Yellow Corp (YELL) 2008 Q4 法說會逐字稿

Good morning. My name is Jessica and I will be your conference facilitator today. At this time I would like to welcome everyone to the YRC Worldwide fourth-quarter earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question-and-answer period. (Operator Instructions)

I will now turn the call over to Sheila Taylor, Vice President, Investor Relations.

Thanks, Jessica. Good morning and thanks for joining us for the YRC Worldwide 2008 earnings call. Bill Zollars, the Chairman, President, and CEO of YRC Worldwide, and Tim Wicks, our CFO, will provide our comments this morning. Mike Smid, President of YRC National Transportation; John Carr, President of YRC Logistics; and Paul Liljegren, our Corporate Controller, are available for questions.

Statements made by management during this call that are not purely historical are forward-looking statements within the meaning of the Private Litigation Securities Reform Act of 1995. This includes statements regarding the Company's expectations and intentions on strategies regarding the future. It is important to note that the Company's future results could differ materially from those projected in such forward-looking statements due to a variety of factors.

The format of this call does not allow us to fully discuss all of these risk factors. For a full discussion, please refer to our 10-K, last night's earnings release, and today's 8-K filing. I will now turn the call over to Bill.

Thanks, Sheila. Good morning. 2008 date was certainly a challenging year for almost every industry and ours was no exception. YRC's operating results reflected the significance of the economic recession that has been longer and deeper than anyone anticipated.

With that said, the year brought some opportunities for us and provided a platform for tremendous improvement going forward. I am going to talk briefly about the quarter, but then I would like to focus on the future and how we plan to improve our results and market position throughout 2009.

With respect to the fourth quarter, each month continued to progressively weaken as the economy slowed further and the retail holiday peak never showed up. Lower volumes and declining prices had the most significant impact on our fourth-quarter earnings, along with some accelerated integration investments and pension settlement costs. So these results may have been unexpected by the Street, they were not a surprise to the Company or our banking group and they are what we had been reviewing in our discussions with them. Tim is going to talk about that in a lot more detail in a minute.

In looking closer at our segments, we remain pleased with the ability of YRC Logistics and Glenmore, our truckload company, to make adjustments for the economic environment. Glenmore's results improved each month of the quarter as fuel prices significantly dropped and the number of driver teams supporting our national transcontinental business increased. While YRC Logistics revenue slowed in relation to the economy, the team did a solid job of managing costs and minimizing the impact on earnings.

The regional company's results continued to be significantly impacted by Holland and the ripple effect of the auto industry. As news around the automaker's future progressed and companies shut down factories for several weeks at a time in the fourth quarter, Holland's revenue progressively weakened. To compound that impact, the early arrival of winter in the heart of Holland's territory caused customers and highways to close for extended periods.

We remain encouraged by Holland's effort to continue reducing costs and improving service through network optimization. Their future results will also include benefits from the union and nonunion reductions that went into effect earlier this month and their efforts to further diversify and expand their customer base.

As for Reddaway and New Penn, they continue to be solid companies with highly valued service offerings. And I might just mention that there seems to be some sort of a rumor in the marketplace about our divestiture of New Penn, and that in fact is not true. They are a valued part of the portfolio and are performing well.

Though the economy has had an impact on their profitability, they do remain focused on providing quality service to their customers while managing costs closely at both Reddaway and New Penn.

Let me move now to the national companies. It's clear that their operating performance is not acceptable and their cost structure and competitive position needs to improve. That is why we have been working closely with the IBT on two game-changing actions. First, the wage reduction and, second, and network integration. I will provide an update on those in a minute, but let's first touch on national's fourth-quarter results.

Consistent with the industry, volumes continue to weaken throughout the quarter despite easier year-over-year comparisons as the quarter progressed. In mid-December we stated that our tonnage for October and November combined was down around 12% and for the quarter we ended up at 14.6%. This step down was largely due to further softening in the economy, as many other companies have said, in addition to a couple of specific factors which I will get to in a second.

Interestingly, if you look at shipments rather than tonnage as a surrogate for activity in the marketplace, you will see that there is a much closer clustering of all of us in this industry in terms of the year-over-year results. I think that is really because the total tonnage that has been reported by all the companies can be distorted by the percentage of truckloads. So you will see in many of the companies' reports a big difference between tonnage per day and shipments per day, and I personally think that the shipments per day is a better surrogate with less noise in it. So if you want to take a look at that you will see that everybody is kind of in the teens year-over-year in terms of shipment.

Let me now go back to a couple of the other factors that impacted our volumes in the fourth quarter. One of those is the acceleration of our internal efforts to improve our business mix while we consolidate the national networks. We mentioned this last quarter that we would be actively working with unprofitable accounts to evaluate alternatives including price increases and opportunities within YRC to move that volume to one of our other companies where it would be more profitable.

By accelerating the integration of Yellow and Roadway to early spring -- and now March 1 is really the final day of the integration -- we became much more aggressive in these efforts and so our business mix and volumes would be in a better match with the network capacity we will have in the new integrated network. In many cases, customers understand the value we provide in our supply chain and except the increases, but in certain situations we have had to allow that business to go back into the market.

Even in this economic environment it doesn't make sense for us to have business that does not cover variable cost or that negatively impacts the efficiency of our network, particularly as we approach the completion of the integration. We will give you a little bit more color there and a few other examples here in a second.

Another impact on our volumes is undoubtedly the fact that some customers have diversified their portfolio, moved away from us really due to misinterpretations and misperceptions about our financial stability. [due to] the numerous reports in the investment committee and media that contain misunderstandings of our financial actions and in some cases mistakes of fact. We will try to clear that up here this morning. Many of our customers have reached out to us to understand the facts, but have commented that the constant public remarks about us are at a minimum annoying and a few are just irresponsible.

We feel confident that most of our customers can filter through the noise, but unfortunately this led to some business diversion. That particularly occurred around the removal of our tender offer around Christmas, and Tim again will give you a little more detail around that.

One last point on volumes and then we will move on. We continue to get asked whether we are losing customers due to the integration of Yellow and Roadway. We don't know of one single customer that has left us as a result of that, and we remain confident that that will not be happening as we complete the integration.

Our customers continue to support the integration and are excited about the benefits of the network and the foundation it provides to launch new service offerings. In fact, in the locations that we have already consolidated most customers have already seen enhanced service.

Let me move on now to pricing. Pricing remains very competitive and it has continued to decline since the third quarter. The rapid drop in fuel prices has made it challenging to renegotiate overall rates with customers as their contracts come up for renewal and has impacted our near-term profitability. After adjusting for the impact of fuel and changes in our mix, we estimate the national LTL yield was down about 1.5% compared to fourth quarter of last year.

Though we expect the pricing environment to remain competitive in the near term, our actions to improve our customer mix mentioned above and the recent GRI that has been introduced have already improved our yields results in January and we expect to see that trend better yields continue through the first quarter. So even in this environment, yield situation for us is improving.

As I mentioned before, the lower revenue is the largest contributor to national's operating loss, but there were also some costs that are worth pointing out. First as a further accelerated the integration, we also accelerated some of the investments such as technology upgrades and data conversions and employee travel and training. These costs are tough to isolate, but we estimate a little over $10 million in the fourth quarter.

Results at national were also negatively impacted by a pension settlement we had of about $9 million related to pension asset investment losses during the second half of the year following the July 1 freeze of our nonunion plants. And that really should be netted against the full year curtailment gains.

We also had, as you know, significant weather impacts on the business particularly in January. I think our networks were only completely open one day in the month of January, but we haven't really trended to make a calculation about that weather impact because again that is more art than science. But obviously not a good month to be trying to figure out what the base volumes really are.

Let's now talk about plans for the future. After thorough evaluation between the Company and the Teamsters, we asked our union employees to make our cost structure more competitive by voting for a 10% wage reduction. More than 75% of our union employees cast ballots, with an overwhelming 3 to 1 margin approaching 80% in favor of the reduction. That reduction went into effect earlier this month and we expect this to improve our cost base by about $220 million to $250 million annually or nearly $1 billion over the remaining life of the contract.

This savings is in addition to the nonunion capped compensation reductions that started on January 1 and are expected to save about $80 million in 2009.

Now in exchange for these reductions, nearly all of our employees will have an equity interest in the Company. Our employees have always represented these brands with pride and have provided exceptional customer service, but owning stock and benefiting from its appreciation going forward will only make that commitment stronger.

As we said previously, our largest opportunity to enhance service and improve efficiencies is in the integration of Yellow and Roadway. And we are well on our way to a successful implantation. We have worked toward the operational integration for years and have already completed many critical steps including the combined operation of nearly 80 locations. We expect to be operating one consolidated network by March 1, and that will leave us with about 450 locations.

This is less by a lot from the 704 locations that we had when we first acquired Roadway, but I think more importantly its 100 more locations than either Yellow or Roadway operates today individually. So this really extends our reach and moves us closer to the customer and demonstrates the significance we have already taken to create a best-in-class national network with better density as a result of this integration. The single network that will result and be up and running on March 1 will be best-in-class in terms of our ability to deliver services.

We started, as you know, with smaller facilities focused on pickup and delivery functions. I want to give you some data around that so you can get a sense for how well this is working. As we moved through the integration of the first 80 or so locations, we were able to manage the risk of consolidating these locations. And given the early success we had and continued support of both customers and employees, we have accelerated that as you know and are now going to be completing the integration on March 1.

Let me give you an example of the savings we are seeing. We reviewed our P&D productivity for a four-week period and all of the new consolidated operations compared to a baseline before the consolidation and compared it to the performance of the non-consolidated operations during the last few months. Facility bills per hour were more than 9% higher than the system average and we had built into our business plan a 5% improvement in productivity. So we are getting almost twice the productivity that we expected out of that piece of the integration.

That is just one example of the power of the integration and the efficiencies that we can recognize. Regarding the financial benefits, we expect improvements as we closed this quarter with significantly more as we move through 2009. During the fourth quarter, we exited 40 facilities at the national companies, which was more than our initial expectations of 30.

Our network optimization is a continual process, but we anticipate exiting an aggregate of around 150 facilities by the end of this year. So this is a significant number of properties., it's important to understand it's just duplicate infrastructure in the new consolidated network that we are exiting. Obviously, that makes those properties available for sale.

We are not reducing service coverage, but in fact are expanding it as I mentioned earlier, and we will have more coverage than any other provider in the industry beginning on March 1. We are still confident that the integration will deliver a run rate of at least $200 million of operating improvements -- operating income improvement from our 2008 results. With the accelerated timeline we expect more of the savings in the second and third quarters than we originally expected. So we still anticipate first-quarter run rate savings of about $10 million, but we expect second quarter to be about $75 million, third quarter $175 million, and the full $200 million early in the fourth quarter.

Before I turn it over to Tim, I would like to make a few comments on the costs that we have removed already from the business throughout 2008. I realize that the economic recession overshadowed the benefits of these reductions, but I think it's important to credit our employees for their tremendous efforts and acknowledge their sacrifices.

Over the past year, we reduced our headcount by more than 12% and aligned our nonunion retirement benefits across the companies. With significantly fewer resources, we redesigned our regional footprint closing 27 unprofitable service centers, and on the national side we accelerated the integration of our networks. Combined with other cost savings initiatives, these reductions should result in ongoing savings of well over $100 million.

We continue to identify additional opportunities to remove more costs from the business and believe with the $200 million from the integration, which included additional headcount reductions through 2009 and $300 million from compensation reductions, we can improve our operating performance by more than $500 million going into 2010.

I am going to turn it over now to Tim and he will give you an update on our bank discussions and some financial expectations for the year.

Thank you, Bill. I mentioned on the last call that I was looking forward to the challenges ahead and the last few months have definitely delivered. As we talk about our ongoing bank discussions, I can't emphasize enough the importance of the actions Bill just covered.

We initiated multiple steps throughout 2008 to change our trajectory going forward and provide the Company and banking group confidence about our future. Bill covered the details on the wage reductions and the national integration, so let's focus on our actions in relation to debt pay down and liquidity. As we entered the fourth quarter, we were very focused on reducing debt and staying well below our leverage ratio of 3.5 times.

The tender offer we announced in mid-November that would have retired over $300 million of debt for less than $0.50 on the dollar was very attractive to us and was launched at every intention on our part to complete it. As the quarter progressed and the economic environment slowed even further, it became clear to us, however, that we needed to take steps to stay in compliance with our credit facilities and at the same time [consider] liquidity going into 2009.

During some of the ongoing conversations with our banks, the options (inaudible) our credit facilities to obtain flexibilities on our leverage ratio and liquidity became very likely. Without the union vote ratified, which is a condition of the tender offer, we allowed the tender to terminate and pursued the discussions with our banks.

In conjunction with these discussions, the Company, with the bank's support, made a decision to maintain the cash drawn on the credit facilities in October and record a debt balance that would contribute to a leverage ratio in excess of 3.5 times. Based on this and our earnings expectations, the Company and the banking group negotiated a waiver that effectively takes the leverage ratio out of the equation in the near term and provides the flexibilities needed to use our cash to operate the business.

While we're on that subject, let me address some of the misperceptions in the marketplace regarding the restrictions from our waiver. First, with regard to not executing the asset sales above $30 million, we had identified a far smaller amount which might occur during the waiver period, and so this limit gave us plenty of cushion during this period. Second, the limit on additional indebtedness of $30 million was surrounding one particular negotiation which we ultimately settled for $31,000, so again well within any limits that were negotiated.

Another item noted as a restriction, though I wouldn't look at it that way, was that we needed to deposit our cash proceeds from asset sales into an account with our agent bank. This was done before January 15th, when we finalized the waiver, and we already maintained cash with our agent bank.

And finally, I'm not requesting a loan revolver other than a disbursement related to a letter of credit, we did this for one identified LC which we and our banks negotiated out until mid-February. It's important to understand that we have preserved liquidity for our inspecting LC requirements -- in 2009 through our discussions with the banks.

Now let's briefly talk about the positives this waiver gives us that some of the markets seem to have overlooked. A good example is that we are no longer required to pay down the term loan with the $150 million of proceeds from the sale and lease financing or the sale and financing leaseback transaction we announced in December. We now intend to maintain the proceeds for our operating purposes.

This is significant as we are currently closing on this transaction. As a quick note, it will be accounted for in the financing lease, which means the assets remain on the books and we will record a long-term note payable with no impact on depreciation expense.

Another positive is that we have already set our ABS facility size to our expected usage, which means we aren't paying for capacity we won't use. And as a reminder, the ABS is being renewed as part of the amendment from mid-February, which is a couple months ahead of schedule.

On the last call we talked about the first phase to improving liquidity, which we executed, and we now have the second phase well under way, which includes negotiating additional sale-leaseback transactions of significant value. It's premature to provide specifics on other opportunities, but we feel confident that there are attractive options to further monetize a portion of our significant real estate assets of more than $1 billion. Although the bank amendment is still in process, these types of transactions are a key component of the discussions with our banks to improve liquidity.

Moving on to the credit amendment, the conversations of the banks continue to be very open and productive. We still expect to finalize an amendment to our revolving credit facility, which again will include the renewal of our ABS facility by mid February. I think Bill's point earlier about the banks being aware of our 2008 results in the current operating environment is an important one. We continue to have an ongoing open dialogue with our banks and have every indication that they will continue to support our efforts to improve our cost structure and enhance our position in the market going forward.

In looking at our balance sheet and cash flow, it's important to focus on our near-term strategy of preserving liquidity. We have $325 million of cash as we exited 2008 and have actions in place to generate significantly more, including the $150 million sale-leaseback. Our net debt position at the year end was $140 million less than the prior year and keep in mind that we do not have any notes maturing until April 2010.

This allows us to focus on liquidity as we start 2009 and recognize the benefits of the cost reductions and operational improvements as we move throughout the year. All of that puts us in a much better position to reduce debt as it matures or the economy improves.

We continue to generate positive free cash flow with over $185 million in 2008, including $128 million of proceeds from asset sales. In fourth quarter we nearly doubled the initial expectations of asset proceeds and recognized $49 million. This was a result of selling more access properties than planned as the national integration continues to exceed our expectations and at slightly better values, which is an indication that even in this market our real estate has significant worth.

We still expect $100 million of excess property sales in 2009, with most coming in the second half of the year from the national integration. And as I mentioned, we continue to evaluate additional sale-leasebacks that would be incremental to this number.

As far as capital expenditures, we invested a gross amount of $58 million in the fourth quarter or $162 million for the year. This number excludes operating leases of about $85 million in 2008, making our total investment nearly $250 million. Moving through 2009, we expect gross CapEx to be slightly lower at around $130 million as we remove older equipment from the fleet and improve our utilization through national integration. Similar to 2008, it is possible that a portion of this investment will be financed through operating lease arrangements, so we'll continue to update you as the year progresses.

Before wrapping up, let me comment quickly on the additional impairment charges that we recorded in the fourth quarter. As we introduced a new unified brand for Yellow and Roadway, we made the determination to eliminate the remaining book value of the Roadway trade name. As the Yellow and Roadway brands have been in the market for over 80 years, we expect the names to be visible for a while, but we believe the new YRC brand effectively represents the more comprehensive service offering of the combined companies.

In addition, we finalized our annual impairment tests that we started in the third quarter. We determined that the remaining goodwill at YRC Logistics needed to be written off in that process. This test took into consideration our low stock price and the general economic outlook in addition to the current operating results. It's important to remember that these are point-in-time accounting entries that are non-cash in nature and do not reflect the significance of these companies to our customers.

In summary, we've managed the financial challenges of the economy in a very tough credit market. We proactively addressed 2008 and 2009 debt maturities and we've taken aggressive cost actions. We continue to have strong working relationships with our banking group and we're actively monitoring the financial markets for opportunities to further optimize our capital structure. I'll now turn it back over to Bill for closing comments.

Thanks, Tim. Well, we obviously can't control the economy, but we have several initiatives underway to better position the Company to weather these times and come out as a much stronger organization. I get the question often about what makes our situation different from previous or even current competitors. We have a lot of differentiators, but three significant ones come to mind.

First, the integration of Yellow and Roadway that will significantly reduce our cost base while at the same time enhancing service to our customers is unique to YRC. This integration will result in the largest, most apprehensive network that can provide the best service in the industry.

Second, the flexibilities that exist in our new labor agreement have never been available in the past and allow us to compete more effectively with nonunion carriers. And finally, we have the largest revenue base in our industry representing over 25% of the LTL space. Our customers appreciate this position and its impact on their LTL needs.

So in summary, we are aggressively addressing our near-term liquidity and improving our balance sheet while removing a significant amount of cost from the business. We expect the economic environment to remain difficult, which obviously impacts our near-term profitability, but with the integration complete and our cost actions, we expect significant improvement starting in the second quarter.

We appreciate the support and loyalty of our customers and remain committed to providing them the most comprehensive service offering for big shipments.

Just one final request. I know there's a lot of interest in the Company and I would urge you to go to our website and look at real-time updates if you have any questions. And as always, if you want to give us a call, we'll be happy to be as transparent with you as possible. So please reach out to us to stay on top of what's going on as you have interest. We'll now take some questions.

(Operator Instructions). Tom Wadewitz, JPMorgan.

Yes, good morning. I wanted to ask a question on cash flow outlook in 2009 if conditions remain pretty difficult. So I don't know if that's for you, Bill, or for Tim, but there are things you control. Obviously you're doing some hard work on wage reduction and the terminal integration, so that's good news. But you can't control what the market does.

So what does the cash flow look like if you have -- let's say you're not able to produce positive EBIT through the year. Are you able to produce positive cash or are there things other than the CapEx that you mentioned that would be draws on cash that would make it difficult to be cash positive in that scenario?

Tim probably can answer that best.

Great. Thanks, Tom. As we think of 2009 and we think of what's happening in the operation, first of all I think it's important that you reference the operating actions that we've taken. The wage reduction with the Teamsters as well as the nonunion employees, together we expect to remove about $300 million of cost out of our operating structure this year. And then by the end of the year being in a position where the integration removes another $200 million of operating costs.

That in this type of environment removing $500 million of operating cost is a significant impact to producing operating cash flow. Beyond operating cash flow there are a number of actions that we've been taking related to the balance sheets and probably the most important of which is the $150 million sale-leaseback transaction announced in December as one of the beginning stages of this phase of producing additional liquidity.

The first tranche of that transaction is planned to close today entry and we have full expectation that everything is on track, that that will in fact closed today, and the second tranche is expected to close two weeks from today. And we have full expectation that will occur as well. Beyond that, we have other transactions that we've identified and we know that we have significant interest from investors regarding other sale-leaseback transactions and then the additional excess real estate that will be liberated by way of the integration.

So the combination of each of those sections that -- ones that we've already taken in terms of operating cost structure adjustments, the integration which is well underway and will be complete within the next month, as well as the sale-leaseback transactions and asset sales give us good confidence that we'll be able to produce efficient operating cash flow through the remainder of the year.

Right, okay. You've got -- it seems like even in a flat or negative EBIT scenario, given how low the CapEx projection is, you'd still be positive on cash. Is there a requirement for meaningful cash contribution to pension fund in 2009?

So, the current expectation for a cash contribution to the pension fund in 2009 is around $11 million in April, a relatively modest amount.

Okay, and then in terms of the discussion that you have with the Board and the discussion that you have with the banks, you've made a lot of changes to try to -- for structural improvement, but is there any consideration or discussion about a bankruptcy restructuring as a possibility or is that something you feel like you've taken off the table and doesn't really -- isn't one of the choices in that Board discussion or bank group discussion?

No, we're very confident that the path we're on is the path to success and that path leads us to a position that's much stronger as we move through the year. So that's our plan, we're on plan and we're very confident about the plan.

And you feel like the bank group is on the same page with that and comfortable with what you're doing for improvement?

Yes.

Okay, just lastly and I'll pass it along. Any -- on the timing, do you think there's a chance that gets pushed back? And if it does, is that an issue or you're pretty confident that you'll get through the various hurdles and get this done by mid-February?

We're very confident that we will meet the mid-February date.

Okay, great. All right, well I appreciate the time. Thank you.

Justin Yagerman, Wachovia Capital Markets.

Good morning, gentlemen. I guess just piggybacking on Tom's question, and not to harp on it, but in your discussions with your bank group, what's the tenor of those conversations? How committed do you think they are to seeing you through this process, not just giving you leeway for the next few months, but I guess considering the economy that this may take a year plus to execute on everything you're talking about.

Are they willing to suspend some of the more restrictive covenants that you guys have -- this 3.5 bogey on the debt to EBITDA has been something that I'm sure has hung around your necks for the last several months. Are they willing to waive those things indefinitely as you get -- or at least for a large period of time while you get through this? Or is that -- are we going to start knocking up against these kinds of liquidity tests as we move through the year again?

Justin, it's Tim. You have a couple of questions in there. Let me focus on the two that I believe you're asking. What -- the tone of the discussions at the bank is very productive and it is very constructive as we work through this. We and the bank group are very interested to move forward the business. We've presented an operating plan that we have significant confidence in.

And because it's an operating plan where we have administered what I would call self-help before we went to the banks in terms of reductions to our cost structure, then it's a plan that is viewed very favorably. And as we think about that type of approach, that yields a very constructive discussion with the banks.

As it relates to the details of the discussions with the banks and the types of discussions around the covenants, I think it would be inappropriate for us to comment on any specific details while we're in the midst of those discussions with the banks. And at the conclusion of the amendment process we'll be able to disclose fully what the new approach to covenants will look like as we move forward.

That's fair, Tim. When are you guys profitable in this operating plan that you've presented to your bank group?

What was the question, Justin?

When do you cross over into profitability in the operating plan that you've presented to your bank group?

Well, as you know, we haven't been giving guidance and we'll continue to not give guidance until we've got better visibility into the economy, so we're not going to give you that information right now.

Okay, it would give us a better sense of the kind of timetable that you're dealing with with the bank group, but I understand you not wanting to make comments on the economy. Bill, I guess switching gears a little bit, as you think that the overall book of business that you guys have and you talked a lot in your prepared remarks about culling bad freight, what do you think the optimal revenue number is for national and for regional?

And when you think about how you get there, and I'm imagining it's probably somewhat smaller than where you are at now given the integrations that are taking place, can you get there solely by shedding that freight that you've got within your network? Or do you need to really get a better mix of business into your book of business in both of those companies in order to get to a healthier business mix?

Justin, let me kind of use some numbers that will be illustrative, not necessarily very accurate, but illustrative. If we've got networks that are 75% full at Yellow and Roadway, and that's probably around where we are, as we combine those we obviously have a significant amount of business beyond what it would take to fill up the new integrated network. So it does give us tremendous leverage as we manage our way through the customer mix.

So that's an opportunity that we're currently pursuing, as I said, and the early results are very encouraging. But we have a significant amount of business that is just not going to fit in the new integrated network without getting into specific numbers. The other thing I will tell you is that once we get this new network in place, and that will be beginning March 1st, we have the density and the reach that will be best in class, as I mentioned earlier.

That gives us an opportunity to provide better service, both in terms of speed and reliability and offers us an opportunity to launch new services in a way that will make us more competitive in the environment, and we think a great foundation to grow the business as we go forward. So yes, we do have enough business in the two networks without having to worry about going out and acquiring a lot of new business, but it does build the platform to allow us to do that as a move forward.

When you look at your value proposition relative to your pricing right now and with how difficult the pricing and the market is getting and has gotten in LTL, do you feel like you're still well-positioned given the fact that you may have a little bit more trouble getting price competitive with your margins where they are?

Well, a couple things. First of all, the cost reductions that we have either implemented or are implementing will really wipe out a lot of the differential between union and nonunion here. That's a big, big step for us and a game changer. The other thing I would say is that, as I mentioned earlier, we're getting really good results from the revenue optimization and customer mix program that we've already implemented and we're seeing yield improve as we move into January. So even in this downturn with volumes that are lower than a year ago, we are getting better pricing and better yield as a result of that approach. I would expect that to continue.

That's interesting. And then I guess last one and I'll turn it over to someone else. Where are you guys right now in terms of fleet age, rolling stock and whatnot given the reduced CapEx and smaller network? I would imagine you have some surplus rolling stock that helps you out, but how are you guys feeling about your fleet as of now? And if you could give us an idea of where the ages are on your line haul and city fleet, that would be helpful.

Yes, I think the average fleet age now is around for years, which is about where we want it. Obviously as we retire equipment through the integration, that gives us an opportunity to make the fleet even younger. So that's an opportunity to improve the age of the fleet while we take out cost and it's also a reason why our capital appetite will go down significantly this year and be materially lower on a go-forward basis.

That four years is the line haul fleet, Bill?

Yes.

Okay, thank you.

Thom Albrecht, Stephens Inc.

Hi, Bill and team. Aren't you glad it's Friday?

Yes, I kind of wish it was the second quarter, Thom, but yes.

Listen, I wanted to, first of all, clarify one thing. I think you said one sale-leaseback you're going to complete within 24 hours and the other within two weeks. In that order is that the 150 and then the 100?

No, let me clarify, Thom. That is the $150 million sale-leaseback that's being closed in two tranches. And we had that flexibility in the original agreement to do that.

Okay, and so one tranche is basically today or tomorrow and the other is two weeks?

One tranche is today and the other is two weeks from today.

Okay. And what's the status then? You also had originally talked about two other $100 million sale-leaseback opportunities. What's going on there?

So we have been in discussions and continue to be in discussions with a number of investors who have significant interest in our real estate facilities who are very interested in completing sale-leasebacks. And we have identified a number of very specific time frames and potential agreements that we're in the process of negotiating at the moment.

So what's the big hang-up? I mean, is it essentially the state of the Capital Markets or is it your own financial performance?

I think it would be hard for me to address that because I come from a very different perspective where I don't see a hang-up. We are being very successful at closing these larger transactions and we're being very successful at closing these sales of excess real estate. And in particular in this type of a market we have been able to sell in the fourth quarter at a rate that was almost double what our original commitment was and there is a very strong market for those properties.

I'm actually still talking now on the other two sale-leaseback possibilities of $100 million each. What's the hang-up? Is it the Capital Markets there as well or is it your own financial performance?

Again, there is no hang-up with them. It takes time to negotiate a transaction and to be sure that we're being prudent how we put the property lists together to make sure that we're building representative portfolios that maintain the value of the assets as we move forward. And again we don't see any hang-up there. There's nothing different in terms of the timing that we've talked about previously.

What is different is that the size of the interests have increased and the quantity of investors who are coming to us to talk with us has increased. So again, I don't see it as a hang-up, but we are seeing substantial interest in the market as it relates to our real estate and that continues to grow.

So in other words, instead of having two other $100 million transactions, each one could be bigger or you're talking about the number of parties has grown in size?

It could be any combination of what you just suggested. It could be both.

Okay, and then let's step back for a minute. Bill, in September, early September is when you announced the merger of Yellow and Roadway to go to approximately 450 terminals. We all know the world has dramatically shrunk in terms of economic output since then. Is 450 going to be enough or do you really need to be thinking about going to 350 terminals or 400 or some other number in a significantly smaller freight environment?

Yes, I think that the 450 is probably not the end game. We have plans on the books to take that down as we continue to optimize the network we'll probably end up in a settled down steady state situation with more like 400, but that will take us a little while to get there. The 450 is still down, as you know, by 150 and the good news there is it's 100 more locations that either Yellow or Roadway has independently. So it's a big opportunity to improve efficiency, but we're not going to quit when we get to the 450. We think there's probably more there.

And I know you don't know which customers will stay with you and which ones come in new, all of that whole yield management you discussed on account profitability, but when the endgame is done, what do you see Yellow or YRC Worldwide's revenues being let's say in 2010 beyond? Is it going to be $6 billion? Is it going to be $7 billion? I can't see any way imaginable where the approximately $8 billion run rate is going to be anywhere near your run rate a year from now. I mean, what do you have as a size discussion with the banks for example? And I know this is theoretical.

Yes, first of all we're not planning on an economic recovery, but it will come at some point and it's hard to quantify exactly what the number will be. We obviously can operate the network above capacity and we do so very efficiently actually. So whether that capacity number turns out to be 130% or 125%, 120%, we've got the ability to flex up and we'll have that capability as we go forward. So rather than give you a number, all I will tell you is that it will be a smaller book of business but more profitable book of business a year from now.

Okay. And I guess lastly, it seems like it's taking longer to reset the covenants than what occurred during 2008. Is that because that's tied to completing some sale-leaseback or is it your results or the state of the Capital Markets? Why is it taking longer?

Tom, it's Tim. Let me just address it because we're taking it in two pieces, the first of which is we did a waiver that we closed two weeks ago and I think it's important to understand that that waiver got closed in just more than a week. And that is a tremendous example of partnership that exists with the bank group as we're working through this environment.

That waiver, despite it being closed in just over a week, had a number of components to it that were slightly more amendment-like and so there's a big request because in that we asked for and received the ability to be able to do this $150 million sale-leaseback and have it not be required for principle repayment during the period of time in the waiver when we close the sale-leaseback.

Secondly, as it relates to the amendment, there are a couple of components that may get a little bit larger amendment. One of those is rolling the ABS forward two months. So as we think of the original expiration of the existing ABS that was in April, we're pulling that forward into this period of time so that it rolls right now. It made no sense to us to go pursue a bank amendment only to need to come back and address the ABS and frankly it made no sense to the banks to do it that way as well.

So we're pulling those two together and our expectation is that the amendment closes in mid-February. And frankly, given that we just launched it officially last Friday with the Bank meeting in New York, we understand that that's fairly rapid timing for a bank amendment in this credit environment.

So it's the classic bank relationship of needing dozens if not hundreds of signatures, red tape at its best?

Well, I would actually say while there are many signatures required, it has been a very productive, very rapid response environment with the banks. And frankly, I don't think I could be more complimentary of the way we've been able to work together and appreciate the partnership of our bank group.

I just couldn't help that comment, but thank you for all the other comments.

John Barnes, BB&T Capital.

Good morning, guys. Listen, all this talk about these sale-leaseback transactions and everything, can you just walk us through what permanent change these transactions have on your cost structure, namely kind of the age of some of these facilities that you're talking about. I would imagine that a lot of the cost had gone away given I'm sure some of these facilities were little bit older, so maybe depreciation off of most of them, but I'm just looking at longer-term how is this changing your cost structure and a go forward basis?

Yes, really there are two pieces to this. Obviously there's the sale of excess property, then there's the sale-leaseback piece. The sale of excess property we will continue -- as Tim mentioned, we'll probably do another $100 million worth of that this year, we'll be selling those properties at market rates. And those have been actually much better than we expected in most cases.

So that's one piece. The second piece -- and that obviously builds liquidity for us. The second piece in the sale-leaseback does add some operating cost, but frankly that's de minimis compared to the $500 million of costs that we're taking out of the cost structure of the Company. So it will be a small increase in operating cost, but as I said, overwhelmed by the cost reductions we've got going on elsewhere.

How many total facilities are you talking about in the sale-leaseback -- in all tranches? I guess you've got -- I'm looking at $350 million, right? $150 million in the -- in one, in the two tranches and then a third deal of $100 million and a fourth deal of $100 million, correct?

Yes, and what I would say is that the numbers that we shared with you previously in terms of those additional sale-leasebacks are probably different by virtue of the increased interest that there is in the market. So it probably isn't appropriate to continue to refer to those additional ones beyond this transaction closing in two tranches that we've already referenced. It probably isn't appropriate to refer to them the remainder as just two $100 million each transactions, just because there continues to be strong interest from the marketplace. It's probably a number north of that.

Okay, but how many total facilities are we talking about?

We are in the process, as we work through the negotiations with those investors, of identifying their specific properties. So can't disclose at the moment exactly what those look like in terms of total quantity, but we will when we disclose the contracts.

All right, the one that's going to close in the next 24 hours, I would imagine you know how many facilities are in that one.

We do.

And can you tell us that?

It is just -- it's approximately 32 facilities and as we go through both today and two weeks from today it will settle at 32.

All right, 32 facilities. And is that $75 million -- is it half? Is it --?

We're not breaking out the difference between the two tranches.

Okay, 32 facilities, all right. So there's going to be some lease expense associated with 32 facilities off of that initial deal?

That's right. That's exactly right.

All right, second thing. Obviously you've talked about freight volumes and that kind of thing. I'm just -- in the near-term obviously, and you all talked about it a little bit. With the pull of the tender offer, and some things like that, shippers are obviously taking your financial condition into their decision process. It is abundantly clear that you've got sharks in the water in terms of some more aggressive competitors bidding against you. I don't think that's any secret.

I'm just curious as to what contingency do you have in place if volumes are down another 5% as a result of those couple of things? Following up on Tom's question about does 450 become 350 on the facility costs, how much more headcount can you aggressively take out if need be if this revenue base gets a little stronger or a little bit weaker?

Yes, well, again go back to the integration, 75% and 75%, if you add them together, which you really can't do, is 150%. There's a terminus amount of cushion in the volume there. The other thing I would say is that built into the $200 million run rate is another reduction in force. So there will be heads that will come out as a result of the integration that's built into the number. But we have got a unique opportunity here that really no one else has.

Everybody else is in the position of trying to shrink their current infrastructure in one network with the given book of business they have. So they can either shrink the network or go out and try and buy more business. We've got the luxury -- and really in this environment it is a luxury, but taking her current book of business and actually improving the customer mix and really force some volume out as we integrate into a single network. So completely different situation, but one that provides us with a significant cushion as the economy continues to struggle.

Great, can you give us an idea of how many kind of full-time equivalents you ended up with at the end of the quarter?

At the end of the quarter overall, John, or at the nationals or where?

Whatever detail you're willing to give.

Yes, total employees was about 55,000.

And could you break out union versus nonunion at this point?

No, probably not. I would say that union is probably around 45'ish.

Okay. And where do you expect -- with another headcount reduction effort, force reduction effort, where do you think those numbers end up, say, at the end of the first quarter?

Well, they'll be lower. We aren't going to, I don't think, get into a lot of detail around that. But I think following the integration as we work our way through March we'll settle in at a new level and we'll be more than happy to share it with you at that time.

All right, one other question. In terms of some of your competitors doing things egregiously in the marketplace on price, and I think that's the right terminology, I'm curious as to how aggressive are you going to be at defending your turf? Obviously some of the rate reductions that we've heard are fairly severe. You know, there's got to be a base level of business that you want to protect at all costs. I mean how aggressive are you willing to be?

Well, you know, one of the things from an aggregate perspective is the fact that our yield is getting better in an economy that's continuing to decline or lease hasn't gotten any better. So that's a pretty good proxy for the fact that we're focused on improving our yield.

The second answer to the question, though, is it's a customer-by-customer, a very customer-specific kind of discussion. If we have a customer where we have a very strong relationship, we're going to defend our turf there if it's a profitable customer to us. If it's a situation where the customer is marginally profitable or maybe we haven't got a strong relationship, then we'll take a different perspective.

But again, going back to the power of being able to aggressively manage our customer mix as we go through this integration gives us terrific flexibility upside on yield.

All right, very good.

John, just one clarification. On the sale-leaseback transaction that we're finalizing, that is a financing lease, so that expense will go through interest, not lease expense or rental.

That's good to know. All right, thank you so much. I appreciate your time.

Edward Wolfe, Wolfe Research.

Thanks for taking my questions. Could I just get a clarification on the lease and sale -- the sale and leaseback? If assets are staying on your books and let's just assume you're going to do $150 million at 16%, so you're paying $24 million back to them a year in rent. And then who's paying depreciation on that?

So they are essentially the same as a capital lease transaction and the cap rate we disclosed when we put out the 8-K back in December that shared what the cap rate was at that time, it's different than what you suggested, it's 14%. So when we make those payments that comes as interest expense on those properties.

Okay, and then does your depreciation expense come down by some percent?

Yes, and then the depreciation stays as it is. There's no change.

Okay, so if I add the depreciation expense on those $150 million plus the 14%, that's your cost for that?

Yes. As I think through the costs, clearly we have the interest expense and then there's the depreciation amount, which obviously is an ad back to cash flow.

It's basically taking a long-term note payable and we're collateralizing it with the asset or turning over the title to somebody else.

Understood. On the pension side, I think I heard you say that there's an $11 million cash impact for the full year '09. Is that correct, that's the full year?

That is correct.

It will be made in quarterly payments though starting in April, so it will be spread over three quarters.

Okay, what's the expense impact that you foresee in terms of the income statement impact from the pension this year, nonunion?

For the nonunion the expense for pension will be around $20 million, Ed.

What was it in '08?

'08 was impacted by the curtailment, so it was about $30 million the first half and then zero second half, other than the curtailment and settlement charges.

So is the $20 million an incremental additional expense or is it $10 million less than '08?

Less than '08.

Okay, the trailing EV to EBITDA under the bank's methodology, including the pension curtailment gain, at year-end we get about (technical difficulty) times.

I'm sorry, say that again, Ed.

At year-end we're getting a trailing EV to EBITDA under the terms as we understand it that include the pension curtailments that your banks have been using at about 6 times. Is that about where you're getting with your math?

So when we think through where we are as it relates to the leverage ratio, essentially the way we ended the year, Ed, was a leverage ratio under the pre-existing arrangement really ceases to exist. They're under the waiver. We end up not calculating a leverage ratio. And while we work through this period of amending the credit facility, we'll exit with a very different approach to the types of covenants that we'll have.

So EV to EBITDA won't matter anymore. But just in case -- I understand it doesn't matter because it's waived, but should we go back there? I just want to make sure I'm doing my math right. Is 6 in the game? I'm guessing you've looked at it.

Well, it's kind of irrelevant at this point. I mean, you can do the math and come to whatever conclusion you'd like, but it's sort of irrelevant.

I can't do the math completely because I don't know exactly what they look like, but okay.

So if it's irrelevant I guess it's --.

It's just not a calculation that we're doing anymore, Ed, because it's not something that exists as a requirement any longer.

Then what's New Penn's revenue run rate currently?

Pardon me?

What's New Penn's revenue run rate currently annual?

We don't get into the individual regional company numbers.

Is it similar to when you acquired it, greater, or less?

As I said, we're not going to get into the numbers at this point. We're given regional numbers and that's what we'll continue to do.

Somebody asked Bill the question about crossing into profitability and I understand you're not giving guidance. I'm not asking for a quarter, but directionally is that an '09 or a 2010 event at some point?

Well it's -- obviously we're not going to get into specifics, as I said, because we don't give guidance. But the fact that we're moving forward effectively with the bank group would indicate that they're very comfortable with our rate of recovery here.

Bill, when you think about the integration of Roadway and Yellow, two large and Teamster businesses, what are the two or three biggest risks that you detect and watch out for and look for? And what are the two or three greatest opportunities you see from the integration?

Mike is here. I think I'd like to have him comment on that.

Yes, I think from a risk standpoint, Ed, we've crossed paths, or we have moved past some of those items that we really anticipated would be the greatest risk. First of all, the communication and the technology side of things to where we were going to be comfortable that our technology would be in a position to handle smooth or an invisible transition from a pricing and a customer standpoint. We've passed that hurdle. We're in the final stages of loading data and putting information together.

The second was the actual engineering and presentation, clearing ourselves through the change of operations proceedings, those types of things and we completed those this week. The phases that we're involved with now are the natural activities that you go through if you complete training with people on new systems. Our processes are in place, the mechanical aspects of defining the new network and optimizing pickup and delivery areas on target and on task.

So I think the two biggest hurdles are risks that we were concerned about. We have passed by and are now actually in the very final phases of integration. New organization in place, people in place, labor agreements and labor process is on target and on task and the number of pilot and physical locations that have already been combined is ahead of schedule.

I think we have passed the most significant hurdles. The most significant opportunities I think play into a lot of the questions that have been here today. We go to a completely different set of dynamics as a network, our ability to move cost to variable to take fixed cost out and determine the ultimate size and the ultimate shape and the ultimate number of terminal accounts, terminal facilities really becomes much more flexible than we've had in the past.

We've got tremendous runway when we look at how big do you want it to be or because of the external environment how small do you want it to be? At the same time, those same capabilities and opportunities apply to new business in our ability to provide coverage basically to every point in North America regardless as to whether it's 100 miles apart or 5,000 miles apart in a very different set of circumstances than we have historically. A lot less touch, a lot less miles, and a lot fewer pipelines connecting them.

That's very helpful. Is there any risk from a human resources standpoint with -- I remember when Carolina Freight and Arkansas Best merged there were issues of seniority in terminals and things like that. Have you seen any of that kind of stuff?

No, we have completed that process. The change of operations that you go through is really just determining those effects and as we completed that through the first several days of this week, it's been determined who follows what work where. The process is set up to where in just a couple of weeks the actual determination of which individual goes to which job takes place and then the actual implementation where people move to those positions and locations will be end of February.

Keep in mind, a lot of this is not requiring out of area movement. As you consolidate facilities within an individual area, the actual physical relocation of people from city to city is fairly minimal. They may go to a different facility across town. We do have some in the area of line haul because, although in the last couple years we had moved to more common network designs, the last tail of that is with this particular cutover, so we do have some drivers moving.

But in the current environment really no risk with that. Obviously we have had significant workforce reductions and adjustment to the current environment and that leaves people at places and at locations to fill any gaps while transition occurs.

Thanks, Mike. Tim, just a follow up. Could it be the EBITDA is no longer a very -- a metric that we should be thinking about if it's a moot point. What are the types of metrics we should be thinking about.

I think it's a great question, Ed, and we're going to be anxious to disclose that to you when we're finished with the discussions at the banks. And I wish I could actually tell you what it is today, but we're still in that process. And as we complete it we'll disclose that as soon as we're done with the process. And then, if there are any calculations that are required with that will be more than delighted to walk you through that at that point.

Understood. One last one, Bill. I thought I heard you say earlier that the January weather has been so bad that the network was only fully opened for one day. What does that mean?

Let Mike tell you what that means.

There has been -- when you talk about completely open, you talk about all highway lanes and all facilities up and running. With the weather, the way it sort of passed across Chicago, across the Northeast, even this example this week of the wave that went across the Southeast and all the way to the Coast, it creates an interruption in the network where the normal lanes and normal pipelines that connect major metropolitan areas, they get interrupted.

You make decisions based on safety, make decisions based on highway closures in those closed. More significantly, though, has been the major storm and temperature type issues with Chicago and on into the Northeast. Each time that happens it kind of -- particularly in a slower economy -- it impacts the economic output and the economic activity in an area, as well as increases your cost just a little bit to cope with it. That's really what that's related to.

How does this compare to, say, a normal January?

It's been multiple years since carriers have experienced the kind of weather we've had beginning in November, particularly across Chicago and the kinds of links in a network that go on in that part of a country and population density. It's been multiple years. I'd have to look to see what the last one that I can relate to in January being as week after week wave of whether, that's been a long time. It's been a more normal cold winter. I think it's been five to seven years since we've seen one.

Thanks, everybody, for all the time. I do appreciate it.

Jon Langenfeld, Robert W. Baird.

Good morning. Tim, do you know what your D&A should be for 2009?

Our expectation, Jon, is that it should be around 240.

240, okay. And do you know what the payables were at the end of the year?

Yes, just a moment, Jon.

Okay, I'll go on to my next one then as well. And then under the old credit facility, the one that was filling up back at the end of -- towards the end of 2008, was there any limitation on the senior revolver, any limitations in terms of net worth metrics or value of asset metrics?

Just so I understand, are you asking in terms of assets that we would be able to sell?

No, I'm just wondering if the borrowing capacity was impacted by any value of, again, either a net worth measure or a value of the assets you have on our book and again I'm excluding the ABS for this question.

Right, I don't believe so, but let me follow up and come back to directly. I get I don't believe so, but let me follow up and come back to directly.

Okay, fair enough. And then the $325 million at the end of the year in cash, are there any -- do you have any restricted cash in there?

Only in so far as we think about float as it relates to checks that haven't cleared.

Got it. And magnitude of something like that, are we in the order of magnitude of $10 million to $20 million?

Typically, Jon, in any given period it would be in the range of $40 million or so.

Okay. And then assuming the sale-leaseback goes through, so you've got another $150 million of cash coming in. What are the calls on that cash here in the first quarter?

So as we think through that first of all, our expectations are very high. It's going to go through the first closes, is closing today. And as we think through the calls on that for the first quarter, it's really available to support overall needs for liquidity as we continue to move through this economic environment. There are not specific calls on it per se. It's available for working capital.

And if I look back, your working capital requirements have never been that meaningful, even in some of the biggest swings. So it doesn't seem like there's a whole lot in the way of calls on that cash, at least here in the first couple quarters.

I think that's the right way to think about it, Jon.

Okay. And then what about potential calls on borrowing capacity from any added or expanded letters of credit or guarantees, things along those lines?

Sure, clearly as we operate our self insured workers comp program we have arrangements in a number of states where there are expectations around the level of LC's that we keep in order to fund claims in those states and our expectation is that as we go renewals in any given state there could well be requests for additional LCs and so we obviously want to be prepared for that.

And the time frame on something like that, do a lot of the states do it toward the beginning of the year?

It really can happen all through the year.

And how big would that pool be today or at the end of '08?

It really is a subject of the way the renewals work and it's a little bit hard to be precise about a future event as we work through those renewals, Jon.

Sure, but if I look at the end of Q3 you had $450 million of letters of credit. I guess how much of that would have been tied to the workers comp pool?

I think, Jon, the bulk of it is really related to the workers comp pool.

Okay, that's what I was wondering.

The small remainder would be anything that would exist with trade, but the lion's share is going to be related to the workers comp pool.

Okay, and then the $117 million, you generate about $117 million in cash in the second half of '08 from facility sales, property sales. Can you give us an idea of how many facilities were in that bucket? And I realize it's not all facilities, but just ball parking at.

Yes, I don't know that we have that specific number in terms of total number of facilities here off the top of our head, but I'd be glad to take a look at it and talk with you off-line.

Great. And then any number on that payable side?

The payables at the end of the year were approximately $334 million.

Great, thanks for all the details.

Jason Seidl, Dahlman Rose.

A quick question here, Bill. Regarding the regionals, is it safe to say that New Penn and Reddaway maintained profitability during the quarter?

We're not going to get into a lot of detail. I think we're very happy with the performance of both Reddaway and New Penn. We continue to struggle at Holland, as I mentioned.

Can you go into a little detail about sort of the fixes that are in place for Holland sort of beyond the Teamster 10% which reduction? So what are some of the operational fixes in place and also what are you doing on the sales front to try to reinvigorate all the lost freight that Holland has?

First of all, in addition to the Teamster wage reduction which is meaningful to Holland, there's also a nonunion wage reduction that's in place there. We are continuing to optimize the network there which is well underway. And then on the sales side we're really trying to focus on the non-auto market related customer base for Holland.

And we're also trying to focus on areas of the country that haven't been as impacted as kind of the core market for Holland has been, that kind of upper Midwest Rust Belt has obviously been devastated as a result of the general economy and the auto impact.

The other thing I will tell you is that we are -- as we work our way through the customer mix management for the nationals, we're looking for opportunities to move business to the regionals and to our logistics company, where it makes sense. We're finding really good opportunities there as we work our way through that. So those are some of the things that are going on.

Can you remind us what the auto-related exposure at Holland is as a percent of revenue, ballpark?

About $20 million.

About $20 million?

20% auto, sorry.

20% auto?

Yes, about 20%

Okay, fair enough. On the logistics side, can you talk about the book of business, the bids that are out there? Have you lost any existing business? Because I guess I was little bit surprised that these guys posted a loss in the quarter.

Yes, I think that -- John Carr is here, he'll probably want to add to this. But I think that the logistics business is obviously suffering from the same headwinds that the rest of the Company and the industry is suffering from. So I think it's really more a function of those economic headwinds than anything else. John, do you want to add to that?

Yes, we are actually continuing to win new business and some of the impact that you'll see in the results are some one-time charges for a technology write-down on some -- as well as closing down two of our businesses, our domestic freight forwarding for ocean freight as well as discontinuation of fleet and TM operations in Mexico. So there's some significant one-time charges. Additionally, we had some restructuring with some severance that was included in the results.

Okay, maybe Sheila could walk over the details with me on the financials. But guys, as always, I appreciate the time.

All right, well we appreciate you taking the time. As I said, we encourage you to give us a call with any questions and if you want to get on the website, you can get real-time information on the status. But again, we thank you for interest and we'll talk to you at the end of the next quarter.

This concludes today's conference call. You may now disconnect.