|
|
|
|
|
þ
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
|
Florida
|
59-0739250
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
|
|
11690 N.W. 105th Street
|
|
Miami, Florida 33178
|
(305) 500-3726
|
(Address of principal executive offices, including zip code)
|
(Registrant’s telephone number, including area code)
|
Large accelerated filer
þ
|
Accelerated filer
¨
|
Non-accelerated filer
¨
|
Smaller reporting company
¨
|
|
(Do not check if a smaller reporting company)
|
|
|
|
|
|
|
|
|
|
|
|
Page No.
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
Consolidated Condensed Statements of Comprehensive Income —
Three months ended March 31, 2016 and 2015
|
|
|
|
|
|
Consolidated Condensed Balance Sheets —
Three months ended March 31, 2016 and 2015
|
|
|
|
|
|
Consolidated Condensed Statements of Cash Flows —
Three months ended March 31, 2016 and 2015
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
Three months ended March 31,
|
|||||
|
2016
|
|
2015
|
|||
|
(In thousands, except per share amounts)
|
|||||
Lease and rental revenues
|
$
|
767,754
|
|
|
729,024
|
|
Services revenue
|
759,127
|
|
|
693,704
|
|
|
Fuel services revenue
|
102,791
|
|
|
144,425
|
|
|
Total revenues
|
1,629,672
|
|
|
1,567,153
|
|
|
|
|
|
|
|||
Cost of lease and rental
|
552,490
|
|
|
518,422
|
|
|
Cost of services
|
631,714
|
|
|
582,330
|
|
|
Cost of fuel services
|
98,901
|
|
|
136,289
|
|
|
Other operating expenses
|
30,151
|
|
|
32,373
|
|
|
Selling, general and administrative expenses
|
211,213
|
|
|
206,605
|
|
|
Gains on used vehicles, net
|
(19,129
|
)
|
|
(27,208
|
)
|
|
Interest expense
|
37,889
|
|
|
36,802
|
|
|
Miscellaneous income, net
|
(2,265
|
)
|
|
(2,637
|
)
|
|
|
1,540,964
|
|
|
1,482,976
|
|
|
Earnings from continuing operations before income taxes
|
88,708
|
|
|
84,177
|
|
|
Provision for income taxes
|
32,523
|
|
|
30,851
|
|
|
Earnings from continuing operations
|
56,185
|
|
|
53,326
|
|
|
Loss from discontinued operations, net of tax
|
(391
|
)
|
|
(537
|
)
|
|
Net earnings
|
$
|
55,794
|
|
|
52,789
|
|
|
|
|
|
|||
Earnings (loss) per common share — Basic
|
|
|
|
|||
Continuing operations
|
$
|
1.06
|
|
|
1.01
|
|
Discontinued operations
|
(0.01
|
)
|
|
(0.01
|
)
|
|
Net earnings
|
$
|
1.05
|
|
|
1.00
|
|
|
|
|
|
|||
Earnings (loss) per common share — Diluted
|
|
|
|
|||
Continuing operations
|
$
|
1.05
|
|
|
1.00
|
|
Discontinued operations
|
(0.01
|
)
|
|
(0.01
|
)
|
|
Net earnings
|
$
|
1.04
|
|
|
0.99
|
|
|
|
|
|
|||
Cash dividends declared per common share
|
$
|
0.41
|
|
|
0.37
|
|
|
Three months ended March 31,
|
|||||
|
2016
|
|
2015
|
|||
|
(In thousands)
|
|||||
|
|
|
|
|||
Net earnings
|
$
|
55,794
|
|
|
52,789
|
|
|
|
|
|
|||
Other comprehensive income (loss):
|
|
|
|
|||
|
|
|
|
|||
Changes in cumulative translation adjustment and other
|
13,684
|
|
|
(57,372
|
)
|
|
|
|
|
|
|||
Amortization of pension and postretirement items
|
7,423
|
|
|
7,058
|
|
|
Income tax expense related to amortization of pension and postretirement items
|
(2,708
|
)
|
|
(2,448
|
)
|
|
Amortization of pension and postretirement items, net of tax
|
4,715
|
|
|
4,610
|
|
|
|
|
|
|
|||
Other comprehensive income (loss), net of taxes
|
18,399
|
|
|
(52,762
|
)
|
|
|
|
|
|
|||
Comprehensive income
|
$
|
74,193
|
|
|
27
|
|
|
March 31,
2016 |
|
December 31,
2015 |
|||
|
(Dollars in thousands, except per
share amount)
|
|||||
Assets:
|
|
|
|
|||
Current assets:
|
|
|
|
|||
Cash and cash equivalents
|
$
|
56,806
|
|
|
60,945
|
|
Receivables, net of allowance of $16,137 and $15,372, respectively
|
822,556
|
|
|
835,489
|
|
|
Inventories
|
65,542
|
|
|
63,725
|
|
|
Prepaid expenses and other current assets
|
149,642
|
|
|
138,143
|
|
|
Total current assets
|
1,094,546
|
|
|
1,098,302
|
|
|
Revenue earning equipment, net
|
8,275,093
|
|
|
8,184,735
|
|
|
Operating property and equipment, net of accumulated depreciation of $1,095,352 and $1,046,137, respectively
|
717,444
|
|
|
714,970
|
|
|
Goodwill
|
389,382
|
|
|
389,135
|
|
|
Intangible assets, net of accumulated amortization of $47,215 and $45,736, respectively
|
53,588
|
|
|
55,192
|
|
|
Direct financing leases and other assets
|
524,477
|
|
|
510,246
|
|
|
Total assets
|
$
|
11,054,530
|
|
|
10,952,580
|
|
|
|
|
|
|||
Liabilities and shareholders’ equity:
|
|
|
|
|||
Current liabilities:
|
|
|
|
|||
Short-term debt and current portion of long-term debt
|
$
|
612,223
|
|
|
634,530
|
|
Accounts payable
|
475,017
|
|
|
502,373
|
|
|
Accrued expenses and other current liabilities
|
506,300
|
|
|
543,352
|
|
|
Total current liabilities
|
1,593,540
|
|
|
1,680,255
|
|
|
Long-term debt
|
4,987,217
|
|
|
4,868,097
|
|
|
Other non-current liabilities
|
806,561
|
|
|
829,595
|
|
|
Deferred income taxes
|
1,621,894
|
|
|
1,587,522
|
|
|
Total liabilities
|
9,009,212
|
|
|
8,965,469
|
|
|
|
|
|
|
|||
Shareholders’ equity:
|
|
|
|
|||
Preferred stock, no par value per share — authorized, 3,800,917; none outstanding,
March 31, 2016 or December 31, 2015 |
—
|
|
|
—
|
|
|
Common stock, $0.50 par value per share — authorized, 400,000,000; outstanding,
March 31, 2016 — 53,703,407; December 31, 2015 — 53,490,603 |
26,850
|
|
|
26,745
|
|
|
Additional paid-in capital
|
1,011,988
|
|
|
1,006,021
|
|
|
Retained earnings
|
1,700,816
|
|
|
1,667,080
|
|
|
Accumulated other comprehensive loss
|
(694,336
|
)
|
|
(712,735
|
)
|
|
Total shareholders’ equity
|
2,045,318
|
|
|
1,987,111
|
|
|
Total liabilities and shareholders’ equity
|
$
|
11,054,530
|
|
|
10,952,580
|
|
|
Three months ended March 31,
|
|||||
|
2016
|
|
2015
|
|||
|
(In thousands)
|
|||||
Cash flows from operating activities from continuing operations:
|
|
|
|
|||
Net earnings
|
$
|
55,794
|
|
|
52,789
|
|
Less: Loss from discontinued operations, net of tax
|
(391
|
)
|
|
(537
|
)
|
|
Earnings from continuing operations
|
56,185
|
|
|
53,326
|
|
|
Depreciation expense
|
287,170
|
|
|
266,278
|
|
|
Gains on used vehicles, net
|
(19,129
|
)
|
|
(27,208
|
)
|
|
Share-based compensation expense
|
4,888
|
|
|
5,665
|
|
|
Amortization expense and other non-cash charges, net
|
13,058
|
|
|
13,317
|
|
|
Deferred income tax expense
|
29,319
|
|
|
26,646
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|||
Receivables
|
3,709
|
|
|
10,775
|
|
|
Inventories
|
(1,558
|
)
|
|
2,563
|
|
|
Prepaid expenses and other assets
|
(21,234
|
)
|
|
(17,093
|
)
|
|
Accounts payable
|
49,206
|
|
|
(28,847
|
)
|
|
Accrued expenses and other non-current liabilities
|
(36,605
|
)
|
|
(21,577
|
)
|
|
Net cash provided by operating activities from continuing operations
|
365,009
|
|
|
283,845
|
|
|
|
|
|
|
|||
Cash flows from financing activities:
|
|
|
|
|||
Net change in commercial paper borrowings and revolving credit facilities
|
98,580
|
|
|
204,750
|
|
|
Debt proceeds
|
298,254
|
|
|
455,111
|
|
|
Debt repaid
|
(312,400
|
)
|
|
(463,536
|
)
|
|
Dividends on common stock
|
(22,482
|
)
|
|
(20,084
|
)
|
|
Common stock issued
|
1,492
|
|
|
11,846
|
|
|
Common stock repurchased
|
—
|
|
|
(6,141
|
)
|
|
Excess tax benefits from share-based compensation and other items
|
994
|
|
|
620
|
|
|
Debt issuance costs
|
(933
|
)
|
|
(3,696
|
)
|
|
Net cash provided by financing activities
|
63,505
|
|
|
178,870
|
|
|
|
|
|
|
|||
Cash flows from investing activities:
|
|
|
|
|||
Purchases of property and revenue earning equipment
|
(575,031
|
)
|
|
(553,242
|
)
|
|
Sales of revenue earning equipment
|
119,188
|
|
|
96,821
|
|
|
Sales of operating property and equipment
|
1,410
|
|
|
273
|
|
|
Collections on direct finance leases and other items
|
25,610
|
|
|
16,243
|
|
|
Changes in restricted cash
|
(221
|
)
|
|
(912
|
)
|
|
Net cash used in investing activities
|
(429,044
|
)
|
|
(440,817
|
)
|
|
|
|
|
|
|||
Effect of exchange rate changes on cash
|
(3,508
|
)
|
|
756
|
|
|
(Decrease) increase in cash and cash equivalents from continuing operations
|
(4,038
|
)
|
|
22,654
|
|
|
|
|
|
|
|||
Decrease in cash and cash equivalents from discontinued operations
|
(101
|
)
|
|
(547
|
)
|
|
|
|
|
|
|||
(Decrease) increase in cash and cash equivalents
|
(4,139
|
)
|
|
22,107
|
|
|
Cash and cash equivalents at January 1
|
60,945
|
|
|
50,092
|
|
|
Cash and cash equivalents at March 31
|
$
|
56,806
|
|
|
72,199
|
|
|
As Previously Reported
|
Adjustment
|
As Revised
|
||||
Net earnings
|
$
|
52.9
|
|
(0.1
|
)
|
52.8
|
|
Depreciation expense
(1)
|
262.4
|
|
3.9
|
|
266.3
|
|
|
Deferred income tax expense
|
26.7
|
|
(0.1
|
)
|
26.6
|
|
|
Accrued expenses and other non-current liabilities
|
(21.5
|
)
|
(0.1
|
)
|
(21.6
|
)
|
|
Net cash provided by operating activities from continuing operations
|
277.9
|
|
6.0
|
|
283.8
|
|
|
Debt repaid, including capital and financing lease obligations
|
(457.6
|
)
|
(6.0
|
)
|
(463.5
|
)
|
|
Net cash provided by financing activities from continuing operations
|
184.8
|
|
(6.0
|
)
|
178.9
|
|
|
March 31, 2016
|
|
December 31, 2015
|
||||||||||||||||
|
Cost
|
|
Accumulated
Depreciation
|
|
Net Book
Value
(1)
|
|
Cost
|
|
Accumulated
Depreciation
|
|
Net Book
Value
(1)
|
||||||||
|
(In thousands)
|
||||||||||||||||||
Held for use:
|
|
||||||||||||||||||
Full service lease
|
$
|
9,093,718
|
|
|
(2,802,126
|
)
|
|
6,291,592
|
|
|
$
|
8,839,941
|
|
|
(2,723,605
|
)
|
|
6,116,336
|
|
Commercial rental
|
2,702,767
|
|
|
(893,981
|
)
|
|
1,808,786
|
|
|
2,811,715
|
|
|
(907,412
|
)
|
|
1,904,303
|
|
||
Held for sale
|
528,231
|
|
|
(353,516
|
)
|
|
174,715
|
|
|
496,634
|
|
|
(332,538
|
)
|
|
164,096
|
|
||
Total
|
$
|
12,324,716
|
|
|
(4,049,623
|
)
|
|
8,275,093
|
|
|
$
|
12,148,290
|
|
|
(3,963,555
|
)
|
|
8,184,735
|
|
(1)
|
Revenue earning equipment, net includes vehicles acquired under capital leases of
$46.3 million
, less accumulated depreciation of
$22.7 million
, at
March 31, 2016
, and
$47.5 million
, less accumulated depreciation of
$22.2 million
, at
December 31, 2015
.
|
|
|
|
Total Losses
(2)
|
||||||||||
|
March 31
|
|
Three months ended March 31,
|
||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||
|
(In thousands)
|
||||||||||||
Assets held for sale:
|
|
|
|
|
|
|
|
||||||
Revenue earning equipment
(1)
:
|
|
|
|
|
|
|
|
||||||
Trucks
|
$
|
11,538
|
|
|
5,298
|
|
|
$
|
1,744
|
|
|
1,228
|
|
Tractors
|
39,739
|
|
|
4,611
|
|
|
4,882
|
|
|
827
|
|
||
Trailers
|
3,153
|
|
|
1,231
|
|
|
662
|
|
|
316
|
|
||
|
|
|
|
|
|
|
|
||||||
Total assets at fair value
|
54,430
|
|
|
11,140
|
|
|
$
|
7,288
|
|
|
2,371
|
|
(1)
|
Assets held for sale in the above table only include the portion of revenue earning equipment held for sale where carrying value exceeded fair value.
|
(2)
|
Total losses represent fair value adjustments for all vehicles held for sale throughout the period for which fair value was less than carrying value.
|
|
March 31
|
|||||
|
2016
|
|
2015
|
|||
|
(In thousands)
|
|||||
Gains on vehicle sales, net
|
$
|
(26,417
|
)
|
|
(29,579
|
)
|
Losses from fair value adjustments
|
7,288
|
|
|
2,371
|
|
|
Gains on used vehicles, net
|
$
|
(19,129
|
)
|
|
(27,208
|
)
|
|
March 31, 2016
|
|
December 31, 2015
|
||||||||||||||||
|
Accrued
Expenses
|
|
Non-Current
Liabilities
|
|
Total
|
|
Accrued
Expenses
|
|
Non-Current
Liabilities
|
|
Total
|
||||||||
|
(In thousands)
|
||||||||||||||||||
Salaries and wages
|
$
|
72,482
|
|
|
—
|
|
|
72,482
|
|
|
$
|
99,032
|
|
|
—
|
|
|
99,032
|
|
Deferred compensation
|
2,621
|
|
|
40,748
|
|
|
43,369
|
|
|
2,252
|
|
|
41,691
|
|
|
43,943
|
|
||
Pension benefits
|
3,823
|
|
|
472,253
|
|
|
476,076
|
|
|
3,790
|
|
|
484,892
|
|
|
488,682
|
|
||
Other postretirement benefits
|
1,636
|
|
|
20,209
|
|
|
21,845
|
|
|
1,624
|
|
|
20,002
|
|
|
21,626
|
|
||
Other employee benefits
|
12,120
|
|
|
3,135
|
|
|
15,255
|
|
|
8,956
|
|
|
9,706
|
|
|
18,662
|
|
||
Insurance obligations
(1)
|
149,258
|
|
|
209,376
|
|
|
358,634
|
|
|
157,014
|
|
|
213,256
|
|
|
370,270
|
|
||
Environmental liabilities
|
3,862
|
|
|
6,394
|
|
|
10,256
|
|
|
3,791
|
|
|
6,554
|
|
|
10,345
|
|
||
Operating taxes
|
101,350
|
|
|
—
|
|
|
101,350
|
|
|
101,649
|
|
|
—
|
|
|
101,649
|
|
||
Income taxes
|
824
|
|
|
23,270
|
|
|
24,094
|
|
|
3,378
|
|
|
22,366
|
|
|
25,744
|
|
||
Interest
|
32,712
|
|
|
—
|
|
|
32,712
|
|
|
31,218
|
|
|
—
|
|
|
31,218
|
|
||
Deposits, mainly from customers
|
64,628
|
|
|
4,974
|
|
|
69,602
|
|
|
61,869
|
|
|
5,085
|
|
|
66,954
|
|
||
Deferred revenue
|
14,655
|
|
|
—
|
|
|
14,655
|
|
|
13,038
|
|
|
—
|
|
|
13,038
|
|
||
Restructuring liabilities
(2)
|
7,526
|
|
|
—
|
|
|
7,526
|
|
|
12,333
|
|
|
—
|
|
|
12,333
|
|
||
Other
|
38,803
|
|
|
26,202
|
|
|
65,005
|
|
|
43,408
|
|
|
26,043
|
|
|
69,451
|
|
||
Total
|
$
|
506,300
|
|
|
806,561
|
|
|
1,312,861
|
|
|
$
|
543,352
|
|
|
829,595
|
|
|
1,372,947
|
|
(1)
|
Insurance obligations primarily represent self-insured claim liabilities.
|
(2)
|
The reduction in restructuring liabilities from December 31, 2015 principally represents cash payments for employee termination costs. The majority of the balance remaining in restructuring liabilities is expected to be paid by the end of 2016.
|
|
Weighted-Average
Interest Rate
|
|
|
|
|
|
|
|||||
|
March 31,
2016 |
|
December 31,
2015 |
|
Maturities
|
|
March 31,
2016 |
|
December 31,
2015 |
|||
|
|
|
|
|
|
|
(In thousands)
|
|||||
Short-term debt and current portion of long-term debt:
|
|
|
|
|
|
|
|
|
|
|||
Short-term debt
|
2.31%
|
|
2.26%
|
|
|
|
$
|
19,994
|
|
|
35,947
|
|
Current portion of long-term debt
|
|
|
|
|
|
|
592,229
|
|
|
598,583
|
|
|
Total short-term debt and current portion of long-term debt
|
|
|
|
|
|
612,223
|
|
|
634,530
|
|
||
Long-term debt:
|
|
|
|
|
|
|
|
|
|
|||
U.S. commercial paper
(1)
|
0.70%
|
|
0.55%
|
|
2020
|
|
637,811
|
|
|
547,130
|
|
|
Global revolving credit facility
|
2.28%
|
|
2.31%
|
|
2020
|
|
53,301
|
|
|
25,291
|
|
|
Unsecured U.S. notes — Medium-term notes
(1)
|
2.86%
|
|
2.84%
|
|
2016-2025
|
|
4,112,706
|
|
|
4,112,519
|
|
|
Unsecured U.S. obligations
|
1.86%
|
|
1.73%
|
|
2018
|
|
50,000
|
|
|
50,000
|
|
|
Unsecured foreign obligations
|
1.93%
|
|
1.92%
|
|
2016-2020
|
|
271,545
|
|
|
275,661
|
|
|
Asset-backed U.S. obligations
(3)
|
1.80%
|
|
1.81%
|
|
2016-2022
|
|
422,466
|
|
|
434,001
|
|
|
Capital lease obligations
|
3.23%
|
|
3.31%
|
|
2016-2022
|
|
29,586
|
|
|
32,054
|
|
|
Total before fair market value adjustment
|
|
|
|
|
|
|
5,577,415
|
|
|
5,476,656
|
|
|
Fair market value adjustment on notes subject to hedging
(4)
|
|
|
|
|
|
18,106
|
|
|
5,253
|
|
||
Debt issuance costs
(2)
|
|
|
|
|
|
|
(16,075
|
)
|
|
(15,229
|
)
|
|
|
|
|
|
|
|
|
5,579,446
|
|
|
5,466,680
|
|
|
Current portion of long-term debt
|
|
|
|
|
|
|
(592,229
|
)
|
|
(598,583
|
)
|
|
Long-term debt
|
|
|
|
|
|
|
4,987,217
|
|
|
4,868,097
|
|
|
Total debt
|
|
|
|
|
|
|
$
|
5,599,440
|
|
|
5,502,627
|
|
(1)
|
We had unamortized original issue discounts of
$7.5 million
and
$7.7 million
at
March 31, 2016
and
December 31, 2015
, respectively.
|
(2)
|
See
Note 2
, "
Recent Accounting Pronouncements
," for further discussion of the presentation of debt issuance costs.
|
(3)
|
Asset-backed U.S. obligations are related to financing transactions involving revenue earning equipment.
|
(4)
|
The notional amount of executed interest rate swaps designated as fair value hedges was
$825 million
at
March 31, 2016
and
December 31, 2015
.
|
|
|
Currency
Translation
Adjustments and Other
|
|
Net Actuarial
Loss
(1)
|
|
Prior Service
Credit
(1)
|
|
Accumulated
Other
Comprehensive
Loss
|
|||||
|
|
(In thousands)
|
|||||||||||
December 31, 2015
|
|
$
|
(136,020
|
)
|
|
(576,993
|
)
|
|
278
|
|
|
(712,735
|
)
|
Amortization
|
|
—
|
|
|
4,752
|
|
|
(37
|
)
|
|
4,715
|
|
|
Other current period change
|
|
13,684
|
|
|
—
|
|
|
—
|
|
|
13,684
|
|
|
March 31, 2016
|
|
$
|
(122,336
|
)
|
|
(572,241
|
)
|
|
241
|
|
|
(694,336
|
)
|
|
|
Currency
Translation
Adjustments and Other
|
|
Net Actuarial
Loss
(1)
|
|
Prior Service
Credit
(1)
|
|
Accumulated
Other
Comprehensive
Loss
|
|||||
|
|
(In thousands)
|
|||||||||||
December 31, 2014
|
|
$
|
(36,087
|
)
|
|
(585,941
|
)
|
|
1,758
|
|
|
(620,270
|
)
|
Amortization
|
|
—
|
|
|
4,961
|
|
|
(351
|
)
|
|
4,610
|
|
|
Other current period change
|
|
(57,372
|
)
|
|
—
|
|
|
—
|
|
|
(57,372
|
)
|
|
March 31, 2015
|
|
$
|
(93,459
|
)
|
|
(580,980
|
)
|
|
1,407
|
|
|
(673,032
|
)
|
(1)
|
These amounts are included in the computation of net periodic benefit cost. See
Note 11
, "
Employee Benefit Plans
," for further information.
|
|
Three months ended March 31,
|
|||||
|
2016
|
|
2015
|
|||
|
(In thousands, except per share amounts)
|
|||||
Earnings per share — Basic:
|
|
|
|
|||
Earnings from continuing operations
|
$
|
56,185
|
|
|
53,326
|
|
Less: Distributed and undistributed earnings allocated to unvested stock
|
(166
|
)
|
|
(148
|
)
|
|
Earnings from continuing operations available to common shareholders — Basic
|
$
|
56,019
|
|
|
53,178
|
|
|
|
|
|
|||
Weighted average common shares outstanding — Basic
|
53,076
|
|
|
52,596
|
|
|
|
|
|
|
|||
Earnings from continuing operations per common share — Basic
|
$
|
1.06
|
|
|
1.01
|
|
|
|
|
|
|||
Earnings per share — Diluted:
|
|
|
|
|||
Earnings from continuing operations
|
$
|
56,185
|
|
|
53,326
|
|
Less: Distributed and undistributed earnings allocated to unvested stock
|
(166
|
)
|
|
(148
|
)
|
|
Earnings from continuing operations available to common shareholders — Diluted
|
$
|
56,019
|
|
|
53,178
|
|
|
|
|
|
|||
Weighted average common shares outstanding — Basic
|
53,076
|
|
|
52,596
|
|
|
Effect of dilutive equity awards
|
287
|
|
|
510
|
|
|
Weighted average common shares outstanding — Diluted
|
53,363
|
|
|
53,106
|
|
|
|
|
|
|
|||
Earnings from continuing operations per common share — Diluted
|
$
|
1.05
|
|
|
1.00
|
|
|
|
|
|
|||
Anti-dilutive equity awards not included above
|
1,186
|
|
|
184
|
|
|
Three months ended March 31,
|
|||||
|
2016
|
|
2015
|
|||
|
(In thousands)
|
|||||
Stock option and stock purchase plans
|
$
|
1,873
|
|
|
2,301
|
|
Unvested stock
|
3,015
|
|
|
3,364
|
|
|
Share-based compensation expense
|
4,888
|
|
|
5,665
|
|
|
Income tax benefit
|
(1,655
|
)
|
|
(1,882
|
)
|
|
Share-based compensation expense, net of tax
|
$
|
3,233
|
|
|
3,783
|
|
|
Three months ended March 31,
|
|||||
|
2016
|
|
2015
|
|||
|
(In thousands)
|
|||||
Cash awards
|
$
|
151
|
|
|
172
|
|
|
Pension Benefits
|
|
Postretirement Benefits
|
||||||||||
|
Three months ended March 31,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||
|
(In thousands)
|
||||||||||||
|
|
|
|
|
|
|
|
||||||
Company-administered plans:
|
|
|
|
|
|
|
|
||||||
Service cost
|
$
|
3,400
|
|
|
3,627
|
|
|
$
|
69
|
|
|
111
|
|
Interest cost
|
22,240
|
|
|
21,887
|
|
|
232
|
|
|
284
|
|
||
Expected return on plan assets
|
(23,085
|
)
|
|
(24,900
|
)
|
|
—
|
|
|
—
|
|
||
Amortization of:
|
|
|
|
|
|
|
|
||||||
Net actuarial loss/(gain)
|
7,965
|
|
|
7,808
|
|
|
(484
|
)
|
|
(196
|
)
|
||
Prior service credit
|
—
|
|
|
(76
|
)
|
|
(58
|
)
|
|
(478
|
)
|
||
|
10,520
|
|
|
8,346
|
|
|
(241
|
)
|
|
(279
|
)
|
||
Union-administered plans
|
2,322
|
|
|
2,172
|
|
|
—
|
|
|
—
|
|
||
Net periodic benefit cost/(credit)
|
$
|
12,842
|
|
|
10,518
|
|
|
$
|
(241
|
)
|
|
(279
|
)
|
|
|
|
|
|
|
|
|
||||||
Company-administered plans:
|
|
|
|
|
|
|
|
||||||
U.S.
|
$
|
11,175
|
|
|
8,892
|
|
|
$
|
(340
|
)
|
|
(415
|
)
|
Non-U.S.
|
(655
|
)
|
|
(546
|
)
|
|
99
|
|
|
136
|
|
||
|
10,520
|
|
|
8,346
|
|
|
(241
|
)
|
|
(279
|
)
|
||
Union-administered plans
|
2,322
|
|
|
2,172
|
|
|
—
|
|
|
—
|
|
||
Net periodic benefit cost/(credit)
|
$
|
12,842
|
|
|
10,518
|
|
|
$
|
(241
|
)
|
|
(279
|
)
|
|
Three months ended March 31,
|
|||||
|
2016
|
|
2015
|
|||
|
(In thousands)
|
|||||
Interest paid
|
$
|
34,421
|
|
|
38,381
|
|
Income taxes paid
|
4,750
|
|
|
3,590
|
|
|
Changes in accounts payable related to purchases of revenue earning equipment
|
(77,486
|
)
|
|
99,972
|
|
(1)
|
Excludes revenue earning equipment acquired under capital leases.
|
(2)
|
See
Note 12
, "
Other Items Impacting Comparability
," for additional information.
|
|
Three months ended March 31,
|
|
Change
|
||||||
|
2016
|
|
2015
|
|
2016/2015
|
||||
|
(In thousands, except per share amounts)
|
|
|
||||||
Total revenue
|
$
|
1,629,672
|
|
|
1,567,153
|
|
|
4
|
%
|
Operating revenue
(1)
|
1,406,013
|
|
|
1,300,286
|
|
|
8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBT
|
$
|
88,708
|
|
|
84,177
|
|
|
5
|
%
|
Comparable EBT
(2)
|
95,576
|
|
|
90,901
|
|
|
5
|
%
|
|
Earnings from continuing operations
|
56,185
|
|
|
53,326
|
|
|
5
|
%
|
|
Comparable earnings from continuing operations
(2)
|
60,145
|
|
|
57,279
|
|
|
5
|
%
|
|
Net earnings
|
55,794
|
|
|
52,789
|
|
|
6
|
%
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|||
Earnings per common share (EPS) — Diluted
|
|
|
|
|
|
|
|||
Continuing operations
|
$
|
1.05
|
|
|
1.00
|
|
|
5
|
%
|
Comparable
(2)
|
1.12
|
|
|
1.08
|
|
|
4
|
%
|
|
Net earnings
|
1.04
|
|
|
0.99
|
|
|
5
|
%
|
(1)
|
We use operating revenue, a non-GAAP financial measure, to evaluate the operating performance of our core businesses and as a measure of sales activity. FMS fuel services revenue and DTS and SCS fuel are ancillary services that we provide our customers and are impacted by fluctuations in market fuel prices. Therefore, these items are excluded from operating revenue as the costs are largely a pass-through to our customers, resulting in minimal changes in our profitability during periods of steady market fuel prices. However, profitability may be positively or negatively impacted by rapid changes in market fuel prices during a short period of time as customer pricing for fuel services is established based on trailing market fuel costs. We also exclude subcontracted transportation from the calculation of operating revenue as this service is also typically a pass-through to our customers and therefore fluctuations result in minimal changes to our profitability. Refer to the“Non-GAAP Financial Measures” section for a reconciliation of total revenue to operating revenue.
|
(2)
|
Non-GAAP financial measure. We believe comparable EBT, comparable earnings and comparable earnings per diluted common share, all from continuing operations, provide useful information to investors because they exclude non-operating pension costs, which we consider to be those impacted by financial market performance and outside the operational performance of the business, and other significant items that are unrelated to our ongoing business operations. Refer to the “Non-GAAP Financial Measures” section for a reconciliation of EBT, net earnings and earnings per diluted common share to the comparable measures.
|
|
Three months ended March 31,
|
|
Change
|
||||||
|
2016
|
|
2015
|
|
2016/2015
|
||||
|
(Dollars in thousands)
|
|
|
||||||
Lease and rental revenues
|
$
|
767,754
|
|
|
729,024
|
|
|
5
|
%
|
Cost of lease and rental
|
552,490
|
|
|
518,422
|
|
|
7
|
%
|
|
Gross margin
|
215,264
|
|
|
210,602
|
|
|
2
|
%
|
|
Gross margin %
|
28
|
%
|
|
29
|
%
|
|
|
|
Three months ended March 31,
|
|
Change
|
||||||
|
2016
|
|
2015
|
|
2016/2015
|
||||
|
(Dollars in thousands)
|
|
|
|
|||||
Services revenue
|
$
|
759,127
|
|
|
693,704
|
|
|
9
|
%
|
Cost of services
|
631,714
|
|
|
582,330
|
|
|
8
|
%
|
|
Gross margin
|
127,413
|
|
|
111,374
|
|
|
14
|
%
|
|
Gross margin %
|
17
|
%
|
|
16
|
%
|
|
|
|
Three months ended March 31,
|
|
Change
|
||||||
|
2016
|
|
2015
|
|
2016/2015
|
||||
|
(Dollars in thousands)
|
|
|
|
|||||
Fuel services revenue
|
$
|
102,791
|
|
|
144,425
|
|
|
(29
|
)%
|
Cost of fuel services
|
98,901
|
|
|
136,289
|
|
|
(27
|
)%
|
|
Gross margin
|
3,890
|
|
|
8,136
|
|
|
(52
|
)%
|
|
Gross margin %
|
4
|
%
|
|
6
|
%
|
|
|
|
Three months ended March 31,
|
|
Change
|
||||||
|
2016
|
|
2015
|
|
2016/2015
|
||||
|
(In thousands)
|
|
|
|
|||||
Other operating expenses
|
$
|
30,151
|
|
|
32,373
|
|
|
(7
|
)%
|
|
Three months ended March 31,
|
|
Change
|
||||||
|
2016
|
|
2015
|
|
2016/2015
|
||||
|
(Dollars in thousands)
|
|
|
|
|||||
Selling, general and administrative expenses (SG&A)
|
$
|
211,213
|
|
|
206,605
|
|
|
2
|
%
|
Percentage of total revenue
|
13
|
%
|
|
13
|
%
|
|
|
||
Percentage of operating revenue
|
15
|
%
|
|
16
|
%
|
|
|
|
Three months ended March 31,
|
|
Change
|
||||||
|
2016
|
|
2015
|
|
2016/2015
|
||||
|
(Dollars in thousands)
|
|
|
||||||
Gains on used vehicles, net
|
$
|
19,129
|
|
|
27,208
|
|
|
(30
|
)%
|
|
Three months ended March 31,
|
|
Change
|
||||||
|
2016
|
|
2015
|
|
2016/2015
|
||||
|
(Dollars in thousands)
|
|
|
||||||
Interest expense
|
$
|
37,889
|
|
|
36,802
|
|
|
3
|
%
|
Effective interest rate
|
2.7
|
%
|
|
3.1
|
%
|
|
|
|
Three months ended March 31,
|
|
Change
|
||||||
|
2016
|
|
2015
|
|
2016/2015
|
||||
|
(Dollars in thousands)
|
|
|
||||||
Miscellaneous income, net
|
$
|
2,265
|
|
|
2,637
|
|
|
(14
|
)%
|
|
Three months ended March 31,
|
|
Change
|
||||||
|
2016
|
|
2015
|
|
2016/2015
|
||||
|
(Dollars in thousands)
|
|
|
||||||
Provision for income taxes
|
$
|
32,523
|
|
|
30,851
|
|
|
5
|
%
|
Effective tax rate from continuing operations
|
36.7
|
%
|
|
36.7
|
%
|
|
|
|
Three months ended March 31,
|
|
Change
|
||||||
|
2016
|
|
2015
|
|
2016/2015
|
||||
|
(Dollars in thousands)
|
|
|
||||||
Revenue:
|
|
|
|
|
|
||||
Fleet Management Solutions
|
$
|
1,097,928
|
|
|
1,087,150
|
|
|
1
|
%
|
Dedicated Transportation Solutions
|
244,842
|
|
|
212,659
|
|
|
15
|
|
|
Supply Chain Solutions
|
388,715
|
|
|
371,054
|
|
|
5
|
|
|
Eliminations
|
(101,813
|
)
|
|
(103,710
|
)
|
|
(2
|
)
|
|
Total
|
$
|
1,629,672
|
|
|
1,567,153
|
|
|
4
|
%
|
Operating Revenue:
|
|
|
|
|
|
||||
Fleet Management Solutions
|
$
|
962,324
|
|
|
899,187
|
|
|
7
|
%
|
Dedicated Transportation Solutions
|
190,273
|
|
|
165,830
|
|
|
15
|
%
|
|
Supply Chain Solutions
|
322,416
|
|
|
295,441
|
|
|
9
|
|
|
Eliminations
|
(69,000
|
)
|
|
(60,172
|
)
|
|
15
|
|
|
Total
|
$
|
1,406,013
|
|
|
1,300,286
|
|
|
8
|
%
|
EBT:
|
|
|
|
|
|
||||
Fleet Management Solutions
|
$
|
82,921
|
|
|
89,718
|
|
|
(8
|
)%
|
Dedicated Transportation Solutions
|
14,268
|
|
|
8,970
|
|
|
59
|
|
|
Supply Chain Solutions
|
19,796
|
|
|
15,689
|
|
|
26
|
|
|
Eliminations
|
(11,744
|
)
|
|
(11,534
|
)
|
|
2
|
|
|
|
105,241
|
|
|
102,843
|
|
|
2
|
|
|
Unallocated Central Support Services
|
(9,665
|
)
|
|
(11,942
|
)
|
|
(19
|
)
|
|
Non-operating pension costs
|
(6,868
|
)
|
|
(4,883
|
)
|
|
41
|
|
|
Professional fees
|
—
|
|
|
(1,841
|
)
|
|
NM
|
|
|
Earnings from continuing operations before income taxes
|
$
|
88,708
|
|
|
84,177
|
|
|
5
|
%
|
|
Three months ended March 31,
|
|
Change
|
||||||
|
2016
|
|
2015
|
|
2016/2015
|
||||
|
(Dollars in thousands)
|
|
|
||||||
Equipment Contribution:
|
|
|
|
|
|
||||
Dedicated Transportation Solutions
|
$
|
7,718
|
|
|
7,804
|
|
|
(1
|
)%
|
Supply Chain Solutions
|
4,026
|
|
|
3,730
|
|
|
8
|
|
|
Total
|
$
|
11,744
|
|
|
11,534
|
|
|
2
|
%
|
|
|
|
|
Three months ended March 31,
|
|||||
Description
|
|
Classification
|
|
2016
|
|
2015
|
|||
|
|
|
|
(In thousands)
|
|||||
Non-operating pension costs
|
|
SG&A
|
|
$
|
(6,868
|
)
|
|
(4,883
|
)
|
Professional fees
(1)
|
|
SG&A
|
|
—
|
|
|
(1,841
|
)
|
|
|
|
|
|
$
|
(6,868
|
)
|
|
(6,724
|
)
|
(1)
|
See
Note 12
, "
Other Items Impacting Comparability
," for additional information.
|
|
Three months ended March 31,
|
|
Change
|
||||||
|
2016
|
|
2015
|
|
2016/2015
|
||||
|
(Dollars in thousands)
|
|
|
|
|||||
Full service lease
|
$
|
622,863
|
|
|
577,113
|
|
|
8
|
%
|
Contract maintenance
|
50,126
|
|
|
45,951
|
|
|
9
|
|
|
Contractual revenue
|
672,989
|
|
|
623,064
|
|
|
8
|
|
|
Commercial rental
|
204,837
|
|
|
205,093
|
|
|
—
|
|
|
Contract-related maintenance
|
64,261
|
|
|
53,146
|
|
|
21
|
|
|
Other
|
20,237
|
|
|
17,884
|
|
|
13
|
|
|
Operating revenue
(1)
|
962,324
|
|
|
899,187
|
|
|
7
|
|
|
Fuel services revenue
(2)
|
135,604
|
|
|
187,963
|
|
|
(28
|
)
|
|
Total revenue
|
$
|
1,097,928
|
|
|
1,087,150
|
|
|
1
|
%
|
|
|
|
|
|
|
||||
Segment EBT
|
$
|
82,921
|
|
|
89,718
|
|
|
(8
|
)%
|
Segment EBT as a % of total revenue
|
7.6
|
%
|
|
8.3
|
%
|
|
(70) bps
|
||
Segment EBT as a % of operating revenue
(1)
|
8.6
|
%
|
|
10.0
|
%
|
|
(140) bps
|
(1)
|
We use operating revenue, which excludes fuel services revenue, and segment EBT as a percent of operating revenue, non-GAAP financial measures, to evaluate the operating performance of our FMS segment and as a measure of sales activity. FMS fuel services revenue is an ancillary service that we provide our customers and is impacted by fluctuations in market fuel prices. Therefore, this item is excluded from operating revenue as the costs are largely a pass-through to our customers, resulting in minimal changes in our profitability during periods of steady market fuel prices. However, profitability may be positively or negatively impacted by rapid changes in market fuel prices during a short period of time as customer pricing for fuel services is established based on trailing market fuel costs.
|
(2)
|
Includes intercompany fuel sales from FMS to DTS and SCS.
|
|
Three months ended March 31, 2016
|
||||
|
Total
|
|
Operating
|
||
Organic including price and volume
|
7
|
%
|
|
8
|
%
|
Fuel
|
(5
|
)
|
|
—
|
|
Foreign exchange
|
(1
|
)
|
|
(1
|
)
|
Net increase
|
1
|
%
|
|
7
|
%
|
|
Three months ended March 31,
|
|
Change
|
||||||
|
2016
|
|
2015
|
|
2016/2015
|
||||
|
(Dollars in thousands)
|
|
|
||||||
Rental revenue from non-lease customers
(1)
|
$
|
120,702
|
|
|
116,151
|
|
|
4
|
%
|
Rental revenue from lease customers
(2)
|
$
|
84,135
|
|
|
88,942
|
|
|
(5
|
)%
|
Average commercial rental power fleet size — in service
(3),
(4)
|
32,900
|
|
|
31,400
|
|
|
5
|
%
|
|
Commercial rental utilization — power fleet
(3)
|
70.4
|
%
|
|
73.4
|
%
|
|
(300) bps
|
(1)
|
Includes extra vehicles rented to lease customers.
|
(2)
|
Represents revenue from rental vehicles provided to our existing full service lease customers, generally in place of a lease vehicle.
|
(3)
|
Number of units rounded to nearest hundred and calculated using quarterly average unit counts.
|
(4)
|
Excluding trailers.
|
|
|
|
|
|
|
|
Change
|
|||||||
|
March 31, 2016
|
|
December 31, 2015
|
|
March 31, 2015
|
|
Mar. 2016/Dec. 2015
|
|
Mar. 2016/Mar. 2015
|
|||||
End of period vehicle count
|
|
|
|
|
|
|
|
|
|
|||||
By type:
|
|
|
|
|
|
|
|
|
|
|||||
Trucks
(1)
|
72,900
|
|
|
72,800
|
|
|
70,400
|
|
|
—
|
%
|
|
4
|
%
|
Tractors
(2)
|
69,000
|
|
|
68,700
|
|
|
63,700
|
|
|
—
|
|
|
8
|
|
Trailers
(3) (4)
|
42,200
|
|
|
42,400
|
|
|
41,900
|
|
|
—
|
|
|
1
|
|
Other
|
1,300
|
|
|
1,300
|
|
|
1,500
|
|
|
—
|
|
|
(13
|
)
|
Total
|
185,400
|
|
|
185,200
|
|
|
177,500
|
|
|
—
|
%
|
|
4
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||
By ownership:
|
|
|
|
|
|
|
|
|
|
|||||
Owned
|
183,900
|
|
|
184,700
|
|
|
173,100
|
|
|
—
|
%
|
|
6
|
%
|
Leased
|
1,500
|
|
|
500
|
|
|
4,400
|
|
|
200
|
|
|
(66
|
)
|
Total
|
185,400
|
|
|
185,200
|
|
|
177,500
|
|
|
—
|
%
|
|
4
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||
By product line:
(4)
|
|
|
|
|
|
|
|
|
|
|||||
Full service lease
|
133,300
|
|
|
131,800
|
|
|
127,500
|
|
|
1
|
%
|
|
5
|
%
|
Commercial rental
|
40,100
|
|
|
42,100
|
|
|
41,100
|
|
|
(5
|
)
|
|
(2
|
)
|
Service vehicles and other
|
3,400
|
|
|
3,300
|
|
|
3,100
|
|
|
3
|
|
|
10
|
|
Active units
|
176,800
|
|
|
177,200
|
|
|
171,700
|
|
|
—
|
|
|
3
|
|
Held for sale
|
8,600
|
|
|
8,000
|
|
|
5,800
|
|
|
8
|
|
|
48
|
|
Total
|
185,400
|
|
|
185,200
|
|
|
177,500
|
|
|
—
|
%
|
|
4
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||
Customer vehicles under contract maintenance
|
49,500
|
|
|
46,700
|
|
|
43,400
|
|
|
6
|
%
|
|
14
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||
Total vehicles under service
|
234,900
|
|
|
231,900
|
|
|
220,900
|
|
|
1
|
%
|
|
6
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||
Quarterly average vehicle count
|
|
|
|
|
|
|
|
|
|
|||||
By product line:
|
|
|
|
|
|
|
|
|
|
|||||
Full service lease
|
132,600
|
|
|
131,100
|
|
|
126,500
|
|
|
1
|
%
|
|
5
|
%
|
Commercial rental
|
41,000
|
|
|
43,200
|
|
|
40,100
|
|
|
(5
|
)
|
|
2
|
|
Service vehicles and other
|
3,400
|
|
|
3,300
|
|
|
3,200
|
|
|
3
|
|
|
6
|
|
Active units
|
177,000
|
|
|
177,600
|
|
|
169,800
|
|
|
—
|
|
|
4
|
|
Held for sale
|
8,500
|
|
|
6,900
|
|
|
5,500
|
|
|
23
|
|
|
55
|
|
Total
|
185,500
|
|
|
184,500
|
|
|
175,300
|
|
|
1
|
%
|
|
6
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||
Customer vehicles under contract maintenance
|
48,200
|
|
|
45,500
|
|
|
42,800
|
|
|
6
|
%
|
|
13
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||
Customer vehicles under on-demand maintenance
(5)
|
7,100
|
|
|
7,200
|
|
|
6,500
|
|
|
(1
|
)%
|
|
9
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||
Total vehicles under service
|
240,800
|
|
|
237,200
|
|
|
224,600
|
|
|
2
|
%
|
|
7
|
%
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Generally comprised of Class 1 through Class 7 type vehicles with a Gross Vehicle Weight (GVW) up to 33,000 pounds.
|
(2)
|
Generally comprised of over the road on highway tractors and are primarily comprised of Class 8 type vehicles with a GVW of over 33,000 pounds.
|
(3)
|
Generally comprised of dry, flatbed and refrigerated type trailers.
|
(4)
|
Includes
5,700
UK trailers (
3,700
full service lease and
2,000
commercial rental),
6,100
UK trailers (
3,900
full service lease and
2,200
commercial rental) and
6,500
UK trailers (
4,400
full service lease and
2,100
commercial rental) as of
March 31, 2016
,
December 31, 2015
, and
March 31, 2015
, respectively.
|
(5)
|
Comprised of the number of unique vehicles serviced under on-demand maintenance agreements for the quarterly periods. This does not represent averages for the periods. Vehicles included in the count may have been serviced more than one time during the respective period.
|
|
|
|
|
|
|
|
Change
|
||||
|
March 31,
2016 |
|
December 31,
2015 |
|
March 31,
2015 |
|
Mar. 2016/Dec. 2015
|
|
Mar. 2016/Mar. 2015
|
||
Not yet earning revenue (NYE)
|
2,400
|
|
2,800
|
|
3,400
|
|
(14
|
)%
|
|
(29
|
)%
|
No longer earning revenue (NLE):
|
|
|
|
|
|
|
|
|
|
||
Units held for sale
|
8,600
|
|
8,000
|
|
5,800
|
|
8
|
|
|
48
|
|
Other NLE units
|
4,800
|
|
3,300
|
|
4,000
|
|
45
|
|
|
20
|
|
Total
|
15,800
|
|
14,100
|
|
13,200
|
|
12
|
%
|
|
20
|
%
|
|
Three months ended March 31,
|
|
Change
|
||||||
|
2016
|
|
2015
|
|
2016/2015
|
||||
|
|
|
|
|
|
||||
Operating revenue
(1)
|
$
|
190,273
|
|
|
165,830
|
|
|
15
|
%
|
Subcontracted transportation
|
31,229
|
|
|
14,621
|
|
|
114
|
%
|
|
Fuel
(2)
|
23,340
|
|
|
32,208
|
|
|
(28
|
)%
|
|
Total revenue
|
$
|
244,842
|
|
|
212,659
|
|
|
15
|
%
|
|
|
|
|
|
|
||||
Segment EBT
|
$
|
14,268
|
|
|
8,970
|
|
|
59
|
%
|
Segment EBT as a % of total revenue
|
5.8
|
%
|
|
4.2
|
%
|
|
160 bps
|
||
Segment EBT as a % of operating revenue
(1)
|
7.5
|
%
|
|
5.4
|
%
|
|
210 bps
|
||
Memo:
|
|
|
|
|
|
||||
Average fleet
|
8,000
|
|
|
7,500
|
|
|
7
|
%
|
(1)
|
We use operating revenue and segment EBT as a percent of operating revenue, non-GAAP financial measures, to evaluate the operating performance of our DTS segment and as a measure of sales activity. Fuel and subcontracted transportation are excluded from the calculation of DTS operating revenue. DTS fuel is an ancillary service we provide our customers and is impacted by fluctuations in market fuel prices. Therefore, this item is excluded from operating revenue
as the costs are largely a pass-through to our customers, resulting in minimal changes in our profitability during periods of steady market fuel prices. However, profitability may be positively or negatively impacted by rapid changes in market fuel prices during a short period of time as customer pricing for fuel services is established based on trailing market fuel costs. We also exclude subcontracted transportation from the calculation of DTS operating revenue as this service is also typically a pass-through to our customers and therefore fluctuations result in minimal changes to our profitability.
|
(2)
|
Includes intercompany fuel sales from FMS to DTS.
|
|
Three months ended March 31, 2016
|
||||
|
Total
|
|
Operating
|
||
Organic including price and volume
|
11
|
%
|
|
15
|
%
|
Subcontracted transportation
|
8
|
|
|
—
|
|
Fuel
|
(4
|
)
|
|
—
|
|
Net increase
|
15
|
%
|
|
15
|
%
|
|
Three months ended March 31,
|
|
Change
|
||||||
|
2016
|
|
2015
|
|
2016/2015
|
||||
|
(Dollars in thousands)
|
|
|
||||||
|
|
|
|
|
|
||||
Automotive
|
$
|
129,124
|
|
|
109,166
|
|
|
18
|
%
|
Technology and healthcare
|
57,438
|
|
|
59,321
|
|
|
(3
|
)
|
|
CPG and Retail
|
108,602
|
|
|
102,695
|
|
|
6
|
|
|
Industrial and other
|
27,252
|
|
|
24,259
|
|
|
12
|
|
|
Operating revenue
(1)
|
322,416
|
|
|
295,441
|
|
|
9
|
|
|
Subcontracted transportation
|
51,979
|
|
|
58,155
|
|
|
(11
|
)
|
|
Fuel
(2)
|
14,320
|
|
|
17,458
|
|
|
(18
|
)%
|
|
Total revenue
|
$
|
388,715
|
|
|
371,054
|
|
|
5
|
%
|
|
|
|
|
|
|
||||
Segment EBT
|
$
|
19,796
|
|
|
15,689
|
|
|
26
|
%
|
Segment EBT as a % of total revenue
|
5.1
|
%
|
|
4.2
|
%
|
|
90 bps
|
||
Segment EBT as a % of operating revenue
(1)
|
6.1
|
%
|
|
5.3
|
%
|
|
80 bps
|
||
Memo:
|
|
|
|
|
|
||||
Average fleet
|
6,900
|
|
|
6,100
|
|
|
13
|
%
|
(1)
|
We use operating revenue and segment EBT as a percent of operating revenue, non-GAAP financial measures, to evaluate the operating performance of our SCS segment and as a measure of sales activity. In addition to excluding subcontracted transportation from the calculation of SCS operating revenue, we will also exclude SCS fuel. SCS fuel is an ancillary service we provide our customers and is impacted by fluctuations in market fuel prices. Therefore, this item is excluded from operating revenue
as the costs are largely a pass-through to our customers, resulting in minimal changes in our profitability during periods of steady market fuel prices. However, profitability may be positively or negatively impacted by rapid changes in market fuel prices during a short period of time as customer pricing for fuel services is established based on trailing market fuel costs. We also exclude subcontracted transportation from the calculation of SCS operating revenue as this service is also typically a pass-through to our customers and therefore fluctuations result in minimal changes to our profitability.
|
(2)
|
Includes intercompany fuel sales from FMS to SCS.
|
|
Three months ended March 31, 2016
|
||||
|
Total
|
|
Operating
|
||
Organic including price and volume
|
9
|
%
|
|
11
|
%
|
Subcontracted transportation
|
(1
|
)
|
|
—
|
|
Fuel
|
(1
|
)
|
|
—
|
|
Foreign exchange
|
(2
|
)
|
|
(2
|
)
|
Net increase
|
5
|
%
|
|
9
|
%
|
|
Three months ended March 31,
|
|
Change
|
||||||
|
2016
|
|
2015
|
|
2016/2015
|
||||
|
(Dollars in thousands)
|
|
|
||||||
Human resources
|
$
|
4,524
|
|
|
5,342
|
|
|
(15
|
)%
|
Finance
|
14,774
|
|
|
14,536
|
|
|
2
|
|
|
Corporate services and public affairs
|
2,455
|
|
|
2,554
|
|
|
(4
|
)
|
|
Information technology
|
19,908
|
|
|
20,662
|
|
|
(4
|
)
|
|
Legal and safety
|
6,258
|
|
|
6,597
|
|
|
(5
|
)
|
|
Marketing
|
3,710
|
|
|
3,780
|
|
|
(2
|
)
|
|
Other
|
6,726
|
|
|
8,747
|
|
|
(23
|
)
|
|
Total CSS
|
58,355
|
|
|
62,218
|
|
|
(6
|
)
|
|
Allocation of CSS to business segments
|
(48,690
|
)
|
|
(50,276
|
)
|
|
(3
|
)
|
|
Unallocated CSS
|
$
|
9,665
|
|
|
11,942
|
|
|
(19
|
)%
|
|
Three months ended March 31,
|
|||||
|
2016
|
|
2015
|
|||
|
(In thousands)
|
|||||
Net cash provided by (used in):
|
|
|
|
|||
Operating activities
|
$
|
365,009
|
|
|
283,845
|
|
Financing activities
|
63,505
|
|
|
178,870
|
|
|
Investing activities
|
(429,044
|
)
|
|
(440,817
|
)
|
|
Effect of exchange rates on cash
|
(3,508
|
)
|
|
756
|
|
|
Net change in cash and cash equivalents
|
$
|
(4,038
|
)
|
|
22,654
|
|
|
Three months ended March 31,
|
|||||
|
2016
|
|
2015
|
|||
|
(In thousands)
|
|||||
Net cash provided by operating activities from continuing operations
|
$
|
365,009
|
|
|
283,845
|
|
Sales of revenue earning equipment
|
119,188
|
|
|
96,821
|
|
|
Sales of operating property and equipment
|
1,410
|
|
|
273
|
|
|
Collections on direct finance leases and other items
|
25,610
|
|
|
16,243
|
|
|
Total cash generated
|
511,217
|
|
|
397,182
|
|
|
Purchases of property and revenue earning equipment
|
(575,031
|
)
|
|
(553,242
|
)
|
|
Free cash flow
|
$
|
(63,814
|
)
|
|
(156,060
|
)
|
|
Three months ended March 31,
|
|||||
|
2016
|
|
2015
|
|||
|
(In thousands)
|
|||||
Revenue earning equipment:
|
|
|
|
|||
Full service lease
|
$
|
441,041
|
|
|
436,050
|
|
Commercial rental
|
33,315
|
|
|
190,420
|
|
|
|
474,356
|
|
|
626,470
|
|
|
Operating property and equipment
|
23,189
|
|
|
26,744
|
|
|
Total capital expenditures
|
497,545
|
|
|
653,214
|
|
|
Changes in accounts payable related to purchases of revenue earning equipment
|
77,486
|
|
|
(99,972
|
)
|
|
Cash paid for purchases of property and revenue earning equipment
|
$
|
575,031
|
|
|
553,242
|
|
|
Short-term
|
|
|
|
Long-term
|
||
|
Rating
|
|
Outlook
|
|
Rating
|
|
Outlook
|
Moody’s Investors Service
|
P2
|
|
Stable
|
|
Baa1
|
|
Stable (affirmed February 2016)
|
Standard & Poor’s Ratings Services
|
A2
|
|
Stable
|
|
BBB
|
|
Positive (affirmed March 2016)
|
Fitch Ratings
|
F2
|
|
Stable
|
|
A-
|
|
Stable (affirmed February 2016)
|
|
(In millions)
|
Global revolving credit facility
|
$489
|
Trade receivables program
|
$175
|
|
Three months ended March 31,
|
|||||
|
2016
|
|
2015
|
|||
|
(In thousands)
|
|||||
Debt balance at January 1
|
$
|
5,502,627
|
|
|
4,717,524
|
|
Cash-related changes in debt:
|
|
|
|
|||
Net change in commercial paper borrowings
|
98,580
|
|
|
204,750
|
|
|
Proceeds from issuance of medium-term notes
|
298,254
|
|
|
399,736
|
|
|
Proceeds from issuance of other debt instruments
|
—
|
|
|
55,375
|
|
|
Retirement of medium term notes
|
(300,000
|
)
|
|
(350,000
|
)
|
|
Other debt repaid
|
(12,400
|
)
|
|
(113,536
|
)
|
|
Debt issuance costs paid
|
(622
|
)
|
|
(1,645
|
)
|
|
|
83,812
|
|
|
194,680
|
|
|
Non-cash changes in debt:
|
|
|
|
|||
Fair value adjustment on notes subject to hedging
|
12,853
|
|
|
5,055
|
|
|
Addition of capital lease obligations
|
240
|
|
|
—
|
|
|
Changes in foreign currency exchange rates and other non-cash items
|
(92
|
)
|
|
(15,909
|
)
|
|
Total changes in debt
|
96,813
|
|
|
183,826
|
|
|
Debt balance at March 31
|
$
|
5,599,440
|
|
|
4,901,350
|
|
|
EBT
|
|
Earnings
|
|
Diluted EPS
|
|||||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|||||||||
Three months ended March 31,
|
(In thousands, except per share amounts)
|
|||||||||||||||||||
EBT/Earnings/EPS
|
$
|
88,708
|
|
|
84,177
|
|
|
$
|
56,185
|
|
|
53,326
|
|
|
$
|
1.05
|
|
|
1.00
|
|
Non-operating pension costs
(1)
|
6,868
|
|
|
4,883
|
|
|
3,960
|
|
|
2,792
|
|
|
0.07
|
|
|
0.06
|
|
|||
Professional fees
(2)
|
—
|
|
|
1,841
|
|
|
—
|
|
|
1,161
|
|
|
—
|
|
|
0.02
|
|
|||
Comparable
|
$
|
95,576
|
|
|
90,901
|
|
|
$
|
60,145
|
|
|
57,279
|
|
|
$
|
1.12
|
|
|
1.08
|
|
(1)
|
Includes the amortization of net actuarial loss, interest cost and expected return on plan assets components of pension and postretirement costs, which are tied to financial market performance. We consider these costs to be outside the operational performance of the business.
|
(2)
|
See
Note 12
, "
Other Items Impacting Comparability
," for additional information.
|
|
Three months ended March 31,
|
|||||
|
2016
|
|
2015
|
|||
|
(In thousands)
|
|||||
Total revenue
|
$
|
1,629,672
|
|
|
1,567,153
|
|
Fuel
|
(140,451
|
)
|
|
(194,091
|
)
|
|
Subcontracted transportation
|
(83,208
|
)
|
|
(72,776
|
)
|
|
Operating revenue
|
$
|
1,406,013
|
|
|
1,300,286
|
|
•
|
our expectations in our FMS business segment regarding anticipated full service lease and commercial rental revenue;
|
•
|
our expectations in our DTS and SCS business segment regarding anticipated operating revenue trends;
|
•
|
our expectations of the long-term residual values of revenue earning equipment;
|
•
|
the anticipated decline in NLE vehicles in inventory through the end of the year;
|
•
|
our expectations of operating cash flow and capital expenditures through the end of
2016
;
|
•
|
the adequacy of our accounting estimates and reserves for pension expense, compensation expense and employee benefit plan obligations, depreciation and residual value guarantees and income taxes;
|
•
|
the adequacy of our fair value estimates of employee incentive awards under our share-based compensation plans, publicly traded debt and other debt;
|
•
|
our beliefs regarding the default risk of our direct financing lease receivables;
|
•
|
our ability to fund all of our operating, investing and financial needs for the foreseeable future through internally generated funds and outside funding sources;
|
•
|
the anticipated impact of fuel price fluctuations;
|
•
|
our expectations as to return on pension plan assets, future pension expense and estimated contributions;
|
•
|
our expectations regarding the scope, anticipated outcomes and the adequacy of our loss provisions with respect to certain claims, proceedings and lawsuits;
|
•
|
our ability to access commercial paper and other available debt financing in the capital markets;
|
•
|
our expectations regarding the future use and availability of funding sources;
|
•
|
the anticipated impact of recent accounting pronouncements; and
|
•
|
the expected resumption of our anti-dilutive share repurchase program.
|
•
|
Market Conditions:
|
|
|
|
Changes in general economic and financial conditions in the U.S. and worldwide leading to decreased demand for our services, lower profit margins, increased levels of bad debt and reduced access to credit
|
|
|
|
Decreases in freight demand which would impact both our transactional and variable-based contractual business
|
|
|
|
Changes in our customers’ operations, financial condition or business environment that may limit their need for, or ability to purchase, our services
|
|
|
|
Further decreases in market demand affecting the commercial rental market and used vehicle sales as well as global economic conditions.
|
|
|
|
Volatility in customer volumes and shifting customer demand in the industries serviced by our SCS business
|
|
|
|
Changes in current financial, tax or regulatory requirements that could negatively impact the leasing market
|
•
|
Competition:
|
|
|
|
Advances in technology may require increased investments to remain competitive, and our customers may not be willing to accept higher prices to cover the cost of these investments
|
|
|
|
Competition from other service providers, some of which have greater capital resources or lower capital costs, or from our customers, who may choose to provide services themselves
|
|
|
|
Continued consolidation in the markets in which we operate which may create large competitors with greater financial resources
|
|
|
|
Our inability to maintain current pricing levels due to economic conditions, demand for services, customer acceptance or competition
|
•
|
Profitability:
|
|
|
|
Our inability to obtain adequate profit margins for our services
|
|
|
|
Lower than expected sales volumes or customer retention levels
|
|
|
|
Lower full service lease sales activity
|
|
|
|
Decreases in commercial rental fleet utilization
|
|
|
|
Lower than expected used vehicle sales pricing levels and fluctuations in the anticipated proportion of retail versus wholesale sales
|
|
|
|
Loss of key customers in our DTS and SCS business segments
|
|
|
|
Our inability to adapt our product offerings to meet changing consumer preferences on a cost-effective basis
|
|
|
|
The inability of our legacy information technology systems to provide timely access to data
|
|
|
|
Sudden changes in fuel prices and fuel shortages
|
|
|
|
Higher prices for vehicles, diesel engines and fuel as a result of exhaust emissions standards enacted over the last few years
|
|
|
|
Higher than expected maintenance costs and lower than expected benefits associated with our maintenance initiatives
|
|
|
|
Our inability to successfully implement our asset management initiatives, maintain our fleet at normalized levels and right-size our fleet in line with demand
|
|
|
|
Our key assumptions and pricing structure of our DTS and SCS contracts prove to be invalid
|
|
|
|
Increased unionizing, labor strikes and work stoppages
|
|
|
|
Difficulties in attracting and retaining drivers and technicians due to driver and technician shortages, which may result in higher costs to procure drivers and technicians and higher turnover rates affecting our customers
|
|
|
|
Our inability to manage our cost structure
|
|
|
|
Our inability to limit our exposure for customer claims
|
|
|
|
Unfavorable or unanticipated outcomes in legal proceedings or uncertain positions
|
|
|
|
Business interruptions or expenditures due to severe weather or natural occurrences
|
•
|
Financing Concerns:
|
|
|
|
Higher borrowing costs and possible decreases in available funding sources caused by an adverse change in our debt ratings
|
|
|
|
Unanticipated interest rate and currency exchange rate fluctuations
|
|
|
|
Negative funding status of our pension plans caused by lower than expected returns on invested assets and unanticipated changes in interest rates
|
|
|
|
Withdrawal liability as a result of our participation in multi-employer plans
|
|
|
|
Instability in U.S. and worldwide credit markets, resulting in higher borrowing costs and/or reduced access to credit
|
•
|
Accounting Matters:
|
|
|
|
Impact of unusual items resulting from ongoing evaluations of business strategies, asset valuations, acquisitions, divestitures and our organizational structure
|
|
|
|
Reductions in residual values or useful lives of revenue earning equipment
|
|
|
|
Increases in compensation levels, retirement rate and mortality resulting in higher pension expense; regulatory changes affecting pension estimates, accruals and expenses
|
|
|
|
Increases in health care costs resulting in higher insurance costs
|
|
|
|
Changes in accounting rules, assumptions and accruals
|
|
|
|
Impact of actual insurance claim and settlement activity compared to historical loss development factors used to project future development
|
•
|
Other risks detailed from time to time in our SEC filings
|
|
Total Number
of Shares
Purchased
(1)
|
|
Average Price
Paid per Share
|
|
Total Number of
Shares
Purchased as
Part of Publicly
Announced
Programs
|
|
Maximum
Number of
Shares That May
Yet Be
Purchased
Under the
Anti-Dilutive
Program
(2)
|
|||||
January 1 through January 31, 2016
|
125
|
|
|
$
|
47.79
|
|
|
—
|
|
|
2,000,000
|
|
February 1 through February 29, 2016
|
29,844
|
|
|
55.97
|
|
|
—
|
|
|
2,000,000
|
|
|
March 1 through March 31, 2016
|
583
|
|
|
63.46
|
|
|
—
|
|
|
2,000,000
|
|
|
Total
|
30,552
|
|
|
$
|
56.08
|
|
|
—
|
|
|
|
(1)
|
During the
three months ended March 31, 2016
, we purchased an aggregate of
30,552
shares of our common stock in employee-related transactions. Employee-related transactions may include: (i) shares of common stock withheld as payment for the exercise price of options exercised or to satisfy the employees' tax withholding liability associated with our share-based compensation programs and (ii) open-market purchases by the trustee of Ryder’s deferred compensation plans relating to investments by employees in our stock, one of the investment options available under the plans.
|
(2)
|
In December 2015, our Board of Directors authorized a new share repurchase program intended to mitigate the dilutive impact of shares issued under our employee stock plans. Under the December 2015 program, management is authorized to repurchase (i) up to 1.5 million shares of common stock, the sum of which will not exceed the number of shares issued to employees under the Company’s employee stock plans from December 1, 2015 to December 9, 2017 plus (ii) 0.5 million shares issued to employees that were not purchased under the Company’s previous share repurchase program. The December 2015 program limits aggregate share repurchases to no more than 2 million shares of Ryder common stock. Share repurchases of common stock are made periodically in open-market transactions and are subject to market conditions, legal requirements and other factors. Management may establish prearranged written plans for the Company under Rule 10b5-1 of the Securities Exchange Act of 1934 as part of the December 2015 program, which allow for share repurchases during Ryder’s quarterly blackout periods as set forth in the trading plan.
|
10.1 (e)
|
|
|
Agreement, dated April 14, 2016, between Ryder System, Inc. and Gregory F. Greene
|
|
|
|
|
12.1
|
|
|
Calculation of Ratio of Earnings to Fixed Charges
|
|
|
|
|
31.1
|
|
|
Certification of Robert E. Sanchez pursuant to Rule 13a-14(a) or Rule 15d-14(a)
|
|
|
||
31.2
|
|
|
Certification of Art A. Garcia pursuant to Rule 13a-14(a) or Rule 15d-14(a)
|
|
|
||
32
|
|
|
Certification of Robert E. Sanchez and Art A. Garcia pursuant to Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. Section 1350
|
|
RYDER SYSTEM, INC.
|
|
|
(Registrant)
|
|
|
|
|
Date: April 26, 2016
|
By:
|
/s/ Art A. Garcia
|
|
|
Art A. Garcia
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
(Principal Financial Officer)
|
|
|
|
Date: April 26, 2016
|
By:
|
/s/ Scott R. Allen
|
|
|
Scott R. Allen
|
|
|
Vice President and Controller
|
|
|
(Principal Accounting Officer)
|
/s/ Robert E. Sanchez
|
|
Robert E. Sanchez
Chairman and Chief Executive Officer
|
|
April 14, 2016
|
|
/s/ Gregory F. Greene
|
|
Gregory F. Greene
|
|
April 14, 2016
|
|
Ryder System, Inc. and Subsidiaries
|
|||||||||
Ratio of Earnings to Fixed Charges
|
|||||||||
Continuing Operations
|
|||||||||
(Dollars in thousands)
|
|||||||||
|
|
|
|
|
|
For the Three Months Ended March 31, 2016
|
|
||
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|||
EARNINGS:
|
|
|
|
|
|
|
|
||
Earnings before income taxes
|
|
|
|
|
|
$
|
88,708
|
|
|
Fixed charges
|
|
|
|
|
|
48,793
|
|
|
|
Add: Amortization of capitalized interest
|
|
|
|
|
|
148
|
|
|
|
Less: Interest capitalized
|
|
|
|
|
|
—
|
|
|
|
Earnings available for fixed charges (A)
|
|
|
|
|
|
$
|
137,649
|
|
|
|
|
|
|
|
|
|
|
||
FIXED CHARGES:
|
|
|
|
|
|
|
|
||
Interest and other financial charges
|
|
|
|
|
|
$
|
37,964
|
|
|
Portion of rents representing interest expense
|
|
|
|
|
|
10,829
|
|
|
|
Total fixed charges (B)
|
|
|
|
|
|
$
|
48,793
|
|
|
|
|
|
|
|
|
|
|
||
RATIO OF EARNINGS TO FIXED CHARGES (A) / (B)
|
|
|
|
|
|
2.82x
|
|
|
|
|
|
|
|
|
|
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Ryder System, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
April 26, 2016
|
/s/ Robert E. Sanchez
|
|
|
Robert E. Sanchez
Chairman and Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Ryder System, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
April 26, 2016
|
/s/ Art A. Garcia
|
|
|
Art A. Garcia
Executive Vice President and Chief Financial Officer
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Robert E. Sanchez
|
|
Robert E. Sanchez
Chairman and Chief Executive Officer
|
|
April 26, 2016
|
|
/s/ Art A. Garcia
|
|
Art A. Garcia
Executive Vice President and Chief Financial Officer
|
|
April 26, 2016
|
|