10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended May 31, 2011.

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     .

Commission file number 1-15829

FEDEX CORPORATION

(Exact Name of Registrant as Specified in its Charter)

Delaware (State or Other Jurisdiction of Incorporation or Organization)	62-1721435 (I.R.S. 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

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Stock, par value $0.10 per share	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes þ No o

Indicate by check mark if the Registrant is not required to file reports pursuant to Rule 13 or Section 15(d) of the Exchange Act. Yes o No þ

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files). Yes þ No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ Accelerated filer o Non-accelerated filer o
(Do not check if a smaller reporting company) Smaller reporting company o

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

The aggregate market value of the common stock held by non-affiliates of the Registrant, computed by reference to the closing price as of the last business day of the Registrant’s most recently completed second fiscal quarter, November 30, 2010, was approximately $26.8 billion. The Registrant has no non-voting stock.

As of July 11, 2011, 317,027,077 shares of the Registrant’s common stock were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant’s definitive proxy statement to be delivered to stockholders in connection with the 2011 annual meeting of stockholders to be held on September 26, 2011 are incorporated by reference in response to Part III of this Report.

TABLE OF CONTENTS

	Page
PART I
ITEM 1. Business		3
ITEM 1A. Risk Factors		20
ITEM 1B. Unresolved Staff Comments		20
ITEM 2. Properties		20
ITEM 3. Legal Proceedings		25
ITEM 4. Reserved		26
Executive Officers of the Registrant		26
PART II
ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		29
ITEM 6. Selected Financial Data		29
ITEM 7. Management’s Discussion and Analysis of Results of Operations and Financial Condition		29
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk		29
ITEM 8. Financial Statements and Supplementary Data		29
ITEM 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure		30
ITEM 9A. Controls and Procedures		30
ITEM 9B. Other Information		30
PART III
ITEM 10. Directors, Executive Officers and Corporate Governance		30
ITEM 11. Executive Compensation		31
ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		31
ITEM 13. Certain Relationships and Related Transactions, and Director Independence		31
ITEM 14. Principal Accountant Fees and Services		31
PART IV
ITEM 15. Exhibits, Financial Statement Schedules		31
FINANCIAL SECTION
Table of Contents		34
Management’s Discussion and Analysis		36
Consolidated Financial Statements		77
Other Financial Information		126
EXHIBITS
Exhibit Index		E-1
Exhibit 10.26
Exhibit 10.56
Exhibit 10.57
Exhibit 21
Exhibit 23
Exhibit 24
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

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PART I

ITEM 1. BUSINESS

Overview

FedEx Corporation (“FedEx”) provides a broad portfolio of transportation, e-commerce and business services through companies competing collectively, operating independently and managed collaboratively, under the respected FedEx brand. These companies are included in four business segments:

• FedEx Express: Federal Express Corporation (“FedEx Express”) is the world’s largest express transportation company, offering time-certain delivery within one to three business days and serving markets that comprise more than 90% of the world’s gross domestic product. The FedEx Express segment also includes FedEx Trade Networks, Inc., which provides international trade services, specializing in customs brokerage and global ocean and air freight forwarding, and FedEx SupplyChain Systems, Inc., which offers a range of supply chain solutions.

• FedEx Ground: FedEx Ground Package System, Inc. (“FedEx Ground”) is a leading provider of small-package ground delivery services. FedEx Ground provides low-cost, day-certain service to every business address in the United States and Canada, as well as residential delivery to nearly 100% of U.S. residences through its FedEx Home Delivery service. The FedEx Ground segment also includes FedEx SmartPost, Inc., which specializes in the consolidation and delivery of high volumes of low-weight, less time-sensitive business-to-consumer packages using the U.S. Postal Service or Canada Post Corporation for final delivery to any residential address or PO Box in the United States and Canada.

• FedEx Freight: FedEx Freight, Inc. (“FedEx Freight”) is a leading U.S. provider of less-than-truckload (“LTL”) freight services, offering: FedEx Freight Priority, when speed is critical to meet supply chain needs; and FedEx Freight Economy, for less time-sensitive shipping at a lower cost. The FedEx Freight segment also offers freight delivery service throughout Canada and Mexico and includes FedEx Custom Critical, Inc., North America’s largest time-specific, critical shipment carrier.

• FedEx Services: FedEx Corporate Services, Inc. (“FedEx Services”) provides our other companies with sales, marketing and information technology support. The FedEx Services segment also includes FedEx TechConnect, Inc., which is responsible for customer service, billings and collections for our U.S. customers and offers technical support services, and FedEx Office and Print Services, Inc. (“FedEx Office”), which provides an array of document and business services and retail access to FedEx Express and FedEx Ground services.

For financial information concerning our reportable business segments, refer to the accompanying financial section, which includes management’s discussion and analysis of results of operations and financial condition and our consolidated financial statements.

Our Web site is located at fedex.com. Detailed information about our services, e-commerce tools and solutions, and citizenship efforts can be found on our Web site. In addition, we make our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to such reports available, free of charge, through our Web site, as soon as reasonably practicable after they are filed with or furnished to the SEC. These and other SEC filings are available through the Investor Relations page of our Web site, the address of which is http://www.fedex.com/us/investorrelations. The information on our Web site, however, is not incorporated by reference in, and does not form part of, this Annual Report on Form 10-K.

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Except as otherwise specified, any reference to a year indicates our fiscal year ended May 31 of the year referenced.

Strategy

FedEx was incorporated in Delaware on October 2, 1997 to serve as the parent holding company of our operating companies. Through our holding company, we provide strategic direction to, and coordination of, the FedEx portfolio of companies. We intend to continue leveraging and extending the FedEx brand and providing our customers with convenient, seamless access to our entire portfolio of integrated services.

We believe that sales and marketing activities, as well as the information systems that support the extensive automation of our delivery services, are functions that are best coordinated across operating companies. Through the use of advanced information systems that connect the FedEx companies, we make it convenient for customers to use the full range of FedEx services. We believe that seamless information integration is critical to obtain business synergies from multiple operating units. For example, our Web site, fedex.com, provides a single point of contact for our customers to access FedEx Express, FedEx Ground and FedEx Freight shipment tracking, customer service and invoicing information, as well as FedEx Office services. Similarly, by making one call to FedEx Expedited Freight Services, our customers can quickly and easily evaluate surface and air freight shipping options available from FedEx Express, FedEx Freight and FedEx Custom Critical in order to select the service best meeting their needs. Through this one point of contact, customers can select from a broad range of freight services, based on their pickup and delivery requirements, time sensitivity and the characteristics of the products being shipped.

We manage our business as a portfolio — in the long-term best interest of the enterprise, not a particular operating company. As a result, we base decisions on capital investment, expansion of delivery, information technology and retail networks, and service additions or enhancements on achieving the highest overall long-term return on capital for our business as a whole. For each FedEx company, we focus on making appropriate investments in the technology and assets necessary to optimize our long-term earnings performance and cash flow. As an example of our commitment to managing collaboratively, all our management incentive compensation programs across the enterprise are tied to the performance of FedEx as a whole.

While we have increased our emphasis on competing collectively and managing collaboratively, we continue to believe that operating independent networks, each focused on its own respective markets, results in optimal service quality, reliability and profitability from each business unit. Each FedEx company focuses exclusively on the market sectors in which it has the most expertise. Each company’s operations, cost structure and culture are designed to serve the unique customer needs of a particular market segment.

Our “compete collectively, operate independently, manage collaboratively” strategy also provides flexibility in sizing our various operating companies to align with varying macro-economic conditions and customer demand for the market segments in which they operate. For example, to accommodate recent and anticipated international growth at FedEx Express, we are adding flights, purchasing aircraft and improving services to and from Asia, Europe and Latin America based on the long-term growth prospects of these regions. We have agreed, subject to certain conditions, to purchase a total of 45 Boeing 777 Freighter (“B777F”) aircraft, a new high-capacity, long-range airplane, 12 of which have already been delivered. We also hold options to purchase an additional 13 B777F aircraft. The B777F enables us to fly between major world markets with lower operating costs, more shipments and in less time than before, allowing later cut-off times for customers in these markets to drop off their shipments. In addition, we continue to expand network capacity at our growing FedEx Ground segment.

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The following four trends have driven world commerce and shaped the global marketplace, and we believe they will continue to do so over the long term:

• Globalization: As the world’s economy has become more fully integrated, companies are sourcing and selling globally. With customers in more than 220 countries and territories, we facilitate this supply chain through our global reach, delivery services and information capabilities.

• Supply Chain Acceleration: As global trade has grown, it has also become more fast-paced, and companies of all sizes now depend on the delivery of just-in-time inventory to help them compete. We have taken advantage of the move toward faster, more efficient supply chains by helping customers obtain near real-time information to manage inventory in motion, thereby reducing overhead and obsolescence and speeding time-to-market.

• Increase in High-Tech and High-Value-Added Businesses: High-tech and high-value-added goods have increased as a percentage of total economic output, and our various operating companies offer a unique menu of services to fit virtually all shipping needs of high-tech and high-value-added industries.

• Growth of E-Commerce: E-commerce acts as a catalyst for the other three trends and is a vital growth engine for businesses, as the Internet is increasingly being used to purchase goods and services. Through our global transportation and technology networks, we contribute to and benefit from the growth of e-commerce.

These trends have produced an unprecedented expansion of customer access — to goods, services and information. Through our global transportation, information technology and retail networks, we help to make this access possible. We continue to position our companies to facilitate and capitalize on this access and move toward stronger long-term growth, productivity and profitability. To this end, we are investing in long-term strategic projects focused on expanding our global networks to accommodate future volume growth and increase customer convenience, such as investments in B777F aircraft. We also continue to broaden and more effectively bundle our portfolio of services in response to the needs and desires of our customers. For example, in 2011, we:

• Continued to reduce transit times within FedEx Ground’s growing and highly profitable network.

• Made a strategic acquisition in India and have one pending in Mexico, which will give us more robust domestic transportation and added capabilities in these important global markets.

• Added more daily scheduled transpacific and transatlantic flights, providing needed capacity between Asia, Europe and the United States.

• Expanded and enhanced FedEx First Overnight service (which offers next-business-day delivery as early as 8:00 a.m. depending on destination ZIP Code) and introduced FedEx First Overnight Freight (which offers early-morning delivery of critical air freight shipments) and FedEx 2Day A.M. service (which provides a 10:30 a.m. delivery commitment time for shipments with two-day delivery).

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• Continued to execute our aggressive plan to expand the global freight forwarding presence of FedEx Trade Networks — by opening additional facilities (over three dozen new freight forwarding offices have already been opened) and establishing new alliances throughout the world.

• Introduced an innovative end-to-end service for the shipping of temperature-sensitive healthcare products, such as pharmaceuticals, around the world.

• Expanded FedEx Freight’s LTL freight service offerings, launching a new unified LTL network and offering customers the choice of two levels of reliable service from a single company: FedEx Freight Priority, the fast-transit choice for time-sensitive freight delivery; and FedEx Freight Economy, the economical choice for less time-sensitive freight delivery.

Reputation and Responsibility

By competing collectively under the FedEx brand, our operating companies benefit from one of the world’s most recognized brands. FedEx is one of the most trusted and respected companies in the world, and the FedEx brand name is a powerful sales and marketing tool. Among the many reputation awards we received during 2011, FedEx ranked 8^th in FORTUNE magazine’s “World’s Most Admired Companies” list — the tenth consecutive year we have been ranked in the top 20 on the list.

FedEx is well recognized as a leader, not only in the transportation industry and technological innovation, but also in global citizenship. We understand that a sustainable global business is tied to our global citizenship, and we are committed to connecting the world responsibly and resourcefully. Our latest published update to our inaugural global citizenship report is available at http://csr.fedex.com. These reports describe how we think about our responsibilities in the area of global citizenship and include important goals and metrics that demonstrate our commitment to fulfilling these responsibilities.

Our People

Along with a strong reputation among customers and the general public, FedEx is widely acknowledged as a great place to work. It is our people — our greatest asset — that give us our strong reputation. In addition to superior physical and information networks, FedEx has an exemplary human network, with more than 290,000 team members who are “absolutely, positively” focused on safety, the highest ethical and professional standards, and the needs of their customers and communities. Through our internal Purple Promise and Humanitarian Award programs, we recognize and reward employees who enhance customer service and promote human welfare. For additional information on our people-first philosophy and workplace initiatives, see http://csr.fedex.com.

Our Community

FedEx is committed to actively supporting the communities we serve worldwide through the strategic investment of our people, resources and network. We provide financial contributions, in-kind charitable shipping services and volunteer efforts by our team members to help a variety of non-profit organizations achieve their goals and make a measurable impact on the world. We have three core focus areas: disaster preparedness, relief and recovery (American Red Cross, Salvation Army and Direct Relief Worldwide); child pedestrian safety (Safe Kids Worldwide); and environmental sustainability (EMBARQ and National Fish & Wildlife Foundation). We support minority access to higher education by funding scholarships, are a major sponsor of the National Civil Rights Museum and also support Teach for America, Junior Achievement and St. Jude Children’s Research Hospital. Additionally, we believe that the United Way of America offers one of the most effective and efficient ways of meeting community needs and have supported the annual United Way fundraising campaign since 1975. For additional information on our community involvement and disaster relief efforts, see http://csr.fedex.com.

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The Environment

In furtherance of our commitment to protecting the environment, we have set long-term goals to reduce aircraft emissions by 20 percent by 2020 on an emissions per available-ton-mile basis, increase FedEx Express vehicle efficiency by 20 percent by 2020, and expand on-site renewable energy generation and procurement of renewable energy credits. To meet our future operational needs, as discussed above, we are adding to our aircraft fleet the more fuel-efficient B777F and retiring and replacing older Boeing 727s with more fuel-efficient and quieter Boeing 757s. The use of newer and more fuel efficient aircraft is reducing our greenhouse gas emissions and airport noise and increasing our jet fuel efficiency. Our hybrid electric delivery fleet has logged more than nine million miles of revenue service. Our solar power generation systems represent another step we are taking toward progressive environmental stewardship and resource sustainability. In December 2010, the FedEx Express facility in Las Vegas, Nevada became our first FedEx facility to receive certification by Leadership in Energy and Environmental Design (LEED^®), the U.S. Green Building Council’s system for rating the environmental performance of buildings, and since then, our FedEx Express World Headquarters in Memphis and our enterprise data center in Colorado Springs, Colorado have received the same certification. FedEx Express has made LEED certification the standard for newly built U.S. facilities. We also continue to evaluate the environmental impacts of our packaging and copy and print services, and minimize waste generation through efforts that include recycling, pollution prevention and the use of copy paper with recycled content, among other environmentally-responsible available choices. For additional information on the ways we are minimizing our impact on the environment, see http://csr.fedex.com.

Governance

FedEx has an independent Board of Directors committed to the highest quality corporate governance. During the past few years, we added a number of highly qualified, independent directors to the Board. The Board has taken significant steps to enhance its accountability to stockholders in recent years. For example, in 2011, the Board determined to submit to stockholders a proposal to amend FedEx’s certificate of incorporation in order to allow holders of 20 percent or more of FedEx’s common stock the right to call special meetings of stockholders, subject to certain customary conditions. Stockholders will vote on the proposed special meeting right at the 2011 annual meeting of stockholders, which will be held on September 26, 2011, and a full description of the proposal will be contained in FedEx’s definitive proxy statement for the meeting.

Our Board of Directors periodically reviews all aspects of our governance policies and practices, including our Corporate Governance Guidelines and our Code of Business Conduct and Ethics, in light of best practices and makes whatever changes are necessary to further our longstanding commitment to the highest standards of corporate governance. The Guidelines and the Code, which applies to all of our directors, officers and employees, including our principal executive officer and senior financial officers, are available in the corporate governance section of the Investor Relations page of our Web site at http://www.fedex.com/us/investorrelations. We will post in the corporate governance section of the Investor Relations page of our Web site information regarding any amendment to, or waiver from, the provisions of the Code to the extent such disclosure is required.

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Business Segments

The following describes in more detail the operations of each of our reportable segments:

FedEx Express Segment

FedEx Express

Overview

FedEx Express invented express distribution in 1973 and remains the industry leader, providing rapid, reliable, time-definite delivery of packages and freight to more than 220 countries and territories through one integrated global network. FedEx Express offers time-definite delivery within one to three business days, serving markets that generate more than 90% of the world’s gross domestic product through door-to-door, customs-cleared service, with a money-back guarantee. FedEx Express’s unmatched air route authorities and extensive transportation infrastructure, combined with leading-edge information technologies, make it the world’s largest express transportation company. FedEx Express employs approximately 143,000 employees and has approximately 57,000 drop-off locations (including FedEx Office centers), 688 aircraft and approximately 50,000 vehicles and trailers in its integrated global network.

Services

FedEx Express offers a wide range of shipping services for delivery of packages and freight. Overnight and deferred package services are backed by money-back guarantees and extend to nearly the entire United States population. FedEx Express offers three U.S. overnight package delivery services: FedEx First Overnight, FedEx Priority Overnight and FedEx Standard Overnight. FedEx SameDay service is available for urgent shipments up to 70 pounds to virtually any U.S. destination. FedEx Express also offers U.S. express overnight and deferred freight services backed by money-back guarantees to handle the needs of the time-definite freight market.

International express and deferred package delivery with a money-back guarantee is available to more than 220 countries and territories, with a variety of time-definite services to meet distinct customer needs. FedEx Express also offers domestic pickup-and-delivery services within certain non-U.S. countries, including the United Kingdom, Canada, China, India and Mexico. In addition, FedEx Express offers comprehensive international express and deferred freight services, backed by a money-back guarantee, real-time tracking and advanced customs clearance.

For information regarding FedEx Express e-shipping tools and solutions, see “FedEx Services — Technology.”

International Expansion

We recently made strategic moves in India and Mexico:

• In February 2011, we acquired the Indian logistics, distribution and express businesses of AFL Pvt. Ltd. and its affiliate Unifreight India Pvt. Ltd.

• On December 15, 2010, we entered into an agreement to acquire Servicios Nacionales Mupa, S.A. de C.V. (MultiPack), a Mexican domestic express package delivery company, which we expect to complete in the first quarter of 2012.

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These acquisitions will give us more robust domestic transportation networks and added capabilities in these important global markets, and are expected to provide important contributions to our long-term growth, productivity and profitability.

We are focused on the long-term expansion of our international presence, especially in key markets such as China, India, Europe and Latin America. We began serving mainland China in 1984, and since that time, we have expanded our service to cover more than 400 cities across the country. Within the past few years, we have taken several important actions that bolster our presence there. As an example, in 2009, we began operations at our new Asia-Pacific hub at the Guangzhou Baiyun International Airport in southern China. The new hub assumed and expanded the activities of our previous hub in Subic Bay, Philippines and better serves our global customers doing business in and with the China and Asia-Pacific markets.

To facilitate the use of our growing international network, we offer a full range of international trade consulting services and a variety of online tools that enable customers to more easily determine and comply with international shipping requirements.

U.S. Postal Service Agreement

Under an agreement with the U.S. Postal Service that runs through September 2013, FedEx Express provides domestic air transportation services to the U.S. Postal Service, including for its First-Class, Priority and Express Mail. FedEx Express also has approximately 5,000 drop boxes at U.S. Post Offices in approximately 340 metropolitan areas and provides transportation and delivery for the U.S. Postal Service’s international delivery service called Global Express Guaranteed (GXG).

Pricing

FedEx Express periodically publishes list prices in its Service Guides for the majority of its services. In general, U.S. shipping rates are based on the service selected, destination zone, weight, size, any ancillary service charge and whether the shipment was picked up by a FedEx Express courier or dropped off by the customer at a FedEx Express, FedEx Office or FedEx Authorized ShipCenter location. International rates are based on the type of service provided and vary with size, weight, destination and, whenever applicable, whether the shipment was picked up by a FedEx Express courier or dropped off by the customer at a FedEx Express, FedEx Office or FedEx Authorized ShipCenter location. FedEx Express offers its customers discounts generally based on actual or potential average daily revenue produced.

FedEx Express has an indexed fuel surcharge for U.S. domestic and U.S. outbound shipments and for shipments originating internationally, where legally and contractually possible. The surcharge percentage is subject to monthly adjustment based on a rounded average of a certain spot price for jet fuel. For example, the fuel surcharge for June 2011 was based on the average spot price for jet fuel published for April 2011. Changes to the FedEx Express fuel surcharge, when calculated according to the average spot price for jet fuel and FedEx Express trigger points, are applied effective from the first Monday of the month. These trigger points may change from time to time, but information on the fuel surcharge for each month is available at fedex.com approximately two weeks before the surcharge is applicable. The weighted average U.S. domestic and U.S. outbound fuel surcharge as a percentage of the base rates for the past three years was: 2011 — 10%; 2010 — 6%; and 2009 — 17%. These percentages include certain fuel surcharge reductions that are associated with our annual base rate increases.

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Operations

FedEx Express’s primary sorting facility, located in Memphis, serves as the center of the company’s multiple hub-and-spoke system. A second national hub facility is located in Indianapolis. In addition to these national hubs, FedEx Express operates regional hubs in Newark, Oakland, Fort Worth and Greensboro and major metropolitan sorting facilities in Los Angeles and Chicago.

Facilities in Anchorage, Paris, Guangzhou and Cologne/Bonn serve as sorting facilities for express package and freight traffic moving to and from Asia, Europe and North America. Additional major sorting and freight handling facilities are located at Narita Airport in Tokyo, Stansted Airport outside London, and Pearson Airport in Toronto. The facilities in Guangzhou, Paris and Cologne/Bonn are also designed to serve as regional hubs for their respective market areas. A facility in Miami — the Miami Gateway Hub — serves our South Florida, Latin American and Caribbean markets.

Throughout its worldwide network, FedEx Express operates city stations and employs a staff of customer service agents, cargo handlers and couriers who pick up and deliver shipments in the station’s service area. In some international areas, independent agents (Global Service Participants) have been selected to complete deliveries and to pick up packages. For more information about our sorting and handling facilities, see Part I, Item 2 of this Annual Report on Form 10-K under the caption “FedEx Express Segment.”

FedEx Office offers retail access to FedEx Express shipping services at all of its U.S. locations. FedEx Express also has alliances with certain other retailers to provide in-store drop-off sites. Our unmanned FedEx Drop Boxes provide customers the opportunity to drop off packages in office buildings, shopping centers, corporate or industrial parks and outside some U.S. Post Offices.

Fuel Supplies and Costs

During 2011, FedEx Express purchased jet fuel from various suppliers under contracts that vary in length and which provide for specific amounts of fuel to be delivered. The fuel represented by these contracts is purchased at market prices. Because of our indexed fuel surcharge, we do not have any jet fuel hedging contracts. See “FedEx Express — Pricing.”

The following table sets forth FedEx Express’s costs for jet fuel and its percentage of consolidated revenues for the last five fiscal years:

	Total Cost		Percentage of Consolidated
Fiscal Year	(in millions)		Revenues
2011	$	3,178		8.1	%
2010		2,342		6.7
2009		2,932		8.3
2008		3,396		8.9
2007		2,639		7.5

Approximately 11% of FedEx Express’s requirement for vehicle fuel is purchased in bulk. The remainder of FedEx Express’s requirement is satisfied by retail purchases with various discounts.

Competition

As described in Item 1A of this Annual Report on Form 10-K (“Risk Factors”), the express package and freight markets are both highly competitive and sensitive to price and service, especially in periods of little or no macro-economic growth. The ability to compete effectively depends upon price, frequency, capacity and speed of scheduled service, ability to track packages, extent of geographic coverage, reliability and innovative service offerings.

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Competitors within the United States include other package delivery concerns, principally United Parcel Service, Inc. (“UPS”), passenger airlines offering express package services, regional express delivery concerns, air freight forwarders and the U.S. Postal Service. FedEx Express’s principal international competitors are DHL, UPS, TNT, other foreign postal authorities, freight forwarders, passenger airlines and all-cargo airlines. Many of FedEx Express’s international competitors are government-owned, -controlled or -subsidized carriers, which may have greater resources, lower costs, less profit sensitivity and more favorable operating conditions than FedEx Express.

Employees

David J. Bronczek is the President and Chief Executive Officer of FedEx Express, which is headquartered in Memphis, Tennessee. As of May 31, 2011, FedEx Express employed approximately 95,000 permanent full-time and 48,000 permanent part-time employees, of which approximately 15% are employed in the Memphis area. FedEx Express’s international employees in the aggregate represent approximately 27% of all employees.

The pilots of FedEx Express, who constitute a small percentage of our total employees, are represented by the Air Line Pilots Association, International (“ALPA”), and are employed under a collective bargaining agreement. During the fourth quarter of 2011, the pilots ratified a new labor contract that includes safety initiatives, increases in hourly pay rates and travel per diem rates, and provisions for opening a European crew base. The new contract is scheduled to become amendable in March 2013 unless the union exercises its option to shorten the contract, in which case the agreement would be amendable in March 2012 and a portion of the hourly pay increases would be canceled.

Attempts by other labor organizations to organize certain other groups of employees occur from time to time. Although these organizing attempts have not resulted in any certification of a U.S. domestic collective bargaining representative (other than ALPA), we cannot predict the outcome of these labor activities or their effect, if any, on FedEx Express or its employees. Certain of FedEx Express’s non-U.S. employees are unionized. FedEx Express believes its relationship with all of its employees is excellent.

FedEx Trade Networks

FedEx Trade Networks provides international trade services, specializing in customs brokerage and global ocean and air freight forwarding. During 2011, FedEx Trade Networks continued to execute an aggressive plan to expand its global freight forwarding presence — by opening additional facilities (over three dozen new freight forwarding offices have already been opened) and establishing new alliances throughout the world. FedEx Trade Networks provides customs clearance services for FedEx Express at its major U.S. hub facilities. Value-added services include Global Trade Data, an information tool that allows customers to track and manage imports. FedEx Trade Networks provides international trade advisory services, including assistance with the Customs-Trade Partnership Against Terrorism (C-TPAT) program, and through its WorldTariff subsidiary, FedEx Trade Networks publishes customs duty and tax information for over 100 customs areas worldwide. FedEx Trade Networks has approximately 4,000 employees and 132 offices in 106 service locations throughout North America and in Asia, Europe, the Middle East and Latin America. FedEx Trade Networks maintains a network of air and ocean freight-forwarding service providers and strategic alliances to provide services in certain countries in which it does not have owned offices.

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FedEx SupplyChain Systems

FedEx SupplyChain is an integrated logistics provider offering a range of supply chain solutions that leverage FedEx information technology and transportation networks around the world. The company offers services that include critical inventory logistics, transportation management and temperature-controlled transportation through a network of owned and managed resources — all tightly integrated via advanced information technology systems.

FedEx Ground Segment

FedEx Ground

Overview

By leveraging the FedEx brand, maintaining a low cost structure and efficiently using information technology and advanced automation systems, FedEx Ground continues to enhance its competitive position as a leading provider of business and residential money-back guaranteed ground package delivery services. FedEx Ground serves customers in the North American small-package market, focusing on business and residential delivery of packages weighing up to 150 pounds. Ground service is provided to 100% of the continental United States population and overnight service of up to 400 miles to nearly 100% of the continental United States population. Service is also provided to nearly 100% of the Canadian population. In addition, FedEx Ground offers service to Alaska and Hawaii through a ground and air network operation coordinated with other transportation providers.

FedEx Ground continues to improve the speed, reach and service capabilities of its network, by reducing transit time for many of its lanes and introducing or expanding overnight ground service in many metropolitan areas. For example, during the most recent two-year period, FedEx Ground has reduced the transit times of over 8,000 of its lanes. FedEx Ground’s ongoing network expansion program is substantially increasing the company’s daily pickup capacity through the addition of new hubs featuring the latest automated sorting technology, the expansion of existing hubs, and the expansion or relocation of other existing facilities.

The company offers FedEx Home Delivery, which reaches nearly 100% of U.S. residences. FedEx Home Delivery is dedicated to meeting the delivery needs of residential customers and provides routine Saturday and evening delivery and premium options such as day-specific, appointment and signature delivery. FedEx Home Delivery brings unmatched services to residential shippers and their customers and is the first residential ground package delivery service to have offered a money-back guarantee.

Pricing

FedEx Ground periodically publishes list prices for the majority of its services in its Service Guide. In general, U.S. shipping rates are based on the service selected, destination zone, weight, size, any ancillary service charge and whether the shipment was picked up by a FedEx Ground contractor or dropped off by the customer at a FedEx Office center or FedEx Authorized ShipCenter.

FedEx Ground has an indexed fuel surcharge, which is subject to a monthly adjustment. The surcharge percentage is based on a rounded average of the national U.S. on-highway average price for a gallon of diesel fuel as published monthly by the U.S. Department of Energy. For example, the fuel surcharge for June 2011 was based on the average diesel fuel price published for April 2011. Changes to the FedEx Ground fuel surcharge, when calculated according to the rounded index average and FedEx Ground trigger points, are applied effective from the first Monday of the month. These trigger points may change from time to time, but information on the fuel surcharge for each month is available at fedex.com approximately two weeks before the surcharge is applicable.

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Operations

FedEx Ground operates a multiple hub-and-spoke sorting and distribution system consisting of 520 facilities, including 32 hubs, in the U.S. and Canada. FedEx Ground conducts its operations primarily with approximately 28,100 owner-operated vehicles and 32,600 company-owned trailers. To provide FedEx Home Delivery service, FedEx Ground leverages its existing pickup operation and hub and linehaul network. FedEx Home Delivery’s operations are often co-located with existing FedEx Ground facilities to achieve further cost efficiencies.

Advanced automated sorting technology is used to streamline the handling of millions of packages daily. Using overhead laser and six-sided camera-based bar code scan technology, hub conveyors electronically guide packages to their appropriate destination chute, where they are loaded for transport to their respective destination terminals for local delivery. Software systems and Internet-based applications are also deployed to offer customers new ways to connect internal package data with external delivery information. FedEx Ground provides shipment tracing and proof-of-delivery signature functionality through the FedEx Web site, fedex.com. For additional information regarding FedEx Ground e-shipping tools and solutions, see “FedEx Services — Technology.”

FedEx Office offers retail access to FedEx Ground shipping services at all of its U.S. locations. FedEx Ground is also available as a service option at many FedEx Authorized ShipCenters in the U.S.

As of May 31, 2011, FedEx Ground had approximately 48,000 employees. In addition, FedEx Ground relies on owner-operators to conduct its linehaul and pickup-and-delivery operations, as the use of independent contractors is well suited to the needs of the ground delivery business and its customers. David F. Rebholz is the President and Chief Executive Officer of FedEx Ground. FedEx Ground is headquartered in Pittsburgh, Pennsylvania, and its primary competitors are UPS and the U.S. Postal Service.

Evolution of Independent Contractor Model

Although FedEx Ground is involved in numerous lawsuits and other proceedings (such as state tax audits or other administrative challenges) where the classification of its independent contractors is at issue, a number of recent judicial decisions have supported the company’s classification of them and the company believes its relationship with its contractors is generally excellent. For a description of these proceedings, see Item 1A of this Annual Report on Form 10-K (“Risk Factors”) and Note 17 of the accompanying consolidated financial statements.

FedEx Ground has made changes to its relationships with contractors that, among other things, provide incentives for improved service and enhanced regulatory and other compliance by the contractors. For example, FedEx Ground has implemented or is implementing its Independent Service Provider (“ISP”) model in a number of states. The ISP model requires pickup-and-delivery contractors based in those states to, among other things: (i) assume responsibility for the pickup-and-delivery operations of an entire geographic service area that includes multiple routes, and (ii) negotiate independent agreements with FedEx Ground, rather than agree to a standard contract.

As of May 31, 2011, FedEx Ground has transitioned to the ISP model in Maryland, New Hampshire, Rhode Island and Vermont, and plans to complete transition to the ISP model in Connecticut, Delaware, Illinois, Iowa, Maine, Massachusetts, Minnesota, Mississippi, Missouri, Montana, North Dakota, South Dakota and Tennessee during 2012. Based upon the success of this model, FedEx Ground may possibly transition to it in other states as well.

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In addition, because of state-specific legal and regulatory issues, FedEx Ground only contracts with contractors that (i) are organized as corporations registered and in good standing under applicable state law, and (ii) ensure that their personnel who provide services under an operating agreement with FedEx Ground are treated as their employees. FedEx Ground also has an ongoing nationwide program to incentivize contractors who choose to grow their businesses by adding routes. During May 2011, approximately 80% of FedEx Ground’s package volume was delivered by multiple route owner-operators or independent service providers.

FedEx SmartPost

FedEx SmartPost (a subsidiary of FedEx Ground) is a leading national small-parcel consolidator, which specializes in the consolidation and delivery of high volumes of low-weight, less time-sensitive business-to-consumer packages, using the U.S. Postal Service for final delivery to residences. The company picks up shipments from customers (including e-tailers and catalog companies), provides sorting and linehaul services and then delivers the packages to a U.S. Postal Service facility for final delivery by a postal carrier. Through its network of 25 distribution hubs and approximately 5,500 employees, FedEx SmartPost provides delivery to all residential addresses in the U.S., including PO Boxes and military destinations. FedEx SmartPost also provides service into Canada for U.S. shippers by using the residential delivery capabilities of Canada Post Corporation. This service (known as FedEx SmartPost International) is available to all residential addresses, including PO Boxes, in Canada and includes around-the-clock shipment tracking status updates via fedex.com.

FedEx Freight Segment

FedEx Freight

FedEx Freight is a leading U.S. provider of LTL freight services, offering FedEx Freight Priority, when speed is critical to meet supply chain needs, and FedEx Freight Economy, for less time-sensitive shipping at a lower cost, through one LTL company. Through a comprehensive network of service centers and advanced information systems, FedEx Freight provides service to virtually all U.S. ZIP Codes (including Alaska and Hawaii) with industry-leading transit times. FedEx Freight Priority service is supported by a no-fee money-back guarantee on eligible shipments. Internationally, FedEx Freight Canada offers freight delivery service throughout Canada, and FedEx Freight serves Mexico, Puerto Rico, Central and South America, the Caribbean, Europe and Asia via alliances and purchased transportation.

FedEx Freight offers choice, simplicity and reliability to meet the needs of LTL shippers. Through its many service offerings, FedEx Freight can match customers’ time-critical needs with reduced transit times or after-hours pickup or delivery. FedEx Freight’s fully integrated Web site and other e-tools, including a bill of lading generator and e-mail delivery notification, make freight shipping easier and bring customers closer to their own account information. The FedEx Freight Advance Notice service feature available on Priority shipments uses the company’s innovative technology systems to proactively notify FedEx Freight customers via the Internet, e-mail or fax when a shipment may be delayed beyond its estimated delivery date, providing customers with greater visibility and control of their LTL freight shipments. Additionally, the FedEx Freight A.M. service offers freight delivery by 10:30 a.m. backed by a money-back guarantee. FedEx Freight has an indexed fuel surcharge, which is subject to weekly adjustment based on a rounded average of the national U.S. on-highway average price for a gallon of diesel fuel.

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As of May 31, 2011, FedEx Freight was operating approximately 58,000 vehicles and trailers from a network of 366 service centers, and the FedEx Freight segment had approximately 33,000 employees. William J. Logue is the President and Chief Executive Officer of FedEx Freight’s parent company, FedEx Freight Corporation, which is based in Memphis, Tennessee. FedEx Freight’s primary competitors are YRC Worldwide Inc. (which includes YRC Regional Transportation and YRC National Transportation), Con-way Freight (a subsidiary of Con-way Inc.), UPS Freight, Old Dominion Freight Line, Inc. and ABF Freight System, Inc.

FedEx Custom Critical

FedEx Custom Critical provides a range of expedited, time-specific freight-shipping services throughout the United States, Canada and Mexico. Among its services are Surface Expedite, for exclusive-use and network-based transport of critical shipments and expedited LTL shipments; Air Expedite, which offers an array of air solutions to meet customers’ critical delivery times; and White Glove Services, for shipments that require extra care in handling, temperature control or specialized security. In addition, its subsidiary FedEx Truckload Brokerage provides freight brokerage solutions within the United States and into and out of Canada and Mexico. Service is available 24 hours a day, 365 days a year, including weekends and holidays at no extra cost. FedEx Custom Critical continuously monitors shipments through an integrated proprietary shipment-control system, including two-way satellite communications on exclusive-use shipments. Through the company’s Shipping Toolkit, customers can quote, ship, track and map shipments; view and print out copies of a shipment’s bill of lading, proof of delivery and invoice; and manage their online accounts. FedEx Custom Critical utilizes approximately 1,400 vehicles, operated by independent contractors and their drivers, which are dispatched out of approximately 150 geographically-based staging areas.

FedEx Services Segment

FedEx Services

FedEx Services provides our other companies with sales, marketing, information technology, customer service and certain other back-office support. Through FedEx Services and its subsidiary FedEx TechConnect, we provide a convenient single point of access for many customer support functions, enabling us to more effectively sell the entire portfolio of transportation services and to help ensure a consistent and outstanding experience for our customers.

T. Michael Glenn is the President and Chief Executive Officer of FedEx Services, which is based in Memphis, Tennessee. As of May 31, 2011, the FedEx Services segment had approximately 36,800 employees (including 19,300 at FedEx Office).

Technology

FedEx is a world leader in technology, and FedEx founder Frederick W. Smith’s vision that “the information about a package is as important as the delivery of the package itself” remains at the core of our comprehensive technology strategy.

Our technology strategy is driven by our desire for customer satisfaction. We strive to build technology solutions that will solve our customers’ business problems with simplicity, convenience, speed and reliability. The focal point of our strategy is our award-winning Web site, together with our customer integrated solutions.

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The fedex.com Web site was launched over fifteen years ago, and during that time, customers have shipped and tracked billions of packages at fedex.com. The fedex.com Web site is widely recognized for its speed, ease of use and customer-focused features. At fedex.com, our customers ship packages, determine international documentation requirements, track package status, pay invoices and access FedEx Office services. The advanced tracking capability within My FedEx provides customers with a consolidated view of inbound, outbound and third-party shipments. FedEx Desktop provides customers the benefit of working offline and having real-time shipment updates sent directly to their computer desktop.

FedEx Mobile is a suite of services available on most Web-enabled mobile devices, such as the BlackBerry, and includes enhanced support for Apple products, such as the iPhone, iPod Touch and iPad. FedEx Mobile allows customers to track the status of packages, create shipping labels, get account-specific rate quotes and access drop-off location data for FedEx shipments. FedEx also uses wireless data collection devices to scan bar codes on shipments, thereby enhancing and accelerating the package information available to our customers.

We design our e-commerce tools and solutions to be easily integrated into our customers’ applications, as well as into third-party software being developed by leading e-procurement, systems integration and enterprise resource planning companies. Our FedEx Ship Manager suite of solutions offers a wide range of options to help our customers manage their shipping and associated processes.

Marketing

The FedEx brand name is a symbol for high-quality service, reliability and speed. FedEx is one of the most widely recognized brands in the world. Special emphasis is placed on promoting and protecting the FedEx brand, one of our most important assets. In addition to traditional print and broadcast advertising, we promote the FedEx brand through corporate sponsorships and special events. For example, FedEx sponsors:

• The National Football League (NFL), as its “Official Delivery Service Sponsor”

• FedExField, home of the NFL’s Washington Redskins

• The #11 Joe Gibbs Racing Toyota Camry driven by Denny Hamlin in the NASCAR Sprint Cup Series

• PGA TOUR and the Champions Tour golf organizations, as the “Official Shipping Company,” and FedExCup, a season-long points competition for PGA TOUR players

• The FedEx St. Jude Classic, a PGA TOUR event that raises millions of dollars for St. Jude Children’s Research Hospital

• FedExForum, home of the NBA’s Memphis Grizzlies

• ATP World Tour men’s professional tennis circuit and French Open tennis tournament

Information Security

FedEx Services has a team of highly qualified professionals dedicated to securing information about our customers’ shipments and protecting our customers’ privacy, and we strive to provide a safe, secure online environment for our customers. We are committed to compliance with applicable information security laws, regulations and industry standards — including, for example, the Payment Card Industry Data Security Standard, a set of comprehensive requirements for enhancing payment account data security developed by the Payment Card Industry Security Standards Council. For a description of risks related to information security, see Item 1A of this Annual Report on Form 10-K (“Risk Factors”).

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Global ISO 9001 Certification

FedEx Services provides our customers with a high level of service quality, as evidenced by our ISO 9001 certification for our global express and ground operations. ISO 9001 registration is required by thousands of customers around the world. FedEx’s global certification, encompassing the processes of FedEx Express, FedEx Ground and FedEx Services, enhances our single-point-of-access strategy and solidifies our reputation as the quality leader in the transportation industry. ISO 9001 is currently the most rigorous international standard for Quality Management and Assurance. ISO standards were developed by the International Organization for Standardization in Geneva, Switzerland to promote and facilitate international trade. More than 150 countries, including European Union members, the United States and Japan, recognize ISO standards.

FedEx Office

FedEx Office’s network of digitally-connected locations offers access to copying and digital printing through retail and Web-based platforms, signs and graphics, professional finishing, computer rentals, and the full range of FedEx day-definite ground shipping and time-definite global express shipping services.

FedEx Office offers the full range of FedEx Express and FedEx Ground services at virtually all U.S. locations. In addition, FedEx Office offers packing services, and packing supplies and boxes are included in its retail product assortment. By allowing customers to have unpackaged items professionally packed by specially trained FedEx Office team members and then shipped using any of the full range of FedEx day-definite ground shipping and time-definite global express shipping services, FedEx Office provides a complete “pack-and-ship” solution.

As of May 31, 2011, FedEx Office operated approximately 1,950 locations, including 130 locations in seven foreign countries, as well as 30 commercial production centers. FedEx Office is headquartered in Dallas, Texas.

Trademarks

The “FedEx” trademark, service mark and trade name is essential to our worldwide business. FedEx, FedEx Express, FedEx Ground, FedEx Freight, FedEx Office, FedEx Services, FedEx SupplyChain Systems, FedEx TechConnect, FedEx Trade Networks, FedEx SmartPost and FedEx Custom Critical, among others, are trademarks, service marks and trade names of Federal Express Corporation for which registrations, or applications for registration, are on file. We have authorized, through licensing arrangements, the use of certain of our trademarks, service marks and trade names by our contractors and Global Service Participants to support our business. In addition, we license the use of certain of our trademarks, service marks and trade names on promotional items for the primary purpose of enhancing brand awareness.

Regulation

Air. Under the Federal Aviation Act of 1958, as amended, both the U.S. Department of Transportation (“DOT”) and the Federal Aviation Administration (“FAA”) exercise regulatory authority over FedEx Express.

The FAA’s regulatory authority relates primarily to operational aspects of air transportation, including aircraft standards and maintenance, as well as personnel and ground facilities, which may from time to time affect the ability of FedEx Express to operate its aircraft in the most efficient manner. FedEx Express holds an air carrier certificate granted by the FAA pursuant to Part 119 of the federal aviation regulations. This certificate is of unlimited duration and remains in effect so long as FedEx Express maintains its standards of safety and meets the operational requirements of the regulations.

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In September 2010, the FAA proposed rules that would significantly reduce the maximum number of hours on duty and increase the minimum amount of rest time for the pilots of FedEx Express, and thus require us to hire additional pilots and modify certain of our aircraft. It is reasonably possible that these rules, if enacted as currently drafted, or other future flight safety requirements could impose material costs on us.

The DOT’s authority relates primarily to economic aspects of air transportation. The DOT’s jurisdiction extends to aviation route authority and to other regulatory matters, including the transfer of route authority between carriers. FedEx Express holds various certificates issued by the DOT, authorizing FedEx Express to engage in U.S. and international air transportation of property and mail on a worldwide basis.

Under the Aviation and Transportation Security Act of 2001, as amended, the Transportation Security Administration (“TSA”), an agency within the Department of Homeland Security, has responsibility for aviation security. The TSA has issued to us a Full All-Cargo Aircraft Operator Standard Security Plan, which contains many new and enhanced security requirements. These requirements are not static, but will change periodically as the result of regulatory and legislative requirements, and to respond to evolving threats. Until these requirements are adopted, we cannot determine the effect that these new rules will have on our cost structure or our operating results. It is reasonably possible, however, that these rules or other future security requirements could impose material costs on us.

FedEx Express participates in the Civil Reserve Air Fleet (“CRAF”) program. Under this program, the U.S. Department of Defense may requisition for military use certain of FedEx Express’s wide-bodied aircraft in the event of a declared need, including a national emergency. FedEx Express is compensated for the operation of any aircraft requisitioned under the CRAF program at standard contract rates established each year in the normal course of awarding contracts. Through its participation in the CRAF program, FedEx Express is entitled to bid on peacetime military cargo charter business. FedEx Express, together with a consortium of other carriers, currently contracts with the U.S. Government for such charter flights.

Ground. The ground transportation performed by FedEx Express is integral to its air transportation services. The enactment of the Federal Aviation Administration Authorization Act of 1994 abrogated the authority of states to regulate the rates, routes or services of intermodal all-cargo air carriers and most motor carriers. States may now only exercise jurisdiction over safety and insurance. FedEx Express is registered in those states that require registration.

The operations of FedEx Ground, FedEx Freight and FedEx Custom Critical in interstate commerce are currently regulated by the DOT and the Federal Motor Carrier Safety Administration, which retain limited oversight authority over motor carriers. Federal legislation preempts regulation by the states of rates and service in intrastate freight transportation.

Like other interstate motor carriers, our operations, including those at FedEx Express, are subject to certain DOT safety requirements governing interstate operations. In addition, vehicle weight and dimensions remain subject to both federal and state regulations.

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International. FedEx Express’s international authority permits it to carry cargo and mail from points in its U.S. route system to numerous points throughout the world. The DOT regulates international routes and practices and is authorized to investigate and take action against discriminatory treatment of United States air carriers abroad. The right of a United States carrier to serve foreign points is subject to the DOT’s approval and generally requires a bilateral agreement between the United States and the foreign government. The carrier must then be granted the permission of such foreign government to provide specific flights and services. The regulatory environment for global aviation rights may from time to time impair the ability of FedEx Express to operate its air network in the most efficient manner. Additionally, global air cargo carriers, such as FedEx Express, are subject to current and potential additional aviation security regulation by foreign governments.

Our operations outside of the United States, such as FedEx Express’s growing international domestic operations, are also subject to current and potential regulations that restrict, and sometimes prohibit, our ability to compete in parts of the transportation and logistics market. As an example, the Chinese government has adopted postal regulations that exclude foreign-owned companies such as FedEx from competing in the mainland China domestic document delivery market.

Communication. Because of the extensive use of radio and other communication facilities in its aircraft and ground transportation operations, FedEx Express is subject to the Federal Communications Commission Act of 1934, as amended. Additionally, the Federal Communications Commission regulates and licenses FedEx Express’s activities pertaining to satellite communications.

Environmental. Pursuant to the Federal Aviation Act, the FAA, with the assistance of the U.S. Environmental Protection Agency, is authorized to establish standards governing aircraft noise. FedEx Express’s aircraft fleet is in compliance with current noise standards of the federal aviation regulations. In addition to federal regulation of aircraft noise, certain airport operators have local noise regulations, which limit aircraft operations by type of aircraft and time of day. These regulations have had a restrictive effect on FedEx Express’s aircraft operations in some of the localities where they apply but do not have a material effect on any of FedEx Express’s significant markets. Congress’s passage of the Airport Noise and Capacity Act of 1990 established a National Noise Policy, which enabled FedEx Express to plan for noise reduction and better respond to local noise constraints. FedEx Express’s international operations are also subject to noise regulations in certain of the countries in which it operates.

Concern over climate change, including the impact of global warming, has led to significant U.S. and international legislative and regulatory efforts to limit greenhouse gas emissions, including our aircraft and diesel engine emissions. For example, during 2009, the European Commission approved the extension of the European Union Emissions Trading Scheme (“ETS”) for GHG emissions, to the airline industry. Under this decision, all FedEx Express flights to and from any airport in any member state of the European Union will be covered by the ETS requirements beginning in 2012, and each year we will be required to submit emission allowances in an amount equal to the carbon dioxide emissions from such flights. For a description of such efforts and their potential effect on our cost structure and operating results, see Item 1A of this Annual Report on Form 10-K (“Risk Factors”).

We are subject to federal, state and local environmental laws and regulations relating to, among other things, contingency planning for spills of petroleum products, the disposal of waste oil and the disposal of toners and other products used in FedEx Office’s copy machines. Additionally, we are subject to numerous regulations dealing with underground fuel storage tanks, hazardous waste handling, vehicle and equipment emissions and noise and the discharge of effluents from our properties and equipment. We have environmental management programs to ensure compliance with these regulations.

Customs. Our activities, including customs brokerage and freight forwarding, are subject to regulation by the Bureau of Customs and Border Protection and the TSA within the Department of Homeland Security (customs brokerage and security issues), the U.S. Federal Maritime Commission (ocean freight forwarding) and the DOT (air freight forwarding). Our offshore operations are subject to similar regulation by the regulatory authorities of foreign jurisdictions.

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Labor. All U.S. employees at FedEx Express are covered by the Railway Labor Act of 1926, as amended (the “RLA”), while labor relations within the United States at our other companies are governed by the National Labor Relations Act of 1935, as amended (the “NLRA”). Under the RLA, groups that wish to unionize must do so across nationwide classes of employees. The RLA also requires mandatory government-led mediation of contract disputes supervised by the National Mediation Board before a union can strike or an employer can replace employees or impose contract terms. This part of the RLA helps minimize the risk of strikes that would shut down large portions of the economy. Under the NLRA, employees can unionize in small localized groups, and government-led mediation is not a required step in the negotiation process.

The RLA was originally passed to govern railroad and express carrier labor negotiations. As transportation systems evolved, the law expanded to cover airlines, which are the dominant national transportation systems of today. As an air express carrier with an integrated air/ground network, FedEx Express and its employees have been covered by the RLA since the founding of the company in 1971. The purpose of the RLA is to offer employees a process by which to unionize (if they choose) and engage in collective bargaining while also protecting global commerce from damaging work stoppages and delays. Specifically, the RLA ensures that an entire transportation system, such as at FedEx Express, cannot be shut down by the actions of a local segment of the network.

The U.S. Congress has, in the past, considered adopting changes in labor laws that would make it easier for unions to organize units of our employees. For example, there is always a possibility that Congress could remove most FedEx Express employees from the jurisdiction of the RLA, thereby exposing the FedEx Express network to sporadic labor disputes and the risk that small groups of employees could disrupt the entire air/ground network. In addition, federal and state governmental agencies have and may continue to take actions that could make it easier for our employees to organize under the RLA or NLRA. For a description of these potential labor law changes, see Item 1A of this Annual Report on Form 10-K (“Risk Factors”).

ITEM 1A. RISK FACTORS

We present information about our risk factors on pages 71 through 76 of this Annual Report on Form 10-K.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

FedEx Express Segment

FedEx Express’s principal owned and leased properties include its aircraft, vehicles, national, regional and metropolitan sorting facilities, administration buildings, FedEx Drop Boxes and data processing and telecommunications equipment.

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Aircraft and Vehicles

As of May 31, 2011, FedEx Express’s aircraft fleet consisted of the following:

								Maximum Operational
								Revenue Payload
Description	Owned		Leased		Total			(Pounds per Aircraft)(1)
Boeing B777F		12		0		12			178,000
Boeing MD11		38		26		64	(2)		164,200
Boeing MD10-30		10		7		17			114,200
Boeing MD10-10		58		0		58			108,700
Airbus A300-600		35		36		71			85,600
Airbus A310-200/300		50		3		53			61,900
Boeing B757-200		58		0		58	(3)		45,800
Boeing B727-200		65		2		67			38,200
ATR 72-202/212		21		0		21	(4)		14,660
ATR 42-300/320		26		0		26			10,880
Cessna 208B		241		0		241			2,500
Total		614		74		688

(1)	Maximum operational revenue payload is the lesser of the net volume-limited payload and the net maximum structural payload.
(2)	Includes 4 aircraft not currently in operation and awaiting completion of modification.
(3)	Includes 21 aircraft not currently in operation and awaiting completion of modification.
(4)	Includes 5 aircraft not currently in operation and awaiting completion of modification.

• The B777Fs are two-engine, wide-bodied cargo aircraft that have a longer range and larger capacity than any other aircraft we operate.

• The MD11s are three-engine, wide-bodied aircraft that have a longer range and larger capacity than MD10s.

• The MD10s are three-engine, wide-bodied aircraft that have received an Advanced Common Flightdeck (ACF) modification, which includes a conversion to a two-pilot cockpit, as well as upgrades of electrical and other systems.

• The A300s and A310s are two-engine, wide-bodied aircraft that have a longer range and more capacity than B757s and B727s.

• The B757s are two-engine, narrow-bodied aircraft configured for cargo service.

• The B727s are three-engine, narrow-bodied aircraft configured for cargo service.

• The ATR and Cessna 208 turbo-prop aircraft are leased to independent operators to support FedEx Express operations in areas where demand does not justify use of a larger aircraft.

An inventory of spare engines and parts is maintained for each aircraft type.

In addition, FedEx Express leases smaller aircraft, which feed packages to and from airports primarily outside the U.S. served by FedEx Express’s larger jet aircraft. The lease agreements generally call for the owner-lessor to provide the aircraft, flight crews, insurance and maintenance, as well as fuel and other supplies required to operate the aircraft. The lease agreements are for terms not exceeding one year and are generally cancelable upon 30 days’ notice.

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At May 31, 2011, FedEx Express operated approximately 50,000 ground transport vehicles, including pickup and delivery vans, larger trucks called container transport vehicles and over-the-road tractors and trailers.

Aircraft Purchase Commitments

The following table is a summary of the number and type of aircraft we were committed to purchase as of May 31, 2011, with the year of expected delivery:

	B757		B777F(1)		Total
2012		16		7		23
2013		4		6		10
2014		—		7		7
2015		—		3		3
2016		—		3		3
Thereafter		—		7		7
Total		20		33		53

(1) Our obligation to purchase 15 of these aircraft is conditioned upon there being no event that causes FedEx Express or its employees to not be covered by the RLA.

As of May 31, 2011, deposits and progress payments of $604 million had been made toward aircraft purchases and other planned aircraft-related transactions. Also see Note 16 of the accompanying consolidated financial statements for more information about our purchase commitments.

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Sorting and Handling Facilities

At May 31, 2011, FedEx Express operated the following major sorting and handling facilities:

					Sorting			Lease
			Square		Capacity			Expiration
Location	Acres		Feet		(per hour)(1)		Lessor	Year
National
Memphis, Tennessee		518		3,450,000		475,000	Memphis-Shelby County Airport Authority	2036
Indianapolis, Indiana		335		2,509,000		215,000	Indianapolis Airport Authority	2017/2028 (5)
Regional
Fort Worth, Texas		168		948,000		76,000	Fort Worth Alliance Airport Authority	2021
Newark, New Jersey		70		595,000		156,000	Port Authority of New York and New Jersey	2030
Oakland, California		75		320,000		54,000	City of Oakland	2031
Greensboro, N. Carolina		165		593,000		29,000	Piedmont Triad Airport Authority	2031
Metropolitan
Chicago, Illinois		51		419,000		52,000	City of Chicago	2028
Los Angeles, California		34		305,000		57,000	City of Los Angeles	2021/2025 (6)
International
Anchorage, Alaska (2)		64		332,000		24,000	Alaska Department of Transportation and Public Facilities	2023
Paris, France (3)		87		861,000		63,000	Aeroports de Paris	2029
Cologne, Germany (3)		7		325,000		20,000	Cologne Bonn Airport	2040
Guangzhou, China (4)		155		882,000		61,000	Guangdong Airport Management Corp.	2029

(1)	Documents and packages.
(2)	Handles international express package and freight shipments to and from Asia, Europe and North America.
(3)	Handles intra-Europe express package and freight shipments, as well as international express package and freight shipments to and from Europe.
(4)	Handles intra-Asia express package and freight shipments, as well as international express package and freight shipments to and from Asia.
(5)	Property is held under two separate leases — lease for original hub expires in 2017, and lease for additional buildings expires in 2028.
(6)	Property is held under two separate leases — lease for sorting and handling facility expires in 2021, and lease for ramp expansion expires in 2025.

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FedEx Express’s primary sorting facility, which serves as the center of its multiple hub-and-spoke system, is located at the Memphis International Airport. FedEx Express’s facilities at the Memphis International Airport also include aircraft hangars, aircraft ramp areas, vehicle parking areas, flight training and fuel facilities, administrative offices and warehouse space. FedEx Express leases these facilities from the Memphis-Shelby County Airport Authority (the “Authority”). The lease obligates FedEx Express to maintain and insure the leased property and to pay all related taxes, assessments and other charges. The lease is subordinate to, and FedEx Express’s rights thereunder could be affected by, any future lease or agreement between the Authority and the U.S. Government.

FedEx Express has additional international sorting-and-handling facilities located at Narita Airport in Tokyo, Stansted Airport outside London, and Pearson Airport in Toronto. FedEx Express also has a substantial presence at airports in Hong Kong, Taiwan, Dubai and Miami.

Administrative and Other Properties and Facilities

The World Headquarters of FedEx Express is located in southeastern Shelby County, Tennessee. The headquarters campus comprises nine separate buildings with approximately 1.3 million square feet of space. FedEx Express also leases 39 facilities in the Memphis area for administrative offices and warehouses.

FedEx Express owns or leases approximately 670 facilities for city station operations in the United States. In addition, approximately 400 city stations are owned or leased throughout FedEx Express’s international network. The majority of these leases are for terms of five to ten years. City stations serve as a sorting and distribution center for a particular city or region. We believe that suitable alternative facilities are available in each locale on satisfactory terms, if necessary.

As of May 31, 2011, FedEx Express had approximately 45,000 Drop Boxes, including 5,000 Drop Boxes outside U.S. Post Offices. As of May 31, 2011, FedEx Express also had approximately 13,000 FedEx Authorized ShipCenters and other types of staffed drop-off locations, such as FedEx Office centers. Internationally, FedEx Express had approximately 4,500 drop-off locations.

FedEx Ground Segment

FedEx Ground’s corporate offices are located in the Pittsburgh, Pennsylvania, area in an approximately 500,000 square-foot building owned by FedEx Ground. As of May 31, 2011, FedEx Ground had approximately 32,600 company-owned trailers and owned or leased 520 facilities, including 32 hubs. In addition, approximately 28,100 owner-operated vehicles support FedEx Ground’s business. Of the 520 facilities that support FedEx Home Delivery, 229 are co-located with existing FedEx Ground facilities. Leased facilities generally have terms of five years or less. The 32 hub facilities are strategically located to cover the geographic area served by FedEx Ground. The hub facilities average approximately 325,000 square feet and range in size from 54,000 to 715,000 square feet.

FedEx Freight Segment

FedEx Freight’s corporate headquarters are located in Memphis, Tennessee, and administrative offices for the FedEx Freight business are in Harrison, Arkansas. As of May 31, 2011, FedEx Freight operated approximately 58,000 vehicles and trailers and 366 service centers, which are strategically located to provide service to virtually all U.S. ZIP Codes. These facilities range in size from 850 to 221,300 square feet of office and dock space. FedEx Custom Critical’s headquarters are located in Green, Ohio.

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FedEx Services Segment

FedEx Services’ corporate headquarters are located in Memphis, Tennessee. FedEx Services and FedEx Express lease state-of-the-art technology centers in Collierville, Tennessee, Irving, Texas, Colorado Springs, Colorado, and Orlando, Florida. These facilities house personnel responsible for strategic software development and other functions that support FedEx’s technology and e-commerce solutions. FedEx Office’s corporate headquarters are located in Dallas, Texas in leased facilities. As of May 31, 2011, FedEx Office operated approximately 1,950 locations, including 130 locations in seven foreign countries, as well as 30 commercial production centers. Substantially all FedEx Office centers are leased, generally for terms of five to ten years with varying renewal options. FedEx Office centers are generally located in strip malls, office buildings or stand-alone structures and average approximately 4,000 square feet in size. We have a multi-year agreement with OfficeMax to offer U.S. domestic FedEx Express and FedEx Ground shipping services at all U.S. OfficeMax retail locations (over 900 locations).

ITEM 3. LEGAL PROCEEDINGS

FedEx and its subsidiaries are subject to legal proceedings and claims that arise in the ordinary course of their business. For a description of material pending legal proceedings, see Note 17 of the accompanying consolidated financial statements.

As described below, we have received requests for information from various governmental agencies over the past five years related to possible anti-competitive behavior in several package and freight transportation segments. We do not believe that we have engaged in any anti-competitive activities, and we are cooperating with these investigations.

In June 2006, we received a grand jury subpoena for the production of documents in connection with a criminal investigation by the Antitrust Division of the U.S. Department of Justice (“DOJ”) into possible anti-competitive behavior in the air freight transportation industry. In July 2007, we received a notice from the Australian Competition and Consumer Commission (“ACCC”) requesting certain information and documents in connection with the ACCC’s investigation into possible anti-competitive behavior relating to air cargo transportation services in Australia. In December 2007, we received a grand jury subpoena for the production of documents in connection with a criminal investigation by the DOJ into possible anti-competitive behavior in the international freight forwarding industry. In March 2008, we received an additional subpoena from the DOJ relating to its investigation of the international freight forwarding industry.

In February 2011, we received a demand for the production of information and documents in connection with a civil investigation by the DOJ into the policies and practices of FedEx and UPS for dealing with third-party consultants who work with shipping customers to negotiate lower rates. Related antitrust litigation with one of these third party consultants was dismissed in early June 2011, but the court granted the plaintiff permission to file an amended complaint, which FedEx received in late June 2011.

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ITEM 4. RESERVED

EXECUTIVE OFFICERS OF THE REGISTRANT

Information regarding executive officers of FedEx is as follows (included herein pursuant to Instruction 3 to Item 401(b) of Regulation S-K and General Instruction G(3) of Form 10-K):

Name and Office	Age		Positions and Offices Held and Business Experience
Frederick W. Smith Chairman, President and Chief Executive Officer		66	Chairman, President and Chief Executive Officer of FedEx since January 1998; Chairman of FedEx Express since 1975; Chairman, President and Chief Executive Officer of FedEx Express from April 1983 to January 1998; Chief Executive Officer of FedEx Express from 1977 to January 1998; and President of FedEx Express from June 1971 to February 1975.
David J. Bronczek President and Chief Executive Officer, FedEx Express		57	President and Chief Executive Officer of FedEx Express since January 2000; Executive Vice President and Chief Operating Officer of FedEx Express from January 1998 to January 2000; Senior Vice President — Europe, Middle East and Africa of FedEx Express from June 1995 to January 1998; Senior Vice President — Europe, Africa and Mediterranean of FedEx Express from June 1993 to June 1995; Vice President — Canadian Operations of FedEx Express from February 1987 to March 1993; and several sales and operations managerial positions at FedEx Express from 1976 to 1987. Mr. Bronczek serves as a director of International Paper Company, an uncoated paper and packaging company.
Robert B. Carter Executive Vice President — FedEx Information Services and Chief Information Officer		52	Executive Vice President — FedEx Information Services and Chief Information Officer of FedEx since January 2007; Executive Vice President and Chief Information Officer of FedEx from June 2000 to January 2007; Corporate Vice President and Chief Technology Officer of FedEx from February 1998 to June 2000; Vice President — Corporate Systems Development of FedEx Express from September 1993 to February 1998; Managing Director — Systems Development of FedEx Express from April 1993 to September 1993. Mr. Carter serves as a director of Saks Incorporated, a retailer operating luxury, specialty and traditional department stores, and as a director of First Horizon National Corporation, a financial services holding company.

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Name and Office	Age		Positions and Offices Held and Business Experience
T. Michael Glenn Executive Vice President — Market Development and Corporate Communications		55	Executive Vice President — Market Development and Corporate Communications of FedEx since January 1998; Senior Vice President — Marketing, Customer Service and Corporate Communications of FedEx Express from June 1994 to January 1998; Senior Vice President — Marketing and Corporate Communications of FedEx Express from December 1993 to June 1994; Senior Vice President — Worldwide Marketing Catalog Services and Corporate Communications of FedEx Express from June 1993 to December 1993; Senior Vice President — Catalog and Remail Services of FedEx Express from September 1992 to June 1993; Vice President — Marketing of FedEx Express from August 1985 to September 1992; and various management positions in sales and marketing and senior sales specialist of FedEx Express from 1981 to 1985. Mr. Glenn serves as a director of Pentair, Inc., a diversified industrial manufacturing company operating in water and technical products business segments, and as a director of Renasant Corporation, a financial services holding company.
Alan B. Graf, Jr. Executive Vice President and Chief Financial Officer		57	Executive Vice President and Chief Financial Officer of FedEx since January 1998; Executive Vice President and Chief Financial Officer of FedEx Express from February 1996 to January 1998; Senior Vice President and Chief Financial Officer of FedEx Express from December 1991 to February 1996; Vice President and Treasurer of FedEx Express from August 1987 to December 1991; and various management positions in finance and a senior financial analyst of FedEx Express from 1980 to 1987. Mr. Graf serves as a director of Mid-America Apartment Communities Inc., a real estate investment trust that focuses on acquiring, constructing, developing, owning and operating apartment communities, and as a director of NIKE, Inc., a designer and marketer of athletic footwear, apparel, equipment and accessories for sports and fitness activities.
William J. Logue President and Chief Executive Officer, FedEx Freight Corporation		53	President and Chief Executive Officer of FedEx Freight Corporation (parent of FedEx Freight) since March 2010; President of FedEx Freight Corporation from December 2009 to February 2010; Executive Vice President and Chief Operating Officer — U.S. of FedEx Express from March 2008 to November 2009; Executive Vice President — U.S. Operations and System Support of FedEx Express from September 2006 to March 2008; Senior Vice President — U.S. Operations of FedEx Express from August 2004 to September 2006; Senior Vice President — Air-Ground and Freight Services of FedEx Express from 1999 to August 2004; Vice President — National Hub Operations, Memphis Hub of FedEx Express from 1995 to 1999; and various operations management positions with FedEx Express from 1989 to 1995.

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Name and Office	Age		Positions and Offices Held and Business Experience
David F. Rebholz President and Chief Executive Officer, FedEx Ground		58	President and Chief Executive Officer of FedEx Ground since January 2007; President of FedEx Ground from September 2006 to January 2007; Executive Vice President — Operations & Systems Support of FedEx Express from December 1999 to September 2006; Senior Vice President — U.S. of FedEx Express from January 1997 to November 1999; Senior Vice President —Sales & Customer Service of FedEx Express from June 1993 to December 1996; Vice President — Regional Operations of FedEx Express from October 1991 to June 1993; Vice President — Customer Service of FedEx Express from December 1988 to October 1991; and various other positions with FedEx Express from 1976 to 1988.
Christine P. Richards Executive Vice President, General Counsel and Secretary		56	Executive Vice President, General Counsel and Secretary of FedEx since June 2005; Corporate Vice President — Customer and Business Transactions of FedEx from March 2001 to June 2005; Senior Vice President and General Counsel of FedEx Services from March 2000 to June 2005; Staff Vice President — Customer and Business Transactions of FedEx from November 1999 to March 2001; Vice President — Customer and Business Transactions of FedEx Express from 1998 to November 1999; and various legal positions with FedEx Express from 1984 to 1998.

Executive officers are elected by, and serve at the discretion of, the Board of Directors. There is no arrangement or understanding between any executive officer and any person, other than a director or executive officer of FedEx or of any of its subsidiaries acting in his or her official capacity, pursuant to which any executive officer was selected. There are no family relationships between any executive officer and any other executive officer or director of FedEx or of any of its subsidiaries.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

FedEx’s common stock is listed on the New York Stock Exchange under the symbol “FDX.” As of July 11, 2011, there were 14,370 holders of record of our common stock. The following table sets forth, for the periods indicated, the high and low sale prices, as reported on the NYSE, and the cash dividends paid per share of common stock.

	Sale Prices
	High		Low		Dividend
Fiscal Year Ended May 31, 2011
Fourth Quarter	$	96.89	$	85.03	$	0.12
Third Quarter		98.52		87.54		0.12
Second Quarter		93.03		79.04		0.12
First Quarter		87.74		69.78		0.12
Fiscal Year Ended May 31, 2010
Fourth Quarter	$	97.75	$	78.29	$	0.11
Third Quarter		92.59		75.17		0.11
Second Quarter		85.43		68.06		0.11
First Quarter		70.27		49.76		0.11

FedEx also paid a cash dividend on July 1, 2011 ($0.13 per share). We expect to continue to pay regular quarterly cash dividends, though each subsequent quarterly dividend is subject to review and approval by our Board of Directors. We evaluate the dividend payment amount on an annual basis at the end of each fiscal year. There are no material restrictions on our ability to declare dividends, nor are there any material restrictions on the ability of our subsidiaries to transfer funds to us in the form of cash dividends, loans or advances. FedEx did not repurchase any of its common stock during the fourth quarter of 2011.

ITEM 6. SELECTED FINANCIAL DATA

Selected financial data as of and for the five years ended May 31, 2011 is presented on page 127 of this Annual Report on Form 10-K.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION

Management’s discussion and analysis of results of operations and financial condition is presented on pages 36 through 76 of this Annual Report on Form 10-K.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Quantitative and qualitative information about market risk is presented on page 126 of this Annual Report on Form 10-K.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

FedEx’s consolidated financial statements, together with the notes thereto and the report of Ernst & Young LLP dated July 12, 2011 thereon, are presented on pages 79 through 125 of this Annual Report on Form 10-K.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Management’s Evaluation of Disclosure Controls and Procedures

The management of FedEx, with the participation of our principal executive and financial officers, has evaluated the effectiveness of our disclosure controls and procedures in ensuring that the information required to be disclosed in our filings under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, including ensuring that such information is accumulated and communicated to FedEx management as appropriate to allow timely decisions regarding required disclosure. Based on such evaluation, our principal executive and financial officers have concluded that such disclosure controls and procedures were effective as of May 31, 2011 (the end of the period covered by this Annual Report on Form 10-K).

Assessment of Internal Control Over Financial Reporting

Management’s report on our internal control over financial reporting is presented on page 77 of this Annual Report on Form 10-K. The report of Ernst & Young LLP with respect to our internal control over financial reporting is presented on page 78 of this Annual Report on Form 10-K.

Changes in Internal Control Over Financial Reporting

During our fiscal quarter ended May 31, 2011, no change occurred in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Information regarding members of the Board of Directors, compliance with Section 16(a) of the Securities Exchange Act of 1934, as amended, FedEx’s Code of Business Conduct and Ethics and certain other aspects of FedEx’s corporate governance (such as the procedures by which FedEx’s stockholders may recommend nominees to the Board of Directors and information about the Audit Committee, including its members and our “audit committee financial expert”) will be presented in FedEx’s definitive proxy statement for its 2011 annual meeting of stockholders, which will be held on September 26, 2011, and is incorporated herein by reference. Information regarding executive officers of FedEx is included above in Part I of this Annual Report on Form 10-K under the caption “Executive Officers of the Registrant” pursuant to Instruction 3 to Item 401(b) of Regulation S-K and General Instruction G(3) of Form 10-K. Information regarding FedEx’s Code of Business Conduct and Ethics is included above in Part I, Item 1 of this Annual Report on Form 10-K under the caption “Reputation and Responsibility — Governance.”

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ITEM 11. EXECUTIVE COMPENSATION

Information regarding director and executive compensation will be presented in FedEx’s definitive proxy statement for its 2011 annual meeting of stockholders, which will be held on September 26, 2011, and is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Information regarding security ownership of certain beneficial owners and management and related stockholder matters, as well as equity compensation plan information, will be presented in FedEx’s definitive proxy statement for its 2011 annual meeting of stockholders, which will be held on September 26, 2011, and is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Information regarding certain relationships and transactions with related persons (including FedEx’s policies and procedures for the review and preapproval of related person transactions) and director independence will be presented in FedEx’s definitive proxy statement for its 2011 annual meeting of stockholders, which will be held on September 26, 2011, and is incorporated herein by reference.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Information regarding the fees for services provided by Ernst & Young LLP during 2011 and 2010 and the Audit Committee’s administration of the engagement of Ernst & Young LLP, including the Committee’s preapproval policies and procedures (such as FedEx’s Policy on Engagement of Independent Auditor), will be presented in FedEx’s definitive proxy statement for its 2011 annual meeting of stockholders, which will be held on September 26, 2011, and is incorporated herein by reference.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a)(1) and (2) Financial Statements; Financial Statement Schedules

FedEx’s consolidated financial statements, together with the notes thereto and the report of Ernst & Young LLP dated July 12, 2011 thereon, are listed on pages 34 through 35 and presented on pages 79 through 125 of this Annual Report on Form 10-K. FedEx’s “Schedule II — Valuation and Qualifying Accounts,” together with the report of Ernst & Young LLP dated July 12, 2011 thereon, is presented on pages 128 through 129 of this Annual Report on Form 10-K. All other financial statement schedules have been omitted because they are not applicable or the required information is included in FedEx’s consolidated financial statements or the notes thereto.

(a)(3) Exhibits

See the Exhibit Index on pages E-1 through E-8 for a list of the exhibits being filed or furnished with or incorporated by reference into this Annual Report on Form 10-K.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

	FEDEX CORPORATION
Dated: July 12, 2011	By:	/s/ FREDERICK W. SMITH
		Frederick W. Smith
		Chairman, President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated.

Signature	Capacity	Date
/s/ FREDERICK W. SMITH Frederick W. Smith	Chairman, President and Chief Executive Officer and Director (Principal Executive Officer)	July 12, 2011
/s/ ALAN B. GRAF, JR. Alan B. Graf, Jr.	Executive Vice President and Chief Financial Officer (Principal Financial Officer)	July 12, 2011
/s/ JOHN L. MERINO John L. Merino	Corporate Vice President and Principal Accounting Officer (Principal Accounting Officer)	July 12, 2011
/s/ JAMES L. BARKSDALE * James L. Barksdale	Director	July 12, 2011
/s/ JOHN A. EDWARDSON * John A. Edwardson	Director	July 12, 2011
/s/ J. R. HYDE, III * J. R. Hyde, III	Director	July 12, 2011
/s/ SHIRLEY ANN JACKSON * Shirley Ann Jackson	Director	July 12, 2011
/s/ STEVEN R. LORANGER * Steven R. Loranger	Director	July 12, 2011

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Signature	Capacity	Date
/s/ GARY W. LOVEMAN * Gary W. Loveman	Director	July 12, 2011
/s/ SUSAN C. SCHWAB * Susan C. Schwab	Director	July 12, 2011
/s/ JOSHUA I. SMITH * Joshua I. Smith	Director	July 12, 2011
/s/ DAVID P. STEINER * David P. Steiner	Director	July 12, 2011
/s/ PAUL S. WALSH * Paul S. Walsh	Director	July 12, 2011

*By:	/s/ JOHN L. MERINO John L. Merino	July 12, 2011
	Attorney-in-Fact

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FINANCIAL SECTION TABLE OF CONTENTS

	PAGE
Management’s Discussion and Analysis of Results of Operations and Financial Condition
Overview of Financial Section		36
Results of Operations		37
New Accounting Guidance		45
Reportable Segments		46
FedEx Services Segment		46
FedEx Express Segment		48
FedEx Ground Segment		52
FedEx Freight Segment		55
Financial Condition		58
Liquidity		58
Capital Resources		59
Liquidity Outlook		60
Contractual Cash Obligations and Off-Balance Sheet Arrangements		61
Critical Accounting Estimates		62
Retirement Plans		62
Self-Insurance Accruals		67
Long-Lived Assets		67
Contingencies		69
Risk Factors		71
Forward-Looking Statements		76

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	PAGE
Consolidated Financial Statements
Management’s Report on Internal Control over Financial Reporting		77
Reports of Independent Registered Public Accounting Firm		78
Consolidated Balance Sheets May 31, 2011 and 2010		80
Consolidated Statements of Income Years Ended May 31, 2011, 2010 and 2009		82
Consolidated Statements of Cash Flows Years Ended May 31, 2011, 2010 and 2009		83
Consolidated Statements of Changes in Stockholders’ Investment and Comprehensive Income Years Ended May 31, 2011, 2010 and 2009		84
Notes to Consolidated Financial Statements		85
Other Financial Information
Quantitative and Qualitative Disclosures about Market Risk		126
Selected Financial Data		127
Report of Independent Registered Public Accounting Firm		128
Schedule II — Valuation and Qualifying Accounts		129
Computation of Ratio of Earnings to Fixed Charges		130

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION

OVERVIEW OF FINANCIAL SECTION

The financial section of the FedEx Corporation (“FedEx”) Annual Report on Form 10-K (“Annual Report”) consists of the following Management’s Discussion and Analysis of Results of Operations and Financial Condition (“MD&A”), the Consolidated Financial Statements and the notes to the Consolidated Financial Statements, and Other Financial Information, all of which include information about our significant accounting policies, practices and the transactions that underlie our financial results. The following MD&A describes the principal factors affecting the results of operations, liquidity, capital resources, contractual cash obligations and the critical accounting estimates of FedEx. The discussion in the financial section should be read in conjunction with the other sections of this Annual Report, particularly “Item 1: Business” and our detailed discussion of risk factors included in this MD&A.

ORGANIZATION OF INFORMATION

Our MD&A is composed of three major sections: Results of Operations, Financial Condition and Critical Accounting Estimates. These sections include the following information:

• Results of Operations includes an overview of our consolidated 2011 results compared to 2010, and 2010 results compared to 2009. This section also includes a discussion of key actions and events that impacted our results, as well as our outlook for 2012.

• The overview is followed by a financial summary and analysis (including a discussion of both historical operating results and our outlook for 2012) for each of our reportable transportation segments.

• Our financial condition is reviewed through an analysis of key elements of our liquidity, capital resources and contractual cash obligations, including a discussion of our cash flows and our financial commitments.

• We conclude with a discussion of the critical accounting estimates that we believe are important to understanding certain of the material judgments and assumptions incorporated in our reported financial results.

DESCRIPTION OF BUSINESS

We provide a broad portfolio of transportation, e-commerce and business services through companies competing collectively, operating independently and managed collaboratively, under the respected FedEx brand. Our primary operating companies are Federal Express Corporation (“FedEx Express”), the world’s largest express transportation company; FedEx Ground Package System, Inc. (“FedEx Ground”), a leading provider of small-package ground delivery services; and FedEx Freight, Inc. (“FedEx Freight”), a leading U.S. provider of less-than-truckload (“LTL”) freight services. These companies represent our major service lines and, along with FedEx Corporate Services, Inc. (“FedEx Services”), form the core of our reportable segments. Our FedEx Services segment provides sales, marketing and information technology support to our transportation segments. In addition, the FedEx Services segment provides customers with retail access to FedEx Express and FedEx Ground shipping services through FedEx Office and Print Services, Inc. (“FedEx Office”) and provides customer service, technical support and billing and collection services through FedEx TechConnect, Inc. (“FedEx TechConnect”). See “Reportable Segments” for further discussion and refer to “Item 1: Business” for a more detailed description of each of our operating companies.

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The key indicators necessary to understand our operating results include:

• the overall customer demand for our various services;

• the volumes of transportation services provided through our networks, primarily measured by our average daily volume and shipment weight;

• the mix of services purchased by our customers;

• the prices we obtain for our services, primarily measured by yield (revenue per package or pound or revenue per hundredweight for LTL freight shipments);

• our ability to manage our cost structure (capital expenditures and operating expenses) to match shifting volume levels; and

• the timing and amount of fluctuations in fuel prices and our ability to recover incremental fuel costs through our fuel surcharges.

The majority of our operating expenses are directly impacted by revenue and volume levels. Accordingly, we expect these operating expenses to fluctuate on a year-over-year basis consistent with the change in revenues and volumes. Therefore, the discussion of operating expense captions focuses on the key drivers and trends impacting expenses other than changes in revenues and volume.

Except as otherwise specified, references to years indicate our fiscal year ended May 31, 2011 or ended May 31 of the year referenced and comparisons are to the prior year. References to our transportation segments include, collectively, our FedEx Express, FedEx Ground and FedEx Freight segments.

RESULTS OF OPERATIONS

CONSOLIDATED RESULTS

The following table compares summary operating results (dollars in millions, except per share amounts) for the years ended May 31:

										Percent Change
	2011 (1)			2010			2009 (2)			2011/2010			2010/2009
Revenues	$	39,304		$	34,734		$	35,497			13			(2	)
Operating income		2,378			1,998			747			19			167
Operating margin		6.1	%		5.8	%		2.1	%	30		bp	370		bp
Net income	$	1,452		$	1,184		$	98			23		NM
Diluted earnings per share	$	4.57		$	3.76		$	0.31			22		NM

(1)	Operating expenses include $133 million in costs associated with the combination of our FedEx Freight and FedEx National LTL operations, effective January 30, 2011, and a $66 million legal reserve associated with the ATA Airlines lawsuit against FedEx Express.
(2)	Operating expenses include charges of $1.2 billion ($1.1 billion, net of tax, or $3.45 per diluted share), primarily for impairment charges associated with goodwill and aircraft (described below).

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The following table shows changes in revenues and operating income by reportable segment for 2011 compared to 2010, and 2010 compared to 2009 (dollars in millions):

	Revenues												Operating Income
	Dollar Change						Percent Change						Dollar Change						Percent Change
	2011/			2010/			2011/			2010/			2011/			2010/			2011/			2010/
	2010			2009			2010			2009			2010			2009			2010			2009
FedEx Express segment(1)	$	3,026		$	(809	)		14			(4	)	$	101		$	333			9			42
FedEx Ground segment		1,046			392			14			6			301			217			29			27
FedEx Freight segment(2)		590			(94	)		14			(2	)		(22	)		(109	)		(14	)		(248	)
FedEx Services segment(3)		(86	)		(207	)		(5	)		(10	)		—			810			—			100
Other and eliminations		(6	)		(45	)	NM			NM				—			—			—			—
	$	4,570		$	(763	)		13			(2	)	$	380		$	1,251			19			167

(1)	FedEx Express segment 2011 operating expenses include a $66 million legal reserve associated with the ATA Airlines lawsuit, and 2009 operating expenses include a charge of $260 million, primarily for aircraft-related asset impairments.
(2)	FedEx Freight segment 2011 operating expenses include $133 million in costs associated with the combination of our FedEx Freight and FedEx National LTL operations, effective January 30, 2011, and 2009 operating expenses include a charge of $100 million, primarily for impairment charges associated with goodwill related to the FedEx National LTL acquisition.
(3)	FedEx Services segment 2009 operating expenses include a charge of $810 million for impairment charges associated with goodwill related to the FedEx Office acquisition.

Overview

Our results for 2011 reflect the momentum of improved global economic conditions and strong demand for our services, which drove yield growth and volume increases across all our transportation segments during 2011, particularly in FedEx International Priority (“IP”) package shipments at FedEx Express. Our FedEx Ground segment continued its exceptional performance, increasing volume, yield and operating margins. The FedEx Freight segment returned to profitability in the fourth quarter of 2011 primarily due to higher LTL yield. All of our transportation segments benefited from our yield management initiatives in 2011. Despite the strength in our businesses and significantly improved results, we incurred increased retirement plans and medical costs, higher aircraft maintenance expenses, higher costs associated with the restoration of compensation programs curtailed during the recession and one-time costs associated with the combination of our LTL operations (described below) during 2011.

The combination of our FedEx Freight and FedEx National LTL operations was completed on January 30, 2011. Our combined LTL network will increase efficiencies, reduce operational costs and provide customers both Priority and Economy LTL freight services across all lengths of haul from one integrated company. The combination resulted in the following incremental costs and charges which were incurred primarily in the second and third quarters of 2011 (in millions):

	2011
Severance	$	40
Lease terminations		20
Asset impairments		29
Impairment and other charges		89
Other program costs		44
Total program costs	$	133

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Other program costs include $15 million in 2011 of accelerated depreciation expense due to a change in the estimated useful life of certain assets impacted by the combination of these operations and other incremental costs directly associated with the program. The net cash effect of the program was immaterial, as cash proceeds from asset sales of $88 million offset severance and other cash outlays for the program.

In 2010, our results reflected the impact of the global recession, which negatively impacted volumes and yields, principally in the first half of the fiscal year. As the global and U.S. economies began to emerge from recession in the second half of 2010, we experienced significant volume growth across all of our transportation segments. Our FedEx Ground segment continued to grow throughout the recession, as customers opted for lower-priced ground transportation services and we continued to gain market share. Despite higher shipment volumes in 2010, our FedEx Freight segment had a difficult year, resulting in an operating loss caused by the highly competitive pricing environment in the LTL market due to excess industry capacity.

The following graphs for FedEx Express, FedEx Ground and FedEx Freight show selected volume trends (in thousands) for the years ended May 31:

     

     

⁽¹⁾ Package statistics do not include the operations of FedEx SmartPost.

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The following graphs for FedEx Express, FedEx Ground and FedEx Freight show selected yield trends for the years ended May 31:

     

⁽¹⁾ Package statistics do not include the operations of FedEx SmartPost.

Revenue

Revenues increased 13% during 2011 due to yield increases and volume growth across all our transportation segments. Yields improved due to higher fuel surcharges and increased base rates under our yield improvement programs, including our dimensional pricing changes for package shipments effective January 1, 2011. At FedEx Express, revenues increased 14% in 2011 led by IP volume growth in Asia, as well as domestic and IP package yield increases. At the FedEx Ground segment, revenues increased 14% in 2011 due to continued volume growth driven by market share gains and yield growth at both FedEx Ground and FedEx SmartPost. At FedEx Freight, yield increases due to our yield management programs and higher LTL fuel surcharges, and higher average daily LTL volumes led to a 14% increase in revenues in 2011.

Revenues decreased 2% during 2010 primarily due to yield decreases at FedEx Express and FedEx Freight as a result of lower fuel surcharges and a continued competitive pricing environment for our services. Increased volumes at all of our transportation segments due to improved economic conditions in the second half of the fiscal year partially offset the yield decreases in 2010. At FedEx Express, IP package volume increased 10%, led by volume growth in Asia. IP freight and U.S. domestic package volume growth also contributed to the revenue increase in 2010. At the FedEx Ground segment, market share gains resulted in a 3% increase in volumes at FedEx Ground and a 48% increase in volumes at FedEx SmartPost during 2010. At FedEx Freight, discounted pricing drove an increase in average daily LTL freight shipments, but also resulted in significant yield declines during 2010.

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Impairment and Other Charges

In 2011, we incurred impairment and other charges of $89 million related to the combination of our LTL operations at FedEx Freight (see “Overview” above for additional information). In 2010, we recorded a charge of $18 million for the impairment of goodwill related to the FedEx National LTL acquisition, eliminating the remaining goodwill attributable to this reporting unit. Our operating results for 2009 included charges of $1.2 billion ($1.1 billion, net of tax, or $3.45 per diluted share) recorded during the fourth quarter, primarily for the impairment of goodwill related to the FedEx Office and FedEx National LTL acquisitions and certain aircraft-related assets at FedEx Express. The key factor contributing to the goodwill impairment was a decline in FedEx Office’s and FedEx National LTL’s actual and forecasted financial performance as a result of weak economic conditions. The FedEx National LTL 2010 and 2009 goodwill impairment charges were included in the results of the FedEx Freight segment. The FedEx Office 2009 goodwill impairment charge was included in the results of the FedEx Services segment and was not allocated to our transportation segments, as the charge was unrelated to the core performance of those businesses.

The majority of our property and equipment impairment charges during 2009 resulted from our decision to permanently remove from service certain aircraft, along with certain excess aircraft engines, at FedEx Express. This decision was the result of efforts to optimize our express network in light of excess aircraft capacity due to weak economic conditions and the delivery of newer, more fuel-efficient aircraft.

Operating Income

The following tables compare operating expenses expressed as dollar amounts (in millions) and as a percent of revenue for the years ended May 31:

	2011			2010		2009
Operating expenses:
Salaries and employee benefits	$	15,276		$	14,027	$	13,767
Purchased transportation		5,674			4,728		4,534
Rentals and landing fees		2,462			2,359		2,429
Depreciation and amortization		1,973			1,958		1,975
Fuel		4,151			3,106		3,811
Maintenance and repairs		1,979			1,715		1,898
Impairment and other charges		89	(1)		18		1,204	(2)
Other		5,322	(3)		4,825		5,132
Total operating expenses	$	36,926		$	32,736	$	34,750

(1)	Represents charges associated with the combination of our FedEx Freight and FedEx National LTL operations, effective January 30, 2011.
(2)	Includes charges of $1.2 billion ($1.1 billion, net of tax, or $3.45 per diluted share), primarily for impairment charges associated with goodwill and aircraft (described above).
(3)	Includes a $66 million legal reserve associated with the ATA Airlines lawsuit against FedEx Express.

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	Percent of Revenue
	2011			2010			2009
Operating expenses:
Salaries and employee benefits		38.9	%		40.4	%		38.8	%
Purchased transportation		14.4			13.6			12.8
Rentals and landing fees		6.3			6.8			6.8
Depreciation and amortization		5.0			5.6			5.6
Fuel		10.6			8.9			10.7
Maintenance and repairs		5.0			4.9			5.3
Impairment and other charges		0.2			0.1			3.4
Other		13.5			13.9			14.5
Total operating expenses		93.9			94.2			97.9
Operating margin		6.1	%		5.8	%		2.1	%

In 2011, operating income increased 19% primarily due to yield and volume increases across all our transportation segments. Higher compensation and benefits, including retirement plans and medical costs, and increased maintenance and repairs expenses had a negative impact on our performance for 2011. Costs related to the combination of our FedEx Freight and FedEx National LTL operations also negatively impacted our 2011 results by $133 million. Unusually severe weather in the second half of 2011 caused widespread disruptions to our networks, which led to lost revenues and drove higher purchased transportation, salaries and wages and other operational costs. Additionally, a $66 million reserve associated with an adverse jury decision in the ATA Airlines lawsuit against FedEx Express was recognized in 2011.

Salaries and employee benefits increased 9% in 2011 due to the reinstatement of merit salary increases, increases in pension and medical costs and the reinstatement of full 401(k) company-matching contributions effective January 1, 2011. Purchased transportation increased 20% in 2011 due to volume growth, higher fuel surcharges and higher rates paid to our independent contractors at FedEx Ground, as well as costs associated with the expansion of our freight forwarding business at FedEx Trade Networks. Maintenance and repairs expense increased 15% in 2011 primarily due to an increase in maintenance events, as a result of timing, and higher utilization of our fleet driven by increased volumes. Other operating expense increased 10% primarily due to volume- and weather-related expenses.

The following graph for our transportation segments shows our average cost of jet and vehicle fuel per gallon for the years ended May 31:

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Fuel expense increased 34% during 2011 primarily due to increases in the average price per gallon of fuel and fuel consumption driven by volume increases. Based on a static analysis of the net impact of year-over-year changes in fuel prices compared to year-over-year changes in fuel surcharges, fuel had a positive impact on operating income in 2011, predominantly at FedEx Express.

Our analysis considers the estimated impact of the reduction in fuel surcharges included in the base rates charged for FedEx Express and FedEx Ground services. However, this analysis does not consider the negative effects that fuel surcharge levels may have on our business, including reduced demand and shifts by our customers to lower-yielding services. While fluctuations in fuel surcharge rates can be significant from period to period, fuel surcharges represent one of the many individual components of our pricing structure that impact our overall revenue and yield. Additional components include the mix of services sold, the base price and extra service charges we obtain for these services and the level of pricing discounts offered. In order to provide information about the impact of fuel surcharges on the trends in revenue and yield growth, we have included the comparative fuel surcharge rates in effect for 2011, 2010 and 2009 in the accompanying discussions of each of our transportation segments.

Operating income and operating margin increased in 2010 primarily as a result of the inclusion in 2009 of the impairment and other charges described above. Volume increases at our package businesses, particularly in higher-margin IP package and freight services at FedEx Express, also benefited our 2010 results. Additionally, we benefited in 2010 from several actions implemented in 2009 to lower our cost structure, including reducing base salaries, optimizing our networks by adjusting routes and equipment types, permanently and temporarily idling certain equipment and consolidating facilities; however, these benefits were partially offset by increased costs in 2010 associated with our variable incentive compensation programs. An operating loss at the FedEx Freight segment due to continued weakness in the LTL freight market constrained the earnings increase.

Maintenance and repairs expense decreased 10% in 2010 primarily due to the timing of maintenance events. Other operating expense decreased 6% in 2010 due to actions to control spending and the inclusion in the prior year of higher self-insurance reserve requirements at FedEx Ground. Purchased transportation costs increased 4% in 2010 due to increased utilization of third-party transportation providers associated primarily with our LTL freight service as a result of higher shipment volumes.

Fuel expense decreased 18% during 2010 primarily due to decreases in the average price per gallon of fuel and fuel consumption, as we lowered flight hours and improved route efficiencies. Based on a static analysis of the net impact of year-over-year changes in fuel prices compared to year-over-year changes in fuel surcharges, fuel had a significant negative impact to operating income in 2010.

Other Income and Expense

Interest expense increased $7 million during 2011 primarily due to a decrease in capitalized interest related to the timing of construction projects and progress payments on aircraft purchases. Interest expense decreased $6 million during 2010 due to increased capitalized interest primarily related to progress payments on aircraft purchases. Interest income decreased $18 million during 2010 primarily due to lower interest rates and invested balances. Other expense increased $22 million during 2010 primarily due to higher amortization of financing fees and foreign currency losses.

Income Taxes

Our effective tax rate was 35.9% in 2011, 37.5% in 2010 and 85.6% in 2009. Our 2011 rate was lower than our 2010 rate primarily due to increased permanently reinvested foreign earnings and a lower state tax rate driven principally by favorable audit and legislative developments. In 2011, our permanent reinvestment strategy with respect to unremitted earnings of our foreign subsidiaries provided a 1.3% benefit to our effective tax rate. Our total permanently reinvested foreign earnings were $640 million at the end of 2011 and $325 million at the end of 2010. Our 2009 rate was significantly impacted by goodwill impairment charges that were not deductible for income tax purposes.

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Our current federal income tax expenses in 2011, 2010, and 2009 were significantly reduced by accelerated depreciation deductions we claimed under provisions of the Tax Relief and the Small Business Jobs Acts of 2010, the American Recovery and Reinvestment Tax Act of 2009, and the Economic Stimulus Act of 2008. Those acts, designed to stimulate new business investment in the U.S., accelerated our depreciation deductions for new qualifying investments, such as our new Boeing 777 Freighter (“B777F”) aircraft. These are timing benefits only, in that the depreciation would have otherwise been recognized in later years.

The components of the provision for federal income taxes for the years ended May 31 were as follows (in millions):

	2011		2010		2009
Current	$	79	$	36	$	(35	)
Deferred		485		408		327
Total Federal Provision	$	564	$	444	$	292

For 2012, we expect our effective tax rate to be in the range of 36.0% to 38.0%. The actual rate, however, will depend on a number of factors, including the amount and source of operating income.

Additional information on income taxes, including our effective tax rate reconciliation and liabilities for uncertain tax positions, can be found in Note 11 of the accompanying consolidated financial statements.

Business Acquisitions

On February 22, 2011, FedEx Express completed the acquisition of the Indian logistics, distribution and express businesses of AFL Pvt. Ltd. and its affiliate Unifreight India Pvt. Ltd. for $96 million in cash. The financial results of the acquired businesses are included in the FedEx Express segment from the date of acquisition and were not material to our results of operations or financial condition. Substantially all of the purchase price was allocated to goodwill.

On December 15, 2010, FedEx entered into an agreement to acquire Servicios Nacionales Mupa, S.A. de C.V. (MultiPack), a Mexican domestic express package delivery company. This acquisition will be funded with cash from operations and is expected to be completed during the first quarter of 2012, subject to customary closing conditions. The financial results of the acquired company will be included in the FedEx Express segment from the date of acquisition and will be immaterial to our 2012 results.

These acquisitions will give us more robust domestic transportation networks and added capabilities in these important global markets.

Outlook

We expect moderate growth in the global economy, combined with ongoing yield improvement actions, to drive a significant improvement in earnings in 2012. Results at FedEx Express, driven by international services, are expected to be the primary driver of earnings growth during 2012. In addition, we expect our FedEx Freight segment to be profitable throughout 2012 and anticipate our FedEx Ground segment to continue to grow significantly. However, our outlook is dependent on continued strengthening in global economic conditions, particularly in industrial production, the pace of which is uncertain due to several factors, including the impact of higher fuel prices on demand. We expect growth in international trade to substantially outpace growth in the U.S. domestic economy, and our unmatched global network is uniquely positioned to service customer needs in this sector. While cost headwinds in pension plans and maintenance and repairs are expected to abate, we expect higher incentive compensation expense as a result of higher earnings and higher expenses related to the full restoration of the company-matching contributions on our 401(k) programs.

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Our capital expenditures for 2012 are expected to be approximately $4.2 billion, an increase over 2011, driven primarily by replacement vehicles and equipment to support international growth at FedEx Express. Our strategic investments in our more fuel efficient B777F and Boeing 757 (“B757”) aircraft will continue in 2012. We are committed to investing in critical long-term strategic projects focused on enhancing and broadening our service offerings to position us for stronger growth as global economic conditions continue to improve. For additional details on key 2012 capital projects, refer to the “Liquidity Outlook” section of this MD&A.

Our outlook is dependent upon a stable pricing environment for fuel, as volatility in fuel prices impacts our fuel surcharge levels, fuel expense and demand for our services. Historically, our fuel surcharges have largely offset incremental fuel costs; however, volatility in fuel costs may impact earnings because adjustments to our fuel surcharges lag changes in actual fuel prices paid. Therefore, the trailing impact of adjustments to our fuel surcharges can significantly affect our earnings either positively or negatively in the short-term.

As described in Note 17 of the accompanying consolidated financial statements and the “Independent Contractor Matters” section of our FedEx Ground segment MD&A, we are involved in a number of lawsuits and other proceedings that challenge the status of FedEx Ground’s owner-operators as independent contractors. FedEx Ground anticipates continuing changes to its relationships with its contractors. The nature, timing and amount of any changes are dependent on the outcome of numerous future events. We cannot reasonably estimate the potential impact of any such changes or a meaningful range of potential outcomes, although they could be material. However, we do not believe that any such changes will impair our ability to operate and profitably grow our FedEx Ground business.

See “Risk Factors” for a discussion of these and other potential risks and uncertainties that could materially affect our future performance.

Seasonality of Business

Our businesses are cyclical in nature, as seasonal fluctuations affect volumes, revenues and earnings. Historically, the U.S. express package business experiences an increase in volumes in late November and December. International business, particularly in the Asia-to-U.S. market, peaks in October and November in advance of the U.S. holiday sales season. Our first and third fiscal quarters, because they are summer vacation and post winter-holiday seasons, have historically experienced lower volumes relative to other periods. Normally, the fall is the busiest shipping period for FedEx Ground, while late December, June and July are the slowest periods. For FedEx Freight, the spring and fall are the busiest periods and the latter part of December, January and February are the slowest periods. For FedEx Office, the summer months are normally the slowest periods. Shipment levels, operating costs and earnings for each of our companies can also be adversely affected by inclement weather, particularly the impact of severe winter weather in our third fiscal quarter.

NEW ACCOUNTING GUIDANCE

New accounting rules and disclosure requirements can significantly impact our reported results and the comparability of our financial statements. New accounting guidance that has impacted our financial statements can be found in Note 2 of the accompanying consolidated financial statements.

In June 2011, the Financial Accounting Standards Board issued new guidance to make the presentation of items within other comprehensive income (“OCI”) more prominent. The new standard will require companies to present items of net income, items of OCI and total comprehensive income in one continuous statement or two separate consecutive statements, and companies will no longer be allowed to present items of OCI in the statement of stockholders’ equity. Reclassification adjustments between OCI and net income will be presented separately on the face of the financial statements. This new standard is effective for our fiscal year ending May 31, 2013.

We believe there is no additional new accounting guidance adopted but not yet effective that is relevant to the readers of our financial statements. However, there are numerous new proposals under development which, if and when enacted, may have a significant impact on our financial reporting.

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REPORTABLE SEGMENTS

FedEx Express, FedEx Ground and FedEx Freight represent our major service lines and, along with FedEx Services, form the core of our reportable segments. Our reportable segments include the following businesses:

FedEx Express Segment	FedEx Express (express transportation)
	FedEx Trade Networks (global trade services)
	FedEx SupplyChain Systems (logistics services)
FedEx Ground Segment	FedEx Ground (small-package ground delivery)
	FedEx SmartPost (small-parcel consolidator)
FedEx Freight Segment	FedEx Freight (LTL freight transportation)
	FedEx Custom Critical (time-critical transportation)
FedEx Services Segment	FedEx Services (sales, marketing and information technology functions)
	FedEx TechConnect (customer service, technical support, billings and collections)
	FedEx Office (document and business services and package acceptance)

Effective January 30, 2011, our FedEx Freight and FedEx National LTL businesses were merged into a single operation. FedEx Freight now offers two standard services: FedEx Freight Priority, a faster transit service with a price premium; and FedEx Freight Economy, an economical service.

FEDEX SERVICES SEGMENT

The FedEx Services segment operates combined sales, marketing, administrative and information technology functions in shared services operations that support our transportation businesses and allow us to obtain synergies from the combination of these functions. The FedEx Services segment includes: FedEx Services, which provides sales, marketing and information technology support to our other companies; FedEx TechConnect, which is responsible for customer service, technical support, billings and collections for U.S. customers of our major business units; and FedEx Office, which provides an array of document and business services and retail access to our customers for our package transportation businesses. Effective September 1, 2009, FedEx SupplyChain Systems, formerly included in the FedEx Services reporting segment, was realigned to become part of the FedEx Express reporting segment. Prior year amounts have not been reclassified to conform to the current year segment presentation because these reclassifications are immaterial.

The FedEx Services segment provides direct and indirect support to our transportation businesses, and we allocate all of the net operating costs of the FedEx Services segment (including the net operating results of FedEx Office) to reflect the full cost of operating our transportation businesses in the results of those segments. Within the FedEx Services segment allocation, the net operating results of FedEx Office are allocated to FedEx Express and FedEx Ground. The allocations of net operating costs are based on metrics such as relative revenues or estimated services provided. We believe these allocations approximate the net cost of providing these functions. We review and evaluate the performance of our transportation segments based on operating income (inclusive of FedEx Services segment allocations). For the FedEx Services segment, performance is evaluated based on the impact of its total allocated net operating costs on our transportation segments.

The operating expenses line item “Intercompany charges” on the accompanying unaudited financial summaries of our transportation segments reflects the allocations from the FedEx Services segment to the respective transportation segments. The “Intercompany charges” caption also includes charges and credits for administrative services provided between operating companies and certain other costs such as corporate management fees related to services received for general corporate oversight, including executive officers and certain legal and finance functions. We believe these allocations approximate the net cost of providing these functions.

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Effective August 1, 2009, approximately 3,600 employees (predominantly from the FedEx Freight segment) were transferred to entities within the FedEx Services segment. This internal reorganization further centralized most customer support functions, such as sales, customer service and information technology, into our shared services organizations. While the reorganization had no impact on the net operating results of any of our transportation segments, the net intercompany charges to our FedEx Freight segment increased significantly with corresponding decreases to other expense captions, such as salaries and employee benefits. The impact of this internal reorganization to the expense captions in our other segments was immaterial.

OTHER INTERSEGMENT TRANSACTIONS

Certain FedEx operating companies provide transportation and related services for other FedEx companies outside their reportable segment. Billings for such services are based on negotiated rates, which we believe approximate fair value, and are reflected as revenues of the billing segment. These rates are adjusted from time to time based on market conditions. Such intersegment revenues and expenses are eliminated in our consolidated results and are not separately identified in the following segment information, because the amounts are not material.

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FEDEX EXPRESS SEGMENT

The following tables compare revenues, operating expenses, operating expenses as a percent of revenue, operating income and operating margin (dollars in millions) for the years ended May 31:

										Percent Change
	2011			2010			2009			2011/2010			2010/2009
Revenues:
Package:
U.S. overnight box	$	6,128		$	5,602		$	6,074			9			(8	)
U.S. overnight envelope		1,736			1,640			1,855			6			(12	)
U.S. deferred		2,805			2,589			2,789			8			(7	)
Total U.S. domestic package revenue		10,669			9,831			10,718			9			(8	)
International priority		8,228			7,087			6,978			16			2
International domestic (1)		653			578			565			13			2
Total package revenue		19,550			17,496			18,261			12			(4	)
Freight:
U.S.		2,188			1,980			2,165			11			(9	)
International priority		1,722			1,303			1,104			32			18
International airfreight		283			251			369			13			(32	)
Total freight revenue		4,193			3,534			3,638			19			(3	)
Other (2)		838			525			465			60			13
Total revenues		24,581			21,555			22,364			14			(4	)
Operating expenses:
Salaries and employee benefits		9,183			8,402			8,217			9			2
Purchased transportation		1,573			1,177			1,112			34			6
Rentals and landing fees		1,672			1,577			1,613			6			(2	)
Depreciation and amortization		1,059			1,016			961			4			6
Fuel		3,553			2,651			3,281			34			(19	)
Maintenance and repairs		1,353			1,131			1,351			20			(16	)
Impairment and other charges		—			—			260	(3)		—		NM
Intercompany charges		2,043			1,940			2,103			5			(8	)
Other		2,917	(4)		2,534			2,672			15			(5	)
Total operating expenses		23,353			20,428			21,570			14			(5	)
Operating income	$	1,228		$	1,127		$	794			9			42
Operating margin		5.0	%		5.2	%		3.6	%	(20		)bp	160		bp

(1)	International domestic revenues include our international intra-country domestic express operations.
(2)	Other revenues include FedEx Trade Networks and, beginning in the second quarter of 2010, FedEx SupplyChain Systems.
(3)	Represents charges associated with aircraft-related asset impairments and other charges primarily associated with aircraft-related lease and contract termination costs and employee severance.
(4)	Includes a $66 million legal reserve associated with the ATA Airlines lawsuit.

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	Percent of Revenue
	2011			2010			2009
Operating expenses:
Salaries and employee benefits		37.4	%		39.0	%		36.7	%
Purchased transportation		6.4			5.5			5.0
Rentals and landing fees		6.8			7.3			7.2
Depreciation and amortization		4.3			4.7			4.3
Fuel		14.4			12.3			14.7
Maintenance and repairs		5.5			5.2			6.0
Impairment and other charges		—			—			1.2	(1)
Intercompany charges		8.3			9.0			9.4
Other		11.9	(2)		11.8			11.9
Total operating expenses		95.0			94.8			96.4
Operating margin		5.0	%		5.2	%		3.6	%

(1)	Includes a charge of $260 million related to aircraft-related asset impairments and other charges primarily associated with aircraft-related lease and contract termination costs and employee severance.
(2)	Includes a $66 million legal reserve associated with the ATA Airlines lawsuit.

The following table compares selected statistics (in thousands, except yield amounts) for the years ended May 31:

							Percent Change
	2011		2010		2009		2011/2010		2010/2009
Package Statistics(1)
Average daily package volume (ADV):
U.S. overnight box		1,184		1,157		1,127		2		3
U.S. overnight envelope		627		614		627		2		(2	)
U.S. deferred		873		867		849		1		2
Total U.S. domestic ADV		2,684		2,638		2,603		2		1
International priority		575		523		475		10		10
International domestic(2)		348		318		298		9		7
Total ADV		3,607		3,479		3,376		4		3
Revenue per package (yield):
U.S. overnight box	$	20.29	$	19.00	$	21.21		7		(10	)
U.S. overnight envelope		10.86		10.47		11.65		4		(10	)
U.S. deferred		12.60		11.70		12.94		8		(10	)
U.S. domestic composite		15.59		14.61		16.21		7		(10	)
International priority		56.08		53.10		57.81		6		(8	)
International domestic(2)		7.38		7.14		7.50		3		(5	)
Composite package yield		21.25		19.72		21.30		8		(7	)
Freight Statistics(1)
Average daily freight pounds:
U.S.		7,340		7,141		7,287		3		(2	)
International priority		3,184		2,544		1,959		25		30
International airfreight		1,235		1,222		1,475		1		(17	)
Total average daily freight pounds		11,759		10,907		10,721		8		2
Revenue per pound (yield):
U.S.	$	1.17	$	1.09	$	1.17		7		(7	)
International priority		2.12		2.01		2.22		5		(9	)
International airfreight		0.90		0.81		0.99		11		(18	)
Composite freight yield		1.40		1.27		1.34		10		(5	)

(1)	Package and freight statistics include only the operations of FedEx Express.
(2)	International domestic statistics include our international intra-country domestic express operations.

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FedEx Express Segment Revenues

FedEx Express segment revenues increased 14% in 2011 driven by higher yield and volumes. In 2011, IP package volume increased 10% led by volume growth from Asia, Europe and the U.S. FedEx Express U.S. domestic package yields increased 7% due to higher fuel surcharges, rate increases and increased package weights. IP package yields increased 6% due to higher fuel surcharges, increased package weights and favorable exchange rates. IP freight pounds increased 25% led by volume growth in Europe.

FedEx Express segment revenues decreased 4% in 2010 due to lower yields primarily driven by a decrease in fuel surcharges. Yield decreases during 2010 were partially offset by increased IP package volume, particularly from Asia, IP freight volume and U.S. domestic package volume due to improved global economic conditions. Lower fuel surcharges were the primary driver of decreased composite package and freight yield in 2010. U.S. domestic package yield also decreased during 2010 due to lower rates and lower package weights. In addition to lower fuel surcharges, IP package yield decreased during 2010 due to lower rates, partially offset by higher package weights and favorable exchange rates.

Our fuel surcharges are indexed to the spot price for jet fuel. Using this index, the U.S. domestic and outbound fuel surcharge and the international fuel surcharges ranged as follows for the years ended May 31:

	2011			2010			2009
U.S. Domestic and Outbound Fuel Surcharge:
Low		7.00	%		1.00	%		—	%
High		15.50			8.50			34.50
Weighted-average		9.77			6.20			17.45
International Fuel Surcharges:
Low		7.00			1.00			—
High		21.00			13.50			34.50
Weighted-average		12.36			9.47			16.75

In January 2011, we implemented a 5.9% average list price increase on FedEx Express U.S. domestic and U.S. outbound express package and freight shipments and made various changes to other surcharges, while we lowered our fuel surcharge index by two percentage points. In January 2010, we implemented a 5.9% average list price increase on FedEx Express U.S. domestic and U.S. outbound express package and freight shipments and made various changes to other surcharges, while we lowered our fuel surcharge index by two percentage points.

FedEx Express Segment Operating Income

FedEx Express segment operating income increased in 2011 due to yield and volume growth, particularly in our higher-margin IP package services, although operating margin was down slightly. Higher revenues in 2011 were partially offset by higher retirement plans and medical expenses, increased aircraft maintenance costs, the reinstatement of certain employee compensation programs, and the negative impact of severe weather during the second half of the year. Results in 2011 were also negatively impacted by a $66 million legal reserve associated with the ATA Airlines lawsuit (see Note 17 of the accompanying consolidated financial statements).

Salaries and benefits increased 9% in 2011 due to volume-related increases in labor hours, the reinstatement of several employee compensation programs including merit salary increases, higher pension and medical costs, and full 401(k) company-matching contributions. Purchased transportation costs increased 34% in 2011 due to costs associated with the expansion of our freight forwarding business at FedEx Trade Networks and IP package and freight volume growth. Other operating expenses increased 15% due to volume-related expenses and the ATA Airlines legal reserve. Maintenance and repairs expense increased 20% in 2011 primarily due to an increase in aircraft maintenance expenses as a result of timing of maintenance events and higher utilization of our fleet driven by increased volumes.

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Fuel costs increased 34% in 2011 due to increases in the average price per gallon of fuel and fuel consumption driven by volume increases. Based on a static analysis of the net impact of year-over-year changes in fuel prices compared to year-over-year changes in fuel surcharges, fuel had a positive impact in 2011. This analysis considers the estimated impact of the reduction in fuel surcharges included in the base rates charged for FedEx Express services.

FedEx Express segment operating income and operating margin increased during 2010 due to volume growth, particularly in higher-margin IP package and freight services. Reductions in network operating costs driven by lower flight hours and improved route efficiencies, as well as other actions to control spending, positively impacted our results for 2010. Our 2010 year-over-year results were also positively impacted by a $260 million charge in 2009 for aircraft-related asset impairments and other charges primarily associated with aircraft-related lease and contract termination costs and employee severance.

Maintenance and repairs expense decreased 16% in 2010 primarily due to the timing of maintenance events, as lower aircraft utilization as a result of weak economic conditions, particularly in the first half of 2010, lengthened maintenance cycles. Purchased transportation costs increased 6% in 2010 primarily due to higher air transportation volume and costs in our freight forwarding business at FedEx Trade Networks. Depreciation expense increased 6% in 2010 primarily due to the addition of 21 aircraft placed into service during the year. Intercompany charges decreased 8% in 2010 primarily due to lower allocated information technology costs and lower net operating costs at FedEx Office.

Fuel costs decreased 19% in 2010 due to decreases in the average price per gallon of fuel and fuel consumption. Based on a static analysis of the net impact of year-over-year changes in fuel prices compared to year-over-year changes in fuel surcharges, fuel had a significant negative impact to operating income in 2010. This analysis considers the estimated impact of the reduction in fuel surcharges included in the base rates charged for FedEx Express services.

FedEx Express Segment Outlook

In 2012, we expect revenue growth at FedEx Express to be driven by continued growth in our international services as international economic conditions are expected to improve at a faster rate than in the U.S. We also anticipate improvement in both domestic and international yields through ongoing yield management initiatives.

FedEx Express segment operating income and operating margin are expected to increase in 2012, driven by continued growth in international package and freight services, and productivity enhancements such as improving on-road productivity, sort efficiency and efficiencies in our aircraft maintenance processes. We anticipate that increases in merit pay, higher incentive compensation and increased depreciation will dampen our earnings growth in 2012.

Capital expenditures at FedEx Express are expected to increase in 2012 driven by replacement vehicle and equipment purchases. In 2012, capital expenditures will also include continued investments for the new B777F and B757 aircraft. These aircraft capital expenditures are necessary to achieve significant long-term operating savings and to support projected long-term international volume growth.

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FEDEX GROUND SEGMENT

The following tables compare revenues, operating expenses, operating expenses as a percent of revenue, operating income and operating margin (dollars in millions) and selected package statistics (in thousands, except yield amounts) for the years ended May 31:

										Percent Change
	2011			2010			2009			2011/2010			2010/2009
Revenues:
FedEx Ground	$	7,855		$	6,958		$	6,670			13			4
FedEx SmartPost		630			481			377			31			28
Total revenues		8,485			7,439			7,047			14			6
Operating expenses:
Salaries and employee benefits		1,282			1,158			1,102			11			5
Purchased transportation		3,431			2,966			2,918			16			2
Rentals		263			244			222			8			10
Depreciation and amortization		337			334			337			1			(1	)
Fuel		12			8			9			50			(11	)
Maintenance and repairs		169			166			147			2			13
Intercompany charges		897			795			710			13			12
Other		769			744			795			3			(6	)
Total operating expenses		7,160			6,415			6,240			12			3
Operating income	$	1,325		$	1,024		$	807			29			27
Operating margin		15.6	%		13.8	%		11.5	%	180		bp	230		bp
Average daily package volume:
FedEx Ground		3,746			3,523			3,404			6			3
FedEx SmartPost		1,432			1,222			827			17			48
Revenue per package (yield):
FedEx Ground	$	8.17		$	7.73		$	7.70			6			—
FedEx SmartPost	$	1.72		$	1.56		$	1.81			10			(14	)

	Percent of Revenue
	2011			2010			2009
Operating expenses:
Salaries and employee benefits		15.1	%		15.5	%		15.6	%
Purchased transportation		40.4			39.9			41.4
Rentals		3.1			3.3			3.1
Depreciation and amortization		4.0			4.5			4.8
Fuel		0.1			0.1			0.1
Maintenance and repairs		2.0			2.2			2.1
Intercompany charges		10.6			10.7			10.1
Other		9.1			10.0			11.3
Total operating expenses		84.4			86.2			88.5
Operating margin		15.6	%		13.8	%		11.5	%

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FedEx Ground Segment Revenues

FedEx Ground segment revenues increased 14% during 2011 due to volume and yield increases at both FedEx Ground and FedEx SmartPost.

FedEx Ground average daily package volume increased 6% during 2011 due to continued growth in our commercial business and our FedEx Home Delivery service. The 6% yield improvement at FedEx Ground during 2011 was primarily due to rate increases, higher fuel surcharges and higher extra service revenue, particularly in residential surcharges.

FedEx SmartPost average daily volume grew 17% during 2011 primarily as a result of growth in e-commerce business, gains in market share and the introduction of new service offerings. Yields increased 10% during 2011 primarily due to growth in higher yielding services, improved fuel surcharges and lower postage costs as a result of increased deliveries to United States Postal Service (“USPS”) final destination facilities.

FedEx Ground segment revenues increased 6% during 2010 due to volume growth at both FedEx Ground and FedEx SmartPost, partially offset by declines in yield at FedEx SmartPost. FedEx Ground average daily package volume increased 3% during 2010 due to growth in our commercial business and our FedEx Home Delivery service. The slight yield improvement at FedEx Ground during 2010 was primarily due to higher base rates and increased extra service revenue, but was mostly offset by higher customer discounts and lower fuel surcharges. FedEx SmartPost volumes grew 48% during 2010 primarily as a result of market share gains, while yields decreased 14% during 2010 due to changes in customer and service mix.

The FedEx Ground fuel surcharge is based on a rounded average of the national U.S. on-highway average price for a gallon of diesel fuel, as published by the Department of Energy. Our fuel surcharge ranged as follows for the years ended May 31:

	2011			2010			2009
Low		5.50	%		2.75	%		2.25	%
High		8.50			5.50			10.50
Weighted-average		6.20			4.23			6.61

In January 2011, we implemented a 4.9% list price increase for FedEx Ground and FedEx Home Delivery services. The full average rate increase of 5.9% was partially offset by adjusting the fuel price threshold at which the fuel surcharge begins, reducing the fuel surcharge by one percentage point. Additional changes were made to other FedEx Ground surcharges and FedEx SmartPost rates. In January 2010, we implemented a 4.9% average list price increase and made various changes to other surcharges, including modifying the fuel surcharge table, on FedEx Ground shipments.

FedEx Ground Segment Operating Income

During 2011, FedEx Ground segment operating income increased 29% and operating margin increased 180 basis points due to improved yield and higher volume resulting from market share growth. We have realized a higher retention of our annual rate increase this year as more customers recognize the competitive advantage that we maintain across many shipping lanes in the U.S. We have also improved our customers’ experience by dramatically reducing our package loss and damage claims while maintaining exceptional service levels. Purchased transportation costs increased 16% in 2011 primarily due to volume growth, higher fuel costs and higher rates paid to our independent contractors. Salaries and employee benefits expense increased 11% in 2011 due primarily to increased staffing at FedEx Ground and FedEx SmartPost to support volume growth and higher pension and medical costs. Intercompany charges increased in 2011 primarily due to higher allocated information technology costs.

FedEx Ground segment operating income and operating margin increased during 2010 due to higher package volume, lower self-insurance expenses and improved productivity. Improved performance at FedEx SmartPost also contributed to the operating income and operating margin increase. The increase in salaries and employee benefits expense during 2010 was primarily due to accruals for our variable incentive compensation programs, increased staffing at FedEx SmartPost to support volume growth and increased healthcare costs. Purchased transportation costs increased 2% during 2010 primarily as a result of higher package volume. Rent expense increased during 2010 primarily due to higher spending on facilities associated with our multi-year network expansion plan. Intercompany charges increased 12% in 2010 primarily due to higher allocated information technology costs (formerly direct charges). Other operating expense decreased during 2010 due to higher self-insurance reserve requirements in 2009.

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Evolution of Independent Contractor Model

Although FedEx Ground is involved in numerous lawsuits and other proceedings (such as state tax audits or other administrative challenges) where the classification of its independent contractors is at issue, a number of recent judicial decisions support our classification and we believe our relationship with the contractors is generally excellent. For a description of these proceedings, see “Risk Factors” and Note 17 of the accompanying consolidated financial statements.

FedEx Ground has made changes to its relationships with contractors that, among other things, provide incentives for improved service and enhanced regulatory and other compliance by the contractors. For example, FedEx Ground has implemented or is implementing its Independent Service Provider (“ISP”) model in a number of states. The ISP model requires pickup-and-delivery contractors based in those states to, among other things: (i) assume responsibility for the pickup-and-delivery operations of an entire geographic service area that includes multiple routes, and (ii) negotiate independent agreements with FedEx Ground, rather than agree to a standard contract.

As of May 31, 2011, FedEx Ground has transitioned to the ISP model in Maryland, New Hampshire, Rhode Island and Vermont, and plans to complete transition to the ISP model in Connecticut, Delaware, Illinois, Iowa, Maine, Massachusetts, Minnesota, Mississippi, Missouri, Montana, North Dakota, South Dakota and Tennessee during 2012. Based upon the success of this model, FedEx Ground may possibly transition to it in other states as well.

In addition, because of state-specific legal and regulatory issues, FedEx Ground only contracts with contractors that (i) are organized as corporations registered and in good standing under applicable state law, and (ii) ensure that their personnel who provide services under an operating agreement with FedEx Ground are treated as their employees. FedEx Ground also has an ongoing nationwide program to incentivize contractors who choose to grow their businesses by adding routes. During May 2011, approximately 80% of FedEx Ground’s package volume was delivered by multiple route owner-operators or independent service providers.

FedEx Ground Segment Outlook

In 2012, we expect the FedEx Ground segment revenue growth will be led by continued improvement in commercial, FedEx Home Delivery and FedEx SmartPost volumes, resulting in additional market share gains. FedEx SmartPost is expected to continue to strengthen its market position by continuing to leverage the FedEx Ground network to enter the optimal USPS entry point. Yields for FedEx Ground are expected to improve in 2012 as a result of yield management initiatives and growth in our higher yielding FedEx Home Delivery service.

We expect the FedEx Ground segment to provide strong operating income growth in 2012 due to efficiency improvements such as an automated operational planning system and improved transit time across numerous shipping lanes. However, we expect to incur higher purchased transportation costs due to higher rates paid to our independent contractors and higher variable incentive compensation in 2012.

We are committed to investing in the FedEx Ground network because of the anticipated growth opportunities within this market. Capital spending is expected to increase in 2012, with the majority of our spending resulting from our continued network expansion and productivity-enhancing technologies.

We will continue to vigorously defend various attacks against our independent contractor model and incur ongoing legal costs as a part of this process. While we believe that FedEx Ground’s owner-operators are properly classified as independent contractors, it is reasonably possible that we could incur a material loss in connection with one or more of these matters or be required to make material changes to our contractor model. However, we do not believe that any such changes will impair our ability to operate and profitably grow our FedEx Ground business.

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FEDEX FREIGHT SEGMENT

The following tables compare revenues, operating expenses, operating expenses as a percent of revenue, operating loss and operating margin (dollars in millions) and selected statistics for the years ended May 31:

										Percent Change
	2011			2010			2009 (3)			2011/2010			2010/2009
Revenues	$	4,911		$	4,321		$	4,415			14			(2	)
Operating expenses:
Salaries and employee benefits		2,303			2,128			2,247			8			(5	)
Purchased transportation		779			690			540			13			28
Rentals		122			116			139			5			(17	)
Depreciation and amortization		205			198			224			4			(12	)
Fuel		585			445			520			31			(14	)
Maintenance and repairs		182			148			153			23			(3	)
Impairment and other charges(1)		89			18			100			394			(82	)
Intercompany charges(2)		427			351			109			22			222
Other		394			380			427			4			(11	)
Total operating expenses		5,086			4,474			4,459			14			—
Operating loss	$	(175	)	$	(153	)	$	(44	)		(14	)		(248	)
Operating margin		(3.6	)%		(3.5	)%		(1.0	)%	(10		)bp	(250		)bp
Average daily LTL shipments (in thousands)		86.0			82.3			74.4			4			11
Weight per LTL shipment (lbs)		1,144			1,134			1,126			1			1
LTL yield (revenue per hundredweight)	$	18.24		$	17.07		$	19.07			7			(10	)

(1)	Includes severance, impairment and other charges associated with the combination of our FedEx Freight and FedEx National LTL operations, effective January 30, 2011. In 2010 and 2009, this charge represents impairment charges associated with goodwill related to the FedEx National LTL acquisition. The charge in 2009 also includes other charges primarily associated with employee severance.
(2)	Certain functions were transferred from the FedEx Freight segment to FedEx Services and FedEx TechConnect effective August 1, 2009. For 2011 and 2010, the costs associated with these functions, previously a direct charge, were allocated to the FedEx Freight segment through intercompany allocations.
(3)	Includes Caribbean Transportation Services, which was merged into FedEx Express effective June 1, 2009.

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	Percent of Revenue
	2011			2010			2009
Operating expenses:
Salaries and employee benefits		46.9	%		49.2	%		50.9	%
Purchased transportation		15.9			16.0			12.2
Rentals		2.5			2.7			3.1
Depreciation and amortization		4.2			4.6			5.0
Fuel		11.9			10.3			11.8
Maintenance and repairs		3.7			3.4			3.5
Impairment and other charges(1)		1.8			0.4			2.3
Intercompany charges(2)		8.7			8.1			2.5
Other		8.0			8.8			9.7
Total operating expenses		103.6			103.5			101.0
Operating margin		(3.6	)%		(3.5	)%		(1.0)	%

(1)	Includes severance, impairment and other charges associated with the combination of our FedEx Freight and FedEx National LTL operations, effective January 30, 2011. In 2010 and 2009, this charge represents impairment charges associated with goodwill related to the FedEx National LTL acquisition. The charge in 2009 also includes other charges primarily associated with employee severance.
(2)	Certain functions were transferred from the FedEx Freight segment to FedEx Services and FedEx TechConnect effective August 1, 2009. For 2011 and 2010, the costs associated with these functions, previously a direct charge, were allocated to the FedEx Freight segment through intercompany allocations.

FedEx Freight Segment Revenues

FedEx Freight segment revenues increased 14% in 2011 due to higher LTL yield and average daily LTL shipments. LTL yields increased 7% during 2011 due to our yield management programs, which began during the fourth quarter of 2010 and continued throughout 2011, and higher fuel surcharges. Under these programs, LTL yields have increased sequentially in each of the past four quarters, while average daily LTL shipments fell during the second half of 2011. For the full year, average daily LTL shipments increased 4% in 2011 primarily due to volume increases during the first half of 2011 resulting from the impact of discounted pricing in contracts signed during 2010.

In 2010, FedEx Freight segment revenues decreased primarily due to lower LTL yield and the merger of Caribbean Transportation Services into FedEx Express effective June 1, 2009, mostly offset by higher average daily LTL shipments. LTL yield decreased 10% during 2010 due to the highly competitive LTL freight market, resulting from excess capacity and lower fuel surcharges. Discounted pricing drove an increase in average daily LTL shipments of 11% during 2010.

The indexed LTL fuel surcharge is based on the average of the national U.S. on-highway average price for a gallon of diesel fuel, as published by the Department of Energy. The indexed LTL fuel surcharge ranged as follows for the years ended May 31:

	2011			2010			2009
Low		15.10	%		10.80	%		8.30	%
High		20.70			16.10			23.90
Weighted-average		17.00			14.00			15.70

In November 2010, we implemented a 6.9% general rate increase for FedEx Freight shipments. In February 2010, we implemented 5.9% general rate increases for FedEx Freight and FedEx National LTL shipments.

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FedEx Freight Segment Operating Loss

The FedEx Freight segment operating loss in 2011 included costs associated with the combination of our FedEx Freight and FedEx National LTL operations and the significant impact from severe weather in the second half of the year. We incurred costs associated with the combination of $133 million in 2011, including $89 million recorded in the “Impairment and other charges” caption of the consolidated income statement (see “Overview” above for additional information).

Salaries and employee benefits increased 8% in 2011 primarily due to volume-related increases in labor, wage increases, higher healthcare and pension costs, and the reinstatement of full 401(k) company-matching contributions. Purchased transportation costs increased 13% in 2011 due to higher shipment volumes and higher rates. Fuel costs increased 31% in 2011 due to a higher average price per gallon of diesel fuel and increased fuel consumption as a result of higher shipment volumes. Based on a static analysis of the net impact of year-over-year changes in fuel prices compared to year-over-year changes in fuel surcharges, fuel had a slightly favorable impact to operating income in 2011. Maintenance and repairs expense increased 23% in 2011 due to higher volumes and the aging of our fleet. Also, higher intercompany charges in 2011 reflect the transfer of sales and customer service employees from the FedEx Freight segment entities in the first quarter of 2010 (described below).

A weak pricing environment, which led to aggressive discounting for our LTL freight services, resulted in an operating loss in 2010 at the FedEx Freight segment. The actions implemented in 2009 to lower our cost structure were more than offset by the negative impacts of lower LTL yields and higher volume-related costs, as significantly higher shipment levels required increased purchased transportation and other expenses during 2010. In addition, we recorded a charge of $18 million for the impairment of the remaining goodwill related to the FedEx National LTL acquisition.

Intercompany charges increased in 2010 due to expenses associated with the functions of approximately 2,700 FedEx Freight segment employees that were transferred to FedEx Services and FedEx TechConnect in the first quarter of 2010. The costs of these functions were previously a direct charge. Purchased transportation costs increased 28% in 2010 due to increased utilization of third-party transportation providers, which were required to support higher shipment volumes. Fuel costs decreased 14% during 2010 due to a lower average price per gallon of diesel fuel, partially offset by increased fuel consumption as a result of higher shipment volumes. Based on a static analysis of the net impact of year-over-year changes in fuel prices compared to year-over-year changes in fuel surcharges, fuel had a negative impact to operating income in 2010. Rent expense decreased 17% and other operating expense decreased 11% in 2010 due to the merger of Caribbean Transportation Services into FedEx Express effective June 1, 2009. Depreciation and amortization expense decreased 12% in 2010 due to the impact of the transfer of employees from the FedEx Freight segment to FedEx Services and FedEx TechConnect during the first quarter of 2010.

FedEx Freight Segment Outlook

In 2012, we expect revenue growth at the FedEx Freight segment to be driven by continued growth in our Priority and Economy service lines as customers increase their utilization of our new integrated LTL network. We expect yield improvement across all service and customer segments due to our unique value proposition and yield management initiatives.

We expect the FedEx Freight segment to be profitable throughout 2012 due to continued yield management initiatives and the successful integration of our operations and optimization of our LTL network. In addition, we will continue to improve productivity and efficiency across our integrated network through technology investments focused on network and equipment planning and customer automation. These investments will further enhance our already outstanding customer service levels.

Capital expenditures are expected to increase significantly in 2012 with the majority of our spending for replacement of vehicles and freight handling equipment.

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FINANCIAL CONDITION

LIQUIDITY

Cash and cash equivalents totaled $2.3 billion at May 31, 2011, compared to $2.0 billion at May 31, 2010. The following table provides a summary of our cash flows for the periods ended May 31 (in millions):

	2011			2010			2009
Operating activities:
Net income	$	1,452		$	1,184		$	98
Noncash impairment and other charges		29			18			1,103
Other noncash charges and credits		2,892			2,514			2,554
Changes in assets and liabilities		(332	)		(578	)		(1,002	)
Cash provided by operating activities		4,041			3,138			2,753
Investing activities:
Capital expenditures		(3,434	)		(2,816	)		(2,459	)
Business acquisition, net of cash acquired		(96	)		—			—
Proceeds from asset dispositions and other		111			35			76
Cash used in investing activities		(3,419	)		(2,781	)		(2,383	)
Financing activities:
Proceeds from debt issuance		—			—			1,000
Principal payments on debt		(262	)		(653	)		(501	)
Dividends paid		(151	)		(138	)		(137	)
Other		126			99			38
Cash (used in) provided by financing activities		(287	)		(692	)		400
Effect of exchange rate changes on cash		41			(5	)		(17	)
Net increase (decrease) in cash and cash equivalents	$	376		$	(340	)	$	753

Cash Provided by Operating Activities. Cash flows from operating activities increased $903 million in 2011 primarily due to increased earnings in 2011 and lower pension contributions. Cash flows from operating activities increased $385 million in 2010 primarily due to the receipt of income tax refunds of $279 million and increased income. We made contributions of $480 million to our tax-qualified U.S. domestic pension plans (“U.S. Pension Plans”) during 2011, including $121 million in voluntary contributions and contributions of $848 million to our U.S. Pension Plans during 2010, including $495 million in voluntary contributions. We made contributions of $1.1 billion to our U.S. Pension Plans during 2009.

Cash Used in Investing Activities. Capital expenditures were 22% higher in 2011 and 15% higher in 2010 largely due to increased spending at FedEx Express. See “Capital Resources” for a discussion of capital expenditures during 2011 and 2010.

Financing Activities. We have a shelf registration statement filed with the Securities and Exchange Commission (“SEC”) that allows us to sell, in one or more future offerings, any combination of our unsecured debt securities and common stock. During 2011, we repaid our $250 million 7.25% unsecured notes that matured on February 15, 2011. During 2010, we repaid our $500 million 5.50% notes that matured on August 15, 2009 using cash from operations and a portion of the proceeds of our January 2009 $1 billion senior unsecured debt offering. During 2011, we made principal payments in the amount of $12 million related to capital lease obligations. During 2010, we made principal payments in the amount of $153 million related to capital lease obligations.

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A $1 billion revolving credit facility is available to finance our operations and other cash flow needs and to provide support for the issuance of commercial paper. This five-year credit agreement was entered into on April 26, 2011, and replaced the $1 billion three-year credit agreement dated July 22, 2009. The agreement contains a financial covenant, which requires us to maintain a leverage ratio of adjusted debt (long-term debt, including the current portion of such debt, plus six times our last four fiscal quarters’ rentals and landing fees) to capital (adjusted debt plus total common stockholders’ investment) that does not exceed 0.7 to 1.0. Our leverage ratio of adjusted debt to capital was 0.5 at May 31, 2011. Under this financial covenant, our additional borrowing capacity is capped, although this covenant continues to provide us with ample liquidity, if needed. We are in compliance with this and all other restrictive covenants of our revolving credit agreement and do not expect the covenants to affect our operations, including our liquidity or borrowing capacity. As of May 31, 2011, no commercial paper was outstanding and the entire $1 billion under the revolving credit facility was available for future borrowings.

CAPITAL RESOURCES

Our operations are capital intensive, characterized by significant investments in aircraft, vehicles, technology, facilities, and package-handling and sort equipment. The amount and timing of capital additions depend on various factors, including pre-existing contractual commitments, anticipated volume growth, domestic and international economic conditions, new or enhanced services, geographical expansion of services, availability of satisfactory financing and actions of regulatory authorities.

The following table compares capital expenditures by asset category and reportable segment for the years ended May 31 (in millions):

							Percent Change
	2011		2010		2009		2011/2010			2010/2009
Aircraft and related equipment	$	1,988	$	1,537	$	925		29			66
Facilities and sort equipment		555		630		742		(12	)		(15	)
Vehicles		282		220		319		28			(31	)
Information and technology investments		455		289		298		57			(3	)
Other equipment		154		140		175		10			(20	)
Total capital expenditures	$	3,434	$	2,816	$	2,459		22			15
FedEx Express segment		2,467		1,864		1,348		32			38
FedEx Ground segment		426		400		636		7			(37	)
FedEx Freight segment		153		212		240		(28	)		(12	)
FedEx Services segment		387		340		235		14			45
Other		1		—		—		—			—
Total capital expenditures	$	3,434	$	2,816	$	2,459		22			15

Capital expenditures during 2011 were higher than the prior-year period primarily due to increased spending at FedEx Express for aircraft and aircraft-related equipment and at FedEx Services for information technology investments. Aircraft and aircraft-related equipment purchases at FedEx Express during 2011 included the delivery of six new B777Fs and 22 B757s. Capital expenditures during 2010 were higher than the prior year primarily due to increased spending at FedEx Express for aircraft and aircraft-related equipment. Aircraft and aircraft-related equipment purchases at FedEx Express during 2010 included six new B777Fs and 12 B757s. FedEx Services capital expenditures increased in 2010 due to information technology facility expansions and projects. Capital spending at FedEx Ground decreased in 2010 due to decreased spending for facilities and sort equipment and vehicles.

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LIQUIDITY OUTLOOK

We believe that our existing cash and cash equivalents, cash flow from operations, and available financing sources will be adequate to meet our liquidity needs, including working capital, capital expenditure requirements and debt payment obligations. Our cash and cash equivalents balance at May 31, 2011 includes $300 million of cash in offshore jurisdictions associated with our permanent reinvestment strategy. We do not believe that the indefinite reinvestment of these funds offshore impairs our ability to meet our domestic debt or working capital obligations. Although we expect higher capital expenditures in 2012, we anticipate that our cash flow from operations will be sufficient to fund these expenditures. Historically, we have been successful in obtaining unsecured financing, from both domestic and international sources, although the marketplace for such investment capital can become restricted depending on a variety of economic factors.

Our capital expenditures are expected to be $4.2 billion in 2012 and will include spending for aircraft and aircraft-related equipment at FedEx Express, network expansion at FedEx Ground and revenue equipment at the FedEx Freight segment. We expect approximately 59% of capital expenditures in 2012 will be designated for growth initiatives and 41% dedicated to maintaining our existing operations. Our capital expenditures are expected to increase in 2012 due to spending for vehicle equipment and on-going investments in aircraft programs. Our expected capital expenditures for 2012 include $2.0 billion in investments for delivery of aircraft as well as progress payments toward future aircraft deliveries at FedEx Express, including B757s and the B777F which are significantly more fuel-efficient per unit than the aircraft type previously utilized. Our B757 aircraft are replacing our Boeing 727 aircraft, and we expect to be completely transitioned out of this aircraft type by 2016. We will benefit from the tax expensing and accelerated depreciation provisions of the Tax Relief Act of 2010 on qualifying capital investments we make in 2012.

We have agreed to purchase a total of 45 B777F aircraft (12 of which were in service at May 31, 2011, and an additional seven to be delivered in 2012). Our obligation to purchase 15 of these aircraft is conditioned upon there being no event that causes FedEx Express or its employees not to be covered by the Railway Labor Act of 1926, as amended. These aircraft-related capital expenditures are necessary to achieve significant long-term operating savings and to support projected long-term international volume growth. Our ability to delay the timing of these aircraft-related expenditures is limited without incurring significant costs to modify existing purchase agreements.

For 2012, we anticipate making required contributions to our U.S. Pension Plans totaling approximately $500 million. Our U.S. Pension Plans have ample funds to meet expected benefit payments. In 2012, we have scheduled principal and interest payments of $25 million on capital leases.

Standard & Poor’s has assigned us a senior unsecured debt credit rating of BBB and commercial paper rating of A-2 and a ratings outlook of “stable.” During the third quarter of 2010, Moody’s Investors Service reaffirmed our senior unsecured debt credit rating of Baa2 and commercial paper rating of P-2 and raised our ratings outlook to “stable.” If our credit ratings drop, our interest expense may increase. If our commercial paper ratings drop below current levels, we may have difficulty utilizing the commercial paper market. If our senior unsecured debt credit ratings drop below investment grade, our access to financing may become limited.

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CONTRACTUAL CASH OBLIGATIONS AND OFF-BALANCE SHEET ARRANGEMENTS

The following table sets forth a summary of our contractual cash obligations as of May 31, 2011. Certain of these contractual obligations are reflected in our balance sheet, while others are disclosed as future obligations under accounting principles generally accepted in the United States. Except for the current portion of long-term debt and capital lease obligations, this table does not include amounts already recorded in our balance sheet as current liabilities at May 31, 2011. Accordingly, this table is not meant to represent a forecast of our total cash expenditures for any of the periods presented.

	Payments Due by Fiscal Year (Undiscounted)
	(in millions)
	2012		2013		2014		2015		2016		Thereafter		Total
Operating activities:
Operating leases	$	1,794	$	1,654	$	1,465	$	1,354	$	1,192	$	6,533	$	13,992
Non-capital purchase obligations and other		209		97		35		24		11		132		508
Interest on long-term debt		126		98		97		78		78		1,659		2,136
Quarterly contributions to our U.S. Pension Plans		500		—		—		—		—		—		500
Investing activities:
Aircraft and aircraft-related capital commitments		1,480		1,086		781		569		584		1,470		5,970
Other capital purchase obligations		210		8		8		6		—		—		232
Financing activities:
Debt		—		300		250		—		—		989		1,539
Capital lease obligations		25		119		2		2		2		13		163
Total	$	4,344	$	3,362	$	2,638	$	2,033	$	1,867	$	10,796	$	25,040

We have certain contingent liabilities that are not accrued in our balance sheet in accordance with accounting principles generally accepted in the United States. These contingent liabilities are not included in the table above.

We have other long-term liabilities reflected in our balance sheet, including deferred income taxes, qualified and nonqualified pension and postretirement healthcare plan liabilities and other self-insurance accruals. The payment obligations associated with these liabilities are not reflected in the table above due to the absence of scheduled maturities. Therefore, the timing of these payments cannot be determined, except for amounts estimated to be payable within 12 months, which are included in current liabilities. Included in the table above are anticipated quarterly contributions to our U.S. Pension Plans totaling approximately $500 million for 2012 that begin in the first quarter.

Open purchase orders that are cancelable are not considered unconditional purchase obligations for financial reporting purposes and are not included in the table above. Such purchase orders often represent authorizations to purchase rather than binding agreements. See Note 16 of the accompanying consolidated financial statements for more information.

Operating Activities

In accordance with accounting principles generally accepted in the United States, future contractual payments under our operating leases (totaling $14.0 billion on an undiscounted basis) are not recorded in our balance sheet. Credit rating agencies routinely use information concerning minimum lease payments required for our operating leases to calculate our debt capacity. The amounts reflected in the table above for operating leases represent future minimum lease payments under noncancelable operating leases (principally aircraft and facilities) with an initial or remaining term in excess of one year at May 31, 2011. In the past, we financed a significant portion of our aircraft needs (and certain other equipment needs) using operating leases (a type of “off-balance sheet financing”). At the time that the decision to lease was made, we determined that these operating leases would provide economic benefits favorable to ownership with respect to market values, liquidity or after-tax cash flows.

The amounts reflected for purchase obligations represent noncancelable agreements to purchase goods or services that are not capital-related. Such contracts include those for printing and advertising and promotions contracts.

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Included in the table above within the caption entitled “Non-capital purchase obligations and other” is our estimate of the current portion of the liability ($1 million) for uncertain tax positions. We cannot reasonably estimate the timing of the long-term payments or the amount by which the liability will increase or decrease over time; therefore, the long-term portion of the liability ($68 million) is excluded from the table. See Note 11 of the accompanying consolidated financial statements for further information.

The amounts reflected in the table above for interest on long-term debt represent future interest payments due on our long-term debt, all of which are fixed rate.

Investing Activities

The amounts reflected in the table above for capital purchase obligations represent noncancelable agreements to purchase capital-related equipment. Such contracts include those for certain purchases of aircraft, aircraft modifications, vehicles, facilities, computers and other equipment. Commitments to purchase aircraft in passenger configuration do not include the attendant costs to modify these aircraft for cargo transport unless we have entered into noncancelable commitments to modify such aircraft.

Financing Activities

We have certain financial instruments representing potential commitments, not reflected in the table above, that were incurred in the normal course of business to support our operations, including surety bonds and standby letters of credit. These instruments are required under certain U.S. self-insurance programs and are also used in the normal course of international operations. The underlying liabilities insured by these instruments are reflected in our balance sheets, where applicable. Therefore, no additional liability is reflected for the surety bonds and letters of credit themselves.

The amounts reflected in the table above for long-term debt represent future scheduled payments on our long-term debt. We currently have no scheduled debt payments in 2012.

CRITICAL ACCOUNTING ESTIMATES

The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make significant judgments and estimates to develop amounts reflected and disclosed in the financial statements. In many cases, there are alternative policies or estimation techniques that could be used. We maintain a thorough process to review the application of our accounting policies and to evaluate the appropriateness of the many estimates that are required to prepare the financial statements of a complex, global corporation. However, even under optimal circumstances, estimates routinely require adjustment based on changing circumstances and new or better information.

The estimates discussed below include the financial statement elements that are either the most judgmental or involve the selection or application of alternative accounting policies and are material to our financial statements. Management has discussed the development and selection of these critical accounting estimates with the Audit Committee of our Board of Directors and with our independent registered public accounting firm.

RETIREMENT PLANS

OVERVIEW. We sponsor programs that provide retirement benefits to most of our employees. These programs include defined benefit pension plans, defined contribution plans and postretirement healthcare plans.

Pension benefits for most employees are accrued under a cash balance formula we call the Portable Pension Account. Under the Portable Pension Account, the retirement benefit is expressed as a dollar amount in a notional account that grows with annual credits based on pay, age and years of credited service, and interest on the notional account balance. The Portable Pension Account benefit is payable as a lump sum or an annuity at retirement at the election of the employee. The plan interest credit rate varies from year to year based on a U.S. Treasury index. Prior to 2009, certain employees earned benefits using a traditional pension formula (based on average earnings and years of service); however, benefits under this formula were capped on May 31, 2008.

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The current rules for pension accounting are complex and can produce tremendous volatility in our results, financial condition and liquidity. Our pension expense is primarily a function of the value of our plan assets and the discount rate used to measure our pension liabilities at a single point in time at the end of our fiscal year (the measurement date). Both of these factors are significantly influenced by the stock and bond markets, which in recent years have experienced substantial volatility.

In addition to expense volatility, we are required to record year-end adjustments to our balance sheet on an annual basis for the net funded status of our pension and postretirement healthcare plans. These adjustments have fluctuated significantly over the past several years and like our pension expense, are a result of the discount rate and value of our plan assets at the measurement date. The funded status of our plans also impacts our liquidity, as current funding laws require increasingly aggressive funding levels for our pension plans. However, the cash funding rules operate under a completely different set of assumptions and standards than those used for financial reporting purposes, so our actual cash funding requirements can differ materially from our reported funded status.

Our retirement plans cost is included in the “Salaries and Employee Benefits” caption in our consolidated income statements. A summary of our retirement plans costs over the past three years is as follows (in millions):

	2011		2010		2009
U.S. domestic and international pension plans	$	543	$	308	$	177
U.S. domestic and international defined contribution plans		257		136		237
Postretirement healthcare plans		60		42		57
	$	860	$	486	$	471

Total retirement plans cost for 2011 increased $374 million due to a significantly lower discount rate used to measure our benefit obligations at our May 31, 2010 measurement date. Additionally, we incurred higher expenses for our 401(k) plans due to the partial reinstatement of the company-matching contributions on January 1, 2010, and the full restoration of company-matching contributions on January 1, 2011 (previously suspended in February 2009). Total retirement plans cost increased $15 million in 2010, primarily due to the negative impact of market conditions on our pension plan assets at our May 31, 2009 measurement date, mostly offset by lower expenses for our 401(k) plans due to the temporary suspension of the company-matching contributions.

Retirement plans cost is expected to increase in 2012 due to the full restoration of company-matching contributions on our 401(k) plans noted above. However, our pension costs in 2012 are expected to remain flat, as the benefit of significant investment returns on our pension plan assets will offset the negative impact of a lower discount rate.

PENSION COST. The accounting for pension and postretirement healthcare plans includes numerous assumptions, such as: discount rates; expected long-term investment returns on plan assets; future salary increases; employee turnover; mortality; and retirement ages. These assumptions most significantly impact our U.S. Pension Plans. The components of pension cost for all pension plans are as follows (in millions):

	2011			2010			2009
Service cost	$	521		$	417		$	499
Interest cost		900			823			798
Expected return on plan assets		(1,062	)		(955	)		(1,059	)
Recognized actuarial losses (gains) and other		184			23			(61	)
Net periodic benefit cost	$	543		$	308		$	177

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Following is a discussion of the key estimates we consider in determining our pension cost:

DISCOUNT RATE. This is the interest rate used to discount the estimated future benefit payments that have been accrued to date (the projected benefit obligation, or “PBO”) to their net present value and to determine the succeeding year’s pension expense. The discount rate is determined each year at the plan measurement date. A decrease in the discount rate increases pension expense. The discount rate affects the PBO and pension expense based on the measurement dates, as described below.

Measurement		Discount			Amounts Determined by Measurement Date and
Date (1)		Rate			Discount Rate
	5/31/2011		5.76	%	2011 PBO and 2012 expense
	5/31/2010		6.37		2010 PBO and 2011 expense
	5/31/2009		7.68		2009 PBO and 2010 expense
	6/01/2008		7.15		2009 expense
	2/29/2008		6.96		2008 PBO

⁽¹⁾ Accounting rules required us to change our measurement date to May 31, beginning in 2009.

We determine the discount rate with the assistance of actuaries, who calculate the yield on a theoretical portfolio of high-grade corporate bonds (rated Aa or better) with cash flows designed to match our expected benefit payments in future years. In developing this theoretical portfolio, we select bonds that match cash flows to benefit payments, limit our concentration by industry and issuer, and apply screening criteria to ensure bonds with a call feature have a low probability of being called. To the extent scheduled bond proceeds exceed the estimated benefit payments in a given period, the calculation assumes those excess proceeds are reinvested at one-year forward rates.

The decrease in the discount rate at May 31, 2011 was driven by conditions in the market for high-grade corporate bonds, where yields have continued to decrease from May 31, 2010. The discount rate assumption is highly sensitive, as the following table illustrates for our largest tax-qualified U.S. domestic pension plan:

	Sensitivity (in millions)
	Effect on 2012		Effect on 2011
	Pension		Pension
	Expense		Expense
One-basis-point change in discount rate	$	1.9	$	1.7

At our May 31, 2011 measurement date, a 50-basis-point increase in the discount rate would have decreased our 2011 PBO by approximately $1.1 billion and a 50-basis-point decrease in the discount rate would have increased our 2011 PBO by approximately $1.2 billion. From 2009 to 2011, the discount rate used to value our liabilities has declined by nearly 200 basis points, which increased the valuation of our liabilities by over $4 billion.

PLAN ASSETS. The estimated average rate of return on plan assets is a long-term, forward-looking assumption that also materially affects our pension cost. It is required to be the expected future long-term rate of earnings on plan assets. Our pension plan assets are invested primarily in listed securities, and our pension plans hold only a minimal investment in FedEx common stock that is entirely at the discretion of third-party pension fund investment managers. As part of our strategy to manage future pension costs and net funded status volatility, we have transitioned to a liability-driven investment strategy with a greater concentration of fixed-income securities to better align plan assets with liabilities. We review the expected long-term rate of return on an annual basis and revise it as appropriate.

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Establishing the expected future rate of investment return on our pension assets is a judgmental matter. Management considers the following factors in determining this assumption:

• the duration of our pension plan liabilities, which drives the investment strategy we can employ with our pension plan assets;

• the types of investment classes in which we invest our pension plan assets and the expected compound geometric return we can reasonably expect those investment classes to earn over time; and

• the investment returns we can reasonably expect our investment management program to achieve in excess of the returns we could expect if investments were made strictly in indexed funds.

The following table summarizes our current asset allocation strategy (dollars in millions):

	Plan Assets at Measurement Date
	2011								2010
Asset Class	Actual		Actual %			Target %			Actual		Actual %			Target %
Domestic equities	$	5,761		37	%		33	%	$	4,569		35	%		33	%
International equities		2,013		13			12			1,502		12			12
Private equities		403		3			5			399		3			5
Total equities		8,177		53			50			6,470		50			50
Fixed-income securities		6,995		45			49			6,205		47			49
Cash and other		346		2			1			380		3			1
	$	15,518		100	%		100	%	$	13,055		100	%		100	%

We have assumed an 8.0% compound geometric long-term rate of return on our U.S. Pension Plan assets for 2012, 2011 and 2010, as described in Note 12 of the accompanying consolidated financial statements. A one-basis-point change in our expected return on plan assets impacts our pension expense by $1.5 million.

The actual historical return on our U.S. Pension Plan assets, calculated on a compound geometric basis, was approximately 7.8%, net of investment manager fees, for the 15-year period ended May 31, 2011 and 7.9%, net of investment manager fees, for the 15-year period ended May 31, 2010.

Pension expense is also affected by the accounting policy used to determine the value of plan assets at the measurement date. We use a calculated-value method to determine the value of plan assets, which helps mitigate short-term volatility in market performance (both increases and decreases) by amortizing certain actuarial gains or losses over a period no longer than four years. Another method used in practice applies the market value of plan assets at the measurement date. For purposes of valuing plan assets for determining 2012 pension expense, we used the calculated-value method, as our actual returns on plan assets significantly exceeded our assumptions. However, as previously indicated, our pension costs in 2012 are expected to remain flat. The calculated-value method resulted in the same value as the market value in 2011. The calculated-value method significantly mitigated the impact of asset value declines in the determination of our 2010 pension expense, reducing our 2010 expense by approximately $135 million.

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FUNDED STATUS. Following is information concerning the funded status of our pension plans as of May 31 (in millions):

	2011			2010
Funded Status of Plans:
Projected benefit obligation (PBO)	$	17,372		$	14,484
Fair value of plan assets		15,841			13,295
Funded status of the plans	$	(1,531	)	$	(1,189	)
Components of Funded Status by Plans:
U.S. qualified plans	$	(927	)	$	(580	)
U.S. nonqualified plans		(339	)		(348	)
International plans		(265	)		(261	)
Net funded status	$	(1,531	)	$	(1,189	)
Components of Amounts Included in Balance Sheets:
Current pension and other benefit obligations		(33	)		(30	)
Noncurrent pension and other benefit obligations		(1,498	)		(1,159	)
Net amount recognized	$	(1,531	)	$	(1,189	)
Cash Amounts:
Cash contributions during the year	$	557		$	900
Benefit payments during the year	$	468		$	391

The amounts recognized in the balance sheet reflect a snapshot of the state of our long-term pension liabilities at the plan measurement date and the effect of year-end accounting on plan assets. At May 31, 2011, we recorded a decrease to equity through OCI of $350 million (net of tax) to reflect unrealized actuarial losses during 2011 related to a decline in the discount rate. Those losses are subject to amortization over future years and may be reflected in future income statements unless they are recovered. At May 31, 2010, we recorded a decrease to equity through OCI of $1.0 billion (net of tax) attributable to our pension plans.

The funding requirements for our U.S. Pension Plans are governed by the Pension Protection Act of 2006, which has aggressive funding requirements in order to avoid benefit payment restrictions that become effective if the funded status determined under Internal Revenue Service rules falls below 80% at the beginning of a plan year. All of our U.S. Pension Plans have funded status levels in excess of 80% and our plans remain adequately funded to provide benefits to our employees as they come due. Additionally, current benefit payments are nominal compared to our total plan assets (benefit payments for our U.S. Pension Plans for 2011 were approximately $411 million or 3% of plan assets).

During 2011, we made $480 million in contributions to our U.S. Pension Plans, including $121 million in voluntary contributions. Over the past several years, we have made voluntary contributions to our U.S. Pension Plans in excess of the minimum required contributions. Amounts contributed in excess of the minimum required result in a credit balance for funding purposes that can be used to meet minimum contribution requirements in future years. For 2012, we anticipate making required contributions to our U.S. Pension Plans totaling approximately $500 million.

Cumulative unrecognized actuarial losses were $5.4 billion through May 31, 2011, compared to $5.2 billion through May 31, 2010. These unrecognized losses reflect changes in the discount rates and differences between expected and actual asset returns, which are being amortized over future periods. These unrecognized losses may be recovered in future periods through actuarial gains. However, unless they are below a corridor amount, these unrecognized actuarial losses are required to be amortized and recognized in future periods. Our pension expense includes amortization of these actuarial losses of $276 million in 2011, $125 million in 2010 and $44 million in 2009.

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SELF-INSURANCE ACCRUALS

We are self-insured up to certain limits for costs associated with workers’ compensation claims, vehicle accidents and general business liabilities, and benefits paid under employee healthcare and long-term disability programs. Our reserves are established for estimates of loss on reported claims, including incurred-but-not-reported claims. At May 31, 2011 and 2010, there were $1.6 billion of self-insurance accruals reflected in our balance sheet. Approximately 40% of these accruals were classified as current liabilities.

Our self-insurance accruals are primarily based on the actuarially estimated, undiscounted cost of claims to provide us with estimates of future claim costs based on claims incurred as of the balance sheet date. These estimates include consideration of factors such as severity of claims, frequency of claims and future healthcare costs. Cost trends on material accruals are updated each quarter. We self-insure up to certain limits that vary by operating company and type of risk. Periodically, we evaluate the level of insurance coverage and adjust insurance levels based on risk tolerance and premium expense. Historically, it has been infrequent that incurred claims exceeded our self-insured limits. Other acceptable methods of accounting for these accruals include measurement of claims outstanding and projected payments based on historical development factors.

We believe the use of actuarial methods to account for these liabilities provides a consistent and effective way to measure these highly judgmental accruals. However, the use of any estimation technique in this area is inherently sensitive given the magnitude of claims involved and the length of time until the ultimate cost is known. We believe our recorded obligations for these expenses are consistently measured on a conservative basis. Nevertheless, changes in healthcare costs, accident frequency and severity, insurance retention levels and other factors can materially affect the estimates for these liabilities.

LONG-LIVED ASSETS

PROPERTY AND EQUIPMENT. Our key businesses are capital intensive, with approximately 57% of our total assets invested in our transportation and information systems infrastructures. We capitalize only those costs that meet the definition of capital assets under accounting standards. Accordingly, repair and maintenance costs that do not extend the useful life of an asset or are not part of the cost of acquiring the asset are expensed as incurred.

The depreciation or amortization of our capital assets over their estimated useful lives, and the determination of any salvage values, requires management to make judgments about future events. Because we utilize many of our capital assets over relatively long periods (the majority of aircraft costs are depreciated over 15 to 18 years), we periodically evaluate whether adjustments to our estimated service lives or salvage values are necessary to ensure these estimates properly match the economic use of the asset. This evaluation may result in changes in the estimated lives and residual values used to depreciate our aircraft and other equipment. For our aircraft, we typically assign no residual value due to the utilization of these assets in cargo configuration, which results in little to no value at the end of their useful life. These estimates affect the amount of depreciation expense recognized in a period and, ultimately, the gain or loss on the disposal of the asset. Changes in the estimated lives of assets will result in an increase or decrease in the amount of depreciation recognized in future periods and could have a material impact on our results of operations. Historically, gains and losses on operating equipment have not been material (typically aggregating less than $10 million annually). However, such amounts may differ materially in the future due to changes in business levels, technological obsolescence, accident frequency, regulatory changes and other factors beyond our control.

Because of the lengthy lead times for aircraft manufacture and modifications, we must anticipate volume levels and plan our fleet requirements years in advance, and make commitments for aircraft based on those projections. Furthermore, the timing and availability of certain used aircraft types (particularly those with better fuel efficiency) may create limited opportunities to acquire these aircraft at favorable prices in advance of our capacity needs. These activities create risks that asset capacity may exceed demand and that an impairment of our assets may occur. Aircraft purchases (primarily aircraft in passenger configuration) that have not been placed in service totaled $173 million at May 31, 2011 and $101 million at May 31, 2010. We plan to modify these assets in the future and place them into operations.

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The accounting test for whether an asset held for use is impaired involves first comparing the carrying value of the asset with its estimated future undiscounted cash flows. If the cash flows do not exceed the carrying value, the asset must be adjusted to its current fair value. We operate integrated transportation networks and, accordingly, cash flows for most of our operating assets are assessed at a network level, not at an individual asset level for our analysis of impairment. Further, decisions about capital investments are evaluated based on the impact to the overall network rather than the return on an individual asset. We make decisions to remove certain long-lived assets from service based on projections of reduced capacity needs or lower operating costs of newer aircraft types, and those decisions may result in an impairment charge. Assets held for disposal must be adjusted to their estimated fair values less costs to sell when the decision is made to dispose of the asset and certain other criteria are met. The fair value determinations for such aircraft may require management estimates, as there may not be active markets for some of these aircraft. Such estimates are subject to revision from period to period.

There were no material property and equipment impairment charges recognized in 2011 (see “Overview” for additional information on certain asset impairments in our FedEx Freight segment in 2011) or 2010. However, during 2009, we recorded $202 million in property and equipment impairment charges. These charges were primarily related to our decision to permanently remove from service certain aircraft, along with certain excess aircraft engines, at FedEx Express.

LEASES. We utilize operating leases to finance certain of our aircraft, facilities and equipment. Such arrangements typically shift the risk of loss on the residual value of the assets at the end of the lease period to the lessor. As disclosed in “Contractual Cash Obligations” and Note 7 of the accompanying consolidated financial statements, at May 31, 2011 we had approximately $14 billion (on an undiscounted basis) of future commitments for payments under operating leases. The weighted-average remaining lease term of all operating leases outstanding at May 31, 2011 was approximately six years. The future commitments for operating leases are not reflected as a liability in our balance sheet under current U.S. accounting rules.

Under a proposed revision to the accounting standards for leases, we would be required to record an asset and a liability for our outstanding operating leases similar to the current accounting for capital leases. Notably, the amount we record in the future would be the net present value of our future lease commitments at the date of adoption. This proposed guidance has not been issued and has been subjected to numerous revisions since the proposal was issued. Accordingly, we cannot make any judgments about the specific impact of the new proposed standard to us. However, our existing financing agreements and the rating agencies that evaluate our credit worthiness already take our operating leases into account.

The determination of whether a lease is accounted for as a capital lease or an operating lease requires management to make estimates primarily about the fair value of the asset and its estimated economic useful life. In addition, our evaluation includes ensuring we properly account for build-to-suit lease arrangements and making judgments about whether various forms of lessee involvement during the construction period make the lessee an agent for the owner-lessor or, in substance, the owner of the asset during the construction period. We believe we have well-defined and controlled processes for making these evaluations, including obtaining third-party appraisals for material transactions to assist us in making these evaluations.

GOODWILL. We have $2.3 billion of recorded goodwill from our acquisitions, representing the excess of cost over the fair value of the net assets we have acquired. Several factors give rise to goodwill in our acquisitions, such as the expected benefit from synergies of the combination and the existing workforce of the acquired entity.

Our annual evaluation of goodwill impairment requires management judgment and the use of estimates and assumptions to determine the fair value of our reporting units. Fair value is estimated using standard valuation methodologies (principally the income or market approach) incorporating market participant considerations and management’s assumptions on revenue growth rates, operating margins, discount rates and expected capital expenditures. Estimates used by management can significantly affect the outcome of the impairment test. Changes in forecasted operating results and other assumptions could materially affect these estimates. We perform our annual impairment tests in the fourth quarter unless circumstances indicate the need to accelerate the timing of the test.

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Our businesses with significant recorded goodwill include our FedEx Express, FedEx Freight and FedEx Office reporting units. We evaluated these reporting units during the fourth quarter of 2011. The estimated fair value of each of these reporting units exceeded their carrying values in 2011, and we do not believe that any of these reporting units are at risk as of May 31, 2011. However, as noted below, we have recorded goodwill impairment charges associated with our FedEx Office reporting unit in recent years. While the performance of this business has improved, the realization of the value of the remaining attributable goodwill ($362 million) is dependent upon execution of our growth strategies and initiatives in the future.

Goodwill Impairment Charges — 2010

In connection with our annual impairment testing of goodwill conducted in the fourth quarter of 2010, we recorded a charge of $18 million for impairment of the value of the remaining goodwill at our FedEx National LTL reporting unit. The impairment charge resulted from the significant negative impact of the U.S. recession on the LTL industry, which resulted in volume and yield declines and operating losses. In connection with the combination of our LTL networks in 2011, this unit was merged into the FedEx Freight reporting unit.

Goodwill Impairment Charges — 2009

FEDEX OFFICE. During 2009, in response to the lower revenues and continued operating losses at FedEx Office resulting from the U.S. recession, the company initiated an internal reorganization designed to improve revenue-generating capabilities and reduce costs including headcount reductions, the termination of operations in some international locations and substantially curtailing future network expansion. Despite these actions, operating losses and weak economic conditions significantly impacted our FedEx Office reporting unit.

In connection with our annual impairment testing in 2009, we concluded that the recorded goodwill was impaired and recorded an impairment charge of $810 million during the fourth quarter of 2009. The goodwill impairment charge is included in 2009 operating expenses in the accompanying consolidated statements of income. This charge was included in the results of the FedEx Services segment and was not allocated to our transportation segments, as the charge was unrelated to the core performance of those businesses.

FEDEX NATIONAL LTL. In 2009, we recorded a goodwill impairment charge of $90 million at our FedEx National LTL unit. This charge was a result of reduced revenues and increased operating losses due to the negative impact of the U.S. recession.

CONTINGENCIES

We are subject to various loss contingencies, including tax proceedings and litigation, in connection with our operations. Contingent liabilities are difficult to measure, as their measurement is subject to multiple factors that are not easily predicted or projected. Further, additional complexity in measuring these liabilities arises due to the various jurisdictions in which these matters occur, which makes our ability to predict their outcome highly uncertain. Moreover, different accounting rules must be employed to account for these items based on the nature of the contingency. Accordingly, significant management judgment is required to assess these matters and to make determinations about the measurement of a liability, if any. Our material pending loss contingencies are described in Note 17 of the accompanying consolidated financial statements. In the opinion of management, the aggregate liability, if any, of individual matters or groups of matters not specifically described in Note 17 is not expected to be material to our financial position, results of operations or cash flows. The following describes our methods and associated processes for evaluating these matters.

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TAX CONTINGENCIES. We are subject to income and operating tax rules of the U.S., its states and municipalities, and of the foreign jurisdictions in which we operate. Significant judgment is required in determining income tax provisions, as well as deferred tax asset and liability balances and related deferred tax valuation allowances, if necessary, due to the complexity of these rules and their interaction with one another. We account for income taxes by recording both current taxes payable and deferred tax assets and liabilities. Our provision for income taxes is based on domestic and international statutory income tax rates in the jurisdictions in which we operate, applied to taxable income, reduced by applicable tax credits.

Tax contingencies arise from uncertainty in the application of tax rules throughout the many jurisdictions in which we operate and are impacted by several factors, including tax audits, appeals, litigation, changes in tax laws and other rules and their interpretations, and changes in our business. We regularly assess the potential impact of these factors for the current and prior years to determine the adequacy of our tax provisions. We continually evaluate the likelihood and amount of potential adjustments and adjust our tax positions, including the current and deferred tax liabilities, in the period in which the facts that give rise to a revision become known. In addition, management considers the advice of third parties in making conclusions regarding tax consequences.

We recognize liabilities for uncertain income tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step requires us to estimate and measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. It is inherently difficult and subjective to estimate such amounts, as we must determine the probability of various possible outcomes. We reevaluate these uncertain tax positions on a quarterly basis or when new information becomes available to management. These reevaluations are based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, successfully settled issues under audit and new audit activity. Such a change in recognition or measurement could result in the recognition of a tax benefit or an increase to the related provision.

We classify interest related to income tax liabilities as interest expense, and if applicable, penalties are recognized as a component of income tax expense. The income tax liabilities and accrued interest and penalties that are due within one year of the balance sheet date are presented as current liabilities. The remaining portion of our income tax liabilities and accrued interest and penalties are presented as noncurrent liabilities. These noncurrent income tax liabilities are recorded in the caption “Other liabilities” in the accompanying consolidated balance sheets.

We account for operating taxes based on multi-state, local and foreign taxing jurisdiction rules in those areas in which we operate. Provisions for operating taxes are estimated based upon these rules, asset acquisitions and disposals, historical spend and other variables. These provisions are consistently evaluated for reasonableness against compliance and risk factors.

We measure and record operating tax contingency accruals in accordance with accounting guidance for contingencies. As discussed below, this guidance requires an accrual of estimated loss from a contingency, such as a tax or other legal proceeding or claim, when it is probable that a loss will be incurred and the amount of the loss can be reasonably estimated.

OTHER CONTINGENCIES. Because of the complex environment in which we operate, we are subject to other legal proceedings and claims, including those relating to general commercial matters, employment-related claims and FedEx Ground’s owner-operators. Accounting guidance for contingencies requires an accrual of estimated loss from a contingency, such as a tax or other legal proceeding or claim, when it is probable (i.e., the future event or events are likely to occur) that a loss will be incurred and the amount of the loss can be reasonably estimated. This guidance also requires disclosure of a loss contingency matter when, in management’s judgment, a material loss is reasonably possible or probable.

During the preparation of our financial statements, we evaluate our contingencies to determine whether it is probable, reasonably possible or remote that a liability has been incurred. A loss is recognized for all contingencies deemed probable and estimable, regardless of amount. For unresolved contingencies with potentially material exposure that are deemed reasonably possible, we evaluate whether a potential loss or range of loss can be reasonably estimated.

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Our evaluation of these matters is the result of a comprehensive process designed to ensure that accounting recognition of a loss or disclosure of these contingencies is made in a timely manner and involves our legal and accounting personnel, as well as external counsel where applicable. The process includes regular communications during each quarter and scheduled meetings shortly before the completion of our financial statements to evaluate any new legal proceedings and the status of any existing matters.

In determining whether a loss should be accrued or a loss contingency disclosed, we evaluate, among other factors:

• the current status of each matter within the scope and context of the entire lawsuit (i.e., the lengthy and complex nature of class-action matters);

• the procedural status of each lawsuit;

• any opportunities to dispose of the lawsuit on its merits before trial (i.e., motion to dismiss or for summary judgment);

• the amount of time remaining before the trial date;

• the status of discovery;

• the status of settlement, arbitration or mediation proceedings, and;

• our judgment regarding the likelihood of success prior to or at trial.

In reaching our conclusions with respect to accrual of a loss or loss contingency disclosure, we take a holistic view of each matter based on these factors and the information available prior to the issuance of our financial statements. Uncertainty with respect to an individual factor or combination of these factors may impact our decisions related to accrual or disclosure of a loss contingency, including a conclusion that we are unable to establish an estimate of possible loss or a meaningful range of possible loss. We update our disclosures to reflect our most current understanding of the contingencies at the time we issue our financial statements. However, events may arise that were not anticipated and the outcome of a contingency may result in a loss to us that differs materially from our previously estimated liability or range of possible loss.

Despite the inherent complexity in the accounting and disclosure of contingencies, we believe that our processes are robust and thorough and provide a consistent framework for management in evaluating the potential outcome of contingencies for proper accounting recognition and disclosure.

RISK FACTORS

Our financial and operating results are subject to many risks and uncertainties, as described below.

We are directly affected by the state of the economy. While macro-economic risks apply to most companies, we are particularly vulnerable. The transportation industry is highly cyclical and especially susceptible to trends in economic activity, such as the recent global recession. Our primary business is to transport goods, so our business levels are directly tied to the purchase and production of goods — key macro-economic measurements. When individuals and companies purchase and produce fewer goods, we transport fewer goods. In addition, we have a relatively high fixed-cost structure, which is difficult to quickly adjust to match shifting volume levels. Moreover, as we grow our international business, we are increasingly affected by the health of the global economy. As a result, the recent global recession had a disproportionately negative impact on us and our recent financial results.

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Our businesses depend on our strong reputation and the value of the FedEx brand. The FedEx brand name symbolizes high-quality service, reliability and speed. FedEx is one of the most widely recognized, trusted and respected brands in the world, and the FedEx brand is one of our most important and valuable assets. In addition, we have a strong reputation among customers and the general public for high standards of social and environmental responsibility and corporate governance and ethics. The FedEx brand name and our corporate reputation are powerful sales and marketing tools, and we devote significant resources to promoting and protecting them. Adverse publicity (whether or not justified) relating to activities by our employees, contractors or agents, such as noncompliance with anti-corruption laws, could tarnish our reputation and reduce the value of our brand. Damage to our reputation and loss of brand equity could reduce demand for our services and thus have an adverse effect on our financial condition, liquidity and results of operations, as well as require additional resources to rebuild our reputation and restore the value of our brand.

We rely heavily on information and technology to operate our transportation and business networks, and any disruption to our technology infrastructure or the Internet could harm our operations and our reputation among customers. Our ability to attract and retain customers and to compete effectively depends in part upon the sophistication and reliability of our technology network, including our ability to provide features of service that are important to our customers. External and internal risks, such as malware, insecure coding, “Acts of God,” attempts to penetrate our networks, data leakage and human error, pose a direct threat to our products, services and data. Any disruption to the Internet or our complex, global technology infrastructure, including those impacting our computer systems and customer Web sites, could adversely impact our customer service, volumes, and revenues and result in increased costs. These types of adverse impacts could also occur in the event the confidentiality, integrity, or availability of company and customer information was compromised due to a data loss by FedEx or a trusted third party. While we have invested and continue to invest in technology security initiatives, information technology risk management and disaster recovery plans, these measures cannot fully insulate us from technology disruptions or data loss and the resulting adverse effect on our operations and financial results.

Our transportation businesses may be impacted by the price and availability of fuel. We must purchase large quantities of fuel to operate our aircraft and vehicles, and the price and availability of fuel can be unpredictable and beyond our control. To date, we have been mostly successful in mitigating over time the expense impact of higher fuel costs through our indexed fuel surcharges, as the amount of the surcharges is closely linked to the market prices for fuel. If we are unable to maintain or increase our fuel surcharges because of competitive pricing pressures or some other reason, fuel costs could adversely impact our operating results. Even if we are able to offset the cost of fuel with our surcharges, high fuel surcharges could move our customers, especially in the U.S. domestic market, away from our higher-yielding express services to our lower-yielding ground services or even reduce customer demand for our services altogether. In addition, disruptions in the supply of fuel could have a negative impact on our ability to operate our transportation networks.

Our businesses are capital intensive, and we must make capital expenditures based upon projected volume levels. We make significant investments in aircraft, vehicles, technology, package handling facilities, sort equipment, copy equipment and other assets to support our transportation and business networks. We also make significant investments to rebrand, integrate and grow the companies that we acquire. The amount and timing of capital investments depend on various factors, including our anticipated volume growth. For example, we must make commitments to purchase or modify aircraft years before the aircraft are actually needed. We must predict volume levels and fleet requirements and make commitments for aircraft based on those projections. Missing our projections could result in too much or too little capacity relative to our shipping volumes. Overcapacity could lead to asset dispositions or write-downs and undercapacity could negatively impact service levels.

We face intense competition. The transportation and business services markets are both highly competitive and sensitive to price and service, especially in periods of little or no macro-economic growth. Some of our competitors have more financial resources than we do, or they are controlled or subsidized by foreign governments, which enables them to raise capital more easily. We believe we compete effectively with these companies — for example, by providing more reliable service at compensatory prices. However, an irrational pricing environment can limit our ability not only to maintain or increase our prices (including our fuel surcharges in response to rising fuel costs), but also to maintain or grow our market share. In addition, maintaining a broad portfolio of services is important to keeping and attracting customers. While we believe we compete effectively through our current service offerings, if our competitors offer a broader range of services or more effectively bundle their services, it could impede our ability to maintain or grow our market share.

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Labor organizations attempt to organize groups of our employees from time to time, and potential changes in labor laws could make it easier for them to do so. If we are unable to continue to maintain good relationships with our employees and prevent labor organizations from organizing groups of our employees, our operating costs could significantly increase and our operational flexibility could be significantly reduced. Despite continual organizing attempts by labor unions, other than the pilots of FedEx Express, all of our U.S. employees have thus far chosen not to unionize. The U.S. Congress has, in the past, considered adopting changes in labor laws, however, that would make it easier for unions to organize small units of our employees. For example, there is always a possibility that Congress could remove most FedEx Express employees from the purview of the Railway Labor Act of 1926, as amended (the “RLA”). For additional discussion of the RLA, see Part I, Item 1 of this Annual Report under the caption “Regulation.” Such legislation could expose our customers to the type of service disruptions that the RLA was designed to prevent — local work stoppages in key areas that interrupt the timely flow of shipments of time-sensitive, high-value goods throughout our global network. Such disruptions could threaten our ability to provide competitively priced shipping options and ready access to global markets. There is also the possibility that Congress could pass other labor legislation that could adversely affect our companies, such as FedEx Ground and FedEx Freight, whose employees are governed by the National Labor Relations Act of 1935, as amended (the “NLRA”). In addition, federal and state governmental agencies, such as the National Labor Relations Board, have and may continue to take actions that could make it easier for our employees to organize under the RLA or NLRA. Finally, changes to federal or state laws governing employee classification could impact the status of FedEx Ground’s owner-operators as independent contractors.

If we do not effectively operate, integrate, leverage and grow acquired businesses, our financial results and reputation may suffer. Our strategy for long-term growth, productivity and profitability depends in part on our ability to make prudent strategic acquisitions and to realize the benefits we expect when we make those acquisitions. In furtherance of this strategy, we recently made strategic moves in India and Mexico. While we expect our past and future acquisitions to enhance our value proposition to customers and improve our long-term profitability, there can be no assurance that we will realize our expectations within the time frame we have established, if at all, or that we can continue to support the value we allocate to these acquired businesses, including their goodwill or other intangible assets.

FedEx Ground relies on owner-operators to conduct its linehaul and pickup-and-delivery operations, and the status of these owner-operators as independent contractors, rather than employees, is being challenged. FedEx Ground’s use of independent contractors is well suited to the needs of the ground delivery business and its customers, as evidenced by the strong growth of this business segment. We are involved in numerous lawsuits and state tax and other administrative proceedings that claim that the company’s owner-operators or their drivers should be treated as our employees, rather than independent contractors. We incur certain costs, including legal fees, in defending the status of FedEx Ground’s owner-operators as independent contractors. We believe that FedEx Ground’s owner-operators are properly classified as independent contractors and that FedEx Ground is not an employer of the drivers of the company’s independent contractors. However, adverse determinations in these matters could, among other things, entitle certain of our contractors and their drivers to the reimbursement of certain expenses and to the benefit of wage-and-hour laws and result in employment and withholding tax and benefit liability for FedEx Ground, and could result in changes to the independent contractor status of FedEx Ground’s owner-operators. If FedEx Ground is compelled to convert its independent contractors to employees, labor organizations could more easily organize these individuals, our operating costs could increase materially and we could incur significant capital outlays.

Increased security or pilot safety requirements could impose substantial costs on us. As a result of concerns about global terrorism and homeland security, governments around the world are adopting or are considering adopting stricter security requirements that will increase operating costs and potentially slow service for businesses, including those in the transportation industry. For example, the U.S. Transportation Security Administration has issued to us a Full All-Cargo Aircraft Operator Standard Security Plan, which contains many new and enhanced security requirements. These requirements are not static, but will change periodically as the result of regulatory and legislative requirements, and to respond to evolving threats. The Federal Aviation Administration, in September 2010, proposed rules that would significantly reduce the maximum number of hours on duty and increase the minimum amount of rest time for our pilots, and thus require us to hire additional pilots and modify certain of our aircraft. Until these requirements are adopted, we cannot determine the effect that these new rules will have on our cost structure or our operating results. It is reasonably possible, however, that these rules or other future security or flight safety requirements could impose material costs on us.

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The regulatory environment for global aviation or other transportation rights may impact our operations. Our extensive air network is critical to our success. Our right to serve foreign points is subject to the approval of the Department of Transportation and generally requires a bilateral agreement between the United States and foreign governments. In addition, we must obtain the permission of foreign governments to provide specific flights and services. Our operations outside of the United States, such as FedEx Express’s growing international domestic operations, are also subject to current and potential regulations that restrict, and sometimes prohibit, our ability to compete in parts of the transportation and logistics market. As an example, the Chinese government has adopted postal regulations that exclude foreign-owned companies such as FedEx from competing in the mainland China domestic document delivery market. Regulatory actions affecting global aviation or transportation rights or a failure to obtain or maintain aviation or other transportation rights in important international markets could impair our ability to operate our networks.

We may be affected by global climate change or by legal, regulatory or market responses to such change. Concern over climate change, including the impact of global warming, has led to significant U.S. and international legislative and regulatory efforts to limit greenhouse gas (“GHG”) emissions. For example, during 2009, the European Commission approved the extension of the European Union Emissions Trading Scheme (“ETS”) for GHG emissions, to the airline industry. Under this decision, all FedEx Express flights to and from any airport in any member state of the European Union will be covered by the ETS requirements beginning in 2012, and each year we will be required to submit emission allowances in an amount equal to the carbon dioxide emissions from such flights. In addition, the U.S. Congress has, in the past, considered bills that would regulate GHG emissions, and some form of federal climate change legislation is possible in the future. Increased regulation regarding GHG emissions, especially aircraft or diesel engine emissions, could impose substantial costs on us, especially at FedEx Express. These costs include an increase in the cost of the fuel and other energy we purchase and capital costs associated with updating or replacing our aircraft or vehicles prematurely. Until the timing, scope and extent of such regulation becomes known, we cannot predict its effect on our cost structure or our operating results. It is reasonably possible, however, that it could impose material costs on us. Moreover, even without such regulation, increased awareness and any adverse publicity in the global marketplace about the GHGs emitted by companies in the airline and transportation industries could harm our reputation and reduce customer demand for our services, especially our air express services. Finally, given the broad and global scope of our operations and our susceptibility to global macro-economic trends, we are particularly vulnerable to the physical risks of climate change that could affect all of humankind, such as shifts in world ecosystems.

A localized disaster in a key geography could adversely impact our business. While we operate several integrated networks with assets distributed throughout the world, there are concentrations of key assets within our networks that are exposed to localized risks from natural or manmade disasters such as tornados, floods, earthquakes or terrorist attacks. The loss of a key location such as our Memphis super hub or one of our information technology centers could cause a significant disruption to our operations and cause us to incur significant costs to relocate or reestablish these functions. Moreover, resulting economic dislocations, including supply chain and fuel disruptions, could adversely impact demand for our services.

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We are also subject to other risks and uncertainties that affect many other businesses, including:

• increasing costs, the volatility of costs and funding requirements and other legal mandates for employee benefits, especially pension and healthcare benefits;

• the increasing costs of compliance with federal and state governmental agency mandates and defending against inappropriate or unjustified enforcement or other actions by such agencies;

• the impact of any international conflicts or terrorist activities on the United States and global economies in general, the transportation industry or us in particular, and what effects these events will have on our costs or the demand for our services;

• any impacts on our businesses resulting from new domestic or international government laws and regulation;

• changes in foreign currency exchange rates, especially in the euro, Chinese yuan, Canadian dollar, British pound and Japanese yen, which can affect our sales levels and foreign currency sales prices;

• market acceptance of our new service and growth initiatives;

• any liability resulting from and the costs of defending against class-action litigation, such as wage-and-hour, discrimination and retaliation claims, and any other legal proceedings;

• the outcome of future negotiations to reach new collective bargaining agreements — including with the union that represents the pilots of FedEx Express (the current pilot contract is scheduled to become amendable in March 2013 unless the union exercises its option to shorten the contract, in which case the agreement would be amendable in March 2012);

• the impact of technology developments on our operations and on demand for our services, and our ability to continue to identify and eliminate unnecessary information technology redundancy and complexity throughout the organization;

• widespread outbreak of an illness or any other communicable disease, or any other public health crisis; and

• availability of financing on terms acceptable to us and our ability to maintain our current credit ratings, especially given the capital intensity of our operations.

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FORWARD-LOOKING STATEMENTS

Certain statements in this report, including (but not limited to) those contained in “Outlook (including segment outlooks),” “Liquidity,” “Capital Resources,” “Liquidity Outlook,” “Contractual Cash Obligations” and “Critical Accounting Estimates,” and the “Retirement Plans” and “Contingencies” notes to the consolidated financial statements, are “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to our financial condition, results of operations, cash flows, plans, objectives, future performance and business. Forward-looking statements include those preceded by, followed by or that include the words “may,” “could,” “would,” “should,” “believes,” “expects,” “anticipates,” “plans,” “estimates,” “targets,” “projects,” “intends” or similar expressions. These forward-looking statements involve risks and uncertainties. Actual results may differ materially from those contemplated (expressed or implied) by such forward-looking statements, because of, among other things, the risk factors identified above and the other risks and uncertainties you can find in our press releases and other SEC filings.

As a result of these and other factors, no assurance can be given as to our future results and achievements. Accordingly, a forward-looking statement is neither a prediction nor a guarantee of future events or circumstances and those future events or circumstances may not occur. You should not place undue reliance on the forward-looking statements, which speak only as of the date of this report. We are under no obligation, and we expressly disclaim any obligation, to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise.

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MANAGEMENT’S REPORT ON INTERNAL
CONTROL OVER FINANCIAL REPORTING

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended). Our internal control over financial reporting includes, among other things, defined policies and procedures for conducting and governing our business, sophisticated information systems for processing transactions and a properly staffed, professional internal audit department. Mechanisms are in place to monitor the effectiveness of our internal control over financial reporting and actions are taken to correct all identified deficiencies. Our procedures for financial reporting include the active involvement of senior management, our Audit Committee and our staff of highly qualified financial and legal professionals.

Management, with the participation of our principal executive and financial officers, assessed our internal control over financial reporting as of May 31, 2011, the end of our fiscal year. Management based its assessment on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria).

Based on this assessment, management has concluded that our internal control over financial reporting was effective as of May 31, 2011.

The effectiveness of our internal control over financial reporting as of May 31, 2011, has been audited by Ernst & Young LLP, the independent registered public accounting firm who also audited the Company’s consolidated financial statements included in this Annual Report on Form 10-K. Ernst & Young LLP’s report on the Company’s internal control over financial reporting is included in this Annual Report on Form 10-K.

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REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders
FedEx Corporation

We have audited FedEx Corporation’s internal control over financial reporting as of May 31, 2011, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). FedEx Corporation’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, FedEx Corporation maintained, in all material respects, effective internal control over financial reporting as of May 31, 2011, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of FedEx Corporation as of May 31, 2011 and 2010, and the related consolidated statements of income, changes in stockholders’ investment and comprehensive income, and cash flows for each of the three years in the period ended May 31, 2011 of FedEx Corporation and our report dated July 12, 2011 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Memphis, Tennessee
July 12, 2011

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REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders
FedEx Corporation

We have audited the accompanying consolidated balance sheets of FedEx Corporation as of May 31, 2011 and 2010, and the related consolidated statements of income, changes in stockholders’ investment and comprehensive income, and cash flows for each of the three years in the period ended May 31, 2011. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of FedEx Corporation at May 31, 2011 and 2010, and the consolidated results of its operations and its cash flows for each of the three years in the period ended May 31, 2011, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), FedEx Corporation’s internal control over financial reporting as of May 31, 2011, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated July 12, 2011 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Memphis, Tennessee
July 12, 2011

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FEDEX CORPORATION

CONSOLIDATED BALANCE SHEETS

(IN MILLIONS)

	May 31,
	2011		2010
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	2,328	$	1,952
Receivables, less allowances of $182 and $166		4,581		4,163
Spare parts, supplies and fuel, less allowances of $169 and $170		437		389
Deferred income taxes		610		529
Prepaid expenses and other		329		251
Total current assets		8,285		7,284
PROPERTY AND EQUIPMENT, AT COST
Aircraft and related equipment		13,146		11,640
Package handling and ground support equipment		5,591		5,193
Computer and electronic equipment		4,408		4,218
Vehicles		3,294		3,170
Facilities and other		7,247		7,081
		33,686		31,302
Less accumulated depreciation and amortization		18,143		16,917
Net property and equipment		15,543		14,385
OTHER LONG-TERM ASSETS
Goodwill		2,326		2,200
Other assets		1,231		1,033
Total other long-term assets		3,557		3,233
	$	27,385	$	24,902

The accompanying notes are an integral part of these consolidated financial statements.

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FEDEX CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN MILLIONS, EXCEPT SHARE DATA)

	May 31,
	2011			2010
LIABILITIES AND STOCKHOLDERS’ INVESTMENT
CURRENT LIABILITIES
Current portion of long-term debt	$	18		$	262
Accrued salaries and employee benefits		1,268			1,146
Accounts payable		1,702			1,522
Accrued expenses		1,894			1,715
Total current liabilities		4,882			4,645
LONG-TERM DEBT, LESS CURRENT PORTION		1,667			1,668
OTHER LONG-TERM LIABILITIES
Deferred income taxes		1,336			891
Pension, postretirement healthcare and other benefit obligations		2,124			1,705
Self-insurance accruals		977			960
Deferred lease obligations		779			804
Deferred gains, principally related to aircraft transactions		246			267
Other liabilities		154			151
Total other long-term liabilities		5,616			4,778
COMMITMENTS AND CONTINGENCIES
COMMON STOCKHOLDERS’ INVESTMENT
Common stock, $0.10 par value; 800 million shares authorized; 317 million shares issued as of May 31, 2011 and 314 million shares issued as of May 31, 2010		32			31
Additional paid-in capital		2,484			2,261
Retained earnings		15,266			13,966
Accumulated other comprehensive loss		(2,550	)		(2,440	)
Treasury stock, at cost		(12	)		(7	)
Total common stockholders’ investment		15,220			13,811
	$	27,385		$	24,902

The accompanying notes are an integral part of these consolidated financial statements.

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FEDEX CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)

	Years ended May 31,
	2011			2010			2009
REVENUES	$	39,304		$	34,734		$	35,497
OPERATING EXPENSES:
Salaries and employee benefits		15,276			14,027			13,767
Purchased transportation		5,674			4,728			4,534
Rentals and landing fees		2,462			2,359			2,429
Depreciation and amortization		1,973			1,958			1,975
Fuel		4,151			3,106			3,811
Maintenance and repairs		1,979			1,715			1,898
Impairment and other charges		89			18			1,204
Other		5,322			4,825			5,132
		36,926			32,736			34,750
OPERATING INCOME		2,378			1,998			747
OTHER INCOME (EXPENSE):
Interest expense		(86	)		(79	)		(85	)
Interest income		9			8			26
Other, net		(36	)		(33	)		(11	)
		(113	)		(104	)		(70	)
INCOME BEFORE INCOME TAXES		2,265			1,894			677
PROVISION FOR INCOME TAXES		813			710			579
NET INCOME	$	1,452		$	1,184		$	98
BASIC EARNINGS PER COMMON SHARE	$	4.61		$	3.78		$	0.31
DILUTED EARNINGS PER COMMON SHARE	$	4.57		$	3.76		$	0.31

The accompanying notes are an integral part of these consolidated financial statements.

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FEDEX CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN MILLIONS)

	Years ended May 31,
	2011			2010			2009
OPERATING ACTIVITIES
Net income	$	1,452		$	1,184		$	98
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization		1,973			1,958			1,975
Provision for uncollectible accounts		152			124			181
Deferred income taxes and other noncash items		669			331			299
Impairment and other charges		29			18			1,103
Stock-based compensation		98			101			99
Changes in assets and liabilities:
Receivables		(400	)		(906	)		762
Other assets		(114	)		276			(196	)
Pension assets and liabilities, net		(169	)		(611	)		(913	)
Accounts payable and other liabilities		370			710			(628	)
Other, net		(19	)		(47	)		(27	)
Cash provided by operating activities		4,041			3,138			2,753
INVESTING ACTIVITIES
Capital expenditures		(3,434	)		(2,816	)		(2,459	)
Business acquisition, net of cash acquired		(96	)		—			—
Proceeds from asset dispositions and other		111			35			76
Cash used in investing activities		(3,419	)		(2,781	)		(2,383	)
FINANCING ACTIVITIES
Principal payments on debt		(262	)		(653	)		(501	)
Proceeds from debt issuance		—			—			1,000
Proceeds from stock issuances		108			94			41
Excess tax benefit on the exercise of stock options		23			25			4
Dividends paid		(151	)		(138	)		(137	)
Other, net		(5	)		(20	)		(7	)
Cash (used in) provided by financing activities		(287	)		(692	)		400
Effect of exchange rate changes on cash		41			(5	)		(17	)
Net increase (decrease) in cash and cash equivalents		376			(340	)		753
Cash and cash equivalents at beginning of period		1,952			2,292			1,539
Cash and cash equivalents at end of period	$	2,328		$	1,952		$	2,292

The accompanying notes are an integral part of these consolidated financial statements.

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FEDEX CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’
INVESTMENT AND COMPREHENSIVE INCOME

(IN MILLIONS, EXCEPT SHARE DATA)

								Accumulated
			Additional					Other
	Common		Paid-in		Retained			Comprehensive			Treasury
	Stock		Capital		Earnings			Income (Loss)			Stock			Total
Balance at May 31, 2008	$	31	$	1,922	$	13,002		$	(425	)	$	(4	)	$	14,526
Adjustment to opening balances for retirement plans measurement date transition, net of tax benefit of $26 and expense of $220, respectively		—		—		(44	)		369			—			325
Balance at June 1, 2008		31		1,922		12,958			(56	)		(4	)		14,851
Net income		—		—		98			—			—			98
Foreign currency translation adjustment, net of tax of $28		—		—		—			(112	)		—			(112	)
Retirement plans adjustments, net of tax of $718		—		—		—			(1,205	)		—			(1,205	)
Total comprehensive loss															(1,219	)
Cash dividends declared ($0.44 per share)		—		—		(137	)		—			—			(137	)
Employee incentive plans and other (995,271 shares issued)		—		131		—			—			—			131
Balance at May 31, 2009		31		2,053		12,919			(1,373	)		(4	)		13,626
Net income		—		—		1,184			—			—			1,184
Foreign currency translation adjustment, net of tax of $2		—		—		—			(25	)		—			(25	)
Retirement plans adjustments, net of tax of $617		—		—		—			(1,042	)		—			(1,042	)
Total comprehensive income															117
Purchase of treasury stock		—		—		—			—			(3	)		(3	)
Cash dividends declared ($0.44 per share)		—		—		(137	)		—			—			(137	)
Employee incentive plans and other (2,375,753 shares issued)		—		208		—			—			—			208
Balance at May 31, 2010		31		2,261		13,966			(2,440	)		(7	)		13,811
Net income		—		—		1,452			—			—			1,452
Foreign currency translation adjustment, net of tax of $27		—		—		—			125			—			125
Retirement plans adjustments, net of tax of $141		—		—		—			(235	)		—			(235	)
Total comprehensive income															1,342
Purchase of treasury stock		—		—		—			—			(5	)		(5	)
Cash dividends declared ($0.48 per share)		—		—		(152	)		—			—			(152	)
Employee incentive plans and other (2,229,051 shares issued)		1		223		—			—			—			224
Balance at May 31, 2011	$	32	$	2,484	$	15,266		$	(2,550	)	$	(12	)	$	15,220

The accompanying notes are an integral part of these consolidated financial statements.

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1: DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS. FedEx Corporation (“FedEx”) provides a broad portfolio of transportation, e-commerce and business services through companies competing collectively, operating independently and managed collaboratively, under the respected FedEx brand. Our primary operating companies are Federal Express Corporation (“FedEx Express”), the world’s largest express transportation company; FedEx Ground Package System, Inc. (“FedEx Ground”), a leading provider of small-package ground delivery services; and FedEx Freight, Inc. (“FedEx Freight”), a leading U.S. provider of less-than-truckload (“LTL”) freight services. These companies represent our major service lines and, along with FedEx Corporate Services, Inc. (“FedEx Services”), form the core of our reportable segments. Our FedEx Services segment provides sales, marketing and information technology support to our transportation segments. In addition, the FedEx Services segment provides customers with retail access to FedEx Express and FedEx Ground shipping services through FedEx Office and Print Services, Inc. (“FedEx Office”) and provides customer service, technical support and billing and collection services through FedEx TechConnect, Inc. (“FedEx TechConnect”).

FISCAL YEARS. Except as otherwise specified, references to years indicate our fiscal year ended May 31, 2011 or ended May 31 of the year referenced.

PRINCIPLES OF CONSOLIDATION. The consolidated financial statements include the accounts of FedEx and its subsidiaries, substantially all of which are wholly owned. All significant intercompany accounts and transactions have been eliminated in consolidation.

REVENUE RECOGNITION. We recognize revenue upon delivery of shipments for our transportation businesses and upon completion of services for our business services, logistics and trade services businesses. Certain of our transportation services are provided with the use of independent contractors. FedEx is the principal to the transaction in most instances and in those cases revenue from these transactions is recognized on a gross basis. Costs associated with independent contractor settlements are recognized as incurred and included in the caption “Purchased transportation” in the accompanying consolidated statements of income. For shipments in transit, revenue is recorded based on the percentage of service completed at the balance sheet date. Estimates for future billing adjustments to revenue and accounts receivable are recognized at the time of shipment for money-back service guarantees and billing corrections. Delivery costs are accrued as incurred.

Our contract logistics, global trade services and certain transportation businesses, such as FedEx SmartPost, engage in some transactions wherein they act as agents. Revenue from these transactions is recorded on a net basis. Net revenue includes billings to customers less third-party charges, including transportation or handling costs, fees, commissions, and taxes and duties.

Certain of our revenue-producing transactions are subject to taxes, such as sales tax, assessed by governmental authorities. We present these revenues net of tax.

CREDIT RISK. We routinely grant credit to many of our customers for transportation and business services without collateral. The risk of credit loss in our trade receivables is substantially mitigated by our credit evaluation process, short collection terms and sales to a large number of customers, as well as the low revenue per transaction for most of our services. Allowances for potential credit losses are determined based on historical experience and the impact of current economic factors on the composition of accounts receivable. Historically, credit losses have been within management’s expectations.

ADVERTISING. Advertising and promotion costs are expensed as incurred and are classified in other operating expenses. Advertising and promotion expenses were $375 million in 2011, $374 million in 2010 and $379 million in 2009.

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CASH EQUIVALENTS. Cash in excess of current operating requirements is invested in short-term, interest-bearing instruments with maturities of three months or less at the date of purchase and is stated at cost, which approximates market value.

SPARE PARTS, SUPPLIES AND FUEL. Spare parts (principally aircraft-related) are reported at weighted-average cost. Allowances for obsolescence are provided for spare parts expected to be on hand at the date the aircraft are retired from service. These allowances are provided over the estimated useful life of the related aircraft and engines. Additionally, allowances for obsolescence are provided for spare parts currently identified as excess or obsolete. These allowances are based on management estimates, which are subject to change. Supplies and fuel are reported at weighted average cost.

PROPERTY AND EQUIPMENT. Expenditures for major additions, improvements, flight equipment modifications and certain equipment overhaul costs are capitalized when such costs are determined to extend the useful life of the asset or are part of the cost of acquiring the asset. Maintenance and repairs are charged to expense as incurred. We capitalize certain direct internal and external costs associated with the development of internal-use software. Gains and losses on sales of property used in operations are classified within operating expenses.

For financial reporting purposes, we record depreciation and amortization of property and equipment on a straight-line basis over the asset’s service life or related lease term, if shorter. For income tax purposes, depreciation is computed using accelerated methods when applicable. The depreciable lives and net book value of our property and equipment are as follows (dollars in millions):

		Net Book Value at May 31,
	Range	2011		2010
Wide-body aircraft and related equipment	15 to 30 years	$	6,536	$	5,897
Narrow-body and feeder aircraft and related equipment	5 to 18 years		1,517		1,049
Package handling and ground support equipment	3 to 30 years		1,985		1,895
Vehicles	3 to 15 years		1,076		1,095
Computer and electronic equipment	2 to 10 years		776		649
Facilities and other	2 to 40 years		3,653		3,800

Substantially all property and equipment have no material residual values. The majority of aircraft costs are depreciated on a straight-line basis over 15 to 18 years. We periodically evaluate the estimated service lives and residual values used to depreciate our property and equipment. This evaluation may result in changes in the estimated lives and residual values. Such changes did not materially affect depreciation expense in any period presented. Depreciation expense, excluding gains and losses on sales of property and equipment used in operations, was $1.9 billion in 2011 and 2010, and $1.8 billion in 2009. Depreciation and amortization expense includes amortization of assets under capital lease.

CAPITALIZED INTEREST. Interest on funds used to finance the acquisition and modification of aircraft, including purchase deposits, construction of certain facilities, and development of certain software up to the date the asset is ready for its intended use is capitalized and included in the cost of the asset if the asset is actively under construction. Capitalized interest was $71 million in 2011, $80 million in 2010 and $71 million in 2009.

IMPAIRMENT OF LONG-LIVED ASSETS. Long-lived assets are reviewed for impairment when circumstances indicate the carrying value of an asset may not be recoverable. For assets that are to be held and used, an impairment is recognized when the estimated undiscounted cash flows associated with the asset or group of assets is less than their carrying value. If impairment exists, an adjustment is made to write the asset down to its fair value, and a loss is recorded as the difference between the carrying value and fair value. Fair values are determined based on quoted market values, discounted cash flows or internal and external appraisals, as applicable. Assets to be disposed of are carried at the lower of carrying value or estimated net realizable value.

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We operate integrated transportation networks, and accordingly, cash flows for most of our operating assets are assessed at a network level, not at an individual asset level, for our analysis of impairment. In 2011, we incurred asset impairment charges of $29 million related to the combination of our LTL operations at FedEx Freight (see “FedEx Freight Network Combination” below for additional information).

There were no material property and equipment impairment charges recognized in 2010. During 2009, we recorded $202 million in property and equipment impairment charges. These charges were primarily related to our decision to permanently remove from service certain aircraft, along with certain excess aircraft engines, at FedEx Express.

GOODWILL. Goodwill is recognized for the excess of the purchase price over the fair value of tangible and identifiable intangible net assets of businesses acquired. Several factors give rise to goodwill in our acquisitions, such as the expected benefit from synergies of the combination and the existing workforce of the acquired entity. Goodwill is reviewed at least annually for impairment by comparing the fair value of each reporting unit with its carrying value (including attributable goodwill). Fair value for our reporting units is determined using an income or market approach incorporating market participant considerations and management’s assumptions on revenue growth rates, operating margins, discount rates and expected capital expenditures. Fair value determinations may include both internal and third-party valuations. Unless circumstances otherwise dictate, we perform our annual impairment testing in the fourth quarter.

INTANGIBLE ASSETS. Intangible assets include customer relationships, technology assets and contract-based intangibles acquired in business combinations. Intangible assets are amortized over periods ranging from 3 to 12 years, either on a straight-line basis or an accelerated basis depending upon the pattern in which the economic benefits are realized.

PENSION AND POSTRETIREMENT HEALTHCARE PLANS. Our defined benefit plans are measured using actuarial techniques that reflect management’s assumptions for discount rate, expected long-term investment returns on plan assets, salary increases, expected retirement, mortality, employee turnover and future increases in healthcare costs. We determine the discount rate (which is required to be the rate at which the projected benefit obligation could be effectively settled as of the measurement date) with the assistance of actuaries, who calculate the yield on a theoretical portfolio of high-grade corporate bonds (rated Aa or better) with cash flows that are designed to match our expected benefit payments in future years. A calculated-value method is employed for purposes of determining the expected return on the plan asset component of net periodic pension cost for our tax-qualified U.S. domestic pension plans (“U.S. Pension Plans”).

The accounting guidance related to employers’ accounting for defined benefit pension and other postretirement plans requires recognition in the balance sheet of the funded status of defined benefit pension and other postretirement benefit plans, and the recognition in other comprehensive income (“OCI”) of unrecognized gains or losses and prior service costs or credits. Additionally, the guidance requires the measurement date for plan assets and liabilities to coincide with the plan sponsor’s year end.

At May 31, 2011, we recorded a decrease to equity through OCI of $350 million (net of tax) based primarily on year-end adjustments related to increases in our projected benefit obligation due to a decrease in the discount rate used to measure the liability at May 31, 2011. At May 31, 2010, we recorded a decrease to equity through OCI of $1.0 billion (net of tax) based primarily on year-end adjustments related to increases in our projected benefit obligation due to a decrease in the discount rate used to measure the liability at May 31, 2010.

INCOME TAXES. Deferred income taxes are provided for the tax effect of temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements. The liability method is used to account for income taxes, which requires deferred taxes to be recorded at the statutory rate expected to be in effect when the taxes are paid.

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We recognize liabilities for uncertain income tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step requires us to estimate and measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. It is inherently difficult and subjective to estimate such amounts, as we must determine the probability of various possible outcomes. We reevaluate these uncertain tax positions on a quarterly basis or when new information becomes available to management. These reevaluations are based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, successfully settled issues under audit, and new audit activity. Such a change in recognition or measurement could result in the recognition of a tax benefit or an increase to the related provision.

We classify interest related to income tax liabilities as interest expense, and if applicable, penalties are recognized as a component of income tax expense. The income tax liabilities and accrued interest and penalties that are due within one year of the balance sheet date are presented as current liabilities. The remaining portion of our income tax liabilities and accrued interest and penalties are presented as noncurrent liabilities because payment of cash is not anticipated within one year of the balance sheet date. These noncurrent income tax liabilities are recorded in the caption “Other liabilities” in the accompanying consolidated balance sheets.

SELF-INSURANCE ACCRUALS. We are self-insured for workers’ compensation claims, vehicle accidents and general liabilities, benefits paid under employee healthcare programs and long-term disability benefits. Accruals are primarily based on the actuarially estimated, undiscounted cost of claims, which includes incurred-but-not-reported claims. Current workers’ compensation claims, vehicle and general liability, employee healthcare claims and long-term disability are included in accrued expenses. We self-insure up to certain limits that vary by operating company and type of risk. Periodically, we evaluate the level of insurance coverage and adjust insurance levels based on risk tolerance and premium expense.

LEASES. We lease certain aircraft, facilities, equipment and vehicles under capital and operating leases. The commencement date of all leases is the earlier of the date we become legally obligated to make rent payments or the date we may exercise control over the use of the property. In addition to minimum rental payments, certain leases provide for contingent rentals based on equipment usage principally related to aircraft leases at FedEx Express and copier usage at FedEx Office. Rent expense associated with contingent rentals is recorded as incurred. Certain of our leases contain fluctuating or escalating payments and rent holiday periods. The related rent expense is recorded on a straight-line basis over the lease term. The cumulative excess of rent payments over rent expense is accounted for as a deferred lease asset and recorded in “Other assets” in the accompanying consolidated balance sheets. The cumulative excess of rent expense over rent payments is accounted for as a deferred lease obligation. Leasehold improvements associated with assets utilized under capital or operating leases are amortized over the shorter of the asset’s useful life or the lease term.

DEFERRED GAINS. Gains on the sale and leaseback of aircraft and other property and equipment are deferred and amortized ratably over the life of the lease as a reduction of rent expense. Substantially all of these deferred gains are related to aircraft transactions.

FOREIGN CURRENCY TRANSLATION. Translation gains and losses of foreign operations that use local currencies as the functional currency are accumulated and reported, net of applicable deferred income taxes, as a component of accumulated other comprehensive income within common stockholders’ investment. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the local currency are included in the caption “Other, net” in the accompanying consolidated statements of income and were immaterial for each period presented. Cumulative net foreign currency translation gains in accumulated other comprehensive income were $156 million at May 31, 2011, $30 million at May 31, 2010 and $56 million at May 31, 2009.

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EMPLOYEES UNDER COLLECTIVE BARGAINING ARRANGEMENTS. The pilots of Federal Express Corporation (“FedEx Express”), which represent a small number of FedEx Express’s total employees, are employed under a collective bargaining agreement. During the fourth quarter of 2011, the pilots ratified a new labor contract that includes safety initiatives, increases in hourly pay rates and travel per diem rates, and provisions for opening a European crew base. The new contract is scheduled to become amendable in March 2013 unless the union exercises its option to shorten the contract, in which case the agreement would be amendable in March 2012 and a portion of the hourly pay increases would be canceled. In addition to our pilots at FedEx Express, certain of FedEx Express’s non-U.S. employees are unionized.

STOCK-BASED COMPENSATION. We recognize compensation expense for stock-based awards under the provisions of the accounting guidance related to share-based payments. This guidance requires recognition of compensation expense for stock-based awards using a fair value method.

DIVIDENDS DECLARED PER COMMON SHARE. On June 6, 2011, our Board of Directors declared a quarterly dividend of $0.13 per share of common stock. The dividend was paid on July 1, 2011 to stockholders of record as of the close of business on June 17, 2011. Each quarterly dividend payment is subject to review and approval by our Board of Directors, and we evaluate our dividend payment amount on an annual basis at the end of each fiscal year.

FEDEX FREIGHT NETWORK COMBINATION. The previously announced combination of our FedEx Freight and FedEx National LTL operations was completed on January 30, 2011. Our combined LTL network will increase efficiencies, reduce operational costs and provide customers both Priority and Economy LTL freight services across all lengths of haul from one integrated company. These actions resulted in the following incremental costs, including an impairment charge recorded during 2011. Charges for the year ended May 31, 2011 include the following (in millions):

	2011
Severance	$	40
Lease terminations		20
Asset impairments		29
Impairment and other charges		89
Other program costs		44
Total program costs	$	133

Other program costs include $15 million of accelerated depreciation expense due to a change in the estimated useful life of certain assets impacted by the combination of these operations and other incremental costs directly associated with the program. Substantially all of the severance accruals were paid during the fourth quarter of 2011 and the remaining severance accruals will be paid during the first quarter of 2012. We have received $88 million related to asset sales, which offset the total cash outlays for the program. The estimates recorded at May 31, 2011 are not subject to any material risk of change.

USE OF ESTIMATES. The preparation of our consolidated financial statements requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, the reported amounts of revenues and expenses and the disclosure of contingent liabilities. Management makes its best estimate of the ultimate outcome for these items based on historical trends and other information available when the financial statements are prepared. Changes in estimates are recognized in accordance with the accounting rules for the estimate, which is typically in the period when new information becomes available to management. Areas where the nature of the estimate makes it reasonably possible that actual results could materially differ from amounts estimated include: self-insurance accruals; retirement plan obligations; long-term incentive accruals; tax liabilities; accounts receivable allowances; obsolescence of spare parts; contingent liabilities; loss contingencies, such as litigation and other claims; and impairment assessments on long-lived assets (including goodwill).

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NOTE 2: RECENT ACCOUNTING GUIDANCE

New accounting rules and disclosure requirements can significantly impact our reported results and the comparability of our financial statements. We believe the following new accounting guidance is relevant to the readers of our financial statements.

On June 1, 2008, we adopted the authoritative guidance issued by the Financial Accounting Standards Board (“FASB”) on fair value measurements, which provides a common definition of fair value, establishes a uniform framework for measuring fair value and requires expanded disclosures about fair value measurements. On June 1, 2009, we implemented the previously deferred provisions of this guidance for nonfinancial assets and liabilities recorded at fair value, as required. The adoption of this new guidance had no impact on our financial statements.

On June 1, 2009, we adopted the authoritative guidance issued by FASB on employers’ disclosures about postretirement benefit plan assets. This guidance provides objectives that an employer should consider when providing detailed disclosures about assets of a defined benefit pension or other postretirement plan, including disclosures about investment policies and strategies, categories of plan assets, significant concentrations of risk and the inputs and valuation techniques used to measure the fair value of plan assets. See Note 12 for related disclosures.

On June 1, 2009, we adopted the authoritative guidance issued by FASB related to interim disclosures about the fair value of financial instruments. This guidance requires disclosures about the fair value of financial instruments for interim reporting periods in addition to annual reporting periods.

In June 2011, the FASB issued new guidance to make the presentation of items within OCI more prominent. The new standard will require companies to present items of net income, items of OCI and total comprehensive income in one continuous statement or two separate consecutive statements, and companies will no longer be allowed to present items of OCI in the statement of stockholders’ equity. Reclassification adjustments between OCI and net income will be presented separately on the face of the financial statements. This new standard is effective for our fiscal year ending May 31, 2013.

We believe there is no additional new accounting guidance adopted but not yet effective that is relevant to the readers of our financial statements. However, there are numerous new proposals under development which, if and when enacted, may have a significant impact on our financial reporting.

NOTE 3: BUSINESS COMBINATIONS

On February 22, 2011, FedEx Express completed the acquisition of the Indian logistics, distribution and express businesses of AFL Pvt. Ltd. and its affiliate Unifreight India Pvt. Ltd. for $96 million in cash. The financial results of the acquired businesses are included in the FedEx Express segment from the date of acquisition and were not material to our results of operations or financial condition. Substantially all of the purchase price was allocated to goodwill.

On December 15, 2010, FedEx entered into an agreement to acquire Servicios Nacionales Mupa, S.A. de C.V. (MultiPack), a Mexican domestic express package delivery company. This acquisition will be funded with cash from operations and is expected to be completed during the first quarter of 2012, subject to customary closing conditions. The financial results of the acquired company will be included in the FedEx Express segment from the date of acquisition and will be immaterial to our 2012 results.

These acquisitions will give us more robust domestic transportation networks and added capabilities in these important global markets.

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NOTE 4: GOODWILL AND OTHER INTANGIBLE ASSETS

GOODWILL. The carrying amount of goodwill attributable to each reportable operating segment and changes therein are as follows (in millions):

	FedEx Express			FedEx Ground		FedEx Freight			FedEx Services
	Segment			Segment		Segment			Segment			Total
Goodwill at May 31, 2009	$	1,090		$	90	$	802		$	1,539		$	3,521
Accumulated impairment charges		—			—		(115	)		(1,177	)		(1,292	)
Balance as of May 31, 2009		1,090			90		687			362			2,229
Impairment charge		—			—		(18	)		—			(18	)
Purchase adjustments and other(1)		(11	)		—		—			—			(11	)
Transfer between segments(2)		66			—		(66	)		—			—
Balance as of May 31, 2010		1,145			90		603			362			2,200
Goodwill acquired(3)		89			—		—			—			89
Purchase adjustments and other(1)		38			—		(1	)		—			37
Balance as of May 31, 2011	$	1,272		$	90	$	602		$	362		$	2,326
Accumulated goodwill impairment charges as of May 31, 2011	$	—		$	—	$	(133	)	$	(1,177	)	$	(1,310	)

(1)	Primarily currency translation adjustments.
(2)	Transfer of goodwill related to the merger of Caribbean Transportation Services into FedEx Express effective June 1, 2009.
(3)	Goodwill acquired in 2011 relates to the acquisition of the Indian logistics, distribution and express businesses of AFL Pvt. Ltd. and its affiliate Unifreight India Pvt. Ltd. See Note 3 for related disclosures.

Our reporting units with significant recorded goodwill include our FedEx Express, FedEx Freight and FedEx Office reporting units. We evaluated these reporting units during the fourth quarter of 2011. The estimated fair value of each of these reporting units exceeded their carrying values in 2011, and we do not believe that any of these reporting units are at risk as of May 31, 2011.

Goodwill Impairment Charges — 2010

In connection with our annual impairment testing of goodwill conducted in the fourth quarter of 2010, we recorded a charge of $18 million for impairment of the value of the remaining goodwill at our FedEx National LTL reporting unit. In connection with the combination of our LTL networks in 2011, this unit was merged into the FedEx Freight reporting unit. The impairment charge resulted from the significant negative impact of the U.S. recession on the LTL industry, which resulted in volume and yield declines and operating losses.

Goodwill Impairment Charges — 2009

FEDEX OFFICE. During 2009, in response to the lower revenues and continued operating losses at FedEx Office resulting from the U.S. recession, the company initiated an internal reorganization designed to improve revenue-generating capabilities and reduce costs including headcount reductions, the termination of operations in some international locations and substantially curtailing future network expansion. Despite these actions, operating losses and weak economic conditions significantly impacted our FedEx Office reporting unit.

In connection with our annual impairment testing in 2009, we concluded that the recorded goodwill was impaired and recorded an impairment charge of $810 million during the fourth quarter of 2009. The goodwill impairment charge is included in 2009 operating expenses in the accompanying consolidated statements of income. This charge was included in the results of the FedEx Services segment and was not allocated to our transportation segments, as the charge was unrelated to the core performance of those businesses.

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FEDEX NATIONAL LTL. In 2009, we recorded a goodwill impairment charge of $90 million at our FedEx National LTL unit. This charge was a result of reduced revenues and increased operating losses due to the negative impact of the U.S. recession.

OTHER INTANGIBLE ASSETS. The net book value of our intangible assets was $38 million in 2011 and $69 million in 2010. Amortization expense for intangible assets was $32 million in 2011, $51 million in 2010 and $73 million in 2009. Estimated amortization expense is expected to be immaterial in 2012.

NOTE 5: SELECTED CURRENT LIABILITIES

The components of selected current liability captions were as follows (in millions):

	May 31,
	2011		2010
Accrued Salaries and Employee Benefits
Salaries	$	256	$	230
Employee benefits, including variable compensation		468		386
Compensated absences		544		530
	$	1,268	$	1,146
Accrued Expenses
Self-insurance accruals	$	696	$	675
Taxes other than income taxes		357		347
Other		841		693
	$	1,894	$	1,715

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NOTE 6: LONG-TERM DEBT AND OTHER FINANCING ARRANGEMENTS

The components of long-term debt (net of discounts), along with maturity dates for the years subsequent to May 31, 2011, are as follows (in millions):

	May 31,
	2011		2010
Senior unsecured debt
Interest rate of 7.25%, due in 2011	$	—	$	250
Interest rate of 9.65%, due in 2013		300		300
Interest rate of 7.38%, due in 2014		250		250
Interest rate of 8.00%, due in 2019		750		750
Interest rate of 7.60%, due in 2098		239		239
		1,539		1,789
Capital lease obligations		146		141
		1,685		1,930
Less current portion		18		262
	$	1,667	$	1,668

Interest on our fixed-rate notes is paid semi-annually. Long-term debt, exclusive of capital leases, had carrying values of $1.5 billion compared with estimated fair values of $1.9 billion at May 31, 2011, and $1.8 billion compared with estimated fair values of $2.1 billion at May 31, 2010. The estimated fair values were determined based on quoted market prices or on the current rates offered for debt with similar terms and maturities.

We have a shelf registration statement filed with the Securities and Exchange Commission that allows us to sell, in one or more future offerings, any combination of our unsecured debt securities and common stock.

During 2011, we repaid our $250 million 7.25% unsecured notes that matured on February 15, 2011. During 2010, we repaid our $500 million 5.50% notes that matured on August 15, 2009 using cash from operations and a portion of the proceeds of our January 2009 $1 billion senior unsecured debt offering. During 2011, we made principal payments in the amount of $12 million related to capital lease obligations. During 2010, we made principal payments in the amount of $153 million related to capital lease obligations.

A $1 billion revolving credit facility is available to finance our operations and other cash flow needs and to provide support for the issuance of commercial paper. This five-year credit agreement was entered into on April 26, 2011, and replaced the $1 billion three-year credit agreement dated July 22, 2009. The agreement contains a financial covenant, which requires us to maintain a leverage ratio of adjusted debt (long-term debt, including the current portion of such debt, plus six times our last four fiscal quarters’ rentals and landing fees) to capital (adjusted debt plus total common stockholders’ investment) that does not exceed 0.7 to 1.0. Our leverage ratio of adjusted debt to capital was 0.5 at May 31, 2011. Under this financial covenant, our additional borrowing capacity is capped, although this covenant continues to provide us with ample liquidity, if needed. We are in compliance with this and all other restrictive covenants of our revolving credit agreement and do not expect the covenants to affect our operations, including our liquidity or borrowing capacity. As of May 31, 2011, no commercial paper was outstanding and the entire $1 billion under the revolving credit facility was available for future borrowings.

We issue other financial instruments in the normal course of business to support our operations, including letters of credit and surety bonds. We had a total of $619 million in letters of credit outstanding at May 31, 2011, with $93 million unused under our primary $500 million letter of credit facility, and $460 million in outstanding surety bonds placed by third-party insurance providers. These instruments are required under certain U.S. self-insurance programs and are also used in the normal course of international operations. The underlying liabilities insured by these instruments are reflected in our balance sheets, where applicable. Therefore, no additional liability is reflected for the letters of credit and surety bonds themselves.

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Our capital lease obligations include leases for aircraft and facilities. Our facility leases include leases that guarantee the repayment of certain special facility revenue bonds that have been issued by municipalities primarily to finance the acquisition and construction of various airport facilities and equipment. These bonds require interest payments at least annually, with principal payments due at the end of the related lease agreement.

NOTE 7: LEASES

We utilize certain aircraft, land, facilities, retail locations and equipment under capital and operating leases that expire at various dates through 2046. We leased 11% of our total aircraft fleet under capital or operating leases as of May 31, 2011 as compared to 12% as of May 31, 2010. A portion of our supplemental aircraft are leased by us under agreements that provide for cancellation upon 30 days’ notice. Our leased facilities include national, regional and metropolitan sorting facilities, retail facilities and administrative buildings.

The components of property and equipment recorded under capital leases were as follows (in millions):

	May 31,
	2011		2010
Aircraft	$	8	$	15
Package handling and ground support equipment		165		165
Vehicles		17		17
Other, principally facilities		145		146
		335		343
Less accumulated amortization		307		312
	$	28	$	31

Rent expense under operating leases for the years ended May 31 was as follows (in millions):

	2011		2010		2009
Minimum rentals	$	2,025	$	2,001	$	2,047
Contingent rentals(1)		193		152		181
	$	2,218	$	2,153	$	2,228

⁽¹⁾ Contingent rentals are based on equipment usage.

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A summary of future minimum lease payments under capital leases and noncancelable operating leases with an initial or remaining term in excess of one year at May 31, 2011 is as follows (in millions):

			Operating Leases
			Aircraft				Total
	Capital		and Related		Facilities		Operating
	Leases		Equipment		and Other		Leases
2012	$	25	$	494	$	1,300	$	1,794
2013		119		499		1,155		1,654
2014		2		473		992		1,465
2015		2		455		899		1,354
2016		2		458		734		1,192
Thereafter		13		1,545		4,988		6,533
Total		163	$	3,924	$	10,068	$	13,992
Less amount representing interest		17
Present value of net minimum lease payments	$	146

The weighted-average remaining lease term of all operating leases outstanding at May 31, 2011 was approximately six years. While certain of our lease agreements contain covenants governing the use of the leased assets or require us to maintain certain levels of insurance, none of our lease agreements include material financial covenants or limitations.

FedEx Express makes payments under certain leveraged operating leases that are sufficient to pay principal and interest on certain pass-through certificates. The pass-through certificates are not direct obligations of, or guaranteed by, FedEx or FedEx Express.

We are the lessee in a series of operating leases covering a portion of our leased aircraft. The lessors are trusts established specifically to purchase, finance and lease aircraft to us. These leasing entities meet the criteria for variable interest entities. We are not the primary beneficiary of the leasing entities, as the lease terms are consistent with market terms at the inception of the lease and do not include a residual value guarantee, fixed-price purchase option or similar feature that obligates us to absorb decreases in value or entitles us to participate in increases in the value of the aircraft. As such, we are not required to consolidate the entity as the primary beneficiary. Our maximum exposure under these leases is included in the summary of future minimum lease payments shown above.

NOTE 8: PREFERRED STOCK

Our Certificate of Incorporation authorizes the Board of Directors, at its discretion, to issue up to 4,000,000 shares of preferred stock. The stock is issuable in series, which may vary as to certain rights and preferences, and has no par value. As of May 31, 2011, none of these shares had been issued.

NOTE 9: STOCK-BASED COMPENSATION

Our total stock-based compensation expense for the years ended May 31 was as follows (in millions):

	2011		2010		2009
Stock-based compensation expense	$	98	$	101	$	99

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We have two types of equity-based compensation: stock options and restricted stock.

STOCK OPTIONS. Under the provisions of our incentive stock plans, key employees and non-employee directors may be granted options to purchase shares of our common stock at a price not less than its fair market value on the date of grant. Vesting requirements are determined at the discretion of the Compensation Committee of our Board of Directors. Option-vesting periods range from one to four years, with 83% of our options vesting ratably over four years. Compensation expense associated with these awards is recognized on a straight-line basis over the requisite service period of the award.

RESTRICTED STOCK. Under the terms of our incentive stock plans, restricted shares of our common stock are awarded to key employees. All restrictions on the shares expire ratably over a four-year period. Shares are valued at the market price on the date of award. The terms of our restricted stock provide for continued vesting subsequent to the employee’s retirement. Compensation expense associated with these awards is recognized on a straight-line basis over the shorter of the remaining service or vesting period.

VALUATION AND ASSUMPTIONS. We use the Black-Scholes option pricing model to calculate the fair value of stock options. The value of restricted stock awards is based on the stock price of the award on the grant date. We record stock-based compensation expense in the “Salaries and employee benefits” caption in the accompanying consolidated statements of income.

The key assumptions for the Black-Scholes valuation method include the expected life of the option, stock price volatility, a risk-free interest rate, and dividend yield. Many of these assumptions are judgmental and highly sensitive. Following is a table of the weighted-average Black-Scholes value of our stock option grants, the intrinsic value of options exercised (in millions), and the key weighted-average assumptions used in the valuation calculations for the options granted during the years ended May 31, and then a discussion of our methodology for developing each of the assumptions used in the valuation model:

	2011			2010			2009
Weighted-average Black-Scholes value	$	28.12		$	20.47		$	23.66
Intrinsic value of options exercised	$	80		$	77		$	7
Black-Scholes Assumptions:
Expected lives	5.9 years			5.7 years			5.5 years
Expected volatility		34	%		32	%		23	%
Risk-free interest rate		2.36	%		3.24	%		3.28	%
Dividend yield		0.558	%		0.742	%		0.492	%

Expected Lives. This is the period of time over which the options granted are expected to remain outstanding. Options granted have a maximum term of 10 years. We examine actual stock option exercises to determine the expected life of the options. An increase in the expected term will increase compensation expense.

Expected Volatility. Actual changes in the market value of our stock are used to calculate the volatility assumption. We calculate daily market value changes from the date of grant over a past period equal to the expected life of the options to determine volatility. An increase in the expected volatility will increase compensation expense.

Risk-Free Interest Rate. This is the U.S. Treasury Strip rate posted at the date of grant having a term equal to the expected life of the option. An increase in the risk-free interest rate will increase compensation expense.

Dividend Yield. This is the annual rate of dividends per share over the exercise price of the option. An increase in the dividend yield will decrease compensation expense.

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The following table summarizes information about stock option activity for the year ended May 31, 2011:

	Stock Options
						Weighted-
				Weighted-		Average
				Average		Remaining	Aggregate
				Exercise		Contractual	Intrinsic Value
	Shares			Price		Term	(in millions)(1)
Outstanding at June 1, 2010		20,238,056		$	78.32
Granted		2,474,603			81.86
Exercised		(2,043,050	)		53.13
Forfeited		(506,446	)		104.38
Outstanding at May 31, 2011		20,163,163		$	81.20	5.7 years	$	327
Exercisable		12,968,690		$	84.74	4.3 years	$	181
Expected to vest		6,618,915		$	74.83	8.2 years	$	135
Available for future grants		11,928,567

⁽¹⁾ Only presented for options with market value at May 31, 2011 in excess of the exercise price of the option.

The options granted during the year ended May 31, 2011 are primarily related to our principal annual stock option grant in June 2010.

The following table summarizes information about vested and unvested restricted stock for the year ended May 31, 2011:

	Restricted Stock
				Weighted-
				Average
				Grant Date
	Shares			Fair Value
Unvested at June 1, 2010		637,296		$	74.02
Granted		235,998			78.74
Vested		(234,716	)		81.11
Forfeited		(12,198	)		70.91
Unvested at May 31, 2011		626,380		$	73.20

During the year ended May 31, 2010, there were 391,786 shares of restricted stock granted with a weighted-average fair value of $57.07. During the year ended May 31, 2009, there were 197,180 shares of restricted stock granted with a weighted-average fair value of $90.57.

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The following table summarizes information about stock option vesting during the years ended May 31:

	Stock Options
	Vested during		Fair value
	the year		(in millions)
2009		2,414,815	$	64
2010		2,296,211		63
2011		2,721,602		67

As of May 31, 2011, there was $132 million of total unrecognized compensation cost, net of estimated forfeitures, related to unvested share-based compensation arrangements. This compensation expense is expected to be recognized on a straight-line basis over the remaining weighted-average vesting period of approximately two years.

Total shares outstanding or available for grant related to equity compensation at May 31, 2011 represented 10% of the total outstanding common and equity compensation shares and equity compensation shares available for grant.

NOTE 10: COMPUTATION OF EARNINGS PER SHARE

The calculation of basic and diluted earnings per common share for the years ended May 31 was as follows (in millions, except per share amounts):

	2011		2010		2009
Basic earnings per common share:
Net earnings allocable to common shares(1)	$	1,449	$	1,182	$	97
Weighted-average common shares		315		312		311
Basic earnings per common share	$	4.61	$	3.78	$	0.31
Diluted earnings per common share:
Net earnings allocable to common shares(1)	$	1,449	$	1,182	$	97
Weighted-average common shares		315		312		311
Dilutive effect of share-based awards		2		2		1
Weighted-average diluted shares		317		314		312
Diluted earnings per common share	$	4.57	$	3.76	$	0.31
Anti-dilutive options excluded from diluted earnings per common share		9.3		11.5		12.6

⁽¹⁾ Net earnings available to participating securities were immaterial in all periods presented.

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NOTE 11: INCOME TAXES

The components of the provision for income taxes for the years ended May 31 were as follows (in millions):

	2011			2010			2009
Current provision (benefit)
Domestic:
Federal	$	79		$	36		$	(35	)
State and local		48			54			18
Foreign		198			207			214
		325			297			197
Deferred provision (benefit)
Domestic:
Federal		485			408			327
State and local		12			15			48
Foreign		(9	)		(10	)		7
		488			413			382
	$	813		$	710		$	579

Our current federal income tax expenses in 2011, 2010, and 2009 were significantly reduced by accelerated depreciation deductions we claimed under provisions of the Tax Relief and the Small Business Jobs Acts of 2010, the American Recovery and Reinvestment Tax Act of 2009, and the Economic Stimulus Act of 2008. Those acts, designed to stimulate new business investment in the U.S., accelerated our depreciation deductions for new qualifying investments, such as our new Boeing 777 freighter (“B777F”) aircraft. These are timing benefits only, in that the depreciation would have otherwise been recognized in later years.

Pre-tax earnings of foreign operations for 2011, 2010 and 2009 were $472 million, $555 million and $106 million, respectively, which represent only a portion of total results associated with international shipments.

A reconciliation of the statutory federal income tax rate to the effective income tax rate for the years ended May 31 was as follows:

	2011			2010			2009
Statutory U.S. income tax rate		35.0	%		35.0	%		35.0	%
Increase resulting from:
Goodwill impairment		—			—			48.0
State and local income taxes, net of federal benefit		1.7			2.4			1.9
Other, net		(0.8	)		0.1			0.7
Effective tax rate		35.9	%		37.5	%		85.6	%

Our 2011 rate was lower than our 2010 rate primarily due to increased permanently reinvested foreign earnings and a lower state tax rate driven principally by favorable audit and legislative developments. Our 2009 rate was significantly impacted by goodwill impairment charges that are not deductible for income tax purposes.

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The significant components of deferred tax assets and liabilities as of May 31 were as follows (in millions):

	2011					2010
	Deferred Tax			Deferred Tax		Deferred Tax			Deferred Tax
	Assets			Liabilities		Assets			Liabilities
Property, equipment, leases and intangibles	$	274		$	2,675	$	377		$	2,157
Employee benefits		1,016			34		783			36
Self-insurance accruals		519			—		416			—
Other		422			269		490			238
Net operating loss/credit carryforwards		172			—		142			—
Valuation allowances		(151	)		—		(139	)		—
	$	2,252		$	2,978	$	2,069		$	2,431

The net deferred tax liabilities as of May 31 have been classified in the balance sheets as follows (in millions):

	2011			2010
Current deferred tax asset	$	610		$	529
Noncurrent deferred tax liability		(1,336	)		(891	)
	$	(726	)	$	(362	)

We have $484 million of net operating loss carryovers in various foreign jurisdictions and $524 million of state operating loss carryovers. The valuation allowances primarily represent amounts reserved for operating loss and tax credit carryforwards, which expire over varying periods starting in 2012. As a result of this and other factors, we believe that a substantial portion of these deferred tax assets may not be realized.

Unremitted earnings of our foreign subsidiaries amounted to $640 million at the end of 2011 and $325 million at the end of 2010. We have not recognized deferred taxes for U.S. federal income tax purposes on the unremitted earnings of our foreign subsidiaries that are permanently reinvested. In 2011, our permanent reinvestment strategy with respect to unremitted earnings of our foreign subsidiaries provided a 1.3% benefit to our effective tax rate. Were the earnings to be distributed, in the form of dividends or otherwise, these unremitted earnings would be subject to U.S. federal income tax and non-U.S. withholding taxes. Unrecognized foreign tax credits potentially would be available to reduce a portion of the U.S. tax liability. Determination of the amount of unrecognized deferred U.S. income tax liability is not practicable due to uncertainties related to the timing and source of any potential distribution of such funds, along with other important factors such as the amount of associated foreign tax credits. As of May 31, 2011, we had $300 million of cash in offshore jurisdictions associated with our permanent reinvestment strategy.

We file income tax returns in the U.S., various U.S. state and local jurisdictions, and various foreign jurisdictions. The Internal Revenue Service is currently auditing our consolidated U.S. income tax returns for the 2007 through 2009 tax years. We are no longer subject to U.S. federal income tax examination for years through 2006 except for specific U.S. federal income tax positions that are in various stages of appeal and/or litigation. No resolution date can be reasonably estimated at this time for these appeals and litigation, but their resolution is not expected to have a material effect on our consolidated financial statements. We are also subject to ongoing audits in state, local and foreign tax jurisdictions throughout the world.

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A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in millions):

	2011			2010			2009
Balance at beginning of year	$	82		$	72		$	88
Increases for tax positions taken in the current year		2			3			7
Increases for tax positions taken in prior years		6			14			10
Decreases for tax positions taken in prior years		(10	)		(4	)		(30	)
Settlements		(11	)		(3	)		(3	)
Balance at end of year	$	69		$	82		$	72

Our liabilities recorded for uncertain tax positions include $56 million at May 31, 2011 and $67 million at May 31, 2010 associated with positions that if favorably resolved would provide a benefit to our effective tax rate. We classify interest related to income tax liabilities as interest expense, and if applicable, penalties are recognized as a component of income tax expense. The balance of accrued interest and penalties was $18 million on May 31, 2011 and $20 million on May 31, 2010. Total interest and penalties included in our consolidated statements of income are immaterial. Included in the 2011 and 2010 balances are $9 million of tax positions for which the ultimate deductibility or income inclusion is certain but for which there may be uncertainty about the timing of such deductibility or income inclusion.

It is difficult to predict the ultimate outcome or the timing of resolution for tax positions. Changes may result from the conclusion of ongoing audits, appeals or litigation in state, local, federal and foreign tax jurisdictions, or from the resolution of various proceedings between the U.S. and foreign tax authorities. Our liability for uncertain tax positions includes no matters that are individually or collectively material to us. It is reasonably possible that the amount of the benefit with respect to certain of our unrecognized tax positions will increase or decrease within the next 12 months, but an estimate of the range of the reasonably possible changes cannot be made. However, we do not expect that the resolution of any of our uncertain tax positions will be material.

NOTE 12: RETIREMENT PLANS

We sponsor programs that provide retirement benefits to most of our employees. These programs include defined benefit pension plans, defined contribution plans and postretirement healthcare plans. The accounting for pension and postretirement healthcare plans includes numerous assumptions, such as: discount rates; expected long-term investment returns on plan assets; future salary increases; employee turnover; mortality; and retirement ages. These assumptions most significantly impact our U.S. Pension Plans.

The accounting guidance related to postretirement benefits requires recognition in the balance sheet of the funded status of defined benefit pension and other postretirement benefit plans, and the recognition in accumulated other comprehensive income (“AOCI”) of unrecognized gains or losses and prior service costs or credits. The funded status is measured as the difference between the fair value of the plan’s assets and the projected benefit obligation (“PBO”) of the plan. At May 31, 2011, we recorded a decrease to equity of $350 million (net of tax) attributable to our plans. At May 31, 2010, we recorded a decrease to equity of $1 billion (net of tax) to reflect unrealized actuarial losses during 2010.

A summary of our retirement plans costs over the past three years is as follows (in millions):

	2011		2010		2009
U.S. domestic and international pension plans	$	543	$	308	$	177
U.S. domestic and international defined contribution plans		257		136		237
Postretirement healthcare plans		60		42		57
	$	860	$	486	$	471

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PENSION PLANS. Our largest pension plan covers certain U.S. employees age 21 and over, with at least one year of service. Pension benefits for most employees are accrued under a cash balance formula we call the Portable Pension Account. Under the Portable Pension Account, the retirement benefit is expressed as a dollar amount in a notional account that grows with annual credits based on pay, age and years of credited service, and interest on the notional account balance. The Portable Pension Account benefit is payable as a lump sum or an annuity at retirement at the election of the employee. The plan interest credit rate varies from year to year based on a U.S. Treasury index. Prior to 2009, certain employees earned benefits using a traditional pension formula (based on average earnings and years of service); however, benefits under this formula were capped on May 31, 2008. We also sponsor or participate in nonqualified benefit plans covering certain of our U.S. employee groups and other pension plans covering certain of our international employees. The international defined benefit pension plans provide benefits primarily based on final earnings and years of service and are funded in compliance with local laws and practices.

POSTRETIREMENT HEALTHCARE PLANS. Certain of our subsidiaries offer medical, dental and vision coverage to eligible U.S. retirees and their eligible dependents. U.S. employees covered by the principal plan become eligible for these benefits at age 55 and older, if they have permanent, continuous service of at least 10 years after attainment of age 45 if hired prior to January 1, 1988, or at least 20 years after attainment of age 35 if hired on or after January 1, 1988. Postretirement healthcare benefits are capped at 150% of the 1993 per capita projected employer cost, which has been reached and, therefore, these benefits are not subject to additional future inflation.

PENSION PLAN ASSUMPTIONS. Our pension cost is materially affected by the discount rate used to measure pension obligations, the level of plan assets available to fund those obligations and the expected long-term rate of return on plan assets.

We use a measurement date of May 31 for our pension and postretirement healthcare plans. Management reviews the assumptions used to measure pension costs on an annual basis. Economic and market conditions at the measurement date impact these assumptions from year to year and it is reasonably possible that material changes in pension cost may be experienced in the future. Actuarial gains or losses are generated for changes in assumptions and to the extent that actual results differ from those assumed. These actuarial gains and losses are amortized over the remaining average service lives of our active employees if they exceed a corridor amount in the aggregate. Additional information about our pension plans can be found in the Critical Accounting Estimates section of Management’s Discussion and Analysis of Results of Operations and Financial Condition (“MD&A”) in this Annual Report on Form 10-K (“Annual Report”).

Weighted-average actuarial assumptions for our primary U.S. retirement plans, which represent substantially all of our PBO and accumulated postretirement benefit obligation (“APBO”), are as follows:

	Pension Plans									Postretirement Healthcare Plans
	2011			2010			2009			2011			2010			2009
Discount rate used to determine benefit obligation		5.76	%		6.37	%		7.68	%		5.67	%		6.11	%		7.27	%
Discount rate used to determine net periodic benefit cost		6.37			7.68			7.15			6.11			7.27			7.13
Rate of increase in future compensation levels used to determine benefit obligation		4.58			4.63			4.42			—			—			—
Rate of increase in future compensation levels used to determine net periodic benefit cost		4.63			4.42			4.49			—			—			—
Expected long-term rate of return on assets		8.00			8.00			8.50			—			—			—

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The estimated average rate of return on plan assets is a long-term, forward-looking assumption that also materially affects our pension cost. It is required to be the expected future long-term rate of earnings on plan assets. Establishing the expected future rate of investment return on our pension assets is a judgmental matter. We review the expected long-term rate of return on an annual basis and revise it as appropriate. Management considers the following factors in determining this assumption:

• the duration of our pension plan liabilities, which drives the investment strategy we can employ with our pension plan assets;

• the types of investment classes in which we invest our pension plan assets and the expected compound geometric return we can reasonably expect those investment classes to earn over time; and

• the investment returns we can reasonably expect our investment management program to achieve in excess of the returns we could expect if investments were made strictly in indexed funds.

Our estimated long-term rate of return on plan assets remains at 8% for 2012, consistent with our expected rate of return in 2011 and 2010. For the 15-year period ended May 31, 2011, our actual returns were 7.8%.

Pension expense is also affected by the accounting policy used to determine the value of plan assets at the measurement date. We use a calculated-value method to determine the value of plan assets, which helps mitigate short-term volatility in market performance (both increases and decreases) by amortizing certain actuarial gains or losses over a period no longer than four years. Another method used in practice applies the market value of plan assets at the measurement date. For purposes of valuing plan assets for determining 2012 pension expense, we used the calculated-value method, as our actual returns on plan assets significantly exceeded our assumptions. However, as previously indicated, our pension costs in 2012 are expected to remain flat. The calculated-value method resulted in the same value as the market value in 2011. The calculated-value method significantly mitigated the impact of asset value declines in the determination of our 2010 pension expense, reducing our 2010 expense by approximately $135 million.

The investment strategy for pension plan assets is to utilize a diversified mix of global public and private equity portfolios, together with fixed-income portfolios, to earn a long-term investment return that meets our pension plan obligations. Our pension plan assets are invested primarily in listed securities, and our pension plans hold only a minimal investment in FedEx common stock that is entirely at the discretion of third-party pension fund investment managers. Our largest holding classes are U.S. Large Cap Equities, which is indexed to an S&P 500 fund, and Corporate and U.S. Government Fixed Income Securities. Accordingly, we do not have any significant concentrations of risk. Active management strategies are utilized within the plan in an effort to realize investment returns in excess of market indices. As part of our strategy to manage future pension costs and net funded status volatility, we have transitioned to a liability-driven investment strategy with a greater concentration of fixed-income securities to better align plan assets with liabilities. Our investment strategy also includes the limited use of derivative financial instruments on a discretionary basis to improve investment returns and manage exposure to market risk. In all cases, our investment managers are prohibited from using derivatives for speculative purposes and are not permitted to use derivatives to leverage a portfolio.

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Following is a description of the valuation methodologies used for investments measured at fair value:

• Cash and cash equivalents. These Level 1 investments include cash, cash equivalents and foreign currency valued using exchange rates. The Level 2 investments include commingled funds valued using the net asset value.

• Domestic and international equities. These Level 1 investments are valued at the closing price or last trade reported on the major market on which the individual securities are traded. The Level 2 investments are commingled funds valued using the net asset value.

• Private equity. The valuation of these Level 3 investments requires significant judgment due to the absence of quoted market prices, the inherent lack of liquidity and the long-term nature of such assets. Investments are valued based upon recommendations of our investment managers incorporating factors such as contributions and distributions, market transactions, market comparables and performance multiples.

• Fixed income. We determine the fair value of these Level 2 corporate bonds, U.S. government securities and other fixed income securities by using bid evaluation pricing models or quoted prices of securities with similar characteristics.

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The fair values of investments by level and asset category and the weighted-average asset allocations for our domestic pension plans at the measurement date are presented in the following table (in millions):

	Plan Assets at Measurement Date
	2011
										Quoted Prices in			Other Observable			Unobservable
										Active Markets			Inputs			Inputs
Asset Class	Fair Value			Actual %			Target %			Level 1			Level 2			Level 3
Cash and cash equivalents	$	409			3	%		1	%	$	107		$	302
Domestic equities
U.S. large cap equity		4,280			27			24			26			4,254
U.S. SMID cap equity		1,481			10			9			1,481
International equities		2,013			13			12			1,702			311
Private equities		403			3			5								$	403
Fixed income securities								49
Corporate		3,794			24									3,794
U.S. government		3,135			20									3,135
Mortgage backed and other		66			—									66
Other		(63	)		—			—			(59	)		(4	)
	$	15,518			100	%		100	%	$	3,257		$	11,858		$	403

	2010
										Quoted Prices in			Other Observable			Unobservable
										Active Markets			Inputs			Inputs
Asset Class	Fair Value			Actual %			Target %			Level 1			Level 2			Level 3
Cash and cash equivalents	$	427			3	%		1	%	$	145		$	282
Domestic equities
U.S. large cap equity		3,374			26			24						3,374
U.S. SMID cap equity		1,195			9			9			1,195
International equities		1,502			12			12			1,262			240
Private equities		399			3			5								$	399
Fixed income securities								49
Corporate		3,546			27									3,546
U.S. government		2,537			19									2,537
Mortgage backed and other		122			1									122
Other		(47	)		—			—			(46	)		(1	)
	$	13,055			100	%		100	%	$	2,556		$	10,100		$	399

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The change in fair value of Level 3 assets that use significant unobservable inputs is shown in the table below (in millions):

Beginning balance May 31, 2009	$	341
Actual return on plan assets:
Assets held at May 31, 2010		38
Assets sold during the year		24
Purchases, sales and settlements		(4	)
Balance at May 31, 2010		399
Actual return on plan assets:
Assets held at May 31, 2011		27
Assets sold during the year		36
Purchases, sales and settlements		(59	)
Ending balance May 31, 2011	$	403

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The following table provides a reconciliation of the changes in the pension and postretirement healthcare plans’ benefit obligations and fair value of assets over the two-year period ended May 31, 2011 and a statement of the funded status as of May 31, 2011 and 2010 (in millions):

	Pension Plans						Postretirement Healthcare Plans
	2011			2010			2011			2010
Accumulated Benefit Obligation (“ABO”)	$	16,806		$	14,041
Changes in Projected Benefit Obligation (“PBO”) and Accumulated Postretirement Benefit Obligation (“APBO”)
PBO/APBO at the beginning of year	$	14,484		$	11,050		$	565		$	433
Service cost		521			417			31			24
Interest cost		900			823			34			30
Actuarial loss		1,875			2,607			44			102
Benefits paid		(468	)		(391	)		(48	)		(45	)
Other		60			(22	)		22			21
PBO/APBO at the end of year	$	17,372		$	14,484		$	648		$	565
Change in Plan Assets
Fair value of plan assets at the beginning of year	$	13,295		$	10,812		$	—		$	—
Actual return on plan assets		2,425			1,994			—			—
Company contributions		557			900			26			24
Benefits paid		(468	)		(391	)		(48	)		(45	)
Other		32			(20	)		22			21
Fair value of plan assets at the end of year	$	15,841		$	13,295		$	—		$	—
Funded Status of the Plans	$	(1,531	)	$	(1,189	)	$	(648	)	$	(565	)
Amount Recognized in the Balance Sheet at May 31:
Current pension, postretirement healthcare and other benefit obligations	$	(33	)	$	(30	)	$	(31	)	$	(28	)
Noncurrent pension, postretirement healthcare and other benefit obligations		(1,498	)		(1,159	)		(617	)		(537	)
Net amount recognized	$	(1,531	)	$	(1,189	)	$	(648	)	$	(565	)
Amounts Recognized in AOCI and not yet reflected in Net Periodic Benefit Cost:
Net actuarial loss (gain)	$	5,386		$	5,157		$	(85	)	$	(134	)
Prior service (credit) cost and other		(993	)		(1,106	)		2			2
Total	$	4,393		$	4,051		$	(83	)	$	(132	)
Amounts Recognized in AOCI and not yet reflected in Net Periodic Benefit Cost expected to be amortized in next year’s Net Periodic Benefit Cost:
Net actuarial loss (gain)	$	307		$	284		$	(1	)	$	(5	)
Prior service credit and other		(112	)		(113	)		—			—
Total	$	195		$	171		$	(1	)	$	(5	)

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Our pension plans included the following components at May 31, 2011 and 2010 (in millions):

					Fair Value of
	ABO		PBO		Plan Assets		Funded Status
2011
Qualified	$	16,024	$	16,445	$	15,518	$	(927	)
Nonqualified		335		339		—		(339	)
International Plans		447		588		323		(265	)
Total	$	16,806	$	17,372	$	15,841	$	(1,531	)
2010
Qualified	$	13,311	$	13,635	$	13,055	$	(580	)
Nonqualified		346		348		—		(348	)
International Plans		384		501		240		(261	)
Total	$	14,041	$	14,484	$	13,295	$	(1,189	)

The table above provides the ABO, PBO, fair value of plan assets and funded status of our pension plans on an aggregated basis. The following table presents our plans on a disaggregated basis to show those plans (as a group) whose assets did not exceed their liabilities. These plans are comprised of our unfunded nonqualified plans, certain international plans and our U.S. Pension Plans. At May 31, 2011 and 2010, the fair value of plan assets for pension plans with a PBO or ABO in excess of plan assets were as follows (in millions):

	PBO Exceeds the Fair Value
	of Plan Assets
	2011			2010
Pension Benefits
Fair value of plan assets	$	15,815		$	13,295
PBO		(17,346	)		(14,484	)
Net funded status	$	(1,531	)	$	(1,189	)

	ABO Exceeds the Fair Value
	of Plan Assets
	2011			2010
Pension Benefits
ABO(1)	$	(16,530	)	$	(14,014	)
Fair value of plan assets		15,538			13,263
PBO		(17,014	)		(14,441	)
Net funded status	$	(1,476	)	$	(1,178	)

⁽¹⁾ ABO not used in determination of funded status.

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Contributions to our U.S. Pension Plans for the years ended May 31 were as follows (in millions):

	2011		2010
Required	$	359	$	353
Voluntary		121		495
	$	480	$	848

Net periodic benefit cost for the three years ended May 31 were as follows (in millions):

	Pension Plans									Postretirement Healthcare Plans
	2011			2010			2009			2011			2010			2009
Service cost	$	521		$	417		$	499		$	31		$	24		$	31
Interest cost		900			823			798			34			30			33
Expected return on plan assets		(1,062	)		(955	)		(1,059	)		—			—			—
Recognized actuarial losses (gains) and other		184			23			(61	)		(5	)		(12	)		(7	)
Net periodic benefit cost	$	543		$	308		$	177		$	60		$	42		$	57

The increase in pension costs from 2010 to 2011 was due to a significantly lower discount rate used to measure our benefit obligations at our May 31, 2010 measurement date.

Amounts recognized in OCI for all plans were as follows (in millions):

	2011										2010
							Postretirement Healthcare										Postretirement Healthcare
	Pension Plans						Plans				Pension Plans						Plans
	Gross			Net of Tax			Gross		Net of Tax		Gross			Net of Tax			Gross		Net of Tax
	Amount			Amount			Amount		Amount		Amount			Amount			Amount		Amount
Net loss and other arising during period	$	511		$	321		$	44	$	26	$	1,562		$	986		$	102	$	59
Loss from settlements and curtailments		(13	)		(8	)		—		—		—			—			—		—
Amortizations:
Prior services credit		113			71			—		—		113			99			—		—
Actuarial (losses) gains and other		(284	)		(178	)		5		3		(130	)		(114	)		12		12
Total recognized in OCI	$	327		$	206		$	49	$	29	$	1,545		$	971		$	114	$	71

Benefit payments, which reflect expected future service, are expected to be paid as follows for the years ending May 31 (millions):

			Postretirement
	Pension Plans		Healthcare Plans
2012	$	562	$	31
2013		633		31
2014		694		33
2015		754		35
2016		843		37
2017-2021		5,667		225

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These estimates are based on assumptions about future events. Actual benefit payments may vary significantly from these estimates.

Future medical benefit claims costs are estimated to increase at an annual rate of 8.3% during 2012, decreasing to an annual growth rate of 4.5% in 2029 and thereafter. Future dental benefit costs are estimated to increase at an annual rate of 7.0% during 2012, decreasing to an annual growth rate of 4.5% in 2029 and thereafter. A 1% change in these annual trend rates would not have a significant impact on the APBO at May 31, 2011 or 2011 benefit expense because the level of these benefits is capped.

NOTE 13: BUSINESS SEGMENT INFORMATION

FedEx Express, FedEx Ground and FedEx Freight represent our major service lines and, along with FedEx Services, form the core of our reportable segments. Our reportable segments include the following businesses:

FedEx Express Segment	FedEx Express (express transportation)
	FedEx Trade Networks (global trade services)
	FedEx SupplyChain Systems (logistics services)
FedEx Ground Segment	FedEx Ground (small-package ground delivery)
	FedEx SmartPost (small-parcel consolidator)
FedEx Freight Segment	FedEx Freight (LTL freight transportation)
	FedEx Custom Critical (time-critical transportation)
FedEx Services Segment	FedEx Services (sales, marketing and information technology functions)
	FedEx TechConnect (customer service, technical support, billings and collections)
	FedEx Office (document and business services and package acceptance)

Effective January 30, 2011, our FedEx Freight and FedEx National LTL businesses were merged into a single operation. FedEx Freight now offers two standard services: FedEx Freight Priority, a faster transit service with a price premium; and FedEx Freight Economy, an economical service.

FedEx Services Segment

The FedEx Services segment operates combined sales, marketing, administrative and information technology functions in shared services operations that support our transportation businesses and allow us to obtain synergies from the combination of these functions. The FedEx Services segment includes: FedEx Services, which provides sales, marketing and information technology support to our other companies; FedEx TechConnect, which is responsible for customer service, technical support, billings and collections for U.S. customers of our major business units; and FedEx Office, which provides an array of document and business services and retail access to our customers for our package transportation businesses. Effective September 1, 2009, FedEx SupplyChain Systems, formerly included in the FedEx Services reporting segment, was realigned to become part of the FedEx Express reporting segment. Prior year amounts have not been reclassified to conform to the current year segment presentation because these reclassifications are immaterial.

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The FedEx Services segment provides direct and indirect support to our transportation businesses, and we allocate all of the net operating costs of the FedEx Services segment (including the net operating results of FedEx Office) to reflect the full cost of operating our transportation businesses in the results of those segments. Within the FedEx Services segment allocation, the net operating results of FedEx Office are allocated to FedEx Express and FedEx Ground. The allocations of net operating costs are based on metrics such as relative revenues or estimated services provided. We believe these allocations approximate the net cost of providing these functions. We review and evaluate the performance of our transportation segments based on operating income (inclusive of FedEx Services segment allocations). For the FedEx Services segment, performance is evaluated based on the impact of its total allocated net operating costs on our transportation segments.

The operating expenses line item “Intercompany charges” on the accompanying unaudited financial summaries of our transportation segments in MD&A reflects the allocations from the FedEx Services segment to the respective transportation segments. The “Intercompany charges” caption also includes charges and credits for administrative services provided between operating companies and certain other costs such as corporate management fees related to services received for general corporate oversight, including executive officers and certain legal and finance functions. We believe these allocations approximate the net cost of providing these functions.

Effective August 1, 2009, approximately 3,600 employees (predominantly from the FedEx Freight segment) were transferred to entities within the FedEx Services segment. This internal reorganization further centralized most customer support functions, such as sales, customer service and information technology, into our shared services organizations. While the reorganization had no impact on the net operating results of any of our transportation segments, the net intercompany charges to our FedEx Freight segment increased significantly with corresponding decreases to other expense captions, such as salaries and employee benefits. The impact of this internal reorganization to the expense captions in our other segments was immaterial.

Other Intersegment Transactions

Certain FedEx operating companies provide transportation and related services for other FedEx companies outside their reportable segment. Billings for such services are based on negotiated rates, which we believe approximate fair value, and are reflected as revenues of the billing segment. These rates are adjusted from time to time based on market conditions. Such intersegment revenues and expenses are eliminated in our consolidated results and are not separately identified in the following segment information, as the amounts are not material.

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The following table provides a reconciliation of reportable segment revenues, depreciation and amortization, operating income (loss) and segment assets to consolidated financial statement totals for the years ended or as of May 31 (in millions):

	FedEx		FedEx		FedEx			FedEx
	Express		Ground		Freight			Services			Other and			Consolidated
	Segment(1)		Segment		Segment(2)			Segment(3)			Eliminations			Total
Revenues
2011	$	24,581	$	8,485	$	4,911		$	1,684		$	(357	)	$	39,304
2010		21,555		7,439		4,321			1,770			(351	)		34,734
2009		22,364		7,047		4,415			1,977			(306	)		35,497
Depreciation and amortization
2011	$	1,059	$	337	$	205		$	371		$	1		$	1,973
2010		1,016		334		198			408			2			1,958
2009		961		337		224			451			2			1,975
Operating income (loss)
2011	$	1,228	$	1,325	$	(175	)	$	—		$	—		$	2,378
2010		1,127		1,024		(153	)		—			—			1,998
2009		794		807		(44	)		(810	)		—			747
Segment assets(4)
2011	$	16,463	$	5,048	$	2,664		$	4,278		$	(1,068	)	$	27,385
2010		14,819		4,118		2,786			4,079			(900	)		24,902
2009		13,483		3,291		3,044			3,240			1,186			24,244

(1)	FedEx Express segment 2011 operating expenses include a $66 million legal reserve associated with the ATA Airlines lawsuit, and 2009 operating expenses include a charge of $260 million primarily for aircraft-related asset impairments.
(2)	FedEx Freight segment 2011 operating expenses include $133 million in costs associated with the combination of our FedEx Freight and FedEx National LTL operations, effective January 30, 2011, and 2009 operating expenses include a charge of $100 million primarily for impairment charges associated with goodwill related to the FedEx National LTL acquisition.
(3)	FedEx Services segment 2009 operating expenses include a charge of $810 million for impairment of goodwill related to the Kinko’s (now known as FedEx Office) acquisition. The normal, ongoing net operating costs of the FedEx Services segment are allocated back to the transportation segments.
(4)	Segment assets include intercompany receivables.

The following table provides a reconciliation of reportable segment capital expenditures to consolidated totals for the years ended May 31 (in millions):

	FedEx		FedEx		FedEx		FedEx
	Express		Ground		Freight		Services				Consolidated
	Segment		Segment		Segment		Segment		Other		Total
2011	$	2,467	$	426	$	153	$	387	$	1	$	3,434
2010		1,864		400		212		340		—		2,816
2009		1,348		636		240		235		—		2,459

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The following table presents revenue by service type and geographic information for the years ended or as of May 31 (in millions):

	2011			2010			2009
REVENUE BY SERVICE TYPE
FedEx Express segment:
Package:
U.S. overnight box	$	6,128		$	5,602		$	6,074
U.S. overnight envelope		1,736			1,640			1,855
U.S. deferred		2,805			2,589			2,789
Total domestic package revenue		10,669			9,831			10,718
International Priority (IP)		8,228			7,087			6,978
International domestic(1)		653			578			565
Total package revenue		19,550			17,496			18,261
Freight:
U.S.		2,188			1,980			2,165
International priority		1,722			1,303			1,104
International airfreight		283			251			369
Total freight revenue		4,193			3,534			3,638
Other(2)		838			525			465
Total FedEx Express segment		24,581			21,555			22,364
FedEx Ground segment		8,485			7,439			7,047
FedEx Freight segment		4,911			4,321			4,415
FedEx Services segment		1,684			1,770			1,977
Other and eliminations		(357	)		(351	)		(306	)
	$	39,304		$	34,734		$	35,497
GEOGRAPHICAL INFORMATION(3)
Revenues:
U.S.	$	27,461		$	24,852		$	25,819
International:
FedEx Express segment		11,437			9,547			9,363
FedEx Ground segment		177			140			124
FedEx Freight segment		84			60			39
FedEx Services segment		145			135			152
Total international revenue		11,843			9,882			9,678
	$	39,304		$	34,734		$	35,497
Noncurrent assets:
U.S.	$	17,235		$	16,089		$	15,615
International		1,865			1,529			1,513
	$	19,100		$	17,618		$	17,128

(1)	International domestic revenues include our international intra-country domestic express operations.
(2)	Other revenues includes FedEx Trade Networks and, beginning in the second quarter of 2010, FedEx SupplyChain Systems.
(3)	International revenue includes shipments that either originate in or are destined to locations outside the United States. Noncurrent assets include property and equipment, goodwill and other long-term assets. Our flight equipment registered in the U.S. is included as U.S. assets; however, many of our aircraft operate internationally.

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NOTE 14: SUPPLEMENTAL CASH FLOW INFORMATION

Cash paid for interest expense and income taxes for the years ended May 31 was as follows (in millions):

	2011			2010			2009
Cash payments for:
Interest (net of capitalized interest)	$	93		$	88		$	61
Income taxes	$	493		$	322		$	517
Income tax refunds received		(106	)		(279	)		(8	)
Cash tax payments, net	$	387		$	43		$	509

NOTE 15: GUARANTEES AND INDEMNIFICATIONS

In conjunction with certain transactions, primarily the lease, sale or purchase of operating assets or services in the ordinary course of business, we may provide routine guarantees or indemnifications (e.g., environmental, fuel, tax and software infringement), the terms of which range in duration, and often they are not limited and have no specified maximum obligation. As a result, the overall maximum potential amount of the obligation under such guarantees and indemnifications cannot be reasonably estimated. Historically, we have not been required to make significant payments under our guarantee or indemnification obligations and no amounts have been recognized in our financial statements for the underlying fair value of these obligations.

Special facility revenue bonds have been issued by certain municipalities primarily to finance the acquisition and construction of various airport facilities and equipment. These facilities were leased to us and are accounted for as either capital leases or operating leases. FedEx Express has unconditionally guaranteed $667 million in principal of these bonds (with total future principal and interest payments of approximately $886 million as of May 31, 2011) through these leases. Of the $667 million bond principal guaranteed, $116 million was included in capital lease obligations in our balance sheet at May 31, 2011. The remaining $551 million has been accounted for as operating leases.

NOTE 16: COMMITMENTS

Annual purchase commitments under various contracts as of May 31, 2011 were as follows (in millions):

	Aircraft and		Facilities
	Aircraft Related		and Other(1)		Total
2012	$	1,480	$	918	$	2,398
2013		1,086		105		1,191
2014		781		43		824
2015		569		30		599
2016		584		11		595
Thereafter		1,470		132		1,602

⁽¹⁾ Primarily vehicles, facilities, advertising and promotions contracts.

The amounts reflected in the table above for purchase commitments represent noncancelable agreements to purchase goods or services. Our obligation to purchase 15 of these B777F aircraft is conditioned upon there being no event that causes FedEx Express or its employees not to be covered by the Railway Labor Act of 1926, as amended. Commitments to purchase aircraft in passenger configuration do not include the attendant costs to modify these aircraft for cargo transport unless we have entered into noncancelable commitments to modify such aircraft. Open purchase orders that are cancelable are not considered unconditional purchase obligations for financial reporting purposes and are not included in the table above.

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We had $604 million in deposits and progress payments as of May 31, 2011 (an increase of $167 million from May 31, 2010) on aircraft purchases and other planned aircraft-related transactions. These deposits are classified in the “Other assets” caption of our consolidated balance sheets. In addition to our commitment to purchase B777Fs, our aircraft purchase commitments include the Boeing 757 (“B757”) in passenger configuration, which will require additional costs to modify for cargo transport. Aircraft and aircraft-related contracts are subject to price escalations. The following table is a summary of the number and type of aircraft we are committed to purchase as of May 31, 2011, with the year of expected delivery:

	B757		B777F		Total
2012		16		7		23
2013		4		6		10
2014		—		7		7
2015		—		3		3
2016		—		3		3
Thereafter		—		7		7
Total		20		33		53

NOTE 17: CONTINGENCIES

Wage-and-Hour. We are a defendant in a number of lawsuits containing various class-action allegations of wage-and-hour violations. The plaintiffs in these lawsuits allege, among other things, that they were forced to work “off the clock,” were not paid overtime or were not provided work breaks or other benefits. The complaints generally seek unspecified monetary damages, injunctive relief, or both. The following describes the wage-and-hour matters that have been certified as class actions.

In September 2008, in Tidd v. Adecco USA, Kelly Services and FedEx Ground, a Massachusetts federal court conditionally certified a class limited to individuals who were employed by two temporary employment agencies and who worked as temporary pickup-and-delivery drivers for FedEx Ground in the New England region within the past three years. Potential claimants must voluntarily “opt in” to the lawsuit in order to be considered part of the class. In addition, in the same opinion, the court granted summary judgment in favor of FedEx Ground with respect to the plaintiffs’ claims for unpaid overtime wages. The court has since granted judgment in favor of the other two defendants with respect to the overtime claims. Accordingly, the conditionally certified class of plaintiffs was limited to a claim of failure to pay minimum wage due under the federal Fair Labor Standards Act. During the fourth quarter of fiscal 2011, FedEx Ground reached an agreement to settle this action for an immaterial amount.

In September 2009, in Taylor v. FedEx Freight, a California state court granted class certification, certifying a class of all current and former drivers employed by FedEx Freight in California who performed linehaul services since June 2003. The plaintiffs alleged, among other things, that they were forced to work “off the clock” and were not provided with required rest or meal breaks. We entered into a tentative settlement agreement with the plaintiffs in June 2011 for an immaterial amount, and the court’s hearing to approve the settlement is anticipated to occur during the first half of fiscal 2012.

In April 2009, in Bibo v. FedEx Express, a California federal court granted class certification, certifying several subclasses of FedEx Express couriers in California from April 14, 2006 (the date of the settlement of the Foster class action) to the present. The plaintiffs allege that FedEx Express violated California wage-and-hour laws after the date of the Foster settlement. In particular, the plaintiffs allege, among other things, that they were forced to work “off the clock” and were not provided with required meal breaks or split-shift premiums. The U.S. Court of Appeals for the Ninth Circuit has refused to accept a discretionary appeal of the class certification order at this time. In April 2011, the court granted our motion for partial summary judgment regarding the proper method for calculating a split-shift premium, effectively eliminating the certified subclass for split-shift premiums. Although the claims for alleged off-the-clock work and missed meal periods are still pending, we do not believe that a material loss is reasonably possible with respect to these remaining claims. We have denied any liability and intend to vigorously defend ourselves in this matter.

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Independent Contractor — Lawsuits and State Administrative Proceedings. FedEx Ground is involved in numerous class-action lawsuits (including 30 that have been certified as class actions), individual lawsuits and state tax and other administrative proceedings that claim that the company’s owner-operators should be treated as employees, rather than independent contractors.

Most of the class-action lawsuits were consolidated for administration of the pre-trial proceedings by a single federal court, the U.S. District Court for the Northern District of Indiana. The multidistrict litigation court granted class certification in 28 cases and denied it in 14 cases. On December 13, 2010, the court entered an opinion and order addressing all outstanding motions for summary judgment on the status of the owner-operators (i.e., independent contractor vs. employee). In sum, the court has now ruled on our summary judgment motions and entered judgment in favor of FedEx Ground on all claims in 20 of the 28 multidistrict litigation cases that had been certified as class actions, finding that the owner-operators in those cases were contractors as a matter of the law of the following states: Alabama, Arizona, Georgia, Indiana, Kansas (the court previously dismissed without prejudice the nationwide class claim under the Employee Retirement Income Security Act of 1974 based on the plaintiffs’ failure to exhaust administrative remedies), Louisiana, Maryland, Minnesota, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Utah, West Virginia and Wisconsin. The plaintiffs filed notices of appeal in all of these 20 cases.

In the other eight certified class actions in the multidistrict litigation, the court ruled in favor of FedEx Ground on some of the claims and against FedEx Ground on at least one claim in three of the cases (filed in Kentucky, Nevada and New Hampshire) and then remanded all eight cases back to district court in the following states for resolution of the remaining claims: Arkansas, California, Florida, Kentucky, Nevada, New Hampshire and Oregon (two certified classes). In January 2011, we asked the court to issue final judgments in these eight cases, and the court denied our motion. In July 2011, we filed a petition for mandamus to the Seventh Circuit asking the appeals court to require these cases to be returned to the multidistrict litigation court for issuance of a final judgment so that all appeals of the December 2010 summary judgment rulings would be heard by the Seventh Circuit.

In January 2008, one of the contractor-model lawsuits that is not part of the multidistrict litigation, Anfinson v. FedEx Ground, was certified as a class action by a Washington state court. The plaintiffs in Anfinson represent a class of single-route, pickup-and-delivery owner-operators in Washington from December 21, 2001 through December 31, 2005 and allege that the class members should be reimbursed as employees for their uniform expenses and should receive overtime pay. In March 2009, a jury trial in the Anfinson case was held, and the jury returned a verdict in favor of FedEx Ground, finding that all 320 class members were independent contractors, not employees. The plaintiffs appealed the verdict. In December 2010, the Washington Court of Appeals reversed and remanded for further proceedings, including a new trial. We filed a motion to reconsider, and this motion was denied. In March 2011, we filed a discretionary appeal with the Washington Supreme Court.

In August 2010, another one of the contractor-model lawsuits that is not part of the multidistrict litigation, Rascon v. FedEx Ground, was certified as a class action by a Colorado state court. The plaintiff in Rascon represents a class of single-route, pickup-and-delivery owner-operators in Colorado who drove vehicles weighing less than 10,001 pounds at any time from August 27, 2005 through the present. The lawsuit seeks unpaid overtime compensation, and related penalties and attorneys’ fees and costs, under Colorado law. Our applications for appeal challenging this class certification decision have been rejected.

Other contractor-model cases that are not or are no longer part of the multidistrict litigation are in varying stages of litigation.

116

With respect to the state administrative proceedings relating to the classification of FedEx Ground’s owner-operators as independent contractors, during the second quarter of 2011, the attorneys general in New York and Kentucky each filed lawsuits against FedEx Ground challenging the validity of the contractor model.

While the granting of summary judgment in favor of FedEx Ground by the multidistrict litigation court in 20 of the 28 cases that had been certified as class actions remains subject to appeal, we believe that it significantly improves the likelihood that our independent contractor model will be upheld. Adverse determinations in the remaining matters related to FedEx Ground’s independent contractors, however, could, among other things, entitle certain of our contractors and their drivers to the reimbursement of certain expenses and to the benefit of wage-and-hour laws and result in employment and withholding tax and benefit liability for FedEx Ground, and could result in changes to the independent contractor status of FedEx Ground’s owner-operators in certain jurisdictions. We believe that FedEx Ground’s owner-operators are properly classified as independent contractors and that FedEx Ground is not an employer of the drivers of the company’s independent contractors. While it is reasonably possible that potential loss in some of these lawsuits or such changes to the independent contractor status of FedEx Ground’s owner-operators could be material, we cannot yet determine the amount or reasonable range of potential loss. A number of factors contribute to this. The number of plaintiffs in these lawsuits continues to change, with some being dismissed and others being added and, as to new plaintiffs, no discovery has been conducted. In addition, the parties have not yet conducted any discovery into damages, which could vary considerably from plaintiff to plaintiff. Further, the range of potential loss could be impacted considerably by future rulings on the merits of certain claims and FedEx Ground’s various defenses, and on evidentiary issues. In any event, we do not believe that a material loss is probable in these matters.

ATA Airlines. In October 2010, a jury returned a verdict in favor of ATA Airlines in its lawsuit against FedEx Express and awarded damages of $66 million, and in January 2011, the court awarded ATA pre-judgment interest of $5 million. The suit was filed in Indiana federal court and alleged that we had breached a contract by not including ATA on our 2009 Civil Reserve Air Fleet (CRAF)/Air Mobility Command (AMC) team, which provides cargo and passenger service to the U.S. military. While we do not agree with the verdict or the amount of damages awarded and have appealed the matter to the U.S. Court of Appeals for the Seventh Circuit, accounting standards required an accrual of a $66 million loss in the second quarter of 2011. We did not accrue the $5 million of interest as a loss because we have additional arguments on appeal that lead us to believe that loss of that amount is not probable.

California Paystub Class Action. A federal court in California ruled in April 2011 that paystubs for certain FedEx Express employees in California did not meet that state’s requirements to reflect pay period begin date, total overtime hours worked and the correct overtime wage rate. The ruling came in a class action lawsuit filed by a former courier seeking damages on behalf of herself and all other FedEx Express employees in California that allegedly received noncompliant paychecks. The court certified the class in June 2011. The court has ruled that FedEx Express is liable to the State of California, and there will be a ruling as to whether FedEx Express is liable to class members who can prove they were injured by the paystub deficiencies. The judge has not yet decided on the amount, if any, of liability to the State of California or to the class, but has wide discretion. A material loss in this matter is reasonably possible but not estimable because both the number of class members and the amount, if any, to which some class members may be entitled is uncertain, and in ruling the judge may consider some or all of the following: whether employees suffered injury; whether remedial action was undertaken; whether there was knowledge of any violation; whether any violation was intentional; and whether any award would be unjust under the circumstances.

Other. FedEx and its subsidiaries are subject to other legal proceedings that arise in the ordinary course of their business. In the opinion of management, the aggregate liability, if any, with respect to these other actions will not have a material adverse effect on our financial position, results of operations or cash flows.

NOTE 18: RELATED PARTY TRANSACTIONS

Our Chairman, President and Chief Executive Officer, Frederick W. Smith, currently holds an approximate 10% ownership interest in the National Football League Washington Redskins professional football team (“Redskins”) and is a member of its board of directors. FedEx has a multi-year naming rights agreement with the Redskins granting us certain marketing rights, including the right to name the Redskins’ stadium “FedExField.”

117

NOTE 19: SUMMARY OF QUARTERLY OPERATING RESULTS (UNAUDITED)

	First		Second		Third		Fourth
(in millions, except per share amounts)	Quarter		Quarter		Quarter		Quarter
2011
Revenues	$	9,457	$	9,632	$	9,663	$	10,552
Operating income		628		469		393		888
Net income		380		283		231		558
Basic earnings per common share(1)		1.21		0.90		0.73		1.76
Diluted earnings per common share		1.20		0.89		0.73		1.75
2010
Revenues	$	8,009	$	8,596	$	8,701	$	9,428
Operating income		315		571		416		696
Net income		181		345		239		419
Basic earnings per common share		0.58		1.10		0.76		1.34
Diluted earnings per common share(1)		0.58		1.10		0.76		1.33

⁽¹⁾ The sum of the quarterly earnings per share may not equal annual amounts due to differences in the weighted-average number of shares outstanding during the respective period.

118

NOTE 20: CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

We are required to present condensed consolidating financial information in order for the subsidiary guarantors (other than FedEx Express) of our public debt to continue to be exempt from reporting under the Securities Exchange Act of 1934, as amended.

The guarantor subsidiaries, which are wholly owned by FedEx, guarantee $1 billion of our debt. The guarantees are full and unconditional and joint and several. Our guarantor subsidiaries were not determined using geographic, service line or other similar criteria, and as a result, the “Guarantor Subsidiaries” and “Non-guarantor Subsidiaries” columns each include portions of our domestic and international operations. Accordingly, this basis of presentation is not intended to present our financial condition, results of operations or cash flows for any purpose other than to comply with the specific requirements for subsidiary guarantor reporting.

119

Condensed consolidating financial statements for our guarantor subsidiaries and non-guarantor subsidiaries are presented in the following tables (in millions):

CONDENSED CONSOLIDATING BALANCE SHEETS
May 31, 2011

			Guarantor		Non-guarantor
	Parent		Subsidiaries		Subsidiaries		Eliminations			Consolidated
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	1,589	$	279	$	546	$	(86	)	$	2,328
Receivables, less allowances		—		3,696		912		(27	)		4,581
Spare parts, supplies, fuel, prepaid expenses and other, less allowances		77		645		44		—			766
Deferred income taxes		—		598		12		—			610
Total current assets		1,666		5,218		1,514		(113	)		8,285
PROPERTY AND EQUIPMENT, AT COST		24		31,916		1,746		—			33,686
Less accumulated depreciation and amortization		18		17,071		1,054		—			18,143
Net property and equipment		6		14,845		692		—			15,543
INTERCOMPANY RECEIVABLE		—		—		1,317		(1,317	)		—
GOODWILL		—		1,564		762		—			2,326
INVESTMENT IN SUBSIDIARIES		15,404		2,705		—		(18,109	)		—
OTHER ASSETS		1,652		1,039		63		(1,523	)		1,231
	$	18,728	$	25,371	$	4,348	$	(21,062	)	$	27,385
LIABILITIES AND STOCKHOLDERS’ INVESTMENT
CURRENT LIABILITIES
Current portion of long-term debt	$	—	$	18	$	—	$	—		$	18
Accrued salaries and employee benefits		50		1,071		147		—			1,268
Accounts payable		—		1,385		430		(113	)		1,702
Accrued expenses		198		1,563		133		—			1,894
Total current liabilities		248		4,037		710		(113	)		4,882
LONG-TERM DEBT, LESS CURRENT PORTION		1,000		667		—		—			1,667
INTERCOMPANY PAYABLE		1,095		222		—		(1,317	)		—
OTHER LONG-TERM LIABILITIES
Deferred income taxes		—		2,842		17		(1,523	)		1,336
Other liabilities		1,165		3,001		114		—			4,280
Total other long-term liabilities		1,165		5,843		131		(1,523	)		5,616
STOCKHOLDERS’ INVESTMENT		15,220		14,602		3,507		(18,109	)		15,220
	$	18,728	$	25,371	$	4,348	$	(21,062	)	$	27,385

120

CONDENSED CONSOLIDATING BALANCE SHEETS
May 31, 2010

			Guarantor		Non-guarantor
	Parent		Subsidiaries		Subsidiaries		Eliminations			Consolidated
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	1,310	$	258	$	443	$	(59	)	$	1,952
Receivables, less allowances		1		3,425		782		(45	)		4,163
Spare parts, supplies, fuel, prepaid expenses and other, less allowances		5		581		54		—			640
Deferred income taxes		—		492		37		—			529
Total current assets		1,316		4,756		1,316		(104	)		7,284
PROPERTY AND EQUIPMENT, AT COST		23		29,193		2,086		—			31,302
Less accumulated depreciation and amortization		18		15,801		1,098		—			16,917
Net property and equipment		5		13,392		988		—			14,385
INTERCOMPANY RECEIVABLE		—		—		1,132		(1,132	)		—
GOODWILL		—		1,551		649		—			2,200
INVESTMENT IN SUBSIDIARIES		13,850		2,619		—		(16,469	)		—
OTHER ASSETS		1,527		801		99		(1,394	)		1,033
	$	16,698	$	23,119	$	4,184	$	(19,099	)	$	24,902
LIABILITIES AND STOCKHOLDERS’ INVESTMENT
CURRENT LIABILITIES
Current portion of long-term debt	$	250	$	12	$	—	$	—		$	262
Accrued salaries and employee benefits		36		955		155		—			1,146
Accounts payable		8		1,196		422		(104	)		1,522
Accrued expenses		47		1,488		180		—			1,715
Total current liabilities		341		3,651		757		(104	)		4,645
LONG-TERM DEBT, LESS CURRENT PORTION		1,000		668		—		—			1,668
INTERCOMPANY PAYABLE		702		430		—		(1,132	)		—
OTHER LONG-TERM LIABILITIES
Deferred income taxes		—		2,253		32		(1,394	)		891
Other liabilities		844		2,921		122		—			3,887
Total other long-term liabilities		844		5,174		154		(1,394	)		4,778
STOCKHOLDERS’ INVESTMENT		13,811		13,196		3,273		(16,469	)		13,811
	$	16,698	$	23,119	$	4,184	$	(19,099	)	$	24,902

121

CONDENSED CONSOLIDATING STATEMENTS OF INCOME
Year Ended May 31, 2011

				Guarantor			Non-guarantor
	Parent			Subsidiaries			Subsidiaries			Eliminations			Consolidated
REVENUES	$	—		$	33,124		$	6,498		$	(318	)	$	39,304
OPERATING EXPENSES:
Salaries and employee benefits		109			13,206			1,961			—			15,276
Purchased transportation		—			4,034			1,745			(105	)		5,674
Rentals and landing fees		4			2,209			253			(4	)		2,462
Depreciation and amortization		1			1,784			188			—			1,973
Fuel		—			4,003			148			—			4,151
Maintenance and repairs		1			1,862			116			—			1,979
Impairment and other charges		—			28			61			—			89
Intercompany charges, net		(222	)		(317	)		539			—			—
Other		107			4,392			1,032			(209	)		5,322
		—			31,201			6,043			(318	)		36,926
OPERATING INCOME		—			1,923			455			—			2,378
OTHER INCOME (EXPENSE):
Equity in earnings of subsidiaries		1,452			200			—			(1,652	)		—
Interest, net		(88	)		13			(2	)		—			(77	)
Intercompany charges, net		104			(135	)		31			—			—
Other, net		(16	)		(14	)		(6	)		—			(36	)
INCOME BEFORE INCOME TAXES		1,452			1,987			478			(1,652	)		2,265
Provision for income taxes		—			677			136			—			813
NET INCOME	$	1,452		$	1,310		$	342		$	(1,652	)	$	1,452

CONDENSED CONSOLIDATING STATEMENTS OF INCOME
Year Ended May 31, 2010

				Guarantor			Non-guarantor
	Parent			Subsidiaries			Subsidiaries			Eliminations			Consolidated
REVENUES	$	—		$	29,360		$	5,700		$	(326	)	$	34,734
OPERATING EXPENSES:
Salaries and employee benefits		91			12,026			1,910			—			14,027
Purchased transportation		—			3,424			1,392			(88	)		4,728
Rentals and landing fees		4			2,118			240			(3	)		2,359
Depreciation and amortization		1			1,751			206			—			1,958
Fuel		—			2,946			160			—			3,106
Maintenance and repairs		1			1,589			125			—			1,715
Impairment and other charges		—			—			18			—			18
Intercompany charges, net		(202	)		(109	)		311			—			—
Other		105			3,950			1,005			(235	)		4,825
		—			27,695			5,367			(326	)		32,736
OPERATING INCOME		—			1,665			333			—			1,998
OTHER INCOME (EXPENSE):
Equity in earnings of subsidiaries		1,184			161			—			(1,345	)		—
Interest, net		(100	)		41			(12	)		—			(71	)
Intercompany charges, net		114			(147	)		33			—			—
Other, net		(14	)		(18	)		(1	)		—			(33	)
INCOME BEFORE INCOME TAXES		1,184			1,702			353			(1,345	)		1,894
Provision for income taxes		—			625			85			—			710
NET INCOME	$	1,184		$	1,077		$	268		$	(1,345	)	$	1,184

122

CONDENSED CONSOLIDATING STATEMENTS OF INCOME
Year Ended May 31, 2009

				Guarantor			Non-guarantor
	Parent			Subsidiaries			Subsidiaries			Eliminations			Consolidated
REVENUES	$	—		$	29,923		$	5,851		$	(277	)	$	35,497
OPERATING EXPENSES:
Salaries and employee benefits		82			11,483			2,202			—			13,767
Purchased transportation		—			3,362			1,211			(39	)		4,534
Rentals and landing fees		4			2,134			296			(5	)		2,429
Depreciation and amortization		2			1,706			267			—			1,975
Fuel		—			3,554			257			—			3,811
Maintenance and repairs		1			1,755			142			—			1,898
Impairment and other charges		—			1,098			106			—			1,204
Intercompany charges, net		(193	)		81			112			—			—
Other		104			4,198			1,063			(233	)		5,132
		—			29,371			5,656			(277	)		34,750
OPERATING INCOME		—			552			195			—			747
OTHER INCOME (EXPENSE):
Equity in earnings of subsidiaries		98			103			—			(201	)		—
Interest, net		(73	)		28			(14	)		—			(59	)
Intercompany charges, net		90			(118	)		28			—			—
Other, net		(17	)		(3	)		9			—			(11	)
INCOME BEFORE INCOME TAXES		98			562			218			(201	)		677
Provision for income taxes		—			514			65			—			579
NET INCOME	$	98		$	48		$	153		$	(201	)	$	98

123

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
Year Ended May 31, 2011

				Guarantor			Non-guarantor
	Parent			Subsidiaries			Subsidiaries			Eliminations			Consolidated
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	$	25		$	3,978		$	65		$	(27	)	$	4,041
INVESTING ACTIVITIES
Capital expenditures		(1	)		(3,263	)		(170	)		—			(3,434	)
Business acquisition, net of cash acquired		—			(96	)		—			—			(96	)
Proceeds from asset dispositions and other		—			110			1			—			111
CASH USED IN INVESTING ACTIVITIES		(1	)		(3,249	)		(169	)		—			(3,419	)
FINANCING ACTIVITIES
Net transfers from (to) Parent		530			(994	)		464			—			—
Payment on loan between subsidiaries		—			235			(235	)		—			—
Intercompany dividends		—			61			(61	)		—			—
Principal payments on debt		(250	)		(12	)		—			—			(262	)
Proceeds from stock issuances		108			—			—			—			108
Excess tax benefit on the exercise of stock options		23			—			—			—			23
Dividends paid		(151	)		—			—			—			(151	)
Other, net		(5	)		(9	)		9			—			(5	)
CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES		255			(719	)		177			—			(287	)
Effect of exchange rate changes on cash		—			11			30			—			41
Net increase (decrease) in cash and cash equivalents		279			21			103			(27	)		376
Cash and cash equivalents at beginning of period		1,310			258			443			(59	)		1,952
Cash and cash equivalents at end of period	$	1,589		$	279		$	546		$	(86	)	$	2,328

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
Year Ended May 31, 2010

				Guarantor			Non-guarantor
	Parent			Subsidiaries			Subsidiaries			Eliminations			Consolidated
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	$	(450	)	$	2,942		$	653		$	(7	)	$	3,138
INVESTING ACTIVITIES
Capital expenditures		—			(2,661	)		(155	)		—			(2,816	)
Proceeds from asset dispositions and other		—			38			(3	)		—			35
CASH USED IN INVESTING ACTIVITIES		—			(2,623	)		(158	)		—			(2,781	)
FINANCING ACTIVITIES
Net transfers from (to) Parent		531			(397	)		(134	)		—			—
Payment on loan between subsidiaries		—			72			(72	)		—			—
Intercompany dividends		—			158			(158	)		—			—
Principal payments on debt		(500	)		(153	)		—			—			(653	)
Proceeds from stock issuances		94			—			—			—			94
Excess tax benefit on the exercise of stock options		25			—			—			—			25
Dividends paid		(138	)		—			—			—			(138	)
Other, net		(20	)		(5	)		5			—			(20	)
CASH USED IN FINANCING ACTIVITIES		(8	)		(325	)		(359	)		—			(692	)
Effect of exchange rate changes on cash		—			(8	)		3			—			(5	)
Net (decrease) increase in cash and cash equivalents		(458	)		(14	)		139			(7	)		(340	)
Cash and cash equivalents at beginning of period		1,768			272			304			(52	)		2,292
Cash and cash equivalents at end of period	$	1,310		$	258		$	443		$	(59	)	$	1,952

124

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
Year Ended May 31, 2009

				Guarantor			Non-guarantor
	Parent			Subsidiaries			Subsidiaries			Eliminations			Consolidated
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	$	(924	)	$	3,156		$	573		$	(52	)	$	2,753
INVESTING ACTIVITIES
Capital expenditures		—			(2,248	)		(211	)		—			(2,459	)
Proceeds from asset dispositions and other		—			69			7			—			76
CASH USED IN INVESTING ACTIVITIES		—			(2,179	)		(204	)		—			(2,383	)
FINANCING ACTIVITIES
Net transfers from (to) Parent		1,173			(1,066	)		(107	)		—			—
Payment on loan from Parent		17			—			(17	)		—			—
Payment on loan between subsidiaries		—			36			(36	)		—			—
Intercompany dividends		—			165			(165	)		—			—
Principal payments on debt		(500	)		—			(1	)		—			(501	)
Proceeds from debt issuance		1,000			—			—			—			1,000
Proceeds from stock issuances		41			—			—			—			41
Excess tax benefit on the exercise of stock options		4			—			—			—			4
Dividends paid		(137	)		—			—			—			(137	)
Other, net		(7	)		—			—			—			(7	)
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		1,591			(865	)		(326	)		—			400
Effect of exchange rate changes on cash		—			(6	)		(11	)		—			(17	)
Net increase (decrease) in cash and cash equivalents		667			106			32			(52	)		753
Cash and cash equivalents at beginning of period		1,101			166			272			—			1,539
Cash and cash equivalents at end of period	$	1,768		$	272		$	304		$	(52	)	$	2,292

125

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

INTEREST RATES. While we currently have market risk sensitive instruments related to interest rates, we have no significant exposure to changing interest rates on our long-term debt because the interest rates are fixed on all of our long-term debt. As disclosed in Note 6 to the accompanying consolidated financial statements, we had outstanding fixed-rate, long-term debt (exclusive of capital leases) with estimated fair values of $1.9 billion at May 31, 2011 and $2.1 billion at May 31, 2010. Market risk for fixed-rate, long-term debt is estimated as the potential decrease in fair value resulting from a hypothetical 10% increase in interest rates and amounts to $36 million as of May 31, 2011 and $41 million as of May 31, 2010. The underlying fair values of our long-term debt were estimated based on quoted market prices or on the current rates offered for debt with similar terms and maturities.

We have interest rate risk with respect to our pension and postretirement benefit obligations. Changes in interest rates impact our liabilities associated with these benefit plans as well as the amount of pension and postretirement benefit expense recognized. Declines in the value of plan assets could diminish the funded status of our pension plans and potentially increase our requirement to make contributions to the plans. Substantial investment losses on plan assets will also increase pension and postretirement benefit expense in the years following the losses.

FOREIGN CURRENCY. While we are a global provider of transportation, e-commerce and business services, the substantial majority of our transactions are denominated in U.S. dollars. The principal foreign currency exchange rate risks to which we are exposed are in the euro, Chinese yuan, Canadian dollar, British pound and Japanese yen. Historically, our exposure to foreign currency fluctuations is more significant with respect to our revenues than our expenses, as a significant portion of our expenses are denominated in U.S. dollars, such as aircraft and fuel expenses. During 2011 and 2010, operating income was positively impacted due to foreign currency fluctuations. However, favorable foreign currency fluctuations also may have had an offsetting impact on the price we obtained or the demand for our services, which is not quantifiable. At May 31, 2011, the result of a uniform 10% strengthening in the value of the dollar relative to the currencies in which our transactions are denominated would result in a decrease in operating income of $38 million for 2012. This theoretical calculation assumes that each exchange rate would change in the same direction relative to the U.S. dollar. This calculation is not indicative of our actual experience in foreign currency transactions. In addition to the direct effects of changes in exchange rates, fluctuations in exchange rates also affect the volume of sales or the foreign currency sales price as competitors’ services become more or less attractive. The sensitivity analysis of the effects of changes in foreign currency exchange rates does not factor in a potential change in sales levels or local currency prices.

COMMODITY. While we have market risk for changes in the price of jet and vehicle fuel, this risk is largely mitigated by our fuel surcharges because our fuel surcharges are closely linked to market prices for fuel. Therefore, a hypothetical 10% change in the price of fuel would not be expected to materially affect our earnings.

However, our fuel surcharges have a timing lag (approximately six to eight weeks for FedEx Express and FedEx Ground) before they are adjusted for changes in fuel prices. Our fuel surcharge index also allows fuel prices to fluctuate approximately 2% for FedEx Express and approximately 4% for FedEx Ground before an adjustment to the fuel surcharge occurs. Accordingly, our operating income in a specific period may be significantly affected should the spot price of fuel suddenly change by a substantial amount or change by amounts that do not result in an adjustment in our fuel surcharges.

OTHER. We do not purchase or hold any derivative financial instruments for trading purposes.

126

SELECTED FINANCIAL DATA

The following table sets forth (in millions, except per share amounts and other operating data) certain selected consolidated financial and operating data for FedEx as of and for the five years ended May 31, 2011. This information should be read in conjunction with the Consolidated Financial Statements, MD&A and other financial data appearing elsewhere in this Annual Report.

	2011 (1)		2010		2009 (2)		2008 (3)		2007 (4)
Operating Results
Revenues	$	39,304	$	34,734	$	35,497	$	37,953	$	35,214
Operating income		2,378		1,998		747		2,075		3,276
Income before income taxes		2,265		1,894		677		2,016		3,215
Net income		1,452		1,184		98		1,125		2,016
Per Share Data
Earnings per share:
Basic	$	4.61	$	3.78	$	0.31	$	3.64	$	6.57
Diluted	$	4.57	$	3.76	$	0.31	$	3.60	$	6.48
Average shares of common stock outstanding		315		312		311		309		307
Average common and common equivalent shares outstanding		317		314		312		312		311
Cash dividends declared	$	0.48	$	0.44	$	0.44	$	0.30	$	0.37
Financial Position
Property and equipment, net	$	15,543	$	14,385	$	13,417	$	13,478	$	12,636
Total assets		27,385		24,902		24,244		25,633		24,000
Long-term debt, less current portion		1,667		1,668		1,930		1,506		2,007
Common stockholders’ investment		15,220		13,811		13,626		14,526		12,656
Other Operating Data
FedEx Express aircraft fleet		688		667		654		677		669
Average full-time equivalent employees and contractors		255,573		245,109		247,908		254,142		241,903

(1)	Results for 2011 include charges of approximately $199 million ($104 million, net of tax and applicable variable incentive compensation impacts, or $0.33 per diluted share) for the combination of our FedEx Freight and FedEx National LTL operations and a reserve associated with a legal matter at FedEx Express. See Notes 1 and 17 to the accompanying consolidated financial statements.
(2)	Results for 2009 include a charge of $1.2 billion ($1.1 billion, net of tax, or $3.45 per diluted share) primarily for impairment charges associated with goodwill and aircraft. See Note 4 to the accompanying consolidated financial statements. Additionally, common stockholders’ investment includes an other comprehensive income charge of $1.2 billion, net of tax, for the funded status of our retirement plans at May 31, 2009.
(3)	Results for 2008 include a charge of $891 million ($696 million, net of tax, or $2.23 per diluted share) recorded during the fourth quarter, predominantly for impairment charges associated with intangible assets from the FedEx Office acquisition. See Note 4 to the accompanying consolidated financial statements. Additionally, results for 2008 and 2007 include several 2007 acquisitions.
(4)	Results for 2007 include a charge of $143 million at FedEx Express associated with upfront compensation and benefits under our labor contract with our pilots.

127

REPORT OF INDEPENDENT REGISTERED

PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders
FedEx Corporation

We have audited the consolidated financial statements of FedEx Corporation as of May 31, 2011 and 2010, and for each of the three years in the period ended May 31, 2011, and have issued our report thereon dated July 12, 2011 (included elsewhere in this Annual Report on Form 10-K). Our audits also included the financial statement schedule listed in Item 15(a) in this Annual Report on Form 10-K. This schedule is the responsibility of the Company’s management. Our responsibility is to express an opinion based on our audits.

In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

/s/ Ernst & Young LLP

Memphis, Tennessee
July 12, 2011

128

SCHEDULE II

FEDEX CORPORATION

VALUATION AND QUALIFYING ACCOUNTS

FOR THE YEARS ENDED MAY 31, 2011, 2010, AND 2009

(IN MILLIONS)

			ADDITIONS
	BALANCE				CHARGED						BALANCE
	AT		CHARGED		TO						AT
	BEGINNING		TO		OTHER						END OF
DESCRIPTION	OF YEAR		EXPENSES		ACCOUNTS			DEDUCTIONS			YEAR
Accounts Receivable Reserves:
Allowance for Doubtful Accounts
2011	$	93	$	152	$	—		$	148	(a)	$	97
2010		114		124		—			145	(a)		93
2009		88		181		—			155	(a)		114
Allowance for Revenue Adjustments
2011	$	73	$	—	$	532	(b)	$	520	(c)	$	85
2010		82		—		430	(b)		439	(c)		73
2009		70		—		466	(b)		454	(c)		82
Inventory Valuation Allowance:
2011	$	170	$	13	$	—		$	14		$	169
2010		175		12		—			17			170
2009		163		15		—			3			175

(a)	Uncollectible accounts written off, net of recoveries.
(b)	Principally charged against revenue.
(c)	Service failures, rebills and other.

129

FEDEX CORPORATION

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

(UNAUDITED)

(IN MILLIONS, EXCEPT RATIOS)

	Year Ended May 31,
	2011		2010		2009		2008		2007
Earnings:
Income before income taxes	$	2,265	$	1,894	$	677	$	2,016	$	3,215
Add back:
Interest expense, net of capitalized interest		86		79		85		98		136
Amortization of debt issuance costs		16		14		5		5		6
Portion of rent expense representative of interest factor		852		806		795		784		766
Earnings as adjusted	$	3,219	$	2,793	$	1,562	$	2,903	$	4,123
Fixed Charges:
Interest expense, net of capitalized interest	$	86	$	79	$	85	$	98	$	136
Capitalized interest		71		80		71		50		34
Amortization of debt issuance costs		16		14		5		5		6
Portion of rent expense representative of interest factor		852		806		795		784		766
	$	1,025	$	979	$	956	$	937	$	942
Ratio of Earnings to Fixed Charges		3.1		2.9		1.6		3.1		4.4

130

EXHIBIT INDEX

Exhibit
Number		Description of Exhibit
		Certificate of Incorporation and Bylaws
	3.1	Second Amended and Restated Certificate of Incorporation of FedEx. (Filed as Exhibit 3.1 to FedEx’s FY07 First Quarter Report on Form 10-Q, and incorporated herein by reference.)
	3.2	Amended and Restated Bylaws of FedEx. (Filed as Exhibit 3.1 to FedEx’s Current Report on Form 8-K dated March 14, 2011 and filed March 15, 2011, and incorporated herein by reference.)
		Facility Lease Agreements
	10.1	Composite Lease Agreement dated May 21, 2007 (but effective as of January 1, 2007) between the Memphis-Shelby County Airport Authority (the “Authority”) and FedEx Express. (Filed as Exhibit 10.1 to FedEx’s FY07 Annual Report on Form 10-K, and incorporated herein by reference.)
	10.2	First Amendment dated December 29, 2009 (but effective as of September 1, 2008) to the Composite Lease Agreement dated May 21, 2007 (but effective as of January 1, 2007) between the Authority and FedEx Express. (Filed as Exhibit 10.1 to FedEx’s FY10 Third Quarter Report on Form 10-Q, and incorporated herein by reference.)
	10.3	Second Amendment dated March 30, 2010 (but effective as of June 1, 2009) and Third Amendment dated April 27, 2010 (but effective as of July 1, 2009), each amending the Composite Lease Agreement dated May 21, 2007 (but effective as of January 1, 2007) between the Authority and FedEx Express. (Filed as Exhibit 10.3 to FedEx’s FY10 Annual Report on Form 10-K, and incorporated herein by reference.)
	10.4	Special Facility Lease Agreement dated as of August 1, 1979 between the Authority and FedEx Express. (Filed as Exhibit 10.15 to FedEx Express’s FY90 Annual Report on Form 10-K, and incorporated herein by reference.)
	10.5	First Special Facility Supplemental Lease Agreement dated as of May 1, 1982 between the Authority and FedEx Express. (Filed as Exhibit 10.25 to FedEx Express’s FY93 Annual Report on Form 10-K, and incorporated herein by reference.)
	10.6	Second Special Facility Supplemental Lease Agreement dated as of November 1, 1982 between the Authority and FedEx Express. (Filed as Exhibit 10.26 to FedEx Express’s FY93 Annual Report on Form 10-K, and incorporated herein by reference.)
	10.7	Third Special Facility Supplemental Lease Agreement dated as of December 1, 1984 between the Authority and FedEx Express. (Filed as Exhibit 10.25 to FedEx Express’s FY95 Annual Report on Form 10-K, and incorporated herein by reference.)
	10.8	Fourth Special Facility Supplemental Lease Agreement dated as of July 1, 1992 between the Authority and FedEx Express. (Filed as Exhibit 10.20 to FedEx Express’s FY92 Annual Report on Form 10-K, and incorporated herein by reference.)

E-1

Exhibit
Number		Description of Exhibit
	10.9	Fifth Special Facility Supplemental Lease Agreement dated as of July 1, 1997 between the Authority and FedEx Express. (Filed as Exhibit 10.35 to FedEx Express’s FY97 Annual Report on Form 10-K, and incorporated herein by reference.)
	10.10	Sixth Special Facility Supplemental Lease Agreement dated as of December 1, 2001 between the Authority and FedEx Express. (Filed as Exhibit 10.28 to FedEx’s FY02 Annual Report on Form 10-K, and incorporated herein by reference.)
	10.11	Seventh Special Facility Supplemental Lease Agreement dated as of June 1, 2002 between the Authority and FedEx Express. (Filed as Exhibit 10.3 to FedEx’s FY03 First Quarter Report on Form 10-Q, and incorporated herein by reference.)
	10.12	Special Facility Lease Agreement dated as of July 1, 1993 between the Authority and FedEx Express. (Filed as Exhibit 10.29 to FedEx Express’s FY93 Annual Report on Form 10-K, and incorporated herein by reference.)
	10.13	Special Facility Ground Lease Agreement dated as of July 1, 1993 between the Authority and FedEx Express. (Filed as Exhibit 10.30 to FedEx Express’s FY93 Annual Report on Form 10-K, and incorporated herein by reference.)
	10.14	First Amendment dated December 29, 2009 (but effective as of September 1, 2008) to the Special Facility Ground Lease Agreement dated as of July 1, 1993 between the Authority and FedEx Express. (Filed as Exhibit 10.2 to FedEx’s FY10 Third Quarter Report on Form 10-Q, and incorporated herein by reference.)
		Aircraft-Related Agreement
	10.15	Boeing 777 Freighter Purchase Agreement dated as of November 7, 2006 between The Boeing Company and FedEx Express. Confidential treatment has been granted for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (Filed as Exhibit 10.1 to FedEx’s FY07 Second Quarter Report on Form 10-Q, and incorporated herein by reference.)
	10.16	Supplemental Agreement No. 1 dated as of June 16, 2008 to the Boeing 777 Freighter Purchase Agreement dated as of November 7, 2006 between The Boeing Company and FedEx Express. (Filed as Exhibit 10.13 to FedEx’s FY08 Annual Report on Form 10-K, and incorporated herein by reference.)
	10.17	Supplemental Agreement No. 2 dated as of July 14, 2008 to the Boeing 777 Freighter Purchase Agreement dated as of November 7, 2006 between The Boeing Company and FedEx Express. (Filed as Exhibit 10.3 to FedEx’s FY09 Second Quarter Report on Form 10-Q, and incorporated herein by reference.)
	10.18	Supplemental Agreement No. 3 dated as of December 15, 2008 (and related side letters) to the Boeing 777 Freighter Purchase Agreement dated as of November 7, 2006 between The Boeing Company and FedEx Express. Confidential treatment has been granted for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (Filed as Exhibit 10.4 to FedEx’s FY09 Second Quarter Report on Form 10-Q, and incorporated herein by reference.)

E-2

Exhibit
Number		Description of Exhibit
	10.19	Supplemental Agreement No. 4 dated as of January 9, 2009 (and related side letters) to the Boeing 777 Freighter Purchase Agreement dated as of November 7, 2006 between The Boeing Company and FedEx Express. Confidential treatment has been granted for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (Filed as Exhibit 10.1 to FedEx’s FY09 Third Quarter Report on Form 10-Q, and incorporated herein by reference.)
	10.20	Side letters dated May 29, 2009 and May 19, 2009, amending the Boeing 777 Freighter Purchase Agreement dated as of November 7, 2006 between The Boeing Company and FedEx Express. Confidential treatment has been granted for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (Filed as Exhibit 10.17 to FedEx’s FY09 Annual Report on Form 10-K, and incorporated herein by reference.)
	10.21	Supplemental Agreement No. 5 dated as of January 11, 2010 to the Boeing 777 Freighter Purchase Agreement dated as of November 7, 2006 between The Boeing Company and FedEx Express. Confidential treatment has been granted for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (Filed as Exhibit 10.3 to FedEx’s FY10 Third Quarter Report on Form 10-Q, and incorporated herein by reference.)
	10.22	Supplemental Agreement No. 6 dated as of March 17, 2010, Supplemental Agreement No. 7 dated as of March 17, 2010, and Supplemental Agreement No. 8 (and related side letters) dated as of April 30, 2010, each amending the Boeing 777 Freighter Purchase Agreement dated as of November 7, 2006 between The Boeing Company and FedEx Express. Confidential treatment has been granted for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (Filed as Exhibit 10.22 to FedEx’s FY10 Annual Report on Form 10-K, and incorporated herein by reference).
	10.23	Supplemental Agreement No. 9 dated as of June 18, 2010, Supplemental Agreement No. 10 dated as of June 18, 2010, Supplemental Agreement No. 11 (and related side letter) dated as of August 19, 2010, and Supplemental Agreement No. 13 (and related side letter) dated as of August 27, 2010, each amending the Boeing 777 Freighter Purchase Agreement dated as of November 7, 2006 between The Boeing Company and FedEx Express. Confidential treatment has been granted for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (Filed as Exhibit 10.1 to FedEx’s FY11 First Quarter Report on Form 10-Q, and incorporated herein by reference.)
	10.24	Supplemental Agreement No. 12 (and related side letter) dated as of September 3, 2010, Supplemental Agreement No. 14 (and related side letter) dated as of October 25, 2010, and Supplemental Agreement No. 15 (and related side letter) dated as of October 29, 2010, each amending the Boeing 777 Freighter Purchase Agreement dated as of November 7, 2006 between The Boeing Company and FedEx Express. Confidential treatment has been granted for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (Filed as Exhibit 10.2 to FedEx’s FY11 Second Quarter Report on Form 10-Q, and incorporated herein by reference.)

E-3

Exhibit
Number		Description of Exhibit
	10.25	Supplemental Agreement No. 16 (and related side letters) dated as of January 31, 2011, and Supplemental Agreement No. 17 dated as of February 14, 2011, each amending the Boeing 777 Freighter Purchase Agreement dated as of November 7, 2006 between The Boeing Company and FedEx Express. Confidential treatment has been granted for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (Filed as Exhibit 10.1 to FedEx’s FY11 Third Quarter Report on Form 10-Q, and incorporated herein by reference.)
	*10.26	Supplemental Agreement No. 18 (and related side letter) dated as of March 30, 2011 to the Boeing 777 Freighter Purchase Agreement dated as of November 7, 2006 between The Boeing Company and FedEx Express. Confidential treatment has been requested for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.
		U.S. Postal Service Agreement
	10.27	Transportation Agreement dated July 31, 2006 between the United States Postal Service and FedEx Express. Confidential treatment has been granted for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (Filed as Exhibit 10.2 to FedEx’s FY07 First Quarter Report on Form 10-Q, and incorporated herein by reference.)
	10.28	Amendment dated November 30, 2006 to the Transportation Agreement dated July 31, 2006 between the United States Postal Service and FedEx Express. Confidential treatment has been granted for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (Filed as Exhibit 10.2 to FedEx’s FY07 Second Quarter Report on Form 10-Q, and incorporated herein by reference.)
	10.29	Letter Agreement dated March 8, 2007 and Letter Agreement dated May 14, 2007, each amending the Transportation Agreement dated July 31, 2006 between the United States Postal Service and FedEx Express. Confidential treatment has been granted for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (Filed as Exhibit 10.15 to FedEx’s FY07 Annual Report on Form 10-K, and incorporated herein by reference.)
	10.30	Amendment dated June 20, 2007 and Amendment dated July 31, 2007, each amending the Transportation Agreement dated July 31, 2006 between the United States Postal Service and FedEx Express. Confidential treatment has been granted for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (Filed as Exhibit 10.1 to FedEx’s FY08 First Quarter Report on Form 10-Q, and incorporated herein by reference.)
	10.31	Amendment dated December 4, 2007 to the Transportation Agreement dated July 31, 2006 between the United States Postal Service and FedEx Express. Confidential treatment has been granted for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (Filed as Exhibit 10.1 to FedEx’s FY08 Third Quarter Report on Form 10-Q, and incorporated herein by reference.)
	10.32	Letter Agreement dated October 23, 2008 and Amendment dated October 23, 2008, each amending the Transportation Agreement dated July 31, 2006 between the United States Postal Service and FedEx Express. Confidential treatment has been granted for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (Filed as Exhibit 10.1 to FedEx’s FY09 Second Quarter Report on Form 10-Q, and incorporated herein by reference.)

E-4

Exhibit
Number		Description of Exhibit
	10.33	Letter Agreement dated March 4, 2009, amending the Transportation Agreement dated July 31, 2006 between the United States Postal Service and FedEx Express. (Filed as Exhibit 10.24 to FedEx’s FY09 Annual Report on Form 10-K, and incorporated herein by reference.)
	10.34	Letter Agreement dated September 29, 2009, amending the Transportation Agreement dated July 31, 2006 between the United States Postal Service and FedEx Express. Confidential treatment has been granted for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (Filed as Exhibit 10.1 to FedEx’s FY10 Second Quarter Report on Form 10-Q, and incorporated herein by reference.)
	10.35	Amendment dated December 8, 2009 to the Transportation Agreement dated July 31, 2006 between the United States Postal Service and FedEx Express. Confidential treatment has been granted for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (Filed as Exhibit 10.4 to FedEx’s FY10 Third Quarter Report on Form 10-Q, and incorporated herein by reference.)
	10.36	Letter Agreement dated August 30, 2010, amending the Transportation Agreement dated July 31, 2006 between the United States Postal Service and FedEx Express. Confidential treatment has been granted for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (Filed as Exhibit 10.2 to FedEx’s FY11 First Quarter Report on Form 10-Q, and incorporated herein by reference.)
	10.37	Amendment dated November 22, 2010 to the Transportation Agreement dated July 31, 2006 between the United States Postal Service and FedEx Express. Confidential treatment has been granted for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (Filed as Exhibit 10.3 to FedEx’s FY11 Second Quarter Report on Form 10-Q, and incorporated herein by reference.)
		Financing Agreement
	10.38	Five-Year Credit Agreement dated as of April 26, 2011, among FedEx, JPMorgan Chase Bank, N.A., individually and as administrative agent, and certain lenders. (Filed as Exhibit 99.1 to FedEx’s Current Report on Form 8-K dated April 26, 2011 and filed April 29, 2011, and incorporated herein by reference.) FedEx is not filing any other instruments evidencing any indebtedness because the total amount of securities authorized under any single such instrument does not exceed 10% of the total assets of FedEx and its subsidiaries on a consolidated basis. Copies of such instruments will be furnished to the Securities and Exchange Commission upon request.
		Management Contracts/Compensatory Plans or Arrangements
	10.39	1993 Stock Incentive Plan and Form of Stock Option Agreement pursuant to 1993 Stock Incentive Plan, as amended. (The 1993 Stock Incentive Plan was filed as Exhibit A to FedEx Express’s FY93 Definitive Proxy Statement, Commission File No. 1-7806, and is incorporated herein by reference, and the form of stock option agreement was filed as Exhibit 10.61 to FedEx Express’s FY94 Annual Report on Form 10-K, and is incorporated herein by reference.)
	10.40	Amendment to 1993 Stock Incentive Plan. (Filed as Exhibit 10.63 to FedEx Express’s FY94 Annual Report on Form 10-K, and incorporated herein by reference.)

E-5

Exhibit
Number		Description of Exhibit
	10.41	1995 Stock Incentive Plan and Form of Stock Option Agreement pursuant to 1995 Stock Incentive Plan. (The 1995 Stock Incentive Plan was filed as Exhibit A to FedEx Express’s FY95 Definitive Proxy Statement, and is incorporated herein by reference, and the form of stock option agreement was filed as Exhibit 99.2 to FedEx Express’s Registration Statement No. 333-03443 on Form S-8, and is incorporated herein by reference.)
	10.42	Amendment to 1993 and 1995 Stock Incentive Plans. (Filed as Exhibit 10.79 to FedEx Express’s FY97 Annual Report on Form 10-K, and incorporated herein by reference.)
	10.43	1997 Stock Incentive Plan, as amended, and Form of Stock Option Agreement pursuant to 1997 Stock Incentive Plan. (The 1997 Stock Incentive Plan was filed as Exhibit 4.3 to FedEx’s Registration Statement on Form S-8, Registration No. 333-71065, and is incorporated herein by reference, and the form of stock option agreement was filed as Exhibit 4.4 to FedEx’s Registration Statement No. 333-71065 on Form S-8, and is incorporated herein by reference.)
	10.44	Amendment to 1997 Stock Incentive Plan. (Filed as Exhibit A to FedEx’s FY98 Definitive Proxy Statement, and incorporated herein by reference.)
	10.45	1999 Stock Incentive Plan and Form of Stock Option Agreement pursuant to 1999 Stock Incentive Plan. (The 1999 Stock Incentive Plan was filed as Exhibit 4.3 to FedEx’s Registration Statement No. 333-34934 on Form S-8, and is incorporated herein by reference, and the form of stock option agreement was filed as Exhibit 4.4 to FedEx’s Registration Statement No. 333-34934 on Form S-8, and is incorporated herein by reference.)
	10.46	2002 Stock Incentive Plan and Form of Stock Option Agreement pursuant to 2002 Stock Incentive Plan. (The 2002 Stock Incentive Plan was filed as Exhibit 4.3 to FedEx’s Registration Statement No. 333-100572 on Form S-8, and is incorporated herein by reference, and the form of stock option agreement was filed as Exhibit 4.4 to FedEx’s Registration Statement No. 333-100572 on Form S-8, and is incorporated herein by reference.)
	10.47	2001 Restricted Stock Plan and Form of Restricted Stock Agreement pursuant to 2001 Restricted Stock Plan. (Filed as Exhibit 10.60 to FedEx’s FY01 Annual Report on Form 10-K, and incorporated herein by reference.)
	10.48	Amendment to 2001 Restricted Stock Plan. (Filed as Exhibit 10.67 to FedEx’s FY02 Annual Report on Form 10-K, and incorporated herein by reference.)
	10.49	Amendment to 1995, 1997, 1999 and 2002 Stock Incentive Plans and 2001 Restricted Stock Plan. (Filed as Exhibit 10.3 to FedEx’s FY04 Second Quarter Report on Form 10-Q, and incorporated herein by reference.)

E-6

Exhibit
Number		Description of Exhibit
	10.50	FedEx Corporation Incentive Stock Plan, as amended; Amendment to FedEx Corporation Incentive Stock Plan, as amended, and 1997, 1999 and 2002 Stock Incentive Plans; Form of Terms and Conditions of stock option grant pursuant to FedEx Corporation Incentive Stock Plan, as amended; and Form of Restricted Stock Agreement pursuant to FedEx Corporation Incentive Stock Plan, as amended. (The FedEx Corporation Incentive Stock Plan, as amended, was filed as Exhibit 4.1 to FedEx’s Registration Statement No. 333-156333 on Form S-8, and is incorporated herein by reference; the Amendment to FedEx Corporation Incentive Stock Plan, as amended, and 1997, 1999 and 2002 Stock Incentive Plans was filed as Exhibit 4.2 to FedEx’s Registration Statement No. 333-156333 on Form S-8, and is incorporated herein by reference; the Form of Terms and Conditions of stock option grant pursuant to FedEx Corporation Incentive Stock Plan, as amended, was filed as Exhibit 4.3 to FedEx’s Registration Statement No. 333-156333 on Form S-8, and is incorporated herein by reference; and the Form of Restricted Stock Agreement pursuant to FedEx Corporation Incentive Stock Plan, as amended, was filed as Exhibit 4.4 to FedEx’s Registration Statement No. 333-156333 on Form S-8, and is incorporated herein by reference.)
	10.51	FedEx Corporation Incentive Stock Plan 2005 Inland Revenue Approved Sub-Plan for the United Kingdom and Form of Share Option Agreement pursuant to the FedEx Corporation Incentive Stock Plan 2005 Inland Revenue Approved Sub-Plan for the United Kingdom. (The United Kingdom Sub-Plan was filed as Exhibit 4.2 to FedEx’s Registration Statement No. 333-130619 on Form S-8, and is incorporated herein by reference, and the form of share option agreement pursuant to the UK Sub-Plan was filed as Exhibit 4.3 to FedEx’s Registration Statement No. 333-130619 on Form S-8, and is incorporated herein by reference.)
	10.52	Amendments to 1993, 1995, 1997, 1999 and 2002 Stock Incentive Plans, as amended, 2001 Restricted Stock Plan, as amended, and FedEx Corporation Incentive Stock Plan, as amended. (Filed as Exhibit 10.48 to FedEx’s FY10 Annual Report on Form 10-K, and incorporated herein by reference.)
	10.53	Amendments to 1993, 1995, 1997, 1999 and 2002 Stock Incentive Plans, 2001 Restricted Stock Plan and FedEx Corporation Incentive Stock Plan. (Filed as Exhibit 10.2 to FedEx’s FY11 Third Quarter Report on Form 10-Q, and incorporated herein by reference.)
	10.54	FedEx Corporation 2010 Omnibus Stock Incentive Plan; Form of Terms and Conditions of stock option grant pursuant to FedEx Corporation 2010 Omnibus Stock Incentive Plan; and Form of Terms and Conditions of restricted stock grant pursuant to FedEx Corporation 2010 Omnibus Stock Incentive Plan. (The FedEx Corporation 2010 Omnibus Stock Incentive Plan was filed as Exhibit 4.3 to FedEx’s Registration Statement No. 333-171232 on Form S-8, and is incorporated herein by reference; the Form of Terms and Conditions of stock option grant pursuant to FedEx Corporation 2010 Omnibus Stock Incentive Plan was filed as Exhibit 4.4 to FedEx’s Registration Statement No. 333-171232 on Form S-8, and is incorporated herein by reference; and the Form of Terms and Conditions of restricted stock grant pursuant to FedEx Corporation 2010 Omnibus Stock Incentive Plan was filed as Exhibit 4.5 to FedEx’s Registration Statement No. 333-171232 on Form S-8, and is incorporated herein by reference.)
	10.55	Amended and Restated FedEx Corporation Retirement Parity Pension Plan. (Filed as Exhibit 10.35 to FedEx’s FY08 Annual Report on Form 10-K, and incorporated herein by reference.)
	*10.56	FedEx Express Supplemental Long Term Disability Plan and Amendment to the Plan.
	*10.57	Compensation Arrangements with Named Executive Officers.

E-7

Exhibit
Number		Description of Exhibit
	10.58	Compensation Arrangements with Outside Directors. (Filed as Exhibit 10.1 to FedEx’s FY11 Second Quarter Report on Form 10-Q, and incorporated herein by reference.)
	10.59	FedEx’s Amended and Restated Retirement Plan for Outside Directors. (Filed as Exhibit 10.2 to FedEx’s FY09 Second Quarter Report on Form 10-Q, and incorporated herein by reference.)
	10.60	Form of revised Management Retention Agreement, dated March 18, 2010, entered into between FedEx and each of Frederick W. Smith, David J. Bronczek, Robert B. Carter, T. Michael Glenn, Alan B. Graf, Jr., William J. Logue, David F. Rebholz and Christine P. Richards. (Filed as Exhibit 10.5 to FedEx’s FY10 Third Quarter Report on Form 10-Q, and incorporated herein by reference.)
		Other Exhibits
	*12	Statement re Computation of Ratio of Earnings to Fixed Charges (presented on page 130 of this Annual Report on Form 10-K).
	*21	Subsidiaries of Registrant.
	*23	Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm.
	*24	Powers of Attorney.
	*31.1	Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	*31.2	Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	*32.1	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	*32.2	Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	*101.1	Interactive Data Files.

* Filed herewith.

E-8

EX-10.26

EXHIBIT 10.26

Supplemental Agreement No. 18

to

Purchase Agreement No. 3157

between

The Boeing Company

And

Federal Express Corporation

Relating to Boeing Model 777-FREIGHTER Aircraft

THIS SUPPLEMENTAL AGREEMENT, entered into as of the 30^th day of March, 2011, by and between THE BOEING COMPANY (Boeing) and FEDERAL EXPRESS CORPORATION (Customer);

W I T N E S S E T H:

WHEREAS, the parties entered into that certain Purchase Agreement No. 3157, dated November 7, 2006 (Purchase Agreement), relating to the purchase and sale of certain Boeing Model 777-FREIGHTER Aircraft (the Aircraft); and

WHEREAS, Customer desires to re-schedule the delivery of one (1) Aircraft (Rescheduled Aircraft) as follows;

Serial	Current Delivery		Revised Delivery
Number	Month per SA # 12		Month
[ * ]		[ * ]		[ * ]

NOW THEREFORE, in consideration of the mutual covenants herein contained, the parties hereto agree to supplement the Purchase Agreement as follows:

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

S18-1

All terms used herein and in the Purchase Agreement, and not defined herein, shall have the same meaning as in the Purchase Agreement.

1. Remove and replace, in its entirety, the “Table of Contents” with the revised Table of Contents attached hereto to reflect the changes made by this Supplemental Agreement No. 18.

2. Remove and replace, in its entirety, Table 1-D to the Purchase Agreement with the revised Table 1-D attached hereto to reflect changes relating to the Rescheduled Aircraft.

3. As a result of accelerating the Rescheduled Aircraft, advance payments in the amount of [ * ] U.S. dollars ([ * ]) will be due within two (2) business days after Customer’s acceptance of this Supplemental Agreement No. 18.

4.	Customer and Boeing hereby acknowledge and confirm that Letter Agreement 6-1162-RRO-1144R4 is hereby cancelled and replaced in its entirety with Letter Agreement 6-1162-RRO-1144R5.
5.	Boeing’s offer to re-schedule the Rescheduled Aircraft will expire on March 31, 2011.

EXECUTED as of the day and year first above written.

THE BOEING COMPANY		FEDERAL EXPRESS CORPORATION
By:	/s/ STUART C. ROSS	By:	/s/ PHILLIP C. BLUM
Its:	Attorney-In-Fact	Its:	VP, Aircraft Acquisitions & SAO

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

S18-2

TABLE OF CONTENTS

	SA
	NUMBER
ARTICLES
1. Quantity, Model and Description
2. Delivery Schedule
3. Price
4. Payment
5. Miscellaneous
TABLE
1. Aircraft Information Table		15
1B Block B Aircraft Information Table		4
1C Block C Aircraft Information Table		13
1C1 Block C Aircraft Information Table (MSN [ * ])		11
1C2 Block C Aircraft Information Table		16
1D Block D Aircraft Information Table		18
EXHIBIT
A. Aircraft Configuration		4
A1. Aircraft Configuration (Block B Aircraft)		4
A2. Aircraft Configuration (Block C Aircraft except MSN [ * ])		11
A3. Aircraft Configuration (Block C Aircraft w/ MSN [ * ])		11
A4. Aircraft Configuration (Block D Aircraft)		12
B. Aircraft Delivery Requirements and Responsibilities
SUPPLEMENTAL EXHIBITS
AE1. Escalation Adjustment/Airframe and Optional Features
CS1. Customer Support Variables
EE1. Engine Escalation/Engine Warranty and Patent Indemnity
SLP1. Service Life Policy Components

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

P.A. No. 3157 1 SA 18

BOEING PROPRIETARY

		SA
		NUMBER
LETTER AGREEMENT
3157-01	777 Spare Parts Initial Provisioning
3157-02	Demonstration Flight Waiver
6-1162-RCN-1785	[ * ]
6-1162-RCN-1789	Option Aircraft Attachment to Letter 6-1162-RCN-1789	Exercised in SA # 4
6-1162-RCN-1790	Special Matters
6-1162-RCN-1791	Performance Guarantees		4
6-1162-RCN-1792	Liquidated Damages Non-Excusable Delay
6-1162-RCN-1793	Open Configuration Matters
6-1162-RCN-1795	AGTA Amended Articles
6-1162-RCN-1796	777 First-Look Inspection Program
6-1162-RCN-1797	Licensing and Customer Supplemental Type Certificates
6-1162-RCN-1798	777 Boeing Converted Freighter	Deleted in SA # 4
6-1162-RCN-1798 R1	777 Boeing Converted Freighter		4
6-1162-RCN-1799	[ * ]
6-1162-RRO-1062	Option Aircraft		4
	Attachment		16
6-1162-RRO-1065	Performance Guarantees for Block B Aircraft		4
6-1162-RRO-1066R1	Special Matters for Block B Aircraft		4
6-1162-RRO-1067	Special Matters for Option Aircraft detailed in Letter Agreement 6-1162-RRO-1062		4
6-1162-RRO-1068	Special Provision — Block B Aircraft		4
FED-PA—LA-1000790R2	Special Matters for Block C Aircraft 16
FED-PA—LA-1001683R1	Special Matters for Block D Aircraft 16
6-1162-RRO-1144R5	[ * ]		18

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

P.A. No. 3157 2 SA 18

BOEING PROPRIETARY

SUPPLEMENTAL AGREEMENTS	DATED AS OF:
Supplemental Agreement No. 1	May 12, 2008
Supplemental Agreement No. 2	July 14, 2008
Supplemental Agreement No. 3	December 15, 2008
Supplemental Agreement No. 4	January 9, 2009
Supplemental Agreement No. 5	January 11, 2010
Supplemental Agreement No. 6	March 17, 2010
Supplemental Agreement No. 7	March 17, 2010
Supplemental Agreement No. 8	April 30, 2010
Supplemental Agreement No. 9	June 18, 2010
Supplemental Agreement No. 10	June 18, 2010
Supplemental Agreement No. 11	August 19, 2010
Supplemental Agreement No. 12	September 3, 2010
Supplemental Agreement No. 13	August 27, 2010
Supplemental Agreement No. 14	October 25, 2010
Supplemental Agreement No. 15	October 29, 2010
Supplemental Agreement No. 16	January 31, 2011
Supplemental Agreement No. 17	February 14, 2011
Supplemental Agreement No. 18	March 30, 2011

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

P.A. No. 3157 3 SA 18

BOEING PROPRIETARY

Table 1-D To
Purchase Agreement No. PA-03157
Aircraft Delivery, Description, Price and Advance Payments

Airframe Model/MTOW:	777-Freighter	766000 pounds		Detail Specification: D019W007FED7F-1 Rev C dated January 10, 2011
Engine Model/Thrust:	GE90-110B1L	110100 pounds		Airframe Price Base Year/Escalation Formula:	Jul-10		ECI-MFG/CPI
Airframe Price:			[ * ]	Engine Price Base Year/Escalation Formula:	N/A		N/A
Optional Features:			[ * ]
Sub-Total of Airframe and Features:			[ * ]	Airframe Escalation Data:
Engine Price (Per Aircraft):			[ * ]	Base Year Index (ECI):		106.8
Aircraft Basic Price (Excluding BFE/SPE):			[ * ]	Base Year Index (CPI):		215.6
Buyer Furnished Equipment (BFE) Estimate:			[ * ]
Seller Purchased Equipment (SPE) Estimate:			[ * ]
Deposit per Aircraft:		As noted below

Escalation

Escalation Estimate

Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):

Delivery

Number of

Factor

Adv Payment Base

At Signing

24 Mos.

21/18/15/12/9/6 Mos.

Total

Date

Aircraft

(Airframe)

MSN

Deposit

Price Per A/P

1%

4%

5%

35%

Block D Aircraft

[ * ]

1

[ * ]

[ * ]

[ * ]

[ * ]

[ * ]

[ * ]

[ * ]

[ * ]

[ * ]

1

[ * ]

[ * ]

[ * ]

[ * ]

[ * ]

[ * ]

[ * ]

[ * ]

[ * ]

1

[ * ]

[ * ]

[ * ]

[ * ]

[ * ]

[ * ]

[ * ]

[ * ]

[ * ]

1

[ * ]

[ * ]

[ * ]

[ * ]

[ * ]

[ * ]

[ * ]

[ * ]

4

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

FED
54641, 55684 and 56375  Boeing Proprietary Supplemental Agreement No. 18
Page 1

The Boeing Company
P. O. Box 3707
Seattle, WA 98124-2207

March 25, 2011
6-1162-RRO-1144R5

Federal Express Corporation
2955 Republican Drive
Memphis, TN 38118

Attention:	Mr. Kevin Burkhart Managing Director — Aircraft Acquisitions & Sales
Subject:	[ * ]
Reference:	Supplemental Agreement No. 8, Nos. 13 through No. 16 and No. 18 to Purchase Agreement 3157, dated November 7, 2006, between The Boeing Company (Boeing) and Federal Express Corporation (Customer) relating to Model 777-FREIGHTER Aircraft (the Aircraft)

Dear Mr. Burkhart:

In consideration of the strong business relationship between Boeing and Customer and Customer executing Supplemental Agreements No. 8, Nos. 13 through No. 16 and No. 18, Boeing has agreed to [ * ].

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

P.A. No. 3157, 6-1162-RRO-1144R5
[ * ] BOEING PROPRIETARY SA-18
Page 1

Further Customer agrees and acknowledges that Attachment A can not be revised/modified in any way unless specifically agreed to in writing by Boeing.

Very truly yours,
THE BOEING COMPANY
By	/s/ STUART C. ROSS
Its	Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: March 30th, 2011
FEDERAL EXPRESS CORPORATION
By	/s/ PHILLIP C. BLUM
Its	VP, Aircraft Acquisitions & SAO
Attachment

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

P.A. No. 3157- 6-1162-RRO-1144R5
[ * ] BOEING PROPRIETARY SA-18
Page 2

Attachment A to 6-1162-RRO-1144R5

[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

BOEING PROPRIETARY

EX-10.56

EXHIBIT 10.56

FEDERAL EXPRESS CORPORATION

SUPPLEMENTAL LONG TERM DISABILITY PLAN

Section 1. Purpose and Description. Federal Express Corporation, a Delaware corporation (the “Company”), has established, effective March 1, 1993 (the “Effective Date”), the Federal Express Corporation Supplemental Long Term Disability Plan (the “Plan”). The Plan is intended to be an “employee welfare benefit plan,” as defined in § 3(1) of the Employee Retirement Income Security Act of 1974 (“ERISA”), and a plan which is unfunded and “maintained by an employer for the purpose of providing benefits for a select group of management or highly compensated employees,” as provided in 29 CFR §2520.104-24 of the Department of Labor regulations promulgated under ERISA. The benefits provided by the Plan shall not be funded, but shall be payable when due out of the assets of the Company as general, unsecured obligations of the Company.

Section 2. Defined Terms. Except as otherwise defined in this Plan or where the context clearly requires a different meaning, defined terms in this Plan shall have the same meaning attributable to such terms in the Federal Express Corporation Long Term Disability Plan (the “LTD Plan”).

(a) Officer shall mean an individual elected to the position of vice president or above, as reflected in the minutes of the Company’s Board of Directors.

Section 3. Eligibility. Any employee of the Company who (i) is serving as an Officer after the Effective Date and at the time he becomes Disabled, (ii) has served as an Officer for a period of five consecutive years prior to becoming Disabled, including service prior to the Effective Date but excluding service with a predecessor-in-interest to the Company, and (iii) is qualified for a benefit under the LTD Plan for the same Disability for which benefits are claimed under this Plan shall be eligible for the benefits described in Section 4 below.

For purposes of this Plan, eligibility under the LTD Plan shall be determined without regard to the provisions of the LTD Plan which limit benefits under that plan for a period of two years for (i) an Occupational Disability and (ii) a mental impairment or nervous condition. In addition, benefits shall not be limited in this Plan by the compensation cap imposed by § 505(b)(7) of the Internal Revenue Code or the LTD Plan’s monthly benefit limit (currently $7500). For the purpose of this Plan, the limitations described in the preceding two sentences shall be referred to as the LTD Limitations.

- 2 -

Section 4. Benefit Amount and Limitations.

(a) An Officer who satisfies the eligibility requirements of Section 3 above shall upon becoming Disabled be paid from the Plan the difference, if any, between the amount determined under the LTD Plan without regard to the LTD Limitations and the amount payable from the LTD Plan; provided however, the aggregate monthly benefit from this Plan and the LTD Plan shall not exceed $27,500.

(b) Benefits payable under this Plan shall be subject to all of the provisions, requirements, exclusions, offsets, restrictions, limitations, etc. provided in the LTD Plan, other than the LTD Limitations described in Section 3 above. In the event of a conflict between the provisions of this Plan and the LTD Plan, the provisions of this Plan shall control with respect to the benefit provided herein.

(c) Notwithstanding any other provision of this Plan to the contrary, benefits provided hereunder shall be reduced by the amount of benefits paid or payable to a Disabled Officer from any “employee benefit pension plan,” as such term is defined in ERISA, as of the first day of the month following the month in which such Officer turns age 62.

- 3 -

Section 5. Payment of Benefits. Benefits under this Plan shall be payable monthly at the time and in the manner determined by the Company.

Section 6. Plan Administration. The Plan shall be administered by the Company, acting through its Employee Benefits Department (the “Administrator”). The Administrator shall have the responsibility to receive, evaluate and process all claims for benefits and shall allow payment of benefits under the Plan in accordance with its terms. In connection with its duties, the Administrator shall have the authority to interpret the Plan’s provisions and to determine eligibility for Plan benefits. The Administrator shall have the authority to adopt such rules and procedures which it deems necessary for the administration of the Plan and recommend any modifications, changes or amendments to the Plan

Section 7. Claims Procedures. As contemplated by Section 4(b) above, the claims procedures for the Plan shall be the same as such procedures in the LTD Plan.

Section 8. Top Hat Plan Designation. Notwithstanding any other provision of this Plan, the Administrator, upon the advice of counsel (including counsel for the Company), shall have the sole discretion to reasonably determine if an Officer fails to fall within the meaning of “a select group of management or highly compensated employees” as such phrase is used in 29 CFR §2520.104-24. Upon such a determination being made, the Officer in question shall be deemed not to be eligible for benefits under the Plan.

- 4 -

Section 9. Non-Assignability of Benefits. Benefits under this Plan shall not be assignable or transferable in any manner, nor shall they be subject to garnishment, attachment of other legal process, except as provided by ERISA and other applicable federal law.

Section 10. Effect. Neither the establishment of the Plan nor any modification thereto, nor the creation of any account on the books of the Company, nor the payment of any benefit from the Plan shall be construed as giving an Officer or any other person any legal or equitable right against the Company, its Directors, Officers, employees or agents, except as provided herein.

Section 11. Forfeiture of Benefits. All rights to any benefits payable under this Plan shall be forfeited by an Officer if the Company’s Board of Directors determines that such Officer breached his duty of loyalty to the Company or if the Officer enters into competition with the Company without the consent of the Company’s Board of Directors, as reflected in its minutes.

- 5 -

Section 12. No Guarantee of Employment. Nothing contained in this Plan shall be construed as a contract of employment between the Company and any Officer nor as a promise that any Officer shall continue in his present or comparable position nor as a limit on the Company’s right to discharge such Officer, with or without notice.

Section 13. Amendment or Termination. The Company may amend or terminate the Plan at any time. An amendment shall become effective upon its execution in writing by an Officer of the Company and the Plan’s termination shall become effective upon the action of the Company’s Compensation Committee of the Board of Directors or the Federal Express Corporation Qualified Employee Benefits Committee (the “Committee”), as reflected in the Compensation Committee’s or Committee’s minutes.

Section 14. Agent for Service of Process. The Company is hereby designated as agent for service of process for all purposes provided herein.

Section 15. Governing Law. Except to the extent preempted by federal law, the provisions of this Plan shall be administered, construed and enforced in accordance with the laws of the State of Tennessee.

Section 16. Number and Gender. Wherever any words are used herein in the masculine gender, they shall be construed as though they were also used in the feminine and neuter gender in all cases where they would so apply, and wherever any words are used herein in the singular form, they shall be construed as though they were also used in the plural form in all cases where they would so apply.

Section 17. Execution. This document may be executed in any number of counterparts and each fully executed counterpart shall be deemed an original.

- 6 -

IN WITNESS WHEREOF, the undersigned duly authorized Officer of the Company has caused this Plan to be adopted as of March 1, 1993, by affixing his signature hereto.

FEDERAL EXPRESS CORPORATION
By:	/s/ STEVEN E. PRIDDY Steven E. Priddy
	Vice President
	Personnel Administration
Date: 11/4/93

ATTEST:

/s/ GEORGE W. HEARN Title: ASSISTANT SECRETARY

DJK/ebw
1634.FXCLA01

- 7 -

AMENDMENT
TO THE
FEDERAL EXPRESS CORPORATION
SUPPLEMENTAL LONG TERM DISABILITY PLAN

WHEREAS, Federal Express Corporation (the “Company”) maintains the Federal Express Corporation Supplemental Long Term Disability Plan (the “Plan”) for the benefit of its eligible officers;

WHEREAS, under Section 13 of the Plan, the Company may amend the Plan at any time;

WHEREAS, the Company desires to amend the Plan to remove the $27,500 benefit limitation, effective for disabilities commencing on or after September 29, 2002;

WHEREAS, the Company desires to amend the Plan to allow eligible officers of certain affiliates of the Company to participate and such affiliates agree to such participation, effective as of the date of this amendment; and

WHEREAS, the Company desires to update the $7,500 benefit limitation mentioned under the Plan, effective for disabilities commencing on or after March 1, 2003.

NOW, THEREFORE, in accordance with the foregoing, the Plan is amended as follows:

1. Section 2(a) of the Plan is hereby amended to read in its entirety as follows:

“(a) Officer shall mean an individual elected to the position of vice president or above, as reflected in the minutes of the Board of Directors of a Participating Employer. For purposes of this Plan, “Participating Employer” shall mean: (i) Federal Express Corporation; (ii) FedEx Corporation; (iii) FedEx Trade Networks, Inc.; (iv) FedEx Trade Networks Transport & Brokerage, Inc.; (v) World Tariff, Limited; (vi) FedEx Corporate Services, Inc.; (vii) FedEx Freight Corporation; (viii) FedEx Trade Networks Trade Services, Inc.; (ix) FedEx Customer Information Services, Inc.; and (x) and each Affiliate that adopts the Plan for the benefit of its officers.”

2. Section 3 of the Plan is hereby amended to read in its entirety as follows:

“Section 3. Eligibility. Any employee of a Participating Employer who (i) is serving as an Officer after the Effective Date and at the time he becomes Disabled, (ii) has served as an Officer for a period of five consecutive years prior to becoming Disabled, including service prior to the Effective Date but excluding service with a predecessor-in-interest to the Company, and (iii) is qualified for a benefit under the LTD Plan for the same Disability for which benefits are claimed under this Plan shall be eligible for the benefits described in Section 4 below.

For purposes of this Plan, eligibility under the LTD Plan shall be determined without regard to the provisions of the LTD Plan which limit benefits under that plan for a period of two years for (i) an Occupational Disability and (ii) a mental impairment or nervous condition. In addition, benefits shall not be limited in this Plan by the compensation cap imposed by §505(b)(7) of the Internal Revenue Code or the LTD Plan’s monthly benefit limit of $7,500 ($10,000 for disabilities commencing on or after March 1, 2003). For the purpose of this Plan, the limitations described in the preceding two sentences shall be referred to as the LTD Limitations.”

3. The following sentence is hereby added to the end of Section 4(a) of the Plan:

“With respect to disabilities commencing on or after September 29, 2002, the $27,500 limit shall not apply.”

4. Section 13 of the Plan is hereby amended to read in its entirety as follows:

“Section 13. Amendment or Termination. A Participating Employer may amend or terminate the Plan at any time with respect to participants who are employed by such Participating Employer. Any such action by a Participating Employer shall become effective upon its execution in writing by a duly authorized officer of the Participating Employer. The Plan as a whole may be terminated by the action of the Compensation Committee of the Board of Directors of FedEx Corporation (the “Committee”), as reflected in the Committee’s minutes.”

5. All other references in the Plan to “Company” are hereby replaced with “Participating Employer.”

This document may be executed in any number of counterparts and each fully executed counterpart shall be deemed an original.

IN WITNESS WHEREOF, the undersigned duly authorized officer of the Company has caused this amendment to the Plan to be adopted as of September 1, 2010, by affixing his signature hereto.

FEDERAL EXPRESS CORPORATION
By:	/s/ DENNIS P. ROCHE Dennis Roche
	Vice President
	Human Resources
Date: 10/1/10

IN WITNESS WHEREOF, the undersigned duly authorized officer of the Participating Employer has agreed to participation in the Plan and caused this amendment to the Plan to be adopted as of September 1, 2010, by affixing her signature hereto.

FEDEX CORPORATION
By:	/s/ JUDITH H. EDGE
	Judith H. Edge
	Corporate Vice-President, Human Resources
Date: 11/1/10

IN WITNESS WHEREOF, the undersigned duly authorized officer of the Participating Employer has agreed to participation in the Plan and caused this amendment to the Plan to be adopted as of September 1, 2010, by affixing her signature hereto.

FEDEX CORPORATE SERVICES, INC.
By:	/s/ DONNA R. HUMPHREYS Donna Humphreys
	Vice-President, Human Resources
Date: 9-30-10

IN WITNESS WHEREOF, the undersigned duly authorized officer of the Participating Employer has agreed to participation in the Plan and caused this amendment to the Plan to be adopted as of September 1, 2010, by affixing her signature hereto.

FEDEX CUSTOMER INFORMATION SERVICES, INC.
By:	/s/ DONNA R. HUMPHREYS Donna Humphreys
	Vice-President, Human Resources
Date: 9-30-10

IN WITNESS WHEREOF, the undersigned duly authorized officer of the Participating Employer has agreed to participation in the Plan and caused this amendment to the Plan to be adopted as of September 1, 2010, by affixing her signature hereto.

FEDEX TRADE NETWORKS, INC.
By:	/s/ PENELOPE W. REGISTER SHAW Penelope Register Shaw
	Vice President and General Counsel
Date: 9-30-10

IN WITNESS WHEREOF, the undersigned duly authorized officer of the Participating Employer has agreed to participation in the Plan and caused this amendment to the Plan to be adopted as of September 1, 2010, by affixing her signature hereto.

FEDEX TRADE NETWORKS TRANSPORT & BROKERAGE, INC.
By:	/s/ PENELOPE W. REGISTER SHAW Penelope Register Shaw
	Senior Vice President and General Counsel
Date: 9-30-10

IN WITNESS WHEREOF, the undersigned duly authorized officer of the Participating Employer has agreed to participation in the Plan and caused this amendment to the Plan to be adopted as of September 1, 2010, by affixing her signature hereto.

FEDEX TRADE NETWORKS TRADE SERVICES, INC.
By:	/s/ PENELOPE W. REGISTER SHAW Penelope Register Shaw
	President, General Counsel, and Secretary
Date: 9-30-10

IN WITNESS WHEREOF, the undersigned duly authorized officer of the Participating Employer has agreed to participation in the Plan and caused this amendment to the Plan to be adopted as of September 1, 2010, by affixing her signature hereto.

WORLD TARIFF, LIMITED
By:	/s/ PENELOPE W. REGISTER SHAW Penelope Register Shaw
	President, General Counsel, and Secretary
Date: 9-30-10

IN WITNESS WHEREOF, the undersigned duly authorized officer of the Participating Employer has agreed to participation in the Plan and caused this amendment to the Plan to be adopted as of September 1, 2010, by affixing her signature hereto.

FEDEX FREIGHT CORPORATION
By:	/s/ LORI R. HENRY Lori R. Henry Vice President, Human Resources
Date: 9-30-2010

EX-10.57

EXHIBIT 10.57

Compensation Arrangements with Named Executive Officers

Base Salaries

The following table sets forth the annual base salaries of FedEx’s named executive officers:

Name and
Current Position	Base Salary
Frederick W. Smith	$	1,266,960
Chairman, President and Chief Executive Officer
Alan B. Graf, Jr.	$	902,784
Executive Vice President and Chief Financial Officer
David J. Bronczek	$	942,096
President and Chief Executive Officer — FedEx Express
T. Michael Glenn	$	833,364
Executive Vice President, Market Development and Corporate Communications
Robert B. Carter	$	762,960
Executive Vice President, FedEx Information Services and Chief Information Officer

Mr. Smith’s base salary is effective as of July 16, 2011. The base salaries of the other named executive officers were effective as of July 1, 2011.

Fiscal 2012 Annual Incentive Compensation Program

Chairman, President and Chief Executive Officer

Frederick W. Smith’s fiscal 2012 annual bonus will be based on the achievement of corporate objectives for consolidated pre-tax income for fiscal 2012. The independent members of the Board of Directors, upon the recommendation of the Compensation Committee, may adjust Mr. Smith’s bonus amount upward or downward based on their annual evaluation of Mr. Smith’s performance, including the quality and effectiveness of his leadership and the following corporate performance measures:

• FedEx’s stock price performance relative to the Standard & Poor’s 500 Composite Index, the Dow Jones Transportation Average, the Dow Jones Industrial Average and competitors;

• FedEx’s stock price to earnings (P/E) ratio relative to the Standard & Poor’s 500 Composite Index, the Dow Jones Industrial Average and competitors;

• FedEx’s market capitalization;

• FedEx’s revenue and operating income growth (excluding certain unusual items) relative to competitors;

• FedEx’s free cash flow (excluding business acquisitions), return on invested capital (excluding certain unusual items), and weighted average cost of capital;

• Analyst coverage and ratings for FedEx’s stock;

• FedEx’s U.S. and international revenue market share; and

• FedEx’s reputation rankings by various publications and surveys.

None of these factors will be given any particular weight in determining whether to adjust Mr. Smith’s bonus amount.

Mr. Smith’s annual bonus target for fiscal 2012 is 130% of his annual base salary (at fiscal year-end), with a maximum payout of 300% of his target bonus.

Non-CEO Named Executive Officers

The fiscal 2012 annual bonus target payouts for the non-CEO named executive officers, as a percentage of annual base salary (at fiscal year-end), are as follows:

Name	Target Payout
Alan B. Graf, Jr.		90	%
David J. Bronczek		100	%
T. Michael Glenn		90	%
Robert B. Carter		90	%

The maximum payout for each executive is 240% of his target bonus.

The fiscal 2012 annual bonus for the non-CEO named executive officers will be based on:

• the achievement of individual objectives established at the beginning of the fiscal year for each executive (30% of each executive’s target bonus); and

• the achievement of corporate objectives for consolidated pre-tax income for fiscal 2012 (70% of each executive’s target bonus).

The annual bonus payout opportunity relating to individual performance will be contingent upon achievement of consolidated pre-tax income objectives under the bonus plan (as well as achievement of the individual performance objectives). Mr. Smith will determine the achievement level of each executive’s individual objectives at the conclusion of fiscal 2012.

Company Financial Performance Measure

The annual bonus payout opportunity relating to company financial performance for each named executive officer ranges, on a sliding scale, from a minimum amount if the annual bonus plan’s pre-established consolidated pre-tax income threshold is achieved up to a maximum amount if such financial performance goal is substantially exceeded. Ordinarily, our business plan objective for consolidated pre-tax income is the target under the annual bonus plan. In keeping with our pay-for-performance philosophy, our fiscal 2012 annual bonus plan design seeks to reward employees for their motivation during lean economic times and for improved company performance. Accordingly, the fiscal 2012 target objective for the company performance factor under the annual bonus plan is less than the fiscal 2012 business plan objective for consolidated pre-tax income.

2

Long-Term Incentive Program

FedEx’s long-term incentive (“LTI”) plans for the three-fiscal-year periods 2010 through 2012, 2011 through 2013 and 2012 through 2014, provide long-term cash bonus opportunities to members of upper management, including the named executive officers, upon the conclusion of fiscal 2012, 2013 and 2014, respectively, if certain aggregate fully diluted earnings per share (“EPS”) goals established by the Board of Directors are achieved with respect to those periods. No amounts can be earned for the fiscal 2010 through 2012, 2011 through 2013 and 2012 through 2014 plans until 2012, 2013 and 2014, respectively, because achievement of the EPS goals can only be determined following the conclusion of the applicable three-fiscal-year period.

Traditionally, the base-year number over which the three-year average annual EPS growth rate goals are measured for an LTI plan is the final full-year EPS of the preceding fiscal year. For the fiscal 2010 through 2012 LTI plan, however, an adjusted base-year number ($2.93) was used rather than the final fiscal 2009 EPS. This adjusted base-year number was set so that 12.5% growth from the number would equal the fiscal 2010 business plan EPS goal.

The following table sets forth the potential future payouts to each of FedEx’s named executive officers under FedEx’s LTI plans:

		Potential Future Payouts
	Performance	Threshold		Target		Maximum
Name	Period	($)		($)		($)
Frederick W. Smith	FY2010–FY2012		875,000		3,500,000		5,250,000
	FY2011–FY2013		875,000		3,500,000		5,250,000
	FY2012–FY2014		1,000,000		4,000,000		6,000,000
Alan B. Graf, Jr.	FY2010–FY2012		300,000		1,200,000		1,800,000
	FY2011–FY2013		300,000		1,200,000		1,800,000
	FY2012–FY2014		300,000		1,200,000		1,800,000
David J. Bronczek	FY2010–FY2012		375,000		1,500,000		2,250,000
	FY2011–FY2013		375,000		1,500,000		2,250,000
	FY2012–FY2014		375,000		1,500,000		2,250,000
T. Michael Glenn	FY2010–FY2012		300,000		1,200,000		1,800,000
	FY2011–FY2013		300,000		1,200,000		1,800,000
	FY2012–FY2014		300,000		1,200,000		1,800,000
Robert B. Carter	FY2010–FY2012		300,000		1,200,000		1,800,000
	FY2011–FY2013		300,000		1,200,000		1,800,000
	FY2012–FY2014		300,000		1,200,000		1,800,000

3

The potential individual future payouts set forth in the table above are set dollar amounts ranging from threshold (minimum) amounts, if the EPS goal achieved is less than target, up to maximum amounts, if the plan goal is substantially exceeded. There can be no assurance that the potential future payouts shown in this table will be achieved.

4

EX-21

EXHIBIT 21

SUBSIDIARIES OF FEDEX CORPORATION

The following is a list of subsidiaries of FedEx Corporation as of May 31, 2011. Pursuant to Item 601(b)(21) of Regulation S-K, we have omitted some subsidiaries that, considered in the aggregate as a single subsidiary, would not constitute a significant subsidiary as of May 31, 2011 under Rule 1-02(w) of Regulation S-X. FedEx Corporation owns, directly or indirectly, 100% of the voting securities of each of the listed subsidiaries.

	JURISDICTION OF
	INCORPORATION OR
NAME OF SUBSIDIARY	ORGANIZATION
Federal Express Corporation	Delaware
Federal Express Canada Ltd.	Canada
Federal Express International, Inc.	Delaware
Federal Express Pacific, Inc.	Delaware
Federal Express Europe, Inc.	Delaware
Federal Express Holdings S.A.	Delaware
FedEx Trade Networks, Inc.	Delaware
FedEx Trade Networks Trade Services, Inc.	Delaware
World Tariff, Limited	California
FedEx Trade Networks Transport & Brokerage, Inc.	New York
FedEx Trade Networks Transport & Brokerage (Canada), Inc.	Canada
FedEx Ground Package System, Inc.	Delaware
FedEx Ground Package System, Ltd.	Wyoming
FedEx SmartPost, Inc.	Delaware
FedEx Freight Corporation	Delaware
FedEx Freight, Inc.	Arkansas
FedEx Custom Critical, Inc.	Ohio
FedEx Corporate Services, Inc.	Delaware
FedEx TechConnect, Inc.	Delaware
FedEx SupplyChain Systems, Inc.	Ohio
FedEx Office and Print Services, Inc.	Texas

EX-23

EXHIBIT 23

Consent of the Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statements (Form S-8 Nos. 333-171232, 333-55055, 333-03443, 333-45037, 333-71065, 333-34934, 333-100572, 333-111399, 333-121418, 333-130619, 333-156333 and Form S-3 No. 333-160953) of FedEx Corporation and in the related Prospectuses of our reports dated July 12, 2011, with respect to the consolidated financial statements and schedule of FedEx Corporation, and the effectiveness of internal control over financial reporting of FedEx Corporation, included in this Annual Report (Form 10-K) for the year ended May 31, 2011.

/s/ Ernst & Young LLP

Memphis, Tennessee
July 12, 2011

EX-24

EXHIBIT 24

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS:

That the undersigned, a Director of FedEx Corporation (the “Corporation”), a Delaware corporation, does hereby constitute and appoint Frederick W. Smith, Alan B. Graf, Jr. and John L. Merino, and each of them, with full power of substitution and resubstitution, his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such Director, the Corporation’s Annual Report on Form 10-K with respect to the Corporation’s fiscal year ended May 31, 2011, and any and all amendments thereto; and hereby ratifies and confirms all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue of these presents.

IN WITNESS WHEREOF, I have hereunto set my hand this 2nd day of June, 2011.

/s/ JAMES L. BARKSDALE James L. Barksdale

STATE OF MISSISSIPPI

COUNTY OF MADISON

I, Sharon S. Lucius, a Notary Public in and for said County, in the aforesaid State, do hereby certify that James L. Barksdale, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the said instrument as his free and voluntary act, for the uses and purposes therein set forth.

/s/ SHARON S. LUCIUS Notary Public

My Commission Expires:

October 15, 2013

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS:

That the undersigned, a Director of FedEx Corporation (the “Corporation”), a Delaware corporation, does hereby constitute and appoint Frederick W. Smith, Alan B. Graf, Jr. and John L. Merino, and each of them, with full power of substitution and resubstitution, his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such Director, the Corporation’s Annual Report on Form 10-K with respect to the Corporation’s fiscal year ended May 31, 2011, and any and all amendments thereto; and hereby ratifies and confirms all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue of these presents.

IN WITNESS WHEREOF, I have hereunto set my hand this 6th day of June, 2011.

/s/ JOHN A. EDWARDSON John A. Edwardson

STATE OF TENNESSEE

COUNTY OF SHELBY

I, Mary T. Britt, a Notary Public in and for said County, in the aforesaid State, do hereby certify that John A. Edwardson, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the said instrument as his free and voluntary act, for the uses and purposes therein set forth.

/s/ MARY T. BRITT Notary Public

My Commission Expires:

2-13-2013

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS:

That the undersigned, a Director of FedEx Corporation (the “Corporation”), a Delaware corporation, does hereby constitute and appoint Frederick W. Smith, Alan B. Graf, Jr. and John L. Merino, and each of them, with full power of substitution and resubstitution, his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such Director, the Corporation’s Annual Report on Form 10-K with respect to the Corporation’s fiscal year ended May 31, 2011, and any and all amendments thereto; and hereby ratifies and confirms all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue of these presents.

IN WITNESS WHEREOF, I have hereunto set my hand this 7th day of June, 2011.

/s/ J.R. HYDE, III J. R. Hyde, III

STATE OF TENNESSEE

COUNTY OF SHELBY

I, Melissa Fleck, a Notary Public in and for said County, in the aforesaid State, do hereby certify that J. R. Hyde, III, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the said instrument as his free and voluntary act, for the uses and purposes therein set forth.

/s/ MELISSA FLECK Notary Public

My Commission Expires:

August 2, 2014

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS:

That the undersigned, a Director of FedEx Corporation (the “Corporation”), a Delaware corporation, does hereby constitute and appoint Frederick W. Smith, Alan B. Graf, Jr. and John L. Merino, and each of them, with full power of substitution and resubstitution, her true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such Director, the Corporation’s Annual Report on Form 10-K with respect to the Corporation’s fiscal year ended May 31, 2011, and any and all amendments thereto; and hereby ratifies and confirms all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue of these presents.

IN WITNESS WHEREOF, I have hereunto set my hand this 21st day of June, 2011.

/s/ SHIRLEY ANN JACKSON Shirley Ann Jackson

STATE OF TENNESSEE

COUNTY OF SHELBY

I, Anne R. Coleman, a Notary Public in and for said County, in the aforesaid State, do hereby certify that Shirley Ann Jackson, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that she signed and delivered the said instrument as her free and voluntary act, for the uses and purposes therein set forth.

/s/ ANNE R. COLEMAN Notary Public

My Commission Expires:

9-18-2013

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS:

That the undersigned, a Director of FedEx Corporation (the “Corporation”), a Delaware corporation, does hereby constitute and appoint Frederick W. Smith, Alan B. Graf, Jr. and John L. Merino, and each of them, with full power of substitution and resubstitution, his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such Director, the Corporation’s Annual Report on Form 10-K with respect to the Corporation’s fiscal year ended May 31, 2011, and any and all amendments thereto; and hereby ratifies and confirms all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue of these presents.

IN WITNESS WHEREOF, I have hereunto set my hand this 14th day of June, 2011.

/s/ STEVEN R. LORANGER Steven R. Loranger

STATE OF NEW YORK

COUNTY OF WESTCHESTER

I, Robin D. Cohen, a Notary Public in and for said County, in the aforesaid State, do hereby certify that Steven R. Loranger, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the said instrument as his free and voluntary act, for the uses and purposes therein set forth.

/s/ ROBIN D. COHEN Notary Public

My Commission Expires:

1/12/2012

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS:

That the undersigned, a Director of FedEx Corporation (the “Corporation”), a Delaware corporation, does hereby constitute and appoint Frederick W. Smith, Alan B. Graf, Jr. and John L. Merino, and each of them, with full power of substitution and resubstitution, his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such Director, the Corporation’s Annual Report on Form 10-K with respect to the Corporation’s fiscal year ended May 31, 2011, and any and all amendments thereto; and hereby ratifies and confirms all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue of these presents.

IN WITNESS WHEREOF, I have hereunto set my hand this 5th day of June, 2011.

/s/ GARY W. LOVEMAN Gary W. Loveman

STATE OF TENNESSEE

COUNTY OF SHELBY

I, Anne R. Coleman, a Notary Public in and for said County, in the aforesaid State, do hereby certify that Gary W. Loveman, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the said instrument as his free and voluntary act, for the uses and purposes therein set forth.

/s/ ANNE R. COLEMAN Notary Public

My Commission Expires:

9-18-2013

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS:

That the undersigned, a Director of FedEx Corporation (the “Corporation”), a Delaware corporation, does hereby constitute and appoint Frederick W. Smith, Alan B. Graf, Jr. and John L. Merino, and each of them, with full power of substitution and resubstitution, his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such Director, the Corporation’s Annual Report on Form 10-K with respect to the Corporation’s fiscal year ended May 31, 2011, and any and all amendments thereto; and hereby ratifies and confirms all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue of these presents.

IN WITNESS WHEREOF, I have hereunto set my hand this 27th day of June, 2011.

/s/ SUSAN C. SCHWAB Susan C. Schwab

STATE OF MISSOURI

COUNTY OF ST. LOUIS

I, Sharon J. Williams, a Notary Public in and for said County, in the aforesaid State, do hereby certify that Susan C. Schwab, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that she signed and delivered the said instrument as her free and voluntary act, for the uses and purposes therein set forth.

/s/ SHARON J. WILLIAMS Notary Public

My Commission Expires:

November 19, 2014

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS:

That the undersigned, a Director of FedEx Corporation (the “Corporation”), a Delaware corporation, does hereby constitute and appoint Frederick W. Smith, Alan B. Graf, Jr. and John L. Merino, and each of them, with full power of substitution and resubstitution, his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such Director, the Corporation’s Annual Report on Form 10-K with respect to the Corporation’s fiscal year ended May 31, 2011, and any and all amendments thereto; and hereby ratifies and confirms all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue of these presents.

IN WITNESS WHEREOF, I have hereunto set my hand this 15th day of June, 2011.

/s/ JOSHUA I. SMITH Joshua I. Smith

STATE OF WEST VIRGINIA

COUNTY OF JEFFERSON

I, Nancy L. Baker, a Notary Public in and for said County, in the aforesaid State, do hereby certify that Joshua I. Smith, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the said instrument as his free and voluntary act, for the uses and purposes therein set forth.

/s/ NANCY L. BAKER Notary Public

My Commission Expires:

Aug. 29, 2015

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS:

That the undersigned, a Director of FedEx Corporation (the “Corporation”), a Delaware corporation, does hereby constitute and appoint Frederick W. Smith, Alan B. Graf, Jr. and John L. Merino, and each of them, with full power of substitution and resubstitution, his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such Director, the Corporation’s Annual Report on Form 10-K with respect to the Corporation’s fiscal year ended May 31, 2011, and any and all amendments thereto; and hereby ratifies and confirms all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue of these presents.

IN WITNESS WHEREOF, I have hereunto set my hand this 31st day of May, 2011.

/s/ DAVID P. STEINER David P. Steiner

STATE OF TEXAS

COUNTY OF HARRIS

I, Victoria Tarpey, a Notary Public in and for said County, in the aforesaid State, do hereby certify that David P. Steiner, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the said instrument as his free and voluntary act, for the uses and purposes therein set forth.

/s/ VICTORIA TARPEY Notary Public

My Commission Expires:

8-21-2014

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS:

That the undersigned, a Director of FedEx Corporation (the “Corporation”), a Delaware corporation, does hereby constitute and appoint Frederick W. Smith, Alan B. Graf, Jr. and John L. Merino, and each of them, with full power of substitution and resubstitution, his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such Director, the Corporation’s Annual Report on Form 10-K with respect to the Corporation’s fiscal year ended May 31, 2011, and any and all amendments thereto; and hereby ratifies and confirms all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue of these presents.

IN WITNESS WHEREOF, I have hereunto set my hand this 22nd day of June, 2011.

/s/ PAUL S. WALSH Paul S. Walsh

UNITED KINGDOM OF GREAT BRITAIN

ENGLAND CITY OF LONDON

I, James Kerr Milligan, a Notary Public in and for said County, in the aforesaid State, do hereby certify that Paul S. Walsh, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the said instrument as his free and voluntary act, for the uses and purposes therein set forth.

/s/ JAMES KERR MILLIGAN Notary Public

My Commission Expires:

with life

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS:

That the undersigned, the principal financial officer of FedEx Corporation (the “Corporation”), a Delaware corporation, does hereby constitute and appoint Frederick W. Smith and John L. Merino, and each of them, with full power of substitution and resubstitution, his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such officer, the Corporation’s Annual Report on Form 10-K with respect to the Corporation’s fiscal year ended May 31, 2011, and any and all amendments thereto; and hereby ratifies and confirms all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue of these presents.

IN WITNESS WHEREOF, I have hereunto set my hand this 1st day of June, 2011.

/s/ ALAN B. GRAF, JR. Alan B. Graf, Jr.

STATE OF TENNESSEE

COUNTY OF SHELBY

I, Mary T. Britt, a Notary Public in and for said County, in the aforesaid State, do hereby certify that Alan B. Graf, Jr., personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the said instrument as his free and voluntary act, for the uses and purposes therein set forth.

/s/ MARY T. BRITT Notary Public

My Commission Expires:

2-13-2013

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS:

That the undersigned, the principal executive officer and a director of FedEx Corporation (the “Corporation”), a Delaware corporation, does hereby constitute and appoint Alan B. Graf, Jr. and John L. Merino, and each of them, with full power of substitution and resubstitution, his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such officer and director, the Corporation’s Annual Report on Form 10-K with respect to the Corporation’s fiscal year ended May 31, 2011, and any and all amendments thereto; and hereby ratifies and confirms all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue of these presents.

IN WITNESS WHEREOF, I have hereunto set my hand this 28th day of June, 2011.

/s/ FREDERICK W. SMITH Frederick W. Smith

STATE OF TENNESSEE

COUNTY OF SHELBY

I, Anne R. Coleman, a Notary Public in and for said County, in the aforesaid State, do hereby certify that Frederick W. Smith, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the said instrument as his free and voluntary act, for the uses and purposes therein set forth.

/s/ ANNE R. COLEMAN Notary Public

My Commission Expires:

9-18-2013

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS:

That the undersigned, the principal accounting officer of FedEx Corporation (the “Corporation”), a Delaware corporation, does hereby constitute and appoint Frederick W. Smith and Alan B. Graf, Jr., and each of them, with full power of substitution and resubstitution, his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such officer, the Corporation’s Annual Report on Form 10-K with respect to the Corporation’s fiscal year ended May 31, 2011, and any and all amendments thereto; and hereby ratifies and confirms all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue of these presents.

IN WITNESS WHEREOF, I have hereunto set my hand this 7th day of June, 2011.

/s/ JOHN L. MERINO John L. Merino

STATE OF TENNESSEE

COUNTY OF SHELBY

I, Jo Ann Hands, a Notary Public in and for said County, in the aforesaid State, do hereby certify that John L. Merino, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the said instrument as his free and voluntary act, for the uses and purposes therein set forth.

/s/ JO ANN HANDS Notary Public

My Commission Expires:

May 2, 2012

EX-31.1

EXHIBIT 31.1

CERTIFICATION PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Frederick W. Smith, certify that:

1. I have reviewed this annual report on Form 10-K of FedEx Corporation (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 12, 2011

/s/ Frederick W. Smith Frederick W. Smith

Chairman, President and

Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Alan B. Graf, Jr., certify that:

1. I have reviewed this annual report on Form 10-K of FedEx Corporation (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 12, 2011

/s/ Alan B. Graf, Jr. Alan B. Graf, Jr.
Executive Vice President and
Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of FedEx Corporation (“FedEx”) on Form 10-K for the period ended May 31, 2011 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Frederick W. Smith, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of FedEx.

Date: July 12, 2011

/s/ Frederick W. Smith Frederick W. Smith
Chairman, President and
Chief Executive Officer

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of FedEx Corporation (“FedEx”) on Form 10-K for the period ended May 31, 2011 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Alan B. Graf, Jr., certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of FedEx.

Date: July 12, 2011

/s/ Alan B. Graf, Jr. Alan B. Graf, Jr.
Executive Vice President and
Chief Financial Officer

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Document and Entity Information (USD $) In Billions, except Share data	12 Months Ended
	May 31, 2011	Jul. 11, 2011	Nov. 30, 2010
Document and Entity Information Abstract
Document Type	10-K
Document Period End Date	May 31, 2011
Amendment Flag	false
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	FY
Entity Registrant Name	FedEx Corporation
Entity Central Index Key	0001048911
Current Fiscal Year End Date	--05-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	Yes
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			$ 26.8
Entity Common Stock, Shares Outstanding		317,027,077

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Business Combinations

12 Months Ended

May 31, 2011

Business Combinations Abstract

Business Combinations

NOTE 3: BUSINESS COMBINATIONS

On February 22, 2011, FedEx Express completed the acquisition of the Indian logistics, distribution and express businesses of AFL Pvt. Ltd. and its affiliate Unifreight India Pvt. Ltd. for $96 million in cash. The financial results of the acquired businesses are included in the FedEx Express segment from the date of acquisition and were not material to our results of operations or financial condition. Substantially all of the purchase price was allocated to goodwill.

On December 15, 2010, FedEx entered into an agreement to acquire Servicios Nacionales Mupa, S.A. de C.V. (MultiPack), a Mexican domestic express package delivery company. This acquisition will be funded with cash from operations and is expected to be completed during the first quarter of 2012, subject to customary closing conditions. The financial results of the acquired company will be included in the FedEx Express segment from the date of acquisition and will be immaterial to our 2012 results.

These acquisitions will give us more robust domestic transportation networks and added capabilities in these important global markets.

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Valuation and Qualifying Accounts (Details) (USD $) In Millions	12 Months Ended
	May 31, 2011		May 31, 2010		May 31, 2009
Allowance For Doubtful Accounts Member
Movement In Valuation Allowances And Reserves Roll Forward
Valuation Allowances And Reserves Balance	$ 93		$ 114		$ 88
Charged To Expenses	152		124		181
Deductions	148	[1]	145	[1]	155	[1]
Valuation Allowances And Reserves Balance	97		93		114
Allowance For Revenue Adjustments Member
Movement In Valuation Allowances And Reserves Roll Forward
Valuation Allowances And Reserves Balance	73		82		70
Charged To Other Accounts	532	[2]	430	[2]	466	[2]
Deductions	520	[3]	439	[3]	454	[3]
Valuation Allowances And Reserves Balance	85		73		82
Inventory Valuation Allowance Member
Movement In Valuation Allowances And Reserves Roll Forward
Valuation Allowances And Reserves Balance	170		175		163
Charged To Expenses	13		12		15
Deductions	14		17		3
Valuation Allowances And Reserves Balance	$ 169		$ 170		$ 175

[1] (a) Uncollectible accounts written off, net of recoveries.

[2] (b) Principally charged against revenue.

[3] (c) Service failures, rebills and other.

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Goodwill and Other Intangible Assets

12 Months Ended

May 31, 2011

Goodwill and Other Intangible Assets Abstract

Goodwill And Other Intangible Assets

NOTE 4: GOODWILL AND OTHER INTANGIBLE ASSETS

GOODWILL. The carrying amount of goodwill attributable to each reportable operating segment and changes therein are as follows (in millions):

			FedEx Express Segment		FedEx Ground Segment		FedEx Freight Segment		FedEx Services Segment		Total
Goodwill at May 31, 2009			$	1,090	$	90	$	802	$	1,539	$	3,521
Accumulated impairment charges				-		-		(115)		(1,177)		(1,292)
Balance as of May 31, 2009				1,090		90		687		362		2,229
Impairment charge				-		-		(18)		-		(18)
Purchase adjustments and other(1)				(11)		-		-		-		(11)
Transfer between segments(2)				66		-		(66)		-		-
Balance as of May 31, 2010				1,145		90		603		362		2,200
Goodwill acquired(3)				89		-		-		-		89
Purchase adjustments and other(1)				38		-		(1)		-		37
Balance as of May 31, 2011			$	1,272	$	90	$	602	$	362	$	2,326
Accumulated goodwill impairment
	charges as of May 31, 2011		$	-	$	-	$	(133)	$	(1,177)	$	(1,310)
(1)		Primarily currency translation adjustments.
(2)		Transfer of goodwill related to the merger of Caribbean Transportation Services into FedEx Express effective June 1, 2009.
(3)		Goodwill acquired in 2011 relates to the acquisition of the Indian logistics, distribution and express businesses of AFL Pvt. Ltd. and its affiliate Unifreight India Pvt. Ltd. See Note 3 for related disclosures.

Our reporting units with significant recorded goodwill include our FedEx Express, FedEx Freight and FedEx Office reporting units. We evaluated these reporting units during the fourth quarter of 2011. The estimated fair value of each of these reporting units exceeded their carrying values in 2011, and we do not believe that any of these reporting units are at risk as of May 31, 2011.

Goodwill Impairment Charges – 2010

In connection with our annual impairment testing of goodwill conducted in the fourth quarter of 2010, we recorded a charge of $18 million for impairment of the value of the remaining goodwill at our FedEx National LTL reporting unit. In connection with the combination of our LTL networks in 2011, this unit was merged into the FedEx Freight reporting unit. The impairment charge resulted from the significant negative impact of the U.S. recession on the LTL industry, which resulted in volume and yield declines and operating losses.

Goodwill Impairment Charges – 2009

FEDEX OFFICE. During 2009, in response to the lower revenues and continued operating losses at FedEx Office resulting from the U.S. recession, the company initiated an internal reorganization designed to improve revenue-generating capabilities and reduce costs including headcount reductions, the termination of operations in some international locations and substantially curtailing future network expansion. Despite these actions, operating losses and weak economic conditions significantly impacted our FedEx Office reporting unit.

In connection with our annual impairment testing in 2009, we concluded that the recorded goodwill was impaired and recorded an impairment charge of $810 million during the fourth quarter of 2009. The goodwill impairment charge is included in 2009 operating expenses in the accompanying consolidated statements of income. This charge was included in the results of the FedEx Services segment and was not allocated to our transportation segments, as the charge was unrelated to the core performance of those businesses.

FEDEX NATIONAL LTL. In 2009, we recorded a goodwill impairment charge of $90 million at our FedEx National LTL unit. This charge was a result of reduced revenues and increased operating losses due to the negative impact of the U.S. recession.

OTHER INTANGIBLE ASSETS. The net book value of our intangible assetswas $38 million in 2011 and $69 million in 2010. Amortization expense for intangible assets was $32 million in 2011, $51 million in 2010 and $73 million in 2009. Estimated amortization expense is expected to be immaterial in 2012.

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Selected Current Liabilities

12 Months Ended

May 31, 2011

Selected Current Liabilities Abstract

Selected Current Liabilities

NOTE 5: SELECTED CURRENT LIABILITIES

The components of selected current liability captions were as follows (in millions):

			May 31,
			2011		2010
Accrued Salaries and Employee Benefits
	Salaries		$	256	$	230
	Employee benefits, including
		variable compensation		468		386
	Compensated absences			544		530
			$	1,268	$	1,146
Accrued Expenses
	Self-insurance accruals		$	696	$	675
	Taxes other than income taxes			357		347
	Other			841		693
			$	1,894	$	1,715

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Long-Term Debt and Other Financing Arrangements

12 Months Ended

May 31, 2011

Long-Term Debt and Other Financing Arrangements Abstract

Long-term Debt and Other Financing Arrangements

NOTE 6: LONG-TERM DEBT AND OTHER FINANCING ARRANGEMENTS

The components of long-term debt (net of discounts),along with maturity dates for the years subsequent to May 31, 2011,are as follows (in millions):

		May 31,
		2011		2010
Senior unsecured debt
	Interest rate of 7.25%, due in 2011	$	-	$	250
	Interest rate of 9.65%, due in 2013		300		300
	Interest rate of 7.38%, due in 2014		250		250
	Interest rate of 8.00%, due in 2019		750		750
	Interest rate of 7.60%, due in 2098		239		239
			1,539		1,789
Capital lease obligations			146		141
			1,685		1,930
	Less current portion		18		262
		$	1,667	$	1,668

Interest on our fixed-rate notes is paid semi-annually. Long-term debt, exclusive of capital leases, had carrying values of $1.5 billion compared with estimated fair valuesof $1.9 billion at May 31, 2011, and $1.8 billion compared with estimated fair values of $2.1 billion at May 31, 2010. The estimated fair values were determined based on quoted market prices or on the current rates offered for debt with similar terms and maturities.

We have a shelf registration statement filed with the Securities and Exchange Commission that allows us to sell, in one or more future offerings, any combination of our unsecured debt securities and common stock.

During 2011, we repaid our $250 million 7.25% unsecured notes that matured on February 15, 2011. During 2010, we repaid our $500 million 5.50% notes that matured on August 15, 2009 using cash from operations and a portion of the proceeds of our January 2009 $1 billion senior unsecured debt offering. During 2011, we made principal payments in the amount of $12 million related to capital lease obligations. During 2010, we made principal payments in the amount of $153 million related to capital lease obligations.

A $1 billion revolving credit facility is available to finance our operations and other cash flow needs and to provide support for the issuance of commercial paper. This five-year credit agreement was entered into on April 26, 2011, and replaced the $1 billion three-year credit agreement dated July 22, 2009. The agreement contains a financial covenant, which requires us to maintain a leverage ratio of adjusted debt (long-term debt, including the current portion of such debt, plus six times our last four fiscal quarters' rentals and landing fees) to capital (adjusted debt plus total common stockholders' investment) that does not exceed 0.7 to 1.0. Our leverage ratio of adjusted debt to capital was 0.5 at May 31, 2011. Under this financial covenant, our additional borrowing capacity is capped, although this covenant continues to provide us with ample liquidity, if needed. We are in compliance with this and all other restrictive covenants of our revolving credit agreement and do not expect the covenants to affect our operations, including our liquidity or borrowing capacity. As of May 31, 2011, no commercial paper was outstanding and the entire $1 billion under the revolving credit facility was available for future borrowings.

We issue other financial instruments in the normal course of business to support our operations, includingletters of credit and surety bonds. We had a total of $619 million in letters of credit outstanding at May 31, 2011, with $93 million unused under our primary $500 million letter of credit facility, and $460 million in outstanding surety bonds placed by third-party insurance providers. These instruments are required under certain U.S. self-insurance programs and are also used in the normal course of international operations. The underlying liabilities insured by these instruments are reflected in our balance sheets, where applicable. Therefore, no additional liability is reflected for the letters of credit and surety bonds themselves.

Our capital lease obligations include leases for aircraft and facilities. Our facility leases include leases that guarantee the repayment of certain special facility revenue bonds that have been issued by municipalities primarily to finance the acquisition and construction of various airport facilities and equipment. These bonds require interest payments at least annually, with principal payments due at the end of the related lease agreement.

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Leases

12 Months Ended

May 31, 2011

Leases Abstract

Leases

NOTE 7: LEASES

We utilize certain aircraft, land, facilities, retail locations and equipment under capital and operating leases that expire at various dates through 2046. Weleased 11% of our total aircraft fleet under capital or operating leases as of May 31, 2011 as compared to 12% as of May 31,2010. A portion of our supplemental aircraft are leased by us under agreements that provide for cancellation upon 30 days' notice. Our leased facilities include national, regional and metropolitan sorting facilities, retail facilities and administrative buildings.

The components of property and equipment recorded under capital leases were as follows (in millions):

		May 31,
		2011		2010
Aircraft		$	8	$	15
Package handling and ground support
	equipment		165		165
Vehicles			17		17
Other, principally facilities			145		146
			335		343
	Less accumulated amortization		307		312
		$	28	$	31

Rent expense under operating leases for the years ended May 31 was as follows (in millions):
		2011		2010		2009
Minimum rentals		$	2,025	$	2,001	$	2,047
Contingent rentals(1)			193		152		181
		$	2,218	$	2,153	$	2,228
(1)	Contingent rentals are based on equipment usage.

A summary of future minimum lease payments under capital leases and noncancelable operating leases with an initial or remaining term in excess of one year at May 31, 2011 is as follows (in millions):

				Operating Leases
				Aircraft				Total
		Capital		and Related		Facilities		Operating
		Leases		Equipment		and Other		Leases
2012		$	25	$	494	$	1,300	$	1,794
2013			119		499		1,155		1,654
2014			2		473		992		1,465
2015			2		455		899		1,354
2016			2		458		734		1,192
Thereafter			13		1,545		4,988		6,533
Total			163	$	3,924	$	10,068	$	13,992
Less amount representing interest			17
Present value of net minimum lease
	payments	$	146

The weighted-average remaining lease term of all operating leases outstanding at May 31, 2011 was approximately six years. While certain of our lease agreements contain covenants governing the use of the leased assets or require us to maintain certain levels of insurance, none of our lease agreements include material financial covenants or limitations.

FedEx Express makes payments under certain leveraged operating leases that are sufficient to pay principal and interest on certain pass-through certificates. The pass-through certificates are not direct obligations of, or guaranteed by, FedEx or FedEx Express.

We are the lessee in a series of operating leases covering a portion of our leased aircraft. The lessors are trusts established specifically to purchase, finance and lease aircraft to us. These leasing entities meet the criteria for variable interest entities. We are not the primary beneficiary of the leasing entities, as the lease terms are consistent with market terms at the inception of the lease and do not include a residual value guarantee, fixed-price purchase option or similar feature that obligates us to absorb decreases in value or entitles us to participate in increases in the value of the aircraft. As such, we are not required to consolidate the entity as the primary beneficiary. Our maximum exposure under these leases is included in the summary of future minimum lease payments shown above.

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Preferred Stock

12 Months Ended

May 31, 2011

Preferred Stock Abstract

Preferred Stock

NOTE 8: PREFERRED STOCK

Our Certificate of Incorporation authorizes the Board of Directors, at its discretion, to issue up to 4,000,000 shares of preferred stock. The stock is issuable in series, which may vary as to certain rights and preferences, and has no par value. As of May 31, 2011, none of these shares had been issued.

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Stock Based Compensation

12 Months Ended

May 31, 2011

Stock-Based Compensation Abstract

Stock-Based Compensation

NOTE 9: STOCK-BASED COMPENSATION

Our total stock-based compensation expense for the years ended May 31 was as follows (in millions):

	2011		2010		2009
Stock-based compensation expense	$	98	$	101	$	99

We have two types of equity-based compensation: stock options and restricted stock.

STOCK OPTIONS. Under the provisions of our incentive stock plans, key employees and non-employee directors may be granted options to purchase shares of our common stock at a price not less than its fair market value on the date of grant. Vesting requirements are determined at the discretion of the Compensation Committee of our Board of Directors. Option-vesting periods range from one to four years, with 83% of our options vesting ratably over four years. Compensation expense associated with these awards is recognized on a straight-line basis over the requisite service period of the award.

RESTRICTED STOCK. Under the terms of our incentive stock plans, restricted shares of our common stock are awarded to key employees. All restrictions on the shares expire ratably over a four-year period. Shares are valued at the market price on the date of award. The terms of our restricted stock provide for continued vesting subsequent to the employee's retirement. Compensation expense associated with these awards is recognized on a straight-line basis over the shorter of the remaining service or vesting period.

VALUATION AND ASSUMPTIONS. We use the Black-Scholes option pricing model to calculate the fair value of stock options. The value of restricted stock awards is based on the stock price of the award on the grant date. We record stock-based compensation expense in the “Salaries and employee benefits” caption in the accompanying consolidated statements of income.

The key assumptions for the Black-Scholes valuation method include the expected life of the option, stock price volatility, a risk-free interest rate, and dividend yield. Many of these assumptions are judgmental and highly sensitive. Following is a table of the weighted-average Black-Scholes value of our stock option grants, the intrinsic value of options exercised (in millions), and the key weighted-average assumptions used in the valuation calculations for the options granted during the years ended May 31, and then a discussion of our methodology for developing each of the assumptions used in the valuation model:

		2011			2010			2009
Weighted-average Black-Scholes value		$	28.12		$	20.47		$	23.66
Intrinsic value of options exercised		$	80		$	77		$	7
Black-Scholes Assumptions:
	Expected lives		5.9 years			5.7 years			5.5 years
	Expected volatility		34	%		32	%		23	%
	Risk-free interest rate		2.36	%		3.24	%		3.28	%
	Dividend yield		0.558	%		0.742	%		0.492	%

Expected Lives. This is the period of time over which the options granted are expected to remain outstanding. Options granted have a maximum term of 10 years. We examine actual stock option exercises to determine the expected life of the options. An increase in the expected term will increase compensation expense.

Expected Volatility. Actual changes in the market value of our stock are used to calculate the volatility assumption. We calculate daily market value changes from the date of grant over a past period equal to the expected life of the options to determine volatility. An increase in the expected volatility will increase compensation expense.

Risk-Free Interest Rate. This is the U.S. Treasury Strip rate posted at the date of grant having a term equal to the expected life of the option. An increase in the risk-free interest rate will increase compensation expense.

Dividend Yield. This is the annual rate of dividends per share over the exercise price of the option. An increase in the dividend yield will decrease compensation expense.

The following table summarizes information about stock option activity for the year ended May 31, 2011:

		Stock Options
		Shares		Weighted-Average Exercise Price	Weighted-Average Remaining Contractual Term	Aggregate Intrinsic Value (in millions)(1)
Outstanding at June 1, 2010		20,238,056	$	78.32
	Granted	2,474,603		81.86
	Exercised	(2,043,050)		53.13
	Forfeited	(506,446)		104.38
Outstanding at May 31, 2011		20,163,163	$	81.20	5.7 years	$	327
Exercisable		12,968,690	$	84.74	4.3 years	$	181
Expected to vest		6,618,915	$	74.83	8.2 years	$	135
Available for future grants		11,928,567
(1)	Only presented for options with market value at May 31, 2011 in excess of the exercise price of the option.

The options granted during the year ended May 31, 2011 are primarily related to our principal annual stock option grant in June 2010.

The following table summarizes information about vested and unvested restricted stock for the year ended May 31, 2011:

		Restricted Stock
		Shares	Weighted-Average Grant Date Fair Value
Unvested at June 1, 2010		637,296	$	74.02
	Granted	235,998		78.74
	Vested	(234,716)		81.11
	Forfeited	(12,198)		70.91
Unvested at May 31, 2011		626,380	$	73.20

During the year ended May 31, 2010, there were 391,786 shares of restricted stock granted with a weighted-average fair value of $57.07. During the year ended May 31, 2009, there were 197,180 shares of restricted stock granted with a weighted-average fair value of $90.57.

The following table summarizes information about stock option vesting during the years ended May 31:

	Stock Options
	Vested during the year	Fair value (in millions)
2009	2,414,815	$	64
2010	2,296,211		63
2011	2,721,602		67

As of May 31, 2011, there was $132 million of total unrecognized compensation cost, net of estimated forfeitures, related to unvested share-based compensation arrangements. This compensation expense is expected to be recognized on a straight-line basis over the remaining weighted-average vesting period of approximately two years.

Total shares outstanding or available for grant related to equity compensation at May 31, 2011represented 10% of the total outstanding common and equity compensation shares and equity compensation shares available for grant.

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Computation of Earnings Per Share

12 Months Ended

May 31, 2011

Earnings Per Share Abstract

Computation of Earnings Per Share

NOTE 10: COMPUTATION OF EARNINGS PER SHARE

The calculation of basic and diluted earnings per common share for the years ended May 31 was as follows (in millions, except per share amounts):

		2011		2010		2009
Basic earnings per common share:
Net earnings allocable to common shares(1)		$	1,449	$	1,182	$	97
Weighted-average common shares			315		312		311
Basic earnings per common share		$	4.61	$	3.78	$	0.31
Diluted earnings per common share:
Net earnings allocable to common shares(1)		$	1,449	$	1,182	$	97
Weighted-average common shares			315		312		311
Dilutive effect of share-based awards			2		2		1
Weighted-average diluted shares			317		314		312
Diluted earnings per common share		$	4.57	$	3.76	$	0.31
Anti-dilutive options excluded from diluted
	earnings per common share		9.3		11.5		12.6
(1)	Net earnings available to participating securities were immaterial in all periods presented.

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Income Taxes

12 Months Ended

May 31, 2011

Income Taxes Abstract

Income Taxes

NOTE 11: INCOME TAXES

The components of the provision for income taxes for the years ended May 31 were as follows (in millions):

			2011		2010		2009
Current provision (benefit)
	Domestic:
		Federal	$	79	$	36	$	(35)
		State and local		48		54		18
	Foreign			198		207		214
				325		297		197
Deferred provision (benefit)
	Domestic:
		Federal		485		408		327
		State and local		12		15		48
	Foreign			(9)		(10)		7
				488		413		382
			$	813	$	710	$	579

Our current federal income tax expenses in 2011, 2010, and 2009 were significantly reduced by accelerated depreciation deductions we claimed under provisions of the Tax Relief and the Small Business Jobs Acts of 2010, the American Recovery and Reinvestment Tax Act of 2009, and the Economic Stimulus Act of 2008. Those acts, designed to stimulate new business investment in the U.S., accelerated our depreciation deductions for new qualifying investments, such as our new Boeing 777 freighter (“B777F”) aircraft. These are timing benefits only, in that the depreciation would have otherwise been recognized in later years.

Pre-tax earnings of foreign operations for 2011, 2010 and 2009 were $472 million, $555 million and $106 million, respectively, which represent only a portion of total results associated with international shipments.

A reconciliation of the statutory federal income tax rate to the effective income tax rate for the years ended May 31 was as follows:

			2011		2010		2009
Statutory U.S. income tax rate			35.0	%	35.0	%	35.0	%
Increase resulting from:
	Goodwill impairment		-		-		48.0
	State and local income taxes,
		net of federal benefit	1.7		2.4		1.9
	Other, net		(0.8)		0.1		0.7
Effective tax rate			35.9	%	37.5	%	85.6	%

Our 2011 rate was lower than our 2010 rate primarily due to increased permanently reinvested foreign earnings and a lower state tax rate driven principally by favorable audit and legislative developments. Our 2009 rate was significantly impacted by goodwill impairment charges that are not deductible for income tax purposes.

The significant components of deferred tax assets and liabilities as of May 31 were as follows (in millions):

		2011				2010
		Deferred Tax Assets		Deferred Tax Liabilities		Deferred Tax Assets		Deferred Tax Liabilities
Property, equipment,
	leases and intangibles	$	274	$	2,675	$	377	$	2,157
Employee benefits			1,016		34		783		36
Self-insurance accruals			519		-		416		-
Other			422		269		490		238
Net operating loss/credit
	carryforwards		172		-		142		-
Valuation allowances			(151)		-		(139)		-
		$	2,252	$	2,978	$	2,069	$	2,431

The net deferred tax liabilities as of May 31 have been classified in the balance sheets as follows (in millions):

	2011		2010
Current deferred tax asset	$	610	$	529
Noncurrent deferred tax liability		(1,336)		(891)
	$	(726)	$	(362)

We have $484 million of net operating loss carryovers in various foreign jurisdictions and $524 million of state operating loss carryovers.  The valuation allowances primarily represent amounts reserved for operating loss and tax credit carryforwards, which expire over varying periods starting in 2012.  As a result of this and other factors, we believe that a substantial portion of these deferred tax assets may not be realized.

Unremitted earnings of our foreign subsidiaries amounted to $640 million at the end of 2011 and $325 million at the end of 2010.  We have not recognized deferred taxes for U.S. federal income tax purposes on the unremitted earnings of our foreign subsidiaries that are permanently reinvested. In 2011, our permanent reinvestment strategy with respect to unremitted earnings of our foreign subsidiaries provided a 1.3% benefit to our effective tax rate.  Were the earnings to be distributed, in the form of dividends or otherwise, these unremitted earnings would be subject to U.S. federal income tax and non-U.S. withholding taxes.  Unrecognized foreign tax credits potentially would be available to reduce a portion of the U.S. tax liability.  Determination of the amount of unrecognized deferred U.S. income tax liability is not practicable due to uncertainties related to the timing and source of any potential distribution of such funds, along with other important factors such as the amount of associated foreign tax credits. As of May 31, 2011, we had $300 million of cash in offshore jurisdictions associated with our permanent reinvestment strategy.

We file income tax returns in the U.S., various U.S. state and local jurisdictions, and various foreign jurisdictions.  The Internal Revenue Service is currently auditing our consolidated U.S. income tax returns for the 2007 through 2009 tax years.  We are no longer subject to U.S. federal income tax examination for years through 2006 except for specific U.S. federal income tax positions that are in various stages of appeal and/or litigation.  No resolution date can be reasonably estimated at this time for these appeals and litigation, but their resolution is not expected to have a material effect on our consolidated financial statements.  We are also subject to ongoing audits in state, local and foreign tax jurisdictions throughout the world.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in millions):

		2011		2010		2009
Balance at beginning of year		$	82	$	72	$	88
	Increases for tax positions taken in the current year		2		3		7
	Increases for tax positions taken in prior years		6		14		10
	Decreases for tax positions taken in prior years		(10)		(4)		(30)
	Settlements		(11)		(3)		(3)
Balance at end of year		$	69	$	82	$	72

Our liabilities recorded for uncertain tax positions include $56 million at May 31, 2011 and $67 million at May 31, 2010 associated with positions that if favorably resolved would provide a benefit to our effective tax rate. We classify interest related to income tax liabilities as interest expense, and if applicable, penalties are recognized as a component of income tax expense. The balance of accrued interest and penalties was $18 million on May 31, 2011 and $20 million on May 31, 2010. Total interest and penalties included in our consolidated statements of income are immaterial.Included in the 2011 and 2010 balances are $9 million of tax positions for which the ultimate deductibility or income inclusion is certain but for which there may be uncertainty about the timing of such deductibility or income inclusion.

It is difficult to predict the ultimate outcome or the timing of resolution for tax positions. Changes may result from the conclusion of ongoing audits, appeals or litigation in state, local, federal and foreign tax jurisdictions, or from the resolution of various proceedings between the U.S. and foreign tax authorities. Our liability for uncertain tax positions includes no matters that are individually or collectively material to us. It is reasonably possible that the amount of the benefit with respect to certain of our unrecognized tax positions will increase or decrease within the next 12 months, but an estimate of the range of the reasonably possible changes cannot be made. However, we do not expect that the resolution of any of our uncertain tax positions will be material.

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Retirement Plans

12 Months Ended

May 31, 2011

Retirement Plans Abstract

Retirement Plans

NOTE 12: RETIREMENT PLANS

We sponsor programs that provide retirement benefits to most of our employees. These programs include defined benefit pension plans, defined contribution plans and postretirement healthcare plans. The accounting for pension and postretirement healthcare plans includes numerous assumptions, such as: discount rates; expected long-term investment returns on plan assets; future salary increases; employee turnover; mortality; and retirement ages. These assumptions most significantly impact our U.S. Pension Plans.

The accounting guidance related to postretirement benefits requires recognition in the balance sheet of the funded status of defined benefit pension and other postretirement benefit plans, and the recognition in accumulated other comprehensive income (“AOCI”) of unrecognized gains or losses and prior service costs or credits. The funded status is measured as the difference between the fair value of the plan's assets and the projected benefit obligation (“PBO”) of the plan. At May 31, 2011, we recorded a decrease to equity of $350million (net of tax) attributable to our plans. At May 31, 2010, we recorded a decrease to equity of $1 billion (net of tax) to reflect unrealized actuarial losses during 2010.

A summary of our retirement plans costs over the past three years is as follows (in millions):

	2011		2010		2009
U.S. domestic and international pension plans	$	543	$	308	$	177
U.S. domestic and international defined contribution plans		257		136		237
Postretirement healthcare plans		60		42		57
	$	860	$	486	$	471

PENSION PLANS. Our largest pension plan covers certain U.S. employees age 21 and over, with at least one year of service. Pension benefits for most employees are accrued under a cash balance formula we call the Portable Pension Account. Under the Portable Pension Account, the retirement benefit is expressed as a dollar amount in a notional account that grows with annual credits based on pay, age and years of credited service, and interest on the notional account balance. The Portable Pension Account benefit is payable as a lump sum or an annuity at retirement at the election of the employee. The plan interest credit rate varies from year to year based on a U.S. Treasury index. Prior to 2009, certain employees earned benefits using a traditional pension formula (based on average earnings and years of service); however, benefits under this formula were capped on May 31, 2008. We also sponsor or participate in nonqualified benefit plans covering certain of our U.S. employee groups and other pension plans covering certain of our international employees. The international defined benefit pension plans provide benefits primarily based on final earnings and years of service and are funded in compliance with local laws and practices.

POSTRETIREMENT HEALTHCARE PLANS. Certain of our subsidiaries offer medical, dental and vision coverage to eligible U.S. retirees and their eligible dependents. U.S. employees covered by the principal plan become eligible for these benefits at age 55 and older, if they have permanent, continuous service of at least 10 years after attainment of age 45 if hired prior to January 1, 1988, or at least 20 years after attainment of age 35 if hired on or after January 1, 1988. Postretirement healthcare benefits are capped at 150% of the 1993 per capita projected employer cost, which has been reached and, therefore, these benefits are not subject to additional future inflation.

PENSION PLAN ASSUMPTIONS. Our pension cost is materially affected by the discount rate used to measure pension obligations, the level of plan assets available to fund those obligations and the expected long-term rate of return on plan assets.

We use a measurement date of May 31 for our pension and postretirement healthcare plans. Management reviews the assumptions used to measure pension costs on an annual basis. Economic and market conditions at the measurement date impact these assumptions from year to year and it is reasonably possible that material changes in pension cost may be experienced in the future. Actuarial gains or losses are generated for changes in assumptions and to the extent that actual results differ from those assumed. These actuarial gains and losses are amortized over the remaining average service lives of our active employees if they exceed a corridor amount in the aggregate. Additional information about our pension plans can be found in the Critical Accounting Estimates section of Management's Discussion and Analysis of Results of Operations and Financial Condition (“MD&A”) in this Annual Report on Form 10-K (“Annual Report”).

Weighted-average actuarial assumptions for our primary U.S. retirement plans, which represent substantially all of our PBO and accumulated postretirement benefit obligation ("APBO"), are as follows:
		Pension Plans						Postretirement Healthcare Plans
		2011		2010		2009		2011		2010		2009
Discount rate used to determine benefit obligation		5.76	%	6.37	%	7.68	%	5.67	%	6.11	%	7.27	%
Discount rate used to determine net periodic benefit cost		6.37		7.68		7.15		6.11		7.27		7.13
Rate of increase in future compensation levels
	used to determine benefit obligation	4.58		4.63		4.42		-		-		-
Rate of increase in future compensation levels
	used to determine net periodic benefit cost	4.63		4.42		4.49		-		-		-
Expected long-term rate of return on assets		8.00		8.00		8.50		-		-		-

The estimated average rate of return on plan assets is a long-term, forward-looking assumption that also materially affects our pension cost. It is required to be the expected future long-term rate of earnings on plan assets. Establishing the expected future rate of investment return on our pension assets is a judgmental matter. We review the expected long-term rate of return on an annual basis and revise it as appropriate. Management considers the following factors in determining this assumption:

• the duration of our pension plan liabilities, which drives the investment strategy we can employ with our pension plan assets;

• the types of investment classes in which we invest our pension plan assets and the expected compound geometric return we can reasonably expect those investment classes to earn over time; and

• the investment returns we can reasonably expect our investment management program to achieve in excess of the returns we could expect if investments were made strictly in indexed funds.

Our estimated long-term rate of return on plan assets remains at 8% for 2012, consistent with our expected rate of return in 2011 and 2010. For the 15-year period ended May 31, 2011, our actual returns were7.8%.

Pension expense is also affected by the accounting policy used to determine the value of plan assets at the measurement date. We use a calculated-value method to determine the value of plan assets, which helps mitigate short-term volatility in market performance (both increases and decreases) by amortizing certain actuarial gains or losses over a period no longer than four years. Another method used in practice applies the market value of plan assets at the measurement date. For purposes of valuing plan assets for determining 2012 pension expense, we used the calculated-value method,as our actual returns on plan assets significantly exceeded our assumptions. However, as previously indicated, our pension costs in 2012 are expected to remain flat. The calculated-value method resulted in the same value as the market value in 2011. The calculated-value method significantly mitigated the impact of asset value declines in the determination of our 2010 pension expense, reducing our 2010 expense by approximately $135 million.

The investment strategy for pension plan assets is to utilize a diversified mix of global public and private equity portfolios, together with fixed-income portfolios, to earn a long-term investment return that meets our pension plan obligations. Our pension plan assets are invested primarily in listed securities, and our pension plans hold only a minimal investment in FedEx common stock that is entirely at the discretion of third-party pension fund investment managers. Our largest holding classes areU.S. Large Cap Equities, which is indexed to an S&P 500 fund, and Corporate and U.S. Government Fixed Income Securities. Accordingly, we do not have any significant concentrations of risk. Active management strategies are utilized within the plan in an effort to realize investment returns in excess of market indices. As part of our strategy to manage future pension costs and net funded status volatility, we have transitioned to a liability-driven investment strategy with a greater concentration of fixed-income securities to better align plan assets with liabilities. Our investment strategy also includes the limited use of derivative financial instruments on a discretionary basis to improve investment returns and manage exposure to market risk. In all cases, our investment managers are prohibited from using derivatives for speculative purposes and are not permitted to use derivatives to leverage a portfolio.

Following is a description of the valuation methodologies used for investments measured at fair value:

• Cash and cash equivalents. These Level 1 investments include cash, cash equivalents and foreign currency valued using exchange rates. TheLevel 2 investments include commingled funds valued using the net asset value.

• Domestic and international equities. These Level 1 investments are valued at the closing price or last trade reported on the major market on which the individual securities are traded. The Level 2 investments are commingled funds valued using the net asset value.

• Private equity. The valuation of these Level 3 investments requires significant judgment due to the absence of quoted market prices, the inherent lack of liquidity and the long-term nature of such assets. Investments are valued based upon recommendations of our investment managers incorporating factors such as contributions and distributions, market transactions, market comparables and performance multiples.

• Fixed income. We determine the fair value of these Level 2 corporate bonds, U.S. government securities and other fixed income securities by using bid evaluation pricing models or quoted prices of securities with similar characteristics.

The fair values of investments by level and asset category and the weighted-average asset allocations for our domestic pension plans at the measurement date are presented in the following table (in millions):

		Plan Assets at Measurement Date
		2011
								Quoted Prices in Active Markets		Other Observable Inputs		Unobservable Inputs
Asset Class		Fair Value		Actual %		Target %		Level 1		Level 2		Level 3
Cash and cash equivalents		$	409	3	%	1	%	$	107	$	302
Domestic equities
	U.S. large cap equity		4,280	27		24			26		4,254
	U.S. SMID cap equity		1,481	10		9			1,481
International equities			2,013	13		12			1,702		311
Private equities			403	3		5						$	403
Fixed income securities						49
	Corporate		3,794	24							3,794
	U.S. government		3,135	20							3,135
	Mortgage backed and other		66	-							66
Other			(63)	-		-			(59)		(4)
		$	15,518	100	%	100	%	$	3,257	$	11,858	$	403
		2010
								Quoted Prices in Active Markets		Other Observable Inputs		Unobservable Inputs
Asset Class		Fair Value		Actual %		Target %		Level 1		Level 2		Level 3
Cash and cash equivalents		$	427	3	%	1	%	$	145	$	282
Domestic equities
	U.S. large cap equity		3,374	26		24					3,374
	U.S. SMID cap equity		1,195	9		9			1,195
International equities			1,502	12		12			1,262		240
Private equities			399	3		5						$	399
Fixed income securities						49
	Corporate		3,546	27							3,546
	U.S. government		2,537	19							2,537
	Mortgage backed and other		122	1							122
Other			(47)	-		-			(46)		(1)
		$	13,055	100	%	100	%	$	2,556	$	10,100	$	399

The change in fair value of Level 3 assets that use significant unobservable inputs is shown in the table below (in millions):

Beginning balance May 31, 2009		$	341
Actual return on plan assets:
	Assets held at May 31, 2010		38
	Assets sold during the year		24
Purchases, sales and settlements			(4)
Balance at May 31, 2010			399
Actual return on plan assets:
	Assets held at May 31, 2011		27
	Assets sold during the year		36
Purchases, sales and settlements			(59)
Ending balance May 31, 2011		$	403

The following table provides a reconciliation of the changes in the pension and postretirement healthcare plans' benefit obligations and fair value of assets over the two-year period ended May 31, 2011 and a statement of the funded status as of May 31, 2011 and 2010 (in millions):

			Pension Plans				Postretirement Healthcare Plans
			2011		2010		2011		2010
Accumulated Benefit Obligation ("ABO")			$	16,806	$	14,041
Changes in Projected Benefit Obligation ("PBO") and
	Accumulated Postretirement Benefit Obligation ("APBO")
PBO/APBO at the beginning of year			$	14,484	$	11,050	$	565	$	433
	Service cost			521		417		31		24
	Interest cost			900		823		34		30
	Actuarial loss			1,875		2,607		44		102
	Benefits paid			(468)		(391)		(48)		(45)
	Other			60		(22)		22		21
PBO/APBO at the end of year			$	17,372	$	14,484	$	648	$	565
Change in Plan Assets
Fair value of plan assets at the beginning of year			$	13,295	$	10,812	$	-	$	-
	Actual return on plan assets			2,425		1,994		-		-
	Company contributions			557		900		26		24
	Benefits paid			(468)		(391)		(48)		(45)
	Other			32		(20)		22		21
Fair value of plan assets at the end of year			$	15,841	$	13,295	$	-	$	-
Funded Status of the Plans			$	(1,531)	$	(1,189)	$	(648)	$	(565)
Amount Recognized in the Balance Sheet at May 31:
	Current pension, postretirement healthcare and other
		benefit obligations	$	(33)	$	(30)	$	(31)	$	(28)
	Noncurrent pension, postretirement healthcare and other
		benefit obligations		(1,498)		(1,159)		(617)		(537)
Net amount recognized			$	(1,531)	$	(1,189)	$	(648)	$	(565)
Amounts Recognized in AOCI and not yet reflected in
	Net Periodic Benefit Cost:
		Net actuarial loss (gain)	$	5,386	$	5,157	$	(85)	$	(134)
		Prior service (credit) cost and other		(993)		(1,106)		2		2
Total			$	4,393	$	4,051	$	(83)	$	(132)
Amounts Recognized in AOCI and not yet reflected in
	Net Periodic Benefit Cost expected to be amortized in
	next year's Net Periodic Benefit Cost:
		Net actuarial loss (gain)	$	307	$	284	$	(1)	$	(5)
		Prior service credit and other		(112)		(113)		-		-
Total			$	195	$	171	$	(1)	$	(5)

Our pension plans included the following components at May 31, 2011 and 2010 (in millions):
		ABO		PBO		Fair Value of Plan Assets		Funded Status
2011
	Qualified	$	16,024	$	16,445	$	15,518	$	(927)
	Nonqualified		335		339		-		(339)
	International Plans		447		588		323		(265)
	Total	$	16,806	$	17,372	$	15,841	$	(1,531)
2010
	Qualified	$	13,311	$	13,635	$	13,055	$	(580)
	Nonqualified		346		348		-		(348)
	International Plans		384		501		240		(261)
	Total	$	14,041	$	14,484	$	13,295	$	(1,189)

The table above provides the ABO, PBO, fair value of plan assets and funded status of our pension plans on an aggregated basis. The following table presents our plans on a disaggregated basis to show those plans (as a group) whose assets did not exceed their liabilities. These plans are comprised of our unfunded nonqualified plans, certain international plans and our U.S. Pension Plans.At May 31, 2011 and 2010, the fair value of plan assets for pension plans with a PBO or ABO in excess of plan assets were as follows (in millions):

		PBO Exceeds the Fair Value of Plan Assets
		2011		2010
Pension Benefits
	Fair value of plan assets	$	15,815	$	13,295
	PBO		(17,346)		(14,484)
	Net funded status	$	(1,531)	$	(1,189)
		ABO Exceeds the Fair Value of Plan Assets
		2011		2010
Pension Benefits
	ABO(1)	$	(16,530)	$	(14,014)
	Fair value of plan assets		15,538		13,263
	PBO		(17,014)		(14,441)
	Net funded status	$	(1,476)	$	(1,178)

(1)ABO not used in determination of funded status.

Contributions to our U.S. Pension Plans for the years ended May 31 were as follows (in millions):

	2011		2010
Required	$	359	$	353
Voluntary		121		495
	$	480	$	848

Net periodic benefit cost for the three years ended May 31 were as follows (in millions):

	Pension Plans						Postretirement Healthcare Plans
	2011		2010		2009		2011		2010		2009
Service cost	$	521	$	417	$	499	$	31	$	24	$	31
Interest cost		900		823		798		34		30		33
Expected return on plan assets		(1,062)		(955)		(1,059)		-		-		-
Recognized actuarial losses (gains) and other		184		23		(61)		(5)		(12)		(7)
Net periodic benefit cost	$	543	$	308	$	177	$	60	$	42	$	57
The increase in pension costs from 2010 to 2011 was due to a significantly lower discount rate used to measure our benefit obligations at our May 31, 2010 measurement date.

Amounts recognized in OCI for all plans were as follows (in millions):
			2011								2010
			Pension Plans				Postretirement Healthcare Plans				Pension Plans				Postretirement Healthcare Plans
			Gross Amount		Net of Tax Amount		Gross Amount		Net of Tax Amount		Gross Amount		Net of Tax Amount		Gross Amount		Net of Tax Amount
Net loss and other
	arising during period		$	511	$	321	$	44	$	26	$	1,562	$	986	$	102	$	59
Loss from settlements
	and curtailments			(13)		(8)		-		-		-		-		-		-
Amortizations:
	Prior services credit			113		71		-		-		113		99		-		-
	Actuarial (losses) gains
		and other		(284)		(178)		5		3		(130)		(114)		12		12
Total recognized in OCI			$	327	$	206	$	49	$	29	$	1,545	$	971	$	114	$	71

Benefit payments, which reflect expected future service, are expected to be paid as follows for the years ending May 31 (millions):
	Pension Plans		Postretirement Healthcare Plans
2012	$	562	$	31
2013		633		31
2014		694		33
2015		754		35
2016		843		37
2017-2021		5,667		225

These estimates are based on assumptions about future events. Actual benefit payments may vary significantly from these estimates.

Future medical benefit claims costs are estimated to increase at an annual rate of 8.3% during 2012, decreasing to an annual growth rate of 4.5% in 2029 and thereafter. Future dental benefit costs are estimated to increase at an annual rate of 7.0% during 2012, decreasing to an annual growth rate of 4.5%in 2029 and thereafter. A 1% change in these annual trend rates would not have a significant impact on the APBO at May 31, 2011 or 2011 benefit expense because the level of these benefits is capped.

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Consolidated Balance Sheets (USD $) In Millions	12 Months Ended
	May 31, 2011	May 31, 2010
CURRENT ASSETS
Cash and cash equivalents	$ 2,328	$ 1,952
Receivables, less allowances of $182 and $166	4,581	4,163
Spare parts, supplies and fuel, less allowances of $169 and $170	437	389
Deferred income taxes	610	529
Prepaid expenses and other	329	251
Total current assets	8,285	7,284
PROPERTY AND EQUIPMENT, AT COST
Aircraft and related equipment	13,146	11,640
Package handling and ground support equipment	5,591	5,193
Computer and electronic equipment	4,408	4,218
Vehicles	3,294	3,170
Facilities and other	7,247	7,081
Gross property and equipment	33,686	31,302
Less accumulated depreciation and amortization	18,143	16,917
Net property and equipment	15,543	14,385
OTHER LONG-TERM ASSETS
Goodwill	2,326	2,200
Other assets	1,231	1,033
Total other long-term assets	3,557	3,233
ASSETS	27,385	24,902
CURRENT LIABILITIES
Current portion of long-term debt	18	262
Accrued salaries and employee benefits	1,268	1,146
Accounts payable	1,702	1,522
Accrued expenses	1,894	1,715
Total current liabilities	4,882	4,645
LONG-TERM DEBT, LESS CURRENT PORTION	1,667	1,668
OTHER LONG-TERM LIABILITIES
Deferred income taxes	1,336	891
Pension, postretirement healthcare and other benefit obligations	2,124	1,705
Self-insurance accruals	977	960
Deferred lease obligations	779	804
Deferred gains, principally related to aircraft transactions	246	267
Other liabilities	154	151
Total other long-term liabilities	5,616	4,778
COMMITMENTS AND CONTINGENCIES
COMMON STOCKHOLDERS' INVESTMENT
Common stock, $0.10 par value; 800 million shares authorized; 317 million shares issued as of May 31, 2011 and 314 million shares issued as of May 31, 2010	32	31
Additional paid-in capital	2,484	2,261
Retained earnings	15,266	13,966
Accumulated other comprehensive loss	(2,550)	(2,440)
Treasury stock, at cost	(12)	(7)
Total common stockholders' investment	15,220	13,811
LIABILITIES AND STOCKHOLDERS' INVESTMENT	$ 27,385	$ 24,902

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Business Segment Information

12 Months Ended

May 31, 2011

Business Segment Information Abstract

Business Segment Information

NOTE 13: BUSINESS SEGMENT INFORMATION

FedEx Express, FedEx Ground and FedEx Freight represent our major service lines and, along with FedEx Services, form the core of our reportable segments. Our reportable segments include the following businesses:

FedEx Express Segment	FedEx Express (express transportation)
	FedEx Trade Networks (global trade services)
	FedEx SupplyChain Systems (logistics services)
FedEx Ground Segment	FedEx Ground (small-package ground delivery)
	FedEx SmartPost (small-parcel consolidator)
FedEx Freight Segment	FedEx Freight (LTL freight transportation)
	FedEx Custom Critical (time-critical transportation)
FedEx Services Segment	FedEx Services (sales, marketing and information technology
		functions)
	FedEx TechConnect (customer service, technical support, billings
		and collections)
	FedEx Office (document and business services and package
		acceptance)

Effective January 30, 2011, our FedEx Freight and FedEx National LTL businesses were merged into a single operation. FedEx Freight now offers two standard services: FedEx Freight Priority, a faster transit service with a price premium; and FedEx Freight Economy, an economical service.

FedEx Services Segment

The FedEx Services segment operates combined sales, marketing, administrative and information technology functions in shared services operations that support our transportation businesses and allow us to obtain synergies from the combination of these functions. The FedEx Services segment includes: FedEx Services, which provides sales, marketing and information technology support to our other companies; FedEx TechConnect, which is responsible for customer service, technical support, billings and collections for U.S. customers of our major business units; and FedEx Office, which provides an array of document and business services and retail access to our customers for our package transportation businesses. Effective September 1, 2009, FedEx SupplyChain Systems, formerly included in the FedEx Services reporting segment, was realigned to become part of the FedEx Express reporting segment. Prior year amounts have not been reclassified to conform to the current year segment presentationbecausethese reclassifications are immaterial.

The FedEx Services segment provides direct and indirect support to our transportation businesses, and we allocate all of the net operating costs of the FedEx Services segment (including the net operating results of FedEx Office) to reflect the full cost of operating our transportation businesses in the results of those segments. Within the FedEx Services segment allocation, the net operating results of FedEx Office are allocated to FedEx Express and FedEx Ground. The allocations of net operating costs are based on metrics such as relative revenues or estimated services provided. We believe these allocations approximate the net cost of providing these functions. We review and evaluate the performance of our transportation segments based on operating income (inclusive of FedEx Services segment allocations). For the FedEx Services segment, performance is evaluated based on the impact of its total allocated net operating costs on our transportation segments.

The operating expenses line item “Intercompany charges” on the accompanying unaudited financial summaries of our transportation segments in MD&Areflects the allocations from the FedEx Services segment to the respective transportation segments. The “Intercompany charges” caption also includes charges and credits for administrative services provided between operating companies and certain other costs such as corporate management fees related to services received for general corporate oversight, including executive officers and certain legal and finance functions. We believe these allocations approximate the net cost of providing these functions.

Effective August 1, 2009, approximately 3,600 employees (predominantly from the FedEx Freight segment) were transferred to entities within the FedEx Services segment. This internal reorganization further centralized most customer support functions, such as sales, customer service and information technology, into our shared services organizations. While the reorganization had no impact on the net operating results of any of our transportation segments, the net intercompany charges to our FedEx Freight segment increased significantly with corresponding decreases to other expense captions, such as salaries and employee benefits. The impact of this internal reorganization to the expense captions in our other segments was immaterial.

Other Intersegment Transactions

Certain FedEx operating companies provide transportation and related services for other FedEx companies outside their reportable segment. Billings for such services are based on negotiated rates, which we believe approximate fair value, and are reflected as revenues of the billing segment. These rates are adjusted from time to time based on market conditions. Such intersegment revenues and expenses are eliminated in our consolidated results and are not separately identified in the following segment information, as the amounts are not material.

The following table provides a reconciliation of reportable segment revenues, depreciation and amortization, operating income (loss) and segment assets to consolidated financial statement totals for the years ended or as of May 31 (in millions):

		FedEx Express Segment(1)		FedEx Ground Segment		FedEx Freight Segment(2)		FedEx Services Segment(3)		Other and Eliminations		Consolidated Total
Revenues
2011		$	24,581	$	8,485	$	4,911	$	1,684	$	(357)	$	39,304
2010			21,555		7,439		4,321		1,770		(351)		34,734
2009			22,364		7,047		4,415		1,977		(306)		35,497
Depreciation and amortization
2011		$	1,059	$	337	$	205	$	371	$	1	$	1,973
2010			1,016		334		198		408		2		1,958
2009			961		337		224		451		2		1,975
Operating income (loss)
2011		$	1,228	$	1,325	$	(175)	$	-	$	-	$	2,378
2010			1,127		1,024		(153)		-		-		1,998
2009			794		807		(44)		(810)		-		747
Segment assets(4)
2011		$	16,463	$	5,048	$	2,664	$	4,278	$	(1,068)	$	27,385
2010			14,819		4,118		2,786		4,079		(900)		24,902
2009			13,483		3,291		3,044		3,240		1,186		24,244
(1)	FedEx Express segment 2011 operating expenses include a $66 million legal reserve associated with the ATA Airlines lawsuit, and 2009 operating expenses include a charge of $260 million primarily for aircraft-related asset impairments.
(2)	FedEx Freight segment 2011 operating expenses include $133 million in costs associated with the combination of our FedEx Freight and FedEx National LTL operations, effective January 30, 2011, and 2009 operating expenses include a charge of $100 million primarily for impairment charges associated with goodwill related to the FedEx National LTL acquisition.
(3)	FedEx Services segment 2009 operating expenses include a charge of $810 million for impairment of goodwill related to the Kinko's (now known as FedEx Office) acquisition. The normal, ongoing net operating costs of the FedEx Services segment are allocated back to the transportation segments.
(4)	Segment assets include intercompany receivables.

The following table provides a reconciliation of reportable segment capital expenditures to consolidated totals for the years ended May 31 (in millions):
	FedEx Express Segment		FedEx Ground Segment		FedEx Freight Segment		FedEx Services Segment		Other		Consolidated Total
2011	$	2,467	$	426	$	153	$	387	$	1	$	3,434
2010		1,864		400		212		340		-		2,816
2009		1,348		636		240		235		-		2,459

The following table presents revenue by service type and geographic information for the years ended or as of May 31 (in millions):
REVENUE BY SERVICE TYPE
				2011		2010		2009
FedEx Express segment:
	Package:
		U.S. overnight box		$	6,128	$	5,602	$	6,074
		U.S. overnight envelope			1,736		1,640		1,855
		U.S. deferred			2,805		2,589		2,789
			Total domestic package revenue		10,669		9,831		10,718
		International Priority (IP)			8,228		7,087		6,978
		International domestic(1)			653		578		565
			Total package revenue		19,550		17,496		18,261
	Freight:
		U.S.			2,188		1,980		2,165
		International priority			1,722		1,303		1,104
		International airfreight			283		251		369
			Total freight revenue		4,193		3,534		3,638
	Other(2)				838		525		465
			Total FedEx Express segment		24,581		21,555		22,364
FedEx Ground segment					8,485		7,439		7,047
FedEx Freight segment					4,911		4,321		4,415
FedEx Services segment					1,684		1,770		1,977
Other and eliminations					(357)		(351)		(306)
				$	39,304	$	34,734	$	35,497
GEOGRAPHICAL INFORMATION(3)
Revenues:
	U.S.			$	27,461	$	24,852	$	25,819
	International:
		FedEx Express segment			11,437		9,547		9,363
		FedEx Ground segment			177		140		124
		FedEx Freight segment			84		60		39
		FedEx Services segment			145		135		152
			Total international revenue		11,843		9,882		9,678
				$	39,304	$	34,734	$	35,497
Noncurrent assets:
	U.S.			$	17,235	$	16,089	$	15,615
	International				1,865		1,529		1,513
				$	19,100	$	17,618	$	17,128
(1)		International domestic revenues include our international intra-country domestic express operations.
(2)		Other revenues includes FedEx Trade Networks and, beginning in the second quarter of 2010, FedEx SupplyChain Systems.
(3)		International revenue includes shipments that either originate in or are destined to locations outside the United States. Noncurrent assets include property and equipment, goodwill and other long-term assets. Our flight equipment registered in the U.S. is included as U.S. assets; however, many of our aircraft operate internationally.

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Supplemental Cash Flow Information

12 Months Ended

May 31, 2011

Supplemental Cash Flow Information Abstract

Supplemental Cash Flow Information

NOTE 14: SUPPLEMENTAL CASH FLOW INFORMATION

Cash paid for interest expense and income taxes for the years ended May 31 was as follows (in millions):

		2011		2010		2009
Cash payments for:
	Interest (net of capitalized interest)	$	93	$	88	$	61
	Income taxes	$	493	$	322	$	517
	Income tax refunds received		(106)		(279)		(8)
	Cash tax payments, net	$	387	$	43	$	509

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Guarantees and Indemnifications

12 Months Ended

May 31, 2011

Guarantees and Indemnifications Abstract

Guarantees and Indemnifications

NOTE 15: GUARANTEES AND INDEMNIFICATIONS

In conjunction with certain transactions, primarily the lease, sale or purchase of operating assets or services in the ordinary course of business, we may provide routine guarantees or indemnifications (e.g., environmental, fuel, tax and software infringement), the terms of which range in duration, and often they are not limited and have no specified maximum obligation. As a result, the overall maximum potential amount of the obligation under such guarantees and indemnifications cannot be reasonably estimated. Historically, we have not been required to make significant payments under our guarantee or indemnification obligations and no amounts have been recognized in our financial statements for the underlying fair value of these obligations.

Special facility revenue bonds have been issued by certain municipalities primarily to finance the acquisition and construction of various airport facilities and equipment. These facilities were leased to us and are accounted for as either capital leases or operating leases. FedEx Express has unconditionally guaranteed $667 million in principal of these bonds (with total future principal and interest payments of approximately $886 million as of May 31, 2011) through these leases. Of the $667 million bond principal guaranteed, $116 million was included in capital lease obligations in our balance sheet at May 31, 2011. The remaining $551 million has been accounted for as operating leases.

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Commitments

12 Months Ended

May 31, 2011

Commitments Abstract

Commitments

NOTE 16: COMMITMENTS

Annual purchase commitments under various contracts as of May 31, 2011 were as follows (in millions):

		Aircraft and		Facilities
		Aircraft Related		and Other(1)		Total
2012		$	1,480	$	918	$	2,398
2013			1,086		105		1,191
2014			781		43		824
2015			569		30		599
2016			584		11		595
Thereafter			1,470		132		1,602
(1)	Primarily vehicles, facilities, advertising and promotions contracts.

The amounts reflected in the table above for purchase commitments represent noncancelable agreements to purchase goods or services. Our obligation to purchase 15 of these B777F aircraft is conditioned upon there being no event that causes FedEx Express or its employees not to be covered by the Railway Labor Act of 1926, as amended.Commitments to purchase aircraft in passenger configuration do not include the attendant costs to modify these aircraft for cargo transport unless we have entered into noncancelable commitments to modify such aircraft.  Open purchase orders that are cancelable are not considered unconditional purchase obligations for financial reporting purposes and are not included in the table above.

We had $604 million in deposits and progress payments as of May 31, 2011 (anincrease of $167 million fromMay 31, 2010) on aircraft purchases and other planned aircraft-related transactions. These deposits are classified in the “Other assets” caption of our consolidated balance sheets. In addition to our commitment to purchase B777Fs, our aircraft purchase commitments include the Boeing 757 (“B757”) in passenger configuration, which will require additional costs to modify for cargo transport. Aircraft and aircraft-related contracts are subject to price escalations. The following table is a summary of the number and type of aircraft we are committed to purchase as of May 31, 2011, with the year of expected delivery:

	B757	B777F	Total
2012	16	7	23
2013	4	6	10
2014	-	7	7
2015	-	3	3
2016	-	3	3
Thereafter	-	7	7
Total	20	33	53

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Contingencies

12 Months Ended

May 31, 2011

Loss Contingency Abstract

Contingencies

NOTE 17: CONTINGENCIES

Wage-and-Hour. We are a defendant in a number of lawsuits containing various class-action allegations of wage-and-hour violations. The plaintiffs in these lawsuits allege, among other things, that they were forced to work “off the clock,” were not paid overtime or were not provided work breaks or other benefits. The complaints generally seek unspecified monetary damages, injunctive relief, or both. The following describes the wage-and-hour matters that have been certified as class actions.

In September 2008, in Tidd v. Adecco USA, Kelly Services and FedEx Ground, a Massachusetts federal court conditionally certified a class limited to individuals who were employed by two temporary employment agencies and who worked as temporary pickup-and-delivery drivers for FedEx Ground in the New England region within the past three years. Potential claimants must voluntarily “opt in” to the lawsuit in order to be considered part of the class. In addition, in the same opinion, the court granted summary judgment in favor of FedEx Ground with respect to the plaintiffs' claims for unpaid overtime wages. The court has since granted judgment in favor of the other two defendants with respect to the overtime claims. Accordingly, the conditionally certified class of plaintiffs was limited to a claim of failure to pay minimum wage due under the federal Fair Labor Standards Act. During the fourth quarter of fiscal 2011, FedEx Ground reached an agreement to settle this action for an immaterial amount.

In September 2009, in Taylor v. FedEx Freight, a California state court granted class certification, certifying a class of all current and former drivers employed by FedEx Freight in California who performed linehaul services since June 2003. The plaintiffs alleged, among other things, that they were forced to work “off the clock” and were not provided with required rest or meal breaks. We entered into a tentative settlement agreement with the plaintiffs in June 2011 for an immaterial amount, and the court's hearing to approve the settlement is anticipated to occur during the first half of fiscal 2012.

In April 2009, in Bibo v. FedEx Express, a California federal court granted class certification, certifying several subclasses of FedEx Express couriers in California from April 14, 2006 (the date of the settlement of the Foster class action) to the present. The plaintiffs allege that FedEx Express violated California wage-and-hour laws after the date of the Foster settlement. In particular, the plaintiffs allege, among other things, that they were forced to work “off the clock” and were not provided with required meal breaks or split-shift premiums. The U.S. Court of Appeals for the Ninth Circuit has refused to accept a discretionary appeal of the class certification order at this time. In April 2011, the court granted our motion for partial summary judgment regarding the proper method for calculating a split-shift premium, effectively eliminating the certified subclass for split-shift premiums. Although the claims for alleged off-the-clock work and missed meal periods are still pending, we do not believe that a material loss is reasonably possible with respect to these remaining claims. We have denied any liability and intend to vigorously defend ourselves in this matter.

Independent Contractor — Lawsuits and State Administrative Proceedings.FedEx Ground is involved in numerous class-action lawsuits (including 30 that have been certified as class actions), individual lawsuits and state tax and other administrative proceedings that claim that the company's owner-operators should be treated as employees, rather than independent contractors.

Most of the class-action lawsuits were consolidated for administration of the pre-trial proceedings by a single federal court, the U.S. District Court for the Northern District of Indiana. The multidistrict litigation court granted class certification in 28 cases and denied it in 14 cases. On December 13, 2010, the court entered an opinion and order addressing all outstanding motions for summary judgment on the status of the owner-operators (i.e., independent contractor vs. employee). In sum, the court has now ruled on our summary judgment motions and entered judgment in favor of FedEx Ground on all claims in 20 of the 28 multidistrict litigation cases that had been certified as class actions, finding that the owner-operators in those cases were contractors as a matter of the law of the following states: Alabama, Arizona, Georgia, Indiana, Kansas (the court previously dismissed without prejudice the nationwide class claim under the Employee Retirement Income Security Act of 1974 based on the plaintiffs' failure to exhaust administrative remedies), Louisiana, Maryland, Minnesota, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Utah, West Virginia and Wisconsin. The plaintiffs filed notices of appeal in all of these 20 cases.

In the other eight certified class actions in the multidistrict litigation, the court ruled in favor of FedEx Ground on some of the claims and against FedEx Ground on at least one claim in three of the cases (filed in Kentucky, Nevada and New Hampshire) and then remanded all eight cases back to district court in the following states for resolution of the remaining claims: Arkansas, California, Florida, Kentucky, Nevada, New Hampshire and Oregon (two certified classes). In January 2011, we asked the court to issue final judgments in these eight cases, and the court denied our motion. In July 2011, we filed a petition for mandamus to the Seventh Circuit asking the appeals court to require these cases to be returned to the multidistrict litigation court for issuance of a final judgment so that all appeals of the December 2010 summary judgment rulings would be heard by the Seventh Circuit.

In January 2008, one of the contractor-model lawsuits that is not part of the multidistrict litigation, Anfinson v. FedEx Ground, was certified as a class action by a Washington state court. The plaintiffs in Anfinson represent a class of single-route, pickup-and-delivery owner-operators in Washington from December 21, 2001 through December 31, 2005 and allege that the class members should be reimbursed as employees for their uniform expenses and should receive overtime pay. In March 2009, a jury trial in the Anfinson case was held, and the jury returned a verdict in favor of FedEx Ground, finding that all 320 class members were independent contractors, not employees. The plaintiffs appealed the verdict. In December 2010, the Washington Court of Appeals reversed and remanded for further proceedings, including a new trial. We filed a motion to reconsider, and this motion was denied. In March 2011, we filed a discretionary appeal with the Washington Supreme Court.

In August 2010, another one of the contractor-model lawsuits that is not part of the multidistrict litigation, Rascon v. FedEx Ground, was certified as a class action by a Colorado state court. The plaintiff in Rascon represents a class of single-route, pickup-and-delivery owner-operators in Colorado who drove vehicles weighing less than 10,001 pounds at any time from August 27, 2005 through the present. The lawsuit seeks unpaid overtime compensation, and related penalties and attorneys' fees and costs, under Colorado law. Our applications for appeal challenging this class certification decision have been rejected.

Other contractor-model cases that are not or are no longer part of the multidistrict litigation are in varying stages of litigation.

With respect to the state administrative proceedings relating to the classification of FedEx Ground's owner-operators as independent contractors, during the second quarter of 2011, the attorneys general in New York and Kentucky each filed lawsuits against FedEx Ground challenging the validity of the contractor model.

While the granting of summary judgment in favor of FedEx Ground by the multidistrict litigation court in 20 of the 28 cases that had been certified as class actions remains subject to appeal, we believe that it significantly improves the likelihood that our independent contractor model will be upheld. Adverse determinations in the remaining matters related to FedEx Ground's independent contractors, however, could, among other things, entitle certain of our contractors and their drivers to the reimbursement of certain expenses and to the benefit of wage-and-hour laws and result in employment and withholding tax and benefit liability for FedEx Ground, and could result in changes to the independent contractor status of FedEx Ground's owner-operators in certain jurisdictions. We believe that FedEx Ground's owner-operators are properly classified as independent contractors and that FedEx Ground is not an employer of the drivers of the company's independent contractors. While it is reasonably possible that potential loss in some of these lawsuits or such changes to the independent contractor status of FedEx Ground's owner-operators could be material, we cannot yet determine the amount or reasonable range of potential loss. A number of factors contribute to this. The number of plaintiffs in these lawsuits continues to change, with some being dismissed and others being added and, as to new plaintiffs, no discovery has been conducted. In addition, the parties have not yet conducted any discovery into damages, which could vary considerably from plaintiff to plaintiff. Further, the range of potential loss could be impacted considerably by future rulings on the merits of certain claims and FedEx Ground's various defenses, and on evidentiary issues. In any event, we do not believe that a material loss is probable in these matters.

ATA Airlines. In October 2010, a jury returned a verdict in favor of ATA Airlines in its lawsuit against FedEx Express and awarded damages of $66 million, and in January 2011, the court awarded ATA pre-judgment interest of $5 million. The suit was filed in Indiana federal court and alleged that we had breached a contract by not including ATA on our 2009 Civil Reserve Air Fleet (CRAF)/Air Mobility Command (AMC) team, which provides cargo and passenger service to the U.S. military. While we do not agree with the verdict or the amount of damages awarded and have appealed the matter to the U.S. Court of Appeals for the Seventh Circuit, accounting standards required an accrual of a $66 million loss in the second quarter of 2011. We did not accrue the $5 million of interest as a loss because we have additional arguments on appeal that lead us to believe that loss of that amount is not probable.

California Paystub Class Action.A federal court in California ruled in April 2011 that paystubs for certain FedEx Express employees in California did not meet that state's requirements to reflect pay period begin date, total overtime hours worked and the correct overtime wage rate.  The ruling came in a class action lawsuit filed by a former courier seeking damages on behalf of herself and all other FedEx Express employees in California that allegedly received noncompliant paychecks.  The court certified the class in June 2011. The court has ruled that FedEx Express is liable to the State of California, and there will be a ruling as to whether FedEx Express is liable to class members who can prove they were injured by the paystub deficiencies.  The judge has not yet decided on the amount, if any, of liability to the State of California or to the class, but has wide discretion.  A material loss in this matter is reasonably possible but not estimable because both the number of class members and the amount, if any, to which some class members may be entitled is uncertain, and in ruling the judge may consider some or all of the following: whether employees suffered injury; whether remedial action was undertaken; whether there was knowledge of any violation; whether any violation was intentional; and whether any award would be unjust under the circumstances.

Other. FedEx and its subsidiaries are subject to other legal proceedings that arise in the ordinary course of their business. In the opinion of management, the aggregate liability, if any, with respect to these other actions will not have a material adverse effect on our financial position, results of operations or cash flows.

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Related Party Transactions

12 Months Ended

May 31, 2011

Related Party Transactions Abstract

Related Party Transactions

NOTE 18: RELATED PARTY TRANSACTIONS

Our Chairman, President and Chief Executive Officer, Frederick W. Smith, currently holds an approximate 10% ownership interest in the National Football League Washington Redskins professional football team (“Redskins”) and is a member of its board of directors. FedEx has a multi-year naming rights agreement with the Redskins granting us certain marketing rights, including the right to name the Redskins' stadium “FedExField.”

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Summary of Quarterly Operating Results (Unaudited)

12 Months Ended

May 31, 2011

Summary of Quarterly Operating Results Abstract

Summary of Quarterly Operating Results (Unaudited)

NOTE 19: SUMMARY OF QUARTERLY OPERATING RESULTS (UNAUDITED)

		First		Second		Third		Fourth
(in millions, except per share amounts)		Quarter		Quarter		Quarter		Quarter
2011
Revenues		$	9,457	$	9,632	$	9,663	$	10,552
Operating income			628		469		393		888
Net income			380		283		231		558
Basic earnings per common share(1)			1.21		0.90		0.73		1.76
Diluted earnings per common share			1.20		0.89		0.73		1.75
2010
Revenues		$	8,009	$	8,596	$	8,701	$	9,428
Operating income			315		571		416		696
Net income			181		345		239		419
Basic earnings per common share			0.58		1.10		0.76		1.34
Diluted earnings per common share(1)			0.58		1.10		0.76		1.33
(1)	The sum of the quarterly earnings per share may not equal annual amounts due to differences in the weighted-average number of shares outstanding during the respective period.

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Condensed Consolidating Financial Statements

12 Months Ended

May 31, 2011

Condensed Consolidating Financial Statements Abstract

Condensed Consolidating Financial Statements

NOTE 20: CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

We are required to present condensed consolidating financial information in order for the subsidiary guarantors (other than FedEx Express) of our public debt to continue to be exempt from reporting under the Securities Exchange Act of 1934, as amended.

The guarantor subsidiaries, which are wholly owned by FedEx, guarantee $1 billion of our debt. The guarantees are full and unconditional and joint and several. Our guarantor subsidiaries were not determined using geographic, service line or other similar criteria, and as a result, the "Guarantor Subsidiaries" and "Non-guarantor Subsidiaries" columns each include portions of our domestic and international operations. Accordingly, this basis of presentation is not intended to present our financial condition, results of operations or cash flows for any purpose other than to comply with the specific requirements for subsidiary guarantor reporting.

Condensed consolidating financial statements for our guarantor subsidiaries and non-guarantor subsidiaries are presented in the following tables (in millions):

CONDENSED CONSOLIDATING BALANCE SHEETS
May 31, 2011
						Guarantor		Non-guarantor
				Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
ASSETS
CURRENT ASSETS
	Cash and cash equivalents			$	1,589	$	279	$	546	$	(86)	$	2,328
	Receivables, less allowances				-		3,696		912		(27)		4,581
	Spare parts, supplies, fuel, prepaid expenses
		and other, less allowances			77		645		44		-		766
	Deferred income taxes				-		598		12		-		610
			Total current assets		1,666		5,218		1,514		(113)		8,285
PROPERTY AND EQUIPMENT, AT COST					24		31,916		1,746		-		33,686
	Less accumulated depreciation and amortization				18		17,071		1,054		-		18,143
			Net property and equipment		6		14,845		692		-		15,543
INTERCOMPANY RECEIVABLE					-		-		1,317		(1,317)		-
GOODWILL					-		1,564		762		-		2,326
INVESTMENT IN SUBSIDIARIES					15,404		2,705		-		(18,109)		-
OTHER ASSETS					1,652		1,039		63		(1,523)		1,231
				$	18,728	$	25,371	$	4,348	$	(21,062)	$	27,385
LIABILITIES AND STOCKHOLDERS' INVESTMENT
CURRENT LIABILITIES
	Current portion of long-term debt			$	-	$	18	$	-	$	-	$	18
	Accrued salaries and employee benefits				50		1,071		147		-		1,268
	Accounts payable				-		1,385		430		(113)		1,702
	Accrued expenses				198		1,563		133		-		1,894
		Total current liabilities			248		4,037		710		(113)		4,882
LONG-TERM DEBT, LESS CURRENT PORTION					1,000		667		-		-		1,667
INTERCOMPANY PAYABLE					1,095		222		-		(1,317)		-
OTHER LONG-TERM LIABILITIES
	Deferred income taxes				-		2,842		17		(1,523)		1,336
	Other liabilities				1,165		3,001		114		-		4,280
		Total other long-term liabilities			1,165		5,843		131		(1,523)		5,616
STOCKHOLDERS' INVESTMENT					15,220		14,602		3,507		(18,109)		15,220
				$	18,728	$	25,371	$	4,348	$	(21,062)	$	27,385

CONDENSED CONSOLIDATING BALANCE SHEETS
May 31, 2010
						Guarantor		Non-guarantor
				Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
ASSETS
CURRENT ASSETS
	Cash and cash equivalents			$	1,310	$	258	$	443	$	(59)	$	1,952
	Receivables, less allowances				1		3,425		782		(45)		4,163
	Spare parts, supplies, fuel, prepaid expenses
		and other, less allowances			5		581		54		-		640
	Deferred income taxes				-		492		37		-		529
			Total current assets		1,316		4,756		1,316		(104)		7,284
PROPERTY AND EQUIPMENT, AT COST					23		29,193		2,086		-		31,302
	Less accumulated depreciation and amortization				18		15,801		1,098		-		16,917
			Net property and equipment		5		13,392		988		-		14,385
INTERCOMPANY RECEIVABLE					-		-		1,132		(1,132)		-
GOODWILL					-		1,551		649		-		2,200
INVESTMENT IN SUBSIDIARIES					13,850		2,619		-		(16,469)		-
OTHER ASSETS					1,527		801		99		(1,394)		1,033
				$	16,698	$	23,119	$	4,184	$	(19,099)	$	24,902
LIABILITIES AND STOCKHOLDERS' INVESTMENT
CURRENT LIABILITIES
	Current portion of long-term debt			$	250	$	12	$	-	$	-	$	262
	Accrued salaries and employee benefits				36		955		155		-		1,146
	Accounts payable				8		1,196		422		(104)		1,522
	Accrued expenses				47		1,488		180		-		1,715
		Total current liabilities			341		3,651		757		(104)		4,645
LONG-TERM DEBT, LESS CURRENT PORTION					1,000		668		-		-		1,668
INTERCOMPANY PAYABLE					702		430		-		(1,132)		-
OTHER LONG-TERM LIABILITIES
	Deferred income taxes				-		2,253		32		(1,394)		891
	Other liabilities				844		2,921		122		-		3,887
		Total other long-term liabilities			844		5,174		154		(1,394)		4,778
STOCKHOLDERS' INVESTMENT					13,811		13,196		3,273		(16,469)		13,811
				$	16,698	$	23,119	$	4,184	$	(19,099)	$	24,902

CONDENSED CONSOLIDATING STATEMENTS OF INCOME
Year Ended May 31, 2011
				Guarantor		Non-guarantor
		Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
REVENUES		$	-	$	33,124	$	6,498	$	(318)	$	39,304
OPERATING EXPENSES:
	Salaries and employee benefits		109		13,206		1,961		-		15,276
	Purchased transportation		-		4,034		1,745		(105)		5,674
	Rentals and landing fees		4		2,209		253		(4)		2,462
	Depreciation and amortization		1		1,784		188		-		1,973
	Fuel		-		4,003		148		-		4,151
	Maintenance and repairs		1		1,862		116		-		1,979
	Impairment and other charges		-		28		61		-		89
	Intercompany charges, net		(222)		(317)		539		-		-
	Other		107		4,392		1,032		(209)		5,322
			-		31,201		6,043		(318)		36,926
OPERATING INCOME			-		1,923		455		-		2,378
OTHER INCOME (EXPENSE):
	Equity in earnings of subsidiaries		1,452		200		-		(1,652)		-
	Interest, net		(88)		13		(2)		-		(77)
	Intercompany charges, net		104		(135)		31		-		-
	Other, net		(16)		(14)		(6)		-		(36)
INCOME BEFORE INCOME TAXES			1,452		1,987		478		(1,652)		2,265
	Provision for income taxes		-		677		136		-		813
NET INCOME		$	1,452	$	1,310	$	342	$	(1,652)	$	1,452
CONDENSED CONSOLIDATING STATEMENTS OF INCOME
Year Ended May 31, 2010
				Guarantor		Non-guarantor
		Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
REVENUES		$	-	$	29,360	$	5,700	$	(326)	$	34,734
OPERATING EXPENSES:
	Salaries and employee benefits		91		12,026		1,910		-		14,027
	Purchased transportation		-		3,424		1,392		(88)		4,728
	Rentals and landing fees		4		2,118		240		(3)		2,359
	Depreciation and amortization		1		1,751		206		-		1,958
	Fuel		-		2,946		160		-		3,106
	Maintenance and repairs		1		1,589		125		-		1,715
	Impairment and other charges		-		-		18		-		18
	Intercompany charges, net		(202)		(109)		311		-		-
	Other		105		3,950		1,005		(235)		4,825
			-		27,695		5,367		(326)		32,736
OPERATING INCOME			-		1,665		333		-		1,998
OTHER INCOME (EXPENSE):
	Equity in earnings of subsidiaries		1,184		161		-		(1,345)		-
	Interest, net		(100)		41		(12)		-		(71)
	Intercompany charges, net		114		(147)		33		-		-
	Other, net		(14)		(18)		(1)		-		(33)
INCOME BEFORE INCOME TAXES			1,184		1,702		353		(1,345)		1,894
	Provision for income taxes		-		625		85		-		710
NET INCOME		$	1,184	$	1,077	$	268	$	(1,345)	$	1,184

CONDENSED CONSOLIDATING STATEMENTS OF INCOME
Year Ended May 31, 2009
				Guarantor		Non-guarantor
		Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
REVENUES		$	-	$	29,923	$	5,851	$	(277)	$	35,497
OPERATING EXPENSES:
	Salaries and employee benefits		82		11,483		2,202		-		13,767
	Purchased transportation		-		3,362		1,211		(39)		4,534
	Rentals and landing fees		4		2,134		296		(5)		2,429
	Depreciation and amortization		2		1,706		267		-		1,975
	Fuel		-		3,554		257		-		3,811
	Maintenance and repairs		1		1,755		142		-		1,898
	Impairment and other charges		-		1,098		106		-		1,204
	Intercompany charges, net		(193)		81		112		-		-
	Other		104		4,198		1,063		(233)		5,132
			-		29,371		5,656		(277)		34,750
OPERATING INCOME			-		552		195		-		747
OTHER INCOME (EXPENSE):
	Equity in earnings of subsidiaries		98		103		-		(201)		-
	Interest, net		(73)		28		(14)		-		(59)
	Intercompany charges, net		90		(118)		28		-		-
	Other, net		(17)		(3)		9		-		(11)
INCOME BEFORE INCOME TAXES			98		562		218		(201)		677
	Provision for income taxes		-		514		65		-		579
NET INCOME		$	98	$	48	$	153	$	(201)	$	98

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
Year Ended May 31, 2011
				Guarantor		Non-guarantor
		Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		$	25	$	3,978	$	65	$	(27)	$	4,041
INVESTING ACTIVITIES
	Capital expenditures		(1)		(3,263)		(170)		-		(3,434)
	Business acquisition, net of cash acquired		-		(96)		-		-		(96)
	Proceeds from asset dispositions and other		-		110		1		-		111
CASH USED IN INVESTING ACTIVITIES			(1)		(3,249)		(169)		-		(3,419)
FINANCING ACTIVITIES
	Net transfers from (to) Parent		530		(994)		464		-		-
	Payment on loan between subsidiaries		-		235		(235)		-		-
	Intercompany dividends		-		61		(61)		-		-
	Principal payments on debt		(250)		(12)		-		-		(262)
	Proceeds from stock issuances		108		-		-		-		108
	Excess tax benefit on the exercise of stock options		23		-		-		-		23
	Dividends paid		(151)		-		-		-		(151)
	Other, net		(5)		(9)		9		-		(5)
CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES			255		(719)		177		-		(287)
Effect of exchange rate changes on cash			-		11		30		-		41
Net increase (decrease) in cash and cash equivalents			279		21		103		(27)		376
Cash and cash equivalents at beginning of period			1,310		258		443		(59)		1,952
Cash and cash equivalents at end of period		$	1,589	$	279	$	546	$	(86)	$	2,328
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
Year Ended May 31, 2010
				Guarantor		Non-guarantor
		Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		$	(450)	$	2,942	$	653	$	(7)	$	3,138
INVESTING ACTIVITIES
	Capital expenditures		-		(2,661)		(155)		-		(2,816)
	Proceeds from asset dispositions and other		-		38		(3)		-		35
CASH USED IN INVESTING ACTIVITIES			-		(2,623)		(158)		-		(2,781)
FINANCING ACTIVITIES
	Net transfers from (to) Parent		531		(397)		(134)		-		-
	Payment on loan between subsidiaries		-		72		(72)		-		-
	Intercompany dividends		-		158		(158)		-		-
	Principal payments on debt		(500)		(153)		-		-		(653)
	Proceeds from stock issuances		94		-		-		-		94
	Excess tax benefit on the exercise of stock options		25		-		-		-		25
	Dividends paid		(138)		-		-		-		(138)
	Other, net		(20)		(5)		5		-		(20)
CASH USED IN FINANCING ACTIVITIES			(8)		(325)		(359)		-		(692)
Effect of exchange rate changes on cash			-		(8)		3		-		(5)
Net (decrease) increase in cash and cash equivalents			(458)		(14)		139		(7)		(340)
Cash and cash equivalents at beginning of period			1,768		272		304		(52)		2,292
Cash and cash equivalents at end of period		$	1,310	$	258	$	443	$	(59)	$	1,952

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
Year Ended May 31, 2009
				Guarantor		Non-guarantor
		Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		$	(924)	$	3,156	$	573	$	(52)	$	2,753
INVESTING ACTIVITIES
	Capital expenditures		-		(2,248)		(211)		-		(2,459)
	Proceeds from asset dispositions and other		-		69		7		-		76
CASH USED IN INVESTING ACTIVITIES			-		(2,179)		(204)		-		(2,383)
FINANCING ACTIVITIES
	Net transfers from (to) Parent		1,173		(1,066)		(107)		-		-
	Payment on loan from Parent		17		-		(17)		-		-
	Payment on loan between subsidiaries		-		36		(36)		-		-
	Intercompany dividends		-		165		(165)		-		-
	Principal payments on debt		(500)		-		(1)		-		(501)
	Proceeds from debt issuance		1,000		-		-		-		1,000
	Proceeds from stock issuances		41		-		-		-		41
	Excess tax benefit on the exercise of stock options		4		-		-		-		4
	Dividends paid		(137)		-		-		-		(137)
	Other, net		(7)		-		-		-		(7)
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES			1,591		(865)		(326)		-		400
Effect of exchange rate changes on cash			-		(6)		(11)		-		(17)
Net increase (decrease) in cash and cash equivalents			667		106		32		(52)		753
Cash and cash equivalents at beginning of period			1,101		166		272		-		1,539
Cash and cash equivalents at end of period		$	1,768	$	272	$	304	$	(52)	$	2,292

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Valuation and Qualifying Accounts

12 Months Ended

May 31, 2011

Schedule of Valuation and Qualifying Accounts Abstract

Schedule Of Valuation And Qualifying Accounts

										SCHEDULE II
FEDEX CORPORATION
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED MAY 31, 2011, 2010, AND 2009
(IN MILLIONS)
			ADDITIONS
	BALANCE				CHARGED						BALANCE
	AT		CHARGED		TO						AT
	BEGINNING		TO		OTHER						END OF
DESCRIPTION	OF YEAR		EXPENSES		ACCOUNTS			DEDUCTIONS			YEAR
Accounts Receivable Reserves:
Allowance for Doubtful Accounts
2011...........................….......…....…	$	93	$	152	$	-		$	148	(a)	$	97
2010...........................….......…....…		114		124		-			145	(a)		93
2009...........................….......…....…		88		181		-			155	(a)		114
Allowance for Revenue Adjustments
2011...........................….......…....…	$	73	$	-	$	532	(b)	$	520	(c)	$	85
2010...........................….......…....…		82		-		430	(b)		439	(c)		73
2009...........................….......…....…		70		-		466	(b)		454	(c)		82
Inventory Valuation Allowance:
2011...........................….......…....…	$	170	$	13	$	-		$	14		$	169
2010...........................….......…....…		175		12		-			17			170
2009...........................….......…....…		163		15		-			3			175
(a) Uncollectible accounts written off, net of recoveries.
(b) Principally charged against revenue.
(c) Service failures, rebills and other.

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Description of Business and Summary of Significant Accounting Policies (Policies)

12 Months Ended

May 31, 2011

Description of Business and Summary of Significant Accounting Policies (Policies)

Description of Business

DESCRIPTION OF BUSINESS. FedEx Corporation (“FedEx”) provides a broad portfolio of transportation, e-commerce and business services through companies competing collectively, operating independently and managed collaboratively, under the respected FedEx brand. Our primary operating companies are Federal Express Corporation (“FedEx Express”), the world's largest express transportation company; FedEx Ground Package System, Inc. (“FedEx Ground”), a leading provider of small-package ground delivery services; and FedEx Freight, Inc. (“FedEx Freight”), a leading U.S. provider of less-than-truckload (“LTL”) freight services.These companies represent our major service lines and, along with FedEx Corporate Services, Inc. (“FedEx Services”), form the core of our reportable segments. Our FedEx Services segment provides sales, marketing and information technology support to our transportation segments. In addition, the FedEx Services segment provides customers with retail access to FedEx Express and FedEx Ground shipping services through FedEx Office and Print Services, Inc. (“FedEx Office”) and provides customer service, technical support and billing and collection services through FedEx TechConnect, Inc. (“FedEx TechConnect”).

Fiscal Years

FISCAL YEARS. Except as otherwise specified, references to years indicate our fiscal year ended May 31, 2011 or ended May 31 of the year referenced.

Principles of Consolidation

PRINCIPLES OF CONSOLIDATION. The consolidated financial statements include the accounts of FedEx and its subsidiaries, substantially all of which are wholly owned. All significant intercompany accounts and transactions have been eliminated in consolidation.

Revenue Recognition

REVENUE RECOGNITION. We recognize revenue upon delivery of shipments for our transportation businesses and upon completion of services for our business services, logistics and trade services businesses. Certain of our transportation services are provided with the use of independent contractors. FedEx is the principal to the transaction in most instances and in those cases revenue from these transactions is recognized on a gross basis. Costs associated with independent contractor settlements are recognized as incurred and included in the caption “Purchased transportation” in the accompanying consolidated statements of income. For shipments in transit, revenue is recorded based on the percentage of service completed at the balance sheet date. Estimates for future billing adjustments to revenue and accounts receivable are recognized at the time of shipment for money-back service guarantees and billing corrections. Delivery costs are accrued as incurred.

Our contract logistics, global trade services and certain transportation businesses, such as FedEx SmartPost, engage in some transactions wherein they act as agents. Revenue from these transactions is recorded on a net basis. Net revenue includes billings to customers less third-party charges, including transportation or handling costs, fees, commissions, and taxes and duties.

Certain of our revenue-producing transactions are subject to taxes, such as sales tax, assessed by governmental authorities. We present these revenues net of tax.

Credit Risk

CREDIT RISK. We routinely grant credit to many of our customers for transportation and business services without collateral. The risk of credit loss in our trade receivables is substantially mitigated by our credit evaluation process, short collection terms and sales to a large number of customers, as well as the low revenue per transaction for most of our services. Allowances for potential credit losses are determined based on historical experience and the impact of current economic factors on the composition of accounts receivable. Historically, credit losses have been within management's expectations.

Advertising

ADVERTISING. Advertising and promotion costs are expensed as incurred and are classified in other operating expenses. Advertising and promotion expenses were $375 million in 2011, $374 million in 2010 and $379 million in 2009.

Cash Equivalents

CASH EQUIVALENTS. Cash in excess of current operating requirements is invested in short-term, interest-bearing instruments with maturities of three months or less at the date of purchase and is stated at cost, which approximates market value.

Spare Parts, Supplies And Fuel

SPARE PARTS, SUPPLIES AND FUEL. Spare parts (principally aircraft-related) are reported at weighted-average cost. Allowances for obsolescence are provided for spare parts expected to be on hand at the date the aircraft are retired from service. These allowances are provided over the estimated useful life of the related aircraft and engines. Additionally, allowances for obsolescence are provided for spare parts currently identified as excess or obsolete. These allowances are based on management estimates, which are subject to change. Supplies and fuel are reported at weighted average cost.

Property And Equipment

PROPERTY AND EQUIPMENT. Expenditures for major additions, improvements, flight equipment modifications and certain equipment overhaul costs are capitalized when such costs are determined to extend the useful life of the asset or are part of the cost of acquiring the asset. Maintenance and repairs are charged to expense as incurred. We capitalize certain direct internal and external costs associated with the development of internal-use software. Gains and losses on sales of property used in operations are classified within operating expenses.

For financial reporting purposes, we record depreciation and amortization of property and equipment on a straight-line basis over the asset's service life or related lease term, if shorter. For income tax purposes, depreciation is computed using accelerated methods when applicable. The depreciable lives and net book value of our property and equipment are as follows (dollars in millions):

		Net Book Value at May 31,
	Range	2011		2010
Wide-body aircraft and related equipment	15 to 30 years	$	6,536	$	5,897
Narrow-body and feeder aircraft and related equipment	5 to 18 years		1,517		1,049
Package handling and ground support equipment	3 to 30 years		1,985		1,895
Vehicles	3 to 15 years		1,076		1,095
Computer and electronic equipment	2 to 10 years		776		649
Facilities and other	2 to 40 years		3,653		3,800

Substantially all property and equipment have no material residual values. The majority of aircraft costs are depreciated on a straight-line basis over 15 to 18 years. We periodically evaluate the estimated service lives and residual values used to depreciate our property and equipment. This evaluation may result in changes in the estimated lives and residual values. Such changes did not materially affect depreciation expense in any period presented. Depreciation expense, excluding gains and losses on sales of property and equipment used in operations, was $1.9 billion in2011and2010, and $1.8 billion in 2009. Depreciation and amortization expense includes amortization of assets under capital lease.

Capitalized Interest

CAPITALIZED INTEREST. Interest on funds used to finance the acquisition and modification of aircraft, including purchase deposits, construction of certain facilities, and development of certain software up to the date the asset is ready for its intended use is capitalized and included in the cost of the asset if the asset is actively under construction. Capitalized interest was $71 million in 2011, $80 million in 2010 and $71 million in 2009.

Impairment of Long-Lived Assets

IMPAIRMENT OF LONG-LIVED ASSETS. Long-lived assets are reviewed for impairment when circumstances indicate the carrying value of an asset may not be recoverable. For assets that are to be held and used, an impairment is recognized when the estimated undiscounted cash flows associated with the asset or group of assets is less than their carrying value. If impairment exists, an adjustment is made to write the asset down to its fair value, and a loss is recorded as the difference between the carrying value and fair value. Fair values are determined based on quoted market values, discounted cash flows or internal and external appraisals, as applicable. Assets to be disposed of are carried at the lower of carrying value or estimated net realizable value.

We operate integrated transportation networks, and accordingly, cash flows for most of our operating assets are assessed at a network level, not at an individual asset level, for our analysis of impairment. In 2011, we incurred asset impairment charges of $29 million related to the combination of our LTL operations at FedEx Freight (see “FedEx Freight Network Combination” below for additional information).

There were no material property and equipment impairment charges recognized in 2010. During 2009, we recorded $202 million in property and equipment impairment charges. These charges were primarily related to our decision to permanently remove from service certain aircraft, along with certain excess aircraft engines, at FedEx Express.

Goodwill And Intangible Assets

GOODWILL. Goodwill is recognized for the excess of the purchase price over the fair value of tangible and identifiable intangible net assets of businesses acquired. Several factors give rise to goodwill in our acquisitions, such as the expected benefit from synergies of the combination and the existing workforce of the acquired entity. Goodwill is reviewed at least annually for impairment by comparing the fair value of each reporting unit with its carrying value (including attributable goodwill). Fair value for our reporting units is determined using an income or market approach incorporating market participant considerations and management's assumptions on revenue growth rates, operating margins, discount rates and expected capital expenditures. Fair value determinations may include both internal and third-party valuations. Unless circumstances otherwise dictate, we perform our annual impairment testing in the fourth quarter.

INTANGIBLE ASSETS. Intangible assets include customer relationships, technology assets and contract-based intangibles acquired in business combinations. Intangible assets are amortized over periods ranging from 3 to 12 years, either on a straight-line basis or an accelerated basis depending upon the pattern in which the economic benefits are realized.

Pension and Postretirement Healthcare Plans

PENSION AND POSTRETIREMENT HEALTHCARE PLANS. Our defined benefit plans are measured using actuarial techniques that reflect management’s assumptions for discount rate, expected long-term investment returns on plan assets, salary increases, expected retirement, mortality, employee turnover and future increases in healthcare costs. We determine the discount rate (which is required to be the rate at which the projected benefit obligation could be effectively settled as of the measurement date) with the assistance of actuaries, who calculate the yield on a theoretical portfolio of high-grade corporate bonds (rated Aa or better) with cash flows that are designed to match our expected benefit payments in future years. A calculated-value method is employed for purposes of determining the expected return on the plan asset component of net periodic pension cost for our tax-qualified U.S. domestic pension plans (“U.S. Pension Plans”). The accounting guidance related to employers’ accounting for defined benefit pension and other postretirement plans requires recognition in the balance sheet of the funded status of defined benefit pension and other postretirement benefit plans, and the recognition in other comprehensive income (“OCI”) of unrecognized gains or losses and prior service costs or credits. Additionally, the guidance requires the measurement date for plan assets and liabilities to coincide with the plan sponsor’s year end. At May 31, 2011, we recorded a decrease to equity through OCI of $350 million (net of tax) based primarily on year-end adjustments related to increases in our projected benefit obligation due to a decrease in the discount rate used to measure the liability at May 31, 2011. At May 31, 2010, we recorded a decrease to equity through OCI of $1.0 billion (net of tax) based primarily on year-end adjustments related to increases in our projected benefit obligation due to a decrease in the discount rate used to measure the liability at May 31, 2010.

Income Taxes

INCOME TAXES. Deferred income taxes are provided for the tax effect of temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements. The liability method is used to account for income taxes, which requires deferred taxes to be recorded at the statutory rate expected to be in effect when the taxes are paid.

We recognize liabilities for uncertain income tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step requires us to estimate and measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. It is inherently difficult and subjective to estimate such amounts, as we must determine the probability of various possible outcomes. We reevaluate these uncertain tax positions on a quarterly basis or when new information becomes available to management. These reevaluations are based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, successfully settled issues under audit, and new audit activity. Such a change in recognition or measurement could result in the recognition of a tax benefit or an increase to the related provision.

We classify interest related to income tax liabilities as interest expense, and if applicable, penalties are recognized as a component of income tax expense. The income tax liabilities and accrued interest and penalties that are due within one year of the balance sheet date are presented as current liabilities. The remaining portion of our income tax liabilities and accrued interest and penalties are presented as noncurrent liabilities because payment of cash is not anticipated within one year of the balance sheet date. These noncurrent income tax liabilities are recorded in the caption “Other liabilities” in the accompanying consolidated balance sheets.

Self-Insurance Accruals

SELF-INSURANCE ACCRUALS. We are self-insured for workers' compensation claims, vehicle accidents and general liabilities, benefits paid under employee healthcare programs and long-term disability benefits. Accruals are primarily based on the actuarially estimated, undiscounted cost of claims, which includes incurred-but-not-reported claims. Current workers' compensation claims, vehicle and general liability, employee healthcare claims and long-term disability are included in accrued expenses. We self-insure up to certain limits that vary by operating company and type of risk. Periodically, we evaluate the level of insurance coverage and adjust insurance levels based on risk tolerance and premium expense.

Leases

LEASES. We lease certain aircraft, facilities, equipment and vehicles under capital and operating leases. The commencement date of all leases is the earlier of the date we become legally obligated to make rent payments or the date we may exercise control over the use of the property. In addition to minimum rental payments, certain leases provide for contingent rentals based on equipment usage principally related to aircraft leases at FedEx Express and copier usage at FedEx Office. Rent expense associated with contingent rentals is recorded as incurred. Certain of our leases contain fluctuating or escalating payments and rent holiday periods. The related rent expense is recorded on a straight-line basis over the lease term. The cumulative excess of rent payments over rent expense is accounted for as a deferred lease asset and recorded in “Other assets” in the accompanying consolidated balance sheets. The cumulative excess of rent expense over rent payments is accounted for as a deferred lease obligation. Leasehold improvements associated with assets utilized under capital or operating leases are amortized over the shorter of the asset's useful life or the lease term.

Deferred Gains

DEFERRED GAINS. Gains on the sale and leaseback of aircraft and other property and equipment are deferred and amortized ratably over the life of the lease as a reduction of rent expense. Substantially all of these deferred gains are related to aircraft transactions.

Foreign Currency Translation

FOREIGN CURRENCY TRANSLATION. Translation gains and losses of foreign operations that use local currencies as the functional currency are accumulated and reported, net of applicable deferred income taxes, as a component of accumulated other comprehensive income within common stockholders' investment. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the local currency are included in the caption “Other, net” in the accompanying consolidated statements of income and were immaterial for each period presented. Cumulative net foreign currency translation gains in accumulated other comprehensive income were $156 million at May 31, 2011, $30 million at May 31, 2010 and $56 million at May 31, 2009.

Employees Under Collective Bargaining Arrangements

EMPLOYEES UNDER COLLECTIVE BARGAINING ARRANGEMENTS. The pilots of Federal Express Corporation (“FedEx Express”), which represent a small number of FedEx Express's total employees, are employed under a collective bargaining agreement. During the fourth quarter of 2011, the pilots ratified a new labor contract that includes safety initiatives, increases in hourly pay rates and travel per diem rates, and provisions for opening a European crew base. The new contract is scheduled to become amendable in March 2013 unless the union exercises its option to shorten the contract, in which case the agreement would be amendable in March 2012 and a portion of the hourly pay increases would be canceled. In addition to our pilots at FedEx Express, certain of FedEx Express's non-U.S. employees are unionized.

Stock-Based Compensation

STOCK-BASED COMPENSATION. We recognize compensation expense for stock-based awards under the provisions of the accounting guidance related to share-based payments. This guidance requires recognition of compensation expense for stock-based awards using a fair value method.

Dividends Declared Per Common Share

DIVIDENDS DECLARED PER COMMON SHARE. On June 6, 2011, our Board of Directors declared a quarterly dividend of $0.13 per share of common stock. The dividend was paid on July 1, 2011 to stockholders of record as of the close of business on June 17, 2011. Each quarterly dividend payment is subject to review and approval by our Board of Directors, and we evaluate our dividend payment amount on an annual basis at the end of each fiscal year.

FedEx Freight Network Combination

FEDEX FREIGHT NETWORK COMBINATION. The previously announced combination of our FedEx Freight and FedEx National LTL operations was completed on January 30, 2011. Our combined LTL network will increase efficiencies, reduce operational costs and provide customers both Priority and Economy LTL freight services across all lengths of haul from one integrated company. These actions resulted in the following incremental costs, including an impairment charge recorded during 2011. Charges for the year ended May 31, 2011 include the following (in millions):

	2011
Severance	$	40
Lease terminations		20
Asset impairments		29
Impairment and other charges		89
Other program costs		44
Total program costs	$	133

Other program costs include $15 million of accelerated depreciation expense due to a change in the estimated useful life of certain assets impacted by the combination of these operations and other incremental costs directly associated with the program. Substantially all of the severance accruals were paid during the fourth quarter of 2011 and the remaining severance accruals will be paid during the first quarter of 2012.  We have received $88 million related to asset sales, which offset the total cash outlays for the program.  The estimates recorded at May 31, 2011 are not subject to any material risk of change.

Use Of Estimates

USE OF ESTIMATES. The preparation of our consolidated financial statements requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, the reported amounts of revenues and expenses and the disclosure of contingent liabilities. Management makes its best estimate of the ultimate outcome for these items based on historical trends and other information available when the financial statements are prepared. Changes in estimates are recognized in accordance with the accounting rules for the estimate, which is typically in the period when new information becomes available to management. Areas where the nature of the estimate makes it reasonably possible that actual results could materially differ from amounts estimated include: self-insurance accruals; retirement plan obligations; long-term incentive accruals; tax liabilities; accounts receivable allowances; obsolescence of spare parts; contingent liabilities; loss contingencies, such as litigation and other claims; and impairment assessments on long-lived assets (including goodwill).

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Consolidated Balance Sheets (Parenthetical) (USD $) In Millions, except Per Share data	May 31, 2011	May 31, 2010
CURRENT ASSETS
Allowances for receivables	$ 182	$ 166
Allowances for spare parts, supplies and fuel	$ 169	$ 170
COMMON STOCKHOLDERS' INVESTMENT
Common stock, par value	$ 0.10	$ 0.10
Common stock, shares authorized	800	800
Common stock, shares issued	317	314

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Description of Business and Summary of Significant Accounting Policies (Tables)

12 Months Ended

May 31, 2011

Business Realignment (Tables) Abstract

Business Realignment Cost Table

	2011
Severance	$	40
Lease terminations		20
Asset impairments		29
Impairment and other charges		89
Other program costs		44
Total program costs	$	133

Property And Equipment (Tables) Abstract

Schedule of Depreciable Lives and Net Book Value of Property and Equipment

		Net Book Value at May 31,
	Range	2011		2010
Wide-body aircraft and related equipment	15 to 30 years	$	6,536	$	5,897
Narrow-body and feeder aircraft and related equipment	5 to 18 years		1,517		1,049
Package handling and ground support equipment	3 to 30 years		1,985		1,895
Vehicles	3 to 15 years		1,076		1,095
Computer and electronic equipment	2 to 10 years		776		649
Facilities and other	2 to 40 years		3,653		3,800

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Goodwill and Other Intagible Assets (Tables)

12 Months Ended

May 31, 2011

Goodwill and Other Intangible Assets (Tables) Abstract

Schedule Of Goodwill

			FedEx Express Segment		FedEx Ground Segment		FedEx Freight Segment		FedEx Services Segment		Total
Goodwill at May 31, 2009			$	1,090	$	90	$	802	$	1,539	$	3,521
Accumulated impairment charges				-		-		(115)		(1,177)		(1,292)
Balance as of May 31, 2009				1,090		90		687		362		2,229
Impairment charge				-		-		(18)		-		(18)
Purchase adjustments and other(1)				(11)		-		-		-		(11)
Transfer between segments(2)				66		-		(66)		-		-
Balance as of May 31, 2010				1,145		90		603		362		2,200
Goodwill acquired(3)				89		-		-		-		89
Purchase adjustments and other(1)				38		-		(1)		-		37
Balance as of May 31, 2011			$	1,272	$	90	$	602	$	362	$	2,326
Accumulated goodwill impairment
	charges as of May 31, 2011		$	-	$	-	$	(133)	$	(1,177)	$	(1,310)
(1)		Primarily currency translation adjustments.
(2)		Transfer of goodwill related to the merger of Caribbean Transportation Services into FedEx Express effective June 1, 2009.
(3)		Goodwill acquired in 2011 relates to the acquisition of the Indian logistics, distribution and express businesses of AFL Pvt. Ltd. and its affiliate Unifreight India Pvt. Ltd. See Note 3 for related disclosures.

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Selected Current Liabilities (Tables)

May 31, 2011

Selected Current Liabilities (Tables) Abstract

Selected Current Liabilities

			May 31,
			2011		2010
Accrued Salaries and Employee Benefits
	Salaries		$	256	$	230
	Employee benefits, including
		variable compensation		468		386
	Compensated absences			544		530
			$	1,268	$	1,146
Accrued Expenses
	Self-insurance accruals		$	696	$	675
	Taxes other than income taxes			357		347
	Other			841		693
			$	1,894	$	1,715

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Long Term Debt and Other Financing Arrangements (Tables)

12 Months Ended

May 31, 2011

Long Term Debt (Tables) Abstract

Components of Long-term Debt (Net of Discounts)

		May 31,
		2011		2010
Senior unsecured debt
	Interest rate of 7.25%, due in 2011	$	-	$	250
	Interest rate of 9.65%, due in 2013		300		300
	Interest rate of 7.38%, due in 2014		250		250
	Interest rate of 8.00%, due in 2019		750		750
	Interest rate of 7.60%, due in 2098		239		239
			1,539		1,789
Capital lease obligations			146		141
			1,685		1,930
	Less current portion		18		262
		$	1,667	$	1,668

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Leases (Tables)

12 Months Ended

May 31, 2011

Leases (Tables) Abstract

Components of Property and Equipment Recorded Under Capital Leases

		May 31,
		2011		2010
Aircraft		$	8	$	15
Package handling and ground support
	equipment		165		165
Vehicles			17		17
Other, principally facilities			145		146
			335		343
	Less accumulated amortization		307		312
		$	28	$	31

Schedule of Rent Expense Under Operating Leases

Rent expense under operating leases for the years ended May 31 was as follows (in millions):
		2011		2010		2009
Minimum rentals		$	2,025	$	2,001	$	2,047
Contingent rentals(1)			193		152		181
		$	2,218	$	2,153	$	2,228
(1)	Contingent rentals are based on equipment usage.

Schedule of Future Minimum Lease Payments, Capital and Operating Leases

				Operating Leases
				Aircraft				Total
		Capital		and Related		Facilities		Operating
		Leases		Equipment		and Other		Leases
2012		$	25	$	494	$	1,300	$	1,794
2013			119		499		1,155		1,654
2014			2		473		992		1,465
2015			2		455		899		1,354
2016			2		458		734		1,192
Thereafter			13		1,545		4,988		6,533
Total			163	$	3,924	$	10,068	$	13,992
Less amount representing interest			17
Present value of net minimum lease
	payments	$	146

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Stock Based Compensation (Tables)

12 Months Ended

May 31, 2011

Stock Based Compensation (Tables) Abstract

Stock-based compensation expense

	2011		2010		2009
Stock-based compensation expense	$	98	$	101	$	99

Schedule of Stock Based Compensation Key Assumptions for Valuation

		2011			2010			2009
Weighted-average Black-Scholes value		$	28.12		$	20.47		$	23.66
Intrinsic value of options exercised		$	80		$	77		$	7
Black-Scholes Assumptions:
	Expected lives		5.9 years			5.7 years			5.5 years
	Expected volatility		34	%		32	%		23	%
	Risk-free interest rate		2.36	%		3.24	%		3.28	%
	Dividend yield		0.558	%		0.742	%		0.492	%

Schedule of Stock Option Activity

		Stock Options
		Shares		Weighted-Average Exercise Price	Weighted-Average Remaining Contractual Term	Aggregate Intrinsic Value (in millions)(1)
Outstanding at June 1, 2010		20,238,056	$	78.32
	Granted	2,474,603		81.86
	Exercised	(2,043,050)		53.13
	Forfeited	(506,446)		104.38
Outstanding at May 31, 2011		20,163,163	$	81.20	5.7 years	$	327
Exercisable		12,968,690	$	84.74	4.3 years	$	181
Expected to vest		6,618,915	$	74.83	8.2 years	$	135
Available for future grants		11,928,567
(1)	Only presented for options with market value at May 31, 2011 in excess of the exercise price of the option.

Schedule of Vested and Unvested Restricted Stock

		Restricted Stock
		Shares	Weighted-Average Grant Date Fair Value
Unvested at June 1, 2010		637,296	$	74.02
	Granted	235,998		78.74
	Vested	(234,716)		81.11
	Forfeited	(12,198)		70.91
Unvested at May 31, 2011		626,380	$	73.20

Schedule of Stock Option Vesting

	Stock Options
	Vested during the year	Fair value (in millions)
2009	2,414,815	$	64
2010	2,296,211		63
2011	2,721,602		67

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Computation of Earnings Per Share (Tables)

12 Months Ended

May 31, 2011

Computation Of Earnings Per Share (Tables) Abstract

Schedule of basic and diluted earnings per common share

		2011		2010		2009
Basic earnings per common share:
Net earnings allocable to common shares(1)		$	1,449	$	1,182	$	97
Weighted-average common shares			315		312		311
Basic earnings per common share		$	4.61	$	3.78	$	0.31
Diluted earnings per common share:
Net earnings allocable to common shares(1)		$	1,449	$	1,182	$	97
Weighted-average common shares			315		312		311
Dilutive effect of share-based awards			2		2		1
Weighted-average diluted shares			317		314		312
Diluted earnings per common share		$	4.57	$	3.76	$	0.31
Anti-dilutive options excluded from diluted
	earnings per common share		9.3		11.5		12.6
(1)	Net earnings available to participating securities were immaterial in all periods presented.

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Income Taxes (Tables)

12 Months Ended

May 31, 2011

Income Taxes (Tables) Abstract

Schedule of Components of the Provision for Income Taxes

			2011		2010		2009
Current provision (benefit)
	Domestic:
		Federal	$	79	$	36	$	(35)
		State and local		48		54		18
	Foreign			198		207		214
				325		297		197
Deferred provision (benefit)
	Domestic:
		Federal		485		408		327
		State and local		12		15		48
	Foreign			(9)		(10)		7
				488		413		382
			$	813	$	710	$	579

Schedule of Reconciliation of the Statutory Federal Income Tax Rate to the Effective Income Tax Rate

			2011		2010		2009
Statutory U.S. income tax rate			35.0	%	35.0	%	35.0	%
Increase resulting from:
	Goodwill impairment		-		-		48.0
	State and local income taxes,
		net of federal benefit	1.7		2.4		1.9
	Other, net		(0.8)		0.1		0.7
Effective tax rate			35.9	%	37.5	%	85.6	%

Schedule of Significant Components of Deferred Tax Assets and Liabilities

		2011				2010
		Deferred Tax Assets		Deferred Tax Liabilities		Deferred Tax Assets		Deferred Tax Liabilities
Property, equipment,
	leases and intangibles	$	274	$	2,675	$	377	$	2,157
Employee benefits			1,016		34		783		36
Self-insurance accruals			519		-		416		-
Other			422		269		490		238
Net operating loss/credit
	carryforwards		172		-		142		-
Valuation allowances			(151)		-		(139)		-
		$	2,252	$	2,978	$	2,069	$	2,431

Schedule of Net Deferred Tax Liabilities

	2011		2010
Current deferred tax asset	$	610	$	529
Noncurrent deferred tax liability		(1,336)		(891)
	$	(726)	$	(362)

Reconciliation of Beginning and Ending Amount of Unrecognized Tax Benefits

		2011		2010		2009
Balance at beginning of year		$	82	$	72	$	88
	Increases for tax positions taken in the current year		2		3		7
	Increases for tax positions taken in prior years		6		14		10
	Decreases for tax positions taken in prior years		(10)		(4)		(30)
	Settlements		(11)		(3)		(3)
Balance at end of year		$	69	$	82	$	72

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Retirement Plans (Tables)

12 Months Ended

May 31, 2011

Retirement Plan (Tables) Abstract

Schedule of Retirement Plan Costs

	2011		2010		2009
U.S. domestic and international pension plans	$	543	$	308	$	177
U.S. domestic and international defined contribution plans		257		136		237
Postretirement healthcare plans		60		42		57
	$	860	$	486	$	471

Schedule of Weighted-Average Actuarial Assumptions for Primary U.S. Retirement Plans

Weighted-average actuarial assumptions for our primary U.S. retirement plans, which represent substantially all of our PBO and accumulated postretirement benefit obligation ("APBO"), are as follows:
		Pension Plans						Postretirement Healthcare Plans
		2011		2010		2009		2011		2010		2009
Discount rate used to determine benefit obligation		5.76	%	6.37	%	7.68	%	5.67	%	6.11	%	7.27	%
Discount rate used to determine net periodic benefit cost		6.37		7.68		7.15		6.11		7.27		7.13
Rate of increase in future compensation levels
	used to determine benefit obligation	4.58		4.63		4.42		-		-		-
Rate of increase in future compensation levels
	used to determine net periodic benefit cost	4.63		4.42		4.49		-		-		-
Expected long-term rate of return on assets		8.00		8.00		8.50		-		-		-

Schedule of Plan Assets at Measurement Date

		Plan Assets at Measurement Date
		2011
								Quoted Prices in Active Markets		Other Observable Inputs		Unobservable Inputs
Asset Class		Fair Value		Actual %		Target %		Level 1		Level 2		Level 3
Cash and cash equivalents		$	409	3	%	1	%	$	107	$	302
Domestic equities
	U.S. large cap equity		4,280	27		24			26		4,254
	U.S. SMID cap equity		1,481	10		9			1,481
International equities			2,013	13		12			1,702		311
Private equities			403	3		5						$	403
Fixed income securities						49
	Corporate		3,794	24							3,794
	U.S. government		3,135	20							3,135
	Mortgage backed and other		66	-							66
Other			(63)	-		-			(59)		(4)
		$	15,518	100	%	100	%	$	3,257	$	11,858	$	403
		2010
								Quoted Prices in Active Markets		Other Observable Inputs		Unobservable Inputs
Asset Class		Fair Value		Actual %		Target %		Level 1		Level 2		Level 3
Cash and cash equivalents		$	427	3	%	1	%	$	145	$	282
Domestic equities
	U.S. large cap equity		3,374	26		24					3,374
	U.S. SMID cap equity		1,195	9		9			1,195
International equities			1,502	12		12			1,262		240
Private equities			399	3		5						$	399
Fixed income securities						49
	Corporate		3,546	27							3,546
	U.S. government		2,537	19							2,537
	Mortgage backed and other		122	1							122
Other			(47)	-		-			(46)		(1)
		$	13,055	100	%	100	%	$	2,556	$	10,100	$	399

Schedule of Change in Fair Value of Level 3 Assets

Beginning balance May 31, 2009		$	341
Actual return on plan assets:
	Assets held at May 31, 2010		38
	Assets sold during the year		24
Purchases, sales and settlements			(4)
Balance at May 31, 2010			399
Actual return on plan assets:
	Assets held at May 31, 2011		27
	Assets sold during the year		36
Purchases, sales and settlements			(59)
Ending balance May 31, 2011		$	403

Schedule of Changes in the Pension and Postretirement Healthcare Plans' Benefit Obligation and Fair Value of Assets and Funded Status

			Pension Plans				Postretirement Healthcare Plans
			2011		2010		2011		2010
Accumulated Benefit Obligation ("ABO")			$	16,806	$	14,041
Changes in Projected Benefit Obligation ("PBO") and
	Accumulated Postretirement Benefit Obligation ("APBO")
PBO/APBO at the beginning of year			$	14,484	$	11,050	$	565	$	433
	Service cost			521		417		31		24
	Interest cost			900		823		34		30
	Actuarial loss			1,875		2,607		44		102
	Benefits paid			(468)		(391)		(48)		(45)
	Other			60		(22)		22		21
PBO/APBO at the end of year			$	17,372	$	14,484	$	648	$	565
Change in Plan Assets
Fair value of plan assets at the beginning of year			$	13,295	$	10,812	$	-	$	-
	Actual return on plan assets			2,425		1,994		-		-
	Company contributions			557		900		26		24
	Benefits paid			(468)		(391)		(48)		(45)
	Other			32		(20)		22		21
Fair value of plan assets at the end of year			$	15,841	$	13,295	$	-	$	-
Funded Status of the Plans			$	(1,531)	$	(1,189)	$	(648)	$	(565)
Amount Recognized in the Balance Sheet at May 31:
	Current pension, postretirement healthcare and other
		benefit obligations	$	(33)	$	(30)	$	(31)	$	(28)
	Noncurrent pension, postretirement healthcare and other
		benefit obligations		(1,498)		(1,159)		(617)		(537)
Net amount recognized			$	(1,531)	$	(1,189)	$	(648)	$	(565)
Amounts Recognized in AOCI and not yet reflected in
	Net Periodic Benefit Cost:
		Net actuarial loss (gain)	$	5,386	$	5,157	$	(85)	$	(134)
		Prior service (credit) cost and other		(993)		(1,106)		2		2
Total			$	4,393	$	4,051	$	(83)	$	(132)
Amounts Recognized in AOCI and not yet reflected in
	Net Periodic Benefit Cost expected to be amortized in
	next year's Net Periodic Benefit Cost:
		Net actuarial loss (gain)	$	307	$	284	$	(1)	$	(5)
		Prior service credit and other		(112)		(113)		-		-
Total			$	195	$	171	$	(1)	$	(5)

Schedule of Components of Pension Plans

Our pension plans included the following components at May 31, 2011 and 2010 (in millions):
		ABO		PBO		Fair Value of Plan Assets		Funded Status
2011
	Qualified	$	16,024	$	16,445	$	15,518	$	(927)
	Nonqualified		335		339		-		(339)
	International Plans		447		588		323		(265)
	Total	$	16,806	$	17,372	$	15,841	$	(1,531)
2010
	Qualified	$	13,311	$	13,635	$	13,055	$	(580)
	Nonqualified		346		348		-		(348)
	International Plans		384		501		240		(261)
	Total	$	14,041	$	14,484	$	13,295	$	(1,189)

Schedule of Fair Value of Plan Assets for Pension Plans with an Obligation in Excess of Plan Assets

		PBO Exceeds the Fair Value of Plan Assets
		2011		2010
Pension Benefits
	Fair value of plan assets	$	15,815	$	13,295
	PBO		(17,346)		(14,484)
	Net funded status	$	(1,531)	$	(1,189)
		ABO Exceeds the Fair Value of Plan Assets
		2011		2010
Pension Benefits
	ABO(1)	$	(16,530)	$	(14,014)
	Fair value of plan assets		15,538		13,263
	PBO		(17,014)		(14,441)
	Net funded status	$	(1,476)	$	(1,178)

(1)ABO not used in determination of funded status.

Schedule of Pension Plans Contributions

	2011		2010
Required	$	359	$	353
Voluntary		121		495
	$	480	$	848

Schedule of Net Periodic Benefit Cost

	Pension Plans						Postretirement Healthcare Plans
	2011		2010		2009		2011		2010		2009
Service cost	$	521	$	417	$	499	$	31	$	24	$	31
Interest cost		900		823		798		34		30		33
Expected return on plan assets		(1,062)		(955)		(1,059)		-		-		-
Recognized actuarial losses (gains) and other		184		23		(61)		(5)		(12)		(7)
Net periodic benefit cost	$	543	$	308	$	177	$	60	$	42	$	57
The increase in pension costs from 2010 to 2011 was due to a significantly lower discount rate used to measure our benefit obligations at our May 31, 2010 measurement date.

Schedule of Amounts Recognized in Other Comprehensive Income for All Plans

Amounts recognized in OCI for all plans were as follows (in millions):
			2011								2010
			Pension Plans				Postretirement Healthcare Plans				Pension Plans				Postretirement Healthcare Plans
			Gross Amount		Net of Tax Amount		Gross Amount		Net of Tax Amount		Gross Amount		Net of Tax Amount		Gross Amount		Net of Tax Amount
Net loss and other
	arising during period		$	511	$	321	$	44	$	26	$	1,562	$	986	$	102	$	59
Loss from settlements
	and curtailments			(13)		(8)		-		-		-		-		-		-
Amortizations:
	Prior services credit			113		71		-		-		113		99		-		-
	Actuarial (losses) gains
		and other		(284)		(178)		5		3		(130)		(114)		12		12
Total recognized in OCI			$	327	$	206	$	49	$	29	$	1,545	$	971	$	114	$	71

Schedule of Expected Future Benefit Payments

Benefit payments, which reflect expected future service, are expected to be paid as follows for the years ending May 31 (millions):
	Pension Plans		Postretirement Healthcare Plans
2012	$	562	$	31
2013		633		31
2014		694		33
2015		754		35
2016		843		37
2017-2021		5,667		225

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Business Segment Information (Tables)

12 Months Ended

May 31, 2011

Business Segment Information (Tables) Abstract

Schedule of Segment Information

		FedEx Express Segment(1)		FedEx Ground Segment		FedEx Freight Segment(2)		FedEx Services Segment(3)		Other and Eliminations		Consolidated Total
Revenues
2011		$	24,581	$	8,485	$	4,911	$	1,684	$	(357)	$	39,304
2010			21,555		7,439		4,321		1,770		(351)		34,734
2009			22,364		7,047		4,415		1,977		(306)		35,497
Depreciation and amortization
2011		$	1,059	$	337	$	205	$	371	$	1	$	1,973
2010			1,016		334		198		408		2		1,958
2009			961		337		224		451		2		1,975
Operating income (loss)
2011		$	1,228	$	1,325	$	(175)	$	-	$	-	$	2,378
2010			1,127		1,024		(153)		-		-		1,998
2009			794		807		(44)		(810)		-		747
Segment assets(4)
2011		$	16,463	$	5,048	$	2,664	$	4,278	$	(1,068)	$	27,385
2010			14,819		4,118		2,786		4,079		(900)		24,902
2009			13,483		3,291		3,044		3,240		1,186		24,244
(1)	FedEx Express segment 2011 operating expenses include a $66 million legal reserve associated with the ATA Airlines lawsuit, and 2009 operating expenses include a charge of $260 million primarily for aircraft-related asset impairments.
(2)	FedEx Freight segment 2011 operating expenses include $133 million in costs associated with the combination of our FedEx Freight and FedEx National LTL operations, effective January 30, 2011, and 2009 operating expenses include a charge of $100 million primarily for impairment charges associated with goodwill related to the FedEx National LTL acquisition.
(3)	FedEx Services segment 2009 operating expenses include a charge of $810 million for impairment of goodwill related to the Kinko's (now known as FedEx Office) acquisition. The normal, ongoing net operating costs of the FedEx Services segment are allocated back to the transportation segments.
(4)	Segment assets include intercompany receivables.

Schedule of Segment Capital Expenditures

The following table provides a reconciliation of reportable segment capital expenditures to consolidated totals for the years ended May 31 (in millions):
	FedEx Express Segment		FedEx Ground Segment		FedEx Freight Segment		FedEx Services Segment		Other		Consolidated Total
2011	$	2,467	$	426	$	153	$	387	$	1	$	3,434
2010		1,864		400		212		340		-		2,816
2009		1,348		636		240		235		-		2,459

Schedule of Revenue by Service Type and Geographical Information

The following table presents revenue by service type and geographic information for the years ended or as of May 31 (in millions):
REVENUE BY SERVICE TYPE
				2011		2010		2009
FedEx Express segment:
	Package:
		U.S. overnight box		$	6,128	$	5,602	$	6,074
		U.S. overnight envelope			1,736		1,640		1,855
		U.S. deferred			2,805		2,589		2,789
			Total domestic package revenue		10,669		9,831		10,718
		International Priority (IP)			8,228		7,087		6,978
		International domestic(1)			653		578		565
			Total package revenue		19,550		17,496		18,261
	Freight:
		U.S.			2,188		1,980		2,165
		International priority			1,722		1,303		1,104
		International airfreight			283		251		369
			Total freight revenue		4,193		3,534		3,638
	Other(2)				838		525		465
			Total FedEx Express segment		24,581		21,555		22,364
FedEx Ground segment					8,485		7,439		7,047
FedEx Freight segment					4,911		4,321		4,415
FedEx Services segment					1,684		1,770		1,977
Other and eliminations					(357)		(351)		(306)
				$	39,304	$	34,734	$	35,497
GEOGRAPHICAL INFORMATION(3)
Revenues:
	U.S.			$	27,461	$	24,852	$	25,819
	International:
		FedEx Express segment			11,437		9,547		9,363
		FedEx Ground segment			177		140		124
		FedEx Freight segment			84		60		39
		FedEx Services segment			145		135		152
			Total international revenue		11,843		9,882		9,678
				$	39,304	$	34,734	$	35,497
Noncurrent assets:
	U.S.			$	17,235	$	16,089	$	15,615
	International				1,865		1,529		1,513
				$	19,100	$	17,618	$	17,128
(1)		International domestic revenues include our international intra-country domestic express operations.
(2)		Other revenues includes FedEx Trade Networks and, beginning in the second quarter of 2010, FedEx SupplyChain Systems.
(3)		International revenue includes shipments that either originate in or are destined to locations outside the United States. Noncurrent assets include property and equipment, goodwill and other long-term assets. Our flight equipment registered in the U.S. is included as U.S. assets; however, many of our aircraft operate internationally.

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Consolidated Statements of Income (USD $) In Millions, except Per Share data	12 Months Ended
	May 31, 2011	May 31, 2010	May 31, 2009
Consolidated Statements of Income
REVENUES	$ 39,304	$ 34,734	$ 35,497
OPERATING EXPENSES:
Salaries and employee benefits	15,276	14,027	13,767
Purchased transportation	5,674	4,728	4,534
Rentals and landing fees	2,462	2,359	2,429
Depreciation and amortization	1,973	1,958	1,975
Fuel	4,151	3,106	3,811
Maintenance and repairs	1,979	1,715	1,898
Impairment and other charges	89	18	1,204
Other	5,322	4,825	5,132
OPERATING EXPENSES	36,926	32,736	34,750
OPERATING INCOME	2,378	1,998	747
OTHER INCOME (EXPENSE):
Interest expense	(86)	(79)	(85)
Interest income	9	8	26
Other, net	(36)	(33)	(11)
OTHER INCOME (EXPENSE)	(113)	(104)	(70)
INCOME BEFORE INCOME TAXES	2,265	1,894	677
PROVISION FOR INCOME TAXES	813	710	579
NET INCOME	$ 1,452	$ 1,184	$ 98
EARNINGS PER COMMON SHARE
Basic	$ 4.61	$ 3.78	$ 0.31
Diluted	$ 4.57	$ 3.76	$ 0.31

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Supplemental Cash Flow Information (Tables)

12 Months Ended

May 31, 2011

Supplemental Cash Flow (Tables) Abstract

Supplemental Cash Flow Table

		2011		2010		2009
Cash payments for:
	Interest (net of capitalized interest)	$	93	$	88	$	61
	Income taxes	$	493	$	322	$	517
	Income tax refunds received		(106)		(279)		(8)
	Cash tax payments, net	$	387	$	43	$	509

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Commitments (Tables)

12 Months Ended

May 31, 2011

Commitments (Tables) Abstract

Schedule of Purchase Commitments

		Aircraft and		Facilities
		Aircraft Related		and Other(1)		Total
2012		$	1,480	$	918	$	2,398
2013			1,086		105		1,191
2014			781		43		824
2015			569		30		599
2016			584		11		595
Thereafter			1,470		132		1,602
(1)	Primarily vehicles, facilities, advertising and promotions contracts.

Schedule of Aircraft Purchase Commitments

	B757	B777F	Total
2012	16	7	23
2013	4	6	10
2014	-	7	7
2015	-	3	3
2016	-	3	3
Thereafter	-	7	7
Total	20	33	53

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Summary of Quarterly Operating Results (Unaudited) (Tables)

12 Months Ended

May 31, 2011

Quarterly Operating Results (Tables) Abstract

Summary of Quarterly Operating Results (Unaudited)

		First		Second		Third		Fourth
(in millions, except per share amounts)		Quarter		Quarter		Quarter		Quarter
2011
Revenues		$	9,457	$	9,632	$	9,663	$	10,552
Operating income			628		469		393		888
Net income			380		283		231		558
Basic earnings per common share(1)			1.21		0.90		0.73		1.76
Diluted earnings per common share			1.20		0.89		0.73		1.75
2010
Revenues		$	8,009	$	8,596	$	8,701	$	9,428
Operating income			315		571		416		696
Net income			181		345		239		419
Basic earnings per common share			0.58		1.10		0.76		1.34
Diluted earnings per common share(1)			0.58		1.10		0.76		1.33
(1)	The sum of the quarterly earnings per share may not equal annual amounts due to differences in the weighted-average number of shares outstanding during the respective period.

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Condensed Consolidating Financial Statements (Tables)

12 Months Ended

May 31, 2011

Condensed Consolidating Financial Statements (Tables) Abstract

Condensed Consolidating Balance Sheets

CONDENSED CONSOLIDATING BALANCE SHEETS
May 31, 2011
						Guarantor		Non-guarantor
				Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
ASSETS
CURRENT ASSETS
	Cash and cash equivalents			$	1,589	$	279	$	546	$	(86)	$	2,328
	Receivables, less allowances				-		3,696		912		(27)		4,581
	Spare parts, supplies, fuel, prepaid expenses
		and other, less allowances			77		645		44		-		766
	Deferred income taxes				-		598		12		-		610
			Total current assets		1,666		5,218		1,514		(113)		8,285
PROPERTY AND EQUIPMENT, AT COST					24		31,916		1,746		-		33,686
	Less accumulated depreciation and amortization				18		17,071		1,054		-		18,143
			Net property and equipment		6		14,845		692		-		15,543
INTERCOMPANY RECEIVABLE					-		-		1,317		(1,317)		-
GOODWILL					-		1,564		762		-		2,326
INVESTMENT IN SUBSIDIARIES					15,404		2,705		-		(18,109)		-
OTHER ASSETS					1,652		1,039		63		(1,523)		1,231
				$	18,728	$	25,371	$	4,348	$	(21,062)	$	27,385
LIABILITIES AND STOCKHOLDERS' INVESTMENT
CURRENT LIABILITIES
	Current portion of long-term debt			$	-	$	18	$	-	$	-	$	18
	Accrued salaries and employee benefits				50		1,071		147		-		1,268
	Accounts payable				-		1,385		430		(113)		1,702
	Accrued expenses				198		1,563		133		-		1,894
		Total current liabilities			248		4,037		710		(113)		4,882
LONG-TERM DEBT, LESS CURRENT PORTION					1,000		667		-		-		1,667
INTERCOMPANY PAYABLE					1,095		222		-		(1,317)		-
OTHER LONG-TERM LIABILITIES
	Deferred income taxes				-		2,842		17		(1,523)		1,336
	Other liabilities				1,165		3,001		114		-		4,280
		Total other long-term liabilities			1,165		5,843		131		(1,523)		5,616
STOCKHOLDERS' INVESTMENT					15,220		14,602		3,507		(18,109)		15,220
				$	18,728	$	25,371	$	4,348	$	(21,062)	$	27,385

CONDENSED CONSOLIDATING BALANCE SHEETS
May 31, 2010
						Guarantor		Non-guarantor
				Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
ASSETS
CURRENT ASSETS
	Cash and cash equivalents			$	1,310	$	258	$	443	$	(59)	$	1,952
	Receivables, less allowances				1		3,425		782		(45)		4,163
	Spare parts, supplies, fuel, prepaid expenses
		and other, less allowances			5		581		54		-		640
	Deferred income taxes				-		492		37		-		529
			Total current assets		1,316		4,756		1,316		(104)		7,284
PROPERTY AND EQUIPMENT, AT COST					23		29,193		2,086		-		31,302
	Less accumulated depreciation and amortization				18		15,801		1,098		-		16,917
			Net property and equipment		5		13,392		988		-		14,385
INTERCOMPANY RECEIVABLE					-		-		1,132		(1,132)		-
GOODWILL					-		1,551		649		-		2,200
INVESTMENT IN SUBSIDIARIES					13,850		2,619		-		(16,469)		-
OTHER ASSETS					1,527		801		99		(1,394)		1,033
				$	16,698	$	23,119	$	4,184	$	(19,099)	$	24,902
LIABILITIES AND STOCKHOLDERS' INVESTMENT
CURRENT LIABILITIES
	Current portion of long-term debt			$	250	$	12	$	-	$	-	$	262
	Accrued salaries and employee benefits				36		955		155		-		1,146
	Accounts payable				8		1,196		422		(104)		1,522
	Accrued expenses				47		1,488		180		-		1,715
		Total current liabilities			341		3,651		757		(104)		4,645
LONG-TERM DEBT, LESS CURRENT PORTION					1,000		668		-		-		1,668
INTERCOMPANY PAYABLE					702		430		-		(1,132)		-
OTHER LONG-TERM LIABILITIES
	Deferred income taxes				-		2,253		32		(1,394)		891
	Other liabilities				844		2,921		122		-		3,887
		Total other long-term liabilities			844		5,174		154		(1,394)		4,778
STOCKHOLDERS' INVESTMENT					13,811		13,196		3,273		(16,469)		13,811
				$	16,698	$	23,119	$	4,184	$	(19,099)	$	24,902

Condensed Consolidating Statements of Income

CONDENSED CONSOLIDATING STATEMENTS OF INCOME
Year Ended May 31, 2011
				Guarantor		Non-guarantor
		Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
REVENUES		$	-	$	33,124	$	6,498	$	(318)	$	39,304
OPERATING EXPENSES:
	Salaries and employee benefits		109		13,206		1,961		-		15,276
	Purchased transportation		-		4,034		1,745		(105)		5,674
	Rentals and landing fees		4		2,209		253		(4)		2,462
	Depreciation and amortization		1		1,784		188		-		1,973
	Fuel		-		4,003		148		-		4,151
	Maintenance and repairs		1		1,862		116		-		1,979
	Impairment and other charges		-		28		61		-		89
	Intercompany charges, net		(222)		(317)		539		-		-
	Other		107		4,392		1,032		(209)		5,322
			-		31,201		6,043		(318)		36,926
OPERATING INCOME			-		1,923		455		-		2,378
OTHER INCOME (EXPENSE):
	Equity in earnings of subsidiaries		1,452		200		-		(1,652)		-
	Interest, net		(88)		13		(2)		-		(77)
	Intercompany charges, net		104		(135)		31		-		-
	Other, net		(16)		(14)		(6)		-		(36)
INCOME BEFORE INCOME TAXES			1,452		1,987		478		(1,652)		2,265
	Provision for income taxes		-		677		136		-		813
NET INCOME		$	1,452	$	1,310	$	342	$	(1,652)	$	1,452
CONDENSED CONSOLIDATING STATEMENTS OF INCOME
Year Ended May 31, 2010
				Guarantor		Non-guarantor
		Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
REVENUES		$	-	$	29,360	$	5,700	$	(326)	$	34,734
OPERATING EXPENSES:
	Salaries and employee benefits		91		12,026		1,910		-		14,027
	Purchased transportation		-		3,424		1,392		(88)		4,728
	Rentals and landing fees		4		2,118		240		(3)		2,359
	Depreciation and amortization		1		1,751		206		-		1,958
	Fuel		-		2,946		160		-		3,106
	Maintenance and repairs		1		1,589		125		-		1,715
	Impairment and other charges		-		-		18		-		18
	Intercompany charges, net		(202)		(109)		311		-		-
	Other		105		3,950		1,005		(235)		4,825
			-		27,695		5,367		(326)		32,736
OPERATING INCOME			-		1,665		333		-		1,998
OTHER INCOME (EXPENSE):
	Equity in earnings of subsidiaries		1,184		161		-		(1,345)		-
	Interest, net		(100)		41		(12)		-		(71)
	Intercompany charges, net		114		(147)		33		-		-
	Other, net		(14)		(18)		(1)		-		(33)
INCOME BEFORE INCOME TAXES			1,184		1,702		353		(1,345)		1,894
	Provision for income taxes		-		625		85		-		710
NET INCOME		$	1,184	$	1,077	$	268	$	(1,345)	$	1,184

CONDENSED CONSOLIDATING STATEMENTS OF INCOME
Year Ended May 31, 2009
				Guarantor		Non-guarantor
		Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
REVENUES		$	-	$	29,923	$	5,851	$	(277)	$	35,497
OPERATING EXPENSES:
	Salaries and employee benefits		82		11,483		2,202		-		13,767
	Purchased transportation		-		3,362		1,211		(39)		4,534
	Rentals and landing fees		4		2,134		296		(5)		2,429
	Depreciation and amortization		2		1,706		267		-		1,975
	Fuel		-		3,554		257		-		3,811
	Maintenance and repairs		1		1,755		142		-		1,898
	Impairment and other charges		-		1,098		106		-		1,204
	Intercompany charges, net		(193)		81		112		-		-
	Other		104		4,198		1,063		(233)		5,132
			-		29,371		5,656		(277)		34,750
OPERATING INCOME			-		552		195		-		747
OTHER INCOME (EXPENSE):
	Equity in earnings of subsidiaries		98		103		-		(201)		-
	Interest, net		(73)		28		(14)		-		(59)
	Intercompany charges, net		90		(118)		28		-		-
	Other, net		(17)		(3)		9		-		(11)
INCOME BEFORE INCOME TAXES			98		562		218		(201)		677
	Provision for income taxes		-		514		65		-		579
NET INCOME		$	98	$	48	$	153	$	(201)	$	98

Condensed Consolidating Statements of Cash Flows

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
Year Ended May 31, 2011
				Guarantor		Non-guarantor
		Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		$	25	$	3,978	$	65	$	(27)	$	4,041
INVESTING ACTIVITIES
	Capital expenditures		(1)		(3,263)		(170)		-		(3,434)
	Business acquisition, net of cash acquired		-		(96)		-		-		(96)
	Proceeds from asset dispositions and other		-		110		1		-		111
CASH USED IN INVESTING ACTIVITIES			(1)		(3,249)		(169)		-		(3,419)
FINANCING ACTIVITIES
	Net transfers from (to) Parent		530		(994)		464		-		-
	Payment on loan between subsidiaries		-		235		(235)		-		-
	Intercompany dividends		-		61		(61)		-		-
	Principal payments on debt		(250)		(12)		-		-		(262)
	Proceeds from stock issuances		108		-		-		-		108
	Excess tax benefit on the exercise of stock options		23		-		-		-		23
	Dividends paid		(151)		-		-		-		(151)
	Other, net		(5)		(9)		9		-		(5)
CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES			255		(719)		177		-		(287)
Effect of exchange rate changes on cash			-		11		30		-		41
Net increase (decrease) in cash and cash equivalents			279		21		103		(27)		376
Cash and cash equivalents at beginning of period			1,310		258		443		(59)		1,952
Cash and cash equivalents at end of period		$	1,589	$	279	$	546	$	(86)	$	2,328
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
Year Ended May 31, 2010
				Guarantor		Non-guarantor
		Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		$	(450)	$	2,942	$	653	$	(7)	$	3,138
INVESTING ACTIVITIES
	Capital expenditures		-		(2,661)		(155)		-		(2,816)
	Proceeds from asset dispositions and other		-		38		(3)		-		35
CASH USED IN INVESTING ACTIVITIES			-		(2,623)		(158)		-		(2,781)
FINANCING ACTIVITIES
	Net transfers from (to) Parent		531		(397)		(134)		-		-
	Payment on loan between subsidiaries		-		72		(72)		-		-
	Intercompany dividends		-		158		(158)		-		-
	Principal payments on debt		(500)		(153)		-		-		(653)
	Proceeds from stock issuances		94		-		-		-		94
	Excess tax benefit on the exercise of stock options		25		-		-		-		25
	Dividends paid		(138)		-		-		-		(138)
	Other, net		(20)		(5)		5		-		(20)
CASH USED IN FINANCING ACTIVITIES			(8)		(325)		(359)		-		(692)
Effect of exchange rate changes on cash			-		(8)		3		-		(5)
Net (decrease) increase in cash and cash equivalents			(458)		(14)		139		(7)		(340)
Cash and cash equivalents at beginning of period			1,768		272		304		(52)		2,292
Cash and cash equivalents at end of period		$	1,310	$	258	$	443	$	(59)	$	1,952

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
Year Ended May 31, 2009
				Guarantor		Non-guarantor
		Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		$	(924)	$	3,156	$	573	$	(52)	$	2,753
INVESTING ACTIVITIES
	Capital expenditures		-		(2,248)		(211)		-		(2,459)
	Proceeds from asset dispositions and other		-		69		7		-		76
CASH USED IN INVESTING ACTIVITIES			-		(2,179)		(204)		-		(2,383)
FINANCING ACTIVITIES
	Net transfers from (to) Parent		1,173		(1,066)		(107)		-		-
	Payment on loan from Parent		17		-		(17)		-		-
	Payment on loan between subsidiaries		-		36		(36)		-		-
	Intercompany dividends		-		165		(165)		-		-
	Principal payments on debt		(500)		-		(1)		-		(501)
	Proceeds from debt issuance		1,000		-		-		-		1,000
	Proceeds from stock issuances		41		-		-		-		41
	Excess tax benefit on the exercise of stock options		4		-		-		-		4
	Dividends paid		(137)		-		-		-		(137)
	Other, net		(7)		-		-		-		(7)
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES			1,591		(865)		(326)		-		400
Effect of exchange rate changes on cash			-		(6)		(11)		-		(17)
Net increase (decrease) in cash and cash equivalents			667		106		32		(52)		753
Cash and cash equivalents at beginning of period			1,101		166		272		-		1,539
Cash and cash equivalents at end of period		$	1,768	$	272	$	304	$	(52)	$	2,292

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Valuation and Qualifying Accounts (Tables)

12 Months Ended

May 31, 2011

Valuation And Qualifying Accounts (Tables) Abstract

Schedule of Valuation and Qualifying Accounts

										SCHEDULE II
FEDEX CORPORATION
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED MAY 31, 2011, 2010, AND 2009
(IN MILLIONS)
			ADDITIONS
	BALANCE				CHARGED						BALANCE
	AT		CHARGED		TO						AT
	BEGINNING		TO		OTHER						END OF
DESCRIPTION	OF YEAR		EXPENSES		ACCOUNTS			DEDUCTIONS			YEAR
Accounts Receivable Reserves:
Allowance for Doubtful Accounts
2011...........................….......…....…	$	93	$	152	$	-		$	148	(a)	$	97
2010...........................….......…....…		114		124		-			145	(a)		93
2009...........................….......…....…		88		181		-			155	(a)		114
Allowance for Revenue Adjustments
2011...........................….......…....…	$	73	$	-	$	532	(b)	$	520	(c)	$	85
2010...........................….......…....…		82		-		430	(b)		439	(c)		73
2009...........................….......…....…		70		-		466	(b)		454	(c)		82
Inventory Valuation Allowance:
2011...........................….......…....…	$	170	$	13	$	-		$	14		$	169
2010...........................….......…....…		175		12		-			17			170
2009...........................….......…....…		163		15		-			3			175
(a) Uncollectible accounts written off, net of recoveries.
(b) Principally charged against revenue.
(c) Service failures, rebills and other.

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Description of Business and Summary of Significant Accounting Policies (Details) (USD $)	12 Months Ended
	May 31, 2011	May 31, 2010	May 31, 2009
Advertising Abstract
Advertising and promotion expenses	$ 375,000,000	$ 374,000,000	$ 379,000,000
Capitalized Interest Abstract
Interest Costs Capitalized	71,000,000	80,000,000	71,000,000
Dividends Declared Abstract
Dividends Payable Amount Per Share	$ 0.13
Finite Lived Intangible Assets Abstract
Intangible assets amortization periods	3 to 12 years
Foreign Currency Translation Abstract
Cumulative net foreign currency translation gains in accumulated other comprehensive income	156,000,000	30,000,000	56,000,000
Impairment Of Long Lived Assets Abstract
Asset impairments	29,000,000		202,000,000
Pension And Postretirement Healthcare Plans Equity Impact Abstract
Benefit plans adjustments at year-end measurement date, net of tax	350,000,000	1,000,000,000
Property And Equipment Abstract
Net property and equipment	15,543,000,000	14,385,000,000
Depreciation expense, excluding gains and losses on sales of property and equipment	1,900,000,000	1,900,000,000	1,800,000,000
Depreciable Life Range For Majority Of Aircraft Costs	15 to 18 years
Wide Body Aircraft And Related Equipment [Member]
Property And Equipment Abstract
Depreciable lives range	15 to 30 years
Net property and equipment	6,536,000,000	5,897,000,000
Narrow Body And Feeder Aircraft And Related Equipment [Member]
Property And Equipment Abstract
Depreciable lives range	5 to 18 years
Net property and equipment	1,517,000,000	1,049,000,000
Package Handling And Ground Support Equipment [Member]
Property And Equipment Abstract
Depreciable lives range	3 to 30 years
Net property and equipment	1,985,000,000	1,895,000,000
Vehicles Property [Member]
Property And Equipment Abstract
Depreciable lives range	3 to 15 years
Net property and equipment	1,076,000,000	1,095,000,000
Computer And Electronic Equipment [Member]
Property And Equipment Abstract
Depreciable lives range	2 to 10 years
Net property and equipment	776,000,000	649,000,000
Facilities And Other Property [Member]
Property And Equipment Abstract
Depreciable lives range	2 to 40 years
Net property and equipment	3,653,000,000	3,800,000,000
FedEx Freight Segment [Member]
Business Realignment Information Abstract
Severance	40,000,000
Lease Terminations	20,000,000
Asset impairments	29,000,000
Impairment and other charges	89,000,000
Other program costs	44,000,000
Total program costs	133,000,000
Accelerated Depreciation Expense	15,000,000
Cash received from FedEx Freight asset sales	$ 88,000,000

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Business Combinations (Details) (USD $) In Millions	May 31, 2011
Business Acquisition Cost Of Acquired Entity Abstract
Acquisition Price	$ 96

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Goodwill and Other Intangible Assets (Details 1) (USD $) In Millions	12 Months Ended
	May 31, 2011		May 31, 2010		May 31, 2009
Net Goodwill Detail
Gross Goodwill at May 31					$ 3,521
Accumulated goodwill impairment charges	(1,310)				(1,292)
Net Goodwill at May 31					2,229
Goodwill Roll Forward
Beginning Goodwill at May 31	2,200		2,229
Goodwill acquired	89	[1]
Impairment charge			(18)
Purchase adjustments and other	37	[2]	(11)	[2]
Ending Goodwill at May 31	2,326		2,200
FedEx Express Segment [Member]
Net Goodwill Detail
Gross Goodwill at May 31					1,090
Net Goodwill at May 31					1,090
Goodwill Roll Forward
Beginning Goodwill at May 31	1,145		1,090
Goodwill acquired	89	[1]
Purchase adjustments and other	38	[2]	(11)	[2]
Transfer between segments			66	[3]
Ending Goodwill at May 31	1,272		1,145
FedEx Ground Segment [Member]
Net Goodwill Detail
Gross Goodwill at May 31					90
Net Goodwill at May 31					90
Goodwill Roll Forward
Ending Goodwill at May 31	90		90		90
FedEx Freight Segment [Member]
Net Goodwill Detail
Gross Goodwill at May 31					802
Accumulated goodwill impairment charges	(133)				(115)
Net Goodwill at May 31					687
Goodwill Roll Forward
Beginning Goodwill at May 31	603		687
Impairment charge			(18)		(90)
Purchase adjustments and other	(1)	[2]
Transfer between segments			(66)	[3]
Ending Goodwill at May 31	602		603		687
FedEx Services Segment [Member]
Net Goodwill Detail
Gross Goodwill at May 31					1,539
Accumulated goodwill impairment charges	(1,177)				(1,177)
Net Goodwill at May 31					362
Goodwill Roll Forward
Impairment charge					(810)
Ending Goodwill at May 31	$ 362		$ 362		$ 362

[1] Goodwill acquired in 2011 relates to the acquisition of the Indian logistics, distribution and express businesses of AFL Pvt. Ltd. and its affiliate Unifreight India Pvt. Ltd. See Note 3 for related disclosures.

[2] Primarily currency translation adjustments.

[3] Transfer of goodwill related to the merger of Caribbean Transportation Services into FedEx Express effective June 1, 2009.

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Goodwill and Other Intangible Assets (Details 2) (USD $) In Millions	12 Months Ended
	May 31, 2010	May 31, 2009
Goodwill Impairment Charges Abstract
Goodwill impairment charge	$ 18
FedEx Freight Segment [Member]
Goodwill Impairment Charges Abstract
Goodwill impairment charge	18	90
FedEx Services Segment [Member]
Goodwill Impairment Charges Abstract
Goodwill impairment charge		$ 810

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Goodwill and Other Intangible Assets (Details 3) (USD $) In Millions	12 Months Ended
	May 31, 2011	May 31, 2010	May 31, 2009
Finite Lived Intangible Assets Abstract
Intangible assets amortization expense	$ 32	$ 51	$ 73
Estimated 2012 amortization expense	immaterial
Finite Lived Intangible Assets Line Items
Net Book Value	$ 38	$ 69

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Consolidated Statements of Cash Flows (USD $) In Millions	12 Months Ended
	May 31, 2011	May 31, 2010	May 31, 2009
Operating Activities:
Net income	$ 1,452	$ 1,184	$ 98
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	1,973	1,958	1,975
Provision for uncollectible accounts	152	124	181
Deferred income taxes and other noncash items	669	331	299
Impairment and other charges	29	18	1,103
Stock-based compensation	98	101	99
Changes in assets and liabilities:
Receivables	(400)	(906)	762
Other assets	(114)	276	(196)
Pension assets and liabilities, net	(169)	(611)	(913)
Accounts payable and other liabilities	370	710	(628)
Other, net	(19)	(47)	(27)
Cash provided by operating activities	4,041	3,138	2,753
Investing Activities:
Capital expenditures	(3,434)	(2,816)	(2,459)
Business acquisition, net of cash acquired	(96)
Proceeds from asset dispositions and other	111	35	76
Cash used in investing activities	(3,419)	(2,781)	(2,383)
Financing Activities:
Principal payments on debt	(262)	(653)	(501)
Proceeds from debt issuance			1,000
Proceeds from stock issuances	108	94	41
Excess tax benefit on the exercise of stock options	23	25	4
Dividends paid	(151)	(138)	(137)
Other, net	(5)	(20)	(7)
Cash (used in) provided by financing activities	(287)	(692)	400
Effect of exchange rate changes on cash	41	(5)	(17)
Net increase (decrease) in cash and cash equivalents	376	(340)	753
Cash and cash equivalents at beginning of period	1,952	2,292	1,539
Cash and cash equivalents at end of period	$ 2,328	$ 1,952	$ 2,292

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Selected Current Liabilities (Details) (USD $) In Millions	May 31, 2011	May 31, 2010
Selected Current Liabilities Details Abstract
Salaries	$ 256	$ 230
Employee benefits, including variable compensation	468	386
Compensated absences	544	530
Accrued salaries and employee benefits	1,268	1,146
Self-insurance accruals	696	675
Taxes other than income taxes	357	347
Other	841	693
Accrued expenses	$ 1,894	$ 1,715

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Long-term Debt and Other Financing Arrangements (Details 1) (USD $)	May 31, 2011	May 31, 2010
Debt Instrument Line Items
Long Term Debt	$ 1,539,000,000	$ 1,789,000,000
Capital lease obligations	146,000,000	141,000,000
Total Debt And Capital Lease Obligations	1,685,000,000	1,930,000,000
Less current portion	18,000,000	262,000,000
LONG-TERM DEBT, LESS CURRENT PORTION	1,667,000,000	1,668,000,000
Senior Unsecured Debt Due In 2011 [Member]
Debt Instrument Line Items
Senior unsecured debt		250,000,000
Debt Instrument Interest Rate Stated Percentage	7.25%
Senior Unsecured Debt Due In 2013 [Member]
Debt Instrument Line Items
Senior unsecured debt	300,000,000	300,000,000
Debt Instrument Interest Rate Stated Percentage	9.65%
Senior Unsecured Debt Due 2014 [Member]
Debt Instrument Line Items
Senior unsecured debt	250,000,000	250,000,000
Debt Instrument Interest Rate Stated Percentage	7.38%
Senior Unsecured Debt Due 2019 [Member]
Debt Instrument Line Items
Senior unsecured debt	750,000,000	750,000,000
Debt Instrument Interest Rate Stated Percentage	8.00%
Senior Unsecured Debt Due 2098 [Member]
Debt Instrument Line Items
Senior unsecured debt	239,000,000	239,000,000
Debt Instrument Interest Rate Stated Percentage	$ 7.60%

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Long Term Debt and Other Financing Arrangements (Details 2) (USD $)	12 Months Ended
	May 31, 2011	May 31, 2010
Long Term Debt And Other Financing Arrangements Abstract
Long Term Debt Exclusive of Capital Leases Carrying Value	$ 1,500,000,000	$ 1,800,000,000
Long Term Debt Exclusive Of Capital Leases Fair Value	1,900,000,000	2,100,000,000
Repayments Of Capital Lease Obligations	12,000,000	153,000,000
Line Of Credit Facility Maximum Borrowing Capacity	1,000,000,000
Line Of Credit Facility Current Borrowing Capacity	1,000,000,000
Line Of Credit Facility Amount Replaced	1,000,000,000
Line Of Credit Facility Covenant Terms Leverage Ratio	0.5
Letters Of Credit Outstanding	619,000,000
Surety Bonds Placed	460,000,000
Unused Portion Of Letter Of Credit Facility	93,000,000
Letter Of Credit Maximum Facility	500,000,000
Repayment Of Seven Point Two Five Percent Note [Member]
Long Term Debt And Other Financing Arrangements Abstract
Repayments of Unsecured Debt	250,000,000
Debt Instrument Interest Rate Stated Percentage	7.25%
Repayment Of Five Point Five Percent Note [Member]
Long Term Debt And Other Financing Arrangements Abstract
Repayments of Unsecured Debt		500,000,000
Debt Instrument Interest Rate Stated Percentage		$ 5.50%

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Leases (Details 1) (USD $) In Millions	May 31, 2011	May 31, 2010
Capital Leases Balance Sheet Assets By Major Class Net Lessee Balance Sheet Abstract
Aircraft	$ 8	$ 15
Package handling and ground support equipment	165	165
Vehicles	17	17
Other, principally facilities	145	146
Capital Leased Assets, Gross, Total	335	343
Less accumulated amortization	307	312
Capital Leased Assets, Net, Total	$ 28	$ 31

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Leases (Details 2) (USD $) In Millions	12 Months Ended
	May 31, 2011		May 31, 2010		May 31, 2009
Operating Leases Rent Expense Abstract
Minimum rentals	$ 2,025		$ 2,001		$ 2,047
Contingent rentals	193	[1]	152	[1]	181	[1]
Operating leases rent expense, total	$ 2,218		$ 2,153		$ 2,228

[1] Contingent rentals are based on equipment usage.

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Leases (Details 3) (USD $) In Millions	May 31, 2011
Capital Leases Future Minimum Payments Due Abstract
2012	$ 25
2013	119
2014	2
2015	2
2016	2
Thereafter	13
Total	163
Less amount representing interest	17
Present value of net minimum lease payments	$ 146

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Leases (Details 4) (USD $) In Millions	May 31, 2011
Schedule of Future Minimum Operating Lease Payments [Line Items]
2012	$ 1,794
2013	1,654
2014	1,465
2015	1,354
2016	1,192
Thereafter	6,533
Total	13,992
Aircraft and Related Equipment [Member]
Schedule of Future Minimum Operating Lease Payments [Line Items]
2012	494
2013	499
2014	473
2015	455
2016	458
Thereafter	1,545
Total	3,924
Facilities and Other [Member]
Schedule of Future Minimum Operating Lease Payments [Line Items]
2012	1,300
2013	1,155
2014	992
2015	899
2016	734
Thereafter	4,988
Total	$ 10,068

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Leases (Details 5)	May 31, 2011	May 31, 2010
Other Lease Information (Details) Abstract
Percentage Total Aircraft Fleet Leased	11.00%	12.00%
Operating Leases Weighted-Average Remaining Lease Term	6 years

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Preferred Stock (Details) (USD $)	May 31, 2011
Preferred Stock Number Of Shares Par Value And Other Disclosures Abstract
Preferred Stock Shares Authorized	4,000,000
Preferred Stock Par Value	$ 0
Preferred Stock Shares Issued	0

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Stock Based Compensation (Details 1) (USD $) In Millions, except Per Share data, unless otherwise specified	12 Months Ended
	May 31, 2011	May 31, 2010	May 31, 2009
Share Based Compensation Allocation And Classification In Financial Statements Abstract
Stock-based compensation expense	$ 98	$ 101	$ 99
Share Based Compensation Arrangement By Share Based Payment Award Fair Value Assumptions And Methodology Abstract
Stock-based compensation valuation method	Black-Scholes
Weighted-average Black-Scholes value	$ 28.12	$ 20.47	$ 23.66
Intrinsic value of options exercised	$ 80	$ 77	$ 7
Expected lives (in years)	5.9	5.7	5.5
Expected volatility	34.00%	32.00%	23.00%
Risk-free interest rate	2.36%	3.24%	3.28%
Dividend Yield	0.558%	0.742%	0.492%
Share Based Compensation Arrangement Stock Options Abstract
Stock option vesting period range	1 to 4 years
Percentage of options vesting ratably over four years	83.00%
Restricted stock expiration period	ratably over 4 years
Maximum term of stock options	10 years

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Consolidated Statements of Changes in Shareholders Equity and Comprehensive Income (USD $) In Millions	Total	Common Stock	Additional Paid-In Capital	Retained Earnings	Accumulated Other Comprehensive Income	Treasury Stock	Scenario Previously Reported Member	Scenario Previously Reported Member Common Stock	Scenario Previously Reported Member Additional Paid-In Capital	Scenario Previously Reported Member Retained Earnings	Scenario Previously Reported Member Accumulated Other Comprehensive Income	Scenario Previously Reported Member Treasury Stock
Beginning balance at May. 31, 2007
Adjustment to opening balances for retirement plans measurement date transition, net of tax	$ 325			$ (44)	$ 369
Ending balance at May. 31, 2008	14,851	31	1,922	12,958	(56)	(4)	14,526	31	1,922	13,002	(425)	(4)
Net income	98			98
Foreign currency translation adjustments, net of tax	(112)				(112)
Retirement plans adjustments, net of tax	(1,205)				(1,205)
Total comprehensive income/(loss)	(1,219)
Cash dividends declared	(137)			(137)
Employee incentive plans and other	131		131
Ending balance at May. 31, 2009	13,626	31	2,053	12,919	(1,373)	(4)
Net income	1,184			1,184
Foreign currency translation adjustments, net of tax	(25)				(25)
Retirement plans adjustments, net of tax	(1,042)				(1,042)
Total comprehensive income/(loss)	117
Purchase of treasury stock	(3)					(3)
Cash dividends declared	(137)			(137)
Employee incentive plans and other	208		208
Ending balance at May. 31, 2010	13,811	31	2,261	13,966	(2,440)	(7)
Net income	1,452			1,452
Foreign currency translation adjustments, net of tax	125				125
Retirement plans adjustments, net of tax	(235)				(235)
Total comprehensive income/(loss)	1,342
Purchase of treasury stock	(5)					(5)
Cash dividends declared	(152)			(152)
Employee incentive plans and other	224	1	223
Ending balance at May. 31, 2011	$ 15,220	$ 32	$ 2,484	$ 15,266	$ (2,550)	$ (12)

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Stock Based Compensation (Details 2) (USD $) In Millions, except Share data, unless otherwise specified	12 Months Ended
	May 31, 2011
Share Based Compensation Arrangement By Share Based Payment Award Options Intrinsic Value Abstract
Outstanding at May 31, 2011	$ 327	[1]
Stock options exercisable	181	[1]
Stock options expected to vest	$ 135	[1]
Share Based Compensation Arrangement By Share Based Payment Award Options Outstanding Roll Forward
Outstanding at June 1, 2010	20,238,056
Stock options granted	2,474,603
Stock options exercised	(2,043,050)
Stock options forfeited	(506,446)
Outstanding at May 31, 2011	20,163,163
Stock options exercisable	12,968,690
Stock options expected to vest	6,618,915
Stock options available for future grants	11,928,567
Share Based Compensation Arrangement By Share Based Payment Award Options Outstanding Weighted Average Remaining Contractual Term (in years) Abstract
Outstanding at May 31, 2011	5.7
Stock options exercisable	4.3
Stock options expected to vest	8.2
Share Based Compensation Arrangement By Share Based Payment Award Options Weighted Average Exercise Price Abstract
Outstanding at June 1, 2010	$ 78.32
Stock options granted	$ 81.86
Stock options exercised	$ 53.13
Stock options forfeited	$ 104.38
Outstanding at May 31, 2011	$ 81.20
Stock options exercisable	$ 84.74
Stock options expected to vest	$ 74.83

[1] Only presented for options with market value at May 31, 2011 in excess of the exercise price of the option.

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Stock Based Compensation (Details 3) (USD $)	12 Months Ended
	May 31, 2011	May 31, 2010	May 31, 2009
Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Nonvested Roll Forward
Unvested at June 1	637,296
Restricted stock granted	235,998	391,786	197,180
Restricted stock vested	(234,716)
Restricted stock forfeited	(12,198)
Unvested at May 31	626,380	637,296
Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Nonvested Weighted Average Grant Date Fair Value Abstract
Unvested at June 1	$ 74.02
Restricted stock granted	$ 78.74	$ 57.07	$ 90.57
Restricted stock vested	$ 81.11
Restricted stock forfeited	$ 70.91
Unvested at May 31	$ 73.20	$ 74.02

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Stock Based Compensation (Details 4) (USD $) In Millions, except Share data, unless otherwise specified	12 Months Ended
	May 31, 2011	May 31, 2010	May 31, 2009
Ratio Of Outstanding And Available To Grant Shares To Total Outstanding Common And Equity Compensation Shares And Equity Compensation Shares Available For Grant Abstract
Ratio Of Outstanding And Available To Grant Shares To Total Outstanding Common And Equity Compensation Shares And Equity Compensation Shares Available For Grant	10.00%
Share Based Compensation Arrangement By Share Based Award Options Vesting During The Years Abstract
Vested during the year	2,721,602	2,296,211	2,414,815
Fair Value	$ 67	$ 63	$ 64
Stock option remaining weighted average vesting period	2 years
Unrecognized Compensation Cost Related To Unvested Share Based Compensation Arrangements Abstract
Total unrecognized compensation cost, net of estimated forfeitures	$ 132

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Computation of Earnings Per Share (Details) (USD $) In Millions, except Per Share data	3 Months Ended																12 Months Ended
	May 31, 2011		Feb. 28, 2011		Nov. 30, 2010		Aug. 31, 2010		May 31, 2010		Feb. 28, 2010		Nov. 30, 2009		Aug. 31, 2009		May 31, 2011		May 31, 2010		May 31, 2009
Basic earnings per common share:
Net earnings allocable to common shares																	$ 1,449	[1]	$ 1,182	[1]	$ 97	[1]
Weighted-average common shares																	315		312		311
Basic earnings per common share	$ 1.76	[2]	$ 0.73	[2]	$ 0.90	[2]	$ 1.21	[2]	$ 1.34		$ 0.76		$ 1.10		$ 0.58		$ 4.61		$ 3.78		$ 0.31
Diluted earnings per common share:
Net earnings allocable to common shares																	$ 1,449	[1]	$ 1,182	[1]	$ 97	[1]
Weighted-average common shares																	315		312		311
Dilutive effect of share-based awards																	2		2		1
Weighted-average diluted shares																	317		314		312
Diluted earnings per common share	$ 1.75		$ 0.73		$ 0.89		$ 1.20		$ 1.33	[2]	$ 0.76	[2]	$ 1.10	[2]	$ 0.58	[2]	$ 4.57		$ 3.76		$ 0.31
Anti-dilutive options excluded from diluted earnings per common share																	9.3		11.5		12.6

[1] Net earnings available to participating securities were immaterial in all periods presented.

[2] The sum of the quarterly earnings per share may not equal annual amounts due to differences in the weighted-average number of shares outstanding during the respective period.

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Income Taxes (Details 1) (USD $) In Millions	12 Months Ended
	May 31, 2011	May 31, 2010	May 31, 2009
Current provision (benefit)
Federal	$ 79	$ 36	$ (35)
State and local	48	54	18
Foreign	198	207	214
Current Provision, Total	325	297	197
Deferred provision (benefit)
Federal	485	408	327
State and local	12	15	48
Foreign	(9)	(10)	7
Deferred Provision, Total	488	413	382
Provision for Income Taxes, Total	$ 813	$ 710	$ 579

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Income Taxes (Details 2) (USD $) In Millions	12 Months Ended
	May 31, 2011	May 31, 2010	May 31, 2009
Pre Tax Earnings Of Foreign Operations Abstract
Earnings From Foreign Operations	$ 472	$ 555	$ 106

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Income Taxes (Details 3)	12 Months Ended
	May 31, 2011	May 31, 2010	May 31, 2009
Effective Income Tax Rate Continuing Operations Tax Rate Reconciliation Abstract
Statutory U.S. income tax rate	35.00%	35.00%	35.00%
Goodwill impairment			48.00%
State and local income taxes, net of federal benefit	1.70%	2.40%	1.90%
Other, net	(0.80%)	0.10%	0.70%
Effective tax rate	35.90%	37.50%	85.60%

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Income Taxes (Details 4) (USD $) In Millions	May 31, 2011	May 31, 2010
Components Of Deferred Tax Assets Abstract
Property, equipment, leases and intangibles	$ 274	$ 377
Employee benefits	1,016	783
Self-insurance accruals	519	416
Other	422	490
Net operating loss/credit carryforwards	172	142
Valuation allowances	(151)	(139)
Deferred Tax Assets, Net	2,252	2,069
Components Of Deferred Tax Liabilities Abstract
Property, equipment, leases and intangibles	2,675	2,157
Employee benefits	34	36
Other	269	238
Deferred Tax Liabilities	$ 2,978	$ 2,431

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Income Taxes (Details 5) (USD $) In Millions	May 31, 2011	May 31, 2010
Deferred Tax Assets Liabilities Net Abstract
Current deferred tax asset	$ 610	$ 529
Noncurrent deferred tax liability	(1,336)	(891)
Net deferred tax liabilities	$ (726)	$ (362)

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Income Taxes (Details 6) (USD $) In Millions	12 Months Ended
	May 31, 2011	May 31, 2010	May 31, 2009
Reconciliation Of Unrecognized Tax Benefits Excluding Amounts Pertaining To Examined Tax Returns Roll Forward
Balance at beginning of year	$ 82	$ 72	$ 88
Increases for tax positions taken in the current year	2	3	7
Increases for tax positions taken in prior years	6	14	10
Decreases for tax positions taken in prior years	(10)	(4)	(30)
Settlements	(11)	(3)	(3)
Balance at end of year	$ 69	$ 82	$ 72

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Consolidated Statements of Changes in Shareholders Equity and Comprehensive Income (Parenthetical) (USD $) In Millions, except Share data	12 Months Ended
	May 31, 2011	May 31, 2010	May 31, 2009	May 31, 2008
Additional Paid-In Capital
Employee incentive plans and other, shares issued	2,229,051	2,375,753	995,271
Retained Earnings
Cash dividends declared, per share	$ 0.48	$ 0.44	$ 0.44
Adjustment to opening balances for retirement plans measurement date transition, tax benefit				$ 26
Accumulated Other Comprehensive Income
Foreign currency translation adjustments, tax	27	2	28
Retirement plans adjustments, tax	141	617	718
Adjustment to opening balances for retirement plans measurement date transition, tax expense				$ 220

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Income Taxes (Details 7) (USD $) In Millions, unless otherwise specified	12 Months Ended
	May 31, 2011	May 31, 2010
Income Tax Uncertainties Abstract
Unrecognized Tax Benefits That Would Impact Effective Tax Rate	$ 56	$ 67
Unrecognized Tax Benefits Accrued Income Tax Penalties And Interest	18	20
Tax Positions For Which Ultimate Deductibility Or Income Inclusion Is Certain But Timing Uncertain Abstract
Tax Positions For Which Ultimate Deductibility Or Income Inclusion Is Certain But Timing Uncertain	9	9
Unremitted Earnings Of Foreign Subsidiaries Abstract
Unremitted Earnings Of Foreign Subsidiaries	640	325
Permanent Reinvestment Strategy Percent Benefit To Effective Tax Rate	1.30%
Cash in Offshore Jurisdictions Associated With Permanent Reinvestment Strategy	300
Foreign Country Member
Operating Loss Carryforwards Line Items
Operating Loss Carryforwards	484
State And Local Jurisdiction Member
Operating Loss Carryforwards Line Items
Operating Loss Carryforwards	$ 524

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Retirement Plans (Details 1) (USD $) In Millions	12 Months Ended
	May 31, 2011	May 31, 2010	May 31, 2009
Pension and Other Postretirement Benefit Expense Abstract
U.S. domestic and international pension plans	$ 543	$ 308	$ 177
U.S. domestic and international defined contribution plans	257	136	237
Postretirement healthcare plans	60	42	57
Retirement plans costs	860	486	471
Pension And Postretirement Healthcare Plans Equity Impact Abstract
Benefit plans adjustments at year-end measurement date, net of tax	$ 350	$ 1,000

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Retirement Plans (Details 2)	12 Months Ended
	May 31, 2011	May 31, 2010	May 31, 2009
Pension Plans
Defined Benefit Plan Assumptions Used In Calculations Abstract
Discount rate used to determine benefit obligation	5.76%	6.37%	7.68%
Discount rate used to determine net periodic benefit cost	6.37%	7.68%	7.15%
Rate of increase in future compensation levels used to determine benefit obligation	4.58%	4.63%	4.42%
Rate of increase in future compensation levels used to determine net periodic benefit cost	4.63%	4.42%	4.49%
Expected long-term rate of return on assets	8.00%	8.00%	8.50%
Postretirement Healthcare Plans
Defined Benefit Plan Assumptions Used In Calculations Abstract
Discount rate used to determine benefit obligation	5.67%	6.11%	7.27%
Discount rate used to determine net periodic benefit cost	6.11%	7.27%	7.13%

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Retirement Plans (Details 3) (USD $) In Millions, unless otherwise specified	12 Months Ended
	May 31, 2011	May 31, 2010
Defined Benefit Plan Assets Other Information Abstract
Estimated long-term rate of return on plan assets for 2012	8.00%
Actual rate of return on plan assets for the 15-year period	7.80%
Pension expense increase (decrease) of using differing plan asset valuation methods		$ (135)

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Retirement Plans (Details 4) (USD $) In Millions, unless otherwise specified	May 31, 2011	May 31, 2010
Cash And Cash Equivalents [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair Value	$ 409	$ 427
Actual %	3.00%	3.00%
Target %	1.00%	1.00%
Quoted Prices In Active Markets Level 1	107	145
Other Observable Inputs Level 2	302	282
Domestic Large Cap Equity Securities [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair Value	4,280	3,374
Actual %	27.00%	26.00%
Target %	24.00%	24.00%
Quoted Prices In Active Markets Level 1	26
Other Observable Inputs Level 2	4,254	3,374
Domestic Small To Mid Cap Equity Securities [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair Value	1,481	1,195
Actual %	10.00%	9.00%
Target %	9.00%	9.00%
Quoted Prices In Active Markets Level 1	1,481	1,195
International Equity Securities [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair Value	2,013	1,502
Actual %	13.00%	12.00%
Target %	12.00%	12.00%
Quoted Prices In Active Markets Level 1	1,702	1,262
Other Observable Inputs Level 2	311	240
Private Equities [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair Value	403	399
Actual %	3.00%	3.00%
Target %	5.00%	5.00%
Unobservable Inputs Level 3	403	399
Total Fixed Income Securities [Member]
Defined Benefit Plan Disclosure [Line Items]
Target %	49.00%	49.00%
Corporate Fixed Income Securities [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair Value	3,794	3,546
Actual %	24.00%	27.00%
Other Observable Inputs Level 2	3,794	3,546
United States Government Fixed Income Securities [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair Value	3,135	2,537
Actual %	20.00%	19.00%
Other Observable Inputs Level 2	3,135	2,537
Mortgage Backed And Other Fixed Income Securities [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair Value	66	122
Actual %		1.00%
Other Observable Inputs Level 2	66	122
Other Investments [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair Value	(63)	(47)
Quoted Prices In Active Markets Level 1	(59)	(46)
Other Observable Inputs Level 2	(4)	(1)
Total Asset Class [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair Value	15,518	13,055
Actual %	100.00%	100.00%
Target %	100.00%	100.00%
Quoted Prices In Active Markets Level 1	3,257	2,556
Other Observable Inputs Level 2	11,858	10,100
Unobservable Inputs Level 3	$ 403	$ 399

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Retirement Plans (Details 5) (Fair Value Inputs Level 3 [Member], USD $) In Millions	12 Months Ended
	May 31, 2011	May 31, 2010
Fair Value Inputs Level 3 [Member]
Defined Benefit Plan Change In Fair Value Of Plan Assets Roll Forward
Beginning balance May 31	$ 399	$ 341
Actual return on plan assets
Assets held at May 31	27	38
Assets sold during the year	36	24
Purchases, sales and settlements	(59)	(4)
Ending balance May 31	$ 403	$ 399

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Retirement Plans (Details 6) (USD $) In Millions	12 Months Ended
	May 31, 2011	May 31, 2010	May 31, 2009
Pension Plans
Defined Benefit Plan Disclosure [Line Items]
Accumulated Benefit Obligation ("ABO")	$ 16,806	$ 14,041
Changes in Projected Benefit Obligation ("PBO") and Accumulated Postretirement Benefit Obligation ("APBO")
PBO/APBO at the beginning of year	14,484	11,050
Service cost	521	417	499
Interest cost	900	823	798
Actuarial loss	1,875	2,607
Benefits paid	(468)	(391)
Other	60	(22)
PBO/APBO at the end of year	17,372	14,484	11,050
Change in Plan Assets
Beginning balance May 31	13,295	10,812
Actual return on plan assets	2,425	1,994
Company contributions	557	900
Benefits paid	(468)	(391)
Other	32	(20)
Ending balance May 31	15,841	13,295	10,812
Funded Status of the Plans	(1,531)	(1,189)
Amount Recognized in the Balance Sheet at May 31
Current pension, postretirement healthcare and other benefit obligations	(33)	(30)
Noncurrent pension, postretirement healthcare and other benefit obligations	(1,498)	(1,159)
Net amount recognized	(1,531)	(1,189)
Amounts Recognized in AOCI and not yet reflected in Net Periodic Benefit Cost
Net actuarial loss (gain)	5,386	5,157
Prior service (credit) cost and other	(993)	(1,106)
Total	4,393	4,051
Defined Benefit Plan Amounts That Will Be Amortized From Accumulated Other Comprehensive Income Loss In Next Fiscal Year Abstract
Net actuarial loss (gain)	307	284
Prior service credit and other	(112)	(113)
Total	195	171
Postretirement Healthcare Plans
Changes in Projected Benefit Obligation ("PBO") and Accumulated Postretirement Benefit Obligation ("APBO")
PBO/APBO at the beginning of year	565	433
Service cost	31	24	31
Interest cost	34	30	33
Actuarial loss	44	102
Benefits paid	(48)	(45)
Other	22	21
PBO/APBO at the end of year	648	565	433
Change in Plan Assets
Company contributions	26	24
Benefits paid	(48)	(45)
Other	22	21
Funded Status of the Plans	(648)	(565)
Amount Recognized in the Balance Sheet at May 31
Current pension, postretirement healthcare and other benefit obligations	(31)	(28)
Noncurrent pension, postretirement healthcare and other benefit obligations	(617)	(537)
Net amount recognized	(648)	(565)
Amounts Recognized in AOCI and not yet reflected in Net Periodic Benefit Cost
Net actuarial loss (gain)	(85)	(134)
Prior service (credit) cost and other	2	2
Total	(83)	(132)
Defined Benefit Plan Amounts That Will Be Amortized From Accumulated Other Comprehensive Income Loss In Next Fiscal Year Abstract
Net actuarial loss (gain)	(1)	(5)
Total	$ (1)	$ (5)

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Retirement Plans (Details 7) (USD $) In Millions	May 31, 2011	May 31, 2010
Qualified [Member]
Defined Benefit Plan Disclosure [Line Items]
Accumulated Benefit Obligation ("ABO")	$ 16,024	$ 13,311
Projected Benefit Obligation ("PBO")	16,445	13,635
Fair Value of Plan Assets	15,518	13,055
Funded Status of the Plans	(927)	(580)
Nonqualified [Member]
Defined Benefit Plan Disclosure [Line Items]
Accumulated Benefit Obligation ("ABO")	335	346
Projected Benefit Obligation ("PBO")	339	348
Funded Status of the Plans	(339)	(348)
International Plans [Member]
Defined Benefit Plan Disclosure [Line Items]
Accumulated Benefit Obligation ("ABO")	447	384
Projected Benefit Obligation ("PBO")	588	501
Fair Value of Plan Assets	323	240
Funded Status of the Plans	(265)	(261)
Components Total [Member]
Defined Benefit Plan Disclosure [Line Items]
Accumulated Benefit Obligation ("ABO")	16,806	14,041
Projected Benefit Obligation ("PBO")	17,372	14,484
Fair Value of Plan Assets	15,841	13,295
Funded Status of the Plans	$ (1,531)	$ (1,189)

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Retirement Plans (Details 8) (USD $) In Millions	May 31, 2011		May 31, 2010
Defined Benefit Plan Pension Plans With Accumulated Benefit Obligations In Excess Of Plan Assets Abstract
ABO	$ (16,530)	[1]	$ (14,014)	[1]
Fair value of plan assets	15,538		13,263
PBO	(17,014)		(14,441)
Net funded status	(1,476)		(1,178)
Defined Benefit Plan Plans With Benefit Obligations In Excess Of Plan Assets Abstract
Fair value of plan assets	15,815		13,295
PBO	(17,346)		(14,484)
Net funded status	$ (1,531)		$ (1,189)

[1] ABO not used in determination of funded status.

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Retirement Plans (Details 9) (USD $) In Millions	12 Months Ended
	May 31, 2011	May 31, 2010
Pension Plans Contributions Abstract
Required U.S. retirement plan contributions	$ 359	$ 353
Voluntary U.S. retirement plan contributions	121	495
Total contributions	$ 480	$ 848

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Description of Business and Summary of Significant Accounting Policies

12 Months Ended

May 31, 2011

Description of Business and Summary of Significant Accounting Policies Abstract

Description of Business and Summary of Significant Accounting Policies

NOTE 1: DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS. FedEx Corporation (“FedEx”) provides a broad portfolio of transportation, e-commerce and business services through companies competing collectively, operating independently and managed collaboratively, under the respected FedEx brand. Our primary operating companies are Federal Express Corporation (“FedEx Express”), the world's largest express transportation company; FedEx Ground Package System, Inc. (“FedEx Ground”), a leading provider of small-package ground delivery services; and FedEx Freight, Inc. (“FedEx Freight”), a leading U.S. provider of less-than-truckload (“LTL”) freight services.These companies represent our major service lines and, along with FedEx Corporate Services, Inc. (“FedEx Services”), form the core of our reportable segments. Our FedEx Services segment provides sales, marketing and information technology support to our transportation segments. In addition, the FedEx Services segment provides customers with retail access to FedEx Express and FedEx Ground shipping services through FedEx Office and Print Services, Inc. (“FedEx Office”) and provides customer service, technical support and billing and collection services through FedEx TechConnect, Inc. (“FedEx TechConnect”).

FISCAL YEARS. Except as otherwise specified, references to years indicate our fiscal year ended May 31, 2011 or ended May 31 of the year referenced.

PRINCIPLES OF CONSOLIDATION. The consolidated financial statements include the accounts of FedEx and its subsidiaries, substantially all of which are wholly owned. All significant intercompany accounts and transactions have been eliminated in consolidation.

REVENUE RECOGNITION. We recognize revenue upon delivery of shipments for our transportation businesses and upon completion of services for our business services, logistics and trade services businesses. Certain of our transportation services are provided with the use of independent contractors. FedEx is the principal to the transaction in most instances and in those cases revenue from these transactions is recognized on a gross basis. Costs associated with independent contractor settlements are recognized as incurred and included in the caption “Purchased transportation” in the accompanying consolidated statements of income. For shipments in transit, revenue is recorded based on the percentage of service completed at the balance sheet date. Estimates for future billing adjustments to revenue and accounts receivable are recognized at the time of shipment for money-back service guarantees and billing corrections. Delivery costs are accrued as incurred.

Our contract logistics, global trade services and certain transportation businesses, such as FedEx SmartPost, engage in some transactions wherein they act as agents. Revenue from these transactions is recorded on a net basis. Net revenue includes billings to customers less third-party charges, including transportation or handling costs, fees, commissions, and taxes and duties.

Certain of our revenue-producing transactions are subject to taxes, such as sales tax, assessed by governmental authorities. We present these revenues net of tax.

CREDIT RISK. We routinely grant credit to many of our customers for transportation and business services without collateral. The risk of credit loss in our trade receivables is substantially mitigated by our credit evaluation process, short collection terms and sales to a large number of customers, as well as the low revenue per transaction for most of our services. Allowances for potential credit losses are determined based on historical experience and the impact of current economic factors on the composition of accounts receivable. Historically, credit losses have been within management's expectations.

ADVERTISING. Advertising and promotion costs are expensed as incurred and are classified in other operating expenses. Advertising and promotion expenses were $375 million in 2011, $374 million in 2010 and $379 million in 2009.

CASH EQUIVALENTS. Cash in excess of current operating requirements is invested in short-term, interest-bearing instruments with maturities of three months or less at the date of purchase and is stated at cost, which approximates market value.

SPARE PARTS, SUPPLIES AND FUEL. Spare parts (principally aircraft-related) are reported at weighted-average cost. Allowances for obsolescence are provided for spare parts expected to be on hand at the date the aircraft are retired from service. These allowances are provided over the estimated useful life of the related aircraft and engines. Additionally, allowances for obsolescence are provided for spare parts currently identified as excess or obsolete. These allowances are based on management estimates, which are subject to change. Supplies and fuel are reported at weighted average cost.

PROPERTY AND EQUIPMENT. Expenditures for major additions, improvements, flight equipment modifications and certain equipment overhaul costs are capitalized when such costs are determined to extend the useful life of the asset or are part of the cost of acquiring the asset. Maintenance and repairs are charged to expense as incurred. We capitalize certain direct internal and external costs associated with the development of internal-use software. Gains and losses on sales of property used in operations are classified within operating expenses.

For financial reporting purposes, we record depreciation and amortization of property and equipment on a straight-line basis over the asset's service life or related lease term, if shorter. For income tax purposes, depreciation is computed using accelerated methods when applicable. The depreciable lives and net book value of our property and equipment are as follows (dollars in millions):

		Net Book Value at May 31,
	Range	2011		2010
Wide-body aircraft and related equipment	15 to 30 years	$	6,536	$	5,897
Narrow-body and feeder aircraft and related equipment	5 to 18 years		1,517		1,049
Package handling and ground support equipment	3 to 30 years		1,985		1,895
Vehicles	3 to 15 years		1,076		1,095
Computer and electronic equipment	2 to 10 years		776		649
Facilities and other	2 to 40 years		3,653		3,800

Substantially all property and equipment have no material residual values. The majority of aircraft costs are depreciated on a straight-line basis over 15 to 18 years. We periodically evaluate the estimated service lives and residual values used to depreciate our property and equipment. This evaluation may result in changes in the estimated lives and residual values. Such changes did not materially affect depreciation expense in any period presented. Depreciation expense, excluding gains and losses on sales of property and equipment used in operations, was $1.9 billion in2011and2010, and $1.8 billion in 2009. Depreciation and amortization expense includes amortization of assets under capital lease.

CAPITALIZED INTEREST. Interest on funds used to finance the acquisition and modification of aircraft, including purchase deposits, construction of certain facilities, and development of certain software up to the date the asset is ready for its intended use is capitalized and included in the cost of the asset if the asset is actively under construction. Capitalized interest was $71 million in 2011, $80 million in 2010 and $71 million in 2009.

IMPAIRMENT OF LONG-LIVED ASSETS. Long-lived assets are reviewed for impairment when circumstances indicate the carrying value of an asset may not be recoverable. For assets that are to be held and used, an impairment is recognized when the estimated undiscounted cash flows associated with the asset or group of assets is less than their carrying value. If impairment exists, an adjustment is made to write the asset down to its fair value, and a loss is recorded as the difference between the carrying value and fair value. Fair values are determined based on quoted market values, discounted cash flows or internal and external appraisals, as applicable. Assets to be disposed of are carried at the lower of carrying value or estimated net realizable value.

We operate integrated transportation networks, and accordingly, cash flows for most of our operating assets are assessed at a network level, not at an individual asset level, for our analysis of impairment. In 2011, we incurred asset impairment charges of $29 million related to the combination of our LTL operations at FedEx Freight (see “FedEx Freight Network Combination” below for additional information).

There were no material property and equipment impairment charges recognized in 2010. During 2009, we recorded $202 million in property and equipment impairment charges. These charges were primarily related to our decision to permanently remove from service certain aircraft, along with certain excess aircraft engines, at FedEx Express.

GOODWILL. Goodwill is recognized for the excess of the purchase price over the fair value of tangible and identifiable intangible net assets of businesses acquired. Several factors give rise to goodwill in our acquisitions, such as the expected benefit from synergies of the combination and the existing workforce of the acquired entity. Goodwill is reviewed at least annually for impairment by comparing the fair value of each reporting unit with its carrying value (including attributable goodwill). Fair value for our reporting units is determined using an income or market approach incorporating market participant considerations and management's assumptions on revenue growth rates, operating margins, discount rates and expected capital expenditures. Fair value determinations may include both internal and third-party valuations. Unless circumstances otherwise dictate, we perform our annual impairment testing in the fourth quarter.

INTANGIBLE ASSETS. Intangible assets include customer relationships, technology assets and contract-based intangibles acquired in business combinations. Intangible assets are amortized over periods ranging from 3 to 12 years, either on a straight-line basis or an accelerated basis depending upon the pattern in which the economic benefits are realized.

PENSION AND POSTRETIREMENT HEALTHCARE PLANS. Our defined benefit plans are measured using actuarial techniques that reflect management's assumptions for discount rate, expected long-term investment returns on plan assets, salary increases, expected retirement, mortality, employee turnover and future increases in healthcare costs. We determine the discount rate (which is required to be the rate at which the projected benefit obligation could be effectively settled as of the measurement date) with the assistance of actuaries, who calculate the yield on a theoretical portfolio of high-grade corporate bonds (rated Aa or better) with cash flows that are designed to match our expected benefit payments in future years. A calculated-value method is employed for purposes of determining the expected return on the plan asset component of net periodic pension cost for our tax-qualified U.S. domestic pension plans (“U.S. Pension Plans”).

The accounting guidance related to employers' accounting for defined benefit pension and other postretirement plans requires recognition in the balance sheet of the funded status of defined benefit pension and other postretirement benefit plans, and the recognition in other comprehensive income (“OCI”) of unrecognized gains or losses and prior service costs or credits. Additionally, the guidance requires the measurement date for plan assets and liabilities to coincide with the plan sponsor's year end.

At May 31, 2011, we recorded a decrease to equity through OCI of $350 million (net of tax) based primarily on year-end adjustments related to increases in our projected benefit obligation due to a decrease in the discount rate used to measure the liability at May 31, 2011. At May 31, 2010, we recorded a decrease to equity through OCI of $1.0 billion (net of tax) based primarily on year-end adjustments related to increases in our projected benefit obligation due to a decrease in the discount rate used to measure the liability at May 31, 2010.

INCOME TAXES. Deferred income taxes are provided for the tax effect of temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements. The liability method is used to account for income taxes, which requires deferred taxes to be recorded at the statutory rate expected to be in effect when the taxes are paid.

We recognize liabilities for uncertain income tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step requires us to estimate and measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. It is inherently difficult and subjective to estimate such amounts, as we must determine the probability of various possible outcomes. We reevaluate these uncertain tax positions on a quarterly basis or when new information becomes available to management. These reevaluations are based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, successfully settled issues under audit, and new audit activity. Such a change in recognition or measurement could result in the recognition of a tax benefit or an increase to the related provision.

We classify interest related to income tax liabilities as interest expense, and if applicable, penalties are recognized as a component of income tax expense. The income tax liabilities and accrued interest and penalties that are due within one year of the balance sheet date are presented as current liabilities. The remaining portion of our income tax liabilities and accrued interest and penalties are presented as noncurrent liabilities because payment of cash is not anticipated within one year of the balance sheet date. These noncurrent income tax liabilities are recorded in the caption “Other liabilities” in the accompanying consolidated balance sheets.

SELF-INSURANCE ACCRUALS. We are self-insured for workers' compensation claims, vehicle accidents and general liabilities, benefits paid under employee healthcare programs and long-term disability benefits. Accruals are primarily based on the actuarially estimated, undiscounted cost of claims, which includes incurred-but-not-reported claims. Current workers' compensation claims, vehicle and general liability, employee healthcare claims and long-term disability are included in accrued expenses. We self-insure up to certain limits that vary by operating company and type of risk. Periodically, we evaluate the level of insurance coverage and adjust insurance levels based on risk tolerance and premium expense.

LEASES. We lease certain aircraft, facilities, equipment and vehicles under capital and operating leases. The commencement date of all leases is the earlier of the date we become legally obligated to make rent payments or the date we may exercise control over the use of the property. In addition to minimum rental payments, certain leases provide for contingent rentals based on equipment usage principally related to aircraft leases at FedEx Express and copier usage at FedEx Office. Rent expense associated with contingent rentals is recorded as incurred. Certain of our leases contain fluctuating or escalating payments and rent holiday periods. The related rent expense is recorded on a straight-line basis over the lease term. The cumulative excess of rent payments over rent expense is accounted for as a deferred lease asset and recorded in “Other assets” in the accompanying consolidated balance sheets. The cumulative excess of rent expense over rent payments is accounted for as a deferred lease obligation. Leasehold improvements associated with assets utilized under capital or operating leases are amortized over the shorter of the asset's useful life or the lease term.

DEFERRED GAINS. Gains on the sale and leaseback of aircraft and other property and equipment are deferred and amortized ratably over the life of the lease as a reduction of rent expense. Substantially all of these deferred gains are related to aircraft transactions.

FOREIGN CURRENCY TRANSLATION. Translation gains and losses of foreign operations that use local currencies as the functional currency are accumulated and reported, net of applicable deferred income taxes, as a component of accumulated other comprehensive income within common stockholders' investment. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the local currency are included in the caption “Other, net” in the accompanying consolidated statements of income and were immaterial for each period presented. Cumulative net foreign currency translation gains in accumulated other comprehensive income were $156 million at May 31, 2011, $30 million at May 31, 2010 and $56 million at May 31, 2009.

EMPLOYEES UNDER COLLECTIVE BARGAINING ARRANGEMENTS. The pilots of Federal Express Corporation (“FedEx Express”), which represent a small number of FedEx Express's total employees, are employed under a collective bargaining agreement. During the fourth quarter of 2011, the pilots ratified a new labor contract that includes safety initiatives, increases in hourly pay rates and travel per diem rates, and provisions for opening a European crew base. The new contract is scheduled to become amendable in March 2013 unless the union exercises its option to shorten the contract, in which case the agreement would be amendable in March 2012 and a portion of the hourly pay increases would be canceled. In addition to our pilots at FedEx Express, certain of FedEx Express's non-U.S. employees are unionized.

STOCK-BASED COMPENSATION. We recognize compensation expense for stock-based awards under the provisions of the accounting guidance related to share-based payments. This guidance requires recognition of compensation expense for stock-based awards using a fair value method.

DIVIDENDS DECLARED PER COMMON SHARE. On June 6, 2011, our Board of Directors declared a quarterly dividend of $0.13 per share of common stock. The dividend was paid on July 1, 2011 to stockholders of record as of the close of business on June 17, 2011. Each quarterly dividend payment is subject to review and approval by our Board of Directors, and we evaluate our dividend payment amount on an annual basis at the end of each fiscal year.

FEDEX FREIGHT NETWORK COMBINATION. The previously announced combination of our FedEx Freight and FedEx National LTL operations was completed on January 30, 2011. Our combined LTL network will increase efficiencies, reduce operational costs and provide customers both Priority and Economy LTL freight services across all lengths of haul from one integrated company. These actions resulted in the following incremental costs, including an impairment charge recorded during 2011. Charges for the year ended May 31, 2011 include the following (in millions):

	2011
Severance	$	40
Lease terminations		20
Asset impairments		29
Impairment and other charges		89
Other program costs		44
Total program costs	$	133

Other program costs include $15 million of accelerated depreciation expense due to a change in the estimated useful life of certain assets impacted by the combination of these operations and other incremental costs directly associated with the program. Substantially all of the severance accruals were paid during the fourth quarter of 2011 and the remaining severance accruals will be paid during the first quarter of 2012.  We have received $88 million related to asset sales, which offset the total cash outlays for the program.  The estimates recorded at May 31, 2011 are not subject to any material risk of change.

USE OF ESTIMATES. The preparation of our consolidated financial statements requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, the reported amounts of revenues and expenses and the disclosure of contingent liabilities. Management makes its best estimate of the ultimate outcome for these items based on historical trends and other information available when the financial statements are prepared. Changes in estimates are recognized in accordance with the accounting rules for the estimate, which is typically in the period when new information becomes available to management. Areas where the nature of the estimate makes it reasonably possible that actual results could materially differ from amounts estimated include: self-insurance accruals; retirement plan obligations; long-term incentive accruals; tax liabilities; accounts receivable allowances; obsolescence of spare parts; contingent liabilities; loss contingencies, such as litigation and other claims; and impairment assessments on long-lived assets (including goodwill).

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Retirement Plans (Details 10) (USD $) In Millions	12 Months Ended
	May 31, 2011	May 31, 2010	May 31, 2009
Pension Plans
Net Periodic Benefit Cost
Service cost	$ 521	$ 417	$ 499
Interest cost	900	823	798
Expected return on plan assets	(1,062)	(955)	(1,059)
Recognized actuarial losses (gains) and other	184	23	(61)
Total net periodic benefit cost	543	308	177
Postretirement Healthcare Plans
Net Periodic Benefit Cost
Service cost	31	24	31
Interest cost	34	30	33
Recognized actuarial losses (gains) and other	(5)	(12)	(7)
Total net periodic benefit cost	$ 60	$ 42	$ 57

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Retirement Plans (Details 11) (USD $) In Millions	12 Months Ended
	May 31, 2011	May 31, 2010
Pension Plans
Defined Benefit Plan Amounts Recognized In Other Comprehensive Income Abstract
Net loss and other arising during period, Gross Amount	$ 511	$ 1,562
Loss from settlements and curtailments, Gross Amount	(13)
Amortization of prior services credit, Gross Amount	113	113
Amortization of actuarial (losses) gains and other, Gross Amount	(284)	(130)
Total recognized in OCI, Gross Amount	327	1,545
Net (gain) loss and other arising during period, Net of Tax Amount	321	986
Loss from settlements and curtailments, Net of Tax Amount	(8)
Amortization of prior services credit, Net of Tax Amount	71	99
Amortization of actuarial (losses) gains and other, Net of Tax Amount	(178)	(114)
Total recognized in OCI, Net of Tax Amount	206	971
Postretirement Healthcare Plans
Defined Benefit Plan Amounts Recognized In Other Comprehensive Income Abstract
Net loss and other arising during period, Gross Amount	44	102
Amortization of actuarial (losses) gains and other, Gross Amount	5	12
Total recognized in OCI, Gross Amount	49	114
Net (gain) loss and other arising during period, Net of Tax Amount	26	59
Amortization of actuarial (losses) gains and other, Net of Tax Amount	3	12
Total recognized in OCI, Net of Tax Amount	$ 29	$ 71

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Retirement Plans (Details 12) (USD $) In Millions	May 31, 2011
Pension Plans
Defined Benefit Plan Estimated Future Benefit Payments Abstract
2012	$ 562
2013	633
2014	694
2015	754
2016	843
2017-2021	5,667
Postretirement Healthcare Plans
Defined Benefit Plan Estimated Future Benefit Payments Abstract
2012	31
2013	31
2014	33
2015	35
2016	37
2017-2021	$ 225

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Retirement Plans (Details 13)	12 Months Ended
	May 31, 2011
Defined Benefit Plan Assumed Health Care Cost Trend Rates Abstract
Defined Benefit Plan Health Care Cost Trend Rate Assumed For Next Fiscal Year	8.30%
Defined Benefit Plan Ultimate Health Care Cost Trend Rate	4.50%
Defined Benefit Plan Year That Rate Reaches Ultimate Trend Rate	2029
Defined Benefit Plan Dental Care Cost Trend Rate Assumed For Next Fiscal Year	7.00%
Defined Benefit Plan Ultimate Dental Care Cost Trend Rate	4.50%
Defined Benefit Plan Year That Dental Care Rate Reaches Ultimate Trend Rate	2029
Defined Benefit Plan Effect Of One Percentage Point Change On Accumulated Postretirement Benefit Obligation	Not significant

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Business Segment Information (Details 1) (USD $) In Millions	12 Months Ended
	May 31, 2011		May 31, 2010		May 31, 2009
FedEx Express Segment [Member]
Segment Reporting Information [Line Items]
Revenues	$ 24,581		$ 21,555		$ 22,364
Depreciation and amortization	1,059		1,016		961
Operating Income (Loss)	1,228	[1]	1,127		794	[1]
Segment assets	16,463	[2]	14,819	[2]	13,483	[2]
Capital expenditures	2,467		1,864		1,348
FedEx Ground Segment [Member]
Segment Reporting Information [Line Items]
Revenues	8,485		7,439		7,047
Depreciation and amortization	337		334		337
Operating Income (Loss)	1,325		1,024		807
Segment assets	5,048	[2]	4,118	[2]	3,291	[2]
Capital expenditures	426		400		636
FedEx Freight Segment [Member]
Segment Reporting Information [Line Items]
Revenues	4,911		4,321		4,415
Depreciation and amortization	205		198		224
Operating Income (Loss)	(175)	[3]	(153)		(44)	[3]
Segment assets	2,664	[2]	2,786	[2]	3,044	[2]
Capital expenditures	153		212		240
FedEx Services Segment [Member]
Segment Reporting Information [Line Items]
Revenues	1,684		1,770		1,977
Depreciation and amortization	371		408		451
Operating Income (Loss)					(810)	[4]
Segment assets	4,278	[2]	4,079	[2]	3,240	[2]
Capital expenditures	387		340		235
Other and Eliminations [Member]
Segment Reporting Information [Line Items]
Revenues	(357)		(351)		(306)
Depreciation and amortization	1		2		2
Segment assets	(1,068)	[2]	(900)	[2]	1,186	[2]
Capital expenditures	1
Consolidated Total [Member]
Segment Reporting Information [Line Items]
Revenues	39,304		34,734		35,497
Depreciation and amortization	1,973		1,958		1,975
Operating Income (Loss)	2,378		1,998		747
Segment assets	27,385	[2]	24,902	[2]	24,244	[2]
Capital expenditures	$ 3,434		$ 2,816		$ 2,459

[1] FedEx Express segment 2011 operating expenses include a $66 million legal reserve associated with the ATA Airlines lawsuit, and 2009 operating expenses include a charge of $260 million primarily for aircraft-related asset impairments.

[2] Segment assets include intercompany receivables.

[3] FedEx Freight segment 2011 operating expenses include $133 million in costs associated with the combination of our FedEx Freight and FedEx National LTL operations, effective January 30, 2011, and 2009 operating expenses include a charge of $100 million primarily for impairment charges associated with goodwill related to the FedEx National LTL acquisition.

[4] FedEx Services segment 2009 operating expenses include a charge of $810 million for impairment of goodwill related to the Kinko's (now known as FedEx Office) acquisition. The normal, ongoing net operating costs of the FedEx Services segment are allocated back to the transportation segments.

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Business Segment Information (Details 2) (USD $) In Millions	12 Months Ended
	May 31, 2011	May 31, 2010	May 31, 2009
Business Segment Information Table Detail Abstract
Goodwill impairment charge		$ 18
Intersegment Revenues And Expenses	immaterial
FedEx Express Segment [Member]
Business Segment Information Table Detail Abstract
ATA Airlines lawsuit reserve	66
Other Asset Impairment Charges			260
FedEx Freight Segment [Member]
Business Segment Information Table Detail Abstract
Restructuring Charges	133
Goodwill impairment charge		18	90
Goodwill And Other Impairment Charge			100
FedEx Services Segment [Member]
Business Segment Information Table Detail Abstract
Goodwill impairment charge			$ 810

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Business Segment Information (Details 3) (USD $) In Millions	12 Months Ended
	May 31, 2011		May 31, 2010		May 31, 2009
FedEx Express Segment [Member]
Entity Wide Information Revenue From External Customer Line Items
U.S. overnight box	$ 6,128		$ 5,602		$ 6,074
U.S. overnight envelope	1,736		1,640		1,855
U.S. deferred	2,805		2,589		2,789
Total domestic package revenue	10,669		9,831		10,718
International Priority (IP)	8,228		7,087		6,978
International domestic	653	[1]	578	[1]	565	[1]
Total package revenue	19,550		17,496		18,261
U.S. freight	2,188		1,980		2,165
International priority freight	1,722		1,303		1,104
International airfreight	283		251		369
Total freight revenue	4,193		3,534		3,638
Other	838	[2]	525	[2]	465	[2]
Total revenue	24,581		21,555		22,364
FedEx Ground Segment [Member]
Entity Wide Information Revenue From External Customer Line Items
Total revenue	8,485		7,439		7,047
FedEx Freight Segment [Member]
Entity Wide Information Revenue From External Customer Line Items
Total revenue	4,911		4,321		4,415
FedEx Services Segment [Member]
Entity Wide Information Revenue From External Customer Line Items
Total revenue	1,684		1,770		1,977
Other and Eliminations [Member]
Entity Wide Information Revenue From External Customer Line Items
Total revenue	(357)		(351)		(306)
Consolidated Total [Member]
Entity Wide Information Revenue From External Customer Line Items
Total revenue	$ 39,304		$ 34,734		$ 35,497

[1] International domestic revenues include our international intra-country domestic express operations.

[2] Other revenues includes FedEx Trade Networks and, beginning in the second quarter of 2010, FedEx SupplyChain Systems.

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Business Segment Information (Details 4) (USD $) In Millions	12 Months Ended
	May 31, 2011		May 31, 2010		May 31, 2009
Entity Wide Information About Geographic Areas Abstract
U.S. revenue	$ 27,461		$ 24,852		$ 25,819
U.S. Noncurrent assets	17,235		16,089		15,615
International Noncurrent assets	1,865		1,529		1,513
Total Noncurrent Assets	19,100	[1]	17,618	[1]	17,128	[1]
FedEx Express Segment [Member]
Entity Wide Information About Geographic Areas Abstract
International revenue	11,437		9,547		9,363
Total revenue	24,581		21,555		22,364
FedEx Ground Segment [Member]
Entity Wide Information About Geographic Areas Abstract
International revenue	177		140		124
Total revenue	8,485		7,439		7,047
FedEx Freight Segment [Member]
Entity Wide Information About Geographic Areas Abstract
International revenue	84		60		39
Total revenue	4,911		4,321		4,415
FedEx Services Segment [Member]
Entity Wide Information About Geographic Areas Abstract
International revenue	145		135		152
Total revenue	1,684		1,770		1,977
International Total [Member]
Entity Wide Information About Geographic Areas Abstract
International revenue	11,843	[1]	9,882	[1]	9,678	[1]
Consolidated Total [Member]
Entity Wide Information About Geographic Areas Abstract
Total revenue	$ 39,304		$ 34,734		$ 35,497

[1] International revenue includes shipments that either originate in or are destined to locations outside the United States. Noncurrent assets include property and equipment, goodwill and other long-term assets. Our flight equipment registered in the U.S. is included as U.S. assets; however, many of our aircraft operate internationally.

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Supplemental Cash Flow Information (Details) (USD $) In Millions	12 Months Ended
	May 31, 2011	May 31, 2010	May 31, 2009
Supplemental Cash Flow Information Abstract
Interest (net of capitalized interest)	$ 93	$ 88	$ 61
Income taxes	493	322	517
Income tax refunds received	(106)	(279)	(8)
Cash tax payments, net	$ 387	$ 43	$ 509

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Guarantees and Indemnifications (Details) (USD $) In Millions	May 31, 2011
Guarantees Abstract
Guaranteed Principal Amount Of Special Facility Revenue Bonds	$ 667
Future Principal And Interest Payments For Special Facility Revenue Bonds	886
Portion Of Guaranteed Principal Included In Capital Lease Obligations	116
Portion Of Guaranteed Principal Accounted For As Operating Leases	$ 551

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Recent Accounting Guidance	12 Months Ended
	May 31, 2011
New Accounting Pronouncements And Changes In Accounting Principles Abstract
Recent Accounting Guidance	NOTE 2: RECENT ACCOUNTING GUIDANCE New accounting rules and disclosure requirements can significantly impact our reported results and the comparability of our financial statements. We believe the following new accounting guidance is relevant to the readers of our financial statements. On June 1, 2008, we adopted the authoritative guidance issued by the Financial Accounting Standards Board (“FASB”) on fair value measurements, which provides a common definition of fair value, establishes a uniform framework for measuring fair value and requires expanded disclosures about fair value measurements. On June 1, 2009, we implemented the previously deferred provisions of this guidance for nonfinancial assets and liabilities recorded at fair value, as required. The adoption of this new guidance had no impact on our financial statements. On June 1, 2009, we adopted the authoritative guidance issued by FASB on employers’ disclosures about postretirement benefit plan assets. This guidance provides objectives that an employer should consider when providing detailed disclosures about assets of a defined benefit pension or other postretirement plan, including disclosures about investment policies and strategies, categories of plan assets, significant concentrations of risk and the inputs and valuation techniques used to measure the fair value of plan assets. See Note 12 for related disclosures. On June 1, 2009, we adopted the authoritative guidance issued by FASB related to interim disclosures about the fair value of financial instruments. This guidance requires disclosures about the fair value of financial instruments for interim reporting periods in addition to annual reporting periods. In June 2011, the FASB issued new guidance to make the presentation of items within OCI more prominent. The new standard will require companies to present items of net income, items of OCI and total comprehensive income in one continuous statement or two separate consecutive statements, and companies will no longer be allowed to present items of OCI in the statement of stockholders’ equity. Reclassification adjustments between OCI and net income will be presented separately on the face of the financial statements. This new standard is effective for our fiscal year ending May 31, 2013. We believe there is no additional new accounting guidance adopted but not yet effective that is relevant to the readers of our financial statements. However, there are numerous new proposals under development which, if and when enacted, may have a significant impact on our financial reporting.

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Commitments (Details 1) (USD $) In Millions	May 31, 2011
Schedule of Purchase Commitments [Line Items]
2012	$ 2,398
2013	1,191
2014	824
2015	599
2016	595
Thereafter	1,602
Aircraft And Related Equipment Commitments [Member]
Schedule of Purchase Commitments [Line Items]
2012	1,480
2013	1,086
2014	781
2015	569
2016	584
Thereafter	1,470
Facilities And Other Commitments [Member]
Schedule of Purchase Commitments [Line Items]
2012	918
2013	105
2014	43
2015	30
2016	11
Thereafter	$ 132

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Commitments (Details 2)	May 31, 2011
Schedule of Aircraft Commitments [Line Items]
2012	23
2013	10
2014	7
2015	3
2016	3
Thereafter	7
Total	53
Boeing 777 Freighter [Member]
Schedule of Aircraft Commitments [Line Items]
2012	7
2013	6
2014	7
2015	3
2016	3
Thereafter	7
Total	33
Boeing 757 [Member]
Schedule of Aircraft Commitments [Line Items]
2012	16
2013	4
Total	20

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Commitments (Details 3) (USD $) In Millions, unless otherwise specified	12 Months Ended
	May 31, 2011
Other Aircraft Commitments [Line Items]
Conditional Aircraft Commitments	15
Other Commitment Disclosures Abstract
Deposit and Progress Payments	$ 604
Change in Deposit and Progress Payments	$ 167

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Contingencies (Details) (A T A Airlines [Member], USD $) In Millions	12 Months Ended
	May 31, 2011
A T A Airlines [Member]
Loss Contingency [Line Items]
Loss Contingency Awarded Damages	$ 66
Loss Contingency Awarded Interest	5
Loss Contingency Reserved	$ 66

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Related Party Transactions (Details)	12 Months Ended
	May 31, 2011
Related Party Transaction Line Items
Related Party Ownership Interest	10.00%

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Summary of Quarterly Operating Results (Unaudited) (Details) (USD $) In Millions, except Per Share data	3 Months Ended																12 Months Ended
	May 31, 2011		Feb. 28, 2011		Nov. 30, 2010		Aug. 31, 2010		May 31, 2010		Feb. 28, 2010		Nov. 30, 2009		Aug. 31, 2009		May 31, 2011	May 31, 2010	May 31, 2009
Selected Quarterly Financial Information Abstract
Revenues	$ 10,552		$ 9,663		$ 9,632		$ 9,457		$ 9,428		$ 8,701		$ 8,596		$ 8,009		$ 39,304	$ 34,734	$ 35,497
Operating Income	888		393		469		628		696		416		571		315		2,378	1,998	747
Net income	$ 558		$ 231		$ 283		$ 380		$ 419		$ 239		$ 345		$ 181		$ 1,452	$ 1,184	$ 98
Basic earnings per common share	$ 1.76	[1]	$ 0.73	[1]	$ 0.90	[1]	$ 1.21	[1]	$ 1.34		$ 0.76		$ 1.10		$ 0.58		$ 4.61	$ 3.78	$ 0.31
Diluted earnings per common share	$ 1.75		$ 0.73		$ 0.89		$ 1.20		$ 1.33	[1]	$ 0.76	[1]	$ 1.10	[1]	$ 0.58	[1]	$ 4.57	$ 3.76	$ 0.31

[1] The sum of the quarterly earnings per share may not equal annual amounts due to differences in the weighted-average number of shares outstanding during the respective period.

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Condensed Consolidating Financial Statements (Details 1) (USD $) In Billions	May 31, 2011
Guarantor Obligations Abstract
Debt Guarantee	$ 1

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Condensed Consolidating Financial Statements (Details 2) (USD $) In Millions	May 31, 2011	May 31, 2010	May 31, 2009	May 31, 2008
CURRENT ASSETS
Cash and cash equivalents	$ 2,328	$ 1,952	$ 2,292	$ 1,539
Receivables, less allowances	4,581	4,163
Spare parts, supplies, fuel, prepaid expenses and other, less allowances	766	640
Deferred income taxes	610	529
Total current assets	8,285	7,284
PROPERTY AND EQUIPMENT, AT COST	33,686	31,302
Less accumulated depreciation and amortization	18,143	16,917
Net property and equipment	15,543	14,385
GOODWILL	2,326	2,200	2,229
Other assets	1,231	1,033
ASSETS	27,385	24,902
CURRENT LIABILITIES
Current portion of long-term debt	18	262
Accrued salaries and employee benefits	1,268	1,146
Accounts payable	1,702	1,522
Accrued expenses	1,894	1,715
Total current liabilities	4,882	4,645
LONG-TERM DEBT, LESS CURRENT PORTION	1,667	1,668
OTHER LONG-TERM LIABILITIES
Deferred income taxes	1,336	891
Other liabilities	4,280	3,887
Total other long-term liabilities	5,616	4,778
STOCKHOLDERS' INVESTMENT	15,220	13,811	13,626	14,851
LIABILITIES AND STOCKHOLDERS' INVESTMENT	27,385	24,902
Parent Company Member
CURRENT ASSETS
Cash and cash equivalents	1,589	1,310	1,768	1,101
Receivables, less allowances		1
Spare parts, supplies, fuel, prepaid expenses and other, less allowances	77	5
Total current assets	1,666	1,316
PROPERTY AND EQUIPMENT, AT COST	24	23
Less accumulated depreciation and amortization	18	18
Net property and equipment	6	5
INVESTMENT IN SUBSIDIARIES	15,404	13,850
Other assets	1,652	1,527
ASSETS	18,728	16,698
CURRENT LIABILITIES
Current portion of long-term debt		250
Accrued salaries and employee benefits	50	36
Accounts payable		8
Accrued expenses	198	47
Total current liabilities	248	341
LONG-TERM DEBT, LESS CURRENT PORTION	1,000	1,000
INTERCOMPANY PAYABLE	1,095	702
OTHER LONG-TERM LIABILITIES
Other liabilities	1,165	844
Total other long-term liabilities	1,165	844
STOCKHOLDERS' INVESTMENT	15,220	13,811
LIABILITIES AND STOCKHOLDERS' INVESTMENT	18,728	16,698
Guarantor Subsidiaries Member
CURRENT ASSETS
Cash and cash equivalents	279	258	272	166
Receivables, less allowances	3,696	3,425
Spare parts, supplies, fuel, prepaid expenses and other, less allowances	645	581
Deferred income taxes	598	492
Total current assets	5,218	4,756
PROPERTY AND EQUIPMENT, AT COST	31,916	29,193
Less accumulated depreciation and amortization	17,071	15,801
Net property and equipment	14,845	13,392
GOODWILL	1,564	1,551
INVESTMENT IN SUBSIDIARIES	2,705	2,619
Other assets	1,039	801
ASSETS	25,371	23,119
CURRENT LIABILITIES
Current portion of long-term debt	18	12
Accrued salaries and employee benefits	1,071	955
Accounts payable	1,385	1,196
Accrued expenses	1,563	1,488
Total current liabilities	4,037	3,651
LONG-TERM DEBT, LESS CURRENT PORTION	667	668
INTERCOMPANY PAYABLE	222	430
OTHER LONG-TERM LIABILITIES
Deferred income taxes	2,842	2,253
Other liabilities	3,001	2,921
Total other long-term liabilities	5,843	5,174
STOCKHOLDERS' INVESTMENT	14,602	13,196
LIABILITIES AND STOCKHOLDERS' INVESTMENT	25,371	23,119
Non Guarantor Subsidiaries Member
CURRENT ASSETS
Cash and cash equivalents	546	443	304	272
Receivables, less allowances	912	782
Spare parts, supplies, fuel, prepaid expenses and other, less allowances	44	54
Deferred income taxes	12	37
Total current assets	1,514	1,316
PROPERTY AND EQUIPMENT, AT COST	1,746	2,086
Less accumulated depreciation and amortization	1,054	1,098
Net property and equipment	692	988
INTERCOMPANY RECEIVABLE	1,317	1,132
GOODWILL	762	649
Other assets	63	99
ASSETS	4,348	4,184
CURRENT LIABILITIES
Accrued salaries and employee benefits	147	155
Accounts payable	430	422
Accrued expenses	133	180
Total current liabilities	710	757
OTHER LONG-TERM LIABILITIES
Deferred income taxes	17	32
Other liabilities	114	122
Total other long-term liabilities	131	154
STOCKHOLDERS' INVESTMENT	3,507	3,273
LIABILITIES AND STOCKHOLDERS' INVESTMENT	4,348	4,184
Consolidation Eliminations Member
CURRENT ASSETS
Cash and cash equivalents	(86)	(59)	(52)
Receivables, less allowances	(27)	(45)
Total current assets	(113)	(104)
INTERCOMPANY RECEIVABLE	(1,317)	(1,132)
INVESTMENT IN SUBSIDIARIES	(18,109)	(16,469)
Other assets	(1,523)	(1,394)
ASSETS	(21,062)	(19,099)
CURRENT LIABILITIES
Accounts payable	(113)	(104)
Total current liabilities	(113)	(104)
INTERCOMPANY PAYABLE	(1,317)	(1,132)
OTHER LONG-TERM LIABILITIES
Deferred income taxes	(1,523)	(1,394)
Total other long-term liabilities	(1,523)	(1,394)
STOCKHOLDERS' INVESTMENT	(18,109)	(16,469)
LIABILITIES AND STOCKHOLDERS' INVESTMENT	$ (21,062)	$ (19,099)

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Condensed Consolidating Financial Statements (Details 3) (USD $) In Millions	3 Months Ended								12 Months Ended
	May 31, 2011	Feb. 28, 2011	Nov. 30, 2010	Aug. 31, 2010	May 31, 2010	Feb. 28, 2010	Nov. 30, 2009	Aug. 31, 2009	May 31, 2011	May 31, 2010	May 31, 2009
Condensed Financial Statements Captions [Line Items]
REVENUES	$ 10,552	$ 9,663	$ 9,632	$ 9,457	$ 9,428	$ 8,701	$ 8,596	$ 8,009	$ 39,304	$ 34,734	$ 35,497
OPERATING EXPENSES:
Salaries and employee benefits									15,276	14,027	13,767
Purchased transportation									5,674	4,728	4,534
Rentals and landing fees									2,462	2,359	2,429
Depreciation and amortization									1,973	1,958	1,975
Fuel									4,151	3,106	3,811
Maintenance and repairs									1,979	1,715	1,898
Impairment and other charges									89	18	1,204
Other									5,322	4,825	5,132
OPERATING EXPENSES									36,926	32,736	34,750
OPERATING INCOME	888	393	469	628	696	416	571	315	2,378	1,998	747
OTHER INCOME (EXPENSE):
Interest, net									(77)	(71)	(59)
Other, net									(36)	(33)	(11)
INCOME BEFORE INCOME TAXES									2,265	1,894	677
PROVISION FOR INCOME TAXES									813	710	579
NET INCOME	558	231	283	380	419	239	345	181	1,452	1,184	98
Parent Company Member
OPERATING EXPENSES:
Salaries and employee benefits									109	91	82
Rentals and landing fees									4	4	4
Depreciation and amortization									1	1	2
Maintenance and repairs									1	1	1
Intercompany charges, net									(222)	(202)	(193)
Other									107	105	104
OTHER INCOME (EXPENSE):
Equity in earnings of subsidiaries									1,452	1,184	98
Interest, net									(88)	(100)	(73)
Intercompany charges, net									104	114	90
Other, net									(16)	(14)	(17)
INCOME BEFORE INCOME TAXES									1,452	1,184	98
NET INCOME									1,452	1,184	98
Guarantor Subsidiaries Member
Condensed Financial Statements Captions [Line Items]
REVENUES									33,124	29,360	29,923
OPERATING EXPENSES:
Salaries and employee benefits									13,206	12,026	11,483
Purchased transportation									4,034	3,424	3,362
Rentals and landing fees									2,209	2,118	2,134
Depreciation and amortization									1,784	1,751	1,706
Fuel									4,003	2,946	3,554
Maintenance and repairs									1,862	1,589	1,755
Impairment and other charges									28		1,098
Intercompany charges, net									(317)	(109)	81
Other									4,392	3,950	4,198
OPERATING EXPENSES									31,201	27,695	29,371
OPERATING INCOME									1,923	1,665	552
OTHER INCOME (EXPENSE):
Equity in earnings of subsidiaries									200	161	103
Interest, net									13	41	28
Intercompany charges, net									(135)	(147)	(118)
Other, net									(14)	(18)	(3)
INCOME BEFORE INCOME TAXES									1,987	1,702	562
PROVISION FOR INCOME TAXES									677	625	514
NET INCOME									1,310	1,077	48
Non Guarantor Subsidiaries Member
Condensed Financial Statements Captions [Line Items]
REVENUES									6,498	5,700	5,851
OPERATING EXPENSES:
Salaries and employee benefits									1,961	1,910	2,202
Purchased transportation									1,745	1,392	1,211
Rentals and landing fees									253	240	296
Depreciation and amortization									188	206	267
Fuel									148	160	257
Maintenance and repairs									116	125	142
Impairment and other charges									61	18	106
Intercompany charges, net									539	311	112
Other									1,032	1,005	1,063
OPERATING EXPENSES									6,043	5,367	5,656
OPERATING INCOME									455	333	195
OTHER INCOME (EXPENSE):
Interest, net									(2)	(12)	(14)
Intercompany charges, net									31	33	28
Other, net									(6)	(1)	9
INCOME BEFORE INCOME TAXES									478	353	218
PROVISION FOR INCOME TAXES									136	85	65
NET INCOME									342	268	153
Consolidation Eliminations Member
Condensed Financial Statements Captions [Line Items]
REVENUES									(318)	(326)	(277)
OPERATING EXPENSES:
Purchased transportation									(105)	(88)	(39)
Rentals and landing fees									(4)	(3)	(5)
Other									(209)	(235)	(233)
OPERATING EXPENSES									(318)	(326)	(277)
OTHER INCOME (EXPENSE):
Equity in earnings of subsidiaries									(1,652)	(1,345)	(201)
INCOME BEFORE INCOME TAXES									(1,652)	(1,345)	(201)
NET INCOME									$ (1,652)	$ (1,345)	$ (201)

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Condensed Consolidating Financial Statements (Details 4) (USD $) In Millions	12 Months Ended
	May 31, 2011	May 31, 2010	May 31, 2009
Condensed Financial Statements Captions [Line Items]
Cash provided by operating activities	$ 4,041	$ 3,138	$ 2,753
Investing Activities:
Capital expenditures	(3,434)	(2,816)	(2,459)
Business acquisition, net of cash acquired	(96)
Proceeds from asset dispositions and other	111	35	76
Cash used in investing activities	(3,419)	(2,781)	(2,383)
Financing Activities:
Principal payments on debt	(262)	(653)	(501)
Proceeds from debt issuance			1,000
Proceeds from stock issuances	108	94	41
Excess tax benefit on the exercise of stock options	23	25	4
Dividends paid	(151)	(138)	(137)
Other, net	(5)	(20)	(7)
Cash (used in) provided by financing activities	(287)	(692)	400
Effect of exchange rate changes on cash	41	(5)	(17)
Net increase (decrease) in cash and cash equivalents	376	(340)	753
Cash and cash equivalents at beginning of period	1,952	2,292	1,539
Cash and cash equivalents at end of period	2,328	1,952	2,292
Parent Company Member
Condensed Financial Statements Captions [Line Items]
Cash provided by operating activities	25	(450)	(924)
Investing Activities:
Capital expenditures	(1)
Cash used in investing activities	(1)
Financing Activities:
Net transfers from (to) Parent	530	531	1,173
Payment on loan from Parent			17
Principal payments on debt	(250)	(500)	(500)
Proceeds from debt issuance			1,000
Proceeds from stock issuances	108	94	41
Excess tax benefit on the exercise of stock options	23	25	4
Dividends paid	(151)	(138)	(137)
Other, net	(5)	(20)	(7)
Cash (used in) provided by financing activities	255	(8)	1,591
Net increase (decrease) in cash and cash equivalents	279	(458)	667
Cash and cash equivalents at beginning of period	1,310	1,768	1,101
Cash and cash equivalents at end of period	1,589	1,310	1,768
Guarantor Subsidiaries Member
Condensed Financial Statements Captions [Line Items]
Cash provided by operating activities	3,978	2,942	3,156
Investing Activities:
Capital expenditures	(3,263)	(2,661)	(2,248)
Business acquisition, net of cash acquired	(96)
Proceeds from asset dispositions and other	110	38	69
Cash used in investing activities	(3,249)	(2,623)	(2,179)
Financing Activities:
Net transfers from (to) Parent	(994)	(397)	(1,066)
Payment on loan between subsidiaries	235	72	36
Intercompany dividends	61	158	165
Principal payments on debt	(12)	(153)
Other, net	(9)	(5)
Cash (used in) provided by financing activities	(719)	(325)	(865)
Effect of exchange rate changes on cash	11	(8)	(6)
Net increase (decrease) in cash and cash equivalents	21	(14)	106
Cash and cash equivalents at beginning of period	258	272	166
Cash and cash equivalents at end of period	279	258	272
Non Guarantor Subsidiaries Member
Condensed Financial Statements Captions [Line Items]
Cash provided by operating activities	65	653	573
Investing Activities:
Capital expenditures	(170)	(155)	(211)
Proceeds from asset dispositions and other	1	(3)	7
Cash used in investing activities	(169)	(158)	(204)
Financing Activities:
Net transfers from (to) Parent	464	(134)	(107)
Payment on loan from Parent			(17)
Payment on loan between subsidiaries	(235)	(72)	(36)
Intercompany dividends	(61)	(158)	(165)
Principal payments on debt			(1)
Other, net	9	5
Cash (used in) provided by financing activities	177	(359)	(326)
Effect of exchange rate changes on cash	30	3	(11)
Net increase (decrease) in cash and cash equivalents	103	139	32
Cash and cash equivalents at beginning of period	443	304	272
Cash and cash equivalents at end of period	546	443	304
Consolidation Eliminations Member
Condensed Financial Statements Captions [Line Items]
Cash provided by operating activities	(27)	(7)	(52)
Financing Activities:
Net increase (decrease) in cash and cash equivalents	(27)	(7)	(52)
Cash and cash equivalents at beginning of period	(59)	(52)
Cash and cash equivalents at end of period	$ (86)	$ (59)	$ (52)