Mickey Foster Frederick W. Smith - Founder, Executive Chairman, Chief Executive Officer and President T. Michael Glenn - Executive Vice President of Market Development & Corporate Communications, Chief Executive Officer of Fedex Services - Sub and President of Fedex Services - Sub Alan B. Graf - Chief Financial Officer and Executive Vice President David F. Rebholz - Chief Executive Officer of FedEx Ground Package System Inc and President of FedEx Ground Package System Inc David J. Bronczek - Chief Executive Officer of FedEx Express and President of FedEx Express William J. Logue - Chief Executive Officer and President

Thomas R. Wadewitz - JP Morgan Chase & Co, Research Division Justin B. Yagerman - Deutsche Bank AG, Research Division David G. Ross - Stifel, Nicolaus & Co., Inc., Research Division Kevin W. Sterling - BB&T Capital Markets, Research Division Helane R. Becker - Dahlman Rose & Company, LLC, Research Division Benjamin J. Hartford - Robert W. Baird & Co. Incorporated, Research Division William J. Greene - Morgan Stanley, Research Division Brandon R. Oglenski - Barclays Capital, Research Division Christian Wetherbee - Citigroup Inc, Research Division Jeffrey A. Kauffman - Sterne Agee & Leach Inc., Research Division Ken Hoexter - BofA Merrill Lynch, Research Division Donald Broughton - Avondale Partners, LLC, Research Division Scott H. Group - Wolfe Trahan & Co. Christopher J. Ceraso - Crédit Suisse AG, Research Division H. Peter Nesvold - Jefferies & Company, Inc., Research Division David Vernon - Sanford C. Bernstein & Co., LLC., Research Division

Good day, everyone, and welcome to the FedEx Corporation Fourth Quarter and Fiscal Year-End 2012 Earnings Conference Call. Today's call is being recorded. At this time, I would like to turn the conference over to Mickey Foster, Vice President of Investor Relations for FedEx Corporation. Please go ahead.

Good morning, and welcome to FedEx Corporation's Fourth Quarter Earnings Conference Call. First, I want to remind you that we're planning an investor meeting here in Memphis on Tuesday and Wednesday, October 9 and 10. Registration information will be e-mailed to you in the next few weeks. The fourth quarter earnings release and our 25-page stat book are on our website at fedex.com. This call is being broadcast from our website and the replay and podcast will be available for approximately 1 year. Joining us on the call today are members of the media. [Operator Instructions] I want to remind all listeners that FedEx Corporation desires to take advantage of the Safe Harbor provisions for the Private Securities Litigation Reform Act. Certain statements in this conference call may be considered forward-looking statements within the meaning of the Act. Such forward-looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. For additional information on these factors, please refer to our press releases and filings with the SEC. In our earnings release, we will include certain non-GAAP financial measures which we may discuss on this call. Please refer to the release available on our website for further discussion of these measures and a reconciliation of them to the most directly comparable GAAP measures. To the extent we disclose any other non-GAAP financial measures on the call, please refer to the Investor Relations portion of our website at fedex.com for a reconciliation of such measures to the directly comparable GAAP measures. Joining us on the call today are Fred Smith, Chairman, President and CEO; Alan Graf, Executive Vice President and CFO; Mike Glenn, President and CEO of FedEx Services; Chris Richards, Executive Vice President, General Counsel and Secretary; Rob Carter, Executive Vice President, FedEx Information Services and CIO, who's dialing in; Dave Bronczek, President and CEO of FedEx Express, who's also dialing in; 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.

Thank you, Mickey. Welcome to our discussion of operating and financial results for the fourth quarter and fiscal year 2012. Following my brief remarks, Mike Glenn, as we started to do at the last one of these meetings, will address our economic outlook and yield situation first, and then Alan Graf will offer an overview of our financial results and outlook. Prior to FY '12, we committed to you that we would increase earnings, margins, returns on invested capital and cash flows, and we have done so. I'd like to thank the more than 300,000 FedEx team members around the world who turned in a world-class performance during a very volatile and challenging year. We had, of course, exceptional performance by FedEx Ground, and the powerful new value proposition at FedEx Freight and improved yields across all transportation segments fueled these outstanding results. We also will continue positioning our company for the long term. In this regard, last week, FedEx Express completed the acquisition of the Polish company, OPEC. During the fourth quarter, Express announced agreements to acquire companies that serve domestic markets in France and Brazil. We've also opened scores of new stations in Europe as part of an aggressive organic expansion strategy and we're very pleased with our progress there. Let me cut to the chase about FY '13. We again are stating to you unequivocally we believe we will continue to improve earnings, margins, returns on invested capital and cash flows, and I would add that the earnings guidance that Alan will talk with you about does not include the effects of significant cost reduction programs currently under review that we believe should be announced in the fall. Let me now turn the call over to Mike Glenn. Mike?

Good morning. FedEx's economic outlook calls for moderate growth to continue in the U.S. and global economy. Our forecast calls for calendar year '12 U.S. GDP growth to be 2.2% and industrial production growth to be 4.3%. For calendar year '13, we expect GDP growth of 2.4%, and our outlook is largely in line with the consensus economic forecast. We expect calendar year '12 world GDP forecast to be 2.4%. It's important to point out that successful management of the debt crisis in Europe and the avoidance of significant tax increases next year in the U.S. are important assumptions in our forecast. Turning to yield, FedEx continued to do an outstanding job managing our yields. Excluding the impact of fuel, year-over-year Express domestic package yield increased to over 5%. The increase was driven by price, rate and discount improvement followed by favorable service and customer mix changes. In the Ground segment, our yield increased 4%, including the impact of fuel. The year-over-year increase was driven by list rate and discount improvement, followed by an increase in extra service charges. On the international front, excluding fuel, IP yield increased almost 2% year-over-year, with improvement being driven by weight and rate and discount changes. And finally, in the Freight segment, excluding the impact of fuel, yield per hundredweight increased 1.5% year-over-year. The increase was primarily driven by pricing rate changes. And now I'd like to turn the call over to Alan Graf.

Thank you very much, Mike, and good morning, everyone. Our fourth quarter adjusted earnings per share was $1.99, up 14% year-over-year, excluding a previously announced $0.26 per share aircraft impairment charge at Express. Despite a global economy that was softer than expected, our FY '12 adjusted earnings per share was $6.59, up 34% from fiscal year '11. Overall, our FY '12 adjusted operating margin increased to 7.7% versus 6.5% last year, on 9% higher revenue. At our Ground segment, operating margin increased to 20% in Q4, as Ground continued to efficiently manage expenses while improving the networks for quicker deliveries and continued growth. At Freight, operating margin climbed to 5.8%, which is the highest fourth quarter margin since 2008. Our Freight segment profitability should continue to improve due to volume growth, base yield improvements and the network design changes that are increasing our operational efficiencies. Result has been a strong turnaround in Freight that will continue in FY '13. Express Q4 operating margins declined year-over-year, primarily due to a $134 million aircraft impairment charge and declining package volumes. A demand shift toward lower yielding International services also negatively impacted margins. We anticipate revenue and earnings growth in 2013 despite modest growth in the global economy. We believe U.S. domestic and global economic conditions will be impacted by the European debt crisis, slowing growth in Asia and the uncertainty these issues create on the global economy and the demand for our services. These weaker global economic conditions have driven a shift by our customers from premium services to our deferred products, and we expect that trend to continue in 2013. Our anticipated earnings growth in '13 is predicated on continued improvement in profitability at our FedEx Freight segment and a sustained strong performance of our FedEx Ground segment. International revenue growth…

[Operator Instructions] And we'll take our first question from Tom Wadewitz with JPMorgan. Thomas R. Wadewitz - JP Morgan Chase & Co, Research Division: Let's see. I wanted to ask you about the, let's see, the restructuring in a sense that you gave us some initial information on fleet reduction, it sounded like in that release that a lot of the aircraft that you were reducing or retiring were actually already parked. And I think one of the things we're trying to figure out is what's the magnitude of potential capacity takeout that you have. So I understand you're saving a lot of this for the fall, but I was wondering if you could give us kind of a directional comment on what -- how big is the opportunity to actually take out capacity in Domestic Express.

I think we'll wait until the fall to talk about that because it's a comprehensive program and I'm not sure we could do it justice here on a telephone call.

And we'll hear next from Justin Yagerman with Deutsche Bank.

When you guys think about your networks, as I see them right now, I mean, especially in Express, in the domestic market, how much of what's being moved in the Express market could really find a home in Ground? And I guess, as you've seen this accelerated Ground growth and continue to see strong margin improvement there, Fred, I think you talked to getting to a 20% goal last quarter. You're there now. Where does the bogey move to? So a 2-part question, how much from Express could move into Ground? And as you get that density, how much better can Ground margins get?

Justin, first, I think it's important to point out that the growth in the Ground segment is largely driven by superior value proposition, which is based on a significantly faster network and outstanding service levels. And the Ground also benefited from some growth in the e-commerce sector. Having said that, any time you see softness in the economy, you see some mode shift where customers reevaluate their supply chains and look to see if they could rely on a slower mode of transportation in some cases or the lack of a time-definite service. So we do see some of that. We work with customers to put their products in the right network that's going to benefit them and, of course, benefit FedEx as well. So it's hard to put a specific number on that because it gets down to the requirements of individual customers in terms of what their needs are.

Justin, this is Dave Rebholz. First of all, let me make the comment that every day, we strive for improved margins and service. And that's not lost commitment on the entire organization and they'd buy into it because that's how we grow. Having said that, there were a lot of headwinds into Q4. You heard me tease you previously about my boss with me, which was totally appropriate. The reality here is, is that we had a lot of good things come together. We had great revenue growth, as Mike already mentioned, on the yields. We had great volume growth, both in Ground and Home, as was evidenced earlier by the additional surcharges we benefited from, and SmartPost. So we're a healthy proposition. We will continue to strive for 20% each and every quarter. I don't know that I can commit that each and every quarter. What I can commit to is that we will continue to improve our performance, both on a margin and service basis so that we differentiate ourselves in the marketplace. And so far, it's playing out very well for us.

Our next question comes from David Ross with Stifel, Nicolaus. David G. Ross - Stifel, Nicolaus & Co., Inc., Research Division: Can you tell me a little bit about the international traffic trends? Is European Express traffic generally getting worse as Asia might be getting a little bit better? And then on air freight capacity in Asia, has it been rightsized or people still pulling plains out of that market?

David, this is Mike. Let me comment about overall traffic levels, if I can, in the quarter. Clearly, the softness in the global economy impacted IP volumes, with the Asia Pacific being impacted the most during the quarter. However, I think it's important to point out that the weakness in APAC was largely driven by specific customers in the tech sectors and how they handled product launches. So if you excluded that issue, IP volumes would've been positive year-over-year during the quarter, and that's an important thing to point out. So APAC was impacted the most, with the other segments performing much better.

This is Alan. Europe's actually performing very well through this crisis. We're very pleased with how that's performing, and I'll turn it over to Dave Bronczek to get his comment as well.

Yes. [Audio Gap] They're both exactly correct. I mean, Mike commented on the high-tech sector hadn't -- we had such a big increase in one customer last year in the fourth quarter. Across the board, we would actually have an increase in IP volume. In Europe, as is pointed out, I think several times on the last few quarters, continues for FedEx Express to perform and outperform quarter on top of quarter. So we've seen very good results from our European business.

And next, we'll hear from Kevin Sterling with BB&T Capital Markets. Kevin W. Sterling - BB&T Capital Markets, Research Division: In Express, you talked about the growth in the deferred services, and does this include a modal shift from the air to the ocean? Or is it mainly just a shift from a premium air product to a more economy air product?

This is Dave Bronczek again. Yes, there is a shift into some more of our FTN network. Our FedEx trade network is handling more traffic, specifically out of Asia, on the ocean. But some of the traffic has shifted from international priority into international deferred, and we're adjusting our network to handle that and handle it more profitably. So I think it is the combination of both.

I think, in the larger perspective, over several years now, it's very clear that the door-to-door Express segment is growing, the movement of goods on the water is growing and traditional Airport-to-Airport commodity airfreight is not growing.

And if I could just add one other comment, I think Fred's exactly correct. You're seeing a lot of companies that just have traditional freighters are finding it very difficult out in the marketplace these days with high fuel costs and relatively low yields on their freight. So the question that was asked earlier is the capacity coming down, at some degree, that's correct with these all freighter parts of people's businesses and companies in general. I think that's exactly correct.

Our next question comes from Helane Becker with Dahlman Rose. Helane R. Becker - Dahlman Rose & Company, LLC, Research Division: Can I just please ask the question about Europe specifically? When you say that Europe is doing well relatively speaking, are you talking about within Europe or you're talking about Europe outbound, Europe inbound, Asia-Europe? Can you just like put some color on to that?

Helane, this is Alan. I'll let Dave go. As we've been talking about for several quarters now, we have a very aggressive organic expansion going on inside Europe. And so we're gaining new customers and new business every day as a result of that expansion. It's working very well for us. So really, across the board, we're very pleased with how well that management team is executing. As you know, we bought the company in Poland, bought the company in France. So despite the turmoil over there, we probably are a little bit more bullish on Europe than others as a result of what we've been doing.

Yes, I'll just add my comments. Europe in general is very profitable. They're doing exceptionally well. They have a very focused, detailed plan on improving service, opening up markets, adding salespeople. We're actually opening up one station per week in Europe, very, very successfully. The international side is growing and profitable as well. So really across the board, to Alan's comments, we're doing very well in Europe.

And our next question comes from Ben Hartford with Baird. Benjamin J. Hartford - Robert W. Baird & Co. Incorporated, Research Division: Dave Bronczek, maybe could you talk a little bit about utilization trends in -- between the 2 networks? If I look at Domestic Express versus international Express or IP, can you talk a little bit about utilization relative to one another and then maybe where each stand against the historical benchmark?

Yes, I'd be glad to. For example, in the domestic flight hours, I'll use that example, we actually are down 3% or 2,000 hours per year year-over-year over the fourth quarter. On the international side, our international pounds are actually up. So IP and IP freight are up. So even though there's a shift into some deferred, actually we're flying more pounds. So we're actually reducing and looking at our domestic network closely to match more of the volume to the weight and to the lift, so there is a shift. It may not be apparent to you, so I thought I'd point that out. The same is actually true on our global FTEs. In the global FTEs, we actually have been acquiring some companies that are fitting in very nicely for our quality service and worldwide coverage expansion. On the other side, because of the domestic volumes coming down slightly, we're adjusting the FTEs there. And again, for example, our U.S. domestic FTEs have come down 3% in the fourth quarter, and that's over 2,600 FTEs, while they may be growing in some other parts of the world, like India and Europe and Asia, so we are always looking at this balance.

Our next question comes from Bill Greene with Morgan Stanley.

Alan, at the Investor Day 2 years ago, you gave some aspirational targets about EPS trajectory versus previous recoveries. And so we're running a little bit below trend, but not materially so. But I'm curious, the cost initiatives that we potentially could see underway here, particularly at Express, do you think those are enough to get you back to that trajectory? Or is improving macro really required here to hit those kind of aspirational goals?

Yes, I think a couple of years ago, Bill, we were looking at GDP for the U.S. and global to be better than they've actually been. They're moderate, they're not strong. And I think for our aspirational goals, we needed a little bit stronger growth than what we've had and what we're actually looking for. So having said that, we now realize we've got to adjust the networks that we built for higher GDP growth than we're actually seeing. So right now the opportunity, I think, is good. We are ongoingly taking out costs as we speak, and we'll come back to you in the fall with some more things that we're going to do to continue to do that. I think that will be 2/3 of the issue. As the economy improves at some point, we have a lot of leverage in these networks. And a very small improvement on GDP percentage point growth comes to the bottom line very rapidly, so that will provide us with the other 1/3 towards our aspirational goals. So it's sort of 2/3-1/3.

And our next question comes from Brandon Oglenski with Barclays.

Just a real quick one on the guidance and then maybe longer term on the same issue. Can we just know what your fuel estimates are for your guidance range? And then it looks like when we've seen jet fuel cross the $3 threshold, we've seen a pretty big degradation in Express package demand globally. Is there any enthusiasm that you guys are seeing in the marketplace? So maybe if we can keep oil crisis around where they are right now, you could potentially see better growth rates ahead?

I'll take the first part and then I'll turn it over to Mike for the second. As we say, every release we come out with, that the current guidance is for fuel prices to be stable where they are. Now whether or not that'll hold will remain to be seen, and let me turn the demand question over to Mike.

Thank you, Alan. I think it's important to note that fuel prices are just one component of the equation. Clearly, the economy and the moderate growth that we're seeing to the bigger issue, and I think customers in general are being fairly conservative in terms of how they're managing their supply chains until they see a little stronger growth. But certainly, lower fuel prices will help.

And just to remind everybody, it's not so much the price changes, it just how rapidly they move up and down because we have this 6-week lag between the surcharge and the -- into plain costs.

And we'll now hear from Christian Wetherbee with Citi.

Maybe talking a little bit about the underlying assumptions within the first quarter guidance just strikes me as a little bit, I guess, softer than maybe the trend would suggest. I guess maybe if you could give us a sense of what you're seeing so far in the month of June and particularly on the Domestic Express side, if volumes look like they're trending kind of in line with what we saw in the fourth quarter, if they're kind of better or weaker?

Christian, I would say they're trending more in line with what we saw in the fourth quarter. And I think it's important to point out that in the first calendar quarter, the Express overnight market declined 1% in volume. But if you exclude the strength in the lightweight e-commerce sector, the decline was certainly more in line with the numbers that we reported. We've been fairly selective in pursuing lightweight e-commerce, residential delivery, overnight express traffic. I think that's one of the main reasons why our yields excluding fuel have improved over 5% relative to the market in general. So we'll continue to balance our volume and yield management activities, but I would say certainly more in line with what we've seen.

And if you just consider the pension and employee cost headwinds and the higher tax rate, I mean, we had last year, that also plays into headwinds for the first quarter, which is why we're working so hard to get to the fall time frame to get our cost structure better acclimated to the volumes we're seeing.

Our next question comes from Jeff Kauffman with Sterne Agee. Jeffrey A. Kauffman - Sterne Agee & Leach Inc., Research Division: I was thinking about it, Mike, you gave the view on industrial production for calendar '12, but not for calendar '13. I'm assuming it's 3% or stronger. When was the last time you saw 3% to 4% industrial production growth and declining domestic package volumes? I mean, is there that much inventory in the system that customers can manage it that more tightly or is it something else?

We're not seeing declining domestic package volumes. We -- you keep segregating the Express from the Ground. It's one basic market, so it's important to focus on that.

Jeff, let me add. We've had all the way back to -- if you look back to Q1 of '11, it was 4.4%. In Q3, it was 5.3%. So as Fred pointed out, if you look at our parcel traffic as a whole, we perform quite nicely relative to the market. We've been gaining market share in that regard. But clearly, customers are manning -- managing their supply chains relatively conservatively given the moderate economic outlook.

Our next question comes from Ken Hoexter with Bank of America Merrill Lynch.

When you think about cost cutting, are you willing to cut into the service levels? Or just so we understand, is that in violate in terms of the larger picture, in terms of service center and aircraft domestic cuts? And then on the International, if you see IP growing so slow, is -- are there any opportunities to stall the 777 deliveries any further?

Well, let me jump in here and answer both questions first, and then Fred may want to follow up on that. But in terms of the fleet for International, as you probably are aware, we moved some of our 777s back when we announced the 767s prior to this. So we actually have done some of the fleet adjusting already, which is actually why some of our CapEx is -- might be better in FY '13. Give me your first question again, Ken.

I got it, Dave. I'll handle it. It's Alan. Ken, several things here. First, we continue to work on our fleet. We continue to work on the size of the Ground network. I think it's important to understand what Mike said. It's one market, so our growth there is pretty strong. And so we have opportunities here, but be sure that you understand, we are going to improve service levels in every transportation segment while we reduce our costs.

This is Fred Smith here. I think that it's very important to understand our philosophy in that regard. We have people coming from all over the world to study our management system, which we call Quality-Driven Management or QDM. And the facts of the matter are that improved service levels actually decrease cost, they don't add to cost because they take out rework mistakes, lost customers and so forth. So we are very committed in FY '13 to doing the same thing we've done for the last 30 years through the use of our quantitative management systems to steadily improve the customer experience, not degrade it at all.

Yes, let me add to Fred's comment because he's exactly right. At FedEx Express, I'm sure Dave Rebholz and Billy at FedEx Freight and Ground are the same. We even now had 12 consecutive years of improving service at FedEx Express, our world-class service. In FY '13, it improves again, once again to the 13th year. On top of that, we have cost initiatives that are prudent and they're in the plan, and we are going to talk about them in October. So we're going to be doing both, and the 2 go hand-in-hand.

We'll be accelerating day savings in Ground. We'll be adding to our First Overnight product, our Saturday zips. We've got a lot of service enhancements across the board that'll be coming in FY '13.

We have an e-mail question for Bill Logue. It's a 2-part question. I'll give you the first part here, Bill. What's the average age of the FedEx Freight fleet currently? And will we see FY '13 Freight CapEx in the same level as the FY '12 level of $340 million?

Well, again, as far as the age of the fleet, we're slightly above kind of normal historical trends. And as you saw, we made a good investment here in FY '12 in the fleet and we will be making a very similar investment in FY '13 going forward. So we're happy where we are. We had an opportunity with the -- when we networks together, so we're in good shape from a fleet perspective. And again, most of the capital will go towards replacements.

Longer term, this is Alan, I hope we have the opportunity to invest more in Freight for its growth but also for technology changes on energy-efficient engines and, hopefully, 33-foot hubs [ph].

The second part of the question here for Bill is with the best OR performance for Freight since 2008 at 94.2%, what further OR gains from technology investments like GPS initiatives at the dock and dolly level and customer automation initiatives can we expect? This is from William Flin [ph] of Potomac.

Two important issues for us in FY '13. First and foremost, number one is on our network design. We've learned a lot in the last 16 months, and obviously, every opportunity we get, we continue to adjust it. And as you saw in our release, we're making some significant adjustments in July designed to improve our efficiency, so we're excited about that. At the same time, we'll be speeding up about 6,000 lanes with that same move. So very important change for our network in July and also designed to give great and improve our customer service. And as far as technology, again, '12 and '13 are important years for us as we transition to our Eden Project, which basically automates a lot of our pickup and delivery and dispatch opportunities, as well as our dock and yard, which come on board later this year, which really kind of enhance and make our dock -- movement in our dock and yard interface much more automated and much more efficient for the network. So we're in a very good phase of our rollout and expect to see very positive results from both those initiatives.

And our next question comes from Donald Broughton with Avondale Partners.

This question is for Bill as well. We saw, what, 4% increase in volume and a 4% increase in pricing on freights. If you had your druthers, would you rather have a little bit more volume or a little bit more of the yield in order to optimize your profitability?

Donald, this is Mike. I'll comment first and then let Bill add anything he'd like. The advantage that we're in right now is that customers really value our differentiated network and the value proposition that we have. They like the choice of party in economy and our sales team is doing a great job helping customers understand how these services will assist them in managing their supply chain. I think we're in a very good position right now in that we can balance the volume and yield growth through the benefits of the operating company, and we are being selectively aggressive where appropriate and then managing yields where also appropriate in terms of improving existing customers' operating ratio and things of that nature. So I'd say we're in a pretty good spot right now in terms of the strength of our volumes and our ability to manage yields as we go through FY '13.

Don, I'll just add on that. Again, great job by Mike and his team on bringing on some very good volume for us at the appropriate yield. As we move into '13, as I tell the team internally, 3 objectives. Number one is continue the yield improvement, which, obviously, is we're very laser-focused on that; more volume at the right yield; and then as I mentioned earlier the network design is really important to really move this volume efficiently through our network to put it to the bottom line. So the team is very engaged on it.

Let me just add, Donald, that one of the advantages of our revenue management committee where our sales and marketing team works with the operating companies on a weekly basis is we can actually fine-tune the strategy as we go through the quarter and the year. So there'll be some periods where we have a little bit more volume focus and there'll be some periods where we have a bit more yield focus. So that's the advantage of working so closely together with our revenue management team, as we're always in sync with the operating company on what's going to benefit them most.

Our next question comes from Scott Group with Wolfe Trahan. Scott H. Group - Wolfe Trahan & Co.: So I got a quick thing I want to clarify on the guidance, and then a longer-term question. So in terms of the guidance for fiscal '13, are you -- I know the broad restructuring, there's no savings in there. But are you assuming any fuel and maintenance savings from the aircraft retirements already announced? And then on the longer-term question, it feels like some carriers are benefiting from tech launches and others aren't. What's your sense of what's driving changes in carrier decisions from customers like Apple? And is there anything strategically you think you need to do to be better positioned for future tech launches?

I think that's 2 questions, but I'll answer the first one. Yes, there would be some savings from the retired aircraft, but remember our depreciation express is going up because we shortened the lives on the ones that we did not retire. So they should about offset each other for the year.

To switch gears, you're going to get a significant improvement as we continue with this fleet modernization program. This is a very big part of achieving double-digit margins at Express. As to the product launches, let me comment on this briefly and then ask Dave Bronczek and Mike Glenn to weigh in on it because we've mentioned this over the last couple of years. This is a very big strategic issue in what's going on in the "air cargo market" defined in the broadest sense. And the segments, as I said earlier, are the Express and the traditional door-to-door commodity airfreight. The important thing in FedEx in terms of product launches is that we benefit from our scale. I mean, we have 100 long-range, wide-body airplanes. So our ability to put up additional capacity for these episodial launches is much easier than it is if you're a smaller carrier, and that's going to continue, I think, for some period of time. Mike? Dave?

Let me just comment that I think the product launch decisions move much further up the supply chain than just looking at the transportation. Clearly, when there's more flexibility on the manufacturing side, there are certain companies that want to use forward deployment models. When the schedules are much tighter, obviously, they use more express-type models. So the same customer for one product launch might use one model and then use a different model the next product launch simply because of activities going on much further up the supply chain. So the good news for us is we have the flexibility to work with these customers regardless of the model they elect to go with, and that's what we've been doing.

Yes, let me just add, this is right in the wheelhouse strength of FedEx Express. I mean, when customers move into the interior of China, for example, we're right there with them. And with our 777 aircraft, now we can fly nonstop to Europe, nonstop back into the United States hubs. We have 2 hours to sometimes 3 hours later pickups, which is very significant for these customers and get the earliest delivery. With our First Overnight, you can get it by 8:00 a.m. I mean, so it's right in the strength in the wheelhouse of FedEx Express.

And next, we'll hear from Chris Ceraso with Crédit Suisse. Christopher J. Ceraso - Crédit Suisse AG, Research Division: I have a question about the Domestic Express business. Do you see that business as being past the point of maturity and now into a decline phase? And so what do you think that means for the potential margin in Express? Do you still think you can get to double digits at some point and how do you do that?

I think that's a difficult question to answer at this stage largely because of the modern economic activity that we're seeing. If we were seeing more trend-like economic growth, I think obviously the Domestic Express business would benefit. Having said that, we manage the organization as a portfolio and we're constantly working with customers to make sure we're putting the right product in the right network. But clearly, I think once we see more trend-like economic growth, that'll be an easier question to call.

This is Dave Bronczek again. And we -- at Express, we look at this as a global business for Express. The United States is just one more region of the world. So as the regions develop offshore and as the growth continues in the higher-yielding IP products and so forth, that the combination of all of it, including our cost decisions in the United States and our growth decisions in International, yes, we see Express into double-digit margins, all up collectively.

I think it's important to focus on the longer-term strategy, which we've mentioned several times over the years, but let me just reiterate it. Our portfolio of our operating companies was put together to complement or execute, I guess would be a better way, the strategy, and that was to produce at FedEx Ground the market-leading, fastest and most efficient ground parcel company. And we have largely done that. It is a formidable competitor now in the marketplace and the results show that. For many years now, we have felt that the Express market was a global market. Many of the products that 10 years ago we might have moved in the "Domestic Express" market are now moving internationally from a foreign origin point to a domestic location or between emerging markets. So our strategy was to increase substantially the International revenues of Express. And as Dave mentioned, the United States is just one, an important and a big one, but one node on that international network. The only thing that's basically changed in our strategy is that because of the policy decisions around the world, the international growth has been lower than we had anticipated. And some of the customers in the international marketplace, not dissimilar to FedEx Freight or, for that matter, FedEx Ground, with its FedEx SmartPost service, they opt, in times of low growth, for the more economical, slower service and we've seen a significant growth in the Express segment, in the international economy package service, International Economy Freight service, International Economy Distribution service. So Dave Bronczek and his team are rightsizing Express and modernizing Express to meet the revised outlook for global growth, but we are firmly convinced that we can get Express to double-digit margins because of the significant contribution levels of the international traffic as it moves through the network regardless of its origin and destination. Put a different way, again, I think it's unfortunate to some degree that we have to report Domestic and International and Express because we don't look at it that way. It's one network. We haven't added a pound of "domestic airlift capacity" in years. The capacity in the United States is driven by the movement of intercontinental traffic that's moving through the network, to and from the hubs and onto an International destination or from an International destination to a U.S. destination -- from an International origin to U.S. destination. So I hope I’ve clarified that again. And it's very important to understand that we were quite confident that given any sort of growth rates in the International marketplace, that we can achieve those goals for Express as Alan Graf said a little earlier on a 2/3-1/3 basis.

Our next question comes from Peter Nesvold with Jefferies. H. Peter Nesvold - Jefferies & Company, Inc., Research Division: I have a longer-term question for Fred. Fred, I've heard you speak a few times in the past about how ocean freight is becoming more of a competitive substitute to international air freight. In the past, when FedEx has made really big bets or big calls like that, you've acquired something and sort of Asia comes to mind, the Ground business comes to mind, LTL. When you look at FedEx Trade Networks today, do you feel that you have sufficient capacity in that business in order to really capitalize on this bigger and longer-term trend? Or do you need to do something strategically bolt-on, perhaps, in ocean freight forwarder in order to really capitalize on this long-term trend?

Well, fortunately, we're in a position that we don't have to make any acquisitions in any sector. And we have selectively made some great bolt-on acquisitions. We've got a great corporate development group. Alan and I both have described to you the criteria we use for acquisitions. We'll do so again in October, but we're very disciplined in that regard. But to go down the list again, we just have a wonderful company in the United Kingdom we bought several years ago. We've got a great team down in Mexico that we acquired through an acquisition. We've made 2 terrific acquisitions that fit like a glove in Europe, we think, with TATEX in France to be closed here shortly and OPEC, which was disclosed. We have a great company in Brazil, we've had a long-term relationship. Now in the sea freight area, we have got a wonderful team that's headed by Fred Schardt. And Fred works for Mike Ducker and Dave Bronczek. And I think the deployment of FedEx Trade Networks over the last few years has been one of our great success stories and I'm not sure has gotten the recognition that it should. But they are a formidable competitor that's achieved scale very quickly. And Dave, you may want to comment on that because it's growing at a very rapid level.

Well, it really is, Fred. And we're seeing the combination of that great team that Fred Schardt has in place, not only in Asia but around the world. And we're capitalizing on that with our tremendous international global powerhouse where we're gaining customers in that bundle almost weekly now. So we think that there's a big opportunity to leverage exactly your question, Peter, in the strength of that network going forward. But if there's opportunities in the future, we'll always take a look at them. But right now, we're very confident that we'll continue to grow and grow profitably there.

But you're exactly right. Sea freight has gotten a lot better over the last few years. And you're seeing more daily sailings, you're seeing better reliability from the container carriers. The information systems are much better, and right at the top of the list is the information system we developed for FedEx Trade Networks. It's got that high-quality FedEx IT capabilities. The customers love it and that's why we're closing a lot of that business. And of course, on the U.S. side, in particular, the FTN product and the more economy-minded shipping or the lower value per pound shipping fits like a hand in a glove into FedEx Freight and FedEx Ground. So we have a compelling value proposition there and there's no requirement to make an acquisition. Obviously, we're always looking for opportunities, but we have no requirement to make an acquisition to be successful in that area. But think it is a high-growth area and a high ROIC sector, and that's one of the reasons that Alan and I both continue to say we're confident we can improve our returns on a go-forward basis, is in part because of the FTN activity.

Our next question comes from David Vernon with Sanford Bernstein. David Vernon - Sanford C. Bernstein & Co., LLC., Research Division: So we're hearing a lot about demand for economy-types of services in the international market, and that seems to be a little bit at odds with some of the investments you're making operationally to do a lot of the nonstop flying from Asia. Is that something you guys are looking at as part of the broader restructuring or is that an investment that you think is still going to pay off from a service perspective?

Well, let me mention a couple of things and ask for Dave to weigh in here. 2 or 3 years ago, our strategy was built around adding 777 as fast as possible into the international marketplace and pushing our MD-11s into the domestic marketplace. The way the market has evolved and given the opportunity to do a mutually attractive transaction with Boeing on the 767s, what we've done is to acquire 767s, which are very efficient relative to the MD-10s and very accretive to Express' earnings and to continue to move the MD-11s into the -- or use the MD-11s into the international system. And the 777 nonstop flights are flown in those markets that need the IP service and the terrific improvement in cutoff times you get from nonstop service. And we're doing more of that this year. But the MD-11 is still a very good airplane, particularly when you come off of Asia and go over our anchorage hub, you don't need the 6,000 nautical mile range. So we've adjusted to what the customers want. And we, just like in freight, have 2 flavors of ice cream: the Priority, which is best-in-class; and then the Economy, which is terrific as well. And what you're talking about is the Priority service is late cutoff times, next-morning delivery to every address in the United States, and the Economy service is a day or 2 longer to any address in the United States. So they're both terrific services and the 777s do the former without equal and the MD-11 is a good workhorse for the International. So that's what's changed is 767s replacing MD-10s in the Domestic business rather than MD-11s, and the MD-11s staying in the International marketplace where they're perfectly adequate for moving the International Economy product line. I hope -- Dave, do you want to add anything?

Yes. Well, Fred said it exactly right. I mean, you're going to see a nice overview of this discussion in October. We're very excited about it because the MD-11s are a perfect airplane for what David, I think, the questioner asked us about for that deferred traffic. In International, the super express freighters on the 777s are perfect for a lot of the high-tech sector and a lot of those customers, the one overnight. So we have beyond what we're going to talk about in the United States in October, we're going to talk about our whole international overview. And we're very excited about that opportunity because we think we have a lot of leverage there. We think we'll make a lot of profits there and we have a lot of opportunity to grow there. So we're going to be showing you that as well in October.

And that is all the time that we have for our question-and-answer session today. At this time, I would like to turn the conference back over to Mickey Foster for any additional or closing remarks.

Thank you for your participation in the FedEx Corporation fourth quarter earnings release conference call today. We look forward to seeing you at our investor meeting here in Memphis on October 9 and 10. Please feel free to call anyone on the Investor Relations team if you have additional questions about FedEx. Thank you.

Thank you. That does conclude today's teleconference. We do thank you all for your participation.