##### Table of Contents



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, 2007.
 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 1-7806
 FEDERAL EXPRESS CORPORATION
 (Exact Name of Registrant as Specified in its Charter)
 Delaware
    
    71-0427007(State or Other Jurisdiction of
    
    (I.R.S. EmployerIncorporation or Organization)
    
    Identification No,)3610 Hacks Cross Road, Memphis, Tennessee
    
    38125(Address of Principal Executive Offices)
    
    (ZIP Code)
 (901) 369-3600
  Title of each class
    

Name
of each exchange on which registeredNone
    
    None
 None
  o þ
  o þ
  þ o
 þ
  o o þ
  o þ
  The
Registrant meets the conditions set forth in General Instruction I(1)(a) and (b) of Form 10-K
and is therefore filing this Form with the reduced disclosure format permitted by General
Instruction I(2).




---



##### 



TABLE OF CONTENTS
 PagePART IITEM 1.
    
    Business
    
    
    3ITEM 1A.
    
    Risk Factors
    
    
    10ITEM 1B.
    
    Unresolved Staff Comments
    
    
    10ITEM 2.
    
    Properties
    
    
    11ITEM 3.
    
    Legal Proceedings
    
    
    14ITEM 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    14PART IIITEM 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    15ITEM 6.
    
    Selected Financial Data
    
    
    15ITEM 7.
    
    Managements Discussion and Analysis of Results of Operations and Financial Condition
    
    
    15ITEM 7A.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    15ITEM 8.
    
    Financial Statements and Supplementary Data
    
    
    15ITEM 9.
    
    Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
    
    
    15ITEM 9A.
    
    Controls and Procedures
    
    
    15ITEM 9B.
    
    Other Information
    
    
    16PART IIIITEM 10.
    
    Directors, Executive Officers and Corporate Governance
    
    
    16ITEM 11.
    
    Executive Compensation
    
    
    16ITEM 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    16ITEM 13.
    
    Certain Relationships and Related Transactions, and Director Independence
    
    
    16ITEM 14.
    
    Principal Accountant Fees and Services
    
    
    16PART IVITEM 15.
    
    Exhibits, Financial Statement Schedules
    
    
    18FINANCIAL SECTIONTable of Contents
    
    
    21Managements Discussion and Analysis
    
    
    22Consolidated Financial Statements
    
    
    34Other Financial Information
    
    
    64EXHIBITSExhibit Index
    
    
    E-lEx-23 Consent of Ernst & Young LLPEx-24 Powers of AttorneyEx-31.1 Section 302 Certification of the CEOEx-31.2 Section 302 Certification of the CFOEx-32.1 Section 906 Certification of the CEOEx-32.2 Section 906 Certification of the CFO




---



##### Table of Contents



PART I
 
 ITEM 1. BUSINESS
 Overview
     Services
   3




---



##### Table of Contents



fedex.com.
 International Expansion
  
    
    In December 2006, FedEx acquired all of the outstanding capital stock
of ANC Holdings Ltd. (ANC), a United Kingdom domestic express
transportation company, for $241 million, predominantly in cash (the
ANC stock was subsequently transferred to us). The acquisition of ANC
allows us to better serve the United Kingdom domestic market, which we
previously served primarily through independent agents.
    
    In January 2007, we acquired all of the outstanding capital stock of
Prakash Air Freight Pvt. Ltd. (PAFEX), our primary service provider
in India, for $32 million in cash. The acquisition of PAFEX extends
our operations in the global express industry with a wholly owned
company in one of the worlds fastest growing markets.
    
    In March 2007, we acquired Tianjin Datian W. Group Co., Ltd.s (DTW
Group) fifty percent share of the FedEx-DTW International Priority
express joint venture and assets relating to DTW Groups domestic
express network in China for $427 million in cash. The acquisition
converted our joint venture with DTW Group, formed in 1999, into a
wholly owned subsidiary and increases our presence in China in the
international and domestic express businesses.
   4




---



##### Table of Contents




    
    In 2005, we launched the express air cargo industrys first direct
flight from mainland China to Europe (a daily direct flight from
Shanghai to Frankfurt, Germany) as part of a new westbound
around-the-world route that originates and terminates in Memphis and
provides connections via the FedEx AsiaOne network to and from
northern and eastern China.
    
    In 2006, we launched the first overnight express link between India
and China as part of our new eastbound around-the-world route, which
connects Europe, India, China and Japan with our U.S. hub in Memphis.
    
    In 2006, we expanded our service in India. We increased our flight
frequencies in and out of India and improved connectivity between key
export centers and regional hubs, resulting in improved service,
especially for customers in Delhi and northern India.
    
    In 2006, we broke ground on a new Asia-Pacific hub at the Guangzhou
Baiyun International Airport in Southern China. The new Asia-Pacific
hub is expected to assume and expand the current activities of our
existing hub in Subic Bay, Philippines, beginning in 2009. We believe
the new hub will better serve our global customers doing business in
and with the fast-growing China and Asia-Pacific markets.
    
    In 2007, we began using four new flight frequencies into China. We now
have authority to operate a total of 30 weekly flights into China, the
most of any U.S.-based cargo carrier.
  Technology
   fedex.com fedex.com. fedex.com fedex.com,
 5




---



##### Table of Contents



fedex.com
  Marketing
  
    
    The National Football League (NFL), as its Official Delivery Service Sponsor
    
    FedExField, home of the NFLs Washington Redskins
    
    FedEx Orange Bowl, host of one of college footballs Bowl Championship Series games
    
    The #11 Joe Gibbs Racing Chevrolet driven by Denny Hamlin in the NASCAR NEXTEL Cup Series
    
    PGA TOUR and the Champions Tour golf organizations, as the Official Shipping Company
    
    FedExCup, a season-long points competition for PGA TOUR players
    
    Pebble Beach Golf Resorts, as the official shipping company
    
    National Basketball Association (NBA), as its official delivery service sponsor
    
    FedExForum, the home of the NBAs Memphis Grizzlies
    
    Vodafone McLaren Mercedes Formula One team
    
    French Open tennis tournament
 U.S. Postal Service Agreement
  6




---



##### Table of Contents



Pricing
  fedex.com
 Operations
     7




---



##### Table of Contents



Fuel Supplies and Costs
   Percentage of TotalFiscal Year
    
    Total Cost (in millions)
    
    Revenues2007
    
    $
    2,639
    
    
    
    11.7
    %2006
    
    
    2,497
    
    
    
    11.72005
    
    
    1,780
    
    
    
    9.22004
    
    
    1,160
    
    
    
    6.72003
    
    
    1,058
    
    
    
    6.5
  Competition
  Employees
   8




---



##### Table of Contents



Trademarks
  Regulation
 Air.
     9




---



##### Table of Contents



Ground.
  Communication.
 Environmental.
  
 ITEM 1A. RISK FACTORS
  
 ITEM 1B. UNRESOLVED STAFF COMMENTS
  10




---



##### Table of Contents



ITEM 2. PROPERTIES
  Aircraft and Vehicles
  Maximum OperationalRevenue PayloadDescription
    
    Owned
    
    Leased
    
    Total
    
    (Pounds per Aircraft)(l)Boeing MD11
    
    
    30
    
    
    
    28
    
    
    
    58
    
    
    
    164,200Boeing MD10-30 (2)
    
    
    5
    
    
    
    2
    
    
    
    7
    
    
    
    114,200Boeing DC10-30
    
    
    6
    
    
    
    7
    
    
    
    13
    
    
    
    114,200Boeing MD10-10 (2)
    
    
    49
    
    
    
    
    
    
    
    49
    
    
    
    113,100Boeing DC10-10
    
    
    12
    
    
    
    2
    
    
    
    14
    (3)
    
    
    113,100Airbus A300-600
    
    
    24
    
    
    
    36
    
    
    
    60
    (4)
    
    
    85,600Airbus A310-200/300
    
    
    50
    
    
    
    16
    
    
    
    66
    
    
    
    61,900Boeing B757-200
    
    
    4
    
    
    
    
    
    
    
    4
    (5)
    
    
    45,800Boeing B727-200
    
    
    85
    
    
    
    9
    
    
    
    94
    
    
    
    38,200Boeing B727-100
    
    
    1
    
    
    
    
    
    
    
    1
    
    
    
    27,700ATR 72-202
    
    
    13
    
    
    
    
    
    
    
    13
    (6)
    
    
    18,000ATR 42-300/320
    
    
    29
    
    
    
    
    
    
    
    29
    
    
    
    12,000Fokker F27-500
    
    
    2
    
    
    
    
    
    
    
    2
    
    
    
    13,500Fokker F27-600
    
    
    6
    
    
    
    
    
    
    
    6
    
    
    
    13,800Cessna 208B
    
    
    243
    
    
    
    
    
    
    
    243
    
    
    
    3,400Cessna 208A
    
    
    10
    
    
    
    
    
    
    
    10
    
    
    
    3,000Total
    
    
    569
    
    
    
    100
    
    
    
    669
 
 (1)
    
    Maximum operational revenue payload is the lesser of the net volume-limited payload and the
net maximum structural payload.(2)
    
    The MD10-30s and MD10-l0s are DC10-30s and DC10-10s, respectively, that have been converted
to an MD10 configuration.(3)
    
    Includes 7 aircraft not currently in operation and awaiting conversion to MD10 configuration.(4)
    
    Includes 5 aircraft not currently in operation and awaiting completion of
passenger-to-freighter modification.(5)
    
    Includes 4 aircraft not currently in operation  1 awaiting completion of
passenger-to-freighter modification and 3 in storage.(6)
    
    Includes 3 aircraft not currently in operation and awaiting completion of
passenger-to-freighter modification. 11




---



##### Table of Contents




    
    The MD11s are three-engine, wide-bodied aircraft that have a longer
range and larger capacity than DC10s.
    
    The DC10s are three-engine, wide-bodied aircraft that have been
specially modified to meet our cargo requirements. The DC10s come in
two models, the DC10-10 and the DC10-30. The DC10-30 has a longer
range and higher weight capacity than the DC10-10.
    
    The MD10s are three-engine, wide-bodied DC10 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 aircraft configured for cargo service.
    
    The B727s are three-engine aircraft configured for cargo service.
    
    The Fokker F27, Cessna 208 and ATR turbo-prop aircraft are leased to
independent operators to support our operations in areas where demand
does not justify use of a larger aircraft.
    Aircraft Purchase Commitments
  A300
    
    A310
    
    B757
    

B777F
    
    Total2008
    
    
    9
    
    
    
    2
    
    
    
    7
    
    
    
    
    
    
    
    182009
    
    
    3
    
    
    
    
    
    
    
    13
    
    
    
    
    
    
    
    162010
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    6
    
    
    
    102011
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    9
    
    
    
    122012
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    3Thereafter
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    12
    
    
    
    2
    
    
    
    30
    
    
    
    15
    
    
    
    59
  12




---



##### Table of Contents



Sorting and Handling Facilities
  Sorting
    
    
    
    LeaseSquare
    
    Capacity
    
    
    
    ExpirationLocation
    
    Acres
    
    Feet
    
    (per hour) (1)
    
    Lessor
    
    YearNationalMemphis, Tennessee
    
    
    518
    
    
    
    3,367,000
    
    
    
    465,000
    
    
    Memphis-Shelby
County Airport
Authority
    
    
    2036Indianapolis, Indiana
    
    
    215
    
    
    
    1,895,000
    
    
    
    192,000
    
    
    Indianapolis
Airport Authority
    
    
    2028RegionalFort Worth, Texas
    
    
    168
    
    
    
    948,000
    
    
    
    76,000
    
    
    Fort Worth Alliance
Airport Authority
    
    
    2021Newark, New Jersey
    
    
    70
    
    
    
    595,000
    
    
    
    154,000
    
    
    Port Authority of
New York and
New Jersey
    
    
    2010Oakland, California
    
    
    74
    
    
    
    320,000
    
    
    
    54,000
    
    
    City of Oakland
    
    
    2011MetropolitanChicago, Illinois
    
    
    51
    
    
    
    419,000
    
    
    
    52,000
    
    
    City of Chicago
    
    
    2018Los Angeles, California
    
    
    23
    
    
    
    305,000
    
    
    
    57,000
    
    
    City of Los Angeles
    
    
    2009InternationalAnchorage, Alaska (2)
    
    
    64
    
    
    
    332,000
    
    
    
    24,000
    
    
    Alaska Department
of Transportation
and Public
Facilities
    
    
    2023Paris, France (3)
    
    
    87
    
    
    
    861,000
    
    
    
    54,000
    
    
    Aeroports de Paris
    
    
    2029Subic Bay, Philippines (4)
    
    
    18
    
    
    
    316,000
    
    
    
    22,000
    
    
    Subic Bay
Metropolitan
Authority
    
    
    2010
 
 (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. 13




---



##### Table of Contents



Administrative and Other Properties and Facilities
    
 ITEM 3. LEGAL PROCEEDINGS
   14




---



##### Table of Contents



ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 PART II
 
 ITEM 5.
    
    MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES
OF EQUITY SECURITIES
  
 ITEM 6. SELECTED FINANCIAL DATA
  
 ITEM 7.  MANAGEMENTS DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
  
 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
  
 ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 ITEM 9A. CONTROLS AND PROCEDURES
 Managements Evaluation of Disclosure Controls and Procedures
  15




---



##### Table of Contents



Assessment of Internal Control Over Financial Reporting
  Changes in Internal Control Over Financial Reporting
  
 ITEM 9B. OTHER INFORMATION
  
 PART III
 
 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
  
 ITEM 11. EXECUTIVE COMPENSATION
  
 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
  
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
  
 ITEM
14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
  2007
    
    

2006Audit fees
    
    $
    8,030
    
    
    $
    8,211Audit-related fees
    
    
    426
    
    
    
    332Tax fees
    
    
    597
    
    
    
    342All other fees
    
    
    9
    
    
    
    13Total
    
    $
    9,062
    
    
    $
    8,898
 16




---



##### Table of Contents




    
    Audit Fees.Represents fees for professional services provided for the
audit of FedEx Expresss annual financial statements and review of
FedEx Expresss quarterly financial statements, for the audit of FedEx
Expresss internal control over financial reporting and for audit
services provided in connection with other statutory or regulatory
filings.
    
    Audit-Related Fees.Represents fees for assurance and other services
related to the audit of FedEx Expresss financial statements. The fees
for 2007 and 2006 include fees primarily for benefit plan audits.
    
    Tax Fees.Represents fees for professional services provided primarily
for domestic and international tax compliance and advice. Tax
compliance and preparation fees totaled $15,000 and $34,000 in 2007
and 2006, respectively.
    
    All Other Fees.Represents fees for products and services not otherwise
included in the categories above. The amounts shown for 2007 and 2006
include fees for online technical resources.
 http://http://ir.fedex.com/governance/Auditor_Policy.cfm.
      17




---



##### Table of Contents



PART IV
 
 ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
 (a)(1) and (2) Financial Statements; Financial Statement Schedules
  (a)(3) Exhibits
  18




---



##### Table of Contents



SIGNATURES
  FEDERAL EXPRESS CORPORATIONDated: July 12, 2007
    By:
    /s/DAVID J. BRONCZEKDavid J. BronczekPresident and Chief Executive Officer  Signature
    
    Capacity
    
    Date/s/ DAVID J. BRONCZEK

David J. Bronczek
    
    President, Chief Executive Officer
and Director (Principal Executive Officer)
    
    July 12, 2007/s/ CATHY D. ROSS

Cathy D. Ross
    
    Senior Vice President and Chief
Financial Officer (Principal Financial
Officer)
    
    July 12, 2007/s/ JAY L. COFIELD

Jay L. Cofield
    
    Vice President and Worldwide
Controller (Principal Accounting Officer)
    
    July 12, 2007/s/ FREDERICK W. SMITH*

Frederick W. Smith
    
    Chairman of the Board of Directors
    
    July 12, 2007/s/ ROBERT B. CARTER*

Robert B. Carter
    
    Director
    
    July 12, 2007/s/ MICHAEL L. DUCKER*

Michael L. Ducker
    
    Executive Vice President and
President  International and Director
    
    July 12, 2007/s/ T. MICHAEL GLENN*

T. Michael Glenn
    
    Director
    
    July 12, 2007/s/ ALAN B. GRAF, JR.*

Alan B. Graf, Jr.
    
    Director
    
    July 12, 2007
 19




---



##### Table of Contents



Signature
    
    Capacity
    
    Date/s/ WILLIAM J. LOGUE*

William J. Logue
    
    Executive Vice
President  U.S. 
Operations and
Systems Support and
Director
    
    July 12, 2007/s/ CHRISTINE P. RICHARDS*

Christine P. Richards
    
    Director
    
    July 12, 2007
 
 * By:

/s/
JAY L. COFIELD
    
    
    July 12, 2007Jay L. CofieldAttorney-in-Fact 20




---



##### Table of Contents



FINANCIAL SECTION TABLE OF CONTENTS
 PAGEManagements Discussion and AnalysisOverview of Financial Section
    
    
    22Results of Operations
    
    
    24New Accounting Pronouncements
    
    
    29Risk Factors
    
    
    30Forward-Looking Statements
    
    
    33Consolidated Financial StatementsManagements Report on Internal Control over Financial Reporting
    
    
    34Reports of Independent Registered Public Accounting Firm
    
    
    35Consolidated
Balance Sheets May 31, 2007 and 2006
    
    
    37Consolidated Statements of Income Years Ended May 31, 2007, 2006 and 2005
    
    
    39Consolidated Statements of Cash Flows Years Ended May 31, 2007, 2006 and 2005
    
    
    40Consolidated Statements of Changes in Owners Equity and Comprehensive Income Years Ended May 31, 2007, 2006 and 2005
    
    
    41Notes to Consolidated Financial Statements
    
    
    42Other Financial InformationQuantitative and Qualitative Disclosures about Market Risk
    
    
    64Report of Independent Registered Public Accounting Firm
    
    
    65Schedule II  Valuation and Qualifying Accounts
    
    
    66Computation of Ratio of Earnings to Fixed Charges
    
    
    67
 21




---



##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
 
 OVERVIEW OF FINANCIAL SECTION
  DESCRIPTION OF BUSINESS
     22




---



##### Table of Contents




    
    the overall customer demand for our various services;
 
    
    the volume of shipments transported through our network, as measured by our average daily volume and shipment weight;
 
    
    the mix of services purchased by our customers;
 
    
    the prices we obtain for our services, as measured by average revenue per shipment (yield);
 
    
    our ability to manage our cost structure for capital expenditures and operating expenses and to match our cost
structure to 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.
  23




---



##### Table of Contents



RESULTS OF OPERATIONS
  Percent Change2007
    
    
    2006
    
    
    2005
    
    
    2007/2006
    
    
    2006/2005Revenues:Package:U.S. overnight box
    
    $
    6,485
    
    
    $
    6,422
    
    
    $
    5,969
    
    
    
    1
    
    
    
    8U.S. overnight envelope
    
    
    1,990
    
    
    
    1,974
    
    
    
    1,798
    
    
    
    1
    
    
    
    10U.S. deferred
    
    
    2,883
    
    
    
    2,853
    
    
    
    2,799
    
    
    
    1
    
    
    
    2Total U.S. domestic package revenue
    
    
    11,358
    
    
    
    11,249
    
    
    
    10,566
    
    
    
    1
    
    
    
    6International Priority (IP)(1)
    
    
    6,722
    
    
    
    6,139
    
    
    
    5,464
    
    
    
    9
    
    
    
    12Total package revenue
    
    
    18,080
    
    
    
    17,388
    
    
    
    16,030
    
    
    
    4
    
    
    
    8Freight:U.S.
    
    
    2,412
    
    
    
    2,218
    
    
    
    1,854
    
    
    
    9
    
    
    
    20International priority freight(1)
    
    
    1,045
    
    
    
    840
    
    
    
    670
    
    
    
    24
    
    
    
    25International airfreight
    
    
    394
    
    
    
    434
    
    
    
    381
    
    
    
    (9
    )
    
    
    14Total freight revenue
    
    
    3,851
    
    
    
    3,492
    
    
    
    2,905
    
    
    
    10
    
    
    
    20Other (2)
    
    
    596
    
    
    
    416
    
    
    
    429
    
    
    
    43
    
    
    
    (3
    )Total revenues
    
    
    22,527
    
    
    
    21,296
    
    
    
    19,364
    
    
    
    6
    
    
    
    10Operating expenses:Salaries and employee benefits
    
    
    8,051
    (3)
    
    
    7,861
    
    
    
    7,540
    
    
    
    2
    
    
    
    4Purchased transportation
    
    
    1,097
    
    
    
    969
    
    
    
    865
    
    
    
    13
    
    
    
    12Rentals and landing fees
    
    
    1,598
    
    
    
    1,684
    (4)
    
    
    1,597
    
    
    
    (5
    )
    
    
    5Depreciation and amortization
    
    
    845
    
    
    
    792
    
    
    
    785
    
    
    
    7
    
    
    
    1Fuel
    
    
    2,946
    
    
    
    2,786
    
    
    
    2,012
    
    
    
    6
    
    
    
    38Maintenance and repairs
    
    
    1,440
    
    
    
    1,340
    
    
    
    1,272
    
    
    
    7
    
    
    
    5Airline Stabilization Act charge
    
    
    
    
    
    
    
    
    
    
    48
    
    
    NM
    
    
    NMIntercompany charges
    
    
    2,076
    
    
    
    1,538
    
    
    
    1,505
    
    
    
    35
    
    
    
    2Other
    
    
    2,561
    
    
    
    2,596
    
    
    
    2,349
    
    
    
    (1
    )
    
    
    11Total operating expenses
    
    
    20,614
    
    
    
    19,566
    
    
    
    17,973
    
    
    
    5
    
    
    
    9Operating income
    
    $
    1,913
    
    
    $
    1,730
    
    
    $
    1,391
    
    
    
    11
    
    
    
    24Operating margin
    
    
    8.5
    %
    
    
    8.1
    %
    
    
    7.2
    %
    
    40
    bp
    
    90
    bpOther income (expense):Interest expense
    
    
    (40
    )
    
    
    (54
    )
    
    
    (73
    )
    
    
    (26
    )
    
    
    (26
    )Interest income
    
    
    213
    
    
    
    104
    
    
    
    45
    
    
    
    105
    
    
    
    131Other, net
    
    
    (102
    )
    
    
    (46
    )
    
    
    (58
    )
    
    
    122
    
    
    
    (21
    )71
    
    
    
    4
    
    
    
    (86
    )
    
    NM
    
    
    NMIncome before income taxes
    
    
    1,984
    
    
    
    1,734
    
    
    
    1,305
    
    
    
    14
    
    
    
    33Provision for income taxes
    
    
    733
    
    
    
    648
    
    
    
    482
    
    
    
    13
    
    
    
    34Net income
    
    $
    1,251
    
    
    $
    1,086
    
    
    $
    823
    
    
    
    15
    
    
    
    32
 
 (1)
    
    We reclassified certain prior period international priority
freight service
revenues previously included within
IP package revenues to international priority freight revenues to conform to the current
period presentation
and more precisely present the nature of the services provided.(2)
    
    Other revenues includes our international domestic express businesses, such as ANC,
DTW Group and our Canadian domestic express operations. See our discussion of acquisitions in the
Business Acquisitions
section of this MD&A.(3)
    
    Includes a $143 million charge for signing bonuses and other upfront compensation
associated with a new
four-year labor contract with our pilots.(4)
    
    Includes a $75 million one-time, noncash charge to adjust the accounting for
certain facility leases. 24




---



##### Table of Contents



Percent Change2007
    
    
    2006
    
    
    2005
    
    
    2007/2006
    
    
    2006/2005Package StatisticsAverage daily package volume (ADV):U.S. overnight box
    
    
    1,174
    
    
    
    1,203
    
    
    
    1,184
    
    
    
    (2
    )
    
    
    2U.S. overnight envelope
    
    
    706
    
    
    
    713
    
    
    
    680
    
    
    
    (1
    )
    
    
    5U.S. deferred
    
    
    898
    
    
    
    901
    
    
    
    958
    
    
    
    
    
    
    
    (6
    )Total U.S. domestic ADV
    
    
    2,778
    
    
    
    2,817
    
    
    
    2,822
    
    
    
    (1
    )
    
    
    IP(1)
    
    
    487
    
    
    
    466
    
    
    
    433
    
    
    
    5
    
    
    
    8Total ADV
    
    
    3,265
    
    
    
    3,283
    
    
    
    3,255
    
    
    
    (1
    )
    
    
    1Revenue per package (yield):U.S. overnight box
    
    $
    21.66
    
    
    $
    20.94
    
    
    $
    19.77
    
    
    
    3
    
    
    
    6U.S. overnight envelope
    
    
    11.06
    
    
    
    10.86
    
    
    
    10.37
    
    
    
    2
    
    
    
    5U.S. deferred
    
    
    12.59
    
    
    
    12.42
    
    
    
    11.46
    
    
    
    1
    
    
    
    8U.S. domestic composite
    
    
    16.04
    
    
    
    15.66
    
    
    
    14.69
    
    
    
    2
    
    
    
    7IP(1)
    
    
    54.13
    
    
    
    51.64
    
    
    
    49.47
    
    
    
    5
    
    
    
    4Composite package yield
    
    
    21.72
    
    
    
    20.77
    
    
    
    19.31
    
    
    
    5
    
    
    
    8Freight StatisticsAverage daily freight pounds:U.S.
    
    
    9,569
    
    
    
    9,374
    
    
    
    8,885
    
    
    
    2
    
    
    
    6International priority freight(1)
    
    
    1,878
    
    
    
    1,634
    
    
    
    1,395
    
    
    
    15
    
    
    
    17International airfreight
    
    
    1,831
    
    
    
    2,126
    
    
    
    1,914
    
    
    
    (14
    )
    
    
    11Total average daily freight pounds
    
    
    13,278
    
    
    
    13,134
    
    
    
    12,194
    
    
    
    1
    
    
    
    8Revenue per pound (yield):U.S.
    
    $
    0.99
    
    
    $
    0.93
    
    
    $
    0.82
    
    
    
    6
    
    
    
    13International priority freight(1)
    
    
    2.18
    
    
    
    2.02
    
    
    
    1.88
    
    
    
    8
    
    
    
    7International airfreight
    
    
    0.84
    
    
    
    0.80
    
    
    
    0.78
    
    
    
    5
    
    
    
    3Composite freight yield
    
    
    1.14
    
    
    
    1.04
    
    
    
    0.93
    
    
    
    10
    
    
    
    12
 
 (1)
    
    We reclassified certain prior period international priority
freight service
statistics previously included within the
IP package statistics to international priority freight statistics to conform to the current
period presentation and
more precisely present the nature of the services provided. Revenues
    25




---



##### Table of Contents



2007
    
    2006
    
    2005U.S. Domestic and Outbound Fuel Surcharge:Low
    
    
    8.50
    %
    
    
    10.50
    %
    
    
    6.00
    %High
    
    
    17.00
    
    
    
    20.00
    
    
    
    13.00Weighted-average
    
    
    12.91
    
    
    
    13.69
    
    
    
    9.05International Fuel Surcharges:Low
    
    
    8.50
    
    
    
    10.00
    
    
    
    3.00High
    
    
    17.00
    
    
    
    20.00
    
    
    
    13.00Weighted-average
    
    
    12.98
    
    
    
    12.73
    
    
    
    8.45
 Operating Income
    26




---



##### Table of Contents



Lease Accounting Charge
  Airline Stabilization Act Charge
  Other Income and Expense and Income Taxes
  27




---



##### Table of Contents



Business Acquisitions
      Outlook
   28




---



##### Table of Contents



Seasonality of Business
  
 NEW ACCOUNTING PRONOUNCEMENTS
      29




---



##### Table of Contents



RISK FACTORS
  Our
business depends on our strong reputation and the value of the FedEx brand.
 We rely heavily on technology to operate our transportation network, and any disruption to FedExs
technology infrastructure or the Internet could harm our operations and our reputation among
customers.
 Our business is capital intensive, and we must make capital expenditures based upon projected
volume levels.
 30




---



##### Table of Contents



We face intense competition.
 If FedEx and we do not effectively operate, integrate, leverage and grow acquired businesses, our
financial results and reputation may suffer.
 Our business may be impacted by the price and availability of jet fuel.
 Increased security requirements could impose substantial costs on us.
 The regulatory environment for global aviation rights may impact our air operations.
 31




---



##### Table of Contents



We are also subject to risks and uncertainties that affect many other businesses, including:
 
    
    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 business resulting from new domestic or
international government laws and regulation, including tax,
accounting, labor or environmental rules;
 
    
    our ability to manage our cost structure for capital expenditures and operating expenses and match them to shifting
customer volume levels;
 
    
    changes in foreign currency exchange rates, especially in the euro, Chinese yuan, Canadian dollar, Great Britain pound
and Japanese yen, which can affect our sales levels and foreign currency sales prices;
 
    
    our ability to maintain good relationships with our employees and prevent attempts by labor organizations to organize
groups of our employees, which could significantly increase our operating costs;
 
    
    a shortage of qualified labor and our ability to mitigate this shortage through recruiting and retention efforts and
productivity gains;
 
    
    increasing costs for employee benefits, especially pension and healthcare benefits;
 
    
    significant changes in the volumes of shipments transported through our network, customer demand for our various
services or the prices we obtain for our services;
 
    
    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 and race
discrimination claims, and any other legal proceedings;
 
    
    the impact of technology developments on our operations and on demand for our services;
 
    
    adverse weather conditions or natural disasters, such as earthquakes and hurricanes, which can damage our property,
disrupt our operations, increase fuel costs and adversely affect shipment levels;
 
    
    widespread outbreak of an illness or any other communicable disease, or any other public health
crisis; and
 
    
    availability of financing on terms acceptable to FedEx and FedExs ability to maintain its current credit ratings,
especially given the capital intensity of our operations.
 We are directly affected by the state of the economy.
 32




---



##### Table of Contents



FORWARD-LOOKING STATEMENTS
   33




---



##### Table of Contents



34




---



##### Table of Contents



/s/ Ernst & Young LLP
 
 35




---



##### Table of Contents



/s/ Ernst & Young LLP
 
 36




---



##### Table of Contents



FEDERAL
EXPRESS CORPORATION
 
 CONSOLIDATED BALANCE SHEETS
(IN MILLIONS)
 ASSETS
 May 31,2007
    
    
    2006CURRENT ASSETSCash and cash equivalents
    
    $
    257
    
    
    $
    217Receivables, less allowances of $61 and $105
    
    
    1,429
    
    
    
    2,860Spare parts, supplies and fuel, less
allowances of $156 and $150
    
    
    269
    
    
    
    251Deferred income taxes
    
    
    404
    
    
    
    422Due from other FedEx subsidiaries
    
    
    432
    
    
    
    11Prepaid expenses and other
    
    
    125
    
    
    
    65Total current assets
    
    
    2,916
    
    
    
    3,826PROPERTY AND EQUIPMENT, AT COSTAircraft and related equipment
    
    
    9,593
    
    
    
    8,611Package handling and ground support
equipment
    
    
    2,008
    
    
    
    1,947Vehicles
    
    
    1,729
    
    
    
    1,647Computer and electronic equipment
    
    
    654
    
    
    
    709Facilities and other
    
    
    2,921
    
    
    
    2,63716,905
    
    
    
    15,551Less accumulated depreciation and amortization
    
    
    8,988
    
    
    
    8,599Net property and equipment
    
    
    7,917
    
    
    
    6,952OTHER LONG-TERM ASSETSDue from parent company
    
    
    3,832
    
    
    
    3,049Goodwill
    
    
    901
    
    
    
    343Intangible and other assets
    
    
    466
    
    
    
    556Total other long-term assets
    
    
    5,199
    
    
    
    3,948$
    16,032
    
    
    $
    14,726
  37




---



##### Table of Contents



FEDERAL EXPRESS CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN MILLIONS, EXCEPT SHARE DATA)
 LIABILITIES
AND OWNERS EQUITY
 May 31,2007
    
    
    2006CURRENT LIABILITIESCurrent portion of long-term debt
    
    $
    88
    
    
    $
    146Accrued salaries and employee benefits
    
    
    824
    
    
    
    855Accounts payable
    
    
    1,329
    
    
    
    1,292Accrued expenses
    
    
    931
    
    
    
    942Due to parent company and other FedEx subsidiaries
    
    
    265
    
    
    
    310Total current liabilities
    
    
    3,437
    
    
    
    3,545LONG-TERM DEBT, LESS CURRENT PORTION
    
    
    745
    
    
    
    828OTHER LONG-TERM LIABILITIESDeferred income taxes
    
    
    705
    
    
    
    656Pension, postretirement healthcare and
other benefit obligations
    
    
    669
    
    
    
    684Self-insurance accruals
    
    
    569
    
    
    
    541Deferred lease obligations
    
    
    606
    
    
    
    623Deferred gains, principally related to
aircraft transactions
    
    
    341
    
    
    
    371Other liabilities
    
    
    55
    
    
    
    46Total other long-term liabilities
    
    
    2,945
    
    
    
    2,921COMMITMENTS AND CONTINGENCIESOWNERS EQUITYCommon stock, $0.10 par value; 1,000 shares
authorized, issued and outstanding
    
    
    
    
    
    
    Additional paid-in capital
    
    
    484
    
    
    
    298Retained earnings
    
    
    8,373
    
    
    
    7,122Accumulated other comprehensive income
    
    
    48
    
    
    
    12Total owners equity
    
    
    8,905
    
    
    
    7,432$
    16,032
    
    
    $
    14,726
  38




---



##### Table of Contents



FEDERAL EXPRESS CORPORATION
 
 CONSOLIDATED STATEMENTS OF INCOME
(IN MILLIONS)
 Years ended May 31,2007
    
    
    2006
    
    
    2005REVENUES
    
    $
    22,527
    
    
    $
    21,296
    
    
    $
    19,364OPERATING EXPENSES:Salaries and employee benefits
    
    
    8,051
    
    
    
    7,861
    
    
    
    7,540Purchased transportation
    
    
    1,097
    
    
    
    969
    
    
    
    865Rentals and landing fees
    
    
    1,598
    
    
    
    1,684
    
    
    
    1,597Depreciation and amortization
    
    
    845
    
    
    
    792
    
    
    
    785Fuel
    
    
    2,946
    
    
    
    2,786
    
    
    
    2,012Maintenance and repairs
    
    
    1,440
    
    
    
    1,340
    
    
    
    1,272Intercompany charges, net
    
    
    2,076
    
    
    
    1,538
    
    
    
    1,505Other
    
    
    2,561
    
    
    
    2,596
    
    
    
    2,39720,614
    
    
    
    19,566
    
    
    
    17,973OPERATING INCOME
    
    
    1,913
    
    
    
    1,730
    
    
    
    1,391OTHER INCOME (EXPENSE):Interest expense
    
    
    (40
    )
    
    
    (54
    )
    
    
    (73
    )Interest income
    
    
    213
    
    
    
    104
    
    
    
    45Other, net
    
    
    (102
    )
    
    
    (46
    )
    
    
    (58
    )71
    
    
    
    4
    
    
    
    (86
    )INCOME BEFORE INCOME TAXES
    
    
    1,984
    
    
    
    1,734
    
    
    
    1,305PROVISION FOR INCOME TAXES
    
    
    733
    
    
    
    648
    
    
    
    482NET INCOME
    
    $
    1,251
    
    
    $
    1,086
    
    
    $
    823
  39




---



##### Table of Contents



FEDERAL EXPRESS CORPORATION
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN MILLIONS)
 Years ended May 31,2007
    
    
    2006
    
    
    2005OPERATING ACTIVITIESNet income
    
    $
    1,251
    
    
    $
    1,086
    
    
    $
    823Adjustments to reconcile net income
to cash provided by operating activities:Depreciation and amortization
    
    
    845
    
    
    
    790
    
    
    
    785Provision for uncollectible accounts
    
    
    80
    
    
    
    82
    
    
    
    68Deferred income taxes and other noncash items
    
    
    (59
    )
    
    
    108
    
    
    
    (1
    )Lease accounting charge
    
    
    
    
    
    
    75
    
    
    
    Changes in operating assets and liabilities:Receivables
    
    
    1,446
    
    
    
    (191
    )
    
    
    (204
    )Other current assets
    
    
    (476
    )
    
    
    (48
    )
    
    
    (15
    )Accounts payable and other
operating liabilities
    
    
    (132
    )
    
    
    340
    
    
    
    228Other, net
    
    
    4
    
    
    
    (31
    )
    
    
    (23
    )Cash provided by operating activities
    
    
    2,959
    
    
    
    2,211
    
    
    
    1,661INVESTING ACTIVITIESCapital expenditures
    
    
    (1,667
    )
    
    
    (1,402
    )
    
    
    (1,189
    )Proceeds from asset dispositions
    
    
    25
    
    
    
    31
    
    
    
    Business acquisitions, net of cash acquired
    
    
    (347
    )
    
    
    
    
    
    
    Cash used in investing activities
    
    
    (1,989
    )
    
    
    (1,371
    )
    
    
    (1,189
    )FINANCING ACTIVITIESPrincipal payments on debt
    
    
    (147
    )
    
    
    (108
    )
    
    
    (173
    )Net payments to parent company
    
    
    (783
    )
    
    
    (772
    )
    
    
    (316
    )Cash used in financing activities
    
    
    (930
    )
    
    
    (880
    )
    
    
    (489
    )CASH AND CASH EQUIVALENTSNet increase (decrease) in cash and cash equivalents
    
    
    40
    
    
    
    (40
    )
    
    
    (17
    )Cash and cash equivalents at beginning of period
    
    
    217
    
    
    
    257
    
    
    
    274Cash and cash equivalents at end of period
    
    $
    257
    
    
    $
    217
    
    
    $
    257
  40




---



##### Table of Contents



FEDERAL EXPRESS CORPORATION
 
 CONSOLIDATED STATEMENTS OF CHANGES IN OWNERS
EQUITY AND COMPREHENSIVE INCOME
(IN MILLIONS)
 AccumulatedAdditional
    
    
    
    
    
    
    OtherCommon
    
    
    Paid-in
    
    
    Retained
    
    
    Comprehensive
    
    
    TotalStock
    
    
    Capital
    
    
    Earnings
    
    
    Income (Loss)
    
    
    Owners EquityBalance at May 31, 2004
    
    $
    
    
    
    $
    298
    
    
    $
    5,213
    
    
    $
    (33
    )
    
    $
    5,478Net income
    
    
    
    
    
    
    
    
    
    
    823
    
    
    
    
    
    
    
    823Foreign currency translation adjustment,
net of deferred taxes of $4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22
    
    
    
    22Minimum pension liability adjustment,
net of deferred tax benefit of $2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4
    )
    
    
    (4
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    841Balance at May 31, 2005
    
    
    
    
    
    
    298
    
    
    
    6,036
    
    
    
    (15
    )
    
    
    6,319Net income
    
    
    
    
    
    
    
    
    
    
    1,086
    
    
    
    
    
    
    
    1,086Foreign currency translation adjustment,
net of deferred taxes of $1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22
    
    
    
    22Minimum pension liability adjustment,
net of deferred taxes of $3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    5Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,113Balance at May 31, 2006
    
    
    
    
    
    
    298
    
    
    
    7,122
    
    
    
    12
    
    
    
    7,432Net income
    
    
    
    
    
    
    
    
    
    
    1,251
    
    
    
    
    
    
    
    1,251Foreign currency translation adjustment,
net of deferred taxes of $6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27
    
    
    
    27Minimum pension liability adjustment,
net of deferred taxes of $3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11
    )
    
    
    (11
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,267Retirement plans liability adjustment in
connection withthe adoption of SFAS
158, net of deferred taxes of $14
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20
    
    
    
    20Contribution by parent company of
acquisition of ANC Holdings Ltd.
    
    
    
    
    
    
    198
    
    
    
    
    
    
    
    
    
    
    
    198Dividend to parent company associated
with the formation of FCIS
    
    
    
    
    
    
    (12
    )
    
    
    
    
    
    
    
    
    
    
    (12
    )Balance at May 31, 2007
    
    $
    
    
    
    $
    484
    
    
    $
    8,373
    
    
    $
    48
    
    
    $
    8,905
  41




---



##### Table of Contents



FEDERAL
EXPRESS CORPORATION
 
 NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
 NOTE
1: DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 DESCRIPTION OF BUSINESS.
 FISCAL YEARS
 PRINCIPLES OF CONSOLIDATION
 REVENUE RECOGNITION
  ACCOUNTS RECEIVABLE ARRANGEMENT.
 CREDIT RISK
 ADVERTISING
 42




---



##### Table of Contents



CASH
EQUIVALENTS
 SPARE PARTS, SUPPLIES AND FUEL
 PROPERTY AND EQUIPMENT
  Net Book Value at May 31,Range
    
    2007
    
    2006Wide-body aircraft and related equipment
    
    
    15 to 25 years
    
    
    $
    5,391
    
    
    $
    4,669Narrow-body and feeder aircraft and related equipment
    
    
    5 to 15 years
    
    
    
    352
    
    
    
    368Package handling and ground support equipment
    
    
    5 to 30 years
    
    
    
    435
    
    
    
    405Vehicles
    
    
    5 to 10 years
    
    
    
    423
    
    
    
    411Computer and electronic equipment
    
    
    5 to 10 years
    
    
    
    148
    
    
    
    115Facilities and other
    
    
    2 to 30 years
    
    
    
    1,168
    
    
    
    984
  CAPITALIZED INTEREST
 IMPAIRMENT OF LONG-LIVED ASSETS.
 43




---



##### Table of Contents



PENSION AND POSTRETIREMENT HEALTHCARE PLANS.
    GOODWILL.
 44




---



##### Table of Contents



INCOME TAXES
  SELF-INSURANCE ACCRUALS
 LEASES
 DEFERRED GAINS
 FOREIGN CURRENCY TRANSLATION
 AIRLINE STABILIZATION ACT CHARGE
 EMPLOYEES UNDER COLLECTIVE BARGAINING ARRANGEMENTS.
 45




---



##### Table of Contents



STOCK-BASED COMPENSATION.
   USE OF ESTIMATES
 NOTE
2: RECENT ACCOUNTING PRONOUNCEMENTS
    NOTE
3: BUSINESS COMBINATIONS
  46




---



##### Table of Contents



ANC
    
    
    DTW GroupCurrent assets
    
    $
    68
    
    
    $
    54Property and equipment
    
    
    20
    
    
    
    16Intangible assets
    
    
    49
    
    
    
    17Goodwill
    
    
    168
    
    
    
    348Other assets
    
    
    2
    
    
    
    10Current liabilities
    
    
    (56
    )
    
    
    (18
    )Long-term liabilities
    
    
    (10
    )
    
    
    Total purchase price
    
    $
    241
    
    
    $
    427
   NOTE
4: GOODWILL AND INTANGIBLES
  47




---



##### Table of Contents



May 31, 2007
    
    
    May 31, 2006Gross Carrying
    
    
    Accumulated
    
    
    Net Book
    
    
    Gross Carrying
    
    
    Accumulated
    
    
    Net BookAmount
    
    
    Amortization
    
    
    Value
    
    
    Amount
    
    
    Amortization
    
    
    ValueCustomer relationships
    
    $
    51
    
    
    $
    (5
    )
    
    $
    46
    
    
    $
    
    
    
    $
    
    
    
    $
    Contract related
    
    
    73
    
    
    
    (57
    )
    
    
    16
    
    
    
    73
    
    
    
    (52
    )
    
    
    21Technology related
and other
    
    
    19
    
    
    
    (2
    )
    
    
    17
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    143
    
    
    $
    (64
    )
    
    $
    79
    
    
    $
    73
    
    
    $
    (52
    )
    
    $
    21
  2008
    
    $
    232009
    
    
    202010
    
    
    132011
    
    
    72012
    
    
    5
 NOTE
5: SELECTED CURRENT LIABILITIES
  May 31,2007
    
    
    2006Accrued Salaries and Employee BenefitsSalaries
    
    $
    184
    
    
    $
    164Employee benefits
    
    
    256
    
    
    
    334Compensated absences
    
    
    384
    
    
    
    357$
    824
    
    
    $
    855Accrued ExpensesSelf-insurance accruals
    
    $
    354
    
    
    $
    361Taxes other than income taxes
    
    
    253
    
    
    
    251Other
    
    
    324
    
    
    
    330$
    931
    
    
    $
    942
 48




---



##### Table of Contents



NOTE
6: LONG-TERM DEBT AND OTHER FINANCING ARRANGEMENTS
  May 31,2007
    
    
    2006Senior unsecured debtInterest rate of 9.65%, due in 2013
    
    $
    300
    
    
    $
    300Interest rate of 7.60%, due in 2098
    
    
    239
    
    
    
    239Medium term notesInterest rate of 9.95%, due in 2007
    
    
    
    
    
    
    18539
    
    
    
    557Capital lease obligations
    
    
    294
    
    
    
    292Other debt, interest rate of 4.03%
    
    
    
    
    
    
    125833
    
    
    
    974Less current portion
    
    
    88
    
    
    
    146$
    745
    
    
    $
    828
      NOTE
7: LEASES
  49




---



##### Table of Contents



May 31,2007
    
    
    2006Aircraft
    
    $
    115
    
    
    $
    114Package handling and ground support equipment
    
    
    165
    
    
    
    167Vehicles
    
    
    20
    
    
    
    34Other, principally facilities
    
    
    133
    
    
    
    131433
    
    
    
    446Less accumulated amortization
    
    
    301
    
    
    
    306$
    132
    
    
    $
    140
  For years ended May 31,2007
    
    
    2006
    
    
    2005Minimum rentals
    
    $
    1,226
    
    
    $
    1,270
    
    
    $
    1,206Contingent rentals(1)
    
    
    171
    
    
    
    190
    
    
    
    165$
    1,397
    
    
    $
    1,460
    
    
    $
    1,371
 
 (1)
    
    Contingent rentals are based on equipment usage.  CapitalLeases2008
    
    $
    1012009
    
    
    122010
    
    
    952011
    
    
    62012
    
    
    6Thereafter
    
    
    118338Less amount representing interest
    
    
    44Present value of net minimum lease payments
    
    $
    294
 50




---



##### Table of Contents



Aircraft and Related
    
    
    Facilities andEquipment
    
    
    Other
    
    
    Total2008
    
    $
    584
    
    
    $
    540
    
    
    $
    1,1242009
    
    
    555
    
    
    
    451
    
    
    
    1,0062010
    
    
    544
    
    
    
    374
    
    
    
    9182011
    
    
    526
    
    
    
    314
    
    
    
    8402012
    
    
    504
    
    
    
    267
    
    
    
    771Thereafter
    
    
    3,430
    
    
    
    2,267
    
    
    
    5,697$
    6,143
    
    
    $
    4,213
    
    
    $
    10,356
    NOTE
8: INCOME TAXES
  2007
    
    
    2006
    
    
    2005Current provisionDomestic:Federal
    
    $
    493
    
    
    $
    374
    
    
    $
    336State and local
    
    
    33
    
    
    
    29
    
    
    
    24Foreign
    
    
    164
    
    
    
    126
    
    
    
    98690
    
    
    
    529
    
    
    
    458Deferred provision
(benefit)Domestic:Federal
    
    
    33
    
    
    
    103
    
    
    
    30State and local
    
    
    4
    
    
    
    17
    
    
    
    (6
    )Foreign
    
    
    6
    
    
    
    (1
    )
    
    
    43
    
    
    
    119
    
    
    
    24$
    733
    
    
    $
    648
    
    
    $
    482
 51




---



##### Table of Contents



2007
    
    2006
    
    2005Statutory U.S. income
tax rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %Increase resulting from:State and local
income taxes,
net of federal benefit
    
    
    1.2
    
    
    
    1.7
    
    
    
    0.9Foreign operations
    
    
    0.2
    
    
    
    (0.3
    )
    
    
    Other, net
    
    
    0.5
    
    
    
    1.0
    
    
    
    1.0Effective tax rate
    
    
    36.9
    %
    
    
    37.4
    %
    
    
    36.9
    %
   2007
    
    
    2006Deferred
    
    
    Deferred
    
    
    Deferred
    
    
    DeferredTax Assets
    
    
    Tax Liabilities
    
    
    Tax Assets
    
    
    Tax LiabilitiesProperty, equipment,
leases and intangibles
    
    $
    307
    
    
    $
    1,065
    
    
    $
    305
    
    
    $
    997Employee benefits
    
    
    333
    
    
    
    36
    
    
    
    351
    
    
    
    39Self-insurance accruals
    
    
    275
    
    
    
    
    
    
    
    276
    
    
    
    Other
    
    
    300
    
    
    
    419
    
    
    
    254
    
    
    
    384Net operating
loss/credit
carryforwards
    
    
    20
    
    
    
    
    
    
    
    22
    
    
    
    Valuation allowance
    
    
    (16
    )
    
    
    
    
    
    
    (22
    )
    
    
    $
    1,219
    
    
    $
    1,520
    
    
    $
    1,186
    
    
    $
    1,420
  2007
    
    
    2006Current deferred tax asset
    
    $
    404
    
    
    $
    422Non-current deferred tax liability
    
    
    (705
    )
    
    
    (656
    )$
    (301
    )
    
    $
    (234
    )
  52




---



##### Table of Contents



NOTE
9: RETIREMENT PLANS
 RETIREMENT PLANS SPONSORED BY FEDEX
   PENSION PLANS.
 DEFINED CONTRIBUTION PLANS
  May 31,2007
    
    2006Projected benefit obligation (PBO)
    
    $
    11,358
    
    
    $
    11,440Accumulated benefit obligation (ABO)
    
    
    10,801
    
    
    
    9,485Fair value of plan assets
    
    
    11,175
    
    
    
    9,861
 53




---



##### Table of Contents



Pension Plan2007
    
    2006
    
    2005Discount rate
    
    
    6.012
    %
    
    
    5.912
    %
    
    
    6.285
    %Rate of increase in future
compensation levels
    
    
    4.47
    
    
    
    3.46
    
    
    
    3.15Expected long-term rate of
return on assets
    
    
    9.10
    
    
    
    9.10
    
    
    
    9.10
    FEDEX EXPRESS SPONSORED RETIREMENT PLANS
 PENSION PLANS.
 POSTRETIREMENT HEALTHCARE PLANS
 NEW ACCOUNTING PRONOUNCEMENT
 54




---



##### Table of Contents



Prior to Adopting
    
    Effect of Adopting
    
    As Reported UnderSFAS 158
    
    SFAS 158
    
    SFAS 158Intangible
and other assets
    
    $
    493
    
    
    $
    (27
    )
    
    $
    466Accrued salaries and employee benefits
    
    
    790
    
    
    
    34
    
    
    
    824Minimum pension liability
    
    
    45
    
    
    
    (45
    )
    
    
    Pension, postretirement healthcare
and other benefit obligations
    
    
    713
    
    
    
    (44
    )
    
    
    669Deferred income taxes
    
    
    693
    
    
    
    12
    
    
    
    705Accumulated other comprehensive income
    
    
    32
    
    
    
    16
    
    
    
    48
 55




---



##### Table of Contents



Pension Plans
    
    
    Postretirement Healthcare Plans2007 (1)
    
    
    2006
    
    
    2007 (1)
    
    
    2006Accumulated Benefit Obligation (ABO)
    
    $
    336
    
    
    $
    275Changes in Projected Benefit Obligation (PBO)Projected benefit obligation at the beginning of year
    
    $
    330
    
    
    $
    301
    
    
    $
    424
    
    
    $
    478Service cost
    
    
    17
    
    
    
    17
    
    
    
    25
    
    
    
    36Interest cost
    
    
    16
    
    
    
    14
    
    
    
    24
    
    
    
    29Actuarial loss (gain)
    
    
    37
    
    
    
    12
    
    
    
    9
    
    
    
    (92
    )Benefits paid
    
    
    (16
    )
    
    
    (20
    )
    
    
    (39
    )
    
    
    (39
    )Amendments
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    Other
    
    
    32
    
    
    
    6
    
    
    
    4
    
    
    
    12Projected benefit obligation at the end of year
    
    $
    416
    
    
    $
    330
    
    
    $
    452
    
    
    $
    424Change in Plan AssetsFair value of plan assets at beginning of year
    
    $
    161
    
    
    $
    127
    
    
    $
    

    
    
    $
    Actual return on plan assets
    
    
    7
    
    
    
    22
    
    
    
    

    
    
    
    Company contributions
    
    
    27
    
    
    
    26
    
    
    
    23
    
    
    
    27Benefits paid
    
    
    (16
    )
    
    
    (20
    )
    
    
    (39
    )
    
    
    (39
    )Other
    
    
    28
    
    
    
    6
    
    
    
    16
    
    
    
    12Fair value of plan assets at end of year
    
    $
    207
    
    
    $
    161
    
    
    $
    
    
    
    $
    Funded Status of the Plans
    
    $
    (209
    )
    
    $
    (169
    )
    
    $
    (452
    )
    
    $
    (424
    )Unrecognized net actuarial loss (gain)
    
    
    
    (2)
    
    
    53
    
    
    
    
(2)
    
    
    (97
    )Unamortized
prior service cost (credit)
    
    
    
(2)
    
    
    3
    
    
    
    
(2)
    
    
    (2
    )Unrecognized net transition amount
    
    
    
(2)
    
    
    1
    
    
    
    
(2)
    
    
    Employer contributions after measurement date
    
    
    5
    
    
    
    5
    
    
    
    4
    
    
    
    5Net amount recognized
    
    $
    (204
    )
    
    $
    (107
    )
    
    $
    (448
    )
    
    $
    (518
    )Amount Recognized in the Balance Sheet
at May 31:Prepaid benefit cost
    
    $
    
(2)
    
    $
    18
    
    
    $
    
(2)
    
    $
    Current pension, postretirement healthcare
and other benefit obligations
    
    
    (7
    )
    
    
    
    
    
    
    (28
    )
    
    
    Accrued benefit liability
    
    
    
(2)
    
    
    (124
    )
    
    
    
(2)
    
    
    (518
    )Minimum pension liability
    
    
    
(2)
    
    
    (30
    )
    
    
    
(2)
    
    
    Noncurrent pension, postretirement healthcare
and other benefit obligations
    
    
    (197
    )
    
    
    
    
    
    
    (420
    )
    
    
    Accumulated other comprehensive income
    
    
    
(2)
    
    
    27
    (3)
    
    
    
(2)
    
    
    Intangible asset
    
    
    
(2)
    
    
    2
    
    
    
    
(2)
    
    
    Net amount recognized
    
    $
    (204
    )
    
    $
    (107
    )
    
    $
    (448
    )
    
    $
    (518
    )Amounts Recognized in AOCI and not yet reflected in
Net Periodic Benefit Cost:Net actuarial loss (gain)
    
    $
    93
    
    
    
    
    
    
    $
    (86
    )Prior service cost
    
    
    3
    
    
    
    
    
    
    
    3Transition amount
    
    
    1
    
    
    
    
    
    
    
    Total
    
    $
    97
    
    
    
    
    
    
    $
    (83
    )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)
    
    $
    4
    
    
    
    
    
    
    $
    (2
    )Prior service cost
    
    
    1
    
    
    
    
    
    
    
    Transition amount
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    5
    
    
    
    
    
    
    $
    (2
    )
 
 (1)
    
    Incorporates the provisions of SFAS 158 adopted on May 31, 2007.(2)
    
    Not applicable for 2007 due to adoption of SFAS 158.(3)
    
    The minimum pension liability component of Accumulated Other Comprehensive Income
for 2006 is shown in the Statement of Changes in Owners Equity and Comprehensive Income, net of
deferred taxes. 56




---



##### Table of Contents



PBO and ABO Exceeding theFair Value of Plan Assets2007
    
    2006Pension BenefitsPBO
    
    $
    416
    
    
    $
    330ABO
    
    
    336
    
    
    
    275Fair Value of Plan Assets
    
    
    207
    
    
    
    161
   PostretirementPension Plans
    
    
    Healthcare Plans2007
    
    
    2006
    
    
    2005
    
    
    2007
    
    
    2006
    
    
    2005Service cost
    
    $
    17
    
    
    $
    17
    
    
    $
    16
    
    
    $
    25
    
    
    $
    35
    
    
    $
    31Interest cost
    
    
    16
    
    
    
    14
    
    
    
    13
    
    
    
    24
    
    
    
    29
    
    
    
    28Expected return on plan assets
    
    
    (10
    )
    
    
    (8
    )
    
    
    (7
    )
    
    
    
    
    
    
    
    
    
    
    Recognized
actuarial losses (gains) and other
    
    
    3
    
    
    
    3
    
    
    
    2
    
    
    
    (3
    )
    
    
    
    
    
    
    $
    26
    
    
    $
    26
    
    
    $
    24
    
    
    $
    46
    
    
    $
    64
    
    
    $
    59
  PostretirementPension Plans
    
    Healthcare Plans2007
    
    2006
    
    2005
    
    2007
    
    2006
    
    2005Discount rate
    
    
    5.01
    %
    
    
    4.86
    %
    
    
    4.98
    %
    
    
    6.084
    %
    
    
    6.080
    %
    
    
    6.160
    %Rate of increase in future
compensation levels
    
    
    4.28
    
    
    
    3.47
    
    
    
    3.49
    
    
    
    
    
    
    
    
    
    
    
    Expected long-term rate of
return on assets
    
    
    5.83
    
    
    
    6.29
    
    
    
    6.25
    
    
    
    
    
    
    
    
    
    
    
    
 57




---



##### Table of Contents



PostretirementPension Plans
    
    Healthcare Plans2008
    
    $
    13
    
    
    $
    282009
    
    
    16
    
    
    
    282010
    
    
    13
    
    
    
    292011
    
    
    13
    
    
    
    302012
    
    
    13
    
    
    
    312013-2017
    
    
    74
    
    
    
    183
   58




---



##### Table of Contents



NOTE
10: BUSINESS SEGMENT INFORMATION
   REVENUE BY SERVICE TYPE
 2007
    
    
    2006
    
    
    2005Package:U.S. overnight box
    
    $
    6,485
    
    
    $
    6,422
    
    
    $
    5,969U.S. overnight envelope
    
    
    1,990
    
    
    
    1,974
    
    
    
    1,798U.S. deferred
    
    
    2,883
    
    
    
    2,853
    
    
    
    2,799Total domestic
package revenue
    
    
    11,358
    
    
    
    11,249
    
    
    
    10,566International Priority (IP) (1)
    
    
    6,722
    
    
    
    6,139
    
    
    
    5,464Total package revenue
    
    
    18,080
    
    
    
    17,388
    
    
    
    16,030Freight:U.S.
    
    
    2,412
    
    
    
    2,218
    
    
    
    1,854International priority freight (1)
    
    
    1,045
    
    
    
    840
    
    
    
    670International airfreight
    
    
    394
    
    
    
    434
    
    
    
    381Total freight revenue
    
    
    3,851
    
    
    
    3,492
    
    
    
    2,905Other
    
    
    596
    
    
    
    416
    
    
    
    429$
    22,527
    
    
    $
    21,296
    
    
    $
    19,364GEOGRAPHICAL INFORMATION(2)Revenues:U.S.
    
    $
    13,790
    
    
    $
    13,471
    
    
    $
    12,436International
    
    
    8,737
    
    
    
    7,825
    
    
    
    6,928$
    22,527
    
    
    $
    21,296
    
    
    $
    19,364Noncurrent assets:U.S.
    
    $
    10,003
    
    
    $
    8,543
    
    
    $
    7,405International
    
    
    3,113
    
    
    
    2,357
    
    
    
    2,051$
    13,116
    
    
    $
    10,900
    
    
    $
    9,456
 
 (1)
    
    We reclassified certain prior period international priority
freight service
revenues previously included within IP
package revenues to international priority freight revenues to conform to the current period
presentation and
more precisely present the nature of the services provided.(2)
    
    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. Flight
equipment is allocated between geographic areas based on usage. 59




---



##### Table of Contents



NOTE
11: SUPPLEMENTAL CASH FLOW INFORMATION
  2007
    
    2006
    
    2005Interest (net of capitalized interest)
    
    $
    41
    
    
    $
    54
    
    
    $
    74Income taxes
    
    
    708
    
    
    
    519
    
    
    
    461
 NOTE
12: GUARANTEES AND INDEMNIFICATIONS
   
  60




---



##### Table of Contents



NOTE
13: COMMITMENTS
  Aircraft-Aircraft
    
    Related (1)
    
    Other (2)
    
    Total2008
    
    $
    482
    
    
    $
    150
    
    
    $
    16
    
    
    $
    6482009
    
    
    788
    
    
    
    157
    
    
    
    11
    
    
    
    9562010
    
    
    907
    
    
    
    146
    
    
    
    11
    
    
    
    1,0642011
    
    
    640
    
    
    
    3
    
    
    
    10
    
    
    
    6532012
    
    
    31
    
    
    
    
    
    
    
    9
    
    
    
    40Thereafter
    
    
    
    
    
    
    
    
    
    
    107
    
    
    
    107
 
 (1)
    
    Primarily aircraft modifications.(2)
    
    Primarily advertising and promotion contracts.    61




---



##### Table of Contents



A300
    
    A310
    
    B757
    
    B777F
    
    Total2008
    
    
    9
    
    
    
    2
    
    
    
    7
    
    
    
    
    
    
    
    182009
    
    
    3
    
    
    
    
    
    
    
    13
    
    
    
    
    
    
    
    162010
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    6
    
    
    
    102011
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    9
    
    
    
    122012
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    3Thereafter
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    12
    
    
    
    2
    
    
    
    30
    
    
    
    15
    
    
    
    59
 NOTE
14: CONTINGENCIES
 Wage-and-Hour.
 Race Discrimination. Satchell v. FedEx Express
 Other.
 NOTE
15: PARENT/AFFILIATE TRANSACTIONS
    62




---



##### Table of Contents



NOTE
16: SUMMARY OF QUARTERLY OPERATING RESULTS (UNAUDITED)
 First
    
    Second
    
    Third
    
    Fourth(in millions)
    
    Quarter (1)
    
    Quarter (2)
    
    Quarter
    
    Quarter2007Revenues
    
    $
    5,601
    
    
    $
    5,653
    
    
    $
    5,486
    
    
    $
    5,787Operating income
    
    
    456
    
    
    
    489
    
    
    
    384
    
    
    
    584Net income
    
    
    289
    
    
    
    318
    
    
    
    270
    
    
    
    3742006Revenues
    
    $
    5,084
    
    
    $
    5,332
    
    
    $
    5,304
    
    
    $
    5,576Operating income
    
    
    273
    
    
    
    466
    
    
    
    440
    
    
    
    551Net income
    
    
    163
    
    
    
    286
    
    
    
    280
    
    
    
    357
 
 (1)
    
    Results for the first quarter of 2006 include a $75 million noncash charge to adjust the
accounting for certain facility leases as described in Note 7.(2)
    
    Results for the second quarter of 2007 include a $143 million charge associated with
upfront compensation and benefits under the new pilot labor contract as described in Note 1. 63




---



##### Table of Contents



QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 INTEREST RATES.
 FOREIGN CURRENCY.
  COMMODITY.
 OTHER.
 64




---



##### Table of Contents



65




---



##### Table of Contents



ADDITIONSBALANCE
    
    
    
    
    
    
    CHARGED
    
    
    
    
    
    
    BALANCEAT
    
    
    CHARGED
    
    
    TO
    
    
    
    
    
    
    ATBEGINNING
    
    
    TO COSTS AND
    
    
    OTHER
    
    
    
    
    
    
    END OFDESCRIPTION
    
    OF YEAR
    
    
    EXPENSES
    
    
    ACCOUNTS
    
    
    DEDUCTIONS
    
    
    YEARAccounts Receivable Reserves:Allowance for Doubtful Accounts2007
    
    $
    52
    
    
    $
    80
    
    
    $
    
    
    
    $
    105
    (b)
    
    $
    272006
    
    
    50
    
    
    
    82
    
    
    
    15
    (a)
    
    
    95
    (b)
    
    
    522005
    
    
    65
    
    
    
    68
    
    
    
    10
    (a)
    
    
    93
    (b)
    
    
    50Allowance for Revenue Adjustments2007
    
    $
    53
    
    
    $
    
    
    
    $
    320
    (c)
    
    $
    339
    (d)
    
    $
    342006
    
    
    42
    
    
    
    
    
    
    
    397
    (c)
    
    
    386
    (d)
    
    
    532005
    
    
    54
    
    
    
    
    
    
    
    337
    (c)
    
    
    349
    (d)
    
    
    42Inventory Valuation Allowance:2007
    
    $
    150
    
    
    $
    9
    
    
    $
    
    
    
    $
    3
    
    
    $
    1562006
    
    
    142
    
    
    
    10
    
    
    
    
    
    
    
    2
    
    
    
    1502005
    
    
    124
    
    
    
    19
    
    
    
    
    
    
    
    1
    
    
    
    142
 
 (a)
    
    Transfers related to FedEx Ground factoring agreement.(b)
    
    Uncollectible accounts written off, net of recoveries.(c)
    
    Principally charged against revenue.(d)
    
    Service failures, rebills and other. 66




---



##### Table of Contents



Year Ended May 31,2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003Earnings:Income before income taxes
    
    $
    1,984
    
    
    $
    1,734
    
    
    $
    1,305
    
    
    $
    541
    
    
    $
    689Add back:Interest expense, net of capitalized interest
    
    
    40
    
    
    
    54
    
    
    
    73
    
    
    
    64
    
    
    
    57Amortization of debt issuance costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Portion of rent expense representative
of interest factor
    
    
    580
    
    
    
    630
    
    
    
    600
    
    
    
    583
    
    
    
    599Earnings as adjusted
    
    $
    2,604
    
    
    $
    2,418
    
    
    $
    1,978
    
    
    $
    1,188
    
    
    $
    1,345Fixed Charges:Interest expense, net of capitalized interest
    
    $
    40
    
    
    $
    54
    
    
    $
    73
    
    
    $
    64
    
    
    $
    57Capitalized interest
    
    
    32
    
    
    
    27
    
    
    
    13
    
    
    
    7
    
    
    
    13Amortization of debt issuance costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Portion of rent expense representative
of interest factor
    
    
    580
    
    
    
    630
    
    
    
    600
    
    
    
    583
    
    
    
    599$
    652
    
    
    $
    711
    
    
    $
    686
    
    
    $
    654
    
    
    $
    669Ratio of Earnings to Fixed Charges
    
    
    4.0
    
    
    
    3.4
    
    
    
    2.9
    
    
    
    1.8
    
    
    
    2.0
 67




---



##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Description of ExhibitCertificate of Incorporation and Bylaws3.1
    
    Restated Certificate of Incorporation of FedEx Express, as amended.
(Filed as Exhibit 3.1 to FedEx Expresss FY98 Third Quarter Report on
Form 10-Q, and incorporated herein by reference.)3.2
    
    By-laws of FedEx Express. (Filed as Exhibit 3.2 to FedEx Expresss
FY93 Annual Report on Form 10-K, and incorporated herein by
reference.)Facility Lease Agreements10.1
    
    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
    
    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.)10.3
    
    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.)10.4
    
    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.)10.5
    
    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.)10.6
    
    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.)10.7
    
    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.)10.8
    
    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.)
 E-1




---



##### Table of Contents



ExhibitNumber
    
    Description of Exhibit10.9
    
    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.)10.10
    
    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.)10.11
    
    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.)Aircraft-Related Agreement10.12
    
    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.)U.S. Postal Service Agreement10.13
    
    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.)10.14
    
    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.)10.15
    
    Letter Agreement dated March 8, 2007 and Letter Agreement
dated May 14, 2007, each amending the Transportation
Agreement dated July 31, 2006, as amended, between the
United States Postal Service 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. (Filed as Exhibit 10.15 to FedExs FY07 Annual
Report on Form 10-K, and incorporated herein by
reference.)
 E-2




---



##### Table of Contents



ExhibitNumber
    
    Description of ExhibitFinancing Agreement10.16
    
    Five-Year Credit Agreement dated as of July 20, 2005 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 July 20, 2005,
and incorporated herein by reference.)FedEx Express 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 Express and its subsidiaries on a
consolidated basis. Copies of such instruments will be
furnished to the Securities and Exchange Commission upon
request.Other Exhibits*12
    
    Statement re Computation of Ratio of Earnings to Fixed Charges
(presented on page 67 of this Annual Report on Form 10-K).*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.
 
 *
    
    Filed herewith. E-3