MESSAGE FROM THE CHIEF FINANCIAL OFFICER
To Our Shareowners:
FedEx delivered solid financial performance for our
shareowners despite increasingly challenging economic
conditions in fiscal 2007. Our results benefited from the
continued strong growth of our ground and international
express businesses and from our investments to
expand our portfolio of service offerings, drive
revenue growth and increase productivity.
We completed strategic acquisitions in three
dynamic international markets - China, India and
the United Kingdom - and began offering domestic
time-definite service to customers throughout China.
In the United States, we absorbed the acquisition
and network integration costs associated with our
new FedEx National LTL business. We also made
investments in technology and network infrastructure
at FedEx Ground, which have resulted in faster
delivery lanes and increased productivity. Finally,
we continued to expand the FedEx Kinko's retail
network with 226 new store openings in FY07.
During the year, we also announced our intentions to
modernize our employee retirement plans in response
to a changing regulatory landscape and shifting
demographic trends. The recently adopted and proposed
accounting rules presented an unacceptable level of risk
and volatility to the future of the company. Under our new
programs, we expect our retirement plan costs to become
more predictable. In addition, we were able to reduce the
impact on shareholder equity of the adoption of SFAS 158
by $1 billion. We feel these changes balance our
responsibilities to remain competitive in the future, to
provide our employees with a comfortable retirement and
to maintain our fiscal responsibility to our shareowners.
In FY08, we will continue to be challenged by a soft
economic environment; however, we will continue to
make significant investments in our global networks.
These investments will position our company to
continue to achieve our long-term financial goals
of improving earnings, margins, cash flows and
returns for our shareowners. We have an excellent
track record in this regard. Over the last 10 years,
our revenues have grown more than 11 percent on
a compounded annual basis while net income has
increased more than 18 percent. Equally as important,
our shareholders have earned more than 15 percent
annually on their investment during that time.
Thank you for your continued support as a FedEx
shareowner. I hope you share my confidence that we
will deliver on our long-term financial goals for our investors.
Alan B. Graf, Jr.
Executive Vice President and Chief Financial Officer
* Shows the value, at the end of each of the last five fiscal years, of $100
invested in FedEx Corporation common stock or the relevant index on May
31, 2002, and assumes reinvestment of dividends. Fiscal year ended May 31.