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): December 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

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

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 December 17, 2009, announcing its and its wholly owned subsidiary Federal Express Corporation’s financial results for the fiscal quarter ended November 30, 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 December 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: December 17, 2009	By:	/s/ HERBERT C. NAPPIER
		Herbert C. Nappier
		Staff Vice President and Corporate Controller
	Federal Express Corporation
Date: December 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 December 17, 2009.

E-1

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

FedEx Corp. Reports Second Quarter Earnings
Improving Global Economy Drives Shipment Growth
FedEx International Priority Package Volume Increases Six Percent

MEMPHIS, Tenn., December 17, 2009 ... FedEx Corp. (NYSE: FDX) today reported earnings of $1.10 per diluted share for the second quarter ended November 30, compared to $1.58 per diluted share a year ago.

“Positive momentum in the global economy and continued execution of our business strategy drove volume growth across all FedEx transportation segments, highlighted by increased international shipments,” said Frederick W. Smith, FedEx Corp. chairman, president and chief executive officer. “We have taken decisive actions during the economic downturn to reduce expenses while expanding our networks in growth markets. We are providing outstanding service levels during our busiest shipping season thanks to the dedication of our more than 275,000 team members.”

Second Quarter Results

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

• Revenue of $8.60 billion, down 10% from $9.54 billion a year ago

• Operating income of $571 million, down 27% from $784 million last year

• Operating margin of 6.6%, down from 8.2% the previous year

• Net income of $345 million, down 30% from last year’s $493 million

Revenue and earnings declined as a result of lower yields, primarily due to a substantial decline in fuel surcharges year over year. Shipment growth, particularly in international express and at FedEx Ground, and strict cost controls benefited results.

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Outlook

FedEx expects earnings per share of $0.50 to $0.70 per diluted share in the third quarter, and $3.45 to $3.75 for fiscal 2010, which reflects the current market outlook for fuel prices and a continued modest recovery in the global economy. The company earned $0.31 per share in last year’s third quarter. The company’s capital spending forecast remains $2.6 billion.

“Our balance sheet is strong, volumes are growing, and we are encouraged by our performance as we emerge from the worst economic downturn in FedEx history,” said Alan B. Graf Jr., FedEx Corp. executive vice president and chief financial officer. “While there is some uncertainty regarding the sustainability of current demand trends after our peak shipping season, we expect our strong operating leverage to provide improved year-over-year profitability in the second half of our fiscal year. Effective cost management remains a priority and should continue to benefit results.”

With an outlook for modestly improving economic conditions and business performance, FedEx will resume merit salary increases for calendar 2010 as well as a 50% resumption of the 401(k) company match for most U.S. employees. These programs were suspended a year ago. In addition, second quarter results reflect expenses to accrue for expected payouts under the company’s variable incentive compensation programs, which are designed to pay base incentives to most hourly, professional and manager-level employees prior to paying any amounts to senior management. These expected costs are included in the company’s earnings guidance.

FedEx Express Segment

For the second quarter, the FedEx Express segment reported:

• Revenue of $5.31 billion, down 13% from $6.10 billion a year ago

• Operating income of $345 million, down 36% from $540 million last year

• Operating margin of 6.5%, down from 8.9% the previous year

U.S. domestic average daily package volume increased 4%, while revenue per package dropped 19% due to lower fuel surcharges, rate per pound and weight per package. FedEx International Priority^® (IP) average daily package volume increased 6%. IP revenue per package declined 14% primarily due to lower fuel surcharges.

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Operating income and margin declined year over year, as last year’s results significantly benefited from falling fuel prices and the related fuel surcharge timing lag. Continued reductions in network operating costs driven by fewer flight hours and improved route efficiencies, along with other aggressive actions to control spending, partially offset the negative impact of fuel price. A one-time adjustment to a self-insurance program also benefited the quarter, but was largely offset by incremental variable compensation accruals.

FedEx Ground Segment

For the second quarter, the FedEx Ground segment reported:

• Revenue of $1.84 billion, up 3% from last year’s $1.79 billion

• Operating income of $238 million, up 12% from $212 million a year ago

• Operating margin of 13.0%, up from 11.9% the previous year

FedEx Ground average daily package volume was up 4%. Yield decreased 2% primarily due to lower fuel surcharges. FedEx SmartPost average daily volume grew 63%, aided by gains from DHL’s exit from the U.S. domestic package market. Operating income and margin grew primarily due to increased volume and improved productivity.

Earlier this month, FedEx Ground announced that it will be increasing FedEx Ground and FedEx Home Delivery^® rates by an average of 4.9%, effective January 4, 2010. FedEx Ground is also making various changes to surcharges, including modifications to its fuel surcharge table.

FedEx Freight Segment

For the second quarter, the FedEx Freight segment reported:

• Revenue of $1.07 billion, down 11% from last year’s $1.20 billion

• Operating loss of $12 million, down from operating income of $32 million a year ago

• Operating margin of (1.1%), down from 2.7% the previous year

Less-than-truckload (LTL) yield decreased 12% due to the continuing effects of a competitive pricing environment and lower fuel surcharges. Average daily LTL shipments increased 3% year over year and growth rates improved month over month throughout the quarter. Operating income and margin decreased in the quarter due to the competitive pricing environment, partially offset by higher shipments.

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FedEx Services Segment

FedEx Services segment revenue for the second quarter, which included the operations of FedEx Office, was down 12% year over year, due to declines in copy product revenues and the realignment of FedEx SupplyChain Systems to the FedEx Express reporting segment, effective September 1, 2009. The financial impact of this realignment was immaterial.

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 $33 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 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 second 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. EST on December 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.

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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

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

	Three Months Ended									Six Months Ended
	November 30									November 30
	2009			2008			%			2009			2008			%
Revenue:
FedEx Express segment	$	5,314		$	6,098			(13	%)	$	10,238		$	12,517			(18	%)
FedEx Ground segment		1,837			1,789			3	%		3,567			3,550			0	%
FedEx Freight segment		1,068			1,200			(11	%)		2,050			2,553			(20	%)
FedEx Services segment		465			528			(12	%)		916			1,041			(12	%)
Other & eliminations		(88	)		(77	)	NM				(166	)		(153	)	NM
Total Revenue		8,596			9,538			(10	%)		16,605			19,508			(15	%)
Operating Expenses:
Salaries and employee benefits		3,424			3,503			(2	%)		6,801			7,088			(4	%)
Purchased transportation		1,155			1,181			(2	%)		2,209			2,459			(10	%)
Rentals and landing fees		593			612			(3	%)		1,171			1,229			(5	%)
Depreciation and amortization		487			491			(1	%)		982			983			(0	%)
Fuel		744			1,106			(33	%)		1,410			2,634			(46	%)
Maintenance and repairs		410			521			(21	%)		811			1,058			(23	%)
Other		1,212			1,340			(10	%)		2,335			2,643			(12	%)
Total Operating Expenses		8,025			8,754			(8	%)		15,719			18,094			(13	%)
Operating Income (Loss):
FedEx Express segment		345			540			(36	%)		449			885			(49	%)
FedEx Ground segment		238			212			12	%		447			408			10	%
FedEx Freight segment		(12	)		32			(138	%)		(10	)		121			(108	%)
Total Operating Income		571			784			(27	%)		886			1,414			(37	%)
Other Income (Expense):
Interest, net		(15	)		(10	)		50	%		(33	)		(19	)		74	%
Other, net		(9	)		—		NM				(12	)		(3	)	NM
Total Other Income (Expense)		(24	)		(10	)		140	%		(45	)		(22	)		105	%
Pretax Income		547			774			(29	%)		841			1,392			(40	%)
Provision for Income Taxes		202			281			(28	%)		315			515			(39	%)
Net Income	$	345		$	493			(30	%)	$	526		$	877			(40	%)
Diluted Earnings Per Share	$	1.10		$	1.58			(30	%)	$	1.68		$	2.81			(40	%)
Weighted Average Common and Common Equivalent Shares		314			312			1	%		313			313			—
Capital Expenditures	$	668		$	750			(11	%)	$	1,549		$	1,387			12	%
Average Full-Time Equivalents (000s)		244			252			(3	%)		241			252			(4	%)

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FEDEX CORP. CONDENSED CONSOLIDATED BALANCE SHEETS

Second Quarter Fiscal 2010
(In millions)

	Nov. 30, 2009
	(Unaudited)		May 31, 2009
ASSETS
Current Assets:
Cash and cash equivalents	$	1,465	$	2,292
Other current assets		4,969		4,824
Total Current Assets		6,434		7,116
Net Property and Equipment		13,937		13,417
Other Long-Term Assets		4,223		3,711
	$	24,594	$	24,244
LIABILITIES AND STOCKHOLDERS’ INVESTMENT
Current Liabilities:
Current portion of long-term debt	$	40	$	653
Other current liabilities		4,079		3,871
Total Current Liabilities		4,119		4,524
Long-Term Debt, Less Current Portion		1,918		1,930
Other Long-Term Liabilities		4,389		4,164
Total Common Stockholders’ Investment		14,168		13,626
	$	24,594	$	24,244

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FEDEX CORP. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Second Quarter Fiscal 2010
(In millions)
(Unaudited)

	Six Months Ended
	November 30
	2009			2008
Operating Activities:
Net income	$	526		$	877
Noncash charges:
Depreciation and amortization		982			983
Other, net		176			213
Changes in operating assets and liabilities, net		(327	)		(618	)
Net cash provided by operating activities		1,357			1,455
Investing Activities:
Capital expenditures		(1,549	)		(1,387	)
Proceeds from asset dispositions and other		33			30
Net cash used in investing activities		(1,516	)		(1,357	)
Financing Activities:
Principal payments on debt		(625	)		(1	)
Dividends paid		(69	)		(68	)
Other, net		13			9
Net cash used in financing activities		(681	)		(60	)
Effect of exchange rate changes on cash		13			(35	)
Net (decrease) increase in cash and cash equivalents		(827	)		3
Cash and cash equivalents at beginning of period		2,292			1,539
Cash and cash equivalents at end of period	$	1,465		$	1,542

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FEDEX EXPRESS SEGMENT FINANCIAL AND OPERATING HIGHLIGHTS

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

	Three Months Ended									Six Months Ended
	November 30									November 30
	2009			2008			%			2009			2008			%
FINANCIAL HIGHLIGHTS
Revenue	$	5,314		$	6,098			(13	%)	$	10,238		$	12,517			(18	%)
Operating Expenses:
Salaries and employee benefits		2,036			2,059			(1	%)		4,079			4,188			(3	%)
Purchased transportation		283			294			(4	%)		538			630			(15	%)
Rentals and landing fees		396			403			(2	%)		781			820			(5	%)
Depreciation and amortization		251			241			4	%		503			480			5	%
Fuel		638			953			(33	%)		1,209			2,272			(47	%)
Maintenance and repairs		267			381			(30	%)		528			775			(32	%)
Intercompany charges		470			532			(12	%)		939			1,065			(12	%)
Other		628			695			(10	%)		1,212			1,402			(14	%)
Total Operating Expenses		4,969			5,558			(11	%)		9,789			11,632			(16	%)
Operating Income	$	345		$	540			(36	%)	$	449		$	885			(49	%)
Operating Margin		6.5	%		8.9	%	(2.4		pts)		4.4	%		7.1	%	(2.7		pts)
OPERATING STATISTICS
Operating Weekdays		63			63			—			128			127			1	%
AVG DAILY VOLUME / POUNDS
Average Daily Package Volume (000s):
U.S. Overnight Box		1,154			1,086			6	%		1,141			1,094			4	%
U.S. Overnight Envelope		606			611			(1	%)		611			621			(2	%)
U.S. Deferred		858			832			3	%		840			830			1	%
Total U.S. Domestic Package		2,618			2,529			4	%		2,592			2,545			2	%
International Priority		529			500			6	%		502			497			1	%
International Domestic		338			311			9	%		315			309			2	%
Total Average Daily Packages		3,485			3,340			4	%		3,409			3,351			2	%
Average Daily Freight Pounds (000s):
U.S.		7,193			7,335			(2	%)		6,883			7,315			(6	%)
International Priority		2,571			2,216			16	%		2,353			2,264			4	%
International Airfreight		1,207			1,605			(25	%)		1,253			1,737			(28	%)
Total Avg Daily Freight Pounds		10,971			11,156			(2	%)		10,489			11,316			(7	%)
YIELD
Revenue Per Package:
U.S. Overnight Box	$	18.87		$	23.66			(20	%)	$	18.51		$	23.96			(23	%)
U.S. Overnight Envelope		10.36			12.62			(18	%)		10.27			12.84			(20	%)
U.S. Deferred		11.58			14.13			(18	%)		11.40			14.25			(20	%)
Total U.S. Domestic Package		14.51			17.86			(19	%)		14.26			18.08			(21	%)
International Priority		52.88			61.30			(14	%)		52.27			62.93			(17	%)
International Domestic		7.09			8.06			(12	%)		7.07			8.34			(15	%)
Composite Package Yield	$	19.62		$	23.44			(16	%)	$	19.19		$	23.84			(20	%)
Revenue Per Freight Pound:
U.S.	$	1.08		$	1.29			(16	%)	$	1.07		$	1.28			(16	%)
International Priority		1.98			2.32			(15	%)		1.93			2.31			(16	%)
International Airfreight		0.83			1.09			(24	%)		0.77			1.10			(30	%)
Composite Freight Yield	$	1.26		$	1.46			(14	%)	$	1.22		$	1.46			(16	%)
Average Full-Time Equivalents (000s)		126			128			(2	%)		126			129			(2	%)

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FEDEX GROUND SEGMENT FINANCIAL AND OPERATING HIGHLIGHTS

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

	Three Months Ended									Six Months Ended
	November 30									November 30
	2009			2008			%			2009			2008			%
FINANCIAL HIGHLIGHTS
Revenue	$	1,837		$	1,789			3	%	$	3,567		$	3,550			0	%
Operating Expenses:
Salaries and employee benefits		288			279			3	%		570			546			4	%
Purchased transportation		733			745			(2	%)		1,426			1,516			(6	%)
Rentals		63			58			9	%		121			109			11	%
Depreciation and amortization		83			81			2	%		168			161			4	%
Fuel		2			3			(33	%)		3			5			(40	%)
Maintenance and repairs		40			37			8	%		78			74			5	%
Intercompany charges		196			180			9	%		380			358			6	%
Other		194			194			—			374			373			0	%
Total Operating Expenses		1,599			1,577			1	%		3,120			3,142			(1	%)
Operating Income	$	238		$	212			12	%	$	447		$	408			10	%
Operating Margin		13.0	%		11.9	%	1.1		pts		12.5	%		11.5	%	1.0		pts
OPERATING STATISTICS
Operating Weekdays		63			63			—			128			127			1	%
Average Daily Package Volume (000s)
FedEx Ground		3,602			3,473			4	%		3,454			3,405			1	%
FedEx SmartPost		1,265			777			63	%		1,135			680			67	%
Yield (Revenue Per Package)
FedEx Ground	$	7.54		$	7.70			(2	%)	$	7.56		$	7.78			(3	%)
FedEx SmartPost	$	1.57		$	2.07			(24	%)	$	1.50		$	2.10			(29	%)

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FEDEX FREIGHT SEGMENT FINANCIAL AND OPERATING HIGHLIGHTS

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

	Three Months Ended									Six Months Ended
	November 30									November 30
	2009			2008			%			2009			2008			%
FINANCIAL HIGHLIGHTS
Revenue	$	1,068		$	1,200			(11	%)	$	2,050		$	2,553			(20	%)
Operating Expenses:
Salaries and employee benefits		513			592			(13	%)		1,020			1,206			(15	%)
Purchased transportation		168			151			11	%		286			331			(14	%)
Rentals		27			35			(23	%)		56			68			(18	%)
Depreciation and amortization		46			53			(13	%)		101			107			(6	%)
Fuel		104			150			(31	%)		198			356			(44	%)
Maintenance and repairs		35			41			(15	%)		69			84			(18	%)
Intercompany charges 1		98			29		NM				150			51		NM
Other		89			117			(24	%)		180			229			(21	%)
Total Operating Expenses		1,080			1,168			(8	%)		2,060			2,432			(15	%)
Operating (Loss) Income	$	(12	)	$	32		NM			$	(10	)	$	121		NM
Operating Margin		(1.1	%)		2.7	%	(3.8		pts)		(0.5	%)		4.7	%	(5.2		pts)
OPERATING STATISTICS
LTL Operating Weekdays		62			62			—			127			126			1	%
LTL Shipments Per Day (000s)		82.9			80.3			3	%		77.0			81.5			(6	%)
Weight Per LTL Shipment (lbs)		1,128			1,122			1	%		1,119			1,131			(1	%)
LTL Revenue/CWT	$	17.09		$	19.44			(12	%)	$	17.45		$	19.96			(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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