TO OUR SHAREOWNERS:
Fiscal year 2008 results clearly reflect the pressure of rapidly rising fuel prices and a weakening economy. Despite these challenges, the strength of the FedEx portfolio and our global reach allowed us to achieve solid earnings and cash flow from operations. Volume growth at FedEx Ground, together with advances in FedEx International Priority service, mitigated some of the negative economic factors and provided tangible evidence that our global strategy remains sound.
The headwinds of FY08 are continuing into FY09. Even so, FedEx has the flexibility, networks and leadership to manage through difficult business cycles. In FY08, we reduced capital expenditures as a percentage of revenue and will reduce that measure again this year. We also announced changes at FedEx Freight and FedEx Office that will streamline their structures, improve the customer experience and lower costs. Across our portfolio, we are taking measures to reduce our expenses to align with revenue and volume expectations. History bears out that proactive companies and management teams will weather difficult economic times and come out on the other side stronger and better positioned for long-term growth and profitability. At FedEx, we are committed to remaining focused and proactive.
One point that I ask you to keep in mind - even though FY09 is expected to be a most challenging year, we enter it from a position of strength. FedEx is truly a leader on the global business stage. We are, and intend to remain, cash-flow positive. Our balance sheet remains strong and our primary pension plans are well funded. I joined FedEx 28 years ago and today FedEx is stronger and better positioned than in any prior period. Our executive team shares this experience and the commitment to you that I have outlined. First and foremost, we will continue to do what is right for our customers every day, a commitment from which high oil prices or weakened economies cannot and must not sway us.
Thank you for your continued commitment as a FedEx shareowner. We remain committed to you and to achieving our long-term financial goals of earnings growth and improved margins, cash flows and returns on capital.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*