SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 17, 1996
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RYDER SYSTEM, INC.
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(Exact name of registrant as specified in its charter)
Florida 1-4364 59-0739250
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(State or other jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
3600 N. W. 82nd Avenue, Miami, Florida 33166
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (305) 593-3276
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<PAGE>
Item 2. Acquisition or Disposition of Assets.
On October 17, 1996, a subsidiary of Ryder System, Inc. (the "Company")
completed the sale of its Ryder Consumer Truck Rental business unit to a
consortium of investors led by Questor Partners Fund, L.P. ("Questor"). The
purchase price of the transaction, $579 million, subject to certain adjustments,
was determined by negotiations between the Company and Questor and was paid in
cash at the closing.
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits
(1) Introduction to Ryder System, Inc. and Consolidated
Subsidiaries Pro Forma Consolidated Condensed
Financial Information.
(2) Ryder System, Inc. and Consolidated Subsidiaries Pro
Forma Consolidated Condensed Statement of Earnings for
the Six Months Ended June 30, 1996.
(3) Ryder System, Inc. and Consolidated Subsidiaries Pro
Forma Consolidated Condensed Statement of Earnings for
the Year Ended December 31, 1995.
(4) Ryder System, Inc. and Consolidated Subsidiaries Pro
Forma Consolidated Condensed Balance Sheet at June 30,
1996.
(5) Notes to Ryder System, Inc. and Consolidated Subsidiaries
Unaudited Pro Forma Consolidated Condensed Financial
Information.
<PAGE>
INTRODUCTION TO PRO FORMA CONSOLIDATED CONDENSED
FINANCIAL INFORMATION
The unaudited Pro Forma Consolidated Condensed Statements of Earnings of Ryder
System, Inc. and subsidiaries for the six-month period ended June 30, 1996 and
for the year ended December 31, 1995, present the Company's earnings before
cumulative effect of change in accounting, assuming that the transactions
resulting from the sale, including the use of proceeds, had occurred on January
1, 1995, and, in the opinion of management, include all material adjustments
necessary to restate the Company's historical results. The adjustments required
to reflect such assumptions are set forth in the "Pro Forma Adjustments" column.
The unaudited Pro Forma Consolidated Condensed Balance Sheet of Ryder System,
Inc. and subsidiaries as of June 30, 1996, presents the consolidated financial
position of the Company, assuming the transactions associated with the sale had
been completed as of that date. The adjustments required to reflect such
assumptions are set forth in the "Pro Forma Adjustments" column.
The historical amounts are derived from the historical financial statements of
Ryder System, Inc. and subsidiaries. The unaudited Pro Forma Consolidated
Condensed Financial Information of the Company should be read in conjunction
with the historical financial statements and related notes of the Company
included in the most recent annual report and the most recent quarterly report
previously filed with the Commission, copies of which are available from the
Company. The pro forma information presented is for informational purposes only
and may not necessarily reflect the results of operations which would have
occurred had the sale of the consumer truck rental business been consummated at
the beginning of the financial periods presented, nor is the pro forma
information intended to be indicative of future results of operations or
financial position of the Company.
<PAGE>
RYDER SYSTEM, INC. AND CONSOLIDATED SUBSIDIARIES
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF EARNINGS
Six Months Ended June 30, 1996
(In thousands, except per share amounts)
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
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REVENUE $ 2,753,999 (216,166) (a) 2,537,833
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Operating expense 2,214,070 (161,274) (a) 2,052,796
Depreciation expense, net of gains 362,203 (45,922) (a) 316,281
Interest expense 106,619 (5,800) (b) 100,819
Miscellaneous (income) expense (269) 664 (a)
(4,800) (c) (4,405)
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2,682,623 (217,132) 2,465,491
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Earnings before income taxes and
cumulative effect
of change in accounting 71,376 966 72,342
Provision for income taxes 29,614 1,642 (a)
(1,100) (d) 30,156
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EARNINGS BEFORE CUMULATIVE EFFECT
OF CHANGE IN ACCOUNTING $ 41,762 424 42,186
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EARNINGS PER COMMON SHARE
BEFORE CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING $ 0.52 0.57
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Average common and common
equivalent shares 80,615 74,615
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See accompanying notes to the unaudited pro forma consolidated condensed
financial information.
<PAGE>
RYDER SYSTEM, INC. AND CONSOLIDATED SUBSIDIARIES
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF EARNINGS
Year Ended December 31, 1995
(In thousands, except per share amounts)
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
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REVENUE $ 5,167,421 (472,319) (a) 4,695,102
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Operating expense 4,049,322 (335,111) (a) 3,714,211
Depreciation expense, net of gains 664,073 (100,748) (a) 563,325
Interest expense 191,157 (11,800) (b) 179,357
Miscellaneous (income) expense (1,517) 776 (a)
(10,600) (c) (11,341)
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4,903,035 (457,483) 4,445,552
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Earnings before income taxes
and cumulative effect
of change in accounting 264,386 (14,836) 249,550
Provision for income taxes 108,961 (3,183) (a)
(2,600) (d) 103,178
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EARNINGS BEFORE CUMULATIVE EFFECT
OF CHANGE IN ACCOUNTING $ 155,425 (9,053) 146,372
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EARNINGS PER COMMON SHARE
BEFORE CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING $ 1.96 1.99
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Average common and common
equivalent shares 79,370 73,370
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See accompanying notes to the unaudited pro forma consolidated condensed
financial information.
<PAGE>
<TABLE>
<CAPTION>
RYDER SYSTEM, INC. AND CONSOLIDATED SUBSIDIARIES
PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
June 30, 1996
(In thousands)
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
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<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 126,102 623,900 (e)
(501,000) (f) 249,002
Receivables 401,911 175,000 (f) 576,911
Inventories 59,600 (219) (e) 59,381
Tires in service 195,314 (26,850) (e) 168,464
Deferred income taxes 24,746 24,746
Prepaid expenses and other current assets 154,568 (13,749) (e) 140,819
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Total current assets 962,241 257,082 1,219,323
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Revenue earning equipment 3,761,200 (509,973) (e) 3,251,227
Operating property and equipment 694,375 (22,589) (e) 671,786
Direct financing leases and other assets 291,983 291,983
Intangible assets and deferred charges 295,824 (100) (e) 295,724
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$6,005,623 (275,580) 5,730,043
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 162,580 162,580
Accounts payable 385,785 (86) (e) 385,699
Accrued expenses 485,614 74,406 (e) 560,020
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Total current liabilities 1,033,979 74,320 1,108,299
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Long-term debt 2,552,424 (146,000) (f) 2,406,424
Other non-current liabilities 465,922 465,922
Deferred income taxes 657,379 (39,000) (e) 618,379
Shareholders' equity:
Common stock of $0.50 par value per share
(shares outstanding at
June 30, 1996 - 80,889,469) 588,861 (180,000) (f) 408,861
Retained earnings 721,304 15,100 (e) 736,404
Translation adjustment (14,246) (14,246)
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Total shareholders' equity 1,295,919 (164,900) 1,131,019
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$6,005,623 (275,580) 5,730,043
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</TABLE>
See accompanying notes to unaudited pro forma consolidated condensed financial
information.
<PAGE>
RYDER SYSTEM, INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED
CONDENSED FINANCIAL INFORMATION
Note 1 -
On October 17, 1996, the Company sold substantially all the assets and certain
liabilities of its consumer truck rental business to Questor Partners Fund, L.P.
and certain other investors for $579 million. The sale is subject to a final
audit of the net assets sold as of the closing date. The audit is to be
completed and final purchase price adjusted based upon such audit before
December 31, 1996. As such, the purchase price and gain reflected in the
accompanying pro forma consolidated condensed financial information is subject
to change.
Pursuant to the terms of the sales agreement, the Company gave the buyer a
royalty-free license to use the Ryder trademark and color scheme, subject to
certain restrictions, for a total of 10 years (with required modifications to
the trademark after five years). The Company and the buyer have also entered
into service agreements for various periods of time ranging from two to five
years, with options for extensions after five years for certain of the
agreements. Under the agreements, the Company will continue to provide various
services to the buyer including vehicle maintenance, claims processing,
management information systems and other administrative services. In addition,
certain Company branch locations will continue to act as consumer truck rental
dealers and the Company will continue to assist in the disposition of the
buyer's used vehicles through its sales network. Rates agreed upon for the
various services are considered reasonable based on market rates.
The Company announced at the time of the sale its intention to use the proceeds
from the sale to pay down debt and repurchase stock. The repurchase of stock is
intended to enhance shareholder value by retiring capital invested previously in
the consumer truck rental business. As such, the accompanying pro forma
consolidated condensed financial information reflects the repurchase of six
million shares and a related reduction in common stock of $180 million. For each
10% change in the assumed stock repurchase price of $30 per common share, the
pro forma earnings per common share would change by approximately $0.01.
The accompanying unaudited pro forma consolidated condensed financial
information reflects all adjustments, in the opinion of management, which are
necessary to present a fair statement of the financial position and results of
operations of the Company. The information does not include certain disclosures
required under generally accepted accounting principles and, therefore should be
read in conjunction with the financial statements and notes thereto included in
the Company's most recent annual report and the most recent quarterly report
filed with the Commission.
Note 2 -
The pro forma adjustments to the accompanying consolidated condensed financial
information are described below:
(a) To deconsolidate the results of the operations of the consumer truck rental
business, net of certain intercompany adjustments (in millions) as follows:
<TABLE>
<CAPTION>
For the six months For the year
ended ended
June 30, 1996 December 31, 1995
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<S> <C> <C>
Charges for maintenance services provided $ 28.8 57.4
Allocated interest 13.5 29.7
Commissions earned as rental dealer 4.3 10.1
Charges for vehicle disposition services 3.3 7.0
(b) To reduce interest expense due to the reduction of debt from cash flows
generated from the sale.
</TABLE>
<PAGE>
RYDER SYSTEM, INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED
CONDENSED FINANCIAL INFORMATION
(CONTINUED)
(c) To increase miscellaneous (income) expense as a result of a reduction in
the level of receivables sold (at a discount) due to cash being available
from the sale (and assumed to be used in lieu of selling receivables).
(d) To reflect the income tax benefit associated with the pro forma
adjustments to the statements of earnings.
(e) To reflect the sale of substantially all the assets and certain liabilities
of the consumer truck rental business. The net book value of the items sold
as of June 30, 1996 was $563.9 million compared with $519.4 million at the
closing date.
The sale price for the business was based upon the net book value of the
net assets sold plus $60 million, subject to a final audit. As such, the
sale proceeds would have been $623.9 million had the transaction taken
place on June 30, 1996.
The net estimated pro forma increase to retained earnings of $15.1 million
is calculated as follows (in millions):
Gross proceeds (assuming June 30, 1996 sale) $ 623.9
Less:
Net book value of assets sold 563.9
Severance and stay-on bonuses 9.3
Direct transaction costs 7.2
Write-off of assets not sold 5.5
Sales tax, vehicle titling, software licensing
and other costs 13.0
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25.0
Income tax benefit (expense) -
Current (48.9)
Deferred 39.0
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Net adjustment to retained earnings
(subject to final audit) $ 15.1
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(f) To reflect the usage of the net proceeds after transaction costs and other
liabilities established upon sale, as follows (in millions):
Proceeds at October 17, 1996 $ 579.4
Less:
Estimated taxes payable 48.9
Severance and stay-on bonuses 9.3
Direct transaction costs 7.2
Sales tax, vehicle titling, software
licensing and other costs 13.0
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$ 501.0
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The net proceeds of $501.0 were assumed to be used as follows:
Repurchase common stock $ 180.0
Reduce sales of receivables 175.0
Debt reduction 146.0
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$ 501.0
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<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.
Dated: October 25, 1996
RYDER SYSTEM, INC.
By: /s/ Edward R. Henderson
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Name: Edward R. Henderson
Title: Associate General Counsel
and Assistant Secretary
