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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 June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
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) 500-3726
I.R.S. Employer Identification No. 59-0739250
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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: YES [X] NO [ ]
Ryder System, Inc. (the "Registrant" or the "Company") had 81,203,295 shares of
common stock ($0.50 par value per share) outstanding as of July 31, 1996.
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<PAGE>
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
Ryder System, Inc. and Consolidated Subsidiaries
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Periods ended June 30, 1996 and 1995 Second Quarter Six Months
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(In thousands, except per share amounts) 1996 1995 1996 1995
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<S> <C> <C> <C> <C>
REVENUE $ 1,426,048 1,324,444 2,753,999 2,557,925
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Operating expense 1,135,425 1,024,338 2,214,070 2,019,101
Depreciation expense, net of gains (quarter, 1996 - $18,390,
1995 - $21,259; six months, 1996 - $39,406, 1995 - $49,957) 183,716 165,671 362,203 314,165
Interest expense 53,803 46,337 106,619 91,446
Miscellaneous (income) expense (545) 1,178 (269) 1,168
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1,372,399 1,237,524 2,682,623 2,425,880
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Earnings before income taxes and cumulative effect
of change in accounting 53,649 86,920 71,376 132,045
Provision for income taxes 22,066 35,434 29,614 53,980
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Earnings before cumulative effect of change in accounting 31,583 51,486 41,762 78,065
Cumulative effect of change in accounting - - - (7,759)
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NET EARNINGS $ 31,583 51,486 41,762 70,306
===================================================================================================================
Earnings per common share:
Earnings before cumulative effect of change in accounting $ 0.39 0.65 0.52 0.99
Cumulative effect of change in accounting - - - (0.10)
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EARNINGS PER COMMON SHARE $ 0.39 0.65 0.52 0.89
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Cash dividends per common share $ 0.15 0.15 0.30 0.30
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Average common and common equivalent shares 81,196 79,291 80,615 79,141
===================================================================================================================
</TABLE>
See accompanying notes to consolidated condensed financial statements.
<PAGE>
<TABLE>
<CAPTION>
ITEM 1. Financial Statements (continued)
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
Ryder System, Inc. and Consolidated Subsidiaries
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Six months ended June 30, 1996 and 1995
(In thousands) 1996 1995
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 41,762 70,306
Cumulative effect of change in accounting - 7,759
Depreciation expense, net of gains 362,203 314,165
Deferred income taxes 23,818 38,636
Proceeds from sales of receivables - 30,000
Increase in working capital items and other, net (85,895) (21,812)
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341,888 439,054
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CASH FLOWS FROM FINANCING ACTIVITIES:
Debt proceeds 236,694 912,363
Debt repaid, including capital lease obligations (153,010) (432,579)
Common stock issued 35,303 2,441
Dividends on common stock (23,978) (23,637)
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95,009 458,588
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and revenue earning equipment (769,995) (1,253,630)
Sales of property and revenue earning equipment 187,185 189,453
Sale and leaseback of revenue earning equipment 150,000 150,000
Other, net 29,158 18,681
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(403,652) (895,496)
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INCREASE IN CASH AND CASH EQUIVALENTS 33,245 2,146
Cash and cash equivalents at January 1 92,857 75,878
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CASH AND CASH EQUIVALENTS AT JUNE 30 $ 126,102 78,024
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</TABLE>
See accompanying notes to consolidated condensed financial statements.
<PAGE>
<TABLE>
<CAPTION>
ITEM 1. Financial Statements (continued)
CONSOLIDATED CONDENSED BALANCE SHEETS
Ryder System, Inc. and Consolidated Subsidiaries
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June 30, December 31,
(Dollars in thousands, except per share amounts) 1996 1995
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<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 126,102 92,857
Receivables 401,911 374,689
Inventories 59,600 59,699
Tires in service 195,314 195,742
Deferred income taxes 24,746 39,527
Prepaid expenses and other current assets 154,568 121,547
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Total current assets 962,241 884,061
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Revenue earning equipment 5,979,821 5,892,408
Less accumulated depreciation (2,218,621) (2,116,523)
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Net revenue earning equipment 3,761,200 3,775,885
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Operating property and equipment 1,222,261 1,174,217
Less accumulated depreciation (527,886) (512,852)
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Net operating property and equipment 694,375 661,365
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Direct financing leases and other assets 291,983 269,819
Intangible assets and deferred charges 295,824 302,685
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$ 6,005,623 5,893,815
==========================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 162,580 212,077
Accounts payable 385,785 380,264
Accrued expenses 485,614 527,834
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Total current liabilities 1,033,979 1,120,175
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Long-term debt 2,552,424 2,411,024
Other non-current liabilities 465,922 474,218
Deferred income taxes 657,379 648,373
Shareholders' equity:
Common stock of $0.50 par value per share
(shares outstanding at June 30, 1996 - 80,889,469;
December 31, 1995 - 79,280,613) 588,861 550,197
Retained earnings 721,304 703,520
Translation adjustment (14,246) (13,692)
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Total shareholders' equity 1,295,919 1,240,025
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$ 6,005,623 5,893,815
==========================================================================================
</TABLE>
See accompanying notes to consolidated condensed financial statements.
<PAGE>
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 1995 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) ACCOUNTING CHANGES
Effective January 1, 1995, the Company adopted Statement of Financial
Accounting Standards No. 116, "Accounting for Contributions Received and
Contributions Made," which requires that promises to make contributions be
recognized in the financial statements as an expense and a liability when
a promise is made. As a result, a pretax charge of $12.2 million ($7.8
million after tax, or $0.10 per common share) was recorded as the
cumulative effect of a change in accounting principle to establish a
liability for the present value of the Company's total outstanding
charitable commitments as of January 1, 1995. Prior to the adoption of the
new Statement, charitable contributions were recorded in the financial
statements in the period in which they were paid.
On January 1, 1996, the Company adopted Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to Be Disposed Of." Adoption of the Statement had no
impact on the Company's results of operations or financial position in
1996. In addition, Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation," became effective in 1996. As
provided for in Statement No. 123, the Company has elected to continue to
apply the provisions of APB No. 25, "Accounting for Stock Issued to
Employees" in accounting for stock-based compensation. As a result, the
Statement had no impact on the Company's results of operations or
financial position in 1996. The Company will provide disclosures required
by Statement No. 123 in its December 31, 1996 annual financial statements.
(C) RESTRUCTURING CHARGE
In the second quarter of 1996, the Company began reviewing various
alternatives to improve its cost structure and enhance productivity and
organizational efficiency. As part of this process, the Company took
several actions in the second quarter which led to a pretax restructuring
charge to operating expense of $19.6 million ($12.4 million after tax, or
$0.15 per common share). These actions included an early retirement
program in the Automotive Carrier Division, the elimination of various
management positions in Commercial Leasing & Services and staff reductions
in the Company's headquarters. Approximately 110 employees were affected
by these actions. The Company also exited the commercial rental business
at most of its locations in Germany and eliminated its company-owned car
benefit program. In addition to recording restructuring liabilities
totaling $10.6 million (of which $9.3 million remained at June 30, 1996),
primarily for employee-related costs, the Company recorded asset
write-downs of $6.3 million and increased pension liabilities by $2.7
million as a result of the actions taken. The remaining restructuring
liabilities at June 30, 1996 are expected to be paid by the end of 1996.
Savings as a result of these actions are projected to be approximately $12
million annually. The plans implemented in the second quarter, which are
part of an ongoing cost reduction program, are expected to be
substantially completed in the third quarter of 1996.
<PAGE>
KPMG PEAT MARWICK LLP
CERTIFIED PUBLIC ACCOUNTANTS
One Biscayne Tower
Suite 2900
2 South Biscayne Boulevard
Miami, FL 33131
Telephone 305-358-2300
Telecopier 305-577-0544
Independent Auditors' Review Report
The Board of Directors and Shareholders
Ryder System, Inc.:
We have reviewed the accompanying consolidated condensed balance sheet of Ryder
System, Inc. and subsidiaries as of June 30, 1996, and the related consolidated
condensed statements of earnings for the three- and six-month periods ended June
30, 1996 and 1995 and the consolidated condensed statements of cash flows for
the six-month periods ended June 30, 1996 and 1995. These consolidated condensed
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 consolidated condensed financial statements referred to above 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, 1995, and the related consolidated statements of earnings and
cash flows for the year then ended (not presented herein); and in our report
dated March 8, 1996, 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, 1995, 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, in
1995, Ryder System, Inc. and subsidiaries changed its method of accounting for
contributions received and contributions made.
KPMG PEAT MARWICK LLP
Miami, Florida
July 22, 1996
<PAGE>
ITEM 2. Management's Discussion and Analysis of Results of Operations
and Financial Condition --
Three and six months ended June 30, 1996 and 1995
RESULTS OF OPERATIONS
The Company reported earnings before income taxes and cumulative effect of
change in accounting of $54 million in the second quarter of 1996, compared with
$87 million in last year's second quarter. Earnings before income taxes and
cumulative effect of change in accounting in the first half of 1996 were $71
million, compared with $132 million in the first half of 1995. Earnings in the
second quarter and first half of 1996 were negatively impacted by a pretax
restructuring charge of $20 million ($12 million after tax) and earnings in the
second quarter and first half of 1995 benefited from a pretax credit of $8
million ($6 million after tax) from the resolution of certain operating tax
matters. In the second quarter and first half of 1996, pretax results improved
in dedicated logistics and consumer truck rental compared with a year ago.
However, improvements in these businesses were more than offset by the
restructuring charge, lower commercial rental operating margin, reduced
operating margin in the Automotive Carrier Division, costs associated with
international expansion and lower gains on vehicle sales.
Net earnings in the second quarter of 1996 were $32 million, or $0.39 per common
share, compared with $51 million, or $0.65 per common share, in the second
quarter of 1995. In the first half of 1996, net earnings were $42 million, or
$0.52 per common share, compared with $70 million, or $0.89 per common share, in
the first half of 1995. Net earnings in the first half of 1995 included a first
quarter after tax charge of $8 million ($0.10 per common share) for the
cumulative effect of a change in accounting for charitable contributions (see
"Accounting Change" below). Excluding the impact of the 1996 restructuring
charge and the 1995 operating tax earnings credit and accounting change, net
earnings were 3% lower in the second quarter and 25% lower in the first half of
1996 compared with the same periods a year ago. The Company's effective tax
rates in the second quarter and first half of 1996 were relatively unchanged
compared with the same periods in 1995.
Revenue was 8% higher in both the second quarter and first half of 1996 compared
with the same periods last year. Vehicle Leasing & Services revenue increased
10% in both periods, led by the division's two primary contractual product
lines, dedicated logistics and full service truck leasing. Automotive Carriers
revenue was 6% lower in the second quarter and 11% lower in the first half of
1996, compared with the same periods last year, due primarily to a reduction in
the number of vehicles shipped. Vehicle shipments in the first half of 1996 were
impacted by a first quarter strike at General Motors, the division's largest
customer.
Operating expense, excluding the 1996 restructuring charge, increased 9% in both
the second quarter and first half of 1996 compared with last year. In addition
to increases which were the result of higher business volumes, operating expense
in both periods reflected higher operating expense ratios in the Automotive
Carrier and public transportation services businesses, costs related to
international expansion and an increase in the number of vehicles leased by the
Company as lessee.
<PAGE>
ITEM 2. Management's Discussion and Analysis of Results of Operations
and Financial Condition (continued) --
Three and six months ended June 30, 1996 and 1995
Depreciation expense (before gains on vehicle sales) increased 8% in the second
quarter and 10% in the first half of 1996 compared with the same periods last
year. Higher depreciation resulted from an increase in the size of the full
service lease fleet, primarily as a result of strong sales of new logistics and
full service lease contracts. Depreciation related to investments in new systems
and technology development also contributed to the increase. Consistent with
management's expectations, gains on vehicle sales were $3 million and $11
million lower in the second quarter and first half of 1996, respectively,
compared with the same periods in 1995. The decrease in gains was primarily due
to a reduction in the average gain per vehicle sold.
Interest expense increased $7 million and $15 million in the second quarter and
first half of 1996, respectively, compared with the same periods in 1995, due to
higher outstanding debt levels resulting from growth in the full service lease
fleet in 1995. The Company continued to maintain slightly less than one-third of
its financing obligations at variable interest rates at June 30, 1996.
In the second quarter of 1996, the Company began reviewing various alternatives
to improve its cost structure and enhance productivity and organizational
efficiency. As part of this process, the Company took several actions in the
second quarter which led to a pretax restructuring charge to operating expense
of $20 million ($12 million after tax, or $0.15 per common share). These actions
included an early retirement program in the Automotive Carrier Division, the
elimination of various management positions in Commercial Leasing & Services and
staff reductions in the Company's headquarters. Approximately 110 employees were
affected by these actions. The Company also exited the commercial rental
business at most of its locations in Germany and eliminated its company-owned
car benefit program. In addition to recording restructuring liabilities totaling
$11 million (of which $9 million remained at June 30, 1996), primarily for
employee-related costs, the Company recorded asset write-downs of $6 million and
increased pension liabilities by $3 million as a result of the actions taken.
The remaining restructuring liabilities at June 30, 1996 are expected to be paid
by the end of 1996. Savings as a result of these actions are projected to be
approximately $12 million annually. The plans implemented in the second quarter,
which are part of an ongoing cost reduction program, are expected to be
substantially completed in the third quarter of 1996. The Company expects to
take further cost reduction actions over the remainder of 1996 which will likely
result in additional restructuring charges.
The Company also has a continuing strategy to focus the majority of its
resources on its long-term contractual businesses. Consistent with this
strategy, on July 19, 1996, the Company announced it was exploring the potential
sale of its transaction-based consumer truck rental business. At June 30, 1996,
this business had approximately 33,000 vehicles and total assets of
approximately $600 million. Consumer truck rental revenue for the six months
<PAGE>
ITEM 2. Management's Discussion and Analysis of Results of Operations
and Financial Condition (continued) --
Three and six months ended June 30, 1996 and 1995
ended June 30, 1996 and the year ended December 31, 1995 was $253 million and
$547 million, respectively. At this time, it is not known whether or when a
transaction will be completed.
Vehicle Leasing & Services
Revenue from full service truck leasing increased 10% in both the second quarter
and first half of 1996, compared with the same periods last year, as a result of
strong new business sales in 1995 and increased fuel revenue as a result of
higher fuel prices in 1996 (full service lease contracts provide for the
pass-through of fuel costs to customers). Dedicated logistics revenue increased
26% and 29% in the second quarter and first half of 1996, respectively, over the
same 1995 periods, as a result of continued strong new business start-ups over
the past 12 months. Revenue from public transportation services increased 10% in
the second quarter and 9% in the first half of 1996, compared with the same
periods last year, due primarily to growth in two of the product line's service
offerings - public transit contracting and fleet management and maintenance.
International Division revenue was 17% higher in the second quarter and 13%
higher in the first half of 1996 compared with the same 1995 periods, due
primarily to new full service lease and logistics contracts in the United
Kingdom combined with growth in the division's expanding operations in Mexico,
Argentina and Brazil. Despite operating with a smaller fleet, revenue from
consumer truck rental was higher in both the second quarter and first half of
1996, compared with the same periods last year, due to an increase in rental
transactions. Commercial truck rental revenue decreased 10% in both the second
quarter and first half of 1996, compared with the same periods in 1995, due to
lower demand from full service lease customers either awaiting delivery of new
lease vehicles or satisfying short-term needs.
Pretax earnings for Vehicle Leasing & Services were $56 million in the second
quarter of 1996 compared with $75 million in the second quarter of 1995. For the
six months ended June 30, 1996, pretax earnings were $82 million compared with
$115 million last year. Excluding the division's portion of the restructuring
charge recorded in the second quarter of 1996 ($13 million pretax) and its
portion of the operating tax earnings credit recognized in the second quarter of
1995 ($5 million pretax), earnings before income taxes were 2% lower in the
second quarter and 14% lower in the first half of 1996 compared with the same
periods last year. Margin (revenue less direct operating expenses, depreciation
and interest expense) from full service truck leasing was slightly higher in the
second quarter and first half of 1996 compared with the same periods last year,
due to increased revenue. However, margin as a percentage of revenue was lower
for both periods, due primarily to lower pricing on new full service lease
contracts signed in 1994 and 1995. Dedicated logistics margin and margin as a
percentage of revenue were higher in the second quarter and first half of 1996,
due primarily to the growth in revenue combined with lower workers' compensation
expense as a result of favorable development of prior year claims. In public
transportation services, margin and margin as a percentage of revenue were lower
in the second quarter and first half of 1996 compared with last year, due mainly
to the adverse effects of poor weather in the first quarter of 1996 on operating
costs, as well as increased driver compensation and vehicle liability expenses.
International Division margin and margin as a percentage of revenue were lower
<PAGE>
ITEM 2. Management's Discussion and Analysis of Results of Operations
and Financial Condition (continued) --
Three and six months ended June 30, 1996 and 1995
in the second quarter and first half of 1996 compared with the same periods in
1995, primarily due to costs associated with new logistics operations in the
United Kingdom.
Consumer truck rental margin and margin as a percentage of revenue were higher
in the second quarter and first half of 1996 compared with the same periods in
1995, due to improved vehicle utilization which resulted from higher
transactions on a smaller fleet. Commercial truck rental margin and margin as a
percentage of revenue were lower in the same periods, due to the decline in
revenue and a decrease in utilization on tractors typically rented on a
short-term basis to full service lease customers. Consistent with management's
plan to down-size the truck rental fleets, the combined number of rental power
units at June 30, 1996 was 12% lower than at June 30, 1995. Management
anticipates further reductions in the rental fleets over the remainder of the
year.
For the division as a whole, higher overall operating margin in the second
quarter and first six months of 1996 was more than offset by the second quarter
restructuring charge, lower gains on vehicle sales and higher indirect operating
expenses, including costs relating to international expansion and new systems
and technology development.
Automotive Carriers
Automotive Carriers revenue was 6% lower in the second quarter and 11% lower in
the first half of 1996 compared with the same periods in 1995, due to a
reduction in the number of vehicles shipped and average revenue per vehicle
shipped in both periods, and a decrease in average length of haul in the first
half. Vehicle shipments in the first six months of 1996 were impacted by a first
quarter strike at two General Motors component plants which led to a temporary
shutdown of the majority of General Motors' North American assembly plants. A
slight increase in vehicle shipments for General Motors in the second quarter
was not enough to offset a 21% first quarter decline. In addition, shipments for
other manufacturers were lower in both the second quarter and first half of 1996
compared with the same periods in 1995. Revenue comparisons in the second half
of 1996 should benefit from the addition of several new contracts which will
begin operating in the third quarter.
Automotive Carriers reported pretax earnings of $6 million in the second quarter
of 1996, compared with $19 million in last year's second quarter. For the six
months ended June 30, 1996, pretax earnings were $3 million compared with $28
million in the first half of last year. The division's portion of the second
quarter restructuring charge was $4 million pretax and its portion of the second
quarter 1995 operating tax earnings credit was $3 million pretax. In addition to
the impact of these items, pretax earnings comparisons in both periods were
affected by lower revenue, higher wages resulting from a May 1995 agreement with
the International Brotherhood of Teamsters and higher vehicle liability expense.
<PAGE>
ITEM 2. Management's Discussion and Analysis of Results of Operations
and Financial Condition (continued) --
Three and six months ended June 30, 1996 and 1995
The current labor contracts between the United Automobile Workers and the Big
Three auto makers expire in September, 1996. The division's operating results
would be negatively impacted should any protracted work stoppage occur at the
Big Three auto makers, particularly General Motors.
Other
Other, which is comprised primarily of corporate administrative costs, reported
net expenses in the second quarter and first half of 1996 of $8 million and $13
million, respectively, compared with net expenses of $7 million and $12 million,
respectively, in the same periods last year. Expenses in the 1996 periods
included a pretax restructuring charge of $3 million.
Accounting Change
The Company adopted Statement of Financial Accounting Standards No. 116,
"Accounting for Contributions Received and Contributions Made," effective
January 1, 1995. The Statement requires that promises to make contributions be
recognized in the financial statements as an expense and a liability when a
promise is made. As a result, the Company recorded a pretax charge of $12
million ($8 million after tax, or $0.10 per common share), to record the
cumulative effect of the change in accounting principle and establish a
liability for the present value of the Company's total outstanding charitable
commitments as of January 1, 1995.
<PAGE>
ITEM 2. Management's Discussion and Analysis of Results of Operations
and Financial Condition (continued) --
Three and six months ended June 30, 1996 and 1995
LIQUIDITY AND CAPITAL RESOURCES
Total capital expenditures in the first half of 1996 were $770 million, compared
with $1.25 billion in the first half of 1995. The reduction was consistent with
management's plan to limit capital spending by being more selective in accepting
new business and focusing on those products and services with the greatest
returns. Capital expenditures in full service truck leasing in the U.S. and
Canada were $443 million in the first half of 1996 - a decrease of $169 million
compared with last year's first half - primarily due to portfolio selectivity
and generally less demand for new vehicles. Consistent with management's plan to
reduce rental fleet levels and allocate capital to the higher return contractual
businesses, capital expenditures in commercial and consumer truck rental were
lower in the first half of 1996 compared with last year's first half. In
commercial truck rental, capital expenditures were $16 million in the first half
of 1996 compared with $188 million in last year's first half, and in consumer
truck rental, capital expenditures were $69 million compared with $207 million
last year. International Division capital expenditures of $66 million in the
first half of 1996 were relatively unchanged from a year ago. Automotive
Carriers capital expenditures fell to $19 million in the first half of 1996,
compared with $47 million in the first half of 1995, due to a lower level of
fleet replacement in 1996. Capital expenditures in all other product lines were
$157 million in the first half of 1996, an increase of $23 million compared with
last year's first half, primarily reflecting higher expenditures on revenue
earning equipment in public transportation services and increased expenditures
on operating property and equipment, primarily relating to logistics and other
systems initiatives. Management estimates that total capital expenditures for
all of 1996 will be 25% to 30% lower compared with 1995.
Total debt at June 30, 1996 was $2.7 billion, compared with $2.6 billion at
December 31, 1995. U.S. commercial paper outstanding increased from $45 million
at December 31, 1995 to $193 million at June 30, 1996. During the first six
months of 1996, the Company made $102 million of scheduled unsecured note
payments. Foreign debt increased $51 million in the first six months of 1996 due
to growth in the Company's international operations. The Company's debt to
equity ratio at June 30, 1996, was 210% compared with 223% at March 31, 1996 and
212% at December 31, 1995. As part of its financing program, the Company
periodically enters into sale and leaseback agreements for revenue earning
equipment which are accounted for as operating leases. Proceeds from
sale-leaseback transactions were $150 million in the first six months of both
1996 and 1995.
Cash flow from operating activities in the first six months of 1996 was $342
million, compared with $439 million in the same period last year. The decrease
resulted primarily from lower earnings and an increase in cash required for
working capital (due mainly to larger reductions in accrued expenses and trade
payables for vehicle purchases), partially offset by a higher non-cash
depreciation charge. Cash flow from operating activities (excluding sales of
receivables) plus asset sales as a percentage of capital expenditures was 69% in
the first half of 1996, compared with 48% in the same period last year as a
result of lower levels of capital spending.
<PAGE>
ITEM 2. Management's Discussion and Analysis of Results of Operations
and Financial Condition (continued) --
Three and six months ended June 30, 1996 and 1995
At June 30, 1996 and December 31, 1995, the Company had "floating to fixed"
interest rate swap agreements outstanding with aggregate notional amounts
totaling $166 million and $171 million, respectively. The Company also continued
to maintain $100 million of "floating to floating" interest rate swap agreements
at June 30, 1996.
The Company had contractual lines of credit totaling $716 million at June 30,
1996, of which $482 million was available. The Company also had $268 million of
debt securities available under a shelf registration statement filed in 1995.
<PAGE>
ITEM 2. Management's Discussion and Analysis of Results of Operations
and Financial Condition (continued) --
Three and six months ended June 30, 1996 and 1995
<TABLE>
<CAPTION>
SELECTED FINANCIAL AND OPERATIONAL DATA
(Dollars in thousands)
Second Quarter Six Months
----------------------- ---------------------
1996 1995 1996 1995
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Vehicle Leasing & Services
Revenue:
Commercial Leasing & Services:
Full service lease and programmed
maintenance $ 535,737 487,239 1,058,586 960,444
Commercial rental 133,382 147,917 254,532 281,497
Other 81,080 81,498 161,514 153,550
----------- --------- --------- ---------
750,199 716,654 1,474,632 1,395,491
Dedicated Logistics 269,716 213,612 527,832 407,741
Consumer Truck Rental 146,680 145,188 252,566 248,232
Public Transportation 113,558 103,081 230,246 211,578
International 84,134 71,746 165,903 147,322
Eliminations (95,259) (93,488) (188,223) (178,635)
----------- --------- --------- ---------
Total 1,269,028 1,156,793 2,462,956 2,231,729
----------- --------- --------- ---------
Operating expense 985,318 876,687 1,928,704 1,726,068
Depreciation expense 191,451 176,200 381,274 343,105
Gains on sale of revenue earning equipment (18,373) (20,637) (39,313) (48,765)
Interest expense 54,955 47,850 108,973 94,491
Miscellaneous (income) expense, net (280) 1,407 1,332 1,530
----------- --------- --------- ---------
Earnings before income taxes $ 55,957 75,286 81,986 115,300
=========== ========= ========= =========
Fleet size (owned and leased including international):
Full service lease 109,628 98,866
Commercial and consumer rental 74,343 80,776
Buses operated or managed 12,992 12,842
Ryder Truck Rental service locations 1,141 1,114
- ------------------------------------------------------------------------------------------------------------
Automotive Carriers
Revenue $ 160,514 170,609 297,945 335,606
=========== ========= ========= =========
Earnings before income taxes $ 5,845 18,931 2,588 28,456
=========== ========= ========= =========
Total units transported (000) 1,638 1,668 3,097 3,282
Total miles traveled (000) 61,195 62,149 113,506 125,050
Auto transports:
Owned and leased 2,791 3,423
Owner-operators 497 456
Locations 84 83
- ------------------------------------------------------------------------------------------------------------
<FN>
Note: Certain 1995 amounts have been reclassified to conform to 1996 classifications.
</FN>
</TABLE>
<PAGE>
PART II. OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security Holders:
(a) The annual meeting of stockholders of Ryder System, Inc. was held on May
3, 1996.
(b) All director nominees described in (c) below were elected. The following
directors continued in office after the meeting: M. Anthony Burns, Arthur
H. Bernstein, Edward T. Foote II, John A. Georges, Vernon E. Jordan, Jr.,
James W. McLamore, Paul J. Rizzo and Alva O. Way.
(c) Certain matters voted on at the meeting and the votes cast with respect to
such matters are as follows:
VOTES CAST
-----------------------
BROKER
FOR AGAINST ABSTAIN NON-VOTES
---------- ---------- ------- ---------
Management Proposal
- -------------------
Ratification of appointment
of independent auditors 68,851,039 175,614 115,622 0
Stockholder Proposal
- --------------------
Relating to annual election
of all directors 35,005,299 29,632,180 413,868 4,090,928
Election of Directors
- ---------------------
Director Votes Received Votes Withheld
Joseph L. Dionne 68,200,941 941,334
David T. Kearns 68,164,631 977,644
Lynn M. Martin 68,158,748 983,527
Mark H. Willes 68,191,311 950,964
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K:
(a) Exhibits
(3.1) 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 the
Company's Annual Report on Form 10-K for the year ended
December 31, 1990, are incorporated by reference into this
report.
(3.2) The Ryder System, Inc. By-Laws, as amended through November
23, 1993, previously filed with the Commission as an exhibit
to the Company's Annual Report on Form 10-K for the year ended
December 31, 1993, are incorporated by reference into this
report.
(11) Statement regarding computation of per share earnings.
(15) Letter regarding unaudited interim financial statements.
(27) Financial data schedule (for SEC use only).
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Registrant during the quarter
ended June 30, 1996.
<PAGE>
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: August 13, 1996 /s/ Edwin A. Huston
-------------------
Edwin A. Huston
Senior Executive Vice President-Finance
and Chief Financial Officer
(Principal Financial Officer)
Date: August 13, 1996 /s/ Anthony G. Tegnelia
-----------------------
Anthony G. Tegnelia
Senior Vice President
and Controller (Principal
Accounting Officer)
Exhibit 11
Statement Regarding Computation of Per Share Earnings
Primary earnings per share are computed by dividing earnings
applicable 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 applicable to common shares 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.
KPMG PEAT MARWICK LLP
CERTIFIED PUBLIC ACCOUNTANTS
One Biscayne Tower
Suite 2900
2 South Biscayne Boulevard
Miami, FL 33131
Telephone 305-358-2300
Telecopier 305-577-0544
The Board of Directors and Shareholders
Ryder System, Inc.:
We acknowledge our awareness of the incorporation by reference in the following
Registration Statements of our report dated July 22, 1996 related to our review
of interim financial information:
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.
- Registration Statement No. 33-58667 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.
<PAGE>
The Board of Directors and Shareholders
Ryder System, Inc.
Page 2
- 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.
- 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. 33-58045 covering the Ryder System,
Inc. Savings Restoration Plan.
- 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.
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 Act.
KPMG PEAT MARWICK LLP
Miami, Florida
August 13, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE RYDER
SYSTEM, INC. AND CONSOLIDATED SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS
AND STATEMENTS OF EARNINGS FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 126,102
<SECURITIES> 0
<RECEIVABLES> 401,911
<ALLOWANCES> 0
<INVENTORY> 59,600
<CURRENT-ASSETS> 962,241
<PP&E> 7,202,082
<DEPRECIATION> 2,746,507
<TOTAL-ASSETS> 6,005,623
<CURRENT-LIABILITIES> 1,033,979
<BONDS> 2,552,424
0
0
<COMMON> 588,861
<OTHER-SE> 707,058
<TOTAL-LIABILITY-AND-EQUITY> 6,005,623
<SALES> 0
<TOTAL-REVENUES> 2,753,999
<CGS> 0
<TOTAL-COSTS> 2,576,004
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 106,619
<INCOME-PRETAX> 71,376
<INCOME-TAX> 29,614
<INCOME-CONTINUING> 41,762
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 41,762
<EPS-PRIMARY> 0.52
<EPS-DILUTED> 0
</TABLE>
