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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission File No. 1-4364
-------------------------------------
RYDER SYSTEM, INC.
(a Florida corporation)
3600 N. W. 82nd Avenue
Miami, Florida 33166
Telephone (305) 500-3726
I.R.S. Employer Identification No. 59-0739250
-------------------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days: YES X NO
Ryder System, Inc. (the "Registrant" or the "Company") had 76,388,072 shares of
common stock ($0.50 par value per share) outstanding as of April 30, 1997.
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
Ryder System, Inc. and Subsidiaries
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Three months ended March 31, 1997 and 1996
(In thousands, except per share amounts) 1997 1996
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REVENUE $ 1,335,895 1,327,951
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Operating expense 1,081,549 1,078,645
Depreciation expense, net of gains (1997 - $16,383; 1996 - $21,016) 153,994 178,487
Interest expense 46,883 52,816
Miscellaneous (income) expense, net (3,719) 276
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1,278,707 1,310,224
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Earnings before income taxes 57,188 17,727
Provision for income taxes 23,522 7,548
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NET EARNINGS $ 33,666 10,179
====================================================================================================================================
EARNINGS PER COMMON SHARE $ 0.43 0.13
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Cash dividends per common share $ 0.15 0.15
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Average common and common equivalent shares 78,748 80,033
====================================================================================================================================
See accompanying notes to consolidated condensed financial statements.
Item 1. Financial Statements (continued)
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
Ryder System, Inc. and Subsidiaries
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Three months ended March 31, 1997 and 1996
(In thousands) 1997 1996
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 33,666 10,179
Depreciation expense, net of gains 153,994 178,487
Deferred income taxes 21,600 5,623
Decrease (increase) in receivables (30,677) 8,036
Increase (decrease) in accounts payable and accrued expenses (17,469) 336
Increase in other working capital items (54,816) (56,411)
Other, net (4,109) (7,538)
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102,189 138,712
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CASH FLOWS FROM FINANCING ACTIVITIES:
Debt proceeds 58,911 234,879
Debt repaid, including capital lease obligations (31,982) (75,385)
Common stock repurchased (31,310) -
Common stock issued 4,884 9,495
Dividends on common stock (11,575) (11,928)
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(11,072) 157,061
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and revenue earning equipment (249,988) (385,051)
Sales of property and revenue earning equipment 106,248 101,844
Acquisitions (46,346) -
Other, net 4,070 9,801
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(186,016) (273,406)
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INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (94,899) 22,367
Cash and cash equivalents at January 1 191,384 92,857
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CASH AND CASH EQUIVALENTS AT MARCH 31 $ 96,485 115,224
====================================================================================================================================
See accompanying notes to consolidated condensed financial statements.
Item 1. Financial Statements (continued)
CONSOLIDATED CONDENSED BALANCE SHEETS
Ryder System, Inc. and Subsidiaries
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March 31, December 31,
(Dollars in thousands, except per share amounts) 1997 1996
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ASSETS
Current assets:
Cash and cash equivalents $ 96,485 191,384
Receivables 598,455 561,927
Inventories 63,848 61,345
Tires in service 166,329 168,367
Deferred income taxes 35,474 82,571
Prepaid expenses and other current assets 134,711 82,172
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Total current assets 1,095,302 1,147,766
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Revenue earning equipment 5,280,444 5,281,934
Less accumulated depreciation (2,022,543) (1,995,846)
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Net revenue earning equipment 3,257,901 3,286,088
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Operating property and equipment 1,119,278 1,128,626
Less accumulated depreciation (501,481) (513,515)
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Net operating property and equipment 617,797 615,111
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Direct financing leases and other assets 335,888 314,574
Intangible assets and deferred charges 299,040 281,850
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$ 5,605,928 5,645,389
====================================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 276,331 199,958
Accounts payable 346,248 321,468
Accrued expenses 599,744 633,529
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Total current liabilities 1,222,323 1,154,955
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Long-term debt 2,167,903 2,237,010
Other non-current liabilities 459,111 461,275
Deferred income taxes 658,976 686,143
Shareholders' equity:
Common stock of $0.50 par value per share (shares outstanding at
March 31, 1997 - 77,121,683; December 31, 1996 - 77,961,154) 470,420 496,292
Retained earnings 635,978 613,887
Translation adjustment (8,783) (4,173)
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Total shareholders' equity 1,097,615 1,106,006
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$ 5,605,928 5,645,389
====================================================================================================================================
See accompanying notes to consolidated condensed financial statements.
Item 1. Financial Statements (continued)
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(A) INTERIM FINANCIAL STATEMENTS
The accompanying unaudited consolidated condensed financial statements
have been prepared by the Company in accordance with the accounting
policies described in the 1996 Annual Report and should be read in
conjunction with the consolidated financial statements and notes which
appear in that report. These statements do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included.
(B) SALE OF CONSUMER TRUCK RENTAL
On October 17, 1996, the Company completed the sale of substantially
all the assets and certain liabilities of its consumer truck rental
business. In the first quarter of 1996, the consumer truck rental
business incurred a $15 million pretax loss on revenue of $106
million.
KPMG PEAT MARWICK LLP
CERTIFIED PUBLIC ACCOUNTANTS
One Biscayne Tower Telephone 305-358-2300
Suite 2900 Telecopier 305-577-0544
2 South Biscayne Boulevard
Miami, FL 33131
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
The Board of Directors and Shareholders
Ryder System, Inc.:
We have reviewed the accompanying consolidated condensed balance sheet of Ryder
System, Inc. and subsidiaries as of March 31, 1997, and the related consolidated
condensed statements of earnings and cash flows for the three-month periods
ended March 31, 1997 and 1996. These consolidated condensed financial statements
are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the consolidated condensed financial statements referred to above for
them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Ryder System, Inc. and subsidiaries
as of December 31, 1996, and the related consolidated statements of operations
and cash flows for the year then ended (not presented herein); and in our report
dated February 4, 1997, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set forth in
the accompanying consolidated condensed balance sheet as of December 31, 1996,
is fairly stated, in all material respects, in relation to the consolidated
balance sheet from which it has been derived.
KPMG PEAT MARWICK LLP
Miami, Florida
April 21, 1997
ITEM 2. Management's Discussion and Analysis of Results of Operations
and Financial Condition --
Three months ended March 31, 1997 and 1996
RESULTS OF OPERATIONS
The Company reported earnings before income taxes of $57 million in the first
quarter of 1997, compared with $18 million in last year's first quarter (which
included a $15 million pretax loss for the consumer truck rental operations,
which were subsequently sold in October 1996). The increase in first quarter
pretax earnings resulted from increased revenue in integrated logistics and
public transportation as well as lower overall costs resulting from
restructuring and other cost-cutting initiatives undertaken in 1996. First
quarter pretax earnings for 1996 were impacted by a strike at General Motors
(which led to a pretax loss in the Automotive Carrier Services Division), softer
commercial truck rental demand, increased costs associated with international
expansion and bad weather in the United States. Net earnings in the first
quarter of 1997 were $34 million, or $0.43 per common share, compared with $10
million, or $0.13 per common share, in the first quarter of 1996. The Company's
effective tax rate in the first quarter of 1997 was 41.1% compared with 42.6% in
the same period of 1996.
Total revenue was $1.34 billion in the first quarter of 1997 compared with $1.33
billion in the first quarter of 1996. Excluding first quarter revenue of $106
million from our former consumer truck rental operations, sold in October 1996,
the year-to-year increase was 9.3%. Vehicle Leasing & Services revenue in the
first quarter of 1997 increased $103 million or 9.5%, compared with the same
period in 1996 (excluding revenue from consumer truck rental), primarily due to
growth in integrated logistics business and new business as well as acquisitions
in public transportation. Automotive Carrier Services revenue in the first
quarter of 1997 increased $15 million or 11%, compared with the first quarter of
1996. Higher 1997 revenue resulted from an increase in the number of vehicles
shipped due primarily to new business and increased vehicle production in North
America and the absence of a strike at General Motors, the division's largest
customer, which was experienced in the first quarter of 1996.
The Company's operating expense ratio was 81.0% in the first quarter of 1997
compared with 81.2% in the same period in 1996. Excluding the results of the
consumer truck rental operations in 1996, the operating expense ratio remained
unchanged at about 81.0%. Increased total revenue and lower employee and
insurance costs as a percentage of revenue were offset by higher subcontracted
freight costs as a percentage of revenue within Integrated Logistics.
Depreciation expense (before gains on vehicle sales) decreased 15% in the first
quarter of 1997 compared with the same period last year. Lower depreciation
resulted from a decrease in the size of the vehicle fleet resulting from the
sale of the consumer truck rental operations and reduction in the commercial
rental fleet. Gains on vehicle sales were $4.6 million lower in the first
quarter of 1997 compared with the same period in 1996. The decrease in gains was
due to a lower number of units sold primarily attributable to the absence of
consumer rental vehicle sales in the first quarter of 1997. Management expects
gains to be lower for fiscal year 1997, as
ITEM 2. Management's Discussion and Analysis of Results of Operations
and Financial Condition (continued) --
Three months ended March 31, 1997 and 1996
compared with the prior year, due to the absence of consumer truck rental and
the resulting reduction in turnover on a smaller fleet.
Interest expense decreased $6 million, or 11%, in the first quarter of 1997
compared with the same period in 1996, due to lower outstanding debt levels
resulting from lower levels of capital spending and usage of cash proceeds from
the sale of the consumer truck rental operations. The Company maintained
slightly less than one-fourth of its financing obligations at variable interest
rates at March 31, 1997.
During the first quarter of 1997, approximately $17 million of the December 31,
1996 restructuring liability was utilized. Management continues to believe that
the remaining restructuring liabilities at March 31, 1997 are adequate to
complete its plans and such liabilities are expected to be substantially paid by
the end of 1997. Of the 2,450 positions planned to be eliminated as part of
these initiatives, approximately 90% of the separations had occurred as of March
31, 1997, with the remainder expected to be completed by the end of this year.
As of March 31, 1997, approximately 65% of the 200 facilities scheduled for
closure have ceased operations. The Company has sold or disposed of
approximately 40% of the closed facilities.
During the first quarter of 1997, the Company agreed to outsource its technology
function and to form a strategic logistics and technology relationship with
Andersen Consulting and IBM Global Services to enhance service offerings and
more rapidly develop and deploy advanced logistics solutions in the future.
VEHICLE LEASING & SERVICES
Revenue from integrated logistics in the first quarter of 1997 increased 23%
from the same period in 1996, primarily due to expansion of revenue with
existing customers and start-up of business sold in the previous year. Operating
revenue (which excludes subcontracted freight costs) in the first quarter of
1997 increased 12% compared with the prior year. Revenue from full service truck
leasing was relatively unchanged in the first quarter of 1997 compared with the
first quarter of 1996, primarily as the result of emphasis on higher margin
business. Revenue from commercial rental in the first quarter of 1997 decreased
7% from the previous year's first quarter resulting from planned reductions in
the fleet, which was down more than 10% from March 31, 1996, however, both
revenue per unit and utilization were higher. Revenue growth in public
transportation of 18% (first quarter 1997 compared with first quarter 1996) was
achieved through expansion of existing contracts and contributions from new
public transit contracts as well as through acquisitions (Larson Transportation
Services and School Bus Services). First quarter 1997 revenue from the
International Division increased 20% compared with the first quarter of 1996.
The revenue growth was led by Ryder Plc, resulting from increased logistics
business, and expansion of existing business in Argentina and Brazil during
1997.
ITEM 2. Management's Discussion and Analysis of Results of Operations
and Financial Condition (continued) --
Three months ended March 31, 1997 and 1996
Pretax earnings for Vehicle Leasing & Services were $60 million in the first
quarter of 1997 compared with $26 million in the first quarter of 1996. For the
division as a whole (excluding the results of consumer truck rental operations
in 1996), total margin (revenue less direct operating expenses, depreciation and
interest expense) in the first quarter of 1997 increased compared with the first
quarter of 1996, while margin as a percentage of revenue was relatively the same
in both periods. Integrated logistics margin and margin as a percentage of
operating revenue were each higher in the first quarter of 1997 compared with
last year's first quarter due to operating efficiencies, higher revenue and
improved pricing on new business. Full service truck leasing and commercial
rental margins were slightly higher in the first quarter of 1997 compared with
the first quarter of 1996 due primarily to higher utilization, especially of the
commercial rental fleet which has been reduced to better match expected demand.
Margin as a percentage of revenue from full service truck leasing was relatively
the same in both the first quarter of 1997 and 1996, while margin as a
percentage of revenue from commercial rental was higher during the same period
reflecting the improvements in fleet productivity. Both margin and margin as a
percentage of revenue from public transportation services were higher in the
first quarter of 1997, compared with the first quarter of 1996, due to the
contribution from 1997 acquisitions as well as an improvement in operating costs
resulting from management initiatives and better weather conditions.
International Division's margin and margin as a percentage of revenue were also
higher in the first quarter of 1997 compared with last year's first quarter. The
higher margin and margin percentage were primarily due to improved results from
logistics contracts in the United Kingdom and growth in profitable business in
Argentina and Germany.
For the division as a whole, overhead expenses (excluding consumer truck rental)
were lower in the first quarter of 1997 compared with the prior year's first
quarter as the result of restructuring and cost-cutting initiatives implemented
in 1996. The increase in margin dollars and decrease in overheads were partially
offset by a slight reduction in gains on vehicle sales. Miscellaneous income was
higher due to gains on sale of certain facilities, including four body shop
operations which were not associated with 1996 restructuring and other charges.
AUTOMOTIVE CARRIER SERVICES
Revenue and vehicle shipments of Automotive Carrier Services in the first
quarter of 1997 were 11% and 9% higher, respectively, compared with last year's
first quarter, primarily as a result of new business, an increase in North
American vehicle production and the absence of a strike at General Motors.
Automotive Carrier Services reported pretax earnings of $1 million in the first
quarter of 1997, compared with a pretax loss of $3 million in last year's first
quarter. In addition to the effect of higher revenue, profitability was enhanced
by the absence of a strike at two General Motors component plants experienced in
1996 and lower operating costs as a percentage of revenue achieved principally
through improved productivity of equipment and
ITEM 2. Management's Discussion and Analysis of Results of Operations
and Financial Condition (continued) --
Three months ended March 31, 1997 and 1996
drivers as well as cost-cutting and restructuring initiatives implemented in
1996, which included exiting a non-strategic business.
As previously disclosed, the Company has retained an advisor to assist in
exploring strategic options for the Automotive Carrier Services business unit
and expects to decide on a course of action by midyear.
OTHER
Other, which is primarily comprised of corporate administrative costs, reported
net expenses of $4 million in the first quarter of 1997 and $5 million in the
comparable 1996 period.
LIQUIDITY AND CAPITAL RESOURCES
Total capital expenditures in the first quarter of 1997 were $250 million,
compared with $385 million in the first quarter of 1996. This decrease was
consistent with management's plans to restrict capital spending by increasing
return thresholds in accepting new business and focusing on those products and
services with the greatest returns. The lower level of capital expenditures was
due primarily to the absence of consumer truck rental expenditures in the first
quarter of 1997 (that business was sold in October 1996 and had capital
expenditures of $51 million in the first quarter of 1996), as well as reduced
expenditures in all product lines. Total capital expenditures for all of 1997
are expected to be less than $1.3 billion. In addition, the Company made
payments of $46 million in the first quarter of 1997 for acquisitions in public
transportation services and the International Division.
Cash flow from operating activities in the first quarter of 1997 was $102
million, compared with $139 million in the first quarter of 1996. The decrease
resulted primarily from an increase in cash required for working capital and
lower non-cash depreciation charges partially offset by stronger earnings and
higher non-cash deferred income tax charges. Cash flow from operating activities
plus asset sales as a percentage of capital expenditures was 83% in the first
quarter of 1997 compared with 62% in the first quarter of 1996, due primarily to
reduced capital expenditures in 1997 offset by the lower cash flow from
operating activities.
At the end of the first quarter of 1997, total debt was $2.4 billion or
relatively the same as at the end of the fiscal year ended December 31, 1996.
During the first quarter of 1997, issuances of U.S. commercial paper to finance
first quarter capital expenditures were somewhat offset by scheduled unsecured
note payments and the continuation of the stock repurchase program. U.S.
commercial paper outstanding increased from $16 million at
ITEM 2. Management's Discussion and Analysis of Results of Operations
and Financial Condition (continued) --
Three months ended March 31, 1997 and 1996
December 31, 1996 to $64 million at March 31, 1997. The Company's debt to equity
ratio at March 31, 1997 was 223%, compared with 220% at December 31, 1996.
At March 31, 1997 and December 31, 1996, the Company had "floating to fixed"
interest rate swap agreements outstanding with aggregate notional amounts
totaling $77 million and $78 million, respectively. The Company also had
"floating to floating" interest rate swap agreements with notional amounts
totaling $90 million and $100 million at March 31, 1997, and December 31, 1996,
respectively.
The Company had contractual lines of credit totaling $719 million at March 31,
1997, of which $607 million was available. The Company also had $268 million of
debt securities available under a shelf registration statement filed in 1995.
During the first quarter of 1997, the Company continued its program to
repurchase six million shares of stock, with payments of $31 million to
repurchase approximately 1.0 million shares. The program was completed in April
1997 with the repurchase of approximately 0.8 million shares.
RECENT ACCOUNTING PRONOUNCEMENTS
Effective in the fourth quarter of 1997, the Company must calculate and disclose
earnings per share (EPS) in accordance with SFAS No. 128, "Earnings Per Share."
The new Statement changes the calculation of primary and fully diluted EPS and
requires additional disclosures. For the first quarter of 1997, the impact on
reported and fully-diluted EPS of $0.43 was less than $0.01 per share. The
Company does not expect a significant change in reported EPS as a result of the
new requirements.
FORWARD-LOOKING STATEMENTS
This management's discussion and analysis of results of operations and financial
condition contains forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements are based on the
current plans and expectations of Ryder System, Inc. and involve risks and
uncertainties that could cause actual future events and results of operations to
be materially different from those in the forward-looking statements. Important
factors that could cause such differences include, among others, lost revenue
from facility closures, greater than expected expenses associated with the
company's personnel needs or operating activities, the competitive pricing
environment applicable to the company's operations or changes in government
regulations.
SELECTED FINANCIAL AND OPERATIONAL DATA
(Dollars in thousands)
1997 1996
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VEHICLE LEASING & SERVICES
Revenue:
Ryder Transportation Services:
Full service lease and programmed maintenance $ 536,572 522,849
Commercial rental 113,134 121,150
Other 75,999 80,434
-------------- --------------
725,705 724,433
Integrated Logistics 316,213 258,116
Consumer Truck Rental - 105,886
Public Transportation 137,375 116,688
International 98,362 81,769
Eliminations (86,460) (92,964)
-------------- --------------
Total 1,191,195 1,193,928
-------------- --------------
Operating expense 941,300 943,385
Depreciation expense 160,726 189,823
Gains on sale of revenue earning equipment (16,401) (20,940)
Interest expense 48,124 54,018
Miscellaneous (income) expense, net (2,785) 1,612
-------------- --------------
Earnings before income taxes $ 60,231 26,030
============== ==============
Fleet size (owned and leased including international):
Full service lease 112,930 107,895
Commercial and consumer rental 35,992 75,411
Buses operated or managed 14,382 12,314
Ryder Transportation Services locations 1,074 1,133
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AUTOMOTIVE CARRIER SERVICES
Revenue $ 152,065 137,431
============== ==============
Earnings (loss) before income taxes $ 1,001 (3,257)
============== ==============
Total units transported (000) 1,589 1,459
Total miles traveled (000) 56,434 52,311
Auto transports:
Owned and leased 2,727 2,831
Owner-operators 590 507
Locations 91 85
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PART II. OTHER INFORMATION
Item 5. Other Information.
(1) Introduction to Ryder System, Inc. and Subsidiaries
Pro Forma Consolidated Condensed Financial Information.
(2) Ryder System, Inc. and Subsidiaries Pro Forma
Consolidated Condensed Statement of Earnings for
the Three Months Ended March 31, 1996.
(3) Notes to Ryder System, Inc. and Subsidiaries
Unaudited Pro Forma Consolidated Condensed Financial
Information.
INTRODUCTION TO PRO FORMA CONSOLIDATED CONDENSED FINANCIAL INFORMATION
On October 17, 1996, a subsidiary of the Company completed the sale of its
consumer truck rental business unit to a consortium of investors led by Questor
Partners Fund, L.P. ("Questor"). The purchase price of the transaction was $574
million and was determined by negotiations between the Company and Questor.
The unaudited Pro Forma Consolidated Condensed Statement of Earnings of Ryder
System, Inc. and subsidiaries for the three months ended March 31, 1996,
presents the Company's results of operations, assuming that the transactions
resulting from the sale, including the use of proceeds, had occurred on January
1, 1996, and, in the opinion of management, include all material adjustments
necessary to restate the Company's historical results. The adjustments required
to reflect such assumptions are set forth in the "Pro Forma Adjustments" column.
The historical amounts are derived from the historical financial statements of
Ryder System, Inc. and subsidiaries. The unaudited Pro Forma Consolidated
Condensed Financial Information of the Company should be read in conjunction
with the historical financial statements and related notes of the Company
included in the most recent annual report previously filed with the Commission,
copies of which are available from the Company. The pro forma information
presented is for informational purposes only and may not necessarily reflect the
results of operations which would have occurred had the sale of the consumer
truck rental business been consummated at the beginning of the financial period
presented, nor is the pro forma information intended to be indicative of future
results of operations of the Company.
Traditionally, the consumer truck rental business is seasonal with generally
higher levels of demand during summer months. Accordingly, the results of the
consumer truck rental business through March 31, 1996 are not indicative of full
year 1996 results.
RYDER SYSTEM, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF EARNINGS
Three Months Ended March 31, 1996
(In thousands, except per share amounts)
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
- - ------------------------------------------------------------------------------------------------------------------
REVENUE $ 1,327,951 (89,186) (a) 1,238,765
- - ------------------------------------------------------------------------------------------------------------------
Operating expense 1,078,645 (74,439) (a) 1,004,206
Depreciation expense, net of gains 178,487 (23,315) (a) 155,172
Interest expense 52,816 (2,800) (b) 50,016
Miscellaneous expense (income), net 276 310 (a)
(2,400) (c) (1,814)
- - ------------------------------------------------------------------------------------------------------------------
1,310,224 (102,644) 1,207,580
- - ------------------------------------------------------------------------------------------------------------------
Earnings before income taxes 17,727 13,458 31,185
Provision for income taxes 7,548 6,900 (a)
(600) (d) 13,848
- - ------------------------------------------------------------------------------------------------------------------
NET EARNINGS $ 10,179 7,158 17,337
==================================================================================================================
EARNINGS PER COMMON SHARE $ 0.13 0.23
- - ------------------------------------------------------------------------------------------------------------------
Average common and common
equivalent shares 80,033 (6,000) (e) 74,033
==================================================================================================================
See accompanying notes to the unaudited pro forma consolidated condensed
financial information.
RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED
CONDENSED FINANCIAL INFORMATION
Note 1 -
On October 17, 1996, the Company sold substantially all the assets and certain
liabilities of its consumer truck rental business to Questor Partners Fund, L.P.
and certain other investors for $574 million in cash, resulting in an after tax
gain of $15.1 million (net of applicable income taxes of $9.9 million), which
was included in miscellaneous income.
Pursuant to the terms of the sale agreement, the Company gave the buyer a
royalty-free license to use the Ryder trademark and color scheme, subject to
certain restrictions, for a total of 10 years (with required modifications to
the trademark after five years). The Company and the buyer have also entered
into service agreements for various periods of time ranging from two to five
years, with options for extensions for certain of the agreements. Under the
agreements, the Company will continue to provide various services to the buyer
and other administrative services. In addition, certain Company branch locations
will continue to assist in the disposition of the buyer's used vehicles through
its sales network. Rates agreed upon for the various services are considered
reasonable based on market rates.
The accompanying unaudited pro forma consolidated condensed financial
information reflects all adjustments, in the opinion of management, which are
necessary to fairly present the results of the operations of the Company. The
information does not include certain disclosures required under generally
accepted accounting principles and, therefore, should be read in conjunction
with the financial statements and notes thereto included in the Company's most
recent annual report filed with the Commission.
Note 2 -
The pro forma adjustments to the accompanying consolidated condensed financial
information are described below:
(a) To deconsolidate the results of the operations of the consumer truck rental
business, net of certain intercompany adjustments (in millions) as follows:
Three Months
Ended
March 31, 1996
-------------------
Charges for maintenance services provided $13.4
Allocated interest 6.8
Commissions earned as rental dealer 1.8
Charges for vehicle disposition services 1.5
(b) To reduce interest expense due to the reduction of debt from cash flows
generated from the sale.
RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED
CONDENSED FINANCIAL INFORMATION
(CONTINUED)
(c) To increase miscellaneous income as a result of a reduction in the level of
receivables sold (at a discount) due to cash being available from the sale
(and assumed to be used in lieu of selling receivables).
(d) To reflect the income tax benefit associated with the pro forma adjustments
to the statement of earnings.
(e) To reflect the use of proceeds from the sale to repurchase up to 6 million
common shares in the open market.
ITEM 6. Exhibits and Reports on Form 8-K:
(a) EXHIBITS
(3.1) The Ryder System, Inc. Restated Articles of Incorporation,
dated November 8, 1985, as amended through May 18, 1990,
previously filed with the Commission as an exhibit to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1990, are incorporated by reference into this
report.
(3.2) The Ryder System, Inc. By-Laws, as amended through November
23, 1993, previously filed with the Commission as an exhibit
to the Company's Annual Report on Form 10-K for the year ended
December 31, 1993, are incorporated by reference into this
report.
(11) Statement regarding computation of per share earnings.
(15) Letter regarding unaudited interim financial statements.
(27) Financial data schedule (for SEC use only).
(b) REPORTS ON FORM 8-K
A report on Form 8-K, dated March 28, 1997, was filed by the Registrant
which included pro forma consolidated condensed financial information
for the Registrant for the year ended December 31, 1996 after giving
effect to the sale of its Consumer Truck Rental business unit in
October 1996.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
RYDER SYSTEM, INC.
(Registrant)
Date: May 15, 1997 /s/ EDWIN A. HUSTON
---------------------------------------
Edwin A. Huston
Senior Executive Vice President-Finance
and Chief Financial Officer
(Principal Financial Officer)
Date: May 15, 1997 /S/ GEORGE P. SCANLON
----------------------------------------
George P. Scanlon
Vice President - Planning and Controller
(Principal Accounting Officer)
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- - ------- -----------
(11) Statement regarding computation of per share earnings.
(15) Letter regarding unaudited interim financial statements.
(27) Financial data schedule (for SEC use only).