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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 September 30,
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Nine months ended September 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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803,006
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802,881
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$
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2,369,147
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2,310,951
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Services revenue
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801,004
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734,803
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2,345,922
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2,165,677
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Fuel services revenue
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120,408
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131,382
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342,765
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422,522
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Total revenues
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1,724,418
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1,669,066
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5,057,834
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4,899,150
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Cost of lease and rental
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557,901
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550,541
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1,665,693
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1,600,271
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Cost of services
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658,793
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606,364
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1,936,636
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1,792,182
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Cost of fuel services
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116,904
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129,562
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331,283
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408,027
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Other operating expenses
|
27,997
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26,957
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85,944
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88,912
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Selling, general and administrative expenses
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198,805
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203,093
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632,466
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624,566
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Gains on used vehicles, net
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(1,873
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)
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(24,965
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)
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(33,002
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)
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(82,158
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)
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Interest expense
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37,440
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38,986
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112,597
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114,863
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Miscellaneous income, net
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(3,247
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)
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(1,372
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)
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(10,968
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)
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(5,037
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)
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1,592,720
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1,529,166
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4,720,649
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4,541,626
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Earnings from continuing operations before income taxes
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131,698
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139,900
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337,185
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357,524
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Provision for income taxes
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46,560
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49,089
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121,820
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127,470
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Earnings from continuing operations
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85,138
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90,811
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215,365
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230,054
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Loss from discontinued operations, net of tax
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(386
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)
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(192
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)
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(1,069
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)
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(1,487
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)
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Net earnings
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$
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84,752
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90,619
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$
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214,296
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228,567
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Earnings (loss) per common share — Basic
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Continuing operations
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$
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1.60
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1.71
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$
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4.05
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4.35
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Discontinued operations
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(0.01
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)
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—
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(0.02
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)
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(0.03
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)
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Net earnings
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$
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1.60
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1.71
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$
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4.03
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4.32
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Earnings (loss) per common share — Diluted
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Continuing operations
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$
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1.59
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1.70
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$
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4.02
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4.31
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Discontinued operations
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(0.01
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)
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—
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(0.02
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(0.03
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)
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Net earnings
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$
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1.59
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1.69
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$
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4.00
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4.28
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Cash dividends declared per common share
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$
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0.44
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0.41
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$
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1.26
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1.15
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Three months ended September 30,
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Nine months ended September 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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84,752
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90,619
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$
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214,296
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228,567
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Other comprehensive income (loss):
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||||||
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Currency translation adjustment and other
|
(19,296
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)
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(42,748
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)
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(37,874
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)
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(73,093
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)
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Amortization of pension and postretirement items
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7,171
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6,873
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22,040
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20,765
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Income tax expense related to amortization of pension and postretirement items
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(2,667
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)
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(2,412
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)
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(7,854
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)
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(7,226
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)
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Amortization of pension and postretirement items, net of tax
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4,504
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4,461
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14,186
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13,539
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Change in net actuarial loss and prior service cost
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—
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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
|
—
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—
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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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—
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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 loss, net of taxes
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(14,792
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)
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(38,287
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)
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(34,710
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)
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(64,875
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)
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Comprehensive income
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$
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69,960
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52,332
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$
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179,586
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163,692
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September 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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74,994
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60,945
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Receivables, net of allowance of $14,911 and $15,560, respectively
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856,763
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835,489
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Inventories
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67,335
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63,725
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Prepaid expenses and other current assets
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138,467
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138,143
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Total current assets
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1,137,559
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1,098,302
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Revenue earning equipment, net
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8,274,832
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8,184,735
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Operating property and equipment, net of accumulated depreciation of $1,116,439 and $1,083,604, respectively
|
740,375
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714,970
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Goodwill
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387,730
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389,135
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Intangible assets, net of accumulated amortization of $50,145 and $45,736, respectively
|
49,994
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|
|
55,192
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|
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Direct financing leases and other assets
|
518,283
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|
|
510,246
|
|
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Total assets
|
$
|
11,108,773
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|
|
10,952,580
|
|
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|
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Liabilities and shareholders’ equity:
|
|
|
|
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Current liabilities:
|
|
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|
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Short-term debt and current portion of long-term debt
|
$
|
1,055,146
|
|
|
634,530
|
|
Accounts payable
|
457,843
|
|
|
502,373
|
|
|
Accrued expenses and other current liabilities
|
516,862
|
|
|
543,352
|
|
|
Total current liabilities
|
2,029,851
|
|
|
1,680,255
|
|
|
Long-term debt
|
4,464,495
|
|
|
4,868,097
|
|
|
Other non-current liabilities
|
817,232
|
|
|
829,595
|
|
|
Deferred income taxes
|
1,700,154
|
|
|
1,587,522
|
|
|
Total liabilities
|
9,011,732
|
|
|
8,965,469
|
|
|
|
|
|
|
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Shareholders’ equity:
|
|
|
|
|||
Preferred stock, no par value per share — authorized, 3,800,917; none outstanding,
September 30, 2016 or December 31, 2015 |
—
|
|
|
—
|
|
|
Common stock, $0.50 par value per share — authorized, 400,000,000; outstanding,
September 30, 2016 — 53,468,413; December 31, 2015 — 53,490,603 |
26,734
|
|
|
26,745
|
|
|
Additional paid-in capital
|
1,022,307
|
|
|
1,006,021
|
|
|
Retained earnings
|
1,795,445
|
|
|
1,667,080
|
|
|
Accumulated other comprehensive loss
|
(747,445
|
)
|
|
(712,735
|
)
|
|
Total shareholders’ equity
|
2,097,041
|
|
|
1,987,111
|
|
|
Total liabilities and shareholders’ equity
|
$
|
11,108,773
|
|
|
10,952,580
|
|
|
Nine months ended September 30,
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|||||
|
2016
|
|
2015
|
|||
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(In thousands)
|
|||||
Cash flows from operating activities from continuing operations:
|
|
|
|
|||
Net earnings
|
$
|
214,296
|
|
|
228,567
|
|
Less: Loss from discontinued operations, net of tax
|
(1,069
|
)
|
|
(1,487
|
)
|
|
Earnings from continuing operations
|
215,365
|
|
|
230,054
|
|
|
Depreciation expense
|
878,173
|
|
|
828,148
|
|
|
Gains on used vehicles, net
|
(33,002
|
)
|
|
(82,158
|
)
|
|
Share-based compensation expense
|
13,870
|
|
|
16,112
|
|
|
Amortization expense and other non-cash charges, net
|
49,869
|
|
|
46,272
|
|
|
Deferred income tax expense
|
109,191
|
|
|
111,609
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|||
Receivables
|
(69,169
|
)
|
|
(23,751
|
)
|
|
Inventories
|
(3,524
|
)
|
|
1,275
|
|
|
Prepaid expenses and other assets
|
(24,241
|
)
|
|
(33,334
|
)
|
|
Accounts payable
|
68,599
|
|
|
(19,506
|
)
|
|
Accrued expenses and other non-current liabilities
|
(20,387
|
)
|
|
(3,385
|
)
|
|
Net cash provided by operating activities from continuing operations
|
1,184,744
|
|
|
1,071,336
|
|
|
|
|
|
|
|||
Cash flows from financing activities:
|
|
|
|
|||
Net change in commercial paper borrowings and revolving credit facilities
|
73,597
|
|
|
184,750
|
|
|
Debt proceeds
|
298,254
|
|
|
1,329,810
|
|
|
Debt repaid
|
(340,707
|
)
|
|
(795,837
|
)
|
|
Dividends on common stock
|
(67,651
|
)
|
|
(61,436
|
)
|
|
Common stock issued
|
9,626
|
|
|
20,397
|
|
|
Common stock repurchased
|
(25,658
|
)
|
|
(6,141
|
)
|
|
Excess tax benefits from share-based compensation and other items
|
(1,685
|
)
|
|
723
|
|
|
Debt issuance costs
|
(1,012
|
)
|
|
(7,483
|
)
|
|
Net cash (used in) provided by financing activities
|
(55,236
|
)
|
|
664,783
|
|
|
|
|
|
|
|||
Cash flows from investing activities:
|
|
|
|
|||
Purchases of property and revenue earning equipment
|
(1,511,359
|
)
|
|
(2,087,294
|
)
|
|
Sales of revenue earning equipment
|
331,720
|
|
|
319,766
|
|
|
Sales of operating property and equipment
|
6,623
|
|
|
1,203
|
|
|
Collections on direct finance leases and other items
|
60,229
|
|
|
51,166
|
|
|
Changes in restricted cash
|
4,203
|
|
|
7,781
|
|
|
Net cash used in investing activities
|
(1,108,584
|
)
|
|
(1,707,378
|
)
|
|
|
|
|
|
|||
Effect of exchange rate changes on cash
|
(5,567
|
)
|
|
(2,006
|
)
|
|
Increase in cash and cash equivalents from continuing operations
|
15,357
|
|
|
26,735
|
|
|
|
|
|
|
|||
|
|
|
|
|||
Decrease in cash and cash equivalents from discontinued operations
|
(1,308
|
)
|
|
(1,440
|
)
|
|
|
|
|
|
|||
Increase in cash and cash equivalents
|
14,049
|
|
|
25,295
|
|
|
Cash and cash equivalents at January 1
|
60,945
|
|
|
50,092
|
|
|
Cash and cash equivalents at September 30
|
$
|
74,994
|
|
|
75,387
|
|
|
September 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
|
$
|
9,460,749
|
|
|
(2,979,195
|
)
|
|
6,481,554
|
|
|
$
|
8,839,941
|
|
|
(2,723,605
|
)
|
|
6,116,336
|
|
Commercial rental
|
2,529,929
|
|
|
(893,545
|
)
|
|
1,636,384
|
|
|
2,811,715
|
|
|
(907,412
|
)
|
|
1,904,303
|
|
||
Held for sale
|
503,160
|
|
|
(346,266
|
)
|
|
156,894
|
|
|
496,634
|
|
|
(332,538
|
)
|
|
164,096
|
|
||
Total
|
$
|
12,493,838
|
|
|
(4,219,006
|
)
|
|
8,274,832
|
|
|
$
|
12,148,290
|
|
|
(3,963,555
|
)
|
|
8,184,735
|
|
(1)
|
Revenue earning equipment, net includes vehicles acquired under capital leases of
$42.9 million
, less accumulated depreciation of
$21.6 million
, at
September 30, 2016
, and
$47.5 million
, less accumulated depreciation of
$22.2 million
, at
December 31, 2015
.
|
|
|
|
Total Losses
(2)
|
|||||||||||||||||
|
September 30,
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
|||||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|||||||||
|
(In thousands)
|
|||||||||||||||||||
Assets held for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Revenue earning equipment
(1)
:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Trucks
|
$
|
17,091
|
|
|
7,701
|
|
|
$
|
2,528
|
|
|
1,657
|
|
|
$
|
6,842
|
|
|
4,400
|
|
Tractors
|
61,480
|
|
|
10,093
|
|
|
7,985
|
|
|
2,062
|
|
|
22,073
|
|
|
3,970
|
|
|||
Trailers
|
2,563
|
|
|
1,195
|
|
|
1,152
|
|
|
610
|
|
|
2,589
|
|
|
1,582
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Total assets at fair value
|
$
|
81,134
|
|
|
18,989
|
|
|
$
|
11,665
|
|
|
4,329
|
|
|
$
|
31,504
|
|
|
9,952
|
|
(1)
|
Assets held for sale in the above table only include the portion of revenue earning equipment held for sale where net book values exceeded fair values and fair value adjustments were recorded. The net book value of assets held for sale not exceeding fair value was
$75.8 million
and
$145.1 million
as of
September 30, 2016
and
2015
, respectively.
|
(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 September 30,
|
|
Nine months ended September 30,
|
||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||
|
(In thousands)
|
||||||||||||
Gains on vehicle sales, net
|
$
|
(13,538
|
)
|
|
(29,294
|
)
|
|
$
|
(64,506
|
)
|
|
(92,110
|
)
|
Losses from fair value adjustments
|
11,665
|
|
|
4,329
|
|
|
31,504
|
|
|
9,952
|
|
||
Gains on used vehicles, net
|
$
|
(1,873
|
)
|
|
(24,965
|
)
|
|
$
|
(33,002
|
)
|
|
(82,158
|
)
|
|
September 30, 2016
|
|
December 31, 2015
|
||||||||||||||||
|
Accrued
Expenses
|
|
Non-Current
Liabilities
|
|
Total
|
|
Accrued
Expenses
|
|
Non-Current
Liabilities
|
|
Total
|
||||||||
|
(In thousands)
|
||||||||||||||||||
Salaries and wages
|
$
|
88,592
|
|
|
—
|
|
|
88,592
|
|
|
$
|
99,032
|
|
|
—
|
|
|
99,032
|
|
Deferred compensation
|
2,874
|
|
|
44,702
|
|
|
47,576
|
|
|
2,252
|
|
|
41,691
|
|
|
43,943
|
|
||
Pension benefits
|
3,808
|
|
|
466,721
|
|
|
470,529
|
|
|
3,790
|
|
|
484,892
|
|
|
488,682
|
|
||
Other postretirement benefits
|
1,634
|
|
|
19,536
|
|
|
21,170
|
|
|
1,624
|
|
|
20,002
|
|
|
21,626
|
|
||
Other employee benefits
|
23,843
|
|
|
5,040
|
|
|
28,883
|
|
|
8,956
|
|
|
9,706
|
|
|
18,662
|
|
||
Insurance obligations
(1)
|
140,528
|
|
|
221,254
|
|
|
361,782
|
|
|
157,014
|
|
|
213,256
|
|
|
370,270
|
|
||
Environmental liabilities
|
3,839
|
|
|
5,911
|
|
|
9,750
|
|
|
3,791
|
|
|
6,554
|
|
|
10,345
|
|
||
Operating taxes
|
96,813
|
|
|
—
|
|
|
96,813
|
|
|
101,649
|
|
|
—
|
|
|
101,649
|
|
||
Income taxes
|
444
|
|
|
23,467
|
|
|
23,911
|
|
|
3,378
|
|
|
22,366
|
|
|
25,744
|
|
||
Interest
|
37,128
|
|
|
—
|
|
|
37,128
|
|
|
31,218
|
|
|
—
|
|
|
31,218
|
|
||
Customer deposits
|
62,035
|
|
|
4,688
|
|
|
66,723
|
|
|
61,869
|
|
|
5,085
|
|
|
66,954
|
|
||
Deferred revenue
|
14,556
|
|
|
—
|
|
|
14,556
|
|
|
13,038
|
|
|
—
|
|
|
13,038
|
|
||
Restructuring liabilities
(2)
|
2,391
|
|
|
—
|
|
|
2,391
|
|
|
12,333
|
|
|
—
|
|
|
12,333
|
|
||
Other
|
38,377
|
|
|
25,913
|
|
|
64,290
|
|
|
43,408
|
|
|
26,043
|
|
|
69,451
|
|
||
Total
|
$
|
516,862
|
|
|
817,232
|
|
|
1,334,094
|
|
|
$
|
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
|
|
|
|
|
|
|
|||||
|
September 30,
2016 |
|
December 31,
2015 |
|
Maturities
|
|
September 30,
2016 |
|
December 31,
2015 |
|||
|
|
|
|
|
|
|
(In thousands)
|
|||||
Short-term debt and current portion of long-term debt:
|
|
|
|
|
|
|
|
|
|
|||
Short-term debt
|
0.92%
|
|
2.26%
|
|
|
|
$
|
133,713
|
|
|
35,947
|
|
Current portion of long-term debt
|
|
|
|
|
|
|
921,433
|
|
|
598,583
|
|
|
Total short-term debt and current portion of long-term debt
|
|
|
|
|
|
1,055,146
|
|
|
634,530
|
|
||
Long-term debt:
|
|
|
|
|
|
|
|
|
|
|||
U.S. commercial paper
(1)
|
0.76%
|
|
0.55%
|
|
2020
|
|
490,685
|
|
|
547,130
|
|
|
Global revolving credit facility
|
2.06%
|
|
2.31%
|
|
2020
|
|
60,885
|
|
|
25,291
|
|
|
Unsecured U.S. notes — Medium-term notes
(1)
|
2.91%
|
|
2.84%
|
|
2016-2025
|
|
4,113,583
|
|
|
4,112,519
|
|
|
Unsecured U.S. obligations
|
2.09%
|
|
1.73%
|
|
2018
|
|
50,000
|
|
|
50,000
|
|
|
Unsecured foreign obligations
|
1.74%
|
|
1.92%
|
|
2017-2020
|
|
248,376
|
|
|
275,661
|
|
|
Asset-backed U.S. obligations
(2)
|
1.77%
|
|
1.81%
|
|
2016-2022
|
|
395,898
|
|
|
434,001
|
|
|
Capital lease obligations
|
3.18%
|
|
3.31%
|
|
2016-2023
|
|
25,818
|
|
|
32,054
|
|
|
Total before fair market value adjustment
|
|
|
|
|
|
|
5,385,245
|
|
|
5,476,656
|
|
|
Fair market value adjustment on notes subject to hedging
(3)
|
|
|
|
|
|
14,213
|
|
|
5,253
|
|
||
Debt issuance costs
(4)
|
|
|
|
|
|
|
(13,530
|
)
|
|
(15,229
|
)
|
|
|
|
|
|
|
|
|
5,385,928
|
|
|
5,466,680
|
|
|
Current portion of long-term debt
|
|
|
|
|
|
|
(921,433
|
)
|
|
(598,583
|
)
|
|
Long-term debt
|
|
|
|
|
|
|
4,464,495
|
|
|
4,868,097
|
|
|
Total debt
|
|
|
|
|
|
|
$
|
5,519,641
|
|
|
5,502,627
|
|
(1)
|
Amounts are net of aggregate unamortized original issue discounts of
$6.8 million
and
$7.7 million
at
September 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
September 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
|
|
—
|
|
|
14,052
|
|
|
134
|
|
|
14,186
|
|
|
Other current period change
|
|
(37,874
|
)
|
|
(5,495
|
)
|
|
(5,527
|
)
|
|
(48,896
|
)
|
|
September 30, 2016
|
|
$
|
(173,894
|
)
|
|
(568,436
|
)
|
|
(5,115
|
)
|
|
(747,445
|
)
|
|
|
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
|
|
—
|
|
|
14,605
|
|
|
(1,066
|
)
|
|
13,539
|
|
|
Other current period change
|
|
(73,093
|
)
|
|
(5,321
|
)
|
|
—
|
|
|
(78,414
|
)
|
|
September 30, 2015
|
|
$
|
(109,180
|
)
|
|
(576,657
|
)
|
|
692
|
|
|
(685,145
|
)
|
(1)
|
These amounts are included in the computation of net pension expense. See
Note 11
, "
Employee Benefit Plans
," for further information.
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||
|
(In thousands, except per share amounts)
|
||||||||||||
Earnings per share — Basic:
|
|
|
|
|
|
|
|
||||||
Earnings from continuing operations
|
$
|
85,138
|
|
|
90,811
|
|
|
$
|
215,365
|
|
|
230,054
|
|
Less: Earnings allocated to unvested stock
|
(261
|
)
|
|
(266
|
)
|
|
(674
|
)
|
|
(654
|
)
|
||
Earnings from continuing operations available to common shareholders — Basic
|
$
|
84,877
|
|
|
90,545
|
|
|
$
|
214,691
|
|
|
229,400
|
|
|
|
|
|
|
|
|
|
||||||
Weighted average common shares outstanding — Basic
|
52,953
|
|
|
52,888
|
|
|
53,029
|
|
|
52,770
|
|
||
|
|
|
|
|
|
|
|
||||||
Earnings from continuing operations per common share — Basic
|
$
|
1.60
|
|
|
1.71
|
|
|
$
|
4.05
|
|
|
4.35
|
|
|
|
|
|
|
|
|
|
||||||
Earnings per share — Diluted:
|
|
|
|
|
|
|
|
||||||
Earnings from continuing operations
|
$
|
85,138
|
|
|
90,811
|
|
|
$
|
215,365
|
|
|
230,054
|
|
Less: Earnings allocated to unvested stock
|
(260
|
)
|
|
(265
|
)
|
|
(672
|
)
|
|
(649
|
)
|
||
Earnings from continuing operations available to common shareholders — Diluted
|
$
|
84,878
|
|
|
90,546
|
|
|
$
|
214,693
|
|
|
229,405
|
|
|
|
|
|
|
|
|
|
||||||
Weighted average common shares outstanding — Basic
|
52,953
|
|
|
52,888
|
|
|
53,029
|
|
|
52,770
|
|
||
Effect of dilutive equity awards
|
338
|
|
|
445
|
|
|
315
|
|
|
476
|
|
||
Weighted average common shares outstanding — Diluted
|
53,291
|
|
|
53,333
|
|
|
53,344
|
|
|
53,246
|
|
||
|
|
|
|
|
|
|
|
||||||
Earnings from continuing operations per common share — Diluted
|
$
|
1.59
|
|
|
1.70
|
|
|
$
|
4.02
|
|
|
4.31
|
|
|
|
|
|
|
|
|
|
||||||
Anti-dilutive equity awards not included above
|
653
|
|
|
352
|
|
|
836
|
|
|
300
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||
|
(In thousands)
|
||||||||||||
Stock option and stock purchase plans
|
$
|
1,633
|
|
|
1,948
|
|
|
$
|
5,410
|
|
|
6,205
|
|
Unvested stock
|
2,237
|
|
|
2,995
|
|
|
8,460
|
|
|
9,907
|
|
||
Share-based compensation expense
|
3,870
|
|
|
4,943
|
|
|
13,870
|
|
|
16,112
|
|
||
Income tax benefit
|
(1,321
|
)
|
|
(1,652
|
)
|
|
(4,691
|
)
|
|
(5,395
|
)
|
||
Share-based compensation expense, net of tax
|
$
|
2,549
|
|
|
3,291
|
|
|
$
|
9,179
|
|
|
10,717
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||
|
(In thousands)
|
||||||||||||
Cash awards
|
$
|
119
|
|
|
197
|
|
|
$
|
447
|
|
|
661
|
|
|
Nine months ended September 30,
|
||||
|
2016
|
|
2015
|
||
|
(Shares 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
|
|
|
87
|
|
Total
|
721
|
|
|
510
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||
|
(In thousands)
|
||||||||||||
Pension Benefits
|
|
|
|
|
|
|
|
||||||
Company-administered plans:
|
|
|
|
|
|
|
|
||||||
Service cost
|
$
|
2,660
|
|
|
3,612
|
|
|
$
|
9,065
|
|
|
10,805
|
|
Interest cost
|
22,754
|
|
|
21,777
|
|
|
72,086
|
|
|
65,712
|
|
||
Expected return on plan assets
|
(22,601
|
)
|
|
(24,697
|
)
|
|
(68,353
|
)
|
|
(74,618
|
)
|
||
Amortization of:
|
|
|
|
|
|
|
|
||||||
Net actuarial loss
|
7,324
|
|
|
7,665
|
|
|
23,889
|
|
|
23,137
|
|
||
Prior service cost/(credit)
|
320
|
|
|
(80
|
)
|
|
3,060
|
|
|
(230
|
)
|
||
|
10,457
|
|
|
8,277
|
|
|
39,747
|
|
|
24,806
|
|
||
Union-administered plans
|
2,493
|
|
|
1,772
|
|
|
7,221
|
|
|
6,057
|
|
||
Net pension expense
|
$
|
12,950
|
|
|
10,049
|
|
|
$
|
46,968
|
|
|
30,863
|
|
|
|
|
|
|
|
|
|
||||||
Company-administered plans:
|
|
|
|
|
|
|
|
||||||
U.S.
|
$
|
10,952
|
|
|
8,746
|
|
|
$
|
41,389
|
|
|
26,237
|
|
Non-U.S.
|
(495
|
)
|
|
(469
|
)
|
|
(1,642
|
)
|
|
(1,431
|
)
|
||
|
10,457
|
|
|
8,277
|
|
|
39,747
|
|
|
24,806
|
|
||
Union-administered plans
|
2,493
|
|
|
1,772
|
|
|
7,221
|
|
|
6,057
|
|
||
Net pension expense
|
$
|
12,950
|
|
|
10,049
|
|
|
$
|
46,968
|
|
|
30,863
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September 30,
|
|||||
|
2016
|
|
2015
|
|||
|
(In thousands)
|
|||||
Interest paid
|
$
|
100,903
|
|
|
110,141
|
|
Income taxes paid
|
12,250
|
|
|
13,635
|
|
|
Changes in accounts payable related to purchases of revenue earning equipment
|
(107,177
|
)
|
|
18,307
|
|
|
Operating and revenue earning equipment acquired under capital leases
|
947
|
|
|
5,956
|
|
(1)
|
Excludes revenue earning equipment acquired under capital leases.
|
(2)
|
Consists of pension-related adjustments and certain 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)
|
Consists of pension-related adjustments and certain professional fees associated with cost savings initiatives.
|
(1)
|
Non-GAAP financial measure. Refer to the“Non-GAAP Financial Measures” section of this MD&A 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 September 30,
|
|
Nine months ended September 30,
|
|
Change 2016/2015
|
||||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Three Months
|
|
Nine Months
|
||||||||
|
(Dollars in thousands)
|
|
|
|
|
||||||||||||||
Lease and rental revenues
|
$
|
803,006
|
|
|
802,881
|
|
|
$
|
2,369,147
|
|
|
2,310,951
|
|
|
—
|
%
|
|
3
|
%
|
Cost of lease and rental
|
557,901
|
|
|
550,541
|
|
|
1,665,693
|
|
|
1,600,271
|
|
|
1
|
%
|
|
4
|
%
|
||
Gross margin
|
245,105
|
|
|
252,340
|
|
|
703,454
|
|
|
710,680
|
|
|
(3
|
)%
|
|
(1
|
)%
|
||
Gross margin %
|
31
|
%
|
|
31
|
%
|
|
30
|
%
|
|
31
|
%
|
|
|
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
|
Change 2016/2015
|
||||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Three Months
|
|
Nine Months
|
||||||||
|
(Dollars in thousands)
|
|
|
|
|
|
|||||||||||||
Services revenue
|
$
|
801,004
|
|
|
734,803
|
|
|
$
|
2,345,922
|
|
|
2,165,677
|
|
|
9
|
%
|
|
8
|
%
|
Cost of services
|
658,793
|
|
|
606,364
|
|
|
1,936,636
|
|
|
1,792,182
|
|
|
9
|
%
|
|
8
|
%
|
||
Gross margin
|
142,211
|
|
|
128,439
|
|
|
409,286
|
|
|
373,495
|
|
|
11
|
%
|
|
10
|
%
|
||
Gross margin %
|
18
|
%
|
|
17
|
%
|
|
17
|
%
|
|
17
|
%
|
|
|
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
|
Change 2016/2015
|
||||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Three Months
|
|
Nine Months
|
||||||||
|
(Dollars in thousands)
|
|
|
|
|
|
|||||||||||||
Fuel services revenue
|
$
|
120,408
|
|
|
131,382
|
|
|
$
|
342,765
|
|
|
422,522
|
|
|
(8
|
)%
|
|
(19
|
)%
|
Cost of fuel services
|
116,904
|
|
|
129,562
|
|
|
331,283
|
|
|
408,027
|
|
|
(10
|
)%
|
|
(19
|
)%
|
||
Gross margin
|
3,504
|
|
|
1,820
|
|
|
11,482
|
|
|
14,495
|
|
|
93
|
%
|
|
(21
|
)%
|
||
Gross margin %
|
3
|
%
|
|
1
|
%
|
|
3
|
%
|
|
3
|
%
|
|
|
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
|
Change 2016/2015
|
||||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Three Months
|
|
Nine Months
|
||||||||
|
(In thousands)
|
|
|
|
|
|
|||||||||||||
Other operating expenses
|
$
|
27,997
|
|
|
26,957
|
|
|
$
|
85,944
|
|
|
88,912
|
|
|
4
|
%
|
|
(3
|
)%
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
|
Change 2016/2015
|
||||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Three Months
|
|
Nine Months
|
||||||||
|
(Dollars in thousands)
|
|
|
|
|
|
|||||||||||||
Selling, general and administrative expenses (SG&A)
|
$
|
198,805
|
|
|
203,093
|
|
|
$
|
632,466
|
|
|
624,566
|
|
|
(2
|
)%
|
|
1
|
%
|
Percentage of total revenue
|
12
|
%
|
|
12
|
%
|
|
13
|
%
|
|
13
|
%
|
|
|
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
|
Change 2016/2015
|
||||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Three Months
|
|
Nine Months
|
||||||||
|
(Dollars in thousands)
|
|
|
|
|
||||||||||||||
Gains on used vehicles, net
|
$
|
1,873
|
|
|
24,965
|
|
|
$
|
33,002
|
|
|
82,158
|
|
|
(92
|
)%
|
|
(60
|
)%
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
|
Change 2016/2015
|
||||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Three Months
|
|
Nine Months
|
||||||||
|
(Dollars in thousands)
|
|
|
|
|
||||||||||||||
Interest expense
|
$
|
37,440
|
|
|
38,986
|
|
|
$
|
112,597
|
|
|
114,863
|
|
|
(4
|
)%
|
|
(2
|
)%
|
Effective interest rate
|
2.7
|
%
|
|
2.9
|
%
|
|
2.7
|
%
|
|
3.0
|
%
|
|
|
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
|
Change 2016/2015
|
||||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Three Months
|
|
Nine Months
|
||||||||
|
(Dollars in thousands)
|
|
|
|
|
||||||||||||||
Miscellaneous income, net
|
$
|
3,247
|
|
|
1,372
|
|
|
$
|
10,968
|
|
|
5,037
|
|
|
137
|
%
|
|
118
|
%
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
|
Change 2016/2015
|
||||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Three Months
|
|
Nine Months
|
||||||||
|
(Dollars in thousands)
|
|
|
|
|
||||||||||||||
Provision for income taxes
|
$
|
46,560
|
|
|
49,089
|
|
|
$
|
121,820
|
|
|
127,470
|
|
|
(5
|
)%
|
|
(4
|
)%
|
Effective tax rate from continuing operations
|
35.4
|
%
|
|
35.1
|
%
|
|
36.1
|
%
|
|
35.7
|
%
|
|
|
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
|
Change 2016/2015
|
||||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Three Months
|
|
Nine Months
|
||||||||
|
(Dollars in thousands)
|
|
|
|
|
||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Fleet Management Solutions
|
$
|
1,155,011
|
|
|
1,157,578
|
|
|
$
|
3,404,452
|
|
|
3,394,077
|
|
|
—
|
%
|
|
—
|
%
|
Dedicated Transportation Solutions
|
260,921
|
|
|
226,921
|
|
|
764,025
|
|
|
663,094
|
|
|
15
|
|
|
15
|
|
||
Supply Chain Solutions
|
416,898
|
|
|
387,305
|
|
|
1,207,665
|
|
|
1,155,300
|
|
|
8
|
|
|
5
|
|
||
Eliminations
|
(108,412
|
)
|
|
(102,738
|
)
|
|
(318,308
|
)
|
|
(313,321
|
)
|
|
6
|
|
|
2
|
|
||
Total
|
$
|
1,724,418
|
|
|
1,669,066
|
|
|
$
|
5,057,834
|
|
|
4,899,150
|
|
|
3
|
%
|
|
3
|
%
|
Operating Revenue:
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Fleet Management Solutions
|
$
|
997,903
|
|
|
988,424
|
|
|
$
|
2,955,466
|
|
|
2,846,661
|
|
|
1
|
%
|
|
4
|
%
|
Dedicated Transportation Solutions
|
196,648
|
|
|
184,247
|
|
|
581,213
|
|
|
526,882
|
|
|
7
|
|
|
10
|
|
||
Supply Chain Solutions
|
345,453
|
|
|
318,759
|
|
|
999,427
|
|
|
934,253
|
|
|
8
|
|
|
7
|
|
||
Eliminations
|
(71,711
|
)
|
|
(64,965
|
)
|
|
(212,087
|
)
|
|
(188,427
|
)
|
|
10
|
|
|
13
|
|
||
Total
|
$
|
1,468,293
|
|
|
1,426,465
|
|
|
$
|
4,324,019
|
|
|
4,119,369
|
|
|
3
|
%
|
|
5
|
%
|
EBT:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Fleet Management Solutions
|
$
|
112,282
|
|
|
126,433
|
|
|
$
|
306,387
|
|
|
338,603
|
|
|
(11
|
)%
|
|
(10
|
)%
|
Dedicated Transportation Solutions
|
17,587
|
|
|
13,296
|
|
|
48,327
|
|
|
34,701
|
|
|
32
|
|
|
39
|
|
||
Supply Chain Solutions
|
30,954
|
|
|
26,573
|
|
|
79,121
|
|
|
69,961
|
|
|
16
|
|
|
13
|
|
||
Eliminations
|
(12,606
|
)
|
|
(11,998
|
)
|
|
(37,116
|
)
|
|
(35,120
|
)
|
|
5
|
|
|
6
|
|
||
|
148,217
|
|
|
154,304
|
|
|
396,719
|
|
|
408,145
|
|
|
(4
|
)
|
|
(3
|
)
|
||
Unallocated Central Support Services
|
(9,313
|
)
|
|
(10,070
|
)
|
|
(30,193
|
)
|
|
(32,936
|
)
|
|
(8
|
)
|
|
(8
|
)
|
||
Non-operating pension costs
|
(7,206
|
)
|
|
(4,780
|
)
|
|
(21,691
|
)
|
|
(14,351
|
)
|
|
51
|
|
|
51
|
|
||
Other items
|
—
|
|
|
446
|
|
|
(7,650
|
)
|
|
(3,334
|
)
|
|
NM
|
|
|
NM
|
|
||
Earnings from continuing operations before income taxes
|
$
|
131,698
|
|
|
139,900
|
|
|
$
|
337,185
|
|
|
357,524
|
|
|
(6
|
)%
|
|
(6
|
)%
|
(1)
|
Non-GAAP financial measure. Refer to the “Non-GAAP Financial Measures” section of this MD&A for a reconciliation of total revenue to operating revenue, and segment total revenue to segment operating revenue, as well as the reasons why management believes these measures are important to investors.
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
|
Change 2016/2015
|
||||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Three Months
|
|
Nine Months
|
||||||||
|
(Dollars in thousands)
|
|
|
|
|
||||||||||||||
Equipment Contribution:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Dedicated Transportation Solutions
|
$
|
8,047
|
|
|
8,527
|
|
|
$
|
24,214
|
|
|
24,351
|
|
|
(6
|
)%
|
|
(1
|
)%
|
Supply Chain Solutions
|
4,559
|
|
|
3,471
|
|
|
12,902
|
|
|
10,769
|
|
|
31
|
|
|
20
|
|
||
Total
|
$
|
12,606
|
|
|
11,998
|
|
|
$
|
37,116
|
|
|
35,120
|
|
|
5
|
%
|
|
6
|
%
|
|
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||
Description
|
|
Classification
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||
|
|
|
|
(In thousands)
|
||||||||||||
Non-operating pension costs
|
|
SG&A
|
|
$
|
(7,206
|
)
|
|
(4,780
|
)
|
|
$
|
(21,691
|
)
|
|
(14,351
|
)
|
Pension-related adjustments
(1)
|
|
SG&A
|
|
—
|
|
|
509
|
|
|
(7,650
|
)
|
|
509
|
|
||
Professional fees
(2)
|
|
SG&A
|
|
—
|
|
|
(63
|
)
|
|
—
|
|
|
(3,843
|
)
|
||
|
|
|
|
$
|
(7,206
|
)
|
|
(4,334
|
)
|
|
$
|
(29,341
|
)
|
|
(17,685
|
)
|
(1)
|
See
Note 11
, “
Employee Benefit Plans
,” in the Notes to Consolidated Condensed Financial Statements for a discussion of adjustments.
|
(2)
|
Charges related to professional fees associated with cost savings initiatives.
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
|
Change 2016/2015
|
||||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Three Months
|
|
Nine Months
|
||||||||
|
(Dollars in thousands)
|
|
|
|
|
|
|||||||||||||
Full service lease
|
$
|
649,208
|
|
|
609,300
|
|
|
$
|
1,918,419
|
|
|
1,782,106
|
|
|
7
|
%
|
|
8
|
%
|
Contract maintenance
|
50,186
|
|
|
48,623
|
|
|
151,489
|
|
|
143,559
|
|
|
3
|
|
|
6
|
|
||
Contractual revenue
|
699,394
|
|
|
657,923
|
|
|
2,069,908
|
|
|
1,925,665
|
|
|
6
|
|
|
7
|
|
||
Commercial rental
|
216,592
|
|
|
250,601
|
|
|
636,028
|
|
|
694,745
|
|
|
(14
|
)
|
|
(8
|
)
|
||
Contract-related maintenance
|
62,907
|
|
|
59,904
|
|
|
189,861
|
|
|
169,585
|
|
|
5
|
|
|
12
|
|
||
Other
|
19,010
|
|
|
19,996
|
|
|
59,669
|
|
|
56,666
|
|
|
(5
|
)
|
|
5
|
|
||
Fuel services revenue
|
157,108
|
|
|
169,154
|
|
|
448,986
|
|
|
547,416
|
|
|
(7
|
)
|
|
(18
|
)
|
||
FMS total revenue
|
$
|
1,155,011
|
|
|
1,157,578
|
|
|
$
|
3,404,452
|
|
|
3,394,077
|
|
|
—
|
%
|
|
—
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
FMS operating revenue
(1)
|
$
|
997,903
|
|
|
988,424
|
|
|
$
|
2,955,466
|
|
|
2,846,661
|
|
|
1
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
FMS EBT
|
$
|
112,282
|
|
|
126,433
|
|
|
$
|
306,387
|
|
|
338,603
|
|
|
(11
|
)%
|
|
(10
|
)%
|
FMS EBT as a % of FMS total revenue
|
9.7
|
%
|
|
10.9
|
%
|
|
9.0
|
%
|
|
10.0
|
%
|
|
(120) bps
|
|
(100) bps
|
||||
FMS EBT as a % of FMS operating revenue
(1)
|
11.3
|
%
|
|
12.8
|
%
|
|
10.4
|
%
|
|
11.9
|
%
|
|
(150) bps
|
|
(150) bps
|
(1)
|
Non-GAAP financial measures. Reconciliations of FMS total revenue to FMS operating revenue, FMS EBT as a % of FMS total revenue to FMS EBT as a % of FMS operating revenue, as well as the reasons why management believes these measures are important to investors are included in the “Non-GAAP Financial Measures” section of this MD&A.
|
|
Three months ended September 30, 2016
|
|
Nine months ended September 30, 2016
|
||||||||
|
Total
|
|
Operating
(1)
|
|
Total
|
|
Operating
(1)
|
||||
Organic, including price and volume
|
2
|
%
|
|
2
|
%
|
|
4
|
%
|
|
5
|
%
|
Fuel
|
(1
|
)
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
Foreign exchange
|
(1
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|
(1
|
)
|
Net increase
|
—
|
%
|
|
1
|
%
|
|
—
|
%
|
|
4
|
%
|
(1)
|
Non-GAAP financial measure. A reconciliation of FMS total revenue to FMS operating revenue as well as the reasons why management believes this measure is important to investors is included in the "Non-GAAP Financial Measures" section of this MD&A.
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
|
Change 2016/2015
|
||||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Three Months
|
|
Nine Months
|
||||||||
|
(Dollars in thousands)
|
|
|
|
|
||||||||||||||
Rental revenue from non-lease customers
|
$
|
141,836
|
|
|
159,912
|
|
|
$
|
397,305
|
|
|
420,356
|
|
|
(11
|
)%
|
|
(5
|
)%
|
Rental revenue from lease customers
(1)
|
$
|
74,756
|
|
|
90,689
|
|
|
$
|
238,723
|
|
|
274,389
|
|
|
(18
|
)%
|
|
(13
|
)%
|
Average commercial rental power fleet size — in service
(2),
(3)
|
30,900
|
|
|
35,500
|
|
|
31,700
|
|
|
33,400
|
|
|
(13
|
)%
|
|
(5
|
)%
|
||
Commercial rental utilization — power fleet
(2)
|
76.7
|
%
|
|
76.4
|
%
|
|
73.9
|
%
|
|
76.0
|
%
|
|
30 bps
|
|
(210) bps
|
(1)
|
Represents revenue from rental vehicles provided to our existing full service lease customers, generally in place of a lease vehicle.
|
(2)
|
Number of units rounded to nearest hundred and calculated using quarterly average unit counts.
|
(3)
|
Excluding trailers.
|
|
|
|
|
|
|
|
Change
|
|||||||
|
September 30, 2016
|
|
December 31, 2015
|
|
September 30, 2015
|
|
Sept. 2016/Dec. 2015
|
|
Sept. 2016/Sept. 2015
|
|||||
End of period vehicle count
|
|
|
|
|
|
|
|
|
|
|||||
By type:
|
|
|
|
|
|
|
|
|
|
|||||
Trucks
(1)
|
73,500
|
|
|
72,800
|
|
|
72,900
|
|
|
1
|
%
|
|
1
|
%
|
Tractors
(2)
|
68,600
|
|
|
68,700
|
|
|
67,100
|
|
|
—
|
|
|
2
|
|
Trailers
(3), (4)
|
42,300
|
|
|
42,400
|
|
|
42,500
|
|
|
—
|
|
|
—
|
|
Other
|
1,200
|
|
|
1,300
|
|
|
1,300
|
|
|
(8
|
)
|
|
(8
|
)
|
Total
|
185,600
|
|
|
185,200
|
|
|
183,800
|
|
|
—
|
%
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||
By ownership:
|
|
|
|
|
|
|
|
|
|
|||||
Owned
|
184,100
|
|
|
184,700
|
|
|
182,200
|
|
|
—
|
%
|
|
1
|
%
|
Leased
|
1,500
|
|
|
500
|
|
|
1,600
|
|
|
200
|
|
|
(6
|
)
|
Total
|
185,600
|
|
|
185,200
|
|
|
183,800
|
|
|
—
|
%
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||
By product line:
(4)
|
|
|
|
|
|
|
|
|
|
|||||
Full service lease
|
136,600
|
|
|
131,800
|
|
|
130,600
|
|
|
4
|
%
|
|
5
|
%
|
Commercial rental
|
38,000
|
|
|
42,100
|
|
|
43,800
|
|
|
(10
|
)
|
|
(13
|
)
|
Service vehicles and other
|
3,500
|
|
|
3,300
|
|
|
3,300
|
|
|
6
|
|
|
6
|
|
Active units
|
178,100
|
|
|
177,200
|
|
|
177,700
|
|
|
1
|
|
|
—
|
|
Held for sale
|
7,500
|
|
|
8,000
|
|
|
6,100
|
|
|
(6
|
)
|
|
23
|
|
Total
|
185,600
|
|
|
185,200
|
|
|
183,800
|
|
|
—
|
%
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||
Customer vehicles under contract maintenance
|
49,300
|
|
|
46,700
|
|
|
41,500
|
|
|
6
|
%
|
|
19
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|||||
Quarterly average vehicle count
|
|
|
|
|
|
|
|
|
|
|||||
By product line:
|
|
|
|
|
|
|
|
|
|
|||||
Full service lease
|
135,100
|
|
|
131,100
|
|
|
129,900
|
|
|
3
|
%
|
|
4
|
%
|
Commercial rental
|
38,300
|
|
|
43,200
|
|
|
43,800
|
|
|
(11
|
)
|
|
(13
|
)
|
Service vehicles and other
|
3,300
|
|
|
3,300
|
|
|
3,300
|
|
|
—
|
|
|
—
|
|
Active units
|
176,700
|
|
|
177,600
|
|
|
177,000
|
|
|
(1
|
)
|
|
—
|
|
Held for sale
|
8,700
|
|
|
6,900
|
|
|
5,900
|
|
|
26
|
|
|
47
|
|
Total
|
185,400
|
|
|
184,500
|
|
|
182,900
|
|
|
—
|
%
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||
Customer vehicles under contract maintenance
|
49,600
|
|
|
45,500
|
|
|
41,400
|
|
|
9
|
%
|
|
20
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||
Customer vehicles under on-demand maintenance
(5)
|
8,000
|
|
|
7,200
|
|
|
8,200
|
|
|
11
|
%
|
|
(2
|
)%
|
|
|
|
|
|
|
|
|
|
|
|||||
Total vehicles under service
|
243,000
|
|
|
237,200
|
|
|
232,500
|
|
|
2
|
%
|
|
5
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|||||
Year-to-date average vehicle count
|
|
|
|
|
|
|
|
|
|
|||||
By product line:
|
|
|
|
|
|
|
|
|
|
|||||
Full service lease
|
133,800
|
|
|
128,800
|
|
|
128,000
|
|
|
4
|
%
|
|
5
|
%
|
Commercial rental
|
39,600
|
|
|
42,400
|
|
|
42,100
|
|
|
(7
|
)
|
|
(6
|
)
|
Service vehicles and other
|
3,400
|
|
|
3,200
|
|
|
3,200
|
|
|
6
|
|
|
6
|
|
Active units
|
176,800
|
|
|
174,400
|
|
|
173,300
|
|
|
1
|
|
|
2
|
|
Held for sale
|
8,600
|
|
|
6,100
|
|
|
5,800
|
|
|
41
|
|
|
48
|
|
Total
|
185,400
|
|
|
180,500
|
|
|
179,100
|
|
|
3
|
%
|
|
4
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||
Customer vehicles under contract maintenance
|
49,000
|
|
|
43,300
|
|
|
42,600
|
|
|
13
|
%
|
|
15
|
%
|
Customer vehicles under on-demand maintenance
(5)
|
22,700
|
|
|
20,000
|
|
|
16,900
|
|
|
NM
|
|
|
34
|
%
|
(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
5,400
UK trailers (
3,500
full service lease and
1,900
commercial rental),
6,100
UK trailers (
3,900
full service lease and
2,200
commercial rental) and
6,500
UK trailers (
4,300
full service lease and
2,200
commercial rental) as of
September 30, 2016
,
December 31, 2015
, and
September 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
|
||||
|
September 30,
2016 |
|
December 31,
2015 |
|
September 30,
2015 |
|
Sept. 2016/Dec. 2015
|
|
Sept. 2016/Sept. 2015
|
||
Not yet earning revenue (NYE)
|
1,900
|
|
2,800
|
|
2,800
|
|
(32
|
)%
|
|
(32
|
)%
|
No longer earning revenue (NLE):
|
|
|
|
|
|
|
|
|
|
||
Units held for sale
|
7,500
|
|
8,000
|
|
6,100
|
|
(6
|
)
|
|
23
|
|
Other NLE units
|
5,000
|
|
3,300
|
|
3,900
|
|
52
|
|
|
28
|
|
Total
|
14,400
|
|
14,100
|
|
12,800
|
|
2
|
%
|
|
13
|
%
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
|
Change 2016/2015
|
||||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Three Months
|
|
Nine Months
|
||||||||
|
(Dollars in thousands)
|
|
|
|
|
||||||||||||||
DTS total revenue
|
$
|
260,921
|
|
|
226,921
|
|
|
$
|
764,025
|
|
|
663,094
|
|
|
15
|
%
|
|
15
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
DTS operating revenue
(1)
|
$
|
196,648
|
|
|
184,247
|
|
|
$
|
581,213
|
|
|
526,882
|
|
|
7
|
%
|
|
10
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
DTS EBT
|
$
|
17,587
|
|
|
13,296
|
|
|
$
|
48,327
|
|
|
34,701
|
|
|
32
|
%
|
|
39
|
%
|
DTS EBT as a % of DTS total revenue
|
6.7
|
%
|
|
5.9
|
%
|
|
6.3
|
%
|
|
5.2
|
%
|
|
80 bps
|
|
110 bps
|
||||
DTS EBT as a % of DTS operating revenue
(1)
|
8.9
|
%
|
|
7.2
|
%
|
|
8.3
|
%
|
|
6.6
|
%
|
|
170 bps
|
|
170 bps
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Memo:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Average fleet
|
8,300
|
|
|
7,900
|
|
|
8,200
|
|
|
7,700
|
|
|
5
|
%
|
|
6
|
%
|
(1)
|
Non-GAAP financial measures. Reconciliations of DTS total revenue to DTS operating revenue, DTS EBT as a % of DTS total revenue to DTS EBT as a % of DTS operating revenue, as well as the reasons why management believes these measures are important to investors are included in the “Non-GAAP Financial Measures” section of this MD&A.
|
|
Three months ended September 30, 2016
|
|
Nine months ended September 30, 2016
|
||||||||
|
Total
|
|
Operating
(1)
|
|
Total
|
|
Operating
(1)
|
||||
Organic, including price and volume
|
16
|
%
|
|
7
|
%
|
|
18
|
%
|
|
10
|
%
|
Fuel
|
(1
|
)
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
Net increase
|
15
|
%
|
|
7
|
%
|
|
15
|
%
|
|
10
|
%
|
(1)
|
Non-GAAP financial measure. A reconciliation of DTS total revenue to DTS operating revenue, as well as the reasons why management believes this measure is important to investors is included in the "Non-GAAP Financial Measures" section of this MD&A.
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
|
Change 2016/2015
|
||||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Three Months
|
|
Nine Months
|
||||||||
|
(Dollars in thousands)
|
|
|
|
|
||||||||||||||
Automotive
|
$
|
140,785
|
|
|
118,786
|
|
|
$
|
407,083
|
|
|
347,284
|
|
|
19
|
%
|
|
17
|
%
|
Technology and healthcare
|
61,425
|
|
|
62,456
|
|
|
177,138
|
|
|
185,762
|
|
|
(2
|
)
|
|
(5
|
)
|
||
CPG and Retail
|
110,840
|
|
|
109,550
|
|
|
324,814
|
|
|
322,977
|
|
|
1
|
|
|
1
|
|
||
Industrial and other
|
32,403
|
|
|
27,967
|
|
|
90,392
|
|
|
78,230
|
|
|
16
|
|
|
16
|
|
||
Subcontracted transportation
|
56,089
|
|
|
53,960
|
|
|
162,743
|
|
|
171,957
|
|
|
4
|
|
|
(5
|
)
|
||
Fuel
(1)
|
15,356
|
|
|
14,586
|
|
|
45,495
|
|
|
49,090
|
|
|
5
|
|
|
(7
|
)
|
||
SCS total revenue
|
$
|
416,898
|
|
|
387,305
|
|
|
$
|
1,207,665
|
|
|
1,155,300
|
|
|
8
|
%
|
|
5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
SCS operating revenue
(2)
|
$
|
345,453
|
|
|
318,759
|
|
|
$
|
999,427
|
|
|
934,253
|
|
|
8
|
%
|
|
7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
SCS EBT
|
$
|
30,954
|
|
|
26,573
|
|
|
$
|
79,121
|
|
|
69,961
|
|
|
16
|
%
|
|
13
|
%
|
SCS EBT as a % of SCS total revenue
|
7.4
|
%
|
|
6.9
|
%
|
|
6.6
|
%
|
|
6.1
|
%
|
|
50 bps
|
|
50 bps
|
||||
SCS EBT as a % of SCS operating revenue
(2)
|
9.0
|
%
|
|
8.3
|
%
|
|
7.9
|
%
|
|
7.5
|
%
|
|
70 bps
|
|
40 bps
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Memo:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Average fleet
|
7,400
|
|
|
6,500
|
|
|
7,100
|
|
|
6,300
|
|
|
14
|
%
|
|
13
|
%
|
(1)
|
Includes intercompany fuel sales from FMS to SCS.
|
(2)
|
Non-GAAP financial measures. Reconciliations of SCS total revenue to SCS operating revenue, SCS EBT as a % of SCS total revenue to SCS EBT as a % of SCS operating revenue, as well as the reasons why management believes these measures are important to investors are included in the “Non-GAAP Financial Measures” section of this MD&A.
|
|
Three months ended September 30, 2016
|
|
Nine months ended September 30, 2016
|
||||||||
|
Total
|
|
Operating
(1)
|
|
Total
|
|
Operating
(1)
|
||||
Organic, including price and volume
|
9
|
%
|
|
9
|
%
|
|
7
|
%
|
|
9
|
%
|
Foreign exchange
|
(1
|
)
|
|
(1
|
)
|
|
(2
|
)
|
|
(2
|
)
|
Net increase
|
8
|
%
|
|
8
|
%
|
|
5
|
%
|
|
7
|
%
|
(1)
|
Non-GAAP financial measure. A reconciliation of SCS total revenue to SCS operating revenue, as well as the reasons why management believes this measure is important to investors is included in the "Non-GAAP Financial Measures" section of this MD&A.
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
|
Change 2016/2015
|
||||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Three Months
|
|
Nine Months
|
||||||||
|
(Dollars in thousands)
|
|
|
|
|
||||||||||||||
Human resources
|
$
|
4,184
|
|
|
4,596
|
|
|
$
|
12,968
|
|
|
14,976
|
|
|
(9
|
)%
|
|
(13
|
)%
|
Finance
|
15,143
|
|
|
15,269
|
|
|
44,267
|
|
|
44,317
|
|
|
(1
|
)
|
|
—
|
|
||
Corporate services and public affairs
|
2,471
|
|
|
2,694
|
|
|
7,463
|
|
|
7,803
|
|
|
(8
|
)
|
|
(4
|
)
|
||
Information technology
|
20,466
|
|
|
22,104
|
|
|
60,369
|
|
|
63,228
|
|
|
(7
|
)
|
|
(5
|
)
|
||
Legal and safety
|
5,711
|
|
|
5,974
|
|
|
17,798
|
|
|
18,406
|
|
|
(4
|
)
|
|
(3
|
)
|
||
Marketing
|
4,336
|
|
|
7,049
|
|
|
14,220
|
|
|
17,177
|
|
|
(38
|
)
|
|
(17
|
)
|
||
Other
|
4,949
|
|
|
6,172
|
|
|
19,550
|
|
|
24,278
|
|
|
(20
|
)
|
|
(19
|
)
|
||
Total CSS
|
57,260
|
|
|
63,858
|
|
|
176,635
|
|
|
190,185
|
|
|
(10
|
)
|
|
(7
|
)
|
||
Allocation of CSS to business segments
|
(47,947
|
)
|
|
(53,788
|
)
|
|
(146,442
|
)
|
|
(157,249
|
)
|
|
(11
|
)
|
|
(7
|
)
|
||
Unallocated CSS
|
$
|
9,313
|
|
|
10,070
|
|
|
$
|
30,193
|
|
|
32,936
|
|
|
(8
|
)%
|
|
(8
|
)%
|
|
Nine months ended September 30,
|
|||||
|
2016
|
|
2015
|
|||
|
(In thousands)
|
|||||
Net cash provided by (used in):
|
|
|
|
|||
Operating activities
|
$
|
1,184,744
|
|
|
1,071,336
|
|
Financing activities
|
(55,236
|
)
|
|
664,783
|
|
|
Investing activities
|
(1,108,584
|
)
|
|
(1,707,378
|
)
|
|
Effect of exchange rates on cash
|
(5,567
|
)
|
|
(2,006
|
)
|
|
Net change in cash and cash equivalents
|
$
|
15,357
|
|
|
26,735
|
|
|
Nine months ended September 30,
|
|||||
|
2016
|
|
2015
|
|||
|
(In thousands)
|
|||||
Net cash provided by operating activities from continuing operations
|
$
|
1,184,744
|
|
|
1,071,336
|
|
Sales of revenue earning equipment
(1)
|
331,720
|
|
|
319,766
|
|
|
Sales of operating property and equipment
(1)
|
6,623
|
|
|
1,203
|
|
|
Collections on direct finance leases and other items
(1)
|
60,229
|
|
|
51,166
|
|
|
Total cash generated
(2)
|
1,583,316
|
|
|
1,443,471
|
|
|
Purchases of property and revenue earning equipment
(1)
|
(1,511,359
|
)
|
|
(2,087,294
|
)
|
|
Free cash flow
(2)
|
$
|
71,957
|
|
|
(643,823
|
)
|
|
|
|
|
|||
Memo:
|
|
|
|
|||
Net cash (used in) provided by financing activities
|
$
|
(55,236
|
)
|
|
664,783
|
|
Net cash used in investing activities
|
$
|
(1,108,584
|
)
|
|
(1,707,378
|
)
|
(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 of this MD&A for the reasons why management believes these measures are important to investors.
|
|
Nine months ended September 30,
|
|||||
|
2016
|
|
2015
|
|||
|
(In thousands)
|
|||||
Revenue earning equipment:
|
|
|
|
|||
Full service lease
|
$
|
1,223,141
|
|
|
1,509,420
|
|
Commercial rental
|
79,204
|
|
|
513,307
|
|
|
|
1,302,345
|
|
|
2,022,727
|
|
|
Operating property and equipment
|
101,837
|
|
|
82,874
|
|
|
Total capital expenditures
|
1,404,182
|
|
|
2,105,601
|
|
|
Changes in accounts payable related to purchases of revenue earning equipment
|
107,177
|
|
|
(18,307
|
)
|
|
Cash paid for purchases of property and revenue earning equipment
|
$
|
1,511,359
|
|
|
2,087,294
|
|
|
Rating Summary
|
|
|
||
|
Short-Term
|
|
Long-Term
|
|
Outlook
|
Fitch Ratings
|
F-2
|
|
A-
|
|
Stable
|
Standard & Poor’s Ratings Services
|
A-2
|
|
BBB
|
|
Positive
|
Moody’s Investors Service
|
P-2
|
|
Baa1
|
|
Stable
|
|
(In millions)
|
Global revolving credit facility
|
$514
|
Trade receivables program
|
$175
|
|
Nine months ended September 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
|
73,597
|
|
|
184,750
|
|
|
Proceeds from issuance of medium-term notes
|
298,254
|
|
|
998,551
|
|
|
Proceeds from issuance of other debt instruments
|
—
|
|
|
331,259
|
|
|
Retirement of medium term notes
|
(300,000
|
)
|
|
(660,000
|
)
|
|
Other debt repaid
|
(40,707
|
)
|
|
(135,837
|
)
|
|
Debt issuance costs paid
|
(622
|
)
|
|
(3,395
|
)
|
|
|
30,522
|
|
|
715,328
|
|
|
Non-cash changes in debt:
|
|
|
|
|||
Fair value adjustment on notes subject to hedging
|
8,960
|
|
|
10,964
|
|
|
Addition of capital lease obligations
|
948
|
|
|
5,956
|
|
|
Changes in foreign currency exchange rates and other non-cash items
|
(23,416
|
)
|
|
(15,565
|
)
|
|
Total changes in debt
|
17,014
|
|
|
716,683
|
|
|
Debt balance at September 30
|
$
|
5,519,641
|
|
|
5,434,207
|
|
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
|
39
|
FMS Operating Revenue
|
FMS Total Revenue
|
MD&A - Non-GAAP Financial Measures section
|
40
|
DTS Operating Revenue
|
DTS Total Revenue
|
MD&A - Non-GAAP Financial Measures section
|
40
|
SCS Operating Revenue
|
SCS Total Revenue
|
MD&A - Non-GAAP Financial Measures section
|
40
|
FMS EBT as a % of FMS Operating Revenue
|
FMS EBT as a % of FMS Total Revenue
|
MD&A - Operating Results by Segment, Fleet Management Solutions section
|
40
|
DTS EBT as a % of DTS Operating Revenue
|
DTS EBT as a % of DTS Total Revenue
|
MD&A - Operating Results by Segment, Dedicated Transportation Solutions section
|
40
|
SCS EBT as a % of SCS Operating Revenue
|
SCS EBT as a % of SCS Total Revenue
|
MD&A - Operating Results by Segment, Supply Chain Solutions section
|
40
|
Comparable Earnings Measures
:
|
|
|
|
Comparable Earnings Before Income Tax
|
Earnings Before Income Tax
|
MD&A, Non-GAAP Financial Measures section
|
39
|
Comparable Earnings
|
Earnings from Continuing Operations
|
||
Comparable EPS
|
EPS from Continuing Operations
|
||
Cash Flow Measures
:
|
|
|
|
Total Cash Generated and Free Cash Flow
|
Cash Provided by Operating Activities
|
MD&A - Financial Resources and Liquidity, Cash Flows section
|
32
|
Operating Revenue Measures
:
|
|
|
|
|
Operating Revenue
FMS Operating Revenue
DTS Operating Revenue
SCS Operating Revenue
FMS EBT as a % of FMS Operating Revenue
DTS EBT as a % of DTS Operating Revenue
SCS EBT as a % of SCS 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 believe operating revenue provides useful information to investors as we use it 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 segment operating revenue for each business segment for the same reason. Note: FMS EBT, DTS EBT and SCS EBT, our primary measures of segment performance, are not non-GAAP measures.
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 before income tax (EBT)
Comparable Earnings
Comparable earnings per diluted common share (EPS)
|
Comparable EBT, comparable earnings and comparable EPS are defined, respectively, as GAAP EBT, earnings and EPS, all from continuing operations, excluding (1) non-operating pension costs and (2) any other significant items that are not representative of our business operations. 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 10-Q:
___
(1)
Pension-related adjustments
(in the year to date 2016, third quarter 2015 and year to date 2015). In the second quarter of 2016, it was determined that certain pension benefit improvements made in 2009 were not fully reflected in our projected benefit obligation, resulting in a charge to reflect those pension benefits. Additionally, in the third quarter of 2015, we recognized a benefit from lower than anticipated settlement charges to exit multi-employer pension plans.
(2)
Professional fees
(in the third quarter 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 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, (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 September 30,
|
(In thousands, except per share amounts)
|
|||||||||||||||||||
EBT/Earnings/EPS
|
$
|
131,698
|
|
|
139,900
|
|
|
$
|
85,138
|
|
|
90,811
|
|
|
$
|
1.59
|
|
|
1.70
|
|
Non-operating pension costs
|
7,206
|
|
|
4,780
|
|
|
4,216
|
|
|
2,727
|
|
|
0.08
|
|
|
0.05
|
|
|||
Pension-related adjustments
|
—
|
|
|
(509
|
)
|
|
—
|
|
|
(309
|
)
|
|
—
|
|
|
(0.01
|
)
|
|||
Professional fees
|
—
|
|
|
63
|
|
|
—
|
|
|
39
|
|
|
—
|
|
|
—
|
|
|||
Comparable EBT/ Earnings/ EPS
|
$
|
138,904
|
|
|
144,234
|
|
|
$
|
89,354
|
|
|
93,268
|
|
|
$
|
1.67
|
|
|
1.74
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Nine months ended September 30,
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
EBT/Earnings/EPS
|
$
|
337,185
|
|
|
357,524
|
|
|
$
|
215,365
|
|
|
230,054
|
|
|
$
|
4.02
|
|
|
4.31
|
|
Non-operating pension costs
|
21,691
|
|
|
14,351
|
|
|
12,653
|
|
|
8,190
|
|
|
0.24
|
|
|
0.15
|
|
|||
Pension-related adjustments
|
7,650
|
|
|
(509
|
)
|
|
4,817
|
|
|
(309
|
)
|
|
0.09
|
|
|
(0.01
|
)
|
|||
Professional fees
|
—
|
|
|
3,843
|
|
|
—
|
|
|
2,424
|
|
|
—
|
|
|
0.04
|
|
|||
Tax law change
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,860
|
)
|
|
—
|
|
|
(0.03
|
)
|
|||
Comparable EBT/ Earnings/ EPS
|
$
|
366,526
|
|
|
375,209
|
|
|
$
|
232,835
|
|
|
238,499
|
|
|
$
|
4.35
|
|
|
4.47
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||
|
(Dollars in thousands)
|
||||||||||||
Provision for income taxes
(1)
|
$
|
(46,560
|
)
|
|
(49,089
|
)
|
|
$
|
(121,820
|
)
|
|
(127,470
|
)
|
Income tax effects of non-GAAP adjustments
(1)
|
(2,990
|
)
|
|
(1,877
|
)
|
|
(11,871
|
)
|
|
(7,380
|
)
|
||
Tax law change
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,860
|
)
|
||
Comparable provision for income taxes
(1)
|
$
|
(49,550
|
)
|
|
(50,966
|
)
|
|
$
|
(133,691
|
)
|
|
(136,710
|
)
|
(1)
|
The comparable provision for income taxes is computed using the same methodology as the GAAP provision of income taxes. Income tax effects of non-GAAP adjustments are calculated based on statutory tax rates of the jurisdictions to which the non-GAAP adjustments related.
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||
|
(In thousands)
|
||||||||||||
Total revenue
|
$
|
1,724,418
|
|
|
1,669,066
|
|
|
$
|
5,057,834
|
|
|
4,899,150
|
|
Fuel
|
(162,293
|
)
|
|
(174,984
|
)
|
|
(464,176
|
)
|
|
(565,007
|
)
|
||
Subcontracted transportation
|
(93,832
|
)
|
|
(67,617
|
)
|
|
(269,639
|
)
|
|
(214,774
|
)
|
||
Operating revenue
|
$
|
1,468,293
|
|
|
1,426,465
|
|
|
$
|
4,324,019
|
|
|
4,119,369
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||
|
(In thousands)
|
||||||||||||
FMS total revenue
|
$
|
1,155,011
|
|
|
1,157,578
|
|
|
$
|
3,404,452
|
|
|
3,394,077
|
|
Fuel
(1)
|
(157,108
|
)
|
|
(169,154
|
)
|
|
(448,986
|
)
|
|
(547,416
|
)
|
||
FMS operating revenue
|
$
|
997,903
|
|
|
988,424
|
|
|
$
|
2,955,466
|
|
|
2,846,661
|
|
|
|
|
|
|
|
|
|
||||||
FMS EBT
|
$
|
112,282
|
|
|
126,433
|
|
|
$
|
306,387
|
|
|
338,603
|
|
FMS EBT as a % of FMS total revenue
|
9.7
|
%
|
|
10.9
|
%
|
|
9.0
|
%
|
|
10.0
|
%
|
||
FMS EBT as a % of FMS operating revenue
|
11.3
|
%
|
|
12.8
|
%
|
|
10.4
|
%
|
|
11.9
|
%
|
(1)
|
Includes intercompany fuel sales from FMS to DTS and SCS.
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||
|
(In thousands)
|
||||||||||||
DTS total revenue
|
$
|
260,921
|
|
|
226,921
|
|
|
$
|
764,025
|
|
|
663,094
|
|
Subcontracted transportation
|
(37,743
|
)
|
|
(13,657
|
)
|
|
(106,896
|
)
|
|
(42,817
|
)
|
||
Fuel
(1)
|
(26,530
|
)
|
|
(29,017
|
)
|
|
(75,916
|
)
|
|
(93,395
|
)
|
||
DTS operating revenue
|
$
|
196,648
|
|
|
184,247
|
|
|
$
|
581,213
|
|
|
526,882
|
|
|
|
|
|
|
|
|
|
||||||
DTS EBT
|
$
|
17,587
|
|
|
13,296
|
|
|
$
|
48,327
|
|
|
34,701
|
|
DTS EBT as a % of DTS total revenue
|
6.7
|
%
|
|
5.9
|
%
|
|
6.3
|
%
|
|
5.2
|
%
|
||
DTS EBT as a % of DTS operating revenue
|
8.9
|
%
|
|
7.2
|
%
|
|
8.3
|
%
|
|
6.6
|
%
|
(1)
|
Includes intercompany fuel sales from FMS to DTS.
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||
|
(In thousands)
|
||||||||||||
SCS total revenue
|
$
|
416,898
|
|
|
387,305
|
|
|
$
|
1,207,665
|
|
|
1,155,300
|
|
Subcontracted transportation
|
(56,089
|
)
|
|
(53,960
|
)
|
|
(162,743
|
)
|
|
(171,957
|
)
|
||
Fuel
(1)
|
(15,356
|
)
|
|
(14,586
|
)
|
|
(45,495
|
)
|
|
(49,090
|
)
|
||
SCS operating revenue
|
$
|
345,453
|
|
|
318,759
|
|
|
$
|
999,427
|
|
|
934,253
|
|
|
|
|
|
|
|
|
|
||||||
SCS EBT
|
$
|
30,954
|
|
|
26,573
|
|
|
$
|
79,121
|
|
|
69,961
|
|
SCS EBT as a % of SCS total revenue
|
7.4
|
%
|
|
6.9
|
%
|
|
6.6
|
%
|
|
6.1
|
%
|
||
SCS EBT as a % of SCS operating revenue
|
9.0
|
%
|
|
8.3
|
%
|
|
7.9
|
%
|
|
7.5
|
%
|
(1)
|
Includes intercompany fuel sales from FMS to SCS.
|
•
|
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 anticipated timing of payment of restructuring liabilities;
|
•
|
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 expectations about the need to repatriate foreign cash to the U.S.;
|
•
|
our ability to access commercial paper and other available debt financing in the capital markets;
|
•
|
our expectations regarding the future use and availability of funding sources; and
|
•
|
the anticipated impact of recent accounting pronouncements.
|
•
|
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 and pricing
|
|
|
|
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 new environmental standards
|
|
|
|
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 inability to redeploy vehicles and prepare vehicles for sale in a cost-efficient manner
|
|
|
|
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)
|
|||||
July 1 through July 30, 2016
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
1,678,282
|
|
August 1 through August 31, 2016
|
58,178
|
|
|
64.59
|
|
|
58,178
|
|
|
1,620,104
|
|
|
September 1 through September 30, 2016
|
2,083
|
|
|
67.23
|
|
|
—
|
|
|
1,620,104
|
|
|
Total
|
60,261
|
|
|
$
|
64.68
|
|
|
58,178
|
|
|
|
(1)
|
During the
three months ended September 30, 2016
, we purchased an aggregate of
60,261
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.
|
3.2
|
|
|
By-Laws of Ryder System, Inc., as amended through February 22, 2016*
|
|
|
|
|
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: October 25, 2016
|
By:
|
/s/ Art A. Garcia
|
|
|
Art A. Garcia
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
(Principal Financial & Accounting Officer)
|
|
|
|
ARTICLE I
|
Name
1
|
ARTICLE II
|
Offices
1
|
ARTICLE III
|
Corporate Seal
1
|
ARTICLE IV
|
Stockholders
2
|
ARTICLE V
|
Directors
22
|
ARTICLE VI
|
Officers
28
|
ARTICLE VII
|
Stock Certificates
31
|
ARTICLE VIII
|
Depositories and Checks
33
|
ARTICLE IX
|
Fiscal Year
33
|
ARTICLE X
|
Dividends
33
|
ARTICLE XI
|
Waiver of Notice
33
|
ARTICLE XII
|
Indemnification of and Advance to Officers, Directors,
|
ARTICLE XIII
|
By-Law Amendment
37
|
ARTICLE XIV
|
Continuing Effect of By-Law Provisions
38
|
Ryder System, Inc. and Subsidiaries
|
|||
Ratio of Earnings to Fixed Charges
|
|||
Continuing Operations
|
|||
(Dollars in thousands)
|
|||
|
|
For the nine months ended September 30, 2016
|
|
|
|
||
|
|
||
EARNINGS:
|
|
|
|
Earnings before income taxes
|
|
337,185
|
|
Fixed charges
|
|
144,393
|
|
Add: Amortization of capitalized interest
|
|
456
|
|
Less: Interest capitalized
|
|
—
|
|
Earnings available for fixed charges (A)
|
|
482,034
|
|
|
|
|
|
FIXED CHARGES:
|
|
|
|
Interest and other financial charges
|
|
112,597
|
|
Portion of rents representing interest expense
|
|
31,796
|
|
Total fixed charges (B)
|
|
144,393
|
|
|
|
|
|
RATIO OF EARNINGS TO FIXED CHARGES (A) / (B)
|
|
3.34x
|
|
|
|
|
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:
|
October 25, 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:
|
October 25, 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
|
|
October 25, 2016
|
|
/s/ Art A. Garcia
|
|
Art A. Garcia
Executive Vice President and Chief Financial Officer
|
|
October 25, 2016
|
|