Mickey Foster – VP, IR Fred Smith – Chairman, President and CEO Alan Graf – EVP & CFO Chris Richards – EVP, General Counsel and Secretary Mike Glenn – President and CEO of FedEx Services Dave Bronczek – President and CEO of FedEx Express Bill Logue – President and CEO of FedEx Freight Dave Rebholz – President and CEO of FedEx Ground

Donald Broughton – Avondale Partners Helane Becker – Jesup & Lamont Tom Wadewitz – JP Morgan Gary Chase – Barclays Capital John Barnes – RBC Capital Markets Justin Yagerman – Deutsche Bank Matthew Brooklier – Piper Jaffray David Ross – Stifel Nicolaus Jon Langenfeld – Robert W. Baird Kevin Sterling – BB&T Capital Markets Bill Greene – Morgan Stanley Chris Ceraso – Credit Suisse Scott Malat – Goldman Sachs Edward Wolfe – Wolfe Trahan Jeff Kauffman – Sterne Agee David Campbell – Thompson, Davis & Co.

Good day everyone, and welcome to the FedEx Corporation fourth quarter earnings conference call. Today’s call is being recorded. At this time, I would like to turn the call over to Mickey Foster, Vice President of Investor Relations for FedEx Corporation. Please go ahead.

Good morning and welcome to FedEx Corporation’s fourth quarter and year-end earnings conference call. I would like to invite you to our Investor Meeting here in Memphis, so please save Tuesday and Wednesday, September 28 and 29, on your calendar. We will have more details about the meeting for you next month. The fourth quarter earnings release and the 25-page stat book are on our Web site at fedex.com. This call is being broadcast from our web site, and the replay and podcast download will be available for approximately one year. Joining us on the call today are members of the media. During our question and answer session, callers will be limited to one question and a follow-up so we can accommodate all those who would like to participate. I want to remind all listeners that FedEx Corporation desires to take advantage of the Safe Harbor provisions of the Private Securities Litigation Reform Act. Certain statements in this conference call may be considered forward-looking statements within the meaning of the Act. Such forward-looking statements are subject to risks, uncertainties, and other factors which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. For additional information on these factors please refer to our press releases and filings with the SEC. In our earnings release, we will include certain non-GAAP financial measures, which we may discuss on this call. Please refer to the release available on our website for further discussion of these measures and a reconciliation to them – to the most directly comparable GAAP measures. To the extent we disclose any other non-GAAP financial measures on this call, please refer to the investor relations portion of our website at fedex.com for a reconciliation of such measures for the most directly comparable GAAP measures. Joining us on the call today are Fred Smith, Chairman, President and CEO; Alan Graf, Executive Vice President and CFO; Chris Richards, Executive Vice President, General Counsel and Secretary; Mike Glenn, President and CEO of FedEx Services; Rob Carter, Executive Vice President, FedEx Information Services and CIO; Dave Bronczek, President and CEO of FedEx Express; Dave Rebholz, President and CEO of FedEx Ground; and Bill Logue, President and CEO of FedEx Freight. And now our Chairman, Fred Smith, will share his views on the quarter, followed by Alan Graf. After Alan, we will have Q&A.

Thank you, Mickey. Good morning. Welcome ladies and gentlemen to our discussion of earnings for the fourth quarter and full year, our fiscal year 2010 just ended and our perspective on fiscal year ’11. We finished FY ‘10 with positive momentum, following gradual economic improvement during quarter three and a strong fourth quarter. Package volume grew significantly as major global economies began emerging from recession in the second half of fiscal year ’10. In addition to being aided by the economic recovery in fiscal year ’10, we were able to successfully navigate the economic downturn for several reasons. First, the FedEx team was absolutely committed to coming out of this recession stronger and in a better competitive position. We made calculated decisions during the recession so we could leverage our unique global networks to take advantage of the economic recovery we knew would come. Second, we built and maintain an exceptionally strong balance sheet, and third, we plan and execute a business model that puts variable cost programs, what I refer to as our shock absorbers, in place over many years throughout our network so we can quickly and efficiently select up or down to match shipping capacity to demand. We implemented in this regard several actions in 2009 to lower our cost, including some salary reductions, suspension of 401 (k) company matching contributions, and significant volume related reductions in hours and line-haul expenses. We are very pleased that we have been able to begin restoring some of these pay programs and incentives in calendar year 2010. As we look into fiscal year ’11, a year that began on June 1, we expect stronger demand for our services and continued growth in revenue and earnings as global economic conditions continued to improve. Our chief economist forecasts FY ‘11 GDP growth will be 3.2% compared to less than 1% in FY ‘10. Industrial production, to which our shipment volume closely correlates, is expected to rise from a negative 3.3% to a positive 5%. We think the restocking process in place will continue in the short-term together with gains in consumption and equipment sales. We believe the improving economy will result in a more stable pricing environment, enhancing our ability to improve yields across all of our transport segments. These yield management initiatives combined with growth in volume should improve our margins in FY ‘11. Shipments by air [ph] are growing largely aided by the current inventory cycle, as companies find themselves with inventories too lean to meet customer demand using slower modes of transport. International load factors are at their highest level since 2000. Asian and Latin American volumes have been particularly strong. FedEx Express increased its operating income and operating margin due to volume growth, especially in higher margin FedEx International Priority package and freight services. IP package volume grew 23% in our fiscal year ’10 fourth quarter. FedEx Ground grew throughout the recession as domestic customers choose lower-priced ground transportations and FedEx Ground gained market share. Despite improving economic conditions, the less-than-truckload freight market remains highly price competitive due to continued excess capacity, contributing to an operating loss in FedEx Freight. Having said that, we are confident that Bill Logue and his leadership team are on course to achieve FedEx goals, which are to be the premier LTL service provider, the market leader, and the most profitable carrier in the industry. FedEx Freight plays an important role in our unmatched bundle of transportation solutions at customer value. Our capital expenditures for FY ‘11 are expected to be approximately $3.2 billion with incremental investment in the substantially more fuel-efficient Boeing 777 freighters that add unique value for our growing number of international customers, and which are helping us win new business for FedEx. The 777 is a significant competitive advantage for us, allowing us the latest cut off times in many Asia-Pacific markets for shipments to the United States and Europe. We will continue to balance the need to control spending with the opportunity to make investments with high returns. In this regard, we are confident that investments in the Boeing 777s and 757s will improve returns for our shareowners by increasing margins, returns on invested capital and cash flow. We believe the action that we’ve taken to reduce cost, while investing in areas with the highest returns have allowed FedEx to resume in FY ‘11 the upward trajectory of financial performance that we saw before the recession began. I like to reiterate our long-term goals of increasing our earnings per share 10% to 15% annually over the long term, while growing revenue, achieving 10% plus operating margins, improving cash flow, and increasing the returns on our invested capital. Finally, let me take a moment to recognize Judith Estrin [ph], and thank her for her 20 plus year service, and her many contributions as a FedEx board member, include sharing our unique information technology oversight committee. Judith will be retiring from our board in the September meeting, and will not stand for a reelection at this year's annual meeting. I won't have a chance to say this before we have another conference call. So we would like to thank her for having been a tremendous business partner for FedEx. We will miss her expertise and leadership, and we wish her the best in the future. Now let me turn the microphone over to Alan Graf, our CFO.

Thank you Fred and good morning everyone. This morning we released our strong fourth quarter results of $1.43 per share, more than double our adjusted $0.64 earned last year, while revenues in the fourth quarter jumped 20%. Earnings increased as a result of stronger shipment growth in international express and continued growth at FedEx Ground. FedEx International Priority average daily package volume grew 23%, led by exports from Asia. IP average daily volume from Asia grew 41% year-over-year, and FedEx Ground packages grew 7%. An operating loss at FedEx Freight, the reinstatement of certain employee compensation programs, and higher aircraft maintenance expenses impacted the fourth quarter results. Looking first at the Express segment, revenue grew 23% to 5.9 billion with an operating margin of 7% in the quarter. Operating profit and margin improvements were driven by volume and revenue growth, particularly in higher margin IP package and freight services, as well as continued strong cost management. IP revenue per package grew 6% due to higher weight per package, which was up 8%; higher fuel surcharges and a favorable exchange rate impact. IP freight volume increased 68%. Express added a night schedule daily transpacific frequency in April, utilizing the capabilities of Boeing 777-F aircraft. This additional frequency provides new capacity from Asia to the US, and allows best in market cut off times. Also in April, a third scheduled daily flight was added from Asia to Europe providing the first in market next day service from Hong Kong to all of Europe. Our international capabilities are simply unmatched. Looking at the Ground segment, revenues climbed 15% to $2 billion, while operating income soared 57% to a quarterly record of $319 million. FedEx Ground average daily package volume grew 7% driven by increases in the business-to-business market, as well as FedEx Home Delivery service. Yield increased 5% primarily due to higher fuel surcharges, increased extra services fees and higher average package weight. FedEx SmartPost average daily volume increased 23%, with yields increasing 6%. I might add that our Ground segment exceeded 1 billion of operating income on an annual basis for the first time in FY ‘10, with an overall operating margin of 13.8%. Looking at freight, segment results were frankly a bit disappointing. Despite significantly higher revenues, losses continued as a result of lower yields and higher volume related costs. Revenue increased 30% from $1.2 billion versus $900 million last year. LTL volume increased 34% to 91,500 shipments per day from 68,400 last year. Weight per shipment increased 4%, but LTL yield decreased 6%. Our balance sheet strengthened again as cash flow from operations were positive and debt was reduced to $650 million. End of the year, our debt total was $1.93 billion, while our cash on hand was greater than that at $1.95 billion. Turning now to the outlook, our current outlook is for FY ‘11 Q1 EPS to be in the range of $0.85 to $1.05, and full FY ‘11 EPS to be in a range of $4.40 to $5.00 per share. In the release, we talk about the fact that our outlook assumed stable fuel crisis at today's market and the futures outlook, and a continued moderate recovery in the global economy. Obviously, the volatility and absolute level of fuel price can have a dramatic impact on our results. Our economic forecast for FY ‘11 assumes 3.2% real GDP growth in the US as Fred mentioned, and 3.1% for the world as a whole. As I am certain, you know, our revenue forecast starts with the economic outlook would. While we have the ability to flex down our cost structure defensively or up offensively, steady moderate growth is a key to hitting these ranges. We are also working very diligently on yield increases across the board, most notably at Freight, and Mike Glenn will be discussing that with you in the Q&A session. We do have some cost headwinds in FY ‘11, the most notable being a fixed pension increase of $260 million over FY ‘10, largely as a result of a 131 basis decline in our discount rate. Suffice [ph] to say, I doubt any of you on the call had that much of an increase in the First Call numbers for FY ‘11. Higher anticipated healthcare costs will also be a headwind. As we return aircraft from the desert to revenue service, our maintenance cost will increase as well, as they did in Q4 of FY ‘10. We are being very aggressive in our international expansion at Express, significantly increasing our network capability with the addition of the 777s, and increasing flat hours across the board. Expansion of the air network brings some start-up costs as well, but these investments will significantly improve our earnings in FY ‘11 and beyond. With all up, I think we're going to have a very good year in FY ‘11, barring some exogenous variable working very hard against us. Our IP network is unparalleled, and revenues are growing rapidly. Our ground network is the fastest in the business, and we will get freight back on track. With that operator, we are happy to open it for questions and answers.

Go ahead with your questions.

: Donald Broughton – Avondale Partners: Good morning everyone. Congratulations on the solid quarter. There is a big ongoing concern about the European economy, and so let us just upfront talk about it. What have you seen in changes in the amount of volume you are seeing coming back and forth across the Atlantic, and for that matter with your new direct Europe Asia flight?

Thanks Donald, this is Dave Bronczek. I will start off. We have seen solid growth in Europe, as our numbers would indicate double-digit growth, we’ve had several years, in fact, you can go back to probably 10 years in a row now we have had double-digit growth out of Europe. So between Europe and Asia and Europe and the United States, we continue to see very strong growth in the sector that we participate in. So I understand your question and I understand that you would be concerned about it, but for FedEx Express very solid growth. Donald Broughton – Avondale Partners: Do you have a projected date at which you think Freight will get to breakeven?

Hi, Don it is Bill Logue. We are working aggressively towards that plan. We have a solid yield plan. We do a great job on the productivity side of the business, but our objective is as I said the three clear goals, number one, we need to be the most profitable carrier in the business, and we are working on that. And again as FY ‘11 moves on that is our number one objective.

Thank you. We will take our next question from Helane Becker with Jesup & Lamont. Helane Becker – Jesup & Lamont: Hi, thanks very much operator. Hi everybody. Just a question on the aircraft that are coming out of the desert Alan, how many are you taking out of service then, and putting back in?

This is Dave Bronczek. We’ve taken six aircraft out of the desert in the fourth quarter, and we will be taking a little bit more than that over the next several quarters in FY ‘11, which is Alan’s earlier comment about maintenance. Helane Becker – Jesup & Lamont: Right, got you. Okay, thank you very much. That was really my only question.

I should add to that, obviously the maintenance to go back to service on the engines in some of the numbers that Alan indicated. Helane Becker – Jesup & Lamont: Right, got it. Thank you.

Thank you. We will go next to Tom Wadewitz with JP Morgan. Tom Wadewitz - JP Morgan: Hi, yes. Good morning. I wanted to – I guess I have two questions for you, one on pricing in domestic express, there tend to be moving parts, and Alan I think you commented on them briefly, but can you give us a little more granularity on what price would have looked like in your domestic express, and how you think that is trending in general?

This is Mike Glenn, and we're beginning to see the results of our efforts as we benefited from improvements in base rates and weight per package in our parcel businesses both Express and Ground as compared to last quarter and last year. So, as I mentioned on the last call we are being very aggressive in terms of our year-end improvement efforts. We're making sure we get acceptable rate increases and taking a much tougher negotiating stance on contract renewals. We have established new pricing guidelines for new business, and we are ensuring that customers are meeting their volume commitments in order to retain existing rates. So the results that we're seeing in terms of improvements in base rates and weight per package are a direct result of those efforts, and we remain committed to that path. Tom Wadewitz - JP Morgan: Okay, and then the second question just on maintenance costs, if I look at the fourth quarter you had I think 342 million in maintenance in Express versus 261 million in third, so there was a decent ramp, and I think that is – you had talked about that before. Is the fourth quarter a reasonable run rate looking forward, or do you see it ramp further, or how do we think about maintenance in fiscal ’11 relative to what the fourth quarter run rate was?

Yes, this is Dave Bronczek again. It is relative to probably the first-half of our fiscal year. The fourth quarter would be similar to the first-half, and then it would gradually decline.

Thank you. Our next question comes from Gary Chase with Barclays Capital. Gary Chase – Barclays Capital: Hi guys, good morning. I wanted to see if I could get some color from Dave Rebholz on just the Ground margin performance was very solid, and wondered if you could speak to the sustainability of that looking forward. In particular, I noted other expenses looked relatively low, was there something in there that we should think is not going to carry forward?

Yes, Gary, Dave. No, the – some of the key advantages we had obviously were our volume growth, and it materialized in great productivity. The second thing is we had a pickup in the growth of our commercial business, which drives productivity, more pieces pushed up [ph]. We had some improved safety performance that allowed us to reverse or lower some of our accrual. So in the aggregate, we're just performing on all eight cylinders and not missing a beat. So with that in mind, absent any one time events, my perspective is that we will continue to perform at these levels. Remembering fourth-quarter is our best quarter, but we are going to – Alan said it is 13%. We see no degradation in that margin performance over the year ahead. Gary Chase – Barclays Capital: Okay, and the lower accruals that you just mentioned Dave, that is going to have some ongoing benefit as well, correct?

Yes, absolutely. They are dialed in now, but we continue with our safety – it is really de minimis in the grand scheme of things, volume is the key driver. And the outliers are quite frankly fuel and any one time issues that we may run into as an organization. But I see sustained growth at this level. Gary Chase – Barclays Capital: Thank you.

Thank you. Our next question comes from John Barnes with RBC Capital Markets. John Barnes - RBC Capital Markets: Hi, in taking a look at the modest sequential improvement in the yields at the freight division, can you talk a little bit about have you begun to see a reversal in the actual rates there or is the sequential yield improvement coming more from a mix shift, and just ridding yourself of maybe some business that didn't necessarily fit your network?

John, this is Mike Glenn again. And we are starting to see the results of our LTL yield improvement efforts, however, during the quarter the most challenging issue that we faced was higher than expected growth rate from our more heavily discounted customers, which tempered [ph] that progress on yield improvement during the quarter. We are executing many of the same tactics in the freight sector that we are in the LTL sector. Having said that, we are being even more aggressive by reviewing accounts with less than acceptable margins, or that are grabbing a disproportionate share of expense and making rate adjustments as required. In some cases, this is going to require us to put traffic at risk, we are prepared to do to meet our goals. John Barnes - RBC Capital Markets: Okay. And then secondly, I was at an event recently where the majority of participants kind of agreed that FAA [ph] reauthorization probably going to happen sometime soon. It sounds like without the FedEx provision in it. From your perspective, do you have any update on the timeline of that and what you expect?

Hello John. This is Chris Richards. I will tell you what we expect right now and it might change in the next 24 hours, but at the current time it looks like a fair amount of progress is being made on the resolution and reconciliation of some of the issues not related to the RLA in the bill. We presently expect the Senate leadership to move forward and see if there is a way to get a FAA bill that does not include the RLA change in it, and quite frankly we could see some efforts in this area as soon as next week.

Thank you. Our next question comes from Justin Yagerman with Deutsche Bank. Justin Yagerman - Deutsche Bank: Hey, good morning. I don't envy you guys having to project what the economy is going to do a year out. And I guess I just wanted to get a sense for how confident you guys are in the full-year guidance you put out, and what kind of visibility you feel like you have to the current environment given all the crosscurrents that are out there in the macro right now.

Well, it is the first time we have given annual guidance in a while Justin, and so, we are a little bit more confident. I think I caveated it quite a bit about totally dependent on a moderate economic growth on a global basis, and fairly stable and fuel prices at a level they are at, which are two obviously things that are out of our control, but our IP growth is continuing exceedingly strong here in June. And it looks like it is going to continue that way for the foreseeable future. Ground traffic is very positive. We will get freight back on track, and if you are looking a little bit further down the road than a year, some of the cost headwinds I was talking about in FY ‘11, don't repeat in FY ‘12. I can't imagine that interest rates are going to anything but go up from this point, which is a big impact on our expense and we could actually see a lower pension expense in ’12 than ’11, rather than a giant increase. So we have a lot of confidence. We feel a lot better about our business, but you are absolutely right. There are so many things going on that I can have a different tune in September, but as where we are today that is our current look. Justin Yagerman - Deutsche Bank: Okay. I appreciate that. And I guess as a follow-up, you guys have talked about the $3 billion in costs that you've taken out over the last couple of years and the $1.5 billion that's permanent. How much of that other $1.5 billion do you guys feel has come back at this point and where are you in seeing those costs begin to come back?

Well, you know, that $3 billion and $1.5 billion was a non-GAAP analytic snapshot at that time, and then after that we go on and we manage our business. So, obviously a lot of those cost savings fell to the bottom line. We absolutely crushed our business plan last year, and funded a significant amount of annual incentive compensation that we didn't think we were going to fund. We are also being very aggressive in international now. So we're spending some of that permanent savings in a different bucket. So the savings is still there. We're just reinvesting it very heavily. Obviously, the earnings are better than they otherwise would have been. So, I'm very comfortable that we have significantly reduced our cost structure by the amount that we said that we are adding in other areas as we are growing and becoming more aggressive. I think the range that we have given you is pretty thrilling from an EPS growth rate. I don't see any other companies out there saying that they are going to be able to do that. So, I think that has been one of the keys. The other key will be our yield management as we go through FY ‘11.

Thank you. Our next question will come from Matthew Brooklier with Piper Jaffray. Matthew Brooklier - Piper Jaffray: Hi, good morning, guys. Just wanted to look at kind of the sequential trends from an EBIT perspective within the Freight division, can you talk about what the op loss looked like in March, April and May? And were you guys operating a loss in May or was there profitability in Freight?

Hi, Matthew. Q3 to Q4 obviously saw some good sequential improvements. The yield front, as Mike talked about, as the quarter went on we saw good improvements, and the productivity improvement was outstanding within the organization. So, we are seeing some good mixes there. I won't quote profitability by month, but just good sequential improvement Q4 over Q3. And if you look at Q4 year-over-year, the variable comp adjustment was pretty close to last year. So I think it was a good performance positioning us well for where we going to have [ph]. Matthew Brooklier - Piper Jaffray: And how are things showing thus far for Freight in June?

I would say overall, starting in June, I think again we look at it from a quarter perspective. Our objective is continued sequential improvement through a quarter, and have a Q1 stronger than Q4 overall.

Matthew, this is Alan. Let me just add that you saw the growth numbers and you heard me talk about the increasing in shipment count. And unlike the package business, where you are everywhere, every day, freight business is much more unique in its pickup and delivery capabilities. And so we outgrew our capabilities, and we had to incur a significant, and still are incurring a significant amount of purchase transportation. That will take us some time to work down. Once we get it back into our networks then our productivity will start to significantly reduce those costs at the same time as we are improving yield. So I can't give you the exact timing, but we have got the formula.

Thank you. Our next question will come from David Ross with Stifel Nicolaus. David Ross - Stifel Nicolaus: Yes, good morning, everyone. I guess if you could talk a little bit about the Express margins, and why they're not the same as they were, I guess for FY05 to FY08. You talked about international load factors being at 10 year highs and the volumes aren't too much different. Is it mainly a yield issue or is there something else there that's not enabling you to get the Express margin back up to where you want it sooner?

Thanks David. I'm glad you asked that question. And you are right, 18 months ago, we were right at 9.2% margins closing in on ’10, and maybe we can stop talking about it, because we will be double digits then and move on, but then the recession of course took place, and then by that 18 months in terms of rebuilding our revenue, taking our cost down, and resetting our baseline going forward to get to our 7% in the fourth quarter, obviously we are very happy with that. But there is no question in any of our minds the goal is double-digit margins as fast as we can get there, and obviously at the rate that international is growing, we have a very good prospect for double-digit margins in the very near future. David Ross - Stifel Nicolaus: Okay, and then I guess could you also talk about the customer supply chain shifts, if you've seen anyone going back from ocean to air recently, and maybe that's one of the reasons for the strong air volumes is the ocean liners have been slow steaming. And then expectations you have I guess for the fall shipping season, maybe a little bit better air than last year for that reason?

Well, this is Dave again, and for Express I can tell you that there is a strong demand for our FedEx Express air freight. You saw it in our numbers. Alan talked about 68% growth. That is international priority freight. So, I think you are right. I think that there is a lot more traffic shifting to air than we saw last year in the airfreight in IP. And then the rest of it moves on the ocean. Of course, we have FedEx trade networks that helps move that as well. So we're actually benefiting from more ocean traffic and more airfreight traffic in our sector. So from a freight perspective that you referenced, we are doing very well in both sectors.

And this is Mike Glenn. I want to make two points here. One as Fred mentioned, we are clearly benefiting from inventory restocking, many of the customers that we are talking to are quite frankly behind the power curve in terms of meeting demands that they have, and we are benefiting from that inventory restocking. And expect that to continue at least in the near term. Secondarily, it is important to understand that we are taking market share. We have value proposition, especially as we deploy these 777 aircrafts that is really resonating with our customers. It is allowing us to enjoy growth rates as a result of the value that we are providing in the international network. So those two factors are important to consider.

This is Fred Smith. Let me give you one fact here that will put what Mike and Dave said in the perspective. When the volcano erupted in Iceland and shut the European airspace down, we continued to get traffic which we had to move by road and accumulate and move to areas, where we could uplift it. But even with those efforts, we still developed a significant backlog because so many airports were shut down. In the week following the opening of European airspace, we flew some 70 some odd incremental wide-bodied flights and cleared every bit of that backlog. There is not another organization in the world that could have done that. So the scale of our international network related to the demand to move goods by air has reached a very important point. And the second thing I would say, which I think sometimes gets missed in these quarter to quarter calls, the largest economy in the world is the economy of global trade, and the fastest growing part of that economy is the movement of high-tech and high-value added items. And those things are increasingly moving by door-to-door express that is required by this fast cycle where we live in, where everybody can go on the Internet and sell and source any product to any other person on the planet that also has an Internet connection, and we sit right in the middle of that. So if you look at these numbers that Dave Bronczek was talking about, that is very encouraging. And in my mind that very large trend of the emergence of these middle classes in India and China and Brazil that are now integrated into this trading nation of global trade is something that is pretty profound, and people have an undue sense of pessimism relative to what is actually happening out there in my opinion.

Thank you. Our next question comes from Jon Langenfeld with Robert W. Baird. Jon Langenfeld - Robert W. Baird: Hi, good morning. Can you talk a little bit about on the Ground side as you think out over the next several years, how you think about the growth in that business? I think if we go back to the last cycle you talked about sustained double-digit volume growth there. How does that change with it being a bigger product and also, more importantly, with it being a better pricing environment domestically? How do you balance that?

Well, this is Dave Rebholz Jon. We’re very optimistic. Right now we’re sitting with 23%, 25%, 22% market share. So the market opportunity out there is great. In fact, an economic turnaround from our base would absolutely accelerate our growth rate in a dramatic way. In other words, existing customers that have also seen downturns in their sales. When you couple that with the fact that we’ve got unique products at home with unique feature sets, and that we have SmartPost as an alternative going back to Alan’s comment about how dramatically they grew, and the way we’re changing their feature set such that we’re giving access to all products, especially SmartPost to smaller customers. We see all sorts of offsets to the economic circumstances, to the pricing environment and getting the right customer in the right network, and growing our business dramatically over the next several years. We’re very bullish on our outlook and that is the reason why we continue to invest $400 million, $500 million a year in our capacity, and I might want to add to that that one of the things that I’ve repeatedly said here is that we continue to improve the value of the product itself. Alan made mention of it. We improved 7000 lanes last year. We’ve got north of a 20% competitive advantage on speed to destination, and we are very proud of that. Those are investments that are paying off as customers realize both the quality and the timeliness of our service, and a very competitive pricing position has great value. So we’re happy as all get out right now.

This is Mike Glenn, I just want to add a comment that I think is important for you to understand. One of the key advantages that we have in our ability to not only deliver solid growth rates, but yield improvement at the same time is the ability to balance our ground and home services with SmartPost. Customers that are benefiting from e-commerce and e-tailing in general tend to be growing at higher rates. At the same time, many of those companies produce packages that result in lower yields for us. While we’re prepared to handle that traffic, we’re going to ship that traffic where appropriate into the SmartPost network and allow us to balance our growth in the respective networks, and ensure that we get an appropriate yield per package for each one of those transactions. So we really have a good portfolio of services that is ideal to take advantage of the market trends and the growth out there yet at the same time deliver yield improvements. So we feel very good about it as Dave said. Jon Langenfeld - Robert W. Baird: Great. Alan, a follow-up question on the free cash flow side, you guys obviously are going through a nice investment phase here that's going to set up the company well over the longer-term. But can you talk to us a little bit about when you'd expect free cash flow to rebound closer to net income? When the current investment phases can be overcome by the business and the infrastructure that's in place?

Well, hopefully not for a while. I think we’ve got a lot of runway ahead of us so to speak in International Priority and Ground, and so we’re going to continue to be very aggressive with our investments in that regard, and as we improve the margins at express, which we will and we are in a good upward slope to continue to do that. And if you just take a look at the range I gave you, you got to know we have to improve Express’ margins in FY ‘11 to hit those kind of numbers. That will also generate a significant amount of cash flow as well. So, I think we rather right now continue to reinvest in the business, because we think the opportunities are so positive for the foreseeable future, and increase the dividend or something other than the nominal dividend we have or do a stock buyback, and that’s where we are right now.

Thank you. Our next question comes from Kevin Sterling with BB&T Capital Markets. Kevin Sterling - BB&T Capital Markets: Good morning, and thanks for your time. You were talking about the growth in air and it looks like it's going to continue for the foreseeable future, particularly on the major trade lanes, Asia to US, Asia to Europe. Where are other opportunities to take advantage of your scale? Is it places like intra-China?

It’s Dave Bronczek, yes it’s intra-China, it’s Mexico, it’s Latin America, it’s Canada, the NAFTA lanes really all around the world we’re seeing obviously fueled by Asia’s economic power, but all around the world we have a lot of upside, lot of opportunity, trucking across the borders. Brazil, as Fred mentioned, before Mexico, intra-Asia and China. So obviously we’re very optimistic about our network opportunity to produce a lot of volume and a lot of growth.

This is Mike Glenn, and I guess in addition to what Dave said we have broadened our portfolio of international services to include deferred services both in the parcel and the freight side, which has actually expanded the market where we are now competing and that’s not including the expansions we’ve made at FedEx trade networks. So we’re competing in a broader market today than we were just a few years ago and that provides new growth opportunities for us. Kevin Sterling - BB&T Capital Markets: Okay, Dave and Mike. Thanks for that color and one follow-up question, and this is maybe more for Alan. Talking about the higher aircraft maintenance expense, it seems a lot of these expenses are one-time in nature bringing your planes out of the desert. It is it reasonable to assume that aircraft maintenance expense will decline in fiscal year '12?

This is Dave again. I had referenced that earlier in this call. We brought 6 aircrafts out of the desert this quarter, and more in the first and second quarter of this year, and then, of course, we added more capacity. So I would expect it to be you know, probably incrementally a little bit more in FY ‘11 than FY ‘10.

Thank you. Our next question will come from Bill Greene with Morgan Stanley. Bill Greene - Morgan Stanley: Yes, just a quick question here on network strategy. Maybe for Fred I guess. If we look at your US strategy, you started over there, added Ground years later, and it seems like you've got a similar strategy outside the US. So I'm curious how important you think it is to have a ground capability maybe in some of the larger markets overseas?

Well, we have, for instance, as Dave mentioned in China a very fast-growing intra-China business, which is both air and ground. We have the same thing in Canada. We have a lot of demand from our customers around the world to broaden the product line, and so I think you will see us looking at that. Having said that the growth in our IP and international economy services that Mike Glenn just mentioned are so strong that we don’t have to do anything in the near or intermediate term, so we will look at it on an opportunistic in a market-by-market basis, but there certainly are opportunities out there and there certainly are customers that would like to see us do that. Bill Greene - Morgan Stanley: Okay thanks. Just one quick follow-up, what was the – was there any impact from currency in the fiscal fourth quarter as it related to your US export business. Did you see the currency fluctuations caused that to change significantly?

No, in the fourth quarter we had a little bit of benefit overall, but it was de minimis.

Thank you. Our next question will come from Chris Ceraso with Credit Suisse. Chris Ceraso - Credit Suisse: There were a number of different references to expenses that are going up – pension, healthcare, aircraft maintenance, et cetera. Are there other actions that you're taking on the cost side outside of the various things you did in fiscal '10 to help offset some of those cost increases?

Well, I am lobbying to get smoothing back on pension accounting for one, you know, obviously there are some things that are under our control and things that we can’t control, and the mark-to-market on pension for a company like FedEx, which has $13.5 billion of assets on the call for only $300 million a year penalizes us more than it does for people who have more current retirees than they do active in just the way it is and the way the discount rates work with our long tail liabilities. So that’s one – we are subject to the market and that more importantly we’re subject to our bottom model in our discount rate, which I think – this is the lowest rate I think we will ever see, and again that was a big factor and why our range maybe a little bit lower for FY ‘11 and where First Call is because we had a much bigger pension hit, than I think most people were anticipating. As far as everything else I think we’ve proven that we can manage defensively and offensively very well. I mean, we had a great FY ‘10 all things considered. We have reinstated certain of the employee benefit programs. We are having merits, we have brought back half of 401 (k) match. You heard about the pension expense, healthcare. I think everybody has got the same problem with healthcare, and we’re just going to see where that goes, and we’re going to continue to manage that aggressively, but fairly getting the right balance. So a lot of productivity things underway at every operating company. We’ll continue to hammer away at our cost structure in that regard, but we aren’t going to sacrifice our service. In fact we are investing in service. Dave is speeding up – Rebholz – a lot of lanes this month by a day. Our international reach is expanding and we will get freight back on track. Chris Ceraso - Credit Suisse: So no big reductions to headcount or changes to the network? You did some of that stuff in 2010. It sounds like you have to just absorb some of these increases this year.

Well, you know, again you take a snapshot on June 15th, and where we are today. I don’t see anything big, but you know, I’m never going to say never particularly as we see what phasing is going forward.

Thank you. Our next question comes from Scott Malat with Goldman Sachs. Scott Malat - Goldman Sachs: Thanks. The US domestic price is impressive. I know people ask that. That is obviously the point here and that is the key positive, but are we seeing some of the effects on volumes, so for both Express and Ground are you may be walking away from some business and that is what we are seeing in the numbers?

I think we’ve got a pretty strong balance performance here. We’ve got industry-leading growth rates on the Ground side. We are very pleased with our performance on the Express side, but having said that as I mentioned on our last earnings call that if we had to walk away from some traffic to accomplish our yield improvement goals that we were prepared to do that, and I can’t tell you how proud I am of our sales team in terms of how they’re executing this strategy. They understand the importance of it. They’re working very hard to deliver upon our goals and they’re doing a fabulous job. So I think we’ve got to write about in the center of the fairway right now, and we’re going to continue to execute accordingly. Scott Malat - Goldman Sachs: Thanks, and then just on China we have heard some reporting of worsening in the business climate maybe the Chinese terrorists, maybe some protectionism over the last few months. Can you talk about any of the changes in your inability to do business in China? Are you seeing anything similar that both from an import export perspective, and then just more importantly doing business in domestic China? Thanks.

Well, this is Dave Bronczek again. Our business in domestic China obviously and our numbers is doing very well. Our intra-Asia because of China obviously is doing well and our growth rates out of China that Alan referenced from Asia is the highest we’ve seen in years. So I mean, it’s always, you know, it’s not the United States, but that being said we’ve been in China for over 20 years, and we have a great leader over there. Eddy Chan is our president in China and so no, I think for FedEx Express, we are well positioned in China. We have been doing business there for a couple of decades now. So the opportunities and the upside for us is very strong.

Our IP revenue out of China increased sequentially every quarter during fiscal ’10.

Thank you. Our next question will come from Edward Wolfe with Wolfe Trahan. Edward Wolfe - Wolfe Trahan: Thanks. One thing I'm trying to get a handle on is if GDP is give or take 3% and IP 5% going forward, and maybe even a little stronger than that now, how come domestic Express continues to be growing less than 1%? What is it you're seeing? Are there cyclical and secular headwinds here? And what's in your guidance for volume growth for the US Express volumes?

I’ll start and then I’ll let Mike go. The net 1% or 2% volume growth is 10% revenue growth is our yield management program is doing so well. That coupled with bundling Ground and Express is right about where we want to be if we can have 10% revenue growth quarter-after-quarter out of domestic express, we’re very pleased with that. Mike.

I remember making this presentation probably about 7 or 8 years ago when I said in front of our annual analyst meeting and told everyone that the domestic express market in a vacuum was a maturing market, and that’s the three primary reasons. One is electronic transmission of documents, two is the substantial improvements in the ground services which have been led by FedEx, and three is the globalization of the economy, and I think it’s important to look at our express network going forward as a global network. Things that were produced many years ago and moved into the US in bulk, then put into a warehouse and then picked, packed and shipped using our domestic system are now manufactured outside the US and moved directly to the point of consumption through our international network, and that’s being driven to a large extent by technological improvements and new technology products such as the iPhone 4 launch, which we will be participating in going forward. So, I think it’s important to understand those three primary factors, which we’ve been talking about for years. So this is not a surprise to us. This is one of the reasons why we’re so focused on our yield improvement strategy and at the same time we’re so critically focused on expansions in our global network, because it is a global network and that’s why you need to look at it. Edward Wolfe - Wolfe Trahan: Thank you. As a follow-up question, can you talk a little bit about an update on the Ground contractors and the MDL after the recent summary judgment for the plaintiffs against you guys on that Illinois case? As I understand it, it's the same judge as the MDL judge. Can we get an update on where we are and what the next actions we might hear on that case are on the Ground contractor side? Thank you.

Ed, this is Chris Richards. Judge Miller entered a number of rulings during this quarter. He denied plaintiffs’ request to have reconsideration of the denial of class certification and those cases where class certification has been denied on in an earlier ruling. And as you know, in Illinois, in the Illinois case at the end of May he granted summary judgment in this case, which pertains to three main plaintiffs on employment classification for purposes of their claim for improper wage deductions under the Illinois Wage Payment and Collection Act. The court ruled only on employment classification, not liability under the act and reserve ruling on the five other asserted claims. The Illinois Wage Payment Act has maybe three tests for determining employment classification and the judge ruled only on the “B" prong, which is the test as to whether the workers performed either outside the employers usual course of business or outside the employer’s places of business. This ruling pertains only to this one state statute in this one state, and this is not a case class had been certified. So it is brought on behalf of the three named plaintiffs. What I expect to see over the next few months is a series of rulings by Judge Miller on the pending motions in these various MDL cases. The current motions all pertain to the classification issue. That round of motions will be followed by the other positive motions in a variety of other kinds of defenses that will also have to follow on. We are very confident in our position in these cases. We expect to move forward with our model and our defense of these actions. I’m pleased that within a week of Judge Miller’s decision in Illinois, we were able to move forward with an agreement in an unemployment tax and workmen’s comp audit in Tennessee, where the State of Tennessee acknowledged that for purposes of their ABC test in Tennessee, the ISP [ph] model as we were able to present, it will meet the requirements of the test in that state. So, I think what you’re going to see going forward is a series of rulings. They will require some explanation, which we’ll be happy to provide and we’ll just be going forward with this process over the next year.

Thank you. Our next question will come from Jeff Kauffman with Sterne Agee. Jeff Kauffman - Sterne Agee: Thank you very much. Congratulations, very solid quarter. If – just one clarification and then a question on trucking, if I look at the total corporate D&A it was down about $8 million, but Express D&A was up about $19 million, which means there was $27 million lower D&A in the other divisions. I know Freight was down $10 million, Ground down $8 million and then this $9 million of other I can't seem to figure out. Why on higher volumes is depreciation expense down so much on the Ground units?

Now remember, we took a lot of assets out of service, and so that stopped the depreciation on them, and we wrote them off in last year’s fourth quarter, and we haven’t been as capital-intensive as we had been in the past over the last couple of years and that slowed it down too, but you know, at the end of day I don’t really look at that number very much Jeff. I don’t think really it is a driver. What I’m trying to look at is what kind of returns we are going to get on these 777s in the long run and let the depreciation, you know, be what it is, and make sure we got the proper cash flows to cover it. Jeff Kauffman - Sterne Agee: Okay. Thank you. The Freight division – I guess my question from 10,000 feet is at what point did you look at it and say, maybe we went a little too far on the volume side, and now we've got to change things? Kind of what has led to the different thinking on the trucking side?

Yes, this is Mike Glenn. We took a hard look at the situation pre-peak. In hindsight, it would have been more prudent to pull the throttle back a bit at that time. To be honest, we did not have the clear visibility in the pipeline that we do on the parcel side of the business in the Freight sector, and we allowed the sales effort to continue through peak season, and then quite frankly we were hit with extremely high volume growth rates, which we did not anticipate post peak season. So, you know, obviously being an armchair quarterback, we would have pulled the throttle back a bit pre-peak. We did not do that, and as a result we have higher traffic levels in our network, and having said that when executing yield improvement program, I much rather have the traffic levels in our network, which provides more flexibility to be more aggressive on rates than if you were dealing in the reverse situation where we were looking for traffic growth while trying to execute the yield improvement program. So, you know, it’s easy to be an armchair quarterback. I think what we’ve learned is that we’ve got to do a better job in terms of having visibility into the pipeline, and we are addressing that and working very hard on that, working very closely from a sales perspective with our operating team and team members at Freight, and I’m confident we’re going to execute and deliver upon these yield improvement plans.

I think it also shows the value of the bundle and the customer what they view as Freight offering in the marketplace. You know, I think these volumes come on because of the expectations of what we can deliver for them and again we – the sales force has done a great job from a bundled perspective and between the Express, the Ground, and the Freight sales, it really positioned us well for the future as Mike said as we work our yield strategy.

Thank you. Our next question comes from David Campbell with Thompson, Davis & Co. David Campbell - Thompson, Davis & Co.: Good morning. I hear a lot of optimism about the Express unit and profitability going forward, but I don't see it in the $4 to $5 estimates for the fiscal 2011 year. And I understand there are cost headwinds and maintenance and pension expense, but it doesn't look like you're going to get any significant growth in margins based on your estimate for the fiscal '11 year. Is that correct?

Yes, this is Dave Bronczek, yes, we actually are going to see improvements in our margins in FY ‘11. Obviously, if we didn’t have some of those headwinds, they’d be very significant. I think Alan correctly pointed out FY ‘12 once we get past few of these headwinds, will be very impressive.

David, what’s wrong with 20 % to 35% improvement in EPS year-over-year? David Campbell - Thompson, Davis & Co.: Nothing, I’m just saying. I don’t see it in the Express margins. I mean, you know, that’s – I’m just looking at the numbers and it doesn’t look like it’s going to be in Express margins, but that’s fine as long as I understand the situation.

Dave if you look at it, obviously the number is different than we are. I don’t know how you get those kinds of forecasts in the improvements in EPS without improved margins in Express. So with all due respect, we don’t agree with what you just said. David Campbell - Thompson, Davis & Co.: Well, that’s fine, thanks. I just see Express profits going up. I don’t see the margins going up.

And the margins will improve as well. David Campbell - Thompson, Davis & Co.: Thank you. And the second question relates to purchase transportation cost. That is – assumes – was there any cost impact there from the volcano, having to purchase transportation to move freight around. Or is that just a reflection of the excellent growth in your Freight forwarding business?

Yes, it’s the latter. It’s – the purchase transportation has gone up with the tremendous amount of volume improvement in international Freight and IP.

Thank you. That is all the time we have for questions. I’d like to turn the conference back to Mr. Foster for any additional or closing remarks.

Thank you for your participation in the FedEx Corporation fourth-quarter earnings release conference call, and please feel free to call anyone on the investor relations team if you have additional questions. Thank you very much.

Thank you. That does conclude today’s conference. We thank you for your participation.