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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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Florida
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59-0739250
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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11690 N.W. 105th Street
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Miami, Florida 33178
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(305) 500-3726
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(Address of principal executive offices, including zip code)
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(Registrant’s telephone number, including area code)
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Large accelerated filer
þ
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Accelerated filer
¨
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Non-accelerated filer
¨
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Smaller reporting company
¨
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(Do not check if a smaller reporting company)
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Page No.
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Three months ended June 30,
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Six months ended June 30,
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||||||||||
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2016
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2015
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2016
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2015
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||||||
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(In thousands, except per share amounts)
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||||||||||||
Lease and rental revenues
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$
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798,387
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779,046
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$
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1,566,141
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1,508,070
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Services revenue
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785,791
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737,170
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1,544,918
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1,430,874
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Fuel services revenue
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119,566
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146,715
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222,357
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291,140
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Total revenues
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1,703,744
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1,662,931
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3,333,416
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3,230,084
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Cost of lease and rental
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555,302
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531,308
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1,107,792
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1,049,730
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Cost of services
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646,129
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603,488
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1,277,843
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1,185,818
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Cost of fuel services
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115,478
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142,176
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214,379
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278,465
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Other operating expenses
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27,796
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29,582
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57,947
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61,955
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Selling, general and administrative expenses
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222,448
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214,868
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433,661
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421,473
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Gains on used vehicles, net
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(12,000
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)
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(29,985
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)
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(31,129
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)
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(57,193
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)
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Interest expense
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37,268
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39,075
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75,157
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75,877
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Miscellaneous income, net
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(5,456
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)
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(1,028
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)
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(7,721
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)
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(3,665
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)
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1,586,965
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1,529,484
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3,127,929
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3,012,460
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Earnings from continuing operations before income taxes
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116,779
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133,447
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205,487
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217,624
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Provision for income taxes
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42,737
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47,530
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75,260
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78,381
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Earnings from continuing operations
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74,042
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85,917
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130,227
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139,243
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Loss from discontinued operations, net of tax
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(292
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)
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(758
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)
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(683
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)
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(1,295
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)
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Net earnings
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$
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73,750
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85,159
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$
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129,544
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137,948
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Earnings (loss) per common share — Basic
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Continuing operations
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$
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1.39
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1.62
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$
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2.45
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2.63
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Discontinued operations
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(0.01
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)
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(0.01
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)
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(0.01
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)
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(0.02
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)
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Net earnings
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$
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1.39
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1.61
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$
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2.43
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2.61
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Earnings (loss) per common share — Diluted
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Continuing operations
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$
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1.38
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1.61
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$
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2.43
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2.61
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Discontinued operations
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(0.01
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)
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(0.01
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(0.01
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(0.03
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)
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Net earnings
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$
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1.38
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1.59
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$
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2.42
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2.59
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Cash dividends declared per common share
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$
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0.41
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0.37
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$
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0.82
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0.74
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Three months ended June 30,
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Six months ended June 30,
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2016
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2015
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2016
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2015
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(In thousands)
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Net earnings
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$
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73,750
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85,159
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$
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129,544
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137,948
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Other comprehensive income (loss):
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||||||
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Currency translation adjustment and other
|
(32,264
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)
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27,027
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(18,578
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)
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(30,345
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)
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Amortization of pension and postretirement items
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7,446
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6,834
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14,869
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13,892
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Income tax expense related to amortization of pension and postretirement items
|
(2,479
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)
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(2,366
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)
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(5,187
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)
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(4,814
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)
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Amortization of pension and postretirement items, net of tax
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4,967
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4,468
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9,682
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9,078
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Change in net actuarial loss and prior service cost
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(17,367
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)
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(8,526
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)
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(17,367
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)
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(8,526
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)
|
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Income tax benefit related to change in net actuarial loss and prior service cost
|
6,345
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3,205
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6,345
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3,205
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Change in net actuarial loss and prior service cost, net of taxes
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(11,022
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)
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(5,321
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)
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(11,022
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)
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(5,321
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)
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Other comprehensive income (loss), net of taxes
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(38,319
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)
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26,174
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(19,918
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)
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(26,588
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)
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Comprehensive income
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$
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35,431
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|
|
111,333
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$
|
109,626
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|
|
111,360
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June 30,
2016 |
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December 31,
2015 |
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(Dollars in thousands, except per
share amount)
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|||||
Assets:
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Current assets:
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Cash and cash equivalents
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$
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65,964
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60,945
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Receivables, net of allowance of $16,138 and $15,560, respectively
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850,504
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|
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835,489
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|
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Inventories
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66,553
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63,725
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Prepaid expenses and other current assets
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143,227
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138,143
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Total current assets
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1,126,248
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1,098,302
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Revenue earning equipment, net
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8,300,108
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8,184,735
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Operating property and equipment, net of accumulated depreciation of $1,105,458 and $1,083,604, respectively
|
741,022
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|
|
714,970
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Goodwill
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388,278
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389,135
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Intangible assets, net of accumulated amortization of $48,691 and $45,736, respectively
|
51,618
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|
|
55,192
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|
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Direct financing leases and other assets
|
528,853
|
|
|
510,246
|
|
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Total assets
|
$
|
11,136,127
|
|
|
10,952,580
|
|
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|
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Liabilities and shareholders’ equity:
|
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|
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Current liabilities:
|
|
|
|
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Short-term debt and current portion of long-term debt
|
$
|
1,047,208
|
|
|
634,530
|
|
Accounts payable
|
462,335
|
|
|
502,373
|
|
|
Accrued expenses and other current liabilities
|
508,517
|
|
|
543,352
|
|
|
Total current liabilities
|
2,018,060
|
|
|
1,680,255
|
|
|
Long-term debt
|
4,586,806
|
|
|
4,868,097
|
|
|
Other non-current liabilities
|
828,181
|
|
|
829,595
|
|
|
Deferred income taxes
|
1,655,982
|
|
|
1,587,522
|
|
|
Total liabilities
|
9,089,029
|
|
|
8,965,469
|
|
|
|
|
|
|
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Shareholders’ equity:
|
|
|
|
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Preferred stock, no par value per share — authorized, 3,800,917; none outstanding,
June 30, 2016 or December 31, 2015 |
—
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|
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—
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|
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Common stock, $0.50 par value per share — authorized, 400,000,000; outstanding,
June 30, 2016 — 53,478,452; December 31, 2015 — 53,490,603 |
26,739
|
|
|
26,745
|
|
|
Additional paid-in capital
|
1,016,173
|
|
|
1,006,021
|
|
|
Retained earnings
|
1,736,839
|
|
|
1,667,080
|
|
|
Accumulated other comprehensive loss
|
(732,653
|
)
|
|
(712,735
|
)
|
|
Total shareholders’ equity
|
2,047,098
|
|
|
1,987,111
|
|
|
Total liabilities and shareholders’ equity
|
$
|
11,136,127
|
|
|
10,952,580
|
|
|
Six months ended June 30,
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|||||
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2016
|
|
2015
|
|||
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(In thousands)
|
|||||
Cash flows from operating activities from continuing operations:
|
|
|
|
|||
Net earnings
|
$
|
129,544
|
|
|
137,948
|
|
Less: Loss from discontinued operations, net of tax
|
(683
|
)
|
|
(1,295
|
)
|
|
Earnings from continuing operations
|
130,227
|
|
|
139,243
|
|
|
Depreciation expense
|
581,043
|
|
|
541,076
|
|
|
Gains on used vehicles, net
|
(31,129
|
)
|
|
(57,193
|
)
|
|
Share-based compensation expense
|
10,001
|
|
|
11,169
|
|
|
Amortization expense and other non-cash charges, net
|
31,407
|
|
|
28,329
|
|
|
Deferred income tax expense
|
67,031
|
|
|
67,592
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|||
Receivables
|
(39,071
|
)
|
|
(33,535
|
)
|
|
Inventories
|
(2,633
|
)
|
|
1,006
|
|
|
Prepaid expenses and other assets
|
(18,734
|
)
|
|
(25,555
|
)
|
|
Accounts payable
|
68,584
|
|
|
(30,439
|
)
|
|
Accrued expenses and other non-current liabilities
|
(34,054
|
)
|
|
17,005
|
|
|
Net cash provided by operating activities from continuing operations
|
762,672
|
|
|
658,698
|
|
|
|
|
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|
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Cash flows from financing activities:
|
|
|
|
|||
Net change in commercial paper borrowings and revolving credit facilities
|
162,105
|
|
|
34,750
|
|
|
Debt proceeds
|
298,254
|
|
|
930,090
|
|
|
Debt repaid
|
(328,416
|
)
|
|
(486,103
|
)
|
|
Dividends on common stock
|
(44,261
|
)
|
|
(39,690
|
)
|
|
Common stock issued
|
6,259
|
|
|
17,129
|
|
|
Common stock repurchased
|
(21,899
|
)
|
|
(6,141
|
)
|
|
Excess tax benefits from share-based compensation and other items
|
(1,710
|
)
|
|
710
|
|
|
Debt issuance costs
|
(933
|
)
|
|
(5,225
|
)
|
|
Net cash provided by financing activities
|
69,399
|
|
|
445,520
|
|
|
|
|
|
|
|||
Cash flows from investing activities:
|
|
|
|
|||
Purchases of property and revenue earning equipment
|
(1,120,182
|
)
|
|
(1,329,218
|
)
|
|
Sales of revenue earning equipment
|
245,681
|
|
|
211,153
|
|
|
Sales of operating property and equipment
|
6,322
|
|
|
641
|
|
|
Collections on direct finance leases and other items
|
43,957
|
|
|
33,912
|
|
|
Changes in restricted cash
|
886
|
|
|
4,849
|
|
|
Net cash used in investing activities
|
(823,336
|
)
|
|
(1,078,663
|
)
|
|
|
|
|
|
|||
Effect of exchange rate changes on cash
|
(3,415
|
)
|
|
(1,198
|
)
|
|
Increase in cash and cash equivalents from continuing operations
|
5,320
|
|
|
24,357
|
|
|
|
|
|
|
|||
|
|
|
|
|||
Decrease in cash and cash equivalents from discontinued operations
|
(301
|
)
|
|
(1,096
|
)
|
|
|
|
|
|
|||
Increase in cash and cash equivalents
|
5,019
|
|
|
23,261
|
|
|
Cash and cash equivalents at January 1
|
60,945
|
|
|
50,092
|
|
|
Cash and cash equivalents at June 30
|
$
|
65,964
|
|
|
73,353
|
|
|
June 30, 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
|
$
|
9,239,442
|
|
|
(2,838,897
|
)
|
|
6,400,545
|
|
|
$
|
8,839,941
|
|
|
(2,723,605
|
)
|
|
6,116,336
|
|
Commercial rental
|
2,589,646
|
|
|
(874,713
|
)
|
|
1,714,933
|
|
|
2,811,715
|
|
|
(907,412
|
)
|
|
1,904,303
|
|
||
Held for sale
|
576,449
|
|
|
(391,819
|
)
|
|
184,630
|
|
|
496,634
|
|
|
(332,538
|
)
|
|
164,096
|
|
||
Total
|
$
|
12,405,537
|
|
|
(4,105,429
|
)
|
|
8,300,108
|
|
|
$
|
12,148,290
|
|
|
(3,963,555
|
)
|
|
8,184,735
|
|
(1)
|
Revenue earning equipment, net includes vehicles acquired under capital leases of
$43.9 million
, less accumulated depreciation of
$21.1 million
, at
June 30, 2016
, and
$47.5 million
, less accumulated depreciation of
$22.2 million
, at
December 31, 2015
.
|
|
|
|
Total Losses
(2)
|
|||||||||||||||||
|
June 30,
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
|||||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|||||||||
|
(In thousands)
|
|||||||||||||||||||
Assets held for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Revenue earning equipment
(1)
:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Trucks
|
$
|
13,749
|
|
|
6,805
|
|
|
$
|
2,570
|
|
|
1,515
|
|
|
$
|
4,314
|
|
|
2,743
|
|
Tractors
|
51,795
|
|
|
7,389
|
|
|
9,206
|
|
|
1,081
|
|
|
14,088
|
|
|
1,908
|
|
|||
Trailers
|
3,015
|
|
|
1,625
|
|
|
775
|
|
|
656
|
|
|
1,437
|
|
|
972
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Total assets at fair value
|
$
|
68,559
|
|
|
15,819
|
|
|
$
|
12,551
|
|
|
3,252
|
|
|
$
|
19,839
|
|
|
5,623
|
|
(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 reclassified to held for sale throughout the period for which fair value was less than carrying value.
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||
|
(In thousands)
|
|
|
|
|
||||||||
Gains on vehicle sales, net
|
$
|
(24,551
|
)
|
|
(33,237
|
)
|
|
$
|
(50,968
|
)
|
|
(62,816
|
)
|
Losses from fair value adjustments
|
12,551
|
|
|
3,252
|
|
|
19,839
|
|
|
5,623
|
|
||
Gains on used vehicles, net
|
$
|
(12,000
|
)
|
|
(29,985
|
)
|
|
$
|
(31,129
|
)
|
|
(57,193
|
)
|
|
Fleet
Management Solutions |
|
Dedicated
Transportation Solutions |
|
Supply
Chain Solutions |
|
Total
|
|||||
|
(In thousands)
|
|||||||||||
Balance at January 1, 2016:
|
|
|
|
|
|
|
|
|||||
Goodwill
|
$
|
231,358
|
|
|
40,808
|
|
|
146,190
|
|
|
418,356
|
|
Accumulated impairment losses
|
(10,322
|
)
|
|
—
|
|
|
(18,899
|
)
|
|
(29,221
|
)
|
|
|
221,036
|
|
|
40,808
|
|
|
127,291
|
|
|
389,135
|
|
|
Foreign currency translation adjustments
|
(1,246
|
)
|
|
—
|
|
|
389
|
|
|
(857
|
)
|
|
Balance at June 30, 2016:
|
|
|
|
|
|
|
|
|||||
Goodwill
|
230,112
|
|
|
40,808
|
|
|
146,579
|
|
|
417,499
|
|
|
Accumulated impairment losses
|
(10,322
|
)
|
|
—
|
|
|
(18,899
|
)
|
|
(29,221
|
)
|
|
|
$
|
219,790
|
|
|
40,808
|
|
|
127,680
|
|
|
388,278
|
|
|
June 30, 2016
|
|
December 31, 2015
|
||||||||||||||||
|
Accrued
Expenses
|
|
Non-Current
Liabilities
|
|
Total
|
|
Accrued
Expenses
|
|
Non-Current
Liabilities
|
|
Total
|
||||||||
|
(In thousands)
|
||||||||||||||||||
Salaries and wages
|
$
|
87,558
|
|
|
—
|
|
|
87,558
|
|
|
$
|
99,032
|
|
|
—
|
|
|
99,032
|
|
Deferred compensation
|
2,725
|
|
|
42,378
|
|
|
45,103
|
|
|
2,252
|
|
|
41,691
|
|
|
43,943
|
|
||
Pension benefits
|
3,822
|
|
|
482,187
|
|
|
486,009
|
|
|
3,790
|
|
|
484,892
|
|
|
488,682
|
|
||
Other postretirement benefits
|
1,637
|
|
|
19,677
|
|
|
21,314
|
|
|
1,624
|
|
|
20,002
|
|
|
21,626
|
|
||
Other employee benefits
|
18,404
|
|
|
4,290
|
|
|
22,694
|
|
|
8,956
|
|
|
9,706
|
|
|
18,662
|
|
||
Insurance obligations
(1)
|
139,959
|
|
|
218,058
|
|
|
358,017
|
|
|
157,014
|
|
|
213,256
|
|
|
370,270
|
|
||
Environmental liabilities
|
3,997
|
|
|
6,333
|
|
|
10,330
|
|
|
3,791
|
|
|
6,554
|
|
|
10,345
|
|
||
Operating taxes
|
97,187
|
|
|
—
|
|
|
97,187
|
|
|
101,649
|
|
|
—
|
|
|
101,649
|
|
||
Income taxes
|
448
|
|
|
24,110
|
|
|
24,558
|
|
|
3,378
|
|
|
22,366
|
|
|
25,744
|
|
||
Interest
|
31,369
|
|
|
—
|
|
|
31,369
|
|
|
31,218
|
|
|
—
|
|
|
31,218
|
|
||
Customer deposits
|
63,272
|
|
|
4,791
|
|
|
68,063
|
|
|
61,869
|
|
|
5,085
|
|
|
66,954
|
|
||
Deferred revenue
|
16,738
|
|
|
—
|
|
|
16,738
|
|
|
13,038
|
|
|
—
|
|
|
13,038
|
|
||
Restructuring liabilities
(2)
|
3,489
|
|
|
—
|
|
|
3,489
|
|
|
12,333
|
|
|
—
|
|
|
12,333
|
|
||
Other
|
37,912
|
|
|
26,357
|
|
|
64,269
|
|
|
43,408
|
|
|
26,043
|
|
|
69,451
|
|
||
Total
|
$
|
508,517
|
|
|
828,181
|
|
|
1,336,698
|
|
|
$
|
543,352
|
|
|
829,595
|
|
|
1,372,947
|
|
(1)
|
Insurance obligations primarily represent claims for which we are self-insured.
|
(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
|
|
|
|
|
|
|
|||||
|
June 30,
2016 |
|
December 31,
2015 |
|
Maturities
|
|
June 30,
2016 |
|
December 31,
2015 |
|||
|
|
|
|
|
|
|
(In thousands)
|
|||||
Short-term debt and current portion of long-term debt:
|
|
|
|
|
|
|
|
|
|
|||
Short-term debt
|
0.94%
|
|
2.26%
|
|
|
|
$
|
122,354
|
|
|
35,947
|
|
Current portion of long-term debt
|
|
|
|
|
|
|
924,854
|
|
|
598,583
|
|
|
Total short-term debt and current portion of long-term debt
|
|
|
|
|
|
1,047,208
|
|
|
634,530
|
|
||
Long-term debt:
|
|
|
|
|
|
|
|
|
|
|||
U.S. commercial paper
(1)
|
0.71%
|
|
0.55%
|
|
2020
|
|
599,605
|
|
|
547,130
|
|
|
Global revolving credit facility
|
2.01%
|
|
2.31%
|
|
2020
|
|
53,037
|
|
|
25,291
|
|
|
Unsecured U.S. notes — Medium-term notes
(1)
|
2.88%
|
|
2.84%
|
|
2016-2025
|
|
4,113,137
|
|
|
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
|
|
254,448
|
|
|
275,661
|
|
|
Asset-backed U.S. obligations
(2)
|
1.78%
|
|
1.81%
|
|
2016-2022
|
|
407,217
|
|
|
434,001
|
|
|
Capital lease obligations
|
3.22%
|
|
3.31%
|
|
2016-2022
|
|
28,031
|
|
|
32,054
|
|
|
Total before fair market value adjustment
|
|
|
|
|
|
|
5,505,475
|
|
|
5,476,656
|
|
|
Fair market value adjustment on notes subject to hedging
(3)
|
|
|
|
|
|
20,989
|
|
|
5,253
|
|
||
Debt issuance costs
(4)
|
|
|
|
|
|
|
(14,804
|
)
|
|
(15,229
|
)
|
|
|
|
|
|
|
|
|
5,511,660
|
|
|
5,466,680
|
|
|
Current portion of long-term debt
|
|
|
|
|
|
|
(924,854
|
)
|
|
(598,583
|
)
|
|
Long-term debt
|
|
|
|
|
|
|
4,586,806
|
|
|
4,868,097
|
|
|
Total debt
|
|
|
|
|
|
|
$
|
5,634,014
|
|
|
5,502,627
|
|
(1)
|
Amounts are net of aggregate unamortized original issue discounts of
$7.2 million
and
$7.7 million
at
June 30, 2016
and
December 31, 2015
, respectively.
|
(2)
|
Asset-backed U.S. obligations are related to financing transactions involving revenue earning equipment.
|
(3)
|
The notional amount of executed interest rate swaps designated as fair value hedges was
$825 million
at
June 30, 2016
and
December 31, 2015
.
|
(4)
|
See
Note 2
, "
Recent Accounting Pronouncements
," for further discussion of the presentation of debt issuance costs.
|
|
|
Currency
Translation
Adjustments and Other
|
|
Net Actuarial
Loss
(1)
|
|
Prior Service (Cost)/
Credit
(1)
|
|
Accumulated
Other
Comprehensive
Loss
|
|||||
|
|
(In thousands)
|
|||||||||||
December 31, 2015
|
|
$
|
(136,020
|
)
|
|
(576,993
|
)
|
|
278
|
|
|
(712,735
|
)
|
Amortization
|
|
—
|
|
|
9,754
|
|
|
(72
|
)
|
|
9,682
|
|
|
Other current period change
|
|
(18,578
|
)
|
|
(5,597
|
)
|
|
(5,425
|
)
|
|
(29,600
|
)
|
|
June 30, 2016
|
|
$
|
(154,598
|
)
|
|
(572,836
|
)
|
|
(5,219
|
)
|
|
(732,653
|
)
|
|
|
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
|
|
—
|
|
|
9,790
|
|
|
(712
|
)
|
|
9,078
|
|
|
Other current period change
|
|
(30,345
|
)
|
|
(5,321
|
)
|
|
—
|
|
|
(35,666
|
)
|
|
June 30, 2015
|
|
$
|
(66,432
|
)
|
|
(581,472
|
)
|
|
1,046
|
|
|
(646,858
|
)
|
(1)
|
These amounts are included in the computation of net periodic benefit cost. See
Note 12
, "
Employee Benefit Plans
," for further information.
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||
|
(In thousands, except per share amounts)
|
||||||||||||
Earnings per share — Basic:
|
|
|
|
|
|
|
|
||||||
Earnings from continuing operations
|
$
|
74,042
|
|
|
85,917
|
|
|
$
|
130,227
|
|
|
139,243
|
|
Less: Earnings allocated to unvested stock
|
(235
|
)
|
|
(246
|
)
|
|
(398
|
)
|
|
(393
|
)
|
||
Earnings from continuing operations available to common shareholders — Basic
|
$
|
73,807
|
|
|
85,671
|
|
|
$
|
129,829
|
|
|
138,850
|
|
|
|
|
|
|
|
|
|
||||||
Weighted average common shares outstanding — Basic
|
53,057
|
|
|
52,827
|
|
|
53,067
|
|
|
52,712
|
|
||
|
|
|
|
|
|
|
|
||||||
Earnings from continuing operations per common share — Basic
|
$
|
1.39
|
|
|
1.62
|
|
|
$
|
2.45
|
|
|
2.63
|
|
|
|
|
|
|
|
|
|
||||||
Earnings per share — Diluted:
|
|
|
|
|
|
|
|
||||||
Earnings from continuing operations
|
$
|
74,042
|
|
|
85,917
|
|
|
$
|
130,227
|
|
|
139,243
|
|
Less: Earnings allocated to unvested stock
|
(234
|
)
|
|
(244
|
)
|
|
(397
|
)
|
|
(390
|
)
|
||
Earnings from continuing operations available to common shareholders — Diluted
|
$
|
73,808
|
|
|
85,673
|
|
|
$
|
129,830
|
|
|
138,853
|
|
|
|
|
|
|
|
|
|
||||||
Weighted average common shares outstanding — Basic
|
53,057
|
|
|
52,827
|
|
|
53,067
|
|
|
52,712
|
|
||
Effect of dilutive equity awards
|
320
|
|
|
468
|
|
|
303
|
|
|
492
|
|
||
Weighted average common shares outstanding — Diluted
|
53,377
|
|
|
53,295
|
|
|
53,370
|
|
|
53,204
|
|
||
|
|
|
|
|
|
|
|
||||||
Earnings from continuing operations per common share — Diluted
|
$
|
1.38
|
|
|
1.61
|
|
|
$
|
2.43
|
|
|
2.61
|
|
|
|
|
|
|
|
|
|
||||||
Anti-dilutive equity awards not included above
|
669
|
|
|
363
|
|
|
928
|
|
|
273
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||
|
(In thousands)
|
||||||||||||
Stock option and stock purchase plans
|
$
|
1,904
|
|
|
1,956
|
|
|
$
|
3,777
|
|
|
4,257
|
|
Unvested stock
|
3,209
|
|
|
3,548
|
|
|
6,224
|
|
|
6,912
|
|
||
Share-based compensation expense
|
5,113
|
|
|
5,504
|
|
|
10,001
|
|
|
11,169
|
|
||
Income tax benefit
|
(1,715
|
)
|
|
(1,860
|
)
|
|
(3,370
|
)
|
|
(3,743
|
)
|
||
Share-based compensation expense, net of tax
|
$
|
3,398
|
|
|
3,644
|
|
|
$
|
6,631
|
|
|
7,426
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||
|
(In thousands)
|
||||||||||||
Cash awards
|
$
|
177
|
|
|
281
|
|
|
$
|
328
|
|
|
464
|
|
|
Six months ended June 30,
|
||||
|
2016
|
|
2015
|
||
|
(In thousands)
|
||||
Stock options
|
513
|
|
|
362
|
|
Market-based restricted stock rights
|
34
|
|
|
19
|
|
Performance-based restricted stock rights
|
45
|
|
|
42
|
|
Time-vested restricted stock rights
|
129
|
|
|
80
|
|
Total
|
721
|
|
|
503
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||
|
(In thousands)
|
||||||||||||
|
|
|
|
|
|
|
|
||||||
Pension Benefits
|
|
|
|
|
|
|
|
||||||
Company-administered plans:
|
|
|
|
|
|
|
|
||||||
Service cost
|
$
|
3,005
|
|
|
3,566
|
|
|
$
|
6,405
|
|
|
7,193
|
|
Interest cost
|
27,093
|
|
|
22,048
|
|
|
49,332
|
|
|
43,935
|
|
||
Expected return on plan assets
|
(22,667
|
)
|
|
(25,021
|
)
|
|
(45,752
|
)
|
|
(49,921
|
)
|
||
Amortization of:
|
|
|
|
|
|
|
|
||||||
Net actuarial loss
|
8,600
|
|
|
7,664
|
|
|
16,565
|
|
|
15,472
|
|
||
Prior service cost/(credit)
|
2,740
|
|
|
(74
|
)
|
|
2,740
|
|
|
(150
|
)
|
||
|
18,771
|
|
|
8,183
|
|
|
29,290
|
|
|
16,529
|
|
||
Union-administered plans
|
2,406
|
|
|
2,113
|
|
|
4,728
|
|
|
4,285
|
|
||
Net pension expense
|
$
|
21,177
|
|
|
10,296
|
|
|
$
|
34,018
|
|
|
20,814
|
|
|
|
|
|
|
|
|
|
||||||
Company-administered plans:
|
|
|
|
|
|
|
|
||||||
U.S.
|
$
|
19,263
|
|
|
8,599
|
|
|
$
|
30,437
|
|
|
17,491
|
|
Non-U.S.
|
(492
|
)
|
|
(416
|
)
|
|
(1,147
|
)
|
|
(962
|
)
|
||
|
18,771
|
|
|
8,183
|
|
|
29,290
|
|
|
16,529
|
|
||
Union-administered plans
|
2,406
|
|
|
2,113
|
|
|
4,728
|
|
|
4,285
|
|
||
Net pension expense
|
$
|
21,177
|
|
|
10,296
|
|
|
$
|
34,018
|
|
|
20,814
|
|
|
|
|
|
|
|
|
|
|
Six months ended June 30,
|
|||||
|
2016
|
|
2015
|
|||
|
(In thousands)
|
|||||
Interest paid
|
$
|
71,141
|
|
|
69,681
|
|
Income taxes paid
|
10,233
|
|
|
9,970
|
|
|
Changes in accounts payable related to purchases of revenue earning equipment
|
(105,480
|
)
|
|
124,766
|
|
|
Operating and revenue earning equipment acquired under capital leases
|
777
|
|
|
5,847
|
|
(1)
|
During the second quarter of 2016, we determined that certain pension benefit improvements made in 2009 were not fully reflected in our projected benefit obligation. We recognized a charge of
$7.7 million
related to these benefit improvements.
|
(2)
|
Excludes revenue earning equipment acquired under capital leases.
|
(3)
|
Charges related to professional fees associated with cost savings initiatives.
|
(1)
|
During the second quarter of 2016, we determined that certain pension benefit improvements made in 2009 were not fully reflected in our projected benefit obligation. We recognized a charge of
$7.7 million
related to these benefit improvements.
|
(2)
|
Excludes revenue earning equipment acquired under capital leases.
|
(3)
|
Charges related to professional fees associated with cost savings initiatives.
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
|
Change 2016/2015
|
|||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Three Months
|
Six Months
|
||||||||
|
(In thousands, except per share amounts)
|
|
|
|
||||||||||||||
Total revenue
|
$
|
1,703,744
|
|
|
1,662,931
|
|
|
$
|
3,333,416
|
|
|
3,230,084
|
|
|
2
|
%
|
3
|
%
|
Operating revenue
(1)
|
1,449,713
|
|
|
1,392,618
|
|
|
2,855,726
|
|
|
2,692,904
|
|
|
4
|
%
|
6
|
%
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
EBT
|
$
|
116,779
|
|
|
133,447
|
|
|
$
|
205,487
|
|
|
217,624
|
|
|
(12
|
)%
|
(6
|
)%
|
Comparable EBT
(2)
|
132,046
|
|
|
140,074
|
|
|
227,622
|
|
|
230,975
|
|
|
(6
|
)%
|
(1
|
)%
|
||
Earnings from continuing operations
|
74,042
|
|
|
85,917
|
|
|
130,227
|
|
|
139,243
|
|
|
(14
|
)%
|
(6
|
)%
|
||
Comparable earnings from continuing operations
(2)
|
83,307
|
|
|
87,952
|
|
|
143,481
|
|
|
145,231
|
|
|
(5
|
)%
|
(1
|
)%
|
||
Net earnings
|
73,750
|
|
|
85,159
|
|
|
129,544
|
|
|
137,948
|
|
|
(13
|
)%
|
(6
|
)%
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Earnings per common share (EPS) — Diluted
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Continuing operations
|
$
|
1.38
|
|
|
1.61
|
|
|
$
|
2.43
|
|
|
2.61
|
|
|
(14
|
)%
|
(7
|
)%
|
Comparable
(2)
|
1.56
|
|
|
1.65
|
|
|
2.68
|
|
|
2.72
|
|
|
(5
|
)%
|
(1
|
)%
|
||
Net earnings
|
1.38
|
|
|
1.59
|
|
|
2.42
|
|
|
2.59
|
|
|
(13
|
)%
|
(7
|
)%
|
(1)
|
Non-GAAP financial measure. Refer to the“Non-GAAP Financial Measures” section for a reconciliation of total revenue to operating revenue and the reasons why management believes this measure is important to investors.
|
(2)
|
Non-GAAP financial measures. 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 and the reasons why management believes these measures are important to investors.
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
|
Change 2016/2015
|
||||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Three Months
|
|
Six Months
|
||||||||
|
(Dollars in thousands)
|
|
|
|
|
||||||||||||||
Lease and rental revenues
|
$
|
798,387
|
|
|
779,046
|
|
|
$
|
1,566,141
|
|
|
1,508,070
|
|
|
2
|
%
|
|
4
|
%
|
Cost of lease and rental
|
555,302
|
|
|
531,308
|
|
|
1,107,792
|
|
|
1,049,730
|
|
|
5
|
%
|
|
6
|
%
|
||
Gross margin
|
243,085
|
|
|
247,738
|
|
|
458,349
|
|
|
458,340
|
|
|
(2
|
)%
|
|
—
|
%
|
||
Gross margin %
|
30
|
%
|
|
32
|
%
|
|
29
|
%
|
|
30
|
%
|
|
|
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
|
Change 2016/2015
|
||||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Three Months
|
|
Six Months
|
||||||||
|
(Dollars in thousands)
|
|
|
|
|
|
|||||||||||||
Services revenue
|
$
|
785,791
|
|
|
737,170
|
|
|
$
|
1,544,918
|
|
|
1,430,874
|
|
|
7
|
%
|
|
8
|
%
|
Cost of services
|
646,129
|
|
|
603,488
|
|
|
1,277,843
|
|
|
1,185,818
|
|
|
7
|
%
|
|
8
|
%
|
||
Gross margin
|
139,662
|
|
|
133,682
|
|
|
267,075
|
|
|
245,056
|
|
|
4
|
%
|
|
9
|
%
|
||
Gross margin %
|
18
|
%
|
|
18
|
%
|
|
17
|
%
|
|
17
|
%
|
|
|
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
|
Change 2016/2015
|
||||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Three Months
|
|
Six Months
|
||||||||
|
(Dollars in thousands)
|
|
|
|
|
|
|||||||||||||
Fuel services revenue
|
$
|
119,566
|
|
|
146,715
|
|
|
$
|
222,357
|
|
|
291,140
|
|
|
(19
|
)%
|
|
(24
|
)%
|
Cost of fuel services
|
115,478
|
|
|
142,176
|
|
|
214,379
|
|
|
278,465
|
|
|
(19
|
)%
|
|
(23
|
)%
|
||
Gross margin
|
4,088
|
|
|
4,539
|
|
|
7,978
|
|
|
12,675
|
|
|
(10
|
)%
|
|
(37
|
)%
|
||
Gross margin %
|
3
|
%
|
|
3
|
%
|
|
4
|
%
|
|
4
|
%
|
|
|
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
|
Change 2016/2015
|
||||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Three Months
|
|
Six Months
|
||||||||
|
(In thousands)
|
|
|
|
|
|
|||||||||||||
Other operating expenses
|
$
|
27,796
|
|
|
29,582
|
|
|
$
|
57,947
|
|
|
61,955
|
|
|
(6
|
)%
|
|
(6
|
)%
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
|
Change 2016/2015
|
||||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Three Months
|
|
Six Months
|
||||||||
|
(Dollars in thousands)
|
|
|
|
|
|
|||||||||||||
Selling, general and administrative expenses (SG&A)
|
$
|
222,448
|
|
|
214,868
|
|
|
$
|
433,661
|
|
|
421,473
|
|
|
4
|
%
|
|
3
|
%
|
Percentage of total revenue
|
13
|
%
|
|
13
|
%
|
|
13
|
%
|
|
13
|
%
|
|
|
|
|
||||
Percentage of operating revenue
|
15
|
%
|
|
15
|
%
|
|
15
|
%
|
|
16
|
%
|
|
|
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
|
Change 2016/2015
|
||||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Three Months
|
|
Six Months
|
||||||||
|
(Dollars in thousands)
|
|
|
|
|
||||||||||||||
Gains on used vehicles, net
|
$
|
12,000
|
|
|
29,985
|
|
|
$
|
31,129
|
|
|
57,193
|
|
|
(60
|
)%
|
|
(46
|
)%
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
|
Change 2016/2015
|
||||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Three Months
|
|
Six Months
|
||||||||
|
(Dollars in thousands)
|
|
|
|
|
||||||||||||||
Interest expense
|
$
|
37,268
|
|
|
39,075
|
|
|
$
|
75,157
|
|
|
75,877
|
|
|
(5
|
)%
|
|
(1
|
)%
|
Effective interest rate
|
2.7
|
%
|
|
3.1
|
%
|
|
2.7
|
%
|
|
3.1
|
%
|
|
|
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
|
Change 2016/2015
|
||||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Three Months
|
|
Six Months
|
||||||||
|
(Dollars in thousands)
|
|
|
|
|
||||||||||||||
Miscellaneous income, net
|
$
|
5,456
|
|
|
1,028
|
|
|
$
|
7,721
|
|
|
3,665
|
|
|
431
|
%
|
|
111
|
%
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
|
Change 2016/2015
|
||||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Three Months
|
|
Six Months
|
||||||||
|
(Dollars in thousands)
|
|
|
|
|
||||||||||||||
Provision for income taxes
|
$
|
42,737
|
|
|
47,530
|
|
|
$
|
75,260
|
|
|
78,381
|
|
|
(10
|
)%
|
|
(4
|
)%
|
Effective tax rate from continuing operations
|
36.6
|
%
|
|
35.6
|
%
|
|
36.6
|
%
|
|
36.0
|
%
|
|
|
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
|
Change 2016/2015
|
||||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Three Months
|
|
Six Months
|
||||||||
|
(Dollars in thousands)
|
|
|
|
|
||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Fleet Management Solutions
|
$
|
1,151,513
|
|
|
1,149,349
|
|
|
$
|
2,249,441
|
|
|
2,236,499
|
|
|
—
|
%
|
|
1
|
%
|
Dedicated Transportation Solutions
|
258,262
|
|
|
223,514
|
|
|
503,104
|
|
|
436,173
|
|
|
16
|
|
|
15
|
|
||
Supply Chain Solutions
|
402,052
|
|
|
396,941
|
|
|
790,767
|
|
|
767,995
|
|
|
1
|
|
|
3
|
|
||
Eliminations
|
(108,083
|
)
|
|
(106,873
|
)
|
|
(209,896
|
)
|
|
(210,583
|
)
|
|
1
|
|
|
—
|
|
||
Total
|
$
|
1,703,744
|
|
|
1,662,931
|
|
|
$
|
3,333,416
|
|
|
3,230,084
|
|
|
2
|
%
|
|
3
|
%
|
Operating Revenue:
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Fleet Management Solutions
|
$
|
995,238
|
|
|
959,050
|
|
|
$
|
1,957,562
|
|
|
1,858,237
|
|
|
4
|
%
|
|
5
|
%
|
Dedicated Transportation Solutions
|
194,292
|
|
|
176,805
|
|
|
384,565
|
|
|
342,635
|
|
|
10
|
|
|
12
|
|
||
Supply Chain Solutions
|
331,558
|
|
|
320,053
|
|
|
653,974
|
|
|
615,494
|
|
|
4
|
|
|
6
|
|
||
Eliminations
|
(71,375
|
)
|
|
(63,290
|
)
|
|
(140,375
|
)
|
|
(123,462
|
)
|
|
13
|
|
|
14
|
|
||
Total
|
$
|
1,449,713
|
|
|
1,392,618
|
|
|
$
|
2,855,726
|
|
|
2,692,904
|
|
|
4
|
%
|
|
6
|
%
|
EBT:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Fleet Management Solutions
|
$
|
111,184
|
|
|
122,452
|
|
|
$
|
194,105
|
|
|
212,170
|
|
|
(9
|
)%
|
|
(9
|
)%
|
Dedicated Transportation Solutions
|
16,472
|
|
|
12,435
|
|
|
30,740
|
|
|
21,405
|
|
|
32
|
|
|
44
|
|
||
Supply Chain Solutions
|
28,371
|
|
|
27,699
|
|
|
48,167
|
|
|
43,388
|
|
|
2
|
|
|
11
|
|
||
Eliminations
|
(12,766
|
)
|
|
(11,588
|
)
|
|
(24,510
|
)
|
|
(23,122
|
)
|
|
10
|
|
|
6
|
|
||
|
143,261
|
|
|
150,998
|
|
|
248,502
|
|
|
253,841
|
|
|
(5
|
)
|
|
(2
|
)
|
||
Unallocated Central Support Services
|
(11,215
|
)
|
|
(10,924
|
)
|
|
(20,880
|
)
|
|
(22,866
|
)
|
|
3
|
|
|
(9
|
)
|
||
Non-operating pension costs
|
(7,617
|
)
|
|
(4,688
|
)
|
|
(14,485
|
)
|
|
(9,571
|
)
|
|
62
|
|
|
51
|
|
||
Other items
|
(7,650
|
)
|
|
(1,939
|
)
|
|
(7,650
|
)
|
|
(3,780
|
)
|
|
NM
|
|
|
NM
|
|
||
Earnings from continuing operations before income taxes
|
$
|
116,779
|
|
|
133,447
|
|
|
$
|
205,487
|
|
|
217,624
|
|
|
(12
|
)%
|
|
(6
|
)%
|
(1)
|
Non-GAAP financial measures. Refer to the“Non-GAAP Financial Measures” section for a reconciliation of total revenue to operating revenue and the reasons why management believes these measure are important to investors. The reconciliations for each segment's total revenue to operating revenue are set forth in this "Operating Results by Segment" section on pages 27 (FMS), 30 (DTS) and 31 (SCS).
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
|
Change 2016/2015
|
||||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Three Months
|
|
Six Months
|
||||||||
|
(Dollars in thousands)
|
|
|
|
|
||||||||||||||
Equipment Contribution:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Dedicated Transportation Solutions
|
$
|
8,449
|
|
|
8,020
|
|
|
$
|
16,167
|
|
|
15,824
|
|
|
5
|
%
|
|
2
|
%
|
Supply Chain Solutions
|
4,317
|
|
|
3,568
|
|
|
8,343
|
|
|
7,298
|
|
|
21
|
|
|
14
|
|
||
Total
|
$
|
12,766
|
|
|
11,588
|
|
|
$
|
24,510
|
|
|
23,122
|
|
|
10
|
%
|
|
6
|
%
|
|
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||
Description
|
|
Classification
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||
|
|
|
|
(In thousands)
|
||||||||||||
Non-operating pension costs
|
|
SG&A
|
|
$
|
(7,617
|
)
|
|
(4,688
|
)
|
|
$
|
(14,485
|
)
|
|
(9,571
|
)
|
Pension-related charge
(1)
|
|
SG&A
|
|
(7,650
|
)
|
|
—
|
|
|
(7,650
|
)
|
|
—
|
|
||
Professional fees
(2)
|
|
SG&A
|
|
—
|
|
|
(1,939
|
)
|
|
—
|
|
|
(3,780
|
)
|
||
|
|
|
|
$
|
(15,267
|
)
|
|
(6,627
|
)
|
|
$
|
(22,135
|
)
|
|
(13,351
|
)
|
(1)
|
During the second quarter of 2016, we determined that certain pension benefit improvements made in 2009 were not fully reflected in our projected benefit obligation. We recognized a charge of
$7.7 million
in the second quarter of 2016 related to these benefit improvements.
|
(2)
|
Charges related to professional fees associated with cost savings initiatives.
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
|
Change 2016/2015
|
||||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Three Months
|
|
Six Months
|
||||||||
|
(Dollars in thousands)
|
|
|
|
|
|
|||||||||||||
Full service lease
|
$
|
646,347
|
|
|
595,693
|
|
|
$
|
1,269,210
|
|
|
1,172,806
|
|
|
9
|
%
|
|
8
|
%
|
Contract maintenance
|
51,177
|
|
|
48,985
|
|
|
101,303
|
|
|
94,936
|
|
|
4
|
|
|
7
|
|
||
Contractual revenue
|
697,524
|
|
|
644,678
|
|
|
1,370,513
|
|
|
1,267,742
|
|
|
8
|
|
|
8
|
|
||
Commercial rental
|
214,599
|
|
|
239,051
|
|
|
419,436
|
|
|
444,144
|
|
|
(10
|
)
|
|
(6
|
)
|
||
Contract-related maintenance
|
62,693
|
|
|
56,535
|
|
|
126,954
|
|
|
109,681
|
|
|
11
|
|
|
16
|
|
||
Other
|
20,422
|
|
|
18,786
|
|
|
40,659
|
|
|
36,670
|
|
|
9
|
|
|
11
|
|
||
Operating revenue
(1)
|
995,238
|
|
|
959,050
|
|
|
1,957,562
|
|
|
1,858,237
|
|
|
4
|
|
|
5
|
|
||
Fuel services revenue
(2)
|
156,274
|
|
|
190,299
|
|
|
291,878
|
|
|
378,262
|
|
|
(18
|
)
|
|
(23
|
)
|
||
Total revenue
|
$
|
1,151,512
|
|
|
1,149,349
|
|
|
2,249,440
|
|
|
2,236,499
|
|
|
—
|
%
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Segment EBT
|
$
|
111,184
|
|
|
122,452
|
|
|
$
|
194,105
|
|
|
212,170
|
|
|
(9
|
)%
|
|
(9
|
)%
|
Segment EBT as a % of total revenue
|
9.7
|
%
|
|
10.7
|
%
|
|
8.6
|
%
|
|
9.5
|
%
|
|
(100) bps
|
|
(90) bps
|
||||
Segment EBT as a % of operating revenue
(1)
|
11.2
|
%
|
|
12.8
|
%
|
|
9.9
|
%
|
|
11.4
|
%
|
|
(160) bps
|
|
(150) bps
|
(1)
|
Non-GAAP financial measures. Reconciliations of FMS total revenue to FMS operating revenue, and FMS EBT as a % of total revenue to FMS EBT as a % of operating revenue, are set forth in this table. Refer to the “Non-GAAP Financial Measures” section for the reasons why management believes these measures are important to investors.
|
(2)
|
Includes intercompany fuel sales from FMS to DTS and SCS.
|
|
Three months ended June 30, 2016
|
|
Six months ended June 30, 2016
|
||||||||
|
Total
|
|
Operating
|
|
Total
|
|
Operating
|
||||
Organic including price and volume
|
4
|
%
|
|
5
|
%
|
|
6
|
%
|
|
6
|
%
|
Fuel
|
(3
|
)
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
Foreign exchange
|
(1
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|
(1
|
)
|
Net increase
|
—
|
%
|
|
4
|
%
|
|
1
|
%
|
|
5
|
%
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
|
Change 2016/2015
|
||||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Three Months
|
|
Six Months
|
||||||||
|
(Dollars in thousands)
|
|
|
|
|
||||||||||||||
Rental revenue from non-lease customers
(1)
|
$
|
134,767
|
|
|
144,293
|
|
|
$
|
255,469
|
|
|
260,444
|
|
|
(7
|
)%
|
|
(2
|
)%
|
Rental revenue from lease customers
(2)
|
$
|
79,832
|
|
|
94,758
|
|
|
$
|
163,967
|
|
|
183,700
|
|
|
(16
|
)%
|
|
(11
|
)%
|
Average commercial rental power fleet size — in service
(3),
(4)
|
31,800
|
|
|
33,200
|
|
|
32,400
|
|
|
33,200
|
|
|
(4
|
)%
|
|
(2
|
)%
|
||
Commercial rental utilization — power fleet
(3)
|
74.7
|
%
|
|
78.1
|
%
|
|
72.5
|
%
|
|
75.8
|
%
|
|
(340) bps
|
|
(330) 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
|
|||||||
|
June 30, 2016
|
|
December 31, 2015
|
|
June 30, 2015
|
|
June 2016/Dec. 2015
|
|
June 2016/June 2015
|
|||||
End of period vehicle count
|
|
|
|
|
|
|
|
|
|
|||||
By type:
|
|
|
|
|
|
|
|
|
|
|||||
Trucks
(1)
|
73,100
|
|
|
72,800
|
|
|
72,300
|
|
|
—
|
%
|
|
1
|
%
|
Tractors
(2)
|
68,700
|
|
|
68,700
|
|
|
65,800
|
|
|
—
|
|
|
4
|
|
Trailers
(3) (4)
|
42,300
|
|
|
42,400
|
|
|
41,900
|
|
|
—
|
|
|
1
|
|
Other
|
1,400
|
|
|
1,300
|
|
|
1,500
|
|
|
8
|
|
|
(7
|
)
|
Total
|
185,500
|
|
|
185,200
|
|
|
181,500
|
|
|
—
|
%
|
|
2
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||
By ownership:
|
|
|
|
|
|
|
|
|
|
|||||
Owned
|
183,900
|
|
|
184,700
|
|
|
179,600
|
|
|
—
|
%
|
|
2
|
%
|
Leased
|
1,600
|
|
|
500
|
|
|
1,900
|
|
|
220
|
|
|
(16
|
)
|
Total
|
185,500
|
|
|
185,200
|
|
|
181,500
|
|
|
—
|
%
|
|
2
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||
By product line:
(4)
|
|
|
|
|
|
|
|
|
|
|||||
Full service lease
|
134,300
|
|
|
131,800
|
|
|
128,700
|
|
|
2
|
%
|
|
4
|
%
|
Commercial rental
|
38,700
|
|
|
42,100
|
|
|
43,700
|
|
|
(8
|
)
|
|
(11
|
)
|
Service vehicles and other
|
3,400
|
|
|
3,300
|
|
|
3,200
|
|
|
3
|
|
|
6
|
|
Active units
|
176,400
|
|
|
177,200
|
|
|
175,600
|
|
|
—
|
|
|
—
|
|
Held for sale
|
9,100
|
|
|
8,000
|
|
|
5,900
|
|
|
14
|
|
|
54
|
|
Total
|
185,500
|
|
|
185,200
|
|
|
181,500
|
|
|
—
|
%
|
|
2
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||
Customer vehicles under contract maintenance
|
50,200
|
|
|
46,700
|
|
|
42,000
|
|
|
7
|
%
|
|
20
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|||||
Quarterly average vehicle count
|
|
|
|
|
|
|
|
|
|
|||||
By product line:
|
|
|
|
|
|
|
|
|
|
|||||
Full service lease
|
133,800
|
|
|
131,100
|
|
|
127,700
|
|
|
2
|
%
|
|
5
|
%
|
Commercial rental
|
39,600
|
|
|
43,200
|
|
|
42,500
|
|
|
(8
|
)
|
|
(7
|
)
|
Service vehicles and other
|
3,400
|
|
|
3,300
|
|
|
3,200
|
|
|
3
|
|
|
6
|
|
Active units
|
176,800
|
|
|
177,600
|
|
|
173,400
|
|
|
—
|
|
|
2
|
|
Held for sale
|
8,800
|
|
|
6,900
|
|
|
6,100
|
|
|
28
|
|
|
44
|
|
Total
|
185,600
|
|
|
184,500
|
|
|
179,500
|
|
|
1
|
%
|
|
3
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||
Customer vehicles under contract maintenance
|
49,700
|
|
|
45,500
|
|
|
43,500
|
|
|
9
|
%
|
|
14
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||
Customer vehicles under on-demand maintenance
(5)
|
7,600
|
|
|
7,200
|
|
|
8,300
|
|
|
6
|
%
|
|
(8
|
)%
|
|
|
|
|
|
|
|
|
|
|
|||||
Total vehicles under service
|
242,900
|
|
|
237,200
|
|
|
231,300
|
|
|
2
|
%
|
|
5
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|||||
Year-to-date average vehicle count
|
|
|
|
|
|
|
|
|
|
|||||
By product line:
|
|
|
|
|
|
|
|
|
|
|||||
Full service lease
|
133,200
|
|
|
128,800
|
|
|
127,100
|
|
|
3
|
%
|
|
5
|
%
|
Commercial rental
|
40,300
|
|
|
42,400
|
|
|
41,300
|
|
|
(5
|
)
|
|
(2
|
)
|
Service vehicles and other
|
3,400
|
|
|
3,200
|
|
|
3,200
|
|
|
6
|
|
|
6
|
|
Active units
|
176,900
|
|
|
174,400
|
|
|
171,600
|
|
|
1
|
|
|
3
|
|
Held for sale
|
8,600
|
|
|
6,100
|
|
|
5,800
|
|
|
41
|
|
|
48
|
|
Total
|
185,500
|
|
|
180,500
|
|
|
177,400
|
|
|
3
|
%
|
|
5
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||
Customer vehicles under contract maintenance
|
48,900
|
|
|
43,300
|
|
|
43,100
|
|
|
13
|
%
|
|
13
|
%
|
Customer vehicles under on-demand maintenance
(5)
|
14,700
|
|
|
20,000
|
|
|
12,600
|
|
|
NM
|
|
|
17
|
%
|
(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
5,300
UK trailers (
3,400
full service lease and
1,900
commercial rental),
6,100
UK trailers (
3,900
full service lease and
2,200
commercial rental) and
6,400
UK trailers (
4,300
full service lease and
2,100
commercial rental) as of
June 30, 2016
,
December 31, 2015
, and
June 30, 2015
, respectively.
|
(5)
|
Comprised of the number of unique vehicles serviced under on-demand maintenance agreements for the quarterly and year-to-date 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
|
||||
|
June 30,
2016 |
|
December 31,
2015 |
|
June 30,
2015 |
|
June 2016/Dec. 2015
|
|
June 2016/June 2015
|
||
Not yet earning revenue (NYE)
|
2,200
|
|
2,800
|
|
3,300
|
|
(21
|
)%
|
|
(33
|
)%
|
No longer earning revenue (NLE):
|
|
|
|
|
|
|
|
|
|
||
Units held for sale
|
9,100
|
|
8,000
|
|
5,900
|
|
14
|
|
|
54
|
|
Other NLE units
|
3,500
|
|
3,300
|
|
3,500
|
|
6
|
|
|
—
|
|
Total
|
14,800
|
|
14,100
|
|
12,700
|
|
5
|
%
|
|
17
|
%
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
|
Change 2016/2015
|
||||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Three Months
|
|
Six Months
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Operating revenue
(1)
|
$
|
194,292
|
|
|
176,805
|
|
|
$
|
384,565
|
|
|
342,635
|
|
|
10
|
%
|
|
12
|
%
|
Subcontracted transportation
|
37,924
|
|
|
14,539
|
|
|
69,153
|
|
|
29,160
|
|
|
161
|
|
|
137
|
|
||
Fuel
(2)
|
26,046
|
|
|
32,170
|
|
|
49,386
|
|
|
64,378
|
|
|
(19
|
)
|
|
(23
|
)
|
||
Total revenue
|
$
|
258,262
|
|
|
223,514
|
|
|
$
|
503,104
|
|
|
436,173
|
|
|
16
|
%
|
|
15
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Segment EBT
|
$
|
16,472
|
|
|
12,435
|
|
|
$
|
30,740
|
|
|
21,405
|
|
|
32
|
%
|
|
44
|
%
|
Segment EBT as a % of total revenue
|
6.4
|
%
|
|
5.6
|
%
|
|
6.1
|
%
|
|
4.9
|
%
|
|
80 bps
|
|
120 bps
|
||||
Segment EBT as a % of operating revenue
(1)
|
8.5
|
%
|
|
7.0
|
%
|
|
8.0
|
%
|
|
6.2
|
%
|
|
150 bps
|
|
180 bps
|
||||
Memo:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Average fleet
|
8,200
|
|
|
7,600
|
|
|
8,100
|
|
|
7,600
|
|
|
8
|
%
|
|
7
|
%
|
(1)
|
Non-GAAP financial measures. Reconciliations of DTS total revenue to DTS operating revenue, and DTS EBT as a % of total revenue to DTS EBT as a % of operating revenue, are set forth in this table. Refer to the “Non-GAAP Financial Measures” section for the reasons why management believes these measures are important to investors.
|
(2)
|
Includes intercompany fuel sales from FMS to DTS.
|
|
Three months ended June 30, 2016
|
|
Six months ended June 30, 2016
|
||||||||
|
Total
|
|
Operating
|
|
Total
|
|
Operating
|
||||
Organic including price and volume
|
8
|
%
|
|
10
|
%
|
|
10
|
%
|
|
12
|
%
|
Subcontracted transportation
|
11
|
|
|
—
|
|
|
8
|
|
|
—
|
|
Fuel
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
Net increase
|
16
|
%
|
|
10
|
%
|
|
15
|
%
|
|
12
|
%
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
|
Change 2016/2015
|
||||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Three Months
|
|
Six Months
|
||||||||
|
(Dollars in thousands)
|
|
|
|
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Automotive
|
$
|
137,174
|
|
|
119,332
|
|
|
$
|
266,298
|
|
|
228,498
|
|
|
15
|
%
|
|
17
|
%
|
Technology and healthcare
|
58,275
|
|
|
63,985
|
|
|
115,713
|
|
|
123,306
|
|
|
(9
|
)
|
|
(6
|
)
|
||
CPG and Retail
|
105,372
|
|
|
110,732
|
|
|
213,974
|
|
|
213,427
|
|
|
(5
|
)
|
|
—
|
|
||
Industrial and other
|
30,737
|
|
|
26,004
|
|
|
57,989
|
|
|
50,263
|
|
|
18
|
|
|
15
|
|
||
Operating revenue
(1)
|
331,558
|
|
|
320,053
|
|
|
653,974
|
|
|
615,494
|
|
|
4
|
|
|
6
|
|
||
Subcontracted transportation
|
54,675
|
|
|
59,842
|
|
|
106,654
|
|
|
117,997
|
|
|
(9
|
)
|
|
(10
|
)
|
||
Fuel
(2)
|
15,819
|
|
|
17,046
|
|
|
30,139
|
|
|
34,504
|
|
|
(7
|
)
|
|
(13
|
)
|
||
Total revenue
|
$
|
402,052
|
|
|
396,941
|
|
|
$
|
790,767
|
|
|
767,995
|
|
|
1
|
%
|
|
3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Segment EBT
|
$
|
28,371
|
|
|
27,699
|
|
|
$
|
48,167
|
|
|
43,388
|
|
|
2
|
%
|
|
11
|
%
|
Segment EBT as a % of total revenue
|
7.1
|
%
|
|
7.0
|
%
|
|
6.1
|
%
|
|
5.6
|
%
|
|
10 bps
|
|
50 bps
|
||||
Segment EBT as a % of operating revenue
(1)
|
8.6
|
%
|
|
8.7
|
%
|
|
7.4
|
%
|
|
7.0
|
%
|
|
(10) bps
|
|
40 bps
|
||||
Memo:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Average fleet
|
6,900
|
|
|
6,200
|
|
|
6,900
|
|
|
6,100
|
|
|
11
|
%
|
|
13
|
%
|
(1)
|
Non-GAAP financial measures. Reconciliations of SCS total revenue to SCS operating revenue, and SCS EBT as a % of total revenue to SCS EBT as a % of operating revenue, are set forth in this table. Refer to the “Non-GAAP Financial Measures” section for the reasons why management believes these measures are important to investors.
|
(2)
|
Includes intercompany fuel sales from FMS to SCS.
|
|
Three months ended June 30, 2016
|
|
Six months ended June 30, 2016
|
||||||||
|
Total
|
|
Operating
|
|
Total
|
|
Operating
|
||||
Organic including price and volume
|
5
|
%
|
|
5
|
%
|
|
10
|
%
|
|
8
|
%
|
Subcontracted transportation
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
Fuel
|
(1
|
)
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
Foreign exchange
|
(2
|
)
|
|
(1
|
)
|
|
(2
|
)
|
|
(2
|
)
|
Net increase
|
1
|
%
|
|
4
|
%
|
|
3
|
%
|
|
6
|
%
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
|
Change 2016/2015
|
||||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Three Months
|
|
Six Months
|
||||||||
|
(Dollars in thousands)
|
|
|
|
|
||||||||||||||
Human resources
|
$
|
4,260
|
|
|
5,038
|
|
|
$
|
8,784
|
|
|
10,380
|
|
|
(15
|
)%
|
|
(15
|
)%
|
Finance
|
14,350
|
|
|
14,512
|
|
|
29,124
|
|
|
29,048
|
|
|
(1
|
)
|
|
—
|
|
||
Corporate services and public affairs
|
2,537
|
|
|
2,555
|
|
|
4,992
|
|
|
5,109
|
|
|
(1
|
)
|
|
(2
|
)
|
||
Information technology
|
19,995
|
|
|
20,462
|
|
|
39,903
|
|
|
41,124
|
|
|
(2
|
)
|
|
(3
|
)
|
||
Legal and safety
|
5,829
|
|
|
5,835
|
|
|
12,087
|
|
|
12,432
|
|
|
—
|
|
|
(3
|
)
|
||
Marketing
|
6,174
|
|
|
6,348
|
|
|
9,884
|
|
|
10,128
|
|
|
(3
|
)
|
|
(2
|
)
|
||
Other
|
7,875
|
|
|
9,359
|
|
|
14,601
|
|
|
18,106
|
|
|
(16
|
)
|
|
(19
|
)
|
||
Total CSS
|
61,020
|
|
|
64,109
|
|
|
119,375
|
|
|
126,327
|
|
|
(5
|
)
|
|
(6
|
)
|
||
Allocation of CSS to business segments
|
(49,805
|
)
|
|
(53,185
|
)
|
|
(98,495
|
)
|
|
(103,461
|
)
|
|
(6
|
)
|
|
(5
|
)
|
||
Unallocated CSS
|
$
|
11,215
|
|
|
10,924
|
|
|
$
|
20,880
|
|
|
22,866
|
|
|
3
|
%
|
|
(9
|
)%
|
|
Six months ended June 30,
|
|||||
|
2016
|
|
2015
|
|||
|
(In thousands)
|
|||||
Net cash provided by (used in):
|
|
|
|
|||
Operating activities
|
$
|
762,672
|
|
|
658,698
|
|
Financing activities
|
69,399
|
|
|
445,520
|
|
|
Investing activities
|
(823,336
|
)
|
|
(1,078,663
|
)
|
|
Effect of exchange rates on cash
|
(3,415
|
)
|
|
(1,198
|
)
|
|
Net change in cash and cash equivalents
|
$
|
5,320
|
|
|
24,357
|
|
|
Six months ended June 30,
|
|||||
|
2016
|
|
2015
|
|||
|
(In thousands)
|
|||||
Net cash provided by operating activities from continuing operations
|
$
|
762,672
|
|
|
658,698
|
|
Sales of revenue earning equipment
(1)
|
245,681
|
|
|
211,153
|
|
|
Sales of operating property and equipment
(1)
|
6,322
|
|
|
641
|
|
|
Collections on direct finance leases and other items
(1)
|
43,957
|
|
|
33,912
|
|
|
Total cash generated
(2)
|
1,058,632
|
|
|
904,404
|
|
|
Purchases of property and revenue earning equipment
(1)
|
(1,120,182
|
)
|
|
(1,329,218
|
)
|
|
Free cash flow
(2)
|
$
|
(61,550
|
)
|
|
(424,814
|
)
|
(1)
|
Included in cash flows from investing activities.
|
(2)
|
Non-GAAP financial measures. Reconciliations of net cash provided by operating activities to total cash generated and to free cash flow are set forth in this table. Refer to the “Non-GAAP Financial Measures” section for the reasons why management believes these measures are important to investors.
|
|
Six months ended June 30,
|
|||||
|
2016
|
|
2015
|
|||
|
(In thousands)
|
|||||
Revenue earning equipment:
|
|
|
|
|||
Full service lease
|
$
|
869,081
|
|
|
947,280
|
|
Commercial rental
|
67,738
|
|
|
452,928
|
|
|
|
936,819
|
|
|
1,400,208
|
|
|
Operating property and equipment
|
77,883
|
|
|
53,776
|
|
|
Total capital expenditures
|
1,014,702
|
|
|
1,453,984
|
|
|
Changes in accounts payable related to purchases of revenue earning equipment
|
105,480
|
|
|
(124,766
|
)
|
|
Cash paid for purchases of property and revenue earning equipment
|
$
|
1,120,182
|
|
|
1,329,218
|
|
|
Short-term
|
|
|
|
Long-term
|
||
|
Rating
|
|
Outlook
|
|
Rating
|
|
Outlook
|
Moody’s Investors Service
|
P2
|
|
Stable
|
|
Baa1
|
|
Stable
|
Standard & Poor’s Ratings Services
|
A2
|
|
Stable
|
|
BBB
|
|
Positive
|
Fitch Ratings
|
F2
|
|
Stable
|
|
A-
|
|
Stable
|
|
(In millions)
|
Global revolving credit facility
|
$425
|
Trade receivables program
|
$175
|
|
Six months ended June 30,
|
|||||
|
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
|
162,105
|
|
|
34,750
|
|
|
Proceeds from issuance of medium-term notes
|
298,254
|
|
|
698,911
|
|
|
Proceeds from issuance of other debt instruments
|
—
|
|
|
231,179
|
|
|
Retirement of medium term notes
|
(300,000
|
)
|
|
(360,000
|
)
|
|
Other debt repaid
|
(28,416
|
)
|
|
(126,103
|
)
|
|
Debt issuance costs paid
|
(622
|
)
|
|
(2,546
|
)
|
|
|
131,321
|
|
|
476,191
|
|
|
Non-cash changes in debt:
|
|
|
|
|||
Fair value adjustment on notes subject to hedging
|
15,736
|
|
|
1,837
|
|
|
Addition of capital lease obligations
|
777
|
|
|
5,847
|
|
|
Changes in foreign currency exchange rates and other non-cash items
|
(16,447
|
)
|
|
(15
|
)
|
|
Total changes in debt
|
131,387
|
|
|
483,860
|
|
|
Debt balance at June 30
|
$
|
5,634,014
|
|
|
5,201,384
|
|
Non-GAAP Financial Measure
|
Comparable GAAP Measure
|
Reconciliation in Section Entitled
|
Page
|
Operating Revenue Measures
:
|
|
|
|
Operating Revenue
|
Total Revenue
|
MD&A - Non-GAAP Financial Measures section
|
41
|
FMS Operating Revenue
|
FMS Total Revenue
|
MD&A - Operating Results by Segment, Fleet Management Solutions section
|
27
|
DTS Operating Revenue
|
DTS Total Revenue
|
MD&A - Operating Results by Segment, Dedicated Transportation Solutions section
|
30
|
SCS Operating Revenue
|
SCS Total Revenue
|
MD&A - Operating Results by Segment, Supply Chain Solutions section
|
31
|
FMS EBT as a % of Operating Revenue
|
FMS EBT as a % of Total Revenue
|
MD&A - Operating Results by Segment, Fleet Management Solutions section
|
27
|
DTS EBT as a % of Operating Revenue
|
DTS EBT as a % of Total Revenue
|
MD&A - Operating Results by Segment, Dedicated Transportation Solutions section
|
30
|
SCS EBT as a % of Operating Revenue
|
SCS EBT as a % of Total Revenue
|
MD&A - Operating Results by Segment, Supply Chain Solutions section
|
31
|
Comparable Earnings Measures
:
|
|
|
|
Comparable Earnings
|
Earnings from Continuing Operations
|
MD&A, Non-GAAP Financial Measures section
|
40
|
Comparable EPS
|
EPS from Continuing Operations
|
||
Comparable Earnings Before Income Tax
|
Earnings Before Income Tax
|
||
Cash Flow Measures
:
|
|
|
|
Total Cash Generated and Free Cash Flow
|
Cash Provided by Operating Activities
|
MD&A - Financial Resources and Liquidity, Cash Flows section
|
33
|
Operating Revenue Measures
:
|
|
|
|
|
Operating Revenue
FMS Operating Revenue
DTS Operating Revenue
SCS Operating Revenue
FMS EBT as a % of Operating Revenue
DTS EBT as a % of Operating Revenue
SCS EBT as a % of Operating Revenue
|
Operating revenue is defined as total revenue for Ryder System, Inc. or each business segment (FMS, DTS and SCS), respectively, excluding any (1) fuel and (2) subcontracted transportation. We use operating revenue to evaluate the operating performance of our core businesses and as a measure of sales activity at the consolidated level for Ryder System, Inc. as well as for each of our business segments. We also use segment EBT as a percentage of operating revenue for each business segment for the same reason.
Fuel
: We exclude FMS, DTS and SCS fuel from the calculation of our operating revenue measures, as fuel is an ancillary service that we provide our customers, which is impacted by fluctuations in market fuel prices, and 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.
Subcontracted transportation
: We also exclude subcontracted transportation from the calculation of our operating revenue measures as these services are also typically a pass-through to our customers and therefore fluctuations result in minimal changes to our profitability. While our DTS and SCS business segments subcontract certain transportation services to third party providers, our FMS business segment does not engage in subcontracted transportation and, therefore, this item is not applicable to FMS.
|
|||
Comparable Earnings Measures
:
|
|
|
|
|
Comparable Earnings
Comparable EPS
Comparable Earnings Before Income Tax
|
Comparable earnings, comparable earnings per diluted common share (EPS) and comparable earnings before income tax are defined, respectively, as GAAP earnings, EPS and earnings before income tax, all from continuing operations, excluding (1) non-operating pension costs and operations (2) any other significant items that are not representative of our business. We believe these comparable earnings measures provide useful information to investors and allow for better year-over-year comparison of operating performance.
Non-Operating Pension Costs
: Our comparable earnings measures exclude non-operating pension costs, which include the amortization of net actuarial loss, interest cost and expected return on plan assets components of pension and postretirement costs. We exclude non-operating pension costs because we consider these to be impacted by financial market performance and outside the operational performance of our business.
Other Significant Items
: Our comparable earnings measures also exclude other significant items that are not representative of our business operations. These other significant items vary from period to period and, in some periods, there may be no such significant items. In this reporting period, we exclude the following other significant items from our comparable earnings measures in this Form 10Q:
___
(1)
Pension-related charge
(in the second quarter 2016 and year to date 2016). This charge represents a one-time, non-cash charge for benefit improvements made in 2009 that were not fully reflected in our projected benefit obligation.
(2)
Professional fees
(in the second quarter 2015 and year to date 2015). These charges represent professional fees associated with the assessment of potential cost savings initiatives.
___
(3)
A benefit from a tax law change
(in the second quarter 2015 and year to date 2015). In the second quarter of 2015, the states of Connecticut and Texas and the city of New York enacted changes to their tax systems, which decreased Ryder's provision for income taxes in each jurisdiction.
Calculation of comparable tax rate
: The comparable provision for income taxes is computed using the same methodology as the GAAP provision for income taxes. Income tax effects of non-GAAP adjustments are calculated based on the statutory tax rates of the jurisdictions to which the non-GAAP adjustments relate.
|
|||
Cash Flow Measures
:
|
|
|
|
Total Cash Generated
Free Cash Flow
|
We consider total cash generated and free cash flow to be important measures of comparative operating performance as our principal sources of operating liquidity are cash from operations and proceeds from the sale of revenue earning equipment.
Total Cash Generated
: Total cash generated is defined as the sum of (1) net cash provided by operating activities, (2) net cash provided by the sale of revenue earning equipment and (3) operating property and equipment, (4) collections on direct finance leases and (5) other cash inflows from investing activities. We believe total cash generated is an important measure of total cash flows generated from our ongoing business activities.
Free Cash Flow
: We refer to the net amount of cash generated from operating activities and investing activities (excluding changes in restricted cash and acquisitions) from continuing operations as “free cash flow”. We calculate free cash flow as the sum of (1) net cash provided by operating activities and (2) net cash provided by the sale of revenue earning equipment and (3) operating property and equipment, (4) collections on direct finance leases and (5) other cash inflows from investing activities, less (6) purchases of property and revenue earning equipment. We believe free cash flow provides investors with an important perspective on the cash available for debt service and for shareholders after making capital investments required to support ongoing business operations. Our calculation of free cash flow may be different from the calculation used by other companies and therefore comparability may be limited.
|
|
EBT
|
|
Earnings
|
|
Diluted EPS
|
|||||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|||||||||
Three months ended June 30,
|
(In thousands, except per share amounts)
|
|||||||||||||||||||
EBT/Earnings/EPS
|
$
|
116,779
|
|
|
133,447
|
|
|
$
|
74,042
|
|
|
85,917
|
|
|
$
|
1.38
|
|
|
1.61
|
|
Non-operating pension costs
|
7,617
|
|
|
4,688
|
|
|
4,448
|
|
|
2,671
|
|
|
0.09
|
|
|
0.05
|
|
|||
Pension-related charge
|
7,650
|
|
|
—
|
|
|
4,817
|
|
|
—
|
|
|
0.09
|
|
|
—
|
|
|||
Professional fees
|
—
|
|
|
1,939
|
|
|
—
|
|
|
1,224
|
|
|
—
|
|
|
0.02
|
|
|||
Tax law change
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,860
|
)
|
|
—
|
|
|
(0.03
|
)
|
|||
Comparable
|
$
|
132,046
|
|
|
140,074
|
|
|
$
|
83,307
|
|
|
87,952
|
|
|
$
|
1.56
|
|
|
1.65
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Six months ended June 30,
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
EBT/Earnings/EPS
|
$
|
205,487
|
|
|
217,624
|
|
|
$
|
130,227
|
|
|
139,243
|
|
|
$
|
2.43
|
|
|
2.61
|
|
Non-operating pension costs
|
14,485
|
|
|
9,571
|
|
|
8,437
|
|
|
5,463
|
|
|
0.16
|
|
|
0.10
|
|
|||
Pension-related charge
|
7,650
|
|
|
—
|
|
|
4,817
|
|
|
—
|
|
|
0.09
|
|
|
—
|
|
|||
Professional fees
|
—
|
|
|
3,780
|
|
|
—
|
|
|
2,385
|
|
|
—
|
|
|
0.04
|
|
|||
Tax law change
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,860
|
)
|
|
—
|
|
|
(0.03
|
)
|
|||
Comparable
|
$
|
227,622
|
|
|
230,975
|
|
|
$
|
143,481
|
|
|
145,231
|
|
|
$
|
2.68
|
|
|
2.72
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||
|
(In thousands)
|
||||||||||||
Total revenue
|
$
|
1,703,744
|
|
|
1,662,931
|
|
|
$
|
3,333,416
|
|
|
3,230,084
|
|
Fuel
|
(161,432
|
)
|
|
(195,932
|
)
|
|
(301,883
|
)
|
|
(390,023
|
)
|
||
Subcontracted transportation
|
(92,599
|
)
|
|
(74,381
|
)
|
|
(175,807
|
)
|
|
(147,157
|
)
|
||
Operating revenue
|
$
|
1,449,713
|
|
|
1,392,618
|
|
|
$
|
2,855,726
|
|
|
2,692,904
|
|
•
|
our expectations in our FMS business segment regarding anticipated full service lease and commercial rental revenue and demand;
|
•
|
our expectations in our DTS and SCS business segments regarding anticipated operating revenue trends and growth rates;
|
•
|
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; and
|
•
|
our expectations regarding the future use and availability of funding sources.
|
•
|
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 execute 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)
|
|||||
April 1 through April 30, 2016
|
233
|
|
|
$
|
62.09
|
|
|
—
|
|
|
2,000,000
|
|
May 1 through May 31, 2016
|
321,819
|
|
|
68.05
|
|
|
321,718
|
|
|
1,678,000
|
|
|
June 1 through June 30, 2016
|
289
|
|
|
65.01
|
|
|
—
|
|
|
1,678,000
|
|
|
Total
|
322,341
|
|
|
$
|
68.04
|
|
|
321,718
|
|
|
|
(1)
|
During the
three months ended June 30, 2016
, we purchased an aggregate of
322,000
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.
|
10.4 (x)
|
|
|
Form of terms and conditions applicable to 2016 annual cash incentive awards granted under the Amended and Restated Ryder System, Inc. 2012 Equity and Incentive Compensation Plan.
|
|
|
|
|
10.4 (y)
|
|
|
Form of terms and conditions applicable to non-qualified stock options granted under the Amended and Restated Ryder System, Inc. 2012 Equity and Incentive Compensation Plan.
|
|
|
|
|
10.4 (z)
|
|
|
Form of terms and conditions applicable to performance-based restricted stock rights granted under the Amended and Restated Ryder System, Inc. 2012 Equity and Incentive Compensation Plan.
|
|
|
|
|
10.4 (aa)
|
|
|
Form of terms and conditions applicable to performance-based cash awards granted under the Amended and Restated Ryder System, Inc. 2012 Equity and Incentive Compensation Plan.
|
|
|
|
|
10.4 (bb)
|
|
|
Form of terms and conditions applicable to restricted stock rights granted under the Amended and Restated Ryder System, Inc. 2012 Equity and Incentive Compensation Plan.
|
|
|
|
|
10.4 (cc)
|
|
|
Form of terms and conditions applicable to restricted stock units granted under the Amended and Restated Ryder System, Inc. 2012 Equity and Incentive Compensation Plan.
|
|
|
|
|
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: July 27, 2016
|
By:
|
/s/ Art A. Garcia
|
|
|
Art A. Garcia
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
(Principal Financial Officer)
|
|
|
|
Date: July 27, 2016
|
By:
|
/s/ Scott R. Allen
|
|
|
Scott R. Allen
|
|
|
Vice President and Controller
|
|
|
(Principal Accounting Officer)
|
1.
|
General
. The Award represents the right to receive a cash payment based on the attainment of certain financial performance goals, on the terms and conditions set forth herein, in
Schedule A
attached hereto, in the Guide and in the Plan, the applicable terms, conditions and other provisions of which are incorporated by reference herein (collectively, the “Award Documents”). It is intended that any Awards granted to “Covered Employees” as that term is defined in Section 162(m) of the Internal Revenue Code of 1986, as amended, including any successor provisions and regulations (the “Code”), shall qualify as “performance-based compensation” for purposes of Section 162(m) of the Code.
|
(a)
|
The Award Documents supersede any and all prior oral representations, promises or guarantees relating to short-term incentives or annual bonuses. All provisions of the Award Documents shall apply unless otherwise prohibited by law. In the event there is an express conflict between the provisions of the Plan and those set forth in the Guide or in these terms and conditions, the terms and conditions of the Plan shall govern. Unless otherwise approved by the Committee, individuals who have written agreements which specifically provide for annual incentive compensation other than that which is provided under the Award or who are participants in any other short-term incentive compensation plan of the Company or its subsidiaries and affiliates are not eligible to receive an Award hereunder. The Company may, in its sole discretion, provide discretionary or other bonuses to Company employees, whether or not they receive an Award.
|
(b)
|
The terms and conditions contained herein may be amended by the Committee as permitted by the Plan; none of the terms and conditions of the Award may be amended or waived without the prior approval of the Committee. Any amendment or waiver not approved by the Committee will be void and have no force or effect. Any employee or officer of the Company who authorizes any such amendment or waiver without the prior approval of the Committee will be subject to disciplinary action up to and including forfeiture of an Award and/or termination of employment (unless otherwise prohibited by law). All decisions and determinations made by the Committee relating to the Awards shall be final and binding on the Participant, his or her beneficiaries and any other person having or claiming an interest under the Plan.
|
2.
|
Financial Performance Goals; Performance Period
. The Awards are intended to reward Participants for the attainment by the Company of certain performance goals during the period beginning on January
|
3.
|
Payment
.
Subject to Sections 4 and 5 below and the provisions of the Guide and the Plan, amounts payable with respect to the Award will be payable in cash to the Participant following the determination of the Company’s performance, the calculation of the Award pursuant to Schedule A, and approval by the Committee (or the Board, as the case may be) of the payout. Payment shall be made during the 2017 calendar year, but in no event later than March 15, 2017 (the applicable date, the “Payment Date”), provided that, subject to Section 5 below, the Participant is, on the Payment Date, and has been from the first day of the Performance Period through the Payment Date, continuously employed in good standing by the Company or a Subsidiary. No Participant shall have a vested or accrued right to any payment under the Award. For purposes of these terms and conditions, the Participant shall not be deemed to have terminated his or her employment with the Company and its Subsidiaries if he or she is then immediately thereafter employed by the Company or another Subsidiary. Participation in the Plan and receipt of any payments thereunder is expressly conditioned upon the Participant remaining fully compliant with all Company values, principles, agreements, plans, procedures, protocols and policies and all rules contained in the Award Documents. Notwithstanding anything to the contrary set forth herein, to the fullest extent permitted under applicable law, (i) the Company retains the right, in its sole and absolute discretion, to withhold payment and participation from any Participant who violates or has violated any Company value, principle, agreement, plan, procedure, protocol, policy or the rules contained in the Award Documents even if there are no documented performance issues in the Participant’s personnel file and (ii) if the Company has any claim against the Participant for money or assets owed that have not been satisfied by the Participant, the amount otherwise payable pursuant to the Award shall be reduced by any such unpaid claims unless otherwise prohibited by law, including without limitation Section 409A of the Code. The calculation of amounts payable pursuant to the Award with respect to Participants outside of the U.S. will be set forth in the Guide.
|
4.
|
New Hire, Promotion or Transfer.
Participants who are newly hired, promoted, or transferred into or out of eligible positions, and those who move from one eligibility level to another, will receive a pro-rata incentive based on the terms in effect for his or her Management Level position, the portion of time spent in each position during the Performance Period, the annual rate of pay and the target incentive award for the eligible position(s).
|
5.
|
Termination of Employment; Temporary Leave.
Except as specifically set forth below, the Award will terminate and no amounts will be paid under the Award following the termination of the Participant’s employment.
|
(a)
|
Resignation by the Participant or Termination by the Company or a Subsidiary
: Notwithstanding anything herein to the contrary, (i) with respect to Participants who are entitled to severance benefits under the terms and conditions of any individual agreement or under the Company’s Executive Severance Plan, any amounts due will be calculated in accordance with such agreement or plan and (ii) with respect to Participants who are not otherwise entitled to severance benefits under the terms of any individual agreement or the Company’s Executive Severance Plan, if any, the Award will terminate and no amounts will be paid under the Award, provided that if a Participant’s employment is terminated by the Company after October 1, 2016 but before the Payment Date as a result of a reduction in force by the Company, or a location closing or loss of business, as determined by the Committee, in its sole and absolute discretion, the Participant shall be eligible to receive a payment hereunder on the Payment Date, if the Participant would have received a payment under the Award but for his or her termination. Payment made to a terminated employee pursuant to the preceding sentence shall only be made if the Participant has executed and delivered to the Company a release in favor of the Company in form and substance satisfactory to the Company, which has not been revoked, and shall not be made prior to the effective date of such release.
|
i.
|
Notwithstanding the foregoing, if the Participant is terminated by the Company or a Subsidiary prior to the Payment Date and is subsequently re-employed by the Company or a Subsidiary prior to the Payment Date, such Participant shall be eligible to receive a pro-rata payment on the Payment Date based on the number of days during the Performance Period that the Participant was considered to be an active employee, as determined by the Company.
|
ii.
|
In the event that the Participant voluntarily terminates his or her employment with the Company prior to the Payment Date, (x) if the Participant is re-employed by the Company or a Subsidiary within 90 days of the effective date of such termination, but in any event prior to the Payment Date, the Participant shall be eligible to receive a pro-rata payment on the Payment Date based on the number of days during the Performance Period that the Participant was considered to be an active employee, as determined by the Company; or (y) unless otherwise provided for herein, if the Participant is re-employed by the Company or a Subsidiary more than 90 days after the effective date of such resignation, but in any event before the end of the Performance Period, the Participant shall be eligible to receive a pro-rata payment on the Payment Date based on the number of days during the Performance Period that the Participant was considered to be an active employee, as determined by the Company, after the Participant was re-employed.
|
(b)
|
Death or Disability (including Disability Retirement)
: If the Participant’s death or Disability occurs after the end of the Performance Period, the Participant (or his or her Beneficiary, in the event of death) shall receive all amounts otherwise payable to him or her under the Award on the Payment Date. If the death or Disability occurs during the Performance Period and the Participant would have received a payment under the Award but for his or her death or Disability, the Participant (or his or her Beneficiary, in the event of death) will be eligible to receive a pro-rata payment on the Payment Date based on the amount otherwise payable to the Participant and the number of days during the Performance Period that the Participant was considered to be an active employee, as determined by the Company.
|
(c)
|
Workers’ Compensation or Approved Leave of Absence
: Except as otherwise set forth herein, a Participant who takes an approved workers’ compensation leave or an approved leave of absence during any portion of the Performance Period and is actively employed for at least 180 days during 2016, as determined by the Company, will be eligible to receive a payment on the Payment Date (to the extent the Participant would have received a payment under the Award but for his or her leave of absence), which will be pro-rated based on the number of days during the Performance Period that the Participant is considered to be an active employee, as determined by the Company.
|
(d)
|
Military Leave of Absence
: A Participant who takes an approved military leave of absence will be eligible to receive a payment on the Payment Date (to the extent the Participant would have received a payment under the Award but for his or her military leave of absence) based on the Participant’s full Eligible Base Salary (as defined on
Schedule A
) regardless of the number of days worked during the Performance Period.
|
(e)
|
Retirement
: If the Participant’s Retirement occurs after December 31, 2016 (the last day worked) and before the Payment Date, the Participant shall receive all amounts due to him or her under the Award on the Payment Date. If the Participant’s Retirement occurs on or prior to December 31, 2016 (the last day worked is December 30 or earlier), the Award will terminate and no amounts will be paid under the Award, unless Section 5(a) or 5(b) applies. As used herein, the term “Retirement” means termination of employment for any reason (other than for Cause or by reason of death or Disability) upon or following attainment of age 55 and completion of 10 years of service, or upon or following attainment of age 65 without regard to years of service.
|
(f)
|
Proscribed Activity
: If, during the Proscribed Period but prior to a Change of Control, the Participant engages in a Proscribed Activity, then the Company shall have the right to reclaim and receive from
|
6.
|
U.S. Federal, State and Local Income Taxes.
The Participant is solely responsible for the satisfaction of all taxes that may arise in connection with the Award. At the time of taxation, the Company shall have the right to deduct from other compensation or from amounts payable with respect to the Award an amount equal to the federal (including FICA), state, and local income and payroll taxes and other amounts as may be required by law to be withheld with respect to the Award. Notwithstanding the foregoing, the Company may satisfy any tax obligations it may have in any other jurisdiction outside of the U.S. in any manner it deems, in its sole and absolute discretion, to be necessary or appropriate.
|
7.
|
Section 409A.
All payments made under the Award are intended to constitute short-term deferral amounts excludible from the requirements of Section 409A of the Code and shall be administered in accordance with Section 9.17 of the Plan. In the event that the Participant is required to execute a release of claims to receive payment pursuant to the Award and the 60 day period following the Participant’s termination of employment spans two calendar years, notwithstanding any provision herein, payment shall not be made until the later calendar year.
|
8.
|
Change of Control
.
Notwithstanding anything herein to the contrary, in the event of a Change of Control of the Company during the Performance Period, (i) with respect to Participants who are entitled to Change of Control benefits under the terms of any individual agreement or any severance plan or arrangement, the amount payable pursuant to this Award will be calculated in accordance with such agreement or plan and (ii) with respect to Participants who are not otherwise entitled to Change of Control benefits under the terms of any individual agreement or any severance plan or arrangement, and whose employment is terminated in connection with or as a result of the Change of Control, upon approval by the Committee, the Participant will be entitled to receive a pro-rata payment based on the number of days during the Performance Period that the Participant is considered to be an active employee, as determined by the Company, assuming target performance. This payment shall be made on or before March 15, 2017.
|
9.
|
Sale of Business
.
If a business unit is sold during the Performance Period, the Participants that are employees of such business unit will receive a pro-rata payment based on performance on the Payment Date. Such payment will be made over time or in one lump sum, as determined by the Committee, provided that in any event all payments will be made on or before March 15, 2017.
|
10.
|
Statute of Limitations and Conflicts of Laws.
All rights of action by, or on behalf of the Company or by any shareholder against any past, present, or future member of the Board of Directors, officer, or employee of the Company arising out of or in connection with the Award or the Award Documents, must be brought within three years from the date of the act or omission in respect of which such right of action arises. The Awards and the Award Documents shall be governed by the laws of the State of Florida, without giving effect to principles of conflict of laws, and construed accordingly.
|
11.
|
No Employment Right
.
Neither the grant of the Award, nor any action taken hereunder, shall be construed as giving any employee or any Participant any right to be retained in the employ of the Company. The Company is under no obligation to grant Awards hereunder. Nothing contained in the Award Documents shall limit or affect in any manner or degree the normal and usual powers of management, exercised by the officers and the Board of Directors or committees thereof, to change the duties or the character of employment of any employee of the Company or to remove the individual from the employment of the Company at any time, all of which rights and powers are expressly reserved.
|
12.
|
No Assignment
.
A Participant’s rights and interest under the Award may not be assigned or transferred, except as otherwise provided herein, and any attempted assignment or transfer shall be null and void and shall extinguish, in the Company’s sole discretion, the Company's obligation under the Award to make any payment thereunder.
|
13.
|
Unfunded Plan
.
Any amounts owed under the Award shall be unfunded. The Company shall not be required to establish any special or separate fund, or to make any other segregation of assets, to assure payment of any amounts payable under the Award.
|
14.
|
Recoupment Policy
.
This Award is considered “incentive compensation” under the Company’s Recoupment Policy, in effect from time to time. The Award and any amounts payable hereunder shall be subject to all applicable clawback or recoupment policies, share trading policies and other policies that may be implemented by the Company’s Board of Directors from time to time.
|
15.
|
Definitions
.
Capitalized terms used above that are not defined below have the meanings set forth in the Plan. For purposes of these Terms and Conditions:
|
(a)
|
“Proscribed Activity” means any of the following:
|
(i)
|
the Participant’s breach of any written agreement between the Participant and the Company or any of its Subsidiaries, including any agreement relating to nondisclosure, noncompetition, nonsolicitation and/or nondisparagement, to the extent such agreements are enforceable under applicable law;
|
(ii)
|
the Participant’s direct or indirect unauthorized use or disclosure of confidential information or trade secrets of the Company or any Subsidiary, including, but not limited to, such matters as costs, profits, markets, sales, products, product lines, key personnel, pricing policies, operational methods, customers, customer requirements, suppliers, plans for future developments, and other business affairs and methods and other information not readily available to the public;
|
(iii)
|
the Participant’s direct or indirect engaging or becoming a partner, director, officer, principal, employee, consultant, investor, creditor or stockholder in/for any business, proprietorship, association, firm or corporation not owned or controlled by the Company or its Subsidiaries which is engaged or proposes to engage in a business competitive directly or indirectly with the business conducted by the Company or its Subsidiaries in any geographic area where such business of the Company or its Subsidiaries is conducted, provided that the Participant’s investment in 1% or less of the outstanding capital stock of any corporation whose stock is listed on a national securities exchange shall not be treated as a Proscribed Activity;
|
(iv)
|
the Participant’s direct or indirect, either on the Participant’s own account or for any person, firm or company, soliciting, interfering with or inducing, or attempting to induce, any employee of the Company or any of its Subsidiaries to leave his or her employment or to breach his or her employment agreement;
|
(v)
|
the Participant’s direct or indirect taking away, interfering with relations with, diverting or attempting to divert from the Company or any Subsidiary any business with any customer of the Company or any Subsidiary, including (A) any customer that has been solicited or serviced by the Company within one year prior to the date of termination of Participant’s employment with the Company and (B) any customer with which the Participant has had contact or association, or which was under the supervision of Participant, or the identity of which was learned by the Participant as a result of Participant’s employment with the Company;
|
(vi)
|
following the Participant’s termination of employment, the Participant’s making of any remarks disparaging the conduct or character of the Company or any of its Subsidiaries, or their current or former agents, employees, officers, directors, successors or assigns; or
|
(vii)
|
the Participant’s failure to cooperate with the Company or any Subsidiary, for no additional compensation (other than reimbursement of expenses), in any litigation or administrative proceedings involving any matters with which the Participant was involved during the Participant’s employment with the Company or any Subsidiary.
|
(b)
|
“Proscribed Period” means the period beginning on the date of termination of Participant’s employment and ending on the later of (A) the one year anniversary of such termination date or (B) if the Participant is entitled to severance benefits in the form of salary continuation, the date on which salary continuation is no longer payable to the Participant.
|
(a)
|
The amount payable pursuant to the Award shall not exceed [X%] of the Company’s Pretax Operating Earnings (the “Maximum Payment”), up to Pretax Operating Earnings of $300 million, for the Performance Period. As soon as practicable after the end of the Performance Period, the Committee will determine the Company’s Pretax Operating Earnings, to the extent applicable, in accordance with generally accepted accounting principles (“GAAP”), provided that, the Committee shall exclude, without duplication, the following items from actual results in determining Pretax Operating Earnings: (i) changes in accounting methods; (ii) non-vehicle asset impairments; (iii) non-recurring acquisition expenses and restructuring charges; (iv) multiemployer pension plan withdrawal liability; and (v) unusual or infrequently occurring income or expense, in each case, other than those included in the Company’s 2016 business plan.
|
(b)
|
Once the Maximum Payment is calculated pursuant to paragraph (a), the Committee shall apply: (i) the performance metrics (the “EPS/OR Metrics”); (ii) the performance targets (the “EPS/OR Targets”); (iii) the weight given to each performance metric; (iv) the threshold, target and maximum payout amounts (expressed as a percentage of the Participant’s Eligible Base Salary) payable if the EPS/OR Targets are achieved; and (v) any other requirements or limitations of the Award approved by the Committee, in each case as applicable to the Participant and specified in the Guide and the Payout Grid, to calculate the amount payable pursuant to this Award. The Committee may, in its sole discretion, increase or decrease the amount calculated pursuant to this paragraph (b), provided that such adjusted amount shall not exceed the Maximum Payment.
|
(c)
|
Once established, neither the EPS/OR Metrics, the EPS/OR Targets, nor the provisions of paragraph (a) above shall be changed during the Performance Period; provided that, with respect to the EPS/OR Metrics and the EPS/OR Targets, if the Committee determines that external changes or other unanticipated business conditions have materially affected the fairness of the EPS/OR Metrics or EPS/OR Targets, then the appropriate adjustments may be made (either up or down) during the Performance Period.
|
(d)
|
For purposes of the Award, Eligible Base Salary means the annual rate of pay for the Performance Period, excluding all other compensation paid to the Participant during the year, including but not limited to bonuses, incentives, commissions, car allowance, employee benefits, relocation expenses, and any imputed income for which the Participant may be eligible (all as more fully described in the Guide).
|
(e)
|
For purposes of this Schedule A, “Pretax Operating Earnings” means Comparable Earnings from Continuing Operations Before Income Tax, as reported in the Company’s earnings press release for the fiscal year ending December 31, 2016.
|
1.
|
General
.
The Option represents the right to purchase Shares on the terms and conditions set forth herein, in the Notification and the Plan, the applicable terms, conditions and other provisions of which are incorporated by reference herein. A copy of the Plan and the documents that constitute the “Prospectus” for the Plan under the Securities Act of 1933 have been made available to the Participant prior to or along with delivery of the Notification. In the event there is an express conflict between the provisions of the Plan and those set forth in these terms and conditions, the terms and conditions of the Plan shall govern.
|
2.
|
Exercisability of Option
.
Subject to Sections 4 and 5 below, the Option shall vest and become exercisable pursuant to the vesting schedule set forth in the Notification and shall remain exercisable until the expiration date set forth in the Notification, or such other expiration date designated by the Committee pursuant to Section 7 of the Plan (the “Expiration Date”).
|
3.
|
Exercise Procedures.
The Option, to the extent exercisable, may be exercised by delivering to the Company’s stock administrator, notice of intent to exercise in the manner designated by the stock administrator on behalf of the Company which may vary based on the Participant’s position with the Company. Payment of the aggregate exercise price and applicable withholding taxes shall be made in the manner, consistent with the Plan and these terms and conditions, designated by the stock administrator on behalf of the Company.
|
4.
|
Termination of Option; Forfeiture.
Notwithstanding the vesting and expiration dates set forth in the Notification, the Option will terminate upon or following the termination of the Participant’s employment with the Company and its Subsidiaries as described below. Except as otherwise provided in Section 4(d) and 5(a) below, upon the Participant’s termination of employment for any reason, the unvested portion of the Option will immediately terminate. For purposes of these terms and conditions, a Participant shall not be deemed to have terminated his or her employment with the Company and its Subsidiaries if he or she is then employed by the Company or another Subsidiary without a break in service.
|
(a)
|
Resignation by the Participant or Termination by the Company or a Subsidiary other than for Cause
: Except as otherwise provided in this Section 4 or Section 5(b) below, the vested portion of the Option will terminate at 12:01 a.m. on the 91st day following the Participant’s last day of employment (but not later than the Expiration Date), provided that if the Participant dies during such 90 day period, such portion of the Option will terminate no earlier than 12:01 a.m. on the first anniversary of the date of death (but not later than the Expiration Date) and
|
(b)
|
Retirement
: If a Participant’s employment terminates for any reason (other than for Cause, death or Disability) at a time when he or she is eligible for Retirement, then the vested portion of the Option will terminate upon the Expiration Date.
|
(c)
|
Termination due to Death
: If a Participant’s employment terminates on account of the Participant’s death, the vested portion of the Option will expire upon the Expiration Date. Following the Participant’s death, the right to exercise such vested portion will pass to the Participant’s Beneficiary.
|
(d)
|
Termination due to Disability
: If a Participant’s employment terminates on account of the Participant’s Disability, the unvested portion of the Option that would otherwise have become vested during the three years following Disability will continue to vest as scheduled (without regard to subsequent status changes). The vested portion of the Option, including the portion that becomes vested pursuant to the preceding sentence, will expire upon the Expiration Date.
|
(e)
|
Termination for Cause
: Notwithstanding the foregoing provisions of this Section 4, the entire Option, including the vested portion, will terminate immediately upon the Participant’s termination of employment for Cause. To the extent the Participant exercised any portion of the Option during the one year period immediately prior to the date of such termination of employment for Cause, the Company shall have the right to reclaim and receive from the Participant all Shares delivered to the Participant upon such exercise, or to the extent the Participant has transferred such Shares, the after-tax equivalent value thereof (as of the date the Shares were transferred by the Participant) in cash, and in each case upon receipt thereof, the Company shall return the exercise price paid by the Participant.
|
(f)
|
Proscribed Activity
: If, during the Proscribed Period but prior to a Change of Control, the Participant engages in a Proscribed Activity, then any portion of the Option still outstanding shall terminate and the Company shall have the right to reclaim and receive from the Participant all Shares delivered to the Participant upon the exercise of the Option during the one year period immediately prior to, or at any time following, the date of the Participant’s termination of employment, or to the extent the Participant has transferred such Shares, the after-tax equivalent value thereof (as of the date the Shares were transferred by the Participant) in cash, and in each case upon receipt thereof, the Company shall return the exercise price paid by the Participant.
|
5.
|
Change of Control.
|
(a)
|
Treatment of the Option
: In the event of a Change of Control, the Committee may take such actions with respect to the Option as it deems appropriate pursuant to the Plan; provided that if the Option continues in effect after a Change of Control and the Participant’s employment is terminated by the Company without Cause, the Participant terminates employment for Good Reason, or the Participant’s employment is terminated on account of death, Disability or Retirement, in each case, upon or within 24 months following the Change of Control, any unvested portion of the Option shall become fully vested upon such termination of employment.
|
(b)
|
Option Termination
: Notwithstanding anything contained herein to the contrary and except as otherwise determined by the Committee prior to a Change of Control in accordance with Section 7 or 8 of the Plan, in the event of a Change of Control, any portion of the Option which is vested as of the Change of Control or becomes vested upon or following the Change of Control (whether pursuant to this Section 5 or otherwise) shall remain outstanding until the Expiration Date, but subject to earlier termination under the circumstances described in Sections 4(e) and (f) above.
|
(c)
|
Termination of Employment Prior to a Change of Control
: For purposes of this Section 5, the term Option shall refer only to those Options that are outstanding at the time of the Change of Control and not to any unvested Options that have terminated pursuant to Section 4 above, provided that, if (i) the Participant’s employment was terminated by the Company other than for Cause or Disability during the 12 month period prior to the Change of Control, (ii) during such 12 month period, the Participant does not engage in a Proscribed Activity, and (iii) the Committee determines, in its sole and absolute discretion, that the decision related to such termination was made in contemplation of the Change of Control, within 30 days following the Change of Control, with respect to any portion of the Option which the Participant forfeited upon the Participant’s termination of employment, the Participant shall receive a lump sum cash payment per Share equal to the excess, if any, of the Fair Market Value of a Share on the date that the Change of Control occurs, over the exercise price per Share subject to the Option. In addition, in the event that a Participant’s employment terminates on account of Disability prior to a Change of Control, any portion of the Option which is unvested and outstanding as of the Change of Control and would otherwise vest during the three years following Disability in accordance with Section 4(d) above shall become fully vested upon the Change of Control.
|
6.
|
U.S. Federal, State and Local Income Withholding.
The Participant is solely responsible for the satisfaction of all taxes that may arise in connection with the Option, and the Option may not be exercised unless the Participant makes arrangements satisfactory to the Company to ensure that its withholding tax obligations will be satisfied. At the time of taxation, the Company shall have the right to deduct from other compensation or from amounts payable with respect to the Option, including by withholding Shares otherwise issuable upon the exercise of the Option, an amount equal to the federal (including FICA), state and local income and payroll taxes and other amounts as may be required by law to be withheld with respect to the Option.
Notwithstanding the foregoing, the Company may satisfy any tax obligations it may have in any other jurisdiction outside the U.S. in any manner it deems, in its sole and absolute discretion, to be necessary or appropriate.
|
7.
|
Definitions
.
|
(a)
|
“Proscribed Activity” means any of the following:
|
(i)
|
the Participant’s breach or violation of (A) any written agreement between the Participant and the Company or any of its Subsidiaries, including any agreement relating to nondisclosure, noncompetition, nonsolicitation and/or nondisparagement,
|
(ii)
|
the Participant’s direct or indirect unauthorized use or disclosure of confidential information or trade secrets of the Company or any Subsidiary, including, but not limited to, such matters as costs, profits, markets, sales, products, product lines, key personnel, pricing policies, operational methods, customers, customer requirements, suppliers, plans for future developments, and other business affairs and methods and other information not readily available to the public;
|
(iii)
|
the Participant’s direct or indirect engaging or becoming a partner, director, officer, principal, employee, consultant, investor, creditor or stockholder in/for any business, proprietorship, association, firm or corporation not owned or controlled by the Company or its Subsidiaries which is engaged or proposes to engage in a business competitive directly or indirectly with the business conducted by the Company or its Subsidiaries in any geographic area where such business of the Company or its Subsidiaries is conducted, provided that the Participant’s investment in 1% or less of the outstanding capital stock of any corporation whose stock is listed on a national securities exchange shall not be treated as a Proscribed Activity;
|
(iv)
|
the Participant’s direct or indirect, either on the Participant’s own account or for any person, firm or company, soliciting, interfering with or inducing, or attempting to induce, any employee of the Company or any of its Subsidiaries to leave his or her employment or to breach his or her employment agreement;
|
(v)
|
the Participant’s direct or indirect taking away, interfering with relations with, diverting or attempting to divert from the Company or any Subsidiary any business with any customer of the Company or any Subsidiary, including (A) any customer that has been solicited or serviced by the Company within one year prior to the date of termination of the Participant’s employment with the Company and (B) any customer with which the Participant has had contact or association, or which was under the supervision of the Participant, or the identity of which was learned by the Participant as a result of the Participant’s employment with the Company;
|
(vi)
|
following the Participant’s termination of employment, the Participant’s making of any remarks disparaging the conduct or character of the Company or any of its Subsidiaries, or their current or former agents, employees, officers, directors, successors or assigns; or
|
(vii)
|
the Participant’s failure to cooperate with the Company or any Subsidiary, for no additional compensation (other than reimbursement of expenses), in any litigation or administrative proceedings involving any matters with which the Participant was involved during the Participant’s employment with the Company or any Subsidiary.
|
(b)
|
“Proscribed Period” means the period beginning on the date of termination of the Participant’s employment and ending on the later of (A) the one year anniversary of such termination date or (B) if the Participant is entitled to severance benefits in the form of salary continuation, the date on which salary continuation is no longer payable to the Participant.
|
(c)
|
“Retirement” means termination of employment for any reason (other than for Cause or by reason of death or Disability) upon or following attainment of age 55 and completion of 10 years of service, or upon or following attainment of age 65 without regard to years of service; provided that, Retirement shall not be deemed to occur unless such termination of service constitutes a separation from service, as defined by Section 409A of the Code.
|
8
.
|
Company Policies.
The Option and any Shares or cash delivered pursuant to the Option shall be subject to all applicable clawback or recoupment policies, share trading policies and other policies that may be implemented by the Company’s Board of Directors from time to time.
|
9.
|
Other Benefits
.
No amount accrued or paid under this Award shall be deemed compensation for purposes of computing a Participant’s benefits under any retirement plan of the Company or its Subsidiaries, nor affect any benefits under any other benefit plan now or subsequently in effect under which the availability or amount of benefits is related to the Participant’s level of compensation.
|
1.
|
General
. Each PBRSR represents the right to receive one Share on a future date based upon the attainment of certain financial performance goals and continued employment, on the terms and conditions set forth herein, in the Notification and in the Plan, the applicable terms, conditions and other provisions of which are incorporated by reference herein (collectively, the “Award Documents”). A copy of the Plan and the documents that constitute the “Prospectus” for the Plan under the Securities Act of 1933 have been made available to the Participant prior to or along with delivery of the Notification. In the event there is an express conflict between the provisions of the Plan and those set forth in any other Award Document, the terms and conditions of the Plan shall govern. It is intended that the PBRSRs qualify as “performance-based compensation” for purposes of Section 162(m) of the Code.
|
2.
|
Financial Performance Goals
.
|
Company’s ROC
|
ROC Accrual Percentage
|
Maximum ROC
|
125%
|
Target ROC
|
100%
|
Threshold ROC
|
25%
|
Below Threshold ROC
|
0%
|
3.
|
Delivery of Shares
. Provided that the Participant remained continuously employed through the end of the Three-Year Performance Period (but subject to Sections 4 and 5 below), the number of Shares equal to the number of Accrued PBRSRs, net of the number of Shares necessary to satisfy applicable withholding taxes, will be transferred to an account held in the name of the Participant by the Company’s independent stock plan administrator and the Participant will receive notice of such transfer together with all relevant account details. Such transfer will occur as soon as practicable after the Committee has determined the Company’s ROC Accrual Percentage for the Third ROC Performance Period and the Company’s TSR Accrual Percentage for the Third TSR Performance Period, provided that in no event shall the transfer be made after March 15, 2019.
|
4.
|
Termination of the PBRSRs; Forfeiture.
The PBRSRs will be cancelled upon the termination of the Participant’s employment with the Company and its Subsidiaries as described below.
|
(a)
|
Resignation by the Participant or Termination by the Company or a Subsidiary
: Except as provided in subsection (b) or Section 5 below, upon any termination of a Participant’s employment with the Company and its Subsidiaries prior to the end of the Three-Year Performance Period, all outstanding PBRSRs, whether or not accrued, will be forfeited and the Participant will not have any right to delivery of Shares. In addition, even if a Participant remains employed through the end of the Three-Year Performance Period, if the Participant’s employment is subsequently terminated by the Company or a Subsidiary for Cause, the right to any undelivered Shares shall be forfeited, and the Company shall have the right to reclaim and receive from the Participant any Shares delivered to the Participant pursuant to Section 3 within the one year period before the date of the Participant’s termination of employment, or to the extent the Participant has transferred such Shares, the equivalent after-tax value thereof (as of the date the Shares were transferred by the Participant) in cash.
|
(b)
|
Termination by reason of Death, Disability or Retirement
: Except as otherwise provided in Section 5 below, if a Participant’s employment terminates due to death, Disability or Retirement prior to the end of the Three-Year Performance Period, the Participant (or his or her Beneficiary, in the event of death) will be entitled to receive a pro-rata number of Shares that would have been delivered pursuant to Section 3, had the Participant remained employed through the end of the Three-Year Performance Period, based on the number of days during the Three-Year Performance Period that the Participant is considered to be an active employee as determined by the Company, payable at the time and manner specified in Section 3 above.
|
(c)
|
Proscribed Activity
: If, during the Proscribed Period but prior to a Change of Control, the Participant engages in a Proscribed Activity, then the Company shall have the right to reclaim and receive from the Participant all Shares delivered to the Participant pursuant to Section 3 during the one year period immediately prior to, or at any time following, the date of the Participant’s termination of employment, or to the extent the Participant has transferred such Shares, the after-tax equivalent value thereof (as of the date the Shares were transferred by the Participant) in cash.
|
5.
|
Change of Control
.
Notwithstanding anything contained herein to the contrary, in the event of a Change of Control during the Three-Year Performance Period, unless otherwise determined by the Committee prior to the Change of Control, each Participant shall be entitled to delivery of a number of Shares equal
|
(a)
|
Calculation of the COC Share Amount
. The COC Share Amount shall be equal to the sum of (i), (ii), (iii) and (iv) below:
|
i.
|
with respect to each completed ROC Performance Period and TSR Performance Period at the time of the Change of Control, the sum of the ROC Accrued PBRSRs and the TSR Accrued PBRSRs for the applicable Performance Periods;
|
ii.
|
with respect to the ROC Performance Period in which the Change of Control occurs, the greater of the ROC Accrued PBRSRs for such ROC Performance Period (measured as though the last day of the applicable ROC Performance Period was the date immediately preceding the date of the Change of Control) or one-third of the ROC PBRSR Award;
|
iii.
|
with respect to each TSR Performance Period in which the Change of Control occurs, the greater of the TSR Accrued PBRSRs for such TSR Performance Period (measured as though the last day of the applicable TSR Performance Period was the date immediately preceding the date of the Change of Control) or one-third of the TSR PBRSR Award; and
|
iv.
|
with respect to each ROC Performance Period which has not commenced as of the date of the Change of Control, one-third of the ROC PBRSR Award.
|
(b)
|
Form of Payment
. The Committee may determine that the COC Shares shall be (i) converted to and payable in units with respect to shares or other equity interests of the acquiring company or its parent or (ii) payable in cash based on the Fair Market Value of the COC Shares as of the Change of Control.
|
(c)
|
Termination without Cause or for Good Reason
. If the Participant’s employment is terminated by the Company without Cause or the Participant terminates employment for Good Reason, prior to the end of the Three-Year Performance Period and upon or within 24 months following a Change of Control, the COC Shares shall be delivered in a lump sum within 60 days following the Participant’s employment termination date, subject to Section 9.17 of the Plan; provided that such Change of Control constitutes a change “in ownership” or “effective control” or a change in the “ownership of a substantial portion of the assets” of the Company under Section 409A of the Code and the rulings and regulations issued thereunder (any such transaction, a “409A Compliant COC”). In the event that such Change of Control does not constitute a 409A Compliant COC (any such transaction, a “Non-409A Compliant COC”), the COC Shares will be delivered to the Participant at the time and manner specified in Section 3 above.
|
(d)
|
Termination due to Death, Disability or Retirement
. If a Participant’s employment terminates due to death, Disability or Retirement prior to the end of the Three-Year Performance Period and upon or within 24 months following a Change of Control, the Participant (or his or her Beneficiary, in the event of death) will be entitled to receive the COC Shares, which shall be delivered in a lump sum within 60 days following the Participant’s employment termination date, subject to Section 9.17 of the Plan; provided that, the COC Shares will be delivered to the Participant at the time and manner specified in Section 3 above if the Change of Control is a Non-409A Compliant COC. If such termination occurs more than 24 months following a Change of Control, the COC Payment Amount will be pro-rated, based on the number of days during the Three-Year Performance Period that the Participant is considered to be an
|
(e)
|
Termination Prior to a Change of Control
. To the extent (i) a Participant’s employment was terminated by the Company other than for Cause or Disability within the 12 months prior to the date on which the Change of Control occurred, (ii) during such 12 month period the Participant did not engage in a Proscribed Activity, and (iii) the Committee determines, in its sole and absolute discretion, that the decision related to such termination was made in contemplation of the Change of Control, then upon the Change of Control, the Participant will become entitled to a cash payment equal to the product of: the Fair Market Value of a Share on the date of the Change of Control and the COC Share Amount. In the event of a 409A Compliant COC, such cash payment will be made in a lump sum within 60 days following the date on which the Change of Control occurs. In the event of a Non-409A Compliant COC, the cash payment will be paid to the Participant at the time and manner specified in Section 3 above.
|
6.
|
Rights as a Shareholder; Dividend Equivalent Rights.
The Participant will not have the rights of a shareholder of the Company with respect to Shares subject to the PBRSRs until such Shares are actually delivered to the Participant. At the time Shares are delivered to the Participant pursuant to Section 3 or Section 5, as applicable, the Company will make a cash payment equal to the product of (i) the number of Accrued PBRSRs or the COC Share Amount, if applicable, and (ii) the aggregate dividends paid on a Share during the Three-Year Performance Period.
|
7.
|
U.S. Federal, State and Local Income Taxes.
The Participant is solely responsible for the satisfaction of all taxes that may arise in connection with the PBRSRs. At the time of taxation, the Company shall have the right to deduct from other compensation or from amounts payable with respect to the PBRSRs, including by withholding Shares otherwise issuable upon settlement of the PBRSRs (as determined by the Company in its sole discretion), an amount equal to the federal (including FICA), state and local income and payroll taxes and other amounts as may be required by law to be withheld with respect to the PBRSRs.
The Company intends to satisfy this withholding obligation by reducing the number of Shares and/or cash to be delivered to the Participant under this Agreement in an amount sufficient to satisfy the withholding obligations due (based on the Fair Market Value of the Shares for the related PBRSRs). Notwithstanding the foregoing, the Company may satisfy any tax obligations it may have in any other jurisdiction outside of the U.S. in any manner it deems, in its sole and absolute discretion, to be necessary or appropriate.
|
8.
|
Section 409A.
The PBRSRs are intended to comply with Section 409A of the Code or an exemption, and delivery of Shares and other payments pursuant to the PBRSRs may only be made upon an event and in a manner permitted by Section 409A, to the extent applicable. The PBRSRs shall be administered consistent with Section 9.17 of the Plan.
|
9.
|
Statute of Limitations and Conflicts of Laws.
All rights of action by, or on behalf of the Company or by any shareholder against any past, present, or future member of the Board of Directors, officer, or employee of the Company arising out of or in connection with the PBRSRs or the Award Documents, must be brought within three years from the date of the act or omission in respect of which such right of action arises. The PBRSRs and the Award Documents shall be governed by the laws of the State of Florida, without giving effect to principles of conflict of laws, and construed accordingly.
|
10.
|
No Employment Right
.
Neither the grant of the PBRSRs nor any action taken hereunder shall be construed as giving any employee or any Participant any right to be retained in the employ of the Company. The Company is under no obligation to grant PBRSRs hereunder. Nothing contained in the Award Documents shall limit or affect in any manner or degree the normal and usual powers of management, exercised by the officers and the Board of Directors or committees thereof, to change the duties or the character of employment of any employee of the Company or to remove the individual from the employment of the Company at any time, all of which rights and powers are expressly reserved.
|
11.
|
No Assignment
.
A Participant’s rights and interest under the PBRSRs may not be assigned or transferred, except as otherwise provided herein, and any attempted assignment or transfer shall be null and void and shall extinguish, in the Company’s sole discretion, the Company’s obligation under the PBRSRs or the Award Documents.
|
12.
|
Unfunded Plan
.
Any Shares or other amounts owed under the PBRSRs shall be unfunded. The Company shall not be required to establish any special or separate fund, or to make any other segregation of assets, to assure delivery or payment of any earned amounts.
|
13.
|
Recoupment Policy
.
Any amounts paid under the PBRSRs are considered “incentive compensation” under the Company’s Recoupment Policy, in effect from time to time. The PBRSRs and any Shares or cash paid pursuant to the PBRSRs shall be subject to all applicable clawback or recoupment policies, share trading policies and other policies that may be implemented by the Company’s Board of Directors from time to time.
|
14.
|
Definitions
.
|
(a)
|
“Accrued PBRSRs” means the sum of (i) the ROC Accrued PBRSRs for all ROC Performance Periods and (ii) the TSR Accrued PBRSRs for all TSR Performance Periods.
|
(b)
|
“Company TSR” means the Company’s Total Shareholder Return for a TSR Performance Period.
|
(c)
|
“Company’s Return on Capital” or “Company ROC” means the Company’s tax adjusted earnings from continuing operations, excluding interest, as a percentage of the sum of the Company’s average (i) debt, (ii) off-balance sheet debt and (iii) shareholders’ equity.
|
(d)
|
“Comparator Group” means the companies listed on
Exhibit A
hereto.
|
(e)
|
“First ROC Performance Period” means the period from January 1, 2016 through December 31, 2016.
|
(f)
|
“First TSR Performance Period” means the period from January 1, 2016 through December 31, 2016.
|
(g)
|
“Performance Period” means an ROC Performance Period or a TSR Performance Period, as applicable.
|
(h)
|
“Proscribed Activity” means any of the following:
|
(i)
|
the Participant’s breach of any written agreement between the Participant and the Company or any of its Subsidiaries, including any agreement relating to nondisclosure, noncompetition, nonsolicitation and/or nondisparagement, to the extent such agreements are enforceable under applicable law;
|
(ii)
|
the Participant’s direct or indirect unauthorized use or disclosure of confidential information or trade secrets of the Company or any Subsidiary, including, but not limited to, such matters as costs, profits, markets, sales, products, product lines, key personnel, pricing policies, operational methods, customers, customer requirements, suppliers, plans for future developments, and other business affairs and methods and other information not readily available to the public;
|
(iii)
|
the Participant’s direct or indirect engaging or becoming a partner, director, officer, principal, employee, consultant, investor, creditor or stockholder in/for any business,
|
(iv)
|
the Participant’s direct or indirect, either on the Participant’s own account or for any person, firm or company, soliciting, interfering with or inducing, or attempting to induce, any employee of the Company or any of its Subsidiaries to leave his or her employment or to breach his or her employment agreement;
|
(v)
|
the Participant’s direct or indirect taking away, interfering with relations with, diverting or attempting to divert from the Company or any Subsidiary any business with any customer of the Company or any Subsidiary, including (A) any customer that has been solicited or serviced by the Company within one year prior to the date of termination of Participant’s employment with the Company and (B) any customer with which the Participant has had contact or association, or which was under the supervision of Participant, or the identity of which was learned by the Participant as a result of Participant’s employment with the Company;
|
(vi)
|
following the Participant’s termination of employment, the Participant’s making of any remarks disparaging the conduct or character of the Company or any of its Subsidiaries, or their current or former agents, employees, officers, directors, successors or assigns; or
|
(vii)
|
the Participant’s failure to cooperate with the Company or any Subsidiary, for no additional compensation (other than reimbursement of expenses), in any litigation or administrative proceedings involving any matters with which the Participant was involved during the Participant’s employment with the Company or any Subsidiary.
|
(i)
|
“Proscribed Period” means the period beginning on the date of termination of Participant’s
|
(j)
|
“Retirement” means termination of employment for any reason (other than for Cause or by reason of death or Disability) upon or following attainment of age 55 and completion of 10 years of service, or upon or following attainment of age 65 without regard to years of service; provided that, Retirement shall not be deemed to occur unless such termination of service constitutes a separation from service, as defined by Section 409A of the Code.
|
(k)
|
“ROC Accrual Percentage” means the percentage of the PBRSRs that accrues at the end of each ROC Performance Period pursuant to Section 2 based on the Company's ROC.
|
(l)
|
“ROC Accrued PBRSRs” means, for each ROC Performance Period, the ROC Accrual Percentage for each ROC Performance Period times one-third of the ROC PBRSR Award.
|
(m)
|
“ROC PBRSR Award” means fifty percent (50%) of the number of PBRSRs awarded as specified in the Notification.
|
(n)
|
“ROC Performance Period” means the First ROC Performance Period, the Second ROC Performance Period, or the Third ROC Performance Period, as applicable.
|
(o)
|
“Rolling Total Shareholder Return” means, for each of the ten (10) consecutive trading days immediately preceding the first day of the applicable TSR Performance Period, the percentage change from (i) the closing stock price on such trading date to (ii) the closing stock price on the corresponding trading date in the last ten (10) consecutive trading days of the applicable TSR Performance Period, assuming reinvestment of dividends on the ex-dividend date.
|
(p)
|
“Second ROC Performance Period” means the period from January 1, 2017 through December 31, 2017.
|
(q)
|
“Second TSR Performance Period” means the period from January 1, 2016 through December 31, 2017.
|
(r)
|
“Third ROC Performance Period” means the period from January 1, 2018 through December 31, 2018.
|
(s)
|
“Third TSR Performance Period” means the period from January 1, 2016 through December 31, 2018.
|
(t)
|
“Three-Year Performance Period” means the period from January 1, 2016 through December 31, 2018.
|
(u)
|
“Total Shareholder Return” means, for each TSR Performance Period, the sum of the ten (10) Rolling Total Shareholder Return calculations for the applicable TSR Performance Period, divided by ten (10).
|
(v)
|
“TSR Accrual Percentage” means the percentage of the PBRSRs that accrues at the end of each TSR Performance Period pursuant to Section 2 based on the Company’s TSR Rank.
|
(w)
|
“TSR Accrued PBRSRs” means, for each TSR Performance Period, the TSR Accrual Percentage for each TSR Performance Period times one-third of the TSR PBRSR Award.
|
(x)
|
“TSR PBRSR Award” means fifty percent (50%) of the number of PBRSRs awarded as specified in the Notification.
|
(y)
|
“TSR Performance Period” means the First TSR Performance Period, the Second TSR Performance Period, or the Third TSR Performance Period, as applicable.
|
13
.
|
Other Benefits
.
No amount accrued or paid under the PBRSRs shall be deemed compensation for purposes of computing a Participant’s benefits under any retirement plan of the Company or its Subsidiaries, nor affect any benefits under any other benefit plan now or subsequently in effect under which the availability or amount of benefits is related to the Participant’s level of compensation.
|
ARKANSAS BEST CORP
|
AVIS BUDGET GROUP INC
|
C. H. ROBINSON WORLDWIDE INC
|
CELADON GROUP INC
|
CSX CORPORATION
|
EXPEDITORS INTERNATIONAL OF WASHINGTON, INC
|
FEDEX CORPORATION
|
FORWARD AIR CORP
|
GATX CORPORATION
|
HERTZ GLOBAL HOLDINGS INC
|
HUB GROUP INC
|
J.B. HUNT TRANSPORT SERVICES INC
|
KNIGHT TRANSPORTATION INC
|
LANDSTAR SYSTEM INC
|
NAVISTAR INTERNATIONAL CORP
|
OLD DOMINION FREIGHT LINE INC.
|
PACCAR INC
|
RUSH ENTERPRISES INC
|
SAIA INC
|
SWIFT TRANSPORTATION CO
|
TAL INTERNATIONAL GROUP INC
|
TRINITY INDUSTRIES
|
U-HAUL
|
UNITED PARCEL SERVICE INC
|
UNIVERSAL TRUCKLOAD SERVICES INC
|
WERNER ENTERPRISES INC
|
1.
|
General
. Each PBCA represents the right to receive a cash payment on a future date based upon the attainment of certain financial performance goals and continued employment, on the terms and conditions set forth herein, in the Notification and in the Plan, the applicable terms, conditions and other provisions of which are incorporated by reference herein (collectively, the “Award Documents”). A copy of the Plan and the documents that constitute the “Prospectus” for the Plan under the Securities Act of 1933 have been made available to the Participant prior to or along with delivery of the Notification. In the event there is an express conflict between the provisions of the Plan and those set forth in any other Award Document, the terms and conditions of the Plan shall govern. It is intended that the PBCAs qualify as “performance-based compensation” for purposes of Section 162(m) of the Code.
|
2.
|
Financial Performance Goals
.
|
Company’s ROC
|
ROC Accrual Percentage
|
Maximum ROC
|
125%
|
Target ROC
|
100%
|
Threshold ROC
|
25%
|
Below Threshold ROC
|
0%
|
3.
|
Payment of Award
. Provided that the Participant remained continuously employed through the end of the Three-Year Performance Period (but subject to Sections 4 and 5 below), a cash payment equal to the Accrued PBCA, less applicable withholding taxes, will be made to the Participant. Except as otherwise provided in Section 5 below, such payment will be made as soon as practicable after the Committee has determined the Company’s ROC Accrual Percentage for the Third ROC Performance Period and the Company’s TSR Accrual Percentage for the Third TSR Performance Period, provided that in no event shall the payment be made after March 15, 2019.
|
4.
|
Termination of the PBCA; Forfeiture.
The PBCA will be cancelled upon the termination of the Participant’s employment with the Company and its Subsidiaries as described below.
|
(a)
|
Resignation by the Participant or Termination by the Company or a Subsidiary
: Except as provided in subsection (b) or Section 5 below, upon any termination of a Participant’s employment with the Company and its Subsidiaries prior to the end of the Three-Year Performance Period, the outstanding PBCA, whether or not accrued, will be forfeited and the Participant will not have any right to any payment in respect thereof. In addition, even if a Participant remains employed through the end of the Three-Year Performance Period, if the Participant’s employment is subsequently terminated by the Company or a Subsidiary for Cause, the right to any payment shall be forfeited, and the Company shall have the right to reclaim and receive from the Participant any payment in respect of the PBCA made to the Participant pursuant to Section 3 within the one year period before the date of the Participant’s termination of employment.
|
(b)
|
Termination by reason of Death, Disability or Retirement
: Except as otherwise provided in Section 5 below, if a Participant’s employment terminates due to death, Disability or Retirement prior to the end of the Three-Year Performance Period, the Participant (or his or her Beneficiary, in the event of death) will be entitled to receive a pro-rata portion of the cash payment that would have been paid pursuant to Section 3, had the Participant remained employed through the end of the Three-Year Performance Period, based on the number of days during the Three-Year Performance Period that the Participant is considered to be an active employee as determined by the Company, payable at the time and manner specified in Section 3 above.
|
(c)
|
Proscribed Activity
: If, during the Proscribed Period but prior to a Change of Control, the Participant engages in a Proscribed Activity, then the Company shall have the right to reclaim and receive from the Participant all cash paid to the Participant pursuant to Section 3 during the one year period immediately prior to, or at any time following, the date of the Participant’s termination of employment.
|
5.
|
Change of Control
.
Notwithstanding anything contained herein to the contrary, in the event of a Change of Control during the Three-Year Performance Period, unless otherwise determined by the Committee prior to the Change of Control, each Participant shall be entitled to receive a cash payment equal to the COC Payment Amount (as defined below); provided that, except as set forth in subsections (b) and (c) below, the Participant remains actively employed through the last day of the Three-Year Performance Period. Except as set forth in subsections (b) and (c) below, the COC Payment Amount shall be paid at the time and manner specified in Section 3 above.
|
(a)
|
Calculation of the COC Payment Amount
. The COC Payment Amount shall be equal to the sum of (i), (ii), (iii) and (iv) below:
|
i.
|
with respect to each completed ROC Performance Period and TSR Performance
|
ii.
|
with respect to the ROC Performance Period in which the Change of Control occurs, the greater of the ROC Accrued PBCA for such ROC Performance Period (measured as though the last day of the applicable ROC Performance Period was the date immediately preceding the date of the Change of Control) or one-third of the ROC PBCA Award;
|
iii.
|
with respect to each TSR Performance Period in which the Change of Control occurs, the greater of the TSR Accrued PBCA for such TSR Performance Period (measured as though the last day of the applicable TSR Performance Periods was the date immediately preceding the date of the Change of Control) or one-third of the TSR PBCA Award; and
|
iv.
|
with respect to each ROC Performance Period which has not commenced as of the date of the Change of Control, one-third of the ROC PBCA Award.
|
(b)
|
Termination without Cause or for Good Reason
. If the Participant’s employment is terminated by the Company without Cause or the Participant terminates employment for Good Reason, prior to the end of the Three-Year Performance Period and upon or within 24 months following a Change of Control, the COC Payment Amount shall be paid in a lump sum within 60 days following the Participant’s employment termination date, subject to Section 9.17 of the Plan; provided that such Change of Control constitutes a change “in ownership” or “effective control” or a change in the “ownership of a substantial portion of the assets” of the Company under Section 409A of the Code and the rulings and regulations issued thereunder (any such transaction, a “409A Compliant COC”). In the event that such Change of Control does not constitute a 409A Compliant COC (any such transaction, a “Non-409A Compliant COC”), the COC Payment Amount will be paid to the Participant at the time and manner specified in Section 3 above.
|
(c)
|
Termination due to Death, Disability or Retirement
. If a Participant’s employment terminates due to death, Disability or Retirement prior to the end of the Three-Year Performance Period and upon or within 24 months following a Change of Control, the Participant (or his or her Beneficiary, in the event of death) will be entitled to receive the COC Payment Amount, which shall be paid in a lump sum within 60 days following the Participant’s employment termination date, subject to Section 9.17 of the Plan; provided that, the COC Payment Amount will be paid to the Participant at the time and manner specified in Section 3 above if the Change of Control is a Non-409A Compliant COC. If such termination occurs more than 24 months following a Change of Control, the COC Payment Amount will be pro-rated, based on the number of days during the Three-Year Performance Period that the Participant is considered to be an active employee, as determined by the Company, and will be paid at the time and manner specified in Section 3 above.
|
(d)
|
Termination Prior to a Change of Control
. To the extent (i) a Participant’s employment was terminated by the Company other than for Cause or Disability within the 12 months prior to the date on which the Change of Control occurred, (ii) during such 12 month period the Participant did not engage in a Proscribed Activity, and (iii) the Committee determines, in its sole and absolute discretion, that the decision related to such termination was made in contemplation of the Change of Control, then upon the Change of Control, the Participant will become entitled to the COC Payment Amount. In the event of a 409A Compliant COC, such cash payment will be made in a lump sum within 60 days following the date on which the Change of Control occurs. In the event of a Non-409A Compliant COC, the cash payment will be paid to the Participant at the time and manner specified in Section 3 above.
|
6.
|
U.S. Federal, State and Local Income Taxes.
The Participant is solely responsible for the satisfaction of all taxes that may arise in connection with the PBCA. At the time of taxation, the Company shall have the right to deduct from other compensation or from amounts payable with respect to the PBCA an amount equal to the federal (including FICA), state, and local income and payroll taxes and other amounts as may be required by law to be withheld with respect to the PBCA. Notwithstanding the foregoing, the Company may satisfy any tax obligations it may have in any other jurisdiction outside of the U.S. in any manner it deems, in its sole and absolute discretion, to be necessary or appropriate.
|
7.
|
Section 409A.
The PBCA is intended to comply with Section 409A of the Code or an exemption, and payments may only be made upon an event and in a manner permitted by Section 409A, to the extent applicable. The PBCA shall be administered consistent with Section 9.17 of the Plan.
|
8.
|
Statute of Limitations and Conflicts of Laws.
All rights of action by, or on behalf of the Company or by any shareholder against any past, present, or future member of the Board of Directors, officer, or employee of the Company arising out of or in connection with the PBCA or the Award Documents, must be brought within three years from the date of the act or omission in respect of which such right of action arises. The PBCA and the Award Documents shall be governed by the laws of the State of Florida, without giving effect to principles of conflict of laws, and construed accordingly.
|
9.
|
No Employment Right
.
Neither the grant of the PBCA nor any action taken hereunder shall be construed as giving any employee or any Participant any right to be retained in the employ of the Company. The Company is under no obligation to grant the PBCA hereunder. Nothing contained in the Award Documents shall limit or affect in any manner or degree the normal and usual powers of management, exercised by the officers and the Board of Directors or committees thereof, to change the duties or the character of employment of any employee of the Company or to remove the individual from the employment of the Company at any time, all of which rights and powers are expressly reserved.
|
10.
|
No Assignment
.
A Participant’s rights and interest under the PBCA may not be assigned or transferred, except as otherwise provided herein, and any attempted assignment or transfer shall be null and void and shall extinguish, in the Company’s sole discretion, the Company’s obligation under the PBCA or the Award Documents.
|
11.
|
Unfunded Plan
.
Any amounts owed under the PBCA shall be unfunded. The Company shall not be required to establish any special or separate fund, or to make any other segregation of assets, to assure payment of any earned amounts.
|
12.
|
Recoupment Policy
.
Any amounts paid under the PBCA are considered “incentive compensation” under the Company’s Recoupment Policy, in effect from time to time. The PBCA and any amounts paid pursuant to the PBCA shall be subject to all applicable clawback or recoupment policies, share trading policies and other policies that may be implemented by the Company’s Board of Directors from time to time.
|
13.
|
Definitions
.
|
(a)
|
“Accrued PBCA” means the sum of (i) the ROC Accrued PBCA for all ROC Performance Periods and (ii) the TSR Accrued PBCA for all TSR Performance Periods.
|
(b)
|
“Company TSR” means the Company’s Total Shareholder Return for a TSR Performance Period.
|
(c)
|
“Company’s Return on Capital” or “Company ROC” means the Company’s tax adjusted earnings from continuing operations, excluding interest, as a percentage of the sum of the Company’s average (i) debt, (ii) off-balance sheet debt and (iii) shareholders’ equity.
|
(d)
|
“Comparator Group” means the companies listed on
Exhibit A
hereto.
|
(e)
|
“First ROC Performance Period” means the period from January 1, 2016 through December 31, 2016.
|
(f)
|
“First TSR Performance Period” means the period from January 1, 2016 through December 31, 2016.
|
(g)
|
“Performance Period” means an ROC Performance Period or a TSR Performance Period, as applicable.
|
(h)
|
“Proscribed Activity” means any of the following:
|
(i)
|
the Participant’s breach of any written agreement between the Participant and the Company or any of its Subsidiaries, including any agreement relating to nondisclosure, noncompetition, nonsolicitation and/or nondisparagement, to the extent such agreements are enforceable under applicable law;
|
(ii)
|
the Participant’s direct or indirect unauthorized use or disclosure of confidential information or trade secrets of the Company or any Subsidiary, including, but not limited to, such matters as costs, profits, markets, sales, products, product lines, key personnel, pricing policies, operational methods, customers, customer requirements, suppliers, plans for future developments, and other business affairs and methods and other information not readily available to the public;
|
(iii)
|
the Participant’s direct or indirect engaging or becoming a partner, director, officer, principal, employee, consultant, investor, creditor or stockholder in/for any business, proprietorship, association, firm or corporation not owned or controlled by the Company or its Subsidiaries which is engaged or proposes to engage in a business competitive directly or indirectly with the business conducted by the Company or its Subsidiaries in any geographic area where such business of the Company or its Subsidiaries is conducted, provided that the Participant’s investment in 1% or less of the outstanding capital stock of any corporation whose stock is listed on a national securities exchange shall not be treated as a Proscribed Activity;
|
(iv)
|
the Participant’s direct or indirect, either on the Participant’s own account or for any person, firm or company, soliciting, interfering with or inducing, or attempting to induce, any employee of the Company or any of its Subsidiaries to leave his or her employment or to breach his or her employment agreement;
|
(v)
|
the Participant’s direct or indirect taking away, interfering with relations with, diverting or attempting to divert from the Company or any Subsidiary any business with any customer of the Company or any Subsidiary, including (A) any customer that has been solicited or serviced by the Company within one year prior to the date of termination of Participant’s employment with the Company and (B) any customer with which the Participant has had contact or association, or which was under the supervision of Participant, or the identity of which was learned by the Participant as a result of Participant’s employment with the Company;
|
(vi)
|
following the Participant’s termination of employment, the Participant’s making of any remarks disparaging the conduct or character of the Company or any of its Subsidiaries, or their current or former agents, employees, officers, directors, successors or assigns; or
|
(vii)
|
the Participant’s failure to cooperate with the Company or any Subsidiary, for no additional compensation (other than reimbursement of expenses), in any litigation or administrative proceedings involving any matters with which the Participant was involved during the Participant’s employment with the Company or any Subsidiary.
|
(i)
|
“Proscribed Period” means the period beginning on the date of termination of Participant’s employment and ending on the later of (i) the one year anniversary of such termination date or (ii) if the Participant is entitled to severance benefits in the form of salary continuation, the date on which salary continuation is no longer payable to the Participant.
|
(j)
|
“Retirement” means termination of employment for any reason (other than for Cause or by reason of death or Disability) upon or following attainment of age 55 and completion of 10 years of service, or upon or following attainment of age 65 without regard to years of service; provided that, Retirement shall not be deemed to occur unless such termination of service constitutes a separation from service, as defined by Section 409A of the Code.
|
(k)
|
“ROC Accrual Percentage” means the percentage of the PBCA that accrues at the end of each ROC Performance Period pursuant to Section 2 based on the Company's ROC.
|
(l)
|
“ROC Accrued PBCA” means, for each ROC Performance Period, the ROC Accrual Percentage for each ROC Performance Period times one-third of the ROC PBCA Award.
|
(m)
|
“ROC PBCA Award” means fifty percent (50%) of the dollar amount specified in the Notification.
|
(n)
|
“ROC Performance Period” means the First ROC Performance Period, the Second ROC Performance Period, or the Third ROC Performance Period, as applicable.
|
(o)
|
“Rolling Total Shareholder Return” means, for each of the ten (10) consecutive trading days immediately preceding the first day of the applicable TSR Performance Period, the percentage change from (i) the closing stock price on such trading date to (ii) the closing stock price on the corresponding trading date in the last ten (10) consecutive trading days of the applicable TSR Performance Period, assuming reinvestment of dividends on the ex-dividend date.
|
(p)
|
“Second ROC Performance Period” means the period from January 1, 2017 through December 31, 2017.
|
(q)
|
“Second TSR Performance Period” means the period from January 1, 2016 through December 31, 2017.
|
(r)
|
“Third ROC Performance Period” means the period from January 1, 2018 through December 31, 2018.
|
(s)
|
“Third TSR Performance Period” means the period from January 1, 2016 through December 31, 2018.
|
(t)
|
“Three-Year Performance Period” means the period from January 1, 2016 through December 31, 2018.
|
(u)
|
“Total Shareholder Return” means, for each TSR Performance Period, the sum of the ten (10) Rolling Total Shareholder Return calculations for the applicable TSR Performance Period, divided by ten (10).
|
(v)
|
“TSR Accrual Percentage” means the percentage of the PBCA that accrues at the end of each TSR Performance Period pursuant to Section 2 based on the Company’s TSR Rank.
|
(w)
|
“TSR Accrued PBCA” means, for each TSR Performance Period, the TSR Accrual Percentage for each TSR Performance Period times one-third of the TSR PBCA Award.
|
(x)
|
“TSR PBCA Award” means fifty percent (50%) of the dollar amount specified in the Notification.
|
(y)
|
“TSR Performance Period” means the First TSR Performance Period, the Second TSR Performance Period, or the Third TSR Performance Period, as applicable.
|
13
.
|
Other Benefits
.
No amount accrued or paid under the PBCA shall be deemed compensation for purposes of computing a Participant’s benefits under any retirement plan of the Company or its Subsidiaries, nor affect any benefits under any other benefit plan now or subsequently in effect under which the availability or amount of benefits is related to the Participant’s level of compensation.
|
ARKANSAS BEST CORP
|
AVIS BUDGET GROUP INC
|
C. H. ROBINSON WORLDWIDE INC
|
CELADON GROUP INC
|
CSX CORPORATION
|
EXPEDITORS INTERNATIONAL OF WASHINGTON, INC
|
FEDEX CORPORATION
|
FORWARD AIR CORP
|
GATX CORPORATION
|
HERTZ GLOBAL HOLDINGS INC
|
HUB GROUP INC
|
J.B. HUNT TRANSPORT SERVICES INC
|
KNIGHT TRANSPORTATION INC
|
LANDSTAR SYSTEM INC
|
NAVISTAR INTERNATIONAL CORP
|
OLD DOMINION FREIGHT LINE INC.
|
PACCAR INC.
|
RUSH ENTERPRISES INC.
|
SAIA INC
|
SWIFT TRANSPORTATION CO
|
TAL INTERNATIONAL GROUP INC
|
TRINITY INDUSTRIES
|
U-HAUL
|
UNITED PARCEL SERVICE INC
|
UNIVERSAL TRUCKLOAD SERVICES INC
|
WERNER ENTERPRISES INC
|
1.
|
General
.
Each RSR represents the right to receive one Share on a future date, on the terms and conditions set forth herein, in the Notification and the Plan, the applicable terms, conditions and other provisions of which are incorporated by reference herein (collectively, the “Award Documents”). A copy of the Plan and the documents that constitute the “Prospectus” for the Plan under the Securities Act of 1933 have been made available to the Participant prior to or along with delivery of the Notification. In the event there is an express conflict between the provisions of the Plan and those set forth in any other Award Document, the terms and conditions of the Plan shall govern.
|
2.
|
Delivery of Shares
.
Subject to Sections 3 and 4 below, the RSRs will vest pursuant to the vesting schedule set forth in the Notification, provided the Participant is, on the relevant vesting date, and has been from the date of grant of the RSRs to the relevant vesting date, continuously employed by the Company or one of its Subsidiaries. For purposes of these terms and conditions, the Participant shall not be deemed to have terminated his or her employment with the Company and its Subsidiaries if he or she is then employed by the Company or another Subsidiary without a break in service.
|
3.
|
Termination of RSRs; Forfeiture.
The RSRs will be cancelled upon or following the termination of the Participant’s employment with the Company and its Subsidiaries as described below.
|
(a)
|
Resignation by the Participant or Termination by the Company or a Subsidiary
: Except as otherwise provided in subsection (b) or Section 4 below, all outstanding RSRs will be forfeited and the Participant will not have any right to delivery of Shares that did not vest prior to such termination. If the Participant’s employment is terminated by the Company or a Subsidiary
|
(b)
|
Termination by Reason of Death, Disability or Retirement
: Except as otherwise provided in Section 4 below, a prorated portion of the RSRs shall vest, calculated as follows: (A) the total number of RSRs awarded, multiplied by a fraction (and rounded down to the nearest whole Share), the numerator of which shall be the number of days from the date of grant of the RSRs to the date of death, Disability or Retirement, as the case may be, and the denominator of which shall be the number of days from the date of grant of the RSRs to the last scheduled vesting date for the RSRs set forth in the Notification, less (B) the number of RSRs already vested at the time of the Participant’s death, Disability or Retirement, as the case may be. Shares equal to the prorated number of RSRs that so vest will be delivered to the Participant (or his or her Beneficiary, in the event of death) within 60 days following the date of death, Disability or Retirement, as the case may be, subject to Section 9.17 of the Plan.
|
(c)
|
Proscribed Activity
: If, during the Proscribed Period but prior to a Change of Control, the Participant engages in a Proscribed Activity, then the Company shall have the right to reclaim and receive from the Participant all Shares delivered to the Participant pursuant to Section 2 during the one year period immediately prior to, or at any time following, the date of the Participant’s termination of employment, or to the extent the Participant has transferred such Shares, the after-tax equivalent value thereof (as of the date the Shares were transferred by the Participant) in cash.
|
4.
|
Change of Control
.
In the event of a Change of Control, the RSRs shall become payable as described in this Section 4, provided that the Committee may take such other actions with respect to the RSRs as it deems appropriate pursuant to Section 7 and 8 of the Plan.
|
(a)
|
Form of Payment
: The Committee may determine that the unvested RSRs will be (i) converted to and payable in units with respect to shares or other equity interests of the acquiring company or its parent or (ii) payable in cash based on the Fair Market Value of the RSRs as of the date of the Change of Control.
|
(b)
|
Continued Employment
: If the Participant continues in employment with the Company or one of its Subsidiaries through each applicable vesting date following the Change of Control, the RSRs will vest pursuant to the vesting schedule set forth in the Notification.
|
(c)
|
Termination without Cause, for Good Reason or on Account of Death, Disability or Retirement
. If the Participant’s employment is terminated by the Company without Cause, the Participant terminates employment for Good Reason, or the Participant’s employment terminates on account of death, Disability or Retirement, in each case, upon or within 24 months following a Change of Control and prior to the last vesting date set forth in the Notification, any unvested RSRs shall become fully vested upon such termination of employment and shall be paid within 60 days following the date of such termination, subject to Section 9.17 of the Plan.
|
(d)
|
Termination Prior to a Change of Control
: To the extent (i) a Participant’s employment was terminated by the Company other than for Cause or Disability within the 12 months prior to the date on which the Change of Control occurred, (ii) during such 12 month period the Participant did not engage in a Proscribed Activity, and (iii) the Committee determines, in its sole and absolute discretion, that the decision related to such termination was made in contemplation of the Change of Control, then upon the Change of Control, the Participant will become entitled to a cash payment equal to the product of: the Fair Market Value of a
|
5.
|
Rights as a Shareholder; Dividend Equivalent Rights.
The Participant will not have the rights of a shareholder of the Company with respect to Shares subject to the RSRs until such Shares are actually delivered to the Participant. If and when Shares are delivered to the Participant pursuant to Section 2, 3 or 4, as applicable, the Company will make a cash payment equal to the product of (i) the number of Shares delivered, and (ii) the aggregate dividends paid on a Share during the period from the date of grant of the award until the date the Shares are delivered.
|
6.
|
U.S. Federal, State and Local Income Taxes.
The Participant is solely responsible for the satisfaction of all taxes generally that may arise in connection with the RSRs. At the time of taxation, the Company shall have the right to deduct from other compensation or from amounts payable with respect to the RSRs, including by withholding Shares otherwise issuable upon settlement of the RSRs an amount equal to the federal (including FICA), state and local income and payroll taxes required by law to be withheld with respect to the RSRs.
The Company intends to satisfy this withholding obligation by reducing the number of Shares and/or cash that are to be delivered to the Participant under this Agreement in an amount sufficient to satisfy the withholding obligations due (based on the Fair Market Value of the Shares for the related RSRs). Notwithstanding the foregoing, the Company may satisfy any tax obligations it may have in any jurisdiction outside the U.S. in any manner it deems, in its sole and absolute discretion, to be necessary or appropriate.
|
7.
|
Section 409A.
The RSRs are intended to comply with Section 409A of the Code or an exemption, and delivery of Shares and other payments pursuant to the RSRs may only be made upon an event and in a manner permitted by Section 409A, to the extent applicable. The RSRs shall be administered consistent with Section 9.17 of the Plan.
|
8.
|
Statute of Limitations and Conflicts of Laws
.
All rights of action by, or on behalf of the Company or by any shareholder against any past, present, or future member of the Board of Directors, officer, or employee of the Company arising out of or in connection with the RSRs or the Award Documents, must be brought within three years from the date of the act or omission in respect of which such right of action arises. The RSRs and the Award Documents shall be governed by the laws of the State of Florida, without giving effect to principles of conflict of laws, and construed accordingly.
|
9.
|
No Employment Right
.
Neither the grant of the RSRs nor any action taken hereunder shall be construed as giving any employee or any Participant any right to be retained in the employ of the Company. The Company is under no obligation to grant RSRs hereunder. Nothing contained in the Award Documents shall limit or affect in any manner or degree the normal and usual powers of management, exercised by the officers and the Board of Directors or committees thereof, to change the duties or the character of employment of any employee of the Company or to remove the individual from the employment of the Company at any time, all of which rights and powers are expressly reserved.
|
10.
|
No Assignment
.
A Participant’s rights and interest under the RSRs may not be assigned or transferred, except as otherwise provided herein, and any attempted assignment or transfer shall be null and void
|
11.
|
Unfunded Plan
.
Any shares or other amounts owed under the RSRs shall be unfunded. The Company shall not be required to establish any special or separate fund, or to make any other segregation of assets, to assure delivery or payment of any earned amounts.
|
12.
|
Company Policies.
The RSRs and any cash or Shares delivered pursuant to the RSRs shall be subject to all applicable clawback or recoupment policies, share trading policies and other policies that may be implemented by the Company’s Board of Directors from time to time.
|
13.
|
Definitions
.
|
(a)
|
“Proscribed Activity” means any of the following:
|
(i)
|
the Participant’s breach of any written agreement between the Participant and the Company or any of its Subsidiaries, including any agreement relating to nondisclosure, noncompetition, nonsolicitation and/or nondisparagement, to the extent such agreements are enforceable under applicable law;
|
(ii)
|
the Participant’s direct or indirect unauthorized use or disclosure of confidential information or trade secrets of the Company or any Subsidiary, including, but not limited to, such matters as costs, profits, markets, sales, products, product lines, key personnel, pricing policies, operational methods, customers, customer requirements, suppliers, plans for future developments, and other business affairs and methods and other information not readily available to the public;
|
(iii)
|
the Participant’s direct or indirect engaging or becoming a partner, director, officer, principal, employee, consultant, investor, creditor or stockholder in/for any business, proprietorship, association, firm or corporation not owned or controlled by the Company or its Subsidiaries which is engaged or proposes to engage in a business competitive directly or indirectly with the business conducted by the Company or its Subsidiaries in any geographic area where such business of the Company or its Subsidiaries is conducted, provided that the Participant’s investment in 1% or less of the outstanding capital stock of any corporation whose stock is listed on a national securities exchange shall not be treated as a Proscribed Activity;
|
(iv)
|
the Participant’s direct or indirect, either on the Participant’s own account or for any person, firm or company, soliciting, interfering with or inducing, or attempting to induce, any employee of the Company or any of its Subsidiaries to leave his or her employment or to breach his or her employment agreement;
|
(v)
|
the Participant’s direct or indirect taking away, interfering with relations with, diverting or attempting to divert from the Company or any Subsidiary any business with any customer of the Company or any Subsidiary, including (A) any customer that has been solicited or serviced by the Company within one year prior to the date of termination of Participant’s employment with the Company and (B) any customer with which the Participant has had contact or association, or which was under the supervision of Participant, or the identity of which was learned by the Participant as a result of Participant’s employment with the Company;
|
(vi)
|
following the Participant’s termination of employment, the Participant’s making of any remarks disparaging the conduct or character of the Company or any of its Subsidiaries, or their current or former agents, employees, officers, directors,
|
(vii)
|
the Participant’s failure to cooperate with the Company or any Subsidiary, for no additional compensation (other than reimbursement of expenses), in any litigation or administrative proceedings involving any matters with which the Participant was involved during the Participant’s employment with the Company or any Subsidiary.
|
(b)
|
“Proscribed Period” means the period beginning on the date of termination of Participant’s employment and ending on the later of (A) the one year anniversary of such termination date or (B) if the Participant is entitled to severance benefits in the form of salary continuation, the date on which salary continuation is no longer payable to the Participant.
|
(c)
|
“Retirement” means termination of employment for any reason (other than for Cause or by reason of death or Disability) upon or following attainment of age 55 and completion of 10 years of service, or upon or following attainment of age 65 without regard to years of service; provided that, Retirement shall not be deemed to occur unless such termination of service constitutes a separation from service, as defined by Section 409A of the Code.
|
12
.
|
Other Benefits
.
No amount accrued or paid under the RSRs shall be deemed compensation for purposes of computing a Participant’s benefits under any retirement plan of the Company or its Subsidiaries, nor affect any benefits under any other benefit plan now or subsequently in effect under which the availability or amount of benefits is related to the Participant’s level of compensation.
|
1.
|
General
. Each RSU represents the right to receive one Share on a future date on the terms and conditions set forth herein, in the Notification Letter and in the Plan, the applicable terms, conditions and other provisions of which are incorporated by reference herein (collectively, the “Award Documents”). A copy of the Plan and the documents that constitute the “Prospectus” for the Plan under the Securities Act of 1933, have been delivered to the Participant prior to or along with delivery of the Notification Letter. In the event there is an express conflict between the provisions of the Plan and those set forth in any Award Document, the terms and conditions of the Plan shall govern.
|
2.
|
Number of RSUs
.
Each Non-Employee Director who is serving as such immediately following the 2016 annual meeting of shareholders of the Company (an “Annual Meeting”), shall receive an award of RSUs immediately following each such Annual Meeting for a number of Shares equal to (i) $125,000 divided by (ii) the Fair Market Value of one Share on the day of such Annual Meeting. If a Non-Employee Director begins his or her service on the Board after an Annual Meeting but prior to December 31, 2016, on the date on which such Non-Employee Director’s service begins (“Service Date”), the Non-Employee Director shall receive an award of RSUs for a number of Shares equal to the product of (i) a quotient the numerator of which is $125,000 and the denominator of which is the Fair Market Value of one Share on the Service Date, times (ii) a quotient, the numerator of which is the total number of days between the Service Date and December 31, 2016 and the denominator of which is 365.
|
3.
|
Vesting of RSUs
.
|
(a)
|
If the Non-Employee Director has completed one year of service on the Board as of the date of grant of the RSUs, the RSUs shall be fully vested as of the date of grant.
|
(b)
|
If the Non-Employee Director has not completed at least one year of service on the Board as of the date of grant of the RSUs, the RSUs shall become fully vested on the date on which the Non-Employee Director completes one year of service on the Board. If the Non-Employee Director’s service on the Board ceases before the Non-Employee Director completes one year of service, upon such cessation of service, the RSUs will be forfeited, and the Non-Employee Director will not have any right to delivery of Shares hereunder. Notwithstanding the foregoing, the RSUs shall become fully vested upon the Non-Employee Director’s cessation of service on the Board if (i) the Non-Employee Director’s service is terminated by the
|
4.
|
Timing of Delivery of Shares
. Actual delivery of the Shares relating to RSUs will occur (or, if installment payments are elected pursuant to Section 5 below, commence) upon or as soon as practicable following, cessation of the Non-Employee Director’s service on the Board; provided that, such cessation of service constitutes a “separation from service” under Section 409A of the Code.
|
5.
|
Form of Delivery of Shares
. Subject in all cases to Section 409A of the Code and Section 9.17 of the Plan, with respect to each award of RSUs, a Non-Employee Director may irrevocably elect, by December 31 of the calendar year immediately preceding the calendar year in which the services to which the RSUs relate are performed (or, in the case of newly elected or appointed Non-Employee Directors, by the end of the day immediately preceding his appointment or election) (such date, the “Election Date”), to receive delivery of the Shares in either one lump sum, or in annual installments over a period not less than 2 years or greater than 10 years, provided that a Non-Employee Director who fails to make an irrevocable election with respect to any award by 5:00 pm on the Election Date shall be deemed to have irrevocably elected to receive delivery of the Shares subject to such award in a lump sum. Notwithstanding the foregoing, Shares deliverable by reason of a Change of Control pursuant to Section 4 shall be delivered in a lump sum
.
|
6.
|
Rights as a Shareholder; Dividend Equivalent Rights.
A holder of RSUs will not have the rights of a shareholder of the Company with respect to Shares subject to the RSUs until such Shares are actually delivered. However, with respect to all RSUs held by the Non-Employee Director, once per year the Company will credit the Non-Employee Director with dividend equivalents in respect of dividends declared on Shares during the prior year, in the form of additional RSUs based on the Fair Market Value of the Shares on the dividend payment date, and such additional RSUs will be paid on the same date and subject to the same terms and conditions as applicable to the RSUs on which they were credited.
|
7.
|
Statute of Limitations and Conflicts of Laws
.
All rights of action by, or on behalf of the Company or by any shareholder against any past, present, or future member of the Board, officer, or employee of the Company arising out of or in connection with the RSUs or the Award Documents, must be brought within three years from the date of the act or omission in respect of which such right of action arises. The RSUs and the Award Documents shall be governed by the laws of the State of Florida, without giving effect to principles of conflict of laws, and construed accordingly.
|
8.
|
No Assignment
.
A Participant’s rights and interest under the RSUs may not be assigned or transferred, except as otherwise provided herein, and any attempted assignment or transfer shall be null and void
|
9.
|
Unfunded Plan
.
Any Shares or other amounts owed under the RSUs shall be unfunded. The Company shall not be required to establish any special or separate fund, or to make any other segregation of assets, to assure delivery or payment of any earned amounts.
|
10.
|
Section 409A.
The RSUs are intended to comply with Section 409A of the Code, and delivery of Shares and other payments pursuant to the RSUs may only be made upon an event and in a manner permitted by Section 409A, to the extent applicable. The RSUs shall be administered consistent with Section 9.17 of the Plan.
|
11.
|
Company Policies.
The RSUs and any cash or Shares delivered pursuant to the RSUs shall be subject to all applicable policies that may be implemented by the Company’s Board of Directors from time to time, including the Company’s share ownership guidelines as in effect from time to time.
|
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:
|
July 27, 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:
|
July 27, 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
|
|
July 27, 2016
|
|
/s/ Art A. Garcia
|
|
Art A. Garcia
Executive Vice President and Chief Financial Officer
|
|
July 27, 2016
|
|