Good afternoon, ladies and gentlemen, and welcome to the C.H. Robinson fourth quarter 2009 conference call. At this time all participants are in a listen-only mode. Following today's presentation instructions will be given for the question-and-answer session. (Operator Instructions). As a reminder this conference is being recorded Tuesday February 2nd, 2010. Now I would like to turn the conference over to Angie Freeman, C.H. Robinson Vice President of Investor Relations. Please go ahead, Ms. Freeman.

Thank you. On our call today will be John Weihoff, CEO, and Chad Lindbloom, Senior Vice President and CFO. John and Chad will provide some prepared comments on the highlights of our fourth quarter performance, and we will follow that with a question-and-answer session. I would like to remind you that comments made by John, Chad, or others representing C.H. Robinson may contain forward-looking statements which are subject to risk and uncertainties. Our SEC filings contain additional information about factors that could cause actual results to differ from management's expectations. With that I'll turn it over to John.

Thank you, Angie and thank you to everyone who has taken the time to listen to our fourth quarter conference call. About an hour ago, we sent out our press release sharing our fourth quarter results for 2009. I'm going to start by highlighting just a few of the key financial results on the release. For the fourth quarter ended December 31, 2009, our total revenues increased 2.7% to $2 billion. Our net revenues decreased 1.5% to $339 million. Our income from operations increased slightly to $142.8 million. Net income decreased 1.3% to $87.7 million and fully diluted EPS was flat at $0.52 a share. For the year ended December 31, our total revenues declined 11.7% to $7.6 billion. Net revenues increased 0.5% to $1.3 billion. Our income from operations increased 2.3% to $584.8 million. Net income increased by 0.5% to $360.8 million, and fully diluted EPS increased 2.4% to $2.13 per share. In addition to those high-level financial metrics, our press release gives more detailed growth percentages by our various service offerings. In our third quarter earnings release and conference call, we discussed that our trends finishing the third quarter and into the first few weeks of October showed improving volume growth in most of our service offerings, offset by gross margin compression that we would normally experience during this part of the business cycle where the demand relative to supply is tightening, but overall capacity is still more than adequate in the marketplace. That trend continued throughout the fourth quarter. In general, during the fourth quarter, transaction volumes increased, but were offset by price decreases resulting in generally flat transportation gross revenues. Our transportation net revenue decline of 4% was driven by gross margin compression. The economic recession began having a material impact on us during the fourth…

Thanks, John, I want to give a few comments on our cash flow and balance sheet. We had another strong cash flow quarter. Our net cash provided by operating activity was $130 million. Our CapEx totaled $5.5 million for the quarter. Our significant investments we made in the data center were completed by the end of the third quarter. We expect our 2010 capital expenditures to continue at approximately this level in total between $20 and $25 million. Our net cash used for financing activity was $125 million for the quarter, resulting primarily from share repurchases and dividends. We repurchased 1,571,000 shares at an average price of $57.25. Our balance sheet remains strong with cash and investments of $386 million. Our investment income was, again, down significant compared to a year ago, due primarily to the change in yields on high quality short-term investments. We are continuing to closely monitor and manage our accounts receivable risk, and will continue to react to changes in our customer base. Although our provisions for doubtful accounts and write-offs have been higher than in previous years, we feel good about the quality of our current receivable portfolio. Our total provision for doubtful accounts was $3.1 million for the quarter, compared to $4.3 million for the fourth quarter of last year. It is difficult for us to predict what this expense will do in the future, but we do feel comfortable with our current level of reserves. With that, we will begin our question-and-answer portion of the call.

Ladies and gentlemen, at this time we will begin the question-and-answer session. (Operator Instructions). One moment, please, for our first question. And our first question's from the line of Alex Brand with Stephens Inc. Please go ahead.

I guess I want to try to get a little color from you guys if I can on the transition from the upper end of gross margin ranges to the lower end, maybe a little faster than I would have thought, and specifically, can you help us understand if your truckload volume was up 13%, your price was down 6%, your LTL net revenue was up in the quarter. It seems to me like there is a gap there that I can't quite fill for how much truck net revenue was down year-over-year or sequentially, whichever way you want to look at it. So I know that's a lot, but…

Yeah, well, I can start with a comment, and then Chad can fill in with any further inside we might be able to share on the changes, but in terms of, the transition happening rather quickly from kind of the range of margins, I think Alex the theme that we've been trying to talk about for the last year or so is that while we feel like our business and volume and margin fluctuations are happening similar to how they've happened over the last couple of decades. They are sort of new extremes in the last year, with the year-ago volume drops being more severe than anybody really had since deregulation and at that time, I think we were pretty open that our margin and our profit per load was expanding as fast as it had ever expanded, so that when you come around a year later, and you get in to that same part of the cycle, we're seeing pretty aggressive volume increases, but we're also seeing the volume swing back to the other end of the cycle. So, our summary of it is, that it feels like it's happening like it always has. It's just probably with a little bit greater speed, and a little, bit wider ranges of what we've experienced before.

Okay. I guess the confusing part is truck capacity hadn't really tightened up that much, and truck rates don't seem to be going up, so all of this compression is taking place at the customer level, the prices you are getting from customers, more so than capacity-rate increases?

When you look at it compared to a year ago, our prices to both our customers and carriers were down about the same, around 6%, but since the price to our customers is a bigger dollar amount, when you reduce both of those numbers by about 6%, it reduces profit per load, and it also reduces gross profit margins. So just because the price of the two numbers changed about the same compared to a year ago, that still results in margin compression. Also, when you look at it sequentially, our pricing to our customers was roughly flat compared to the third quarter of this year, but our prices to our carriers started to rise a little bit compared to the third quarter of this year. So our cost of hire did go up in the fourth quarter compared to the third quarter, but the pricing to the customer was about the same.

Chad, one more quick question so I can stay with Angie's rules. Can you give us volume in weight per shipment for LTL for the quarter?

LTL volumes were up near 40%. Weight per shipment was down 11% or 12%, and pricing was also down, and margins were slightly down.

Our next question comes from the line of Bill Greene with Morgan Stanley. Please go ahead.

Yes, just a quick question on past cycles. If you looked at the time lag between volume growth and margin stabilization, you mentioned this, you've got more volatility, and more speed now. What's the past usually look like, how long does it take before we get to stabilization in the margin?

You know, it will vary, so I think, as we look at our business model, and you say, how do the cycles work, and what's the next trigger point to look for, as supply and demand starts to come more into line, that the next inflexion point if you will, would be price increases. When is it appropriate or when are we able to charge customers more and see market pricing move back up? And that generally happens as we discussed before when there are either service failures or customer's experiences get deeper in to the route guide. That could happen in a period of months. It could wait a year or more until prices adjust. So it really kind of depends upon if the demand stays strong, we'd obviously expect to see price increases in general happen sooner. If volume demand gets softer again, pricing could stay where it's at, and margins could then tend to go more sideways. So, it really depends upon the correction of the demand, and how fast the supply and demand relationship tightens up.

Did I understand in your opening remarks to say you were using price to win share earlier?

No, we always believe that we're pricing to customers and carriers at the market, and that we make our margin by providing the services that we do. Those fluctuate of supply and demand. So what we're trying to do is just focus on selling and account management and winning new business as aggressively as ever, but our philosophy and approach towards pricing would be similar to how it's always been.

Just one quick follow-up on restocking. There is some data out there that suggests inventory is very low. Other signs that inventories have started to rebuild. What's your views on what you're seeing from your customers? Are their inventories very low? Have they started the restocking? How does it look? Thank you.

We don't get great visibility to the overall inventory data. I know that a year ago there was a lot of discussion with many of our customers about managing inventories lower, and trying to free up working capital. So, our experience would correlate with the data that inventory levels were extremely low. How much of the incremental freight volume is going to replenish inventory and how much of that are true sales that our customers already have or have committed, we don't really get good visibility to that.

Thank you. Our next question comes from the line of Edward Wolfe with Wolfe Research. Please go ahead.

When I look at the gross yield in the quarter, that's not what surprises me as much as the gross revenue being lighter, and obviously there's a relationship there, but I think there was a lot of expectation that as truck pricing tightened, your yields would tighten, not as truck prices remained weak that your yields would tighten. Is that just me being wrong, and some investors thinking about it wrong? Or is that how you guys have historically thought about it as well?

I would say that tightness, and therefore our yields are a function of two variables, it's obviously the overall demand and then the supply side of it. And Chad's comment earlier about sequentially supply side increasing, and supply side contractions was probably the more relative relevant variable for this quarter. So, the tightening and the margin compression comes when the market tightens up, not necessarily when the price side or the gross revenues to the customers move. It can be either/or.

Our truckload costs adjusts on a daily basis. We talked about this many times, but changes in our cost to capacity happen far more quickly than changes in prices to our customers. So the fact we had a slight sequential increase in our cost capacity, to us it makes sense there is a tightening in that revenues based on how described it in the past.

If I look at your yields of 18.3, that's what I had in my model. What's short by quite a bit is the total revenue piece of that and I have heard you say the cost of your capacity, and what you are charging your customer, both are down similar levels, and now it just sounds like I heard you say that the cost of the capacity went up, or isn't down as much as what you are getting?

Maybe I was unclear. When I was talking about changes in prices that was excluding the impact of fuel. So total rates moved more like 10% down. If you only include the underlying rate excluding the impact of fuel is 6%. So I think all of the comments are consistent.

Does that mean you are having trouble passing the fuel through, but you are taking the fuel increase from your drivers? How do we think about that?

No. It means that our cost to capacity has begun on a sequential basis to increase, but the underlying cost, the underlying line haul rate excluding fuel has started to sequentially slightly increase, but our prices to our customers excluding fuel have stayed about the same.

As we look at gross yields for truck and transportation, 4Q to first quarter, which is obviously a seasonally weaker quarter, but it sounds like it is going to be down first quarter relative to fourth. Is that the right feeling I'm getting?

I don't know that we really have a forecast for it sequentially because January and February are always so much different than the fourth quarter. What the prepared comments said, and all we really know at this point is that year-over-year volume growth continued to increase in January, so it was up more than the 13%, but we're running into comparisons a year ago where our profit per load and margins were very high. So that it comes again about flat in that revenue. How the total quarter will compare to the fourth quarter, is difficult to predict at this point.

If you look at the first quarter of '09, our total net revenues were $338 million, compared to the fourth quarter of 2010, we're at $339 million. So roughly the same number and so far, we're roughly flat. January compared to January on a per-business day basis.

Our next question comes from the line of Justin Yagerman with Deutsche Bank. Please go ahead.

The implication if net revenues were roughly flat in January and you have seen a continuation of this compression trend, is that the volumes are growing materially here. Is that the right assumption? And I guess what kind of yields are you taking on new volumes at right now if that's what is going on, and where do you think that market share is coming from?

We're doing what we have always done, which is when the market starts to tighten, that there will be incremental freight opportunities in the marketplace, so being very active selling, and, cross selling, outsourcing, and all the different modes and services that we do, we feel that the additional tightening in the market is what's giving us a good opportunity to go out and get market share and increase the volume. I've mentioned this several times on past calls, but if you accept the fact that margins are going to fluctuate, they have for the last 30 years, and they will continue to, that there will be supply and demand fluctuations. We really focus long term on the value of growing market share and growing volume and expanding those customer relationships knowing that at some point if we can continue to increase our presence, build the relationships that the margins will fluctuate back the other way on us. So our overall summation of this is a year ago industry volumes dropped 20%. Our volumes dropped double digits, but we had margin expansion and roughly flat net revenue. Now we're seeing the other side of the cycle where there's good opportunity in the marketplace to go get more volume. Our margins are not out of the range of what we would consider acceptable. They are just on the lower end of the range compared to a year ago when we had very high margins because of the great availability of capacity at the time. So our approach is that we're doing what we have always done. We're building relationships, we're selling, we are going out and trying to aggressively take market share, and we have to live through the normal fluctuations of margin expansion and margin compression that obviously have an impact on our earnings, but to us it's a normal part of the cycle, and we're really focused on the long-term value of expanding our presence in the market.

Can you tell if it's market share or if it's economy?

Our best information would be all the same indexes you are looking at with ATA and Cass and everybody else who publishes it and we're pretty confident that our volume growth throughout the entire year has been better than those average indexes. So, yes, we feel pretty good that we have continued to take market share, especially in LTL, and some of the other areas where we feel like we have a more of a specialized competency, but across the board we feel pretty good that we're expanding our relationships and taking market share.

On the LTL side with that becoming a bigger piece of the total and you guys having grown this cycle, how do you think about that over the next year with the potential for large capacity exit and what that could do to pricing, and do you think that that is something that could potentially delay any margin recovery relative to past cycles if you start getting any kind of sharp pricing change in that market place?

Whenever there is abrupt capacity adjustments for whatever reasons, it is certainly ripple through in terms of price adjustments, some prices could up, some could go down, business will realign and display, so it could certainly have a material impact on it. We feel like our relationships are pretty broad and pretty solid, so that we can help our customers through whatever type of environment happens, so I don't think that kind of an abrupt change is necessarily a real good thing for anybody in the industry just because there would be a large degree of displacement, but I think the industry would get through it and we would too, and we would do exactly. What we have been doing all along is get out and sell and try to get everybody through these relationships with greater participation and more freight going through our network.

Our next question comes from the line of Chris Ceraso with Credit Suisse. Please go ahead.

There has been some talk about the upcoming bid season, and that might bring some relief on the pricing front especially in the truckload market. Will you experience relief from that at the same time, or are you going to feel a lag if pricing is going up with customers, maybe not as fast as what's happening with carriers? What's your expectation for the upcoming bid season?

Well, every bid is a unique circumstance, we don't do centralized pricing and from a top down. We're working relationship by relationship across the network to adjust to what makes sense. I would say as a general statement when prices in the market move, we move with them. That we're not leading by dictating a certain price increase or trying to, state it in the marketplace and hope that it sticks like a lot of the large asset providers might be doing. We're more participating in the bids, and trying to adapt to the market to whatever it changes. So if prices start to go up, and if bid prices start to increase, we would benefit from that at the same pace that everybody else would. But, again, in our network, there is no defined date to razor decrease prices. It's thousands of relationships that each have kind of unique dates and terms in terms of how and when they reprice. So for us it would just be a matter if that market continues to tighten and capacity becomes more difficult to get, cost of hires continues to increase, you start to see service failures, and people experiencing the need to go deeper in their route guide to find capacity that works for them. Those are the environmental things that we would look for to indicate that is appropriate to start raising prices to a customer.

So it's not clear, you would have to look at it on a case-by-case basis. You can't say that the bid season would put incremental pressure on your margin?

That's correct.

You've had in the release the change in your net revenues in your air and ocean businesses and I understand those are relatively small businesses for you, but what was the gross revenue change in the quarter? Adjusted for the acquisitions?

We don't disclose gross revenues by mode, but I can tell you on ocean our volumes were down about 14%. So it made up about half of the net revenue decrease. And generally prices were down in double digits, near 20%.

And what about air volumes?

We gave the number excluding acquisitions. It's about 10% down, excluding acquisitions.

That was the net revenue, volume was the same?

Yes, about the same.

Our next question comes from the line of Jon Langenfeld with Robert W. Baird.

I understand the formula where you are taking the net revenue and the profit, if that goes negative, does that basically zero out that minus 5%? How does that work relative to the multiple vesting years that you have in place in 2009 and moving into 2010?

Right, so you are talking about the performance-based restricted stock, not generally incentive comp?

Correct. Thank you.

The formula is the average of operating income growth, and earnings per share growth, and add 5%. So on your assumption, at 5% down on average for those two measures, there would be exactly 0% vesting. At 6% down, there would be 0% vesting.

Okay and that would be the same for both plans?

Yes, all of the awards we do have, those performed-based restricted stocks have all had the same vesting formula. There are other equity programs out there that don't follow that, but all the performance-based one which are all the material currently awards in place use the same formula.

Then as far as the sourcing side of the business, is there any shift from any of your bigger customers to do that in house and not go through a broker? There was some noise or some PR that Wal-Mart was going to insource more of some of its direct store-delivered products including some of the produce. Does that have any impact on you, are you seeing any broader trend out there with respect to that?

I would say there's not any trends that are new or different. The one customer that you referenced has made some statements that will change our business relationship with them. They are leveraging their global network to the best that they can, and there are certain commodities that they are going to source directly. Many of those commodities, we've not been involved in the past, because they are high-volume commodities that they've been able to source themselves in the past already. Just like in transportation, our core strengths tend to be in the more fragmented or decentralized commodities. So just with that customer, just like every other one, there will be a constant fluctuation of what commodities they are going to source themselves versus what they would source from us or through anybody else. So, there will likely be some more opportunities for us, and there will likely be some products that we sell less of them as they try to leverage their global procurement a little bit differently.

Do you see a long-term growth in sourcing, being any different I think, what the latest number was mid-to-upper single digits?

We think that's still a good number, yes.

Our next question's from the line of Tom Wadewitz with JPMorgan. Please go ahead.

Yes, good afternoon. I guess you've been asked quite a few questions here on the gross margin progression. I am not sure if I'll get a new angle on it here, but I'll give it a shot. When you look at the way the market could play out, it seems that, there is demand improves, maybe capacity tightens a little more. It seems reasonable to think you can get some tightening and if you look at second or third quarter this year that the market could feel quite a bit tighter. Is it reasonable to think that you probably see more gross margin compression in that type of a scenario or is there something that really helps you avoid that?

Well, the primary thing we've been talking about is gross margin compression compared to a year ago, because there was a unique environment a year ago where freight volumes dropped more than they've ever dropped since deregulation. So, the biggest variable of margin compression or expansion that we've been talking about is year-over-year comparisons which will by definition, change as the year wears on and comparisons start to change. What will happen sequentially has a lot more to do with, the variables you were talking about, about what does overall freight do? How does the capacity turn impact it? And when do price adjustments, if any, occur? So there are some comparison things that will drive margins looking better as the year wears on in a pretty material way, but when and how they'll become favorable to a year ago, really depends upon the market conditions.

And then in terms of the cost side and how that might look for you, the operating cost side, not the transportation cost side. In 2010, what can you do on the SG&A line? Is that something, in this type of environment maybe you'll hold it flat? And I guess in terms of headcount, you are in an environment where you are handling more transactions, so you are doing more work. At some point it would seem to indicate you would want to bring on more employees, but I don't know if that's more of a 2011 event. So any thoughts on the kind of headcount and also the SG&A costs in 2010?

Yes, so I'll start with the headcount. At the beginning of this year, we talked about the fact that we were staffed up for growth. We started 2009 with 8% more people than we had at the beginning of the previous year, and in January of 2009, volumes were down double digits. So much of the staffing adjustments that we made throughout the beginning half of 2009 was to bring us back to something within our productivity metrics, and within a better range. So as this year has worn on and as volumes have come back, we've started to feel better and better about our productivity metrics being in the middle of the ranges where we would like to see them from a long term. So we feel like we have good flexibility to continue to take on growth without adding people for some period of time. If volume growth continues to stay very strong throughout 2010, we will have to add people. And again, these are generalizations, there are some offices who are adding people today, and there are some offices that would still be overstaffed, but, looking at the network in aggregate, we feel like we've got adequate people for today's level of activity, and as the year goes on, we've got a very good process for recruiting, and adding to the team, and training, and getting them pretty productive pretty quickly. And our strong hope is that we need to do that during 2010, and that will continue this level of volume activity and build our networks, strengthen our team, get back on the hiring trail, and then when the margins level off, we can all start talking about supply chain and transportation again rather than margin fluctuations.

And then any quick thought on SG&A?

I don't think it will change significantly in relation to net revenue. When you look at it for the past couple of years it bounces around $1 or $2 million, but it stayed relatively consistent through this period, so if the business in a flat net revenue, expecting flat SG&A would be a reasonable expectation and if we start to grow, it will grow, but hopefully we'll gain some leverage. One of the big variables is obviously the bad debt expense that we've experienced over the past couple of years, and if the general economy gets better, we'll likely have reduced bad debt expense as well.

Our next question comes from the line of Matt Troy with Citigroup. Please go ahead.

I wanted to change the emphasis from the year-over-year comps which we know are tough to a more sequential-based analysis, working in the fourth quarter as our base. What's your sense if you look across the system on a transport side, LTL side, what's the mismatch that we should begin to think about if we have to scale this wall of worry on capacity, not tightening sufficiently enough to cause the systematic failure, to cause the pricing power? Is the disconnect 3% to 5%. Do we need to just see a low single digit improvement in volumes off of what we saw in fourth quarter to begin to elicit that kind of failure or just help us maybe sequentially from here, what kind of spread you see on the capacity and supply demand and balance that helps us get over that hump.

That's a good question. That's very difficult to answer, and it varies quite a bit by mode, obviously LTL and intermodal and some of those modes where you have a greater component of fixed capacity, the level of excess capacity and what types of adjustments would vary quite a bit. But for our largest chunk of revenue on the truckload side, what our transportation leadership has talked about is that if you rewind the clock, 15, 18 months and say that capacity was generally balanced, there was probably fluctuations throughout 2008, but as you get to the end of 2008 when you start to see 17%, 18%, 19% industry drops in freight shipments and demand, you're starting out the year in 2009 with a pretty high degree of excess capacity. And throughout the year in 2009 we talked about that capacity correcting down, large carriers, parking equipment, Small carriers filing bankruptcy, and then prices adjusting downward on the shipper side. So as we get in to the second half of 2009, you start to see price stability on the shipper side. So you've got rates in the marketplace that have adjusted, capacity continuing to gradually correct down. We've heard estimates that make sense to us that I think you said it as well, that there's maybe 3% to 5% still excess capacity. The exact amount of excess capacity varies month-by-month and season-by-season with any year. So, normally January and February are seasonally a little bit slower where you would see kind of excess capacity. So it feels like to us today that there still is plenty of truckload capacity in the marketplace. The issue will become when you get in to the spring, the March and April timeframe, and demand starts to increase, how much of it's been inventory, how much of it is new sale, how much of the capacity leaves us in the February and March timeframe and doesn't renew their operating authority. So it's low to mid-single digits, but, you've got two variables that are pretty aggressive, and the freight demand side of it is much more volatile, and the fluctuation in the demand side or the freight side is probably what will really cause the inflexion point to change.

Thank you. That's actually very helpful. My second question, whenever you have a margin squeeze story on a high multiple stock, the conspiracy theories always emerged that something is different about the story. I think we can all agree relative to past cycles that what's different is the depth and breadth of this downturn, but from an industry-watcher perspective there's not much different in terms of the competitive dynamic or your model. Help me though just address one variable I could ask about, and that's the change in the competitive relevance or behavior from some of the asset based carriers or newer asset like models that have emerged in the space that did not exist at the same size or scale as they do in this cycle. And are you seeing any more aggressive bidding by those folks? Any change in their behavior that leads you to believe they'll have an impact either on pricing or margins come out of this downturn. Thanks guys.

That's another good question, and we do think the landscape continues to change, and obviously there are competitive factors. The thing we talk about a lot that was when people get in to third-party services, or another person puts up a brokerage sign or whatever, and asset players evolve, and their approach to the marketplace, all those things do have potential relevance to the long-term marketplace, and margins and pricing and all the rest of that stuff, but all that happens over a very long period of time from our assessment. It takes years and years, and perhaps (inaudible) for those sort of competitive landscape things to adjust. When you see the types of margin swings that we've talked about in the last 12 months. It's almost entirely due to supply and demand relationship in the marketplace by our assessment versus any sort of competitive impact. So, while the competitive impacts are real, and we would not in anyways dismiss them, trying to quantify or measure what might be different now versus 12 months ago, due to the competitive landscape, that doesn't even really come up in our assessment. It's truly just the supply and demand fluctuations in the short-term. And when we think about how we price compared to others and how many third parties there are, we don't have a clean number on it, but our assessment would be there are far fewer third parties and intermediaries and licensed brokers today just like there are fewer truck lines out there as well too that the market contracts on all fronts. So we'll try to keep a sense of that and stay ahead of the market and adjust for it as it goes, but when you look within any year within any shorter period of time, our assessment would be that whatever competitive impacts there might be are very minimal.

Our next question comes from the line of John Barnes with RBC Capital Markets. Please go ahead.

Two questions here. Number one, and again, I hate to keep beating the dead horse, but from a gross margin perspective, spot business versus contractual. I guess I'm assuming on a spot basis, kind of day-to-day, you would be better able to marry those rates that you are changing to the customer, with what you are having to buy capacity, whereas your contractual rates you would tend to get a little bit more squeezed on. Am I right in thinking about it that way? And, can you give us a little bit of color about where you stand, kind of percentage breakdown of spot versus contractual, and was the big move or the big margin squeeze on the contractual side and is just basically a timing thing until you can reprise that business?

Yes, the way you described it is accurate that there is more obviously fluid pricing on the spot versus the contractual stuff. I think over the last couple of years, we've talked about the fact that it's helpful and relevant to understand the universe of our freight by thinking of it as a continuum, where on one side of the continuum you have firm price commitments for a year or whatever period of time that you're going to honor unless the market moves significantly or that more contracted pricing. On the other end of the continuum, you have the pure-spot market stuff where you don't really know when you're going to get the next load or where it's going to go to or what it might be priced at and obviously on that freight you can adjust prices daily and you can protect your margins a little bit better. In the middle, there is the majority of the freight where there are bids, there are price indications, there are historical prices that we've quoted and moved freight at. There may not be a firm contract or a firm expectation to do it, but there is pricing in place, so there is a historical inertia to it that even though your cost of hire might go up a few cents a mile, you still have to make the decision on whether or not it's the right time to change prices to the customer, and given the fact that there's still a lot of capacity available in the marketplace, and we're happy taking the market share, it doesn't feel for the most part that a lot of that's appropriate at this point in time. So while our balance of contracted or pre-bid freight kind of fluctuates back and forth depending upon the environment, there is not a huge percentage of the freighted today that re-prices daily to the customer like it does virtually all of it on the capacity side.

Okay. All right. And then the second question I have got is longer-term, you have had this kind of 15% growth target out there since the company went public. This target has got some, got a little age on it now, I'm just kind of curious, where do you get the confidence from that is still a good growth target, especially given the size of the business now, and what have you done to kind of go back and test those variables to make sure that what you used when you went public in coming up with that target is still relevant today?

Good question. So, our targeted 15% growth rate that we have used since we went public 12 years ago, was derived when we went public look back over the 20 years before that and calculated that we'd average little bit more than 15%. For the last 12 years up until a year ago, I think our average was 17 % - 18% since going public in the low 20s from an earnings stand point, but we had always said it's an average. Margin fluctuate, growth rates fluctuate, but it's averaged 15%. In that first 20 years since deregulation there were some low single-digit growth years, and there were some 15% - 20% - 25% years out there. When we had some 30% growth years in 2004, 2005, a lot of people asked us why we were still talking about 15%. And we pointed out then that rate cycle and growth rate cycle, there could be down times. So when we look at how we performed this year with roughly flat net revenue and you look at kind of the extremes of the market cycles and what happened with the recession and all the rest of that, yeah this is kind of a hopefully a low point in terms of the pluses and minuses over the last 30 years. But then you step back on it and look and say all right, what are the long-term trends that are driving our market share and driving our business? And like I said in my prepared comments, it's about greater emphasis on fast management of inventory, higher service transportation, integration of modes, globalization of supply chains, and doing all the forwarding services. We look at the longer-term trends in our business relationships, and the fact that today more and more of the customers want to talk about this holistic approach of managing costs down and outsourcing, and looking at all modes of transportation, trying to consolidate freight more aggressively. There just seems to be as much momentum as ever in terms of what we would define as the long-term volume market share growth drivers for us and we are still a very low percentage of the overall market. So that's our assessment, is we think we can keep doing for the foreseeable future what we have been doing for the last 30 years. The market conditions if anything seem as good as ever in terms of receptiveness to our third-party approach and the types of ways that we are trying to add value. Volume and market share will be the long-term growth driver, and measurement of our success and as long as margins continue to fluctuate within those historic ranges, we are just going to have to live through conversations like this where they get on the low side of it.

Thank you. Our next question comes from the line of Ken Hoexter with Merrill Lynch.

John can you just talk about the on the truck load side you talked about the capacity side a bit. Can you talk about what you are seeing in the market right now? Are you seeing kind of the acceleration of that cost increase? Have you seen that level off? Just wondering where you think we are on that cost side?

Well, it feels to us like, rates to shippers, rates in the marketplace came down aggressively in the first half of 2009 and sequentially have been staying relatively stable. You see more customers talking about maybe a two year rate or trying to lock in feeling like maybe we are reaching the bottom of the cycle from a pricing and lose market stand point. The correction on the capacity side gets tougher to be precise about for some of the things that I talked about earlier, that you always have normal seasonal fluctuations where January is not historically a real high demand month so, it gets tough to gauge the overall market sense, but our sense was that during the second half of the year in 2009 that capacity continued to grind out of the marketplace slowly and that towards the fourth quarter and end of the year, when we saw some, moderate increases in demand and sequential tightening of the market, we were able to get good volume growth particularly compared to a year ago, and we saw some of that squeeze starting to come. So where we go from here? That's really hard to say if it gets down to literally tens or thousands of individual truck lines and businesses making decisions on whether they are going to carry on or out or whether they are going to run out of money, or when they are going to ask for price increases, and all of the rest of that. So it really could go either way. I mean, it really depends like I said couple of times, that demand side of how does the overall freight demand compare to that universe of capacity.

Okay. And then just a follow-up on D&A. Chad, did I see that right that it jumped quite significantly in the quarter? Up to over $8 million? Just wondering if that I'm getting that math right, then why it jumped so much, and then talk about what you are doing with the cash?

The D&A jump would have to do with two primary signings. One being the acquisitions that were closed during the second and third quarter. So some of them that were closed in the third quarter did not have a full quarter's worth of amortization in Q3, as well as the data center coming online. That also only had a partial quarter in the third quarter. As far as the cash, we are continuing to manage the cash the way we always have, very conservatively. Today its split between municipal bonds and municipal money markets. And we are managing the balance by adjusting our share repurchase activity.

Thank you. Our next question comes from the line of Matt Brooklier with Piper Jaffray. Please go ahead.

Good afternoon. I guess another truck gross yield question, if you will. Has fundamentally the way you guys book your transportation costs and pass those transportation costs through to your customers has that changed at all?

No.

Okay. And then I guess the other end of that is kind of the pricing component here, and I'm just wondering given kind of the downturn that we have been in, we have been in kind of a freight-starved environment, and we are starting to see a volume pickup at this point in time. Would you guys approach this business and the potential to take more market share, would you be willing to may be give a little bit in terms of price to lock in with new customers or with a larger portion of current customers? Take a little bit more market share, give a little bit more on price and then think about taking rates up as we move forward, and I guess capacity tightens a little bit more?

During this part of the cycle, the supply and demand cycle, we will always be chasing volume as aggressively as we can, because when freight market starts to tighten up, that's a good opportunity to go get volume in the marketplace, and customers none of us are open armed waiting for price increases. We all know that those are challenge to get in any industry. And so it takes like we said many time those service failures are a little bit of disruption to allow for that to happen. So, we would be approaching the marketplace right now exactly the way we always would during this part of the cycle which is to go get that incremental volume. Any unplanned volume any unbid volume anything that falls through the route guide, any capacity that leaves the marketplace is an opportunity for us to go in and try to fill that void. So, yes, we would be working the customer side or the volume side as aggressively as we can. If you think about our labor and our focus and kind of how we are managing the business, there are period of time in the cycle where we have to dedicate a significant amount of our effort to finding capacity and working with the trucks to try to get it in to our network. Today we can spend a lot of our energy working with the shippers, working with the customers, trying to get more freight because capacity is more available. So it does differ in different years, different parts of the cycle and yes, we are going out and getting volume now that we would hope would have better margins in the future. I don't want to describe that as something different than what we have been doing in the last 25 years.

Okay. So nothing different, you guys don't have a mandate in terms of getting more aggressive on price to hit maybe some incremental volume levels here with the volume pickup and with the tightness in capacity. It's kind of business as usual for you guys?

Correct. During 2009, we did talk about the fact that prices had to come down, that with this type of capacity adjustment, there were a number of bids that we participated in, and relationships where we talked about pricing does have to come down and it did. And now we are saying that prices are relatively stable, so it's not a great time to go out and ask for price increases, so our transportation leadership team and our network would be, sharing their market experiences and sharing their information and talking about what is going on and trying to react literally daily to what we see and what's happening.

Okay. And now a non-gross yield or truck gross yield question. You guys had spoken previously about going through an integration process with some of your more recent acquisitions, where are you in terms of that process in terms of integrating and getting those acquisitions on CH Technology?

I would say we are on target with our plans. Not all of them are on CH Robinson technology but the recent acquisitions, one of them is in the middle of transitioning all of their business on to our technology, and a couple of the international forwarding one, the Walker acquisition will roll on to our international forwarding system in the next year or so as we roll it out to the rest of the country. We would expect to make major progress in 2010. There are a lot of milestones this year to integrate foreign offices and convert existing sites and release new versions of the operating system, so the goal is to get the entire world on the common platform and to be able to have common visibility and integrate all of our locations and hopefully we'll be done with almost all of that by the end of 2010.

Thank you. Our final question comes from the line of Anthony Gallo with Wells Fargo.

The bid season, I know you answered it John before, but I think you said that it's a lot of onesies, twosies. But when is the bulk of your contract business rebid? Or when does the bulk of the '09 contracts run off?

So most of the shipper relationships that we deal reserve the privilege of the contracts or structure that the rates are in place until either side decides that they want to give 30 day notice. Many of the customers that did bids in the spring of 2009 had not done bids for several years. So each shipper has their own approach to the marketplace. A lot of the asset based providers will have a time of the year or a cycle where they will choose to adjust rates and try to get them to stick to all of their customers. What we are doing is assessing contract-by-contract, what are our margins like, what's the relationship like? We don't know when our customers are going to bid the reason why there was a lot of bidding in the February, March timeframe of 2009 is because everybody knew the market has dropped, and so a vast majority of the shippers were taking those bids to the marketplace in order to try to participate in the savings and frankly we were encouraging and helping them to do that because it's the right thing to do they'll be smart and take advantage of the market place. Our general thought would be that you are going to see a lot less bid activity during 2010. That you are going to see the shippers who are happy with their pricing trying to hang on to it and make it last as long as possible. Bids that we are working on now are looking for generally longer term commitments to try to hold them and probably the more interesting market data point in 2010 will be if and when asset providers come up with price increases, and decide to exercise that 30-day notice in the contract that allows price changes.

Okay. Sounds like a lot of work. Can you remind us where volumes in February and March of '09 were relative to January of '09? February - March fall off sequentially from January last year, or how did that play out?

I won't be reminding you, because I don't think we have disclosed it, but they did increase throughout the quarter. I don't think that's a normal seasonal trend that March would be the biggest month of the first quarter.

Thanks. Well we apologize that we didn't have time to get to everybody's questions today. Thank you for participating in our fourth quarter 2009 conference call. I want to remind you this call will be available for replay in the investor relations section of the CH Robinson website at chrobinson.com. It will also be available by dialing 800-406-7325, and entering the pass code 4200623 pound. A replay will be available at approximately 7:00 PM Eastern time today. If you have additional questions, please call me, Angie Freeman at 952-937-7847. Thank you.

Thank you ma'am. Ladies and gentlemen, that does conclude our conference for today. Thank you very much for your participation. You may now disconnect.