<PAGE> 1
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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File No. 1-4364
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RYDER SYSTEM, INC.
(a Florida corporation)
3600 N.W. 82nd Avenue
Miami, Florida 33166
Telephone (305) 593-3726
I.R.S. Employer Identification No. 59-0739250
------------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days:
X YES NO
--- ---
Ryder System, Inc. (the "Registrant" or the "Company") had 77,675,566 shares of
common stock ($0.50 par value per share) outstanding as of April 30, 1994.
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<PAGE> 2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
Ryder System, Inc. and Consolidated Subsidiaries
<TABLE>
<CAPTION>
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Three months ended March 31, 1994 and 1993
(In thousands, except per share amounts) 1994 1993*
---------------------------------------------------------------------------------------------------------
<S> <C> <C>
REVENUE $ 1,071,837 999,657
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Operating expense 860,281 807,560
Depreciation expense, net of gains (1994 - $17,773; 1993 - $15,522) 139,547 127,653
Interest expense 31,916 30,070
Miscellaneous expense (income) (237) 272
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1,031,507 965,555
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Earnings from continuing operations before income taxes 40,330 34,102
Provision for income taxes 16,592 14,156
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Earnings from continuing operations 23,738 19,946
Earnings from discontinued operations - 4,290
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Earnings before cumulative effect of change in accounting 23,738 24,236
Cumulative effect of change in accounting - (25,433)
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NET EARNINGS (LOSS) 23,738 (1,197)
Preferred dividend requirements - 2,589
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EARNINGS (LOSS) APPLICABLE TO COMMON SHARES $ 23,738 (3,786)
=========================================================================================================
Earnings (loss) per common share:
Continuing operations $ 0.30 0.23
Discontinued operations - 0.05
Cumulative effect of change in accounting - (0.33)
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EARNINGS (LOSS) PER COMMON SHARE $ 0.30 (0.05)
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Cash dividends per common share $ 0.15 0.15
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Average common and common equivalent shares 78,444 77,059
=========================================================================================================
</TABLE>
* Certain amounts have been restated for discontinued operations.
See accompanying notes to consolidated condensed financial statements.
<PAGE> 3
Item 1. Financial Statements (continued)
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
Ryder System, Inc. and Consolidated Subsidiaries
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
Three months ended March 31, 1994 and 1993
(In thousands) 1994 1993*
----------------------------------------------------------------------------------------------------
<S> <C> <C>
CONTINUING OPERATIONS
CASH FLOWS FROM OPERATING ACTIVITIES:
Earnings from continuing operations $ 23,738 19,946
Depreciation expense, net of gains 139,547 127,653
Deferred income taxes 6,892 4,171
Increase in other working capital items (70,003) (73,663)
Other, net (6,376) 6,905
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93,798 85,012
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CASH FLOWS FROM FINANCING ACTIVITIES:
Debt proceeds 354,705 307,495
Debt repaid, including capital lease obligations (80,032) (124,602)
Common stock issued 6,582 7,208
Dividends on common and preferred stock (11,634) (13,985)
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269,621 176,116
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and revenue earning equipment (447,157) (330,759)
Sales of property and revenue earning equipment 77,902 75,988
Other, net 11,717 10,181
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(357,538) (244,590)
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NET CASH FLOWS FROM CONTINUING OPERATIONS 5,881 16,538
NET CASH FLOWS FROM DISCONTINUED OPERATIONS - (14,153)
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INCREASE IN CASH AND CASH EQUIVALENTS 5,881 2,385
Cash and cash equivalents at January 1 56,691 50,747
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CASH AND CASH EQUIVALENTS AT MARCH 31 $ 62,572 53,132
====================================================================================================
</TABLE>
* Certain amounts have been restated for discontinued operations.
See accompanying notes to consolidated condensed financial statements.
<PAGE> 4
Item 1. Financial Statements (continued)
CONSOLIDATED CONDENSED BALANCE SHEETS
Ryder System, Inc. and Consolidated Subsidiaries
<TABLE>
<CAPTION>
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March 31, December 31,
(Dollars in thousands, except per share amounts) 1994 1993
---------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 62,572 56,691
Receivables 261,857 197,956
Inventories 57,834 52,963
Tires in service 151,235 144,488
Deferred income taxes 50,970 60,326
Prepaid expenses and other current assets 137,756 89,020
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Total current assets 722,224 601,444
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Revenue earning equipment 4,990,817 4,784,122
Less accumulated depreciation (2,112,956) (2,108,075)
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Net revenue earning equipment 2,877,861 2,676,047
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Operating property and equipment 933,363 913,421
Less accumulated depreciation (410,637) (402,932)
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Net operating property and equipment 522,726 510,489
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Direct financing leases and other assets 212,586 223,374
Intangible assets and deferred charges 245,861 247,034
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$ 4,581,258 4,258,388
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 119,267 156,503
Accounts payable 369,314 297,282
Accrued expenses 497,784 514,982
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Total current liabilities 986,365 968,767
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Long-term debt 1,676,540 1,374,943
Other non-current liabilities 388,535 397,873
Deferred income taxes 522,990 526,624
Shareholders' equity:
Common stock of $0.50 par value per share (shares outstanding at
March 31, 1994 - 77,631,053; December 31, 1993 - 77,294,484) 515,922 508,832
Retained earnings 508,727 496,623
Translation adjustment (17,821) (15,274)
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Total shareholders' equity 1,006,828 990,181
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$ 4,581,258 4,258,388
=========================================================================================================
</TABLE>
See accompanying notes to consolidated condensed financial statements.
<PAGE> 5
Item 1. Financial Statements (continued)
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(a) INTERIM FINANCIAL STATEMENTS
The accompanying unaudited consolidated condensed financial
statements have been prepared by the Company in accordance
with the accounting policies described in the 1993 Annual
Report and should be read in conjunction with the consolidated
financial statements and notes which appear in that report.
These statements do not include all of the information and
footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have
been included.
(b) DISCONTINUED OPERATIONS
On December 7, 1993, the Company completed the spin off of its
aviation services subsidiaries into a new public company
("Aviall, Inc." or "Aviall"). Under the terms of the spin
off, the Company distributed to common stockholders one share
of Aviall, Inc. common stock for each four Ryder System, Inc.
common shares owned. The distribution had the effect of
reducing the Company's retained earnings by $314 million.
Accordingly, the earnings from the Company's aviation services
subsidiaries in 1993 have been reported as discontinued operations.
The following summarizes the results of operations for the
discontinued aviation services subsidiaries:
<TABLE>
<CAPTION>
(In millions)
First Quarter
-------------
1994 1993
------- ------
<S> <C> <C>
Net sales $ - $277.0
======== ======
Earnings before income taxes $ - $ 7.0
Provision for income taxes - 2.7
-------- ------
Earnings from discontinued operations $ - $ 4.3
======== ======
</TABLE>
(c) ACCOUNTING CHANGES
Effective January 1, 1993, the Company adopted Statement of
Financial Accounting Standards No. 106, "Employers' Accounting
for Postretirement Benefits Other Than Pensions." As a
result, a pretax charge of $41 million ($25 million after tax)
was recorded as the cumulative effect of a change in
accounting principle to establish a liability for the present
value of expected future benefits attributed to employees'
service rendered prior to January 1, 1993. The Company also
adopted Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes," effective January 1, 1993.
<PAGE> 6
KPMG PEAT MARWICK
CERTIFIED PUBLIC ACCOUNTANTS
One Biscayne Tower Telephone 305-358-2300 Telecopier 305-577-0544
Suite 2900
2 South Biscayne Boulevard
Miami, Fl. 33131
Independent Auditors' Report
The Board of Directors
Ryder System, Inc.:
We have reviewed the accompanying consolidated condensed balance sheet
of Ryder System, Inc. and subsidiaries as of March 31, 1994, and the related
consolidated condensed statements of earnings and cash flows for the three-month
periods ended March 31, 1994 and 1993. These financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying financial statements for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet of Ryder System, Inc. and
subsidiaries as of December 31, 1993, and the related consolidated statements
of earnings and cash flows for the year then ended (not presented herein);
and in our report dated February 7, 1994, we expressed an unqualified opinion
on those consolidated financial statements. In our opinion, the information set
forth in the accompanying consolidated condensed balance sheet as of December
31, 1993, is fairly presented, in all material respects, in relation to the
consolidated balance sheet from which it has been derived.
As discussed in the notes to the consolidated condensed financial
statements, the Company changed its method of accounting for income taxes and
for postretirement benefits other than pensions in 1993.
KPMG PEAT MARWICK
Miami, Florida
April 19, 1994
<PAGE> 7
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition --
Three months ended March 31, 1994 and 1993
RESULTS OF OPERATIONS
The Company recorded earnings from continuing operations before income
taxes of $40 million in the first quarter of 1994, compared with $34 million in
last year's first quarter. First quarter earnings in 1994 benefited primarily
from higher revenue, improved asset utilization in both commercial and consumer
truck rental and higher gains on sales of vehicles in Vehicle Leasing &
Services. Also contributing to the improvement in earnings were lower costs in
Automotive Carriers primarily as a result of the fourth quarter 1993
organizational streamlining.
Earnings from continuing operations after taxes in the first quarter of
1994 were $24 million, or $0.30 per common share, compared with $20 million, or
$0.23 per common share in the first quarter of 1993. The Company's effective
tax rate for continuing operations in the first quarter of 1994 was 41.1%,
compared with 41.5% in last year's first quarter. The Company reported a net
loss in the first quarter of 1993 of $1 million which included an after tax
charge of $25 million, or $0.33 per common share for a change in accounting for
postretirement benefits, and earnings of $4 million, or $0.05 per common share,
from Aviall, Inc., which was spun off in December 1993.
Consolidated revenue in the first quarter of 1994 was $1.1 billion,
compared with $1.0 billion in the first quarter of 1993. In Vehicle Leasing &
Services revenue increased 9% compared with last year, while Automotive
Carriers first quarter revenue was about the same as last year.
Operating expense in the first quarter of 1994 increased 7% compared
with the same period in the prior year. This increase is due primarily to the
Company's increased revenue, reengineering and marketing efforts in Vehicle
Leasing & Services. Offsetting some of these increases was a reduction in rent
expense primarily due to a decrease in the number of vehicles leased by the
Company under operating lease agreements.
Depreciation expense (net of gains) in the first quarter of 1994 increased 9%
compared with the first quarter of 1993. This increase was due to an increase
in the fleet size needed to support higher 1994 revenues. A decrease in the
number of vehicles on operating lease also contributed to higher depreciation
expense in the first quarter of 1994. A portion of the increase in
depreciation expense was offset by an increase of $2 million in gains on
vehicle sales in the first quarter of 1994 compared with the prior year. The
increase in vehicle gains is a result of an increase in the average gain per
unit sold offset somewhat by a decrease in the number of units sold.
Vehicle Leasing & Services
First quarter Vehicle Leasing & Services revenue increased 9% compared
with the same period in 1993. Revenue from full service truck leasing, the
division's largest product line, increased 3% compared with last year. Revenue
benefited from an increase in lease sales made partly offset by prices lower
than on those leases that are expiring. First quarter revenue from commercial
truck rental increased 20% compared with the same period in 1993, reflecting
higher demand. Revenue from consumer truck rental in the first quarter of 1994
increased 22% compared with last year's first quarter, primarily as a result of
higher demand for local and long-distance rentals. To satisfy the higher
demand, the average fleet size increased in both rental product lines in the
first quarter of 1994 compared with the first quarter of 1993. Dedicated
logistics revenue increased 10% compared with the first quarter of 1993 due to
new customers which were obtained through intensified marketing and sales
efforts. Revenue from the division's public transportation services business
in the first quarter of 1994 increased 4% compared with last year's first
quarter, due to several new contracts.
<PAGE> 8
Item 2. Management's Discussion and Analysis of Results of Operations
and Financial Condition (continued) --
Three months ended March 31, 1994 and 1993
Vehicle Leasing & Services earned pretax profits of $37 million in the
first quarter of 1994 compared with $34 million in the first quarter of 1993.
Margin (revenue less direct operating expenses, depreciation and interest
expense) and margin as a percentage of revenue for full service truck leasing
were slightly lower in the first quarter of 1994 compared with last year's
first quarter. Lower first quarter margins are primarily a result of lower
lease prices on new lease sales compared with prices on those leases that are
expiring. Margin and margin as a percentage of revenue for both commercial and
consumer truck rental increased substantially in the first quarter of 1994
compared with the same period last year, reflecting primarily higher revenue
and improved asset utilization. Also contributing to the improvement in
margins for consumer truck rental in 1994 were lower maintenance costs,
primarily due to the decrease in the average age of the fleet. Dedicated
logistics margin and margin as a percentage of revenue decreased during the
first quarter of 1994 compared with last year's first quarter, primarily due to
increased operating costs, weather-related inefficiencies and new business
start-up costs. Margin and margin as a percentage of revenue for the
division's public transportation services business were slightly higher in the
first quarter of 1994 compared with the prior year, as a result of higher
revenue. For the division as a whole, higher total margin and a slight increase
in gains on vehicle sales in the first quarter of 1994 were partially offset
by increased investments in reengineering, marketing and sales programs and
systems technology.
Automotive Carriers
First quarter 1994 revenue for Automotive Carriers was about the same
as in last year's first quarter. Revenue in 1994 reflects an increase in the
number of units shipped, offset by a decline in the average length of haul.
The division's first quarter 1994 shipments of General Motors vehicles were
lower than in the first quarter of 1993, primarily as a result of extended
model changeover periods and the closure of a General Motors assembly plant.
However, offsetting this decrease was an increase of 13% in vehicle shipments
for other manufacturers as a result of an increase in domestic automobile
sales. Also favorably impacting first quarter 1994 revenue were shipments
diverted from rail to highway carriers due to the impact of the harsh winter
weather on certain rail operations.
Automotive Carriers pretax earnings were $8 million in the first
quarter of 1994, compared with $4 million in the prior year's first quarter.
First quarter pretax earnings benefited primarily from efficiencies realized
from a fourth quarter 1993 organizational streamlining and lower depreciation
expense as a result of an increase in the average age of the fleet.
Other
Other, which is comprised primarily of corporate administrative costs,
was a loss of $5 million in the first quarter of 1994 compared with a loss of
$4 million in the same period last year, primarily due to lower reimbursement
from the Company's operating segments.
<PAGE> 9
Item 2. Management's Discussion and Analysis of Results of Operations
and Financial Condition (continued) --
Three months ended March 31, 1994 and 1993
LIQUIDITY AND CAPITAL RESOURCES
Total capital expenditures in the first quarter of 1994 were $447
million, compared with $331 million in the first quarter of the prior year. In
the full service truck leasing business, capital expenditures increased $66
million compared with last year's first quarter, due primarily to improved
lease sales. Capital expenditures in commercial truck rental were about the
same as the prior year level. Consumer truck rental capital expenditures
increased $37 million in the first quarter of 1994 compared with the prior year
primarily as a result of the timing of expenditures. Capital expenditures in
Automotive Carriers declined $7 million in the first quarter of 1994 as a
result of a decision to continue to age the fleet.
Cash flow from operating activities in the first quarter of 1994 was
$94 million, compared with $85 million in the first quarter of 1993. The
increase resulted primarily from improved earnings in 1994 and an increase in
depreciation offset somewhat by changes in working capital and other
non-current liabilities. Cash flow from continuing operating activities plus
asset sales as a percentage of capital expenditures was 38% in the first
quarter of 1994, compared with 49% in the same period last year. This
percentage declined as a result of the changes in working capital
requirements and other non-current liabilities and the strategic timing of
capital expenditures, but is likely to increase in the remainder of 1994.
Total debt at March 31, 1994 was $1.8 billion, compared with $1.5
billion at the end of 1993. During the first quarter of 1994, the Company
issued $61 million of medium-term unsecured notes and made $76 million of
scheduled unsecured note payments. U.S. commercial paper outstanding at the
end of the first quarter of 1994 was $362 million, compared with $84 million at
December 31, 1993. The Company's debt to equity ratio at March 31, 1994, was
178%, compared with 155% at December 31, 1993. The Company had interest rate
swap agreements outstanding at March 31, 1994 and December 31, 1993 with
aggregate notional amounts of $676 million and $315 million, respectively. At
March 31, 1994, interest rate cap agreements with aggregate notional amounts
totaling $350 million were outstanding. These instruments have been assigned to
specific financial obligations, and amounts to be paid or received under the
agreements are recognized over the terms of the agreements as adjustments to
earnings.
The Company had contractual lines of credit totaling $693 million at
March 31, 1994, of which $330 million was available. Also, at March 31, 1994,
the Company had $810 million of debt securities available under shelf
registrations filed in 1988 and 1992.
<PAGE> 10
Item 2. Management's Discussion and Analysis of Results of Operations
and Financial Condition (continued) --
Three months ended March 31, 1994 and 1993
SELECTED FINANCIAL AND OPERATIONAL DATA
(Dollars in thousands)
<TABLE>
<CAPTION>
1994 1993
-----------------------------------------------------------------------------------------------------
<S> <C> <C>
VEHICLE LEASING & SERVICES
Revenue:
Full service lease and programmed maintenance $ 444,840 432,115
Commercial and consumer rental 227,087 187,855
Dedicated logistics 148,517 135,334
Other 153,355 141,157
Eliminations (56,550) (52,209)
---------- -------
Total 917,249 844,252
Operating expense 716,338 660,735
Depreciation expense 148,140 132,670
Gains on sale of revenue earning equipment (17,671) (15,513)
Interest expense 33,182 31,835
Miscellaneous expense, net 1 367
---------- -------
Earnings before income taxes $ 37,259 34,158
========== =======
Fleet size (owned and leased):
Full service lease 80,282 75,612
Commercial and consumer rental 71,239 63,727
Buses operated or managed 11,919 11,826
Ryder Truck Rental service locations 993 981
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AUTOMOTIVE CARRIERS
Revenue $ 158,506 159,616
========== =======
Earnings before income taxes $ 8,180 4,099
========== =======
Total units transported (000) 1,504 1,449
Total miles traveled (000) 57,484 59,801
Auto transports:
Owned and leased 4,061 4,234
Owner-operators 514 503
Locations 89 92
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</TABLE>
<PAGE> 11
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K:
(a) Exhibits
(11) Statement re computation of per share earnings.
(15) Letter re unaudited interim financial statements.
(b) Form 8-K
No Reports on Form 8-K were filed by the Registrant during the
quarter ended March 31, 1994.
<PAGE> 12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
RYDER SYSTEM, INC.
(Registrant)
Date: May 16, 1994 /s/ Edwin A. Huston
-------------------------------
Edwin A. Hutson
Senior Executive Vice President-Finance
and Chief Financial Officer
(Principal Financial Officer)
Date: May 16, 1994 /s/ Anthony G. Tegnelia
-------------------------------
Anthony G. Tegnelia
Senior Vice President
and Controller (Principal
Accounting Officer)
<PAGE> 1
Exhibit 11
Statement re Computation of Per Share Earnings
Primary earnings per share are computed by dividing earnings
available to common shares by the weighted average number of common
and common equivalent shares outstanding during the period.
For purposes of computing primary earnings per share, common
equivalent shares include the average number of common shares issuable
upon the exercise of all employee stock options and awards and
outstanding employee stock subscriptions, if dilutive, less the common
shares which could have been purchased at the average market price
during the period, with the assumed proceeds, including "windfall" tax
benefits, from the exercise of the options, awards and subscriptions.
Fully-diluted earnings per share are computed by dividing the
sum of earnings available to common shares and dividends on preferred
shares that are potentially dilutive by the weighted average number of
common shares, common equivalent shares and common shares assumed
converted from potentially dilutive securities outstanding during the
period.
For purposes of computing fully-diluted earnings per share, common
equivalent shares are computed on a basis comparable to that for
primary earnings per share, except that common shares are assumed to
be purchased at the market price at the end of the period, if
dilutive. Common shares assumed converted from potentially dilutive
securities in the three-month period ended March 31, 1993, include
common shares that would have been issuable upon the conversion of the
Registrant's Fixed Rate Auction Preferred Stock, Series A and B
(collectively the "FRAPS"), at the applicable rate which would have
resulted in the greatest potential dilution. For the three-month
period ended March 31, 1993, the FRAPS were antidilutive. In the
second quarter of 1993 the Company redeemed all of the FRAPS. The
FRAPS have therefore not been considered potentially dilutive
securities in the computation of fully-diluted earnings per share for
the three-month period ended March 31, 1994.
<PAGE> 1
EXHIBIT 15
KPMG PEAT MARWICK
CERTIFIED PUBLIC ACCOUNTANTS
One Biscayne Tower Telephone 305-358-2300
Suite 2900 Telecopier 305-577-0544
2 South Biscayne Boulevard
Miami, FL. 33131
The Board of Directors
Ryder System, Inc.:
We acknowledge our awareness of the incorporation by reference in
the following Registration Statements of our report dated April
19, 1994 related to our review of interim financial information:
<TABLE>
<S> <C> <C>
Form S-3:
- Registration Statement No. 33-20359 covering $1,000,000,000 aggregate principal amount of
debt securities.
- Registration Statement No. 33-50232 covering $800,000,000 aggregate principal amount of
debt 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. 33-37677 covering the Ryder System UK Stock Purchase Scheme.
- Registration Statement No. 33-442507 covering the Ryder Student Transportation Services,
Inc. Retirement/Savings Plan.
- Registration Statement No. 33-63990 covering the Ryder System, Inc. Directors' Stock Plan.
</TABLE>
Pursuant to Rule 436 (c) under the Securities Act of 1933, such
report is not considered a part of a Registration Statement prepared
or certified by an accountant or a report prepared or certified by
an accountant within the meaning of Sections 7 and 11 of the
Securities Act.
KPMG PEAT MARWICK
Miami, Florida
May 16, 1994
