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EXHIBIT 13.1
[PHOTO]
[RYDER Logo]
1994 ANNUAL REPORT
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Ryder System is an international company doing business in the Americas and
Western Europe, whose vision is to serve its customers with the best value in
logistics and transportation solutions, around the world or around the corner.
CONTENTS
Letter to Shareholders 3
Understanding the Need 7
Responding to the Need 13
Introduction to Financial Section 25
Financial Review 26
Selected Finanical and Operational Data 32
Report of Management and Independent Auditors' Report 33
Consolidated Financial Statements 34
Notes to Consolidated Financial Statements 37
Supplemental Financial Data 47
Glossary of Industry Terms 50
Board of Directors and Corporate Management 54
Operating Management 55
Corporate Information 56
Corporate Responsibility 57
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FINANCIAL HIGHLIGHTS Ryder System, Inc.
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(Dollars in thousands, except per share amounts) 1994 1993 Change
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OPERATING DATA:
Revenue $ 4,685,603 4,217,030 +11%
Earnings from continuing operations $ 153,529 114,722 +34%
Net earnings (loss) (a) $ 153,529 (61,424) N/A
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FINANCIAL DATA:
Total assets $ 5,014,473 4,258,388 +18%
Total shareholders' equity $ 1,129,024 990,181 +14%
Return on average common equity (b) 14.5% 10.2% +4.3 pts.
Debt to equity 169% 155% +14 pts.
Debt to tangible equity 227% 202% +25 pts.
Total capital spending $ 1,914,736 1,237,521 +55%
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PER COMMON SHARE DATA:
Earnings from continuing operations $ 1.95 1.43 +36%
Net earnings (loss) (a) $ 1.95 (0.84) N/A
Book value $ 14.33 12.81 +12%
Cash dividends $ 0.60 0.60 -
Market price (high-low) (c) $ 28-19 7/8 26 5/8-24 3/4
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OTHER DATA:
Common shareholders of record 19,605 19,025 +3%
Common shares outstanding 78,760,742 77,294,484 +2%
Number of vehicles 188,831 168,278 +12%
Number of employees 43,095 37,949 +14%
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(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. See "Notes to Consolidated Financial Statements" for
additional discussion.
(b) Excludes the cumulative effect of a change in accounting and special
charges 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.
LINES OF BUSINESS
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(In thousands) 1994 1993 1992 1991 1990
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REVENUE:
Vehicle Leasing & Services $4,057,735 3,596,803 3,384,952 3,229,437 3,285,742
Automotive Carriers 645,402 634,634 651,216 645,051 688,971
Other - - - - 3,267
Intersegment (17,534) (14,407) (16,493) (23,154) (27,956)
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Total $4,685,603 4,217,030 4,019,675 3,851,334 3,950,024
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EARNINGS FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES:
Vehicle Leasing & Services $ 234,258 204,370 135,291 52,511 79,711
Automotive Carriers 50,078 31,955 48,220 24,318 22,604
Other (23,817) (26,549) (17,966) (16,350) (3,625)
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Total $ 260,519 209,776 165,545 60,479 98,690
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(Copyright 1995) Ryder System, Inc.
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PERFORMANCE HIGHLIGHTS
Earnings per share from
Revenue (in millions) continuing operations
[FIGURE 1] [FIGURE 3]
1990 - $3,950 1990 - $0.64
1991 - $3,851 1991 - $0.28
1992 - $4,020 1992 - $1.17
1993 - $4,217 1993 - $1.43
1994 - $4,686 1994 - $1.95
Expansion of contractual Earnings increased while
business contributed to also making major
the company's 11% revenue investments in logistics,
growth during 1994. marketing and sales,
and reengineering.
Return on Average Full Service Lease
Common Equity Customer Satisfaction Index
[FIGURE 2] [FIGURE 4]
1990 - 5.0% 1990 - 81.0
1991 - 4.2% 1991 - 80.4
1992 - 8.1% 1992 - 82.6
1993 - 10.2% 1993 - 83.7
1994 - 14.5% 1994 - 84.5
Return on average common Customer satisfaction with
equity approaches the com- the company's full service
pany's 17% goal. truck leasing product con-
tinues to climb.
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LETTER TO SHAREHOLDERS
[PHOTO]
M. ANTHONY BURNS
In terms of both revenue and earnings from continuing operations, 1994 was
Ryder's strongest year ever. All of our business units contributed to the
record-setting performance, and we are particularly pleased with the growth in
our long-term, contractual businesses, which helps reduce our sensitivity to
the inevitable peaks and valleys of the economy.
STRONG FINANCIAL PERFORMANCE IN 1994
Revenue from continuing operations in 1994 was $4.7 billion, 11% greater than
revenue of $4.2 billion in 1993 and the highest percentage increase in revenue
since 1987. Earnings from continuing operations rose to $154 million, or $1.95
per share, an increase in earnings per share of 36%, compared with $115
million, or $1.43 per share, in 1993. It is important to note that we achieved
this performance while continuing to make major investments in logistics,
marketing and sales, and reengineering.
In dedicated logistics, we enjoyed revenue growth in excess of 20%.
The strong momentum of Ryder Dedicated Logistics was demonstrated by fourth
quarter revenue growth of 33%, making the unit - for the first time - the
company's second largest revenue generator. A 7% rise in revenue, with 9%
growth in the fourth quarter, was recorded in full service truck leasing, still
our largest business unit, with much of the increase coming from new customers.
This bodes well for the future, because the bulk of this unit's growth has come
historically from expanding business with existing customers.
Net new sales of long-term, contractual business were excellent; in
fact, sales of new full service truck leasing and dedicated logistics contracts
exceeded previous highs. Ryder Plc, our United Kingdom subsidiary, experienced
a 45% revenue increase in the fourth quarter of 1994, benefiting from continued
growth in existing contractual business and several strategic acquisitions made
during the year.
Our return on equity in 1994 was 14.5%, moving us ever closer to our
goal of a 17% return on equity in the next several years. Asset turnover was
nearly 100%, and our capital spending reached $1.9 billion, the majority of
which was invested in our long-term, contractual product lines. Our balance
sheet is strong and our cash flow is solid.
A REFINED VISION
We refined our vision to reflect the exciting developments that are taking
place within Ryder, our industry, and the markets we serve. We have also
modified our organization to promote teamwork and ensure that our structure is
aligned with our vision. Our vision is: Ryder will serve its customers with the
best value in logistics and transportation solutions around the world or around
the corner.
Today, as never before, our customers expect excellent value from the
solutions we offer, and we intend to deliver just that. Importantly, while
increasing customer value is the key
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to success in today's - and tomorrow's - marketplace, it is also central to
building shareholder value. Our vision is reinforced by ever-increasing demands
in the marketplace:
- Reengineering efforts often lead companies to the conclusion that they
should be focusing their efforts on their core competencies while
outsourcing their non-core functions.
- The speed with which companies deliver their products has taken on new
significance as reduced cycle times yield competitive advantage.
- Controlling costs, particularly in the area of inventory investment,
is critical.
- The battle for market share is being fought globally. This creates
huge logistics challenges for companies as they develop efficient
strategies to distribute their products throughout their markets.
- More companies now see the need for formal logistics strategies.
To fulfill our vision and capitalize on the significant opportunities
arising from the marketplace needs, we are leveraging our core competencies of
logistics management and asset management by focusing on three areas of
emphasis. First, we will stress the value of the solutions we provide. Second,
we will seek to increase the volume of business being done within each of our
business units. Finally, we will continue to lower our cost structure.
[PHOTO]
We are using the power
of information technology
to add value, allowing
our customers to replace
inventory with information.
ADDING VALUE
Our value-added services help drive down our customers' costs, while allowing
our customers to better serve their own customers. We continue to introduce
new, high quality products and services to the market; in 1994, we expanded our
services in transportation management (carrier selection) and inventory
deployment to help fill out our integrated logistics capabilities. Acquisition
and alliance activities are a key part of our strategy in order to compress the
time required to introduce these services.
We are also taking our value-added services into new industries.
Just-in-time delivery, for example, a service we have been providing primarily
to the automotive industry, is one that we are now expanding to serve such
other industries as electronics and appliances.
In addition, we are using the power of information technology to add
value. Flow-through distribution services, enabled by technology, are allowing
our customers to replace inventory with information. Introducing technology
into our shop management services helps our customers better manage their
transportation activities through improved management reporting. Technology is
also a key enabler for our expanded services in the area of carrier management.
We have added to our sales force and also improved our training and
support efforts. We believe our sales force is the best prepared in the
industry when it comes to helping our customers solve complex logistics and
transportation issues, and we are continuing to build our expertise in the area
of logistics system design. Our market coverage strategy is built around teams
consisting of sales, operations and logistics managers.
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[PHOTO]
We have added to
our sales force and also
improved our training
and support efforts. We
believe our sales force
is the best prepared in
the industry.
[PHOTO]
Increased growth
will come through
the development of
new markets as well
as expanding our
penetration in
existing markets.
These teams are organized, and performance-compensated, around the customer in
order to speed decision making and pursue continuous customer improvement. We
have implemented new pricing strategies and tools in order to better find and
price value throughout the marketplace.
INCREASING VOLUME
We need to increase our volume in order to grow. Our robust volume growth in
1994 confirms the value we are providing to our customers. Ryder's full service
truck leasing and dedicated logistics businesses added approximately 2,500 new
customers in 1994, and expanding our business with existing customers also
generated a significant portion of our revenue growth. Our fleet grew 12%
during the year to a total of almost 190,000 vehicles.
Increased growth will come through the development of new markets as
well as expanding our penetration in existing markets. Telecommunications is a
good example of a new market where significant progress has been made, and we
are continuing to improve our penetration of the automotive, bakery, and
beverage industries. We study the needs of the industries we target, develop
new information systems and equipment to meet those needs, and hire industry
specialists who understand the "ins and outs" of the business and can speak to
customers in their own language.
Our logistics and full service truck leasing businesses are also
growing outside the U.S. In the United Kingdom, we made several acquisitions in
1994 which will provide a solid base from which we can hasten the growth of our
distribution business, and we have strengthened our operations in Germany and
opened new operations in Mexico. We will serve our existing customers as they
expand in these markets, and, of course, seek to provide our services to
companies that are already there. As we expand in Western Europe and the
Americas, we will use the experience and expertise gained in Germany and Mexico
to help us.
ENHANCING SERVICES WHILE LOWERING COSTS
The key to increasing customer value and lowering our cost structure lies in
reengineering, where we are using technology and process changes to drive
efficiencies. Information technology will help us take costs out. Building and
changing processes provides the discipline to make sure unnecessary costs don't
creep back in.
Since we began our reengineering efforts, we have invested
approximately $85 million in three crucial areas:
- Marketing and sales, providing innovation in account management,
knowledge-based marketing, and improved purchasing and asset
management processes;
- Vehicle maintenance, automating the shop environment and equipping our
service technicians with state-of-the-art electronic diagnostic tools;
and
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[PHOTO]
We are automating our
maintenance shops and
equipping our service
technicians with state-of-
the-art electronic tools.
- Administration and finance, including a redesign of our invoice and
billing processes to make them more customer friendly.
We are sensitive to the impact that reengineering will have on the way
we do business, and we are investing in change management processes to enhance
the success of program implementation.
The success of our ongoing reengineering initiatives was recognized in
early 1995 when the consulting firm Arthur D. Little announced that Ryder was
included in Little's 1995 "Best of the Best" list. Little's annual Best of the
Best program recognizes 20 companies that have developed and implemented
outstanding standards in six critical business processes: customer management,
process management, manufacturing management, product and technology
management, supply chain management and environmental management.
Our standing as the leader in third-party logistics was similarly
recognized during 1994, in a survey conducted by Northeastern University and
Mercer Management Consulting among CEOs of companies that identify themselves
as offering logistics services. According to that survey, Ryder is seen at the
top of the list of "today's winners" and further out in front "three years from
now."
BOARD OF DIRECTORS
Before closing this letter, I want to take a moment to acknowledge the return
of Paul J. Rizzo, retired vice chairman of International Business Machines
Corporation, to our board of directors, effective January 1, 1995. It is a
pleasure to have Mr. Rizzo back with us.
A LOOK AHEAD
I have seen this company and the markets we serve change in ways that would
have been impossible to predict just a few years ago. Today, we are
transforming Ryder into a world class, integrated logistics company capable of
delivering a broad base of customized, yet flexible products and services that
can manage all, or part, of a customer's supply chain. We are on track to
achieve our vision as we continue to drive toward a culture that is
market-driven and fosters teamwork, collaboration and learning.
I thank our employees for their limitless talent and devotion, our
customers for giving us the opportunity to serve them, and our shareholders for
your continued support.
M. Anthony Burns
Chairman, President and Chief Executive Officer
February 17, 1995
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[PHOTO]
UNDERSTANDING THE NEED
THE ROLE OF LOGISTICS AND TRANSPORTATION
IN TODAY'S GLOBAL ECONOMY
Call it distribution or logistics or supply-chain management. By whatever name,
it is the sinuous, gritty, and cumbersome process by which companies move
materials, parts, and products to customers.... Hard-pressed to knock out
competitors on quality or price, companies are trying to gain an edge through
their ability to deliver the right stuff in the right amount at the right time.
FORTUNE, November 28, 1994
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EFFICIENCIES IN LOGISTICS AND TRANSPORTATION HAVE BECOME JUST AS IMPORTANT TO
STRATEGIC PLANNING AS IMPROVEMENTS IN MANUFACTURING AND MARKETING.
Logistics and transportation services form the cornerstone of a steady shift in
the way business is conducted in the global marketplace of the 1990s. Once
regarded simply as overhead, these disciplines are now recognized as strategic
and are used by sophisticated companies as a competitive weapon to improve
customer service, control costs, reduce cycle time and increase margins.
Producing and marketing world class products used to be enough to guarantee
success. That is no longer true. Successful companies have found that speed -
delivering the right products in the right quantity to the right place at the
right time - at the right cost - is the key differentiator today.
Nearly 80% of more than 1,300 corporate executives surveyed by Ryder
agree. They said that product delivery is just as important as a product's
quality. In addition, their customers have come to expect high quality at a
reasonable price. Therefore, finding efficiencies in logistics and
transportation has become just as important to their strategic planning as
improvements in manufacturing and marketing.
This trend has catapulted interest in logistics and transportation
from the loading dock to the corporate boardroom. A recent survey by KPMG Peat
Marwick LLP found that the logistics function now reports to the president or
chief executive officer in 29% of the 309 companies surveyed. The top two
concerns of executives in the KPMG study were cost control and inventory
JUST IN TIME
300 TIMES [PHOTO] [PHOTO] [PHOTO] [PHOTO]
A DAY, Thursday, 9 a.m.: A Workers load The drivers check Spring Hill,Tennesee,
365 DAYS Ryder truck arrives speedometers and the on-board com- Friday, 3 a.m.: The
A YEAR at a Saturn supplier odometers packed in puter, which tells truck parks its trailer
in Winchester, reusable bins. them where they at a computer-
Virginia. should go, how to assigned spot.
get there, and how
long it should take.
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management. To achieve gains in both, more and more companies are focusing on
transportation and logistics.
ON A BROAD SCALE AMERICAN COMPANIES ARE TAPPING INTO A TREMENDOUS RESOURCE -
CASH PREVIOUSLY TIED UP IN EXCESS INVENTORY - BY MORE EFFCIENTLY MANAGING THE
IN-BOUND FLOW OF MATERIAL.
THE BACKBONE OF COMMERCE
As the amount spent on global freight and passenger transportation continues to
rise, productivity is being boosted also as both companies and their
transportation partners become more sophisticated. The Eno Transportation
Foundation, Inc., which tracks vital U.S. freight and passenger statistics,
estimates that freight costs increased to over $390 billion in 1993 (truck
freight expenditures represent almost 80 of this figure). Yet distribution
costs as a percentage of gross domestic product declined by 33% from 1981 to
1992, according to Cass Information Systems.
"Taken together," writes Keith G. Biondo, publisher of Inbound
Logistics magazine, "these two facts show that on a broad scale American
companies are tapping into a tremendous resource - cash previously tied up in
excess inventory - by more efficiently managing the in-bound flow of material.
Companies are using top carriers and premium services to do this for them, or
to help them do it themselves."
Dr. Douglas M. Lambert, the Prime F. Osborn III Professor of
Transportation and Logistics at the University of North Florida, describes the
importance of supply chain management this way: "For many manufacturers,
wholesalers and retailers, investments in inventory represent the largest
single component
[PHOTO] [PHOTO] [PHOTO] [PHOTO] [PHOTO]
A driver downloads The Ryder 12:53 p.m.: The trailer ...for Saturn and unwrap pre-
the key-shaped floppy mainframe arrives at one of workers to unload inspected parts to
disk from his on-board generates perfor- Saturn's 56 receiving the bins... ready them for the
computer into mance reports docks, just in time... production line.
Ryder's mainframe. for Saturn.
Text, photos and captions excerpted from "Delivering the Goods" by Ronald
Henkoff, FORTUNE (November 28, 1994) (c) 1994 Time Inc. Reprinted by
permission.
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of a company's corporate assets. Utilizing efficient supply chain management
concepts and integrated information systems can result in increased customer
service, less inventory on hand, decreased transportation and warehousing
costs and improvements in cash flow and return on assets."
These factors take on even greater significance as companies reach out
to large new markets around the world, aided by trade pacts such as the General
Agreement on Tariffs and Trade (GATT) and the North American Free Trade
Agreement (NAFTA). Three-quarters of the world's highway transportation market
lies outside the U.S., with Europe and Latin America representing 23% and 14% of
the world's market, respectively.
CORPORATIONS AND PUBLIC SECTOR ORGANIZATIONS ARE EVALUATING THEIR LOGISTICS AND
TRANSPORTATION PROCESSES IN ORDER TO FIND MORE EFFICIENT AND LESS EXPENSIVE
WAYS TO MANAGE INVENTORY AND MOVE FREIGHT OR PEOPLE.
Research by Bernard J. La Londe, Mason Professor of Transportation and
Logistics at The Ohio State University, in conjunction with Cass Information
Systems, identified the "global perspective" as one of five reasons why
transportation and logistics have become such important topics among U.S.
corporate executives:
Global marketing perspective - executives are thinking about global market
suppliers and competitors as well as local ones.
Reduced order cycle times - the average transit time from factory to shelf in
the U.S. is expected to decrease from 60 hours to 38 hours by the year 2000.
Shift from transactional to contractual/relationship linkages among companies -
the percentage of freight moving under contract in 1990 was 45%; that number is
expected to grow to 75% by the year 2000.
Replacing inventory with information in the logistics process - taking excess
inventory out of the pipeline is key to speeding the process and saving money.
Improved asset productivity - maximizing utilization of assets will
increasingly be seen as the primary way to bring value to customers. This means
more miles per truck, fewer vehicles on hand, filling vehicles to capacity, and
maintaining vehicles when they are not used, anywhere, any place or any time of
the day or night.
TREND TOWARD OUTSOURCING
The pressures of global competition are causing many companies to concentrate
their resources on their core businesses. As a result, corporations and public
sector organizations are evaluating their logistics and transportation
processes in order to find more efficient and less expensive ways to manage
inventory and move freight or people, whether it is around the corner or around
the world. Increasingly, they are turning to third-party providers like Ryder
which use sophisticated systems to meet those challenges. The best third-party
providers have the ability to keep pace with current technology by leveraging
their assets and expertise for the benefit of all their
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customers. They achieve economies of scale that enable them to control costs
and, in the end, provide competitive advantages for their customers.
While third-party suppliers did $6 billion in full service truck
leasing business and, according to Cass Information Systems, $16 billion in
logistics business in the U.S. in 1993, it is widely believed that both of
these businesses are underpenetrated. Professor Donald J. Bowersox of Michigan
State University's Eli Broad Graduate School of Management writes that "the
growth potential of leasing and contract logistics is limited only by the
combined imagination of service providers and their customers."
Research supports this. A study of fortune 500 manufacturing companies
by Professor Robert C. Lieb of Northeastern University's College of Business
Administration found that as the acceptance of transportation and
logistics-related outsourcing continues to grow, so too does the level.
Third-party logistics contracts which involve the out sourcing of all primary
functions across a company's logistic channel are occurring with greater
frequency. Therefore, there is a growing need for single-source providers
capable of supplying cost-effective, integrated solutions.
The decision to outsource logistics and transportation products and
services by world class companies like those surveyed by Professor Lieb
typically begins with an internal assessment of whether the company can manage
and/or execute an integrated logistics strategy on its own in a cost-effective
manner. Some can, and do it well. If the company decides to seek
LOGISTICS HELPS XEROX
KEEP ITS CUSTOMERS SATISFIED
Excellence in business today means continually improving customer satisfaction,
while at the same time controlling costs. Xerox understands this formula for
success, as well as the role that logistics plays in bringing it to life.
Xerox has been working with Ryder Dedicated Logistics for many years.
Ryder is the largest third-party provider operating out-bound logistics systems
for Xerox in which the traditional role of drivers has been significantly
expanded. Ryder drivers are, in fact, highly trained customer service
representatives that not only deliver office equipment to Xerox customers, but
they also install the equipment and familiarize the office staff on its
operation. Drivers are an integral component of the overall logistics process
Ryder Dedicated Logistics manages for Xerox that includes: management of
flow-through logistics centers, final equipment assembly, delivery,
installation, equipment familiarization and the recovery and shipment of
equipment being replaced.
[PHOTO]
The resulting benefit of this integrated process is that Xerox is able to
cost-effectively compress the time it takes to fulfill a customer's order,
enhancing customer satisfaction. The speed at which a company can deliver a
product to the customer can mean the difference between winning and losing in
today's competitive, time-based marketplace.
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the assistance of a third-party provider for some or all of the services it
needs, there is a broad range of logistics and transportation products and
services offered in the marketplace.
COMPLEX SERVICES LIKE INTEGRATED LOGISTICS REQUIRE HIGHLY TRAINED PERSONNEL AND
SOPHISTICATED LOGISTICS INFORMATION SYSTEMS, AND INVOLVE LONG-TERM PARTNERSHIPS
BETWEEN PROVIDERS AND SHIPPERS.
These products and services have varying degrees of complexity and
customization associated with each. They include services such as common and
for-hire transport via highway, air, rail or water; warehousing; freight
payment; dedicated contract carriage; traffic management; import/export
management; and integrated logistics management of the entire supply chain.
Complex services like integrated logistics require highly trained personnel and
sophisticated logistics information systems, and involve long-term partnerships
between providers and shippers.
Cass Information Systems Executive Vice President Bob Delaney cites
three additional reasons why companies outsource their logistics and
transportation needs in his "Fifth Annual State of Logistics Report." They
include:
Financial leverage - outsourcing permits a company to get out of the
transportation business, reducing equipment, facilities and personnel, as well
as freeing up cash and improving return on investment.
Freeing up management - companies can focus on their core business activities
like manufacturing, marketing, or research and development. No more worrying
about complex government regulations or inventory buffers.
Risk reduction - the right provider has better resources to keep a company's
distribution network running in spite of unexpected disaster, wherever it
strikes. Earthquakes, fire, floods, snow and strikes all wreak havoc on
smaller, less flexible internal organizations.
These developments in transportation and logistics are not only
changing the way products are sold, they are radically changing the way
products are designed, manufactured and delivered. The impact of this is
increasingly being felt in a wide range of businesses, such as the automotive,
appliance and grocery industries, and in public sector organizations for their
passenger transportation and fleet maintenance functions.
Today's advanced logistics and transportation products and services
are making global markets more accessible to more businesses. Most logistical
accomplishments occur outside the glare of public attention; most consumers are
unaware of the savings they have reaped in the past decade as a result of
advances in logistics and transportation technologies. Clearly, a major
opportunity exists for leaders in these disciplines to redefine their
businesses and build even greater growth in the coming years. Ryder is one of
the few companies that has the resources and track record to meet this
challenge.
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[FIGURE 5]
Revenue of $4.7 billion
Dedicated Logistics - 15%
Full Service Leasing - 35%
Commercial and Consumer Rental - 23%
Automotive Carriers - 14%
Public Transportation Services and Other - 13%
RESPONDING TO THE NEED
HOW RYDER USES LOGISTICS AND TRANSPORTATION
SOLUTIONS TO HELP ITS CUSTOMERS BECOME MORE COMPETITIVE
Today's increasingly global economy presents a clear and growing need for
sophisticated, information-based logistics and transportation solutions and the
resulting benefits of improved customer service, reduced inventory, lower
overall costs, and greater speed to market. No company better understands the
need and how to deliver the benefits - indeed, no one is better positioned to
lead the growth in partnered logistics and transportation services - than
Ryder.
Ryder is a market-driven company focused on two core competencies -
asset management and logistics management - that enable the company to provide
customized, cost-effective logistics and transportation solutions to customers.
The company leverages its core competencies across all of its business
units. Through close coordination, Ryder is able to deliver to its customers a
comprehensive range of products and services, ranging from a single truck
rental to a complex integrated logistics system, seamlessly and efficiently.
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LOGISTICS
Ryder Dedicated Logistics is the company's fastest growing business unit,
providing logistics reengineering, logistics operations and logistics
management solutions for hundreds of customers in a multitude of industries,
including such familiar names as Saturn, Xerox, Northern Telecom, The Wall
Street Journal, and Delphi Energy and Engine Management Systems (formerly AC
Delco Systems).
Dedicated logistics enjoyed significant revenue growth during 1994
making the unit - for the first time - the company's second largest revenue
generator. Revenue growth accelerated over the second half of 1994, as
strategic investments in reengineering and marketing to expand the company's
logistics capabilities began to take effect.
This business unit is steadily building competencies to position
itself as the first and best single-source integrated logistics provider,
managing its customers' entire supply chain, from raw materials to finished
product distribution. The business unit was selected in 1994 to provide
logistics services by such world class companies as Mercedes-Benz, BellSouth
and Whirlpool.
THIS BUSINESS UNIT IS STEADILY BUILDING COMPETENCIES TO POSITION ITSELF AS THE
FIRST AND BEST SINGLE-SOURCE INTEGRATED LOGISTICS PROVIDER, MANAGING ITS
CUSTOMERS' ENTIRE SUPPLY CHAIN, FROM RAW MATERIALS TO FINISHED PRODUCT
DISTRIBUTION.
DEDICATED LOGISTICS REVENUE
(in millions)
[FIGURE 6]
1990 $337
1991 $416
1992 $498
1993 $569
1994 $692
The integrated logistics system that Ryder has been selected to
operate for Whirlpool is one of the most comprehensive, non-automotive systems
in the U.S. Ryder is responsible for transporting material and components from
suppliers nationwide to eleven Whirlpool manufacturing facilities. In-bound
loads are "mixed and matched" according to the changing needs of Whirlpool's
flexible manufacturing plants, which can quickly convert from producing one
appliance model to another.
Whirlpool is just one of an increasing number of Ryder customers
demanding a more complete range of information-based logistics service
offerings. The acquisition of LogiCorp in 1994 gave Ryder the sophisticated
information technology needed to deliver cost-efficient carrier management to
its customers for all freight modes - domestically or internationally - whether
it be by air, rail, sea, highway or an intermodal combination. Through
alliances, Ryder has also expanded its service offerings in the area of
inventory management.
In a study conducted in 1994 by Mercer Management Consulting and
Northeastern University, chief executive officers of 22 logistics firms - many
direct competitors of Ryder - were asked to rank the country's leading
third-party logistics providers. Ryder finished in first place. The study
went on to ask which provider would be the leader in three years. Ryder was
again ranked first, by an even wider margin.
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"Ryder offered us a creative plan that places responsibility for our
sophisticated and complex logistics operations under one roof. We expect the
new system to reduce costs, improve quality, and reduce our overall order
processing and manufacturing cycle time."
Dan E. Prickett,
Director of Inbound
Logistics, Whirlpool
North American
Appliance Group
[PHOTO]
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[PHOTO]
"Ryder plays an important role in delivering the commitment Pepperidge Farm has
made to its customers and consumers in providing the freshest product possible
to the market."
Stephen D. Gould,
Vice President
of Distribution,
Pepperidge Farm, Inc.
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PUBLIC TRANSPORTATION
Ryder's logistics expertise extends to its Public Transportation Services unit,
which includes student transportation, public transit and public fleet
maintenance. Performance of this unit was up solidly in 1994. Ryder is one of
the largest providers of student transportation services in the U.S.,
transporting more than 440,000 students in 20 states to and from school each
day. Through ATE Management and Service Company, Ryder operates or manages 89
public transit systems, ranging from computer-routed dial-a-ride vans for
seniors and persons with disabilities, to fixed-route and commuter express bus
services. Ryder/MLS is the nation's leading provider of municipal fleet
management and maintenance services. MLS maintains thousands of vehicles for
local governments and utilities, including police, fire, construction and other
public works vehicles.
PUBLIC TRANSPORTATION
SERVICES REVENUE
(in millions)
[FIGURE 7]
1990 - $256
1991 - $272
1992 - $324
1993 - $345
1994 - $365
FULL SERVICE TRUCK LEASING
Full service truck leasing continues to be Ryder's largest business and the
foundation upon which Ryder's other units rest. The full
FULL SERVICE LEASE AND
PROGRAMMED MAINTENANCE
REVENUE (in millions)
[FIGURE 8]
1990 - $1,684
1991 - $1,725
1992 - $1,718
1993 - $1,750
1994 - $1,866
INVESTMENTS IN TECHNOLOGY, SALES AND MARKETING, AND REENGINEERING HAVE GREATLY
ENHANCED RYDER'S FULL SERVICE TRUCK LEASING PRODUCTS AND SERVICES, AND HAVE
HELPED THE COMPANY TO SUSTAIN ITS LEADERSHIP AND GROWTH POTENTIAL IN THE
MARKETPLACE.
service leasing unit provides nearly all the vehicles used by Ryder to serve
logistics customers, as well as maintenance for Ryder's truck rental fleets and
its Public Transportation Services vehicles.
Ryder offers its customers a flexible and immediate range of full
service truck leasing products and services. With more than 13,000 customers,
including such well-known companies as Pepsi-Cola, Home Depot, and
International Paper, Ryder is the largest full service truck leasing company in
the world.
Full service truck leasing reported a 7% increase in revenue in 1994,
with much of the increase coming from new customers. Investments in
technology, sales and marketing, and reengineering have greatly enhanced
Ryder's full service truck leasing products and services, and have helped the
company to sustain its leadership and growth potential in the marketplace.
At the heart of Ryder's full service truck leasing success is its
expertise in asset management. Ryder professionals purchase, manage, maintain
and dispose of trucks better than anyone in the business.
Included in Ryder's total fleet of almost 190,000 vehicles (one of the
world's largest) are nearly 90,000 full service lease vehicles. The
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company's network of more than 1,000 maintenance facilities allows customers
to get responsive vehicle service no matter where they are or when they need
it. Ryder's facilities are being equipped with Ryder Fast Track Maintenance
technology used to maximize vehicle "uptime" by more quickly and accurately
scheduling work, capturing valuable vehicle performance data, and diagnosing
and repairing vehicle problems.
One customer that relies heavily upon Ryder's maintenance expertise is
Pepperidge Farm, which has been working with Ryder since 1974 and currently has
more than 80 tractors, nearly 120 trailers and 10 straight trucks under full
service lease. Consumers have come to expect the freshest products from
Pepperidge Farm, making the dependability and productivity of its vehicles a
particularly important concern.
COMMERCIAL AND CONSUMER
RENTAL REVENUE
(in millions)
[FIGURE 9]
1990 - $892
1991 - $778
1992 - $836
1993 - $936
1994 - $1,140
TRUCK RENTAL
Ryder's two truck rental fleets - one serving commercial customers, the other
primarily consumers - recorded higher revenue
RYDER HAS SUCCESSFULLY DIFFERENTIATED ITSELF IN THE RENTAL MARKETPLACE THROUGH
SUCH PROGRAMS AS THE COMMERCIAL TRUCK RENTAL GUARANTEE, WHICH PROMISES THAT
VEHICLE CHECK-IN OR CHECK-OUT WILL NOT TAKE MORE THAN 20 MINUTES, AND THE
VEHICLE WILL BE PROPERLY MAINTAINED, CLEAN AND ROAD-READY.
in 1994, thanks to a strong economy and successful marketing programs that
boosted vehicle utilization.
Ryder is the world's largest commercial truck rental company and, with
its fleet of more than 41,000 commercial rental vehicles, helps businesses meet
their short-term transportation needs efficiently and cost-effectively. Ryder
has successfully differentiated itself in the rental marketplace through such
programs as the Commercial Truck Rental Guarantee. The company's promise is
that vehicle check-in or check-out will not take more than 20 minutes, and the
vehicle will be properly maintained, clean and road-ready. Such distinctive
service is crucial, because truck rental is often a customer's first experience
with Ryder. Therefore, that first impression can play a key role in the
customer's decision to convert later to a full service truck lease.
The commercial rental fleet is also used to supply replacement and
initial start-up vehicles to Ryder's full service lease and logistics
customers, and to supplement these customers' full-time fleets during peak
demand periods.
Ryder's more than 34,000 yellow consumer rental trucks are a familiar
sight on the nation's highways and come equipped with the features that
do-it-yourself movers want, such as air conditioning, automatic transmissions
and AM/FM radios.
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[PHOTO]
"We used a 24-foot Ryder truck and car carrier to move our belongings from
Chicago to Atlanta. Ryder was the most convenient company for us to rent from
because they had dealerships in our neighborhoods in both Chicago and Atlanta."
Curtis and Julia Phillip,
Lithonia, Georgia
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[PHOTO]
"Ryder's automotive carriers have been transporting Chrysler vehicles to
dealers for nearly 60 years. As our customers' needs have changed, our products
have changed, and Ryder has changed with us. When it comes to transportation,
it's fair to say that Ryder delivers."
Edward J. Krajca,
Director Logistics
Procurement and Supply,
Chrysler Corporation
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The company prides itself on being the most convenient company for the
do-it-yourself mover. Its over 4,800 dealers are located throughout North
America. In addition to renting trucks, they offer a variety of moving supplies
such as boxes, sealing tape and packing material. Ryder also provides its
customers with instructional brochures, offers discounts to AAA members and
maintains a 24-hour toll-free service hotline. RyderFIRST(R), the first
nationwide automated reservation system for dealers in the consumer truck
rental industry, is designed to ensure that the right truck is available to the
consumer at the right time and at the right price, and also enables Ryder to
more efficiently manage its fleet and maximize utilization.
Ryder Move Management arranges cost-effective moves - both truck
rental and van line - for clients such as Procter & Gamble and Bank of America.
AUTOMOTIVE CARRIERS
REVENUE
(in millions)
[FIGURE 10]
1990 - $689
1991 - $645
1992 - $651
1993 - $635
1994 - $645
AUTOMOTIVE CARRIERS
Ryder's Automotive Carrier Division had an excellent year in 1994. Earnings
were higher as a result of continued strength in
IN ORDER TO ENSURE THE MOST EFFICIENT, DAMAGE-FREE DELIVERY FOR ITS CUSTOMERS,
RYDER PROVIDES ITS DRIVERS WITH EXTENSIVE TRAINING ON HOW TO SAFELY DRIVE THEIR
VEHICLES AND LOAD AND UNLOAD THEIR CARGO.
the new vehicle market and the ongoing positive effects of an organizational
streamlining that took place at the end of 1993.
Ryder transports more than half of all the General Motors vehicles -
and almost half of the Chrysler, Toyota and Honda vehicles - sold annually in
the U.S. and transported nearly 6.3 million vehicles in 1994 from assembly
plants, railheads and ports. Cars and trucks carried include popular models
such as the complete Saturn line, the Cadillac Seville STS and El Dorado
Touring Coupe, the full line of Chevrolet pickup trucks, the Nissan Altima,
the Dodge Intrepid and Chrysler's Jeep(R) Grand Cherokee.
In addition to vehicle transport, Ryder also offers a number of
finished vehicle services, such as final detailing for automotive dealerships,
on- and off-loading vehicles from rail cars, and yard management.
In order to ensure the most efficient, damage-free delivery for its
customers, Ryder provides its drivers with extensive training on how to safely
drive their vehicles and load and unload their
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cargo. Ryder has an excellent safety record as is reflected by its workers'
compensation costs, which have dropped over the past several years.
The company is also committed to constantly upgrading its carrier
equipment and information technology. By reducing the weight of new transports,
Ryder has been able to boost carrying capacity and fuel efficiency. The company
has also developed a number of "driver-friendly" features such as hydraulic
ramps and skids and easy-to-release friction tie-downs.
The Automotive Carrier Division is also working with Ryder Dedicated
Logistics to design seamless in-bound and out-bound automotive logistics
solutions for a number of auto manufacturers, including Mercedes-Benz and
General Motors.
FOREIGN PORTION OF
REVENUE
(in millions)
[FIGURE 11]
1990 - $302
1991 - $327
1992 - $336
1993 - $311
1994 - $348
INTERNATIONAL
Ryder is already a leader in the U.S. transportation and logistics industries,
but roughly three-fourths of the world's freight moves outside of the U.S. The
international transportation and logistics
THE INTERNATIONAL TRANSPORTATION AND LOGISTICS MARKETPLACE REPRESENTS AN
OPPORTUNITY FOR RYDER TO EXPAND ITS FULL SERVICE TRUCK LEASING AND LOGISTICS
BUSINESSES. EUROPE AND LATIN AMERICA HOLD THE BEST OPPORTUNITIES, AND THE
COMPANY IS FOCUSING ITS EFFORTS IN THESE REGIONS.
marketplace, therefore, represents an opportunity for Ryder to expand its full
service truck leasing and logistics businesses.
Europe and Latin America hold the best opportunities for Ryder
internationally, and the company is focusing its efforts in these regions.
Ryder's strategy is to serve its existing customers as they expand in these
markets and to provide services to companies which are already there.
Ryder has operations in several countries. The company has had a major
presence in Canada and the United Kingdom for decades. Ryder has operated in
Germany since the late 1980s. In 1993, Ryder opened an operation in Poland, and
at the end of 1994, Ryder entered Mexico.
Ryder Plc, the company's United Kingdom subsidiary, experienced a
revenue increase of 45% in the fourth quarter of 1994, benefiting from
continued growth in existing business and several strategic acquisitions made
during the year.
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"Ryder's integrated warehouse service provides us with efficient, cost
effective and accurate distribution services that enable us to concentrate our
resources on our specific product assembly requirements. It is a truly
beneficial partnership."
Robin Field,
Chief Executive,
Filofax Group plc
London, England
[PHOTO]
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Filofax Group plc, a Ryder customer in the United Kingdom, became a
customer as a result of a 1994 acquisition. Ryder provides a totally integrated
warehouse and distribution service for all Filofax products throughout the
United Kingdom.
Ryder has strengthened its operations in Germany, consolidating its
full service truck leasing, commercial truck rental and dedicated logistics
operations in one headquarters office in Dusseldorf. This location was selected
because of its favorable location in Germany and its proximity to other
European nations.
Ryder is developing a presence in the Mexican market as well. The
company will focus initially on three major Mexican industrial centers:
Guadalajara, Mexico City and Monterrey.
Mexico and Germany, in addition to having enormous transportation and
logistics needs themselves, will also serve as platforms for Ryder's future
expansion into Latin America and Western Europe, respectively.
LEADING THE INDUSTRY
Businesses around the world are discovering the competitive advantages that
well-designed and executed logistics and transportation systems can yield. As
companies come closer to achieving parity in traditional areas such as quality
and price - and with excellence in both areas taken as a given by today's
customer - the role that logistics and transportation play in a company's
ability to compete and win will only become more prominent.
Ryder's expertise in asset management and logistics and the
interaction among its business units make the company unique in its ability to
provide its customers with a complete range of sophisticated logistics and
transportation services. It would be difficult for any organization - customer
or competitor - to duplicate this ability without the devotion of tremendous
time and resources.
Every industry needs a leader, and Ryder continues to strengthen its
leadership in the logistics and transportation industry. Ryder's company-wide
commitment to understanding the needs of its customers and responding to them
with innovative, cost-effective logistics and transportation solutions will
help to maintain the company's leadership position in the years ahead.
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INTRODUCTION TO FINANCIAL SECTION
Some of the Significant Factors Affecting 1994 Results Were:
EARNINGS FROM CONTINUING OPERATIONS REACH NEW RECORD
Earnings totaled $154 million, an increase of 34% from 1993, and reached the
highest level ever for the company.
REVENUE REACHES AN ALL TIME HIGH
Total revenue was $4.7 billion, representing an increase of 11% over 1993's
revenue of $4.2 billion, and the highest amount ever reported by the company.
All product lines experienced revenue growth.
REVENUE GROWTH FROM DEDICATED LOGISTICS AND
FULL SERVICE TRUCK LEASING IS ACCELERATED
Dedicated logistics revenue grew 21% in 1994 compared with 14% in 1993. For
full service truck leasing, revenue in 1994 was 7% higher compared with flat
revenue in 1993.
SALES OF NEW LONG-TERM CONTRACTUAL BUSINESS
EXCEED PREVIOUS HIGHS
Sales of new contracts in both dedicated logistics and full service truck
leasing reached their highest level ever, reflecting the successful efforts of
the company's sales and marketing initiatives.
RETURN ON AVERAGE COMMON EQUITY APPROACHES COMPANY'S GOAL
1994's return reached 14.5%, a substantial improvement over 1993's performance
of 10.2%, and represents significant progress toward the company's goal of 17%.
HIGHER CAPITAL SPENDING
Increased capital spending 55% to $1.9 billion in response to higher sales of
new long-term contractual business.
HIGHER ASSET UTILIZATION IN COMMERCIAL AND
CONSUMER TRUCK RENTAL
Average asset utilization climbed as a result of better asset management and
stronger economic conditions.
SEVERAL STRATEGIC ACQUISITIONS COMPLETED, INCLUDING
THREE IN THE UNITED KINGDOM
The acquisitions included three leasing companies, a logistics management
company and a provider of dedicated distribution solutions. The United Kingdom
acquisitions will provide substantial revenue growth in the international area.
CONTINUING INVESTMENT IN STRATEGIC INITIATIVES
Invested a significant portion of the company's earnings in several strategic
areas designed to enhance future profitability, including logistics and systems
capabilities and reengineering of the maintenance, sales and marketing and
finance and administration areas.
CREDIT RATING UPGRADED
Credit rating for the company's unsecured notes was raised by Moody's from Baa1
to A3, reflecting strengthening financial position.
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FINANCIAL REVIEW Ryder System, Inc. and Consolidated Subsidiaries
OVERVIEW
The company continued to report strong growth in 1994, with both revenue and
earnings from continuing operations reaching their highest levels in the
company's history. These results were achieved while also making significant
investments in logistics and systems capabilities, sales and marketing, and
reengineering. Additionally, management believes it achieved its four primary
objectives established for 1994. First, dedicated logistics growth was
substantially accelerated, with resulting record sales of new logistics
contracts signed and 21% higher dedicated logistics revenue in 1994 compared
with 1993. Second, full service truck leasing growth also accelerated, with
sales of new contracts at their highest level ever. Third, the company made
significant progress toward implementing its reengineering programs which are
intended to further improve customer service and reduce costs. Finally, the
company began expanding its international operations.
Earnings from continuing operations in 1994 increased to $154 million, or
$1.95 per common share, compared with $115 million, or $1.43 per common share
in 1993, and $98 million, or $1.17 per common share in 1992. Higher 1994
earnings reflected record pretax earnings from Vehicle Leasing & Services and a
significant increase in pretax earnings at Automotive Carriers. Earnings
comparisons were aided by a lower effective income tax rate in 1994 compared
with 1993. The company's effective tax rate for continuing operations was 41.1%
in 1994, 45.3% in 1993 and 40.8% in 1992. The higher 1993 rate resulted from an
accumulated deferred income tax adjustment of $8 million, or $0.10 per common
share, necessitated by an increase in the corporate Federal income tax rate
from 34% to 35%.
Revenue in 1994 totaled $4.7 billion, an increase of $469 million, or 11%,
over 1993. Vehicle Leasing & Services revenue increased 13% to $4.1 billion,
reflecting accelerated revenue growth in all of its major product lines.
Automotive Carriers revenue increased slightly to $645 million. In 1993, the
company reported an increase in revenue of $197 million, or 5%, compared with
1992, led by dedicated logistics and commercial and consumer truck rental.
Operating expense increased 10% in 1994 compared with 1993, due primarily
to the increase in revenue and higher spending on logistics and systems
capabilities, sales and marketing, and reengineering. Higher direct operating
costs at dedicated logistics also impacted 1994 operating expense. Operating
expense in 1993 increased 5% compared with 1992 due primarily to increased
revenue.
Depreciation expense (net of gains) in 1994 increased 9% compared with 1993
due to a larger vehicle fleet as a result of strong lease sales (aided by
growth in logistics contracts), and rental fleet expansion of certain vehicle
types in selected markets. The size of the total vehicle fleet increased 12% in
1994 to 188,831 units. The increase in depreciation was partially offset by an
increase in gains on vehicle sales of $19 million. Net depreciation expense
decreased in 1993 compared with 1992 as a result of higher 1993 gains on
vehicle sales. The higher gains more than offset an increase in depreciation
which resulted from a larger vehicle fleet during 1993.
Interest expense totaled $145 million in 1994, compared with $125 million
in 1993 and $140 million in 1992. The 1994 increase was due to higher average
outstanding debt levels, resulting from the growth in the vehicle fleet,
combined with higher interest rates on the company's variable-rate debt in the
second half of the year. The 1993 decrease resulted primarily from lower
interest rates on the company's variable-rate debt.
EARNINGS FROM CONTINUING OPERATIONS
(in millions)
[FIGURE 12]
1992 - $ 98
1993 - $115
1994 - $154
Higher 1994 earnings reflected record pretax earnings from Vehicle Leasing
& Services and a significant increase in pretax earnings from Automotive
Carriers.
In 1993, the company adopted Statement of Financial Accounting Standards
No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions," and recorded an after tax charge of $25 million, or $0.33 per common
share, to establish the resulting transition obligation. Expense for
postretirement benefits for continuing operations was $6 million in 1994 and $5
million in 1993, compared with $3 million in 1992 under the previous accounting
policy.
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FINANCIAL RESOURCES AND LIQUIDITY
CASH FLOW
In 1994, a majority of the company's cash needs were funded internally through
operations and sales of revenue earning equipment. The company also increased
its level of borrowings in 1994 as a result of higher capital spending,
including the company's continued investments in various programs designed to
improve future profitability. Cash flow from continuing operating activities
was $831 million in 1994, compared with $771 million in 1993 and $847 million
in 1992. The increase in 1994 was a result of improved earnings and an increase
in depreciation expense, partially offset by an increase in certain working
capital items. The most significant working capital change impacting cash flow
comparisons was an increase in receivables resulting from higher revenue. The
decrease in cash flow from continuing operating activities in 1993 compared
with 1992 was primarily attributable to higher proceeds from the sale of
receivables in 1992.
Capital expenditures were $1.8 billion in 1994, compared with $1.2 billion
in 1993 and $1.1 billion in 1992. Capital expenditures in 1994 for full service
truck leasing were $1.1 billion, an increase of $353 million compared with
1993, due to higher new lease sales, aided by growth in logistics contracts.
Capital expenditures for commercial truck rental in 1994 increased $71 million
to $255 million, as a result of demand created by new lease customers and an
increase in the number of certain vehicle types within selected markets.
Consumer truck rental 1994 capital expenditures of $196 million were relatively
unchanged compared with 1993. Capital expenditures for the public
transportation services businesses increased $18 million in 1994 to $35
million, as a result of new contracts and planned fleet replacement. Capital
expenditures for Automotive Carriers in 1994 increased $13 million to $40
million, as a result of replacing older equipment with more efficient, higher
technology, automobile hauling equipment. The remaining increase in capital
expenditures was primarily for operating property and equipment and included
expenditures to expand and upgrade maintenance facilities and for systems
technology and development.
During 1994, the company made expenditures of $145 million on strategic
acquisitions which strengthened the company's existing full service truck
leasing and logistics businesses. Acquisitions made include three providers of
full service truck leasing (one in the U.S. and two in the United Kingdom), a
logistics management company and a provider of dedicated distribution services
in the United Kingdom. The company will continue to evaluate strategic
acquisition opportunities as a means of strengthening its core contractual
businesses.
Cash flow from continuing operating activities (excluding sales of
receivables) plus asset sales as a percentage of capital expenditures was 62%
in 1994, compared with 80% in 1993 and 89% in 1992. The decrease in 1994 was
due to a significant increase in capital expenditures required to support the
increase in new lease sales.
In 1995, management projects that capital expenditures will increase
approximately 10% compared with 1994. The company plans to increase its capital
expenditures for full service truck leasing (including the impact of logistics
growth), commercial and consumer truck rental and the public transportation
services businesses to accommodate planned vehicle replacements and an increase
in fleet size. The company plans to increase capital expenditures at Automotive
Carriers to continue the replacement of older equipment with more efficient,
higher technology equipment. Capital expenditures within the company's
international operations are also expected to increase as these operations
expand. The company expects to fund its 1995 capital expenditures with
internally generated funds and additional financing as necessary.
TOTAL CAPITAL SPENDING
(in millions)
[FIGURE 13]
1992 - $1,092
1993 - $1,238
1994 - $1,915
Capital spending was higher in 1994 primarily
as a result of increased purchases of full
service lease equipment.
Several strategic 1994 acquisitions also
impacted capital spending.
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
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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 which have
historically been accounted for as operating leases.
In August 1994, Moody's Investors Service upgraded its rating on the
company's unsecured notes from Baa1 to A3 and reaffirmed the commercial paper
rating of P2, reflecting the company's strengthening financial condition. The
company's other credit ratings were A2 for commercial paper and A- for
unsecured notes from Standard & Poor's Ratings Group, and D1 for commercial
paper and A for unsecured notes from Duff and Phelps.
Debt increased from $1.5 billion at the end of 1993 to $1.9 billion at the
end of 1994. This increase was due to financing requirements associated with
1994 capital expenditures and acquisitions. During 1994, the company issued
$437 million of primarily fixed-rate unsecured notes and made $119 million of
scheduled unsecured note payments. The company also borrowed an amount
equivalent to $99 million of primarily variable-rate pound sterling denominated
obligations during 1994. U.S. commercial paper outstanding at December 31,
1994, was $44 million, compared with $84 million at the end of 1993. Proceeds
from sale-leaseback transactions during 1994 were $400 million. The company did
not enter into any sale-leaseback transactions during 1993.
The company has no derivative financial instruments held for trading
purposes or that are leveraged. During 1994, the company increased its
outstanding interest rate swap agreements by a total notional principal amount
of $358 million and interest rate cap agreements by a notional principal amount
of $350 million, as part of the management of its interest rate exposure. See
the "Financial Instruments" note to the consolidated financial statements for a
further discussion of the company's interest rate management program.
At the end of 1994, committed unused lines of credit totaled $614 million.
At December 31, 1994, the company had $434 million of debt securities available
for issuance under a shelf registration statement filed in 1992. The ratio of
debt to equity at December 31, 1994 was 169%, compared with 155% at December
31, 1993. The ratio of debt to tangible equity at December 31, 1994 was 227%,
compared with 202% at December 31, 1993.
In January 1995, the company redeemed at par, $100 million of its 9.375%
unsecured notes. The company also announced that it will redeem $200 million of
9.20% unsecured notes at par in March 1995.
RESULTS OF OPERATIONS
VEHICLE LEASING & SERVICES
REVENUE. Revenue for Vehicle Leasing & Services increased 13% in 1994 compared
with 1993 and 6% in 1993 compared with 1992. The increases reflected growth in
all of the division's contractual product lines - full service truck leasing,
dedicated logistics and public transportation services - as well as the truck
rental businesses.
Revenue from full service truck leasing increased 7% in 1994 compared with
1993 and 2% in 1993 compared with 1992. Revenue in 1994 benefited from a
significant increase in new lease sales combined with the impact of
acquisitions made in 1994. The average fleet size in 1994 increased 11%
compared with 1993, a rate greater than the revenue growth rate, primarily as a
result of lower prices on new leases compared with prices on those expiring.
The increase in revenue in 1993 was due to new lease sales.
Revenue from dedicated logistics increased 21% in 1994 compared with 1993.
Higher revenue was attributable to a record level of new logistics contracts
sold and an expansion of service provided to existing customers. The division
continues to reinvest heavily in logistics capabilities, including new
information technologies, and sales and marketing programs to further
accelerate the growth in dedicated logistics. For the same reasons, dedicated
logistics revenue increased 14% in 1993 compared with 1992.
Revenue from the division's public transportation services businesses
increased 6% in 1994 compared with 1993, as a result of several new student
transportation contracts. The same businesses reported revenue that was 7%
higher in 1993 compared with 1992, due primarily to new contracts and several
small acquisitions made in late 1992.
Commercial truck rental revenue increased 25% in 1994 compared with 1993,
reflecting higher demand from both full service truck leasing customers
awaiting new lease vehicles or satisfying short-term needs, and the commercial
truck rental market in general. Increased demand in 1994 also reflected
continued strength in the U.S. economy. To satisfy the higher demand, the
average fleet size increased approximately 19% in 1994 compared with 1993.
Revenue from commercial truck
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rental increased 16% in 1993 compared with 1992, as a result of higher demand.
Consumer truck rental revenue increased 19% in 1994 compared with 1993.
This increase reflected higher demand for long-distance rentals, and to a
lesser extent, local rentals, driven by continued strength in the nation's
economy. Higher revenue per transaction for local rentals also contributed to
the increase. The consumer truck rental average fleet size was 6% higher in
1994 than in 1993. Consumer truck rental revenue increased 8% in 1993 compared
with 1992, driven by higher demand and an increase in market share for this
product line.
VEHICLE LEASING & SERVICES
EARNINGS BEFORE
REVENUE INCOME TAXES
(in millions) (in millions)
[FIGURE 14] [FIGURE 15]
1992 - $3,385 1992 - $135
1993 - $3,597 1993 - $204
1994 - $4,058 1994 - $234
EARNINGS BEFORE INCOME TAXES. Pretax earnings for Vehicle Leasing & Services
were $234 million in 1994 compared with $204 million in 1993, an increase of
15%. Overall, higher pretax earnings in 1994 were the result of increased
revenue in all major product lines, higher commercial and consumer truck rental
margin as a percentage of revenue, and higher gains on vehicle sales. Partially
offsetting these increases were continued investments in several strategic
spending programs which are designed to improve the future growth and
profitability of the division. The division's pretax earnings in 1993 increased
$69 million, or 51%, compared with 1992.
Margin (revenue less direct operating expenses, depreciation, and interest
expense) from full service truck leasing increased slightly in 1994 as a result
of higher revenue and acquisitions made. Margin as a percentage of revenue was
lower in 1994 as a result of lower prices on new leases compared with prices on
those expiring, combined with higher interest expense. Full service truck
leasing margin in 1993 increased slightly compared with 1992, primarily as a
result of higher revenue and lower interest expense as a percentage of revenue.
Dedicated logistics reported slightly higher margin in both 1994 and 1993
as a result of the continued growth in revenue. Margin as a percentage of
revenue for dedicated logistics was lower in 1994 as a result of higher
operating costs including new contract start-up costs. Higher operating costs
also resulted from increases in driver wages. Dedicated logistics margin as a
percentage of revenue was relatively unchanged in 1993 compared with 1992.
Margin from the public transportation services businesses increased in 1994
compared with 1993, primarily as a result of higher revenue; margin as a
percentage of revenue was relatively unchanged. Margin from these businesses
increased in 1993 compared with 1992 as a result of higher revenue and a
decrease in vehicle liability and workers' compensation expense.
Commercial truck rental margin and margin as a percentage of revenue
increased substantially in 1994, reflecting higher revenue, increased asset
utilization and lower maintenance costs as a percentage of revenue, partially
offset by higher interest expense. Lower maintenance costs as a percentage of
revenue reflected a reduction in the average age of the fleet. Both margin and
margin as a percentage of revenue increased significantly in 1993 compared with
1992, primarily as a result of increased revenue, improved asset utilization,
lower maintenance costs and lower interest expense.
Consumer truck rental recorded significantly higher margin and higher
margin as a percentage of revenue in 1994 as a result of revenue growth,
increased asset utilization and lower maintenance costs as a percentage of
revenue, partially offset by higher vehicle liability expense. The improvement
in maintenance costs as a percentage of revenue was primarily due to a change
in the age and mix of the fleet to newer and more maintenance efficient
vehicles. Vehicle liability expense increased in 1994 over a lower than normal
1993 level. Consumer truck rental margin and margin as a percentage of revenue
were higher in 1993 compared with 1992 as a result of revenue growth, better
asset utilization and lower than normal vehicle liability expense.
For the division as a whole, pretax profits were higher in 1994 compared
with 1993 as a result of higher overall margin and an increase in gains on
vehicle sales, partially offset by
29
32
increases in indirect operating expenses. Higher gains were due to an
increase in both the average gain per vehicle sold and the number of vehicles
sold. Higher indirect operating expenses were primarily the result of several
strategic spending programs. These programs are focused on further developing
logistics and other systems capabilities, improving the division's sales and
marketing initiatives, and reengineering the company's maintenance, sales and
marketing, and finance and administration functions. In fact, within dedicated
logistics, the increase in strategic spending on logistics capabilities and
sales and marketing programs in 1994 more than offset margin growth. These
strategic spending programs are expected to continue to impact profitability
in 1995 as the company strives to continue stimulating growth in its long-term
contractual products while making its operations more customer responsive and
efficient for the future. Pretax earnings for the division in 1993 were higher
compared with 1992, as a result of margin increases and an increase of $21
million in gains on vehicle sales, partially offset by an increase in indirect
operating expenses. Gains on vehicle sales increased due to higher gains per
vehicle sold, while indirect operating expenses were affected by an increase
in sales and marketing spending.
AUTOMOTIVE CARRIERS
REVENUE. Automotive Carriers revenue increased 2% in 1994 after a decrease of
3% in 1993. Higher 1994 revenue resulted from an increase in the number of
units shipped, somewhat offset by a decline in average length of haul. The
overall increase in the number of units shipped in 1994 was a result of higher
vehicle production in North America. Shipments of General Motors vehicles were
relatively unchanged in 1994 compared with 1993, while the number of vehicles
shipped for other manufacturers was up 13%. Lower revenue in 1993 compared with
1992 reflected a decrease in average length of haul. The division's largest
customer, General Motors, accounts for approximately 54% of its revenue.
EARNINGS BEFORE INCOME TAXES. Pretax earnings increased $18 million in 1994
compared with 1993. Earnings comparisons were impacted by a 1993 pretax charge
of $6 million for the cost of a program to streamline the division's
operations. Pretax earnings in 1994 benefited from the effects of the 1993
streamlining, fleet operating efficiencies and reduced depreciation expense.
Lower depreciation resulted from an increase in the age of the vehicle fleet
and a reduction in the size of the fleet. Pretax earnings in 1993 were lower
compared with 1992 due to a decrease in revenue, the charge for the
organizational streamlining, higher labor costs, and higher cargo damage and
vehicle liability expense.
AUTOMOTIVE CARRIERS
EARNINGS BEFORE
REVENUE INCOME TAXES
(in millions) (in millions)
[FIGURE 16] [FIGURE 17]
1992 - $651 1992 - $48
1993 - $635 1993 - $32
1994 - $645 1994 - $50
The truckaway automobile hauling industry is currently negotiating a new
industry-wide collective bargaining agreement with the International
Brotherhood of Teamsters. The current agreement with the Teamsters expires on
May 21, 1995. While negotiations are in the early stages, the agreement may
provide for wage and benefit increases. However, management does not expect
material adverse economic consequences from the outcome of the negotiations.
OTHER
Other, which is composed primarily of corporate administrative costs, reported
net expenses of $24 million in 1994 compared with $27 million in 1993 and $18
million in 1992. The lower level of expenses in 1992 reflected a combination
of higher reimbursement of corporate administrative costs from the divisions
and lower overall levels of spending.
FOREIGN OPERATIONS
The majority of the company's foreign operations are in the United Kingdom and
Canada. These operations are composed 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 discussions
above. In 1994, revenue and pretax earnings from foreign operations were $348
million and $16 million, respectively, compared with $311 million and $9
million in 1993 and $336 million and $7 million in 1992. The 1994
30
33
increase in revenue was due to a significant increase in full service truck
lease and commercial truck rental revenue in the United Kingdom, primarily as
a result of strong new lease sales and acquisitions made in 1994. Of the $7
million increase in pretax earnings in 1994, $4 million related to a change in
the capital structure of the operations in the United Kingdom, which
effectively reduced its interest costs. The remaining increase was due
primarily to higher pretax earnings in the United Kingdom and Canada, somewhat
offset by start-up costs in Germany and Mexico. Growth in profitability from
foreign operations will continue to be impacted in the short-term by start-up
related investments in Germany, Mexico and other targeted international markets
as opportunities are identified. The company will continue to evaluate further
strategic expansion in Western Europe and the Americas. Economic and political
developments in Mexico will be closely monitored as the company expands in that
country. At this time there are no legal restrictions regarding the
repatriation of cash flows to the U.S. from the foreign countries where the
company is currently operating.
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 $8
million in 1994. Environmental capital expenditures are primarily related to a
mandated tank replacement program required to be completed by the end of 1998.
These capital expenditures are not expected to increase materially in relation
to the company's level of total capital expenditures. The company incurred $24
million of environmental expenses in 1994 and 1993, compared with $23 million
in 1992. Based on the present standards imposed by governmental regulations,
management expects that environmental expenses will remain at current levels or
decrease slightly 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
In June 1993, the Financial Accounting Standards Board issued Statement No.
116, "Accounting for Contributions Received and Contributions Made." The
statement, which is effective for fiscal years beginning after December 15,
1994, requires that promises to make contributions be recognized in the
financial statements as an expense and a liability when a promise is made.
Currently, contributions are recognized as an expense in the period paid. The
company anticipates that adoption of the statement in the first quarter of 1995
will result in an after tax charge to earnings of approximately $8 million, or
$0.10 per common share, to record the cumulative effect of the change in
accounting.
OUTLOOK
In 1995, the company will continue to build upon accomplishments achieved and
initiatives started in 1994. However, to ensure the momentum created in 1994 is
sustained and shareholder value is maximized, the company will focus on three
areas of emphasis in 1995. First, the company will intensify the marketing and
selling of its highest value-added contractual products, dedicated logistics
and full service truck leasing, to maximize its less economically sensitive
sources of revenue. Second, the company will attempt to increase its market
coverage and market share. Finally, the company will attempt to continue to
lower its cost structure by further implementing its reengineering in the areas
of sales and marketing, maintenance, and finance and administration.
Strong financial results in 1994 have positioned Ryder for continued
earnings growth in 1995. While continued investments in strategic initiatives
may slow the growth in profitability in the near-term, these investments are
being made to better position the company for long-term growth and
profitability. Sustained earnings improvement in 1995 also depends to a great
extent on domestic economic conditions.
31
34
SELECTED FINANCIAL AND OPERATIONAL DATA Ryder System, Inc. and Consolidated Subsidiaries
---------------------------------------------------------------------------------------------------------------------------------
(Dollars in thousands) 1994 1993 1992
---------------------------------------------------------------------------------------------------------------------------------
VEHICLE LEASING & SERVICES
Revenue:
Full service lease and programmed maintenance $1,865,738 1,749,592 1,718,090
Commercial and consumer rental 1,140,190 935,792 835,722
Dedicated logistics 691,647 569,479 497,509
Other 608,619 558,041 514,326
Eliminations (248,459) (216,101) (180,695)
---------------------------------------------------------------------------------------------------------------------------------
Total 4,057,735 3,596,803 3,384,952
Operating expense 3,112,746 2,758,681 2,598,020
Depreciation expense 628,625 557,406 536,951
Gains on sales of revenue earning equipment (72,721) (54,084) (33,525)
Interest expense 151,581 128,760 145,336
Miscellaneous expense, net 3,246 1,670 2,879
---------------------------------------------------------------------------------------------------------------------------------
Earnings before income taxes $ 234,258 204,370 135,291
---------------------------------------------------------------------------------------------------------------------------------
Fleet size (owned and leased):
Full service lease 89,672 78,544 74,902
Commercial and consumer rental 75,759 67,016 62,924
Buses operated or managed 12,519 12,154 11,860
Ryder Truck Rental service locations 1,101 979 971
=================================================================================================================================
AUTOMOTIVE CARRIERS
Revenue $ 645,402 634,634 651,216
---------------------------------------------------------------------------------------------------------------------------------
Earnings before income taxes $ 50,078 31,955 48,220
---------------------------------------------------------------------------------------------------------------------------------
Total units transported (000) 6,277 5,934 5,871
Total miles traveled (000) 239,831 238,840 247,034
Auto transports:
Owned and leased 3,790 4,131 4,237
Owner-operators 516 505 508
Locations 80 89 92
=================================================================================================================================
32
35
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 of Ryder System, Inc.:
We have audited the accompanying consolidated balance sheets of Ryder System,
Inc. and subsidiaries as of December 31, 1994 and 1993, and the related
consolidated statements of earnings and cash flows for each of the years in the
three-year period ended December 31, 1994. 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, 1994 and 1993, and the results
of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1994, 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 LLP
Miami, Florida
February 7, 1995
33
36
CONSOLIDATED STATEMENTS OF EARNINGS Ryder System, Inc. and Consolidated Subsidiaries
Years ended December 31
------------------------------------------------------------------------------------------------------------------------
(In thousands, except per share amounts) 1994 1993 1992
------------------------------------------------------------------------------------------------------------------------
REVENUE $4,685,603 4,217,030 4,019,675
------------------------------------------------------------------------------------------------------------------------
Operating expense 3,686,053 3,338,477 3,164,775
Depreciation expense, net of gains 591,669 543,338 547,013
Interest expense 144,735 124,789 139,664
Miscellaneous expense, net 2,627 650 2,678
------------------------------------------------------------------------------------------------------------------------
4,425,084 4,007,254 3,854,130
------------------------------------------------------------------------------------------------------------------------
Earnings from continuing operations before income taxes 260,519 209,776 165,545
Provision for income taxes 106,990 95,054 67,495
------------------------------------------------------------------------------------------------------------------------
Earnings from continuing operations 153,529 114,722 98,050
Earnings (loss) from discontinued operations - (150,713) 25,876
------------------------------------------------------------------------------------------------------------------------
Earnings (loss) before cumulative effect of change in accounting 153,529 (35,991) 123,926
Cumulative effect of change in accounting - (25,433) -
------------------------------------------------------------------------------------------------------------------------
NET EARNINGS (LOSS) 153,529 (61,424) 123,926
Preferred dividend requirements - 3,617 10,500
------------------------------------------------------------------------------------------------------------------------
EARNINGS (LOSS) APPLICABLE TO COMMON SHARES $ 153,529 (65,041) 113,426
========================================================================================================================
Earnings (loss) per common share:
Continuing operations $ 1.95 1.43 1.17
Discontinued operations - (1.94) 0.34
Cumulative effect of change in accounting - (0.33) -
------------------------------------------------------------------------------------------------------------------------
EARNINGS (LOSS) PER COMMON SHARE $ 1.95 (0.84) 1.51
========================================================================================================================
See accompanying notes to consolidated financial statements.
34
37
CONSOLIDATED STATEMENTS OF CASH FLOWS Ryder System, Inc. and Consolidated Subsidiaries
Years ended December 31
------------------------------------------------------------------------------------------------------------------------
(In thousands) 1994 1993 1992
------------------------------------------------------------------------------------------------------------------------
CONTINUING OPERATIONS
CASH FLOWS FROM OPERATING ACTIVITIES:
Earnings from continuing operations $ 153,529 114,722 98,050
Depreciation expense, net of gains 591,669 543,338 547,013
Deferred income taxes 56,648 44,905 22,292
Proceeds from sales of receivables - - 115,000
Decrease (increase) in receivables (87,761) (6,616) 2,282
Decrease (increase) in inventories (2,914) 881 (4,030)
Increase in accounts payable 66,087 41,738 4,580
Increase in accrued expenses 25,031 7,584 13,909
Increase in other non-current liabilities 27,733 21,255 25,380
Other, net 941 3,226 22,126
------------------------------------------------------------------------------------------------------------------------
830,963 771,033 846,602
------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Debt proceeds 609,637 165,503 244,494
Debt repaid, including capital lease obligations (195,099) (295,144) (533,503)
Preferred stock redeemed - (100,000) -
Common stock issued 27,601 37,225 31,242
Dividends on common and preferred stock (46,926) (50,790) (55,141)
------------------------------------------------------------------------------------------------------------------------
395,213 (243,206) (312,908)
------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and revenue earning equipment (1,769,130) (1,237,486) (1,070,472)
Sales of property and revenue earning equipment 265,259 224,921 220,334
Sale and leaseback of revenue earning equipment 400,000 - 200,000
Acquisitions, net of cash acquired (144,574) - (20,525)
Other, net 41,456 43,840 40,273
------------------------------------------------------------------------------------------------------------------------
(1,206,989) (968,725) (630,390)
------------------------------------------------------------------------------------------------------------------------
NET CASH FLOWS FROM CONTINUING OPERATIONS 19,187 (440,898) (96,696)
NET CASH FLOWS FROM DISCONTINUED OPERATIONS - 446,842 87,448
------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 19,187 5,944 (9,248)
Cash and cash equivalents at January 1 56,691 50,747 59,995
------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT DECEMBER 31 $ 75,878 56,691 50,747
========================================================================================================================
See accompanying notes to consolidated financial statements.
35
38
CONSOLIDATED BALANCE SHEETS Ryder System, Inc. and Consolidated Subsidiaries
December 31
-----------------------------------------------------------------------------------------------------------------------
(Dollars in thousands, except per share amounts) 1994 1993
-----------------------------------------------------------------------------------------------------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 75,878 56,691
Receivables 316,855 197,956
Inventories 57,124 52,963
Tires in service 164,347 144,488
Deferred income taxes 51,619 60,326
Prepaid expenses and other current assets 92,999 89,020
-----------------------------------------------------------------------------------------------------------------------
Total current assets 758,822 601,444
-----------------------------------------------------------------------------------------------------------------------
Revenue earning equipment 3,135,064 2,676,047
Operating property and equipment 594,328 510,489
Direct financing leases and other assets 223,680 223,374
Intangible assets and deferred charges 302,579 247,034
-----------------------------------------------------------------------------------------------------------------------
$5,014,473 4,258,388
=======================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 118,103 156,503
Accounts payable 422,532 297,282
Accrued expenses 552,518 514,982
-----------------------------------------------------------------------------------------------------------------------
Total current liabilities 1,093,153 968,767
-----------------------------------------------------------------------------------------------------------------------
Long-term debt 1,794,795 1,374,943
Other non-current liabilities 426,848 397,873
Deferred income taxes 570,653 526,624
Shareholders' equity:
Common stock of $.50 par value per share
Authorized, 400,000,000; outstanding, 1994 - 78,760,742; 1993 - 77,294,484 539,101 508,832
Retained earnings 603,226 496,623
Translation adjustment (13,303) (15,274)
-----------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 1,129,024 990,181
-----------------------------------------------------------------------------------------------------------------------
$5,014,473 4,258,388
=======================================================================================================================
See accompanying notes to consolidated financial statements.
36
39
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ryder System, Inc. and Consolidated Subsidiaries
December 31, 1994, 1993 and 1992
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. Annual straight-line depreciation rates are 8% to 30% for revenue
earning equipment, 2.5% to 10% for buildings and improvements and 8% to 33% for
machinery and equipment.
Gains on operating property and equipment sales are reflected in
miscellaneous expense. Gains on sales of revenue earning equipment, net of
selling and equipment preparation costs, are reported as reductions of
depreciation expense and totaled $74 million, $55 million and $34 million in
1994, 1993 and 1992, respectively.
INTANGIBLE ASSETS. Intangible assets consist principally of goodwill totaling
$270 million in 1994 and $215 million in 1993. These amounts are reported net
of accumulated amortization of $65 million and $57 million, respectively.
Goodwill is amortized on a straight-line basis primarily over 40 years, with
goodwill acquired during 1994 amortized over a period of 10 to 20 years.
Goodwill was reduced by $4 million in 1994 and $1 million in 1993 as a result
of the recognition of tax benefits associated with prior year acquisitions. The
company reevaluates the recoverability of intangible assets as well as the
amortization periods to determine whether an adjustment to the carrying value
or a revision to estimated useful lives is appropriate. The primary indicators
of recoverability are the associated current and forecasted operating cash
flow.
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.
OTHER COSTS. Advertising and sales promotion costs are expensed as incurred.
Vehicle repairs and maintenance which do not extend the life or increase the
value of the vehicle are expensed as incurred.
FOREIGN CURRENCY TRANSLATION. The company's foreign operations use the local
currency as their functional currency. Assets and liabilities of these
operations are translated at the exchange rates in effect on the balance sheet
date. Income statement items are translated at the average exchange rates for
the year. For these companies, the impact of currency fluctuation is included
in shareholders' equity as a translation adjustment.
ACCOUNTING CHANGES. Effective January 1, 1995, the company will adopt Statement
of Financial Accounting Standards No. 116, "Accounting for Contributions
Received and Contributions Made." This 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 company anticipates that adoption in the
first quarter of 1995 will result in an after tax charge to earnings of
approximately $8 million, or $0.10 per common share, to record the cumulative
effect of the change in accounting.
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 did not impact the
company's financial position or results of operations.
SALES OF RECEIVABLES
The company participates in an agreement to sell, with limited recourse, up to
$220 million of trade receivables on a revolving basis through September 1996.
The costs associated with this program approximate the costs of issuing
commercial paper and are charged to miscellaneous expense. At both December 31,
1994 and 1993, the outstanding balance of receivables sold pursuant to this
agreement was $220 million.
37
40
REVENUE EARNING EQUIPMENT
----------------------------------------------------------------------------------------
(In thousands) 1994 1993
----------------------------------------------------------------------------------------
Full service lease $ 2,631,148 2,361,684
Commercial and consumer rental 1,999,867 1,728,299
----------------------------------------------------------------------------------------
4,631,015 4,089,983
Accumulated depreciation (1,738,019) (1,636,778)
----------------------------------------------------------------------------------------
2,892,996 2,453,205
----------------------------------------------------------------------------------------
Other revenue earning equipment 699,571 694,139
Accumulated depreciation (457,503) (471,297)
----------------------------------------------------------------------------------------
242,068 222,842
----------------------------------------------------------------------------------------
$ 3,135,064 2,676,047
========================================================================================
OPERATING PROPERTY AND EQUIPMENT
----------------------------------------------------------------------------------------
(In thousands) 1994 1993
----------------------------------------------------------------------------------------
Land $ 116,212 108,209
Buildings and improvements 432,686 409,028
Machinery and equipment 394,400 323,359
Other 101,510 72,825
----------------------------------------------------------------------------------------
1,044,808 913,421
Accumulated depreciation (450,480) (402,932)
----------------------------------------------------------------------------------------
$ 594,328 510,489
========================================================================================
ACCRUED EXPENSES AND OTHER
NON-CURRENT LIABILITIES
----------------------------------------------------------------------------------------
(In thousands) 1994 1993
----------------------------------------------------------------------------------------
Salaries and wages $ 119,183 104,787
Employee benefits 8,564 13,527
Interest 35,524 29,578
Operating taxes 66,995 61,898
Insurance and loss reserves 393,801 382,607
Postretirement benefits other than pensions 50,507 47,076
Vehicle rent and related accruals 149,842 143,199
Other 154,950 130,183
----------------------------------------------------------------------------------------
979,366 912,855
Less - non-current portion (426,848) (397,873)
----------------------------------------------------------------------------------------
Accrued expenses $ 552,518 514,982
========================================================================================
ACQUISITIONS
During 1994, the company completed a number of acquisitions, including a
logistics management company, three providers of full service truck leasing
(one in the U.S. and two in the U.K.) and a provider of dedicated distribution
services in the U.K. All acquisitions consummated during the three-year period
ended December 31, 1994 have been accounted for using the purchase method and
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, 1992, consolidated revenue and net earnings for the three-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) 1994 1993 1992
----------------------------------------------------------------------------------------
Working capital $ (3,675) - 435
Goodwill 66,969 - 3,072
Other net assets 82,181 - 17,173
Debt assumed - - (155)
----------------------------------------------------------------------------------------
Net assets acquired $145,475 - 20,525
========================================================================================
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 these leases meet certain requirements for classification
as direct financing leases under Statement of Financial Accounting Standards
No. 13, "Accounting for Leases." The net investment in direct financing leases
consists of:
----------------------------------------------------------------------------------------------------
(In thousands) 1994 1993
----------------------------------------------------------------------------------------------------
Minimum lease payments receivable $254,585 259,654
Executory costs and unearned income (65,680) (70,387)
Unguaranteed residuals 38,408 38,736
----------------------------------------------------------------------------------------------------
Net investment in direct financing leases 227,313 228,003
Current portion included in receivables 42,151 43,143
----------------------------------------------------------------------------------------------------
Non-current portion included in other assets $185,162 184,860
====================================================================================================
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 1994, 1993 and 1992, rent expense was $141 million,
$137 million and $132 million, respectively.
38
41
CAPITAL LEASES. The company occasionally enters into lease arrangements
accounted for as capitalized leases. Capital leases entered into during the
three-year period ended December 31, 1994 were not material. Capital leases are
amortized over the effective economic lease term.
LEASE PAYMENTS. Future minimum payments for leases in effect at December 31,
1994, 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
----------------------------------------------------------------------------------------------------
1995 $1,016,513 58,252 158,710 5,615
1996 834,856 49,878 172,115 5,439
1997 659,624 41,106 139,028 3,385
1998 492,625 30,064 128,945 2,874
1999 299,133 24,237 129,486 2,622
Thereafter 226,823 51,048 223,071 423
----------------------------------------------------------------------------------------------------
$3,529,574 254,585 951,355 20,358
Portion representing interest (3,836)
----------------------------------------------------------------------------------------------------
Present value of minimum lease payments $16,522
====================================================================================================
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. 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) 1994 1993 1992
---------------------------------------------------------------------------------------------
Current tax expense:
Federal $ 44,039 45,557 31,648
State 6,232 3,563 13,841
Foreign 71 1,029 (286)
----------------------------------------------------------------------------------------------
50,342 50,149 45,203
---------------------------------------------------------------------------------------------
Deferred tax expense:
Federal 34,123 28,836 20,825
State 14,267 11,332 (3,041)
Foreign 8,258 4,737 4,607
---------------------------------------------------------------------------------------------
56,648 44,905 22,391
---------------------------------------------------------------------------------------------
Amortization of deferred
investment tax credits - - (99)
---------------------------------------------------------------------------------------------
Provision for income taxes $106,990 95,054 67,495
=============================================================================================
A reconciliation of the Federal statutory tax rate with the effective
tax rate for continuing operations follows:
----------------------------------------------------------------------------------------------
% of Pretax Income
----------------------------------------
1994 1993 1992
----------------------------------------------------------------------------------------------
Statutory rate 35.0 35.0 34.0
Impact on deferred taxes
for changes in tax rates 0.6 3.7 -
State income taxes, net of
Federal income tax benefit 4.5 4.6 4.3
Amortization and write-down
of goodwill, net of benefits
realized from business sold 0.8 1.0 1.0
Miscellaneous items, net 0.2 1.0 1.5
----------------------------------------------------------------------------------------------
Effective rate 41.1 45.3 40.8
==============================================================================================
The components of the net deferred income tax asset and liability as
of December 31, 1994 and 1993 were as follows:
----------------------------------------------------------------------------------------------
(In thousands) 1994 1993
----------------------------------------------------------------------------------------------
Deferred income tax assets:
Accrued insurance and loss reserves $ 148,816 145,719
Alternative minimum taxes 32,380 34,869
Accrued compensation and benefits 37,789 37,191
Accrued reserves and other items 70,510 63,027
---------------------------------------------------------------------------------------------
289,495 280,806
Valuation allowance (7,855) (5,723)
---------------------------------------------------------------------------------------------
281,640 275,083
----------------------------------------------------------------------------------------------
Deferred income tax liabilities:
Property and equipment basis differences (734,722) (672,341)
Other items (65,952) (69,040)
----------------------------------------------------------------------------------------------
(800,674) (741,381)
---------------------------------------------------------------------------------------------
Net deferred income tax liability $(519,034) (466,298)
=============================================================================================
39
42
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 $62 million at December 31, 1994. 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 $1
million and unused alternative minimum tax credits, for tax purposes, of $32
million at December 31, 1994, available to reduce future income tax
liabilities. The investment tax credits are expected to be utilized before
their expiration in 1998, and have been reflected in the financial statements
as a reduction of deferred income taxes.
Income taxes paid totaled $45 million in 1994. Income taxes paid of
$52 million in 1993 and $44 million in 1992 include amounts related to both
continuing and discontinued operations.
DEBT
----------------------------------------------------------------------------------------------
(In thousands) 1994 1993
----------------------------------------------------------------------------------------------
U.S. commercial paper $ 44,000 83,500
Canadian commercial paper 55,963 32,482
Unsecured U.S. notes:
Debentures, 8.38% to 9.88%,
due 1998 to 2017 839,499 840,499
Medium-term notes, 4.81% to 9.90%,
due 1995 to 2021 748,400 393,300
Discount on unsecured U.S. notes (22,215) (22,776)
Unsecured foreign obligations (principally
pound sterling), 6.21% to 11.75%,
due 1995 to 1998 195,793 105,466
Capital lease obligations and other debt 51,458 98,975
---------------------------------------------------------------------------------------------
Total debt 1,912,898 1,531,446
Less - amount classified as current (118,103) (156,503)
---------------------------------------------------------------------------------------------
Long-term debt $1,794,795 1,374,943
==============================================================================================
Debt maturities (including sinking fund requirements and excluding
capital lease obligations) during the five years subsequent to December 31,
1994, are as follows:
----------------------------------------------------------------------------------------------
Debt
(In thousands) Maturities
----------------------------------------------------------------------------------------------
1995 $114,057
1996 171,760
1997 169,357
1998 467,862
1999 261,899
==============================================================================================
In January 1995, the company redeemed at par $100 million of 9.375%
debentures scheduled to be retired in 1998; these debentures were refinanced
with medium-term notes at an average rate of 8.37% maturing in 1999 and 2000
(maturities of new debt reflected above). Additionally, in January 1995, the
company announced that it will redeem in March 1995 at par $200 million of
9.20% debentures scheduled to mature in 1998.
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 secondary
agreement, with a total commitment of $150 million, expires in December 1999.
No compensating balances are required for either of these facilities, however
they do require annual commitment fees ranging from .095% to .165%. There were
no borrowings under either of these agreements during 1994 or 1993. The company
had $606 million available under these agreements at December 31, 1994. The
company has other committed lines of credit at December 31, 1994 totaling
$43 million, of which $8 million was available. The weighted average interest
rate for outstanding U.S. and Canadian commercial paper was 6.06% and 6.07%,
respectively, at December 31, 1994.
The primary revolving loan agreement contains the most restrictive
covenants as to the payment of cash dividends. As of December 31, 1994,
approximately $105 million of consolidated retained earnings were available for
the payment of cash dividends.
Interest paid totaled $139 million in 1994. Interest paid was $154
million in 1993 and $187 million in 1992 and included amounts related to both
continuing and discontinued operations.
40
43
FINANCIAL INSTRUMENTS
The company enters into interest rate swap and cap agreements as part of the
management of its interest rate exposure; the company has no derivative
financial instruments held for trading purposes and none of the instruments are
leveraged. The company has assigned each interest rate swap and cap agreement
to a debt or operating lease obligation.
In order to manage its mix of fixed and variable rate debt instruments
and to better match the repricing life of the company's debt to its portfolio
of assets, the company enters into interest rate swap agreements which
effectively convert the interest rate on certain debt from fixed rate to
floating rate over the terms of the agreements. The company had notional
principal amounts of $500 million and $200 million of such "fixed to floating"
rate swap agreements outstanding at December 31, 1994 and 1993, respectively,
with expiration dates ranging from 2001 to 2009. Under these agreements, the
company received an average fixed rate of 6.15% and paid an average floating
rate of 5.93% at December 31, 1994.
In 1994, the company entered into interest rate cap agreements to
limit its exposure to movements in interest rates above a specified level on
certain fixed to floating rate swap agreements. Under these agreements the
company is entitled to receive the amount, if any, by which London Interbank
Offered Rate (LIBOR) exceeds the fixed cap rate specified in the agreement
applied to a notional principal amount. At December 31, 1994, the company had
interest rate cap agreements outstanding with an aggregate notional principal
amount of $350 million. The premiums paid by the company for the interest rate
caps are recorded in deferred charges and amortized over the lives of the cap
agreements, which expire in 1996 and 1997. The recorded amount of the interest
rate caps was $2 million at December 31, 1994. The company receives payments
under the cap agreements when floating rates exceed the fixed cap rates, which
average 5.46% at December 31, 1994.
To mitigate exposure to variable interest rates, the company enters
into agreements to effectively convert the interest rate exposure on certain
debt and operating lease agreements in which the company is a lessee, from
floating rate to fixed rate over the terms of the agreements. These "floating
to fixed" rate swap agreements had notional amounts totaling $173 million and
$115 million outstanding at December 31, 1994 and 1993, respectively, with
expiration dates ranging from 1996 to 1998. Under these agreements, the company
received an average floating rate of 6.36% and paid an average fixed rate of
7.02% at December 31, 1994.
Under the interest rate swap agreements the company agrees to exchange
in cash, at specified intervals, the difference between fixed and floating
interest rate amounts based on agreed upon notional principal amounts. Floating
interest rates paid or received by the company are based on the LIBOR and
reprice periodically, typically in three to six month intervals.
Amounts to be paid or received under the swap and cap agreements are
recognized over the terms of the agreements as adjustments to interest expense
or rent expense. Amounts receivable or payable under the agreements are
included in receivables or accrued expenses in the consolidated balance sheets
and were not material at December 31, 1994 and 1993.
Although the company is exposed to credit loss for the interest rate
differential in the event of nonperformance by the counterparties to the
agreements described above, it does not currently anticipate nonperformance.
The company mitigates counterparty risk by entering into transactions with
financial institutions in the high investment grade category of ratings by
Standard & Poor's Ratings Group and/or Moody's Investors Service.
The estimated fair values of the company's debt, interest rate swap
and cap agreements were determined from dealer quotations and represent the
discounted future cash flows through maturity or expiration using current
rates, and are effectively the amounts the company would pay or receive to
terminate the agreements or retire the debt. The fair values of the interest
rate swap and cap agreements discussed below are before consideration of the
offsetting gains or losses associated with the exposures the instruments are
intended to hedge.
At December 31, 1994, the company had unrecognized gains of $13
million and $5 million on the interest rate caps and floating to fixed rate
swap agreements, respectively, and an unrecognized loss of $61 million on the
fixed to floating rate swap agreements. At December 31, 1993, the company had
an unrecognized gain of $7 million on its fixed to floating rate swap
agreements and an unrecognized loss of $3 million on its floating to fixed rate
swap agreements. Changes in the fair values of these instruments are offset by
changes in the fair values of the underlying assigned obligations.
The estimated fair value of the company's debt (excluding capital
lease obligations) was $1.91 billion and $1.65 billion at December 31, 1994 and
1993, respectively. This compares with net book values of $1.90 billion and
$1.50 billion at December 31, 1994 and 1993, respectively.
41
44
SHAREHOLDERS' EQUITY
--------------------------------------------------------------------------------------------------------------------------------
Preferred Common Retained Translation
(In thousands, except share and per share amounts) Stock Stock Earnings Adjustment Total
--------------------------------------------------------------------------------------------------------------------------------
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)
Fixed Rate Auction 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)
FRAPS - $4.96 per share - - (4,958) - (4,958)
Aviall, Inc. stock - - (314,000) - (314,000)
Redemption of 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
Net earnings - - 153,529 - 153,529
Common stock dividends declared - $.60 per share - - (46,926) - (46,926)
Common stock issued under employee plans (1,466,258 shares) - 27,601 - - 27,601
Foreign currency translation adjustment - - - 1,971 1,971
Other - 2,668 - - 2,668
--------------------------------------------------------------------------------------------------------------------------------
AT DECEMBER 31, 1994 $ - 539,101 603,226 (13,303) 1,129,024
================================================================================================================================
At December 31, 1994, the company had 78,760,742 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.
In 1993, the company redeemed all of its outstanding Fixed Rate Auction
Preferred Stock (Series A and B) for $100 million.
EMPLOYEE STOCK OPTION AND
DIRECTORS' STOCK 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 1994, 1993 and 1992 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
42
45
20% or 50% each year, based on the terms of the grant, and may be granted in
tandem with stock appreciation rights, limited stock appreciation rights and
performance units. The plan also provides for restricted stock rights to these
employees at no cost to them; none were granted in 1994, 1993 or 1992.
The following table summarizes the status of the company's stock option
plans:
----------------------------------------------------------------
(Shares in thousands) 1994 1993 1992
----------------------------------------------------------------
Outstanding, January 1 6,110 6,342 6,557
Average per share $22.45 23.09 22.37
Granted 1,380 772 840
Average per share $24.80 26.43 23.93
Exercised 405 1,305 757
Average per share $20.42 20.32 17.18
Expired or canceled 505 127 298
Average per share $24.87 24.98 24.57
Adjustment for dividend of Aviall stock - 428 -
Outstanding, December 31 6,580 6,110 6,342
Average per share $22.88 22.45 23.09
Exercisable, December 31 4,839 4,901 4,957
Available for future grant 983 1,858 903
================================================================
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.
DIRECTORS' STOCK PLAN. Under the company's Directors' Stock Plan, any eligible
director may elect to receive restricted common shares equal to the nearest
number of whole shares that can be purchased for $15 thousand based on the fair
market value at the date of the grant, in lieu of $10 thousand cash
compensation. The shares fully vest six months after the date of grant,
provided that the director continues to serve in that capacity at that date.
The shares may not be sold or transferred until six months after the date when
service as a director ceases. During 1994, 6,232 shares, with a fair market
value of $165 thousand at the date of grant, were issued under this plan. No
shares were issued pursuant to this plan prior to 1994.
PENSION PLANS
The company and its subsidiaries sponsor several defined benefit pension 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 1994, 1993 and 1992 was as follows:
----------------------------------------------------------------
(In thousands) 1994 1993 1992
----------------------------------------------------------------
Company-administered plans:
Present value of benefits
earned during the year $ 23,378 21,780 20,320
Interest cost on projected
benefit obligation 32,290 28,263 25,269
Return on plan assets:
Actual (1,725) (43,551) (26,387)
Deferred (34,345) 11,366 (2,271)
Other, net 165 (2,066) (2,113)
----------------------------------------------------------------
19,763 15,792 14,818
Union-administered plans 21,282 19,239 19,448
----------------------------------------------------------------
Net pension expense $ 41,045 35,031 34,266
================================================================
Included in the above amounts is the pension expense allocated to
discontinued operations totaling $2 million in 1993 and 1992.
The following table sets forth the plans' funded status and the company's
prepaid expense at December 31, 1994 and 1993:
-----------------------------------------------------------------------------
(In thousands) 1994 1993
-----------------------------------------------------------------------------
Plan assets at fair value $ 442,562 423,636
-----------------------------------------------------------------------------
Actuarial present value of service rendered to date:
Accumulated benefit obligation, including
vested benefits of $323,455 in
1994 and $376,951 in 1993 (350,269) (402,560)
Additional benefit based on estimated
future salary levels (53,681) (56,431)
-----------------------------------------------------------------------------
Projected benefit obligation (403,950) (458,991)
-----------------------------------------------------------------------------
Projected benefit obligation (in excess of)
less than plan assets 38,612 (35,355)
Unrecognized transition amount (22,647) (26,276)
Other, primarily unrecognized prior
service cost and net (gains) losses (1,389) 66,865
-----------------------------------------------------------------------------
Prepaid pension expense $ 14,576 5,234
=============================================================================
43
46
The following table sets forth the actuarial assumptions used for the
company's dominant plan:
-----------------------------------------------------------
1994 1993
-----------------------------------------------------------
Discount rate for determining projected
benefit obligation 8.50% 7.00%
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 as of December 31,
1994 is included above in unrecognized net gains (losses).
In connection with the spin off of Aviall, the company was required to
retain the accumulated benefit obligation and associated assets related to
participants in the company's primary pension plan who were either present or
former employees of Aviall for services rendered through the date of the spin
off. The company treated all present or former employees of Aviall as
terminated participants of this plan as of the date of the spin off.
EMPLOYEE SAVINGS AND
STOCK PURCHASE PLANS
SAVINGS PLANS. The company has defined contribution savings plans that cover
substantially all eligible employees. Company contributions to the plans are
based on employee contributions and the level of company match. Company
contributions to the plans totaled approximately $7 million in 1994 and 1993
and $4 million in 1992.
PURCHASE PLANS. The Employee Stock Purchase Plan provides for periodic
offerings to substantially all U.S. and Canadian employees, with the exception
of executives who participate in the 1980 Stock Incentive Plan, 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 date of the offering.
The following table summarizes the status of the company's stock purchase
plans:
----------------------------------------------------------------------
(Shares in thousands) 1994 1993 1992
----------------------------------------------------------------------
Outstanding, January 1 1,187 1,784 1,350
Average per share $18.08 19.79 19.06
Granted 1,827 - 1,745
Average per share $22.92 - 19.92
Exercised 1,054 641 1,019
Average per share $18.16 19.92 19.23
Expired or canceled 141 53 292
Average per share $18.45 19.92 19.24
Adjustment for dividend of Aviall stock - 97 -
Outstanding, December 31 1,819 1,187 1,784
Average per share $22.87 18.08 19.79
Exercisable, December 31 - 1,142 -
Available for future grant 1,574 3,260 3,207
======================================================================
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.
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 health and welfare 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 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 1992.
44
47
Total periodic postretirement benefit expense for 1994 and 1993 was as
follows:
--------------------------------------------------------------------
(In thousands) 1994 1993
--------------------------------------------------------------------
Current year service cost $1,792 1,360
Interest accrued on postretirement
benefit obligation 3,693 3,682
Other, net 317 -
--------------------------------------------------------------------
Periodic postretirement benefit cost $5,802 5,042
====================================================================
The company's postretirement benefit plans are not funded. The company's
obligation under the plans as of December 31, 1994 and 1993 is as follows:
--------------------------------------------------------------------
(In thousands) 1994 1993
--------------------------------------------------------------------
Accumulated postretirement benefit obligation:
Retirees $26,586 27,487
Fully eligible active plan participants 6,631 4,401
Other active plan participants 16,031 20,697
--------------------------------------------------------------------
49,248 52,585
Unrecognized net gain (loss) 1,259 (5,509)
--------------------------------------------------------------------
Accrued unfunded postretirement benefit obligation $50,507 47,076
====================================================================
The following table sets forth the actuarial assumptions used for the
company's dominant plan:
--------------------------------------------------------------------
1994 1993
--------------------------------------------------------------------
Discount rate for determining accumulated
postretirement benefit obligation 8.50% 7.00%
Present health care cost trend rate 12.50% 13.00%
Ultimate trend rate in 2003 and later 6.00% 6.00%
====================================================================
The cumulative effect of the change in the discount rate as of December 31,
1994 is included above in unrecognized net gain (loss).
Increasing the assumed health care cost trend rates by 1% in each year
would increase the accumulated postretirement benefit obligation as of December
31, 1994 by $2 million and would not have a material effect on periodic
postretirement benefit cost for 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 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 Response, Compensation and Liability Act, the
Superfund Amendments and Reauthorization Act and similar state statutes and may
be required to share in the cost of cleanup of 25 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, 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. The liability does not reflect
possible recoveries from insurance companies or reimbursement of remediation
costs by state agencies, but does include a reasonable estimate of cost sharing
with other PRPs at Superfund sites. At December 31, 1994 and 1993, the company
had accrued $57 million and $45 million, respectively, for environmental
liabilities. The company incurred $24 million of environmental expenses in both
1994 and 1993 and $23 million in 1992.
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.
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 accompanying consolidated statements of earnings, Aviall's results
of operations have been combined with those of the company's previously
discontinued aircraft leasing
45
48
business, which was disposed of in 1992, and reported as discontinued
operations.
The results of discontinued operations are summarized below:
----------------------------------------------------------------------------
Period Ended Year Ended
December 7, December 31,
(In thousands) 1993 1992
----------------------------------------------------------------------------
Net sales $1,086,600 1,171,847
============================================================================
Earnings (loss) from operations before
income taxes and disposition gain $ (191,874) 33,099
Income tax benefit (provision) 41,161 (13,223)
----------------------------------------------------------------------------
Earnings (loss) from operations
before disposition gain (150,713) 19,876
----------------------------------------------------------------------------
Estimated gain on disposition - 9,272
Income tax provision - (3,272)
----------------------------------------------------------------------------
Net gain on disposition - 6,000
----------------------------------------------------------------------------
Earnings (loss) from discontinued operations $ (150,713) 25,876
============================================================================
The loss from discontinued operations in 1993 includes an after tax charge
of $169 million ($2.18 per common share) related to the restructuring of Aviall
and transaction costs associated with the spin off. Earnings from 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.
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 and $33 million was included in the operating
results of discontinued operations for 1993 and 1992, respectively.
The company will continue to guarantee, for a limited period, approximately
$19 million of Aviall's indebtedness to the European Investment Bank in
exchange for a customary guarantee fee.
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 $452 million, $453 million
and $468 million, primarily from Automotive Carriers, was derived from General
Motors Corporation in 1994, 1993 and 1992, respectively.
-------------------------------------------------------------------------------
(In thousands) 1994 1993 1992
-------------------------------------------------------------------------------
REVENUE:
Vehicle Leasing & Services $4,057,735 3,596,803 3,384,952
Automotive Carriers 645,402 634,634 651,216
Intersegment (17,534) (14,407) (16,493)
-------------------------------------------------------------------------------
$4,685,603 4,217,030 4,019,675
-------------------------------------------------------------------------------
Foreign portion of revenue $ 347,671 311,265 336,499
===============================================================================
OPERATING PROFIT:
Vehicle Leasing & Services $ 389,085 335,793 283,505
Automotive Carriers 49,850 31,832 47,876
Other 166 (49) 118
-------------------------------------------------------------------------------
Operating profit 439,101 367,576 331,499
Miscellaneous expense, net (2,627) (650) (2,678)
Interest expense (144,735) (124,789) (139,664)
Unallocated corporate
overhead expense (31,220) (32,361) (23,612)
-------------------------------------------------------------------------------
Earnings from continuing operations
before income taxes $ 260,519 209,776 165,545
-------------------------------------------------------------------------------
Foreign portion of operating profit $ 30,030 26,176 25,692
-------------------------------------------------------------------------------
Foreign portion of earnings from
continuing operations
before income taxes $ 16,017 9,140 6,711
===============================================================================
DEPRECIATION:
Vehicle Leasing & Services $ 628,625 557,406 536,951
Automotive Carriers 35,689 39,418 43,155
Other 900 1,074 1,144
-------------------------------------------------------------------------------
665,214 597,898 581,250
Gains on vehicle sales (73,545) (54,560) (34,237)
-------------------------------------------------------------------------------
$ 591,669 543,338 547,013
===============================================================================
IDENTIFIABLE ASSETS:
Vehicle Leasing & Services $4,644,294 3,908,931 3,446,998
Automotive Carriers 285,950 277,310 303,917
Other 121,911 107,327 61,283
Eliminations (37,682) (35,180) (43,789)
-------------------------------------------------------------------------------
5,014,473 4,258,388 3,768,409
Net assets of discontinued operations - - 910,124
-------------------------------------------------------------------------------
Total assets $5,014,473 4,258,388 4,678,533
-------------------------------------------------------------------------------
Foreign portion of identifiable assets $ 562,664 414,173 394,571
===============================================================================
CAPITAL EXPENDITURES,
INCLUDING CAPITAL LEASES:
Vehicle Leasing & Services $1,722,329 1,205,620 1,030,012
Automotive Carriers 43,789 31,045 40,528
Other 4,044 856 494
-------------------------------------------------------------------------------
$1,770,162 1,237,521 1,071,034
===============================================================================
46
49
SUPPLEMENTAL FINANCIAL DATA Ryder System, Inc. and Consolidated Subsidiaries
QUARTERLY DATA
----------------------------------------------------------------------------------------------------------------------------
Quarters
-------------------------------------------------------------
(In thousands, except per share amounts) First Second Third Fourth
----------------------------------------------------------------------------------------------------------------------------
Revenue:
1994 $1,071,837 1,176,339 1,194,675 1,242,752
1993 $ 999,657 1,080,233 1,043,495 1,093,645
----------------------------------------------------------------------------------------------------------------------------
Earnings from continuing operations:
1994 $ 23,738 49,842 41,957 37,992
1993 $ 19,946 40,744 23,488 30,544
----------------------------------------------------------------------------------------------------------------------------
Net earnings (loss):
1994 $ 23,738 49,842 41,957 37,992
1993 $ (1,197) (122,204) 27,783 34,194
----------------------------------------------------------------------------------------------------------------------------
Earnings per common share from continuing operations:
1994 $ 0.30 0.64 0.53 0.48
1993 $ 0.23 0.51 0.30 0.39
----------------------------------------------------------------------------------------------------------------------------
Net earnings (loss) per common share:
1994 $ 0.30 0.64 0.53 0.48
1993 $ (0.05) (1.60) 0.36 0.44
============================================================================================================================
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 "Postretirement Benefits Other Than Pensions"
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. See "Discontinued Operations" note for additional
discussion.
COMMON STOCK DATA
At December 31, 1994 and 1993, the company had 78,760,742 and 77,294,484
shares, respectively, of common stock outstanding. As of January 31, 1995,
there were 19,516 common stockholders. The payment of cash dividends is subject
to the restrictions described on page 40.
The company's common shares are traded on the New York Stock Exchange,
the Chicago 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 1994 and 1993 were as follows:
-----------------------------------------------------------------------------------------------------
Market Price
------------------------------------------------ Common Share
1994 1993 Cash Dividends
-------------------- ------------------- ---------------
High Low High Low 1994 1993
-----------------------------------------------------------------------------------------------------
First quarter $27 7/8 24 1/8 32 1/4 27 1/4 .15 .15
Second quarter 25 7/8 21 3/8 31 7/8 26 1/2 .15 .15
Third quarter 28 24 1/2 33 1/2 27 7/8 .15 .15
Fourth quarter (a) 26 7/8 19 7/8 26 5/8 24 3/4 .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.
47
50
SUPPLEMENTAL FINANCIAL DATA
ELEVEN YEAR SUMMARY
----------------------------------------------------------------------------------------------------------
(Dollars in thousands, except per share amounts) 1994 1993 1992 1991
----------------------------------------------------------------------------------------------------------
Revenue $4,685,603 4,217,030 4,019,675 3,851,334
Earnings from continuing operations (a):
Before income taxes $ 260,519 209,776 165,545 60,479
After income taxes $ 153,529 114,722 98,050 30,923
Per common share $ 1.95 1.43 1.17 0.28
Net earnings (loss) (b) $ 153,529 (61,424) 123,926 14,017
Per common share (b) $ 1.95 (0.84) 1.51 0.05
----------------------------------------------------------------------------------------------------------
Cash dividends per common share $ 0.60 0.60 0.60 0.60
Average number of common and
common equivalent shares (in thousands) 78,768 77,535 75,046 73,837
Average common equity $1,057,931 1,266,715 1,327,624 1,317,888
Return on average common equity (%) (c) 14.5 10.2 8.1 4.2
Book value per common share $ 14.33 12.81 18.26 17.50
Market price - high (d) $ 28 26 5/8 28 7/8 21 5/8
Market price - low (d) $ 19 7/8 24 3/4 19 5/8 14
----------------------------------------------------------------------------------------------------------
Total debt $1,912,898 1,531,446 1,668,947 1,988,509
Long-term debt $1,794,795 1,374,943 1,499,765 1,742,911
Debt to equity (%) 169 155 113 143
Debt to tangible equity (%) 227 202 135 176
----------------------------------------------------------------------------------------------------------
Year-end assets $5,014,473 4,258,388 4,678,533 4,843,991
Return on average assets (%) (e) 3.3 2.7 2.3 0.5
Average asset turnover (%) (e) 99.6 103.2 104.0 95.2
----------------------------------------------------------------------------------------------------------
Cash flow from continuing operating activities
and asset sales $1,096,222 995,954 1,066,936 855,373
Capital expenditures, including capital leases $1,770,162 1,237,521 1,071,034 598,044
----------------------------------------------------------------------------------------------------------
Number of vehicles (e) 188,831 168,278 160,188 155,159
Number of employees (e) 43,095 37,949 37,336 35,566
==========================================================================================================
(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 a
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.
48
51
Ryder System, Inc. and Consolidated Subsidiaries
------------------------------------------------------------------------------------------------------------------------------------
(Dollars in thousands, except per share amounts) 1990 1989 1988 1987 1986 1985 1984
------------------------------------------------------------------------------------------------------------------------------------
Revenue 3,950,024 3,889,063 3,842,724 3,621,526 3,105,632 2,723,705 2,445,038
Earnings from continuing operations (a):
Before income taxes 98,690 54,090 167,131 237,560 232,855 188,686 191,125
After income taxes 58,632 31,975 100,249 149,615 139,317 118,496 115,736
Per common share 0.64 0.31 1.18 1.82 1.80 1.64 1.62
Net earnings (loss) (b) 42,680 45,986 197,173 187,113 160,933 125,316 135,908
Per common share (b) 0.43 0.50 2.40 2.29 2.09 1.73 1.91
------------------------------------------------------------------------------------------------------------------------------------
Cash dividends per common share 0.60 0.60 0.56 0.52 0.44 0.40 0.36
Average number of common and
common equivalent shares (in thousands) 74,769 77,275 79,641 79,621 74,898 72,410 71,226
Average common equity 1,365,269 1,419,226 1,406,470 1,227,372 957,084 814,897 702,972
Return on average common equity (%) (c) 5.0 3.1 9.1 14.8 16.3 15.4 16.8
Book value per common share 18.06 18.24 18.71 16.75 14.72 12.20 10.84
Market price - high (d) 23 3/8 31 1/8 32 1/2 43 35 1/2 24 5/8 19 5/8
Market price - low (d) 12 1/4 19 3/4 22 5/8 20 21 1/2 14 5/8 12 3/4
------------------------------------------------------------------------------------------------------------------------------------
Total debt 2,402,741 2,674,884 2,576,568 2,614,018 2,037,824 1,553,100 1,055,471
Long-term debt 1,883,869 2,151,411 2,281,604 2,476,715 1,866,980 1,459,235 1,012,054
Debt to equity (%) 168 180 162 185 164 160 138
Debt to tangible equity (%) 213 226 202 232 214 231 151
------------------------------------------------------------------------------------------------------------------------------------
Year-end assets 5,263,498 5,690,450 5,639,674 5,450,809 4,526,087 3,643,599 2,718,591
Return on average assets (%) (e) 1.1 0.5 2.0 3.5 3.6 3.8 4.8
Average asset turnover (%) (e) 88.7 83.0 83.5 87.2 83.4 87.2 100.6
------------------------------------------------------------------------------------------------------------------------------------
Cash flow from continuing operating activities
and asset sales 1,093,739 1,017,418 1,004,776 1,006,819 891,601 697,987 658,935
Capital expenditures, including capital leases 787,740 1,032,056 1,120,751 1,157,993 758,450 768,509 865,463
------------------------------------------------------------------------------------------------------------------------------------
Number of vehicles (e) 160,983 163,082 162,633 153,848 134,987 109,644 100,654
Number of employees (e) 35,591 37,628 40,625 36,811 30,865 24,624 21,688
====================================================================================================================================
(c) Excludes the cumulative effect of changes 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.
49
52
GLOSSARY OF INDUSTRY TERMS
[PHOTO]
Ryder auto carriers
transported nearly 6.3 million
vehicles in 1994.
ASSET MANAGEMENT:
A Ryder core competency that encompasses the specification,
purchasing, managing, maintaining, and disposing of vehicles at the
appropriate time, all to increase return on investment.
ASSET RATIONALIZATION:
A process that audits a company's transportation and distribution
assets and compares them against an optimum supply chain design.
AUTOMOTIVE CARRIAGE:
A business that delivers finished vehicles to dealers from
manufacturing plants, ports and railheads. Automotive carriers often
provide other value-added services such as vehicle inspection, yard
management and finished vehicle detailing.
BACKHAUL:
The return movement of a vehicle from its original destination back to
its point of origin with a payload.
CONTRACT CARRIER:
A for-hire carrier that serves only shippers with which the carrier
has a continuing contract, and not the general public.
CONTRACT LOGISTICS:
The use of a third-party provider to plan, implement and control 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, or any portion thereof.
CUBED OUT:
A term that refers to the percentage of a vehicle's cubic hauling
space that is utilized in a shipment. If a particular vehicle is 100%
"cubed out," it has no additional space in which to carry freight.
CYCLE TIME:
The time it takes for a business to receive, fulfill and then deliver
an order to a customer. Once measured only in days, many industries
now measure it in hours.
DEDICATED CONTRACT CARRIAGE:
A third-party contractual service that dedicates vehicles and drivers
to a single customer for its exclusive use, usually done in a closed
loop or fixed route situation.
EFFICIENT CONSUMER RESPONSE (ECR):
A grocery industry initiative designed to replenish stock on store
shelves based on actual consumer demand rather than by demand
forecasting.
50
53
[PHOTO]
Home Depot is one
of Ryder's more
than 13,000 full service
truck leasing customers.
ELECTRONIC DATA INTERCHANGE (EDI):
Computer-to-computer communication between two or more companies that
is used to generate documents like purchase orders and
invoices. EDI also enables firms to access the information systems of
suppliers, customers and carriers to determine real-time status of
shipments and inventory.
FINANCE LEASE:
Often, a full-payout agreement in which the customer, at the end of
the lease term, assumes ownership of the vehicle or is provided with a
purchase option. The lessee is usually responsible for maintenance,
taxes and insurance.
FLOW-THROUGH DISTRIBUTION:
A process in which products from multiple locations are brought into a
central facility (sometimes called a cross-dock), are re-sorted by
delivery destination and shipped in the same day. This eliminates
warehousing, reduces inventory levels and speeds order turnaround
time. The designing, location and management of flow-through
distribution locations is often a part of a company's logistics
reengineering strategy.
FULL SERVICE TRUCKLEASE:
A full service truck lease is a system that provides the customer with
a truck and a variety of support services for a single monthly lease
payment. Full service leases may include features like preventive
maintenance, emergency roadside repairs, equipment evaluations and
specifications, fuel, administrative support, driver support, safety
programs, and the return of vehicles at the end of the contract term.
INTEGRATED LOGISTICS:
A system-wide management view of the entire supply chain, from raw
materials supply through finished goods distribution. It requires
managing all functions that make up the supply chain as a single
entity, rather than managing individual functions separately.
INTERMODAL TRANSPORTATION:
Transporting freight by using two or more transportation modes. An
example would be freight in containers which might first be taken to a
port by truck, transported by ship, then carried by rail, and finally
be transferred back to a truck for delivery to its final destination.
INVENTORY DEPLOYMENT:
A technique for reducing the number of warehouses required by
replacing excess inventory with event-driven information derived from
tracking the location of inventory at rest as well as in motion. It is
typically done using bar-coding and radio frequency technology, which
eliminate paperwork.
51
54
[PHOTO]
Ryder Dedicated Logistics
delivers parts to Saturn's
manufacturing facility
just in time, 300 times a day,
365 days a year.
INVENTORY MANAGEMENT:
The process of ensuring the availability of products through inventory
administration activities such as planning, stock positioning, and
monitoring the age of the product.
INVENTORY TURNS:
The number of times inventory is sold during a period, generally
measured in turns per year.
JUST-IN-TIME (JIT):
An in-bound manufacturing strategy that smoothes material flow into
assembly and manufacturing plants. JIT minimizes inventory investment
by providing timely, sequential deliveries of product exactly where
and when it is needed, from a multitude of suppliers. Traditionally an
automotive strategy, it is being introduced into many other
industries.
LESS-THAN-TRUCKLOAD (LTL) CARRIERS:
Trucking companies that consolidate and then transport small shipments
of freight by utilizing a network of terminals and relay points.
LOGISTICS:
The function which encompasses materials management and physical
distribution.
LOGISTICS CHANNEL:
The network of supply chain participants engaged in storage, handling,
transfer, transportation and communications functions that contribute
to the efficient flow of goods.
OUTSOURCING:
Subcontracting business functions or processes such as logistics and
transportation services to an outside firm, instead of doing them
in-house.
PRIVATIZATION:
A trend in the U.S. public sector brought about by the need to gain
cost and service efficiencies available through private management of
public services.
PUBLIC TRANSIT:
The transportation of people by public sector organizations to and
from work or other destinations. There is a trend in the public sector
to outsource public transit to third-party providers, or "privatize,"
in order to gain cost and service efficiencies.
QUICK RESPONSE (QR) DELIVERY:
A rapidly expanding delivery process using information technology to
measure customer demand, enabling retailers to have stock on shelves
when needed while maintaining minimum backroom inventories.
52
55
[PHOTO]
Ryder has more
than 34,000 vehicles
in its consumer truck
rental fleet.
RENTAL DAY:
The basic unit used to measure fleet utilization rates by companies
that are in the business of renting vehicles. The total number of
rental days recorded by commercial truck rental companies is an
indicator that measures businesses' incremental need to ship products.
REVERSE LOGISTICS:
Historically, the logistics process ended once products reached
the consumer. Reverse logistics melds classic logistics activities with
conservation, recycling and disposal - activities that center around
preserving the environment and the need to conserve raw materials.
ROLLING STOCK:
In the transportation business, rolling stock traditionally has
meant "vehicles." The term is used in logistics to refer to inventory
in motion, not at rest.
STUDENT TRANSPORTATION:
The logistics business that transports students to and from
school and extracurricular activities.
SUPPLY CHAIN MANAGEMENT:
An integrating process that combines the classic logistics
functions of physical distribution and materials management with the
purchasing of raw materials and/or inventory and sales, marketing,
information technology and strategic planning functions.
[PHOTO]
Ryder Student
Transportation Services
transports more than
440,000 students to and
from school each day.
THIRD-PARTY PROVIDER:
A firm that supplies goods and services such as transportation
and logistics to another company.
TIME-BASED COMPETITION:
A competitive marketing strategy based on a company's ability to
deliver its products to customers faster than its competition.
TRUCKLOAD (TL) CARRIERS:
Trucking companies that move full truckloads of freight directly from
the point of origin to its destination.
TRUCK RENTAL:
A short-term transaction, generally under 12 months, that
allows the customer the use of a truck for a specified period of time,
generally measured in "rental days." Rental can be used to supplement a
leased or privately-owned fleet during short periods of peak need to
execute rush orders or handle excess volume, or to test new routes and
distribution channels.
UTILIZATION RATE:
A fleet productivity measurement that tracks the percentage of time
that a truck or vehicle is being used or rented.
53
56
BOARD OF DIRECTORS CORPORATE MANAGEMENT
M. ANTHONY BURNS M. ANTHONY BURNS
Chairman, President and Chairman, President and
Chief Executive Officer Chief Executive Officer
ARTHUR H.BERNSTEIN (1,3) JAMES M. HERRON
President and Chief Executive Officer, Senior Executive Vice President and
Bancorp Capital Group,Inc. General Counsel
EDWARD T. FOOTE II (2,3) EDWIN A. HUSTON
President, University of Miami Senior Executive Vice President -
Finance and Chief Financial Officer
JOHN A. GEORGES (1,4)
Chairman and C. ROBERT CAMPBELL
Chief Executive Officer, Executive Vice President -
International Paper Company Human Resources and Administration
VERNON E. JORDAN, JR. (1,4) J. ERNEST RIDDLE
Senior Partner, Executive Vice President -
Akin, Gump, Strauss, Marketing
Hauer & Feld, LLP
R. RAY GOODE
HOWARD C. KAUFFMANN (2,4) Senior Vice President -
Retired President, Public Affairs
Exxon Corporation
JOHN R. HADDOCK
DAVID T. KEARNS (1,3) Senior Vice President -
Chairman, Industry and Commercial Marketing
New American Schools Development
Corporation and Retired Chairman BRUCE D. PARKER
and Chief Executive Officer, Senior Vice President -
Xerox Corporation MIS and Chief Information Officer
LYNN M. MARTIN (2,3) KEVIN M. PETERS
Former U.S. Secretary of Labor; Senior Vice President -
Chairperson, Corporate Account Sales
Deloitte & Touche's Council
for the Advancement of Women; ANTHONY G. TEGNELIA
advisor to Deloitte & Touche; and Senior Vice President and Controller
Professor, J.L. Kellogg Graduate School of
Management at Northwestern University STEVEN R. GOLDBERG
Vice President and Treasurer
JAMES W. MCLAMORE (1,4)
Chairman Emeritus, JOSHUA HIGH
Burger King Corporation Vice President - Corporate Tax
PAUL J. RIZZO (2,3) J. WAYNE JOHNSON
Retired Vice Chairman, Vice President - Risk Management
International Business
Machines Corporation LISA A. RICKARD
Vice President - Federal Affairs
DONALD V. SEIBERT (1,4)
Retired Chairman of the Board and FRED RAY STUEVER
Chief Executive Officer, Vice President -
J.C. Penney Company, Inc. Environment, Health and Safety
HICKS B. WALDRON (2,4) H. JUDITH CHOZIANIN
Retired Chairman and Secretary
Chief Executive Officer,
Avon Products, Inc.
ALVA O. WAY (2,3)
Chairman,
IBJ Schroder Bank &
Trust Company
MARK H. WILLES (2,3)
Vice Chairman,
General Mills, Inc.
(1) Audit Committee
(2) Compensation Committee
(3) Finance Committee
(4) Committee on Directors and
Public Responsibility
54
57
OPERATING MANAGEMENT
VEHICLE LEASING & RYDER PUBLIC
SERVICES DIVISION TRANSPORTATION SERVICES
President
RYDER COMMERCIAL Gerald R. Riordan
LEASING &SERVICES
President Senior Vice President &
Dwight D. Denny General Manager
John H. Dorr
Senior Vice President
Franklin W. Stephens Vice Presidents &
General Managers
Vice Presidents & John A. Elliott
General Managers (Ryder Student Transportation
Joel E. Biggerstaff Services, Inc.)
(Southeast Region) John C. Green
Christopher H. Culley (Managed Logistics
(Mid West Region) Systems, Inc.)
Robert A. Dickinson Bobby J. Griffin
(Southwest Region) (ATE Management and
John R. Hosmer Service Company,Inc.)
(Mid Atlantic Region)
Stephen E. Hunt
(Northeast Region) AUTOMOTIVE CARRIER
Edward R. Justis, Jr. DIVISION
(Mid South Region)
William L. O'Donnell RYDER AUTOMOTIVE CARRIER
(Great Lakes Region) GROUP, INC.
Douglas M. Slack President
(West Region) James B. Griffin
Vice Presidents Executive Vice President
George E. Arseneau Michael J. Wagner
Thomas D. Hjertquist
Michael W. Kuryla Senior Vice President
Tracy A. Leinbach Steven C. Nichols
J. Randall Nobles
Robert P. Tabb Vice President
Rolland G. Hill
RYDER TRUCK RENTAL
CANADA LTD. A.T.G. AUTOMOTIVE
Vice President & TRANSPORT GROUP, INC.
General Manager Vice President &
Gordon J. Box General Manager
David N. Flett
RYDER DEDICATED
LOGISTICS, INC. BLAZER TRUCK LINES, INC.
President Vice President &
Larry S. Mulkey General Manager
Donn B. Whitmer
Senior Vice President
William D. Zollars RYDER AUTOMOTIVE
OPERATIONS, INC.
Vice Presidents Senior Vice President
William A. Baum Bruce R. LeMar
Jerry W. Bowman
Enrique P. Fiallo Vice Presidents
Shar Javad Ronald R. Borges
C. Michael McCanta Ronald L. Butterbaugh
Miles M. Raper Stephen M. Donly
Vincent E. Fortuna
RYDER CONSUMER John S.Gottlieb
TRUCK RENTAL Gerald J. MacDonald
President Craig J. McGrath
Gerald R. Riordan W. Joseph Tripp
Area Vice Presidents
Raymond W. Casey INTERNATIONAL
(Eastern Area) DIVISION
Wayne M. Mincey
(Central Area) Senior Vice President &
Jack P. Summerville General Manager
(Western Area) Randall E.West
Vice Presidents Vice Presidents
David S. Russell Dennis M. Custage
C. Mack Kenneth V. Eckhart
Scott R. Francis
Glenn A. Schneider
RYDER PLC
Managing Director
John Hodges
RYDER TRANSPORT
SERVICES GMBH
Managing Director
Rainer Sandow
RYDER DE MEXICO,
S.A. DE C.V.
Managing Director
Jaime White Ibanez
55
58
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
Automotive 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)
Ryder de Mexico, S.A. de C.V. (Mexico)
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:
The First National Bank of Boston
Shareholder Services Division
Dividend Reinvestment Unit M/S 45-01-06
Post Office Box 1681
Boston, Massachusetts 02105-1681
CORPORATE INFORMATION
ANNUAL MEETING
The annual meeting of stockholders of Ryder System, Inc. will be held at 11:00
a.m., Friday, May 5, 1995, 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 1994 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, 1995, 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 LLP
Certified Public Accountants
One Biscayne Tower
Suite 2900
2 South Biscayne Boulevard
Miami,Florida 33131
TRANSFER AGENT AND REGISTRAR
The First National Bank of Boston
Shareholder Services Division
Investor Relations Unit M/S 45-02-09
Post Office Box 644
Boston, Massachusetts 02105-0644
(617) 575-3170
COMMON STOCK LISTINGS
New York Stock Exchange
Chicago Stock Exchange
Pacific Stock Exchange
TRADING SYMBOL: R
EXECUTIVE OFFICES
Ryder System,Inc.
3600 N.W. 82nd Avenue
Miami, Florida 33166
(305) 593-3726
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CORPORATE RESPONSIBILITY
In communities where its employees live and work, Ryder supports efforts which
favorably impact the ability of women, minorities and the disadvantaged to
participate more fully in society. The company believes such efforts are not
only the right things to do, but also good business.
Ryder addresses corporate responsibility in two ways, through Ryder-based
programs designed to expand opportunities for women and minorities and through
support of community organizations with the same focus.
To Ryder, expanding opportunities for women and minorities provides a
competitive advantage, both domestically and in important emerging global
markets. The company believes so strongly in this advantage that it now
requires employement diversity objectives as part of annual business plans for
all bonus-eligible management personnel.
To attract the best and brightest talent, including women and minority
employees, Ryder works with and receives excellent advice from groups such as
Catalyst, which represents women's issues; National Council of LaRaza, which
represents Hispanic issues; and the National Urban League, which represents
African American issues. Recruiting drives at historically black colleges and
universities such as Florida A&M University, Howard University and Morehouse
College also continue to be rich sources of qualified recruits. Of Ryder's
1994 MBA college recruits, more than 50% were women or minorities.
[PHOTO]
MEMBERS OF THE DIVERSITY COUNCIL MEET WITH TONY BURNS.
From left: CAELI MATTHEWS, PRESIDENT, RYDER WOMEN'S MANAGEMENT
ASSOCIATION; OFELIA SAN PEDRO, PRESIDENT, RYDER
HISPANIC NETWORK; LOLLY WALTON, PRESIDENT, RYDER
PROFESSIONAL SECRETARIES; AND MARY WALTON, PRESIDENT,
RYDER BLACK EMPLOYEE NETWORK.
The company has established employee network groups for the areas of Black
Employees, Hispanic Employees, Professional Secretaries and Women's Management.
These groups provide tangible business results through mentoring and
recruiting, and by offering special insights into ways to improve operations
and marketing. One interesting outgrowth has been an initiative to expand
market penetration in key minority markets.
The company's charitable contributions are made largely through the Ryder
System Charitable Foundation, which supports a wide array of local and national
causes aimed at bringing the disadvantaged more fully into the mainstream.
Reflecting a growing belief that education provides the best hope of
reaching that goal, a relatively large precentage of giving is made to programs
in this area. From the local classroom to the national level, the company
supports efforts to address the complex challenges facing today's educators.
Scholarships and financial aid are made available for minority students at
the community college, undergraduate and graduate levels through relationships
with specific schools as well as the United Negro College Fund and the Jackie
Robinson Foundation, which combines college scholarships with much-needed
hands-on business experience.
At home in South Florida, Ryder is a leader in meeting a variety of
community needs. The company provides active leadership and significant
financial support to such human needs groups as the United Way of Dade County.
Extending its educational focus to the arts, support for "in-school" programs
of the Florida Grand Opera, Coconut Grove Playhouse and Florida Philharmonic
helps expose people of all ages and backgrounds to new cultural arts
experiences. The company has made a significant gift to the South Florida
Performing Arts Center Foundation's capital campaign and is providing
leadership to that campaign, which will help fund construction of a new
performing arts complex in downtown Miami.
At Ryder, diversity and community involvement are fundamental elements of
its business philosophy, and the company also encourage its employees to be
active in the communities where they live and work. In doing so, the company
believes it not only extends a positive impact to the communities, but also
helps to develop business leadership skills in its employees.
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RYDER SYSTEM, INC.
3600 NW 82nd Avenue
Miami, Florida 33166