Mickey Foster – Vice President, Investor Relations Fred Smith - Chairman, President and CEO Alan Graf - Executive Vice President and CFO Mike Glenn - Executive Vice President, Market Development and Corporate Communications Chris Richards - Executive Vice President, General Counsel and Secretary 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 Doug Duncan, President and CEO of FedEx Freight

David Ross – Stifel Nicolaus Donald Broughton – Avondale Partners Peter Jacobs – Ragen Mackenzie Helane Becker – Jesup & Lamont Tom Wadewitz – JP Morgan Art Hatfield – Morgan Keegan John Barnes – BB&T Capital Markets Justin Yagerman – Wachovia Capital Markets William Greene – Morgan Stanley Chris Ceraso – Credit Suisse Gary Chase – Barclays Capital Ed Wolfe – Wolfe Research Ken Hoexter – Merrill Lynch David Campbell – Thompson, Davis & Company

(Operator Instructions) Welcome to the FedEx Corporation Third Quarter Earnings Conference Call. Now it is my pleasure to turn the conference over to Mickey Foster, VP Investor Relations.

Welcome to the FedEx Corporation Third Quarter Earnings Conference Call. The earnings release and 25 page stat book are on our website at FedEx.com. This call is being broadcast from our website 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 include certain non-GAAP financial measures which we may discuss on this call. Please refer to the release available on our website for a further discussion of these measures and a reconciliation 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 the website 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, Executive Vice President, Market Development and Corporate Communications, Chris Richards, Executive Vice President, General Counsel and Secretary, 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 Doug Duncan, President and CEO of FedEx Freight. Now our Chairman, Fred Smith, will share his views on the quarter followed by Alan Graf. After Alan we will have Q&A.

If you’ll recall during our last earnings call we discussed how FedEx faced some of the worst economic conditions in many decades. As we all know, the global economy has been very weak during this period of time. There are, however, positive signs supporting eventual improvement in the economy. They’re often overlooked in the midst of the current uncertainty but we’re confident the FedEx business model is solid and will deliver long term value. We’re focused on steady gains in market share and productivity. We’re also focused on continuing to improve our customer’s experience, keeping the purple promise. We’re positioning FedEx to take full advantage of the recovery. Because we can flex our networks and pull many other levers at our disposal FedEx continues to operate profitably. Our service levels are extremely high. Our balance sheet is very strong, we have excellent access to liquidity as our recent $1 billion bond offering proves. In December we announced a series of cost saving measures. Today we’re unveiling additional cost reduction actions in light of the continuing deterioration of the economy since our last earnings call. In this regard we will reduce the capacity of the FedEx Express and FedEx Freight networks. We will further reduce personnel and work hours and I’ll be happy to comment on that in greater detail during the Q&A session if you’d like. We will expand pay actions to include non-US employees where permitted. We will be streamlining our information technology systems and other internal processes. We will reduce spending in additional categories and increase economies purchasing goods and services. These actions are targeted to additionally reduce FY10 expenses by about $1 billion. When we announced our compensation reductions in December our goals were to protect our business and minimize the loss of jobs. With industrial production and global trade trends having worsened since that time we are adopting today’s actions to secure the jobs of as many of our teammates as possible. We have, quite frankly, the best folks in the business. I’m confident that these team members worldwide will continue to work together in these challenging times to continue to make every experience outstanding. Our management team is steadfastly committed to reducing costs. We absolutely will not compromise our outstanding service levels. In this regard we continue to work to ensure success for FedEx in the long term. For example, in February, FedEx Express improved its international and domestic services in Mexico with an expanded air cargo terminal, bonded warehouse and a new hub. In China, FedEx Express began operations at our new $150 million Asia/Pacific hub located at the new Baiyun International Airport in Guangzhou, China. I’m proud to say that earlier this month FedEx Corporation was rated as one of the worlds most admired companies by Fortune Magazine in what many consider to be the definitive report card on corporate reputations. In addition, in January, FedEx was once again named to Fortune’s list of the 100 best companies to work for. In December, Forbes Magazine named FedEx to its honor roll of best big companies. These honors are a reflection of the values, culture and people who make FedEx what it is. I know a number of you will have questions about the railway labor act issue and other matters which we’ll be happy to take up in the Q&A session but let me just tie off my portion of these prepared remarks by reiterating that we are determined to act decisively so that FedEx will overcome the current economic challenges and emerge a stronger more competitive company than before. I am particularly proud of the strong balance sheet we have developed over the years and the measures that we have taken that have given us the flexibility to weather an economic challenge of this magnitude. In that regard let me know turn the microphone over to our Chief Financial Officer, Alan Graf.

Today I will discuss our third quarter results and our fourth quarter outlook, following that I will give you a few thoughts regarding our fiscal year 2010 which begins June 1. For the third quarter first up is FedEx Ground where operating results improved due to volume and revenue growth, lower fuel prices, and improved performance at FedEx SmartPost. During this very difficult time revenue increased 4% to $1.8 billion as volumes and yields were both up 2%. FedEx SmartPost volumes increased a whopping 44%. Operating income increased 15% to just under $200 million and operating margin increased a full percentage point to 10.9%. Notably, market share increased as we believe we captured more then our fair share of former DHL traffic at higher yield then DHL has been receiving. At FedEx Freight the economy took its toll as shipments, yields and weights declined due to the weakest LTL environment in a very long time. Revenue decreased 21% on a decline in average daily shipments of 13% and a yield decline of 7%. Operating income decreased to a loss of $59 million versus income of $46 million last year. Again, we believe we are taking market share and will be well poised for substantial profitability increases once the economy recovers. Turning to FedEx Express, operating results declined as lower volumes and yields more then offset significant reductions in cost. Revenue decreased 18% to $5.1 billion a decline of approximately $1 billion from the previous year, driven by volume and lower fuel surcharges. US Domestic volume was down 3% and yield was down 12%. International Priority package volume fell 13% from last years third quarter and yields declined 8%. Freight pounds declined 19%. As a result, in spite of significant escalating cost reductions operating income in Express decreased 89% to $45 million. Overall, for Freight and Express it was a very tough quarter but a very solid one for Ground. EPS decreased 75% for the Corporation to $0.31 a share. Looking at the fourth quarter we have provided an EPS range estimate of $0.45 to $0.70 a share. Obviously we had a significantly worse economy in the third quarter versus last year and we expect continued difficult comparisons in our fourth quarter versus previous year. I am also concerned about potential fuel price increases as fuel surcharges have already been set for April and are about 60% set for May and I see that oil is spiking up this morning. We are presently in the middle of planning for fiscal year 2010. Given the very tough comparisons with last year’s first half and fiscal ’10 and the uncertain economy we are planning very conservatively. Aside from the global economic conditions we face significant fuel and pension headwinds in fiscal 2010. In fiscal 2009 we benefited from the gentle decline in fuel prices during the first three quarters. We do not expect that to continue during fiscal ’10. We have also seen our base Express volume and revenue levels drop sharply compared to the average of the first half. Additionally, our pension plan, like many others, has sustained asset value losses during FY09. Our domestic pension plans however, have more then ample funds to meet benefit payments and no contributions are legally required for fiscal ’09. Future funding requirements will depend on the funding status of these plans on May 31, 2009, partially mitigated by the Worker Retiree and Employee recovery act of 2008 enacted into law in December 2008. In order to improve the funded status of our principal plan and reduce fiscal 2010 expense we may make additional voluntary contributions in fiscal 2009. Our balance sheet is solid and we have over $2.6 billion in cash at the end of the third quarter. In any event, a substantial year over increase in our pension expense in 2010 is likely based on current conditions. Having said that, some of the projections that third parties have made regarding the potential FY10 pension expense increase and mark to market hit to equity are significantly worse then what I anticipate given current market conditions. Recognizing these headwinds of economic conditions, fuel and pension, we are making significantly greater cost reductions beyond what we previously announced and had underway. During the third quarter you may recall the actions we implemented through reduced costs included base salary reductions for US salaried personnel effective January 1, a suspension of 401K company contributions effective February 1. Throughout the year we have also eliminated variable compensation payments, extended a hiring freeze and made significant volume reductions in labor hours and line haul expenses. As the economy continued to worsen during Q3 we recognized that further cost reductions would be required to protect our long term franchise and we have announced those this morning both in the release and discussed already by Fred. Other then these qualitative comments I, nor any of my partners, are in a position to comment at this time on specific numbers for fiscal year ’10 as we are in the midst of our planning cycle and still monitoring the economic climate. We will not, however, do anything to impair our superior service nor are we reducing any coverage provided by any of our networks. Long term we are extremely well positioned, where strong earnings growth and cash flow growth when the economy turns up. With that, operator, we’re happy to take questions.

(Operator Instructions) Your first question comes from David Ross – Stifel Nicolaus David Ross – Stifel Nicolaus: On the Express business how flexible is the Express network given the downturn I know you tried to reduce it and it’s not immediately flexible on the downside. How long does it take to right size it, how much further do you think you have to go still?

What we’re showing by the cost reductions we had already taken and the ones that we’re about to take, we have a lot more flexibility and variability in our cost structure then most people give us credit for. That’s why the one time charges that we anticipate in the fourth quarter are so small compared to the ongoing expense reductions that we’re going to see in FY10. Most notably will be what we’re going to do at Express and with that I’m going to turn it over to Dave Bronczek.

We have a lot of flexibility to your earlier comment. The $1 billion that Fred and Alan referenced before in cost reductions obviously the lion’s share of that cost reduction effort will be at Express. That’s all around the world, that’s Asia, Europe, here in the United States. We have a lot of levers to pull, we have a lot of initiatives underway and we’re moving forward on all of those initiatives. David Ross – Stifel Nicolaus: On the DHL business you said that you got a lot of DHL traffic at higher yields. My understanding is that a lot of that might have gone into the Ground network as well. Could you explain how you see the DHL business being split up between what you got on the Express side and on the Ground side?

We were able to leverage our vast network and broader range of services which included FedEx Express, FedEx Ground and FedEx SmartPost to work with DHL customers to ensure that we put the traffic in the right network to meet their needs. Obviously given the economic situation, some of the traffic and the pricing that was in the marketplace some of the traffic moved out of the Express network and their system and moved into other networks then ours. Having said that, we exceeded our fair share in every segment which includes Domestic Express, US Export, Ground and we also added quite a bit of volume to our SmartPost as well. We were especially proud of the effort of our sales and marketing team to deliver this volume at higher yields then DHL was carrying the traffic for. That was important to us because we wanted to make sure that FedEx received an appropriate return on investment for this work. We did will in all segments exceeding our fair share in every segment where we put traffic. Our objective was to work with the customers and our sales team did a great job of this in making sure the volume went in the right network.

Your next question comes from Donald Broughton – Avondale Partners Donald Broughton – Avondale Partners: It appears the Democrats in the House seem determined to pass Card Check and it’s easy to understand why Card Check would be bad for FedEx’s business, FedEx’s shareholders and FedEx’s financial returns. Can you outline for us why it would be bad for FedEx employees?

I’m going to ask Christine Richards our General Council to comment on this in greater depth. We are just one among many industrial companies that feel that the legislation is not well thought out. Obviously we don’t agree with the concept of doing away with the secret ballot for elections. As I understand it in union organizing efforts the unions win at least half, maybe more. Particularly worrisome is the mandatory arbitration provision.

The most important thing that people have really not focused on with respect to this legislation is this arbitration provision. What it would require is that when a union is elected that the employer and the union negotiate for a very short period of time, 120 days, at which point if no contract has been reached an arbitrator who has no responsibility to the employee, to the management, or to the shareowners of that company, would impose an agreement that would set the wages and benefits for those employees for a two year period. What this means is that a person who maybe knows nothing about the industry or knows little would be setting those rates for wages and benefits. One could logically expect that in some cases they will set a rate that is too high for the company to compete effectively in its business or in some instances they may set a rate that is so low that employees cannot be attracted and the employees would not be able to find compensation that would allow them to perform the work. The most egregious part of this is that this arbitrator would have no accountability to the shareowners of a particular business. If you look at the need for American business as a whole and not just FedEx to remain competitive one of the clearest things that is apparent from this current economic situation is that businesses must be able to control their costs and balance the needs of their employees to have a stable job opportunity with a successful business against the need for making cuts in certain areas to provide an opportunity for the business to remain profitable. This arbitration provision is not just bad for FedEx its bad for business as a whole and I think that’s why you’re seeing a lot of people particularly Senators up in Washington starting to look at this and recognize that this bill has the potential to negatively impact the existence and creation of jobs in the US going forward.

Your next question comes from Peter Jacobs – Ragen Mackenzie Peter Jacobs – Ragen Mackenzie: Could you give a little more detail around the market share gains that you’ve seen in your different business segments are there any numbers that you can put around those?

If you look at volume share more importantly revenue share which is what we pay more attention to, we outperformed our primary competition in every segment. Obviously the DHL traffic had a lot to do with the share during the fourth quarter so the market as a whole the two primary competitors remaining in the express market in the US gained share as a result of the DHL traffic. However, we performed much better again obtaining more then our fair share. Regardless of whether you look at Ground, Express, and US Export or for that matter SmartPost. We were very pleased with our performance not only on a volume basis but on a revenue share basis and we felt we came out very well in that regard. Peter Jacobs – Ragen Mackenzie: Are there any segments of the industry that noticeably weak. I’m sure it was weak across the board but are there any particular outliers that you would point to.

The retail sector in particular has been weak but there’s been broad based weakness across the board. Obviously there are some sectors that are performing a bit better but this is a broad economic issue and the recession is affecting virtually every segment.

I would say that one of the things in particular as Alan mentioned in his remarks has been our Freight business. The Freight business is heavily tied into automotive and housing. I don’t think any two industries in the country have been worse hit with this economic slowdown then that.

Clearly the Freight business almost half of our market can be tracked back to durable goods either manufacturing or distributions. The downturn in the housing industry, the decline in the auto industry and now the lack of consumer spending on large screen TVs and that type of thing have had a huge impact on the Freight business. The Freight business has actually been in contraction since 2006 because of these issues. This has been a prolonged period of time but we’ve been able to gain market share over that period of time and we continue to gain market share but not sufficiently to get over the year over year decline in overall demand.

Your next question comes from Helane Becker – Jesup & Lamont Helane Becker – Jesup & Lamont: On the outlook for the current quarter and then beyond is there anything you can say internationally versus domestically in terms of weakness or industry groups that might be more weak then others or is it just broad based every market down similarly or is there China showing any signs of improvement anything like that.

What we’ve seen in fiscal year ’09 are quarter sequential declines in International Priority where we were about flat in the first quarter, we were down 6% or 7% in the second, we’re down almost 14% in the third. We think that’s about to bottom. As our fourth quarter we don’t think we’re going to see continued quarterly sequential declines. Asia by far has been the weakest but there’s general weakness everywhere.

That’s correct, we have actually seen some pretty good growth in China Domestic, in Mexico, United Kingdom, and our domestic markets are doing better. Similarly to how we’re doing here in the United States but Alan’s right, Asia/Pacific specifically has been hit the hardest and it’s probably the weakest at the moment but I agree with Alan that we probably have hit the bottom. Helane Becker – Jesup & Lamont: My follow up question is on Mexico, do changes in NAFTA and the whole truck slap affect you guys at all?

Let me mention the broader strategic issue then I’ll ask Dave to comment specifically. We were very concerned obviously with what the Congress did on this reneging on our responsibilities under the NAFTA Treaty about the Mexican truck. These operators are as safe or safer then many other operations. It was a solemn obligation of the United States it entered into a treaty. Mexico is among our largest trading partners so we hope that that gets resolved. We have a very good business in Mexico, one that is growing and we think we’re doing a great job for our customers south of the border and north of the border. As I mentioned in my remarks we are expanding our business down there and Dave can comment further on that.

We are expanding our business, we opened a domestic hub in San Luis Potosi in the Golden Triangle in Mexico and coming across Juarez into El Paso and that business is very important for us and for US commerce. We would hope that that continues on the trade pattern that it is.

Your next question comes from Tom Wadewitz – JP Morgan Tom Wadewitz – JP Morgan: My first question is along the lines of the trends in Express, you commented a little bit and on the volumes bottoming out in third quarter. What about yields, the yields were down pretty significantly in Express year over year in third quarter and the margins obviously were under some pressure. Do you think on a year over year basis third quarter is representative of what we see going forward and that yields and margins in Express have bottomed as well? How would we look at that?

In the Domestic business for example there were several issues. One obviously is fuel surcharges dramatically lower this year versus last year. The second issue would be weight per package which is a trend that you typically see during a poor economy. The third issue is the DHL traffic that we added. As I mentioned before while we were able to get this traffic at significantly higher yields then DHL had been carrying it still is less then our average yield per transaction. The traffic that DHL carried also was lighter then our average weight per transaction in the US business. Those are the factors that were impacting yield during the quarter. Tom Wadewitz – JP Morgan: Any thoughts on the margin side year over year in the third quarter and whether that’s representative of going forward or not?

Obviously when we gave you the range for the year at the end of the second quarter the high side of that would have been the economy quit declining and the low side of that would have been it continued. Obviously we’re at the low side of that so it continued a very steep decline and we’re chasing the revenue and volume declines with our cost programs and they’re lagging which is natural. However, I think we can react very quickly here and I think that we can have a decent FY10 at Express. You tell me when the economy is going to turn. If it starts to turn here at the end of the calendar year and we start getting some sequential quarterly improvements and then start eventually to get some year over year improvements we are going to have great leverage in the Express network. It’s just a matter of when not so much an FY10 issue as when it turns and how strong our cash flows and earnings will be at that point.

The variable profit improvement margins that we would get on a package whether it’s in the United States and especially international goes very quickly to our bottom line. We’re doing all the right things on our costs all around the world. When some of this volume and the trends improve not only here in the US but around the world there’s very big upside going forward.

On the strategic issue here too which I think is very important for your understanding of our business, when we basically created the modern door to door Express business in the early 90s for international traffic the segment probably was about 5% of the total market for the movement of goods internationally. In 2007 the last full year before this slowdown the overall market for moving goods by air intercontinental was about $75 billion approximately. The door to door Express segment had grown to almost 40% in terms of revenue share and about 10% to 12% in terms of the weight share. What’s happened when the economy has gotten very bad is the more commodity type traffic has gone down on the water and the capacity in the traditional airport to airport air freight business has been pulled down at a very rapid rate. When you come out of this thing I think quite frankly that some of those business models that people were hanging on to are simply not viable. In our case, however, being such a huge player in the market and we are the largest transporter of goods by air in the world the ability to flex our intercontinental networks as a percentage of our total flight is much greater than people who are flying a couple of times per week between point ‘a’ and point ‘b’. That’s why Dave was talking about these levers that he can pull. We were able to take some of our capacity down over the Pacific but we have not degraded the service capabilities that we’re able to offer our customers. The same thing is true on the Atlantic. That’s not true with some of the more traditional services that have been offered. It’s important that you understand what’s going on within the context of that strategic market analysis.

Your next question comes from Art Hatfield – Morgan Keegan Art Hatfield – Morgan Keegan: When we think about a recovery is you have to put assets back to work. Is there a period of time there where we don’t see as much leverage in the profitability of the company due to having to flex up the network?

We see a tremendous amount of leverage on the initial upside because we will be reducing capacity in terms of aircraft not being flown. The ones that are being flown will still have capacity in them so once the economy turns up initially at Express we’ll get tremendous leverage then we’ll begin to add back flights and assets as appropriate. Particularly if you can tell me exactly when it’s going to turn I can tell you exactly what our earnings are going to be. Art Hatfield – Morgan Keegan: On your pension comment, I know you don’t want to get specific; you made a comment that the high end estimates from third parties you’ve seen are too high. I’ve seen numbers all over the place and some of the high end numbers I’ve seen are a little above $1 a share in earnings. Is that the range that you’re referring to or have you seen something much higher then that.

I’ve seen higher then that and I’ve seen $5 or $6 billion hits to equity. Unfortunately those are people who are taking May 31 data from the 10-K a year ago, have no idea how we’ve been managing our pension fund and no idea what our assumptions are going to be, have no idea what corporate long term bond interest rates have done. Unfortunately a pension program is a long, I’m going to have a soap box here so just get ready, is a long term program where you’re providing benefits for your employees and we have a very unfortunate accounting standard that makes us mark to market and while we got relief fund funding we no relief funds smoothing for expense. We pick one day of the year and whatever the market is that day, whatever the discount rate is that day you’re stuck with. Believe me; we could have tens of millions of dollars of swing that day, hour to hour. I won’t know until we get to May 31. I will tell you that we are a lot less sensitive to equities then we were at May 31. We’ve been using liability driven investing and are continuing to do that so we’re probably in better shape then a lot of people think.

The other thing about our pension is we have a huge amount of assets in that pension fund and very little draw on it. As Alan said, having to do this thing on a single day is really not very well thought out. As you know, when the so called pension protection act was passed in 2006 one of the things that we did, and I think our employees covered by the pension program can take a lot of solace and have great confidence in is we moved to a cash balance pension program so that we can make sure that our pensions are fully funded and we don’t have the level of volatility that we otherwise would have had. Put a different way, we saw what this 100 year flood level evaluation could do and changed our plans accordingly. I’m very pleased with where we are and very happy that we did it so we can ensure our folks have a strong retirement program.

Your next question comes from John Barnes – BB&T Capital Markets John Barnes – BB&T Capital Markets: Your competitor talked about using DHL pull out of the US market as kind of a lever to go after them on a global scale. From a strategic standpoint is that a strategy that you’re following, are you trying to attack them in Asia and Europe and elsewhere?

A significant percentage of the global traffic transits the US and obviously the absence of a US footprint weakens the value proposition of any competitor that doesn’t have a presence in the US. That creates opportunities and we’re working very hard to take advantage of those opportunities. We have a tremendous global footprint and mentioned today despite pulling down capacity we’ve not affected our value proposition. We’re selling that aggressively in the marketplace today in having a lot of success with that. John Barnes – BB&T Capital Markets: Looking at your cash balance what’s going to be your position going forward? Do you stay defensive, are you cutting just back to maintenance CapEx at the $40 stock price, $40 range, are repurchases looking attractive, can you give some color on that?

Obviously those are all the things that are going through our minds right now as we’re going through our planning process and discussing our options with our Board of Directors. I will say this, for FY10 the number one objective building our plan is to stay as close to cash flow positive we can. Again, with the pension wildcard how much we fund and when could swing that one way or the other. As for CapEx it’s still very important for us to change our fleet at Express to have more 757s and 777s. FY10 is a fairly heavy year at the moment for deposits and deliveries. We’re examining that and looking at that in the context of everything else and haven’t made any decisions one way or the other but all those things are at the top of our mind right now.

Your next question comes from Justin Yagerman – Wachovia Capital Markets Justin Yagerman – Wachovia Capital Markets: We’ve seen a lot of bid activity on the trucking side of things in the first half of this year and I was wondering I’ve heard a little bit about some small parcel bids out there. What’s been going on, on that end and have you guys been happy with the results of that? Is that where you’re seeing the visibility on the DHL pickups and any color you could give on that would be great.

Obviously we have contracts that come due on a monthly basis. These are typical multi-year agreements that end up being put out for RFQ or renegotiated and so the activity level there is certainly consistent with what we’ve seen in the past. There’s no question that when DHL announced that they were going to pull out of the US domestic operation, customers started to become very aggressive in looking at alternatives and we were well prepared for that, we had planned for that for many months prior to DHLs announcement, anticipating that was the likely outcome. We were way ahead of the game in that regard and that’s why we were able to take greater then our fair share. Clearly a lot of activity leading up to the end of January closure of DHL operations but it’s settled down since then. Justin Yagerman – Wachovia Capital Markets: It’s not outside of normal kind of trends?

No, there’s a lot of activity. Any time you’re in a weak economy there’s more activity then the norm but certainly not inconsistent with our expectations. Justin Yagerman – Wachovia Capital Markets: When you’re talking about volumes bottoming both on International which got worse this quarter sequentially and Domestic which let up a little bit, what gets you confidence that we’re seeing that bottom? Are you getting a better result in March as we moved into the fourth quarter for you guys? Is there something out there in terms of business trends from customers activity that they’re talking about that gets you that level of confidence? It feels like every time we’ve tried to call a bottom in this economy that bottom tends to fall out a bit.

When I was referring to the bottom before I was talking about our International Priority. We do believe that quarter to quarter sequentially we’re going to see improvement in the second calendar quarter here in 2009 from what we’ve been seeing in terms of the big deep red numbers. Whether it’ll be actually positive or not in the second quarter remains to be seen but by the end of this calendar year sequentially, not year over year, but sequentially we believe it will be improving.

During the fourth calendar quarter what happened was basically a hard down by a lot of people in terms of their purchases. You had a huge spike in inventory and the inventory to sales ratio went up to levels that hadn’t been seen in years. The low replenishment levels that have been going on are not sustainable if you assume that the economy is not going to continue to contract. At some point you have to begin the reorder cycle. We track this very carefully; we have a great economist Gene Huang who’s sitting in the room here with me to pull my ear if I say anything wrong. When you get towards the later part of this year you will have to have some increase in the order cycle if you don’t have a decline in the GDP. We do not anticipate that there will be a significant further decline in GDP for calendar 2009. It will definitely be weak probably for the year be a down year in terms of GDP coming into 2010 perhaps with lower growth. That’s the basis on which we make the comments because the inventory to sales ratio, the inventories are now being bled off and they’ll have to be restocked beginning later in the year if the economy stays even at these levels.

Your next question comes from William Greene – Morgan Stanley William Greene – Morgan Stanley: I’m wondering if you can comment at all on the productivity metrics, you talked about having some metrics here improving. How about man hours, how much did those decline in the third quarter, is that the right metrics we should be thinking about when you talk about productivity?

Obviously each segment’s different. At Freight and Express part of the big leverage that we have is being able to reduce hours across the board. Of course at Ground where we have volume growth we’re getting great productivity out of our model.

In anticipation of the weaker economy we contracted our normal expansion of our contract routes. Contractors of course hire their own employees as business expands or if they need to diminish the hours they diminish them. The equivalent value of the productivity with slower growth rates still came in at about 2.6% so we achieved real productivity on the basis of the volumes and our settlement costs as it relates to our contractors. William Greene – Morgan Stanley: At Express how did the hours change it?

Obviously we reduced our hours a lot and a lot of attrition and so forth. We’ve actually consolidated our operations. Our routes have consolidated so we’ve added one or two routes together in many of our operations. Our volumes have been down and our productivity has actually been up. We’re looking forward to the same kind of improvement in productivity in FY10. William Greene – Morgan Stanley: To be clear, you’re saying that the pounds flown are down but the hours worked are down more?

The pounds flown are down as well, they are 6% down but the productivity in my courier workforce we’ve consolidated routes here in the United States primarily but all around the world so our volumes are down and our productivity is up. William Greene – Morgan Stanley: The postal service has been struggling as we know. Is there any chance you think they come back and ask to renegotiate the contract you guys have?

We talk with the Post Office every month. Lately it’s been more frequent then that. All I can tell you is they’re very pleased with our service and the performance that we’re providing in that service agreement. I would say right now we don’t see anything going forward like that.

I want to add one thing to this question it’s iterative to what I mentioned earlier but important. We are not reducing our service levels whatsoever. In fact, we continue to improve them. We are not reducing any coverage’s in any of our network as we do this. That’s important for you to know because some of our competitors in fact are doing that in various segments, we are not.

Your next question comes from Chris Ceraso – Credit Suisse Chris Ceraso – Credit Suisse: There was a mention in the press release about costs related to consolidation in the regional offices, in Freight and some severance charges. Are these one time in nature and can you quantify the magnitude of those costs?

At the end of calendar four we actually closed our San Jose general office and we combined our two regional operating companies. The general office and headquarters for what was previously our FedEx Freight West Operations was ceased to exist and was combined into our operation headquartered in Harrison. Basically that was it. Plus we had some headcount reductions that there was severance costs for. The reorganization into a single network, the shutdown of our general office in San Jose and the headcount reductions and the severance according to that was all part of that. I would mention to you we continue to manage our resources to our volumes for Q3 we actually had our decline in FTEs of roughly equal to our decline in average daily shipment. We’ve managed this very well.

Your next question comes from Gary Chase – Barclays Capital Gary Chase – Barclays Capital: I wanted to see if we could get a little more color obviously you clarified on International Priority that you think things are stabilizing. Can you give us a sense of where you think the Domestic trend is? Specifically I’m wondering, DHL it’s hard to know exactly when the volume would have spilled off DHL into you and others but they officially were out on January 30th which only left you with a month of time in the quarter. Should we not see additional contribution from DHL over the span of the next quarter versus what we saw during this quarter?

It’s important to understand that we began planning for this departure by DHL almost nine months ago. It became pretty clear that they were going to continue to struggle and while they were negotiating with our primary competitor on line haul agreements we were planning for their departure. We had quite a head start in that regard and we saw volume begin to come on shortly after we initiated our plan. You’ve see an increase in volume coming from DHL throughout our planning horizon. This has not been a one month or one quarter issue, this volume has come in over time. The bulk of the volume that you’re going to see certainly is there already. Will there be some accounts that say, “Gee I went with one competitor versus the other and now that I’ve got a little more time I’ll go out and put a formal RFQ in place.” Certainly that will happen. There may be some movement in that regard. We’re very pleased with our performance and I think it’s safe to say that the bulk of the volume has entered an alternative network. Gary Chase – Barclays Capital: Do you see the same kind of volume trends domestically where you think things are bottoming out as what you referenced in the IP market?

Alan’s already commented on the sequential GDP forecast that we have which would suggest that it will although be difficult in calendar ’09, will continue to improve. If that’s the case then we do believe that we’ve probably seen the worst. It’s difficult to say exactly what’s happening because clearly the DHL volume is masking a lot of the underlying trends. While we believe we’ve got a pretty good handle on that it is a little more difficult as a result of that. We’re pretty pleased with where we sit right now on the Domestic Express side relative to the market as a whole. Obviously we’re not pleased with the performance overall but relative to the market we’re very pleased with our performance.

Your next question comes from Ed Wolfe – Wolfe Research Ed Wolfe – Wolfe Research: I know you don’t break out the Domestic versus International margins but directionally does it make sense that since the international margins have had better margins and they need better margins because there’s more fixed cost that they’re probably at lower margins right now then the domestic?

I can tell you that the opportunity for us to improve dramatically our margins comes from International so your premise is probably correct.

Your next question comes from Ken Hoexter – Merrill Lynch Ken Hoexter – Merrill Lynch: In the press release you mentioned a potential impairment coming up in the fourth quarter. Can you talk about that? Similarly on that subject, you mentioned on the CapEx as you look forward there were a lot of planes coming on 757s, 777s is there any move to, or do you have the capability to delay any of that or is that not something you want to do?

Don’t want to do it because those are great pieces of equipment with high productivity, great leverage and high ROIC. We don’t want to and hopefully we won’t have to but yes we can. As to impairments, obviously the weak global economic conditions have had a negative impact on our overall earnings and the profitability of our reporting units and our market cap has been reduced. There is an increased risk there that we could record non-cash impairment losses on goodwill and we’re in our annual study of that and we’ll just have to go through that. There’s certainly a higher risk of that then there had been previously.

Your last question comes from David Campbell – Thompson, Davis & Company David Campbell – Thompson, Davis & Company: I wanted to know the status of the 757 replacement program, is that still a high priority for you in reducing fuel consumption?

We’re very pleased with our 757 program. We’re getting one a month. We’re replacing 727s as quickly as we can. They are flying, very, very high reliability. We’re very pleased.

It appears that is all the time we have for questions. Mr. Foster I’ll turn the call back over to you.

Thank you for your participation on the FedEx Corporation Third Quarter Earnings Conference Call. Please feel free to call anyone on the Investor Relations team if you have any additional questions. Thanks again.

That does conclude today’s conference call. Once again, that you for your participation. Have a wonderful day.