Good morning, ladies and gentlemen, and welcome to the C. H. Robinson Q3 2014 Conference Call. (Operator instructions.) As a reminder, this conference is being recorded today, Wednesday October 29th, 2014. I would now like to turn the conference over to Tim Gagnon, the Director of Investor Relations. Please go ahead.

Thank you, Debbie, and good morning everyone. On our call this morning will be John Wiehoff, our Chief Executive Officer, and Chad Lindbloom, Chief Financial Officer. John and Chad will provide some prepared remarks on the highlights of our Q3 and we’ll follow that with a response to pre-submitted questions we have received after our earnings release yesterday. Please note that there are presentation slides that accompany our call to facilitate our discussion today. Those slides can be accessed in the Investor Relations section of our website which is located at www.chrobinson.com. John and Chad will be referring to these slides in their prepared comments. I’d 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 risks and uncertainties. Our SEC filings contain additional information about factors that could cause actual results to differ from management’s expectations. With that I will now turn it over to John to begin his prepared comments on Slide 3 with a review of Q3 2014 results.

Thank you, Tim. Thanks everybody for taking the time to listen to our call. On that Slide 3 that highlights our consolidated results for Q3 2014 I’ll highlight just a couple of the key metrics that we reference every quarter. Total revenues for Q3 were up 4.5%. Net revenues grew at 13.9%. The higher net revenue growth was driven by margin expansion that we’ll share several comments about to explain further. Income from operations in the quarter was up 15.3% and net income increased at 16.0%. So overall our operating expenses and our income from operations are growing roughly in line with our net revenue growth. There are some variations in the fixed and variable expenses that Chad and I will cover with more comments on later but in general our income grew at the rate of our net revenues. Our EPS for the quarter was $0.85 compared to $0.69 last year which represents a 23% growth in EPS for the quarter. As the slide highlights, the variance in the growth in the EPS rate was impacted by a lower effective tax rate this quarter that we’ll come back to as well, and our change in our capital structure that improved our EPS growth for the quarter. Moving on to Slide 4 and our overall Transportation results for the quarter. Transportation revenues increased 6.5% and net revenues were up 14.9% for Q3. As we have been for a while on Slide 4 we show a ten-year history of our Transportation net revenue margin. As I’ve commented in the past there’s a lot going on on this slide because it’s total Transportation and it includes not only truckload which is two-thirds of our revenues, but less-than-truckload, intermodal as well as our international services. But nonetheless, with all of the margin fluctuations…

Thanks, John. I’ll begin my remarks on Slide 11 which is our summarized income statement. As John mentioned earlier, our total net revenues were up 14% and our operating income was up 15%. Even though we did achieve a little operating margin expansion our personnel expenses did grow faster than our net revenues. Our personnel expenses increased approximately 20% or $40 million. Approximately $30 million of the increase was caused by increased incentive compensation. Our total equity compensation was up $16 million and our cash and other incentive plans were up $14 million. Our incentive compensation philosophy and plan stayed relatively consistent with previous years. The increase is based on our increased net revenue and earnings growth. Last year our incentives were extremely low due to our lack of earnings growth. Most of these plans are based on annual performance. If our earnings growth continues our personnel expense will likely continue to grow faster than net revenues for the remainder of the year. The remaining $10 million of the increase was driven by approximately 2% average headcount increase compared to last year’s Q3 and also increases in other personnel-related costs including slight salary increases. Our SG&A decreased 3.6%. This was primarily by reductions in claims expense and travel expense. Some of this reduction in travel was driven by less integration-related travel from the Phoenix acquisition. Moving on to Slide 12, we had a strong free cash flow quarter with cash provided by operations of $177 million and CapEx including investments in software of $6.3 million. Our debt balance dropped from $900 million at the end of Q2 to $845 million at the end of Q3 – again, this reduction in debt was driven by our strong cash flow. Moving on to Slide 13, we are continuing our capital distribution methodology that we described at our Investor Day last November. Our goal is to distribute 90% of our net income to shareholders in most environments while maintaining our debt to EBITDA ratio in the range of 1.0 to 1.5 times. These distributions will vary based on our cash flow generation, needs for working capital and other capital needs. When you look at the table on Slide 13 you can see that we have a long track record of achieving this goal of cash distribution. During the quarter we paid $52.7 million in cash dividends and spent $76.8 million repurchasing shares. Our share repurchases tend to be more weighted towards the second half of the year which is when we tend to generate the bulk of our cash flow for the year. With that I will turn it back to John for our closing prepared comments.

Okay, finishing off our prepared comments addressing Slide 14 and the bullet points around the look ahead and sharing some thoughts about our future. This quarter similar to the past when we think about Q4 or the upcoming quarter, the thing that we find the most helpful or correlating in our world is the North American Truckload net revenue metric which we shared to-date in October is up 13% per business day when compared to last year. So a couple of percentage points less than Q3 this year but very much in line with the same trend around double-digit net revenue growth and very modest volume growth. About a year ago we also held an Investor Day in New York and we walked through at that point in time how we were thinking about our business from a strategy standpoint and from a long-term focus standpoint. When we look at the rest of this year and into next year our team believes that long-range plan and that investor deck that we shared a year ago still remains very valid. For those of you who weren’t there or want to be refreshed by it, it is still available at www.chrobinson.com under the Investor Deck. I just want to highlight a few of the things that we talked about a year ago and that we still believe to be true in our business that will impact us in Q4 as well as 2015 and beyond. A lot of discussion over the last several years about the fact that our business is impacted by both business cycles and secular change in our industry and that it’s very difficult to quantify any of those individual variables, and that it’s very easy to confuse the two because the impacts are oftentimes blended together. So while…

Thanks, John. So first I’d like to just take a minute to thank all of the analysts and investors for taking the time yesterday afternoon and last evening to submit some strong questions. And we’ve bundled them or categorized them this morning and John or Chad will respond to some questions that I’ll ask them and we’ll get right into that right away here. So the first question is for John and it’s picking up on the topic that you just spoke about and that is headcount. So the question reads “Why was ending headcount down 103 people sequentially and what can we expect going forward? How long can we expect headcount to grow slower than volumes and/or net revenues? And which is more important – headcount, volume, shipments or net revenues?”

So I did weave some of these into my prepared comments but I’ll reiterate them again because I do think they’re fairly important messages, that over a long period of time our investment in talent and people, headcount, will correlate more with shipment volume across literally all of our services; and that adding that talent is a very important growth driver for us that we will be focused on for the remainder of this year and into 2015. As I mentioned we have a lot of different initiatives to try to continue to make ourselves more productive and as Chad laid out our variable compensation programs are structured to try to keep our business model in line when our rate of growth of when we add the people varies a little bit.

Okay, thanks John. And the second question’s for Chad and it’s on the topic of personnel: “How should we think about personnel costs going forward given the increase of 19% this quarter primarily tied to variable compensation and increase in the accrual of compensation and profit sharing?”

Yeah, I covered this in some detail in my prepared remarks and John mentioned it earlier. It is important to realize that most of our incentive compensation plans are annual plans, and many of these plans are based not only on earnings but growth in earnings. So when you look at last year, profit sharing and some other expenses – bonus growth pools – were at zero. This year as we’re experiencing growth those plans are accruing some expense and some future benefits for our employees. Because of this our personnel expense is growing faster than net revenue. If our earnings growth continues that will also continue to be the case in Q4 2014. Looking forward to 2015 the year as a whole, if we grow at about the same rate for the year as we grew this year personnel expense and net revenue should grow closer together. However, Q1 2014 we didn’t have a lot of earnings growth so you could continue to see personnel expenses increasing at a faster rate than net revenue in Q1 2015.

Okay, thanks Chad. The next question is for John. Any change to your long-term growth rate targets?

This speaks to the earlier comments around yes, a year ago we did tamp down those long-term growth targets from 15% to double-digit EPS growth but in terms of what we laid out a year ago around believing that we can take market share and continue to create long-term shareholder value through double-digit EPS growth. I think we feel very confident that those targets are still valid goals for us to have.

Thanks, John. The next question for Chad: should we expect a return to a 38% tax rate in Q4?

Our expected tax rate that we’ve communicated in the past is 38.5% to 39.0%. Obviously it was lower this quarter with the $5 million foreign tax credit that was generated through a complex set of situations but basically by repatriating some foreign earnings generated some tax deductions this quarter. So 38.5% to 39.0% is what we believe our normalized ongoing tax rate should be.

And a follow-up question about tax for Chad: were the tax credits received in Q3 something that will continue in the coming quarters? Or were they one-time in nature?

I don’t want to call them one-time but they’re unusual and will be infrequent. And as I just mentioned it was a set of pretty unique circumstances that generated such a large foreign tax credit during Q3.

Okay. For John this next question related to Truckload volumes: growth year-over-year in the North American Truckload market moderated by 200 basis points from Q2 as was represented by cash shipments as well, and CHRW followed that trend. However with so many shippers apparently turning to brokers one might expect CHRW’s Truckload volume growth to exceed the overall truckload market. Is CHRW under-growing the market because of selectivity and what business you take on or capacity constraints in the market?

I think this question speaks to the challenge of sorting out both longer-term secular and shorter-term cyclical issues that we have woven into our business. As I commented earlier we have adapted to market conditions that have had us re-pricing a lot of our freight and we do believe that our approach to changes in the market has impacted our volume growth this year. So yes, the short-term market cycles and how we’re approaching the market we do believe has impacted our volume growth in the current year. The comment about more shippers turning to brokers and being more receptive to 3PL providers, we do believe that to be the case. And in those long-term goals that I referenced several times earlier one of the things that does give us longer-term confidence that we can continue to take share and create value in the long term is that trend, that we think the 3PL model does have more and more applicability and shippers are more receptive to it. And that is part of what will enable us to be successful in the long term.

Thanks, John. Next question for Chad: are you experiencing an improvement because of your ability to re-price contracted volumes higher? And this related to negative loads – are you seeing an improvement in your negative loads?

Okay, Tim. Our negative loads or loser loads are down sequentially compared to last quarter and they’re also down year-over-year compared to Q3 last year. All these quarters I referenced are in the high-single digits which is higher than our normalized loser loads. When we look at history it’s closer to mid-single digits so I think there’s still some room to go. The improvement, yes, is based on the changes in the marketplace which have allowed us to raise prices or provided us opportunities to raise prices more than we did in previous quarters.

Okay, next question for John: can you elaborate on the cross-selling benefits you are seeing from the Phoenix integration, highlighting any wins and talk to the drivers of strong international air and ocean margins? We’re trying to understand what impact if any procurement synergies are having on the results.

When we acquired Phoenix two years ago one of the very first things that we focused on because it’s required essentially is the combination of the service contracts and creating greater scale by putting the combined business together. And that was one of the first-year successes around seeing some improved pricing around the combined contracting. There are a lot of things as you know that impact the margins around how you route the freight, how you distribute it across those contracts, how you consolidate it. And a lot of the things that we continue to work on this year and into the future do continue to have an impact on our cost structure and on our margins around how efficient we are in routing the freight and how effective we can be in generating a margin with that. So the procurement side has had an impact on synergies. Some of it was in year one and some of it continues depending upon sort of how you break down your view towards the cost structure and what we’re doing. The benefits of cross-selling go more to the customer side that I talked about earlier. We do believe that we have very strong customer relationships in North America, and as I mentioned for twenty years we’ve been selling Global Forwarding services in the North American marketplace. But in those bids that we participate in like every other service they are very competitive and there are other providers, and it comes down to price and service capabilities. And we’ve had more success recently cross-selling our services and we think it’s from the improved pricing and service capabilities that we’ve developed over the last couple of years; and we’re going to just continue to focus in on that and drive more and more of our account management relationships to take a look at opportunities where we can get involved in international freight as well.

Thank you, John. A technology question for Chad: what is the status of the Navisphere rollout? How far along in the process are you domestically and internationally? Have you given guidance on what level of operating efficiency improvement you expect this system could deliver?

As John mentioned in his prepared remarks we have a significant amount of work done on the integration of Phoenix onto our Navisphere platform but there is still work ongoing into 2015. In early- or mid-2015 we will be at a point where 95% plus of our net revenues are running through our Navisphere systems from a financial and an online visibility perspective. Future initiatives will include trying to further integrate and improve some of the functionality within Navisphere to make the system even better both in foreign locations as well as domestic. As far as the guidance on productivity, no, we really haven’t given it any guidance and it’s really been happening on an ongoing basis because we have continuous release throughout the year that we pick up a little bit of the incremental value as we go. So we’re not able to really quantify what we expect the future productivity pickups to be and when they will occur.

Thanks, Chad. The next question also for you related to margin: 2014 has been an unusual year with respect to Transportation gross margins as they have risen on a percentage basis through the year. Is 16.1% an appropriate placeholder for 2015? Do you believe gross margins can continue to expand sequentially in Q4 as they have expanded sequentially since troughing at 14.9% in Q3 2013?

Yeah, I would refer you back to Slide 4 which shows you a ten-year history of our Transportation net revenues by quarter and by year. And when you look back there you’ll see that usually Q1 is the highest quarter for total Transportation net revenue. 2014 was unusual to have it be the lowest and that had to do with the market dynamics and cyclicality. If you look when the market finally shifted and demand started to increase relative to supply you’ll see that we did return to what we would consider a more normal, or the, as John mentioned we’re roughly at the “average” of our net revenue margins. So what will they do in the future? The market will be a big part of determining that but is 16.1% a good estimate? I’d say it’s at the midpoint but what happens next year would more depend on what happens in the marketplace.

Okay, thanks Chad. Next question for John: the publicly traded truckload carriers signaled in their Q3 conference calls and releases that continued tightness in truck capacity and an otherwise strong demand environment. Are you experiencing similar outcomes and can you talk a bit about how these market fundamentals are impacting the truckload brokerage market?

Throughout all of this year we have continued to see the truck market conditions be a little bit tighter than what we had seen over the previous three or four years prior to that. We do believe and agree with a lot of the truckload providers that are being referenced here that if you look at the underlying cost structure and demographics of the trucking industry, the driver shortage is a very real thing, the new equipment costs a lot more. There is a lot of cost pressure in the industry, so in that difficult-to-predict assessment of supply and demand and where pricing will go, assuming demand stays stable or increases we do believe that truckload pricing is going to continue to have pressure on it and will continue to rise under the current environment. How is that impacting the truckload brokerage market? As I said earlier, shippers are very focused and we are very focused today on having appropriate plans for your known freight or your committed freight, because planning is as big a premium as ever to make sure that in a tight market you’ve got the capacity that you need secured. It also means that where there is surge freight or unexpected freight or transactional opportunities that it’s generally at a much higher price than a committed or a contracted shipment would be in today’s market. So one of the effects of what’s happening is it’s creating a premium on planning and that’s one of the primary ways that we’re working with our customers more aggressively is to make sure that lead times and route guides are well established and that commitments are understood and worked with; and doing the best we can to try to serve incremental needs when additional capacity typically has a pretty significant premium to it.

Thanks, John. The next question again for you: how should we think about your plan to build out a European Union truckload operation in light of the disappointing macro data from the region? Are you less interested now or are you looking to invest counter-cyclically to be positioned better once the region gets on track? When do you think this business could become a meaningful contributor to growth and how should we think about the eventual margin profile?

A lot of good questions in there. For starters we would validate the notion that macro data in Europe does translate into some more difficult conditions in the trucking market. It has been pretty difficult the last couple of years with a lot of declining prices and declining demand on the truckload side in a lot of the parts of Europe but especially in Western Europe. Combining that with a lot of lower-cost capacity coming in from the East and supply chains changing it is a pretty difficult environment to grow the business right now. We have not changed our long-term commitment. We’ve been at it for a little over twenty years and we do continue to invest in building our European surface transportation business by opening offices and by hiring salespeople and going after building a presence in the market. We have backed off a little bit in our rate of some of those activities just to make sure that we’re investing proportionate to kind of the market demand that is there. From a margin standpoint I think we’ve been very open that while we’re profitable in Europe, with the scale of the business relative to the overhead and the investment that we have today it’s not anywhere near kind of the North American profitability metrics. So our goal is to continue to invest even in a difficult time, position ourselves to build out our network for better growth periods so that we can be in a good spot to take advantage of the market condition when they turn; but be prudent along the way to make sure that we’re building a strong foundation and being responsible with our expenses along the way.

Thank you, John. Next question for Chad: did your Truckload length of haul continue to shrink in Q3?

Yes it did, both sequentially and compared to last year’s Q3. Last year’s Q3 our length of haul is down about 4%. We believe our length of haul is shortening more than the market is as a total, and the primary driver of that is our fastest-growing volume segment is freight of 500 miles or less. A lot of that freight is coming with the increased integrated relationships that John mentioned earlier.

Thanks Chad, the next question for John. In prior communication CHRW has targeted 2.5 times debt to EBITDA for the right acquisition. Under what conditions if any would CHRW consider a purchase that would either be dilutive or exceed this leverage threshold?

We haven’t really talked about or explored anything today that would have us thinking that way. I think like any company you probably have to stay open minded to it if the right sort of opportunity came along that we felt could really create value in the long term but in the short term would be more dilutive. It could possibly be a technology business or something that had less revenue or earnings today but had a very positive impact on us, or some competitive threat that was more of a defensive move I think could be likely scenarios where we might consider thinking about different valuation parameters. But the foundation of our thinking has been and remains today that if we have confidence in our plan which we do then we can create long-term shareholder value by growing primarily organically with some investments that are valued properly and thoroughly integrated into our global network – that that’s what our growth strategy will be.

Thanks, John. Next question is a capital allocation question for Chad: you haven’t raised the dividend since Q4 2012. Q4 2013 was the first Q4 you hadn’t raised it since 2007. What can we expect in Q4 ’14 and when will we hear a definitive announcement?

We’ve talked about for quite a long time now that our dividend payout ratio target is 45%. And you’re right, we do tend to raise the dividend for the Q4 dividend. The reason why it didn’t go up last year is because our earnings didn’t grow. As we look forward to this year, Q4 of this year, we will be reviewing our dividend again at the Q4 Board meeting and the announcement of what our dividend will be for Q4 of this year will be in early December.

Thanks, Chad. Next question for John: in Truck what was the mix of contractual business versus spot in Q3 and how does that compare to Q3 ’13?

This is a question that we get often and the way we have answered it remains valid, that compared to some truckload providers or maybe even some other 3PLs in our world there’s not a clear definitional break between contractual and spot market type business. We have a wide variety of commitments and contracts, so we can generalize about it but it’s really hard to put percentages on it. We get a lot of incremental freight from our contractual relationships, and we get a lot of pre-priced opportunities where even though it may be considered spot market freight there are existing quotes out there and the freight will move along those existing prices until there’s a change in the marketplace – but there’s no real firm commitment to do that. From a generalizing standpoint what we talked about from really 2010 all the way through 2013 last year, that our business was moving towards more and more contracted or committed relationships. The changes this year have resulted in a slightly greater mix of our freight being priced more frequently or fluidly into what we would classify as spot market. Longer-term our estimate had always been that we were roughly 50/50 in terms of a mix of freight and that during that four-year period of time up until a year ago that we were trending higher than that – maybe 60/40 or 70/30; and that this year it’s probably trending somewhere back closer to a more balanced view. But again that all depends upon your definition and categorization of what’s contracted or what’s committed versus what is a true spot market opportunity.

Thanks, John. Next question again for you related to Intermodal: does the extremely tight driver situation make you more or less interested in increasing your Intermodal presence? Intermodal has obviously had some real challenges with the rail service issues so how is this impacting your business and your thoughts on becoming a more active player in this space? Are you more interested in acquiring an existing player to quickly establish an existing presence or leaning more towards building it on your own?

I would say that in general over the last three or four years with the changes that have gone on in both the truckload and rail industry, that our appetite for Intermodal is probably greater than it was even three or four years ago. It has always been an important part of our portfolio but particularly in those longer length of hauls and increasing fuel prices and other things like that from just a long-term strategy standpoint, Intermodal is as important as it’s ever been – maybe slightly more important than versus several years ago. You know, the current environment around railroad service issues and some of the pain that comes with the lessened efficiency of assets that you owned and the way that you can serve your customers in this environment points out some of the risk of the business model that it takes to be larger and drive scale advantages in Intermodal. So from the standpoint of building it ourselves we feel like we have done a nice job of improving our operations and becoming more efficient and serving our customers. Growth has been the more challenging part because every time you grow your network you have to either invest in some more boxes or look at how you’re going to do things differently to try to drive that growth. So I would say we’re mixed or neutral as to whether organic growth or acquisition is the right path to go. We’ve been wrestling with that for a while and it just kind of comes down to perpetually looking at the opportunities that exist and trying to make a decision on which path forward will help us grow better.

One more for you here, John, on LTL: one of the larger LTL carriers talked about increasing 3PL blanket rates in a similar fashion to the general rate increases. What type of an impact on net revenue margin would this have on your business?

So almost all of the larger LTL carriers that we deal with we do have what’s called a general rate tariff or a general pricing for customers of all different sorts and classes. And as I mentioned earlier when those LTL providers do do general rate increases they apply to general rate tariffs or 3PL blanket rates – I guess the way the question was phrased would apply to us as well, too. So that’s very similar to any other Transportation offering that we have. When our cost of hire goes up that impact on us is that if we do nothing we have some margin compression. If we’re able to pass that along to our customer we can keep our margin stable by passing that through in the marketplace. Because a lot of our larger LTL customers do have customer-specific pricing with some of the LTL carriers it’s a little bit easier on the LTL side that I mentioned earlier to make sure that rates adjust simultaneously or at least close to each other, so there’s probably just a little bit less volatility in our LTL margin fluctuations at least for some of those larger accounts. But it happens in greater volume versus a single truckload shipment at a time, but basically it works like those other modes where when we get those price increases we have to react to them and see if that causes any changes to our routing or how we might service that account; or if it’s an increase that we have to consider trying to pass along to the customer and if so, can we do that.

The next question is for Chad: overall gross operating margins are holding at 38% level from CH standalone in the 40%s. As you noted there would be more pressure with a more people-intensive business. Would you expect these levels to hold or could they accrete as you gain synergies?

Right, just some background on that. We talked a lot about when we acquired Phoenix, Phoenix’s operating income to net revenue was kind of at the industry gold standard or benchmark of 30% operating income to net revenue. In round numbers, that’s 10% lower than Robinson prior to Phoenix operating income to net revenue. Phoenix was about 10% the size of Robinson so that’s 1% dilution right there, and there’s also about a 1% dilution from the increased amortization expense for deal-related intangibles that came with the Phoenix acquisition. So that reconciles from 40% to 38%. I do believe that in most operating environments this 38% is attainable to continue to generate. And if I refer again back to our investor presentation at our Investor Day last November, if you look at our expected growth rates for net revenue and operating income they are the same. So there is definitely increased competition. Our net revenue margins going forward will also impact that operating income to net revenue, but generally going forward we expect the two to grow together. However, we are managing for efficiency every day and looking for ways to improve that metric.

Thanks, Chad. Next question is for John related to competition: can you discuss the current competitive environment in the truck brokerage market and are you concerned about other participants being able to do the same business for a significantly smaller margin going forward?

One of the longer-term changes that we’ve talked about over the last several years is the recognition that the space has become more competitive. There’s specific examples of new competitors that exist today that didn’t exist five years ago and the challenge for us is to manage that incremental competition with what we also believe is increased opportunity with shippers and a greater acceptance to the 3PL and brokerage market that exists out there. So it is more competitive. It will remain more competitive. We do believe that some of those newer competitors have been very aggressive about going after market share with less focus on profitability and willing to accept less margin than we have been able to earn historically. Obviously they may be able to do that for a shorter period of time or I don’t know how sustainable it will be. We also believe that we have some pretty meaningful competitive advantages with our scale and our technology and some things that we can continue to leverage. But it does put pressure on us to stay that industry leader and to continue to invest and be smart about what we do and make sure that we’re pricing competitively with our customers to make sure that we continue to grow with them, too. So yes, it’s a concern. It’s been around for a couple of years now and I think we’re reacting to it, and hopefully it’ll be something that we can manage successfully going forward.

Thanks, John. Next question for Chad around the tax rate: why did you state that the lower tax rate year-over-year helped EPS by $0.03? The difference between 36.6% and last year’s 38.0% was approximately $2.8 million and divided into the shares it seems like $0.02 and not $0.03.

Okay. Last year’s 38% was slightly lower than our overall expected tax rate so you’re comparing it to what was a lower base. The way that we calculated the $0.03 is the actual tax benefits that we believe were unusual were $5 million. That divided by our share count is $0.03.

Okay, thanks Chad. Next question for John: how do you balance use of cash and paying down debt versus buying back stock? Given the change in the market demand would you consider further acquisition candidates or not at this time?

We are very much open to looking at acquisitions at this point in time. We are actively looking. As I said before we believe that we’re appropriate in having a more selective approach, to make sure that we do the right sort of deals at the right price and make sure that we grow our business in the long-term stable way. In terms of what do we do with our cash, we added that capital management strategy slide to the deck just to sort of reemphasize that our capital management philosophy has been to essentially through dividends and share repurchases distribute whatever we generate every year regardless of or above and beyond any acquisitions that we do. Because of the fact that if you go back five years on that slide we had accumulated some cash that what you see beyond our ongoing annual distribution plan is the fact that we did distribute some of that excess cash. And then last year through our ASR transaction we swung to somewhere around 1x turn of debt that we added to the balance sheet. So the way we’re managing things today is assuming that level of debt that we’re carrying will remain rather stable and just going on with our normal policy that Chad articulated about the 90% current year earnings distribution target, we would consider changing that leverage ratio and that amount of debt for the right type of acquisition that comes along. And we are actively looking for something like that at this point in time.

Thanks, John. Next question is for Chad: depreciation expense declined sequentially. How should we be thinking about this? Is this a trend you expect to continue in Q4?

Okay, that question is the combination of depreciation and amortization I believe, and the sequential decline has to do with some acquisition-related intangibles that were acquired and being amortized. Those acquisitions happened between five and seven years ago and the amortization expense for certain intangible assets did end. So yes, that lower amount will continue. In addition there is another acquisition-related intangible from five years ago that ended during the quarter, and that will reduce next quarter by about $200,000. Those are just the impacts of those specific acquisition amortizations. Obviously depreciation amortization will fluctuate as we acquire and add new assets and retire old assets.

Thanks, Chad. And the last question here is for John related to Sourcing: when do you expect the year-over-year negative impacts of your large customer in Sourcing to abate?

I might have mentioned this earlier but we do know and anticipate that in Q4 of this year, that we will have some continuing comparison challenges for that business cycling out. From what we know of today we hope to have a fresh start into 2015 and be able to return to more normal growth activity. We win and lose every day so hopefully that’ll be the case when we come into 2015 but we know for sure that there’s at least one more quarter of some comparison challenges.

Okay, thanks John and Chad. That takes us to the end of the hour here and we’re out of time. Unfortunately we weren’t able to get to all of the questions today and we really appreciate the submissions that were made. Thank you for participating in our Q3 2014 Conference Call. The call will be available for replay in the Investor Relations section of the C.H. Robinson website at www.chrobinson.com. It will also be available by dialing 888-203-1112 and entering the passcode 8557362. The replay will be available at approximately 7:00 PM Eastern Time this evening. If you have additional questions please call me, Tim Gagnon at 952-683-5007 or contact me by email at tim.gagnon@chrobinson.com. Thank you again, have a good day.

Ladies and gentlemen, thank you for your participation. This does conclude today’s conference.