聯合包裹運送服務公司 (UPS) 2003 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Q4 2003 Overnite Corporation earnings conference call.

At this time, all participants are in a listen-only mode.

We will be facilitating a question and answer session towards the end of this conference.

If at any time during the call you require assistance, please key star followed by zero and a coordinator will be happy to assist you.

As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the presentation over to your hosts for the call, Mr. Leo Suggs, Chairman, President and CEO of Overnite Corporation;

Pat Hanley, Senior VP of Finance and CFO; and Mr. Paul Holting, Vice President of Treasury and Planning.

Please proceed, sir.

Thank you.

Thanks for joining us.

With us today are Leo Suggs, Chairman, President and CEO of Overnite Corporation; and Pat Hanley, Senior Vice President of Finance and Chief Financial Officer.

Our comments include forward-looking statements including projections of future results and are made only as of today's date.

These forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties.

Please refer to the Safe Harbor provisions at the end of our press release for a review of some of the factors to cause our actual results to differ materially from our projections..

In addition, our comments today include certain non-GAAP financial measures.

A reconciliation of these non-GAAP financial measures to the most comparable GAAP measures can be found in our press release.

If you don't have a press release, a copy is available on our website at www.ovnt.com.

Leo Suggs and Pat Hanley will provide our comments this morning followed by a Q&A session.

With that I turn the call over to our chairman, Leo Suggs.

Thanks, and welcome to Overnite's earnings release teleconference and webcast.

As you all know we became a public company on November 5th of last year, and this is our first conference call to discuss earnings.

The year 2003 was a truly historic year for Overnite.

Not only because we became a public company, but also because we became 100% union-free at our Overnite transportation subsidiary.

It's very gratifying to know that we've once again earned the trust and respect of our employees, and I'm determined to keep it that way.

Despite a sluggish economy in 2003, that saw industrial production increase by only about .2% and GDP by about 3%;

Overnite was able to grow it's LTL tonnage by 5.5% and increase overall revenues by 9.1% during the year.

Our operating income was also up about 18% on a pro forma basis which Pat, our CFO, will discuss in greater detail later on during the call.

Our free cash flow was stronger than expected for the year.

This allowed us to pull ahead a $16 million voluntary pension payment from the first quarter of 2004 back into the fourth quarter of 2003.

For those of you who read our perspectus, you'll recall that we stated we planned to make a pension contribution of about $45 million in both 2003 and 2004.

Now that we've accelerated part of the 2004 pension funding, we currently plan to only make payments totaling about $30 million this year.

We also ended the year with a strong balance sheet.

Our year end debt to capital ratio, including leases, was about 35% and our cash balance was around $11million.

Overall, I'm pleased with our performance and achievements in 2003.

Before I turn it over to Pat, I want to express how excited I am about future prospects.

We have many opportunities with the improving economy and the breadth of coverage and service offerings, but we also have several challenges ahead of us; such as controlling our group health, insurance and pension costs.

Of course, these are challenges that all businesses are facing regardless of the industry, and I'm confident that we have the right management team in place not only to tackle these issues but also move Overnite to the next level.

I'd like to thank you for joining us today and I'll now now turn the call over to Pat Hanley, our CFO, to take you through the financial results.

Thank you, Leo.

Our earnings release is somewhat complex today to give you year over year comparisons, as we've only been an independent company for three months; so please bear with me.

Revenue is simple.

Our operating revenue for the quarter was $378 million, an increase of $26.9 million or 7.7% from the $351 million in the fourth quarter of '02.

Within revenue, our daily LTL tonnage was up 7.4% versus last year.

Our LTL rate factor, including fuel surcharge, was $14.79 per hundred weight, which was flat with last year, our LTL rate factor excluding fuel surcharge was $14.33 which was down .7% versus '02.

Rate factor, however, as you all know can be misleading.

It's only an accurate indication of yield improvement if the overall mix of freight doesn't change.

Our mix has changed, we've experienced a 3% increase of our weight per shipment as well as a 3% reduction in our average class of freight.

If you exclude these mix changes, our prices were up 2% during the quarter.

That was revenue.

Now to the complex part of the release on our earnings.

In our perspectus, which we filed on October 30, we discussed the annualized, stand-alone expenses and one-time costs we expected to incur once the IPO transaction was completed.

The stand-alone costs include expenses such as director and officer insurance, legal and accounting services, data center moves and investments, internal audit, et cetera.

The one-time cost primarily represented a stock grant we gave to our employees, as well as, the acceleration of vesting requirements for certain Union Pacific incentive plans.

In the perspectus, we estimated the stand-alone costs at $9.1 million, and one-time costs at $13.9 million.

Please note that the annual stand-alone costs are now estimated at $8.3 million, and that the one-time costs ended up being $14.1million instead of the original $13.9 million we projected.

In addition to the stand-alone costs and the one-time costs, we are now incurring interest expense on the $128 million debt we incurred as a result of the IPO.

We also will no longer receive interest income from Union Pacific for the excess cash balance they managed on our behalf.

The pro forma financials in our earnings release adjust for these stand-alone and one-time costs.

We included a pro forma net income, operating income and operating ratio in our earnings release, in order to present our results as if the company were an independent public entity for the entire fourth quarter of 2003 and 2002.

We believe that these non-GAAP financial measures are more reflective of the company's continuing operations.

The press release we sent out yesterday with our earnings contains a reconciliation between these non-GAAP measures and GAAP reported earnings.

If you go to page 3 of the press release, I'll walk you through a reconciliation of reported income to pro forma income for the fourth quarter.

Now looking at page 3, if you add back our operating income was reported at $4,929,000 for the fourth quarter.

If you add back $14,146,000 in one-time non-recurring expenses related to the IPO transaction, and subtract $322,000 in estimated stand-alone costs for October, you get to a pro forma operating income of $18,753,000.

This equates to a pro forma operating ratio of 95%.

Now the second column on page 3 shows you similar adjustments for '02.

We subtracted $1,417,000 which is equivalent to the actual stand-alone costs of $1.1 million that we incurred in November and December plus the $322,000 for October.

The pro forma operating income for the fourth quarter, with these adjustments is $15,276,000; which equates to a pro forma operating ratio of 95.6%.

So in summary, on a pro forma basis, our operating income was up $3.5 million year over year, or 22.8%.

That's what we think is an apples to apples comparison of our fourth quarter results.

Now let's look at the pro forma adjustments to net income and earnings per share.

We reported a net income of $3,110,000.

The calculated pro forma net income that you need to make the adjustments to, you need to add back stand-alone costs of after-tax of $8,629,000, subtract after-tax October stand-alone costs of $196,000.

Subtract after-tax interest income we received from Union Pacific of $847,000 and finally subtract $219,000 in interest expense that we would have incurred if we had been free-standing as of October 1 rather than October 31.

In summary, our pro forma net income ends up being $10,477,000 for fourth quarter '03, which equates to an earnings per share of 38cents.

Now let's look at the pro forma adjustments for '02.

Similar adjustments start off with reported net income of $13,097,000.

We added in $1.4 million of stand-alone costs.

Again we took it in the after-tax expense of $861,000.

Next you are going to need to remove the after-tax interest income from Union Pacific which was $2,862,000.

Finally subtract the after-tax expense associated with interest we would have paid on debt if we had about free-standing of $701,000.

After making these adjustments, the pro forma net income ends up being $8,673,000.

Again in summary, on a pro forma basis, our net income was $10,477,000 in the fourth quarter or 20.8% higher than the $8,673,000 for '02 on a pro forma basis.

Similar pro forma adjustments were made for the full year of '03 and '02 and are illustrated on the right.

As you can see, pro forma net income increased to $41,312,000 in '03, which represented a 17.9% increase over $35,032,000 in '02.

Pro forma operating income was $74,260,000, which is up 18.4% over the $62,713,000 in '02.

The pro forma OR improved from 95.4 to 95% from '02 to '03 which represented .4 of a point improvement.

Now, that's a look at those pages in the adjustments.

I want you now to flip to the last page in the package which is a look at our detailed expense reporting and our Overnite standard income statement as you'll see it going forward.

I want to walk you through three lines on this income statement that had the largest bearings.

First are salary, wages, and benefits increased 9.3%, which was primarily driven by the LTL tonnage growth of 7.4% during the quarter.

We actually improved in salary and wages, if you'd looked at those on a stand-alone basis; but higher benefit costs primarily in group health and workers compensation more than offset the improvement.

Second item I want to focus on is our supplies and expenses, which were $33.4 million compared to $29 million last year in '02.

The 15% increase was primarily attributed to higher fuel prices and a non-recurring favorable hedge position worth about $600,000 in the fourth quarter of 2002.

The third item is claims and insurance expenses which were $10.4 million in the fourth quarter of '03 compared to $15.3 for a comparable period in 2002.

That reflects a 32% decrease.

Unfortunately, it's primarily timing.

This improvement is mainly a timing issue as this quarterly favorable variance did not offset the unfavorable variance we experienced in this category for the full year.

The year over year variance was up $11.5 million.

The $11.5 million increase is primarily attributed to a few serious accidents we had in 2003.

It's frustrating on these accidents, because in the past year we experienced our best accident frequency in over the last ten years; but despite the improvement in accident frequency, the cost per accident because of a few serious accidents more than overwhelmed the improvement we had in reduction in accidents themselves.

Let me flip now to full year highlights.

Revenues were up $9.1 million for the year.

Our daily tonnage was up 5.5%.

If you recall our tonnage was up 7.4% in the fourth quarter of 2003, so thus we finished the year very strong in terms of tonnage growth.

Our rate factor with fuel surcharge for the full year was $14.74 per hundredweight, which was 3.2% higher than last year's rate factor.

Our rate factor without fuel was $14.27, which was 1.9% higher than last year's rate factor of $14.01.

The mix adjusted rate factor was up 3% for the year.

As Leo pointed out earlier, we had very strong catch flow in 2003, which ended up as $82.9 million free cash flow.

That free cash flow was bolstered by both an improvement in working capital and significant tax reductions from our pension funding.

At the end of 2003, Overnite pension expenses, and I bring up pension because I know it's a hot item with all of you.

Our pension plan assets the end of 2003 were $742 million, compared to year end 2002 when the balance was $571 million.

On a FAS 87 basis and these numbers aren't in your packet, but I wanted to give them to you, the underfunded amounts for 2003 ended up at $118.5 million compared to $208 million in year end 2002.

As you can see, we made a lot of progress in funding our plans.

Bank debt at the end of the year was $128 million, which consisted of $115.5 million in long-term; and the balance $12.5 million in short-term.

The cash balance was 11.1 million.

Overall we're in good shape on our balance sheet.

Finally, our capital expenditures for 2003, we spent $58 million, which consisted of $15 million for real estate, $30 million for revenue equipment, and $13 million for technology and other miscellaneous expenditures.

Now let's shift gears and talk about 2004 and our guidance.

We are projecting high single digit revenue growth.

Our forecasts are based on an economic growth of 4-4.5%, and the balance of the revenue growth will be achieved through both price improvements and market share gains.

With the operating leverage we gained from the higher volumes, we anticipate first quarter 2004 earnings per diluted share to be between 19-24 cents; and earnings per diluted share for the full year of 2004 to be between $1.58-$1.68.

In 2004 we plan to invest between $75-$85 million in capital expenditures consisting of $45-$50 in revenue equipment, $15-$20 in land and buildings, and approximately $15 million for technology and other miscellaneous expenditures.

That concludes the formal part of our discussion and now we'd be happy to answer a few questions.

Ladies and gentlemen, at this time, if you wish to ask a question, please key star followed by 1 on your touch-tone telephone.

If your question has been answered or you wish to withdraw your question, please key star followed by 2.

Again that is star 1 to ask a question.

Please hold for your first question.

Our first question comes from Gary Yablon of Credit Suisse First Boston.

Hi, guys.

How are you doing?

Good morning, Gary.

Just a couple of things, first, on a knit picky item.

The stand-alone cost numbers that you are now projecting going forward are less than the IPO road show.

First, is that correct?

And if so, what's going your way there?

Yes, it is correct.

There are about $800,000 less, probably the biggest single factor is our insurance costs came down.

We were able to negotiate slightly better than what we expected.

Okay.

Leo, I guess this one is for you and I want to relate it to Yellow Roadway's announcement last night.

Roadway on a stand-alone basis, at least in our opinion, had a weak report.

As regards to tonnage, their daily tonnage year to year in Q4 was down 9% and the question's that a lot of us are now asking is where is it all going?

Where has it gone, could you talk about the whole CF thing and where things seem to be falling out?

Your tonnage is better than expected.

Are you seeing benefit from that kind of stuff?

Well Gary, as we said when we were going through the IPO presentation, long haul is, in fact, the fastest growing part of our business; but we really don't attribute that to the Yellow Roadway situation.

I think it's more indicative of the fact that we finally got our national footprint in place, and began to focus on that business somewhat.

As was the case back in October-November when we talked to you folks, I really don't see too many specific situations where customers are abandoning Yellow Roadway.

I probably wouldn't recognize that if it were happening.

I think it's more, what we are seeing in growth, is more focused on the fact that we're -- we have the capacity and the ability to do a better job.

We got some great service that we're out there selling and it's attracting some business, but I certainly would not characterize it as being as a result of what's going on with Yellow Roadway.

I think it's more what's going on with Overnite.

Fair enough.

Thank you.

Our next question comes from James Valentine of Morgan Stanley.

Good morning.

Pat, can you go over your opening remarks.

I didn't get all this down.

I think you said that if we adjust for the weight per shipment and the change in freight classification that your yields were up 2% in the fourth quarter?

Yes.

And it's a little better than we've seen from others.

If you wanted to just talk about what you see going on in the yield environment.

I'm really asking more to think about modeling 2004 for the full year, or at least for the next quarter or two.

I would tell you as we went through the fourth quarter, we didn't, there's been some question about whether prices getting softer; and we didn't see that.

As we negotiated contracts towards year end and they held up well.

I would tell you also that the normal decline you see on our general rate increase has been fairly flat, so I'd say prices are remaining pretty firm.

Good, good.

If I can switch gears now and talk about pension for a minute.

During the IPO process, one of the things on everyone's mind was talking about the discount rate, because it can be a pretty big lever on your earnings.

I was wondering if you can talk about the methodology you're using and what the assumption is now for 2004.

As you know, it was a critical question about what's your discount going to be at year end '03.

Our discount rate year end came in at 6.5%.

We had a very strong year obviously in terms of our asset returns; they were over 20%.

Those are the two big building blocks.

The 6.5% is not tied directly to Moody's AA, but it is reflective of the age of our employees, and that's mainly the factor you adjust for.

So it's tied to both.

That's locked in for a full year so when we're trying to model up pension exposure to the extent interest rates change here, the next mark-to-market is going to be 2005, right?

Year end 2004, yes.

My assumption is that for 2005, it will be the year end; and, I guess, we can all speculate on interest rates.

I can't believe they're going to go lower.

Thanks, guys.

Appreciate it.

Good quarter.

Our next question comes from Ken Hawkster of Merrill Lynch.

Good morning.

Just wanted to see, Patrick, if you could break out the fuel surcharge revenues on the revenue line.

Also talk a little bit about LTL broken out; just wanted to understand the truckload volumes, and how the breakout of revenue is going.

Thank you.

The overall benefit we had from fuel surcharge was about $20 million in the fourth quarter.

The second question you were asking for, how did truckload do?

Kind of on the road show, you talked about the different parts of the revenue business.

There were other start-up operations, there was the less-than-truckload and truckload; so it seemed like on the release just because the breakout on the LTL on the revenue for hundredweight.

Ken, I think the piece most significant to talk about is, we talked about our dedicated truckload business and that's part of our revenues; and it was up 25% in the fourth quarter, so that's the other big piece of revenues.

In other words, you asked the fuel surcharge and then add in dedicated truckload, those are the other two main components outside of LTL and TL.

And what about the value-added services, have we started to see them increase?

They continued to finish off the year very well.

We were looking for 20-25% improvement in revenue and that's where they are so we're pleased.

We think they are poised to continue to grow in 2004.

Thank you.

Your next question comes from Gregory Burns of J. P. Morgan.

Hey, guys.

Looks like a very strong quarter.

Just want to drill down if I could on the tonnage on the revenue side.

Leo, it looks like your tonnage growth actually accelerated throughout the year even though you had the CF comp in the fourth quarter.

Just curious, looking at the tonnage growth that we see in the LTL side, could you break it down further in terms of that national, regional, and inter-regional segments; what were the relative growth rates between those three in the quarter?

Also how is January looking?

Are we sort of trending where we were at the end of the quarter?

Greg, I don't have the breakdown by segment at this point in time.

As I commented earlier, the long haul business continues to be the fastest growing segment of our business.

With regard to January, you know, we continue to be optimistic as we were in talking about the fourth quarter.

January is always pretty tough.

I think this year we've been clobbered by bad weather for three or four days, but that happens every January.

It's a little harder to get a handle on how the year is starting out in January, simply because of that external factor; but we still feel good about how things look going forward.

Great.

Just, I don't want to pin you down on an exact number; but just to get an order of magnitude, could the national segment be growing double digits?

You know, 10-11%, is that the ballpark number we should be talking about?

Do you mean national or long haul?

I meant the long haul.

We are getting double digit growth in the long haul.

That's helpful.

And, Pat, turning to cost side; two items, can you refresh my memory what the actual pension expense drag in the P&L was?

Not the cash contribution, but the expense quarter versus quarter?

If you don't have that I can get it offline.

I don't have that off the top of my head.

I know what we spent on a full year basis, which was roughly $30 million; and I would assume knowing nothing else, Greg, it should be --you ought to be able to take a fourth of that for what we had in expense last quarter.

Fair enough.

And finally on the healthcare that Leo alluded to, obviously health and welfare costs are hitting everyone from UPS on down.

It seems like if the trend persists, it's going to limit the natural operating leverage in the business.

Just curious, are there additional steps you can take, or are willing to take, or looking at so that if the revenue continues to accelerate it will drop down to the shareholders, rather than chewed up in higher wage costs?

Let me answer that, I guess.

Health costs, as Leo said, are a challenge to everyone.

Our experience in 2003 was rather than severe in terms of what our healthcare costs went up.

They were in the high teens.

We have both an HMO and a PPO; which means we have both an insured product in an HMO, and PPO which is a self-insured.

You never know where your self-insured is going to come out, we can't tell you where the results are going to be for the year; but on the HMO side, we brought those costs down because you've all ready negotiated those for 2004.

We brought those down into low double digits, so they are going in the right direction.

Unfortunately, I'm still talking about double digits.

As you all know we don't get to price double digits, so that's still a challenge.

They're better than they were this time a year ago, and therefore, hopefully positively looking forward to things getting better.

Okay.

And one final question, Pat, on the insurance, sounds like severity was up in the year even though frequency was down.

What is your deductible per occurrence and any thoughts of changing that number?

The deductible is $2 million.

Okay.

As a maximum, obviously.

I will tell you, again, our accident frequency was the best we've had in a long, long time.

We had a couple of severe accidents.

Those things, I hate to say it, you can't plan for them, you can't model them.

We've had a couple of years where we've had severe accidents.

I'm hopeful this year we're going to make dramatic improvements in that, and we are doing a lot of different training to work on that and we're getting our what we call America road team involved in training our drivers directly.

We're looking positively to that as something to help us this year.

That's the Overnite all-star road team, not to be confused with the ATAs, America's road team.

But sounds like in terms of tinkering the arrangement with the insurance that that's not something you're looking at at this point.

No.

Thanks a lot, guys.

Ladies and gentlemen, as a reminder, that's star 1 to ask a question.

Our next question comes from Scott Flower of Citigroup.

Good morning, Leo and Pat.

Hi, Scott.

Hi.

Wondering if you could perhaps give us some color, how were volume trends through the fourth quarter?

Did they accelerate, did they stay at about the same pace?

I guess the reason I was asking that question, and maybe I'm knit picking, but the way you wrote the release you talked about how economic trends were good but more modest than third quarter.

Just trying to get a sense as as you looked at fourth quarter, were things picking up or were they steady through the quarter or were they showing some signs of moderation through the quarter?

Scott, this is Pat.

I would characterize they were continuing to grow.

I think that part of the issue, if you ask year over year; last year continued to falloff.

If I were just looking at the fourth quarter alone, I think they held pretty steady.

I think our normal seasonality was pretty much on track.

I think last year, and I'm talking about '02, we had a continuing falloff.

So I think volumes are doing exactly what we would hope they are doing.

I think that fourth quarter in terms of the economy was certainly better than we expected when we talked with you back in late September, beginning of October.

Did you see any benefit, and we've heard this from others; and if you did, maybe you can give us some sense if it's minor or something that's helpful to a more significant extent.

That with hours of a service, some of the milk stop runs that the TL industry used to do may not make sense, and so some other carriers were seeing volumes that were coming over later in the quarter, in front of hours of service toward the LTL environment.

Were you seeing any benefit from that?

Scott, I don't think we can put our finger on that.

Certainly we have made it clear to our customers that we would like to work with them and, of course, most every customer has some sort of rate model whereby when they make a shipment, they can determine the most economic way to ship it.

So it would make sense that with higher stopoff charges, there will be some freight that at one time probably moved LTL and then went into the truckload market that may move back into the LTL.

But we haven't seen any windfall as a result of that.

Keeping on the broad theme, any particular regions of the country more robust than others or is it all pretty much steady, generically similar growth rates; or are there particular regions that are weaker or stronger than others?

Scott, I'd tell you that-- tough to say any region was particularly strong.

We've had continual growth in the west, probably our leading area; but the midwest and central areas of the country have been strong as well, and we've seen a pickup in our southeast.

So-- I gave you the indication they are all doing well.

Probably a slight edge to the west.

Then just a couple other quick questions.

I know that you said rates were mix adjusted, up 2%.

Now that's slightly below where you ended the year, I think you said for the year was about 3%.

Are yields at all still positive, but perhaps moderating a little bit?

Perhaps more competitive activity?

Scott, if you look at it, this happens every year.

You take your general rate increase and then as you go forward, you see that slowly leaking.

I think that from an overall standpoint, this year has been very good.

If you look at our patterns, it happens every year.

By the time you lap back around to the next year, you know you've lost a part of what you gained in the rate increase.

Got it.

And two other quick questions for Pat.

What is your estimate of pension expense for '03?

I know you gave us your discount rate assumption.

I'm assuming you've also made assumption for returns as well.

What does that translate to in terms of pension expense, not funding, but pension expense for '04?

The answer is, on pension expense, the increase is probably somewhere, still probably 15%+, 15-20% from the $30 million we had this year.

Okay, but that's better than perhaps you thought it might have been earlier.

Yes.

Again the 20%+ returns, and quite honestly as Jim asked her earlier, I was very concerned about that 6.5% liability discount.

Right.

That fortunately came in without a hurt.

I was worried it can go down lower.

And I think Leo mentioned this in her comments on the pension funding.

Obviously you moved a little bit into '03.

As we look forward '05 and beyond.

You would still, for a pretty good period of time, expect it to be funding $45 million annually.

That at this juncture is a good forward planning assumption?

As we said, I think of the $45 million that it has three traunches.

We pulled one of those traunches into '03, so now we only have $30 million for this year.

But as you look at '05-06, if we were to have last year's experience again, I might have a different story.

Right now I'm still planning for that $45 million.

Last question and you've been helpful.

The insurance issue, and I know you mentioned about the claim.

I take it then, was fourth quarter then a true-up; if I think about it that way, i.e. in terms of your insurance and claims line item?

When I talk about timing, you all do actuarial studies to see how these things work out.

There's timing in terms of getting the actuarial studies done.

We did a redo at the end of the year to true up.

We had done one in the third quarter this year, and that's why if you look at full year, we're up, there was no -- last year in '02, that true-up came in the fourth quarter and we had already done it in the first nine months.

Got it.

Thank you very much.

Your next question comes from Ben Silver of Zima Investment Management.

I have three fairly quick questions.

The first is how many working days did you have in this quarter versus '02?

Second question is what was your average length of haul this quarter.

The third question is, for 2004, what's going to be your tax rate?

I think 62 is the number of days, the length of haul for us for the quarter is around just shy of 800, and then the last question was the tax rate we're using 40%.

Thank you.

And now Mr. James Valentine of Morgan Stanley with a follow-up.

Actually it's Mike on the line right now.

Just a question about the pricing environment.

In the past quarter, more in the regional market , we've seen three of your roll-out guaranteed, free ontime delivery.

I wondered if this had any impact on your yield or your market share on the inter-region or the regional market versus the long haul market where we really haven't seen that type of pricing action?

I don't think it's had any great of impact.

If you look, there's a lot of fine print you need to interpret when you read those guarantees.

And I know you talked about on the road show when you were out on the road the pricing in the long haul was firmer than the regional and inter-regional markets.

That still the case?

I don't know that it's any firmer in one or the other.

Certainly the regional markets with all your niche carriers and so forth appear to be have for some time, appear to be more aggressive from a pricing standpoint; but I don't think anything's changed there.

Great.

At this time there are no further questions.

And now your closing remarks.

Well, just close up by telling those of you on the line we appreciate you bearing with us in our first experience here in our teleconference.

We certainly look forward to working with you in 2004, and hopefully the economy will stay strong and we can have some pleasant quarterly calls.

Once again, thank you.

We'll be talking to you, I'm sure.

Goodbye.

Ladies and gentlemen, thank you for your participation in this conference call.

This concludes your presentation.

You may now disconnect.