FORM 11-K
(Mark one)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _______________ to _______________________.
Commission file number # 001-04364
RYDER SYSTEM, INC. DEFERRED COMPENSATION PLAN
Ryder System, Inc.
3600 N.W. 82 Avenue
Miami, Florida 33166
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REQUIRED INFORMATION
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FINANCIAL STATEMENTS PAGE NO.
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\bullet\ Independent Auditors' Report 2
\bullet\ Statement of Financial Position
December 31, 1997 3
\bullet\ Statement of Income and Changes in Plan Equity
for the year ended December 31, 1997 4
\bullet\ Notes to Financial Statements 5
EXHIBITS
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\bullet\ Exhibit Index 11
\bullet\ Independent Auditors' Consent 12
SIGNATURE
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Pursuant to the requirements of the Securities Exchange Act of 1934, the Ryder
System, Inc. Retirement Committee has duly caused this annual report to be
signed by the undersigned thereunto duly authorized.
RYDER SYSTEM, INC.
DEFERRED COMPENSATION PLAN
Date: June 29, 1998 By:/s/ THOMAS E. MCKINNON
--------------------------------
Thomas E. McKinnon
Chairman - Retirement Committee
Executive Vice President - Human
Resources and Corporate Services
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INDEPENDENT AUDITORS' REPORT
The Participants and Administrator
Ryder System, Inc. Deferred Compensation Plan:
We have audited the accompanying statement of financial position of Ryder
System, Inc. Deferred Compensation Plan as of December 31, 1997, and the related
statement of income and changes in plan equity for the year then ended. These
financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Plan as of December 31,
1997, and the changes in plan equity for the year then ended, in conformity with
generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
Miami, Florida
June 26, 1998
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RYDER SYSTEM, INC. DEFERRED COMPENSATION PLAN
STATEMENT OF FINANCIAL POSITION
DECEMBER 31, 1997
1997
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ASSETS
Receivable from Ryder System, Inc. $ 4,709,671
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Total assets $ 4,709,671
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LIABILITIES AND PLAN EQUITY
Plan equity $ 4,709,671
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Total liabilities and plan equity $ 4,709,671
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See accompanying notes to financial statements.
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RYDER SYSTEM, INC. DEFERRED COMPENSATION PLAN
STATEMENT OF INCOME AND CHANGES IN PLAN EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1997
1997
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Investment income from notional investments:
Net appreciation in value $ 323,702
Dividends 187,505
Interest 7,527
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Net investment income 518,734
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Contributions to notional investments:
Employer contributions 47,774
Employee contributions 1,767,335
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Total contributions 1,815,109
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Transfer from the Ryder System, Inc.
Savings Restoration Plan 2,638,586
Distributions (262,758)
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Net increase in plan equity 4,709,671
Plan equity at beginning of period -
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Plan equity at end of period $ 4,709,671
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See accompanying notes to financial statements.
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RYDER SYSTEM, INC. DEFERRED COMPENSATION PLAN
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF PLAN
The following description of the Ryder System, Inc. Deferred Compensation
Plan (the "Plan") provides only general information. Participants should
refer to the Plan document for a more comprehensive description of the Plan's
provisions.
GENERAL. The Plan was adopted effective January 1, 1997. The Plan is unfunded
and is intended to be exempt from the participation, vesting, funding, and
fiduciary requirements of Title I of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), but is subject to certain reporting and
disclosure requirements under ERISA. Further, benefits under the Plan are not
guaranteed under Title IV of ERISA. The right of a participant or his
designated beneficiary to receive a distribution under the Plan will be an
unsecured claim against the general assets of Ryder System, Inc. (the
"Company"), and neither the participant nor a designated beneficiary will
have any rights in or against any specific assets of the Company. Net assets
of the Ryder System, Inc. Savings Restoration Plan were transferred to the
Plan on January 1, 1997.
Effective July 1, 1997, the Company transferred assets to a trust for the
benefit of the Plan participants (the "Trust") which may be used to pay all
or a portion of the obligations of the Plan. The right of a participant or
his designated beneficiary to receive a distribution under the Plan will be
an unsecured claim against the Trust and the general assets of the Company,
and neither the participant nor a designated beneficiary will have any rights
in or against any specific assets of the Trust or the Company.
The Plan Administrator is the Ryder System, Inc. Retirement Committee.
Effective July 1, 1997, Fidelity Management Trust Co. became the Plan's
trustee. Prior to July 1, 1997, State Street Bank & Trust Company was the
Plan's trustee.
ELIGIBILITY. Participation in the Plan is voluntary. To participate in the
Plan, an employee must (i) be designated by a committee appointed by the
Board of Directors, (ii) be part of a select group of management or highly
compensated employees within the meaning of Sections 201(2), 301(a)(3) and
401 (a)(1) of ERISA, and (iii) be an eligible employee of the Company with
tax-deferred contributions or Company matching contributions under the Ryder
System, Inc. Savings Plan A or B (the "Savings Plan") limited by reason of
limitations imposed by Sections 402(g), 415 or 401(a)(17) of the Internal
Revenue Code of 1986 (the "Code"), as amended. Members of the Company's Board
of Directors are eligible for participation in the Plan.
CONTRIBUTIONS. Compensation deferral agreements are effective on a Plan year
basis, and must be filed before the beginning of a Plan year. Participants
may contribute up to 100% of compensation less applicable earnings necessary
to cover statutory taxes and benefit elections. The Company matches 50% of
employee contributions up to 3% of compensation (4% effective January 1,
1998), offset by any Company match recorded during the plan year in the
Savings Plan. Plan contributions and match are not tied to participation in
the Savings Plan.
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PARTICIPANT ACCOUNTS. Each participant's account is credited with the
participant's contribution and allocations of (a) the Company's contribution
and, (b) appreciation which is indexed to the market performance of the
participants' elections among the notional investment funds made available
under the Plan less administrative expenses, if any. Allocations are based on
participant earnings or account balances, as defined. Earnings are currently
allocated daily based on units of notional investment. Forfeited balances of
terminated participants' non-vested accounts are used to reduce future
Company contributions. The benefit to which a participant is entitled is the
benefit that can be provided from the participant's vested account.
VESTING. Participants are immediately vested in their contributions plus
earnings thereon. Participants vest 25% per year in the Company contributions
and the earnings attributable to such contributions. At retirement age, a
participant becomes fully vested in the Company contributions and the
earnings attributable to such contributions.
INVESTMENT OPTIONS. Participants may elect to contribute to, or transfer
among, any of thirteen notional investment options. Participants may transfer
among funds on a daily basis. Note 3 provides a description of each
investment option.
DISTRIBUTIONS. The vested portion of a participant's account, less any
applicable withholding, shall be distributed at the participant's election,
as either a) a lump sum or b) a minimum of 2, and a maximum of 15 annual
installments. Distributions shall be paid on the January 1 immediately
following a participant's separation from employment, or as soon as
administratively practical thereafter. Each year's deferral has a separate
distribution election and participants may elect up to 15 annual installments
or a fixed date distribution during employment. A participant may request a
distribution of all or a portion of his elective contribution account balance
if he can demonstrate financial hardship. The Plan Administrator must approve
the request and the amount withdrawn cannot be subsequently repaid to the
Company. Such amounts will be considered distributions to the participant for
tax purposes. Participants may elect to withdraw all of the vested portion of
their account less a withdrawal penalty of 10% of such amount. Once payment
is made, the participant shall not be eligible to participate in the Plan
again.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING. The financial statements of the Plan are prepared on the
accrual basis of accounting.
USE OF ESTIMATES. The Plan Administrator has made a number of estimates and
assumptions relating to the reporting of assets and liabilities and the
disclosure of contingent assets and liabilities to prepare these financial
statements in conformity with generally accepted accounting principles.
Actual results could differ from those estimates.
RECEIVABLE FROM COMPANY. The Plan records a receivable from the Company equal
to the notional amount of the participants' accounts including company
matches. Purchases and sales of securities are recorded on a trade-date
basis. Dividends on notional investments in Company common stock are
recorded on the record date. Interest income on notional investments is
recorded on the accrual basis.
PAYMENT OF BENEFITS. Benefits are recognized when paid.
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3. NOTIONAL PLAN INVESTMENT FUNDS
Notional Investment Fund A ("Fund A") - Fund A is invested in Ryder System,
Inc. common stock, which is purchased on a regular and continuous basis.
Dividends are automatically reinvested in the common stock.
Notional Investment Fund B ("Fund B") - Fund B is comprised of high quality
investments including corporate notes, bonds, and similar debt instruments,
commercial paper, time deposits, certificates of deposit, bankers
acceptances, repurchase agreements, variable and indexed interest notes, and
obligations of U.S. government agencies. Since Plan inception, this fund had
been invested solely in shares of the State Street Bank Seven Seas Money
Market Fund. Effective July 1, 1997, holdings in the State Street Bank Seven
Seas Money Market Fund were liquidated and reinvested in the Fidelity
Retirement Money Market Portfolio.
Notional Investment Fund C ("Fund C") - Fund C may normally be invested in a
variety of common, preferred or capital stocks, but may include investments
in bonds or securities convertible into common or capital stocks, similar
types of equity investments and bonds. Since Plan inception, this fund had
been invested solely in shares of the Lord Abbett Affiliated Fund. Effective
July 1, 1997, holdings in the Lord Abbett Affiliated Fund were liquidated and
reinvested in the Fidelity U.S. Equity-Income Fund.
Notional Investment Fund D ("Fund D") - Fund D may be invested primarily in
common or capital stocks, though it may invest in other types of securities,
including convertible bonds, convertible preferred stock, warrants, preferred
stock or debt securities. Since Plan inception, this fund has been invested
solely in shares of the Putnam Voyager Fund(A).
Notional Investment Fund E ("Fund E") - Fund E may be invested in
securities issued by U.S. based companies that are selling below book value.
The primary objective of the fund is capital appreciation and not
necessarily the attainment of a balanced investment program. Since Plan
inception, this fund had been invested solely in shares of the Mutual
Series Fund, Inc., Qualified Income Fund. Effective July 1, 1997, holdings in
this fund were liquidated and reinvested in the Fidelity Contrafund.
Notional Investment Fund F ("Fund F") - Fund F may be invested in all types
of securities. The fund invests primarily in common stock of companies
outside the United States. The fund maintains a flexible investment policy
and can invest in all types of securities in any foreign country, developed
or undeveloped. The fund's investment objective is long-term capital growth.
Since Plan inception, this fund had been invested solely in shares of the
Templeton Foreign Fund. Effective July 1, 1997, holdings in this fund were
liquidated and reinvested in the Fidelity Diversified International Fund.
Notional Investment Fund G ("Fund G") - Fund G, the Fidelity Asset Manager
Growth Fund, was added as an investment option in the Plan effective July 1,
1997. This fund's goal is to provide high total return over the long-term.
This fund invests in all basic types of U.S. and foreign investments: stocks,
bonds, and short-term and money market instruments.
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Notional Investment Fund H ("Fund H") - Fund H, the Fidelity Asset Manager
Fund, was added as an investment option in the Plan effective July 1, 1997.
This fund's goal is to provide high total return with reduced risk over the
long term. This fund invests in all basic types of U.S. and foreign
investments: stocks, bonds, and short-term and money market instruments. Over
time, the fund will generally aim for the following investment combination:
50% stock, 40% bonds, and 10% short-term/money market class. The fund manager
may adjust the mix of these investments depending on the outlook for market
conditions.
Notional Investment Fund I ("Fund I") - Fund I, the Fidelity Asset Manager
Income Fund, was added as an investment option in the Plan effective July 1,
1997. This fund's goal is to provide high current income, but also considers
the potential for long-term growth. This fund invests in all basic types of
U.S. and foreign investments: stocks, bonds, and short-term and money market
instruments. Over time, the fund will generally aim for the following
investment combination: 20% stock, 50% bonds, and 30% short-term/money market
class. The fund manager may adjust the mix of these investments depending on
the outlook for market conditions.
Notional Investment Fund J ("Fund J") - Fund J, the Fidelity U.S. Bond Index
Fund, was added as an investment option in the Plan effective July 1, 1997.
This fund's goal is to provide investment results that correspond to the
aggregate price and interest performance of the debt securities in the Lehman
Brothers Aggregate Bond Index. The fund purchases investment-grade securities
with maturities of at least one year including U.S. Treasury and U.S. or
government securities, corporate bonds, asset-backed and mortgage-backed
securities, and U.S. dollar denominated foreign securities.
Notional Investment Fund K ("Fund K") - Fund K, the Spartan U.S. Equity Index
Fund, was added as an investment option in the Plan effective July 1, 1997.
This fund's goal is to match the total return of the Standard & Poor's 500
Index. The fund invests in the 500 companies that make up the S&P 500 and in
other securities that are based on the value of the index. The fund's manager
focuses on duplicating the composition and performance of a specific market
index as opposed to a strategy of selecting attractive stocks.
Notional Investment Fund L ("Fund L") - Fund L, the Fidelity Emerging Growth
Fund, was added as an investment option in the Plan effective July 1, 1997.
This fund's goal is long term capital growth. The fund invests mainly in
stocks of small and medium-sized companies in the developing stages of their
life cycle that the fund's manager believes have the potential for
accelerated earnings or revenue growth. Such stocks may be subject to abrupt
or erratic changes. This fund carries a redemption fee, which is charged to
discourage short-term buying and selling of fund shares. Currently the
redemption fee is 0.75% of the value of the shares sold.
Notional Investment Fund M ("Fund M") - Fund M, the Fidelity Growth Company
Fund, was added as an investment option in the Plan effective July 1, 1997.
This fund's goal is long term capital growth. The fund invests in common
stocks of companies with earnings or gross sales that indicate the potential
for above-average growth.
The 1997 performance of participant's notional investment funds is as
follows:
Fund A 18.3%
Fund B 5.4%
Fund C 30.0%
Fund D 26.0%
Fund E 23.0%
Fund F 13.7%
Fund G 26.5%
Fund H 22.3%
Fund I 12.4%
Fund J 9.6%
Fund K 33.0%
Fund L 19.5%
Fund M 18.9%
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The number of participants' accounts in each of the funds at December 31,
1997 is as follows:
Fund A 55
Fund B 66
Fund C 66
Fund D 104
Fund E 92
Fund F 65
Fund G 3
Fund H 0
Fund I 0
Fund J 2
Fund K 7
Fund L 6
Fund M 3
4. PLAN TERMINATION
While it has not expressed any intention to do so, the Company may amend or
terminate the Plan at any time. In the event the Plan is terminated, assets
will be payable to each participant on the January 1 immediately following a
participant's separation from employment in accordance with the participant's
most recent participant election and enrollment form which is effective at
least one year prior to the date of separation of employment. No additional
credits of contributions shall be made to the participant's account for
periods after termination of the Plan, but the Retirement Committee shall
continue to credit gains and losses to the participant's account, until the
balance has been fully distributed.
5. TAX STATUS OF THE PLAN
A participant generally will not be taxed on the tax-deferred contributions
or the Company matching contributions to the Plan, or earnings thereon,
allocable to his participant's account until such amounts are distributed to
the participant or his beneficiary under the Plan. The value of the
participant's account, including any earnings, are deductible by the Company
for federal tax purposes in the year in which those amounts become taxable to
the participant or his beneficiary.
Participants or their beneficiaries generally will be taxed, at ordinary
income rates, on the amount they receive as a distribution from the Plan at
the time they receive the distribution. Since the Plan is not qualified under
Section 401(a) of the Code, distributions from the Plan will not qualify for
any of the favorable tax rulings applicable to qualified tax distributions,
such as tax-deferred rollovers or five year averaging. On the other hand,
distributions from the Plan will not be subject to various excise taxes
applicable to qualified plan distributions, such as 10% excise tax on
distribution prior to age 59 1/2, or the 15% excise tax on excess benefit
payments.
An employee's tax-deferred contributions to the Plan are subject to federal
social security and medicare taxes and federal unemployment taxes when
earned, and Company matching contributions, and any earnings thereon prior to
the time such amounts become vested, are subject to those taxes as and when
they become vested.
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6. PLAN FEES AND EXPENSES
Although all expenses of administration relating to the Plan may be charged
against a participant's account, at the present time, the Company has elected
to pay all administrative and marketing expenses.
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EXHIBIT INDEX
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EXHIBIT DESCRIPTION
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23.1 Independent Auditors' Consent
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EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
The Participants and Administrator
Ryder System, Inc. Deferred Compensation Plan:
We consent to incorporation by reference in the Registration Statement (No.
333-19515) on Form S-8 of Ryder System, Inc. of our report dated June 26, 1998,
relating to the statement of financial position of the Ryder System, Inc.
Deferred Compensation Plan as of December 31, 1997, and the related statement of
income and changes in plan equity for the year then ended which report appears
in the December 31, 1997 annual report on Form 11-K of the Ryder System, Inc.
Deferred Compensation Plan filed by Ryder System, Inc.
/s/ KPMG Peat Marwick LLP
Miami, Florida
June 26, 1998
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