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EXHIBIT 13.1
13.1 The Ryder System, Inc. 1993 Annual Report to Shareholders. Those portions
of the Ryder System, Inc. 1993 Annual Report to Shareholders which are not
incorporated by reference into this report are furnished to the Commission
solely for information purposes and are not to be deemed "filed" as part
of this report.
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RYDER 1993
Ryder System is an international company which provides highway transportation
services throughout the United States and in Canada, Puerto Rico, the United
Kingdom, Germany and Poland. Ryder strives to meet or exceed its customers'
expectations and to maximize shareholder value by providing its customers with
the best transportation services in the world. Toward this end, the company
participates in markets in which it can add value, differentiate its services
and be a market leader.
CONTENTS
Letter to Shareholders 2
Company Profile 6
Productivity 8
Managing Assets 13
Dedicated Logistics 17
Roads to Growth 21
Corporate Responsibility 23
Financial Review 24
Selected Financial and Operational Data 29
Report of Management and Independent Auditors' Report 30
Consolidated Financial Statements 31
Notes to Consolidated Financial Statements 34
Supplemental Financial Data 43
Board of Directors 46
Corporate Management 47
Division Management 48
Corporate Information 49
(C) 1994 Ryder System, Inc.
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FINANCIAL HIGHLIGHTS Ryder System, Inc.
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(Dollars in thousands, except per share amounts) 1993 1992* Change
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OPERATING DATA:
Revenue $ 4,217,030 4,019,675 +5%
Earnings from continuing operations $ 114,722 98,050 +17%
Net earnings (loss) (a) $ (61,424) 123,926 N/A
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FINANCIAL DATA:
Total assets $ 4,258,388 4,678,533 -9%
Total shareholders' equity $ 990,181 1,475,134 -33%
Return on average common equity (b) 10% 8% +2 pts.
Debt to equity 155% 113% +42 pts.
Debt to tangible equity 202% 135% +67 pts.
Total capital spending $ 1,237,521 1,091,559 +13%
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PER COMMON SHARE DATA:
Earnings from continuing operations $ 1.43 1.17 +22%
Net earnings (loss) (a) $ (0.84) 1.51 N/A
Book value $ 12.81 18.26 -30%
Cash dividends $ 0.60 0.60 -
Market price (high-low) (c) $ 26 5/8-24 3/4 28 7/8-19 5/8
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OTHER DATA:
Common shareholders of record 19,025 19,233 -1%
Common shares outstanding 77,294,484 75,411,422 +2%
Number of vehicles (d) 168,278 160,188 +5%
Number of employees (d) 37,949 37,336 +2%
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* Certain amounts have been restated for discontinued operations.
(a) Net loss for 1993 includes an after tax charge of $25 million for the cumulative effect of a change in accounting and
an after tax charge of $169 million related to the discontinued aviation services subsidiaries. Net earnings for 1992
include an after tax gain of $6 million on the final disposition of the discontinued aircraft leasing business. See
"Notes to Consolidated Financial Statements" for additional discussion.
(b) Excludes the cumulative effect of a change in accounting and special charges and gains related to discontinued
operations.
(c) On December 7, 1993, the company completed the spin off of its aviation services subsidiaries by distributing to common
stockholders one share of Aviall, Inc. common stock valued at $16.25 for each four Ryder System, Inc. common shares
owned. The high and low presented for 1993 were the values of the company's common stock after the spin off. The high
and low for 1993 prior to the spin off were 33 1/2 and 26 1/4, respectively.
(d) Excludes discontinued operations.
LINES OF BUSINESS
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(In thousands) 1993 1992* 1991* 1990* 1989*
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REVENUE:
Vehicle Leasing & Services $3,596,803 3,384,952 3,229,437 3,285,742 3,154,799
Automotive Carriers 634,634 651,216 645,051 688,971 716,147
Other - - - 3,267 45,269
Intersegment (14,407) (16,493) (23,154) (27,956) (27,152)
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Total $4,217,030 4,019,675 3,851,334 3,950,024 3,889,063
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EARNINGS FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES:
Vehicle Leasing & Services $ 205,364 135,291 52,511 79,711 17,254
Automotive Carriers 31,955 48,220 24,318 22,604 20,340
Other (27,543) (17,966) (16,350) (3,625) 16,496
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Total $ 209,776 165,545 60,479 98,690 54,090
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* Certain amounts have been restated for discontinued operations.
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LETTER TO SHAREHOLDERS
(Photo)
M. Anthony Burns
1993 was a good year for Ryder. Culminating with the December spin off of
Aviall, Inc., we completed the transition of the company into a more clearly
defined, focused highway transportation services company. We have a sharper
vision and are more productive and efficient. The results confirm that we are
on the right track.
In 1992, we established a Strategy Council in the company, composed of 13
senior executives. The Council meets regularly to review and develop strategic
consensus, then supervise implementation of key strategies for the future
direction of the company.
One of our earliest decisions was to establish a vision for the company. Our
vision is to provide Ryder customers with the best transportation services in
the world. The fact that the vision statement mentions customers early is no
accident. Our customers come first in everything that we do. In today's market,
customers are seeking greater value, so only by creating customer value can we
create shareholder value and reach our goal of 17% return on equity in the mid
1990s.
Another key action of the Strategy Council was the identification of Ryder's
core competencies: asset management and logistics. In these competencies we
feel we have unique advantages that we can leverage for competitive advantage
in the changing marketplace.
CONTINUING PROGRESS IN 1993
In 1993, we had four key goals: improve our aviation business, accelerate the
growth in Dedicated Logistics, grow full service truck leasing in an
increasingly competitive marketplace and set the stage for international
expansion. Those were important goals, and we made significant progress toward
their achievement.
The 1993 restructuring of Aviall, Inc. improved the aviation business and the
successful December spin off completed the transition that clearly focuses
Ryder on leveraging its core competencies in highway transportation services.
Our second goal was to accelerate the growth in Ryder Dedicated Logistics, and
we did. The dedicated logistics market is very large and growing rapidly, and
we are a market leader. To continue to be a leader in the market, we are
recruiting, selecting, training and developing excellent people in sales and
marketing, logistics and systems, and operations. We are upgrading our sales
and marketing systems, and we are continuing to invest in our logistics and
information systems.
In 1993, Ryder Dedicated Logistics' revenue and profits were at record levels,
as were sales. This business unit accounted for more than $565 million in
revenue, and our goal is to increase revenue by 20% to 30% annually for the
next few years.
Our third goal was to grow full service truck leasing. This market is also
large and growing, and we are the market leader. We have increased the
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(Graph)
EARNINGS FROM CONTINUING OPERATIONS
The company's clear focus on highway transportation
services helped improve earnings from continuing
operations.
(Graph)
VEHICLE LEASING & SERVICES DIVISION EARNINGS BEFORE
INCOME TAXES
Vehicle Leasing & Services 1993 pretax earnings were
the highest in division history.
size of our full service leasing sales force, and we've established a new
marketing organization which emphasizes better market research and improved
market segmentation techniques. We have increased sales and marketing training
programs, and we have begun to reengineer many of our internal processes in
order to improve customer service and reduce operating costs.
Full service truck leasing revenue, up modestly last year, is heading in the
right direction. This business unit had a very strong fourth quarter in 1993,
with excellent lease sales.
Finally, we wanted to set the stage for international expansion. The
international market for our services is also large and growing. Our operations
in the United Kingdom have improved, and we see opportunities elsewhere in
Europe and in the Americas to leverage our U.S. strength. We plan to take
advantage of new opportunities that are now available to us as a result of the
North American Free Trade Agreement (NAFTA), and we will also evaluate requests
to help some of our current customers as they begin doing business in countries
that might not otherwise be of immediate interest to us.
During 1993, we put our International management team in place. That team is
developing the strategic plan for international expansion and will implement
it.
In 1993, we also saw Ryder Consumer Truck Rental return to profitability.
A focused organization, newer equipment, a new information system --
RyderFIRST(R) -- and enhanced marketing and advertising all contributed to
greatly improved vehicle utilization. Similarly, Commercial Truck Rental
achieved its best vehicle utilization rate since the mid '80s.
The Automotive Carrier Division showed major improvement toward the end of the
year. A restructured organization and increased auto production helped the
division's performance.
FINANCIALLY STRONG
We continue to be pleased with the company's financial strength. Our balance
sheet, smaller than in recent years, is strong; our debt to equity ratio is
good; our 1993 return on equity was over 10% for the first time since 1987; our
cost of capital is low and competitive; and our asset turnover is greater than
100%. The spin off of Aviall, in particular, was a positive factor in improving
our financial strength. It reduced our cost of capital and it increased our
return on equity.
Of course, the proof of our actions is in our earnings. Earnings per share from
continuing operations were up 39% in the fourth quarter of 1993, and they were
up 22% for the full year. For the Vehicle Leasing & Services Division, 1993's
revenue and pretax earnings were the best ever.
1994 OBJECTIVES
Even though 1993 was a good year, we know that we have more work to do. With
the goal of increasing
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shareholder value by improving customer value, we have four objectives in 1994.
Because we feel we are on the right road to increasing value, they are much
like our 1993 objectives. We want to explode the growth of Ryder Dedicated
Logistics; develop more customized product offerings in full service truck
leasing to increase growth; expand internationally; and improve customer
service and reduce our costs through aggressive reengineering of our own
internal processes.
In today's market, customers are seeking greater value,
so only by creating customer value can we create
shareholder value and reach our goal of 17% return on
equity.
In Dedicated Logistics, we will become the lead logistics provider for more of
our customers. We will leverage our systems and expertise to make our customers
more productive and increase our participation in this large, rapidly growing
market.
In full service truck leasing, we will expand our sales force, increase our
knowledge of our customers' distribution needs, increase our training and
development activities and improve our technology so that we consistently
deliver distinctive customized products and services to convert and retain
customers.
Internationally, we are moving forward. We expect to accelerate our growth in
the United Kingdom, Germany and Poland and other countries where we may have
unique opportunities. Similarly, we are actively looking for opportunities in
Mexico in 1994.
Finally, we will move ahead boldly to reengineer our marketing and sales,
vehicle maintenance, and administration and finance areas. In 1992, we began
to implement RyderFIRST, a $20 million project that has markedly improved the
levels of service we offer to our customers and our dealers and has enhanced
the way we do business in consumer truck rental. In 1993, we began a $27
million project to automate our vehicle maintenance shops and fuel islands. The
new systems, now being installed in our shops across the U.S., will improve
service to our customers and greatly increase our shop productivity. At its
February 1994 meeting, the Board of Directors approved a $47 million technology
project to upgrade important processes in our sales and marketing and finance
operations. These systems will make us even more productive, and our customers
will benefit from significant improvements in every aspect of our relationships
with them.
In addition, we have strategies in place to improve the performance of our
Commercial Truck Rental, Consumer Truck Rental and Automotive Carrier
businesses.
THEMES FOR LONG-TERM IMPROVEMENT
As we develop and implement our business strategies, we also seek to build a
company that is more
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(Graph)
INDEX OF FULL SERVICE TRUCK LEASING CUSTOMER SATISFACTION
Customer satisfaction has been improving in recent years.
/*/ Survey not conducted in 1989.
(Graph)
AVERAGE ASSET TURNOVER
Ryder's asset turnover rate demonstrates the
strength of the company's skill at asset management.
(Graph)
RETURN ON AVERAGE COMMON EQUITY*
Return on equity trends show that the company is on target
to reach its goal of 17% ROE in the mid 1990s.
*Excludes the cumulative effect of a change in accounting
and special charges and gains related to discontinued
operations.
dynamic, customer focused and advanced as a whole, and there are three themes
that flow throughout the company. They are: improving our marketing and sales,
upgrading our information systems and enhancing our organizational
effectiveness.
Increased marketing resources will help us stay close to our customers. Our
newly formed Marketing Council brings together all of the marketing talent in
the organization to clearly understand and address our customers' needs,
improve our products and correctly position those products in the marketplace.
We are focusing relentlessly on upgrading and making use of the latest
information system technology. Where it makes sense, either operationally or
commercially, we are taking advantage of computers and information technology
to help drive out costs and improve productivity and service throughout the
company.
In the area of human resources, the need for sales training increases as the
service offerings become more tailored and complex. The increased use of
vehicle electronics challenges us to provide even more training for our service
technicians. Management development and personal development are important in
maintaining organizational effectiveness and in meeting the challenges of
having the right people in the right places at the right time.
A BRIGHT FUTURE
As we look forward, Ryder, its people and its customers face an exhilarating
and rewarding future. Ryder is the biggest and best at what it does. We have
the resources and the vision to stay ahead of the market in offering new
services, new technology and additional information. Reengineering efforts will
improve customer service and enhance productivity, which will result in lower
customer costs.
With our excellent financial condition and good access to capital, we can
continue to expand investments in our base businesses. We intend to be the
partner of choice for customers looking to solve transportation and
distribution problems. And we expect creating value for our customers to
contribute to increasing shareholder value.
Finally, I want to remind our shareholders and our customers that it is Ryder's
people who create this value, who implement solutions, who are the company. I
wish to extend my sincerest thanks and gratitude to them for their
contributions. If Ryder has a secret of success, it is the quality and devotion
of its people. With their help and support, we look confidently to Ryder's
future.
M. Anthony Burns
Chairman, President and
Chief Executive Officer
February 18, 1994
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RYDER SYSTEM COMPANY PROFILE
Our vision is to provide Ryder customers with the best
transportation services in the world.
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REVENUE SOURCES
REVENUE OF $4.2 BILLION
(Graph)
BUSINESS UNIT AND DESCRIPTION
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(Graph)
FULL SERVICE TRUCK LEASING
Includes the vehicles and virtually all of the support services a customer
needs to operate them
(Graph)
COMMERCIAL TRUCK RENTAL
Provides vehicles and support services to businesses on a short-term basis, and
also supplements the needs of full service lease customers
(Graph)
DEDICATED LOGISTICS
Provides customers with comprehensive logistics and distribution systems
(Graph)
CONSUMER TRUCK RENTAL
Rents trucks to do-it-yourself movers and light commercial customers, and
manages corporate employee relocations
(Graph)
PUBLIC TRANSPORTATION SERVICES
Offers school administrators, public transit managers and municipal fleet
managers a variety of transportation management, maintenance and service
options
(Graph)
AUTOMOTIVE CARRIERS
Transports new automobiles and trucks from manufacturing plants, railheads and
ports to dealers throughout the U.S. and in several Canadian provinces
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OPERATING DATA
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- - World's largest full service truck leasing company
- - Over 975 locations in U.S., Canada, Puerto Rico, U.K., Germany and Poland
- - More than 11,100 customers and 78,500 vehicles
- - World's largest commercial truck rental company
- - More than 1.7 million truck rental transactions in 1993
- - Over 33,700 trucks, tractors and trailers available for rent
- - A leading provider of dedicated logistics services
- - Nearly 350 customers in North America and Europe
- - Serves customers in more than 30 different industries
- - A market leader in consumer truck rental
- - 4,600 independent dealers and company-owned locations in
North America
- - 33,200 vehicles ranging from 10-ft vans to 24-ft trucks
- - Transports over 420,000 students in 19 states every school day
- - Manages or operates 88 public transit systems
- - More than 12,000 buses operated or managed
- - North America's largest highway transporter of new automobiles
and trucks
- - 5.9 million cars and trucks transported in 1993
- - Serves automotive industry from 89 U.S. and Canadian locations
1993 HIGHLIGHTS
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- - Highest sales in product line's history
- - Achieved highest level of overall customer satisfaction ever
- - Sharpened marketing focus and increased sales force
- - 20% increase in the sales force contributed to higher revenue
- - Margin grew more than 40%
- - Increased the number of vehicles and fleet utilization
- - 50% larger sales force contributed to record revenue
- - Fastest growing product line, with 1993 revenue of more than $565 million
- - More than 450 customer locations, some using just-in-time delivery and/or
quick response systems
- - Profitable in 1993, completing a two-year turnaround
- - Point-of-sale automation contributed to highest level of fleet utilization
since 1986
- - Sales of moving aids and accessories grew 28% in 1993
- - Profits increased 38% over 1992
- - Over 45% of new contracts represented conversions from school- and
public-operated transportation systems
- - Reorganized and consolidated product line management and locations
- - Transported half of all General Motors, Chrysler, Toyota and Honda vehicles
sold in U.S.
- - Used laser technology to improve equipment design
- - Reorganized and consolidated domestic and Canadian operations to reduce costs
and better serve the market
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The '90s imperative is improving service to customers while doing more with
less to reduce costs and boost profits.
(Photo)
New automated shop systems will enhance customer service by improving
maintenance shop productivity.
PRODUCTIVITY
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(Photo)
Ask any chief executive or corporate director what's on their minds these days,
and more than likely the answer will be "customer service and productivity" -
improving service to customers while doing more with less to reduce costs and
boost profits.
Growing competition in today's global marketplace and investor pressure to
improve profitability are forcing companies of all sizes to refocus their
processes and right-size their work forces and asset bases.
Perfect productivity is, of course, a goal that can never be reached. A company
continually seeking to increase productivity can always find tasks to be
eliminated or jobs to be done better. When it comes to transportation services,
that search has often led to Ryder. Ryder's more than 60 years of experience in
buying, managing, maintaining and disposing of trucks has relieved customers of
these chores, allowing them to focus on the essential elements of designing,
manufacturing and selling their products.
PRODUCTIVITY THROUGH LOGISTICS
Among all of Ryder's services, the one that offers customers the greatest
productivity improvements is Ryder Dedicated Logistics. Taking all of Ryder's
experience in the management and maintenance of vehicles and enhancing it with
state-of-
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CUSTOMER
ACCOUNT MANAGER
(Graph)
the-art in-bound and out-bound logistics systems and expertise, it provides
such customers as General Motors, Chrysler, Dow Jones, Dollar General Stores
and scores of others reductions in cost and improvements in efficiency.
The same benefits are provided to customers of Ryder Public Transportation
Services. Through its local operating units, Ryder Public Transportation
transports more than 420,000 students to school every day in 19 states, manages
or operates 88 public transit systems in 28 states and also provides municipal
fleet management and maintenance services covering thousands of public-owned
vehicles. With its access to Ryder's technology and systems, one of the most
important advantages Ryder Public Transportation offers its customers is
improved productivity with increased control of operating and administrative
costs.
Improving productivity for its customers is also a primary focus of Ryder's
Automotive Carrier Division as it strives to drive down customer costs and
improve the efficiency of automotive distribution. This division, which
transported nearly 6 million cars and trucks for all the major domestic and
foreign manufacturers in 1993, has been providing its customers with
distribution services longer than any other part of the company.
In recent years, its partnership with the automotive manufacturers has
strengthened as both the manufacturers and Ryder have sought to improve
productivity. Direct computer links between the manufacturers and Ryder handle
a variety of tasks ranging from billing to the transmission of information
about vehicles ready for shipment.
While much productivity improvement has been won for both Ryder and its
customers, there is much yet to be accomplished. By creatively implementing new
technologies, Ryder continues to redefine expectations within the
transportation and distribution industries. With this redefinition comes a
greater awareness among the senior managers of customers and potential
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Ryder's computer architecture is designed for easy
interchange of global data and market information
that can help make internal processes more efficient,
help improve the quality of business decisions, and
make Ryder easier to do business with.
customers that their transportation and distribution functions are more than
cost centers. They are areas that can be managed, with help from companies like
Ryder, to increase productivity and profitability.
PRODUCTIVITY INITIATIVES
Like many of its peers, over the past several years, Ryder, too, has placed
increased emphasis on improving productivity -- reviewing, revising and changing
many elements of how the company conducts its business.
Compared with Ryder in the mid 1980s, the company today has a flatter, more
efficient organization. Employees who have daily customer contact have been
empowered to make decisions affecting customer satisfaction. Many parts of the
company are undergoing process reengineering in order to increase customer
focus, improve service quality and enhance financial performance. A multi-year
investment in computers, technology and related training is changing the way
the company runs its business,
(Photo)
markets its services, maintains its vehicles and provides services to its
customers.
EFFICIENT SALES & MARKETING
With the investments Ryder is making in computer technology, customers can find
even greater productivity through their transportation and distribution
systems. For example, Ryder sales people are being equipped with notebook
computers with which they can analyze customers' -- and potential
Ryder Consumer Truck Rental's new automated management
system for dealers is helping to improve both customer
service and vehicle utilization.
customers' -- fleet costs. This information, which is developed by combining
Ryder's knowledge with cost data supplied by the customer, can assist customers
in the improvement of their truck fleet's productivity.
Additional software is being developed which will allow Ryder sales people to
involve customers in the preparation of vehicle specifi-
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cations right in the customers' offices and immediately begin the purchasing
process. Not only will the process begin more quickly and take far less of the
sales person's time, but use of the computers will eliminate errors that can
result from manual, multi-step order processing and shorten the procurement
cycle.
AUTOMATING MAINTENANCE
Similarly, new computer technology is being installed in Ryder's maintenance
facilities beginning in 1994. Hand-held computers will allow fuel island
attendants to record fueling, mileage and other informa-
(Photo)
New hand-held computers will record vehicle information,
capture vehicle maintenance data and help get vehicles
back on the road more quickly.
tion more quickly, assuring billing accuracy and timeliness, reducing the time
it takes for routine vehicle fueling and servicing, and getting customers'
vehicles back on the road more quickly.
Inside the maintenance shops, new automated shop systems will improve customer
service by reducing vehicle down time, capturing maintenance-related
information about vehicles from the fuel islands' hand-held computers and
increasing shop productivity. Inventory management systems will maintain
optimum levels of parts and supplies, resulting in lower inventory levels and
assuring that parts and service items for customers' vehicles are available
when required. Computer-assisted diagnostic systems will enable technicians to
accurately diagnose vehicle maintenance problems. State-of-the-art information
systems will replace nearly all of the printed manuals and technical
information, giving technicians easy to access maintenance information and, in
many cases, direct on-line access to manufacturers' own maintenance information
systems.
TRUCK RENTAL SYSTEMS
Application of computer technology to the company's consumer and commercial
truck rental businesses has already increased productivity while improving
customer service.
RyderFIRST(R), the installation of which was completed in 1993, is the first
nationwide automation system for dealers in the consumer truck rental industry.
Using RyderFIRST, consumer truck rental dealers can provide customers with
timely and accurate information on vehicle availability. They can also offer
incentive pricing to customers who reschedule their use of a truck from such
heavy utilization times as weekends, for example, to midweek days when vehicles
are more available.
The system provides Ryder Consumer Truck Rental with timely information for
running the business by organizing truck rental reservations, providing sales
scripting to improve telephone sales, tracking truck movements and availability
and, by communicating with a separate yield management system, allowing
immediate updating of rental pricing to manage returns throughout the system.
Computer systems used by Ryder Commercial Truck Rental also facilitate daily
operations. In addition, they maintain important information on national
customers and others who are frequent renters so that doing business with Ryder
is easy and convenient, anywhere in the U.S. and Canada.
Ryder knows how to select vehicle specifications and
options, purchase, maintain and dispose of trucks better
than any other company in the world.
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MANAGING ASSETS
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To improve efficiency, companies are managing their core assets while
outsourcing their non-core activities to others, such as Ryder.
(Photo)
Diagnostic computers allow service technicians to
retrieve information from vehicles' internal
electronic systems.
Efficient management of assets is a key to the success of any business; at
Ryder, managing assets is a core competency. Ryder knows how to select vehicle
specifications and options, purchase, maintain and dispose of trucks better
than any other company in the world. That is an important part of Ryder's
success, and it is also an important part of Ryder's contribution to the
success of its customers. More and more, companies are managing the assets at
the core of their profitability while outsourcing their non-core activities to
others, such as Ryder.
SUCCESSFULLY MANAGING ASSETS
Ryder's assets include a fleet of nearly 170,000 vehicles, more than 1,000
service locations throughout the United States and in Canada, Puerto Rico, the
United Kingdom, Germany and Poland, and state-of-the-art computer systems that
define and distinguish the company's capabilities.
One of the asset management tools being developed by Ryder is a new simplified
asset management system which is being implemented beginning in 1994. When
fully operational, the system will enable Ryder sales representatives to work
with customers in their own offices to determine availability of vehicles to
fill customer requirements, help determine whether customers should retain
existing vehicles or lease new ones and, ultimately, help show how Ryder's
transportation, distribution and logistics capabilities can best serve
customers' needs.
TRUCK PURCHASING MADE EASY
Ryder's asset management expertise is available to customers who lease trucks
from Ryder or who contract with Ryder to provide some or all of their logistics
needs. Simply eliminating the need to go through the
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Ryder safety programs have helped reduce injuries and
accidents for both employees and customers.
process of purchasing trucks is a major advantage to Ryder customers, and the
company's more than 60 years of experience offers a real advantage in
recommending the most appropriate vehicles for each customer's situation. A
different vehicle would be recommended, for example, for interstate
transportation of heavy freight in mountainous terrain than for transportation
of similar freight in an urban environment, and the differences between the two
vehicles could have significant cost and operating impacts.
PROPER MAINTENANCE IS KEY
Once the vehicles have been purchased, they must be maintained. No organization
in the world is better than Ryder at maintaining trucks.
The company's service technicians are continually trained on the latest vehicle
maintenance procedures, and with the new automated shop system soon to be
operational in each of the service facilities operated by Ryder Commercial
Leasing & Services in the U.S. and Canada, vehicle service will become even
better. No other vehicle mainte-
Ryder Commercial Truck Rental guarantees customer
satisfaction.
nance organization in the world has Ryder's scheduling, inventory management,
computer-assisted diagnostics, electronic information and environmental
management systems.
Vehicle maintenance and having vehicles available for customers' use are
important, so Ryder works with the manufacturers of vehicles and components in
a variety of research and development efforts. Belts, hoses, tires, lubricants,
engines and other mechanical components are often field tested on Ryder trucks.
As a result, Ryder's technicians develop significant knowledge about new
designs and materials. This knowledge provides the company with an excellent
understanding of maintenance costs, helping Ryder to assure its customers that
there will be no maintenance surprises.
Because it has such a large vehicle maintenance operation, Ryder has developed
an industry-leading, pro-active environmental management program. The program
includes responsible disposal or recycling of such things as tires, batteries,
oil, coolants and other vehicle fluids as well as state-of-the-art fuel storage
systems. The ambitious goal of the program is 100 percent recycling of all
vehicle maintenance waste.
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VEHICLE MANAGEMENT EXPERTISE
Under its full service leases, Ryder assumes responsibility for appropriate
licensing of the vehicles, acquisition of permits from various states in which
the vehicles will be operated, payment of taxes, and similar requirements of
vehicle operation. Substitute and additional vehicles are available to
customers from Ryder's truck rental fleets, and Ryder usually extends insurance
coverage and paints vehicles according to customers' preferences. In addition,
such things as vehicle washing, tire maintenance and related services are also
included.
Beyond those strictly vehicle related services, Ryder customers have access to
state-of-the-art safety programs, which help to assure that customers' drivers
are both qualified and properly licensed to operate the equipment to which they
are assigned.
The technology for managing Ryder's large and diverse fleet and the expertise
of the people who manage the technology are significant differentiators for
Ryder in the marketplace.
NO VEHICLE DISPOSAL CONCERNS
Depending on the service in which they are operated, trucks in Ryder's lease
and rental fleets seldom are kept longer than four to seven years. Under its
full service lease agreements, Ryder typically takes the vehicle residual value
risk at the end of the lease, relieving customers of concern about market
conditions several years from the time they sign the lease agreement.
Ryder minimizes its risk by maintaining its vehicles in top condition and by
operating its own used vehicle sales organization in the U.S. and Canada, where
both trucks and school buses are sold. Ryder Road Ready vehicles sold through
Ryder centers are regarded as among the best in the market.
In addition to operating its own sales centers, the company has had success
over the past few years in exporting used vehicles. A number of vehicles have
been exported to Latin America, and some have been sold in Eastern Europe and
Africa.
Such creative solutions to the problem of used vehicle disposal are indicative
of the importance Ryder places on the active and successful management of
assets. The transfer of the benefits of this asset management focus to its
customers is an important reason why so many knowledgeable companies choose to
do business with Ryder.
Ryder Dedicated Logistics works with customers
continuously to improve efficiency and productivity
and reduce distribution costs.
16
19
DEDICATED
LOGISTICS
17
20
Out-bound delivery systems for customers like Xerox
involve not only delivery, but also final assembly,
installation and initial training for users.
Ryder's most sophisticated service and the one that makes the fullest use of
the company's core competencies, including asset management and the application
of state-of-the-art technology, is offered by Ryder Dedicated Logistics, a
value-added third-party supplier of contract logistics services. Dedicated
Logistics brings value to its customers by planning, implementing and
controlling the efficient, cost-effective flow and storage of raw materials,
in-process inventory, finished goods and related information from the point of
origin to the point of consumption. In its most complete form, this service not
only relieves a customer of all the burdens of running a transportation system,
it also helps a customer develop efficiencies along the entire logistics supply
chain. Handling challenges ranging from hiring and managing drivers and the
scheduling and transportation of in-bound materials and components through the
delivery of the finished product to the end user, dedicated logistics can
deliver significant productivity gains and cost savings to customers.
Ryder Dedicated Logistics is the company's fastest growing business unit and is
one of the largest presences in its marketplace. Experts predict continued
market growth, because rising distribution costs and increased global
competition have created new logistics challenges in all industries. Businesses
are realizing that outsourcing logistics functions can provide the edge needed
to gain such critical competitive advantages as improved customer service,
lower overall costs, increased flexibility and enhanced control.
RYDER HAS YEARS OF EXPERIENCE
For over 25 years, Ryder Dedicated Logistics has been successful in assisting
other firms with improving their transportation and distribution operations and
with lowering their overall cost. Much of this business unit's success has come
from its operating philosophy under which its people consider themselves to be
more than just their customers' business associates, they consider themselves
to be their customers' partners.
In the 1960s, the company began designing and operating dedicated contract
carriage systems for
------------------------------------------------------
Just-in-time manufacturing: parts and components for
Saturn cars are delivered to the manufacturing plant
on strict, carefully planned and controlled schedules.
(Photo)
18
21
Ryder Dedicated Logistics is the company's fastest growing
business unit and one of the largest presences in its marketplace.
- -------------------------------------------------------------------------------
(Photo)
companies that saw the benefits of outsourcing some or all of their highway
transportation requirements. Computer links were established in later years.
Among the first electronic data interchange (EDI) "pull" systems were those
that allow auto dealers to order parts instantly from manufacturers' regional
warehouses. Using unattended nighttime delivery systems, Ryder's dedicated
contract carriage operations deliver the parts overnight for use the next day.
More recently, just-in-time in-bound delivery systems with electronic data
interchange links were established by Ryder at Saturn's Spring Hill, Tennessee
assembly plant, Toyota's Georgetown, Kentucky manufacturing facility and
Chrysler's Jeep(R) Grand Cherokee and Dodge Viper plants in Detroit, Michigan.
LOGISTICS SOLUTIONS
Many customers ask Ryder to work with them on highly complex logistics
challenges. The relationship usually progresses rapidly to more than simply
outsourcing of certain services. It becomes a strategic partnership between the
customer and Ryder, which applies its experience and expertise to analyze and
reconfigure or create an entire supply chain. That chain might require any
number of advanced strategies, including flow-through centers, pool
distribution, contract warehousing, continuous replenishment of inventory,
just-in-time delivery, quick response systems, EDI and more. The benefits of
the new system often include reduction in the customer's inventory levels, an
increase in inventory velocity through the customer's pipelines or elimination
of unnecessary storage facilities.
Ryder's solution development process begins with a blank sheet of paper. The
only "givens" are the requirements of the customer and, often, the customer's
customer. By thoroughly studying and understanding the customer's needs,
Ryder's logistics analysts can design the optimum solution, incorporating only
the assets and capabilities
19
22
that are required for efficient and cost effective operation of the system.
As the system is designed, refined and accepted by the customer, measurement
and feedback systems are incorporated so that both the customer and Ryder have
the tools to assure maximum levels of
Transporting vehicles to dealers from assembly plants,
railheads and ports, Ryder is the largest highway
transporter of new cars and trucks in the U.S. and
Canada.
customer satisfaction and to pursue continuous improvement of the operation.
These tools, like the systems themselves, are modified and improved as a
routine part of dedicated logistics operations.
CUSTOMERS IN MANY INDUSTRIES
Ryder's expertise in logistics management has been applied to many industries.
For example, the company has provided out-bound logistics to Xerox since 1984.
The out-bound system combines warehousing, final assembly of Xerox machines,
delivery and installation of the equipment and the provision of initial
training for the Xerox customer's staff.
For Montgomery Ward and Mervyn's, Ryder utilizes quick response distribution
systems, which use EDI systems linked to store sales for inventory
replenishment. For Montgomery Ward, Ryder also operates home delivery systems,
taking appliances to the homes of the retailer's customers and installing them.
The company is also beginning to serve the grocery industry with "efficient
consumer response" systems. In all, Ryder provides dedicated logistics services
to over 30 industries representing a diverse cross section of business.
TECHNOLOGY ADVANTAGES
Two of the major competitive advantages which Ryder enjoys in the dedicated
logistics market are its proprietary software systems and its team of system
designers who have the knowledge and experience to apply the systems technology
with which to operate,
(Photo)
Ryder transports over 420,000 students every school
day for more than 500 school systems.
monitor and measure the performance of logistics systems.
Ryder system-design software, for example, can allow customers to ask "what-if"
questions, examining the implications of hundreds of different solutions for
their specific needs. The system-design software can be used by a manufacturer
to help decide where to locate a new warehouse or it may calculate the costs
and service levels associated with an alternative relay routing solution, where
an over-the-road truck carries product to local or regional distribution points
and locally domiciled trucks handle final delivery. Other software can
determine the number, size and type of local delivery trucks needed to complete
the system. Using this technology, a relay routing system developed by Ryder
Dedicated Logistics for AC Delco, for example, helped reduce the number of
warehouses required for distribution of automotive batteries.
DEDICATED LOGISTICS
DEMAND IS GROWING
Dedicated logistics is a dynamic, fast-changing business, where Ryder enjoys
distinct market leadership. Expansion of Ryder's dedicated logistics business
will come from growth of the market, from development of new logistics
capabilities, and from transfer of this technology to international markets as
opportunities become available. Ryder is already a supplier of dedicated
logistics in Canada and the United Kingdom, and these services will continue to
be in demand as the global marketplace more fully recognizes the efficiencies
and competitive advantages that dedicated logistics systems can offer to
sophisticated manufacturers.
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23
ROADS TO GROWTH
21
Pepsi-Cola's fleet of delivery
trucks in Warsaw, Poland is
maintained by Ryder.
24
Ryder's strengths in asset management, information technologies and logistics
are solid reasons for its standing as the leading highway transportation
services company. Those same strengths, plus the company's talented work force,
its market leadership in both full service truck leasing and dedicated
logistics and its important logistics partnerships with such well-known
manufacturers as General Motors, Xerox, Chrysler and others, provide Ryder with
a strong foundation upon which to not only continue its industry leadership,
but also to grow in both new and existing markets.
GROWING IN NEW MARKETS
With greater emphasis on marketing, the company is developing new services
within existing product lines, increasing its presence with a larger and more
experienced sales force and exploring opportunities for international growth.
The International Division is pursuing opportunities, often with foreign
subsidiaries of existing U.S. customers, in Europe and the Americas.
At the request of longtime customer Pepsi-Cola, for example, in 1993, Ryder
Transport Services of Germany and Ryder Polska began maintaining a fleet of
nearly 70 vehicles operated by Pepsi-Cola in Warsaw, Poland. That agreement
followed the opening of Ryder's first location in Puerto Rico earlier in the
year to provide full service truck leasing and Ryder Programmed Maintenance for
the Pepsi fleet in that area. Similar opportunities exist with other companies
that are expanding and strengthening their foreign operations.
Ryder's transportation expertise, distribution technology and record of
Ryder believes that a diversified work force is good business,
and it is the company's goal to be a good place to work for all
people.
success give the company an important edge for growth in international markets.
Application of the technology, however, is not simply a matter of turning on a
computer and loading a program. More importantly, it requires properly trained
and motivated people who understand how to apply the technology to customers'
unique situations. In that area, Ryder is particularly well prepared.
TALENTED PEOPLE MAKE THE DIFFERENCE
Ryder believes that a diversified work force is not only good business, it is
the right thing to do. It is the company's goal to be a good place to work for
all people, because such traits as intelligence and a willingness to work hard
are not defined by race, gender or physical limitation. Competing in the global
marketplace, Ryder needs the best human resources available.
The company has developed recruiting and training partnerships with local Urban
League affiliates in several U.S. cities and participates in a variety of other
minority recruiting activities. It also recruits at colleges and universities
where high quality women, Hispanics, African Americans and other minority
students are educated, and pursues other avenues to find, recruit and hire the
best people. Once the best people are part of the Ryder work force,
sophisticated training activities designed to improve the performance and
productivity of every employee help assure the quality of both customer
services and planning for the company's future.
Its well trained and motivated work force and leading-edge transportation and
distribution technology help assure that Ryder will maintain its highway
transportation leadership and will grow. With opportunities still emerging in
Europe and with the passage of the North American Free Trade Agreement
beginning to define new relationships in the Americas, the future will be
exciting, indeed.
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25
CORPORATE
RESPONSIBILITY
In the communities where employees live and work, Ryder seeks to provide
leadership that will make a difference in meeting social needs. The company
believes that providing such leadership is not only the right thing to do, but
good business as well.
Ryder channels most of its support through the Ryder System Charitable
Foundation which the company funds with a portion of its profits. While
underwriting a diverse array of projects, the foundation looks most favorably
upon those that will bring minorities and the disadvantaged more fully into
society's economic mainstream.
Reflecting a growing belief that education provides the best hope, significant
disbursements are now made in this area. The most direct forms of educational
assistance are the scholarships and financial aid made available to minority
students at the community college, undergraduate and graduate school levels.
One worthwhile arrangement with the Jackie Robinson Foundation combines college
scholarships with internships at Ryder locations.
The foundation renders indirect, though equally valuable, assistance through
program funding. Commitments range from an endowed teaching chair at Miami-Dade
Community College to general operating support for Florida Memorial College, a
predominantly African-American institution. Another important beneficiary is
the United Negro College Fund.
Also, Ryder's Matching Gifts Program enables employees to help determine which
colleges and universities receive corporate support.
At the K through 12 level, dropout prevention is an important priority. To help
combat unacceptably high dropout rates among Hispanics, Ryder teamed up with
HISPANIC Magazine to sponsor the 1993 Schools of Excellence awards. These
awards pay tribute to five schools nationwide that offer outstanding and unique
programs to prepare Hispanic youths for the next century.
In Ryder's home South Florida community, the company supports Dade County
Public Schools magnet programs in tourism and international business and
finance. These specialized academy programs bridge the gap between the
classroom and the workplace.
Another promising educational investment is Impact II, a voice for teachers in
the national debate on school reform. This nationwide teachers' organization
has issued a declaration of principles as the first step in implementing a
teachers' vision of the future of education in America.
To improve the skills of school administrators, 16 chosen annually as Ryder
Fellows spend a year in Washington attending the Institute for
Educational Leadership's Education Policy Fellowship Program. These mid-career
educators explore challenging public policy and leadership questions.
Outside the scope of its foundation grant program, Ryder furnished immediate
and substantial aid to victims of 1993's devastating Midwest floods. The
company donated cash to the American Red Cross and local United Way
organizations and mobilized fleets of trucks in Des Moines, Kansas City and St.
Louis to haul needed supplies. Meanwhile, employees in flood areas received
assistance from the company's emergency relief fund, established after
Florida's Hurricane Andrew.
In every activity, Ryder strives to be a leader in meeting the highest
standards of corporate citizenship. The company recognizes the importance of
creating opportunities for all people to reach their potential.
23
26
FINANCIAL REVIEW
Ryder System,Inc. and Consolidated Subsidiaries
OVERVIEW
In addition to successfully completing the spin off of its aviation services
subsidiaries as a new public company ("Aviall, Inc." or "Aviall") in 1993, the
company also continued its strong earnings trend, recording its best results
from continuing operations since 1987. In fact, pretax earnings for Vehicle
Leasing & Services were the highest in its history. In the accompanying
consolidated statements of earnings, Aviall's results of operations have been
combined with those of the company's previously discontinued aircraft leasing
business and reported as discontinued operations (see the "Discontinued
Operations" note to the consolidated financial statements).
The company continued its strong earnings trend,
recording its best results from continuing
operations since 1987.
Earnings from continuing operations in 1993 increased to $115 million, or
$1.43 per common share, compared with $98 million, or $1.17 per common share in
1992, and $31 million, or $0.28 per common share in 1991. The increase in 1993
earnings was primarily attributable to both record revenue and pretax earnings
in Vehicle Leasing & Services, partially offset by lower pretax earnings at
Automotive Carriers, which included a charge of $6 million associated with the
streamlining of that operation. Earnings comparisons were negatively impacted
by the increase in the corporate Federal income tax rate from 34% to 35%,
effective January 1, 1993. The higher 1993 income tax rate increased income tax
expense $10 million, or $0.13 per common share, of which $8 million relates to
a one-time adjustment to accumulated deferred income tax balances.
Revenue in 1993 totaled $4.2 billion, an increase of $197 million, or 5%,
over 1992. This increase was attributable mainly to improvements in revenue
from commercial and consumer truck rental, another year of record revenue from
dedicated logistics and a slight increase in revenue from full service lease.
These increases were somewhat offset by a revenue decline at Automotive
Carriers, due to a decrease in average length of haul combined with extended
model changeover periods and the closure of a General Motors assembly plant. In
1992 revenue increased $168 million, or 4%, compared with 1991. Dedicated
logistics led the 1992 increase in revenue followed by smaller increases at
most of the company's other businesses.
Operating expense in 1993 increased 5% compared with 1992 due primarily to
the company's increased revenue, investments in logistics and other systems
technology, reengineering and intensified marketing and sales efforts in
Vehicle Leasing & Services. Also contributing to the 1993 increase in
operating expense were the Automotive Carriers' streamlining costs and higher
levels of corporate spending. Offsetting some of these increases was a $6
million reduction in workers' compensation expense and a $10 million decrease
in vehicle liability expense as a result of company-wide safety programs and
improved experience with prior years' claims. Operating expense in 1992
increased 4% compared to 1991 due primarily to increased revenue, partially
offset by a $22 million reduction in workers' compensation expense.
Depreciation expense (net of gains) in 1993 decreased slightly compared
with 1992. This decrease was due to gains on vehicle sales in 1993 which were
$20 million higher than in 1992. Higher gains were primarily due to an increase
in the average gain per vehicle sold. Offsetting higher gains was an increase
in depreciation due to an increase in the fleet size needed to support higher
1993 revenues. Depreciation expense also decreased in 1992 compared with 1991
due to higher gains on sale of vehicles of $22 million, which resulted from an
increase in the average gain per vehicle sold. An increase in the number of
vehicles on operating leases also contributed to the 1992 reduction in
depreciation expense.
Interest expense totaled $125 million in 1993, compared with $140 million
in 1992 and $167 million in 1991. The 1993 decrease resulted primarily from
lower average interest rates on the company's debt. Interest expense in 1992
was lower than the previous year due to both a decrease in debt outstanding and
lower interest rates compared with 1991.
Miscellaneous expense totaled $1 million in 1993, compared with $3 million
in 1992 and $7 million in 1991. Miscellaneous expense consists primarily of the
discount associated with sales of receivables on a revolving basis, offset by
net gains associated on the sale of non-operating equipment and property.
The company's effective tax rate for continuing operations was 45.3% in
1993, compared with 40.8% in 1992 and 48.9% in 1991. The increase in the 1993
tax rate resulted primarily from the impact of the increase in the corporate
Federal income tax rate, including the one-time adjustment to accumulated
deferred tax balances. The decrease in the 1992 tax rate compared with 1991
resulted primarily from the impact of a similar amount of non-deductible
expenses on higher pretax earnings, and adjustments made in 1991 to deferred
income taxes to reflect higher state income tax rates.
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27
ACCOUNTING CHANGES
Effective January 1, 1993, the company adopted Statement of Financial
Accounting Standards No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions," and recorded a pretax charge of $41 million ($25
million after tax, or $0.33 per common share) to establish the resulting
transition obligation. Expense for postretirement benefits for continuing
operations was $5 million in 1993, compared with $3 million in both 1992 and
1991 under the previous accounting policy.
The company also adopted Statement of Financial Accounting Standards
No. 109, "Accounting for Income Taxes," and Statement of Financial Accounting
Standards No. 112, "Employers' Accounting for Postemployment Benefits,"
effective January 1, 1993. The adoption of these statements did not impact
earnings in 1993. However, the company classified its deferred income tax
balances in the 1993 balance sheet in accordance with the provisions of
Statement No. 109. Prior year financial statements have not been restated.
FINANCIAL RESOURCES AND LIQUIDITY
CASH FLOW
Even with higher levels of capital spending in 1993 and the company's continued
investment in various programs designed to improve future profitability, the
company's cash needs continued to be funded internally through operations,
sales of revenue earning equipment and in 1993, through the repayment by Aviall
of its net indebtedness to Ryder at the time of the spin off. Cash flow from
continuing operating activities was $771 million in 1993, compared with $847
million in 1992 and $647 million in 1991. The decrease in cash flow from
continuing operations in
Even with higher levels of capital spending in 1993 and
the company's continued investment in various programs
designed to improve future profitability, the company's
cash needs continued to be funded internally.
1993 compared with 1992, resulted primarily from several changes in working
capital items, partially offset by higher 1993 earnings from continuing
operations. The most significant working capital change affecting cash flow
comparisons was the impact of a change in the outstanding balance of
receivables sold on a revolving basis between December 31, 1991 and 1992, which
resulted in $115 million of additional operating cash flow in 1992. Impacting
cash flow comparisons for discontinued operations was the 1993 repayment by
Aviall of its net indebtedness to Ryder at the time of the spin off.
Capital expenditures were $1.2 billion in 1993, compared with $1.1 billion
and $598 million in 1992 and 1991, respectively. In full service truck leasing,
1993 capital expenditures increased $157 million compared with 1992, due to an
increase in lease sales. Commercial truck rental capital expenditures in 1993
were $31 million lower than in 1992. Impacting the comparison was unusually
high spending in 1992, due to low spending in both 1991 and 1990. Consumer
truck rental capital expenditures increased $33 million in 1993 compared with
1992, as part of a program to increase the size and reduce the average age of
the fleet in order to match market demand and reduce maintenance costs.
Cash flow from continuing operating activities (excluding sales of
receivables) plus asset sales as a percentage of capital expenditures was 80%
in 1993, compared with 89% in 1992 and 143% in 1991. The ratio in 1991 was
unusually high due to lower capital requirements in that year.
In 1994, management projects that capital expenditures will increase
approximately 10% compared with 1993. The company plans to increase its capital
expenditures for full service truck leasing, commercial truck rental and
student transportation services. The company expects to fund its 1994 capital
expenditures with both internally generated funds and additional financing.
FINANCING
Ryder is a capital intensive company and often depends on external capital. The
company has a variety of financing alternatives available to fund its capital
needs. These alternatives include long- and medium-term public and private
debt, as well as variable-rate financing available through bank credit
facilities and commercial paper. The company also periodically enters into sale
and leaseback agreements for revenue earning equipment, the majority of which
are accounted for as operating leases.
Debt decreased from $1.7 billion at the end of 1992 to $1.5 billion at
the end of 1993. This reduction was primarily due to the repayment of debt with
the proceeds received from Aviall when it repaid its net indebtedness to Ryder
at the time of the spin off. During 1993, the company issued $129 million of
fixed-rate unsecured notes. The company also made $138 million of scheduled
unsecured note payments and repaid $56 million of bankers' acceptances. U.S.
commercial paper outstanding at December 31, 1993, was $84 million, compared
with $95 million at the end of 1992. During the second quarter of 1993, the
company redeemed all of its Fixed Rate Auction Preferred Stock (Series A and B)
for
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28
$100 million. The redemption of these securities, which yielded a 10.5%
fixed-rate dividend, allowed the company to take advantage of more economical
financing alternatives.
As explained in the notes to the consolidated financial statements, the
estimated fair value of the company's debt portfolio (excluding capital lease
obligations) exceeded its net book value by 10%, or $150 million, as of
December 31, 1993. This difference reflected current market rates which are
below the interest rates on much of the company's unsecured fixed-rate debt,
most of which was issued during the mid- to late-1980's. Unless the company
chooses to buy back its debt, much of which is not callable at par, this excess
will be reflected through future interest expense above current market rates.
However, the company has entered into various interest rate swap agreements to
manage its interest rate exposure in its existing debt portfolio.
At the end of 1993, available committed lines of credit totaled $609
million. At December 31, 1993, the company had $871 million of debt securities
available for issuance under shelf registrations filed in 1988 and 1992.
The ratio of debt to equity at December 31, 1993 was 155%, compared with
113% at December 31, 1992. The ratio of debt to tangible equity at December 31,
1993 was 202%, compared with 135% at December 31, 1992.
RESULTS OF OPERATIONS
VEHICLE LEASING & SERVICES
- -----------------------------------------------------------
(In millions) 1993 1992 1991
- -----------------------------------------------------------
Revenue $3,597 3,385 3,229
Earnings before income taxes 205 135 53
===========================================================
REVENUE. Revenue for Vehicle Leasing & Services increased 6% in 1993 compared
with 1992. The increase reflected better demand in all of the division's
product lines.
Revenue from full service truck leasing increased 2% in 1993 compared
with 1992 and was relatively flat in 1992 compared with 1991. Revenue in 1993
benefited from an increase in lease sales partly offset by prices lower than
those of previous years' leases (primarily due to lower implicit interest
rates). As a result of the increase in lease sales made in 1993 the average
fleet size was 5% higher than the previous year.
Commercial truck rental revenue increased 16% in 1993 compared with 1992,
reflecting higher demand as a result of a change in vehicle mix to better match
the demands of the market. Also impacting demand in 1993 was the continued
improvement in the U.S. economy. To satisfy the higher demand, the average
fleet size increased approximately 15% in 1993 compared with 1992. Revenue from
commercial truck rental increased 4% in 1992 compared with 1991, primarily as a
result of higher demand.
Consumer truck rental revenue increased 8% in 1993, reflecting higher
demand for both local and long-distance rentals driven by continued improvement
in the U.S. economy, combined with an increase in market share by the product
line. Improvements in revenue per transaction also contributed to the increase
in revenue for local rentals. Consumer truck rental revenue increased 10% in
1992 compared with 1991, primarily as a result of higher demand for local
rentals.
Revenue from dedicated logistics increased 14% in 1993. The revenue
increase was attributable to growing customer demand for this product,
evidenced by the addition of approximately 90 new accounts during 1993.
Investments in logistics technology and intensified marketing and sales efforts
continue to drive revenue growth. For the same reasons, dedicated logistics
revenue increased 20% in 1992 compared with 1991.
Revenue from the division's public transportation services business
increased 7% in 1993 compared with 1992, due to higher revenue from new
contracts and several small acquisitions made in late 1992. The same business
reported revenue that was 19% higher in 1992 compared with 1991, due primarily
to a late-1991 public transit contracting acquisition and slightly higher
student transportation revenue in 1992.
EARNINGS BEFORE INCOME TAXES. Pretax earnings for Vehicle Leasing &
Services increased $70 million in 1993 compared with 1992, the highest earnings
in its history. Overall, higher pretax earnings in 1993 were the result of
increased revenue, a reduction in workers' compensation and vehicle liability
expense, and higher gains on vehicle sales. Offsetting some of these items were
investments in reengineering, marketing and sales programs and logistics and
other systems technology, all designed to improve the future profitability of
the division.
Margin (revenue less direct operating expenses, depreciation
and interest expense) for full service truck leasing increased slightly in 1993
as a result of higher revenue, while margin as a percentage of revenue was
relatively flat com-
Pretax earnings for Vehicle Leasing & Services increased $70
million in 1993 compared with 1992, the highest earnings in its
history.
pared to the prior year. Full service truck leasing margin in 1992 increased
slightly compared with 1991, primarily as a result of lower interest expense
and a decrease in workers' compensation expense.
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29
Commercial truck rental margin and its margin as a percentage of
revenue increased substantially in 1993, reflecting higher revenue, lower
maintenance costs, improved asset utilization and lower interest expense. Lower
maintenance costs resulted from a reduction in the average age of the fleet and
a shift in fleet mix toward lower maintenance vehicles. Both margin and margin
as a percentage of revenue increased significantly in 1992 compared with 1991,
primarily as a result of increased revenue, improved utilization and lower
interest expense.
Consumer truck rental recorded higher margin and an increase in margin as
a percentage of revenue in both 1993 and 1992. Most of the improvements in 1993
and 1992 resulted from revenue growth, better asset utilization and improved
vehicle liability expense. Also contributing to the improvement in margin for
1993 were lower maintenance costs, primarily due to the decrease in the average
age of the fleet.
Dedicated logistics reported higher margin in both 1993 and 1992 as a
result of continued growth in revenue. Margin as a percentage of revenue for
dedicated logistics was relatively flat for all periods. Margin for the
division's public transportation services business increased in 1993 compared
with 1992 primarily as a result of higher revenue, a decrease in vehicle
liability expense and a slight decrease in workers' compensation expense.
Margin for the division's public transportation services business increased in
1992 compared with 1991, as a result of higher revenue.
The impact on pretax earnings in 1993 of higher margin in each of the
division's product lines was partially offset by increases in indirect
operating expenses. These increases were primarily the result of higher
investments in logistics and other systems technology, reengineering, and
higher costs associated with intensified marketing and sales efforts. The
investments in these programs are designed to improve future profitability.
Also positively impacting 1993 results were gains from the sale of vehicles
which increased $21 million. Pretax earnings for the division in 1992 increased
$82 million compared to the prior year, as a result of margin increases,
somewhat offset by a slight increase in indirect operating expenses. Gains from
the sale of vehicles increased $22 million in 1992 compared with 1991.
AUTOMOTIVE CARRIERS
- -----------------------------------------------------------
(In millions) 1993 1992 1991
- -----------------------------------------------------------
Revenue $635 651 645
Earnings before income taxes 32 48 24
===========================================================
REVENUE. Automotive Carriers revenue decreased 2% in 1993 and increased
slightly in 1992. Lower 1993 revenue resulted from a decrease in average length
of haul, due to more long-haul General Motors shipments going by rail, extended
model changeover periods and the closure of a General Motors assembly plant.
Partially offsetting these factors was an increase in the number of vehicles
shipped by the division, resulting from an increase in domestic automobile
sales. Higher revenue in 1992 compared with 1991 reflected a 4% increase in
vehicle shipments, resulting from increased domestic automobile sales in 1992,
partially offset by a decline in average length of haul.
EARNINGS BEFORE INCOME TAXES. Pretax earnings decreased in 1993 primarily as a
result of both the decline in revenue and the impact of a $6 million charge for
the cost of a program to streamline the division's operations. This program
resulted in the elimination of numerous salaried positions in order to
consolidate certain functional responsibilities and is designed to improve the
division's future performance. Pretax earnings were also unfavorably impacted
by higher labor costs, primarily driver salaries, with no commensurate increase
in rates charged to customers. Also impacting pretax earnings was an increase
in cargo damage expense and vehicle liability expense, somewhat offset by a
decrease in workers' compensation expense. Despite only a slight improvement in
revenue, Automotive Carriers pretax earnings increased substantially in 1992
compared with 1991. The increase in earnings resulted from a decline in cargo
damage expense and a decrease in workers' compensation expense primarily as a
result of improved experience with prior years' claims.
During 1992, the automobile transport industry reached a four-year
agreement (retroactive to June 1, 1991) with the International Brotherhood of
Teamsters. Significant provisions of the agreement include wage and benefit
increases over the four-year term and certain restrictions on the use of
additional non-Teamster drivers to transport automobiles. As a result of these
provisions, the division's results for 1993 were negatively impacted by wage
and benefit increases.
The division's largest customer, General Motors, accounts for
approximately 55% of the division's revenue. In 1992, General Motors commenced
several major cost reduction programs, including closing certain assembly
plants. The 1993 results have been adversely impacted by some of these
programs.
OTHER
- -----------------------------------------------------------
(In millions) 1993 1992 1991
- -----------------------------------------------------------
Earnings before income taxes $(28) (18) (16)
===========================================================
The decline in Other pretax earnings in 1993 resulted primarily from lower
reimbursement of corporate administrative costs from the divisions combined
with higher levels of corporate spending, including costs associated with
establishing an international corporate management team and development of a
new strategic planning process.
27
30
FOREIGN OPERATIONS
The majority of the company's foreign operations are in Canada and the United
Kingdom. These operations are comprised primarily of full service truck
leasing, commercial and consumer truck rental, dedicated logistics and
automotive carriage. The results of these operations have been included in the
Vehicle Leasing & Services and Automotive Carriers discussions above. In 1993,
revenue and pretax earnings from foreign operations were $311 million and $9
million, respectively, compared with $336 million and $7 million in 1992. The
1993 decrease in revenue was due to the strengthening of the U.S. dollar
against both the Canadian dollar and British pound during 1993 combined with
lower Canadian automotive carriage revenue. The 1993 increase in pretax
earnings was primarily attributable to higher gains on the sale of vehicles in
1993 somewhat offset by the strengthening of the U.S. dollar. There are no
current legal restrictions regarding the repatriation of cash flows of the
foreign operations to the U.S.
ENVIRONMENTAL MATTERS
The operations of the company involve storing and dispensing petroleum
products, primarily diesel fuel, regulated under environmental protection laws.
These laws require the company to eliminate or mitigate the effect of such
substances on the environment. In response to these requirements, the company
has upgraded operating facilities and implemented various programs to detect
and minimize contamination.
Capital expenditures related to these programs totaled approximately
$7 million in 1993. The company expects the level of capital expenditures,
primarily related to its underground tank replacement program, to be equal to
1993's level in the near-term. The company incurred $24 million of
environmental expenses in 1993, compared with $23 million in 1992 and $22
million in 1991. Based on increasingly stringent standards imposed by
governmental regulations, management currently expects that environmental
expenses will continue to increase in the near-term.
The ultimate cost of the company's environmental liabilities cannot
presently be projected with certainty due to the presence of several unknown
factors, primarily the level of contamination, the effectiveness of selected
remediation methods, the stage of management's investigation at the individual
sites, and the recoverability of such costs from third parties. Based upon
information presently available, management believes that the ultimate
disposition of these matters, although potentially material to the results of
operations in any one year, will not have a material adverse effect on the
company's financial condition or liquidity. See the "Environmental Matters"
note to the consolidated financial statements for a further discussion.
RECENT ACCOUNTING PRONOUNCEMENTS
See the "Summary of Significant Accounting Policies" note to the consolidated
financial statements for a description of new accounting pronouncements and
their expected impact on the company.
OUTLOOK
In 1994, the company will focus on four primary strategies designed to maximize
shareholder value through long-term revenue growth and profitability. The first
of these strategies is to accelerate the growth of our dedicated logistics
operations by increasing our investment in sales and marketing, training and
new systems technology. Second, the company will continue to emphasize the
profitable growth of full service truck leasing through development of
customized product offerings. Third, the company will increase its investment
in the reengineering of its sales and marketing, mainte-
Strong financial results in 1993 along with the successful
spin off of Aviall have positioned Ryder for continued
earnings growth in 1994.
nance, and finance and administration functions. And finally, the company will
continue expansion internationally into high potential countries with high
potential customers.
Strong financial results in 1993 along with the successful spin off of
Aviall have positioned Ryder for continued earnings growth in 1994. Continued
strong earnings improvement in 1994, however, depends to a great extent on
domestic economic growth. The company will continue to focus on maximizing
shareholder value by continuing to invest in programs and initiatives that will
strongly position the company for the long-term.
28
31
SELECTED FINANCIAL AND OPERATIONAL DATA Ryder System, Inc. and Consolidated Subsidiaries
- ------------------------------------------------------------------------------------------------------------------------------------
(Dollars in thousands) 1993 1992 1991
- ------------------------------------------------------------------------------------------------------------------------------------
VEHICLE LEASING & SERVICES
Revenue:
Full service lease and programmed maintenance $1,749,592 1,718,090 1,725,075
Commercial and consumer rental 935,792 835,722 778,089
Dedicated logistics 569,479 497,509 415,963
Other 558,041 514,326 465,417
Eliminations (216,101) (180,695) (155,107)
- ------------------------------------------------------------------------------------------------------------------------------------
Total 3,596,803 3,384,952 3,229,437
Operating expense 2,757,687 2,598,020 2,464,623
Depreciation expense 557,406 536,951 541,716
Gains on sale of revenue earning equipment (54,084) (33,525) (11,396)
Interest expense 128,760 145,336 173,300
Miscellaneous expense, net 1,670 2,879 8,683
- ------------------------------------------------------------------------------------------------------------------------------------
Earnings before income taxes $ 205,364 135,291 52,511
- ------------------------------------------------------------------------------------------------------------------------------------
Fleet size (owned and leased):
Full service lease 78,544 74,902 72,345
Commercial and consumer rental 67,016 62,924 60,416
Buses operated or managed 12,154 11,860 11,924
Ryder Truck Rental service locations 979 971 938
====================================================================================================================================
AUTOMOTIVE CARRIERS
Revenue $ 634,634 651,216 645,051
- ------------------------------------------------------------------------------------------------------------------------------------
Earnings before income taxes $ 31,955 48,220 24,318
- ------------------------------------------------------------------------------------------------------------------------------------
Total units transported (000) 5,934 5,871 5,664
Total miles traveled (000) 238,840 247,034 247,823
Auto transports:
Owned and leased 4,131 4,237 4,326
Owner-operators 505 508 517
Locations 89 92 89
====================================================================================================================================
29
32
REPORT OF MANAGEMENT
To the Shareholders of Ryder System, Inc.:
The financial information in this annual report has been prepared by the
management of Ryder System. Management is responsible for the fair presentation
of the financial statements of the company in accordance with generally
accepted accounting principles and for the objectivity of key underlying
assumptions and estimates.
Ryder System maintains a dynamic system of internal controls to
provide reasonable assurance that assets are safeguarded and transactions are
properly authorized, recorded and reflected in the financial statements. This
system is continually reviewed, evaluated and revised to reflect changes in the
company and in the businesses in which we operate. One of the key elements of
Ryder System's internal financial controls has been the company's success in
recruiting, selecting, training and developing professional financial managers
who implement and oversee the financial control system.
The board of directors, acting through its audit committee, is responsible
for determining that management fulfills its responsibilities in the
preparation of financial statements and the financial control of operations.
The audit committee is composed solely of outside directors. The committee
recommends to the board of directors the appointment of the independent public
accountants and meets regularly with management, internal auditors and
independent accountants.
Our commitment to social responsibility is a key management principle.
Management is responsible for conducting our businesses in an ethical, moral
manner assuring that our business practices encompass the highest, most
uncompromising standards of personal and business conduct. These standards,
which address conflicts of interest, compliance with laws and acceptable
business practices, and proper employee conduct are included in our Code of
Conduct. The importance of these standards is stressed throughout the company
and all of our employees are expected to comply with them.
M. Anthony Burns
Chairman, President and
Chief Executive Officer
Edwin A. Huston
Senior Executive Vice President-Finance
and Chief Financial Officer
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Ryder System, Inc.:
We have audited the accompanying 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. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Ryder
System, Inc. and subsidiaries as of December 31, 1993 and 1992, and the results
of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1993, in conformity with generally
accepted accounting principles.
As discussed in the notes to the consolidated financial statements, the
Company changed its method of accounting for income taxes and for
postretirement benefits other than pensions in 1993.
KPMG Peat Marwick
Miami, Florida
February 7, 1994
30
33
CONSOLIDATED STATEMENTS OF EARNINGS Ryder System, Inc. and Consolidated Subsidiaries
Years ended December 31
- ------------------------------------------------------------------------------------------------------------------------------------
(In thousands, except per share amounts) 1993 1992 1991
- ------------------------------------------------------------------------------------------------------------------------------------
REVENUE $4,217,030 4,019,675 3,851,334
- ------------------------------------------------------------------------------------------------------------------------------------
Operating expense 3,338,477 3,164,775 3,038,418
Depreciation expense, net of gains 543,338 547,013 577,994
Interest expense 124,789 139,664 167,346
Miscellaneous expense, net 650 2,678 7,097
- ------------------------------------------------------------------------------------------------------------------------------------
4,007,254 3,854,130 3,790,855
- ------------------------------------------------------------------------------------------------------------------------------------
Earnings from continuing operations before income taxes 209,776 165,545 60,479
Provision for income taxes 95,054 67,495 29,556
- ------------------------------------------------------------------------------------------------------------------------------------
Earnings from continuing operations 114,722 98,050 30,923
Earnings (loss) from discontinued operations (150,713) 25,876 (16,906)
- ------------------------------------------------------------------------------------------------------------------------------------
Earnings (loss) before cumulative effect of change in accounting (35,991) 123,926 14,017
Cumulative effect of change in accounting (25,433) - -
- ------------------------------------------------------------------------------------------------------------------------------------
NET EARNINGS (LOSS) (61,424) 123,926 14,017
Preferred dividend requirements 3,617 10,500 10,500
- ------------------------------------------------------------------------------------------------------------------------------------
EARNINGS (LOSS) APPLICABLE TO COMMON SHARES $ (65,041) 113,426 3,517
====================================================================================================================================
Earnings (loss) per common share:
Continuing operations $ 1.43 1.17 0.28
Discontinued operations (1.94) 0.34 (0.23)
Cumulative effect of change in accounting (0.33) - -
- ------------------------------------------------------------------------------------------------------------------------------------
EARNINGS (LOSS) PER COMMON SHARE $ (0.84) 1 .51 0.05
====================================================================================================================================
See accompanying notes to consolidated financial statements.
31
34
CONSOLIDATED STATEMENTS OF CASH FLOWS Ryder System, Inc. and Consolidated Subsidiaries
Years ended December 31
- ------------------------------------------------------------------------------------------------------------------------------------
(In thousands) 1993 1992 1991
- ------------------------------------------------------------------------------------------------------------------------------------
CONTINUING OPERATIONS
CASH FLOWS FROM OPERATING ACTIVITIES:
Earnings from continuing operations $ 114,722 98,050 30,923
Depreciation expense, net of gains 543,338 547,013 577,994
Deferred income taxes 44,905 22,292 (4,200)
Proceeds from sales of receivables - 115,000 -
Decrease (increase) in receivables (6,616) 2,282 (80,353)
Decrease (increase) in inventories 881 (4,030) 4,645
Increase in accounts payable 41,738 4,580 36,389
Increase in accrued expenses 7,584 13,909 25,445
Increase in other non-current liabilities 21,255 25,380 46,684
Other, net 3,226 22,126 9,594
- ------------------------------------------------------------------------------------------------------------------------------------
771,033 846,602 647,121
- ------------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Debt proceeds 165,503 244,494 344,386
Debt repaid, including capital lease obligations (295,144) (533,503) (755,658)
Preferred stock redeemed (100,000) - -
Common stock issued 37,225 31,242 489
Dividends on common and preferred stock (50,790) (55,141) (54,684)
- ------------------------------------------------------------------------------------------------------------------------------------
(243,206) (312,908) (465,467)
- ------------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and revenue earning equipment (1,237,486) (1,070,472) (597,750)
Sales of property and revenue earning equipment 224,921 220,334 208,252
Sale and leaseback of revenue earning equipment - 200,000 113,590
Acquisitions, net of cash acquired - (20,525) (10,200)
Proceeds from businesses sold - - 8,027
Other, net 43,840 40,273 20,935
- ------------------------------------------------------------------------------------------------------------------------------------
(968,725) (630,390) (257,146)
- ------------------------------------------------------------------------------------------------------------------------------------
NET CASH FLOWS FROM CONTINUING OPERATIONS (440,898) (96,696) (75,492)
NET CASH FLOWS FROM DISCONTINUED OPERATIONS 446,842 87,448 41,522
- ------------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 5,944 (9,248) (33,970)
Cash and cash equivalents at January 1 50,747 59,995 93,965
- ------------------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT DECEMBER 31 $ 56,691 50,747 59,995
====================================================================================================================================
See accompanying notes to consolidated financial statements.
32
35
CONSOLIDATED BALANCE SHEETS Ryder System, Inc. and Consolidated Subsidiaries
December 31
- ------------------------------------------------------------------------------------------------------------------------------------
(Dollars in thousands, except per share amounts) 1993 1992
- ------------------------------------------------------------------------------------------------------------------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 56,691 50,747
Receivables 197,956 191,348
Inventories 52,963 53,844
Tires in service 144,488 123,776
Deferred income taxes 60,326 -
Prepaid expenses and other current assets 89,020 69,282
- ------------------------------------------------------------------------------------------------------------------------------------
Total current assets 601,444 488,997
- ------------------------------------------------------------------------------------------------------------------------------------
Revenue earning equipment 2,676,047 2,293,854
Operating property and equipment 510,489 504,064
Net assets of discontinued operations - 910,124
Direct financing leases and other assets 223,374 220,959
Intangible assets and deferred charges 247,034 260,535
- ------------------------------------------------------------------------------------------------------------------------------------
$4,258,388 4,678,533
- ------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 156,503 169,182
Accounts payable 297,282 253,571
Accrued expenses 514,982 518,389
- ------------------------------------------------------------------------------------------------------------------------------------
Total current liabilities 968,767 941,142
- ------------------------------------------------------------------------------------------------------------------------------------
Long-term debt 1,374,943 1,499,765
Other non-current liabilities 397,873 335,905
Deferred income taxes 526,624 426,587
Shareholders' equity:
Preferred stock without par value
Authorized, 3,800,917; outstanding, 1993 - none; 1992 - 1,000,000 - 98,025
Common stock of $.50 par value per share
Authorized, 400,000,000; outstanding, 1993 - 77,294,484;
1992 - 75,411,422 (exclusive of 7,883,291 treasury shares) 508,832 463,315
Retained earnings 496,623 924,812
Translation adjustment (15,274) (11,018)
- ------------------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 990,181 1,475,134
- ------------------------------------------------------------------------------------------------------------------------------------
$4,258,388 4,678,533
====================================================================================================================================
See accompanying notes to consolidated financial statements.
33
36
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Ryder System, Inc. and Consolidated Subsidiaries
December 31, 1993, 1992 and 1991
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF CONSOLIDATION. The consolidated financial statements include Ryder
System, Inc. and subsidiaries. All significant intercompany transactions have
been eliminated in consolidation.
REVENUE RECOGNITION. Lease revenue and other transportation services revenue
is recognized as earned.
CASH EQUIVALENTS. All investments in highly liquid debt instruments with a
maturity of three months or less at purchase are classified as cash
equivalents.
INVENTORIES. Inventories which consist primarily of fuel and truck parts are
valued using the lower of cost (specific identification or average cost) or
market.
REVENUE EARNING EQUIPMENT, OPERATING PROPERTY AND
EQUIPMENT AND DEPRECIATION. Revenue earning equipment, principally vehicles,
and operating property and equipment are stated at cost. Provision for
depreciation and amortization on substantially all depreciable assets is
computed using the straight-line method.
Gains on operating property and equipment sales are reflected in
miscellaneous expense. Gains on sales of revenue earning equipment, net of
costs incurred in preparing the equipment for sale, are reported as reductions
of depreciation expense and totaled $55 million, $34 million and $12 million in
1993, 1992 and 1991, respectively.
INTANGIBLE ASSETS. Intangible assets consist principally of goodwill totaling
$215 million in 1993 and $225 million in 1992. These amounts are reported net
of accumulated amortization of $57 million and $50 million, respectively.
Goodwill is amortized on a straight-line basis primarily over 40 years.
Goodwill was reduced by $1 million in 1993 and $6 million in 1992 as a result
of the recognition of tax benefits associated with prior year acquisitions.
The company continually reevaluates the propriety of the carrying value of
intangibles as well as the amortization periods to determine whether current
events and circumstances warrant an adjustment to the carrying value or a
revision to estimated useful lives.
ACCRUED INSURANCE AND LOSS RESERVES. The company retains a portion of the risk
under vehicle liability, workers' compensation and other insurance programs.
In addition, the company has indemnified the buyer of its reinsurance
operations (sold in 1989) from adverse loss development in excess of loss
reserves transferred to the buyer. Reserves have been recorded which reflect
the undiscounted estimated liabilities including claims incurred but not
reported. Amounts estimated to be paid within one year have been classified as
accrued expenses with the remainder included in other non-current liabilities.
ACCOUNTING CHANGES. Effective January 1, 1993, the company adopted Statement of
Financial Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions" and Statement No. 109, "Accounting
for Income Taxes." The company also adopted Statement No. 112, "Employers'
Accounting for Postemployment Benefits," effective January 1, 1993, which
applies to employers who provide certain benefits to former or inactive
employees after employment but before retirement. The statement requires that
the cost of such benefits be recognized over the service period of employees as
these benefits vest or accumulate. The adoption of this statement did not
impact the company's financial position or results of operations.
In June 1993, the Financial Accounting Standards Board issued
Statement No. 116, "Accounting for Contributions Received and Contributions
Made." The statement applies to all entities that receive or make
contributions. The company makes contributions both directly and through the
Ryder System Charitable Foundation. The statement requires that promises to
make contributions be recognized in the financial statements as an expense and
a liability when a promise is made. The provisions of this statement must be
adopted for fiscal years beginning after December 15, 1994. Based on the
company's current level of charitable commitments, the adoption of this
statement is not expected to have a material effect on the company's financial
position or results of operations.
FOREIGN EXCHANGE. The company's foreign operations use the local currency as
their functional currency. For these companies, the impact of currency
fluctuation is included in stockholders' equity as a translation adjustment.
INTEREST RATE SWAP AGREEMENTS. The company enters into interest rate swap
agreements to manage its third-party interest rate exposure. Amounts to be paid
or received under the agreements are recognized over the terms of the
agreements as adjustments to earnings. Although the company is exposed to
credit loss for the interest rate differential in the event of nonperformance
by the financial institutions which are counterparties to the agreements
described above, it does not anticipate nonperformance by the counterparties.
The company had interest rate swap agreements outstanding at December
31, 1993 and 1992 with aggregate notional amounts of $315 million and $215
million, respectively. These swaps mature at various dates through 2003. The
estimated fair value of these swaps at December 31, 1993 and 1992, was an asset
of $4 million and a liability of $0.7 million, respectively.
34
37
The estimated fair value of the swaps was determined from dealer quotations and
represents the estimated amount the company would receive or pay to terminate
the agreements.
SALES OF RECEIVABLES
The company participates in an agreement to sell, with limited recourse,
undivided percentage ownership interests in certain trade receivables. The
agreement allows the company to sell up to $220 million of such interests on a
revolving basis through September 1995. The costs associated with this program
approximate the costs of issuing commercial paper and are charged to
miscellaneous expense. At both December 31, 1993 and 1992, the outstanding
balance of receivables sold pursuant to this agreement was $220 million.
DISCONTINUED OPERATIONS
On December 7, 1993, the company completed the spin off of its aviation
services subsidiaries as a new public company ("Aviall, Inc." or "Aviall").
Under the terms of the spin off, the company distributed to common stockholders
one share of Aviall, Inc. common stock for each four Ryder System, Inc. common
shares owned. The distribution had the effect of reducing the company's
retained earnings by $314 million.
In the fourth quarter of 1990, the company discontinued its aircraft
leasing business, which included aircraft and other assets. The company
completed its disposition of this business in 1992.
In the accompanying consolidated statements of earnings, Aviall's results
of operations have been combined with those of the company's previously
discontinued aircraft leasing business and reported as discontinued operations.
The net assets of Aviall have been segregated in the 1992 consolidated balance
sheet.
The results of discontinued operations are summarized below:
- -------------------------------------------------------------------------------
Period Years
Ended ended
December 7 December 31
---------- -----------------
(In thousands) 1993 1992 1991
- -------------------------------------------------------------------------------
Net sales $1,086,600 1,171,847 1,209,765
===============================================================================
Earnings (loss) from operations
before income taxes and
disposition gain (loss) $ (191,874) 33,099 54,396
Income tax benefit (provision) 41,161 (13,223) (19,599)
- -------------------------------------------------------------------------------
Earnings (loss) from operations before
disposition gain (loss) (150,713) 19,876 34,797
- -------------------------------------------------------------------------------
Estimated gain (loss) on disposition - 9,272 (80,000)
Income tax benefit (provision) - (3,272) 28,297
- -------------------------------------------------------------------------------
Net gain (loss) on disposition - 6,000 (51,703)
- -------------------------------------------------------------------------------
Earnings (loss) from
discontinued operations $ (150,713) 25,876 (16,906)
===============================================================================
The loss from discontinued operations in 1993 includes an after tax
charge of $169 million ($2.18 per common share). This charge includes $76
million for the planned disposition of certain businesses; $49 million for the
write off of goodwill associated with those dispositions; $35 million for the
consolidation of some aviation facilities; and $9 million for transaction costs
associated with the spin off.
The 1991 results of discontinued operations include an after tax charge of
$52 million ($0.70 per common share) related to revised estimates of aircraft
disposition losses. Results of discontinued operations for 1992 include an
after tax gain of $6 million ($0.08 per common share) on the final disposition
of the discontinued aircraft leasing business. The gain resulted from higher
proceeds from the sale of aircraft and lower operating costs than anticipated.
Interest expense was allocated to the discontinued businesses based upon
an assumed debt to equity ratio consistent with other similar businesses and
with the company's historical interest allocation method for segment reporting.
Interest expense of $24 million, $33 million and $36 million was included in
the operating results of discontinued operations for 1993, 1992 and 1991,
respectively.
The company will continue to guarantee, for a limited period,
approximately $25 million of Aviall's indebtedness to the European Investment
Bank in exchange for a customary guarantee fee. In addition, the company
entered into a formal tax sharing agreement with Aviall that provides that
Aviall will, to the extent not previously paid to the company, be liable for
all Federal, state, local and foreign tax liabilities which are attributable to
Aviall through the distribution date. The amounts owed to the company from
Aviall under this agreement totaled approximately $8 million, and have been
included in prepaid expenses and other current assets in the 1993 consolidated
balance sheet.
REVENUE EARNING EQUIPMENT
- ------------------------------------------------------------------------
(In thousands) 1993 1992
- ------------------------------------------------------------------------
Full service lease $ 2,361,684 2,077,607
Commercial and consumer rental 1,728,299 1,539,678
- ------------------------------------------------------------------------
4,089,983 3,617,285
Accumulated depreciation (1,636,778) (1,563,751)
- ------------------------------------------------------------------------
2,453,205 2,053,534
- ------------------------------------------------------------------------
Other revenue earning equipment 694,139 681,184
Accumulated depreciation (471,297) (440,864)
- ------------------------------------------------------------------------
222,842 240,320
- ------------------------------------------------------------------------
$ 2,676,047 2,293,854
========================================================================
35
38
OPERATING PROPERTY AND EQUIPMENT
- ------------------------------------------------------------------
(In thousands) 1993 1992
- ------------------------------------------------------------------
Land $ 108,209 108,330
Buildings and improvements 409,028 398,391
Machinery and equipment 323,359 297,472
Other 72,825 62,610
- ------------------------------------------------------------------
913,421 866,803
Accumulated depreciation (402,932) (362,739)
- ------------------------------------------------------------------
$ 510,489 504,064
==================================================================
ACCRUED EXPENSES AND OTHER
NON-CURRENT LIABILITIES
- ------------------------------------------------------------------
(In thousands) 1993 1992
- ------------------------------------------------------------------
Salaries and wages $ 104,787 101,512
Employee benefits 13,527 17,339
Interest 29,578 32,393
Operating taxes 61,898 56,540
Insurance and loss reserves 382,607 385,168
Postretirement benefits other than pensions 47,076 10,485
Other 273,382 250,857
- ------------------------------------------------------------------
912,855 854,294
Less - non-current portion (397,873) (335,905)
- ------------------------------------------------------------------
Accrued expenses $ 514,982 518,389
==================================================================
ACQUISITIONS
The company completed a number of acquisitions during the two-year period ended
December 31, 1992 accounted for using the purchase method. Acquisitions during
this period were not material in relation to the company's total assets. The
consolidated financial statements reflect the results of operations of the
acquired businesses from the acquisition dates. Had the acquisitions been
consummated at January 1, 1991, consolidated revenue and net earnings for the
two-year period would not have been materially affected.
The fair value of assets acquired and liabilities assumed in
connection with these acquisitions follows:
- -----------------------------------------------------------
(In thousands) 1993 1992 1991
- -----------------------------------------------------------
Working capital $ - 435 2,168
Goodwill - 3,072 3,503
Other net assets - 17,173 6,563
Debt assumed - (155) -
- -----------------------------------------------------------
Net assets acquired $ - 20,525 12,234
===========================================================
LEASES
OPERATING LEASES AS LESSOR. One of the company's major product lines is full
service leasing of commercial trucks, tractors and trailers. The standard full
service lease requires the company to furnish the customer a vehicle, together
with all services, supplies and equipment necessary for its operation. These
services include maintenance, parts, tires, licenses, taxes, a substitute
vehicle if needed and, in most cases, fuel. The agreements provide for a fixed
time charge plus a fixed per-mile charge and, in some instances, a provision
for guaranteed mileage. A portion of these charges is often adjusted in
accordance with changes in the Consumer Price Index.
DIRECT FINANCING LEASES. The company leases additional revenue earning
equipment under agreements that are accounted for as direct financing leases.
The provisions of these lease agreements are essentially the same as operating
leases, except some of the direct financing leases contain residual value
guarantees. The net investment in direct financing leases consists of:
- ---------------------------------------------------------------------
(In thousands) 1993 1992
- ---------------------------------------------------------------------
Minimum lease payments receivable $259,654 254,400
Executory costs and unearned income (70,387) (70,461)
Unguaranteed residuals 38,736 34,962
- ---------------------------------------------------------------------
Net investment in direct financing leases 228,003 218,901
Current portion included in receivables 43,143 43,152
- ---------------------------------------------------------------------
Non-current portion included in other assets $184,860 175,749
=====================================================================
OPERATING LEASES AS LESSEE. The company leases vehicles, facilities and office
equipment under operating lease agreements. The majority of these agreements
are vehicle leases which specify that rental payments be adjusted every six
months based on changes in interest rates and provide for early termination at
stipulated values. During 1993, 1992 and 1991, rent expense was $137 million,
$132 million and $116 million, respectively.
CAPITAL LEASES. The company enters into vehicle lease arrangements accounted
for as capitalized leases. Capital leases entered into during the three-year
period ended December 31, 1993, were not material. Capital leases are amortized
over the effective economic lease term. At December 31, 1993 and 1992, the
investment in capitalized lease equipment net of accumulated amortization was
$28 million and $50 million, respectively.
36
39
LEASE PAYMENTS. Future minimum payments for leases in effect at December 31,
1993, which include an estimate of the future fixed time and guaranteed mileage
charges for operating leases as lessor, are as follows:
- ------------------------------------------------------------------------
As Lessor As Lessee
------------------- -------------------
Direct
Operating Financing Operating Capital
(In thousands) Leases Leases Leases Leases
- --------------------------------------------------------------------------
1994 $ 684,567 61,954 125,142 14,176
1995 541,929 54,038 120,542 5,615
1996 400,713 44,331 108,830 5,700
1997 277,149 34,497 74,551 3,523
1998 164,625 22,568 66,215 3,286
Thereafter 105,058 42,266 65,932 3,022
- --------------------------------------------------------------------------
$2,174,041 259,654 561,212 35,322
Portion representing interest (6,856)
- --------------------------------------------------------------------------
Present value of minimum lease payments $28,466
==========================================================================
The amounts on the previous table are based upon the assumption that
revenue earning equipment will remain on lease for the length of time specified
by the respective lease agreements. This is not a projection of future fixed
lease revenue; no effect has been given to renewals, new business,
cancellations or future rate changes.
INCOME TAXES
Effective January 1, 1993, the company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes." Under this method,
deferred tax assets and liabilities are determined based upon differences
between financial reporting and tax bases of assets and liabilities and are
measured using the enacted tax rates and laws that will be in effect when the
differences are expected to reverse. Additionally, deferred tax balances are
adjusted in periods that include the enactment of tax rate changes. The
adoption of this statement, which was made on a prospective basis, did not have
a material impact on the company's financial condition or results of
operations. The company classified its deferred income tax balances in
accordance with the provisions of the statement in the 1993 consolidated
balance sheet. Prior to 1993, the company followed the accounting for income
taxes prescribed by Statement No. 96.
The total provision for income taxes (excluding taxes related to
discontinued operations and cumulative effect of change in accounting) includes
the following components:
- ------------------------------------------------------------
(In thousands) 1993 1992 1991
- ------------------------------------------------------------
Current tax expense:
Federal $45,557 31,648 24,908
State 3,563 13,841 8,044
Foreign 1,029 (286) 804
- ------------------------------------------------------------
50,149 45,203 33,756
- ------------------------------------------------------------
Deferred tax expense:
Federal 28,836 20,825 (6,391)
State 11,332 (3,041) 541
Foreign 4,737 4,607 2,233
- ------------------------------------------------------------
44,905 22,391 (3,617)
- ------------------------------------------------------------
Amortization of deferred
investment tax credits - (99) (583)
- ------------------------------------------------------------
Provision for income taxes $95,054 67,495 29,556
============================================================
A reconciliation of the Federal statutory tax rate with the effective
tax rate for continuing operations follows:
% of Pretax Income
- ------------------------------------------------------------------------
1993 1992 1991
- ------------------------------------------------------------------------
Statutory rate 35.0 34.0 34.0
Impact on deferred taxes for changes
in tax rates 3.7 - 3.6
State income taxes, net of Federal
income tax benefit 4.6 4.3 5.0
Amortization and write down of goodwill,
net of benefits realized from business sold 1.0 1.0 0.9
Miscellaneous items, net 1.0 1.5 5.4
- ------------------------------------------------------------------------
Effective rate 45.3 40.8 48.9
========================================================================
The significant temporary differences which gave rise to the net
deferred income tax liability as of December 31, 1993 pursuant to Statement No.
109, were as follows:
- -------------------------------------------------------------
(In thousands) 1993
- -------------------------------------------------------------
Deferred income tax assets:
Accrued insurance and loss reserves $ 145,719
Alternative minimum taxes 34,869
Accrued compensation & benefits 37,191
Accrued reserves and other items 63,027
- -------------------------------------------------------------
280,806
Valuation allowance (5,723)
- -------------------------------------------------------------
275,083
- -------------------------------------------------------------
Deferred income tax liabilities:
Property and equipment basis differences (672,341)
Other items (69,040)
- -------------------------------------------------------------
Deferred income tax liabilities (741,381)
- -------------------------------------------------------------
$(466,298)
=============================================================
At December 31, 1992, the company's deferred income tax liability
reflected the impact of "temporary differences" between the amount of assets
and liabilities for financial reporting purposes and such amounts for tax
purposes as determined pursuant to Statement No. 96. The most significant type
of
37
40
temporary difference that gave rise to these deferred tax liabilities
related to higher tax depreciation over book depreciation. This was partially
offset by the temporary difference created by expenses for book purposes being
in excess of amounts currently deductible for tax purposes (primarily accrued
insurance and loss reserves).
Deferred taxes have not been provided on temporary differences related to
investments in foreign subsidiaries that are considered permanent in duration.
These temporary differences consist primarily of undistributed foreign earnings
of $47 million at December 31, 1993. A full foreign tax provision has been made
on these undistributed foreign earnings. Determination of the amount of
deferred taxes on these temporary differences is not practicable due to foreign
tax credits and exclusions.
The company had unused investment tax credits, for tax purposes, of $3
million and unused alternative minimum tax credits, for tax purposes, of $35
million at December 31, 1993, available to reduce future income tax
liabilities. The investment tax credits are expected to be utilized before
their expiration, ranging from 1997 to 1998, and have been reflected in the
financial statements as a reduction of deferred income taxes.
Income taxes paid totaled $52 million in 1993, $44 million in 1992 and $41
million in 1991 and include amounts related to both continuing and discontinued
operations.
DEBT
- -----------------------------------------------------------------------
(In thousands) 1993 1992
- -----------------------------------------------------------------------
U.S. commercial paper $ 83,500 95,000
Unsecured U.S. term loans 63,411 41,069
Unsecured notes
Series C, 9.10% - 13,720
Series E, 8.75% through 1996, due 2000 15,499 15,499
Series G, 9%, due 2016 100,000 100,000
Series H, 8.375%, due 2017 125,000 125,000
Series J, 8.75%, due 2017 100,000 100,000
Series K, 9.875%, due 2017 100,000 100,000
Series L, 9.375%, due 1998 100,000 100,000
Series M, 9.2%, due 1998 200,000 200,000
Series N, 9.25%, due 2001 100,000 100,000
Medium-term notes, 4.94%
to 10.08%, due 1994 to 2021 393,300 381,150
Discount on unsecured notes (22,776) (23,294)
Capital lease obligations 28,466 62,189
Other 145,046 258,614
- -----------------------------------------------------------------------
Total debt 1,531,446 1,668,947
Less - amount classified as current 156,503 169,182
- -----------------------------------------------------------------------
Long-term debt $1,374,943 1,499,765
=======================================================================
In 1993, the company redeemed its Series C unsecured notes at par.
Debt maturities (including sinking fund requirements and excluding
capital lease obligations) during the five years subsequent to December 31,
1993, are as follows:
- ----------------------------------------------------------
Debt
(In thousands) Maturities
- ----------------------------------------------------------
1994 $144,841
1995 70,747
1996 197,161
1997 35,215
1998 387,968
==========================================================
To support the company's outstanding U.S. commercial paper, the
company maintains two revolving credit agreements. The primary agreement, with
a total commitment of $500 million, has no expiration date. The second
agreement, with a total commitment of $150 million, expires in December 1994.
No compensating balances are required for either of these facilities and the
agreements carry annual commitment fees of 1/8% to 1/4%. There were no
borrowings under either of these agreements during 1993 or 1992. The company
had $567 million available under these agreements at December 31, 1993. The
company also has available other committed lines of credit totaling $42 million
as of December 31, 1993. The weighted average interest rate for outstanding
U.S. commercial paper was 3.63% at December 31, 1993.
The primary revolving loan agreement contains the most restrictive
covenants as to the payment of cash dividends. As of December 31, 1993,
approximately $90 million of consolidated retained earnings were available for
the payment of cash dividends.
The estimated fair value of the company's debt (excluding capital lease
obligations) was $1.65 billion at December 31, 1993 and $1.69 billion at
December 31, 1992. This compares to the net book value of $1.50 billion at
December 31, 1993 and $1.61 billion at December 31, 1992. The estimated fair
value of debt was calculated by discounting future cash flows through estimated
maturity using the borrowing rate currently available to the company for debt
of similar maturity.
Interest paid totaled $154 million in 1993, $187 million in 1992 and $210
million in 1991 and includes amounts related to both continuing and
discontinued operations.
38
41
SHAREHOLDERS' EQUITY
- ---------------------------------------------------------------------------------------------------------------------------------
Preferred Common Retained Translation
(In thousands, except share and per share amounts) Stock Stock Earnings Adjustment Total
- ---------------------------------------------------------------------------------------------------------------------------------
At December 31, 1990 $ 98,025 429,470 896,694 4,257 1,428,446
Net earnings - - 14,017 - 14,017
Dividends declared:
Common stock - $.60 per share - - (44,184) - (44,184)
Fixed Rate Auction Preferred Stock (FRAPS) - $10.50 per share - - (10,500) - (10,500)
Common stock issued under employee plans (35,712 shares) - 489 - - 489
Foreign currency translation adjustment - - - (688) (688)
Other - 74 - - 74
- ---------------------------------------------------------------------------------------------------------------------------------
At December 31, 1991 98,025 430,033 856,027 3,569 1,387,654
Net earnings - - 123,926 - 123,926
Dividends declared:
Common stock - $.60 per share - - (44,641) - (44,641)
Preferred stock (FRAPS) - $10.50 per share - - (10,500) - (10,500)
Common stock issued under employee plans (1,720,115 shares) - 31,242 - - 31,242
Foreign currency translation adjustment - - - (14,587) (14,587)
Other - 2,040 - - 2,040
- ---------------------------------------------------------------------------------------------------------------------------------
At December 31, 1992 98,025 463,315 924,812 (11,018) 1,475,134
Net loss - - (61,424) - (61,424)
Dividends declared:
Common stock - $.60 per share - - (45,832) - (45,832)
Preferred stock (FRAPS) - $4.96 per share - - (4,958) - (4,958)
Aviall, Inc. stock - - (314,000) - (314,000)
Redemption of preferred stock (FRAPS) (98,025) - (1,975) - (100,000)
Common stock issued under employee plans (1,883,062 shares) - 37,225 - - 37,225
Foreign currency translation adjustment - - - (4,256) (4,256)
Other - 8,292 - - 8,292
- ---------------------------------------------------------------------------------------------------------------------------------
AT DECEMBER 31, 1993 $ - 508,832 496,623 (15,274) 990,181
=================================================================================================================================
In 1993, the company redeemed all of its outstanding Fixed Rate Auction
Preferred Stock (Series A and B) for $100 million.
At December 31, 1993, the company had 77,294,484 Preferred Stock
Purchase Rights (Rights) outstanding. The Rights were issued in March 1986 as a
dividend to common shares outstanding and expire in 1996. The Rights contain
provisions to protect shareholders in the event of an unsolicited attempt to
acquire the company which is not believed by the Board of Directors to be in
the best interest of shareholders. The Rights are evidenced by common stock
certificates, are subject to antidilution provisions, and are not exercisable
or transferable apart from the common stock until ten days after a person, or a
group of affiliated or associated persons, acquires beneficial ownership of 10%
or more, or makes a tender offer for 30% or more, of the company's common stock.
The Rights entitle the holder, except such an acquiring person, to purchase at
the current exercise price of $100 that number of the company's common shares
which at the time would have a market value of $200. In the event the company
is acquired in a merger or other business combination (including one in which
the company is the surviving corporation), each Right entitles its holder to
purchase at the current exercise price of $100 that number of common shares of
the surviving corporation which would then have a market value of $200. In lieu
of common shares, Rights holders can purchase 1/150 of a share of Series C
Preferred Stock for each Right. The Series C Preferred Stock would be entitled
to quarterly dividends equal to the greater of $10 per share or 150 times the
common stock dividend per share, and have 150 votes per share, voting together
with the common stock. The Rights have no voting rights and are redeemable, at
the option of the company, at a price of $.033 per Right prior to the
acquisition by a person or a group of affiliated or associated persons of
beneficial ownership of 10% or more of the company's common stock.
EMPLOYEE STOCK OPTION AND PURCHASE PLANS
OPTION PLANS. The Profit Incentive Stock Plan provides for the granting of
stock options to certain non-officer employees to purchase common shares at
prices not less than 85% of the fair market value at the date of grant; all
options granted in 1993, 1992 and 1991 were at fair market value. These options
are for terms not exceeding 10 years and are exercisable cumulatively 25% or
50% each year, based on the terms of the grant.
The 1980 Stock Incentive Plan provides for the granting of stock
options to key employees at a price equal to the fair market value of shares at
the date of grant. These options are for terms not exceeding 10 years, are
generally exercisable cumulatively 50% each year, and may be granted in tandem
with stock appreciation rights, limited stock appreciation rights and perfor-
39
42
mance units. The plan also provides for restricted stock rights to these
employees at no cost to them; none were granted in 1993, 1992 or 1991.
The following table summarizes the status of the company's stock option
plans:
- --------------------------------------------------------------------------
(Shares in thousands) 1993 1992 1991
- --------------------------------------------------------------------------
Outstanding, January 1 6,342 6,557 6,036
Average per share $23.09 22.37 23.23
Granted 772 840 930
Average per share $26.43 23.93 18.75
Exercised 1,305 757 34
Average per share $20.32 17.18 13.44
Expired or cancelled 127 298 375
Average per share $24.98 24.57 28.10
Adjustment for dividend of Aviall stock 428 - -
Outstanding, December 31 6,110 6,342 6,557
Average per share $22.45 23.09 22.37
Exercisable, December 31 4,901 4,957 4,619
Available for future grant 1,858 903 1,445
==========================================================================
During December 1993, the number and exercise price of all options
outstanding at the time of the spin off of Aviall were adjusted using a
conversion ratio such that: (1) the aggregate difference between the exercise
price and the market value of the shares which are subject to the options is
unchanged from the same calculation immediately prior to the spin off and (2)
the ratio of the exercise price per option to the market value per share is
also unchanged.
PURCHASE PLANS. The Employee Stock Purchase Plan provides for periodic
offerings to substantially all U.S. and Canadian employees to subscribe shares
of the company's common stock at 85% of the fair market value on either the
date of offering or the last day of the purchase period, whichever is less. The
U.K. Stock Purchase Scheme provides for periodic offerings to substantially all
U.K. employees to subscribe shares of the company's common stock at 85% of the
fair market value on the day prior to the offering.
The following table summarizes the status of the company's stock purchase
plans:
- --------------------------------------------------------------------------
(Shares in thousands) 1993 1992 1991
- --------------------------------------------------------------------------
Outstanding, January 1 1,784 1,350 1,692
Average per share $ 19.79 19.06 19.23
Granted - 1,745 45
Average per share $ - 19.92 14.93
Exercised 641 1,019 2
Average per share $ 19.92 19.23 19.23
Expired or cancelled 53 292 385
Average per share $ 19.92 19.24 19.23
Adjustment for dividend of Aviall stock 97 - -
Outstanding, December 31 1,187 1,784 1,350
Average per share $ 18.08 19.79 19.06
Exercisable, December 31 1,142 - 1,305
Available for future grant 3,260 3,207 4,660
==========================================================================
Shares outstanding at the time of the spin off of Aviall were adjusted
using a method similar to the one used for the company's stock option plans.
PENSION PLANS
The company and its subsidiaries sponsor several pension plans, primarily
defined benefit plans, covering substantially all employees not covered by
union-administered plans, including certain employees in foreign countries.
These plans generally provide participants with benefits based on years of
service and career-average compensation levels. Funding policy for these plans
is to make contributions based on normal costs plus amortization of unfunded
past service liability, but not greater than the maximum allowable contribution
deductible for Federal income tax purposes. The majority of the plans' assets
are invested in a master trust which, in turn, is primarily invested in listed
stocks and bonds. The company also contributed to various defined benefit,
union-administered, multi-employer plans for employees under collective
bargaining agreements. Total pension expense for 1993, 1992 and 1991 was as
follows:
- --------------------------------------------------------------------------
(In thousands) 1993 1992 1991
- --------------------------------------------------------------------------
Company-administered plans:
Present value of benefits
earned during the year $ 21,780 20,320 16,966
Interest cost on projected
benefit obligation 28,263 25,269 21,895
Return on plan assets:
Actual (43,551) (26,387) (68,576)
Deferred 11,366 (2,271) 46,837
Other, net (2,066) (2,113) (2,683)
- --------------------------------------------------------------------------
15,792 14,818 14,439
Union-administered plans 19,239 19,448 18,356
- --------------------------------------------------------------------------
Net pension expense $ 35,031 34,266 32,795
==========================================================================
Included in the above amounts is the pension expense allocated to
discontinued operations totaling $2 million in 1993, 1992 and 1991.
The following table sets forth the plans' funded status at December 31,
1993 and 1992:
- ----------------------------------------------------------------------
(In thousands) 1993 1992
- ----------------------------------------------------------------------
Plan assets at fair value $ 423,636 370,491
- ----------------------------------------------------------------------
Actuarial present value of
service rendered to date:
Accumulated benefit obligation,
including vested benefits of
$376,951 in 1993 and $288,498 in 1992 (402,560) (296,749)
Additional benefit based on
estimated future salary levels (56,431) (45,935)
- ----------------------------------------------------------------------
Projected benefit obligation (458,991) (342,684)
- ----------------------------------------------------------------------
Projected benefit obligation
(in excess of) less than plan assets $ (35,355) 27,807
======================================================================
40
43
The following table sets forth the actuarial assumptions used for the
company's dominant plan:
- --------------------------------------------------------------------------
1993 1992
- --------------------------------------------------------------------------
Discount rate for determining projected benefit obligation 7.00% 8.25%
Rate of increase in compensation levels 5.00% 5.00%
Expected long-term rate of return on plan assets 8.50% 8.50%
Transition amortization in years 15 15
Gain and loss amortization in years 9 9
==========================================================================
The cumulative effect of the change in the discount rate is included
below in unrecognized net gains (losses). The change in the 1993 discount rate
is expected to increase pension expense in 1994 by approximately $8 million.
A reconciliation of the company's prepaid pension expense to the plans'
funded status at December 31, 1993 and 1992 is as follows:
- -----------------------------------------------------------------------
(In thousands) 1993 1992
- -----------------------------------------------------------------------
Prepaid pension expense $ 5,234 9,064
Unrecognized transition amount 26,276 30,895
Other, primarily unrecognized prior
service cost and net gains (losses) (66,865) (12,152)
- -----------------------------------------------------------------------
Projected benefit obligation (in excess of)
less than plan assets $(35,355) 27,807
=======================================================================
In connection with the spin off of Aviall, the company agreed to
retain the accumulated benefit obligation and associated assets related to
participants in the company's primary pension plan who are either present or
former employees of Aviall for services rendered through the date of the spin
off. The company will treat all present or former employees of Aviall as
terminated participants of this plan as of the date of the spin off.
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
The company and its subsidiaries sponsor plans which provide retired employees
with certain health care and life insurance benefits. Substantially all
employees not covered by union-administered retirement plans are eligible for
these benefits. Health care benefits for the company's principal plans are
generally provided to qualified retirees under age 65 and eligible dependents.
Generally, these plans require employee contributions which vary based on years
of service and include provisions which cap company contributions.
Effective January 1, 1993, the company adopted Statement of Financial
Accounting Standards No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions." The statement requires that the expected costs
of health care and life insurance provided to retired employees be recognized
as expense during the years employees render service. As a result of adopting
this new statement, a pretax charge of $41 million ($25 million after tax, or
$0.33 per common share) was recorded as the cumulative effect of a change in
accounting principle to establish a liability for the present value of expected
future benefits attributed to employees' service rendered prior to January 1,
1993. Under the company's previous accounting policy the cost of these benefits
was recognized as expense as claims were incurred. Costs under this method were
$3 million in both 1992 and 1991.
Total periodic postretirement benefit cost for continuing operations in
1993 under the provisions of the new statement included the following
components:
- ------------------------------------------------------------------
(In thousands) 1993
- ------------------------------------------------------------------
Current year service cost $1,360
Interest accrued on postretirement benefit obligations 3,682
- ------------------------------------------------------------------
Periodic postretirement benefit cost $5,042
==================================================================
41
44
The company's postretirement benefit plans are not funded. The
company's obligation under the plans as of December 31, 1993 for continuing
operations is as follows:
- ------------------------------------------------------------------
(In thousands) 1993
- ------------------------------------------------------------------
Accumulated postretirement benefit obligation:
Retirees $27,487
Fully eligible active plan participants 4,401
Other active plan participants 20,697
- ------------------------------------------------------------------
52,585
- ------------------------------------------------------------------
Unrecognized net loss (5,509)
- ------------------------------------------------------------------
Accrued unfunded postretirement benefit obligation $47,076
==================================================================
The accumulated postretirement benefit obligation as of January 1,
1993 (initial adoption) and December 31, 1993 was determined using a discount
rate of 8.25% and 7.00%, respectively. The annual rate of increase in the per
capita cost of covered health benefits was assumed to be 12.5% for 1994. This
rate was assumed to decrease gradually to 6% through the year 2003 and remain
at that level thereafter. Increasing the assumed health care cost trend rates
by 1% in each year would increase the accumulated postretirement benefit
obligation as of December 31, 1993 by $2 million and would not have a material
effect on periodic postretirement benefit cost for 1993. The cumulative effect
of the change in the discount rate as of December 31, 1993 is included above in
unrecognized net loss. The change in the discount rate will not have a material
effect on periodic postretirement benefit cost in 1994.
ENVIRONMENTAL MATTERS
The company's operations involve storing and dispensing petroleum products,
primarily diesel fuel. In 1988, the Environmental Protection Agency issued
regulations that established requirements for testing and replacing underground
storage tanks. The company is involved in various stages of investigation,
cleanup and tank replacement in order to comply with the regulations. In
addition, the company received notices from the Environmental Protection Agency
and others that it has been identified as a potentially responsible party (PRP)
under the Comprehensive Environmental
45
Response, Compensation and Liability Act and the Superfund Amendments and
Reauthorization Act and may be required to share in the cost of cleanup of 29
identified disposal sites.
The company records a liability for environmental assessments and/or
cleanup when it is probable a loss has been incurred. Generally, the timing of
these accruals coincides with the identification of an environmental problem
through the company's internal procedures or upon notification from regulatory
agencies. The company's probable environmental loss is based on information
obtained from independent environmental engineers and/or from company experts
regarding the nature and extent of environmental contamination, remedial
alternatives available, and the cleanup criteria required by relevant
governmental agencies. The estimated costs include anticipated site testing,
consulting, remediation, disposal, and post-remediation monitoring, and legal
fees, as appropriate, based on information available at that time. These
amounts represent the estimated undiscounted costs to fully resolve the
environmental matters in accordance with prevailing Federal, state and local
requirements based on information presently available. At December 31, 1993,
the company had accrued $45 million for environmental liabilities. The company
incurred $24 million of environmental expenses in 1993, compared with $23
million in 1992 and $22 million in 1991.
The ultimate costs of the company's environmental liabilities cannot be
projected with certainty due to the presence of several unknown factors,
primarily the level of contamination, the effectiveness of selected remediation
methods, the stage of investigation at the individual sites, the determination
of the company's liability in proportion to other responsible parties and the
recoverability of such costs from third parties. Based on information presently
available, management believes that the ultimate disposition of these matters,
although potentially material to the results of operations in any one year,
will not have a material adverse effect on the company's financial condition or
liquidity.
OTHER MATTERS
The company is a party to various claims, legal actions and complaints arising
in the ordinary course of business. While any proceeding or litigation has an
element of uncertainty, management believes that the disposition of these
matters will not have a material impact on the financial condition, liquidity
or results of operations of the company.
SEGMENT INFORMATION
The company's operating segments are Vehicle Leasing & Services and Automotive
Carriers. Vehicle Leasing & Services offers a variety of truck-related services
including full service truck leasing, commercial and consumer truck rental,
programmed maintenance service and dedicated logistics. It also operates
student transit services and manages and operates public transit services.
Automotive Carriers is the largest highway transporter of new cars and trucks
in the United States and a major transporter in Canada.
Revenue by segment includes intersegment transactions which are based
on substantially the same terms as transactions with unaffiliated customers.
These amounts are eliminated in consolidation. Revenue of $453 million, $468
million and $494 million was derived from General Motors in 1993, 1992 and
1991, respectively.
42
46
- -----------------------------------------------------------------------------------------------------
(In thousands) 1993 1992 1991
- -----------------------------------------------------------------------------------------------------
REVENUE:
Vehicle Leasing & Services $3,596,803 3,384,952 3,229,437
Automotive Carriers 634,634 651,216 645,051
Intersegment (14,407) (16,493) (23,154)
- -----------------------------------------------------------------------------------------------------
$4,217,030 4,019,675 3,851,334
- -----------------------------------------------------------------------------------------------------
Foreign portion of revenue $ 311,265 336,499 326,679
=====================================================================================================
OPERATING PROFIT:
Vehicle Leasing & Services $ 335,793 283,505 234,493
Automotive Carriers 31,832 47,876 22,434
Other (49) 118 270
- -----------------------------------------------------------------------------------------------------
Operating profit 367,576 331,499 257,197
Miscellaneous expense, net (650) (2,678) (7,097)
Interest expense (124,789) (139,664) (167,346)
Unallocated corporate
overhead expense (32,361) (23,612) (22,275)
- -----------------------------------------------------------------------------------------------------
Earnings from continuing oper-
ations before income taxes $ 209,776 165,545 60,479
- -----------------------------------------------------------------------------------------------------
Foreign portion of
operating profit $ 26,176 25,692 30,318
- -----------------------------------------------------------------------------------------------------
Foreign portion of earnings
from continuing operations
before income taxes $ 9,140 6,711 8,245
=====================================================================================================
DEPRECIATION:
Vehicle Leasing & Services $ 557,406 536,951 541,716
Automotive Carriers 39,418 43,155 47,198
Other 1,074 1,144 1,286
- -----------------------------------------------------------------------------------------------------
597,898 581,250 590,200
Gains on vehicle sales (54,560) (34,237) (12,206)
- -----------------------------------------------------------------------------------------------------
$ 543,338 547,013 577,994
=====================================================================================================
IDENTIFIABLE ASSETS:
Vehicle Leasing & Services $3,908,931 3,446,998 3,544,169
Automotive Carriers 277,310 303,917 319,844
Other 107,327 61,283 125,413
Eliminations (35,180) (43,789) (103,984)
- -----------------------------------------------------------------------------------------------------
4,258,388 3,768,409 3,885,442
Net assets of discontinued operations - 910,124 958,549
- -----------------------------------------------------------------------------------------------------
Total assets $4,258,388 4,678,533 4,843,991
- -----------------------------------------------------------------------------------------------------
Foreign portion of identifiable assets $ 414,173 394,571 433,979
=====================================================================================================
CAPITAL EXPENDITURES,
INCLUDING CAPITAL LEASES:
Vehicle Leasing & Services $1,205,620 1,030,012 554,222
Automotive Carriers 31,045 40,528 43,097
Other 856 494 725
- -----------------------------------------------------------------------------------------------------
$1,237,521 1,071,034 598,044
=====================================================================================================
47
SUPPLEMENTAL FINANCIAL DATA
Ryder System, Inc. and Consolidated Subsidiaries
QUARTERLY DATA
- ---------------------------------------------------------------------------------------------------------------------------------
Quarters
------------------------------------------------------------
(In thousands, except per share amounts) First Second Third Fourth
- ---------------------------------------------------------------------------------------------------------------------------------
Revenue:
1993 $999,657 1,080,233 1,043,495 1,093,645
1992 $950,891 1,035,004 1,005,141 1,028,639
- ---------------------------------------------------------------------------------------------------------------------------------
Earnings from continuing operations:
1993 $ 19,946 40,744 23,488 30,544
1992 $ 12,244 34,726 27,378 23,702
- ---------------------------------------------------------------------------------------------------------------------------------
Net earnings (loss):
1993 $ (1,197) (122,204) 27,783 34,194
1992 $ 17,409 37,575 39,138 29,804
- ---------------------------------------------------------------------------------------------------------------------------------
Earnings per common share from continuing operations:
1993 $ 0.23 0.51 0.30 0.39
1992 $ 0.13 0.43 0.33 0.28
- ---------------------------------------------------------------------------------------------------------------------------------
Net earnings (loss) per common share:
1993 $ (0.05) (1.60) 0.36 0.44
1992 $ 0.20 0.47 0.49 0.36
=================================================================================================================================
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.
Net loss in the first quarter of 1993 includes the cumulative effect
of a change in accounting resulting in an after tax charge of $25 million
($0.33 per common share). See "Summary of Significant Accounting Policies" note
for additional discussion.
Net loss for the second quarter of 1993 includes an after tax charge of
$169 million ($2.18 per common share) related to the discontinued aviation
services subsidiaries. Net earnings in the third quarter of 1992 include an
after tax gain of $6 million ($0.08 per common share) related to the final
disposition of the discontinued aircraft leasing business. See "Discontinued
Operations" note for additional discussion.
COMMON STOCK DATA
At December 31, 1993 and 1992, the company had 77,294,484 and 75,411,422
shares, respectively, of common stock outstanding. Common stock outstanding was
exclusive of 7,883,291 common treasury shares at year-end 1992. As of January
31, 1994, there were 19,078 common shareholders. The payment of cash dividends
is subject to the restrictions described on page 38.
The company's common shares are traded on the New York Stock Exchange,
the Midwest Stock Exchange and the Pacific Stock Exchange and its ticker symbol
is "R". Quarterly market price ranges of the common shares and quarterly cash
dividends on common shares during 1993 and 1992 were as follows:
- ---------------------------------------------------------------------------------------------------------------------------------
Market Price
------------------------------------------------- Common Share
1993 1992 Cash Dividends
------------------- ------------------ ------------------
High Low High Low 1993 1992
- ---------------------------------------------------------------------------------------------------------------------------------
First quarter $32 1/4 27 1/4 25 3/8 19 5/8 .15 .15
Second quarter 31 7/8 26 1/2 27 1/4 22 1/4 .15 .15
Third quarter 33 1/2 27 7/8 26 7/8 22 1/4 .15 .15
Fourth quarter (a) 26 5/8 24 3/4 28 7/8 21 .15 .15
=================================================================================================================================
(a) On December 7, 1993, the company completed the spin off of its aviation services subsidiaries by distributing to common
stockholders one share of Aviall, Inc. common stock valued at $16.25 for each four Ryder System, Inc. common shares owned.
The high and low presented for the first, second, and third quarter of 1993 represent the values of the company's common stock
before the spin off. The high and low for the fourth quarter of 1993 represent the values of the company's common stock after
the spin off. The high and low for the fourth quarter prior to the spin off were 31 3/4 and 26 1/4, respectively.
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SUPPLEMENTAL FINANCIAL DATA
ELEVEN YEAR SUMMARY
- ---------------------------------------------------------------------------------------------------------------------------------
(Dollars in thousands, except per share amounts) 1993 1992 1991 1990
- ---------------------------------------------------------------------------------------------------------------------------------
Revenue $4,217,030 4,019,675 3,851,334 3,950,024
Earnings from continuing operations (a):
Before income taxes $ 209,776 165,545 60,479 98,690
After income taxes $ 114,722 98,050 30,923 58,632
Per common share $ 1.43 1.17 0.28 0.64
Net earnings (loss) (b) $ (61,424) 123,926 14,017 42,680
Per common share (b) $ (0.84) 1.51 0.05 0.43
- ---------------------------------------------------------------------------------------------------------------------------------
Cash dividends per common share $ 0.60 0.60 0.60 0.60
Average number of common and
common equivalent shares (in thousands) 77,535 75,046 73,837 74,769
Average common equity $1,266,715 1,327,624 1,317,888 1,365,269
Return on average common equity (%) (c) 10.2 8.1 4.2 5.0
Book value per common share $ 12.81 18.26 17.50 18.06
Market price-high (d) $ 26 5/8 28 7/8 21 5/8 23 3/8
Market price-low (d) $ 24 3/4 19 5/8 14 12 1/4
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Total debt $1,531,446 1,668,947 1,988,509 2,402,741
Long-term debt $1,374,943 1,499,765 1,742,911 1,883,869
Debt to equity (%) 155 113 143 168
Debt to tangible equity (%) 202 135 176 213
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Year-end assets $4,258,388 4,678,533 4,843,991 5,263,498
Return on average assets (%) (e) 2.7 2.3 0.5 1.1
Average asset turnover (%) (e) 103.2 104.0 95.2 88.7
- ---------------------------------------------------------------------------------------------------------------------------------
Cash flow from continuing operating activities and asset sales $ 995,954 1,066,936 855,373 1,093,739
Capital expenditures, including capital leases $1,237,521 1,071,034 598,044 787,740
- ---------------------------------------------------------------------------------------------------------------------------------
Number of vehicles (e) 168,278 160,188 155,159 160,983
Number of employees (e) 37,949 37,336 35,566 35,591
=================================================================================================================================
(a) Earnings from continuing operations for 1989 include a pretax charge of $83 million ($52 million after tax or $0.67 per common
share) related to several unusual items, primarily anticipated losses on accelerated vehicle dispositions, changes to prior
years' workers' compensation loss reserves and staff and facility reductions. Earnings from continuing operations for 1988
include a pretax charge of $66 million ($50 million after tax or $0.63 per common share) related to provision for business
restructurings and revaluation of goodwill.
(b) Net loss for 1993 includes the cumulative effect of a change in accounting resulting in an after tax charge of $25 million
($0.33 per common share), and an after tax charge of $169 million ($2.18 per common share) related to the discontinued
aviation services subsidiaries. Net earnings for 1992 include an after tax gain of $6 million ($0.08 per common share),
related to the final disposition of the discontinued aircraft leasing business. Net earnings for 1991 and 1990 include after
tax charges of $52 million ($0.70 per common share) and $36 million ($0.48 per common share), respectively, for the
discontinuance of the same business. Net earnings for 1989 and 1988 include, in addition to the items discussed in (a) above,
after tax extraordinary losses of $6 million ($0.08 per common share) and $19 million ($0.23 per common share), respectively,
related to the early retirement of debt. Also included in 1988 is a one-time favorable adjustment of $81 million ($1.02 per
common share) for the cumulative effect of a change in accounting for income taxes. Net earnings (loss) for all years include
the results of discontinued operations.
(c) Excludes the cumulative effect of a change in accounting and special charges and gains related to discontinued
operations.
(d) On December 7, 1993, the company completed the spin off of its aviation services subsidiaries by distributing to common
stockholders one share of Aviall, Inc. common stock valued at $16.25 for each four Ryder System,Inc. common shares owned.
The high and low presented for 1993 were the values of the company's common stock after the spin off. The high and low for 1993
prior to the spin off were 33-1/2% and 26-1/4%, respectively.
(e) Excludes discontinued operations.
Average common shares and all per share information have been adjusted for 3% stock dividends in 1983-1984, the March 1985
two-for-one split and the May 1986 three-for-two split, as appropriate.
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Ryder System, Inc. and Consolidated Subsidiaries
- ----------------------------------------------------------------------------------------------------------------------------
1989 1988 1987 1986 1985 1984 1983
- ----------------------------------------------------------------------------------------------------------------------------
3,889,063 3,842,724 3,621,526 3,105,632 2,723,705 2,445,038 2,013,734
54,090 167,131 237,560 232,855 188,686 191,125 160,346
31,975 100,249 149,615 139,317 118,496 115,736 98,375
0.31 1.18 1.82 1.80 1.64 1.62 1.39
45,986 197,173 187,113 160,933 125,316 135,908 101,094
0.50 2.40 2.29 2.09 1.73 1.91 1.43
- ----------------------------------------------------------------------------------------------------------------------------
0.60 0.56 0.52 0.44 0.40 0.36 0.36
77,275 79,641 79,621 74,898 72,410 71,226 70,529
1,419,226 1,406,470 1,227,372 957,084 814,897 702,972 597,179
3.1 9.1 14.8 16.3 15.4 16.8 16.9
18.24 18.71 16.75 14.72 12.20 10.84 9.32
31 1/8 32 1/2 43 35 1/2 24 5/8 19 5/8 19 7/8
19 3/4 22 5/8 20 21 1/2 14 5/8 12 3/4 14 5/8
- ----------------------------------------------------------------------------------------------------------------------------
2,674,884 2,576,568 2,614,018 2,037,824 1,553,100 1,055,471 856,849
2,151,411 2,281,604 2,476,715 1,866,980 1,459,235 1,012,054 828,363
180 162 185 164 160 138 132
226 202 232 214 231 151 146
- ----------------------------------------------------------------------------------------------------------------------------
5,690,450 5,639,674 5,450,809 4,526,087 3,643,599 2,718,591 2,243,860
0.5 2.0 3.5 3.6 3.8 4.8 4.7
83.0 83.5 87.2 83.4 87.2 100.6 96.7
- ----------------------------------------------------------------------------------------------------------------------------
1,017,418 1,004,776 1,006,819 891,601 697,987 658,935 584,334
1,032,056 1,120,751 1,157,993 758,450 768,509 865,463 536,263
- ----------------------------------------------------------------------------------------------------------------------------
163,082 162,633 153,848 134,987 109,644 100,654 85,033
37,628 40,625 36,811 30,865 24,624 21,688 22,770
============================================================================================================================
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BOARD OF DIRECTORS
M. Anthony Burns David T. Kearns (1,3) James W. McLamore (1,4) Alva O.Way (2,3)
Chairman, President and Chairman, New American Chairman Emeritus, Chairman of the Board,
Chief Executive Officer Schools Development Burger King Corporation IBJ Schroder Bank
Corporation and Retired and Trust Company
Arthur H. Bernstein (1,3) Chairman and Chief Executive Donald V. Seibert (1,4)
President and Chief Officer, Xerox Corporation Retired Chairman of the Board Mark H. Willes (2,3)
Executive Officer, and Chief Executive Officer, Vice Chairman,
Bancorp Capital Group, Inc. Lynn M. Martin (2,3) J.C. Penney Company, Inc. General Mills, Inc.
Former U.S. Secretary of Labor;
Edward T. Foote II (2,3) Chairperson, Deloitte & Touche's Hicks B. Waldron (2,4) (1) Audit Committee
President, University of Miami Council for the Advancement Retired Chairman and Chief (2) Compensation Committee
of Women; advisor to Deloitte Executive Officer, (3) Finance Committee
John A. Georges (1,4) & Touche Avon Products, Inc. (4) Committee on Directors and
Chairman and Chief Public Responsibility
Executive Officer,
International Paper Company
(Photo) (Photo)
Vernon E. Jordan, Jr. (1,4)
Senior Partner, Akin, Gump,
Strauss, Hauer & Feld (Left to right) Alva O. Way, Lynn M. (Left to right) John A. Georges, Hicks B.
Martin, M. Anthony Burns, Mark H. Waldron, Vernon E. Jordan, Jr.
Howard C. Kauffmann (2,4) Willes
Retired President,
Exxon Corporation (Photo) (Photo)
(Left to right) James W. McLamore, (Left to right) Edward T. Foote II,
Donald V. Seibert, Howard C. Kauffmann David T. Kearns, Arthur H. Bernstein
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51
CORPORATE MANAGEMENT
M. Anthony Burns Wendell R. Beard R. Ray Goode Dennis M. Klinger
Chairman, President and Executive Vice President- Senior Vice President- Vice President-Management
Chief Executive Officer Office of the Chairman Public Affairs Information Systems
James M.Herron C. Robert Campbell Steven R.Goldberg Lisa A. Rickard
Senior Executive Vice President Executive Vice President- Vice President and Treasurer Vice President-Federal Affairs
and General Counsel Human Resources and
Administration Joshua High Fred Ray Stuever
Edwin A. Huston Vice President-Corporate Tax Vice President-Environment,
Senior Executive Vice President- Anthony G. Tegnelia Health and Safety
Finance and Chief Financial Senior Vice President and J. Wayne Johnson
Officer Controller Vice President-Risk Management H. Judith Chozianin
Secretary
EXECUTIVE COMMITTEE
(Photo)
(Left to Right) Randall E. West, C. Robert Campbell, Dwight D. Denny,
James B. Griffin, Edwin A. Huston, R. Ray Goode, Gerald R. Riordan,
Wendell R. Beard, M. Anthony Burns, James M. Herron, Larry S. Mulkey
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52
DIVISION MANAGEMENT
VEHICLE LEASING &
SERVICES DIVISION
RYDER COMMERCIAL RYDER DEDICATED AUTOMOTIVE INTERNATIONAL DIVISION
LEASING & SERVICES LOGISTICS, INC. CARRIER DIVISION
President President Senior Vice President & General
Dwight D. Denny Larry S. Mulkey RYDER AUTOMOTIVE Manager
CARRIER GROUP, INC. Randall E. West
Senior Vice President- Vice Presidents President
Marketing and Sales William A. Baum James B. Griffin Vice Presidents
J. Ernie Riddle (Finance) Kenneth V. Eckhart
Jerry W. Bowman Executive Vice President Scott R. Francis
Vice Presidents (Central Area) Michael J. Wagner Glenn A. Schneider
& General Managers Shar Javad
Joel E. Biggerstaff (Logistics Services) Vice President RYDER PLC.
(Southeast Region) C. Michael McCanta Roland G. Hill Managing Director
Christopher H. Culley (Western Area) Carl D. Simmons
(Mid West Region) Miles M. Raper A.T.G. AUTOMOTIVE
Robert A. Dickinson (Eastern Area) TRANSPORT GROUP, INC. RYDER TRANSPORT SERVICES, GmbH
(Southwest Region) Vice President & Managing Director
John R. Hosmer RYDER PUBLIC General Manager William A. Gilliham
(Mid Atlantic Region) TRANSPORTATION David N. Flett
Stephen E. Hunt SERVICES
(Northeast Region) Senior Vice President BLAZER TRUCK
Edward R. Justis, Jr. & General Manager LINES, INC.
(Mid South Region) John H. Dorr Vice President
William L. O'Donnell & General Manager
(Great Lakes Region) RYDER CONSUMER Donn B. Whitmer
Douglas M. Slack TRUCK RENTAL
(West Region) President RYDER AUTOMOTIVE
Gerald R. Riordan OPERATIONS, INC.
Vice Presidents Senior Vice Presidents
George E. Arseneau Area Vice Presidents Bruce R. LeMar
Thomas D. Hjertquist Raymond W. Casey Steven C. Nichols
Michael W. Kuryla (Eastern Area)
Tracy A. Leinbach Wayne M. Mincey Vice Presidents
(Central Area) Ronald R. Borges
RYDER TRUCK RENTAL Jack P. Summerville Ronald L. Butterbaugh
CANADA LTD. (Western Area) Vincent E. Fortuna
Vice President & John S. Gottlieb
General Manager Vice President Gerald J. MacDonald
Gordon J. Box David S. Russell Craig J. McGrath
Donald A. Tomrell
PURCHASING & W. Joseph Tripp
ASSET MANAGEMENT
Senior Vice President
Franklin W. Stephens
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53
RYDER IN THE MARKETPLACE
VEHICLE LEASING & SERVICES DIVISION
Ryder Commercial Leasing & Services
Ryder Dedicated Logistics, Inc.
Ryder Consumer Truck Rental
Ryder Student Transportation Services, Inc.
Ryder Truck Rental Canada Ltd.
ATE Management and Service Company, Inc.
Ryder Move Management, Inc.
Managed Logistics Systems, Inc.
AUTOMOTIVE CARRIER DIVISION
Automobile Transport Inc.
Blazer Truck Lines Inc.
Commercial Carriers, Inc.
Delavan
F.J. Boutell Driveaway Co., Inc.
MCL Motor Carriers Limited
QAT, Inc.
INTERNATIONAL DIVISION
Ryder Plc. (United Kingdom)
Ryder Transport Services, GmbH (Germany)
Ryder Polska Sp.z o.o (Poland)
- --------------------------------------------------------------------------------
DIVIDEND REINVESTMENT PLAN
Stockholders may automatically reinvest their dividends and cash in additional
shares of Ryder System stock by enrolling in the company's Dividend
Reinvestment Plan. Costs of the plan are paid by the company.
Information about the Dividend Reinvestment Plan may be obtained by writing
to the following address:
First Chicago Trust Company of New York
Ryder Dividend Reinvestment Plan
Post Office Box 2598
Jersey City, New Jersey 07303-2598
(201) 324-0498
CORPORATE INFORMATION
ANNUAL MEETING
The annual meeting of stockholders of Ryder System, Inc. will be held at 11:00
a.m., Friday, May 6, 1994, at the Miami Airport Hilton and Towers, 5101 Blue
Lagoon Drive, Miami, Florida. A formal notice of the meeting, together with a
proxy statement and a form of proxy, was mailed to each stockholder with this
annual report.
STOCKHOLDER INFORMATION AND 1993 FORM 10-K
For stockholder information or to obtain without charge a copy of Ryder
System's Form 10-K Annual Report to the Securities and Exchange Commission,
which will be available after March 31, 1994, please write to:
Robert H. Tromberg
Group Director-Investor Relations
Ryder System, Inc.
3600 N.W. 82nd Avenue
Miami, Florida 33166
AUDITORS
KPMG Peat Marwick
Certified Public Accountants
One Biscayne Tower
Suite 2900
2 South Biscayne Boulevard
Miami, Florida 33131
TRANSFER AGENT AND REGISTRAR
First Chicago Trust Company of New York
Post Office Box 2500
Jersey City, New Jersey 07303-2500
(201) 324-0498
COMMON STOCK LISTINGS
New York Stock Exchange
Midwest Stock Exchange
Pacific Stock Exchange
STOCK SYMBOL: R
EXECUTIVE OFFICES
Ryder System, Inc.
3600 N.W. 82nd Avenue
Miami, Florida 33166
(305) 593-3726
49