þ
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 |
|
For the fiscal year ended December 31, 2004 | ||
OR | ||
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 |
|
For the transition period from to |
Florida
|
59-0739250 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
3600 N.W.
82
nd
Avenue,
Miami, Florida 33166 |
(305) 500-3726 | |
(Address of principal executive offices, including zip code) | (Telephone number, including area code) |
Documents Incorporated by Reference into this Report | Part of Form 10-K into which Document is Incorporated | |
Ryder System, Inc. 2005 Proxy Statement
|
Part III |
Title of each class | Name of exchange on which registered | |
Ryder System, Inc. Common Stock ($0.50 par value)
|
New York Stock Exchange | |
Ryder System, Inc. 9% Series G Bonds, due May 15,
2016
|
New York Stock Exchange | |
Ryder System, Inc.
9
7
/
8
%
Series K Bonds, due May 15, 2017
|
New York Stock Exchange |
Page No. | ||||||||
PART I | ||||||||
1 | ||||||||
12 | ||||||||
12 | ||||||||
12 | ||||||||
PART II | ||||||||
13 | ||||||||
14 | ||||||||
15 | ||||||||
42 | ||||||||
43 | ||||||||
95 | ||||||||
95 | ||||||||
95 | ||||||||
PART III | ||||||||
95 | ||||||||
95 | ||||||||
96 | ||||||||
96 | ||||||||
96 | ||||||||
PART IV | ||||||||
96 | ||||||||
97 | ||||||||
SIGNATURES | 100 | |||||||
Directors Stock Award Plan | ||||||||
Directors Stock Award Plan as Amended | ||||||||
EX-10.10 | ||||||||
EX-21.1 | ||||||||
EX-23.1 | ||||||||
EX-24.1 | ||||||||
EX-31.1 | ||||||||
EX-31.2 | ||||||||
EX-32 |
i
Fleet Management Solutions |
1
Service | Description | |
Insurance
|
Liability insurance coverage under Ryders insurance program which includes monthly invoicing, discounts based on driver performance and vehicle specifications, flexible deductibles and claims administration; gap insurance; fleet risk assessment | |
Safety
|
Establishing safety standards; providing safety training, driver certification, prescreening and road tests; safety audits; instituting procedures for transport of hazardous materials; coordinating drug and alcohol testing; loss prevention consulting | |
Fuel
|
Fuel purchasing (both in bulk and at the pump) at competitive prices; fuel planning; fuel tax reporting; centralized billing; fuel cards | |
Administrative
|
Vehicle use and other tax reporting; permitting and licensing; regulatory compliance (including hours of service administration) | |
Environmental management
|
Storage tank monitoring; stormwater management; environmental training; ISO 14001 certification |
2
| deliver unparalleled maintenance, environmental and safety services to our customers; | |
| offer a wide range of support services that complement our leasing, rental and maintenance businesses; | |
| optimize asset utilization and management; and | |
| offer competitive pricing through cost management initiatives and increased pricing discipline on new business. |
Supply Chain Solutions |
3
4
| offer strategically-focused comprehensive supply chain solutions to our customers; | |
| leverage the expertise and resources of our FMS business; | |
| achieve strong partnering relationships with our customers; | |
| be a market innovator by continuously improving the effectiveness and efficiency of our solution delivery model; | |
| serve our customers global needs as lead manager, integrator and high-value operator; and | |
| create shareholder value for our customers. |
Dedicated Contract Carriage |
5
| align our DCC and SCS businesses to create revenue opportunities and improve operating efficiencies in both segments, particularly through increased backhaul utilization; | |
| increase market share for customers that operate closed loop distribution systems that require a more comprehensive transportation solution; | |
| leverage the expertise and resources of our FMS business; and | |
| expand our DCC support services to create customized transportation solutions for new customers and improve the solutions we have created for existing customers. |
International |
6
E-Commerce Solutions |
| e - Fulfillment provides end-to-end management of the fulfillment channel from order entry to final delivery, including web-enabled inventory visibility, transportation planning/management, value-added services and reverse logistics; | |
| Ryder.com includes a range of web-enabled tools that allow SCS and DCC customers to access information and enhance supply chain performance; | |
| RyderTrac/ RyderShip/ RyderFlow web-enabled shipment tracking system; | |
| RyderFleetProducts.com after market distributor of a complete range of truck parts, shop supplies, safety products and automotive products for private fleets; | |
| Usedtrucks.Ryder.com listing of Road Ready used vehicles for sale from Ryders extensive fleet including maintenance histories; and | |
| RyderSafetyServices.com after market distributor of a complete range of safety products and services related to fleet management. |
Administration |
Regulation |
7
Safety |
Risk Management |
Competition |
8
Employees |
Name | Age | Position | ||
Gregory T. Swienton
|
55 | Chairman, President and Chief Executive Officer | ||
Robert D. Fatovic
|
39 | Executive Vice President, General Counsel and Corporate Secretary | ||
Art A. Garcia
|
43 | Vice President and Controller | ||
Gregory F. Greene
|
45 | Senior Vice President, Strategic Planning and Development | ||
Bobby J. Griffin
|
56 | Executive Vice President, International Operations | ||
Gregory E. Hyland
|
54 | Executive Vice President, U.S. Fleet Management Solutions | ||
Tracy A. Leinbach
|
45 | Executive Vice President and Chief Financial Officer | ||
Vicki A. OMeara
|
47 | Executive Vice President and Chief of Corporate Operations | ||
Thomas S. Renehan
|
42 | Senior Vice President, Asset Management, Sales and Marketing | ||
Robert E. Sanchez
|
39 | Senior Vice President and Chief Information Officer | ||
Anthony G. Tegnelia
|
59 | Executive Vice President, U.S. Supply Chain Solutions | ||
Jennifer E. Thomas
|
42 | Senior Vice President and Chief Human Resources Officer |
9
10
11
12
Ryder Common Stock Prices |
Stock Price | Dividends per | |||||||||||
Common | ||||||||||||
High | Low | Share | ||||||||||
2004
|
||||||||||||
First quarter
|
$ | 38.99 | 33.61 | 0.15 | ||||||||
Second quarter
|
40.93 | 35.13 | 0.15 | |||||||||
Third quarter
|
47.14 | 37.92 | 0.15 | |||||||||
Fourth quarter
|
55.55 | 46.21 | 0.15 | |||||||||
Full year
|
$ | 55.55 | 33.61 | 0.60 | ||||||||
2003
|
||||||||||||
First quarter
|
$ | 23.94 | 20.26 | 0.15 | ||||||||
Second quarter
|
27.34 | 20.00 | 0.15 | |||||||||
Third quarter
|
31.26 | 23.10 | 0.15 | |||||||||
Fourth quarter
|
34.65 | 28.14 | 0.15 | |||||||||
Full year
|
$ | 34.65 | 20.00 | 0.60 | ||||||||
Purchases of Equity Securities |
Total Number of | ||||||||||||||||
Shares Purchased | Maximum Number of | |||||||||||||||
Total Number | Average Price | as Part of Publicly | Shares That May Yet | |||||||||||||
of Shares | Paid per | Announced | Be Purchased Under | |||||||||||||
Purchased (1),(2) | Share | Program (1) | the Program (1) | |||||||||||||
(Shares in thousands) | ||||||||||||||||
October 1 through October 31, 2004
|
175,755 | $ | 47.88 | 170,214 | 2,467,786 | |||||||||||
November 1 through November 30, 2004
|
156,138 | 51.31 | 154,000 | 2,313,786 | ||||||||||||
December 1 through December 31, 2004
|
262,917 | 51.60 | 168,000 | 2,145,786 | ||||||||||||
Total
|
594,810 | $ | 50.43 | 492,214 | 2,145,786 | |||||||||||
(1) | In July 2004, we announced a two-year share repurchase program providing for the repurchase of up to 3.5 million shares of our common stock. Under the program, we have purchased in open-market transactions a total of 1,354,214 shares of our common stock at December 31, 2004, a portion of which was purchased through a 10b5-1 trading plan. |
(2) | During the three months ended December 31, 2004, we purchased an aggregate of 492,214 shares of our common stock as part of our share repurchase program and an aggregate of 102,596 shares of our common stock in employee-related transactions outside of the share repurchase program. Employee-related transactions include: (i) shares of common stock delivered as payment for the exercise price of options exercised or to satisfy the option holders withholding tax liability associated with our stock-based compensation programs and (ii) open-market purchases by the trustee of Ryders deferred compensation plan relating to investments by employees in our common stock, one of the investment options available under the plan. |
13
Years ended December 31 | |||||||||||||||||||||
2004 | 2003 | 2002 | 2001 | 2000 | |||||||||||||||||
(Dollars in thousands, except per share amounts) | |||||||||||||||||||||
Operating Data:
|
|||||||||||||||||||||
Revenue
|
$ | 5,150,278 | 4,802,294 | 4,776,265 | 5,006,123 | 5,336,792 | |||||||||||||||
Earnings before accounting
changes
(1)
|
$ | 215,609 | 135,559 | 112,565 | 18,678 | 89,032 | |||||||||||||||
Net
earnings
(1),(2)
|
$ | 215,609 | 131,436 | 93,666 | 18,678 | 89,032 | |||||||||||||||
Per Common Share Data:
|
|||||||||||||||||||||
Earnings before accounting changes
Diluted
(1)
|
$ | 3.28 | 2.12 | 1.80 | 0.31 | 1.49 | |||||||||||||||
Net earnings
Diluted
(1),(2)
|
$ | 3.28 | 2.06 | 1.50 | 0.31 | 1.49 | |||||||||||||||
Cash dividends
|
$ | 0.60 | 0.60 | 0.60 | 0.60 | 0.60 | |||||||||||||||
Book
value
(3)
|
$ | 23.48 | 20.85 | 17.75 | 20.24 | 20.86 | |||||||||||||||
Financial Data:
|
|||||||||||||||||||||
Total asset
|
$ | 5,637,933 | 5,287,664 | 4,766,982 | 4,927,161 | 5,474,923 | |||||||||||||||
Average assets
|
$ | 5,459,600 | 4,964,880 | 4,845,689 | 5,156,489 | 5,691,121 | |||||||||||||||
Return on average assets(%)
|
3.9 | 2.6 | 1.9 | 0.4 | 1.6 | ||||||||||||||||
Average asset turnover(%)
|
94.3 | 96.7 | 98.6 | 97.1 | 93.8 | ||||||||||||||||
Total debt
|
$ | 1,783,216 | 1,815,900 | 1,551,468 | 1,708,684 | 2,016,980 | |||||||||||||||
Long-term debt
|
$ | 1,393,666 | 1,449,489 | 1,389,099 | 1,391,597 | 1,604,242 | |||||||||||||||
Shareholders
equity
(3)
|
$ | 1,510,188 | 1,344,385 | 1,108,215 | 1,230,669 | 1,252,708 | |||||||||||||||
Debt to
equity(%)
(3)
|
118 | 135 | 140 | 139 | 161 | ||||||||||||||||
Average shareholders
equity
(3)
|
$ | 1,412,039 | 1,193,850 | 1,246,068 | 1,242,543 | 1,225,910 | |||||||||||||||
Return on average shareholders equity(%)
(3)
|
15.3 | 11.0 | 7.5 | 1.5 | 7.3 | ||||||||||||||||
Net cash provided by operating activities
|
$ | 883,034 | 811,302 | 614,703 | 356,671 | 1,022,967 | |||||||||||||||
Capital expenditures
|
$ | 1,091,582 | 733,577 | 582,217 | 704,566 | 1,296,218 | |||||||||||||||
Other Data:
|
|||||||||||||||||||||
Average common shares Diluted (in thousands)
|
65,671 | 63,871 | 62,587 | 60,665 | 59,759 | ||||||||||||||||
Number of vehicles Owned and leased
|
164,400 | 160,200 | 161,400 | 170,100 | 176,300 | ||||||||||||||||
Number of employees
|
26,300 | 26,700 | 27,800 | 29,500 | 33,100 |
Note: | Certain prior year amounts have been reclassified to conform to the current year presentation. |
(1) | Earnings include restructuring and other (recoveries) charges, net of $(11) million after-tax, or $(0.17) per diluted common share in 2004, $2 million after-tax, or $0.04 per diluted common share in 2002, $81 million after-tax, or $1.34 per diluted common share in 2001 and $26 million after-tax, or $0.44 per diluted common share in 2000. Earnings also include goodwill and intangible amortization totaling $12 million after-tax, or $0.19 per diluted common share in 2001 and $10 million after-tax, or $0.17 per diluted common share in 2000. In addition, earnings include net income tax benefits of $9 million, or $0.14 per diluted common share in 2004, associated with developments in various tax matters and $7 million, or $0.11 per diluted common share in 2001, as a result of a change in Canadian tax law that reduced deferred taxes of our Canadian operations. |
(2) | Net earnings for 2003 include the cumulative effect of a change in accounting principle for (i) variable interest entities resulting in an after-tax charge of $3 million, or $0.05 per diluted common share and (ii) costs associated with eventual retirement of long-lived assets primarily relating to components of revenue earning equipment resulting in an after-tax charge of $1 million, or $0.02 per diluted common share. Net earnings for 2002 include the cumulative effect of a change in accounting principle for goodwill resulting in an after-tax charge of $19 million, or $0.30 per diluted common share. |
(3) | Shareholders equity at December 31, 2004, 2003 and 2002 reflects after-tax equity charges of $189 million, $187 million and $229 million, respectively, related to the accrual of additional minimum pension liability. |
14
| Net earnings increased 64% to $216 million compared with $131 million in 2003. After-tax earnings in 2004 benefited from gains on the sale of our headquarters complex of $15 million and net income tax benefits of $9 million associated with developments in various tax matters. Excluding these items, the earnings improvement was driven by the positive impact of FMS acquisitions, improved FMS commercial rental performance, higher gains on FMS used vehicle sales, lower pension costs, and reductions in operating expenses stemming from cost management and process improvement actions. | |
| Total revenue increased 7% to $5.2 billion compared with 2003 due to the growth in FMS. During 2004, FMS revenue was positively impacted by acquisitions and higher rental revenue resulting from better pricing and increased activity. Revenue comparisons for 2004 were also favorably impacted by increased FMS fuel services revenue primarily as a result of higher average fuel prices, and foreign currency exchange rate changes related to our international operations. | |
| We continued to target strategic opportunities in FMS. In March, Ryder completed the acquisition of Ruan Leasing Company for $148 million. This acquisition enabled us to leverage our existing infrastructure within FMS and drive profitable growth. We also completed two acquisitions related to FMS at the end of 2003. | |
| Capital expenditures increased to $1.1 billion compared with $734 million in 2003. The increase in capital expenditures was due primarily to increased activity in our full service lease business for both new and replacement vehicles. | |
| Our debt to equity ratio declined to 118% from 135% in 2003. Total obligations to equity ratio declined to 129% from 146% in 2003. The decline in our leverage ratios was driven by our reduced |
15
funding needs as a result of improved operating performance and higher proceeds from sales of property and revenue earning equipment. |
| The IRS proposed adjustments related to our 1998 to 2000 tax period which were resolved in February 2005. See Note 11, Income Taxes, in the Notes to Consolidated Financial Statements. |
FMS Acquisitions |
Accounting Changes |
16
Years ended December 31
2004
2003
2002
(In thousands, except per share
amounts)
$
331,122
212,475
175,883
115,513
76,916
63,318
$
215,609
135,559
112,565
$
3.28
2.12
1.80
$
215,609
131,436
93,666
$
3.28
2.06
1.50
65,671
63,871
62,587
(1) | Results include restructuring and other (recoveries) charges, net of $(11) million after-tax, or $(0.17) per diluted common share, in 2004 and $2 million after-tax, or $0.04 per diluted common share, in 2002. See Note 4, Restructuring and Other (Recoveries) Charges, Net, in the Notes to Consolidated Financial Statements for additional discussion. |
(2) | 2004 includes a net income tax benefit of $9 million, or $0.14 per diluted common share, associated with developments in various tax matters. See Note 11, Income Taxes, in the Notes to Consolidated Financial Statements for additional discussion. |
(3) | Net earnings for 2003 include the cumulative effect of a change in accounting principle for (i) variable interest entities resulting in an after-tax charge of $3 million, or $0.05 per diluted common share, and (ii) costs associated with eventual retirement of long-lived assets primarily relating to components of revenue earning equipment resulting in an after-tax charge of $1 million, or $0.02 per diluted common share. Net earnings for 2002 include the cumulative effect of a change in accounting principle for goodwill resulting in an after-tax charge of $19 million, or $0.30 per diluted common share. |
17
Years ended December 31 | ||||||||||||||
2004 | 2003 | 2002 | ||||||||||||
(In thousands) | ||||||||||||||
Revenue:
|
||||||||||||||
Fleet Management Solutions
|
$ | 3,602,839 | 3,231,675 | 3,183,022 | ||||||||||
Supply Chain Solutions
|
1,354,003 | 1,362,428 | 1,388,299 | |||||||||||
Dedicated Contract Carriage
|
506,100 | 514,731 | 517,961 | |||||||||||
Eliminations
|
(312,664 | ) | (306,540 | ) | (313,017 | ) | ||||||||
Total
|
$ | 5,150,278 | 4,802,294 | 4,776,265 | ||||||||||
Years ended December 31 | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
(In thousands) | ||||||||||||
Operating expense
|
$ | 2,305,703 | 2,039,156 | 1,949,384 | ||||||||
Percentage of revenue
|
45% | 42% | 41% |
18
Years ended December 31
2004
2003
2002
(In thousands)
$
1,233,038
1,242,930
1,268,704
24%
26%
27%
Years ended December 31 | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
(In thousands) | ||||||||||||
Freight under management expense
|
$ | 426,739 | 414,284 | 414,369 | ||||||||
Percentage of revenue
|
8% | 9% | 9% |
Years ended December 31 | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
(In thousands) | ||||||||||||
Depreciation expense
|
$ | 706,028 | 624,580 | 552,491 | ||||||||
Gains on vehicle sales, net
|
(34,504 | ) | (15,780 | ) | (14,223 | ) | ||||||
Equipment rental
|
108,468 | 200,868 | 343,531 |
19
Years ended December 31 | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
(In thousands) | ||||||||||||
Interest expense
|
$ | 100,114 | 96,169 | 91,718 | ||||||||
Percentage of revenue
|
2% | 2% | 2% |
Years ended December 31 | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
(In thousands) | ||||||||||||
Miscellaneous income, net
|
$ | (8,754 | ) | (12,158 | ) | (9,808 | ) |
20
Years ended December 31 | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
(In thousands) | ||||||||||||
Restructuring and other (recoveries) charges, net
|
$ | (17,676 | ) | (230 | ) | 4,216 |
Years ended December 31 | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
(In thousands) | ||||||||||||
Provision for income taxes
|
$ | 115,513 | 76,916 | 63,318 | ||||||||
Effective tax rate
|
34.9% | 36.2% | 36.0% |
21
Years ended December 31
2004
2003
2002
(In thousands)
$
3,602,839
3,231,675
3,183,022
1,354,003
1,362,428
1,388,299
506,100
514,731
517,961
(312,664
)
(306,540
)
(313,017
)
$
5,150,278
4,802,294
4,776,265
$
312,706
194,940
214,692
37,079
40,064
(7,485
)
29,450
35,259
32,113
(32,728
)
(33,586
)
(34,636
)
346,507
236,677
204,684
(33,061
)
(24,432
)
(24,585
)
17,676
230
(4,216
)
$
331,122
212,475
175,883
22
Years ended December 31 | ||||||||||||||
2004 | 2003 | 2002 | ||||||||||||
(In thousands) | ||||||||||||||
Equipment Contribution:
|
||||||||||||||
Supply Chain Solutions
|
$ | 14,971 | 15,319 | 15,454 | ||||||||||
Dedicated Contract Carriage
|
17,757 | 18,267 | 19,182 | |||||||||||
Total
|
$ | 32,728 | 33,586 | 34,636 | ||||||||||
Fleet Management Solutions |
Years ended December 31 | |||||||||||||
2004 | 2003 | 2002 | |||||||||||
(In thousands) | |||||||||||||
Full service lease and programmed maintenance
|
$ | 1,896,041 | 1,791,478 | 1,795,254 | |||||||||
Commercial rental
|
590,984 | 490,864 | 458,355 | ||||||||||
Other
|
313,616 | 308,606 | 346,770 | ||||||||||
Dry
revenue
(1)
|
2,800,641 | 2,590,948 | 2,600,379 | ||||||||||
Fuel services revenue
|
802,198 | 640,727 | 582,643 | ||||||||||
Total revenue
|
$ | 3,602,839 | 3,231,675 | 3,183,022 | |||||||||
Segment NBT
|
$ | 312,706 | 194,940 | 214,692 | |||||||||
Segment NBT as a % of total revenue
|
8.7% | 6.0% | 6.7% | ||||||||||
Segment NBT as a % of dry
revenue
(1)
|
11.2% | 7.5% | 8.3% | ||||||||||
(1) | We use dry revenue, a non GAAP financial measure, to evaluate the operating performance of our FMS business segment and as a measure of sales activity. Fuel services revenue, which is directly impacted by fluctuations in market fuel prices, is excluded from our dry revenue computation, as fuel is largely a pass-through to customers for which we realize minimal changes in profitability as a result of fluctuations in fuel services revenue. |
2004 versus 2003 |
23
2003 versus 2002 |
24
December 31 | ||||||||||
Number of Units | 2004 | 2003 | ||||||||
By type:
|
||||||||||
Trucks
|
63,700 | 62,400 | ||||||||
Tractors
|
51,700 | 48,900 | ||||||||
Trailers
|
43,100 | 43,200 | ||||||||
Other
|
5,900 | 5,700 | ||||||||
Total
|
164,400 | 160,200 | ||||||||
By product line:
|
||||||||||
Full service lease
|
119,700 | 118,900 | ||||||||
Commercial rental
|
41,700 | 38,500 | ||||||||
Service and other vehicles
|
3,000 | 2,800 | ||||||||
Total
|
164,400 | 160,200 | ||||||||
Owned
(1)
|
157,000 | 150,200 | ||||||||
Leased
|
7,400 | 10,000 | ||||||||
Total
|
164,400 | 160,200 | ||||||||
Full year average
|
164,300 | 160,000 | ||||||||
(1) | Effective March 1, 2004, approximately 6,400 units were added to the fleet as part of the Ruan acquisition. |
December 31 | ||||||||||
Number of Units | 2004 | 2003 | ||||||||
Not yet earning revenue (NYE)
|
1,900 | 1,100 | ||||||||
No longer earning revenue (NLE):
|
||||||||||
Units held for sale
|
4,800 | 5,000 | ||||||||
Other NLE units
|
1,600 | 2,000 | ||||||||
Total
(1)
|
8,300 | 8,100 | ||||||||
(1) | Non-revenue earning equipment for FMS operations outside the U.S. totaled approximately 1,500 vehicles in 2004 and 1,000 vehicles in 2003, which are not included above. |
25
Supply Chain Solutions |
Years ended December 31 | ||||||||||||||
2004 | 2003 | 2002 | ||||||||||||
(In thousands) | ||||||||||||||
U.S. operating revenue:
|
||||||||||||||
Automotive, aerospace and industrial
|
$ | 425,103 | 419,655 | 439,489 | ||||||||||
High-tech and consumer industries
|
230,030 | 247,475 | 295,428 | |||||||||||
Transportation management
|
20,331 | 15,076 | 14,649 | |||||||||||
U.S. operating revenue
|
675,464 | 682,206 | 749,566 | |||||||||||
International operating revenue
|
261,479 | 270,316 | 228,206 | |||||||||||
Total operating
revenue
(1)
|
936,943 | 952,522 | 977,772 | |||||||||||
Freight under management (FUM) expense
|
417,060 | 409,906 | 410,527 | |||||||||||
Total revenue
|
$ | 1,354,003 | 1,362,428 | 1,388,299 | ||||||||||
Segment NBT
|
$ | 37,079 | 40,064 | (7,485 | ) | |||||||||
Segment NBT as a % of total revenue
|
2.7% | 2.9% | (0.5% | ) | ||||||||||
Segment NBT as a % of operating
revenue
(1)
|
4.0% | 4.2% | (0.8% | ) | ||||||||||
(1) | We use operating revenue, a non GAAP financial measure, to evaluate the operating performance of our SCS business segment and as a measure of sales activity. FUM expense is deducted from total revenue to arrive at our operating revenue computation as FUM expense is largely a pass-through to customers. Ryder realizes minimal changes in profitability as a result of fluctuations in FUM expense. |
2004 versus 2003 |
2003 versus 2002 |
26
Dedicated Contract Carriage |
Years ended December 31 | |||||||||||||
2004 | 2003 | 2002 | |||||||||||
(In thousands) | |||||||||||||
Operating
revenue
(1)
|
$ | 496,421 | 510,353 | 514,119 | |||||||||
Freight under management (FUM) expense
|
9,679 | 4,378 | 3,842 | ||||||||||
Total revenue
|
$ | 506,100 | 514,731 | 517,961 | |||||||||
Segment NBT
|
$ | 29,450 | 35,259 | 32,113 | |||||||||
Segment NBT as a % of total revenue
|
5.8% | 6.8% | 6.2% | ||||||||||
Segment NBT as a % of operating
revenue
(1)
|
5.9% | 6.9% | 6.2% | ||||||||||
(1) | We use operating revenue, a non GAAP financial measure, to evaluate the operating performance of our DCC business segment and as a measure of sales activity. FUM expense is deducted from total revenue to arrive at our operating revenue computation as FUM expense is largely a pass-through to customers. Ryder realizes minimal changes in profitability as a result of fluctuations in FUM expense. |
2004 versus 2003 |
2003 versus 2002 |
27
Central Support Services |
Years ended December 31 | |||||||||||||
2004 | 2003 | 2002 | |||||||||||
(In thousands) | |||||||||||||
Sales and marketing
|
$ | 7,057 | 8,964 | 12,636 | |||||||||
Human resources
|
13,982 | 18,000 | 21,151 | ||||||||||
Finance
|
56,136 | 55,180 | 58,498 | ||||||||||
Corporate services/public affairs
|
9,196 | 7,314 | 7,672 | ||||||||||
Information technology
|
69,457 | 78,084 | 89,092 | ||||||||||
Health and safety
|
8,303 | 8,199 | 9,192 | ||||||||||
Other
|
50,480 | 37,275 | 35,191 | ||||||||||
Total CSS
|
214,611 | 213,016 | 233,432 | ||||||||||
Allocation of CSS to business segments
|
(181,550 | ) | (188,584 | ) | (208,847 | ) | |||||||
Unallocated CSS
|
$ | 33,061 | 24,432 | 24,585 | |||||||||
2004 versus 2003 |
2003 versus 2002 |
Cash Flows |
Years ended December 31 | ||||||||||||||
2004 | 2003 | 2002 | ||||||||||||
(In thousands) | ||||||||||||||
Net cash provided by (used in):
|
||||||||||||||
Operating activities
|
$ | 883,034 | 811,302 | 614,703 | ||||||||||
Financing activities
|
(195,760 | ) | (232,796 | ) | (269,508 | ) | ||||||||
Investing activities
|
(726,930 | ) | (542,116 | ) | (358,824 | ) | ||||||||
Net cash flows from operations
|
$ | (39,656 | ) | 36,390 | (13,629 | ) | ||||||||
28
Years ended December 31 | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
(In thousands) | ||||||||||||
Net cash provided by operating activities
|
$ | 883,034 | 811,302 | 614,703 | ||||||||
Changes in the aggregate balance of trade receivables sold
|
| | 110,000 | |||||||||
Collections on direct finance leases
|
63,795 | 61,368 | 66,489 | |||||||||
Sales of property and revenue earning equipment
|
352,335 | 222,888 | 152,685 | |||||||||
Sale and leaseback of revenue earning equipment
|
96,801 | | | |||||||||
Purchases of property and revenue earning equipment
|
(1,091,582 | ) | (733,577 | ) | (582,217 | ) | ||||||
Acquisitions
|
(148,791 | ) | (96,518 | ) | | |||||||
Other, net
|
512 | 3,723 | 4,219 | |||||||||
Free cash flow
|
$ | 156,104 | 269,186 | 365,879 | ||||||||
29
Years ended December 31 | ||||||||||||||
2004 | 2003 | 2002 | ||||||||||||
(In thousands) | ||||||||||||||
Revenue earning
equipment:
(1)
|
||||||||||||||
Full service lease
|
$ | 862,994 | 459,239 | 536,151 | ||||||||||
Commercial rental
|
241,858 | 219,880 | 20,177 | |||||||||||
1,104,852 | 679,119 | 556,328 | ||||||||||||
Operating property and equipment
|
59,767 | 46,011 | 43,973 | |||||||||||
Total capital expenditures
|
1,164,619 | 725,130 | 600,301 | |||||||||||
Changes in accounts payable related to purchases of revenue
earning equipment
|
(73,037 | ) | 8,447 | (18,084 | ) | |||||||||
Cash paid for purchases of property and revenue earning
equipment |
$ | 1,091,582 | 733,577 | 582,217 | ||||||||||
(1) | Capital expenditures exclude non-cash additions of approximately $54 million, $67 million and $67 million in 2004, 2003 and 2002, respectively, in assets held under capital leases resulting from the extension of existing operating leases and other additions. |
Financing and Other Funding Transactions |
30
Years ended December 31 | ||||||||||
2004 | 2003 | |||||||||
(In thousands) | ||||||||||
Debt balance at January 1
|
$ | 1,815,900 | 1,551,468 | |||||||
Cash-related changes in debt:
|
||||||||||
Net change in commercial paper borrowings
|
79,033 | (2,500 | ) | |||||||
Proceeds from issuance of medium-term notes
|
135,000 | 80,000 | ||||||||
Proceeds from issuance of other debt instruments
|
147,153 | 25,115 | ||||||||
Retirement of medium-term notes
|
(72,000 | ) | (75,500 | ) | ||||||
Other debt repaid, including capital lease obligations
|
(384,932 | ) | (264,933 | ) | ||||||
(95,746 | ) | (237,818 | ) | |||||||
Non-cash changes in debt:
|
||||||||||
Fair market value adjustment on notes subject to hedging
|
(9,380 | ) | (9,997 | ) | ||||||
Addition of capital lease obligations
|
54,094 | 66,861 | ||||||||
Addition of variable interest entity debt
|
| 413,983 | ||||||||
Changes in foreign currency exchange rates and other non-cash
items
|
18,348 | 31,403 | ||||||||
Total changes in debt
|
(32,684 | ) | 264,432 | |||||||
Debt balance at December 31
|
$ | 1,783,216 | 1,815,900 | |||||||
December 31, | % to | December 31, | % to | ||||||||||||||
2004 | Equity | 2003 | Equity | ||||||||||||||
(Dollars in thousands) | |||||||||||||||||
On-balance sheet debt
|
$ | 1,783,216 | 118% | $ | 1,815,900 | 135% | |||||||||||
PV of minimum lease payments and guaranteed residual values
under operating leases for
equipment
(1)
|
161,138 | 153,222 | |||||||||||||||
Total obligations
|
$ | 1,944,354 | 129% | $ | 1,969,122 | 146% | |||||||||||
(1) | Present value does not reflect payments Ryder would be required to make if we terminated the related leases prior to the scheduled expiration dates. |
31
Short-term | Long-term | Outlook | ||||||||||
Moodys Investors Service
|
P2 | Baa1 | Stable (June 2004) | |||||||||
Standard & Poors Ratings Services
|
A2 | BBB | Positive (July 2003) | |||||||||
Fitch Ratings
|
F2 | BBB+ | Positive (January 2004) |
(In millions) | ||||
Global revolving credit facility
|
$ | 646 | ||
Shelf registration statement
|
665 |
Off-Balance Sheet Arrangements |
32
Contractual Obligations and Commitments |
2005 | 2006 - 2007 | 2008 - 2009 | Thereafter | Total | ||||||||||||||||||
(In thousands) | ||||||||||||||||||||||
Debt
|
$ | 354,482 | 571,778 | 542,108 | 261,451 | 1,729,819 | ||||||||||||||||
Capital lease obligations
|
35,068 | 18,181 | 148 | | 53,397 | |||||||||||||||||
Total debt
|
389,550 | 589,959 | 542,256 | 261,451 | 1,783,216 | |||||||||||||||||
Interest on
debt
(1)
|
93,062 | 125,201 | 67,991 | 197,890 | 484,144 | |||||||||||||||||
Operating
leases
(2)
|
106,326 | 145,434 | 63,246 | 77,494 | 392,500 | |||||||||||||||||
Purchase
obligations
(3)
|
81,685 | 48,494 | 43,014 | 6,960 | 180,153 | |||||||||||||||||
Total contractual cash obligations
|
281,073 | 319,129 | 174,251 | 282,344 | 1,056,797 | |||||||||||||||||
Self-insurance obligations
|
97,822 | 90,777 | 33,664 | 43,443 | 265,706 | |||||||||||||||||
Other long-term
liabilities
(4),(5)
|
| 18,855 | 1,454 | 16,859 | 37,168 | |||||||||||||||||
Total
|
$ | 768,445 | 1,018,720 | 751,625 | 604,097 | 3,142,887 | ||||||||||||||||
(1) | Total debt matures at various dates through fiscal year 2025 and bears interest principally at fixed rates. Interest on variable rate debt is calculated based on the applicable rate at December 31, 2004. Amounts are based on existing debt obligations and do not consider potential refinancings of expiring debt obligations. |
(2) | Represents future lease payments associated with vehicles, equipment and properties under operating leases. Amounts are based upon the assumption that the leased asset will remain on lease for the length of time specified by the respective lease agreements. No effect has been given to renewals, cancellations, contingent rentals or future rate changes. |
(3) | The majority of our purchase obligations are pay-as-you-go transactions made in the ordinary course of business. Purchase obligations include agreements to purchase goods or services that are legally binding and that specify all significant terms, including: fixed or minimum quantities to be purchased; fixed minimum or variable price provisions; and the approximate timing of the transaction. The most significant items included in the above table are purchase obligations related to information technology services and vehicles. Purchase orders made in the ordinary course of business are excluded from the above table. Any amounts for which we are liable under purchase orders are reflected in our consolidated balance sheet as Accounts payable and Accrued expenses. |
(4) | Represents other long-term liability amounts reflected in our consolidated balance sheets that have known payment streams. The most significant items included were derivative contracts, deferred compensation obligations and legal contractual obligations. |
(5) | The amounts exclude our minimum funding requirements as set forth by ERISA and international regulatory bodies, which are $4 million in 2006. Our minimum funding requirements after 2006 are dependent on several factors. However, we estimate that the present value of required contributions over the next 5 years is approximately $80 million for the U.S. plan (assuming expected long-term rate of return realized and other assumptions remain unchanged). We also have payments due under our other postretirement benefit (OPEB) plans. These plans are not required to be funded in advance, but are pay-as-you-go. See further discussion in Note 19, Employee Benefit Plans, in the Notes to Consolidated Financial Statements. |
33
Guarantees |
Pension Information |
Share Repurchases and Cash Dividends |
Market Risk |
34
35
36
Impact on 2005 Net | ||||||||||||
Assumed Rate | Change | Pension Expense | ||||||||||
Discount rate
|
5.90% | +/- 0.25% | -/+ $ | 4 million | ||||||||
Expected long-term rate of return on assets
|
8.50% | +/- 0.25% | -/+ $ | 2 million | ||||||||
Rate of increase in compensation levels
|
4.00% | +/- 0.50% | +/- $ | 1 million |
37
38
39
| our expectations as to growth opportunities and anticipated revenue growth across all business segments; | |
| our ability to improve our competitive advantage by leveraging our vehicle buying power, reducing vehicle downtime, providing innovative broad-based supply chain solutions and increasing our customers competitive position; | |
| anticipated gains on the sale of used vehicles; | |
| our ability to successfully achieve the operational goals that are the basis of our business strategies, including offering competitive pricing, optimizing asset utilization, leveraging the expertise of our various business segments, serving our customers global needs and expanding our support services; | |
| our ability to successfully identify, consummate and integrate future acquisitions; | |
| our belief as to the adequacy of our insurance coverage and funding sources and the effectiveness of our interest and foreign currency exchange rate risk management programs; | |
| our relationship with our employees; | |
| our belief that we can continue to realize significant savings from our cost management initiatives and process improvement actions, including those associated with the recent termination of an information technology infrastructure contract; | |
| the adequacy of our accounting estimates and reserves for pension expense, depreciation and residual value guarantees, self-insurance reserves; goodwill impairment and income taxes; | |
| our belief that we have not entered into any other transactions since 2000 that raise the same type of issues identified by the IRS in their audit of the 1998 to 2000 tax period; | |
| our ability to fund all of our operations in 2005 through internally generated funds and outside funding sources; and | |
| the anticipated cost of environmental liabilities. |
| Market Conditions: |
o | Changes in general economic conditions in the U.S. and worldwide leading to decreased demand for our services, lower profit margins and increased levels of bad debt | |
o | Changes in our customers operations, financial condition or business environment that may limit their need for, or ability to purchase, our services | |
o | Changes in market conditions affecting the commercial rental market or the sale of used vehicles |
40
o | Less than anticipated growth rates in the markets in which we operate |
| Competition: |
o | Competition from other service providers, some of which have greater capital resources or lower capital costs | |
o | Continued consolidation in the markets in which we operate which may create large competitors with greater financial resources | |
o | Competition from vehicle manufacturers in our foreign FMS business operations | |
o | Our inability to maintain current pricing levels due to customer acceptance or competition |
| Profitability: |
o | Our inability to obtain adequate profit margins for our services | |
o | Lower than expected customer retention levels | |
o | Loss of a large customer or customer base | |
o | Our inability to adapt our product offerings to meet changing consumer preferences on a cost-effective basis | |
o | The inability of our business segments to create operating efficiencies | |
o | Availability of heavy- and medium-duty vehicles | |
o | Increases in fuel prices | |
o | Our inability to successfully implement our asset management initiatives | |
o | An increase in the cost of, or shortages in the availability of, qualified drivers | |
o | Labor strikes and work stoppages | |
o | Our ability to successfully integrate and realize the expected benefits of recent and future acquisitions | |
o | Our inability to manage our cost structure | |
o | Our inability to limit our exposure for customer claims |
| Government Regulation: |
o | Cost of compliance with new or changing government regulations, including regulations regarding vehicle emissions, drivers, hours of service and anti-terrorism and security regulations issued by the Department of Homeland Security and the U.S. Customs Service |
| Financing Concerns: |
o | Higher borrowing costs and possible decreases in available funding sources caused by an adverse change in our debt ratings | |
o | Unanticipated interest rate and currency exchange rate fluctuations | |
o | Negative funding status of our pension plans caused by lower than expected returns on invested assets and unanticipated changes in interest rates |
| Accounting Matters: |
o | Impact of unusual items resulting from on-going evaluations of business strategies, asset valuations, acquisitions, divestitures and organizational structure | |
o | Reductions in residual values or useful lives of revenue earning equipment |
41
o | Increases in compensation levels, retirement rate and mortality resulting in higher pension expense | |
o | Increases in healthcare costs resulting in higher insurance reserves | |
o | Changes in accounting rules, assumptions and accruals |
| Other risks detailed from time to time in our SEC filings |
42
Page No. | |||||||
Managements Report on Internal Control Over Financial Reporting | 44 | ||||||
Reports of Independent Registered Public Accounting Firm | 45 | ||||||
Consolidated Statements of Earnings | 48 | ||||||
Consolidated Balance Sheets | 49 | ||||||
Consolidated Statements of Cash Flows | 50 | ||||||
Consolidated Statements of Shareholders Equity | 51 | ||||||
Notes to Consolidated Financial Statements: | |||||||
Summary of Significant Accounting Policies | 52 | ||||||
Accounting Changes | 60 | ||||||
Acquisitions | 61 | ||||||
Restructuring and Other (Recoveries) Charges | 63 | ||||||
Receivables | 65 | ||||||
Revenue Earning Equipment | 65 | ||||||
Operating Property and Equipment | 66 | ||||||
Direct Financing Leases and Other Assets | 66 | ||||||
Goodwill and Other Intangible Assets | 66 | ||||||
Accrued Expenses and Other Non-Current Liabilities | 67 | ||||||
Income Taxes | 68 | ||||||
Leases | 70 | ||||||
Debt | 73 | ||||||
Financial Instruments and Risk Management | 75 | ||||||
Guarantees | 77 | ||||||
Shareholders Equity | 78 | ||||||
Stock-Based Compensation Plans | 79 | ||||||
Earnings Per Share Information | 81 | ||||||
Employee Benefit Plans | 81 | ||||||
Environmental Matters | 88 | ||||||
Other Matters | 88 | ||||||
Segment Reporting | 88 | ||||||
Quarterly Information (unaudited) | 93 | ||||||
Consolidated Financial Statement Schedule for the Years Ended December 31, 2004, 2003 and 2002: | |||||||
II Valuation and Qualifying Accounts | 94 |
43
44
45
46
47
Table of Contents
Years ended December 31
2004
2003
2002
(In thousands, except per share amounts)
$
5,150,278
4,802,294
4,776,265
2,305,703
2,039,156
1,949,384
1,233,038
1,242,930
1,268,704
426,739
414,284
414,369
706,028
624,580
552,491
(34,504
)
(15,780
)
(14,223
)
108,468
200,868
343,531
100,114
96,169
91,718
(8,754
)
(12,158
)
(9,808
)
(17,676
)
(230
)
4,216
4,819,156
4,589,819
4,600,382
331,122
212,475
175,883
115,513
76,916
63,318
215,609
135,559
112,565
(4,123
)
(18,899
)
$
215,609
131,436
93,666
$
3.35
2.15
1.83
(0.06
)
(0.31
)
$
3.35
2.09
1.52
$
3.28
2.12
1.80
(0.06
)
(0.30
)
$
3.28
2.06
1.50
48
December 31
2004
2003
(Dollars in thousands,
except per share amount)
$
100,971
140,627
732,835
640,769
59,284
54,806
175,715
160,020
158,864
119,939
1,227,669
1,116,161
3,331,711
3,046,040
479,598
506,898
416,531
440,971
182,424
177,594
$
5,637,933
5,287,664
$
389,550
366,411
384,016
299,725
681,290
434,941
1,454,856
1,101,077
1,393,666
1,449,489
408,554
564,948
870,669
827,765
4,127,745
3,943,279
32,155
32,244
668,152
593,843
963,482
897,841
(4,180
)
(2,887
)
(149,421
)
(176,656
)
1,510,188
1,344,385
$
5,637,933
5,287,664
49
Years ended December 31
2004
2003
2002
(In thousands)
$
215,609
131,436
93,666
4,123
18,899
706,028
624,580
552,491
(34,504
)
(15,780
)
(14,223
)
(17,262
)
3,263
8,713
9,815
51,467
52,615
(110,000
)
(81,832
)
(4,191
)
35,048
(4,583
)
5,398
6,262
(10,077
)
6,029
5,797
11,254
29,141
4,704
88,586
(24,164
)
(39,269
)
883,034
811,302
614,703
79,033
(2,500
)
(92,500
)
282,153
105,115
185,316
(456,932
)
(340,433
)
(360,359
)
(38,731
)
(37,984
)
(37,137
)
87,743
46,576
37,083
(149,026
)
(3,570
)
(1,911
)
(195,760
)
(232,796
)
(269,508
)
(1,091,582
)
(733,577
)
(582,217
)
352,335
222,888
152,685
96,801
(148,791
)
(96,518
)
63,795
61,368
66,489
512
3,723
4,219
(726,930
)
(542,116
)
(358,824
)
(39,656
)
36,390
(13,629
)
140,627
104,237
117,866
$
100,971
140,627
104,237
$
73,037
(8,447
)
18,084
54,094
66,681
67,036
50
Accumulated Other
Comprehensive Loss
Preferred
Stock
Common Stock
Additional
Currency
Minimum
Unrealized
Paid-In
Retained
Deferred
Translation
Pension
Gain/(Loss)
Amount
Shares
Par
Capital
Earnings
Compensation
Adjustments
Liability
on Derivative
Total
(Dollars in thousands, except per share amounts)
$
60,809,628
$
30,405
507,151
750,232
(5,304
)
(50,570
)
(1,245
)
1,230,669
93,666
93,666
9,255
9,255
(227,573
)
(227,573
)
(493
)
(493
)
(125,145
)
(37,137
)
(37,137
)
1,761,289
880
36,396
(193
)
37,083
(73,992
)
(37
)
(1,874
)
(1,911
)
3,272
3,272
(55,988
)
(28
)
(662
)
2,074
1,384
62,440,937
31,220
544,283
806,761
(3,423
)
(41,315
)
(228,818
)
(493
)
1,108,215
131,436
131,436
52,308
52,308
41,376
41,376
286
286
225,406
(37,984
)
(37,984
)
2,233,900
1,117
47,243
(1,784
)
46,576
(2,953
)
(1
)
(74
)
(75
)
(117,500
)
(59
)
(1,064
)
(2,372
)
(3,495
)
4,852
4,852
(66,898
)
(33
)
(1,397
)
2,320
890
64,487,486
32,244
593,843
897,841
(2,887
)
10,993
(187,442
)
(207
)
1,344,385
215,609
215,609
27,983
27,983
(1,072
)
(1,072
)
324
324
242,844
(38,731
)
(38,731
)
3,538,235
1,769
88,693
(3,613
)
86,849
20,945
10
884
894
(3,714,559
)
(1,857
)
(35,932
)
(111,237
)
(149,026
)
21,071
21,071
(21,255
)
(11
)
(407
)
2,320
1,902
$
64,310,852
$
32,155
668,152
963,482
(4,180
)
38,976
(188,514
)
117
1,510,188
(1) | Net of common shares delivered as payment for the exercise price or to satisfy the option holders withholding tax liability upon exercise of options. |
(2) | Represents open-market transactions of common shares by the trustee of Ryders deferred compensation plan. |
51
1. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Basis of Consolidation |
Consolidation of Variable Interest Entities |
52
Use of Estimates |
Cash Equivalents |
Revenue Recognition |
| Operating lease and rental revenue is recognized on a straight-line basis as vehicles are used over the terms of the related agreements. Lease and rental agreements do not provide for scheduled rent increases or escalations. However, lease agreements allow for rate changes based upon changes in the Consumer Price Index (CPI). Lease and rental agreements also provide for a fixed time charge plus a fixed per-mile charge. The fixed time charge, the fixed per-mile charge and the changes in rates attributed to changes in the CPI are considered contingent rentals and recognized as earned. | |
| Programmed maintenance revenue is recognized on a straight-line basis as maintenance services are rendered over the terms of the related agreements. Programmed maintenance agreements allow for rate changes based upon changes in the CPI. Maintenance agreements also provide for a fixed per-mile charge. The fixed per-mile charge and the changes in rates attributed to changes in the CPI are recognized as earned. | |
| Direct financing lease revenue is recognized using the interest method over the terms of the lease agreements. | |
| Fuel services revenue is recognized when fuel is delivered to customers. |
53
| Revenue from service contracts is recognized as services are rendered in accordance with contract terms, which typically include discrete billing rates for the services. |
Accounts Receivable Allowance |
Inventories |
Tires in Service |
Revenue Earning Equipment, Operating Property and Equipment and Depreciation |
54
Goodwill and Other Intangible Assets |
Impairment of Long-Lived Assets Other than Goodwill |
Self-Insurance Accruals |
55
Residual Value Guarantees |
Income Taxes |
Environmental Expenditures |
Derivative Instruments and Hedging Activities |
56
Foreign Currency Translation |
Stock-based Compensation |
57
Years ended December 31
2004
2003
2002
(In thousands, except per share amounts)
$
215,609
131,436
93,666
1,155
523
886
(8,971
)
(5,694
)
(8,201
)
$
207,793
126,265
86,351
$
3.35
2.09
1.52
$
3.23
2.01
1.40
$
3.28
2.06
1.50
$
3.16
1.98
1.38
Earnings Per Share |
Share Repurchases |
Comprehensive Income (Loss) |
58
Reclassifications |
Recent Accounting Pronouncements |
59
2. | ACCOUNTING CHANGES |
Years ended | |||||||||
December 31 | |||||||||
2003 | 2002 | ||||||||
(In thousands) | |||||||||
FIN 46 Variable interest entities (See
Note 1)
|
$ | (2,954 | ) | | |||||
SFAS No. 143 Asset retirement obligations
|
(1,169 | ) | | ||||||
SFAS No. 142 Goodwill and other intangible assets
|
| (18,899 | ) | ||||||
Cumulative effect of changes in accounting principles
|
$ | (4,123 | ) | (18,899 | ) | ||||
60
3. | ACQUISITIONS |
Original Amount | Purchase | |||||||||||||
Disclosed First | Accounting | |||||||||||||
Quarter 2004 | Adjustments | Total Allocation | ||||||||||||
(In thousands) | ||||||||||||||
Assets:
|
||||||||||||||
Revenue earning equipment
|
$ | 138,587 | 612 | 139,199 | ||||||||||
Operating property and equipment
|
1,280 | (749 | ) | 531 | ||||||||||
Customer relationship intangibles
|
5,209 | (9 | ) | 5,200 | ||||||||||
Other assets
|
3,370 | 64 | 3,434 | |||||||||||
Total assets
|
148,446 | (82 | ) | 148,364 | ||||||||||
Liabilities:
|
||||||||||||||
Asset retirement obligations and other liabilities
|
(213 | ) | | (213 | ) | |||||||||
Purchase price
|
$ | 148,233 | (82 | ) | 148,151 | |||||||||
61
Original Amount
Purchase
Disclosed in 2003
Accounting
Annual Report
Adjustments
Total Allocation
(In thousands)
$
98,236
(378
)
97,858
6,646
(621
)
6,025
2,330
153
2,483
1,709
599
2,308
108,921
(247
)
108,674
(133
)
(811
)
(944
)
$
108,788
(1,058
)
107,730
Unaudited | |||||||||
December 31 | |||||||||
2004 | 2003 | ||||||||
(In thousands, except per share | |||||||||
amounts) | |||||||||
Revenue
|
$ | 5,173,276 | 5,044,304 | ||||||
Earnings before cumulative effect of changes in accounting
principles
|
$ | 214,193 | 115,273 | ||||||
Net earnings
|
$ | 214,193 | 111,150 | ||||||
Earnings per common share Diluted:
|
|||||||||
Before cumulative effect of changes in accounting principles
|
$ | 3.26 | 1.80 | ||||||
Net earnings
|
$ | 3.26 | 1.74 |
62
4.
RESTRUCTURING AND OTHER (RECOVERIES) CHARGES
Years ended December 31
2004
2003
2002
(In thousands)
$
(1,216
)
4,902
5,198
(79
)
(8
)
106
(1,295
)
4,894
5,304
(61
)
(1,182
)
(285
)
(24,308
)
(64
)
8,000
(219
)
(42
)
(520
)
(12
)
(3,900
)
$
(17,676
)
(230
)
4,216
Years ended December 31 | |||||||||||||
2004 | 2003 | 2002 | |||||||||||
(In thousands) | |||||||||||||
Fleet Management Solutions
|
$ | 4,312 | (961 | ) | (177 | ) | |||||||
Supply Chain Solutions
|
1,937 | 536 | 5,137 | ||||||||||
Dedicated Contract Carriage
|
503 | (311 | ) | 243 | |||||||||
Central Support Services
|
(24,428 | ) | 506 | (987 | ) | ||||||||
Total
|
$ | (17,676 | ) | (230 | ) | 4,216 | |||||||
2004 Activity |
63
2003 Activity |
2002 Activity |
Beginning | Ending | |||||||||||||||||
Balance | Additions | Deductions | Balance | |||||||||||||||
(In thousands) | ||||||||||||||||||
Year Ended December 31, 2004:
|
||||||||||||||||||
Employee severance and benefits
|
$ | 6,665 | 271 | 5,811 | 1,125 | |||||||||||||
Facilities and related costs
|
1,322 | 101 | 663 | 760 | ||||||||||||||
Total
|
$ | 7,987 | 372 | 6,474 | 1,885 | |||||||||||||
Year Ended December 31, 2003:
|
||||||||||||||||||
Employee severance and benefits
|
$ | 9,369 | 5,832 | 8,536 | 6,665 | |||||||||||||
Facilities and related costs
|
3,275 | 367 | 2,320 | 1,322 | ||||||||||||||
Total
|
$ | 12,644 | 6,199 | 10,856 | 7,987 | |||||||||||||
64
5.
RECEIVABLES
December 31
2004
2003
(In thousands)
$
654,752
556,209
67,671
61,791
3,888
2,653
18,447
29,477
744,758
650,130
(11,923
)
(9,361
)
$
732,835
640,769
6. | REVENUE EARNING EQUIPMENT |
December 31 | |||||||||||||
Estimated | |||||||||||||
Useful Lives | 2004 | 2003 | |||||||||||
(In years) | |||||||||||||
(In thousands) | |||||||||||||
Full service lease
|
3 12 | $ | 4,518,029 | 4,186,497 | |||||||||
Commercial rental
|
4.5 12 | 1,518,462 | 1,333,525 | ||||||||||
6,036,491 | 5,520,022 | ||||||||||||
Accumulated depreciation
|
(2,704,780 | ) | (2,473,982 | ) | |||||||||
Total
(1)
|
$ | 3,331,711 | 3,046,040 | ||||||||||
(1) | Revenue earning equipment, net includes vehicles acquired under capital leases of $67 million, less accumulated amortization of $24 million at December 31, 2004, and $107 million, less accumulated amortization of $28 million at December 31, 2003. Amortization expense attributed to vehicles acquired under capital leases is combined with depreciation expense. |
65
7.
OPERATING PROPERTY AND EQUIPMENT
December 31
Estimated
Useful Lives
2004
2003
(In years)
(In thousands)
$
105,820
107,770
10 40
573,717
603,610
3 10
473,036
477,145
3 10
65,168
56,800
1,217,741
1,245,325
(738,143
)
(738,427
)
$
479,598
506,898
8. | DIRECT FINANCING LEASES AND OTHER ASSETS |
December 31 | ||||||||||||
2004 | 2003 | |||||||||||
(In thousands) | ||||||||||||
Direct financing leases, net | $ | 333,339 | 344,091 | |||||||||
Cash reserve deposits (vehicle securitization credit enhancements) | 24,537 | 24,267 | ||||||||||
Investments held in Rabbi Trust | 21,737 | 18,239 | ||||||||||
Swap and cap agreements | 4,911 | 14,431 | ||||||||||
Deferred debt issuance costs | 6,933 | 5,488 | ||||||||||
Other | 25,074 | 34,455 | ||||||||||
Total | $ | 416,531 | 440,971 | |||||||||
9. | GOODWILL AND OTHER INTANGIBLE ASSETS |
December 31 | ||||||||||||
2004 | 2003 | |||||||||||
(In thousands) | ||||||||||||
Unamortizable intangible assets: | ||||||||||||
Goodwill | $ | 157,904 | 155,628 | |||||||||
Trade name | 8,686 | 8,686 | ||||||||||
Pension intangible | 8,804 | 10,950 | ||||||||||
175,394 | 175,264 | |||||||||||
Amortizable intangible assets: | ||||||||||||
Customer relationship intangibles (1) | 7,683 | 2,330 | ||||||||||
Accumulated amortization | (653 | ) | | |||||||||
7,030 | 2,330 | |||||||||||
Total | $ | 182,424 | 177,594 | |||||||||
(1) | Customer relationship intangibles are being amortized over their estimated useful lives of 10 years. |
66
Fleet
Supply
Dedicated
Management
Chain
Contract
Solutions
Solutions
Carriage
Total
(In thousands)
$
126,318
24,410
4,900
155,628
260
260
751
1,265
2,016
$
127,329
25,675
4,900
157,904
(1) | Amounts represent purchase accounting adjustments relating to the November 2003 acquisition of Vertex Services, LLC. |
10. | ACCRUED EXPENSES AND OTHER NON-CURRENT LIABILITIES |
December 31 | ||||||||||
2004 | 2003 | |||||||||
(In thousands) | ||||||||||
Accrued Expenses
|
||||||||||
Salaries and wages
|
$ | 82,613 | 60,869 | |||||||
Pension benefits
|
39,189 | 41,498 | ||||||||
Deferred compensation
|
3,589 | 1,856 | ||||||||
Postretirement benefits other than pensions
|
7,441 | 6,894 | ||||||||
Employee benefits
|
19,124 | 17,229 | ||||||||
Self-insurance accruals
|
97,822 | 95,858 | ||||||||
Reserve for residual value guarantees
|
3,617 | 6,952 | ||||||||
Vehicle rent and related accruals
|
11,787 | 9,562 | ||||||||
Environmental liabilities
|
5,518 | 8,876 | ||||||||
Operating taxes
|
81,984 | 83,315 | ||||||||
Income taxes
|
246,896 | 6,792 | ||||||||
Restructuring
|
1,885 | 7,987 | ||||||||
Interest
|
16,442 | 18,480 | ||||||||
Other
|
63,383 | 68,773 | ||||||||
Total accrued expenses
|
$ | 681,290 | 434,941 | |||||||
Non-Current Liabilities
|
||||||||||
Pension benefits
|
$ | 114,099 | 117,944 | |||||||
Deferred compensation
|
20,701 | 21,374 | ||||||||
Postretirement benefits other than pensions
|
27,324 | 29,221 | ||||||||
Self-insurance accruals
|
167,884 | 162,441 | ||||||||
Reserve for residual value guarantees
|
2,589 | 3,582 | ||||||||
Vehicle rent and related accruals
|
4,568 | 5,283 | ||||||||
Environmental liabilities
|
11,252 | 6,503 | ||||||||
Income taxes
|
29,090 | 190,901 | ||||||||
Cross-currency swap
|
15,946 | 8,614 | ||||||||
Other
|
15,101 | 19,085 | ||||||||
Non-current liabilities
|
$ | 408,554 | 564,948 | |||||||
67
11.
INCOME TAXES
Years ended December 31
2004
2003
2002
(In thousands)
$
270,666
155,376
125,616
60,456
57,099
50,267
$
331,122
212,475
175,883
$
88,920
(2,614
)
3,958
4,039
321
12,820
21,410
12,996
105,698
25,449
10,703
(6,001
)
45,230
37,017
9,510
6,564
13,796
6,306
(327
)
1,802
9,815
51,467
52,615
$
115,513
76,916
63,318
(1) | Excludes federal and state tax benefits resulting from the exercise of stock options and vesting of restricted stock awards, which were credited directly to Additional paid-in-capital. |
Years ended December 31 | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
(Percentage of pre-tax earnings) | ||||||||||||
Federal statutory tax rate
|
35.0 | 35.0 | 35.0 | |||||||||
Impact on deferred taxes for changes in tax rates
|
(0.2 | ) | 0.7 | | ||||||||
State income taxes, net of federal income tax benefit
|
2.9 | 3.2 | 5.2 | |||||||||
Tax reviews and audits
|
(2.8 | ) | | | ||||||||
Miscellaneous items, net
|
| (2.7 | ) | (4.2 | ) | |||||||
Effective tax rate
|
34.9 | 36.2 | 36.0 | |||||||||
68
December 31
2004
2003
(In thousands)
$
74,140
72,565
40,495
40,220
33,074
31,603
2,523
12,428
43,884
58,897
62,687
43,641
256,803
259,354
(11,559
)
(10,331
)
245,244
249,023
(1,063,596
)
(1,034,682
)
(15,559
)
(31,640
)
(1,079,155
)
(1,066,322
)
$
(833,911
)
(817,299
)
(1) | Deferred tax assets of $37 million and $10 million have been included in Prepaid expenses and other current assets at December 31, 2004 and 2003, respectively. |
69
12. | LEASES |
Direct Financing Leases |
December 31 | |||||||||
2004 | 2003 | ||||||||
(In thousands) | |||||||||
Total minimum lease payments receivable
|
$ | 646,950 | 687,587 | ||||||
Less: Executory costs
|
(193,892 | ) | (203,293 | ) | |||||
Minimum lease payments receivables
|
453,058 | 484,294 | |||||||
Less: Allowance for uncollectibles
|
(782 | ) | (489 | ) | |||||
Net minimum lease payments receivable
|
452,276 | 483,805 | |||||||
Unguaranteed residuals
|
86,323 | 78,842 | |||||||
Less: Unearned income
|
(137,589 | ) | (156,765 | ) | |||||
Net investment in direct financing leases
|
401,010 | 405,882 | |||||||
Current portion
|
(67,671 | ) | (61,791 | ) | |||||
Non-current portion
|
$ | 333,339 | 344,091 | ||||||
Operating Leases as Lessee |
70
Beginning | Charged to | Ending | ||||||||||||||
Balance | Earnings | Deductions | Balance | |||||||||||||
(In thousands) | ||||||||||||||||
2004
|
$ | 10,534 | 1,250 | (5,578 | ) | 6,206 | ||||||||||
2003
|
$ | 27,770 | 1,665 | (18,901 | ) | 10,534 | ||||||||||
2002
|
$ | 44,095 | 19,052 | (35,377 | ) | 27,770 |
71
Lease Payments |
As Lessor (1) | As Lessee | ||||||||||||
Direct | |||||||||||||
Operating | Financing | Operating | |||||||||||
Leases | Leases | Leases | |||||||||||
(In thousands) | |||||||||||||
2005
|
$ | 996,630 | 140,955 | 106,326 | |||||||||
2006
|
723,752 | 125,370 | 83,459 | ||||||||||
2007
|
497,840 | 109,972 | 61,975 | ||||||||||
2008
|
340,570 | 92,140 | 36,205 | ||||||||||
2009
|
220,314 | 71,483 | 27,041 | ||||||||||
Thereafter
|
148,121 | 107,030 | 77,494 | ||||||||||
Total
|
$ | 2,927,227 | 646,950 | 392,500 | |||||||||
(1) | Amounts do not include contingent rentals, which may be received under certain leases on the basis of miles of use or changes in the Consumer Price Index. Contingent rentals from operating leases included in revenue during 2004, 2003 and 2002 were $285 million, $264 million and $267 million, respectively. Contingent rentals from direct financing leases included in revenue during 2004, 2003 and 2002 were $29 million, $30 million and $30 million, respectively. |
72
13.
DEBT
December 31
2004
2003
(In thousands)
$
119,000
115,000
80,869
325,870
325,810
795,640
732,034
162,072
197,594
186,457
294,991
55,000
57,043
53,397
79,137
1,778,305
1,801,609
4,911
14,291
1,783,216
1,815,900
(389,550
)
(366,411
)
$
1,393,666
1,449,489
(1) | Asset-backed securities represent outstanding debt of consolidated VIEs. Asset-backed securities are collateralized by cash reserve deposits (included in Direct financing leases and other assets) and revenue earning equipment of consolidated VIEs totaling $218 million and $350 million at December 31, 2004 and 2003, respectively. |
(2) | The notional amount of executed interest rate swaps designated as fair value hedges was $285 million and $322 million at December 31, 2004 and 2003, respectively. |
Capital Leases | Debt | ||||||||
(In thousands) | |||||||||
2005
|
$ | 36,514 | $ | 354,482 | |||||
2006
|
17,850 | 236,010 | |||||||
2007
|
351 | 335,768 | |||||||
2008
|
162 | 112,381 | |||||||
2009
|
| 429,727 | |||||||
Thereafter
|
| 261,451 | |||||||
Total
|
54,877 | $ | 1,729,819 | ||||||
Imputed interest
|
(1,480 | ) | |||||||
Present value of minimum capitalized lease payments
|
53,397 | ||||||||
Current portion
|
(35,068 | ) | |||||||
Long-term capitalized lease obligations
|
$ | 18,329 | |||||||
73
74
14. | FINANCIAL INSTRUMENTS AND RISK MANAGEMENT |
Interest Rate Risk |
75
Currency Risk |
Fair Value |
December 31 | |||||||||||||||||
2004 | 2003 | ||||||||||||||||
Carrying | Carrying | ||||||||||||||||
Amount | Fair Value | Amount | Fair Value | ||||||||||||||
(In thousands) | |||||||||||||||||
Assets:
|
|||||||||||||||||
Interest rate swaps
|
$ | 4,911 | 4,911 | 14,291 | 14,291 | ||||||||||||
Interest rate caps
|
| | 140 | 140 | |||||||||||||
Forward foreign currency exchange contracts
|
100 | 100 | | | |||||||||||||
Liabilities:
|
|||||||||||||||||
Total
debt
(1)
|
1,729,819 | 1,795,091 | 1,736,763 | 1,834,820 | |||||||||||||
Cross-currency swap
|
15,946 | 15,946 | 8,614 | 8,614 |
(1) | The carrying amount of total debt excludes capital leases of $53 million and $79 million at December 31, 2004 and 2003, respectively. |
76
15. | GUARANTEES |
Maximum | Carrying | |||||||||
Exposure of | Amount | |||||||||
Guarantee | Guarantee | of Liability | ||||||||
(In thousands) | ||||||||||
Vehicle residual value guarantees:
|
||||||||||
Sales and leaseback arrangements end of term
guarantees
(1)
|
$ | 5,655 | 22 | |||||||
Finance lease program
|
4,496 | 1,344 | ||||||||
Used vehicle financing
|
4,101 | 1,576 | ||||||||
Standby letters of credit
|
12,208 | | ||||||||
Total
|
$ | 26,460 | 2,942 | |||||||
(1) | Amounts exclude contingent rentals associated with residual value guarantees on certain vehicles held under operating leases for which the guarantees are conditioned upon disposal of the leased vehicles prior to the end of their lease term. Ryders maximum exposure for such guarantees was approximately $222 million, with $6 million recorded as a liability at December 31, 2004. |
77
16. | SHAREHOLDERS EQUITY |
Share Repurchase Programs |
Preferred Stock |
78
17.
STOCK-BASED COMPENSATION PLANS
Stock Option Plans
Years ended December 31
2004
2003
2002
Weighted-
Weighted-
Weighted-
Average
Average
Average
Exercise
Exercise
Exercise
Shares
Price
Shares
Price
Shares
Price
(Shares in thousands)
6,805
$
25.46
8,619
$
25.18
8,914
$
24.43
1,236
37.83
1,150
22.39
1,292
26.91
(3,308
)
25.67
(1,700
)
22.25
(1,342
)
21.92
(238
)
27.71
(1,264
)
25.07
(245
)
24.88
4,495
$
28.60
6,805
$
25.46
8,619
$
25.18
2,155
$
25.94
4,576
$
26.40
5,576
$
26.55
3,360
N/A
4,481
N/A
4,160
N/A
Options Outstanding | Options Exercisable | ||||||||||||||||||||
Remaining | Weighted- | Weighted- | |||||||||||||||||||
Life (In | Average | Average | |||||||||||||||||||
Price Ranges | Shares | years) | Price | Shares | Price | ||||||||||||||||
(Shares in thousands) | |||||||||||||||||||||
$15.00-20.00
|
418 | 5.5 | $ | 17.71 | 418 | $ | 17.71 | ||||||||||||||
20.00-25.00
|
1,145 | 5.2 | 21.85 | 377 | 21.41 | ||||||||||||||||
25.00-35.00
|
1,406 | 3.7 | 27.67 | 1,055 | 27.87 | ||||||||||||||||
35.00-40.00
|
1,433 | 5.4 | 36.74 | 305 | 36.16 | ||||||||||||||||
40.00-55.00
|
93 | 6.8 | 49.19 | | N/A | ||||||||||||||||
Total
|
4,495 | 4.8 | $ | 28.60 | 2,155 | $ | 25.94 | ||||||||||||||
Stock Purchase Plans |
79
Years ended December 31
2004
2003
2002
Weighted-
Weighted-
Weighted-
Average
Average
Average
Exercise
Exercise
Exercise
Shares
Price
Shares
Price
Shares
Price
(Shares in thousands)
$
$
40
$
30.28
418
33.59
547
19.90
436
20.53
(418
)
33.59
(547
)
19.90
(436
)
20.53
(40
)
30.28
$
$
$
N/A
N/A
N/A
315
N/A
733
N/A
1,280
N/A
Stock-Based Compensation Fair Value Assumptions |
Years ended December 31 | |||||||||||||
2004 | 2003 | 2002 | |||||||||||
Dividend yield
|
1.2% | 1.7% | 2.7% | ||||||||||
Expected volatility
|
30.7% | 29.7% | 29.6% | ||||||||||
Option plans:
|
|||||||||||||
Risk-free interest rate
|
3.0% | 3.3% | 4.7% | ||||||||||
Weighted-average expected life
|
4 years | 6 years | 6 years | ||||||||||
Weighted-average grant-date fair value per option
|
$9.60 | $5.74 | $7.52 | ||||||||||
Purchase plans:
|
|||||||||||||
Risk-free interest rate
|
1.2% | 1.2% | 2.0% | ||||||||||
Weighted-average expected life
|
0.25 year | 0.25 year | 0.25 year | ||||||||||
Weighted-average grant-date fair value per option
|
$8.18 | $4.75 | $5.09 |
Restricted Stock Plans |
80
Years ended December 31
2004
2003
2002
Weighted-
Weighted-
Weighted-
Average
Average
Average
Grant Date
Grant Date
Grant Date
Shares
Fair Value
Shares
Fair Value
Shares
Fair Value
(Shares in thousands)
292
$
21.36
341
$
20.85
416
$
20.64
94
40.97
79
23.79
11
27.56
(90
)
20.87
(46
)
22.57
(23
)
26.48
(21
)
21.72
(82
)
20.87
(63
)
18.83
275
$
28.18
292
$
21.36
341
$
20.85
18. | EARNINGS PER SHARE INFORMATION |
Years ended December 31 | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
(In thousands) | ||||||||||||
Weighted-average shares outstanding Basic
|
64,280 | 62,954 | 61,571 | |||||||||
Effect of dilutive options and unvested restricted stock
|
1,391 | 917 | 1,016 | |||||||||
Weighted-average shares outstanding Diluted
|
65,671 | 63,871 | 62,587 | |||||||||
Anti-dilutive options not included above
|
93 | 3,231 | 4,368 | |||||||||
19. | EMPLOYEE BENEFIT PLANS |
Pension Plans |
81
Years ended December 31
2004
2003
2002
(In thousands)
$
36,473
34,141
29,196
71,465
66,687
60,330
(82,312
)
(64,250
)
(75,731
)
(29
)
(26
)
(24
)
31,639
39,943
9,508
2,186
2,276
2,276
59,422
78,771
25,555
4,012
3,677
3,384
$
63,434
82,448
28,939
$
44,484
61,941
13,447
14,938
16,830
12,108
59,422
78,771
25,555
4,012
3,677
3,384
$
63,434
82,448
28,939
U.S. Plans | Non-U.S. Plans | |||||||||||||||||||||||
January 1 | January 1 | |||||||||||||||||||||||
2004 | 2003 | 2002 | 2004 | 2003 | 2002 | |||||||||||||||||||
Discount rate
|
6.00% | 6.50% | 7.00% | 5.61% | 5.68% | 5.64% | ||||||||||||||||||
Rate of increase in compensation levels
|
5.00% | 5.00% | 5.00% | 3.50% | 3.50% | 3.50% | ||||||||||||||||||
Expected long-term rate of return on plan assets
|
8.50% | 8.50% | 8.75% | 7.92% | 8.40% | 8.40% | ||||||||||||||||||
Transition amortization in years
|
9 | 9 | 6 | 7 | 8 | 9 | ||||||||||||||||||
Gain and loss amortization in years
|
9 | 9 | 6 | 8 | 8 | 8 |
82
December 31
2004
2003
(In thousands)
$
1,202,952
1,023,582
36,473
34,141
71,465
66,687
47,484
99,793
(44,597
)
(41,956
)
16,579
20,705
1,330,356
1,202,952
964,890
756,464
101,076
164,551
69,687
67,768
2,422
2,685
(44,597
)
(41,956
)
12,908
15,378
1,106,386
964,890
(223,970
)
(238,062
)
(221
)
(234
)
8,804
10,950
370,766
369,226
$
155,379
141,880
December 31 | |||||||||
2004 | 2003 | ||||||||
(In thousands) | |||||||||
Accrued benefit liability
|
$ | (153,288 | ) | (159,442 | ) | ||||
Intangible assets
|
8,804 | 10,950 | |||||||
Accumulated other comprehensive loss (pre-tax)
|
299,863 | 290,372 | |||||||
Net amount recognized
|
$ | 155,379 | 141,880 | ||||||
83
U.S. Plans
Non-U.S. Plans
Total
December 31
December 31
December 31
2004
2003
2004
2003
2004
2003
(In thousands)
$
1,082,327
1,004,520
248,029
198,432
1,330,356
1,202,952
912,492
812,654
193,894
152,236
1,106,386
964,890
$
(169,835
)
(191,866
)
(54,135
)
(46,196
)
(223,970
)
(238,062
)
$
1,021,098
932,759
238,576
191,573
1,259,674
1,124,332
U.S. Plans | Non-U.S. Plans | |||||||||||||||
December 31 | December 31 | |||||||||||||||
2004 | 2003 | 2004 | 2003 | |||||||||||||
Discount rate
|
5.90% | 6.00% | 5.58% | 5.61% | ||||||||||||
Rate of increase in compensation levels
|
4.00% | 5.00% | 3.50% | 3.50% |
U.S. Plans | Non- U.S. Plans | ||||||||||||||||||||||||||||||||
Actual December 31 | Target | Actual December 31 | Target | ||||||||||||||||||||||||||||||
2004 | 2003 | 2004 | 2003 | 2004 | 2003 | 2004 | 2003 | ||||||||||||||||||||||||||
Asset category:
|
|||||||||||||||||||||||||||||||||
Equity securities
|
75% | 75% | 70% | 70% | 76% | 76% | 77% | 77% | |||||||||||||||||||||||||
Debt securities
|
22% | 23% | 26% | 26% | 23% | 22% | 23% | 23% | |||||||||||||||||||||||||
Other
|
3% | 2% | 4% | 4% | 1% | 2% | 0% | 0% | |||||||||||||||||||||||||
100% | 100% | 100% | 100% | 100% | 100% | 100% | 100% | ||||||||||||||||||||||||||
84
Benefits
(In thousands)
$
48,099
50,446
52,909
56,483
60,768
380,084
Savings Plans |
Supplemental Pension, Deferred Compensation and Long-Term Compensation Plans |
85
Postretirement Benefits Other than Pensions |
Years ended December 31 | |||||||||||||
2004 | 2003 | 2002 | |||||||||||
(In thousands) | |||||||||||||
Service cost
|
$ | 964 | 957 | 911 | |||||||||
Interest cost
|
2,295 | 2,546 | 2,564 | ||||||||||
Recognized net actuarial loss (gain)
|
441 | 564 | (68 | ) | |||||||||
Amortization of prior service credit
|
(1,157 | ) | (1,157 | ) | (1,157 | ) | |||||||
Postretirement benefit expense
|
$ | 2,543 | 2,910 | 2,250 | |||||||||
Company-administered plans:
|
|||||||||||||
U.S.
|
$ | 2,214 | 2,708 | 2,085 | |||||||||
Non-U.S.
|
329 | 202 | 165 | ||||||||||
$ | 2,543 | 2,910 | 2,250 | ||||||||||
U.S. Plans | Non-U.S. Plans | |||||||||||||||||||||||
January 1 | January 1 | |||||||||||||||||||||||
2004 | 2003 | 2002 | 2004 | 2003 | 2002 | |||||||||||||||||||
Discount rate
|
6.00% | 6.50% | 7.00% | 6.25% | 6.75% | 6.75% |
86
December 31
2004
2003
(In thousands)
$
42,468
39,883
964
957
2,295
2,546
(2,259
)
3,107
(4,072
)
(3,697
)
(571
)
(425
)
171
243
39,142
42,468
4,081
5,238
(8,458
)
(11,591
)
$
34,765
36,115
U.S. Plan | Non-U.S. Plan | |||||||||||||||
December 31 | December 31 | |||||||||||||||
2004 | 2003 | 2004 | 2003 | |||||||||||||
Discount rate
|
5.90% | 6.00% | 6.00% | 6.25% | ||||||||||||
Rate of increase in compensation levels
|
4.00% | 5.00% | 3.50% | 3.50% | ||||||||||||
Health care cost trend rate assumed for next year
|
10.00% | 11.00% | 10.00% | 9.00% | ||||||||||||
Rate to which the cost trend rate is assumed to decline
(ultimate trend rate)
|
6.00% | 6.00% | 5.00% | 5.00% | ||||||||||||
Year that the rate reaches the ultimate trend rate
|
2010 | 2010 | 2014 | 2011 |
Benefits | ||||
(In thousands) | ||||
2005
|
$ | 3,979 | ||
2006
|
3,790 | |||
2007
|
3,536 | |||
2008
|
3,357 | |||
2009
|
3,206 | |||
2010-2014
|
15,908 |
87
20. | ENVIRONMENTAL MATTERS |
21. | OTHER MATTERS |
22. | SEGMENT REPORTING |
88
| Sales and marketing, finance, corporate services and health and safety allocated based upon estimated and planned resource utilization; | |
| Human resources individual costs within this category are allocated in several ways, including allocation based on estimated utilization and number of personnel supported; | |
| Information technology allocated principally based upon utilization-related metrics such as number of users or minutes of CPU time. Customer-related project costs and expenses are allocated to the business segment responsible for the project; and | |
| Other represents purchasing, legal, and other centralized costs and expenses including certain incentive compensation costs. Expenses, where allocated, are based primarily on the number of personnel supported. |
Years ended December 31 | ||||||||||||||
2004 | 2003 | 2002 | ||||||||||||
(In thousands) | ||||||||||||||
Revenue from external customers:
|
||||||||||||||
Fleet Management Solutions
|
$ | 3,290,175 | 2,925,135 | 2,870,005 | ||||||||||
Supply Chain Solutions
|
1,354,003 | 1,362,428 | 1,388,299 | |||||||||||
Dedicated Contract Carriage
|
506,100 | 514,731 | 517,961 | |||||||||||
5,150,278 | 4,802,294 | 4,776,265 | ||||||||||||
Intersegment revenue:
|
||||||||||||||
Fleet Management Solutions
|
312,664 | 306,540 | 313,017 | |||||||||||
Eliminations
|
(312,664 | ) | (306,540 | ) | (313,017 | ) | ||||||||
Total revenue
|
$ | 5,150,278 | 4,802,294 | 4,776,265 | ||||||||||
NBT:
|
||||||||||||||
Fleet Management Solutions
|
$ | 312,706 | 194,940 | 214,692 | ||||||||||
Supply Chain Solutions
|
37,079 | 40,064 | (7,485 | ) | ||||||||||
Dedicated Contract Carriage
|
29,450 | 35,259 | 32,113 | |||||||||||
Eliminations
|
(32,728 | ) | (33,586 | ) | (34,636 | ) | ||||||||
346,507 | 236,677 | 204,684 | ||||||||||||
Unallocated Central Support Services
|
(33,061 | ) | (24,432 | ) | (24,585 | ) | ||||||||
Restructuring and other recoveries (charges), net
|
17,676 | 230 | (4,216 | ) | ||||||||||
Earnings before income taxes and cumulative effect of changes in
accounting principles
|
$ | 331,122 | 212,475 | 175,883 | ||||||||||
89
Years ended December 31
2004
2003
2002
(In thousands)
$
14,971
15,319
15,454
17,757
18,267
19,182
$
32,728
33,586
34,636
Years ended December 31 | ||||||||||||||
2004 | 2003 | 2002 | ||||||||||||
(In thousands) | ||||||||||||||
Depreciation
expense
(1)
:
|
||||||||||||||
Fleet Management Solutions
|
$ | 680,676 | 594,950 | 517,302 | ||||||||||
Supply Chain Solutions
|
23,591 | 27,102 | 32,623 | |||||||||||
Dedicated Contract Carriage
|
1,465 | 1,970 | 2,067 | |||||||||||
Central Support Services
|
296 | 558 | 499 | |||||||||||
Total
|
$ | 706,028 | 624,580 | 552,491 | ||||||||||
(1) | Depreciation expense associated with CSS assets are allocated to business segments based upon estimated and planned asset utilization. Depreciation expense totaling $13 million, $16 million and $19 million during 2004, 2003 and 2002, respectively, associated with CSS assets was allocated to other business segments. |
Years ended December 31 | ||||||||||||||
2004 | 2003 | 2002 | ||||||||||||
(In thousands) | ||||||||||||||
Amortization expense and other non-cash (gains) charges,
net:
|
||||||||||||||
Fleet Management Solutions
|
$ | 4,320 | 93 | 7,093 | ||||||||||
Supply Chain Solutions
|
802 | 373 | 494 | |||||||||||
Dedicated Contract Carriage
|
39 | (34 | ) | 142 | ||||||||||
Central Support
Services
(1)
|
(22,423 | ) | 2,831 | 984 | ||||||||||
Total
|
$ | (17,262 | ) | 3,263 | 8,713 | |||||||||
(1) | 2004 includes gains from properties sold in connection with the relocation of our headquarters complex. |
90
Years ended December 31
2004
2003
2002
(In thousands)
$
98,608
94,600
88,185
3,824
3,696
6,416
(2,395
)
(2,579
)
(3,087
)
77
452
204
$
100,114
96,169
91,718
December 31 | ||||||||||
2004 | 2003 | |||||||||
(In thousands) | ||||||||||
Assets:
|
||||||||||
Fleet Management Solutions
|
$ | 5,129,375 | 4,777,691 | |||||||
Supply Chain Solutions
|
394,195 | 366,307 | ||||||||
Dedicated Contract Carriage
|
104,629 | 110,311 | ||||||||
Central Support Services
|
143,242 | 155,697 | ||||||||
Eliminations
|
(133,508 | ) | (122,342 | ) | ||||||
Total
|
$ | 5,637,933 | 5,287,664 | |||||||
Years ended December 31 | ||||||||||||||
2004 | 2003 | 2002 | ||||||||||||
(In thousands) | ||||||||||||||
Capital expenditures:
|
||||||||||||||
Fleet Management
Solutions
(1)
|
$ | 1,061,846 | 712,866 | 557,983 | ||||||||||
Supply Chain Solutions
|
15,458 | 14,666 | 17,625 | |||||||||||
Dedicated Contract Carriage
|
533 | 732 | 344 | |||||||||||
Central Support Services
|
13,745 | 5,313 | 6,265 | |||||||||||
Total
|
$ | 1,091,582 | 733,577 | 582,217 | ||||||||||
(1) | Excludes acquisitions of $149 million and $97 million in 2004 and 2003, respectively, primarily comprised of long-lived assets. |
91
Geographic Information
Years ended December 31
2004
2003
2002
(In thousands)
$
4,226,179
3,933,283
3,993,368
411,843
362,414
302,026
360,204
364,228
375,672
120,590
102,752
92,185
31,462
39,617
13,014
924,099
869,011
782,897
$
5,150,278
4,802,294
4,776,265
$
3,050,259
2,899,096
2,439,436
320,938
269,371
227,472
400,582
344,449
323,003
17,253
17,389
15,337
22,277
22,633
23,243
761,050
653,842
589,055
$
3,811,309
3,552,938
3,028,491
92
23.
QUARTERLY INFORMATION (UNAUDITED)
Earnings per Common
Earnings Before
Share Before
Cumulative
Cumulative Effect of
Effect of
Changes in
Net Earnings per
Changes in
Accounting Principles
Common Share
Accounting
Revenue
Principles
Net Earnings
Basic
Diluted
Basic
Diluted
(In thousands, except per share data)
$
1,212,258
35,041
35,041
0.54
0.53
0.54
0.53
1,268,915
63,645
63,645
0.99
0.97
0.99
0.97
1,305,914
54,282
54,282
0.85
0.83
0.85
0.83
1,363,191
62,641
62,641
0.98
0.96
0.98
0.96
$
5,150,278
215,609
215,609
3.35
3.28
3.35
3.28
$
1,194,375
20,940
19,771
0.34
0.33
0.32
0.31
1,197,400
34,682
34,682
0.55
0.55
0.55
0.55
1,193,603
40,507
37,553
0.64
0.63
0.59
0.58
1,216,916
39,430
39,430
0.62
0.61
0.62
0.61
$
4,802,294
135,559
131,436
2.15
2.12
2.09
2.06
93
Column A
Column B
Column C
Column D
Column E
Additions
Balance at
Transferred
Balance
Beginning
Charged to
(from) to Other
at End of
Description
of Period
Earnings
Accounts
(1)
Deductions
(2)
Period
(In thousands)
$
9,361
9,545
6,983
11,923
$
10,534
1,250
5,578
6,206
$
258,299
151,675
144,268
265,706
$
10,331
1,024
(204
)
11,559
$
8,003
8,461
7,103
9,361
$
27,770
1,665
18,901
10,534
$
241,350
147,045
130,096
258,299
$
14,392
(305
)
3,756
10,331
$
8,864
8,457
9,318
8,003
$
1,422
(1,422
)
$
44,095
19,052
35,377
27,770
$
218,786
143,858
14,198
107,096
241,350
$
16,092
(1,700
)
14,392
(1) | Transferred (from) to other accounts includes reclassification of reinsurance amounts to other assets and adjustments (from) to the deferred tax valuation allowance for the effect of foreign currency translation, which is recorded in equity through accumulated other comprehensive loss. |
(2) | Deductions represent receivables written-off, lease termination payments and insurance claim payments during the period. |
94
Evaluation of Disclosure Controls and Procedures |
Managements Report on Internal Control Over Financial Reporting |
Changes in Internal Controls |
95
Page No. | |||||
1. Financial Statements for Ryder System, Inc. and
Consolidated Subsidiaries:
|
|||||
A) Managements Report on Internal Control Over Financial
Reporting
|
44 | ||||
B) Reports of Independent Registered Public Accounting Firm
|
45 | ||||
C) Consolidated Statements of Earnings
|
48 | ||||
D) Consolidated Balance Sheets
|
49 | ||||
E) Consolidated Statements of Cash Flows
|
50 | ||||
F) Consolidated Statements of Shareholders Equity
|
51 | ||||
G) Notes to Consolidated Financial Statements
|
52 | ||||
2. Consolidated Financial Statement Schedule for years
ended December 31, 2004, 2003 and 2002:
|
|||||
II Valuation and Qualifying Accounts
|
94 |
96
Exhibit | ||||
Number | Description | |||
3 | .1(a) | The Ryder System, Inc. Restated Articles of Incorporation, dated November 8, 1985, as amended through May 18, 1990, previously filed with the Commission as an exhibit to Ryders Annual Report on Form 10-K for the year ended December 31, 1990, are incorporated by reference into this report. | ||
3 | .1(b) | Articles of Amendment to Ryder System, Inc. Restated Articles of Incorporation, dated November 8, 1985, as amended, previously filed with the Commission on April 3, 1996, an exhibit to Ryders Form 8-A are incorporated by reference into this report. | ||
3 | .2 | The Ryder System, Inc. By-Laws, as amended through February 16, 2001, previously filed with the Commission as an exhibit to Ryders Annual Report on Form 10-K for the year ended December 31, 2000, are incorporated by reference into this report. | ||
4 | .1 | Ryder hereby agrees, pursuant to paragraph (b)(4)(iii) of Item 601 of Regulation S-K, to furnish the Commission with a copy of any instrument defining the rights of holders of long-term debt of Ryder, where such instrument has not been filed as an exhibit hereto and the total amount of securities authorized thereunder does not exceed 10% of the total assets of Ryder and its subsidiaries on a consolidated basis. | ||
4 | .2(a) | The Form of Indenture between Ryder System, Inc. and The Chase Manhattan Bank (National Association) dated as of June 1, 1984, filed with the Commission on November 19, 1985 as an exhibit to Ryders Registration Statement on Form S-3 (No. 33-1632), is incorporated by reference into this report. | ||
4 | .2(b) | The First Supplemental Indenture between Ryder System, Inc. and The Chase Manhattan Bank (National Association) dated October 1, 1987, previously filed with the Commission as an exhibit to Ryders Annual Report on Form 10-K for the year ended December 31, 1994, is incorporated by reference into this report. | ||
4 | .3 | The Form of Indenture between Ryder System, Inc. and The Chase Manhattan Bank (National Association) dated as of May 1, 1987, and supplemented as of November 15, 1990 and June 24, 1992, filed with the Commission on July 30, 1992 as an exhibit to Ryders Registration Statement on Form S-3 (No. 33-50232), is incorporated by reference into this report. | ||
4 | .4 | The Form of Indenture between Ryder System, Inc. and J.P. Morgan Trust Company, National Association dated as of October 3, 2003 filed with the Commission on August 29, 2003 as an exhibit to Ryders Registration Statement on Form S-3 (No. 333-108391), is incorporated by reference into this report. | ||
10 | .1 | The form of change of control severance agreement for executive officers effective as of January 1, 2000, previously filed with the Commission as an exhibit to Ryders Annual Report on Form 10-K for the year ended December 31, 2003, is incorporated by reference to this report. | ||
10 | .2 | The form of severance agreement for executive officers effective as of January 1, 2000, previously filed with the Commission as an exhibit to Ryders Annual Report on Form 10-K for the year ended December 31, 2003, is incorporated by reference to this report. | ||
10 | .3(f) | The Ryder System, Inc. 2005 Management Incentive Compensation Plan, previously filed with the Commission as an exhibit to Ryders Current Report on Form 8-K filed with the Commission on February 16, 2005, is incorporated by reference into this report. | ||
10 | .4(a) | The Ryder System, Inc. 1980 Stock Incentive Plan, as amended and restated as of August 15, 1996, previously filed with the Commission as an exhibit to Ryders Annual Report on Form 10-K for the year ended December 31, 1997, is incorporated by reference into this report. | ||
10 | .4(b) | The form of Ryder System, Inc. 1980 Stock Incentive Plan, United Kingdom Section, dated May 4, 1995, previously filed with the Commission as an exhibit to Ryders Annual Report on Form 10-K for the year ended December 31, 1995, is incorporated by reference into this report. |
97
John M. Berra
David I. Fuente Daniel H. Mudd Abbie J. Smith Christine A. Varney |
Joseph L. Dionne
Lynn M. Martin Eugene A. Renna Hansel E. Tookes II |
98
Exhibit
Number
Description
31
.1
Certification of Gregory T. Swienton pursuant to
Rule 13a-15(e) or Rule 15d-15(e).
31
.2
Certification of Tracy A. Leinbach pursuant to
Rule 13a-15(e) or Rule 15d-15(e).
32
Certification of Gregory T. Swienton and Tracy A. Leinbach
pursuant to Rule 13a-14(b) or Rule 15d-14(b) and
18 U.S.C. Section 1350.
99
Date: February 24, 2005
|
RYDER SYSTEM, INC.
By: /s/ Gregory T. Swienton Chairman, President and Chief Executive Officer |
100
By:
Eugene A. Renna
*
Director
By:
Abbie J. Smith
*
Director
By:
Hansel E.
Tookes II *
Director
By:
Christine A.
Varney *
Director
*By: /s/
Richard H.
Siegel
Attorney-in-Fact
101
EXHIBIT 10.5(b)
RYDER SYSTEM, INC.
BOARD OF DIRECTORS STOCK AWARD PLAN
As amended through February 10, 2005
RYDER SYSTEM, INC.
BOARD OF DIRECTORS STOCK AWARD PLAN
1. Purpose of this Plan
The purpose of the Ryder System, Inc. Board of Directors Stock Award Plan (this Plan) is to attract and retain persons of outstanding competence to serve as directors of Ryder System, Inc. (the Company) and to provide a mutuality of interest between the directors and shareholders by increasing the proportion of directors compensation which is stock based.
2. Effective Date and Term of this Plan
This Plan became effective on May 2, 1997, with the approval of the shareholders of the Company. Unless previously terminated in accordance with Section 13 of this Plan, this Plan shall terminate on the close of business on May 1, 2007, after which no awards shall be granted under this Plan. Such termination shall not affect any awards granted prior to such termination.
3. Administration of this Plan
A. Duties of the Committee . The Plan shall be administered by the Compensation Committee (the Committee). The Committee shall have full authority to interpret the Plan and to decide any questions and settle all controversies and disputes that may arise in connection with the Plan; to establish, amend and rescind rules for carrying out the Plan; to administer the Plan, subject to its provisions; to prescribe the form or forms of instruments evidencing grants made hereunder and any other instruments required under the Plan and to change such forms from time to time; and to make all other determinations and to take all such steps in connection with the Plan and the grants as the Committee, in its sole discretion, deems necessary or desirable. Any determination, action or conclusion of the Committee shall be final, conclusive and binding on all parties.
B. Advisors . The Committee may employ such legal counsel, consultants and agents as it may deem desirable for the administration of the Plan, and may rely upon any advice or opinion received from any such counsel or consultant and any computation received from any such consultant or agent. Expenses incurred by the Committee in the engagement of such counsel, consultant or agent shall be paid by the Company.
C. Determinations . Each determination, interpretation or other action made or taken pursuant to the provisions of this Plan by the Committee shall be final, conclusive and binding for all purposes and upon all persons, including, without limitation, the Participants, the Company, directors, officers and other employees of the Company, and the respective heirs, executors, administrators, personal representatives and other successors in interest of each of the foregoing.
D. Disinterested or Non-Employee Directors . Notwithstanding anything herein to the contrary and solely to the extent required under Section 16(b) of the Act, the Committee may not
-2-
take any action which would cause any director to cease to be a disinterested person or non-employee director for purposes of Rule 16b-3 promulgated under the Act, as then in effect or any successor provisions (Rule 16b-3), with regard to any equity plan of the Company.
4. Common Stock Subject to this Plan
A. Number of Shares . The shares of common stock of the Company, par value $.50 per share (Common Stock), to be issued in connection with an award under this Plan may be made available from authorized but unissued Common Stock, or Common Stock purchased on the open market or otherwise. Subject to the provisions of the next succeeding paragraph, the maximum aggregate number of shares of Common Stock for which awards may be granted under this Plan shall be 500,000 shares. If a Unit (as defined in Section 7) awarded under this Plan fails to become vested, any share allocable to that Unit shall become available for grant to other Participants (as defined in Section 5). If an Option (as defined in Section 9) granted under this Plan expires or is terminated without having been exercised in full, the unpurchased or forfeited shares or rights to receive shares shall become available for grant to other Participants.
B. Adjustments; Recapitalization, etc . The existence of this Plan and the grants made hereunder shall not affect in any way the right or power of the Board or the shareholders of the Company to make or authorize any adjustment, recapitalization, reorganization or other change in the Companys capital structure or its business, any merger or consolidation of the Company, any issue of bonds, debentures, preferred or prior preference stocks ahead of or affecting Common Stock, the dissolution or liquidation of the Company or any sale or transfer of all or part of its assets or business, or any other corporate act or proceeding, in which case the provisions of this Section 4.B. shall govern outstanding grants:
(i) The shares with respect to which Options or Units may be granted are shares of Common Stock as presently constituted, but, if and whenever the Company shall effect a subdivision, recapitalization or consolidation of shares or the payment of a stock dividend on shares without receipt of consideration, the aggregate number and kind of shares of capital stock issuable under this Plan shall be proportionately adjusted, and each holder of a then outstanding Option shall have the right to purchase under such Option, in lieu of the number of shares as to which the Option was then exercisable but on the same terms and conditions of exercise set forth in such Option, the number and kind of shares of capital stock which he or she would have owned after such sub-division, recapitalization, consolidation or dividend if immediately prior thereto he had been the holder of record of the number of shares as to which such Option was then exercisable. Similarly, regarding shares with respect to Units that may be granted, the number of Units shall be appropriately adjusted to reflect the foregoing types of transactions.
(ii) If the Company merges or consolidates with one or more corporations and the Company shall be the surviving corporation, thereafter upon exercise of an Option theretofore granted, the Participant shall be entitled to purchase under such Option in lieu of the number of Shares as to which such Option shall then be exercisable, but on the same terms and conditions of exercise set forth in such Option, the number and kind of shares of capital stock or other property to which the Participant would have been entitled pursuant to the terms of the agreement of merger or consolidation if, immediately prior to such merger or consolidation, the Participant had been the
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holder of record of the number of shares as to which such Option was then exercisable. Similarly, regarding shares with respect to Units that may be granted, the number of Units shall be appropriately adjusted to reflect the foregoing types of transactions.
(iii) If as a result of any adjustment made pursuant to the preceding paragraphs of this Section 4.B., any Participant shall become entitled upon exercise of an Option or vesting of a Unit to receive any shares of capital stock other than Common Stock, then the number and kind of shares of capital stock so receivable thereafter shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Common Stock set forth in this Section 4.B.
(iv) Except as hereinbefore expressly provided, the issuance by the Company of shares of stock of any class or securities convertible into shares of stock of any class, for cash, property, labor or services, upon direct sale, upon the exercise of rights or warrants to subscribe therefor, or upon conversion of shares or other securities, and in any case whether or not for fair value, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number of shares subject to Options or Units theretofore granted or the purchase price per share.
(v) Any adjustment made by the Committee pursuant to this paragraph shall be conclusive and binding upon the Participant, the Company and any other related person.
5. Eligible Persons
Participation in this Plan shall be limited to those members of the Board who, at the time an award is made hereunder, are not employees of the Company or any of its subsidiaries or affiliates within the meaning of the Employee Retirement Income Security Act of 1974, as amended (a Participant). A member of the Board who is an employee and who retires or resigns from employment with the Company or any of its subsidiaries or affiliates, but remains a member of the Board, shall become a Participant at the time of such termination of employment.
6. Awards
The Committee may grant the following types of awards under this Plan: Units pursuant to Section 7 hereof and Options pursuant to Section 9 hereof.
7. Units
Effective as of May 2, 1997, the Company discontinued its prior retirement plan for the Board. The retirement compensation which would have otherwise been payable at retirement to those individuals who were Participants on May 2, 1997, was converted to a present value dollar amount, based on actuarial assumptions satisfactory to the Committee. Such dollar amount was converted into a number of restricted stock units (Units) by dividing such dollar amount by the average of the Fair Market Values of the Common Stock on the last business day of each of the three (3) months preceding May 2, 1997. Fair Market Value as used in this Plan shall mean the average of the high and low price of a share of Common Stock as reported by the composite transaction reporting system for securities listed on the New York Stock Exchange on the applicable date.
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On the date of the Companys annual shareholders meeting (the Grant Date), each Participant shall be granted additional Units. The number of Units which shall be granted will be the number of whole shares of Common Stock that can be purchased for $80,000 based on the Fair Market Value of the Common Stock on the Grant Date. Fractional shares shall not be granted. Fair Market Value will be the average of the highest and lowest sales price for the Common Stock as reported on the New York Stock Exchange Composite Transaction Reporting System on the Grant Date.
In addition, from time to time, the Committee may award additional Units to Participants pursuant to this Section 7 and the other terms and conditions of this Plan. Such Units may be granted as initial grants upon a Participants appointment to the Board, and/or annually.
The Company shall maintain an individual book account under this Plan for each Participant awarded Units pursuant to this Section 7. Such account shall be credited with the number of Units awarded to each Participant and shall continue to be expressed in Units until such Participant has vested in such Units. Any dividends or other distributions paid on the Common Stock shall be credited on an annual basis to each Participants account in respect of each Unit and shall be deemed to be reinvested in additional Units based on the Fair Market Value of a share of Common Stock on the dividend payment or distribution date. Any accrued and unpaid dividends will be credited to each Participants account upon termination of their service on the Board. In addition, the number of Units allocated to each Participants account shall be adjusted to reflect stock dividends, stock splits and similar transactions affecting the value of Common Stock as described more fully in Section 4.B. hereof.
With respect to Units in each Participants account that are made as annual grants by the Committee, such Units shall vest on the date of such Participants cessation of service as a Director and shall be paid to such Participant, in an equivalent number of shares of Common Stock, in accordance with such Participants payment election described below in Section 8. With respect to Units in each Participants account that are made as an initial grant by the Committee upon a directors election to the Board, such Units shall vest on the date of such Participants cessation of service as a Director, provided the director has served for at least one year and shall be paid to such Participant, in an equivalent number of shares of Common Stock, in accordance with such Participants payment election described below in Section 8. With respect to Units in each Participants account that were made in connection with the termination of the prior retirement plan described in the first paragraph of this Section 7, such Units shall vest on the date of such Participants retirement from the Board after age 65 with at least ten years of service, and shall be paid to such Participant, in an equivalent number of shares of Common Stock, in accordance with such Participants payment election described below in Section 8. Prior to vesting, no Units in a Participants account shall be assignable or transferable by such Participant and no right or interest of any Participant shall be subject to any lien, obligation or liability.
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8. Payment Elections for Units
In connection with the commencement of participation in this Plan, each Participant eligible to receive an award of Units hereunder shall make an election (the Payment Election) concerning the timing of distribution of the amounts credited to such Participants account. Any payment from such account shall commence following such Participants retirement from, or cessation of service with, the Board, but in no event prior to one year after receipt by the Committee of such Participants initial Payment Election, except for Participants who retired from, or ceased service with, the Board in calendar year 1997 who received payment in a lump sum as soon as practicable following their retirement or cessation of service. The forms of payment available to all other Participants shall be a lump sum payment of the shares or annual installments of the shares over a period not to exceed ten (10) years from the earliest date the Participant may commence receiving payments hereunder. Subsequent Payment Elections which shall supersede the Initial Payment Election may be made by a Participant, but any subsequent Payment Election shall not be valid unless it is made at least one year prior to the date that the commencement of payments to the Participant hereunder is otherwise due to commence.
In the event of a Participants death before the balance from such Participants account is fully paid, payment of the balance of such Participants account shall be made to such Participants estate in accordance with the manner selected by the Participant prior to death; provided, however, the Committee may, upon consideration of the application of the duly appointed administrator or executor of such Participants estate, direct that the balance of such Participants account be paid to the estate in a single payment.
9. Stock Options
On the date of the Companys annual shareholders meeting, the Company may, during the term of this Plan, grant Participants a non-qualified stock option (an Option) to purchase a number of shares of Common Stock determined by the Committee, provided the Participant will continue to serve as a member of the Board following the meeting. The purchase price for each share of Common Stock issuable under an Option shall not be less than 100 percent (100%) of the Fair Market Value of a share of Common Stock on the date of grant. Each Option shall be for such term (but, in no event for greater than ten years) and shall be exercisable in such installments as shall be determined by the Committee at the time of grant of the Option. No Option granted under this Plan shall be assignable or transferable by a Participant except by will or the laws of descent and distribution. A Participant shall forfeit any Option assigned or transferred, voluntarily or involuntarily, other than as permitted under this Section 9. Each Option shall be exercised during the Participants lifetime only by the Participant or the Participants guardian or legal representative. Each Option granted shall be evidenced by an Option Agreement entered into between the Participant and the Committee.
10. Exercise of Options
Subject to the provisions of this Section 10, each Option may be exercised in whole or, from time to time, in part with respect to the number of then exercisable shares in any sequence desired by the Participant. To exercise an Option, the Participant shall (i) give written notice to
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the Company in form satisfactory to the Committee indicating the number of shares of Common Stock which the Participant elects to purchase, (ii) deliver to the Company payment of the full purchase price of the shares being purchased (A) in cash or a certified or bank cashiers check payable to the order of the Company, or (B) with the approval of the Committee, in shares of Common Stock having a Fair Market Value on the date of exercise equal to the purchase price, or (C) a combination of the foregoing having an aggregate Fair Market Value equal to such purchase price, and (iii) deliver to the Secretary of the Company such written representations, warranties and covenants as the Company may require to permit this Plan and any Options or shares of Common Stock granted or issued hereunder to comply with any applicable blue sky or other federal or state securities laws. A Participant shall not have any rights as a shareholder with respect to shares subject to an Option until the close of business on the date on which the Option has been exercised.
11. Cessation of Service on the Board
If a Participants service on the Board ceases for any reason, other than as specified in the subsequent paragraphs of this Section 11, any Option held by such Participant shall terminate three (3) months after the date of such cessation of service; provided, however, that in the event of the death of the Participant during such three-month period, such Option shall, to the extent it was exercisable on the date of cessation of service, be exercisable by the Participants legal representatives, heirs or legatees for a period of one (1) year commencing on the date of the Participants death and shall terminate at the expiration of such period. Except as provided in subsequent paragraphs of this Section 11, Options that were not exercisable during the period a person served as a director shall not become exercisable upon a termination of service for any reason, and such Options shall terminate and become null and void upon the termination of service.
If the cessation of service on the Board is due to the Participants death, any Option shall, to the extent it was exercisable on the date of death, continue to be exercisable by such Participants legal representatives, heirs or legatees for the term of such Option.
If the cessation of service is due to the Participants retirement or disability, any Option not previously exercised or expired shall continue to vest and be exercisable during the three (3) year period following the date of cessation of service, and to the extent it is exercisable at the expiration of such three (3) year period, it shall continue to be exercisable by such Participant or such Participants legal representatives, heirs or legatees for the term of such Option.
12. Change of Control
Notwithstanding any other provision of this Plan, in the event of a Change of Control (as defined below), the Units in each Participants account shall become immediately vested and shall be paid in full in a lump sum of equivalent shares of Common Stock to each Participant as soon as practicable following the Change of Control. In addition, in the event of a Change of Control, each Option not previously exercised or expired under the terms of this Plan shall become immediately exercisable in full and shall remain exercisable to the full extent of the shares of Common Stock available thereunder, regardless of any installment provisions applicable thereto, for the remainder of its term.
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A Change of Control shall be deemed to have occurred if:
(i) any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the 1934 Act)) (a Person) becomes the beneficial owner, directly or indirectly, of twenty percent (20%) or more of the combined voting power of the Companys outstanding voting securities ordinarily having the right to vote for the election of directors of the Company; provided, however, that for purposes of this subparagraph (i), the following acquisitions shall not constitute a Change of Control: (A) any acquisition by any employee benefit plan or plans (or related trust) of the Company and its subsidiaries and affiliates or (B) any acquisition by any corporation pursuant to a transaction which complies with clauses (A), (B) and (C) of subparagraph (iii) of this Section 12; or
(ii) the individuals who, as of August 18, 1995, constituted the Board (and as of August 18, 1995, the Incumbent Board) cease for any reason to constitute at least two-thirds (2/3) of the Board, provided, that any person becoming a director subsequent to August 18, 1995 whose election, or nomination for election, was approved by a vote of the persons comprising at least two-thirds (2/3) of the Incumbent Board (other than an election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened election contest, as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the 1934 Act) shall be, for purposes of this Plan, considered as though such person were a member of the Incumbent Board; or
(iii) there is a reorganization, merger or consolidation of the Company (a Business Combination), in each case, unless, following such Business Combination, (A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Companys outstanding Common Stock and outstanding voting securities ordinarily having the right to vote for the election of directors of the Company immediately prior to such Business Combination beneficially own, directly or indirectly, more than fifty percent (50%) of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities ordinarily having the right to vote for the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Companys assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the Companys outstanding Common Stock and outstanding voting securities ordinarily having the right to vote for the election of directors of the Company, as the case may be, (B) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan or plans (or related trust) of the Company or such corporation resulting from such Business Combination and their subsidiaries and affiliates) beneficially owns, directly or indirectly, 20% or more of the combined voting power of the then outstanding voting securities of the corporation resulting from such Business Combination and (C) at least two-thirds (2/3) of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or
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(iv) there is a liquidation or dissolution of the Company approved by the shareholders; or
(v) there is a sale of all or substantially all of the assets of the Company.
13. Amendments to this Plan
The Committee may at any time (i) terminate this Plan or (ii) modify or amend this Plan in any respect, except that, to the extent required to maintain the qualification of this Plan under Section 16 of the 1934 Act, or as otherwise required to comply with applicable law or the regulations of any stock exchange on which the Common Stock is listed, the Committee may not, without the shareholders approval, (A) materially increase the benefits accruing to Participants under this Plan; (B) materially increase the number of securities which may be issued under this Plan; or (C) materially modify the requirements as to eligibility for participation in this Plan. Should this Plan require amendment to maintain full legal compliance because of rules, regulations, opinions or statutes issued by the Securities and Exchange Commission, the U.S. Department of the Treasury or any other governmental or governing body, then the Committee or the Board may take whatever action, including but not limited to amending or modifying this Plan, is necessary to maintain such compliance. The termination or any modification or amendment of this Plan shall not, without the consent of any Participant involved, adversely affect rights under a Unit or an Option previously awarded to such Participant.
Transactions under this Plan are intended to comply with all applicable conditions of Rule 16b-3 or its successors under the 1934 Act. To the extent any provision of this Plan or action by the Committee fails to so comply, it shall be deemed null and void, to the extent permitted by law and deemed advisable by the Committee. Moreover, in the event this Plan does not include a provision required by Rule 16b-3 to be stated herein, such provision (other than one relating to eligibility requirements, or the price and amount of Options) shall be deemed automatically to be incorporated by reference into this Plan.
14. General Provisions
A. Sale Proceeds . The proceeds of the sale of shares subject to Options under the Plan are to be added to the general funds of the Company and used for its general corporate purposes, as the Board shall determine.
B. Right to Terminate Directorship . This Plan shall not impose any obligations on the Company to retain any Participant as a director nor shall it impose any obligation on the part of any Participant to remain as a director of the Company.
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C. Trusts, etc. Nothing contained in the Plan and no action taken pursuant to the Plan (including, without limitation, the grant of any Option or Unit thereunder) shall create or be construed to create a trust of any kind, or a fiduciary relationship, between the Company and any Participant or the executor, administrator or other personal representative or designated beneficiary of such Participant, or any other persons. If and to the extent that any Participant or such Participants executor, administrator or other personal representative, as the case may be, acquires a right to receive any payment from the Company pursuant to the Plan, such right shall be no greater than the right of an unsecured general creditor of the Company.
D. Notices . Any notice to the Company required by or in respect of this Plan will be addressed to the Company at 3600 N.W. 82nd Street, Miami, Florida 33166-6623; Attention: General Counsel, or such other place of business as shall become the Companys principal executive offices from time to time. Each Participant shall be responsible for furnishing the Committee with the current and proper address for the mailing to such Participant of notices and the delivery to such Participant of agreements, shares and payments. Any such notice to the Participant will, if the Company has received notice that the Participant is then deceased, be given to the Participants personal representative if such representative has previously informed the Company of his or her status and address (and has provided such reasonable substantiating information as the Company may request) by written notice under this Section. Any notice required by or in respect of this Plan will be deemed to have been duly given when delivered in person or when dispatched by telecopy or, in the case of notice to the Company, by facsimile as described above, or one business day after having been dispatched by a nationally recognized overnight courier service or three business days after having been mailed by United States registered or certified mail, return receipt requested, postage prepaid. The Company assumes no responsibility or obligation to deliver any item mailed to such address that is returned as undeliverable to the addressee and any further mailings will be suspended until the Participant furnishes the proper address.
E. Severability of Provisions . If any provisions of the Plan shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions of the Plan, and the Plan shall be construed and enforced as if such provisions had not been included.
F. Payment to Minors, Etc. Any benefit payable to or for the benefit of a minor, an incompetent person or other person incapable of receipt thereof shall be deemed paid when paid to such persons guardian or to the party providing or reasonably appearing to provide for the care of such person, and such payment shall fully discharge the Committee, the Company and their employees, agents and representatives with respect thereto.
G. Headings and Captions . The headings and captions herein are provided for reference and convenience only. They shall not be considered part of the Plan and shall not be employed in the construction of the Plan.
H. Controlling Law . The Plan shall be construed and enforced according to the laws of the State of Florida, without giving effect to rules governing the conflict of laws.
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I. Section 16(b) of the Act . All elections and transactions under the Plan by persons subject to Section 16 of the Act involving shares of Common Stock are intended to comply with any applicable condition under Rule 16b-3. To the extent any provision of the Plan or action by the Committee fails to so comply, it shall be deemed null and void. The Committee may establish and adopt written administrative guidelines, designed to facilitate compliance with Section 16(b) of the Act, as it may deem necessary or proper for the administration and operation of the Plan and the transaction of business thereunder.
J. Listing of Shares . If at any time the Board or the Committee shall determine in its sole discretion that the listing, registration or qualification of the shares covered by the Plan upon any national securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition of, or in connection with, the grant of Options or Units or the award or sale of shares under the Plan, no Option or Unit grant shall be effective and no shares will be delivered, as the case may be, unless and until such listing, registration, qualification, consent or approval shall have been effected or obtained, or otherwise provided for, free of any conditions not acceptable to the Board.
K. Withholding . The Company shall have the right to require, prior to the issuance or delivery of any shares of Common Stock, payment by the Participant of any federal, state or local taxes required by law to be withheld.
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EXHIBIT 10.5(c)
RYDER SYSTEM, INC.
DIRECTORS STOCK PLAN
(As amended through May 7, 2004)
RYDER SYSTEM, INC.
DIRECTORS STOCK PLAN
SECTION I
PURPOSES OF THE PLAN
The Ryder System, Inc. Directors Stock Plan (the Plan) is intended to enable Ryder System, Inc. (the Company) to attract and retain persons of outstanding competence to serve as members of the Board of Directors of the Company and to provide a direct link between Directors compensation and shareholder value.
SECTION II
ADMINISTRATION OF THE PLAN
A. Committee The Plan shall be administered by the Compensation Committee of the Board of Directors of the Company (the Committee), which shall consist of not less than three members of the Board of Directors, each of whom shall be a disinterested person as that term is used in Rule 16b-3 under the Securities Exchange Act of 1934, as amended. Grants of stock to eligible participants under the Plan and the amount, nature and timing of the grants shall be automatically determined as described in Sections IV and V and shall not be subject to the determination of the Committee.
B. Authority of the Committee Subject to certain specific limitations and restrictions set forth in the Plan, the Committee shall have full and final authority to interpret the Plan; to prescribe, amend and rescind rules and regulations, if any, relating to the Plan; and to make all determinations necessary or advisable for the administration of the Plan. No member of the Committee shall be liable for anything done or omitted to be done by him or by any other member of the Committee in connection with the Plan, except for his own willful misconduct or gross negligence. All decisions which are made by the Committee with respect to interpretation of the terms of the Plan and with respect to any questions or disputes arising under the Plan shall be final and binding on the Company and the participants, their heirs or beneficiaries. The Committee shall not be empowered to take any action, whether or not otherwise authorized under the Plan, which would result in any Director failing to qualify as a disinterested person.
C. Acts of the Committee A majority of the Committee will constitute a quorum and the acts of a majority of the members present at any meeting at which a quorum is present, or acts approved in writing by all members of the Committee without a meeting, will be the acts of the Committee.
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SECTION III
STOCK SUBJECT TO THE PLAN
A. Common Stock The stock which is the subject of grants under the Plan shall be the Companys Common Stock, par value $ .50 per share (Common Stock), which shares shall be subject to the terms, conditions and restrictions described in the Plan.
B. Maximum Number Of Shares That May Be Granted There may be granted under the Plan an aggregate of not more than one hundred thousand (100,000) shares of Common Stock, subject to adjustment as provided in Section VII hereof. Shares of Common Stock granted pursuant to the Plan may be either authorized, but unissued, shares or reacquired shares, or both.
C. Rights With Respect To Shares A Director to whom a grant of Common Stock has been made shall have absolute beneficial ownership of the shares of Common Stock granted to that Director, including the right to vote the shares and to receive dividends thereunder; subject, however, to the terms, conditions and restrictions described in the Plan, including, but not limited to, Section V. The certificate(s) for such shares shall be held by the Company (or by an agent designated by the Secretary of the Company) for the Directors benefit until the terms, conditions and restrictions lapse, whereupon the certificates shall be delivered to the Director.
SECTION IV
PARTICIPATION
A. Directors Participation in the Plan shall be limited to persons who serve as members of the Board of Directors of the Company and who, at the time of grant, are not employees of the Company and/or any of its subsidiaries, within the meaning of the Employee Retirement Income Security Act of 1974 (ERISA). A Director who is an employee and who retires or resigns from employment with the Company and/or any of its subsidiaries, but remains, a Director of the Company, shall become eligible to participate in the Plan at the time of such termination of employment.
B. Elections Any eligible Director may elect to participate in the Plan and receive grants of Common Stock as set out in Paragraph C of this Section IV by delivering to the Committee a written notice to such effect. Such election shall be made on or before December 31 st of the year immediately preceding the Grant Date (as defined below) and shall remain in effect until changed by the Director in writing. Any such change shall become effective on January 1 st of the following year.
C. Grants Each participating Director who has made an election pursuant to Paragraph B of this Section IV shall be eligible to receive, on the first New York Stock Exchange trading day of the year immediately following the date on which such Director made an election pursuant to Paragraph B of this Section IV to participate in the Plan, and thereafter annually on the first New York Stock Exchange trading day of each year (each such date referred to herein as the Grant
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Date) until such time as the Director changes his/her election in accordance with Paragraph B of this Section IV, a grant of Common Stock in lieu of all or a portion (as set forth in the Directors written election) of the Directors annual retainer for service as a director of the Company. The amount of common Stock which shall be granted to a participating Director will be the number of whole shares which can be purchased for that portion of the Directors annual retainer which the Director has elected to receive in Common Stock based on the Fair Market Value of the shares on the Grant Date. Fractional shares shall not be granted. Fair Market Value will be the average of the highest and lowest sale price for the Common Stock as reported on the New York Stock Exchange Composite Transaction Reporting System on the Grant Date.
SECTION V
TERMS AND CONDITIONS OF STOCK GRANTS
A. Vesting Each grant of Common Stock to a participating Director in accordance with the Plan shall be vested on the six-month anniversary of the Grant Date, so long as the Director has served continuously as a director of the Company during the intervening six-month period. In the event a Directors service to the Company terminates before the shares have vested, then all shares granted to such Director which have not vested shall be cancelled and the shares forfeited and retransferred to the Company, with the Director having no further right or interest in such forfeited and retransferred shares.
B. Restrictions on Transfer Shares of Common Stock granted to a participating Director may not be assigned, (transferred, pledged, hypothecated or otherwise disposed of (i) before they have vested in accordance with (i) Paragraph A of this Section V and (ii) until six (6) months after the termination of the Directors service to the Company as a director.
SECTION VI
COMPLIANCE WITH LAW AND OTHER CONDITIONS
A. Restrictions Upon Grant Of Common Stock The listing upon the New York Stock Exchange or the registration or qualification under any federal or state law of any shares of Common Stock to be granted pursuant to the Plan may be necessary or desirable as a condition of, or in connection with, such grant and, in any such event, delivery of the certificates for such shares of Common Stock shall, if the Committee, in its sole discretion, shall determine, not be made until such listing, registration or qualification shall have been completed.
B. Restrictions Upon Resale Of Unregistered Stock If the issuances of the shares of Common Stock that have been granted to a participating Director pursuant to the terms of the Plan are not registered under the Securities Act of 1933, as amended, pursuant to an effective registration statement, such Director, if the Committee shall deem it advisable, may be required to represent and agree in writing.
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(i) that any shares of Common Stock acquired by such Director pursuant to the Plan will not be sold, except pursuant to an effective registration statement under the Securities Act of 1933, as amended, or pursuant to an exemption from registration under such Act, and
(ii) that such Director is acquiring such shares of Common Stock for his own account and not with a view to the distribution thereof.
SECTION VII
ADJUSTMENTS
The number of shares of Common Stock of the Company reserved for grants under the Plan shall be subject to appropriate adjustment by the Committee, as necessary, to reflect any stock split, stock dividend, recapitalization, merger, consolidation, reorganization, combination or exchange of shares or similar event.
SECTION VIII
MISCELLANEOUS PROVISIONS
A. Nothing in the Plan shall be construed to give any Director of the Company any right to a grant of Common Stock under the Plan unless all conditions described within the Plan are met as determined in the sole discretion of the Committee.
B. Neither the Plan, nor the granting of Common Stock nor any other action taken pursuant to the Plan, shall constitute or be evidence of any agreement or understanding, express or implied, that the Company will retain a Director for any period of time. Nothing in the Plan shall in any manner be construed to limit in any way the right of the Company or its shareholders to reelect or not reelect or renominate or not renominate a participating Director.
C. Any shares of Common Stock of the Company issued as a stock dividend, or as a result of stock splits, combinations, exchanges of shares, reorganizations, mergers, consolidations or otherwise with respect to shares of Common Stock granted pursuant to the Plan shall have the same status and be subject to the same restrictions as the shares granted.
D. The costs and expenses of administering the Plan shall be borne by the Company and not charged to any grant of Common Stock nor to any participating Director.
E. The Company may make such provisions and take such steps as it may deem necessary or appropriate for the withholding of any taxes which the Company is required by any law or regulation of any governmental authority, whether federal, state or local, to withhold in connection with any event or action under the Plan.
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SECTION IX
AMENDMENT
The Committee or the Board of Directors of the Company may suspend or discontinue the Plan, or revise or amend it in any respect whatsoever; except that, without shareholder approval, the Committee or the Board of Directors may not (a) materially increase the benefits accruing to participants under the Plan, (b) increase the number of shares of Common Stock available for grants under the Plan, or (c) materially modify the requirements as to eligibility for participation in the Plan. Additionally, should the Plan require amendment to maintain full legal compliance because of rules, regulations, opinions or statutes issued by the SEC, the U.S. Department of the Treasury or any other governmental or governing body, then the Committee or the Board of Directors may take whatever action, including but not limited to amending or modifying the Plan, is necessary to maintain such compliance. The termination or any modification or amendment of the Plan shall not, without the consent of any participant involved, adversely affect rights under a previous grant of Common Stock. In no event shall Plan provisions dealing with the eligibility of participants to receive grants, the amount and price of securities to be granted, or the timing of the grants be amended more than once every six months, other than to comport with changes in the Internal Revenue Code, ERISA, or the rules thereunder.
SECTION X
GOVERNING LAW
The Plan and all determinations made and actions taken pursuant thereto shall be governed by the laws of the State of Florida and construed accordingly.
SECTION XI
APPROVAL BY SHAREHOLDERS
The Plan shall become effective only upon approval by the shareholders of the Company.
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EXHIBIT 10.10
RYDER SYSTEM, INC.
DEFERRED COMPENSATION PLAN
This Ryder System, Inc. Deferred Compensation Plan (the Plan) is amended and restated as of January 1, 2005. Compensation deferred and vested as of December 31, 2004 shall continue to be governed in accordance with the provisions of the Plan in effect for the year of deferral. The Plan is established and maintained by Ryder System, Inc. (RSI) solely for the purpose of providing specified benefits to the members of the Board of Directors of RSI and a select group of management and highly compensated Employees who contribute materially to the continued growth, development and future business success of RSI, and its subsidiaries, that elect to sponsor this Plan. This Plan shall be unfunded for tax purposes and for purposes of Title I of the Employee Retirement Income Security Act of 1974, as amended (ERISA).
ARTICLE I
DEFINITIONS
Wherever used herein the following terms shall have the meanings hereinafter set forth:
1.1 Accounting Date means each business day of the Plan Year on which the national stock exchanges and the Nasdaq system are open for trading.
1.2 Accounting Period means each period beginning on the day following an Accounting Date and ending on the following Accounting Date.
1.3 Affiliate means any Employer, and any member of a controlled group of corporations, a group of trades or businesses under common control, an affiliated service group of which any Employer is a member or any other entity required to be aggregated with the Employer pursuant to regulations under Section 414(o) of the Code. For purposes hereof: (i) a controlled group of corporations shall mean a controlled group of corporations as defined in Section 1563(a) of the Code, determined without regard to Sections 1563(a)(4) and (e)(3)(C) thereof, (ii) a group of trades or businesses under common control shall mean a group of trades or businesses under common control as defined in the regulations promulgated under Section 414(c) of the Code; and (iii) an affiliated service group shall mean an affiliated service group as defined in Section 414(m) of the Code.
1.4 Beneficiary means the person or persons designated by a Participant, upon such forms as shall be provided by the Committee, to receive payments of the vested portion of the Participants Account after the Participants death. If the Participant shall fail to designate a Beneficiary, or if for any reason such designation shall be ineffective, or if such Beneficiary shall predecease the Participant or die simultaneously with him, then the Beneficiary shall be, in the following order of preference:
(i) the Participants surviving spouse, or
(ii) the Participants estate.
1.5 Board means the Board of Directors of the Company.
1.6 Change of Control shall be deemed to have occurred if:
(i) any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the 1934 Act)) (a Person) becomes the beneficial owner, directly or indirectly, of twenty percent (20%) or more of the combined voting power of RSIs outstanding voting securities ordinarily having the right to vote for the election of directors of RSI; provided, however, that for purposes of this subparagraph (i), the following acquisitions shall not constitute a Change of Control: (A) any acquisition by any employee benefit plan or plans (or related trust) of RSI and its subsidiaries and affiliates or (B) any acquisition by any corporation pursuant to a transaction which complies with clauses (A), (B) and (C) of subparagraph (iii) of this Section 1.6; or
(ii) the individuals who, as of August 18, 1995 constituted the Board of Directors of RSI (the Board generally and as of August 18, 1995 the Incumbent Board) cease for any reason to constitute at least two-thirds (2/3) of the Board, provided that any person becoming a director subsequent to August 18, 1995 whose election, or nomination for election, was approved by a vote of the persons comprising at least two-thirds (2/3) of the Incumbent Board (other than an election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened election contest, as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the 1934 Act) shall be, for purposes of this Plan, considered as though such person were a member of the Incumbent Board; or
(iii) there is a reorganization, merger or consolidation of RSI (a Business Combination), in each case, unless, following such Business Combination, (A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of RSIs outstanding Company Stock and outstanding voting securities ordinarily having the right to vote for the election of directors of RSI immediately prior to such Business Combination beneficially own, directly or indirectly, more than fifty percent (50%) of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities ordinarily having the right to vote for the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns RSI or all or substantially all of RSIs assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of RSIs outstanding Company Stock and outstanding voting securities ordinarily having the right to vote for the election of directors of RSI, as the case may be, (B) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan or plans (or related trust) of RSI or such corporation resulting from such Business Combination and their subsidiaries and affiliates) beneficially owns, directly or indirectly, 20% or more of the combined voting power of the then outstanding voting securities of the corporation resulting from such Business Combination and (C) at least two-thirds (2/3) of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or
(iv) there is a liquidation or dissolution of RSI approved by the shareholders; or
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(v) there is a sale of all or substantially all of the assets of RSI. If the sponsor enters into an agreement or series of agreements or the Board passes a resolution which will result in the occurrence of any of the matters described in subsections (i), (ii), (iii), (iv), or (v), and a Participants employment is terminated subsequent to the date of execution of such agreement or series of agreements or the passage of such resolution, but prior to the occurrence of any of the matters described in subsections (i), (ii), (iii), (iv), or (v), a Change of Control shall be deemed to have retroactively occurred on the date of the execution of the earliest of such agreements(s), or the passage of such resolution.
If a Change of Control occurs and if a Participants employment is terminated prior to the date on which the Change of Control occurs, and if it is reasonably demonstrated by the Participant that such termination of employment (A) was at the request of a third party who has taken steps reasonably calculated to effect a Change of Control or (B) otherwise arose in connection with or in anticipation of a Change of Control, a Change of Control shall be deemed to have retroactively occurred on the date immediately prior to the date of such termination of employment.
1.7 Code means the Internal Revenue Code of 1986, as amended from time to time, and any regulations relating thereto.
1.8 Committee means the Committee appointed by the Board to administer the Savings Plan in accordance with Article X of the Savings Plan or when applicable, the person to whom the Committee has delegated authority pursuant to Article X of the Savings Plan for the matter in question.
1.9 Company means Ryder System, Inc., a Florida corporation, or any successor corporation or other entity resulting from a merger or consolidation into or with the Company or a transfer or sale of substantially all of the assets of the Company.
1.10 Company Stock means the common stock of the Company, par value $.50, which is readily tradable on an established securities market.
1.11 Compensation means (i) in the case of an Employee, the sum of the total of all amounts paid to a Participant by an Employer as salary (including commissions) or bonuses for personal services and any Savings Plan Tax-Deferred Contributions or Tax-Deferred Contributions made by the Employer on behalf of a Participant for the Plan Year excluding any other amounts earned by the Participant for the Plan Year but that are deferred under any other plan or arrangement maintained by the Employer, or (ii) in the case of a Director, the Directors fees including the Directors annual cash retainer, committee retainer and per diem meeting fees earned by the Director.
1.12 Director means a member of the Board.
1.13 Disability means a Participants inability to engage in any substantial gainful activity by reason of any medically determined physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months, as determined in a uniform and non-discriminatory manner by the Committee after requiring any medical examinations by a physician or reviewing any medical
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evidence which the Committee considers necessary, and which results in the Participants Separation from Employment.
1.14 Eligible Employee means any Employee who is (i) employed by the Employer, (ii) designated by the Committee to be eligible to participate in the Plan, and (iii) is part of a select group of management or highly compensated employees within the meaning of Sections 201(2), 301(a)(3)and 401(a)(l) of ERISA, and any regulations relating thereto. Notwithstanding the foregoing, effective as of January 1, 2005, Employees shall only become Eligible Employees on the January 1st, or July 1st next following the date on which the Committee selects the Employee for Plan participation.
1.15 Employee means any employee of (i) the Company or (ii) any other entity that is an Employer as defined in the Savings Plan.
1.16 Employer means (i) the Company and (ii) any other entity that is an Employer as defined in the Savings Plan.
1.17 Investment Funds means those investment options that shall from time to time be made available as investment options under the Plan, as determined by the Committee.
1.18 Key Employee means an Employee who meets the definition of a key employee set forth in Section 416(i) of the Code, without regard to paragraph (5) thereof.
1.19 Leave of Absence means an Employees leave of absence from active employment with the Company or an Affiliate because of military service, illness which does not constitute a Disability, educational pursuits, services as a juror, or temporarily with a government agency, or any other leave of absence, if (i) such leave of absence is approved by the Company or an Affiliate that employs the Employee, and (ii) upon termination of any such leave of absence, such Employee promptly returns or has returned to the employ of the Company or an Affiliate, without employment (other than military service) elsewhere in the meantime except with the consent of the Company or an Affiliate. The Company or an Affiliate shall determine the first and last days of any Leave of Absence that it approves.
1.20 Matching Contributions means the matching contributions credited to the Participants Account in accordance with Section 3.2 of the Plan.
1.21 Matching Contributions Account means the account maintained by the Company under the Plan for a Participant that is credited with the Participants Matching Contributions, and any gains or losses allocable thereto.
1.22 Participant means a Director or an Eligible Employee of the Employer who elects to participate in the Plan.
1.23 Participants Account means the total amount credited to the account maintained in the Plan in accordance with the provisions of the Plan for each Participant, which represents his total proportionate interest of all accounts under the Plan as of any Accounting Date, and which consists of his Tax-Deferred Contributions Account and his Matching Contributions Account.
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1.24 Plan means the Ryder System, Inc. Deferred Compensation Plan.
1.25 Plan Year means the calendar year.
1.26 Retirement means either (i) in the case of an Employee, termination of employment from an Employer at or after Retirement Age or (ii) in the case of a Director, retirement as a member of the Board.
1.27 Retirement Age means the earlier of (i) the date on which a Participant attains age 65, and (ii) the date on which a Participant has both (a) attained age 55 and (b) completed at least 10 years of service. For purposes of this provision, Service shall mean that period of an Employees continuous uninterrupted employment with an Employer and any Affiliate, and with any predecessor businesses of the Employer or an Affiliate, conducted as corporations, partnerships, or proprietorships, from the Employees last date of hire to the date of termination of his employment for any reason; provided however, that the employment of an Employee, who immediately before his current employment was employed by a predecessor or acquired business continuously up to the date of its merger with or acquisition by the Employer or an Affiliate, shall include only that part of his employment for said business which has occurred after the date fixed for this purpose by the Company and provided that the same date is uniformly fixed for this purpose as to all of the employees of a given predecessor or acquired business. An Employee may work simultaneously for more than one Employer and Affiliate, but the total period of his employment shall not be increased by reason of such simultaneous employment.
1.28 Savings Plan means the Ryder System, Inc. Employee Savings Plan A, established effective January 1, 1984, and as amended from time to time, and the Ryder System, Inc. Employee Savings Plan B, established effective January 1, 1993, and as amended from time to time, and each successor or replacement salaried employees cash or deferred arrangement.
1.29 Savings Plan Matching Contributions means the total of all Matching Contributions made by the Employer for the benefit of a Participant under and in accordance with the terms of the Savings Plan.
1.30 Savings Plan Tax-Deferred Contributions means the Tax Deferred Contributions made by the Employer for the benefit of a Participant under and in accordance with the terms of the Savings Plan.
1.31 Separation from Employment means a discontinuance of the Participants employment relationship with the Company and its Affiliates due to Retirement, Disability, death, or other termination of employment (voluntary or involuntary). For purposes of this provision, the employment relationship with the Company and its Affiliates of a Participant entitled to earned vacation time and/or severance pay after he ceases to perform services for the Company and its Affiliates shall be deemed to terminate upon the date his earned vacation time, if any, expires, or if the Participant is entitled to severance pay, then upon the last date on which the Participant is entitled to receive payment of such severance pay from the Company or any Affiliate. The fact that an Employee who is a Participant ceases to elect to have any Tax-Deferred Contributions credited to his Account under the Plan shall not constitute a Separation
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from Employment, and a Participants absence from active employment due to military service or Leave of Absence shall not constitute a Separation from Employment.
1.32 Tax-Deferred Contributions means the compensation reduction contributions credited to the Participants Account under Section 3.1 of the Plan.
1.33 Tax-Deferred Contributions Account means the account maintained by the Company under the Plan for a Participant that is credited with the Participants Tax-Deferred Contributions, and any gains or losses allocable thereto.
ARTICLE II
ELIGIBILITY
2.1 Eligibility . An Employee shall be eligible to participate each January 1 or July 1 coincident with or immediately following the date as of which he becomes an Eligible Employee. Each Director shall be eligible to participate in the Plan each January 1 or July 1 coincident with or immediately following election to the Board.
ARTICLE III
CONTRIBUTIONS AND VESTING
3.1 Tax-Deferred Contributions .
(i) Each Participant who is an Eligible Employee, so long as he remains a Participant, may elect (via on-line election) to reduce and defer receipt pursuant to this Plan of his Compensation by an amount equal to the excess of (a) a minimum of 1% and a maximum of 100% of his Compensation, over (b) the amount of his Savings Plan Tax-Deferred Contributions for the Plan Year, if any, after applicable taxes and deductions. The amount of deferral so elected shall be applied against and reduce the Participants (x) salary (including commissions), (y) bonuses, or (z) salary, (including commissions) and bonuses, earned during the Plan Year as elected by the Participant (via on-line election).
(ii) Each Participant who is a Director, so long as he remains a Participant, may elect (on a form furnished by the Committee and in accordance with Committee rules) to reduce and defer receipt pursuant to this Plan of his Compensation by an amount equal to a minimum of 1% and a maximum of 100% of his Compensation.
(iii) A Participants election to participate in the Plan shall be effective on a Plan Year basis, and must be made before the beginning of the Plan Year to which it relates, provided that, with respect to any compensation deemed to be performance-based under Section 409A of the Code, such election must be made by no later than six months before the end of the performance cycle. Notwithstanding the foregoing, a newly eligible participant may elect to participate in the Plan within 30 days following the date as of which he become an Eligible Employee or Director with respect to compensation earned thereafter in the current Plan Year. The election of an Eligible Employee to enroll in the Plan must be made via on-line election. The election of a Director to enroll in the Plan must be made on a Participant Election and
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Enrollment Form. In either case, an enrollment election may not be amended or revoked during the Plan Year to which it relates. The Employer shall withhold, by payroll deduction, the Compensation deferred pursuant to this Section 3.1 from the current Compensation payments of a Participant and credit such withheld amount to a Participants Tax-Deferred Contributions Account under the Plan.
3.2 Matching Contribution .
(i) For Participants who are Eligible Employees, and specifically excluding Participants who are Directors, the Employer shall credit to the Participants Matching Contributions Account of each such Participant who elects to make an eligible Tax-Deferred Contribution for the Plan Year an amount equal to the excess, if any, of:
(a) the amount of the Savings Plan Matching Contribution that would have been credited to such Participants Account under the Savings Plan if the Eligible Tax-Deferred Contributions had been made into the Savings Plan, over
(b) the Savings Plan Matching Contributions actually allocated to such Participants Account under the Savings Plan for the Plan Year.
For purposes of this provision, the term Eligible Tax-Deferred Contribution shall mean the Tax-Deferred Contributions made on behalf of the Participant for the Plan Year pursuant to Section 3.1(i).
(ii) Each Matching Contribution for each Participant shall be credited to the Participants Account as of the end of the Accounting Period for which the Tax-Deferred Contribution is withheld, or as soon as practicable thereafter. Each Matching Contribution shall be made in cash and shall be invested according to the investment options selected by the Participant. Matching Contributions prior to October 1, 2002 which were made in Company Stock may be exchanged in whole or in part beginning July 1, 2003.
(iii) Participants who are Directors shall not be credited with Matching Contributions under this Section 3.2.
3.3 Vesting .
(i) A Participants interest in his Tax-Deferred Contributions Account shall be 100% nonforfeitable at all times. A Participants interest in his Matching Contributions Account shall become nonforfeitable and vest in accordance with the following schedule, based upon the number of the Participants Years of Vesting Service as determined under the Savings Plan.
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Number of Years | Vested Percentage of | |||
of Vesting Service | Participants Account | |||
Less than 2
|
0 | % | ||
2
|
25 | % | ||
3
|
50 | % | ||
4
|
75 | % | ||
5 or more
|
100 | % |
Notwithstanding the foregoing, a Participants vested percentage shall be 100% (a) if the Participants employment with the Employer terminates due to Retirement, or by reason of the Participants death or Disability, or (b) in the event that a Change of Control shall occur while the Participant is an Employee of the Employer or an Affiliate.
(ii) The nonvested portion of a Participants Account that is forfeited shall not be allocated to the Participants Account of any other Participant.
ARTICLE IV
INVESTMENT OF PARTICIPANTS ACCOUNTS
4.1 Investment . Amounts credited to a Participants Account shall be treated as if they were actually invested in the Investment Funds selected by the Participant in accordance with the Plan, and shall be credited with gains and losses allocable thereto at such times and in such manner as shall be determined by the Committee. Each Director and Eligible Employee upon becoming a Participant shall elect, upon enrollment, the portion of the Participants Account, in any whole percentage multiples (or in such other proportions as the Committee may from time to time determine), that are to be treated as if invested in each of the Investment Funds. A Participant may, at such times and in such manner as shall be permitted by the Committee, change such election as to the investment of his Participants Account. Sales of Company Stock in the event that there is insufficient liquidity shall be governed by Schedule F of the Rabbi Trust Agreement dated as of October 1, 2002 as follows:
(i) Withdrawals and distributions will be aggregated and placed first in the hierarchy. If Available Liquidity is sufficient for the aggregate of such transactions, all such withdrawals and distributions will be honored. If Available Liquidity is not sufficient for the aggregate of such transactions, then such transactions will be suspended, and no transactions requiring a sale of Sponsor Stock Fund units shall be honored for that day.
(ii) If Available Liquidity has not been exhausted by the aggregate of withdrawals and distributions, then all remaining transactions involving a sale of units in the Sponsor Stock Fund (exchanges out) shall be grouped on the basis of when such requests were received, in accordance with standard procedures maintained by the Trustee for such grouping as
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they may be amended from time to time. To the extent of Available Liquidity, groups of exchanges out of the Sponsor Stock Fund shall be honored, by group, on a first in, first out basis. If Available Liquidity is insufficient to honor all exchanges out within a group, then none of the exchanges out in such group shall be honored, and no exchanges out in a later group shall be honored.
(iii) Transactions not honored on a particular day due to insufficient Available Liquidity shall be honored, using the hierarchy specified above, on the next business day on which there is Available Liquidity.
ARTICLE V
DISTRIBUTIONS
5.1 Fixed Date Distribution .
(i) Upon enrollment, a Participant may make an irrevocable election to receive a lump sum payment of all of the deferral amount at a specific date in the future (the Fixed Date Distribution). Provided, however, that each such Fixed Date Distribution shall be paid in a lump sum and shall be paid as soon as practicable following the July 1 of the Plan Year designated by the Participant that is at least two Plan Years after the Plan Year in which such deferral amount is actually deferred.
(ii) Should an event occur that triggers a benefit under Section 5.2, any deferral amounts that are subject to a Fixed Date Distribution election under this Section 5.1 shall not be paid in accordance with Section 5.1 but shall be paid in accordance with the other applicable Section. Except that while the Participant is receiving severance payments, Fixed Date Distributions that may come due shall be paid.
5.2 Distributions for Separation from Employment .
(i) Effective as of January 1, 2003, in the case of Disability, death or other termination of employment or Board service (voluntary or involuntary), a Participant shall receive a distribution from the Plan in a lump sum as soon as practicable following the January 1 immediately following such Participants Separation from Employment or cessation of Board service. Provided that if the Employee is a Key Employee at the time of such Separation from Employment, the lump sum payment may not be made earlier than 6 months following the date of such Separation from Employment. Provided further that if a Director is also an Employee or a Key Employee at the time of such cessation from service from the Board, the distribution will be delayed until the Participants Separation from Employment (or 6 months thereafter for Key Employees). If a participant has a rehire date prior to December 31 of the year in which the separation of employment occurs, and the Participant is an active employee on December 31, no distribution will be made the following January 1.
(ii) Notwithstanding the foregoing, effective as of January 1, 2003, each Participant shall elect a method of receipt for distributions from the Plan upon Retirement upon
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enrollment. The distribution upon Retirement shall be made in a lump sum or in accordance with the Participants most recent election on file with the Committee which is effective at least one year prior to the date of the Participants Retirement. Such election shall indicate that the Participant has chosen to receive either: (a) a lump sum as soon as practicable following the January 1 immediately following the Participants Retirement, or (b) a minimum of 2, and a maximum of 15, annual installments beginning as soon as practicable following the January 1 immediately following the Participants Retirement. Each annual installment shall be equal to the value of the vested portion of the Participants Account multiplied by a fraction, the numerator of which is 1 and the denominator of which is the number of installments remaining to be paid less any applicable tax withholding. Distributions of amounts contributed to the Plan prior to January 1, 2003 shall be made in accordance with the Participants most recent election on file with the Committee which is effective at least one year prior to the Participants Separation from Employment or cessation of Board service.
(iii) Notwithstanding the foregoing, effective as of January 1, 2005, if a Participant has elected to receive payments in the form of installments, then he may not later elect to accelerate the payment of any installment thereunder. In addition, effective as of January 1, 2005, if a Participant desires to change an election to defer the payment of any benefit, then such election must be made at least 1 year prior to Retirement and the distributions may not commence for at least 5 years from the date the first payment would have been made but for such change.
(iv) If a Participant should die before distribution of the entire vested portion of the Participants Account has been made to him, any remaining amounts, less applicable withholding taxes, shall be distributed to the Participants Beneficiary in the same manner in which such amounts otherwise would have been distributed to the Participant.
(v) Notwithstanding the foregoing provisions of this Section 5.2 or the provisions of Section 5.1, the remaining vested portion of a Participants Account, less applicable withholding taxes, shall be distributed to the Participant or his Beneficiary, in a lump sum as soon as administratively practicable following a Change of Control.
(vi) The value of a Participants Account, for purposes of determining the amount to be distributed to the Participant or his Beneficiary, shall be determined as of the Accounting Date immediately preceding the distribution or such other date as the Committee shall determine.
5.3 Method of Distribution . Distribution of the Participants Account shall be made in cash.
5.4 Hardship Distributions . Upon the written request of a Participant and in the event the Committee determines that an unforeseeable emergency has occurred with respect to a Participant, the Participant may be allowed to (i) suspend any deferrals required to be made by the Participant and/or (ii) receive a partial or full payment from the Plan as long as the amounts distributed with respect to an emergency do not exceed the amounts necessary to satisfy such emergency plus amounts necessary to pay taxes reasonably anticipated as a result of the distribution, after taking into account the extent to which such hardship is or may be relieved
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through reimbursement or compensation by insurance or otherwise or by liquidation of the Participants assets (to the extent the liquidation of such assets wouldnt itself cause severe financial hardship). The payout shall not exceed the lesser of (i) the amount the Committee deems to be necessary to meet the emergency or (ii) the Participants Account. For this purpose, an unforeseeable emergency shall mean a severe financial hardship resulting from an illness or accident of the Participant, the Participants spouse or a dependent (as defined in Section 152(a) of the Code) of the Participant, loss of the Participants property due to casualty, or other similar extraordinary and unforeseeable circumstances arising beyond the control of the Participant. The need to pay a Participants childs tuition to college and the desire to purchase a home shall not be considered unforeseeable emergencies.
ARTICLE VI
ADMINISTRATION OF THE PLANS
6.1 Administration by the Committee . The Committee shall be responsible for the general operation and administration of the Plan and for carrying out the provisions thereof.
6.2 General Powers of Administration . All provisions set forth in the Savings Plan with respect to the administrative powers and duties of the Committee and procedures for filing claims shall also be applicable with respect to the Plan. The Committee shall be entitled to rely conclusively upon all tables, valuations, certificates, opinions and reports furnished by any actuary, accountant, controller, counsel or other person employed or engaged by the Committee with respect to the Plan. All expenses of administration relating to the Plan may be debited against the Participants Account, in the same manner as expenses are charged to accounts under the Savings Plan.
ARTICLE VII
AMENDMENT OR TERMINATION
7.1 Amendment or Termination . The Company intends the Plan to be permanent but reserves the right, by resolution of the Board or by action of any committee thereof, to amend or terminate the Plan when, in the sole opinion of the Board or the committee, such amendment or termination is advisable. Any such amendment or termination shall be made pursuant to a resolution of the Board, or by action of a committee thereof, and shall be effective as of the date of such resolution or action unless specifically provided otherwise.
7.2 Effect of Amendment or Termination . No amendment or termination of the Plan shall directly or indirectly reduce the balance of any Participants Account held hereunder as of the effective date of such amendment or termination. Upon termination of the Plan, distribution of amounts in the Participants Account shall be made to the Participant or his Beneficiary in the manner and at the time described in Article V of the Plan. No additional credits of Tax Deferred Contributions or Matching Contributions shall be made to the Participants Account for periods after termination of the Plan, but the Committee shall continue to credit gains and losses to the Participants Account, until the balance of such Participants Account has been fully distributed to the Participant or his Beneficiary.
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ARTICLE VIII
GENERAL PROVISIONS
8.1 Participants Rights Unsecured . The Plan shall be unfunded for tax purposes and for purposes of Title I of ERISA. However, the Company may transfer assets to cover all or a portion of the value of Participant Accounts in a trust for the benefit of the Participants which such trust shall be subject to the rights of creditors of the Company. Although the value of each Participants Account will be measured as if such Accounts were invested in the Investment Funds selected by the Participant pursuant to the Plan, neither the Company nor any other Employer or the trust shall be required to invest any assets in any Investment Funds, and if the Company or any other Employer does in fact make any investments in any Investment Funds, the Participant or Beneficiary shall have no rights in or claims against any such investments. The right of a Participant or his designated Beneficiary to receive a distribution hereunder shall be an unsecured claim against the trust and against the general assets of his Employer and the Company, and neither the Participant nor a designated beneficiary shall have any rights in or against any specific assets of the Company or any other Employer.
8.2 No Guarantee of Benefits . Nothing contained in the Plan shall constitute a guaranty by the Company or any other Employer or any other person or entity that the assets of the Company or any other Employer will be sufficient to pay any benefit hereunder.
8.3 Spendthrift Provision . No interest of any person or entity in, or right to receive a distribution under, the Plan shall be subject in any manner to sale, transfer, assignment, pledge, attachment, garnishment, or other alienation or encumbrance of any kind; nor may such interest or right to receive a distribution be taken, either voluntarily or involuntarily for the satisfaction of the debts of, or other obligations or claims against, such person or entity, including claims in bankruptcy proceedings.
8.4 Applicable Law . Except to the extent preempted by ERISA or other Federal law, the Plan shall be construed and administered under the laws of the State of Florida.
8.5 Indirect Payment of Benefits . If any Participant or his Beneficiary is, in the judgment of the Committee, legally, physically or mentally incapable of personally receiving and receipting for any payment due hereunder, payment may be made to the guardian or other legal representative of such Participant or Beneficiary or, if none, to such person or institution who, in the opinion of the Committee, is then maintaining or has custody of such Participant or Beneficiary. Such payments shall constitute a full discharge with respect thereto.
8.6 Notice of Address . Each person entitled to a benefit under the Plan must file with the Employer or the Company, in writing, his post office address and each change of post office address which occurs between the date of his termination of service with the Employer or the Company and the date he ceases to be a Participant. Any communication, statement, or notice addressed to such a person at his latest reported post office address will be binding upon him for all purposes of the Plan and neither the Committee, the Company, nor the Employer shall be obliged to search for or ascertain his whereabouts.
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8.7 Notices . Any notice required or permitted to be given hereunder to a Participant or Beneficiary will be properly given if delivered or mailed, postage prepaid, to the Participant or Beneficiary at his last post office address as shown on the Companys or the Employers records. Any notice to the Committee, the Company or the Employer shall be properly given or filed upon receipt by the Committee, the Company or the Employer, as the case may be, at such address as may be specified from time to time by the Committee.
8.8 Waiver of Notice . Any notice required hereunder may be waived by the person entitled thereto.
8.9 Unclaimed Payments . If a Participant or his Beneficiary fails to apprise the Committee of changes in the address of the Participant or Beneficiary, and the Committee is unable to communicate with the Participant or Beneficiary at the address last recorded by the Committee within five years after any benefit becomes due and payable from the Plan to the Participant or Beneficiary, the Committee may mail a notice by registered mail to the last known address of such person outlining the following action to be taken unless such person makes written reply to the Committee within 60 days from the mailing of such notice: The Committee may direct that such benefit and all further benefits with respect to such person shall be discontinued and all liability for the payment thereof shall terminate.
8.10 Employer-Employee Relationship . The establishment of this Plan shall not be construed as conferring any legal or other rights upon any Employee or any person for a continuation of employment, nor shall it interfere with the rights of an Employer to discharge any Employee or otherwise act with relation to him. Each Employer may take any action (including discharge) with respect to any Employee or other person and may treat him without regard to the effect which such action or treatment might have upon him as a Participant of this Plan.
8.11 Receipt and Release . Any final payment or distribution to any Participant, his Beneficiary or his legal representative in accordance with this Plan shall be in full satisfaction of all claims against the Committee, the Company, and the Employer; the Employer, the Company, or the Committee may require a Participant, his Beneficiary or his legal representative to execute a receipt and release of all claims under this Plan upon a final payment or distribution or a receipt to the extent of any partial payment or distribution; and the form of any such receipt and release shall be determined by the Employer, the Company or the Committee.
8.12 Limitations on Liability . Notwithstanding any of the preceding provisions of the Plan, neither the Company, the Committee, nor any individual acting as employee or agent of the Company or the Committee shall be liable to any Participant, former Participant or other person for any claim, loss, liability or expense incurred in connection with the Plan.
8.13 Withholding of Taxes . The Employer shall have the right to make such provisions as it deems necessary or appropriate to satisfy any obligations it may have to withhold Federal, state or local income or other taxes incurred by reason of payments pursuant to the Plan. In lieu thereof, the Employer shall have the right to withhold the amount of such taxes from any other sums due or to become due from the Employer to the Participant upon such terms and conditions as the Committee may prescribe.
13
8.14 Severability of Provisions . If any provision of the Plan shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof, and the Plan shall be construed and enforced as if such provisions had not been included.
8.15 Miscellaneous . Words in the masculine gender shall include the feminine and the singular shall include the plural, and vice versa, unless qualified by the context. Any headings used herein are included for ease of reference only, and are not to be construed so as to alter the terms hereof.
14
EXHIBIT 21.1
The following list sets forth (i) all subsidiaries of Ryder System, Inc. at December 31, 2004, (ii)
the state or country of incorporation or organization of each subsidiary, and (iii) the names under
which certain subsidiaries do business.
State or Country of
Name of Subsidiary
Incorporation or Organization
Canada
Taiwan
Florida
Brazil
Florida
Vermont
United Kingdom
England
Florida
England
Bermuda
Delaware
Netherlands
Delaware
Canada
British Virgin Islands
Delaware
Delaware
Florida
Argentina
Singapore
Singapore
Australia
England
Delaware
Delaware
Mexico
Delaware
Florida
Delaware
Mexico
Delaware
West Germany
England
Brazil
Florida
Netherlands
Tennessee
Delaware
Delaware
Delaware
Delaware
Hungary
Florida
Delaware
Florida
Florida
Brazil
China
Delaware
Delaware
Delaware
Delaware
State or Country of | ||
Name of Subsidiary | Incorporation or Organization | |
Ryder Mexicana, S.A. de C.V.
|
Mexico | |
Ryder Offshore Holdings I LLC
|
Delaware | |
Ryder Offshore Holdings II LLC
|
Delaware | |
Ryder Offshore Holdings III LLC
|
Delaware | |
Ryder Offshore Holdings LP
|
Delaware | |
Ryder Pension Fund Limited
|
England | |
Ryder Polska Sp. z o.o.
|
Poland | |
Ryder Public Limited Company
|
England | |
Ryder Puerto Rico, Inc.
|
Delaware | |
Ryder Purchasing LLC
|
Delaware | |
Ryder Realty, Inc.
|
Delaware | |
Ryder Receivable Funding, L.L.C.
|
Florida | |
Ryder Services Corporation
(3)
|
Florida | |
Ryder Servicios do Brasil Ltda.
|
Brazil | |
Ryder Servicios S.A. de C.V.
|
Mexico | |
Ryder Singapore Pte Ltd.
|
Singapore | |
Ryder Sistemas Integrados de Logistica Limitada
(4)
|
Chile | |
Ryder St. Louis Redevelopment Corporation
|
Missouri | |
Ryder Sweden AB
|
Sweden | |
Ryder System B.V.
|
Netherlands | |
Ryder System Holdings (UK) Limited
|
England | |
Ryder System Ltd.
|
England | |
Ryder Truck Rental Holdings Canada Ltd.
|
Canada | |
Ryder Truck Rental, Inc.
(5)
|
Florida | |
Ryder Truck Rental I LLC
|
Delaware | |
Ryder Truck Rental II LLC
|
Delaware | |
Ryder Truck Rental III LLC
|
Delaware | |
Ryder Truck Rental IV LLC
|
Delaware | |
Ryder Truck Rental I LP
|
Delaware | |
Ryder Truck Rental II LP
|
Delaware | |
Ryder Truck Rental Canada Ltd.
(6)
|
Canada | |
Ryder Truck Rental LT
|
Delaware | |
Ryder Truckstops, Inc.
|
Florida | |
Ryder Vehicle Lease Trust 1999-A
|
Delaware | |
Ryder Vehicle Lease Trust 2001-A
|
Delaware | |
Sistemas Logisticos Sigma S.A.
|
Argentina | |
Spring Hill Integrated Logistics Management, Inc.
|
Delaware | |
Surplus Property Holding Corp.
|
Florida | |
Tandem Transport, L.P.
|
Georgia | |
Translados Americanos S De RL De CV
|
Mexico | |
TTR Logistics, LLC
|
Delaware | |
Truck Transerv, Inc.
|
Delaware | |
Unilink Contract Hire Limited
|
England | |
UniRyder Limited
|
England |
(1) | Ontario, Canada: d/b/a Ryder Grocery Services | |
(2) | Florida: d/b/a UniRyder | |
(3) | Ohio and Texas: d/b/a Ryder Claims Services Corporation | |
(4) | Chile: d/b/a Ryder Chile Limitada | |
(5) |
Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, District of
Columbia, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky,
Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri,
Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina,
North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South
Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin and
Wyoming: d/b/a Ryder Transportation Services
Maryland and Virginia: d/b/a Ryder/Jacobs Michigan: d/b/a Atlas Trucking, Inc. Michigan: d/b/a Ryder Atlas of Western Michigan |
|
(6) | French Name: Location de Camions Ryder du Canada Ltee. |
Canada: d/b/a |
Ryder Integrated Logistics
Ryder Dedicated Logistics Ryder Canada |
EXHIBIT 23.1
CONSENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Shareholders of
We consent to the incorporation by reference in the following Registration Statements on Forms
S-3 and S-8 of Ryder System, Inc. of our report dated February 22, 2005, with respect to the
consolidated balance sheets of Ryder System, Inc. and subsidiaries as
of December 31, 2004 and 2003,
and the related consolidated statements of earnings, shareholders equity and cash flows for each
of the years in the three-year period ended December 31, 2004, and the related consolidated
financial statement schedule, managements assessment of the
effectiveness of internal control over financial reporting as of
December 31, 2004, and the effectiveness of internal control
over financial reporting as of December 31, 2004, which reports appear in the
December 31, 2004 annual report on Form
10-K of Ryder System, Inc., and refers to
a change in method of accounting for variable interest entities and
method of accounting for asset retirement obligations in 2003 and
method of accounting for goodwill and other intangible assets in 2002:
Form S-3:
/s/ KPMG LLP
Miami, Florida
Ryder System, Inc.:
Registration Statement No. 33-1623 covering $500,000,000 aggregate principal amount of debt securities.
Registration Statement No. 33-13962 covering $500,000,000 aggregate principal amount of debt securities.
Registration Statement No. 33-20359 covering $1,000,000,000 aggregate principal amount of debt securities.
Registration Statement No. 33-58667 covering $800,000,000 aggregate principal amount of debt securities.
Registration Statement No. 333-63049 covering $800,000,000 aggregate principal amount of debt securities.
Registration Statement No. 333-108391 covering $800,000,000 aggregate amount of securities.
Form S-8:
Registration Statement No. 33-20608 covering the Ryder System Employee Stock Purchase Plan.
Registration Statement No. 33-4333 covering the Ryder Employee Savings Plan.
Registration Statement No. 1-4364 covering the Ryder System Profit Incentive Stock Plan.
Registration Statement No. 33-69660 covering the Ryder System, Inc. 1980 Stock Incentive Plan.
Registration Statement No. 33-63990 covering the Ryder System, Inc. Directors Stock Plan.
Registration Statement No. 33-58001 covering the Ryder System, Inc. Employee Savings Plan A.
Registration Statement No. 33-58003 covering the Ryder System, Inc. Employee Savings Plan B.
Registration Statement No. 33-61509 covering the Ryder System, Inc. Stock for Merit Increase Replacement Plan.
Registration Statement No. 33-62013 covering the Ryder System, Inc. 1995 Stock Incentive Plan.
Registration Statement No. 333-19515 covering the Ryder System, Inc. 1997 Deferred Compensation Plan.
Registration Statement No. 333-26653 covering the Ryder System, Inc. Board of Directors Stock Award Plan.
Registration Statement No. 333-57593 covering the Ryder System, Inc. Stock Purchase Plan for Employees.
Registration Statement No. 333-57595 covering the Ryder System, Inc. 1995 Stock Incentive Plan.
Registration Statement No. 333-69626 covering the Ryder System, Inc. 1995 Stock Incentive Plan.
Registration Statement No. 333-69628 covering the Ryder System, Inc. Directors Stock Plan.
Registration Statement No. 333-108364 covering the Ryder System, Inc. Board of Directors Stock Award Plan.
February 24, 2005
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being directors of Ryder System,
Inc., a Florida corporation, hereby constitutes and appoints Robert D. Fatovic, Richard H. Siegel
and Flora R. Perez, and each of them, his or her true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, for the undersigned and in his or her name, place
and stead, in any and all capacities, to sign the Ryder System, Inc. Form 10-K (Annual Report
pursuant to the Securities Exchange Act of 1934) for the fiscal year ended December 31, 2004 (the
Form 10-K), and any and all amendments thereto, and to file the same, with all exhibits thereto
and other documents in connection therewith, with the Securities and Exchange Commission and with
the New York Stock Exchange and any other stock exchange on which the Companys common stock is
listed, granting unto each said attorney-in-fact and agent full power and authority to perform
every act requisite and necessary to be done in connection with the execution and filing of the
Form 10-K and any and all amendments thereto, as fully for all intents and purposes as he or she
might or could do in person, hereby ratifying all that each said attorney-in-fact and agent, or his
or her substitute or substitutes, may lawfully do or cause to be done by virtue thereof.
This Power of Attorney may be signed in any number of counterparts, each of which shall
constitute an original and all of which, taken together, shall constitute one Power of Attorney.
IN WITNESS WHEREOF, each of the undersigned has hereunto set his or her hand effective the
10
th
day of February, 2005.
/s/ Joseph L. Dionne
Joseph L. Dionne
/s/ Lynn M. Martin
Lynn M. Martin
/s/ Eugene A. Renna
Eugene A. Renna
/s/ Hansel E. Tookes II
Hansel E. Tookes II
1. | I have reviewed this annual report on Form 10-K 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 registrants 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 registrants 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 registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants 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 registrants 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 registrants internal control over financial reporting. |
Date: February 24, 2005
|
/s/
Gregory T. Swienton
Chairman, President and Chief Executive Officer |
1. | I have reviewed this annual report on Form 10-K 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 registrants 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 registrants 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 registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants 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 registrants 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 registrants internal control over financial reporting. |
Date: February 24, 2005
|
/s/
Tracy A. Leinbach
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. |