8-K

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): December 17, 2003

FEDEX CORPORATION
(Exact name of registrant as specified in its charter)

Commission file number 1-15829

Delaware	62-1721435
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
942 South Shady Grove Road, Memphis, Tennessee	38120
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code: (901) 818-7500

FEDERAL EXPRESS CORPORATION
(Exact name of registrant as specified in its charter)

Commission file number 1-7806

Delaware	71-0427007
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
3610 Hacks Cross Road, Memphis, Tennessee	38125
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code: (901) 369-3600

EXPLANATORY NOTE

        The information in this Report, including the exhibit, is being furnished pursuant to Item 12 of Form 8-K and General Instruction B.6 thereunder. Such information shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended.

Item 7.    Financial Statements and Exhibits.

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

Exhibit Number	Description
99.1	Press Release of FedEx Corporation dated December 17, 2003.

Item 12.    Results of Operations and Financial Condition.

        Attached as Exhibit 99.1 and incorporated herein by reference is a copy of FedEx Corporation's press release, dated December 17, 2003, announcing its and its wholly owned subsidiary Federal Express Corporation's financial results for the fiscal quarter ended November 30, 2003.

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SIGNATURES

        Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned thereunto duly authorized.

	FedEx Corporation
Date: December 17, 2003	By:	/s/  JAMES S. HUDSON James S. Hudson Corporate Vice President— Strategic Financial Planning and Control
	Federal Express Corporation
Date: December 17, 2003	By:	/s/  JAY L. COFIELD Jay L. Cofield Vice President and Worldwide Controller

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EXHIBIT INDEX

Exhibit Number	Description
99.1	Press Release of FedEx Corporation dated December 17, 2003.

E-1

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EXPLANATORY NOTE
SIGNATURES
EXHIBIT INDEX

EX-99.1

Exhibit 99.1

        FOR IMMEDIATE RELEASE

FedEx Corp. Reports Higher Second Quarter Revenue
Business Realignment Programs Exceed Expectations

        MEMPHIS, Tenn., December 17, 2003... FedEx Corporation (NYSE: FDX) today reported earnings of $0.30 per diluted share for the quarter ended November 30, including $0.57 per diluted share of costs and $0.05 per diluted share of savings associated with the previously announced business realignment through early retirement and severance programs. Excluding these costs, earnings for the second quarter were $0.87 per diluted share. Earnings were $0.81 per diluted share a year ago.

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

	Q2 Fiscal 2004
	As Reported (GAAP)	YOY %	Before Realignment Costs	YOY %	Q2 Fiscal 2003 As Reported (GAAP)
Revenue	$5.92 billion	4	$5.92 billion	4	$5.67 billion
Operating Income	$183 million	(57)	$466 million	9	$427 million
Net Income	$91 million	(63)	$266 million	9	$245 million
Diluted EPS	$0.30	(63)	$0.87	7	$0.81

        "There was clear improvement in the Express cost structure this quarter, as evidenced by the higher operating income and margin before business realignment costs," said Alan B. Graf, Jr., executive vice president and chief financial officer. "We expect FedEx Corp. earnings per share for the fiscal second half to be substantially higher than last year's second half. We continue to examine cost reduction opportunities for fiscal 2004 and beyond in order to further improve profitability."

        During the first half of 2004, voluntary early retirement incentives with enhanced pension and postretirement healthcare benefits were offered to certain groups of employees at FedEx Express who were age 50 or older. Voluntary cash severance incentives were also offered to eligible employees at FedEx Express. These programs, which commenced August 1, 2003 and expired during the second quarter, were limited to eligible U.S. salaried staff employees and managers. Approximately 3,600 employees accepted offers under these programs. This response substantially exceeded the company's expectations. Consequently, replacement management and staff will be required and employee departure dates may be deferred up to May 31, 2004. Also, certain management positions were eliminated at FedEx Express and other business units based on the anticipated staff reductions from the voluntary programs and other cost reduction initiatives.

        The second quarter pretax cost of all of these programs was $283 million, including $7 million incurred in the other business units. For the fiscal first half, the cost of all these programs was $415 million. Including the effect of business realignment activities in business units outside of FedEx Express, the company expects second half charges of $15 million to $25 million. Therefore, full-year charges will be slightly higher than previous estimates.

        The company expects the savings from these initiatives to be $135 million to $145 million in fiscal 2004, mostly in the fiscal second half and slightly higher than previous estimates. Approximately $25 million of savings were realized in the second quarter, reflected primarily in lower ongoing salaries, wages and benefit costs. In fiscal 2005 and beyond, the estimated annual savings from all of these programs is expected to be $235 million to $240 million, slightly higher than previous estimates.

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        The company generated positive cash flow in the quarter. Cash was used to contribute $320 million to the company's principal pension plan, acquire 0.9 million FedEx shares under the company's share repurchase programs and pay a dividend. The company has also announced a 20% increase to its next quarterly dividend, to $0.06 per share.

Outlook

        Earnings are expected to be $0.60 to $0.70 per diluted share in the third quarter, excluding the costs of our business realignment activities, compared to $0.49 per diluted share a year ago. Fiscal 2004 earnings are expected to be $3.30 to $3.40 per diluted share, excluding business realignment costs and a one-time tax benefit recorded in the first quarter. This is higher than the company's previous fiscal 2004 earnings guidance, as projected savings from the business realignment programs are now included.

FedEx Express Segment

        For the second quarter, the FedEx Express segment reported:

	Q2 Fiscal 2004
	As Reported (GAAP)	YOY %	Before Realignment Costs	YOY %	Q2 Fiscal 2003 As Reported (GAAP)
Revenue	$4.28 billion	4	$4.28 billion	4	$4.13 billion
Op. Income (Loss)	$(19) million	NM	$260 million	13	$230 million
Operating Margin	(0.4%)		6.1%		5.6%

        FedEx Express operating income improved 13% before business realignment costs, benefiting from revenue growth, ongoing cost control efforts and voluntary early retirement and severance savings, partially offset by higher pension, healthcare, intercompany charges and maintenance costs. Intercompany charges from FedEx Services for sales, marketing and IT support rose due to higher salaries, variable compensation and employee benefits costs.

        FedEx International Priority® (IP) revenue grew 14% for the quarter, as IP revenue per package grew 10%, primarily due to an increase in weight per package and exchange rate differences. IP average daily package volume grew 4% year over year, led by 11% growth in Asian export volume and improving European and Latin American volume growth rates. U.S. domestic express average daily package volume declined slightly, while package yield was unchanged.

        As part of the company's continued growth in Asia, FedEx recently announced plans to increase its presence in China by establishing a new regional headquarters in Shanghai. In order to increase its market leadership position, the company, which currently serves more than 220 Chinese cities, also plans to expand that number by 100 over the next five years.

FedEx Ground Segment

        For the second quarter, the FedEx Ground segment reported:

•

Revenue of $978 million, up 8% from last year's $905 million



•

Operating income of $135 million, even with $135 million a year ago



•

Operating margin was 13.8%, down from 14.8% the previous year

        Average daily package volume grew 3% in the second quarter, up from 1% growth in the first quarter. FedEx Ground volume growth rates continue to be affected by year-over-year comparison with last year which was boosted by the threat of a UPS work stoppage. Lower than normal customer

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inventory levels in the retail sector also affected volumes. Yield per package increased 4%, attributable to last January's rate increase and an increase in extra service and fuel surcharge revenue. The company benefited from an extra day in the quarter.

        Operating income remained flat in the second quarter as intercompany charges increased because Ground utilized a larger portion of allocated sales, marketing, information technology and customer support resources. In addition, intercompany charges increased due to higher salaries, variable compensation and employee benefits costs at FedEx Services. Ground also experienced higher healthcare and pension costs as well as increased expenses related to terminal expansions and relocations.

FedEx Freight Segment

        For the second quarter, the FedEx Freight segment reported:

•

Revenue of $664 million, up 5% from last year's $634 million



•

Operating income of $66 million, up 6% from $62 million a year ago



•

Operating margin was 10.0%, up from 9.9% the previous year

        Average daily less-than-truckload (LTL) shipments decreased 2% compared to last year's second quarter, although November showed favorable year-over-year growth. LTL yield improved 6% year over year due to higher fuel surcharge revenue, the growth of Freight's interregional service, a 5.9% general rate increase on June 30, 2003 and favorable contract renewals.

        During the past quarter, FedEx Freight enhanced its value proposition by improving service performance and by launching a no-fee money-back guarantee.

Corporate Overview

        With annual revenues of $23 billion, FedEx Corp. is the premier global provider of transportation, e-commerce and supply chain management services. The company offers integrated business solutions through a network of subsidiaries operating independently, including: FedEx Express, the world's largest express transportation company; FedEx Ground, North America's second largest provider of small-package ground delivery service; FedEx Freight, the largest U.S. provider of regional less-than-truckload freight services; FedEx Custom Critical, North America's largest provider of expedited time-critical shipments; and FedEx Trade Networks, North America's largest customs broker and a provider of international freight forwarding and trade facilitation services. FedEx ranked highest in the J.D. Power and Associates 2002 Small Package Delivery Service Business Customer Satisfaction Study^SM in the categories of air, ground and international delivery services.

        Additional information and operating data are contained in the company's annual report, Form 10-K, Form 10-Qs and second quarter FY2004 Statistical Book. These materials, as well as a Webcast of the earnings release conference call to be held at 8:30 a.m. EST on December 17, are available on the company's Web site at www.fedex.com/us/investorrelations. A replay of the conference call Webcast will be posted on our Web site following the call.

        Certain statements in this press release may be considered forward-looking statements, such as statements relating to management's views with respect to future events and financial performance. Such forward-looking statements are subject to risks, uncertainties and other factors which could cause actual results to differ materially from historical experience or from future results expressed or implied by such forward-looking statements. Potential risks and uncertainties include, but are not limited to, any impacts on the company's business resulting from the timing, speed and magnitude of the U.S. domestic economic recovery, the number, timing, mix and relocation costs of replacement staff required as a result of the company's early retirement and severance programs, new U.S. domestic or

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international government regulation, the impact from any terrorist activities or international conflicts, the impact of rising fuel prices, our ability to match capacity to shifting volume levels, the timing and amount of any money that FedEx is entitled to receive under the Air Transportation Safety and System Stabilization Act and other factors which can be found in FedEx Corp.'s and its subsidiaries' press releases and filings with the SEC.

Media Contact: Shirlee Clark 901-818-7463
Investor Contact: Jim Clippard 901-818-7468
Home Page: fedex.com

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RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
TO GAAP FINANCIAL MEASURES

        The company believes that meaningful analysis of our financial performance requires an understanding of the factors underlying that performance and our judgments about the likelihood that particular factors will repeat. Excluding the impact of business realignment costs from our second quarter results and from our earnings guidance will allow more accurate comparisons to prior periods of our year-to-date and expected operating performance in fiscal 2004 and beyond. As required by SEC rules, the tables below present a reconciliation of our presented non-GAAP measures to the most directly comparable GAAP measures.

Second Quarter Fiscal 2004
(Dollars in millions, except earnings per share)

	FedEx Corp.											FedEx Express Segment
	Operating											Operating
						Net Income			Diluted Earnings Per Share
	Income			Margin								Income			Margin
Non-GAAP Measure	$	466		7.9	%	$	266		$	0.87		$	260		6.1	%
Business Realignment Costs		(283	)	(4.8	)%		(175	)		(0.57	)		(279	)	(6.5	)%
GAAP Measure	$	183		3.1	%	$	91		$	0.30		$	(19	)	(0.4	)%

Fiscal 2004 Third Quarter and Full-Year Earnings Guidance

	Q3 Diluted EPS Guidance			FY 2004 Diluted EPS Guidance
Non-GAAP Measure	$	0.60 to $0.70		$	3.30 to $3.40
Business Realignment Costs		(0.05 to 0.03	)		(0.90 to 0.88	)
Benefit From Tax Court Decision		—			0.08
GAAP Measure	$	0.55 to $0.67		$	2.48 to $2.60

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FEDEX CORP. FINANCIAL HIGHLIGHTS
(Unaudited)
Second Quarter Fiscal 2004
(In millions, except earnings per share)

			Three Months Ended November 30								Six Months Ended November 30
			2003			2002			%		2003			2002			%
Revenue:
	FedEx Express segment		$	4,279		$	4,128		4%		$	8,416		$	8,090		4%
	FedEx Ground segment			978			905		8%			1,892			1,774		7%
	FedEx Freight segment			664			634		5%			1,301			1,249		4%
	Eliminations & other			(1	)		—		NM			(2	)		(1	)	NM
		Total Revenue		5,920			5,667		4%			11,607			11,112		4%
Operating Expenses:
	Salaries and employee benefits			2,559			2,403		6%			5,129			4,829		6%
	Purchased transportation			598			549		9%			1,153			1,067		8%
	Rentals and landing fees			447			465		(4%	)		876			909		(4%	)
	Depreciation and amortization			336			338		(1%	)		670			677		(1%	)
	Fuel			340			336		1%			662			630		5%
	Maintenance and repairs			370			354		5%			734			725		1%
	Business realignment costs			283			—		NM			415			—		NM
	Other			804			795		1%			1,585			1,565		1%
		Total Operating Expenses		5,737			5,240		9%			11,224			10,402		8%
Operating Income (Loss):
	FedEx Express segment			(19	)		230		NM			4			358		(99%	)
	FedEx Ground segment			135			135		—			251			236		6%
	FedEx Freight segment			66			62		6%			127			116		9%
	Eliminations & other			1			—		NM			1			—		NM
		Total Operating Income		183			427		(57%	)		383			710		(46%	)
Other Income (Expense):
	Interest, net			(35	)		(28	)	25%			(40	)		(59	)	(32%	)
	Other, net			(2	)		(4	)	(50%	)		(1	)		(1	)	—
	Total Other Income (Expense)			(37	)		(32	)	16%			(41	)		(60	)	(32%	)
Pretax Income				146			395		(63%	)		342			650		(47%	)
Provision for Income Taxes				55			150		(63%	)		123			247		(50%	)
Net Income			$	91		$	245		(63%	)	$	219		$	403		(46%	)
Diluted Earnings Per Share			$	0.30		$	0.81		(63%	)	$	0.72		$	1.33		(46%	)
Weighted Average Common and Common Equivalent Shares				304			303		0%			304			302		1%
Capital Expenditures			$	308		$	352		(13%	)	$	608		$	888		(32%	)

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FEDEX CORP. OPERATING HIGHLIGHTS
(Unaudited)
Second Quarter Fiscal 2004
(In thousands, except yield, weight and operating weekdays)

			Three Months Ended November 30						Six Months Ended November 30
			2003		2002		%		2003		2002		%
FEDEX EXPRESS
Operating Weekdays				63		63	—			127		127	—
AVG DAILY VOLUME/POUNDS
Average Daily Package Volume:
	U.S. Overnight Box			1,169		1,183	(1	)%		1,169		1,168	0	%
	U.S. Overnight Envelope			655		685	(4	)%		668		683	(2	)%
	U.S. Deferred			924		903	2	%		898		874	3	%
		Total U.S. Domestic Package		2,748		2,771	(1	)%		2,735		2,725	0	%
	International Priority			397		381	4	%		383		369	4	%
		Total Average Daily Packages		3,145		3,152	(0	)%		3,118		3,094	1	%
Average Daily Freight Pounds:
	U.S.			8,649		9,469	(9	)%		8,270		9,215	(10	)%
	International			2,092		2,271	(8	)%		2,185		2,144	2	%
		Total Avg Daily Freight Pounds		10,741		11,740	(9	)%		10,455		11,359	(8	)%
YIELD
Revenue Per Package:
	U.S. Overnight Box		$	18.29	$	18.12	1	%	$	18.15	$	18.10	0	%
	U.S. Overnight Envelope			9.90		9.79	1	%		9.90		9.80	1	%
	U.S. Deferred			10.74		10.95	(2	)%		10.81		10.94	(1	)%
		Total U.S. Domestic Package		13.75		13.73	0	%		13.72		13.73	(0	)%
	International Priority			50.30		45.86	10	%		49.57		45.43	9	%
		Composite Package Yield	$	18.37	$	17.61	4	%	$	18.13	$	17.51	4	%
Revenue Per Freight Pound:
	U.S.		$	0.74	$	0.67	10	%	$	0.73	$	0.67	9	%
	International			0.74		0.71	4	%		0.73		0.71	3	%
		Composite Freight Yield	$	0.74	$	0.68	9	%	$	0.73	$	0.68	7	%
FEDEX GROUND
Operating Weekdays				63		62	2	%		127		126	1	%
Average Daily Package Volume				2,342		2,281	3	%		2,228		2,189	2	%
Yield			$	6.37	$	6.10	4	%	$	6.40	$	6.12	5	%
FEDEX FREIGHT
LTL Operating Weekdays				62		62	—			126		126	—
LTL Shipments Per Day				58		59	(2	)%		57		59	(3	)%
Weight Per LTL Shipment (lbs)				1,119		1,104	1	%		1,119		1,112	1	%
LTL Revenue/CWT			$	14.32	$	13.55	6	%	$	14.14	$	13.17	7	%
FEDEX CORP.
Average Full-Time Equivalents (FTEs)				191		192	(1	)%		190		192	(1	)%

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FEDEX CORP. CONDENSED CONSOLIDATED BALANCE SHEETS

Second Quarter Fiscal 2004
(In millions)

			Nov. 30, 2003 (Unaudited)		May 31, 2003
ASSETS
Current Assets:
Cash and cash equivalents			$	1,030	$	538
Other current assets				3,529		3,403
	Total Current Assets			4,559		3,941
Net Property and Equipment				8,813		8,700
Other Long-Term Assets				2,842		2,744
			$	16,214	$	15,385
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current Liabilities:
Current portion of long-term debt			$	332	$	308
Other current liabilities				3,384		3,027
		Total Current Liabilities		3,716		3,335
Long-Term Debt, Less Current Portion				1,893		1,709
Other Long-Term Liabilities				3,195		3,053
Total Common Stockholders' Investment				7,410		7,288
			$	16,214	$	15,385

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FEDEX CORP. CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)

Second Quarter Fiscal 2004
(In millions)

			Six Months Ended November 30
			2003			2002
Operating Activities:
	Net income		$	219		$	403
	Noncash charges (credits):
		Depreciation and amortization		670			677
		Other, net		64			92
Changes in operating assets and liabilities, net				307			(33	)
Net cash provided by operating activities				1,260			1,139
Investing Activities:
	Capital expenditures			(608	)		(888	)
Proceeds from asset dispositions				12			11
Net cash used in investing activities				(596	)		(877	)
Financing Activities:
	Dividends paid			(30	)		(30	)
	Other, net			(142	)		(44	)
Net cash used in financing activities				(172	)		(74	)
Net increase in cash and cash equivalents				492			188
Cash and cash equivalents at beginning of period				538			331
Cash and cash equivalents at end of period			$	1,030		$	519

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FEDEX EXPRESS SEGMENT FINANCIAL HIGHLIGHTS
(Unaudited)

Second Quarter Fiscal 2004
(In millions, except FTEs)

			Three Months Ended November 30								Six Months Ended November 30
			2003			2002			%		2003			2002			%
Revenue			$	4,279		$	4,128		4	%	$	8,416		$	8,090		4	%
Operating Expenses:
	Salaries and employee benefits			1,806			1,716		5	%		3,640			3,435		6	%
	Purchased transportation			169			151		12	%		327			295		11	%
	Rentals and landing fees			384			400		(4	)%		754			782		(4	)%
	Depreciation and amortization			203			205		(1	)%		407			409		(0	)%
	Fuel			310			307		1	%		603			578		4	%
	Maintenance and repairs			293			277		6	%		578			571		1	%
	Business realignment costs			279			—		NM			411			—		NM
	Intercompany charges			347			324		7	%		689			659		5	%
	Other			507			518		(2	)%		1,003			1,003		—
		Total Operating Expenses		4,298			3,898		10	%		8,412			7,732		9	%
Operating Income (Loss)			$	(19	)	$	230		NM		$	4		$	358		NM
Operating Margin				(0.4	)%		5.6	%				0.0	%		4.4	%
Average Full-Time Equivalents (000s)				122			123		(1	)%		122			124		(2	)%

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FEDEX GROUND SEGMENT FINANCIAL HIGHLIGHTS
(Unaudited)

Second Quarter Fiscal 2004
(In millions)

			Three Months Ended November 30								Six Months Ended November 30
			2003			2002			%		2003			2002			%
Revenue			$	978		$	905		8	%	$	1,892		$	1,774		7	%
Operating Expenses:
	Salaries and employee benefits			187			179		4	%		364			355		3	%
	Purchased transportation			367			337		9	%		709			655		8	%
	Rentals			26			23		13	%		46			46		—
	Depreciation and amortization			39			40		(3	)%		76			77		(1	)%
	Fuel			3			3		—			5			4		25	%
	Maintenance and repairs			24			22		9	%		47			44		7	%
	Intercompany charges			103			81		27	%		205			175		17	%
	Other			94			85		11	%		189			182		4	%
		Total Operating Expenses		843			770		9	%		1,641			1,538		7	%
Operating Income			$	135		$	135		—		$	251		$	236		6	%
Operating Margin				13.8	%		14.8	%				13.3	%		13.3	%

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FEDEX FREIGHT SEGMENT FINANCIAL HIGHLIGHTS
(Unaudited)

Second Quarter Fiscal 2004
(In millions)

			Three Months Ended November 30								Six Months Ended November 30
			2003			2002			%		2003			2002			%
Revenue			$	664		$	634		5	%	$	1,301		$	1,249		4	%
Operating Expenses:
	Salaries and employee benefits			345			329		5	%		685			657		4	%
	Purchased transportation			64			62		3	%		120			119		1	%
	Rentals and landing fees			25			29		(14	)%		49			55		(11	)%
	Depreciation and amortization			24			20		20	%		45			43		5	%
	Fuel			27			26		4	%		54			49		10	%
	Maintenance and repairs			29			31		(6	)%		56			59		(5	)%
	Intercompany charges			4			4		—			10			9		11	%
	Other			80			71		13	%		155			142		9	%
		Total Operating Expenses		598			572		5	%		1,174			1,133		4	%
Operating Income			$	66		$	62		6	%	$	127		$	116		9	%
Operating Margin				10.0	%		9.9	%				9.8	%		9.3	%

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