SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): September 13, 1999
RYDER SYSTEM, INC.
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(Exact name of registrant as specified in its charter)
Florida 1-4364 59-0739250
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(State or other (Commission (IRS Employer
jurisdiction of incorporation) File Number) Identification No.)
3600 NW 82nd Avenue, Miami, Florida 33166
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (305) 500-3726
RYDER SYSTEM, INC.
TABLE OF CONTENTS
PAGE
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ITEM 2. Acquisition or Disposition of Assets. 3
ITEM 7. Financial Statements and Exhibits.
(b) Pro Forma Financial Information
(1) Introduction to Unaudited Pro Forma Consolidated
Condensed Financial Information 4
(2) Unaudited Pro Forma Consolidated Condensed
Balance Sheet as of June 30, 1999 5
(3) Unaudited Pro Forma Consolidated Condensed
Statement of Earnings for the six months ended
June 30, 1999 6
(4) Unaudited Pro Forma Consolidated Condensed
Statement of Earnings for the year ended
December 31, 1998 7
(4) Notes to Unaudited Pro Forma Consolidated
Condensed Financial Information 8
(c) Exhibits 9
Signatures 10
Exhibit Index
2
ITEM 2. Acquisition or Disposition of Assets.
On September 13, 1999, Ryder System, Inc. (the "Company")
completed the sale of Ryder Public Transportation Services, Inc., the
Company's public transportation services segment, to FirstGroup plc
("FirstGroup") for $940 million. The preliminary purchase price was
determined by negotiations between the Company and FirstGroup and was
paid in cash at closing. The purchase price is subject to adjustment
by December 12, 1999 for changes in the net assets of the public
transportation services segment from May 31, 1999 to September 13,
1999.
The Company will record an after-tax gain on the sale of
approximately $348 million, substantially all of which will be
recorded in the third quarter of 1999. The actual amount of the gain
is subject to the resolution of the purchase price and the
finalization of transaction costs and exit costs to separate the
public transportation business. The disposal of the public
transportation services segment will be accounted for as a
discontinued operation and accordingly, its operating results and cash
flows will be segregated and reported as discontinued operations in
the Company's consolidated financial statements.
3
ITEM 7. Financial Statements and Exhibits.
INTRODUCTION TO UNAUDITED PRO FORMA CONSOLIDATED
CONDENSED FINANCIAL INFORMATION
The following unaudited pro forma consolidated condensed financial
information is based on the historical consolidated condensed financial
statements of Ryder System, Inc. and subsidiaries, adjusted to give effect to
the sale of its public transportation services segment and the application of
proceeds therefrom.
The unaudited pro forma consolidated condensed statements of earnings for
the six months ended June 30, 1999 and the year ended December 31, 1998 give
effect to the sale of the public transportation services segment and the
application of proceeds therefrom, as if each of the underlying transactions had
been consummated on January 1, 1998. The unaudited pro forma consolidated
condensed balance sheet as of June 30, 1999 gives effect to the sale of the
public transportation services segment and the application of proceeds
therefrom, as if each of the underlying transactions had been consummated on
June 30, 1999.
On September 13, 1999, the Company completed the sale of the public
transportation services segment to FirstGroup plc ("FirstGroup") for $940
million in cash. The purchase price is subject to adjustment by December 12,
1999 for changes in the net assets of the public transportation services segment
from May 31, 1999 to September 13, 1999. The accompanying unaudited pro forma
consolidated condensed financial information assumes (I) a purchase price of
$925 million based on the net assets of the public transportation services
segment as of June 30, 1999; and (II) cash proceeds of $660 million, net of
direct transaction costs and expenses and income taxes.
The Company has announced its intention to use the proceeds from the sale
for working capital needs and other prudent capital investment purposes, for
debt reduction consistent with its objective of maintaining and improving its
existing credit ratings, and to deliver value to its shareholders through a
share repurchase program. As such, the accompanying unaudited pro forma
consolidated condensed financial information assumes $460 million and $200
million of the pro forma cash proceeds are used for debt reduction and share
repurchases, respectively. The unaudited pro forma consolidated condensed
statements of earnings for the six months ended June 30, 1999 and the year ended
December 31, 1998 assume an interest rate of 5.33% and 5.91%, respectively,
based on the Company's average commercial paper borrowing rates for those
periods, and a stock repurchase price of $23.38 based on the Company's closing
common stock price on September 13, 1999.
The unaudited pro forma consolidated condensed financial information should
be read in conjunction with the historical financial information (financial
statements, related notes and Management's Discussion and Analysis of Financial
Condition and Results of Operations) included in the Company's most recent
annual report and Form 10-Q filed with the Commission, copies of which are
available from the Company. The pro forma adjustments are based on available
information and assumptions management believes to be reasonable. The pro forma
information does not purport to represent what the Company's results would have
been if the sale had occurred at the dates indicated, nor does it purport to
project the results of the Company or its financial position for any future
period.
4
RYDER SYSTEM, INC AND SUBSIDIARIES
PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET (UNAUDITED)
June 30, 1999
(In thousands, except per share amounts)
(NOTE 1)
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
------------- --------------- -------------
Assets
Current assets:
Cash and cash equivalents $ 65,595 (2,468) (a) 81,819
924,775 (b)
(906,083) (c)
Receivables 544,746 (80,093) (a) 464,653
Inventories 73,899 (9,590) (a) 64,309
Tires in service 190,413 (7,841) (a) 182,572
Prepaid expenses and other current assets 139,255 (2,234) (a) 135,484
(1,537) (d)
------------- --------------- -------------
1,013,908 (85,071) 928,837
Revenue earning equipment 3,664,993 (190,760) (a) 3,474,233
Operating property and equipment 600,100 (15,998) (a) 584,102
Direct financing leases and other assets 595,233 (5,255) (a) 593,776
3,798 (e)
Intangible assets and deferred charges 309,216 (62,471) (a) 246,745
------------- --------------- -------------
$ 6,183,450 (355,757) 5,827,693
============= =============== =============
Liabilities and Shareholders' Equity
Current liabilities:
Current portion of long-term debt $ 697,783 (696) (a) 237,052
(460,035) (c)
Accounts payable 530,115 (13,129) (a) 516,986
Accrued expenses 429,929 (23,449) (a) 425,172
18,692 (e)
246,048 (d)
(246,048) (c)
------------- --------------- -------------
1,657,827 (478,617) 1,179,210
Long-term debt 2,269,605 (1,514) (a) 2,268,091
Deferred income taxes 841,577 (15,769) (d) 825,808
Other non-current liabilities 332,955 (6,686) (a) 325,375
(894) (e)
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Total liabilities 5,101,964 (503,480) 4,598,484
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Shareholders' equity:
Common stock of $0.50 par value per share (shares
outstanding at June 30, 1999: historical - 69,898,865;
pro forma - 61,342,865) 601,746 (73,658) (c) 528,088
Retained earnings 506,259 347,723 (f) 727,640
(126,342) (c)
Accumulated other comprehensive income (26,519) (26,519)
------------- --------------- -------------
Total shareholders' equity 1,081,486 147,723 1,229,209
------------- --------------- -------------
$ 6,183,450 (355,757) 5,827,693
============= =============== =============
5
RYDER SYSTEM, INC AND SUBSIDIARIES
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF EARNINGS (UNAUDITED)
Six months ended June 30, 1999
(In thousands, except per share amounts)
(NOTE 1)
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
------------- --------------- -------------
Revenue $ 2,697,055 (328,201) (g) 2,368,854
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Operating expense 1,980,492 (269,966) (g) 1,710,526
Freight under management expense 206,752 - 206,752
Year 2000 expense 21,659 (688) (g) 20,971
Depreciation expense, net of gains 299,551 (17,363) (g) 282,188
Interest expense 100,173 (5,796) (g) 87,246
(7,131) (h)
Miscellaneous expense 3,014 149 (g) 3,163
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2,611,641 (300,795) 2,310,846
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Earnings before income taxes 85,414 (27,406) 58,008
Provision for income taxes 33,124 (14,172) (g) 21,533
2,581 (i)
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Earnings from continuing operations $ 52,290 (15,815) 36,475
============= =============== =============
Earnings per common share:
Basic $ 0.74 0.59
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Diluted $ 0.74 0.58
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Weighted average shares outstanding:
Basic 70,856 (8,556) (j) 62,300
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Diluted 71,112 (8,556) (j) 62,556
============= =============
6
RYDER SYSTEM, INC AND SUBSIDIARIES
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF EARNINGS (UNAUDITED)
Year ended December 31, 1998
(In thousands, except per share amounts)
(NOTE 1)
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
-------------- --------------- --------------
Revenue $ 5,188,724 (581,748) (g) 4,606,976
-------------- --------------- --------------
Operating expense 3,767,063 (484,681) (g) 3,282,382
Freight under management expense 330,124 - 330,124
Year 2000 expense 38,173 (755) (g) 37,418
Depreciation expense, net of gains 604,281 (34,089) (g) 570,192
Interest expense 198,857 (10,532) (g) 170,930
(17,395) (h)
Miscellaneous income (6,730) 701 (g) (6,029)
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4,931,768 (546,751) 4,385,017
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Earnings before income taxes 256,956 (34,997) 221,959
Provision for income taxes 97,885 (21,040) (g) 83,142
6,297 (i)
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Earnings from continuing operations $ 159,071 (20,254) 138,817
============== =============== ==============
Earnings per common share:
Basic $ 2.18 2.15
============== ==============
Diluted $ 2.16 2.13
============== ==============
Weighted average shares outstanding:
Basic 73,068 (8,556) (j) 64,512
============== ==============
Diluted 73,645 (8,556) (j) 65,089
============== ==============
7
RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED
CONDENSED FINANCIAL INFORMATION
Note 1. Pro Forma Adjustments
The pro forma adjustments to the accompanying unaudited pro forma
consolidated condensed financial information related to the sale of the public
transportation services segment and the application of proceeds therefrom are
described below:
(a) To remove the assets and liabilities of the public transportation services
segment.
(b) To reflect the cash proceeds from the sale of $925 million (assuming the
sale took place on June 30, 1999, based on net assets at that date).
(c) To reflect the use of the net cash proceeds from the sale of $906 million.
The calculation of net cash proceeds and the application therefrom
follows:
Cash proceeds from sale $925 million
Direct transaction costs and
exit costs to separate the public
transportation business to be
settled in cash (19) million
----
Net cash proceeds from sale $906 million
====
Pay income taxes due on the sale $246 million
Reduce debt 460 million
Repurchase stock 200 million
----
$906 million
====
The cost of stock repurchases has been allocated between common stock and
retained earnings based on the amount of capital surplus at June 30, 1999.
(d) To reflect the accrual of income taxes as result of the sale.
(e) To reflect the accrual of direct transaction costs, curtailment and
settlement of certain employee benefit plan liabilities and exit costs to
separate the public transportation business as a result of the sale. The
cash requirements associated with these costs and expenses follows:
Direct transaction costs and exit
costs to separate the public
transportation business $19 million
Non-cash curtailment and settlement
gains of certain employee benefit plain (5) million
liabilities ---
$14 million
===
(f) To reflect the estimated after-tax gain on the sale of $348 million (net of
income taxes of $232 million at 40%).
(g) To remove the results of operations of the public transportation services
segment, net of certain intercompany eliminations from the Company. The
Company's historical reporting of business segment results includes these
intercompany charges. Interest expense includes an allocation from the
Company based upon targeted debt to equity ratios using an interest factor
which reflects the Company's average cost of debt. Allocated interest
expense totaled $5.1 million and $9.8 million for the six months ended June
30, 1999 and the year ended December 31, 1998, respectively.
(h) To reduce interest expense due to a reduction of debt from the application
of cash proceeds generated from the sale, net of allocated interest expense
eliminated with pro forma adjustment (g). The assumed debt reduction is
$460 million based on the net assets of the public transportation services
segment as of June 30, 1999. The assumed interest rates for the six months
ended June 30, 1999 and the year ended December 31, 1998 are 5.33% and
5.91%, respectively, based on the Company's average commercial paper
borrowing rates for those periods.
(i) To reflect the income tax expense (at 36.2%) associated with pro forma
adjustment (h).
(j) To reflect the use of $200 million of the after-tax cash proceeds generated
from the sale to repurchase 8.6 million shares of the Company's common
stock. The assumed stock repurchase price is $23.38 based on the Company's
closing common stock price on September 13, 1999.
8
ITEM 7. Financial Statements and Exhibits.
c) The following exhibit is filed with this report
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
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99.1 Stock Purchase Agreement, dated as of July 21, 1999,
between FirstGroup plc and Ryder System, Inc.
relating to the purchase and sale of Ryder Public
Transportation Services, Inc.
9
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: September 24, 1999 /s/ FREDERICK V. PERRY
----------------------
Frederick V. Perry
Vice President and Chief Counsel
10
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
99.1 Stock Purchase Agreement, dated as of July 21, 1999,
between FirstGroup plc and Ryder System, Inc.
relating to the purchase and sale of Ryder Public
Transportation Services, Inc.