FORM 11-K
(Mark one)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _______________ to _______________________.
Commission file number # 001-04364
RYDER SYSTEM, INC. DEFERRED COMPENSATION PLAN
Ryder System, Inc.
3600 N.W. 82 Avenue
Miami, Florida 33166
REQUIRED INFORMATION
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FINANCIAL STATEMENTS PAGE NO.
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\bullet\ Independent Auditors' Report 2
\bullet\ Statement of Financial Position
December 31, 1998 and 1997 3
\bullet\ Statement of Income and Changes in Plan Equity
for the year ended December 31, 1998 and 1997 4
\bullet\ Notes to Financial Statements 5
EXHIBITS
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\bullet\ Exhibit Index 11
\bullet\ Independent Auditors' Consent 12
SIGNATURE
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Pursuant to the requirements of the Securities Exchange Act of 1934, the Ryder
System, Inc. Retirement Committee has duly caused this annual report to be
signed by the undersigned thereunto duly authorized.
RYDER SYSTEM, INC.
DEFERRED COMPENSATION PLAN
Date: June 28, 1999 By:/s/ EDWIN A. HUSTON
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Edwin A. Huston
Vice Chairman
INDEPENDENT AUDITORS' REPORT
The Participants and Administrator
Ryder System, Inc. Deferred Compensation Plan:
We have audited the accompanying statements of financial position of Ryder
System, Inc. Deferred Compensation Plan as of December 31, 1998 and 1997, and
the related statements of income and changes in plan equity for the years then
ended. These financial statements are the responsibility of the Plan's
management. Our responsibility is to express an opinion on these 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 financial statements referred to above present fairly, in
all material respects, the financial position of the Plan as of December 31,
1998 and 1997, and the changes in plan equity for the years then ended, in
conformity with generally accepted accounting principles.
/s/ KPMG LLP
Miami, Florida
June 25, 1999
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RYDER SYSTEM, INC. DEFERRED COMPENSATION PLAN
STATEMENTS OF FINANCIAL POSITION
DECEMBER 31, 1998 AND 1997
1998 1997
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ASSETS
Receivable from Ryder System, Inc. $11,278,809 4,709,671
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Total assets $11,278,809 4,709,671
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LIABILITIES AND PLAN EQUITY
Plan equity $11,278,809 4,709,671
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Total liabilities and plan equity $11,278,809 4,709,671
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The accompanying notes are an integral part of these financial statements.
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RYDER SYSTEM, INC. DEFERRED COMPENSATION PLAN
Statements of Income and Changes in Plan Equity
For the Years Ended December 31, 1998 and 1997
1998 1997
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Additions to plan equity attributed to:
Investment income from notional investments:
Net appreciation in value $ 477,235 323,702
Dividends 518,918 187,505
Interest -- 7,527
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Net investment income 996,153 518,734
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Contributions to notional investments:
Employer 204,103 47,774
Employee 3,642,943 1,767,335
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Total contributions 3,847,046 1,815,109
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Transfers from other plans 2,480,577 2,638,586
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Total additions 7,323,776 4,972,429
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Deductions from plan equity:
Distributions 754,638 262,758
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Net increase in plan equity 6,569,138 4,709,671
Plan equity at beginning of period 4,709,671 --
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Plan equity at end of period $11,278,809 4,709,671
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The accompanying notes are an integral part of these financial statements.
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RYDER SYSTEM, INC. DEFERRED COMPENSATION PLAN
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF PLAN
The following description of the Ryder System, Inc. Deferred Compensation
Plan (the "Plan") provides only general information. Participants should
refer to the Plan document for a more comprehensive description of the
Plan's provisions.
GENERAL. The Plan was adopted effective January 1, 1997. The Plan is
unfunded and is intended to be exempt from the participation, vesting,
funding, and fiduciary requirements of Title I of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), but is subject to
certain reporting and disclosure requirements under ERISA. Further,
benefits under the Plan are not guaranteed under Title IV of ERISA. The
right of a participant or his designated beneficiary to receive a
distribution under the Plan will be an unsecured claim against the general
assets of Ryder System, Inc. (the "Company"), and neither the participant
nor a designated beneficiary will have any rights in or against any
specific assets of the Company.
Effective July 1, 1997, the Company transferred assets to a trust for the
benefit of the Plan participants (the "Trust") which may be used to pay all
or a portion of the obligations of the Plan and certain other non-qualified
benefit obligations of the Company. The right of a participant or his
designated beneficiary to receive a distribution under the Plan will be an
unsecured claim against the Trust and the general assets of the Company,
and neither the participant nor a designated beneficiary will have any
rights in or against any specific assets of the Trust or the Company.
The Plan Administrator is the Ryder System, Inc. Retirement Committee.
Effective July 1, 1997, Fidelity Management Trust Co. became the Plan's
trustee and recordkeeper. Prior to July 1, 1997, State Street Bank & Trust
Company was the Plan's trustee and recordkeeper.
ELIGIBILITY. Participation in the Plan is voluntary. To participate in the
Plan, an employee must (i) be designated by a committee appointed by the
Board of Directors, (ii) be part of a select group of management or highly
compensated employees within the meaning of Sections 201(2), 301(a)(3) and
401 (a)(1) of ERISA, and (iii) be an eligible employee of the Company with
tax-deferred contributions or Company matching contributions under the
Ryder System, Inc. Savings Plan A or B (the "Savings Plans") limited by
reason of limitations imposed by Sections 402(g), 415 or 401(a)(17) of the
Internal Revenue Code of 1986 (the "Code"), as amended. Members of the
Company's Board of Directors are eligible for participation in the Plan.
CONTRIBUTIONS. Compensation deferral agreements are effective on a Plan
year basis, and must be filed before the beginning of a Plan year.
Participants may contribute, on a tax-deferred basis, up to 100% of
compensation less the amount of Savings Plan tax-deferred contributions
permitted under the Plan. Beginning January 1, 1998, the Company
contributions are automatically allocated to the Ryder System, Inc. Common
Stock Fund and will remain there until the participant terminates
employment or reaches age 55, whichever comes first. The Company matches
50% of employee contributions up to 4% of compensation (6% if the Company
meets its EVA goal), offset by any company match recorded during the plan
year in the Savings Plans. Prior to January 1, 1998, the Company matched
50% of employee contributions up to 3% of compensation. Plan contributions
and match are not tied to participation in the Savings Plans.
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PARTICIPANT ACCOUNTS. Each participant's account is credited with the
participant's contribution and allocations of (a) the Company's
contribution and, (b) appreciation which is indexed to the market
performance of the participants' elections among the notional investment
funds made available under the Plan less administrative expenses, if any.
Allocations are based on participant earnings or account balances, as
defined. Earnings are currently allocated daily based on units of notional
investment. Forfeited balances of terminated participants' nonvested
accounts are used to reduce future Company contributions. At December 31,
1998, forfeited nonvested accounts available to reduce future employer
contributions totalled $6,362. The benefit to which a participant is
entitled is the benefit that can be provided from the participant's vested
account.
VESTING. Participants are immediately vested in their contributions plus
earnings thereon. Upon completion of two years of service, participants
vest 25% in the Company contributions and the earnings attributable to such
contributions and 25% upon completion of each year thereafter until they
are fully vested. At retirement age, a participant becomes fully vested in
the Company contributions and the earnings attributable to such
contributions.
INVESTMENT OPTIONS. Participants may elect to contribute to any of thirteen
notional investment options. Participants may transfer their contributions
among funds on a daily basis. Note 3 provides a description of each
investment option.
DISTRIBUTIONS. The vested portion of a participant's account, less any
applicable withholding, shall be distributed at the participant's election,
as either a) a lump sum or b) a minimum of 2, and a maximum of 15 annual
installments. Distributions shall be paid on the January 1 immediately
following a participant's separation from employment, or as soon as
administratively practical thereafter. Each year's deferral has a separate
distribution election and participants may elect up to 15 annual
installments or a fixed date distribution during employment. A participant
may request a distribution of all or a portion of his elective contribution
account balance if he can demonstrate financial hardship. The Plan
Administrator must approve the request and the amount withdrawn cannot be
subsequently repaid to the Company. Such amounts will be considered
distributions to the participant for tax purposes. At anytime, participants
may elect to withdraw all of the vested portion of their account less a
withdrawal penalty of 10% of such amount. Once payment is made, the
participant shall not be eligible to participate again in the Plan.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING. The financial statements of the Plan are prepared on
the accrual basis of accounting.
USE OF ESTIMATES. The Plan Administrator has made a number of estimates and
assumptions relating to the reporting of assets and liabilities and the
disclosure of contingent assets and liabilities to prepare these financial
statements in conformity with generally accepted accounting principles.
Actual results could differ from those estimates.
RECEIVABLE FROM COMPANY. The Plan records a receivable from the Company
equal to the notional amount of the participants' accounts including
Company matches. Purchases and sales of securities are recorded on a
trade-date basis. Dividends on notional investments in Company common stock
and mutual funds are recorded on the record date. Interest income on
notional investments is recorded on the accrual basis.
PAYMENT OF BENEFITS. Benefits are recognized when paid.
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3. NOTIONAL PLAN INVESTMENT FUNDS
Notional Investment Fund A ("Fund A") - Fund A is invested in Ryder
System, Inc. common stock, which is purchased on a regular and continuous
basis. Dividends are automatically reinvested in the common stock.
Ownership is measured in units of the fund instead of shares of stock.
Notional Investment Fund B ("Fund B") - Fund B, the Fidelity Retirement
Money Market Portfolio, invests in high quality U.S. dollar-denominated
money market instruments of U.S. and foreign issuers. Prior to July 1,
1997, holdings in this fund were invested in the State Street Bank Seven
Seas Money Market Fund.
Notional Investment Fund C ("Fund C") - Fund C, the Fidelity Equity-Income
Fund, normally invests in income-producing equity securities, mainly large
cap stocks, but may invest in other types of equity and debt securities.
The fund may invest in securities of domestic and foreign issuers. Prior
to July 1, 1997, Fund C was invested in the Lord Abbett Affiliated Fund.
Notional Investment Fund D ("Fund D") - Fund D, the Putnam Voyager Fund A,
invests primarily in common stocks of both well-known, established
companies, as well as smaller, less well-known companies. Investments are
diversified across many different types of companies and industries. The
fund may also invest in bonds. Since Plan inception, this fund has been
invested solely in shares of the Putnam Voyager Fund A.
Notional Investment Fund E ("Fund E") - Fund E, the Fidelity Contrafund,
invests primarily in common stock of domestic and foreign issuers that are
selling below book value. Prior to July 1, 1997, holdings in this fund
were invested in shares of the Mutual Series Fund, Inc., Qualified Income
Fund.
Notional Investment Fund F ("Fund F") - Fund F, the Fidelity Diversified
International Fund, normally invests at least 65% of total assets in
foreign securities. The fund may be invested in all types of securities,
including stocks and debt securities of companies and governments of all
nations. Prior to July 1, 1997, holdings in this fund were invested in the
Templeton Foreign Fund.
Notional Investment Fund G ("Fund G") - Fund G, the Fidelity Asset Manager
Growth Fund, was added as an investment option in the Plan effective July
1, 1997. This fund invests in all basic types of U.S. and foreign
investments: stocks, bonds, and short-term/money market instruments. The
fund's more aggressive approach focuses on stocks and will generally aim
for the following combination: 70% stocks, 25% bonds, and 5%
short-term/money market class.
Notional Investment Fund H ("Fund H") - Fund H, the Fidelity Asset Manager
Fund, was added as an investment option in the Plan effective July 1,
1997. This fund invests in all basic types of U.S. and foreign
investments: stocks, bonds, and short-term/money market instruments. The
fund will generally aim for the following combination: 50% stocks, 40%
bonds, and 10% short-term/money market class.
Notional Investment Fund I ("Fund I") - Fund I, the Fidelity Asset Manager
Income Fund, was added as an investment option in the Plan effective July
1, 1997. This fund invests in all basic types of U.S. and foreign
investments: stocks, bonds, and short-term and money market instruments.
The fund focuses on bonds and short-term/money market instruments and aims
for the following combination: 20% stock, 50% bonds, and 30%
short-term/money market class.
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Notional Investment Fund J ("Fund J") - Fund J, the Fidelity U.S. Bond
Index Fund, was added as an investment option in the Plan effective July
1, 1997. The fund purchases investment-grade securities with maturities of
at least one year including U.S. Treasury and U.S. or government
securities, corporate bonds, asset-backed and mortgage-backed securities,
and U.S. dollar denominated foreign securities.
Notional Investment Fund K ("Fund K") - Fund K, the Spartan U.S. Equity
Index Fund, was added as an investment option in the Plan effective July
1, 1997. The fund invests in the 500 companies that make up the Standard &
Poor's 500 Index and in other securities that are based on the value of
the index. The fund's manager focuses on duplicating the composition and
performance of a specific market index as opposed to a strategy of
selecting attractive stocks.
Notional Investment Fund L ("Fund L") - Fund L, the Fidelity Aggressive
Growth Fund (formerly known as Fidelity Emerging Growth Fund), was added
as an investment option in the Plan effective July 1, 1997. The fund
focuses on investment in stocks of medium-sized companies, but may invest
substantially in larger or smaller companies. The fund invests in
companies that are believed to offer the potential for accelerated
earnings or revenue growth. This fund carries a "short-term trading fee",
which is charged to discourage short-term buying and selling of fund
shares. Currently the fee is 0.75% of the value of the shares sold.
Notional Investment Fund M ("Fund M") - Fund M, the Fidelity Growth
Company Fund, was added as an investment option in the Plan effective July
1, 1997. The fund invests primarily in common stocks of domestic and
foreign issuers. The fund invests in companies with earnings or gross
sales that indicate the potential for above-average growth.
The performance of participant's notional investment funds for the years
ended December 31, 1998 and 1997 was as follows:
1998 1997
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Fund A -18.9% 18.3%
Fund B 5.4% 5.4%
Fund C 12.5% 30.0%
Fund D 24.1% 26.0%
Fund E 31.5% 23.0%
Fund F 14.3% 13.7%
Fund G 18.1% 26.5%
Fund H 16.1% 22.3%
Fund I 10.3% 12.4%
Fund J 8.9% 9.6%
Fund K 28.5% 33.0%
Fund L 43.3% 19.5%
Fund M 27.2% 18.9%
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The number of participants' accounts in each of the funds at December 31,
1998 and 1997 is as follows:
1998 1997
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Fund A 191 55
Fund B 138 66
Fund C 138 66
Fund D 169 104
Fund E 153 92
Fund F 97 65
Fund G 33 3
Fund H 13 0
Fund I 12 0
Fund J 37 2
Fund K 77 7
Fund L 71 6
Fund M 56 3
4. TRANSFERS FROM OTHER PLANS
Effective January 1, 1998, participants of the Prime Rate Deferred
Compensation Plan had the option to transfer any or all of their account
balances to the Plan. Account balances transferred from the Prime Rate
Deferred Compensation Plan totaled $2.5 million. The net assets of the
Ryder System, Inc. Savings Restoration Plan which amounted to $2.6 million
were transferred to the Plan on January 1, 1997.
5. PLAN TERMINATION
While it has not expressed any intention to do so, the Company may amend or
terminate the Plan at any time. In the event the Plan is terminated,
distribution of amounts in the participant's account shall be made to the
participant on January 1st immediately following a participant's separation
from employment. Payment will be made in accordance with the participant's
most recent participant election and enrollment form which is effective at
least one year prior to the date of separation of employment. No additional
credits of contributions shall be made to the participant's account for
periods after termination of the Plan, but the Retirement Committee shall
continue to credit gains and losses to the participant's account, until the
balance has been fully distributed.
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6. TAX STATUS OF THE PLAN
A participant generally will not be taxed on the tax-deferred contributions
or the Company matching contributions to the Plan, or earnings thereon,
allocable to his participant's account until such amounts are distributed
to the participant or his beneficiary under the Plan. The value of the
participant's account, including any earnings, is deductible by the
Company for federal tax purposes in the year in which those amounts become
taxable to the participant or his beneficiary.
Participants or their beneficiaries generally will be taxed, at ordinary
income rates, on the amount they receive as a distribution from the Plan
at the time they receive the distribution. Since the Plan is not qualified
under Section 401(a) of the Code, distributions from the Plan will not
qualify for any of the favorable tax rulings applicable to qualified tax
distributions, such as tax-deferred rollovers or five year averaging. On
the other hand, distributions from the Plan will not be subject to various
excise taxes applicable to qualified plan distributions, such as 10%
excise tax on distribution prior to age 59 1/2, or the 15% excise tax on
excess benefit payments.
An employee's tax-deferred contributions to the Plan are subject to
federal social security and medicare taxes and federal unemployment taxes
when earned, and Company matching contributions, and any earnings thereon
prior to the time such amounts become vested, are subject to those taxes
as and when they become vested.
7. ADMINISTRATIVE EXPENSES
Although all expenses of administration relating to the Plan may be charged
against a participant's account, at the present time, the Company has
elected to pay all administrative and marketing expenses.
8. YEAR 2000 PREPAREDNESS (UNAUDITED)
The Year 2000 issue is the result of information systems, including
computer systems and software products, using two digits rather than four
to indicate the applicable year. The operations and records of the Plan are
dependent on the information systems of the Company, Plan
trustee/recordkeeper, and various other service providers, which are
outside the Plan administrator's scope of control such as financial
institutions and government functions. Therefore, the Plan could be
adversely affected if these information systems do not properly process
date-related information from and after January 1, 2000. Both the Company
and Plan trustee/recordkeeper have indicated that they are: (1) currently
in the remediation and testing phases of their Year 2000 readiness plans
with testing expected to continue until late 1999, and (2) developing and
refining contingency plans for their respective information systems and
processes. The Plan administrator will continue to monitor their progress
and can make no assurances that the Plan will not be materially impacted by
potential Year 2000 failure. In addition, the Plan administrator cannot
reasonably predict the possible exposure and impact of Year 2000 failure on
the Plan resulting from other service providers, which are outside the
scope of its control.
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EXHIBIT INDEX
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EXHIBIT DESCRIPTION
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23.1 Independent Auditors' Consent
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