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 26, 2001
RYDER SYSTEM, INC.
(Exact name of registrant as specified in its charter)
Florida 1-4364 59-0739250
(State or other jurisdiction of (Commission (IRS Employer
incorporation or organization) File Number) Identification No.)
3600 NW 82/nd/ Avenue, Miami, Florida 33166
(Address of principal executive offices) (Zip Code)
(305) 500-3726
(Registrant's telephone number, including area code)
Page 1 of 9
This report consists of 9 consecutively numbered pages.
ITEM 9. REGULATION FD DISCLOSURE
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Ryder System, Inc. (the "Company") has made this filing to furnish
answers to questions that were submitted by analysts and investors
subsequent the Company's July 25, 2001 earnings conference call and the
Company's filing of Form 10-Q as of and for the periods ended June 30,
2001 (the "Q and A").
Additionally, on September 24, 2001, the Company announced a third
quarter restructuring charge and reaffirmed earnings guidance for the
third quarter of 2001 ("Press Release").
The content of the Q and A and the Press Release are furnished below in
accordance with the requirements of Regulation FD.
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Ryder System, Inc.
Questions and Answers
Question: In your filing of Form 10-Q as of and for the periods ended June 30,
2001, the Company indicated that responsibility for the Company's e-Commerce
operations was transferred to the leadership of the Supply Chain Solutions (SCS)
business segment in July 2001. Could you please furnish the Company's results
by business segment that reflect reclassifications to conform to current
presentation?
Answer: In addition to the transfer of responsibility for e-Commerce operations
to the SCS leadership, responsibility for certain SCS accounts that had become
more similar to the Company's Dedicated Contract Carriage (DCC) product was
transferred from the SCS leadership to the DCC leadership in July 2001. Also,
costs and personnel associated with the maintenance of the Company's general web
site began being reported internally as a component of Central Support Services
in July 2001. The business segment revenue and contribution margin information
furnished below reflects the aforementioned reclassifications to conform the
Company's current reporting and presentation.
3
Ryder System, Inc.
Business Segment Revenue and Contribution Margin
Three and Six Months ended June 30, 2001 and 2000
Three Months After Six Months After
As Reported Reclassifications As Reported Reclassifications
-------------------------- ------------------- --------------------- -----------------
2001 2000 2001 2000 2001 2000 2001 2000
-------------------------- ------------------- --------------------- -----------------
(unaudited)
Revenue:
Fleet management solutions:
Full service lease and program $ 468.8 464.3 468.8 464.3 $ 933.9 924.4 933.9 924.4
maintenance
Commercial rental 121.1 135.4 121.1 135.4 230.4 256.6 230.4 256.6
Fuel 175.5 186.8 175.5 186.8 357.9 383.4 357.9 383.4
Other 95.1 99.3 95.1 99.3 192.5 203.3 192.5 203.3
-------------------------- ------------------- ----------------------- -----------------
Total fleet management solutions 860.5 885.8 860.5 885.8 1,714.7 1,767.7 1,714.7 1,767.7
-------------------------- ------------------- ----------------------- -----------------
Supply chain solutions 387.8 402.3 385.7 400.3 773.1 788.9 769.1 785.1
Dedicated contract carriage 128.6 134.0 132.3 136.0 259.2 267.6 265.9 271.4
E-Commerce 1.6 - - - 2.7 - - -
Eliminations (84.4) (89.9) (84.4) (89.9) (174.1) (183.4) 174.1) (183.4)
-------------------------- ------------------- ----------------------- ------------------
Total revenue $1,294.1 1,332.2 1,294.1 1,332.2 $2,575.6 2,640.8 2,575.6 2,640.8
========================== =================== ======================= ==================
Contribution margin:
Fleet management solutions $ 87.1 97.7 87.1 97.7 $ 162.7 178.5 162.7 178.5
Supply chain solutions 16.2 17.8 14.0 16.9 23.8 32.4 19.2 31.0
Dedicated contract carriage 14.5 14.2 14.8 14.5 25.7 28.2 26.3 28.7
E-Commerce (2.4) (1.1) - - (5.0) (1.6) - -
Eliminations (9.2) (10.4) (9.2) (10.4) (18.0) (20.8) (18.0) (20.8)
-------------------------- ------------------- ----------------------- ------------------
106.2 118.2 106.7 118.7 189.2 216.7 190.2 217.4
Central support services (66.1) (71.2) (66.6) (71.7) (132.1) (138.2) (133.1) (138.9)
-------------------------- ------------------- ----------------------- ------------------
Earnings from continuing operations
before unusual items and income taxes 40.1 47.0 40.1 47.0 57.1 78.5 57.1 78.5
Restructuring and other charges (19.4) - (19.4) - (29.9) - (29.9) -
-------------------------- ------------------- ----------------------- ------------------
Earnings before income taxes 20.7 47.0 20.7 47.0 27.2 78.5 27.2 78.5
Provision for income taxes (0.8) (17.4) (0.8) (17.4) (3.2) (29.1) (3.2) (29.1)
-------------------------- ------------------- ----------------------- ------------------
Net earnings $ 19.9 29.6 19.9 29.6 $ 24.0 49.4 24.0 49.4
========================== =================== ======================= ==================
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RYDER ANNOUNCES THIRD QUARTER CHARGE AND REAFFIRMS CURRENT EARNINGS PER SHARE
CONSENSUS ESTIMATES
MIAMI, SEPTEMBER 24, 2001...Ryder System, Inc. (NYSE:R), a global leader in
supply chain and transportation management solutions, announced it will record
restructuring and other charges before income taxes of $50 million to $54
million, or $0.52 to $0.56 per share after income taxes, this quarter. The
Company also indicated its third quarter earnings per share, excluding
restructuring and other charges, should meet or exceed previous after-tax
estimates of $0.47 to $0.49, as well as current Wall Street consensus estimates
of $0.47. The Company's third quarter ends September 30, 2001.
Gregory T. Swienton, Ryder's President and Chief Executive Officer, stated,
"We continue to review contracts, operations and strategy to better position
Ryder for long-term, sustainable and profitable growth. Although we are making
these assessments in a difficult business environment, we're creating an
infrastructure for improved performance."
As expected, Ryder's revenue was lower than last year's first two months of
the quarter, but was off more than previously anticipated due to continued
sluggishness in the global economy. Ryder's aggressive cost-cutting and
strategic initiatives, however, have generated better than expected results,
significantly reducing the Company's cost structure. "These measures helped
offset the revenue shortfall, stabilize earnings and are expected to help
maintain lower overhead expenses for the foreseeable future," said Ryder's
Senior Executive Vice President and Chief Financial Officer, C.J. Nelson.
Commenting further, Swienton stated, "Current charges stem from the
continuing review and revamping of our business, and the actions we've taken to
proactively align the Company with the marketplace. We have worked diligently
to eliminate unprofitable business, cut unnecessary expenses and overhead,
overhaul processes and systems and enable Ryder to take advantage of current and
future opportunities."
- more -
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Ryder Announces Third Quarter Charge
Page Two
The four principal components of the pre-tax charge include: the
cancellation of an information technology (IT) project in the Company's Fleet
Management Solutions business unit; the write-off of certain software licenses;
the pending shutdown of Systemcare, Ryder's shared-user home delivery network in
the United Kingdom; and a continuation of previously announced headcount
reductions and facility closures.
The IT project is being cancelled because many of its anticipated benefits
have been realized through other initiatives already underway. Moreover,
anticipated costs now outweigh the project's expected short-term and long-term
benefits. Ryder remains committed to upgrading its information technology
systems and capabilities, and is currently prioritizing all current and proposed
IT development projects in relation to Ryder's business objectives. It is
unlikely, however, that the Company will deploy the type of enterprise-wide
system originally envisioned for this project. The charges associated with
canceling this project are approximately $22 million.
The Company's investment in certain license agreements for supply chain
management software is being written off because the software no longer has a
viable business or customer application. The charge for the write-off, along
with associated maintenance support, is approximately $5 million.
While its contractual obligations to customers will be met, Systemcare will
undergo a phased shutdown. The profit margin associated with maintaining
Systemcare's facilities, technology and vehicles were no longer acceptable due
to current market conditions. Ryder previously exited the shared-user home
delivery business in the U.S. in the 1990s. The total severance, restructuring
and other charges associated with the Systemcare shutdown are anticipated to be
approximately $16 million.
Although Ryder is exiting the shared-user sector in the U.K., the Company
will continue to build its supply chain and logistics business in the United
Kingdom and Europe, and is specifically targeting the dedicated user home
delivery logistics sector. Among Ryder's customers in that sector are Sharps
Bedrooms and Sainsbury's.
Finally, Ryder will take $7 to $11 million in charges related to the
ongoing restructuring of its U.S. operations. The charges consist primarily of
severance and employee-related costs and facility closures related to the
Company's previously announced and ongoing strategic initiatives designed to
strengthen the Company.
Actual results for the third quarter will be released on October 24, 2001,
at which time the Company will host a conference call. Because of SEC
regulations regarding fair disclosure, Ryder does not plan to provide any
further information regarding its third quarter performance until October 24th.
- more -
6
Ryder Announces Third Quarter Charge
Page Three
About Ryder
Ryder provides a continuum of leading-edge logistics, supply chain and
transportation management solutions worldwide. Ryder's product offerings range
from full-service leasing, commercial rental and programmed maintenance of
vehicles to integrated services such as dedicated contract carriage and carrier
management. Additionally, Ryder offers comprehensive supply chain solutions,
consulting, lead logistics management services and e-Business solutions that
support customers' entire supply chains, from the sourcing of inbound raw
materials through distribution and delivery of finished goods. Ryder serves
customer needs throughout North America, in Latin America, Europe and Asia.
For the fifth consecutive year, Ryder was ranked among Fortune's Most
Admired Companies in the publication's 2001 survey of corporate reputations.
Ryder has consistently ranked among the top five in its industry category since
1997. Forbes named Ryder "Best in Transportation and Logistics" as one of its
"Magnetic 40" listing of companies that "create a network of partnerships that
can spur growth, innovation and most important, serve customers better."
InternetWeek named Ryder one of the top 100 U.S. companies for its effectiveness
in using the Internet to achieve tangible business benefits. For the fourth
consecutive year, Inbound Logistics recognized Ryder in 2001 as the top third-
party logistics provider.
Ryder's stock is a component of the Dow Jones Transportation Average and
the Standard & Poor's 500 Index. With 2000 revenue of $5.34 billion, Ryder was
ranked 333rd on the Fortune 500 list and 319th on the Forbes 500 in 2001. For
more information on Ryder System, Inc., visit www.ryder.com.
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FORWARD-LOOKING STATEMENTS
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Certain statements and information included in this Form 8-K are "forward-
looking statements" under the Federal Private Securities Litigation Reform Act
of 1995. Accordingly, we advise that these forward-looking statements be
evaluated with consideration given to the many uncertainties inherent in our
business that could cause actual results and events to differ materially from
those in the forward-looking statements. Important factors that could cause
such differences include, among others, the competitive pricing environment
applicable to the Company's businesses, customer retention levels, changes in
customers' business environments, changes in market conditions affecting the
sale of used vehicles, greater than expected expenses associated with the
Company's activities and changes in general economic conditions. Information
furnished is not necessarily indicative of future results.
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SIGNATURE
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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 hereunto duly authorized.
RYDER SYSTEM, INC.
(Registrant)
Date: September 24, 2001 /s/ Corliss J. Nelson
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Corliss J. Nelson
Senior Executive Vice President
and Chief Financial Officer
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