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 18, 2008

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

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 18, 2008, announcing its and its wholly owned subsidiary Federal Express Corporation’s financial results for the fiscal quarter ended November 30, 2008.

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 18, 2008.

2

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 18, 2008	By:	/s/ JOHN L. MERINO
		John L. Merino Corporate Vice President and Principal Accounting Officer
	Federal Express Corporation
Date: December 18, 2008	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 18, 2008.

E-1

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

FedEx Corp. Reports Second Quarter Earnings
Announces Broad Cost Reduction Actions Due to Weak Economy

MEMPHIS, Tenn., December 18, 2008 ... FedEx Corp. (NYSE: FDX) today reported earnings of $1.58 per diluted share for the second quarter ended November 30, compared to $1.54 per diluted share a year ago.

“Our financial performance is increasingly being challenged by some of the worst economic conditions in the company’s 35-year operating history,” said Frederick W. Smith, FedEx Corp. chairman, president and chief executive officer. “We are managing our costs and taking full advantage of market opportunities, and our team members are delivering every day on our promise to ‘make every customer experience outstanding’. However, with the decline in shipping trends during our second quarter and the expectation that economic conditions will remain very difficult through calendar 2009, we are taking additional actions necessary to help offset weak demand, protect our business and minimize the loss of jobs.”

Cost Reductions

FedEx has already taken actions to reduce over $1 billion of expenses for all of fiscal 2009, including:

• Elimination of variable compensation payouts

• Hiring freeze

• Volume-related reductions in labor hours and line-haul expenses

• Discretionary spending cuts

• Personnel reductions at FedEx Freight and FedEx Office

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FedEx is now implementing a number of additional cost reduction initiatives to mitigate the effects of deteriorating business conditions, including:

• Base salary decreases, effective January 1, 2009:

• 20% reduction for FedEx Corp. CEO Frederick W. Smith

• 7.5%-10.0% reduction for other senior FedEx executives

• 5.0% reduction for remaining U.S. salaried exempt personnel

• Elimination of calendar 2009 merit-based salary increases for U.S. salaried exempt personnel

• Suspension of 401(k) company matching contributions for a minimum of one year, effective February 1, 2009

These additional actions are expected to reduce expenses by $200 million during the remainder of fiscal 2009 and approximately $600 million in fiscal 2010. In addition to these actions, each operating company is evaluating other measures should business conditions further deteriorate.

Outlook

FedEx reaffirms last week’s earnings estimate of $3.50 to $4.75 per diluted share for fiscal 2009, which assumes weak global macroeconomic conditions, anticipated volume gains from DHL and stable fuel prices. The company’s earnings estimate for the second half of fiscal 2009 is $0.69 to $1.94 per diluted share. FedEx will not provide third quarter guidance due to significant economic uncertainty and the difficulty in forecasting the impact of recently acquired DHL customers. Capital spending is now expected to be $2.4 billion for fiscal 2009, down from $3.0 billion at the start of the year.

“While the departure of DHL from the U.S. domestic package market presents a rare opportunity, significant uncertainty exists in the global economy,” said Alan B. Graf, Jr., FedEx Corp. executive vice president and chief financial officer. “Our latest earnings outlook reflects that uncertainty and incorporates the expected savings from our cost reduction actions.”

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Second Quarter Results

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

• Revenue of $9.54 billion, up 1% from $9.45 billion the previous year

• Operating income of $784 million, up from $783 million a year ago

• Operating margin of 8.2%, down from 8.3% the previous year

• Net income of $493 million, up 3% from last year’s $479 million

Total combined average daily package volume in the FedEx Express and FedEx Ground segments was down 2% year over year, as the weak economy reduced demand for shipping services.

Operating income was essentially flat, as the company significantly benefited from rapidly declining fuel prices and from the timing lag that exists between when fuel prices change and when indexed fuel surcharges automatically adjust. These benefits and the cost reduction activities were offset by the negative impact of lower shipping volumes resulting from the weak global economy.

FedEx Express Segment

For the second quarter, the FedEx Express segment reported:

• Revenue of $6.10 billion, up 1% from last year’s $6.04 billion

• Operating income of $540 million, up 2% from $531 million a year ago

• Operating margin of 8.9%, up from 8.8% the previous year

Volume and revenue growth were significantly impacted by global economic weakness. Operating income and margin reflect the benefits of rapidly decreasing fuel prices during the quarter and of the timing lag that exists between when fuel prices change and when indexed fuel surcharges automatically adjust. Results also include benefits from cost-containment activities, such as volume-related reductions in flight hours, labor hours and fuel consumption.

FedEx International Priority^® (IP) package revenue grew 1% for the quarter, driven by 8% growth in revenue per package due to higher fuel surcharges. IP average daily package volume declined 7%. FedEx International Priority

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Freight^® revenue grew 4%. U.S. domestic express package volume declined 8%, while revenue per package increased 9% due to higher fuel surcharges.

FedEx Ground Segment

For the second quarter, the FedEx Ground segment reported:

• Revenue of $1.79 billion, up 5% from last year’s $1.70 billion

• Operating income of $212 million, up 23% from $173 million a year ago

• Operating margin of 11.9%, up from 10.2% the previous year

FedEx Ground average daily package volume was down 1% year over year, as continued growth in the FedEx Home Delivery service was more than offset by a decline in commercial volume. Yield improved 6% primarily due to higher fuel surcharges. FedEx SmartPost revenue increased 11% with one fewer operating day, while average daily volume grew 16% largely due to DHL’s discontinuation of its @Home service at the beginning of the quarter.

Operating income was higher primarily due to the timing impact of fuel surcharges.

FedEx Freight Segment

For the second quarter, the FedEx Freight segment reported:

• Revenue of $1.20 billion, down 3% from last year’s $1.24 billion

• Operating income of $32 million, down 59% from $79 million a year ago

• Operating margin of 2.7%, down from 6.4% the previous year

Less-than-truckload (LTL) average daily shipments decreased 2% year over year, as market share gains were more than offset by the weakening U.S. economy. LTL yield declined 1%, as higher fuel surcharges were offset by the effects of a competitive pricing environment.

Operating income and margin decreased in the quarter due to the competitive pricing environment and lower average daily shipments, partially offset by the benefits from lower variable incentive compensation and continued cost containment initiatives, including the alignment of staffing to current volume levels.

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FedEx Services Segment

FedEx Services segment revenue, which includes the operations of FedEx Office and FedEx Global Supply Chain Services, was down 4% year over year, as declines in copy revenues exceeded revenue generated from FedEx Office locations opened in the last year. The company expects continued deterioration in the core FedEx Office business, and has announced staffing reductions and location closures so that expenses are in line with revenue.

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 $39 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 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 second quarter fiscal 2009 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 18 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, the impact of high fuel prices, 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 2009
(In millions, except earnings per share and FTEs)
(Unaudited)

	Three Months Ended									Six Months Ended
	November 30									November 30
	2008			2007			%			2008			2007			%
Revenue:
FedEx Express segment	$	6,098		$	6,037			1	%	$	12,517		$	11,926			5	%
FedEx Ground segment		1,789			1,698			5	%		3,550			3,316			7	%
FedEx Freight segment		1,200			1,236			(3	%)		2,553			2,469			3	%
FedEx Services segment		528			550			(4	%)		1,041			1,075			(3	%)
Other & eliminations		(77	)		(70	)	NM				(153	)		(136	)	NM
Total Revenue		9,538			9,451			1	%		19,508			18,650			5	%
Operating Expenses:
Salaries and employee benefits		3,503			3,510			(0	%)		7,088			6,993			1	%
Purchased transportation1		1,181			1,178			0	%		2,459			2,235			10	%
Rentals and landing fees		612			611			0	%		1,229			1,204			2	%
Depreciation and amortization		491			482			2	%		983			955			3	%
Fuel1		1,106			1,018			9	%		2,634			1,950			35	%
Maintenance and repairs		521			519			0	%		1,058			1,063			(0	%)
Other		1,340			1,350			(1	%)		2,643			2,653			(0	%)
Total Operating Expenses		8,754			8,668			1	%		18,094			17,053			6	%
Operating Income:
FedEx Express segment		540			531			2	%		885			1,050			(16	%)
FedEx Ground segment		212			173			23	%		408			363			12	%
FedEx Freight segment		32			79			(59	%)		121			184			(34	%)
Total Operating Income		784			783			0	%		1,414			1,597			(11	%)
Other Income (Expense):
Interest, net		(10	)		(15	)		(33	%)		(19	)		(40	)		(53	%)
Other, net		—			—		NM				(3	)		(2	)	NM
Total Other Income (Expense)		(10	)		(15	)		(33	%)		(22	)		(42	)		(48	%)
Pretax Income		774			768			1	%		1,392			1,555			(10	%)
Provision for Income Taxes		281			289			(3	%)		515			582			(12	%)
Net Income	$	493		$	479			3	%	$	877		$	973			(10	%)
Diluted Earnings Per Share	$	1.58		$	1.54			3	%	$	2.81		$	3.12			(10	%)
Weighted Average Common and Common Equivalent Shares		312			312			0	%		313			312			0	%
Capital Expenditures	$	750		$	747			0	%	$	1,387		$	1,522			(9	%)
Average Full-Time Equivalents (000s)		252			256			(2	%)		252			253			(0	%)

1 - FedEx Ground reclassified certain fuel supplement costs related to its independent contractors from fuel expense to purchased transportation expense to conform to the current period presentation.

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FEDEX CORP. CONDENSED CONSOLIDATED BALANCE SHEETS

Second Quarter Fiscal 2009
(In millions)

	Nov. 30, 2008
	(Unaudited)		May 31, 2008
ASSETS
Current Assets:
Cash and cash equivalents	$	1,542	$	1,539
Other current assets		5,292		5,705
Total Current Assets		6,834		7,244
Net Property and Equipment		13,610		13,478
Other Long-Term Assets		5,940		4,911
	$	26,384	$	25,633
LIABILITIES AND STOCKHOLDERS’ INVESTMENT
Current Liabilities:
Current portion of long-term debt	$	1,089	$	502
Other current liabilities		4,434		4,866
Total Current Liabilities		5,523		5,368
Long-Term Debt, Less Current Portion		918		1,506
Other Long-Term Liabilities		4,462		4,233
Total Common Stockholders’ Investment		15,481		14,526
	$	26,384	$	25,633

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FEDEX CORP. CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS

Second Quarter Fiscal 2009
(In millions)
(Unaudited)

	Six Months Ended
	November 30
	2008			2007
Operating Activities:
Net income	$	877		$	973
Noncash charges:
Depreciation and amortization		983			955
Other, net		213			146
Changes in operating assets and liabilities, net		(618	)		(810	)
Net cash provided by operating activities		1,455			1,264
Investing Activities:
Capital expenditures		(1,387	)		(1,522	)
Proceeds from asset dispositions and other		30			20
Net cash used in investing activities		(1,357	)		(1,502	)
Financing Activities:
Principal payments on debt		(1	)		(515	)
Dividends paid		(68	)		(62	)
Other, net		9			62
Net cash used in financing activities		(60	)		(515	)
Effect of exchange rate changes on cash		(35	)		14
Net increase (decrease) in cash and cash equivalents		3			(739	)
Cash and cash equivalents at beginning of period		1,539			1,569
Cash and cash equivalents at end of period	$	1,542		$	830

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FEDEX EXPRESS SEGMENT FINANCIAL AND OPERATING HIGHLIGHTS

Second Quarter Fiscal 2009
(Dollars in millions)
(Unaudited)

	Three Months Ended									Six Months Ended
	November 30									November 30
FINANCIAL HIGHLIGHTS	2008			2007			%			2008			2007			%
Revenue	$	6,098		$	6,037			1	%	$	12,517		$	11,926			5	%
Operating Expenses:
Salaries and employee benefits		2,059			2,059			—			4,188			4,119			2	%
Purchased transportation		294			299			(2	%)		630			579			9	%
Rentals and landing fees		403			417			(3	%)		820			828			(1	%)
Depreciation and amortization		241			234			3	%		480			464			3	%
Fuel		953			872			9	%		2,272			1,672			36	%
Maintenance and repairs		381			376			1	%		775			778			(0	%)
Intercompany charges		532			536			(1	%)		1,065			1,051			1	%
Other		695			713			(3	%)		1,402			1,385			1	%
Total Operating Expenses		5,558			5,506			1	%		11,632			10,876			7	%
Operating Income	$	540		$	531			2	%	$	885		$	1,050			(16	%)
Operating Margin		8.9	%		8.8	%	0.1 pts				7.1	%		8.8	%	(1.7 pts)
OPERATING STATISTICS
Operating Weekdays		63			63			—			127			128			(1	%)
AVG DAILY VOLUME / POUNDS
Average Daily Package Volume (000s):
U.S. Overnight Box		1,086			1,163			(7	%)		1,094			1,150			(5	%)
U.S. Overnight Envelope		611			677			(10	%)		621			688			(10	%)
U.S. Deferred		832			902			(8	%)		830			883			(6	%)
Total U.S. Domestic Package		2,529			2,742			(8	%)		2,545			2,721			(6	%)
International Priority		500			535			(7	%)		497			516			(4	%)
International Domestic		311			310			0	%		309			294			5	%
Total Average Daily Packages		3,340			3,587			(7	%)		3,351			3,531			(5	%)
Average Daily Freight Pounds (000s):
U.S.		7,335			8,915			(18	%)		7,315			8,878			(18	%)
International Priority		2,216			2,279			(3	%)		2,264			2,150			5	%
International Airfreight		1,605			1,827			(12	%)		1,737			1,789			(3	%)
Total Avg Daily Freight Pounds		11,156			13,021			(14	%)		11,316			12,817			(12	%)
YIELD
Revenue Per Package:
U.S. Overnight Box	$	23.66		$	22.06			7	%	$	23.96		$	21.94			9	%
U.S. Overnight Envelope		12.62			11.27			12	%		12.84			11.26			14	%
U.S. Deferred		14.13			12.84			10	%		14.25			12.76			12	%
Total U.S. Domestic Package		17.86			16.36			9	%		18.08			16.26			11	%
International Priority		61.30			56.63			8	%		62.93			56.52			11	%
International Domestic		8.06			8.90			(9	%)		8.34			8.75			(5	%)
Composite Package Yield	$	23.44		$	21.73			8	%	$	23.84		$	21.52			11	%
Revenue Per Freight Pound:
U.S.	$	1.29		$	1.08			19	%	$	1.28		$	1.05			22	%
International Priority		2.32			2.17			7	%		2.31			2.19			5	%
International Airfreight		1.09			0.83			31	%		1.10			0.83			33	%
Composite Freight Yield	$	1.46		$	1.23			19	%	$	1.46		$	1.21			21	%
Average Full-Time Equivalents (000s)		128			131			(2	%)		129			131			(2	%)

9

FEDEX GROUND SEGMENT FINANCIAL AND OPERATING HIGHLIGHTS

Second Quarter Fiscal 2009
(Dollars in millions)
(Unaudited)

	Three Months Ended									Six Months Ended
	November 30									November 30
	2008			2007			%			2008			2007			%
FINANCIAL HIGHLIGHTS
Revenue	$	1,789		$	1,698			5	%	$	3,550		$	3,316			7	%
Operating Expenses:
Salaries and employee benefits		279			272			3	%		546			532			3	%
Purchased transportation1		745			739			1	%		1,516			1,391			9	%
Rentals		58			50			16	%		109			93			17	%
Depreciation and amortization		81			77			5	%		161			150			7	%
Fuel1		3			4			(25	%)		5			6			(17	%)
Maintenance and repairs		37			38			(3	%)		74			72			3	%
Intercompany charges		180			165			9	%		358			324			10	%
Other		194			180			8	%		373			385			(3	%)
Total Operating Expenses		1,577			1,525			3	%		3,142			2,953			6	%
Operating Income	$	212		$	173			23	%	$	408		$	363			12	%
Operating Margin		11.9	%		10.2	%	1.7 pts				11.5	%		10.9	%	0.6 pts
OPERATING STATISTICS
Operating Weekdays		63			63			—			127			128			(1	%)
Average Daily Package Volume (000s)
FedEx Ground		3,473			3,505			(1	%)		3,405			3,356			1	%
FedEx SmartPost		777			672			16	%		680			603			13	%
Yield (Revenue Per Package)
FedEx Ground	$	7.70		$	7.27			6	%	$	7.78		$	7.34			6	%
FedEx SmartPost	$	2.07		$	2.12			(2	%)	$	2.10		$	2.07			1	%

1 - FedEx Ground reclassified certain fuel supplement costs related to its independent contractors from fuel expense to purchased transportation expense to conform to the current period presentation.

10

FEDEX FREIGHT SEGMENT FINANCIAL AND OPERATING HIGHLIGHTS

Second Quarter Fiscal 2009
(Dollars in millions)
(Unaudited)

	Three Months Ended									Six Months Ended
	November 30									November 30
	2008			2007			%			2008			2007			%
FINANCIAL HIGHLIGHTS
Revenue	$	1,200		$	1,236			(3	%)	$	2,553		$	2,469			3	%
Operating Expenses:
Salaries and employee benefits		592			607			(2	%)		1,206			1,202			0	%
Purchased transportation		151			147			3	%		331			277			19	%
Rentals and landing fees		35			29			21	%		68			57			19	%
Depreciation and amortization		53			58			(9	%)		107			115			(7	%)
Fuel		150			141			6	%		356			271			31	%
Maintenance and repairs		41			45			(9	%)		84			92			(9	%)
Intercompany charges		29			20			45	%		51			41			24	%
Other		117			110			6	%		229			230			(0	%)
Total Operating Expenses		1,168			1,157			1	%		2,432			2,285			6	%
Operating Income	$	32		$	79			(59	%)	$	121		$	184			(34	%)
Operating Margin		2.7	%		6.4	%	(3.7 pts)				4.7	%		7.5	%	(2.8 pts)
OPERATING STATISTICS
LTL Operating Weekdays		62			62			—			126			127			(1	%)
LTL Shipments Per Day (000s)		80.3			81.9			(2	%)		81.5			80.6			1	%
Weight Per LTL Shipment (lbs)		1,122			1,129			(1	%)		1,131			1,130			0	%
LTL Revenue/CWT	$	19.44		$	19.56			(1	%)	$	19.96		$	19.48			2	%

11