Mickey Foster – VP, IR Fred Smith – Chairman, President and CEO Alan Graf – EVP & CFO 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 Chris Richards – EVP, General Counsel and Secretary

Tom Wadewitz – JPMorgan Donald Broughton – Avondale Partners Gary Chase – Barclays Capital Helane Becker – Jesup & Lamont Edward Wolfe – Wolfe Trahan & Co. Ken Hoexter – Bank of America/Merrill Lynch Rob Salmon – Deutsche Bank Ben Hartford – Robert W. Baird & Co. William Greene – Morgan Stanley Chris Ceraso – Credit Suisse

Good day everyone and welcome to the FedEx Corporation third quarter 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. Please go ahead.

Good morning and welcome to the conference call. We are planning an Investor Meeting during September in Memphis, so please save Tuesday and Wednesday, September 28 and 29, 2010 on your calendar. We will have more details about the meeting for you in the next few months. The 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 Q&A session, callers will be limited to one question and a follow-up so we can accommodate 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. To the extent we disclose any non-GAAP financial measures on this call, please refer to the Investor Relations portion of our 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 who is on the telephone; Alan Graf, Executive Vice President and CFO; Chris Richards, Executive Vice President, General Counsel and Secretary; Mike Glenn, President, CEO of FedEx Services; 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 questions and answers.

Thank you very much, Mickey. Good morning everyone and welcome to today’s conference call to discuss third quarter earnings and our outlook for the remainder of fiscal-year 2010. Outstanding execution of our business strategy and an improving global economy drove solid financial performance in the quarter. I am very confident of our team’s continuing ability to skillfully manage our networks and take advantage of the economic recovery that is well underway. In fact, the recovery is broadening. Trade in international shipping are more positive. At FedEx, our unmatched bundle of transportation solutions along with outstanding customer service and reliability resulted in higher volumes across all our transportation segments in quarter three. Our overall strategy to compete collectively, operate independently and manage collaboratively has proven to be a powerful approach to the marketplace, providing the right service at the right price for our millions of customers. FedEx International Priority package and freight volume increased substantially in the third quarter with volume growth in most international markets. At FedEx Ground, revenues increased due to volume growth at both FedEx Ground and FedEx SmartPost and yield growth at FedEx Ground. A competitive pricing environment, however, challenged FedEx Freight during the quarter and it reported a significant loss. Having said that, we are confident that Freight’s performance will improve as the economy strengthens. FedEx Freight provides an important contribution to the FedEx bundle of transportation solutions; and I am sure that Bill Logue and Mike Glenn will have more to say about this later in the call. In the United States, we see solid GDP growth in the near term led by gains in inventory restocking and manufacturing. Profits in business investment are strengthening and should help sustained growth. Even as the economy improves, however, housing could remain a problem. Credit conditions are improving, but bank credit still is not flowing freely. Though consumers remain cautious, US retail sales are improving. Increased consumer spending that began in late 2009 continues into this New Year. Looking at 2010, we see a relatively strong first half followed by steady economic growth. Our economist, Gene Huang predicts that in FY ’11, US industrial production, which is a primary driver of FedEx volume growth, will rise in the mid-single digit range in contrast to declines in each of our past two fiscal years. In our view, the improving economy will result in a better pricing environment, consistent with our strategy to improve yields across all our transport segments. Now FedEx will continue to balance controlling costs with high-return investments such as the fuel efficient Boeing 777 freighter, a positive gain changer for our customers that offers them a unique advantage in international shipping. In January, we began flying the 777 from Shanghai to our world hub in Memphis. Already we are seeing market share gains. The service offered by the 777 is unmatched in the industry offering a best in class through our improvement in cutoff times in China, increased payload and greater fuel and operational efficiencies. Due to additional investments in 777 aircraft, our capital expenditures are expected to be about $2.9 billion in the fiscal year that ends May 31, fiscal-year 2010. These capital expenditures, we believe, are necessary to achieve significant long-term savings and support projected international growth. In addition, we will continue to enhance and broaden service offerings to better meet our customers rising expectations. This month FedEx Trade Networks, our growing international freight forwarding operation, opened six new offices in its Europe, Middle East and Africa region and in Latin America. Trade Networks has opened 20 international freight forwarding locations in the past nine months. FTN also this month broadened its portfolio by directly offering full and less-than-container-load ocean services at many of our offices in Asia. Recently, we expanded our FedEx Express international economy services by an additional 50 destinations bringing the total to more than 130 countries and territories served with this compelling value offering. FedEx Express delivered a unique innovative solution for our long-term customer ProFlowers to deliver Valentine's Day gifts to some locations around the country on Sunday, February 14. The collaboration was unique because it marked the first time that FedEx Express work with a customer for scheduled Sunday deliveries. Finally, I would like to express our appreciation to all the FedEx team members for their work to help the residents of Haiti and Chile recover from recent devastating earthquakes. In this regard, FedEx has provided more than $1.8 million in cash and support for Haitian relief. This includes 13 charter flights for global relief agencies, and within one day of the earthquake FedEx committed $425,000 in cash to support Haitian relief. Within seven days, FedEx transported more than 0.5 million pounds of relief supplies, and within the first month we had transported more than 1 million pounds of relief materials and medicines. FedEx continues to work with relief agencies, such as Heart to Heart and Direct Relief International regarding shipments of relief supplies into Chile as well. We are very proud that in January, FedEx was again named to Fortune Magazine’s list of The 100 Best Companies to Work for in the United States. Fortune cited our ability to manage through the economic downturn by taking proactive steps to minimize layoffs and to reinstate salary increases and 401(k) matches, which were effective January 1. And earlier this month, Fortune recognized FedEx as one of the most admired companies in the world in its annual rankings. We are particularly appreciative of the tens of thousands of FedEx team members around the world who have delivered this outstanding performance coming out of this economic downturn. Now I would like to turn the mike over to our Chief Financial Officer, Alan Graf. Alan?

Well, thank you, Fred, and good morning everybody. Our greatly improved results for the third quarter of 2010 of $0.76 per share versus $0.31 a year ago, reflect the benefits of improving global economic conditions as major economies are emerging from recession. Our revenue growth was driven by higher volumes across all of our transportation segments, particularly continued growth in FedEx International Priority package and International Priority freight shipment at FedEx Express and increased volumes at FedEx Ground with significant yield improvement. We experienced stronger volumes across our networks and the continued benefit of numerous cost containment activities implemented in 2009. Our earnings growth in the third quarter was mitigated by a significant negative comparison to 2009 from the impact of volatility and fuel prices and fuel surcharges and operating losses at our FedEx Freight segment, as well as increased costs from the partial reinstatement of several of our employee compensation programs. Looking at our segments and starting with Express; the Express segment operating profit was up $220 million and margin was up 4 percentage points. Express segment revenues increased 8% in third quarter due to increased International Priority package volume which was up 18%, most notably from Asia. IP freight volume was up 62% and International Domestic volume increased 13% led by China, the UK and Canada. US domestic package volume increased 1%, as a result of continued improvement in economic conditions. Both US domestic and International Priority yields were essentially flat versus last year. Increased weight per package in US domestic was offset by lower fuel surcharges. International Priority yields were favorably impacted by higher weights and favorable exchange rates, again offset by lower fuel surcharges and lower rate per pound. Fuel costs increased 26% during the third quarter due to an increase in the average price per gallon of fuel. Again I’ll remind you that the timing is such that fuel surcharges actually decreased although expense went up. Fuel costs decreased 33% in the nine months, which is important to point out, as the impact on the year has been significant. Based on a static analysis of the net impact of year-over-year changes in fuel prices compared to year-over-year changes in fuel surcharges, we did had, again, a significant negative impact to operating income in both the third quarter and the nine months. This analysis considers the estimated impact of the reduction in fuel surcharges included in the base rates charged for FedEx services. Purchased transportation costs increased 21% due to IP package volume growth, which requires a higher utilization of contract pickup and delivery services. Maintenance and repairs decreased 18% in the third quarter primarily due to the timing of maintenance events. Lower aircraft utilization as a result of the weaker economic conditions lengthened maintenance cycles; however, we do expect maintenance costs in future periods to become more highly utilized and probably increase. Depreciation expense increased 5% in the third quarter primarily due to the addition of 20 new aircraft into service since the third quarter of 2009. Turning to Ground, segment revenues increased 7% during the third quarter due to volume growth at both FedEx Ground and FedEx SmartPost. Average daily volume at Ground increased 5% during the third quarter, particularly due to continued growth in our commercial business and our FedEx Home Delivery service. The 2% yield improvement was primarily due to a higher average weight per package. SmartPost volumes grew 46% during the quarter. Yields at SmartPost did decrease 5% due to changes in customer and service mix. Certain customers elected to utilize lower-yielding service offerings that did not require standard pickup and line-haul services. The Ground operating income grew 32% to $258 million and margin increased to an impressive 13.5%, again due to higher package volume, as well as lower self-insurance expenses and improved performance, the operating level at SmartPost. Turning to Freight, segment revenues increased 14% during the quarter as a result of higher average daily LTL shipments, which was offset by lower yield. The LTL market remains highly competitive due to excess capacity. Discounted pricing drove the increase in average daily shipments of 26%, but also resulted in yield declines of 8% versus last year. A weak pricing environment was the major contributor for the loss of $107 million in the quarter. Purchased transportation costs increased 84% during the quarter due to increased utilization of third-party transportation providers as a result of the quickly accelerating higher shipment volumes. You should note that on February 1, we implemented a 5.9% general rate increase for FedEx Freight and FedEx National LTL shipments, and we are aggressively pursuing opportunities to increase yields. And you will hear more from that from Mike Glenn and Bill Logue. We are going to talk a moment about services so that you will understand a little bit better about the freight and services income statements. In August of 2009, approximately 3,600 employees predominately from the freight segment were transferred to entities within the FedEx Services segment. This internal reorganization further centralizes most customer support functions, including sales, customer service and information technology into our shared services organizations. While the reorganization had no impact on the net operating results of any of our segments, the net inter-company charges to our FedEx Freight segment increased significantly with corresponding decreases to other expense captions such as salaries and employee benefits. The impact of this internal reorganization to the expense captions in our other segments was immaterial. FedEx Services segment revenues, which reflect predominately the operations of FedEx Office, decreased 11% during the third quarter of 2010 due to revenue declines at Office and the realignment of FedEx SupplyChain Systems into the FedEx Express segment, which was effective September 1, 2009. Although revenue at Office declined during the third quarter due to lower demand for copy services, the allocated net operating costs of FedEx Office decreased, as we continue to see benefits from initiatives that we’ve been implementing since 2009 to reduce that company’s cost structure and improve its revenue performance; my hats off to the team who has done a great job of improving the service and performance at Office. Looking ahead to the fourth quarter, we are expecting earnings per share of $1.17 to $1.37, which reflects the current market outlook for fuel prices and a continued modest recovery in the global economy. With global economic conditions continuing to improve, we expect stronger demand for our services in the fourth quarter of 2010 and continued growth in revenue and earnings. We believe the improving economy will result in a more stable pricing environment, consistent with our strategy to improve yields across all of our transportation segments. We continue to closely manage our cost structure; however, continued improvement in demand for our services will produce volume-related increases in our operating costs in future periods, particularly maintenance expense. In addition, in connection with our improving results, we are reinstating several employee compensation programs, including variable incentive compensation, merit salary increases and 401(k) company-matching contributions. Starting January 1, 2010, merit salary increases resumed for eligible employees and we reinstated company-matching contributions to 401(k) accounts at 50% of previous levels for most employees. Our results also include the impact of accruals for our variable incentive compensation programs in the third quarter, which we did not have in the prior year. The impact of reinstating these programs will dampen our earnings growth both in the fourth quarter and into fiscal 2011, although we do expect our earnings growth to be substantial. As Fred mentioned, our capital expenditures are expected to be about $2.9 billion in 2010. This is an increase from our previous estimate due to additional investments in Boeing 777 aircraft. We also continue to invest in productivity-enhancing technologies. Beginning in April, Express will add a nine scheduled trans-pacific frequency providing much needed capacity from Asia to the US. This offers best-in-market service and later cutoff times by up to two hours. Adding this schedule flight ensures that lift is available and our sales force can capitalize on growth opportunities in the rapidly growing Asian market. Also on April, we are adding a third schedule Asia to Europe frequency. This is the fastest growing intercontinental lane that we have and this flight will provide more capacity, improved service while growing that lane and providing unmatched value proposition from Asia to Europe while allowing us to offer the first in market next day service from Hong Kong to all of Europe. Lastly, I want to thank all the team members around the world for their outstanding performance in hanging with us during very difficult times. I want to point out one in particular; Mr. Jim Hudson who is retiring at the end of this month after 36 years with FedEx. Jim has spent his career in finance, now is the Corporate VP of Strategic Financial Planning and Analysis. Jim’s accomplishments along the way have been nothing short of spectacular and he has been a major contributor to our strategy and success. Affectionately known as Mr. Business Plan, he has been my partner for over 18 years and I will greatly miss his leadership, advice and counsel as where we are. With that, we are now happy to answer any questions you may have. Again, in April, Express led a nine schedule Trans-Pacific frequency providing much needed capacity from Asia to the US. This offers best in market service and later cutoff times by up to two hours. Adding this schedule flight ensures that lift is available and our sales force can capitalize on growth opportunities in the rapidly growing Asian market. Also on April, we are adding a third schedule Asia to Europe frequency. This is the fastest growing intercontinental lane that we have and this flight will provide more capacity, improved service while growing that lane and providing unmatched value proposition from Asia to Europe while allowing us to offer the first in market next day service from Hong Kong to all of Europe. Lastly, I want to thank all the team members around the world for their outstanding performance in hanging with us during very difficult times. I want to point out one in particular; Mr. Jim Hudson who is retiring at the end of this month after 36 years with FedEx. Jim has spent his career in finance, now is the Corporate VP of Strategic Financial Planning and Analysis. Jim’s accomplishments along the way have been nothing short of spectacular and he has been a major contributor to our strategy and success. Affectionately known as Mr. Business Plan, he has been my partner for over 18 years and I will greatly miss his leadership, advice and counsel as where we are. With that, we are now happy to answer any questions you may have.

Thank you. (Operator instructions) And our first question comes from Tom Wadewitz with JPMorgan. Please go ahead. Tom Wadewitz – JPMorgan: Yes, good morning. I wanted to ask you on pricing, you had some constructive comments, I think both Fred and Alan had constructive comments on pricing, but I was wondering if you could give us some specific actions within Ground and Express that you are taking that you think might drive a more constructive, I guess, result on pricing versus what you saw last year; and if you have any kind of early data points in terms of the market and response from customers to your actions on pricing?

Tom, this is Mike Glenn, and as Alan and Fred stated as the economy continues to improve it provides a great opportunity to ensure that our pricing strategy reflects the value of services that we provide. And there are several tactics that we are deploying at this point. They include, one, ensuring higher retention rate of the annual GR [ph]; two, ensuring acceptable rate increases for contract renewals; three, we have revised the pricing guidelines for new business to ensure appropriate yields coming in given the economic improvement we have seen; four, we are ensuring that all of our customers are meeting their volume commitments in order to retain their current rates, if not, we will re-engage in negotiations to ensure that the pricing reflects the current business that we are receiving; five, we are leveraging our total portfolio of services to ensure that we have the right traffic in the right network. For example, in some cases we’ve dealt with some of our home customers who have moved some of the lighter weight traffic to our SmartPost network which provides tremendous value for our customers and obviously enhances our yields and profitability. We have stated very clearly to our sales team that we are willing to walk away from specific accounts absent reasonable rate increases. So, we are taking a much firmer stance in this regard and then we are also providing incentives to our sales team to ensure that we increase yields for accounts that are not producing acceptable margins. And these tactics apply not only to the parcel segment but to the LTL segment as well; and I am very, very pleased with how our sales team has responded to the new pricing guidelines and how they are executing. We do believe the pricing environment is firming, customers have been – I guess have been accepting these new guidelines without significant pushback. Clearly, (inaudible) always going to be negotiations but with the pricing environment and the economic environment improving we’ve had success so far and we expect to continue to have success executing this strategy. So, I am quite confident in our ability to execute this new pricing strategy, and I think you will see the results in quarters ahead. Tom Wadewitz – JPMorgan: Okay. Great, that's helpful. And then the second question would be on expenses. Alan, you called out maintenance expense as something rising in fourth quarter, and then also mentioned the year-over-year increase in variable compensation. Is there any way you can kind of give us a ballpark for considering the magnitude of change in expense in those two segments as we look to fourth quarter on a year-over-year basis? Thank you.

Tom, I will let Dave talk about maintenance expense and particularly at Express. As to our employee compensation programs it is one giant category, salaries, and wages and benefits. And we have been very strict on headcount. We only are allowing replacements with specific approval from the strategic management team [ph] for additions, even though we are growing. I think we have done a very good job with our overhead but at the same time while our shock absorber worked very well on the way down, as we took pay cuts and froze merits and eliminated the 401(k) match and eliminated bonuses on the way back up we need to start to reinstate those. Our folks have earned them and deserve them and so we have to add some of that going forward. So, I think that is number one. Number two, as you all know, Tom, the pension accounting rules, which as I have stated many times I think are ridiculous when we have mark-to-market but we still have to do it. On May 31, we will have to see what interest rates are then and they look like they are going to be lower than they were last May 31 and just 1-basis point in interest rates has about a $2 million impact on our pension expense. So, as I am looking into FY ’11 right now I see lower interest rates and probably higher pension expense than otherwise we would have had in FY ‘11. Over time, as interest rates go up that will mitigate significantly but it will be a headwind going into ’11.

Yes Tom, this is Dave Bronczek. On the aircraft maintenance or the maintenance issues that Alan had referenced, we did a very good job last year in the economic downturn on matching lift to load, and of course as everybody has mentioned so far our volumes are increasing and the demand is increasing. So, as that continues to happen in Q4 coming up here for example, we will bring some of our aircraft that we put in the desert, will bring them out and we will do the aircraft maintenance in advance of that.

Thank you. And our next question comes from Donald Broughton with Avondale. Please go ahead. Donald Broughton – Avondale Partners: Good morning, gentlemen. I was looking at Freight specifically. Do we have – I know you've starting to really focus on yield and trying to improve the pricing in what has been a very ugly pricing market. Do we have a target at which we could look forward to? Are you expecting Freight to return to profitability? Is it going to be a fourth quarter fiscal event or is it more a first, second quarter of next fiscal year event?

Hi Don, this is Bill Logue. Obviously, our number one focus as we talked about is on yield and obviously that’s going to drive our return to profitability. We have a tremendous focus on operational expenses. We are working internally with our staffing to make sure that we have the appropriate resources in the right lanes. Again, as you saw on the earnings, our purchased transportation is up and so forth. We are going to work internally to get our staffing correct to move volume between the two networks and again, that will help us. So the yield combined with our operational efficiency activities will help us move toward that direction and that is our objective as it is stated very clearly to the organization.

Donald, this is Mike Glenn. I want to add a couple of points to what Bill said. In addition to the tactics that I mentioned on the pricing side for parcel and freight, there are a couple of different things that are going on on the freight side. One is, given our traffic levels in the freight network we have the opportunity to be a bit more aggressive in terms of taking these rate increases because of the significant increase in traffic that we’ve had. So that gives us a little more flexibility on the pricing side. And secondarily, we are really focusing on those specific accounts that are driving higher costs in our network. That’s a bit different than what you typically see in the parcel side of the house but a particular customer can be – drive a lot of cost in the freight network and we are really focusing with the freight operations team to make sure we are addressing those specific issues that can have a near-term impact on the bottom line; so, just a couple of more tactics on the freight side that we are deploying to improve the pricing environment. Donald Broughton – Avondale Partners: If I am doing my math right, you guys are now the largest LTL out there in the US marketplace. So the question is when does it become profitable?

Donald, we are working aggressively towards that objective, obviously as we go through Q4. Again, Q4 is seasonally our strongest quarter. Obviously, Q3 is seasonally our weakest quarter in the industry. So, Q4 we line up, we have the price activities going on and our objective is to use Q4 as a strong return to our strong performance levels and our number one objective is to return FedEx Freight to a key contributive profitability to the FedEx Corporation. And as I stated clearly to the organization, profit, market share leader and a premier provider of service to our customers are the three objectives we are looking for. So, we have – profitability is in our scope and that is our number one objective going forward here. So we will work internally with Mike’s team working on the yield side of the business, but again on the operating performance side of it we’ll also. When you spike up 26% growth on a year-over-year basis and we saw a great growth between Q2 and Q3 fiscal year, obviously, it takes you a bit of time to react to that spike in growth. The team is working fantastically towards that mission. We are seeing really good performance on our productivity initiatives, in our key metrics, a startling to return to a nice favorable trend line, and again that will see great results for us going forward.

Donald, this is Alan. Mike gave you some specific forecast of when we are going to return to profitability but I will say that the worst is behind us. We are going to see significant improvements going forward.

Thank you. And our next question comes from Gary Chase with Barclays Capital. Please go ahead. Gary Chase – Barclays Capital: Good morning, everybody. I wanted to see if I could follow up with Mike Glenn on the pricing question. You referenced those five initiatives that you are working towards. I wondered if you could give us a sense of how far you think you are through that and what a reasonable timeframe is to think you could thoroughly pursue those opportunities. It looks like the price improvement this quarter was not a function of weight per package. So it looks like you're starting to get some core yield traction. Just wondering how much further you have to go there?

Well, I think it is important to understand this not a short-term tactical exercise. This is a long-term strategy. Obviously, we have had to react to very difficult market conditions with the economy which typically results in trade down of volume, lighter weight shipments and things of that nature and clearly excess capacity in the LTL market. But as the economy improves that allows us to move back towards longer-term strategic objectives in the pricing arena more in line with what I talked about with reasonable yield improvement on a year-over-year basis. So, I want to be real clear this is a long-term strategic direction for us. This is not a set of short-term tactical exercises. Gary Chase – Barclays Capital: Okay, and then within Ground, you referenced specifically that weight per package had improved. I am wondering if that is a market dynamic or if that is just a transition you are describing, moving some of your lower-weight product into a more cost-effective channel in SmartPost?

Gary, this is Dave Rebholz. It’s a combination of all the above. We have moved the right volume into the right networks but that has not been a dramatic implication to us. We’ve seen an all-up average weight increase as our volume has shifted more towards the commercial side during this restocking timeframe. All up, I think we have got to balance correctly, and as Mike has said on both of his comments, we have got a long-term strategy here to get this balance correctly.

Thank you. And our next question comes from Helane Becker with Jesup & Lamont. Please go ahead. Helane Becker – Jesup & Lamont: Thank you very much, operator. Alan, I saw in – the United Airlines yesterday offered a promotion to their travelers that they will ship golf clubs, skis, whatever, via FedEx for $25 per bag. So could you just talk about that type of promotion? Do they pay you the regular rate and they are just discounting to their customers? Do they pay you a discounted rate? And are you going to do more promotions like that?

Good morning, Helane. Well, Amazon uses FedEx a lot and offers free shipping. I promise you we don’t give it to them for free. I’ll let Mike handle that. Helane Becker – Jesup & Lamont: Thanks.

Helane, FedEx is for many years been in the business of transporting baggage, transporting skis, golf clubs. As a matter of fact, we have a number of different agreements with airlines to do so and also agreements with various associations which offer their members’ benefits similar to what you are referencing – to transport skis for example when they go on ski trips. So this is not an unusual thing. Obviously, as the airlines tighten the restrictions on baggage it provides us additional opportunities which we are certainly planning to take advantage of, but this is not a new program Helane Becker – Jesup & Lamont: Okay, but you are still making money on this?

Yes, ma’am. Helane Becker – Jesup & Lamont: Okay. And then just as a follow-up on the international side, are you – given how much demand has come – or rather demand has gone up and supply has come down, are you able to get any pricing increases in place?

We have seen improvements in the market and obviously that again relates to the economy and the type of goods that are being shipped. Our business is very closely tied to industrial production and we have seen exports improve out of Asia in particular. Those tend to be hard goods which have a heavier weight per package and higher yielding. So, we are seeing some improvement there.

Thank you. Our next question comes from Edward Wolfe, Wolfe Trahan. Please go ahead. Edward Wolfe – Wolfe Trahan & Co.: Thanks. Good morning. Just wanted to get a little more detail; Mike, you noted about the incentive change to your sales to increase yields in Express and LTL, how quick until we see some tangible signs of yields improvement and can you talk to us a little bit more about what that means because UPS is saying some of the same things and I haven't heard this for a while.

Well, I think this does take time to see the kind of results that we are looking for which is why I referenced that it is a long-term strategy but the biggest opportunities, as I mentioned are when you reset the guidelines for new volume opportunities going forward. Obviously, we are being much more aggressive in terms of getting the contract rate increases that are stated in the contract, which in a difficult economy, obviously, you will lose some of that negotiating power. But clearly, the biggest opportunity going forward is with some of our larger customers when we are renewing contracts and when we are looking at surcharge adjustments and things of that nature. So, I will tell you that we are already starting to see some positive impacts, particularly in the freight sector and you will see the same thing in the parcel sector going forward. But, it is not a situation where it is going to be a 180 degree turn. I mean this is a long-term strategy in a measured approach. As I mentioned, we are prepared to put some traffic at risk to execute this strategy because we believe that is in the best interest of the company but it will be a few quarters before you kind of see the continuous improvement that we are looking for. Edward Wolfe – Wolfe Trahan & Co.: And can you give more details on how you are incentivizing sales? What has changed and how that works and what that means?

Well, we are looking at a number of different opportunities for the long haul, Ed. I think the biggest opportunity we have in the short term is about focusing on specific accounts. Now, how are we incenting our sales people to deal with specific accounts? In the past, you tend to look more at volume and revenue growth. There are plenty of opportunities for us to change that and look at profit improvement as a way to incent our sales team on specific accounts. So that is the biggest leverage opportunity. It is very easy to continue to incent the sales people through volume and revenue growth with new pricing guidelines for smaller accounts, mid-size accounts. But for the very largest accounts, we have the opportunity to change the incentives and actually focus them more on profit improvement as opposed to volume and revenue growth. Obviously, if I have the choice of improving volume by 10% on a particular account at the risk of – and seeing profits improve only 2% versus improving bottom line by 5% and 2% growth I am going to take the latter. So, it is just a matter of how you choose to incent the sales people on specific accounts, which is the biggest short-term lever.

Thank you. Our next question comes from Ken Hoexter with Bank of America/Merrill Lynch. Please go ahead. Ken Hoexter – Bank of America/Merrill Lynch: Great, good morning. On the – Fred, you mentioned the retail sales are increasing inventory restocking a bit. Can you talk a bit about the transition? Are we starting to see a migration more from the Express to the Ground product?

Well, I will ask Mike Glenn to talk about this in greater detail but I think in the main, the migration from Express to Ground has already taken place. What drive the Express volumes is generally the nature of the shipment and the consequences of the item not being there within a time-certain delivery window that has been selected by the customer. With the outstanding job we have done in services in having a sales force that can give the customer the advantage of the bundle of transportation solutions that we offer from SmartPost to FedEx Ground to First Overnight or Express Freight versus LTL, we are able to put the customer in the right network and there may be some more on the margin but I think in the main a great deal that’s already taken place and it has already been absorbed in the existing businesses. Mike, do you want to comment on that? Dave Rebholz, Dave Bronczek?

Well, if you go back over the last 10 years, as I have said before, there are really three things that have affected the domestic Express business. One is the electronic transmission of documents that used to move in a physical form. Two is obviously the tremendous service improvements that we have seen at FedEx Ground with day-certain delivery, money back guarantees, so on and so forth. And three is the globalization of the economy. Very specifically, items that used to be moved into the US in bulk, put in the warehouse and then moved through the domestic system are now moved on a point-to-point basis from point of manufacturer outside the US to point of consumption inside the US. So, it is the combination of those three things that have affected the overall growth rates of the US market. Now clearly the second issue which is the Ground improvements have some impact but I agree with Fred that we’ve seen, I would say, the bulk of that going forward but I think it is important to understand and we harp on this all the time why this is so critical to look at the Express company as a global company for that third reason and that is the globalization of the economy and how our customers are moving items from point of manufacture to point of consumption.

Let me just jump in. This is Dave Bronczek. To Mike’s point and Fred’s point, that’s exactly right. We are a global powerhouse now at FedEx Express and as you look at our all up revenues, for example, this past quarter they were up 8% across the enterprise and our Express is only up 1% if you take out the fuel impact, fuel added another 2%. So, it is our all up global powerhouse that we look at when we look at our revenues across the system. The United States domestic is filled up now with a lot of international priority coming in from all around the world, very important point.

And this is Dave Rebholz as well. We are extremely proud of all of the improvements we have made in service to our customers. In fact, we did another 3,677 lanes in February which brings us just this fiscal year alone 7,000 lanes where we have put ourselves in a competitive position of advantage. If you look at it more than 77,000 or 64% of all lanes have been accelerated over the last seven years. Having said that to Fred’s point about time definite and having worked in both organizations, effective service in a time-definite marketplace is different than day definite. We see most of our closes coming from the competition, not coming from FedEx Express. And so that is the net of it, and I am in agreement with previous comments. Ken Hoexter – Bank of America/Merrill Lynch: I appreciate the depth of the answer. Just a follow-up then, just talking about the expenses there; when you look at coming out of the downturn here and all the cost cuts you have put in place, when you look to that long-term target of that 10% operating margin, is there anything that gives you more confidence in either getting to that point or maybe even surpassing some of those targets, due to the costs you have put in place and now the addition of things like the 777 and other more fuel-efficient domestic aircraft that you are putting in place? Can you talk a bit about that?

Well, I will start and I am sure it’s only 10% in Express, just to remind you that Ground is already at 13.5% and doing a great job. We have been through the cost thing and we have restructured all of our companies but Express in particular. I thought we are doing an excellent job with that. Right now, we are highly focused on yields. I can’t make that point enough. I thought Mike did an outstanding job of telling you exactly where we are and let me just add to that that when you talk about changing the incentive of our sales force that’s difficult for a lot of companies to do to make that work but not for our sales force. They are going to execute and deliver. I have total confidence in that so I think you need to look at our earnings growth more from the revenue side than the cost side because I think we are pretty well structured. Having said that, we are very aggressive. Don’t misunderstand the fact that we are very aggressive. I mean we have increased our CapEx significantly to add additional 777s. We think we’ve got, obviously, by far the best service with the latest pickups and we are going to push that advantage and we are going to be aggressive about it. That comes with some additional depreciation and some additional maintenance expense as we take airplanes that are mothballed and putting back into service because we have the volume there and we think we have – we know we have the yields and the profitability to make it work. So, if you look at Express getting – improving up to 10% and beyond quite frankly because (inaudible) on before Express’s international revenues outpace its domestic we are very excited about those prospects and if you just look at this quarter I mean it was up 4 percentage points on margin, we get a lot of momentum. Dave?

Yes, let me just add to that. It wasn’t – but just right in front of the economic downturn that Express was at 9.3% and marching very quickly to a double-digit profit. So, it is clearly not a magical number that we can’t get to. We will reach that target. It is the yield improvement, it is our cost structure, it is international around the world – international revenues and yields are significantly higher. So, just two years ago right before the economic downturn we were rapidly closing in on that double-digit margin of 10% and going beyond so it is clearly within our grasp and now that the economy is turning back around and all the things we have going for us as Alan has mentioned that’s our goal, that’s our target and we are confident that we will get there.

Thank you. Our next question comes from Justin Yagerman with Deutsche Bank. Please go ahead. Rob Salmon – Deutsche Bank: Hi, good morning, guys. This is Rob Salmon on for Justin. I was hoping to dig a little more into some of the former DHL US domestic small package business. How much of this business has been repriced in calendar year 2010? What sort of pricing increases have you been able to garner to date on that business and what are your expectations going forward?

Rob, this is Mike Glenn. A lot of that business was brought on really in the last – towards the end of last year so we are just coming up on renewals on some of the contracts and as they come up obviously we are taking adjustments accordingly. So, we have to absent somebody not meeting their volume commitments. What we are doing is pacing these things as the contracts come up for annual rate increases or contract renewals. So, I want to be very clear about that. We are not in the situation where we are breaking contracts or anything like that. And secondarily, we did take on this business at a premium to what DHL had it. So, we will deal with those as they come up for renewal or annual rate increases but we have to pace it along those lines. Rob Salmon – Deutsche Bank: No, Mike, that is definitely fair. When I think about that business in the economic period when that came on, I would imagine that quite a bit of this business is probably still significantly under your average pricing on the domestic business. Could you give us a sense of what the differential is if I am looking at the average, which hasn't yet been kind of brought to market? And how much of that is remaining in terms of contract renewals that should be coming up at some point during the year?

Well, your assessment is correct. I mean this business did come on at lower average yields than what we typically enjoy at Express and that’s one of the dampening factors that we have been dealing with and as we lap that obviously that would be an advantage to us. The primary driver for the lower yields was two things. One is DHL carried a lower average weight per transaction than FedEx did. And then secondarily, they were more aggressive in their pricing. While we were able to command a premium when we took that business into FedEx obviously we were not in a position to affect the average weight per transaction. So we will just have to deal with that as these contracts come up and that relates directly to my comment regarding incentives for our sales team on specific accounts. If we incent our sales people for the right behavior they will perform accordingly and that is what we intend to do. So we are quite confident in our ability to get the appropriate rate increases as contracts come up for renewal.

Thank you. Our next question comes from Jon Langenfeld with Baird. Please go ahead. Ben Hartford – Robert W. Baird & Co.: Good morning. This is Ben Hartford in for Jon. A quick question on the trade network side. You guys have opened a number of offices over the past 12 to 18 months organically. Trying to get a sense for what the strategy on the development of that offering is going to be going forward, whether you are satisfied with doing it organically or if you think that you need to look on the outside and do an acquisition to help supplement that growth?

Well, this is Dave Bronczek. We are very pleased with our organic growth. We have opened up 20 locations around the world. This fiscal year we have planned – we have approved going forward as well in all the major places in the world. We just opened up Dubai, Brussels, Frankfurt, China was at the beginning of the year, parts and rest of Asia. We are actually using FedEx Trade Networks for ocean and air freight forwarding as part of our overall bundle and strategy. The teams that we have met with around the world are excited and understand the business opportunities that we didn’t play in quite frankly before. So it is an all up bundle that improves the overall transportation power of FedEx Express and actually into Ground and Freight. Ben Hartford – Robert W. Baird & Co.: Okay, great. Then I don't want to belabor the point, but specifically on the Ground side when we talk about yields, I think you guys have done a great job articulating that. But moving forward when we look at the growth rates, when we look at volume growth in that segment, are you satisfied – it sounds like the number of yield initiatives might pressure volume growth moving forward. Would you be satisfied with metering that growth with something closer to the upper single digits moving forward and forsaking some market share growth to ensure that you do get the yield growth that you're looking for?

This is Dave Rebholz. I think we have the right quotient of growth rate and yield and, as Mike pointed out, the right network combination to appropriately grow our aggregate business but not do it at a reduced rate structure. We don’t want to buy the marketplace. I think we are right in the sweet spot right now. I think everything that Mike has already articulated let’s you recognize we continue to – and our results, we continue to grow but we are going to grow the right way with the right mix of customers, even the right network. So, I am perfectly pleased and as Mike pointed out with of his detailed comments about the tactics and strategies for sales, I don’t know that I could be anything other than redundant.

Ben, this is Alan, let me just say we are growing market share, improving profitability and increasing yields at the same time in a not so great economy. That tells you a lot about the service that we are delivering. Dave mentioned the lanes and we are the fastest and we are going to push that advantage really hard going forward.

Thank you. Our next question comes from William Greene with Morgan Stanley. William Greene – Morgan Stanley: Hi, I am just curious – there were some comments about the domestic business being sort of full on international. We've not really seen the snap back on the domestic Express side. So do the comments suggest that we will sort of – this is kind of a new normal off of which we will grow and that we should think about the package division in total rather than domestic and international kind of growing at different rates? How should we think about kind of overall package growth on Express?

This is Fred Smith. Let me say what I have said now for a number of years and add Dave Bronczek to put any color that he wants on it or Mike Glenn. We have to report Express as domestic and international because that is what the SEC requires of us. We do not look at the Express business as domestic or international. It is one global network. Many of the things that 10 years ago we carried from, let’s say, Phoenix to Boston, we now carry from Guangzhou to Boston. The difference is rather than getting $15 for the former, we get $90 if it is an international priority shipment and 80% if it is an international economy shipment. Those are not real prices but you understand the point. And what Dave was mentioning about “the domestic system” being full of international traffic, when we bring this traffic into United States to one of our hubs, Memphis for work, Indianapolis, New York, Oakland, what happens is a lot of the traffic goes to the smaller cities and points around the network and it’s commingled with traffic that originates in the United States and is destined to points in the United States. So, the future of FedEx Express and the Express segment is international, and I don’t think that you will see as reported in the SEC reports any significant growth beyond say GDP levels of “domestic Express”. But it’s really traffic coming from the same customers that just become more global in nature and the United States is just one part of that global system. This is an area that it continues to be misunderstood and the reason that we are very confident about the margin improvement in Express is the incremental profit on these international door-to-door Express shipments are far, far greater than any other service that we offer in our transport networks with the possible exception of some of our small and medium-sized drop-off traffic. So Dave, you and Mike want to reiterate that again?

That’s well said, Fred. Obviously, that was the point I was trying to make. We look at our system as one global system and as you put international priority high yielding traffic from China and Japan into the United States, the network that is flying out in the US here of its domestic package and goods coupled with these very high yielding, very profitable packages from all around the world, very much the same for example, would be the case in Europe. When Europe is flying its intra-European network, it is now commingled with its international priority shipments from China and Japan and the United States, international traffic that is high yielding and very profitable for us. So going forward, it is one global network and that was my point.

Thank you. Our next question comes from Chris Ceraso with Credit Suisse. Please go ahead. Chris Ceraso – Credit Suisse: Thank you, good morning. Fred, do you have an update on the RLA and should we view the increased buy on airplanes as a positive signal in that regard?

Let me ask Chris Richards to talk about the RLA issue in general. But let me talk about the airplane issue specifically because I think this is something that needs clarification. I mean the business press is completely full of stories about Boards of Directors advocating their responsibility to effectively manage risk that brought on the financial crisis. We are heavily invested in the Express business and have been for 40 years as a Railway Labor Act carrier. And we feel we have an enormous opportunity in this sector, particularly built around these 777 airplanes. When the Board of Directors approved the second tranche of purchases of 777s, the Board insisted prudently that if there were a change in this regard that additional aircraft in that order were subject to continue under that Railway Labor Act. And the facts of the matter are 100 some odd years of history, two Supreme Court sanctioned decisions and almost 40 years of FedEx Express’ history of operating as a Railway Labor Act carrier, mean that we could not invest in the Express sector nor could any railroad or any passenger airline, invest in locomotives or airplanes if they weren’t Railway Labor Act carriers. That’s why the Railway Labor Act was passed in 1926. There is a huge history here. So, we have said very publicly if that change were made we could not continue the investments. I mean that is no part of any legislative strategy. That is just the nature of the business. So it is very important that you separate that issue from the legislative issue which Chris is going to talk to you about. One is simply a Board decision that had to be made in the way it was because that’s the Board’s fiduciary responsibility. Now, I am going to be quiet about that unless you want to know more about that and ask Chris to talk about the legislation itself.

And that does conclude the question-and-answer session for today. I would like to turn the conference back over to Mickey Foster for any additional or closing remarks.

We have some more comments on the RLA by Chris Richards. Hold on.

Let me just give a real quick update on this. As you all are probably aware that the Senate is continuing to debate on its Bill today. We expect the Senate Bill to pass by the end of the week. It does not contain language amending the RLA and that Bill will then move to the House for consideration. Given the focus on healthcare in Congress, the House yesterday passed a 90-day extension of FAA funding and we expect the Senate to pass a similar extension before their spring recess. We hope that after the spring recess, the House will move quickly to pass final FAA authorization legislation which does not contain modification of the RLA or other extraneous labor provisions. The Senate Bill will be clean and will be focused on improving passenger and air safety and air traffic control systems including very important safety provisions like increasing the minimum number of hours that a pilot must fly before they can operate commercial passenger aircraft. We believe that UPS should abandon its efforts to add the language amending the RLA to this Bill as it is simply a corporate bailout that is putting UPS’ interest ahead of those of the American public. So we were very pleased with the Senate’s initiative to pass a clean Bill. We intend to aggressively work through this Bill [ph] on the hill and look forward to the passage of a clean Bill by both Houses of Congress.

I want to thank everyone for your participation today on FedEx Corporation’s third quarter earnings release conference call. Please feel free to call anyone on the Investor Relations team if you have any additional questions. Thank you very much.

Thank you. And that does conclude today’s conference. Thank you for your participation.