FedEx (FDX) 8-K FedEx Corp. Reports Third Quarter Earnings

Exhibit 99.1

FOR IMMEDIATE RELEASE

FedEx Corp. Reports Third Quarter Earnings

MEMPHIS, Tenn., March 17, 2011 ... FedEx Corp. (NYSE: FDX) today reported earnings of $0.73 per diluted share for the third quarter ended February 28. Excluding costs related to the previously announced combination of the company’s FedEx Freight and FedEx National LTL operations, third quarter earnings were $0.81 per diluted share, compared to $0.76 per diluted share a year ago.

“Continued growth in the global economy is driving solid revenue gains in our transportation businesses,” said Frederick W. Smith, FedEx Corp. chairman, president and chief executive officer. “We expect strong demand for our services to boost our financial performance in our fourth quarter.”

Third Quarter Results

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

• Revenue of $9.66 billion, up 11% from $8.70 billion the previous year

• Operating income of $393 million, down 6% from $416 million last year

• Operating margin of 4.1%, down from 4.8% the previous year

• Net income of $231 million, down 3% from $239 million a year ago

While yields grew in all transportation segments, unusually severe winter storms during the quarter disrupted operations, decreased shipping volume and increased costs, impacting year-over-year results by approximately $0.12 per diluted share. Earnings were also reduced by costs related to the January 30, 2011 combination of FedEx Freight and FedEx National LTL operations, including lease termination costs and severance expenses. The reinstatement of merit salary increases, increases in pension and medical costs, higher aircraft maintenance expenses and the full reinstatement of 401(k) company-matching contributions also impacted earnings.

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Outlook

FedEx projects earnings to be $1.66 to $1.83 per diluted share in the fourth quarter and an adjusted $4.83 to $5.00 per diluted share for fiscal 2011. The company’s forecast assumes the current market outlook for fuel prices and continued moderate growth in the global economy. Earnings could be affected by the impact of the ongoing political turmoil in the Middle East and North Africa on fuel prices and the economy. Also, the near-term impact of the earthquake and tsunami in Japan on operational costs, shipping patterns and the global economy is currently uncertain. The annual guidance excludes FedEx Freight combination costs and a second quarter legal reserve. Including costs from the FedEx Freight combination and the legal reserve, earnings are expected to be $4.49 to $4.66 per diluted share for fiscal 2011. The company reported earnings of $1.33 per diluted share in last year’s fourth quarter. The capital spending forecast for fiscal 2011 remains $3.5 billion.

“Successful yield management initiatives helped drive significant revenue growth across our transportation segments in the third quarter, although results were dampened by severe winter storms and higher-than-expected fuel costs,” said Alan B. Graf, Jr., FedEx Corp. executive vice president and chief financial officer. “Our FedEx Ground segment had record third quarter results. In addition, we are very pleased with the execution of the new FedEx Freight strategy, which is expected to drive FedEx Freight’s return to profitability in the fourth quarter. More broadly, we expect continued positive yield trends to improve revenues and margins in the fourth quarter and in fiscal 2012.”

FedEx Express Segment

For the third quarter, the FedEx Express segment reported:

• Revenue of $6.05 billion, up 11% from last year’s $5.44 billion

• Operating income of $178 million, down 33% from $265 million a year ago

• Operating margin of 2.9%, down from 4.9% the previous year

FedEx International Priority^® (IP) average daily package volume increased 5%, led by exports from Asia and Europe. IP revenue per package grew 7% due to improved weight per package, rate increases and higher fuel surcharges. IP freight pounds increased 21% with revenue per pound up 3%. U.S. domestic average daily package volume increased 2% and revenue per package grew 5% due to higher fuel surcharges, rate increases and improved weight per package.

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Operating income and margin were negatively impacted by increased aircraft maintenance, the reinstatement of certain employee compensation programs, higher employee benefits expenses and the negative impact of severe winter weather, which more than offset strong revenue growth.

During the quarter FedEx completed the acquisition of the logistics, distribution and express businesses of AFL Pvt. Ltd. and its affiliate, Unifreight India Pvt. Ltd. This acquisition provides FedEx more robust domestic transportation and added capabilities in India. The acquisition had no material impact on segment financial results for the quarter.

FedEx Ground Segment

For the third quarter, the FedEx Ground segment reported:

• Revenue of $2.18 billion, up 14% from last year’s $1.91 billion

• Operating income of $325 million, up 26% from $258 million a year ago

• Operating margin of 14.9%, up from 13.5% the previous year

FedEx Ground average daily package volume grew 6% in the third quarter driven by increases in the business-to-business market and FedEx Home Delivery. Yield increased 5% primarily due to rate increases and higher fuel surcharges. FedEx SmartPost average daily volume increased 17% due to growth in e-commerce, gains in market share and the introduction of new service offerings. FedEx SmartPost yield increased 7% primarily due to lower postage costs resulting from increased deliveries to U.S. Postal Service final destination facilities and increased fuel surcharges.

Operating income and margin increased primarily due to higher package yield and volume. Current year results were also favorably impacted by one additional operating day.

FedEx Freight Segment

For the third quarter, the FedEx Freight segment reported:

• Revenue of $1.12 billion, up 8% from last year’s $1.04 billion

• Operating loss of $110 million, compared with an operating loss of $107 million a year ago

• Operating margin of (9.8%), compared with (10.3%) the previous year

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Less-than-truckload (LTL) yield increased 11% primarily due to yield management initiatives. LTL average daily shipments decreased 6% as a result of the yield management initiatives and the severe winter weather.

On January 30, 2011, FedEx Freight and FedEx National LTL combined operations, launching a new unified LTL freight network that offers customers the choice of two levels of service—FedEx Freight^® Priority and FedEx Freight^® Economy—from a single company. As a result of this combination, the segment incurred one-time costs of $43 million during the quarter and $130 million fiscal year-to-date due primarily to lease termination costs and severance expenses.

The operating loss in the quarter included the costs associated with the combination of the FedEx Freight and FedEx National LTL operations. Severe winter weather also significantly impacted results. The segment benefited from one additional operating day during the quarter.

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 $38 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, visitnews.fedex.com.

Additional information and operating data are contained in the company’s annual report, Form 10-K, Form 10-Qs and third quarter fiscal 2011 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 March 17 are available on the company’s Web site atwww.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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RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
TO GAAP FINANCIAL MEASURES

The company believes that meaningful analysis of our financial performance requires an understanding of the factors underlying that performance and our judgments about the likelihood that particular factors will repeat. Excluding a reserve associated with a legal matter in the second quarter and the costs of the combination of FedEx Freight and FedEx National LTL operations from our third quarter earnings and our full-year earnings guidance, net of applicable incentive compensation impacts, will allow more accurate comparisons to prior periods of our third quarter operating performance and our expected operating performance for fiscal 2011. As required by SEC rules, the tables below present a reconciliation of our presented non-GAAP measures to the most directly comparable GAAP measures.

Fiscal 2011 Third Quarter Earnings

	Q3 Diluted
	Earnings Per Share
Non-GAAP Measure	$	0.81
FedEx Freight Combination Costs		(0.08	)
GAAP Measure	$	0.73

Fiscal 2011 Full-Year Earnings Guidance

	FY 2011 Diluted
	EPS Guidance
Non-GAAP Measure	$	4.83 to $5.00
FedEx Freight Combination Costs		(0.27	)
ATA Legal Reserve		(0.07	)
GAAP Measure	$	4.49 to $4.66

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FEDEX CORP. FINANCIAL HIGHLIGHTS

Third Quarter Fiscal 2011
(In millions, except earnings per share and FTEs)
(Unaudited)

	Three Months Ended									Nine Months Ended
	February 28									February 28
	2011			2010			%			2011			2010			%
Revenue:
FedEx Express segment	$	6,049		$	5,440			11	%	$	17,953		$	15,678			15	%
FedEx Ground segment		2,184			1,910			14	%		6,222			5,477			14	%
FedEx Freight segment		1,123			1,040			8	%		3,602			3,090			17	%
FedEx Services segment		397			406			(2	%)		1,246			1,322			(6	%)
Other & eliminations		(90	)		(95	)		5	%		(271	)		(261	)		(4	%)
Total Revenue		9,663			8,701			11	%		28,752			25,306			14	%
Operating Expenses:
Salaries and employee benefits		3,828			3,549			8	%		11,410			10,350			10	%
Purchased transportation		1,446			1,220			19	%		4,163			3,429			21	%
Rentals and landing fees		621			593			5	%		1,850			1,764			5	%
Depreciation and amortization		493			488			1	%		1,474			1,470			0	%
Fuel		1,049			810			30	%		2,874			2,220			29	%
Maintenance and repairs		480			404			19	%		1,470			1,215			21	%
Impairment and other charges		21			—		NM				88			—		NM
Other		1,332			1,221			9	%		3,933			3,556			11	%
Total Operating Expenses		9,270			8,285			12	%		27,262			24,004			14	%
Operating Income (Loss):
FedEx Express segment		178			265			(33	%)		799			714			12	%
FedEx Ground segment		325			258			26	%		908			705			29	%
FedEx Freight segment		(110	)		(107	)		(3	%)		(217	)		(117	)		(85	%)
Total Operating Income		393			416			(6	%)		1,490			1,302			14	%
Other Income (Expense):
Interest, net		(24	)		(19	)		26	%		(65	)		(52	)		25	%
Other, net		(9	)		(16	)		(44	%)		(25	)		(28	)		(11	%)
Total Other Income (Expense)		(33	)		(35	)		(6	%)		(90	)		(80	)		13	%
Pretax Income		360			381			(6	%)		1,400			1,222			15	%
Provision for Income Taxes		129			142			(9	%)		506			457			11	%
Net Income	$	231		$	239			(3	%)	$	894		$	765			17	%
Diluted Earnings Per Share	$	0.73		$	0.76			(4	%)	$	2.82		$	2.43			16	%
Weighted Average Diluted Common and Common Equivalent Shares		317			315			1	%		316			314			1	%
Capital Expenditures	$	643		$	432			49	%	$	2,703		$	1,981			36	%
Average Full-Time Equivalents (000s)		259			250			4	%		255			244			5	%

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FEDEX CORP. CONDENSED CONSOLIDATED BALANCE SHEETS

Third Quarter Fiscal 2011
(In millions)

	Feb. 28, 2011
	(Unaudited)			May 31, 2010
ASSETS
Current Assets
Cash and cash equivalents	$	1,359		$	1,952
Receivables, less allowances		4,478			4,163
Spare parts, supplies and fuel, less allowances		413			389
Deferred income taxes		540			529
Prepaid expenses and other		448			251
Total current assets		7,238			7,284
Property and Equipment, at Cost		33,078			31,302
Less accumulated depreciation and amortization		17,750			16,917
Net property and equipment		15,328			14,385
Other Long-Term Assets
Goodwill		2,321			2,200
Other assets		1,315			1,033
Total other long-term assets		3,636			3,233
	$	26,202		$	24,902
LIABILITIES AND STOCKHOLDERS’ INVESTMENT
Current Liabilities
Current portion of long-term debt	$	18		$	262
Accrued salaries and employee benefits		1,143			1,146
Accounts payable		1,590			1,522
Accrued expenses		1,823			1,715
Total current liabilities		4,574			4,645
Long-Term Debt, Less Current Portion		1,667			1,668
Other Long-Term Liabilities
Deferred income taxes		1,328			891
Pension, postretirement healthcare and other benefit obligations		1,598			1,705
Self-insurance accruals		976			960
Deferred lease obligations		769			804
Deferred gains, principally related to aircraft transactions		252			267
Other liabilities		158			151
Total other long-term liabilities		5,081			4,778
Commitments and Contingencies
Common Stockholders’ Investment
Common stock, $0.10 par value, 800 million shares authorized		31			31
Additional paid-in capital		2,408			2,261
Retained earnings		14,709			13,966
Accumulated other comprehensive loss		(2,256	)		(2,440	)
Treasury stock, at cost		(12	)		(7	)
Total common stockholders’ investment		14,880			13,811
	$	26,202		$	24,902

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FEDEX CORP. CONDENSED CONSOLIDATED

STATEMENTS OF CASH FLOWS

Third Quarter Fiscal 2011
(In millions)
(Unaudited)

	Nine Months Ended
	February 28
	2011			2010
Operating Activities:
Net income	$	894		$	765
Noncash charges:
Depreciation and amortization		1,474			1,470
Other, net		662			363
Changes in operating assets and liabilities, net		(573	)		(690	)
Cash provided by operating activities		2,457			1,908
Investing Activities:
Capital expenditures		(2,703	)		(1,981	)
Business acquisitions, net of cash acquired		(96	)		—
Proceeds from asset dispositions and other		15			31
Cash used in investing activities		(2,784	)		(1,950	)
Financing Activities:
Principal payments on debt		(262	)		(632	)
Dividends paid		(113	)		(103	)
Other, net		75			29
Cash used in financing activities		(300	)		(706	)
Effect of exchange rate changes on cash		34			5
Net decrease in cash and cash equivalents		(593	)		(743	)
Cash and cash equivalents at beginning of period		1,952			2,292
Cash and cash equivalents at end of period	$	1,359		$	1,549

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FEDEX EXPRESS SEGMENT FINANCIAL AND OPERATING HIGHLIGHTS

Third Quarter Fiscal 2011
(Dollars in millions)
(Unaudited)

	Three Months Ended									Nine Months Ended
	February 28									February 28
	2011			2010			%			2011			2010			%
FINANCIAL HIGHLIGHTS
Revenue	$	6,049		$	5,440			11	%	$	17,953		$	15,678			15	%
Operating Expenses:
Salaries and employee benefits		2,321			2,136			9	%		6,832			6,215			10	%
Purchased transportation		386			292			32	%		1,143			830			38	%
Rentals and landing fees		424			397			7	%		1,254			1,178			6	%
Depreciation and amortization		267			254			5	%		787			757			4	%
Fuel		898			694			29	%		2,454			1,903			29	%
Maintenance and repairs		330			261			26	%		1,002			789			27	%
Intercompany charges		498			497			0	%		1,523			1,436			6	%
Other1		747			644			16	%		2,159			1,856			16	%
Total Operating Expenses		5,871			5,175			13	%		17,154			14,964			15	%
Operating Income	$	178		$	265			(33	%)	$	799		$	714			12	%
Operating Margin		2.9	%		4.9	%	(2.0 pts)				4.5	%		4.6	%	(0.1 pts)
OPERATING STATISTICS
Operating Weekdays		62			62			—			190			190			—
AVG DAILY VOLUME / POUNDS
Average Daily Package Volume (000s):
U.S. Overnight Box		1,218			1,190			2	%		1,194			1,157			3	%
U.S. Overnight Envelope		631			601			5	%		627			608			3	%
U.S. Deferred		952			949			0	%		887			876			1	%
Total U.S. Domestic Package		2,801			2,740			2	%		2,708			2,641			3	%
International Priority		558			530			5	%		569			511			11	%
International Domestic		337			317			6	%		338			315			7	%
Total Average Daily Packages		3,696			3,587			3	%		3,615			3,467			4	%
Average Daily Freight Pounds (000s):
U.S.		8,000			7,906			1	%		7,447			7,217			3	%
International Priority		3,131			2,577			21	%		3,158			2,427			30	%
International Airfreight		1,262			1,184			7	%		1,248			1,230			1	%
Total Avg Daily Freight Pounds		12,393			11,667			6	%		11,853			10,874			9	%
YIELD
Revenue Per Package:
U.S. Overnight Box	$	20.05		$	19.16			5	%	$	19.81		$	18.73			6	%
U.S. Overnight Envelope		10.87			10.70			2	%		10.68			10.41			3	%
U.S. Deferred		12.60			11.77			7	%		12.29			11.53			7	%
Total U.S. Domestic Package		15.45			14.74			5	%		15.23			14.43			6	%
International Priority		57.07			53.23			7	%		55.06			52.59			5	%
International Domestic		7.54			7.22			4	%		7.33			7.12			3	%
Composite Package Yield	$	21.01		$	19.76			6	%	$	20.77		$	19.39			7	%
Revenue Per Freight Pound:
U.S.	$	1.14		$	1.07			7	%	$	1.14		$	1.07			7	%
International Priority		2.12			2.06			3	%		2.09			1.97			6	%
International Airfreight		0.88			0.84			5	%		0.88			0.79			11	%
Composite Freight Yield	$	1.36		$	1.26			8	%	$	1.37		$	1.24			10	%
Average Full-Time Equivalents (000s)		136			130			5	%		133			127			5	%

1 - Current year includes a $66 million reserve for a legal matter.

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FEDEX GROUND SEGMENT FINANCIAL AND OPERATING HIGHLIGHTS

Third Quarter Fiscal 2011
(Dollars in millions)
(Unaudited)

	Three Months Ended									Nine Months Ended
	February 28									February 28
	2011			2010			%			2011			2010			%
FINANCIAL HIGHLIGHTS
Revenue	$	2,184		$	1,910			14	%	$	6,222		$	5,477			14	%
Operating Expenses:
Salaries and employee benefits		329			289			14	%		954			859			11	%
Purchased transportation		911			771			18	%		2,538			2,197			16	%
Rentals		68			63			8	%		197			184			7	%
Depreciation and amortization		84			83			1	%		249			251			(1	%)
Fuel		5			3			67	%		9			6			50	%
Maintenance and repairs		40			41			(2	%)		126			119			6	%
Intercompany charges		221			207			7	%		669			587			14	%
Other		201			195			3	%		572			569			1	%
Total Operating Expenses		1,859			1,652			13	%		5,314			4,772			11	%
Operating Income	$	325		$	258			26	%	$	908		$	705			29	%
Operating Margin		14.9	%		13.5	%	1.4 pts				14.6	%		12.9	%	1.7 pts
OPERATING STATISTICS
Operating Weekdays		63			62			2	%		191			190			1	%
Average Daily Package Volume (000s)
FedEx Ground		3,882			3,674			6	%		3,751			3,526			6	%
FedEx SmartPost		1,736			1,489			17	%		1,433			1,248			15	%
Yield (Revenue Per Package)
FedEx Ground	$	8.16		$	7.75			5	%	$	8.01		$	7.63			5	%
FedEx SmartPost	$	1.70		$	1.59			7	%	$	1.70		$	1.53			11	%

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FEDEX FREIGHT SEGMENT FINANCIAL AND OPERATING HIGHLIGHTS

Third Quarter Fiscal 2011
(Dollars in millions)
(Unaudited)

	Three Months Ended									Nine Months Ended
	February 28									February 28
	2011			2010			%			2011			2010			%
FINANCIAL HIGHLIGHTS
Revenue	$	1,123		$	1,040			8	%	$	3,602		$	3,090			17	%
Operating Expenses:
Salaries and employee benefits		562			532			6	%		1,746			1,552			13	%
Purchased transportation		178			191			(7	%)		567			477			19	%
Rentals		29			29			—			94			85			11	%
Depreciation and amortization		48			49			(2	%)		158			150			5	%
Fuel		145			112			29	%		409			310			32	%
Maintenance and repairs		44			36			22	%		135			105			29	%
Intercompany charges		106			99			7	%		323			249			30	%
Impairment and other charges1		21			—		NM				88			—		NM
Other		100			99			1	%		299			279			7	%
Total Operating Expenses		1,233			1,147			7	%		3,819			3,207			19	%
Operating Loss	$	(110	)	$	(107	)		(3	%)	$	(217	)	$	(117	)		(85	%)
Operating Margin		(9.8	%)		(10.3	%)	0.5 pts				(6.0	%)		(3.8	%)	(2.2 pts)
OPERATING STATISTICS
LTL Operating Weekdays		62			61			2	%		189			188			1	%
LTL Shipments Per Day (000s)		78.3			83.4			(6	%)		86.6			79.1			9	%
Weight Per LTL Shipment (lbs)		1,151			1,133			2	%		1,133			1,124			1	%
LTL Revenue/CWT	$	18.66		$	16.82			11	%	$	18.04		$	17.24			5	%

1 - Current year includes charges associated with the combination of FedEx Freight and FedEx National LTL operations, which became effective January 30, 2011.

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