Ladies and gentlemen, thank you for standing by, and welcome to the Second Quarter 2012 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded, Tuesday, July 31, 2012. I would now like to turn the call forward to Mr. Dave Humphrey, Vice President of Investor Relations and Corporate Communications. Please go ahead, sir.

Welcome to the Arkansas Best Corporation's Second Quarter 2012 Earnings Conference Call. We'll have a short discussion of the second quarter results, and then we'll open up for a question-and-answer period. Our presentation this morning will be done by: Ms. Judy R. McReynolds, President and Chief Executive Officer of Arkansas Best Corporation; Mr. Michael E. Newcity, Vice President, Chief Financial Officer of Arkansas Best Corporation. We thank you for joining us today. In order to help you better understand Arkansas Best Corporation and its results, 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 statements section of the company's earnings press release and the company's most recent SEC public filings. We'll now begin with Mr. Newcity.

Thank you for joining us this morning. Continuous improvement in tonnage and pricing levels at ABF led to a profitable second quarter. While we are encouraged with a positive result, we know we have more to do to return our company back to a level of historical earnings. In mid-June, we completed our acquisition of Panther Expedited Services. This important transaction in a premium logistics space is part of a long-term strategy to grow our non-asset-based businesses, expand our product offerings and better serve our customers. Later, Judy will give her thoughts and perspective on our recent results in the addition of Panther into the Arkansas Best family of companies. But now, I'd like to cover the details of our performance for the second quarter of 2012. Arkansas Best second quarter 2012 revenue was $511 million compared to last year's second quarter revenue of $499 million. This included approximately $11 million of revenue from Panther for the second half of June following the June 15 closure of its purchase. Excluding Panther, Arkansas Best second quarter revenue was slightly above that of last year's second quarter. In the second quarter, we earned $0.44 per share compared to $0.20 per share last year. This quarter's net income included tax benefits of $0.31 per share and transaction costs of $0.05 per share associated with the Panther acquisition. Excluding both of these items, our adjusted second quarter net income was $0.18 per share. In the 2012 second quarter, approximately $8 million of valuation allowances related to deferred tax assets were reversed, contributing $0.31 per share to second quarter earnings. These valuation allowances were initially established due to limitations on the amount of deferred tax assets that could be recognized. Approximately $5 million of these valuation allowances were established in the first quarter of 2012,…

Thank you, Michael, and good morning, everyone. The second quarter marked an important development in our company's history with the acquisition of Panther. In the last several years, we have seen how the supply chains of our customers have become much more multifaceted and, as a result, how their end-to-end logistical needs have greatly expanded. We have made and continue to make investments in various service offerings under ABF and other subsidiaries. At the same time, we have reviewed a number of industry segments, as well as potential acquisition targets that could expand our offering to meet the evolving needs of the marketplace. Panther was one of those targets in a segment that speaks to the needs of our customers. As one of North America's largest expedited transportation providers, Panther possesses an expanding platform and premium freight logistics, expedited transportation, freight forwarding and transportation management. Panther is complementary to our asset-based core LTL business at ABF. It aligns well with the competencies of our organization and it extends our ability to provide the integrated supply chain solutions desired by our customers. We're excited about the addition of Panther and we believe its expertise and expedited transportation and premium logistics is an excellent strategic fit with our company's history of doing the difficult things well. And now turning to our second quarter results. ABF maintained a high level of customer service and improved pricing across the broad base of its accounts in the midst of a shifting economy that lacks consistency. The freight environment is better than in recent previous periods, but growing economic uncertainty limits its strengths. In the second quarter of 2011, ABF began an initiative to address inadequate pricing and improve the profitability of many accounts across its network. As a result of comparing back to those previous…

Tommy, I think we're ready for questions.

[Operator Instructions] And our first question comes from the line of Chris Wetherbee.

Yes. Maybe, Judy, just a quick reference point, and I apologize if I missed it, but did you mention what core pricing was in the quarter or pricing x fuel was in 2Q?

Well, quarter -- the kind of the all-in number, the reported number was up 4.7%. And excluding fuel, it was up in the mid- to high-single digits.

Okay, okay. And you mentioned that, that number now is trending in the 3.5% range for the month of July?

X of fuel, yes.

X fuel, okay. That's helpful. I guess, you think about being a year kind of into the addressing the customer accounts, underperforming customer accounts, I know it's an ongoing process, but how do you feel the progress you've made so far? I mean, do you still have a significant portion of folks that need to be addressed from a customer perspective or does it feel like it's just more on the edge now as opposed to some significant improvements that you need to make?

Well, I'd give you 2 responses to that question. One, from the initiative standpoint, we feel like that we have really gone through kind of the worst-performing accounts and dealt with those in a pretty thorough away. But the other thing I'd mentioned to you is that when you look at where we are from a pricing standpoint because of what happened to us in the depths of the recession and with some of our competitors going through a very competitive time from a pricing standpoint, we're still at basically 2008 levels for pricing. And so that tells you that we still have a lot of work to do from a kind of blocking and tackling standpoint and making sure that we're asking customers to pay us for the value that we provide to them.

Okay, okay, that's helpful. And then just maybe one final question, just on the Panther acquisition. As you guys have now gotten a little bit of more time under your belt and probably taking a little bit of a deeper look at the company, can you give us a sense of how we should think about any potential progress of not just integration, but necessarily kind of customer focus and drilling down on your customers where you may have some cross-selling opportunities and maybe just give us a little bit of a better perspective of how we should be able to think about that starting in the second half of the year, that'd be great.

Well, we feel like that everything is just proceeding very smoothly. Both companies were familiar with each other prior to this transaction. So there weren't really any surprises in terms of or changes from expectation as we went through the month of July. But we have identified and prioritized specific areas where we can strengthen our company by Panther and ABF looking at business opportunities together. The initial area of focus has been collaboration between Panther and our expedited solutions group at ABF. And we've begun to work on some medium and longer-term initiatives that will aid us in cross selling other services like our truckload brokerage, air and ocean forwarding, and to some extent, transportation management. Both sales teams are really seeing increased customer interest and there are some cross-selling opportunities and we're very focused on those. And so we have seen excitement in both teams of employees, both at Panther and at ABF. And the people at Panther are genuinely thankful for being in a situation of stability. They can go to their customers with confidence that they will have good operating results and they will be able to invest in their company as they need to grow it. So it's been a very exciting month.

And it's probably going to happen starting in the third quarter as the way we should start to think about some of those opportunities coming back or coming through.

Yes. I mean, I think that as we go through 2012, there will be more of those opportunities that are taking advantage of. There's some low hanging fruit that will be quicker and then there will some discussions that are ongoing now about some longer-term initiatives. And their -- the list is that I've seen is at least 3 pages long of opportunities that we have. So we're working through those one by one.

We'll proceed to our next question, the line of Justin Yagerman.

I guess I wanted to start with the Teamsters side of things. Very curious to what extent you think that your lawsuit is going to color any of the negotiations? And as we head into the actual contract expiry next year, do you think you can get these guys to the table while this is still kind of up in the air, or are we going to have to wait for some resolution from the lower court in order to see some really talks with labor?

Well, we think of those 2, I guess, events or sets of circumstances as separate from each other at this point. As we go into the fall of this year, we don't have any expectation other than we will enter into normal activities. As far as the discussions go, the lawsuit will be the timing that the judge chooses, and we really don't have a lot of direct influence over that. They're both -- the common theme between them is that we are attempting to address our cost structure in each of those 2, as I say, sets of circumstances or events, and so that's the common theme. But you really have different paths that those things are going on. I'll mention to you that we have seen no change in just the conversations or activity levels between the parties as a result of the lawsuit. So we don't have any concern over that being a negative factor.

Okay. I think in your prepared remarks, Judy, you mentioned some slowdown in the economy. Obviously, it's been fairly well-publicized. I'm curious from your specific vantage point, what you guys are seeing, how that's manifested in your business, if it has yet and what you're hearing from your customers? And then along those lines, if you have the numbers, I'd love to hear how tonnage declines progressed through the quarter.

Well, with respect to how the weakness in the economy has impacted us, I would say that we started to see some weakness from our expectations in about the third week of June. That was the week where you're expecting a lot of uptick in activity and it was a little flattish from what we had expected. And so, and then in July, when we look at what our expectation would be on a sequential basis relative to June, we're saying tonnage looks like it's going to be down about 3%. That's slightly worse than the historical average. So it's not terribly worse, but it's slightly worse. And again, sometimes, it's difficult to tell exactly what's happening in a month like July because of customer's businesses and activity levels and that sort of thing. But we're not hearing anything specific from customers that has been reported to me that would indicate anything negative. And so what I'm going to do, Justin, is turn it over to David and let him recite to you the tonnage by month.

Okay, Justin. Let's see, April was down 9.1%, all of these are total tonnage per day: April, down 9.1%; May, down 5.5%; June, down 4.3%; and then as we said earlier, July, I would expect it to be down about 3%. We're going to go ahead and move along.

And we'll proceed to our next question from the line of Scott Group.

So Judy, or Mike, I'm wondering, can you give us year-to-date revenue and operating income for Panther, just so we can think about a base for modeling in the back half?

We will give that to you offline. It's a part of what we're going to be filing with our 10-Q. And so to just kind of move this call along, we'll give that to you offline. But we have it.

Okay, perfect. That's great. I'll follow-up offline. So with the economy feeling like it's slowing a little bit, I'm wondering if you're thinking about slowing on a pricing a little bit and focusing a little bit more on tonnage. And then maybe with that, you're able to keep margins and LTL pretty flat year-over-year despite some pretty large declines in tonnage. Do you think that the environment of less worse tonnage but maybe less strong yield growth, if that's an environment where we can start to think about some margin improvement on the LTL side in the back half of the year?

Well, Scott, here's what I'd suggest to you and it's what I did, so I think it's a good exercise to go through. We went through this initiative to address the worst-performing accounts and we knew that there will be some tonnage loss associated with that, and we experienced that in the second half of 2011. But as we moved into this year, you could look at our first quarter results, look at our second quarter results and then compare the 2, because there is about 11% more revenue in the second quarter and about a 7 point improvement in the O/R. And that's the best indicator for me and should be you as to what we can do with additional business.

And how do you think about the margin question in terms of is this the right environment where we can see margin improvement in the back of the year, or is the goal to maintain margins like you did in the first half?

No, our goal is never to maintain margins, particularly when they're 98 3. Our goal is to get back to our historical margins, and I think what we're doing is to work through our account base to try to improve the profitability of it on an account-by-account level so that we do have the opportunity to grow the business more profitably as we go forward. When I look at our incremental operating ratios associated with our top 50 accounts, it's in a great play in comparison to history. And so what we need, as I mentioned before, is more business. And when you look at times where we have more business and do those comparisons, you can clearly see the margin improvement.

And we'll proceed to our next question from the line of Todd Fowler.

Judy, I just want to make sure I understand some of the puts and takes within the salaries and wages line here in the quarter. Maybe, it's a question for Michael. But it sounds like in the prepared remarks, there was some movement within workers comp, a little bit unfavorable in the first quarter, maybe a little bit of a benefit here. Can you guys hear me okay? [Technical Difficulty] So, yes. So I just wanted to follow up on the salaries and wages and make sure I understood the moving parts with workers comp and how we think about that, what the run rate should be going forward?

We don't think that's on our end. But not to say that it's pleasant, nevertheless. Todd, when we look at the salaries and wages line, I mean, as you said, there are lots of puts and takes. The workers comp cost in the first quarter were clearly out of line and what we saw in the second quarter was a normalization of that. And so we did see -- the other. [Technical Difficulty]

Okay. We think we may have it now. Something was going on that we can't explain, thank goodness. We'll extend that, Todd. Well, Todd, why don't we do this, would you be able to call back and we'll be sure that you get in the queue.

Yes, I'll get back in the queue.

Okay. We'll try to proceed to our next question from the line of Ken Hoexter.

Back on the union, when you look at the negotiations, can you address the major issues like pension and those kind of issues on the new contract? And if you can and when you think about the negotiations, what would ideal be for you? Just what can we start to look forward to in terms of the negotiations?

Well, the one question that you asked that I'll answer is that on the pension side, we will be able to address that in the normal negotiations process. But outside of that, we're not really going to get into the details of our negotiation strategy nor what we expect from the other side as we really don't feel like that will benefit us in a kind of a public view of that prior to the negotiations.

Understood. Judy, to your comments, you mentioned that market share is improving, but I just want to understand if volume's down and are you suggesting that the overall market is declining rapidly as well?

I don't think rapidly is a fair word. But we do have information for market share either to the month of June that indicates that we have gained market share. [Technical Difficulty]

Last one really quick is, just last September, I think your freight turned negative. So you've got some easier comps coming up. Is anything -- you're talking about the economy getting a little bit soft. I'm just wondering how you look at that just kind of as you move forward. Do you think we start seeing positive on the volume side or do you start using that price a little bit more aggressively, would it keep those volumes at these levels? Just wondering how you look at that going forward.

Well, no. I mean, we would not use price as a lever to grow tonnage because what we want to do is improve our company. And we know that if we -- the plan is to grow revenues profitably that you really can't do that. I think I don't know if you were on the call at the beginning, but I mentioned, I think to the first person that asked a question, that our pricing levels even as much work as we've done, which is a tremendous amount of work over the last year, our pricing levels are still somewhere in the neighborhood of 2008 levels. And that's something that is going to require a continued diligence on the negotiations of each account and on our contracts and deferred pricing agreements. And we are continuing to see good effort and good results in that regard. I do believe that as the economy improves, that we will be able to grow both. And if you look at last year's second quarter, we had a quarter last year where we grew tonnage and pricing by about 10% each. And we had a good result in terms of operating ratio improvement when that happened. Certainly, as we go into the next few months, it's going to be easier to report positive tonnage figures because of the declines that we experienced last year. But what we want to do is to grow our company and build a base of good accounts that are more profitable for us than -- we believe that, that is the process on an account-by-account basis that's going to return the historical profitability of our company. That, plus having a cost structure that is more in line with the market.

And we'll proceed to our next question. We have Mr. Fowler back in the queue.

So I just wanted to make sure I understood the workers' comp sequential year-over-year and thinking about that going forward, and I've got one follow-up to that.

Well, the workers comp, as you know, it was about pretty close -- it was between 1.5 to 2 points worse than history. And by that, we mean longer-term history, 5 and 10 year averages in the first quarter. The second quarter was much more normal. And so you do have the benefit of that as you do a comparison of second to first in the numbers. There's -- outside of that, the only other unusual aspect to it is we continued to invest in some sales folks, our customer service people in I,T in each of our business lines and we believe that those are investments that will pay off for us, some of those in the second half of 2012. And so it's a -- but with respect to workers comp, the unusual period was first quarter. Second quarter was much more normal.

Got it. Okay, that makes sense. And then just the last piece on the salaries and wages, and I can follow-up offline on the rest of the stuff that I had. But you did have the 2% wage increase in April 1, is that correct? And then do you have an estimate for what you're thinking on the health and welfare piece coming into August, and if you quantify kind of what piece that applies to from an expense base, that would be helpful.

The health and welfare piece is August 1. It's going to be about 3.7% increase on that and that flows into the -- I mean, it's in the salaries, wages and benefits segment.

And, Todd, when I think our cost there, what you got to do is think 75% of our people are union workers subject to that increase and about 1/3 or so of the cost associated with those people is health, welfare and pension. 2/3 of it is really their wages. And so that's really kind of how you think through that.

Okay, that's helpful. And then the 2% wage increase did come through in the second quarter?

Yes, yes. It was April 1.

We'll proceed to our next question on queue from the line of David Ross.

Was fuel a net positive year-over-year or net negative, given that there were changes both in the level of fuel prices and also with your fuel surcharge programs, I think, versus a year ago?

Well, it can -- when you look at what happened on the revenue line, there was actually less revenue from fuel surcharge in the second quarter. And again, we look at it on a total account profitability basis, and so that 4.7% increase that we quoted includes the effect of fuel surcharges. And so on a kind of an overall pricing basis, we had good results, particularly when you consider the 10% or so increase that we had last year.

I mean, if fuel hadn't declined through the quarter and kind of stayed at the April levels, would the quarter have been more profitable or less profitable?

Well, there's a lot of different factors that are involved there. We -- not only do you have the diesel fuel price, which is typically less than what we have on the fuel surcharge, you also have the factors involved with rail fuel surcharges and other elements of your cost structure that are impacted by that. So it would be hard to say.

Okay. And then going forward, the amortization, $2 million a quarter, it's going to be in what segment? Is that going to be in ABF or in Panther or...

It will be in Panther. Yes, it'll be in Panther. Yes, definitely. And that's going to be separated out. You can see, I mean, it's not much, but it was 2 weeks worth, but you can see that's at a separate segment if you look at the press release how we've handled it.

Okay. And last question, the union reaction so far to the Panther deal?

Really just fine. We had no negative reaction, no positive reaction, just kind of -- we let them know and they accepted that move.

And we'll proceed to our next question, the line of Tom Wadewitz.

Let's see, I wanted to ask you on competitive environments. It sounds like there is some degree of, I don't know if you want to say modest weakening in demand, it looks like the GRI there, most the GRIs are pretty similar. But how do you think about competitive dynamic and how you would expect pricing to maybe progress in second half?

Well, when you look at pricing for the second half, on a year-over-year basis, you're going to see what appears to be lower numbers than you've been used to seeing earlier this year and kind of toward the end of last year, and that's just because we had this initiative to address the worst-performing account. And now we're kind of -- it's business as usual so to speak, but business as usual is always an effort to get adequately paid for the value that we provide. So understand that. On the competitive environment, really not much change. We always talk about that at a monthly meeting that we have with the ABF folks. And when you look at the accounts that we gained and that we lost, we feel pretty good about how we're coming out there. No concerns, but not a lot of change from normal, is what I would say.

Tom, to reiterate what Judy was saying, third quarter last year, revenue of hundredweight was up 17.2%. And in the fourth quarter last year, it was up 12.8%.

So the 3.5 x fuel in July, that number will hit, maybe accelerate further because the comp gets more difficult by month, or is July represented of what the third quarter comparison looks like?

I would expect that we may see some weaker numbers in terms of the year-over-year, but really the best thing to do is to look sequentially. That when you're in this kind of a period and I think we reported that sequentially July compared to June is up about 2.5%, which is right in line with what you would expect given the general rate increase that occurred.

Okay, all right. And then a second one, with respect to the negotiation with the Teamsters, I think the last time around YRC was kind of dominated the discussion with the Teamsters and you had to wait until they were done. And then you maybe didn't have a lot of, I guess, opportunity to reach a different deal than they had. This time around, obviously, it's a different set up. Are there activities with YRC first that you think the Teamsters are going to do or is that essentially out of the way, given that they had extensions in some of their agreements?

I think it's out of the way. I think their agreement doesn't expire until 2015, at least as they've agreed to with the IBT. So I think that, that's a nonissue.

I will proceeds to our next question, the line of John Barnes.

Judy, with the commentary around deceleration in volumes kind of across the universe, I know you're going to get into easier comps in the back half. But if we are beginning to see some additional slowdown in the economy, do you have a plan in place on where you need to attack the cost structure, the things you can attack to make quick changes to better align your infrastructure with whatever that volume level may be if the economy were to slide into a little bit weaker position?

Yes. I mean, we have -- when you look at our business, the weekly activity that you have with ours matches up pretty well, but whenever you get into a rougher period, there are changes that you have to make in terms of the headcount that is dedicated to the business and make the appropriate changes. The trick in our business is to be able to see that quick enough to be able to react to it quick enough and have it implemented quick enough. And I'll be the first to say that in past periods, we could have done a better job of that. We are concerned about the PMI index that was reported, I think, last month, there may be a new number out there that I haven't seen yet, but are probably even out yet today. But there is a move down in the PMI index, so we're watching that. That causes us to think along the lines that you're discussing. And the only other factor there that I think is a positive, it's on the other side is housing. There's some indicators and activity for housing that are looking up and that's what's been missing from our business and the LTL market in general since 2006, since late 2006. So we have to be able to adjust and adapt to any environment, and I think we get better and better at that all of the time. We've increased the number of employees that we have that are utility workers that can do both loading and unloading and driving, and that gives us more flexibility in our network than in past periods. And the more that we continue to get those changes of operations through that give us that flexibility, the greater ability that we will have to have a variable cost structure. And so -- but we can look out there just like you can and see that there might be something to plan for. We're not going to say that there is or say that there isn't, but we will have a plan that is implemented and is appropriate for whatever business level we have.

We'll proceed to our next question from the line of the Jack Waldo.

I wanted to ask, could you tell me what -- you mentioned easier comparisons, do you have the July, August and September tonnage comparisons from a year ago?

Yes. David -- David will give them to you.

I sure do, here. Okay, July of last year was basically flat up 0.1%, but then in August, it goes negative minus 3.5% in August. September was minus 5.1%.

Okay, so the comps get materially easier. And, I guess, what I'm trying to reconcile is basically earnings in the second quarter were pretty flat with the year ago and if tonnage, looks like tonnage is flat with the year ago and at the end of the third quarter, and pricing is up from a year ago, aside from cost structures and then adding in the accretion for Panther, is there anything else that would be big moving parts to you guys duplicating the earnings of a year ago in the third quarter, which I think were $0.46?

Well, we -- I mean, I think if you have an environment where tonnage is flat or growing and pricing is up, you have a much better opportunity to perform better. I think that David pulled something together for me that shows that based on history, our third quarter is typically better than our second quarter by about 1.5 or something like that. And obviously, there's a range there of performance that we've had over the years. But we typically have some improvement as you move into the third quarter from the second.

And our next question comes from the line of Will Greene.

Can I just ask -- I know you guys mentioned earlier in the call, you wouldn't use price as a weapon to gain market share or whatnot. But what are you seeing sort of competitively? Are the GRI sticking broadly, that sort of thing?

Yes.

So others are not using...

Yes, we're seeing nice results on the general rate increase so far. It's early, but we're seeing expected and nice results from that.

So others are not using pricing at all in the competitive environment?

We haven't seen any evidence of that. There's always a story on a given account where you'll see that. But it's not a pattern or even something to get overly concerned about at this point. I think things are going along just fine on that front. And that's like I mentioned before, a couple times, that's where it needs to be.

Yes, exactly. And then just on July, the timing of the holiday, do you think that affected the comps at all? Were you profitable in the month?

Well, we really haven't closed the month of July yet to know that, but we have an expectation of profitability. And I think the comps are affected always by the timing of the 4th of July, but you can make arguments probably in any direction on that. Because of it being Wednesday, you could argue that well, maybe, people didn't do as much in terms of taking a long weekend or you could argue that they took the whole week. So there's a lot that you can speculate about on that. But we try not to speculate and just look at the numbers after we close the books.

I will proceed to our next question, the line of Tom Albrecht.

A couple of things here. Number 1, sometimes, you'll give the average contract renewal rate. Do you have that figure? And then I have a follow-up.

It's 4.5% for the quarter.

Okay, okay. And then, Judy, I was just a little bit confused about your July commentary, and I wanted to clarify that. So I think you said tonnage down about 3% year-over-year.

Right.

Did you give a figure on how much its varied seasonally versus June? You did mention that it seemed to be a little bit weaker seasonally.

It's slightly weaker. We look back at the past 20 years of history. In this case, 23 years of history. And this has hit right in the, I guess, 13 of 23 years is what it is. And so it's just slightly worse than normal. And again...

Can you put a figure on that? I mean, what is July normally do versus June?

Well, it would be down, and we're saying that it's 3% so that it would be down something less than that. It's not much different. It's hard to do that, Tom, because there's a range. If you look at all the years that are in there, you got some negative 4s, you've got some positive 1s. But we're trying to look at a longer period of history and give you an average, and that's really probably -- it appears to tell you more than it does. That's probably the way to think about that.

And the health and welfare increase of 3.7%, what is that, $0.50 an hour?

It's about $0.60, I think.

Yes, that's right. $0.59.

We'll proceeds to our next question, the line of Jason Seidl.

Judy, just a real quick one. When SAI [ph] reported, they talked about a benefit in the quarter between wholesale and retail spreads blowing out a little bit on diesel. Did you guys see a similar benefit, and how should we look at that for the next quarter?

Well, I think it's possible that there was, but you have so many other moving parts to that. Your MPG, the mixture of 2010 engines versus 2007, I mean, there's just a lot to that. And you see that, that's not -- they're reporting that, but that happened some time. And so -- and I have no way of predicting that for next quarter.

But did you guys see a benefit in the quarter from that? I'm just trying to get...

Well, I'm sure there probably was. We haven't looked at that to carefully study it because we don't think it was a really big factor.

And our next question is from the line of Ben Hartford.

I was hoping if you could talk a little bit about productivity during the quarter. If we look at pounds per employee, I know tonnages were down about 6%, shipments down 6% as well, salary, wages and benefit down about 1%. I assume we have some wage and benefit inflation in there. So can you talk a little bit about pounds per employee in the quarter with the tonnage and shipment declines and how we should think about productivity gains going forward in the context of some of the IT initiatives that you have ongoing?

Well, we had a little bit of a hit on productivity during the quarter. Our pounds per DSY hour were down about 1.7%. And then our pounds per mile were -- I guess that was about flat. So there's not really a concern there. When you have lesser tonnage levels like we did in the second quarter, when you're looking year-over-year, you're going to have some impact. So it's not surprising that there's an impact here. But the way to think about that is if you have more flattish tonnage comparisons or a lesser tonnage decline. You're going to have better productivity statistics, generally speaking.

And our next question comes from the line of Jeff Kauffman.

This is actually Ryan calling in for Jeff. I have a question about the capital plan for 2013 and how the Panther acquisition would affect that...

You said the capital plan? I'm sorry, Ryan, is that what you said?

Yes, yes. The capital plans...

I think it's maybe $1.5 million additional CapEx from Panther, and that's it.

And that's it? Okay.

Yes.

Because you had mentioned the Panther call, right. You can do -- see some aggressive growth with that, both the economic headwinds out there, has that thought changed at all and slowing down maybe? How fast do you want to foresee that?

Well, no. I mean, you absolutely want to pursue it at the highest level that makes sense for your organization. So our enthusiasm for pursuing growth with Panther has not dampened. It may be impacted by economic conditions, but we still believe that it will -- that business will have above average growth relative to our core business. And that the thing that makes me most confident in that, is that they have really been saddled with a great deal of interest expense and cash resources devoted to that cost under their previous ownership that is not there today. And they have a much better capital structure for that business. So when they see business opportunities, we are actually able to act on those fairly quickly. Most of those business opportunities are going to come through people additions to their organization that can really add to the revenue base that they have. And so -- but we have not changed our view of the -- the growth that we expect out of that business. But I'll be the first to say, I can't necessarily predict the economy, and if the economy is headed in a rough direction, that will impact that.

Just for clarification. I'm not sure if you had said CapEx year-to-date or CapEx for 2013, but it's $1.5 million for the remainder of this year and probably an annual run rate is about $3 million for Panther on CapEx.

We'll proceeds to our next question from the line of Matt Young.

Just a quick question again on the CapEx. What would you, for 2012 or 2013, how much would be associated with equipment spending and would you expect that run rate to change? I think you've mentioned in the past $55 million or so?

Yes, I think that's probably about right. Our total for the year is $80 million to $90 million. And Michael, do you have the revenue equipment part of that?

Yes, we're currently -- it's at, yes, $47 million for the year, and we're currently at $40 million total CapEx for the year. That's not net, it's about $37 million net. And again, like Judy mentioned, $80 million to $90 million.

Okay. Just one last question. It's sounds like for the most part you're keeping Panther separate. But have you given any thought to combining your legacy brokerage and Panther's brokerage operations, perhaps to capitalize on buying scale and such over time?

Yes, that's something that we will be talking about. We have a good smaller, but a really good operating platform that we currently have in a subsidiary called FreightValue that -- and then Panther has a solution for truck brokerage, and that's something that we're going to evaluate and do the thing that is best for the customers.

Okay. Well, I think that concludes our call. We appreciate you joining us this morning. And our call is now ended. Thank you very much.

Thank you. Ladies and gentlemen, that does concludes the conference call for today. We thank you for your participation and ask to disconnect your lines. Have a great day, everyone.