This is a summary of the third quarter fiscal 2008 earnings call conducted by FedEx Corporation (FDX: chart) on March 20, 2008.

Management:

- Chairman, President & Chief Executive Officer:Frederick W. Smith
- Chief Financial Officer & Executive Vice President:Alan B. Graf, Jr.
- President & Chief Executive Officer of FedEx Express:David J. Bronczek
- President & Chief Executive Officer of FedEx Ground:David F. Rebholz
- President & Chief Executive Officer of FedEx Freight:Douglas G. Duncan
- Executive Vice President Marketing Development :T. Michael Glenn
- Executive Vice President, General Counsel & Secretary: Christine P. Richards
- Executive Vice President FedEx Information Services:Robert B. Carter
- Vice President Investor Relations:Mickey Foster

Key Investor Issues:

- Earnings dropped 6% to $393 million or $1.26 a share.
- Revenues were $9.44 billion, up 10% from $8.59 billion in the prior year.
- FedEx Kinko''s has opened 252 centers fiscal year-to-date as part of its plan to open 300 new centers this year.

Third Quarter Highlights

Net income decreased 6% from $420 million or $1.35 a share a year ago to $393 million or $1.26 a share, due to higher fuel surcharges.

- Revenue of $9.44 billion, was up 10% from $8.59 billion the previous year, with the growth primarily attributable to continued growth in international services at FedEx Express, growth at FedEx Ground and increase in FedEx Express US domestic package yields.
- The firm''s average daily package volume grew 5% year-over-year overall.
- This growth was boosted by continued strong increase in FedEx international priority shipments, international domestic express shipments and FedEx ground shipments.

Operating income of $641 million, was flat due to substantially higher fuel prices and the weak US economy which pressured volume and yield growth at FedEx Express and FedEx Freight.

- Operating margin of 6.8%, was down from 7.5% the previous year.
- Fuel expense increased 42% in this third quarter versus the prior year.
- Higher fuel surcharges continue to be the key driver of increased yields in the transportation segments.

- Additionally, higher expense associated with advertising and promotion and strategic technology initiatives amongst others had a negative impact on the results.
- Lower variable incentive compensation combined with cost of containment activities partially mitigated the negative impact of these factors.

Segment Highlights:

- FedEx Express revenues increased 11% to $6.13 billion due to increases in fuel surcharges, the impact of favorable exchange rates and international priority volume growth of 6%.
- Operating income of $425 million, was up 8% from $395 million a year ago, resulting in operating margins of 6.9%, down from 7.2% in the previous year.

US domestic package volumes decreased 2% as the ongoing weak US economy continued to negatively impact demand for these services.

- US domestic yield increase of 6% were primarily due to higher fuel surcharges and general rate increases partially offset by lower package weights.
- IP package revenue grew 18% for the quarter, as IP revenue per package grew 10%, primarily due to higher fuel surcharges and favorable exchange rates.
- IP yield increased 10% due to favorable exchange rates, higher fuel surcharges and increases in package weights partially offset by decreases in the average rate per pound.
- IP average daily package volume grew 6%, led by increases in volume originating in Latin America, the United States and Asia.

FedEx Express operating results were negatively impacted by the continued softness in the US economy, increased intercompany charges and continued investments in the domestic express service in China.

- Net fuel costs versus last year''s third quarter, one additional operating day and favorable exchange rates partially mitigate the impact of these factors on operating results versus last year.
- Ground revenues increased 13% to $1.72 billion due to continued volume and yield growth.
- Operating income of $170 million, was down 13% from $196 million a year ago, while operating margin of 9.9%, was down from 12.9% the previous year

Average daily volume increased 7% and growth of the FedEx Home Delivery service was outstanding where volume grew 15% versus last year.

- Operating income and margins were lower due to increased intercompany charges from the FedEx services segment.
- Fuel cost increased 96% and purchase transportation costs increased as a result of higher rates paid to independent contractors.

- Intercompany charges increased primarily due to increased net operating cost at FedEx Kinkos associated with reduced copy and print revenues, store expansion and service improvement activities.
- In the freight segment, revenues increased 5% to $1.16 billion due to higher less than truckload yields.
- Operating income of $46 million, down 8% from $50 million a year ago, resulted in an operating margin of 4.0%, down from 4.5% the previous year

Although average daily LTL shipments decreased 3% because of the weak US economy, the firm is growing market share in both regional and national sectors.

- FedEx Freight segment operating income and operating margin decreased primarily due to the net impact of higher fuel costs, the fuel surcharge rate reduction and fewer long haul LTL shipments.
- Revenue for the FedEx Services segment, which includes the operations of FedEx Kinko''s and FedEx Global Supply Chain Services, was up 1% year over year.