Robert S. Brunn - Vice President of Corporate Strategy & Investor Relations Gregory T. Swienton - Executive Chairman Art A. Garcia - Chief Financial Officer and Executive Vice President Robert E. Sanchez - Chief Executive Officer, President and Director Dennis C. Cooke - President of Global Fleet Management Solutions John H. Williford - President of Global Supply Chain Solutions

Kevin W. Sterling - BB&T Capital Markets, Research Division John R. Mims - FBR Capital Markets & Co., Research Division Benjamin J. Hartford - Robert W. Baird & Co. Incorporated, Research Division H. Peter Nesvold - Jefferies & Company, Inc., Research Division David G. Ross - Stifel, Nicolaus & Co., Inc., Research Division Todd C. Fowler - KeyBanc Capital Markets Inc., Research Division Arthur W. Hatfield - Raymond James & Associates, Inc., Research Division Jeffrey A. Kauffman - Sterne Agee & Leach Inc., Research Division Thomas Kim - Goldman Sachs Group Inc., Research Division Scott H. Group - Wolfe Trahan & Co. Matthew S. Brooklier - Longbow Research LLC A. Brad Delco - Stephens Inc., Research Division

Good morning, and welcome to Ryder System, Inc. Fourth Quarter 2012 Earnings Release Conference Call. [Operator Instructions] Today's call is being recorded. If you have any objections, please disconnect at this time. I would now like to introduce Mr. Bob Brunn, Vice President, Corporate and Strategy, and Investor Relations for Ryder. Mr. Brunn, you may begin.

Thanks very much. Good morning, and welcome to Ryder's fourth quarter 2012 earnings and 2013 forecast conference call. I'd like to remind you that during this presentation you'll hear some forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to changes in economic, business, competitive, market, political and regulatory factors. More detailed information about these factors is contained in this morning's earnings release and in Ryder's filings with the Securities and Exchange Commission. Presenting on today's call are Greg Swienton, Executive Chairman; Robert Sanchez, President and Chief Executive Officer; and Art Garcia, Executive Vice President and Chief Financial Officer. Additionally, Dennis Cooke, President of Global Fleet Management Solutions; and John Williford, President of Global Supply Chain Solutions, are on the call today and available for questions following the presentation. With that, let me turn it over to Greg.

Thank you, Bob, and good morning, everyone. Today we'll recap our fourth quarter 2012 results, review the asset management area and discuss our current outlook and forecast for 2013. And then after our initial remarks, as always, we'll open up the call for questions. But before I get into the actual numbers, please allow me to make a few personal comments. As you are aware, in December, we announced our organization plans and that I'll be retiring as Chairman after our annual shareholders meeting on May 3, and we've transitioned to Robert Sanchez as our new CEO effective the first of this year. And as you've known him in various positions at Ryder over the years as CIO, CFO, President of FMS and Chief Operating Officer of the company, I know you agree he's an ideal and a great choice. For myself, it's hard to believe how time flies by. But today, I am presenting Ryder results for the 55th consecutive quarter. And in reaching almost 14 years, I wanted to say how privileged and grateful I've been to not only to serve Ryder and our customers and our employees, but also to thank all of you as investors and analysts for the relationships and the time we [Audio Gap] Improving our business model and direction and results that this was time very well spent together. We've not only worked on improving our performance and credibility, but we've also diligently worked at always providing solid and improved disclosure so you could understand our business. We are unique in our portfolio of business and structure, and therefore believe that the better you understand us and our business model and its subtleties, the better you could be at analysis and investment, which ultimately serves both of our mutual interests. We believe in…

Thanks, Greg. Turning to Page 11, full-year gross capital expenditures were approximately $2.2 billion, up $400 million from the prior year. This growth reflects an increase of $481 million for purchases of new leased vehicles. This capital spending reflects an increase in the number of leases renewed, growth in the fleet size and a higher investment cost per vehicle, which is being priced in to customer rates. Capital spending on Commercial Rental vehicles was down $80 million. We realized proceeds primarily from sales of revenue earning equipment of $413 million, up by $113 million from the prior year. This increase reflects more units sold versus last year, as well as higher pricing. Including a $130 million sale-leaseback in the second quarter, net capital expenditures increased by $200 million to just over $1.6 billion. Turning to the next page, we generated cash from operating activities of over $1.1 billion during 2012, $92 million over the prior year. The improvement reflects higher cash-based earnings, partially offset by increased pension contributions. We generated $1.75 billion of total cash for the year, up by $300 million, including higher used vehicle sales, as well as increased proceeds from sale-leasebacks. Cash payments for capital expenditures increased by $434 million to approximately $2.1 billion. The company had negative free cash flow of $384 million for the full-year. Free cash flow was down by $127 million from the prior year's negative free cash flow, due mainly to higher planned lease fleet investments. Free cash flow came in somewhat below our latest forecast range of negative $270 million to $330 million, primarily due to shorter OEM lead times on new lease vehicles ordered. Page 13 addresses our debt to equity position. Total obligations of just under $4 billion are up by over $500 million compared to year-end 2011. The increased debt level is largely due to higher lease capital spending. Total obligations as a percent to equity at the end of the year were 270%, up from 261% at the end of 2011. Our leverage calculation was impacted by a pension equity charge that was determined at year-end, based on planned discount rates and asset values. Year-end leverage increased by 12 percentage points from the pension charge, which related primarily to lower discount rates. The format of the charts shown here has been revised to illustrate the cumulative impact of the pension equity charge on leverage. As you can see, this impact has been quite significant in recent years and was 83 percentage points at year-end 2012. Equity at the end of the year was just under $1.5 billion, up by $150 million versus year-end 2011. The equity increase was driven by higher earnings, and was somewhat offset by a $50 million pension equity charge. At this point, I'll hand the call over to Robert to provide an asset management update.

Thanks, Art. Page 15 summarizes key results for our asset management area globally. At the end of the quarter, our used vehicle inventory for sale was 9,200 vehicles, up from 6,300 units in the fourth quarter of 2011, but in line with our expectations coming into the quarter. On a sequential basis, from the third quarter 2012, ending inventory increased by only 100 units. Used Vehicle inventories are elevated beyond our typical target range by approximately 6,000 to 8,000 vehicles. This largely reflects a planned increase in lease replacement activity. Used Vehicle inventories are expected to remain in the 9,000 to 10,000 range during 2013 due to the continued heavier-than-normal lease expiration and replacement. We sold 5,400 vehicles during the quarter, up approximately 30% compared to the prior year, reflecting continued strong market demand for used vehicles. Pricing for used vehicles remained strong. Comparisons were negatively impacted, however, by an increased use of wholesaling to manage inventory levels, as discussed on previous earnings calls, as well as some softening for tractor pricing coming off of historically high levels. Compared to the fourth quarter of 2011, proceeds from vehicles sold including wholesaled units were down 9% for tractors and up 2% for trucks. From a sequential standpoint, tractor pricing was down 3% and truck pricing was up 2%, again including the increased wholesaling activity. Retail pricing was down by 3% for tractors and up 6% on trucks on a year-over-year basis. Given our current inventory levels, as well as anticipated strength in lease replacement activity, we expect to continue somewhat higher usage of wholesale channels in 2013. The number of leased vehicles that were extended beyond their original lease term increased versus last year by 340 units. This reflects and is consistent with the higher volume of renewal activity this year…

Thanks, Robert. Turning to Page 22, we're forecasting gross capital spending in the range of about $1.8 billion to $1.9 billion, down by almost $300 million to $400 million from the prior year due to lower spending on rental vehicles. Lease capital is projected to remain at the elevated levels seen in 2012, increasing modestly in '13 by up to $75 million. Spending on replacements is forecast at $1.1 billion and represents a higher-than-normal level of expiring leases. Replacement spending is currently anticipated to decline in 2014 as lease expirations return to a normalized range. Growth-related lease spending in 2013 is forecast at $450 million to $500 million. This includes $410 million to $420 million of higher purchased cost per vehicle and $40 million to $80 million due to growth in fleet size. We plan to spend $150 million on Commercial Rental vehicles, significantly below last year's spend of $542 million as our rental fleet is appropriately aged and sized relative to forecast demand levels. As always, please note that the split of capital between lease and rental could be revised during the year based upon movements of trucks between product lines, and that lease capital is only spent once we've signed customer contracts. Proceeds from sales of primarily revenue earning equipment are forecast to improve by $17 million to $430 million. This reflects an increase in the number of vehicles sold. We're not forecasting a sale-leaseback transaction this year. As a result, net capital expenditures are forecast at roughly $1.3 billion to $1.4 billion, this represents a decrease of approximately $200 million to $300 million from 2012. Accordingly, free cash flow is forecast to improve to a negative $130 million to $190 million due to lower gross capital spending, partially offset by the lack of a sale-leaseback in 2013…

Thanks, Art. Turning to Page 25, as I previously outlined in the waterfall chart, our full-year 2013 EPS forecast is a range of $4.70 to $4.85, up $0.29 to $0.44 from the comparable $4.41 in the prior year. As Art covered, 2012 comparable EPS has been adjusted to exclude $0.37 of nonoperating pension cost. We're also providing a first quarter EPS forecast of $0.75 to $0.80 versus comparable prior year EPS of $0.69. I'd like to point out that the first quarter forecast includes $0.02 of planned restructuring costs for FMS International operations, which will remain in the comparable EPS for the quarter. Turning to Page 26, we provided a view of historical and forecasted comparable earnings per share under the new reporting that excludes nonoperating pension cost. As you can see, the mid point of our 2013 EPS forecast is $4.78. This represents record comparable EPS exceeding our prior peak earnings year of 2008 and reflects the many improvements made in the business over the past 5 years. While FMS margins continue to improve, they're expected to still remain below prerecession levels in 2013. And as such, we believe there's significant earnings upside in the business going forward. That concludes our prepared remarks this morning. We had a lot of material to cover today with both our fourth quarter results and 2013 outlook. As a result, I'd ask that you limit yourself to 1 question and 1 follow-up each. [Operator Instructions] At this time, I'll turn it over to the operator to open up the line for questions.

[Operator Instructions] Our first question today is from Kevin Sterling with BB&T Capital Markets. Kevin W. Sterling - BB&T Capital Markets, Research Division: Greg, let me say, congratulations on your pending retirement. I hope you get to spend some time with your family.

Thank you. Well, I'm here through May 3 if you need me. Kevin W. Sterling - BB&T Capital Markets, Research Division: Okay, I'm sure we'll be talking. Let me start with your CapEx outlook, and you did a great job on Page 22 of your presentation, kind of walking through your forecast for 2013. In particular, your Full Service Lease replacement or Full Service Lease growth, could you tell us what Full Service Lease replacement or Full Service Lease growth looked like for 2012, just so we could compare to 2013?

Yes, I'll let Art take a look at that. It's probably not too different from what you're seeing in 2013.

Right, Kevin, yes. Those numbers would be comparable. Obviously, we're spending a little bit more in the 2013 forecast, so maybe a little bit higher this year around growth, but not measurably. Kevin W. Sterling - BB&T Capital Markets, Research Division: Okay, so a little bit more on growth, okay. All right. And then just as a follow-up question here, if we get to the back half of the year and then say, the economy picks up, will you have to grow your rental fleet or do you think you're still at the right size? Where if we do see some pickup in the economy, you still have enough trucks in rental?

Yes. I think, Kevin, we have a few things we could do. First thing, what we can do is obviously get even better utilization on the fleet we have. We have units that we have planned to dispose from our rental fleet that we could hang onto certainly throughout most of the season. We can redeploy units coming off of lease and coming off other product lines into rental, and we can do all those things without additional CapEx. If it were to really heat up, and I think we could probably handle maybe 3% demand increase that way, 3% to 4%. If it got beyond that, then we'd probably be in a position that we would be adding some trucks. Anything else, Dennis?

No, that covers it, Robert. That asset management flexibility is what we'll turn to first before we spend the CapEx.

Our next question is from John Mims with FBR Capital Markets. John R. Mims - FBR Capital Markets & Co., Research Division: Greg, best of luck for -- and whatever comes next.

Thank you. John R. Mims - FBR Capital Markets & Co., Research Division: Robert, let's start with you. When you -- we've discussed for several quarters the reasons why used truck prices have been as high as they have been, and that you've been able to enjoy that for the last several quarters, but we're talking now about that unwinding a bit in 2013. In your mind, does that just -- does that indicate that the replacement cycle that everyone's been talking about for so long is starting to unwind or is it just -- is there more kind of Ryder-specific pricing issues that you expect to happen in '13?

No, no. I want to make sure we left the right message on that. We expect slight reductions in some of the pricing, but really still at a pretty healthy level. We're coming off of record high Used Vehicle prices. So I would probably describe it as still relatively strong pricing. And again, a lot of that is due to the fact that we still have the pre-'07 engine technology. Plus, what we're seeing in the market, we're still seeing good demand on the used truck side. John R. Mims - FBR Capital Markets & Co., Research Division: Okay, that's fair. And then maybe switching over to the Supply Chain side. John, can you comment -- it's gotten progressively stronger now when you look at the guidance outlook for '13. Supply Chain revenue growth is expected to be a bit stronger, kind of leading the charges. Can you comment on how much of that is just Ryder-specific kind of organic new business growth versus just the outsourced market getting better as a whole?

Yes, thanks for that question. As Robert mentioned, we've had really strong, actually record sales in Q4, and that's been continuing into Q1. I think there's a bunch of things going on. I think our strategy of focusing on vertical industry groups is driving part of that. And then I also think part of it is coming from some private fleet conversions that are out there that we're seeing more of, and we're expecting to continue to see more of. And probably, a big driver there is the new CSA regulations that are causing private fleets to report and post their safety scores. And some of these private fleet operators are starting to look at how their safety scores compare to companies like Ryder that focus on this as a business and have much better safety scores, and are starting to consider outsourcing. So we're seeing some more private fleet conversions, and that's part of our growth as well. John R. Mims - FBR Capital Markets & Co., Research Division: What's the margin profile of the dedicated private fleet side versus your traditional Supply Chain?

Well, we used to report on that. And so, you could kind of look back in prior years. It had been a little higher than Supply Chain and had come down a little bit in 2011, as we reported, because of some of the challenges we had with some of the Scully accounts that we brought on, if you remember. And then during the year, we kind of fixed those challenges and the margins came back up. Probably, I don't -- I'm not looking at the precise numbers, but at a high level I would say, they're back up to about the kind of margins we had historically had, where they're very slightly higher and dedicated than they are in the rest of the business. John R. Mims - FBR Capital Markets & Co., Research Division: Right, okay. That's safe to say that dedicated is -- the engine -- I mean, you're getting slightly better growth at dedicated and slightly higher-margin, which should reflect in the whole group?

Yes, I think that's a fair statement.

Our next question is from Ben Hartford with Baird. Benjamin J. Hartford - Robert W. Baird & Co. Incorporated, Research Division: I know it was stated, but, Greg, congratulations on the retirement, certainly well-deserved.

Thank you. Benjamin J. Hartford - Robert W. Baird & Co. Incorporated, Research Division: Can we talk a little bit about FMS margins? As we look toward -- or to calendar '14 and if we assume that the fleet age will start to normalize within the lease fleet at some point in time that year, what prevents either that year's margin, or as you exit that year, the margin on an EBT basis as a percent of operating revenue, at least matching 2006 peak of roughly 13%? Can you talk a little bit about some of the puts and takes and how we should think about what the margin profile will be, if and when the lease fleet age does normalize?

Well, we're probably getting a little ahead of ourselves to talk about '14 yet. But I can tell you that we expect the fleet age to continue to decline in 2013. And I think it's fair to say that we'll also continue into 2014, based on our latest estimates. So I would expect continued improvement coming from the fleet age and the maintenance cost reductions in FMS over the next certainly 12, and I would say even beyond that, probably into the next 24 months. So I think you're going to -- you're seeing, in 2013, continued improvement in FMS margins, I would expect that. It still hasn't gotten back to prerecession levels. And we expect that, as we've said in the past, to get to prerecession even a little better over time. Benjamin J. Hartford - Robert W. Baird & Co. Incorporated, Research Division: Okay. And then you've given some of this data in the past on the organic fleet side, both within Full Service Lease and Commercial Rental. Could you talk about where the fleet size is today on the Full Service Lease side relative to maybe 2008's peak and similarly, commercial rental relative to maybe 2006's peak? How far are we from those peak levels? You have that data on hand?

Let me -- the group is trying to get them. I'm not sure we have that on hand. But I can tell you, if you remember, the lease fleet was getting back close but the power fleet was still slightly below. I think that's probably where we're at. Our lease fleet -- our power fleet is still slightly below, maybe the peak '08 in lease.

Right, if you focus then prerecession, we're probably that 1,000, 2,000 units down still in power. Because when we acquired Hill Hire, they had a big trailer business, and that's not obviously our core.

But our rental fleet, just to follow up on rental, our rental fleet, as you know, came down last year. We started the year at about close to 40,000 units, and we ended at 38,000. And we're expecting now in 2013 to probably be down another 1,600 units, if demand doesn't come back. If it does, obviously you'll see us hold off and keep that fleet up.

Our next question is from Peter Nesvold with Jefferies and Company. H. Peter Nesvold - Jefferies & Company, Inc., Research Division: Can I turn to Slide 23 on the -- so I'm looking at the spreads between the cost of capital and the return on capital. And we've seen this really terrific step-up from negative 2 in 2009 to positive 1 in '13. I guess first question would be, is there a way for me to estimate what the incremental spreads were in 2012? What kind of spreads were you writing incremental new business at?

Right, we write our lease businesses. It's in that 60 to 100 basis points spread over cost of capital. H. Peter Nesvold - Jefferies & Company, Inc., Research Division: So as I look at the 2013 target of 1.0 and in the past, past was like 1.0 to 1.2 back in 2005, 2006. Does that mean that you've sort of repriced all of the sort of bad business last cycle, and that the spread's kind of leveled off here? Or is there more upside to that number?

Yes, I would highlight first. I wouldn't say we're repricing bad business. Our pricing has been disciplined throughout the period. So really, what we've seen here is the fleet age associated with the lease businesses is dragging down the spread, if you will, right now. We're starting to see that improve in '13 as we go to the replacement cycle. And that really is what gives the upside that we see long-term. Our target is 150 basis points spread.

Yes. And I think the other thing that I would add to that is certainly a robust rental environment would help also. And if you go back to '06, we were also in a pretty healthy rental year, then. So we saw some strengthening in rental would certainly help, too. H. Peter Nesvold - Jefferies & Company, Inc., Research Division: Is there a way -- I mean, do we know how much of the book was repriced since, let's say, January 1, '07 the last major kind of peak of the last truck cycle?

Well, yes, if you assume it's 15% to 20% each year, you probably have a lot of it already repriced. H. Peter Nesvold - Jefferies & Company, Inc., Research Division: Okay. All right, last question. Maintenance costs, we're seeing it from some of the other truckload carriers, some of the public guys reported recently, is their maintenance costs are still going up even though they really lowered the average age of their fleet. What's been your experience so far on the post-2010 trucks? And I know you don't know inside their business, but where do you think others in the industry aren't seeing the same earnings leverage from better maintenance costs with the new equipment?

Yes. I'll hand it over to Dennis to give you more color on that. But I think a couple of things, the holding periods on our fleet are very different than what many of the truckload guys are doing. They hold them certainly shorter. So -- and I think we certainly are benefiting from the expertise that we have in the maintenance area. But we're -- our experience with the new technology has been good. We work very closely with the OEMs. And certainly, there's more components with the new technology, more expensive components. But all in all, I think the experience has been good. Dennis, you want to add?

' I would just add, Peter, that we've been focused on truck-up time, and we're having a lot of benefit there by focusing on fewer breakdowns and fewer repairs in our -- between our PM cycles. So with that focus, we're getting some real benefit year-over-year with the maintenance costs.

Our next question is from David Ross with Stifel, Nicolaus. David G. Ross - Stifel, Nicolaus & Co., Inc., Research Division: Also on the -- your return on capital, cost of capital slide, that includes both FMS and SCS, correct?

That includes everything. That's consolidated, yes.

Yes, the whole business. David G. Ross - Stifel, Nicolaus & Co., Inc., Research Division: Okay. So if SCS grows as a percent of operating income, that spread should...

Yes, that helps the spread. David G. Ross - Stifel, Nicolaus & Co., Inc., Research Division: Okay. And then on the SCS, your new business that's coming in, is that mostly with existing customers opening up new plants? Are you seeing, you guys, in new geographies, or is it new customers coming into Ryder?

Mostly new customers. Some of it's expansion with existing customers, but no. Most of it's new customers, and it's kind of across-the-board. It's in all of our vertical industry groups, and it's in Dedicated as well. David G. Ross - Stifel, Nicolaus & Co., Inc., Research Division: And are there, generally, guys that are new to outsourcing or are you winning that business from competitors?

Our best opportunities and certainly well over half of our new business is customers who are, where the project at least, is new to outsourcing. Maybe the customers outsourced somewhere else in their company, but the project is a new outsource. The service we're performing is new outsourcing. David G. Ross - Stifel, Nicolaus & Co., Inc., Research Division: And are you losing any business to insourcing that's been an issue? Or is outsourcing still the main [indiscernible]?

It occasionally happens. It's not, on a net basis, it's not even close. We talk a lot about only 11% of the services we provide are outsourced. We performed logistic services, we provide in the U.S. are outsourced. So there's a huge, that 89%, that we're -- our strategy is aimed at going after that 89% and providing more value than anybody else and helping customers save money by outsourcing to us. So that's really everything we're aiming at, is the 89% that's not outsourced. David G. Ross - Stifel, Nicolaus & Co., Inc., Research Division: Very helpful. And then 1 quick question on the comment made about shorter lead times at the OEMs. I guess I didn't write it fast enough to understand what exactly you guys were talking about there?

Right. As we went through the year, David, we were seeing, when we order equipment, we forecast when it will be delivered to us. And as we got later in the year, the lead time shortened. So we probably went from 4 months at the beginning of the year to at the end, it was maybe 90 days. So that drove a little bit more spending at the end of 2012 than what we had forecast. David G. Ross - Stifel, Nicolaus & Co., Inc., Research Division: But that's generally a good thing because it gets...

Yes, there's nothing wrong with that. I'm just saying. I was more commenting about why our forecast was off a little bit on free cash flow.

Right. David G. Ross - Stifel, Nicolaus & Co., Inc., Research Division: And do you expect that to trend back to the 4 months in 2013 or stay at the 90 days? Any idea from the OEMs?

Dennis?

Yes. It's dependent on demand that we see in the marketplace. So right now, based on the estimate, I think it's going to stay in that 3-month timeframe.

Our next question is from Todd Fowler with KeyBanc Capital markets.

Greg and Robert, congratulations to you both again. I guess where I wanted to start, on the waterfall chart, looking at the headwinds that are coming in, in '13 related to compensation and insurance in medical, those are higher than what I would've expected. Is that normal wage inflation? And is that something we should expect on the medical side based on where medical costs are going? I know that you just went through a period of cost reductions, and you still have some benefit from that. But I guess I'm just trying to get my arms around the salary increases, and if that's related to having to bring on new people to support growth or kind of the leverage that you have in the model?

Yes, let me give you a little more color on it. The compensation is a combination of salary increases that we give as part of our -- the normal annual process and also getting bonus back to the target level. We fell short of our plan this year due to the challenges we had in rental. So certainly, a portion of that, about half of that, is for getting back to target. So again, that's self adjusting. I guess, if we don't hit the numbers, that doesn't come in. On insurance and medical, again it's about 50/50. About 50% of that $0.21 is due to higher insurance premiums. And that's really been, as we've renewed our insurance agreements, we've seen some premium increases. On the medical side, we -- last year, this last year, we had some challenging experience in medical that we're now planning for some of that in 2013. Obviously, if that doesn't come in, then we'll have a benefit. Go ahead.

Right, yes. I mean, Todd, so a couple of things. The insurance here we're focused on is more on the property. It's not related to medical. And the market is hardening generally around property insurance. And also, there is a post-Sandy impact there that's kind of embedded in there. So we're anticipating that. The medical side, as Robert said, we saw much higher medical costs in 2012. We highlighted it a couple of times. We went back in the second quarter, as well as in the fourth quarter for Supply Chain. So we forecasted that to grow a little bit based on, I think it's prudent at this time. 2012 was in that sense, not the best year for us, so we may have some upside if it doesn't really replicate again in '13. David G. Ross - Stifel, Nicolaus & Co., Inc., Research Division: Okay, all of that helps. So I just wanted to make sure it also wasn't all of Greg's severance, I guess. The follow-up that I had was, there were some comments about the age of the lease fleet coming down, I think 4 months this year? Can you talk about where the age of the lease fleet is relative to, I think that it had bottomed somewhere below 40 months in 2009? Can you at least give us a sense of where it is relative to when you were at higher margin levels historically?

Yes. We still have some room to go, right. We're probably in the high 40s now. And we still have -- we probably still have a way to go to get to the high 30s, which is where we were.

High 30s, low 40 range.

Low 40s back in during that time. So we still expect certainly, to get an improvement this year, maybe 4, 5 months. And that's why I still think there's some opportunity for 2014 also.

Our next question is from Art Hatfield with Raymond James. Arthur W. Hatfield - Raymond James & Associates, Inc., Research Division: Let me just start by congratulating Greg and saying a job well done to you, and you're definitely leaving the company in some good hands.

Thank you. Arthur W. Hatfield - Raymond James & Associates, Inc., Research Division: Just I got a question about your leverage and your comments on the cumulative pension charge that is built up within that number and how we can think about that going forward? Because if I look at what your leverage is X that, and I would -- in my opinion, and correct me if I'm wrong on this, but I would characterize that pension charge or liability, however you want to phrase it, it's somewhat contingent as it could potentially get reversed out going forward. Given that, it appears that the company would be significantly under-levered, I guess, from a historical perspective. So is it fair to say that really, even though you're up in that range or midpoint of that range that you're really not constrained going forward? I know you want to consider the ratings of the company and all that. But as we think about the company, you're really in a good position from that standpoint. Help me how I should...

Right. You're right. You're right in that. Art, if you just look at balance sheet debt to equity, we really haven't levered up that much. Most of the increase has been driven by the pension equity charge. Now that being said, it is a metric. It is an item that has to be considered. It's factored in by the rating agencies when they look at the company. And ratings are important to us. So it's not something that we can just push aside, if you will. Now to your point about, it's due really to this interest rate environment we've experienced over the last 3 years. Discount rate is down over 200... [Audio Gap] in the decade of the '90s, free cash flow was a negative $3 billion. In the decade of the 2000s, free cash flow was a positive. That $3 billion, I think, was the number. So I want to talk a little bit about that because you've had 3 years of some pretty elevated capital spend. And at what point in the next 2 to 3 years do you think we get back to kind of that normalized cap spend? And what do you think the free cash flow profile looks when we get back there? Because I see Chart 23 on return on capital, cost of capital, but yet it seems like the free cash flow wasn't what it was because of the higher cap spend? Can you talk a little bit about that?

Yes. Jeff, I think, and I'll let Art expand on this, I think the biggest driver over the last few year's obviously been this replacement cycle that we're in on a lease, which was really driven by a pretty significant replacement that happened in 2006, 2007. I think once you get past that, you're going to see free cash flow improve, obviously go positive. And I would expect over a 10-year period to have similar free cash flow as we had in the 2000s. But, Art, go ahead.

Right. And one thing I would not lose sight of, Jeff, is when we talk on the deck on Page 22 about growth capital, the lion's share of that is associated with replacement equipment, right? So we said it was around just a little over $400 million of that is just on the replacement equipment. And the 2012 spend had a similar amount. We talked to Kevin earlier about that. So you think about in the last 2 years, what we're seeing in '12 and '13, there's $800 million of upfront spend that's kind of outside the normal run rate. And that goes to Robert's point then as we move forward, you're not going to see those kind of deltas going forward. So that's from where you see the free cash flow play out over the cycle.

I think the important thing is we've maintained pricing discipline on the lease side. And as long as we have that, you're going to have some capital up front, which is going to impact free cash flow negatively. But the cash flows from that lease will come in for a 6-, 7-year period, and will provide you that benefit going forward. Jeffrey A. Kauffman - Sterne Agee & Leach Inc., Research Division: So when we get to a normalized run rate on cap spend, Art, what kind of CapEx should we be looking at?

Well, it -- right here, you see replacement is higher. It's probably in that $1.3 billion, $1.4 billion range, I think, at the higher levels that we're now at ever since the cost of vehicles are so much more. Jeffrey A. Kauffman - Sterne Agee & Leach Inc., Research Division: Okay. And that's what I'm getting at, and I'll wrap up with this final point, and then pass it on. But if the cost of vehicles has risen, do we need to generate higher margins across a cycle to compensate for that higher cost per vehicle if we're to get back to that $3 billion over 10-year kind of free cash flow thought process? Or at the end of the day, are we swallowing, so to speak, the higher cost of equipment for our customers?

No. We should, by the nature of our pricing model, we should generate higher margins because we're getting a return on that capital. And so, even though it does cost more, we're getting our returns, so it may vary within the structure and the margin percents may start to change a little bit between the lines, but on a net, on a pretax basis, you'll see earnings rise because we're getting a spread over that.

Our next question is from Thomas Kim with Goldman Sachs.

I wanted to ask about the fleet inventory days. And I was wondering if you could just elaborate on how much of the inventory days outstanding may have changed? And then I guess related to that, would you care to remind us the last time you may have had the write-down inventories?

Okay. Inventory days, they were looking that up. But we haven't had -- the last inventory write-down was way back in 2001. And I'm sorry, are you talking about inventory on used vehicles?

I'm assuming.

Correct, yes. There hasn't been a big change in the days outstanding for inventory. We've been running at this...

Elevated level.

Above this 9,000 range in inventory, selling 5,000 to 5,500 units a quarter at that clip, it hasn't really changed dramatically.

So just to remind you, we adjust this, adjust the price, not adjust the pricing, adjust the book values on an ongoing basis. So it really minimizes the chance of a onetime write-down, if you will, of Used Vehicle.

Coming out of -- out of the '01 timeframe, where we had that write-down, we kind of changed some of our accounting around Used Vehicles to reflect any value declines we see as units age out. And so, that's kind of reflected in the numbers. It's within the depreciation expense we reported at quarter, and we could give you that offline as to how that -- what that totaled for Q4.

That's really helpful, I appreciate the additional color. I know you'd commented that the sales activity has been very healthy. So this is helpful. And then just with regard to the commentary about the pause of the buybacks, could you help give us a little bit of guidance in terms of what balance sheet benchmarks that we should be looking at to help us understand when the buybacks might resume or if there's certain debt coverage ratios that we might be able to calculate independently to help us understand how that might -- how that perspective on the buybacks might change?

I think the main one we continue to focus on is the leverage metric. Obviously, we do look at interest coverage and the like, but I would focus around the leverage. And we're at right now at the lower end of the range by 2013 or the end of 2013. So we're comfortable to have a little cushion there to provide the flexibility for growth and acquisitions, as well as to cushion us around pension charges since we keep thinking it can't happen again, but it's happened 3 straight years, it seems like. So I think as it moves down below that, we'll see how the numbers play out in 2014. That will start to drive our decisions about whether to reinstate it.

Our next question is from Scott Group with Wolfe Trahan. Scott H. Group - Wolfe Trahan & Co.: Just wanted to go back to the waterfall chart for a second. When I look at the strategic investments and other, the headwind there, it looks like it's about twice as big as what you estimated in last year's waterfall chart. Can you give us a sense, what's in here, a little bit more color? And then, how do we think about future benefits associated with these costs?

Sure, Scott. We've got $0.23 or $0.27 in there. I'd tell you about half of it I would really explain this as customer facing technology projects and some maintenance technology projects. We're doing things that are going to make us more competitive in the marketplace with technology that we present to our customers, giving them better fleet data, better fleet information, some investments we're making with a Write Smart telematics device. And then also sales and marketing investments, additional salespeople and some sales productivity investments. So it's about half of it. The other half, there's several different items. There's some onetime items, some onetime benefits that we had in 2012 that we don't expect to recur in 2013. And we also have some onetime hits from 2013 that were not in 2012. As an example, I mentioned the restructuring of some international activity in the first quarter. We had a couple of cents there. That is included in that number also. Scott H. Group - Wolfe Trahan & Co.: Okay. So maybe a normalized run rate, as we think about future years, is somewhere between what you laid out this year and what you laid out last year?

Right. I think that's fair. Scott H. Group - Wolfe Trahan & Co.: Okay, okay. That's helpful. And then just -- we've spent a lot of time talking about the age of the leasing fleet. Is that all that needs to go right to get back to peak margins or are there other things? Because even though the fleet age started to come down and you saw margin improvement in '12, where we're still a ways below where we were in '06, and what are the other things that need to happen?

Right. I think there's really -- we've mentioned this in the past that there's about 300 basis points delta in our FMS margins from where we were last year to the peak. And we said about half of that was really from improved fleet age and lower maintenance costs. The other half is really growth and getting the fleet count, the power fleet count back up to those levels. And obviously, also rental, I think, is another component that could help. So I think if you look at it across those 3 items, that's probably what's driving, what would drive us, getting back to peak margin levels. Scott H. Group - Wolfe Trahan & Co.: And how do much lower interest rates today relative to then impact margin percent?

Can you say that one more time, Scott? Scott H. Group - Wolfe Trahan & Co.: So we have much lower interest rates today relative to peak in '06. How does that impact margin percentages?

It's not dramatic. I mean, as we price business, obviously, we're renewing them at, and we contemplate the lower rate environment. So some of that is manifest in lower pricing to customers.

And remember, these are Full Service Leases. So the cost structure interest is not a large component, although you've got maintenance costs and depreciation as bigger components.

Your next question is from Matt Brooklier with Longbow Research.

I just wanted to dig in a little bit. I think Robert mentioned there was roughly $0.03 of rental benefit from Hurricane Sandy or Superstorm Sandy, whatever we're calling it these days. But was curious to hear if, a, some of that carries forward in the first quarter and those customers hold on to those trucks? And then b, looking at utilization, how much of utilization improvement on the rental fleet was due to Sandy activity?

Well, yes, you're right. There was $0.03 in the fourth quarter. It's really from improved rental demand, as well as we had some used vehicles that were impacted by the storm. And we had -- we accelerated the sale of those vehicles. They're actually through an insurance coverage on those vehicles. So the combination of those 2 was really the $0.03. We are expecting in the first quarter to continue with some of the benefit around rent. I think we've got about a penny in there for the first quarter. And in terms of improvement in the utilization, Dennis?

We've got about 100 basis points of improvement. Sorry, 100 basis points of improvement year-over-year.

In utilization.

Yes, I was just curious if we're able to distinguish between how much of that was just your regular business and then how much of that was potentially related to Sandy? I'm trying to get a sense for the ongoing kind of direction of the rental utilization.

Yes. I think that maybe that -- what we do, what we can tell you is that it was the fourth quarter was 100 basis points better than our expectation. So a good chunk of that, I would say, was probably driven by Superstorm Sandy.

Along with the rightsizing that we had done on the fleet already.

Right.

Right. So, Matt, one thing you want to keep in mind, we talked about at as we were going through it, is that we're positioning the fleet. We have a smaller fleet in '13 relative to the prior-year, and also we're forecasting lower demand. That's going to be offset by higher planned utilization of the fleet. So we would expect favorable comps from a utilization perspective in 2013.

Okay. And then a second question related to, I guess, what sounds like a pickup in terms of demand for outsourcing of vehicles on the Dedicated side, given the impact of CSA in the market, just curious to hear if hours of service and the potential for that change this year is also part of that conversation?

That's harder to tell. The benefit we've seen in terms of fleets outsourcing because of CSA has been something we've seen anecdotally. Customers have come and said, "One reason we're thinking of outsourcing is this issue." I just haven't heard that as often about hours of service.

Our final question today is from Brad Delco with Stephens.

I think, Art, I want to go back to a question earlier. You said the replacement growth -- replacement and growth CapEx on the Full Service Lease is about the same, incrementally a little bit higher though, versus '12. Is it fair to assume a similar change in the average equipment for lease in terms of growth, call it 4.5% to 5%?

I'm not sure. I didn't understand the question, Brad, try that one more time?

If your CapEx on Full Service Lease is fairly similar to '12, we have your average fleet count in the Full Service Lease up about 4.9% in 2012. Should we think about the same amount of units being added to that business in '13 versus '12?

Yes. No, what we had talked about earlier was we were forecasting fleet growth of about 500 to 1,000 units. That's buried within the growth capital that I talked about. Replacement is just that, it's really the fleet size stays the same, it's just the amount we have to spend for customers who are renewing.

Yes, and the fleet growth is consistent with what we did this year.

Right.

Got you, and that's where I wanted to get to. And then, so when I take that and looking back at kind of that waterfall chart for '12, the FMS contractual EPS contribution for the year that you expected this year was going to be -- I think it was $0.13 to $0.17. So it's about $0.25 higher this year. What really drives the difference of CapEx as the same. Is that all average age savings that you're seeing?

Yes, that's reflecting the benefit of the fleet age.

Right. And the maintenance initiative is what's driving on.

Okay, got you. So in essence, bringing down the average age to be about $0.25 of that difference?

Right, average to average.

Yes, that's probably right.

And this concludes the question-and-answer session. I would now like to turn the call over to Robert Sanchez for closing comments.

Okay. Well, thank you very much. We're about 15 minutes past the hour. So we came -- we went a little long, but I think we wanted to get to everybody's questions. I appreciate everybody getting on the call. And have a great day, have a safe day, and we'll talk to you soon.

Thank you. This concludes today's conference. Thank you very much for joining. You may disconnect at this time.