		$	426
Noncash charges (credits):
Depreciation and amortization	1,091			1,010
Other, net	29			77
Changes in operating assets and liabilities, net	(161		)	219
Net cash provided by operating activities	1,960			1,732
Investing Activities:
Capital expenditures	(1,661		)	(892		)
Business acquisitions	(122		)	(2,410		)
Proceeds from asset dispositions	10			14
Net cash used in investing activities	(1,773		)	(3,288		)
Financing Activities:
Proceeds from short-term borrowings, net	—			1,929
Dividends paid	(63		)	(48		)
Other, net	(86		)	(388		)
Net cash (used in) provided by financing activities	(149		)	1,493
Net increase (decrease) in cash and cash equivalents	38			(63		)
Cash and cash equivalents at beginning of period	1,046			538
Cash and cash equivalents at end of period	$	1,084		$	475

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FEDEX EXPRESS SEGMENT FINANCIAL AND OPERATING HIGHLIGHTS

Third Quarter Fiscal 2005

(Dollars in millions)

(Unaudited)

	Three Months Ended							Nine Months Ended
	Feb. 28, 2005			Feb. 29, 2004			%	Feb. 28, 2005			Feb. 29, 2004			%
FINANCIAL HIGHLIGHTS
Revenue	$	4,915		$	4,374		12%	$	14,365		$	12,790		12%
Operating Expenses:
Salaries and employee benefits	1,961			1,855			6%	5,723			5,495			4%
Purchased transportation	216			177			22%	613			504			22%
Rentals and landing fees	411			388			6%	1,193			1,142			4%
Depreciation and amortization	199			203			(2)%	598			610			(2)%
Fuel	498			356			40%	1,433			959			49%
Maintenance and repairs	307			300			2%	954			878			9%
Airline Stabilization Act charge	—			—			NM	48			—			NM
Business realignment costs	—			12			NM	—			423			NM
Intercompany charges	382			350			9%	1,118			1,039			8%
Other	601			515			17%	1,702			1,518			12%
Total Operating Expenses	4,575			4,156			10%	13,382			12,568			6%
Operating Income	$	340		$	218		56%	$	983		$	222		343%
Operating Margin	6.9		%	5.0		%		6.8		%	1.7		%
OPERATING STATISTICS
Operating Weekdays	62			63			(2)%	190			190			—
AVG DAILY VOLUME / POUNDS
Average Daily Package Volume (000s):
U.S. Overnight Box	1,217			1,197			2%	1,182			1,178			0%
U.S. Overnight Envelope	681			628			8%	668			655			2%
U.S. Deferred	1,086			1,003			8%	961			933			3%
Total U.S. Domestic Package	2,984			2,828			6%	2,811			2,766			2%
International Priority	435			393			11%	432			386			12%
Total Average Daily Packages	3,419			3,221			6%	3,243			3,152			3%
Average Daily Freight Pounds (000s):
U.S.	9,331			9,082			3%	8,842			8,540			4%
International	1,868			2,060			(9)%	1,867			2,143			(13)%
Total Avg Daily Freight Pounds	11,199			11,142			1%	10,709			10,683			0%
YIELD
Revenue Per Package:
U.S. Overnight Box	$	19.79		$	18.37		8%	$	19.66		$	18.23		8%
U.S. Overnight Envelope	10.51			10.06			4%	10.35			9.95			4%
U.S. Deferred	11.26			10.85			4%	11.44			10.82			6%
Total U.S. Domestic Package	14.57			13.86			5%	14.63			13.77			6%
International Priority	56.14			51.41			9%	54.73			50.19			9%
Composite Package Yield	$	19.86		$	18.43		8%	$	19.97		$	18.23		10%
Revenue Per Freight Pound:
U.S.	$	0.82		$	0.73		12%	$	0.81		$	0.73		11%
International	0.81			0.75			8%	0.78			0.74			5%
Composite Freight Yield	$	0.82		$	0.74		11%	$	0.81		$	0.73		11%
Average Full-Time Equivalents (000s)	126			122			3%	123			122			1%

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FEDEX GROUND SEGMENT FINANCIAL AND OPERATING HIGHLIGHTS

Third Quarter Fiscal 2005

(Dollars in millions)

(Unaudited)

	Three Months Ended							Nine Months Ended
	Feb. 28, 2005			Feb. 29, 2004			%	Feb. 28, 2005			Feb. 29, 2004			%
FINANCIAL HIGHLIGHTS
Revenue	$	1,200		$	960		25%	$	3,447		$	2,852		21%
Operating Expenses:
Salaries and employee benefits	214			183			17%	624			547			14%
Purchased transportation	464			367			26%	1,330			1,076			24%
Rentals	31			26			19%	89			72			24%
Depreciation and amortization	47			38			24%	130			114			14%
Fuel	11			4			175%	31			9			244%
Maintenance and repairs	28			22			27%	80			69			16%
Business realignment costs	—			1			NM	—			1			NM
Intercompany charges	124			107			16%	358			312			15%
Other	132			100			32%	374			289			29%
Total Operating Expenses	1,051			848			24%	3,016			2,489			21%
Operating Income	$	149		$	112		33%	$	431		$	363		19%
Operating Margin	12.4		%	11.6		%		12.5		%	12.7		%
OPERATING STATISTICS
Operating Weekdays	63			62			2%	191			189			1%
Average Daily Package Volume(1) (000s)	2,660			2,296			16%	2,609			2,250			16%
Yield (Revenue Per Package)(1)	$	6.79		$	6.52		4%	$	6.60		$	6.44		2%

⁽¹⁾ - Package statistics exclude FedEx SmartPost.

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FEDEX FREIGHT SEGMENT FINANCIAL AND OPERATING HIGHLIGHTS

Third Quarter Fiscal 2005

(Dollars in millions)

(Unaudited)

	Three Months Ended							Nine Months Ended
	Feb. 28, 2005			Feb. 29, 2004			%	Feb. 28, 2005			Feb. 29, 2004			%
FINANCIAL HIGHLIGHTS
Revenue	$	747		$	630		19%	$	2,374		$	1,931		23%
Operating Expenses:
Salaries and employee benefits	404			346			17%	1,220			1,031			18%
Purchased transportation	71			59			20%	243			179			36%
Rentals and landing fees	25			25			—	76			74			3%
Depreciation and amortization	25			24			4%	75			69			9%
Fuel	61			43			42%	180			121			49%
Maintenance and repairs	33			28			18%	95			84			13%
Intercompany charges	6			5			20%	19			15			27%
Other	68			63			8%	207			194			7%
Total Operating Expenses	693			593			17%	2,115			1,767			20%
Operating Income	$	54		$	37		46%	$	259		$	164		58%
Operating Margin	7.2		%	5.9		%		10.9		%	8.5		%
OPERATING STATISTICS
LTL Operating Weekdays	62			62			—	189			188			1%
LTL Shipments Per Day (000s)	60			55			9%	63			56			13%
Weight Per LTL Shipment (lbs)	1,129			1,121			1%	1,129			1,119			1%
LTL Revenue/CWT	$	15.58		$	14.35		9%	$	15.36		$	14.21		8%

Note: Certain prior period amounts have been reclassified to conform to the current period’s presentation.

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FEDEX KINKO’S SEGMENT FINANCIAL HIGHLIGHTS

Third Quarter Fiscal 2005

(Dollars in millions)

(Unaudited)

	Three Months Ended			Nine Months Ended
	February 28			February 28
	2005			2005
FINANCIAL HIGHLIGHTS
Revenue	$	499		$	1,513
Operating Expenses:
Salaries and employee benefits	185			553
Rentals	103			327
Depreciation and amortization	36			100
Maintenance and repairs	17			36
Intercompany charges	(1		)	5
Other operating expenses:
Supplies, including paper and toner	70			232
Other	78			201
Total Operating Expenses	488			1,454
Operating Income	$	11		$	59
Operating Margin	2.2		%	3.9		%

Note:  The FedEx Kinko’s segment was formed in the fourth quarter of fiscal 2004.

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