8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): March 19, 2014

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)	(IRS Employer Identification No.)

942 South Shady Grove Road, Memphis, Tennessee	38120
(Address of principal executive offices)	(ZIP Code)

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

FEDERAL EXPRESS CORPORATION

(Exact name of registrant as specified in its charter)

Commission File Number 1-7806

Delaware	71-0427007
(State or other jurisdiction of incorporation)	(IRS Employer Identification No.)

3610 Hacks Cross Road, Memphis, Tennessee	38125
(Address of principal executive offices)	(ZIP Code)

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

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

EXPLANATORY NOTE

The information in this Report, including the exhibit, is being furnished pursuant to Item 2.02 of Form 8-K and General Instruction B.2 thereunder. Such information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended.

SECTION 2. FINANCIAL INFORMATION.

Item 2.02. Results of Operations and Financial Condition.

Attached as Exhibit 99.1 and incorporated herein by reference is a copy of FedEx Corporation’s press release, dated March 19, 2014, announcing its and its wholly owned subsidiary Federal Express Corporation’s financial results for the fiscal quarter ended February 28, 2014.

SECTION 9. FINANCIAL STATEMENTS AND EXHIBITS.

Item 9.01. Financial Statements and Exhibits.

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

Exhibit Number	Description
99.1	Press Release of FedEx Corporation dated March 19, 2014.

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SIGNATURES

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

	FedEx Corporation
Date: March 19, 2014	By:	/s/ HERBERT C. NAPPIER
		Herbert C. Nappier
		Staff Vice President and Corporate Controller
	Federal Express Corporation
Date: March 19, 2014	By:	/s/ CATHY D. ROSS
		Cathy D. Ross
		Executive Vice President, Chief Financial Officer and Director

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EXHIBIT INDEX

Exhibit Number	Description
99.1	Press Release of FedEx Corporation dated March 19, 2014.

E-1

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

FedEx Corp. Reports Third Quarter Results

Operating Results Significantly Impacted by Severe Winter Weather

MEMPHIS, Tenn., March 19, 2014… FedEx Corp. (NYSE: FDX) today reported earnings of $1.23 per diluted share for the third quarter ended February 28, compared to $1.13 per share last year. Unusually severe winter storms throughout the quarter disrupted operations, decreasing shipping volume and increasing costs, and impacted year-over-year operating income by an estimated $125 million. Last year’s third quarter results were impacted by business realignment costs totaling $47 million, primarily related to the company’s voluntary buyout program for eligible U.S. officers and managing directors. Excluding the realignment costs, last year’s third quarter earnings were $1.23 per diluted share.

“Historically severe winter weather significantly affected our third-quarter earnings,” said Frederick W. Smith, FedEx Corp. chairman, president and chief executive officer. “On days when the weather was closer to normal seasonal conditions, our volumes were solid and service levels were high. The FedEx strategy of maintaining separate express and ground networks with multiple hubs proved to be an especially important advantage for our package customers during this quarter’s severe weather and peak shipping.”

Third Quarter Results

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

• Revenue of $11.3 billion, up 3% from $11.0 billion the previous year

• Operating income of $641 million, up 9% from $589 million last year

• Operating margin of 5.7%, up from 5.4% the previous year

• Net income of $378 million, up 5% from last year’s $361 million

Operating results increased despite the impact of severe winter weather. Results also include a negative net impact from fuel. These headwinds were partially offset by the benefit from one additional operating day in each transportation segment.

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During the third quarter, the company entered into accelerated share repurchase agreements to repurchase an aggregate of $2.0 billion of the company’s common stock. Share repurchases had a minimal positive impact on third quarter earnings per diluted share.

Outlook

FedEx projects earnings to be $2.25 to $2.50 per diluted share in the fourth quarter and $6.55 to $6.80 per diluted share for fiscal 2014. This outlook reflects share repurchases made to date, but does not include any benefit from additional share repurchases. Share repurchases are expected to continue, but the timing will be at the company’s discretion. The outlook also assumes the market outlook for fuel prices and continued moderate economic growth. The capital spending forecast for fiscal 2014 is now $3.8 billion, down $200 million from the previous forecast.

“While severe winter weather often affects our third-quarter results, the impact from multiple severe storms and frigid temperatures was significantly more pronounced this year and we are reducing our full-year earnings per share guidance as a result of the weather impact,” said Alan B. Graf, Jr., FedEx Corp. executive vice president and chief financial officer. “The $1.6 billion profit improvement plan at FedEx Express remains on track despite the near-term impact of weather. Our accelerated stock repurchase program initiated in January reflects our confidence in achieving our financial goals.”

FedEx Express Segment

For the third quarter, the FedEx Express segment reported:

• Revenue of $6.67 billion, down slightly from last year’s $6.70 billion

• Operating income of $135 million, up 14% from $118 million a year ago

• Operating margin of 2.0%, up from 1.8% the previous year

Revenue decreased slightly due to lower freight revenue, lower fuel surcharges and the impact from weather. U.S. domestic revenue per package was up slightly, as higher rates and weight per package were mostly offset by lower fuel surcharges. U.S. domestic average daily package volume increased slightly.

International export revenue per package increased 1%, as higher base yields were partially offset by lower fuel surcharges, unfavorable exchange rates, and the ongoing demand shift toward lower-yielding international services. FedEx International Priority^® (IP) average daily volume declined 5%, due to a drop in lower-yielding distribution services. IP average daily volume, excluding these distribution services, was essentially flat. FedEx International Economy^® average daily volume grew 8%.

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Operating results increased year over year despite the impact of weather, which reduced operating income by an estimated $70 million compared to the prior year. Benefiting the quarter were higher base package yields, lower pension expense, one additional operating day and ongoing cost reduction activities, partially offset by lower freight revenue and the negative net impact of fuel.

FedEx Ground Segment

For the third quarter, the FedEx Ground segment reported:

• Revenue of $3.03 billion, up 10% from last year’s $2.75 billion

• Operating income of $477 million, up 2% from $467 million a year ago

• Operating margin of 15.7%, down from 17.0% the previous year

FedEx Ground average daily volume grew 8% in the third quarter, as growth in both FedEx Home Delivery and business to business services was driven by market share gains. Revenue per package increased 1% due to rate increases and higher residential surcharges, partially offset by lower fuel surcharges. FedEx SmartPost average daily volume increased 2%. FedEx SmartPost net revenue per package increased 3% due to rate increases and service mix, partially offset by higher postage rates and lower fuel surcharges.

Operating income increased due to higher volume and revenue per package. The third quarter was favorably impacted by Cyber Week, which was in the second quarter last year, as well as one additional operating day. The favorability was significantly offset by an estimated $40 million year-over-year impact on operating income from weather, as well as increased network expansion costs and the negative net impact of fuel.

FedEx Freight Segment

For the third quarter, the FedEx Freight segment reported:

• Revenue of $1.35 billion, up 9% from last year’s $1.24 billion

• Operating income of $29 million, up from $4 million a year ago

• Operating margin of 2.2%, up from 0.3% the previous year

Less-than-truckload (LTL) average daily shipments and weight per shipment increased 7% and 2%, respectively. LTL revenue per hundredweight decreased 2% primarily due to changes in shipment characteristics and lower fuel surcharges.

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Operating income improved as the positive impacts of higher shipment volumes, heavier average weight per shipment, greater utilization of rail in the Economy service offering and one additional business day were partially offset by the impact of weather.

Effective March 31, 2014, FedEx Freight will increase certain U.S. and other shipping rates by an average of 3.9%.

Corporate Overview

FedEx Corp. (NYSE: FDX) provides customers and businesses worldwide with a broad portfolio of transportation, e-commerce and business services. With annual revenues of $45 billion, the company offers integrated business applications through operating companies competing collectively and managed collaboratively, under the respected FedEx brand. Consistently ranked among the world’s most admired and trusted employers, FedEx inspires its more than 300,000 team members to remain “absolutely, positively” focused on safety, the highest ethical and professional standards and the needs of their customers and communities. For more information, visit news.fedex.com.

Additional information and operating data are contained in the company’s annual report, Form 10-K, Form 10-Qs and third quarter fiscal 2014 Statistical Book. These materials, as well as a webcast of the earnings release conference call to be held at 8:30 a.m. EDT on March 19 are available on the company’s website at investors.fedex.com. A replay of the conference call webcast will be posted on our website following the call.

Certain statements in this press release may be considered forward-looking statements, such as statements relating to management’s views with respect to future events and financial performance. Such forward-looking statements are subject to risks, uncertainties and other factors which could cause actual results to differ materially from historical experience or from future results expressed or implied by such forward-looking statements. Potential risks and uncertainties include, but are not limited to, economic conditions in the global markets in which we operate, legal challenges or changes related to FedEx Ground’s owner-operators, our ability to execute on our business realignment program, new U.S. domestic or international government regulation, the impact from any terrorist activities or international conflicts, our ability to effectively operate, integrate and leverage acquired businesses, changes in fuel prices and currency exchange rates, our ability to match capacity to shifting volume levels and other factors which can be found in FedEx Corp.’s and its subsidiaries’ press releases and filings with the SEC.

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Media Contact: Jess Bunn 901-818-7463

Investor Contact: Mickey Foster 901-818-7468

Home Page: fedex.com

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RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

TO GAAP FINANCIAL MEASURES

The company believes that meaningful analysis of our historical and expected financial performance requires an understanding of the factors underlying that performance and our judgments about the likelihood that particular factors will repeat. Excluding charges associated with the business realignment program from prior period results will allow for more accurate comparisons of the company’s third quarter operating performance. As required by SEC rules, the table below presents a reconciliation of our presented non-GAAP measure to the most directly comparable GAAP measure.

	Q3 FY2013 Diluted Earnings Per Share
Non-GAAP Measure	$	1.23
Business Realignment Costs		(0.09	)
GAAP Measure	$	1.13	*

* Does not sum to total due to rounding

# # #

6

FEDEX CORP. FINANCIAL HIGHLIGHTS

Third Quarter Fiscal 2014

(In millions, except earnings per share)

(Unaudited)

	Three Months Ended February 28									Nine Months Ended February 28
	2014			2013			%			2014			2013			%
Revenue:
FedEx Express segment	$	6,674		$	6,704			—		$	20,123		$	20,194			—
FedEx Ground segment		3,031			2,747			10	%		8,610			7,802			10	%
FedEx Freight segment		1,347			1,237			9	%		4,205			4,013			5	%
FedEx Services segment		368			380			(3	%)		1,134			1,174			(3	%)
Other & eliminations		(119	)		(115	)		NM			(344	)		(331	)		NM
Total Revenue		11,301			10,953			3	%		33,728			32,852			3	%
Operating Expenses:
Salaries and employee benefits		4,167			4,150			—			12,392			12,378			—
Purchased transportation		2,063			1,871			10	%		5,982			5,411			11	%
Rentals and landing fees		662			640			3	%		1,950			1,888			3	%
Depreciation and amortization		652			599			9	%		1,938			1,764			10	%
Fuel		1,163			1,215			(4	%)		3,403			3,588			(5	%)
Maintenance and repairs		438			424			3	%		1,397			1,477			(5	%)
Business realignment costs		—			47			NM			—			64			NM
Other		1,515			1,418			7	%		4,403			4,233			4	%
Total Operating Expenses		10,660			10,364			3	%		31,465			30,803			2	%
Operating Income:
FedEx Express segment		135			118			14	%		697			555			26	%
FedEx Ground segment		477			467			2	%		1,369			1,324			3	%
FedEx Freight segment		29			4			NM			197			170			16	%
Total Operating Income		641			589			9	%		2,263			2,049			10	%
Other Expense:
Interest, net		(38	)		(9	)		NM			(95	)		(37	)		NM
Other, net		(9	)		(16	)		NM			(16	)		(29	)		NM
Total Other Expense		(47	)		(25	)		NM			(111	)		(66	)		NM
Pretax Income		594			564			5	%		2,152			1,983			9	%
Provision for Income Taxes		216			203			6	%		785			725			8	%
Net Income	$	378		$	361			5	%	$	1,367		$	1,258			9	%
Diluted Earnings Per Share	$	1.23		$	1.13			9	%	$	4.34		$	3.97			9	%
Weighted Average Common and Common Equivalent Shares		307			317			(3	%)		315			316			—
Capital Expenditures	$	864		$	542			59	%	$	2,554		$	2,430			5	%

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FEDEX CORP. CONDENSED CONSOLIDATED BALANCE SHEETS

Third Quarter Fiscal 2014

(In millions)

	Feb. 28, 2014 (Unaudited)			May 31, 2013
ASSETS
Current Assets
Cash and cash equivalents	$	3,042		$	4,917
Receivables, less allowances		5,197			5,044
Spare parts, supplies and fuel, less allowances		462			457
Deferred income taxes		624			533
Prepaid expenses and other		456			323
Total current assets		9,781			11,274
Property and Equipment, at Cost		40,019			38,109
Less accumulated depreciation and amortization		20,734			19,625
Net property and equipment		19,285			18,484
Other Long-Term Assets
Goodwill		2,739			2,755
Other assets		924			1,054
Total other long-term assets		3,663			3,809
	$	32,729		$	33,567
LIABILITIES AND STOCKHOLDERS’ INVESTMENT
Current Liabilities
Current portion of long-term debt	$	1		$	251
Accrued salaries and employee benefits		1,284			1,688
Accounts payable		1,903			1,879
Accrued expenses		1,831			1,932
Total current liabilities		5,019			5,750
Long-Term Debt, Less Current Portion		4,735			2,739
Other Long-Term Liabilities
Deferred income taxes		2,083			1,652
Pension, postretirement healthcare and other benefit obligations		3,586			3,916
Self-insurance accruals		1,028			987
Deferred lease obligations		741			778
Deferred gains, principally related to aircraft transactions		208			227
Other liabilities		102			120
Total other long-term liabilities		7,748			7,680
Commitments and Contingencies
Common Stockholders’ Investment
Common stock, $0.10 par value, 800 million shares authorized		32			32
Additional paid-in capital		2,259			2,668
Retained earnings		19,699			18,519
Accumulated other comprehensive loss		(3,754	)		(3,820	)
Treasury stock, at cost		(3,009	)		(1	)
Total common stockholders’ investment		15,227			17,398
	$	32,729		$	33,567

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FEDEX CORP. CONDENSED CONSOLIDATED

STATEMENTS OF CASH FLOWS

Third Quarter Fiscal 2014

(In millions)

(Unaudited)

	Nine Months Ended February 28
	2014			2013
Operating Activities:
Net income	$	1,367		$	1,258
Noncash charges:
Depreciation and amortization		1,938			1,764
Other, net		581			710
Changes in operating assets and liabilities, net		(1,308	)		(756	)
Net cash provided by operating activities		2,578			2,976
Investing Activities:
Capital expenditures		(2,554	)		(2,430	)
Business acquisitions, net of cash acquired		—			(483	)
Proceeds from asset dispositions and other		23			45
Net cash used in investing activities		(2,531	)		(2,868	)
Financing Activities:
Principal payments on debt		(254	)		(417	)
Proceeds from debt issuances		1,997			991
Dividends paid		(142	)		(132	)
Purchase of treasury stock		(3,984	)		(246	)
Other, net		471			221
Net cash (used in) provided by financing activities		(1,912	)		417
Effect of exchange rate changes on cash		(10	)		4
Net (decrease) increase in cash and cash equivalents		(1,875	)		529
Cash and cash equivalents at beginning of period		4,917			2,843
Cash and cash equivalents at end of period	$	3,042		$	3,372

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FEDEX EXPRESS SEGMENT FINANCIAL HIGHLIGHTS

Third Quarter Fiscal 2014

(Dollars in millions)

(Unaudited)

	Three Months Ended February 28							Nine Months Ended February 28
	2014			2013			%	2014			2013			%
Revenues:
Package Revenue:
U.S. Overnight Box	$	1,643		$	1,609		2%	$	4,852		$	4,822		1%
U.S. Overnight Envelope		393			413		(5%)		1,210			1,252		(3%)
Total U.S. Overnight		2,036			2,022		1%		6,062			6,074		—
U.S. Deferred		869			812		7%		2,369			2,246		5%
Total U.S. Package Revenue		2,905			2,834		3%		8,431			8,320		1%
International Priority		1,542			1,567		(2%)		4,760			4,906		(3%)
International Economy		540			491		10%		1,639			1,492		10%
Total International Export Package		2,082			2,058		1%		6,399			6,398		—
International Domestic1		347			342		1%		1,077			1,035		4%
Total Package Revenue		5,334			5,234		2%		15,907			15,753		1%
Freight Revenue:
U.S.		577			668		(14%)		1,786			1,923		(7%)
International Priority		379			384		(1%)		1,184			1,269		(7%)
International Airfreight		48			64		(25%)		157			215		(27%)
Total Freight Revenue		1,004			1,116		(10%)		3,127			3,407		(8%)
Other Revenue2		336			354		(5%)		1,089			1,034		5%
Total Express Revenue	$	6,674		$	6,704		—	$	20,123		$	20,194		—
Operating Expenses:
Salaries and employee benefits		2,509			2,539		(1%)		7,418			7,500		(1%)
Purchased transportation		608			583		4%		1,876			1,728		9%
Rentals and landing fees		432			429		1%		1,273			1,262		1%
Depreciation and amortization		374			334		12%		1,116			993		12%
Fuel		1,010			1,066		(5%)		2,952			3,126		(6%)
Maintenance and repairs		273			262		4%		888			983		(10%)
Business realignment costs3		—			13		NM		—			14		NM
Intercompany charges4		507			548		(7%)		1,514			1,620		(7%)
Other5		826			812		2%		2,389			2,413		(1%)
Total Operating Expenses		6,539			6,586		(1%)		19,426			19,639		(1%)
Operating Income	$	135		$	118		14%	$	697		$	555		26%
Operating Margin		2.0	%		1.8	%	0.2 pts		3.5	%		2.7	%	0.8 pts

1 - International Domestic represents international intra-country express operations, including acquisitions in Poland (June 2012), France (July 2012) and Brazil (July 2012).

2 - Includes FedEx Trade Networks and FedEx SupplyChain Systems.

3 - Includes predominantly severance costs associated with the company’s voluntary buyout program.

4 - Includes allocations of $21 million in the third quarter of 2013 and $31 million year-to-date for business realignment costs.

5 - Includes predominantly costs associated with outside service contracts (such as security, facility services and cargo handling), professional fees, uniforms, insurance and advertising.

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FEDEX EXPRESS SEGMENT OPERATING HIGHLIGHTS

Third Quarter Fiscal 2014

(Unaudited)

	Three Months Ended February 28							Nine Months Ended February 28
	2014		2013		%			2014		2013		%
PACKAGE STATISTICS1
Average Daily Package Volume (000s):
U.S. Overnight Box		1,202		1,176		2	%		1,153		1,135		2	%
U.S. Overnight Envelope		515		569		(9	%)		538		570		(6	%)
Total U.S. Overnight Package		1,717		1,745		(2	%)		1,691		1,705		(1	%)
U.S. Deferred		984		944		4	%		871		843		3	%
Total U.S. Domestic Package		2,701		2,689		—			2,562		2,548		1	%
International Priority		399		420		(5	%)		409		424		(4	%)
International Economy		168		155		8	%		168		152		11	%
Total International Export Package		567		575		(1	%)		577		576		—
International Domestic2		780		781		—			822		781		5	%
Total Average Daily Packages		4,048		4,045		—			3,961		3,905		1	%
Yield (Revenue Per Package):
U.S. Overnight Box	$	21.70	$	22.08		(2	%)	$	22.15	$	22.35		(1	%)
U.S. Overnight Envelope		12.09		11.69		3	%		11.84		11.57		2	%
U.S. Overnight Composite		18.82		18.69		1	%		18.87		18.75		1	%
U.S. Deferred		14.01		13.87		1	%		14.31		14.02		2	%
U.S. Domestic Composite		17.07		17.00		—			17.32		17.18		1	%
International Priority		61.38		60.25		2	%		61.30		60.93		1	%
International Economy		51.01		51.03		—			51.24		51.72		(1	%)
Total International Export Composite		58.30		57.76		1	%		58.37		58.50		—
International Domestic2		7.05		7.06		—			6.90		6.98		(1	%)
Composite Package Yield	$	20.91	$	20.87		—		$	21.14	$	21.23		—
FREIGHT STATISTICS
Average Daily Freight Pounds (000s):
U.S.		8,263		8,324		(1	%)		7,850		7,697		2	%
International Priority		2,823		2,894		(2	%)		2,917		3,098		(6	%)
International Airfreight		757		1,035		(27	%)		839		1,102		(24	%)
Total Avg Daily Freight Pounds		11,843		12,253		(3	%)		11,606		11,897		(2	%)
Revenue Per Freight Pound:
U.S.	$	1.11	$	1.30		(15	%)	$	1.20	$	1.31		(8	%)
International Priority		2.13		2.14		—			2.14		2.15		—
International Airfreight		1.00		0.99		1	%		0.98		1.03		(5	%)
Composite Freight Yield	$	1.35	$	1.47		(8	%)	$	1.42	$	1.51		(6	%)
Operating Weekdays		63		62		2	%		190		190		—

1 - Package and freight statistics include only the operations of FedEx Express.

2 - International Domestic represents international intra-country express operations, including acquisitions in Poland (June 2012), France (July 2012) and Brazil (July 2012).

11

FEDEX GROUND SEGMENT FINANCIAL AND OPERATING HIGHLIGHTS

Third Quarter Fiscal 2014

(Dollars in millions)

(Unaudited)

	Three Months Ended February 28									Nine Months Ended February 28
	2014			2013			%			2014			2013			%
FINANCIAL HIGHLIGHTS
Revenues:
FedEx Ground	$	2,751		$	2,480			11	%	$	7,858		$	7,112			10	%
FedEx SmartPost		280			267			5	%		752			690			9	%
Total Revenues		3,031			2,747			10	%		8,610			7,802			10	%
Operating Expenses:
Salaries and employee benefits		460			405			14	%		1,319			1,178			12	%
Purchased transportation		1,253			1,121			12	%		3,476			3,124			11	%
Rentals		105			86			22	%		299			245			22	%
Depreciation and amortization		121			111			9	%		350			324			8	%
Fuel		7			6			17	%		14			13			8	%
Maintenance and repairs		57			48			19	%		166			140			19	%
Intercompany charges		287			270			6	%		864			794			9	%
Other1		264			233			13	%		753			660			14	%
Total Operating Expenses		2,554			2,280			12	%		7,241			6,478			12	%
Operating Income	$	477		$	467			2	%	$	1,369		$	1,324			3	%
Operating Margin		15.7	%		17.0	%		(1.3 pts	)		15.9	%		17.0	%		(1.1 pts	)
OPERATING STATISTICS
Operating Weekdays
FedEx Ground		63			62			2	%		190			190			—
FedEx SmartPost		61			61			—			188			189			(1	%)
Average Daily Package Volume (000s)
FedEx Ground		4,817			4,476			8	%		4,584			4,214			9	%
FedEx SmartPost		2,529			2,477			2	%		2,276			2,051			11	%
Yield (Revenue Per Package)
FedEx Ground	$	9.04		$	8.92			1	%	$	9.00		$	8.86			2	%
FedEx SmartPost	$	1.82		$	1.77			3	%	$	1.76		$	1.78			(1	%)

1 - Includes predominantly costs associated with outside service contracts (such as security and facility services), insurance and professional fees.

12

FEDEX FREIGHT SEGMENT FINANCIAL AND OPERATING HIGHLIGHTS

Third Quarter Fiscal 2014

(Dollars in millions)

(Unaudited)

	Three Months Ended February 28									Nine Months Ended February 28
	2014			2013			%			2014			2013			%
FINANCIAL HIGHLIGHTS
Revenue	$	1,347		$	1,237			9	%	$	4,205		$	4,013			5	%
Operating Expenses:
Salaries and employee benefits		598			562			6	%		1,807			1,750			3	%
Purchased transportation		231			197			17	%		715			647			11	%
Rentals		31			30			3	%		94			88			7	%
Depreciation and amortization		58			55			5	%		172			160			8	%
Fuel		146			142			3	%		436			447			(2	%)
Maintenance and repairs		42			45			(7	%)		134			142			(6	%)
Business realignment costs		—			1			NM			—			1			NM
Intercompany charges		111			109			2	%		349			330			6	%
Other1		101			92			10	%		301			278			8	%
Total Operating Expenses		1,318			1,233			7	%		4,008			3,843			4	%
Operating Income	$	29		$	4			NM		$	197		$	170			16	%
Operating Margin		2.2	%		0.3	%		1.9 pts			4.7	%		4.2	%		0.5 pts
OPERATING STATISTICS
LTL Operating Weekdays		62			61			2	%		188			188			—
Average Daily LTL Shipments (000s)
Priority		59.5			55.3			8	%		61.5			59.5			3	%
Economy		26.3			25.2			4	%		27.3			26.2			4	%
Total Average Daily LTL Shipments		85.8			80.5			7	%		88.8			85.7			4	%
Weight Per LTL Shipment (lbs)
Priority		1,280			1,250			2	%		1,255			1,226			2	%
Economy		1,002			989			1	%		995			993			—
Composite Weight Per LTL Shipment		1,195			1,168			2	%		1,175			1,154			2	%
LTL Yield (Revenue/CWT)
Priority	$	17.54		$	17.87			(2	%)	$	17.77		$	17.91			(1	%)
Economy		25.71			26.17			(2	%)		25.83			25.92			—
Composite LTL Yield	$	19.67		$	20.10			(2	%)	$	19.88		$	20.03			(1	%)

1 - Includes predominantly costs associated with insurance, professional fees and outside service contracts (such as security and facility services).

13

Frederick W. Smith, chairman, president and chief executive officer of FedEx Corp., said he was “very proud of the FedEx team” for delivering outstanding service to customers during the company’s third quarter despite severe weather.