Robert A. Davidson – Chief Executive Officer Judy R.

McReynolds – Chief Financial Officer David Humphrey – Director of Investor Relations

Edward Wolfe – Wolfe Research Justin Yagerman – Wachovia Capital Markets Jon Langenfeld – Robert W. Baird & Co.

Thomas Wadewitz – JP Morgan Thomas Albrecht – Stephens Inc. David Ross – Stifel Nicolaus & Company, Inc.

Welcome to Arkansas Best Corporation third quarter 2008 earnings conference call. We'll have a short discussion of third quarter results then we'll open up for a question and answer period.

Our presentation this morning will be done by Mr. Robert A.

Davidson, President and Chief Executive Officer of Arkansas Best Corporation, Ms. Judy R.

McReynolds, Senior Vice President, Chief Financial Officer and Treasurer of Arkansas Best Corporation. We thank you for joining us today.

In order to help you better understand Arkansas Best Corporation and its result, some forward-looking statements could be made during this call. As we all know forward-looking statements by their very nature are subject to uncertainties and risk.

For a more complete discussion of factors that could affect the company's future results please refer to the forward-looking statement section of the company's earnings press release and the company's most recent SEC public filings. We'll now begin the call with Ms.

McReynolds.

Thank you for joining us this morning. I'll start with our company's third quarter results, and then provide some comments related to the financial market, and then I'll turn it over to Bob for further discussion of the quarter.

Our third quarter 2008 revenues were $496 million, a slight daily increase over last year's figure of $486 million. Our diluted earnings per share for the quarter were $0.61 a share compared to $0.75 a share last year.

There were three unusual items that impacted out third quarter results. First, we had a very favorable worker's compensation experience this year.

As we alerted you last quarter we're comparing that to a last year third quarter, which included unusually high worker's compensation costs compared to our longer-term historical averages. The stableable comparisons positively impacted our earnings this quarter by $0.14 a share.

We've experienced some quarterly volatility in the results of this category this year; nevertheless, the trend is excellent and we're very pleased with the lower level of worker's compensation expense that we have experienced through the first nine months of this year when you compare it to last year. Second, as we saw last quarter we were once again impacted by the market performance and investments associated with life insurance policies we maintain on certain company executives.

A portion of the policies we own are invested much like pension plan assets, and their returns have been affected by the downturn in the stock market. The negative earnings impacted this change in cash surrender values was nearly $0.07 a share versus last year.

The returns on these policies has been a negative to us in the last couple of quarters, but since their inception the average annual return on these policies has been nearly 10% inclusive of life insurance gain. As a reminder, changes in cash surrender value of life insurance are shown below the operating line in other net expense.

Finally, in last year's third quarter we received an alternative fuel tax credit for the time. The amount of the credit taken in that quarter represented the year-to-date credit for ABF's propane usage, because the amount of the credit had just been determined.

Since this year's third quarter tax rate reflects only one quarter's worth of this tax credit, the year-over-year of comparison of our earnings declined by $0.02 a share. And now let's move on to our cash flow information for the quarter.

Arkansas Best year-to-date operating cash flows were $104 million. Net purchases of property and equipment totaled $30 million, and so far this year we've paid common stock dividends of $11.5 million.

We're projecting that our 2008 capital expenditures will be somewhat lower than we originally anticipated. We now expect the net CapEx range to be between $45 million and $55 million.

Our originally anticipated capital expenditures ranged from $60 million to $70 million. We continue to evaluate our capital needs relative to our declining business levels.

We're following through on planned road tractor and trailer replacements, but we're reducing our purchases of other equipment, and we will also not spend as much on real estate expansions and improvements. We're considering a cash contribution of $10 million to $20 million to our nonunion pension plan before yearend.

The plan has suffered investment losses of approximately $20 million through the first nine months of 2008. This contribution is not a required contribution, but we feel it is prudent to maintain appropriate funding levels for the plan.

Our balance of cash and short-term investments was $231 million at the end of September. We've not experienced any losses associated with our cash and short-term investments as a result of the stock market turmoil.

Our balances currently reside in U.S. Treasury funds, FDIC insured certificates of deposit, and other government securities funds.

Although our current average earnings rate is less than last quarter we've made the necessary changes to better preserve this capital. During a period of uncertainty in our economy and our financial markets, Arkansas Best is in a strong and stable financial position.

We've emphasized this point many times but it has never been more important. We have virtually no debt and our significant cash balances put us in a position of flexibility.

And now I'll turn it over to Bob for his comments about ABF and our third quarter performance.

Thank you, Judy, and good morning everyone. ABF reported third quarter revenues of $476 million.

That's the same on a per-day basis as in last year's third quarter. ABF's third quarter operating ratio was 94.7.

That's compared to a 93.9 during the same period last year. During the third quarter ABF experienced a deteriorating LTL freight environment as we saw progressively worse tonnage declines in each month of the quarter.

We ended the third quarter with ABF's daily average tonnage down 5.1% compared to the same period last year. Based on the early part of the month, it looks like October will be a point or two worse than the full third quarter.

We reviewed the historical seasonal fourth quarter relationships between October and the months of November and December. And based on that review and the current October tonnage levels we expect a very tough fourth quarter tonnage-wise.

During the period of lower tonnage the ABF team continues to respond positively by providing efficient handling of our customers' freight in a safe and cost-effective manner. Our folks always seem to find to work with and make the best of whatever the economy brings us.

As a result, ABF was able to actually improve hourly operational productivity on both a weight and shipment basis during the third quarter as it had done during the first two quarters of the year. Our employees remain focused on upholding ABF's reputation for offering superior value to our customers, and providing a comprehensive array of services at a fair price.

ABF customers benefited from our continual emphasis on best-in-class cargo care. For example, ABF's third quarter cargo claims ratio was 0.63% of revenue.

That's a figure consistent with the first half of this year, and it's actually better than last year's results, which was ABF's best in over 25 years. ABF's cost management and value creation contributed to the third quarter operating ratio increase of only 80 basis points.

Superior success and reducing worker's compensation costs dropped ROI by 120 basis points from the third quarter of last year. On the year-to-date basis worker's comp costs are well below our 10-year historical average, and they're 60 basis points less than the same period last year.

The reduction in the number and severity of claims will benefit out company for many years to come. In the third quarter, ABF city and road-rate of DOT recordable accident per mile decreased 9% from the third quarter of last year.

We're delighted with the impact on the health of our employees and the safety of the general public. These positive results also highlight the experience of ABF's professional driving team, and they also improve the reliability of the services that we offer to customers.

ABF's billed revenue per hundred weight in the third increased by 5.8% over the same period last year. Although the fuel surcharge steadily declined throughout the quarter, it was still at a much higher level than last year's third quarter and it was the biggest factor in this nominal price increase.

Changes in freight profile and customer mix continue to impact ABF's pricing comparisons. ABF handled a larger percentage of regional shipments and that resulted in a 3.1% reduction in the third quarter length-of-haul.

In addition, the total average weight per shipment increased by 3.4%. We continue to handle more spot-priced truckload shipments in order to use our available system capacity, and as you may remember, our higher shipment weights are cross-correlated with a shorter length-of-haul.

In addition, LTL's shipment density also increased, and all of these factors reduced nominal revenue per hundred weight. As it's been for some time, the LTL marketplace remains very competitive and the recent step down in plate level hasn't helped any.

In addition, higher fuel surcharge levels have dampened our ability to secure core rate increases. ABF's customers understand the fuel surcharge mechanism and they've generally been supportive of paying it when fuel costs were at record levels.

Now they're enjoying the benefits of consistent fuel surcharge reductions that are associated with the diesel fuel price reductions that we're seeing. From the middle of July through the end of the third quarter the fuel surcharge percentage has declined over 8 percentage points.

I said before that the fuel surcharge affects the overall yield we get from customers, especially when it was at the record levels we saw in June and early July. Now that our customers have received much needed relief from high fuel surcharges it's important that ABF secure base-rate increases in order to cover our increased costs of labor, equipment and other items in our network.

In mid September ABF began to market the service improvements that resulted from additional enhancements. ABF's regional infrastructure is currently in place in the eastern two-thirds of the United States.

Since it's beginnings ABF's regional initiative has cut at least a day of transit time and nearly 23,000 new second-day lanes, and over 7,400 new next-day lanes throughout the network. Overall ABF's regional initiative has reduced transit times in over 33,000 total station-to-station lanes.

That's more than 40% of ABF's overall North American network. ABF's regional service offering in the eastern two-thirds of the United States is now fully developed and operational.

Within a single carrier platform ABF now provides comprehensive regional and national LTL service, and at the same time offering the impeccable cargo protection, the personalized customer service, the unmatched Web visibility and the strong safety record that has made ABF unique. Based on our experience so far in the regional market we're excited about the additional opportunities that will result from these enhancements.

Arkansas Best is a stable financially secure company. We have essentially no debt, we have an abundance of available cash on our balance sheet, and we've got the opportunity to access further capital through our existing credit agreement making our situation rare, or even unique, in the current financial environment, especially in the transportation sector.

As we develop our strategic alternatives we'll continue to evaluate our external options carefully and deliberately in order to take advantage of opportunities that can benefit customers, but especially to maximize the returns that we generate for our shareholders. Looking out into ABF's near-term future we don't anticipate an improved freight environment for some time; however, we believe that ABF is positioned internally for significant growth in a way that it's never been before.

I think we're ready to take some questions now.

Hey, I'm sorry, I just joined. I'm sorry, I was on another call cut off so.

Would you like us just to repeat it from the start?

Yes, could you do that? I got a lot of questions.

I'll jump on the back of the list and I'll learn from that what you said and what you didn't and I'll let others get at it and don't forget me on the end though, please.

Talk to you later.

I was just listening for a little bit, but.

Can you fill Ed in then?

He'll do all right. When I'm looking at the price, I know you guys commented on in the press release, that 2.4% on the average increase on contracting to per price that you've got, is that net or gross of fuel?

Well it includes the impact at the bottom line, so it would be gross of fuel. In other words if we had gained a price increase, but given up something on the fuel surcharge it would have reduced that number.

It's an all-in number.

It was 3.8% a quarter ago, and I'm just trying to get at how materially the environment has deteriorated sequentially here. How much of that is fuel, and when we got from 3.8 to 2.4, and how much of that is actual base-rate that you guys may be losing in this current environment?

I wouldn't draw a whole lot of conclusions by the difference between those numbers. That number will fluctuate back and forth.

I will say that directionally the pricing environment is tough out there and you wouldn't expect anything otherwise when you see another step down in tonnage on top of the downturn that began in October of '06. But I think there's still an opportunity for a company like ABF to demonstrate that it's different, to differentiate itself, and to continue to extract the yield for the value that we provide.

When you think about that, and that's always been you're guys' philosophy, you feel like you're sacrificing market share in the current environment, or do you feel like with the RPM product out there that you're actually maybe picking up some accounts versus kind of what the general LTL pool is doing?

I'm not sure we've got a great deal of visibility in that. When you look at the fact that our length-of-haul decreased 3.1%, that's consistent with what you've seen the last couple of quarters.

It certainly looks like that we're showing some separation in our regional business compared to the long-haul business, but I don't know how the numbers would shake out overall. I think if we can look at after everybody reports and get some color and visibility on that.

Five years down the road, Yellow and Roadway, it sounds like they may be actually merging, do you guys see any fallout of freight from what's going on here, or are you guys getting calls from customers? I know you guy's trade freight back and forth on a regular basis, but is there anything that sticks out to you in terms of behavior of customers around Yellow and Roadway right now?

I'm not seeing anything different in the last month that was different from all year long. And you're correct; we do trade freight back and forth.

I think we’ll probably continue to do that.

Bob you made a quick comment about tonnage in October it’s down 1% to 2% sequentially. What is that year-over-year so far month-to-date, did you give that?

I think my comment was that the third quarter was down 5.1% and that each month during the quarter was progressively worse. And the comment about October, and keep in mind it’s a really thin sample size.

Is that it might be a point or two worse than the 5.1% we saw in the third quarter.

Okay that makes more sense. Judy you made a couple of comments around pension stuff.

Obviously with the markets being the way that they are, that’s something that’s on everybody’s mind right now. Can you talk a little bit to what’s included in your contract on the union side?

I think it’s a dollar per hour per year that steps up. And if there’s additional contributions to the pension then that comes out of that dollar before it comes out of your pocket.

But is it possible for that to exceed that dollar per hour in terms of what you’re paying for your employees? And then on the nonunion side you guys are making potentially a discretionary payment that says to me that obviously, as you said that there’s a potential funding issue.

Or you just try to shore things up I guess would be a better way to say it. But I mean as you look at planned assumptions at the end of the year and going into the end of the year.

Do you expect ’09 to be a heavy pension year? I know it’s a long and convoluted question but maybe we can take it in parts.

Well let me start with where you are at the end. When you say a heavy pension year, what do you mean?

Well I mean if the statements in terms of returns on pensions plans come in, you may have funding that steps up.

Well I think that’s absolutely the case. Whenever you see what’s happened to the investment center in our nonunion pension fund that’s the simplest and best example.

We’ve experienced year-to-date about a $20 million investment loss in that fund. And so what we’re planning to do is put approximately that amount back in.

And I think that companies that didn’t have a 90% plus funded level before that are going to have a much worse problem. And so that will be a topic I think for a lot of companies in the latter part of 2008 and into 2009.

Switching over to the multi-employer plans that we participate in, I think you said it well when we have contractual arrangements that go through March of 2013. That includes what we’ll pay on an hourly basis for our pension contributions.

For health, welfare and pension we have $1 an hour increase for each year that we’re in the contract, and that occurs on August 1st each year. We do have a provision in the agreement that says that any surcharges that result from a fund, be in critical status, and not having a rehabilitation plan if there was a surcharge that comes from that event that would come out of the increase that we’re already paying.

I wouldn’t want to comment on all the possibilities of underfunding, because we don’t have control over those funds and we don’t have access to all the information that’s there. But we do feel confident that for the five-year period that’s coming up, we know what our costs are going to be.

And we continue to participate in those plans and make the contributions on an hourly basis.

Can you go over that dollar, I mean if there’s an excess of that, I guess that’s what I was trying to figure out?

Well, I’m not aware so far. I know for instance [Central Space] is a good example.

They’re on a rehabilitation plan, and the amounts that we’re paying into the funds comply with that plan. There are also several other issues involved there, I mean they have a default plan that includes benefit modifications.

When they faced situations like this in the past they’ve gone for legislative relief. There was an act in 2004 and the Pension Protection Act in 2006.

They’ve gone to the government for relief and gotten extensions, an extension for the amortization period that they fund losses over. There’s a number of levers that they have and back in 2002 they had to use sort of all of the above.

And one of those was they had to reduce the 25 and 30 and out benefits and reduce the benefit accrual in that plan. So you the trustees or fiduciaries under ERISA law and they are compelled to improve the funding situation under the Pension Protection Act.

And they are compelled to have a fair result for both employees and employers. And so we stay as close to that as we can and we get the information as soon as we can.

But we can’t really control all the specific actions that they would take.

In terms of your shipments are down considerably, weight per shipment is up. Bob, are you guys seeing a material difference in the way that your shippers are aggregating the freights that they give to you?

I mean typically weight per shipment would be an economic indicator; I don’t think that anyone could draw that conclusion right now in a big way. Are you getting three pallets instead of two or how is that working when your weight per shipment is up like that, but your shipments are down?

I exactly believe that you’re correct. This weight per shipment I do not believe is a harbinger of spring, I think that it represents a willingness of shippers to hold freight a little longer in order to reduce their transportation costs per pound.

And again, I also believe that it cross correlates with our shorter length of haul. So I think you’re seeing in the longer haul perhaps a little bit of [mobile] shift, and I think you’re seeing a little more willingness of customers to ship twice a week rather than every day.

Is it cheaper for a shipper as their weight goes up, if the class of the freight is not changing?

Sure. If you –5,000 pounds has a lower cost per pound than 1,000 pounds does.

That makes sense.

Can you just tell us what your monthly volume trends were?

We have disclosed that the overall was 5.1]and it was progressively worse and that’s all the color that we’re going to give.

And then can you talk about the worker's compensation claims? I know you’ve done well on that this year.

But how did you do in the fourth quarter last year, just so we understand how the comparisons play out?

That’s a good question and we’re having someone give us a number here.

How about I come back to that?

Jon, we actually don’t have that in front of us so we’ll have to get back with you on it.

I’ll follow up on it that’s fine. And then back on the, not to beat a dead horse here, but back on the pension side.

You know, looks to us like the liabilities for the Teamsters, the unfunded liabilities increased by 50% here this year. Any updated number in terms of what your portion of that liability would be?

Jon, we don’t have an updated number. But I want to point out that we are no longer in the mode of trying to negotiate through our contract to withdraw from the fund.

And so it’s the share or the portioning out of that into withdrawal liabilities really is only relevant and only matters if you’re making an attempt to withdraw. Otherwise the funding issues for the fund, whether they be from market losses or from carriers that have gone out of business and been unable to pay their liabilities.

It really doesn’t matter what the under-funding has been caused by, but you kind of go back to the same levers that I talked about before that the trustees have at their hands to try to address this problem and to deal with it. And we feel like the past history when you look back to 2002 and they had a similar market situation.

And they kind of stepped through the process with legislation and government help, and also with addressing the benefit accruals. That those are all approaches that are available to them and actually under the rehabilitation plan their cause to have to address those issues.

And so you don’t have control over that, their activities, but we feel like under law that they're compelled to address those issues in a timely fashion.

That makes sense.

Jon, going back to the worker's comp question you asked, in the fourth quarter of last year it was 1.66% of revenue that's slightly better than the five year and ten year averages. This year year-to-date that number is 1.39%.

These are real cost reductions and we are pretty proud of them. I think they represent not just money that we found laying on the ground, but they represent a core change in the company.

Its one of those things that goes back to lower accident rates and lower injury rates and lower loss and damage claims rates. They show that fundamentally even in a downturn the company is operating pretty well.

Yes, I know it looks like it from that prospective. The last question I had for you was with regards to kind of union work rules and the adjustment that needed to be made for the regional performance side, and we have come across some things with your larger competitor that have said they've gone back to the union for additional flexibilities or concessions on work rules with the teamsters and they've not been allowed thus far.

Are there any additional items of flexibility you've been looking for outside of the terms you had negotiated as part of a contract?

I'm sure that there are always elements of worker flexibility that we would have, but I'll just simply say that we feel like that we have enough flexibility to operate a robust regional operation and we’ve put that in place. We didn't just discover this year that we wanted to be in the regional business.

There were some constraints on our company under the prior contract which prevented us from effectively entering especially the two-day market. The contract that we have in place beginning April 1 largely removes those constraints and we have moved forward to enter that market and we believe that we have the tools to succeed at this point.

I had just I guess a short follow-up on one of John's questions. You mentioned the workers’ comp is a percent of revenue, I believe, for fourth quarter 2007 and then in year-to-date 2008.

What was it actually in third quarter 2008 in the prior year quarter?

The third quarter 2008 it was 1.1%, and what did you say the prior third quarter?

Yes, third quarter a year ago I guess you said it was…

It was 2.3.

You may remember last quarter we warned you that we were going to have a favorable comp there and we did.

And again that’s workers’ compensation cost as a percent of total revenue?

Yes.

Yes. I might point out that BIPD expense is separate from that but the trends are also good there as well.

So, is that 1.1 obviously you’re happy about that performance; it's good performance. Is that a reasonable target that you can look for as you go to 2009 or as you go to fourth quarter recognizing that there are obviously going to be volatility?

I don't think so, Tom, but I think as Judy pointed out there is some volatility here but you got to look at the overall trend. The overall trend here is excellent.

I wouldn't project what it will be in the fourth quarter because every quarter we true this up based on our claims and the experience and loss development factors and a number of other things, but just looking in managing this the trend over an extended period of time is excellent here, it's excellent in BIPD, it's excellent in loss and damage claims and a lot of other of these quality related issues. I've spoke the last couple of quarters about the quality process and what it's done for our company and how that it may not be the most popular topic in the business world, but it certainly means a lot to us and we see real results from my quality of process and these are three good examples.

It certainly is good to see the results of the hard work there. Can you run through in terms of if you look at the cost side where do you have opportunity to further scale down costs and in terms of headcount is that the type of thing that you can scale down at a pace approaching the decline in tonnage or how much flexibility do you have on the cost side as, like you said it doesn't look like freight's going to get better for perhaps quite a while?

Sure, Tom. We do have considerable flexibility to scale labor costs and I think we've shown that by actually increasing productivity so far this year.

Nevertheless, with another step down in tonnage, it gets a little more difficult to scale labor as you have another step down in tonnage, but I will make this observation that the earlier – you recall that we have a multi tier wage system in the company where newer employers are paid less and as those employees were laid off it tends to be those employees that are on the lower wage scale – so cuts that we make at this point tend to be higher wage employees which we regret doing that. We certainly don't think that it's anything that anyone enjoys doing, but we have to scale the company for the available tonnage and will continue to do that.

The real opportunity for unit cost reduction is in filling in the lanes with our regional operation. Even in this environment we have put in place a network.

We've spent money to build out another line haul transportation that works within our company to serve the regional market. We are running those loads light because we're serious about being in this market and even in the downturn we are going to continue to provide the service that we promised customers.

As we fill in those lanes we expect a natural cost reduction associated with that and that's our biggest opportunity for revision costs.

If you look at FTEs in the quarter or hours worked or some metric of labor, what would that look like in a third quarter 2008 versus the prior year quarter?

On a full-time equivalent basis our employees were down about 6% quarter-over-quarter.

That's down 6% versus third quarter 2007 or versus second quarter?

Versus third quarter 2007, and then if you look back to the fourth quarter of 2006 when we first started to see tonnage decline we're down somewhere close to 10% in our workforce on a full-time equivalent basis.

It sounds like you actually did better with headcount reduction in terms of 6% year-over-year relative to the 5% tonnage decline.

Yes, I think always we are trying to do that. I think it increases your difficulty when you see continual drop-offs in tonnage or more difficult environments come quickly and but we do it just as quickly as we can.

We try to be sure that we are providing good service levels to our customers and so we are always balancing that with this decision.

I think what's interesting also with that number is that we had that higher headcount reduction compared to tonnage even in light of the fact that we reduced our rail percentage and we reduced our outside cartage expense as well, so the numbers are really even better than the FTE reduction shows.

Nice job on the cost side, and I appreciate the time.

Just a couple of fact keeping numbers first, Judy, what was the length of haul and what was it versus and then the rail percentage and what it was versus.

Average haul was 1,129 versus 1,165 last year and rail percentage was 11.8% versus 13.6%.

I know you've been undertaking a bigger strategic review for some time, are there any indications that you might be done with that by year end or any sort of timetable that you could share with us?

We don't have a timetable but I would be surprised if we would announce anything in the fourth quarter.

Is there anything that you could disclose that you have eliminated from what you've studied even if you can't share what is on the table going forward?

I don’t think we're going to provide public visibility into our internal planning process, but if we buy anything we'll tell you.

I just want to make sure on the fuel tax credits those are all done now, right?

We are continuing to have that credit. I believe it goes all the way through the end of 2009.

If you look for instance at year-to-date numbers, not quarterly numbers, but year-to-date numbers we are going to be on the same comparative basis now going forward.

So we should look for fourth quarter tax rate solidly under 40% then because you were I think at this point…

I wouldn't say that. What we had said earlier this year was we would be between 39% and 40% and right now we're right at 40%.

That's probably a better indicator of where we'll be for year end since that nine months of activity already. We’re being affected there obviously by these life insurance policies that the movements in them are on an after tax basis, and also the fact that last year we had the tax exempt auction rate security investments that we don’t now, and so both of those work against us in the tax rate.

So for modeling purposes for 2009 if the tax credit goes away at the end of this year...

No, it goes away at the end of 2009.

Okay, but what is the benefit if everything is sort of squared away between the auction rate stuff and the cash surrender issues on the life insurance. Is it 100 basis points, 200 basis points?

I'm just trying to given the volatility of the….

I really can't give you a hard fast rule there because I know that there's an effect but what you've got is the market activity either positive or negative in each quarter, but it's not going to be going forward much of an issue if you start with a 39% to 40% rate and that's going to be our ballpark range for tax rate in 2009.

I am just curious, Bob, not to be a pain but you guys have always given the monthly tonnage forever and you seem a little bit hesitant to want to share September. I don’t think there's anything dark about that but I'm just curious why you wouldn't want to share that.

I think we are doing it for competitive reasons. I think we're dealing with competitors.

Some competitors don't even share total revenue, weight or operating ratio. We have provided color in terms of the number and direction and some insight into October.

I think that’s for competitive reasons why we're not willing to share.

Obviously during the quarter you had provided a couple of updates so we can back in that number. Okay, I think that's all I had.

First question I have is again on the tonnage I don't need a specific number but one of your competitors said that really for the first time since they've been keeping track September on an absolute tonnage basis is lower than August, which is something we've never really seen in freight. Is that something that you saw at ABF as well with September actually weaker than August or sequentially how did that play out?

I think that was true. I don't have the exact number in front of me but I think that resonates.

With the rail usage coming down on us a couple hundred basis points, I assume that was to better utilize your trucks in a weak freight environment but is there any issues with rail service there.

It's more of an issue with rail costs. Rail services have become more expensive, particularly with the respect of drill surcharge and what we do is we evaluate those lanes compared to moving it ourselves in terms of the service and cost and we make those decisions on a lane-by-lane basis, I think.

The change that you see is certainly we try to keep our drivers working and any close call goes in favor of using our own drivers, but I think the fact of the rail usage is more a factor of cost rather than service at this point.

On the RPM initiative you said that it is now fully developed and operational in the East and two-thirds of the US. I guess I had been under the impression that it was fully developed and operational a little bit earlier this year.

Is there something that you know, final speak in the third quarter to get you to fully operational?

Well we put it in place operationally early in the third quarter. And then we began marketing it after we were comfortable that we were doing what we said we were going to be doing.

So what you may be thinking about is the fact that we actually started running the loads before we told customers about it.

Dave, I’m going to just say this just to make sure that we were clear. You may also be thinking of the next day service that we have versus the two day.

We rolled out the next day service to our customers in early 2007. So what we’re talking about here in mid September from an operational standpoint, a little bit earlier but in this September we began marketing to our customer’s improvements in two day service.

It’s a dramatic improvement.

As for the RPM initiative continuing out West in the Western third, is there any update on the time table and any drag that bringing that up to speed might have on the next couple quarters?

We’re looking at probably now early in first quarter of 2009 to put in place service initiative on the West Coast. While that’s important in the West in terms of the scale of what we’re doing it’s considerably less than what we’ve done in the East.

It affects I think 400 station-to-station lanes compared to the 33,000 that we’ve done so far.

Last question is just on cash. Bob, you commented on the acquisitions that you’ve been looking at as kind of the primary use of cash is you know still in the evaluation stage.

You didn’t’ raise your dividend when you declared that earlier this week and you haven’t bought any shares back year to date. Could we see an increase share buyback before anything’s announced with acquisition related?

We still have authorization from our board for some member’s shares which were made outstanding as always. Pursue that on an opportunistic basis.

We will always evaluate any strategic alternative against the lands of returning money to the shareholders if we can’t make more money than they could make with the same buys.

How determined are you to roll out the West Coast initiative? We’ve heard you talk about it now for awhile.

Is this going to happen first quarter or it’s not definitely the timings still not sure?

We have the operational plan in place. In fact we’ve already leased a key facility that we didn’t have in the Portfolio in order to make it work.

But, again it’s not done until it’s done. But it’s something that we’re definitely going to do.

We know what we want to do. We know how we want to do it.

Yellow Roadway are selling terminals or at least talking about selling terminals. Have you seen any of those come to market?

Is there anything there you might want?

We’re in dialogue with Yellow Roadway, just as we are in constant communication with the real estate departments of all of our competitors. As you probably know we tend to swap facilities and trade facilities in this industry as our various needs change, and that’s true of Yellow Roadway as well.

Is there needs because of the roll out for many terminals or are you pretty much have what you need now with that one in the work?

One of the beauties of what we’ve done with our regional initiative is we’ve added 22 high velocity exchange points. Seventeen of those co-exist with our existing facilities.

We’re essentially using the doors at night, when they otherwise would have been idle. We have secured five additional facilities plus the one facility in the West, but in the scheme of things that’s pretty modest and that’s like the runs that we are making using city equipment that otherwise would be parked against the fence at night.

We are able to use that over the road, so this initiative has not been capital intensive. We have been able to use a lot of the same infrastructure and rolling stock.

Judy, can you give an update on what the drag was from the rollout of the regional this quarter, what the OR impact or EBIT impact was?

Well, it was close to a point on the OR but still we have done a lot to change that with the roll-out of the second day service. It doesn’t add a lot of cost.

For instance, initially we spent $20 to $25 million. We have made some progress on that but it’s still about a point on the OR and we expect that in the fourth quarter, that could be as much as an additional $2 million more in costs for the full development of the second day service.

And as you go into 2009, is that $2 million extra run rate or how do we think about that then?

It doesn’t take a lot of freight additions to overcome that, but until we get the same growth in those markets and we overcome those costs, we’ll have the emphasis on service and we’ll continue to provide service in those lanes and we’ll have those costs in our infrastructure. But certainly we are hopeful we’ll have the growth and be able to overcome those because we have dramatically improved service for our customers.

This is the most important initiative in this company in that, here, if not decades. We are so committed to the idea of being able to offer 50 state coverage to our customers and even in the freight downturn, we consider this absolutely essential.

We’re fortunate enough to have the resources to be able to pursue it. We have the program in place and we are just excited about the prospects.

What is the revenue base now?

On a tonnage base, it’s about 46% of our tonnage.

That is less than $800.

Yes. Then again, that wouldn’t reflect this two-day service enhancement because we just rolled that out to customers in mid September.

Do you have a revenue number that goes with that?

No I don’t.

Fair enough. Bob, you have been through a lot of these downturns and obviously the company is in the best shape it has ever been historically, but you have a very large competitor who is hurting right now.

In past downturns, we’ve seen particularly in first quarters where you can get a little weather, and things can take another turn. Things get pretty competitive and tough.

Do you believe at this point that a loss in a quarter, an operating loss without some special charge, just pure operating loss because of difficult pricing and demand, is out of the question at this point or is that something that is still possible in a downturn?

Are you still stating – I guess I don’t understand what the question is.

If I go and look back in 2001, you never touched down to 100 OR where you had been in past cycles and you talked a lot about how the business is better than past cycles. I guess my question to you is, we are in a very deep cycle plus you have a wounded competitor, do you think it’s possible that you could go back to 100 OR in this environment as bad as it’s getting?

That sounds suspiciously like guidance to me Ed and I think you know we are loathe to try to project an OR in the future. I will tell you that last quarter I talked about how our tonnage has been rocking along the bottom for two years at no better, no worse, and during this quarter we saw another step down in tonnage and we are reacting to that environment just like we reacted to the original step down in tonnage and we are going to operate the company based on what available tonnage we have.

I am confident that we can make some significant sailing but at the end of the day, we’ll see what it is at the end of the quarter. I have no doubt in you and your team’s ability to do that very quickly.

Is the pricing different than the last step down? Is that something that’s a bigger issue today with the investor step down and some of the things FedEx is doing in a wounded competitor and all those kinds of things?

Where does that not feel much different?

It’s been pretty tough all year since the step down is occurring kind of concurrently here perhaps we haven’t really seen what will happen, particularly in the winter environment. I think there are some carriers that would tend to be more aggressive in a seasonal slow time in addition to the overall systemic decline that we’ve had.

Honestly, it’s been a fairly tough environment since all of 2007 and all of 2008.

So you don’t see that getting worse. It’s just been kind of – is it kind of a flat-ward spin or it’s been just slowly getting worse and that the acceleration isn’t changing from a pricing perspective?

I think that you’ve seen an unusual event with the higher fuel surcharge, which has suppressed our ability to gain core price increases. As that goes down, as I’ve told you before, we’re going to fight to try and convert some of that into core yield.

Honestly, given the tonnage environment it’s going to be challenging to do that, but we’ve got people that are trying to do that and we’ve got the value that we’re providing that gives us a legitimate, plausible reason to be able to ask for price increases. It’s hard to really evaluate how it’s going to come out overall because we’re dealing with not only a macroeconomic environment, but a tonnage environment that’s outside of the realm of our experience and I don’t’ think there’s been – we talk a lot about the ABS people with our long tenure and we’ve seen a lot of downturns.

Nobody has really seen a downturn that’s like this one and we’re just kind of managing as we go along.

How do you say that when if I look at the tonnage even in 2001 it was down more than it is now? You’re talking about September relative to July and August kind of thing?

Yes, we’re seeing that and also we’re seeing the length of the downturn. We’ve been in this environment since October of 2006, which is sitting here seems like a long, long time ago.

Would you read from that that maybe the people, like me, who are assuming a recovery at some point at the end of 2009 and 2010 for the general economy, maybe freight will recovery but maybe the general economy is going to be lagging? Is that your history?

I think you know that we have almost no visibility into the macro environment in the future. We don’t try to predict and we just don’t know.

Just a couple of small things, Judy, you had an almost $700,000 other net work against you in the quarter. What was that?

I mentioned on the beginning of the call that its market losses on some life insurance policies that we have invested like [inaudible] assets would be. Also, in addition to the $700,00 or so that we had in losses last year, we’re comparing to $1 million in income on that same line item, and so that’s where the $0.07 per share comes from that I mentioned.

Is that ongoing or is that kind of a one-time…

It’s as a result of the severe market declines that have been experienced, so no I wouldn’t say it’s ongoing but also we can’t predict it.

Was that AIG related or something like that?

No, all it is, is that you’ve got a life insurance policies; they’re not related to AIG, but they’re just invested 60% in equities, 40% in fixed income, and you mark them to market every quarter and we’re comparing back to a period last year where we’ve had good results and this year we’ve had losses, but it’s only on about $17 million in policies. So it’s an item that certainly most of the time falls – it flies under the radar screen.

But also since we entered into these policies back in 2003, we’ve had about a 10% after-tax return including the life insurance gains. So life today, they've been good for us but certainly created some volatility these last two quarters.

So in fourth quarter do I do that line as a positive, a negative, a flat? What's the way to think about that?

You tell me what the market's going to do and I'll tell you what the line will do. I honestly don't know.

No, but assuming no changes in the market, I mean, in other words is it mark-to-market now and then that goes forward?

Yes. Assuming no change in the market you would have nothing on that line item.

That's what I was going for. And then one last thing, gains on sales of equipment continue to be a little bit better for everybody than we've expected including you guys and up from second quarter.

Are you seeing some used vehicles sell again after a period where nobody was buying them? What are you seeing?

Well, I think we've seen some, I would say consistent, pretty positive results all year long. I think the mentions on previous calls that we've had access to some overseas markets and that's been good for us.

That I think if you look at our numbers on a year-to-date basis they're really similar to last year.

Is it your sense that pricing is flat, down, up year-over-year on the used equipment?

I don't know on a year-over-year basis, but we are selling equipment that is in line or maybe slightly in excess of our salvage value and so we're confident and comfortable with where we are.

And were the overseas markets still open in September or have those slowed up?

Well I think there's – we ask that question because we thought honestly that we might get it. We've sold some equipment or some tractors in South America and it looks like those markets are still fine.

It looks like that the Russian market is a little less active than it was earlier this year. Gives you a little color.

Operator, I think that's it. That's enough.

We've been on this an hour.