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This Annual Report contains forward-looking statements including, but not limited to, statements regarding: • our expectations in our FMS business segment regarding anticipated ChoiceLease revenue and fleet growth and commercial rental revenue and demand; • our expectations in our DTS and SCS business segments regarding anticipated operating revenue trends, sales activity and growth rates; • our expectations of the long-term residual values of revenue earning equipment; • the anticipated increase in NLE vehicles in inventory through the end of the year; • the expected pricing and inventory levels for used vehicles; • our expectations of operating cash flow, free cash flow, and capital expenditures through the end of 2019; • the adequacy of our accounting estimates and reserves for pension expense, compensation expense and employee benefit plan obligations, depreciation and residual value guarantees, goodwill impairment, accounting changes, and income taxes; • our expected future contractual cash obligations and commitments; • the adequacy of our fair value estimates of employee incentive awards under our share-based compensation plans, publicly traded debt and other debt; • our beliefs regarding the default risk of our direct financing lease receivables; • our ability to fund all of our operating, investing and financial needs for the foreseeable future through internally generated funds and outside funding sources; • our expected level of use and availability of outside funding sources, anticipated future payments under debt, lease and purchase agreements, and risk of losses resulting from counterparty default under hedging and derivative agreements; • the anticipated impact of fuel price and exchange rate fluctuations; • our expectations as to return on pension plan assets, future pension expense and estimated contributions; • our expectations regarding the scope and anticipated outcomes with respect to certain claims, proceedings and lawsuits; • the ultimate disposition of estimated environmental liabilities; • our expectations about the need to repatriate foreign cash to the U.S.; • our ability to access commercial paper and other available debt financing in the capital markets; • our expected cost savings from workforce reductions and restructuring actions; • the size and impact of our strategic investments; • our expectations regarding restructuring charges in connection with the anticipated exit of our Singapore business operations; • the status of our unrecognized tax benefits related to the U.S. federal, state and foreign tax positions; • our expectations regarding the completion and ultimate outcome of certain tax audits; and • the anticipated impact of recent accounting pronouncements. |
• Profitability: ◦ Our inability to obtain adequate profit margins for our services ◦ Lower than expected sales volumes or customer retention levels ◦ Decreases in commercial rental fleet utilization and pricing ◦ Lower than expected used vehicle sales pricing levels and fluctuations in the anticipated proportion of retail versus wholesale sales ◦ Loss of key customers in our DTS and SCS business segments ◦ Our inability to adapt our product offerings to meet changing consumer preferences on a cost-effective basis ◦ The inability of our legacy information technology systems to provide timely access to data ◦ Sudden changes in fuel prices and fuel shortages ◦ Higher prices for vehicles, diesel engines and fuel as a result of new environmental standards ◦ Higher than expected maintenance costs and lower than expected benefits associated with our maintenance initiatives ◦ Our inability to successfully execute our asset management initiatives, maintain our fleet at normalized levels and right-size our fleet in line with demand ◦ Our key assumptions and pricing structure of our DTS and SCS contracts prove to be inaccurate ◦ Increased unionizing, labor strikes and work stoppages ◦ Difficulties in attracting and retaining drivers and technicians due to driver and technician shortages, which may result in higher costs to procure drivers and technicians and higher turnover rates affecting our customers ◦ Our inability to manage our cost structure ◦ Our inability to limit our exposure for customer claims ◦ Unfavorable or unanticipated outcomes in legal or regulatory proceedings or uncertain positions ◦ Business interruptions or expenditures due to severe weather or natural occurrences • Financing Concerns: ◦ Higher borrowing costs ◦ Unanticipated interest rate and currency exchange rate fluctuations ◦ Negative funding status of our pension plans caused by lower than expected returns on invested assets and unanticipated changes in interest rates ◦ Withdrawal liability as a result of our participation in multi-employer plans ◦ Instability in U.S. and worldwide credit markets, resulting in higher borrowing costs and/or reduced access to credit ITEM 7. |
This Annual Report contains forward-looking statements including, but not limited to, statements regarding: • our expectations as to anticipated revenue and earnings growth specifically, total revenue, operating revenue and product line revenues, used vehicle sales, demand, pricing, inventory and volumes, contract revenues, ChoiceLease growth, SelectCare growth, commercial rental pricing and demand, and actual and planned new sales activity in lease, DTS and SCS; • our expectations relating to further deterioration in the used vehicle sales market and residual values of used vehicles; • the size and impact of strategic investments; • our expected cost savings from workforce reductions and restructuring actions; • the continuing benefits of our maintenance initiatives and a newer fleet; • our ability to successfully achieve the operational goals that are the basis of our business strategies, including driving fleet growth, delivering a consistent, industry-leading and cost-effective maintenance program, optimizing asset utilization and management, providing differentiated quality of service and best execution, developing broad-based capabilities, creating a culture of innovation, focusing on continuous improvement and standardization and successfully implementing sales and marketing strategies; • impact of losses from conditional obligations arising from guarantees; • number of NLE and used vehicles in inventory and the appropriate size of our commercial rental fleet given commercial rental market expectations; • estimates of cash flows from operations, free cash flow and capital expenditures for 2018; • the adequacy of our accounting estimates and reserves for pension expense, compensation-related expense, postretirement benefit expense, depreciation and residual value guarantees, rent expense under operating leases, self-insurance reserves, goodwill impairment, accounting changes and income taxes; • our ability to meet our operating, investing and financing needs in the foreseeable future through internally generated funds and outside funding sources; • our expected level of use of outside funding sources, anticipated future payments under debt, lease and purchase agreements, and risk of losses resulting from counterparty default under hedging and derivative agreements; • anticipated impact of exchange rate fluctuations; • the anticipated impact of fuel price fluctuations on our operations, cash flows and financial position; • our expectations as to future pension expense and contributions, as well as the continued effect of the freeze of our pension plans on our benefit funding requirements; • the anticipated deferral of tax gains on disposal of eligible revenue earning equipment under our vehicle like-kind exchange program; • our expectations relating to withdrawal liabilities and funding levels of multi-employer plans; • the status of our unrecognized tax benefits related to the U.S. federal, state and foreign tax positions; • our expectations regarding the completion and ultimate outcome of certain tax audits; • the ultimate disposition of legal proceedings and estimated environmental liabilities; • our expectations relating to compliance with new regulatory requirements; • our expectations regarding the effects of the adoption of recent accounting pronouncements; and • the impact of tax reform legislation. |
This Annual Report contains forward-looking statements including, but not limited to, statements regarding: • our expectations as to anticipated revenue and earnings growth specifically, total revenue, operating revenue and product line revenues, used vehicle sales, demand, pricing, inventory and volumes, contract revenues, full service lease growth, on-demand maintenance growth, commercial rental pricing and demand, and actual and planned new sales activity in lease, DTS and SCS; • our expectations relating to further deterioration in the used vehicle sales market; • the size and impact of strategic investments; • our expected cost savings from workforce reductions and restructuring actions; • the continuing benefits of our maintenance initiatives and a newer fleet; • our ability to successfully achieve the operational goals that are the basis of our business strategies, including driving fleet growth, delivering a consistent, industry-leading and cost-effective maintenance program, optimizing asset utilization and management, providing differentiated quality of service and best execution, developing broad-based capabilities, creating a culture of innovation, focusing on continuous improvement and standardization and successfully implementing sales and marketing strategies; • impact of losses from conditional obligations arising from guarantees; • number of NLE and used vehicles in inventory and the appropriate size of our commercial rental fleet given commercial rental market expectations; • estimates of cash flows from operations, free cash flow and capital expenditures for 2017; • the adequacy of our accounting estimates and reserves for pension expense, compensation-related expense, postretirement benefit expense, depreciation and residual value guarantees, rent expense under operating leases, self-insurance reserves, goodwill impairment, accounting changes and income taxes; • our ability to meet our operating, investing and financing needs in the foreseeable future through internally generated funds and outside funding sources; • our expected level of use of outside funding sources, anticipated future payments under debt, lease and purchase agreements, and risk of losses resulting from counterparty default under hedging and derivative agreements; • anticipated impact of exchange rate fluctuations; • the anticipated impact of fuel price fluctuations on our operations, cash flows and financial position; • our expectations as to future pension expense and contributions, as well as the continued effect of the freeze of our pension plans on our benefit funding requirements; • the anticipated deferral of tax gains on disposal of eligible revenue earning equipment under our vehicle like-kind exchange program; • our expectations relating to withdrawal liabilities and funding levels of multi-employer plans; • the status of our unrecognized tax benefits related to the U.S. federal, state and foreign tax positions; • our expectations regarding the completion and ultimate outcome of certain tax audits; • the ultimate disposition of legal proceedings and estimated environmental liabilities; • our expectations relating to compliance with new regulatory requirements; • our expectations regarding the effects of the adoption of recent accounting pronouncements; and • our plans regarding renewal of our automatic shelf registration statement. |
If uncertainty and lack of customer confidence around macroeconomic and transportation industry conditions increase, they may impact our future growth prospects and our business and results of operations could be materially adversely affected, as follows: • difficulty forecasting, budgeting and planning due to limited visibility into the spending plans of current or prospective customers; • increased competition for projects and sales opportunities; • pricing pressure that may adversely affect revenue and earnings; • higher overhead costs as a percentage of revenue; • increased risk of charges relating to asset impairments, including goodwill and other intangible assets; • customer financial difficulty and increased risk of uncollectible accounts receivable; • additional fleet downsizing which could adversely impact profitability; • increased risk of declines in the residual values of our vehicles; and • sudden changes in fuel prices and fuel shortages, which may adversely impact total vehicle miles driven by our customers. |
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (Continued) The following table provides a numerical reconciliation of total revenue to operating revenue for the three months ended December 31, 2015 and 2014 which was not provided within the MD&A discussion: The following table provides a numerical reconciliation of net earnings and average shareholders' equity used to calculate return on average shareholders’ equity to adjusted net earnings and average adjusted total capital used to calculate adjusted return on average capital for the years ended December 31, 2015, 2014, 2013, 2012 and 2011 which was not provided within the MD&A discussion: ________________ (1) For 2015, 2014 and 2013, see Note 5, “Restructuring and Other Charges (Recoveries)” and Note 25, “Other Items Impacting Comparability,” in the Notes to Consolidated Financial Statements; 2012 includes $8 million of restructuring and other charges primarily related to position eliminations as a result of cost containment actions; and 2011 includes $4 million of restructuring and other charges related to position eliminations and terminations of non-essential equipment contracts in our Hillhire and Scully acquisitions. |
This Annual Report contains forward-looking statements including, but not limited to, statements regarding: • our expectations as to anticipated revenue and earnings growth specifically, total revenue, operating revenue and product line revenues, used vehicle sales, demand, pricing, inventory and volumes, contract revenues, accelerated full service lease growth, on-demand maintenance growth, commercial rental pricing and demand, and actual and planned new sales activity in lease, DTS and SCS; • the size and impact of strategic investments; • our expected cost savings from workforce reductions and restructuring actions; • the continuing benefits of our maintenance initiatives and a newer fleet; • our ability to successfully achieve the operational goals that are the basis of our business strategies, including driving fleet growth, delivering a consistent, industry-leading and cost-effective maintenance program, optimizing asset utilization and management, providing differentiated quality of service and best execution, developing broad-based capabilities, creating a culture of innovation, focusing on continuous improvement and standardization and successfully implementing sales and marketing strategies; • impact of losses from conditional obligations arising from guarantees; • number of NLE and used vehicles in inventory and the size of our commercial rental fleet; • estimates of cash flows from operations, free cash flow and capital expenditures for 2016; • the adequacy of our accounting estimates and reserves for pension expense, compensation-related expense, postretirement benefit expense, depreciation and residual value guarantees, rent expense under operating leases, self-insurance reserves, goodwill impairment, accounting changes and income taxes; • our ability to meet our operating, investing and financing needs in the foreseeable future through internally generated funds and outside funding sources; • our expected level of use of outside funding sources, anticipated future payments under debt, lease and purchase agreements, and risk of losses resulting from counterparty default under hedging and derivative agreements; • anticipated impact of exchange rate fluctuations; • the anticipated impact of fuel price fluctuations on our operations, cash flows and financial position; • our expectations as to future pension expense and contributions, as well as the continued effect of the freeze of our pension plans on our benefit funding requirements; • the anticipated deferral of tax gains on disposal of eligible revenue earning equipment under our vehicle like-kind exchange program; • our expectations relating to withdrawal liabilities and funding levels of multi-employer plans; • the status of our unrecognized tax benefits related to the U.S. federal, state and foreign tax positions; • our expectations regarding the completion and ultimate outcome of certain tax audits; • the ultimate disposition of legal proceedings and estimated environmental liabilities; • our expectations relating to compliance with new regulatory requirements; • our expectations regarding the effects of the adoption of recent accounting pronouncements; and • our plans regarding renewal of our automatic shelf registration statement. |
If uncertainty and lack of customer confidence around macroeconomic and transportation industry conditions return, they may impact our future growth prospects, our business, and results of operations could be materially adversely affected, including as follows: • difficulty forecasting, budgeting and planning due to limited visibility into the spending plans of current or prospective customers; • increased competition for projects and sales opportunities; • pricing pressure that may adversely affect revenue and earnings; • higher overhead costs as a percentage of revenue; • increased risk of charges relating to asset impairments, including goodwill and other intangible assets; • customer financial difficulty and increased risk of uncollectible accounts receivable; • additional fleet downsizing which could adversely impact profitability; • increased risk of declines in the residual values of our vehicles; and • sudden changes in fuel prices and fuel shortages, which may adversely impact total vehicle miles driven by our customers. |
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (Continued) With respect to adjusted return on average capital, the following table provides a numerical reconciliation of net earnings and average total debt used to calculate return on average shareholders’ equity to adjusted net earnings and adjusted average total capital used to calculate adjusted return on average capital for the years ended December 31, 2014, 2013, 2012, 2011 and 2010 which was not provided within the MD&A discussion: ________________ (1) For 2014, 2013 and 2012, see Note 4, “Restructuring and Other Charges (Recoveries)” and Note 25, “Other Items Impacting Comparability,” in the Notes to Consolidated Financial Statements; 2011 includes $4 million of restructuring and other charges related to position eliminations and terminations of non-essential equipment contracts in our Hillhire and Scully acquisitions; 2010 includes $3 million of restructuring and other charges related to our discontinued operations. |
This Annual Report contains forward-looking statements including, but not limited to, statements regarding: • our expectations as to anticipated revenue and earnings trends specifically, total revenue, operating revenue and product line revenues, used vehicle sales, pricing, inventory and volumes, contract revenues, accelerated full service lease growth, commercial rental and contract maintenance growth, commercial rental pricing and demand, and sales activity in lease and SCS; • the size and impact of strategic investments; • cost savings from restructuring actions; • the continuing benefits of our maintenance initiatives and a newer fleet; • our ability to successfully achieve the operational goals that are the basis of our business strategies, including driving fleet growth, delivering a consistent, industry-leading and cost-effective maintenance program, optimizing asset utilization and management, providing differentiated quality of service and best execution, developing broad-based capabilities, creating a culture of innovation, focusing on continuous improvement and standardization and successfully implementing sales and marketing strategies; • impact of losses from conditional obligations arising from guarantees; • number of NLE vehicles in inventory and the size of our commercial rental fleet; • estimates of free cash flow and capital expenditures for 2015; • the adequacy of our accounting estimates and reserves for pension expense, compensation-related expense, depreciation and residual value guarantees, rent expense under operating leases, self-insurance reserves, goodwill impairment, accounting changes and income taxes; • our ability to meet our operating, investing and financing needs in the foreseeable future through internally generated funds and outside funding sources; • our expected level of use of outside funding sources, anticipated future payments under debt, lease and purchase agreements, and risk of losses resulting from counterparty default under hedging and derivative agreements; • the anticipated impact of fuel price fluctuations on our operations, cash flows and financial position; • our expectations as to future pension expense and contributions, as well as the continued effect of the freeze of our pension plans on our benefit funding requirements; • our expectations relating to withdrawal liabilities and funding levels of multi-employer plans; • the status of our unrecognized tax benefits related to the U.S. federal, state and foreign tax positions; • our expectations regarding the completion and ultimate outcome of certain tax audits; • the ultimate disposition of legal proceedings and estimated environmental liabilities; • our expectations relating to compliance with new regulatory requirements; and • our expectations regarding the effect of the adoption of a recent accounting pronouncement. |
If uncertainty and lack of customer confidence around macroeconomic and transportation industry conditions return, they may impact our future growth prospects, our business, and results of operations could be materially adversely affected, including as follows: • difficulty forecasting, budgeting and planning due to limited visibility into the spending plans of current or prospective customers; • increased competition for projects and sales opportunities; • pricing pressure that may adversely affect revenue and gross margin; • higher overhead costs as a percentage of revenue; • increased risk of charges relating to asset impairments, including goodwill and other intangible assets; • customer financial difficulty and increased risk of uncollectible accounts receivable; • additional fleet downsizing which could adversely impact profitability; • increased risk of declines in the residual values of our vehicles; and • sudden changes in fuel prices and fuel shortages, which may adversely impact total vehicle miles driven by our customers. |
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (Continued) With respect to adjusted return on average capital, the following table provides a numerical reconciliation of net earnings and average total debt used to calculate return on average shareholders’ equity to adjusted net earnings and adjusted average total capital used to calculate adjusted return on average capital for the years ended December 31, 2013, 2012, 2011, 2010 and 2009 which was not provided within the MD&A discussion: ________________ (1) For 2013, 2012 and 2011, see Note 4, “Discontinued operations,” Note 5, “Restructuring and Other (Recoveries) Charges” and Note 26, “Other Items Impacting Comparability,” in the Notes to Consolidated Financial Statements; 2010 includes $3 million of restructuring and other charges related to our discontinued operations; 2009 includes $23 million of restructuring and other charges, of which $17 million related to our discontinued operations, and a $7 million impairment charge on an international asset. |
This Annual Report contains forward-looking statements including, but not limited to, statements regarding: • our expectations as to anticipated revenue and earnings trends specifically, total revenue, operating revenue and product line revenues, used vehicle sales inventory and volumes, contract revenues, full service lease, commercial rental and contract maintenance growth, pricing trends in used vehicle sales and commercial rental and new SCS business, improved SCS retention levels, and higher SCS volumes; • the continuing benefits of our maintenance initiatives and a newer fleet; • our ability to successfully achieve the operational goals that are the basis of our business strategies, including driving fleet growth, delivering a consistent, industry-leading and cost-effective maintenance program, optimizing asset utilization and management, providing differentiated quality of service and best execution, developing broad-based capabilities, creating a culture of innovation, focusing on continuous improvement and standardization and successfully implementing sales and marketing strategies; • impact of losses from conditional obligations arising from guarantees; • number of NLE vehicles in inventory and the size of our commercial rental fleet; • estimates of free cash flow and capital expenditures for 2014; • the adequacy of our accounting estimates and reserves for pension expense, compensation-related expense, depreciation and residual value guarantees, rent expense under operating leases, self-insurance reserves, goodwill impairment, accounting changes and income taxes; • our ability to meet our operating, investing and financing needs in the foreseeable future through internally generated funds and outside funding sources; • our expected level of use of outside funding sources, anticipated future payments under debt, lease and purchase agreements, and risk of losses resulting from counterparty default under hedging and derivative agreements; • the anticipated impact of fuel price fluctuations on our operations, cash flows and financial position; • our expectations as to future pension expense and contributions, as well as the continued effect of the freeze of our pension plans on our benefit funding requirements; • our expectations relating to withdrawal liabilities and funding levels of multi-employer plans; • the status of our unrecognized tax benefits related to the U.S. federal, state and foreign tax positions; • our expectations regarding the completion and ultimate outcome of certain tax audits; • the ultimate disposition of legal proceedings and estimated environmental liabilities; • our expectations relating to compliance with new regulatory requirements; and • our expectations regarding the effect of the adoption of a recent accounting pronouncement. |
We offer the following fleet support services: Service Description Fuel Full service diesel fuel and natural gas dispensing at competitive prices; fuel planning; fuel tax reporting; centralized billing; and fuel cards Insurance Liability insurance coverage under our existing insurance policies which includes monthly invoicing, flexible deductibles, claims administration and discounts based on driver performance and vehicle specifications; physical damage waivers; gap insurance; and fleet risk assessment Safety Establishing safety standards; providing safety training, driver certification, prescreening and road tests; safety audits; instituting procedures for transport of hazardous materials; coordinating drug and alcohol testing; and loss prevention consulting Administrative Vehicle use and other tax reporting; permitting and licensing; and regulatory compliance (including hours of service administration) Environmental Management Storage tank monitoring; storm water management; environmental training; and ISO 14001 certification Information Technology RydeSmart® is a full-featured GPS fleet location, tracking, and vehicle performance management system designed to provide our customers improved fleet operations and cost controls. |
These factors include the following: • our inability to obtain expected customer retention levels or sales growth targets; • advances in technology require increased investments to remain competitive, and our customers may not be willing to accept higher prices to cover the cost of these investments, and our reputation with our customers may suffer if outages, system failures or delays in timely access to data occur in legacy information technology systems that support key business processes; • we compete with many other transportation and logistics service providers, some of which have greater capital resources than we do; • customers may choose to provide the services we provide for themselves; • some of our competitors periodically reduce their prices to gain business, and some of our smaller competitors may have lower cost structures than we do, which may limit our ability to maintain or increase prices; and • because cost of capital is a significant competitive factor, any increase in either our debt or equity cost of capital as a result of reductions in our debt rating or stock price volatility could have a significant impact on our competitive position. |
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (Continued) The following table provides a numerical reconciliation of total revenue to operating revenue for the three months ended December 31, 2012 and 2011 which was not provided within the MD&A discussion: The following table provides a numerical reconciliation of net earnings to adjusted net earnings and average total debt to adjusted average total capital for the years ended December 31, 2012, 2011, 2010, 2009 and 2008 which was not provided within the MD&A discussion: ________________ (1) For 2012, 2011 and 2010, see Note 4, “Discontinued operations,” Note 5, “Restructuring and Other Charges” and Note 26, “Other Items Impacting Comparability,” in the Notes to Consolidated Financial Statements; 2009 includes $23 million of restructuring and other charges, of which $17 million related to our discontinued operations, and a $7 million impairment charge related to an international asset; 2008 includes $68 million of restructuring and other charges, of which $47 million related to our discontinued operations, and $2 million of impairment charges on an international operating facility. |
This Annual Report contains forward-looking statements including, but not limited to, statements regarding: • our expectations as to anticipated revenue and earnings trends specifically, earnings per share, total revenue, operating revenue, used vehicle sales and volume results, contract revenues, full service lease and contract maintenance growth, pricing trends in used vehicle sales and commercial rental and new SCS business, improved SCS retention levels, and higher SCS volumes; • our ability to successfully achieve the operational goals that are the basis of our business strategies, including driving fleet growth, delivering a consistent, industry-leading and cost-effective maintenance program, optimizing asset utilization and management, providing differentiated quality of service and best execution, developing broad-based capabilities, creating a culture of innovation, focusing on continuous improvement and standardization and successfully implementing sales and marketing strategies; • impact of losses from conditional obligations arising from guarantees; • number of NLE vehicles in inventory and the size of our commercial rental fleet; • estimates of free cash flow and capital expenditures for 2013; • the adequacy of our accounting estimates and reserves for pension expense, compensation-related expense, depreciation and residual value guarantees, rent expense under operation leases, self-insurance reserves, goodwill impairment, accounting changes and income taxes; • our ability to meet our operating, investing and financing needs in the foreseeable future through internally generated funds and outside funding sources; • our expected level of use of outside funding sources, anticipated future payments under debt, lease and purchase agreements, and risk of losses resulting from counterparty default under hedging and derivative agreements; • the anticipated impact of fuel price fluctuations on our operations, cash flows and financial position; • our expectations as to future pension expense and contributions, the impact of pension legislation, as well as the continued effect of the freeze of our pension plans on our benefit funding requirements; • our expectations relating to withdrawal liability and funding levels of multi-employer plans; • the status of our unrecognized tax benefits related to the U.S. federal, state and foreign tax positions; • our expectations regarding the completion and ultimate outcome of certain tax audits; • the ultimate disposition of legal proceedings and estimated environmental liabilities; • our expectations relating to compliance with new regulatory requirements; • our expectations regarding the effect of the adoption of recent accounting pronouncements; and • expected recovery of costs and losses resulting from Superstorm Sandy. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (Continued) The following table provides a numerical reconciliation of total revenue to operating revenue for the years ended December 31, 2011, 2010 and 2009 which was not provided within the MD&A discussion: The following table provides a numerical reconciliation of total revenue to operating revenue for the three months ended December 31, 2011 and 2010 which was not provided within the MD&A discussion: The following table provides a numerical reconciliation of net earnings to adjusted net earnings and average total debt to adjusted average total capital for the years ended December 31, 2011, 2010, 2009, 2008 and 2007 which was not provided within the MD&A discussion: (1) For 2011, 2010 and 2009, see Note 4, “Discontinued operations,” Note 5, “Restructuring and Other Charges” and Note 26, “Other Items Impacting Comparability,” in the Notes to Consolidated Financial Statements; 2008 includes $68 million of restructuring and other charges, of which $47 million related to our discontinued operation, and $2 million of impairment charges on an international operating facility; 2007 includes restructuring and other charges of $11 million in the second half of 2007 and a gain of $10 million related to the sale of property in the third quarter. |
This Annual Report contains forward-looking statements including, but not limited to, statements regarding: • our expectations as to anticipated revenue and earnings trends and future economic conditions specifically, earnings per share, total revenue, operating revenue, used vehicle sales results, contract revenues, full service lease, contract maintenance and commercial rental growth, improved pricing trends in used vehicle sales and commercial rental freight volume projections and new SCS business and higher SCS volumes; • the expected effects of our acquisitions on revenue; • our ability to successfully achieve the operational goals that are the basis of our business strategies, including delivering product innovation, offering competitive pricing and value-added differentiation, diversifying our customer base, focusing on conversion to full service lease customers, successfully implementing sales and contractual revenue growth initiatives, optimizing asset utilization, leveraging the expertise of our various business segments, serving our customers’ global needs and expanding our support services; • impact of losses from conditional obligations arising from guarantees; • number of NLE vehicles in inventory and the size of our commercial rental fleet; • estimates of free cash flow and capital expenditures for 2012, and the impact of our plans to grow and refresh our commercial rental and lease fleets on these estimates; • the adequacy of our accounting estimates and reserves for pension expense, depreciation and residual value guarantees, rent expense under operation leases, compensation expense, self-insurance reserves, goodwill impairment, accounting changes and income taxes; • our ability to meet our operating, investing and financing needs in the foreseeable future through internally generated funds and outside funding sources; • our expected level of use of outside funding sources anticipated future payments under debt, lease and purchase agreements, and risk of losses resulting from counterparty default under hedging and derivative agreements; • the anticipated impact of fuel price fluctuations on our operations, cash flows and financial position; • our expectations as to future pension expense and contributions, the impact of pension legislation, as well as the continued effect of the freeze of our pension plans on our benefit funding requirements; • our expectations relating to withdrawal liability and funding levels of multi-employer plans; • the anticipated deferral of tax gains on disposal of eligible revenue earning equipment pursuant to our vehicle like-kind exchange program; • the status of our unrecognized tax benefits related to the U.S. federal, state and foreign tax positions and the impact of recent federal and state tax law changes; • our expectations regarding the completion and ultimate outcome of certain tax audits; • the ultimate disposition of legal proceedings and estimated environmental liabilities; • our expectations relating to compliance with new regulatory requirements; and • our expectations regarding the effect of the adoption of recent accounting pronouncements. |
We operate in three reportable business segments: (1) FMS, which provides full service leasing, contract maintenance, contract-related maintenance and commercial rental of trucks, tractors and trailers to customers, principally in the U.S., Canada and the U.K.; (2) SCS, which provides comprehensive supply chain consulting including distribution and transportation services throughout North America and in Asia; and (3) DCC, which provides vehicles and drivers as part of a dedicated transportation solution in the U.S. RYDER SYSTEM, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Our primary measurement of segment financial performance, defined as “Earnings Before Tax” (EBT) from continuing operations, includes an allocation of CSS and excludes restructuring and other charges, net described in Note 5, “Restructuring and Other Charges” and excludes the items discussed in Note 26, “Other Items Impacting Comparability.” CSS represents those costs incurred to support all business segments, including human resources, finance, corporate services, public affairs, information technology, health and safety, legal and corporate communications. |
Our annual and quarterly operating and financial results are affected by a number of economic, regulatory and competitive factors, including: • changes in current financial, tax or regulatory requirements that could negatively impact the leasing market; • our inability to obtain expected customer retention levels or sales growth targets; • our inability to integrate acquisitions as projected, achieve planned synergies or retain customers of companies we acquire; • unanticipated interest rate and currency exchange rate fluctuations; • labor strikes, work stoppages, driver shortages; • higher costs to procure drivers and high driver turnover rates affecting our customers; • sudden changes in fuel prices and fuel shortages; • relationships with and competition from vehicle manufacturers; • changes in accounting rules, estimates, assumptions and accruals, including changes in lease accounting that could impact customers’ leasing decisions; • increases in healthcare costs resulting in higher insurance costs; • outages, system failures or delays in timely access to data in legacy information technology systems that support key business processes; and • reputational risk and other detrimental business consequences in the U.S. and internationally associated with employees, customers, agents, suppliers or other persons using our supply chain or assets to commit illegal acts, including the use of company assets for terrorist activities. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (Continued) offerings, delivering industry leading maintenance in a cost effective manner, offering competitive pricing, a wide range of support services and value-added differentiation, optimizing asset utilization and management, leveraging infrastructure, providing operational execution, expanding our expertise and market presence in certain supply chain industry segments and maintaining a diversified customer base; • impact of losses from conditional obligations arising from guarantees; • number of NLE vehicles in inventory and the size of our contractual lease and commercial rental fleets; • estimates of free cash flow and capital expenditures for 2011; • the adequacy of our accounting estimates and reserves for pension expense, employee benefit plan obligations, depreciation and residual value guarantees, self-insurance reserves, impairment of goodwill and other long-lived assets, revenue recognition, allowance for accounts receivable, income taxes, contingent liabilities, fair value estimates, risk of loss under derivative instruments and hedging activities and accounting changes; • our ability to fund all of our operations for the foreseeable future through internally generated funds and outside funding sources; • future availability and our expected use of outside funding sources; • the anticipated impact of fuel price fluctuations; • our expectations as to future pension expense, contributions and return on plan assets; • our expectations relating to withdrawal liability and funding levels of multi-employer plans; • the anticipated deferral of federal and state tax gains on disposal of eligible revenue earning equipment pursuant to our vehicle like-kind exchange program; • our expectations regarding the completion and ultimate outcome of certain tax audits; • the impact of recent U.S. tax law changes; • the ultimate disposition of legal proceedings and estimated environmental liabilities; • our expectations relating to compliance with new regulatory requirements; and • our expectations regarding the effect of the adoption of recent accounting pronouncements. |
We operate in three reportable business segments: (1) FMS, which provides full service leasing, contract maintenance, contract-related maintenance and commercial rental of trucks, tractors and trailers to customers, principally in the U.S., Canada and the U.K.; (2) SCS, which provides comprehensive supply chain consulting including distribution and transportation services throughout North America and in Asia; and (3) DCC, which provides vehicles and drivers as part of a dedicated transportation solution in the U.S. RYDER SYSTEM, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Our primary measurement of segment financial performance, defined as “Net Before Taxes” (NBT) from continuing operations, includes an allocation of CSS and excludes restructuring and other charges, net described in Note 5, “Restructuring and Other Charges” and excludes the items discussed in Note 26, “Other Items Impacting Comparability.” CSS represents those costs incurred to support all business segments, including human resources, finance, corporate services, public affairs, information technology, health and safety, legal and corporate communications. |
The benefits provide by Mr. Garcia’s agreement are substantially the same benefits as those set forth in the Form of Severance Agreement that was filed with the SEC on February 11, 2009 and which is described under “Potential Payments Upon Termination or Change of Control” in our Schedule 14A filed with the SEC on March 29, 2010 (the “2010 Schedule 14A”); provided, however, that rather than provide for a gross-up of payments in the case that any payment under the agreement would constitute an “excess parachute payment” within the meaning of Section 280G of the Internal Revenue Code of 1986 as amended (the “Code”), our severance agreement with Mr. Garcia provides that the Company shall reduce (but not below zero) the aggregate present value of the payments under the agreement to an amount which does not cause any payment to be subject to the excise tax under Section 4999 of the Code, if reducing the payments under the agreement would provide the executive with a greater net after-tax amount than would be the case if no reduction was made. |
Currently, we offer the following fleet support services: Service Description Fuel Full service diesel fuel dispensing at competitive prices; fuel planning; fuel tax reporting; centralized billing; and fuel cards Insurance Liability insurance coverage under our existing insurance policies which includes monthly invoicing, flexible deductibles, claims administration and discounts based on driver performance and vehicle specifications; physical damage waivers; gap insurance; and fleet risk assessment Safety Establishing safety standards; providing safety training, driver certification, prescreening and road tests; safety audits; instituting procedures for transport of hazardous materials; coordinating drug and alcohol testing; and loss prevention consulting Administrative Vehicle use and other tax reporting; permitting and licensing; and regulatory compliance (including hours of service administration) Environmental management Storage tank monitoring; stormwater management; environmental training; and ISO 14001 certification Information technology RydeSmartTM is a full-featured GPS fleet location, tracking, and vehicle performance management system designed to provide our customers improved fleet operations and cost controls. |
This Annual Report contains forward-looking statements including, but not limited to, statements regarding: • the status of our unrecognized tax benefits for 2009 related to the U.S. federal, state and foreign tax positions and the impact of recent state tax law changes; • our expectations as to anticipated revenue and earnings trends and future economic conditions specifically, earnings per share, operating revenue, used vehicle sales results, contract revenue declines, non-renewal of automotive contracts, commercial rental growth and freight volume projections; • the economic and business impact of our strategy to continue supply chain operations in the U.S., Canada, Mexico and Asia markets, discontinue supply chain operations in South America and Europe and carry out workforce reductions; • the anticipated pre-tax cost annual savings from our global cost savings initiatives; • our ability to successfully achieve the operational goals that are the basis of our business strategies, including offering competitive pricing and value-added differentiation, diversifying our customer base, optimizing asset utilization, leveraging the expertise of our various business segments, serving our customers’ global needs and expanding our support services; • impact of losses from conditional obligations arising from guarantees; • number of NLE vehicles in inventory, and the size of our commercial rental fleet, for the remainder of the year; • estimates of free cash flow and capital expenditures for 2010; • the adequacy of our accounting estimates and reserves for pension expense, depreciation and residual value guarantees, self-insurance reserves, goodwill impairment, accounting changes and income taxes; • our ability to fund all of our operations for the foreseeable future through internally generated funds and outside funding sources; • our expected level of use of outside funding sources; • the anticipated impact of fuel price fluctuations; • our expectations as to future pension expense and contributions, the impact of pension legislation, as well as the effect of the freeze of our pension plans on our benefit funding requirements; • our expectations relating to withdrawal liability and funding levels of multi-employer plans; • the anticipated deferral of tax gains on disposal of eligible revenue earning equipment pursuant to our vehicle like-kind exchange program; • our expectations regarding the completion and ultimate outcome of certain tax audits; • the anticipated effects of our decision to resume our share repurchase program; • the ultimate disposition of legal proceedings and estimated environmental liabilities; • our expectations relating to compliance with new regulatory requirements; and • our expectations regarding the effect of the adoption of recent accounting pronouncements. |
We operate in three reportable business segments: (1) FMS, which provides full service leasing, contract maintenance, contract-related maintenance and commercial rental of trucks, tractors and trailers to customers, principally in the U.S., Canada and the U.K.; (2) SCS, which provides comprehensive supply chain consulting including distribution and transportation services throughout North America and in Asia; and (3) DCC, which provides vehicles and drivers as part of a dedicated transportation solution in the U.S. Our primary measurement of segment financial performance, defined as “Net Before Taxes” (NBT) from continuing operations, includes an allocation of CSS and excludes restructuring and other charges, net described in Note 5, “Restructuring and Other Charges” and excludes the items discussed in Note 26, “Other Items Impacting Comparability.” CSS represents those costs incurred to support all business segments, including human resources, finance, corporate services, public affairs, information technology, health and safety, legal and corporate communications. |
.1 PricewaterhouseCoopers LLP consent to incorporation by reference in certain Registration Statements on Forms S-3 and S-8 of their report on Consolidated Financial Statements financial statement schedule and effectiveness of internal controls over financial reporting of Ryder System, Inc. .1 Manually executed powers of attorney for each of: James S. Beard John M. Berra David I. Fuente L. Patrick Hassey Lynn M. Martin Luis P. Nieto, Jr. Eugene A. Renna Abbie J. Smith E. Follin Smith Hansel E. Tookes, II (b) Executive Compensation Plans and Arrangements: Please refer to the description of Exhibits 10.1 through 10.10 set forth under Item 15(a)3 of this report for a listing of all management contracts and compensation plans and arrangements filed with this report pursuant to Item 601(b)(10) of Regulation S-K. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. |
This Annual Report contains forward-looking statements including, but not limited to, statements regarding: • the status of our unrecognized tax benefits for 2008 related to the U.S. federal, state and foreign tax positions and the impact of recent state tax law changes; • our expectations as to anticipated revenue and earnings trends and future economic conditions specifically, earnings per share, operating revenue, used vehicle sales results, contract revenue growth and commercial rental declines; • the economic and business impact of continuing supply chain operations in the U.S., Canada, Mexico, U.K. and Asia markets and workforce reductions; • the anticipated pre-tax annual cost savings from our global cost savings initiatives; • our ability to successfully achieve the operational goals that are the basis of our business strategies, including offering competitive pricing, diversifying our customer base, optimizing asset utilization, leveraging the expertise of our various business segments, serving our customers’ global needs and expanding our support services; • impact of losses from conditional obligations arising from guarantees; • our expectations as to the future level of vehicle wholesaling activity; • number of NLE vehicles in inventory, and the size of our commercial rental fleet, for the remainder of the year; • estimates of free cash flow and, capital expenditures for 2009; • the adequacy of our accounting estimates and reserves for pension expense, depreciation and residual value guarantees, self-insurance reserves, goodwill impairment, accounting changes and income taxes; • our ability to fund all of our operations for the foreseeable future through internally generated funds and outside funding sources; • the anticipated impact of fuel price fluctuations; • our expectations as to future pension expense and contributions, the impact of pension legislation, as well as the effect of the freeze of the U.S. and Canadian pension plan on our benefit funding requirements; • the anticipated deferral of tax gains on disposal of eligible revenue earning equipment pursuant to our vehicle like-kind exchange program; • our expectations as to the future effect of amendments to our contractual relationship with GM; and • our expectations regarding the effect of the adoption of recent accounting pronouncements. |
We operate in three reportable business segments: (1) FMS, which provides full service leasing, contract maintenance, contract-related maintenance and commercial rental of trucks, tractors and trailers to customers, principally in the U.S., Canada and the U.K.; (2) SCS, which provides comprehensive supply chain consulting including distribution and transportation services throughout North America and in South America, Europe and Asia; and (3) DCC, which provides vehicles and drivers as part of a dedicated transportation solution in the U.S. Our primary measurement of segment financial performance, defined as “Net Before Taxes” (NBT), includes an allocation of CSS and excludes restructuring and other charges, net described in Note 4, “Restructuring and Other Charges” and excludes the items discussed in Note 25, “Other Items Impacting Comparability.” CSS represents those costs incurred to support all business segments, including human resources, finance, corporate services, public affairs, information technology, health and safety, legal and corporate communications. |
.1 PricewaterhouseCoopers LLP consent to incorporation by reference in certain Registration Statements on Forms S-3 and S-8 of their report on Consolidated Financial Statements financial statement schedule and effectiveness of internal controls over financial reporting of Ryder System, Inc. .1 Manually executed powers of attorney for each of: James S. Beard David I. Fuente Lynn M. Martin Eugene A. Renna E. Follin Smith Christine A. Varney John M. Berra L. Patrick Hassey Luis P. Nieto, Jr. Abbie J. Smith Hansel E. Tookes, II (b) Executive Compensation Plans and Arrangements: Please refer to the description of Exhibits 10.1 through 10.10 set forth under Item 15(a)3 of this report for a listing of all management contracts and compensation plans and arrangements filed with this report pursuant to Item 601(b)(10) of Regulation S-K. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (Continued) • our ability to successfully achieve the operational goals that are the basis of our business strategies, including offering competitive pricing, diversifying our customer base, optimizing asset utilization, leveraging the expertise of our various business segments, serving our customers’ global needs and expanding our support services; • impact of losses from conditional obligations arising from guarantees; • our expectations as to the future level of vehicle wholesaling activity; • number of NLE vehicles in inventory, and the size of our commercial rental fleet, for the remainder of the year; • estimates of free cash flow, capital expenditures and environmental expenses for 2008; • the adequacy of our accounting estimates and reserves for pension expense, depreciation and residual value guarantees, self-insurance reserves, goodwill impairment, accounting changes and income taxes; • our ability to fund all of our operations for the foreseeable future through internally generated funds and outside funding sources; • the anticipated impact of fuel price fluctuations; • our expectations as to future pension expense and contributions, the impact of recent pension legislation, as well as the effect of the freeze of the U.S. pension plan on our benefit funding requirements; • the anticipated income tax impact of the like-kind exchange program; • the anticipated deferral of tax gains on disposal of eligible revenue earning equipment pursuant to our vehicle like-kind exchange program; • our expectations as to the future effect of amendments to our contractual relationship with GM; and • our expectations regarding the effect of the adoption of recent accounting pronouncements. |
We operate in three reportable business RYDER SYSTEM, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) segments: (1) FMS, which provides full service leasing, contract maintenance, contract-related maintenance and commercial rental of trucks, tractors and trailers to customers, principally in the U.S., Canada and the U.K.; (2) SCS, which provides comprehensive supply chain consulting including distribution and transportation services throughout North America and in Latin America, Europe and Asia; and (3) DCC, which provides vehicles and drivers as part of a dedicated transportation solution in the U.S. Our primary measurement of segment financial performance, defined as “Net Before Taxes” (NBT), includes an allocation of Central Support Services (CSS) and excludes restructuring and other (charges), net, the 2007 gain on sale of property described in Note 9, “Operating Property and Equipment,” and certain 2006 net retirement plan charges described in Note 23, “Employee Benefit Plans.” CSS represents those costs incurred to support all business segments, including human resources, finance, corporate services, public affairs, information technology, health and safety, legal and corporate communications. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (Continued) • number of NLE vehicles in inventory over the near term; • our belief as to the adequacy of our insurance coverages and self-insurance accruals, funding sources and the effectiveness of our interest and foreign currency exchange rate risk management programs; • our relationship with our employees; • our belief that we can continue to realize significant savings from our cost management initiatives and process improvement actions, and that such initiatives and actions will mitigate pricing pressures from our SCS customers; • estimates of free cash flow and capital expenditures for 2007; • the adequacy of our accounting estimates and reserves for pension expense, depreciation and residual value guarantees, self-insurance reserves, goodwill impairment, accounting changes and income taxes, and the future impact of FIN 48; • our belief that we have not entered into any other transactions since 2000 that raise the same type of issues identified by the IRS in their audit of the 1998 to 2000 tax period; • our ability to fund all of our operations for the foreseeable future through internally generated funds and outside funding sources; and • the anticipated impact of fuel price fluctuations and cost of environmental liabilities; • the anticipated impact of ongoing legal proceedings; • our expectations as to future pension expense and contributions, as well as the effect of the freeze of the U.S. pension plan on our benefit funding requirements; • the anticipated income tax impact of the like-kind exchange program; • our ability to mitigate the impact of adverse downturns in specific sectors of the economy through customer diversification. |
This Annual Report contains forward-looking statements including, but not limited to, statements regarding: • our expectations as to anticipated revenue and earnings growth across all business segments; • our ability to improve our competitive advantage by leveraging our vehicle buying power, reducing vehicle downtime, providing innovative broad-based supply chain solutions and increasing our customers’ competitive positions; • anticipated gains on the sale of used vehicles; • the impact of the restructuring activities and growth initiatives on our FMS business segment; • our ability to successfully achieve the operational goals that are the basis of our business strategies, including offering competitive pricing, diversifying our customer base, optimizing asset utilization, leveraging the expertise of our various business segments, serving our customers’ global needs and expanding our support services; • impact of losses from conditional obligations arising from guarantees; • number of NLE vehicles in inventory over the near term; • our belief as to the adequacy of our insurance coverages, funding sources and the effectiveness of our interest and foreign currency exchange rate risk management programs; • our relationship with our employees; • our belief that we can continue to realize significant savings from our cost management initiatives and process improvement actions, and that such initiatives and actions will mitigate pricing pressures from our SCS customers; • estimates of free cash flow, leverage ratios and capital expenditures for 2006; ITEM 7. |
E-Commerce Solutions As part of the services provided by our FMS, SCS and DCC business segments, we have developed the following e-commerce solutions: • e-Fulfillment - provides end-to-end management of the fulfillment channel from order entry to final delivery, including web-enabled inventory visibility, transportation planning/management, value-added services and reverse logistics; • Ryder.com - includes a range of web-enabled tools that allow SCS and DCC customers to access information and enhance supply chain performance; • RyderTrac/ RyderShip/ RyderFlow - web-enabled shipment tracking system; • RyderFleetProducts.com - after market distributor of a complete range of truck parts, shop supplies, safety products and automotive products for private fleets; • Usedtrucks.Ryder.com - listing of Road Ready used vehicles for sale from Ryder’s extensive fleet including maintenance histories; and • RyderSafetyServices.com - after market distributor of a complete range of safety products and services related to fleet management. |
This Annual Report contains forward-looking statements including, but not limited to, statements regarding: • our expectations as to growth opportunities and anticipated revenue growth across all business segments; • our ability to improve our competitive advantage by leveraging our vehicle buying power, reducing vehicle downtime, providing innovative broad-based supply chain solutions and increasing our customers’ competitive position; • anticipated gains on the sale of used vehicles; • our ability to successfully achieve the operational goals that are the basis of our business strategies, including offering competitive pricing, optimizing asset utilization, leveraging the expertise of our various business segments, serving our customers’ global needs and expanding our support services; • our ability to successfully identify, consummate and integrate future acquisitions; • our belief as to the adequacy of our insurance coverage and funding sources and the effectiveness of our interest and foreign currency exchange rate risk management programs; • our relationship with our employees; • our belief that we can continue to realize significant savings from our cost management initiatives and process improvement actions, including those associated with the recent termination of an information technology infrastructure contract; • the adequacy of our accounting estimates and reserves for pension expense, depreciation and residual value guarantees, self-insurance reserves; goodwill impairment and income taxes; • our belief that we have not entered into any other transactions since 2000 that raise the same type of issues identified by the IRS in their audit of the 1998 to 2000 tax period; • our ability to fund all of our operations in 2005 through internally generated funds and outside funding sources; and • the anticipated cost of environmental liabilities. |
These risk factors include, but are not limited to, the following: • Market Conditions: o Changes in general economic conditions in the U.S. and worldwide leading to decreased demand for our services, lower profit margins and increased levels of bad debt o Changes in our customers’ operations, financial condition or business environment that may limit their need for, or ability to purchase, our services o Changes in market conditions affecting the commercial rental market or the sale of used vehicles o Less than anticipated growth rates in the markets in which we operate • Competition: o Competition from other service providers, some of which have greater capital resources or lower capital costs o Continued consolidation in the markets in which we operate which may create large competitors with greater financial resources o Competition from vehicle manufacturers in our foreign FMS business operations o Our inability to maintain current pricing levels due to customer acceptance or competition • Profitability: o Our inability to obtain adequate profit margins for our services o Lower than expected customer retention levels o Loss of a large customer or customer base o Our inability to adapt our product offerings to meet changing consumer preferences on a cost-effective basis o The inability of our business segments to create operating efficiencies o Availability of heavy- and medium-duty vehicles o Increases in fuel prices o Our inability to successfully implement our asset management initiatives o An increase in the cost of, or shortages in the availability of, qualified drivers o Labor strikes and work stoppages o Our ability to successfully integrate and realize the expected benefits of recent and future acquisitions o Our inability to manage our cost structure o Our inability to limit our exposure for customer claims • Government Regulation: o Cost of compliance with new or changing government regulations, including regulations regarding vehicle emissions, drivers, hours of service and anti-terrorism and security regulations issued by the Department of Homeland Security and the U.S. Customs Service • Financing Concerns: o Higher borrowing costs and possible decreases in available funding sources caused by an adverse change in our debt ratings o Unanticipated interest rate and currency exchange rate fluctuations o Negative funding status of our pension plans caused by lower than expected returns on invested assets and unanticipated changes in interest rates • Accounting Matters: o Impact of unusual items resulting from on-going evaluations of business strategies, asset valuations, acquisitions, divestitures and organizational structure o Reductions in residual values or useful lives of revenue earning equipment o Increases in compensation levels, retirement rate and mortality resulting in higher pension expense o Increases in healthcare costs resulting in higher insurance reserves o Changes in accounting rules, assumptions and accruals • Other risks detailed from time to time in our SEC filings The risks included here are not exhaustive. |
Reclassifications In order to maintain consistency and comparability between periods, certain reclassifications of amounts previously reported have been made to the accompanying Consolidated Financial Statements and related notes at December 31, 2003 and for the years ended December 31, 2003 and 2002, as follows: (i) tax contingency accruals previously included within “Deferred income taxes” have been reclassified to “Other non-current liabilities” to conform to the current year presentation; (ii) pension accruals expected to be settled within the next year previously included within “Other non-current liabilities” have been reclassified to “Accrued expenses” to conform to current year presentation based on management’s best estimate of pension contributions in the next year and (iii) the presentation of “Purchases of property and revenue earning equipment” in the Consolidated Statements of Cash Flows has been revised to reflect the non-cash impact of changes in accounts payable related to purchases of revenue earning equipment. |
E-Commerce Solutions As part of the services provided by our FMS, SCS and DCC business segments, we have developed the following e-commerce solutions: • e-Fulfillment - provides end-to-end management of the fulfillment channel from order entry to final delivery, including web-enabled inventory visibility, transportation planning/management, value-added services and reverse logistics; • Ryder.com - includes a range of web-enabled tools that allow SCS and DCC customers to access information and enhance supply chain performance; • RyderTrac/ RyderShip/ RyderFlow - web-enabled shipment tracking system; • RyderFleetProducts.com - after market distributor of a complete range of truck parts, shop supplies, safety products and automotive products for their fleet; • Usedtrucks.Ryder.com - listing of Road Ready used vehicles for sale from Ryder’s extensive fleet including maintenance histories; and • RyderSafetyServices.com - after market distributor of a complete range of safety products and services related to fleet management. |
Important factors that could cause such differences include, among others: general economic conditions in the U.S. and worldwide; the market for used equipment; the highly competitive environment applicable to our operations (including competition in supply chain solutions from other logistics companies as well as from air cargo, shippers, railroads and motor carriers and competition in full service leasing and commercial rental from companies providing similar services as well as truck and trailer manufacturers that provide leasing, extended warranty maintenance, rental and other transportation services); greater than expected expenses associated with Ryder’s activities (including increased cost of fuel, freight and transportation) or personnel needs; availability of equipment; adverse changes in debt ratings; changes in accounting assumptions; Ryder’s ability to create operating synergies in connection with its recent FMS acquisitions; changes in customers’ business environments (or the loss of a significant customer) or changes in government regulations. |
Date: March 3, 2003 By: /S/ Gregory T. Swienton Gregory T. Swienton Chairman, President and Chief Executive Officer (Principal Executive Officer) Date: March 3, 2003 By: /S/ Corliss J. Nelson Corliss J. Nelson Senior Executive Vice President and Chief Financial Officer (Principal Financial Officer) Date: March 3, 2003 By: /S/ Art A. Garcia Art A. Garcia Vice President and Controller (Principal Accounting Officer) Date: March 3, 2003 By: /S/ John H. Dasburg * John H. Dasburg Director Date: March 3, 2003 By: /S/ Joseph L. Dionne * Joseph L. Dionne Director Date: March 3, 2003 By: /S/ Edward T. Foote II * Edward T. Foote II Director Date: March 3, 2003 By: /S/ David I. Fuente * David I. Fuente Director Date: March 3, 2003 By: /S/ John A. Georges * John A. Georges Director Date: March 3, 2003 By: /S/ Lynn M. Martin * Lynn M. Martin Director Date: March 3, 2003 By: /S/ Daniel H. Mudd * Daniel H. Mudd Director Date: March 3, 2003 By: /S/ Eugene A. Renna * Eugene A. Renna Director Date: March 3, 2003 By: /S/ Hansel E. Tookes II * Hansel E. Tookes II Director Date: March 3, 2003 By: /S/ Christine A. Varney * Christine A. Varney Director Date: March 3, 2003 *By: /S/ Richard H. Siegel Richard H. Siegel Attorney-in-Fact CERTIFICATION I, Gregory T. Swienton, certify that: 1. |
The components of charges in 2001, 2000 and 1999 were as follows: In thousands - ------------------------------------------------------------------------------- Years ended December 31 2001 2000 1999 Restructuring charges (recoveries): Severance and employee-related costs: Shutdown of U.K. home delivery network $ 2,593 -- -- Other 27,845 (1,077) 16,500 - ------------------------------------------------------------------------------- Total severance and employee-related costs 30,438 (1,077) 16,500 Facilities and related costs 6,261 (2,009) 4,478 - ------------------------------------------------------------------------------- 36,699 (3,086) 20,978 Other charges (recoveries): Cancellation of IT project 21,727 -- -- Goodwill impairment 13,823 -- -- Shutdown of U.K. home delivery network 12,862 -- -- Contract termination costs 11,204 -- -- Strategic consulting fees 8,586 958 3,935 Asset write-downs 7,273 41,100 14,215 Write-down of software licenses 5,311 -- -- Loss on the sale of business 3,512 -- -- Start-up costs -- -- 7,970 Other (recoveries) charges, net (4,433) 3,042 4,995 - ------------------------------------------------------------------------------- $ 116,564 42,014 52,093 =============================================================================== 2001 Charges During the third quarter of 2001, the Company initiated the shutdown of Systemcare, Ryder's shared-user home delivery network in the U.K. |
OPERATING RESULTS BY BUSINESS SEGMENT In thousands - ------------------------------------------------------------------------------- Years ended December 31 2001 2000 1999 Revenue: Fleet Management Solutions: Full service lease and program maintenance $ 1,855,865 1,865,345 1,816,599 Commercial rental 468,438 523,776 540,734 Fuel 658,325 773,320 587,193 Other 369,912 393,549 362,718 - ------------------------------------------------------------------------------- 3,352,540 3,555,990 3,307,244 Supply Chain Solutions 1,453,881 1,595,252 1,441,029 Dedicated Contract Carriage 534,962 551,706 531,642 Eliminations (335,260) (366,156) (327,711) - ------------------------------------------------------------------------------- Total revenue $ 5,006,123 5,336,792 4,952,204 =============================================================================== In thousands - ------------------------------------------------------------------------------- Years ended December 31 2001 2000 1999 Contribution margin: Fleet Management Solutions $ 339,326 382,851 372,164 Supply Chain Solutions 51,236 65,484 54,832 Dedicated Contract Carriage 57,679 60,828 59,633 Eliminations (36,989) (41,888) (40,280) - ------------------------------------------------------------------------------- 411,252 467,275 446,349 Central Support Services (263,982) (283,940) (252,712) Restructuring and other charges, net (116,564) (42,014) (52,093) Year 2000 expense -- -- (24,050) Earnings from continuing operations before income taxes $ 30,706 141,321 117,494 =============================================================================== Management evaluates business segment financial performance based upon several factors, of which the primary measure relied upon is contribution margin. |
The Company's fleet of owned and leased revenue earning equipment is summarized as follows: Number of Units - -------------------------------------------------------------------------------- December 31 2001 2000 By type: Trucks 66,000 66,800 Tractors 52,400 56,400 Trailers 46,700 48,500 Other 5,000 4,600 - -------------------------------------------------------------------------------- 170,100 176,300 ================================================================================ By business: Full service lease 126,900 130,700 Commercial rental 40,200 42,200 Service and other vehicles 3,000 3,400 - -------------------------------------------------------------------------------- 170,100 176,300 ================================================================================ The totals in each of the tables above include the following non-revenue earning equipment: Number of Units - -------------------------------------------------------------------------------- December 31 2001 2000 Not yet earning revenue (NYE) 1,200 2,400 No longer earning revenue (NLE): Units held for sale 5,200 5,100 Other NLE units 4,700 3,200 - -------------------------------------------------------------------------------- 11,100 10,700 ================================================================================ NYE units represent new units on hand that are being prepared for deployment to a lease customer or into the rental fleet. |
The following table sets forth contribution margin for each of the Company's business segments after CSS allocation for 2001 and 2000 (such information is not available for 1999): In thousands - -------------------------------------------------------------------------------- Years ended December 31 2001 2000 Contribution margin after allocated CSS: Fleet Management Solutions $ 187,965 219,759 Supply Chain Solutions (12,851) 3,918 Dedicated Contract Carriage 34,541 37,068 Eliminations (36,989) (41,888) - -------------------------------------------------------------------------------- 172,666 218,857 Central Support Services (unallocated) (25,396) (35,522) Restructuring and other charges, net (116,564) (42,014) - -------------------------------------------------------------------------------- Earnings before income taxes $ 30,706 141,321 ================================================================================ DISCONTINUED OPERATIONS On September 13, 1999, the Company completed the sale of RPTS for $940 million in cash and realized a $339 million after-tax gain ($4.94 per diluted common share). |
RESTRUCTURING AND OTHER CHARGES, NET The components of restructuring and other charges and the allocation across business segments were as follows: In thousands - -------------------------------------------------------------------------------- Years ended December 31 2001 2000 1999 Restructuring charges (recoveries): Severance and employee- related costs: Shutdown of U.K. home delivery network $ 2,593 -- -- Other 27,845 (1,077) 16,500 - -------------------------------------------------------------------------------- Total severance and employee-related costs 30,438 (1,077) 16,500 Facilities and related costs 6,261 (2,009) 4,478 - -------------------------------------------------------------------------------- 36,699 (3,086) 20,978 Other charges (recoveries): Cancellation of IT project 21,727 -- -- Goodwill impairment 13,823 -- -- Shutdown of U.K. home delivery network 12,862 -- -- Contract termination costs 11,204 -- -- Strategic consulting fees 8,586 958 3,935 Asset write-downs 7,273 41,100 14,215 Write-down of software licenses 5,311 -- -- Loss on the sale of business 3,512 -- -- Start-up costs -- -- 7,970 Other (recoveries) charges, net (4,433) 3,042 4,995 - -------------------------------------------------------------------------------- $ 116,564 42,014 52,093 ================================================================================ Allocation of restructuring and other charges across business segments in 2001, 2000 and 1999 is as follows: In thousands - -------------------------------------------------------------------------------- Years ended December 31 2001 2000 1999 Fleet Management Solutions $ 38,268 38,992 24,403 Supply Chain Solutions 56,221 2,422 5,773 Dedicated Contract Carriage 964 -- -- Central Support Services 21,111 600 21,917 - -------------------------------------------------------------------------------- $116,564 42,014 52,093 ================================================================================ 2001 Charges During the third quarter of 2001, the Company initiated the shutdown of Systemcare, Ryder's shared-user home delivery network in the U.K. |
The following tables present a rollforward of the activity and balances of the restructuring reserve account for the years ended December 31, 2001 and 2000: In thousands - -------------------------------------------------------------------------------- Dec. 31 Dec. 31 2000 2001 2001 - -------------------------------------------------------------------------------- Balance Additions Deductions Balance Employee severance and benefits $ 3,908 30,438 20,296 14,050 Facilities and related costs 2,012 6,261 2,506 5,767 - -------------------------------------------------------------------------------- $ 5,920 36,699 22,802 19,817 ================================================================================ In thousands - -------------------------------------------------------------------------------- Dec. 31 Dec. 31 1999 2000 2000 - -------------------------------------------------------------------------------- Balance Additions Deductions Balance Employee severance and benefits $13,017 -- 9,109 3,908 Facilities and related costs 7,182 -- 5,170 2,012 - -------------------------------------------------------------------------------- $20,199 -- 14,279 5,920 ================================================================================ Additions relate to liabilities for employee severance and benefits and lease obligations on facility closures, all incurred in 2001. |
REVENUE EARNING EQUIPMENT In thousands - -------------------------------------------------------------------------------- December 31 2001 2000 Full service lease $ 2,901,623 3,227,830 Commercial rental 1,168,351 1,201,038 - -------------------------------------------------------------------------------- 4,069,974 4,428,868 Accumulated depreciation (1,590,860) (1,416,062) - -------------------------------------------------------------------------------- $ 2,479,114 3,012,806 ================================================================================ OPERATING PROPERTY AND EQUIPMENT In thousands - -------------------------------------------------------------------------------- December 31 2001 2000 Land $ 106,441 107,853 Buildings and improvements 574,539 559,707 Machinery and equipment 494,388 462,631 Other 75,722 114,651 - -------------------------------------------------------------------------------- 1,251,090 1,244,842 Accumulated depreciation (684,207) (632,216) - -------------------------------------------------------------------------------- $ 566,883 612,626 ================================================================================ DIRECT FINANCING LEASES AND OTHER ASSETS In thousands - -------------------------------------------------------------------------------- December 31 2001 2000 Direct financing leases $413,075 427,862 Prepaid pension benefit cost 159,214 145,546 Vehicle securitization credit enhancement 60,477 27,741 Investments held in Rabbi Trust 37,133 37,661 Other 36,059 54,287 - -------------------------------------------------------------------------------- $705,958 693,097 ================================================================================ ACCRUED EXPENSES AND OTHER NON-CURRENT LIABILITIES In thousands - -------------------------------------------------------------------------------- December 31 2001 2000 Salaries and wages $ 84,815 104,166 Employee benefits 31,000 22,397 Interest 17,403 19,682 Operating taxes 79,110 75,595 Income taxes 2,124 -- Self-insurance reserves 218,786 228,452 Postretirement benefits other than pensions 37,916 38,274 Vehicle rent and related accruals 105,813 160,579 Environmental liabilities 12,182 14,174 Restructuring 19,817 5,920 Other 116,223 139,537 - -------------------------------------------------------------------------------- 725,189 808,776 Non-current portion (284,274) (298,365) - -------------------------------------------------------------------------------- Accrued expenses $ 440,915 510,411 ================================================================================ LEASES Operating Leases as Lessor One of the Company's major product lines is full service leasing of commercial trucks, tractors and trailers. |
INCOME TAXES The components of earnings before income taxes and the provision for income taxes attributable to continuing operations were as follows: In thousands - -------------------------------------------------------------------------------- Years ended December 31 2001 2000 1999 Earnings before income taxes: United States $ 27,332 101,727 92,003 Foreign 3,374 39,594 25,491 - -------------------------------------------------------------------------------- $ 30,706 141,321 117,494 ================================================================================ Current tax expense (benefit): Federal $ -- (40,204) (183,470) State 132 4,652 (24,392) Foreign 13,785 14,602 2,398 - -------------------------------------------------------------------------------- 13,917 (20,950) (205,464) - -------------------------------------------------------------------------------- Deferred tax (benefit) expense: Federal 3,737 66,062 210,542 State 5,849 3,351 31,596 Foreign (11,475) 3,826 7,903 - -------------------------------------------------------------------------------- (1,889) 73,239 250,041 - -------------------------------------------------------------------------------- Provision for income taxes $ 12,028 52,289 44,577 ================================================================================ A reconciliation of the Federal statutory tax rate with the effective tax rate for continuing operations follows: Percentage of Pre-tax Income - -------------------------------------------------------------------------------- Years ended December 31 2001 2000 1999 Federal statutory tax rate 35.0 35.0 35.0 Impact on deferred taxes for changes in tax rates (34.8) -- -- State income taxes, net of federal income tax benefit 12.7 3.7 4.0 Amortization of goodwill 10.6 2.0 0.1 Restructuring and other charges, net 28.1 -- -- Miscellaneous items, net (12.4) (3.7) (1.2) - -------------------------------------------------------------------------------- Effective tax rate 39.2 37.0 37.9 ================================================================================ The higher 2001 effective tax rate and magnitude of reconciling items is primarily due to the effects of changes in foreign tax rates, non-deductible foreign charges included in restructuring and other charges and the relatively low level of income before income taxes compared to such items. |
The components of the net deferred income tax liability were as follows: In thousands - -------------------------------------------------------------------------------- December 31 2001 2000 Deferred income tax assets: Self-insurance reserves $ 77,592 74,388 Net operating loss carryforwards 195,050 99,271 Alternative minimum tax credits 31,109 31,109 Accrued compensation and benefits 27,782 31,445 Lease accruals and reserves 31,335 43,365 Miscellaneous other accruals 57,327 36,451 - -------------------------------------------------------------------------------- 420,195 316,029 Valuation allowance (16,093) (12,815) - -------------------------------------------------------------------------------- 404,102 303,214 - -------------------------------------------------------------------------------- Deferred income tax liabilities: Property and equipment bases difference (1,256,520) (1,155,110) Other items (128,752) (130,481) - -------------------------------------------------------------------------------- (1,385,272) (1,285,591) - -------------------------------------------------------------------------------- Net deferred income tax liability* $ (981,170) (982,377) ================================================================================ * Deferred tax assets of $22 million and $35 million have been included in prepaid expenses and other current assets at December 31, 2001 and 2000, respectively. |
DEBT In thousands - -------------------------------------------------------------------------------- December 31 2001 2000 U.S. commercial paper $ 210,000 441,106 Canadian commercial paper -- 31,692 Unsecured U.S. notes: Debentures, 6.50% to 9.88%, due 2005 to 2017 325,687 425,610 Medium-term notes, 5.00% to 8.10%, due 2002 to 2025 742,527 755,863 Unsecured foreign obligations (principally pound sterling), 4.50% to 13.50%, due 2002 to 2006 331,306 332,680 Other debt, including capital leases 99,164 30,029 - -------------------------------------------------------------------------------- Total debt 1,708,684 2,016,980 Current portion (317,087) (412,738) - -------------------------------------------------------------------------------- Long-term debt $ 1,391,597 1,604,242 ================================================================================ Debt maturities (including sinking fund requirements) during the five years subsequent to December 31, 2001 are as follows: In thousands - -------------------------------------------------------------------------------- Debt Maturities 2002 $ 317,087 2003 122,303 2004 165,269 2005 204,660 2006 492,018 During 2001, the Company replaced its $720 million global revolving credit facility with a new $860 million global revolving credit facility. |
The following table summarizes the status of the Company's stock option plans: Shares in thousands - ------------------------------------------------------------------------------ 2001 2000 1999 - ------------------------------------------------------------------------------ Weighted Weighted Weighted Average Average Average Exercise Exercise Exercise Shares Price Shares Price Shares Price Beginning of year 8,772 $24.76 6,762 $27.77 5,253 $28.06 Granted 849 20.45 2,969 18.61 2,200 26.76 Exercised (233) 17.32 (73) 14.11 (92) 22.44 Forfeited (474) 26.80 (886) 27.97 (599) 27.47 - ------------------------------------------------------------------------------- End of year 8,914 $24.43 8,772 $24.76 6,762 $27.77 =============================================================================== Exercisable at end of year 5,007 $27.01 4,123 $28.25 4,099 $27.59 =============================================================================== Available for future grant 5,151 N/A 2,477 N/A 2,258 N/A =============================================================================== Information about options in various price ranges at December 31, 2001 follows: Shares in thousands - --------------------------------------------------------------------------- Options Options Outstanding Exercisable - --------------------------------------------------------------------------- Remaining Weighted Weighted Price Life Average Average Ranges Shares (in years) Price Shares Price $ 10-20 2,160 7.9 $ 17.81 663 $ 17.77 20-25 2,143 6.5 21.53 573 22.46 25-30 3,555 4.5 26.98 2,735 27.08 30-38 1,056 5.0 35.28 1,036 35.25 - --------------------------------------------------------------------------- 8,914 5.8 $ 24.43 5,007 $ 27.01 =========================================================================== Purchase Plans The Employee Stock Purchase Plan provides for periodic offerings to substantially all U.S. and Canadian employees to subscribe to shares of the Company's common stock at 85 percent of the fair market value on either the date of offering or the last day of the purchase period, whichever is less. |
The following table summarizes the status of the Company's stock purchase plans: Shares in thousands - ------------------------------------------------------------------------------ 2001 2000 1999 - ------------------------------------------------------------------------------ Weighted Weighted Weighted Average Average Average Exercise Exercise Exercise Shares Price Shares Price Shares Price Beginning of year 63 $26.81 72 $27.00 82 $27.05 Granted 413 15.44 379 16.03 300 18.43 Exercised (413) 15.44 (379) 16.03 (300) 19.71 Forfeited (23) 20.66 (9) 28.34 (10) 27.66 - ------------------------------------------------------------------------------ End of year 40 $30.28 63 $26.81 72 $27.00 ============================================================================== Exercisable at end of year -- N/A 22 $20.66 -- N/A ============================================================================== Available for future grant 1,676 N/A 2,066 N/A 2,436 N/A ============================================================================== Pro Forma Information The Company accounts for stock-based compensation using the intrinsic value method. |
The option pricing assumptions were as follows: - ------------------------------------------------------------------------------ Years ended December 31 2001 2000 1999 Dividend yield 2.7% 3.5% 2.5% Expected volatility 27.0% 26.9% 25.7% Option plans: Risk-free interest rate 4.9% 6.3% 5.4% Weighted average expected life 7 years 7 years 7 years Weighted average grant-date fair value per option $5.69 $5.01 $ 7.77 Purchase plans: Risk-free interest rate 3.3% 5.8% 4.9% Weighted average expected life .25 year .25 year .25 year Weighted average grant-date fair value per option $3.65 $4.08 $ 4.99 - ------------------------------------------------------------------------------ EARNINGS PER SHARE INFORMATION A reconciliation of the number of shares used in computing basic and diluted EPS follows: In thousands - --------------------------------------------------------------------------- Years ended December 31 2001 2000 1999 Weighted average shares outstanding - Basic 60,083 59,567 68,536 Effect of dilutive options and unvested restricted stock 582 192 196 - --------------------------------------------------------------------------- Weighted average shares outstanding - Diluted 60,665 59,759 68,732 =========================================================================== Anti-dilutive options not included above 6,793 6,446 5,750 =========================================================================== EMPLOYEE BENEFIT PLANS Pension Plans The Company sponsors several defined benefit pension plans covering substantially all employees not covered by union-administered plans, including certain employees in foreign countries. |
The following table sets forth the balance sheet impact, as well as the benefit obligations, assets and funded status associated with the Company's pension plans: In thousands - ------------------------------------------------------------------------------ December 31 2001 2000 Change in benefit obligations: Benefit obligations at January 1, $ 820,169 701,776 Service cost 26,248 23,836 Interest cost 58,306 54,047 Amendments -- 7,747 Actuarial loss 8,820 37,444 Benefits paid (37,585) (36,229) Change in discount rate assumption 49,249 22,502 Plan transfers -- 15,627 Foreign currency exchange rate changes (3,197) (6,581) - ------------------------------------------------------------------------------ Benefit obligations at December 31, 922,010 820,169 - ------------------------------------------------------------------------------ Change in plan assets: Fair value of plan assets at January 1, 993,493 1,054,123 Actual return on plan assets (79,472) (41,672) Employer contribution 6,141 2,293 Plan participants' contributions 2,631 2,692 Benefits paid (37,585) (36,229) Plan transfers -- 20,110 Foreign currency exchange rate changes (3,405) (7,824) - ------------------------------------------------------------------------------ Fair value of plan assets at December 31, 881,803 993,493 - ------------------------------------------------------------------------------ Funded status (40,207) 173,324 Unrecognized transition asset (237) (267) Unrecognized prior service cost 15,412 17,950 Unrecognized net actuarial loss (gain) 168,494 (59,933) - ------------------------------------------------------------------------------ Prepaid benefit cost $ 143,462 131,074 ============================================================================== Plan transfers relate to obligations assumed and assets received in 2000 related to a customer's employees who were hired by the Company as a result of a new contract in the U.K. Additionally, in 2000, the Company's dominant plan was amended to increase certain benefit levels and resulted in an additional benefit obligation of $7 million. |
Amounts recognized in the balance sheet consist of: In thousands - ------------------------------------------------------------------------------ December 31 2001 2000 Prepaid pension benefit cost (other assets) $ 159,214 145,546 Accrued benefit liability (accrued expenses) (15,752) (14,472) Additional minimum liability (accrued expenses) (3,102) -- Intangible assets 1,857 -- Accumulated other comprehensive loss 1,245 -- - ------------------------------------------------------------------------------ $ 143,462 131,074 ============================================================================== The following table sets forth the actuarial assumptions used for the Company's dominant plan: - ------------------------------------------------------------------------------ December 31 2001 2000 Discount rate 7.00% 7.50% Rate of increase in compensation levels 5.00% 5.00% Expected long-term rate of return on plan assets 9.25% 9.50% Transition amortization in years 6 6 Gain and loss amortization in years 6 6 - ------------------------------------------------------------------------------ Savings Plans The Company also has defined contribution savings plans that cover substantially all eligible employees. |
The following table sets forth the balance sheet impact, as well as the benefit obligations and rate assumptions associated with the Company's postretirement benefit plans: In thousands - ------------------------------------------------------------------------------- December 31 2001 2000 Benefit obligations at January 1, $ 26,932 29,639 Service cost 999 975 Interest 2,247 2,233 Amendment -- (4,318) Actuarial loss 5,102 2,699 Benefits paid (4,431) (3,585) Curtailment and settlement -- (1,148) Change in discount rate assumption 1,042 437 Change in healthcare trend assumption 366 -- Foreign currency exchange rate changes (23) -- - ------------------------------------------------------------------------------- Benefit obligations at December 31, 32,234 26,932 Unrecognized prior service credit 7,551 8,708 Unrecognized net actuarial (loss) gain (1,869) 2,634 - ------------------------------------------------------------------------------- Accrued postretirement benefit obligation $ 37,916 38,274 =============================================================================== Discount rate 7.00% 7.50% - ------------------------------------------------------------------------------- The actuarial assumptions include healthcare cost trend rates projected at 13 percent for 2002, graded down to 6 percent for 2010 and thereafter. |
Business segment revenue and contribution margin are presented below: In thousands - -------------------------------------------------------------------------------- Years ended December 31 2001 2000 1999 Revenue: Fleet Management Solutions: Full service lease and program maintenance $ 1,855,865 1,865,345 1,816,599 Commercial rental 468,438 523,776 540,734 Fuel 658,325 773,320 587,193 Other 369,912 393,549 362,718 - -------------------------------------------------------------------------------- 3,352,540 3,555,990 3,307,244 Supply Chain Solutions 1,453,881 1,595,252 1,441,029 Dedicated Contract Carriage 534,962 551,706 531,642 Eliminations (335,260) (366,156) (327,711) - -------------------------------------------------------------------------------- Total revenue $ 5,006,123 5,336,792 4,952,204 ================================================================================ Contribution margin: Fleet Management Solutions $ 339,326 382,851 372,164 Supply Chain Solutions 51,236 65,484 54,832 Dedicated Contract Carriage 57,679 60,828 59,633 Eliminations (36,989) (41,888) (40,280) - -------------------------------------------------------------------------------- 411,252 467,275 446,349 Central Support Services (263,982) (283,940) (252,712) Restructuring and other charges, net (116,564) (42,014) (52,093) Year 2000 expense -- -- (24,050) - -------------------------------------------------------------------------------- Earnings from continuing operations before income taxes $ 30,706 141,321 117,494 ================================================================================ Each business segment follows the same accounting policies as described in the Summary of Significant Accounting Policies. |
In thousands - ------------------------------------------------------------------------------- Years ended December 31 2001 2000 1999 Amortization expense and other non-cash charges, net: Fleet Management Solutions $ 35,653 15,973 17,147 Supply Chain Solutions 47,543 14,624 11,072 Dedicated Contract Carriage 431 -- -- Central Support Services 7,286 2,330 (1,983) - ------------------------------------------------------------------------------- Total amortization expense and other non-cash charges, net $ 90,913 32,927 26,236 =============================================================================== In thousands - ------------------------------------------------------------------------------- Years ended December 31 2001 2000 Interest expense: Fleet Management Solutions $ 111,032 152,596 Supply Chain Solutions 5,321 5,196 Dedicated Contract Carriage 19 3 Central Support Services 2,177 (3,786) - ------------------------------------------------------------------------------- Total interest expense $ 118,549 154,009 =============================================================================== As a result of the change in reportable business segments in 2000, 1999 disclosure of interest expense included in contribution margin under the new reportable segments is impracticable. |
Geographic Information In thousands - ------------------------------------------------------------------------------- Years ended December 31 2001 2000 1999 Revenue: United States $4,218,163 4,445,842 4,078,087 Foreign 787,960 890,950 874,117 - ------------------------------------------------------------------------------- Total $5,006,123 5,336,792 4,952,204 =============================================================================== In thousands - ------------------------------------------------------------------------------- December 31 2001 2000 1999 Long-lived assets: United States $2,489,338 3,026,644 3,072,892 Foreign 556,659 598,788 603,664 - ------------------------------------------------------------------------------- Total $3,045,997 3,625,432 3,676,556 =============================================================================== The Company believes that its diversified portfolio of customers across a full array of transportation and logistics solutions across many industries will help to mitigate the impact of adverse downturns in specific sectors of the economy in the near to medium-term. |
Date: March 25, 2002 By: /S/ GREGORY T. SWIENTON ------------------------------------- Gregory T. Swienton President and Chief Executive Officer (Principal Executive Officer) Date: March 25, 2002 By: /S/ CORLISS J. NELSON ------------------------------------- Corliss J. Nelson Senior Executive Vice President and Chief Financial Officer (Principal Financial Officer) Date: March 25, 2002 By: /S/ KATHLEEN S. PARTRIDGE ------------------------------------- Kathleen S. Partridge Senior Vice President, Business and Accounting Services (Principal Accounting Officer) Date: March 25, 2002 By: /S/ M. ANTHONY BURNS * ------------------------------------- M. Anthony Burns Chairman Date: March 25, 2002 By: /S/ JOSEPH L. DIONNE * ------------------------------------- Joseph L. Dionne Director Date: March 25, 2002 By: /S/ EDWARD T. FOOTE II * ------------------------------------- Edward T. Foote II Director Date: March 25, 2002 By: /S/ DAVID I. FUENTE * ------------------------------------- David I. Fuente Director Date: March 25, 2002 By: /S/ JOHN A. GEORGES * ------------------------------------- John A. Georges Director Date: March 25, 2002 By: /S/ DAVID T. KEARNS * ------------------------------------- David T. Kearns Director Date: March 25 , 2002 By: /S/ LYNN M. MARTIN * ------------------------------------- Lynn M. Martin Director Date: March 25, 2002 By: /S/ CHRISTINE A. VARNEY * -------------------------------------- Christine A. Varney Director Date: March 25, 2002 By: /S/ CARLOS J. ABARCA -------------------------------------- Carlos J. Abarca Attorney-in-Fact |
OPERATING RESULTS BY BUSINESS SEGMENT Years ended December 31 2000 1999 1998 - -------------------------------------------------------------------------------- (in thousands) Revenue Fleet management solutions: Full service lease and programmed maintenance $1,865,345 1,816,599 1,762,621 Commercial rental 523,776 540,734 505,558 Fuel 773,320 587,193 542,140 Other 393,549 362,718 352,591 -------------------------------------------------- 3,555,990 3,307,244 3,162,910 Supply chain solutions 1,604,862 1,449,871 1,242,664 Dedicated contract carriage 542,096 522,800 512,800 Eliminations (366,156) (327,711) (311,398) -------------------------------------------------- Total revenue $5,336,792 4,952,204 4,606,976 ================================================================================ Years ended December 31 2000 1999 1998 - -------------------------------------------------------------------------------- (in thousands) Contribution margin Fleet management solutions $382,851 372,164 395,828 Supply chain solutions 70,242 56,365 56,914 Dedicated contract carriage 59,669 58,100 59,600 Eliminations (41,888) (40,280) (39,666) ----------------------------------------------------- 470,874 446,349 472,676 Central support services (287,539) (252,712) (233,734) Restructuring and other charges (42,014) (52,093) 3,040 Year 2000 expense -- (24,050) (37,418) ----------------------------------------------------- Earnings from continuing operations before income taxes $141,321 117,494 204,564 ================================================================================ During the fourth quarter of 1999, the Company implemented several restructuring initiatives designed to improve profitability and align the organizational structure with the strategic direction of the Company (see "Restructuring and Other Charges"). |
The Company's fleet of owned and leased revenue earning equipment is summarized as follows: Years ended December 31 2000 1999 - -------------------------------------------------------------------------------- Number of units By type: Trucks 66,800 65,600 Tractors 56,400 54,700 Trailers 48,500 46,700 Other 4,600 4,500 ------------------------------------------ 176,300 171,500 ================================================================================ Years ended December 31 2000 1999 - -------------------------------------------------------------------------------- Number of units By business: Full service lease 130,700 125,400 Commercial rental 42,200 43,200 Service vehicles and other 3,400 2,900 ------------------------------------------ 176,300 171,500 ================================================================================ The totals in each of the tables above include the following non-revenue earning equipment: Years ended December 31 2000 1999 - -------------------------------------------------------------------------------- Number of units Not yet earning revenue 2,400 3,200 No longer earning revenue 8,300 6,300 ----------------------------------------- 10,700 9,500 ================================================================================ SUPPLY CHAIN SOLUTIONS SCS revenue increased 11 percent in 2000 and 17 percent in 1999 compared with the previous years. |
RESTRUCTURING AND OTHER CHARGES The components of restructuring and other charges and the allocation across business segments were as follows: Years ended December 31 2000 1999 1998 - -------------------------------------------------------------------------------- (in thousands) Restructuring charges (recoveries): Employee severance and benefits $ (1,077) 16,500 724 Facilities and related costs (2,009) 4,478 -- -------------------------------------------- (3,086) 20,978 724 Other charges: Asset write-downs and valuation allowances, net 41,100 14,215 (8,264) Start-up costs -- 7,970 -- Other 4,000 8,930 4,500 -------------------------------------------- $ 42,014 52,093 (3,040) ================================================================================ Fleet management solutions $38,992 24,403 2,069 Supply chain solutions 2,422 5,773 (5,109) Dedicated contract carriage -- -- -- Central support services 600 21,917 -- -------------------------------------------- $ 42,014 52,093 (3,040) ================================================================================ In 2000, the Company recorded a pre-tax charge of $42 million. |
The following tables display a rollforward of the activity and balances of the restructuring reserve account for the years ended December 31, 2000 and 1999: Dec. 31, 1999 2000 Dec. 31, ----------------------- 2000 Balance Additions Deductions Balance - -------------------------------------------------------------------------------- (in thousands) Employee severance and benefits $13,017 -- 9,109 3,908 Facilities and related costs 7,182 -- 5,170 2,012 ----------------------------------------------------- $20,199 -- 14,279 5,920 ================================================================================ Dec. 31, 1998 1999 Dec. 31, ----------------------- 1999 Balance Additions Deductions Balance - -------------------------------------------------------------------------------- (in thousands) Employee severance and benefits $ 537 16,500 4,020 13,017 Facilities and related costs 4,124 4,478 1,420 7,182 ------------------------------------------------------ $ 4,661 20,978 5,440 20,199 ================================================================================ Deductions include cash payments of $11 million and prior year charge reversals of $3 million in 2000 and none in 1999. |
REVENUE EARNING EQUIPMENT December 31 2000 1999 - -------------------------------------------------------------------------------- (in thousands) Full service lease $ 3,227,830 3,442,205 Commercial rental 1,201,038 1,136,330 ---------------------------------------------- 4,428,868 4,578,535 Accumulated depreciation (1,416,062)(1,483,084) ---------------------------------------------- $ 3,012,806 3,095,451 ================================================================================ OPERATING PROPERTY AND EQUIPMENT December 31 2000 1999 - -------------------------------------------------------------------------------- (in thousands) Land $ 107,853 105,794 Buildings and improvements 559,707 521,746 Machinery and equipment 462,631 439,352 Other 114,651 88,997 --------------------------------------------- 1,244,842 1,155,889 Accumulated depreciation (632,216) (574,784) --------------------------------------------- $ 612,626 581,105 ================================================================================ DIRECT FINANCING LEASES AND OTHER ASSETS December 31 2000 1999 - -------------------------------------------------------------------------------- (in thousands) Direct financing leases $ 427,862 391,346 Prepaid benefit cost 145,546 95,074 Vehicle securitization credit enhancement 27,741 28,697 Investments held in Rabbi Trust 37,661 36,961 Deposits 1,301 17,151 Other 52,986 83,041 -------------------------------------------- $ 693,097 652,270 ================================================================================ ACCRUED EXPENSES AND OTHER NON-CURRENT LIABILITIES December 31 2000 1999 - -------------------------------------------------------------------------------- (in thousands) Salaries and wages $ 104,166 102,250 Employee benefits 22,397 21,228 Interest 19,682 27,859 Operating taxes 75,595 82,646 Income taxes -- 42,734 Self-insurance reserves 227,130 227,456 Postretirement benefits other than pensions 38,274 41,766 Vehicle rent and related accruals 160,579 118,672 Environmental liabilities 14,174 18,462 Restructuring 5,920 20,199 Other 140,859 123,686 -------------------------------------------- 808,776 826,958 Non-current portion (298,365) (285,802) -------------------------------------------- Accrued expenses $ 510,411 541,156 ================================================================================ LEASES Operating Leases as Lessor One of the Company's major product lines is full service leasing of commercial trucks, tractors and trailers. |
INCOME TAXES The components of earnings before income taxes and the provision for income taxes attributable to continuing operations were as follows: Years ended December 31 2000 1999 1998 - -------------------------------------------------------------------------------- (in thousands) Earnings before income taxes: United States $101,727 92,003 184,476 Foreign 39,594 25,491 20,088 -------------------------------------------------------- $141,321 117,494 204,564 ================================================================================ Current tax benefit: Federal $(40,204) (183,470) (24,173) State 4,652 (24,392) (6,357) Foreign 14,602 2,398 6,850 -------------------------------------------------------- (20,950) (205,464) (23,680) -------------------------------------------------------- Deferred tax expense: Federal 66,062 210,542 88,173 State 3,351 31,596 11,729 Foreign 3,826 7,903 530 -------------------------------------------------------- 73,239 250,041 100,432 -------------------------------------------------------- Provision for income taxes $ 52,289 44,577 76,752 ================================================================================ A reconciliation of the Federal statutory tax rate with the effective tax rate for continuing operations follows: % of Pre-tax Income - -------------------------------------------------------------------------------- 2000 1999 1998 - -------------------------------------------------------------------------------- Federal statutory tax rate 35.0 35.0 35.0 Impact on deferred taxes for changes in tax rates -- -- (0.8) State income taxes, net of Federal income tax benefit 3.7 4.0 1.7 Miscellaneous items, net (1.7) (1.1) 1.6 ------------------------------------------ Effective tax rate 37.0 37.9 37.5 ================================================================================ The components of the net deferred income tax liability were as follows: December 31 2000 1999 - -------------------------------------------------------------------------------- (in thousands) Deferred income tax assets: Self-insurance reserves $ 74,388 51,667 Net operating loss carryforwards 99,271 -- Alternative minimum taxes 31,109 6,011 Accrued compensation and benefits 31,445 30,484 Lease accruals and reserves 43,365 28,378 Miscellaneous other accruals 36,451 48,447 ------------------------------------------ 316,029 164,987 Valuation allowance (12,815) (12,822) ------------------------------------------ 303,214 152,165 ------------------------------------------ Deferred income tax liabilities: Property and equipment bases difference (1,155,110) (1,039,023) Other items (130,481) (102,173) ------------------------------------------ (1,285,591) (1,141,196) ------------------------------------------ Net deferred income tax liability* $ (982,377) (989,031) ================================================================================ *Deferred tax assets of $35 million and $22 million have been included in the consolidated balance sheet caption "Prepaid expenses and other current assets" at December 31, 2000 and 1999, respectively. |
DEBT December 31 2000 1999 - -------------------------------------------------------------------------------- (in thousands) U.S. commercial paper $ 441,106 320,000 Canadian commercial paper 31,692 45,006 Unsecured U.S. notes: Debentures, 6.50% to 9.88%, due 2001 to 2017 425,610 453,244 Medium-term notes, 5.00% to 8.37%, due 2001 to 2025 755,863 1,181,443 Unsecured foreign obligations (principally pound sterling), 4.84% to 14.25%, due 2001 to 2006 332,680 335,343 Other debt, including capital leases 30,029 58,353 ------------------------------------- Total debt 2,016,980 2,393,389 Current portion (412,738) (574,253) ------------------------------------- Long-term debt $ 1,604,242 1,819,136 ================================================================================ Debt maturities (including sinking fund requirements) during the five years subsequent to December 31, 2000 are as follows: Debt Maturities - -------------------------------------------------------------------------------- (in thousands) 2001 $412,738 2002 788,986 2003 114,447 2004 88,931 2005 203,870 ================================================================================ The Company can borrow up to $720 million through an unsecured global revolving credit facility, which expires in June 2002. |
The following table summarizes the status of the Company's stock option plans (shares in thousands): - -------------------------------------------------------------------------------- 2000 1999 1998 Weighted Weighted Weighted Average Average Average Exercise Exercise Exercise Shares Price Shares Price Shares Price - -------------------------------------------------------------------------------- Beginning of year 6,762 $27.77 5,253 $28.06 6,000 $27.18 Granted 2,969 18.61 2,200 26.76 246 33.21 Exercised (73) 14.11 (92) 22.44 (911) 23.60 Forfeited (886) 27.97 (599) 27.47 (82) 27.01 ------------------------------------------------------------- End of year 8,772 $24.76 6,762 $27.77 5,253 $28.06 ============================================================= Exercisable at end of year 4,123 $28.25 4,099 $27.59 3,610 $26.12 ============================================================= Available for future grant 2,477 N/A 2,258 N/A 3,907 N/A ================================================================================ Information about options in various price ranges at December 31, 2000 follows (shares in thousands): Options Options Outstanding Exercisable - -------------------------------------------------------------------------------- Remaining Weighted Weighted Price Life Average Average Ranges Shares (in years) Price Shares Price - -------------------------------------------------------------------------------- $10 - 20 2,388 8.7 $17.71 176 $17.25 20 - 25 1,423 6.4 22.03 523 22.55 25 - 30 3,818 5.4 27.01 2,369 27.14 30 - 38 1,143 5.9 35.34 1,055 35.40 ================================================================================ 8,772 6.5 $24.76 4,123 $28.25 ================================================================================ Purchase Plans The Employee Stock Purchase Plan provides for periodic offerings to substantially all U.S. and Canadian employees, with the exception of employees in executive stock option plans, to subscribe to shares of the Company's common stock at 85 percent of the fair market value on either the date of offering or the last day of the purchase period, whichever is less. |
The option pricing assumptions were as follows: Years ended December 31 2000 1999 1998 - -------------------------------------------------------------------------------- Dividend yield 3.5% 2.5% 2.3% Expected volatility 26.9% 25.7% 25.1% Option Plans: Risk-free interest rate 6.3% 5.4% 5.4% Weighted average expected life 7 years 7 years 9 years Weighted average grant - date fair value per option $5.01 $7.77 $11.05 Purchase plans: Risk-free interest rate 5.8% 4.9% 5.3% Weighted average expected life .25 year .25 year .25 year Weighted average grant - date fair value per option $4.08 $4.99 $5.50 ================================================================================ EARNINGS PER SHARE INFORMATION A reconciliation of the number of shares used in computing basic and diluted EPS follows: Years ended December 31 2000 1999 1998 - -------------------------------------------------------------------------------- (in thousands) Weighted average shares outstanding - Basic 59,567 68,536 73,068 Effect of dilutive options and unvested restricted stock 192 196 577 ------------------------------------------ Weighted average shares outstanding - Diluted 59,759 68,732 73,645 ========================================== Anti-dilutive options not included above 6,446 5,750 1,485 ================================================================================ EMPLOYEE BENEFIT PLANS Pension Plans The Company sponsors several defined benefit pension plans covering substantially all employees not covered by union-administered plans, including certain employees in foreign countries. |
The following table sets forth the balance sheet impact, as well as the benefit obligations, assets and funded status associated with the Company's pension plans: December 31 2000 1999 - -------------------------------------------------------------------------------- (in thousands) Change in benefit obligations: Benefit obligations at January 1, $ 701,776 787,729 Service cost 23,836 32,649 Interest cost 54,047 50,087 Amendments 7,747 -- Actuarial loss (gain) 37,444 (7,047) Benefits paid (36,229) (34,905) Settlement and curtailment -- (21,331) Change in discount rate assumption 22,502 (104,019) Plan transfers 15,627 -- Foreign currency exchange rate changes (6,581) (1,387) -------------------------------------- Benefit obligations at December 31, 820,169 701,776 -------------------------------------- Change in plan assets: Fair value of plan assets at January 1, 1,054,123 929,161 Actual return on plan assets (41,672) 167,229 Employer contribution 2,293 10,084 Plan participants' contributions 2,692 3,025 Benefits paid (36,229) (34,905) Settlement -- (19,183) Plan transfers 20,110 -- Foreign currency exchange rate changes (7,824) (1,288) -------------------------------------- Fair value of plan assets at December 31, 993,493 1,054,123 -------------------------------------- Funded status 173,324 352,347 Unrecognized transition asset (267) (4,036) Unrecognized prior service cost 17,950 12,795 Unrecognized net actuarial gain (59,933) (278,761) -------------------------------------- Prepaid benefit cost $ 131,074 82,345 ================================================================================ Amounts recognized in the balance sheet consist of: December 31 2000 1999 - -------------------------------------------------------------------------------- (in thousands) Other assets (prepaid pension benefit cost) $ 145,546 95,074 Accrued expenses (14,472) (12,729) -------------------------------------------- $ 131,074 82,345 ================================================================================ The following table sets forth the actuarial assumptions used for the Company's dominant plan: December 31 2000 1999 - -------------------------------------------------------------------------------- Discount rate 7.50% 7.75% Rate of increase in compensation levels 5.00% 5.00% Expected long-term rate of return on plan assets 9.50% 9.50% Transition amortization in years 6 8 Gain and loss amortization in years 6 8 ================================================================================ Savings Plans The Company also has defined contribution savings plans that cover substantially all eligible employees. |
The following table sets forth the balance sheet impact, as well as the benefit obligations and rate assumptions associated with the Company's postretirement benefit plans: December 31 2000 1999 - -------------------------------------------------------------------------------- (in thousands) Benefit obligations at January 1, $ 29,639 38,976 Service cost 975 1,360 Interest cost 2,233 2,210 Amendment (4,318) -- Actuarial loss (gain) 2,699 (3,830) Benefits paid (3,585) (3,847) Settlement and curtailment (1,148) (2,271) Change in discount rate assumption 437 (2,959) ------------------------------------------ Benefit obligations at December 31, 26,932 29,639 Unrecognized prior service credit 8,708 5,556 Unrecognized net actuarial gain 2,634 6,571 ------------------------------------------ Accrued postretirement benefit obligation $ 38,274 41,766 ================================================================================ Discount rate 7.50% 7.75% ------------------------------------------ The actuarial assumptions include healthcare cost trend rates projected at 7 percent for 2001 and 2002, and 6 percent thereafter. |
Business segment revenue and contribution margin are presented below: Years ended December 31 2000 1999 1998 - -------------------------------------------------------------------------------- (in thousands) Revenue Fleet management solutions: Full service lease and programmed maintenance $1,865,345 1,816,599 1,762,621 Commercial rental 523,776 540,734 505,558 Fuel 773,320 587,193 542,140 Other 393,549 362,718 352,591 ------------------------------------------------ 3,555,990 3,307,244 3,162,910 Supply chain solutions 1,604,862 1,449,871 1,242,664 Dedicated contract carriage 542,096 522,800 512,800 Eliminations (366,156) (327,711) (311,398) ------------------------------------------------ Total revenue $5,336,792 4,952,204 4,606,976 ================================================================================ Years ended December 31 2000 1999 1998 - -------------------------------------------------------------------------------- (in thousands) Contribution margin Fleet management solutions $ 382,851 372,164 395,828 Supply chain solutions 70,242 56,365 56,914 Dedicated contract carriage 59,669 58,100 59,600 Eliminations (41,888) (40,280) (39,666) -------------------------------------------------- 470,874 446,349 472,676 Central support services (287,539) (252,712) (233,734) Restructuring and other charges (42,014) (52,093) 3,040 Year 2000 expense -- (24,050) (37,418) -------------------------------------------------- Earnings from continuing operations before income taxes $ 141,321 117,494 204,564 ================================================================================ Management evaluates business segment financial performance based upon several factors, of which the primary measure is contribution margin. |
Geographic Information Years ended December 31 2000 1999 1998 - -------------------------------------------------------------------------------- (in thousands) Revenue United States $4,445,842 4,078,087 3,764,309 Foreign 890,950 874,117 842,667 ---------------------------------------------------------- Total $5,336,792 4,952,204 4,606,976 ================================================================================ Years ended December 31 2000 1999 1998 - -------------------------------------------------------------------------------- (in thousands) Long-lived assets United States $3,026,644 3,072,892 3,209,027 Foreign 598,788 603,664 600,893 ---------------------------------------------------------- Total $3,625,432 3,676,556 3,809,920 ================================================================================ Ryder System, Inc. and Subsidiaries SUPPLEMENTARY DATA QUARTERLY FINANCIAL AND COMMON STOCK DATA Quarterly and year-to-date computations of per share amounts are made independently; therefore, the sum of per share amounts for the quarters may not equal per share amounts for the year. |
Date: March 23, 2001 By: /S/ GREGORY T. SWIENTON ------------------------------------- Gregory T. Swienton President and Chief Executive Officer (Principal Executive Officer) Date: March 23, 2001 By: /S/ CORLISS J. NELSON ------------------------------------- Corliss J. Nelson Senior Executive Vice President and Chief Financial Officer (Principal Financial Officer) Date: March 23, 2001 By: /S/ RICHARD G. RODICK ------------------------------------- Richard G. Rodick Senior Vice President and Controller (Principal Accounting Officer) Date: March 23, 2001 By: /S/ M. ANTHONY BURNS * ------------------------------------- M. Anthony Burns Chairman Date: March 23, 2001 By: /S/ JOSEPH L. DIONNE * ------------------------------------- Joseph L. Dionne Director Date: March 23, 2001 By: /S/ EDWARD T. FOOTE II * ------------------------------------- Edward T. Foote II Director Date: March 23, 2001 By: /S/ DAVID I. FUENTE * ------------------------------------- David I. Fuente Director Date: March 23, 2001 By: /S/ JOHN A. GEORGES * ------------------------------------- John A. Georges Director Date: March 23, 2001 By: /S/ VERNON E. JORDAN, JR. * ------------------------------------- Vernon E. Jordan, Jr. Director Date: March 23, 2001 By: /S/ DAVID T. KEARNS * ------------------------------------- David T. Kearns Director Date: March 23 , 2001 By: /S/ LYNN M. MARTIN * ------------------------------------- Lynn M. Martin Director Date: March 23, 2001 By: /S/ CHRISTINE A. VARNEY * ------------------------------------- Christine A. Varney Director Date: March 23, 2001 By: /S/ ALVA O. |
OPERATING RESULTS BY BUSINESS SEGMENT Years ended December 31 Dollars in thousands 1999 1998 1997 - ------------------------------------------------------------------ REVENUE Transportation Services: Full service lease and programmed maintenance $1,613,679 1,553,568 1,538,621 Commercial rental 503,989 467,222 419,720 Fuel 574,424 528,977 631,702 Other 281,456 261,477 246,907 - ------------------------------------------------------------------ 2,973,548 2,811,244 2,836,950 Integrated Logistics 1,713,051 1,501,126 1,370,320 International 590,226 603,834 457,869 Eliminations (324,621) (309,228) (296,991) - ------------------------------------------------------------------ Total revenue $4,952,204 4,606,976 4,368,148 ================================================================== EARNINGS BEFORE INCOME TAXES Transportation Services $ 192,764 214,028 200,254 Integrated Logistics 54,365 76,514 67,300 International 29 252 1,516 Eliminations (38,709) (38,618) (35,754) - ------------------------------------------------------------------ Total reportable segments 208,449 252,176 233,316 Other, primarily corporate administrative expense (14,812) (13,234) (20,274) Restructuring and other charges (52,093) 3,040 -- Year 2000 expense (24,050) (37,418) (3,492) - ------------------------------------------------------------------ Total earnings before income taxes $ 117,494 204,564 209,550 ================================================================== VEHICLE FLEET SIZE (owned and leased - continuing operations): Transportation Services:* Full service lease 115,464 109,124 102,914 Commercial rental 40,984 37,517 34,371 Service vehicles 2,178 2,127 2,053 - ------------------------------------------------------------------ 158,626 148,768 139,338 International 12,839 13,802 13,386 Integrated Logistics 73 107 109 - ------------------------------------------------------------------ 171,538 162,677 152,833 ================================================================== *Includes vehicles: Not yet earning revenue 3,197 4,314 2,775 No longer earning revenue 6,337 4,159 4,009 - ------------------------------------------------------------------ 9,534 8,473 6,784 ================================================================== The Company evaluates financial performance based upon several factors, of which the primary measure is business segment earnings before income taxes and unusual items such as restructuring and other charges and Year 2000 expense. |
Summarized results of discontinued operations were as follows: Years ended December 31 In thousands 1999 1998 1997 - ---------------------------------------------------------------------- Revenue $411,743 581,748 988,610 ====================================================================== Earnings before income taxes $ 20,050 52,392 72,630 Provision for income taxes 8,219 21,133 28,033 - ---------------------------------------------------------------------- Earnings from discontinued operations $ 11,831 31,259 44,597 - ---------------------------------------------------------------------- Gain (loss) on disposal $573,178 -- (5,300) Income taxes 233,855 -- (8,500) - ---------------------------------------------------------------------- Net gain on disposal $339,323 -- 3,200 ====================================================================== In the fourth quarter of 1999, the Company increased the gain on disposal of the public transportation services business by $4 million, reflecting the reduction of income taxes as a consequence of the sale, the settlement of the final sale price and the impact of insurance purchased to cover certain retained liabilities of the discontinued operation. |
RESTRUCTURING AND OTHER CHARGES The components of restructuring and other charges and the allocation across business segments were as follows: Years ended December 31 In thousands 1999 1998 - ------------------------------------------------------------- Restructuring charges: Employee severance and benefits $16,500 724 Facilities and related costs 4,478 -- - ------------------------------------------------------------- 20,978 724 Other charges: Asset write-downs and valuation allowances 14,215 (8,264) Start-up costs 7,970 -- Other 8,930 4,500 - ------------------------------------------------------------- $52,093 (3,040) ============================================================= Transportation Services $17,728 (3,385) Integrated Logistics 5,310 -- International 7,138 345 Corporate and other 21,917 -- - ------------------------------------------------------------- $52,093 (3,040) ============================================================= During the fourth quarter of 1999, the Company implemented several restructuring initiatives designed to improve profitability and align the organizational structure with the strategic direction of the Company. |
The following table displays a rollforward of the activity and balances of the restructuring reserve account for the years ended December 31, 1999 and 1998: Dec. 31 1999 Dec. 31 1998 ---------------------- 1999 In thousands Balance Additions Deductions Balance - ---------------------------------------------------------------------- Employee severance and benefits $ 537 16,500 4,020 13,017 Facilities and related costs 4,124 4,478 1,420 7,182 - ---------------------------------------------------------------------- $ 4,661 20,978 5,440 20,199 ====================================================================== Dec. 31 1998 Dec. 31 1998 ---------------------- 1998 In thousands Balance Additions Deductions Balance - ---------------------------------------------------------------------- Employee severance and benefits $ 4,431 724 4,618 537 Facilities and related costs 8,033 -- 3,909 4,124 - ---------------------------------------------------------------------- $12,464 724 8,527 4,661 ====================================================================== RECEIVABLES December 31 In thousands 1999 1998 - ---------------------------------------------------- Gross trade $ 736,555 705,695 Receivables sold (75,000) (200,000) - ---------------------------------------------------- Net trade 661,555 505,695 Financing lease 54,570 55,927 Other 19,944 8,066 - ---------------------------------------------------- 736,069 569,688 Allowance (10,254) (10,547) - ---------------------------------------------------- $ 725,815 559,141 ==================================================== The Company participates in an agreement to sell, with limited recourse, up to $375 million of trade receivables on a revolving basis through July 2002. |
REVENUE EARNING EQUIPMENT December 31 In thousands 1999 1998 - -------------------------------------------------------- Full service lease $3,442,205 3,552,891 Commercial rental 1,136,330 1,278,036 - --------------------------------------------------------- 4,578,535 4,830,927 Accumulated depreciation (1,483,084) (1,803,425) - -------------------------------------------------------- 3,095,451 3,027,502 - -------------------------------------------------------- Public transportation revenue earning equipment -- 352,739 Accumulated depreciation -- (168,272) - -------------------------------------------------------- -- 184,467 - -------------------------------------------------------- $3,095,451 3,211,969 ======================================================== OPERATING PROPERTY AND EQUIPMENT December 31 In thousands 1999 1998 - -------------------------------------------------------- Land $ 105,794 107,057 Buildings and improvements 521,746 503,188 Machinery and equipment 439,352 407,304 Other 88,997 114,548 - -------------------------------------------------------- 1,155,889 1,132,097 Accumulated depreciation (574,784) (534,146) - -------------------------------------------------------- $ 581,105 597,951 ======================================================== DIRECT FINANCING LEASES AND OTHER ASSETS December 31 In thousands 1999 1998 - ------------------------------------------------------- Direct financing leases $ 391,346 375,360 Prepaid pension benefit cost 95,074 71,270 Vehicle securitization credit enhancement 28,697 6,793 Investments held in Rabbi Trust 36,961 22,807 Notes receivable on asset sales 36,855 7,234 Deposits 17,151 8,582 Other 46,186 51,196 - ------------------------------------------------------- $ 652,270 543,242 ======================================================= ACCRUED EXPENSES AND OTHER NON-CURRENT LIABILITIES December 31 In thousands 1999 1998 - ------------------------------------------------------- Salaries and wages $ 102,250 104,498 Employee benefits 21,228 16,360 Interest 27,859 38,628 Operating taxes 82,646 80,078 Income taxes 42,734 425 Self-insurance reserves 227,456 227,982 Postretirement benefits other than pensions 41,766 46,761 Vehicle rent and related accruals 109,193 153,018 Environmental liabilities 18,462 22,962 Restructuring 20,199 4,661 Other 133,165 127,465 - ------------------------------------------------------- 826,958 822,838 Non-current portion (285,802) (343,003) - ------------------------------------------------------- Accrued expenses $ 541,156 479,835 ======================================================= LEASES Operating Leases as Lessor. |
INCOME TAXES The components of the provision for income taxes attributable to continuing operations were as follows: Years ended December 31 In thousands 1999 1998 1997 - -------------------------------------------------------------- Current tax benefit: Federal $(183,470) (24,173) (38,068) State (24,392) (6,357) (4,329) Foreign 2,398 6,850 1,439 - -------------------------------------------------------------- (205,464) (23,680) (40,958) - -------------------------------------------------------------- Deferred tax expense: Federal 210,542 88,173 99,610 State 31,596 11,729 14,796 Foreign 7,903 530 8,214 - -------------------------------------------------------------- 250,041 100,432 122,620 - -------------------------------------------------------------- Provision for income taxes $ 44,577 76,752 81,662 ============================================================== A reconciliation of the Federal statutory tax rate with the effective tax rate for continuing operations follows: % of Pretax Income 1999 1998 1997 - ------------------------------------------------------ Federal statutory tax rate 35.0 35.0 35.0 Impact on deferred taxes for changes in tax rates -- (0.8) (0.7) State income taxes, net of Federal income tax benefit 4.0 1.7 3.3 Amortization of goodwill 0.1 1.2 1.0 Miscellaneous items, net (1.2) 0.4 0.4 - ------------------------------------------------------ Effective tax rate 37.9 37.5 39.0 ====================================================== The components of the net deferred income tax liability were as follows: December 31 In thousands 1999 1998 - --------------------------------------------------------------------- Deferred income tax assets: Self-insurance reserves $ 51,667 74,190 Alternative minimum taxes 6,011 30,905 Accrued compensation and benefits 30,484 31,345 Lease accruals and reserves 28,378 45,707 Miscellaneous other accruals 48,447 32,375 - --------------------------------------------------------------------- 164,987 214,522 Valuation allowance (12,822) (13,030) - --------------------------------------------------------------------- 152,165 201,492 - --------------------------------------------------------------------- Deferred income tax liabilities: Property and equipment bases difference (1,039,023) (894,475) Other items (102,173) (113,361) - --------------------------------------------------------------------- (1,141,196) (1,007,836) - --------------------------------------------------------------------- Net deferred income tax liability* $ (989,031) (806,344) ===================================================================== *Deferred tax assets of $22 million and $1 million have been included in the consolidated balance sheet caption "Prepaid expenses and other current assets" at December 31, 1999 and 1998, respectively. |
DEBT December 31 In thousands 1999 1998 - ----------------------------------------------------------------------- U.S. commercial paper $ 320,000 197,500 Canadian commercial paper 45,006 18,102 Unsecured U.S. notes: Debentures, 6.50% to 9.88%, due 2001 to 2017 453,244 623,971 Medium-term notes, 5.00% to 8.45%, due 2000 to 2025 1,181,443 1,364,062 Unsecured foreign obligations (principally pound sterling), 4.84% to 14.25%, due 2000 to 2006 335,343 338,496 Other debt, including capital leases 58,353 40,900 - ----------------------------------------------------------------------- Total debt 2,393,389 2,583,031 Current portion (574,253) (483,334) - ----------------------------------------------------------------------- Long-term debt $1,819,136 2,099,697 ======================================================================= Debt maturities (including sinking fund requirements) during the five years subsequent to December 31, 1999 were as follows: Debt In thousands Maturities - --------------------------------------------------- 2000 $574,253 2001 322,347 2002 655,207 2003 126,835 2004 90,214 - --------------------------------------------------- The weighted average interest rates for outstanding U.S. commercial paper at December 31, 1999 and 1998, were 6.60 percent and 5.96 percent, respectively. |
The following table summarizes the status of the Company's stock option plans (shares in thousands): 1999 1998 1997 - ------------------------------------------------------------------------------ Weighted Weighted Weighted Average Average Average Exercise Exercise Exercise Shares Price Shares Price Shares Price - ------------------------------------------------------------------------------ Beginning of year 5,253 $28.06 6,000 $27.18 6,878 $24.33 Granted 2,200 26.76 246 33.21 1,339 35.08 Exercised (92) 22.44 (911) 23.60 (2,037) 22.85 Forfeited (599) 27.47 (82) 27.01 (180) 26.40 - ------------------------------------------------------------------------------ End of year 6,762 $27.77 5,253 $28.06 6,000 $27.18 ============================================================================== Exercisable at end of year 4,099 $27.59 3,610 $26.12 3,373 $23.87 ============================================================================== Available for future grant 2,258 N/A 3,907 N/A 1,566 N/A ============================================================================== Information about options in various price ranges at December 31, 1999 follows (shares in thousands): Options Options Outstanding Exercisable - --------------------------------------------------------------------------- Remaining Weighted Weighted Price Life Average Average Ranges Shares (in years) Price Shares Price - --------------------------------------------------------------------------- $10-20 254 1.5 $16.13 254 $16.13 20-25 832 4.3 22.96 596 22.64 25-30 4,363 6.5 27.06 2,390 27.24 30-38 1,313 6.8 35.42 859 35.42 - --------------------------------------------------------------------------- 6,762 6.1 $27.77 4,099 $27.59 =========================================================================== Purchase Plans. |
The following table summarizes the status of the Company's stock purchase plans (shares in thousands): 1999 1998 1997 - ----------------------------------------------------------------------------- Weighted Weighted Weighted Average Average Average Exercise Exercise Exercise Shares Price Shares Price Shares Price - ----------------------------------------------------------------------------- Beginning of year 82 $27.05 571 $24.46 1,653 $23.88 Granted 300 18.43 146 20.31 63 30.28 Exercised (300) 19.71 (586) 23.05 (994) 23.96 Forfeited (10) 27.66 (49) 24.54 (151) 23.91 - ----------------------------------------------------------------------------- End of year 72 $27.00 82 $27.05 571 $24.46 ============================================================================= Exercisable at end of year -- N/A -- N/A 472 $23.96 ============================================================================= Available for future grant 2,436 N/A 226 N/A 323 N/A ============================================================================= Pro Forma Information. |
The option pricing assumptions were as follows: Years ended December 31 1999 1998 1997 - ------------------------------------------------------------------- Dividend yield 2.5% 2.3% 1.8% Expected volatility 25.7% 25.1% 24.5% Option plans: Risk-free interest rate 5.4% 5.4% 6.2% Weighted average expected life 7 years 9 years 8 years Weighted average grant-date fair value per option $7.77 $11.05 $12.59 Purchase plans: Risk-free interest rate 4.9% 5.3% 6.1% Weighted average expected life .25 year .25 year 5 years Weighted average grant-date fair value per option $4.99 $5.50 $12.30 - ------------------------------------------------------------------- EARNINGS PER SHARE INFORMATION A reconciliation of the number of shares used in computing basic and diluted EPS follows: Years ended December 31 In thousands 1999 1998 1997 - ---------------------------------------------------------------------- Weighted average shares outstanding - Basic 68,536 73,068 76,888 Common equivalents: Shares issuable under outstanding dilutive options 1,084 3,850 5,442 Shares assumed repurchased based on the average market value for the period (994) (3,416) (4,494) Dilutive effect of restricted stock and exercised options prior to being exercised, net 106 143 356 - ---------------------------------------------------------------------- Weighted average shares outstanding - Diluted 68,732 73,645 78,192 ====================================================================== Anti-dilutive options not included above 5,750 1,485 1,129 ====================================================================== EMPLOYEE BENEFIT PLANS Pension Plans. |
The following table sets forth the balance sheet impact, as well as the benefit obligations, assets and funded status associated with the Company's pension plans: December 31 In thousands 1999 1998 - ----------------------------------------------------------------------- Change in benefit obligations: Benefit obligations at January 1, $ 787,729 708,714 Service cost 32,649 26,067 Interest cost 50,087 48,356 Amendments -- 618 Actuarial gain (7,047) (4,053) Benefits paid (34,905) (38,530) Settlement and curtailment (21,331) -- Change in discount rate assumption (104,019) 46,986 Foreign currency exchange rate changes (1,387) (429) - ----------------------------------------------------------------------- Benefit obligations at December 31, 701,776 787,729 - ----------------------------------------------------------------------- Change in plan assets: Fair value of plan assets at January 1, 929,161 820,696 Actual return on plan assets 167,229 136,108 Employer contribution 10,084 8,466 Plan participants' contributions 3,025 2,746 Benefits paid (34,905) (38,530) Settlement (19,183) -- Foreign currency exchange rate changes (1,288) (325) - ----------------------------------------------------------------------- Fair value of plan assets at December 31, 1,054,123 929,161 - ----------------------------------------------------------------------- Funded status 352,347 141,432 Unrecognized transition asset (4,036) (7,990) Unrecognized prior service cost 12,795 15,355 Unrecognized net actuarial gain (278,761) (88,713) - ----------------------------------------------------------------------- Prepaid pension benefit cost $ 82,345 60,084 ======================================================================= Amounts recognized in the balance sheet consist of: December 31 In thousands 1999 1998 - ----------------------------------------------------------------------- Other assets (prepaid pension benefit cost) $ 95,074 71,270 Accrued expenses (12,729) (11,186) - ----------------------------------------------------------------------- $ 82,345 60,084 ======================================================================= The following table sets forth the actuarial assumptions used for the Company's dominant plan: December 31 1999 1998 - ----------------------------------------------------------------------- Discount rate 7.75% 6.75% Rate of increase in compensation levels 5.00% 5.00% Expected long-term rate of return on plan assets 9.50% 9.50% Transition amortization in years 8 8 Gain and loss amortization in years 8 8 - ----------------------------------------------------------------------- Savings Plans. |
The following table sets forth the balance sheet impact, as well as the benefit obligations and rate assumptions associated with the Company's postretirement benefit plans: December 31 In thousands 1999 1998 - ---------------------------------------------------------------- Benefit obligations at January 1, $38,976 44,286 Service cost 1,360 1,117 Interest cost 2,210 2,535 Amendment -- (8,731) Actuarial loss (gain) (3,830) 2,801 Benefits paid (3,847) (3,497) Curtailment and settlement (2,271) -- Change in discount rate assumption (2,959) 1,797 Change in participation assumption -- (1,332) - ---------------------------------------------------------------- Benefit obligations at December 31, 29,639 38,976 Unrecognized prior service credit 5,556 7,640 Unrecognized net actuarial gain 6,571 145 - ---------------------------------------------------------------- Accrued postretirement benefit obligation $41,766 46,761 - ---------------------------------------------------------------- Discount rate 7.75% 6.75% ================================================================ The actuarial assumptions include health care cost trend rates projected ratably from 7.5 percent in 2000 to 6 percent in 2003 and thereafter. |
Years ended December 31 In thousands 1999 1998 1997 - ------------------------------------------------------------------------- REVENUE Transportation Services $2,973,548 2,811,244 2,836,950 Integrated Logistics 1,713,051 1,501,126 1,370,320 International 590,226 603,834 457,869 Eliminations (324,621) (309,228) (296,991) - ------------------------------------------------------------------------- Total revenue $4,952,204 4,606,976 4,368,148 ========================================================================= Years ended December 31 In thousands 1999 1998 1997 - ------------------------------------------------------------------------- EARNINGS BEFORE INCOME TAXES Transportation Services $ 192,764 214,028 200,254 Integrated Logistics 54,365 76,514 67,300 International 29 252 1,516 Eliminations (38,709) (38,618) (35,754) - ------------------------------------------------------------------------- Total reportable segments 208,449 252,176 233,316 Other, primarily corporate administrative expense (14,812) (13,234) (20,274) Restructuring and other charges (52,093) 3,040 -- Year 2000 expense (24,050) (37,418) (3,492) - ------------------------------------------------------------------------- Total earnings before income taxes $ 117,494 204,564 209,550 ========================================================================= Years ended December 31 In thousands 1999 1998 1997 - ------------------------------------------------------------------------- DEPRECIATION EXPENSE, NET OF GAINS Transportation Services $ 461,586 463,567 465,708 Integrated Logistics 20,662 18,824 16,485 International 82,408 84,824 74,730 - ------------------------------------------------------------------------- Total reportable segments 564,656 567,215 556,923 Other, primarily corporate 2,109 2,447 2,250 - ------------------------------------------------------------------------- Total depreciation, net of gains $ 566,765 569,662 559,173 ========================================================================= Years ended December 31 In thousands 1999 1998 1997 - ------------------------------------------------------------------------- AMORTIZATION EXPENSE AND OTHER NON-CASH CHARGES, NET Transportation Services $ 2,093 2,649 (1,270) Integrated Logistics 8,267 4,969 5,996 International 7,905 (4,490) (1,225) - ------------------------------------------------------------------------- Total reportable segments 18,265 3,128 3,501 Other, primarily corporate 7,971 (3,920) 2,361 - ------------------------------------------------------------------------- Total amortization and other non-cash charges, net $ 26,236 (792) 5,862 ========================================================================= Years ended December 31 In thousands 1999 1998 1997 - ------------------------------------------------------------------------- INTEREST EXPENSE, NET Transportation Services $ 169,082 162,070 159,317 Integrated Logistics 2,368 1,588 214 International 22,187 25,564 22,975 - ------------------------------------------------------------------------ Total reportable segments 193,637 189,222 182,506 Other, primarily corporate (9,961) (1,436) (2,755) - ------------------------------------------------------------------------- Total interest expense, net $ 183,676 187,786 179,751 ========================================================================= December 31 In thousands 1999 1998 1997 - ------------------------------------------------------------------------- ASSETS Transportation Services $4,633,637 4,236,787 4,229,236 Integrated Logistics 325,175 294,667 286,677 International 567,947 611,755 552,522 - ------------------------------------------------------------------------- Total reportable segments 5,526,759 5,143,209 5,068,435 Other, primarily corporate 243,691 186,909 87,143 Discontinued operations -- 378,483 353,482 - ------------------------------------------------------------------------- Total assets $5,770,450 5,708,601 5,509,060 ========================================================================= Years ended December 31 In thousands 1999 1998 1997 - ------------------------------------------------------------------------ CAPITAL EXPENDITURES Transportation Services $1,617,934 1,203,885 872,568 Integrated Logistics 19,437 20,413 24,921 International 92,683 107,366 89,603 - ------------------------------------------------------------------------ Total reportable segments 1,730,054 1,331,664 987,092 Other, primarily corporate 4,165 1,477 2,485 - ------------------------------------------------------------------------ Total capital expenditures $1,734,219 1,333,141 989,577 ======================================================================== Geographic Information Years ended December 31 In thousands 1999 1998 1997 - ------------------------------------------------------------------------ REVENUE Transportation Services $2,521,561 2,377,851 2,408,954 Integrated Logistics 1,556,526 1,386,458 1,298,408 - ------------------------------------------------------------------------ Total United States 4,078,087 3,764,309 3,707,362 - ------------------------------------------------------------------------ Transportation Services 460,993 400,354 386,045 Integrated Logistics 413,124 442,313 274,741 - ------------------------------------------------------------------------ Total Foreign 874,117 842,667 660,786 - ------------------------------------------------------------------------ Total $4,952,204 4,606,976 4,368,148 ======================================================================== December 31 In thousands 1999 1998 1997 - ------------------------------------------------------------------------ LONG-LIVED ASSETS United States $3,072,892 3,209,027 3,139,084 Foreign 603,664 600,893 588,082 - ------------------------------------------------------------------------ Total $3,676,556 3,809,920 3,727,166 ======================================================================== SUPPLEMENTARY DATA RYDER SYSTEM, INC. AND SUBSIDIARIES QUARTERLY FINANCIAL AND COMMON STOCK DATA Quarterly and year-to-date computations of per share amounts are made independently; therefore, the sum of per share amounts for the quarters may not equal per share amounts for the year. |
Date: March 13, 2000 By: /S/ M. ANTHONY BURNS ------------------------------------ M. Anthony Burns Chairman and Chief Executive Officer (Principal Executive Officer) Date: March 13, 2000 By: /S/ CORLISS J. NELSON ------------------------------------ Corliss J. Nelson Senior Executive Vice President - Finance and Chief Financial Officer (Principal Financial Officer) Date: March 13, 2000 By: /S/ GEORGE P. SCANLON ------------------------------------ George P. Scanlon Senior Vice President - Planning and Controller (Principal Accounting Officer) Date: March 13, 2000 By: /S/ GREGORY T. SWIENTON ------------------------------------ Gregory T. Swienton President and Chief Operating Officer Date: March 13, 2000 By: /S/ JOSEPH L. DIONNE * ------------------------------------ Joseph L. Dionne Director Date: March 13, 2000 By: /S/ EDWARD T. FOOTE II * ------------------------------------ Edward T. Foote II Director Date: March 13, 2000 By: /S/ DAVID I. FUENTE * ------------------------------------ David I. Fuente Director Date: March 13, 2000 By: /S/ JOHN A. GEORGES * ------------------------------------ John A. Georges Director Date: March 13, 2000 By: /S/ VERNON E. JORDAN, JR. * ------------------------------------ Vernon E. Jordan, Jr. Director Date: March 13, 2000 By: /S/ DAVID T. KEARNS * ------------------------------------ David T. Kearns Director Date: March 13 , 2000 By: /S/ LYNN M. MARTIN * ------------------------------------ Lynn M. Martin Director Date: March 13, 2000 By: /S/ PAUL J. RIZZO * ------------------------------------ Paul J. Rizzo Director Date: March 13, 2000 By: /S/ CHRISTINE A. VARNEY * ------------------------------------ Christine A. Varney Director Date: March 13, 2000 By: /S/ ALVA O. |
Date: March 26, 1999 By: /s/ M. ANTHONY BURNS -------------------------- M. Anthony Burns Chairman, President and Chief Executive Officer (Principal Executive Officer) Date: March 26, 1999 By: /s/ EDWIN A. HUSTON --------------------------- Edwin A. Huston Senior Executive Vice President - Finance and Chief Financial Officer (Principal Financial Officer) Date: March 26, 1999 By: /s/ GEORGE P. SCANLON ---------------------------- George P. Scanlon Senior Vice President - Planning and Controller (Principal Accounting Officer) Date: March 26, 1999 By: /s/ JOSEPH L. DIONNE * ------------------------------ Joseph L. Dionne Director Date: March 26, 1999 By: /s/ EDWARD T. FOOTE II * ------------------------------ Edward T. Foote II Director Date: March 26, 1999 By: /s/ DAVID I. FUENTE * ------------------------------ David I. Fuente Director Date: March 26, 1999 By: /s/ JOHN A. GEORGES * ------------------------------ John A. Georges Director Date: March 26, 1999 By: /s/ VERNON E. JORDAN, JR. * ------------------------------- Vernon E. Jordan, Jr. Director Date: March 26, 1999 By: /s/ DAVID T. KEARNS * ------------------------------ David T. Kearns Director Date: March 26, 1999 By: /s/ LYNN M. MARTIN * ------------------------------ Lynn M. Martin Director Date: March 26, 1999 By: /s/ PAUL J. RIZZO * ----------------------------- Paul J. Rizzo Director Date: March 26, 1999 By: /s/ CHRISTINE A. VARNEY * ----------------------------- Christine A. Varney Director Date: March 26, 1999 By: /s/ ALVA O. |
Date: March 26, 1997 By: /S/ M. ANTHONY BURNS -------------------- M. Anthony Burns Chairman, President and Chief Executive Officer (Principal Executive Officer) Date: March 26, 1997 By: /S/ EDWIN A. HUSTON ------------------- Edwin A. Huston Senior Executive Vice President - Finance and Chief Financial Officer (Principal Financial Officer) Date: March 26, 1997 By: /S/ GEORGE P. SCANLON --------------------- George P. Scanlon Vice President - Planning and Controller (Principal Accounting Officer) Date: March 26, 1997 By: /S/ ARTHUR H. BERNSTEIN * --------------------------------- Arthur H. Bernstein Director Date: March 26, 1997 By: /S/ JOSEPH L. DIONNE * ------------------------------ Joseph L. Dionne Director Date: March 26, 1997 By: /S/ EDWARD T. FOOTE II * -------------------------------- Edward T. Foote II Director Date: March 26, 1997 By: /S/ JOHN A. GEORGES * ---------------------------- John A. Georges Director Date: March 26, 1997 By: /S/ VERNON E. JORDAN, JR. * ---------------------------------- Vernon E. Jordan, Jr. Director Date: March 26, 1997 By: /S/ DAVID T. KEARNS * --------------------------- David T. Kearns Director Date: March 26, 1997 By: /S/ LYNN M. MARTIN * -------------------------- Lynn M. Martin Director Date: March 26, 1997 By: /S/ PAUL J. RIZZO * ------------------------ Paul J. Rizzo Director Date: March 26, 1997 By: /S/ ALVA O. |
(2) Reconciliation of 1993 property and equipment additions on Schedule V with the consolidated statement of cash flows is as follows: Method and depreciable lives as to Ryder System, Inc. and consolidated subsidiaries: Provision for depreciation and amortization on substantially all depreciable assets is computed using the straight-line method over the following estimated useful asset lives: Schedule VI RYDER SYSTEM, INC. AND CONSOLIDATED SUBSIDIARIES Accumulated Depreciation of Property and Equipment Years Ended December 31, 1993, 1992 and 1991 (Thousands of Dollars) Schedule VII RYDER SYSTEM, INC. AND CONSOLIDATED SUBSIDIARIES Guarantees of securities of other issuers (Thousands of dollars) Schedule X RYDER SYSTEM, INC. AND CONSOLIDATED SUBSIDIARIES Supplementary Income Statement Information Years ended December 31, 1993, 1992 and 1991 (Thousands of dollars) INDEPENDENT AUDITORS' REPORT ---------------------------- The Board of Directors and Shareholders Ryder System, Inc.: Under date of February 7, 1994, we reported on the consolidated balance sheets of Ryder System, Inc. and subsidiaries as of December 31, 1993 and 1992, and the related consolidated statements of earnings and cash flows for each of the years in the three-year period ended December 31, 1993, as contained in the 1993 annual report to shareholders. |
We have a significant amount of indebtedness, which could have important consequences, including the following: • it may limit our ability to obtain additional debt or equity financing for working capital, capital expenditures, acquisitions, debt service requirements, and general corporate or other purposes; • a portion of our cash flows from operations will be dedicated to the payment of principal and interest on our indebtedness, including indebtedness we may incur in the future, and will not be available for other purposes, including to finance our working capital, capital expenditures, acquisitions, and general corporate costs or other purposes; • it could limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate and place us at a competitive disadvantage compared to our competitors that have less debt; • it could make us more vulnerable to downturns in general economic or industry conditions or in our business, or prevent us from carrying out activities that are important to our growth; • it could increase our interest expense if interest rates in general increase because a portion of our indebtedness, including all of our indebtedness under our senior credit facilities, bears interest at floating rates; and • it could make it more difficult for us to satisfy our obligations with respect to our indebtedness, and any failure to comply with the obligations of any of our debt instruments, including any financial and other restrictive covenants, could result in an event of default under the agreements governing our other indebtedness which, if not cured or waived, could result in the acceleration of our indebtedness. |
We have a significant amount of indebtedness which could have important consequences, including the following: • it may limit our ability to obtain additional debt or equity financing for working capital, capital expenditures, acquisitions, debt service requirements, and general corporate or other purposes; • a portion of our cash flows from operations will be dedicated to the payment of principal and interest on our indebtedness, including indebtedness we may incur in the future, and will not be available for other purposes, including to finance our working capital, capital expenditures, acquisitions, and general corporate costs or other purposes; • it could limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate and place us at a competitive disadvantage compared to our competitors that have less debt; • it could make us more vulnerable to downturns in general economic or industry conditions or in our business, or prevent us from carrying out activities that are important to our growth; • it could increase our interest expense if interest rates in general increase because a portion of our indebtedness, including all of our indebtedness under our senior credit facilities, bears interest at floating rates; and • it could make it more difficult for us to satisfy our obligations with respect to our indebtedness, and any failure to comply with the obligations of any of our debt instruments, including any financial and other restrictive covenants, could result in an event of default under the agreements governing our other indebtedness which, if not cured or waived, could result in the acceleration of our indebtedness. |
We have a significant amount of indebtedness which could have important consequences, including the following: • it may limit our ability to obtain additional debt or equity financing for working capital, capital expenditures, acquisitions, debt service requirements, and general corporate or other purposes; • a portion of our cash flows from operations will be dedicated to the payment of principal and interest on our indebtedness, including indebtedness we may incur in the future, and will not be available for other purposes, including to finance our working capital, capital expenditures, acquisitions, and general corporate or other purposes; • it could limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate and place us at a competitive disadvantage compared to our competitors that have less debt; • it could make us more vulnerable to downturns in general economic or industry conditions or in our business, or prevent us from carrying out activities that are important to our growth; • it could increase our interest expense if interest rates in general increase because a portion of our indebtedness, including all of our indebtedness under our senior credit facilities, bears interest at floating rates; and • it could make it more difficult for us to satisfy our obligations with respect to our indebtedness, and any failure to comply with the obligations of any of our debt instruments, including any financial and other restrictive covenants, could result in an event of default under the agreements governing our other indebtedness which, if not cured or waived, could result in the acceleration of our indebtedness. |
Our substantial indebtedness could have important consequences, including the following: •it may limit our ability to obtain additional debt or equity financing for working capital, capital expenditures, acquisitions, debt service requirements, and general corporate or other purposes; •a portion of our cash flows from operations will be dedicated to the payment of principal and interest on our indebtedness, including indebtedness we may incur in the future, and will not be available for other purposes, including to finance our working capital, capital expenditures, acquisitions, and general corporate or other purposes; •it could limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate and place us at a competitive disadvantage compared to our competitors that have less debt; •it could make us more vulnerable to downturns in general economic or industry conditions or in our business, or prevent us from carrying out activities that are important to our growth; •it could increase our interest expense if interest rates in general increase because a portion of our indebtedness, including all of our indebtedness under our senior credit facilities, bears interest at floating rates; and •it could make it more difficult for us to satisfy our obligations with respect to our indebtedness, and any failure to comply with the obligations of any of our debt instruments, including any financial and other restrictive covenants, could result in an event of default under the agreements governing our other indebtedness which, if not cured or waived, could result in the acceleration of our indebtedness. |
Internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, and effected by the board of directors, management, and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with US GAAP including those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company, (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with US GAAP and that receipts and expenditures are being made only in accordance with authorizations of management and directors of the company, and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. |
SERVICE CORPORATION INTERNATIONAL NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) The Company’s reportable segment information is as follows: SERVICE CORPORATION INTERNATIONAL NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) The following table reconciles certain reportable segment amounts to the Company’s corresponding consolidated amounts: The following table reconciles gross profits from reportable segments shown above to the Company’s consolidated income from continuing operations before income taxes and cumulative effects of accounting changes: SERVICE CORPORATION INTERNATIONAL NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) The Company’s geographic area information was as follows: Included in the North American figures above are the following United States amounts: Included in the Other Foreign figures above are the following French amounts: (1) Operating income includes $(27,597), $24,625 and $41,397 in Gains and impairment (losses) on dispositions, net and Other operating expenses in the United States and $0, $92 and ($734) in Gains and impairment (losses) on dispositions, net in France for the years ended December 31, 2005, 2004, and 2003, respectively. |
Internal control over financial reporting Also, we have audited management’s assessment, included in Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A, that Service Corporation International did not maintain effective internal control over financial reporting as of December 31, 2004, because of the effect of material weaknesses relating to (i) revenue recognition on preneed cemetery contracts; (ii) reconciliations of preneed funeral and cemetery detailed records to trust fund assets and corresponding deferred revenue and non-controlling interest accounts related to preneed funeral and cemetery activities, and of cemetery deferred selling costs; (iii) lease accounting; (iv) revenue recognition and deferred revenue from preneed and atneed funeral and cemetery contracts; (v) use and control of pre-numbered manual contracts; (vi)cash receipts; (vii) approval of adjustments to and review of collectability of atneed funeral and cemetery accounts receivable; (viii) cash disbursements at the funeral and cemetery locations; (ix) and merchandise inventory, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). |
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