Alan B. Graf - Chief Financial Officer and Executive Vice President David J. Bronczek - Chief Executive Officer of FedEx Express and President of FedEx Express Christine P. Richards - Executive Vice President, General Counsel and Secretary David F. Rebholz - Chief Executive Officer of FedEx Ground Package System Inc and President of FedEx Ground Package System Inc T. Michael Glenn - Executive Vice President of Market Development & Corporate Communications, Chief Executive Officer of FedEx Services and President of FedEx Services Mickey Foster - Vice President Investor Relations Frederick W. Smith - Founder, Executive Chairman, Chief Executive Officer and President

James Corridore - S&P Equity Research Ken Hoexter - BofA Merrill Lynch, Research Division William J. Greene - Morgan Stanley, Research Division Seth Lowry Peter Nesvold - Bear Stearns Benjamin J. Hartford - Robert W. Baird & Co. Incorporated, Research Division Keith Schoonmaker - Morningstar Inc., Research Division Garrett L. Chase - Barclays Capital, Research Division David G. Ross - Stifel, Nicolaus & Co., Inc., Research Division Donald Broughton - Avondale Partners, LLC, Research Division Kevin W. Sterling - BB&T Capital Markets, Research Division Nathan Brochmann - William Blair & Company L.L.C., Research Division Scott Group - Wolfe Research Arthur W. Hatfield - Morgan Keegan & Company, Inc., Research Division Urs Dür - Lazard Capital Markets LLC, Research Division Christopher J. Ceraso - Crédit Suisse AG, Research Division Jason H. Seidl - Dahlman Rose & Company, LLC, Research Division Thomas R. Wadewitz - JP Morgan Chase & Co, Research Division Matthew Brooklier - Piper Jaffray Companies, Research Division Justin B. Yagerman - Deutsche Bank AG, Research Division Robert F. Pickels - Manning & Napier Advisors, Inc Jeffrey A. Kauffman - Sterne Agee & Leach Inc., Research Division

Good day, everyone and welcome to the FedEx Corporation First Quarter Fiscal Year 2012 Earnings Conference Call. Today's call is being recorded. At this time, I will 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 First Quarter Earnings Conference Call. The first quarter earnings release and our 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 in order to allow us to accommodate all those who would like to participate. Next quarter, we will enhance our earnings call by taking written questions the morning of the release through our web site in addition to questions on the call. I want to remind all listeners that FedEx Corporation desires to take advantage of the Safe Harbor provision 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. To the extent we disclose any non-GAAP financial measures on the call, please refer to the Investor Relations portion of the web site at fedex.com for a reconciliation of such measures to 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; Mike Glenn, President and CEO of FedEx Services; Chris Richards, Executive Vice President, and General Counsel and Secretary; Rob Carter, Executive Vice President of 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 Fred Smith will share his views on the quarter, followed by Alan Graf. After Alan, we will conduct a question-and-answer session. Frederick W. Smith: Thank you, Mickey. Good morning, and welcome to our discussion of operating and financial results for the first quarter of fiscal year 2012. Revenue and earnings increased significantly in the quarter due to strong FedEx Ground performance, improved FedEx Freight performance and the continued success of the company's yield management actions. While there's been considerable speculation that the economy has or will soon enter a recession, this is not our view at present. We expect sluggish economic growth will continue largely due to a lack of confidence that U.S. and European policymakers will effectively address current economic challenges. Slowing global economic growth affected volume and operating performance at FedEx Express in the first quarter. Accordingly, we've taken actions to manage through a period of lower demand for shipping, particularly in International Express. We have many options that allow us to flex our operations up or down to balance capacity and demand such as reducing the number of airplanes in service and other related activities when demand slows. While economic environment is challenging, we remain confident FedEx will improve earnings, improve margins and cash flows this fiscal year. During this first quarter, a few highlights. FedEx Express completed its acquisition of MultiPack, a Mexican domestic express package delivery company and launched domestic next-business-day service in Columbia's major cities. FedEx Freight added new markets in Mexico. FedEx Express enhanced service between Asia and Europe and within the FedEx Express AsiaOne network. In India, we broadened the reach of FedEx branded domestic services. In 2 years, we've grown Domestic Express Services from 16 origin cities and 58 destination cities to 116 origin cities and 331 destinations. FedEx Trade Networks, our international ocean and air forwarding company, opened 3 new offices in Munich, Bucharest, Romania, and Chengdu in China. FedEx Office enhanced its portfolio of mobile business solutions with a first-to-market feature allowing customers to retrieve files from their Google accounts for convenient printing from where ever their files are stored. And last month, FedEx delivered about 200,000 pounds of high-nutrient food in response to the famine in Somalia for UNICEF. FedEx, in this regard, donated more than 5 million pounds of shipping last year to various causes around the world. Now let me turn the call over to Alan Graf, our Chief Financial Officer, for his comments on the quarter. Alan? Alan B. Graf: Well, thank you, Fred, and good morning, everyone. During the first quarter of fiscal '12, FedEx Corporation earned $1.46 per share, a year-over-year increase of 22%. The result was within the range we provided in June and was led by our yield improvement program, outstanding performance at Ground and a swing to profit at Freight from last year. Looking at FedEx Corporation, revenue increased 11% to $10.5 billion versus $9.5 billion last year. Operating income increased 17% to $737 million versus $628 million the previous year, and our operating margin improved to 7% versus 6.6% the previous year. Our performance was led by Ground. Ground continued its outstanding performance for the segment. For the segment, revenue was up -- was $2.3 billion, up 16% versus last year's first quarter. Operating profit was $407 million, an increase of 42% and operating margin was 17.9%. Ground package volume was up 5% and yields were up 9%, 6% from base yield improvement and 3% from higher fuel surcharges. SmartPost average daily volume increased 29% to 1.4 million packages and yield was up 5%, all of which is attributed to higher fuel surcharges. The incredible industry-leading speed and reliability of the Ground network continues to win customers and deliver outstanding financial results. Looking at Freight, revenue was $1.33 billion, up 6% year-over-year. And operating income was $42 million versus a loss of $16 million a year ago, resulting from increased LTL yield and efficiencies coming from January's combination of FedEx Freight and FedEx National operations. LTL yield increased 11%, 6% from base yield improvement and 5% from higher fuel surcharges. LTL volume did decline 7%. Turning now to Express. Revenue for the quarter was $6.6 billion, up 12% from the prior year, but operating income fell 19% to $288 million. U.S. domestic package yields increased 13%, including 7% of base improvement and 6% due to higher fuel surcharges. IP package yields increased 16%. Fuel surcharge accounted for 6%, and base and exchange rates provided 10% in the year-over-year improvements. However, slower global economic growth, particularly from Asia, resulted in a shift to our lower yielding services and reduced demand in general for IP package and U.S. domestic services. U.S. domestic volume declined 3%. IP volume declined 4% and total International Priority weight was up 2%. I should note that last year, inventory restocking was occurring and the comparisons were going to be tough without the economic shortfall. The decline in economic conditions versus what we expected for the first quarter outpaced reductions in variable operating costs such as flat hours and FTEs. Simply stated, we put capacity out anticipating traffic that did not materialize. We have subsequently adjusted our networks to match current demand. Turning to our outlook. As we said in the release, we're projecting earnings to be $1.40 to $1.60 per diluted share in the second quarter and $6.25 to $6.75 per diluted share for fiscal 2012 compared to the company's previous full year forecast of $6.35 to $6.85 per share. This guidance assumes the current market outlook for fuel prices and moderate low growth in the global economy. Even though the economy for the rest of the fiscal year will be weaker than we thought when we provided annual guidance in June, the range was only lowered $0.10 per share as we expect further yield improvements across our portfolio, continued strong Ground and improved Freight performance, and we have positioned our express network for lower volumes. I should note that our express network is now properly aligned to current volume levels, and we have additional action plans and trigger points identified to quickly further reduce frequencies and expenses if the economic conditions continue to deteriorate from here. We are not relying on significant Express volume growth to drive operating margin improvement in quarters 2 through 4 at Express, which we know it will come. Strong Ground financial performance will continue, as well as ongoing profitability at freight. Additionally, we have built-in shock absorbers to use as needed such as reduction in variable compensation accruals. And with that, now we're ready to take questions.

[Operator Instructions] We'll take our first question from Donald Broughton with Avondale Partners. Donald Broughton - Avondale Partners, LLC, Research Division: The question I'm sure is on everyone's mind, talk to us about current Asian, Hong Kong volumes. I know we're very early in the quarter, but what have you seen already just in the first couple of weeks of that quarter -- of that volume as it's developing? David J. Bronczek: Donald, this is Dave Bronczek. Thanks for the question. Well, Alan said it right. We've readjusted our Linehaul anticipating moderate growth over in Asia. Of course, when you saw the quarter -- last quarter, we were at 6% growth in IP in Q4 to negative 4%. So we're actually very comfortable with the performance that we're expecting in Q2 relative to our new network performance that we put in place. And I think you'll see improved profits and margins for Express coming out of Q2. And the question specifically on Hong Kong, we're actually going to see a pickup in our traffic relative to last year's Q2. We have more high-tech customers that shipped last year in Q1 that are going to be shipping in Q2.

We'll take our next question from Tom Wadewitz with JPMorgan. Thomas R. Wadewitz - JP Morgan Chase & Co, Research Division: I wanted to ask you a bit about the cost side. Alan, you gave us some comments at that you've reset the network in terms of some of the cost items. But maybe if you could give a little more detail behind that in terms of how -- what Express headcount might look like year-over-year with the reset network and what you think Express margin might look like year-over-year given that you do have some volume pressures, but you've done some work on the cost side, and obviously, pricing should provide some support. Alan B. Graf: Well, I'll start and then I'll turn it over to Dave to get more specific. We were on track for growth in June when we gave you our first quarter and annual earnings guidance. And then in July, we saw sudden deceleration that continued all the way through August, again, versus tough comps, particularly I'm talking about International Priority. And that's continuing right now. But we have done a substantial amount of network reduction, which does take us anywhere from a month to 6 weeks to change our flight schedules and change the amount of hours that we have in the field. And so we believe now that we've caught up with that, and I'm going to let Dave give you some more details because his team has done a great job. David J. Bronczek: Thanks, Alan. That's right. We actually have -- and going back to that earlier question from Donald, our comps in Q2 will be much easier for us to hit, quite frankly, on the revenue side. And our expenses are better because we've actually gone back and adjust the Linehaul, the frequencies, the headcount and some of the traffic that we're anticipating coming from some high-tech customers in Q2. So we're positioned quite well for Q2. Alan B. Graf: I want to go back also and talk about Ground and Freight, what we're seeing great productivity. I mean, 17.9% margins at Ground in the first quarter are phenomenal. And Freight, I mean its second consecutive quarter of profitability. We're starting to see a lot of productivity improvements with more to come from the combination of those networks. So on the cost side there, we're in terrific shape.

We'll take our next question from Justin Yagerman with Deutsche Bank. Justin B. Yagerman - Deutsche Bank AG, Research Division: So if I'm hearing you right, it sounds like the Express issue was more of a timing issue than it is actual economic weakness. I mean it sounds like last -- in Q1, you had difficult comps because your customers last year were bringing a lot of goods in and restocking. And this quarter should be easier because now we're going to see an easier year-over-year comp. But you also called out weakness in Asia and we heard that from your main competitor last week at their Investor Day. So I guess what I'm just trying to figure out is, how much the environment has actually stepped down versus how much of this is actually a timing issue in terms of when your customers are shipping goods? And then I guess on top of that, if I could, just how you have such confidence in the visibility into that high-tech chain? David J. Bronczek: Well, thanks for the question. It's actually a combination of everything you just said. It is a slowing down in Asia, obviously, when you look at our Q4 IP performance of plus 4% on the volume and up on the yields and then negative 4% in Q1, so it swung pretty dramatically. So it's partly that. It's partly that last year in Q1, if you go back, actually, our 2-year running rate for Q1 to Q1 is actually up 14%. That just goes to show you how strong last year's Q1 was for IP and driven obviously by Asia and specifically, China. So you have a very high Q1 last year. And to compare it to Q1 this year, it was tougher. We had a lot of traffic in the high-tech sector in Q1 last year. That's actually shifted to Q2 this year. So Q2's comps, you can understand, are more -- they're relatively easier to hit and the expenses are better because we went back and readjusted the Linehaul so that it actually gives us the confidence in the Q2.

We'll take our next question from Matthew Brooklier with Piper Jaffray. Matthew Brooklier - Piper Jaffray Companies, Research Division: Just wondering if you could provide some commentary in terms of, I guess, your macro assumptions baked into your current annual guidance. I think previously you had commented on in June with the guide specific GDP and IP numbers. Just wondering if you could talk a little bit about that. T. Michael Glenn: Matthew, let me review our current GDP assumptions. For calendar year FY -- excuse me, calendar year '11, our current GDP forecast is 1.8%. For calendar year '12, our GDP forecast is 2.5%. The industrial production forecast for calendar year '11 is 4.1% and the industrial production forecast for calendar year '12 is 3.9%. I think it's important to note the forecast has come down for just a couple of reasons. One, as you know, the Bureau of Economic Analysis revised down the historical GDP growth rates and that impacted about 2/3 of our forecast. The other third of the forecast was really impacted by the issues that we're dealing with, with the U.S. debt crisis, Treasury downgrades and the EU debt crisis. And let me put a point on the debt ceiling debate and its impact on consumer sentiment. There was a university -- excuse me, a Michigan Consumer Sentiment Index study that was done during the time of the debt ceiling debate, and over that 2-month period, consumer sentiment dropped almost 16 points and it was directly related to the lack of confidence in the country's ability to deal with that issue. So make no mistake about it, a lot of what we're dealing with today is sentiment based. There's some sound underlying economic issues such as the auto sector which we talked about earlier, but we've got to turn around the sentiment in order to see some growth beyond what we're expecting right now.

We'll take our next question from Art Hatfield with Morgan Keegan. Arthur W. Hatfield - Morgan Keegan & Company, Inc., Research Division: Just a quick 2-part question. First, Alan, I thought I heard you say that the volume decline in Asia are continuing. Can you just characterize that further? And then secondly, can you talk a little bit about what's going -- you mentioned what prices are going -- list prices are going to do at the beginning of 2012. Can you talk a little bit about what's going on with contract pricing right now? Alan B. Graf: We're only supposed to let you have one question, Art, but you snuck it in, so. I'm just saying understand that the trends that we saw in the first quarter are continuing in the easier comps in the second quarter out of Asia. There's no real pickup at this point. I think we had an earlier question about how do we have such good visibility? Well, since we're talking to our customers every day, they tell us exactly when and what they're going to ship. So I have a lot of confidence about what our Asia traffic is going to look like in the second quarter and all the way through the holiday season. T. Michael Glenn: Art, this is Mike. The list price increase that we announced for Express and U.S. export is consistent with what we've done in the last 2 years. During this period of time, I'm also very proud of the sales team and the revenue management team for the job that they've done in working with our customers to renegotiate new contract rates. We have been exceeding our expectations in that regard and are quite pleased with that performance and expect that to continue at least through this contract cycle.

We'll take our next question from Nate Brochmann with William Blair & Company. Nathan Brochmann - William Blair & Company L.L.C., Research Division: Yes, I wanted to talk a little bit about kind of to tag along with those questions what you're hearing from your customers on their inventory levels and whether there's any true optimism that we could see some emergency shipping heading into the late holiday peak season. T. Michael Glenn: Retailers have certainly responded to the weaker sentiment by managing inventory levels very conservatively. As a matter of fact, the value of inventory levels relative to sales is near historic lows, and we believe that any increase in consumer sentiment and consumer spending could certainly benefit us by more expedited transportation based upon these lean inventories. So as we see new product introductions in the tech sector, particularly in the mobile device sector, that can certainly benefit us.

We'll take our next question from David Ross with Stifel, Nicolaus. David G. Ross - Stifel, Nicolaus & Co., Inc., Research Division: A question on the FedEx Freight segment, improving margins there and better pricing. Are the volumes where you want them to be and when do you expect to see your volume growth in the network? William J. Logue: David, this is Bill. Yes, we're pleased with the current volume levels, obviously with the current economic soft patch. We are about one more quarter before we'll start to see year-over-year growth. So again, the negative 7 on the volume, obviously, is the result of our yield strategy. And we -- one more quarter to go and we should be lapping ourselves and heading into annual year-over-year growth.

Our next question comes from Kevin Sterling with BB&T Capital Markets. Kevin W. Sterling - BB&T Capital Markets, Research Division: Going back to Express, how much of an impact was Japan on your Express volumes? And then also, are you seeing any strength in other regions, maybe South America? David J. Bronczek: Yes. Japan, obviously, like most of Asia Pacific kind of fell into the same soft patch that Billy was talking about. But mostly, it was China. So I would say that Japan and most of Asia Pacific was softer. In terms of Latin America, yes, that's actually been strengthening. So we're seeing some additional volume from Brazil and Mexico and Latin America in general. But the question on Japan, kind of fell under the same category, but it was the lesser impact.

Our next question comes from Jason Seidl with Dahlman Rose. Jason H. Seidl - Dahlman Rose & Company, LLC, Research Division: A quick question. There's been a lot of talk about the post office and the post office pulling back. You are the largest contractor, but clearly if they eliminated Saturday deliveries, that would be on the positive side. Net-net, what would you be looking at in terms of the impact for that reaction from the post office? Christine P. Richards: Jason, it's Chris Richards. As everyone knows, the business fundamentals of the post office have changed and they need action by Congress to address some of the issues. There have been a number of different proposals offered in legislation and we're monitoring that situation closely. As you note, FedEx Ground is the large customer of the Postal Service with our SmartPost service. And FedEx Express is a key provider to the Postal Service because we provide the transportation service that has improved the reliability of Postal Service's priority mail service from less than 70% to more than 95%. We look forward to continuing both of those relationships. We'll be monitoring the situation and feel confident with our relationship with them.

Our next concert question comes from Jeff Kauffman with Sterne Agee. Jeffrey A. Kauffman - Sterne Agee & Leach Inc., Research Division: I just wanted to ask the below-the-line question, big change in other net. Could you give us a little bit of insight on that? Alan B. Graf: Well, big change but really not too material. I mean, I'll talk about tax rate and interest, we got a lot of cash. We're capitalizing a lot of interest expense on the 777 deliveries. Our tax rates, a little bit lower because we are permanently investing offshore a lot of earnings that we actually do intend to reinvest offshore. So all those things, Jeff, are helping us below the line. But the real story will be how well the economy grows going forward and that will be the bigger difference as we look at quarters 2 through 4.

Our next question comes from Bill Greene with Morgan Stanley. William J. Greene - Morgan Stanley, Research Division: Alan, Fred mentioned in his comments that he doesn't see at this point a double dip. When we think back to '08, what was sort of the canary in the coal mine? What are the things you'd be watching for to say, yes, our business is turning south at a broad portfolio level? As we think about each sort of segment, what are the things we need to watch? Alan B. Graf: Well, I think Mike hit it. I mean, it's consumer sentiment this time. We have an environment of significantly lower interest rates than we had in 2008. We have really -- if you look at Ground's performance and we still have an economy that is growing and moving things. And so at this point, there hasn't been this, well, we're just going to shut down everything kind of mentality that we went through the last time, I think. The company is much more flexible in its cost structure than it was back in 2008. We're able to react much more rapidly, much more variable costs than we were. So all of those things, I think, protect us on the downside. In my range, we have, because we are forecasting a substantial improvement year-over-year, we have our annual incentive compensation is being fully funded and it wasn't back in that timeframe. We can also start to reduce that and will if we start seeing a deterioration. So just a completely different situation. Our customers' hair is not on fire. They're just saying, "We're going to be steady as you go." So it just feels completely different than it did back in '08.

Our next question comes from Peter Nesvold with Jefferies & Company. Peter Nesvold - Bear Stearns: If I can dig maybe just a little bit into the guidance, it directionally feels a little back ended and the reason I say that is when I look at -- if I strip out the midpoint of fiscal second quarter, midpoint of the year, if I did the math right, it seems like you're assuming high-single-digit earnings growth in the back half above past peak earnings. And then to put that into contrast from fiscal 1Q to fiscal 2Q, it's almost flat sequentially whereas historically you might have seen like a $0.10 bump on the low end to $0.20 on the high end. So it feels like the expectations are kind of set low for the current quarter, but that in the back half of the year, your fiscal year, it seems like things are anticipated to get directionally better. Is there anything beyond the GDP forecast that you had cited that would suggest that or am I interpreting the information wrong? Alan B. Graf: A couple of things. First, we're not expecting the peak we had last year. But even with that, we're going to have a substantial earnings improvement in the second quarter even when you count the charges that we had in last year's second quarter. So sequentially from the first quarter -- I mean the company worked really hard in the first quarter to lower its cost to achieve that number. And so if we were going to have our normal really high peak, you'd probably see a lot bigger differential sequentially Q2 over Q1. As we get to the second half, again, Express -- we expect Ground and Freight to continue their performance. And Express, we think the volume situation will be a little better than it was in the first quarter with a little bit of growth, but we don't need a whole lot to hit those numbers. And so that's why I still have a pretty wide range for the year. It depends on where the economy falls out. But right now, we're feeling, like we told you, fairly confident that it's going to be a steady as she goes and no double dip.

Our next question comes from Gary Chase with Barclays Capital. Garrett L. Chase - Barclays Capital, Research Division: Last quarter, one of the things that you guys spoke about was some degree of investment in Express, that the other segments were performing so well that you decided to accelerate some of the investment there. I wondered if you could just elaborate a bit on where those investments were being made, if they continued in the fiscal first quarter and whether or not some of the cost reduction will come from sort of a wind down of that investment activity. David J. Bronczek: Yes, this is Dave Bronczek. That's correct. We've added some more investments in Europe, Asia, Latin America, and they're all geared to improve our profits and our margins. They're all organic in nature. They're all station operation, sales marketing and so forth. So it is the same as we said in Q4 of last year. We decided to keep those programs in place because they were going to improve our profits and our margins. And they're all organic inside FedEx Express in Europe, Asia and Latin America.

We'll take our next question from Robert Pickels with Manning & Napier. Robert F. Pickels - Manning & Napier Advisors, Inc: Just -- and you may have touched on it a little bit already, but what would cause you to adjust your capital spending forecast? I mean you've been spending a lot and I think the economy is slowing. What would cause you to adjust that in the rest of the year or going forward? Alan B. Graf: I think you got to take a look at the performance of the company in general. I mean, we're in a 25% ROIC at Ground. I'm going to put as much money in Ground as they can possibly stand and continue to grow and take market share with those margins in return. So we're not backing off any. We may even be accelerating there. In terms of Freight, we're going to make sure that we have the most modern equipment and the highest-service levels to help them get back to their double-digit margins. So we're going to continue to invest there. And in terms of Express, we're not going to back off from our 777 orders, whatsoever. We may delay some station expansion and some hub improvements and things like that depending, but it'll just be on the margin. But remember, we're still enjoying the accelerated depreciation from a tax standpoint, so we still want to take advantage of that. We'd be looking more at FY '13 and beyond for us to be talking about any significant reduction in CapEx.

Our next question comes from Keith Schoonmaker with MorningStar. Keith Schoonmaker - Morningstar Inc., Research Division: Just some expansion of OD points in India. I was hoping you could elaborate a bit on this market particularly in regards to dealing with low price per parcel, maybe what portion of this business is carried by company assets, materiality of that market in the IP portfolio. David J. Bronczek: Yes, we -- as you know, we acquired a company in India for exactly that purpose to bundle and leverage the domestic market in India and our international business in and out of India. And of course, that market is so important to us strategically going forward, connecting India to Asia, and India to Europe and the United States. So we've made a lot of improvements there, bought a very nice company there and we're integrating it to bundle our customers to give them better value.

We'll take our next question from Chris Ceraso with Crédit Suisse. Christopher J. Ceraso - Crédit Suisse AG, Research Division: Can you talk a little bit more about Asia, maybe give us some color on where you saw the slowdown sequentially, what industries or which customers, and which destinations? Is it U.S? Is it Europe? David J. Bronczek: I'll start and I'll kick it over to Mike Glenn. But obviously, last year, in the first quarter, we had a booming quarter in Asia and we had a lot of high-tech traffic coming through multiple big customers of ours. And that shipping pattern is shifting into the second quarter this year. So we had high growth rates. Obviously, when you look at our 2-year average of 14% volume growth and what I just said our IP was negative 4% this year, you can see that last year's Q1 was booming in international. So it's obviously, mostly China, mostly the high-tech customers for Express. Mike, you want to add to that? T. Michael Glenn: Well, I agree with what Dave said. And again, I'd like to reinforce is the consumer sentiment issues that we're dealing with right now. There's just an overall lack of confidence, and I think that's impacting certainly exports out of Asia and China in general. We were impacted most by the tech sector, though.

We'll take our next question from Ben Hartford with Baird. Benjamin J. Hartford - Robert W. Baird & Co. Incorporated, Research Division: To follow up on that, Dave, I'm wondering if you could provide what the IP volume growth number was for the month of August, just to get a sense for the pace of change through the quarter and what we have experienced from an IP volume growth or contraction number here in the first 3 weeks of September? David J. Bronczek: Well, we obviously don't give out regions in IP volumes and so forth. But I'll add to what Alan said before on a comp basis year-over-year. We're very pleased with how the performance is going to do in Q2 for IP going into the comp comparison year-over-year for volume, it will improve and the yields are still strong, and our expenses are improving. So really, that's a story for us for International in the Q2.

We'll take our next question from Scott Group with Wolfe Trahan. Scott Group - Wolfe Research: So I hear that you feel you've adjusted the network for slower volumes, but can you give some color on what kind of volume growth you're actually expecting? It certainly sounds like you're expecting a lot better than minus 3% in the U.S. and minus 4% IP. Is it fair that you have assumed growth closer to 3%, 3.5% between your GDP and IP assumptions? And just with that, how much of the buyback is assumed in your guidance now? Alan B. Graf: I will just say that we're not expecting a big difference from what we experienced in the first quarter, particularly in the second quarter. We do expect it to slowly improve on the comps year-over-year. But we don't, again, as I've said in my opening remarks, we don't need, at Express, much growth at all to hit the range that I've given you because we have done such a good job of matching the size of our network accordingly. And don't forget about our yield improvement program which is delivering unbelievable results, as I mentioned to you, on the base improvements, and that is going to continue. Regarding the buyback, it's not a material impact in the range.

We'll take our next question from Christian Wetherbee with Citi.

This is Seth Lowry in for Chris. I just wondering if you could give us a sense if you're to sort of average out fourth quarter and first quarter IP volume trends and let's say that 2Q plays out as expected, what's sort of the trailing couple of quarters run rate on IP that you're seeing and if could you just give us a sense on that? T. Michael Glenn: Yes. I think the best way to deal with the IP issue is to state that we have seen a modest improvement in trends going forward relative to our expectations. But as Alan said, we don't anticipate a significant peak this year, so that's important to keep in perspective, that we do anticipate some product launches in the tech sector based upon feedback from our customers which will certainly benefit us. And we've got better comps. But again, I would just summarize by saying that we have seen some improvement relative to what we've been seeing in the quarter. But we don't expect strong volume growth in that sector, as Alan mentioned earlier. Frederick W. Smith: This is Fred Smith speaking. One of the things that you have to focus on in the international air cargo and the International Express market is the fact that a very large percentage of the goods that are moved by air today are technology and electronic products. And we know from talking to our customers, the retailers, the manufacturers and so forth, the primary driver of the reduced demand is the lower sales of electronic product. And in the second quarter, there will be some new product launches, but there hasn't been a collapse in demand on electronic products. It's just that the consumer is, with the sentiment that Mike mentioned, just doesn't have an appetite for a considerably more purchases. That's really the swing issue in the express market place in the international side of the house. T. Michael Glenn: Yes. Let me just add to what Fred said because that's right. If you look at our numbers closely there, our IPFS weight, the pounds actually went up 2% year-over-year in Q2. So they shifted some of the premium products into more deferred as well.

Our next question comes from Ken Hoexter with Bank of America Merrill Lynch. Ken Hoexter - BofA Merrill Lynch, Research Division: If I can just switch over to Ground for a second. Your margins were up 350 basis points year-over-year, I think the highest level I've seen since you created FedEx Ground. Can you talk about what drove that? Was that just volumes pouring onto the network or is there anything onetime in nature in that number? It's obviously a very strong number. David F. Rebholz: Ken, this is Dave Rebholz. There's good volume. We got the benefit of yield from fuel as the headline said that we've released. We got the benefit from pricing actions. We have a few key accounts that are blowing and going, and we're pleased to service them. I think the more important point is that the customers are recognizing the very positive differential in our service offering. There was a time where people questioned why weren't we like Express. Well, now, our service performance is like Express. All up, I think customers really like what we have to offer. We're at the right price point. We're getting a premium because of our significant -- relatively speaking, 24% speed advantage on overnight lanes. And as we've talked before, we have a huge advantage in the aggregate marketplace with all the changes we made. They've been an investment, but the investment is paying off. So we're very pleased and customers like what we have to offer. And then last but not least, our broad portfolio of commercial, home, which has its unique attributes and SmartPost are really providing the opportunity to grow for customers who are looking for the right channel. And we can trade off channels for price, and that really works.

Our next question comes from Jim Corridore with S&P IQ. James Corridore - S&P Equity Research: Most of my questions have been answered. But I want to know -- Fred spoke about leverage you could pull in terms of reducing frequencies or reducing volumes. Have you taken any planes out of service or actually reduced frequencies out of Asia to combat the slowness? David J. Bronczek: The answer is yes obviously. We adjusted the Linehaul. It didn't affect the service at all. But we did because of the lower volumes, we were able to take some of the frequencies out and move them into the United States and when we need to, we can look at adjusting it further.

[Operator Instructions] Our next question comes from Justin Yagerman with Deutsche Bank. Justin B. Yagerman - Deutsche Bank AG, Research Division: I was just wondering if you guys can give a little more quantification on the cost reductions that took place in the quarter. If you look at -- Alan, how much annualized cost came out of Express, can you give us a sense -- and maybe if we can get a sense of how many planes have been taken out, whether they're permanently retired or planes that would come back into service at some point or another. I guess just trying to get a feel for how big of a cost reduction took place. And I guess if things took another step change down, if you have to take out more planes or if that's kind of if you think the network is right sized for even another step down. David J. Bronczek: I think it's important to point out that we're such a big, powerful network that we have a lot of flexibility and the utilization of our planes is really the key. I mean, when there's a swing up in demand, we add extra sections and extra frequencies. When there's swings down, we pull them down. And so pull down our flight hours and all the associated costs that go along with that. It's a big swing. Now what Alan said to start with is June actually, we're starting off pretty strong and right when we got into July, that we saw the changes start to take place. So to pull the network back takes a little bit of time. The good news is we've done that now. If it continues to strengthen, then we have the flexibility to add the frequencies back in.

Our next question comes from Urs Dür with Lazard. Urs Dür - Lazard Capital Markets LLC, Research Division: Most everything has really been asked multiple times. I like the fact that you're not saying it's a double-dip recession. I tend to agree. Can you just give us more of a macro view on sluggish growth in the West and better growth in the East? What are your GDP outlooks for the major regions including South America? Do you have those and willing to share them? Frederick W. Smith: Well, I've given you the calendar year numbers. I think we'll stay at that level. I think when you start dissecting the economy down to regional levels within the U.S., that's probably putting a finer point than need be for this call. But again, we expect modest growth to continue. The biggest drag on economic improvement at this time is sentiment. And the country, as well as FedEx, needs to change in that in order to benefit from further economic growth.

We'll take a follow-up question from Tom Wadewitz with JPMorgan. Thomas R. Wadewitz - JP Morgan Chase & Co, Research Division: Chris had -- Chris Richards had commented a little bit on the Postal Service and it sounds like maybe you don't want to go into a lot of detail. But I was wondering if at a high level, you could give us a sense of the strengths of your contract and whether as the Postal Service works hard to cut costs, there is some degree of risk that the terms in that contract could change or if you think that, that's set up in a way that it will be pretty difficult for them to change the terms. And I'm referring to priority mail specifically. Christine P. Richards: Tom, it's Chris. Our contract is well established. It has flexibility built into it. So while there's fundamental threshold commitments by the Postal Service as far as volumes and weight go, it's able to move up and down depending upon what their need is as they go through the year. It is not set as a single level the way you might think about a traditional contract. And that's one reason why it's been so successful because we've been able to flex our system and support it up and down to meet their needs. We're very comfortable with where we are on the agreement. We've got enough flexibility, and we stay in constant comment with -- constant conversation with them to make sure that we understand where their volumes are and how their system and needs are changing.

Ladies and gentlemen, this does conclude our question-and-answer session. At this time, I would like to turn the conference back over to Mickey Foster for any additional or closing remarks.

Thank you very much for your participation on our earnings release conference call. Please feel free to call anyone on the Investor Relations team if you have additional questions. Thank you very much.

Thank you. Ladies and gentlemen, this does conclude today's presentation. You may now disconnect.